International Paper IP · USD

REVENUE RECOGNITIONDISAGGREGATED REVENUE2025Reportable SegmentsPackaging Solutions North AmericaPackaging Solutions EMEACorporate & IntersegmentTotalPrimary Geographical Markets (a) United States$14,431$—$8$14,439EMEA—8,451—8,451Pacific Rim and Asia31——31Americas, other than U.S.713——713Total$15,175$8,451$8$23,634(a) Net sales are attributed to countries based on the location of the reportable segment making the sale.2024Reportable SegmentsPackaging Solutions North AmericaPackaging Solutions EMEACorporate & IntersegmentTotalPrimary Geographical Markets (a) United States$13,500$—$186$13,686EMEA—1,355—1,355Pacific Rim and Asia63—164Americas, other than U.S.730——730Total$14,293$1,355$187$15,835(a) Net sales are attributed to countries based on the location of the reportable segment making the sale.2023Reportable SegmentsPackaging Solutions North AmericaPackaging Solutions EMEACorporate & IntersegmentTotalPrimary Geographical Markets (a) United States$13,435$—$342$13,777EMEA—1,398—1,398Pacific Rim and Asia37——37Americas, other than U.S.821——821Total$14,293$1,398$342$16,033(a) Net sales are attributed to countries based on the location of the reportable segment making the sale.REVENUE CONTRACT BALANCESA 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. Contract liabilities of $18 million and $30 million are included in Other current liabilities in the accompanying consolidated balance sheet as of December 31, 2025 and 2024, respectively. 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.

COMMITMENTS AND CONTINGENT LIABILITIESGeneralThe 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.

DEBT AND LINES OF CREDITThe 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, 2025 and December 31, 2024 under this program.At December 31, 2025, the Company's credit facilities totaled $1.9 billion, excluding the DS Smith credit facilities discussed below. 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 include a $1.4 billion contractually committed bank facility with a maturity date of June 2028. 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 2026. As of December 31, 2025 and December 31, 2024, the Company had no borrowings outstanding under the program.Below is a table of the foreign denominated credit facilities:In millionsDecember 31, 2025Credit FacilitiesBorrowing CurrencyUSD Equivalent CapacityUSD Equivalent Outstanding2.834% Amortizing credit facility - due 2026-2029EUR$191$191Floating rate instruments: Committed bank facility maturing May 2027GBP, EUR, USD1,6841,158Uncommitted facilityGBP, EUR, USD6765Committed bank facility maturing December 2026 GBP, EUR, USD70—Total$2,012$1,414Following the DS Smith acquisition, International Paper assumed foreign denominated debt of DS Smith in various currencies with an approximated value of $3.6 billion. In March 2025, the Company amended and restated DS Smith's credit facility agreements and entered into agreements to guarantee the outstanding notes of DS Smith. A summary of all long-term debt follows: In millions at December 31202520247.350% notes – due 2025$—$397.750% notes – due 2025—220.875% notes – due 2026 (EUR)705—7.200% notes – due 202658586.400% notes – due 2026554.375% notes – due 2027 (EUR)998—7.150% notes – due 2027776.875% notes – due 202910102.875% notes – due 2029 (GBP)337—4.500% notes – due 2030 (EUR)764—5.000% notes – due 20354074076.650% notes – due 2037338.700% notes – due 203886867.300% notes – due 20394534536.000% notes – due 20415855854.800% notes – due 20446866865.

INCOME TAXESThe components of International Paper’s earnings from continuing operations before income taxes and equity earnings by taxing jurisdiction were as follows: In millions202520242023Earnings (loss)U.S.$(224)$127$203Non-U.S.(3,144)242199Earnings (loss) from continuing operations before income taxes and equity earnings (losses)$(3,368)$369$402The provision (benefit) for income taxes from continuing operations (excluding noncontrolling interests) by taxing jurisdiction was as follows:In millions202520242023Current tax provision (benefit)U.S. federal$(13)$(71)$132U.S. state and local32610Non-U.S.924236 $82$(3)$178Deferred tax provision (benefit)U.S. federal$(352)$(252)$(125)U.S. state and local(65)(92)12Non-U.S.(198)(14)3 $(615)$(358)$(110)Income tax provision (benefit)$(533)$(361)$68The Company’s deferred income tax provision (benefit) includes a $(1) million benefit, a $1 million expense and a $(6) million benefit for 2025, 2024 and 2023, respectively, for the effect of various changes in non-U.S. and U.S. state tax rates.In 2025, International Paper made income tax payments (net of refunds) of $161 million, consisting of $39 million of U.S. Federal tax payments, $13 million of U.S. state and local income tax payments and $109 million of non-U.S. tax payments. Of these amounts, income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions: In millionsIncome Tax Payments (Net of Refunds) Germany$18Ireland13Italy9Mexico25Morocco20Spain13The Company made income tax payments, net of refunds, of $394 million and $340 million in 2024 and 2023, respectively.The following table reconciles income tax expense using the statutory U.S. Federal income tax rate to the consolidated income tax provision and reported effective tax rate in 2025: In millions2025Effective Income Tax Rate %Earnings (loss) from continuing operations before income taxes and equity earnings$(3,368)n/aStatutory U.S. income tax rate21%n/aTax expense (benefit) using statutory U.S. income tax rate(707)21%State and local income taxes, net of federal income tax effect (a)(39)1%Foreign tax effects: Luxembourg: NOL Expiration134(4)% Non-Deductible Expenses32(1)% Valuation Allowance(140)4% Other8—%Subtotal Luxembourg34(1)% Portugal: Other(62)2%Subtotal Portugal(62)2% United Kingdom: Impact of rate differential on non-U.S.

