International Paper (IP) 10-K risk factor changes: FY2016 vs FY2015

| 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: 2015] [added: 2016] |

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: 2015)] [added: 2016)] was approximately [removed: $21,026,985,885.][added: $17,330,052,160.]

The number of shares outstanding of the Company’s common stock as of February [removed: 19, 2016] [added: 17, 2017] was [removed: 411,157,696.][added: 411,255,197.]

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: 2016] [added: 2017] annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2015][added: 2016]

| ITEM 1. | [removed: [BUSINESS.](#sBB0E0420FB443D655AEAA3F31E4CC0E4)] [added: [BUSINESS.](#s073C691F046F2F03BC4FE15658BF7F78)] | [removed: [1](#sBB0E0420FB443D655AEAA3F31E4CC0E4)] [added: [1](#s073C691F046F2F03BC4FE15658BF7F78)] |

| | [Financial Information Concerning Industry [removed: Segments](#sDF1A704D1E556CF01071A3F31EAA7FF1)] [added: Segments](#s260FB640681FAAE518C9E156590F2541)] | [removed: [1](#sDF1A704D1E556CF01071A3F31EAA7FF1)] [added: [1](#s260FB640681FAAE518C9E156590F2541)] |

| | [Financial Information About International and U.S. [removed: Operations](#s944742D7BF53F901D879A3F31EB9E6C1)] [added: Operations](#s2DD34DE5F1667EBDD6CFE156592DFF66)] | [removed: [1](#s944742D7BF53F901D879A3F31EB9E6C1)] [added: [1](#s2DD34DE5F1667EBDD6CFE156592DFF66)] |

| | [Competition and [removed: Costs](#sC4B10AF823FB0A5BE7E8A3F31EF8506C)] [added: Costs](#s8D31B59C7E704A4D8786E15659690D32)] | [removed: [1](#sC4B10AF823FB0A5BE7E8A3F31EF8506C)] [added: [1](#s8D31B59C7E704A4D8786E15659690D32)] |

| | [Marketing and [removed: Distribution](#s20E43103EC0D3D2E42A2A3F31F17B5E4)] [added: Distribution](#s1589FC22330C38AE9DE8E1565987D901)] | [removed: [2](#s20E43103EC0D3D2E42A2A3F31F17B5E4)] [added: [2](#s1589FC22330C38AE9DE8E1565987D901)] |

| | [Description of Principal [removed: Products](#s2CC43489F83200018702A3F31F465267)] [added: Products](#s2CF8426CE8B7B814B0A9E15659B98210)] | [removed: [2](#s2CC43489F83200018702A3F31F465267)] [added: [2](#s2CF8426CE8B7B814B0A9E15659B98210)] |

| | [Sales Volumes by [removed: Product](#sA5891823DB439E82B729A3F31400E9E7)] [added: Product](#s73E4705FF5D7722CA634E1564D896C10)] | [removed: [2](#sA5891823DB439E82B729A3F31400E9E7)] [added: [2](#s73E4705FF5D7722CA634E1564D896C10)] |

| | [Research and [removed: Development](#sC20BD79CD679A8B99FD1A3F31F9422A0)] [added: Development](#s1A0FFCDDE2F87D91E9A0E1565A09C1A2)] | [removed: [3](#sC20BD79CD679A8B99FD1A3F31F9422A0)] [added: [3](#s1A0FFCDDE2F87D91E9A0E1565A09C1A2)] |

| | [Environmental [removed: Protection](#s6C76EB8948A28F6944C3A3F31FB39D9C)] [added: Protection](#s0076CC87A97DCB23EC85E1565A3155CA)] | [removed: [3](#s6C76EB8948A28F6944C3A3F31FB39D9C)] [added: [3](#s0076CC87A97DCB23EC85E1565A3155CA)] |

| | [Climate [removed: Change](#s57EF6311990CEEF2EB5CA3F31FF1FCB7)] [added: Change](#s5111776F20BD3B9F3CD4E1565A637BA9)] | [removed: [3](#s57EF6311990CEEF2EB5CA3F31FF1FCB7)] [added: [3](#s5111776F20BD3B9F3CD4E1565A637BA9)] |

| | [Executive Officers of the [removed: Registrant](#s6EC505ADE3A72F5501FDA3F3203FC822)] [added: Registrant](#s6956D32C22F266A53C11E1565AB32317)] | [removed: [5](#s6EC505ADE3A72F5501FDA3F3203FC822)] [added: [5](#s6956D32C22F266A53C11E1565AB32317)] |

