<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For Quarter Ended March 31, 1999
Commission File Number 0-23876
SMURFIT-STONE CONTAINER CORPORATION
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 43-1531401
- ------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
150 North Michigan Avenue, Chicago, Illinois 60601
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(312) 346-6600
--------------------------------------------------
Registrant's telephone number, including area code
Not Applicable
--------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of March 31, 1999, the registrant had outstanding 215,239,677 shares of
common stock, $.01 par value per share.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SMURFIT-STONE CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31, (In millions, except per share data) 1999 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,720 $764
Costs and expenses
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . 1,513 637
Selling and administrative expenses . . . . . . . . . . . . . . . . . 191 68
Restructuring charge. . . . . . . . . . . . . . . . . . . . . . . . . 5
------------------------------
Income from operations . . . . . . . . . . . . . . . . . . . . . . 11 59
Other income (expense)
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . (153) (51)
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (1)
------------------------------
Income (loss) from continuing operations before
income taxes, minorityinterest, extraordinary item
and cumulative effect of accounting change . . . . . . . . . . . . (132) 7
Benefit from (provision for) income taxes . . . . . . . . . . . . . . . 42 (4)
Minority interest expense . . . . . . . . . . . . . . . . . . . . . . . (2)
------------------------------
Income (loss) from continuing operations before extraordinary
item and cumulative effect of accounting change .. . . . . . . . . (92) 3
Discontinued operations
Income from discontinued operations,
net of income taxes of $1 in 1999, and $6 in 1998. . . . . . . . . 4 8
------------------------------
Income (loss) before extraordinary item and
cumulative effect of accounting change . . . . . . . . . . . . . (88) 11
Extraordinary item
Loss from early extinguishment of debt, net of income
tax benefit of $9 . . . . . . . . . . . . . . . . . . . . . . . . (13)
Cumulative effect of accounting change
Start -up costs, net of income tax benefit of $2 . . . . . . . . . . (3)
-------------------------------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . $ (88) $(5)
-------------------------------
Basic earnings per common share
Income (loss) from continuing operations before
extraordinary item and accounting change. . . . . . . . . . . . . . $ (.43) $.03
Discontinued operations.. . . . . . . . . . . . . . . . . . . . . . . .02 .07
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . .. . (.12)
Cumulative effect of accounting change . . . . . . . . . . . . . . . (.03)
------------------------------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (.41) $(.05)
------------------------------
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . 215 111
------------------------------
Diluted earnings per common share
Income (loss) from continuing operations before
extraordinary item and accounting change . . . .. . . . . . . . . . $ (.43) $.03
Discontinued operations .. . . . . . . . . . . . . . . . . . . . . . .02 .07
Extraordinary item .. . . . . . . . . . . . . . . . . . . . . . . . . (.11)
Cumulative effect of accounting change . . . .. . . . . . . . . . . . (.03)
------------------------------
Net loss.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (.41) $(.04)
------------------------------
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . 215 112
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
1
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<PAGE>
SMURFIT-STONE CONTAINER CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, December 31,
(In millions, except share data) 1999 1998
- -------------------------------------------------------------------------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . $ 71 $ 155
Receivables, less allowances of $83 in 1999 and $85 in 1998 . 806 743
Inventories
Work-in-process and finished goods .. . . . . . . . . . . . 205 238
Materials and supplies . . . . . . . . . . . . . . . . . . 543 546
------------------------------------
748 784
Refundable income taxes . . . . . . . . . . . . . . . . . . 44 24
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 142 160
Prepaid expenses and other current assets . . . . . . . . . . 104 118
------------------------------------
Total current assets . . . . . . . . . . . . . . . . . . . . 1,915 1,984
Net property, plant and equipment . . . . . . . . . . . . . . . 5,418 5,496
Timberland, less timber depletion . . . . . . . . . . . . . . . 274 276
Goodwill, less accumulated amortization of
$92 in 1999 and $73 in 1998 . . . . . . . . . . . . . . . . . 2,850 2,869
Investment in equity of non-consolidated affiliates . . . . . . 555 638
Other assets . . . . . . . . . . . . . . . . . . . .. . . . . . 363 368
------------------------------------
$ 11,375 $ 11,631
- -------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt . . . . . . . . . . . . . $ 417 $ 205
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 546 533
Accrued compensation and payroll taxes . . . . . . . . . . . . 179 174
Interest payable . . . . . . . . . . . . . . . . . . . . . . . 146 126
Other current liabilities . . . . . . . . . . . . . . . . . . 304 311
------------------------------------
Total current liabilities . . . . . . . . . . . . . . . . . . 1,592 1,349
Long-term debt, less current maturities . . . . . . . . . . . 6,085 6,428
Other long-term liabilities . . . . . . . . . . . . . . . . . 1,015 1,026
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 1,062 1,113
Minority interest . . . . . . . . . . . . . . . . . . . . . . 84 81
Stockholders' equity
Preferred stock, par value $.01 per share; 25,000,000
shares authorized; none issued and outstanding
Common stock, par value $.01 per share; 400,000,000 shares
authorized, 215,239,677 and 214,959,041 issued and
and outstanding in 1999 and 1998, respectively . . . . . . . 2 2
Additional paid-in capital . . . . . . . . . . . . . . . . . . 3,378 3,376
Retained earnings (deficit). . . . . . . . . . . . . . . . . . (1,831) (1,743)
Accumulated other comprehensive income (loss). . . . . . . . . (12) (1)
------------------------------------
Total stockholders' equity . . . . . . . . . . . . . . . . . . 1,537 1,634
------------------------------------
$ 11,375 $ 11,631
- -------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
2
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<PAGE>
SMURFIT-STONE CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31, (In millions) 1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (88) $ (5)
