UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, ~~2017~~2022

¨ ☐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 ~~1-3157~~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.)
~~incorporation of organization)~~			~~Identification No.)~~

6400 Poplar Avenue, Memphis, TNTennessee			38197
(Address of ~~principal executive offices)~~Principal Executive Offices)			(Zip Code)

Registrant’s telephone number, including area code: (901) 419-7000

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

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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ý☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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 filer		ý☒		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. ¨

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

The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of October ~~27, 2017~~21, 2022 was ~~412,928,210~~.355,670,009.

Table of Contents

INDEX


					PAGE NO.
			PART I. FINANCIAL INFORMATION

				~~PAGE NO.~~
	~~PART I. FINANCIAL INFORMATION~~

Item 1.	Financial Statements

			Condensed Consolidated Statement of Operations - Three Months and Nine Months Ended September 30, ~~2017~~2022 and ~~2016~~2021		1

			Condensed Consolidated Statement of Comprehensive Income - Three Months and Nine Months Ended September 30, ~~2017~~2022 and ~~2016~~2021		2

			Condensed Consolidated Balance Sheet - September 30, ~~2017~~2022 and December 31, ~~2016~~2021		3

			Condensed Consolidated Statement of Cash Flows - Nine Months Ended September 30, ~~2017~~2022 and ~~2016~~2021		4

			Condensed Notes to Consolidated Financial Statements		5

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		2526

Item 3.			Quantitative and Qualitative Disclosures About Market Risk		4239

Item 4.			Controls and Procedures		4239

			PART II. OTHER INFORMATION

Item 1.			Legal Proceedings		4340

Item 1A.			Risk Factors		4340

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		4341

Item 3.			Defaults Upon Senior Securities		41

Item 4.			Mine Safety Disclosures		41

Item 5.			Other Information		41

Item 6.			Exhibits		4442

~~Signatures~~		45

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~


~~ITEM 1.~~ Signatures						~~FINANCIAL STATEMENTS~~ 43

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Operations

(Unaudited)

(In millions, except per share amounts)


	Three Months Ended September 30,					Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016			2017			2016				2022		2021		2022		2021
Net Sales	$	5,913	$	5,266		$	17,196		$	15,698		Net Sales	$	5,402	$	4,914	$	16,028	$	14,277
Costs and Expenses												Costs and Expenses
Cost of products sold	4,024		3,622			12,069			11,345			Cost of products sold	3,830		3,423		11,475		10,173
Selling and administrative expenses	431		380			1,275			1,142			Selling and administrative expenses	337		343		978		1,041
Depreciation, amortization and cost of timber harvested	373		314			1,075			899			Depreciation, amortization and cost of timber harvested	261		280		789		820
Distribution expenses	386		353			1,155			1,012			Distribution expenses	471		365		1,337		1,042
Taxes other than payroll and income taxes	44		41			132			123			Taxes other than payroll and income taxes	38		35		110		106
Restructuring and other charges	—		46			(16		)	47
Restructuring and other charges, net												Restructuring and other charges, net	93		39		93		243
Net (gains) losses on sales and impairments of businesses	—		5			9			70			Net (gains) losses on sales and impairments of businesses	—		—		—		(7)
Litigation settlement	—		—			354			—
Net bargain purchase gain on acquisition of business	—		—			(6		)	—
Net (gains) losses on sales of equity method investments												Net (gains) losses on sales of equity method investments	—		—		—		(204)
Net (gains) losses on mark to market investments												Net (gains) losses on mark to market investments	(16)		—		(65)		—
Interest expense, net	152		132			431			384			Interest expense, net	123		82		266		261
Non-operating pension expense (income)												Non-operating pension expense (income)	(48)		(50)		(144)		(153)
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings	503		373			718			676			Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings	313		397		1,189		955
Income tax provision (benefit)	153		107			147			139			Income tax provision (benefit)	(575)		59		(384)		193
Equity earnings (loss), net of taxes	45		43			113			151			Equity earnings (loss), net of taxes	63		94		249		247
Earnings (Loss) From Continuing Operations	395		309			684			688			Earnings (Loss) From Continuing Operations	$	951	$	432	$	1,822	$	1,009
Discontinued operations, net of taxes	—		—			—			(5		)	Discontinued operations, net of taxes	—		432		—		638
Net Earnings (Loss)	395		309			684			683			Net Earnings (Loss)	$	951	$	864	$	1,822	$	1,647
Less: Net earnings (loss) attributable to noncontrolling interests	—		(3		)	—			(3		)	Less: Net earnings (loss) attributable to noncontrolling interests	—		—		—		2
Net Earnings (Loss) Attributable to International Paper Company	$	395	$	312		$	684		$	686		Net Earnings (Loss) Attributable to International Paper Company	$	951	$	864	$	1,822	$	1,645
Basic Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders												Basic Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders
Earnings (loss) from continuing operations	$	0.96	$	0.76		$	1.65		$	1.68		Earnings (loss) from continuing operations	$	2.66	$	1.11	$	4.97	$	2.58
Discontinued operations, net of taxes	—		—			—			(0.01		)	Discontinued operations, net of taxes	—		1.11		—		1.63
Net earnings (loss)	$	0.96	$	0.76		$	1.65		$	1.67		Net earnings (loss)	$	2.66	$	2.22	$	4.97	$	4.21
Diluted Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders												Diluted Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders
Earnings (loss) from continuing operations	$	0.95	$	0.75		$	1.64		$	1.66		Earnings (loss) from continuing operations	$	2.64	$	1.10	$	4.92	$	2.55
Discontinued operations, net of taxes	—		—			—			(0.01		)	Discontinued operations, net of taxes	—		1.10		—		1.61
Net earnings (loss)	$	0.95	$	0.75		$	1.64		$	1.65		Net earnings (loss)	$	2.64	$	2.20	$	4.92	$	4.16
Average Shares of Common Stock Outstanding – assuming dilution	417.4		415.3			417.4			415.5			Average Shares of Common Stock Outstanding – assuming dilution	360.4		392.6		370.7		395.3
Cash Dividends Per Common Share	$	0.4625	$	0.4400		$	1.3875		$	1.3200
Amounts Attributable to International Paper Company Common Shareholders
Earnings (loss) from continuing operations	$	395	$	312		$	684		$	691
Discontinued operations, net of taxes	—		—			—			(5		)
Net earnings (loss)	$	395	$	312		$	684		$	686

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

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INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

(In millions)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net Earnings (Loss) $ 395
$ 309
$ 684
$ 683
Other Comprehensive Income (Loss), Net of Tax:
Amortization of pension and post-retirement prior service costs and net loss:
U.S. plans 59
72
176
471
Pension and postretirement liability adjustments:
U.S. plans —
(53 ) —
(598 )
Non-U.S. plans —
—
1
17
Change in cumulative foreign currency translation adjustment 100
3
234
373
Net gains/losses on cash flow hedging derivatives:
Net gains (losses) arising during the period 1
5
9
(5 )
Reclassification adjustment for (gains) losses included in net earnings (loss) (2 ) (3 ) (6 ) (7 )
Total Other Comprehensive Income (Loss), Net of Tax 158
24
414
251
Comprehensive Income (Loss) 553
333
1,098
934
Net (earnings) loss attributable to noncontrolling interests —
3
—
3
Other comprehensive (income) loss attributable to noncontrolling interests 1
(1 ) (1 ) (1 )
Comprehensive Income (Loss) Attributable to International Paper Company $ 554
$ 335
$ 1,097
$ 936


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net Earnings (Loss)	$	951	$	864	$	1,822	$	1,647
Other Comprehensive Income (Loss), Net of Tax:
Amortization of pension and post-retirement prior service costs and net loss:
U.S. plans	21		31		64		101
Pension and postretirement adjustments:
U.S. plans	—		826		—		826
Non-U.S. plans	—		5		—		6
Change in cumulative foreign currency translation adjustment	(120)		(70)		14		99
Net gains/losses on cash flow hedging derivatives:
Net gains (losses) arising during the period	—		(4)		—		3
Reclassification adjustment for (gains) losses included in net earnings (loss)	2		(8)		2		(9)
Total Other Comprehensive Income (Loss), Net of Tax	(97)		780		80		1,026
Comprehensive Income (Loss)	854		1,644		1,902		2,673
Net (earnings) loss attributable to noncontrolling interests	—		—		—		(2)
Other comprehensive (income) loss attributable to noncontrolling interests	—		—		—		2
Comprehensive Income (Loss) Attributable to International Paper Company	$	854	$	1,644	$	1,902	$	2,673

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

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INTERNATIONAL PAPER COMPANY

Condensed Consolidated Balance Sheet

(In millions)

September 30,
2017 December 31,
2016
(unaudited)
Assets
Current Assets
Cash and temporary investments $ 998
$ 1,033
Accounts and notes receivable, net 3,343
3,001
Inventories 2,465
2,438
Other current assets 405
198
Total Current Assets 7,211
6,670
Plants, Properties and Equipment, net 14,065
13,990
Forestlands 468
456
Investments 336
360
Financial Assets of Special Purpose Entities (Note 13) 7,047
7,033
Goodwill 3,420
3,364
Deferred Charges and Other Assets 1,266
1,220
Total Assets $ 33,813
$ 33,093
Liabilities and Equity
Current Liabilities
Notes payable and current maturities of long-term debt $ 958
$ 239
Accounts payable 2,408
2,309
Accrued payroll and benefits 447
430
Other accrued liabilities 1,056
1,091
Total Current Liabilities 4,869
4,069
Long-Term Debt 11,373
11,075
Nonrecourse Financial Liabilities of Special Purpose Entities (Note 13) 6,289
6,284
Deferred Income Taxes 3,505
3,127
Pension Benefit Obligation 2,069
3,400
Postretirement and Postemployment Benefit Obligation 315
330
Other Liabilities 460
449
Equity
Common stock, $1 par value, 2017 – 448.9 shares and 2016 – 448.9 shares 449
449
Paid-in capital 6,176
6,189
Retained earnings 4,918
4,818
Accumulated other comprehensive loss (4,949 ) (5,362 )
6,594
6,094
Less: Common stock held in treasury, at cost, 2017 – 36.0 shares and 2016 – 37.7 shares 1,680
1,753
Total International Paper Shareholders’ Equity 4,914
4,341
Noncontrolling interests 19
18
Total Equity 4,933
4,359
Total Liabilities and Equity $ 33,813
$ 33,093


	September 30, 2022		December 31, 2021
	(unaudited)
Assets
Current Assets
Cash and temporary investments	$	511	$	1,295
Accounts and notes receivable, net	3,453		3,232
Contract assets	514		378
Inventories	1,976		1,814
Current investments	—		245
Other current assets	168		132
Total Current Assets	6,622		7,096
Plants, Properties and Equipment, net	10,219		10,441
Long-Term Investments	926		751
Long-Term Financial Assets of Variable Interest Entities (Note 16)	2,289		2,275
Goodwill	3,116		3,130
Overfunded Pension Plan Assets	772		595
Right of Use Assets	387		365
Deferred Charges and Other Assets	534		590
Total Assets	$	24,865	$	25,243
Liabilities and Equity
Current Liabilities
Notes payable and current maturities of long-term debt	$	616	$	196
Accounts payable	2,668		2,606
Accrued payroll and benefits	378		440
Other current liabilities	1,143		902
Total Current Liabilities	4,805		4,144
Long-Term Debt	4,766		5,383
Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities (Note 16)	2,105		2,099
Deferred Income Taxes	1,806		2,618
Underfunded Pension Benefit Obligation	359		377
Postretirement and Postemployment Benefit Obligation	189		205
Long-Term Lease Obligations	251		236
Other Liabilities	1,096		1,099
Equity
Common stock, $1 par value, 2022 – 448.9 shares and 2021 – 448.9 shares	449		449
Paid-in capital	4,702		4,668
Retained earnings	10,340		9,029
Accumulated other comprehensive loss	(1,586)		(1,666)
	13,905		12,480
Less: Common stock held in treasury, at cost, 2022 – 93.3 shares and 2021 – 70.4 shares	4,417		3,398
Total Equity	9,488		9,082
Total Liabilities and Equity	$	24,865	$	25,243

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

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INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(In millions)


	Nine Months Ended September 30,							Nine Months Ended September 30,
	2017			2016				2022		2021
Operating Activities							Operating Activities
Net earnings (loss)	$	684		$	683		Net earnings (loss)	$	1,822	$	1,647
Depreciation, amortization and cost of timber harvested	1,075			899			Depreciation, amortization and cost of timber harvested	789		933
Deferred income tax provision (benefit), net	295			45			Deferred income tax provision (benefit), net	(816)		(151)
Restructuring and other charges	(16		)	47
Pension plan contributions	(1,250		)	(750		)
Net bargain purchase gain on acquisition of business	(6		)	—
Restructuring and other charges, net							Restructuring and other charges, net	93		243
Net (gains) losses on mark to market investments							Net (gains) losses on mark to market investments	(65)		—
Net (gains) losses on sales and impairments of businesses	9			70			Net (gains) losses on sales and impairments of businesses	—		(367)
Ilim dividends received	129			58
Equity (earnings) loss, net	(113		)	(151		)
Periodic pension expense, net	237			718
Net (gains) losses on sales of equity method investments							Net (gains) losses on sales of equity method investments	—		(205)
Net (gains) losses on sales of fixed assets							Net (gains) losses on sales of fixed assets	—		(86)
Equity method dividends received							Equity method dividends received	204		149
Equity (earnings) losses, net							Equity (earnings) losses, net	(249)		(247)
Periodic pension (income) expense, net							Periodic pension (income) expense, net	(87)		(84)
Other, net	92			67			Other, net	126		129
Changes in current assets and liabilities							Changes in current assets and liabilities
Accounts and notes receivable	(293		)	(83		)	Accounts and notes receivable	(294)		(510)
Contract assets							Contract assets	(138)		(74)
Inventories	(70		)	(6		)	Inventories	(217)		(133)
Accounts payable and accrued liabilities	5			(37		)	Accounts payable and accrued liabilities	218		716
Interest payable	(11		)	24			Interest payable	50		9
Other	(198		)	(18		)	Other	(23)		(46)
Cash Provided By (Used For) Operations	569			1,566			Cash Provided By (Used For) Operations	1,413		1,923
Investment Activities							Investment Activities
Invested in capital projects	(935		)	(903		)
Invested in capital projects, net of insurance recoveries							Invested in capital projects, net of insurance recoveries	(609)		(348)
Acquisitions, net of cash acquired	(45		)	(56		)	Acquisitions, net of cash acquired	—		(80)
Proceeds from divestitures, net of cash divested	4			105
Proceeds from sales of equity method investments							Proceeds from sales of equity method investments	—		843
Proceeds from sales of businesses, net of cash divested							Proceeds from sales of businesses, net of cash divested	—		827
Proceeds from exchange of equity securities							Proceeds from exchange of equity securities	311		—
Proceeds from settlement of Variable Interest Entity installment notes							Proceeds from settlement of Variable Interest Entity installment notes	—		4,850
Proceeds from sale of fixed assets	22			13			Proceeds from sale of fixed assets	11		95
Other	(54		)	(130		)	Other	(6)		(3)
Cash Provided By (Used For) Investment Activities	(1,008		)	(971		)	Cash Provided By (Used For) Investment Activities	(293)		6,184
Financing Activities							Financing Activities
Repurchases of common stock and payments of restricted stock tax withholding	(46		)	(132		)	Repurchases of common stock and payments of restricted stock tax withholding	(1,093)		(425)
Issuance of debt	1,366			3,447			Issuance of debt	752		1,511
Reduction of debt	(369		)	(1,855		)	Reduction of debt	(954)		(1,132)
Change in book overdrafts	5			(5		)	Change in book overdrafts	—		29
Dividends paid	(573		)	(543		)	Dividends paid	(509)		(602)
Debt tender premiums paid	(1		)	(31		)
Net debt tender premiums paid							Net debt tender premiums paid	(89)		(221)
Reduction of Variable Interest Entity loans							Reduction of Variable Interest Entity loans	—		(4,220)
Other	(2		)	(3		)	Other	(2)		(14)
Cash Provided By (Used For) Financing Activities	380			878			Cash Provided By (Used For) Financing Activities	(1,895)		(5,074)
Effect of Exchange Rate Changes on Cash	24			39
Effect of Exchange Rate Changes on Cash and Temporary Investments							Effect of Exchange Rate Changes on Cash and Temporary Investments	(9)		(7)
Change in Cash and Temporary Investments	(35		)	1,512			Change in Cash and Temporary Investments	(784)		3,026
Cash and Temporary Investments							Cash and Temporary Investments
Beginning of period	1,033			1,050			Beginning of period	1,295		595
End of period	$	998		$	2,562		End of period	$	511	$	3,621

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

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INTERNATIONAL PAPER COMPANY

Condensed Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed 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~~("International Paper's", "the Company’s" or ~~our)~~"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. ~~It is suggested that~~You should read these condensed financial statements ~~be read~~ 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, ~~2016 and the Company's Current Report on Form 8-K dated July 31, 2017 (collectively the "2016 10-K"~~2021 (the "Annual Report"), ~~both of~~ which have previously been filed with the Securities and Exchange Commission. The Current Report on Form 8-K dated July 31, 2017 was filed to retrospectively adjust portions of the Company's Annual Report on Form 10-K for the year ended December 31, 2016, to reflect the adoption of the required guidance

These consolidated financial statements have been prepared in ~~ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes." In addition, as a result of an internal reorganization~~conformity with accounting principles generally accepted in the ~~2017 first quarter,~~United States that require the ~~net sales and operating profits for the Asian Distribution operations are included in the~~use of management’s estimates. Actual results ~~of the businesses that manufacture the products, and as such, prior year amounts have been reclassified to conform with the presentation in 2017.~~could differ from management’s estimates.

~~During the fourth quarter of 2016,~~Printing Papers Spinoff

On October 1, 2021, the Company completed the ~~acquisition~~previously announced spin-off of ~~Weyerhaeuser's~~its Printing Papers segment along with certain mixed-use coated paperboard and pulp ~~business (see~~ ~~Note 7~~businesses in North America, France and Russia into a standalone, publicly-traded company, Sylvamo Corporation ("Sylvamo"). ~~Subsequent~~The transaction was implemented through the distribution of shares of the standalone company to International Paper's shareholders (the "Distribution"). As a result of the Distribution, Sylvamo is an independent public company that trades on the New York Stock Exchange under the symbol "SLVM".

In addition to the ~~acquisition,~~spin-off of Sylvamo, the Company ~~began reporting Global Cellulose Fibers~~completed the sale of its Kwidzyn, Poland mill on August 6, 2021. All historical operating results of the Sylvamo businesses and Kwidzyn mill have been presented as ~~a separate reportable business segment~~Discontinued Operations, net of tax, in the ~~fourth quarter~~condensed consolidated statement of ~~2016 due~~operations. See Note 9 - Divestitures and Impairments of Businesses for further details regarding the Sylvamo spin-off and discontinued operations.

Russia-Ukraine Conflict

The Russia-Ukraine conflict, including current and future sanctions, actions by the Russian government, and associated domestic and global economic and geopolitical conditions, have affected and could materially and adversely affect our Ilim joint venture and could otherwise adversely affect our business, financial condition, results of operations and cash flows. We are unable to predict the full impact of Russia’s ongoing invasion of Ukraine, sanctions that have been imposed to date or that may in the future be imposed, geopolitical instability and the possibility of broadened military conflict may have on us or our Ilim joint venture, including whether our Ilim joint venture may be able to continue to pay dividends to us. We continue to actively explore strategic options with respect to the ~~increased materiality~~Ilim joint venture, including a sale of our 50% equity interest in Ilim. While we may sell our equity interests in the ~~results~~Ilim joint venture, we cannot be certain if and when this may occur, or the impact that possible disruptions in the capital markets, negative macroeconomic conditions, or conditions associated with the Russia-Ukraine conflict, could have on the value of ~~this business. This segment includes~~and our ability to sell our equity interest in the ~~Company's legacy pulp business~~Ilim joint venture and the ~~newly acquired pulp business. As~~timing of any such amounts related to the legacy pulp business have been reclassified out of the Printing Papers' segment and included in the new Global Cellulose Fibers business segment for all prior periods to conform with current year presentation.sale.

NOTE 2 - RECENT ACCOUNTING DEVELOPMENTS

~~Derivatives and Hedging~~Recently Issued Accounting Pronouncements Not Yet Adopted

Reference Rate Reform

In ~~August 2017,~~March 2020, the FASB issued ASU ~~2017-12, "Derivatives and Hedging~~2020-04, "Reference Rate Reform (Topic ~~815)~~848): ~~Targeted Improvements~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This guidance provides companies with optional guidance to ~~Accounting for Hedging Activities." The objective of this new~~ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is the improvement of the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition to that main objective,effective upon issuance and generally can be applied through December 31, 2022. The Company will apply the amendments in this update to account for contract modifications due to changes in reference rates once those occur. We do not expect these amendments to have a material impact on our consolidated financial statements and related disclosures.

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Government Assistance

In November 2021, the FASB issued ASU 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance." This guidance ~~make~~requires a business entity to provide certain ~~targeted improvements to simplify the application of the hedge accounting guidance in current GAAP.~~disclosures around assistance received from governments. This guidance is effective for annual reporting periods beginning after December 15, ~~2018, and interim periods within those years. Early adoption is permitted. The Company is currently evaluating the provisions of~~2021. We do not expect this guidance ~~but plans~~ to ~~early adopt the provisions of this guidance for the year beginning January 1, 2018.~~have a material impact on our consolidated financial statements and related disclosures.

~~Retirement Benefits~~Liabilities - Supplier Finance Programs

In ~~March 2017,~~September 2022, the FASB issued ASU ~~2017-07, "Compensation~~2022-04, "Liabilities - ~~Retirement Benefits (Topic 715)~~Supplier Finance Programs (Subtopic 405-50): ~~Improving the Presentation~~Disclosure of ~~Net Periodic Pension Cost~~Supplier Finance Program Obligations." This guidance requires a business entity operating as a buyer in a supplier finance agreement to disclose qualitative and Net Periodic Postretirement Benefit Cost." Under this new guidance, employers will present the service costs component of the net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. In addition, only the service cost component will be eligible for capitalization in assets. Employers will present the other components separately from the line items(s) that includes the service cost and outside of any subtotal of operating income. In addition, disclosure of the line(s) used to present the other components of net periodic benefit cost will be required if the components are not presented separately in the income statement.quantitative information about its supplier finance programs. This guidance is effective for annual reporting periods beginning after December 15, ~~2017,~~2022, and interim periods within those years. ~~Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance.~~ The Company is currently evaluating the provisions of ~~this guidance; however, we expect~~ the ~~adoption~~guidance.

NOTE 3 - REVENUE RECOGNITION

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

A geographic disaggregation of ~~ASU 2017-07~~revenues across our company segmentation in the following tables provides information to ~~result~~assist in ~~a change in our adjusted operating profit (used~~evaluating the nature, timing and uncertainty of revenue and cash flows and how they may be impacted by economic factors.


	Three Months Ended September 30, 2022
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate and Inter-segment Sales		Total
Primary Geographical Markets (a)
United States	$	3,816	$	846	$	129	$	4,791
EMEA	355		29		—		384
Pacific Rim and Asia	12		12		1		25
Americas, other than U.S.	202		—		—		202
Total	$	4,385	$	887	$	130	$	5,402

Operating Segments
North American Industrial Packaging	$	4,055	$	—	$	—	$	4,055
EMEA Industrial Packaging	355		—		—		355
Global Cellulose Fibers	—		887		—		887
Intra-segment Eliminations	(25)		—		—		(25)
Corporate & Inter-segment Sales	—		—		130		130
Total	$	4,385	$	887	$	130	$	5,402

(a) Net sales are attributed to measure the earnings performance of the Company's business segments), which will be offset by a corresponding change in non-operating pension expense to reflect the impact of presenting the amortization of the prior service cost component of net periodic pension expense outside of operating income. We expect to adopt the provisions of this guidance on January 1, 2018 using the retrospective method. We also do not expect ASU 2017-07 to have an impact on our statements of financial position or cash flows.

~~Intangibles~~

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." This guidance eliminates the requirement to calculate the implied fair value of goodwill under Step 2 of today's goodwill impairment test to measure a goodwill impairment charge. Instead, entities will record an impairment chargecountries based on the excess of a reporting unit's carrying amount over its fair value. This guidance should be applied prospectively and is effective for annual reporting periods beginning after December 15, 2019, for any impairment test performed in 2020. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is currently evaluating the provisions of this guidance; however, we do not anticipate adoption having material impact given we have no impairment triggers.

~~Business Combinations~~

In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." Under the new guidance, an entity must first determine whether substantially alllocation of the ~~fair value~~seller.

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	Nine Months Ended September 30, 2022
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate & Intersegment		Total
Primary Geographical Markets (a)
United States	$	11,419	$	2,260	$	358	$	14,037
EMEA	1,178		84		—		1,262
Pacific Rim and Asia	33		41		3		77
Americas, other than U.S.	652		—		—		652
Total	$	13,282	$	2,385	$	361	$	16,028

Operating Segments
North American Industrial Packaging	$	12,206	$	—	$	—	$	12,206
EMEA Industrial Packaging	1,178		—		—		1,178
Global Cellulose Fibers	—		2,385		—		2,385
Intra-segment Eliminations	(102)		—		—		(102)
Corporate & Inter-segment Sales	—		—		361		361
Total	$	13,282	$	2,385	$	361	$	16,028

(a) Net sales are attributed to countries based on the location of the ~~gross assets acquired~~seller.


	Three Months Ended September 30, 2021
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate & Intersegment		Total
Primary Geographical Markets (a)
United States	$	3,590	$	675	$	51	$	4,316
EMEA	331		28		(1)		358
Pacific Rim and Asia	13		37		8		58
Americas, other than U.S.	177		—		5		182
Total	$	4,111	$	740	$	63	$	4,914

Operating Segments
North American Industrial Packaging	$	3,814	$	—	$	—	$	3,814
EMEA Industrial Packaging	331		—		—		331
Global Cellulose Fibers	—		740		—		740
Intra-segment Eliminations	(34)		—		—		(34)
Corporate & Inter-segment Sales	—		—		63		63
Total	$	4,111	$	740	$	63	$	4,914

(a) Net sales are attributed to countries based on the location of the seller.

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	Nine Months Ended September 30, 2021
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate & Intersegment		Total
Primary Geographical Markets (a)
United States	$	10,352	$	1,851	$	141	$	12,344
EMEA	1,119		74		(3)		1,190
Pacific Rim and Asia	45		90		32		167
Americas, other than U.S.	555		—		21		576
Total	$	12,071	$	2,015	$	191	$	14,277

Operating Segments
North American Industrial Packaging	$	11,037	$	—	$	—	$	11,037
EMEA Industrial Packaging	1,121		—		—		1,121
Global Cellulose Fibers	—		2,015		—		2,015
Intra-segment Eliminations	(87)		—		—		(87)
Corporate & Inter-segment Sales	—		—		191		191
Total	$	12,071	$	2,015	$	191	$	14,277

(a) Net sales are attributed to countries based on the location of the seller.

Revenue Contract Balances

A contract asset is ~~concentrated in a single identifiable asset or a group~~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 similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. If this threshold is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contributeloss passes to the ~~ability~~customer.

A contract liability is created when customers prepay for goods prior to ~~create outputs. This guidance~~the Company transferring those goods to the customer. The contract liability is ~~effective~~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 ~~annual reporting periods beginning after December 15, 2017,~~goods that will be transferred to customers over the following twelve months. Contract liabilities of $17 million and interim periods within those years. Early adoption is permitted. The Company is currently evaluating the provisions of this guidance; however, we do not anticipate the adoption having a material impact on the financial statements.

