filings.toolsItem 2. [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#i23e23e74ffae4467b99480730e23722f91)
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Item 2. [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#i23e23e74ffae4467b99480730e23722f91)
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in "Financial Statements and Supplementary Data" of this Quarterly Report on Form 10-Q (this "Form 10-Q") and the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (our "Annual Report"). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and in our Annual Report, particularly under "Risk Factors" and "Forward-Looking Statements" of this Form 10-Q and our Annual Report. Please see our "Cautionary Statement Regarding Forward-Looking Statements" below.
EXECUTIVE SUMMARY
Net earnings (loss) were $75 million ($0.14 per diluted share) in the second quarter of 2025, compared with $(105) million ($(0.24) per diluted share) in the first quarter of 2025 and $498 million ($1.41 per diluted share) in the second quarter of 2024. The Company generated Adjusted operating earnings (a non-GAAP measure defined below) of $105 million ($0.20 per diluted share) in the second quarter of 2025, compared with $101 million ($0.23 per diluted share) in the first quarter of 2025 and $193 million ($0.55 per diluted share) in the second quarter of 2024.
International Papers’ second quarter results, compared to the first quarter of 2025, reflect higher sales and earnings through the successful execution of sales price increases along with favorable volume in our Packaging Solutions North America segment ("PS NA"). The second quarter of 2025 reflects one additional month of DS Smith activity in both our PS NA and Packaging Solutions EMEA ("PS EMEA") segments. Industry demand in North America has been relatively stable, but softer than last year as economic uncertainty from tariffs continues to impact industrial production and box demand across the manufacturing sector. In our PS EMEA segment, weaker market demand driven by macroeconomic volatility was a headwind in the second quarter of 2025. Box shipments slowed sequentially in the second quarter by approximately 1%, primarily driven by softness in April and May although we saw signs of volume recovery in June. We continue to actively monitor recent changes in trade policy, particularly newly implemented tariffs affecting goods imported in the United States. While the full scope of the financial impact remains under evaluation, our risk management and supply chain teams are engaged in contingency planning to mitigate potential disruptions. We continued to make progress in our commercial efforts through a focus on our customers and growing the business in attractive markets. We also took several cost-out actions in the second quarter, including announced facility closures in North America and EMEA, as part of our overall effort to reduce complexity and minimize costs, which enables us to reinvest to build an advantaged cost position. We remain committed to the pursuit and execution of our commercial and cost-out actions.
The following is a discussion, by segment, of the second quarter of 2025 performance compared to the first quarter of 2025 as well as the third quarter of 2025 outlook. Second quarter of 2025 operating profit in our PS NA segment was $277 million versus $142 million in the first quarter of 2025. Price and mix was higher from the realization of prior index movements, especially in local accounts and we expect this to continue in the third quarter of 2025. Volume was seasonally higher in the second quarter of 2025 and we expect this trend to continue in the third quarter of 2025 as we onboard our strategic wins. Operations and costs in the second quarter of 2025 was unfavorable sequentially, primarily driven by the non-repeat of favorable items from the first quarter of 2025 along with additional costs associated with footprint and business optimization actions, inventory valuation adjustments and increased employee benefit costs in the second quarter of 2025. Operations and costs also included unplanned costs from the natural gas curtailment we experienced at our Valliant, Oklahoma mill. These unfavorable costs were partially offset by footprint optimization benefits from the Campti, Louisiana mill closure and other prior cost-out initiatives. For the third quarter, operations and costs are anticipated to be favorable due to the non-repeat of unfavorable items in the second quarter, continued benefits from cost-out actions and focused performance improvement. Planned maintenance outage costs were sequentially higher with the second quarter being the heaviest outage quarter of 2025 and are expected to be lower in the third quarter coming off the peak activity. Input costs were lower in the second quarter of 2025 due to lower energy and fiber costs but we expect higher input costs in the third quarter due to increased energy costs. Depreciation and amortization was lower in the second quarter of 2025 associated with the non-repeat of the accelerated depreciation from the Campti, Louisiana mill closure, offset by an additional month of depreciation for DS Smith North American assets and updates to DS Smith purchase price accounting values.
Second quarter 2025 operating loss in our PS EMEA business was $1 million versus operating profit of $46 million in the first quarter of 2025. Price and mix was sequentially higher in the second quarter of 2025 due to prior index movements and higher external paper sales. We expect price and mix to be higher in the third quarter of 2025 on continued realization of prior index
movements. Volume was lower in the second quarter of 2025 due to the overall soft demand environment. We expect improved volume in the third quarter of 2025 due to an improving demand environment along with the benefits of confirmed strategic wins. Operations and costs in the second quarter of 2025 were sequentially higher driven by the non-repeat of favorable first quarter of 2025 items, including energy credits recognized in the prior quarter. In the region, input costs were higher in the second quarter driven by higher fiber costs that were offset by lower energy costs. Operations and costs are expected to be lower in the third quarter of 2025 as we realize the benefits of cost- out initiatives. Input costs were sequentially flat versus the first quarter of 2025, and we expect some improvement in the third quarter of 2025 on lower fiber costs. Depreciation and amortization was higher in the second quarter of 2025 associated with an additional month of depreciation for DS Smith EMEA assets and updates to DS Smith purchase price accounting values.
Second quarter of 2025 operating loss in our Global Cellulose Fibers business was $4 million versus operating profit of $17 million in the first quarter of 2025. Price and mix was higher versus the first quarter of 2025 on the realization of prior index movements. We expect price and mix to be lower in the third quarter of 2025 on lower price realization from prior index movements and lower energy credits sales compared to the first half of 2025. Volume was sequentially lower in the second quarter of 2025 due to higher maintenance outage activity. We expect volumes to be higher in the third quarter of 2025 in response to lower outage activity in the quarter. Operations and costs were sequentially higher in the second quarter of 2025 due to the timing of spend on turbine maintenance, partially offset by improved mill reliability. We expect improved operations and costs in the third quarter on the non-repeat of the second quarter turbine maintenance and continued mill reliability improvement. Planned maintenance outage costs were higher in the second quarter of 2025 as we have now completed 80% of planned outages which will result in lower maintenance outage costs in the third quarter of 2025. Finally, input costs were lower in the second quarter of 2025 on lower energy costs which are expected to increase in the third quarter of 2025. We are pursuing strategic options for our Global Cellulose Fibers business. There is no assurance that this process will result in any transaction or other outcome. See “Item 1A Risk Factors - There are risks associated with our pursuit of strategic options of our Global Cellulose Fibers business, and there is no assurance that this process will result in any transactions or other outcome."