| | [Raw [removed: Materials](#s09E3C5CAA74BA6C021EAA3F3205FE1FF)] [added: Materials](#s504E29C1715329BB9D78E1565AD1B0C5)] | [removed: [6](#s09E3C5CAA74BA6C021EAA3F3205FE1FF)] [added: [6](#s504E29C1715329BB9D78E1565AD1B0C5)] |

| | [Forward-looking [removed: Statements](#s6ABFF66008B00C860F34A3F3209DF3E4)] [added: Statements](#s037DBEA2C7CC9558219DE1565B0DC310)] | [removed: [6](#s6ABFF66008B00C860F34A3F3209DF3E4)] [added: [7](#s037DBEA2C7CC9558219DE1565B0DC310)] |

| ITEM 1A. | [RISK [removed: FACTORS.](#sD33363F7E517BEE6E0E3A3F320ADEAF1)] [added: FACTORS.](#sCB80C167784B0E0C3CE5E1565B2B9482)] | [removed: [7](#sD33363F7E517BEE6E0E3A3F320ADEAF1)] [added: [7](#sCB80C167784B0E0C3CE5E1565B2B9482)] |

| ITEM 1B. | [UNRESOLVED STAFF [removed: COMMENTS.](#sC1A23F28E7E20B10D5E7A3F320EB2963)] [added: COMMENTS.](#sC14FA1909D465FAEAE40E1565B5DD057)] | [removed: [11](#sC1A23F28E7E20B10D5E7A3F320EB2963)] [added: [11](#sC14FA1909D465FAEAE40E1565B5DD057)] |

| ITEM 2. | [removed: [PROPERTIES.](#s9B7B766D8947CE2E14DCA3F3210AC893)] [added: [PROPERTIES.](#sE26FFD5365BE2DD54AB6E1565B7B25F6)] | [removed: [11](#s9B7B766D8947CE2E14DCA3F3210AC893)] [added: [11](#sE26FFD5365BE2DD54AB6E1565B7B25F6)] |

| | [Mills and [removed: Plants](#s4E50654F31088969EAFAA3F32158C666)] [added: Plants](#s41BFC46008DD0CCB21F8E1565BCB8B93)] | [removed: [11](#s4E50654F31088969EAFAA3F32158C666)] [added: [11](#s41BFC46008DD0CCB21F8E1565BCB8B93)] |

| | [Capital Investments and [removed: Dispositions](#s0782BBAC7490F8636643A3F321972183)] [added: Dispositions](#sD60B3A8CE48CF6303807E1565C07E2CE)] | [removed: [11](#s0782BBAC7490F8636643A3F321972183)] [added: [11](#sD60B3A8CE48CF6303807E1565C07E2CE)] |

| ITEM 3. | [LEGAL [removed: PROCEEDINGS.](#s97239DF07E36ACF2300EA3F321A6704C)] [added: PROCEEDINGS.](#sD4B6714242C1A9A17E8BE1565C257C1E)] | [removed: [11](#s97239DF07E36ACF2300EA3F321A6704C)] [added: [12](#sD4B6714242C1A9A17E8BE1565C257C1E)] |

| ITEM 4. | [MINE SAFETY [removed: DISCLOSURES.](#s367DBD425EC04B1484D4A3F321E5A7B4)] [added: DISCLOSURES.](#sF55C703A34703C9F95F4E1565C574E2C)] | [removed: [11](#s367DBD425EC04B1484D4A3F321E5A7B4)] [added: [12](#sF55C703A34703C9F95F4E1565C574E2C)] |

| PART II. | | [removed: [12](#s8409F7E6444FFE5CDBE3A3F32204FFCA)] [added: [12](#sD6ADBF6E8C8E3AA9DEC0E1565C7553D8)] |

| ITEM 5. | [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES.](#s190A22C24C0419620E54A3F322338723)] [added: SECURITIES.](#s21A1F483FA915B627BE5E1565CA7D8D4)] | [removed: [12](#s190A22C24C0419620E54A3F322338723)] [added: [12](#s21A1F483FA915B627BE5E1565CA7D8D4)] |

| ITEM 6. | [SELECTED FINANCIAL [removed: DATA.](#sD0987DB64CDFA1D73F1EA3F322527447)] [added: DATA.](#sA86AA34DA9C365B82D32E1564F553E75)] | [removed: [14](#sD0987DB64CDFA1D73F1EA3F322527447)] [added: [14](#sA86AA34DA9C365B82D32E1564F553E75)] |

