International Paper (IP) 10-K risk factor changes: FY2015 vs FY2014

| ý | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, [removed: 2014] [added: 2015] |

The aggregate market value of the Company’s outstanding common stock held by non-affiliates of the registrant, computed by reference to the closing price as reported on the New York Stock Exchange, as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, [removed: 2014)] [added: 2015)] was approximately [removed: $21,745,527,580.][added: $21,026,985,885.]

The number of shares outstanding of the Company’s common stock as of February [removed: 20, 2015] [added: 19, 2016] was [removed: 422,845,435.][added: 411,157,696.]

Portions of the registrant’s proxy statement filed within 120 days of the close of the registrant’s fiscal year in connection with registrant’s [removed: 2015] [added: 2016] annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2014][added: 2015]

| ITEM 1. | [removed: [BUSINESS.](#sE782195FC14D9C4B276F182ECA22FBFC)] [added: [BUSINESS.](#sBB0E0420FB443D655AEAA3F31E4CC0E4)] | [removed: [1](#sE782195FC14D9C4B276F182ECA22FBFC)] [added: [1](#sBB0E0420FB443D655AEAA3F31E4CC0E4)] |

| | [Financial Information Concerning Industry [removed: Segments](#s1EBC1CA6B0BD7391783E182ECA7FB425)] [added: Segments](#sDF1A704D1E556CF01071A3F31EAA7FF1)] | [removed: [1](#s1EBC1CA6B0BD7391783E182ECA7FB425)] [added: [1](#sDF1A704D1E556CF01071A3F31EAA7FF1)] |

| | [Financial Information About International and U.S. [removed: Operations](#sC83716A409A58DD6EF60182ECAAEF387)] [added: Operations](#s944742D7BF53F901D879A3F31EB9E6C1)] | [removed: [1](#sC83716A409A58DD6EF60182ECAAEF387)] [added: [1](#s944742D7BF53F901D879A3F31EB9E6C1)] |

| | [Competition and [removed: Costs](#s8BB5199E278E4B8CF946182ECACD820F)] [added: Costs](#sC4B10AF823FB0A5BE7E8A3F31EF8506C)] | [removed: [1](#s8BB5199E278E4B8CF946182ECACD820F)] [added: [1](#sC4B10AF823FB0A5BE7E8A3F31EF8506C)] |

| | [Marketing and [removed: Distribution](#s1E8E52F0901D39EA7C8B182ECAFC5899)] [added: Distribution](#s20E43103EC0D3D2E42A2A3F31F17B5E4)] | [removed: [2](#s1E8E52F0901D39EA7C8B182ECAFC5899)] [added: [2](#s20E43103EC0D3D2E42A2A3F31F17B5E4)] |

| | [Description of Principal [removed: Products](#sA34F5C76B05828796ABF182ECB1B4454)] [added: Products](#s2CC43489F83200018702A3F31F465267)] | [removed: [2](#sA34F5C76B05828796ABF182ECB1B4454)] [added: [2](#s2CC43489F83200018702A3F31F465267)] |

| | [Sales Volumes by [removed: Product](#s21FDE4C29C4ABD4AB98D182EBE9D0AA9)] [added: Product](#sA5891823DB439E82B729A3F31400E9E7)] | [removed: [3](#s21FDE4C29C4ABD4AB98D182EBE9D0AA9)] [added: [2](#sA5891823DB439E82B729A3F31400E9E7)] |

| | [Research and [removed: Development](#s31952577EE07480E9EEE182ECB698291)] [added: Development](#sC20BD79CD679A8B99FD1A3F31F9422A0)] | [removed: [4](#s31952577EE07480E9EEE182ECB698291)] [added: [3](#sC20BD79CD679A8B99FD1A3F31F9422A0)] |

| | [Environmental [removed: Protection](#s13A37FB31D1CAF0F3ECA182ECBB7905A)] [added: Protection](#s6C76EB8948A28F6944C3A3F31FB39D9C)] | [removed: [4](#s13A37FB31D1CAF0F3ECA182ECBB7905A)] [added: [3](#s6C76EB8948A28F6944C3A3F31FB39D9C)] |

| | [Climate [removed: Change](#sEC235459C8842343F6C3182ECBC73656)] [added: Change](#s57EF6311990CEEF2EB5CA3F31FF1FCB7)] | [removed: [4](#sEC235459C8842343F6C3182ECBC73656)] [added: [3](#s57EF6311990CEEF2EB5CA3F31FF1FCB7)] |

| | [Executive Officers of the [removed: Registrant](#s3A600305FC805EBB3D09182ECC158153)] [added: Registrant](#s6EC505ADE3A72F5501FDA3F3203FC822)] | [removed: [6](#s3A600305FC805EBB3D09182ECC158153)] [added: [5](#s6EC505ADE3A72F5501FDA3F3203FC822)] |

| | [Raw [removed: Materials](#s6F4E6E937EC797BDFEA3182ECC5340A9)] [added: Materials](#s09E3C5CAA74BA6C021EAA3F3205FE1FF)] | [removed: [7](#s6F4E6E937EC797BDFEA3182ECC5340A9)] [added: [6](#s09E3C5CAA74BA6C021EAA3F3205FE1FF)] |

| | [Forward-looking [removed: Statements](#s1345260FD3BAAA4466BE182ECC72AA54)] [added: Statements](#s6ABFF66008B00C860F34A3F3209DF3E4)] | [removed: [7](#s1345260FD3BAAA4466BE182ECC72AA54)] [added: [6](#s6ABFF66008B00C860F34A3F3209DF3E4)] |

| ITEM 1A. | [RISK [removed: FACTORS.](#sF2761F957A346D770405182ECCA183EC)] [added: FACTORS.](#sD33363F7E517BEE6E0E3A3F320ADEAF1)] | [removed: [8](#sF2761F957A346D770405182ECCA183EC)] [added: [7](#sD33363F7E517BEE6E0E3A3F320ADEAF1)] |

