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Management Side
Technical Side
International Paper's Transformation Strengthens Balance Sheet
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Memphis, Tennessee, USA, 02 January 2007 -- /PRNewswire/ -- International Paper (NYSE: IP) today announced that it has strengthened its balance sheet by more than USD 7 billion since undertaking a transformation plan in mid-2005 to become a more profitable, more focused company.

"Strengthening our balance sheet provides solid positioning as we move into 2007," said Marianne Parrs, International Paper chief financial officer. "This approach is consistent with our intent to maintain our investment-grade credit rating, while also reducing our annual interest expense."

On 13 July 2006, the company announced, as part of its transformation, plans to spend approximately USD 6 billion to USD 7 billion to strengthen its balance sheet through debt repayment and voluntary contributions to its U.S. pension fund.

International Paper has reduced its debt by approximately USD 6.2 billion, from approximately USD 13.4 billion at the end of the second quarter of 2005 to about USD 7.2 billion at year-end 2006. Most of the debt reduction was funded through divestiture proceeds and cash from operations.

In late 2006, International Paper also made voluntary contributions totaling USD 1 billion to its U.S. pension fund to address longer-term funding requirements and reduce pension expense.

"With these contributions, our pension fund is now approximately 95% funded," Parrs said. "This puts us in a very strong position going forward and reassures our employees who participate in the pension plan that the benefits they've earned will be there for them at retirement."

About International Paper's Transformation Plan

International Paper announced its transformation plan in July 2005 to strengthen the company by

* focusing on two global platform businesses (uncoated papers and packaging, along with xpedx, its merchant distribution business) and improving profitability of those key businesses;

* exploring strategic options, including possible sale or spin-off, for certain assets or businesses; and

* using proceeds from divestitures to return value to shareowners, strengthen the company's balance sheet, and selectively reinvest in its two global platform businesses.

Details about the transformation plan and related divestitures are contained in the company's Securities and Exchange Commission filings.

Headquartered in the United States, International Paper has been a leader in the forest products industry for more than 100 years. The company is currently transforming its operations to focus on its global uncoated papers and packaging businesses, which operate and serve customers in the United States, Europe, South America, and Asia, as well as xpedx, an extensive North American merchant distribution system. International Paper is committed to environmental, economic, and social sustainability, and has a long-standing policy of using no wood from endangered forests. To learn more, visit www.internationalpaper.com.

Source: International Paper



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