INTERNATIONAL PAPER CO NEW

Current report

Changes in international conditions or other risks arising from conducting business internationally could adversely affect our business and operations.

Current report

As a global producer of renewable fiber-based packaging and pulp products, we operate in many different countries. As a result, we are vulnerable to risks related to our international operations. These risks, which can vary substantially by country, include economic or political instability, geopolitical events, corruption, anti-American sentiment, expropriation measures, social and ethnic unrest, natural disasters, military conflicts and terrorism, the regulatory environment (including the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation and enforceability of legal requirements and the enforceability of contractual rights and intellectual property rights), adverse currency fluctuations, foreign exchange control regimes (including restrictions on currency conversion), downturns or changes in economic conditions (including in relation to commodity inflation and tariffs), adverse tax consequences or rulings, import restrictions, controls or other trade protection measures, economic sanctions, health guidelines and safety protocols, nationalization, changes in social, political or labor conditions, and adverse developments regarding sustainability, environmental regulations and trade policies and agreements, any of which risks could negatively affect our financial results. For example, a portion of our sales could be adversely affected by changes in economic conditions and demographics, including as a result of tariffs. Trade protection measures in favor of local producers of competing products, including governmental subsidies, tariffs, tax benefits and other measures may give local producers a competitive advantage and adversely impact our operating results and our business prospects in these countries. Likewise, disruption in existing trade agreements or increased trade friction between countries (such as in relation to the trade tensions between the U.S. and China) could have a negative effect on our business and results of operations by restricting the free flow of goods and services across borders. Additionally, the U.S. government recently increased certain rates and broadened the scope of certain tariffs imposed on goods imported into the U.S., such as from China, which may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States. Specifically, the U.S. government implemented tariffs on certain foreign goods and may implement additional tariffs on foreign goods. If lasting, such tariffs and any further legislation or actions taken by the U.S. federal government that restrict trade, such as additional tariffs, trade barriers, and other protectionist or retaliatory measures taken by governments in Europe, Asia, and other countries, could adversely impact our ability to sell products and services in our international markets. Tariffs could increase the cost of our product…

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Current report

We may continue to be adversely affected by ongoing geopolitical instability and the economic consequences and disruptions arising therefrom, including as the result of the military conflict between Russia and Ukraine, the conflict in the Middle East, and increasing tensions between China and Taiwan. These risks may be further heightened in the event of the expansion in the scope or escalation of any such conflicts. In addition, changes to economic sanctions programs, could put us at risk of violating sanctions as a result of an existing presence in a newly sanctioned jurisdiction or relationship with a newly sanctioned entity if we fail or are unable to end such presence or relationship in a timely manner.

Current report

In addition, we are subject to laws related to operations in foreign jurisdictions, including laws prohibiting bribery of government officials and other corrupt practices. Anti-bribery laws such as the U.K. Bribery Act 2010, the Foreign Corrupt Practices Act of 1977, and similar worldwide anti-corruption laws generally prohibit companies and their intermediaries from making improper payments to public officials for the purpose of obtaining or retaining business. Further, the U.S. Department of the Treasury’s Office of Foreign Assets Control and other non-U.S. government entities maintain economic sanctions targeting various countries, persons and entities. We are also subject to the laws and regulations of governmental and regulatory agencies. Failure to comply with domestic or foreign laws could result in various adverse consequences for us including the imposition of civil or criminal sanctions, reputational damage and the prosecution of executives overseeing international operations.

Current report

We are exposed to the translation of the results of overseas subsidiaries into their respective reporting currencies, as well as the impact of currency fluctuations on their commercial transactions denominated in foreign currencies. Adverse movements in foreign exchange rates relating to foreign currency denominated commodities, assets and liabilities, and transactions could have a material impact on our business, financial condition, results of operations and/or future prospects.

Previous report

Risks Relating to Review of Strategic Options for our Global Cellulose Fibers Business

Previous report

There are risks associated with our review of strategic options for our global cellulose fibers business, and there is no assurance that this review will result in any transaction or other outcome.

Previous report

On October 31, 2024, we announced that we were reviewing strategic options for our global cellulose fibers business. There can be no assurance that this review will result in any kind of transaction or other outcome, or, if any transaction or other outcome occurs, the timing or terms thereof. Moreover, our ability to effect any transaction or other outcome may be dependent on a number of factors that may be beyond our control, such as market conditions and industry trends. In addition, even if this review ultimately results in a transaction or other outcome, there can be no assurance that such transaction or other outcome will have a positive effect on shareholder value.

Previous report

Further, there can be no assurance that this review of strategic options will not cause the diversion of management’s attention, interfere with our ability to retain or attract key personnel, disrupt our business, adversely impact important business relationships, adversely impact our financial results, or expose us to litigation. In addition, we may incur significant costs and expenses in connection with this process. It is also possible that speculation regarding any developments related to this review and perceived uncertainties associated therewith could cause the market price of our common stock to fluctuate significantly or to decline.

Previous report

Risks Relating to 80/20 Strategic Approach and Restructuring Initiatives

Previous report

We may be unable to realize the expected benefits and cost savings associated with our 80/20 strategic approach and restructuring initiatives.

Previous report

In 2024, the Company began implementing an 80/20 strategic approach to drive transformational performance. Through the 80/20 strategic approach, we intend to deliver profitable market share growth by striving to be the lowest-cost producer, and the most reliable and innovative sustainable packaging solutions provider to our customers across North America and EMEA. As part of the Company's 80/20 strategic approach, the Company intends to guide investments and align resources to win with customers, while reducing complexity and cost across the Company. To that end, we currently have restructuring initiatives taking place. For example, on October 15, 2024, we announced a corporate overhead restructuring plan aimed at reducing operating costs, optimizing our organizational structure, and better aligning our workforce with the needs of our business and customers. Further, on October 31, 2024, we announced plans to permanently close our pulp and paper mill in Georgetown, South Carolina. We incurred certain charges during the three months ended September 30, 2024, associated with this corporate overhead restructuring plan, and expect additional charges associated with these restructuring plans during the three months ended December 31, 2024. We are also implementing certain commercial initiatives as a part of the Company’s 80/20 strategic approach and its box go-to-market strategy. Among other things, these commercial initiatives include strategically focusing our business, pricing to better reflect the services and value we provide, and aligning resources with our best and most strategic customers. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

Previous report

We may be unable to realize the expected benefits from these and any other restructuring or commercial initiatives which we may undertake. In particular, restructuring activities may divert the attention of management, disrupt our operations and fail to achieve the intended cost savings and operational benefits. Moreover, our estimates of these restructuring charges are subject to judgment and assumptions, which may change as additional information becomes available or facts or circumstances change related to these restructuring initiatives. As such, actual results may differ materially from these estimates. Although our commercial initiatives are expected to improve future operating margins and growth, they also have had, and are expected to have, a negative impact on the Company’s sales and revenue growth in the short term. If the Company is unable to realize the expected benefits from its commercial initiatives, the Company’s financial results could be adversely impacted, and the Company may not meet its medium-term or long-term financial performance targets.