Adjustments to reconcile net loss to
net cash provided by (used for) operating activities
Extraordinary loss from early extinguishment of debt. . . . . . . 22
Cumulative effect of accounting change for start-up costs . . . . 5
Depreciation, depletion and amortization . . . . . . . . . . . . 110 33
Amortization of deferred debt issuance costs . . . . . . . . . . 4 3
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . (31) (1)
Non-cash employee benefit expense . . . . . . . . . . . . . . . . 10 2
Foreign currency transaction gains . . . . . . . . . . . . . . .. (4)
Non-cash restructuring charge . . . . . . . . . . . . . . . . . . 3
Change in current assets and liabilities,
net of effects from acquisitions and dispositions
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . (76) (4)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 24 (19)
Prepaid expenses and other current assets . . . . . . . . . . (4) (12)
Accounts payable and accrued liabilities . . . . . . . . . . 15 (41)
Interest payable . . . . . . . . . . . . . . . . . . . . . . 20 24
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . (23) (3)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (3)
-------------------------------
Net cash provided by (used for) operating activities . . . . . . . (38) 1
-------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Property additions . . . . . . . . . . . . . . . . . . . . . . . (37) (21)
Proceeds from property and investment
disposals and sale of businesses . . . . . . . . . . . . . . . 108 2
-------------------------------
Net cash provided by (used for) investing activities. . . . . . . 71 (19)
-------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Borrowings under bank credit facilities . . . . . . . . . . . . . 891
Payments of long-term debt . . . . . . . . . . . . . . . . . . . (116) (861)
Deferred debt issuance costs. . . . . . . . . . . . . . . . . . . (13)
-------------------------------
Net cash provided by (used for) financing activities. . . . . . . (116) 17
-------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH . . . . . . . . . . . . . . (1)
DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . (84) (1)
Cash and cash equivalents
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 155 12
-------------------------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 71 $ 11
- -----------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
3
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SMURFIT-STONE CONTAINER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in millions, except share data)
1. SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements and notes thereto, of
Smurfit-Stone Container Corporation ("SSCC" or the "Company") have been prepared
in accordance with the instructions to Form 10-Q and reflect all adjustments
which management believes necessary (which include only normal recurring
accruals) to present fairly the financial position, results of operations and
cash flows. These statements, however, do not include all information and
footnotes necessary for a complete presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. Interim results may not necessarily be indicative of results that
may be expected for any other interim period or for the year as a whole. These
financial statements should be read in conjunction with the audited consolidated
financial statements and footnotes included in the SSCC Annual Report on Form
10-K for the year ended December 31, 1998, filed March 31, 1999 with the
Securities and Exchange Commission.
SSCC, formerly Jefferson Smurfit Corporation, owns 100% of the common equity
interest in JSCE, Inc. and Stone Container Corporation ("Stone"). The Company
has no operations other than its investments in JSCE, Inc. and Stone. JSCE, Inc.
owns 100% of the equity interest in Jefferson Smurfit Corporation (U.S.) ("JSC
(U.S.)") and is the guarantor of the senior unsecured indebtedness of JSC
(U.S.). JSCE, Inc. has no operations other than its investment in JSC (U.S.).
JSC (U.S.) has extensive operations throughout the United States. Stone has
extensive domestic and international operations.
2. RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current year
presentation.
3. MERGER AND RESTRUCTURING
MERGER WITH STONE CONTAINER CORPORATION
On November 18, 1998, Stone merged with a wholly-owned subsidiary of the Company
("the Merger"). The Merger was accounted for as a purchase business combination
and, accordingly, the results of operations of Stone have been included in the
consolidated statements of operations of the Company after November 18, 1998.
The cost to acquire Stone has been preliminarily allocated to the assets
acquired and liabilities assumed according to their estimated fair values and
are subject to adjustment when additional information concerning asset and
liability valuations is finalized. In addition, the allocation may be impacted
by changes in pre-acquisition contingencies, identified during the allocation
period by the Company, relating to its investment in Florida Coast Paper Company
L.L.C. and the resolution of litigation related to Stone's purchase of the
common stock of Stone Savannah River Pulp and Paper Corporation.
RESTRUCTURING OF JSC (U.S.) OPERATIONS
As part of the Company's continuing evaluation of all areas of its business in
connection with its merger integration, the Company recorded a $5 million
restructuring charge during the first quarter of 1999 related to the permanent
shutdown of three corrugated container facilities. Additional restructuring
charges are expected in 1999 as management finalizes its plans.
4
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<PAGE>
4. NON-CONSOLIDATED AFFILIATES
The Company has several non-consolidated affiliates that are engaged in paper
and packaging operations in North America, South America, Europe and Asia.
Investments in majority-owned affiliates where control does not exist and non
majority-owned affiliates are accounted for under the equity method.
The Company's significant non-consolidated affiliates at March 31, 1999 are
MacMillian Bathurst, Inc. ("MBI"), a Canadian corrugated container company, in
which the Company owns a 50% interest, that had sales of $84 and $82 million for
the three months ended March 31, 1999 and 1998, respectively, and
Abitibi-Consolidated Inc., a Canada-based manufacturer and marketer of
publication paper ("Abitibi"), which had sales of $640 and $698 million for the
three months ended March 31, 1999 and 1998, respectively.
On January 21, 1999, the Company sold 16% (approximately 7.8 million shares) of
its interest in Abitibi for approximately $80 million, and on April 23, 1999,
the Company sold its remaining interest (approximately 41 million shares) for
net proceeds of approximately $414 million. The proceeds have been applied to
debt reduction. The Company will record a gain of approximately $39 million
during the second quarter of 1999.