~~Income Taxes~~

~~In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets~~$27 million are included in Other ~~Than Inventory." This ASU requires companies to recognize the income tax effects of intercompany sales and transfers of assets other than inventory~~current liabilities in the period in which the transfer occurs rather than defer the income tax effects which is current practice. This new guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. The guidance requires companies to apply a modified retrospective approach with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. Early adoption is permitted. The Company does not expect that the adoption of the standard will result in a material impact on the financial statements.

~~Stock Compensation~~

In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting." This guidance clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under this guidance, entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. This guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted, including adoption in any interim period. The Company is currently evaluating the provisions of this guidance; however, we do not anticipate the adoption having a material impact on the financial statements.

In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." Under this new guidance, all excess tax benefits and tax deficiencies are recognized in the income statement as they occur and therefore impact the Company's effective tax rate. This guidance replaced previous guidance which required tax benefits that exceed compensation costs (windfalls) to be recognized in equity. The new guidance also changed the cash flow presentation of excess tax benefits, classifying them as operating inflows rather than financing activities as they were previously classified. In addition, the new guidance allows companies to provide net settlement of stock-based compensation to cover tax withholding as long as the net settlement does not exceed the maximum individual statutory tax rate in the employee's tax jurisdiction. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value were to be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equityaccompanying condensed consolidated balance sheet as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement were to be applied retrospectively. Amendments requiring recognition of excess tax benefitsSeptember 30, 2022 and tax deficiencies in the income statement and the practical expedient for estimating expected term were applied prospectively. An entity could elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. This ASU was effective for annual reporting periods beginning after December ~~15, 2016, and interim periods with those years. The Company prospectively adopted the provisions of this ASU in the first quarter of 2017 with no material impact on the financial statements.~~

~~Leases~~

In February 2016, the FASB issued ASU 2016-02, "Leases Topic (842): Leases." This ASU will require most leases to be recognized on the balance sheet which will increase reported assets and liabilities. Lessor accounting will remain substantially similar to current U.S. GAAP. This ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years, and mandates a modified retrospective transition method for all entities. The Company expects to adopt this guidance using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We expect to recognize a liability and corresponding asset associated with in-scope operating and finance leases but are still in the process of determining those amounts and the processes required to account for leasing activity on an ongoing basis.

~~Revenue Recognition~~

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." This guidance replaces most existing revenue recognition guidance and provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This ASU was effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years and permits the use of either the retrospective or cumulative effect transition method; however, in August 2015, the FASB issued ASU 2015-14 which defers the effective date by one year making the guidance effective for annual reporting periods beginning after December 15, 2017. The FASB has continued to clarify this guidance in various updates during 2015, 2016 and 2017, all of which, have the same effective date as the original guidance.

~~We are currently evaluating the impact of ASU 2014-09 and all related ASU's on our financial statements.~~31, 2021, respectively. During the second quarter of ~~2017, we finalized our plan~~2021, the Company also recorded a contract liability of $115 million related to ~~adopt~~ the ~~new revenue guidance effective January 1, 2018 using~~April 2021 acquisition disclosed in Note 8 - Acquisitions. The balance of this contract liability was $101 million and $107 million at September 30, 2022 and December 31, 2021, respectively, and is recorded in Other current liabilities and Other Liabilities in the ~~modified retrospective transition method.~~ accompanying condensed consolidated balance sheet.

The ~~Company's transition team, including representatives from all of our business segments, continues to review~~difference between the opening and ~~analyze the impact of the standard on our revenue contracts. Surveys were developed and reviews of customer contracts have been performed in order to gather information and identify areas~~closing balances of the Company's ~~business where potential differences could result in applying the requirements of the new standard to its revenue contracts. The results of the surveys~~contract assets and contract ~~reviews indicate that~~liabilities primarily results from the ~~adoption of~~difference between the ~~standard may require acceleration of revenue~~price and quantity at comparable points in time for ~~products produced by~~goods for which we have an unconditional right to payment or receive prepayment from the Company without an alternative future use and where the Company would have a legally enforceable right of payment for production of products completed to date. The Company is continuing to evaluate the terms of its revenue contracts, including evaluating the materiality of the potential impact to the financial statements; however, due to the repetitive nature of our sales, we do not expect the impact of this acceleration to significantly alter our sales recognition patterns over time. In addition, the Company continues to assess the impact of required disclosures around revenue recognition in the notes to the financial statements and any necessary policy and process changes, in preparation for adoption. The Company does not expect that the adoption of the other elements of the standard will result in a material impact on its financial statements.customer, respectively.

NOTE 34 - EQUITY

A summary of the changes in equity for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 is provided below:


	Three Months Ended September 30, 2022
In millions, except per share amounts	Common Stock Issued		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Common Stock Held In Treasury, At Cost		Total Equity
Balance, July 1	$	449	$	4,675	$	9,557	$	(1,489)	$	4,149	$	9,043
Issuance of stock for various plans, net	—		27		—		—		(2)		29
Repurchase of stock	—		—		—		—		270		(270)
Common stock dividends ($0.4625 per share)	—		—		(168)		—		—		(168)
Comprehensive income (loss)	—		—		951		(97)		—		854
Ending Balance, September 30	$	449	$	4,702	$	10,340	$	(1,586)	$	4,417	$	9,488

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	Nine Months Ended September 30,
	2017								2016										Nine Months Ended September 30, 2022
In millions, except per share amounts	Total International Paper Shareholders’ Equity			Noncontrolling Interests		Total Equity			Total International Paper Shareholders’ Equity			Noncontrolling Interests			Total Equity			In millions, except per share amounts	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	$	4,341		$	18	$	4,359		$	3,884		$	25		$	3,909		Balance, January 1	$	449	$	4,668	$	9,029	$	(1,666)	$	3,398	$	9,082
Issuance of stock for various plans, net	130			—		130			100			—			100			Issuance of stock for various plans, net	—		34		—		—		(74)		108
Repurchase of stock	(46		)	—		(46		)	(132		)	—			(132		)	Repurchase of stock	—		—		—		—		1,093		(1,093)
Common stock dividends ($1.3875 per share in 2017 and $1.3200 per share in 2016)	(584		)	—		(584		)	(550		)	—			(550		)
Transactions of equity method investees	(24		)	—		(24		)	(37		)	—			(37		)
Divestiture of noncontrolling interests	—			—		—			—			(3		)	(3		)
Other	—			—		—			8			—			8
Common stock dividends ($1.3875 per share)																		Common stock dividends ($1.3875 per share)	—		—		(511)		—		—		(511)
Comprehensive income (loss)	1,097			1		1,098			936			(2		)	934			Comprehensive income (loss)	—		—		1,822		80		—		1,902
Ending Balance, September 30	$	4,914		$	19	$	4,933		$	4,209		$	20		$	4,229		Ending Balance, September 30	$	449	$	4,702	$	10,340	$	(1,586)	$	4,417	$	9,488

~~NOTE 4~~


	Three Months Ended September 30, 2021
In millions, except per share amounts	Common Stock Issued		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Common Stock Held In Treasury, At Cost		Total International Paper Shareholders’ Equity		Noncontrolling Interests		Total Equity
Balance, July 1	$	449	$	6,330	$	8,442	$	(4,094)	$	2,775	$	8,352	$	2	$	8,354
Issuance of stock for various plans, net	—		41		—		—		—		41		—		41
Repurchase of stock	—		—		—		—		212		(212)		—		(212)
Common stock dividends ($0.5125 per share)	—		—		(203)		—		—		(203)		—		(203)
Divestiture of noncontrolling interests	—		—		—		—		—		—		(1)		(1)
Comprehensive income (loss)	—		—		864		780		—		1,644		—		1,644
Ending Balance, September 30	$	449	$	6,371	$	9,103	$	(3,314)	$	2,987	$	9,622	$	1	$	9,623


	Nine Months Ended September 30, 2021
In millions, except per share amounts	Common Stock Issued		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Common Stock Held In Treasury, At Cost		Total International Paper Shareholders’ Equity		Noncontrolling Interests		Total Equity
Balance, January 1	$	449	$	6,325	$	8,070	$	(4,342)	$	2,648	$	7,854	$	14	$	7,868
Issuance of stock for various plans, net	—		27		—		—		(86)		113		—		113
Repurchase of stock	—		—		—		—		425		(425)		—		(425)
Common stock dividends ($1.5375 per share)	—		—		(612)		—		—		(612)		—		(612)
Transactions of equity method investees	—		19		—		—		—		19		—		19
Divestiture of noncontrolling interests	—		—		—		—		—		—		(13)		(13)
Comprehensive income (loss)	—		—		1,645		1,028		—		2,673		—		2,673
Ending Balance, September 30	$	449	$	6,371	$	9,103	$	(3,314)	$	2,987	$	9,622	$	1	$	9,623

N OTE 5 - OTHER COMPREHENSIVE INCOME

The following table presents changes in ~~AOCI~~accumulated other comprehensive income (AOCI) for the ~~three-month period~~three months and nine months ended September 30, ~~2017:~~2022 and 2021:

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In millions Defined Benefit Pension and Postretirement Items (a) Change in Cumulative Foreign Currency Translation Adjustments (a) Net Gains and Losses on Cash Flow Hedging Derivatives (a) Total (a)
Balance, July 1, 2017 $ (2,954 ) $ (2,155 ) $ 1
$ (5,108 )
Other comprehensive income (loss) before reclassifications —
101
1
102
Amounts reclassified from accumulated other comprehensive income 59
(1 ) (2 ) 56
Net Current Period Other Comprehensive Income (Loss) 59
100
(1 ) 158
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest —
1
—
1
Balance, September 30, 2017 $ (2,895 ) $ (2,054 ) $ —
$ (4,949 )


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Defined Benefit Pension and Postretirement Adjustments
Balance at beginning of period	$	(919)	$	(1,809)	$	(962)	$	(1,880)
Other comprehensive income (loss) before reclassifications	—		831		—		832
Amounts reclassified from accumulated other comprehensive income	21		31		64		101
Balance at end of period	(898)		(947)		(898)		(947)
Change in Cumulative Foreign Currency Translation Adjustments
Balance at beginning of period	(560)		(2,286)		(694)		(2,457)
Other comprehensive income (loss) before reclassifications	(120)		(114)		14		(85)
Amounts reclassified from accumulated other comprehensive income	—		44		—		184
Other comprehensive income (loss) attributable to noncontrolling interest	—		—		—		2
Balance at end of period	(680)		(2,356)		(680)		(2,356)
Net Gains and Losses on Cash Flow Hedging Derivatives
Balance at beginning of period	(10)		1		(10)		(5)
Other comprehensive income (loss) before reclassifications	—		(4)		—		3
Amounts reclassified from accumulated other comprehensive income	2		(8)		2		(9)
Balance at end of period	(8)		(11)		(8)		(11)
Total Accumulated Other Comprehensive Income (Loss) at End of Period	$	(1,586)	$	(3,314)	$	(1,586)	$	(3,314)


~~(a)~~	~~All amounts are net of tax.~~

~~The following table presents changes in AOCI for the three-month period ended September 30, 2016:~~

In millions Defined Benefit Pension and Postretirement Items (a) Change in Cumulative Foreign Currency Translation Adjustments (a) Net Gains and Losses on Cash Flow Hedging Derivatives (a) Total (a)
Balance, July 1, 2016 $ (3,298 ) $ (2,179 ) $ (4 ) $ (5,481 )
Other comprehensive income (loss) before reclassifications (53 ) 3
5
(45 )
Amounts reclassified from accumulated other comprehensive income 72
—
(3 ) 69
Net Current Period Other Comprehensive Income (Loss) 19
3
2
24
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest —
(1 ) —
(1 )
Balance, September 30, 2016 $ (3,279 ) $ (2,177 ) $ (2 ) $ (5,458 )


~~(a)~~	~~All amounts are net of tax.~~

~~The following table presents changes in AOCI for the nine-month period ended September 30, 2017:~~

In millions Defined Benefit Pension and Postretirement Items (a) Change in Cumulative Foreign Currency Translation Adjustments (a) Net Gains and Losses on Cash Flow Hedging Derivatives (a) Total (a)
Balance, January 1, 2017 $ (3,072 ) $ (2,287 ) $ (3 ) $ (5,362 )
Other comprehensive income (loss) before reclassifications 1
235
9
245
Amounts reclassified from accumulated other comprehensive income 176
(1 ) (6 ) 169
Net Current Period Other Comprehensive Income 177
234
3
414
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest —
(1 ) —
(1 )
Balance, September 30, 2017 $ (2,895 ) $ (2,054 ) $ —
$ (4,949 )


~~(a)~~	~~All amounts are net of tax.~~

~~The following table presents changes in AOCI for the nine-month period ended September 30, 2016:~~

In millions Defined Benefit Pension and Postretirement Items (a) Change in Cumulative Foreign Currency Translation Adjustments (a) Net Gains and Losses on Cash Flow Hedging Derivatives (a) Total (a)
Balance, January 1, 2016 $ (3,169 ) $ (2,549 ) $ 10
$ (5,708 )
Other comprehensive income (loss) before reclassifications (581 ) 376
(5 ) (210 )
Amounts reclassified from accumulated other comprehensive income 471
(3 ) (7 ) 461
Net Current Period Other Comprehensive Income (110 ) 373
(12 ) 251
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest —
(1 ) —
(1 )
Balance, September 30, 2016 $ (3,279 ) $ (2,177 ) $ (2 ) $ (5,458 )


~~(a)~~	~~All amounts are net of tax.~~

The following table presents details of the reclassifications out of AOCI for the ~~three-month~~three months and ~~nine-month periods~~nine months ended September 30, ~~2017~~2022 and ~~2016:~~2021:


In millions:	Amount Reclassified from Accumulated Other Comprehensive Income									Location of Amount Reclassified from AOCI
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Defined benefit pension and postretirement items:
Prior-service costs	$	(6)	$	(5)	$	(17)	$	(17)	(a)	Non-operating pension expense (income)
Actuarial gains (losses)	(22)		(36)		(68)		(118)		(a)	Non-operating pension expense (income)
Total pre-tax amount	(28)		(41)		(85)		(135)
Tax (expense) benefit	7		10		21		34
Net of tax	(21)		(31)		(64)		(101)

Change in cumulative foreign currency translation adjustments:
Business acquisitions/divestitures	—		(44)		—		(184)			Net (gains) losses on sales and impairments of businesses and Cost of products sold
Tax (expense) benefit	—		—		—		—
Net of tax	—		(44)		—		(184)

Net gains and losses on cash flow hedging derivatives:
Interest rate contracts	(2)		—		(2)		—		(b)	Cost of products sold
Foreign exchange contracts	—		10		—		12		(b)	Cost of products sold
Total pre-tax amount	(2)		10		(2)		12
Tax (expense)/benefit	—		(2)		—		(3)
Net of tax	(2)		8		(2)		9
Total reclassifications for the period	$	(23)	$	(67)	$	(66)	$	(276)

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Details About Accumulated Other Comprehensive Income Components Amounts Reclassified from Accumulated Other Comprehensive Income Location of Amount Reclassified from AOCI
Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
In millions:
Defined benefit pension and postretirement items:
Prior-service costs $ (6 ) $ (9 ) $ (19 ) $ (27 ) (a) Cost of products sold
Actuarial gains (losses) (89 ) (108 ) (266 ) (739 ) (a) Cost of products sold
Total pre-tax amount (95 ) (117 ) (285 ) (766 )
Tax (expense) benefit 36
45
109
295

Net of tax (59 ) (72 ) (176 ) (471 )

Change in cumulative foreign currency translation adjustments:
Business acquisitions/divestitures 1
—
1
3
Net (gains) losses on sales and impairments of businesses
Tax (expense)/benefit —
—
—
—

Net of tax 1
—
1
3

Net gains and losses on cash flow hedging derivatives:
Foreign exchange contracts 3
5
8
10
(b) Cost of products sold
Total pre-tax amount 3
5
8
10

Tax (expense)/benefit (1 ) (2 ) (2 ) (3 )
Net of tax 2
3
6
7

Total reclassifications for the period $ (56 ) $ (69 ) $ (169 ) $ (461 )
(a)These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 19 for additional details).


~~(a)~~	~~These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 16 for additional details).~~


~~(b)~~	~~This accumulated other comprehensive income component is included in our derivatives and hedging activities (see Note 15 for additional details).~~

(b)This accumulated other comprehensive income component is included in our derivatives and hedging activities (see Note 18 for additional details).

NOTE 56 - EARNINGS PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS

Basic earnings per ~~common~~ share ~~are~~is computed by dividing earnings by the weighted average number of common shares outstanding. Diluted earnings per ~~common~~ share ~~are~~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 ~~common~~ share and diluted earnings (loss) per ~~common~~ share is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions, except per share amounts	2022		2021		2022		2021
Earnings (loss) from continuing operations attributable to International Paper Company common shareholders	$	951	$	432	$	1,822	$	1,007
Weighted average common shares outstanding	357.8		388.8		366.8		391.0
Effect of dilutive securities
Restricted performance share plan	2.6		3.8		3.9		4.3
Weighted average common shares outstanding – assuming dilution	360.4		392.6		370.7		395.3
Basic earnings (loss) per share from continuing operations	$	2.66	$	1.11	$	4.97	$	2.58
Diluted earnings (loss) per share from continuing operations	$	2.64	$	1.10	$	4.92	$	2.55

Three Months Ended
September 30, Nine Months Ended
September 30,
In millions, except per share amounts 2017 2016 2017 2016
Earnings (loss) from continuing operations $ 395
$ 312
$ 684
$ 691
Effect of dilutive securities —
—
—
—
Earnings (loss) from continuing operations – assuming dilution $ 395
$ 312
$ 684
$ 691
Average common shares outstanding 412.9
411.2
412.6
411.0
Effect of dilutive securities
Restricted stock performance share plan 4.5
4.1
4.8
4.5
Average common shares outstanding – assuming dilution 417.4
415.3
417.4
415.5
Basic earnings (loss) from continuing operations per common share $ 0.96
$ 0.76
$ 1.65
$ 1.68
Diluted earnings (loss) from continuing operations per common share $ 0.95
$ 0.75
$ 1.64
$ 1.66

NOTE 67 - RESTRUCTURING AND OTHER CHARGES, NET

~~2017:~~ ~~There were no restructuring and other charges recorded during the three months ended September 30, 2017.~~

~~During the three months ended June 30, 2017, restructuring and other charges totaling a $16 million benefit before taxes were recorded. Details of these charges were as follows:~~

In millions Three Months Ended
June 30, 2017
Gain on sale of investment in ArborGen $ (14 )
Other (2 )
Total $ (16 )

~~There were no restructuring and other charges recorded during the three months ended March 31, 2017.~~

~~2016:~~ 2022: During the three months ended September 30, ~~2016, restructuring and other charges totaling $46~~2022, the Company recorded a $93 million ~~before taxes were recorded. Details of these charges were as follows:~~pre-tax charge in Corporate related to early debt extinguishment costs.

In millions Three Months Ended
September 30, 2016
Early debt extinguishment costs $ 29
India packaging evaluation write-off 17
Total $ 46

There were no restructuring and other charges recorded during the three months ended June 30, ~~2016.~~2022 and March 31, 2022.

2021: During the three months ended September 30, 2021, the Company recorded a $35 million pre-tax charge in Corporate related to early debt extinguishment costs and a $4 million pre-tax charge in Corporate for severance.

During the three months ended June 30, 2021, the Company recorded a $170 million pre-tax charge in Corporate related to early debt extinguishment costs and a $4 million pre-tax charge in Corporate for severance.

During the three months ended March 31, ~~2016, restructuring and other charges totaling $1 million before taxes were recorded. Details of these charges were as follows:~~

In millions Three Months Ended
March 31, 2016
Gain on sale of investment in Arizona Chemical $ (8 )
Riegelwood mill conversion costs 9
Total $ 1

~~NOTE 7 - ACQUISITIONS~~

~~Tangier, Morocco Facility~~

~~On June 30, 2017,~~2021, the Company ~~completed~~recorded an $18 million pre-tax charge in Corporate related to early debt extinguishment costs and a $12 million pre-tax charge in the ~~acquisition of Europac's Tangier, Morocco facility, a corrugated packaging facility,~~Industrial Packaging segment for €40 million (approximately $46 million using the June 30, 2017 exchange rate), subject to certain post-closing adjustments. Approximately 80% of the fair value has been provisionally allocated to property, plant and equipment. Adjustments, if any, to provisional amounts will be finalized within the measurement period of up to one year from the acquisition date. Pro forma informationseverance related to the optimization of our EMEA Packaging business.

NOTE 8 - ACQUISITIONS

2021: On April 1, 2021, the Company closed on the previously announced acquisition of two box plants located in Spain. The total purchase consideration, inclusive of working capital adjustments, was approximately €71 million (approximately $83 million based on the ~~Europac business~~April 1, 2021 exchange rate).

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The following table summarizes the final fair value assigned to assets and liabilities acquired as of April 1, 2021:


In millions
Cash and temporary investments	$	5
Accounts and notes receivable	10
Inventories	3
Plants, properties and equipment	50
Goodwill	23
Intangible assets	13
Total assets acquired	$	104
Short-term debt	2
Accounts payable and accrued liabilities	4
Other current liabilities	2
Long-term debt	1
Deferred income taxes	12
Total liabilities assumed	21
Net assets acquired	$	83

Pro forma information has not been included as it is ~~impractical~~impracticable to obtain the information due to the lack of availability of historical U.S. GAAP financial ~~data and does~~data. The results of the operations of these businesses do not have a material effect on the ~~Company’s~~Company's consolidated results of operations.

~~Weyerhaeuser Pulp Business~~

On December 1, 2016, the Company completed the acquisition of Weyerhaeuser Company's pulp business for approximately $2.2 billion in cash. Under the terms of the agreement, International Paper acquired four fluff pulp mills, one Northern bleached softwood kraft mill and two converting facilities of modified fiber, located in the United States, Canada and Poland.

~~The following table summarizes the provisional fair value assigned to assets and liabilities acquired as of December 1, 2016:~~

In millions
Cash and temporary investments $ 12
Accounts and notes receivable 195
Inventory 238
Other current assets 11
Plants, properties and equipment 1,711
Goodwill 52
Other intangible assets 212
Deferred charges and other assets 6
Total assets acquired 2,437
Accounts payable and accrued liabilities 114
Long-term debt 104
Other long-term liabilities 28
Total liabilities assumed 246
Net assets acquired $ 2,191

The assignment to fair value is provisional and could be revised as a result of additional information obtained regarding assets acquired and liabilities assumed, and revisions of provisional estimates of fair values, including, but not limited to, the completion of independent appraisals and valuations related to property, plant and equipment and intangible assets. While we do not anticipate these changes to be significant, the provisional amounts will not be finalized until the end of the measurement period of up to one year from the acquisition date.

In connection with the business combination, inventories were written up by $33 million to their estimated fair value. During the first quarter of 2017, $14 million before taxes ($8 million after taxes) were expensed to Cost of products sold as the related inventory was sold.

~~The identifiable intangible assets acquired in connection with the acquisition of the Weyerhaeuser pulp business included the following:~~

In millions Estimated
Fair Value Average
Remaining
Useful Life
Asset Class: (at acquisition
date)
Customer relationships and lists $ 95
24 years
Trade names, patents, trademarks and developed technology 113
8 years
Other 4
10 years
Total $ 212

~~Holmen Paper Newsprint Mill~~

On June 30, 2016, the Company completed the acquisition of Holmen Paper's newsprint mill in Madrid, Spain. Under the terms of the acquisition agreement, International Paper purchased the Madrid newsprint mill, as well as associated recycling operations and a 50% ownership interest in a cogeneration facility. The Company intends to convert the mill during the fourth quarter of 2017, to produce recycled containerboard with an expected capacity of 440,000 tons. Once completed, the converted mill will support the Company's corrugated packaging business in EMEA.

The Company's aggregate purchase price for the mill, recycling operations and 50% ownership of the cogeneration facility was €53 million (approximately $59 million using the June 30, 2016 exchange rate). The assignment of fair value to assets acquired and liabilities assumed was completed in the first quarter of 2017. Approximately $60 million was allocated to property, plant and equipment, $14 million to current assets (primarily cash and accounts receivable), $14 million to equity method investments, $5 million to long-term assets, $9 million to short-term liabilities and $16 million to long-term liabilities related to a supply contract entered into with the seller. The final fair values assigned indicated that the sum of the cash consideration paid was less than the fair value of the underlying net assets, after adjustments, by $6 million, resulting in a bargain purchase gain being recorded on this transaction. Pro forma information related to the acquisition of the Holmen business has not been included as it is impractical to obtain the information due to the lack of availability of financial data and does not have a material effect on the Company’s consolidated results of operations.

The Company has accounted for the above ~~acquisitions~~acquisition under ASC 805, "Business Combinations" and the results of operations have been included in ~~International Paper's~~the Company's financial statements beginning with the ~~dates~~date of acquisition.

2021: In April 2021, the Company received a noncontrolling interest in a U.S-based corrugated packaging producer. In the second quarter of 2021, the Company recorded its investment of $115 million based on the fair value of the noncontrolling interest and a corresponding contract liability that is amortized over 15 years. The Company is party to various agreements with the entity which includes a containerboard supply agreement. The Company is accounting for its interest as an equity method investment.

NOTE 89 - DIVESTITURES ~~/ SPINOFF~~AND IMPAIRMENTS

~~Other Divestitures and Impairments~~Printing Papers Spin-off

~~2017:~~ 2021:On ~~September 7, 2017,~~October 1, 2021, the Company completed the previously announced spin-off of its Printing Papers segment along with certain mixed-use coated paperboard and pulp businesses in North America, France and Russia into a standalone, publicly-traded company, Sylvamo Corporation. The transaction was implemented through the distribution of shares of the standalone company to International Paper's shareholders (the "Distribution"). As a result of the Distribution, Sylvamo is an independent public company that trades on the New York Stock Exchange under the symbol "SLVM".

The Distribution was made to the Company's stockholders of record as of the close of business on September 15, 2021 (the "Record Date"), and such stockholders received one share of Sylvamo common stock for every 11 shares of International Paper common stock held as of the close of business on the Record Date. The Company retained 19.9% of the shares of Sylvamo at the time of the separation and this retained investment is discussed further in Note 10 - Supplementary Financial Statement Information. The spin-off was tax-free for the Company and its shareholders for U.S. federal income tax purposes.

In connection with the Distribution, on September 29, 2021, the Company and Sylvamo entered into a separation and distribution agreement as well as various other agreements that govern the relationships between the parties following the Distribution, including a transition services agreement, a tax matters agreement and an employee matters agreement. These agreements provide for the allocation between the Company and Sylvamo of assets, liabilities and obligations attributable to periods prior to, at and after the Distribution and govern certain relationships between the Company and Sylvamo after the Distribution. The Company is also party to various ongoing operational agreements with Sylvamo under which it sells fiber, paper and other products. Sales under these agreements were $230 million and $630 million for the three months and nine months ended September 30, 2022, respectively. As of September 30, 2022, the Company no longer had an ownership interest in Sylvamo and as such will no longer be a related party. See Note 10 - Supplementary Financial Statement Information for further discussion.

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All historical operating results of the Sylvamo businesses, as well as the results of our Kwidzyn, Poland mill that was sold on August 6, 2021, are presented as Discontinued Operations, net of tax, in the condensed consolidated statement of operations. Kwidzyn was previously part of the Printing Papers business prior to its sale in August 2021. See the Kwidzyn Mill section below for further details regarding this sale.

