2024 Annual Report
A message from our CEO
Dear Shareholders,
2024 was a transformative year for International
Paper. I was graciously welcomed by the team in
May and together we embarked on a journey to
reshape our company by embracing a customer-
centric strategy to drive profitable growth and
enhance our position as the leader in sustainable
packaging solutions. We adopted a disciplined
80/20 performance system and began focusing
on what matters most — reducing complexity,
removing costs and aligning resources to delight
our customers. Grounded in our values of safety,
ethics and excellence, we restructured our corporate
organization, optimized operations, executed our
box go-to-market strategy and made targeted
investments to improve reliability and better serve
our customers.
Our 2024 results reflect our strategic focus on
customer excellence and profitable growth. Our
customer service performance improved significantly
as we operationalized reliability improvements. We
launched 80/20 “lighthouses” at select box plants
to pilot new ways of operating our facilities. To date,
these lighthouses have achieved 20% productivity
gains, positively impacting our service reliability and
cost position. We will expand and scale this approach
to approximately 60 box plants in 2025. We expect
these improvements will be foundational to drive
future results.
Looking ahead, we will continue our
transformational journey in 2025, both in North
America and Europe. Earlier this year, we welcomed
DS Smith to the IP family, which expanded our
capabilities and increased our presence with
customers in North America and EMEA. We expect
that our combination will result in significant
opportunities for driving innovation and service, and
for achieving efficiencies for an advantaged cost
position. We have an ambitious pipeline of capital
projects planned that will optimize our box system,
improve mill reliability and drive market share growth.
We will aim to achieve these goals while accelerating
synergies from the DS Smith acquisition. We also
continue to explore strategic options for our Global
Cellulose Fibers business.
I am proud of our team’s progress and believe
we have the right strategy to thrive through the
inevitable fluctuations in the economic landscape.
We have the people, assets, and position to win in
an attractive market that thrives on innovation and
service. Through our sustainable packaging solutions,
we help make the world safer and more productive.
Ultimately the underlying stability of our industry and
the need for sustainable packaging across the globe
will continue to generate ongoing demand.
International Paper has an exceptional team
dedicated to winning. As we execute with excellence,
I am confident that our actions in 2025 will drive
improvements that create significant value for our
employees, customers and shareholders.
Thank you for your continued support.
Sincerely,
Andy Silvernail
Chairman and CEO
International Paper
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
12/31/2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from - to -
Commission File No. 1-3157
INTERNATIONAL PAPER COMPANY
(Exact name of registrant as specified in its charter)
New York
13-0872805
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
6400 Poplar Avenue
Memphis, Tennessee
(Address of principal executive offices)
38197
(Zip Code)
Registrant's telephone number, including area code:
901 419-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Shares
IP
New York Stock Exchange
Common Shares
IPC
London Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes 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, 2024) was approximately $14,910,126,297.
The number of shares outstanding of the Company’s common stock as of February 14, 2025 was 526,125,614.
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 2025
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, 2024
PART I.
1
ITEM 1.
BUSINESS.
1
1
2
6
6
6
6
6
7
10
10
General
Human Capital
Competition and Costs
Marketing and Distribution
Description of Principal Products
Government Regulation
Environmental Protection
Climate Change
Raw Materials
Information About Our Executive Officers
Forward-looking Statements
11
ITEM 1A.
RISK FACTORS.
12
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
29
ITEM 1C.
29
ITEM 2.
CYBERSECURITY.
PROPERTIES.
32
Mills and Plants
32
32
ITEM 3.
32
ITEM 4.
Capital Investments and Dispositions
LEGAL PROCEEDINGS.
MINE SAFETY DISCLOSURES.
32
PART II.
33
ITEM 5.
33
ITEM 6.
ITEM 7.
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.
34
35
38
42
42
44
47
50
50
50
50
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
50
INTERNATIONAL PAPER COMPANY
INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2024
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
51
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
52
Report of Management on Financial Statements, Internal Control over
Financial Reporting and Internal Control Environment and Board of
Directors Oversight
52
Reports of Deloitte & Touche LLP, Independent Registered Public
Accounting Firm
54
Consolidated Statement of Operations
58
Consolidated Statement of Comprehensive Income
59
Consolidated Balance Sheet
60
Consolidated Statement of Cash Flows
61
Consolidated Statement of Changes in Equity
62
Notes to Consolidated Financial Statements
63
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
98
ITEM 9A.
CONTROLS AND PROCEDURES.
98
ITEM 9B.
OTHER INFORMATION.
98
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS.
98
PART III.
98
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
98
ITEM 11.
EXECUTIVE COMPENSATION.
99
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
99
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
99
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
99
PART IV.
99
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
99
Additional Financial Data
99
ITEM 16.
FORM 10-K SUMMARY.
104
SIGNATURES.
105
APPENDIX I
2024 LISTING OF FACILITIES.
A-1
APPENDIX II
2024 CAPACITY INFORMATION.
A-3
PART I.
ITEM 1. BUSINESS
GENERAL
International
Paper
Company
(the
"Company,"
"International Paper" or "IP", which may also be
referred to as "we" or "us") is a global leader in
sustainable
packaging
solutions.
We
produce
renewable fiber-based packaging and pulp products
with manufacturing operations in North America, Latin
America, Europe and North Africa. We are a New
York corporation, incorporated in 1941 as the
successor to the New York corporation of the same
name organized in 1898. You can learn more about
us
by
visiting
our
website
at
www.internationalpaper.com.
In the United States, at December 31, 2024, the
Company operated 22 pulp and packaging mills, 157
converting and packaging plants, 16 recycling plants
and three bag facilities. Production facilities at
December 31, 2024 in Canada, Europe, North Africa
and Latin America included four pulp and packaging
mills, 36 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 excellence.
•
Safety – Above all else, 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.
•
Excellence – We set high expectations and
aim to deliver outstanding results for each
other, our customers and our shareholders.
For management and financial reporting purposes,
our businesses are separated into two segments:
Industrial Packaging and Global Cellulose Fibers. A
description of these business segments can be found
on page 42 of Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
In 2024, International Paper made significant strides
to further enhance our performance-driven culture
that we believe will enable us to create significant
value for our employees, customers and share
owners. In April 2024, International Paper announced
a proposed business combination with DS Smith Plc
("DS Smith"), a global packaging, paper and recycling
company and leading provider of sustainable fiber-
based packaging headquartered in England in an all-
stock
transaction.
This
highly
complementary
business combination is designed to create a truly
sustainable packaging solutions leader that can serve
a broad set of customers across a wide range of
attractive and growing end-markets to generate
significant shareholder value. Shareholders of DS
Smith
and
International
Paper
overwhelmingly
approved the business combination at separate
meetings in October 2024. On January 24, 2025, the
Company announced plans to divest plants located in
Mortagne, Saint-Amand, and Cabourg (France), Ovar
(Portugal) and Bilbao (Spain) in connection with the
European Commission’s clearance of the business
combination. The business combination closed on
January 31, 2025. Thereafter, the Company obtained
a secondary listing of International Paper common
stock on the London Stock Exchange (LSE: IPC) and
established a Europe, Middle East and Africa
("EMEA") headquarters in DS Smith's existing main
office in London. DS Smith re-registered as DS Smith
Limited, a private limited company effective on
February 5, 2025.
In the third quarter of 2024, the Company also began
implementing an 80/20 strategic approach to drive
transformational performance. The 80/20 approach
suggests that 80% of our results come from 20% of
efforts. As applied to our business, the approach is
used to determine the most impactful areas to focus
on. Through the 80/20 strategic approach, we intend
to deliver profitable market share growth by striving to
be the lowest-cost producer and the most reliable and
innovative sustainable packaging solutions provider
to our customers across North America and EMEA.
As part of the Company’s 80/20 strategic approach,
the Company intends to guide investments and align
resources to win with our most strategic customers,
while reducing complexity and cost across the
Company.
To that end, the Company initiated a corporate
overhead restructuring plan in the third quarter of
2024 aimed at better aligning our workforce with the
needs of the business and our customers, optimizing
our organizational structure and reducing operating
costs. Additionally, we committed to investing to
strengthen our most competitive and strategic assets
and closed facilities to structurally reduce operating
costs. Further, in October 2024, we announced that
we are exploring strategic options for our Global
Cellulose Fibers business.
1
These significant undertakings follow the September
2023 completion of the sale of our 50% equity interest
in Ilim S.A. ("Ilim"), the sale of all of our Ilim Group
shares (constituting a 2.39% stake) and divestment of
other non-material residual interests associated with
Ilim. Ilim was a joint venture that operated a pulp and
paper business in Russia and has subsidiaries
including Ilim Group. Following 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 10 - Equity Method Investments on
page 75 of Item 8. Financial Statements and
Supplementary Data.
We remain confident that the initiatives undertaken as
part of our transformational journey in 2024 will
unlock substantial value at IP and strengthen the
Company
for
our
employees,
customers
and
shareholders.
From 2020 through 2024, International Paper’s
capital spending approximated $4.3 billion, excluding
mergers and acquisitions. These expenditures reflect
our continuing efforts to use our capital strategically
to improve product quality and environmental
performance, as well as lower costs, maintain
reliability of operations and deploy strategic capital for
capacity expansion. Capital spending in 2024 was
approximately $921 million and is expected to be
approximately $1.2 billion in 2025. You can find more
information about capital spending on page 46 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 72 of Item 8. Financial
Statements and Supplementary Data.
You can find discussions of restructuring charges and
other special items on page 37 of Item 7.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
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.
Our website contains a significant amount of
information about the Company, including our SEC
filings and financial and other information 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 to our website, however, 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.
HUMAN CAPITAL
EMPLOYEES
As of December 31, 2024, we have approximately
37,000 employees, nearly 31,000 of whom are
located in the United States. Of our U.S. employees,
21,000
are
hourly,
with
unions
representing
approximately 13,000 employees. Of this number,
9,600 are represented by the United Steelworkers
union ("USW").
International Paper, the USW, and several other
unions have entered into five master agreements
covering various U.S. mills and converting facilities.
Four of the master agreements are with the USW and
include members from the International Association of
Machinists and Aerospace Workers, International
Brotherhood of Electrical Workers, United Food and
Commercial
Workers
International
Union
and
Workers Unite at certain U.S. mills and converting
facilities. The Company also has a master agreement
with District Counsel 2, which is affiliated with the
Printing Packaging & Production Workers Union of
North America that covers additional converting
facilities. Individual facilities continue to have local
agreements for subjects not covered by the master
agreements. If local facility agreements are not
successfully negotiated at the time of expiration,
under the terms of the master agreements, the local
agreements will automatically renew with the same
terms in effect.
SAFETY AND WELLBEING
At International Paper, we prioritize the safety and
well-being of every employee and contractor. Safety
is core to who we are and how we operate – at IP we
strive to put safety above all else. To achieve this, we
are cultivating a resilient safety culture where every
team member is empowered to stop work they
2
believe is unsafe. We work tirelessly to anticipate and
address unexpected events by incorporating layers of
protection, continuously enhancing our systems and
engaging all team members in learning events to
prevent injuries before they take place. In 2024, we
engaged an independent safety consultant firm to
help
the
Company
improve
workplace
safety
performance through risk assessments, safety culture
development and programs designed to reduce
accidents and injuries. We launched a Company-wide
safety culture survey in 2024 to all U.S.-based
employees. Results of the survey will be analyzed in
2025 with the goal of learning, growing and aspiring
to achieve our Vision 2030 goal to create a 100%
injury-free workplace for our team members and
contractors.
We believe workplace safety includes psychological
and emotional safety. At International Paper 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 resilience.
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
positive
employee
experience
that
begins
at
onboarding.
Our
Human
Resources
Talent
Management
Team
hosts
online
Global
New
Employee Orientation for employees and each
business conducts onsite new hire integration training
unique to its business and/or facility. This experience
continues
through
our
continuous
learning,
development
and
performance
management
programs. We provide continuing education courses
that are relevant to our industry and job functions
within the Company, including both instructor-led and
online training through our Learning Management
System (“LMS”) MyLearning platform. Across the
enterprise in 2024, employees completed 2.7 million
learning activities through our platform.
In addition, we have created learning paths for
specific positions that are designed to encourage an
employee’s advancement and growth within our
organization, such as our REACH (Recruit, Engage,
Align
College
Hires)
program
and
Global
Manufacturing Training Initiative programs. Through
REACH
we
recruit
and
develop
early-career
engineers and safety professionals for our U.S. mills,
preparing them to become future leaders. We invest
in the growth and development of our employees by
providing a multi-dimensional approach to learning
that empowers, intellectually grows and professionally
develops our employees. Our Global Manufacturing
Training Initiative provides training services to hourly
operations and maintenance employees in our mills in
a standardized and structured manner. On the
converting side of our business, more than 200 front
line and future leaders participated in our multi-day in-
person Leadership Application and Professional
Development
and
Manufacturing
Management
Associate Programs during 2024.
We develop leaders through our IP Leadership
Institute offering a broad range of LMS virtual and in
person resources, courses and workshops for
individual contributors, people leaders and teams. We
also offer peer mentoring and leadership and career
development training to support and develop our
employees.
We help our employees better themselves by offering
tuition reimbursement to employees to pursue
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.
The labor market for both hourly and salaried workers
continues
to
be
competitive.
For
additional
information regarding risks related to the current labor
market, see Item 1A. Risk Factors – We operate in a
challenging market for talent and my fail to attract
and retain qualified personnel, including key
management personnel.
COMPENSATION AND BENEFITS
We view compensation and benefits as part of how
we attract, engage and retain our talented workforce.
We do so by rewarding performance while ensuring
competitive compensation in our local markets
around the world. We continually evaluate our
compensation and benefits so that we offer optimal
compensation programs and remain a leading
employer of choice in the areas in which we operate.
TEAM-ORIENTED CULTURE
As a result of our recent business combination with
DS Smith, the Company has significantly expanded
our global footprint. The business combination not
only enhances our operational capabilities but also
enriches our cross-culturalism, bringing together a
broader range of perspectives, experiences, and
3
talents. With the integration of DS Smith, we are
dedicated to ensuring our efforts to embrace a team-
oriented culture are effectively extended across our
newly expanded organization and guided by our
commitment to equal employment opportunity for all.
The Company is focused on promoting a culture that
leverages
the
talents
of
all
employees,
and
implementing practices that attract, recruit and retain
a broad array of talent. We believe our efforts will
lead to improved business results, as teams with a
broad range of perspectives drive innovation,
enhance decision-making, and better reflect the
markets we serve.
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 and build a network of relationships
across the Company. Our ENCs help educate and
motivate our global workforce, strengthening our
business practices.
The make-up of our Board of Directors and Executive
Leadership Team ("ELT") reflects our efforts to seek
the most qualified board candidates with a broad
range of experiences and perspectives.
Our
Executive
Leadership
Team
is
currently
comprised of our chief executive officer, one
executive vice president and four senior vice
presidents who oversee crucial functions and
business units within the Company.
By virtue of the Company’s secondary listing on the
London Stock Exchange, International Paper is now
subject to certain board composition disclosure
requirements under the UK Listing Rules (the
“UKLR”) established by the UK Financial Conduct
Authority (the "FCA"). The information below is
disclosed solely in order to comply with UKLR
14.3.30R and for no other purpose. The required
disclosure below is set out as of December 31, 2024,
and the data provided in relation to the Board and
executive officers has been collected through the
annual Directors and Officers’ questionnaire.
As of December 31, 2024, the Company can confirm
the following in relation to each of the following
reporting standards contained in the UKLR:
UKLR Reporting
Standards (the
"Standards")
Result
Implementation
Progress
At least 40% of the
Board are women.
Not met
30% of the Board were
women.
At least one member
of the Board is from
an ethnic minority.
Met
There were two ethnic
minority men on the
Board.
At least one of the
senior Board positions
(Chair, CEO, Senior
Independent Director
(SID) or CFO) is a
woman.
Not met
The senior Board
positions of Chairman,
CEO, CFO and Lead
Director are currently
held by men. Until the
individuals in those
positions retire or
otherwise leave, the
Company will not meet
the Standards.
An additional director David A. Robbie was appointed
to the Board effective February 11, 2025. Mr.
Robbie's appointment does not affect the result of any
of the Standards set out above.
4
In accordance with UKLR 14.3.31R, and for no other purpose, numerical data on the ethnic background and the
gender identity or sex of the individuals on the Company’s Board and in its executive management as of
December 31, 2024 is set out below:
Number of
Board Members
Percentage
of the Board
Number of
senior
positions on
the Board
(CEO, CFO, SID
and Chair) 1
Number in
executive
management2
Percentage of
executive
management
Men
7
70%
3 3
5
83%
Women
3
30%
—
1
17%
Not specified/prefer not to say
—
—%
—
—
—%
White British or other White
(including minority white groups)
8
80%
2
6
100%
Mixed multiple ethnic groups
—
—%
—
—
—%
Asian/Asian British
—
—%
—
—
—%
Black/African Caribbean/Black
British
2
20%
—
—
—%
Other ethnic group including Arab
—
—%
—
—
—%
Not specified/prefer not to say
—
—%
—
—
—%
1 The Company is reporting on the positions of CEO, CFO, Chairman of the Board and Lead Director positions.
2 Executive management is defined, in accordance with the UKLR, as International Paper’s Executive Leadership Team, including the Corporate
Secretary.
3 Andrew K. Silvernail holds the position of CEO and Chair. Christopher M. Connor holds the position of Lead Director. The position of CFO is not
held by a member of the Board.
COMMUNITY ENGAGEMENT
We encourage our employees to support the
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 2024 we
invested approximately $17 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 is by addressing hunger and food
security for children, families and seniors in
partnership with The Global FoodBanking Network
(the “GFN”) and Feeding America. The Company
delivers dependable and sustainable packaging
solutions that protect and transport foods to our
community and customers. We also promote health
and wellness 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.
Also in 2024, the Company was awarded a
Leadership in Sustainability Award for Resilient U.S.
Forests by the American Forest & Paper Association
recognizing
the
positive
outcomes
from
the
Company’s
longstanding
Forestland
Stewards
partnership with the National Fish and Wildlife
Foundation. Through this partnership, the Company
also endeavored to support the restoration of forest
ecosystems to restore critical bat habitats through
oak regeneration projects in Alabama. 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 18 consecutive years.
INTELLECTUAL
PROPERTY,
PATENTS,
AND
TRADEMARKS
We rely on a combination of patent, copyright,
trademark, design, trade secret, and internet domain
laws to establish and protect our intellectual property
rights in the United States and in foreign jurisdictions.
The Company’s practice is to file applications and
obtain patents for products and services we believe
improve our value proposition to customers. We
maintain a portfolio of trademarks and service marks
registered with the U.S. Patent and Trademark Office
5
and in certain foreign jurisdictions, unregistered
trademarks, licenses, and internet domain names that
we consider important to the marketing of our
products and business. These trademarks and
service marks include those entity and product names
that appear in this Annual Report on Form 10-K and
our logo, as well as names of other products and
marketing-related taglines. Our registered intellectual
property has various expiration dates. The Company
also relies on trade secret and other confidential
information protection for manufacturing processes,
product specifications, formulae, analyses, market
information,
forecasts,
and
other
competitively
sensitive information.
COMPETITION AND COSTS
The 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.
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
34 through 44 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
page 42 of Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
GOVERNMENTAL REGULATION
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
regulations
as
well
as
those
governing
the
manufacturing,
production,
content,
handling,
storage, transport, marketing and sale of our
products. Our operations are also subject to forestry
reserve
requirements,
other
environmental
regulations and occupational health and safety laws.
Violations
can
result
in
substantial
fines,
administrative
sanctions,
criminal
penalties,
revocations of operating permits and/or shutdowns of
our facilities, litigation, other liabilities, as well as
damage to our reputation. We incur costs to comply
with these requirements. For additional information
regarding
risks
associated
with
environmental
matters, see Item 1A. Risk Factors – We may fail to
successfully integrate DS Smith and realize the
anticipated benefits and operating synergies
expected from the business combination, which
could adversely affect our business, financial
condition and operating results; We are subject to
a wide variety of laws, regulations and other
governmental requirements that may change in
significant ways, and the cost of compliance, or
the failure to comply with such requirements,
could impact our business and results of
operations.
ENVIRONMENTAL PROTECTION
Our 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 these efforts and more,
the Company tackles the toughest issues in the value
chain to improve its environmental footprint and
promote the long-term sustainability of natural capital.
Our approach to sustainability considers our entire
value chain, from sourcing raw materials responsibly
and working safely, to making renewable, recyclable
products and providing a market for recovered
products. To help inform and prioritize the focus of our
sustainability strategy, we have engaged with internal
and external stakeholders using a variety of methods,
assessed key issues and associated risks and
opportunities,
and
incorporated
sustainability
considerations into our processes.
The Company operations are subject to extensive
and evolving federal, state, local, and international
laws and regulations governing the protection of the
environment and will be more so in light of our
increased scale and global presence following
completion of our business combination with DS
Smith. 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
6
regulations, along with requirements of environmental
permits or analogous authorizations issued by various
governmental authorities. Our continuing objectives
include: (i) controlling emissions and discharges from
our facilities to avoid adverse impacts on the
environment, and (ii) maintaining compliance with
applicable laws and regulations. The Company spent
approximately $20 million in 2024 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 in 2025 for
environmental capital projects. Capital expenditures
on environmental projects for 2026 and 2027,
respectively, are anticipated to be approximately $35
million and $30 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
costs or changes in environmental laws and
regulations.
The Company has been named as a potentially
responsible
party
("PRP")
in
environmental
remediation actions under various federal and state
laws, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"). For additional information
regarding certain remediation actions, see Note 13
Commitments and Contingent Liabilities of Item 8.
Financial Statements and Supplementary Data on
pages 79 through 83. For additional information
regarding
risks
associated
with
environmental
matters, see Item 1A. Risk Factors – We are subject
to a wide variety of laws, regulations and other
governmental requirements that may change in
significant ways, and the cost of compliance with
such requirements, or the failure to comply with
such requirements, could impact our business
and results of operations.
CLIMATE CHANGE
The Company recognizes the impact of climate
change on people and our planet. To manage
climate-related
risks,
we
are
taking
actions
throughout our value chain to help advance a low-
carbon
economy.
We
aligned
our
annual
sustainability reporting with the recommendations of
the International Financial Reporting Standards S2
Climate-related Disclosures in the 2024 reporting
cycle (based upon data from 2023). As part of our
climate reports, we identify and report on climate-
related opportunities. We identify and evaluate
physical and transition climate-related risks through
our enterprise risk management process.
The Company has included in its 2023 Task Force on
Climate-related Financial Disclosures Report (the
"TCFD
Report,"
which
can
be
found
at
www.internationalpaper.com and provides information
as of December 31, 2023) climate related disclosures
consistent with the four recommendations and the 11
recommended disclosures set out in the June 2017
report on the Task force on Climate-related Financial
Disclosures entitled “Recommendations of the Task
Force on Climate-related Financial Disclosures.” Our
2024 International Sustainability Standards Board
IFRS Sustainability Disclosure Standard 2 (the "ISSB
IFRS S2 Report," formerly the TCFD Report), which
will
be
available
later
in
2025
at
www.internationalpaper.com and which will provide
information as of December 31, 2024), will contain
similar consistent disclosures. For ease of review and
given the detailed and technical content of these
disclosures, the TCFD Report is considered to be the
most appropriate location for the disclosures. This
statement is provided in accordance with UKLR
14.3.24R.
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 targeted incremental
reductions of 35% in our Scope 1, 2, and 3 GHG
emissions by 2030 in comparison to 2019 levels. We
intend to continue to evaluate and implement projects
as we pursue this Vision 2030 GHG goal. This
includes ongoing energy efficiency efforts and capital
projects to phase out our most carbon intensive fuel
sources (Scope 1) as well as developing GHG
reduction strategies for our energy sourcing (Scope
2) and broader supply chain footprint (Scope 3). In
addition, we have committed to be an early adopter of
the Taskforce on Nature-related Financial Disclosures
(“TNFD”) and plan to publish our first TNFD report in
2025 with 2024 data. TNFD adopters intend to make
corporate reporting disclosures that are aligned with
TNFD recommendations, which have been designed
to (i) meet the corporate reporting requirements of
7
organizations across jurisdictions; (ii) be consistent
with the global baseline for corporate sustainability
reporting; and (iii) be aligned with the global policy
goals outlined in the Kunming-Montreal Global
Biodiversity Framework, which was adopted to halt
and reverse nature loss by 2030.
We use carbon-neutral biomass and manufacturing
residuals to generate a majority of the manufacturing
energy at our mills. We believe our efforts to advance
sustainable forest management and restore forest
landscapes are an important lever for mitigating
climate change through carbon storage in forests.
INTERNATIONAL EFFORTS
The 2015 Paris Agreement compels international
efforts and voluntary commitments toward reducing
the emissions of GHGs. While the United States has
officially withdrawn from the 2015 Paris Agreement,
IP recognizes the importance of global policy action
to achieve emission reductions consistent with an
increase of “well below 2 ° Celsius above pre-
industrial levels and to pursue efforts to limit the
temperature increase even further to 1.5 ° Celsius.”
Consistent with this objective, participating countries
aim to balance GHG emissions generation and
sequestration in the second half of this century or, in
effect, achieve net-zero global GHG emissions.
To assist member countries in meeting GHG
reduction obligations, the European Union operates
an Emissions Trading System ("EU ETS"). Our
operations in the EU experience indirect impacts of
the EU ETS through purchased power pricing.
Neither the direct nor indirect impacts of the EU ETS
have been material to the Company. However, these
impacts could become material in the future due to (i)
our recent business combination with DS Smith and
the resulting increased global footprint and (ii)
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.
Additionally,
the
EU’s
Corporate
Sustainability
Reporting
Directive
(“CSRD”),
Corporate
Sustainability Due Diligence Directive ("CSDDD") and
Deforestation Regulation (“EUDR”), each impose
additional
compliance
responsibilities
on
the
Company. The CSRD requires additional reporting
processes for greater accountability. The Company’s
first reporting year under the CSRD is expected to be
2026. 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.
The CSDDD requires reporting and documentation
about due diligence systems covering company and
supply chains. The CSDDD entered into force in 2024
and EU member states have two years to implement
through national laws and decide on enforcement.
CSDDD implementation and compliance timeline may
vary based on details once finalized by each member
state.
The EUDR requires companies trading in products
derived
from
certain
commodities
to
conduct
extensive diligence on the value chain to ensure
goods do not result from recent deforestation, forest
degradation or breaches of local environmental and
social laws. Currently, the Company is evaluating the
implications of the EUDR to its business with the
expected reporting date now postponed until 2026.
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
have a material impact on the Company. For
example, the State of California passed the Climate
Corporate Data Accountability Act and the Climate-
Related Financial Risk Act, which imposes climate-
related reporting obligations on companies doing
business in California meeting specified thresholds,
including 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, as
well as the outcome of any legal challenges to these
rules.
SUMMARY
Regulation related to GHGs and climate change
continues to evolve in the areas of the world in which
we do business and areas in which we will do
business following completion of our business
combination with DS Smith. However, it is unclear
8
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
and may be undergoing legal challenges. In addition
to possible direct impacts, future legislation and
regulation could have indirect impacts on the
Company, such as higher prices for 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 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 discussed above. Furthermore, in
connection with complying with legal requirements
and/or our efforts to meet our internal targets and
goals, we have made and expect to continue to make
capital and other investments to displace traditional
fossil fuels, such as fuel oil and coal, with lower
carbon alternatives, such as biomass and natural
gas. Rather than rely on carbon offsets, we focus on
reducing energy consumption as well as relative GHG
emissions across our mills and manufacturing
facilities. Currently, these efforts and obligations have
not materially impacted the Company but such efforts
and obligations may have a material impact on the
Company in the future.
We believe sustainability is a key element of
corporate governance promoted by our Board of
Directors, committees of the Board of Directors and
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")
•
Recommends
approval
of
our
Chief
Executive Officer's ("CEO") sustainability-
focused
objectives
and
evaluates
performance.
•
Considers
sustainability
factors
in
ELT
compensation and in overall compensation
plan design.
Public Policy and Environment Committee ("PPE
Committee")
•
Reviews sustainability and social impact
policies, plans and performance to ensure
commitments to stewardship.
•
Stays current on emerging sustainability and
social impact trends and issues impacting the
Company.
At the management level, ownership and governance
of sustainability matters is embedded in the
organization from the top down. Our CEO and ELT
are responsible for corporate strategy and leadership
including incorporation of our sustainability goals and
standards into our daily operations and long-term
business strategy. Our ELT, which is comprised of
one executive vice president and four senior vice
presidents who report directly to the CEO and
oversee critical functions and business units within
the Company, evaluates sustainability issues based
on input from function-specific councils that report to
9
the ELT. The ELT receives several sustainability
updates throughout the year from our CSO.
For additional information regarding risks associated
with climate change and the evolving regulatory
landscape, see Item 1A. Risk Factors – We are
subject to risks associated with climate change
and other sustainability matters and global,
regional and local weather conditions as well as
legal, regulatory and market responses to climate
change and we are subject to a wide variety of
laws,
regulations
and
other
government
requirements that may change in significant
ways, and the cost of compliance with such
requirements, or the failure to comply with such
requirements, could impact our business and
results of operations.
Additional information regarding climate change and
the Company is available in our annual Sustainability
Report and ISSB IFRS S2 Report (previously TCFD),
both of which can, or will be, found on our website at
www.internationalpaper.com. Our 2024 Sustainability
Report and 2024 ISSB IFRS S2 will be available later
in 2025. 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 46.
INFORMATION ABOUT OUR EXECUTIVE
OFFICERS
The following are the executive officers of our
Company as of the date of this filing.
Andrew K. Silvernail, 54, joined International Paper
as chief executive officer on May 1, 2024 and
became chairman of the International Paper Board of
Directors on October 1, 2024. Mr. Silvernail has two
decades of experience leading global companies in
the manufacturing and technology sectors. He joined
IP from KKR & Co., Inc., a global investment firm,
where he served as an executive advisor, and 5
Nails, LLC, a private investment advisory firm where
he served as founder, chair and chief executive
officer (2022-2024). Mr. Silvernail served as the
chairman and chief executive officer of Madison
Industries, one of the world’s largest privately held
companies (2021). Prior to that, Silvernail served as
chairman and chief executive officer of IDEX
Corporation (NYSE: IEX) (2011-2020). Mr. Silvernail
previously held executive positions at Rexnord
Industries, Newell Rubbermaid (NASDAQ: NWL) and
Danaher Corporation (NYSE: DHR). He serves on the
board of directors of Stryker Corporation (NYSE:
SYK) and Potter Global Technologies, a privately held
company specializing in fire and safety solutions.
Clay R. Ellis, 54, 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.
W. Thomas Hamic, 58, was appointed executive vice
president and president - North American Packaging
Solutions effective September 1, 2024. In this newly
created role, Mr. Hamic leads the Container and
Containerboard businesses in North America. Prior to
this promotion, Mr. Hamic served as senior vice
president - North American Container and chief
commercial officer since January 2023. Mr. Hamic
also served as senior vice president - Global
Cellulose
Fibers
and
Enterprise
Commercial
Excellence (2020-2022), senior vice president -
Containerboard
and
Enterprise
Commercial
Excellence (2019-2020), vice president and general
manager - Containerboard and Recycling, North
American Container (2015-2019), vice president and
general manager of the South Area Container the
Americas (2009), and vice president, Industrial
Packaging Group’s Finance and Strategy (2010). Mr.
Hamic joined International Paper in 1991.
Timothy S. Nicholls, 63, has been the Company’s
chief financial officer since June 2018. At completion
of the DS Smith business combination, Mr. Nicholls
also began serving as the interim leader of the
combined Company’s Europe Middle East & Africa
team responsible for leading integration planning. 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
10
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.
Joy N. Roman, 46, was appointed as the Company’s
senior vice president, chief strategy and people
officer effective February 3, 2025. Ms. Roman has
broad experience and a proven track record in talent
development,
organizational
effectiveness
and
strategy deployment in large global companies. Ms.
Roman joined the Company from Berry Global, Inc.
(NYSE: BERY), a manufacturer and marketer of
plastic packaging solutions, where she served as
chief people and strategy officer since April 2024.
Prior to this position, Roman served as group head of
human resources for the technical and sustainability
functions for Anglo American (LSE: AAL), a global
mining company (2022-2023), and as chief human
resources officer for the De Beers Group, a diamond
company and joint venture of Anglo American and the
government
of
the
Republic
of
Botswana
(2021-2022). She also spent four years as senior vice
president and chief human resources officer for Toll
Brothers (NYSE: TOL) (2017-2021), a builder of
luxury homes, and served in various roles of
increasing responsibility across the strategy and
human resource functions at 3M (NYSE: MMM), a
diversified technology company (2015-2017).
Joseph R. Saab, 56, has been senior vice president,
general counsel and corporate secretary since July
2022 and served as interim senior vice president –
Human Resources and Corporate Affairs (August
2024-February 2025). 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 (2014-2019). Mr. Saab
joined International Paper in 2001.
There are no family relationships, as defined by the
instructions to this item, among any of the Company’s
executive officers and any other executive officers or
directors of the Company.
FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report on Form 10-
K that are not historical in nature may be considered
“forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995,
as amended. Forward-looking statements can be
identified by the use of forward-looking or conditional
words such as “expects,” “anticipates,” “believes,”
“estimates,”
“could,”
“should,”
“can,”
“forecast,”
“intend,” “look,” “may,” “will,” “remain,” “confident,”
“commit” and “plan” or similar expressions. These
statements are not guarantees of future performance
and reflect management’s current views and speak
only as to the dates the statements are made and are
subject to risks and uncertainties that could cause
actual
results
to
differ
materially
from
those
expressed or implied in these statements. All
statements, other than statements of historical fact,
are forward-looking statements, including, but not
limited to, statements regarding anticipated financial
results, economic conditions, industry trends, future
prospects, and the anticipated benefits, execution
and consummation of corporate transactions or
contemplated acquisitions, including our recently
completed business combination with DS Smith Plc,
subsequently re-registered as DS Smith Limited ("DS
Smith"), which closed on January 31, 2025. Factors
which could cause actual results to differ include but
are not limited to: (i) our ability to consummate and
achieve the benefits expected from, and other risks
associated
with,
acquisitions,
joint
ventures,
divestitures, spinoffs, capital investments and other
corporate transactions, including, but not limited to,
our business combination with DS Smith; (ii) our
ability to integrate and implement our plans,
forecasts, and other expectations with respect to the
combined company, including in light of our increased
scale and global presence; (iii) our failure to comply
with the obligations associated with being a public
company listed on the New York Stock Exchange and
the London Stock Exchange and the costs associated
therewith; (iv) risks with respect to climate change
and global, regional, and local weather conditions, as
well as risks related to our targets and goals with
respect to climate change and the emission of
greenhouse gases and other environmental, social
and governance matters, including our ability to meet
such targets and goals; (v) loss contingencies and
pending, threatened or future litigation, including with
respect to environmental related matters; (vi) 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); (vii) the impact of global and domestic
economic
conditions
and
industry
conditions,
including
with
respect
to
current
challenging
macroeconomic
conditions,
recent
inflationary
pressures and changes in the cost or availability of
raw materials, energy sources and transportation
sources, supply chain shortages and disruptions,
competition we face, cyclicality and changes in
consumer preferences, demand and pricing for our
products, and conditions impacting the credit, capital
and financial markets; (viii) risks arising from
conducting business internationally, domestic and
global
geopolitical
conditions,
military
conflict
(including the Russia/Ukraine conflict, the conflict in
the Middle East, the further expansion of such
conflicts,
and
the
geopolitical
and
economic
consequences associated therewith), changes in
11
currency exchange rates, including in light of our
increased proportion of assets, liabilities and earnings
denominated in foreign currencies as a result of our
business combination with DS Smith, trade policies
(including but not limited to protectionist measures
and increased tariffs and retaliatory tariffs) and trade
tensions, downgrades in our credit ratings, and/or the
credit ratings of banks issuing certain letters of credit,
issued by recognized credit rating organizations; (ix)
the amount of our future pension funding obligations,
and pension and healthcare costs; (x) the costs of
compliance, or the failure to comply with, existing,
evolving or new environmental (including with respect
to climate change and greenhouse gas emissions),
tax, trade, labor and employment, privacy, anti-
bribery and anti-corruption, and other U.S. and non-
U.S. governmental laws, regulations and policies
(including but not limited to those in the United
Kingdom and European Union); (xi) any material
disruption at any of our manufacturing facilities or
other adverse impact on our operations due to severe
weather, natural disasters, climate change or other
causes; (xii) our ability to realize expected benefits
and cost savings associated with restructuring
initiatives;
(xiii)
cybersecurity
and
information
technology risks, including as a result of security
breaches and cybersecurity incidents; (xiv) our
exposure to claims under our agreements with
Sylvamo Corporation; (xv) the qualification of such
spin-off as a tax-free transaction for U.S. federal
income tax purposes; (xvi) risks associated with our
review of strategic options for our Global Cellulose
Fibers business; (xvii) our ability to attract and retain
qualified personnel and maintain good employee or
labor relations; (xviii) our ability to maintain effective
internal control over financial reporting; and (xix) our
ability to adequately secure and protect our
intellectual property rights. These and other factors
that could cause or contribute to actual results
differing
materially
from
such
forward-looking
statements can be found in our press releases and
reports filed with the U.S. Securities and Exchange
Commission. In addition, other risks and uncertainties
not presently known to the Company or that we
currently believe to be immaterial could affect the
accuracy of any forward-looking statements. The
Company undertakes no obligation to publicly update
any forward-looking statements, whether as a result
of new information, future events or otherwise.