Combined summarized financial information for all of the Company's
non-consolidated affiliates that are accounted for under the equity method of
accounting is presented below:
<TABLE>
<CAPTION>
For the three months ended March 31, 1999
----
<S> <C>
Results of operations
Net sales........................................ $ 809
Cost of sales.................................... 590
Income (loss) before income taxes, minority
interest and extraordinary charges............. (66)
Net income (loss)................................ (50)
</TABLE>
5. DISCONTINUED OPERATIONS
During February 1999 the Company adopted a formal plan to sell the operating
assets of its subsidiary, Smurfit Newsprint Corporation ("SNC"). Accordingly,
SNC is accounted for as discontinued operations in the accompanying consolidated
financial statements. The Company has restated its prior financial statements to
present the operating results of SNC as a discontinued operation. SNC revenues
were $74 million and $80 million for the first quarter of 1999 and 1998,
respectively.
5
<PAGE>
<PAGE>
6. COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1999 1998
---- ----
<S> <C> <C>
Net loss........................................ $ (88) $ (5)
Other comprehensive income (loss), net of tax:
Foreign currency translation.................. (11)
----- -----
Comprehensive loss.............................. $ (99) $ (5)
===== =====
</TABLE>
7. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
NUMERATOR:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of accounting
change..................................................... $ (92) $ 3
DENOMINATOR:
Denominator for basic earnings per share -
Weighted average shares.................................... 215 111
Effect of dilutive securities:
Employee stock options..................................... 1
--- ---
Denominator for diluted earnings per share -
adjusted weighted average shares........................... 215 112
=== ===
Basic earnings (loss) per share from continuing operations
before extraordinary item and cumulative effect of
accounting change.......................................... $(.43) $ .03
===== =====
Diluted earnings (loss) per share from continuing
operations before extraordinary item and cumulative
effect of accounting change................................ $(.43) $ .03
===== =====
</TABLE>
Options to purchase three million shares of common stock under the treasury
stock method, convertible debt to acquire one million shares of common stock
with an earnings effect of $.5 million, and additional minority interest shares
of $3 million with an earnings effect of $2 million are excluded from the
diluted earnings per share computation in 1999 because they are antidilutive.
6
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8. BUSINESS SEGMENT INFORMATION
The Company has two reportable segments: (1) Containerboard and Corrugated
Containers, and (2) Boxboard and Folding Cartons. The Containerboard and
Corrugated Containers segment is highly integrated. It includes a system of
mills and plants that produces a full line of containerboard that is converted
into corrugated containers. Corrugated containers are used to transport such
diverse products as home appliances, electric motors, small machinery, grocery
products, produce, books, tobacco and furniture. The Boxboard and Folding
Cartons segment is also highly integrated. It includes a system of mills and
plants that produces a broad range of coated recycled boxboard that is converted
into folding cartons. Folding cartons are used primarily to protect products,
such as food, fast food, detergents, paper products, beverages, health and
beauty aids and other consumer products, while providing point of purchase
advertising.
Other includes four non-reportable segments, specialty packaging, industrial
bags, reclamation, international and corporate related items. Corporate related
items include income and expense not allocated to reportable segments, goodwill
amortization, interest expense, the adjustment to record inventory at LIFO, and
the elimination of intercompany profit.
A summary by business segment follows:
<TABLE>
<CAPTION>
Container- Boxboard
board & &
Corrugated Folding
Containers Cartons Other Total
---------- ------- ----- -----
<S> <C> <C> <C> <C>
March 31, 1999
Revenues from external
customers........................ $ 1,110 $ 197 $ 413 $ 1,720
Intersegment revenues............... 48 36 84
Segment profit (loss)............... 50 13 (195) (132)
March 31, 1998
Revenues from external
customers........................ $ 419 $ 195 $ 150 $ 764
Intersegment revenues............... 11 37 48
Segment profit (loss)............... 35 14 (42) 7
</TABLE>
9. CONTINGENCIES
The Company's past and present operations include activities which are subject
to federal, state and local environmental requirements, particularly relating to
air and water quality. The Company faces potential environmental liability as a
result of violations of permit terms and similar authorizations that have
occurred from time to time at its facilities.
The Company faces potential liability for response costs at various sites with
respect to which the Company has received notice that it may be a potentially
responsible party ("PRP"), as well as contamination of certain Company-owned
properties, concerning hazardous substance contamination. In estimating its
reserves for environmental remediation and future costs, the Company's estimated
liability reflects only the Company's expected share. In determining the
liability, the estimate takes into consideration the number of other PRP's at
each site, the identity and financial condition of such parties and experience
regarding similar matters.
7
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<PAGE>
Stone is a party to an Output Purchase Agreement (the "OPA") with Four M
Corporation ("Four M") and Florida Coast Paper Company, L.L.C. ("FCPC"), a
joint venture owned 50% by each of Stone and Four M. The OPA requires that
Stone and Four M each purchase one half of the linerboard produced at FCPC's
mill in Port St. Joe, FL (the "FCPC Mill") at a minimum price sufficient to
cover certain obligations of FCPC. The OPA also requires Stone and Four M to
use their best efforts to cause the FCPC Mill to operate at a production rate
not less than the reported average capacity utilization of the U.S. linerboard
industry. FCPC indefinitely discontinued production at the FCPC Mill in August
1998. On April 2, 1999, FCPC and three related companies filed a Chapter 11
bankruptcy petition in United States Bankruptcy Court in Wilmington, Delaware.
All of the obligations of FCPC and the related entities are non-recourse to
Stone, and the bankruptcy filing has no effect on any of the indebtedness of
Stone or any other subsidiaries of the Company. On May 10, 1999, the Indenture
Trustee with respect to the first mortgage notes of FCPC (the "FCPC Notes")
commenced an adversary proceeding in the FCPC bankruptcy case against Stone and
certain other parties, including two former officers of Stone. The complaint
contains allegations that Stone violated the provisions of the OPA and a
subordinated credit agreement with FCPC, breached certain fiduciary duties owed
to the holders of the FCPC Notes, and negligently discharged certain additional
duties owed to the holders of the FCPC Notes. While Stone believes that such
allegations are without merit, it is unable to predict the likely outcome of
this action or its impact on the FCPC bankruptcy proceeding at this time.
