CREVE COEUR, Mo. and CHICAGO, Aug. 3 /CNW/ -- Company completes
reorganization and positions itself for improved performance in the
second half of 2010 Smurfit-Stone Container Corporation (NYSE:
SSCC) today reported net income attributable to common stockholders
of $1.41 billion, or $5.41 per diluted share, for the second
quarter of 2010, compared with a net loss of ($91) million, or
($0.35) per diluted share in the first quarter of 2010, and net
income of $155 million, or $0.60 per diluted share, for the second
quarter of 2009. Smurfit-Stone's second-quarter 2010 adjusted net
income was $2 million, or $0.01 per diluted share, compared with an
adjusted net loss of ($59) million, or ($0.23) per diluted share,
in the first quarter of this year, and an adjusted net loss of
($21) million, or ($0.08) per diluted share, in the second quarter
of 2009. The most significant adjustment in the second quarter of
2010 was exclusion of $1.42 billion of income, including tax
benefits, related to the Company's emergence from bankruptcy
reorganization proceedings in the U.S. and Canada. Diluted Earnings
Per Share Attributable to Common Stockholders Second First Second
Quarter Quarter Quarter 2010 2010 2009 ---- ---- ---- Net Income
(loss) $5.41 ($0.35) $0.60 Adjustments ($5.40) $0.12 ($0.68)
Adjusted Net Income (loss) $0.01 ($0.23) ($0.08) ===== ======
====== The Company reported an operating loss of ($6) million for
the three months ended June 30, 2010, compared to an operating loss
of ($31) million in the first quarter of 2010, and operating income
of $271 million in the second quarter of 2009. The second quarter
2010 operating loss was primarily driven by a concentration of
planned maintenance-related downtime. Second quarter 2009 operating
income was significantly impacted by the income related to the
alternative fuel tax credits that were received in 2009. Patrick J.
Moore, Smurfit-Stone's Chief Executive Officer, commented, "We
believe our successful financial restructuring positions us for
long-term profitable growth. We will continue to focus on what
matters - serving our customers, improving margins and delivering
shareholder value. Looking ahead, we are confident that continued
high operating rates, productivity improvements, higher average
prices, and low inventories combined with assumed stable demand
will drive significant earnings improvement in the second half of
the year." Adjusted EBITDA for the second quarter ended June 30,
2010, was $102 million compared with $46 million in the first
quarter of this year and $103 million in the second quarter a year
ago. The improvement in adjusted EBITDA from the first quarter
reflects the benefits of higher selling prices and volumes, offset
by significant maintenance-related downtime and related expenses.
Net sales for the second quarter of this year were $1.56 billion,
compared with $1.46 billion in this year's first quarter and $1.41
billion in the second quarter of 2009. The improvement in second
quarter 2010 net sales is primarily due to higher average selling
prices and corrugated container shipments during the period.
Second-Quarter 2010 Highlights -- The Company successfully emerged
from its financial reorganization on June 30 with a significant
reduction in leverage and a strong liquidity position. -- Operating
results improved significantly due to steady demand improvement,
higher capacity utilization, and improved selling prices. --
Continuing year-to-date productivity gains included a 5 percent
improvement in tons per operating day per facility in our
containerboard mills and a 3 percent improvement in average units
of production per machine hour in our converting facilities. -- The
Company closed three converting facilities. Year-to-Date Results
For the six months ended June 30, 2010, net income was $1.32
billion, or $5.07 per diluted share, compared with a net loss of
($62) million, or ($0.24) per diluted share, in the first half of
2009. Smurfit-Stone's first-half 2010 adjusted net loss was ($57)
million, or ($0.20) per diluted share, compared with an adjusted
net loss of ($56) million, or ($0.22) per diluted share, in the
first half of 2009. The Company reported an operating loss of ($37)
million for the six months ended June 30, 2010, compared with
operating income of $265 million in the first half of 2009, which
was primarily attributable to the alternative fuel tax credit