Divestiture of European Corrugated Box Plants
On June 30, 2025, the Company completed the sale of five corrugated box plants in Europe as part of its remedy package for the previously disclosed acquisition of DS Smith. The divested assets include (i) three plants in Normandy, France (namely, one box plant in Saint-Amand, one box plant in Mortagne, and one sheet plant in Cabourg); (ii) one box plant in Ovar, Portugal; and (iii) one box plant in Bilbao, Spain. The sale of these plants was agreed to with the European Commission as a remedy for IP’s acquisition of DS Smith, as published on the European Commission’s website on January 24, 2025.
This divestiture follows the Company’s acquisition of DS Smith, which closed on January 31, 2025. As part of the transaction, IP issued 0.1285 shares for each DS Smith share, resulting in the issuance of approximately 178 million new shares of IP common stock. Holders of these shares owned roughly 34.1% of the Company’s outstanding share capital post-closing. The total purchase consideration was approximately $9.9 billion, based on the closing share price of $55.63. Subsequently, on February 4, 2025, the new shares began trading under the symbol “IP” on the New York Stock Exchange and under “IPC” on the London Stock Exchange via a secondary listing. The combined Company’s global headquarters remains in Memphis, Tennessee, with its EMEA headquarters established at DS Smith’s London office.
Macroeconomic and Market Conditions
In the second quarter, the Company navigated a dynamic macroeconomic environment marked by cost pressures, shifting consumer demand, elevated interest rates and evolving global trade policies. These factors, along with heightened geopolitical tensions, are contributing to broader consumer uncertainty and impacting industrial demand.
We continue to actively monitor recent changes in trade policy, particularly newly implemented tariffs affecting goods imported into the United States. Economic uncertainty from tariffs continues to impact industrial production and box demand across the manufacturing sector.
The OBBBA enacted in July 2025 introduced a wide range of tax policy changes. Key provisions include the extension of select elements of the Tax Cuts and Jobs Act, updates to the international tax framework, and the reinstatement of favorable treatment for certain business-related deductions. With staggered effective dates beginning in 2025 and extending through 2027, the Company is actively evaluating the OBBBA’s potential implications on its consolidated financial statements.
Reconciliation of Net earnings (loss) to Adjusted operating earnings (loss)
Adjusted Operating Earnings and Adjusted Operating Earnings Per Share are non-GAAP measures defined as net earnings (loss) (a GAAP measure) excluding net special items and non-operating pension expense (income). Net earnings (loss) and Diluted earnings (loss) per share are the most directly comparable GAAP measures. The Company calculates Adjusted Operating Earnings by excluding the after-tax effect of non-operating pension expense (income) and net special items, as described in greater detail below, from net earnings (loss) reported under GAAP. Adjusted Operating Earnings Per Share is calculated by dividing Adjusted Operating Earnings by diluted average shares of common stock outstanding. Management uses these non-GAAP measures to focus on ongoing operations and believes that such non-GAAP measures are useful to investors in assessing the operational performance of the Company and enabling investors to perform meaningful comparisons of past and present consolidated operating results. The Company believes that using these non-GAAP measures, along with the most directly comparable GAAP measures, provides for a more complete analysis of the Company's results of operations.
Non-operating pension expense (income) represents amortization of prior service cost, amortization of actuarial gains/losses, expected return on assets and interest cost. The Company excludes these amounts from our Adjusted Operating Earnings as the Company does not believe these items reflect ongoing operations. These particular pension cost elements are not directly attributable to current employee service. The Company includes service cost in our non-GAAP measure as it is directly attributable to employee service, and the corresponding employees’ other compensation elements, in connection with ongoing operations.
The following is a reconciliation of Net earnings (loss) to Adjusted operating earnings (loss) on a total basis. Additional detail is provided below regarding the net special items expense (income) referenced in the charts below.
| Three Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||
| In millions | 2025 | 2024 | 2025 | ||||||||||||||
| Net earnings (loss) | $ | 75 | $ | 498 | $ | (105) | |||||||||||
| Add back - Non-operating pension expense (income) | (5) | (10) | 3 | ||||||||||||||
| Add back - Net special items expense (income) | 35 | 49 | 249 | ||||||||||||||
| Income taxes - Non-operating pension and special items (a) | — | (344) | (46) | ||||||||||||||
| Adjusted operating earnings (loss) | $ | 105 | $ | 193 | $ | 101 |
(a) For the three months ended June 30, 2025, this amount includes a tax expense of $1 million on the non-operating pension expense and a tax benefit of $1 million associated with special items. The three months ended June 30, 2024 include a tax benefit of $338 million related to internal legal entity restructuring. This amount also includes a tax expense of $2 million on the non-operating pension incomes and a tax benefit of $8 million associated with special items. The three months ended March 31, 2025 includes a tax benefit of $1 million on the non-operating pension expense and a tax benefit of $45 million associated with special items.