Stone believes existing reserves are adequate to cover the amount of any
adverse judgement in this matter.
In April 1998, a suit was filed against Stone in Los Angeles Superior Court by
Chesterfield Investments L.P. ("Chesterfield"), and D.P. Investments L.P.
("DPI"), alleging that Stone owes such parties approximately $120 million
relating to Stone's purchase of common stock of Stone Savanna River Pulp and
Paper Corporation ("SSR"). In 1991, Stone purchased the shares of common stock
of SSR held by Chesterfield and DPI for approximately $6 million plus a
contingent payment payable in March 1998 based upon the post-closing performance
of the operations of SSR from 1991 through 1997. Stone has concluded a
settlement of the case with DPI, which had a 30% interest in the contingent
payment. Chesterfield is continuing to pursue the case as to the remaining 70%
of the contingent payment. Stone disputes Chesterfield's calculation of the
contingent payment, and is vigorously defending the litigation. The case is
currently set for trial in the second quarter of 1999. Stone believes that
existing reserves are adequate and the Company does not believe that the
resolution of this matter will have a significant impact on the Company's
financial condition or results of operations.
Subsequent to an understanding reached in December 1998, the Company and SNC
entered into a Settlement Agreement in January 1999 to implement a nationwide
class action settlement of claims involving Cladwood(R), a composite wood siding
product manufactured by SNC that has been used primarily in the construction of
manufactured or mobile homes. The Company recorded a $30 million pre-tax charge
to reflect amounts SNC has agreed to pay into a settlement fund, administrative
costs, plaintiffs' attorneys' fees, class representative payments and other
costs. The Company believes its reserve is adequate to pay eligible claims.
However, the number of claims, and the number of potential claimants who choose
not to participate in the settlement, could cause the Company to re-evaluate
whether the liabilities in connection with the Cladwood'r' cases could exceed
established reserves.
In March 1999, management of SNC's Oregon City, OR newsprint mill became aware
of possible violations of the mill's National Pollutant Discharge Elimination
System permit. SNC has provided both the EPA and Oregon Department of
Environmental Quality with a detailed report of its internal investigation and
it is probable that the agencies will conduct an additional investigation based
on this report. The Company is unable to predict its potential liability in this
matter at this time.
8
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<PAGE>
The Company is a defendant in a number of lawsuits and claims arising out of the
conduct of its business, including those related to environmental matters. While
the ultimate results of such suits or other proceedings against the Company
cannot be predicted with certainty, the management of the company believes that
the resolution of these matters will not have a material adverse effect on its
consolidated financial condition or results of operations.
9
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
As discussed in the Company's Annual Report filed on Form 10-K for the year
ended December 31, 1998 (the "SSCC 1998 10-K"), a subsidiary of the Company
merged with Stone as of November 18, 1998 and Stone became a wholly-owned
subsidiary of the Company.
<TABLE>
<CAPTION>
(In millions) Three months ended March 31,
----------------------------------------
1999 1998
---------------- -------------------
Net Profit/ Net Profit/
sales (loss) sales (loss)
------- ------ ------ -------
<S> <C> <C> <C> <C>
Containerboard & corrugated
containers $1,110 $ 50 $ 419 $ 35
Boxboard & folding cartons 197 13 195 14
Other operations 413 27 150 9
------ ----- ----- -----
Total operations $1,720 90 $ 764 58
====== =====
Other, net (1) (222) (51)
----- -----
Income (loss) from continuing
operations before income taxes,
minority interest, extraordinary
item and cumulative effect of
accounting change $(132) $ 7
===== =====
</TABLE>
(1) Other, net includes corporate revenues and expenses, net interest expense
and, for 1999, a restructuring charge in connection with the Merger.
Net sales for the Company for the three months ended March 31, 1999 were $1,720
million, an increase of 125% compared to the same period last year. Operating
profits for the Company for the three months ended March 31, 1999 were $90
million, an increase of $32 million compared to the same period last year. The
increases in net sales and operating profits compared to last year were due
primarily to Stone's operations acquired in the Merger. Net sales compared to
last year were unfavorably impacted by lower average sales prices for the
Company's products and the closure or sale of operating facilities. The impact
of the lower sales prices on profits were more than offset by profits of Stone's
operating facilities acquired in the Merger. Other, net increased compared to
last year due primarily to the consolidation of Stone's corporate expenses and
interest, higher LIFO expense, a $5 million restructuring charge and interest
expense on higher levels of debt as a result of the Merger. The changes in sales
price and product mix, shipment volumes, the Merger and other acquired, closed
or sold operations on net sales for each of the Company's segments is shown in
the chart below.
10
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<PAGE>
<TABLE>
<CAPTION>
(In millions) 1999 compared to 1998
---------------------------------------------
Containerboard Boxboard
Increase (decrease) & corrugated & folding Other
in net sales due to: containers cartons operations Total
- -------------------- -------------- --------- ---------- -----
<S> <C> <C> <C> <C>
Sales price and product mix $(29) $ (4) $(31) $( 64)
Sales volume (1) 6 2 7
Stone merger 734 295 1,029
Other acquisitions 5 5
Closed or sold facilities (18) (3) (21)
--- --- --- ---
Total increase $691 $ 2 $263 $ 956
=== === === ===
</TABLE>
Containerboard and Corrugated Containers Segment
Net sales of $1,110 million for the three months ended March 31, 1999, increased
165% compared to last year and profits increased by $15 million to $50 million.