income. Other Financial Items -- As a result of emergence and fresh
start accounting, as of June 30, 2010, net property, plant and
equipment was fair valued at $4.41 billion, representing a write-up
of $1.43 billion, goodwill of $126 million was recorded, and
pension and postretirement benefit liabilities were adjusted to
$1.64 billion on the balance sheet. -- As of June 30, 2010,
Smurfit-Stone had net tax operating loss carryforwards (NOLs) for
U.S. federal income tax purposes of $722 million. As a result of
the NOL carryforwards and the tax benefit of projected pension
contributions described below, the Company estimates it will have
limited cash tax obligations in the U.S. for at least the next
several years. -- The Company's defined benefit pension plans in
the U.S. and Canada were underfunded at June 30, 2010, by
approximately $1.45 billion combined. The Company's current annual
funding requirements are estimated to be $77 million for 2010, and
$235 million in 2011, with contributions increasing to a range of
approximately $270 million to $300 million through 2014. -- Capital
expenditures for the first half of 2010 totaled $83 million. The
Company expects its capital expenditures for 2010 will be
approximately $200 million. Outlook Smurfit-Stone expects its
operating rates to remain at high levels throughout the remainder
of the year. Input costs, particularly fiber, energy and
transportation, have stabilized moving into the second half of the
year. The price increases announced in the first and second
quarters are expected to be substantially reflected in earnings
during the second half of this year. With the impact of the
reorganization now complete, the Company expects to be solidly
profitable in the third quarter and to achieve positive earnings
and free cash flow for the second half of 2010. As previously
announced, the Company's Chief Executive Officer, Patrick J. Moore,
will retire by early 2011. The Company's Board of Directors is
launching a confidential search for a chief executive officer. A
search is also currently underway for a chief financial officer.
Both searches are expected to be completed by the end of the year.
Conference Call and Webcast Smurfit-Stone will host a conference
call for analysts, institutional investors and shareholders on
Tuesday, Aug. 3, 2010, at 10 a.m. Eastern Time. To access the call,
participants should dial the number below approximately 10 minutes
before the start time. U.S. - (888) 679-8037 or International -
(617) 213-4849 Passcode: 20306220 The call will also be webcast in
a listen-only format with an accompanying slide presentation and
can be accessed at www.smurfit-stone.com. A replay of the
conference call will be available through Aug. 17, 2010. To access
the replay, dial (888) 286-8010 (U.S.) or (617) 801-6888
(International), and enter passcode 16228881. A replay of the
webcast will be available at www.smurfit-stone.com. Forward-Looking
Statements This press release contains statements relating to
future results, which are forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those projected as a
result of certain risks and uncertainties, including but not
limited to changes in general economic conditions, pricing
pressures in key product lines, seasonality, changes in input costs
including recycled fiber and energy costs, as well as other risks
and uncertainties described in the Company's Annual Report on Form
10-K for the year ended December 31, 2009, as updated from time to
time in the Company's Securities and Exchange Commission filings.
In this press release, certain non-U.S. GAAP financial information
is presented. A reconciliation of that information to U.S. GAAP
financial measures and additional disclosure regarding our use of
non-GAAP financial measures are included in the attached schedules.
The Company does not intend to review, revise or update any
particular forward-looking statements in light of future events.
About Smurfit-Stone Smurfit-Stone Container Corporation is one of
the industry's leading integrated containerboard and corrugated
packaging producers and one of the world's largest paper recyclers.
Smurfit-Stone generated revenue of $5.57 billion in 2009, has led
the industry in safety every year since 2001, and conducts its
business in compliance with the environmental, health, and safety
principles of the American Forest & Paper Association. The
company is a member of the Sustainable Forestry Initiative® .
