"We recognize these are very difficult decisions affecting our employees, their families and the communities surrounding these mills," said Chairman and CEO John Faraci. "We have concluded that we have excess capacity in our North American paper and packaging businesses, and these decisions will better match our supply with our expected customer demand." 

Since the onset of the global recession, the decline in demand for International Paper's uncoated freesheet in North America has accelerated, and consequently the company has decided to further reduce its uncoated freesheet capacity. 

In its containerboard and coated paperboard businesses, International Paper expects demand to resume growth as the economy rebounds. However, the company's demand is not expected to return to 2008 levels in the near future. Therefore, permanent IP capacity closures are necessary. 

The closures, which will affect about 1600 employees, will result in permanent North American capacity reductions as follows:

         Mill                       Annual
    (# of affected    Products     capacity      # of     % of IP  Estimated
       employees)                   (Tons)     machines   capacity  closure
    --------------    --------     ---------   --------   -------- ---------
                      Uncoated
      Franklin  	   freesheet     600,000        3         19%   Spring 2010
                      ---------    ---------   --------   -------- -----------
       (1,100)         Coated                                        By 2009
                     paperboard     140,000        1          7%     year-end
    --------------   ----------    ---------   --------   -------- -----------
      Albany                       580,000(1)      2
         (270)
    --------------                 ---------   --------
    Pineville  	 Containerboard   390,000        1         12%  Mid-December
         (230)                     ---------   --------
    --------------
     Valliant
     (No additional                 430,000(2)     1
         effect)
    --------------  -------------- ----------  --------   -------- -----------

    (1) Includes 250,000 tons of capacity previously idled in October 2008
    (2) Capacity of No. 3 paper machine previously idled in November 2008 

Following these permanent shutdowns, International Paper in North America will have approximately 10 million tons of containerboard capacity, 2.6 million tons of uncoated freesheet production capacity, and 1.7 million tons of coated paperboard capacity. These capacity shutdowns will not affect the company's ability to serve its customers. 

International Paper is committed to helping employees through this transition. The company will work closely with union officials concerning severance benefits for hourly employees. Salaried employees impacted by these shutdowns will be offered severance packages and outplacement assistance consistent with company policy. Employee assistance providers will be available to support employee and family needs.

The company estimates that these closures will result in noncash asset write-off and accelerated depreciation charges of approximately USD 1.1 billion and cash severance charges of approximately USD 60 million to be recorded in the fourth quarter of 2009 and first quarter of 2010, plus additional closure costs to be determined and recorded as the facilities are closed. 

International Paper (NYSE: IP) is a global paper and packaging company with manufacturing operations in North America, Europe, Latin America, Russia, Asia, and North Africa. Its businesses include uncoated papers and industrial and consumer packaging, complemented by xpedx, the company's North American distribution company. Headquartered in Memphis, Tennessee, the company employs more than 58,000 people in more than 20 countries and serves customers worldwide. Net sales in 2008 were approximately USD 25 billion. For more information about International Paper, its products, and stewardship efforts, visit www.internationalpaper.com.