<PAGE> 1
Exhibit 99.4
ST. LAURENT PAPERBOARD INC.
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
(unaudited)
(in thousands of US dollars, except per share amounts)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
-------------------------
2000 1999
-------- --------
<S> <C> <C>
Sales $300,110 $216,475
Cost of delivery 17,921 18,051
-------- --------
Net sales 282,189 198,424
Cost of sales 213,621 164,592
Selling and administrative expenses 23,694 12,687
Amortization 18,631 16,435
-------- --------
255,946 193,714
-------- --------
Operating earnings 26,243 4,710
Interest expense, net 8,193 7,057
Other expense (income) 3,373 (4,816)
-------- --------
Earnings before income taxes 14,677 2,469
Provision for income taxes 6,207 479
-------- --------
8,470 1,990
Earnings from equity investment / minority
interests (137) 285
-------- --------
Net earnings $ 8,333 $ 2,275
======== ========
Net earnings per common share
Basic $ 0.17 $ 0.05
======== ========
Fully diluted $ 0.17 $ 0.05
======== ========
Weighted average number of outstanding
common shares (in thousands) 49,559 49,264
======== ========
Retained earnings at beginning of period $ 40,106 $ 1,769
Employee future benefits transitional amount (19,643) --
Net earnings 8,333 2,275
-------- --------
Retained earnings at end of period $ 28,796 $ 4,044
======== ========
</TABLE>
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<PAGE> 2
ST. LAURENT PAPERBOARD INC.
CONSOLIDATED STATEMENT OF CHANGES IN CASH POSITION
(unaudited)
(in thousands of US dollars)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
--------------------
2000 1999
------ ------
<S> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net earnings $ 8,333 $ 2,275
Items not involving cash
Amortization of property, plant and equipment,
start up, deferred costs and goodwill 18,631 16,435
Amortization of debt issue costs 510 399
Future income taxes 5,456 185
Loss (gain) on sale of property, plant and equipment 185 (4,553)
Other 135 (222)
Start-up and other deferred costs incurred (1,511) (691)
Post retirement expense, net of funding (378) 1,041
Earnings from equity investment / minority
interests 137 (285)
------- -------
31,498 14,584
Change in non-cash working capital
relating to operations
Accounts receivable (6,120) (9,674)
Inventory (4,732) 8,345
Prepaid expenses 7,445 1,464
Accounts payable and accruals 2,597 11,092
Income and other taxes payable (425) (42)
------- -------
(1,235) 11,185
------- -------
Cash provided by operating activities 30,263 25,769
------- -------
INVESTING ACTIVITIES
Equity investment -- (9,607)
Additions to property, plant and equipment (23,245) (6,204)
Proceeds from disposals of property, plant
and equipment 142 5,655
-------- --------
(23,103) (10,156)
-------- --------
FINANCING ACTIVITIES
Issuance of common shares, net of expenses 3,318 333
Minority interests 729 --
Issuance of long-term debt 8,790 70
Repayment of long-term debt (9,561) (24)
Debt issue costs 19 (127)
-------- --------
3,295 252
-------- --------
INCREASE (DECREASE) IN CASH 10,455 15,865
CASH (INDEBTEDNESS) AT BEGINNING OF PERIOD 14,891 (3,519)
-------- --------
CASH (INDEBTEDNESS) AT END OF PERIOD $ 25,346 $ 12,346
======== ========
CASH AND CASH EQUIVALENTS
Cash on hand 22,225 6,713
Temporary investments 3,121 5,633
-------- --------
$ 25,346 $ 12,346
========= ========
</TABLE>
2
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ST. LAURENT PAPERBOARD INC.
CONSOLIDATED BALANCE SHEET
(in thousands of US dollars)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- -----------
(unaudited) (audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and temporary investments $ 25,346 $ 14,891
Accounts receivable 130,399 124,279
Income and other taxes receivable 5,217 4,792
Inventories 111,213 106,481
Prepaid expenses 6,539 13,984
---------- ----------
278,714 264,427
PROPERTY, PLANT AND EQUIPMENT 822,530 816,879
DEFERRED CHARGES AND OTHER ASSETS 33,008 33,898
GOODWILL 39,783 40,339
---------- ----------
$1,174,035 $1,155,543
========== ==========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 105,443 $ 102,846
Current portion of long-term debt 48,167 47,397
---------- ----------
153,610 150,243
LONG-TERM DEBT 336,735 338,206
FUTURE INCOME TAXES 14,501 18,305
OTHER LIABILITIES 61,196 32,804
SHAREHOLDERS' EQUITY
Common shares 576,789 573,471
Contributed surplus 2,408 2,408
Retained earnings 28,796 40,106
---------- ----------
607,993 615,985
---------- ----------
$1,174,035 $1,155,543
========== ==========
</TABLE>
3
<PAGE> 4
ST. LAURENT PAPERBOARD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL AMOUNTS ARE EXPRESSED IN UNITED STATES ("US") DOLLARS EXCEPT WHERE
OTHERWISE INDICATED)
(Unaudited)
1. CHANGE IN ACCOUNTING POLICY
In the first quarter of 2000, the Company retroactively adopted the new
accounting standard of the Canadian Institute of Chartered Accountants
regarding employee future benefits which requires all employee future
benefits to be accounted for on an accrual basis. Financial statements of
prior periods were not restated. The impact of this change was to increase
other liabilities by $28.9 million, increase future tax benefits by $9.3
million and decrease retained earnings by $19.6 million. The impact on
earnings was not significant.
2. SUBSEQUENT EVENTS
Contingency
The consolidated financial statements of the Company as at December 31,
1999 mentioned the issuance of Notices of Violations under the Clear Air
Act by the U.S. Environmental Protection Agency and the Virginia Department
of Environmental Quality to its West Point mill which was acquired in 1997
from Chesapeake Corporation and the related circumstances. Under the
Purchase Agreement, the Company is entitled to indemnification up to a
maximum of $50 million. A third party appointed by the Company and
Chesapeake has ruled to extend the indemnification period from May 8, 2000,
as previously reported, to August 7, 2000 and further extended by agreement
of the parties to November 6, 2000.
Merger with Smurfit Stone Container Corporation ("SSCC")
On February 20, 2000, SSCC and the Company entered into a pre-merger
agreement pursuant to which SSCC agreed to acquire all the issued and
outstanding shares of the Company for a per share consideration of $12.50
and one-half share of SSCC. Shareholders and regulatory approvals were
subsequently obtained and the transaction closed on May 31, 2000.
3. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP)
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in Canada (Canadian GAAP) which
conform in all material respects with generally accepted accounting
principles in the United States to the extent as required by Item 17 of
Form 20-F, except as set forth below.
RECONCILIATION OF EARNINGS AND BALANCE SHEET TO U.S. GAAP
EARNINGS ADJUSTMENTS
<TABLE>
<CAPTION>
First quarter First quarter
2000 1999
------------- -------------
<S> <C> <C>
Net earnings (loss) in accordance with
Canadian GAAP $8,333 $2,275
------ ------
Adjustments:
Pension expense (1) $ (225) $ (233)
Unrealized exchange loss on long-term debt (2) 96 95
RSU/stock options (3) (169) (126)
Deferred start-up costs (4) (742) 172
Income tax impact of the above adjustments 319 20
------ ------
$ (721) $ (72)
------ ------
Net earnings (loss) in accordance with $7,612 $2,203
U.S. GAAP ====== ======
Net earnings (loss) per common share
in accordance with U.S. GAAP - basic $ 0.15 $ 0.04
====== ======
Net earnings (loss) per common share -
fully diluted (6) $ 0.15 $ 0.04
====== ======
</TABLE>
CONSOLIDATED BALANCE SHEET ADJUSTMENTS
<TABLE>
<CAPTION>
March 31st 2000 December 31st 1999
CAN. GAAP U.S. GAAP CAN. GAAP U.S. GAAP
--------- --------- --------- ---------
(in thousands of dollars)
<S> <C> <C> <C> <C>
Working capital $ 125,104 $ 125,104 $ 114,184 $ 114,184
Property, plant and equipment 822,530 822,530 816,879 816,879
Future income taxes (1,4) -- -- -- --
Other assets (1,2,4,5) 72,791 75,316 74,237 77,051
---------- ---------- ---------- ----------
$1,020,425 $1,022,950 $1,005,300 $1,008,114
========== ========== ========== ==========
Long-term debt $ 336,735 $ 336,735 $ 338,206 $ 338,206
Future income taxes (1,4) 14,501 21,156 18,305 16,018
Other liabilities (1) 61,196 46,241 32,804 46,528
Shareholders' equity (1,2,3,4,5) 607,993 618,818 615,985 607,362
---------- ---------- ---------- ----------
$1,020,425 $1,022,950 $1,005,300 $1,008,114
========== ========== ========== ==========
</TABLE>
(1) Until December 1999, accounting for pension costs under U.S. GAAP
differed from Canadian GAAP principally with respect to the choice
of the discount rate used to calculate the projected benefit
obligation and to the valuation of assets and related effects on
pension expense. The adoption in 2000 of a new accounting standard
for pension costs in Canada eliminated most of the differences
with the U.S. accounting rule. With the adoption of the new
Canadian accounting rule, the Company recognized as of the
beginning of the year, the liability for underfunded plans
representing the excess of the projected benefit obligation
over the pension plan assets, less the pension liability already
recognized. Under U.S. GAAP, the Company would have recorded an
additional minimum liability for underfunded plans representing
the excess of the accumulated benefit obligation over the
pension plan assets, less the pension liability already
recognized and the net unamortized prior service cost. Starting in
2000, the amortization of the unrecognized liability under U.S.