(Financial statements follow) SMURFIT-STONE CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Predecessor
----------- Three Months Ended June 30, March 31, --------
--------- (In millions, except per share data) 2010 2009 2010
------------------------------------ ---- ---- ---- Net sales
$1,563 $1,407 $1,461 Costs and expenses Cost of goods sold 1,407
1,256 1,356 Selling and administrative expenses 143 146 151
Restructuring (income) expenses 19 11 (4) (Gain) loss on disposal
of assets (1) Other operating income (276) (11) ---- --- Operating
income (loss) (6) 271 (31) Other income (expense) Interest expense,
net (10) (74) (13) Debtor-in-possession debt issuance costs Loss on
early extinguishment of debt Foreign currency exchange gains
(losses) 9 (2) (6) Other, net 2 6 2 --- --- --- Income (loss)
before reorganization items and income taxes (5) 201 (48)
Reorganization items income (expense), net 1,219 (39) (41) -----
--- --- Income (loss) before income taxes 1,214 162 (89) (Provision
for) benefit from income taxes 199 (4) --- --- Net income (loss)
1,413 158 (89) Preferred stock dividends and accretion (2) (3) (2)
--- --- --- Net income (loss) attributable to common stockholders
$1,411 $155 $(91) ------ ---- ---- Basic earnings per common share
Net income (loss) attributable to common stockholders $5.47 $0.60
$(0.35) ----- ----- ------ Weighted average shares outstanding 258
257 258 --- --- --- Diluted earnings per common share Net income
(loss) attributable to common stockholders $5.41 $0.60 $(0.35)
----- ----- ------ Weighted average shares outstanding 261 257 258
----------------------------------- --- --- --- Predecessor
----------- Six Months Ended June 30, -------- (In millions, except
per share data) 2010 2009 ------------------------------------ ----
---- Net sales $3,024 $2,778 Costs and expenses Cost of goods sold
2,763 2,473 Selling and administrative expenses 294 291
Restructuring (income) expenses 15 24 (Gain) loss on disposal of
assets 1 Other operating income (11) (276) --- ---- Operating
income (loss) (37) 265 Other income (expense) Interest expense, net
(23) (145) Debtor-in-possession debt issuance costs (63) Loss on
early extinguishment of debt (20) Foreign currency exchange gains
(losses) 3 1 Other, net 4 4 --- --- Income (loss) before
reorganization items and income taxes (53) 42 Reorganization items
income (expense), net 1,178 (93) ----- --- Income (loss) before
income taxes 1,125 (51) (Provision for) benefit from income taxes
199 (5) --- --- Net income (loss) 1,324 (56) Preferred stock
dividends and accretion (4) (6) --- --- Net income (loss)
attributable to common stockholders $1,320 $(62) ------ ---- Basic
earnings per common share Net income (loss) attributable to common
stockholders $5.12 $(0.24) ----- ------ Weighted average shares
outstanding 258 257 --- --- Diluted earnings per common share Net
income (loss) attributable to common stockholders $5.07 $(0.24)
----- ------ Weighted average shares outstanding 261 257
----------------------------------- --- --- SMURFIT-STONE CONTAINER
CORPORATION CONSOLIDATED BALANCE SHEETS Successor Predecessor June
30, December 31, (In millions, except share data) 2010 2009
-------------------------------- ---- ---- Assets (Unaudited)
Current assets Cash and cash equivalents $340 $704 Restricted cash
7 9 Receivables 750 674 Inventories 496 452 Refundable income taxes
31 23 Prepaid expenses and other current assets 47 43 --- --- Total
current assets 1,671 1,905 Net property, plant and equipment 4,405
3,081 Deferred income taxes 23 Goodwill 126 Intangible assets, net
77 Other assets 121 68 --- --- $6,400 $5,077 ------ ------
Liabilities and Stockholders' Equity (Deficit) Liabilities not
subject to compromise Current liabilities Current maturities of
long-term debt $18 $1,354 Accounts payable 515 387 Accrued
compensation and payroll taxes 176 145 Interest payable 5 12 Other
current liabilities 81 164 --- --- Total current liabilities 795
2,062 Long-term debt, less current maturities 1,188 Pension and
postretirement benefits, net of current portion 1,639 Other
long-term liabilities 140 117 Deferred income taxes 286 --- Total
liabilities not subject to compromise 4,048 2,179 Liabilities
subject to compromise 4,272 ----- Total liabilities 4,048 6,451
Stockholders' equity Successor preferred stock, par value $.001 per
share; 10,000,000 shares authorized; none issued and outstanding in
2010 Successor common stock, par value $.001 per share; 150,000,000
shares authorized; 90,702,816 issued and outstanding in 2010
Predecessor preferred stock, aggregate liquidation preference of
$126; 25,000,000 shares authorized; 4,599,300 issued and
outstanding in 2009 104 Predecessor common stock, par value $.01
per share; 400,000,000 shares authorized; 257,482,839 issued and
outstanding in 2009 3 Additional paid-in capital 2,352 4,081
Retained earnings (deficit) (4,883) Accumulated other comprehensive
income (loss) (679) ---- Total stockholders' equity (deficit) 2,352
(1,374) ----- ------ $6,400 $5,077 ------ ------ SMURFIT-STONE
CONTAINER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Predecessor ----------- 2010 ---- Pre Six Months Ended
June 30, (In millions) Emergence Adjustments
----------------------------- --------- ----------- Cash flows from
operating activities Net income (loss) $(198) $1,522 Adjustments to
reconcile net income (loss) to net cash provided by (used for)
operating activities Loss on early extinguishment of debt
Depreciation, depletion and amortization 168 Debtor-in-possession
debt issuance costs Amortization of deferred debt issuance costs
Deferred income taxes (1) (200) Pension and postretirement benefits
50 Loss on disposal of assets Non-cash restructuring expense 7
Non-cash stock-based compensation 3 Non-cash foreign currency
exchange gains (3) Gain due to plan effects (580) Gain due to fresh
start accounting adjustments (742) Payment to settle non-debt
liabilities subject to compromise (202) Non-cash reorganization
items 101 Change in restricted cash for utility deposits 2 Change
in operating assets and liabilities, net of effects from
acquisitions and dispositions Receivables and retained interest in
receivables sold (129) Receivable for alternative energy tax
credits 48 Inventories 1 Prepaid expenses and other current assets
1 Accounts payable and accrued liabilities 57 Interest payable 2
Other, net 8 Net cash provided by (used for) operating activities
117 (202) --- ---- Cash flows from investing activities
Expenditures for property, plant and equipment (83) Proceeds from
property disposals 10 Advances to affiliates, net Net cash used for
investing activities (73) --- Cash flows from financing activities
Proceeds from exit credit facility 1,200 Original issue discount
(12) Proceeds from debtor-in- possession financing Net borrowings
(repayments) of long-term debt (1) (1,346) Repurchase of
receivables Debtor-in-possession debt issuance costs Debt issuance
costs on exit credit facility (15) (32) Change in restricted cash
for collateralizing outstanding letters of credit (11) 11 --- ---
Net cash provided by (used for) financing activities (27) (179) ---
---- Increase (decrease) in cash and cash equivalents 17 (381) Cash
and cash equivalents Beginning of period 704 --- End of period $721
$(381) ------------- ---- ----- Predecessor ----------- 2010 ----
Post Six Months Ended June 30, (In millions) Emergence 2009
------------------------- --------- ---- Cash flows from operating
activities Net income (loss) $1,324 $(56) Adjustments to reconcile
net income (loss) to net cash provided by (used for) operating
activities Loss on early extinguishment of debt 20 Depreciation,
depletion and amortization 168 182 Debtor-in-possession debt
issuance costs 63 Amortization of deferred debt issuance costs 3
Deferred income taxes (201) 3 Pension and postretirement benefits
50 20 Loss on disposal of assets 1 Non-cash restructuring expense 7
4 Non-cash stock-based compensation 3 4 Non-cash foreign currency
exchange gains (3) (1) Gain due to plan effects (580) Gain due to
fresh start accounting adjustments (742) Payment to settle non-debt
liabilities subject to compromise (202) Non-cash reorganization
items 101 61 Change in restricted cash for utility deposits 2 (13)
Change in operating assets and liabilities, net of effects from
acquisitions and dispositions Receivables and retained interest in
receivables sold (129) (38) Receivable for alternative energy tax
credits 48 (89) Inventories 1 19 Prepaid expenses and other current
assets 1 (5) Accounts payable and accrued liabilities 57 204
