Timothy McKenna (investors), 314-746-1254
Thomas L. Lange (media), 314-746-1236
Smurfit-Stone Reports 3rd Quarter Loss of $.07/share
CHICAGO, October 22, 1999 -- Smurfit-Stone Container Corporation (Nasdaq: SSCC) reported a net loss of $16 million, or $.07 per diluted share, for the third quarter of 1999, compared to net income of $8 million, or $.07 per diluted share, for the third quarter of 1998. Excluding discontinued operations and an extraordinary charge, the company lost $.05 per share from continuing operations. Sales for the 1999 period were $1.8 billion, compared to $758 million in the third quarter of 1998.
For the first nine months of 1999, the company reported a net loss of $129 million, or $.60 per diluted share, with a loss from continuing operations, before extraordinary item of $126 million, or $.58 per share. This compares to 1998 net income of $14 million, or $.13 per diluted share, with income from continuing operations, before extraordinary item and cumulative effect of an accounting change of $8 million, or $.07 per share. Sales for the 1999 period were $5.2 billion, compared to $2.3 billion for the first nine months of 1998.
Smurfit-Stone's results for 1998 include only the results of Jefferson Smurfit Corporation (JSC), the predecessor of SSCC.
Ray M. Curran, president and chief executive officer, said, "Although we reported a net loss, this was Smurfit-Stone's third consecutive quarter of improved profit from operations since the company was formed by the merger of JSC and Stone Container Corporation last November." Curran noted that the improvement was achieved despite several negatives. Hurricane Floyd forced the company to take an extended outage at its Philadelphia boxboard mill as a result of severe flooding and to temporarily close three containerboard mills. The company also recorded charges related to plant rationalizations. The costs associated with these events had an impact of $.03 per share. In addition, the company absorbed higher recycled fiber costs during the quarter.
"The sequential improvement in earnings was primarily the result of continued successful implementation of the corrugated container price increases in a healthy market for packaging," Curran said. He added, "Our shipments are running ahead of expectations. In fact our September shipments were the strongest since the early spring." Container volumes are down marginally compared to year-ago levels, as a result of the ongoing rationalization of the container plant system.
In other packaging, Curran added, the company implemented increases in coated and uncoated boxboard during the quarter and began to pass the increases along to finished products late in the quarter.
Smurfit-Stone's progress on divestitures, debt reduction and synergies continued during the quarter, Curran said. In the third quarter, the company announced agreements to sell its timberland holdings to Rayonier, Inc., for approximately $725 million; and its Newberg, OR, newsprint mill to Southeast Paper Manufacturing Co., for $220 million. Both transactions are expected to be completed in the fourth quarter. The company also continued to rationalize its manufacturing system with announcements covering the restructuring of its reclamation system and the closings of two container facilities and a reclamation plant. Total debt, Curran said, stands at $5.96 billion. "We have reduced debt by $82 million in the quarter and $671 million year-to-date," he said. "When we close the sale of the timberlands and newsprint mill in the fourth quarter, proceeds from divestitures will have reached $1.8 billion, which is ahead of the target for year-end 1999."
Curran said, "We are currently experiencing healthy packaging demand. We expect to realize the full impact of container price improvements in the fourth quarter. At the same time, recycled fiber prices have trended downward slightly. As a result, we expect our earnings to continue to improve in the fourth quarter."
Archived Conference Calls. Currently online: Q3 Earnings Release 10/1999.
Section 1: Introduction (1 min. 30 sec.)
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 industry's leading manufacturer of paper and paperboard-based packaging, including containerboard, corrugated containers, industrial bags, and claycoated recycled boxboard; and is the world's largest paper recycler. In addition, Smurfit-Stone is a leading producer of folding cartons, paper tubes and cores, and labels. The company operates about 300 facilities worldwide and employs more than 30,000.
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, continued pricing pressures in key product lines, seasonality and higher recycled fiber costs, as well as other risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings.