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 March 31, 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 incorporation (I.R.S. employer
or organization) identification no.)
150 North Michigan Avenue, Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 312-346-6600
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act 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 requirements for the past 90 days.
Yes X No
Number of shares of common stock outstanding as of April 28, 1995:
90,555,706
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<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
(in millions) 1995* 1994
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents............................ $ 111.1 $ 108.6
Accounts and notes receivable (less allowances of
$22.2 and $20.2).................................... 938.2 824.5
Inventories.......................................... 715.1 673.1
Other................................................ 231.0 210.7
Total current assets....................... 1,995.4 1,816.9
Property, plant and equipment........................ 5,616.6 5,465.5
Accumulated depreciation and amortization............ (2,214.8) (2,106.5)
Property, plant and equipment--net......... 3,401.8 3,359.0
Timberlands.......................................... 75.1 75.1
Goodwill............................................. 864.8 860.2
Other................................................ 886.6 893.7
Total assets......................................... $7,223.7 $7,004.9
=======================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable..................................... $ 351.4 $ 328.0
Current maturities of senior long-term debt.......... 25.7 276.1
Notes payable and current maturities of non-recourse
debt of consolidated affiliates..................... 43.9 36.5
Income taxes......................................... 49.4 35.2
Accrued and other current liabilities................ 353.2 355.7
Total current liabilities.................. 823.6 1,031.5
Senior long-term debt................................ 2,735.1 2,488.5
Subordinated debt.................................... 1,137.5 1,159.6
Non-recourse debt of consolidated affiliates......... 763.6 783.8
Other long-term liabilities.......................... 306.7 290.2
Deferred taxes....................................... 435.9 381.4
Minority interest.................................... 226.0 221.8
Commitments and contingencies........................
Stockholders' equity:
Series E preferred stock.......................... 115.0 115.0
Common stock (90.5 and 90.4 shares outstanding)... 849.2 849.1
Retained earnings (accumulated deficit)........... .5 (96.3)
Foreign currency translation adjustment........... (165.8) (215.2)
Unamortized expense of restricted stock plan...... (3.6) (4.5)
Total stockholders' equity................. 795.3 648.1
Total liabilities and stockholders' equity........... $7,223.7 $7,004.9
=======================
<FN>
*Unaudited; subject to year-end audit
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
<CAPTION>
Three months ended
March 31,
(in millions except per share) 1995 1994
<S> <C> <C>
Net sales............................................ $1,819.3 $1,290.8
Cost of products sold................................ 1,288.7 1,067.1
Selling, general and administrative expenses......... 155.0 133.5
Depreciation and amortization........................ 96.0 89.3
Equity (income) loss from affiliates................. (1.8) 4.2
Other operating (income) expense-net................. -- (4.9)
Other (income) expense-net........................... (8.3) 9.2
Income (loss) before interest expense, income taxes,
minority interest, extraordinary loss and
cumulative effect of an accounting change.......... 289.7 (7.6)
Interest expense..................................... (121.4) (113.5)
Income (loss) before income taxes, minority interest,
extraordinary loss and cumulative effect of an
accounting change.................................. 168.3 (121.1)
(Provision) credit for income taxes.................. (67.3) 40.0
Minority interest.................................... (4.2) 2.2
Income (loss) before extraordinary loss and
cumulative effect of an accounting change.......... 96.8 (78.9)
Extraordinary loss from early extinguishment of debt
(net of income tax benefit)........................ -- (16.8)
Cumulative effect of change in accounting for
postemployment benefits (net of income tax
benefit)........................................... -- (14.2)
Net income (loss).................................... 96.8 (109.9)
Preferred stock dividends............................ (2.0) (2.0)
Net income (loss) applicable to common shares........ $ 94.8 $ (111.9)
Retained earnings (accumulated deficit), beginning
of period.......................................... $ (96.3) $ 101.6
Net income (loss).................................... 96.8 (109.9)
Unrealized loss on marketable equity security (net
of income tax benefit)............................. -- (9.0)
Retained earnings (accumulated deficit), end of
period............................................. $ .5 $ (17.3)
========= =========
Per share of common stock - Primary:
Income (loss) before extraordinary loss and
cumulative effect of an accounting change.......... $ 1.04 $ (.99)
Extraordinary loss from early extinguishment of debt
(net of income tax benefit)........................ -- (.21)
Cumulative effect of change in accounting for
postemployment benefits (net of income tax benefit) -- (.17)
Net income (loss).................................... $ 1.04 $ (1.37)
========= =========
Per share of common stock - Fully Diluted:
Net income........................................... $ .85 $ *
========= =========
Cash dividends....................................... $ -- $ --
========= =========
Common shares and common share equivalents
outstanding (weighted average, in millions):
Primary............................................ 90.8 81.5
========= =========
Fully Diluted...................................... 118.6 *
========= =========
<FN>
Unaudited; subject to year-end audit
The accompanying notes are an integral part of these statements.
* Fully diluted earnings per share are not disclosed because the amounts are
anti-dilutive.
</TABLE>
<TABLE>
STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three months ended
March 31,
(in millions except per share) 1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)..................................... $ 96.8 $ (109.9)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization....................... 96.0 89.3
Deferred taxes...................................... 43.4 (43.2)
Foreign currency transaction losses................. -- 15.2
Extraordinary loss from early extinguishment of
debt.............................................. -- 16.8
Cumulative effect of change in accounting for
postemployment benefits........................... -- 14.2
Other--net.......................................... 13.0 (26.0)
Changes in current assets and liabilities--net of
adjustments for a disposition:
(Increase) in accounts and notes receivable--net.... (109.5) (62.3)
(Increase) decrease in inventories.................. (39.2) 15.7
(Increase) in other current assets.................. (21.4) (18.8)
Increase (decrease) in accounts payable and other
current liabilities............................... 25.5 (5.2)
Net cash provided by (used in) operating activities... 104.6 (114.2)
Cash flows from financing activities:
Debt repayments....................................... (300.1) (897.1)
Payments by consolidated affiliates on non-recourse
debt................................................ (15.5) (19.2)
Borrowings............................................ 267.2 721.2
Non-recourse borrowings of consolidated affiliates.... 1.7 --
Proceeds from issuance of common stock--net........... -- 276.3
Funding of letter of credit........................... -- (22.3)
Net cash (used in) provided by financing activities... (46.7) 58.9
Cash flows from investing activities:
Capital expenditures.................................. (68.5) (17.7)
Proceeds from sales of assets......................... 2.4 7.5
Payments made for businesses acquired................. (3.2) --
Other--net............................................ 5.9 (1.3)
Net cash used in investing activities................. (63.4) (11.5)
Effect of exchange rate changes on cash............... 8.0 (1.5)
Net increase (decrease) in cash and cash equivalents.. 2.5 (68.3)
Cash and cash equivalents, beginning of period........ 108.6 247.4
Cash and cash equivalents, end of period.............. $ 111.1 $ 179.1
========= =========
<FN>
See Note 9 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>
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 ("SEC") 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 March 31, 1995
and the results of operations and cash flows for the three month
periods ended March 31, 1995 and 1994.
NOTE 2: 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 $29 million has been
received by the Company from certain carriers, claims of approximately
$13 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. In addition, subsequent to the end of the first
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, notwithstanding
such denials, the receivable recorded on its financial statements is
fully recoverable.
NOTE 3: 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. Also in April 1995, the
Company requested and received from its lenders an amendment to its
Credit Agreement which permits the Company to repay Seminole's bank
debt and to call and repay Seminole's 13-1/2 percent Subordinated Notes
due in 1996 by utilizing borrowings under the Company's $450 million
revolving credit facility. On April 28, 1995, the Company paid
Seminole's bank debt and its 13-1/2 percent Subordinated Notes,
including accrued interest thereon, for approximately $123 million, of
which the Company borrowed $97 million under its revolving credit
facility for such payment. Prior to such payment, the Company had no
outstanding borrowings under its revolving credit facility. Effective
April 30, 1995, the Company merged Seminole with and into the Company.
NOTE 4: 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 from collections or
borrowings 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 March 31, 1995, the Company had no
outstanding revolving credit facility borrowings under the program.
NOTE 5: Liquidity Matters
The Company's liquidity and financial flexibility had been adversely
affected as a result of the net losses incurred in recent years
through the end of the third quarter of 1994. The Company improved its
liquidity and financial flexibility as a result of its net income in
the fourth quarter of 1994 and first quarter 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 provided for, among
other things, a $450 million revolving credit facility. At May 11,
1995, the Company had borrowing availability of approximately $279
million (net of letters of credit and remaining borrowings of $76
million incurred to pay the Seminole debt previously described which
reduce the amount available to be borrowed) under its $450 million
revolving credit facility.
Additionally, at May 11, 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).
Beginning in 1997 and continuing thereafter, the Company will be
required to make significant amortization payments on its existing
indebtedness. Notwithstanding the improvements in the Company's
liquidity and financial flexibility, the Company will be required in
the future to generate sufficient cash flows to fully meet the
Company's debt service requirements. In the event the Company is
unable to generate sufficient operating cash flows to fully meet such
debt service requirements, the Company would be required to pursue
other alternatives to improve liquidity, including cost reductions,
sales of assets, the deferral of certain capital expenditures and/or
obtaining additional sources of funds.
NOTE 6: Inventories
Inventories are summarized as follows:
March 31, December 31,
(in millions) 1995 1994
Raw materials and supplies.................. $ 315.5 $ 306.9
Paperstock.................................. 281.6 263.4
Work in process............................. 20.9 21.4
Finished products--converting facilities.... 133.6 116.1
751.6 707.8
Excess of current cost over LIFO inventory
value..................................... (36.5) (34.7)
Total inventories........................... $ 715.1 $ 673.1
========= =========
At March 31, 1995 and December 31, 1994, the percentage of total
inventories costed by the LIFO, FIFO and average cost methods were as
follows:
March 31, December 31,
1995 1994
LIFO............................. 38% 42%
FIFO............................. 6% 7%
Average Cost..................... 56% 51%
NOTE 7: Current Maturities of Long-term Debt
Current maturities of long-term debt at March 31, 1995 and December 31,
1994 consisted of the following components:
March 31, December 31,
(in millions) 1995 1994
Senior debt................................ $ 25.7 $ 276.1
Non-recourse debt of consolidated
affiliates............................... 34.8 29.2
Total current maturities of long-term debt. $ 60.5 $ 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
had been scheduled to mature in September 1995. As discussed in Note 4
- -- "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.
