FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
September 30, 1999
ST. LAURENT PAPERBOARD INC.
(Translation of registrant's name into English)
630 Rene-Levesque Boulevard, West, Suite 3000,
Montreal, Quebec H3B 5C7
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F ...... Form 40-F ..X...
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b)under the Securities Exchange Act of 1934.
Yes ..... No ...X..
INFORMATION FILED WITH THIS REPORT
The following document is filed as an Exhibit to this Report:
Exhibit I -- St. Laurent Paperboard Inc. 1999 Third Quarter Report
<PAGE>
PRESENTATION OF OUR FINANCIAL INFORMATION
Beginning in 1997, we began reporting our financial results in U.S.
dollars. In this Report, unless otherwise specified or the context otherwise
requires, all dollar amounts are expressed in U.S. dollars. Amounts reported by
us in years prior to 1997 have been converted into U.S. dollars using a
convenience exchange rate of US $0.73 to CAN $1, the closing rate as at December
31, 1996. The average exchange rate of the U.S. dollar to the Canadian dollar
for 1994, 1995 and 1996 was $0.7300, $0.7286 and $0.7332, respectively.
Beginning in 1997, we also started to report production and sales figures in
short tons instead of metric tons, the reporting standard of the containerboard
industry.
Unless otherwise indicated, our financial information in this Report
has been prepared in accordance with generally accepted accounting principles in
Canada. As described in Note 20 to our Consolidated Financial Statements for the
year-ended December 31, 1998, as contained in our 1998 Annual Report, those
principles differ in certain material respects from those that we would have
followed had our Consolidated Financial Statements been prepared in accordance
with generally accepted accounting principles in the United States. We filed our
Consolidated Financial Statements for the year-ended December 31, 1998, as
contained in our 1998 Annual Report, with the Commission as Exhibit 43 to our
Form 40-F/A filed with the Commission on June 8, 1999.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made in this Report are not historical facts and are
"forward-looking" (as defined in the Private Securities Litigation Reform Act of
1995). Words such as "believes," "expects," "estimates," "may," "intends,"
"will," "should" or "anticipates" and similar expressions or their negatives
identify forward-looking statements. Forward-looking statements contained in
this Report (and the Exhibit attached to this Report) regarding matters that are
not historical facts reflect our current views about future events and are
subject to risks, uncertainties and assumptions. Such risks, uncertainties and
assumptions include the following:
o continued demand for our products,
o industry cyclicality,
o fluctuation in foreign currency exchange rates,
o changes in environmental and other laws or regulations affecting our
operations,
o factors influencing competition in our industry and pricing, and
o industry-wide market factors and other general economic and business
conditions.
Our actual results could differ materially from those indicated, expressed
or implied in such forward-looking statements as a result of these and other
factors, many of which are beyond our control.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 5, 1999 ST. LAURENT PAPERBOARD INC.
(Registrant)
By: /s/ Richard Garneau
-------------------------------
Name: Richard Garneau
Title: Senior Vice President and
Chief Financial Officer
St. Laurent Paperboard Inc.
<PAGE>
EXHIBIT I
THIRD QUARTER REPORT
For the period ending
September 30, 1999
To obtain a French version of this Report please contact:
Communication Department
630 Rene-Levesque Bvld. West, Suite 3000
Montreal (Quebec) H3B 5C7
Tel: (514) 861-4011, ext: 234
Fax: (514) 861-7003
Pour obtenir la version francaise de
ce rapport, veuillez communiquer avec le:
Service des communications
630, boul. Rene-Levesque ouest, bureau 3000
Montreal (Quebec) H3B 5C7
Tel: (514) 861-4011, poste 234
Telec.:(514) 861-7003
<PAGE>
MESSAGE TO SHAREHOLDERS
For the third quarter of 1999, St. Laurent Paperboard Inc. generated net
earnings of $20.3 million, or $0.42 per share, on net sales of $246.2 million,
compared to a net loss of $12.8 million, or $0.26 per share, on net sales of
$197.7 million for the same quarter in 1998. The third quarter net earnings
include an unusual gain of $5.8 million after tax, or $0.12 per share, resulting
from the renegotiation of fibre supply agreements with Chesapeake Corp. The 1998
third quarter net earnings included a special charge of $8.3 million after tax
or $0.17 per share related to the major restructuring project implemented at the
West Point, Virginia mill. Before these special items, 1999's third quarter
earnings increased by $19.0 million, or $0.39 per share, over the same period of
1998.