The following summarizes the major classes of line items comprising Earnings (Loss) Before Income Taxes and Equity Earnings reconciled to Discontinued Operations, net of tax, related to the Sylvamo businesses and Kwidzyn for the three months and nine months ended September 30, 2021 in the condensed consolidated statement of operations:


In millions	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Net Sales	$	800	$	2,416
Costs and Expenses
Cost of products sold	500		1,509
Selling and administrative expenses	92		214
Depreciation, amortization and cost of timber harvested	37		113
Distribution expenses	82		229
Taxes other than payroll and income taxes	7		24
Net (gains) losses on sales of fixed assets	(86)		(86)
Net (gains) losses on sales and impairments of businesses	(360)		(360)
Interest expense, net	10		(19)
Earnings (Loss) Before Income Taxes and Equity Earnings	518		792
Income tax provision (benefit)	86		154
Discontinued Operations, Net of Taxes	$	432	$	638

The following summarizes the total cash provided by operations and total cash used for investing activities related to the Sylvamo businesses and Kwidzyn and included in the condensed consolidated statement of cash flows for the nine months ended September 30, 2021:


In millions	Nine Months Ended September 30, 2021
Cash Provided by (Used For) Operating Activities	$	290
Cash Provided by (Used For) Investment Activities	$	757

In anticipation of the spin-off, Sylvamo incurred $1.5 billion in debt during the third quarter of 2021 with the proceeds used for a distribution to the Company and other expenses associated with the transaction. The Company was an obligor of the debt prior to the spin-off as Sylvamo was a wholly-owned subsidiary. Subsequent to the distribution of the net assets, the Company was no longer an obligor of the Sylvamo debt. The $1.5 billion of borrowings was comprised of $450 million of 7.00% senior unsecured notes due 2029 issued in September 2021. It was also comprised of the senior secured credit facility that Sylvamo entered into in September 2021 which consisted of $450 million of borrowings related to its term loan “B” facility, $520 million of borrowings related to its term loan “F” facility, and the $100 million draw on its revolving credit facility which had a capacity of $450 million. Additionally, at the time of the spin-off in the fourth quarter of 2021, the Company distributed $130 million to Sylvamo.

Kwidzyn Mill

2021: On August 6,2021, the Company completed the sale of its ~~foodservice business in China to Huhtamaki Hong Kong Limited. Proceeds received totaled approximately RMB 129~~Kwidzyn, Poland mill for €669 million ~~($18~~(approximately $794 million using the ~~September 30, 2017~~July 31, 2021 exchange rate) in cash. The business included the pulp and paper mill in Kwidzyn and supporting functions. During the third quarter of 2021, the Company recorded a net gain of $360 million ($350 million after taxes) including a gain of $404 million ($394 million after taxes) related to the sale of net assets and a loss of $44 million (before and after taxes) related to the cumulative foreign currency translation loss. During the fourth quarter of 2021, the Company incurred $9 million ($6 million after taxes) of costs related to the sale of Kwidzyn. All historical operating results for Kwidzyn have been presented as Discontinued Operations, net of tax, in the condensed consolidated statement of operations.

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Olmuksan International Paper

2021: On May 31, 2021, the Company completed the sale of its 90.38% ownership interest in Olmuksan International Paper, a corrugated packaging business in Turkey, to Mondi Group for €66 million (approximately $81 million using the May 31, 2021 exchange rate). ~~Under~~During the ~~terms~~nine months ended September 30, 2021, the Company recorded a net gain of$4 million (charge of $2 million after taxes) related to the ~~transaction,~~business working capital adjustment and after post-closing adjustments, International Paper received approximately RMB 49 million in exchange for its ownership interest in two China foodservice entities and RMB 80 million for the sale of notes receivable from the acquired entities.cumulative foreign currency translation loss.

~~Subsequent to~~In conjunction with the announced agreement in ~~June 2017,~~the fourth quarter of 2020, a determination was made that the current book value of the ~~asset~~Olmuksan International Paper disposal group exceeded its estimated fair value of $7$79 million which was based on the agreed upon ~~selling~~transaction price. As a result, a ~~pre-tax~~preliminary charge of $9$123 million (before and after taxes) was recorded during the ~~second~~fourth quarter of 2017, in the Company's Consumer Packaging segment, to write down the long-lived assets of this business to their estimated fair value. Amounts related to this business included in the Company's statement of operations were immaterial for both the three months and nine months ended September 30, 2017.2020.

~~2016:~~ On June 30, 2016, the Company completed the previously announced sale of its corrugated packaging business in China and Southeast Asia to Xiamen Bridge Hexing Equity Investment Partnership Enterprise. Under the terms of the transaction and after post-closing adjustments, International Paper received a total of approximately RMB 957 million (approximately $144 million at the June 30, 2016 exchange rate), which included the buyer's assumption of the liability for outstanding loans of approximately $55 million which are payable up to three years from the closing of the sale. The remaining balance of the outstanding loans payable to International Paper as of September 30, 2017, totaled $9 million.

Subsequent to the announced agreement in March 2016, a determination was made that the current book value of the asset group exceeded its estimated fair value of $155 million which was the agreed upon selling price, less costs incurred to sell. As a result, a pre-tax charge of $41 million was recorded during the six months ended June 30, 2016 in the Company's Industrial Packaging segment to write down the long-lived assets of this business to their estimated fair value. In addition, the Company recorded a pre-tax charge of $24 million in the 2016 second quarter for severance that was contingent upon the sale of this business. The amount of pre-tax losses related to this IP Asia Packaging business included in the Company's statement of operations were $7 million and $80 million for the three months and nine months ended September 30, 2016.

NOTE 910 - SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Temporary Investments

Temporary investments with an original maturity of three months or less and money market funds with greater than three month maturities but with the right to redeem without notices are treated as cash equivalents and are stated at cost. Temporary investments totaled ~~$663~~$408 million and ~~$757 million~~$1.1 billion at September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively.

Accounts and Notes Receivable


In millions	September 30, 2017		December 31, 2016		In millions	September 30, 2022		December 31, 2021
Accounts and notes receivable, net:					Accounts and notes receivable, net:
Trade	$	3,098	$	2,759
Trade (less allowances of $29 in 2022 and $34 in 2021)					Trade (less allowances of $29 in 2022 and $34 in 2021)	$	3,179	$	3,027
Other	245		242		Other	274		205
Total	$	3,343	$	3,001	Total	$	3,453	$	3,232

~~The allowance~~Inventories


In millions	September 30, 2022		December 31, 2021
Raw materials	$	272	$	245
Finished pulp, paper and packaging	1,128		1,014
Operating supplies	492		486
Other	84		69
Total	$	1,976	$	1,814

Current Investments

As a result of the 2021 spin-off of Sylvamo, the Company retained 19.9% of the shares of Sylvamo with the intent to monetize its investment and provide additional proceeds to the Company. In April 2022, the Company exchanged 4,132,000 shares of Sylvamo common stock owned by the Company in exchange and as repayment for ~~doubtful accounts was $78~~an approximately $144 million term loan obligation which resulted in the reversal of a $31 million deferred tax liability due to the tax-free exchange of the Sylvamo Corporation common stock. In September 2022, the Company exchanged the remaining 4,614,358 shares of Sylvamo common stock owned by the Company in exchange for $167 million and ~~$70~~as partial repayment of a $210 million term loan obligation. This also resulted in the reversal of a $35 million deferred tax liability due to the tax-free exchange of the Sylvamo Corporation common stock. See Note 17 - Debt for further discussion.

As of September 30, 2022, the Company no longer had an ownership interest in Sylvamo. The Company's investment in Sylvamo was valued at $245 million at ~~September 30, 2017 and~~ December 31, ~~2016, respectively.~~2021, and was recorded in Current investments in the accompanying condensed consolidated balance sheet. The Company accounted for its ownership interest in Sylvamo at fair value as an investment in equity securities.

~~Inventories~~

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In millions September 30, 2017 December 31, 2016
Raw materials $ 275
$ 296
Finished pulp, paper and packaging 1,453
1,381
Operating supplies 646
661
Other 91
100
Total $ 2,465
$ 2,438
Plants, Properties and Equipment

~~Depreciation~~

Accumulated depreciation was ~~$22.7~~$18.1 billion and ~~$21.6~~$17.6 billion at September 30, ~~2017~~2022 and December 31, ~~2016.~~2021, respectively. Depreciation expense was ~~$341~~$250 million and ~~$294~~$270 million for the three months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively, and ~~$997~~$756 million and ~~$845~~$790 million for the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

Non-cash additions to plants, properties and equipment included within accounts payable were $102 million and $106 million at September 30, 2022 and December 31, 2021, respectively.

Amounts invested in capital projects in the accompanying condensed consolidated statement of cash flows are presented net of insurance recoveries of $26 million received during the nine months ended September 30, 2022 and $6 million received during the nine months ended September 30, 2021.

Interest

Interest payments made during the nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 were ~~$600~~$273 million and ~~$511~~$346 million, respectively.

Amounts related to interest were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Interest expense	$	150	$	104	$	310	$	345
Interest income	27		22		44		84
Capitalized interest costs	5		3		13		8

Asset Retirement Obligations

The Company had recorded liabilities of $105 million and $107 million related to asset retirement obligations at September 30, 2022 and December 31, 2021, respectively.

NOTE 11 - 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 a remaining lease term of up to 31 years. Total lease costs were $68 million and $61 million for the three months ended September 30, 2022 and 2021, respectively, and $192 million and $184 million for the nine months ended September 30, 2022 and 2021, respectively.

Supplemental Balance Sheet Information Related to Leases


In millions	Classification	September 30, 2022		December 31, 2021
Assets
Operating lease assets	Right-of-use assets	$	387	$	365
Finance lease assets	Plants, properties and equipment, net (a)	51		57
Total leased assets		$	438	$	422
Liabilities
Current
Operating	Other current liabilities	$	141	$	132
Finance	Notes payable and current maturities of long-term debt	10		10
Noncurrent
Operating	Long-term lease obligations	251		236
Finance	Long-term debt	50		56
Total lease liabilities		$	452	$	434

(a)Finance leases are recorded net of accumulated amortization of $56 million and $51 million as of September 30, 2022 and December 31, 2021, respectively.

Three Months Ended
September 30, Nine Months Ended
September 30,
In millions 2017 2016 2017 2016
Interest expense $ 198
$ 181
$ 571
$ 513
Interest income 46
49
140
129
Capitalized interest costs 6
7
18
21

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NOTE 12 - EQUITY METHOD INVESTMENTS

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

Ilim S.A.

The Company has a 50% equity interest in Ilim S.A. (Ilim), which has subsidiaries whose primary operations are in Russia. The Company recorded equity earnings, net of taxes, of $64 million and $95 million for the three months ended September 30, 2022 and 2021, respectively and $252 million and $245 million for the nine months ended September 30, 2022 and 2021, respectively. The Company received cash dividends from the joint venture of $204 million and $144 million during the first nine months of 2022 and 2021, respectively. At September 30, 2022 and December 31, 2021, the Company's investment in Ilim, which is recorded in Long-Term Investments in the condensed consolidated balance sheets, was $736 million and $557 million, respectively, which was $129 million and $121 million, respectively, more than the Company's proportionate share of the joint venture's underlying net assets. The differences primarily relate to currency translation adjustments and the basis difference between the fair value of our investment at acquisition and the underlying net assets. As of September 30, 2022, there was $250 million of cumulative translation adjustment loss included within equity related to our Ilim investment. Prior to the spin-off of the Printing Papers segment on October 1, 2021, the Company was party to a joint marketing agreement with Ilim Group under which the Company purchased, marketed and sold paper produced by Ilim Group. Purchases under this agreement were $42 million and $125 million for the three months and nine months ended September 30, 2021, respectively. The joint marketing agreement was conveyed to Sylvamo as part of the spin-off transaction on October 1, 2021. See Note 1 - Basis of Presentation for additional discussion regarding our Ilim investment.

Summarized financial information for Ilim is presented in the following tables:

Balance Sheet


In millions	September 30, 2022	December 31, 2021
Current assets	892	$	1,010
Noncurrent assets	4,360	3,145
Current liabilities	1,457	1,212
Noncurrent liabilities	2,534	2,047
Noncontrolling interests	47	24

Income Statement


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Net sales	$	834	$	729	$	2,356	$	1,993
Gross profit	391		393		1,234		1,051
Income (loss) from continuing operations	129		190		501		498
Net income (loss)	124		182		486		481

The Company's remaining equity method investments are not material.

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NOTE 1013 - GOODWILL AND OTHER INTANGIBLES

Goodwill

The following table presents changes in goodwill balances as allocated to each business segment for the ~~nine-month period~~nine-months ended September 30, ~~2017:~~2022:

In millions
Industrial
Packaging
Global Cellulose Fibers
Printing
Papers

Consumer
Packaging
Total
Balance as of January 1, 2017
Goodwill $ 3,316
$ 19
   $ 2,143
   $ 1,664
$ 7,142
Accumulated impairment losses (a) (237 ) —
   (1,877 ) (1,664 ) (3,778 )
3,079
19
   266
   —
3,364
Reclassifications and other (b) 5
—
14
—
19
Additions/reductions 5
(c) 33
(d) (1 ) —
37
Balance as of September 30, 2017
Goodwill 3,326
52
   2,156
   1,664
7,198
Accumulated impairment losses (a) (237 ) —
   (1,877 ) (1,664 ) (3,778 )
Total $ 3,089
$ 52
   $ 279
   $ —
$ 3,420


In millions	Industrial Packaging		Global Cellulose Fibers		Total
Balance as of January 1, 2022
Goodwill	$	3,426	$	52	$	3,478
Accumulated impairment losses	(296)		(52)		(348)
	3,130		—		3,130
Currency translation and other (a)	(12)		—		(12)
Goodwill additions/reductions (b)	(2)		—		(2)
Accumulated impairment loss additions / reductions	—		—		—
Balance as of September 30, 2022
Goodwill	3,412		52		3,464
Accumulated impairment losses	(296)		(52)		(348)
Total	$	3,116	$	—	$	3,116


~~(a)~~	~~Represents accumulated goodwill impairment charges since the adoption of ASC 350, “Intangibles – Goodwill and Other” in 2002.~~


~~(b)~~	~~Represents the effects of foreign currency translations and reclassifications.~~


~~(c)~~	~~Reflects the acquisition of the newly acquired Moroccan box plant.~~


~~(d)~~	~~Represents purchase price adjustments related to the the newly acquired pulp business.~~

(a)Represents the effects of foreign currency translations.

(b)Represents a reduction from benefits generated by the deduction of goodwill amortization for tax purposes in the U.S.

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, 2017				December 31, 2016					September 30, 2022						December 31, 2021
In millions	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		In millions	Gross Carrying Amount		Accumulated Amortization		Net Intangible Assets		Gross Carrying Amount		Accumulated Amortization		Net Intangible Assets
Customer relationships and lists	$	612	$	242	$	605	$	211	Customer relationships and lists	$	486	$	294	$	192	$	493	$	273	$	220
Non-compete agreements	71		71		69		64
Tradenames, patents and trademarks, and developed technology	173		69		173		56		Tradenames, patents and trademarks, and developed technology	170		143		27		170		131		39
Land and water rights	8		2		10		2		Land and water rights	8		2		6		8		2		6
Software	23		22		21		20
Other	50		38		48		26		Other	22		18		4		24		21		3
Total	$	937	$	444	$	926	$	379	Total	$	686	$	457	$	229	$	695	$	427	$	268

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


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Amortization expense related to intangible assets	$	11	$	11	$	33	$	33

Three Months Ended
September 30, Nine Months Ended
September 30,
In millions 2017 2016 2017 2016
Amortization expense related to intangible assets $ 27
$ 14
$ 60
$ 39

NOTE 1114 - INCOME TAXES

International Paper made income tax payments, net of refunds, of ~~$122~~$287 million and ~~$68~~$389 million for the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

~~The following table presents a rollforward of unrecognized tax benefits and related accrued estimated interest and penalties for the nine months ended September 30, 2017:~~

In millions
Unrecognized
Tax Benefits

Accrued Estimated
Interest and Tax
Penalties
Balance at December 31, 2016 $ (98 ) $ (22 )
Activity for three months ended March 31, 2017 (2 ) 2
Activity for the three months ended June 30, 2017 (42 ) 1
Activity for the three months ended September 30, 2017 1
—
Balance at September 30, 2017 $ (141 ) $ (19 )

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 $4$28 million during the next 12 months.

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. The Company recorded a tax benefit

Table of ~~$29 million in the third quarter related to Investment Tax Credits earned in tax years 2016-2017.~~Contents

NOTE 1215 - COMMITMENTS AND CONTINGENCIES

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"), a wholly-owned subsidiary of the Company, until the October 1, 2021 spin-off of the Printing Papers business after which it became a subsidiary of Sylvamo. Sylvamo Brazil received assessments for the tax years 2007-2015 totaling approximately $109 million in tax, and $346 million in interest, penalties, and fees as of September 30, 2022 (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 has appealed these decisions and intends to appeal any future unfavorable administrative judgments to the Brazilian federal courts; however, this tax litigation matter may take many years to resolve. Sylvamo Brazil and International Paper believe the transaction underlying these assessments was appropriately evaluated, and that Sylvamo Brazil's tax position would be sustained, based on Brazilian tax law.

This matter pertains to a business that was conveyed to Sylvamo as of October 1, 2021, as part of our spin-off transaction. Pursuant to the terms of the tax 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 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 historic tax position against the current assessments and any similar assessments that may be issued for tax years subsequent to 2015. The Brazilian government may enact a tax amnesty program that would allow Sylvamo Brazil to resolve this dispute for less than the assessed amount. As of October 1, 2021, in connection with the recording of the distribution of 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 September 30, 2022. This liability will not be increased in subsequent periods unless facts and circumstances change such that an amount greater than the initial recognized liability becomes probable and estimable.

Environmental

~~International Paper~~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 (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 or 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 ~~$130~~$198 million ($206 million undiscounted) in the aggregate atas of September 30, ~~2017.~~2022. Other than as described ~~above,~~below, completion of required environmental remedial actions 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-treating~~wood-treatment facility located in Cass Lake, Minnesota. In June 2011, the United States Environmental Protection Agency (EPA) selected and published a proposed soil remedy at the site with an estimated cost of $46 million. The overall remediation reserve for the site is currently $48 million to address the selection of an alternative for the soil remediation component of the overall site remedy which includes the ongoing groundwater remedy. In ~~October 2011, the EPA released a public statement indicating that the final soil remedy decision would be delayed. In March 2016,~~April 2020, the EPA issued a ~~proposed~~final plan concerning clean-up standards at a portion of the site, the estimated cost of which is included within the ~~$48 million reserve~~soil remedy referenced above. In October 2012, the Natural Resource Trustees for this site provided notice to International Paper and other potentially responsible parties of their intent to perform a Natural Resource Damage Assessment. It is premature to predict the outcome of this assessment or to estimate a loss or range of loss, if any, which may be incurred.

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 (PCBs) primarily as a result of

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discharges from various paper mills located along the Kalamazoo River, including a paper mill ~~(the Allied 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 ~~related to this portion of the site~~ totaling $37 million, including $19 millionin 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 for this portion of the site.~~remedy. The Company responded to the unilateral administrative order, agreeing to comply with the order subject to its sufficient cause defenses.

In April 2016, the EPA issued a separate unilateral administrative order to the Company and certain other PRPs for a time-critical removal action (TCRA) of PCB-contaminated sediments from a different portion of the site. The Company responded to the unilateral administrative order, agreeing to comply with the order subject to its sufficient cause defenses.

•Operable Unit 1: In October 2016, the Company and another PRP received a special notice letter from the EPA inviting participation in the remedial design component of the landfill remedy for the Allied Paper ~~Mill.~~Mill, which is also known as Operable Unit 1. The ~~record~~Record of ~~decision~~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 ~~late~~ December ~~2016~~.2016. In February 2017, the EPA informed the Company that it would make other arrangements for the performance of the remedial design.

In addition, in December 2019, the United States published notice in the Federal Register of a proposed consent decree with NCR Corporation (one of the parties to the allocation/apportionment litigation described below), the State of Michigan and natural resource trustees under which NCR would make payments of more than $100 million and perform work in Operable Unit 5, Areas 2, 3, and 4 at an estimated cost of $136 million. In December 2020, the Federal District Court approved the proposed consent decree.

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. ~~However, we do not believe~~We have recorded a liability for future remediation costs at the site that ~~any material loss is probable.~~are probable and reasonably estimable, and it remains reasonably possible that additional losses in excess of this recorded liability could be material.

The Company was named as a defendant by Georgia-Pacific Consumer Products LP, Fort James Corporation and Georgia Pacific LLC (collectively, GP) in a contribution and cost recovery action for alleged pollution at the site. NCR Corporation and Weyerhaeuser Company are also named as defendants in the suit. The suit seeks contribution under CERCLA for costs purportedly expended by plaintiffs ($($79 million as of the filing of the complaint) and for future remediation costs. ~~The suit alleges that a mill, during~~In June 2018, the ~~time it was allegedly owned~~Court issued its Final Judgment and ~~operated by St. Regis, discharged PCB contaminated solids~~Order, which fixed the past cost amount at approximately $50 million (plus interest to be determined) and paper residuals resulting from paper de-inking and recycling. NCR Corporation and Weyerhaeuser Company are also named as defendants in the suit. In mid-2011, the suit was transferred from the District Court for the Eastern District of Wisconsinallocated to the ~~District Court~~Company a 15% share of responsibility for the Western District of Michigan. The trial of the initial liability phase took place in February 2013. Weyerhaeuser conceded prior to trial that it was a liable party with respect to the site. In September 2013, an opinion and order was issued in the suit. The order concluded that the Company (as the successor to St. Regis) was not an “operator,” but was an “owner,” of the mill at issue during a portion of the relevant period and is therefore liable under CERCLA. The order also determined that NCR is a liable party as an "arranger for disposal" of PCBs in waste paper that was de-inked and recycled by mills along the Kalamazoo River. The order did not address the Company's responsibility, if any, forthose past ~~or future~~ costs. The ~~parties’ responsibility, including that of the Company, was the subject of a second trial, which was concluded in late 2015. A decision has~~Court did not ~~been rendered and it is unclear to what extent the Court will~~ address responsibility for future costs in its decision. In July 2018, the Company and each of the other parties filed notices appealing the Final Judgment and prior orders incorporated into that ~~decision. We are unable to predict~~Judgment. On April 25, 2022, the ~~outcome or estimate our maximum reasonably possible loss. However, we do not believe~~appellate court reversed the Judgment of the Court, finding that ~~any material loss is probable.~~the suit against the Company was time-barred by the applicable statute of limitations.

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.~~ site and share the costs of these activities.

In September 2016, the EPA issued a proposed remedial action plan (PRAP) for the site, which identified the preferred remedy as the removal of the contaminated material currently protected by an armored cap. In addition, the EPA selected a preferred remedy for the separate southern impoundment that requires offsite disposal. In January 2017, the PRPs submitted comments on the PRAP.

On October ~~11,~~ 2017, the EPA issued a ~~Record of Decision (ROD)~~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. ~~On October 25, 2017,~~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, ~~received a letter from~~and the Company continues to work with the EPA ~~inviting participation~~and MIMC/WMI to develop the remedial design.

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 remedial design ~~component~~for the northern impoundment. That remedial design 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 ~~EPA’s~~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.

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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 (TCEQ), progress was made to resolve key technical issues previously preventing the Company from determining the manner in which the selected remedy for the ~~site, and the Company plans to participate in this remedial design process to determine if and how the remedy can~~northern impoundment would be ~~accomplished. We expect this process will include additional studies to determine feasible alternatives and costs to complete this final remedy. Consequently, while additional losses are probable as~~feasibly implemented. As a result of these developments, the ~~selected remedy,~~Company reserved the following 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 May 7, 2021. The EPA issued a Unilateral Administrative Order for Remedial Action of the southern impoundment on August 5, 2021. An addendum to the Final 100% Remedial Design (Amended April 2021) was submitted to the EPA for the southern impoundment on June 2, 2022. This addendum incorporated additional data collected to date which indicated that additional waste material removal will be required, lengthening the time to complete the remedial action. The Company's reserve as of September 30, 2022 was $25 million.

With respect to the northern impoundment, the respondents continue remedial design, with the 90% remedial design due to EPA on November 8, 2022. While several key technical issues have been resolved, we still face significant challenges remediating this area in a cost-efficient manner and without a release to the environment, and therefore our discussions with the EPA on the best approach to remediation will continue. Because of ongoing questions regarding cost effectiveness, timing and gathering other technical data, additional losses in excess of our recorded liability are possible. We are currently unable to ~~determine~~reasonably estimate any further adjustment to our ~~immaterial~~ recorded ~~liability. It is reasonably possible that additional losses could be material as the remedial design process with the EPA continues over the coming quarters.~~

International Paper and MIMC/WMI are also defending an additional lawsuit related to the site brought by approximately 600 individuals who allege property damage and personal injury. Because this case is still in the discovery phase, it is premature to predict the outcomeliability or ~~to estimate a~~any loss or range of loss ifin excess of such liability; however, we believe it is unlikely any ~~which may~~adjustment would be ~~incurred.~~material.

Asbestos-Related Matters

~~Antitrust~~

~~Containerboard:~~ ~~On June 27, 2017, the Company entered into a settlement agreement with the class plaintiffs in the class action lawsuit captionedKleen Products LLC et al. v. International Paper Co. et al. (N.D. Ill.)~~ ~~which was filed in September~~

2010, and is pending in the United States District Court for the Northern District of Illinois. Eight containerboard producers, including the Company, Temple-Inland and Weyerhaeuser Company (the "Released Defendants"), were named as defendants in the lawsuit which alleges a civil violation of Section 1 of the Sherman Act. In particular, the lawsuit alleges that the defendants conspired to limit the supply and thereby increase prices of containerboard products during the period from February 15, 2004, through November 8, 2010. Four similar complaints were filed and consolidated in the Northern District of Illinois. In March 2015, the District Court certified a plaintiff class consisting of all persons who purchased containerboard products directly from the defendant for use or delivery in the United States during the class period.

Under the terms of the settlement agreement, on August 1, 2017, the Company paid $354 million into a settlement fund in return for a dismissal of the Released Defendants and release of all claims and alleged damages asserted against the Released Defendants in the lawsuit or that are related to or arise from the direct purchase of containerboard products from the Released Defendants by the class members from the beginning of time up to preliminary approval of the settlement agreement by the district court, which occurred on July 13, 2017. Any attorneys' fees awarded by the district court and all costs of notice and claims administration will be paid from the settlement fund. On October 17, 2017, the district court granted final approval of the settlement agreement and thus the release is now effective as to all class members.