ITEM 1A. RISK FACTORS
The following is a summary of the material risks and
uncertainties that could affect our business, financial
condition and results of operations. You should read
this summary together with the more detailed
description of each risk factor contained below.
Risks Related to the Business Combination and
the Share Issuance
•
Failure to achieve the benefits and operating
synergies
expected
from
the
business
combination of DS Smith.
•
Significant integration costs that could cause
an interruption of, or loss of momentum in,
the activities of the Company.
•
Exposure
to
significant
unanticipated
liabilities.
•
Shareholders are more exposed to currency
exchange rate fluctuations.
•
Failure to successfully integrate DS Smith
and realize the benefits and operating
synergies
expected
from
the
business
combination to the extent or within the
timeframes anticipated
•
Adverse effects and pricing differentials
arising
from
the
maintenance
of
two
exchange listings
Risks Related to Industry Conditions
•
Fluctuations in the prices of and the demand
for our products due to factors such as
economic cyclicality and changes in customer
or consumer preferences, and government
regulations.
•
Changes in the cost and availability of raw
materials, energy and transportation have
recently affected, and could continue to
affect, our profitability.
•
Competition and downward pricing pressure
in the global packaging industry could
negatively impact our financial results.
Risks Related to Market and Economic Factors
•
Developments in general business and
economic conditions could have an adverse
effect on the demand for our products, our
financial condition and the results of our
operations.
•
Changes in international conditions or other
risks
arising
from
conducting
business
internationally could adversely affect our
business and operations.
Risks Related to Climate and Weather and Social
and Environmental Impact Reporting
•
We are subject to risks associated with
climate change and other sustainability
matters and global, regional and local
weather conditions as well as by legal,
regulatory, and market responses to climate
change.
12
Risks Related to our Operations
•
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.
•
We are subject to a wide variety of laws,
regulations
and
other
government
requirements that may change in significant
ways, and the cost of compliance with such
requirements, or the failure to comply with
such requirements could impact our business
and results of operations.
•
Material
disruptions
at
one
of
our
manufacturing
facilities
could
negatively
impact financial results.
•
We operate in a challenging market for talent
and may fail to attract and retain qualified
personnel, including key management
personnel.
•
Our failure to maintain good employee or
labor relations may affect our respective
operations.
•
We may be unable to realize the expected
benefits and costs savings associated with
restructuring initiatives, including our 80/20
strategic approach.
•
We may not achieve the expected benefits
from strategic acquisitions, joint ventures,
divestitures, spin-offs, capital investments,
capital
projects
and
other
corporate
transactions that are or will be pursued.
•
There are risks associated with our review of
strategic options for our Global Cellulose
Fibers business, and there is no assurance
that this review will result in any transaction
or other outcome.
•
Our continued growth will depend on our
ability to retain existing customers and attract
new customers.
•
Uninsured losses or losses in excess of our
insurance coverage for various risks could
have an adverse financial effect on our
business.
•
We may not be able to adequately secure
and protect our intellectual property rights,
which could harm our competitive advantage.
•
We may fail to identify or leverage digital
transformation initiatives.
Risks
Related
to
Legal
Proceedings
and
Compliance Costs
•
Results of legal proceedings could have a
material effect on our consolidated financial
results.
•
We could be exposed to liability for Brazilian
taxes under our agreements with Sylvamo
Corporation.
•
If our spin-off of Sylvamo Corporation were to
fail to qualify for non-recognition treatment for
U.S. federal income tax purposes, then we
may be subject to significant U.S. federal
income taxes.
Risks Related to our Indebtedness
•
Changes in credit ratings issued by nationally
recognized statistical rating organizations
could adversely affect our cost of financing
and have an adverse effect on the market
price of our securities.
•
The
level
of
our
indebtedness
could
adversely affect our financial condition and
impair our ability to operate our business.
•
We are subject to risks associated with
variable rate debt.
•
Downgrades in the credit ratings of banks
issuing certain letters of credit will increase
our cost of maintaining certain indebtedness
and may result in the acceleration of deferred
taxes.
Risks Related to our Pension and Healthcare
Costs
•
Our pension and health care costs are
subject to numerous factors which could
cause these costs to change.
•
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.
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.
13
The following are material risk factors of which we are
aware, including risk factors that could cause the
Company’s actual results to differ materially from
those contemplated in any forward-looking statement.
If any of the events or circumstances described in any
of the following risk factors occurs, our business,
results of operations and/or financial condition could
be materially and adversely affected, and our actual
results may differ materially from those contemplated
in any forward-looking statements we make in any
public disclosures. Additional factors that could affect
our business, results of operations and/or financial
condition are discussed elsewhere in this Annual
Report on Form 10-K (including in Item 7.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations) and in the
Company’s other filings with the Securities and
Exchange Commission.
RISKS
RELATED
TO
THE
BUSINESS
COMBINATION AND THE SHARE ISSUANCE
We may fail to successfully integrate DS Smith
and realize the anticipated benefits and operating
synergies
expected
from
the
business
combination, which could adversely affect our
business,
financial
condition
and
operating
results.
On January 31, 2025, we completed the previously
announced business combination with DS Smith. The
success of the business combination will depend, in
significant part, on our ability to successfully integrate
DS Smith, grow the revenue of the combined
company and realize the anticipated strategic benefits
and synergies from the business combination.
The complexity and magnitude of the integration
effort associated with the business combination are
significant, and integrating DS Smith has resulted,
and will continue to result, in significant costs. The
integration process could cause an interruption of, or
loss of momentum in, the other activities of the
Company, and our failure to meet the challenges
involved in integrating DS Smith and realize the
anticipated benefits of the business combination
could
adversely
affect
our
business,
financial
condition and results of operations. These challenges
include, without limitation:
•
Diversion of management’s attention from
ongoing business concerns;
•
Managing the larger combined business,
including in light of our increased scale and
global presence;
•
Difficulties in the integration of operations and
systems, including significant modifications to
our internal control systems, processes and
critical information systems;
•
Designing, implementing and maintaining
effective
internal
control
over
financial
reporting and remediating the previously
disclosed material weaknesses of DS Smith;
•
Unanticipated expenses, difficulties of delays;
and
•
Designing
and
implementing
control
processes
to
comply
with
additional
regulations
and
laws
related
to
the
environment, climate change, privacy, and
data protection in light of our increased scale
and global presence.
There are many factors beyond our control that could
affect the timing or total amount of integration-related
risks. The failure to effectively address any of these
risks, or any other risks related to the integration of
DS Smith, could materially adversely impact our
business,
financial
condition
and
results
of
operations. In addition, the impact and extent of these
integration challenges may exacerbate the other risks
described in this “Risk Factors” section, which could
materially adversely affect us.
The anticipated benefits of the business combination
may not be realized fully or at all, or may take longer
to realize than we expect. Actual operating,
technological, strategic and revenue benefits, if
achieved at all, may be less significant than we
expect or may take longer to achieve than
anticipated. Further, our results of operations may
differ from the projections made with respect to the
business combination prior to closing, which were
based on assumptions and estimates known to
management at the time. If we are not able to realize
the anticipated benefits and synergies expected from
the business combination within a reasonable time,
our business, financial condition and operating results
may be adversely affected.
The business combination may expose us to
significant unanticipated liabilities that could
adversely affect our business, financial condition
and results of operations.
The business combination may expose us to
significant unanticipated liabilities relating to the
operation of the combined company. These liabilities
could
include
tax
liabilities,
employment
or
severance-related obligations under applicable law or
other benefits arrangements, legal claims, warranty or
similar liabilities to customers, and claims by or
amounts owed to vendors. Particularly in international
jurisdictions, the business combination, or our
decision to enter new international markets where DS
Smith previously conducted business, could also
expose us to tax liabilities and other amounts
previously owed by DS Smith. The occurrence of
such unforeseen or unanticipated liabilities, should
14
they be significant, could have a material adverse
effect on our business, financial condition and results
of operations.
As a result of the business combination, our financial
results are more exposed to currency exchange rate
fluctuations and an increased proportion of assets,
liabilities and earnings are denominated in non-U.S.
Dollar
currencies.
We
present
our
financial
statements in U.S. Dollars and will have a significant
proportion of net assets and income in non-U.S.
Dollar currencies, primarily the Pound Sterling and
Euro. Our financial condition and results of operation
will therefore be more sensitive to movements in
foreign exchange rates. A depreciation of non-U.S.
Dollar currencies relative to the U.S. Dollar could
have an adverse impact on our financial results.
Our maintenance of two exchange listings may
adversely affect liquidity in the market for our
shares of common stock and result in pricing
differentials of shares of common stock between
the two exchanges.
Trading in shares of common stock on the London
Stock Exchange ("LSE") and the NYSE takes place in
different currencies (Pound Sterling on the LSE and
U.S. Dollars on the NYSE) and at different times
(resulting from different time zones, different trading
hours and different trading days for the LSE and the
NYSE). The trading prices of shares of common stock
on these two exchanges may at times differ due to
these and other factors. Any decrease in the price of
shares of common stock on the NYSE could cause a
decrease in the trading price of shares of common
stock on the LSE and vice versa.
The benefits we expect of the dual listing on the
NYSE and the LSE, which are increased liquidity,
visibility among investors and access to investors
who may be able to hold listed shares in the United
Kingdom, but not the United States, and vice versa,
may not be realized or, if realized, may not be
sustained, and the costs and additional regulatory
burdens associated with a dual listing may ultimately
outweigh the associated benefits.
RISKS RELATED TO INDUSTRY CONDITIONS
Fluctuations in the prices of and the demand for
our products due to factors such as economic
cyclicality and changes in customer or consumer
preferences, and government regulation could
materially affect our financial condition, results of
operations and cash flows.
Substantially all of our business has experienced, and
is expected to continue to experience, cycles relating
to industry capacity, customer demand, and general
economic conditions. The length and magnitude of
these cycles have varied over time and by product.
Product prices and sales volumes have fallen in the
past in periods and regions where demand was lower
than available supply, and there can be no assurance
that this will not recur. New or existing producers of
pulp or paper products may add or adjust capacity
affecting available supply. Further, changes in
customer or consumer preferences may increase or
decrease the demand for fiber-based products and
non-fiber
substitutes.
Customer
and
consumer
preferences change based on, among other factors,
cost, convenience, health concerns and perceptions
and an increased awareness of sustainability
considerations. In some areas, customers have
increasingly shown interest in environmentally-
friendly products such as fiber-based packaging.
Advances in non-fiber technologies such as plastic
packaging or other materials could result in
decreased demand for our products. In addition, legal
developments, such as new governmental regulations
on single-use packaging products could significantly
alter the market for our products. Any of the
foregoing, including a failure to anticipate and
respond to changing trends, customer preferences
and technological and regulatory developments could
have a material adverse effect on our business,
financial condition, results of operations and/or future
prospects. A lack of investor confidence in the paper
and packaging industry could also have a negative
impact on our business, financial condition, results of
operations and/or future prospects.
Changes in the cost and availability of raw
materials,
energy
and
transportation
have
recently affected, and could continue to affect,
our profitability.
We rely heavily on the use of certain raw materials
(principally virgin wood fiber, recycled fiber, caustic
soda, starch and adhesives), energy sources
(principally biomass, natural gas, electricity and fuel
oil) and third-party transport companies. The market
price of virgin wood fiber varies based upon
availability, demand, quality, and source. The global
supply and demand for recycled fiber may be affected
by factors such as trade policies between countries,
individual governments’ legislation and regulations,
and general macroeconomic conditions. In addition,
the increase in demand of products manufactured, in
whole or in part, from recycled fiber, on a global
basis, may cause significant fluctuations in recycled
fiber prices. Taking into account ongoing inflationary
conditions in domestic and global markets, we have
experienced, and may continue to experience, a
significant increase in various costs, including
recycled fiber, energy, freight, chemical, and other
supply chain costs, which has adversely affected, and
may continue to adversely affect, our operations.
15
Moreover, the availability of labor and the market
price for fuel may affect third-party transportation
costs.
In addition, because our business operates in highly
competitive industry segments, we have not always
been able to, and may in the future be unable to,
recoup past or future increases in the costs of any
raw materials, energy sources or transportation
sources from customers, which significantly affect
profitability. In addition, where we are able to recoup
our cost increases, there may be a delay between the
onset of the cost increases and the recoupment. Any
inability to recover input cost increases could lead to
a material adverse effect on our business, financial
condition,
results
of
operations
and/or
future
prospects.
We have significant exposure to energy costs, in
particular gas, electricity and other fuel costs. Energy
prices have fluctuated dramatically in the past and
may continue to increase and/or fluctuate in the
future. Transportation costs are also impacted by
energy costs since a key component of transportation
costs relates to the cost of oil. We have employed
and expect to continue to employ, strategies and tools
to reduce the volatility of energy costs and ensure a
degree of certainty over future energy costs.
However, there can be no certainty that those
strategies and tools will continue to manage such
impact in the future. Volatile and increasing energy
prices, including as a consequence of the conflict
between Russia and Ukraine and other geopolitical
conflicts, or a failure to effectively implement such
strategies and tools could have a material adverse
effect on our business, financial condition, results of
operations and/or future prospects.
Competition and downward pricing pressure in
the global packaging industry could negatively
impact our financial results.
We
operate
in
a
competitive
international
environment in all operating segments. Our products
compete with products produced by other forest
products
companies.
Product
innovations,
manufacturing and operating efficiencies, additional
manufacturing capacity, distribution and commercial
strategies pursued or achieved by competitors, the
increased use of artificial intelligence ("AI") and
machine learning solutions in the paper industry, and
the entry of new competitors, could negatively impact
our financial results. In addition, our products
compete with companies that produce substitutes for
wood-fiber products, such as plastics and various
types of metal. Customer shifts away from wood-fiber
products toward such substitute products may
adversely affect our business and financial results.
Further, we depend on critical suppliers and key
customers. An inability to foster these relationships
and to manage any material changes in commercial
terms and service levels could have a material
adverse impact on our business, financial condition,
results of operations and/or future prospects.
Pricing in the paper and packaging industry can be
affected
by,
among
other
things,
product
commoditization,
changes
in
demand,
price
reductions, entrance of new competitors or capacity,
changes in product supply, and the introduction of
new products, technologies and equipment, including
the use of AI and machine learning solutions. We face
significant pressure to reduce per unit costs to
achieve
commercially
acceptable
returns.
In
circumstances where we are unable to adjust the
relevant cost base sufficiently, pricing pressure could
have a material adverse effect on our business,
financial condition, results of operations and/or future
prospects.
RISKS RELATED TO MARKET AND ECONOMIC
FACTORS
We are affected by adverse developments in
general business and economic conditions,
which could have an adverse effect on the
demand for our products, our financial condition
and the results of our operations.
General economic conditions may adversely affect
industrial non-durable goods production, consumer
confidence and spending, and 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, 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 also 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 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, capital and
credit
markets,
and
negative
developments
associated with interest rates, asset values, currency
exchange rates and the availability of credit, could
also have a material adverse effect on our business,
financial condition and results of operations.
16
Macroeconomic conditions in the U.S., Europe and
globally continue to be challenging in certain
respects, including as the result of significant
inflationary pressures impacting recent periods,
elevated interest rates, challenging labor market
conditions, and adverse effects and uncertainty
associated with current geopolitical conditions. Our
operations have been adversely affected, and could
continue to be adversely affected in the future, by
these challenging macroeconomic and geopolitical
conditions, including as the result of lower demand for
certain products, and higher raw material and labor
costs. Further, because the markets for packaging
products
in
many
industrialized
countries
are
generally mature, there is a significant degree of
correlation between economic growth and demand for
packaging products. Therefore, any deterioration in
macroeconomic conditions in the U.S., Europe and/or
globally resulting in a slowdown in economic growth
may correlate with a corresponding decline in
demand for packaging products in those markets.
Moreover, any significant deterioration in current
negative macroeconomic conditions, or any recovery
therefrom that is significantly slower than anticipated,
could have a material adverse effect on our business,
results of operations or financial condition. Further, if
negative
macroeconomic
conditions
result
in
significant disruptions to capital and financial markets,
the cost of borrowing, our ability to access capital on
favorable terms, and our overall liquidity could be
adversely affected.
Changes in international conditions or other risks
arising from conducting business internationally
could
adversely
affect
our
business
and
operations.
As a global producer of renewable fiber-based
packaging and pulp products, we operate in many
different countries. As a result, we are vulnerable to
risks related to our international operations. These
risks, which can vary substantially by country, may
include economic or political instability, geopolitical
events,
corruption,
anti-American
sentiment,
expropriation measures, social and ethnic unrest,
natural disasters, military conflicts and terrorism, the
regulatory environment (including the risks of
operating in developing or emerging markets in which
there are significant uncertainties regarding the
interpretation and enforceability of legal requirements
and the enforceability of contractual rights and
intellectual
property
rights),
adverse
currency
fluctuations,
foreign
exchange
control
regimes
(including
restrictions
on
currency
conversion),
downturns or changes in economic conditions
(including in relation to commodity inflation), adverse
tax consequences or rulings, import restrictions,
controls
or
other
trade
protection
measures,
economic sanctions, health guidelines and safety
protocols, nationalization, changes in social, political
or labor conditions, and adverse developments
regarding sustainability, environmental regulations
and trade policies and agreements, any of which risks
could negatively affect our financial results. For
example, a 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. Trade
protection measures in favor of local producers of
competing
products,
including
governmental
subsidies, tax benefits and other measures giving
local producers a competitive advantage may also
adversely impact our operating results and our
business prospects in these countries. Likewise,
disruption in existing trade agreements or increased
trade friction between countries (such as in relation to
the trade tensions between the U.S. and China),
could have a negative effect on our business and
results of operations by restricting the free flow of
goods and services across borders. Additionally, the
current U.S. presidential administration has indicated
a desire to significantly increase the rates and
broaden the scope of tariffs imposed on goods
imported into the U.S., such as from China, which
may strain international trade relations and increase
the
risk
that
foreign
governments
implement
retaliatory tariffs on goods imported from the United
States. Specifically, the U.S. federal government has
implemented tariffs on certain foreign goods and may
implement additional tariffs on foreign goods. Such
tariffs and any further legislation or actions taken by
the U.S. federal government that restrict trade, such
as additional tariffs, trade barriers, and other
protectionist or retaliatory measures taken by
governments in Europe, Asia, and other countries,
could adversely impact our ability to sell products and
services in our international markets. Tariffs could
increase the cost of our products and the components
and raw materials that go into making them. These
increased costs could adversely impact the profit
margin that we earn on our products, which could
make our products less competitive and reduce
consumer demand. Countries may also adopt other
protectionist measures that could limit our ability to
offer our products and services. The ultimate impact
of any tariffs will depend on various factors, including
if any tariffs are ultimately implemented, the timing of
implementation, and the amount, scope, and nature
of the tariffs.
We may continue to be adversely affected by ongoing
geopolitical
instability
and
the
economic
consequences and disruptions arising therefrom,
including as the result of the military conflict between
Russia and Ukraine, the conflict in the Middle East,
and increasing tensions between China and Taiwan.
For example, prior to the closing of the disposal of our
ownership stake in Ilim and Ilim Group in the third
17
quarter of 2023, the military conflict between Russia
and Ukraine adversely affected our Ilim joint venture
and financial results, including as the result of
economic
sanctions,
actions
by
the
Russian
government, and associated domestic and global
economic and geopolitical conditions. These risks
may be further heightened in the event of the
expansion in the scope or escalation of any such
conflicts. In addition, changes to economic sanctions
programs, such as in response to the conflict
between Russia and Ukraine, could put us at risk of
violating sanctions as a result of an existing presence
in a newly sanctioned jurisdiction or relationship with
a newly sanctioned entity if we fail or are unable to
end such presence or relationship in a timely manner.
In addition, our international operations are subject to
laws related to operations in foreign jurisdictions,
including laws prohibiting bribery of government
officials and other corrupt practices. Anti-bribery laws
such as the U.K. Bribery Act 2010, the Foreign
Corrupt Practices Act of 1977, and similar worldwide
anti-corruption laws generally prohibit companies and
their intermediaries from making improper payments
to public officials for the purpose of obtaining or
retaining business. Further, the U.S. Department of
the Treasury’s Office of Foreign Assets Control and
other
non-U.S.
government
entities
maintain
economic sanctions targeting various countries,
persons and entities. We are also subject to the laws
and regulations of governmental and regulatory
agencies. Failure to comply with domestic or foreign
laws could result in various adverse consequences
for us including the imposition of civil or criminal
sanctions, reputational damage and the prosecution
of executives overseeing international operations.
We are exposed to the translation of the results of
overseas subsidiaries into their respective reporting
currencies, as well as the impact of currency
fluctuations
on
their
commercial
transactions
denominated
in
foreign
currencies.
Adverse
movements in foreign exchange rates relating to
foreign currency denominated commodities, assets
and liabilities, and transactions could have a material
impact on our business, financial condition, results of
operations and/or future prospects.
RISKS RELATED TO CLIMATE AND WEATHER
AND SOCIAL AND ENVIRONMENTAL IMPACT
REPORTING
We are subject to risks associated with climate
change and other sustainability matters and
global, regional and local weather conditions as
well
as
by
legal,
regulatory,
and
market
responses to climate change.
Climate
change
impacts,
including
rising
temperatures and the increasing severity and/or
frequency of adverse weather conditions, may result
in operational impacts on our facilities, as well as
supply chain disruptions and increased raw material
and other costs. These adverse weather conditions
and
other
physical
impacts
which
may
be
exacerbated as the result of climate change include
floods,
hurricanes,
tornadoes,
earthquakes,
hailstorms, wildfires, snow, ice storms and drought.
Climate change may also contribute to the decreased
productivity of forests, a key source in the production
of paper products, and adverse impacts on the
distribution and abundance of species, and the
spread of disease and insect epidemics, any of which
developments could adversely affect forestland
management and the availability of energy and water
resources. The effects of climate change and global,
regional and local weather conditions, including the
resulting financial costs of compliance with legal or
regulatory initiatives, could have a material adverse
effect on our results of operations and business.
In recent years, there has been a heightened focus,
including from investors, customers, the general
public, domestic and foreign governmental (including
but not limited to the United Kingdom and the
European Union) and nongovernmental authorities,
regarding
sustainability
matters,
including
with
respect to climate change, greenhouse gas (“GHG”)
emissions, packaging and waste, sustainable supply
chain practices, biodiversity, deforestation, land,
energy and water use, and human capital matters.
This heightened focus on sustainability matters,
including climate change, has resulted in more
prescriptive reporting requirements with respect to
sustainability metrics and other new requirements, an
increased expectation that such metrics will be
voluntarily disclosed by companies such as ours, and
increased
pressure
with
respect
to
making
commitments, setting targets, or establishing goals,
and taking action to meet them, which has caused
and is expected to continue to cause the incurrence
by us of increased compliance costs. As the result of
this increased focus and commitment to sustainability
matters, we (either voluntarily and/or as required by
applicable
law
and
regulation)
have
provided
disclosure and established targets and goals with
respect to various sustainability matters, including
climate change. For example, we have publicly
committed to reducing our Scope 1, 2 and 3 GHG
emissions by 35% from 2019 to 2030. Meeting these
and other sustainability targets and goals have
increased our capital and operational costs. Further,
we may continue to establish, increase and/or revise
such disclosure, targets and goals in the future. For
example, following the completion of our business
combination with DS Smith, we are reassessing our
Vision 2030 goals to ensure that they align with our
18
expanded operations and capabilities, which may
result in modifications to our existing targets and
timelines. While we aim to lever the strengths and
synergies of our combined Company to enhance our
initiatives, there is a risk that we may need to revise
our Vision 2030 goals to ensure they align with our
expanded business operations, increased scale and
global presence. Efforts to achieve our initiatives and
goals, including collecting, measuring, and reporting
sustainability
information,
involve
operational,
reputational, financial, legal, and other challenges
and may result in additional costs or delays related to
achieving our Vision 2030 goals. Such efforts may
have a negative impact on us, including our brand
name, reputation, and the market price of our
common stock.
There also continues to be a lack of consistency in
legal and regulatory initiatives regarding climate
change across jurisdictions and various governmental
entities. Additional expenses are expected to be
incurred as a result of domestic and international
regulators requiring additional disclosures regarding
GHG emissions. Further, there can be no assurance
regarding the extent to which our climate and other
sustainability targets can be achieved, and the
achievement of these targets is subject to various
risks and uncertainties, some of which are outside our
control. Moreover, there is no assurance that
investments made in furtherance of achieving such
targets and goals will meet investor expectations or
any binding or non-binding legal standards regarding
sustainability performance. If we are unable to meet
climate and other sustainability targets and goals, on
projected timelines or at all, or if such goals and
targets are perceived negatively, including the
perception that they are not sufficiently robust or,
conversely, are too costly or not otherwise in our best
interests, investor, customer and other stakeholder
relationships could be damaged, which could
adversely impact our reputation, business and results
of operations. Moreover, not all of our competitors
establish climate or other sustainability targets and
goals at comparable levels, which could result in
competitors having lower supply chain or operating
costs as well as reduced reputational risks associated
with not meeting such goals.
We may be unable to manage energy demand needs
within our sustainability targets and certain of our
respective acquisitions, may bring new sustainability
challenges. Such inability to manage sustainability
demands and challenges could have a significant
impact on our business, financial condition, results of
operations and/or future prospects. Other climate-
related business risks that we face, include risks
related to the transition to a lower-carbon economy,
such as increased prices for fossil fuels; the
introduction of a carbon tax; increased regulation of
operations and products, and the resulting potential
for increased litigation; and more stringent and/or
complex
environmental
and
other
permitting
requirements. To the extent that climate-related
business risks materialize, particularly if we are
unprepared for them, we may incur unexpected costs,
and our business may be materially and adversely
affected.
Additionally, sustainability reporting is becoming more
broadly
expected
by
regulators,
investors,
shareholders, and other third parties. If we do not
adapt to or comply with such investor, customer, or
other stakeholder expectations, or if we are perceived
to have not responded appropriately or quickly
enough to growing sustainability related concerns for
sustainability issues, regardless of whether there is a
regulatory or legal requirement to do so, we may
suffer reputational damage or be precluded from
doing business with certain customers. Our business,
financial condition, and/or the market price of our
common stock could be materially and adversely
affected. Further, our sustainability and goals may not
be favored by certain stakeholders, whose priorities
and expectations may not align or may be opposed to
one another, which could result in public scrutiny or
reputational damage, and could impact the attraction
and
retention
of
investors,
customers,
and
employees.
RISKS RELATED TO OUR OPERATIONS
We are subject to cybersecurity and information
technology risks related to breaches of security
pertaining
to
sensitive
company,
customer,
employee and vendor information as well as
breaches in the technology used to manage
operations and other business processes.
Our business operations rely on securely managed
information technology systems, some of which are
provided or managed by third parties, for data
capture, processing, storage and reporting. We have
invested in information technology security initiatives
and risk management, as well as incident response,
business continuity and disaster recovery plans, but it
is not possible to eliminate all systematic or external
risk. Further, the development and maintenance of
information technology security measures is costly
and
requires
ongoing
monitoring,
testing
and
updating as technologies and processes change, and
efforts to overcome security measures become
increasingly sophisticated. Additionally, the global
regulatory
environment
surrounding
information
security, data privacy and data protection is becoming
increasingly restrictive and is evolving frequently.
The current cyber threat environment presents
increased risk for all companies, including those in
19
our industry. Like other global companies, our
systems are subject to recurring attempts by third
parties to access information, manipulate data or
disrupt
operations.
In
this
regard,
we
have
experienced cyber threats and events from time to
time, although none have materially affected us,
including our results of operations or financial
condition. Given the current cyber threat environment,
the volume and intensity of cybersecurity attacks and
attempted intrusions are expected to increase in the
future. We work with a large number of third-party
vendors, suppliers, platforms, software, applications,
and technologies, each of which may be subject to a
cybersecurity incident or information technology
failure that impacts our business or operations. We
may be required to spend significant resources to
verify the implementation of cybersecurity controls by
our vendors and suppliers. In addition, despite careful
security
and
controls
design,
implementation,
updating, monitoring and independent third-party
verification, our information technology systems,
together with those of our third-party providers or joint
venture partners, have been and could again be
compromised or disrupted due to factors such as
employee
error
or
malfeasance,
cyber-attacks,
including ransomware, malware, phishing attacks,
advanced persistent threats, social engineering,
credential stuffing or distributed denial-of-service
attacks or data or security breaches by malicious
actors such as common hackers, criminal groups or
nation-state
organizations
or
social
activist
(“hacktivist”) organizations, disruptions resulting from
geopolitical events, natural disasters, failures or
impairments of telecommunications networks or other
catastrophic events. Such attacks are increasing in
complexity, and the rapid evolution and increased
adoption
of
AI
technologies
may
intensify
cybersecurity risks by making cyber-attacks more
difficult to detect, contain, and mitigate. Furthermore,
remote working and personal device use increases
the risks of cyber incidents and the improper
dissemination of personal or confidential information.
Moreover, the hardware, software or applications we
use may have inherent vulnerabilities or defects of
design, manufacture or operations or could be
inadvertently or intentionally implemented or used in
a manner that could compromise information security.
In addition, cybersecurity-related threats may remain
undetected for an extended period of time.
Any cybersecurity attack, data or security breach,
other
security
incident,
compromise,
damage,
disruption, outage or shutdown to our or the
information technology systems or networks, or those
of any businesses with which we interact could result
in lost sales, business delays, negative publicity or
reputational impact, and a loss of customer
confidence, and have a material adverse effect on our
business or financial results. Any such incident or
breach could also result in operational or supply chain
disruptions, data loss, corruption or manipulation, or
information misappropriation including, but not limited
to, interruption to systems availability, denial of
access to and misuse of applications required by
customers to conduct business, the acquisition, use
or disclosure of data or inability to access data, the
release
of
confidential
information
about
our
operations,
and
subject
us
to
litigation
and
government enforcement actions. Further, in such
event, access to applications required to plan
operations, source materials, manufacture and ship
finished goods and account for orders could be
denied or misused. Theft of intellectual property or
trade secrets, and loss or inappropriate disclosure of
confidential company, employee, customer or vendor
information, could also stem from such incidents.
Moreover, any significant cybersecurity event could
require us to devote significant management time and
resources in response to such event, interfere with
the pursuit of other important business strategies and
initiatives,
and
cause
us
to
incur
additional
expenditures, which could be material, including to
investigate and remediate such event, recover lost
data, prevent future compromises and adapt systems
and practices in response to such events. There is no
assurance that any remedial actions will meaningfully
limit the success of future attempts to breach our
information systems, particularly because malicious
actors are increasingly sophisticated and utilize tools
and techniques specifically designed to circumvent
security measures, avoid detection and obfuscate
forensic evidence, which means we may be unable to
identify, investigate or remediate effectively or in a
timely manner. Further, following completion of our
business combination with DS Smith, we are subject
to an increasing number of cybersecurity reporting
obligations in different jurisdictions that vary in their
scope and application, which may add complexities in
providing complete and reliable information about
cybersecurity incidents to customers, counterparties,
and regulators, as well as the public. The recent
completion of our business combination with DS
Smith has resulted in increased scale and a broader
global presence, which will impact our cybersecurity
risk profile. As part of the integration of the newly
acquired business, we are actively assessing and
addressing these cybersecurity risks to ensure robust
protection of our expanded operations and data
assets.
Additionally,
while
insurance
coverage
designed to address certain aspects of cyber risks
may be in place, such insurance coverage may be
insufficient to cover all losses or all types of claims
that may arise in connection with such incidents.
20
We are subject to a wide variety of laws,
regulations and other government requirements
that may change in significant ways, and the cost
of compliance with such requirements, or the
failure to comply with such requirements, could
impact our business and results of operations.
As a publicly listed company, we are subject to the
reporting requirements of the Exchange Act and the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”), and the listing requirements of the NYSE. By
virtue of our secondary listing on the LSE, we are
now subject to the listing requirements of the LSE,
the
Market Abuse
Regulation
and
Disclosure
Guidance and Transparency Rules. The Exchange
Act requires that we file annual and other reports with
respect to our business, financial condition and
results of operations. The Sarbanes-Oxley Act
requires, among other things, that we establish and
maintain effective internal controls and procedures for
financial reporting. Any failure to maintain effective
controls or any difficulties encountered implementing
required new or improved controls could cause us to
fail to meet our reporting obligations, which could
have a material adverse effect on our business and
the trading price of our common stock.
Our operations are subject to regulation under a wide
variety of domestic and international laws, regulations
and other government requirements, including,
among others, those relating to the environment,
health and safety, labor and employment, data
privacy, tax, trade and health care. There can be no
assurance that laws, regulations and government
requirements will not be changed, applied or
interpreted in ways that will require us to modify our
respective operations and objectives or affect our
respective returns on investments by restricting
existing activities and products or increasing costs. In
addition, any failure or alleged failure to comply with
applicable laws, regulations or other government
requirements could have an adverse effect on our
reputation and financial results or may result in,
among other things, litigation, revocation of required
licenses,
internal
investigations,
governmental
investigations
or
proceedings,
administrative
enforcement actions, fines and civil and criminal
liability.
We are subject to increasingly stringent federal, state,
local and international laws governing the protection
of the environment that continue to evolve as new
guidance is provided by regulatory and governing
bodies and as pending or future litigation is resolved.
The changing laws, regulations and standards
relating to corporate governance, ESG matters and
public disclosures in various jurisdictions create
uncertainty for public companies, increase legal and
compliance costs and make activities more time
consuming. We have incurred, and, following
completion of our business combination with DS
Smith, expect to continue to incur and invest
resources, significant capital, operating and other
expenditures
complying
with
applicable
and
forthcoming environmental laws and regulations,
including with respect to GHG emissions and other
climate-related matters. These investments may lead
to higher operating expenses as the cost of
compliance
increases.
Our
environmental
expenditures include, among other areas, those
related to air and water quality, waste disposal and
the cleanup of soil and groundwater, including
situations where we have been identified as a
potentially responsible party. There can be no
assurance that future remediation requirements and
compliance with existing and new laws and
requirements will not require significant expenditures,
or that existing reserves for specific matters will be
adequate to cover future costs. We could also incur
substantial fines or sanctions, enforcement actions
(including orders limiting operations or requiring
corrective measures), natural resource damages
claims, cleanup and closure costs, third-party claims
for property damage and personal injury and
reputational harm as a result of violations of, or
liabilities under, environmental laws, regulations,
codes and common law. The amount and timing of
environmental expenditures is difficult to predict, and,
in some cases, liability may be imposed without
regard to contribution or to whether we knew of, or
caused, the release of hazardous substances.
