Smurfit-Stone Reports Second Quarter 2010 Results


    
    Company completes reorganization and positions itself for improved
    performance in the second half of 2010




    
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<p>CREVE COEUR, Mo. and <span class="xn-location">CHICAGO</span>, <span class="xn-chron">Aug. 3</span> /CNW/ -- Smurfit-Stone Container Corporation (NYSE:   SSCC) today reported net income attributable to common stockholders of <span class="xn-money">$1.41 billion</span>, or <span class="xn-money">$5.41</span> per diluted share, for the second quarter of 2010, compared with a net loss of (<span class="xn-money">$91</span>) million, or (<span class="xn-money">$0.35</span>) per diluted share in the first quarter of 2010, and net income of <span class="xn-money">$155 million</span>, or <span class="xn-money">$0.60</span> per diluted share, for the second quarter of 2009.</p>
<p/>
<p>Smurfit-Stone's second-quarter 2010 adjusted net income was <span class="xn-money">$2 million</span>, or <span class="xn-money">$0.01</span> per diluted share, compared with an adjusted net loss of (<span class="xn-money">$59</span>) million, or (<span class="xn-money">$0.23</span>) per diluted share, in the first quarter of this year, and an adjusted net loss of (<span class="xn-money">$21</span>) million, or (<span class="xn-money">$0.08</span>) per diluted share, in the second quarter of 2009.  The most significant adjustment in the second quarter of 2010 was exclusion of <span class="xn-money">$1.42 billion</span> of income, including tax benefits, related to the Company's emergence from bankruptcy reorganization proceedings in the U.S. and <span class="xn-location">Canada</span>.</p>
<p/>
<p> </p>
<p>          Diluted Earnings Per Share Attributable to Common Stockholders</p>
<p> </p>
<p> </p>
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                               Second          First         Second
                              Quarter        Quarter        Quarter
                                 2010           2010           2009
                                 ----           ----           ----
    
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<p> </p>
<p>Net Income (loss)           <span class="xn-money">$5.41</span>         (<span class="xn-money">$0.35</span>)         <span class="xn-money">$0.60</span></p>
<p> </p>
<p>Adjustments                (<span class="xn-money">$5.40</span>)         <span class="xn-money">$0.12</span>         (<span class="xn-money">$0.68</span>)</p>
<p> </p>
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    Adjusted Net Income
     (loss)                     $0.01         ($0.23)        ($0.08)
                                =====         ======         ======


    
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<p>The Company reported an operating loss of (<span class="xn-money">$6</span>) million for the three months ended <span class="xn-chron">June 30, 2010</span>, compared to an operating loss of (<span class="xn-money">$31</span>) million in the first quarter of 2010, and operating income of <span class="xn-money">$271 million</span> in the second quarter of 2009.  The second quarter 2010 operating loss was primarily driven by a concentration of planned maintenance-related downtime.  Second quarter 2009 operating income was significantly impacted by the income related to the alternative fuel tax credits that were received in 2009.</p>
<p/>
<p>Patrick J. Moore, Smurfit-Stone's Chief Executive Officer, commented, "We believe our successful financial restructuring positions us for long-term profitable growth.  We will continue to focus on what matters - serving our customers, improving margins and delivering shareholder value.  Looking ahead, we are confident that continued high operating rates, productivity improvements, higher average prices, and low inventories combined with assumed stable demand will drive significant earnings improvement in the second half of the year."</p>
<p/>
<p>Adjusted EBITDA for the second quarter ended <span class="xn-chron">June 30, 2010</span>, was <span class="xn-money">$102 million</span> compared with <span class="xn-money">$46 million</span> in the first quarter of this year and <span class="xn-money">$103 million</span> in the second quarter a year ago.  The improvement in adjusted EBITDA from the first quarter reflects the benefits of higher selling prices and volumes, offset by significant maintenance-related downtime and related expenses.</p>
<p/>
<p>Net sales for the second quarter of this year were <span class="xn-money">$1.56 billion</span>, compared with <span class="xn-money">$1.46 billion</span> in this year's first quarter and <span class="xn-money">$1.41 billion</span> in the second quarter of 2009.  The improvement in second quarter 2010 net sales is primarily due to higher average selling prices and corrugated container shipments during the period.</p>
<pre>
    

    Second-Quarter 2010 Highlights
    --  The Company successfully emerged from its financial reorganization on
        June 30 with a significant reduction in leverage and a strong
liquidity
        position.
    --  Operating results improved significantly due to steady demand
        improvement, higher capacity utilization, and improved selling prices.
    --  Continuing year-to-date productivity gains included a 5 percent
        improvement in tons per operating day per facility in our
        containerboard mills and a 3 percent improvement in average units of
        production per machine hour in our converting facilities.
    --  The Company closed three converting facilities.


