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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2024
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From              to             
 _________________________________________
Commission File Number 001-03157
INTERNATIONAL PAPER COMPANY
(Exact name of registrant as specified in its charter)

New York
13-0872805
(State or other jurisdiction
of incorporation)
(I.R.S. Employer
Identification No.)
6400 Poplar Avenue, Memphis, Tennessee
38197
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code: (901419-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common SharesIPNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  ☒
The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of October 25, 2024 was 347,408,286.


INDEX
 
  PAGE NO.
Condensed Consolidated Statement of Operations - Nine Months Ended September 30, 2024 and 2023
Condensed Consolidated Statement of Comprehensive Income - Nine Months Ended September 30, 2024 and 2023
Condensed Consolidated Balance Sheet - September 30, 2024 and December 31, 2023
Condensed Consolidated Statement of Cash Flows - Nine Months Ended September 30, 2024 and 2023



 

INTERNATIONAL PAPER COMPANY
(Unaudited)
(In millions, except per share amounts)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2024202320242023
Net Sales$4,686 $4,613 $14,039 $14,315 
Costs and Expenses
Cost of products sold3,342 3,345 10,126 10,347 
Selling and administrative expenses508 286 1,319 1,003 
Depreciation and amortization267 258 806 743 
Distribution expenses357 382 1,127 1,180 
Taxes other than payroll and income taxes37 39 113 115 
Restructuring and other charges, net56  59  
Net (gains) losses on sales of fixed assets    
Interest expense, net51 58 152 179 
Non-operating pension expense (income)(12)13 (34)40 
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings (Loss)80 232 371 708 
Income tax provision (benefit)(71)39 (337)120 
Equity earnings (loss), net of taxes(1)(1)(4)(2)
Earnings (Loss) From Continuing Operations150 192 704 586 
Discontinued operations, net of taxes (27) (14)
Net Earnings (Loss)$150 $165 $704 $572 
Basic Earnings (Loss) Per Share
Earnings (loss) from continuing operations$0.43 $0.55 $2.02 $1.69 
Discontinued operations, net of taxes (0.08) (0.04)
Net earnings (loss)$0.43 $0.47 $2.02 $1.65 
Diluted Earnings (Loss) Per Share
Earnings (loss) from continuing operations$0.42 $0.55 $1.99 $1.68 
Discontinued operations, net of taxes (0.08) (0.04)
Net earnings (loss)$0.42 $0.47 $1.99 $1.64 
Average Shares of Common Stock Outstanding – assuming dilution353.4 348.1 353.6 349.0 
The accompanying notes are an integral part of these condensed financial statements.

1

INTERNATIONAL PAPER COMPANY
(Unaudited)
(In millions)
 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2024202320242023
Net Earnings (Loss)$150 $165 $704 $572 
Other Comprehensive Income (Loss), Net of Tax:
Amortization of pension and post-retirement prior service costs and net loss:
U.S. plans18 22 52 66 
Change in cumulative foreign currency translation adjustment8 438 (41)399 
Total Other Comprehensive Income (Loss), Net of Tax26 460 11 465 
Comprehensive Income (Loss)$176 $625 $715 $1,037 
The accompanying notes are an integral part of these condensed financial statements.

