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): November 7, 1995
Stone Container Corporation
(Exact name of Registrant as specified in its charter)
Delaware 1-3439 36-2041256
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
150 North Michigan Avenue, Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (312) 346-6600
N/A
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events
On October 23, 1995, Stone Container Corporation issued a press
release, which is attached as Exhibit 20 hereto and is incorporated by
reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(c) Exhibits
The exhibits accompanying this report are listed in the
accompanying Exhibit Index.
<PAGE>
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.
STONE CONTAINER CORPORATION
By: /s/ Leslie T. Lederer
Leslie T. Lederer
Vice President, Secretary
and Counsel
Date: November 7, 1995
EXHIBIT INDEX
The following exhibit is filed herewith as noted below.
Exhibit No. Exhibit
20 Press Release issued by Stone Container
Corporation dated October 23, 1995.
<PAGE>
Traded: NYSE
Symbol: STO
For More Information Contact:
Arnold F. Brookstone Ira N. Stone
Executive Vice President - Senior Vice President -
Chief Financial & Chief Marketing, Communications
Planning Officer & Public Affairs Officer
(312) 580-4637 (312) 580-4608
STONE CONTAINER REPORTS RECORD SALES & EARNINGS
FOR THIRD QUARTER AND FIRST NINE MONTHS OF 1995
BEFORE NON-CASH EXTRAORDINARY CHARGE
CHICAGO, October 23, 1995 -- Stone Container Corporation continued
its strong earnings recovery in 1995, setting pre-tax earnings records
for both the third quarter and first nine months of the year. Earnings
for a third quarter and any nine month period also set records before a
non-cash extraordinary charge for the early extinguishment of debt.
Sales also set new records for a third quarter and a nine month period.
"The non-cash extraordinary charge that we reported in the third
quarter should not mask the fact that Stone Container reported record
operating results for the quarter and nine months," said Roger Stone,
Chairman, President and Chief Executive Officer. "Demand, while lower
than a year ago, is strengthening and, in our opinion, will continue to
rise. As the economy continues to strengthen, we are confident that
the near-term and long-range prospects for our Company are truly
outstanding."
---more---
<PAGE>
STONE--Page 2
Reported Results:
For the third quarter of 1995, the Company reported earnings of
$129 million before the extraordinary charge, a turnaround of $158
million from the same period in 1994. On the same basis, earnings per
share were $1.32 primary and $1.12 fully diluted in the third quarter
of 1995, compared to a loss of $0.34 per Common share in the third
quarter of 1994.
For the nine months ended September 30, 1995, earnings before the
extraordinary charge were $357 million (a turnaround of $515 million
from the first nine months of 1994), or $3.79 per primary and $3.08 per
fully diluted share. For the first nine months of 1994, the Company
reported a loss of $1.89 per Common share before extraordinary charges
and the cumulative effect of an accounting change.
After the extraordinary charge, which totalled $178 million in the
third quarter and $181 million in the first nine months of 1995, the
Company reported a net loss for the quarter of $49 million, or $0.53
per primary share and $0.45 on a fully diluted basis. For the nine
months, net income was $176 million, or $1.84 per primary share and
$1.53 per fully diluted share.
Sales of $1.9 billion for the third quarter and $5.7 billion for
the first nine months of 1995 were up 30 percent and 38 percent over
the respective year-ago levels.
---more---
<PAGE>
STONE--Page 3
Operating Comments:
The Company removed approximately 145 thousand tons of
containerboard production from its mills for inventory balancing
purposes during the third quarter. This reduced the Company's
quarterly earnings by approximately $28 million before taxes and
$16 million after taxes. The Company plans to take additional market-
related downtime of approximately 160 thousand tons of containerboard
during the fourth quarter of 1995.
Costs for recycled fibre decreased in the third quarter when
compared to the 1995 first and second quarters, but were still higher
when compared to the third quarter of 1994. The third-quarter effects
of lower fibre costs were limited, however, due to the extensive
downtime taken at the Company's recycled mills during the period.
Increased benefits of lower recycled fibre costs are expected for the
fourth quarter.