    Year-to-Date Results
    
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<p>For the six months ended <span class="xn-chron">June 30, 2010</span>, net income was <span class="xn-money">$1.32 billion</span>, or <span class="xn-money">$5.07</span> per diluted share, compared with a net loss of (<span class="xn-money">$62</span>) million, or (<span class="xn-money">$0.24</span>) per diluted share, in the first half of 2009.</p>
<p/>
<p>Smurfit-Stone's first-half 2010 adjusted net loss was (<span class="xn-money">$57</span>) million, or (<span class="xn-money">$0.20</span>) per diluted share, compared with an adjusted net loss of (<span class="xn-money">$56</span>) million, or (<span class="xn-money">$0.22</span>) per diluted share, in the first half of 2009.</p>
<p/>
<p>The Company reported an operating loss of (<span class="xn-money">$37</span>) million for the six months ended <span class="xn-chron">June 30, 2010</span>, compared with operating income of <span class="xn-money">$265 million</span> in the first half of 2009, which was primarily attributable to the alternative fuel tax credit income.</p>
<pre>
    

    Other Financial Items
    --  As a result of emergence and fresh start accounting, as of June 30,
        2010, net property, plant and equipment was fair valued at $4.41
        billion, representing a write-up of $1.43 billion, goodwill of $126
        million was recorded, and pension and postretirement benefit
        liabilities were adjusted to $1.64 billion on the balance sheet.
    --  As of June 30, 2010, Smurfit-Stone had net tax operating loss
        carryforwards (NOLs) for U.S. federal income tax purposes of $722
        million.  As a result of the NOL carryforwards and the tax benefit of
        projected pension contributions described below, the Company estimates
        it will have limited cash tax obligations in the U.S. for at least the
        next several years.
    --  The Company's defined benefit pension plans in the U.S. and Canada
were
        underfunded at June 30, 2010, by approximately $1.45 billion combined.
        The Company's current annual funding requirements are estimated to be
        $77 million for 2010, and $235 million in 2011, with contributions
        increasing to a range of approximately $270 million to $300 million
        through 2014.
    --  Capital expenditures for the first half of 2010 totaled $83 million. 
        The Company expects its capital expenditures for 2010 will be
        approximately $200 million.


    Outlook
    
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<p>Smurfit-Stone expects its operating rates to remain at high levels throughout the remainder of the year.  Input costs, particularly fiber, energy and transportation, have stabilized moving into the second half of the year.  The price increases announced in the first and second quarters are expected to be substantially reflected in earnings during the second half of this year.  With the impact of the reorganization now complete, the Company expects to be solidly profitable in the third quarter and to achieve positive earnings and free cash flow for the second half of 2010.</p>
<p/>
<p>As previously announced, the Company's Chief Executive Officer, Patrick J. Moore, will retire by early 2011.  The Company's Board of Directors is launching a confidential search for a chief executive officer.  A search is also currently underway for a chief financial officer.  Both searches are expected to be completed by the end of the year.</p>
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    Conference Call and Webcast
    
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<p>Smurfit-Stone will host a conference call for analysts, institutional investors and shareholders on <span class="xn-chron">Tuesday, Aug. 3, 2010</span>, at <span class="xn-chron">10 a.m. Eastern Time</span>. To access the call, participants should dial the number below approximately 10 minutes before the start time.</p>
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    U.S. - (888) 679-8037 or International - (617) 213-4849
    Passcode:  20306220

    
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<p>The call will also be webcast in a listen-only format with an accompanying slide presentation and can be accessed at <a href="http://www.smurfit-stone.com">www.smurfit-stone.com</a>.</p>
<p/>
<p>A replay of the conference call will be available through <span class="xn-chron">Aug. 17, 2010</span>.  To access the replay, dial (888) 286-8010 (U.S.) or (617) 801-6888 (International), and enter passcode 16228881.</p>
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    A replay of the webcast will be available at www.smurfit-stone.com.

    Forward-Looking Statements
    
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<p>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, pricing pressures in key product lines, seasonality, changes in input costs including recycled fiber and energy costs, as well as other risks and uncertainties described in the Company's Annual Report on Form 10-K for the year ended <span class="xn-chron">December 31, 2009</span>, as updated from time to time in the Company's Securities and Exchange Commission filings. In this press release, certain non-U.S. GAAP financial information is presented. A reconciliation of that information to U.S. GAAP financial measures and additional disclosure regarding our use of non-GAAP financial measures are included in the attached schedules.  The Company does not intend to review, revise or update any particular forward-looking statements in light of future events.</p>
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    About Smurfit-Stone
    
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<p>Smurfit-Stone Container Corporation is one of the industry's leading integrated containerboard and corrugated packaging producers and one of the world's largest paper recyclers.   Smurfit-Stone generated revenue of <span class="xn-money">$5.57 billion</span> in 2009, has led the industry in safety every year since 2001, and conducts its business in compliance with the environmental, health, and safety principles of the American Forest & Paper Association.  The company is a member of the Sustainable Forestry Initiative® .</p>
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    (Financial statements follow)



    
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<p> </p>
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                                        SMURFIT-STONE CONTAINER CORPORATION
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (Unaudited)
    