| ITEM 1B. | [UNRESOLVED STAFF [removed: COMMENTS.](#s5F1659BEC421F370DA3A182ECCC0E3BD)] [added: COMMENTS.](#sC1A23F28E7E20B10D5E7A3F320EB2963)] | [removed: [12](#s5F1659BEC421F370DA3A182ECCC0E3BD)] [added: [11](#sC1A23F28E7E20B10D5E7A3F320EB2963)] |

| ITEM 2. | [removed: [PROPERTIES.](#sC7B09C65DCC21AC90527182ECCEF6785)] [added: [PROPERTIES.](#s9B7B766D8947CE2E14DCA3F3210AC893)] | [removed: [12](#sC7B09C65DCC21AC90527182ECCEF6785)] [added: [11](#s9B7B766D8947CE2E14DCA3F3210AC893)] |

| | [Mills and [removed: Plants](#sB02CDD2C3423C479A04C182ECD4DA3A8)] [added: Plants](#s4E50654F31088969EAFAA3F32158C666)] | [removed: [12](#sB02CDD2C3423C479A04C182ECD4DA3A8)] [added: [11](#s4E50654F31088969EAFAA3F32158C666)] |

| | [Capital Investments and [removed: Dispositions](#s4E5A431AF678827FB377182ECD6C24A2)] [added: Dispositions](#s0782BBAC7490F8636643A3F321972183)] | [removed: [12](#s4E5A431AF678827FB377182ECD6C24A2)] [added: [11](#s0782BBAC7490F8636643A3F321972183)] |

| ITEM 3. | [LEGAL [removed: PROCEEDINGS.](#s022525817A4C2F939363182ECD9B9011)] [added: PROCEEDINGS.](#s97239DF07E36ACF2300EA3F321A6704C)] | [removed: [12](#s022525817A4C2F939363182ECD9B9011)] [added: [11](#s97239DF07E36ACF2300EA3F321A6704C)] |

| ITEM 4. | [MINE SAFETY [removed: DISCLOSURES.](#s43773FF782ED03D84D3F182ECDBAEA02)] [added: DISCLOSURES.](#s367DBD425EC04B1484D4A3F321E5A7B4)] | [removed: [12](#s43773FF782ED03D84D3F182ECDBAEA02)] [added: [11](#s367DBD425EC04B1484D4A3F321E5A7B4)] |

| PART II. | | [removed: [13](#s3A203A9A689B3E648E38182ECDE9948A)] [added: [12](#s8409F7E6444FFE5CDBE3A3F32204FFCA)] |

| ITEM 5. | [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES.](#s857F4A48DC27C0994993182ECE086A8B)] [added: SECURITIES.](#s190A22C24C0419620E54A3F322338723)] | [removed: [13](#s857F4A48DC27C0994993182ECE086A8B)] [added: [12](#s190A22C24C0419620E54A3F322338723)] |

| ITEM 6. | [SELECTED FINANCIAL [removed: DATA.](#s49B2CA639CF6CD76B7F5182ECE460194)] [added: DATA.](#sD0987DB64CDFA1D73F1EA3F322527447)] | [removed: [15](#s49B2CA639CF6CD76B7F5182ECE460194)] [added: [14](#sD0987DB64CDFA1D73F1EA3F322527447)] |

| ITEM 7. | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS.](#sD9EF4FAC90890F4DF93F182ECE949EB1)] [added: OPERATIONS.](#sC232888A425899C65909A3F322AF7AAA)] | [removed: [19](#sD9EF4FAC90890F4DF93F182ECE949EB1)] [added: [17](#sC232888A425899C65909A3F322AF7AAA)] |

| | [Executive [removed: Summary](#sDD02C336EAA4B6D86D8E182EBE01754E)] [added: Summary](#s146F8F314A66A90C9D00A3F312C82456)] | [removed: [19](#sDD02C336EAA4B6D86D8E182EBE01754E)] [added: [17](#s146F8F314A66A90C9D00A3F312C82456)] |

| | [Corporate [removed: Overview](#s0A2249B21658A98AB9BC182ECEC3CCC0)] [added: Overview](#sCB5750E48CD0CAC46C89A3F322DE9BAB)] | [removed: [23](#s0A2249B21658A98AB9BC182ECEC3CCC0)] [added: [20](#sCB5750E48CD0CAC46C89A3F322DE9BAB)] |

| | [Results of [removed: Operations](#s58F71BD8710F8AEACDAA182ECEE212B1)] [added: Operations](#s5A71B88CA7A01A5646B5A3F322FD81C1)] | [removed: [23](#s58F71BD8710F8AEACDAA182ECEE212B1)] [added: [21](#s5A71B88CA7A01A5646B5A3F322FD81C1)] |

| | [Description of Industry [removed: Segments](#sA03432E7B50898E34938182ECF02C31F)] [added: Segments](#s5A13FCCF6BCB039300BBA3F3232CCEEB)] | [removed: [26](#sA03432E7B50898E34938182ECF02C31F)] [added: [24](#s5A13FCCF6BCB039300BBA3F3232CCEEB)] |

| | [Industry Segment [removed: Results](#sF44E7E42771F13E69959182ECF40EB06)] [added: Results](#s1AFF5FB9711429CCAFCFA3F3234B55D9)] | [removed: [27](#sF44E7E42771F13E69959182ECF40EB06)] [added: [25](#s1AFF5FB9711429CCAFCFA3F3234B55D9)] |

