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
For the Quarterly period ended June 30, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ___________ to __________.
Commission file number 1-3439
STONE CONTAINER CORPORATION
_______________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 36-2041256
_____________________________________ __________________________
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
150 North Michigan Avenue, Chicago, Illinois 60601
_______________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 312-346-6600
Indicate by check mark (X) whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 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 requirement for the past 90
days.
Yes X No
_____ _____
Number of common shares outstanding as of August 9, 1995: 95,747,954
<PAGE>
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<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
(in millions) 1995* 1994
_________________________________________________ ___________ ___________
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents........................ $ 45.9 $ 108.6
Accounts and notes receivable (less allowances
of $23.8 and $20.2)............................ 1,011.0 824.5
Inventories...................................... 744.5 673.1
Other............................................ 221.4 210.7
_________________________________________________ ___________ ___________
Total current assets....................... 2,022.8 1,816.9
_________________________________________________ ___________ ___________
Property, plant and equipment.................... 5,751.2 5,465.5
Accumulated depreciation and amortization........ (2,295.6) (2,106.5)
_________________________________________________ ___________ ___________
Property, plant and equipment--net......... 3,455.6 3,359.0
Timberlands...................................... 77.5 75.1
Goodwill......................................... 869.3 860.2
Other............................................ 876.3 893.7
_________________________________________________ ___________ ___________
Total assets $ 7,301.5 $ 7,004.9
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable................................. $ 413.8 $ 328.0
Current maturities of senior and subordinated
long-term debt................................. 26.5 276.1
Notes payable and current maturities of
non-recourse debt of consolidated affiliates... 21.6 36.5
Income taxes..................................... 24.9 35.2
Accrued and other current liabilities............ 328.2 355.7
_________________________________________________ ___________ ___________
Total current liabilities.................. 815.0 1,031.5
_________________________________________________ ___________ ___________
Senior long-term debt............................ 2,740.8 2,488.5
Subordinated debt................................ 1,098.8 1,159.6
Non-recourse debt of consolidated affiliates..... 660.6 783.8
Other long-term liabilities...................... 308.6 290.2
Deferred taxes................................... 496.4 381.4
Minority interest................................ 238.8 221.8
Commitments and contingencies....................
Stockholders' equity:
Series E preferred stock...................... 115.0 115.0
Common stock (90.6 and 90.4 shares
outstanding)................................ 850.0 849.1
Retained earnings (accumulated deficit)....... 128.4 (96.3)
Foreign currency translation adjustment....... (147.9) (215.2)
Unamortized expense of restricted stock plan.. (3.0) (4.5)
_________________________________________________ ___________ ___________
Total stockholders' equity................. 942.5 648.1
_________________________________________________ ___________ ___________
Total liabilities and stockholders' equity....... $ 7,301.5 $ 7,004.9
=========== ===========
<FN>
*Unaudited; subject to year-end audit
The accompanying notes are an integral part of these statements.
</TABLE>
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<TABLE>
STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
(in millions except per share) 1995 1994 1995 1994
_________________________________ _________ _________ _________ _________
<S> <C> <C> <C> <C>
Net sales........................ $1,963.6 $1,354.3 $3,782.8 $2,645.1
Cost of products sold............ 1,382.8 1,116.9 2,671.6 2,184.0
Selling, general and
administrative expenses......... 149.2 136.9 304.2 270.5
Depreciation and amortization.... 92.7 88.5 188.6 177.7
Equity (income) loss from
affiliates...................... (1.9) 1.5 (3.8) 5.7
Other operating (income)
expense-net..................... -- (28.5) -- (33.4)
Other (income) expense-net....... (10.2) (1.0) (18.5) 8.1
_________________________________ _________ _________ _________ _________
Income before interest expense,
income taxes, minority interest,
extraordinary losses and
cumulative effect of an
accounting change............... 351.0 40.0 640.7 32.5
Interest expense................. (118.1) (110.7) (239.5) (224.3)
_________________________________ _________ _________ _________ _________
Income (loss) before income
taxes, minority interest,
extraordinary losses and
cumulative effect of an
accounting change............... 232.9 (70.7) 401.2 (191.8)
(Provision) credit for income
taxes........................... (93.2) 20.0 (160.5) 60.0
Minority interest................ (8.7) (.1) (12.9) 2.1
_________________________________ _________ _________ _________ _________
Income (loss) before extraordinary
losses and cumulative effect of
an accounting change............ 131.0 (50.8) 227.8 (129.7)
Extraordinary losses from early
extinguishment of debt (net of
income tax benefit)............. (3.1) -- (3.1) (16.8)
Cumulative effect of change in
accounting for postemployment
benefits (net of income tax
benefit)........................ -- -- -- (14.2)
_________________________________ _________ _________ _________ _________
Net income (loss)................ 127.9 (50.8) 224.7 (160.7)
Preferred stock dividends........ (2.0) (2.0) (4.0) (4.0)
_________________________________ _________ _________ _________ _________
Net income (loss) applicable to
common shares................... $ 125.9 $ (52.8) $ 220.7 $ (164.7)
_________________________________ _________ _________ _________ _________
Retained earnings (accumulated
deficit), beginning of period... $ .5 $ (17.3) $ (96.3) $ 101.6
Net income (loss)................ 127.9 (50.8) 224.7 (160.7)
Cash dividends on preferred
stock........................... -- (8.0) -- (8.0)
Unrealized gain (loss) on
marketable equity security (net
tax benefit).................... -- 3.3 -- (5.7)
_________________________________ _________ _________ _________ _________
Retained earnings (accumulated
deficit), end of period......... $ 128.4 $ (72.8) $ 128.4 $ (72.8)
_________________________________ ========= ========= ========= =========
Per share of common stock -
Primary:
Income (loss) before extraordinary
losses and cumulative effect of
an accounting change............ $ 1.42 $ (.58) $ 2.46 $ (1.55)
Extraordinary losses from early
extinguishment of debt (net of
income tax benefit)............. (.03) -- (.03) (.20)
Cumulative effect of change in
accounting for postemployment
benefits (net of income tax
benefit)........................ -- -- -- (.17)
_________________________________ _________ _________ _________ _________
Net income (loss)................ $ 1.39 $ (.58) $ 2.43 $ (1.92)
_________________________________ ========= ========= ========= =========
Per share of common stock -
Fully Diluted:
Income (loss) before extraordinary
losses and cumulative effect of
an accounting change............ $ 1.12 $ * $ 1.97 $ *
Extraordinary losses from early
extinguishment of debt (net of
income tax benefit)............. (.03) * (.03) *
Cumulative effect of change in
accounting for postemployment
benefits (net of income tax
benefit)........................ -- * -- *
_________________________________ _________ _________ _________ _________
Net income (loss)................ $ 1.09 $ * $ 1.94 $ *
========= ========= ========= =========
Cash dividends................... $ -- $ -- $ -- $ --
========= ========= ========= =========
Common shares and common share
equivalents outstanding (weighted
average, in millions):
Primary....................... 90.8 90.4 90.8 86.0
========= ========= ========= =========
Fully Diluted................. 117.9 * 118.4 *
========= ========= ========= =========
<FN>
Unaudited; subject to year-end audit
The accompanying notes are an integral part of these statements.
