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
| 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
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