Effects of Net Special Items Expense (Income)
Details of net special items expense (income) included in continuing operations for the three months ended are as follows:
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | ||||||||||||||||||||||||||||||||||||
| In millions | Before Tax | After Tax | Before Tax | After Tax | Before Tax | After Tax | ||||||||||||||||||||||||||||||||
| DS Smith combination costs | $ | 32 | $ | 29 | (a) | $ | 17 | $ | 17 | (a) | $ | 221 | $ | 183 | (a) | |||||||||||||||||||||||
| Severance and other costs | 39 | 34 | (b) | — | — | 83 | 63 | (b) | ||||||||||||||||||||||||||||||
| Global Cellulose Fibers strategic options costs | 15 | 11 | (a) | — | — | 12 | 9 | (a) | ||||||||||||||||||||||||||||||
| Strategic advisory fees | — | — | 12 | 9 | (a) | |||||||||||||||||||||||||||||||||
| Environmental remediation adjustments | — | — | 25 | 19 | (d) | — | — | |||||||||||||||||||||||||||||||
| Legal reserve adjustments | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Net (gain) loss on sale of business | (51) | (40) | (c) | — | — | |||||||||||||||||||||||||||||||||
| Net (gain) loss on sale of fixed assets | — | — | (5) | (4) | (e) | (67) | (51) | (e) | ||||||||||||||||||||||||||||||
| Total | 35 | 34 | 49 | 41 | 249 | 204 | ||||||||||||||||||||||||||||||||
| Tax expense (benefit) | ||||||||||||||||||||||||||||||||||||||
| Tax benefit related to internal legal entity restructuring | — | — | — | (338) | (f) | |||||||||||||||||||||||||||||||||
| Tax Total | — | — | — | (338) | — | — | ||||||||||||||||||||||||||||||||
| Total Net Special Items | $ | 35 | $ | 34 | $ | 49 | $ | (297) | $ | 249 | $ | 204 |
| (a) | Transaction and other costs that the Company believes are not reflective of the Company's underlying operations recorded in cost of products sold, selling and administrative expenses and taxes other than payroll and income taxes. | ||||
| (b) | Severance and other costs associated with the Company's 80/20 strategic approach which includes the realignment of resources and mill strategic actions recorded in restructuring charges, net. | ||||
| (c) | Gain on the sale of five European box plants in Mortagne, Saint-Amand, and Cabourg (France), Ovar (Portugal) and Bilbao (Spain) to satisfy regulatory commitments in connection with the DS Smith combination. | ||||
| (d) | Environmental remediation adjustments associated with remediation work at a waste pit site at a mill acquired but never operated by the Company, and last utilized by the predecessor owner of the mill. | ||||
| (e) | Net (gain) loss on the sale of fixed assets related to the sale of assets at our permanently closed Orange, Texas containerboard mill, miscellaneous land and other items that the Company does not believe are reflective of the Company's underlying operations. | ||||
| (f) | Tax benefit related to internal legal entity restructuring. |
The following is a reconciliation of Net earnings (loss) to Adjusted operating earnings (loss) on a per share basis:
| Three Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||
| 2025 | 2024 | 2025 | |||||||||||||||
| Diluted earnings (loss) per share | $ | 0.14 | $ | 1.41 | $ | (0.24) | |||||||||||
| Add back - Non-operating pension expense (income) per share | — | (0.02) | 0.01 | ||||||||||||||
| Add back - Net special items expense (income) per share | 0.06 | 0.14 | 0.57 | ||||||||||||||
| Income taxes per share - Non-operating pension and special items | — | (0.98) | (0.11) | ||||||||||||||
| Adjusted operating earnings (loss) per share | $ | 0.20 | $ | 0.55 | $ | 0.23 |
Cash provided by (used for) operations totaled $188 million and $760 million for the first six months of 2025 and 2024, respectively. Free cash flow in the first six months of 2025 and 2024 was $(564) million and $311 million, respectively. Free cash flow is a non-GAAP measure, which equals cash provided by operations less capital expenditures, and the most directly comparable GAAP measure is cash provided by (used for) operations. Management utilizes this measure in connection with managing our business and believes that free cash flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a strong balance sheet, pay dividends, repurchase stock, service debt and make investments for future growth. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures.
The following is a reconciliation of cash provided by operations to free cash flow:
| Six Months Ended June 30, | |||||||||||
| In millions | 2025 | 2024 | |||||||||
| Cash provided by operations | $ | 188 | $ | 760 | |||||||
| Adjustments: | |||||||||||
| Capital expenditures | (752) | (449) | |||||||||
| Free Cash Flow | $ | (564) | $ | 311 |
The non-GAAP financial measures presented in this Form 10-Q as referenced above have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. In addition, because not all companies utilize identical calculations, the Company's presentation of non-GAAP measures in this Form 10-Q may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as the Company. Investors are cautioned not to place undue reliance on any non-GAAP financial measures used in this Form 10-Q.
The following summarizes our results of operations for second quarter of 2025 compared with the first quarter of 2025 and the second quarter of 2024:
| Three Months Ended June 30, | Three Months Ended March 31, | Change Compared to March 31, 2025 | Change Compared to June 30, 2024 | |||||||||||||||||||||||||||||
| In millions | 2025 | 2024 | 2025 | $ | % | $ | % | |||||||||||||||||||||||||
| Net sales | $ | 6,767 | $ | 4,734 | $ | 5,901 | $ | 866 | 15 | % | $ | 2,033 | 43 | % | ||||||||||||||||||
| Cost of products sold | 4,876 | 3,360 | 4,259 | 617 | 14 | % | 1,516 | 45 | % | |||||||||||||||||||||||
| Selling and administrative expenses | 578 | 453 | 530 | 48 | 9 | % | 125 | 28 | % | |||||||||||||||||||||||
| Depreciation and amortization | 480 | 261 | 571 | (91) | (16) | % | 219 | 84 | % | |||||||||||||||||||||||
| Distribution expenses | 578 | 379 | 483 | 95 | 20 | % | 199 | 53 | % | |||||||||||||||||||||||
| Taxes other than payroll and income taxes | 49 | 35 | 93 | (44) | (47) | % | 14 | 40 | % | |||||||||||||||||||||||
| Restructuring charges, net | 39 | — | 83 | |||||||||||||||||||||||||||||
| Net (gains) losses on sales and impairments of businesses | (51) | — | — | |||||||||||||||||||||||||||||
| Net (gains) losses on sale of fixed assets | — | (5) | (67) | |||||||||||||||||||||||||||||
| Interest expense, net | 107 | 55 | 81 | 26 | 32 | % | 52 | 95 | % | |||||||||||||||||||||||
| Non-operating pension expense (income) | (5) | (10) | 3 | |||||||||||||||||||||||||||||
| Earnings (loss) before income taxes and equity earnings (loss) | 116 | 206 | (135) | |||||||||||||||||||||||||||||
| Income tax provision (benefit) | 40 | (293) | (31) | |||||||||||||||||||||||||||||
| Equity earnings (loss), net of taxes | (1) | (1) | (1) | |||||||||||||||||||||||||||||
| Net earnings (loss) | $ | 75 | $ | 498 | $ | (105) | ||||||||||||||||||||||||||
| Diluted earnings (loss) per share | $ | 0.14 | $ | 1.41 | $ | (0.24) |
Three Months Ended June 30, 2025 Compared to the Three Months Ended March 31, 2025 and the Three Months Ended June 30, 2024
Refer to the Effects of Net Special Items Expense (Income) section on page 32 for details of net special items expense (income) discussed below.