NOTE 8: Segment Information
Financial information by business segment is summarized as follows:
Three months ended
March 31, 1995 March 31, 1994
Income (loss)
before income
taxes, minority
interest,
extraordinary
Income loss and
before income cumulative
taxes and effect of an
Total minority Total accounting
(in millions) sales interest sales change
Paperboard and paper
packaging.......... $1,334.2 $ 233.9 $ 954.0 $ 52.5
White paper and
other.............. 501.1 71.0 349.3 (26.6)
Intersegment......... (16.0) -- (12.5) --
1,819.3 304.9 1,290.8 25.9
Interest expense..... (121.4) (113.5)
Foreign currency
adjustments........ -- (15.2)
General corporate
and miscellaneous
(net).............. (15.2) (18.3)
Total................ $1,819.3 $ 168.3 $ 1,290.8 $ (121.1)
========= =========== ========== ===========
Financial information by geographic region is summarized as follows:
Three months ended
March 31, 1995 March 31, 1994
Income (loss)
before income
taxes, minority
interest,
extraordinary
Income loss and
before income cumulative
taxes and effect of an
Total minority Total accounting
(in millions) sales interest sales change
United States........ $1,308.0 $ 233.5 $ 951.8 $ 39.4
Canada............... 319.9 59.3 206.6 (14.7)
Europe............... 206.9 12.1 141.4 1.2
1,834.8 304.9 1,299.8 25.9
Interest expense..... (121.4) (113.5)
Foreign currency
adjustments........ -- (15.2)
General corporate and
miscellaneous (net) (15.2) (18.3)
Inter-area
eliminations....... (15.5) -- (9.0) --
Total................ $1,819.3 $ 168.3 $1,290.8 $ (121.1)
========= =========== ========== ==========
NOTE 9: 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
March 31,
(in millions) 1995 1994
Non-cash investing and financing activities:
Unrealized loss on an investment in an
equity security (net of income tax
benefit)................................. $ -- $ 9.0
Note receivable received from sale of
assets................................... -- 1.3
Cash paid during the periods for:
Interest (net of capitalization)........... $ 117.1 $ 98.8
Income taxes (net of refunds).............. 11.0 2.5
========= =========
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 March 31,
1995 1994
Percent of Percent of
(dollars in millions) Amount net sales Amount net sales
Net sales................. $1,819.3 100.0% $1,290.8 100.0%
Cost of products sold..... 1,288.7 70.8 1,067.1 82.7
Selling, general and
administrative expenses.. 155.0 8.5 133.5 10.3
Depreciation and
amortization............. 96.0 5.3 89.3 6.9
Equity (income) loss from
affiliates............... (1.8) (.1) 4.2 .3
Other operating (income)
expense-net.............. -- -- (4.9) (.3)
Other (income) expense-net (8.3) (.4) 9.2 .7
Income (loss) before
interest expense, income
taxes, minority interest,
extraordinary loss and
cumulative effect of an
accounting change........ 289.7 15.9 (7.6) (.6)
Interest expense.......... (121.4) (6.7) (113.5) (8.8)
Income (loss) before
income taxes, minority
interest, extraordinary
loss and cumulative
effect of an accounting
change................... 168.3 9.2 (121.1) (9.4)
(Provision) credit for
income taxes............. (67.3) (3.7) 40.0 3.1
Minority interest......... (4.2) (.2) 2.2 .2
Income (loss) before
extraordinary loss and
cumulative effect of an
accounting change........ 96.8 5.3 (78.9) (6.1)
Extraordinary loss from
early extinguishment of
debt (net of income tax
benefit)................. -- -- (16.8) (1.3)
Cumulative effect of
change in accounting for
postemployment benefits
(net of income tax
benefit)................. -- -- (14.2) (1.1)
Net income (loss)......... $ 96.8 5.3 $ (109.9) (8.5)
========= =========== ========= ==========
Net income for the 1995 first quarter was $96.8 million, or $1.04
per share of common stock on a primary basis and $.85 per share of
common stock on a fully diluted basis. The first quarter 1994 loss
before the extraordinary loss from the early extinguishment of debt and
the cumulative effect of a change in the accounting for postemployment
benefits was $78.9 million, or $.99 per share of common stock. In the
1994 first quarter, the Company recorded an extraordinary loss from the
early extinguishment of debt of $16.8 million, net of income tax
benefit, or $.21 per share of common stock and a one-time, non-cash
cumulative effect charge of $14.2 million, net of income tax benefit,
or $.17 per share of common stock from the adoption of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" ("SFAS 112"), resulting in a net loss for the
1994 first quarter of $109.9 million, or $1.37 per share of common
stock.
The improved results for the three months ended March 31, 1995
over the comparable prior year period primarily reflect improved
product pricing for the Company's products which more than offset a
substantial increase in recycled fiber costs.
Paperboard and paper packaging:
Net sales for the three months ended March 31, 1995 for the
paperboard and paper packaging segment increased approximately 40
percent over the prior year period 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 shipments by its affiliates, were 13.7 billion
square feet for the first quarter of 1995, compared with 12.9 billion
square feet for the comparable prior year period. Shipments of paper
bags and sacks were 147 thousand tons for the three month period ended
March 31, 1995, compared with 159 thousand tons shipped during the
comparable 1994 period.
Production of containerboard and kraft paper for the three months
ended March 31, 1995, was 1.33 million tons, compared to 1.29 million
tons produced during the comparable prior year period.
Operating income for the paperboard and paper packaging segment
increased significantly for the three months ended March 31, 1995, as
compared with the corresponding 1994 period. This increase is
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 three months ended March 31, 1995 for the white
paper and other segment increased approximately 43 percent over the
comparable prior year period. This increase was due in part to the
inclusion of $36 million 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 first
quarter of 1995 for the segment increased 33 percent over the
comparable prior year period, reflecting significant sales increases
for market pulp, newsprint and groundwood paper. These sales increases
were mainly attributable to higher average selling prices, although
improved volume, particularly for market pulp, also contributed to the
increased sales.
Production of newsprint, market pulp and groundwood paper for the
three months ended March 31, 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 726 thousand tons
compared with 667 thousand tons produced during the comparable prior
year period. 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 first quarter was $71.0 million, compared to an operating loss in
the comparable prior year period of $26.6 million. The significant
improvement in operating income was mainly attributable to improved
operating margins resulting primarily from significantly higher average
selling prices for market pulp, newsprint and groundwood paper.