* Fully diluted earnings per share are not applicable because the amounts are
anti-dilutive.
</TABLE>
<PAGE>
<TABLE>
STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three months ended Six months ended
June 30, June 30,
(in millions except per share) 1995 1994 1995 1994
_________________________________ ____________________ ____________________
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss)................ $ 127.9 $ (50.8) $ 224.7 $ (160.7)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities:
Depreciation and amortization.. 92.7 88.5 188.6 177.7
Deferred taxes................. 65.2 (21.0) 108.6 (64.2)
Foreign currency transaction
(gains) losses................ (4.3) .7 (4.3) 15.9
Extraordinary losses from early
extinguishment of debt........ 3.1 -- 3.1 16.8
Cumulative effect of change in
accounting for postemployment
benefits...................... -- -- -- 14.2
Other--net..................... 18.1 (31.8) 31.2 (57.7)
Changes in current assets and
liabilities--net of adjustments
for dispositions:
Increase in accounts and notes
receivable--net............... (69.3) (19.1) (178.8) (81.4)
(Increase) decrease in
inventories................... (32.2) 41.1 (71.5) 56.8
Increase in other current
assets........................ (1.6) (18.0) (23.0) (36.8)
Increase in accounts payable
and other current liabilities. 21.5 26.3 47.1 21.1
_________________________________ ____________________ ____________________
Net cash provided by (used in)
operating activities............ 221.1 15.9 325.7 (98.3)
_________________________________ ____________________ ____________________
Cash flows from financing
activities:
Debt repayments.................. (74.5) (20.5) (374.6) (917.6)
Payments by consolidated
affiliates on non-recourse debt. (123.2) (11.6) (138.7) (30.8)
Borrowings....................... 34.9 30.2 302.1 751.4
Non-recourse borrowings of
consolidated affiliates......... -- -- 1.7 --
Proceeds from issuance of common
stock-net....................... .8 -- .8 276.3
Payment (refund) of letter of
credit.......................... -- 1.7 -- (20.6)
Cash dividends................... -- (8.0) -- (8.0)
_________________________________ ____________________ ____________________
Net cash (used in) provided by
financing activities............ (162.0) (8.2) (208.7) 50.7
_________________________________ ____________________ ____________________
Cash flows from investing
activities:
Capital expenditures............. (113.5) (48.5) (182.0) (66.2)
Proceeds from sales of assets.... 6.6 12.4 9.0 19.9
Payments made for businesses
acquired........................ (8.4) (.1) (11.5) (.1)
Other--net....................... (9.5) (4.1) (3.7) (5.4)
_________________________________ ____________________ ____________________
Net cash used in investing
activities...................... (124.8) (40.3) (188.2) (51.8)
_________________________________ ____________________ ____________________
Effect of exchange rate changes
on cash......................... .5 3.6 8.5 2.1
_________________________________ ____________________ ____________________
Net decrease in cash and cash
equivalents..................... (65.2) (29.0) (62.7) (97.3)
Cash and cash equivalents,
beginning of period............. 111.1 179.1 108.6 247.4
_________________________________ ____________________ ____________________
Cash and cash equivalents, end
of period....................... $ 45.9 $ 150.1 $ 45.9 $ 150.1
==================== ====================
<FN>
See Note 11 regarding non-cash investing and financing activities and
supplemental cash flow information.
Unaudited; subject to year-end audit
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<PAGE>
STONE CONTAINER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: Basis of Presentation
Pursuant to the rules and regulations of the Securities and Exchange
Commission for Form 10-Q, the financial statements, footnote
disclosures and other information normally included in the financial
statements prepared in accordance with generally accepted accounting
principles have been condensed. These financial statements, footnote
disclosures and other information should be read in conjunction with
the financial statements and the notes thereto included in Stone
Container Corporation's (the "Company's") latest Annual Report on Form
10-K. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments necessary to
fairly present the Company's financial position as of June 30, 1995 and
the results of operations and cash flows for the three and six month
periods ended June 30, 1995 and 1994. All adjustments reflected in the
accompanying unaudited consolidated financial statements are of a
normal recurring nature.
NOTE 2: Reclassifications
Certain prior year amounts have been restated to conform with the
current year presentation in the Consolidated Statements of Cash Flows.
NOTE 3: Subsequent Events
On July 24, 1995, the Company's Board of Directors declared a cash
dividend of $2.1875 per share on the Series E Cumulative Convertible
Exchangeable Preferred Stock (the "Series E Cumulative Preferred
Stock") payable August 15, 1995 to stockholders of record on August 7,
1995. The cash dividend represents a payment of $1.75 cumulative
arrearage for four quarters plus a regular quarterly dividend of
$0.4375. The cumulative cash dividend will fully satisfy all dividends
in arrears on the Series E Cumulative Preferred Stock. Additionally,
on July 24, 1995, the Company's Board of Directors declared a quarterly
cash dividend of $0.15 per share on the Company's common stock payable
September 13, 1995 to shareholders of record on August 24, 1995.
In the third quarter through August 9, 1995, in separate,
independently negotiated transactions, the Company purchased and
retired approximately $129 million principal amount of its 8-7/8
percent Convertible Senior Subordinated Notes (the "Convertible Senior
Subordinated Notes"). Each Convertible Senior Subordinated Note is
convertible into 86.58 shares of the Company's common stock at the
effective price of $11.55 per share. Thus, the purchased Convertible
Senior Subordinated Notes had represented the potential conversion into
approximately 11.2 million common shares. The aggregate purchase price
paid by the Company for the subject Convertible Senior Subordinated
Notes was approximately $129 million cash and the issuance of
approximately 5.9 million shares of common stock, thus eliminating the
potential conversion of an additional approximate 5.3 million shares of
common stock. These transactions will result in the Company reporting
an extraordinary loss from the early extinguishment of debt of
approximately $129 million (including the write-off of deferred debt
issuance costs, net of income tax benefit), and an increase of
approximately $127 million in common stock as a result of the increase
of shares of common stock as partial payment for the Convertible Senior
Subordinated Notes. Total stockholders' equity in the Company's
Consolidated Balance Sheet will not substantially change as a result of
the purchases of the Convertible Senior Subordinated Notes. The
purchases of the Convertible Senior Subordinated Notes will not
substantially affect the availability in the dividend pools under any
of the Company's covenants concerning dividend restrictions. Funding
for the cash portion of the purchases of the Convertible Senior
Subordinated Notes has been financed from bank borrowings. See also
Note 7 - "Liquidity Matters".
