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Exhibit 99.1
SMURFIT-STONE CONTAINER ENTERPRISES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
On November 1, 2004, Smurfit-Stone Container Corporation ("SSCC") merged the operations of its two principal operating subsidiaries, Stone Container Corporation ("Stone Container") and Jefferson Smurfit Corporation (U.S.) ("JSC(U.S.)"), with Stone Container as the surviving entity (the "Merger"). Stone Container was then renamed Smurfit-Stone Container Enterprises, Inc. ("SSCE"). JSCE, Inc. ("JSCE"), which was a holding company that conducted its operations through its wholly-owned subsidiary, JSC(U.S.), first merged with and into JSC(U.S.), with JSC(U.S.) as the surviving company, prior to the 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 the merger of Stone Container and JSC(U.S.), as if the transaction had occurred as of the beginning of the periods presented. The following unaudited pro forma condensed consolidated balance sheet was prepared as if the transaction had occurred as of June 30, 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 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.
SMURFIT-STONE CONTAINER ENTERPRISES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| | June 30, 2004
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| | Stone
Container
Historical
| | JSCE, Inc Historical(c)
| | Intercompany Eliminations
| | SSCE
Pro Forma
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| | (in millions)
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| ASSETS | | | | | | | | | | | | | |
| Current assets: | | | | | | | | | | | | | |
| | Cash and cash equivalents | | $ | 4 | | $ | 6 | | $ | | | $ | 10 | |
| | Receivables | | | 274 | | | 368 | | | (27 | )(a) | | 615 | |
| | Inventories | | | 499 | | | 222 | | | | | | 721 | |
| | Deferred income taxes | | | 145 | | | 16 | | | | | | 161 | |
| | Prepaid expenses and other current assets | | | 46 | | | 20 | | | | | | 66 | |
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| | | Total current assets | | | 968 | | | 632 | | | (27 | ) | | 1,573 | |
| Property, plant and equipment, net | | | 3,455 | | | 1,333 | | | | | | 4,788 | |
| Timberland, net | | | 42 | | | 2 | | | | | | 44 | |
| Goodwill | | | 3,117 | | | 184 | | | | | | 3,301 | |
| Notes receivable from SSCC | | | | | | 617 | (e) | | | | | 617 | |
| Other assets | | | 213 | | | 150 | | | | | | 363 | |
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| | | $ | 7,795 | | $ | 2,918 | | $ | (27 | ) | $ | 10,686 | |
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LIABILITIES AND STOCKHOLDER'S EQUITY |
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| Current liabilities: | | | | | | | | | | | | | |
| | Current maturities of long-term debt | | $ | 17 | | $ | 435 | | $ | | | $ | 452 | (d) |
| | Accounts payable | | | 329 | | | 245 | | | (27 | )(a) | | 547 | |
| | Other accrued liabilities | | | 326 | | | 176 | | | | | | 502 | |
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| | | Total current liabilities | | | 672 | | | 856 | | | (27 | ) | | 1,501 | |
| Long-term debt, less current maturities | | | 3,230 | | | 1,188 | | | | | | 4,418 | (d) |
| Other long-term liabilities | | | 671 | | | 373 | | | | | | 1,044 | |
| Deferred income taxes | | | 527 | | | 464 | | | | | | 991 | |
| Stockholder's equity: | | | | | | | | | | | | | |
| | Common stock and additional paid-in capital | | | 3,016 | | | 1,205 | | | | | | 4,221 | |
| | Retained earnings (deficit) | | | (201 | ) | | (998 | ) | | | | | (1,199 | ) |
| | Accumulated other comprehensive income (loss) | | | (120 | ) | | (170 | ) | | | | | (290 | ) |
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| | | Total stockholder's equity | | | 2,695 | | | 37 | | | — | | | 2,732 | |
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| | | $ | 7,795 | | $ | 2,918 | | $ | (27 | ) | $ | 10,686 | |
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See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
SMURFIT-STONE CONTAINER ENTERPRISES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| | Stone
Container
Historical
| | JSCE, Inc Historical(c)
| | Intercompany Eliminations
| | SSCE
Pro Forma
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| | (in millions)
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| Six Months Ended June 30, 2004: | | | | | | | | | | | | | |
| | Net sales | | $ | 2,626 | | $ | 1,865 | | $ | (511 | )(b) | $ | 3,980 | |