The increase in net sales and profits was due primarily to the Merger. Net sales
and profits for the Stone operations included in this segment for the three
months ended March 31, 1999 were $734 million and $31 million, respectively. Net
sales were negatively impacted by lower average sales prices, primarily for
corrugated containers and containerboard, and the permanent closure of three JSC
(U.S.) containerboard mills in December 1998. Operations for 1999 include a
containerboard machine (the "Fernandina No. 2 Machine") acquired from Jefferson
Smurfit Group plc in November 1998. Cost of goods sold as a percent of net sales
increased to 84% for the three months ended March 31, 1999 compared to 83% for
the same period last year due primarily to the lower average selling prices in
1999.
Linerboard prices in the first quarter of 1999 were lower than last year by
6% and the average price of corrugated containers was lower by 2%. Market
conditions began to improve late in 1998 and, during the first quarter of 1999,
the Company implemented price increases of $50 and $60 per ton for linerboard
and medium, respectively. The Company also began to implement price increases
for corrugated containers. The price increases are expected to be fully
implemented by the end of the second quarter of 1999. Containerboard shipments
decreased 1% and shipments of corrugated containers increased 2% during the
first quarter of 1999 compared to last year.
The average price of SBS in the first quarter of 1999 declined 8% and shipments
were lower by 3% compared to last year.
Boxboard and Folding Cartons Segment
For the three months ended March 31, 1999, net sales increased by 1% compared to
last year to $197 million and profits decreased by $1 million to $13 million.
The decline in profits was due primarily to the lower sales prices for folding
cartons and boxboard. On average, boxboard prices were lower than last year by
11% and the average price of folding cartons was lower by 1%. Boxboard shipments
decreased 15% while shipments of folding cartons increased 11% compared to last
year. Cost of goods sold as a percent of net sales for the three months ended
March 31, 1999 were comparable to the same period last year.
Other Operations
Net sales for the Company's other operations for the three months ended March
31, 1999 increased $263 million, or 175%, and profits increased by $18 million
11
<PAGE>
<PAGE>
compared to last year, due primarily to the results of the other Stone
businesses acquired in the Merger. Stone's industrial bag and international
operations had net sales of $133 million and $160 million, respectively, and
each had profits of $9 million for the first quarter of 1999. Other operations
also include the Company's reclamation and specialty packaging operations.
Reclamation sales prices were significantly lower than last year as a result
of lower demand and the drop in the price of old corrugated containers ("OCC")
experienced in 1998. The average price of OCC, the primary grade used by paper
mills, was lower in the 1999 period by approximately $50 per ton compared to
last year. The price of old newsprint was higher compared to last year by
approximately $10 per ton.
Discontinued Operations
During February 1999, the Company adopted a formal plan to sell the operating
assets of its subsidiary, Smurfit Newsprint Corporation ("SNC"). Accordingly,
SNC is accounted for as a discontinued operation for the periods shown. Income
from discontinued operations, net of tax, for the three months ended March 31,
1999 was $4 million compared to $8 million for the same period last year.
Newsprint inventories within the industry continue to be excessive, with
deteriorating prices. Many newsprint producers, including the Company, have
announced the curtailment of production in the first quarter of 1999. SNC
revenues were $74 million and $80 million for the first quarter of 1999 and
1998, respectively. Average sales prices and shipments during the quarter were
each lower than last year by 5%.
Costs and Expenses
The increases in costs and expenses compared to last year in the Company's
Consolidated Statements of Operations resulted primarily from the Stone merger
and higher LIFO expense. Such increases were partially offset by elimination of
cost for certain containerboard mill operations which were permanently shut down
in December 1998. The increase in the Company's overall cost of goods sold as a
percent of net sales for the three months ended March 31, 1998, from 83% in 1998
to 88% in 1999, was due primarily to the lower average selling prices in 1999.
Selling and administrative expenses also increased compared to 1998 due to the
Stone merger.
Interest expense for the three months ended March 31, 1999 was $102 million
higher than last year due primarily to Stone's interest expense of $94 million
and higher levels of debt as a result of the Merger. Average effective interest
rates for the three months ended March 31, 1999 were lower than last year.
The Company recorded an income tax benefit of $42 million on a pretax loss of
$132 million for the three months ended March 31, 1999. The effective tax rate
for the stated period includes the effect of permanent differences from applying
purchase accounting.
12
<PAGE>
<PAGE>
RESTRUCTURING AND MERGER SYNERGIES
As explained in the SSCC 1998 10-K, the Company recorded a pre-tax charge of
$257 million in the fourth quarter of 1998 for restructuring costs related to
the permanent closure of certain JSC (U.S.) operations in 1998 in connection
with the Merger. The restructuring charge included provisions for costs
associated with (1) adjustment of property, plant and equipment of closed
facilities to fair value less costs to sell of $179 million, (2) facility
closure costs of $42 million, (3) severance related costs of $27 million, and
(4) other Merger related costs of $9 million.
In addition, the preliminary allocation of the cost to acquire Stone included
an adjustment to fair value of property, plant and equipment associated with
the permanent closure of certain facilities owned by Stone in 1998, liabilities
for the termination of certain Stone employees and liabilities for long-term
commitments. Such exit liabilities amounted to $117 million, including (1)
facility closure costs of $9 million, (2) severance related costs of $14
million, (3) lease commitments of $38 million and (4) other commitments of $56
million.
The exit liabilities recorded for JSC (U.S.) and Stone consisted of
approximately $195 million of anticipated cash expenditures. To date, through
March 31, 1999, approximately $48 million (25%) of the cash expenditures were
incurred, the majority of which related to severance and facility closure costs.
The remaining cash expenditures will continue to be funded through operations,
approximately 50% of which will be paid by the end of 1999, as originally
planned.