2

INTERNATIONAL PAPER COMPANY
(In millions)
September 30,
2024
December 31,
2023
 (unaudited) 
Assets
Current Assets
Cash and temporary investments$1,159 $1,113 
Accounts and notes receivable, net3,116 3,059 
Contract assets434 433 
Inventories1,795 1,889 
Other current assets139 114 
Total Current Assets6,643 6,608 
Plants, Properties and Equipment, net9,960 10,150 
Investments161 163 
Long-Term Financial Assets of Variable Interest Entities (Note 15)2,326 2,312 
Goodwill3,038 3,041 
Overfunded Pension Plan Assets197 118 
Right of Use Assets438 448 
Deferred Charges and Other Assets398 421 
Total Assets$23,161 $23,261 
Liabilities and Equity
Current Liabilities
Notes payable and current maturities of long-term debt$259 $138 
Accounts payable2,436 2,442 
Accrued payroll and benefits637 397 
Other current liabilities1,021 982 
Total Current Liabilities4,353 3,959 
Long-Term Debt5,307 5,455 
Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities (Note 15)2,118 2,113 
Deferred Income Taxes957 1,552 
Underfunded Pension Benefit Obligation247 280 
Postretirement and Postemployment Benefit Obligation126 140 
Long-Term Lease Obligations295 312 
Other Liabilities1,129 1,095 
Equity
Common stock, $1 par value, 2024 – 448.9 shares and 2023 – 448.9 shares
449 449 
Paid-in capital4,710 4,730 
Retained earnings9,705 9,491 
Accumulated other comprehensive loss(1,554)(1,565)
13,310 13,105 
Less: Common stock held in treasury, at cost, 2024 – 101.5 shares and 2023 – 102.9 shares
4,681 4,750 
Total Equity8,629 8,355 
Total Liabilities and Equity$23,161 $23,261 
The accompanying notes are an integral part of these condensed financial statements.

3

INTERNATIONAL PAPER COMPANY
(Unaudited)
(In millions)
 Nine Months Ended
September 30,
 20242023
Operating Activities
Net earnings (loss)$704 $572 
Depreciation and amortization806 743 
Deferred income tax provision (benefit), net(606)(47)
Restructuring and other charges, net59  
Net (gains) losses on sales and impairments of equity method investments 135 
Equity method dividends received 13 
Equity (earnings) losses, net of taxes4 (109)
Periodic pension (income) expense, net(1)70 
Other, net99 36 
Changes in current assets and liabilities
Accounts and notes receivable(79)201 
Contract assets(1)7 
Inventories49 62 
Accounts payable and accrued liabilities233 (332)
Interest payable24 (5)
Other(10)(5)
Cash Provided By (Used For) Operations1,281 1,341 
Investment Activities
Invested in capital projects(661)(836)
Proceeds from sales of equity method investments, net of transaction costs 472 
Proceeds from insurance recoveries25  
Proceeds from sale of fixed assets5 4 
Other(3)2 
Cash Provided By (Used For) Investment Activities(634)(358)
Financing Activities
Repurchases of common stock and payments of restricted stock tax withholding(22)(218)
Issuance of debt 772 
Reduction of debt(33)(689)
Change in book overdrafts(51)(26)
Dividends paid(482)(482)
Other (1)
Cash Provided By (Used For) Financing Activities(588)(644)
Effect of Exchange Rate Changes on Cash and Temporary Investments(13)6 
Change in Cash and Temporary Investments46 345 
Cash and Temporary Investments
Beginning of period1,113 804 
End of period$1,159 $1,149 

The accompanying notes are an integral part of these condensed financial statements.

4

INTERNATIONAL PAPER COMPANY
(Unaudited)


The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments that are necessary for the fair presentation of International Paper Company’s ("International Paper's," "the Company’s," "IP's" or "our") financial position, results of operations, and cash flows for the interim periods presented. Except as disclosed herein, such adjustments are of a normal, recurring nature. Results for the first nine months of the year may not necessarily be indicative of full year results. You should read these unaudited condensed financial statements in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"), which have previously been filed with the U.S. Securities and Exchange Commission ("SEC").

These unaudited condensed 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.


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 and will continue to apply this guidance to account for contract modifications due to changes in reference rates as those modifications occur. This guidance has not had a material impact and we do not expect it to have 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. Early adoption of these amendments is permitted and 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 and will update disclosures within the Company's 2024 annual filing.

Recently Issued Accounting Pronouncements Not Yet Adopted

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.







5


Generally, the Company recognizes revenue on a point-in-time basis when the customer takes title to the goods and assumes the risks and rewards for the goods. 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.