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<p> </p>
<pre>
    
                                                     Predecessor
                                                     -----------
                                               Three Months Ended
                                              June 30,            March 31,
                                              --------            ---------
    (In millions, except per share data)      2010       2009        2010
    ------------------------------------      ----       ----        ----
    Net sales                               $1,563     $1,407      $1,461
    Costs and expenses
      Cost of goods sold                     1,407      1,256       1,356
      Selling and administrative expenses      143        146         151
      Restructuring (income) expenses           19         11          (4)
      (Gain) loss on disposal of assets                   (1)
      Other operating income                            (276)        (11)
                                                        ----         ---
        Operating income (loss)                 (6)       271         (31)
    Other income (expense)
      Interest expense, net                    (10)       (74)        (13)
      Debtor-in-possession debt issuance
       costs
      Loss on early extinguishment of debt
      Foreign currency exchange gains
       (losses)                                  9         (2)         (6)
      Other, net                                 2          6           2
                                               ---        ---         ---
        Income (loss) before reorganization
         items and income taxes                 (5)       201         (48)
    Reorganization items income
     (expense), net                          1,219        (39)        (41)
                                             -----        ---         ---
        Income (loss) before income taxes    1,214        162         (89)
    (Provision for) benefit from income
     taxes                                     199         (4)
                                               ---        ---
        Net income (loss)                    1,413        158         (89)
    Preferred stock dividends and
     accretion                                  (2)        (3)         (2)
                                               ---        ---         ---
        Net income (loss) attributable to
         common stockholders                $1,411       $155        $(91)
                                            ------       ----        ----
    
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<p> </p>
<p> </p>
<pre>
    
    Basic earnings per common share
        Net income (loss) attributable to
         common stockholders                 $5.47      $0.60      $(0.35)
                                             -----      -----      ------
    Weighted average shares outstanding        258        257         258
                                               ---        ---         ---
    
</pre>
<p> </p>
<pre>
    
    Diluted earnings per common share
        Net income (loss) attributable to
         common stockholders                 $5.41      $0.60      $(0.35)
                                             -----      -----      ------
    Weighted average shares outstanding        261        257         258
    -----------------------------------        ---        ---         ---



    
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<p> </p>
<p> </p>
<pre>
    
                                                      Predecessor
                                                      -----------
                                                        Six Months Ended
                                                            June 30,
                                                            --------
    (In millions, except per share data)                    2010         2009
    ------------------------------------                    ----         ----
    Net sales                                             $3,024       $2,778
    Costs and expenses
      Cost of goods sold                                   2,763        2,473
      Selling and administrative expenses                    294          291
      Restructuring (income) expenses                         15           24
      (Gain) loss on disposal of assets                                     1
      Other operating income                                 (11)        (276)
                                                             ---         ----
        Operating income (loss)                              (37)         265
    Other income (expense)
      Interest expense, net                                  (23)        (145)
      Debtor-in-possession debt issuance costs                            (63)
      Loss on early extinguishment of debt                                (20)
      Foreign currency exchange gains (losses)                 3            1
      Other, net                                               4            4
                                                             ---          ---
        Income (loss) before reorganization items and
         income taxes                                        (53)          42
    Reorganization items income (expense), net             1,178          (93)
                                                           -----          ---
        Income (loss) before income taxes                  1,125          (51)
    (Provision for) benefit from income taxes                199           (5)
                                                             ---          ---
        Net income (loss)                                  1,324          (56)
    Preferred stock dividends and accretion                   (4)          (6)
                                                             ---          ---
        Net income (loss) attributable to common
         stockholders                                     $1,320         $(62)
                                                          ------         ----
    
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<p> </p>
<p> </p>
<pre>
    
    Basic earnings per common share
        Net income (loss) attributable to common
         stockholders                                      $5.12       $(0.24)
                                                           -----       ------
    Weighted average shares outstanding                      258          257
                                                             ---          ---
    
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<p> </p>
<pre>
    
    Diluted earnings per common share
        Net income (loss) attributable to common
         stockholders                                      $5.07       $(0.24)
                                                           -----       ------
    Weighted average shares outstanding                      261          257
    -----------------------------------                      ---          ---


    
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<p> </p>
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                                   SMURFIT-STONE CONTAINER CORPORATION
                                       CONSOLIDATED BALANCE SHEETS
    
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<p> </p>
<pre>
    
                                              Successor    Predecessor
                                               June 30,   December 31,
    (In millions, except share data)                 2010          2009
    --------------------------------                 ----          ----
    Assets                                    (Unaudited)
    
</pre>
<p> </p>
<pre>
    
    Current assets
      Cash and cash equivalents                      $340          $704
      Restricted cash                                   7             9
      Receivables                                     750           674
      Inventories                                     496           452
      Refundable income taxes                          31            23
      Prepaid expenses and other current
       assets                                          47            43
                                                      ---           ---
         Total current assets                       1,671         1,905
    Net property, plant and equipment               4,405         3,081
    Deferred income taxes                                           23
    Goodwill                                          126
    Intangible assets, net                             77
    Other assets                                      121            68
                                                      ---           ---
                                                   $6,400        $5,077
                                                   ------        ------
    Liabilities and Stockholders' Equity
     (Deficit)
    
</pre>
<p> </p>
<pre>
    
    Liabilities not subject to compromise
    Current liabilities
      Current maturities of long-term debt            $18        $1,354
      Accounts payable                                515           387
      Accrued compensation and payroll taxes          176           145
      Interest payable                                  5            12
      Other current liabilities                        81           164
                                                      ---           ---
         Total current liabilities                    795         2,062
    Long-term debt, less current
     maturities                                     1,188
    Pension and postretirement benefits,
     net of current portion                         1,639
    Other long-term liabilities                       140           117
    Deferred income taxes                             286
                                                      ---
       Total liabilities not subject to
        compromise                                  4,048         2,179
    
</pre>
<p> </p>
<pre>
    
    Liabilities subject to compromise                             4,272
                                                                  -----
       Total liabilities                            4,048         6,451
    