~~In June 2016, a lawsuit captioned~~ ~~Ashley Furniture Indus., Inc. v. Packaging Corporation of America (W.D. Wis.), was filed in federal court in Wisconsin against ten defendants, including the Company, Temple-Inland and Weyerhaeuser Company. The~~ ~~Ashley Furniture~~ ~~lawsuit closely tracks the allegations found in the~~ ~~Kleen Products~~ ~~complaint, alleging a practically identical civil violation of Section 1 of the Sherman Act, but also asserts Wisconsin state antitrust claims. In January 2011, International Paper was~~We have been named as a defendant in ~~a lawsuit filed~~various asbestos-related personal injury litigation, in both state and federal court, primarily in ~~Cocke County, Tennessee alleging that International Paper violated Tennessee law by conspiring to limit the supply and fix the prices of containerboard from mid-2005~~relation to the ~~present. Plaintiffs in~~prior operations of certain companies previously acquired by the ~~state court action seek certification~~Company. As of ~~a class~~September 30, 2022, the Company's total recorded liability with respect to pending and future asbestos-related claims was $104 million, net of ~~Tennessee indirect purchasers of containerboard products, damages and costs, including attorneys' fees. No class certification materials have been filed to date in the Tennessee action.~~

~~The Company continues to dispute the allegations made in the~~ ~~Ashley Furniture~~ ~~and Tennessee lawsuits and vigorously defend each. At this time, however, because the actions are in a preliminary stage, we are unable to predict an outcome or estimate a range of~~estimated insurance recoveries. While it is reasonably possible ~~loss.~~

~~Contract~~

~~Signature:~~ ~~In August 2014, a lawsuit captioned~~ ~~Signature Industrial Services LLC et al. v. International Paper Company~~ ~~was filed in state court in Texas. The~~ ~~Signature~~ ~~lawsuit arises out of approximately~~ ~~$1 million~~ in disputed invoices related to the installation of new equipment at the Company's Orange, Texas mill. In addition to the invoices in dispute, Signature and its president allege consequential damages arising from the Company's nonpayment of those invoices. The lawsuit was tried before a jury in Beaumont, Texas, in May 2017. On June 1, 2017, the jury returned a verdict awarding approximately ~~$125 million~~ ~~in damages to the plaintiffs. The verdict will not be final until post-trial motions are decided, and~~that the Company ~~will appeal the final judgment thereafter. The Company has numerous and strong bases for appeal, and we believe we will prevail on appeal. Because post-trial proceedings are~~may incur losses in ~~a preliminary stage,~~excess of its recorded liability with respect to asbestos-related matters, we are unable to estimate aany loss or range of ~~reasonably possible~~ loss ~~but we expect~~in excess of such liability, and do not believe additional material losses are probable.

Antitrust

In March 2017, the ~~amount~~Italian Competition Authority (ICA) commenced an investigation into the Italian packaging industry to determine whether producers of ~~any loss to be immaterial.~~

~~Tax~~

~~On October 16, 2015,~~corrugated sheets and boxes violated the ~~Company was notified of a $110 million tax assessment~~applicable European competition law. In April 2019, the ICA concluded its investigation and issued byinitial findings alleging that over 30 producers, including our Italian packaging subsidiary (IP Italy), improperly coordinated the ~~state of Sao Paulo, Brazil (State) for tax years 2011 through 2013. The assessment pertained to invoices issued by the Company related to the~~production and sale of ~~paper to~~corrugated sheets and boxes. On August 6, 2019, the ~~editorial segment,~~ICA issued its decision and assessed IP Italy a fine of €29 million (approximately $28 million at current exchange rates) which ~~is exempt from the payment of ICMS value-added tax. During the second quarter of 2016, the Company received a favorable first instance judgment vacating the State's assessment. During~~was recorded in the third quarter of ~~2017, the Company received a favorable decision on the second instance judgment after the State~~2019. We appealed the ~~first instance. In October of 2017,~~ICA decision and our appeal was denied on May 25, 2021. However, we continue to believe we have numerous and strong bases to challenge the ~~Company was notified the State will not appeal the second instance judgment, making~~ICA decision, and we have further appealed the decision ~~final and canceling~~to the ~~tax assessment.~~Italian Council of State.

General

The Company is involved in various other inquiries, administrative proceedings and litigation relating to environmental and safety matters, personal injury, product liability, labor and employment, contracts, sales of property, intellectual property, tax, and other matters, some of which allege substantial monetary damages. ~~While any proceeding or litigation has~~Assessments of lawsuits and claims can involve a series of complex judgments about future events, can rely heavily on estimates and assumptions, and are otherwise subject to significant uncertainties. As a result, there can be no certainty that the ~~element~~Company will not ultimately incur charges in excess of ~~uncertainty, the~~presently recorded liabilities. The Company believes that loss contingencies arising from pending matters including the ~~outcome of any of these lawsuits or claims that are pending or threatened or all of them combined (other than those that cannot be assessed due to their preliminary nature)~~matters described herein, will not have a material effect on ~~its~~the consolidated financial ~~statements.~~position or liquidity of the Company. However, in light of the inherent uncertainties involved in pending or threatened legal matters, some of which are beyond the Company's control, and the large or indeterminate damages sought in some of these matters, a future adverse ruling, settlement, unfavorable development, or increase in accruals with respect to these matters could result in future charges that could be material to the Company's results of operations or cash flows in any particular reporting period.

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NOTE 1316 - VARIABLE INTEREST ENTITIES ~~AND PREFERRED SECURITIES OF SUBSIDIARIES~~

Variable Interest Entities

As of September 30, ~~2017,~~2022, the fair value of the Timber Notes and Extension Loans ~~is $4.80~~for the 2007 Financing Entities was $2.3 billion and ~~$4.32~~$2.1 billion, ~~respectively, for the 2015 Financing Entities.~~respectively. The Timber Notes and Extension Loans are classified as Level 2 within the fair value hierarchy, which is further defined in Note 1417 in the Company’s Annual ~~Report on Form 10-K for the year ended December 31, 2016.~~Report.

~~Activity between the Company and the 2015 Financing Entities was as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
In millions 2017 2016 2017 2016
Revenue (a) $ 24
$ 24
$ 71
$ 71
Expense (a) 32
32
96
96
Cash receipts (b) 48
47
95
76
Cash payments (c) 64
64
128
98


~~(a)~~	~~The revenue and expense are included in Interest expense, net in the accompanying statement of operations.~~


~~(b)~~	~~The cash receipts are interest received on the Financial assets of special purpose entities.~~


~~(c)~~	~~The cash payments represent interest paid on Nonrecourse financial liabilities of special purpose entities.~~

~~As of September 30, 2017, the fair value of the Timber Notes and Extension Loans is $2.23 billion and $2.09 billion, respectively, for the 2007 Financing Entities.~~ The Timber Notes of $2.3 billion and the Extension Loans of $2.1 billion both mature in 2027 and are ~~classified as Level 2 within~~shown in Long-term nonrecourse financial assets of variable interest entities and Long-term nonrecourse financial liabilities of variable interest entities, respectively, on the ~~fair value hierarchy, which is further defined in Note 14 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.~~accompanying balance sheet.

Activity between the Company and the 2007 Financing Entities was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2017		2016		2017		2016		In millions	2022		2021		2022		2021
Revenue (a)	$	12	$	8	$	35	$	26	Revenue (a)	$	23	$	5	$	36	$	18
Expense (b)	13		10		36		26		Expense (b)	18		6		34		18
Cash receipts (c)	7		4		19		10		Cash receipts (c)	8		1		11		4
Cash payments (d)	10		7		28		19		Cash payments (d)	11		4		21		12


~~(a)~~	The revenue is included in Interest expense, net in the accompanying statement of operations and includes approximately $5 million and $14 million for the three and nine months ended September 30, 2017 and 2016, respectively, of accretion income for the amortization of the purchase accounting adjustment on the Financial assets of special purpose entities.


~~(b)~~	The expense is included in Interest expense, net in the accompanying statement of operations and includes approximately $2 million and $5 million for the three and nine months ended September 30, 2017 and 2016, respectively, of accretion expense for the amortization of the purchase accounting adjustment on the Nonrecourse financial liabilities of special purpose 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.~~

(a)The revenue is included in Interest expense, net in the accompanying statement of operations and includes approximately $5 million and $14 million for the three months and nine months ended September 30, 2022 and 2021, respectively, of accretion income for the amortization of the basis difference adjustment on the Financial assets of special purpose entities.

(b)The expense is included in Interest expense, net in the accompanying statement of operations and includes approximately $2 million and $5 million for the three months and nine months ended September 30, 2022 and 2021, respectively, of accretion expense for the amortization of the basis difference adjustment on the Nonrecourse financial liabilities of special purpose entities.

~~NOTE 14 - DEBT~~(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 August ~~2017, International Paper issued $1.0~~2021, the Timber Notes of $4.8 billion and the Extension Loans of ~~4.35% senior unsecured notes~~$4.2 billion related to the 2015 Financing Entities both matured. We settled the Extension Loans at their maturity with ~~a maturity date in 2048. The~~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. Under this ~~offering, together~~agreement, the Company will fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest will also be charged upon closing of the audit. The amount of interest expense recognized through September 30, 2022 is $52 million. As of September 30, 2022, $89 million in U.S. federal income taxes and $28 million in interest expense have been paid as a result of the settlement agreement. The remaining $163 million U.S. federal income tax liability and $24 million accrued interest liability are recorded as current liabilities in the balance sheet. As part of the settlement with ~~a combination of available cash and other borrowings, were used to make a $1.25 billion voluntary cash contribution~~the Internal Revenue Service, the $72 million tax payment discussed in the preceding paragraph was applied to the ~~Company's pension plan.~~2022 U.S. federal estimated tax payments. 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.

~~Subsequent to~~Activity between the Company and the 2015 Financing Entities for the three months and nine months ended September 30, ~~2017, International Paper repaid approximately $382 million~~2021 was as follows:


In millions	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Revenue (a)	$	14	$	61
Expense (a)	8		34
Cash receipts (b)	48		95
Cash payments (c)	24		38

(a)The revenue and expense are included in Interest expense, net in the accompanying statement of ~~notes with an~~operations.

(b)The cash receipts are interest ~~rate~~received on the Financial assets of ~~7.95% and an original maturity date in 2018.~~special purpose entities.

(c)The cash payments represent interest paid on Nonrecourse financial liabilities of special purpose entities.

~~In June 2016, International Paper entered into a~~

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NOTE 17 - DEBT

The borrowing capacity of the Company's commercial paper program ~~with a borrowing capacity of $750 million.~~is $1.0 billion supported by its $1.5 billion credit agreement. Under the terms of the 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. As of September 30, ~~2017,~~2022, the Company had ~~$445~~$260 million ~~of borrowings~~ outstanding under the program ~~at a weighted average interest rate~~with remaining capacity available of ~~1.39%.~~$740 million. As of September 30, 2022, the remaining credit agreement capacity was $1.2 billion.

At September 30, ~~2017,~~2022, International Paper’s credit facilities totaled $2.0 billion. The Agreements generally provide for interest rates at a floating rate index plus a pre-determined margin dependent upon International Paper’s credit rating. The Agreements include a $1.5 billion contractually committed bank facility with a maturity date of June 2026. The liquidity facilities also previously included up to $550 million of uncommitted financings based on eligible receivables balances under a receivables securitization program that had an expiration date in April 2022. The receivables securitization program was renewed on April 27, 2022 with up to $500 million of uncommitted financings based on eligible receivables balances with the expiration date in April 2024. At September 30, 2022, there were no borrowings outstanding under either the bank facility or receivables securitization program.

During the first quarter of 2022, the Company issued approximately $88 million of debt with an interest rate of 2.65% and a maturity date of 2037. The proceeds from this issuance were used to repay approximately $88 million of outstanding debt that matured on April 1, 2022.

During the second quarter of 2022, the Company borrowed approximately $144 million under a term loan credit agreement with a third party lender. Subsequently, the Company exchanged 4,132,000 shares of Sylvamo common stock owned by the Company in exchange and as repayment of the approximately $144 million term loan obligation.

During the third quarter of 2022, the Company borrowed approximately $210 million under a term loan credit agreement with a third party lender. Subsequently, the Company repaid $167 million of the term loan with an exchange of 4,614,358 shares of Sylvamo common stock owned by the Company. The remainder of the term loan was repaid with cash. In addition, during the third quarter of 2022, the Company issued approximately $50 million of debt with a variable rate of interest and a maturity date of 2027. Moreover, as a result of a tender offer which was completed in September 2022, the Company had early debt reductions of $498 million related to debt with interest rates ranging from 6.40% to 8.70% and maturity dates ranging from 2023 to 2039. In addition to debt activity noted above, the Company had debt reductions of $14 million during the first nine months of 2022 related primarily to open market debt repurchases, and decreases in the amount of capital leases and international debt.

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 September 30, 2022, we were in compliance with our debt covenants.

At September 30, 2022, the fair value of International Paper’s ~~$12.3~~$5.4 billion of debt was approximately ~~$13.5~~$4.9 billion. The fair value of the Company’s long-term debt is estimated based on the quoted market prices for the same or similar issues. International Paper’s long-term debt is classified as Level 2 within the fair value hierarchy, which is further defined in Note 1417 in the Company’s Annual ~~Report on Form 10-K for the year ended December 31, 2016.~~Report.

NOTE 1518 - DERIVATIVES AND HEDGING ACTIVITIES

As a multinational company, ~~we are~~International Paper is exposed to market risks, such as changes in interest rates, currency ~~exchanges~~exchange rates and commodity prices.

For detailed information regarding the Company’s hedging activities and related accounting, refer to Note 14 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The notional amounts of qualifying and non-qualifying financial instruments used in hedging transactions were as follows:


In millions	September 30, 2022	December 31, 2021






Derivatives Not Designated as Hedging Instruments:
Electricity contract (MWh)	0.3	0.5

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In millions September 30, 2017 December 31, 2016
Derivatives in Cash Flow Hedging Relationships:
Foreign exchange contracts (a) $ 348
$ 275

Derivatives Not Designated as Hedging Instruments:
Electricity contract 12
6

Foreign exchange contracts 11
24


~~(a)~~	~~These contracts had maturities of two years or less as of September 30, 2017.~~

The following table shows gains or losses recognized in AOCI, net of tax, related to derivative instruments:


	Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)										Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)
	Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2017		2016		2017		2016			In millions	2022		2021		2022		2021
Derivatives in Cash Flow Hedging Relationships:										Derivatives in Cash Flow Hedging Relationships:
Foreign exchange contracts	$	1	$	5	$	9	$	6		Foreign exchange contracts	$	—	$	(4)	$	—	$	3
Interest rate contracts	—		—		—		(11		)
Total	$	1	$	5	$	9	$	(5	)	Total	$	—	$	(4)	$	—	$	3
Derivatives in Net Investment Hedging Relationships:										Derivatives in Net Investment Hedging Relationships:
Foreign exchange contracts										Foreign exchange contracts	$	—	$	6	$	—	$	18
Total										Total	$	—	$	6	$	—	$	18

During the next 12 months, ~~the amount~~none of the September 30, ~~2017~~2022 AOCI balance, after tax, ~~that~~ is expected to be reclassified to ~~earnings is a gain of $2 million.~~earnings.

The amounts of gains and losses recognized in the statement of operations on qualifying and non-qualifying financial instruments used in hedging transactions were as follows:

Gain (Loss)
Reclassified from
AOCI
(Effective Portion)
Location of Gain (Loss)
Reclassified from AOCI
(Effective Portion)
Three Months Ended
September 30, Nine Months Ended
September 30,
In millions 2017 2016 2017 2016
Derivatives in Cash Flow Hedging Relationships:
Foreign exchange contracts $ 2
$ 3
$ 6
$ 7
Cost of products sold
Total $ 2
$ 3
$ 6
$ 7


	Gain (Loss) Reclassified from AOCI Into Income (Effective Portion)								Location of Gain (Loss) Reclassified from AOCI (Effective Portion)
	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(2)	$	—	$	(2)	$	—	Cost of products sold
Foreign exchange contracts	—		8		—		9		Discontinued operations, net of taxes
Total	$	(2)	$	8	$	(2)	$	9


	Gain (Loss) Recognized in Income								Location of Gain (Loss) In Statement of Operations
	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Derivatives Not Designated as Hedging Instruments:
Electricity contract	$	1	$	6	$	12	$	13	Cost of products sold
Foreign exchange contracts	—		5		—		(1)		Cost of products sold
Total	$	1	$	11	$	12	$	12

Gain (Loss) Recognized
Location of Gain (Loss)
In
Statement
of Operations
Three Months Ended
September 30, Nine Months Ended
September 30,
In millions 2017 2016 2017 2016
Derivatives Not Designated as Hedging Instruments:
Electricity contract $ (8 ) $ —
$ (10 ) $ —
Cost of products sold
Foreign exchange contracts —
—
—
—
Cost of products sold
Interest rate contracts —

2
—
5
Interest expense, net
Total $ (8 ) $ 2
$ (10 ) $ 5

~~The following activity is related to fully effective interest rate swaps designated as fair value hedges:~~

2017

2016

In millions Issued
Terminated
Undesignated

Issued

Terminated
Undesignated
Third Quarter $ —
$ —
$ —
$ —
$ —
$ —
Second Quarter —
—
   —
—
—
—
First Quarter —
—
   —
—

55

—
Total $ —
   $ —
   $ —
$ —
$ 55
   $ —

~~Fair Value Measurements~~

For a discussion of the Company’s fair value measurement policies under the fair value hierarchy, refer to Note 14 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The Company has not changed its valuation techniques for measuring the fair value of any financial assets or liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period.

~~The following table provides a summary of the impact of our derivative instruments in the balance sheet:~~

Fair Value Measurements

The following table provides a summary of the impact of our derivative instruments in the balance sheet:

Fair Value Measurements

Level 2 – Significant Other Observable Inputs

Assets Liabilities
In millions September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
Derivatives designated as hedging instruments
Foreign exchange contracts – cash flow $ 9
(a) $ 3
(b) $ 3
(c) $ 4
(e)
Total derivatives designated as hedging instruments 9
   3
3
   4

Derivatives not designated as hedging instruments
Electricity contract —

—

8
(d) 2
(e)
Total derivatives not designated as hedging instruments —
   —
8
   2

Total derivatives $ 9
   $ 3
$ 11
   $ 6


	Assets
In millions	September 30, 2022			December 31, 2021






Derivatives not designated as hedging instruments
Electricity contract	$	14		$	10


Total derivatives	$	14	(a)	$	10	(b)


~~(a)~~	~~Includes $8 million recorded in Other current assets and $1 million recorded in Deferred charges and other assets in the accompanying balance sheet.~~


~~(b)~~	~~Included in Other current assets in the accompanying balance sheet.~~


~~(c)~~	~~Includes~~ ~~$2 million~~ ~~recorded in Other accrued liabilities and $1 million recorded in Other liabilities in the accompanying consolidated balance sheet.~~


~~(d)~~	~~Includes~~ ~~$4 million~~ ~~recorded in Other accrued liabilities and~~ ~~$4 million~~ ~~recorded in Other liabilities in the accompanying consolidated balance sheet.~~


~~(e)~~	~~Included in Other accrued liabilities in the accompanying balance sheet.~~

(a)Includes $14 million recorded in Other current assets in the accompanying condensed consolidated balance sheet.

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(b)Includes $6 million recorded in Other current assets and $4 million recorded in Deferred charges and other assets in the accompanying condensed consolidated balance sheet.

The above contracts are subject to enforceable master netting arrangements that provide rights of offset with each counterparty when amounts are payable on the same date in the same currency or in the case of certain specified defaults. Management has made an accounting policy election to not offset the fair value of recognized derivative assets and derivative liabilities in the

balance sheet. The amounts owed to the counterparties and owed to the Company are considered immaterial with respect to each counterparty and in the aggregate with all counterparties.

~~Credit-Risk-Related Contingent Features~~

Certain of the Company’s financial instruments used in hedging transactions are governed by standard credit support arrangements with counterparties. If the lower of the Company’s credit rating by Moody’s or S&P were to drop below investment grade, the Company would be required to post collateral for all of its derivatives in a net liability position, although no derivatives would terminate. The fair values of derivative instruments containing credit risk-related contingent features in a net liability position were $2 million and $3 million as of September 30, 2017 and December 31, 2016, respectively. The Company was not required to post any collateral as of September 30, 2017 or December 31, 2016. For more information on credit-risk-related contingent features, refer to Note 14 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

NOTE 1619 - 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 substantially all ~~U.S. salaried employees and hourly employees (receiving salaried benefits) hired prior to July 1, 2004, and substantially all other U.S.~~ hourly and union employees who work at a participating business ~~unit regardless of hire date. These employees generally are eligible to participate in the~~unit. The Pension Plan ~~upon attaining 21 years~~was frozen as of ~~age and completing one year of eligibility service. U.S.~~January 1, 2019 for salaried employees and hourly employees (receiving salaried benefits) hired after June 30, 2004, are not eligible for the Pension Plan, but receive a company contribution to their individual savings plan accounts; however, salaried employees hired by Temple Inland prior to March 1, 2007 or Weyerhaeuser Company's Cellulose Fibers division prior to December 1, 2011 also participate in the Pension Plan.participants.

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 will freeze participation, including credited service and compensation, for salaried employees under the Pension Plan, the Pension Restoration Plan and the two SERP plans for all service on or after January 1, 2019. This change will not affect benefits accrued through December 31, 2018.

Net periodic pension expense (income) for our qualified and nonqualified U.S. defined benefit plans comprised the following:


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2017			2016			2017			2016			In millions	2022		2021		2022		2021
Service cost	$	39		$	41		$	118		$	114		Service cost	$	21	$	26	$	64	$	78
Interest cost	138			135			415			449			Interest cost	85		84		254		251
Expected return on plan assets	(192		)	(199		)	(577		)	(611		)	Expected return on plan assets	(162)		(177)		(487)		(543)
Actuarial loss	87			103			260			293			Actuarial loss	21		35		65		114
Amortization of prior service cost	7			11			21			31			Amortization of prior service cost	6		5		17		16
Settlement	—			3			—			442
Net periodic pension expense	$	79		$	94		$	237		$	718
Net periodic pension expense (income)													Net periodic pension expense (income)	$	(29)	$	(27)	$	(87)	$	(84)

InThe components of net periodic pension expense (income) other than the ~~first quarter of 2016, International Paper offered a voluntary, limited-time opportunity for former employees who were participants~~Service cost component are included in Non-operating pension expense (income) in the ~~Retirement Plan~~Condensed Consolidated Statement of International Paper Company (the Pension Plan) to request early payment of their entire Pension Plan benefit in the form of a single lump sum payment. The amount of total payments under this program was approximately $1.2 billion, and were made from Plan trust assets on June 30, 2016. Based on the level of payments made, settlement accounting rules applied and resulted in a plan remeasurement as of the June 30, 2016 payment date. The discount rate used in the plan remeasurement was 3.80%, down from 4.40% at December 31, 2015. As a result of settlement accounting, the Company recognized a pro-rata portion of the unamortized net actuarial loss, after remeasurement, resulting in a $439 million non-cash charge to the Company's earnings in the second quarter of 2016. Additional payments of $8 million were made during the third quarter of 2016 due to mandatory cash payouts and a small lump sum payout project, and the pension plan was subsequently remeasured at September 30, 2016 using a discount rate of 3.60%, down from 3.80% at June 30, 2016. As a result of settlement accounting, the Company recognized a pro-rata portion of the unamortized net actuarial loss, after remeasurement, resulting in a $3 million non-cash charge to the Company's earnings in the third quarter of 2016.Operations.

The Company’s funding policy for our pension plans 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 made no voluntary cash contributions ~~of $1.25 billion and $750 million~~ to the qualified pension plan in the first nine months of ~~2017 and 2016, respectively.~~2022 or 2021. The nonqualified defined benefit plans are funded to the extent of benefit payments, which totaled ~~$34~~$16 million for the nine months ended September 30, ~~2017.~~2022.

On September 26, 2017, the Company entered into an agreement with The Prudential Insurance Company of America to purchase a group annuity contract and transfer approximately $1.3 billion of International Paper's U.S. qualified pension plan projected benefit obligations, subject to customary closing conditions. The transaction closed on October 3, 2017 and was funded with pension plan assets. Under the transaction, at the end of 2017, Prudential will assume responsibility for pension benefits and annuity administration for approximately 45,000 retirees or their beneficiaries receiving less than $450 in monthly benefit payments from the plan. The Company expects to recognize a non-cash pension settlement charge of approximately $400 million before tax in the fourth quarter of 2017.

NOTE 1720 - STOCK-BASED COMPENSATION

~~International Paper~~The Company has an Incentive Compensation Plan (ICP) which is administered by the Management Development and Compensation Committee of the Board of Directors (the Committee). The ICP authorizes the grants of restricted stock, restricted or deferred stock units, performance awards payable in cash or stock upon the attainment of specified performance goals, dividend equivalents, stock options, stock appreciation rights, other stock-based awards and cash-based awards at the discretion of the Committee. As of September 30, ~~2017, 13.1~~2022, 7.3 million shares were available for grant under the ICP.

Stock-based compensation expense and related income tax benefits were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Total stock-based compensation expense (selling and administrative)	$	26	$	42	$	98	$	103
Income tax benefits related to stock-based compensation	—		(2)		13		13

Three Months Ended
September 30, Nine Months Ended
September 30,
In millions 2017 2016 2017 2016
Total stock-based compensation expense (selling and administrative) $ 38
$ 33
$ 120
$ 100
Income tax benefits related to stock-based compensation (2 ) —
45
33

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At September 30, ~~2017, $110~~2022, $113 million, net of estimated forfeitures, of compensation cost related to unvested restricted performance shares, executive continuity awards and restricted stock attributable to future service had not yet been recognized. This amount will be recognized in expense over a weighted-average period of 1.8 years.

Performance Share Plan

During the first nine months of ~~2017,~~2022, the Company granted ~~2.2~~1.9 million performance units at an average grant date fair value of ~~$51.78.~~$50.32.

NOTE 1821 - BUSINESS SEGMENT INFORMATION

International Paper’s business segments, Industrial Packaging and Global Cellulose Fibers, ~~Printing Papers, and Consumer Packaging,~~ are consistent with the internal structure used to manage these businesses. ~~All~~Both segments are differentiated on a common product, common customer basis consistent with the business segmentation generally used in the Forest Products industry. ~~Subsequent to the acquisition of the Weyerhaeuser pulp business in December 2016,~~On October 1, 2021, the Company ~~began reporting~~completed the ~~Global Cellulose Fibers business as a separate business segment due to the increased materiality~~previously announced spin-off of the results of this business. This segment includes the Company's legacy pulp business and the newly acquired pulp business. As such, amounts related to the legacy pulp business have been reclassified out of theits Printing Papers business into a new, publicly-traded company, Sylvamo, listed on the New York Stock Exchange. Additionally, on August 6, 2021, the Company completed the sale of its Kwidzyn, Poland mill which included the pulp and paper mill in Kwidzyn and supporting functions. As a result of the Sylvamo spin-off and the sale of Kwidzyn, the Company no longer has a Printing Papers segment, and ~~into the new Global Cellulose Fibers business segment for~~ all prior ~~periods.~~year amounts have been adjusted to reflect the Sylvamo and Kwidzyn businesses as a discontinued operation.

Business segment operating profits are used by International Paper's management to measure the earnings performance of its businesses. Management believes that this measure allows a better understanding of trends in costs, operating efficiencies, prices and volumes. Business segment operating profits are defined as earnings (loss) from continuing operations before income taxes and equity earnings, but including the impact of ~~noncontrolling interests,~~less than wholly owned subsidiaries, and excluding interest expense, net, corporate expenses, net, corporate net special items, business net special items and ~~corporate special items.~~non-operating pension expense.

The Company also has a 50% equity interest in Ilim Holding S.A. (Ilim) operating in Russia, that is a separate business segment. The Company recorded equity earnings (losses), net of taxes, of $48 million and $46 million for the three months

ended September 30, 2017 and 2016, respectively, and $119 million and $154 million for the nine months ended September 30, 2017 and 2016, respectively, for Ilim. The Company received cash dividends from the joint venture of $129 million during the first nine months of 2017. At September 30, 2017 and December 31, 2016, the Company's investment in Ilim was $279 million and $302 million, respectively, which was $158 million and $164 million, respectively, more than the Company's proportionate share of the joint venture's underlying net assets. The differences primarily relate to purchase price fair value adjustments and currency translation adjustments. The Company is party to a joint marketing agreement with Ilim, under which the Company purchases, markets and sells paper produced by Ilim. Purchases under this agreement were $52 million and $40 million for the three months ended September 30, 2017 and 2016, respectively, and $151 million and $124 million for the nine months ended September 30, 2017 and 2016, respectively.