As part of the Company's continuing evaluation of all areas of its business in
connection with its Merger integration, the Company recorded a $5 million
restructuring charge during the first quarter of 1999 related to the permanent
shutdown of three JSC (U.S.) corrugated container facilities. Additional
restructuring charges are expected in 1999 as management finalizes its plans.
Merger synergies of at least $350 million per year are targeted by the end of
2000. Approximately half of this amount is projected to come from optimizing the
combined manufacturing systems of JSC (U.S.) and Stone. Synergies in 1999, less
costs to implement these savings, are expected to exceed $200 million. Merger
synergies, including the benefits of mill shutdowns at the end of 1998 and
staff headcount reductions, through the first quarter of 1999 totaled
approximately $40 million.
STATISTICAL DATA
<TABLE>
<CAPTION>
(In thousands of tons, Three months ended
except as noted) March 31
----------------------
1999 1998
---- ----
<S> <C> <C>
Mill production:
Containerboard 1,460 518
Solid bleached sulfate 44 49
Kraft paper 113
Coated boxboard 150 145
Corrugated shipments (billion square feet) 22.8 7.2
Folding carton shipments 141 133
Industrial bag shipments 130
Fiber reclaimed and brokered 1,591 1,279
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1999, proceeds from the sale of assets of
$108 million and available cash of $84 million were used to fund cash used for
operating activities of $38 million, property additions of $37 million and net
debt payments of $116 million. Working capital, exclusive of cash and current
maturities of debt, increased approximately $44 million during the three months
ended March 31, 1999, due primarily to the price increases implemented in the
first quarter.
The Company intends to sell or liquidate certain of its assets, including its
woodlands operations, its remaining newsprint operations and other non-core
businesses. On January 21, 1999, the Company sold 7.8 million shares of Abitibi
for approximately $80 million and on April 23, 1999, the Company sold its
remaining interest in Abitibi for approximately $414 million. Proceeds were
applied to reduce Stone's debt. The proceeds were sufficient to prepay the
entire outstanding balance of the Tranche B term loan and, in accordance with
the Stone Credit Agreement (as defined below), the revolving credit maturity
date was extended from April 30, 2000 to December 31, 2000.
Stone has a $210 million accounts receivable securitization program (the
"Securitization Program") whereby certain trade accounts receivable are sold to
Stone Receivables Corporation, a wholly owned, bankruptcy remote, limited
purpose subsidiary. The accounts receivable purchases are financed through the
issuance of $210 million in term loans with a final maturity of December 15,
2000. In December 1999, the Securitization Program will discontinue the purchase
of additional trade accounts receivable and convert to a repayment program in
March of 2000. Therefore, the $210 million Securitization Program is classified
as a current maturity of long-term debt as of March 31, 1999. It is the
Company's intention to refinance the
13
<PAGE>
<PAGE>
Securitization Program in 1999 on terms and conditions similar to the existing
program.
The credit facilities of JSC (U.S.) and Stone (the "JSC (U.S.) Credit Agreement"
and the "Stone Credit Agreement", respectively and collectively, the "Credit
Agreements") contain various business and financial covenants including, among
other things, (i) limitations on dividends, redemptions and repurchases of
capital stock, (ii) limitations on the incurrence of indebtedness, (iii)
limitations on capital expenditures and (iv) maintenance of certain financial
covenants. The Credit Agreements also require prepayments if JSC (U.S.) or Stone
have excess cash flows, as defined, or receive proceeds from certain asset
sales, insurance, issuance of equity securities or incurrence of certain
indebtedness. The obligations under the JSC (U.S.) Credit Agreement are
unconditionally guaranteed by the Company and certain of its subsidiaries. The
obligations under the Credit Agreements are secured by a security interest in
substantially all of the assets of JSC (U.S.) and Stone, respectively. Such
restrictions, together with the highly leveraged position of the Company, could
restrict corporate activities, including the Company's ability to respond to
market conditions, to provide for unanticipated capital expenditures or to take
advantage of business opportunities.
On January 22, 1999, Stone obtained a waiver from its bank group for
non-compliance with certain financial covenant requirements under the Stone
Credit Agreement as of December 31, 1998. Subsequently, on March 23, 1999, Stone
and its bank group amended the Stone Credit Agreement to further ease certain
quarterly financial covenant requirements for 1999.
As mentioned above, the declaration of dividends by the Board of Directors is
subject to, among other things, certain restrictive provisions contained in the
Credit Agreements and certain note indentures. At March 31, 1999, Stone had
accumulated dividend arrearages of $16 million related to its preferred stock.
Based upon covenants in the Stone Indentures, Stone is required to maintain
certain levels of equity. If the minimum equity levels are not maintained for
two consecutive quarters, the applicable interest rates on the Indentures are
increased by 50 basis points per semiannual interest period (up to a maximum of
200 basis points) until the minimum equity level is attained. Stone's equity
level was below the minimum equity level during most of 1998. As a result, the
interest rates increased. The interest rates on the Indentures returned to the
original interest rates on April 1, 1999 due to Stone's minimum equity levels
exceeding the minimum on December 31, 1998.
As of March 31, 1999, JSC (U.S.) had $406 million of unused borrowing capacity
under its credit agreement and Stone had $420 million of unused borrowing
capacity under its credit agreement. The Company expects that internally
generated cash flows, proceeds from asset divestitures and existing financing
resources will be sufficient for the next several years to meet its obligations,
including debt service, restructuring payments, settlement of certain litigation
relating to Cladwood'r' siding and capital expenditures.