| | [Liquidity and Capital [removed: Resources](#sC20C5B28C2ED39E3D927182EBE9D0DF8)] [added: Resources](#s899B95420BF3ED3F8D8BA3F312A873E3)] | [removed: [31](#sC20C5B28C2ED39E3D927182EBE9D0DF8)] [added: [30](#s899B95420BF3ED3F8D8BA3F312A873E3)] |

| | [Critical Accounting Policies and Significant Accounting [removed: Estimates](#sC3EF0F89BEA43DAF5C0D182EBEFB0A4A)] [added: Estimates](#s706B79E144F1AA203124A3F31400F8F4)] | [removed: [36](#sC3EF0F89BEA43DAF5C0D182EBEFB0A4A)] [added: [35](#s706B79E144F1AA203124A3F31400F8F4)] |

| | [Recent Accounting [removed: Developments](#s02AA8DE6CD49EAE05496182ECFFB94B0)] [added: Developments](#sC01FA631C42F20DFFF3EA3F323E728FE)] | [removed: [40](#s02AA8DE6CD49EAE05496182ECFFB94B0)] [added: [38](#sC01FA631C42F20DFFF3EA3F323E728FE)] |

| | [Legal [removed: Proceedings](#s1AA81E7CBEE67BFFCAB7182ECFFB1A42)] [added: Proceedings](#s53FA0CDEEF88E263931FA3F323F7EA01)] | [removed: [40](#s1AA81E7CBEE67BFFCAB7182ECFFB1A42)] [added: [38](#s53FA0CDEEF88E263931FA3F323F7EA01)] |

| | [Effect of [removed: Inflation](#s25491C5804EBE9BF5F3F182ED00BBB67)] [added: Inflation](#sC747D238B9A797496D80A3F32426823A)] | [removed: [40](#s25491C5804EBE9BF5F3F182ED00BBB67)] [added: [38](#sC747D238B9A797496D80A3F32426823A)] |

| | [Foreign Currency [removed: Effects](#s6292060831F53C0720E9182ED03A36CF)] [added: Effects](#s540306DE6C0843B30AF5A3F3244570C8)] | [removed: [40](#s6292060831F53C0720E9182ED03A36CF)] [added: [38](#s540306DE6C0843B30AF5A3F3244570C8)] |

10-K 1 ip10-k123115.htm 10-K

| PART I. | | [1](#s664CFBC09B9C6B2E6B65A3F31E1D1096) |

| | [General](#s93E8D9ED095C4C7386E9A3F31E6BBDE5) | [1](#s93E8D9ED095C4C7386E9A3F31E6BBDE5) |

| | [Employees](#s2E9549B26848C21EBEDAA3F3201129DE) | [5](#s2E9549B26848C21EBEDAA3F3201129DE) |

| | [Forestlands](#s52440A124A1367372CC3A3F32139C0B6) | [11](#s52440A124A1367372CC3A3F32139C0B6) |

FOR THE YEAR ENDED DECEMBER 31, 2015

| | [SIGNATURES](#s8FDF183A76879FB1D9DCA3F331CC7889) | [91](#s8FDF183A76879FB1D9DCA3F331CC7889) |

[PART I.](#s664CFBC09B9C6B2E6B65A3F31E1D1096)

BUSINESS](#sBB0E0420FB443D655AEAA3F31E4CC0E4)

[GENERAL](#s93E8D9ED095C4C7386E9A3F31E6BBDE5)

Management’s Discussion and Analysis of Financial Condition and Results of Operations](#sC232888A425899C65909A3F322AF7AAA).

Management’s Discussion and Analysis of Financial Condition and Results of Operations](#sC232888A425899C65909A3F322AF7AAA).

Financial Statements and Supplementary Data](#s894CA3A1E8D87DB36311A3F324D12CD7).

Management’s Discussion and Analysis of Financial Condition and Results of](#sC232888A425899C65909A3F322AF7AAA)

[Operations](#sC232888A425899C65909A3F322AF7AAA).

Management’s Discussion and Analysis of Financial Condition and Results of Operations](#sC232888A425899C65909A3F322AF7AAA).

We expect

to spend $118 million in 2016 for similar capital projects.

On December 3, 2015, the U.S. Court of Appeals for the D.C. Circuit heard oral arguments of the petitioners challenging these regulations.

of on-going international negotiations including a Conference of the Parties (COP21) to the Kyoto Protocol.

COP21 took place in December 2015 and although well short of reaching another international agreement, many countries, including the U.S. and EU member states, did establish non-binding emissions reduction targets.

The U.S non-binding commitment is for greenhouse gas (GHG) emissions to be 26% to 28% below 2005 GHG emissions levels by 2025.

Other countries in which we do business made similar non-binding commitments.

The Company’s voluntary GHG reductions, which are set out in the Company’s annual Sustainability Report, are roughly in line with the percentages of the U.S. non-binding commitment.

It is not clear at this time what, if any, further reductions by the Company might be required by the countries in which we operate.

Given the uncertainties

To date there have been only minor permitting considerations and no substantive impacts.

On August 3, 2015, EPA promulgated the Clean Power Plan (CPP) rule to address climate change by reducing carbon dioxide (CO2) and other designated green house gas pollutant emissions from utility EGUs.

In response, states are to develop EGU pollutant reduction plans over the next 1 to 3 years to reduce emissions over the 2022 to 2033 timeframe by about 32 percent from 2005 levels.

These plans, or the federal plan that would take effect if the states do not act, pose potential cost increases for electricity purchased by the Company.

The magnitude of the cost increase to the Company will not be possible to estimate reliably until the plans and the utility industries’ responses are better defined over the next few years.

Adding to the uncertainty, states and some industry parties have filed lawsuits challenging the rule, the result of which could materially affect the scope and stringency of the regulations.

On February 9, 2016, the U.S. Supreme Court granted a stay of the Clean Power Plan.

The stay will remain in effect until final disposition of the case, and as such, the rule’s potential impact on the Company remains unclear.

have on the Company’s operations.