Interest payable 2 77 Other, net 8 33 Net cash provided by (used
for) operating activities (85) 492 --- --- Cash flows from
investing activities Expenditures for property, plant and equipment
(83) (69) Proceeds from property disposals 10 4 Advances to
affiliates, net (15) Net cash used for investing activities (73)
(80) --- --- Cash flows from financing activities Proceeds from
exit credit facility 1,200 Original issue discount (12) Proceeds
from debtor-in- possession financing 440 Net borrowings
(repayments) of long-term debt (1,347) 60 Repurchase of receivables
(385) Debtor-in-possession debt issuance costs (63) Debt issuance
costs on exit credit facility (47) Change in restricted cash for
collateralizing outstanding letters of credit Net cash provided by
(used for) financing activities (206) 52 ---- --- Increase
(decrease) in cash and cash equivalents (364) 464 Cash and cash
equivalents Beginning of period 704 126 --- --- End of period $340
$590 ------------- ---- --- SMURFIT-STONE CONTAINER CORPORATION
REORGANIZED CONSOLIDATED BALANCE SHEET June 30, 2010 -------------
(In millions) Predecessor Plan Effect ------------- -----------
Adjustments ----------- Assets Current assets Cash and cash
equivalents $721 $(381) Restricted cash 18 (11) Receivables 750
Inventories 449 Refundable income taxes 24 7 Prepaid expenses and
other current assets 42 --- Total current assets 2,004 (385) Net
property, plant and equipment 2,979 Deferred income taxes 22 148
Goodwill Intangible assets, net Other assets 75 31 --- --- $5,080
$(206) ------ ----- Liabilities and Stockholders' Equity (Deficit)
Liabilities not subject to compromise Current liabilities Current
maturities of long-term debt $1,352 $(1,334) Accounts payable 488
27 Accrued compensation and payroll taxes 139 34 Interest payable
12 (7) Other current liabilities 141 (59) --- --- Total current
liabilities 2,132 (1,339) Long-term debt, less current maturities
1,176 Pension and postretirement benefits, net of current portion
1,179 Other long-term liabilities 116 Deferred income taxes Total
liabilities not subject to compromise 2,248 1,016 Liabilities
subject to compromise 4,354 (4,354) ----- ------ Total liabilities
6,602 (3,338) Stockholders' equity Preferred stock successor Common
stock successor Preferred stock predecessor 104 (104) Common stock
predecessor 3 (3) Additional paid-in capital 4,084 (1,732) Retained
earnings (deficit) (5,081) 4,971 Accumulated other comprehensive
income (loss) (632) ---- Total stockholders' equity (deficit)
(1,522) 3,132 ------ ----- $5,080 $(206) ------ ----- June 30, 2010
------------- (In millions) Fresh Start Successor -------------
Adjustments --------- ----------- Assets Current assets Cash and
cash equivalents $ $340 Restricted cash 7 Receivables 750
Inventories 47 496 Refundable income taxes 31 Prepaid expenses and
other current assets 5 47 --- --- Total current assets 52 1,671 Net
property, plant and equipment 1,426 4,405 Deferred income taxes
(170) Goodwill 126 126 Intangible assets, net 77 77 Other assets 15
121 --- --- $1,526 $6,400 ------ ------ Liabilities and
Stockholders' Equity (Deficit) Liabilities not subject to
compromise Current liabilities Current maturities of long-term debt
$ $18 Accounts payable 515 Accrued compensation and payroll taxes 3
176 Interest payable 5 Other current liabilities (1) 81 --- ---
Total current liabilities 2 795 Long-term debt, less current
maturities 12 1,188 Pension and postretirement benefits, net of
current portion 460 1,639 Other long-term liabilities 24 140
Deferred income taxes 286 286 --- --- Total liabilities not subject
to compromise 784 4,048 Liabilities subject to compromise Total
liabilities 784 4,048 Stockholders' equity Preferred stock
successor Common stock successor Preferred stock predecessor Common
stock predecessor Additional paid-in capital 2,352 Retained
earnings (deficit) 110 Accumulated other comprehensive income
(loss) 632 --- Total stockholders' equity (deficit) 742 2,352 ---
----- $1,526 $6,400 ------ ------ SMURFIT-STONE CONTAINER
CORPORATION ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE (In
Millions, Except Per Share Data) (Unaudited) 2Q 10 2Q 09 1Q 10 1H
10 1H 09 ----- ----- ----- ----- ----- Net income (loss)
attributable to common stockholders (GAAP) $1,411 $155 $(91) $1,320
