Smurfit-Stone Reports Fourth Quarter 2010 Results

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CREVE COEUR, Mo., and CHICAGO, Jan. 23, 2011 /CNW/ -- Smurfit-Stone Container Corporation (NYSE: SSCC) today reported net income of $49 million, or $0.49 per diluted share, for the fourth quarter ended Dec. 31, 2010, compared with net income of $65 million, or $0.65 per diluted share, for the third quarter of 2010, and a net loss attributable to common stockholders of ($6) million, or ($0.02) per share, for the fourth quarter of 2009.

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    (Logo:  http://photos.prnewswire.com/prnh/20070129/SMURFIT-STONELOGO )

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Smurfit-Stone's fourth quarter 2010 adjusted net income was $62 million, or $0.62 per diluted share, down seasonally from adjusted net income of $76 million, or $0.76 per diluted share, in the third quarter of 2010, and an adjusted net loss of ($16) million, or ($0.06) per diluted share, in the fourth quarter of 2009. The adjustments in the third and fourth quarter of 2010 were primarily the exclusion of costs related to reorganization and restructuring.

Diluted Earnings Per Share Attributable to Common Stockholders

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                                      Fourth     Third      Fourth
                                     Quarter    Quarter     Quarter
                                         2010       2010        2009
                                         ----       ----        ----
    Net Income (Loss) Attributable
     to
      Common Stockholders               $0.49      $0.65      ($0.02)
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Adjustments $0.13 $0.11 ($0.04)

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    Adjusted Net Income (loss)          $0.62      $0.76      ($0.06)
                                        =====      =====      ======
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    Weighted Average Shares (MM)          100        100         257


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The Company reported operating income of $103 million for the fourth quarter of 2010, compared to operating income of $142 million in the third quarter of 2010, and an operating loss of ($131) million in the fourth quarter of 2009. The sequential decline in operating income is mainly due to seasonally lower volumes, higher mill annual outage costs, and cost inflation, including a substantial increase in reclaimed fiber costs during the fourth quarter.

Patrick J. Moore, Smurfit-Stone's Chief Executive Officer, commented, "Fourth quarter performance was strong, meeting our expectations, and demonstrating that our initiatives to improve productivity and lower costs are enabling us to deliver improvement in earnings, margins and cash flow."

Adjusted EBITDA for the fourth quarter of 2010 was $205 million, down from $239 million in the third quarter of 2010, and up from $67 million in the fourth quarter of 2009. The sequential decline in adjusted EBITDA reflects seasonally lower volumes, cost inflation, the impact of a work stoppage at the Company's La Tuque, Quebec, mill, and market-related downtime taken in December in order to balance supply and demand in the Company's system.

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Net sales for the fourth quarter of 2010 were $1.63 billion, unchanged from the third quarter of 2010 and up 18 percent compared with sales of $1.38 billion in the fourth quarter of 2009. The stable sales in fourth quarter 2010 reflect modestly higher selling prices, offset by seasonally lower volumes.

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    Fourth Quarter Highlights

    --  The Company achieved strong financial results despite higher reclaimed
        fiber costs, a work stoppage at its La Tuque facility and
        market-related downtime in the quarter.

    --  Initial SG&A cost reductions were completed in the fourth quarter that
        will produce net savings of $50 million in 2011.

    --  The Company ended the quarter with cash of $449 million, down only $15
        million from the end of the third quarter, despite capital
expenditures
        of $67 million and a voluntary $105 million pension contribution in
the
        quarter.

    --  The Company's underfunded pension position improved to $1.13 billion
at
        year end from $1.45 billion at June 30, 2010, reflecting strong asset
        returns and contributions totaling $199 million in 2010.

    --  The Company ended 2010 with net debt of $745 million and liquidity of
        nearly $1 billion.

    Outlook
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Smurfit-Stone expects lower sequential earnings in the first quarter of 2011 compared with the fourth quarter of 2010. Moderate improvement in pricing will be more than offset by seasonally higher energy usage, cost inflation in fiber and energy, and the impact of employee benefit cost timing.

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    Conference Call and Webcast

    The previously scheduled conference call and webcast will not be held.

    Forward-Looking Statements & Non-GAAP Measures
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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 December 31, 2009, 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.

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    About Smurfit-Stone
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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 $6.3 billion in 2010, 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® .

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    (Financial statements follow)


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      SMURFIT-STONE CONTAINER CORPORATION
     CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Unaudited)
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                                            Successor
                                            ---------
                            Three Months                     Six Months
                                Ended       Three Months        Ended
                                                Ended
                            December 31,   September 30,   December 31,
    (In millions,
     except per share
     data)                           2010            2010           2010
    -----------------                ----            ----           ----
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    Net sales                      $1,628          $1,634         $3,262
    Costs and expenses
      Cost of goods sold            1,379           1,344          2,723
      Selling and
       administrative
       expenses                       129             141            270
      Restructuring
       expense                         18               7             25
      (Gain) loss on
       disposal of assets              (1)                            (1)
      Other operating
       income
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        Operating income
         (loss)                       103             142            245
    Other income
     (expense)
      Interest expense,
       net                            (22)            (23)           (45)
      Debtor-in-
       possession debt
       issuance costs
      Loss on early
       extinguishment of
       debt
      Foreign currency
       exchange gains
       (losses)
      Other, net                                        2              2
                                                      ---            ---
        Income (loss)
         before
         reorganization
         items
        and income taxes               81             121            202
    Reorganization
     items income
     (expense), net                    (5)             (7)           (12)
                                      ---             ---            ---
        Income (loss)
         before income
         taxes                         76             114            190
    (Provision for)
     benefit from
     income taxes                     (27)            (49)           (76)
                                      ---             ---            ---
        Net income (loss)              49              65            114
    Preferred stock
     dividends and
     accretion
    >>

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        Net income (loss)
         attributable to
        common stockholders           $49             $65           $114
                                      ---             ---           ----
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    Basic earnings per
     common share
        Net income (loss)
         attributable to
        common stockholders         $0.49           $0.65          $1.13
                                    -----           -----          -----
    Weighted average
     shares outstanding               100             100            100
                                      ---             ---            ---
    >>

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    Diluted earnings
     per common share
        Net income (loss)
         attributable to
        common stockholders         $0.49           $0.65          $1.13
                                    -----           -----          -----
    Weighted average
     shares outstanding               100             100            100
    -------------------               ---             ---            ---



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                                                   Predecessor
                                                   -----------
                                       Three Months Six Months
                                            Ended        Ended   Year Ended
                                                                   December
                                       December 31,    June 30,       31,
    (In millions, except per share
     data)                                      2009         2010       2009
    ------------------------------              ----         ----       ----
    >>

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    Net sales                                 $1,379       $3,024     $5,574
    Costs and expenses
      Cost of goods sold                       1,266        2,763      5,023
      Selling and administrative
       expenses                                  141          294        569
      Restructuring expense                      281           15        319
      (Gain) loss on disposal of
       assets                                                              3
      Other operating income                    (178)         (11)      (633)
                                                ----          ---       ----
        Operating income (loss)                 (131)         (37)       293
    Other income (expense)
      Interest expense, net                      (48)         (23)      (265)
      Debtor-in-possession debt
       issuance costs                                                    (63)
      Loss on early extinguishment
       of debt                                                           (20)
      Foreign currency exchange
       gains (losses)                             (4)           3        (14)
      Other, net                                   4            4         14
                                                 ---          ---        ---
        Income (loss) before
         reorganization items
        and income taxes                        (179)         (53)       (55)
    Reorganization items income
     (expense), net                              149        1,178         40
                                                 ---        -----        ---
        Income (loss) before income
         taxes                                   (30)       1,125        (15)
    (Provision for) benefit from
     income taxes                                 26          199         23
                                                 ---          ---        ---
        Net income (loss)                         (4)       1,324          8
    Preferred stock dividends and
     accretion                                    (2)          (4)       (11)
                                                 ---          ---        ---
        Net income (loss) attributable
         to
        common stockholders                      $(6)      $1,320        $(3)
                                                 ---       ------        ---
    >>

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    Basic earnings per common
     share
        Net income (loss) attributable
         to
        common stockholders                    $(.02)       $5.12      $(.01)
                                               -----        -----      -----
    Weighted average shares
     outstanding                                 257          258        257
                                                 ---          ---        ---
    >>

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    Diluted earnings per common
     share
        Net income (loss) attributable
         to
        common stockholders                    $(.02)       $5.07      $(.01)
                                               -----        -----      -----
    Weighted average shares
     outstanding                                 257          261        257
    -----------------------                      ---          ---        ---




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                    SMURFIT-STONE CONTAINER CORPORATION
                        CONSOLIDATED BALANCE SHEETS
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                                          Successor            Predecessor
                                          ---------            -----------
                               December 31,      June 30,   December 31,
    (In millions, except
     share data)                        2010           2010          2009
    --------------------                ----           ----          ----
    Assets                      (Unaudited)    (Unaudited)
    >>

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    Current assets
      Cash and cash
       equivalents                      $449           $340          $704
      Restricted cash                                     7             9
      Receivables                        765            739           615
      Receivable for
       alternative energy tax
       credits                            11             11            59
      Inventories                        496            496           452
      Refundable income taxes              6             31            23
      Prepaid expenses and
       other current assets               24             47            43
                                         ---            ---           ---
         Total current assets          1,751          1,671         1,905
    Net property, plant and
     equipment                         4,374          4,405         3,081
    Deferred income taxes                                             23
    Goodwill                             100             93
    Intangible assets, net                75             77
    Other assets                         159            163            68
                                         ---            ---           ---
                                      $6,459         $6,409        $5,077
                                      ------         ------        ------
    Liabilities and
     Stockholders' Equity
     (Deficit)
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    Liabilities not subject
     to compromise
    Current liabilities
      Current maturities of
       long-term debt                    $16            $18        $1,354
      Accounts payable                   503            515           387
      Accrued compensation and
       payroll taxes                     180            176           145
      Interest payable                     3              5            12
      Other current
       liabilities                        86             81           164
                                         ---            ---           ---
         Total current
          liabilities                    788            795         2,062
    Long-term debt, less
     current maturities                1,178          1,176
    Pension and
     postretirement
     benefits, net of
     current portion                   1,300          1,639
    Other long-term
     liabilities                         129            140           117
    Deferred income taxes                453            307
                                         ---            ---
       Total liabilities not
        subject to compromise          3,848          4,057         2,179
    >>

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    Liabilities subject to
     compromise                                                     4,272
                                                                    -----
       Total liabilities               3,848          4,057         6,451
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    Stockholders' equity
      Successor preferred
       stock
      Successor common stock
      Predecessor preferred
       stock                                                               104
      Predecessor common stock                                          3
      Additional paid-in
       capital                         2,366          2,352         4,081
      Retained earnings
       (deficit)                         114                       (4,883)
      Accumulated other
       comprehensive income
       (loss)                            131                         (679)
                                         ---                         ----
         Total stockholders'
          equity (deficit)             2,611          2,352        (1,374)
                                       -----          -----        ------
                                      $6,459         $6,409        $5,077
                                      ------         ------        ------