| ITEM 7. | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS.](#sC232888A425899C65909A3F322AF7AAA)] [added: OPERATIONS.](#s378C6238D19645006406E1565D294959)] | [removed: [17](#sC232888A425899C65909A3F322AF7AAA)] [added: [18](#s378C6238D19645006406E1565D294959)] |

| | [Executive [removed: Summary](#s146F8F314A66A90C9D00A3F312C82456)] [added: Summary](#s2685D5EB59E2222CE651E1564FAF2288)] | [removed: [17](#s146F8F314A66A90C9D00A3F312C82456)] [added: [18](#s2685D5EB59E2222CE651E1564FAF2288)] |

| | [Results of [removed: Operations](#s5A71B88CA7A01A5646B5A3F322FD81C1)] [added: Operations](#s2275563E37768C3FFAF7E1565D795A0C)] | [removed: [21](#s5A71B88CA7A01A5646B5A3F322FD81C1)] [added: [21](#s2275563E37768C3FFAF7E1565D795A0C)] |

| | [Description of Industry [removed: Segments](#s5A13FCCF6BCB039300BBA3F3232CCEEB)] [added: Segments](#s6A02AE9F730F80BCAB9DE1565DB5C7FB)] | [removed: [24](#s5A13FCCF6BCB039300BBA3F3232CCEEB)] [added: [24](#s6A02AE9F730F80BCAB9DE1565DB5C7FB)] |

| | [Industry Segment [removed: Results](#s1AFF5FB9711429CCAFCFA3F3234B55D9)] [added: Results](#s90EF158B97A5DEB01632E1565DBF2E86)] | [removed: [25](#s1AFF5FB9711429CCAFCFA3F3234B55D9)] [added: [25](#s90EF158B97A5DEB01632E1565DBF2E86)] |

| | [Liquidity and Capital [removed: Resources](#s899B95420BF3ED3F8D8BA3F312A873E3)] [added: Resources](#s1E9D368BA2A879D63432E1564E1F7CF0)] | [removed: [30](#s899B95420BF3ED3F8D8BA3F312A873E3)] [added: [30](#s1E9D368BA2A879D63432E1564E1F7CF0)] |

| | [Critical Accounting Policies and Significant Accounting [removed: Estimates](#s706B79E144F1AA203124A3F31400F8F4)] [added: Estimates](#s8EF8F6104ADDE498E971E1564D25F611)] | [removed: [35](#s706B79E144F1AA203124A3F31400F8F4)] [added: [34](#s8EF8F6104ADDE498E971E1564D25F611)] |

| | [Recent Accounting [removed: Developments](#sC01FA631C42F20DFFF3EA3F323E728FE)] [added: Developments](#s7EE44D4398D423E8D146E1565EA5F861)] | [removed: [38](#sC01FA631C42F20DFFF3EA3F323E728FE)] [added: [37](#s7EE44D4398D423E8D146E1565EA5F861)] |

| | [Legal [removed: Proceedings](#s53FA0CDEEF88E263931FA3F323F7EA01)] [added: Proceedings](#s2DD33C9E750BA92207E4E1565EAF091E)] | [removed: [38](#s53FA0CDEEF88E263931FA3F323F7EA01)] [added: [37](#s2DD33C9E750BA92207E4E1565EAF091E)] |

| | [Effect of [removed: Inflation](#sC747D238B9A797496D80A3F32426823A)] [added: Inflation](#s979F7730B293D4D55CCAE1565EAF5A01)] | [removed: [38](#sC747D238B9A797496D80A3F32426823A)] [added: [37](#s979F7730B293D4D55CCAE1565EAF5A01)] |

| | [Foreign Currency [removed: Effects](#s540306DE6C0843B30AF5A3F3244570C8)] [added: Effects](#sC048E195CECB946139EFE1565EAF4BD6)] | [removed: [38](#s540306DE6C0843B30AF5A3F3244570C8)] [added: [38](#sC048E195CECB946139EFE1565EAF4BD6)] |

| | [Market [removed: Risk](#s84ED1F0249A94490131CA3F32483EA7B)] [added: Risk](#s04D2F85E879A7CB5930BE1565EEB7EC7)] | [removed: [39](#s84ED1F0249A94490131CA3F32483EA7B)] [added: [38](#s04D2F85E879A7CB5930BE1565EEB7EC7)] |