The following tables provide actual earnings per share information
for the three and six month periods ended June 30, 1995 and pro forma
earnings per share information for the three and six month periods
ended June 30, 1995 assuming the issuance of approximately 5.9 million
common shares as partial payment for the purchases of the Convertible
Senior Subordinated Notes occurred as of the beginning of each period:
Three months ended June 30, 1995
Actual Pro Forma
_________________ _________________
Fully Fully
Primary Diluted Primary Diluted
Per share of common stock:
Income before extraordinary
losses.................... $ 1.42 $ 1.12 $ 1.33 $ 1.16
======= ======= ======= =======
Average common shares
(in millions)............. 90.8 117.9 96.7 112.6
======= ======= ======= =======
Six months ended June 30, 1995
Actual Pro Forma
_________________ _________________
Fully Fully
Primary Diluted Primary Diluted
Per share of common stock:
Income before extraordinary
losses.................... $ 2.46 $ 1.97 $ 2.32 $ 2.03
======= ======= ======= =======
Average common shares
(in millions)............. 90.8 118.4 96.7 113.1
======= ======= ======= =======
Supplemental primary earnings per share before extraordinary
losses for the three and six months ended June 30, 1995, assuming the
issuance of approximately 5.9 million common shares as partial payment
for the purchases of the Convertible Senior Subordinated Notes occurred
as of the beginning of each period is $1.34 and $2.33 per share of
common stock.
NOTE 4: Insurance Matters
In the second quarter of 1994, a digester vessel ruptured at the
Company's pulp and paperboard mill in Panama City, Florida causing
extensive damage to certain of the facility's assets. The Company is
seeking recovery for both the losses to property and the losses as a
result of business interruption arising from the Panama City
occurrence. A partial recovery of approximately $31 million has been
received by the Company from certain carriers, claims of approximately
$11 million have been committed to be paid and claims of approximately
$41 million covering the remaining portion of such losses are still
pending. The insurance carrier providing boiler and machinery coverage
for the Company has denied the Company's claim; the Company has
challenged the denial. The Company has commenced a declatory judgement
action against the boiler and machinery insurance carrier for a
determination that such insurance carrier is responsible for coverage
of the loss. In addition, during the second quarter of 1995, certain
of the all-risk insurance carriers, which would cover the losses not
covered under the boiler and machinery coverage, have denied coverage.
Management believes the receivable recorded on its financial statements
is fully recoverable.
NOTE 5: Acquisition and Retirement of Non-recourse Debt
In March 1995, the Company acquired the remaining 1 percent of the
common stock of Seminole Kraft Corporation ("Seminole") thereby making
it a wholly-owned subsidiary of the Company. During the second quarter
of 1995, the Company (i) repaid Seminole's bank debt and (ii) redeemed
Seminole's 13-1/2 percent Subordinated Notes for approximately $123
million. Effective April 30, 1995, the Company merged Seminole with
and into the Company.
NOTE 6: Refinancing
In March 1995, the Company completed the refinancing of the obligations
relating to its accounts receivable securitization program with a new
$310 million accounts receivable securitization program consisting of
$260 million of floating-rate notes due in 2000 (the "Notes") together
with a five-year $50 million revolving credit facility (collectively,
the "March 1995 Refinancing"). The March 1995 Refinancing permits the
Company to sell certain of its accounts receivable to Stone Receivables
Corporation which purchases such receivables under the program. The
initial accounts receivable under the program were purchased with the
net proceeds received from the issuance of the Notes. The purchased
accounts receivable are solely the assets of Stone Receivables
Corporation, which is a wholly-owned subsidiary of the Company, with
its own borrowings. In the event of a liquidation of Stone Receivables
Corporation, such borrowings would be satisfied from the assets of
Stone Receivables Corporation prior to any distribution to the Company.
At June 30, 1995, the Company's Consolidated Balance Sheet included
approximately $322 million of accounts receivable and $264.9 million of
borrowings under the program.
NOTE 7: Liquidity Matters
The Company improved its liquidity and financial flexibility as a
result of its net income in the fourth quarter of 1994 and first and
second quarters of 1995, completion of the March 1995 Refinancing,
completion of significant refinancings in 1994 and completion of the
refinancing of its Credit Agreement (the "Credit Agreement") in October
1994. The Credit Agreement provides for, among other things, a $450
million revolving credit facility. At August 9, 1995, the Company had
borrowing availability of approximately $195 million (net of letters of
credit which reduce the amount available to be borrowed) under its $450
million revolving credit facility. The increase in borrowings under
the revolving credit facility primarily resulted from the approximate
$129 million cash portion paid in partial payment of the purchases of
the Convertible Senior Subordinated Notes as described in Note 3 -
"Subsequent Events". The Company has received and executed a
commitment letter from its agent bank to provide an additional term
loan of $200 million which will mature October 1, 2003. The additional
term loan may be used to repay all or any portion of the remaining
outstanding Convertible Senior Subordinated Notes, the revolving credit
facility (without a reduction in the amount available to be borrowed)
and/or certain other senior indebtedness of the Company. Also, in July
1995, the Company received a waiver of its mandatory prepayments of
excess cash flow (as defined) for four quarters beginning with the 1995
second quarter payment that would have been scheduled to be paid on or
before August 15, 1995. Such quarterly payment on August 15, 1995
would have been approximately $49 million.
The Company's primary capital requirements consist of debt service
and capital expenditures. The Company is highly leveraged, and while
highly leveraged, will incur substantial ongoing interest expense. No
significant debt maturities or amortization obligations are due until
June 1997. The Company reduced its total debt during the second
quarter of 1995 and first half of 1995 by approximately $157 million
and $196 million, respectively.
At August 9, 1995, Stone-Consolidated Corporation ("Stone-
Consolidated"), a non-recourse subsidiary of the Company, had no
outstanding borrowings under its $100 million revolving credit
facility. (All amounts presented for Stone-Consolidated are in U.S.
dollars unless otherwise indicated).
NOTE 8: Inventories
Inventories are summarized as follows:
June 30, December 31,
(in millions) 1995 1994
______________________________________ ________ ____________
Raw materials and supplies............ $ 325.9 $ 306.9
Paperstock............................ 306.5 263.4
Work in process....................... 21.1 21.4
Finished products--converting
facilities........................... 127.5 116.1
______________________________________ ________ ____________
781.0 707.8
Excess of current cost over LIFO
inventory value...................... (36.5) (34.7)
________ ____________
Total inventories..................... $ 744.5 $ 673.1
========= ============
At June 30, 1995 and December 31, 1994, the percentage of total
inventories costed by the LIFO, FIFO and average cost methods were as
follows:
June 30, December 31,
1995 1994
____________________________ ________ ____________
LIFO........................ 38% 42%
FIFO........................ 6% 7%
Average Cost................ 56% 51%
NOTE 9: Current Maturities of Long-Term Debt
Current maturities of long-term debt at June 30, 1995 and December 31,
1994 consisted of the following components:
June 30, December 31,
(in millions) 1995 1994
______________________________________ ________ ____________
Senior debt........................... $ 26.5 $ 276.1
Non-recourse debt of consolidated
affiliates........................... 13.4 29.2
______________________________________ ________ ____________
Total current maturities of long-term
debt................................. $ 39.9 $ 305.3
======== ============
The current maturities at December 31, 1994 included $253.8
million of revolving credit facility borrowings outstanding under the
Company's previous accounts receivable securitization program which
were scheduled to mature in September 1995. As discussed in Note 6 --
"Refinancing," the Company refinanced such obligations through the
completion of the March 1995 Refinancing, which provided for a new,
five-year accounts receivable securitization program.
<PAGE>
NOTE 10: Segment Information
Financial information by business segment is summarized as follows:
Three months ended
June 30, 1995 June 30, 1994
_________________________ ______________________
Income before
income taxes, Income (loss)
minority before income
interest and taxes and
Total extraordinary Total minority
(in millions) sales loss sales interest
_______________ _________ _________ _________ _________
Paperboard and
paper
packaging..... $1,418.7 $ 255.4 $ 992.4 $ 52.6
White paper
and other..... 560.5 107.8 366.5 6.8
Intersegment... (15.6) -- (4.6) --
_________ _________ _________ _________
1,963.6 363.2 1,354.3 59.4
Interest
expense....... (118.1) (110.7)
Foreign
currency
adjustments... 4.3 (.7)
General
corporate and
miscellaneous
(net)......... (16.5) (18.7)
_________ _________ _________ _________
Total.......... $1,963.6 $ 232.9 $1,354.3 $ (70.7)
========= ======== ========= =========
Six months ended
June 30, 1995 June 30, 1994
_________________________ ______________________
Income (loss)
before income
taxes, minority
interest,
Income before extraordinary
income taxes, loss and
minority cumulative
interest and effect of an
Total extraordinary Total accounting
(in millions) sales loss sales change
_______________ _________ _________ _________ _________
Paperboard and
paper
packaging.... $2,752.9 $ 489.3 $1,946.4 $ 105.1
White paper
and other.... 1,061.6 178.8 715.8 (19.8)
Intersegment.. (31.7) -- (17.1) --
_________ _________ _________ _________
3,782.8 668.1 2,645.1 85.3
Interest
expense...... (239.5) (224.3)
Foreign
currency
adjustments.. 4.3 (15.9)
General
corporate and
miscellaneous
(net)........ (31.7) (36.9)
_________ _________ _________ _________
Total......... $3,782.8 $ 401.2 $2,645.1 $ (191.8)
========= ========= ========= =========
<PAGE>
Financial information by geographic region is summarized as follows:
Three months ended
June 30, 1995 June 30, 1994
_________________________ ______________________
Income before
income taxes, Income (loss)
minority before income
interest and taxes and
Total extraordinary Total minority
(in millions) sales loss sales interest
_______________ _________ _________ _________ _________
United States.. $1,384.6 $ 253.2 $ 985.7 $ 61.0
Canada......... 381.3 101.9 247.5 (2.6)
Europe......... 226.0 8.1 141.0 1.0
_________ _________ _________ _________
1,991.9 363.2 1,374.2 59.4
Interest
expense....... (118.1) (110.7)
Foreign
currency
adjustments... 4.3 (.7)
General
corporate and
miscellaneous
(net)......... (16.5) (18.7)
Inter-area
eliminations.. (28.3) -- (19.9) --
_________ _________ _________ _________
Total.......... $1,963.6 $ 232.9 $1,354.3 $ (70.7)
========= ========= ========= =========
Six months ended
June 30, 1995 June 30, 1994
_________________________ ______________________
Income (loss)
before income
taxes, minority
interest,
Income before extraordinary
income taxes, loss and
minority cumulative
interest and effect of an
Total extraordinary Total accounting
(in millions) sales loss sales change
_______________ _________ _________ _________ _________
United States.. $2,692.5 $ 486.7 $1,937.5 $ 100.4
Canada......... 701.2 161.2 454.1 (17.3)
Europe......... 433.0 20.2 282.3 2.2
_________ _________ _________ _________
3,826.7 668.1 2,673.9 85.3
Interest
expense....... (239.5) (224.3)
Foreign
currency
adjustments... 4.3 (15.9)
General
corporate and
miscellaneous
(net)......... (31.7) (36.9)
Inter-area
eliminations.. (43.9) -- (28.8) --
_________ _________ _________ _________
Total............ $3,782.8 $ 401.2 $2,645.1 $ (191.8)
========= ========= ========= =========
<PAGE>
NOTE 11: Additional Cash Flow Statement Information
The Company's non-cash investing and financing activities and cash
payments for interest and income taxes were as follows:
Three months ended Six months ended
June 30, June 30,
(in millions) 1995 1994 1995 1994
____________________ ______ ______ ______ ______
Non-cash investing
and financing
activities:
Unrealized gain
(loss) on an
investment in
an equity
security (net
of income tax)...... $ -- $ 3.3 $ -- $ (5.7)
Note receivable
received from sale
of assets........... -- -- -- 1.3
Cash paid during the
periods for:
Interest (net of
capitalization)..... $ 116.2 $ 91.9 $233.3 $190.7
Income taxes (net
of refunds)........ 51.0 .9 62.0 3.4
======== ======== ======= =======
<PAGE>
STONE CONTAINER CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months ended June 30,
1995 1994
Percent of Percent of
(dollars in millions) Amount net sales Amount net sales
Net sales.................. $1,963.6 100.0% $1,354.3 100.0%
Cost of products sold...... 1,382.8 70.4 1,116.9 82.5
Selling, general and
administrative expenses... 149.2 7.6 136.9 10.1
Depreciation and
amortization.............. 92.7 4.7 88.5 6.5
Equity (income) loss from
affiliates................ (1.9) (.1) 1.5 .1
Other operating (income)
expense-net............... -- -- (28.5) (2.1)
Other (income) expense-net. (10.2) (.5) (1.0) (.1)
__________ ___________ _________ __________
Income before interest
expense, income taxes,
minority interest,
extraordinary loss and
cumulative effect of an
accounting change......... 351.0 17.9 40.0 3.0
Interest expense........... (118.1) (6.0) (110.7) (8.2)
__________ ___________ _________ __________
Income (loss) before income
taxes, minority interest,
extraordinary loss and
cumulative effect of an
accounting change......... 232.9 11.9 (70.7) (5.2)
(Provision) credit for
income taxes.............. (93.2) (4.8) 20.0 1.4
Minority interest.......... (8.7) (.4) (.1) --
__________ ___________ _________ __________
Income (loss) before
extraordinary loss and
cumulative effect of an
accounting change......... 131.0 6.7 (50.8) (3.8)
Extraordinary loss from
early extinguishment of
debt (net of income tax
benefit).................. (3.1) (.2) -- --
Cumulative effect of change
in accounting for
postemployment benefits
(net of income tax
benefit).................. -- -- -- --
__________ ___________ _________ __________
Net income (loss).......... $ 127.9 6.5 $ (50.8) (3.8)
========= =========== ========== ==========
<PAGE>
Results of Operations (continued)
Six months ended June 30,
1995 1994
Percent of Percent of
(dollars in millions) Amount net sales Amount net sales
Net sales.................. $3,782.8 100.0% $2,645.1 100.0%
Cost of products sold...... 2,671.6 70.6 2,184.0 82.6
Selling, general and
administrative expenses... 304.2 8.1 270.5 10.2
Depreciation and
amortization.............. 188.6 5.0 177.7 6.7
Equity (income) loss from
affiliates................ (3.8) (.1) 5.7 .2
Other operating (income)
expense-net............... -- -- (33.4) (1.2)
Other (income) expense-net. (18.5) (.5) 8.1 .3
__________ ___________ _________ __________
Income before interest
expense, income taxes,
minority interest,
extraordinary losses and
cumulative effect of an
accounting change......... 640.7 16.9 32.5 1.2
Interest expense........... (239.5) (6.3) (224.3) (8.5)
__________ ___________ _________ __________
Income (loss) before income
taxes, minority interest,
extraordinary losses and
cumulative effect of an
accounting change......... 401.2 10.6 (191.8) (7.3)
(Provision) credit for
income taxes.............. (160.5) (4.2) 60.0 2.3
Minority interest.......... (12.9) (.4) 2.1 .1
__________ ___________ _________ __________
Income (loss) before
extraordinary losses and
cumulative effect of an
accounting change......... 227.8 6.0 (129.7) (4.9)
Extraordinary losses from
early extinguishment of
debt (net of income tax
benefit).................. (3.1) (.1) (16.8) (.7)
Cumulative effect of change
in accounting for
postemployment benefits
(net of income tax
benefit).................. -- -- (14.2) (.5)
__________ ___________ _________ __________
Net income (loss).......... $ 224.7 5.9 $ (160.7) (6.1)
========= =========== ========= ==========
For the three months ended June 30, 1995, income before the
extraordinary loss from the early extinguishment of debt was $131
million, or $1.42 per share of common stock on a primary basis and
$1.12 per share of common stock on a fully diluted basis. In the 1995
second quarter, the Company recorded an extraordinary loss from the
early extinguishment of debt of $3.1 million, net of income tax
benefit, or $.03 per share of common stock, resulting in net income for
the 1995 second quarter of $127.9 million, or $1.39 per share of common
stock on a primary basis and $1.09 per share of common stock on a fully
diluted basis. The Company incurred a net loss for the 1994 second
quarter of $50.8 million, or $.58 per share of common stock.
For the six months ended June 30, 1995, income before the
extraordinary loss from the early extinguishment of debt was $227.8
million, or $2.46 per share of common stock on a primary basis and
$1.97 per share of common stock on a fully diluted basis. The
extraordinary loss from the early extinguishment of debt recorded in
the 1995 second quarter resulted in net income for the six months ended
June 30, 1995 of $224.7 million, or $2.43 per share of common stock on
a primary basis and $1.94 per share of common stock on a fully diluted
basis. For the six months ended June 30, 1994, the loss before an
extraordinary loss and the cumulative effect of an accounting change
was $129.7 million, or $1.55 per share of common stock. After the
extraordinary loss and the cumulative effect of an accounting change,
the net loss for the six months ended June 30, 1994 was $160.7 million,
or $1.92 per share of common stock.
The improved results for the three and six month periods ended
June 30, 1995 over the comparable prior year periods primarily reflect
improved product pricing for the Company's products which was partially
offset by a substantial increase in recycled fiber costs.
Paperboard and paper packaging:
Net sales for the three and six months ended June 30, 1995 for the
paperboard and paper packaging segment increased approximately 43
percent and 41 percent, respectively, over the comparable prior year
periods reflecting higher sales for corrugated containers, paperboard
and paper bags and sacks. These sales increases primarily resulted
from significantly higher average selling prices. Additionally, an
increase in corrugated container shipments also contributed to the
increased sales.
Shipments of corrugated containers, including the Company's
proportionate share of the shipments by its affiliates, were 13.4
billion square feet for the second quarter of 1995, compared with 13.3
billion square feet for the comparable prior year period. For the
first six months of 1995, the Company shipped 27.1 billion square feet
of corrugated containers, compared with 26.2 billion square feet
shipped during the first six months of 1994. Shipments of paper bags
and sacks were 147 thousands tons and 294 thousand tons for the three
month and six month periods ended June 30, 1995, respectively, compared
with 163 thousand tons and 322 thousand tons shipped during the
comparable 1994 periods.
Production of containerboard and kraft paper for the three and six
month periods ended June 30, 1995, was 1.28 million tons and 2.61
million tons, respectively, compared to 1.29 million tons and 2.58
million tons produced during the comparable prior year periods.
Operating income for the paperboard and paper packaging segment
increased significantly for the three and six month periods ended June
30, 1995, as compared with the corresponding 1994 periods. These
increases are attributable to improved operating margins primarily
resulting from significantly higher average selling prices for the
Company's paperboard and paper packaging products.
White paper and other:
Net sales for the second quarter and first half of 1995 for the white
paper and other segment increased approximately 53 percent and 48
percent, respectively, over the comparable prior year periods. These
increases were due in part to the inclusion of approximately $41
million for the 1995 second quarter and $78 million for the first half
of 1995 of market pulp sales for Stone Venepal (Celgar) Pulp, Inc.
("SVCPI") which, effective December 31, 1994, became a consolidated
subsidiary when the Company increased its ownership in SVCPI's common
stock from 50 percent to 90 percent. SVCPI had previously been
accounted for in accordance with the equity method of accounting.
Excluding the effect of SVCPI, net sales for the second quarter and
first half of 1995 for this segment increased 42 percent and 37
percent, respectively, over the comparable prior year periods,
reflecting significant sales increases for market pulp, newsprint and
groundwood paper. These sales increases were mainly attributable to
higher average selling prices, although improved market pulp sales
volume also contributed to the increases.
Production of newsprint, market pulp and groundwood paper for the
three and six month periods ended June 30, 1995, including 100 percent
of the production at Stone-Consolidated Inc. ("Stone-Consolidated"),
the Company's 74.6 percent owned Canadian subsidiary, and 45 percent of
the production at the Company's affiliated market pulp mill in British
Columbia for 1995 and 25 percent for 1994, was 729 thousand tons and
1.46 million tons, respectively, compared with 600 thousand tons and
1.27 million tons produced during the comparable prior year periods.
As a result of the Company increasing its ownership in SVCPI's common
stock effective December 31, 1994, the Company indirectly acquired an
additional 20 percent of the affiliated market pulp mill in British
Columbia.
Operating income for the white paper and other segment for the
1995 second quarter was $107.8 million compared to operating income of
$6.8 million for the 1994 second quarter. Operating income for the
first half of 1995 was $178.8 million compared to an operating loss of
$19.8 million for the comparable period of 1994. The significant
improvement in operating income was mainly attributable to improved
operating margins resulting primarily from the significantly higher
average selling prices for market pulp, newsprint and groundwood paper.