Financial Condition and Liquidity
The Company's working capital ratio at March 31, 1995, which included
cash and cash equivalents of $111.1 million, was 2.4 to 1, compared to
a working capital ratio at December 31, 1994, which included cash and
cash equivalents of $108.6 million, of 1.8 to 1. The Company's long-
term debt to total capitalization ratio was 76.1 percent at March 31,
1995 and 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's Credit Agreement (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 May 11, 1995,
the Company had borrowing availability of approximately $279 million
(net of letters of credit and remaining borrowings of $76 million
incurred to pay the Seminole debt previously described which reduce the
amount available to be borrowed) under its $450 million revolving
credit facility. The term loan and the revolving credit facility had
weighted average interest rates for the 1995 first quarter of 9.27
percent and 9.51 percent, respectively. The weighted average rates do
not include the effects of the amortization of deferred debt issuance
costs.
Additionally, at May 11, 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 by 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. 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 March 31, 1995, SVCPI had approximately $288 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 $104.6 million for
the three months ended March 31, 1995, an improvement of $218.8
million, compared with net cash used in operating activities of $114.2
million for the comparable period of 1994. The improvement in
operating cash flows primarily reflects the Company's improved
earnings, a decrease in debt issuance costs and an increase in accounts
payable and other current liabilities. These improvements more than
offset the effects of an increase in inventories and accounts and notes
receivable.
Financing activities:
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 from collections or
borrowings 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 March 31, 1995, the Company had no
outstanding revolving credit facility 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 did not declare the scheduled August 15,
1994, November 15, 1994, February 15, 1995 and the May 15, 1995
quarterly dividends of $.4375 on the 4.6 million shares of Series E
Cumulative Convertible Exchangeable Preferred Stock ("Series E
Cumulative Preferred Stock"). The dividend pool, established by the
restrictions on payment of dividends under the Senior Subordinated
Indenture, was significantly replenished with the net income from the
first quarter of 1995 and the fourth quarter of 1994. As a result, at
March 31, 1995, the deficit in the dividend pool in the Senior
Subordinated Indenture had been reduced to approximately $6 million.
At March 31, 1995, the dividend pool under the Company's Credit
Agreement was approximately a positive $88 million.
The Company has restrictions on the payment of cash dividends on
its common stock under certain of the Company's indentures and under
its Credit Agreement. Cash dividends on common stock cannot be
declared and paid until the Company fully satisfies all accumulated
preferred stock dividends in arrears and there is an available dividend
pool under the Senior Subordinated Indenture and under the Credit
Agreement.
Investing activities:
Capital expenditures for the three months ended March 31, 1995 totalled
approximately
$69 million.
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. Also in April 1995, the
Company requested and received from its lenders an amendment to its
Credit Agreement which permits the Company to repay Seminole's bank
debt and to call and repay Seminole's 13-1/2 percent Subordinated Notes
due in 1996 by utilizing borrowings under the Company's $450 million
revolving credit facility. On April 28, 1995, the Company paid
Seminole's bank debt and its 13-1/2 percent Subordinated Notes,
including accrued interest thereon, for approximately $123 million, of
which the Company borrowed $97 million under its revolving credit
facility for such payment. Prior to such payment, the Company had no
outstanding borrowings under its revolving credit facility. Effective
April 30, 1995, the Company merged Seminole with and into the Company.
Outlook:
The Company's liquidity and financial flexibility had been adversely
affected as a result of the net losses incurred in recent years through
the end of the third quarter of 1994. The Company improved its
liquidity and financial flexibility as a result of its net income in
the fourth quarter of 1994 and first quarter of 1995, completion of the
March 1995 Refinancing, completion of significant refinancings in 1994
and completion of the refinancing of its Credit Agreement in October
1994. The Credit Agreement provided for, among other things, a $450
million revolving credit facility. At May 11, 1995, the Company had
borrowing availability of approximately $279 million (net of letters of
credit and remaining borrowings of $76 million incurred to pay the
Seminole debt previously described which reduce the amount available to
be borrowed) under its $450 million revolving credit facility.
Additionally, at May 11, 1995, Stone-Consolidated had no
outstanding borrowings under its $100 million revolving credit
facility.
Beginning in 1997 and continuing thereafter, the Company will be
required to make significant amortization payments on its existing
indebtedness. Notwithstanding the improvements in the Company's
liquidity and financial flexibility, the Company will be required in
the future to generate sufficient cash flows to fully meet the
Company's debt service requirements. In the event the Company is
unable to generate sufficient operating cash flows to fully meet such
debt service requirements, the Company would be required to pursue
other alternatives to improve liquidity, including cost reductions,
sales of assets, the deferral of certain capital expenditures and/or
obtaining additional sources of funds.
As a result of favorable industry conditions, the Company
implemented price increases for containerboard and corrugated
containers during the first quarter of 1995 and has implemented a
further $50/ton containerboard price increase effective April 1, 1995.
The Company is also currently implementing further price increases for
corrugated containers. The Company's containerboard and corrugated
container product lines represent a substantial portion of the
Company's net sales.
Also, in January and March of 1995, the Company implemented price
increases for market pulp and has announced a further market pulp price
increase effective June 1995.
Additionally, the Company implemented newsprint and groundwood
paper price increases in March 1995 and has announced a further
newsprint price increase effective in May 1995 and further groundwood
paper price increases effective in the second and third quarters of
1995.
While there can be no assurance that prices will continue to
increase or remain at current levels, the Company believes that the
supply/demand characteristics for its product lines have substantially
improved which 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 was approximately $79 million
higher in the first quarter of 1995 compared to the first quarter of
1994 and was approximately $31 million higher than the fourth quarter
of 1994. There can be no assurance that recycled fiber costs will not
moderate or continue to 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, 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.