10-K 1 ip10-k123116.htm 10-K

| PART I. | | [1](#sCBBAD1FC241260D28019E156588D0DEE) |

| | [General](#s906BDAED9BE523363A01E15658DDBCB0) | [1](#s906BDAED9BE523363A01E15658DDBCB0) |

| | [Employees](#s7730682EFCF71E6B7C54E1565A81495C) | [5](#s7730682EFCF71E6B7C54E1565A81495C) |

| | [Forestlands](#s398EC5157BB6EE2750F4E1565BAD3103) | [11](#s398EC5157BB6EE2750F4E1565BAD3103) |

FOR THE YEAR ENDED DECEMBER 31, 2016

| | [SIGNATURES](#sB3CE35192A9795B15B47E1566909EC86) | [91](#sB3CE35192A9795B15B47E1566909EC86) |

[PART I.](#sCBBAD1FC241260D28019E156588D0DEE)

BUSINESS](#s073C691F046F2F03BC4FE15658BF7F78)

[GENERAL](#s906BDAED9BE523363A01E15658DDBCB0)

Subsequent to the acquisition of the Weyerhaeuser pulp business in December 2016, the Company began reporting the Global Cellulose Fibers business as a separate busines segment due to the increased materiality of the results of this business.

This segment includes the Company's legacy pulp business and the newly acquired pulp business.

As such, amounts related to the legacy pulp business have been reclassified out of the Printing Papers business segment and into the new Global Cellulose Fibers business segment for all prior periods.

These expenditures reflect

Financial Statements and Supplementary Data](#sE2E446478787451A5414E1565F458DD1).

Our products

Management’s Discussion and Analysis of Financial Condition and Results of Operations](#s378C6238D19645006406E1565D294959).

| Asian Box (3) (5) | 208 | | 426 | | 407 | |

| Brazilian Packaging | 371 | | 348 | | 362 | |

| Industrial Packaging | 18,347 | | 18,314 | | 18,377 | |

| Cellulose Fibers (in thousands of metric tons) (2) | 1,870 | | 1,575 | | 1,612 | |

| (3) | Volumes for corrugated box sales reflect consumed tons sold (CTS). Board sales by these businesses reflect invoiced tons. |

| (4) | Excludes newsprint sales volumes at Madrid, Spain mill. |

| (5) | Includes sales volumes through the date of sale on June 30, 2016. |

| (6) | Includes sales volumes through the date of sale in October 2015. |

The 2016 spend

On December 23, 2016, the U.S. Court of Appeals for the D.C. Circuit remanded the Boiler MACT regulations to EPA requiring the agency to revise emission standards for boiler subcategories that had been affected by flawed calculations.

The Court determined that the existing MACT standards should remain in place while the revised standards are being developed, but did not establish a deadline for EPA to complete the rulemaking.

A successor program to the 1997 Kyoto Protocol, the Paris Agreement went into effect in November 2016 which continued international efforts and voluntary commitments toward reducing Greenhouse gasses (GHGs).

Consistent with this objective, participating

countries aim to balance GHG emissions generation and removal in the second half of this century, or in effect achieve a net-zero global GHG emissions.

In response,

The magnitude of cost increases to the Company, if any, are not possible to estimate reliably at this time.

California has already enacted such a program and similar actions are being considered by Oregon.

causing delays and higher costs to implement capital projects.

[EMPLOYEES](#s7730682EFCF71E6B7C54E1565A81495C)

Two of these were locations not covered by a master agreement.

Mr. Sutton serves on the board of directors of The Kroger Company.

He is a member of The Business Council and the Business Roundtable and serves on the American Forest & Paper Association board of directors and the international advisory board of the Moscow School of Management - Skolkovo.

He was appointed chairman of the U.S. Russian Business Council and was also appointed to the U.S. Section of the U.S.-Brazil CEO Forum.

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

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

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

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

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

| | [Corporate Overview](#sCB5750E48CD0CAC46C89A3F322DE9BAB) | [20](#sCB5750E48CD0CAC46C89A3F322DE9BAB) |

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

[PART I.](#s664CFBC09B9C6B2E6B65A3F31E1D1096)

BUSINESS](#sBB0E0420FB443D655AEAA3F31E4CC0E4)

[GENERAL](#s93E8D9ED095C4C7386E9A3F31E6BBDE5)

[Operations](#sC232888A425899C65909A3F322AF7AAA).

| Asian Box | 359 | | 408 | | 416 | |

| Brazilian Packaging | 305 | | 318 | | 297 | |

| Industrial Packaging | 18,204 | | 18,334 | | 18,565 | |

| Market Pulp (2) | 1,736 | | 1,776 | | 1,711 | |

We expect

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

Similarly, regulations addressing specific implementation issues related to the SO2 NAAQS were released in 2015 by the EPA and are being implemented during the next two to four years.