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                       SMURFIT-STONE CONTAINER CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
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                                       Successor Predecessor
                                       --------- -----------
                                      Six Months Six Months   Year
                                          Ended     Ended    Ended
                                                            December
                                      December 31, June 30,    31,
    (In millions)                             2010      2010     2009
    -------------                             ----      ----     ----
    Cash flows from operating
     activities
      Net income                              $114    $1,324       $8
      Adjustments to reconcile
       net income to net cash
       provided by (used for)
          operating activities
        Loss on early
         extinguishment of debt                                    20
        Depreciation, depletion
         and amortization                      169       168      364
        Debtor-in-possession
         debt issuance costs                                           63
        Amortization of deferred
         debt issuance costs and
         original issue discount                 5                  6
        Deferred income taxes                   99      (201)     (26)
        Pension and postretirement
         benefits                             (158)       50       76
        (Gain) loss on disposal of
         assets                                 (1)                 3
        Non-cash restructuring
         expense                                 3         7      250
        Non-cash stock-based
         compensation                           10         3        9
        Non-cash foreign currency
         exchange (gains) losses                          (3)      14
        Gain due to plan effects                        (580)
        Gain due to fresh start
         accounting adjustments                         (742)
        Payments to settle pre-
         petition liabilities
         excluding debt                                 (202)
        Non-cash reorganization
         items                                           101      (96)
        Change in restricted cash
         for utility deposits                    7         2       (9)
        Change in operating assets
         and liabilities,
         net of effects from
          acquisitions and
          dispositions
           Receivables and retained
            interest in receivables
            sold                               (22)     (129)      (4)
           Receivable for alternative
            energy tax credits                            48      (59)
           Inventories                           5         1       55
           Prepaid expenses and other
            current assets                      23         1      (13)
           Accounts payable and
            accrued liabilities                (21)       57      219
           Interest payable                     (2)        2      165
        Other, net                             (20)        8       49
    >>

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      Net cash provided by (used
       for) operating activities               211       (85)   1,094
                                               ---       ---    -----
    Cash flows from investing
     activities
      Expenditures for property,
       plant and equipment                    (106)      (83)    (172)
      Proceeds from property
       disposals                                 9        10       48
      Advances to affiliates,
       net                                                        (15)
    >>

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      Net cash used for
       investing activities                    (97)      (73)    (139)
                                               ---       ---     ----
    Cash flows from financing
     activities
      Proceeds from exit credit
       facilities                                      1,200
      Original issue discount                            (12)
      Proceeds from debtor-in-
       possession financing                                       440
      Repayments of debtor-in-
       possession financing                                      (440)
      Net borrowings
       (repayments) of long-
       term debt                                (7)   (1,347)      71
      Repurchase of receivables                                  (385)
      Debtor-in-possession
       debt issuance costs                                        (63)
      Debt issuance costs on
       exit credit facilities
       and other financing costs                         (47)
                                                         ---
      Net cash used for
       financing activities                     (7)     (206)    (377)
                                               ---      ----     ----
      Effect of exchange rate
       changes on cash                           2
                                               ---
    Increase (decrease) in
     cash and cash equivalents                 109      (364)     578
    Cash and cash equivalents
      Beginning of period                      340       704      126
                                               ---       ---      ---
      End of period                           $449      $340     $704
      -------------                            ---       ---      ---




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                    SMURFIT-STONE CONTAINER CORPORATION
                          EBITDA, As Defined Below
                               (In millions)
                                (Unaudited)
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                                           Successor          Predecessor
                                           ---------          -----------
                                    4Q 10            3Q 10      4Q 09
                                    -----            -----      -----
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Net sales $1,628 $1,634 $1,379

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    Net income (loss)                    $49             $65         $(4)
      (Benefit from) provision for
       income taxes                       27              49         (26)
      Interest expense, net               22              23          48
      Depreciation, depletion and
       amortization                       85              84          91
                                         ---             ---         ---
    EBITDA                               183             221         109
    >>

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      Reorganization items (income)
       expense                             5               7        (149)
      Restructuring charges               18               7         281
      Alternative fuel mixture tax
       credits                             -               -        (178)
      Non-cash foreign currency
       exchange (gains) losses             -               -           4
      (Gain) loss on sale of assets       (1)              -           -
      Multi-employer pension plan
       withdrawal charge                   -               4           -
    >>

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    Adjusted EBITDA                     $205            $239         $67
                                        ----            ----         ---
    >>

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    Adjusted EBITDA margin              12.6%           14.6%        4.9%
                                        ----            ----         ---
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    Other Financial Information:
    ----------------------------
    Net cash provided by
     operating activities                $50            $161        $301
    Capital expenditures                  67              39          60
    Pension expense                       14              14          29
    Pension contributions                154              31           1
    Cash taxes refunded (paid)            14               9          (1)
    Change in working capital             19             (36)        121
    Containerboard, corrugated
     containers and reclamation
      operations segment operating
       profit                            174             216          41
    >>

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    "EBITDA" is defined as net income 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 following regarding the use of non-GAAP
    financial measures.