Net sales
The increase in the second quarter of 2025 compared to the first quarter of 2025 and the second quarter of 2024 was primarily driven by the addition of the DS Smith business and the three months of activity in the second quarter of 2025 compared to two months of activity in the first quarter of 2025. Additional details on net sales are provided in the Business Segment Operating Results section below.
Cost of products sold
Net special items charges of $25 million and $70 million in the second quarter of 2024 and the first quarter of 2025, respectively, are included in cost of products sold. The second quarter of 2025 includes $1.6 billion for DS Smith and the first quarter of 2025 includes $1.09 billion for DS Smith (including $70 million of special items charges). Cost of products sold includes three months of DS Smith activity in the second quarter of 2025 compared to two months in the first quarter of 2025. For legacy IP, compared to the first quarter of 2025, there were increases of $55 million in raw materials and $109 million in maintenance and labor expense, offset by decreases of $52 million in fuel and other expenses. Compared to the second quarter of 2024, cost of products sold was impacted by decreases in raw materials and operating materials of $218 million, offset by an increase of $182 million in maintenance and fuel expense.
Selling and administrative expenses
Net special items charges of $47 million, $29 million and $113 million in the second quarter of 2025 and 2024 and the first quarter of 2025, respectively, are included in selling and administrative expenses. The second quarter of 2025 includes $144 million for DS Smith (including $15 million of special items charges) and the first quarter of 2025 includes $123 million for DS Smith (including $49 million of special items charges). Selling and administrative expenses includes three months of DS Smith activity in the second quarter of 2025 compared to two months in the first quarter of 2025. For legacy IP, compared to the first quarter of 2025, there were increases in incentive compensation of $10 million and medical benefit costs of $15 million. Compared to the second quarter of 2024, there were decreases in medical benefit costs of $10 million and incentive compensation of $45 million.
Depreciation and amortization
Depreciation expense for the first quarter of 2025 includes $197 million for accelerated depreciation related to the Campti, Louisiana mill closure and other 80/20 strategic actions. The second quarter of 2025 and the first quarter of 2025 includes $214 million and $107 million, respectively, for DS Smith. Depreciation and amortization includes three months of DS Smith activity in the second quarter of 2025 compared to two months in the first quarter of 2025. Depreciation and amortization expense in the second quarter of 2025 is higher primarily due to the changes in the valuation of intangible assets and property plant, and equipment along with changes to estimated lives associated with the acquisition accounting of DS Smith. Depreciation and amortization expense is based on an estimate of asset fair values and will be updated throughout the calendar year as we complete the purchase price allocation.
Distribution expenses
The second quarter of 2025 includes $228 million compared to $140 million in the first quarter of 2025 for DS Smith. Distribution expenses includes three months of DS Smith activity in the second quarter of 2025 compared to two months in the first quarter of 2025. For legacy IP, compared to the first quarter of 2025, there was an increase in freight expense of $8 million and compared to the second quarter of 2024, there were decreases in freight expense and warehousing expense of $29 million.
Taxes other than payroll and income taxes
Net special items charges of $50 million in the first quarter of 2025 are included in taxes other than payroll and income taxes. The second quarter of 2025 includes $10 million compared to $5 million in the first quarter of 2025 for DS Smith. For legacy IP, taxes other than payroll and income taxes includes three months of DS Smith activity in the second quarter of 2025 compared to two months in the first quarter of 2025.
Interest expense, net
The second quarter of 2025 includes $45 million compared to $24 million in the first quarter of 2025 for DS Smith. Interest expense, net includes three months of DS Smith activity in the second quarter of 2025 compared to two months in the first quarter of 2025.
Income tax provision (benefit)
An income tax provision of $40 million was recorded for the second quarter of 2025 and the reported effective income tax rate was 34%. Excluding a benefit of $1 million related to the tax effects of net special items and an expense of $1 million related to the tax effects of non-operating pension income, the operational effective income tax rate was 27% for the second quarter of 2025.
An income tax benefit of $31 million was recorded for the first quarter of 2025 and the reported effective income tax rate was 23%. Excluding a benefit of $45 million related to the tax effects of net special items and benefit of $1 million related to the tax effects of non-operating pension expense, the operational effective income tax rate was 13% for the first quarter of 2025. The operational and reported effective income tax rates were higher in the second quarter of 2025 than in the first quarter of 2025 primarily due to decreased tax expense related to equity-based compensation that occurred in the first quarter.
An income tax benefit of $293 million was recorded for the second quarter of 2024 and the reported effective income tax rate was (142)%. Excluding a benefit of $346 million related to the tax effects of net special items and expense of $2 million related to the tax effects of non-operating pension income, the operational effective income tax rate was 21% for the second quarter of 2024.
The following is a reconciliation of the net income tax provision (benefit) to the operational income tax provision (a non-GAAP financial measure) and the reported effective income tax rate to the operational effective income tax rate (a non-GAAP financial measure):
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | |||||||||||||||||||
| In millions (except rates) | 2025 | 2024 | 2025 | |||||||||||||||||
| Provision (Benefit) | Rate | Provision (Benefit) | Rate | Provision (Benefit) | Rate | |||||||||||||||
| Income tax provision (benefit) and reported effective income tax rate | $ | 40 | 34 | % | $ | (293) | (142) | % | $ | (31) | 23 | % | ||||||||
| Income tax effect - non-operating pension (income) expense and special items | — | 344 | 46 | |||||||||||||||||
| Operational Tax Provision and Operational Effective Tax Rate | $ | 40 | 27 | % | $ | 51 | 21 | % | $ | 15 | 13 | % |
The operational income tax provision and operational effective income tax rate are non-GAAP financial measures and are calculated by adjusting the earnings (loss) before income taxes and equity earnings (loss), income tax provision (benefit) and rate to exclude net special items and non-operating pension expense (income). The most directly comparable GAAP measures are the reported income tax provision and effective income tax rate, respectively. Management believes that this presentation provides useful information to investors by providing a meaningful comparison of the income tax rate between past and present periods.
BUSINESS SEGMENT OPERATING RESULTS
The Company currently operates in three segments: Packaging Solutions North America (PS NA), Packaging Solutions EMEA (PS EMEA) and Global Cellulose Fibers.
The following tables present net sales and business segment operating profit (loss), which is the Company's measure of segment profitability. Business segment operating profit (loss) is a measure reported to our management for purposes of making decisions about allocating resources to our business segments and assessing the performance of our business segments and is presented in our financial statement footnotes in accordance with ASC 280 - "Segment Reporting." For additional information regarding business segment operating profit (loss), including a description of the manner in which business segment operating profit (loss) is calculated, see Note 19 - Business Segment Information to the Condensed Notes to the Consolidated Financial Statements.
PS NA
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| In millions | 2nd Quarter | 1st Quarter | Six Months | 2nd Quarter | 1st Quarter | Six Months | ||||||||||||||||||||||||||||||||
| Sales | $ | 3,860 | $ | 3,702 | $ | 7,562 | $ | 3,628 | $ | 3,486 | $ | 7,114 | ||||||||||||||||||||||||||
| Business Segment Operating Profit (Loss) | $ | 277 | $ | 142 | $ | 419 | $ | 281 | $ | 192 | $ | 473 | ||||||||||||||||||||||||||
PS NA results include sales of $173 million and business segment operating profit (loss) of $(33) million for the legacy DS Smith North America business in the second quarter of 2025 compared with sales of $127 million and business segment operating profit (loss) of $(9) million in the first quarter of 2025. The financial results of the PS NA segment include three months in the second quarter compared with two months in the first quarter for the DS Smith North America business. For legacy IP PS NA, sales were higher compared to the first quarter of 2025 driven by higher average sales prices for boxes and export containerboard reflecting prior index movements and seasonally higher box volumes. Cost of products sold increased by $84 million and was impacted by higher manufacturing costs, including planned maintenance downtime costs, partially offset by lower input costs. Depreciation and amortization expense decreased by $196 million driven by the non-repeat of $193 million of accelerated depreciation associated with the previously announced closure of our Red River containerboard mill in Campti, Louisiana. Selling and administrative expenses increased by $55 million driven by higher overhead costs, including the non-repeat of favorable employee medical costs in the first quarter of 2025.
Compared with the second quarter of 2024, IP legacy PS NA sales in the second quarter of 2025 were higher driven by higher sales prices, partially offset by lower sales volumes reflecting the impact of our box go-to-market strategy. Cost of products sold increased by $12 million as the impact of higher manufacturing costs, including planned maintenance downtime costs and input costs, was partially offset by lower sales volumes. Selling and administrative expenses increased by $17 million and was impacted by higher overhead costs. Distribution expense decreased by $17 million and was impacted by lower sales volumes.
Entering the third quarter of 2025, sales volumes are expected to be seasonally higher compared to the second quarter of 2025. Sales are also expected to be impacted by prior index movements. Operating costs are expected to be lower. Planned
maintenance downtime costs are expected to be lower in the third quarter of 2025 compared with the second quarter of 2025. Input costs are expected to be higher driven by energy costs.
PS EMEA
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| In millions | 2nd Quarter | 1st Quarter | Six Months | 2nd Quarter | 1st Quarter | Six Months | |||||||||||||||||||||||||||||
| Sales | $ | 2,291 | $ | 1,550 | $ | 3,841 | $ | 328 | $ | 348 | $ | 676 | |||||||||||||||||||||||
| Business Segment Operating Profit (Loss) | $ | (1) | $ | 46 | $ | 45 | $ | 10 | $ | 24 | $ | 34 |
PS EMEA results include sales of $1.9 billion and business segment operating profit (loss) of $(10) million for the legacy DS Smith EMEA business in the second quarter of 2025 compared with sales of $1.2 billion and business segment operating profit (loss) of $13 million in the first quarter of 2025. The financial results of the PS EMEA segment include three months in the second quarter compared with two months in the first quarter for the DS Smith EMEA business. Compared with the first quarter of 2025, sales were higher driven by higher sales prices reflecting prior price increases and higher external paper sales, partially offset by lower volumes reflecting seasonality and a soft demand environment. Cost of products sold increased and was impacted by higher fiber costs partially offset by lower energy costs and higher planned maintenance downtime costs. Selling and administrative expenses increased driven by higher overhead costs. Depreciation and amortization expense in the second quarter of 2025 is higher primarily due to the changes in the valuation of intangible assets and property, plant and equipment along with changes to estimated lives associated with the acquisition accounting of DS Smith. Depreciation and amortization expense is based on an estimate of asset fair values and will be updated throughout the calendar year as we complete the purchase price allocation.
Compared with the second quarter of 2024, legacy IP PS EMEA sales in the second quarter of 2025 were higher driven by higher sales prices for paper. Cost of products sold were slightly higher, reflecting higher input costs. Selling and administrative expenses were $8 million higher compared to the first quarter of 2024 driven by higher overhead costs.
Looking ahead to the third quarter of 2025, sales are expected to be higher. Operating costs are expected to be lower. Input costs are expected to be lower, driven by fiber costs. Planned maintenance downtime costs are expected to be higher in the third quarter of 2025.
Global Cellulose Fibers
| 2025 | 2024 | |||||||||||||||||||||||||||||||
| In millions | 2nd Quarter | 1st Quarter | Six Months | 2nd Quarter | 1st Quarter | Six Months | ||||||||||||||||||||||||||
| Sales | $ | 628 | $ | 643 | $ | 1,271 | $ | 717 | $ | 704 | $ | 1,421 | ||||||||||||||||||||
| Business Segment Operating Profit (Loss) | $ | (4) | $ | 17 | $ | 13 | $ | 31 | $ | (47) | $ | (16) |
Global Cellulose Fibers sales were lower for the second quarter of 2025 compared with the first quarter of 2025, as higher sales prices from prior index movements were more than offset by lower volumes driven by the heavy outage quarter. Cost of products sold was slightly lower and was impacted by lower sales volumes and lower energy costs offset by planned maintenance downtime costs. Selling and administrative expenses increased $13 million driven by higher overhead costs, including the non-repeat of favorable employee medical costs in the first quarter of 2025. Distribution costs were lower reflecting lower sales volumes.