Additionally, if our compliance efforts with new
applicable laws, regulations, and standards do not
align with the expectations of regulatory or governing
bodies due to ambiguities in their application and
implementation, or if they differ from interpretations
arising from related litigation, we may face legal
actions. This could negatively impact our business,
financial condition, operational results, and cash flow.
Our global operations are subject to complex and
evolving domestic and international data privacy laws
and regulations, such as the European Union’s
General Data Protection Regulation, the UK's
General
Data
Protection
Regulation,
any
supplemental applicable European Union member
state or UK national data protection laws, China’s
Personal
Information
Protection
Law
and
comprehensive privacy laws in many U.S. states,
including California, Connecticut, Colorado, Utah, and
Virginia. These laws impose a range of compliance
obligations regarding the handling of personal data.
There are significant penalties for non-compliance,
including monetary fines, disruption of operations and
reputational harm. Moreover, other states and
governmental authorities around the world have
introduced or passed, or are considering, similar
legislation which may impose varying standards and
21
requirements on data collection, use and processing
activities.
This increasingly restrictive and evolving global
regulatory environment related to data privacy and
data protection may continue to require changes to
our business practices, and give rise to significantly
expanded
compliance
burdens,
costs
and
enforcement risks. Moreover, many of these laws and
regulations are subject to uncertain application,
interpretation or enforcement standards that could
result in claims, changes to business practices, data
processing
and
security
systems,
penalties,
increased operating costs or other impacts on our
business. Additionally, regulatory bodies and others
tasked with enforcing privacy and data protection
laws have been actively engaging in enforcement
investigations and actions. These laws often provide
for civil penalties for violations, as well as private
rights of action for data breaches that may increase
data breach litigation. We use internal and external
resources to monitor compliance with relevant
legislation and continually evaluate and, where
necessary, modify data processing practices and
policies to comply with evolving privacy laws.
Nevertheless, relevant regulatory authorities could
determine that our data handling practices fail to
address all the requirements of certain new laws,
which could subject us to penalties and/or litigation. In
addition, there is no assurance that our security
controls over personal data, the training of employees
and vendors on data privacy and data security, and
policies, procedures and practices will prevent the
improper handling of, disclosure of or access to
personal data. Improper handling and disclosure of or
access to personal data in violation of other data
privacy and protection laws could cause reputational
harm and loss of consumer confidence and subject
us to government enforcement actions (including
fines), or result in private litigation, which could result
in loss of revenue, increased costs, liability for
monetary damages, fines and/or criminal prosecution,
all of which could negatively affect our business and
operating results.
We are also exposed to the risk of changes in tax law
and tax rates in a number of jurisdictions. The costs
associated to comply with these laws and regulations
are substantial and possible future laws and
regulations or changes to existing laws and
regulations (including the imposition of higher taxes)
could require us to incur additional expenses or
capital expenditures or result in restrictions on or
suspensions
of
operations.
For
example,
the
Organization
for
Economic
Cooperation
and
Development (the “OECD”), the EU and various
countries (including countries in which we operate)
have enacted or committed to enact a 15% global
minimum tax applied on a country-by-country basis
(the “Pillar Two rule”). In many of the countries
implementing the Pillar Two rule, the first component
of the Pillar Two rule became effective in 2024, with
the second component expected to come into effect
in 2025. It is possible that the Pillar Two rule could
adversely impact our effective tax rate in future
periods. Additionally, administrative guidance with
respect to tax law can be incomplete or vary from
legislative intent, and therefore the application of the
tax law is uncertain. While we believe our reported
positions comply with relevant tax laws and
regulations, taxing authorities could interpret the
application of certain laws and regulations differently.
We have been and continue to be subject to tax
audits in various taxing jurisdictions around the world.
In some cases, we have appealed, and may continue
to appeal, assessments by taxing authorities,
including in the court system. As such, tax
controversy
matters
may
result
in
previously
unrecorded tax expenses, accelerated cash tax
payments, higher future tax expenses, or the
assessment of interest and penalties.
As with many technological innovations, AI presents
risks and challenges that could affect its adoption,
and therefore our business. Uncertainty in the legal
regulatory regime relating to AI may require
significant resources to modify and maintain business
practices to comply with international laws, the nature
of which cannot be determined at this time. Several
jurisdictions, including Europe, the U.S. federal
government, and certain U.S. states, have already
proposed or enacted laws, regulations, and other
requirements governing AI. For example, on May 21,
2024, the Council of the European Union adopted the
EU AI Act, regulating the developments and
deployment of AI systems. The EU AI Act imposes
obligations on transparency, risk management and
data governance for AI systems, particularly those
classified as high risk, with significant fines for
noncompliance. Other jurisdictions may decide to
adopt similar or more restrictive requirements that
may render the use 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 AI usage, which may lead to
inefficiencies or competitive disadvantages.
Material disruptions at one of our manufacturing
facilities could negatively impact financial results.
We operate facilities in compliance with applicable
rules and regulations and take measures to minimize
the risks of disruption. A material disruption at our
corporate headquarters, a manufacturing facility or
key mill could prevent us from meeting customer
demand, reduce sales and/or negatively impact our
financial condition. Any of our manufacturing facilities
22
or any machines within an otherwise operational
facility, could cease operations unexpectedly due to a
number of events, including:
•
adverse weather events like fires, floods,
earthquakes, hurricanes, winter storms and
extreme temperatures, or other catastrophes
(including adverse weather conditions that
may be intensified by climate change);
•
the effect of a drought or reduced rainfall on
its water supply;
•
disruption in the supply of raw materials or
other manufacturing inputs;
•
terrorism or threats of terrorism;
•
information system disruptions or failures due
to any number of causes, including cyber-
attacks;
•
domestic
and
international
laws
and
regulations applicable to us and any of our
respective business partners, including joint
venture partners, around the world;
•
unscheduled maintenance outages;
•
prolonged power failures;
•
an equipment failure;
•
a chemical spill or release;
•
explosion of a boiler or other equipment;
•
damage or disruptions caused by third parties
operating on or adjacent to a manufacturing
facility;
•
disruptions
in
the
transportation
infrastructure,
including
roads,
bridges,
railroad tracks and tunnels;
•
a widespread outbreak of an illness or any
other communicable disease, or any other
public health crisis or any impacts related to
government regulation as a result thereof;
•
failure of third-party service providers and
business partners to satisfactorily fulfill their
commitments and responsibilities in a timely
manner and in accordance with agreed upon
terms;
•
labor difficulties; and
•
other operational problems.
Any such downtime or facility damage could prevent
us from meeting production targets, customer
demand and satisfying customer requirements, which
may necessitate unplanned expenditures, resulting in
lower sales and have a negative effect on our
financial results.
We operate in a challenging market for talent and
may fail to attract and retain qualified personnel,
including key management personnel.
Our ability to operate and grow our business depends
on our ability to attract and retain employees with the
skills necessary to operate and maintain our facilities,
produce our products and serve our customers. The
market for both hourly workers and salaried workers
continues
to
be
competitive,
particularly
for
employees with specialized technical and trade
experience. This, along with the current competitive
labor market and ongoing inflationary conditions, has
led to higher labor costs. In addition, we rely on our
key executive and management personnel to manage
our
business
efficiently
and
effectively.
The
unanticipated departure of key executive and
management employees, particularly in a challenging
market for attracting and retaining employees, could
adversely affect our business. Moreover, changing
demographics and labor work force trends, including
remote
work
and
changing
work-life
balance
expectations, may make it difficult for us to replace
retiring or departing employees. The failure to retain
and/or
recruit
additional
or
substitute
senior
managers and/or other key employees and a failure
to identify and resource for future capability
requirements such that there is a gap in skills and
knowledge across key business areas, or if higher
labor costs and shortages persist, could have a
material adverse effect on our business, financial
condition,
results
of
operations
and/or
future
prospects.
Our failure to maintain good employee or labor
relations may affect our respective operations.
Future developments in relation to our business could
adversely affect employee or labor relations. Good
employee and labor relations depend on the ability to
drive innovation, manage change and engage the
workforce, and failure to do so could have a material
adverse effect on our business, financial condition,
results of operations and/or future prospects. Further,
labor disputes or other problems could lead to a
substantial interruption to our business and have a
material adverse effect on our business, financial
condition,
results
of
operations
and/or
future
prospects.
23
Following the completion of our business combination
with DS Smith, a significant number of our employees
are represented by unions, trade unions and national
works councils. We have collective bargaining
agreements in place with U.S. and international trade
unions. In the U.S., we may not be able to
successfully negotiate new collective bargaining
agreements once our current contracts with unions
expire without work stoppages or labor difficulties, or
we may be unable to renegotiate such contracts on
favorable terms. Negotiations between us and the
United Steelworkers union (the “USW”) regarding the
mill master collective bargaining agreement and
related mill joint pension council master agreement
resulted in new agreements which will expire August
2027 and September 2027, respectively. Negotiations
between us and the USW regarding the converting
master
collective
bargaining
agreement
(which
expired in April 2024) and related converting joint
pension council master (which expired September
2024) took place in February 2024 and resulted in
new agreements which will expire in April and
September 2028, respectively. The USW represents
approximately 10,600 employees in our mills and
converting facilities. In Europe, we have collective
agreements in place with trade unions, and also have
agreements in place with a European Works Council,
which brings together employee representatives from
the different European countries in which we operate
and provides a forum for information sharing and
consultation. We have experienced limited work
stoppages in the past and may experience work
stoppages in the future. Further, labor organizations
may attempt to organize groups of additional
employees from time to time, and recent and potential
changes in labor laws could make it easier for them to
do so.
If there is a substantial change to the terms of any
collective bargaining agreements or an agreement
acceptable to us cannot be reached at all when the
collective agreements are renewed, we could face
increased labor costs or disruptions as a result of
labor union activity in the future. If we experience any
extended interruption of operations at any of the
relevant facilities as a result of strikes or other work
stoppages, or if unions, trade unions and national
works councils are able to organize additional groups
of our employees, our operating costs could increase
and our operational flexibility could be reduced.
We may be unable to realize the expected benefits
and cost savings associated with restructuring
initiatives, including our 80/20 strategic approach.
We have restructured portions of our operations from
time to time and have current restructuring initiatives
taking place, and it is likely that we will engage in
restructuring activities in the future. For example, as
previously disclosed in October 2023, we committed
to
certain
strategic
actions
impacting
our
Containerboard
and
Global
Cellulose
Fibers
businesses.
Consistent
with
this
initiative,
in
December
2023,
we
permanently
closed
our
containerboard
mill
in
Orange,
Texas,
and
permanently ceased production on two of our pulp
machines at our mills in Riegelwood, North Carolina,
and Pensacola, Florida. We recorded charges
associated with these actions during the three months
ended December 31, 2023. Moreover, in 2024, we
began implementing an 80/20 strategic approach to
drive transformational performance. Through the
80/20 strategic approach, we intend to deliver
profitable market share growth by striving to be the
lowest-cost producer, and the most reliable and
innovative sustainable packaging solutions provider
to our customers across North America and EMEA.
As part of our 80/20 strategic approach, we intend to
guide investments and align resources to win with
customers, while reducing complexity and cost across
the
Company. To
that
end,
we
have
been
implementing restructuring initiatives. For example,
on October 15, 2024, we announced a corporate
overhead restructuring plan to reduce operating
costs, optimize organizational structure and better
align our workforce with the needs to our customers,
pursuant to which we reduced our workforce by
approximately 650 employees. This restructuring plan
was substantially implemented in the fourth quarter of
2024. We recorded charges associated with these
actions during the three months ended September
30, 2024, and December 31, 2024. Further, on
October
31,
2024,
we
announced
plans
to
permanently close our pulp and paper mill in
Georgetown, South Carolina. We incurred $119
million of charges during the three months ended
December 31, 2024 for the Georgetown, South
Carolina mill closure. On February 13, 2025, we
announced
plans
to
permanently
close
our
containerboard mill in Campti, Louisiana. We expect
to incur pre-tax charges of approximately $357 million
during the three months ending March 31, 2025.
We have also been implementing certain commercial
initiatives as a part of our 80/20 strategic approach
and our box go-to-market strategy. Among other
things,
these
commercial
initiatives
include
strategically focusing our business, pricing to better
reflect the services and value we provide, and
aligning resources with our best and most strategic
customers.
We may be unable to realize the expected benefits
from these and other restructuring initiatives that we
may
in
the
future
undertake.
In
particular,
restructuring activities may divert the attention of
management, disrupt operations and fail to achieve
the intended cost and operational benefits. If the
24
Company is unable to realize the expected benefits
from its restructuring initiatives, the Company’s
financial results could be adversely impacted. In
addition, because we are unable to predict or control
market conditions, including changes in the supply
and demand for our products, product prices or
manufacturing costs, we may not be able to predict
the appropriate time to undertake restructurings.
Further, cash and non-cash charges may be incurred
in connection with restructuring activities, which may
be material. Moreover, judgment is required to
estimate restructuring charges, and these estimates,
and the assumptions underlying them, may change
as additional information becomes available or facts
or circumstances related to restructuring initiatives
change.
We may not achieve the expected benefits from
strategic acquisitions, joint ventures, divestitures,
spin-offs, capital investments, capital projects
and other corporate transactions that are or will
be pursued.
Our strategy for long-term growth, productivity and
profitability depends, in part, on our ability to
accomplish prudent acquisitions, joint ventures,
divestitures,
spin-offs,
and
other
corporate
transactions and to realize the benefits expected from
such transactions, including the acquisition of DS
Smith as set forth above. Ongoing capital investment
is also required to expand, maintain and upgrade
existing facilities, to develop new facilities and to
ensure compliance with new regulatory requirements.
Our expenditures on capital projects could be higher
than anticipated, the projects may experience
unanticipated disruptions or delays in completing the
projects and the desired benefits from those projects
may not be achieved, including as a result of a
deterioration in macroeconomic conditions, the
unavailability
of
capital
equipment
or
related
materials, delays in obtaining permits or other
requisite
approvals
or
changes
in
laws
and
regulations. We are subject to the risk that the
expected benefits from such transactions may not be
achieved. This failure could require an impairment
charge to be recorded for goodwill or other intangible
assets, which could lead to decreased assets and
reduced net earnings. Among the benefits expected
from 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 realization of proceeds from the sale of
businesses and assets to purchasers who place a
higher strategic value on such businesses and
assets.
Corporate transactions of this nature that we may
pursue involve a number of special risks, including
with respect to the inability to realize business goals
with such transactions as noted above, including our
acquisition assumptions, the focus of management’s
attention on these transactions and the assimilation of
acquired businesses into existing operations, the
demands on financial, operational and information
technology
systems
resulting
from
acquired
businesses, our ability to integrate personnel, labor
models, financials, customer relationships, supply
chain
and
logistics,
IT
and
other
systems
successfully, business culture compatibility, the
possibility of becoming responsible for substantial
contingent or unanticipated legal liabilities as the
result of acquisitions or other corporate transactions,
and increasing the scope geographic diversity and
complexity of our operations.
Moreover, effective internal controls are necessary to
provide reliable and accurate financial reports, and
the integration of businesses may create complexity
in our financial systems and internal controls and
make them more difficult to manage. Integration of
businesses into our internal control system could
cause us to fail to meet our financial reporting
obligations. Moreover, any failure to integrate, or
delay
in
integrating,
IT
systems
of
acquired
businesses could create an increased risk of
cybersecurity incidents. Following integration, an
acquired business may not produce the expected
margins or cash flows. Furthermore, we may finance
these strategic transactions by incurring additional
debt or issuing equity, which could increase leverage
or impact our ability to access capital in the future.
There are risks associated with our review of
strategic options for our Global Cellulose Fibers
business, and there is no assurance that this
review will result in any transaction or other
outcome.
On October 31, 2024, we announced that we were
reviewing strategic options for our Global Cellulose
Fibers business. There can be no assurance that this
review will result in any kind of transaction or other
outcome, or, if any transaction or other outcome
occurs, the timing or terms thereof. Moreover, our
ability to affect any transaction or other outcome may
be dependent on a number of factors that may be
beyond our control, such as market conditions,
industry trends, regulatory approvals, and the
availability of financing on favorable terms. In
addition, even if this review ultimately results in a
transaction or other outcome, there can be no
assurance that such transaction or other outcome will
have a positive effect on shareholder value.
Further, there can be no assurance that this review of
strategic options will not cause the diversion of
management’s attention, interfere with our ability to
25
retain or attract key personnel, disrupt our business,
adversely impact important business relationships,
adversely impact our financial results, or expose us to
litigation. In addition, we may incur significant costs
and expenses in connection with this process. It is
also
possible
that
speculation
regarding
any
developments related to this review and perceived
uncertainties associated therewith could cause the
market price of our common stock to fluctuate
significantly or to decline.
Our continued growth will depend on our ability
to retain existing customers and attract new
customers.
Our future growth will depend on our ability to retain
existing customers, attract new customers as well as
make existing customers and new customers
increase their volume commitments. There can be no
assurance that customers will continue to use our
products or that they will be able to continue to attract
new volumes at the same rate as in the past.
A customer’s use of our products may decrease for a
variety of reasons, including the customer’s level of
satisfaction with our products and services, the
expansion of business to offer new products, the
effectiveness of our support services, the pricing of
our products, the pricing, range and quality of
competing products, the effects of global economic
conditions, regulatory limitations, trust, perception
and interest in the paper and packaging industry and
in their products. Furthermore, the complexity and
costs associated with switching to a competitor may
not be significant enough to prevent a customer from
switching packaging providers.
Any failure by us to retain existing customers, attract
new customers, and increase revenue from both new
and existing customers could have a material adverse
effect on our business, results of operations, financial
condition and/or future prospects. These efforts may
require
substantial
financial
expenditures,
commitments
of
resources,
developments
of
processes, and other investments and innovations
without a guarantee that existing customers will be
retained and/or new customers will be attracted.
Uninsured losses or losses in excess of our
insurance coverage for various risks could have
an adverse financial effect on our business.
We maintain business insurance that we consider to
be adequate and appropriate for our business and
activities. Certain types of risks such as losses due to
natural disasters, riots, acts of war or terrorism are,
however, either uninsurable or not economically
insurable. In addition, even if a loss is insured, we
may be required to pay a significant deductible on
any claim for recovery of such loss prior to the insurer
being obliged to reimburse the loss, or the amount of
the loss may exceed the coverage for the loss. Any
uninsured losses could have a material adverse effect
on our business, financial condition, results of
operations and/or future prospects.
We may not be able to adequately secure and
protect our intellectual property rights, which
could harm our competitive advantage.
We rely on intellectual property laws to protect our
rights to certain aspects of our systems, products and
processes including product designs, proprietary
technologies, research and concepts. For example,
our packaging business owns hundreds of patents
covering our designs and products. Trademarks and
licenses and their effective management play an
important role in protecting intellectual property rights.
The actions taken by us to protect our respective
proprietary rights may be inadequate to prevent
imitation or unauthorized use. The laws of various
countries offer different levels of protection for
intellectual property rights and there can be no
assurance that our intellectual property rights will not
be
challenged,
invalidated,
misappropriated
or
circumvented
by
third
parties. Any
of
these
possibilities could have a material adverse effect on
our business, financial condition, results of operations
and/or future prospects.
We may fail to identify or leverage digital and/or
AI transformation initiatives.
We may fail to identify or leverage digital and/or AI
transformation initiatives in areas from point-of-sale
through to manufacture and delivery to customers, or
miss the opportunity to meet the demand for smart
products. Failure to implement digital and data
programs or identify or prioritize the latest digital and/
or AI transformation initiatives may result in us falling
behind our competitors with regards to speed to
market, smart product offerings, manufacturing
capacity and service levels, each of which could have
a material adverse effect on our business, financial
condition,
results
of
operations
and/or
future
prospects.
RISKS RELATED TO LEGAL PROCEEDINGS AND
COMPLIANCE COSTS
Results of legal proceedings could have a
material effect on our consolidated financial
results.
We are a party to various legal, regulatory and
governmental proceedings and other related matters,
including with respect to environmental matters. In
addition, we are and may become subject to other
loss contingencies, both known and unknown, which
26
may relate to past, present and future facts, events,
circumstances
and
occurrences.
Should
an
unfavorable outcome occur in connection with the
legal, regulatory or governmental proceedings or our
other loss contingencies or we become subject to any
such loss contingencies in the future, there could be a
material adverse impact on our financial results. See
Note 13 - Commitments and Contingent Liabilities of
Item 8. Financial Statements and Supplementary
Data for further information.
For example, we (through both International Paper
and our newly acquired DS Smith subsidiaries
operating in Italy) are among a number of companies
operating in the paper packaging industry subject to a
decision
by
the
Italian
Competition
Authority
concerning anti-competitive behavior in Italy. We are
further subject to a number of actual and threatened
claims for compensation arising out of or relating to
the decision by the Italian Competition Authority.
Given the early stages of these claims and our
intention to defend robustly against such claims, it is
too early to predict or reasonably estimate the overall
outcome or ultimate potential liability (if any) that
might be incurred in connection therewith, and there
can be no guarantee that the aggregate of possible
damages could not have a material impact on our
financial condition.
We could be exposed to liability for Brazilian
taxes under our agreements with Sylvamo
Corporation.
In
connection
with
the
spin-off
of
Sylvamo
Corporation (“Sylvamo”), we previously entered into
agreements with Sylvamo and its subsidiaries,
including among others a tax matters agreement.
Under the tax matters agreement, we could have
significant payment obligations in connection with
certain Brazilian tax matters. Under this agreement,
we have agreed to pay 60% of the first $300 million of
any liability resulting from the resolution of these
Brazilian tax matters (with Sylvamo paying the
remaining 40% of the first $300 million of any such
liability) and 100% of any liability resulting from the
Brazilian tax matters over $300 million. These
Brazilian tax matters relate to assessments for the tax
years 2007-2015 of approximately $95 million in tax
(adjusted for variation in currency exchange rates)
and approximately $235 million in interest, penalties,
and fees (adjusted for variation in currency exchange
rates).
Accordingly,
the
assessments
total
approximately $330 million (adjusted for variation in
currency exchange rates), although interest, penalties
and fees continue to accrue over time. Under the tax
matters agreement, our potential liability for such
assessments would currently be approximately $210
million (adjusted for variation in currency exchange
rates). If we were found liable to pay such amounts,
this could have an adverse effect on our business,
financial condition, results of operations and/or cash
flow. See Note 13 - Commitments and Contingent
Liabilities of Item 8. Financial Statements and
Supplementary Data for further information.
If our spin-off of Sylvamo Corporation were to fail
to qualify for non-recognition treatment for U.S.
federal income tax purposes, then we may be
subject to significant U.S. federal income taxes.
We received opinions from tax advisors 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 tax-free for U.S. federal
income tax purposes to Sylvamo, us and our
shareholders who received a distribution of Sylvamo
common stock in connection with the spin-off. 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, our advisors
and the IRS relied on certain representations and
covenants delivered by us and Sylvamo in rendering
such opinions and in the private letter ruling. If any of
the representations or covenants relied upon for the
tax opinions or private letter ruling were inaccurate,
incomplete or not complied with by us, Sylvamo or
any of their respective subsidiaries, the tax opinions
and private letter ruling 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 for U.S.
federal income tax purposes as a taxable gain to us
(determined as of the date of the spin-off). In such
event, significant U.S. federal income tax liabilities
could be incurred by us. These income tax liabilities
may be indemnifiable by Sylvamo pursuant to a tax
matters agreement between us and Sylvamo.
However, there can be no assurance that Sylvamo
would have adequate resources or liquidity if it were
required to indemnify us.
RISKS RELATED TO OUR INDEBTEDNESS
Changes in credit ratings issued by nationally
recognized statistical rating organizations could
adversely affect our cost of financing and have an
adverse effect on the market price of our
securities.
Maintaining an investment-grade credit rating is an
important element of our financial strategy. A
downgrade of ratings below investment grade will
likely eliminate our ability to access the commercial
paper market, may limit access to the capital markets,
have an adverse effect on the market price of our
securities, increase borrowing costs and require us to
27
post collateral for derivatives in a net liability position.
The desire to maintain an investment grade rating
may cause us to take certain actions designed to
improve our respective cash flow, including a sale of
assets, suspension or reduction of dividends and
reductions in capital expenditures and working
capital.
Certain of our debt agreements provide for an interest
rate increase in case of a credit rating downgrade.
This applies to agreements governing approximately
$539 million of our debt as of December 31, 2024. As
a result, a downgrade in credit rating may lead to an
increase in interest expenses. There can be no
assurance that our credit ratings will remain in effect
for any given period of time or that such ratings will
not be lowered, suspended or withdrawn entirely by
the rating agencies if, in each rating agency’s
judgment, circumstances so warrant. Any such
downgrade, suspension or withdrawal of credit ratings
could adversely affect our cost of borrowing, limit
access to the capital markets or result in more
restrictive covenants in agreements governing the
terms of any future indebtedness that we may incur.
The level of our indebtedness could adversely
affect our financial condition and impair our
ability to operate our business.
As of December 31, 2024, we had approximately $5.6
billion of outstanding indebtedness. The level of our
indebtedness could have important consequences to
our
financial
condition,
operating
results
and
business, including the following:
•
it may limit our ability to obtain additional debt
or equity financing for working capital, capital
expenditures,
product
development,
dividends, share repurchases, debt service
requirements,
acquisitions
and
general
corporate or other purposes;
•
a portion of our cash flows from operations
will
be
dedicated
to
payments
on
indebtedness and will not be available for
other purposes, including operations, capital
expenditures
and
future
business
opportunities;
•
the
debt
service
requirements
of
our
indebtedness could make it more difficult for
us to satisfy other obligations;
•
it may limit our ability to adjust to changing
market conditions, including to take actions in
connection with changes in interest rates
(such as in the current elevated interest rate
environment), and place us at a competitive
disadvantage compared to our competitors
that have less debt;
•
it may increase our exposure to risks related
to fluctuations in foreign currency as we earn
profits in a variety of currencies around the
world and our debt is denominated in U.S.
dollars;
•
it may increase our exposure to the risk of
increased interest rates insofar as we are
compelled to refinance indebtedness at
higher interest rates, which risk is heightened
by the current high interest rate environment;
and
•
it may increase our vulnerability to a
downturn in general economic conditions or
in our business, and may make us unable to
carry out capital spending that is important to
our growth.
In addition, we are subject to agreements governing
our indebtedness that require us to meet and
maintain certain financial ratios and covenants. A
significant or prolonged downturn in general business
and economic conditions, or other significant adverse
developments
with
respect
to
our
results
of
operations or financial condition, may affect our ability
to comply with these covenants or meet those
financial ratios and tests and could require us to take
action to reduce our debt or to act in a manner
contrary to our current business objectives. Moreover,
the restrictions associated with these financial ratios
and covenants may prevent us from taking actions
that we believe would be in the best interest of our
business and may make it difficult for us to execute
our business strategy successfully or effectively
compete with companies that are not similarly
restricted. Additionally, despite these restrictions, we
may
be
able
to
incur
substantial
additional
indebtedness in the future, which might subject us to
additional restrictive covenants that could affect our
financial and operational flexibility and otherwise
increase the risks associated with our indebtedness
as noted above.
We are subject to risks associated with variable
rate debt.
We are subject to interest rate risk associated with
short-term cash investments, variable rate debts,
supply chain financing and short-term debt. We are
also exposed to interest rate risk in relation to our
installment notes and loans in the Temple Inland
timber monetization special purpose entities. We
have variable rate debt in the aggregate amount of
approximately $908 million as of December 31, 2024.
Interest rates rose significantly during 2022 and 2023
28
with adjustments made by the Federal Reserve in
2024 to address economic conditions. Interest rates
could remain volatile in 2025. Changes in interest
rates impacts the earnings on our short-term cash
investments, the interest rate payable on our variable
rate debt and credit agreements, the cost of supply
chain financing and the refinance rate on our short-
term debt.
Downgrades in the credit ratings of banks issuing
certain letters of credit will increase our cost of
maintaining certain indebtedness and may result
in the acceleration of deferred taxes.
We are subject to the risk that a bank with currently
issued
irrevocable
letters
of
credit
supporting
installment notes in connection with Temple Inland’s
2007 sales of forestlands, may be downgraded below
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, the three
letter-of-credit banks currently in place remain subject
to risk of downgrade and the number of qualified
replacement banks remains limited. The downgrade
of one or more of these banks may subject us to
additional costs of securing a replacement letter-of-
credit bank or could result in an acceleration of
payments of up to $486 million in deferred income
taxes if replacement banks cannot be obtained.
RISKS
RELATED
TO
OUR
PENSION
AND
HEALTHCARE COSTS
Our pension and health care costs are subject to
numerous factors which could cause these costs
to change.
We have defined benefit pension plans covering
substantially all U.S. salaried employees hired prior to
July 1, 2004, and substantially all hourly union and
non-union employees regardless of hire date. We
froze participation for U.S. salaried employees under
these
plans,
including
credited
service
and
compensation on or after January 1, 2019; however,
the pension freeze does not affect benefits accrued
through December 31, 2018. We provide retiree
health
care
benefits
to
certain
former
U.S.
employees, as well as financial assistance toward the
cost of individual retiree medical coverage for certain
former U.S. salaried employees. Pension costs are
dependent upon numerous factors resulting from
actual plan experience and assumptions of future
experience. Pension plan assets are primarily made
up
of
equity
and
fixed
income
investments.
Fluctuations in actual market returns on plan assets,
changes in general interest rates and in the number
of retirees may impact pension costs in future
periods. Likewise, changes in assumptions regarding
current discount rates and expected rates of return on
plan assets could increase pension costs. However,
the impact of market fluctuations has been reduced
as a result of investments in our pension plan asset
portfolio which hedge the impact of changes in
interest rates on the plan’s funded status. Drivers for
fluctuating health costs include unit cost changes,
health care utilization by participants, and potential
changes in legal requirements and government
oversight. If any of these factors cause pension costs
or health care benefits to increase in future periods,
this could have an adverse effect on our business,
financial condition, results of operations and/or cash
flow.
Our U.S. 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 excess
of the benefit obligation over the fair value of plan
assets. As of December 31, 2024, we had an
overfunded U.S. qualified pension with a surplus of
$92 million. When aggregated with U.S. nonqualified
pension obligations, the benefit deficit recorded under
the provisions of Accounting Standards Codification
715, “Compensation – Retirement Benefits,” as of
December 31, 2024 was $156 million. The amount
and timing of future contributions, which could be
material, will depend upon a number of factors,
including the actual earnings, changes in values of
plan assets and changes in interest rates. If benefit
obligations under the U.S. qualified pension exceed
the value of plan assets by more than permitted
under
applicable
statutory
minimum
funding
requirements, then we may be required to make
additional contributions to the U.S. qualified pension.
Such contributions may have an adverse effect on
our operational results and cash flow.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
RISK MANAGEMENT AND STRATEGY
The Company’s cybersecurity risk management
processes are integrated into our overall risk
management system. The Company has a formalized
enterprise risk management program overseen by the
29
Board of Directors and committees of the Board of
Directors that addresses strategic, operational,
financial,
compliance,
legal
and
information
technologies and cybersecurity risks. In addition, the
Enterprise
Risk
Management
Council
(“ERM
Council”) is a management-level team 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.
As part of our 80/20 strategic approach and our
integration of DS Smith, the Company is evaluating
how the ERM Council might operate in 2025 to
ensure that our structure supports our strategic goals.
The Company has an Information Technology (“IT”)
Risk Governance Program that aligns with our
enterprise risk management framework and assists
with fulfilling oversight responsibilities for major IT
risks, including cybersecurity risks. An enterprise
Cyber Governance, Risk, and Compliance function
manages overall Company cyber risk, coordinating
risk management functions with each business.
Business and IT leaders conduct cyber risk reviews
monthly within each business. These monthly reviews
include the evaluation of new and evolving risks,
management of risk mitigation plans, and a review of
all cybersecurity incidents meeting certain criteria.
Our Risk Assessment Program
The Company has a risk assessment program in
place to assess, identify and manage material risks
from cybersecurity threats. Cybersecurity risks the
Company
faces
include
targeted
attacks,
ransomware, malware, phishing attacks, data theft,
other data or security breaches, virus and intrusion
software, as well as attacks to our website, financial
applications,
operational
technology,
telecommunications and human resources data. Key
aspects of the Company’s cybersecurity program
include the following:
•
layered technical protective capabilities and
detective surveillance controls;
•
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;
•
courses
and
awareness
training
on
information security for employees with
Company email or access to Company
devices,
including
phishing,
social
engineering and other cybersecurity training
as well as targeted training for specific roles
based on responsibilities and risk level;
•
global security and privacy policies; and
•
business continuity, incident response and
disaster recovery procedures, including table
top exercises involving senior leaders.
The Company does not believe that risks from
cybersecurity threats, including as a result of any
previous cybersecurity incidents, have materially
affected the Company, including its business strategy,
results of operations or financial condition. For a full
discussion of cybersecurity risks facing the Company,
please see Part I, Item 1A. Risk Factors - We are
subject
to
cybersecurity
and
information
technology risks related to breaches of security
pertaining
to
sensitive
company,
customer,
employee and vendor information as well as
breaches
in
technology
used
to
manage
operations and other business processes.
The Company carries cyber insurance which provides
coverage
in
connection
with
cybersecurity
breaches.
Engagement of Third Parties
The Company engages third parties in connection
with
assessing,
identifying
and
managing
its
cybersecurity risks, including the following:
•
Engagement of an independent third party
with incident response expertise to provide
intelligence-based
cybersecurity
solutions
and services to assist the Company with
preparing
for,
preventing,
investigating,
responding to and remediating cybersecurity
incidents, including attacks that target on-
premise, cloud, and critical infrastructure
environments.
•
Engagement of an independent third party to
conduct
an
annual
security
program
assessment of the controls, maturity and
performance of the Company’s information
security program and the information security
risk associated with the Company’s business
systems. The assessment uses the National
Institute
of
Standards
and
Technology
Cybersecurity Framework as its benchmark.
•
Engagement of a leading third-party service
provider to 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.
30
Oversight of Third Parties
The Company has processes to oversee and identify
material risks from cybersecurity threats associated
with the Company’s use of third-party service
providers.
In
this
regard,
the
Company’s
cybersecurity risk management program takes into
account third-party systems whereby the Company
could be impacted by the compromise of the security
of vendors or other business relations of the
Company, and the Company has a comprehensive
third-party access management system. In addition,
the Company conducts risk-based due diligence on
the profiles of third-party service providers with
respect to cybersecurity risks prior to engagement,
and providers of critical services are continuously
monitored with respect to security risks. The
Company also requires service providers to provide
prompt notification of any actual or suspected breach
impacting Company data or operations.
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, including processes for management’s
identification and reporting of material cybersecurity
incidents. The PPE Committee reviews technology
issues pertinent to the Company including those
associated
with
information
and
operational
technology, cybersecurity and data security and
assesses related Company strategies.
Our Board of Directors, Audit and Finance Committee
and PPE Committee each 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 at least
annually regarding cybersecurity risks, as well as
plans and strategies to mitigate those risks.
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 trends through continuing education
activities such as participation at conferences and in
webinars. Our CISO reports to our Chief Financial
Officer. Additionally, our CISO and members of the
cybersecurity team hold a number of industry
recognized
certifications,
such
as
Certified
Information Systems Security Professional, Certified
Information Security Manager, and Certified Ethical
Hacker, among others.
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
non-operational
and
operational
cybersecurity events. Evaluation and response to
cybersecurity events is led by our Cybersecurity
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
leads remediation and recovery activities. Our
General Counsel, Senior Vice President, Chief
People and Strategy Officer, 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, and, if appropriate,
may be further elevated for the review of the Board of
Directors.
The
Disclosure
Committee,
General
Counsel and Chief Financial Officer assess and
determine materiality using the facts gathered and
chronology of events provided by the Incident
Command Team.
31
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 the level of planned capital
investments for 2025 on page 45, and dispositions
and restructuring activities as of December 31, 2024,
on page 37 of Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations, and in Note 7 Acquisitions on page 72 of
Item 8. Financial Statements and Supplementary
Data.
