International Paper (IP) 10-K risk factor changes: FY2017 vs FY2016

| 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: 2016] [added: 2017] |

| Large accelerated filer [removed: x] [added: ý] | | Accelerated filer [added: ¨] | | Non-accelerated filer [added: ¨] | | Smaller reporting company [added: ¨] | [added: | Emerging growth company ¨ |]

| | | | | (Do not check if a smaller reporting company) | | | [added: | |]

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: 2016)] [added: 2017)] was approximately [removed: $17,330,052,160.][added: $23,247,397,657.]

The number of shares outstanding of the Company’s common stock as of February [removed: 17, 2017] [added: 16, 2018] was [removed: 411,255,197.][added: 412,940,532.]

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: 2017] [added: 2018] annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2016][added: 2017]

| ITEM 1. | [removed: [BUSINESS.](#s073C691F046F2F03BC4FE15658BF7F78)] [added: [BUSINESS.](#s62974B48D044FDD5D0B5149D6C667E87)] | [removed: [1](#s073C691F046F2F03BC4FE15658BF7F78)] [added: [1](#s62974B48D044FDD5D0B5149D6C667E87)] |

| | [Financial Information Concerning Industry [removed: Segments](#s260FB640681FAAE518C9E156590F2541)] [added: Segments](#s61D74C1D790FFBF779D3149D6CC3FFC7)] | [removed: [1](#s260FB640681FAAE518C9E156590F2541)] [added: [1](#s61D74C1D790FFBF779D3149D6CC3FFC7)] |

| | [Financial Information About International and U.S. [removed: Operations](#s2DD34DE5F1667EBDD6CFE156592DFF66)] [added: Operations](#s127036428E9880EF1C24149D6CE24A04)] | [removed: [1](#s2DD34DE5F1667EBDD6CFE156592DFF66)] [added: [1](#s127036428E9880EF1C24149D6CE24A04)] |

| | [Competition and [removed: Costs](#s8D31B59C7E704A4D8786E15659690D32)] [added: Costs](#s0F63BA0172D2A3AB2814149D6D2114F4)] | [removed: [1](#s8D31B59C7E704A4D8786E15659690D32)] [added: [1](#s0F63BA0172D2A3AB2814149D6D2114F4)] |

| | [Marketing and [removed: Distribution](#s1589FC22330C38AE9DE8E1565987D901)] [added: Distribution](#s38EDB7E844EA22C222BA149D6D40F977)] | [removed: [2](#s1589FC22330C38AE9DE8E1565987D901)] [added: [2](#s38EDB7E844EA22C222BA149D6D40F977)] |

| | [Description of Principal [removed: Products](#s2CF8426CE8B7B814B0A9E15659B98210)] [added: Products](#sA9818ACE5B8B06191C90149D6D6FB101)] | [removed: [2](#s2CF8426CE8B7B814B0A9E15659B98210)] [added: [2](#sA9818ACE5B8B06191C90149D6D6FB101)] |

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

| | [Research and [removed: Development](#s1A0FFCDDE2F87D91E9A0E1565A09C1A2)] [added: Development](#sA00EF1DA36E7CCFC05C4149D6DBD676B)] | [removed: [3](#s1A0FFCDDE2F87D91E9A0E1565A09C1A2)] [added: [3](#sA00EF1DA36E7CCFC05C4149D6DBD676B)] |

| | [Environmental [removed: Protection](#s0076CC87A97DCB23EC85E1565A3155CA)] [added: Protection](#s9015AE2902A6CC0E6C79149D6DDC770F)] | [removed: [3](#s0076CC87A97DCB23EC85E1565A3155CA)] [added: [3](#s9015AE2902A6CC0E6C79149D6DDC770F)] |

| | [Climate [removed: Change](#s5111776F20BD3B9F3CD4E1565A637BA9)] [added: Change](#s559ED22D6647BA877445149D6E1AAA8E)] | [removed: [3](#s5111776F20BD3B9F3CD4E1565A637BA9)] [added: [3](#s559ED22D6647BA877445149D6E1AAA8E)] |

