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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Smurfit-Stone Container Corp. Common Stock | NYSE:SSCC | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 41.25 | 0.00 | 01:00:00 |
From Jul 2019 to Jul 2024
CREVE COEUR, Mo. and CHICAGO, Aug. 3 /PRNewswire-FirstCall/ -- Smurfit-Stone Container Corporation (NYSE: SSCC) today reported net income attributable to common stockholders of $1.41 billion, or $5.41 per diluted share, for the second quarter of 2010, compared with a net loss of ($91) million, or ($0.35) per diluted share in the first quarter of 2010, and net income of $155 million, or $0.60 per diluted share, for the second quarter of 2009.
Smurfit-Stone's second-quarter 2010 adjusted net income was $2 million, or $0.01 per diluted share, compared with an adjusted net loss of ($59) million, or ($0.23) per diluted share, in the first quarter of this year, and an adjusted net loss of ($21) million, or ($0.08) per diluted share, in the second quarter of 2009. The most significant adjustment in the second quarter of 2010 was exclusion of $1.42 billion of income, including tax benefits, related to the Company's emergence from bankruptcy reorganization proceedings in the U.S. and Canada.
Diluted Earnings Per Share Attributable to Common Stockholders | |||||||
Second | First | Second | |||||
Quarter | Quarter | Quarter | |||||
2010 | 2010 | 2009 | |||||
Net Income (loss) | $5.41 | ($0.35) | $0.60 | ||||
Adjustments | ($5.40) | $0.12 | ($0.68) | ||||
Adjusted Net Income (loss) | $0.01 | ($0.23) | ($0.08) | ||||
The Company reported an operating loss of ($6) million for the three months ended June 30, 2010, compared to an operating loss of ($31) million in the first quarter of 2010, and operating income of $271 million 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.
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."
Adjusted EBITDA for the second quarter ended June 30, 2010, was $102 million compared with $46 million in the first quarter of this year and $103 million 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.
Net sales for the second quarter of this year were $1.56 billion, compared with $1.46 billion in this year's first quarter and $1.41 billion 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.
Second-Quarter 2010 Highlights
Year-to-Date Results
For the six months ended June 30, 2010, net income was $1.32 billion, or $5.07 per diluted share, compared with a net loss of ($62) million, or ($0.24) per diluted share, in the first half of 2009.
Smurfit-Stone's first-half 2010 adjusted net loss was ($57) million, or ($0.20) per diluted share, compared with an adjusted net loss of ($56) million, or ($0.22) per diluted share, in the first half of 2009.
The Company reported an operating loss of ($37) million for the six months ended June 30, 2010, compared with operating income of $265 million in the first half of 2009, which was primarily attributable to the alternative fuel tax credit income.
Other Financial Items
Outlook
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.
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.
Conference Call and Webcast
Smurfit-Stone will host a conference call for analysts, institutional investors and shareholders on Tuesday, Aug. 3, 2010, at 10 a.m. Eastern Time. To access the call, participants should dial the number below approximately 10 minutes before the start time.
U.S. – (888) 679-8037 or International – (617) 213-4849
Passcode: 20306220
The call will also be webcast in a listen-only format with an accompanying slide presentation and can be accessed at www.smurfit-stone.com.
A replay of the conference call will be available through Aug. 17, 2010. To access the replay, dial (888) 286-8010 (U.S.) or (617) 801-6888 (International), and enter passcode 16228881.
A replay of the webcast will be available at www.smurfit-stone.com.
Forward-Looking Statements
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.
About Smurfit-Stone
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 $5.57 billion 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® .
(Financial statements follow)
SMURFIT-STONE CONTAINER CORPORATION | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited) | |||||||||||||||
Predecessor | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||
(In millions, except per share data) | 2010 | 2009 | 2010 | 2010 | 2009 | ||||||||||
Net sales | $ | 1,563 | $ 1,407 | $ | 1,461 | $ | 3,024 | $ 2,778 | |||||||
Costs and expenses | |||||||||||||||
Cost of goods sold | 1,407 | 1,256 | 1,356 | 2,763 | 2,473 | ||||||||||
Selling and administrative expenses | 143 | 146 | 151 | 294 | 291 | ||||||||||
Restructuring (income) expenses | 19 | 11 | (4) | 15 | 24 | ||||||||||
(Gain) loss on disposal of assets | (1) | 1 | |||||||||||||
Other operating income | (276) | (11) | (11) | (276) | |||||||||||
Operating income (loss) | (6) | 271 | (31) | (37) | 265 | ||||||||||
Other income (expense) | |||||||||||||||
Interest expense, net | (10) | (74) | (13) | (23) | (145) | ||||||||||
Debtor-in-possession debt issuance costs | (63) | ||||||||||||||