ITEM 3. LEGAL PROCEEDINGS
Information concerning certain legal proceedings of
the Company is set forth in Note 13 Commitments
and Contingent Liabilities on pages 79 through 83 of
Item 8. Financial Statements and Supplementary
Data which is incorporated herein by reference.
The Company is not subject to any administrative or
judicial proceeding arising under any federal, state or
local provisions that have been enacted or adopted
regulating the discharge of materials into the
environment or primarily for the purpose of protecting
the environment that is likely to result in monetary
sanctions of $1 million or more.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
32
PART II.
ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS
AND
ISSUER
PURCHASES
OF
EQUITY
SECURITIES
As of the filing of this Annual Report on Form 10-K,
the Company’s common shares are traded on the
New York Stock Exchange (NYSE: IP) and on the
London Stock Exchange (LSE: IPC). As of February
14, 2025, there were approximately 9,900 record
holders of common stock of the Company.
We pay regular quarterly cash dividends and expect
to continue to pay regular quarterly cash dividends in
the foreseeable future, though each quarterly
dividend payment is subject to review and approval
by our Board of Directors.
The table below presents information regarding the
Company’s purchases of its equity securities for the
time periods presented.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.
Period
Total Number of Shares
Purchased (a)
Average Price Paid per
Share
Total Number of Shares (or
Units) Purchased as Part of
Publicly Announced
Programs
Maximum Number
(or Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs (in billions)
October 1, 2024 - October 31, 2024
11,250 $
48.62
— $
2.96
November 1, 2024 - November 30, 2024
3,381
51.57
—
2.96
December 1, 2024 - December 31, 2024
1,957
53.64
—
2.96
Total
16,588
(a)
16,588 shares were acquired from employees or members of our Board of Directors as a result of share withholdings to pay income taxes
under the Company's stock program. On October 11, 2022, our Board of Directors increased the authorization up to a total of $3.35 billion
shares. This repurchase program does not have an expiration date. As of December 31, 2024, approximately $2.96 billion aggregate
shares of our common stock remained authorized for repurchase.
33
PERFORMANCE GRAPH
The performance graph shall not be deemed
"soliciting material" or to be "filed" with the
Commission or subject to Regulation 14A or 14C
under, or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended, (the
"Exchange Act") and will not be deemed to be
incorporated by reference into any filing of the
Company under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent
the Company specifically incorporates it by reference
into such a filing.
The following line graph compares a $100 investment
in Company stock on December 31, 2019 with a $100
investment in our peer group and the S&P
Composite-500 Stock Index (S&P 500 Index) also
made at market close on December 31, 2019. The
graph portrays total return, 2019-2024, 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, and Stora Enso Group.
2)
Returns are calculated in $USD.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of our financial
condition and results of operations should be read in
conjunction with our consolidated financial statements
and related notes included in “Item 8. Financial
Statements and Supplementary Data” of this Annual
Report on Form 10-K. In addition to historical
consolidated financial information, the following
discussion contains forward-looking statements that
reflect our plans, estimates, and beliefs that involve
significant risks and uncertainties. Our actual results
could differ materially from those discussed in the
forward-looking statements. Factors that could cause
or contribute to those differences include those
discussed below and elsewhere in this Annual Report
on Form 10-K, particularly in “Risk Factors” and
“Forward-Looking Statements.”
34
The following generally discusses 2024 and 2023
items and year-to-year comparisons between 2024
and 2023. Discussion of historical items in 2022, and
year-to-year comparisons between 2023 and 2022,
can be found in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2023, filed with
the SEC on February 16, 2024, under Part II, Item 7,
Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
EXECUTIVE SUMMARY
Full-year
2024
net
earnings
attributable
to
shareholders were $557 million ($1.57 per diluted
share) compared with $288 million ($0.82 per diluted
share) for full-year 2023.
In 2024, we initiated our strategy to deliver profitable
growth as the low-cost, most reliable and innovative
sustainable packaging solutions provider for our
customers. Through a disciplined 80/20 approach, we
restructured
our
corporate
organization,
added
resources to the business, reduced structural costs
through footprint actions and successfully piloted
regional
box
plant
optimization.
Our
earnings
stabilized in the fourth quarter 2024 and we intend to
accelerate earnings improvement in 2025. Our Go-to-
Market value over volume reset was largely complete
in 2024 and we expect the final unfavorable impacts
to volume to be behind us later in 2025. There was a
significant focus throughout 2024 on cost reduction.
This included a zero-up approach to the corporate
organization, including shifting resources to the
business and reducing corporate staffing to the level
required as a public company. We expect this to
reduce costs by approximately $120 million on a run
rate basis. Additionally, we made the challenging
decision to close five box plants and our Global
Cellulose Fibers Georgetown, South Carolina mill.
These actions are expected to remove roughly
another $110 million of annual cost on a run rate
basis. Mill reliability was an issue in 2024 resulting in
elevated costs throughout the year. This presents a
significant cost reduction opportunity and we will
continue to improve the reliability at our mills and
optimize our mill and box system so that we are able
to reduce structural costs. Finally, we completed the
acquisition of DS Smith on January 31, 2025, creating
a global leader in sustainable packaging solutions,
focused on the attractive and growing North American
and EMEA regions.
Comparing 2024 financial performance to 2023, sales
in our North American Industrial Packaging business
were relatively flat versus the prior year. This was due
in part to higher price and mix driven by favorable
prior index movements and the execution of our go-
to-market strategy. The improved price and mix was
offset by lower volumes as we worked through
customer contract restructuring. This decline was in
line with our expectations. Sales in our Global
Cellulose Fibers business were lower compared to
prior year. This was due to lower price and mix driven
by prior index movements. Volume was relatively flat
versus 2023. Cost of products sold in our North
American Industrial Packaging business was lower
versus the prior year in line with lower sales during
2024 along with lower maintenance outage expenses.
This was partially offset by higher costs associated
with mill reliability issues along with increased input
costs on higher recovered fiber costs. Cost of
products sold in our Global Cellulose Fibers business
was lower versus the prior year in line with lower
sales during 2024 along with lower maintenance
outage expenses and lower input costs. Cost of
products sold includes higher costs associated with
mill reliability issues. Selling and administrative
expenses were higher in our North American
Industrial Packaging and Global Cellulose Fibers
businesses primarily driven by higher employee
incentive
compensation
expense.
Distribution
expenses were lower in both our North American
Industrial Packaging and Global Cellulose Fibers
businesses primarily driven by lower freight expense
on reduced sales.
Looking ahead to the first quarter 2025 in our North
American
Industrial
Packaging
business,
as
compared to the fourth quarter 2024 and without
consideration of the DS Smith acquisition, we expect
slightly lower price and mix based on lower export
pricing observed to date along with an unfavorable
seasonal mix impact. Volume is expected to be
slightly higher in the first quarter 2025 due to two
more shipping days partially offset by the near-term
impact of our go-to-market strategy. Operations and
costs are expected to increase earnings driven by the
benefits of our box plant optimization as well as the
non-repeat of the higher incentive compensation
costs and other unfavorable items from the fourth
quarter 2024. Maintenance outage expense is
expected to be marginally lower relative to the fourth
quarter 2024. Input costs are expected to be relatively
flat as higher energy costs will be offset by lower
recovered fiber costs. Finally, in February we
announced our plan to close the containerboard mill
in Campti, Louisiana with operations expected to
cease by March 31, 2025. We estimate that the
closure will result in aggregate pre-tax charges of
approximately $357 million, including pre-tax noncash
asset write-offs of approximately $311 million (of
which $276 million is accelerated depreciation), and
pre-tax cash severance and other shutdown charges
of approximately $46 million. In our Global Cellulose
Fibers business, we expect price and mix to be lower
due to unfavorable prior index movements. We
expect volume to be relatively flat. Operations and
costs are expected to increase earnings due to
35
improved mill performance and reliability along with
the non-repeat of the higher incentive compensation
costs and other unfavorable one-time items from the
fourth quarter 2024. Maintenance outage expense is
expected to decrease earnings while input costs are
expected to be stable relative to the fourth quarter
2024.
In closing, we believe 2025 will be a transformational
year. During the first few months, we anticipate
earnings will continue the stabilization trend we saw
in the fourth quarter 2024. As we progress further in
the year, we expect our earnings to progressively
ramp up as the commercial contract restructuring is
completed and the 80/20 initiatives deliver value. We
have an ambitious pipeline of capital projects that we
predict will facilitate the regional optimization of our
box system and deliver profitable market share
growth. We believe we are well on our way to building
a performance-driven and customer-centric culture.
We are confident we have developed the right
strategy and a concrete plan that will deliver customer
excellence and drive profitable growth. We believe
our actions will drive transformational improvements
and create significant value for our shareholders.
Acquisition of DS Smith
On January 31, 2025, the Company, through its
indirect wholly owned subsidiary, International Paper
UK Holdings Limited, completed the closing (the
“Closing”) of its previously announced business
combination of the entire issued and to be issued
ordinary shares of DS Smith plc, a public limited
company registered in England and Wales that has
since been re-registered as DS Smith Limited, a
private limited company (“DS Smith”). The business
combination was effected by means of a court-
sanctioned scheme of arrangement between DS
Smith and shareholders of DS Smith under Part 26 of
the UK Companies Act 2006, as amended.
The consummation followed the Company’s April 16,
2024 announcement pursuant to Rule 2.7 of the
United Kingdom City Code on Takeovers and
Mergers disclosing the terms of the business
combination (the “Rule 2.7 Announcement”), pursuant
to which, for each ordinary share of DS Smith (the
“DS Smith Shares”), DS Smith shareholders would
receive 0.1285 of a new share of common stock of
the Company, par value $1.00 per share (the
“Company Common Stock”), resulting in the issuance
of 178,126,631 new shares of Company Common
Stock (the “New Company Common Stock”).
On January 24, 2025, the European Commission
issued its Phase I clearance of the business
combination, conditional on International Paper
entering into commitments to divest its plants in
Mortagne, Saint-Amand, and Cabourg (France), Over
(Portugal) and Bilbao (Spain). As such, the Company
has agreed to divest these locations.
On February 4, 2025, the DS Smith Shares were
delisted from the London Stock Exchange (the “LSE”)
and the shares of New Company Common Stock
began trading on the New York Stock Exchange
under the symbol “IP” and the shares of Company
Common Stock, including the shares of New
Company Common Stock, began trading on the LSE
via a secondary listing under the symbol “IPC.”
Reconciliation of Net earnings (loss) to Adjusted
operating earnings (loss)
Adjusted Operating Earnings and Adjusted Operating
Earnings Per Share are non-GAAP measures defined
as net earnings (loss) (a GAAP measure) excluding
discontinued operations, net special items and non-
operating pension expense (income). Net earnings
(loss) and Diluted earnings (loss) per share 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 net special items, as described in greater detail
below, from net earnings (loss) reported under GAAP.
Adjusted Operating Earnings Per Share is calculated
by dividing Adjusted Operating Earnings by diluted
average shares of common stock outstanding.
Management uses these non-GAAP measures to
focus on ongoing operations and believes that such
non-GAAP measures are useful to investors in
assessing the operational performance of the
Company
and
enabling
investors
to
perform
meaningful
comparisons
of
past
and
present
consolidated
operating
results
from
continuing
operations. The Company believes that using these
non-GAAP measures, along with the most directly
comparable GAAP measures, provides for a more
complete analysis of the Company's results of
operations.
Non-operating pension expense (income) represents
amortization of prior service cost, amortization of
actuarial gains/losses, expected return on assets and
interest cost. The Company excludes these amounts
from our Adjusted Operating Earnings as the
Company does not believe these items reflect
ongoing operations. These particular pension cost
elements are not directly attributable to current
employee service. The Company includes service
cost in our non-GAAP measure as it is directly
attributable
to
employee
service,
and
the
corresponding
employees’
other
compensation
elements, in connection with ongoing operations.
36
The following is a reconciliation of Net earnings (loss)
to Adjusted operating earnings (loss) on a total basis.
Additional detail is provided below regarding the net
special items expense (income) referenced in the
charts below.
In millions
2024
2023
Net Earnings (Loss)
$ 557 $ 288
Less - Discontinued operations, net of taxes
(gain) loss
—
14
Earnings (Loss) from Continuing Operations
557
302
Add back - Non-operating pension expense
(income)
(42)
54
Add back - Net special items expense (income)
(a)
363
150
Income tax effect - Non-operating pension and
special items (b)
(478)
(68)
Adjusted Operating Earnings (Loss)
$ 400 $ 438
(a) Adjusted operating earnings (non-GAAP), and adjusted
operating earnings per share (non-GAAP) for the year ended
December 31, 2023, included in this Annual Report on Form 10-K
have been adjusted to include the pre-tax charge of $422 million for
accelerated depreciation related to mill strategic actions in the year
ended December 31, 2023. This charge was previously treated as
a special item and excluded from these non-GAAP earnings
measures.
(b) Special items for the year ended December 31, 2024 include a
tax benefit of $416 million related to internal legal entity
restructuring. This amount also includes tax expense of $10 million
on the non-operating pension income and a tax benefit of $72
million associated with special items. Special items for the year
ended December 31, 2023 includes a tax benefit of $23 million for
the settlement of tax audits and tax expense of $4 million related to
internal legal entity restructuring. This amount also includes tax
benefit of $13 million on the non-operating pension expense and a
tax benefit of $36 million associated with special items.
In millions
Three Months
Ended
December 31,
2024
Three Months
Ended
September 30,
2024
Three Months
Ended
December 31,
2023
Net Earnings
(Loss)
$
(147) $
150
$
(284)
Less - Discontinued
operations, net of
taxes (gain) loss
—
—
—
Earnings (Loss)
from Continuing
Operations
(147)
150
(284)
Add back - Non-
operating pension
expense (income)
(8)
(12)
14
Add back - Net
special items
expense (income)
182
114
124
Income tax effect -
Non-operating
pension and special
items (a)
(34)
(99)
(29)
Adjusted Operating
Earnings (Loss)
$
(7) $
153
$
(175)
(a) This amount for the three months ended December 31, 2024
includes tax expense of $2 million on the non-operating pension
income and a tax benefit of $36 million associated with special
items. Special items for the three months ended September 30,
2024 include a tax benefit of $78 million related to internal legal
entity restructuring. This amount also includes tax expense of $3
million on the non-operating pension income and a tax benefit of
$24 million associated with special items. Special items for the
three months ended December 31, 2023 include tax expense of $4
million related to internal legal entity restructuring. This amount
also includes tax benefit of $3 million on the non-operating pension
expense and a tax benefit of $30 million associated with special
items.
Effects of Net Special Items Expense (Income)
Pre-tax
special
items
included
in
continuing
operations totaling $363 million and $150 million were
recorded in 2024 and 2023, respectively. Details of
these charges were as follows:
Special Items
In millions
2024
2023
Mill closure costs
$ 121 (a)
$ 118 (a)
Severance and other costs
105 (b)
(19) (j)
DS Smith combination costs
86 (c)
—
Environmental remediation reserve
adjustments
60 (d)
36 (d)
Strategic advisory fees
37 (c)
—
Third-party warehouse fire
13 (e)
—
Legal reserve adjustments
10 (f)
—
Global Cellulose Fibers strategic options
costs
5 (c)
Net (gains) on sales of fixed assets
(58) (g)
—
Italy antitrust
(6) (h)
—
Equity method investment impairment
—
18 (k)
Interest related to settlement of tax
audits
(10) (i)
(6) (i)
Interest related to the timber
monetization settlement
—
3 (l)
Total Pre-Tax Special Items
$ 363
$ 150
(a) Severance and other closure costs associated with our mill
strategic actions recorded in restructuring and other charges, net.
(b) Severance and other costs associated with the Company's
80/20 strategic approach which includes the realignment of
resources recorded in restructuring and other charges, net.
(c) Transaction related costs that the Company believes are not
reflective of the Company's underlying operations recorded in
selling and administrative expenses.
(d) Environmental remediation adjustments associated with
remediation work at sites that have been closed/divested that the
Company believes are not reflective of the Company's underlying
operations recorded in cost of products sold.
(e) The Company's cost for third-party damages associated with a
warehouse fire in Morocco recorded in cost of products sold.
(f) Legal reserve adjustment associated with a previously
discontinued business recorded in cost of products sold.
(g) Net gains related to the sale of a building at our permanently
closed Orange, Texas containerboard mill, miscellaneous land
sales and other items that the Company does not believe are
reflective of the Company's underlying operations recorded in net
(gains) losses on fixed assets.
(h) Settlement associated with an Italian antitrust matter initially
recorded as a special item in 2019 recorded in cost of products
sold.
(i) Interest income on tax overpayments in prior years associated
with the settlement of certain tax audits recorded in interest
expense, net.
(j) Revision of severance estimates related to the Company's Build
a Better IP initiative recorded in restructuring and other charges,
net.
37
(k) Other-than-temporary impairment of an equity method
investment recorded in equity earnings (loss), net of taxes.
(l) Interest income related to the settlement of the timber
monetization restructuring tax matter recorded in interest expense,
net.
The following is a reconciliation of Net earnings (loss)
to Adjusted operating earnings (loss) on a per share
basis.
2024
2023
Diluted Earnings (Loss) Per Share
$ 1.57 $ 0.82
Less - Discontinued operations, net of taxes
(gain) loss per share
—
0.04
Diluted Earnings (Loss) Per Share from
Continuing Operations
1.57
0.86
Add back - Non-operating pension expense
(income) per share
(0.12)
0.15
Add back - Net special items expense (income)
per share
1.02
0.43
Income tax effect per share - Non-operating
pension and special items
(1.34) (0.19)
Adjusted Operating Earnings (Loss) Per Share
$ 1.13 $ 1.25
Three Months
Ended
December 31,
2024
Three Months
Ended
September 30,
2024
Three Months
Ended
December 31,
2023
Diluted Earnings
(Loss) Per Share
$
(0.42) $
0.42
$
(0.82)
Less - Discontinued
operations, net of
taxes (gain) loss per
share
—
—
—
Diluted Earnings
(Loss) Per Share
from Continuing
Operations
(0.42)
0.42
(0.82)
Add back - Non-
operating pension
expense (income)
per share
(0.02)
(0.03)
0.04
Add back - Net
special items
expense (income)
per share
0.52
0.33
0.36
Income tax effect per
share - Non-
operating pension
and special items
(0.10)
(0.28)
(0.09)
Adjusted Operating
Earnings (Loss)
Per Share
$
(0.02) $
0.44
$
(0.51)
Cash provided by operations, including discontinued
operations, totaled approximately $1.7 billion and
$1.8 billion for 2024 and 2023, respectively. The
Company generated free cash flow of approximately
$757 million in 2024 and $692 million in 2023. Free
cash flow is a non-GAAP measure, which equals
cash provided by operations less cash invested in
capital projects, and the most directly comparable
GAAP measure is cash provided by (used for)
operations. Management utilizes this measure in
connection with managing our business and believes
that free cash flow is useful to investors as a liquidity
measure because it measures the amount of cash
generated that is available, after reinvesting in the
business, to maintain a strong balance sheet, pay
dividends, repurchase stock, service debt and make
investments for future growth. It should not be
inferred that the entire free cash flow amount is
available for discretionary expenditures.
The following are reconciliations of free cash flow to
cash provided by operations:
In millions
2024
2023
Cash provided by operations
$
1,678 $
1,833
Adjustments:
Cash invested in capital projects
(921)
(1,141)
Free Cash Flow
$
757 $
692
In millions
Three Months
Ended
December 31,
2024
Three Months
Ended
September 30,
2024
Three Months
Ended
December 31,
2023
Cash provided by
operations
$
397 $
521 $
492
Adjustments:
Cash invested in
capital projects
(260)
(212)
(305)
Free Cash Flow
$
137 $
309 $
187
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.
Investors are cautioned not to place undue reliance
on any non-GAAP financial measures used in this
Annual Report on Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
International Paper generated $1.7 billion of cash flow
from operations for the year ended December 31,
2024,
compared
with
$1.8
billion,
including
discontinued operations, in 2023. Capital spending for
2024 totaled $921 million, or 71% of depreciation and
amortization expense. Our liquidity position remains
strong, supported by approximately $1.9 billion of
credit facilities.
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,
38
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 summarizes our results from continuing
operations for the year ended December 31, 2024
compared with the year ended December 31, 2023:
In millions
2024
2023
Net sales
$ 18,619
$
18,916
Cost of products sold
13,376
13,629
Selling and administrative expenses
1,840
1,360
Depreciation and amortization
1,305
1,432
Distribution expenses
1,475
1,575
Taxes other than payroll and income
taxes
147
154
Restructuring and other charges, net
221
99
Net (gains) losses on sales of fixed
assets
(58)
—
Interest expense, net
208
231
Non-operating pension (income)
expense
(42)
54
Earnings from continuing operations
before income taxes and equity
earnings (loss)
147
382
Income tax provision (benefit)
(415)
59
Equity earnings (loss), net of taxes
(5)
(21)
Earnings (loss) from continuing
operations
$
557
$
302
TWELVE MONTHS ENDED DECEMBER 31, 2024 COMPARED
TO THE TWELVE MONTHS ENDED DECEMBER 31, 2023
The following is a discussion of International Paper’s
consolidated results of operations for the year ended
December 31, 2024, and the major factors affecting
these results compared to 2023.
Refer to the Effects of Net Special Items Expense
(Income) section beginning on page 37 for details of
net special items expense (income) discussed below.
Net sales
Net sales for the year ended December 31, 2024
decreased by $297 million or 2% compared to the
year ended December 31, 2023. The decrease was
driven by lower sales volumes partially offset by
higher sales prices. International net sales (based on
the location of the seller and including U.S. exports)
totaled $5.2 billion or 28% of total sales in 2024. This
compares with international net sales of $5.3 billion in
2023 or 28% of total sales. Additional details on net
sales are provided in the Business Segment Results
section below.
Cost of products sold
Compared to the year ended December 31, 2023,
cost
of
products
sold
for
the
year
ended
December 31, 2024 decreased by $253 million or 2%.
Net special items includes charges of $77 million and
$36 million in the year ended December 31, 2024 and
the year ended December 31, 2023, respectively, in
cost of products sold. Additionally, there were
decreases of $368 million driven by lower sales and
lower fuel and packaging expense, partially offset by
an increase in raw materials, maintenance and other
expenses of $75 million.
Selling and administrative expenses
Compared to the year ended December 31, 2023,
selling and administrative expenses for the year
ended December 31, 2024 increased by $480 million
or 35%. Net special items includes charges of $128
million for the year ended December 31, 2024 in
selling and administrative expenses. There were no
special items included in selling and administrative
expense for the year ended December 31, 2023. The
increase in 2024 compared to the 2023 was primarily
driven by higher incentive compensation of $325
million.
Depreciation and amortization
Compared to the year ended December 31, 2023,
depreciation and amortization for the year ended
December 31, 2024 decreased by $127 million or 9%.
Depreciation expense includes $233 million and $422
million for the years ended December 31, 2024 and
December 31, 2023, respectively, for accelerated
depreciation related to mill and other 80/20 strategic
actions. The decrease in 2024 compared to 2023 was
primarily driven by less accelerated depreciation,
partially offset by the write-down of fixed assets for
the Ixtac, Mexico box plant fire in 2024.
39
Distribution expenses
Compared to the year ended December 31, 2023,
distribution
expenses
for
the
year
ended
December 31, 2024 decreased by $100 million or 6%,
primarily driven by lower freight expense of $76
million reflecting lower sales volumes.
Taxes other than payroll and income taxes
Compared to the year ended December 31, 2023,
taxes other than payroll and income taxes for the year
ended December 31, 2024 decreased by $7 million or
5%, primarily driven by lower real estate tax expense
of $8 million due to the divestiture of real estate.
Interest expense, net
Compared to the year ended December 31, 2023,
interest
expense,
net
for
the
year
ended
December 31, 2024 decreased by $23 million or 10%.
Net special items includes income of $10 million and
$3 million for the years ended December 31, 2024
and December 31, 2023, respectively, in interest
expense, net. The decrease in 2024 compared to
2023 was primarily driven by higher interest income
of $22 million in 2024.
Income tax provision (benefit)
Refer to Income Taxes section on pages 41 and 42
for discussion on income tax provision (benefit) and
income tax rates.
Net earnings (loss) and earnings (loss) from
continuing operations
Full year 2024 net earnings totaled $557 million
($1.57 per diluted share), compared with net earnings
of $288 million ($0.82 per diluted share) in 2023.
Amounts in 2023 include the results of discontinued
operations.
Earnings from continuing operations after taxes in
2024 and 2023 were as follows:
In millions
2024
2023
Earnings from continuing operations
$
557 (a)
$ 302 (b)
(a)
Includes $125 million of net special items income and $32
million of non-operating pension income.
(b)
Includes $95 million of net special items charges and $41
million of non-operating pension expense.
Compared with 2023, the benefits from higher sales
prices net of an unfavorable mix ($163 million), lower
maintenance outage costs ($52 million), lower
accelerated depreciation expense ($147 million),
lower net interest expense ($12 million) and lower tax
expense ($41 million) were partially offset by lower
sales volumes ($92 million), higher operating costs
($293 million), higher input costs ($54 million) and
higher corporate and other costs ($12 million). In
addition, 2024 results included lower equity earnings,
net of taxes.
40
See Business Segment Results on pages 42 through
44 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
separate
reportable
industry
segment.
This
transaction is discussed further in Note 10 - Equity
Method Investments on page 75 of Item 8. Financial
Statements and Supplementary Data for further
discussion.
Discontinued operations include the equity earnings
of the prior Ilim joint venture. Discontinued operations
also includes after-tax losses of $126 million in 2023
for impairment and transaction costs related to our
former equity method investment in the Ilim joint
venture.
INCOME TAXES
The following is a reconciliation of the net income tax
provision (benefit) to the operational income tax
provision and the reported effective income tax rate to
the operational effective income tax rate:
In millions
2024
2023
Provision
(Benefit)
Rate
Provision
(Benefit)
Rate
Income tax provision
(benefit) and reported
effective income tax rate
$
(415) (282) % $
59
15 %
Income tax effect - non-
operating pension
(income) expense and
special items
478
68
Operational Tax
Provision and
Operational Effective
Tax Rate
$
63
13 % $
127
22 %
A net income tax benefit from continuing operations of
$415 million was recorded for 2024 and the reported
effective income tax rate was (282)%. This includes a
tax benefit of $416 million related to internal legal
entity restructuring. Excluding this item, a $72 million
net tax benefit for other special items and a $10
million tax expense related to non-operating pension
expense, the operational tax provision (non-GAAP)
for 2024 was $63 million, or 13% of pre-tax earnings
before equity earnings.
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 $36 million net tax benefit for other special
items and a $13 million tax benefit related to non-
operating pension income, the operational tax
41
provision (non-GAAP) for 2023 was $127 million, or
22% of pre-tax earnings before equity earnings.
The operational income tax provision and operational
effective income 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). The most
directly comparable GAAP measures are the reported
income tax provision and effective income tax rate,
respectively.
Management
believes
that
this
presentation provides useful information to investors
by providing a meaningful comparison of the income
tax rate between past and present periods.
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 approximately 13 million tons
annually.
Containerboard
includes
linerboard,
medium,
whitetop, recycled linerboard, recycled medium and
saturating kraft. Approximately 75% of our production
is converted into corrugated packaging and other
packaging by our 168 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 one 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
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.
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 Company currently operates in two segments:
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
historical results of the Ilim investment are presented
as Discontinued Operations, net of taxes and our
equity investment is no longer a separate reportable
segment.
The following tables present net sales and business
segment operating profit (loss), which is the
Company's
measure
of
segment
profitability.
Business segment operating profit (loss) is a measure
reported to our management for purposes of making
decisions about allocating resources to our business
segments and assessing the performance of our
business segments and is presented in our financial
statement footnotes in accordance with ASC 280 -
"Segment
Reporting".
During
2024,
business
segment operating profits (losses) used by the chief
operating decision maker were adjusted to include
accelerated depreciation as part of the measure of
business performance. As such, results for the year
ended December 31, 2023 have been recast to
reflect $422 million for accelerated depreciation
related to mill strategic actions in business segment
operating profit (losses). For additional information
regarding business segment operating profit (loss),
including a description of the manner in which
business segment operating profit (loss) is calculated,
see Note 20 - Financial Information by Business
Segment starting on page 95 of Item 8. Financial
Statements and Supplementary Data.
INDUSTRIAL PACKAGING
Demand for Industrial Packaging products is closely
correlated
with
non-durable
industrial
goods
production, as well as with demand for e-commerce,
processed foods, poultry, meat and agricultural
products. In addition to prices and volumes, major
factors
affecting
the
profitability
of
Industrial
Packaging are raw material and energy costs, freight
costs, mill outage costs, manufacturing efficiency and
product mix.
42
Industrial Packaging
In millions
2024
2023
Net Sales
$ 15,534 $ 15,596
Operating Profit (Loss)
$
951 $
919
Industrial Packaging net sales for 2024 decreased
to $15.5 billion compared with $15.6 billion in 2023.
Operating profits in 2024 were 3% higher than in
2023. Comparing 2024 with 2023, benefits from
higher sales prices net of an unfavorable mix ($310
million), lower maintenance outage costs ($17 million)
and lower accelerated depreciation expense ($336
million) were partially offset by lower sales volumes
($128 million), higher operating costs ($390 million)
and higher input costs ($113 million).
North American Packaging Solutions
In millions
2024
2023
Net Sales (a)
$ 14,293 $ 14,293
Operating Profit (Loss)
$
891 $
839
(a) Includes intra-segment sales of $114 million for 2024 and
$95 million for 2023.
North American Packaging Solutions' net sales
were flat as the benefits of higher prices for both
containerboard and corrugated boxes were offset by
an unfavorable geographic mix and lower sales
volumes.
Sales
volumes
decreased
in
2024
compared with 2023 for corrugated boxes reflecting
the impact of our box go-to-market strategy. Total
maintenance and economic downtime was about 1.2
million short tons lower in 2024 compared with 2023,
primarily due to economic downtime that was
favorably impacted by the mill strategic actions taken
in the fourth quarter of 2023. Cost of products sold
decreased by $53 million and was impacted by higher
operating
costs,
lower
planned
maintenance
downtime costs and higher input costs. Operating
costs were higher primarily due to increased costs on
materials and services, increased spending on
maintenance and reliability and higher employee
benefits costs, partially offset by lower economic
downtime. Input costs were higher, driven by higher
recovered fiber costs, partially offset by lower energy,
freight and wood costs. Selling and administrative
expenses were $347 million higher due to higher
incentive compensation expense. Distribution costs
were $64 million lower driven by lower sales volumes.
Looking ahead to the first quarter of 2025, compared
with the fourth quarter of 2024, sales volumes for
corrugated boxes are expected to be higher. Average
sales margins are expected to be lower. Operating
costs are expected to be lower. Planned maintenance
downtime costs are expected to be lower. Input costs
are expected to be lower, primarily for recovered fiber.
EMEA Industrial Packaging
In millions
2024
2023
Net Sales
$
1,355 $ 1,398
Operating Profit (Loss)
$
60 $
80
EMEA Industrial Packaging's net sales were lower
in 2024 than in 2023 reflecting lower average sales
prices partially offset by a favorable product mix and
higher sales volumes. Cost of products sold
decreased $55 million and was impacted by higher
operating
costs,
higher
planned
maintenance
downtime costs and lower input costs. Operating
costs were negatively impacted by a warehouse fire
in Morocco and higher administrative spend. Input
costs were lower in 2024, driven by energy and
chemical costs mostly offset by higher purchased
pulp costs. Input costs benefited from an energy
subsidy in both 2024 and 2023. Selling and
administrative expenses were $26 million higher
driven
by
incentive
compensation
expense.
Distribution expenses were flat.
Entering the first quarter of 2025, compared with the
fourth quarter of 2024, sales volumes are expected to
be stable. Average sales margins are expected to be
lower,
reflecting
higher
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 lower. Earnings
will be impacted by the non-repeat of an energy
subsidy received in the fourth quarter 2024.
GLOBAL CELLULOSE FIBERS
Demand for Cellulose Fibers products is closely
correlated with changes in demand for absorbent
hygiene
products,
primarily
driven
by
the
demographics
and
income
growth
in
various
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.
Global Cellulose Fibers
In millions
2024
2023
Net Sales
$ 2,793 $ 2,890
Operating Profit (Loss)
$
(226) $
(92)
Global Cellulose Fibers net sales for 2024
decreased 3% to $2.8 billion, compared with $2.9
billion in 2023. Operating profits in 2024 decreased
compared to 2023. Comparing 2024 with 2023,
benefits from higher sales volumes ($9 million), lower
operating
costs
($11
million),
lower
planned
maintenance outage costs ($50 million) and lower
input costs ($43 million) were more than offset by
lower average sales price net of a favorable mix
43
($100 million) and higher accelerated depreciation
expense ($147 million).
Net sales in 2024 compared with 2023 were lower,
driven
by
lower
average
sales
prices.
Total
maintenance and economic downtime was about
535,000 short tons lower in 2024 compared with
2023, due to both economic and maintenance
downtime. Economic downtime was impacted by the
mill strategic actions taken in the second half of 2023
and the fourth quarter of 2024. Cost of products sold
decreased by $138 million and was impacted by
higher operating costs, lower planned downtime costs
and lower input costs. Operating costs increased,
driven by higher costs on materials and services and
reliability incidents. Input costs were lower, driven by
energy, chemicals, freight and wood. Selling and
administrative expenses increased $51 million driven
by
higher
incentive
compensation
expense.
Distribution costs were lower by $40 million.
Entering the first quarter of 2025, compared with the
fourth quarter of 2024, sales volumes are expected to
be stable. Average sales margins are expected to be
lower. Operating costs are expected to be lower.
Planned maintenance outage costs are expected to
be higher than in the fourth quarter of 2024. Input
costs are expected to be stable. Operating profit will
benefit
from
the
non-repeat
of
accelerated
depreciation expense in the fourth quarter of 2024.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
A major factor in International Paper’s liquidity and
capital resource planning is generation of operating
cash flow, which is highly sensitive to changes in the
pricing and demand for our major products. While
changes in key operating cash costs, such as raw
material, energy, mill outage and distribution, have an
effect on operating cash generation, we believe our
focus on commercial and operational excellence, as
well as our ability to tightly manage costs and working
capital has improved our cash flow generation over
an operating cycle.
Use of cash during 2024 was primarily focused on
working capital requirements, capital spending and
returning cash to shareholders through dividends.
CASH PROVIDED BY OPERATING ACTIVITIES
Cash provided by operations, including discontinued
operations, totaled $1.7 billion in 2024, compared
with $1.8 billion for 2023. Cash used by working
capital components (accounts receivable, contract
assets and inventory less accounts payable and
accrued liabilities, interest payable and other) totaled
$10 million in 2024, compared with cash used by
working capital components of $2 million in 2023.
Cash dividends received from equity investments
were $13 million in 2023. There were no cash
dividends received from equity method investments in
2024. The change in cash provided by operations in
2024 compared to the 2023 period was primarily due
to lower accounts receivable cash receipts due to the
timing of sales, partially offset by higher incentive
compensation.
INVESTMENT ACTIVITIES
Cash used for investment activities totaled $808
million in 2024 compared with $668 million in 2023.
The increase in cash used for investment activities in
2024 compared to 2023 is mainly due to proceeds
from sales of equity method investments of $472
million received in 2023. Additionally, 2024 includes
lower capital spending and proceeds from insurance
recoveries and the sale of fixed assets.
Capital spending was $921 million in 2024, or 71% of
depreciation and amortization, compared with $1.1
billion in 2023, or 80% of depreciation and
amortization. Capital spending as a percentage of
depreciation and amortization was impacted by
accelerated depreciation of $233 million and $422
million for the years ended December 31, 2024 and
December 31, 2023, respectively, related to mill
strategic actions and other 80/20 strategic actions.