For the nine months ended September 30, 1999, net earnings totaled $29.4
million, or $0.60 per share, on net sales of $663.3 million, compared to a net
loss of $12.7 million on net sales of $607.6 million for the same period in
1998.
NET SALES
Net sales in the third quarter of 1999 increased to $246.2 million compared to
$197.7 million for the same period in 1998. This improvement in net sales is
attributable to higher net price realizations and increased shipments. Shipments
were up 21.5% for corrugated products and 4.6% for paperboard products. Net
price realizations in the third quarter of 1999 increased by 10.8% for
corrugated products and 16.0% for paperboard products. Shipments and net price
realizations for liquid and food packaging products decreased slightly during
the third quarter of 1999 compared to the same period of 1998. The new sawmills
acquired in July 1999 also contributed to the sales increase, adding $4.6
million to net sales. Shipments were higher for all paperboard products in the
third quarter of this year. White top linerboard shipments increased by 19,600
tons, corrugating medium and kraft linerboard shipments increased by 5,000 and
5,400 tons respectively, compared to the corresponding period in 1998. No
shipments of market pulp were made in the third quarter, compared to 19,700 tons
in 1998. Moreover, overseas shipments decreased by 46,000 tons compared to the
same period of 1998, contributing to the improvement in net price realization
for the quarter.
Business Review
o Higher shipments for paperboard and corrugated products
o 4,000 tons production reduction at the La Tuque mill for major maintenance
o Significant price realization increases for paperboard and corrugated products
o New sawmills, acquired on July 30, contributed $0.7 million to operating
earnings
o Unusual gain of $5.8 million after tax on the renegotiation of fibre supply
agreements
o Hurricane Floyd caused production disturbances and reduced West Point mill
shipments
o Significant purchase price increase for Old Corrugated container (OCC)
Note : All amounts are expressed in US dollars
<PAGE>
<TABLE>
<CAPTION>
Table 1 - Key Financial Results
(In millions of US dollars, except percentage and per share amounts)
<S> <C> <C> <C>
------------------------------------------------------------------------------------------
1999 1998 1999
Third Quarter Third Quarter Second Quarter
--------------------------------------------- ----------- ------------ -----------------
Net sales 246.2 197.7 218.6
--------------------------------------------- ----------- ------------ -----------------
EBITDA - before restructuring costs 46.9 18.1 33.9
--------------------------------------------- ----------- ------------ -----------------
EBITDA margin - % 19.0% 9.2% 15.5%
--------------------------------------------- ----------- ------------ -----------------
Operating earnings -
before restructuring costs 29.9 1.5 17.3
--------------------------------------------- ----------- ------------ -----------------
Unusual items and (restructuring costs)
after taxes 5.8 (8.3) ---
--------------------------------------------- ----------- ------------ -----------------
Net earnings (losses) 20.3 (12.8) 6.8
--------------------------------------------- ----------- ------------ -----------------
Per share 0.42 (0.26) 0.13
--------------------------------------------- ----------- ------------ -----------------
</TABLE>
Note: EBITDA is Earnings Before Interest, Taxes, Depreciation and
Amortization. EBITDA margin is the ratio of EBITDA divided by net sales.
OPERATING EARNINGS
1999 3rd quarter vs 1998 3rd quarter
For the third quarter of 1999, operating earnings were $29.9 million compared to
$1.5 million before West Point mill restructuring charges, an increase of $28.4
million compared to the corresponding quarter in 1998. The operating earnings
improvement is mainly attributable to higher net price realization for
paperboard and corrugated products, which were respectively 16.0% and 10.8%
higher than the corresponding period in 1998. Paperboard cash manufacturing
costs were negatively impacted by higher OCC prices, which increased the average
cash manufacturing cost by approximately $4.0 million or $10/ton. Higher
productivity and the various cost reduction programs underway offset the impact
of higher OCC costs. Operating earnings from converting activities improved by
$3.8 million as a result of the implementation of price increases, the inclusion
of Castle Rock Container's results for the whole quarter and higher volume
shipped.
