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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 18, 1998
STONE CONTAINER CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-03439 65-0654331
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(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
150 North Michigan Avenue
Chicago, Illinois 60601
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(Address of Principal Executive Offices) (Zip Code)
(312) 346-6600
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(Registrant's telephone number, including area code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. Other Events.
On November 24, 1998 and December 1, 1998, Smurfit-Stone Container
Corporation (the "Company"), a Delaware corporation and the parent company of
Stone Container Corporation, a Delaware corporation, issued press releases
announcing the restructuring of the Company's manufacturing operations.
Copies of the press releases are attached hereto as Exhibits 99.1 and 99.2
and are incorporated by reference herein.
ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
Exhibit 99.1 Press Release dated November 24, 1998.
Exhibit 99.2 Press Release dated December 1, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
STONE CONTAINER CORPORATION
Dated: December 1, 1998 By: /s/ Craig A. Hunt
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Name: Craig A. Hunt
Title: Vice President, Secretary &
General Counsel
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release dated November 24, 1998.
99.2 Press Release dated December 1, 1998.
EXHIBIT 99.1
[GRAPHIC OMITTED] Smurfit-Stone
For Immediate Release
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Contact: Timothy McKenna (investors)
312-580-4637, 314-746-1254
Tom Lange (media)
314-746-1236
SMURFIT-STONE CONTAINER ANNOUNCES RESTRUCTURING;
COMPANY WILL SHUT DOWN AND MOTHBALL APPROXIMATELY
1.1 MILLION TONS OF CONTAINERBOARD CAPACITY AND
400,000 TONS OF MARKET PULP CAPACITY;
TAKE 4TH QUARTER CHARGE IN THE RANGE OF $300-350 MILLION
CHICAGO, November 24, 1998 --The board of directors of Smurfit-Stone Container
Corporation (Nasdaq: SSCC) has approved a major restructuring that will include
the shutdown and mothballing of approximately 1.1 million tons, or about 17
percent, of the company's U.S. containerboard mill capacity, and approximately
400,000 tons of market pulp capacity. This is in addition to the currently idled
Port St. Joe, Florida, containerboard mill owned by Florida Coast Paper Company
LLC, which is 50 percent owned by Stone Container Corporation and has an annual
capacity of about 500,000 tons.
Smurfit-Stone expects to take a one-time charge in the range of $300-350
million during the fourth quarter in connection with the restructuring and other
actions associated with the company's recently completed merger. The charge will
include the write-down of the value of idled mill capacity, the closure costs
and write-down of other manufacturing operations, as well as severance costs
associated with reducing manufacturing employment and eliminating overhead
costs. The actual amounts to be included in the charge will be finalized prior
to year-end. The company anticipates that the restructuring will reduce
Smurfit-Stone's employment by up to 10 percent of the 36,000 total.
Facilities that will be affected by the restructuring plan will be
identified by management and announced in the near future.
"The restructuring of our operations is the first step in our strategic
plan to create the leading paper-based packaging company," according to Dr.
Michael W. J. Smurfit, chairman of Smurfit-Stone. "Smurfit-Stone's strategy is
to run our integrated container business more profitably with a smaller, more
efficient mill system. In addition, we plan to reduce our open-market position
and focus our marketing on the most profitable containerboard segments."
"The restructuring is a difficult action to take, considering the impact it
will have on jobs and on communities. However, it contributes significantly to
achieving our synergy goals, increasing our competitive edge, and building
shareholder value," said Roger W. Stone, president and chief executive officer.
As a result of the restructuring, Smurfit-Stone's annual U.S.
containerboard production capacity will be reduced from approximately 6.8
million tons to about 5.7 million tons. This action will increase to about 90
percent the portion of the company's U.S. containerboard output consumed at
Smurfit-Stone's own plants and will significantly reduce SSCC's exposure to the
most volatile open markets for containerboard.
Synergies, Divestitures
Jefferson Smurfit Corporation and Stone Container Corporation closed their
merger transaction on November 18 to become Smurfit-Stone Container. The merger
and restructuring are expected to generate annual cost savings of at least $350
million, prior to any planned asset divestitures. The majority of these cost
savings are expected to be achieved within the next 24 months.
The company also expects to substantially reduce its debt through
divestiture of non-core assets. Prior to the merger, Stone Container sold its
Snowflake, Arizona, newsprint operations to Abitibi-Consolidated for
approximately $250 million, proceeds of which have been used to retire debt.
Smurfit-Stone is the industry's leading manufacturer of paper-based
packaging, including corrugated containers, folding cartons, industrial bags and
other consumer and industrial packaging. It is the largest producer of
containerboard, boxboard and kraft paper, and the largest collector, marketer,
and exporter of recovered fiber. The company operates more than 300 facilities
worldwide.
# # #
This document contains certain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, about
Smurfit-Stone Container Corporation. Although the company believes that, in
making any such statements, its expectations are based on reasonable
assumptions, any such statement may be influenced by factors that could cause
actual outcomes and results to be materially different from those projected.
When used in this document, the words "anticipates," "believes," "expects,"
"intends," and similar expressions as they relate to Smurfit-Stone Container
Corporation or its management are intended to identify such forward-looking
statements. These forward-looking statements are subject to numerous risks and
uncertainties. Important factors that could cause actual results to differ
materially from those in forward-looking statements, certain of which are beyond
the control of Smurfit-Stone Container Corporation include: the impact of
general economic conditions in the U.S. and Canada and in other countries in
which the companies and their subsidiaries currently do business (including
Asia, Europe and Latin and South America); industry conditions, including
competition and product and raw material prices; fluctuations in exchange rates
and currency values; capital expenditure requirements; legislative or regulatory
requirements, particularly concerning environmental matters; interest rates;
access to capital markets; the timing of and value received in connection with
asset divestitures and other corporate transactions; and obtaining required
approvals, if any, of debt holders. The actual results, performance or
achievement by Smurfit-Stone Container Corporation could differ materially from
those expressed in, or implied by, these forward-looking statements and,
accordingly, no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do so,
what impact they will have on the results of operations and financial condition
of Smurfit-Stone Container Corporation.
Smurfit-Stone Container Corporation
150 North Michigan Avenue, Chicago, Illinois 60601
phone 312-580-4637 fax 312-580-3486
8182 Maryland Avenue, Clayton, Missouri 63105
phone 314-746-1254 fax 314-746-1347
EXHIBIT 99.2
[GRAPHIC OMITTED] Smurfit-Stone
For Immediate Release Contact: Timothy McKenna (investors)
312-580-4637, 314-746-1254
Tom Lange (media)
314-746-1236
SMURFIT-STONE CONTAINER CORPORATION ANNOUNCES
DETAILS OF ITS PLANNED CONTAINERBOARD MILL
CAPACITY REDUCTION OF 1.1 MILLION TONS;
MARKET PULP REDUCTION TO EXCEED 300,000 TONS
CHICAGO, December 1, 1998 - Smurfit-Stone Container Corporation
(NASDAQ: SSCC) today announced its intention to discontinue containerboard mill
and market pulp manufacturing operations at four U.S. mills and one Canadian
mill. The facilities annually produce approximately 1.1 million tons of
containerboard and 325,000 tons of market pulp.
The announcement provides the details of a major restructuring first
announced on November 24.
The U.S. mill locations are Alton, Illinois; Circleville, Ohio;
Jacksonville, Florida; and Port Wentworth, Georgia. Market pulp operations will
be discontinued at the Canadian mill located in Bathurst, New Brunswick, and at
the Port Wentworth facility. Bathurst will continue to manufacture
containerboard. Smurfit-Stone has two mills in Jacksonville - one recycled and
one kraft. The company plans to continue operations at its recycled mill.
As previously announced, Smurfit-Stone expects its recently completed
merger and the restructuring to generate annual cost savings of approximately
$350 million, prior to any asset divestitures. The majority of those cost
savings are expected to be achieved within the next 24 months.