The following table shows capital spending by
business segment for the years ended December 31,
2024 and 2023:
In millions
2024
2023
Industrial Packaging
$
763 $
928
Global Cellulose Fibers
133
177
Subtotal
896
1,105
Corporate and other
25
36
Capital Spending
$
921 $ 1,141
Acquisitions
See Note 7 Acquisitions on page 72 of Item 8.
Financial Statements and Supplementary Data for a
discussion of the Company's acquisitions.
FINANCING ACTIVITIES
Financing activities during 2024 included debt
issuances of $102 million and reductions of $141
million for a net decrease of $39 million. Financing
activities during 2023 included debt issuances of
$783 million and reductions of $780 million.
44
There were no early debt extinguishments during the
years ended December 31, 2024 and December 31,
2023.
Other financing activities during 2024 included the net
issuance of approximately 2.0 million shares of
treasury stock, while repurchases of common stock
and payments of restricted stock withholding taxes
totaled
$23
million.
During
the
year
ended
December 31, 2024, the Company did not repurchase
any shares of common stock under our share
repurchase program. Through December 31, 2024,
the Company had repurchased 119.8 million shares
at an average price of $46.23, for a total of
approximately $5.5 billion, since the repurchase
program began in September 2013. The Company
paid cash dividends totaling $643 million during 2024.
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. The Company paid cash dividends totaling
$642 million during 2023.
Interest Rate Swaps
Our policy is to manage interest cost using a mixture
of fixed-rate and variable-rate debt. To manage this
risk, International Paper utilizes interest rate swaps to
change the mix of fixed and variable rate debt. During
2020, International Paper terminated its interest rate
swaps with a notional amount of $700 million and
maturities ranging from 2024 to 2026 with an
approximate fair value of $85 million. Subsequent to
the termination of the interest rate swaps, the fair
value basis adjustment is amortized to earnings as
interest income over the same period as a debt
premium on the previously hedged debt. The
Company had no outstanding interest rate swaps for
the years ended December 31, 2024 and 2023.
Variable Interest Entities
Information concerning variable interest entities is set
forth in Note 14 Variable Interest Entities on pages 83
and 84 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
representing our equity in the 2015 Financing
Entities. Maturity of the installment notes and
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
to
settle
the
2015
Financing
Entities
timber
monetization restructuring tax matter. Under this
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
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
has now fully satisfied the payment terms of the
settlement agreement regarding the 2015 Financing
Entities timber monetization restructuring tax matter.
The reversal of the 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.
LIQUIDITY AND CAPITAL RESOURCES OUTLOOK FOR 2025
We intend to continue making choices for the use of
cash that are consistent with our capital allocation
framework to drive long-term value creation. These
include maintaining a strong balance sheet and
investment grade credit rating, and creating value
with a continued focus on cost reduction and making
organic investments to maintain our world-class
system and strengthen our businesses.
On 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
authorized
for
purchase
as
of
December 31, 2024. We may repurchase shares
under such authorization in open market transactions
(including
block
trades),
privately
negotiated
transactions or otherwise, subject to prevailing market
conditions, our liquidity requirements, applicable
securities laws requirements and other factors. In
addition, we have paid regular quarterly cash
dividends and expect to continue to pay regular
quarterly cash dividends in the foreseeable future.
Each quarterly dividend is subject to review and
approval by our Board of Directors.
45
Capital Expenditures and Long-Term Debt
Capital spending for 2025 is planned at approximately
$1.2 billion, or about 117% of depreciation and
amortization.
At December 31, 2024, International Paper’s credit
agreements totaled $1.9 billion, which is comprised of
the $1.4 billion contractually committed bank credit
agreement and up to $500 million under the
receivables securitization program. 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. 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,
2024, 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
restrictive
covenants
other
than
the
financial
covenants as disclosed on pages 84 and 85 in Note
15 - Debt and Lines of Credit of Item 8. Financial
Statements and Supplementary Data, and the
borrowings under the receivables securitization
program being limited by eligible receivables. The
Company was in compliance with all its debt
covenants at December 31, 2024 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 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, 2024 and December 31, 2023 under
this program.
During the year ended December 31, 2024, the
Company had debt reductions of $141 million in
2024, related primarily to $14 million of capital leases
and $127 million of environmental development
bonds ("EDB"). In addition, during the year ended
December 31, 2024, the Company also had debt
issuances of $102 million of EDBs.
For additional information regarding the Company’s
credit agreements and outstanding indebtedness, see
Note 15 Debt and Lines of Credit on pages 84 and 85
of Item 8. Financial Statements and Supplementary
Data.
International Paper expects to be able to meet
projected capital expenditures, service existing debt,
meet working capital and dividend requirements and
make common stock and/or debt repurchases for the
next 12 months and for the foreseeable future
thereafter with current cash balances and cash from
operations, supplemented as required by its existing
credit facilities. The Company will continue to rely on
debt and capital markets for the majority of any
necessary
long-term
funding
not
provided
by
operating cash flows. Funding decisions will be
guided by our capital structure planning objectives.
The primary goals of the Company’s capital structure
planning are to maximize financial flexibility and
maintain appropriate levels of liquidity to meet our
needs while managing balance sheet debt and
interest expense. We have repurchased, and may
continue to repurchase, our common stock (under our
existing share repurchase program) and debt
(including through open market purchases, privately
negotiated transactions or otherwise) to the extent
consistent with this capital structure planning, and
subject to prevailing market conditions, our liquidity
requirements, applicable securities laws requirements
and other factors. The majority of International
Paper’s debt is accessed through global public capital
markets where we have a wide base of investors.
Maintaining an investment grade credit rating is an
important element of International Paper’s financing
strategy. At December 31, 2024, 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, 2024, were as follows:
In millions
2025
2026
2027
2028
2029
Thereafter
Debt maturities (a)
$
193 $
142 $
346 $
672 $
18 $
4,190
Operating lease
obligations
175
133
94
49
21
21
Purchase obligations (b)
2,121
1,062
866
618
415
1,574
Total (c)
$ 2,489 $ 1,337 $ 1,306 $ 1,339 $
454 $
5,785
(a)
Includes financing lease obligations.
(b)
Includes $3.2 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 $199 million. Also not included in
46
the above table is $67 million of Deemed Repatriation
Transition Tax associated with the 2017 Tax Cuts and Jobs
Act which will be settled from 2025 - 2026. Additionally, the
deferred tax liability of $486 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, 2024, to be
permanently reinvested and, accordingly, no U.S.
income taxes have been provided thereon (see Note
12 Income Taxes on pages 77 through 79 of Item 8.
Financial Statements and Supplementary Data). We
do not anticipate the need to repatriate funds to the
United States to satisfy domestic liquidity needs
arising in the ordinary course of business, including
liquidity needs associated with our domestic debt
service requirements.
Pension Obligations and Funding
At December 31, 2024, the projected benefit
obligation for the Company’s U.S. defined benefit
plans
determined
under
U.S.
GAAP
was
approximately $156 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 $92 million higher than the projected
benefit obligation. Under current IRS funding rules,
the calculation of minimum funding requirements
differs from the calculation of the present value of
plan benefits (the "projected benefit obligation") for
accounting purposes. Funding contributions depend
on the funding methods selected by the Company.
The selected methods allow for the smoothing of
asset values and interest rates used to measure the
funding
obligations.
The
Company
continually
reassesses
the
amount
and
timing
of
any
discretionary contributions and elected not to make
any voluntary contributions in 2022, 2023 or 2024. At
this time, we do not expect to have any required
contributions to our plans in 2025, although the
Company may elect to make future voluntary
contributions. The timing and amount of future
contributions, which could be material, will depend on
a number of factors, including the actual earnings and
changes in values of plan assets and changes in
interest rates.
CRITICAL ACCOUNTING POLICIES AND
SIGNIFICANT ACCOUNTING ESTIMATES
The preparation of financial statements in conformity
with U.S. GAAP requires International Paper to
establish accounting policies and to make estimates
that affect both the amounts and timing of the
recording
of
assets,
liabilities,
revenues
and
expenses.
Some
of
these
estimates
require
subjective
judgments
about
matters
that
are
inherently uncertain.
Accounting policies whose application has had or is
reasonably likely to have a material impact on the
reported results of operations and financial position of
International Paper, and that can require a significant
level of estimation or uncertainty by management that
affect their application, include the accounting for
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, if applicable, other experts. Liabilities for
environmental matters require evaluations of relevant
environmental regulations and estimates of future
remediation alternatives and costs. The Company
estimated the probable liability associated with
environmental matters to be approximately $279
million and $251 million in the aggregate as of
December 31, 2024 and 2023, 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
asbestos-related claims was $100 million and $97
million, net of estimated insurance recoveries, as of
December 31, 2024 and 2023, 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
Long-lived assets are reviewed for impairment upon
the
occurrence
of
events
or
changes
in
circumstances that indicate that the carrying value of
the assets may not be recoverable. A recoverability
test is performed by comparing the undiscounted
cash flows to carrying value of the assets. 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.
47
We perform an annual goodwill impairment as of
October 1. Additionally, interim assessments of
possible impairments of goodwill are also made when
events or changes in circumstances indicate that the
carrying value of the asset may not be recoverable
through future operations. A goodwill impairment
exists when the carrying amount of goodwill exceeds
its fair value.
The amount and timing of goodwill and long-lived
asset
impairment
charges
based
on
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
key factors, including future selling prices and
volumes, operating, raw material, energy and freight
costs, various other projected operating economic
factors and other intended uses of the assets.
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, 2024, we performed our annual goodwill
impairment test for this reporting unit through a
quantitative goodwill impairment test. For the 2024
quantitative assessment, the estimated fair value of
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 requires management to make
significant estimates and assumptions including
forecasts of revenues, operating profit margins, and
discount rates. The determination of fair value using
market multiples and transaction multiples requires
management to make significant assumptions related
to revenue multiples and 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.
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, 2024, for International Paper’s pension
plan were as follows:
In millions
Benefit
Obligation
Fair Value of
Plan Assets
U.S. qualified pension
$
8,096 $
8,189
U.S. nonqualified pension
248
—
Non-U.S. pension
56
20
The table below shows the discount rate used by
International
Paper
to
calculate
U.S.
pension
obligations for the years shown:
2024
2023
2022
Discount rate
5.68 %
5.10 %
5.40 %
International
Paper
determines
the
actuarial
assumptions to calculate liability information as of
December 31 each year or more frequently if required
and pension expense for the following year.
International Paper consults with our third-party
actuary in determining these actuarial assumptions.
The expected long-term rate of return on plan assets
is based on projected rates of return for current asset
classes in the plan’s investment portfolio. The
discount rate assumption was determined based on a
hypothetical settlement portfolio selected from a
universe of high-quality corporate bonds.
The expected long-term rate of return on U.S.
pension plan assets used to determine net periodic
cost for the year ended December 31, 2024 was
7.00%.
48
Increasing the expected long-term rate of return on
U.S. plan assets by an additional 0.25% would
decrease 2025 pension expense by approximately
$20 million, while a (decrease) increase of 0.25% in
the discount rate would (increase) decrease pension
expense by approximately $14 million.
Actual rates of return earned on U.S. pension plan
assets for each of the last 10 years were:
Year
Return
Year
Return
2024
(0.1) %
2019
23.9 %
2023
7.3 %
2018
(3.0) %
2022
(22.0) %
2017
19.3 %
2021
7.7 %
2016
7.1 %
2020
24.7 %
2015
1.3 %
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
remaining
service
period
of
active
employees expected to receive benefits under the
plans to the extent that they are not offset by gains
and losses in subsequent years.
Net periodic pension plan expenses, calculated for all
of International Paper’s plans, were as follows:
In millions
2024
2023
2022
2021
2020
Pension (income) expense
U.S. plans
$
1 $ 94 $ (116) $ (112) $ 32
Non-U.S. plans
6
5
5
4
5
Net (income) expense
$
7 $ 99 $ (111) $ (108) $ 37
The decrease in 2024 pension expense primarily
reflects higher asset returns, lower interest cost due
to a lower discount rate, and lower actuarial loss.
Assuming that discount rates, expected long-term
returns
on
plan
assets
and
rates
of
future
compensation increases remain the same as of
December 31, 2024, projected future net periodic
pension plan expense (income) would be as follows:
In millions
2026
2025
Pension expense (income)
U.S. plans
$
13 $
36
Non-U.S. plans
5
5
Net (income) expense
$
18 $
41
The Company estimates that it will record net pension
expense of approximately $36 million for its U.S.
defined benefit plans in 2025, compared to expense
of $1 million in 2024.
The market value of plan assets for International
Paper’s U.S. qualified pension plan at December 31,
2024 totaled approximately $8.2 billion, consisting of
approximately 62% hedging assets and 38% 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 2024. The nonqualified defined
benefit plans are funded to the extent of benefit
payments, which totaled $23 million for the year
ended December 31, 2024.
INCOME TAXES
International Paper records its global tax provision
based on the respective tax rules and regulations for
the jurisdictions in which it operates. Where the
Company believes that a tax position is supportable
for income tax purposes, the item is included in its
income tax returns. Where treatment of a position is
uncertain, liabilities are recorded based upon the
Company’s evaluation of the “more likely than not”
outcome considering technical merits of the position
based on specific tax regulations and facts of each
matter. Changes to recorded liabilities are only made
when an identifiable event occurs that changes the
likely outcome, such as settlement with the relevant
tax authority, the expiration of statutes of limitation for
the subject tax year, change in tax laws, or recent
court cases that are relevant to the matter. Accrued
interest related to these uncertain tax positions is
recorded in our consolidated statement of operations
in Interest expense, net. The Company's uncertain
tax positions were $204 million and $173 million at
December 31, 2024 and 2023, respectively.
Valuation allowances are recorded to reduce deferred
tax assets when it is more likely than not that a tax
benefit will not be realized. Significant judgment is
required in assessing the need for and magnitude of
appropriate valuation allowances against deferred tax
assets. This assessment is completed by tax
jurisdiction and relies on both positive and negative
evidence available, with significant weight placed on
recent financial results. Cumulative reported pre-tax
income is considered objectively verifiable positive
49
evidence of our ability to generate positive pre-tax
income in the future. In accordance with GAAP, when
there is a recent history of pre-tax losses, there is
little or no weight placed on forecasts for purposes of
assessing the recoverability of our deferred tax
assets. When necessary, we use systematic and
logical methods to estimate when deferred tax
liabilities will reverse and generate taxable income
and when deferred tax assets will reverse and
generate tax deductions. Assumptions, judgment, and
the use of estimates are required when scheduling
the reversal of deferred tax assets and liabilities, and
the exercise is inherently complex and subjective.
The realization of these assets is dependent on
generating future taxable income, as well as
successful implementation of various tax planning
strategies. The Company's valuation allowance was
$1.2 billion and $848 million at December 31, 2024
and 2023, respectively.
While
International
Paper
believes
that
these
judgments and estimates are appropriate and
reasonable
under
the
circumstances,
actual
resolution of these matters may differ from recorded
estimated amounts.
LEGAL PROCEEDINGS
Information concerning certain legal proceedings
involving the Company is set forth on pages 79
through 83 of Item 8. Financial Statements and
Supplementary Data, which is incorporated by
reference herein. Except as set forth in Note 13
Commitments
and
Contingent
Liabilities,
the
Company is not subject to any administrative or
judicial proceeding arising under any federal, state or
local provisions that have been enacted or adopted
regulating the discharge of materials into the
environment or primarily for the purpose of protecting
the environment that is likely to result in monetary
sanctions of $1 million or more.
RECENT ACCOUNTING DEVELOPMENTS
See Note 2 Recent Accounting Developments starting
on page 66 of Item 8. Financial Statements and
Supplementary Data for a discussion of new
accounting pronouncements.
EFFECT OF INFLATION
Inflationary increases in certain input costs, such as
energy, wood fiber and chemical costs, can impact
the Company’s operating results as can general
inflationary
conditions,
including
labor
market
conditions, economic activity, consumer behavior, and
supply shortages and disruptions. During 2024,
inflationary pressures stabilized and moderated over
the year and did not have a significant impact on our
operating results. The Company's operating results
are more strongly influenced by economic supply and
demand factors in specific markets due to the impact
on sales prices and volumes and exchange rate
fluctuations when compared to inflationary factors.
FOREIGN CURRENCY EFFECTS
International Paper has operations in a number of
countries. Its operations in those countries also
export to, and compete with imports from other
regions. As such, currency movements can have a
number of direct and indirect impacts on the
Company’s financial statements. Direct impacts
include the translation of international operations’
local currency financial statements into U.S. dollars
and the remeasurement impact associated with non-
functional currency financial assets and liabilities.
Indirect
impacts
include
the
change
in
competitiveness of imports into, and exports out of,
the United States (and the impact on local currency
pricing of products that are traded internationally). In
general, a weaker U.S. dollar and stronger local
currency is beneficial to International Paper. The
currency that has the most impact is the Euro.
MARKET RISK
We use financial instruments, including fixed and
variable rate debt, to finance operations, for capital
spending programs and for general corporate
purposes. Additionally, financial instruments, including
various derivative contracts, are used to hedge
exposures to interest rate, commodity and foreign
currency risks. We do not use financial instruments
for
trading
purposes.
Information
related
to
International Paper’s debt obligations is included in
Note 15 Debt and Lines of Credit on pages 84 and 85
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
50
issuer or fund. Our investments in marketable
securities at December 31, 2024 and 2023 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.
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, 2024
and 2023, the fair value of the net liability of financial
instruments with exposure to interest rate risk was
approximately
$4.0
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 $206 million
and $301 million at December 31, 2024 and 2023,
respectively.
COMMODITY PRICE RISK
The
objective
of
our
commodity
exposure
management is to minimize volatility in earnings due
to large fluctuations in the price of commodities.
Commodity swap or forward purchase contracts may
be used to manage risks associated with market
fluctuations in energy prices. At December 31, 2024
and 2023, the net fair value of these contracts was $3
million asset and $27 million asset. The potential loss
in fair value from a 10% adverse change in quoted
commodity prices for these contracts would have
been approximately $1 million and $4 million at
December 31, 2024 and 2023, respectively.
FOREIGN CURRENCY RISK
International Paper transacts business in many
currencies and is also subject to currency exchange
rate risk through investments and businesses owned
and operated in foreign countries. The 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.
At December 31, 2024 and 2023, the net fair value of
financial instruments with exposure to 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
See the preceding discussion regarding market risk.
51
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
REPORT OF MANAGEMENT ON:
Financial Statements
The management of International Paper Company is
responsible for the preparation of the consolidated
financial statements in this Annual Report on Form
10-K. The consolidated financial statements have
been prepared using accounting principles generally
accepted in the United States of America considered
appropriate in the circumstances to present fairly the
Company’s consolidated financial position, results of
operations and cash flows on a consistent basis.
Management has also prepared the other information
in this Annual Report on Form 10-K and is
responsible for its accuracy and consistency with the
consolidated financial statements.
As can be expected in a complex and dynamic
business environment, some financial statement
amounts are based on estimates and judgments.
Even though estimates and judgments are used,
measures have been taken to provide reasonable
assurance of the integrity and reliability of the
financial information contained in this Annual Report
on Form 10-K. We have formed a Disclosure
Committee to oversee this process.
The accompanying consolidated financial statements
have been audited by the independent registered
public accounting firm Deloitte & Touche LLP
(PCAOB ID No. 34). During its audits, Deloitte &
Touche LLP was given unrestricted access to all
financial records and related data, including minutes
of all meetings of shareholders and the Board of
Directors and all committees of the Board of
Directors.
Management
believes
that
all
representations made to the independent auditors
during their audits were valid and appropriate.
Internal Control Over Financial Reporting
The management of International Paper Company is
also responsible for establishing and maintaining
adequate internal control over financial reporting (as
defined in Rules (13a-15(e) and 15d-15(e) under the
Exchange Act).
Internal
control
over
financial
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
Directors, management and other personnel to
provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial
statements for external purposes. All internal control
systems have inherent limitations, including the
possibility of circumvention and overriding of controls,
and therefore can provide only reasonable assurance
of achieving the designed control objectives. The
Company’s internal control system is supported by
written policies and procedures, contains self-
monitoring mechanisms, and is audited by our
internal audit function. Appropriate actions are taken
by management to correct deficiencies as they are
identified. Our procedures for financial reporting
include the active involvement of senior management,
our Audit and Finance Committee and our staff of
highly qualified financial and legal professionals.
The Company has assessed the effectiveness of its
internal control over financial reporting as of
December 31, 2024. In making this assessment, it
used the criteria described in “Internal Control –
Integrated
Framework
(2013)”
issued
by
the
Committee of Sponsoring Organizations of the
Treadway Commission ("COSO"). Based on this
assessment, management believes that, as of
December 31, 2024, the Company’s internal control
over financial reporting was effective.
The
Company’s
independent
registered
public
accounting firm, Deloitte & Touche LLP, has issued its
report on the effectiveness of the Company’s internal
control over financial reporting. The report appears on
pages 54 through 57.
Internal Control Environment And Board Of
Directors Oversight
Our
internal
control
environment
includes
an
enterprise-wide attitude of integrity and control
consciousness that establishes a positive “tone at the
top.” This is exemplified by our ethics program that
includes long-standing principles and policies on
ethical business conduct that require employees to
maintain the highest ethical and legal standards in the
conduct of International Paper business, which have
been distributed to all employees. The Company
provides a toll-free telephone helpline whereby any
employee
may
anonymously
report
suspected
violations of law or International Paper’s policy; and
maintains an office of ethics and business practice.
The internal control system further includes careful
selection
and
training
of
supervisory
and
management personnel, appropriate delegation of
authority and division of responsibility, dissemination
of accounting and business policies throughout
International Paper, and an extensive program of
internal audits with management follow-up.
The Board of Directors, assisted by the Audit and
Finance Committee, monitors the integrity of the
Company’s
financial
statements
and
financial
reporting
procedures,
the
performance
of
the
Company’s internal audit function and independent
auditors, and other matters set forth in its charter. The
52
Audit and Finance Committee, which consists of
independent
directors,
meets
regularly
with
representatives of management, and with the
independent auditors and the Internal Auditor, with
and
without
management
representatives
in
attendance, to review their activities. The Audit and
Finance Committee Charter takes into account the
New York Stock Exchange rules relating to audit
committees and the SEC rules and regulations
promulgated as a result of the Sarbanes-Oxley Act of
2002. The Audit and Finance Committee has
reviewed and discussed the consolidated financial
statements for the year ended December 31, 2024,
including critical accounting policies and significant
management judgments, with management and the
independent auditors. The Audit and Finance
Committee’s report recommending the inclusion of
such financial statements in this Annual Report on
Form 10-K will be set forth in our Proxy Statement.
ANDREW K. SILVERNAIL
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
TIMOTHY S. NICHOLLS
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
53
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
International Paper Company:
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of International Paper Company and
subsidiaries (the "Company") as of December 31,
2024 and 2023, 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, 2024, and the related
notes (collectively referred to as the "financial
statements"). In our opinion, the financial statements
present fairly, in all material respects, the financial
position of the Company as of December 31, 2024
and 2023, and the results of its operations and its
cash flows for each of the three years in the period
ended December 31, 2024, in conformity with
accounting principles generally accepted in the
United States of America.
We did not audit the financial statements of Ilim S.A.
for the year ended December 31, 2022. The
Company’s investment in Ilim S.A. was accounted for
by use of the equity method and was presented as
held-for-sale and within discontinued operations as of
December 31, 2022, as disclosed in Note 10. The
accompanying financial statements of the Company
include 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 AO Business
Solutions and Technologies whose report has been
furnished to us, and our opinion, insofar as it relates
to the amounts included for Ilim S.A. for the year
ended December 31, 2022, is based solely on the
report of AO Business Solutions and Technologies.
We have also audited, in accordance with the
standards of the Public Company Accounting
Oversight Board (United States) (PCAOB), the
Company's internal control over financial reporting as
of December 31, 2024, based on criteria established
in Internal Control — Integrated Framework (2013)
issued
by
the
Committee
of
Sponsoring
Organizations of the Treadway Commission and our
report dated February 21, 2025, expressed an
unqualified opinion on the Company's internal control
over financial reporting.
Basis for Opinion
These financial statements are the responsibility of
the Company's management. Our responsibility is to
express an opinion on the Company's financial
statements based on our audits. We are a public
accounting firm registered with the PCAOB and are
required to be independent with respect to the
Company in accordance with the U.S. federal
securities laws and the applicable rules and
regulations
of
the
Securities
and
Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require
that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement,
whether due to error or fraud. Our audits included
performing procedures to assess the risks of material
misstatement of the financial statements, whether
due to error or fraud, and performing procedures that
respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting
principles used and significant estimates made by
management, as well as evaluating the overall
presentation of the financial statements. We believe
that our audits provide a reasonable basis for our
opinion.
Critical Audit Matters
The critical audit matters communicated below are
matters arising from the current-period audit of the
financial statements that were communicated or
required to be communicated to the Audit and
Finance Committee and that (1) relate to accounts or
disclosures that are material to the financial
statements
and
(2)
involved
our
especially
challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter
in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating
the critical audit matters below, providing separate
opinions on the critical audit matters or on the
accounts or disclosures to which they relate.
Retirement
Plans
—
Fair
value
of
other
investments — Refer to Note 17 to the financial
statements
Critical Audit Matter Description
As of December 31, 2024, the Company’s qualified
Pension Plan held approximately $2.4 billion in
investments whose reported value is determined
based on net asset value (“NAV”). The strategic
asset allocation policy prescribed by the Company’s
qualified
Pension
Plan
includes
permissible
investments in certain hedge funds, private equity
funds, and real estate funds whose reported values
54
are determined based on the estimated NAV of each
investment.
These NAVs are generally determined by the
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.
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, including those related to the
reliability of NAVs reported by third-party
administrators and fund managers.
•
We
inquired
of
management
and
the
investment advisors regarding changes to the
investment
portfolio
and
investment
strategies.
•
We obtained a confirmation from the third-
party custodian as of December 31, 2024 of
all individual investments held in trust for the
qualified
Pension
Plan
to
confirm
the
existence of each individual asset held in
trust.
•
For selected investment funds with a fiscal
year end of December 31, we performed a
retrospective review in which we compared
the estimated fair value recorded by the
Company in the December 31, 2023 financial
statements, to the actual fair value of the fund
(using the per-share NAV disclosed in the
fund’s subsequently issued audited financial
statements), to evaluate the appropriateness
of management’s estimation process.
•
We rolled forward the valuation from selected
funds’
most
recently
audited
financial
statements to December 31, 2024. This roll
forward procedure included consideration of
the Company’s transactions in the fund
during the period, as well as an estimate of
the funds’ returns based on an appropriate,
independently obtained benchmark or index.
We then compared our independent fund
valuation estimate to the December 31, 2024,
balance recorded by the Company. For
certain selected funds, our roll forward
procedures included alternative procedures,
such as inspecting trust statements for
observable transactions near year-end to
compare to the estimated fair value.
•
For certain investments, we inquired of
management to understand year-over-year
changes in the fund manager’s estimate of
NAV and compared the fund’s return on
investment to other available qualitative and
quantitative information.
Income taxes — Legal entity restructuring —
Refer to Note 12 to the financial statements
Critical Audit Matter Description
During 2024, the Company completed a legal entity
restructuring for which a tax benefit was recognized
for U.S. federal tax purposes. The tax benefit was
derived from the associated tax basis and the fair
value of the legal entities subject to the restructuring.
Given the complexity of the legal entity restructuring,
including the interpretation of relevant tax regulations,
tax authority rulings and the determination of both the
associated tax basis and fair values of the legal
entities involved, we identified the resulting U.S.
federal tax benefit as a critical audit matter.
Evaluating the reasonableness of the legal entity
restructuring plan and determination of the tax basis
requires a high degree of expertise and increased
extent of audit effort, including the need to involve our
tax
specialists.
In
addition,
evaluating
the
reasonableness of management's estimate of fair
value of the legal entities requires a high degree of
auditor judgment and an increased extent of effort,
including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the
Audit
Our audit procedures related to the reasonableness
of the U.S. federal tax benefit recorded in association
with the legal entity restructuring included the
following procedures, among others:
•
We tested the effectiveness of controls over
management's evaluation of the U.S. federal
tax
benefit,
including
those
over
the
determination of the tax basis and the
determination of the fair value of the
55
Company’s legal entities, such as controls
related to management's evaluation of the
forecast of revenue and EBITDA, as well as
the selection of fair value assumptions,
including discount rates and long-term growth
rates.
•
We evaluated the experience, qualifications,
and objectivity of management's experts.
•
With the assistance of our tax specialists, we
evaluated the reasonableness of the tax
basis by:
•
Evaluating
the
underlying
transactions that created the tax
basis in the legal entities, on a
sample basis.
•
Evaluating the completeness of the
tax basis adjustments.
•
Evaluating
management's
interpretation
of
relevant
tax
regulations and tax authority rulings.
•
We evaluated key business assumptions,
such as revenues and EBITDA forecasts
used in the fair value discounted cash flow
model by:
•
Performing a sensitivity analysis of
the revenue and EBITDA forecasts,
and their impact to fair value.
•
For
certain
legal
entities,
we
evaluated the reasonableness of
management's forecasts of revenue
and
EBITDA
by
comparing
the
forecasts to historical information and
information included in third-party
macroeconomic
benchmarking
reports.
•
With the assistance of our fair value
specialists, we evaluated the reasonableness
of the valuation methodology and valuation
assumptions, for certain entities, including,
discount rates, and long-term growth rates
by:
•
Testing
the
source
information
underlying
the
determination
of
discount rates and long-term growth
rates, including the mathematical
accuracy of the calculations.
•
Comparing the long-term growth
rates to third-party macroeconomic
benchmarking reports.
•
Developing a range of independent
estimates
for
the
selection
of
discount rates and comparing the
discount
rates
selected
by
management to those ranges.
•
Performing a sensitivity analysis of
the discount rates and long-term
growth rates used in the fair value
cash flow models, and their impact to
fair value.
/s/ Deloitte & Touche LLP
Memphis, Tennessee
February 21, 2025
We have served as the Company's auditor since
2002.
REPORT
OF
INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
International Paper Company:
Opinion on Internal Control over Financial
Reporting
We have audited the internal control over financial
reporting of International Paper Company and
subsidiaries (the “Company”) as of December 31,
2024, based on criteria established in Internal Control
— Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the
Treadway Commission (COSO). In our opinion, the
Company maintained, in all material respects,
effective internal control over financial reporting as of
December 31, 2024, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by COSO.
We have also audited, in accordance with the
standards of the Public Company Accounting
Oversight Board (United States) (PCAOB), the
consolidated financial statements as of and for the
year ended December 31, 2024, of the Company and
our report dated February 21, 2025, expressed an
unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for
maintaining effective internal control over financial
reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in
the accompanying Report 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
56
regulations
of
the
Securities
and
Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require
that we plan and perform the audit to obtain
reasonable
assurance
about
whether
effective
internal
control
over
financial
reporting
was
maintained in all material respects. Our audit included
obtaining an understanding of internal control over
financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design
and operating effectiveness of internal control based
on the assessed risk, and performing such other
procedures as we considered necessary in the
circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control over
Financial Reporting
A company’s internal control over financial reporting
is a process designed to provide reasonable
assurance regarding the reliability of financial
reporting and the preparation of financial statements
for external purposes in accordance with generally
accepted accounting principles. A company’s internal
control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements in accordance with generally accepted
accounting
principles,
and
that
receipts
and
expenditures of the company are being made only in
accordance with authorizations of management and
directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on
the financial statements.
Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk
that controls may become inadequate because of
changes in conditions, or that the degree of
compliance with the policies or procedures may
deteriorate.
/s/ Deloitte & Touche LLP
Memphis, Tennessee
February 21, 2025
57
CONSOLIDATED STATEMENT OF OPERATIONS
In millions, except per share amounts, for the years ended December 31
2024
2023
2022
NET SALES
$ 18,619 $ 18,916 $ 21,161
COSTS AND EXPENSES
Cost of products sold
13,376
13,629 15,143
Selling and administrative expenses
1,840
1,360
1,293
Depreciation and amortization
1,305
1,432
1,040
Distribution expenses
1,475
1,575
1,783
Taxes other than payroll and income taxes
147
154
148
Restructuring and other charges, net
221
99
89
Net (gains) losses on sales and impairments of businesses
—
—
76
Net (gains) losses on sales of equity method investments
—
—
10
Net (gains) losses on sales of fixed assets
(58)
—
—
Net (gains) losses on mark to market investments
—
—
(65)
Interest expense, net
208
231
325
Non-operating pension (income) expense
(42)
54
(192)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY
EARNINGS (LOSSES)
147
382
1,511
Income tax provision (benefit)
(415)
59
(236)
Equity earnings (loss), net of taxes
(5)
(21)
(6)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
557
302
1,741
Discontinued operations, net of taxes
—
(14)
(237)
NET EARNINGS (LOSS)
557
288
1,504
BASIC EARNINGS (LOSS) PER SHARE
Earnings (loss) from continuing operations
$
1.60 $
0.87 $
4.79
Discontinued operations, net of taxes
—
(0.04)
(0.65)
Net earnings (loss)
$
1.60 $
0.83 $
4.14
DILUTED EARNINGS (LOSS) PER SHARE
Earnings (loss) from continuing operations
$
1.57 $
0.86 $
4.74
Discontinued operations, net of taxes
—
(0.04)
(0.64)
Net earnings (loss)
$
1.57 $
0.82 $
4.10
The accompanying notes are an integral part of these financial statements.
58
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
In millions for the years ended December 31
2024
2023
2022
NET EARNINGS (LOSS)
$
557 $
288 $
1,504
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Amortization of pension and postretirement prior service costs and net loss:
U.S. plans (less tax of $22, $29 and $28)
69
87
85
Non-U.S. plans (less tax of $0, $0 and $0)
—
(1)
1
Pension and postretirement liability adjustments:
U.S. plans (less tax of $(33), $(56) and $(109))
(102)
(170)
(327)
Non-U.S. plans (less tax of $1, $0 and $1)
(3)
3
8
Change in cumulative foreign currency translation adjustment (less tax of $0, $0 and $0)
(121)
441
(28)
Net gains/losses on cash flow hedging derivatives (less tax of $0, $0 and $1)
—
—
2
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
(157)
360
(259)
COMPREHENSIVE INCOME (LOSS)
400
648
1,245
The accompanying notes are an integral part of these financial statements.
59
CONSOLIDATED BALANCE SHEET
In millions, except per share amounts, at December 31
2024
2023
ASSETS
Current Assets
Cash and temporary investments
$ 1,170 $ 1,113
Accounts and notes receivable (less allowances of $30 in 2024 and $34 in 2023)
2,966
3,059
Contract assets
396
433
Inventories
1,784
1,889
Other current assets
108
114
Total Current Assets
6,424
6,608
Plants, Properties and Equipment, net
9,658 10,150
Investments
160
163
Long-Term Financial Assets of Variable Interest Entities (Note 14)
2,331
2,312
Goodwill
3,038
3,041
Overfunded Pension Plan Assets
92
118
Right of Use Assets
433
448
Deferred Charges and Other Assets
664
421
TOTAL ASSETS
$ 22,800 $ 23,261
LIABILITIES AND EQUITY
Current Liabilities
Notes payable and current maturities of long-term debt
$
193 $
138
Accounts payable
2,316
2,442
Accrued payroll and benefits
749
397
Other current liabilities
1,000
982
Total Current Liabilities
4,258
3,959
Long-Term Debt
5,368
5,455
Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities (Note 14)
2,120
2,113
Deferred Income Taxes
1,072
1,552
Underfunded Pension Benefit Obligation
233
280
Postretirement and Postemployment Benefit Obligation
133
140
Long-Term Lease Obligations
292
312
Other Liabilities
1,151
1,095
Commitments and Contingent Liabilities (Note 13)
Equity
Common stock $1 par value, 2024 - 448.9 shares and 2023 - 448.9 shares
449
449
Paid-in capital
4,732
4,730
Retained earnings
9,393
9,491
Accumulated other comprehensive loss
(1,722)
(1,565)
12,852 13,105
Less: Common stock held in treasury, at cost, 2024 – 101.5 shares and 2023 – 102.9 shares
4,679
4,750
Total Equity
8,173
8,355
TOTAL LIABILITIES AND EQUITY
$ 22,800 $ 23,261
The accompanying notes are an integral part of these financial statements.