The Company actively manages its Canadian dollar currency and its commodity
prices exposure. The Company bought Canadian dollar forward contracts to
protect its third quarter exposure at US$0.71, while the actual rate was
US$0.67, resulting in an opportunity loss of $2.4 million (including Canadian
dollar denominated inventory translation and the opportunity loss on its
commodity forward contracts). For the corresponding quarter in 1998, the
opportunity loss was $6.5 million. During the third quarter, the Canadian
dollar appreciated by about 2% when compared to 1998 and increased the
Company's Canadian manufacturing costs by $1.1 million. This currency related
cost increase translates into a $3 per ton increase on the overall primary
mills production.
Note : All amounts are expressed in US dollars
<PAGE>
<TABLE>
<CAPTION>
Table 2 - Operating earnings variances
1999 3rd quarter vs 1998 3rd quarter
(In millions of US dollars)
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
VARIANCE Positive (Negative)
---------------------------------------------------------------------------------------------
Mill Converting Other Total
--------------------------------------- ------------ -------------- ------------ ------------
Net price realization on all products 20.9 7.1 0.0 28.0
--------------------------------------- ------------ -------------- ------------ ------------
Cost reduction (increase) 0.5 (4.7) (0.5) (4.7)
--------------------------------------- ------------ -------------- ------------ ------------
Volume increase 1.1 2.6 0.9 4.6
--------------------------------------- ------------ -------------- ------------ ------------
Commodity and currency 4.1 -- -- 4.1
--------------------------------------- ------------ -------------- ------------ ------------
Selling and administration (2.3) (0.9) 0.0 (3.2)
--------------------------------------- ------------ -------------- ------------ ------------
Depreciation 0.1 (0.3) (0.2) (0.4)
--------------------------------------- ------------ -------------- ------------ ------------
Total 24.4 3.8 0.2 28.4
--------------------------------------- ------------ -------------- ------------ ------------
</TABLE>
1999 3rd quarter vs 1999 2nd quarter
In the third quarter of 1999, operating earnings increased to $29.9 million
compared to $17.3 million in the second quarter, an increase of $12.6 million,
mainly resulting from higher net price realization for paperboard and converting
products totalling $15.5 million and $5.1 million respectively. The favourable
impact of the price increases was partially offset by higher OCC costs, which
increased costs by $4.6 million, higher losses on commodity contracts and higher
selling and administrative expenses. Converting profitability also increased
compared to the second quarter as a result of the price increase implementation
and higher volume shipped.
Table 3 - Operating earnings variances
1999 3rd quarter vs 1999 2nd quarter
(In millions of US dollars)
<TABLE>
<CAPTION>
Table 3 - Operating earnings variances
1999 3rd quarter vs 1999 2nd quarter
(In millions of US dollars)
<S> <C> <C> <C> <C>
-------------------------------------------- ------------- -------------- --------- -----------
VARIANCE Positive (Negative)
-------------------------------------------- ------------- -------------- --------- -----------
Mill Converting Other Total
-------------------------------------------- ------------- -------------- --------- -----------
Net price realization on all products 15.5 5.1 0.0 20.6
-------------------------------------------- ------------- -------------- --------- -----------
Cost reduction (increase) (3.1) (2.9) 0.0 (6.0)
-------------------------------------------- ------------- -------------- --------- -----------
Volume increase (reduction) (0.1) 1.4 0.8 2.1
-------------------------------------------- ------------- -------------- --------- -----------
Commodity and currency (1.9) -- -- (1.9)
-------------------------------------------- ------------- -------------- --------- -----------
Selling and administration (1.1) (0.7) 0.0 (1.8)
-------------------------------------------- ------------- -------------- --------- -----------
Depreciation 0.1 (0.3) (0.2) (0.4)
-------------------------------------------- ------------- -------------- --------- -----------
Total 9.4 2.6 0.6 12.6
-------------------------------------------- ------------- -------------- --------- -----------
</TABLE>
LIQUIDITY AND CAPITAL EXPENDITURES
During the third quarter, cash provided by operating activities was $42.0
million compared to $7.6 million for the corresponding quarter in 1998. The
$34.4 million increase is attributable to profitability improvement. Capital
expenditures were $12.6 million compared to $10.5 million for the third quarter
of 1998. The increase in capital expenditures in the third quarter is
attributable to two projects currently underway at the La Tuque mill. When
completed, the first project will allow for the production of about 50,000 tons
per year of coated white top linerboard. The second project involves the
modernization of the fibre receiving and handling area. On July 30, 1999, the
Company also acquired, for an aggregate purchase price of $13.9 million, two
sawmills with a combined capacity of 60 million board feet, a lumber
re-manufacturing facility as well as a chip mill from Chesapeake Corp. This
transaction was mainly financed by the proceeds resulting from the renegotiation
of fibre supply agreements with the seller.