Roger Stone said that a somewhat cooler U.S. economy in the period
led to a small decrease in demand for both containerboard and
corrugated containers.
"That brief dip led to a temporary imbalance between supply and
demand. However, we are confident that the downtime that we and other
producers independently took during the third quarter, combined with
the downtime announced for the fourth quarter, will restore balance.
We have already begun to detect an increase in business activity and an
accompanying increase in containerboard and corrugated demand," Stone
said.
---more---
<PAGE>
STONE--Page 4
For the third quarter, the Company increased the effective rate of
its income tax provision to 42 percent, which resulted in a $4.9
million reduction in net income for the quarter.
Non-Cash Extraordinary Charge Relating to Early Extinguishment of Debt:
The major factor contributing to the non-cash charge relating to
the early extinguishment of debt for the third quarter of 1995 was the
Company's open market purchases of its 8-7/8 percent Convertible Senior
Subordinated Debentures. In the third quarter, the Company purchased
$182 million face value of its 8-7/8 percent Convertible Senior
Subordinated Debentures, or approximately 73 percent of the total $250
million issue. The aggregate purchase price of those open market
purchases of convertible debt was $357 million, of which cash was paid
in the amount equal to the face value and $175 million was, in effect,
paid by the issuance of 8.2 million Common shares. The $175 million
equity issuance was approximately equal to the amount included for
those transactions in the charge for the quarter. Although the Company
issued 8.2 million shares, total shares on a fully diluted basis were
reduced by 7.6 million.
In addition to the transactions relative to the 8-7/8 percent
convertibles, the Company made open market purchases of other debt
securities which also contributed to the non-cash extraordinary charge
for the early extinguishment of debt.
---more---
<PAGE>
STONE--Page 5
Primary and Fully Diluted Common Shares:
The transactions in the third quarter relating to the 8-7/8
percent convertible debt, and the open market cash purchases, primarily
in the first half, of the Company's 6-3/4 percent Convertible
Subordinated Debentures, affected the average number of shares
outstanding in the third quarter.
Had the open market purchases of the two convertible debt issues taken
place at the beginning of the year, fully diluted earnings, on a pro-
forma basis, would have been $1.14 per share for the third quarter of
1995 and $3.20 per share for the nine months. Those pro-forma fully
diluted earnings per share are based upon the approximate weighted
average of 110 million shares and are before the effect of the
extraordinary charge.
Looking forward, 9.4 million is the actual total number of shares
eliminated from future conversion.
Other Financial Activities:
Late in September 1995, the Company redeemed at par its remaining
outstanding 12-1/8 percent Subordinated Debentures of approximately $90
million.
Also in September, the Company entered into a new $200 million
term loan facility, or "C" tranche. The Company used those proceeds
partly to fund its open market purchases of debt and partly to fund the
redemption of the 12-1/8 percent Subordinated Debentures.
---more---
<PAGE>
STONE--Page 6
During the first nine months of the year, Stone Container reduced
debt by approximately $311 million. "This is consistent with our
stated financial plan and our dedication to deleverage and normalize
our balance sheet," said Arnold F. Brookstone, Executive Vice President
and Chief Financial & Planning Officer.
Stone Consolidated/Rainy River Transaction:
Also in the quarter, Stone-Consolidated Corporation, the Company's
Canadian newsprint and groundwood papers subsidiary, announced plans to
acquire by merger the operations of Rainy River Forest Products Inc., a
Toronto-based pulp and paper company. The transaction, subject to
certain conditions and scheduled to be completed in November, would, as
a result of the issuance of new shares to accomplish the merger, reduce
Stone Container's equity ownership in Stone-Consolidated to 46.0
percent from the present 74.6 percent primary and 61.1 percent fully
diluted. Due to this transaction, earnings of Stone-Consolidated,
beginning in the fourth quarter of 1995, would be reported, on the
equity method, as earnings of a non-consolidated affiliate. The
deconsolidation from the balance sheet would remove from Stone
Container's balance sheet all of Stone-Consolidated's debt of almost
$400 million and approximately $340 million of goodwill.
Dividends:
In the third quarter, the Company brought current the dividend on
its Series "E" Preferred Stock and resumed cash dividends on its Common
stock.