YEAR 2000
The Year 2000 problem concerns the inability of computer systems and devices to
properly recognize and process date-sensitive information when the year
14
<PAGE>
<PAGE>
changes to 2000. The Company depends upon its information technology ("IT") and
non-IT systems (used to run manufacturing equipment that contain embedded
hardware or software that must handle dates) to conduct and manage the Company's
business. The Company believes that, by replacing, repairing or upgrading the
systems, the Year 2000 issue can be resolved without material operational
difficulties. While it is difficult, at present, to fully quantify the overall
cost of this work, the Company expects to spend approximately $68 million
through 1999 to correct the Year 2000 problem, of which approximately $27
million has been incurred through March 31, 1999. A large portion of these costs
relate to enhancements that will enable the Company to reduce or avoid costs and
operate many of its production facilities more efficiently. Some of these
projects have been accelerated in order to replace existing systems that cannot
be brought into compliance by the year 2000. The Company is utilizing both
internal and external resources to evaluate the potential impact of the Year
2000 problem. The Company plans to fund its Year 2000 effort with cash from
operations and borrowings under the Credit Agreements.
The Company's Year 2000 Program Management Office is responsible for guiding and
coordinating operating units in developing and executing their Year 2000 plans,
enabling the Company to share knowledge and work across operating units,
developing standard planning and formats for internal and external reporting,
consistent customer and vendor communications and where appropriate, the
development of contingency plans. The Company's Year 2000 program consists of
the following seven phases:
Phase 1: Planning/Awareness: The planning and awareness phase includes the
identification of critical business processes and components.
Phase 2: Inventory: During the inventory phase, Company personnel identified
systems that could potentially have a Year 2000 problem and categorized the
system as compliant, non-compliant, obsolete or unknown.
Phase 3: Triage: In the triage phase, every system is assigned a business risk
as high, medium, or low.
Phase 4: Detailed Assessment: The detailed assessment provides for a planned
schedule of remediation and estimated cost.
Phase 5: Remediation: Remediation involves what corrective action to take if
there is a Year 2000 problem, such as replacing, repairing or upgrading the
system, and concludes with the execution of system test.
Phase 6: Fallout: In the Fallout phase, the inventory will be kept up to date
and no new Year 2000 problems will be introduced.
Phase 7: Contingency Planning: The Company is developing contingency plans for
the most reasonable worst case scenarios.
The Company has completed the planning, inventory, triage, and detailed
assessment of its IT systems and is taking corrective action and testing the
new, upgraded or repaired systems. The Company identified ten high-risk IT
systems, of which two have been remediated and the remaining eight are scheduled
to be substantially completed in the second and third quarters of 1999.
The Company's operating facilities rely on control systems, which control and
monitor production, power, emissions and safety. The inventory, triage and
detailed assessment phases for all operating facilities were substantially
15
<PAGE>
<PAGE>
complete as of the end of the first quarter of 1999. The Company had retained a
third party to assist with the verification and validation of these three
phases. The Company expects to have substantially completed all phases of its
Year 2000 program, for non-IT systems, by the end of the third quarter of 1999.
The Year 2000 Program Management Office has compiled a list of mission critical
vendors. A mission critical vendor is a provider of goods or services without
which a facility could not function. Each of the mission critical vendors was
surveyed to insure that they are Year 2000 compliant or have a plan in place. As
of March 31, 1999, 66% of the mission critical vendors surveyed have responded.
The results of the mission critical vendors surveyed indicate 22% are currently
compliant, 34% have provided a target date for compliance, and 10% have replied
but did not provide a target date for compliance. A second follow-up survey has
been sent to the 34% who did not respond. Where appropriate, Company
representatives will conduct an in-depth investigation of a mission critical
vendor's ability to be Year 2000 compliant.
The Company currently believes that it will be able to replace, repair or
upgrade all of its IT and non-IT systems affected by the Year 2000 problem on a
timely basis. In the event the Company does not complete its plan to bring
systems into compliance before the year 2000, there could be severe disruption
in the operation of its process control and other manufacturing systems,
financial systems and administrative systems. Production problems and delayed
product deliveries could result in a loss of customers. The production impact of
a Year 2000 related failure varies significantly among the facilities and any
such failure could cause manufacturing delays, possible environmental
contamination or safety hazards. The most reasonably likely worst case scenario
is the occurrence of a Year 2000 related failure at one or more of the Company's
paper mills which, could include multiple paper machines. The Company has the
capability to produce and ship products from multiple geographic locations
should disruptions occur. Delays in invoicing customer shipments could cause a
slowdown in cash receipts, which could affect the Company's ability to meet its
financial obligations. To the extent customers experience Year 2000 problems
that are not remediated on a timely basis, the Company may experience material
fluctuations in the demand for its products. The amount of any potential
liability and/or lost revenue cannot be reasonably estimated at this time;
however, such amounts could be material.
While the Company currently expects no material adverse consequences on its
financial condition or results of operations due to Year 2000 issues, the
Company's beliefs and expectations are based on certain assumptions that
ultimately may prove to be inaccurate. Each of the Company's operating
facilities is developing a specific contingency plan for their most reasonably
likely worst case scenarios. The Company will also seek to take appropriate
actions to mitigate the effects of the Company's or significant vendors' failure
to remediate the Year 2000 problem in a timely manner, including increasing the
inventory of critical raw materials and supplies, increasing finished goods
inventories, switching to alternative energy sources, and making arrangements
for alternate vendors.
There is a risk that the Company's plans for achieving Year 2000 compliance may
not be completed on time. However, failure to meet critical milestones being
identified in the Company's plans would provide advance notice, and steps would
be taken to prevent injuries to employees and others, and to
16
<PAGE>
<PAGE>
prevent environmental contamination. Customers and suppliers would also receive
advance notice allowing them to implement alternate plans.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a discussion of certain market risks related to the Company, See Part II,
Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", in the
SSCC 1998 10-K.
