Schweitzer-Mauduit to Cut Capacity, Jobs Worldwide

Oct. 1, 2007 - Schweitzer-Mauduit International today said it will cut some 300 jobs and reduce paper capacity in both France and the U.S. as part of a three-pronged restructuring plan. The company will also reduce its employment levels in Brazil.

The restructuring includes the shutdown of Schweitzer-Mauduit's paper mill in Lee, Massachusetts beginning in May 2008, the expected idling of a base tipping paper machine at the company's mill in Malaucene, France by the end of 2008, and reductions that occurred in August 2007 in employment levels at the company's paper mill in Santanesia, Brazil.

In total, four paper machines will be shutdown—three in the United States and one in France. The production of certain tobacco-related paper products will transfer to Schweitzer-Mauduit's other paper machines in Brazil, France and the United States, the company said.

The reduction in workforce, which will be completed during 2008, includes 170 employees in the U.S., 70 employees in France, and 60 employees in Brazil.

"Schweitzer-Mauduit evaluated options to address the impact on our operations from declining demand for traditional tobacco-related paper products in western Europe and North America," said Wayne H. Deitrich, Chairman of the Board and Chief Executive Officer.

"Further, significant strengthening of the Brazilian real to the U.S. dollar in recent years has negatively impacted our Brazilian unit's profitability and cost competitiveness. These factors led to today's announced actions. Though these steps are regrettable in terms of the impact on our employees and the communities in which our facilities operate, they are necessary to improve our business performance and long-term profitability," Deitrich said.

Upon full implementation, the annual pre-tax benefits of these three restructuring activities are estimated to be in the range of $9 - $11 million. Schweitzer-Mauduit projects pre-tax restructuring expenses in the range of $27 - $30 million as a result of these actions, comprised of $12 - $13 million in cash expenses and $15 - $17 million in non-cash charges. Approximately $19 million of these projected restructuring expenses are expected to be recorded during the third quarter of 2007.

Schweitzer-Mauduit International, Inc. is a diversified producer of premium specialty papers and the world's largest supplier of fine papers to the tobacco industry. It also manufactures specialty papers for use in alkaline batteries, vacuum cleaner bags, overlay products, saturating base papers, business forms and printing and packaging applications.

SOURCE: Schweitzer-Mauduit International, Inc.

PaperAge. Copyright © O'Brien Publications, Inc. All rights reserved.