ACQUISITIONS

9 Months Ended

Sep. 30, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

ACQUISITIONS

ACQUISITIONS

As previously disclosed, on January 31, 2025, the Company completed its acquisition of the entire issued and to be issued share capital of DS Smith. Upon closing, IP issued 0.1285 shares for each DS Smith share, resulting in the issuance of 178,126,631 new shares of IP common stock ("New Company Common Stock"). As a result of the share issuance, the holders of the New Company Common Stock own approximately 34.1% of the Company's outstanding share capital. Based on the issuance of 178,126,631 new shares and the closing price of $55.63 on the close of January 31, 2025, the total purchase consideration for the completed acquisition was approximately $9.9 billion. Acquisition-related costs were $4 million and $94 million for the three months and nine months ended September 30, 2025, respectively, and $26 million and $48 million for the three months and nine months ended September 30, 2024, respectively, and were recorded in Selling and administrative expenses and Taxes other than payroll and income taxes in the accompanying condensed consolidated statement of operations. On February 4, 2025, the Company began trading the New Company Common Stock and continues to be listed on the New York Stock Exchange under the trading symbol "IP" and via a secondary listing on the London Stock Exchange under the trading symbol "IPC." The headquarters of the combined company is based in Memphis, Tennessee, and the EMEA headquarters has been established at DS Smith's existing main office in London.

The Company is accounting for the acquisition under ASC 805, "Business Combinations" and the results of operations have been included in International Paper's financial statements beginning with the date of acquisition.

The following table summarizes the provisional fair value assigned to assets and liabilities acquired as of January 31, 2025:

In millions
Cash and temporary investments	$	448
Accounts and notes receivable, net	1,379
Contract assets	236
Inventories	639
Other current assets	234
Plants, properties and equipment	6,643
Intangibles	3,987
Goodwill	4,229
Overfunded pension plan assets	79
Right of use assets	256
Deferred charges and other assets	84
Total assets acquired	18,214
Notes payable and current maturities of long-term debt	60
Accounts payable	1,664
Accrued payroll and benefits	219
Other current liabilities	744
Long-term debt	3,640
Deferred income taxes	1,538
Underfunded pension benefit obligation	78
Long-term lease obligations	174
Other liabilities	188
Total liabilities assumed	8,305
Net assets acquired	$	9,909

The provisional fair value assigned to the assets and liabilities acquired above were measured using Level 2 and Level 3 inputs, which are further defined in Note 1 in the Company's Annual Report. The estimated fair value of inventory was determined using the Comparative Sales and Replacement Cost methods. Fair value estimates related to the trade name and patents identified intangible assets were determined using the Relief from Royalty method. The fair value estimates related to customer relationships identified intangible assets were determined using the Multi-Period Excess Earnings method. The property, plant and equipment, specifically the machinery and equipment and buildings and improvements, were valued using either the indirect or direct methods of the Cost Approach, while the land was valued using the Sales Comparison Approach. The purchase price and related allocation are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding assets acquired and liabilities assumed, review of contracts and revisions of provisional estimates of fair values, including, but not limited to, the completion of independent appraisals and valuations related to inventory, property, plant and equipment, acquired intangible assets, leases, taxes, contract assets and derivatives. Adjustments to provisional amounts will be finalized as new information becomes available, but within the adjustment period of up to one year from the acquisition date. Goodwill is not deductible for local income tax purposes and is primarily related to the value of new customers through expansion opportunities not reflected in the fair value of the existing customers relationships and the value of the intellectual property beyond selected life for trade names. During the third quarter of 2025, we recorded adjustments to the preliminary purchase price allocation. These adjustments resulted in an approximately $89 million decrease in property, plant and equipment due to additional information received during the measurement period. These adjustments also resulted in a reclassification in contract assets of $236 million and inventories of $212 million.

Since acquisition, Net sales of $2.2 billion and $5.7 billion and Net earnings (loss) of $(317) million and $(505) million have been included in the Company's condensed consolidated statement of operations for the three months and nine months ended September 30, 2025, respectively.

The identifiable intangible assets acquired in connection with the acquisition of DS Smith included the following:

In millions	Estimated Fair Value		Average Useful Life
Customer relationships and lists	$	3,502	19 years
Tradenames, patents and trademarks, and developed technology	381		15 years
Software (a)	90		3 - 5 years
Other	14		Indefinite lived
Total	$	3,987

(a) Of this balance, $57 million has been placed in service and $33 million is in development.

Below are the consolidated results on an unaudited pro forma basis assuming the DS Smith acquisition had closed on January 1, 2024:

	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2025 (Unaudited)		2024 (Unaudited)		2025 (Unaudited)		2024 (Unaudited)
Net Sales	$	6,222	$	6,131	$	18,364	$	18,270
Net Earnings (Loss)	(1,131)		80		(1,148)		565

The unaudited pro forma information for the three months ended September 30, 2025 excludes the non-recurring integration costs associated with the acquisition of $11 million and excludes the adjustment to the write-off of the estimated fair value of inventory of $41 million. The unaudited pro forma information for the nine months ended September 30, 2025 includes additional amortization expense on identifiable intangible assets of $16 million and additional depreciation expense on identifiable fixed assets of $13 million and excludes the write-off of the estimated fair value of inventory of $30 million and the non-recurring integration costs associated with the acquisition of $104 million.

The unaudited pro forma information for the three months ended September 30, 2024 includes additional amortization expense on identifiable intangible assets of $47 million, additional depreciation expense on identifiable fixed assets of $38 million and non-recurring integration costs associated with the acquisition of $11 million. The unaudited pro forma information for the nine months ended September 30, 2024 includes additional amortization expense on identifiable intangible assets of $140 million, additional depreciation expense on identifiable fixed assets of $113 million, incremental expense of $30 million associated with the write-off of the estimated fair value of inventory and non-recurring integration costs associated with the acquisition of $104

million.

The unaudited pro forma consolidated financial information was prepared for comparative purposes only and includes certain adjustments, as noted above. The adjustments are estimates based on currently available information and actual amounts may have differed materially from these estimates. They do not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to represent International Paper's actual results of operations as if the transaction described above would have occurred as of January 1, 2024, nor is it necessarily an indicator of future results.

In connection with the DS Smith acquisition, the European Commission issued its Phase I clearance of the business combination between International Paper and DS Smith on January 31, 2025, with the condition that International Paper commit to divest five European plants in Mortagne, Saint-Amand, and Cabourg (France), Ovar (Portugal) and Bilbao (Spain). On June 30, 2025, the Company completed the sale of these locations to Palm Group of Germany for €125 million (approximately $147 million at the June 30, 2025 exchange rate) in cash. The Company recorded a net gain of $51 million in Net (gains) losses on sales of businesses in the accompanying condensed consolidated statement of operations during the nine months ended September 30, 2025.