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Exhibit 99.3
STONE CONTAINER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated statements of
operations and condensed consolidated balance sheet of Stone were prepared to
illustrate the estimated effects of the Transaction, including the financing
plan, as if those transactions had occurred for the statements of operations as
of the beginning of the periods presented and for the balance sheet presentation
as of March 31, 2000.
The pro forma adjustments are based upon available information and upon
certain assumptions that Stone and St. Laurent believe are reasonable. The
unaudited pro forma condensed consolidated financial statements and accompanying
notes should be read in conjunction with the historical financial statements of
Stone and St. Laurent, and the related notes thereto. The historical condensed
consolidated statements of operations and condensed consolidated balance sheets
of St. Laurent are presented in accordance with accounting principles generally
accepted in the United States.
The unaudited pro forma condensed consolidated financial statements are
provided for informational purposes only in response to Securities and Exchange
Commission ("SEC") requirements and do not purport to represent what Stone's
financial position or results of operations would actually have been if the
Transaction had in fact occurred at such dates or to project Stone's financial
position or results of operations for any future date or period.
For financial accounting purposes, the acquisition of St. Laurent will be
accounted for using the purchase method of accounting. Accordingly, St.
Laurent's assets and liabilities have been adjusted, on a preliminary basis, to
reflect their fair values in the unaudited pro forma condensed consolidated
balance sheet as of March 31, 2000. The estimated effects resulting from these
adjustments have been reflected in the unaudited pro forma condensed
consolidated statements of operations. The allocation of the estimated purchase
price and the estimated transaction fees and expenses included in the unaudited
pro forma condensed consolidated financial statements are preliminary; final
amounts may differ from those set forth herein and such differences may be
material.
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STONE CONTAINER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 2000
----------------------------------------------------------------
Stone Container St. Laurent Pro Forma Stone Container
Historical Historical Adjustments Pro Forma
--------------- ----------- ----------- ---------------
(in millions)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 19 $ 25 $ (622) (a) $ 44
622 (c)
Receivables ........................................ 336 130 (2) (b) 464
Inventories ........................................ 503 111 614
Refundable income taxes ............................ 5 5
Deferred income taxes .............................. 88 88
Prepaid expenses and other current assets .......... 35 7 42
------ ------ ------ ------
Total current assets .......................... 981 278 (2) 1,257
Property, plant and equipment, net ...................... 3,054 813 550 (a) 4,417
Timberland, net ......................................... 22 10 32
Goodwill, net ........................................... 3,102 40 96 (a) 3,238
Investment in non-consolidated affiliates ............... 140 140
Other assets ............................................ 206 36 (6) (a) 244
8 (c)
------ ------ ------ ------
$7,505 $1,177 $ 646 $9,328
====== ====== ====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt ............... $ 31 $ 48 $ (48) (c) $ 31
Accounts payable ................................... 314 105 (2) (b) 417
Other accrued liabilities .......................... 351 24 (a) 351
(24) (c)
------ ------ ------ ------
Total current liabilities ..................... 696 153 (50) 799
Long-term debt, less current maturities ................. 3,196 337 (323) (c) 4,235
1,025 (c)
Other long-term liabilities ............................. 626 46 11 (a) 683
Deferred income taxes ................................... 462 22 209 (a) 693
Stockholder's equity:
Preferred stock .................................... 78 78
Common stock and additional paid-in capital......... 2,545 581 (581) (a) 2,938
393 (a)
Retained earnings (deficit) ........................ (85) 38 (38) (a) (85)
Accumulated other comprehensive income (loss)....... (13) (13)
------ ------ ------ ------
Total stockholder's equity .................... 2,525 619 (226) 2,918
------ ------ ------ ------
$7,505 $1,177 $ 646 $9,328
====== ====== ====== ======
Common stock shares outstanding .................... 110 50 (50) (a)
25 (a) 135
</TABLE>
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
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STONE CONTAINER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
Stone Container St. Laurent Pro Forma Stone Container
Historical Historical Adjustments Pro Forma
--------------- ----------- ----------- ---------------
(in millions)
<S> <C> <C> <C> <C>
Three Months Ended March 31, 2000:
Net sales......................................... $ 1,143 $ 282 $(10) (b) $ 1,415
Cost of goods sold................................ 896 233 4 (a) 1,123
(10) (b)
Selling and administrative expenses............... 104 24 128
Restructuring charge.............................. 6 6
------ ---- ---- -------
Income from operations............................ 137 25 (4) 158
Interest expense, net............................. (81) (8) (18) (c) (107)
Equity income from affiliates..................... 4 4
Other income (loss) - net......................... (3) (3)
------ ---- ---- -------
Income from continuing operations before
income taxes and extraordinary item.............. 60 14 (22) 52
Benefit from (provision for) income taxes......... (32) (6) 8 (a) (30)
------ ---- ---- -------
Income from continuing operations before
extraordinary item............................... $ 28 $ 8 $(14) $ 22
====== ==== ==== =======
</TABLE>
See accompanying notes to the Unaudited Pro forma condensed Consolidated
Financial Statements.