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 March 31, 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 $29 million has been
received by the Company from certain carriers, claims of approximately
$13 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. In addition, subsequent to the end of the first
quarter of 1995, certain of the all-risks insurance carriers, which
would cover the losses not covered under the boiler and machinery
coverage, have denied coverage. Management believes, notwithstanding
such denials, the receivable recorded on its financial statements is
fully recoverable.
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 $.4375 August 15, 1994, November 15,
1994, February 15, 1995 and the 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"). In the event the Company has six
quarterly dividends which remain unpaid 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 response to Part II Item 2(b) above is incorporated by
reference herein.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4 Second Amendment of Credit Agreement dated as of April 12,
1995 among the Company, the financial institutions
signatory thereto, Bankers Trust Company, as agent, and
Bank of America National Trust and Savings Association,
The Bank of New York, The Bank of Nova Scotia, Caisse
Nationale de Credit Agricole, Chemical Bank, The Chase
Manhattan Bank, N.A., Dresdner Bank AG-Chicago and
Grand Cayman Branches, The First National Bank of
Chicago, The Long-Term Credit Bank of Japan, Ltd.,
Chicago Branch, and the Toronto-Dominion Bank, as Co
-Agents.
11 Computation of Primary and Fully Diluted Net Income (Loss)
Per Common Share
27 Financial Data Schedule for the three months ended March 31,
1995.
(b) Reports on Form 8-K
1. A Report on Form 8-K dated February 16, 1995 was filed
reporting under Item 5--Other Events, that the Company
issued a press release on February 6, 1995 announcing
its financial results for the fourth quarter of 1994
and for the year ended December 31, 1994.
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: May 15, 1995
SECOND AMENDMENT
OF
CREDIT AGREEMENT
THIS SECOND AMENDMENT OF CREDIT AGREEMENT is dated as of April 12,
1995 (this "Amendment") and is by and among Stone Container
Corporation, a Delaware corporation (the "Borrower"), the undersigned
financial institutions, including Bankers Trust Company, in their
capacities as lenders (collectively, the "Lenders," and each
individually, a "Lender"), Bankers Trust Company, as agent (the
"Agent") for the Lenders, and Bank of America National Trust & Savings
Association, The Bank of New York, The Bank of Nova Scotia, Caisse
Nationale de Credit Agricole, Chemical Bank, The Chase Manhattan Bank,
N.A., Dresdner Bank AG-Chicago and Grand Cayman Branches, The First
National Bank of Chicago, The Long-Term Credit Bank of Japan, Ltd.,
NationsBank of North Carolina, N.A., The Sumitomo Bank, Ltd., Chicago
Branch and The Toronto Dominion Bank, as co-agents for the Lenders
(collectively, the "Co-Agents," and each individually, a "Co-Agent").
RECITALS:
A. The Borrower, the Co-Agents, the Agent and the Lenders are
parties to that certain Credit Agreement dated as of October 12, 1994,
as amended by the First Amendment, Consent and Waiver of Credit
Agreement dated as of January 30, 1995 (collectively, the "Credit
Agreement").
B. The Borrower, the Co-Agents, the Agent and the Lenders
desire to amend the Credit Agreement on the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein,
all capitalized terms used herein shall have the meanings given them in
the Credit Agreement.
SECTION 2. Amendments to the Credit Agreement. The Credit
Agreement is, as of the Effective Date (as defined below), hereby
amended as follows:
(a) Section 2.12(a) of the Credit Agreement is amended by
deleting the number "$50,000,000" appearing in the first sentence
of such Section and replacing it with "$62,000,000".
(b) Section 5.2.3(a) of the Credit Agreement is amended by
deleting such Section in its entirety and replacing it with the
following:
"(a) subject to Section 5.3.2, the Borrower may assume,
guarantee or endorse, or otherwise become directly or
contingently liable in respect of, any obligation of any
Person, provided that notwithstanding the foregoing the
Borrower shall not be permitted to assume, guarantee or
otherwise take any of the foregoing actions with respect
to any Indebtedness for Money Borrowed incurred by S-CC,
Seminole Kraft (except as permitted by Sections 5.2.8(g)
and 5.2.10(a)(xiii)), StoneSub, SVCPI or any Subsidiary
of any of such entities except as set forth on Schedule
5.2.3 hereto;"
(c) Section 5.2.7 of the Credit Agreement is amended by (i)
deleting the word "and" appearing at the end of clause (n)
thereof, (ii) deleting the period appearing at the end of clause
(o) thereof and inserting "; and" in place thereof and (iii)
inserting after clause (o) thereof the following new clause (p):
"(p) an additional Investment in Seminole Kraft in an
amount not to exceed $1,250,000 for the purpose of
acquiring the remaining 1% of outstanding capital stock
of Seminole Kraft that was not previously owned by the
Borrower."
(d) Section 5.2.7 of the Credit Agreement is further amended
by deleting the last sentence of such Section in its entirety and
replacing it with the following:
"Except as specifically provided in the foregoing
clauses (d) (with respect to SVCPI only), (g) and (j)
neither the Borrower nor any Subsidiary shall be
permitted to make additional Investments in Seminole
Kraft, S-CC, SVCPI or any of their respective
Subsidiaries (other than (A) pursuant to contractual
agreements permitted by this Agreement and as in effect
on the date hereof and set forth on Schedule 5.2.7-A and
(B) Investments in Seminole Kraft, the proceeds of which
are promptly used to prepay Indebtedness for Money
Borrowed pursuant to Section 5.2.10(a)(xiii))."