$(62) Reorganization items (income) expense, net of income taxes
(1,419) 39 41 (1,378) 93 Debtor-in-possession financing costs - - -
- 63 Alternative fuel mixture tax credits - (276) (11) (11) (276)
Loss on early extinguishment of debt - - - - 20 Non-cash foreign
currency exchange (gains)/losses (9) 2 6 (3) (1) Interest on
unsecured debt - 48 - - 83 Restructuring (income) charges 19 11 (4)
15 24 --- --- --- --- --- Adjusted net income (loss) attributable
to common stockholders (Note 1) $2 $(21) $(59) $(57) $(56) --- ----
---- ---- ---- 2Q 10 2Q 09 1Q 10 1H 10 1H 09 ----- ----- -----
----- ----- Net income (loss) per diluted share attributable to
common stockholders (GAAP) $5.41 $0.60 $(0.35) $5.07 $(0.24)
Reorganization items (income) expense, net of income taxes (5.44)
0.15 0.16 (5.28) 0.36 Debtor-in-possession financing costs - - - -
0.24 Alternative fuel mixture tax credits - (1.07) (0.04) (0.04)
(1.07) Loss on early extinguishment of debt - - - - 0.08 Non-cash
foreign currency exchange (gains)/losses (0.03) 0.01 0.02 (0.01) -
Interest on unsecured debt - 0.19 - - 0.32 Restructuring (income)
charges 0.07 0.04 (0.02) 0.06 0.09 ---- ---- ----- ---- ----
Adjusted net income (loss) per diluted share attributable to common
stockholders (Note 1) $0.01 $(0.08) $(0.23) $(0.20) $(0.22) -----
------ ------ ------ ------ Note 1: Exclusive of reorganization
items (income) expense, debtor- in-possession financing costs,
alternative fuel mixture tax credits, loss on early extinguishment
of debt, non-cash foreign currency (gains) losses, accrued but
unpaid interest on unsecured debt and restructuring (income)
charges. Adjusted net income (loss) attributable to common
stockholders and adjusted net income (loss) per diluted share
attributable to common stockholders are non-GAAP financial
measures. See disclosure regarding the use of non-GAAP financial
measures following these financial statements. Diluted earnings per
common share computations for the three and six months ended June
30, 2010 were adjusted to reflect the assumed conversion of
preferred stock into common stock because the effect was dilutive.
SMURFIT-STONE CONTAINER CORPORATION EBITDA, As Defined Below (In
millions) (Unaudited) 2Q 10 1Q 10 2Q 09 ----- ----- ----- Net Sales
$1,563 $1,461 $1,407 Net income (loss) $1,413 $(89) $158 (Benefit
from) provision for income taxes (199) - 4 Interest expense, net.
10 13 74 Depreciation, depletion and amortization 83 85 92 --- ---
--- EBITDA 1,307 9 328 Reorganization items (income) expense
(1,219) 41 39 Restructuring (income) charges 19 (4) 11 Alternative
fuel mixture tax credits - (11) (276) Non-cash foreign currency
exchange (gains) losses (9) 6 2 Other 4 5 (1) Adjusted EBITDA $102
$46 $103 ---- --- ---- Adjusted EBITDA Margin 6.5% 3.1% 7.3% ---
--- --- Other Financial Information: ----------------------------
Capital Expenditures $49 $34 $30 Pension Expense 34 31 30 Pension
Contribution 12 2 - Cash Taxes 1 2 - Change in Working Capital (2)
(18) 62 "EBITDA" is defined as net income (loss) before (benefit
from) provision for income taxes, interest expense, net and
depreciation, depletion and amortization. "Adjusted EBITDA" is
defined as EBITDA adjusted as indicated above. EBITDA and Adjusted
EBITDA are non-GAAP financial measures. See disclosure regarding
the use of non-GAAP financial measures following these financial
statements. SMURFIT-STONE CONTAINER CORPORATION STATISTICAL
INFORMATION 2010 2009 ---- ---- 1st 2nd 1st 2nd Qtr Qtr June YTD
Qtr Qtr June YTD ---- ---- -------- ---- ---- --------
Containerboard System North American Mill Operating Rates
(Containerboard Only) 100.0% 97.1% 98.9% 82.4% 85.0% 83.7% North
American Containerboard Production -M Tons 1,585 1,545 3,130 1,435
1,497 2,932 Sequential Avg. Domestic Linerboard Price Change 6.3%
13.2% N/A -7.4% -9.8% N/A Pulp Production -M Tons 62 72 134 66 76
142 SBS/Bleached Board Production -M Tons 35 31 66 33 32 65 Kraft
Paper Production -M Tons 29 26 55 19 28 47 Total Maintenance
Downtime Tons -M Tons 20 76 96 46 50 96 Corrugated Containers North
American Shipments -BSF 16.4 17.3 33.7 16.6 16.7 33.3 Per Day North
American Shipments - MMSF 260.9 273.7 267.3 267.8 265.7 266.7
Sequential Avg. Corrugated Price Change -0.6% 3.6% N/A -0.9% -3.0%
N/A Fiber Reclaimed and Brokered -M Tons 1,423 1,468 2,891 1,241