In October, the Board of Directors declared regular fourth quarter
dividends on both the Preferred and the Common stocks, reflecting the
confidence of the Directors in the outlook for the Company.
<PAGE>
STONE--Page 7
Stone Container Corporation is a multinational pulp, paper and
paper packaging company. Its product line includes containerboard,
corrugated containers, kraft paper, paper bags and sacks, market pulp,
wood products and, through Stone-Consolidated Corporation, newsprint
and groundwood papers.
Headquartered in Chicago, the Company has manufacturing facilities
and sales offices in North America, Europe, the United Kingdom, Central
and South America, Australia and the Pacific Rim.
###
(see tabulars attached)
<PAGE>
<PAGE>
<TABLE>
STONE CONTAINER CORPORATION (NYSE)
SUMMARY (a)
<CAPTION>
For the For the
three months ended nine months ended
September 30, September 30,
(dollars in millions except per
share amounts) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales........................... $1,924.0 $1,482.2 $5,706.8 $4,127.3
Income before interest and taxes.... 358.8 81.3 999.4 113.8
Interest expense.................... (114.5) (113.9) (354.0) (338.1)
Income (loss) before income taxes
and minority interest.............. 244.3 (32.6) 645.4 (224.3)
(Provision) credit for income taxes. (102.6) 5.4 (263.1) 65.4
Minority interest................... (12.7) (1.7) (25.5) .3
Income (loss) before extraordinary
items and cumulative effect of an
accounting change.................. 129.0 (28.9) 356.8 (158.6)
Extraordinary items (net of income
tax benefit)....................... (177.9) (44.8) (181.0) (61.6)
Cumulative effect of an accounting
change (net of income tax benefit). -- -- -- (14.2)
Net income (loss)................... $ (48.9) $ (73.7) $ 175.8 $ (234.4)
Net income (loss) applicable to
common shares...................... $ (50.9) $ (75.7) $ 169.8 $ (240.4)
========= ========= ========= =========
Per share of common stock - Primary:
Income (loss) before extraordinary
items and cumulative effect of an
accounting change.................. $ 1.32 $ (.34) $ 3.79 $ (1.89)
Extraordinary items (net of income
tax benefit)....................... (1.85) (.50) (1.95) (.70)
Cumulative effect of an accounting
change (net of income tax benefit). -- -- -- (.16)
Net income (loss)................... $ (.53) $ (.84) $ 1.84 $ (2.75)
========= ========= ========= =========
Per share of common stock -
Fully Diluted:
Income (loss) before extraordinary
items and cumulative effect of an
accounting change.................. $ 1.12 $ * $ 3.08 $ *
Extraordinary items (net of income
tax benefit)....................... (1.57) * (1.55) *
Cumulative effect of an accounting
change (net of income tax benefit). -- * -- *
Net income (loss)................... $ (.45) $ * $ 1.53 $ *
========= ========= ========= =========
<PAGE>
Average common shares outstanding
(in millions):
Primary............................. 95.9 90.4 92.5 87.5
========= ========= ========= =========
Fully Diluted....................... 113.1 * 116.6 *
========= ========= ========= =========
Unit Statistics:
Mill tonnage produced (in thousands
of short tons):
Containerboard and kraft paper(b)... 1,226 1,294 3,836 3,877
Newsprint(d)........................ 330 334 988 951
Market pulp(b)(c)................... 274 178 808 564
Groundwood paper(d)................. 134 138 397 402
Other............................... 29 29 91 71
Total mill tonnage produced..... 1,993 1,973 6,120 5,865
========= ========= ========= =========
Containerboard and kraft paper
converted (in thousands of
short tons)........................ 1,072 1,165 3,306 3,349
Corrugated shipments (in billions
of square feet).................... 13.1 14.3 40.2 40.4
Paper bag and sack shipments (in
thousands of short tons)........... 140 164 434 486
<FN>
Notes: (a) Subject to year-end audit.
(b) Includes 100 percent of the Stone Savannah River and/or Seminole
Kraft mills.