(e) Section 5.2.8(a) of the Credit Agreement is amended by
deleting such Section in its entirety and replacing it with the
following:
"(a) any Wholly-Owned Subsidiary of the Borrower (except
for StoneSub and any Restricted Subsidiary) may merge,
consolidate or amalgamate with or into the Borrower or
another Wholly-Owned Subsidiary of the Borrower (except
for StoneSub and any Restricted Subsidiary) and any
corporation that is a StoneSub may merge or consolidate
with any other corporation that is a StoneSub; provided,
however, that StoneSub may merge with and into the
Borrower in order to consummate a refinancing of the
Receivables Financings existing on the date hereof so
long as (i) the Borrower immediately contributes and
transfers all or a substantial portion of the assets of
StoneSub into a newly formed StoneSub in connection with
such refinancing and (ii) all Indebtedness of the
StoneSub which has been merged with and into the
Borrower is immediately repaid in full with the proceeds
of such refinancing;"
(f) Section 5.2.8 of the Credit Agreement is further amended
by (i) deleting the word "and" appearing at the end of clause (e)
thereof, (ii) deleting the period appearing at the end of clause
(f) thereof and inserting "; and" in place thereof and (iii)
inserting at the end of Section 5.2.8 the following new clause
(g):
"(g) Seminole Kraft may merge with and into the Borrower
with the Borrower as the surviving corporation, provided
that (i) the Borrower shall have prepaid, defeased or
otherwise deposited under an irrevocable trust agreement
in form and substance reasonably satisfactory to the
Agent, or caused to be prepaid, defeased or so
deposited, pursuant to the terms and conditions of
Section 5.2.10(a)(xiii), the Indebtedness of Seminole
Kraft under (A) the Credit Agreement dated as of March
27, 1991, as amended, among Seminole Kraft, Citibank,
N.A., as agent, and the financial institutions party
thereto and (B) Seminole Kraft's 13.50% Subordinated
Notes due October 15, 1996 issued under the Indenture
dated as of October 15, 1986, as supplemented and
amended, between Seminole Kraft and Norwest Bank, as
successor trustee to Manufacturers Hanover Trust
Company, (ii) Seminole Kraft shall have no Indebtedness
for Money Borrowed outstanding at the time of such
merger other than the Indebtedness for Money Borrowed
set forth on Schedule 5.2.8(g) hereto, (iii) on the date
of such merger the Borrower shall deliver to the Agent a
certificate of a Responsible Officer of the Borrower
certifying that both before and after giving effect to
the prepayment of such Indebtedness and the consummation
of such merger, no Event of Default or Unmatured Event
of Default has occurred is continuing and the
representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and
correct in all material respects at and as of the date
thereof as though made on and as of the date thereof
(except to the extent specifically made with regard to a
particular date) and (iv) such merger shall occur on or
prior to June 30, 1995."
(g) Section 5.2.10(a) of the Credit Agreement is amended by
(i) deleting the word "and" appearing at the end of clause (xi)
thereof and (ii) inserting at the end of clause (xii) thereof the
following new clause (xiii):
"and (xiii) the Borrower may voluntarily prepay, or
cause to be prepaid, the Indebtedness of Seminole Kraft
consisting of (A) Indebtedness under the Credit
Agreement dated as of March 27, 1991, as amended, among
Seminole Kraft, Citibank, N.A., as agent, and the
financial institutions party thereto, (B) Seminole
Kraft's 13.50% Subordinated Notes due October 15, 1996
issued under the Indenture dated as of October 15, 1986,
as supplemented and amended, between Seminole Kraft and
Norwest Bank, as successor trustee to Manufacturers
Hanover Trust Company, and (C) if necessary, up to
$8,400,000 of Indebtedness under the 1991 Settlement
Agreement dated as of March 26, 1991 entered into by
Champion International Corporation and Seminole Kraft,
so long as the aggregate amount of all such Indebtedness
prepaid does not exceed $140,000,000, and may use
proceeds of the Revolving Loan to prepay any such
Indebtedness for Money Borrowed, provided that (1) all
existing Liens securing any such Indebtedness for Money
Borrowed of Seminole Kraft are promptly released upon
the prepayment of such Indebtedness for Money Borrowed
and (2) the Borrower shall, promptly upon the prepayment
of such Indebtedness for Money Borrowed, cause Seminole
Kraft to be merged with and into the Borrower pursuant
to the terms and conditions of Section 5.2.8(g)."
(h) The Credit Agreement is amended by appending thereto as
Schedule 5.2.8(g) the Schedule 5.2.8(g) attached to this
Amendment.
(i) The definition of "Excess Cash Flow" appearing in the
Definitional Appendix to the Credit Agreement is amended by adding
the following sentence at the end thereof:
"In the event that Seminole Kraft merges with and into
the Borrower pursuant to Section 5.2.8(g) in any Fiscal
Quarter, Excess Cash Flow for such Fiscal Quarter shall
be calculated as though the merger of Seminole Kraft
with and into the Borrower occurred on the first day of
such Fiscal Quarter."
SECTION 3. Additional Amendments to the Credit Agreement. The
Credit Agreement is, as of the effective date of the merger of Seminole
Kraft with and into the Borrower pursuant to Section 5.2.8(g) of the
Credit Agreement, hereby further amended as follows:
(a) Section 3.4(b) of the Credit Agreement is amended by
deleting clause (iv) appearing therein in its entirety.
(b) Section 3.4(c) of the Credit Agreement is amended by (i)
deleting clause (H) appearing therein in its entirety and (ii) re-
numbering clause (I) thereof as clause (H).
(c) Section 5.2.6 of the Credit Agreement is amended by (i)
deleting clause (iii) appearing therein in its entirety and (ii)
re-numbering clauses (iv), (v) and (vi) appearing therein as
clauses (iii), (iv) and (v), respectively.
(d) Section 5.2.9 of the Credit Agreement is amended by
deleting clause (h) appearing therein in its entirety and
replacing it with "(h) [Intentionally Omitted];".