"The shutdown of less efficient operations is a key part of
Smurfit-Stone's overall strategy to achieve synergies," said Roger Stone,
Smurfit-Stone president and chief executive officer. "Unfortunately, that leads
to some very difficult decisions in terms of employee reduction. However, the
long-term profitability of our company, as well as the creation of additional
value, is dependent upon this restructuring process."
Following the restructuring, SSCC will reduce its annual U.S.
linerboard capacity at wholly owned mills from approximately 4.8 million tons to
4.1 million tons and its U.S. medium capacity from 1.7 million tons to 1.3
million tons. The company will have Canadian linerboard capacity of
approximately 245,000 tons and medium capacity of about 225,000 tons. In
addition, Smurfit-Stone will reduce its U.S. market pulp capacity from 600,000
tons to 340,000 tons. Its Canadian market pulp capacity will be reduced from
over 300,000 tons to about 240,000 tons of specialty pulp.
Numerous factors were taken into consideration in making the decision,
including near- and long-term capital requirements, operating margins, cash
flow, strategic fit, closure costs and potential costs of re-opening. SSCC's
intention is to discontinue these operations for an indefinite period.
All four of the affected containerboard mills are currently taking
market-related downtime. Alton and Circleville began taking downtime November
23; Jacksonville began taking downtime October 29; and Port Wentworth October 4.
Approximately 1,400 employees will be affected at the five mill
locations. In addition, the company will eliminate approximately 260 staff
positions as part of the restructuring.
As previously announced, Smurfit-Stone expects to take a one-time
charge in the range of $300-$350 million during the fourth quarter in connection
with the restructuring and other actions associated with the company's recently
completed merger. The charge will include the write-down of the value of the
idled mill capacity, the closure costs and write-down of other manufacturing
operations, as well as severance costs associated with reducing manufacturing
employment and eliminating overhead costs. The actual amounts to be included in
the charge will be finalized prior to year-end. Also as previously announced,
the company anticipates that the restructuring will reduce Smurfit-Stone's
employment by up to 10 percent of the 36,000 total.
Smurfit-Stone is the industry's leading manufacturer of paper-based
packaging, including corrugated containers, folding cartons, industrial bags and
other consumer and industrial packaging. It is the largest producer of
containerboard, boxboard and kraft paper, and the largest collector, marketer,
and exporter of recovered fiber. The company operates more than 300 facilities
worldwide.
# # #
This document contains certain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, about
Smurfit-Stone Container Corporation. Although the company believes that, in
making any such statements, its expectations are based on reasonable
assumptions, any such statement may be influenced by factors that could cause
actual outcomes and results to be materially different from those projected.
When used in this document, the words "anticipates," "believes," "expects,"
"intends," and similar expressions as they relate to Smurfit-Stone Container
Corporation or its management are intended to identify such forward-looking
statements. These forward-looking statements are subject to numerous risks and
uncertainties. Important factors that could cause actual results to differ
materially from those in forward-looking statements, certain of which are beyond
the control of Smurfit-Stone Container Corporation include: the impact of
general economic conditions in the U.S. and Canada and in other countries in
which the companies and their subsidiaries currently do business (including
Asia, Europe and Latin and South America); industry conditions, including
competition and product and raw material prices; fluctuations in exchange rates
and currency values; capital expenditure requirements; legislative or regulatory
requirements, particularly concerning environmental matters; interest rates;
access to capital markets; and the timing of and value received in connection
with asset divestitures and other corporate transactions. The actual results,
performance or achievement by Smurfit-Stone Container Corporation could differ
materially from those expressed in, or implied by, these forward-looking
statements and, accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or occur, or if any
of them do so, what impact they will have on the results of operations and
financial condition of Smurfit-Stone Container Corporation.
Smurfit-Stone Container Corporation
150 North Michigan Avenue, Chicago, Illinois 60601
phone 312-580-4637 fax 312-580-3486
8182 Maryland Avenue, Clayton, Missouri 63105
phone 314-746-1254 fax 314-746-1347