(c) Includes 45 percent of the Celgar mill for 1995 and 25 percent for
1994. Effective December 31, 1994, the Company indirectly
acquired an additional 20 percent of the Celgar mill, thereby
increasing its ownership interest from 25 percent to 45 percent.
(d) Includes 100 percent of Stone-Consolidated Corporation.
* Fully diluted earnings per share not applicable because the
amounts are anti-dilutive.
/TABLE
<PAGE>
<TABLE>
Page 1 of 2
SEGMENT INFORMATION (a)
Financial information by business segment is summarized as follows:
<CAPTION>
Three months ended
September 30, 1995 September 30, 1994
Income (loss)
Income before before income
income taxes, taxes,
minority minority
interest and interest and
Total extraordinary Total extraordinary
(in millions) sales item sales item
<S> <C> <C> <C> <C>
Paperboard and paper
packaging............. $1,351.8 $ 236.8 $1,099.7 $ 82.6
White paper and other.. 588.3 134.6 391.8 8.0
Intersegment........... (16.1) -- (9.3) --
1,924.0 371.4 1,482.2 90.6
Interest expense....... (114.5) (113.9)
Foreign currency
adjustments........... 5.6 12.2
General corporate and
miscellaneous (net)... (18.2) (21.5)
Total.................. $1,924.0 $ 244.3 $1,482.2 $ (32.6)
========= =========== ========= =========
Nine months ended
September 30, 1995 September 30, 1994
Income (loss)
before income
taxes, minority
interest,
Income before extraordinary
income taxes, items and
minority cumulative
interest and effect of an
Total extraordinary Total accounting
(in millions) sales item sales change
Paperboard and paper
packaging............. $4,104.7 $ 726.1 $3,046.1 $ 187.7
White paper and other.. 1,649.9 313.4 1,107.6 (11.8)
Intersegment........... (47.8) -- (26.4) --
5,706.8 1,039.5 4,127.3 175.9
Interest expense....... (354.0) (338.1)
Foreign currency
adjustments........... 9.9 (3.7)
General corporate and
miscellaneous (net)... (50.0) (58.4)
Total.................. $5,706.8 $ 645.4 $4,127.3 $ (224.3)
========= =========== ========= =========
<FN>
(a) Subject to year-end audit
/TABLE
<PAGE>
<TABLE>
Page 2 of 2
SEGMENT INFORMATION (a)
Financial information by geographic region is summarized as follows:
<CAPTION>
Three months ended
September 30, 1995 September 30, 1994
Income (loss)
Income before before income
income taxes, taxes,
minority minority
interest and interest and
Total extraordinary Total extraordinary
(in millions) sales item sales item
<S> <C> <C> <C> <C>
United States.......... $1,329.1 $ 247.2 $1,082.9 $ 74.8
Canada................. 407.0 113.8 253.7 12.0
Europe................. 224.2 10.4 163.5 3.8
1,960.3 371.4 1,500.1 90.6
Interest expense....... (114.5) (113.9)
Foreign currency
adjustments........... 5.6 12.2
General corporate and
miscellaneous (net)... (18.2) (21.5)
Inter-area eliminations (36.3) -- (17.9) --
Total.................. $1,924.0 $ 244.3 $1,482.2 $ (32.6)
========= =========== ========= =========
Nine months ended
September 30, 1995 September 30, 1994
Income (loss)
before income
taxes, minority
interest,
Income before extraordinary
income taxes, items and
minority cumulative
interest and effect of an
Total extraordinary Total accounting
(in millions) sales item sales change
United States.......... $4,021.6 $ 733.9 $3,020.5 $ 175.2
Canada................. 1,108.2 275.0 707.8 (5.3)
Europe................. 657.2 30.6 445.8 6.0
5,787.0 1,039.5 4,174.1 175.9
Interest expense....... (354.0) (338.1)
Foreign currency
adjustments........... 9.9 (3.7)
General corporate and
miscellaneous (net)... (50.0) (58.4)
Inter-area eliminations (80.2) -- (46.8) --
Total.................. $5,706.8 $ 645.4 $4,127.3 $ (224.3)
========= =========== ========= =========
<FN>
(a) Subject to year-end audit
</TABLE>