Compared with the second quarter of 2024, sales in the second quarter of 2025 were lower, as higher average sales prices and an improved product mix were more than offset by lower commodity volumes driven by the mill strategic actions taken in the fourth quarter of 2024. Cost of products sold decreased $25 million and was impacted by lower sales volumes partially offset by higher planned maintenance downtime costs. Selling and administrative expense was $5 million lower driven by lower overhead costs. Distribution costs were $13 million lower reflecting lower sales volumes.
Entering the third quarter of 2025, sales are expected to be lower. Planned maintenance downtime costs in the third quarter of 2025 are expected to be lower compared with the second quarter of 2025. Operating costs are expected to be lower. Input costs are expected to be higher driven by energy costs.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by (used for) operations totaled $188 million and $760 million for the first six months of 2025 and 2024, respectively. Cash provided by (used for) working capital components (accounts receivable, contract assets and inventory less accounts payable and accrued liabilities, interest payable and other) totaled $(683) million for the six months ended June 30, 2025 compared with cash provided by (used for) working capital components of $12 million for the six months ended June 30, 2024. The change in cash provided by operations in the first six months of 2025 compared to the comparable 2024 six-month period was primarily due to significant payments made in the first quarter of 2025 that impacted operating cash flow by approximately $670 million, including $240 million of DS Smith transaction costs and $80 million of severance payments, as well as incentive compensation and other benefit payments.
Cash provided by (used for) investment activities totaled $(38) million in the first six months of 2025 compared with $(446) million in the first six months of 2024. The increase in cash provided by investment activities is mainly due to proceeds from the sale of fixed assets of $89 million, proceeds from divestitures, net of transaction costs of $138 million, proceeds from insurance recoveries of $28 million and net cash acquired from acquisitions of $419 million, offset by higher capital expenditures of $303 million.
Capital expenditures totaled $752 million in the first six months of 2025, compared to $449 million in the first six months of 2024. Full-year 2025 capital expenditures are currently expected to be approximately $1.8 billion to $1.9 billion, or 90% to 95% of depreciation and amortization.
Financing activities for the first six months of 2025 included a $200 million net increase in debt versus a $8 million net decrease in debt during the comparable 2024 six-month period.
During the second quarter of 2025, the Company had no borrowings outstanding under its commercial paper program and its USD denominated committed bank facility.
See Note 15 - Debt to the Condensed Notes to the Consolidated Financial Statements for a discussion of various debt-related actions taken by the Company during the six months ended June 30, 2025.
Maintaining an investment-grade credit rating is an important element of International Paper’s financing strategy. At June 30, 2025, the Company held long-term credit ratings of BBB (stable outlook) and Baa2 (stable outlook) by S&P and Moody’s, respectively. In addition, the Company held short-term credit ratings of A2 and P2 by S&P and Moody's, respectively, for borrowings under the Company's commercial paper program.
At June 30, 2025, International Paper’s USD denominated credit facilities totaled $1.9 billion, which is comprised of the $1.4 billion contractually committed bank credit agreement and up to $500 million under the receivables securitization program. Management believes that the Company's credit agreements are adequate to cover expected operating cash flow variability during the current economic cycle. The credit agreements generally provide for interest rates at a floating rate index plus a pre-determined margin dependent upon International Paper’s credit rating. At June 30, 2025, the Company had no borrowings outstanding under the $1.4 billion credit agreement or the $500 million receivables securitization program. The Company’s credit agreements are not subject to any restrictive covenants other than the financial covenants as disclosed in Note 15 - Debt to the Condensed Notes to the Consolidated Financial Statements, and the borrowings under the receivables securitization program being limited by eligible receivables. The Company was in compliance with all its debt covenants at June 30, 2025, and was well below the thresholds stipulated under the covenants as defined in the credit agreements. The financial covenants do not restrict any borrowings under the credit agreements.
In addition to the $1.4 billion capacity under the Company's credit agreements, International Paper has a commercial paper program with a borrowing capacity of $1.0 billion supported by its $1.4 billion credit agreement. Under the terms of the program, individual maturities on borrowings may vary, but not exceed one year from the date of issue. Interest bearing notes may be issued either as fixed or floating rate notes. As of June 30, 2025, the Company had no borrowings outstanding under the commercial paper program.
On February 14, 2025, DS Smith, a wholly owned subsidiary of International Paper, announced separate invitations (each such invitation, a “Consent Solicitation”) to eligible holders of its outstanding (i) €600 million 0.875 percent Notes due September 12, 2026 (the “2026 Notes”); (ii) €850 million 4.375 percent Notes due July 27, 2027 (the “2027 Notes”); (iii) £250 million 2.875 percent Notes due July 26, 2029 (the “2029 Notes”); and (iv) €650 million 4.500 percent Notes due July 27, 2030 (the “2030 Notes”), in each case issued by DS Smith under its Euro-Medium Term Note Programme (each a “Series” and, together, the “Notes”) to consent to, amongst other things, certain modifications to the terms and conditions (the “Conditions”) of, and
the trust deed (the “Trust Deed”) for, the relevant Series to provide for (i) the removal of the obligation for DS Smith to prepare audited and unaudited consolidated accounts; (ii) the amendment of certain events of default to align more closely with certain equivalent provisions included in the documentation relating to debt securities issued by International Paper and to allow additional flexibility for potential reorganization of DS Smith’s subsidiaries, if required, now that DS Smith and its subsidiaries are part of the International Paper group; and (iii) certain consequential modifications to the applicable Conditions and Trust Deed for the relevant Series in relation to items (i) and (ii) above (together, the “Proposed Amendments”). As consideration for the holders of the Notes consenting to the Proposed Amendments, it was proposed that DS Smith procure a guarantee from International Paper, to guarantee the payment obligations of DS Smith under the Notes. The full principal amount of each Series of Notes issued by DS Smith remains outstanding as of the date hereof. On March 10, 2025, DS Smith has executed and delivered a Supplemental Trust Deed in respect of each Series to implement the Proposed Amendments, and International Paper has executed and delivered a deed of guarantee in respect of each Series to guarantee the payment obligations of DS Smith under such Series.