Further state measures are under substantive review as they respond to EPA’s 2015 Clean Power Plan and develop an implementation plan over the next 1 to 3 years.

The CPP allows significant flexibility in how states develop their plans, so the uncertainty regarding potential impacts will remain high until more specificity is reached and individual power companies develop their compliance strategies.

[EMPLOYEES](#s2E9549B26848C21EBEDAA3F3201129DE)

These master agreements cover several specific items, including

and vice president, Wood Products, from 2000 until 2004.

10-K 1 ip10-k123114.htm 10-K

| PART I. | | [1](#sC3E625C0B53DEBFCE065182ECA026FB1) |

| | [General](#s5B427C253D221A2ECB71182ECA60BD82) | [1](#s5B427C253D221A2ECB71182ECA60BD82) |

| | [Employees](#sC24C7867CC7F14EAE1D2182ECBF68118) | [6](#sC24C7867CC7F14EAE1D2182ECBF68118) |

| | [Forestlands](#sC3923A4B3D64BB82665B182ECD0E7A76) | [12](#sC3923A4B3D64BB82665B182ECD0E7A76) |

| | [SIGNATURES](#s995A0F1C23EA55B2D02D182ED9F9E15B) | [98](#s995A0F1C23EA55B2D02D182ED9F9E15B) |

[PART I.](#sC3E625C0B53DEBFCE065182ECA026FB1)

BUSINESS](#sE782195FC14D9C4B276F182ECA22FBFC)

[GENERAL](#s5B427C253D221A2ECB71182ECA60BD82)

| | |

| --- | --- |

| (2) | Includes Temple-Inland volumes from date of acquisition in February 2012. |

| (3) | Includes Turkish box plants beginning in Q1 2013 when a majority ownership was acquired. |

| (4) | Includes Brazil Packaging from date of acquisition in mid- January 2013. |

regulations.

Litigation challenging these regulations is ongoing.

Conference of the Parties to the Kyoto Protocol scheduled for December 2015.

It is not yet clear if these negotiations will result in a new International Climate Change Agreement and, if so, what form it may take.

In 2010, EPA issued GHG regulations for new and modified sources under the New Source Review and Title V Operating Permit programs and shortly thereafter deferred the applicability of these GHGs regulations to biomass carbon emissions until the summer of 2014.

EPA subsequently issued guidance clarifying that GHGs cannot be the sole basis for designating a new or modified source as a major source subject to new source review or Title V air permitting requirements.

EPA also established that BACT (Best Available Control Technology) would be required for any GHG emissions increase above 75,000 tons per year if a new source or Title V review was required for other regulated pollutants.

Given the uncertainties regarding the framework and scope of future GHG

In 2014, EPA proposed regulations for GHGs from new and existing utility electric generators.

These regulations have the potential to increase purchased electricity prices across the United States.

The proposed rules phase in the compliance obligations between about 2018 and 2030 and they remain subject to substantive revisions before final promulgation.

Given the uncertainties regarding the scope of the final regulations, it is unclear what impacts, if any, these regulations will have on the Company’s operations.

delays and higher costs to implement capital projects.

[EMPLOYEES](#sC24C7867CC7F14EAE1D2182ECBF68118)

John V.

Faraci, 65, special advisor to the board since January 1, 2015.

Mr. Faraci will retire as an officer and employee effective February 28, 2015.

Mr. Faraci previously served as chairman from 2003 to December 31, 2014, and as chief executive officer from 2003 to October 31, 2014.

Mr. Faraci joined International Paper in 1974.

Paul J.

Karre, 62, senior vice president - human resources & communications since May 2009.

Mr. Karre will retire as an officer and employee effective March 31, 2015.

Mr. Karre previously served as vice president - human resources from 2000 until 2009.

Mr. Karre joined International Paper in 1974.

Tim S.

Ms. Roberts serves on the board of directors of Alcoa Inc. and Ilim Holding S.A., a Swiss holding company in which International Paper holds a 50% interest, and of its subsidiary, Ilim Group.

Dividend per share data on the Company’s common stock and the high and low sales prices for the Company’s common stock for each of the four quarters in [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] are set forth on page [removed: 87] [added: 83] of [Item 8.

Financial Statements and Supplementary [removed: Data](#s9D93C734F207D979F955182ED0A77413).][added: Data](#s894CA3A1E8D87DB36311A3F324D12CD7).]

As of February [removed: 20, 2015,] [added: 19, 2016,] there were approximately [removed: 13,267] [added: 12,705] record holders of common stock of the Company.

| (a) | [removed: 12,573] [added: 2,767] shares were acquired from employees from share withholdings to pay income taxes under the Company’s restricted stock programs. The remainder were purchased under a share repurchase program that was approved by our Board of Directors and announced on [removed: September 10, 2013, and through which we were authorized to purchase, in open market transactions (including block trades), privately negotiated transactions or otherwise, up to $1.5 billion of our common stock by December 31, 2016. Another repurchase program was approved by our Board of Directors and announced on] July 8, [removed: 2014, to supplement the former program.] [added: 2014.] Through [removed: the latter] [added: this] program, which does not have an expiration date, we were authorized to purchase, in open market transactions (including block trades), privately negotiated transactions or otherwise, up to $1.5 billion of [removed: additional] shares of our common stock. As of February [removed: 20, 2015,] [added: 19, 2016,] approximately [removed: $1.54 billion] [added: $933 million] of shares of our common stock remained authorized for purchase under our share repurchase programs. |

[removed: The following graph compares a $100] investment in [removed: Company stock on December 31, 2009 with a $100 investment in] our Return on Invested Capital (ROIC) Peer Group and the S&P 500 also made at market close on December 31, [removed: 2009.][added: 2010.]