(e) Section 7.1(l) of the Credit Agreement is amended by
deleting the words "SVCPI, S-CC or Seminole Kraft" appearing
therein and replacing them with "SVCPI or S-CC".
(f) Section 9.21 of the Credit Agreement is amended by
deleting such Section in its entirety.
(g) The definition of "Investment" appearing in the
Definitional Appendix to the Credit Agreement is amended by
deleting the parenthetical "(other than Seminole Kraft)" appearing
therein.
(h) The definition of "Restricted Subsidiary" appearing in the
Definitional Appendix to the Credit Agreement is amended by
deleting such definition in its entirety and replacing it with the
following:
""Restricted Subsidiary" means S-CC upon the Borrower
acquiring all of its outstanding shares of capital
stock."
(i) All references to "Seminole Kraft", "Seminole Kraft,",
"Seminole Kraft and" and "Seminole Kraft or" appearing in Sections
1.2, 5.1.1(b), (c), (d) and (e), 5.1.16, 5.2.2(c) and (d),
5.2.3(d) and (e), 5.2.7(c), (g) and (l), 5.2.10(c), 5.2.11, 5.2.14
and 7.1(g), and appearing in the definitions of "Excess Cash
Flow," "Participating Subsidiary" and clause (k) of the definition
of "Permitted Liens" appearing in the Definitional Appendix to the
Credit Agreement are deleted, as applicable, such that the
remaining portions of such Sections and definitions are given
effect without such reference to Seminole Kraft.
SECTION 4. Conditions Precedent to Effectiveness of Amendment.
This Amendment shall become effective upon the date (the "Effective
Date") each of the following conditions are satisfied:
(a) The Borrower, the Agent and the Required Lenders shall
have executed and delivered this Amendment; and
(b) The Borrower shall have paid in full to the Agent on or
before April 12, 1995, for ratable distribution to those Lenders
that have signed this Amendment on or before April 12, 1995, an
amount equal to twelve and one-half basis points of the then
outstanding loans and commitments to make loans or extensions of
credit under the Credit Agreement of such Lenders; provided,
however, that the fee payable pursuant to this clause (b) shall be
payable only in the event that this Amendment has been executed by
the Required Lenders.
SECTION 5. Representations and Warranties of the Borrower.
The Borrower represents and warrants to the Lenders, the Co-Agents and
the Agent as follows:
(a) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all
material respects at and as of the date hereof as though made on
and as of the date hereof (except to the extent specifically made
with regard to a particular date).
(b) No Event of Default or Unmatured Event of Default has
occurred and is continuing.
(c) The execution, delivery and performance of this Amendment
has been duly authorized by all necessary action on the part of,
and duly executed and delivered by, the Borrower and this
Amendment is a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms,
except as the enforcement thereof may be subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
(d) The execution, delivery and performance of this Amendment
do not conflict with or result in a breach by the Borrower of any
term of any material contract, loan agreement, indenture or other
agreement or instrument to which the Borrower is a party or is
subject.
SECTION 6. References to and Effect on the Credit Agreement.
(a) On and after the Effective Date each reference in the
Credit Agreement to "this Agreement," "hereunder," "hereof,"
"herein," or words of like import, and each reference to the
Credit Agreement in the Loan Documents and all other documents
(the "Ancillary Documents") delivered in connection with the
Credit Agreement shall mean and be a reference to the Credit
Agreement as amended hereby.
(b) Except as specifically amended above, the Credit
Agreement, the Loan Documents and all other Ancillary Documents
shall remain in full force and effect and are hereby ratified and
confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy of the Lenders, the Co-
Agents or the Agent under the Credit Agreement, the Loan Documents
or the Ancillary Documents.
SECTION 7. Execution in Counterparts. This Amendment may be
executed in counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument. This Amendment shall be
binding upon the respective parties hereto upon the execution and
delivery of this Amendment by the Borrower, the Agent and the Required
Lenders regardless of whether it has been executed and delivered by all
of the Lenders.
SECTION 8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED
BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO THE INTERNAL CONFLICTS OF LAWS
PROVISIONS THEREOF.
Section 9. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purposes.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed by their respective officers thereunto duly
authorized as of the date above first written.
STONE CONTAINER CORPORATION BANKERS TRUST COMPANY, in its
individual capacity and as
By:__________________________ Agent
Name:________________________ By:___________________________
Title:_______________________ Name:_________________________
Title:________________________
BANK OF AMERICA NATIONAL TRUST THE BANK OF NEW YORK, in its
AND SAVINGS ASSOCIATION, in its individual capacity and as a
individual capacity and as a Co-Agent
Co-Agent
By:___________________________
By:__________________________
Name:_________________________
Name:________________________
Title:________________________
Title:_______________________
THE BANK OF NOVA SCOTIA, in its CAISSE NATIONALE DE CREDIT
individual capacity and as a AGRICOLE, in its individual
Co-Agent capacity and as a Co-Agent
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
CHEMICAL BANK, in its THE CHASE MANHATTAN BANK, N.A.,
individual capacity and as a in its individual capacity and
Co-Agent as a Co-Agent
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
DRESDNER BANK AG (Chicago and THE FIRST NATIONAL BANK OF
Grand Cayman Branches), in its CHICAGO, in its individual
individual capacity and as a capacity and as a Co-Agent
Co-Agent
By:___________________________
By:__________________________
Name:_________________________
Name:________________________
Title:________________________
Title:_______________________
THE LONG-TERM CREDIT BANK OF NATIONSBANK OF NORTH CAROLINA,
JAPAN, LTD. in its individual N.A., in its individual
capacity and as a Co-Agent capacity and as a Co-Agent
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
SUMITOMO BANK, LTD., CHICAGO THE TORONTO DOMINION BANK, in
BRANCH, in its individual its individual capacity and as
capacity and as a Co-Agent a Co-Agent
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
COMPAGNIE FINANCIERE DE CIC ET PRIME INCOME TRUST
DE L'UNION EUROPEENNE
By:___________________________
By:__________________________
Name:_________________________
Name:________________________
Title:________________________
Title:_______________________
EATON VANCE PRIME RATE RESERVES MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By:__________________________
By:___________________________
Name:________________________
Name:_________________________
Title:_______________________
Title:________________________
SENIOR STRATEGIC INCOME FUND, PILGRAM PRIME RATE TRUST
INC.