Note : All amounts are expressed in US dollars
<PAGE>
COST REDUCTION INITIATIVES
The West Point restructuring initiative contributed to the reduction of
manufacturing costs by $4.2 million during the third quarter compared to the
corresponding quarter in 1998. The savings realized are essentially on target
with the restructuring program.
PRODUCTIVITY ENHANCEMENT
Compared to the corresponding quarter in 1998 productivity increased by 10.5% on
the #3 paper machine at the La Tuque mill, by 7.1% at the Matane mill and by
6.7% at the Thunder Bay mill.
YEAR-2000 COMPLIANCE
Approach
The Company initiated its Year 2000 compliance program ("Y2K") under the
supervision of a centralized Y2K Project Management Organization (PMO) in
February 1998 with a focus of achieving Y2K readiness for all Information
Technology (IT) and computer controlled process technologies used in the
Company's business. The PMO reports to the Chief Information Officer with
regular reporting to the Audit Committee of the Board of Directors. The
Company's Y2K compliance program also includes the assessment of the Y2K
readiness of its major suppliers and customers by contacting them to evaluate
their strategies and action plans for the Y2K transition. To minimize the Y2K
risk, contingency plans and year-end rollover strategies are being deployed
within the Company as part of the program.
Readiness
As of the end of the third quarter of 1999, the Company has successfully
completed its remedial program in all material respects and considers itself
compliant with regards to items under its control.
Among others, process control, shop floor technology, infrastructure and
business systems including finance, accounting, payroll, order fulfilment, order
tracking and invoicing software programs, were successfully replaced or upgraded
as required at all facilities. To maintain the Company's readiness level,
further testing will continue beyond Year 2000.
As part of the Y2K due diligence process, the Company is taking steps to insure
that new acquisitions meet compliance standards.
Risk to the Company
The Company's primary business consists of manufacturing and selling paperboard
products, and most of our systems are not date sensitive. For systems where
dates are critical, the Company could face localized interruptions if Y2K issues
are not properly resolved. Our main risk, therefore, would arise if we were
temporarily unable to produce and deliver our products to our customers due to
interruption of a production unit, the malfunction of a production management
system, or an interruption in delivery of raw material or services from a
critical supplier.
To minimize any potential disruption, the Company's Y2K compliance program will
continue with further system testing. In addition, the risks to the Company
posed by possible non-compliance of the critical suppliers of raw materials,
utilities, financial services and government agencies are currently being
re-assessed.. Contingency plans are being prepared, where required, to minimize
such risk. It is not possible however, to be certain that all aspects of the Y2K
issue affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
Note : All amounts are expressed in US dollars
<PAGE>
Contingency planning
The contingency planning is focusing on two levels of potential critical
business disruption: marketplace risks and opportunities, production unit and
supply chain risks. The plans include alternate solutions to ensure delivery of
our products and services to our customers, procedures to minimize disruption of
critical supplies as well as procedures to deal with possible disruption of
production. Contingency plans are carefully reviewed and rehearsed by facility
personnel. The conditions which may trigger these plans will be tested against
expected results during the rollover period.
The Company believes that its pro-active approach will secure business
continuity by ensuring readiness before, at and after the Year 2000.
Costs
The Company's cost to achieve Y2K compliance is estimated at $5.6 million. At
the end of September, about $2.3 million has been capitalized and $2.7 million
has been expensed.
OUTLOOK
Demand for containerboard is expected to remain consistent as the North American
economies continue to remain stable. Price increases have also been implemented
in Europe and Asia as demand in those regions is stronger.
On behalf of the Board of Directors,
/s/ Raymond R. Pinard
Raymond R. Pinard
Chairman of the Board
/s/ Jay J. Gurandiano
Jay J. Gurandiano
President and Chief Executive Officer
Note : All amounts are expressed in US dollars
<PAGE>
ST. LAURENT PAPERBOARD INC.