In March 2025, the Company amended and restated its £1.25 billion credit facility agreement to, among other things (i) replace its obligation to prepare audited and unaudited consolidated accounts and instead provide International Paper’s account information, on the same terms as International Paper’s existing credit facilities, (ii) amend the financial covenant in the credit facility agreement to align with financial covenants given by International Paper in its existing credit facilities, (iii) amend certain events of default, and undertakings to align more closely with certain equivalent provisions included in the documentation relating to the existing financings of International Paper and to allow additional flexibility for potential reorganization of DS Smith’s subsidiaries, if required, now that DS Smith and its subsidiaries are part of the International Paper group. The multi-currency credit facility allows for GBP, EUR and USD borrowings and provides for interest rates at a floating rate index plus a pre-determined margin. Credit facility borrowings are denominated in the currency that aligns with the Company's cashflows. At June 30, 2025, the Company had €970 million (approximately $1.1 billion) borrowings outstanding under the credit facility. The Company’s credit facility agreement is not subject to any restrictive covenants other than that International Paper must comply with the same negative covenants as per its existing credit facilities. IP was in compliance with all its debt covenants at June 30, 2025, and was well below the thresholds stipulated under the covenants as defined in the credit facility agreement. Further the financial covenants do not restrict any borrowings under the credit facility agreement.
In April 2025, the Company amended and restated its credit facility agreement to, among other things (i) replace its obligation to prepare audited and unaudited consolidated accounts and instead provide International Paper’s account information, on the same terms as International Paper’s existing credit facilities, (ii) amend the financial covenant in the credit facility agreement to align with financial covenants given by International Paper in its existing credit facilities, (iii) amend certain events of default, and undertakings to align more closely with certain equivalent provisions included in the documentation relating to the existing financings of International Paper and to allow additional flexibility for potential reorganization of DS Smith’s subsidiaries, if required, now that DS Smith and its subsidiaries are part of the International Paper group. The credit facility agreement provides for interest rates at a fixed rate for each facility. At June 30, 2025, the Company had €188 million (approximately $221 million) borrowings outstanding under the €200 million credit facility agreement. The Company’s credit facility agreement is not subject to any restrictive covenants other than that International Paper must comply with the same negative covenants as per its existing credit facilities. IP was in compliance with all its debt covenants at June 30, 2025, and was well below the thresholds stipulated under the covenants as defined in the credit facility agreement. Further the financial covenants do not restrict any borrowings under the credit facility agreement.
The Company also has a €60 million committed bank facility that matures in December 2026. In April 2025, the Company amended and restated its credit facility agreement to, among other things (i) replace its obligation to prepare audited and unaudited consolidated accounts and instead provide International Paper’s account information, on the same terms as International Paper’s existing credit facilities, (ii) amend the financial covenant in the credit facility agreement to align with financial covenants given by International Paper in its existing credit facilities, (iii) amend certain events of default, and undertakings to align more closely with certain equivalent provisions included in the documentation relating to the existing financings of International Paper and to allow additional flexibility for potential reorganization of DS Smith’s subsidiaries, if required, now that DS Smith and its subsidiaries are part of the International Paper group. The multi-currency credit facility allows for GBP, EUR and USD borrowings. At June 30, 2025, there were no borrowings outstanding under this agreement. The Company has a £50 million uncommitted bank facility. At June 30, 2025 the Company had €55 million (approximately $65 million) borrowings outstanding under this agreement.
International Paper expects to meet projected capital expenditures, service existing debt, meet working capital and dividend payments and make common stock and/or debt repurchases for the next 12 months and for the foreseeable future thereafter with current cash balances and cash from operations, supplemented as required by its existing credit facilities. The Company will continue to rely on debt and capital markets for the majority of any necessary long-term funding not provided by operating cash flows. Funding decisions will be guided by our capital structure planning objectives. The primary goals of the Company’s
capital structure planning are to maximize financial flexibility and maintain appropriate levels of liquidity to meet our needs while managing balance sheet debt and interest expense. We have repurchased, and may continue to repurchase, our common stock (under our existing share repurchase program) and debt (including in open market purchases) to the extent consistent with this capital structure planning, and subject to prevailing market conditions, our liquidity requirements, applicable securities laws requirements, and other factors. The majority of International Paper’s debt is accessed through global public capital markets where we have a wide base of investors.
During the first six months of 2025, International Paper used 3.5 million shares of treasury stock for various incentive plans. International Paper also acquired 1.1 million shares of treasury stock, related to restricted stock tax withholdings during the first six months of 2025. Payments of restricted stock withholding taxes totaled $63 million during this period. Our current share repurchase program approved by our Board of Directors ("Board") on October 11, 2022, does not have an expiration date and has approximately $2.96 billion aggregate amount of shares of common stock remaining authorized for purchase as of June 30, 2025. During the six months ended June 30, 2025, no shares of common stock were repurchased under our share repurchase program.
During the first six months of 2024, International Paper used approximately 2.0 million shares of treasury stock for various incentive plans. International Paper also acquired 0.6 million shares of treasury stock, related to restricted stock tax withholding during the first three months of 2024. Payments of restricted stock withholding taxes totaled $22 million. During the six months ended June 30, 2024, no shares of common stock were repurchased under our share repurchase program.
Cash dividend payments related to common stock totaled $488 million and $321 million for the first six months of 2025 and 2024, respectively. Dividends were $0.9250 per share for the first six months of 2025 and 2024.
Our U.S. and U.K. qualified pension plans are currently fully funded.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires International Paper to establish accounting policies and to make estimates that affect both the amounts and timing of the recording of assets, liabilities, revenues and expenses. Some of these estimates require judgments about matters that are inherently uncertain.