Disaggregated Revenue

Three Months Ended September 30, 2024
In millionsIndustrial PackagingGlobal Cellulose FibersCorporate & IntersegmentTotal
Primary Geographical Markets (a)
United States$3,429 $675 $49 $4,153 
Europe, Middle East & Africa ("EMEA")322 21  343 
Pacific Rim and Asia17 14 1 32 
Americas, other than U.S.158   158 
Total$3,926 $710 $50 $4,686 
Operating Segments
North American Industrial Packaging$3,640 $ $ $3,640 
EMEA Industrial Packaging322  — 322 
Global Cellulose Fibers 710 — 710 
Intrasegment Eliminations(36)  (36)
Corporate & Intersegment Sales  50 50 
Total$3,926 $710 $50 $4,686 
(a) Net sales are attributed to countries based on the location of the seller.

Nine Months Ended September 30, 2024
In millionsIndustrial PackagingGlobal Cellulose FibersCorporate & IntersegmentTotal
Primary Geographical Markets (a)
United States$10,067 $1,994 $242 $12,303 
EMEA998 58  1,056 
Pacific Rim and Asia50 79 1 130 
Americas, other than U.S.550   550 
Total$11,665 $2,131 $243 $14,039 
Operating Segments
North American Industrial Packaging$10,754 $ $ $10,754 
EMEA Industrial Packaging998  — 998 
Global Cellulose Fibers 2,131 — 2,131 
Intrasegment Eliminations(87)  (87)
Corporate & Intersegment Sales  243 243 
Total$11,665 $2,131 $243 $14,039 
(a) Net sales are attributed to countries based on the location of the seller.


6

Three Months Ended September 30, 2023
In millionsIndustrial PackagingGlobal Cellulose FibersCorporate & IntersegmentTotal
Primary Geographical Markets (a)
United States$3,281 $646 $101 $4,028 
EMEA316 26  342 
Pacific Rim and Asia9 53  62 
Americas, other than U.S.181   181 
Total$3,787 $725 $101 $4,613 
Operating Segments
North American Industrial Packaging$3,491 $— $— $3,491 
EMEA Industrial Packaging316 — — 316 
Global Cellulose Fibers— 725 — 725 
Intrasegment Eliminations(20)— — (20)
Corporate & Intersegment Sales— — 101 101 
Total$3,787 $725 $101 $4,613 
(a) Net sales are attributed to countries based on the location of the seller.


Nine Months Ended September 30, 2023
In millionsIndustrial PackagingGlobal Cellulose FibersCorporate & IntersegmentTotal
Primary Geographical Markets (a)
United States$10,041 $1,992 $327 $12,360 
EMEA1,058 77  1,135 
Pacific Rim and Asia24 165  189 
Americas, other than U.S.631   631 
Total$11,754 $2,234 $327 $14,315 
Operating Segments
North American Industrial Packaging$10,765 $— $— $10,765 
EMEA Industrial Packaging1,058 — — 1,058 
Global Cellulose Fibers— 2,234 — 2,234 
Intrasegment Eliminations(69)— — (69)
Corporate & Intersegment Sales— — 327 327 
Total$11,754 $2,234 $327 $14,315 
(a) Net sales are attributed to countries based on the location of the seller.



7

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 goods are transferred 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 $11 million and $32 million are included in Other current liabilities in the accompanying condensed consolidated balance sheet as of September 30, 2024 and December 31, 2023, respectively. The Company also recorded a contract liability of $115 million related to a previous acquisition. The balance of this contract liability was $86 million and $92 million at September 30, 2024 and December 31, 2023, respectively, and is recorded in Other current liabilities and Other Liabilities in the accompanying condensed 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 for which we have an unconditional right to payment or receive prepayment from the customer, respectively.


8


A summary of the changes in equity for the three months and nine months ended September 30, 2024 and 2023 is provided below:

Three Months Ended September 30, 2024
In millions, except per share amountsCommon Stock IssuedPaid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Common Stock Held In Treasury, At CostTotal
Equity
Balance, July 1$449 $4,688 $9,719 $(1,580)$4,681 $8,595 
Issuance of stock for various plans, net 22    22 
Common stock dividends
($0.4625 per share)
  (164)  (164)
Comprehensive income (loss)  150 26  176 
Ending Balance, September 30$449 $4,710 $9,705 $(1,554)$4,681 $8,629 