</pre>
<p> </p>
<pre>
    
    Stockholders' equity
      Successor preferred stock, par value
       $.001 per share; 10,000,000 shares
       authorized;
        none issued and outstanding in 2010
      Successor common stock, par value
       $.001 per share; 150,000,000 shares
       authorized; 90,702,816
        issued and outstanding in 2010
      Predecessor preferred stock, aggregate
       liquidation preference of $126;
        25,000,000 shares authorized;
         4,599,300 issued and outstanding in
         2009                                                            104
      Predecessor common stock, par value
       $.01 per share; 400,000,000 shares
       authorized;
        257,482,839 issued and outstanding in
         2009                                                         3
      Additional paid-in capital                    2,352         4,081
      Retained earnings (deficit)                                (4,883)
      Accumulated other comprehensive income
       (loss)                                                      (679)
                                                                   ----
         Total stockholders' equity (deficit)       2,352        (1,374)
                                                    -----        ------
                                                   $6,400        $5,077
                                                   ------        ------


    
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<p> </p>
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                                     SMURFIT-STONE CONTAINER CORPORATION
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (Unaudited)
    
</pre>
<p> </p>
<pre>
    
                                                           Predecessor
                                                           -----------
                                                                         2010
                                                                         ----
                                                      Pre
    Six Months Ended June 30, (In
     millions)                                    Emergence       Adjustments
    -----------------------------                 ---------       -----------
    Cash flows from operating
     activities
      Net income (loss)                                $(198)          $1,522
      Adjustments to reconcile net
       income (loss) to net cash
       provided by
          (used for) operating
           activities
        Loss on early extinguishment
         of debt
        Depreciation, depletion and
         amortization                                    168
        Debtor-in-possession debt
         issuance costs
        Amortization of deferred debt
         issuance costs
        Deferred income taxes                             (1)            (200)
        Pension and postretirement
         benefits                                         50
        Loss on disposal of assets
        Non-cash restructuring
         expense                                           7
        Non-cash stock-based
         compensation                                      3
        Non-cash foreign currency
         exchange gains                                   (3)
        Gain due to plan effects                                         (580)
        Gain due to fresh start
         accounting adjustments                                          (742)
        Payment to settle non-debt
         liabilities subject to
         compromise                                                      (202)
        Non-cash reorganization
         items                                           101
        Change in restricted cash for
         utility deposits                                  2
        Change in operating assets
         and liabilities,
         net of effects from
          acquisitions and
          dispositions
                    Receivables and retained
                     interest in receivables sold       (129)
                    Receivable for alternative
                     energy tax credits                   48
                    Inventories                            1
                    Prepaid expenses and other
                     current assets                        1
                    Accounts payable and accrued
                     liabilities                          57
                    Interest payable                       2
        Other, net                                         8
    
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<p> </p>
<pre>
    
      Net cash provided by (used
       for) operating activities                         117             (202)
                                                         ---             ----
    Cash flows from investing
     activities
      Expenditures for property,
       plant and equipment                               (83)
      Proceeds from property
       disposals                                          10
      Advances to affiliates, net
    
</pre>
<p> </p>
<pre>
    
      Net cash used for investing
       activities                                        (73)
                                                         ---
    Cash flows from financing
     activities
      Proceeds from exit credit
       facility                                                         1,200
      Original issue discount                                             (12)
      Proceeds from debtor-in-
       possession financing
      Net borrowings (repayments)
       of long-term debt                                  (1)          (1,346)
      Repurchase of receivables
      Debtor-in-possession debt
       issuance costs
      Debt issuance costs on exit
       credit facility                                   (15)             (32)
      Change in restricted cash for
       collateralizing outstanding
         letters of credit                               (11)              11
                                                         ---              ---
      Net cash provided by (used
       for) financing activities                         (27)            (179)
                                                         ---             ----
    
</pre>
<p> </p>
<pre>
    
    Increase (decrease) in cash
     and cash equivalents                                 17             (381)
    Cash and cash equivalents
      Beginning of period                                704
                                                         ---
      End of period                                     $721            $(381)
      -------------                                     ----            -----



    
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<p> </p>
<p> </p>
<pre>
    
                                                 Predecessor
                                                 -----------
                                                              2010
                                                              ----
                                                    Post
    Six Months Ended June 30,
     (In millions)                               Emergence           2009
    -------------------------                    ---------           ----
    Cash flows from operating
     activities
      Net income (loss)                                     $1,324   $(56)
      Adjustments to reconcile net
       income (loss) to net cash
       provided by
          (used for) operating
           activities
        Loss on early extinguishment
         of debt                                                       20
        Depreciation, depletion and
         amortization                                          168    182
        Debtor-in-possession debt
         issuance costs                                                63
        Amortization of deferred
         debt issuance costs                                            3
        Deferred income taxes                                 (201)     3
        Pension and postretirement
         benefits                                               50     20
        Loss on disposal of assets                                      1
        Non-cash restructuring
         expense                                                 7      4
        Non-cash stock-based
         compensation                                            3      4
        Non-cash foreign currency
         exchange gains                                         (3)    (1)
        Gain due to plan effects                              (580)
        Gain due to fresh start
         accounting adjustments                               (742)
        Payment to settle non-debt
         liabilities subject to
         compromise                                           (202)
        Non-cash reorganization
         items                                                 101     61
        Change in restricted cash
         for utility deposits                                    2    (13)
        Change in operating assets
         and liabilities,
         net of effects from
          acquisitions and
          dispositions
                    Receivables and retained
                     interest in receivables
                     sold                                     (129)   (38)
                    Receivable for alternative
                     energy tax credits                         48    (89)
                    Inventories                                  1     19
                    Prepaid expenses and other
                     current assets                              1     (5)
                    Accounts payable and accrued
                     liabilities                                57    204
                    Interest payable                             2     77
        Other, net                                               8     33
    
</pre>
<p> </p>
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      Net cash provided by (used
       for) operating activities                               (85)   492
                                                               ---    ---
    Cash flows from investing
     activities
      Expenditures for property,
       plant and equipment                                     (83)   (69)
      Proceeds from property
       disposals                                                10      4
      Advances to affiliates, net                                     (15)
    
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<p> </p>
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      Net cash used for investing
       activities                                              (73)   (80)
                                                               ---    ---
    Cash flows from financing
     activities
      Proceeds from exit credit
       facility                                              1,200
      Original issue discount                                  (12)
      Proceeds from debtor-in-
       possession financing                                           440
      Net borrowings (repayments)
       of long-term debt                                    (1,347)    60
      Repurchase of receivables                                     (385)
      Debtor-in-possession debt
       issuance costs                                                 (63)
      Debt issuance costs on exit
       credit facility                                         (47)
      Change in restricted cash
       for collateralizing
       outstanding
         letters of credit
    
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<p> </p>
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      Net cash provided by (used
       for) financing activities                              (206)    52
                                                              ----    ---
    
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<p> </p>
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    Increase (decrease) in cash
     and cash equivalents                                     (364)   464
    Cash and cash equivalents
      Beginning of period                                      704    126
                                                               ---    ---
      End of period                                           $340   $590
      -------------                                           ----    ---




    
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<p> </p>
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      SMURFIT-STONE CONTAINER CORPORATION
     REORGANIZED CONSOLIDATED BALANCE SHEET
    
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<p> </p>
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                                                  June 30, 2010
                                                  -------------
    (In millions)                             Predecessor   Plan Effect
    -------------                             -----------   Adjustments
                                                            -----------
    Assets
    
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<p> </p>
<pre>
    
    Current assets
      Cash and cash equivalents                       $721         $(381)
      Restricted cash                                   18           (11)
      Receivables                                      750
      Inventories                                      449
      Refundable income taxes                           24             7
      Prepaid expenses and other current
       assets                                           42
                                                       ---
         Total current assets                        2,004          (385)
    Net property, plant and equipment                2,979
    Deferred income taxes                               22           148
    Goodwill
    Intangible assets, net
    Other assets                                        75            31
                                                       ---           ---
                                                    $5,080         $(206)
                                                    ------         -----
    Liabilities and Stockholders' Equity
     (Deficit)
    
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<p> </p>
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    Liabilities not subject to compromise
    Current liabilities
      Current maturities of long-term debt          $1,352       $(1,334)
      Accounts payable                                 488            27
      Accrued compensation and payroll taxes           139            34
      Interest payable                                  12            (7)
      Other current liabilities                        141           (59)
                                                       ---           ---
         Total current liabilities                   2,132        (1,339)
    Long-term debt, less current maturities                        1,176
    Pension and postretirement benefits,
     net of current portion                                        1,179
    Other long-term liabilities                        116
    Deferred income taxes
    
</pre>
<p> </p>
<pre>
    
       Total liabilities not subject to
        compromise                                   2,248         1,016
    
</pre>
<p> </p>
<pre>
    
    Liabilities subject to compromise                4,354        (4,354)
                                                     -----        ------
       Total liabilities                             6,602        (3,338)
    
</pre>
<p> </p>
<pre>
    
    Stockholders' equity
      Preferred stock successor
      Common stock successor
      Preferred stock predecessor                      104          (104)
      Common stock predecessor                           3            (3)
      Additional paid-in capital                     4,084        (1,732)
      Retained earnings (deficit)                   (5,081)        4,971
      Accumulated other comprehensive income
       (loss)                                         (632)
                                                      ----
         Total stockholders' equity (deficit)       (1,522)        3,132
                                                    ------         -----
                                                    $5,080         $(206)
                                                    ------         -----



    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                                June 30, 2010
                                                -------------
    (In millions)                             Fresh Start     Successor
    -------------                             Adjustments     ---------
                                              -----------
    Assets
    
</pre>
<p> </p>
<pre>
    
    Current assets
      Cash and cash equivalents                          $           $340
      Restricted cash                                                   7
      Receivables                                                     750
      Inventories                                       47            496
      Refundable income taxes                                          31
      Prepaid expenses and other current
       assets                                            5             47
                                                       ---            ---
         Total current assets                           52          1,671
    Net property, plant and equipment                1,426          4,405
    Deferred income taxes                             (170)
    Goodwill                                           126            126
    Intangible assets, net                              77             77
    Other assets                                        15            121
                                                       ---            ---
                                                    $1,526         $6,400
                                                    ------         ------
    Liabilities and Stockholders' Equity
     (Deficit)
    