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                             SMURFIT-STONE CONTAINER CORPORATION
                                   STATISTICAL INFORMATION
    >>

    <<
                                                                 2010
                                                                 ----
                                                                Combined
                           Successor               Predecessor            (1)
                           ---------        -----------         ---------
                         4th    3rd      2nd     1st
                         Qtr    Qtr      Qtr     Qtr        Dec YTD
                        ----   ----     ----    ----        -------
    >>

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    Containerboard
     System
      North American
       Mill Operating
       Rates
       (Containerboard
       Only)             95.4%  99.7% 97.1%  100.0%        98.2%
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      North American
       Containerboard
       Production -M
       Tons             1,534  1,603    1,545   1,585           6,267
      Sequential Avg.
       Domestic
       Linerboard Price
       Change            -1.5%   7.2%    13.2%    6.3%            N/A
    >>

    <<
      Pulp Production -
       M Tons              73     73       72      62             280
      SBS/Bleached
       Board Production
       -M Tons             28     32       31      35             126
      Kraft Paper
       Production -M
       Tons                27     26       26      29             108
    >>

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      Total Maintenance
       Downtime Tons -M
       Tons                43     49       76      20             188
    >>

    <<
    Corrugated
     Containers
      North American
       Shipments -BSF    16.3   17.1     17.3    16.4            67.1
      Per Day North
       American
       Shipments -MMSF  267.9  266.9    273.7   260.9           267.3
      Sequential Avg.
       Corrugated Price
       Change             0.5%   3.2%     3.6%   -0.6%            N/A
    >>

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    Fiber Reclaimed
     and Brokered -M
     Tons               1,458  1,494    1,468   1,423           5,843



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    <<
                                                      2009
                                                      ----
                                     Predecessor
                                     -----------
                          4th    3rd    2nd    1st    Dec
                          Qtr    Qtr    Qtr    Qtr    YTD
                         ----   ----   ----   ----   ----
    >>

    <<
    Containerboard
     System
      North American
       Mill Operating
       Rates
       (Containerboard
       Only)              87.1%  87.2%  85.0%  82.4%  85.4%
    >>

    <<
      North American
       Containerboard
       Production -M
       Tons              1,550  1,551  1,497  1,435  6,033
      Sequential Avg.
       Domestic
       Linerboard Price
       Change             -5.1%  -5.9%  -9.8%  -7.4%   N/A
    >>

    <<
      Pulp Production -
       M Tons               74     78     76     66    294
      SBS/Bleached
       Board Production
       -M Tons              36     29     32     33    130
      Kraft Paper
       Production -M
       Tons                 29     34     28     19    110
    >>

    <<
      Total Maintenance
       Downtime Tons -M
       Tons                 33     29     50     46    158
    >>

    <<
    Corrugated
     Containers
      North American
       Shipments -BSF     16.1   16.7   16.7   16.6   66.1
      Per Day North
       American
       Shipments -MMSF   264.6  260.9  265.7  267.8  264.7
      Sequential Avg.
       Corrugated Price
       Change             -2.0%  -2.6%  -3.0%  -0.9%   N/A
    >>

    <<
    Fiber Reclaimed
     and Brokered -M
     Tons                1,344  1,317  1,280  1,241  5,182
    >>

    <<
    (1)  Although the 2010 Successor Period and the 2010 Predecessor
    Period are distinct reporting periods, we combined the statistical
    information for the six months ended June 30, 2010 of the
    Predecessor with the six months ended December 31, 2010 of the
    Successor for analytical purposes.