Nine Months Ended September 30, 2024
In millions, except per share amountsCommon Stock IssuedPaid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Common Stock Held In Treasury, At CostTotal
Equity
Balance, January 1$449 $4,730 $9,491 $(1,565)$4,750 $8,355 
Issuance of stock for various plans, net (20)  (91)71 
Repurchase of stock    22 (22)
Common stock dividends
($1.3875 per share)
  (490)  (490)
Comprehensive income (loss)  704 11  715 
Ending Balance, September 30$449 $4,710 $9,705 $(1,554)$4,681 $8,629 

Three Months Ended September 30, 2023
In millions, except per share amountsCommon Stock IssuedPaid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Common Stock Held In Treasury, At CostTotal
Equity
Balance, July 1$449 $4,688 $9,938 $(1,920)$4,751 $8,404 
Issuance of stock for various plans, net— 17 — — (1)18 
Repurchase of stock— — — —   
Common stock dividends
($0.4625 per share)
— — (165)— — (165)
Comprehensive income (loss)— — 165 460 — 625 
Ending Balance, September 30$449 $4,705 $9,938 $(1,460)$4,750 $8,882 

Nine Months Ended September 30, 2023
In millions, except per share amountsCommon Stock IssuedPaid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Common Stock Held In Treasury, At CostTotal
Equity
Balance, January 1$449 $4,725 $9,855 $(1,925)$4,607 $8,497 
Issuance of stock for various plans, net— (20)— — (76)56 
Repurchase of stock— — — — 219 (219)
Common stock dividends
($1.3875 per share)
— — (489)— — (489)
Comprehensive income (loss)— — 572 465 — 1,037 
Ending Balance, September 30$449 $4,705 $9,938 $(1,460)$4,750 $8,882 



9


The following table presents changes in Accumulated Other Comprehensive Income (Loss) ("AOCI"), net of tax, for the three months and nine months ended September 30, 2024 and 2023:

Three Months Ended
September 30,
Nine Months Ended
September 30,
In millions2024202320242023
Defined Benefit Pension and Postretirement Adjustments
Balance at beginning of period$(1,242)$(1,151)$(1,276)$(1,195)
Amounts reclassified from accumulated other comprehensive income18 22 52 66 
Balance at end of period(1,224)(1,129)(1,224)(1,129)
Change in Cumulative Foreign Currency Translation Adjustments
Balance at beginning of period(330)(761)(281)(722)
Other comprehensive income (loss) before reclassifications8 (79)(41)(118)
Amounts reclassified from accumulated other comprehensive income 517  517 
Balance at end of period(322)(323)(322)(323)
Net Gains and Losses on Cash Flow Hedging Derivatives
Balance at beginning of period(8)(8)(8)(8)
Balance at end of period(8)(8)(8)(8)
Total Accumulated Other Comprehensive Income (Loss) at End of Period$(1,554)$(1,460)$(1,554)$(1,460)

The following table presents details of the reclassifications out of AOCI for the three months and nine months ended September 30, 2024 and 2023:

In millions:Amount Reclassified from Accumulated Other Comprehensive IncomeLocation of Amount Reclassified from AOCI
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
Defined benefit pension and postretirement items:
Prior-service costs$(4)$(6)$(10)$(18)(a)Non-operating pension expense (income)
Actuarial gains (losses)(20)(23)(59)(69)(a)Non-operating pension expense (income)
Total pre-tax amount(24)(29)(69)(87)
Tax (expense) benefit6 7 17 21 
Net of tax(18)(22)(52)(66)
Change in cumulative foreign currency translation adjustments:
Business acquisitions/divestitures (517) (517)Discontinued operations, net of taxes
Tax (expense)/benefit    
Net of tax (517) (517)
Total reclassifications for the period$(18)$(539)$(52)$(583)

(a)These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 17 for additional details).


