On 10 September, employees at PDM, located in Quimperle, France, were notified of the initiation of consultations with the unions and the Work's Council regarding intended reductions of employment levels by 106 people, or 15% of the current work force. Meetings with the unions and the Work's Council must be completed before the amount of the restructuring expenses, timing, and ongoing benefits of the changes can be determined. However, cash severance expenses associated with this action are expected to total approximately USD 14 million through the planned completion of the actions in the second quarter of 2010 and result in annual pre-tax savings of approximately USD 8 million, or USD 0.36 per share, with roughly half of this savings to be realized during 2010. 

Restructuring expenses associated with this action will be recorded beginning in the third quarter of 2009 and continue to be recorded through the expected second quarter 2010 completion of the staff reductions. Financing of the approximate USD 14 million in projected cash severance expenses, which are expected to be paid by the end of 2011, can be fully secured through internally generated funds and Schweitzer-Mauduit's existing bank credit facilities. 

Frederic Villoutreix, chairman of the board and chief executive officer, commented that, "The action at PDM being announced today brings nearer to completion the strategy to transform our base tobacco-related paper business to be more competitive. The expected reduction in employment levels at PDM, although regrettable in terms of the impact on the employees and communities affected, further advances this strategy and highlights our resolve to adjust the levels of our operations and the supporting overhead structure to achieve this more competitive position. The contemplated reduction of PDM employment levels, primarily among general staff, are made possible by the installation of an enterprise resource planning computer system as well as the now nearly concluded closure of the Malaucene finished tipping facility, both of which reduce administrative requirements. Following completion of the proposed actions, we anticipate PDM will achieve competitive cost parity among western European-based cigarette paper mills and thus better ensure its long-term viability. 

"To minimize the number of involuntary severances at PDM, we will first implement a plan for voluntary terminations and offer certain benefits to assist employees in finding new employment opportunities through training or other assistance. With today's announcement, SWM is now near the end of the five-year-long restructuring of its base paper operations," he said. 

"No further restructuring actions are currently planned in our French operations," Villoutreix said. "For SWM as a whole, we will continuously adjust our paper machine schedules to optimize efficiency and cost in response to changes in market demands and anticipate this will at most result in the idling of one higher cost paper machine between now and early 2010. We will continue to provide updates about any further restructuring actions as decisions are made." 

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 other applications. Schweitzer-Mauduit and its subsidiaries conduct business in more than 90 countries and employ 3100 people worldwide, with operations in the United States, France, Brazil, the Philippines, Indonesia, Canada, and a joint venture in China. For further information, visit www.schweitzer-mauduit.com.