60
CONSOLIDATED STATEMENT OF CASH FLOWS
In millions for the years ended December 31
2024
2023
2022
OPERATING ACTIVITIES
Net earnings (loss)
$
557 $
288 $ 1,504
Depreciation and amortization
1,305
1,432
1,040
Deferred income tax provision (benefit), net
(473)
(156)
(773)
Restructuring and other charges, net
221
99
89
Periodic pension (income) expense, net
1
94
(116)
Net (gains) losses on mark to market investments
—
—
(65)
Net (gains) losses on sales and impairments of businesses
—
—
76
Net (gains) losses on sales and impairments of equity method investments
—
153
543
Net (gains) losses on sales of fixed assets
(58)
—
—
Equity method dividends received
—
13
204
Equity (earnings) losses, net
5
(108)
(291)
Other, net
130
20
108
Changes in operating assets and liabilities
Accounts and notes receivable
59
255
(59)
Contract assets
36
48
(103)
Inventories
12
73
(162)
Accounts payable and other liabilities
(140)
(402)
110
Interest payable
16
(19)
41
Other
7
43
28
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
1,678
1,833
2,174
INVESTMENT ACTIVITIES
Invested in capital projects
(921)
(1,141)
(931)
Proceeds from sales of equity method investments, net of transaction costs
—
472
—
Proceeds from exchange of equity securities
—
—
311
Proceeds from insurance recoveries
25
—
—
Proceeds from sale of fixed assets
91
4
13
Other
(3)
(3)
(1)
CASH PROVIDED BY (USED FOR) INVESTMENT ACTIVITIES
(808)
(668)
(608)
FINANCING ACTIVITIES
Repurchases of common stock and payments of restricted stock tax withholding
(23)
(218)
(1,284)
Issuance of debt
102
783
1,011
Reduction of debt
(141)
(780)
(1,017)
Change in book overdrafts
(69)
(8)
1
Dividends paid
(643)
(642)
(673)
Net debt tender premiums paid
—
—
(89)
Other
(1)
(1)
(3)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
(775)
(866)
(2,054)
Effect of Exchange Rate Changes on Cash
(38)
10
(3)
Change in Cash and Temporary Investments
57
309
(491)
Cash and Temporary Investments
Beginning of the period
1,113
804
1,295
End of the period
$ 1,170 $ 1,113 $
804
The accompanying notes are an integral part of these financial statements.
61
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
In millions
Common
Stock
Issued
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Common
Stock Held
In Treasury,
At Cost
Total Equity
BALANCE, JANUARY 1, 2022
$
449 $
4,668 $
9,029 $
(1,666) $
3,398 $
9,082
Issuance of stock for various plans, net
—
57
—
—
(75)
132
Repurchase of stock
—
—
—
—
1,284
(1,284)
Dividends ($1.850 per share)
—
—
(678)
—
—
(678)
Comprehensive income (loss)
—
—
1,504
(259)
—
1,245
BALANCE, DECEMBER 31, 2022
449
4,725
9,855
(1,925)
4,607
8,497
Issuance of stock for various plans, net
—
5
—
—
(77)
82
Repurchase of stock
—
—
—
—
220
(220)
Dividends ($1.850 per share)
—
—
(652)
—
—
(652)
Comprehensive income (loss)
—
—
288
360
—
648
BALANCE, DECEMBER 31, 2023
449
4,730
9,491
(1,565)
4,750
8,355
Issuance of stock for various plans, net
—
2
—
—
(94)
96
Repurchase of stock
—
—
—
—
23
(23)
Dividends ($1.850 per share)
—
—
(655)
—
—
(655)
Comprehensive income (loss)
—
—
557
(157)
—
400
BALANCE, DECEMBER 31, 2024
$
449 $
4,732 $
9,393 $
(1,722) $
4,679 $
8,173
The accompanying notes are an integral part of these financial statements.
62
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 1 SUMMARY OF BUSINESS AND
SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
International Paper (the "Company") is a global
producer of renewable fiber-based packaging and
pulp
products
with
primary
markets
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.
DISCONTINUED OPERATIONS
A discontinued operation may include a component or
a group of components of the Company's operations.
A disposal of a component or a group of components
is reported in discontinued operations if the disposal
represents a strategic shift that has or will have a
major effect on the Company's operations and
financial results when the following occurs: (1) a
component (or group of components) meets the
criteria to be classified as held for sale; (2) the
component or group of components is disposed of by
sale; or (3) the component or group of components is
disposed of other than by sale (for example, by
abandonment or in a distribution to owners in a spin-
off). For any component classified as held for sale or
disposed of by sale or other than by sale, qualifying
for presentation as a discontinued operation, the
Company reports the results of operations of the
discontinued operations (including any gain or loss
recognized on the disposal or loss recognized on
classification as held for sale of a discontinued
operation), less applicable income taxes (benefit), as
a separate component in the consolidated 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.
The
Company
recorded
discontinued
operations for the years ended December 31, 2023
and 2022 in connection with the sale of its equity
method investment in Ilim. See Note 10 for further
details.
CONSOLIDATION
The consolidated financial statements include the
accounts of International Paper and subsidiaries for
which we have a controlling financial interest,
including variable interest entities for which we are
the primary beneficiary. All significant intercompany
balances and transactions are eliminated.
EQUITY METHOD INVESTMENTS
The equity method of accounting is applied for
investments when the Company has significant
influence over the investee’s operations, or when the
investee is structured with separate capital accounts.
Our
material
equity
method
investments
are
described in Note 10.
OTHER-THAN-TEMPORARY IMPAIRMENT
The
Company
evaluates
our
equity
method
investments for other-than-temporary impairment
("OTTI") when circumstances indicate the investment
may be impaired. When a decline in fair value is
deemed to be an OTTI, an impairment is recognized
to the extent that the fair value is less than the
carrying value of the investment. We consider various
factors in determining whether a loss in value of an
investment is other than temporary including: the
length of time and the extent to which the fair value
has been below cost, the financial condition of the
investee, and our intent and ability to retain the
investment for a period of time sufficient to allow for
recovery of value. Management makes certain
judgments and estimates in its assessment including
but not limited to: identifying if circumstances indicate
a decline in value is other than temporary,
expectations about operations, as well as industry,
financial, regulatory and market factors.
BUSINESS COMBINATIONS
The Company allocates the total consideration of the
assets acquired and liabilities assumed based on
their estimated fair value as of the business
combination date. In developing estimates of fair
values for long-lived assets, including identifiable
intangible assets, the Company utilizes a variety of
inputs including forecasted cash flows, anticipated
growth rates, discount rates, estimated replacement
costs and depreciation and obsolescence factors.
Determining the fair value for specifically identified
intangible assets such as customer lists and
developed technology involves judgment. We may
refine our estimates and make adjustments to the
63
assets acquired and liabilities assumed over a
measurement period, not to exceed one year. Upon
the conclusion of the measurement period or the final
determination of the values of assets acquired and
liabilities assumed, whichever comes first, any
subsequent
adjustments
are
charged
to
the
consolidated 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.
RESTRUCTURING LIABILITIES AND COSTS
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
broadly
communicated
policy
covering
involuntary termination benefits (severance plan), a
liability is recorded for costs to terminate employees
(one-time termination benefits) when the termination
plan has been approved and committed to by
management, the employees to be terminated have
been identified, the termination plan benefit terms are
communicated, the employees identified in the plan
have been notified and actions required to complete
the plan indicate that it is unlikely that significant
changes to the plan will be made or that the plan will
be withdrawn. The timing and amount of an accrual is
dependent upon the type of benefits granted, the
timing of communication and other provisions that
may be provided in the benefit plan. The accounting
for each termination is evaluated individually. See
Note 6 for further details.
REVENUE RECOGNITION
Generally, the Company recognizes revenue on a
point-in-time basis when the Company transfers
control of the goods to the customer. For customized
goods where the Company has a legally enforceable
right to payment for the goods, the Company
recognizes revenue over time, which generally is, as
the goods are produced.
The Company’s revenue is primarily derived from
fixed consideration; however, we do have contract
terms that give rise to variable consideration,
primarily volume rebates, early payment discounts
and other customer refunds. The Company estimates
its volume rebates at the individual customer level
based on the most likely amount method outlined in
ASC 606 "Revenue from Contracts with Customers".
The Company estimates early payment discounts and
other customer refunds based on the historical
experience across the Company's portfolio of
customers to record reductions in revenue that is
consistent with the expected value method outlined in
ASC 606. Management has concluded that these
methods result in the best estimate of the
consideration the Company will be entitled to from its
customers.
The Company has elected to present all sales taxes
on a net basis, account for shipping and handling
activities as fulfillment activities, recognize the
incremental costs of obtaining a contract as expense
when incurred if the amortization period of the asset
the Company would recognize is one year or less,
and not record interest income or interest expense
when the difference in timing of control or transfer
and customer payment is one year or less. See Note
3 for further details.
TEMPORARY INVESTMENTS
Temporary investments with an original maturity of
three months or less and money market funds with
greater than three-month maturities but with the right
to redeem without notice are treated as cash
equivalents
and
are
stated
at
cost,
which
approximates market value. See Note 8 for further
details.
INVENTORIES
Inventories include all costs directly associated with
manufacturing
products:
materials,
labor,
and
manufacturing overhead. In the United States, costs
of raw materials and finished pulp and paper products
are generally determined using the last-in, first-out
method. These inventories are measured at the lower
of cost or market. Other inventories are valued using
the first-in, first-out or average cost methods. These
inventories are measured at the lower of cost or net
realizable value. See Note 8 for further details.
LEASED ASSETS
Operating lease right of use ("ROU") assets and
liabilities are recognized at the commencement date
of the lease based on the present value of lease
payments over the lease term. The Company's leases
may include options to extend or terminate the lease.
These options to extend are included in the lease
term when it is reasonably certain that we will
exercise that option. Some leases have variable
payments, however, because they are not based on
an index or rate, they are not included in the ROU
assets and liabilities. Variable payments for real
estate leases primarily relate to common area
maintenance, insurance, taxes and utilities. Variable
payments for equipment, vehicles, and leases within
64
supply agreements primarily relate to usage, repairs
and maintenance. As the implicit rate is not readily
determinable for most of the Company's leases, the
Company applies a portfolio approach using an
estimated incremental borrowing rate to determine
the initial present value of lease payments over the
lease terms on a collateralized basis over a similar
term, which is based on market and company specific
information. We use the unsecured borrowing rate
and
risk-adjust
that
rate
to
approximate
a
collateralized rate, and apply the rate based on the
currency of the lease, which is updated on a quarterly
basis for measurement of new lease liabilities.
Leases having a lease term of twelve months or less
are not recorded on the balance sheet and the related
lease expense is recognized on a straight-line basis
over the term of the lease. In addition, the Company
has applied the practical expedient to account for the
lease and non-lease components as a single lease
component for all of the Company's leases except for
certain gas and chemical agreements. See Note 9 for
further details.
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 8 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
occurred that would result in the impairment of a
reporting unit’s goodwill.
The Company has the option to evaluate goodwill for
impairment
by
first
performing
a
qualitative
assessment
of
events
and
circumstances
to
determine whether it is more likely than not that the
fair value of a reporting unit is less than its carrying
amount. If, after assessing the totality of events or
circumstances, the Company determines that it is not
more likely than not that the fair value of a reporting
unit is less than its carrying amounts, then the
quantitative goodwill impairment test is not required to
be performed. If the Company determines that it is
more likely than not that the fair value of a reporting
unit is less than its carrying amount, or if the
Company does not elect the option to perform an
initial qualitative assessment, the Company is
required
to
perform
the
quantitative
goodwill
impairment test. In performing this evaluation, the
Company estimates the fair value of its reporting unit
using a weighted approach based on discounted
future cash flows, 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 related to 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.
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets are reviewed for impairment upon
the
occurrence
of
events
or
changes
in
circumstances that indicate that the carrying value of
the assets may not be recoverable. A recoverability
test is performed by comparing the undiscounted
cash flows to carrying value of the assets. The inputs
related to the undiscounted cash flows requires
judgments as to whether assets are held and used or
held for sale, the weighting of operational alternatives
being considered by management and estimates of
the amount and timing of expected future cash flows
from the use of the long-lived assets generated by
their use. If the carrying amount is less than the
undiscounted cash flows, the fair value of the assets
is compared to the carrying value to determine if they
are impaired. We estimate fair value using discounted
cash flows and other valuation techniques as needed.
Impaired assets are recorded at their estimated fair
value.
INCOME TAXES
International Paper uses the asset and liability
method of accounting for income taxes whereby
deferred income taxes are recorded for the future tax
consequences attributable to differences between the
financial statement and tax bases of assets and
liabilities. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply
to taxable income in the years in which those
temporary differences are expected to be recovered
or settled. Deferred tax assets and liabilities are
remeasured to reflect new tax rates in the periods
rate changes are enacted.
65
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 12 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 is completed by tax
jurisdiction and relies on both positive and negative
evidence available, with significant weight placed on
recent financial results. Cumulative reported pre-tax
income is considered objectively verifiable positive
evidence of our ability to generate positive pre-tax
income in the future. In accordance with GAAP, when
there is a recent history of pre-tax losses, there is
little or no weight placed on forecasts for purposes of
assessing the recoverability of our deferred tax
assets. When necessary, we use systematic and
logical methods to estimate when deferred tax
liabilities will reverse and generate taxable income
and when deferred tax assets will reverse and
generate tax deductions. Assumptions, judgment, and
the use of estimates are required when scheduling
the reversal of deferred tax assets and liabilities, and
the exercise is inherently complex and subjective.
The realization of these assets is dependent on
generating future taxable income, as well as
successful implementation of various tax planning
strategies.
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 13 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.
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.
66
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
Reference Rate Reform
In March 2020, the Financial Accounting Standards
Board ("FASB") issued Accounting Standard Update
("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
transitioning away from reference rates that are
expected to be discontinued. This guidance is
effective upon issuance and generally can be applied
through December 31, 2024. The Company has
applied this guidance to account for contract
modifications due to changes in reference rates as
those modifications occurred. This guidance has not
had a material impact on our consolidated financial
statements and related disclosures.
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. Amendments are required to be applied
retrospectively to all prior periods presented in the
financial statements. The Company adopted this
guidance as of January 1, 2024 which only impacted
the related disclosure - see Note 20 - Financial
Information by Business Segment and Geographic
Area.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT
YET ADOPTED
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03,
"Income Statement - Reporting Comprehensive
Income
-
Expense
Disaggregation
Disclosures
(Subtopic
220-40)."
This
guidance
requires
companies to provide more detailed information of
certain income statement expenses within the
footnotes to the financial statements. This guidance is
effective for annual reporting periods beginning after
December 15, 2026 and interim periods within fiscal
years beginning after December 15, 2027. Early
adoption is permitted and should be applied
prospectively. The Company is currently evaluating
the provisions of this guidance.
Income Taxes
In December 2023, the FASB issued ASU 2023-09,
"Income Taxes (Topic 740): Improvements to Income
Tax Disclosures." This guidance requires companies
to enhance income tax disclosures, particularly
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 plans to adopt this guidance as of January
1, 2025 and will update disclosures within the
Company's 2025 annual filing.
67
NOTE 3 REVENUE RECOGNITION
DISAGGREGATED REVENUE
2024
Reportable Segments
Industrial
Packaging
Global
Cellulose
Fibers
Corporate &
Intersegment
Total
Primary Geographical Markets (a)
United States
$
13,386
$
2,623
$
291
$
16,300
EMEA
1,355
77
—
1,432
Pacific Rim and Asia
63
93
1
157
Americas, other than U.S.
730
—
—
730
Total
$
15,534
$
2,793
$
292
$
18,619
Operating Segments
North American Industrial Packaging
$
14,293
$
—
$
—
$
14,293
EMEA Industrial Packaging
1,355
—
—
1,355
Global Cellulose Fibers
—
2,793
—
2,793
Intrasegment Eliminations
(114)
—
—
(114)
Corporate & Intersegment Sales
—
—
292
292
Total
$
15,534
$
2,793
$
292
$
18,619
(a) Net sales are attributed to countries based on the location of the reportable segment making the sale.
2023
Reportable Segments
Industrial
Packaging
Global
Cellulose
Fibers
Corporate &
Intersegment
Total
Primary Geographical Markets (a)
United States
$
13,340
$
2,570
$
430
$
16,340
EMEA
1,398
96
—
1,494
Pacific Rim and Asia
37
224
—
261
Americas, other than U.S.
821
—
—
821
Total
$
15,596
$
2,890
$
430
$
18,916
Operating Segments
North American Industrial Packaging
$
14,293
$
—
$
—
$
14,293
EMEA Industrial Packaging
1,398
—
—
1,398
Global Cellulose Fibers
—
2,890
—
2,890
Intrasegment Eliminations
(95)
—
—
(95)
Corporate & Intersegment Sales
—
—
430
430
Total
$
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.
68
2022
Reportable Segments
Industrial
Packaging
Global
Cellulose
Fibers
Corporate &
Intersegment
Total
Primary Geographical Markets (a)
United States
$
14,970
$
3,032
$
480
$
18,482
EMEA
1,572
121
—
1,693
Pacific Rim and Asia
46
74
3
123
Americas, other than U.S.
863
—
—
863
Total
$
17,451
$
3,227
$
483
$
21,161
Operating Segments
North American Industrial Packaging
$
16,011
$
—
$
—
$
16,011
EMEA Industrial Packaging
1,572
—
—
1,572
Global Cellulose Fibers
—
3,227
—
3,227
Intrasegment Eliminations
(132)
—
—
(132)
Corporate & Intersegment Sales
—
—
483
483
Total
$
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.
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 $30 million and $32 million are included in
Other
current
liabilities
in
the
accompanying
consolidated balance sheet as of December 31, 2024
and 2023, respectively. The Company also recorded
a contract liability of $115 million related to a previous
acquisition. The balance of this contract liability was
$84 million and $92 million at December 31, 2024
and 2023, respectively, and is recorded in Other
current
liabilities
and
Other
Liabilities
in
the
accompanying consolidated balance sheet.
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.
PERFORMANCE
OBLIGATIONS
AND
SIGNIFICANT
JUDGMENTS
International
Paper's
principal
business
is
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.
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.).
Management
has
concluded
that
the
prices
negotiated
with
each
individual
customer
are
representative of the stand-alone selling price of the
product.
69
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
2024
2023
2022
Earnings (loss) from continuing
operations attributable to
International Paper common
shareholders
$
557
$ 302
$ 1,741
Weighted average common shares
outstanding
347.2
346.9
363.5
Effect of dilutive securities:
Restricted performance share plan
7.0
2.2
3.5
Weighted average common shares
outstanding – assuming dilution
354.2
349.1
367.0
Basic earnings (loss) per share
from continuing operations
$ 1.60
$ 0.87
$ 4.79
Diluted earnings (loss) per share
from continuing operations
$ 1.57
$ 0.86
$ 4.74
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
2024
2023
2022
Defined Benefit Pension and Postretirement Adjustments
Balance at beginning of period
$
(1,276) $
(1,195) $
(962)
Other comprehensive income (loss) before reclassifications
(105)
(167)
(319)
Amounts reclassified from accumulated other comprehensive loss
69
86
86
Balance at end of period
(1,312)
(1,276)
(1,195)
Change in Cumulative Foreign Currency Translation Adjustments
Balance at beginning of period
(281)
(722)
(694)
Other comprehensive income (loss) before reclassifications
(121)
(76)
(38)
Amounts reclassified from accumulated other comprehensive loss
—
517
10
Balance at end of period
(402)
(281)
(722)
Net Gains and Losses on Cash Flow Hedging Derivatives
Balance at beginning of period
(8)
(8)
(10)
Amounts reclassified from accumulated other comprehensive loss
—
—
2
Balance at end of period
(8)
(8)
(8)
Total Accumulated Other Comprehensive Income (Loss) at End of Period
$
(1,722) $
(1,565) $
(1,925)
70
Reclassifications out of AOCI for the three years ended December 31 were as follows:
Amount Reclassified from Accumulated
Other Comprehensive Loss
Location of Amount
Reclassified from AOCI
2024
2023
2022
In millions
Defined benefit pension and postretirement items:
Prior-service costs
$
(13) $
(23) $
(23) (a)
Non-operating pension expense
Actuarial gains/(losses)
(78)
(92)
(91) (a)
Non-operating pension expense
Total pre-tax amount
(91)
(115)
(114)
Tax (expense)/benefit
22
29
28
Net of tax
(69)
(86)
(86)
Change in cumulative foreign currency translation
adjustments:
Business divestiture
—
(517)
(10) (b)
Net (gains) losses on sales of
equity method investments and
Discontinued Operations, net of
taxes
Tax (expense)/benefit
—
—
—
Net of tax
—
(517)
(10)
Net gains and losses on cash flow hedging
derivatives:
Cash flow hedges
—
—
(3)
Interest expense, net
Total pre-tax amount
—
—
(3)
Tax (expense)/benefit
—
—
1
Total, net of tax
—
—
(2)
Total reclassifications for the period, net of tax
$
(69) $
(603) $
(98)
(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost (see Note
17 - Retirement Plans for additional details).
(b) See Note 10 - Equity Method Investments for additional details for 2023 amounts.
71
NOTE 6 RESTRUCTURING AND OTHER
CHARGES, NET
2024: During 2024, restructuring and other charges,
net, totaling $221 million before taxes were recorded.
The charges included:
Georgetown mill closure costs (b)
119
Other restructuring items
(3)
Total
$
221
In millions
2024
80/20 strategic approach (a)
$
105
(a) Severance and other costs related to the resource alignment
component of our 80/20 strategic approach. These severance
and other costs include $61 million, $42 million and $2 million
in the Corporate, Industrial Packaging and Global Cellulose
Fibers segments, respectively. The severance charges are
recorded in Accrued payroll and benefits and Other Liabilities
in the accompanying consolidated balance sheet. The
majority of these charges will be paid in 2025.
(b) Includes $39 million of severance charges recorded in
Accrued
payroll
and
benefits
in
the
accompanying
consolidated balance sheet, $34 million of inventory charges
recorded in Inventories in the accompanying consolidated
balance sheet and $46 million of other costs recorded in Other
current liabilities and Other Liabilities in the accompanying
consolidated balance sheet, associated with the permanent
closure of our Georgetown, South Carolina mill. The majority
of the severance charges will be paid in 2025.
2023: During 2023, restructuring and other charges,
net, totaling $99 million before taxes were recorded.
The charges included:
In millions
2023
Orange, Texas mill closure costs (a)
$
81
Pensacola mill and Riegelwood mill pulp machine
shutdowns (b)
37
Building a Better IP (c)
(19)
Total
$
99
(a) Includes $25 million of severance charges, $30 million of
inventory charges and $26 million of other costs associated
with the closure of our containerboard mill in Orange, Texas.
The majority of the severance charges were paid in 2024.
(b) Includes $21 million of severance charges, $12 million of
inventory 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 were 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.
These charges included:
In millions
2022
Early debt extinguishment costs (see Note 16)
$
93
Other restructuring items
(4)
Total
$
89
NOTE 7 ACQUISITIONS
COMPLETED BUSINESS COMBINATION OF DS SMITH
2024: On April 16, 2024, the Company issued an
announcement, pursuant to Rule 2.7 of the United
Kingdom City Code on Takeovers and Mergers,
disclosing the terms of a recommended offer by the
Company to acquire the entire issued and to be
issued share capital of DS Smith Plc, a public limited
company incorporated in England and Wales (“DS
Smith”), in an all-stock transaction (the “Business
Combination”). Costs related to the transaction were
$86 million for the year ended December 31, 2024
and were recorded in selling and administrative
expenses
in
the
accompanying
consolidated
statement of operations.
On January 24, 2025, the European Commission
issued its Phase I clearance of the business
combination, conditional on International Paper
entering into commitments to divest its plants in
Mortagne, Saint-Amand, and Cabourg (France), Over
(Portugal) and Bilbao (Spain). As such, the Company
has agreed to divest these locations.
On January 31, 2025, the Company closed on the
acquisition of the entire issued and to be issued share
capital of DS Smith. Upon closing of the acquisition,
IP issued 0.1285 shares for each DS Smith share,
resulting in the issuance of 178,126,631 new shares
of IP common stock ("New Company Common
Stock"). As a result of the share issuance, the holders
of
the
New
Company
Common
Stock
own
approximately 34.1% of the Company's outstanding
share capital. Based on the issuance of 178,126,631
new shares and the closing price of $55.63 on the
close of January 31, 2025, the total purchase
consideration for the completed acquisition was
approximately $9.9 billion. On February 4, 2025, the
Company began trading the New Company Common
Stock and continues to be listed on the New York
Stock Exchange under the symbol "IP" and via a
secondary listing on the London Stock Exchange
under the symbol "IPC". The headquarters of the
combined company is based in Memphis, Tennessee,
and the EMEA headquarters has been established at
DS Smith's existing main office in London.
72
NOTE 8 SUPPLEMENTARY FINANCIAL
STATEMENT INFORMATION
TEMPORARY INVESTMENTS
Temporary investments totaled $990 million and $950
million at December 31, 2024 and 2023, respectively.
ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable, net, by classification
were:
In millions at December 31
2024
2023
Accounts and notes receivable:
Trade (less allowances of $30 in 2024 and
$34 in 2023)
$ 2,703 $ 2,841
Other
263
218
Total
$ 2,966 $ 3,059
INVENTORIES
In millions at December 31
2024
2023
Raw materials
$
188 $
229
Finished pulp and packaging products
934
975
Operating supplies
623
622
Other
39
63
Inventories
$ 1,784 $ 1,889
The last-in, first-out inventory method is used to value
most of International Paper’s U.S. inventories.
Approximately 81% of total raw materials and finished
products inventories were valued using this method.
The last-in, first-out inventory reserve was $336
million and $343 million at December 31, 2024 and
2023, respectively.
PLANTS, PROPERTIES AND EQUIPMENT
In millions at December 31
2024
2023
Pulp and packaging facilities
$ 28,249 $ 28,661
Other properties and equipment
1,031
1,050
Gross cost
29,280 29,711
Less: Accumulated depreciation
19,622 19,561
Plants, properties and equipment, net
$ 9,658 $ 10,150
Non-cash
additions
to
plants,
properties
and
equipment included within accounts payable were
$110 million, $141 million and $185 million at
December 31, 2024, 2023 and 2022, respectively.
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
$1.3 billion, $1.4 billion and $996 million for the years
ended December 31, 2024, 2023 and 2022.
Depreciation
expense
for
the
years
ended
December 31, 2024 and December 31, 2023,
includes $233 million and $422 million, respectively,
of accelerated depreciation related to mill strategic
actions and other 80/20 strategic actions. Cost of
products sold excludes depreciation and amortization
expense.
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 $115 million and $122 million of supplier
finance program liabilities as of December 31, 2024
and 2023, respectively.
The following table presents supplier finance program
obligations confirmed and paid for the years ended
December 31, 2024 and 2023:
In millions
Confirmed obligations outstanding at December
31, 2022
$
122
Invoiced confirmed during the year
594
Confirmed invoices paid during the year
(594)
Confirmed obligations outstanding at December
31, 2023
122
Invoiced confirmed during the year
516
Confirmed invoices paid during the year
(523)
Confirmed obligations outstanding at
December 31, 2024
$
115
INTEREST
Interest payments of $437 million, $463 million and
$380 million were made during the years ended
December 31, 2024, 2023 and 2022, respectively.
Amounts related to interest were as follows:
In millions
2024
2023
2022
Interest expense
$
430 $
421 $
403
Interest income
222
190
78
Capitalized interest costs
21
22
18
ASSET RETIREMENT OBLIGATIONS
At December 31, 2024 and 2023, we had recorded
liabilities
of
$128
million
and
$103
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
remove certain materials from these facilities.
73
Applicable regulations and standards provide that the
removal of certain materials would only be required if
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
technique
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
the
timing
of
such
remediation.
NOTE 9 LEASES
International Paper leases various 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 29 years.
COMPONENTS OF LEASE EXPENSE
In millions
2024
2023
2022
Operating lease costs, net
$
188 $
177 $
153
Variable lease costs
52
39
39
Short-term lease costs, net
74
71
57
Finance lease cost
Amortization of lease assets
11
12
11
Interest on lease liabilities
3
3
3
Total lease cost, net
$
328 $
302 $
263
SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED
TO LEASES
In millions
Classification
2024
2023
Assets
Operating
lease assets
Right of use assets
$
433 $
448
Finance lease
assets
Plants, properties and
equipment, net (a)
39
47
Total leased
assets
$
472 $
495
Liabilities
Current
Operating
Other current liabilities $
156 $
153
Finance
Notes payable and
current maturities of
long-term debt
11
11
Noncurrent
Operating
Long-term lease
obligations
292
312
Finance
Long-term debt
38
44
Total lease
liabilities
$
497 $
520
(a) Finance leases are recorded net of accumulated amortization
of $70 million and $67 million at December 31, 2024 and
2023, respectively.
LEASE TERM AND DISCOUNT RATE
In millions
2024
2023
Weighted average remaining lease
term (years)
Operating leases
3.6 years
4.0 years
Finance leases
7.2 years
7.7 years
Weighted average discount rate
Operating leases
4.34 %
3.99 %
Finance leases
4.93 %
4.78 %
SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO
LEASES
In millions
2024
2023
2022
Cash paid for amounts included
in the measurement of lease
liabilities
Operating cash flows related
to operating leases
$
202 $
180 $
160
Operating cash flows related
to financing leases
3
3
3
Financing cash flows related
to finance leases
9
13
10
Right of use assets obtained in
exchange for lease liabilities
Operating leases
185
216
221
Finance leases
6
12
6
MATURITY OF LEASE LIABILITIES
In millions
Operating
Leases
Financing
Leases
Total
2025
$
175 $
13 $
188
2026
133
12
145
2027
94
10
104
2028
49
8
57
2029
21
7
28
Thereafter
21
13
34
Total lease
payments
493
63
556
Less imputed
interest
45
14
59
Present value of
lease liabilities
$
448 $
49 $
497
74
NOTE 10 EQUITY METHOD INVESTMENTS
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 S.A. ("Ilim"),
which was a joint venture that operated a pulp and
paper business in Russia and its 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 completed sales,
the Company no longer has an interest in Ilim or any
of
its
subsidiaries.
Additionally,
we
incurred
transaction fees of $36 million in the third quarter of
2023 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.
All historical results of the Ilim investment are
presented as Discontinued Operations, net of taxes in
the consolidated statement of operations.
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
Year Ended December 31,
2022
$
296
$
533
$
—
$
(237) $
204
Year Ended December 31,
2023
$
112
$
135
$
(9)
$
(14) $
13
(a)
Discontinued operations, net of tax is Equity Earnings less Impairment Charges and Tax Expense (Benefit).
The Company's remaining equity method investments are not material.
NOTE 11 GOODWILL AND OTHER INTANGIBLES
GOODWILL
The following table presents changes in the goodwill balances as allocated to each reportable business segment for
the years ended December 31, 2024 and 2023:
In millions
Industrial
Packaging
Global
Cellulose
Fibers
Total
Balance as of December 31, 2022
Goodwill
$
3,413
$
52
$
3,465
Accumulated impairment losses
(372)
(52)
(424)
3,041
—
3,041
Balance as of December 31, 2023
Goodwill
3,413
52
3,465
Accumulated impairment losses
(372)
(52)
(424)
3,041
—
3,041
Currency translation and other (a)
(3)
—
(3)
Balance as of December 31, 2024
Goodwill
3,410
52
3,462
Accumulated impairment losses
(372)
(52)
(424)
Total
$
3,038
$
—
$
3,038
(a) Represents the effects of foreign currency translations and reclassifications.
75
The
Company
performed
its
annual
goodwill
impairment testing by applying the quantitative
goodwill impairment test to its North America
Industrial Packaging reporting unit as of October 1,
2024. This was performed by comparing the carrying
amount of the North America Industrial Packaging
reporting unit to its estimated fair value. The
estimated fair value of 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
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 related to revenue multiples and
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.
In the fourth quarter of 2022, the Company performed
the quantitative goodwill impairment test related to its
EMEA Industrial Packaging 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
was due to the impacts of certain negative
macroeconomic conditions, including the impacts
from inflation and the geopolitical environment to the
reporting unit.
OTHER INTANGIBLES
Identifiable intangible assets are recorded in Deferred Charges and Other Assets in the accompanying consolidated
balance sheet and comprised the following:
2024
2023
In millions at December 31
Gross
Carrying
Amount
Accumulated
Amortization
Net
Intangible
Assets
Gross
Carrying
Amount
Accumulated
Amortization
Net Intangible
Assets
Customer relationships and lists
$
489 $
360 $
129 $
494 $
335 $
159
Tradenames, patents and trademarks, and
developed technology
170
162
8
170
154
16
Land and water rights
8
2
6
8
2
6
Other
19
17
2
21
19
2
Total
$
686 $
541 $
145 $
693 $
510 $
183
The Company recognized the following amounts as amortization expense related to intangible assets:
In millions
2024
2023
2022
Amortization expense related to intangible assets
$
37 $
37 $
44
Based on current intangibles subject to amortization, estimated amortization expense for each of the succeeding
years is as follows: 2025 – $38 million, 2026 – $29 million, 2027 – $10 million, 2028 – $8 million, 2029 – $7 million,
and cumulatively thereafter – $47 million.
76
NOTE 12 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
2024
2023
2022
Earnings (loss)
U.S.
$
(140) $
129 $ 1,469
Non-U.S.
287
253
42
Earnings (loss) from continuing
operations before income taxes
and equity earnings (losses)
$
147 $
382 $ 1,511
The provision (benefit) for income taxes from
continuing
operations
(excluding
noncontrolling
interests) by taxing jurisdiction was as follows:
In millions
2024
2023
2022
Current tax provision (benefit)
U.S. federal
$
(4) $
157 $
454
U.S. state and local
20
16
56
Non-U.S.
42
42
27
$
58 $
215 $
537
Deferred tax provision (benefit)
U.S. federal
$
(367) $
(164) $
(775)
U.S. state and local
(98)
3
(39)
Non-U.S.
(8)
5
41
$
(473) $
(156) $
(773)
Income tax provision (benefit)
$
(415) $
59 $
(236)
The Company’s deferred income tax provision
(benefit) includes a $1 million expense, a $6 million
benefit and an $3 million benefit for 2024, 2023 and
2022, 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 $394 million, $340 million and $345
million in 2024, 2023 and 2022, 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
2024
2023
2022
Earnings (loss) from
continuing
operations before income
taxes
and equity earnings
$
147
$ 382
$ 1,511
Statutory U.S. income tax rate
21 %
21 %
21 %
Tax expense (benefit) using
statutory U.S. income tax rate
31
80
317
State and local income taxes
(62)
2
44
Impact of rate differential on
non-U.S. permanent differences
and earnings
(26)
(10)
1
Foreign valuation allowance
—
—
45
Tax expense (benefit) on
exchange of Sylvamo shares
—
—
(56)
Non-taxable income
(4)
(2)
(2)
Non-deductible business
expenses
21
7
2
Non-deductible impairments
—
—
16
Non-deductible compensation
8
7
13
Tax audits
—
(4)
6
Timber Monetization Audit
Settlement
—
—
(604)
Foreign derived intangible
income deduction
—
2
(8)
US tax on non-U.S. earnings
(GILTI and Subpart F)
32
—
27
Foreign tax credits
7
8
8
General business and other tax
credits
(31)
(38)
(43)
Tax expense (benefit) on equity
earnings
(1)
(4)
(1)
Legal entity restructuring
expense (benefit)
(391)
4
—
Other, net
1
7
(1)
Income tax provision (benefit)
$ (415)
$
59
$ (236)
Effective income tax rate
(282) %
15 %
(16) %
77
The tax effects of significant temporary differences,
representing deferred income tax assets and liabilities
at December 31, 2024 and 2023, were as follows:
In millions
2024
2023
Deferred income tax assets:
Postretirement benefit accruals
$
72 $
67
Pension obligations
63
61
Tax credits
183
182
Net operating and capital loss
carryforwards
1,181
699
Compensation reserves
224
146
Lease obligations
112
116
Environmental reserves
131
114
Investments
4
—
Research and development expenditures
240
162
Other
203
157
Gross deferred income tax assets
$
2,413 $
1,704
Less: valuation allowance (a)
(1,201)
(848)
Net deferred income tax asset
$
1,212 $
856
Deferred income tax liabilities:
Intangibles
$
(133) $
(141)
Investments
—
3
Right of use assets
(112)
(116)
Plants, properties and equipment
(1,528)
(1,650)
Forestlands, related installment sales,
and investment in subsidiary
(486)
(485)
Gross deferred income tax liabilities
$ (2,259) $ (2,389)
Net deferred income tax liability
$ (1,047) $ (1,533)
(a) The net change in the total valuation allowance for the years
ended December 31, 2024 and 2023 was an increase of
$353 million and a increase of $171 million, respectively.
