EX-99.1 2 a2140184zex-99_1.htm EX-99.1
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Exhibit 99.1


STONE CONTAINER CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

We expect to merge the operations of Stone Container and JSC (U.S.) in the near future, principally to simplify and consolidate debt financing activities. JSCE, which is a holding company that conducts its operations through its wholly-owned subsidiary, JSC (U.S.), will merge with and into JSC (U.S.), with JSC (U.S.) as the surviving company, prior to the proposed merger of Stone Container and JSC (U.S.). As a result, the financial data presented for JSC (U.S.) in the following unaudited pro forma financial statements is the same as for JSCE.

        The following unaudited pro forma condensed consolidated statements of operations were prepared to illustrate the estimated effects of an offering of new senior notes and the application of the proceeds therefrom and the proposed merger of Stone Container and JSC (U.S.), as if these transactions had occurred as of the beginning of the periods presented. The following unaudited pro forma condensed consolidated balance sheet was prepared as if these transactions had occurred as of March 31, 2004.

        The pro forma adjustments are based upon available information and upon certain assumptions that we believe are reasonable. The unaudited pro forma condensed consolidated financial statements and accompanying notes should be read in conjunction with the historical financial statements and the related notes thereto of Stone Container and JSCE.

        The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and do not purport to represent what our financial position or results of operations would actually have been if the offering of the new senior notes and the application of the proceeds therefrom and the proposed merger of Stone Container and JSC (U.S.) had in fact occurred at such dates or to project our financial position or results of operations for any future date or period.

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STONE CONTAINER CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

 
   March 31, 2004
  
 
   Stone
Container
Historical
   Offering
Adjustments
   Proposed
Merger
Adjustments(d)
   Stone
Container
Pro Forma
  
 
   (In millions)

  
ASSETS                          
Current assets:                          
  Cash and cash equivalents   $ 4   $     $ 6   $ 10  
  Receivables     243           335     547  
                    (31 )(b)      
  Inventories     500           223     723  
  Deferred income taxes     140           13     153  
  Prepaid expenses and other current assets     35           19     54  
   
 
 
 
 
    Total current assets     922           565     1,487  
Property, plant and equipment, net     3,508           1,354     4,862  
Timberland, net     42           2     44  
Goodwill     3,117           184     3,301  
Note receivable from SSCC                 600     600  
Other assets     219     3   (a)   149     371  
   
 
 
 
 
    $ 7,808   $ 3   $ 2,854   $ 10,665  
   
 
 
 
 

LIABILITIES AND STOCKHOLDER'S EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:                          
  Current maturities of long-term debt   $ 16   $ (10 )(a) $ 266   $ $272  
  Accounts payable     322           254     545  
                    (31 )(b)      
  Other accrued liabilities     270           196     466  
   
 
 
 
 
    Total current liabilities     608     (10 )(a)   685     1,283  
Long-term debt, less current maturities     3,288     11   (a)   1,309     4,608  
Other long-term liabilities     671           390     1,061  
Deferred income taxes     538     1   (a)   456     995  
Stockholder's equity:                          
  Common stock and additional paid-in capital     3,016           1,193     4,209  
  Retained earnings (deficit)     (194 )   1   (a)   (1,009 )   (1,202 )
  Accumulated other comprehensive income (loss)     (119 )         (170 )   (289 )
   
 
 
 
 
    Total stockholder's equity     2,703     1     14     2,718  
   
 
 
 
 
    $ 7,808   $ 3   $ 2,854   $ 10,665  
   
 
 
 
 

See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

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STONE CONTAINER CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
   Stone
Container
Historical
   Offering
Adjustments
   Proposed
Merger
Adjustments(d)
   Stone
Container
Pro Forma
  
 
   (In millions)

  
Three Months Ended March 31, 2004:                          
  Net sales   $ 1,275   $     $ 907   $ 1,942  
                    (240 )(c)      
  Cost of goods sold     1,166           824     1,750  
                    (240 )(c)      
  Selling and administrative expenses     118           82     200  
  Restructuring charges     10           5     15  
   