1,280 2,521 SMURFIT-STONE CONTAINER CORPORATION NON-GAAP FINANCIAL
MEASURES In the accompanying financial presentation, we use the
financial measures "adjusted net income (loss) attributable to
common stockholders" (adjusted net income (loss)), "adjusted net
income (loss) per diluted share attributable to common
stockholders" (adjusted net income (loss) per diluted share),
"EBITDA" and "adjusted EBITDA" which are derived from our
consolidated financial information but are not presented in our
financial statements prepared in accordance with U.S. generally
accepted accounting principles (GAAP). These measures are
considered "non-GAAP financial measures" under the U.S. Securities
and Exchange Commission (SEC) rules. Adjusted net income (loss) and
adjusted net income (loss) per diluted share are non-GAAP financial
measures that exclude from net income (loss) attributable to common
stockholders the effects of reorganization items (income) expense,
debtor-in-possession financing costs, alternative fuel mixture tax
credits, loss on early extinguishment of debt, restructuring
(income) charges, non-cash foreign currency exchange (gains)
losses, and interest on unsecured debt. EBITDA is defined as net
income (loss) before (provision for) benefit from income taxes,
interest expense, net and depreciation, depletion and amortization.
Adjusted EBITDA is defined as EBITDA adjusted for reorganization
items (income) expense, debtor-in-possession financing costs,
alternative fuel mixture tax credits, loss on early extinguishment
of debt, non-cash foreign currency exchange (gains) losses, (gain)
loss on sale of assets, restructuring charges and other
adjustments. The accompanying financial presentation includes a
reconciliation of net income (loss) attributable to common
stockholders and net income (loss) per diluted share attributable
to common stockholders, the most directly comparable GAAP financial
measures, to adjusted net income (loss) and adjusted net income
(loss) per diluted share, respectively. A reconciliation of net
(income) loss to EBITDA and adjusted EBITDA is also presented. We
use these supplemental non-GAAP measures to evaluate performance
period over period, to analyze the underlying trends in our
business, to assess our performance relative to our competitors and
to establish operational goals and forecasts that are used in
allocating resources. These non-GAAP measures of operating results
are reported to our board of directors, chief executive officer and
our president and chief operating officer and are used to make
strategic and operating decisions and assess performance. These
non-GAAP measures are presented to enhance an understanding of our
operating results and are not intended to represent cash flows or
results of operations. We also believe these non-GAAP measures are
beneficial to investors, potential investors and other key
stakeholders, including analysts and creditors who use these
measures in their evaluations of our performance from period to
period and against the performance of other companies in our
industry. Our creditors also use these measures to evaluate our
ability to service our debt. The use of these non-GAAP financial
measures is beneficial to these stakeholders because they exclude
certain items that management believes are not indicative of the
on-going operating performance of our business, and including them
would distort comparisons to our past operating performance.
Accordingly, we have excluded the adjustments, as detailed below,
for the purpose of calculating these non-GAAP measures. The
following is an explanation of each of the adjustments that we have
made to arrive at these non-GAAP measures for the three and six
months ended June 30, 2010 and 2009, as well as the reasons
management believes each of these items is not indicative of
operating performance: -- Reorganization items (income) expense,
net of income taxes - These income and expense items are directly
related to the process of our reorganizing under Chapter 11 and the
Companies' Creditors Arrangement Act in Canada. The items include
gain due to plan effects, gain due to fresh start accounting
adjustments, provision for rejected/settled executory contracts and
leases, accounts payable settlement gains and professional fees.