Deferred income tax assets and liabilities are
recorded in the accompanying consolidated balance
sheet under the captions Deferred charges and other
assets and Deferred income taxes, respectively. The
$486 million of deferred tax liabilities for forestlands,
related
installment
sales,
and
investment
in
subsidiary is attributable to a 2007 Temple-Inland
installment sale of forestlands (see Note 14 - Variable
Interest Entities).
During 2024, the Company completed an internal
legal entity restructuring for which a capital loss was
recognized for U.S. federal and state income tax
purposes resulting in a tax benefit of $416 million.
The Company intends to carry back a portion of the
loss to prior years and has set up a non-current
receivable in the amount of $279 million. The
remaining capital loss will be carried forward to offset
future capital gains, and, as such, the Company
recorded a deferred tax asset in the amount of $137
million for the year ended December 31, 2024.
A reconciliation of the beginning and ending amount
of unrecognized tax benefits recorded in Other
Liabilities in the accompanying consolidated balance
sheet for the years ended December 31, 2024, 2023
and 2022 is as follows:
In millions
2024
2023
2022
Balance at January 1
$
(173) $
(177) $
(166)
(Additions) reductions for tax
positions related to current year
(10)
(13)
(7)
(Additions) for tax positions related
to prior years
(40)
(11)
(10)
Reductions for tax positions
related to prior years
7
1
3
Settlements
4
17
1
Expiration of statutes of
limitations
6
11
1
Currency translation adjustment
2
(1)
1
Balance at December 31
$
(204) $
(173) $
(177)
If the Company were to prevail on the unrecognized
tax benefits recorded, substantially all of the balances
at December 31, 2024, 2023 and 2022 would benefit
the effective tax rate. Pending audit settlements and
the expiration of statutes of limitation are not
expected to reduce uncertain tax positions during the
next twelve months.
The Company accrues interest on unrecognized tax
benefits as a component of interest expense.
Penalties, if incurred, are recognized as a component
of
income
tax
expense.
The
Company
had
approximately $50 million and $34 million accrued for
the payment of estimated interest and penalties
associated
with
unrecognized
tax
benefits
at
December 31, 2024 and 2023, respectively.
The Company is currently subject to audits in the
United States and other taxing jurisdictions around
the world. Generally, tax years 2012 through 2023
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.
On September 3, 2024, the Company received the
Unagreed Revenue Agent Report from the Internal
Revenue Service relating to investment tax credits for
the 2017-2019 years that currently are under
examination. The estimated net incremental tax
liability associated with the proposed adjustments
would be approximately $50 million. The Company
disagrees with the proposed adjustments and initiated
the administrative appeals process on October 30,
2024 with the filing of our Protest of the proposed
adjustments. An unfavorable resolution in the
administrative appeals process or future tax litigation
could result in cash tax payments and could
adversely impact the effective tax rate.
78
The Organization for Economic Cooperation and
Development 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 became
effective as of January 1, 2024 and did not have a
material impact on the Company’s effective tax rate.
The second component is expected to go into effect
in 2025.
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 $1.1 billion of
undistributed earnings of non-U.S. subsidiaries as of
December 31, 2024 has been made, as these
earnings
are
considered
indefinitely
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.
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 and capital loss carryforwards:
In millions
2025
Through
2034
2035
Through
2044
Indefinite
Total
U.S. federal and
non-U.S. NOLs
$
3 $
603 $
397 $
1,003
State taxing
jurisdiction NOLs (a)
28
9
—
37
U.S. federal, non-
U.S. and state tax
credit carryforwards
(a)
73
14
96
183
U.S. federal and
state capital loss
carryforwards (a)
141
—
—
141
Total
$
245 $
626 $
493 $
1,364
Less: valuation
allowance (a)
(58)
(612)
(449)
(1,119)
Total, net
$
187 $
14 $
44 $
245
(a) State amounts are presented net of federal benefit.
NOTE 13 COMMITMENTS AND CONTINGENT
LIABILITIES
GENERAL
The Company is involved in various 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, that arise in the normal course of business.
These matters may raise difficult and complicated
legal
issues
and
may
be
subject
to
many
uncertainties and complexities. Moreover, some of
these matters allege substantial or indeterminate
monetary damages.
International Paper reviews inquiries, administrative
proceedings and litigation, including with respect to
environmental matters, on an ongoing basis and
establishes an estimated liability for specific legal
proceedings and other loss contingencies when it
determines that the likelihood of an unfavorable
outcome is probable, and the amount of the loss can
be reasonably estimated. In addition, if the likelihood
of an unfavorable outcome with respect to material
loss contingencies is reasonably possible and
International Paper is able to determine an estimate
of the possible loss or range of loss, whether in
excess of a related accrued liability of where there is
no accrued liability, International Paper will disclose
the estimate of the possible loss or range of loss.
When no amount in a range of loss is more likely than
any other amount in the range, the low end of the
range is used as the estimate of the possible loss.
International Paper’s assessment of whether a loss is
probable is based on management’s assessment of
the ultimate outcome of the matter.
Assessments of lawsuits and claims and the
estimates reflected herein, are subject to significant
judgments about future events, rely heavily on
estimates and assumptions, and are otherwise
subject
to
significant
known
and
unknown
uncertainties. The matters underlying such estimates
may change from time to time and actual losses may
vary significantly from current estimates. Additionally,
the estimated liability for loss contingencies does not
include matters or losses that are not reasonably
estimable and probable.
Based on information currently known to International
Paper, management believes that loss contingencies
arising from pending matters, including the matters
described herein, will not have a material adverse
effect on the consolidated financial position or liquidity
of the Company. However, in light of the inherent
uncertainties involved in such matters, some of which
are beyond the Company's control, and the large or
79
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 materially adverse to the Company's
results of operations or cash flows in any particular
reporting period.
ENVIRONMENTAL AND LEGAL PROCEEDINGS
Environmental
The Company has been named as a potentially
responsible
party
("PRP")
in
environmental
remediation actions under various federal and state
laws, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"). 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. 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.
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 $279 million
and $251 million in the aggregate as of December 31,
2024 and December 31, 2023, respectively. Other
than as described below, completion of required
environmental remedial actions ("RAs") is not
expected
to
have
a
material
effect
on
our
consolidated financial statements.
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. In
April 2020, the EPA issued a final plan concerning
clean-up standards at a portion of the site. The
Company is performing RA and continues to
cooperate with the EPA on the remaining remediation
goals at the site. The estimated liability for the Cass
Lake superfund site was $48 million and $46 million
as of December 31, 2024 and December 31, 2023,
respectively.
Kalamazoo River: The Company is a PRP with
respect to the Allied Paper, Inc./Portage Creek/
Kalamazoo River Superfund Site in Michigan. The
EPA asserts that the site is contaminated by
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.
• Operable Unit 5, Area 1: In March 2016, the
Company 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 ("OU5"), Area 1, and (ii) demanding
reimbursement of EPA past costs totaling $37
million. In December 2016, the EPA issued a
unilateral administrative order ("UAO") to the
Company and other PRPs to perform the remedy.
The Company responded to the UAO, agreeing to
comply with the order subject to its sufficient cause
defenses. The Company continues to comply with
the UAO in performing remediation activities at
OU5, Area 1.
• Operable Unit 1 ("OU1"): 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 denying liability for OU1. In 2021,
the EPA initiated RA activities. In October 2022,
the Company received a unilateral administrative
order to perform the RA. The Company began
performing the RA in 2023 and established a $27
million reserve to account for this liability in the
fourth quarter of 2022. In the fourth quarter of
2024, the Company increased the reserve by $27
million to account for the reasonably estimable
costs for the next phases of the RA, following an
EPA approved design modification in October to
the original remedial design.
The total reserve for the combined liabilities for OU5,
Area 1 and OU1 at the Kalamazoo River superfund
site was $29 million and $27 million as of
December 31, 2024 and 2023, respectively.
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 related to the Company's
potential CERCLA liability. NCR Corporation and
Weyerhaeuser Company were also named as
defendants. The lawsuit seeks contribution under
CERCLA for costs purportedly expended by plaintiffs
80
($79 million as of the filing of the complaint) and for
future remediation costs. In June 2018, the District
Court issued its Final Judgment and Order, which
fixed the past cost amount at approximately $50
million (plus interest 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 the Final Judgment. In April
2022, the Sixth Circuit Court of Appeals (the "Sixth
Circuit") reversed the Final Judgment of the Court,
finding that the lawsuit 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, 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, thus rendering final the Sixth Circuit's
decision that GP's lawsuit 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. On April 9, 2024, the District Court entered
Final Judgment After Remand, declaring, consistent
with the Sixth Circuit's decision, that GP’s past costs
are
time-barred
by
the
applicable
statute
of
limitations. The District Court also entered Final
Judgment on Remand that all three parties, including
the Company, are jointly and severally liable for future
response costs at the site. The Company believes the
District Court’s Final Judgment on Remand regarding
liability for future costs is in error and has appealed
the Final Judgment on Remand on future costs
liability to the Sixth Circuit.
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.
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. The AOC does not include any
agreement to perform waste removal or other
construction activity at the site.
In 2020, the Company reserved the following
estimated liability amounts in relation to remediation
at this site: (a) $10 million for the southern
impoundment; and (b) $55 million for the northern
impoundment, which represented the Company's
50% share of our estimate of the low end of the range
of probable remediation costs.
The Company submitted the Final Design Package
for the southern impoundment to the EPA, and the
EPA approved the 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. The Company substantially completed
the RA for the southern impoundment in 2024.
With respect to the northern impoundment, the PRPs
submitted a Final 100% RD to EPA in July 2024. EPA
provided comments at the end of October and a
Revised Final 100% RD was submitted at the end of
November 2024. The total estimated liability for the
southern and northern impoundment was $98 million
and $83 million as of December 31, 2024 and 2023,
respectively. The current reserve is primarily for the
Company’s 50% share of our estimate of the low end
of the range of probable costs to implement the RD.
Because of ongoing questions regarding cost
effectiveness, timing and gathering other technical
data, additional losses in excess of our recorded
liability are possible.
Versailles Pond: The Company is a responsible
party for the investigation and remediation of
Versailles
Pond,
a
57-acre
dammed
river
impoundment that historically received paperboard
mill
wastewater
in
Sprague,
Connecticut.
A
comprehensive investigation has determined that
Versailles Pond is contaminated with polychlorinated
biphenyls, mercury, and metals. A preliminary
remediation plan was prepared in the third quarter of
2023.
Negotiations
with
state
and
federal
governmental officials are ongoing regarding the
scope and timing of the remediation. The total
estimated liability for Versailles Pond was $30 million
as of both December 31, 2024 and 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 $100 million and $97
million, both net of insurance recoveries as of
81
December 31, 2024 and December 31, 2023,
respectively. While it 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.
Antitrust
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 subsidiary ("IP Italy") and, prior to
completion of the business combination certain
subsidiaries of DS Smith operating in Italy ("DS Smith
Italy"), 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 the
then-current exchange rates) for participation in the
boxes coordination, 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. Given the failure of the Council of
State to address certain arguments brought by IP, we
further appealed the Council of State decision to
uphold the ICA’s findings. In March 2024, the Council
of State published its decision holding that its earlier
decision should be interpreted as accepting many of
IP Italy’s earlier arguments and that the ICA should
reduce IP Italy’s fine accordingly. Notwithstanding
these decisions by the Council of State, in March
2024 the ICA served IP Italy with its redetermination
decision leaving IP Italy’s fine unchanged. IP
appealed the ICA's redetermination decision as
inconsistent with the Council of State's 2024 and
2023 decision. In July 2024, the Council of State
partially annulled the ICA redetermination decision,
reducing IP Italy's fine by $6 million (€6 million). As of
December 31, 2024, after giving effect to this
development, the Company did not have any
remaining liability related to IP Italy's fine. IP Italy has
further appealed the Council of State's July 2024
decision seeking further reduction. DS Smith Italy
was also subject to the ICA decision but not fined,
given its position as leniency applicant. IP Italy, DS
Smith Italy, and other producers also have been
named in lawsuits, and we have received other
claims, by a number of customers for damages
associated with the alleged anticompetitive conduct.
Given the early stages of these claims and the
intention of the Company to defend robustly against
such claims, it is too early to predict with any real
degree of certainty, the precise overall outcome and
ultimate potential liability (if any) that might be
incurred in connection therewith, and there can be no
guarantee that the aggregate of possible damages
against IP Italy and DS Smith Italy could not,
together, have a material impact on the Company’s
financial condition.
GUARANTEES
In connection with sales of businesses, property,
equipment, forestlands and other assets, International
Paper
commonly
makes
representations
and
warranties relating to such businesses or assets, and
may agree to indemnify buyers with respect to tax
and
environmental
liabilities,
breaches
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.
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 Corporation ("Sylvamo"). Sylvamo Brazil
received assessments for the tax years 2007-2015
totaling approximately $95 million (adjusted for
variation in currency exchange rates) in tax, plus
interest, penalties and fees. The interest, penalties
and fees currently total approximately $235 million
(adjusted for variation in currency exchange rates).
Accordingly,
the
assessments
currently
total
approximately $330 million (adjusted for variation in
currency exchange rates). After an initial favorable
ruling challenging the basis for these assessments,
Sylvamo Brazil received subsequent unfavorable
decisions from the Brazilian Administrative Council of
Tax Appeals.
Sylvamo
Brazil
appealed
these
decisions. On October 11, 2024, the federal regional
court issued a ruling favorable to Sylvamo Brazil in
the first stage of judicial review on the assessments
for tax years 2007 and 2008-2012, comprising
approximately $210 million of the total $330 million as
of December 31, 2024. On December 18, 2024, the
Brazilian Federal Revenue Service appealed this
ruling. 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
82
Brazil's tax position should be sustained, based on
Brazilian tax law.
This matter pertains to a business that was conveyed
to Sylvamo on October 1, 2021, as part of our spin-off
transaction. Pursuant to the terms of the tax matters
agreement entered into between the 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 tax matters
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 to this ongoing litigation. The
Company intends to vigorously defend this historical
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
assets and liabilities resulting from the spin-off
transaction, the Company established a liability
representing the initial fair value of the contingent
liability under the 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, 2024. 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.
NOTE 14 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, 2024, this deferred tax
liability was $486 million, which will be settled with the
maturity of the notes in 2027.
In October 2007, Temple-Inland sold 1.55 million
acres of timberland for $2.4 billion. The total
consideration consisted almost entirely of notes due
in 2027 issued by the buyer of the timberland, which
Temple-Inland contributed to two wholly-owned,
bankruptcy-remote special purpose entities. The
notes are shown in Long-term financial assets of
variable interest entities in 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.
In December 2007, Temple-Inland's two wholly-
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, 2024 and 2023, the fair
value of the notes receivable was $2.3 billion. As of
both December 31, 2024 and 2023, 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
2024
2023
2022
Revenue (a)
$ 152 $ 146 $ 65
Expense (b)
136 136
58
Cash receipts (c)
135 122
28
Cash payments (d)
130 123
40
(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, 2024, 2023 and 2022, 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, 2024, 2023 and 2022 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.
In connection with the 2006 sale of approximately 5.6
million acres of forestlands, 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
83
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
formation
of
wholly-owned,
bankruptcy-remote
special purpose entities (the "2015 Financing
Entities").
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
from the Timber Notes. This resulted in cash
proceeds of approximately $630 million representing
our equity in the variable interest entities. Maturity of
the installment notes and 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 to settle the previously
disclosed timber monetization restructuring tax matter
involving the 2015 Financing Entities. Under this
agreement, the Company was required to 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 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.
NOTE 15 DEBT AND LINES OF CREDIT
Amounts related to early debt extinguishment during
the years ended December 31, 2024, 2023 and 2022
were as follows:
In millions
2024
2023
2022
Early debt reductions (a)
$
— $
— $ 503
Pre-tax early debt extinguishment
costs (b)
—
—
93
(a)
Reductions related to notes with interest rates ranging from
4.35% to 8.70% with original maturities from 2023 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.
The Company had debt reductions of $141 million in
2024, related primarily to $14 million of capital leases
and $127 million of environmental development
bonds ("EDB"). The Company also had debt
issuances of $102 million of EDBs.
The Company had debt issuances in 2023 of $600
million of term loan agreements and $183 million of
EDBs.
The Company had debt issuances in 2022 of $354
million of term loan agreements, $410 million of
commercial paper and $248 million of EDBs.
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
or floating rate notes. The Company had no
borrowings outstanding as of December 31, 2024 and
December 31, 2023 under this program.
At December 31, 2024, 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, 2024
and December 31, 2023, the Company had no
borrowings outstanding under the program.
84
A summary of long-term debt follows:
In millions at December 31
2024
2023
7.350% notes – due 2025
$
39 $
39
7.750% notes – due 2025
22
22
7.200% notes – due 2026
58
58
6.400% notes – due 2026
5
5
7.150% notes – due 2027
7
7
6.875% notes – due 2029
10
10
5.000% notes – due 2035
407
407
6.650% notes – due 2037
3
3
8.700% notes – due 2038
86
86
7.300% notes – due 2039
453
453
6.000% notes – due 2041
585
585
4.800% notes – due 2044
686
686
5.150% notes – due 2046
449
449
4.400% notes – due 2047
647
647
4.350% notes – due 2048
740
740
Floating rate notes – due 2027 – 2030 (a)
308
308
Environmental and industrial development
bonds – due 2025 – 2031 (b)
394
419
Floating rate term loan - due 2028
600
600
Total principal
5,499
5,524
Capitalized leases
49
55
Premiums, discounts, and debt issuance
costs
(39)
(41)
Terminated interest rate swaps
51
54
Other
1
1
Total (c)
5,561
5,593
Less: current maturities
193
138
Long-term debt
$ 5,368 $ 5,455
(a)
The weighted average interest rate on these notes was
4.6% in 2024 and 5.4% in 2023.
(b)
The weighted average interest rate on these bonds was
2.8% in 2024 and 2.4% in 2023.
(c)
The fair market value was approximately $5.2 billion at
December 31, 2024 and $5.5 billion at December 31, 2023.
Debt fair value measurements use Level 2 inputs.
At December 31, 2024, contractual obligations for
future payments of debt maturities (including finance
lease liabilities disclosed in Note 9 - Leases and
excluding
the
timber
monetization
structures
disclosed in Note 14 - Variable Interest Entities) by
calendar year were as follows over the next five
years: 2025 – $193 million; 2026 – $142 million;
2027 – $346 million; 2028 – $672 million; and 2029 –
$18 million.
The Company’s financial covenants require 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, 2024,
we were in compliance with our debt covenants.
NOTE 16 CAPITAL STOCK
The authorized capital stock at both December 31,
2024 and 2023, 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, 2024,
2023 and 2022:
Common Stock
In thousands
Issued
Treasury
Balance at January 1, 2022
448,916
70,362
Issuance of stock for various plans, net
—
(1,569)
Repurchase of stock
—
29,839
Balance at December 31, 2022
448,916
98,632
Issuance of stock for various plans, net
—
(1,647)
Repurchase of stock
—
5,894
Balance at December 31, 2023
448,916 102,879
Issuance of stock for various plans,
net
—
(2,028)
Repurchase of stock
—
648
Balance at December 31, 2024
448,916 101,499
85
NOTE 17 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 $23 million, $22 million and $29 million
in 2024, 2023 and 2022, respectively, and which are
expected to be $49 million in 2025.
Effective January 1, 2019, the Company froze
participation,
including
credited
service
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 to their
individual Retirement Savings Account as described
later in this Note 17.
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 2024 and 2023 and the
plans’ funded status.
2024
2023
In millions
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Change in projected benefit
obligation:
Benefit obligation,
January 1
$ 8,982 $
58 $ 8,816 $
54
Service cost
53
3
48
4
Interest cost
447
3
459
3
Actuarial loss (gain)
(547)
5
225
(3)
Plan amendments
16
—
26
—
Curtailments
—
(4)
—
—
Settlements
—
(2)
—
—
Benefits paid
(609)
(3)
(593)
(3)
Special termination
benefits
3
—
1
—
Effect of foreign currency
exchange rate movements
—
(4)
—
3
Benefit obligation,
December 31
$ 8,345 $
56 $ 8,982 $
58
Change in plan assets:
Fair value of plan assets,
January 1
$ 8,836 $
20 $ 8,845 $
18
Actual return on plan
assets
(57)
1
562
1
Company contributions
23
4
22
3
Benefits paid
(609)
(2)
(593)
(3)
Settlements
—
(2)
—
—
Transfer Payments
(4)
—
—
—
Effect of foreign currency
exchange rate movements
—
(1)
—
1
Fair value of plan assets,
December 31
$ 8,189 $
20 $ 8,836 $
20
Funded status,
December 31
$
(156) $
(36) $
(146) $
(38)
Amounts recognized in the
consolidated balance sheet:
Overfunded pension plan
assets
$
92 $
— $
118 $
—
Underfunded pension
benefit obligation - current
(49)
(2)
(20)
(2)
Underfunded pension
benefit obligation - non-
current
(199)
(34)
(244)
(36)
$
(156) $
(36) $
(146) $
(38)
Amounts recognized in
accumulated other
comprehensive income
(loss) under ASC 715 (pre-
tax):
Prior service cost (credit)
$
94 $
— $
91 $
—
Net actuarial loss (gain)
1,691
(5)
1,663
(10)
$ 1,785 $
(5) $ 1,754 $
(10)
86
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.
The largest contributor to the actuarial loss affecting
the benefit obligation was the increase in the discount
rate from 5.10% at December 31, 2023 to 5.68% at
December 31, 2024.
The components of the $31 million and $5 million
related
to
U.S.
plans
and
non-U.S.
plans,
respectively, in the amounts recognized in other
comprehensive income ("OCI") during 2024 consisted
of:
In millions
U.S.
Plans
Non-
U.S.
Plans
Current year actuarial (gain) loss
$
106 $
—
Amortization of actuarial loss
(78)
—
Current year prior service cost
16
—
Amortization of prior service cost
(13)
—
Settlements/curtailments
—
4
Effect of foreign currency exchange
rate movements
—
1
$
31 $
5
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 $32 million, $197 million and
$474 million in 2024, 2023 and 2022, respectively.
The portion of the change in funded status for the
non-U.S. plans was $11 million, $2 million, and $(6)
million in 2024, 2023 and 2022, respectively.
The accumulated benefit obligation at December 31,
2024 and 2023 was $8.3 billion and $9.0 billion,
respectively, for our U.S. defined benefit plans and
$46
million
and
$49
million,
respectively,
at
December 31, 2024 and 2023 for our non-U.S.
defined benefit plans.
The following table summarizes information for
pension plans with an accumulated benefit obligation
in excess of plan assets at December 31, 2024 and
2023:
2024
2023
In millions
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Projected benefit obligation $
248 $
55 $
264 $
57
Accumulated benefit
obligation
248
46
264
49
Fair value of plan assets
—
20
—
20
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 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:
2024
2023
2022
In millions
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Service cost
$
53 $
3 $
48 $
4 $
85 $
3
Interest cost
447
3
459
3
338
2
Expected return
on plan assets
(593)
— (530)
(1) (649)
(1)
Actuarial loss
(gain)
78
—
93
(1)
87
1
Amortization of
prior service cost
13
—
23
—
23
—
Special
termination
benefits
3
—
1
—
—
—
Net periodic
pension
(income)
expense
$
1 $
6 $
94 $
5 $ (116) $
5
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.
The decrease in 2024 pension expense primarily
reflects higher asset returns, lower interest cost due
to a lower discount rate, and lower actuarial loss.
87
ASSUMPTIONS
International
Paper
evaluates
its
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
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
following year (i.e., the discount rate used to
determine the benefit obligation as of December 31,
2024 is also the discount rate used to determine net
pension expense for the 2025 year).
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:
2024
2023
2022
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Actuarial assumptions used to determine benefit obligations as of December 31:
Discount rate
5.68 %
4.99 %
5.10 % 5.88 % 5.40 %
5.31 %
Rate of compensation increase
3.00 %
3.37 %
3.00 % 3.40 % 3.00 %
3.36 %
Actuarial assumptions used to determine net periodic pension cost for years ended
December 31:
Discount rate (a)
5.10 %
5.88 %
5.40 % 5.31 % 2.90 %
2.59 %
Expected long-term rate of return on plan assets (a)
7.00 %
3.79 %
6.50 % 3.83 % 6.00 %
3.66 %
Rate of compensation increase
3.00 %
3.40 %
3.00 % 3.36 % 3.00 %
2.92 %
(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
assets.
The
discount
rate
assumption
was
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 2025,
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 5.68%
and an assumed rate of compensation increase of
3.00%. The Company estimates that it will record net
pension expense of approximately $36 million for its
U.S. defined benefit plans in 2025, compared to
expense of $1 million in 2024.
For non-U.S. pension plans, assumptions reflect
economic assumptions applicable to each country.
The following illustrates the effect on pension
expense for 2025 of a 25 basis point decrease in the
above assumptions:
In millions
2025
Expense (Income):
Discount rate
$
14
Expected long-term rate of return on plan assets
20
PLAN ASSETS
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
objectives
and
investment
manager
performance. For non-U.S. plans, assets consist
principally of common stock and fixed income
securities.
88
International Paper’s U.S. pension allocations by type
of fund at December 31, 2024 and 2023 and target
allocations were as follows:
Asset Class
2024
2023
Target
Allocations
Hedging assets
62 %
66 %
61% - 72%
Return seeking assets (a)
38 %
34 %
28% - 39%
Total
100 %
100 %
(a) Return seeking assets include Real Estate (8% for 2024 and
9% for 2023) and Private Equity (7% and 7% for 2024 and 2023,
respectively).
The fair values of International Paper’s pension plan
assets at December 31, 2024 and 2023 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, 2024
Asset Class
Total
Quoted
Prices
in
Active
Markets
For
Identical
Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
In millions
Equities
$ 1,537 $
972 $
565 $
—
Fixed income
4,227
—
4,220
7
Derivatives
9
—
—
9
Cash and cash equivalents
(20)
(20)
—
—
Other investments:
Hedge funds
1,148
Private equity
599
Real estate funds
689
Total Investments
$ 8,189 $
952 $
4,785 $
16
Fair Value Measurement at December 31, 2023
Asset Class
Total
Quoted
Prices in
Active
Markets
For
Identical
Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
In millions
Equities
$ 1,336 $
835 $
501 $
—
Fixed income
4,691
—
4,684
7
Derivatives
71
—
—
71
Cash and cash equivalents
49
49
—
—
Other investments:
Hedge funds
1,293
Private equity
644
Real estate funds
752
Total Investments
$ 8,836 $
884 $
5,185 $
78
In accordance with accounting standards, certain
investments that are measured at NAV are not
classified in the fair value hierarchy.
Other Investments at December 31, 2024
Investment
Fair Value
Unfunded
Commitments
Redemption
Frequency
Remediation
Notice Period
In millions
Hedge funds
$
1,148 $
93
Quarterly to
semi-annually
45 - 60 days
Private equity
599
50
(a)
None
Real estate
funds
689
79
Quarterly
45 - 60 days
Total
$
2,436 $
222
(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, 2023
Investment
Fair Value
Unfunded
Commitments
Redemption
Frequency
Remediation
Notice Period
In millions
Hedge funds
$
1,293 $
103
Quarterly to semi-
annually
45 - 60 days
Private equity
644
81
(a)
None
Real estate
funds
752
94
Quarterly
45 - 60 days
Total
$
2,689 $
278
(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.
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.
Fixed income consists of government securities,
mortgage-backed
securities,
corporate
bonds,
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.
Derivative investments such as futures, 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
mismatches,
or
bona
fide
hedging
or
other
89
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, 2024 and 2023, respectively:
Derivatives at December 31, 2024
In millions
Gross Asset
Gross Liability
Total
Collateral
$
17 $
(1) $
16
Credit Default Swap
3
—
3
Interest Rate Swap
7
—
7
Bond/Equity Swap
—
(17)
(17)
Total
$
27 $
(18) $
9
Derivatives at December 31, 2023
In millions
Gross Asset
Gross Liability
Total
Collateral
$
7 $
(7) $
—
Credit Default Swap
2
—
2
Interest Rate Swap
4
—
4
Bond/Equity Swap
65
—
65
Total
$
78 $
(7) $
71
Hedge funds are investment structures for managing
private, loosely-regulated investment pools that can
pursue a diverse array of investment strategies with a
wide range of different securities and derivative
instruments. These investments are made through
funds-of-funds (commingled, multi-manager fund
structures)
and
through
direct
investments
in
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 the specific type of security or
instrument held. Funds-of-funds are valued based
upon the net asset values of the underlying
investments in hedge funds.
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
inputs such as cost, discounted cash flows,
independent
appraisals
and
market
based
comparable data.
The following is a reconciliation of the assets that are classified using significant unobservable inputs (Level 3) at
December 31, 2024:
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
In millions
Other
fixed
income
Derivatives
Total
Beginning balance at December 31, 2022
$
7 $
25 $
32
Actual return on plan assets:
Relating to assets still held at the reporting date
—
57
57
Relating to assets sold during the period
—
48
48
Purchases, sales and settlements
—
(59)
(59)
Transfers in and/or out of Level 3
—
—
—
Ending balance at December 31, 2023
$
7 $
71 $
78
Actual return on plan assets:
Relating to assets still held at the reporting date
—
(80)
(80)
Relating to assets sold during the period
—
31
31
Purchases, sales and settlements
—
(13)
(13)
Transfers in and/or out of Level 3
—
—
—
Ending balance at December 31, 2024
$
7 $
9 $
16
90
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,
and
other
factors.
The
Company
continually
reassesses
the
amount
and
timing
of
any
discretionary contributions. No voluntary contributions
were made in 2022, 2023 or 2024. 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, 2024, projected future pension
benefit payments, excluding any termination benefits,
were as follows:
In millions
2025
$
663
2026
638
2027
639
2028
638
2029
637
2030-2034
3,135
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
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.
The Company also sponsors the International Paper
Company Deferred Compensation Savings Plan,
which
is
an
unfunded
nonqualified
defined
contribution
plan.
This
plan
permits
eligible
employees to continue to make deferrals and receive
company matching contributions (and Retirement
Savings
Account
contributions)
when
their
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
to
the
plans
totaled
approximately $177 million, $160 million and $159
million for the plan years ended in 2024, 2023 and
2022, respectively.
91
NOTE 18 POSTRETIREMENT BENEFITS
U.S. POSTRETIREMENT BENEFITS
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
2024, 2023 and 2022 were as follows:
In millions
2024
2023
2022
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Interest cost
$
6 $
— $
7 $ — $
5 $
—
Actuarial loss
1
—
—
—
3
—
Net
postretirement
expense
$
7 $
— $
7 $ — $
8 $
—
International
Paper
evaluates
its
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 of employers’ accounting for
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, 2024, 2023 and 2022 were as
follows:
2024
2023
2022
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Discount rate 5.20 %
6.10 % 5.50 %
5.70 % 2.90 %
5.20 %
The
weighted
average
assumptions
used
to
determine the benefit obligation at December 31,
2024 and 2023 were as follows:
2024
2023
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Discount rate
5.67 %
5.70 % 5.20 %
6.10 %
Health care cost trend rate
assumed for next year
6.75 %
4.00 % 7.00 %
4.00 %
Rate that the cost trend rate
gradually declines to
5.00 %
4.00 % 5.00 %
4.00 %
Year that the rate reaches the
rate it is assumed to remain
2032
2024
2032
2023
The plans are only funded in an amount equal to
benefits paid. The following table presents the
changes in benefit obligation and plan assets for
2024 and 2023:
In millions
2024
2023
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Change in projected benefit
obligation:
Benefit obligation, January 1
$ 118 $
4 $ 125 $
4
Interest cost
6
—
7
—
Participants’ contributions
1
1
2
—
Actuarial (gain) loss
15
(1)
8
—
Benefits paid
(22)
—
(24)
—
Benefit obligation,
December 31
$ 118 $
4 $ 118 $
4
Change in plan assets:
Fair value of plan assets,
January 1
$
— $
— $
— $
—
Company contributions
21
—
22
—
Participants’ contributions
1
—
2
—
Benefits paid
(22)
—
(24)
—
Fair value of plan assets,
December 31
$
— $
— $
— $
—
Funded status, December 31
$ (118) $
(4) $ (118) $
(4)
Amounts recognized in the
consolidated balance sheet
under ASC 715:
Current liability
$ (14) $
— $ (13) $
—
Non-current liability
(104)
(4) (105)
(4)
$ (118) $
(4) $ (118) $
(4)
Amounts recognized in
accumulated other
comprehensive income (loss)
under ASC 715 (pre-tax):
Net actuarial loss (gain)
$
16 $
(2) $
2 $
(1)
$
16 $
(2) $
2 $
(1)
92
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.
The components of the $14 million and ($1) million
change in the amounts recognized in OCI during
2024 for U.S. and non-U.S. plans, respectively,
consisted of:
In millions
U.S.
Plans
Non-
U.S.
Plans
Current year actuarial (gain) loss
$
15 $
(1)
Amortization of actuarial (loss) gain
(1)
—
$
14 $
(1)
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 $(7) million, $(2) million and
$44 million in 2024, 2023 and 2022, respectively.
The portion of the change in funded status for the
non-U.S. plans was $(1) million, $0 million, and $0
million in 2024, 2023 and 2022, respectively.
At December 31, 2024, estimated total future
postretirement benefit payments, net of participant
contributions and estimated future Medicare Part D
subsidy receipts, were as follows:
In millions
Benefit
Payments
Subsidy
Receipts
Benefit
Payments
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
2025
$
14 $
1 $
—
2026
14
1
—
2027
13
1
—
2028
12
1
—
2029
11
1
—
2030– 2034
47
2
1
NOTE 19 INCENTIVE PLANS
On February 13, 2024, the Company's Board of
Directors, upon recommendation of the Management
Development and Compensation Committee (the
"MDCC"), authorized adoption of a 2024 Long-Term
Incentive Compensation Plan (the "2024 LTICP") to
replace the 2009 Amended and Restated Incentive
Compensation Plan (the "2009 Plan"), subject to
shareholder approval at the Company's annual
meeting of shareholders held on May 13, 2024. The
2024 LTICP became effective following approval by
shareholders at the May 13, 2024 annual meeting
and replaced the 2009 Plan. The 2024 LTICP
authorized up to 9,250,000 shares of our Class A
common stock, par value $1.00 per share, available
for future grants in the form of restricted stock,
restricted or deferred stock units, performance
awards payable in cash or stock upon the attainment
of specified performance goals, dividend equivalents,
options, stock appreciation rights, other stock-based
awards and cash-based awards at the discretion of
the Committee. The LTICP is administered by the
Committee.
Additionally, restricted stock, which may be deferred
into RSUs, may be awarded under a Restricted Stock
and Deferred Compensation Plan for Non-Employee
Directors.
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.
The maximum aggregate number of shares of the
Company’s common stock that may be issued
pursuant to awards under the LTICP shall not exceed
9,250,000 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 LTICP.
Performance Stock 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
2022-2024, 2023-2025 and 2024-2026 Awards are
weighted 50% ROIC and 50% TSR for all
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
93
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 in cash or shares at the
Company's discretion.
