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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 20, 2000
SMURFIT-STONE CONTAINER CORPORATION
(Exact name of Registrant as specified in its charter)
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DELAWARE 000-23876 43-1531401
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
150 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
(Address of Principal Executive Offices) (Zip Code)
(312) 346-6600
Registrant's Telephone Number, Including Area Code
-----------------------------
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On April 20, 2000, St. Laurent Paperboard Inc. ("St.
Laurent") sent to its securityholders a Notice of Special Meeting and
Management Proxy Circular dated April 14, 2000 ("Proxy Circular") in
connection with the solicitation of securityholder approval of St. Laurent's
pending acquisition by Smurfit-Stone Container Corporation (the "Company").
The Proxy Circular included certain Unaudited Pro Forma Condensed Consolidated
Financial Data of the Company, a copy of which is attached hereto as
Exhibit 99.1 and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
C. Exhibits. The following exhibits are filed as a part of this
report:
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Exhibit No. Description
----------- -----------
99.1 Unaudited Pro Forma Condensed Consolidated Financial Data of the
Company
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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 hereunto duly authorized.
SMURFIT-STONE CONTAINER CORPORATION
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Dated: April 25, 2000 By: /s/ Paul K. Kaufmann
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Name: Paul K. Kaufmann
Title: Vice President and Corporate Controller
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EXHIBIT INDEX
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Exhibit No. Description
- ----------- -----------
99.1 Unaudited Pro Forma Condensed Consolidated Financial Data of the Company
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EXHIBIT 99.1
SMURFIT-STONE CONTAINER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated statement of
operations and condensed consolidated balance sheet of Smurfit-Stone Container
Corporation (the "Company") were prepared to illustrate the estimated effects of
the Company's pending acquisition (the "Transaction") of St. Laurent Paperboard
Inc. ("St. Laurent"), including the financing plan, as if those transactions had
occurred for the statement of operations as of the beginning of the period
presented and for the balance sheet presentation as of December 31, 1999.
The pro forma adjustments are based upon available information and upon
certain assumptions that the Company and St. Laurent believe are reasonable. The
unaudited pro forma condensed consolidated financial statements and accompanying
notes should be read in conjunction with the historical financial statements of
the Company and St. Laurent, and the related notes thereto. The historical
condensed consolidated statement of operations and condensed consolidated
balance sheet of St. Laurent are presented in accordance with accounting
principles generally accepted in the United States.
The unaudited pro forma condensed consolidated financial statements are
provided for informational purposes only in response to Securities and Exchange
Commission requirements and do not purport to represent what the Company's
financial position or results of operations would actually have been if the
Transaction had in fact occurred at such dates or to project the Company's
financial position or results of operations for any future date or period.
For financial accounting purposes, the acquisition of St. Laurent will be
accounted for using the purchase method of accounting. Accordingly, St.
Laurent's assets and liabilities have been adjusted, on a preliminary basis, to
reflect their fair values in the unaudited pro forma condensed consolidated
balance sheet as of December 31, 1999. The estimated effects resulting from
these adjustments have been reflected in the unaudited pro forma condensed
consolidated statement of operations. The allocation of the estimated purchase
price and the estimated transaction fees and expenses included in the unaudited
pro forma condensed consolidated financial statements are preliminary; final
amounts may differ from those set forth herein and such differences may be
material.
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SMURFIT-STONE CONTAINER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
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DECEMBER 31, 1999
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SMURFIT-STONE ST. LAURENT PRO FORMA SMURFIT-STONE
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------- ----------- ----------- -------------
(In millions)
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ASSETS
Current assets:
Cash and cash equivalents.................. $ 24 $ 15 $ (619)(a) $ 39
619 (e)
Receivables................................ 647 124 771
Inventories................................ 734 106 840
Refundable income taxes.................... 7 5 12
Deferred income taxes...................... 130 130
Prepaid expenses and other current
assets.................................. 69 14 83
------ ------ ------ -------
Total current assets.................... 1,611 264 1,875
Property, plant and equipment, net........... 4,395 804 140 (a) 5,339
Timberland, net.............................. 24 13 37
Goodwill, net................................ 3,328 40 358 (a) 3,733
7 (d)
Investment in non-consolidated affiliates.... 176 176
Other assets................................. 325 37 (6)(a) 367
11 (e)
------ ------ ------ -------
$9,859 $1,158 $ 510 $11,527
====== ====== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt....... $ 174 $ 47 $ (47)(e) $ 174
Accounts payable........................... 662 68 730
Other accrued liabilities.................. 733 35 34 (a) 768
(34)(e)
------ ------ ------ -------
Total current liabilities............... 1,569 150 (47) 1,672
Long-term debt, less current maturities...... 4,619 339 (339)(e) 5,669
1,050 (e)
Other long-term liabilities.................. 894 46 11 (a) 951
Deferred income taxes........................ 839 16 49 (a) 904
Minority interest............................ 91 91
Stockholders' equity:
Common stock and additional paid-in
capital................................. 3,438 576 (576)(a) 3,831
386 (a)
7 (d)
Retained earnings (deficit)................ (1,586) 32 (32)(a) (1,586)
Accumulated other comprehensive income..... (5) (1) 1 (a) (5)
------ ------ ------ -------
Total stockholders' equity.............. 1,847 607 (214) 2,240
------ ------ ------ -------
$9,859 $1,158 $ 510 $11,527
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Common stock shares outstanding............ 218 49 (24)(c) 243
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See accompanying notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
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SMURFIT-STONE CONTAINER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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SMURFIT-STONE ST. LAURENT PRO FORMA SMURFIT-STONE
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
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(in millions, except per share data)
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YEAR ENDED DECEMBER 31, 1999:
Net sales.................................. $7,151 $916 $(53)(b) $8,014
Cost of goods sold......................... 6,022 778 0 (a) 6,747
(53)(b)
Selling and administrative expenses........ 696 64 760
Restructuring charge....................... 10 10
------ ---- ---- ------
Income from operations..................... 423 74 497
Interest expense, net...................... (563) (29) (70)(e) (662)
Other income -- net........................ 479(f) 14 493
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Income from continuing operations before
income taxes, minority interest and
extraordinary item...................... 339 59 (70) 328
Provision for income taxes................. (168) (22) 24 (a) (166)
Minority interest expense.................. (8) (8)
------ ---- ---- ------
Income from continuing operations before
extraordinary item...................... $ 163 $ 37 $(46) $ 154
====== ==== ==== ======
Basic earnings per common share from
continuing operations before
extraordinary item...................... $ .75 $.75 $ .64
====== ==== ======
Diluted earnings per common share from
continuing operations before
extraordinary item...................... $ .74 $.75 $ .63
====== ==== ======
Weighted average common shares outstanding
-- Basic................................ 217 49 (24)(c) 242
Weighted average common shares outstanding
-- Diluted.............................. 220 49 (23)(c) 246
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See accompanying notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
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SMURFIT-STONE CONTAINER CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) To record:
Balance Sheet
- The cash payment of $617 million representing 49.4 million shares of St.