| | [Executive Officers of the [removed: Registrant](#s6956D32C22F266A53C11E1565AB32317)] [added: Registrant](#sFEBC1D90EB01AF4E8465149D6E686F22)] | [removed: [5](#s6956D32C22F266A53C11E1565AB32317)] [added: [5](#sFEBC1D90EB01AF4E8465149D6E686F22)] |

| | [Raw [removed: Materials](#s504E29C1715329BB9D78E1565AD1B0C5)] [added: Materials](#s89CA8E48E58629733FE2149D6E88F439)] | [removed: [6](#s504E29C1715329BB9D78E1565AD1B0C5)] [added: [6](#s89CA8E48E58629733FE2149D6E88F439)] |

| | [Forward-looking [removed: Statements](#s037DBEA2C7CC9558219DE1565B0DC310)] [added: Statements](#s1764D7F1DAE3824AD108149D6EB63B98)] | [removed: [7](#s037DBEA2C7CC9558219DE1565B0DC310)] [added: [6](#s1764D7F1DAE3824AD108149D6EB63B98)] |

| ITEM 1A. | [RISK [removed: FACTORS.](#sCB80C167784B0E0C3CE5E1565B2B9482)] [added: FACTORS.](#sD129D40EAB2F61B6958D149D6ED60B7C)] | [removed: [7](#sCB80C167784B0E0C3CE5E1565B2B9482)] [added: [7](#sD129D40EAB2F61B6958D149D6ED60B7C)] |

| ITEM 1B. | [UNRESOLVED STAFF [removed: COMMENTS.](#sC14FA1909D465FAEAE40E1565B5DD057)] [added: COMMENTS.](#s19B0F834B06AC51C4420149D6F04DB9C)] | [removed: [11](#sC14FA1909D465FAEAE40E1565B5DD057)] [added: [11](#s19B0F834B06AC51C4420149D6F04DB9C)] |

| ITEM 2. | [removed: [PROPERTIES.](#sE26FFD5365BE2DD54AB6E1565B7B25F6)] [added: [PROPERTIES.](#s25842F2933EC138468E7149D6F33E907)] | [removed: [11](#sE26FFD5365BE2DD54AB6E1565B7B25F6)] [added: [11](#s25842F2933EC138468E7149D6F33E907)] |

| | [Mills and [removed: Plants](#s41BFC46008DD0CCB21F8E1565BCB8B93)] [added: Plants](#s3337372147C2DFA10385149D6F81E474)] | [removed: [11](#s41BFC46008DD0CCB21F8E1565BCB8B93)] [added: [11](#s3337372147C2DFA10385149D6F81E474)] |

| | [Capital Investments and [removed: Dispositions](#sD60B3A8CE48CF6303807E1565C07E2CE)] [added: Dispositions](#s7D3A95345FBCB2CE8F22149D6FB07749)] | [removed: [11](#sD60B3A8CE48CF6303807E1565C07E2CE)] [added: [11](#s7D3A95345FBCB2CE8F22149D6FB07749)] |

| ITEM 3. | [LEGAL [removed: PROCEEDINGS.](#sD4B6714242C1A9A17E8BE1565C257C1E)] [added: PROCEEDINGS.](#sABB0CF4C50C85637809A149D6FDFAD44)] | [removed: [12](#sD4B6714242C1A9A17E8BE1565C257C1E)] [added: [11](#sABB0CF4C50C85637809A149D6FDFAD44)] |

| ITEM 4. | [MINE SAFETY [removed: DISCLOSURES.](#sF55C703A34703C9F95F4E1565C574E2C)] [added: DISCLOSURES.](#s194D617E473395FA21C5149D700E9EA9)] | [removed: [12](#sF55C703A34703C9F95F4E1565C574E2C)] [added: [11](#s194D617E473395FA21C5149D700E9EA9)] |

| PART II. | | [removed: [12](#sD6ADBF6E8C8E3AA9DEC0E1565C7553D8)] [added: [12](#s12881C628959C91A7B71149D702DAE9C)] |

| ITEM 5. | [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES.](#s21A1F483FA915B627BE5E1565CA7D8D4)] [added: SECURITIES.](#sBE18846D631C3E02134F149D705C0808)] | [removed: [12](#s21A1F483FA915B627BE5E1565CA7D8D4)] [added: [12](#sBE18846D631C3E02134F149D705C0808)] |