Restricted Stock Units
Time-based RSU awards granted under the LTIP are
expected to vest in three equal installments
commencing on February 1st following the first
anniversary of the grant date over a 3-year service
period, subject to forfeiture and transfer restrictions.
RSUs are payable in cash or shares at the
Company’s discretion.
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.
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.
The following table sets forth the assumptions used to
determine compensation cost for the market condition
component of the LTIP plan:
Twelve Months Ended
December 31, 2024
Expected volatility
27.09% - 37.11%
Risk-free interest rate
0.97% - 4.79%
The following summarizes LTIP activity for the three
years ended December 31, 2024:
Share/Units
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2021
5,926,142
$35.43
Granted
1,899,211
50.32
Shares issued
(1,130,236)
40.23
Forfeited
(1,382,637)
42.03
Outstanding at December 31, 2022
5,312,480
38.01
Granted - LTIP PSU
1,619,481
37.78
Granted - LTIP RSU
1,411,042
34.63
Shares issued - LTIP PSU
(972,563)
40.44
Shares issued - LTIP RSU
(15,161)
34.63
Forfeited
(1,234,328)
45.38
Outstanding at December 31, 2023
6,120,951
35.31
Granted - LTIP PSU
2,039,725
35.28
Granted - LTIP RSU
1,414,316
36.15
Shares issued - LTIP PSU
(851,962)
53.32
Shares issued - LTIP RSU
(446,582)
34.63
Shares issued - LTIP RSU
(8,060)
36.15
Forfeited
(1,350,063)
45.58
Outstanding at December 31, 2024
6,918,325
$31.29
RECOGNITION AWARD PROGRAM
The Recognition Award Program ("RA Program") is
service-based and designed for recruitment, retention
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,
2024:
Shares
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2021
103,769
$49.03
Granted
132,200
43.38
Shares issued
(104,177)
44.53
Forfeited
(5,400)
47.78
Outstanding at December 31, 2022
126,392
46.88
Granted
123,454
35.51
Shares issued
(81,629)
45.40
Forfeited
(11,643)
39.77
Outstanding at December 31, 2023
156,574
39.22
Granted
115,200
43.26
Shares issued
(85,236)
37.53
Forfeited
(6,700)
38.30
Outstanding at December 31, 2024
179,838
$42.64
94
At December 31, 2024, 2023 and 2022 a total of 9.1
million,
5.5
million
and
7.3
million
shares,
respectively, were available for grant under the LTICP.
Stock-based compensation expense and related
income tax benefits were as follows:
In millions
2024
2023
2022
Total stock-based compensation
expense (included in selling and
administrative expense)
$
82 $
58 $
124
Income tax benefits related to stock-
based compensation
14
12
13
At December 31, 2024, $72 million of compensation
cost, net of estimated forfeitures, related to unvested
restricted stock unit awards, performance stock unit
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 1.7 years.
NOTE
20
FINANCIAL
INFORMATION
BY
BUSINESS SEGMENT AND GEOGRAPHIC AREA
International Paper operates in two segments:
Industrial Packaging and Global Cellulose Fibers.
Industrial
Packaging
is
primarily
focused
on
producing
fiber-based
packaging.
We
produce
linerboard, medium, whitetop, recycled linerboard,
recycled medium and saturating kraft of which
approximately 75% of our production is converted into
corrugated packaging and other packaging. The
revenue for our Industrial Packaging segment is
derived from selling these products to our customers.
Global Cellulose Fibers primarily focus on producing
cellulose fibers which is a renewable raw material
used in a variety of products people depend on every
day such as diapers, towel and tissue products,
feminine care, incontinence and other personal care
products. In addition, our innovative specialty pulps
serve as a sustainable raw material used in textiles,
construction materials, paints, coatings and more.
The revenue for our Global Cellulose Fibers segment
is derived from selling these products to our
customers.
The accounting policies of the Industrial Packaging
and Global Cellulose Fibers segments are the same
as those described in the summary of significant
accounting policies.
The chief operating decision maker ("CODM")
assesses performance for these segments and
decides how to allocate resources based on business
segment
operating
profit.
Business
segment
operating
profits
(losses)
are
also
used
by
International Paper's CODM to measure the earnings
performance of its businesses and to focus on on-
going operations. During 2024, business segment
operating profits (losses) used by the CODM were
adjusted to include accelerated depreciation as part
of the measure of business performance. As such,
results for the year ended December 31, 2023 have
been recast to reflect $422 million for accelerated
depreciation related to mill strategic actions in
business segment operating profit (losses).
International
Paper's
reportable
segments
are
strategic business units that offer different products.
They
are
managed
separately
because
each
business requires different resources and strategies.
International Paper’s CODM is the chief executive
officer.
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 in the Net Sales table are
determined using a management approach and
include intersegment sales.
INFORMATION BY BUSINESS SEGMENT
The following tables illustrate reportable segment
revenue,
significant
segment
expenses,
and
measures of a segment’s profit or loss for the years
ended December 31, 2024, 2023 and 2022. The table
also reconciles these amounts to Earnings (loss) from
continuing operations before income taxes and equity
earnings.
95
2024:
In millions
Industrial
Packaging
Global
Cellulose
Fibers
Total
Net Sales
$
15,534
$
2,793
$ 18,327
Corporate and
Intrasegment Sales
292
Total Net Sales
18,619
Less:
Cost of products sold
10,985
1,983
Selling and administrative
expenses
1,451
262
Depreciation and
amortization
850
450
Distribution expenses
1,179
295
Other segment items (a)
118
29
Business Segment
Operating Profit (Losses)
951
(226)
725
Interest Expense, net
208
Adjustment for less than
wholly owned subsidiaries
(b)
(5)
Corporate expenses, net
44
Corporate net special items
251
Business net special items
122
Non-operating pension
(income) expense
(42)
Earnings (losses) from
continuing operations
before income taxes and
equity earnings (losses)
$
147
2023:
In millions
Industrial
Packaging
Global
Cellulose
Fibers
Total
Net Sales
$
15,596
$
2,890
$ 18,486
Corporate and
Intrasegment Sales
430
Total Net Sales
18,916
Less:
Cost of products sold
11,093
2,121
Selling and administrative
expenses
1,078
211
Depreciation and
amortization
1,144
286
Distribution expenses
1,240
335
Other segment items (a)
122
29
Business Segment
Operating Profit (Losses)
919
(92)
827
Interest Expense, net
231
Adjustment for less than
wholly owned subsidiaries
(b)
(2)
Corporate expenses, net
27
Corporate net special
items
28
Business net special items
107
Non-operating pension
(income) expense
54
Earnings (losses) from
continuing operations
before income taxes and
equity earnings (losses)
$
382
96
2022:
In millions
Industrial
Packaging
Global
Cellulose
Fibers
Total
Net Sales
$
17,451
$
3,227
$ 20,678
Corporate and
Intrasegment Sales
483
Total Net Sales
21,161
Less:
Cost of products sold
12,509
2,183
Selling and administrative
expenses
983
189
Depreciation and
amortization
783
255
Distribution expenses
1,315
468
Other segment items (a)
119
26
Business Segment
Operating Profit (Losses)
1,742
106
1,848
Interest Expense, net
325
Adjustment for less than
wholly owned subsidiaries
(b)
(5)
Corporate expenses, net
34
Corporate net special
items
99
Business net special items
76
Non-operating pension
(income) expense
(192)
Earnings (losses) from
continuing operations
before income taxes and
equity earnings (losses)
$
1,511
Assets
In millions
2024
2023
Industrial Packaging
$ 15,805
$ 16,060
Global Cellulose Fibers
2,857
3,369
Corporate and other
4,138
3,832
Assets
$ 22,800
$ 23,261
Capital Spending
In millions
2024
2023
2022
Industrial Packaging
$
763
$
928
$
762
Global Cellulose Fibers
133
177
143
Subtotal
896
1,105
905
Corporate and other
25
36
26
Capital Spending
$
921
$
1,141
$
931
External Sales By Major Product
In millions
2024
2023
2022
Industrial Packaging
$ 15,533
$ 15,596
$ 17,441
Global Cellulose Fibers
2,784
2,883
3,219
Other
302
437
501
Net Sales
$ 18,619
$ 18,916
$ 21,161
INFORMATION BY GEOGRAPHIC AREA
Net Sales (c)
In millions
2024
2023
2022
United States (d)
$ 16,300
$ 16,340
$ 18,482
EMEA
1,432
1,494
1,693
Pacific Rim and Asia
157
261
123
Americas, other than U.S.
730
821
863
Net Sales
$ 18,619
$ 18,916
$ 21,161
Long-Lived Assets (e)
In millions
2024
2023
United States
$
8,617
$
9,021
EMEA
706
757
Americas, other than U.S.
352
390
Long-Lived Assets
$
9,675
$ 10,168
(a)
Other segment items includes Taxes other than payroll.
(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.
(c)
Net sales are attributed to countries based on the location of
the seller.
(d)
Export sales to unaffiliated customers were $2.9 billion in
2024, $2.7 billion in 2023 and $3.2 billion in 2022.
(e)
Long-Lived
Assets
includes
Forestlands
and
Plants,
Properties and Equipment, net.
NOTE 21 SUBSEQUENT EVENT
On February 13, 2025, the Company announced the
permanent closure of its Red River containerboard
mill in Campti, Louisiana with operations expected to
cease by March 31, 2025. The Company expects to
recognize costs associated with the closure in the first
quarter of 2025, including accelerated depreciation,
pre-tax cash severance and other shutdown charges.
For discussion of the DS Smith acquisition that was
completed subsequent to December 31, 2024, refer
to Note 7.
97
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
As of December 31, 2024, 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, 2024.
CHANGES
IN
INTERNAL
CONTROL
OVER
FINANCIAL
REPORTING
There have been no changes in our internal control
over financial reporting during the quarter ended
December 31, 2024, 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 52 and 53 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
During the quarter ended December 31, 2024, no
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.
PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
Information concerning our directors is hereby
incorporated by reference to our definitive proxy
statement for the Annual Meeting of Shareowners
(the "Proxy Statement") to be held in May 2025 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 is hereby incorporated by reference to the
Proxy Statement. Information with respect to our
executive officers is set forth on pages 10 and 11 in
Part I, Item 1 of this Form 10-K under the caption,
“Information About Our Executive Officers.”
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 have adopted an Insider Trading Policy applicable
to our directors, officers, and employees, and have
implemented processes for the Company, that we
believe
are
reasonably
designed
to
promote
compliance with insider trading laws, rules, and
regulations, the UK Market Abuse Regulation, and the
NYSE listing standards.
Our Insider Trading Policy prohibits our employees
and related persons and entities from trading in
securities of International Paper and other companies
while
in
possession
of
material,
non-public
information. Our Insider Trading Policy also prohibits
our employees from disclosing material, non-public
information regarding International Paper, or any
other publicly traded company, to others who may
trade on the basis of that information. In addition, with
regard to the Company’s trading in its own securities,
it is the Company’s policy to comply with the federal
securities laws and the applicable exchange listing
requirements. A copy of our Insider Trading Policy is
filed as Exhibit 19 to this Form 10-K.
We make our Corporate Governance Guidelines, our
Code, our Insider Trading Policy 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. Our Corporate
Governance Statement as required under the FCA's
Disclosure Guidance and Transparency Rule ("DTR")
7.2.2 is available on the Governance page of the
98
Investors tab of our website at internationalpaper.com
under Governance Documents. 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
Information
with
respect
to
compliance
with
Section 16(a) of the Exchange Act and our corporate
governance is hereby incorporated by reference to
our Proxy Statement.
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
director
independence
matters,
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 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES
Information with respect to fees paid to, and services
rendered by, our independent registered public
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 IV.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
(1) Financial Statements – See Item 8. Financial
Statements and Supplementary Data.
(2) Financial Statement Schedules – The following
additional financial data should be read in
conjunction with the consolidated 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
information
is
shown
in
the
consolidated financial statements or the notes
thereto.
Additional Financial Data
2024, 2023 and 2022
(2.1)
Transaction Agreement, dated October
23, 2017, by and among the Company,
Graphic Packaging Holding Company,
Gazelle
Newco
LLC
and
Graphic
Packaging
International,
Inc.
(incorporated by reference to Exhibit 2.1
to the Company’s Current Report on
Form 8-K dated October 24, 2017).
(2.2)
Separation and Distribution Agreement,
dated as of September 29, 2021, by and
between International Paper Company
and Sylvamo Corporation (incorporated
by reference to Exhibit 2.1 to the
Company’s’ Current Report on Form 8-K
dated October 1, 2021).
(2.3)
Rule 2.7 Announcement dated April 16,
2024 (incorporated by reference to
Exhibit 2.1 to the Company’s Current
Report on Form 8-K dated April 16,
2024).
(2.4)
Co-operation
Agreement
between
International Paper Company and DS
Smith, Plc (incorporated by reference to
Exhibit 2.1 to the Company’s Current
Report on Form 8-K dated April 16,
2024).
99
(3.1)
Restated Certificate of Incorporation
of
the
Company
(incorporated
by
reference
to
Exhibit
3.1
to
the
Company’s Current Report on Form 8-K
dated May 13, 2013).
(3.2)
By-laws of the Company, as amended
through May 9, 2023 (incorporated by
reference
to
Exhibit
3.1
to
the
Company’s Current Report on Form 8-K
dated May 9, 2023).
(4.1)
Indenture, dated as of April 12, 1999,
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 16, 2000).
(4.2)
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).
(4.3)
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 to Exhibit 4.1 to the
Company's Current Report on Form 8-K
dated December 7, 2009).
(4.4)
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 to Exhibit 4.1 to the
Company's Current Report on Form 8-K
dated November 16, 2011).
(4.5)
Supplemental Indenture (including the
form of Notes), dated as of June 10,
2014, between the Company and The
Bank
of
New York
Mellon Trust
Company,
N.A.,
as
trustee
(incorporated
by
reference
to
Exhibit 4.1 to the Company's Current
Report on Form 8-K dated June 10,
2014).
(4.6)
Supplemental Indenture (including the
form of Notes), dated as of May 26,
2015, between the Company and The
Bank
of
New York
Mellon Trust
Company,
N.A.,
as
trustee
(incorporated
by
reference
to
Exhibit 4.1 to the Company's Current
Report on Form 8-K dated May 26,
2015).
(4.7)
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,
N.A.,
as
trustee
(incorporated by reference to Exhibit
4.1 to the Company's Current Report on
Form 8-K dated August 11, 2016).
(4.8)
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,
N.A.,
as
trustee
(incorporated by reference to Exhibit
4.1 to the Company's Current Report on
Form 8-K dated August 9, 2017.
(4.10)
In
accordance
with
Item
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.
(4.11)
Description of Securities*.
(10.1)
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). +
(10.1.1)
2024
Long-Term
Incentive
Compensation Plan (incorporated by
reference
to
Exhibit
10.1
to
the
Company’s Current Report on Form 8-
K dated May 16, 2024). +
(10.2)
Restricted
Stock
and
Deferred
Compensation Plan for Non-Employee
Directors, Amended and Restated as of
May
10,
2010
(incorporated
by
reference
to
Exhibit
10.1
to
the
Company’s Quarterly Report on Form
10-Q for the quarter ended June 30,
2010). +
100
(10.3)
Form of Notice of Award under the
Recognition Plan Restricted Stock Unit
Award Agreement (stock settled) providing
for accelerated vesting. +
(10.4)
Form of Notice of Award under the
Recognition Plan Restricted Stock Unit
Award Agreement (stock settled). +
(10.5)
Form of Notice of Award under the
Recognition Plan Restricted Stock Unit
Award Agreement (cash settled). +
(10.6)
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). +
(10.6.1(a)) Form of Notice of Award under the Long-
Term Incentive Plan Performance Stock
Unit Award Agreement (cash settled,
100%
total
shareholder
return
performance metrics). * +
(10.6.2)
Form of Notice of Award under the Long-
Term Incentive Plan Performance Stock
Unit Award Agreement (stock settled). * +
(10.6.2(a)) Form of Notice of Award under the Long-
Term Incentive Plan Performance Stock
Unit Award Agreement (stock settled,
100%
total
shareholder
return
performance metrics). * +
(10.6.3)
Form of Notice of Award under the Long-
Term Incentive Plan Restricted Stock Unit
Award Agreement (cash settled). +
(10.6.4)
Form of Notice of Award under the Long-
Term Incentive Plan Restricted Stock Unit
Award Agreement (stock settled). +
(10.6.5)
Notice of Award under the Recognition
Award Plan Restricted Stock Units (stock
settled)
between
International
Paper
Company
and
W.
Thomas
Hamic,
providing for accelerated vesting, accepted
June 26, 2024 (incorporated by reference
to Exhibit 10.3 to the Company’s Quarterly
Report on Form 10-Q for the quarter
ended June 30, 2024).+
(10.7)
International Paper Company Pension
Restoration Plan for Salaried Employees
effective April 1, 1991 (corrected version of
previously filed exhibit). +
(10.8)
Amendment
Number
One
to
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). +
(10.9)
Amendment
Number
Two
to
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). +
(10.10)
Amendment
Number
Three
to
the
International Paper Company Pension
Restoration Plan for Salaried Employees
effective January 1, 2015 (incorporated by
reference
to
Exhibit
10.10
to
the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
2019). +
(10.11)
Amendment
Number
Four
to
the
International Paper Company Pension
Restoration Plan for Salaried Employees
effective July 1, 2014 (incorporated by
reference
to
Exhibit
10.11
to
the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
2019). +
(10.12)
Amendment
Number
Five
to
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). +
(10.13)
Amendment
Number
Six
to
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
to
the
International Paper Company Pension
Restoration Plan for Salaried Employees
effective September 1, 2021. +
(10.13.2)
Amendment
Number
Eight
to
the
International Paper Company Pension
Restoration Plan for Salaried Employees
effective January 1, 2023. +
(10.14)
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). +
101
(10.15)
Amendment No. 1 to the International
Paper Company Unfunded 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). +
(10.16)
Amendment No. 2 to the International
Paper
Company
Unfunded
Supplemental
Retirement
Plan
for
Senior Managers, effective October 14,
2008 (incorporated by reference to
Exhibit 10.5 to the Company’s Current
Report on Form 8-K dated October 17,
2008). +
(10.17)
Amendment No. 3 to the International
Paper
Company
Unfunded
Supplemental
Retirement
Plan
for
Senior Managers, effective December 8,
2008 (incorporated by reference to
Exhibit 10.20 to the Company’s Annual
Report on Form 10-K for the fiscal year
ended December 31, 2008). +
(10.18)
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). +
(10.19)
Amendment No. 5 to the International
Paper
Company
Unfunded
Supplemental
Retirement
Plan
for
Senior Managers, effective October 31,
2009 (incorporated by reference to
Exhibit 10.17 to the Company’s Annual
Report on Form 10-K for the fiscal year
ended December 31, 2009). +
(10.20)
Amendment No. 6 to the International
Paper
Company
Unfunded
Supplemental
Retirement
Plan
for
Senior Managers, effective January 1,
2012 (incorporated by reference to
Exhibit 10.21 to the Company’s Annual
Report on Form 10-K for the fiscal year
ended December 31, 2011). +
(10.21)
Amendment No. 7 to the International
Paper
Company
Unfunded
Supplemental
Retirement
Plan
for
Senior Managers effective July 12, 2016
(incorporated by reference to Exhibit
10.20 to the Company's Annual Report
on Form 10-K for the fiscal year ended
December 31, 2019). +
(10.22)
Amendment No. 8 to the International
Paper Company Unfunded Supplemental
Retirement Plan for Senior Managers
effective January 1, 2019 (incorporated by
reference
to
Exhibit
10.21
to
the
Company's Annual Report on Form 10-K
for the fiscal year ended December 31,
2019). +
(10.23)
Amendment No. 9 to the International
Paper Company Unfunded Supplemental
Retirement Plan for Senior Managers
effective November 1, 2019 (incorporated
by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-
Q for the quarter ended September 30,
2019. +
(10.24)
Form of Non-Competition Agreement,
entered
into
by
certain
Company
employees (including named executive
officers) who have received restricted
stock units. +
(10.25)
Form of Non-Solicitation Agreement,
entered
into
by
certain
Company
employees (including named executive
officers) who have received restricted
stock units. +
(10.26)
Form of Change-in-Control Agreement -
Tier I, for the Chief Executive Officer and
all
"grandfathered"
senior
vice
presidents elected prior to 2012 (all but
one named executive officer) - approved
September
2013
(incorporated
by
reference
to
Exhibit
10.1
to
the
Company’s Quarterly Report on Form
10-Q for the quarter ended September
30, 2013). +
(10.27)
Form of Change-in-Control Agreement -
Tier II, for all future senior vice
presidents and all "grandfathered" vice
presidents
(one
named
executive
officer) elected prior to February 2008 -
approved
September
2013
(incorporated by reference to Exhibit
10.2 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended
September 30, 2013). +
(10.27.1)
Form of Change-in-Control Agreement –
Tier II, for all current and future senior
vice presidents and all “grandfathered”
vice presidents elected prior to February
2008 – approved October 14, 2024
(incorporated by reference to Exhibit
10.2 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended
September 30, 2024) +.
(10.28)
Form
of
Indemnity
Agreement
(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). +
102
(10.31)
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). +
(10.32)
Commitment
Agreement,
dated
September
26,
2017,
between
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)
Commitment
Agreement,
dated
September
25,
2018,
between
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). +
(10.34)
Amendment No. 20 to the Second
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.
(10.35)
Third Amended and Restated Five-Year
Credit Agreement, dated as of June 7,
2023,
among
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.
(10.36)
Term Loan Agreement dated January
24, 2023, between International Paper
Company
and
CoBank,
ACB,
as
administrative agent (incorporated by
reference
to
Exhibit
10.1
to
the
Company's Current Report on Form 8-K
filed January 24, 2023).+
(10.37)
Share Purchase Agreement for the
Divestiture
of
International
Paper-
Kwidzyn SP. Z.O.O. by and among
International Paper (Poland) Holding SP.
Z.O.O., Mayr-Melnhof Containerboard
International,
GMBH,
Mayr-Melnhof
Karton AG and International Paper
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.
(10.38)
Share
Purchase
Agreement,
dated
February 12, 2021, by and between
International
Paper
Investments
(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).
(10.39)
Transfer Notice from International Paper
Switzerland GmbH to Pulp Holding
Luxembourg S.A.R.L and ILIM Holding
Luxembourg S.A.R.L dated December
15, 2022.
(10.40)
Employment Offer Letter dated March
14, 2024, between International Paper
Company and Andrew K. Silvernail
(incorporated by reference to Exhibit
10.1 to the Company’s Current Report
on Form 8-K dated March 19, 2024). +
(10.40.1)
Addendum to Terms and Conditions of
Offer of Employment Agreement dated
October 30, 2024, by and between
Andrew K. Silvernail and 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, 2024). +
(10.41)
Notice of Award under the 2024 Long-
Term Incentive Plan Performance Stock
Unit Inducement Award (stock settled)
between International Paper Company
and Andrew K. Silvernail, accepted May
7, 2024 (incorporated by reference to
Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q for the quarter
ended June 30, 2024). +
(10.42)
Form of Notice of Award under the
Long-Term Incentive Plan Performance
Stock Units (stock settled) between
International
Paper
Company
and
Andrew
K.
Silvernail
providing
for
retirement eligibility at 60 years of age
regardless of service (incorporated by
reference
to
Exhibit
10.2
to
the
Company’s Quarterly Report on Form
10-Q for the quarter ended June 30,
2024). +
103
(10.43)
Form of Notice of Award under the
Long-Term Incentive Plan Performance
Stock Units (stock settled) between
International
Paper
Company
and
Andrew
K.
Silvernail
providing
for
retirement eligibility at 60 years of age
regardless of service and 100% total
shareholder return performance metrics.
* +
(10.44)
Time Sharing Agreement dated May 14,
2024 (and effective May 1, 2024) by and
between Andrew
K
Silvernail
and
International
Paper
Company
(incorporated by reference to Exhibit
10.5 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended
June 30, 2024). +
(10.45)
Change-in-Control
Agreement
dated
May 6, 2024, by and between Andrew K.
Silvernail
and
International
Paper
Company
providing
for
retirement
eligibility at 60 years of age regardless
of service and cash severance payment
equal to 2.99 times the sum of base
salary plus target bonus (incorporated
by reference to Exhibit 10.6 to the
Company’s Quarterly Report on Form
10-Q for the quarter ended June 30,
2024). +
(10.46)
International Paper Company Executive
Severance
Plan
(incorporated
by
reference
to
Exhibit
10.1
to
the
Company’s Current Report on Form 8-K
dated February 11, 2025). +
(19)
International Paper Company Insider
Trading Policy amended and restated as
of January 31, 2025.*
(21)
Subsidiaries and Joint Ventures.*
(23.1)
Consent of Independent Registered
Public Accounting Firm. *
(23.2)
Consent of Independent Registered
Public Accounting Firm. *
(24)
Power of Attorney (contained on the
signature page to the Company’s Annual
Report on Form 10-K for the year ended
December 31, 2014). *
(31.1)
Certification by Andrew K. Silvernail,
Chairman and Chief Executive Officer,
pursuant
to
Section
302
of
the
Sarbanes-Oxley Act of 2002. *
(31.2)
Certification by Timothy S. Nicholls,
Senior
Vice
President
and
Chief
Financial Officer, pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
*
(32)
Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002.**
(97)
International Paper Company Clawback
Policy.
(99)
Report of Independent Auditors for Ilim
S.A and subsidiaries as of and for the
years ended December 31, 2022 and
2021. *
(101.INS)
XBRL Instance Document - the instance
document does not appear in the
Interactive Data File because its XBRL
tags are embedded within the inline
XBRL document. *
(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
Interactive
Data
File
(formatted
as
Inline
XBRL,
and
contained in Exhibit 101. *
+ 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.
104
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
February 21, 2025
Joseph R. Saab
Senior Vice President, General Counsel
and Corporate Secretary
POWER OF ATTORNEY
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/ ANDREW K. SILVERNAIL
Chairman of the Board & Chief Executive
Officer and Director
February 21, 2025
Andrew K. Silvernail
/S/ JAMIE A. BEGGS
Director
February 21, 2025
Jamie A. Beggs
/S/ CHRISTOPHER M. CONNOR
Director
February 21, 2025
Christopher M. Connor
/S/ AHMET C. DORDUNCU
Director
February 21, 2025
Ahmet C. Dorduncu
/S/ ANDERS GUSTAFSSON
Director
February 21, 2025
Anders Gustafsson
/S/ JACQUELINE C. HINMAN
Director
February 21, 2025
Jacqueline C. Hinman
105
/s/ CLINTON A. LEWIS, JR.
Director
February 21, 2025
Clinton A. Lewis, Jr.
/S/ DAVID A. ROBBIE
Director
February 21, 2025
David A. Robbie
/s/ KATHRYN D. SULLIVAN
Director
February 21, 2025
Kathryn D. Sullivan
/s/ SCOTT A. TOZIER
Director
February 21, 2025
Scott A. Tozier
/s/ ANTON V. VINCENT
Director
February 21, 2025
Anton V. Vincent
/S/ TIMOTHY S. NICHOLLS
Senior Vice President and Chief Financial
Officer
February 21, 2025
Timothy S. Nicholls
/S/ HOLLY G. GOUGHNOUR
Vice President – Finance and Corporate
Controller
February 21, 2025
Holly G. Goughnour
106
APPENDIX I
2024 LISTING OF FACILITIES
(all facilities are owned except noted otherwise)
INDUSTRIAL PACKAGING
Modesto, California
Fridley, Minnesota
Ontario, California
Minneapolis, Minnesota leased
Containerboard
Salinas, California
Shakopee, Minnesota
U.S.:
Sanger, California
White Bear Lake, Minnesota
Pine Hill, Alabama
Santa Fe Springs, California (2
locations)
Houston, Mississippi
Prattville, Alabama
Tracy, California
Jackson, Mississippi
Selma, Alabama (Riverdale Mill)
Golden, Colorado
Magnolia, Mississippi leased
Cantonment, Florida (Pensacola Mill)
Wheat Ridge, Colorado
Olive Branch, Mississippi
Rome, Georgia
Putnam, Connecticut
Fenton, Missouri
Savannah, Georgia
Orlando, Florida
Kansas City, Missouri (2 locations) (2)
Cayuga, Indiana
Plant City, Florida
Maryland Heights, Missouri
Cedar Rapids, Iowa
Tampa, Florida leased
North Kansas City, Missouri leased
Henderson, Kentucky
Columbus, Georgia
St. Joseph, Missouri
Maysville, Kentucky
Forest Park, Georgia
St. Louis, Missouri
Bogalusa, Louisiana
Griffin, Georgia
Omaha, Nebraska
Campti, Louisiana
Lithonia, Georgia
McCarran, Nevada
Mansfield, Louisiana
Savannah, Georgia
Barrington, New Jersey
Vicksburg, Mississippi
Tucker, Georgia
Bellmawr, New Jersey
Valliant, Oklahoma
Aurora, Illinois (3 locations) 1 leased
Milltown, New Jersey leased
Springfield, Oregon
Bedford Park, Illinois
Spotswood, New Jersey
Belleville, Illinois
Thorofare, New Jersey
Carol Stream, Illinois
Binghamton, New York
International:
Des Plaines, Illinois
Buffalo, New York
Veracruz, Mexico
Lincoln, Illinois
Rochester, New York
Kenitra, Morocco
Montgomery, Illinois
Scotia, New York
Madrid, Spain
Northlake, Illinois
Utica, New York
Rockford, Illinois (1)
Charlotte, North Carolina (2
locations) 1 leased
Corrugated Packaging
Butler, Indiana
Lumberton, North Carolina
U.S.:
Crawfordsville, Indiana
Manson, North Carolina
Bay Minette, Alabama
Fort Wayne, Indiana
Newton, North Carolina
Decatur, Alabama
Indianapolis, Indiana (3 locations)
Statesville, North Carolina (1)
Dothan, Alabama leased
Saint Anthony, Indiana
Byesville, Ohio
Huntsville, Alabama
Tipton, Indiana
Delaware, Ohio
Conway, Arkansas
Cedar Rapids, Iowa
Eaton, Ohio
Fort Smith, Arkansas (2 locations)
Waterloo, Iowa
Madison, Ohio
Russellville, Arkansas (2 locations)
Garden City, Kansas
Marion, Ohio
Tolleson, Arizona
Bowling Green, Kentucky
Marysville, Ohio leased
Yuma, Arizona
Lexington, Kentucky
Middletown, Ohio
Anaheim, California
Louisville, Kentucky
Mt. Vernon, Ohio
Buena Park, California leased
Walton, Kentucky
Newark, Ohio
Camarillo, California
Bogalusa, Louisiana
Streetsboro, Ohio
Carson, California
Lafayette, Louisiana
Wooster, Ohio
Cerritos, California leased
Shreveport, Louisiana
Oklahoma City, Oklahoma
Compton, California
Springhill, Louisiana
Beaverton, Oregon
Elk Grove, California
Auburn, Maine
Hillsboro, Oregon
Exeter, California
Three Rivers, Michigan
Portland, Oregon
Gilroy, California (2 locations)
Arden Hills, Minnesota
Salem, Oregon leased
Los Angeles, California
Austin, Minnesota
Atglen, Pennsylvania
A-1
Biglerville, Pennsylvania (2 locations)
Puebla, Mexico leased
Bags
Eighty-four, Pennsylvania
Reynosa, Mexico
U.S.:
Hazleton, Pennsylvania
San Jose Iturbide, Mexico
Buena Park, California
Kennett Square, Pennsylvania
Santa Catarina, Mexico
Beaverton, Oregon
Lancaster, Pennsylvania
Silao, Mexico
Grand Prairie, Texas
Mount Carmel, Pennsylvania
Toluca, Mexico
Georgetown, South Carolina
Zapopan, Mexico
GLOBAL CELLULOSE FIBERS
Laurens, South Carolina
Agadir, Morocco
Lexington, South Carolina
Casablanca, Morocco
Pulp
Ashland City, Tennessee leased
Tangier, Morocco
U.S.:
Cleveland, Tennessee (1)
Ovar, Portugal
Flint River, Georgia
Elizabethton, Tennessee leased
Barcelona, Spain
Port Wentworth, Georgia
Morristown, Tennessee
Bilbao, Spain
Columbus, Mississippi (2 locations)
Murfreesboro, Tennessee
Gandia, Spain
New Bern, North Carolina
Amarillo, Texas
Grinon, Spain
Riegelwood, North Carolina
Carrollton, Texas (2 locations)
Las Palmas, Spain
Georgetown, South Carolina (1)
Edinburg, Texas
Madrid, Spain
Franklin, Virginia
El Paso, Texas
Montblanc, Spain
Ft. Worth, Texas leased
Tavernes de la Valldigna, Spain
Grand Prairie, Texas
Tenerife, Spain
International:
Hidalgo, Texas
Valls, Spain
Grande Prairie, Alberta, Canada
McAllen, Texas
Gdansk, Poland
San Antonio, Texas (2 locations) (3)
Recycling
Sealy, Texas
U.S.:
DISTRIBUTION
Waxahachie, Texas
Phoenix, Arizona
Lynchburg, Virginia
Fremont, California
International:
Petersburg, Virginia
Norwalk, California
Guangzhou, China leased
Richmond, Virginia
West Sacramento, California
Hong Kong, China leased
Moses Lake, Washington
Itasca, Illinois
Shanghai, China leased
Olympia, Washington
Des Moines, Iowa
Japan leased
Yakima, Washington
Wichita, Kansas
Korea leased
Fond du Lac, Wisconsin
Roseville, Minnesota
Singapore leased
Manitowoc, Wisconsin
Omaha, Nebraska
Charlotte, North Carolina
International:
Beaverton, Oregon
Rancagua, Chile
Springfield, Oregon leased
1) Closed December 2024
Cabourg, France
Carrollton, Texas
2) Closed one location December 2024
Chalon, France
Salt Lake City, Utah
3) Closed one location November 2024
Espaly, France
Richmond, Virginia
4) Closed March 2024
Mortagne, France
Kent, Washington
Saint Amand, France
Bellusco, Italy
International:
Catania, Italy
Monterrey, Mexico leased
Pomezia, Italy
Xalapa, Veracruz, Mexico leased
San Felice, Italy
Apodaco, Mexico leased
Ixtaczoquitlan, Mexico (4)
Juarez, Mexico leased (2 locations)
Los Mochis, Mexico
A-2
APPENDIX II
2024 CAPACITY INFORMATION
(in thousands of short tons except as noted)
U.S.
EMEA
Americas,
other
than U.S.
Total
Industrial Packaging
Containerboard (a)
12,984
560
27
13,571
Global Cellulose Fibers
Dried Pulp (in thousands of metric tons)
2,341
—
384
2,725
(a) In addition to Containerboard, this also includes saturated kraft, kraft bag and gypsum. 2024 U.S capacity includes Campti, Louisiana mill,
which will be permanently closed in 2025.
A-3
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Board of Directors
Kathyrn D. Sullivan
Senior Fellow at the Potomac Institute
for Policy Studies & Ambassador-at-
Large, The Smithsonian National Air
and Space Museum
Christopher M. Connor
Retired Executive Chairman,
The Sherwin-Williams Company
Anders Gustafsson
Chairman,
Zebra Technologies Corporation
Ahmet C. Dorduncu
Retired Chief Executive Officer,
Akkök Group
Anton V. Vincent
President,
Mars Wrigley Corporation
Jacqueline C. Hinman
Chief Executive Officer,
Atlas Technical Consultants
Clinton A. Lewis, Jr.
Chief Executive Officer,
AgroFresh Solutions, Inc.
Jamie A. Beggs
Senior Vice President and Chief
Financial Officer, Avient Corporation
David A. Robbie
Retired Group Finance Director,
Rexam PLC
Scott A. Tozier
Retired Strategic Advisor to the
CEO and Chief Financial Officer,
Albemarle Corporation
Andrew K. Silvernail
Chairman of the Board and Chief
Executive Officer, International Paper
International Paper 2024 Annual Report
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