Potentially material capital investment may be required in response to these emerging requirements, but evaluations are ongoing.

The 1997 Kyoto Protocol established emission reduction obligations for certain countries where the Company had and continues to have operations.

Though the Kyoto Protocol expired in 2012, several countries, and most notably the European Union (EU), extended their emissions commitments until 2020.

A successor program to the Kyoto Protocol is the subject

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

In 2015, the Company reported to EPA the GHG emissions from 21 of our U.S. manufacturing sites and 9 landfills.

On November 19, 2014, EPA issued a revised draft carbon accounting framework addressing the circumstances under which biomass combustion can be considered carbon neutral.

EPA has stated it intends to issue future rulemakings to address how states may use the revised framework in implementing state permit rules and in developing plans for regulating GHGs from utility electric generators.

Given the uncertainties

regarding the framework and scope of future GHG rulemaking, it is unclear what impacts, if any, EPA’s actions in this area will have on the Company’s operations.

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

In 2013, EPA issued final regulations establishing NSPS for new (EGUs).

This regulation is the first of several expected NSPSs that EPA will implement over the coming years.

EPA estimated that the proposed rule would increase purchased electricity prices by less than seven percent, but some utilities are estimating significantly higher price increases from the final rule (11 to 14%, or more).

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.

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

One such state is California.

have on the Company’s operations.

[EMPLOYEES](#s2E9549B26848C21EBEDAA3F3201129DE)

wages, select benefit programs, successorship, employment security, and health and safety.

Michael Amick, Jr., 52, senior vice president - North American papers, pulp & consumer packaging since November 1, 2014.

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

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: 2015] [added: 2016] and [removed: 2014] [added: 2015] are set forth on page 83 of [Item 8.

Financial Statements and Supplementary [removed: Data](#s894CA3A1E8D87DB36311A3F324D12CD7).][added: Data](#sE2E446478787451A5414E1565F458DD1).]

[added: As of] the filing of this Annual Report on Form 10-K, the Company’s common shares are traded on the New York Stock Exchange.

As of February [removed: 19, 2016,] [added: 17, 2017,] there were approximately [removed: 12,705] [added: 12,311] record holders of common stock of the Company.

| (a) | [removed: 2,767] [added: 11,738] shares were acquired from employees from share withholdings to pay income taxes under the Company’s restricted stock programs. [removed: The remainder] [added: During these periods, no shares] were purchased under [removed: a] [added: our] share repurchase [removed: program that] [added: program, which] was [added: was] approved by our Board of Directors and announced on July 8, 2014. Through 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 shares of our common stock. As of February [removed: 19, 2016,] [added: 17, 2017,] approximately $933 million of shares of our common stock remained authorized for purchase under [removed: our share repurchase programs.] [added: this program.] |

[added: The following graph compares a $100] investment in [added: Company stock on December 31, 2011 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: 2010.][added: 2011.]

The graph portrays total return, [removed: 2010–2015,] [added: 2011–2016,] assuming reinvestment of dividends.

[removed: ][added: ]

Note 1: The companies included in the ROIC Peer Group are Domtar Inc., Fibria Celulose S.A., [added: Graphic Packaging Holding Company,] Klabin S.A., Metsa Board Corporation, Mondi Group, Packaging Corporation of America, Smurfit Kappa Group, Stora Enso Group, and UPM-Kymmene Corp. MeadWestvaco Corp. and Rock-Tenn Company are included in the ROIC Peer Group results through [removed: 2014.][added: 2014 and subsequently, after the merger of those companies, WestRock was added to the Peer group beginning in 2015.]