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                    SMURFIT-STONE CONTAINER CORPORATION
               ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE
                   (In Millions, Except Per Share Data)
                                (Unaudited)
    >>

    <<
                            Successor (Note 1)
                            ------------------
                                       Six Months
                                          Ended
                                         December
                                            31,
                        4Q 10   3Q 10         2010
                        -----   -----         ----
    >>

    <<
    Net income
     (loss)
     attributable
     to common
     stockholders
     (GAAP)                $49    $65         $114
       Reorganization
       items
       (income)
       expense, net
       of income
       taxes                 3      4            7
      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               (1)     -           (1)
      Interest on
       Predecessor
       unsecured
       debt                  -      -            -
      Restructuring
       charges              11      4           15
      Multi-
       employer
       pension plan
       withdrawal
       charge, net
       of income
       taxes                 -      3            3
                           ---    ---          ---
    Adjusted net
     income
     (loss)
     attributable
     to common
     stockholders
     (Note 2)              $62    $76         $138
                           ---    ---         ----
    >>

    <<
                           Successor (Note 1)
                           ------------------
                                       Six Months
                                          Ended
                                         December
                                            31,
                        4Q 10   3Q 10         2010
                        -----   -----         ----
    >>

    <<
    Net income
     (loss) per
     diluted
     share
     attributable
     to common
     stockholders
     (GAAP)              $0.49  $0.65        $1.13
       Reorganization
       items
       (income)
       expense, net
       of income
       taxes              0.03   0.04         0.07
      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            (0.01)     -        (0.01)
      Interest on
       Predecessor
       unsecured
       debt                  -      -            -
      Restructuring
       charges            0.11   0.04         0.15
      Multi-
       employer
       pension plan
       withdrawal
       charge, net
       of income
       taxes                 -   0.03         0.03
                           ---   ----         ----
    Adjusted net
     income
     (loss) per
     diluted
     share
     attributable
     to common
     stockholders
     (Note 2)            $0.62  $0.76        $1.37
                         -----  -----        -----



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                             Predecessor (Note 1)
                             --------------------
                                    Six
                                  Months
                                  Ended    Year Ended
                                             December
                                June 30,        31,
                       4Q 09         2010         2009
                       -----         ----         ----
    >>

    <<
    Net income
     (loss)
     attributable
     to common
     stockholders
     (GAAP)                $(6)    $1,320          $(3)
       Reorganization
       items
       (income)
       expense, net
       of income
       taxes              (149)    (1,378)         (40)
      Debtor-in-
       possession
       financing
       costs                 -          -           63
      Alternative
       fuel mixture
       tax credits        (178)       (11)        (633)
      Loss on early
       extinguishment
       of debt               -          -           20
      Non-cash
       foreign
       currency
       exchange
       (gains)
       losses                4         (3)          14
      (Gain) loss
       on sale of
       assets                -          -            2
      Interest on
       Predecessor
       unsecured
       debt                 32          -          163
      Restructuring
       charges             281         15          319
      Multi-
       employer
       pension plan
       withdrawal
       charge, net
       of income
       taxes                 -          -            -
                           ---        ---          ---
    Adjusted net
     income
     (loss)
     attributable
     to common
     stockholders
     (Note 2)             $(16)      $(57)        $(95)
                          ----       ----         ----
    >>

    <<
                            Predecessor (Note 1)
                            --------------------
                                    Six
                                  Months
                                  Ended    Year Ended
                                             December
                                June 30,        31,
                       4Q 09         2010         2009
                       -----         ----         ----
    >>