| ITEM 6. | [SELECTED FINANCIAL [removed: DATA.](#sA86AA34DA9C365B82D32E1564F553E75)] [added: DATA.](#s7E2FD5E819ECD5C9E169149D612FDDD1)] | [removed: [14](#sA86AA34DA9C365B82D32E1564F553E75)] [added: [14](#s7E2FD5E819ECD5C9E169149D612FDDD1)] |

| ITEM 7. | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS.](#s378C6238D19645006406E1565D294959)] [added: OPERATIONS.](#s0F28FB50E27675CAC6CF149D71468C47)] | [removed: [18](#s378C6238D19645006406E1565D294959)] [added: [17](#s0F28FB50E27675CAC6CF149D71468C47)] |

| | [Executive [removed: Summary](#s2685D5EB59E2222CE651E1564FAF2288)] [added: Summary](#sB99BFA1E634CE1ABD7B7149D64F6445F)] | [removed: [18](#s2685D5EB59E2222CE651E1564FAF2288)] [added: [17](#sB99BFA1E634CE1ABD7B7149D64F6445F)] |

| | [Results of [removed: Operations](#s2275563E37768C3FFAF7E1565D795A0C)] [added: Operations](#sE221436ED19037E79F62149D6757801D)] | [removed: [21](#s2275563E37768C3FFAF7E1565D795A0C)] [added: [20](#sE221436ED19037E79F62149D6757801D)] |

| | [Description of Industry [removed: Segments](#s6A02AE9F730F80BCAB9DE1565DB5C7FB)] [added: Segments](#s010F0073676E03743615149D71F199A9)] | [removed: [24](#s6A02AE9F730F80BCAB9DE1565DB5C7FB)] [added: [23](#s010F0073676E03743615149D71F199A9)] |

| | [Industry Segment [removed: Results](#s90EF158B97A5DEB01632E1565DBF2E86)] [added: Results](#sEDE4E59FC5DE6CE2B258149D60456CD6)] | [removed: [25](#s90EF158B97A5DEB01632E1565DBF2E86)] [added: [24](#sEDE4E59FC5DE6CE2B258149D60456CD6)] |

| | [Liquidity and Capital [removed: Resources](#s1E9D368BA2A879D63432E1564E1F7CF0)] [added: Resources](#s83C88A784A9415CC771F149D60C2D402)] | [removed: [30](#s1E9D368BA2A879D63432E1564E1F7CF0)] [added: [27](#s83C88A784A9415CC771F149D60C2D402)] |

| | [Critical Accounting Policies and Significant Accounting [removed: Estimates](#s8EF8F6104ADDE498E971E1564D25F611)] [added: Estimates](#s20E827B67AF926D3286B149D61EA9428)] | [removed: [34](#s8EF8F6104ADDE498E971E1564D25F611)] [added: [31](#s20E827B67AF926D3286B149D61EA9428)] |

| | [Recent Accounting [removed: Developments](#s7EE44D4398D423E8D146E1565EA5F861)] [added: Developments](#sF0662F648BEF470ED0FC149D72EB725B)] | [removed: [37](#s7EE44D4398D423E8D146E1565EA5F861)] [added: [35](#sF0662F648BEF470ED0FC149D72EB725B)] |

| | [Legal [removed: Proceedings](#s2DD33C9E750BA92207E4E1565EAF091E)] [added: Proceedings](#s2E90DECF87FCED8A5F2E149D72EBCB2D)] | [removed: [37](#s2DD33C9E750BA92207E4E1565EAF091E)] [added: [35](#s2E90DECF87FCED8A5F2E149D72EBCB2D)] |

| | [Effect of [removed: Inflation](#s979F7730B293D4D55CCAE1565EAF5A01)] [added: Inflation](#s7F88296846636B91ACD3149D731A1B1A)] | [removed: [37](#s979F7730B293D4D55CCAE1565EAF5A01)] [added: [35](#s7F88296846636B91ACD3149D731A1B1A)] |

10-K 1 ip10-k123117.htm 10-K

| | | | | | | | | |

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

| | | | | | | | | |

If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.