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
PROSPECT STREET SENIOR PROTECTIVE LIFE INSURANCE
PORTFOLIO, L.P. (by Prospect COMPANY
Street Senior Loan corporation,
as managing general partner) By:__________________________
By:___________________________ Name:________________________
Name:_________________________ Title:_______________________
Title:________________________
VAN KAMPEN MERRITT PRIME RATE
INCOME TRUST STRATA FUNDING LTD.
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
STICHTING RESTRUCTURED
OBLIGATIONS BACKED BY SENIOR RESTRUCTURED OBLIGATIONS BACKED
ASSETS 2 (ROSA2) BY SENIOR ASSETS B.V.
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
By its Managing Director By its Managing Director
ABN TRUSTCOMPANY (NEDERLAND) ABN TRUSTCOMPANY (NEDERLAND)
B.V. B.V.
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
CERES FINANCE LTD. MERRILL LYNCH PRIME RATE
PORTFOLIO
By:__________________________
By: Merill Lynch Assets
Name:________________________ Management, LP,
as Investment Advisor
Title:_______________________
By:__________________________
UNION BANK OF FINLAND, LTD., Name:________________________
GRAND CAYMAN BRANCH
Title:_______________________
By:__________________________
Name:________________________
Title:_______________________
MERRILL LYNCH, PIERCE, FENNER &
SMITH, INC.
By:___________________________
Name:_________________________
Title:________________________
LEHMAN COMMERCIAL PAPER, INC.
By:___________________________
Name:_________________________
Title:________________________
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By:___________________________
Name:_________________________
Title:________________________
SENIOR DEBT PORTFOLIO
By:___________________________
Name:_________________________
Title:________________________
PEARL STREET, L.P.
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
SCHEDULE 5.2.8(g)
Indebtedness for Money Borrowed of Seminole Kraft
Which May Remain Outstanding After Merger Into Borrower
$8,400,000 of Indebtedness owing to Champion International
Corporation pursuant to the 1991 Settlement Agreement dated as of March
26, 1991 between Champion International Corporation and Seminole Kraft.
<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
March 31,
1995 1994
Primary Earnings Per Share
<S> <C> <C>
Shares of Common Stock:
Weighted average number of common shares
outstanding.................................... 90.8 81.5
Primary Weighted Average Shares Outstanding........ 90.8 81.5
======== =========
Net income (loss).................................. $ 96.8 $ (109.9)
Less:
Series E Cumulative Convertible Exchangeable
Preferred Stock dividend....................... (2.0) (2.0)
Net income (loss) used in computing primary net
income (loss) per common share................... $ 94.8 $ (111.9)
======== =========
Primary Earnings Per Share......................... $ 1.04 $ (1.37)
======== =========
Fully Diluted Earnings Per Share
Shares of Common Stock:
Weighted average number of common shares
outstanding.................................... 90.8 81.5
Dilutive effect of options and warrants.......... .1 --
Addition from assumed conversion of 8.875%
convertible senior subordinated notes.......... 21.6 21.6
Addition from assumed conversion of 6.75%
convertible subordinated debentures............ 2.7 3.4
Addition from assumed conversion of Series E
Cumulative Convertible Exchangeable Preferred
Stock.......................................... 3.4 3.4
Fully Diluted Weighted Average Shares Outstanding.. 118.6 109.9
======== =========
Net Income (Loss).................................. $ 96.8 $ (109.9)
Less:
Series E Cumulative Convertible Exchangeable
Preferred Stock dividend....................... (2.0) (2.0)
Income adjustment associated with assumed
conversion of Stone-Consolidated Corporation
8% convertible subordinated debentures......... (.8) --
Add back:
Interest on 8.875% convertible senior
subordinated notes............................. 3.4 3.4
Interest on 6.75% convertible subordinated
debentures..................................... 1.0 1.2
Income adjustment associated with assumed
conversion of Stone-Consolidated Corporation
8% convertible subordinated debentures......... -- 3.4
Series E Cumulative Convertible Exchangeable
Preferred Stock dividend....................... 2.0 2.0
Net income (loss) used in computing fully diluted
net income (loss) per common share............... $ 100.4 $ (101.9)
======== =========
Fully Diluted Earnings Per Share(A)................ $ .85 $ (.93)
======== =========
<FN>
(A) Fully diluted earnings per share for the three months ended March 31, 1994
is not disclosed in the Consolidated Statement 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' March 31, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 111
<SECURITIES> 0
<RECEIVABLES> 960
<ALLOWANCES> 22
<INVENTORY> 715
<CURRENT-ASSETS> 1995
<PP&E> 5617
<DEPRECIATION> 2215
<TOTAL-ASSETS> 7224
<CURRENT-LIABILITIES> 824
<BONDS> 4636
<COMMON> 849
0
115
<OTHER-SE> (169)
<TOTAL-LIABILITY-AND-EQUITY> 7224
<SALES> 1819
<TOTAL-REVENUES> 1819
<CGS> 1289
<TOTAL-COSTS> 1540
<OTHER-EXPENSES> (10)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121
<INCOME-PRETAX> 168
<INCOME-TAX> 67
<INCOME-CONTINUING> 97
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 0.85
</TABLE>