~~Sales~~Net sales by business segment for the three months and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 were as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2017			2016		2017			2016		In millions	2022		2021		2022		2021
Industrial Packaging	$	3,734		$	3,491	$	10,939		$	10,422	Industrial Packaging	$	4,385	$	4,111	$	13,282	$	12,071
Global Cellulose Fibers	654			242		1,830			713		Global Cellulose Fibers	887		740		2,385		2,015
Printing Papers	1,039			1,019		3,051			3,003
Consumer Packaging	491			494		1,431			1,490
Corporate and Intersegment Sales	(5		)	20		(55		)	70		Corporate and Intersegment Sales	130		63		361		191
Net Sales	$	5,913		$	5,266	$	17,196		$	15,698	Net Sales	$	5,402	$	4,914	$	16,028	$	14,277

Operating profit (loss) by business segment for the three months and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Industrial Packaging	$	369	$	414	$	1,326	$	1,224
Global Cellulose Fibers	95		76		71		(4)
Business Segment Operating Profits	$	464	490		$	1,397	1,220

Earnings (loss) from continuing operations before income taxes and equity earnings	$	313	$	397	$	1,189	$	955
Interest expense, net	123		82		266		261
Adjustment for less than wholly owned subsidiaries	(1)		(1)		(2)		(3)
Corporate expenses, net	15		13		54		85
Corporate net special items	62		49		34		70
Business net special items	—		—		—		5
Non-operating pension expense (income)	(48)		(50)		(144)		(153)
Business Segment Operating Profits	$	464	$	490	$	1,397	$	1,220

Three Months Ended
September 30, Nine Months Ended
September 30,
In millions 2017 2016 2017 2016
Industrial Packaging $ 469
(a) $ 423
(f) $ 884
(a) $ 1,277
(f)
Global Cellulose Fibers 49
(b) (38 ) (g) (14 ) (b) (109 ) (g)
Printing Papers 135

167

321
(c) 419

Consumer Packaging 54

61

73
(d) 150
(h)
Business Segment Operating Profits 707
   613
   1,264
1,737

Earnings (loss) from continuing operations before income taxes and equity earnings 503
373
718
   676

Interest expense, net 152

132
431
(e) 384

Noncontrolling interests/equity earnings adjustment (j) —
   1
   (1 )    1

Corporate items, net 19
11
34
57

Special items, net —
54
(16 ) 46

Non-operating pension expense 33
42

98
573
(i)

$ 707
   $ 613
   $ 1,264
$ 1,737

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~~(a)~~

Includes a charge of $354 million for the nine months ended September 30, 2017 related to the agreement to settle the Kleen Products anti-trust class action lawsuit, a charge of $10 million for the three months and nine months ended September 30, 2017 for the accelerated amortization of an intangible asset in Brazil, a gain of $6 million for the nine months ended September 30, 2017 for a net bargain purchase gain associated with the June 2016 acquisition of Holmen Paper's newsprint mill in Madrid, Spain, and charges of $5 million and $9 million for the three months and nine months ended September 30, 2017, respectively, for other items.

~~(b)~~

Includes charges of $6 million and $15 million for the three months and nine months ended September 30, 2017, respectively, for costs associated with the acquisition of the pulp business acquired in December 2016, a charge of $14 million for the nine months ended September 30, 2017 for the amortization of the inventory fair value step-up for that business and charges of $2 million and $3 million for the three months and nine months ended September 30, 2017, respectively, for other items.


~~(c)~~	~~Includes a charge of $2 million for the nine months ended September 30, 2017 for other items.~~


~~(d)~~	~~Includes a charge of $9 million for the nine months ended September 30, 2017 for the impairment of the assets of our Foodservice business in Asia.~~


~~(e)~~	~~Includes a gain of $4 million for the nine months ended September 30, 2017 for interest income associated with an income tax refund claim.~~


~~(f)~~	~~Includes charges of~~ ~~$5 million~~ ~~and~~ ~~$70 million~~ for the three months and nine months ended September 30, 2016, respectively, for the impairment of the assets of our corrugated packaging business in Asia and costs associated with the sale of that business.


~~(g)~~	~~Includes charges of~~ ~~$7 million~~ ~~and $12 million for the three months and nine months ended September 30, 2016, respectively, for costs associated with the agreement to purchase the Weyerhaeuser pulp business.~~


~~(h)~~	~~Includes a charge of~~ ~~$9 million~~ ~~for the nine months ended September 30, 2016 for costs associated with the Riegelwood conversion to~~ ~~100%~~ ~~pulp production.~~


~~(i)~~	~~Includes a charge of~~ ~~$439 million~~ ~~for the nine months ended September 30, 2016 for a settlement accounting charge associated with term-vested lump sum payments.~~


~~(j)~~	Operating profits for business 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 noncontrolling interest and equity earnings for these subsidiaries are adjusted here to present consolidated earnings before income taxes and equity earnings.

ITEM 2.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 condensed consolidated financial statements and related notes included in "Financial Statements and Supplementary Data" of this Quarterly Report on Form 10-Q (this "Form 10-Q") and the Company's Annual Report on Form 10-K for the year ended December 31, 2021 (our "Annual Report"). 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 in our Annual Report, particularly under "Risk Factors" and "Forward-Looking Statements" of this Form 10-Q and our Annual Report.

~~NOTE 19 - SUBSEQUENT EVENT~~

On October 23, 2017, the Company entered into an agreement to contribute its North American Consumer Packaging business, which includes its North American Coated Paperboard and Foodservice businesses, to a subsidiary of Graphic Packaging Holding Company, in a transaction valued at $1.8 billion. International Paper will receive a 20.5% ownership interest, valued at $1.14 billion, in a subsidiary of Graphic Packaging Holding Company that will hold the assets of the combined business. International Paper plans to use $660 million in cash proceeds from a new loan expected to be entered into prior to closing to pay down existing debt. The new loan will be assumed by a subsidiary of Graphic Packaging Holding Company on the transaction closing date. The transaction is expected to close in early 2018, subject to the receipt of regulatory approval and certain other closing conditions.


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

EXECUTIVE SUMMARY

Net earnings (loss) attributable to ~~International Paper~~the Company's common shareholders were ~~$395~~$951 million ($~~0.95~~2.64 per diluted share) in the third quarter of ~~2017,~~2022, compared with ~~$80~~$511 million ($~~0.19~~1.38 per diluted share) in the second quarter of ~~2017~~2022 and ~~$312~~$864 million ($~~0.75~~2.20 per diluted share) in the third quarter of ~~2016.~~2021. The Company generated Adjusted ~~Operating Earnings is a~~operating earnings attributable to its common shareholders (a non-GAAP measure ~~and is~~ defined as net earnings from continuing operations (a GAAP measure) excluding special items and non-operating pension expense. International Paper generated Adjusted Operating Earnings Attributable to International Paper Common Shareholdersbelow) of ~~$449~~$364 million ($~~1.08~~1.01 per diluted share) in the third quarter of ~~2017,~~2022, compared with ~~$270~~$459 million ($~~0.65~~1.24 per diluted share) in the ~~2017~~ second quarter of 2022 and ~~$380~~$431 million ($~~0.91~~1.10 per diluted share) in the ~~2016~~ third ~~quarter.~~quarter of 2021.

During the third quarter 2022, International ~~Paper delivered strong results~~Paper’s earnings were significantly impacted by a challenging macroeconomic environment, resulting in a sharp decline in demand related to our Industrial Packaging segment, and significant cost headwinds from higher energy and distribution costs. As we entered the third quarter 2022, we recognized there were considerable macroeconomic uncertainties ahead of us, however these trends significantly shifted roughly mid-way through the third quarter, creating stronger headwinds than expected. Demand for packaging continued to weaken in the ~~2017~~ third quarter 2022 across all channels and all end-use segments as consumers reduced their spending for goods, focusing more on non-discretionary products and services. In addition, we saw our customers, and the broader retail channel, continue to manage through elevated inventories which further impacted demand for packaging in the third quarter 2022. The large decline in volume also significantly impacted operating costs as we adjusted our system to align our production with ~~sequential~~customer demand. This resulted in approximately 400,000 tons of economic downtime across the system resulting in high unabsorbed fixed costs and a sub-optimized system. Despite these macroeconomic challenges, fluff pulp demand was stable, and our Global Cellulose business generated strong earnings growth ~~across all~~to deliver cost-of-capital returns in the third quarter 2022. On capital allocation, we returned $434 million to shareowners in the third quarter 2022, including $269 million of share repurchases. We have returned approximately $1.6 billion of cash to shareowners so far this year. Additionally, in October 2022, our ~~business segments. This earnings growth was~~Board of Directors authorized an additional $1.5 billion of share repurchases, in addition to amounts previously authorized and available.

Comparing our performance in the third quarter 2022 to the second quarter 2022, price and mix improved, driven by continued ~~solid global demand and~~ price realization ~~particularly~~from prior period increases in both our North American Industrial Packaging and Global Cellulose Fibers businesses. During the quarter, results were negatively impacted by operational headwinds related to Hurricanes Harvey and Irma along with record high OCC prices. The Global Cellulose Fibers continued to generate strong results during the quarter, delivering more synergies at a faster pace than expected. Finally, in October 2017, we signed an agreement to transfer our North American Consumer Packaging business, which includes the North American Coated Paperboard mills and Foodservice operations, to a subsidiary of Graphic Packaging Holding Company in a transaction valued at $1.8 billion.

~~Prices were up across the Company’s portfolio, driving significant earnings improvement in the 2017 third quarter versus the 2017 second quarter, particularly~~Volume was lower in our North American Industrial Packaging ~~and~~business as a result of softer demand across all channels, while volume improved in our Global Cellulose Fibers ~~businesses. The~~business on improved supply chain velocity. Operations and costs were significantly higher in our North American Industrial Packaging business ~~continues to benefit~~on the non-repeat of favorable one-time items from the second quarter 2022, along with significant economic downtime, higher ~~pricing~~distribution costs and ~~flow-through in export containerboard exports. Volume was lower on a sequential quarter basis primarily due to one less shipping day~~other inflation driven cost increases. Operations and costs were relatively flat in our ~~North American corrugated box~~Global Cellulose Fibers business. ~~Operations~~Maintenance outages were ~~negatively impacted by approximately $30 million~~sequentially lower in both business segments coming off of ~~costs tied to mill and box plant disruptions caused by Hurricanes Harvey and Irma. As expected,~~the heavy maintenance outage ~~expenses were significantly lower~~activity in the ~~2017 third~~second quarter ~~versus the 2017 second quarter.~~2022. Input costs continued to be a significant headwind ~~due to elevated OCC~~with sequentially unfavorable costs ~~which continued to rise above 2017 second quarter levels, reaching a new historical high. In the 2017 third quarter, our Ilim joint venture again delivered strong results~~in both business segments, driven by ~~improved pricing,~~higher energy and chemicals, partially offset by lower ~~volume. Equity earnings also benefited from a non-cash foreign exchange gain on the joint venture's U.S. dollar denominated net debt.~~

Looking ahead, the Company is well positioned for strong fourth quarter results and cash generation. In our North American Industrial Packaging business, we expect to see flow-through benefits from containerboard and box price increases from the first half of 2017, along with further realization of prior price increases in exports. We anticipate additional price realization in our Global Cellulose Fibers business tied to continued strong global demand, particularly in China. Demand in our North American Industrial Packaging business will be unfavorably impacted by one less shipping day; however, we anticipate stable volumes across all of our other businesses with some seasonal improvement in our EMEA Printing Papers and Global Cellulose Fibers businesses. Manufacturing performance should improve as we move past the effects of the previously mentioned hurricanes and other one-off operational issues experienced at some of our mills during the 2017 third quarter. Inputrecovered fiber costs in our North American Industrial Packaging ~~business should benefit from declining OCC prices, partly offset by higher wood and chemical costs. We expect higher input costs~~business.

Looking ahead to the fourth quarter 2022, as compared to the third quarter 2022, in our ~~other businesses, partly~~Industrial Packaging business, we expect price and mix to be lower due to the ~~lingering effects~~export market. Volume is expected to be lower on four fewer shipping days, partially offset by seasonally higher produce volume in our EMEA Packaging business. The traditional seasonal increase in volume from holiday demand is not expected to be as strong this year. Operations and costs are expected to be significantly higher due to unabsorbed fixed costs on lower volumes, higher seasonal energy costs, along with further inflation on materials and services. Maintenance outage expense is expected to be flat relative to the third quarter 2022. Input costs are expected to be lower driven by lower fiber and energy costs. In our Global Cellulose Fibers business, we expect price and mix to improve on price realization from prior period increases. Volume is expected to be lower on timing of shipments through the ~~hurricanes, particularly~~supply chain. Operations and costs are expected to be stable while maintenance outage expenses are expected to increase. Input costs are expected to increase, primarily related to energy costs at our converting operation in Poland.

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The Russia-Ukraine conflict, including current and future sanctions, actions by the ~~case of wood~~Russian government, and ~~chemicals. Finally, for~~associated domestic and global economic and geopolitical conditions, have affected and could materially and adversely affect our Ilim joint venture ~~we expect improved operational~~and could otherwise adversely affect our business, financial condition, results of operations and cash flows. We are unable to predict the full impact of Russia’s ongoing invasion of Ukraine, sanctions that have been imposed to date or that may in the ~~2017 fourth quarter~~future be imposed, geopolitical instability and the possibility of broadened military conflict may have on ~~strong, demand-driven market fundamentals.~~us or our Ilim joint venture, including whether our Ilim joint venture may be able to continue to pay dividends to us. We continue to actively explore strategic options with respect to the Ilim joint venture, including a sale of our 50% equity interest in Ilim. While we may sell our equity interests in the Ilim joint venture, we cannot be certain if and when this may occur, or the impact that possible disruptions in the capital markets, negative macroeconomic conditions, or conditions associated with the Russia-Ukraine conflict, could have on the value of and our ability to sell our equity interest in the Ilim joint venture and the timing of any such sale.

Adjusted ~~Operating Earnings~~operating earnings and Adjusted ~~Operating Earnings Per Share~~operating earnings per share are non-GAAP ~~measures. Diluted~~measures and are defined as net earnings (loss) attributable to International Paper (a GAAP measure) excluding discontinued operations, net special items and non-operating pension expense (income). Net earnings (loss) and Diluted earnings (loss) per share attributable to common shareholders are the most ~~direct~~directly comparable GAAP measures. The Company calculates Adjusted ~~Operating Earnings~~operating earnings by excluding the after-tax effect of discontinued operations, non-operating pension expense (income) and items considered by management to be unusual or otherwise not reflective of on-going operations (net special items) from ~~the~~net earnings (loss) attributable to shareholders reported under ~~GAAP, non-operating pension expense (includes all U.S. pension costs, excluding service costs and prior service costs), and discontinued operations.~~GAAP. Adjusted ~~Operating Earnings Per Share~~operating earnings per share is calculated by dividing Adjusted ~~Operating Earnings~~operating earnings by diluted average shares of common stock outstanding. Management uses ~~this measure~~these measures to focus on on-going operations, and believes that ~~it is~~these measures are useful to investors because ~~it enables them~~such measures enable investors to perform meaningful comparisons of past and present consolidated operating results. The Company believes that using this information, along with the most ~~direct~~directly comparable GAAP ~~measure, provides~~measures, provide for a more complete analysis of the results of operations.

The following are reconciliations of ~~Diluted~~Net earnings (loss) attributable to shareholders to Adjusted operating earnings (loss) attributable to common shareholders on a total and per share basis. Additional detail is provided later in this Form 10-Q regarding the net special items expense (income) referenced in the charts below.


	Three Months Ended September 30,				Three Months Ended June 30,
In millions	2022		2021		2022
Net earnings (loss) attributable to shareholders	$	951	$	864	$	511
Less - Discontinued operations (gain) loss	—		(432)		—
Earnings (loss) from continuing operations attributable to shareholders	951		432		511
Add back - Non-operating pension expense (income)	(48)		(50)		(47)
Add back - Net special items expense (income)	117		49		18
Income tax effect - Non-operating pension and net special items expense (income)	(656)		—		(23)
Adjusted operating earnings (loss) attributable to shareholders	$	364	$	431	$	459


	Three Months Ended September 30,				Three Months Ended June 30,
In millions	2022		2021		2022
Diluted earnings (loss) per share attributable to shareholders	$	2.64	$	2.20	$	1.38
Less - Discontinued operations (gain) loss per share	—		(1.10)		—
Diluted earnings (loss) per share from continuing operations attributable to shareholders	2.64		1.10		1.38
Add back - Non-operating pension expense (income) per share	(0.13)		(0.12)		(0.13)
Add back - Net special items expense (income) per share	0.32		0.12		0.05
Income tax effect per share - Non-operating pension and net special items expense (income)	(1.82)		—		(0.06)
Adjusted operating earnings (loss) per share attributable to shareholders	$	1.01	$	1.10	$	1.24

Cash provided by operations totaled $1.4 billion and $1.9 billion for the first nine months of 2022 and 2021, respectively. The Company generated free cash flow of approximately $804 million and $1.6 billion in the first nine months of 2022 and 2021, respectively. Free cash flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by operations. Management utilizes this measure in connection with managing our business and believes that free cash flow is useful to ~~Adjusted Operating Earnings attributable to common shareholders.~~investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in

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Three Months Ended
September 30, Three Months Ended June 30,
2017 2016 2017
Diluted Earnings (Loss) Attributable to Shareholders $ 395
$ 312
$ 80
Add back - Discontinued operations (gain) loss —
—
—
Diluted Earnings (Loss) from Continuing Operations 395
312
80
Add Back - Non-operating pension (income) expense 33
43
34
Add Back - Net special items expense (income) 23
65
353
Income tax effect - Non-operating pension and special items expense (2 ) (40 ) (197 )
Adjusted Operating Earnings (Loss) Attributable to Shareholders $ 449
$ 380
$ 270
the business, to maintain a strong balance sheet, pay dividends, repurchase stock, service debt and make investments for future growth. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. By adjusting for certain items that are not indicative of the Company's ongoing performance, we believe that free cash flow also enables investors to perform meaningful comparisons between past and present periods.

The following is a reconciliation of cash provided by operations to free cash flow:


	Nine Months Ended September 30,
In millions	2022		2021
Cash provided by operations	$	1,413	$	1,923
Adjustments:
Cash invested in capital projects, net of insurance recoveries	(609)		(348)
Free Cash Flow	$	804	$	1,575

The non-GAAP financial measures presented in this Form 10-Q 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 Form 10-Q may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as the Company.

Three Months Ended
September 30, Three Months Ended June 30,
2017 2016 2017
Diluted Earnings (Loss) Per Share Attributable to Shareholders $ 0.95
$ 0.75
$ 0.19
Add Back - Discontinued operations (gain) loss per share —
—
—
Diluted Earnings (Loss) Per Share from Continuing Operations 0.95
0.75
0.19
Add Back - Non-operating pension (income) expense per share 0.08
0.10
0.08
Add Back - Net special items expense (income) per share 0.05
0.16
0.85
Income tax effect per share - Non-operating pension and special items expense —
(0.10 ) (0.47 )
Adjusted Operating Earnings (Loss) Per Share Attributable to Shareholders $ 1.08
$ 0.91
$ 0.65

RESULTS OF OPERATIONS

For the third quarter of ~~2017,~~2022, International Paper ~~Company~~ reported net sales of ~~$5.9~~$5.4 billion, compared with ~~$5.8~~$5.4 billion in the second quarter of ~~2017~~2022 and ~~$5.3~~$4.9 billion in the third quarter of ~~2016.~~2021.

Net earnings (loss) attributable to International Paper totaled ~~$395~~$951 million, or ~~$0.95~~$2.64 per diluted share, in the ~~2017~~ third ~~quarter.~~quarter of 2022. This compared with ~~$80~~$511 million, or ~~$0.19~~$1.38 per diluted share, in the second quarter of ~~2017~~2022 and ~~$312~~$864 million, or ~~$0.75~~$2.20 per diluted share, in the third quarter of ~~2016.~~2021.

~~Earnings from continuing operations attributable to International Paper Company were $395 million in the third quarter of 2017 compared~~Compared with ~~$312 million in the third quarter of 2016 and $80 million in~~ the second quarter of ~~2017. Compared with the third quarter of 2016, the 2017 third quarter reflects~~2022, earnings benefited from higher average sales ~~price realizations~~prices net of an unfavorable mix ($~~164~~114 million), lower mill maintenance outage costs ($2148 million), ~~the operating results for the recently acquired pulp business which was not included in the prior year~~lower corporate and other items ($369 million), lower net interest expense ($5 million), lower tax expense ($1612 million) ~~reflecting a lower estimated tax rate,~~ and lower non-operating pension expense ($61 million). These benefits

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were offset by lower sales volumes ($20 million), higher operating costs ($176 million) and higher raw material and freight costs ($57 million). Equity earnings, net of taxes, relating to International Paper’s investments in Ilim and other investments were $30 million lower in the third quarter of 2022 than in the second quarter of 2022. Net special items in the third quarter of 2022 were a gain of $551 million compared with a gain of $17 million in the second quarter of 2022.

Compared with the third quarter of 2021, the third quarter of 2022 reflects higher average sales prices and a favorable mix ($473 million) and lower net interest expense ($12 million). These benefits were offset by lower sales volumes ($624 million), higher operating costs ($72209 million), higher raw material and freight costs ($66247 million), higher mill maintenance outage costs ($15 million), higher corporate and other costs ($122 million), higher tax expense ($24 million) and higher ~~net interest~~non-operating pension expense ($142 million). Equity earnings, net of taxes, relating to International Paper’s ~~investment~~investments in Ilim ~~Holding S.A.~~and other investments were $2$31 million ~~higher~~lower in the ~~2017~~ third quarter of 2022 than in the ~~2016~~ third ~~quarter.~~quarter of 2021. Net special items in the ~~2017~~ third quarter of 2022 were a ~~loss~~gain of ~~$34~~$551 million compared with a loss of ~~$42~~$37 million in the ~~2016~~ third ~~quarter.~~

~~Compared with the second~~ quarter of 2017, earnings benefited from higher average sales price realizations net of an unfavorable mix ($76 million), lower mill maintenance outage costs ($123 million), lower tax expense ($13 million) reflecting a lower estimated tax rate and lower non-operating pension expense ($1 million). These benefits were offset by lower sales volumes ($11 million), higher operating costs ($10 million), higher raw material and freight costs ($16 million), higher corporate and other items ($15 million) and higher net interest expense ($8 million). Equity earnings, net of taxes, for Ilim Holding, S.A. were $27 million higher than in the 2017 second quarter. Net special items in the 2017 third quarter were a loss of $34 million compared with a loss of $169 million in the 2017 second quarter.2021.

Business ~~Segment Operating Profits~~segment operating profits are used by International Paper's management to measure the earnings performance of its businesses. Management believes that this measure allows a better understanding of trends in costs, operating efficiencies, prices and volumes. Business Segment Operating Profits are defined as earnings (loss) from continuing operations before income taxes and equity earnings, but including the impact of equity earnings and noncontrolling interests, excluding corporate items and corporate special items.

~~International Paper operates in four segments: Industrial Packaging, Global Cellulose Fibers, Printing Papers and Consumer Packaging.~~

~~The following table presents a reconciliation of net earnings attributable to International Paper Company to its Total Business Segment Operating Profit:~~

Three Months Ended
September 30 June 30,
In millions 2017 2016 2017
Earnings (Loss) From Continuing Operations Attributable to International Paper Company $ 395
$ 312
$ 80
Add back (deduct):
Income tax provision (benefit) 153
107
(89 )
Equity (earnings) loss, net of taxes (45 ) (43 ) (20 )
Noncontrolling interests, net of taxes —
(3 ) —
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings 503
373
(29 )
Interest expense, net 152
132
137
Noncontrolling interests / equity earnings included in operations —
1
(1 )
Corporate items 19
11
4
Special items (income) expense —
54
(16 )
Non-operating pension expense 33
42
34
Adjusted Operating Profit $ 707
$ 613
$ 129
Business Segment Operating Profit:
Industrial Packaging $ 469
$ 423
$ 50
Global Cellulose Fibers 49
(38 ) 7
Printing Papers 135
167
86
Consumer Packaging 54
61
(14 )
Total Business Segment Operating Profit $ 707
$ 613
$ 129

~~Business Segment Operating Profit~~

Total business segment operating profits of $707 million in the 2017 third quarter were higher than the $613 million in the 2016 third quarter and the $129 million in the 2017 second quarter. Compared with the third quarter of 2016, operating profits in the current quarter benefited from higher average sales price realizations net of an unfavorable mix ($236 million), lower mill outage costs ($30 million) and the operating results for the recently acquired pulp business which are not included in the prior year ($52 million). These benefits were offset by lower sales volumes ($9 million), higher operating costs ($104 million), higher raw material and freight costs ($95 million), and higher other costs ($5 million). Special items were a loss of $23 million in the 2017 third quarter compared with a loss of $12 million in the 2016 third quarter.

Compared with the second quarter of 2017, operating profits benefited from higher average sales price realizations net of an unfavorable mix ($109 million) and lower mill outage costs ($176 million). These benefits were offset by lower sales volumes ($15 million), higher operating costs ($14 million), higher raw material and freight costs ($23 million) and higher other items ($5 million). Special items were a loss of $23 million in the 2017 third quarter compared with a loss of $373 million in the 2017 second quarter.

During the 2017 third quarter, International Paper took approximately 93,000 tons of downtime of which none were economic-related, compared with approximately 226,000 tons of downtime, which included about 107,000 tons that were economic-related, in the 2016 third quarter. During the 2017 second quarter, International Paper took approximately 291,000 tons of downtime of which none were economic-related. Economic downtime is taken to balance internal supply with our customer demand, while maintenance downtime is taken periodically during the year.

~~Sales Volumes by Product (a)~~

~~Sales volumes of major products for the three months and nine months ended September 30, 2017 and 2016 were as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
In thousands of short tons (except as noted) 2017 2016 2017 2016
Industrial Packaging
North American Corrugated Packaging (c) 2,599
2,640
7,784
7,801
North American Containerboard 828
801
2,438
2,311
North American Recycling 924
977
2,799
2,873
North American Saturated Kraft 45
51
132
142
North American Gypsum/Release Kraft 54
49
165
142
North American Bleached Kraft 7
7
20
18
EMEA Industrial Packaging (c) (d) 350
344
1,124
1,091
Asian Box (c) (e) —
—
—
208
Brazilian Packaging (c) 93
93
266
254
Industrial Packaging 4,900
4,962
14,728
14,840
Cellulose Fibers (in thousands of metric tons) (b)
933
415
2,706
1,233
Printing Papers
North American Uncoated Papers 497
467
1,451
1,402
EMEA and Russian Uncoated Papers 365
358
1,104
1,120
Brazilian Uncoated Papers 280
274
832
800
Indian Uncoated Papers 58
51
186
175
Uncoated Papers 1,200
1,150
3,573
3,497
Consumer Packaging
North American Consumer Packaging 296
301
876
915
EMEA Coated Paperboard 103
105
296
298
Consumer Packaging 399
406
1,172
1,213


~~(a)~~	~~Sales volumes include third party and inter-segment sales and exclude sales of equity investees.~~


~~(b)~~	~~Includes North American, European and Brazilian volumes and internal sales to mills. Includes sales volumes from the pulp business acquired beginning December 1, 2016.~~


~~(c)~~	~~Volumes for corrugated box sales reflect consumed tons sold (CTS). Board sales for these businesses reflect invoiced tons.~~


~~(d)~~	~~Excludes newsprint sales volumes at the Madrid, Spain mill.~~


~~(e)~~	~~Includes sales volumes through the date of sale on June 30, 2016.~~

~~Income Taxes~~

An income tax provision of $153 million was recorded for the 2017 third quarter and the reported effective income tax rate for continuing operations was 30.5%. Excluding an expense of $11 million related to the tax effects of special items and a benefit of $13 million related to the tax effects of non-operating pension expense, the effective income tax rate for continuing operations was 28.0% for the quarter.