SELECTED FINANCIAL [removed: DATA](#sD0987DB64CDFA1D73F1EA3F322527447)][added: DATA](#sA86AA34DA9C365B82D32E1564F553E75)]

| Dollar amounts in millions, except per share amounts and stock prices | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | |

| Net sales | $ | [removed: 22,365] [added: 21,079] | | | $ | [removed: 23,617] [added: 22,365] | | | $ | [removed: 23,483] [added: 23,617] | | | $ | [removed: 21,852] [added: 23,483] | | | $ | [removed: 19,464] [added: 21,852] | | |

| Costs and expenses, excluding interest | [removed: 20,544] [added: 19,603] | | | | [removed: 22,138] [added: 20,544] | | | | [removed: 21,643] [added: 22,138] | | | | [removed: 20,214] [added: 21,643] | | | | [removed: 17,528] [added: 20,214] | | | |

| Earnings (loss) from continuing operations before income taxes and equity earnings | [removed: 1,266] [added: 956] | | | (b) | [removed: 872] [added: 1,266] | | | [removed: (d)] [added: (e)] | [removed: 1,228] [added: 872] | | | (g) | [removed: 967] [added: 1,228] | | | (j) | [removed: 1,395] [added: 967] | | | (m) |

| Equity earnings (loss), net of taxes | [added: 198 | | | |] 117 | | | | (200 | | ) | | (39 | | ) | | 61 | | | | [removed: 140 | | | |]

| Discontinued operations, net of taxes | [removed: —] [added: (5] | | [added: )] | [added: (c)] | [removed: (13] [added: —] | | [removed: )] | [removed: (e)] | [removed: (309] [added: (13] | | ) | (h) | [removed: 77] [added: (309] | | [added: )] | (k) | [removed: 82] [added: 77] | | | (n) |

| Net earnings (loss) | [removed: 917] [added: 902] | | | [removed: (b-c)] [added: (b-d)] | [removed: 536] [added: 917] | | | [removed: (d-f)] [added: (e-f)] | [removed: 1,378] [added: 536] | | | (g-i) | [removed: 799] [added: 1,378] | | | (j-l) | [removed: 1,336] [added: 799] | | | (m-o) |

| Noncontrolling interests, net of taxes | [removed: (21] [added: (2] | | ) | | [removed: (19] [added: (21] | | ) | | [removed: (17] [added: (19] | | ) | | [removed: 5] [added: (17] | | [added: )] | | [removed: 14] [added: 5] | | | |

| Net earnings (loss) attributable to International Paper Company | [removed: 938] [added: 904] | | | [removed: (b-c)] [added: (b-d)] | [removed: 555] [added: 938] | | | [removed: (d-f)] [added: (e-f)] | [removed: 1,395] [added: 555] | | | (g-i) | [removed: 794] [added: 1,395] | | | (j-l) | [removed: 1,322] [added: 794] | | | (m-o) |

| Current assets less current liabilities | $ | [removed: 2,553] [added: 2,897] | | | $ | [removed: 3,050] [added: 2,553] | | | $ | [removed: 3,898] [added: 3,050] | | | $ | [removed: 3,907] [added: 3,898] | | | $ | [removed: 5,718] [added: 3,907] | | |

| Plants, properties and equipment, net | [removed: 11,980] [added: 13,990] | | | | [removed: 12,728] [added: 11,980] | | | | [removed: 13,672] [added: 12,728] | | | | [removed: 13,949] [added: 13,672] | | | | [removed: 11,817] [added: 13,949] | | | |

| Forestlands | [removed: 366] [added: 456] | | | | [removed: 507] [added: 366] | | | | [removed: 557] [added: 507] | | | | [removed: 622] [added: 557] | | | | [removed: 660] [added: 622] | | | |

| Notes payable and current maturities of long-term debt | [removed: 426] [added: 239] | | | | [removed: 742] [added: 426] | | | | [removed: 661] [added: 742] | | | | [removed: 444] [added: 661] | | | | [removed: 719] [added: 444] | | | |

| Total shareholders’ equity | [removed: 3,884] [added: 4,341] | | | | [removed: 5,115] [added: 3,884] | | | | [removed: 8,105] [added: 5,115] | | | | [removed: 6,304] [added: 8,105] | | | | [removed: 6,645] [added: 6,304] | | | |

| Earnings (loss) from continuing operations | $ | [removed: 2.25] [added: 2.21] | | | $ | [removed: 1.33] [added: 2.25] | | | $ | [removed: 3.85] [added: 1.33] | | | $ | [removed: 1.65] [added: 3.85] | | | $ | [removed: 2.87] [added: 1.65] | | |

| Discontinued operations | [added: (0.01 | | ) | |] — | | | | (0.03 | | ) | | (0.70 | | ) | | 0.17 | | | | [removed: 0.19 | | | |]

| Net earnings (loss) | [removed: 2.25] [added: 2.20] | | | | [removed: 1.30] [added: 2.25] | | | | [removed: 3.15] [added: 1.30] | | | | [removed: 1.82] [added: 3.15] | | | | [removed: 3.06] [added: 1.82] | | | |

