INTERNATIONAL PAPER CO /NEW/

Current report

RISKS RELATED TO THE SEPARATION

Current report

The proposed separation of our EMEA packaging business may not be completed, on the terms or the timeline announced, if at all, and we may fail to realize some or all of the potential benefits of the proposed separation.

Current report

On January 29, 2026, we announced our intention to create two independent, publicly traded companies: International Paper will be comprised of its current business in North America including both legacy IP and DS Smith assets, and the EMEA packaging business will be comprised of both legacy DS Smith and IP assets in EMEA. The separation may be structured as a taxable spin-off of the combined EMEA Packaging business to shareholders, subject to the satisfaction of certain customary conditions, including final approval by the IP Board of Directors as well as the filing and effectiveness of a registration statement with the U.S. Securities and Exchange Commission and the publication of a prospectus approved by the U.K. Financial Conduct Authority.

Current report

Executing the proposed separation will require significant amounts of time and effort, which could divert management attention, disrupt the activities of our employees and have negative implications for our relationships with our customers and other third parties. We have incurred and expect to continue to incur additional costs and expenses in connection with the separation.

Current report

The proposed separation is complex, and completion of the proposed separation and the timing of its completion will be subject to a number of factors and conditions, including the readiness of the new company to operate as an independent public company, the successful integration of both legacy DS Smith and International Paper businesses in EMEA into one packaging business and finalization of the capital structure of the new company. The complexity and magnitude of the restructuring and regional integration efforts associated with the separation are significant and will continue to result in substantial costs. The restructuring and regional integration processes could cause an interruption of, or loss of momentum in, the other activities of the Company, and our failure to meet the challenges involved in successfully restructuring and regionally integrating legacy DS Smith and International Paper businesses in North America and EMEA, respectively, could adversely affect our ability to separate businesses and our business financial condition, results of operations, and cash flows. Further, unanticipated developments could delay, prevent or otherwise adversely affect the proposed separation, including disruptions in general or financial market conditions, material adverse changes in business or industry conditions, unanticipated costs and potential problems or delays in obtaining various regulatory and tax approvals or clearances. In addition, the Board of Directors may, consistent with its fiduciary duties and after evaluating strategic alternatives and opportunities to maximize shareholder value, determine to pursue a strategic alternative.

Current report

There can be no assurances regarding the ultimate timing or structure of the proposed separation or that we will be able to complete the proposed separation on the terms or on the timeline that was announced, if at all. In the event that a separation is not completed, we will have incurred and may continue to incur, certain significant non-recurring costs related to a separation without realizing the anticipated benefits.

Current report

If a separation is completed, we may not be able to achieve the full strategic and financial benefits that are expected to result from the separation. An inability to realize some or all of the anticipated benefits of a separation, as well as any delays encountered in the process, could have an adverse effect on our business, financial condition, results of operations and cash flows. There can be no assurance that the combined value of the common stock and ordinary shares of the two companies will be equal or exceed the value that our common stock might have been had the proposed separation not occurred.

Current report

RISKS RELATED TO LEGAL PROCEEDINGS AND COMPLIANCE COSTS

Current report

Management has identified a material weakness in its internal controls over financial reporting related to previously identified acquisition related legacy DS Smith material weaknesses.

Current report

As more fully disclosed in Item 4, “Controls and Procedures,” under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures and internal control over financial reporting. Based on that evaluation, management has concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report, due to a material weakness identified in legacy DS Smith’s internal control over financial reporting.

Current report

Prior to the acquisition of DS Smith on January 31, 2025, material weaknesses were identified within the legacy DS Smith internal control environment of the historic financial periods (the “Legacy DS Smith Material Weaknesses”). Among other matters, DS Smith’s Information Technology General Controls ("ITGCs") were not consistently operating effectively. As DS Smith was not previously subject to the internal control requirements of Section 404 of the Sarbanes-Oxley Act, management began integrating DS Smith into the Company's internal control framework, including assessing and remediating the legacy DS Smith ITGC control deficiencies.

Current report

Based on management's assessment as of September 30, 2026, including the design and effectiveness testing, management concluded that the legacy DS Smith ITGC control deficiencies constitute a material weakness in the Company's internal control over financial reporting.

Current report

The Company is undertaking the separation of its EMEA packaging business. As a result, the Company anticipates that the material weakness will be remediated following the separation.