An income tax benefit of $89 million was recorded for the 2017 second quarter and the reported effective income tax rate for continuing operations was 298%. Excluding a benefit of $184 million related to the tax effects of special items and a benefit of $13 million related to the tax effects of non-operating pension expense, the effective income tax rate for continuing operations was 30.0% for the quarter.

An income tax provision of $107 million was recorded for the 2016 third quarter and the reported effective income tax rate for continuing operations was 29%. Excluding a benefit of $24 million related to the tax effects of special items and a benefit of $16 million related to the tax effects of non-operating pension expense, the effective income tax rate for continuing operations was 30.5% for the quarter.

~~Interest Expense and Noncontrolling Interest~~

Net interest expense for the 2017 third quarter was $152 million compared with $137 million which includes interest income of $4 million related to income tax refund claims in the 2017 second quarter and $132 million in the 2016 third quarter.

~~Effects of Special Items~~

~~Details of special items for the three months are as follows:~~

Three Months Ended
September 30 June 30,
2017 2016 2017
In millions Before Tax After Tax Before Tax After Tax Before Tax After Tax
Business Segments
Kleen Products anti-trust class action lawsuit settlement $ —
$ —
$ —
$ —
$ 354
$ 219
Weyerhaeuser pulp business integration costs 6
4
7
4
5
3
Asia Packaging restructuring and impairment —
—
5
4
—
—
Foodservice Asia impairment —
—
—
—
9
4
Brazil intangible asset accelerated amortization 10
7
—
—
—
—
Abandoned property 7
4
—
—
5
3
Business Segments Total 23
15
12
8
373
229
Corporate
Debt extinguishment —
—
29
18
—
—
Write-off of certain regulatory pre-engineering costs —
—
8
5
—
—
India Packaging business evaluation write-off —
—
17
11
(2 ) (2 )
Gain on sale of investment in ArborGen —
—
—
—
(14 ) (9 )
Interest income related to income tax refund claim —
—
—
—
(4 ) (2 )
Corporate Total —
—
54
34
(20 ) (13 )
Total special items 23
15
66
42
353
216
Non-operating pension expense 33
20
42
26
34
21
Total $ 56
$ 35
$ 108
$ 68
$ 387
$ 237

~~Special items include the following tax expenses (benefits):~~

Three Months Ended
September 30 June 30,
In millions 2017 2016 2017
Income tax refund claims $ —
$ —
$ (85 )
Pension contribution return to accrual —
—
38
International investment restructuring 19
—
—
Total $ 19
$ —
$ (47 )

~~Details of special items for the nine months are as follows:~~

Nine Months Ended
September 30
2017 2016
In millions Before Tax After Tax Before Tax After Tax
Business Segments
Kleen Products anti-trust class action lawsuit settlement $ 354
$ 219
$ —
$ —
Pulp business acquisition inventory fair value step-up amortization 14
8
—
—
Weyerhaeuser pulp business integration costs 15
9
12
7
Holmen mill net bargain purchase gain (6 ) (6 ) —
—
Riegelwood mill conversion costs —
—
9
6
Asia Packaging restructuring and impairment —
—
70
58
Foodservice Asia impairment 9
4
—
—
Abandoned property 14
9
—
—
Brazil Packaging Intangible Asset Accelerated Amortization 10
7
—
—
Business Segments Total 410
250
91
71
Corporate
Debt extinguishment —
—
29
18
Write-off of certain regulatory pre-engineering costs —
—
8
5
Gain on sale of investment in Arizona Chemical —
—
(8 ) (5 )
India Packaging business evaluation write-off (2 ) (2 ) 17
11
Gain on sale of investment in ArborGen (14 ) (9 ) —
—
Interest income related to income tax refund claim (4 ) (2 ) —
—
Corporate Total (20 ) (13 ) 46
29
Total special items 390
237
137
100
Non-operating pension expense 98
60
573
352
Total $ 488
$ 297
$ 710
$ 452

~~Special items include the following tax expenses (benefits):~~

Nine Months Ended
September 30
In millions 2017 2016
Income tax refund claims $ (85 ) $ —
Pension contribution return to accrual 38
23
International investment restructuring 34
(63 )
Federal income tax audit closure —
(14 )
Total $ (13 ) $ (54 )

~~BUSINESS SEGMENT OPERATING RESULTS~~

The following tables present net sales and operating profit (loss) which is the Company's measure of segment profitability. The tables include a detail of special items in each year, where applicable, in order to show operating profit before special items. The Company calculates Operating Profit Before Special Items (non-GAAP) by excluding the pre-tax effect of items considered by management to be unusual from the earnings reported under U.S. generally accepted accounting principles (“GAAP”). Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. International Paper believes that using this information, along with net earnings, provides ~~for~~ a more complete analysis of the results of operations by quarter. Business segment operating profits are defined as earnings (loss) from continuing operations before income taxes and equity earnings, but including the impact of less than wholly owned subsidiaries, and excluding interest expense, net, corporate expenses, net, corporate net special items, business net special items and non-operating pension expense. Business segment operating profits 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.

The Company currently operates in two segments: Industrial Packaging and Global Cellulose Fibers.

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The following table presents a reconciliation of Net earnings (loss) attributable to International Paper Company to its Total business segment operating profit:


	Three Months Ended
	September 30,				June 30,
In millions	2022		2021		2022
Net Earnings (Loss) from Continuing Operations Attributable to International Paper Company	$	951	$	432	$	511
Add back (deduct):
Income tax provision (benefit)	(575)		59		96
Equity (earnings) loss, net of taxes	(63)		(94)		(93)
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings	313		397		514
Interest expense, net	123		82		74
Less than wholly owned subsidiaries included in operations	(1)		(1)		(1)
Corporate expenses, net	15		13		27
Corporate net special items	62		49		18
Non-operating pension expense (income)	(48)		(50)		(47)
Adjusted Operating Profit	$	464	$	490	$	585
Business Segment Operating Profit (Loss):
Industrial Packaging	$	369	$	414	$	560
Global Cellulose Fibers	95		76		25
Total Business Segment Operating Profit	$	464	$	490	$	585

Business Segment Operating Profit

Total business segment operating profits were $464 million in the third quarter of 2022, $585 million in the second quarter of 2022 and $490 million in the third quarter of 2021.

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Compared with the second quarter of 2022, operating profits benefited from higher average sales prices net of an unfavorable mix ($151 million) and lower mill outage costs ($63 million). These benefits were offset by lower sales volumes ($27 million), higher operating costs ($233 million) and higher raw material and freight costs ($75 million).

Compared with the third quarter of 2021, operating profits in the current quarter benefited from higher average sales prices and a favorable mix ($556 million). These benefits were offset by lower sales volumes ($28 million), higher operating costs ($246 million), higher raw material and freight costs ($290 million) and higher mill outage costs ($18 million).

Sales Volumes by Product (a)

Sales volumes of major products for the three months and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,
In thousands of short tons (except as noted)	2022	2021	2022	2021
Industrial Packaging
Corrugated Packaging (b)	2,522	2,689	7,759	8,106
Containerboard	677	710	2,096	2,118
Recycling	546	521	1,645	1,647
Saturated Kraft	51	45	146	140
Gypsum/Release Kraft	66	56	184	179
EMEA Packaging (b)	297	334	1,019	1,179
Industrial Packaging	4,159	4,355	12,849	13,369
Global Cellulose Fibers (in thousands of metric tons) (c)	750	748	2,182	2,246

(a)Sales volumes include third party and inter-segment sales and exclude sales of equity investees.

(b)Volumes for corrugated box sales reflect consumed tons sold (CTS). Board sales for these businesses reflect invoiced tons.

(c)Includes North American volumes and internal sales to mills.

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Discontinued Operations

On October 1, 2021, the Company completed the previously announced spin-off of its Printing Papers business along with certain mixed-use coated paperboard and pulp businesses in North America, France and Russia into a standalone, publicly-traded company, Sylvamo. On August 6, 2021, the Company completed the sale of its Kwidzyn, Poland mill which included the pulp and paper mill in Kwidzyn and supporting functions. As a result of the Sylvamo spin-off and sale of Kwidzyn, the Company no longer has a Printing Papers business segment, and all historical results have been adjusted to reflect the Kwidzyn and the Printing Papers business and other businesses conveyed to Sylvamo as discontinued operations. See Note 9 - Divestitures and Impairments of Item 1. Financial Statements for further discussion.

Discontinued operations include the operating earnings of the businesses noted above. Discontinued operations also includes after-tax net special items income of $331 million and $338 million for the three months and nine months ended September 30, 2021, respectively.

Details of these charges were as follows:


	Three Months Ended				Nine Months
	September 30,				September 30,
	2021				2021
In millions	Before Tax		After Tax		Before Tax		After Tax
Gain on sale of Kwidzyn, Poland mill	$	(360)	$	(350)	$	(360)	$	(350)
Gain on sale of La Mirada, CA distribution center	(86)		(65)		(86)		(65)
Printing Papers spin-off	52		47		101		87
Foreign value-added tax credit (including interest)	15		10		(55)		(37)
Foreign and state taxes related to Printing Papers spin-off	—		27		—		27
Total	$	(379)	$	(331)	$	(400)	$	(338)

Income Taxes

An income tax benefit of $575 million was recorded for the third quarter of 2022 and the reported effective income tax rate was (184)%. Excluding a benefit of $668 million related to the tax effects of net special items and expense of $12 million related to the tax effects of non-operating pension expense, the effective income tax rate was 21% for the quarter. The effective tax rate for the third quarter of 2022 was lower than the prior quarter primarily due to the tax-free exchange of a portion of the Company’s shares of Sylvamo Corporation, the settlement of the timber monetization restructuring tax matter with the Internal Revenue Service and a reduction in the forecasted annual effective tax rate including additional tax credits available through the Inflation Reduction Act.

An income tax provision of $96 million was recorded for the second quarter of 2022 and the reported effective income tax rate was 19%. Excluding a benefit of $35 million related to the tax effects of net special items and expense of $12 million related to the tax effects of non-operating pension expense, the effective income tax rate was 25% for the quarter. The effective tax rate for the second quarter of 2022 was lower than the first quarter of 2022 due to the tax-free exchange of a portion of the Company’s shares of Sylvamo Corporation.

An income tax provision of $59 million was recorded for the third quarter of 2021 and the reported effective income tax rate was 15%. Excluding a benefit of $12 million related to the tax effects of net special items and expense of $12 million related to the tax effects of non-operating pension expense, the effective income tax rate was 15% for the quarter. The tax rate in the third quarter of 2021 was lower than the prior two quarters in 2021 primarily as a result of tax benefits recognized after the finalization of the 2020 U.S. federal income tax return, and the impact of lower tax expense associated with the sale of our Kwidzyn, Poland mill.

Interest Expense

Net interest expense was $123 million in the third quarter of 2022, compared with $74 million in the second quarter of 2022 and $82 million in the third quarter of 2021. The third quarter of 2022 includes $55 million of interest expense related to the previously announced settlement of the timber monetization restructuring tax matter.

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Effects of Net Special Items Expense (Income) and Non-Operating Pension Expense

Details of net special items expense (income) and non-operating pension expense (income) for the three months ended are as follows:


	Three Months Ended
	September 30,								June 30,
	2022				2021				2022
In millions	Before Tax		After Tax		Before Tax		After Tax		Before Tax		After Tax



Corporate
Debt extinguishment costs	$	93	$	70	$	35	$	26	$	—	$	—
Timber monetization settlement interest	55		41		—		—		—		—
Environmental remediation reserve adjustment	—		—		5		4		15		11
Sylvamo investment	(16)		(12)		—		—		(3)		(2)
Legal settlement	(15)		(11)		—		—		—		—
Other	—		—		9		7		6		5
Corporate Total	117		88		49		37		18		14
Total net special items expense (income)	117		88		49		37		18		14
Non-operating pension expense (income)	(48)		(36)		(50)		(38)		(47)		(35)
Total net special items and non-operating pension expense (income)	$	69	$	52	$	(1)	$	(1)	$	(29)	$	(21)

Net special items expense (income) include the following tax expenses (benefits):


	Three Months Ended
	September 30,				June 30,
In millions	2022		2021		2022
Tax benefit related to the timber monetization settlement	$	(604)	$	—	$	—
Tax benefit related to tax-free exchange of Sylvamo shares	(35)		—		(31)
Total	$	(639)	$	—	$	(31)

Details of net special items expense (income) and non-operating pension expense (income) for the nine months ended are as follows:


	Nine Months Ended
	September 30,
	2022				2021
In millions	Before Tax		After Tax		Before Tax		After Tax
Business Segments
EMEA Packaging business optimization	$	—	$	—	$	12	$	10	(a)
EMEA Packaging impairment - Turkey	—		—		(6)		—		(a)
Business Segments Total	—		—		6		10
Corporate
Debt extinguishment costs	93		70		223		168
Timber monetization settlement interest	55		41		—		—
Environmental remediation reserve adjustment	15		11		10		7
Real estate - office impairment	—		—		21		16
Sylvamo investment	(65)		(49)		—		—
Legal settlement	(15)		(11)		—		—
Gain on sale of equity investment in Graphic Packaging	—		—		(204)		(154)
Other	6		5		20		15
Corporate Total	89		67		70		52
Total net special items expense (income)	89		67		76		62
Non-operating pension expense (income)	(144)		(108)		(153)		(115)
Total net special items and non-operating pension expense (income)	$	(55)	$	(41)	$	(77)	$	(53)

(a) Recorded in the Industrial Packaging segment.

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Net special items include the following tax expenses (benefits):


	Nine Months Ended
	September 30,
In millions	2022		2021
Tax benefit related to the timber monetization settlement	$	(604)	$	—
Tax benefit related to tax-free exchange of Sylvamo shares	(66)		—
Total	$	(670)	$	—

BUSINESS SEGMENT OPERATING RESULTS

The following tables present net sales and business segment operating profit (loss) which is the ~~most directly comparable GAAP measure. See~~ ~~Note 18 - Business Segment Information~~ ~~in the Condensed Notes to the Consolidated Financial Statements for the GAAP reconciliation~~Company's measure of segment ~~operating profit.~~profitability.

Industrial Packaging

Total Industrial Packaging 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 3,734
$ 3,706
$ 10,939
$ 3,491
$ 3,520
$ 10,422
Operating Profit $ 469
$ 50
$ 884
$ 423
$ 458
$ 1,277
Asia Packaging restructuring and impairment —
—
—
5
28
70
Holmen mill bargain purchase gain —
—
(6 ) —
—
—
Kleen Products anti-trust settlement —
354
354
—
—
—
Brazil Intangible Asset Accelerated Amortization 10
—
10
—
—
—
Other 5
3
9
—
—
—
Operating Profit Before Special Items $ 484
$ 407
$ 1,251
$ 428
$ 486
$ 1,347


Total Industrial Packaging	2022						2021
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	4,385	$	4,491	$	13,282	$	4,111	$	4,030	$	12,071
Operating Profit (Loss)	$	369	$	560	$	1,326	$	414	$	389	$	1,224

Industrial Packaging net sales for the third quarter of ~~2017~~2022 were ~~1% higher than in~~2% lower compared with the second quarter of ~~2017~~2022 and ~~were~~ 7% higher ~~than~~compared with the third quarter of 2021. Operating profit was 34% lower in the third quarter of ~~2016. Operating profit before special items~~2022 compared with the second quarter of 2022 and 11% lower compared with the third quarter of 2021.


North American Industrial Packaging	2022						2021
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales (a)	$	4,055	$	4,126	$	12,206	$	3,814	$	3,663	$	11,037
Operating Profit (Loss)	$	387	$	550	$	1,337	$	418	$	377	$	1,190

(a)Includes intra-segment sales of $25 million and $34 million for the three months ended September 30, 2022 and 2021, respectively; $48 million and $27 million for the three months ended June 30, 2022 and 2021, respectively; and $102 million and $87 million for the nine months ended September 30, 2022 and 2021, respectively.

North American Industrial Packaging sales volumes in the third quarter of 2022 were lower compared to the second quarter of 2022 for corrugated boxes in all segments driven by the macroeconomic environment reflecting lower consumer spending on goods and retailer inventory destocking. Export and domestic containerboard volumes were also lower. Total maintenance and economic downtime was ~~19%~~about 391,000 short tons higher in the third quarter of ~~2017 than in~~2022 compared with the second quarter of ~~2017~~2022, due to economic downtime. Average sales margins were higher reflecting higher average sales prices for boxes and ~~13%~~containerboard. Operating costs were higher ~~than~~driven by economic downtime and inflation. Distribution costs increased. Planned maintenance downtime costs were $37 million lower in the third quarter of ~~2016.~~

North American Industrial Packaging 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales (a) $ 3,383
$ 3,336
$ 9,874
$ 3,151
$ 3,138
$ 9,344
Operating Profit $ 487
$ 51
$ 899
$ 439
$ 496
$ 1,373
Kleen Products anti-trust settlement —
354
354
—
—
—
Other 5
3
9
—
—
—
Operating Profit Before Special Items $ 492
$ 408
$ 1,262
$ 439
$ 496
$ 1,373


~~(a)~~	Includes intra-segment sales of $50 million and $35 million for the three months ended September 30, 2017 and 2016, respectively, $31 million and $32 million for the three months ended June 30, 2017 and 2016, respectively, and $113 million and $112 million for the nine months ended September 30, 2017 and 2016, respectively.

~~North American Industrial Packaging~~ ~~sales volumes for boxes in the third quarter of 2017 were lower than in~~2022 compared with the second quarter of 2017 reflecting one less shipping day and the impact of Hurricanes Harvey and Irma. Containerboard shipments to export markets increased, but were more than offset by lower domestic shipments. Total maintenance downtime decreased 72,000 tons from 157,000 tons to 85,000 tons. There was no economic downtime taken in either period. Average sales margins for boxes were higher due to the realization of box sales price increases. Average sales price realizations for containerboard also increased in both the domestic and export markets.2022. Input costs were higher ~~primarily for recycled fiber, but also for~~as higher energy ~~wood and chemicals. Planned maintenance downtime~~ costs were ~~$62 million~~partially offset by lower recovered fiber costs. Second quarter 2022 results were impacted by some favorable one-time items that did not repeat in the ~~2017~~ third ~~quarter compared with the 2017 second~~ quarter. ~~Operating costs were higher including the hurricane-related temporary shutdown of two mills. The total negative impact of the hurricanes was approximately $20 million during the quarter.~~

Compared with the third quarter of ~~2016,~~2021, sales volumes ~~for boxes were lower~~ in the third quarter of ~~2017 which included two fewer shipping days.~~2022 were lower for corrugated boxes and domestic containerboard but increased for export containerboard. Sales volumes for ~~containerboard increased in export markets, while domestic shipments decreased.~~corrugated boxes were lower reflecting inflation impacts on consumer spending. Total maintenance and economic downtime was ~~108,000~~about 450,000 short tons ~~lower~~higher in the third quarter of ~~2017 which comprises a decrease of 1,000 tons for maintenance downtime and a decrease of 107,000 tons for~~2022, primarily due to economic downtime. Average sales ~~margins~~prices for boxes and containerboard were higher reflecting previous price increases. Operating costs increased, ~~primarily due to higher average sales price realizations. Average sales price realizations in both domestic~~driven by economic downtime and ~~export containerboard markets were also higher. Input~~inflation. Distribution costs ~~for recycled fiber were significantly higher, while slightly higher costs for energy, chemicals and freight were offset by lower wood costs.~~increased. Planned maintenance downtime costs were $6$21 million higher in the third quarter of 2022 compared with the third quarter of 2021. Input costs were significantly higher driven by energy, chemicals and freight, partially offset by lower recovered fiber costs.

Entering the fourth quarter of 2022, sales volumes are expected to be lower compared to the third quarter of 2022 including the impact of four less shipping days. Average sales margins are expected to be lower. Operating costs are expected to be higher. Planned maintenance downtime costs are expected to be slightly lower in the fourth quarter of 2022 compared with the third quarter of 2022. Input costs are expected to be lower.

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EMEA Industrial Packaging	2022						2021
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	355	$	413	$	1,178	$	331	$	394	$	1,121
Operating Profit (Loss)	$	(18)	$	10	$	(11)	$	(4)	$	12	$	34

EMEA Industrial Packaging sales volumes for corrugated boxes in the third quarter of 2022 were lower compared with the second quarter of 2022 reflecting seasonally lower volumes in Morocco. Average sales margins for corrugated boxes and containerboard were stable. Operating costs were stable. Distribution costs were higher. There were no planned maintenance outages in either the third quarter of 2022 or the second quarter of 2022. Input costs were significantly higher, reflecting significantly higher energy costs.

Compared with the third quarter of 2021, sales volumes in the third quarter of 2022 were lower reflecting softening demand in the Eurozone. Average sales margins for corrugated boxes were higher driven by higher sales prices in the Eurozone. Operating costs were higher mostly due to inflation. Distribution costs were higher. Planned maintenance downtime costs were $2 million lower in the third quarter of ~~2017~~2022 compared with the third quarter of ~~2016. Earnings were also impacted by higher mill operating costs.~~

~~Entering the fourth quarter of 2017, sales volumes for boxes are expected to be stable, but will include one less shipping day. Containerboard export shipments are expected to decrease.~~2021. Input costs ~~for recycled fiber are expected to be~~were significantly ~~lower, partially offset~~higher driven by ~~higher energy, chemical and freight costs. Planned maintenance downtime costs should be $8 million lower.~~energy.

EMEA Industrial Packaging 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 333
$ 341
$ 991
$ 313
$ 295
$ 902
Operating Profit $ (5 ) $ 5
$ 14
$ —
$ 6
$ 13
Holmen mill net bargain purchase gain —
—
(6 ) —
—
—
Operating Profit Before Special Items $ (5 ) $ 5
$ 8
$ —
$ 6
$ 13

~~EMEA Industrial Packaging~~ sales volumes for boxes in the third quarter of 2017 were seasonally lower than in the second quarter of 2017 in Morocco and the Euro-zone. Average sales margins decreased due to higher input costs for containerboard. Input costs for energy were flat, while distribution costs decreased due to lower export shipments from Turkey and Morocco. Operating costs were lower.

Compared with the third quarter of 2016, sales volumes in the third quarter of 2017 were higher. Average sales margins decreased in the Euro-zone and Morocco due to higher containerboard costs. Input costs for energy were lower, but distribution costs were higher due to increased export shipments.

Looking ahead to the fourth quarter of ~~2017,~~2022, sales volumes for corrugated boxes are expected to be higher driven by seasonally ~~stronger. Average sales margins~~higher volumes in Morocco. Operating costs are expected to ~~recover due~~be flat. Planned maintenance downtime costs are expected to ~~the realization of prior price increases and a more favorable mix. Earnings will~~ be ~~negatively impacted by costs at the Madrid mill during its conversion to recycled containerboard production.~~

Brazilian Industrial Packaging 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 68
$ 60
$ 187
$ 62
$ 51
$ 155
Operating Profit $ (13 ) $ (6 ) $ (29 ) $ (9 ) $ (12 ) $ (29 )
Brazil Intangible Asset Accelerated Amortization 10
—
10
—
—
—
Operating Profit Before Special Items $ (3 ) $ (6 ) $ (19 ) $ (9 ) $ (12 ) $ (29 )

~~Brazilian Industrial Packaging~~ ~~sales volumes~~$4 million higher in the third quarter of 2017 compared with the second quarter of 2017 were higher for boxes, but slightly lower for containerboard. Improved average sales margins reflect higher sales prices for both boxes and containerboard, partially offset by an unfavorable mix. Operating costs were favorable while input costs, primarily for natural gas, were higher.

Compared with the third quarter of 2016, sales volumes in the third quarter of 2017 were higher for boxes, but lower for containerboard, while average sales price realizations for both boxes and containerboard increased. Input costs, primarily for recycled fiber and wood, decreased. Operating costs were also lower.

~~Looking ahead to~~ the fourth quarter of 2017, sales volumes are expected to be about flat. Average sales margins are expected to increase reflecting prior sales price realizations for both boxes and containerboard, partially offset by an unfavorable mix.2022. Input ~~costs should be slightly higher and operating~~ costs are expected to ~~increase, primarily due to labor costs.~~increase.

Asian Industrial Packaging 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ —
$ —
$ —
$ —
$ 68
$ 133
Operating Profit $ —
$ —
$ —
$ (7 ) $ (32 ) $ (80 )
Asia Packaging Restructuring and Impairment —
—
—
5
28
70
Operating Profit Before Special Items $ —
$ —
$ —
$ (2 ) $ (4 ) $ (10 )

~~Asian Industrial Packaging~~

~~On June 30, 2016, the Company completed the sale of its corrugated packaging business in China and Southeast Asia to Xiamen Bridge Hexing Equity Investment Partnership Enterprise. See~~ ~~Note 8 - Divestitures / Spinoff~~ ~~in the Condensed Notes to the Consolidated Financial Statements for further discussion of the sale of this business.~~

Global Cellulose Fibers

Total Global Cellulose Fibers 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 654
$ 612
$ 1,830
$ 242
$ 259
$ 713
Operating Profit $ 49
$ 7
$ (14 ) $ (38 ) $ (21 ) $ (109 )
Acquisition costs 6
5
15
7
5
12
Inventory fair value step-up amortization —
—
14
—
—
—
Other 2
—
3
—
—
—
Operating Profit Before Special Items $ 57
$ 12
$ 18
$ (31 ) $ (16 ) $ (97 )


Total Global Cellulose Fibers	2022						2021
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	887	$	788	$	2,385	$	740	$	680	$	2,015
Operating Profit (Loss)	$	95	$	25	$	71	$	76	$	1	$	(4)

Global Cellulose Fibers ~~includes the results of the pulp business acquired from Weyerhaeuser beginning in December 2016. See~~ ~~Note 7 - Acquisitions~~ ~~in the Condensed Notes to Consolidated Financial Statements for further discussion of this acquisition. Net~~ net sales ~~were 7% higher~~ in the third quarter of ~~2017 than in~~2022 were 13% higher compared with the second quarter of ~~2017~~2022 and ~~significantly~~20% higher than in the third quarter of ~~2016 due to the acquisition.~~2021. Operating profit ~~before special items~~ was ~~375%~~280% higher in the third quarter of ~~2017 than in~~2022 compared with the second quarter of ~~2017~~2022 and ~~284%~~25% higher ~~than in~~compared with the third quarter of ~~2016.~~2021.

Sales volumes in the third quarter of ~~2017 increased~~2022 compared with the second quarter of ~~2017 reflecting steady demand. Average sales price realizations~~2022 were higher ~~primarily~~reflecting a favorable demand/supply environment for fluff pulp ~~but were partially offset by an unfavorable product mix.~~and some improvement in supply chain conditions. Total maintenance and economic downtime was about 10,000 short tons lower in the third quarter of 2022 compared with the second quarter of 2022 due to maintenance downtime. Average sales margins improved significantly, reflecting higher average sales price for both fluff pulp and market pulp. Operating costs ~~and input~~were higher due to inflation. Distribution costs ~~were flat.~~also increased. Planned maintenance downtime costs in the third quarter of ~~2017~~2022 were ~~$37~~$26 million lower than in the second quarter of 2017. Costs associated with Hurricane Irma negatively impacted the business by approximately $5 million in the quarter. In Europe and Russia, sales volumes were lower, while average sales price realizations were favorable.