| PART I. | | [1](#sE0F3691F05D601207A18149D6C66A475) |

| | [General](#sE3FCDE1C5B8D7EC464EC149D6C942D9E) | [1](#sE3FCDE1C5B8D7EC464EC149D6C942D9E) |

| | [Employees](#s22E10C8A62EA316807C7149D6E2AF7BF) | [5](#s22E10C8A62EA316807C7149D6E2AF7BF) |

| | [Forestlands](#s598EC7DEBBEAD38B30BD149D6F62E76B) | [11](#s598EC7DEBBEAD38B30BD149D6F62E76B) |

FOR THE YEAR ENDED DECEMBER 31, 2017

| | [SIGNATURES](#s79A16C45571BFA134CE1149D7D271D06) | [90](#s79A16C45571BFA134CE1149D7D271D06) |

[PART I.](#sE0F3691F05D601207A18149D6C66A475)

BUSINESS](#s62974B48D044FDD5D0B5149D6C667E87)

[GENERAL](#sE3FCDE1C5B8D7EC464EC149D6C942D9E)

Management’s Discussion and Analysis of Financial Condition and Results of Operations](#s0F28FB50E27675CAC6CF149D71468C47).

Management’s Discussion and Analysis of Financial Condition and Results of Operations](#s0F28FB50E27675CAC6CF149D71468C47).

Financial Statements and Supplementary Data](#s77A48FB747C7B5C2CF1B149D73C5D3D5).

Management’s Discussion and Analysis of Financial Condition and Results of Operations](#s0F28FB50E27675CAC6CF149D71468C47).

Management’s Discussion and Analysis of Financial Condition and Results of Operations](#s0F28FB50E27675CAC6CF149D71468C47).

| Recycling | 2,257 | | 2,450 | | 2,379 | |

| Industrial Packaging | 18,674 | | 18,788 | | 18,695 | |

Capital

The Company has completed its Boiler MACT capital projects to meet the existing regulations.

We are not able to project any additional Boiler MACT capital project expenditures as it is uncertain to what extent the EPA will revise Boiler MACT standards that are subject to the remand.

On

August 4, 2017, the U.S. filed official notice to withdraw from the Paris Agreement.

U.S. Efforts

The 2017 change in leadership of the U.S. executive branch may result in significant revisions to or rescission of the EPA's GHG regulations.

In October 2017, the EPA issued a regulatory action to withdraw the CPP in its entirety.

Notwithstanding the withdrawal of the CPP, some states have remained committed to reaching the reduction targets set out in the CPP.

These GHG reduction plans,

International Paper plays a significant role in responding to the climate change challenge.

Our entire business depends upon the sustainability of forests.

We transform renewable resources into recyclable products that people depend on every day.

This cycle begins with

sourcing renewable fiber from responsibly managed forests, and at the end of use our products are recycled into new products at a higher rate than any other base material.

We will continue to lead the world in responsible forest stewardship to ensure healthy and productive forest ecosystems for generations to come.

Our efforts to advance sustainable forest management and restore forest landscapes are an important lever for mitigating climate change through carbon storage in forests.

Furthermore, we use biomass and manufacturing residuals (rather than fossil fuels) to generate a substantial majority of the manufacturing energy at our mills.

[EMPLOYEES](#s22E10C8A62EA316807C7149D6E2AF7BF)

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

| | | | | | | |

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

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

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

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

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

| | [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

Our products

| North American Recycling | 2,402 | | 2,379 | | 2,459 | |

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

| Consumer Packaging | | | | | | |

| North American Consumer Packaging | 1,189 | | 1,425 | | 1,486 | |

| Asian Coated Paperboard (6) | — | | 958 | | 1,358 | |

| Consumer Packaging | 1,582 | | 2,764 | | 3,198 | |

| | |

| --- | --- |

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

Additionally, the Company has an interest in ArborGen, Inc., a joint venture with certain other forest products companies.

The 2016 spend

On January 31, 2013, EPA issued the final suite of Boiler MACT regulations.

These regulations require owners of specified boilers to meet revised air emissions standards for certain substances.