10


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:
 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
In millions, except per share amounts2024202320242023
Earnings (loss) from continuing operations $150 $192 $704 $586 
Weighted average common shares outstanding347.4 346.0 347.1 347.2 
Effect of dilutive securities
Restricted performance share plan6.0 2.1 6.5 1.8 
Weighted average common shares outstanding – assuming dilution353.4 348.1 353.6 349.0 
Basic earnings (loss) per share from continuing operations$0.43 $0.55 $2.02 $1.69 
Diluted earnings (loss) per share from continuing operations$0.42 $0.55 $1.99 $1.68 


2024: During the three months and nine months ended September 30, 2024, the Company recorded restructuring and other charges of $56 million for severance related to the resource realignment component of our 80/20 strategic approach. These severance charges include $38 million, $17 million and $1 million in the Corporate, Industrial Packaging and Global Cellulose Fibers segments, respectively. The majority of the severance charges will be paid in the first quarter of 2025.

The Company also recorded restructuring and other charges of $3 million for the nine months ended September 30, 2024 for costs associated with the permanent closure of our containerboard mill in Orange, Texas and the permanent shutdown of pulp machines at our Riegelwood, North Carolina and Pensacola, Florida mills.

2023: There were no restructuring and other charges recorded during the three months and nine months ended September 30, 2023.


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”). Under the terms of the Business Combination, each DS Smith share will be valued at 415 pence per share based on the Company’s closing share price of $40.85 and GBP/USD exchange rate of 1.2645 on March 25, 2024, being the close of business on the last day prior to the announcement by DS Smith of a previously disclosed possible offer by the Company. This will result in IP issuing 0.1285 shares for each DS Smith share, resulting in pro forma ownership of 66.3% for IP shareholders and 33.7% for DS Smith shareholders, with an implied enterprise value of approximately $9.9 billion. Costs related to the transaction were $26 million and $48 million for the three months and nine months ended September 30, 2024, respectively. In connection with the Business Combination, the Company also intends to seek a secondary listing of International Paper common stock on the London Stock Exchange. Following completion of the Business Combination, Memphis, Tennessee, will be the headquarters of the combined company, with plans to establish a Europe, Middle East and Africa ("EMEA") headquarters at DS Smith’s existing main office in London. Upon the completion of the Business Combination, it is intended that the Company’s board of directors will form the board of directors of the combined company, and that up to two directors of DS Smith will be invited to join the board of directors of the combined company. Mr. Andrew K. Silvernail will be Chairman of the Board of Directors and Chief Executive Officer of the combined company. On June 25, 2024, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), for the proposed Business Combination expired, which removes the HSR Act's bar to closing.

The Company expects to effect the Business Combination by way of scheme of arrangement under the laws of England and Wales, such that the proposed issuance (the “Share Issuance”) of new shares of common stock of the Company, par value $1.00 per share (the “Company Common Stock”) to the shareholders of DS Smith in connection with the Business Combination is not expected to require registration under the U.S. Securities Act, as amended.

11

In connection with the Share Issuance, the Company on September 11, 2024, published a prospectus in accordance with the Prospectus Regulation Rules of the U.K. Financial Conduct Authority (the “FCA”) made under Section 73A of the U.K. Financial Services and Markets Act 2000, as amended (the “U.K. Prospectus”), which the Company intends to supplement in accordance with the Prospectus Regulation Rules. The U.K. Prospectus relates to the admission of the Company Common Stock to the equity shares (international commercial companies secondary listing) category of the Official List of the FCA and to trading on the main market for listed securities of the London Stock Exchange in connection with the Business Combination. Also on September 11, 2024, DS Smith published a scheme document (the “U.K. Scheme Document”) prepared in accordance with Part 26 of the UK Companies Act 2006, containing the full terms and conditions of the Business Combination, and which set October 7, 2024 as the date of DS Smith’s shareholder meeting to approve the Business combination. On October 7, 2024, DS Smith announced that the shareholders of DS Smith voted to approve the proposals related to the Business Combination at a meeting of the DS Smith shareholders.

The Company filed its definitive proxy statement on Schedule 14A with the SEC on September 12, 2024 (together with any amendments and supplements thereto, the "Definitive Proxy Statement") related to the Share Issuance. On October 11, 2024, International Paper announced that the shareholders of the Company had voted to approve the Share Issuance at a duly convened meeting of the shareholders of the Company.