GAAP represented by the difference between the projected benefit
obligation and the accumulated benefit obligation will create the
main difference between the Canadian and U.S. GAAP. Under U.S.
GAAP, a minimum liability at December 31, 1999 and March 31, 2000
of $12.1 million would be accounted for and offset by an
intangible asset of $11.4 million and a component of accumulated
other comprehensive income of $0.5 million net of a tax benefit of
$0.2 million.
-4-
<PAGE> 5
RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP) (CONTINUED)
(2) Unrealized exchange gains and losses arising on the translation,
at exchange rates prevailing on the balance sheet date, of
long-term debt repayable in a foreign currency are deferred and
amortized over the remaining life of the related debt. Under U.S.
GAAP, such exchange gains and losses are included in earnings.
(3) Under U.S. GAAP, the Company had elected in 1995 to measure
compensation costs related to awards of RSUs and stock options
using the fair value based method of accounting as recommended
under FASB Statement 123. The recognition provision has not been
applied to awards granted in 1994. The fair value of options
granted in 1999 was estimated using the Black-Scholes options
pricing model, taking into account an interest risk-free rate of
6%, an expected volatility of 25% and an expected life of four
years. The weighted average grant date fair value of options
granted during 1999 was $3.39. The expected rate of cancellation
of options and RSUs is estimated at 5% and 6.5% respectively per
year. The cost related to the RSUs, which is amortized over a
period of three years, is based on the market value of the
Company's shares as of the grant date. The program was terminated
in 1998. No RSUs were granted in 1999 and 2000 and no options were
granted in the first quarter of 2000.
(4) Under Canadian GAAP, start-up costs can be deferred and amortized.
Under U.S. GAAP, such costs are charged to earnings as incurred.
(5) Under U.S. GAAP, advances to officers and managers for the
purchase of shares of the Company must be deducted from
shareholders' equity.
(6) Under U.S. GAAP, the effect of potential conversion is calculated
using the treasury stock method for options and warrants. Under
the treasury stock method, earnings per share are calculated as if
options and warrants were exercised at the beginning of the year
and as if the funds were used to purchase the Company's stock in
the market. Under Canadian GAAP, the funds theoretically received
on conversion are assumed to earn an appropriate rate of return.
4. SEGMENTED INFORMATION
<TABLE>
<CAPTION>
Woodlands,
Solid Wood
Primary and unallocated
First Quarter ended March 31, 2000 mills Converting amounts Total
---------------------------------- -------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Net sales to third parties $134,819 $133,674 $13,696 $ 282,189
Inter-segment sales 31,744 - - 31,744
-------- -------- ------- ----------
Total $166,563 $133,674 $13,696 $ 313,933
EBITDA 38,193 6,410 271 44,874
Amortization 14,401 3,474 756 18,631
Operating earnings (loss) 23,792 2,936 (485) 26,243
Identifiable assets 764,941 345,428 63,666 1,174,035
Additions to property, plant and equipment 10,163 12,759 323 23,245
</TABLE>
<TABLE>
<CAPTION>
Woodlands,
Solid Wood
Primary and unallocated
First Quarter ended March 31, 1999 mills Converting amounts Total
---------------------------------- -------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Net sales to third parties $119,521 $ 75,271 $ 3,632 $ 198,424
Inter-segment sales 18,338 - - 18,338
-------- -------- ------- ----------
Total $137,859 $ 75,271 $ 3,632 $ 216,762
EBITDA 16,052 5,629 (536) 21,145
Amortization 13,994 2,034 407 16,435
Operating earnings (loss) 2,058 3,595 (943) 4,710
Identifiable assets 785,028 188,866 85,943 1,059,837
Additions to property, plant and equipment 3,783 2,246 175 6,204
</TABLE>