As such, the projected capital expenditures for environmental projects represent our current best estimate of future expenditures with the recognition that the Boiler MACT regulations could change as a result of new, revised standards.

Climate change refers to any significant change in the measure of the earth’s climatic conditions such as temperature, precipitation, or winds that persist for decades or longer.

Climate change can be caused by natural factors, such as changes in the sun’s intensity and ocean circulation, and human activities can also affect the composition of the earth’s atmosphere, such as from the burning of fossil fuels.

Consistent with this objective, participating

National Efforts

The EPA has not yet identified the pulp and paper industry in the sectors to be covered by new standards.

However, we anticipate that at some future time pulp and paper sources may be subject to new GHG NSPS rules.

In response,

Adding to the uncertainty, states and some industry parties have filed lawsuits challenging the rule, and 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.

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.

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: 2016] [added: 2017] and [removed: 2015] [added: 2016] are set forth on page [removed: 83] [added: 81] of [Item 8.

Financial Statements and Supplementary [removed: Data](#sE2E446478787451A5414E1565F458DD1).][added: Data](#s77A48FB747C7B5C2CF1B149D73C5D3D5).]

[removed: 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: 17, 2017,] [added: 16, 2018,] there were approximately [removed: 12,311] [added: 11,766] record holders of common stock of the Company.

| Period | Total Number of Shares Purchased (a) | | Average Price Paid per Share | | | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Programs | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in billions) | | [added: |]

| Total | [removed: 11,738] | [removed: |] [added: $] | [added: 62] | | | [added: $] | [added: 38] | |

| (a) | [removed: 11,738] [added: 5,335] shares were acquired from employees from share withholdings to pay income taxes under the Company’s restricted stock programs. During these periods, no shares were purchased under our share repurchase program, which was [removed: 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 [removed: of] shares of our common stock. As of February [removed: 17, 2017,] [added: 16, 2018,] approximately $933 million [removed: of] shares of our common stock remained authorized for purchase under this program. |

The following graph compares a $100 investment in Company stock on December 31, [removed: 2011] [added: 2012] 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: 2011.][added: 2012.]

The graph portrays total return, [removed: 2011–2016,] [added: 2012–2017,] assuming reinvestment of dividends.

[removed: ][added: ]

SELECTED FINANCIAL [removed: DATA](#sA86AA34DA9C365B82D32E1564F553E75)][added: DATA](#s7E2FD5E819ECD5C9E169149D612FDDD1)]

| Dollar amounts in millions, except per share amounts and stock prices | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | |

| Earnings [removed: (loss) from continuing operations before income taxes] [added: (Loss) From Continuing Operations Before Income Taxes] and [removed: equity earnings | 956 | | | (b) | 1,266 | | | (e) | 872 | |] [added: Equity Earnings] | [removed: (g)] [added: 848] | [removed: 1,228] | | [added: 795] | [removed: (j)] | [removed: 967] | [added: 1,132] | | [removed: (m)] |

| Equity earnings (loss), net of taxes | [added: 177 | | | |] 198 | | | | 117 | | | | (200 | | ) | | (39 | | ) | | [removed: 61 | | | |]

| Discontinued operations, net of taxes | [removed: (5 | | ) | (c) | — | | | | (13 | | ) | (h)] [added: 34] | [removed: (309] | | [removed: )] [added: 102] | [removed: (k)] | [removed: 77] | [added: 85] | | [removed: (n)] |

| Net earnings (loss) | [removed: 902] [added: 2,144] | | | (b-d) | [removed: 917] [added: 902] | | | [removed: (e-f)] [added: (e-g)] | [removed: 536] [added: 917] | | | [removed: (g-i)] [added: (h-j)] | [removed: 1,378] [added: 536] | | | [removed: (j-l)] [added: (k-m)] | [removed: 799] [added: 1,378] | | | [removed: (m-o)] [added: (n-p)] |