The graph portrays total return, [removed: 2009–2014,] [added: 2010–2015,] assuming reinvestment of dividends.

[removed: ][added: ]

[removed: Note:] [added: Note 1:] The companies included in the ROIC Peer Group are Domtar Inc., Fibria Celulose S.A., Klabin S.A., [removed: MeadWestvaco Corp.,] Metsa Board Corporation, Mondi Group, Packaging Corporation of America, [removed: Rock-Tenn Company,] Smurfit Kappa Group, Stora Enso Group, and UPM-Kymmene Corp. [added: MeadWestvaco Corp. and Rock-Tenn Company are included in the ROIC Peer Group results through 2014.]

SELECTED FINANCIAL [removed: DATA](#s49B2CA639CF6CD76B7F5182ECE460194)][added: DATA](#sD0987DB64CDFA1D73F1EA3F322527447)]

| Dollar amounts in millions, except per share amounts and stock prices | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | |

| Net sales | $ | [removed: 23,617] [added: 22,365] | | | $ | [removed: 23,483] [added: 23,617] | | | $ | [removed: 21,852] [added: 23,483] | | | $ | [removed: 19,464] [added: 21,852] | | | $ | [removed: 18,496] [added: 19,464] | | |

| Costs and expenses, excluding interest | [removed: 22,138] [added: 20,544] | | | | [removed: 21,643] [added: 22,138] | | | | [removed: 20,214] [added: 21,643] | | | | [removed: 17,528] [added: 20,214] | | | | [removed: 17,169] [added: 17,528] | | | |

| Earnings (loss) from continuing operations before income taxes and equity earnings | [removed: 872] [added: 1,266] | | | (b) | [removed: 1,228] [added: 872] | | | [removed: (e)] [added: (d)] | [removed: 967] [added: 1,228] | | | [removed: (h)] [added: (g)] | [removed: 1,395] [added: 967] | | | [removed: (k)] [added: (j)] | [removed: 719] [added: 1,395] | | | [removed: (n)] [added: (m)] |

| Equity earnings (loss), net of taxes | [added: 117 | | | |] (200 | | ) | | (39 | | ) | | 61 | | | | 140 | | | | [removed: 111 | | | |]

| Discontinued operations, net of taxes | [added: — | | | |] (13 | | ) | [removed: (c)] [added: (e)] | (309 | | ) | [removed: (f)] [added: (h)] | 77 | | | [removed: (i)] [added: (k)] | 82 | | | [removed: (l) | 65 | | | (o)] [added: (n)] |

| Net earnings (loss) | [removed: 536] [added: 917] | | | [removed: (b-d)] [added: (b-c)] | [removed: 1,378] [added: 536] | | | [removed: (e-g)] [added: (d-f)] | [removed: 799] [added: 1,378] | | | [removed: (h-j)] [added: (g-i)] | [removed: 1,336] [added: 799] | | | [removed: (k-m)] [added: (j-l)] | [removed: 712] [added: 1,336] | | | [removed: (n-p)] [added: (m-o)] |

| Noncontrolling interests, net of taxes | [removed: (19] [added: (21] | | ) | | [removed: (17] [added: (19] | | ) | | [removed: 5] [added: (17] | | [added: )] | | [removed: 14] [added: 5] | | | | [removed: 21] [added: 14] | | | |

| Net earnings (loss) attributable to International Paper Company | [removed: 555] [added: 938] | | | [removed: (b-d)] [added: (b-c)] | [removed: 1,395] [added: 555] | | | [removed: (e-g)] [added: (d-f)] | [removed: 794] [added: 1,395] | | | [removed: (h-j)] [added: (g-i)] | [removed: 1,322] [added: 794] | | | [removed: (k-m)] [added: (j-l)] | [removed: 691] [added: 1,322] | | | [removed: (n-p)] [added: (m-o)] |

| Current assets less current liabilities | $ | [removed: 3,050] [added: 2,553] | | | $ | [removed: 3,898] [added: 3,050] | | | $ | [removed: 3,907] [added: 3,898] | | | $ | [removed: 5,718] [added: 3,907] | | | $ | [removed: 3,525] [added: 5,718] | | |

| Plants, properties and equipment, net | [removed: 12,728] [added: 11,980] | | | | [removed: 13,672] [added: 12,728] | | | | [removed: 13,949] [added: 13,672] | | | | [removed: 11,817] [added: 13,949] | | | | [removed: 12,002] [added: 11,817] | | | |

| Forestlands | [removed: 507] [added: 366] | | | | [removed: 557] [added: 507] | | | | [removed: 622] [added: 557] | | | | [removed: 660] [added: 622] | | | | [removed: 747] [added: 660] | | | |

| Total assets | [removed: 28,684] [added: 30,587] | | | | [removed: 31,528] [added: 28,684] | | | | [removed: 32,153] [added: 31,528] | | | | [removed: 27,018] [added: 32,153] | | | | [removed: 25,409] [added: 27,018] | | | |

| Notes payable and current maturities of long-term debt | [removed: 742] [added: 426] | | | | [removed: 661] [added: 742] | | | | [removed: 444] [added: 661] | | | | [removed: 719] [added: 444] | | | | [removed: 313] [added: 719] | | | |

| Long-term debt | [removed: 8,631] [added: 8,900] | | | | [removed: 8,827] [added: 8,631] | | | | [removed: 9,696] [added: 8,827] | | | | [removed: 9,189] [added: 9,696] | | | | [removed: 8,358] [added: 9,189] | | | |

| Total shareholders’ equity | [removed: 5,115] [added: 3,884] | | | | [removed: 8,105] [added: 5,115] | | | | [removed: 6,304] [added: 8,105] | | | | [removed: 6,645] [added: 6,304] | | | | [removed: 6,875] [added: 6,645] | | | |