The Business Combination remains subject to satisfaction or waiver of the conditions described in the Definitive Proxy Statement, including among other things, antitrust clearance from the European Commission. International Paper and DS Smith continue to work collaboratively with the European Commission with a view to obtaining the requisite clearance. The Business Combination is expected to become effective (subject to all conditions being satisfied) early in the first quarter of 2025.


Temporary Investments 

Temporary investments with an original maturity of three months or less and money market funds with greater than three month maturities but with the right to redeem without notices are treated as cash equivalents and stated at cost. Temporary investments totaled $976 million and $950 million at September 30, 2024 and December 31, 2023, respectively.

Accounts and Notes Receivable

In millionsSeptember 30, 2024December 31, 2023
Accounts and notes receivable, net:
Trade (less allowances of $31 in 2024 and $34 in 2023)
$2,850 $2,841 
Other266 218 
Total$3,116 $3,059 

Inventories

In millionsSeptember 30, 2024December 31, 2023
Raw materials$199 $229 
Finished pulp, paper and packaging867 975 
Operating supplies646 622 
Other83 63 
Total$1,795 $1,889 

Plants, Properties and Equipment  

Accumulated depreciation was $20.0 billion and $19.6 billion at September 30, 2024 and December 31, 2023, respectively. Depreciation expense was $257 million and $248 million for the three months ended September 30, 2024 and 2023, respectively, and $776 million and $715 million for the nine months ended September 30, 2024 and 2023, respectively.

Non-cash additions to plants, properties and equipment included within accounts payable were $100 million and $141 million at September 30, 2024 and December 31, 2023, respectively.




12

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 $105 million and $122 million of supplier finance program liabilities as of September 30, 2024 and December 31, 2023, respectively.

Interest

Interest payments made during the nine months ended September 30, 2024 and 2023 were $315 million and $333 million, respectively.

Amounts related to interest were as follows: 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
In millions2024202320242023
Interest expense$106 $105 $322 $311 
Interest income55 47 170 132 
Capitalized interest costs6 5 14 16 

Asset Retirement Obligations

The Company recorded liabilities in Other Liabilities in the accompanying condensed consolidated balance sheet of $104 million and $103 million related to asset retirement obligations at September 30, 2024 and December 31, 2023, respectively.


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 a remaining lease term of up to 29 years. Total lease costs were $82 million and $76 million for the three months ended September 30, 2024 and 2023, respectively, and $240 million and $224 million for the nine months ended September 30, 2024 and 2023, respectively.

Supplemental Balance Sheet Information Related to Leases

In millionsClassificationSeptember 30, 2024December 31, 2023
Assets
Operating lease assetsRight-of-use assets$438 $448 
Finance lease assetsPlants, properties and equipment, net (a)41 47 
Total leased assets$479 $495 
Liabilities
Current
OperatingOther current liabilities$154 $153 
FinanceNotes payable and current maturities of long-term debt11 11 
Noncurrent
OperatingLong-term lease obligations295 312 
FinanceLong-term debt39 44 
Total lease liabilities$499 $520 

(a)Finance leases are recorded net of accumulated amortization of $71 million and $67 million as of September 30, 2024 and December 31, 2023, respectively.







13


The Company accounts for the following investment under the equity method of accounting.

Ilim S.A.

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 condensed 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 millionsEquity EarningsImpairment ChargesTax Expense (Benefit)Discontinued Operations, net of tax (a)Dividends
2023 First Quarter43 43    
2023 Second Quarter46 33  13 13 
2023 Third Quarter23 59 (9)(27) 
Nine Months Ended
September 30, 2023
112 135 (9)(14)13 
(a)    Discontinued operations, net of tax is Equity Earnings less Impairment Charges and Tax Expense (Benefit)


Goodwill

The following table presents changes in goodwill balances as allocated to each business segment for the nine months ended September 30, 2024:
In millionsIndustrial
Packaging
Global Cellulose Fibers Total
Balance as of January 1, 2024
Goodwill$3,413 $52   $3,465 
Accumulated impairment losses (372)(52)  (424)
Total3,041    3,041 
Currency translation and other (a)(3) (3)
Goodwill additions/reductions    
Balance as of Sept 30, 2024
Goodwill3,410 52   3,462 
Accumulated impairment losses (372)(52)  (424)
Total$3,038 $   $3,038 
     (a) Represents the effects of foreign currency translations and reclassifications