Compared with the third quarter of 2016, for the legacy business sales volumes increased in the third quarter of 2017. Average sales price realizations improved reflecting a stronger pricing environment. Planned maintenance downtime costs in the third quarter of 2017 were $14 million lower than in the third quarter of 2016. Input costs decreased slightly, although in Europe and Russia input costs were higher for wood, energy and purchased pulp. In Europe and Russia, sales volumes decreased and average sales margins were unfavorably impacted by lower sales price realizations partially offset by a favorable mix.

Entering the fourth quarter of 2017, sales volumes are expected to be seasonally higher. Average sales price realizations are expected to reflect the further recognition of recent price increases. Average sales margins will also benefit from a more favorable product mix. Input costs are expected to be higher. Planned maintenance downtime costs should be $5 million higher in the fourth quarter of 2017. Sales volumes and average sales price realizations are expected to increase in Europe and Russia.

~~Printing Papers~~

Total Printing Papers 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 1,039
$ 1,017
$ 3,051
$ 1,019
$ 1,012
$ 3,003
Operating Profit $ 135
$ 86
$ 321
$ 167
$ 117
$ 419
Other —
2
2
—
—
—
Operating Profit Before Special Items $ 135
$ 88
$ 323
$ 167
$ 117
$ 419

Printing Papers net sales for the third quarter of 2017 were 2% higher than in the second quarter of 2017 and 2% higher than in the third quarter of 2016. Operating profit before special items in the third quarter of 2017 was 53% higher than in the second quarter of 2017 but 19% lower than in the third quarter of 2016.

North American Papers 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 470
$ 446
$ 1,384
$ 477
$ 466
$ 1,425
Operating Profit $ 54
$ 19
$ 106
$ 81
$ 51
$ 193
Other —
2
2
—
—
—
Operating Profit Before Special Items $ 54
$ 21
$ 108
$ 81
$ 51
$ 193

~~North American Papers~~ sales volumes in the third quarter of 2017 were higher than in the second quarter of 2017 reflecting seasonally higher domestic demand. Average sales price realizations for uncoated freesheet paper were lower due to competitive pressures. Average sales margins were also negatively impacted by an unfavorable mill sourcing mix. Input costs were slightly higher, primarily for wood. Planned maintenance downtime costs were $34 million lower in the third quarter of 2017, which included no outages, compared with the second quarter of ~~2017.~~

Compared with the third quarter of 2016, sales volumes in the third quarter of 2017 were higher primarily due to increased shipments of uncoated freesheet paper to export markets. Average sales price realizations were lower, reflecting weaker market conditions. Average sales margins were also impacted by unfavorable geographic and mill sourcing mix. Input costs increased.

Entering the fourth quarter of 2017, sales volumes are expected to be seasonally lower, while average sales price realizations are expected to be stable with the partial realization of a previous sales price increase for uncoated freesheet paper. Input costs are expected to be steady. Planned maintenance downtime costs should be $11 million higher with an outage scheduled in the fourth quarter at our Eastover mill.

European Papers 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 292
$ 299
$ 865
$ 278
$ 288
$ 825
Operating Profit $ 38
$ 26
$ 93
$ 40
$ 34
$ 114

~~European Papers~~ sales volumes for uncoated freesheet paper in the third quarter of 2017 compared with the second quarter of 2017 were lower in both Russia and Europe. Average sales margins for uncoated freesheet paper increased in Europe due to the partial realization of a sales price increase, and in Russia due to a favorable geographic mix.2022. Input costs were higher, primarily for wood and ~~energy. Planned maintenance downtime costs~~chemicals. Second quarter 2022 results were impacted by some favorable one-time items that did not repeat in the third quarter.

Compared with the third quarter of 2021, sales volumes in the third quarter of ~~2017~~2022 were ~~$6 million lower than in the second quarter of 2017 which included an outage at the Svetogorsk mill. Manufacturing operating costs were lower.~~

~~Sales~~flat as higher sales volumes for ~~uncoated freesheet paper~~fluff pulp were mostly offset by lower sales volumes for market pulp reflecting continued logistics challenges. Total maintenance and economic downtime was about 2,000 short tons higher in the third quarter of ~~2017 compared with the third quarter of 2016, were lower in Europe, but higher in Russia.~~2022, due to maintenance downtime. Average sales ~~price realizations~~prices were higher for ~~uncoated freesheet paper increased in Europe, but~~both fluff and market pulp. Operating costs were ~~slightly lower in Russia. Input~~higher due to continued logistics challenges and inflation. Distribution costs ~~primarily for wood and energy,~~ were also higher. Planned maintenance downtime costs in the third quarter of ~~2017~~2022 were $9$1 million lower ~~than in~~compared with the third quarter of ~~2016 which included an outage at the Kwidzyn mill.~~2021. Input costs were higher primarily for energy, chemicals, wood and freight.

~~Looking forward to~~Entering the fourth quarter of ~~2017,~~2022, sales volumes ~~for uncoated freesheet paper~~ are expected to ~~increase.~~be lower. Average sales ~~price realizations should~~margins are expected to be higher. Planned maintenance downtime costs in the fourth quarter of 2022 are expected to be $34 million higher ~~in both Europe and Russia.~~compared with the third quarter of 2022. Operating costs are expected to be lower. Input costs are expected to be ~~higher for wood in Russia and higher in Europe for wood and energy.~~higher.

Brazilian Papers 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales (a) $ 239
$ 232
$ 685
$ 229
$ 219
$ 637
Operating Profit $ 46
$ 43
$ 128
$ 54
$ 34
$ 123


~~(a)~~	Includes intra-segment sales of $6 million and $0 million for the three months ended September 30, 2017 and 2016, respectively, $7 million and $3 million for the three months ended June 30, 2017 and 2016, respectively, and $22 million and $4 million for the nine months ended September 30, 2017 and 2016, respectively.

~~Brazilian Papers~~ sales volumes in the third quarter of 2017 were lower than in the second quarter of 2017 reflecting higher than anticipated export shipments in the second quarter along with the negative impact of logistical issues in the third quarter, partially offset by seasonally stronger demand in Brazil. Average sales margins were higher due to increased average sales price realizations for export uncoated freesheet papers, as well as a favorable geographic mix. Input costs increased for purchased pulp and energy. Planned maintenance downtime costs were $3 million lower than in the second quarter of 2017 which included an outage at the Mogi Guacu mill.

Compared with the third quarter of 2016, sales volumes for uncoated freesheet paper in the third quarter of 2017 increased in other Latin American countries, but were flat in Brazil. Average sales margins improved, reflecting higher average sales price realizations for export markets, improved customer mix in Brazil and a favorable geographic mix, partially offset by an unfavorable product mix. Input costs were stable.

Entering the fourth quarter of 2017, sales volumes for uncoated freesheet paper are expected to be seasonally higher in Brazil while export shipments should also increase due to the recovery from the logistical issues that occurred during the third quarter. Average sales margins should benefit from a more favorable geographic mix. Input costs are expected to be higher, particularly for purchased pulp and energy.

Indian Papers 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 44
$ 47
$ 139
$ 35
$ 42
$ 120
Operating Profit $ (3 ) $ (2 ) $ (6 ) $ (8 ) $ (2 ) $ (11 )

~~Indian Papers~~ sales volumes in the third quarter of 2017 compared with the second quarter of 2017 were lower due to reduced production capacity associated with a planned maintenance outage and a 6-day contract workers' strike. Average sales price realizations were slightly lower. Input costs were lower, primarily for wood and coal, but this benefit was more than offset by higher operating costs. Planned maintenance outage costs were $1 million higher than in the second quarter of 2017 due to an

outage at the Rajahmundry mill. Compared with the third quarter of 2016, sales volumes in the third quarter of 2017 were higher and average sales price realizations increased. Input costs were lower for wood, partially offset by higher chemical costs.

Looking ahead to the fourth quarter of 2017, sales volumes are expected to be higher as the third-quarter production constraints do not recur. Average sales price realizations should be slightly higher. Planned maintenance outage costs are expected to be $1 million lower than in the third quarter of 2017 with no outages scheduled in the fourth quarter.

~~Consumer Packaging~~

Total Consumer Packaging 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 491
$ 474
$ 1,431
$ 494
$ 501
$ 1,490
Operating Profit $ 54
$ (14 ) $ 73
$ 61
$ 73
$ 150
Riegelwood mill conversion costs —
—
—
—
—
9
Foodservice Asia asset impairment —
9
9
—
—
—
Operating Profit Before Special Items $ 54
$ (5 ) $ 82
$ 61
$ 73
$ 159

Consumer Packaging net sales in the third quarter of 2017 were 4% higher than in the second quarter of 2017, but 1% lower than in the third quarter of 2016. Operating profit before special items was higher in the third quarter of 2017 than in the second quarter of 2017, but 11% lower than in the third quarter of 2016.

North American Consumer Packaging 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 403
$ 395
$ 1,186
$ 407
$ 416
$ 1,241
Operating Profit $ 33
$ (28 ) $ 19
$ 39
$ 48
$ 77
Riegelwood mill conversion costs —
—
—
—
—
9
Foodservice Asia asset impairment —
9
9
—
—
—
Operating Profit Before Special Items $ 33
$ (19 ) $ 28
$ 39
$ 48
$ 86

~~North American Consumer Packaging~~ Coated paperboard sales volumes in the third quarter of 2017 were higher than in the second quarter of 2017. Average sales price realizations increased reflecting the effect of a 2017 second quarter sales price increase. Planned maintenance downtime costs were $33 million lower than in the second quarter of 2017 which included outages at our Augusta and Texarkana mills. Operating costs improved due to the resolution of some performance issues at our Augusta mill during the 2017 second quarter. Input costs for wood were slightly lower.

Compared with the third quarter of 2016, sales volumes in the third quarter of 2017 were slightly lower. Average sales price realizations increased slightly, reflecting the realization of second-quarter 2017 sales price increases offset by competitive price erosion. Operating costs were higher due to reliability issues at our Augusta mill, while input costs were steady.

Foodservice sales volumes in the third quarter of 2017 were seasonally lower than in the second quarter of 2017. Average sales margins increased, reflecting higher average sales price realizations partially offset by an unfavorable customer mix. Distribution costs were lower due to the impact of freight savings initiatives. Compared with the third quarter of 2016, sales volumes in the third quarter of 2017 decreased slightly reflecting weaker customer demand. Average sales margin decreased as higher input costs for resin and board were only partially offset by the realization of 2017 second quarter sales price increases.

Looking forward to the fourth quarter of 2017, coated paperboard sales volumes are expected to be seasonally weaker. Average prior sales price realizations are expected to be flat, but average sales margins should benefit from a favorable mix. Input costs for wood and polystyrene costs are expected to be higher following the hurricanes that occurred in the third quarter. Planned maintenance downtime costs should be $4 million higher in the fourth quarter of 2017 with an outage scheduled at our Texarkana mill. Operating costs are expected to recover. For Foodservice, sales volumes are expected to be seasonally higher while average sales margins should be relatively flat.

European Consumer Packaging 2017 2016
In millions 3rd Quarter 2nd Quarter Nine Months 3rd Quarter 2nd Quarter Nine Months
Sales $ 88
$ 79
$ 245
$ 87
$ 85
$ 249
Operating Profit $ 21
$ 14
$ 54
$ 22
$ 25
$ 73

~~European Consumer Packaging~~ sales volumes in the third quarter of 2017 compared with the second quarter of 2017 were higher in both Europe and Russia. Average sales margins decreased in both regions, reflecting lower sales price realizations partially mitigated by favorable mix. Input costs were higher in both Europe and Russia. Planned maintenance downtime costs

~~were $2 million lower in the third quarter of 2017 compared with the second quarter of 2017. Operating costs were also favorable.~~

Compared with the third quarter of 2016, sales volumes decreased in both Europe and Russia. In Russia, average sales margins decreased due to lower average sales price realizations, but in Europe sales margins reflected higher average sales price realizations and a more favorable mix. Input costs increased for wood, energy and purchased pulp. Planned maintenance downtime costs were $3 million lower in the third quarter of 2017 than in the third quarter of 2016.

Entering the fourth quarter of 2017, sales volumes are expected to be higher in Russia, but about flat in Europe. Average sales margins are expected to increase, reflecting higher sales price realizations in Europe. Input costs for wood and energy are expected to be higher.

Equity Earnings, Net of Taxes – Ilim

~~Since October 2007,~~

International Paper ~~and~~accounts for its 50% equity interest in Ilim ~~Holding S.A. (Ilim) have operated a 50:50 joint venture in Russia.~~using the equity method of accounting. Ilim is a separate reportable ~~business segment.~~industry segment with primary operations in Russia. During the first quarter of 2022, the Company announced its intention to explore strategic options, including a sale of its 50% ownership in Ilim. The Company recorded equity earnings, net

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of taxes, of ~~$48~~$64 million in the third quarter of ~~2017,~~2022, compared with ~~$21~~$95 million in the second quarter of ~~2017~~2022 and ~~$46~~$95 million in the third quarter of 2016. In the third quarter of 2017, the after-tax foreign exchange impact primarily on the remeasurement of U.S. dollar-denominated net debt was a gain of $7 million compared with a loss of $18 million in the second quarter of 2017. 2021.

Compared with the second quarter of ~~2017,~~2022, sales volumes in the third quarter of ~~2017~~2022 were ~~lower primarily for sales of softwood pulp and containerboard in China, partially offset~~3% higher led by ~~higher sales of~~ hardwood pulp ~~and containerboard in Russia. Average sales price realizations increased, primarily for sales of hardwood pulp and containerboard in~~shipments to China and other export markets, and shipments of containerboard in Russia, but were partially offset by lower shipments of containerboard to other export markets. Softwood pulp shipments to China and in Russia were higher but were offset by lower shipments of softwood pulp to other export markets. Average sales prices for containerboard decreased in all markets. Average sales prices for softwood pulp and hardwood pulp were sequentially higher in China and ~~containerboard sales in~~ Russia. ~~Input~~Costs primarily for wood increased while fuel and energy costs were ~~relatively flat, while planned~~lower. Distribution costs decreased. Planned mill maintenance ~~downtime~~outage costs were ~~higher in the third quarter of 2017.~~lower.

Compared with the third quarter of ~~2016,~~2021, sales volumes in the third quarter of ~~2017~~2022 were ~~relatively flat~~8% higher overall, ~~while sales~~driven by shipments of softwood pulp, hardwood pulp and containerboard to China and ~~containerboard sales in Russia increased, but were partially offset by lower sales of~~Russia. Shipments to other export markets declined sharply for softwood pulp toand containerboard. Average sales margins for softwood pulp and hardwood pulp increased reflecting higher average sales prices in China and Russia. Average sales ~~price realizations were higher, primarily~~prices for ~~sales of softwood and hardwood pulp in China and~~containerboard decreased in Russia and ~~for sales~~in China. Costs of ~~containerboard in all countries. Input costs, primarily for~~ wood, chemicals and ~~energy, were higher. Operating~~labor increased due to inflation. Transportation costs were ~~negatively impacted~~also higher, partially driven by inflation and the ~~planned~~change of shipping routes due to restrictions. Planned mill maintenance downtime taken in the third quarter of 2017. An after-tax foreign exchange gain of $3 million primarily on the remeasurement of U.S. dollar denominated net debt was recorded in the third quarter of 2016.outage costs were lower.

Looking forward to the fourth quarter of ~~2017,~~2022, sales volumes are expected to ~~increase.~~be lower due to continued logistics challenges impacting export shipments. Average sales ~~price realizations~~margins are ~~expected~~projected to ~~increase compared with the third quarter of 2017,~~decrease, primarily for ~~export sales of softwood and hardwood pulp, and~~ containerboard. Input costs for wood are expected to be seasonally higher, ~~for wood~~but transportation costs are expected to decline. Repair and ~~energy.~~maintenance costs are projected to be higher.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operations totaled ~~$569 million~~$1.4 billion for the first nine months of ~~2017~~,2022, compared with ~~$1.6~~$1.9 billion for the comparable ~~2016nine-month~~2021 nine-month period. ~~Cash used for working capital components totaled~~ ~~$567 million~~ ~~for the first~~ ~~nine~~ ~~months of~~ ~~2017~~ ~~compared to~~ ~~$120 million~~ ~~for the comparable~~ ~~2016nine-month period. The increase to working capital in 2017 includes income tax receivables primarily driven by the pension contribution and the Kleen Products litigation settlement.~~

~~The Company generated free cash flow of approximately~~ ~~$1.2 billion~~ ~~and $1.4 billion in the first~~ ~~nine~~ ~~months of~~ ~~2017~~ ~~and~~ ~~2016~~, respectively. Free cash flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by operations. Management believes that free cash flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet, pay dividends, repurchase stock, service debt and make investments for future growth. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. By adjusting for certain items that are not indicative of the Company's ongoing performance, free cash flow also enables investors to perform meaningful comparisons between past and present periods.

~~The following is a reconciliation of cash provided by operations to free cash flow:~~

Nine Months Ended
September 30,
In millions 2017 2016
Cash provided by operations $ 569
$ 1,566
Adjustments:
Cash invested in capital projects (935 ) (903 )
Cash contribution to pension plan 1,250
750
Cash payment for Kleen settlement 354
—
Free Cash Flow $ 1,238
$ 1,413

Investments in capital projects, net of insurance recoveries, totaled ~~$935~~$609 million in the first nine months of ~~2017~~2022, compared to ~~$903~~$348 million in the first nine months of ~~2016~~.2021. Full-year ~~2017~~2022 capital spending is currently expected to be approximately ~~$1.5~~$900 million to $1.0 billion, or ~~about 107%~~86% to 95% of depreciation and ~~amortization expense for our current businesses.~~amortization.

Financing activities for the first nine months of ~~2017~~2022 included a ~~$997~~$202 million net ~~increase~~decrease in debt versus a ~~$1.6 billion~~$379 million net increase in debt during the comparable ~~2016~~2021 nine-month period. ~~During~~

See Note 17 - Debt of Item 1. Financial Statements for a discussion of various debt-related actions taken by the Company during the third quarter of ~~2017,~~2022, including the Company issued $1.0 billion of 4.35% senior unsecured notes with a maturity date in 2048. The proceeds from this offering, together with a combination of available cash and other borrowings, were used to make a $1.25 billion voluntary cash contribution totender offer completed by the ~~Company's pension plan.~~Company.

Amounts related to early debt extinguishment during the three ~~months~~ and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2022		2021		2022		2021
Early debt reductions (a)	$	498	$	200	$	503	$	1,097
Pre-tax early debt extinguishment (gain) loss, net	93		35		93		223

Three Months Ended
September 30, Nine Months Ended
September 30,
In millions 2017 2016 2017 2016
Early debt reductions (a) $ 95
$ 266
$ 122
$ 266
Pre-tax early debt extinguishment costs 2
29
2
29

(a)Reductions related to notes with interest rates ranging from 6.40% to 8.70% with original maturities from 2023 to 2039 and 3.55% with original maturities of 2029 for the three month ended September 30, 2022 and 2021, respectively, and from 4.35% to 8.70% with original maturities from 2023 to 2048 and from 3.00% to 5.15% with original maturities from 2027 to 2048 for the nine months ended September 30, 2022 and 2021, respectively.


~~(a)~~	Reductions related to notes with interest rates ranging from 4.63% to 6.63% with original maturities from 2018 to 2031 and from 1.57% to 6.63% with original maturities from 2018 to 2031 for the three and nine months ended September 30, 2017, and 7.95% with an original maturity in 2018 for the three and nine months ended September 30, 2016.

At September 30, ~~2017,~~2022, contractual obligations for future payments of debt maturities (including finance lease liabilities disclosed in Note 11 - Leases and excluding the timber monetization structure disclosed in Note 16 - Variable Interest Entities) by calendar year were as follows: ~~$476 million in 2017; $461 million in 2018; $422 million in 2019; $159 million in 2020; $663 million in 2021; $923~~$356 million in 2022; $352 million in 2023; $149 million in 2024; $192 million in 2025; $74 million in 2026; and ~~$9.23~~$4.3 billion thereafter.

Maintaining an investment-grade credit rating is an important element of International Paper’s financing strategy. At September 30, ~~2017~~,2022, the Company held long-term credit ratings of BBB (stable outlook) and Baa2 (stable outlook) by S&P and Moody’s, respectively. In addition, the Company held short-term credit ratings of A2 and P2 by S&P and Moody's, respectively, for borrowings ~~during the current quarter~~ under the Company's commercial paper program.

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At September 30, ~~2017,~~2022, International Paper’s credit agreements totaled ~~$2.1~~$2.0 billion, which ~~management~~is comprised of the $1.5 billion contractually committed bank credit agreement and up to $500 million under the receivables securitization program. 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. ~~The liquidity facilities include a~~At September 30, 2022, the Company had no borrowings outstanding under the $1.5 billion ~~contractually committed bank~~ credit agreement ~~that expires~~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 in ~~December 2021~~Note 17 - Debt, and ~~has a facility fee of 0.15% per annum payable quarterly.~~the borrowings under the receivables securitization program being limited by eligible receivables. The ~~liquidity facilities also include up to $600 million of uncommitted financings based on eligible receivable balances ($600 million available~~Company was in compliance with all its debt covenants at September 30, ~~2017)~~2022 and was well below the thresholds stipulated under ~~a receivables securitization program that expires~~the covenants as defined in ~~December 2017.~~the credit agreements. Further the financial covenants do not restrict any borrowings under the credit agreements.

In ~~June 2016,~~addition to the $2.0 billion capacity under the Company's credit agreements, International Paper ~~entered into~~has a commercial paper program with a borrowing capacity of ~~$750 million.~~$1.0 billion supported by its $1.5 billion credit agreement. Under the terms of the 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 ~~notes~~ or floating rate notes. As of September 30, ~~2017,~~2022, the Company had ~~$445~~$260 million ~~of borrowings~~ outstanding under ~~this~~the program ~~at a weighted average interest rate~~with remaining capacity available of ~~1.39%.~~

~~Subsequent to September 30, 2017, International Paper repaid approximately $382 million of notes with an interest rate of 7.95% and an original maturity date in 2018.~~

~~During the first~~ ~~nine~~ months of 2017, International Paper used 2.6 million shares of treasury stock for various incentive plans. International Paper also acquired 0.9 million shares of treasury stock, including shares for the payment of restricted stock tax withholding. Repurchases of common stock and payments of restricted stock withholding taxes totaled $46$740 million. In

September 2013, the Company announced a share repurchase program to acquire up to $1.5 billion of the Company's common stock in open market repurchase transactions. In addition, in July 2014, the Company announced that it would acquire up to $1.5 billion of additional shares of the Company's common stock to supplement the $1.5 billion share repurchase program authorized in September 2013 and would continue to repurchase such shares in open market repurchase transactions. Under this $3.0 billion share repurchase program, the Company has repurchased 44.6 million shares at an average price of $46.40, for a total of approximately $2.1 billion, asAs of September 30, ~~2017.~~2022, the remaining credit agreement capacity was $1.2 billion.

During the first nine months of 2016, International Paper used approximately 2.7 million shares of treasury stock for various incentive plans. International Paper also acquired 3.6 million shares of treasury stock, including restricted stock tax withholding. Repurchases of common stock and payments of restricted stock withholding taxes totaled $131.7 million, including $100.1 million related to shares repurchased under the Company's $3.0 billion share repurchase program. Cash dividend payments related to common stock totaled $573 million and $543 million for the first ~~nine~~ ~~months of 2017 and 2016, respectively. Dividends were $1.3875 per share and $1.3200 per share for the first~~ ~~nine~~ ~~months in 2017 and 2016, respectively.~~

International Paper expects to be able to meet projected capital expenditures, service existing debt, ~~and~~ meet working capital and dividend requirements ~~during~~ ~~2017~~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 ~~preserve~~maintain appropriate levels of liquidity to meet our needs while ~~reducing~~managing balance sheet debt and interest ~~expense.~~expense, and we have repurchased, and may continue to repurchase, our common stock (under our existing share repurchase program) and debt (including in open market purchases) to the extent consistent with this capital structure planning. The majority of International Paper’s debt is accessed through global public capital markets where we have a wide base of investors.

~~Acquisitions~~

~~See discussion~~During the first nine months of 2022, International Paper used 1.5 million shares of treasury stock for various incentive plans. International Paper also acquired 24.4 million shares of treasury stock, including restricted stock tax withholdings. Repurchases of common stock and payments of restricted stock withholding taxes totaled $1.09 billion, including $1.07 billion related to shares repurchased under the Company's repurchase program. On October 11, 2022, the Company’s Board of Directors authorized the Company to acquire up to an additional $1.5 billion of the Company’s common stock. This new authorization is in addition to $1.85 billion remaining as of September 30, 2022 from a previous repurchase authorization. Thus, our current share repurchase program, which does not have an expiration date, has approximately $3.35 billion aggregate amount of shares of common stock remaining authorized for purchase.

During the first nine months of 2021, International Paper used approximately 1.8 million shares of treasury stock for various incentive plans. International Paper also acquired 7.7 million shares of treasury stock, including restricted stock tax withholding. Repurchases of common stock and payments of restricted stock withholding taxes totaled $425 million, including $398 million related to shares repurchased under the Company's repurchase program.

Cash dividend payments related to common stock totaled $509 million and $602 million for the first nine months of 2022 and 2021, respectively. Dividends were $1.3875 per share and $1.5375 per share for the first nine months in 2022 and 2021, respectively.

Our pension plan is currently sufficiently funded and we do not anticipate any required contributions for the next 12 months.

Variable Interest Entities

Information concerning variable interest entities is set forth in Note ~~7 - Acquisitions~~15 in the ~~Condensed Notes~~Company's Annual Report on Form 10-K for the year ended December 31, 2021. In connection with the 2006 International Paper installment sale of forestlands, we received $4.8 billion of installment notes. The restructured variable interest 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. On September 2, 2022, the Company and the Internal Revenue Service agreed to settle the ~~Consolidated Financial Statements.~~previously disclosed timber monetization restructuring tax matter. Under this agreement, the Company will fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest will also be charged upon closing of the audit. The amount of interest expense recognized through September 30, 2022 is $52 million. As of September 30, 2022, $89 million

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in U.S. federal income taxes and $28 million in interest expense have been paid as a result of the settlement agreement. The remaining $163 million U.S. federal income tax liability and $24 million accrued interest liability are recorded as current liabilities in the balance sheet. 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.

Ilim ~~Holding~~ S.A. Shareholders’ Agreement

~~In October 2007, in connection~~

We continue to actively explore strategic options with ~~the formation of~~respect to the Ilim ~~Holding S.A.~~ joint venture, ~~International Paper entered into~~including a ~~shareholder’s agreement that includes provisions relating to the reconciliation~~sale of disputes among the partners. This agreement provides that at any time, either the Company or its partners may commence procedures specified under the deadlock agreement. If these or any other deadlock procedures under the shareholder's agreement are commenced, although it is not obligated to do so, the Company may in certain situations choose to purchase its partners'our 50% equity interest in Ilim. ~~Any such transaction would~~While we may sell our equity interests in the Ilim joint venture in the future, we cannot be ~~subject to review~~certain if and ~~approval by Russian and other relevant anti-trust authorities. Based~~when this may occur, or the impact that possible disruptions in the capital markets, or conditions associated with the Russia-Ukraine conflict, could have on the ~~provisions~~value of ~~the agreement, the Company estimates that the current purchase price for its partners' 50%~~and our ability to sell our equity interests would be approximately $1.3 billion, which could be satisfied by payment of cash or International Paper common stock, or some combination of the two, at the Company's option. The purchase by the Company of its partners’ 50% interest in Ilim would result in the ~~consolidation~~Ilim joint venture and the timing of Ilim's financial position and results of operations in all subsequent periods. The parties have informed each other that they have no current intention to commence procedures specified under the deadlock provisions of the shareholder’s agreement.any such sales.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 judgments about matters that are inherently uncertain.