| Earnings (loss) from continuing operations | $ | [removed: 1.33] [added: 2.25] | | | $ | [removed: 3.85] [added: 1.33] | | | $ | [removed: 1.65] [added: 3.85] | | | $ | [removed: 2.87] [added: 1.65] | | | $ | [removed: 1.46] [added: 2.87] | | |

| Discontinued operations | [added: — | | | |] (0.03 | | ) | | (0.70 | | ) | | 0.17 | | | | 0.19 | | | | [removed: 0.15 | | | |]

| Net earnings (loss) | [removed: 1.30] [added: 2.25] | | | | [removed: 3.15] [added: 1.30] | | | | [removed: 1.82] [added: 3.15] | | | | [removed: 3.06] [added: 1.82] | | | | [removed: 1.61] [added: 3.06] | | | |

| Earnings (loss) from continuing operations | $ | [removed: 1.31] [added: 2.23] | | | $ | [removed: 3.80] [added: 1.31] | | | $ | [removed: 1.63] [added: 3.80] | | | $ | [removed: 2.84] [added: 1.63] | | | $ | [removed: 1.44] [added: 2.84] | | |

| Discontinued operations | [added: — | | | |] (0.02 | | ) | | (0.69 | | ) | | 0.17 | | | | 0.19 | | | | [removed: 0.15 | | | |]

| Net earnings (loss) | [removed: 1.29] [added: 2.23] | | | | [removed: 3.11] [added: 1.29] | | | | [removed: 1.80] [added: 3.11] | | | | [removed: 3.03] [added: 1.80] | | | | [removed: 1.59] [added: 3.03] | | | |

| Cash dividends | [removed: 1.4500] [added: 1.640] | | | | [removed: 1.2500] [added: 1.450] | | | | [removed: 1.088] [added: 1.250] | | | | [removed: 0.975] [added: 1.088] | | | | [removed: 0.400] [added: 0.975] | | | |

| Total shareholders’ equity | [removed: 12.18] [added: 9.43] | | | | [removed: 18.57] [added: 12.18] | | | | [removed: 14.33] [added: 18.57] | | | | [removed: 15.21] [added: 14.33] | | | | [removed: 15.71] [added: 15.21] | | | |

| High | $ | [removed: 55.73] [added: 57.90] | | | $ | [removed: 50.33] [added: 55.73] | | | $ | [removed: 39.88] [added: 50.33] | | | $ | [removed: 33.01] [added: 39.88] | | | $ | [removed: 29.25] [added: 33.01] | | |

| Low | [removed: 44.24] [added: 36.76] | | | | [removed: 39.47] [added: 44.24] | | | | [removed: 27.29] [added: 39.47] | | | | [removed: 21.55] [added: 27.29] | | | | [removed: 19.33] [added: 21.55] | | | |

| Year-end | [removed: 53.58] [added: 37.70] | | | | [removed: 49.03] [added: 53.58] | | | | [removed: 39.84] [added: 49.03] | | | | [removed: 29.60] [added: 39.84] | | | | [removed: 27.24] [added: 29.60] | | | |

| Current ratio | [removed: 1.6] [added: 1.7] | | | | [removed: 1.8] [added: 1.6] | | | | 1.8 | | | | [removed: 2.2] [added: 1.8] | | | | [removed: 1.8] [added: 2.2] | | | |

| Total debt to capital ratio | [removed: 0.65] [added: 0.71] | | | | [removed: 0.54] [added: 0.65] | | | | [removed: 0.62] [added: 0.54] | | | | [removed: 0.60] [added: 0.62] | | | | [removed: 0.56] [added: 0.60] | | | |

| Return on shareholders’ equity | [removed: 7.7] [added: 20.0] | | % | [removed: (b-d)] [added: (b-c)] | [removed: 20.2] [added: 7.7] | | % | [removed: (e-g)] [added: (d-f)] | [removed: 11.6] [added: 20.2] | | % | [removed: (h-j)] [added: (g-i)] | [removed: 17.9] [added: 11.6] | | % | [removed: (k-m)] [added: (j-l)] | [removed: 11.4] [added: 17.9] | | % | [removed: (n-p)] [added: (m-o)] |

| CAPITAL EXPENDITURES | $ | [removed: 1,366] [added: 1,487] | | | $ | [removed: 1,198] [added: 1,366] | | | $ | [removed: 1,383] [added: 1,198] | | | | [removed: $1,159] [added: $1,383] | | | | [removed: $775] [added: $1,159] | | |

| October 1, 2015 - October 31, 2015 | — | | | $— | | — | | $1.13 | |

| November 1, 2015 - November 30, 2015 | 2,028,004 | | 41.05 | | | 2,027,636 | | 1.05 | |

| December 1, 2015 - December 31, 2015 | 404,562 | | 41.80 | | | 402,163 | | 1.03 | |

| Total | 2,432,566 | | | | | | | | |

The following graph compares a $100 investment in Company stock on December 31, 2010 with a $100

Note 2: Returns are calculated in $USD.