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
(unaudited)
(in thousands of US dollars, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Third quarter ended Second quarter ended 9 months ended
September 30 June 30 September 30
1999 1998 1999 1999 1998
- ------------------------------------------------------------------------- ---------------- ------------------------------
Sales $ 263,965 214,159 $ 236,184 $ 716,624 $ 659,004
Cost of delivery 17,739 16,467 17,565 53,355 51,398
------------------------------ ---------------- ------------------------------
Net sales 246,226 197,692 218,619 663,269 607,606
------------------------------ ---------------- ------------------------------
Cost of sales 183,480 166,883 170,584 518,656 501,687
Selling and administrative expenses 15,861 12,687 14,092 42,640 38,247
Restructuring charge - 12,878 - - 12,878
Amortization 17,024 16,648 16,598 50,057 48,693
------------------------------ ---------------- ------------------------------
216,365 209,096 201,274 611,353 601,505
------------------------------ ---------------- ------------------------------
Operating earnings 29,861 (11,404) 17,345 51,916 6,101
Interest expense, net 7,103 7,247 6,517 20,677 22,184
Other expense (income) (10,020) (634) 630 (14,206) (644)
------------------------------ ---------------- ------------------------------
Earnings before income taxes 32,778 (18,017) 10,198 45,445 (15,439)
Provision for income taxes 12,670 (5,235) 3,550 16,699 (2,729)
------------------------------ ---------------- ------------------------------
20,108 (12,782) 6,648 28,746 (12,710)
Earnings from equity investment 208 - 186 679 -
------------------------------ ---------------- ------------------------------
Net earnings (loss) 20,316 (12,782) 6,834 29,425 (12,710)
------------------------------ ---------------- ------------------------------
Net earnings (loss) per common share
Basic 0.42 (0.26) 0.13 0.60 (0.26)
------------------------------ ---------------- ------------------------------
Fully diluted $ 0.41 (FN1 ) $ 0.13 $ 0.59 $ (FN1)
------------------------------ ---------------- ------------------------------
Retained earnings at beginning of period $ 10,878 25,104 $ 4,044 1,769 $ 25,032
Net earnings (loss) 20,316 (12,782) 6,834 29,425 (12,710)
------------------------------ ---------------- ------------------------------
Retained earnings at end of period $ 31,194 12,322 $ 10,878 31,194 $ 12,322
------------------------------ ---------------- ------------------------------
Weighted average number of outstanding
common shares (in thousands) 49,356 49,161 49,310 49,310 49,092
------------------------------ ---------------- ------------------------------
FN1 Anti-dilutive
</TABLE>
<PAGE>
ST. LAURENT PAPERBOARD INC.
CONSOLIDATED STATEMENT OF CHANGES IN CASH POSITION
(unaudited)
(in thousands of US dollars)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Third quarter ended Second quarter ended 9 months ended
September 30 June 30 September 30
1999 1998 1999 1999 1998
- ------------------------------------------------------------------------- ---------------------------------------------
Cash provided by (used in)
Operating activities
Net earnings (loss) $ 20,316 (12,782) $ 6,834 $ 29,425 $ (12,710)
Items not involving cash
Amortization of property, plant and
equipment, deferred costs and goodwill 17,024 16,648 16,598 50,057 48,693
Amortization of debt issue costs 469 386 311 1,179 991
Future income taxes 12,200 (5,305) 3,011 15,396 (3,626)
Gain on sale of property, plant and
equipmen (547) - - (5,100) (235)
Other (268) (194) (64) (554) (843)
Start-up and other deferred costs incurred (2,072) (1,225) (587) (3,350) (384)
Post retirement expense, net of funding (616) 11,056 665 1,090 12,251
Earnings from equity investment (208) - (186) (679) -
------------------------------ ------------ ------------------------------
46,298 8,584 26,582 87,464 44,137
Change in non-cash working capital
relating to operations
Accounts receivable (7,793) 1,320 (495) (17,963) 7,555
Inventory 244 (4,729) 2,419 11,009 (7,849)
Prepaid expenses (4,373) (1,764) (2,914) (5,822) (6,255)
Accounts payable and accruals 7,395 4,333 5,605 24,091 4,500
Income and other taxes payable 263 (175) (306) (85) 440
------------------------------ ------------ ------------------------------
(4,264) (1,015) 4,309 11,230 (1,609)
------------------------------ ------------ ------------------------------
Cash provided by operating activities 42,034 7,569 30,891 98,694 42,528
------------------------------ ------------ ------------------------------
Investing activities
Equity investment - - - (9,607) -
Business acquisitions (13,922) - (25,483) (39,405) -
Additions to property, plant and
equipment (12,572) (10,516) (11,930) (30,706) (38,468)
Proceeds from disposals of property,
plant and equipment 1,150 - - 6,805 235
------------------------------ ------------ ------------------------------
(25,344) (10,516) (37,413) (72,913) (38,233)
------------------------------ ------------ ------------------------------
Financing activities
Issuance of common shares, net of expenses 526 623 390 1,249 1,892
Redemption of common shares - - - - (242)
Issuance of long-term debt 112 59 66 248 230,195
Repayment of long-term debt (69) (33) (22) (115) (241,519)
Debt issue costs (710) (379) (583) (1,420) (4,960)
Cash held in escrow - - - 11,000
------------------------------ ------------ ------------------------------
(141) 270 (149) (38) (3,634)
------------------------------ ------------ ------------------------------
Increase (decrease) in cash 16,549 (2,677) (6,671) 25,743 661
Cash and cash equivalents at beginning of period 5,675 16,778 12,346 (3,519) 13,440
------------------------------ -------------- ------------------------------
Cash and cash equivalents at end of period $ 22,224 14,101 $ 5,675 $ 22,224 $ 14,101
------------------------------ -------------- ------------------------------
Cash and cash equivalents
Cash on hand (indebtedness) 10,013 4,969 (475) 10,013 4,969
Temporary investments 12,211 9,132 6,150 12,211 9,132
------------------------------ -------------- ------------------------------
$ 22,224 14,101 $ 5,675 $ 22,224 $ 14,101
------------------------------ -------------- ------------------------------
</TABLE>
<PAGE>
ST. LAURENT PAPERBOARD INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
(in thousands of US dollars)
September 30
1999 1998
- -----------------------------------------------------------------------------
ASSETS
Current assets
Cash and temporary investments $ 22,224 $ 14,101
Accounts receivable 119,065 100,253
Income and other taxes receivable 4,956 4,553
Inventories 97,118 104,449
Prepaid expenses 19,679 11,934
-----------------------------
263,042 235,290
Property, plant and equipment 784,570 779,206
Future income taxes - 6,887
Deferred charges and other assets 45,009 22,658
Goodwill 19,100 20,206
-----------------------------
$ 1,111,721 $ 1,064,247
-----------------------------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 97,427 85,437
Current portion of long-term debt 23,152 259
-----------------------------
120,579 85,696
Long-term debt 339,515 362,248
Future income taxes 13,322 9,350
Other liabilities 31,519 20,413
SHAREHOLDERS' EQUITY
Common shares 573,184 571,810
Contributed surplus 2,408 2,408
Retained earnings 31,194 12,322
-----------------------------
606,786 586,540
-----------------------------
$ 1,111,721 $ 1,064,247
-----------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ST. LAURENT PAPERBOARD INC.
SEGMENTED INFORMATION
(unaudited)
(in thousands of US dollars) Third quarter ended 9 months ended
September 30 September 30
1999 1998 1999 1998
------------------------- -------------------------
Net sales to third parties
From Canada
Within Canada $ 42,004 $ 30,056 $ 103,473 $ 96,082
To the United States 53,464 38,656 151,807 114,108
Other 5,409 12,099 22,453 33,814
------------------------- -------------------------
$ 100,877 $ 80,811 $ 277,733 $ 244,004
From the United States 145,349 116,881 385,536 363,602
------------------------- -------------------------
$ 246,226 $ 197,692 $ 663,269 $ 607,606
------------------------- -------------------------
Intercompany sales between geographic areas
From Canada $ 5,217 $ 2,364 $ 13,014 $ 6,839
From the United States 322 772 813 1,727
------------------------- -------------------------
$ 5,539 $ 3,136 $ 13,827 $ 8,566
------------------------- -------------------------
Operating earnings (loss)
Canada $ 13,920 $ (1,557) $ 26,413 $ 3,580
United States 15,941 (9,847) 25,503 2,521
------------------------- -------------------------
$ 29,861 $ (11,404) $ 51,916 $ 6,101
------------------------- -------------------------
Identifiable assets
Canada $ 464,668 $ 456,204
United States 647,053 608,043
-------------------------
$1,111,721 $ 1,064,247
-------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ST. LAURENT PAPERBOARD INC.