| Earnings (loss) from continuing operations | $ | [removed: 2.23] [added: 2.19] | | | $ | [removed: 1.31] [added: 2.23] | | | $ | [removed: 3.80] [added: 1.31] | | | $ | [removed: 1.63] [added: 3.80] | | | $ | [removed: 2.84] [added: 1.63] | | |

| Discontinued operations | [added: (0.01 | | ) | |] — | | | | (0.02 | | ) | | (0.69 | | ) | | 0.17 | | | | [removed: 0.19 | | | |]

| Net earnings (loss) | [removed: 2.23] [added: 2.18] | | | | [removed: 1.29] [added: 2.23] | | | | [removed: 3.11] [added: 1.29] | | | | [removed: 1.80] [added: 3.11] | | | | [removed: 3.03] [added: 1.80] | | | |

| Cash dividends | [removed: 1.640] [added: 1.783] | | | | [removed: 1.450] [added: 1.640] | | | | [removed: 1.250] [added: 1.450] | | | | [removed: 1.088] [added: 1.250] | | | | [removed: 0.975] [added: 1.088] | | | |

| Total shareholders’ equity | [removed: 9.43] [added: 10.56] | | | | [removed: 12.18] [added: 9.43] | | | | [removed: 18.57] [added: 12.18] | | | | [removed: 14.33] [added: 18.57] | | | | [removed: 15.21] [added: 14.33] | | | |

| High | $ | [removed: 57.90] [added: 54.68] | | | $ | [removed: 55.73] [added: 57.90] | | | $ | [removed: 50.33] [added: 55.73] | | | $ | [removed: 39.88] [added: 50.33] | | | $ | [removed: 33.01] [added: 39.88] | | |

| Low | [removed: 36.76] [added: 32.50] | | | | [removed: 44.24] [added: 36.76] | | | | [removed: 39.47] [added: 44.24] | | | | [removed: 27.29] [added: 39.47] | | | | [removed: 21.55] [added: 27.29] | | | |

| Year-end | [removed: 37.70] [added: 53.06] | | | | [removed: 53.58] [added: 37.70] | | | | [removed: 49.03] [added: 53.58] | | | | [removed: 39.84] [added: 49.03] | | | | [removed: 29.60] [added: 39.84] | | | |

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

| Total debt to capital ratio | [removed: 0.71] [added: 0.72] | | | | [removed: 0.65] [added: 0.70] | | | | [removed: 0.54] [added: 0.65] | | | | [removed: 0.62] [added: 0.54] | | | | [removed: 0.60] [added: 0.62] | | | |

| Return on shareholders’ equity | [removed: 20.0] [added: 22.1] | | % | [removed: (b-c)] [added: (b-d)] | [removed: 7.7] [added: 20.0] | | % | [removed: (d-f)] [added: (e-f)] | [removed: 20.2] [added: 7.7] | | % | (g-i) | [removed: 11.6] [added: 20.2] | | % | (j-l) | [removed: 17.9] [added: 11.6] | | % | (m-o) |

| CAPITAL EXPENDITURES | $ | [removed: 1,487] [added: 1,348] | | | $ | [removed: 1,366] [added: 1,487] | | | $ | [removed: 1,198] [added: 1,366] | | | | [removed: $1,383] [added: $1,198] | | | | [removed: $1,159] [added: $1,383] | | |

| NUMBER OF EMPLOYEES | [removed: 56,000] [added: 55,000] | | | | [removed: 58,000] [added: 56,000] | | | | [removed: 64,000] [added: 58,000] | | | | [removed: 65,000] [added: 64,000] | | | | [removed: 56,000] [added: 65,000] | | | |

| October 1, 2016 - October 31, 2016 | — | | | $— | | — | | $0.933 | |

| November 1, 2016 - November 30, 2016 | 9,096 | | 45.03 | | | — | | 0.933 | |

| December 1, 2016 - December 31, 2016 | 2,642 | | 52.29 | | | — | | 0.933 | |

| Total assets | 33,345 | | | | 30,531 | | | | 28,637 | | | | 31,488 | | | | 32,106 | | | |

| Long-term debt | 11,075 | | | | 8,844 | | | | 8,584 | | | | 8,787 | | | | 9,649 | | | |