(b) Includes the following pre-tax charges (gains):

| Riegelwood mill conversion costs, net of proceeds from sale of Carolina Coated Bristols brand | | $ | 8 | |

| Timber monetization restructuring | | 16 | | |

| Early debt extinguishment costs | | 207 | | |

| IP-Sun JV impairment | | 174 | | |

| Brazil Packaging impairment | | 137 | | |

| Legal liability reserve adjustment | | 15 | | |

| Refund of state tax credits | | (4 | | ) |

| Total | | $ | 559 | |

(c) Includes the following tax expenses (benefits):

| IP-Sun JV impairment | | $ | (67 | ) |

(d) Includes the following pre-tax charges (gains):

| In millions | | 2014 | | |

| Early debt extinguishment costs | | 276 | | |

| India legal contingency resolution | | (20 | | ) |

| Multi-employer pension plan withdrawal liability | | 35 | | |

| Foreign tax amnesty program | | 32 | | |

| Asia Industrial Packaging goodwill impairment | | 100 | | |

| Loss on sale by investee and impairment of investment | | 47 | | |

| Total | | $ | 1,052 | |

(e) Includes the after-tax operating earnings of the xpedx business prior to the spin-off and the following after-tax charges (gains):

| In millions | | 2014 | | |

| xpedx spinoff | | $ | 16 | |

| Building Products divestiture | | 9 | | |

| xpedx restructuring | | (1 | | ) |

(f) Includes the following tax expenses (benefits):

| In millions | | 2014 | | |

| State legislative tax change | | $ | 10 | |

| Internal restructuring | | (90 | | ) |

(g) Includes the following pre-tax charges (gains):

| Temple-Inland integration | | $ | 62 | |

| Early debt extinguishment costs | | 25 | | |

| Insurance reimbursement related to legal settlement | | (30 | | ) |

| Shut down of paper machine at Augusta mill | | 45 | | |

| October 1, 2014 - October 31, 2014 | 2,825,448 | | | $46.80 | | 2,825,448 | | $1.59 | |

| November 1, 2014 - November 30, 2014 | 177,532 | | 52.68 | | | 177,300 | | 1.58 | |

| December 1, 2014 - December 31, 2014 | 545,681 | | 53.84 | | | 533,340 | | 1.56 | |

| Total | 3,548,661 | | | | | | | | |

| | |

| --- | --- |

| (b) | Includes restructuring and other charges of $846 million before taxes ($518 million after taxes) including pre-tax charges of $276 million ($169 million after taxes) for early debt extinguishment costs, pre-tax charges of $554 million ($338 million after taxes for costs associated with the shutdown of our Courtland, Alabama mill and a net pre-tax charge of $16 million ($11 million after taxes) for other items. Also included are a pre-tax charge of $47 million ($36 million after taxes) for a loss on the sale of a business by ASG in which we hold an investment and the subsequent partial impairment of our ASG investment, a goodwill impairment charge of $100 million (before and after taxes) related to our Asia Industrial Packaging business, pre-tax charges of $35 million ($21 million after taxes) for a multi-employer pension withdrawal liability, a pre-tax charge of $32 million ($17 million after taxes) for costs associated with a foreign tax amnesty program, a gain of $20 million (before and after taxes) for the resolution of a legal contingency in India, pre-tax charges of $16 million ($10 million after taxes) for costs associated with the integration of Temple-Inland, and a net gain of $4 million ($2 million after taxes) for other items. |

| (e) | Includes restructuring and other charges of $156 million before taxes ($98 million after taxes) including pre-tax charges of $25 million ($16 million after taxes) for early debt extinguishment costs, pre-tax charges of $118 million ($72 million after taxes) for costs associated with the shutdown of our Courtland, Alabama mill, a pre-tax gain of $30 million ($19 million after taxes) for insurance reimbursements related to the 2012 Guaranty Bank legal settlement, a pre-tax charge of $45 million ($28 million after taxes) for costs associated with the permanent shutdown of a paper machine at our Augusta, Georgia mill and a net pre-tax gain of $2 million (a loss of $1 million after taxes) for other items. Also included are a pre-tax goodwill and trade name intangible asset impairment of $127 million ($122 million after taxes) related to our India Papers business, pre-tax charges of $9 million ($5 million after taxes) to adjust the value of two Company airplanes to fair value, pre-tax charges of $62 million ($38 million after taxes) for integration costs associated with the acquisition of Temple-Inland, pre-tax charges of $6 million ($4 million after taxes) for an environmental reserve related to the Company's property in Cass Lake, Minnesota, and a gain of $13 million (before and after taxes) related to a bargain purchase adjustment on the acquisition of a majority share of our operations in Turkey. |

| (f) | Includes the operating results of the xpedx business for the full year and the Temple-Inland Building Products business through the date of sale in July 2013. Also includes pre-tax charges of $32 million ($19 million after taxes) for costs associated with the restructuring of the Company's xpedx operations, pre-tax charges of $22 million ($14 million after taxes) for costs associated with the spin-off of our xpedx operations, a pre-tax goodwill impairment charge of $400 million ($366 million after taxes) related to our xpedx business and pre-tax charges of $23 million ($19 million after taxes) for expenses associated with the divestiture of the Temple-Inland Building Products business. |

| (g) | Includes a tax benefit of $744 million associated with the closings of U.S. federal tax audits, a tax benefit of $31 million for an income tax reserve release and a net tax loss of $1 million for other items. |

| (h) | Includes restructuring and other charges of $65 million before taxes ($46 million after taxes) including pre-tax charges of $48 million ($30 million after taxes) for early debt extinguishment costs, pre-tax charges of $17 million ($12 million after taxes) for costs associated with the restructuring of the Company's Packaging business in EMEA. Also included are a pre-tax charge of $20 million ($12 million after taxes) related to the write-up of the Temple-Inland inventories to fair value, pre-tax charges of $164 million ($108 million after taxes) for integration costs associated with the acquisition of Temple-Inland, a pre-tax charge of $62 million ($38 million after taxes) to adjust the long-lived assets of the Hueneme mill in Oxnard, California to their fair value in anticipation of its divestiture, and pre-tax charges of $29 million ($55 million after taxes) for costs associated with the divestiture of three containerboard mills. |

| (j) | Includes a net tax expense of $14 million related to internal restructurings and a $5 million expense to adjust deferred tax assets related to post-retirement prescription drug coverage (Medicare Part D reimbursement). |