These income and expense items are not considered indicative of our
ongoing operating performance and are not used by us to assess our
operating performance. -- Debtor-in-possession (DIP) financing
costs - These expenses were incurred and paid during the first
quarter of 2009 in connection with entering into the DIP Credit
Agreement. These expense items are not considered indicative of our
ongoing operating performance and are not used by us to assess our
operating performance. -- Alternative fuel mixture tax credits -
These amounts represent an excise tax credit for alternative fuel
mixtures produced by a taxpayer for sale, or for use as a fuel in a
taxpayer's trade or business, through December 31, 2009, at which
time the credit expired. These items are not considered indicative
of our ongoing operating performance and are not used by us to
assess our operating performance. -- Loss on early extinguishment
of debt - These losses represent unamortized deferred debt issuance
cost and call premiums charged to expense in connection with our
financing activities. These losses were not considered indicative
of our ongoing operating performance because they related to
specific financing activities and were not used by us to assess our
operating performance. -- Non-cash foreign currency (gains) losses-
The functional currency for our Canadian operations was the U.S.
dollar. Fluctuations in Canadian dollar-denominated monetary assets
and liabilities resulted in non-cash gains or losses. We excluded
the impact of foreign currency exchange gains and losses because
the impact of foreign exchange is highly variable and difficult to
predict from period to period and is not tied to our operating
performance. These gains or losses are not considered indicative of
our ongoing operating performance and are not used by us to assess
our operating performance. -- Interest on unsecured debt - These
amounts represent the post-petition interest accrued on unsecured
debt from the time of our bankruptcy filing, which was stayed and
not paid as a result of the bankruptcy proceedings. In the fourth
quarter of 2009, we concluded it was not probable that interest
expense that was accrued from the time of our bankruptcy filing
through November 30, 2009, would be an allowed claim. This expense
was not considered indicative of our ongoing operating performance
and was excluded by management in assessing our operating
performance. -- Restructuring (income) charges - These adjustments
represent the write-down of assets, primarily property, plant and
equipment, to estimated net realizable values, the acceleration of
depreciation for equipment to be abandoned or taken out of service,
severance costs and other costs associated with our restructuring
activities. These income and expense items were not considered
indicative of our ongoing operating performance and were excluded
by management in assessing our operating performance. -- (Gain)
loss on sale of assets - These amounts represent gains and losses
we recognized related to the sale of non-strategic assets. These
gains and losses were not considered indicative of ongoing
operating performance and were excluded by management in assessing
our operating performance. -- Other - These adjustments principally
represent amounts accrued under our 2009 long-term incentive plan.
These income and expense items were not considered indicative of
our ongoing operating performance and were excluded by management
in assessing our operating performance. Adjusted net income (loss),
adjusted net income (loss) per diluted share, EBITDA and adjusted
EBITDA have certain material limitations associated with their use
as compared to net income (loss). These limitations are primarily
due to the exclusion of certain amounts that are material to our
consolidated results of operations, as discussed above. In
addition, these adjusted net income (loss) and EBITDA measures may
differ from adjusted net income (loss) and EBITDA calculations of
other companies in our industry, limiting their usefulness as
comparative measures. Because of these limitations, adjusted net
income (loss), adjusted net income (loss) per diluted share, EBITDA
and adjusted EBITDA should be read in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
We compensate for these limitations by relying primarily on our
GAAP results and using adjusted net income (loss), adjusted net
income (loss) per diluted share, EBITDA and adjusted EBITDA only as
supplemental measures of our operating performance. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for financial statements
prepared in accordance with GAAP. We believe that providing these
non-GAAP measures in addition to the related GAAP measures provides
investors greater transparency to the information our management
uses for financial and operational decision-making and allows
investors to see our results as management sees them. We also
believe that providing this information better enables investors to
understand our operating performance and to evaluate the
methodology used by our management to evaluate and measure our
operating performance, and the methodology and financial measures
used by our board of directors to assess management's performance.
Media, Sue Neumann, +1-314-656-5287, or Investors, Tim Griffith or
Scott Dudley, +1-314-656-5553, all of Smurfit-Stone Container
Corporation Web Site: http://www.smurfit-stone.com
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