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

| Net earnings (loss) attributable to International Paper Company | [removed: 904] [added: 2,144] | | | (b-d) | [removed: 938] [added: 904] | | | [removed: (e-f)] [added: (e-g)] | [removed: 555] [added: 938] | | | [removed: (g-i)] [added: (h-j)] | [removed: 1,395] [added: 555] | | | [removed: (j-l)] [added: (k-m)] | [removed: 794] [added: 1,395] | | | [removed: (m-o)] [added: (n-p)] |

| Plants, [removed: properties] [added: Properties] and [removed: equipment,] [added: Equipment,] net | [removed: 13,990 | | | | 11,980 | | | | 12,728 | | | | 13,672 | |] [added: 13,265] | | [removed: 13,949] | [added: 13,003] | | |

| Forestlands | [removed: 456] [added: 448] | | | | [removed: 366] [added: 456] | | | | [removed: 507] [added: 366] | | | | [removed: 557] [added: 507] | | | | [removed: 622] [added: 557] | | | |

| Notes payable and current maturities of long-term debt | [removed: 239] [added: 311] | | | | [removed: 426] [added: 239] | | | | [removed: 742] [added: 426] | | | | [removed: 661] [added: 742] | | | | [removed: 444] [added: 661] | | | |

| Long-term debt | [removed: 11,075] [added: 10,846] | | | | [removed: 8,844] [added: 11,075] | | | | [removed: 8,584] [added: 8,844] | | | | [removed: 8,787] [added: 8,584] | | | | [removed: 9,649] [added: 8,787] | | | |

| Total shareholders’ equity | [removed: 4,341] [added: 6,522] | | | | [removed: 3,884] [added: 4,341] | | | | [removed: 5,115] [added: 3,884] | | | | [removed: 8,105] [added: 5,115] | | | | [removed: 6,304] [added: 8,105] | | | |

| Net earnings (loss) | [removed: 2.20] [added: 5.19] | | | | [removed: 2.25] [added: 2.20] | | | | [removed: 1.30] [added: 2.25] | | | | [removed: 3.15] [added: 1.30] | | | | [removed: 1.82] [added: 3.15] | | | |

| Net earnings (loss) | [removed: 2.18] [added: 5.13] | | | | [removed: 2.23] [added: 2.18] | | | | [removed: 1.29] [added: 2.23] | | | | [removed: 3.11] [added: 1.29] | | | | [removed: 1.80] [added: 3.11] | | | |

| Cash dividends | [removed: 1.783] [added: 1.863] | | | | [removed: 1.640] [added: 1.783] | | | | [removed: 1.450] [added: 1.640] | | | | [removed: 1.250] [added: 1.450] | | | | [removed: 1.088] [added: 1.250] | | | |

| Total shareholders’ equity | [removed: 10.56] [added: 15.79] | | | | [removed: 9.43] [added: 10.56] | | | | [removed: 12.18] [added: 9.43] | | | | [removed: 18.57] [added: 12.18] | | | | [removed: 14.33] [added: 18.57] | | | |

| High | $ | [removed: 54.68] [added: 58.96] | | | $ | [removed: 57.90] [added: 54.68] | | | $ | [removed: 55.73] [added: 57.90] | | | $ | [removed: 50.33] [added: 55.73] | | | $ | [removed: 39.88] [added: 50.33] | | |

| Low | [removed: 32.50] [added: 49.60] | | | | [removed: 36.76] [added: 32.50] | | | | [removed: 44.24] [added: 36.76] | | | | [removed: 39.47] [added: 44.24] | | | | [removed: 27.29] [added: 39.47] | | | |

| Year-end | [removed: 53.06] [added: 57.94] | | | | [removed: 37.70] [added: 53.06] | | | | [removed: 53.58] [added: 37.70] | | | | [removed: 49.03] [added: 53.58] | | | | [removed: 39.84] [added: 49.03] | | | |

| Current ratio | [removed: 1.7] [added: 1.6] | | | | [removed: 1.7] [added: 1.6] | | | | 1.6 | | | | [removed: 1.8] [added: 1.5] | | | | [removed: 1.8] [added: 1.7] | | | |

| Total debt to capital ratio | [removed: 0.72] [added: 0.63] | | | | [removed: 0.70] [added: 0.72] | | | | [removed: 0.65] [added: 0.70] | | | | [removed: 0.54] [added: 0.65] | | | | [removed: 0.62] [added: 0.54] | | | |