Financial Condition and Liquidity
The Company's working capital ratio at June 30, 1995 was 2.5 to 1
compared to 1.8 to 1 at December 31, 1994. The Company's long-term
debt to total capitalization ratio was 72.8 percent at June 30, 1995 as
compared with 78.0 percent at December 31, 1994. Capitalization, for
purposes of this ratio, includes long-term debt (which includes debt of
consolidated affiliates which is non-recourse to the Company), deferred
income taxes, minority interest and stockholders' equity.
The Company's primary capital requirements consist of debt service
and capital expenditures. The Company is highly leveraged, and while
highly leveraged, will incur substantial ongoing interest expense. No
significant debt maturities or amortization obligations are due until
June 1997. The Company reduced its total debt during the second
quarter of 1995 and first half of 1995 by approximately $157 million
and $196 million, respectively.
The Company's working capital ratio at June 30, 1995 was 2.5 to 1
compared to 1.8 to 1 at December 31, 1994. The Company's long-term
debt to total capitalization ratio was 72.8 percent at June 30, 1995 as
compared with 78.0 percent at December 31, 1994. Capitalization, for
purposes of this ratio, includes long-term debt (which includes debt of
consolidated affiliates which is non-recourse to the Company), deferred
income taxes, minority interest and stockholders' equity.
The Company's primary capital requirements consist of debt service
and capital expenditures. The Company is highly leveraged, and while
highly leveraged, will incur substantial ongoing interest expense. No
significant debt maturities or amortization obligations are due until
June 1997. The Company reduced its total debt during the second
quarter of 1995 and first half of 1995 by approximately $157 million
and $196 million, respectively.
The Company improved its liquidity and financial flexibility as a
result of its net income in the fourth quarter of 1994 and the first
and second quarters of 1995, completion of the March 1995 Refinancing
as defined in Note 6 -- "Refinancing", completion of significant
refinancings in 1994 and completion of the refinancing of the Company's
bank credit agreement (the "Credit Agreement") in October 1994. The
Credit Agreement consists of a $400 million senior secured term loan
facility maturing through April 1, 2000 and a $450 million senior
secured revolving credit facility commitment maturing May 15, 1999,
which includes a $25 million swing-line sub-facility also maturing May
15, 1999. At August 9, 1995, the Company had borrowing availability of
approximately $195 million (net of letters of credit which reduce the
amount available to be borrowed) under its $450 million revolving
credit facility. The increase in borrowings under the revolving credit
facility primarily resulted from the approximate $129 million cash
portion paid in partial payment of the purchases of the Convertible
Senior Subordinated Notes as described in Note 3 -- "Subsequent
Events". The Company has received and executed a commitment letter
from its agent bank to provide an additional term loan of $200 million
which will mature October 1, 2003. The additional term loan may be
used to repay all or any portion of the remaining outstanding
Convertible Senior Subordinated Notes, the revolving credit facility
(without a reduction in the amount available to be borrowed) and/or
certain other senior indebtedness of the Company. The term loan and
the revolving credit facility had weighted average interest rates for
the six months ended June 30, 1995 of 9.28 percent and 9.64 percent,
respectively. The weighted average rates do not include the effects of
the amortization of deferred debt issuance costs.
At August 9, 1995, Stone-Consolidated, a non-recourse subsidiary
of the Company, had no outstanding borrowings under its $100 million
revolving credit facility. (All amounts presented for Stone-
Consolidated are in U.S. dollars unless otherwise indicated).
Borrowings under the Credit Agreement are secured with a
significant portion of the assets of the Company. The Credit Agreement
contains covenants that include, among other things, the maintenance of
certain financial tests and ratios. Additionally, the term loan
portion of the Credit Agreement provides for mandatory prepayments from
sales of certain assets, certain debt financings and a percentage of
excess cash flow (as defined). The Company's bank lenders, at the
Company's optional request, may at their option waive the receipt of
certain mandatory prepayments. In July 1995, the Company received a
waiver of its mandatory prepayments of excess cash flow for four
quarters beginning with the 1995 second quarter payment that would have
been scheduled to be paid on or before August 15, 1995. Such quarterly
payment on August 15, 1995 would have been approximately $49 million.
The amortizations for each semi-annual period is 1/2 of 1 percent of
the principal amount of the outstanding term loans and all mandatory
and voluntary prepayments are allocated against the term loan
amortizations in inverse order of maturity. Mandatory prepayments from
sales of collateral, unless replacement collateral is provided, will be
applied ratably to the term loan and revolving credit facility,
permanently reducing the loan commitments under the Credit Agreement.
The Credit Agreement also contains cross-default provisions to the
indebtedness of $10 million or more of the Company and certain
subsidiaries, as well as cross-acceleration provisions to the non-
recourse debt of $10 million or more of Stone-Consolidated. These
cross-acceleration provisions also relate to the non-recourse debt of
SVCPI. At June 30, 1995, SVCPI had approximately $289 million in
secured indebtedness owed to bank lenders. The Credit Agreement
allows, under certain specific circumstances, for the Company to make
further investments in SVCPI.
Operating activities:
Net cash provided by operating activities was $325.7 million for the
six months ended June 30, 1995, an improvement of $424.0 million over
the comparable period of 1994. The improvement in operating cash flows
primarily reflects the Company's improved earnings and decrease in debt
issuance costs which more than offset the effects of an increase in
accounts and notes receivable and inventories.
Financing activities:
During the second quarter of 1995, the Company (i) repaid Seminole
Kraft Corporation's ("Seminole") bank debt and (ii) redeemed Seminole's
13-1/2 percent Subordinated Notes for approximately $123 million. The
Company had previously acquired the remaining 1 percent of the common
stock of Seminole, thereby making it a wholly-owned subsidiary of the
Company, in March 1995. Effective April 30, 1995, the Company merged
Seminole with and into the Company.
In March 1995, the Company completed the refinancing of the
obligations relating to its accounts receivable securitization program
with a new $310 million accounts receivable securitization program
consisting of $260 million of floating-rate notes due in 2000 (the
"Notes") together with a five-year $50 million revolving credit
facility (collectively, the "March 1995 Refinancing"). The March 1995
Refinancing permits the Company to sell certain of its accounts
receivable to Stone Receivables Corporation, which purchases such
receivables under the program. The initial accounts receivable under
the program were purchased with the net proceeds received from the
issuance of the Notes. The purchased accounts receivable are solely
the assets of Stone Receivables Corporation, a wholly-owned subsidiary
of the Company, with its own borrowings. In the event of a liquidation
of Stone Receivables Corporation, such borrowings would be satisfied
from the assets of Stone Receivables Corporation prior to any
distribution to the Company. At June 30, 1995, the Company's
Consolidated Balance Sheet included approximately $322 million of
accounts receivable and $264.9 million of borrowings under the program.