Laurent common stock at $12.50 per share to the existing shareholders;
- The cash payment of $5 million or $12.50 per share for .4 million shares
of St. Laurent common stock issued upon the conversion of St. Laurent
warrants prior to the Transaction, less $3 million cash received upon the
conversion from warrant holders;
- The conversion of 49.8 million shares of St. Laurent common stock
including .4 million shares from exercise of warrants into 24.9 million
shares of the Company's common stock at a fair value of $386 million,
determined based upon an average market price of $15.51 for the Company's
shares five days before and after February 23, 2000, the date of the
Pre-Merger Agreement among the Company, Stone Container Corporation,
3038727 Nova Scotia Company and St. Laurent
- Acquired assets and liabilities, at fair value;
- Excess purchase price as goodwill; and
- Estimated merger costs of the Company of $34 million directly
attributable to the cost of acquisition representing primarily financial
advisor, banking and legal fees.
Statement of Operations
- Depreciation of property, plant and equipment over an average life of
seventeen years; and
- Amortization of goodwill over a forty year period.
Tax effects are recorded assuming a 39% tax rate.
The allocation of fair values to assets and liabilities, including
intangibles and property, plant and equipment was performed on a preliminary
basis. Based upon additional analyses and evaluations to be performed, the
final amounts to be allocated to assets and liabilities may differ from
those amounts included herein and such differences may be material. In
particular the amount allocated to property, plant and equipment will change
upon completion of certain valuations and other studies. A $100 million
increase in property, plant and equipment and a corresponding decrease in
goodwill would increase the pro forma after-tax loss by $1 million for the
year ended December 31, 1999.
(b) To eliminate the effects of sales transactions between the Company and St.
Laurent.
(c) To convert St. Laurent common stock including shares from exercise of
warrants to the Company's common stock using a 0.5 conversion factor. The
diluted weighted average common shares include incremental shares from St.
Laurent options under the treasury stock method.
The Company has granted Smurfit International B.V. ("SIBV") the right to
maintain its percentage ownership of the Company's common stock in the event
of public or private issuances. It was assumed that SIBV will not elect to
exercise its right.
(d) To record the vesting of approximately one million St. Laurent stock options
based on their intrinsic value which approximates fair value. No
compensation expense was included in the pro forma statement of operations
because the acceleration of vesting would not require the determination of a
new measurement date under APB No. 25.
(e) To record the effects of additional borrowings under the Company's senior
secured credit facilities and repayment of St. Laurent debt:
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PRINCIPAL
BALANCE SHEET DECEMBER 31, 1999
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NEW BORROWINGS
U.S. term facility (variable rate of 9.5%) due 2006......... $ 500
Canadian term facility (variable rate of 9.5%) due 2006..... 550
------
Total new borrowings...................................... $1,050
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The interest rate on the term facilities is based on the assumed LIBOR rate
of 6.00%. A one-eighth of one percent change in the interest rate would
increase or decrease interest expense by $1 million for the year ended
December 31, 1999.
REPAYMENTS OF ST. LAURENT DEBT
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Secured term loan (6.68% weighted average variable rate)
payable in installments through 2005...................... $ 224
Senior secured notes (8.54% weighted average variable rate)
payable in installments through 2008...................... 125
Other debt.................................................. 37
------
Total St. Laurent debt to be repaid....................... 386
------
Net increase to total debt.................................. $ 664
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PRINCIPAL
DECEMBER 31, 1999
ADDITIONAL NET BORROWINGS WILL BE USED AS FOLLOWS -----------------
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Cash consideration to St. Laurent shareholders at $12.50 per
share..................................................... $ 619
Deferred debt issuance costs................................ 11
Advisory and banking fees................................... 34
------
Total uses of additional borrowings....................... $ 664
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YEAR ENDED
STATEMENT OF OPERATIONS DECEMBER 31, 1999
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Interest expense on $1,050 million new borrowings used to
finance the acquisition................................... $ 100
Amortization of new deferred debt issuance costs............ 2
Less interest expense on extinguished debt.................. (32)
------
Net interest expense increase............................... $ 70
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(f) Other, net for the Company includes pretax gains on asset sales of $446
million resulting from the sales of a majority of its timberlands and its
interest in Abitibi.
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