| Return on shareholders’ equity | [removed: 22.1] [added: 43.9] | | % | [removed: (b-d)] | [removed: 20.0] [added: 22.1] | | % | [removed: (e-f)] | [removed: 7.7] [added: 20.0] | | % | [removed: (g-i)] | [removed: 20.2] [added: 7.7] | | % | [removed: (j-l)] | [removed: 11.6] [added: 20.2] | | % | [removed: (m-o)] |

| CAPITAL EXPENDITURES | $ | [removed: 1,348] [added: 1,391] | | | $ | [removed: 1,487] [added: 1,348] | | | $ | [removed: 1,366] [added: 1,487] | | | | [removed: $1,198] [added: $1,366] | | | | [removed: $1,383] [added: $1,198] | | |

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

| (a) | All periods presented have been restated to reflect the [added: North American Consumer Packaging business,] xpedx [removed: business] [added: business,] and the Temple-Inland Building Products business as discontinued operations [added: (excluding cash flow related items)] and prior period amounts have been adjusted to conform with current year presentation, if applicable. |

[removed: (c)] [added: (e)] Includes [added: the operating earnings of the North American Consumer Packaging business for the full year and] a pre-tax charge of $8 million [removed: ($5 million after taxes)] for a legal settlement associated with the xpedx business.

| Total | | $ | [removed: (23] [added: 8] | [removed: )] | [added: | $ | 5 | |]

| Total | [added: $] | [added: — | |] $ | [removed: (37] [added: 8] | [added: | $ | (4 |] ) |

[removed: (g)] [added: (h)] Includes the following charges (gains):

As of

| | | | | | | | | | | |

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

| | | | | | | | | | | |

| October 1, 2017 - October 31, 2017 | 78 | | $ | 56.82 | | — | | $ | 0.933 | |

| November 1, 2017 - November 30, 2017 | — | | — | | | — | | 0.933 | | |

| December 1, 2017 - December 31, 2017 | 5,257 | | 56.96 | | | — | | 0.933 | | |

| Net sales | $ | 21,743 | | | $ | 19,495 | | | $ | 20,675 | | | $ | 21,889 | | | $ | 21,244 | | |

| Costs and expenses, excluding interest | 20,323 | | | | 18,180 | | | | 18,988 | | | | 20,548 | | | | 19,540 | | | |

| Current assets less current liabilities | $ | 3,175 | | | $ | 2,601 | | | $ | 2,244 | | | $ | 2,719 | | | $ | 3,597 | | |

| Plants, properties and equipment, net | 13,265 | | | | 13,003 | | | | 11,000 | | | | 11,794 | | | | 12,745 | | | |

| Total assets | 33,903 | | | | 33,093 | | | | 30,271 | | | | 28,369 | | | | 31,242 | | | |

| Earnings (loss) from continuing operations | $ | 5.11 | | | $ | 1.95 | | | $ | 2.05 | | | $ | 1.12 | | | $ | 3.63 | | |

| Discontinued operations | 0.08 | | | | 0.25 | | | | 0.20 | | | | 0.18 | | | | (0.48 | | ) | |

| Earnings (loss) from continuing operations | $ | 5.05 | | | $ | 1.93 | | | $ | 2.03 | | | $ | 1.10 | | | $ | 3.59 | | |

| Discontinued operations | 0.08 | | | | 0.25 | | | | 0.20 | | | | 0.19 | | | | (0.48 | | ) | |

| Gain on sale of investment in ArborGen | | $ | (14 | ) | | $ | (9 | ) |

| Costs associated with the pulp business acquired in 2016 | | 33 | | | | 20 | | |

| Amortization of Weyerhaeuser inventory fair value step-up | | 14 | | | | 8 | | |

| Holmen bargain purchase gain | | (6 | | ) | | (6 | | ) |

| Abandoned property removal | | 20 | | | | 13 | | |

| Kleen Products settlement | | 354 | | | | 219 | | |

| Asia Foodservice sale | | 9 | | | | 4 | | |

| Brazil Packaging wood supply accelerated amortization | | 10 | | | | 7 | | |

| Interest income on income tax refund claims | | (5 | | ) | | (3 | | ) |

| Total special items | | $ | 496 | | | $ | 302 | |

| Non-operating pension expense | | 484 | | | | 298 | | |

| Total | | $ | 980 | | | $ | 600 | |

| International legal entity restructuring | | $ | 34 | |

| Income tax refund claims | | (113 | | ) |

| Cash pension contribution | | 38 | | |

| International Tax Law Change | | 9 | | |

| Tax benefit of Tax Cuts and Jobs Act | | (1,222 | | ) |

| Tax impact of other special items | | $ | (1,254 | ) |

(f) Includes the operating earnings of the North American Consumer Packaging business for the full year.