Due to restrictive provisions in the Company's indentures, the
most restrictive of which is contained in the Senior Subordinated
Indenture dated March 15, 1992 (the "Senior Subordinated Indenture"),
relating to the Company's 10-3/4 percent Senior Subordinated Notes due
June 15, 1997, its 11 percent Senior Subordinated Notes due August 15,
1999 and its 10-3/4 percent Senior Subordinated Debentures due April 1,
2002, the Board of Directors had not declared the scheduled August 15,
1994, November 15, 1994, February 15, 1995 and the May 15, 1995
quarterly dividends of $0.4375 on the 4.6 million shares of Series E
Cumulative Convertible Exchangeable Preferred Stock ("Series E
Cumulative Preferred Stock"). As a result of net income from the first
and second quarters of 1995 and the fourth quarter of 1994, the
dividend pool, established by the restrictions on payment of dividends
under the Senior Subordinated Indenture, was replenished and
approximated $121 million at June 30, 1995. On July 24, 1995, the
Company's Board of Directors declared a cash dividend of $2.1875 per
share on the Series E Cumulative Preferred Stock payable August 15,
1995 to stockholders of record on August 7, 1995. The cash dividend
represents a payment of $1.75 cumulative arrearage for four quarters
plus a regular quarterly dividend of $0.4375. The cumulative cash
dividend will fully satisfy all dividends in arrears on the Series E
Cumulative Preferred Stock. Additionally, on July 24, 1995, the
Company's Board of Directors declared a quarterly cash dividend of
$0.15 per share on the Company's common stock payable September 13,
1995 to shareholders of record on August 24, 1995.
Investing activities:
Capital expenditures for the six months ended June 30, 1995 totalled
$182 million.
Outlook:
As a result of favorable industry conditions, the Company has
implemented price increases for containerboard and corrugated
containers during the first and second quarters of 1995. The Company's
containerboard and corrugated container product lines represent a
substantial portion of the Company's net sales.
Also, during the first and second quarters of 1995, the Company
implemented price increases for market pulp and has announced a further
market pulp price increase effective in September and October of 1995.
Additionally, the Company implemented newsprint and groundwood
paper price increases during the first and second quarters of 1995 and
has announced a further newsprint price increase effective in September
1995. Further price increases for certain grades of groundwood paper
are also scheduled to be implemented during the 1995 third quarter.
While there can be no assurance that prices will continue or
remain at current levels, the Company believes that the current
supply/demand characteristics for its product lines should allow for
further product price improvements.
Wood fiber and recycled fiber, the principal raw materials used in
the manufacture of the Company's products, are purchased in highly
competitive, price sensitive markets. These raw materials have
historically exhibited price and demand cyclicality. In addition,
increased demand for the Company's and the industry's products has
resulted in greater demand for raw materials, which has translated into
higher raw material prices, including a significant increase in the
costs of recycled fiber.
The Company purchases or cuts a variety of species of timber from
which the Company utilizes wood fiber. The supply and price of wood
fiber in particular is dependent upon a variety of factors over which
the Company has no control, including environmental and conservation
regulations and natural disasters, such as forest fires and hurricanes,
and weather. A decrease in the supply of wood fiber has caused, and
will likely continue to cause, higher wood fiber costs in some of the
regions in which the Company procures wood.
The increase in demand for products manufactured, in whole or in
part, from recycled fiber has caused a tightness in supply of recycled
fiber and a resulting significant increase in the cost of such fiber
used in the manufacture of recycled containerboard and other products.
As a result, the cost of recycled fiber for the second quarter and
first half of 1995 increased approximately $90 million and $170
million, respectively, over the comparable 1994 periods, and was
approximately $31 million higher than the first quarter of 1995. While
the Company currently expects recycled fiber costs to moderate in the
third quarter of 1995, there can be no assurance that such will be the
case or that recycled fiber costs will not escalate in the future.
While the Company has not experienced any significant difficulty
in obtaining wood fiber and recycled fiber in economic proximity to its
mills and does not expect to have such difficulty, there can be no
assurances that this will continue to be the case for any or all of its
mills.
In April 1995, the Company announced incremental containerboard
capacity projects at seven of its twelve U.S. mills. These projects,
which will be phased in between December 1995 and October 1996, will
add a total of 704 tons per day to the Company's production capacity,
or less than 3 percent of the Company's total mill production capacity.
The cost of these projects is approximately $87,500 per daily ton.
In July 1995, the Company announced that it has indefinitely
delayed the planned conversion of the No. 1 paper machine from
newsprint to corrugating medium at its mill in Snowflake, Arizona. The
Company remains on schedule at this mill to convert its No. 2
linerboard machine to also produce corrugating medium and to construct
an OCC ("old corrugated container") processing plant.
The Company is continuing to pursue its financial strategy of
enhancing its liquidity and financial flexibility by evaluating
alternatives related to its non-core assets, including the U.S. wood
products business. As an initial step in achieving this objective, the
Company ceased operations of three wood products facilities in the
Pacific Northwest and has begun and will continue to divest the assets
of those facilities as appropriate opportunities arise. Accordingly,
such net assets held for sale are included in other current assets
within the June 30, 1995 Consolidated Balance Sheet.
In the second quarter of 1994, a digester vessel ruptured at the
Company's pulp and paperboard mill in Panama City, Florida causing
extensive damage to certain of the facility's assets. The Company is
seeking recovery for both the losses to property and the losses as a
result of business interruption arising from the Panama City
occurrence. A partial recovery of approximately $31 million has been
received by the Company from certain carriers, claims of approximately
$11 million have been committed to be paid and claims of approximately
$41 million covering the remaining portion of such losses are still
pending. The insurance carrier providing boiler and machinery coverage
for the Company has denied the Company's claim; the Company has
challenged the denial. The Company has commenced a declatory judgement
action against the boiler and machinery insurance carrier for a
determination that such insurance carrier is responsible for coverage
of the loss. In addition, during the second quarter of 1995, certain
of the all-risk insurance carriers, which would cover the losses not
covered under the boiler and machinery coverage, have denied coverage.
Management believes the receivable recorded on its financial
statements is fully recoverable.
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities
(b) Due to restrictive covenants in certain instruments
evidencing indebtedness of the Company, the Company's Board
of Directors did not declare the scheduled $0.4375 August 15,
1994, November 15, 1994, February 15, 1995 and May 15, 1995
quarterly dividends on the Company's 4.6 million outstanding
shares of $1.75 Series E Cumulative Convertible Exchangeable
Preferred Stock (the "Series E Cumulative Preferred Stock").
On July 24, 1995, the Company's Board of Directors declared a
cash dividend of $2.1875 per share on the Series E Cumulative
Preferred Stock payable August 15, 1995. The cash dividend
represents a payment of $1.75 cumulative arrearage for four
quarters plus a regular quarterly dividend of $0.4375. The
cumulative cash dividend will fully satisfy all dividends in
arrears. In the event the Company has six quarterly
dividends which remain unpaid beginning August 15, 1995 on
the Series E Cumulative Preferred Stock, the holders of the
Series E Cumulative Preferred Stock would have the right to
elect two members to the Company's Board of Directors until
the accumulated dividends thereon have been declared and paid
or set aside for payment.
