Timothy McKenna (investors), 312/580-4637 or 314-746-1254
George Csolak (media), 314-746-1236
Smurfit-Stone Reports 1st Quarter Profit Of $.18 Per Share
CHICAGO, April 25, 2000 Smurfit-Stone Container Corporation (Nasdaq: SSCC) reported income from continuing operations of $40 million or $.18 per diluted share in the first quarter of 2000. This includes the impact of $.02 per share in restructuring charges resulting from plant closures. The first quarter profit compares to a net loss of $92 million or $.43 per diluted share from continuing operations in the first quarter of 1999. Sales for the quarter were $1.9 billion, compared to $1.7 billion in the first quarter of 1999.
Commenting on the first quarter results, Ray Curran, president and chief executive officer, said, "The significant improvement in our bottom line compared to the first quarter of 1999 reflects the substantial progress we have made over the past year. This includes repayment of $1.6 billion in debt, a $32 million reduction in quarterly interest expense, efficiency improvements in our mill system, and the achievement of $350 million in annualized synergies since the merger date. In addition, we are benefiting from the improved market climate.
"We successfully implemented a $50 per ton linerboard increase during the quarter," he said. In addition, the company experienced steady demand growth for corrugated containers, folding cartons and industrial bags, especially toward the end of the quarter. Despite the continued improvement in the packaging markets, he noted that operating profits were down slightly from the levels of the fourth quarter of 1999. This was the result of higher costs for recycled fiber, a major raw material, and the impact of higher containerboard costs, without the offsetting improvement in container prices. The company also took downtime at its containerboard mills to adjust inventories and reduce working capital.
Smurfit-Stones debt increased $98 million during the quarter to $4.9 billion. This was the result of a temporary increase in working capital resulting from the previously mentioned price increase, and the $123 million payment to successfully resolve the bankruptcy reorganization plan of Florida Coast Paper, a joint venture of Stone Container and Four M Corporation. Smurfit-Stone now owns the 500,000 ton per year linerboard mill, which will remain shut.
"Debt reduction remains an ongoing priority for the company as it continues to divest non-strategic assets," Curran said. Following the end of the quarter, the company agreed to sell its Port Wentworth, GA, pulp facility for $63 million, the net cash proceeds of which will go toward debt reduction. The company is close to finalizing the transfer of its remaining newsprint mill in Oregon City to a group of investors, management and mill employees.
During the first quarter, Smurfit-Stone also signed an agreement to purchase St. Laurent Paperboard Inc., for approximately $625 million in cash and 25 million shares of Smurfit-Stone common stock. "This transaction is an excellent fit which allows us to expand our packaging capabilities in specialty containerboard," Curran said. "Pending an approval by St. Laurent shareholders on May 26, we expect to close this transaction later in this second quarter."
Curran concluded, "Demand for recycled fiber continues to be strong, particularly in the export market. As a consequence, we expect prices to remain firm. We also expect continued improvement in prices in containers, folding cartons and other packaging products. In addition, with most of the strategic restructuring of the first year behind us, and the expected completion of the St. Laurent transaction, we can intensify our focus on delivering greater value to our packaging customers and improving our operating performance."
Smurfit-Stone Container Corporation was formed on November 18, 1998 as a result of the merger of Jefferson Smurfit Corporation and Stone Container Corporation. The company is the industrys leading manufacturer of paper and paperboard-based packaging, including containerboard, corrugated containers, industrial bags, and claycoated recycled boxboard; and is the worlds largest paper recycler. In addition, Smurfit-Stone is a leading producer of solid bleached sulfate, folding cartons, paper tubes and cores, and labels. The company operates about 300 facilities worldwide and employs approximately 35,000.
Archived Conference Calls. Currently online: 2000 Q1 Earnings Conference Call 4/25/2000 56 min.
Adobe® Acrobat® version of the Consolidated Statements of Operations and Supplementary Financial Information (48k)
This document contains certain forward-looking statements within the meaning of Section 21 E 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 Smurfit-Stone Container Corporation and its 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 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.