Foreign Currency Risk
During the first quarter of 1999 the exchange rates for the Canadian dollar and
the German Mark strengthened (weakened) against the U.S. dollar as compared to
the rates at December 31, 1998 as follows:
<TABLE>
<S> <C>
Rate at March 31, 1999 vs. December 31, 1998
Canadian dollar 1.4 %
German Mark (8.8)%
Average Rate First Quarter 1999 vs. First Quarter 1998
Canadian dollar (5.7)%
German Mark (4.1)%
</TABLE>
The Company has experienced foreign currency transaction gains and losses on the
translation of U.S. dollar denominated obligations of certain of its Canadian
subsidiaries, non-consolidated affiliates and a German Mark obligation. The
Company recognized foreign currency transaction gains of $4 million in the first
quarter of 1999.
Interest Rate Risk
The Company's earnings and cash flows are significantly affected by the amount
of interest on its indebtedness. No significant change has occurred in the
Company's exposure to such risk in the first quarter of 1999.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 19, 1999, Stone received a Notice of Violation ("NOV") from the United
States Environmental Protection Agency ("EPA") for alleged violations of the
requirements of the Virginia State Implementation Plan pertaining to the
prevention of significant deterioration ("PSD") of air quality under the Clean
Air Act. EPA alleges in the NOV both past and ongoing violations arising out of
modifications which were made at Stone's Hopewell, Virginia mill relating to the
black liquor solids loading of the mill's recovery boiler. The Clean Air Act
authorizes EPA to assess a penalty of up to $27,500 per day of each violation
($25,000 per day of violation for violations occurring on or before January 30,
1997). In a related matter, Stone has been advised by the Virginia Department of
Environmental Quality that it intends to issue a similar NOV for alleged
violations of permitting requirements under the Virginia Air Pollution Control
Law. Stone denies any violation of the PSD requirements and intends to
vigorously contest the allegations of the NOVs.
On April 2, 1999, Florida Coast Paper Company L.L.C. ("FCPC") and three related
companies filed a Chapter 11 bankruptcy petition in United States Bankruptcy
Court in Wilmington, Delaware. FCPC and the related entities are 50% owned by
Stone. All of the obligations of FCPC and the related entities are non-recourse
to Stone, and the bankruptcy filing has no effect on any of
17
<PAGE>
<PAGE>
the indebtedness of Stone or any other subsidiaries of the Company. On May 10,
1999, the Indenture Trustee with respect to the first mortgage notes of FCPC
(the "FCPC Notes") commenced an adversary proceeding in the FCPC bankruptcy case
against Stone and certain other parties, including two former officers of Stone.
The complaint contains allegations that Stone violated the provision of an
output purchase agreement and a subordinated credit agreement with FCPC,
breached certain fiduciary duties owed to the holders of the FCPC Notes, and
negligently discharged certain additional duties owed to the holders of the FCPC
Notes. While Stone believes that such allegations are without merit, it is
unable to predict the likely outcome of this action or its impact on the FCPC
bankruptcy proceeding at this time. Stone believes existing reserves are
adequate to cover the amount of any adverse judgement in this matter.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) The following exhibits are included in this Form 10-Q.
11.1 Calculation of Per Share Earnings
27.1 Financial Data Schedule
b) Reports on Form 8-K
Form 8-K dated February 12, 1999 was filed under Item 5 - Other Events and
Item 7--Exhibits.
18
<PAGE>
<PAGE>
SIGNATURES
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.
SMURFIT-STONE CONTAINER CORPORATION
-----------------------------------
(Registrant)
Date May 17, 1999 /s/ Paul K. Kaufmann
------------ -----------------------------------
Paul K. Kaufmann
Vice President and
Corporate Controller
(Principal Accounting Officer)
19
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as..................... 'r'
<PAGE>
<PAGE>
EXHIBIT 11.1
Smurfit-Stone Container Corporation
Calculation of Per Share Earnings
(In millions, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting change $ (92) $ 3
Discontinued operations 4 8
Extraordinary item (13)
Cumulative effect of accounting change (3)
---- ----
Net loss $ (88) $ (5)
==== ====
Weighted average shares outstanding
for basic earnings per share 215 111
Effect of diluted securities
Employee stock options 1
---- ----
Weighted average shares outstanding
for diluted earnings per share 215 112
==== ====
Basic per share amounts:
Income (loss) before extraordinary item $(.43) $ .03
Discontinued operations .02 .07
Extraordinary item (.12)
Cumulative effect of accounting change (.03)
---- ----
Net loss $(.41) $(.05)
==== ====
Diluted per share amounts:
Income (loss) before extraordinary item $(.43) $ .03
Discontinued operations .02 .07
Extraordinary item (.11)
Cumulative effect of accounting change (.03)
---- ----
Net loss $(.41) $(.04)
==== ====
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<CIK> 0000919226
<NAME> SMURFIT-STONE CONTAINER CORPORATION CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 71
<SECURITIES> 0
<RECEIVABLES> 889
<ALLOWANCES> 83
<INVENTORY> 748
<CURRENT-ASSETS> 1,915
<PP&E> 6,336
<DEPRECIATION> 918
<TOTAL-ASSETS> 11,375
<CURRENT-LIABILITIES> 1,592
<BONDS> 6,085
<COMMON> 2
0
0
<OTHER-SE> 1,537
<TOTAL-LIABILITY-AND-EQUITY> 11,375
<SALES> 1,720
<TOTAL-REVENUES> 1,720
<CGS> 1,513
<TOTAL-COSTS> 1,513
<OTHER-EXPENSES> 196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 153
<INCOME-PRETAX> (132)
<INCOME-TAX> (42)
<INCOME-CONTINUING> (92)
<DISCONTINUED> 4
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (88)
<EPS-PRIMARY> (.41)
<EPS-DILUTED> (.41)
</TABLE>