</pre>
<p> </p>
<pre>
    
    Liabilities not subject to compromise
    Current liabilities
      Current maturities of long-term debt               $            $18
      Accounts payable                                                515
      Accrued compensation and payroll taxes             3            176
      Interest payable                                                  5
      Other current liabilities                         (1)            81
                                                       ---            ---
         Total current liabilities                       2            795
    Long-term debt, less current maturities             12          1,188
    Pension and postretirement benefits,
     net of current portion                            460          1,639
    Other long-term liabilities                         24            140
    Deferred income taxes                              286            286
                                                       ---            ---
       Total liabilities not subject to
        compromise                                     784          4,048
    
</pre>
<p> </p>
<p>Liabilities subject to compromise</p>
<p> </p>
<p>   Total liabilities                               784          4,048</p>
<p> </p>
<pre>
    
    Stockholders' equity
      Preferred stock successor
      Common stock successor
      Preferred stock predecessor
      Common stock predecessor
      Additional paid-in capital                                    2,352
      Retained earnings (deficit)                      110
      Accumulated other comprehensive income
       (loss)                                          632
                                                       ---
         Total stockholders' equity (deficit)          742          2,352
                                                       ---          -----
                                                    $1,526         $6,400
                                                    ------         ------





    
</pre>
<p> </p>
<pre>
    
         SMURFIT-STONE CONTAINER CORPORATION
     ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE
         (In Millions, Except Per Share Data)
                     (Unaudited)
    
</pre>
<p> </p>
<pre>
    
                               2Q 10    2Q 09    1Q 10    1H 10    1H 09
                               -----    -----    -----    -----    -----
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Net income (loss)
     attributable to common
     stockholders (GAAP)        $1,411     $155     $(91)  $1,320     $(62)
      Reorganization items
       (income) expense, net
       of income taxes          (1,419)      39       41   (1,378)      93
      Debtor-in-possession
       financing costs               -        -        -        -       63
      Alternative fuel mixture
       tax credits                   -     (276)     (11)     (11)    (276)
      Loss on early
       extinguishment of debt        -        -        -        -       20
      Non-cash foreign
       currency exchange
       (gains)/losses               (9)       2        6       (3)      (1)
      Interest on unsecured
       debt                          -       48        -        -       83
      Restructuring (income)
       charges                      19       11       (4)      15       24
                                   ---      ---      ---      ---      ---
    Adjusted net income
     (loss) attributable to
     common stockholders
     (Note 1)                       $2     $(21)    $(59)    $(57)    $(56)
                                   ---     ----     ----     ----     ----
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
                               2Q 10    2Q 09    1Q 10    1H 10    1H 09
                               -----    -----    -----    -----    -----
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Net income (loss) per
     diluted share
     attributable to common
     stockholders (GAAP)         $5.41    $0.60   $(0.35)   $5.07   $(0.24)
      Reorganization items
       (income) expense, net
       of income taxes           (5.44)    0.15     0.16    (5.28)    0.36
      Debtor-in-possession
       financing costs               -        -        -        -     0.24
      Alternative fuel mixture
       tax credits                   -    (1.07)   (0.04)   (0.04)   (1.07)
      Loss on early
       extinguishment of debt        -        -        -        -     0.08
      Non-cash foreign
       currency exchange
       (gains)/losses            (0.03)    0.01     0.02    (0.01)       -
      Interest on unsecured
       debt                          -     0.19        -        -     0.32
      Restructuring (income)
       charges                    0.07     0.04    (0.02)    0.06     0.09
                                  ----     ----    -----     ----     ----
    Adjusted net income
     (loss) per diluted
     share attributable to
     common stockholders
     (Note 1)                    $0.01   $(0.08)  $(0.23)  $(0.20)  $(0.22)
                                 -----   ------   ------   ------   ------
    
</pre>
<p> </p>
<pre>
    
    Note 1: Exclusive of reorganization items (income) expense, debtor-
    in-possession financing costs, alternative fuel mixture
    tax credits, loss on early extinguishment of debt, non-cash foreign
    currency (gains) losses, accrued but unpaid interest on
    unsecured debt and restructuring (income) charges.  Adjusted net
    income (loss) attributable to common stockholders and
    adjusted net income (loss) per diluted share attributable to common
    stockholders are non-GAAP financial measures.
    See disclosure regarding the use of non-GAAP financial measures
    following these financial statements.
    Diluted earnings per common share computations for the three and six
    months ended June 30, 2010 were adjusted to reflect
    the assumed conversion of preferred stock into common stock because
    the effect was dilutive.





    
</pre>
<p> </p>
<pre>
    
                     SMURFIT-STONE CONTAINER CORPORATION
                          EBITDA, As Defined Below
                                (In millions)
                                 (Unaudited)
    
</pre>
<p> </p>
<pre>
    
                                               2Q 10   1Q 10   2Q 09
                                               -----   -----   -----
    
</pre>
<p> </p>
<p>Net Sales                                  <span class="xn-money">$1,563</span>  <span class="xn-money">$1,461</span>  <span class="xn-money">$1,407</span></p>
<p> </p>
<pre>
    
    Net income (loss)                          $1,413    $(89)   $158
      (Benefit from) provision for income
       taxes                                     (199)      -       4
      Interest expense, net.                       10      13      74
      Depreciation, depletion and amortization     83      85      92
                                                  ---     ---     ---
    EBITDA                                      1,307       9     328
    
</pre>
<p> </p>
<pre>
    
      Reorganization items (income) expense    (1,219)     41      39
      Restructuring (income) charges               19      (4)     11
      Alternative fuel mixture tax credits          -     (11)   (276)
      Non-cash foreign currency exchange
       (gains) losses                              (9)      6       2
      Other                                         4       5      (1)
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Adjusted EBITDA                              $102     $46    $103
                                                 ----     ---    ----
    