LEASESInternational 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 28 years. COMPONENTS OF LEASE EXPENSEIn millions202520242023Operating lease costs, net$258$172$168Variable lease costs 505137Short-term lease costs, net1126156Finance lease costAmortization of lease assets1599Interest on lease liabilities322Total lease cost, net$438$295$272SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASESIn millionsClassification20252024AssetsOperating lease assetsRight of use assets$697$402Finance lease assetsPlants, properties and equipment, net (a)7031Total leased assets$767$433LiabilitiesCurrentOperatingOther current liabilities$221$144FinanceNotes payable and current maturities of long-term debt179NoncurrentOperatingLong-term lease obligations486269FinanceLong-term debt5431Total lease liabilities$778$453(a) Finance leases are recorded net of accumulated amortization of $69 million and $59 million at December 31, 2025 and 2024, respectively.LEASE TERM AND DISCOUNT RATEIn millions20252024Weighted average remaining lease term (years)Operating leases4.83.6Finance leases6.07.2Weighted average discount rateOperating leases4.23%4.34%Finance leases4.19%4.

ACQUISITIONSOn January 31, 2025, the Company completed its acquisition of the entire issued and to be issued share capital of DS Smith, a leading provider of sustainable paper-based packaging solutions across Europe and North America. This acquisition combines two complementary businesses to create a global leader in sustainable packaging solutions with industry leading positions in two geographies, Europe and North America. The acquisition is expected to enhance the efficiency of the Company's core operations in North America with the integration of DS Smith’s complementary U.S. business and strengthen the Company's capabilities to advance its strategy to be a truly global sustainable packaging solutions leader.Upon closing, 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. Acquisition-related costs were $96 million and $86 million for the years ended December 31, 2025 and December 31, 2024, respectively, and were recorded in Selling and administrative expenses and Taxes other than payroll and income taxes in the accompanying consolidated statements of operations. 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 trading symbol "IP" and via a secondary listing on the London Stock Exchange under the trading 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.The Company is accounting for the acquisition under ASC 805, "Business Combinations" and the results of operations have been included in International Paper's financial statements beginning with the date of acquisition.

RISK MANAGEMENT AND STRATEGYThe Company’s cybersecurity risk management processes are integrated into our overall risk management system. The Company has a formalized enterprise risk management program overseen by the Board of Directors and committees of the Board of Directors that addresses strategic, operational, financial, compliance, legal and information technologies and cybersecurity risks. Each year, the Chief Audit Executive provides the Board of Directors and members of the ELT with a comprehensive update on the Company’s risk management activities. This update includes a structured, collaborative review through which key risks are examined and prioritized. In 2025, the Board of Directors identified seven priority risks for the Company, including cybersecurity. The Company has an Information Technology (“IT”) Risk Governance Program that aligns with our enterprise risk management framework and assists with fulfilling oversight responsibilities for major IT risks, including cybersecurity risks. An enterprise Cyber Governance, Risk, and Compliance function manages overall Company cyber risk, coordinating risk management functions with each business. Business and IT leaders conduct cyber risk reviews monthly within each business. These monthly reviews include the evaluation of new and evolving risks, management of risk mitigation plans, and a review of all cybersecurity incidents meeting certain criteria.Our Cybersecurity Risk Assessment Program The Company has a risk assessment program in place to assess, identify and manage material risks from cybersecurity threats. Cybersecurity risks the Company faces include targeted attacks, ransomware, malware, phishing attacks, data theft, other data or security breaches, virus and intrusion software, as well as attacks to our website, financial applications, operational technology, telecommunications and human resources data.

DIVESTITUREOn January 23, 2026, the Company completed the previously announced sale of its Global Cellulose Fibers business to AIP for $1.5 billion, including the issuance of preferred stock with an aggregate initial liquidation preference of $190 million. The fair value of the preferred stock is estimated using an income approach, which is classified as Level 2 within the fair value hierarchy. The fair value is calculated as the probability-weighted present value over all future modelled payoffs. In conjunction with this previous announcement and subsequent sale, the Company recorded a net pre-tax charge of $1.07 billion ($805 million after taxes) for the year ended December 31, 2025 related to the impairment of the Global Cellulose Fibers business. This non-cash charge is included in Discontinued Operations, net of taxes in the accompanying consolidated statements of operations. All current and historical operating results of the Global Cellulose Fibers business are presented as Discontinued Operations, net of taxes, in the consolidated statements of operations. All current and historical assets and liabilities of the Global Cellulose Fibers business are classified as Assets held for sale and Long-Term Assets Held For Sale and Liabilities held for sale and Long-Term Liabilities Held For Sale in the accompanying consolidated balance sheets.