The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments that are necessary for the fair presentation of International Paper Company’s ("International Paper's",Paper's," "the Company’s"Company’s," "IP's" or "our") financial position, results of operations, and cash flows for the interim periods presented. Except as disclosed herein, such adjustments are of a normal, recurring nature. Results for the first three months of the year may not necessarily be indicative of full year results. You should read these unaudited condensed financial statements in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20222023 (the "Annual Report"), which have previously been filed with the U.S. Securities and Exchange Commission.Commission ("SEC").

These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States that require the use of management’s estimates. Actual results could differ from management’s estimates.

In March 2020,December 2023, the FASB issued ASU 2020-04, "Reference Rate Reform2023-09, "Income Taxes (Topic 848)740): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This guidance provides companies with optional guidanceImprovements to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is effective upon issuance and generally can be applied through December 31, 2024. The Company 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.

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.

A contract asset is created when the Company recognizes revenue on its customized products prior to having an unconditional right to payment from the customer, which generally does not occur until title and risk of loss passes to the customer.

A contract liability is created when customers prepay for goods prior to the Company transferring those goods to the customer. The contract liability is reduced once control of the goods is transferred to the customer. The majority of our customer prepayments are received during the fourth quarter each year for goods that will be transferred to customers over the following twelve months. Contract liabilities of $36$28 million and $38$32 million are included in Other current liabilities in the accompanying condensed consolidated balance sheet as of March 31, 20232024 and December 31, 2022,2023, respectively. The Company also recorded a contract liability of $115 million related to a previous acquisition. The balance of this contract liability was $97$90 million and $99$92 million at March 31, 20232024 and December 31, 2022,2023, respectively, and is recorded in Other current liabilities and Other Liabilities in the accompanying condensed consolidated balance sheet.

The difference between the opening and closing balances of the Company's contract assets and contract liabilities primarily results from the difference between the price and quantity at comparable points in time for goods for which we have an unconditional right to payment or receive prepayment from the customer, respectively.

Accumulated depreciation was $18.6$19.7 billion and $18.4$19.6 billion at March 31, 20232024 and December 31, 2022,2023, respectively. Depreciation expense was $232$268 million and $250$232 million for the three months ended March 31, 2024 and 2023, and 2022, respectively. Depreciation expense for the three months ended March 31, 2024 includes $5 million of accelerated depreciation related to mill strategic actions.

Non-cash additions to plants, properties and equipment included within accounts payable were $94$61 million and $185$141 million at March 31, 20232024 and December 31, 2022,2023, respectively.

Under a supplier finance program, IPInternational Paper agrees to pay a bank the stated amount of confirmed invoices from its designated suppliers on the original maturity dates of the invoices. IPInternational Paper or the bank may terminate the agreement upon at least 90 days’ notice. The supplier invoices that have been confirmed as valid under the program require payment in full on the due date with the payment date not to exceedno terms exceeding 180 days past the invoice date.days. The accounts payable balance included $142$116 million and $122 million of supplier finance program liabilities as of March 31, 20232024 and December 31, 2022,2023, respectively.

Interest payments made during the three months ended March 31, 2024 and 2023 and 2022 were $114$94 million and $56$114 million, respectively.

The Company had recorded liabilities in Other Liabilities in the accompanying condensed consolidated balance sheet of $104 million and $105$103 million related to asset retirement obligations at both March 31, 20232024 and December 31, 2022, respectively.2023.

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 3029 years. Total lease costs were $75$79 million and $60$75 million for the three months ended March 31, 20232024 and 2022,2023, respectively.

TheOn September 18, 2023, pursuant to a previously announced agreement, the Company has acompleted the sale of its 50% equity interest in Ilim S.A. (Ilim)("Ilim"), which was a joint venture that operated a pulp and paper business in Russia and has subsidiaries including JSC Ilim Group, ("Ilim Group" and together with Ilim, the "Ilim joint venture"), whose primary operations are in Russia. The Company announced in January 2023 that it had entered into an agreement to sell its interest in Ilim to its joint venture partners for $484 million. The completion of the sale is subject to various closing conditions, including the receipt of regulatory approvalsmillion in Russia.

All current and historical results of the Ilim joint venture investment are presented as Discontinued Operations, net of taxes in the condensed consolidated statement of operations. The Company recorded equity earnings, net of taxes, of $43 million and $93 million for the three months ended March 31, 2023 and 2022, respectively. The Company received cash dividends from the Ilim joint venture of $0 million and $204 million during the first three months of 2023 and 2022, respectively. At March 31, 2023 and December 31, 2022, the Company's investment in the Ilim joint venture, which is recorded in Assets held for sale in the condensed consolidated balance sheets, was $90 million and $133 million, respectively, which was $442 million and $403 million, respectively, lower than the Company's proportionate share of the Ilim joint venture's underlying net assets.

International Paper made income tax payments, net of refunds, of $169$5 million and $20$169 million for the three months ended March 31, 20232024 and 2022,2023, respectively.

The Company currently estimates, that as a result of ongoing discussions, pending tax settlements and expirations of statutes of limitations, the amount of unrecognized tax benefits could be reduced by approximately $30$7 million during the next 12 months.

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.

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, 20222021 was $48 million and remains this amount at March 31, 2023.2024. This liability will not be increased in subsequent periods unless facts and circumstances change such that an amount greater than the initial recognized liability becomes probable and estimable.

The Company has been named as a potentially responsible party (PRP)("PRP") in environmental remediation actions under various federal and state laws, including the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)("CERCLA"). Many of these proceedings involve the cleanup of hazardous substances at large commercial landfills that received waste from many different sources. While joint and several liability is authorized under CERCLA and equivalent state laws, as a practical matter, liability for CERCLA cleanups is typically allocated among the many PRPs. There are other remediation costs typically associated with the cleanup of hazardous substances at the Company’s current, closed and formerly-owned facilities, and recorded as liabilities in the balance sheet.

Remediation costs are recorded in the consolidated financial statements when they become probable and reasonably estimable. International Paper has estimated the probable liability associated with these environmental remediation matters, including those described herein, to be approximately $240$249 million ($248and $251 million undiscounted) in the aggregate as of March 31, 2023.2024 and December 31, 2023, respectively. Other than as described below, completion of required environmental remedial actions ("RAs") is not expected to have a material effect on our consolidated financial statements.

with an estimated cost of $46 million. In April 2020, the EPA issued a final plan concerning clean-up standards at a portion of the site, the estimated cost of which is included within the soil remedy referenced above. The total reserve for the Cass Lake superfund site was $45 million and $46 million as of March 31, 2024 and December 31, 2023, respectively.

The total reserve for the Kalamazoo River superfund site was $37$22 million and $27 million as of March 31, 20232024 and December 31, 2022.2023, respectively.

In addition, in December 2019,2020, the Federal District Court approved a Consent Decree among 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 whichtrustees. Under the Consent Decree NCR wouldagreed to make payments of more than $100 million and perform work in Operable Unit 5, Areas 2, 3, and 4 at an estimated cost of $136 million. 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. We have recorded a liability for future remediation costs at the site that are probable and presently reasonably estimable, and it remains reasonably possible that additional losses in excess of this recorded liability could be material.

regarding liability for future costs is in oppositionerror and is appealing the Final Judgment on Remand on future costs liability to this writ.the Sixth Circuit.

In October 2017, the EPA issued a ROD selecting the final remedy for the site: removal and relocation of the waste material from both the northern and southern impoundments. The EPA did not specify the methods or practices needed to perform this work. The EPA’s selected remedy was accompanied by a cost estimate of approximately $115 million ($105 million for the northern impoundment, and $10 million for the southern impoundment). Subsequent to the issuance of the ROD, there have been numerous meetings between the EPA and the PRPs, and the Company continues to work with the EPA and MIMC/WMI to develop the remedial design.RD.

To this end, in April 2018, the PRPs entered into an Administrative Order on Consent (AOC)("AOC") with the EPA, agreeing to work together to develop the remedial designRD for the northern impoundment. That remedial designRD work is ongoing. The AOC does

We submitted the Final Design Package for the southern impoundment to the EPA, and the EPA approved this plan in May 7, 2021. The EPA issued a Unilateral Administrative Order for Remedial ActionRA of the southern impoundment onin August 5, 2021. An addendum to the Final 100% Remedial DesignRD (Amended April 2021) was submitted to the EPA for the southern impoundment onin 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.RA.

With respect to the northern impoundment, the respondentsPRPs submitted the final component of the 90% remedial design to the EPA onin November 8, 2022. Upon submittal of the final component, an updated engineering estimate was developed, and the Company increased the reserved amount by approximately $21 million, which represents the Company's 50% share of our estimate of the low end of the range of probable remediation costs. On January 5, 2024, the PRPs received comments from the EPA on the November 2022 90% RD submittal. The PRPs responded to the EPA comments in late January 2024. While several key technical issues have been resolved, respondents still face significant challenges remediating this area in a cost-efficient manner and withoutthat will not result in a release of contaminated materials to the environment during the excavation, removal and therefore ourtransport of the materials. Our discussions with the EPA on the best approach to remediation will continue. Because of ongoing questions regarding cost effectiveness, timing and gathering other technical data, additional losses in excess of our recorded liability are possible.possible; however, we are unable to estimate any loss or range of loss in excess of such liability. The total reserve for the southern and northern impoundment was $95$78 million and $83 million as of March 31, 2024 and December 31, 2023, respectively.

We have been named as a defendant in various asbestos-related personal injury litigation, in both state and federal court, primarily in relation to the prior operations of certain companies previously acquired by the Company. The Company's total recorded liability with respect to pending and future asbestos-related claims was $107$110 million and $97 million as of March 31,

2024 and December 31, 2023, respectively, both net of estimated insurance recoveries and $105 million, net of estimated insurance recoveries as of March 31, 2023 and December 31, 2022, respectively.recoveries. While it is reasonably possible that the Company may incur losses in excess of its recorded liability with respect to asbestos-related matters, we are unable to estimate any loss or range of loss in excess of such liability, and do not believe additional material losses are probable.

In March 2017, the Italian Competition Authority (ICA)("ICA") commenced an investigation into the Italian packaging industry to determine whether producers of corrugated sheets and boxes violated the applicable European competition law. In April 2019, the ICA concluded its investigation and issued initial findings alleging that over 30 producers, including our Italian packaging subsidiary (IP Italy)("IP Italy"), improperly coordinated the production and sale of corrugated sheets and boxes. In August 2019, the ICA issued its decision and assessed IP Italy a fine of €29 million (approximately $31 million at the then-current exchange rates) which was recorded in the third quarter of 2019. We appealed the ICA decision and our appeal was denied in May 2021. We further appealed the decision to the Italian Council of State ("Council of State"), and in March 2023 the Council of State largely upheld the ICA’s findings, but referred the calculation of IP Italy’s fine back to the ICA, finding that it was disproportionately high based on the conduct found. We are evaluating whether to further appealappealed the Italian Council of State decision to uphold the ICA’s findings.findings, and in March 2024, the Council published its decision holding that its earlier decision should be interpreted as accepting many of IP Italy’s earlier arguments and that the ICA should reduce IP Italy’s fine accordingly. Notwithstanding these decisions by the Council of State, in March 2024 the ICA served IP Italy with its redetermination decision leaving IP Italy’s fine unchanged. IP Italy does not believe the ICA's redetermination decision is consistent with the Council of State's March 2024 decision or its March 2023 referral back to the ICA, and intends to further appeal the amount of its fine. The Company and other producers also have been named in lawsuits, and we have received other claims, by a number of customers in Italy for damages associated with the alleged anticompetitive conduct. We do not believe material losses arising from such private lawsuits and claims are probable.

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. Assessments of lawsuits and claims can involve a series of complex judgments about future events, can rely heavily on estimates and assumptions, and are otherwise subject to significant uncertainties. As a result, there can be no certainty that the Company will not ultimately incur charges in excess of presently recorded liabilities. The Company believes that loss contingencies arising from pending matters including the matters described herein, will not have a material effect on the consolidated financial 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.

As of March 31, 2023,2024, the fair value of the Timber Notes and Extension Loans for the 2007 Financing Entities was $2.3$2.4 billion and $2.1 billion, respectively. The Timber Notes and Extension Loans are classified as Level 2 within the fair value hierarchy, which is further defined in Note 1 in the Company’s Annual Report.

The Timber Notes of $2.3 billion and the Extension Loans of $2.1 billion both mature in 2027 and are shown in Long-term nonrecourse financial assets of variable interest entities and Long-term nonrecourse financial liabilities of variable interest entities, respectively, on the accompanying condensed consolidated balance sheet.

On September 2, 2022, the Company and the Internal Revenue Service agreed to settle the previously disclosed timber monetization restructuring tax matter involving wholly-owned, special purposethe variable interest entities (the "2015that were restructured in 2015 ("the 2015 Financing Entities"). in connection with an extension of installment notes and third-party loans. Under this agreement, the Company willwas required to fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest will also bewas charged upon closing of the audit. The amount of interest expense recognized in 2022 was $58 million. As of March 31, 2023,Company has paid $252 million in U.S. federal income taxes and $58 million in interest expense have been paid as a result of the settlement agreement. The Company paid $163 million in U.S. federal income taxes and $30 million in interest during the first quarter of 2023 and has now fully satisfied the payment terms of the settlement agreement regarding the 2015 Financing Entities timber monetization restructuring tax matter. The reversal ofmatter during 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 thirdsecond quarter of 2022.2023.

The borrowing capacity of the Company's commercial paper program is $1.0 billion supported by its $1.5$1.4 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 March 31, 2023,2024, the Company had no borrowings outstanding under the program.

At March 31, 2023,2024, International Paper’s credit facilities totaled $2$1.9 billion. The Agreementscredit facilities generally provide for interest rates at a floating rate index plus a pre-determined margin dependent upon International Paper’s credit rating. The Agreements includecredit facilities previously included a $1.5 billion contractually committed bank facility with a maturity date of June 2026. In June 2023, the Company amended and restated its credit agreement to, among other things, (i) reduce the size of the contractually committed bank facility from $1.5 billion to $1.4 billion, (ii) extend the maturity date from June 2026 to June 2028, and (iii) replace the LIBOR-based rate with a SOFR-based rate. The liquidity facilities also included up to $500 million of uncommitted financings based on eligible receivables balances under a receivables securitization program that expires in April 2024.June 2025. At March 31, 2023, there were2024, the Company had no borrowings outstanding under either the bank facility or receivables securitization program.

During the first quarter of 2023,2024, the Company entered into a variable term loan agreement providing for a $600had debt reductions of $3 million term loan which was fully drawn onrelated to decreases in the dateamount of such loan agreement and matures in 2028. The $600 million debt was issued following the repayment of $410 million of commercial paper earlier in 2023 and will be used to repay debt maturing later in 2023 and general corporate purposes. Additionally during the first quarter of 2023, the Company issued an approximately $72 million EDB with an interest rate of 4.00% and a maturity date of April 1, 2026. The proceeds from this issuance were used to repay an approximately $72 million outstanding EDB that matured on April 1, 2023.capital leases.