    <<
    Net income
     (loss) per
     diluted
     share
     attributable
     to common
     stockholders
     (GAAP)             $(0.02)     $5.07       $(0.01)
       Reorganization
       items
       (income)
       expense, net
       of income
       taxes             (0.58)     (5.28)       (0.16)
      Debtor-in-
       possession
       financing
       costs                 -          -         0.24
      Alternative
       fuel mixture
       tax credits       (0.69)     (0.04)       (2.46)
      Loss on early
       extinguishment
       of debt               -          -         0.08
      Non-cash
       foreign
       currency
       exchange
       (gains)
       losses             0.02      (0.01)        0.06
      (Gain) loss
       on sale of
       assets                -          -         0.01
      Interest on
       Predecessor
       unsecured
       debt               0.12          -         0.63
      Restructuring
       charges            1.09       0.06         1.24
      Multi-
       employer
       pension plan
       withdrawal
       charge, net
       of income
       taxes                 -          -            -
                           ---        ---          ---
    Adjusted net
     income
     (loss) per
     diluted
     share
     attributable
     to common
     stockholders
     (Note 2)           $(0.06)    $(0.20)      $(0.37)
                        ------     ------       ------
    >>

    <<
    Note 1:  For the Predecessor Company, adjustments to GAAP net income,
    other than reorganization items (income) expense, were not tax
    effected because it was more likely than not that substantially all
    of the deferred tax assets that were generated during bankruptcy
    would not be realized and we did not record any additional tax
    benefit for 2009 and the six months ended June 30, 2010.  Due to the
    effects of the Plan of Reorganization, we concluded that it was more
    likely than not that substantially all of the deferred tax assets
    would be realized and we recognized an income tax benefit related to
    reorganization items in the six months ended June 30, 2010.
    >>

    <<
    For the Successor Company periods, we recorded a provision for income
    taxes related to the statements of operations.  As a result, the
    Successor period adjustments to net income are presented on a net of
    tax basis.
    >>

    <<
    Note 2:  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, (gain) loss on sale of assets, accrued but
    unpaid interest on Predecessor unsecured debt, restructuring charges
    and a multi-employer pension plan withdrawal charge.  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 following
    regarding the use of non-GAAP financial measures.
    >>

    <<
    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.



    SMURFIT-STONE CONTAINER CORPORATION
    NON-GAAP FINANCIAL MEASURES

    >>

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 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, non-cash foreign currency exchange (gains) losses, (gain) loss on disposal of assets, interest on Predecessor unsecured debt, restructuring charges and a multi-employer pension plan withdrawal charge. 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, restructuring charges, (gain) loss on disposal of assets and a multi-employer pension plan withdrawal charge.

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.

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. 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.

The following is an explanation of each of the adjustments that we have made to arrive at these non-GAAP measures for (1) the three and six months ended December 31, 2010 of the Successor, (2) the three months ended September 30, 2010 of the Successor, (3) the six months ended June 30, 2010 of the Predecessor, (4) and the three and twelve months ended December 31, 2009 of the Predecessor, as well as the reasons management believes each of these items is not indicative of operating performance:

    <<

    --  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 on-going 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 on-going 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 on-going 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 on-going 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 - Through June 30, 2010, 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 on-going operating
        performance and are not used by us to assess our operating
performance.

    --  (Gain) loss on disposal 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 on-going
        operating performance and were excluded by management in assessing our
        operating performance.

    --  Interest on Predecessor 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
        Petition Date through November 30, 2009, would be an allowed claim. 
        This expense was not considered indicative of our on-going operating
        performance and was excluded by management in assessing our operating
        performance.

    --  Restructuring 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 on-going operating
        performance and were excluded by management in assessing our operating
        performance.

    --  Multi-employer pension plan withdrawal charge - This amount represents
        the charge associated with the withdrawal from a multi-employer
pension
        plan.  This expense item was not considered indicative of our on-going
        operating performance and was excluded by management in assessing our
        operating performance.

    >>

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.

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.

    <<



    >>

SOURCE Smurfit-Stone Container Corporation

For further information: Lisa Esneault (media): +1-314-656-5827, Tim Griffith or Scott Dudley (investors): +1-314-656-5553, www.smurfit-stone.com Web Site: http://www.smurfit-stone.com

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Smurfit-Stone Container Corporation

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