| | Cost of goods sold | | | 2,369 | | | 1,674 | | | (511 | )(b) | | 3,532 | |
| | Selling and administrative expenses | | | 229 | | | 162 | | | | | | 391 | |
| | Restructuring charges | | | 10 | | | 7 | | | | | | 17 | |
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| | Income from operations | | | 18 | | | 22 | | | — | | | 40 | |
| | Interest expense, net | | | (118 | ) | | (54 | ) | | | | | (172 | )(d) |
| | Interest income from SSCC | | | | | | 41 | (e) | | | | | 41 | |
| | Other income (expense)—net | | | 11 | | | 2 | | | | | | 13 | |
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| | Income (loss) from continuing operations before income taxes and cumulative effect of accounting change | | | (89 | ) | | 11 | | | — | | | (78 | ) |
| | (Provision for) benefit from income taxes | | | 37 | | | (4 | ) | | | | | 33 | |
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| | Income (loss) from continuing operations before cumulative effect of accounting change | | $ | (52 | ) | $ | 7 | | $ | — | | $ | (45 | ) |
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Year Ended December 31, 2003: |
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| | Net sales | | $ | 5,051 | | $ | 3,651 | | $ | (980 | )(b) | $ | 7,722 | |
| | Cost of goods sold | | | 4,430 | | | 3,222 | | | (980 | )(b) | | 6,672 | |
| | Selling and administrative expenses | | | 528 | | | 355 | | | | | | 883 | |
| | Restructuring charges | | | 94 | | | 21 | | | | | | 115 | |
| | Loss on sale of assets | | | | | | 5 | | | | | | 5 | |
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| | Income (loss) from operations | | | (1 | ) | | 48 | | | — | | | 47 | |
| | Interest expense, net | | | (237 | ) | | (104 | ) | | | | | (341 | )(d) |
| | Interest income from SSCC | | | | | | 80 | (e) | | | | | 80 | |
| | Gain (loss) from early extinguishment of debt | | | (1 | ) | | (2 | ) | | | | | (3 | ) |
| | Other income (expense)—net | | | (44 | ) | | 3 | | | | | | (41 | ) |
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| | Income (loss) from continuing operations before income taxes and cumulative effect of accounting change | | | (283 | ) | | 25 | | | — | | | (258 | ) |
| | (Provision for) benefit from income taxes | | | 116 | | | (5 | ) | | | | | 111 | |
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| | Income (loss) from continuing operations before cumulative effect of accounting change | | $ | (167 | ) | $ | 20 | | $ | — | | $ | (147 | ) |
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See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
SMURFIT-STONE CONTAINER ENTERPRISES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Intercompany Elimination Adjustments
- (a)
- To eliminate the effects of accounts receivables and accounts payables between Stone Container and JSC(U.S.).
- (b)
- To eliminate the effects of sales transactions between Stone Container and JSC(U.S.).
JSCE, Inc. Historical and SSCE Pro Forma
- (c)
- To incorporate, except for adjustments (a) and (b), the JSC(U.S.) balance sheet and income statements into Stone Container in connection with the 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.
- (d)
- In connection with the Merger, SSCE and Smurfit-Stone Container Canada, Inc., as borrowers, and SSCC, as guarantor, entered into a new credit agreement, which refinances and replaces SSCC's existing credit agreements in their entirety. The impact of the new credit agreement would not be material to the Company's financial statements and has therefore been excluded from these pro forma financial statements.
- (e)
- SSCE's notes receivable from SSCC mature on November 18, 2004. SSCC is considering various options to repay the notes, including exchanging certain of its shares of common stock of SSCE for the notes or extending the maturity of the notes. If an exchange of shares for the notes were to occur, SSCE's stockholder's equity would be reduced by the amount of the notes receivable from SSCC and interest income from SSCC in future periods would be eliminated.
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SMURFIT-STONE CONTAINER ENTERPRISES, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATASMURFIT-STONE CONTAINER ENTERPRISES, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETSMURFIT-STONE CONTAINER ENTERPRISES, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSSMURFIT-STONE CONTAINER ENTERPRISES, INC. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