</pre>
<p> </p>
<pre>
    
    Adjusted EBITDA Margin                        6.5%    3.1%    7.3%
                                                  ---     ---     ---
    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    Other Financial Information:
    ----------------------------
    Capital Expenditures                          $49     $34     $30
    Pension Expense                                34      31      30
    Pension Contribution                           12       2       -
    Cash Taxes                                      1       2       -
    Change in Working Capital                      (2)    (18)     62
    
</pre>
<p> </p>
<pre>
    
    "EBITDA" is defined as net income (loss) before (benefit from)
    provision for income
    taxes, interest expense, net and depreciation, depletion and
    amortization. "Adjusted
    EBITDA" is defined as EBITDA adjusted as indicated above.  EBITDA and
    Adjusted
    EBITDA are non-GAAP financial measures.  See disclosure regarding
    the use of
    non-GAAP financial measures following these financial statements.





    
</pre>
<p> </p>
<pre>
    
                                SMURFIT-STONE CONTAINER CORPORATION
                                      STATISTICAL INFORMATION
    
</pre>
<p> </p>
<pre>
    
                                              2010                    2009
                                              ----                    ----
                             1st    2nd              1st    2nd
                             Qtr    Qtr   June YTD   Qtr    Qtr   June YTD
                            ----   ----   --------  ----   ----   --------
    
</pre>
<p> </p>
<pre>
    
    Containerboard System
      North American Mill
       Operating Rates
       (Containerboard
       Only)                100.0%  97.1%     98.9%  82.4%  85.0%     83.7%
    
</pre>
<p> </p>
<pre>
    
      North American
       Containerboard
       Production -M Tons   1,585  1,545     3,130  1,435  1,497     2,932
      Sequential Avg.
       Domestic Linerboard
       Price Change           6.3%  13.2%      N/A   -7.4%  -9.8%      N/A
    
</pre>
<p> </p>
<pre>
    
      Pulp Production -M
       Tons                    62     72       134     66     76       142
      SBS/Bleached Board
       Production -M Tons      35     31        66     33     32        65
      Kraft Paper
       Production -M Tons      29     26        55     19     28        47
    
</pre>
<p> </p>
<pre>
    
      Total Maintenance
       Downtime Tons -M
       Tons                    20     76        96     46     50        96
    
</pre>
<p> </p>
<pre>
    
    Corrugated Containers
      North American
       Shipments -BSF        16.4   17.3      33.7   16.6   16.7      33.3
      Per Day North
       American Shipments -
       MMSF                 260.9  273.7     267.3  267.8  265.7     266.7
      Sequential Avg.
       Corrugated Price
       Change                -0.6%   3.6%      N/A   -0.9%  -3.0%      N/A
    
</pre>
<p> </p>
<pre>
    
    Fiber Reclaimed and
     Brokered -M Tons       1,423  1,468     2,891  1,241  1,280     2,521



    SMURFIT-STONE CONTAINER CORPORATION
    NON-GAAP FINANCIAL MEASURES

    
</pre>
<p>In the accompanying financial presentation, we use the financial measures "adjusted net income (loss) attributable to common stockholders" (adjusted net income (loss)), "adjusted net income (loss) per diluted share attributable to common stockholders" (adjusted net income (loss) per diluted share), "EBITDA" and "adjusted EBITDA" which are derived from our consolidated financial information but are not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). These measures are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission (SEC) rules.  Adjusted net income (loss) and adjusted net income (loss) per diluted share are non-GAAP financial measures that exclude from net income (loss) attributable to common stockholders the effects of reorganization items (income) expense, debtor-in-possession financing costs, alternative fuel mixture tax credits, loss on early extinguishment of debt, restructuring (income) charges, non-cash foreign currency exchange (gains) losses, and interest on unsecured debt.  EBITDA is defined as net income (loss) before (provision for) benefit from income taxes, interest expense, net and depreciation, depletion and amortization.  Adjusted EBITDA is defined as EBITDA adjusted for reorganization items (income) expense, debtor-in-possession financing costs, alternative fuel mixture tax credits, loss on early extinguishment of debt, non-cash foreign currency exchange (gains) losses, (gain) loss on sale of assets, restructuring charges and other adjustments.</p>
<p/>
<p>The accompanying financial presentation includes a reconciliation of net income (loss) attributable to common stockholders and net income (loss) per diluted share attributable to common stockholders, the most directly comparable GAAP financial measures, to adjusted net income (loss) and adjusted net income (loss) per diluted share, respectively.  A reconciliation of net (income) loss to EBITDA and adjusted EBITDA is also presented.</p>
<p/>
<p>We use these supplemental non-GAAP measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors and to establish operational goals and forecasts that are used in allocating resources. These non-GAAP measures of operating results are reported to our board of directors, chief executive officer and our president and chief operating officer and are used to make strategic and operating decisions and assess performance.  These non-GAAP measures are presented to enhance an understanding of our operating results and are not intended to represent cash flows or results of operations.  We also believe these non-GAAP measures are beneficial to investors, potential investors and other key stakeholders, including analysts and creditors who use these measures in their evaluations of our performance from period to period and against the performance of other companies in our industry. Our creditors also use these measures to evaluate our ability to service our debt.  The use of these non-GAAP financial measures is beneficial to these stakeholders because they exclude certain items that management believes are not indicative of the on-going operating performance of our business, and including them would distort comparisons to our past operating performance.  Accordingly, we have excluded the adjustments, as detailed below, for the purpose of calculating these non-GAAP measures.</p>
<p/>
<p>The following is an explanation of each of the adjustments that we have made to arrive at these non-GAAP measures for the three and six months ended <span class="xn-chron">June 30, 2010</span> and 2009, as well as the reasons management believes each of these items is not indicative of operating performance:</p>
<pre>
    