| In millions | | Before Tax | | | | After Tax | | |

| Riegelwood mill conversion costs | | $ | 9 | | | $ | 6 | |

| India Packaging evaluation write-off | | 17 | | | | 11 | | |

| Write-off of certain regulatory pre-engineering costs | | 8 | | | | 5 | | |

| Costs associated with the newly acquired pulp business | | 31 | | | | 21 | | |

| Asia Box impairment / restructuring | | 70 | | | | 58 | | |

| Gain on sale of investment in Arizona Chemical | | (8 | | ) | | (5 | | ) |

| Turkey mill closure | | 7 | | | | 6 | | |

| Amortization of Weyerhaeuser inventory fair value step-up | | 19 | | | | 11 | | |

| Total special items | | $ | 182 | | | $ | 131 | |

| Total | | $ | 792 | | | $ | 506 | |

| Cash pension contribution | | $ | 23 | |

| U.S. Federal audit | | (14 | | ) |

| Brazil goodwill | | (57 | | ) |

| International legal entity restructuring | | (6 | | ) |

| Luxembourg tax rate change | | 31 | | |

| In millions | | Before Tax | | | | After Tax | | |

| Legal reserve adjustment | | 15 | | | | 9 | | |

| Impairment of Orsa goodwill and trade name intangible | | 137 | | | | 137 | | |

| Total special items | | $ | 559 | | | $ | 476 | |

| Total | | $ | 817 | | | $ | 633 | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| In millions | | Before Tax | | | | After Tax | | |

| Total special items | | $ | 1,052 | | | $ | 680 | |

| Non-operating pension expense | | 212 | | | | 129 | | |

| Total | | $ | 1,264 | | | $ | 809 | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| In millions | | Before Tax | | | | After Tax | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

As of

| 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

| Total assets | 30,587 | | | | 28,684 | | | | 31,528 | | | | 32,153 | | | | 27,018 | | | |

| Long-term debt | 8,900 | | | | 8,631 | | | | 8,827 | | | | 9,696 | | | | 9,189 | | | |

| | | | | |

| --- | --- | --- | --- | --- |

2011:

| In millions | | 2011 | | |

| Reversal of environmental and other reserves related to repurposing at Franklin mill | | (24 | | ) |

| Cass Lake environmental reserve | | 27 | | |

| North American Shorewood business fixed asset impairment | | 129 | | |

| Shorewood business impairment | | 78 | | |

| Inverurie, Scotland mill asset impairment | | 11 | | |

| Total | | $ | 291 | |

| Gain for earnout provision - sale of Kraft Papers business | | $ | (30 | ) |

| Tax benefit - Brazilian Coated Papers business sale | | (15 | | ) |

| Interest income on tax benefit - Brazilian Coated Papers business sale | | (4 | | ) |

| xpedx restructuring | | 34 | | |

| Total | | $ | (15 | ) |

| Internal restructuring | | $ | 24 | |

| Tax benefit related to reduction of the carrying value of the Shorewood business and write-off of the associated deferred tax liability | | (222 | | ) |

| Tax expense for APPM acquisitions costs | | 9 | | |

| Release of deferred tax asset valuation allowance | | 13 | | |

| Total | | $ | (174 | ) |

International Paper delivered solid results during 2015 driven by strong margins and earnings in our North American Industrial Packaging business and record performance from the Ilim joint venture.

We generated $1.8 billion of free cash flow which enabled the Company to return cash to our shareholders in the form of approximately $500 million in share repurchases and a 10% increase in the quarterly dividend beginning with the 2015 fourth quarter dividend payment.

During 2015, we successfully completed the restructuring of the 2006 timber monetization to achieve our objectives of reducing risk and preserving financial flexibility, while maintaining the deferral of $1.4 billion of deferred income taxes.

Finally, with respect to our balanced use of cash, we completed a $2 billion bond issue and related tender offer along with making a $750 million voluntary pension contribution.

Our 2015 results reflect the benefits of favorable input costs offset by price and mix declines across our North American businesses.

Volumes were generally flat compared to 2014 except for lower volumes in our North American Industrial Packaging business due to lower containerboard export tons.

Input costs decreased versus 2014 largely due to lower energy, chemicals and freight costs.

Price declined relative to 2014 driven mainly by lower pricing in our North American Industrial Packaging and Printing Papers and Pulp businesses.

Our Ilim joint venture generated record results in 2015 driven by improved operations and increased margins.

The positive results were partially offset by the unfavorable impact of non-cash foreign currency movements associated with Ilim’s US dollar denominated debt.