| xpedx legal settlement | | $ | 8 | | | $ | 5 | |

(i) Includes the operating earnings of the North American Consumer Packaging business for the full year .

| Tax impact of other special items | | $ | (81 | ) |

| Total special items | | $ | 299 | | | $ | 227 | |

| Total | | $ | 622 | | | $ | 424 | |

| | | | | | | | | | |

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

| 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 | |

| --- | --- |

| Net sales | $ | 21,079 | | | $ | 22,365 | | | $ | 23,617 | | | $ | 23,483 | | | $ | 21,852 | | |

| Costs and expenses, excluding interest | 19,603 | | | | 20,544 | | | | 22,138 | | | | 21,643 | | | | 20,214 | | | |

| Current assets less current liabilities | $ | 2,897 | | | $ | 2,553 | | | $ | 3,050 | | | $ | 3,898 | | | $ | 3,907 | | |

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

| Earnings (loss) from continuing operations | $ | 2.21 | | | $ | 2.25 | | | $ | 1.33 | | | $ | 3.85 | | | $ | 1.65 | | |

| Discontinued operations | (0.01 | | ) | | — | | | | (0.03 | | ) | | (0.70 | | ) | | 0.17 | | | |

| Earnings (loss) from continuing operations | $ | 2.19 | | | $ | 2.23 | | | $ | 1.31 | | | $ | 3.80 | | | $ | 1.63 | | |

| Discontinued operations | (0.01 | | ) | | — | | | | (0.02 | | ) | | (0.69 | | ) | | 0.17 | | | |

2014:

| In millions | | 2014 | | |

| Total | | $ | 344 | | | $ | 255 | |

| Total | | $ | 667 | | | $ | 452 | |

| Total | | $ | 477 | | | $ | 418 | |

| Total | | $ | (774 | ) |

2012:

| | | 2012 | | | | | | |

| Temple-Inland integration | | $ | 164 | | | $ | 105 | |

| EMEA packaging business restructuring | | 17 | | | | 12 | | |

| Temple-Inland inventory fair value adjustment | | 20 | | | | 12 | | |

| Hueneme mill long-lived asset fair value adjustment | | 62 | | | | 38 | | |

| Containerboard mill divestitures | | 29 | | | | 55 | | |

| Total | | $ | 494 | | | $ | 360 | |

| Building Products divestiture | | $ | 15 | | | $ | 9 | |

| xpedx restructuring | | 44 | | | | 28 | | |

| In millions | | 2012 | | |

| Internal restructuring | | $ | 14 | |

| Deferred tax asset adjustment related to Medicare Part D reimbursement | | 5 | | |

| Total | | $ | 25 | |

International Paper generated Adjusted Operating Earnings Attributable to Common Shareholders of $1.4 billion ($3.35 per share) in 2016, compared with $1.5 billion ($3.65 per share) in 2015, and $1.3 billion ($3.00 per share) in 2014 (see reconciliation on page 19).

Despite a tough global environment, International Paper delivered another year of solid performance, with continued strong cash flow generation and a return on invested capital in excess of our cost of capital.

During 2016, we took steps to further strengthen our portfolio.

We completed the acquisition of Weyerhaeuser’s pulp business, which we have combined with IP’s legacy pulp business to form our new Global Cellulose Fibers business.

We also completed the conversion of a machine at the Riegelwood, North Carolina mill to produce fluff pulp, which coupled with the newly acquired pulp business, gives the Company the capacity to grow both fluff and high-value specialty pulp products.

In addition, we also acquired a top-quartile mill asset in Madrid, which we will convert in the second half of 2017 to produce recycled containerboard to support our EMEA Industrial Packaging business.