Accounting policies whose application may have a significant effect on the reported results of operations and financial position of International Paper, and that can require judgments by management that affect their application, include accounting for contingencies, impairment or disposal of long-lived assets, goodwill and other intangible assets, pensions ~~postretirement benefits other than pensions,~~and income ~~taxes~~taxes.

As of September 30, 2022, our EMEA packaging reporting unit had a goodwill balance of $76 million. Our 2021 annual goodwill impairment test for the EMEA Packaging reporting unit indicated that the fair value exceeded the carrying amount by 28%. Certain macroeconomic conditions continue to be challenging, including assessing the impacts from inflation and the geopolitical environment. We will continue to evaluate these macroeconomic conditions and their overall longer-term impact on the business ~~combinations.~~and on the reporting unit’s fair value.

The Company has included in its ~~2016~~ ~~Form 10-K~~Annual Report a discussion of these critical accounting policies, which are important to the portrayal of the Company’s financial condition and results of operations and require management’s judgments. The Company has not made any changes in these critical accounting policies during the first nine months of ~~2017, other than a change in the timing of the annual impairment testing of goodwill which is referenced in Note 1 in the Condensed Notes to the Consolidated Financial Statements and discussed below.~~2022.

~~Pension Accounting~~

~~Net pension expense totaled approximately~~ ~~$237 million~~ ~~for International Paper’s U.S. plans for the nine months ended~~ ~~September 30, 2017, or about $481 million less than the pension expense for the first~~ ~~nine~~ ~~months of~~ ~~2016. The decrease in U.S. plan expense was due to $442 million plan settlement accounting charges in the second and third quarters of 2016, and~~

~~lower amortization of unrecognized actuarial losses and prior service cost. Net pension expense for non-U.S. plans was about $3 million for the first nine months of~~ ~~2017~~ ~~and~~ ~~2016~~.

In the first quarter of 2016, International Paper offered a voluntary, limited-time opportunity for former employees who were participants in the Retirement Plan of International Paper Company (the Pension Plan) to request early payment of their entire Pension Plan benefit in the form of a single lump sum payment. The amount of total payments under this program was approximately $1.2 billion, and were made from Plan trust assets on June 30, 2016. Based on the level of payments made, settlement accounting rules applied and resulted in a plan remeasurement as of the June 30, 2016 payment date. The discount rate used in the plan remeasurement was 3.80%, down from 4.40% at December 31, 2015. As a result of settlement accounting, the Company recognized a pro-rata portion of the unamortized net actuarial loss, after remeasurement, resulting in a $439 million non-cash charge to the Company's earnings in the second quarter of 2016. Additional payments of $8 million were made during the third quarter of 2016 due to mandatory cash payouts and a small lump sum payout project, and the pension plan was subsequently remeasured at September 30, 2016 using a discount rate of 3.60%, down from 3.80% at June 30, 2016. As a result of settlement accounting, the Company recognized a pro-rata portion of the unamortized net actuarial loss, after remeasurement, resulting in a $3 million non-cash charge to the Company's earnings in the third quarter of 2016.

After consultation with our actuaries, International Paper determines key actuarial assumptions on December 31 of each year that are used to calculate liability information as of that date and pension expense for the following year. Key assumptions affecting pension expense include the discount rate, the expected long-term rate of return on plan assets, the projected rate of future compensation increases, and various demographic assumptions including expected mortality. The discount rate assumption is determined based on approximately 500 Aa-rated bonds appropriate to provide the projected benefit payments of the plan. A bond portfolio is selected and a single rate is determined that equates the market value of the bonds purchased to the discounted value of the plan’s benefit payments. The expected long-term rate of return on plan assets is based on projected rates of return for current and planned asset classes in the plan’s investment portfolio. At September 30, 2017, the market value of plan assets for International Paper’s U.S. plans totaled approximately $12.4 billion, consisting of approximately 45% equity securities, 36% fixed income securities, and 19% real estate and other assets. Plan assets did not include International Paper common stock.

The Company’s funding policy for our pension plans 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 made voluntary cash contributions of $1.25 billion and $750 million to the qualified pension plan in the first nine months of 2017 and 2016, respectively. The U.S. nonqualified plans are only funded to the extent of benefits paid, which totaled $34 million for the nine months ended September 30, 2017.

FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q that are not historical in nature may be considered ~~“forward-looking” statements~~“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. ~~These statements are often identified by the words, “will,~~Words such as “expects,” ~~“may,~~“anticipates,” ~~“should,~~“believes,” ~~“continue,” “anticipate,” “believe,” “expect,” “plan,” “appear,” “project,” “estimate,” “intend,”~~“estimates” and ~~words of a~~ similar ~~nature.~~expressions identify forward-looking statements. These statements are not guarantees of future performance and reflect management’s current views ~~with respect to future events, which~~and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. Factors which could cause actual results to differ include but are not limited to: (i) risks with respect to climate change and global, regional, and local weather conditions, as well as risks related to our ability to meet targets and goals with respect to climate change and the emission of GHGs and other environmental, social and governance matters; (ii) the impact of the conflict involving Russia and Ukraine, including in connection with related escalated sanctions imposed by the United States, the European Union, G7 and other countries and possible actions by the Russian government, and the impact of such developments on domestic and global economic and geopolitical conditions in general and on us and our Ilim joint venture, which could be materially and adversely affected by such developments, and our inability to predict the full impact of the Russian invasion of Ukraine, current or future sanctions, geopolitical instability and the possibility of broadened military conflict on our Ilim joint venture and on our receipt of dividends from our Ilim joint venture; (iii ) the level of our indebtedness and changes in interest rates; ~~(ii)~~(iv) the impact of global and domestic economic conditions and industry conditions, including ~~but not limited~~with respect to commercial activity, inflationary pressures and changes in the cost or availability of raw materials, energy sources and transportation ~~costs,~~sources, supply chain shortages and disruptions, the availability of labor, particularly in light of current labor market conditions which are exceptionally tight, competition we face, cyclicality and changes in consumer preferences, demand and pricing for our ~~products; (iii)~~products, and conditions impacting the credit, capital and financial markets; (v) domestic and global ~~economic~~geopolitical conditions, ~~and political changes, including but not limited to the impairment of financial institutions,~~ changes in currency exchange rates, trade protectionist policies, downgrades in our credit ratings, and/or the credit ratings of banks issuing certain letters of credit, issued by recognized credit rating ~~organizations,~~organizations; (vi) the amount of our future pension funding ~~obligation, changes in tax laws~~obligations, and pension and ~~health care~~healthcare costs; ~~(iv)~~(vii) unanticipated expenditures or other adverse developments related to ~~the cost of~~ compliance with existing and new environmental, tax, labor and employment, privacy, anti-bribery and anti-corruption, and

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other U.S. and non-U.S. governmental ~~regulations~~laws and ~~to actual or potential litigation; (v) whether we experience a~~regulations; (viii) any material disruption at ~~one~~any of our manufacturing ~~facilities; (vi)~~facilities or other adverse impact on our operations due to severe weather, natural disasters, climate change or other causes; (ix) risks inherent in conducting business through joint ventures; (vii) the failure to realize the expected synergies and cost-savings from our purchase of the pulp business of Weyerhaeuser Company or delay in realization thereof; (viii) purchase price adjustments relating to our pending transaction to transfer our North American

consumer packaging business to Graphic Packaging Holding Company in exchange for, among other things, an equity interest in an entity that will hold the assets for the combined business; (ix) receipt of regulatory approvals for the Graphic Packing transaction and the successful fulfillment or waiver of all other closing conditions without unexpected delays or conditions; (x) the successful closing of the Graphic Packing transaction within the estimated timeframe; (xi) the uncertainty of the expected financial performance of the combined business following completion of the Graphic Packaging transaction; (xii) the failure of the combined business to realize the expected synergies, cost-savings and other benefits from the Graphic Packaging transaction or delay in realization thereof; (xiii) the successful financing of the Graphic Packaging transaction; (ix) unforeseen tax treatment relating to the Graphic Packaging transaction, (xv) litigation related to the Graphic Packaging transaction or limitations or restrictions imposed by regulatory authorities that may delay or negatively impact the Graphic Packaging transaction; and (xvi) our ability to achieve the benefits ~~we expect~~expected from, ~~all~~and other ~~strategic~~risks associated with, acquisitions, joint ventures, divestitures, spinoffs and ~~restructurings;~~other corporate transactions, (xi) cybersecurity and ~~(xvii)~~information technology risks; (xii) loss contingencies and pending, threatened or future litigation, including with respect to environmental related matters; (xiii) our exposure to claims under our agreements with Sylvamo Corporation; (xiv) our failure to realize the anticipated benefits of the spin-off of Sylvamo Corporation and the qualification of such spin-off as a tax-free transaction for U.S. federal income tax purposes; and (xv) our ability to attract and retain qualified personnel. These and other factors ~~you~~that could cause or contribute to actual results differing materially from such forward-looking statements can ~~find~~be found in our press releases and ~~filings with~~SEC filings. In addition, other risks and uncertainties not presently known to the ~~Securities and Exchange Commission, including~~Company or that we currently believe to be immaterial could affect the ~~risk factors identified in Item 1A~~accuracy of ~~Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended~~ ~~December 31, 2016, as updated in Item 1A of Part II of this Quarterly Report on Form 10-Q ("Risk Factors"). We undertake~~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 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information relating to quantitative and qualitative disclosures about market risk is shown on ~~page 38~~pages 39-40 of International Paper’s ~~2016 Form 10-K,~~Annual Report, which information is incorporated herein by reference. There have been no material changes in the Company’s exposure to market risk since December 31, ~~2016~~.2021.

ITEM 4.CONTROLS AND PROCEDURES


~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~

Evaluation of Disclosure Controls and Procedures:

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (Exchange Act), is recorded, processed, summarized and reported (and accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure) within the time periods specified in the Securities and Exchange Commission’s rules and forms. As of the end of the period covered by this ~~report,~~Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, ~~2017~~2022 (the end of the period covered by this ~~report)~~Form 10-Q).

Changes in Internal Control over Financial Reporting:

There have been no changes in our internal control over financial reporting during the quarter ended September 30, ~~2017~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS


~~ITEM 1.~~	~~LEGAL PROCEEDINGS~~

A discussion of material developments inregarding certain legal proceedings involving the ~~Company’s litigation matters~~Company occurring in the period covered by this ~~report~~Form 10-Q is found inNote 1215 of the Condensed Notes to the ~~financial statements~~Consolidated Financial Statements in this Form ~~10-Q.~~


~~ITEM 1A.~~	~~RISK FACTORS~~

~~Our proposed transaction to contribute our North American Consumer Packaging business to Graphic Packaging may~~10-Q, which is incorporated by reference herein. The Company is not be completed within the expected timeframe, or at all, and we may not achieve the expected benefits from this transaction or from other strategic acquisitions, joint ventures, divestitures and other corporate transactions. On October 23, 2017, we entered into an agreement to contribute our North American Consumer Packaging business to Graphic Packaging in exchange for, among other things, an equity interest in the combined business and the assumption by the combined business of $660 million of indebtedness that we intend to incur prior to closing of the transaction. No assurances can be given about the timing, availability or cost of such financing. The transaction is expected to close in the first quarter of 2018. Completion of the transaction is subject to any administrative or judicial proceeding arising under any Federal, State or local provisions that have been enacted or adopted regulating the ~~satisfaction~~discharge of materials into the environment or ~~waiver~~primarily for the purpose of ~~certain conditions~~protecting the environment that ~~are beyond our control and may prevent, delay~~is likely to result in monetary sanctions of $1 million or otherwise negatively affect its completion. These conditions include U.S. antitrust clearance. The Antitrust Division of the U.S. Department of Justice or other regulatory agencies may refuse to approve the acquisition or seek to make its approval subject to compliance with unanticipated or onerous conditions that could reduce the anticipated benefits of the transaction.more.

The success of the transaction will depend, in part, on the financial performance of the combined business and on the ability of the combined business to realize anticipated growth opportunities, cost savings and other synergies. The combined business’s success in realizing these growth opportunities, cost savings and other synergies, and the timing of this realization, will depend on the successful integration of our North American Consumer Packaging business with Graphic Packaging’s business.

ITEM 1A.RISK FACTORS

More broadly, our strategy for long-term growth, productivity and profitability depends, in part, on our ability to make prudent strategic acquisitions, joint ventures, divestitures and other corporate transactions and to realize the benefits we expect from them.

~~Otherwise, there~~There have been no material changes from the risk factors disclosed in Part I, Item 1A of our Annual Report other than as discussed below.

Our financial results and businesses, including our Ilim joint venture, have been adversely and may continue to be affected by the current military conflict between Russia and Ukraine, including ongoing or future sanctions and export controls targeting Russia and other responses to Russia's invasion of Ukraine.

The global economy has been, and may continue to be, negatively impacted by Russia’s invasion of Ukraine. As a result of Russia's invasion of Ukraine, the United States, the United Kingdom, the European Union and other G7 countries, among other countries, have imposed coordinated financial and economic sanctions and export-control measures on ~~Form 10-K~~certain industry sectors and parties in Russia. Some of these measures include: (i) comprehensive financial sanctions against major Russian banks; (ii) additional designations of Russian individuals with significant business interests and government connections; (iii) designations of individuals and entities involved in Russian military activities; and (iv) enhanced export controls and trade sanctions targeting Russia's import of various goods. These events are currently escalating and creating increasingly volatile global economic conditions. The negative impacts arising from the conflict and these sanctions have included and may continue to include reduced consumer demand, supply chain disruptions and increased costs for transportation, energy, and raw materials. We will continue to monitor the ~~fiscal year ended December 31, 2016 (Part~~conflict and the potential impact of financial and economic sanctions on the regional and global economy.

We have a 50% equity interest in Ilim, the parent company of Ilim Group, whose primary operations are in Russia. Specifically, Ilim Group’s facilities include three paper mills located in Bratsk, Ust-Ilimsk, and Koryazhma, Russia, with combined total pulp and paper capacity of over 3.6 million metric tons. In joint ventures, such as the Ilim joint venture, we share ownership and management of a company with one or more parties who may or may not have the same goals, strategies, priorities or resources as we do. Ilim, and its directors and employees are not specially designated nationals or blocked persons or otherwise named in sanctions issued by the United States or other countries.

The military conflict between Russia and Ukraine, including ongoing sanctions, actions by the Russian government, and associated domestic and global economic and geopolitical conditions, has adversely affected and may continue to adversely affect our Ilim joint venture and our businesses, financial condition, results of operations and cash flows. We are unable to predict the full impact that Russia’s ongoing invasion of Ukraine, current or potential future sanctions, potential embargoes, supply chain disruptions, geopolitical instability and shifts, and the possibility of broadened military conflict may have on us or our Ilim joint venture, including on whether our Ilim joint venture will be able to continue to pay dividends to us. We continue to explore strategic options, including a sale of our equity interest in the Ilim joint venture, but we cannot be certain if and when this may occur or of the terms of any such sale. Further, potential disruptions resulting from the conflict, ever changing regulatory environment in Russia or negative economic or capital market conditions more generally may adversely impact the value of and our ability to sell our interest in the Ilim joint venture and the timing of any such sale. In addition, the effects of further escalated or prolonged military conflict could heighten many of our known risks described in Part I, Item ~~1A).~~1A. “Risk Factors” in our Annual Report. Such risks include, but are not limited to, adverse effects on global business and economic conditions, including volatility and increases in the price and demand of oil, natural gas and other energy products and inflation, demand for our products, increased cyber security risks, adverse changes in trade policies, taxes, government regulations, our ability to implement and execute our business strategy including with respect to joint ventures, divestitures, spin-offs, capital investments and other corporate transactions that we have pursued or may pursue, disruptions in global supply chains, risks related to employees and contracts in the affected regions, our exposure to foreign currency fluctuations and potential nationalizations and asset seizures in Russia, constraints, volatility, or disruption in the capital markets and our sources of liquidity, and our potential inability to service our remaining performance obligations and potential contractual breaches and litigations. Additionally, fluctuations in the value of the Russian ruble versus the U.S. dollar impacts our investment carrying

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~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

value as well as financial results based on translation of ruble denominated results into U.S. dollars and the remeasurement impact associated with non-functional currency financial assets and liabilities.

In particular, our investments in Ilim involve certain legal, geopolitical, investment, repatriation, and transparency risks as a result of the military conflict between Russia and Ukraine including: (i) the legal framework of Russia continues to rapidly evolve and it is not possible to accurately predict the content or implications of changes in their statutes or regulations; there has been a number of legislative proposals that, if adopted, could result in nationalization, expropriation, onerous or disadvantageous exit terms or other unfavorable regulations and may be introduced at any time without prior warning or consultation; (ii) current and future statutes and regulations may be unfairly or unevenly enforced, the courts may decline to enforce legal protections covering our investments altogether and the cost and difficulties of litigation in Russia may make enforcement of our rights impractical or impossible; (iii) the risk we may inadvertently violate sanctions that may be imposed by the United States or foreign governments, including Russia, given the complexity and fluidity of the situation; (iv) financial and economic sanctions and export-control measures imposed on certain industry sectors and parties in Russia as well as counter-sanctions measures implemented by Russia could lead to further disruptions in supply chains and adversely affect operations in Russia; (v) increased risks of economic, political, or social instability, escalating military conflicts with Ukraine or new conflicts with any other countries, war, or terrorism, which could adversely affect the economies of Russia or lead to a material adverse change in the value of our investments in Russia; and (vi) disclosure, accounting, and financial standards and requirements in Russia may rapidly evolve and it is not possible to accurately predict the content or implications of changes in their disclosure requirements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 Purchased as Part of a Publicly Announced Plan or Program Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
July 1, 2017 - July 31, 2017 646
$ 56.41
—
$0.933
August 1, 2017 - August 31, 2017 —
—
—
0.933
September 1, 2017 - September 30, 2017 173
56.82
—
0.933
Total 819


Period	Total Number of Shares Purchased (a)	Average Price Paid per Share	Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in billions)
July 1, 2022 - July 31, 2022	3,568,255	$42.08	3,566,436	$1.97
August 1, 2022 - August 31, 2022	2,240,390	42.92	2,240,272	1.87
September 1, 2022 - September 30, 2022	571,469	40.06	571,469	1.85
Total	6,380,114

(a) ~~819~~1,937 shares were acquired from employees ~~from~~or board members as a result of share withholdings to pay income taxes under the Company's restricted stock ~~programs.~~program. The remainder were purchased under a share repurchase program. As of September 30, 2022 approximately $1.85 billion aggregate shares of our common stock remained authorized for repurchase under a previous Board authorization. This authorization was increased by our Board on October 11, 2022, up to a total of $3.35 billion shares. This repurchase program does not have an expiration date.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS


~~ITEM 6.~~	~~EXHIBITS~~



~~10.1~~31.1		Commitment Agreement, dated September 26, 2017, between International Paper Company and Prudential Insurance Company of America, relating to the Retirement Plan of International Paper Company.*

11	~~Statement of Computation of Per Share Earnings.~~

12	~~Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.~~

~~31.1~~	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of principal 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.

101.INS		XBRL Instance ~~Document.~~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.~~


*101.PRE	~~Confidential treatment has been requested for certain information pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,~~	XBRL Extension Presentation Linkbase.

104		Cover Page Interactive Data File (formatted as ~~amended.~~Inline XBRL, and contained in Exhibit 101).

~~SIGNATURES~~

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SIGNATURES

Pursuant to the requirements 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 (Registrant)

October 28, 2022		~~INTERNATIONAL PAPER COMPANY~~ ~~(Registrant)~~ By	/s/ Tim S. Nicholls
			Tim S. Nicholls
~~November 3, 2017~~		By	~~/s/ Glenn R. Landau~~
	~~Glenn R. Landau~~
	Senior Vice President and Chief Financial Officer

~~November 3, 2017~~October 28, 2022		By	/s/ ~~Vincent P. Bonnot~~Holly G. Goughnour
			~~Vincent P. Bonnot~~Holly G. Goughnour
			Vice President – Finance and Corporate Controller



	September 30, 2017			December 31, 2016
	(unaudited)
Assets
Current Assets
Cash and temporary investments	$	998		$	1,033
Accounts and notes receivable, net	3,343			3,001
Inventories	2,465			2,438
Other current assets	405			198
Total Current Assets	7,211			6,670
Plants, Properties and Equipment, net	14,065			13,990
Forestlands	468			456
Investments	336			360
Financial Assets of Special Purpose Entities (Note 13)	7,047			7,033
Goodwill	3,420			3,364
Deferred Charges and Other Assets	1,266			1,220
Total Assets	$	33,813		$	33,093
Liabilities and Equity
Current Liabilities
Notes payable and current maturities of long-term debt	$	958		$	239
Accounts payable	2,408			2,309
Accrued payroll and benefits	447			430
Other accrued liabilities	1,056			1,091
Total Current Liabilities	4,869			4,069
Long-Term Debt	11,373			11,075
Nonrecourse Financial Liabilities of Special Purpose Entities (Note 13)	6,289			6,284
Deferred Income Taxes	3,505			3,127
Pension Benefit Obligation	2,069			3,400
Postretirement and Postemployment Benefit Obligation	315			330
Other Liabilities	460			449
Equity
Common stock, $1 par value, 2017 – 448.9 shares and 2016 – 448.9 shares	449			449
Paid-in capital	6,176			6,189
Retained earnings	4,918			4,818
Accumulated other comprehensive loss	(4,949		)	(5,362		)
	6,594			6,094
Less: Common stock held in treasury, at cost, 2017 – 36.0 shares and 2016 – 37.7 shares	1,680			1,753
Total International Paper Shareholders’ Equity	4,914			4,341
Noncontrolling interests	19			18
Total Equity	4,933			4,359
Total Liabilities and Equity	$	33,813		$	33,093



In millions	Three Months Ended June 30, 2017
Gain on sale of investment in ArborGen	$	(14	)
Other	(2		)
Total	$	(16	)



In millions	Three Months Ended September 30, 2016
Early debt extinguishment costs	$	29
India packaging evaluation write-off	17
Total	$	46



In millions	Three Months Ended March 31, 2016
Gain on sale of investment in Arizona Chemical	$	(8	)
Riegelwood mill conversion costs	9
Total	$	1



In millions	Estimated Fair Value		Average Remaining Useful Life
Asset Class:			(at acquisition date)
Customer relationships and lists	$	95	24 years
Trade names, patents, trademarks and developed technology	113		8 years
Other	4		10 years
Total	$	212



In millions	Unrecognized Tax Benefits			Accrued Estimated Interest and Tax Penalties
Balance at December 31, 2016	$	(98	)	$	(22	)
Activity for three months ended March 31, 2017	(2		)	2
Activity for the three months ended June 30, 2017	(42		)	1
Activity for the three months ended September 30, 2017	1			—
Balance at September 30, 2017	$	(141	)	$	(19	)



	Gain (Loss) Recognized										Location of Gain (Loss) In Statement of Operations
	Three Months Ended September 30,					Nine Months Ended September 30,
In millions	2017			2016		2017			2016
Derivatives Not Designated as Hedging Instruments:
Electricity contract	$	(8	)	$	—	$	(10	)	$	—	Cost of products sold
Foreign exchange contracts	—			—		—			—		Cost of products sold
Interest rate contracts	—			2		—			5		Interest expense, net
Total	$	(8	)	$	2	$	(10	)	$	5



	Three Months Ended
	September 30						June 30,
In millions	2017			2016			2017
Earnings (Loss) From Continuing Operations Attributable to International Paper Company	$	395		$	312		$	80
Add back (deduct):
Income tax provision (benefit)	153			107			(89		)
Equity (earnings) loss, net of taxes	(45		)	(43		)	(20		)
Noncontrolling interests, net of taxes	—			(3		)	—
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings	503			373			(29		)
Interest expense, net	152			132			137
Noncontrolling interests / equity earnings included in operations	—			1			(1		)
Corporate items	19			11			4
Special items (income) expense	—			54			(16		)
Non-operating pension expense	33			42			34
Adjusted Operating Profit	$	707		$	613		$	129
Business Segment Operating Profit:
Industrial Packaging	$	469		$	423		$	50
Global Cellulose Fibers	49			(38		)	7
Printing Papers	135			167			86
Consumer Packaging	54			61			(14		)
Total Business Segment Operating Profit	$	707		$	613		$	129



Brazilian Industrial Packaging	2017									2016
In millions	3rd Quarter			2nd Quarter			Nine Months			3rd Quarter			2nd Quarter			Nine Months
Sales	$	68		$	60		$	187		$	62		$	51		$	155
Operating Profit	$	(13	)	$	(6	)	$	(29	)	$	(9	)	$	(12	)	$	(29	)
Brazil Intangible Asset Accelerated Amortization	10			—			10			—			—			—
Operating Profit Before Special Items	$	(3	)	$	(6	)	$	(19	)	$	(9	)	$	(12	)	$	(29	)



Asian Industrial Packaging	2017						2016
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter			2nd Quarter			Nine Months
Sales	$	—	$	—	$	—	$	—		$	68		$	133
Operating Profit	$	—	$	—	$	—	$	(7	)	$	(32	)	$	(80	)
Asia Packaging Restructuring and Impairment	—		—		—		5			28			70
Operating Profit Before Special Items	$	—	$	—	$	—	$	(2	)	$	(4	)	$	(10	)



Total Printing Papers	2017						2016
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	1,039	$	1,017	$	3,051	$	1,019	$	1,012	$	3,003
Operating Profit	$	135	$	86	$	321	$	167	$	117	$	419
Other	—		2		2		—		—		—
Operating Profit Before Special Items	$	135	$	88	$	323	$	167	$	117	$	419



North American Papers	2017						2016
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	470	$	446	$	1,384	$	477	$	466	$	1,425
Operating Profit	$	54	$	19	$	106	$	81	$	51	$	193
Other	—		2		2		—		—		—
Operating Profit Before Special Items	$	54	$	21	$	108	$	81	$	51	$	193



European Papers	2017						2016
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	292	$	299	$	865	$	278	$	288	$	825
Operating Profit	$	38	$	26	$	93	$	40	$	34	$	114



Brazilian Papers	2017						2016
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales (a)	$	239	$	232	$	685	$	229	$	219	$	637
Operating Profit	$	46	$	43	$	128	$	54	$	34	$	123



Indian Papers	2017									2016
In millions	3rd Quarter			2nd Quarter			Nine Months			3rd Quarter			2nd Quarter			Nine Months
Sales	$	44		$	47		$	139		$	35		$	42		$	120
Operating Profit	$	(3	)	$	(2	)	$	(6	)	$	(8	)	$	(2	)	$	(11	)



Total Consumer Packaging	2017							2016
In millions	3rd Quarter		2nd Quarter			Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	491	$	474		$	1,431	$	494	$	501	$	1,490
Operating Profit	$	54	$	(14	)	$	73	$	61	$	73	$	150
Riegelwood mill conversion costs	—		—			—		—		—		9
Foodservice Asia asset impairment	—		9			9		—		—		—
Operating Profit Before Special Items	$	54	$	(5	)	$	82	$	61	$	73	$	159



North American Consumer Packaging	2017							2016
In millions	3rd Quarter		2nd Quarter			Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	403	$	395		$	1,186	$	407	$	416	$	1,241
Operating Profit	$	33	$	(28	)	$	19	$	39	$	48	$	77
Riegelwood mill conversion costs	—		—			—		—		—		9
Foodservice Asia asset impairment	—		9			9		—		—		—
Operating Profit Before Special Items	$	33	$	(19	)	$	28	$	39	$	48	$	86



European Consumer Packaging	2017						2016
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	88	$	79	$	245	$	87	$	85	$	249
Operating Profit	$	21	$	14	$	54	$	22	$	25	$	73