    --  Reorganization items (income) expense, net of income taxes - These
        income and expense items are directly related to the process of our
        reorganizing under Chapter 11 and the Companies' Creditors Arrangement
        Act in Canada.  The items include gain due to plan effects, gain due
to
        fresh start accounting adjustments, provision for rejected/settled
        executory contracts and leases, accounts payable settlement gains and
        professional fees.  These income and expense items are not considered
        indicative of our ongoing operating performance and are not used by us
        to assess our operating performance.
    --  Debtor-in-possession (DIP) financing costs - These expenses were
        incurred and paid during the first quarter of 2009 in connection with
        entering into the DIP Credit Agreement.  These expense items are not
        considered indicative of our ongoing operating performance and are not
        used by us to assess our operating performance.
    --  Alternative fuel mixture tax credits - These amounts represent an
        excise tax credit for alternative fuel mixtures produced by a taxpayer
        for sale, or for use as a fuel in a taxpayer's trade or business,
        through December 31, 2009, at which time the credit expired.  These
        items are not considered indicative of our ongoing operating
        performance and are not used by us to assess our operating
performance.
    --  Loss on early extinguishment of debt - These losses represent
        unamortized deferred debt issuance cost and call premiums charged to
        expense in connection with our financing activities.  These losses
were
        not considered indicative of our ongoing operating performance because
        they related to specific financing activities and were not used by us
        to assess our operating performance.
    --  Non-cash foreign currency (gains) losses- The functional currency for
        our Canadian operations was the U.S. dollar.  Fluctuations in Canadian
        dollar-denominated monetary assets and liabilities resulted in
non-cash
        gains or losses.  We excluded the impact of foreign currency exchange
        gains and losses because the impact of foreign exchange is highly
        variable and difficult to predict from period to period and is not
tied
        to our operating performance.  These gains or losses are not
considered
        indicative of our ongoing operating performance and are not used by us
        to assess our operating performance.
    --  Interest on unsecured debt - These amounts represent the post-petition
        interest accrued on unsecured debt from the time of our bankruptcy
        filing, which was stayed and not paid as a result of the bankruptcy
        proceedings.  In the fourth quarter of 2009, we concluded it was not
        probable that interest expense that was accrued from the time of our
        bankruptcy filing through November 30, 2009, would be an allowed
claim.
        This expense was not considered indicative of our ongoing operating
        performance and was excluded by management in assessing our operating
        performance.
    --  Restructuring (income) charges - These adjustments represent the
        write-down of assets, primarily property, plant and equipment, to
        estimated net realizable values, the acceleration of depreciation for
        equipment to be abandoned or taken out of service, severance costs and
        other costs associated with our restructuring activities. These income
        and expense items were not considered indicative of our ongoing
        operating performance and were excluded by management in assessing our
        operating performance.
    --  (Gain) loss on sale of assets - These amounts represent gains and
        losses we recognized related to the sale of non-strategic assets. 
        These gains and losses were not considered indicative of ongoing
        operating performance and were excluded by management in assessing our
        operating performance.
    --  Other - These adjustments principally represent amounts accrued under
        our 2009 long-term incentive plan.  These income and expense items
were
        not considered indicative of our ongoing operating performance and
were
        excluded by management in assessing our operating performance.


    
</pre>
<p>Adjusted net income (loss), adjusted net income (loss) per diluted share, EBITDA and adjusted EBITDA have certain material limitations associated with their use as compared to net income (loss).  These limitations are primarily due to the exclusion of certain amounts that are material to our consolidated results of operations, as discussed above.  In addition, these adjusted net income (loss) and EBITDA measures may differ from adjusted net income (loss) and EBITDA calculations of other companies in our industry, limiting their usefulness as comparative measures.  Because of these limitations, adjusted net income (loss), adjusted net income (loss) per diluted share, EBITDA and adjusted EBITDA should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.  We compensate for these limitations by relying primarily on our GAAP results and using adjusted net income (loss), adjusted net income (loss) per diluted share, EBITDA and adjusted EBITDA only as supplemental measures of our operating performance.  The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial statements prepared in accordance with GAAP.</p>
<p/>
<p>We believe that providing these non-GAAP measures in addition to the related GAAP measures provides investors greater transparency to the information our management uses for financial and operational decision-making and allows investors to see our results as management sees them. We also believe that providing this information better enables investors to understand our operating performance and to evaluate the methodology used by our management to evaluate and measure our operating performance, and the methodology and financial measures used by our board of directors to assess management's performance.</p>
<pre>
    




    

For further information: For further information: Media, Sue Neumann, +1-314-656-5287, or Investors, Tim Griffith or Scott Dudley, +1-314-656-5553, all of Smurfit-Stone Container Corporation Web Site: http://www.smurfit-stone.com

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