 
 
 
 
  Loss from operations     (19 )         (4 )   (23 )
  Interest expense, net     (59 )   1 (a)   (27 )   (85 )
  Interest income from SSCC                 20     20  
  Other income (expense) — net     4           1     5  
   
 
 
 
 
  Income (loss) from continuing operations before income taxes and cumulative effect of accounting change     (74 )   1     (10 )   (83 )
  Benefit from income taxes     29           4     33  
   
 
 
 
 
  Income (loss) from continuing operations before cumulative effect of accounting change   $ (45 ) $ 1   $ (6 ) $ (50 )
   
 
 
 
 

Year Ended December 31, 2003:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net sales   $ 5,051   $     $ 3,651   $ 7,722  
                    (980 )(c)      
  Cost of goods sold     4,430           3,222     6,672  
                    (980 )(c)      
  Selling and administrative expenses     528           355     883  
  Restructuring charges     94           21     115  
  Loss on sale of assets                 5     5  
   
 
 
 
 
  Income (loss) from operations     (1 )         48     47  
  Interest expense, net     (237 )   5 (a)   (104 )   (336 )
  Interest income from SSCC                 80     80  
  Gain (loss) from early extinguishment of debt     (1 )   2 (a)   (2 )   (1 )
  Other income (expense) — net     (44 )         3     (41 )
   
 
 
 
 
  Income (loss) from continuing operations before income taxes and cumulative effect of accounting change     (283 )   7     25     (251 )
  (Provision for) benefit from income taxes     116     (3 )(a)   (5 )   108  
   
 
 
 
 
  Income (loss) from continuing operations before cumulative effect of accounting change   $ (167 ) $ 4   $ 20   $ (143 )
   
 
 
 
 

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

Offering Adjustments

(a)
To reflect the effects of the new senior notes offered at an assumed interest rate of 7.625% and the repayment of the outstanding 11.5% senior notes due August 15, 2006 and a portion of the Tranche B term loan:

Balance Sheet
   March 31, 2004
New borrowings:      
7.625% senior notes due 2014   $ 200

Repayments of debt:
 
 
 
11.5% senior notes due August 15, 2006 (plus unamortized premium of $2 million)     187
Tranche B term loan, due June 30, 2009     12
   
Total debt to be repaid     199
   

Net increase to total debt
 
$
1
   

    Net increase to debt of $1 million includes $3 million used to pay debt issuance costs related to these refinancing transactions, less a $2 million debt premium. The gain on early extinguishment of debt of $2 million has been included in the year ended December 31, 2003 pro forma statement of operations, with the related after-tax impact included in the pro forma balance sheet.

    A reclassification adjustment of $10 million was made to properly state the current and long-term portions of total debt.

Statements of operations
   Year Ended
December 31, 2003
   Three Months
Ended
March 31, 2004
  
Interest expense on the new 7.625% senior notes due 2014   $ 15   $ 4  
Amortization of new deferred debt issuance cost     1        
Elimination of amortization of debt premium     1        
Less interest expense on extinguished debt     (22 )   (5 )
   
 
 
Net interest expense decrease   $ (5 ) $ (1 )
   
 
 

    Income tax effects are recorded assuming a 39% tax rate.

Proposed Merger Adjustments

(b)
To eliminate the effects of accounts receivables and accounts payables between Stone Container and JSC (U.S.).

(c)
To eliminate the effects of sales transactions between Stone Container and JSC (U.S.).

(d)
To incorporate, except for adjustments (b) and (c), the JSC (U.S.) balance sheet and income statements into Stone Container in connection with the proposed merger. Stone Container and JSC (U.S.) are entities under common control and, therefore, the historical cost basis of the acquired entity, JSC (U.S.), carries over into the combined entity.

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STONE CONTAINER CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
STONE CONTAINER CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
STONE CONTAINER CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
STONE CONTAINER CORPORATION NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS