INTERNATIONAL PAPER CO /NEW/

The following summarizes our results from operations for the year ended December 31, 2025 compared with the

year ended December 31, 2024:

(a) Refer to special items discussion on page 41.

TWELVE MONTHS ENDED DECEMBER 31, 2025 COMPARED TO THETWELVE MONTHS ENDED DECEMBER 31, 2024

The following is a discussion of International Paper’s consolidated results of operations for the year ended

December 31, 2025, and the major factors affecting these results compared to 2024.

Refer to the Effects of Net Special Items Expense (Income) section for details of net special items expense (income)

discussed below.

Net sales

Compared to the year ended December 31, 2024, net sales for the year ended December 31, 2025 increased by

$7.8 billion. DS Smith accounted for $7.8 billion of net sales in 2025. For IP legacy, the increase of $46 million was

driven by higher sales prices partially offset by lower sales volumes. Additional details on net sales are provided in

the Business Segment Results section below.

Cost of products sold

Compared to the year ended December 31, 2024, cost of products sold for the year ended December 31, 2025

increased by$5.2 billion. DS Smith accounted for $5.8 billion of total cost of products sold in 2025 and net special

items charges of $31 million were included in 2025 compared to $77 million in 2024. For IP legacy, cost of products

sold was impacted by lower raw materials and operating materials of $542 million, partially offset by increases in

fuel and utility expenses of $111 million.

Selling and administrative expenses

Compared to the year ended December 31, 2024, selling and administrative expenses for the year ended

December 31, 2025 increased by$347 million. DS Smith accounted for $442 million of total selling and

administrative expenses in 2025 and net special items charges of $158 million were included in 2025 compared to

$123 million in 2024. For IP legacy, selling and administrative expenses were impacted by decreases in incentive

compensation of $148 million and increases in other costs of $21 million.

Depreciation and amortization

Compared to the year ended December 31, 2024, depreciation and amortization for the year ended December 31,

2025 increased by$1.9 billion. DS Smith accounted for $1.3 billion of depreciation and amortization in 2025,

including $403 million of accelerated depreciation associated with mill and other strategic actions. For IP legacy, the

increase compared to 2024 was due to an increase of $553 million in accelerated depreciation related to mill and

other strategic actions in 2025.

Distribution expenses

Compared to the year ended December 31, 2024, distribution expenses for the year ended December 31, 2025

increased by$820 million. DS Smith accounted for $858 million of distribution expenses in 2025. For IP legacy,

distribution expenses were impacted by lower freight costs and lower sales volumes compared to 2024.

Taxes other than payroll and income taxes

Compared to the year ended December 31, 2024, taxes other than payroll and income taxes for the year ended

December 31, 2025 increased by$91 million. DS Smith accounted for $33 million of taxes other than payroll and

income taxes in 2025. Net special items charges of $50 million were included in taxes other than payroll and income

taxes in 2025. For IP legacy, taxes other than payroll and income taxes were impacted by higher real estate taxes

compared to 2024.

Interest expense, net

Compared to the year ended December 31, 2024, interest expense, net for the year ended December 31, 2025

increased by$158 million. DS Smith accounted for $160 million of interest expense, net in 2025 and net special

items income of $10 million was included in interest expense, net in 2024. For IP legacy, interest expense, net was

impacted by higher interest income.

Income tax provision (benefit)

A net income tax benefit from continuing operations of$533 million was recorded for 2025 and the reported effective

income tax rate was 16%. This includes a tax benefit of $271 million related to the EMEA goodwill impairment and a

tax benefit of $62 million related to capital losses associated with the announced agreement to sell our GCF

business, which closed in January 2026. Excluding these items, a $157 million net tax benefit for other special items

and $3 million tax expense related to non-operating pension income, the operational tax provision (benefit) (non-

GAAP) for 2025 was $46 million, or 32% of pre-tax earnings before equity earnings.

A net income tax benefit from continuing operations of$361 million was recorded for 2024 and the reported effective

income tax rate was (98)%. This includes a tax benefit of $416 million related to internal legal entity restructuring.

Excluding these items, a $41 million net tax benefit for other special items and $10 million tax expense related to

non-operating pension income, the operational tax provision (non-GAAP) for 2024 was $86 million, or 15% of pre-

tax earnings before equity earnings.

Compared to the year ended December 31, 2024, the operational effective tax rate increased by 17% in 2025. DS

Smith accounted for a significant increase in the foreign taxes driving up the operational effective tax rate in the

year.

Refer to "Non-GAAP Financial Measures" for a reconciliation of the net income tax provision (benefit) (GAAP) to the

operational income tax provision (benefit) (non-GAAP) and the reported effective income tax rate (GAAP) to the

operational effective income tax rate (non-GAAP).

Discontinued operations, net of taxes

On August 21, 2025, the Company announced that it had reached a definitive agreement with American Industrial

Partners ("AIP") to sell its GCF business. All current and historical operating results of the GCF business are

presented as Discontinued Operations, net of taxes, in the consolidated statements of operations. All current and

historical assets and liabilities of the GCF business are classified as Assets held for sale and Long-Term Assets

Held For Sale and Liabilities held for sale and Long-Term Liabilities Held For Sale in the accompanying consolidated

balance sheets. See Note 8 - Divestiture of Item 8. Financial Statements and Supplementary Data for further

details.

Discontinued operations, net of taxes for 2025 and 2024 includes the operating earnings of the GCF business.

Discontinued operations, net of taxes also includes the following charges (benefits):