| Item 2.05. | Costs Associated with Exit or Disposal Activities. |
On October 17, 2023, International Paper Company (the “Company”) committed to certain actions impacting its Containerboard and Global Cellulose Fibers businesses, which the Company estimates will result in aggregate pre-tax charges of approximately $664 million as further described below.
Containerboard
The Company plans to permanently close its containerboard mill in Orange, Texas. The containerboard mill will shut down in stages with all operations expected to cease by year end. The closure is expected to reduce the Company’s containerboard capacity by approximately 800,000 tons. The Company estimates that the closure will result in pre-tax noncash asset write-off and accelerated depreciation charges of approximately $395 million and pre-tax cash severance and other shutdown charges of approximately $55 million, and anticipates that these charges will be recorded during the three months ending December 31, 2023. The Company expects closure of the containerboard mill to reduce its workforce by approximately 565 employees.
Global Cellulose Fibers
The Company plans to permanently cease production on its #4 Fluff Pulp Machine at its Pensacola, Florida mill. The machine had been idle since August 2023 and will not resume production. The Company estimates that the machine shutdown will result in pre-tax noncash asset write-off and accelerated depreciation charges of approximately $100 million and pre-tax cash severance and other shutdown charges of approximately $4 million, and anticipates that these charges will be recorded during the three months ending December 31, 2023. The Company expects the shutdown of the #4 machine to reduce its workforce by approximately 100 employees.
Additionally, the Company plans to permanently cease production on its #20 Fluff Pulp Machine at its Riegelwood, North Carolina mill by year end. The Company estimates that the machine shutdown will result in pre-tax noncash asset write-off and accelerated depreciation charges of approximately $100 million and pre-tax cash severance and other shutdown charges of approximately $10 million, and anticipates that these charges will be recorded during the three months ending December 31, 2023. The Company expects the shutdown of the #20 machine to reduce its workforce by approximately 200 employees.
The Company expects these actions with respect to the Pensacola and Riegelwood mills to reduce the Company’s fluff pulp capacity by approximately 500,000 tons (300,000 tons fluff pulp and 200,000 tons southern bleached softwood).
The Company issued a press release announcing these actions, which is attached as Exhibit 99.1 and is incorporated herein by reference in this Item 2.05.
This Item 2.05 contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the expected amount of certain pre-tax charges and the anticipated timing of such pre-tax charges and certain actions described herein. These forward-looking statements reflect management’s current views and are subject to risks and uncertainties that could cause actual results and the timing of events to differ materially from those expressed or implied in these forward-looking statements. Factors which could cause actual results to differ from such forward-looking statements include, but are not limited to, industry, global, economic and other conditions, as well as other factors, that could affect the amount of such pre-tax charges and the timing of such pre-tax charges or actions described herein. These forward-looking statements are also subject to the risks and uncertainties relating to the business of the Company contained in the Company’s Annual Report on Form 10-K for the fiscal year
2