Accounting policies whose application may have a significant effect on the reported results of operations and financial position of International Paper, and that may require judgments by management that affect their application, include accounting for contingencies, impairment or disposal of long-lived assets, goodwill and other intangible assets, pensions and income taxes.
The Company has included in its Annual Report a discussion of these critical accounting policies, which are important to the portrayal of the Company’s financial condition and results of operations and may require management’s judgments. Except as described below, the Company has not made any changes in these critical accounting policies during the first six months of 2025.
Business Combinations
The Company’s acquisitions of businesses are accounted for in accordance with ASC 805, "Business Combinations." We allocate the total purchase price of the assets acquired and liabilities assumed based on their estimated fair value as of the business combination date. In developing estimates of fair values for long-lived assets, including identifiable intangible assets, the Company utilizes a variety of inputs including forecasted cashflows, anticipated growth rates, discount rates, appraisals, market valuations, estimated replacement costs and depreciation, and obsolescence factors. Determining the fair value for specifically identified intangible assets such as customer relationships and lists and tradenames, patents, trademarks and developed technology involves judgment. We may refine our estimates and make adjustments to the assets acquired and liabilities assumed over a measurement period, not to exceed one year. Upon the conclusion of the measurement period or the final determination of the values of assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are charged to the consolidated statements of earnings. Subsequent actual results of the underlying business activity supporting the goodwill and specifically identified intangible assets could change, requiring us to record impairment charges or adjust their economic lives in future periods.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q that are not historical in nature may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements can be identified by the use of forward-looking or conditional words such as “expects,” “anticipates,” “believes,” “estimates,” “could,” “should,” “can,” “forecast,” “outlook,” “intend,” “look,” “may,” “will,” “remain,” “confident,” “commit” and “plan” or similar expressions. These statements are not guarantees of future performance and reflect management’s current views and speak only as to the dates the statements are made and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. All statements, other than statements of historical fact, are forward-looking statements, including, but not limited to, statements regarding anticipated financial results, economic conditions, industry trends, future prospects, and the anticipated benefits, execution and consummation of corporate transactions or contemplated acquisitions, including our completed business combination with DS Smith Limited (“DS Smith”). Factors which could cause actual results to differ include but are not limited to: (i) our ability to consummate and achieve the benefits expected from, and other risks associated with, acquisitions, joint ventures, divestitures, spinoffs, capital investments and other corporate transactions, including, but not limited to, our business combination with DS Smith; (ii) our ability to integrate and implement our plans, forecasts, the internal control framework of DS Smith, including assessment of its internal control over financial reporting, and other expectations with respect to the combined company, including in light of our increased scale and global presence; (iii) risks associated with our strategic business decisions including facility closures, business exits, operational changes, and portfolio rationalizations intended to support the Company’s 80/20 strategic approach for long-term growth; (iv) our failure to comply with the obligations associated with being a public company listed on the New York Stock Exchange and the London Stock Exchange and the costs associated therewith; (v) risks with respect to climate change and global, regional, and local weather conditions, as well as risks related to our targets and goals with respect to climate change and the emission of greenhouse gases and other environmental, social and governance matters, including our ability to meet such targets and goals; (vi) loss contingencies and pending, threatened or future litigation, including with respect to environmental and antitrust related matters; (vii) the level of our indebtedness, including our obligations related to becoming the guarantor of the Euro Medium Term Notes as a result of our acquisition of DS Smith, risks associated with our variable rate debt, and changes in interest rates (including the impact of current elevated interest rate levels); (viii) the impact of global and domestic economic conditions and industry conditions, including with respect to current challenging macroeconomic conditions, inflationary pressures and changes in the cost or availability of raw materials, energy sources and transportation sources, supply chain shortages and disruptions, competition we face, cyclicality and changes in consumer preferences, demand and pricing for our products, and conditions impacting the credit, capital and financial markets; (ix) risks arising from conducting business internationally, domestic and global geopolitical conditions, military conflict (including the Russia/Ukraine conflict, the conflict in the Middle East, the further expansion of such conflicts, and the geopolitical and economic consequences associated therewith), changes in currency exchange rates, including in light of our increased proportion of assets, liabilities and earnings denominated in foreign currencies as a result of our business combination with DS Smith, trade policies (including but not limited to protectionist measures and the imposition of new or increased tariffs as well as the potential impact of retaliatory tariffs and other penalties including retaliatory policies against the United States) and global trade tensions, downgrades in our credit ratings, and/or the credit ratings of banks issuing certain letters of credit, issued by recognized credit rating organizations; (x) the amount of our future pension funding obligations, and pension and healthcare costs; (xi) the costs of compliance, or the failure to comply with, existing, evolving or new environmental (including with respect to climate change and greenhouse gas emissions), tax, trade, labor and employment, privacy, anti-bribery and anti-corruption, and other U.S. and non-U.S. governmental laws, regulations and policies (including but not limited to those in the United Kingdom and European Union); (xii) any material disruption at any of our manufacturing facilities or other adverse impact on our operations due to severe weather, natural disasters, climate change or other causes; (xiii) our ability to realize expected benefits and cost savings associated with restructuring initiatives; (xiv) cybersecurity and information technology risks, including as a result of security breaches and cybersecurity incidents; (xv) our exposure to claims under our agreements with Sylvamo Corporation; (xvi) the qualification of the Sylvamo Corporation spin-off as a tax-free transaction for U.S. federal income tax purposes; (xvii) risks associated with our pursuit of strategic options for our Global Cellulose Fibers business, including the costs and expenses related to a potential transaction, the diversion of management’s attention, our ability to identify and attract potential buyers and negotiate definitive transaction documentation, the completion of any such transaction, and the possibility of asset impairment charges arising from or in connection with any such transaction; (xviii) our ability to attract and retain qualified personnel and maintain good employee or labor relations; (xix) our ability to maintain effective internal control over financial reporting; and (xx) our ability to adequately secure and protect our intellectual property rights. These and other factors that could cause or contribute to actual results differing materially from such forward-looking statements can be found in our press releases and reports filed with the U.S. Securities and Exchange Commission. In addition, other risks and uncertainties not presently known to the Company or that we currently believe to be immaterial could affect the accuracy of any forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
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