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STONE CONTAINER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Stone Container St. Laurent Pro Forma Stone Container
Historical Historical Adjustments Pro Forma
--------------- ----------- ----------- ---------------
(in millions)
<S> <C> <C> <C> <C>
Year Ended December 31, 1999:
Net sales..................................... $ 4,341 $ 916 $ (53) (b) $ 5,204
Cost of goods sold............................ 3,755 778 18 (a) 4,498
(53) (b)
Selling and administrative expenses........... 389 64 453
------- ----- ----- -------
Income from operations........................ 197 74 (18) 253
Interest expense, net......................... (340) (29) (73) (c) (442)
Equity income from affiliates................. 12 12
Other income - net............................ 56 14 70
------- ----- ----- -------
Income (loss) from continuing operations
before income taxes and extraordinary item.. (75) 59 (91) (107)
Benefit from (provision for) income taxes..... (22) 34 (a) 12
------- ----- ----- -------
Income (loss) from continuing operations
before extraordinary item................... $ (75) $ 37 $ (57) $ (95)
======= ===== ===== =======
</TABLE>
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
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STONE CONTAINER CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) To record:
Balance Sheet
-- The SSCC contribution of 25.3 million of its shares to Stone in exchange
for 25.3 million shares of Stone common stock;
-- The exchange of 50.7 million shares of St. Laurent common stock including
.9 shares from the exercise of stock options for 25.3 million shares of
Smurfit-Stone common stock at a fair value of $393 million, based upon an
average market price of $15.51 for Smurfit-Stone shares five days before
and after February 23, 2000, the date of the Pre-Merger Agreement;
-- The cash payment of $622 million for 49.8 million shares of St.
Laurent common stock at $12.50 per share to the existing shareholders;
-- The cash payment of $11 million or $12.50 per share for .9 million shares
of St. Laurent common stock issued upon exercise of stock options in
conjunction with the Transaction, less $11 million received upon exercise
from optionees;
-- Acquired assets and liabilities, at fair value;
-- Excess purchase price as goodwill; and
-- Estimated Stone merger costs of $24 million directly attributable to the
cost of acquisition representing primarily financial advisor, banking and
legal fees.
Statements of Operations
-- Depreciation of property, plant and equipment over an average life of
seventeen years; and
-- Amortization of goodwill over a forty year period.
Tax effects are recorded assuming a 39% tax rate.
The allocation of fair values to assets and liabilities, including
intangibles and property, plant and equipment was performed on a
preliminary basis. Based upon additional analyses and evaluations to be
performed, the final amounts to be allocated to assets and liabilities may
differ from those amounts included herein and such differences may be
material. In particular the amount allocated to property, plant and
equipment will change upon completion of certain valuations and other
studies. A $100 million increase in property, plant and equipment and a
corresponding decrease in goodwill would increase the pro forma after-tax
loss by $1 million for the year ended December 31, 1999 and decrease the
pro forma after-tax income by $.3 million for the three months ended March
31, 2000.
(b) To eliminate the effects of sales transactions between Stone and
St. Laurent.
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STONE CONTAINER CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(c) To record the effects of additional borrowings under the Stone senior
secured credit facilities and repayment of St. Laurent debt:
<TABLE>
<CAPTION>
Principal
Balance sheet March 31, 2000
------------- --------------
<S> <C>
New borrowings
U.S. term facility (variable rate of 10%) due 2006 ................... $ 450
Canadian term facility (variable rate of 10%) due 2006................ 500
Stone revolving credit facility (variable rate of 10%) due 2005....... 75
------
Total new borrowings............................................. $1,025
======
</TABLE>
The interest rate on the term facilities is based on the assumed LIBOR rate
of 6.50%. A one-eighth of one percent change in the interest rate would
increase or decrease interest expense by $1 million for the year ended
December 31, 1999 and by $.3 million for the three months ended March 31,
2000.
<TABLE>
<S> <C>
Repayments of St. Laurent debt
Secured term loan (7.68% weighted average variable rate)
payable in installments through 2005............................. $ 219
Senior secured notes (9.01% weighted average variable rate)
payable in installments though 2008.............................. 125
Other debt............................................................ 27
------
Total St. Laurent debt to be repaid.............................. 371
------
Net increase to total debt............................................ $ 654
======
Additional net borrowings will be used as follows
Cash consideration to St. Laurent shareholders at $12.50 per share.... $ 622
Deferred debt issuance costs.......................................... 8
Advisory and banking fees............................................. 24
------
Total uses of additional borrowings.............................. $ 654
======
</TABLE>
<TABLE>
<CAPTION>
Year Ended Three Months Ended
Statements of operations December 31, 1999 March 31, 2000
------------------------ ----------------- ------------------
<S> <C> <C>
Interest expense on $1,025 million new borrowings
used to finance the acquisition....................... $ 103 $ 26
Amortization of new deferred debt issuance costs........... 1
Less interest expense on extinguished debt................. (31) (8)
----- ----
Net interest expense increase.............................. $ 73 $ 18
===== ====
</TABLE>
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