| (k) | Includes restructuring and other charges of $53 million before taxes ($32 million after taxes) including pre-tax charges of $32 million ($19 million after taxes) for early debt extinguishment costs, pre-tax charges of $18 million ($12 million after taxes) for costs associated with the acquisition of a majority share of Andhra Pradesh Paper Mills Limited in India, pre-tax charges of $20 million ($12 million after taxes) for costs associated with signing an agreement to acquire Temple-Inland, and a pre-tax gain of $24 million ($15 million after taxes) related to the reversal of environmental and other reserves due to the announced repurposing of a portion of the Franklin mill. Also included are a pre-tax charge of $27 million ($17 million after taxes) for an environmental reserve related to the Company’s property in Cass Lake, Minnesota, a pre-tax charge of $129 million ($104 million after |

taxes) for a fixed-asset impairment of the North American Shorewood business, pre-tax charges of$78 million (a gain of $143 million after taxes) to reduce the carrying value of the Shorewood business based on the terms of the definitive agreement to sell that business, and a charge of $11 million (before and after taxes) for asset impairment costs associated with the Inverurie, Scotland mill which was closed in 2009.

| (l) | Includes a pre-tax gain of $50 million ($30 million after taxes) for an earnout provision related to the sale of the Company’s Kraft Papers business completed in January 2007. Also, the Company sold its Brazilian Coated Paper business in the third quarter 2006. Local country tax contingency reserves were included in the business’ operating results in 2005 and 2006 for which the related statute of limitations has expired. The reserves were reversed and a tax benefit of $15 million plus associated interest income of $6 million ($4 million after taxes) was recorded. Also included are the operating results of our xpedx business and pre-tax charges of $49 million ($34 million after taxes) for costs associated with the restructuring of the Company's xpedx business. |

| (m) | Includes a tax benefit of $222 million related to the reduction of the carrying value of the Shorewood business and the write-off of a deferred tax liability associated with Shorewood, a $24 million tax expense related to internal restructurings, a $9 million tax expense for costs associated with our acquisition of a majority share of Andhra Pradesh Paper Mills Limited in India, a $13 million tax benefit related to the release of a deferred tax asset valuation allowance, and a $2 million tax expense for other items. |

2010:

| (n) | Includes restructuring and other charges of $390 million before taxes ($239 million after taxes) including pre-tax charges of $315 million ($192 million after taxes) for shutdown costs related to the Franklin, Virginia mill, a pre-tax charge of $35 million ($21 million after taxes) for early debt extinguishment costs, pre-tax charges of $7 million ($4 million after taxes) for closure costs related to the Bellevue, Washington container plant, a pre-tax charge of $11 million ($7 million after taxes) for an Ohio Commercial Activity tax adjustment, a pre-tax charge of $2 million ($1 million after taxes) for severance and benefit costs associated with the Company’s S&A reduction initiative, and a pre-tax charge of $8 million ($5 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations. Also included are a pre-tax charge of $18 million ($11 million after |

taxes) for an environmental reserve related to the Company’s property in Cass Lake, Minnesota, and a pre-tax gain of $25 million ($15 million after taxes) related to the partial redemption of the Company’s interests in Arizona Chemical.

| (o) | Includes the operating results of the Company's xpedx business. |

| (p) | Includes tax expense of $14 million and $32 million for tax adjustments related to incentive compensation and Medicare Part D deferred tax write-offs, respectively, and a $40 million tax benefit related to cellulosic bio-fuel tax credits. |

International Paper delivered strong results during 2014, driven by margin expansion in all our key businesses, most notably in our North American Industrial Packaging business.

Finally, with respect to our balanced use of cash, we completed a bond issue and related tender offer which enabled us to address outstanding debt due in 2018 and 2019 as well as shift from higher cost to lower cost debt.

In aggregate, volumes were down, largely due to declines in our North American Printing Papers business following the completion of the Courtland mill closure.

Input costs increased year over year largely due to higher wood costs and higher energy costs, which were impacted by the significant adverse weather events experienced in much of the U.S. during the 2014 first quarter.

Our Ilim joint venture delivered continued solid operational performance in 2014 associated with the productivity ramp-up of the two joint venture funded capital projects and other efficiency improvements.

Finally, during 2014, we completed the spin-off of the xpedx distribution business which included our receipt of $411 million in special payments.

Overall, 2014 reflects our successful efforts to drive margin growth across all of our key businesses.

We exited

2014 with significant momentum, entering 2015 with a particular focus on execution to drive continued earnings growth and strong free cash flow.

Looking ahead to the 2015 first quarter, we expect volume to be largely flat with the exception of seasonally lower volumes in our Brazilian and European Printing Papers businesses.

Pricing is expected to be relatively stable except for our European Printing Papers and European Industrial Packaging businesses where pricing pressure continues due to the challenging economic conditions.

We expect improved operating performance as we move past the isolated issues that impacted the 2014 fourth quarter in our North American Industrial Packaging and Brazil Printing Papers businesses.

Input costs should be relatively stable in the 2015 first quarter with some improvement in the North American Industrial Packaging business, primarily related to lower energy and fuel costs.

Equity earnings from our Ilim joint venture are expected to benefit from the absence of the significant negative impact from remeasurement of Ilim’s U.S. dollar denominated debt due to devaluation of the Russian ruble in the 2014 fourth quarter.

For the 2015 full year, we anticipate an overall challenging macroeconomic environment but expect to benefit from the strengthening U.S. economy.

Even in those markets facing economic headwinds, namely Brazil and Russia, our low cost export position should enable us to effectively navigate these challenges.

Additionally, we expect improvement in the results of our Brazilian Industrial Packaging business along with the benefits of continued margin expansion at the Ilim joint venture.

We also expect to take further advantage of the growing demand for fiber-based food packaging.

In addition, we expect to realize the benefits of the repositioned North American Printing Papers business following the completion of the Courtland mill closure.