Item 3. Defaults Upon Senior Securities
(b) The Company has no defaults upon senior securities. The response
to Part II Item 2(b) is incorporated by reference herein.
Item 4. Submission of Matters to a Vote of Security - Holders
(a) The Company held its Annual Meeting of Stockholders on May 9,
1995.
(c) The following matters were voted upon at the Annual Meeting of
Stockholders:
1. The election of the nominees for Directors who will serve for
a term to expire at the next succeeding Annual Meeting of
Stockholders was voted on by the stockholders. The nominees,
all of whom were elected, are set forth below. The
inspectors of election certified the following vote
tabulations:
FOR WITHHELD NON-VOTES
Richard A. Giesen 76,578,555 410,690 0
James J. Glasser 76,583,691 405,554 0
Jack M. Greenberg 76,560,214 429,031 0
George Kennedy 76,576,589 412,656 0
Howard C. Miller, Jr. 76,580,098 409,147 0
John D. Nichols 76,590,515 398,730 0
Jerry K. Pearlman 76,576,687 412,558 0
Richard J. Raskin 76,571,296 417,949 0
Alan Stone 75,814,908 1,174,337 0
Avery J. Stone 76,572,126 417,119 0
Ira N. Stone 76,503,690 485,555 0
James H. Stone 76,514,524 474,721 0
Roger W. Stone 76,507,609 481,636 0
2. A proposal to adopt the 1995 Long-Term Incentive Plan was
approved by the stockholders. The inspectors of election
certified the following vote tabulations:
FOR AGAINST ABSTAIN NON-VOTES
51,169,760 12,701,128 1,313,926 11,804,431
3. A proposal to adopt the 1995 Key Executive Officer Short Term
Incentive Plan was approved by the stockholders. The
inspectors of election certified the following vote
tabulations:
FOR AGAINST ABSTAIN NON-VOTES
73,320,908 2,303,140 1,365,197 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Computation of Primary and Fully Diluted Net Income (Loss)
Per Common Share
27 Financial Data Schedule for the six months ended June 30,
1995.
(b) Reports on Form 8-K
1. None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
STONE CONTAINER CORPORATION
By: Thomas P. Cutilletta
Thomas P. Cutilletta
Senior Vice President and
Corporate Controller
(Principal Accounting
Officer)
Date: August 14, 1995
<PAGE>
<TABLE>
EXHIBIT 11
STONE CONTAINER CORPORATION
COMPUTATION OF PRIMARY AND FULLY DILUTED
NET INCOME (LOSS) PER SHARE
(in millions, except per share)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Primary Earnings Per Share
<S> <C> <C> <C> <C>
Shares of Common Stock:
Weighted average number of
common shares outstanding..... 90.8 90.4 90.8 86.0
_______ _______ _______ _______
Primary Weighted Average Shares
Outstanding..................... 90.8 90.4 90.8 86.0
======= ======= ======= =======
Net income (loss)................. $127.9 $(50.8) $224.7 $(160.7)
Less:
Series E Cumulative Convertible
Exchangeable Preferred Stock
dividend.................... (2.0) (2.0) (4.0) (4.0)
_______ _______ _______ _______
Net income (loss) used in
computing primary net income
(loss) per common share......... $125.9 $(52.8) $220.7 $(164.7)
======= ======= ======= ========
Primary Earnings Per Share........ $ 1.39 $ (.58) $ 2.43 $ (1.92)
======= ======= ======= ========
Fully Diluted Earnings Per Share
Shares of Common Stock:
Weighted average number of common
shares outstanding............ 90.8 90.4 90.8 86.0
Dilutive effect of options and
warrants...................... .1 -- .1 --
Addition from assumed conversion
of 8.875% convertible senior
subordinated notes............ 21.6 21.6 21.6 21.6
Addition from assumed conversion
of 6.75% convertible
subordinated debentures....... 2.0 3.4 2.5 3.4
Addition from assumed conversion
of Series E Cumulative
Convertible Exchangeable
Preferred Stock............... 3.4 3.4 3.4 3.4
_______ _______ _______ _______
Fully Diluted Weighted Average
Shares Outstanding.............. 117.9 118.8 118.4 114.4
======= ======= ======= ========
Net Income (Loss)................. $127.9 $(50.8) $224.7 $(160.7)
Less:
Series E Cumulative Convertible
Exchangeable Preferred Stock
dividend...................... (2.0) (2.0) (4.0) (4.0)
Income adjustment associated
with assumed conversion of
Stone-Consolidated Corporation
8% convertible subordinated
debentures.................... (3.0) -- (3.9) --
Add back:
Interest on 8.875% convertible
senior subordinated notes..... 3.4 3.4 6.8 6.8
Interest on 6.75% convertible
subordinated debentures....... .7 1.2 1.8 2.4
Income adjustment associated
with assumed conversion of
Stone-Consolidated Corporation
8% convertible subordinated
debentures.................... -- 2.1 -- 5.5
Series E Cumulative Convertible
Exchangeable Preferred Stock
dividend...................... 2.0 2.0 4.0 4.0
_______ _______ _______ _______
Net income (loss) used in
computing fully diluted net
income (loss) per common share.. $129.0 $(44.1) $229.4 $(146.0)
======= ======= ======= ========
Fully Diluted Earnings Per
Share(A)........................ $ 1.09 $(.37) $ 1.94 $(1.28)
======= ======= ======= ========
<FN>
(A) Fully diluted earnings per share for the three and six months ended
June 30, 1994 are not disclosed in the Consolidated Statements of
Operations and Retained Earnings (Accumulated Deficit) because the
amounts are anti-dilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Stone
Container Corporation and Subsidiaries' June 30, 1995 Consolidated Balance
Sheet and Consolidated Statement of Operations & Retained Earnings and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 46
<SECURITIES> 0
<RECEIVABLES> 1035
<ALLOWANCES> 24
<INVENTORY> 745
<CURRENT-ASSETS> 2023
<PP&E> 5751
<DEPRECIATION> 2296
<TOTAL-ASSETS> 7302
<CURRENT-LIABILITIES> 815
<BONDS> 4500
<COMMON> 850
0
115
<OTHER-SE> (23)
<TOTAL-LIABILITY-AND-EQUITY> 7302
<SALES> 3783
<TOTAL-REVENUES> 3783
<CGS> 2672
<TOTAL-COSTS> 3164
<OTHER-EXPENSES> (22)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 240
<INCOME-PRETAX> 401
<INCOME-TAX> 161
<INCOME-CONTINUING> 228
<DISCONTINUED> 0
<EXTRAORDINARY> (3)
<CHANGES> 0
<NET-INCOME> 225
<EPS-PRIMARY> 2.43
<EPS-DILUTED> 1.94
</TABLE>