14

Other Intangibles

Identifiable intangible assets are recorded in Deferred Charges and Other Assets in the accompanying condensed consolidated balance sheet and comprised the following: 

 September 30, 2024December 31, 2023
In millionsGross
Carrying
Amount
Accumulated
Amortization
Net Intangible AssetsGross
Carrying
Amount
Accumulated
Amortization
Net Intangible Assets
Customer relationships and lists$493 $356 $137 $494 $335 $159 
Tradenames, patents and trademarks, and developed technology171 160 11 170 154 16 
Land and water rights8 2 6 8 2 6 
Other20 18 2 21 19 2 
Total$692 $536 $156 $693 $510 $183 

The Company recognized the following amounts as amortization expense related to intangible assets: 

 Three Months Ended
September 30,
Nine Months Ended
September 30,
In millions2024202320242023
Amortization expense related to intangible assets$9 $9 $28 $27 


International Paper made income tax payments, net of refunds, of $285 million and $295 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company currently estimates that, as a result of ongoing discussions, pending tax settlements and expirations of statutes of limitations, the amount of unrecognized tax benefits could be reduced by approximately $3 million during the next 12 months.

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.

During the second quarter, the Company completed an internal legal entity restructuring for which a capital loss was recognized for U.S. federal and state income tax purposes. The Company intends to use this capital loss to offset capital gains, and, as such, recorded a deferred tax asset and a deferred tax benefit of approximately $338 million in the second quarter, which impacted the effective income tax rate for the three months and six months ended June 30, 2024. During the third quarter of 2024, an adjustment to the capital loss amount resulted in an additional deferred tax asset and deferred tax benefit recorded of $78 million.

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.


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

15

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 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

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 $262 million and $251 million in the aggregate as of September 30, 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 with an estimated cost of $46 million. In April 2020, the EPA issued a final plan concerning clean-up standards at a portion of the site, the estimated cost of which is included within the soil remedy referenced above. The estimated liability for the Cass Lake superfund site was $49 million and $46 million as of September 30, 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 and other PRPs received a special notice letter from the EPA (i) inviting participation in implementing a remedy for a portion of the site known as Operable Unit 5, Area 1, and (ii) demanding reimbursement of EPA past costs totaling $37 million, including $19 million in past costs previously demanded by the EPA. The Company responded to the special notice letter. In December 2016, the EPA issued a unilateral administrative order to the Company and other PRPs to perform the remedy. The Company responded to the unilateral administrative order, agreeing to comply with the order subject to its sufficient cause defenses.

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Operable Unit 1: In October 2016, the Company and another PRP received a special notice letter from the EPA inviting participation in the remedial design ("RD") component of the landfill remedy for the Allied Paper Mill, which is also known as Operable Unit 1. A Record of Decision ("ROD") establishing the final landfill remedy for the Allied Paper Mill was issued by the EPA in September 2016. The Company responded to the Allied Paper Mill special notice letter in December 2016. In February 2017, the EPA informed the Company that it would make other arrangements for the performance of the RD. In the summer 2021, the EPA initiated RA activities. In October 2022, the Company received a unilateral administrative order to perform the RA. As a result, the Company increased its estimated liability by $27 million in the fourth quarter of 2022.

The total estimated liability for the Kalamazoo River superfund site was $12 million and $27 million as of September 30, 2024 and December 31, 2023, respectively. The estimated liability decrease results from the completion of significant remediation activity in 2024.

In addition, in December 2020, the U.S. District for the Western District of Michigan ("District Court") approved a Consent Decree among the United States, NCR Corporation (one of the parties to the allocation/apportionment litigation described below), the State of Michigan and natural resource trustees. Under the Consent Decree NCR agreed to make payments of more than $100 million and perform work in Operable Unit 5, Areas 2, 3, and 4 at an estimated cost of $136 million.