SUMMARY OF OPERATIONS
(unaudited)
(in thousands of US dollars, except for units)
Woodlands,
Solid Wood and
Primary Unallocated
Third Quarter ended September 30, 1999 mills Converting amounts Total
- -----------------------------------------------------------------------------------------------------------
Net sales to third parties $ 139,202 $ 97,532 $ 9,492 $ 246,226
Inter-segment sales 25,390 - - 25,390
----------------------------------------------------
Total $ 164,592 $ 97,532 $ 9,492 $ 271,616
EBITDA 38,465 7,858 562 46,885
Amortization 13,982 2,453 589 17,024
Operating earnings (loss) 24,483 5,405 (27) 29,861
Identifiable assets 760,022 243,045 108,654 1,111,721
Additions to property, plant and equipment 8,476 3,783 313 12,572
Sales to third parties (short tons) 332,798 - -
Sales to third parties - corrugated containers (MMSF) - 1,505 -
Sales to third parties - liquid and food (short tons) - 17,374 -
Inter-segment sales (short tons) 58,414 - -
Woodlands,
Solid Wood and
Primary Unallocated
Third Quarter ended September 30, 1998 mills Converting amounts Total
- -----------------------------------------------------------------------------------------------------------
Net sales to third parties $ 116,707 $ 76,649 $ 4,336 $ 197,692
Inter-segment sales 18,896 - - 18,896
----------------------------------------------------
Total $ 135,603 $ 76,649 $ 4,336 $ 216,588
EBITDA - Before restructuring charge 14,162 3,799 161 18,122
Amortization 14,053 2,199 396 16,648
Operating earnings (loss) - Before restructuring charge 109 1,600 (235) 1,474
Identifiable assets 814,529 189,671 60,047 1,064,247
Additions to property, plant and equipment 7,299 2,998 219 10,516
Sales to third parties (short tons) 321,295 - -
Sales to third parties - corrugated containers (MMSF) - 1,239 -
Sales to third parties - liquid and food (short tons) - 18,241 -
Inter-segment sales (short tons) 52,707 - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ST. LAURENT PAPERBOARD INC.
SUMMARY OF OPERATIONS - YEAR TO DATE
(unaudited)
(in thousands of US dollars, except for units)
Woodlands,
Solid Wood and
Primary Unallocated
Nine months ended September 30, 1999 mills Converting amounts Total
- -----------------------------------------------------------------------------------------------------------
Net sales to third parties $ 386,726 $ 258,744 $ 17,799 $ 663,269
Inter-segment sales 63,169 - - 63,169
----------------------------------------------------
Total $ 449,895 $ 258,744 $ 17,799 $ 726,438
EBITDA 83,697 18,495 (219) 101,973
Amortization 42,011 6,649 1,397 50,057
Operating earnings (loss) 41,686 11,846 (1,616) 51,916
Identifiable assets 760,022 243,045 108,654 1,111,721
Additions to property, plant and equipment 19,537 10,673 496 30,706
Sales to third parties (short tons) 1,019,524 - -
Sales to third parties - corrugated containers (MMSF) - 4,075 -
Sales to third parties - liquid and food (short tons) - 50,741 -
Inter-segment sales (short tons) 159,590 - -
Woodlands,
Solid Wood
Primary and unallocated
Nine months ended September 30, 1998 mills Converting amounts Total
- -----------------------------------------------------------------------------------------------------------
Net sales to third parties $ 369,191 $ 224,374 $ 14,041 $ 607,606
Inter-segment sales 61,451 - - 61,451
----------------------------------------------------
Total $ 430,642 $ 224,374 $ 14,041 $ 669,057
EBITDA - Before restructuring charge 56,862 12,735 (1,925) 67,672
Amortization 41,314 6,104 1,275 48,693
Operating earnings (loss) - Before restructuring charge 15,548 6,631 (3,200) 18,979
Identifiable assets 814,529 189,671 60,047 1,064,247
Additions to property, plant and equipment 26,470 10,846 1,152 38,468
Sales to third parties (short tons) 965,693 - -
Sales to third parties - corrugated containers (MMSF) - 3,515 -
Sales to third parties - liquid and food (short tons) - 45,616 -
Inter-segment sales (short tons) 163,325 - -
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