The Company’s CERCLA liability has not been finally determined with respect to these or any other portions of the site, and except as noted above, the Company has declined to perform any work or reimburse the EPA at this time. As noted below, the Company is involved in allocation/apportionment litigation with regard to the site. Accordingly, it is premature to predict the outcome or estimate our maximum reasonably possible loss or range of loss with respect to this site. We have recorded a liability for future remediation costs at the site that are probable and presently reasonably estimable, and it remains reasonably possible that additional losses in excess of this recorded liability could be material; however, we are unable to estimate any possible loss or range of loss in excess of such recorded liability.

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 ($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 is appealing 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. The EPA did not specify the methods or practices needed to perform this work. The EPA’s selected remedy was accompanied by a cost estimate of approximately $115 million ($105 million for the northern impoundment and $10 million for the southern impoundment). Subsequent to the issuance of the ROD, there have been numerous meetings between the EPA and the PRPs, and the Company continues to work with the EPA and MIMC/WMI to develop the RD.


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To this end, in April 2018, the PRPs entered into an Administrative Order on Consent ("AOC") with the EPA, agreeing to work together to develop the RD for the northern impoundment. That RD work is ongoing. The AOC does not include any agreement to perform waste removal or other construction activity at the site. Rather, it involves adaptive management techniques and a pre-design investigation, the objectives of which include filling data gaps (including but not limited to post-Hurricane Harvey technical data generated prior to the ROD and not incorporated into the selected remedy), refining areas and volumes of materials to be addressed, determining if an excavation remedy is able to be implemented in a manner protective of human health and the environment, and investigating potential impacts of remediation activities to infrastructure in the vicinity.
During the first quarter of 2020, through a series of meetings among the Company, MIMC/WMI, our consultants, the EPA and the Texas Commission on Environmental Quality, progress was made to resolve key technical issues previously preventing the Company from determining the manner in which the selected remedy for the northern impoundment would be feasibly implemented. As a result of these developments, 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 represents the Company's 50% share of our estimate of the low end of the range of probable remediation costs.

We submitted the Final Design Package for the southern impoundment to the EPA, and the EPA approved this plan in May 2021. The EPA issued a Unilateral Administrative Order for RA of the southern impoundment in August 2021. An addendum to the Final 100% RD (Amended April 2021) was submitted to the EPA for the southern impoundment in June 2022. This addendum incorporated additional data collected to date which indicated that additional waste material removal will be required, lengthening the time to complete RA.

With respect to the northern impoundment, the PRPs submitted the final component of the 90% to the EPA in November 2022. Upon submittal of the final component, an updated engineering estimate was developed, and the Company increased the estimated liability amount by approximately $21 million, which represents the Company's 50% share of our estimate of the low end of the range of probable remediation costs. On January 5, 2024, the PRPs received comments from the EPA on the November 2022 90% RD submittal. The PRPs responded to the EPA comments in late January 2024. In April 2024, the EPA responded to the submitted plans and requested a 100% RD by July 17, 2024, which was timely submitted by the PRPs. Among other things, the revised RD proposes design changes that include modification of the wastewater treatment facilities, changes to outer walls, and the addition of scour and barge protection systems. During the nine months ended September 30, 2024, the Company increased the estimated liability amount by approximately $25 million to account for the design changes and the updated estimate of costs from the site engineer. This amount represents the Company’s 50% share of the low end of the range of estimated remediation costs. While several key technical issues have been resolved, respondents still face significant challenges remediating this area in a cost-efficient manner that will not result in a release of contaminated materials to the environment during the excavation, removal and transport of the materials. Our discussions with the EPA on the best approach to remediation will continue. The EPA provided comments to the 100% RD on October 25, 2024 with a request for response due on November 25, 2024. The Company is reviewing the comments and intends to timely respond by the requested deliverable date. Because of ongoing questions regarding cost effectiveness, timing and gathering other technical data, additional losses in excess of our recorded liability are possible. The total estimated liability for the southern and northern impoundment was $97 million and $83 million as of September 30, 2024 and December 31, 2023, respectively.

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 September 30, 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 $109 million and $97 million as of September 30, 2024 and December 31, 2023, respectively, both net of estimated insurance recoveries. 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.


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