Loss on early extinguishment of debt | (20) | ||||||||||||||
Foreign currency exchange gains (losses) | 9 | (2) | (6) | 3 | 1 | ||||||||||
Other, net | 2 | 6 | 2 | 4 | 4 | ||||||||||
Income (loss) before reorganization items and income taxes | (5) | 201 | (48) | (53) | 42 | ||||||||||
Reorganization items income (expense), net | 1,219 | (39) | (41) | 1,178 | (93) | ||||||||||
Income (loss) before income taxes | 1,214 | 162 | (89) | 1,125 | (51) | ||||||||||
(Provision for) benefit from income taxes | 199 | (4) | 199 | (5) | |||||||||||
Net income (loss) | 1,413 | 158 | (89) | 1,324 | (56) | ||||||||||
Preferred stock dividends and accretion | (2) | (3) | (2) | (4) | (6) | ||||||||||
Net income (loss) attributable to common stockholders | $ | 1,411 | $ 155 | $ | (91) | $ | 1,320 | $ (62) | |||||||
Basic earnings per common share | |||||||||||||||
Net income (loss) attributable to common stockholders | $ | 5.47 | $ 0.60 | $ | (0.35) | $ | 5.12 | $ (0.24) | |||||||
Weighted average shares outstanding | 258 | 257 | 258 | 258 | 257 | ||||||||||
Diluted earnings per common share | |||||||||||||||
Net income (loss) attributable to common stockholders | $ | 5.41 | $ 0.60 | $ | (0.35) | $ | 5.07 | $ (0.24) | |||||||
Weighted average shares outstanding | 261 | 257 | 258 | 261 | 257 | ||||||||||
SMURFIT-STONE CONTAINER CORPORATION | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
Successor | Predecessor | |||||
(In millions, except share data) | 2010 | 2009 | ||||
Assets | (Unaudited) | |||||
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) | ||||||
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 | ||||
Liabilities subject to compromise | 4,272 | |||||
Total liabilities | 4,048 | 6,451 | ||||
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 | ||||
SMURFIT-STONE CONTAINER CORPORATION | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(Unaudited) | ||||||||||
Predecessor | ||||||||||
2010 | ||||||||||
Pre | Post | |||||||||
Six Months Ended June 30, (In millions) | Emergence | Adjustments | Emergence | 2009 | ||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | $ (198) | $ 1,522 | $ 1,324 | $ | (56) | |||||
Adjustments to reconcile net income (loss) to net cash provided by | ||||||||||
Loss on early extinguishment of debt | 20 | |||||||||
Depreciation, depletion and amortization | 168 | 168 | 182 | |||||||
Debtor-in-possession debt issuance costs | 63 | |||||||||
Amortization of deferred debt issuance costs | 3 | |||||||||
Deferred income taxes | (1) | (200) | (201) | 3 | ||||||
Pension and postretirement benefits | 50 | 50 | 20 | |||||||
Loss on disposal of assets | 1 | |||||||||
Non-cash restructuring expense | 7 | 7 | 4 | |||||||
Non-cash stock-based compensation | 3 | 3 | 4 | |||||||
Non-cash foreign currency exchange gains | (3) | (3) | (1) | |||||||
Gain due to plan effects | (580) | (580) | ||||||||
Gain due to fresh start accounting adjustments | (742) | (742) | ||||||||
Payment to settle non-debt liabilities subject to compromise | (202) | (202) | ||||||||
Non-cash reorganization items | 101 | 101 | 61 | |||||||
Change in restricted cash for utility deposits | 2 | 2 | (13) | |||||||
Change in operating assets and liabilities, | ||||||||||
net of effects from acquisitions and dispositions | ||||||||||
Receivables and retained interest in receivables sold | (129) | (129) | (38) | |||||||
Receivable for alternative energy tax credits | 48 | 48 | (89) | |||||||
Inventories | 1 | 1 | 19 | |||||||
Prepaid expenses and other current assets | 1 | 1 | (5) | |||||||
Accounts payable and accrued liabilities | 57 | 57 | 204 | |||||||
Interest payable | 2 | 2 | 77 | |||||||
Other, net | 8 | 8 | 33 | |||||||
Net cash provided by (used for) operating activities | 117 | (202) | (85) | 492 | ||||||
Cash flows from investing activities | ||||||||||
Expenditures for property, plant and equipment | (83) | (83) | (69) | |||||||
Proceeds from property disposals | 10 | 10 | 4 | |||||||
Advances to affiliates, net | (15) | |||||||||
Net cash used for investing activities | (73) | (73) | (80) | |||||||
Cash flows from financing activities | ||||||||||
Proceeds from exit credit facility | 1,200 | 1,200 | ||||||||
Original issue discount | (12) | (12) | ||||||||
Proceeds from debtor-in-possession financing | 440 | |||||||||
Net borrowings (repayments) of long-term debt | (1) | (1,346) | (1,347) | 60 | ||||||
Repurchase of receivables | (385) | |||||||||
Debtor-in-possession debt issuance costs | (63) | |||||||||
Debt issuance costs on exit credit facility | (15) | (32) | (47) | |||||||
Change in restricted cash for collateralizing outstanding | ||||||||||
letters of credit | (11) | 11 | ||||||||
Net cash provided by (used for) financing activities | (27) | (179) | (206) | 52 | ||||||
Increase (decrease) in cash and cash equivalents | 17 | (381) | (364) | 464 | ||||||
Cash and cash equivalents | ||||||||||
Beginning of period | 704 | 704 | 126 | |||||||
End of period | $ 721 | $ (381) | $ 340 | $ | 590 | |||||
SMURFIT-STONE CONTAINER CORPORATION | |||||||||
REORGANIZED CONSOLIDATED BALANCE SHEET | |||||||||
June 30, 2010 | |||||||||
(In millions) | Predecessor | Plan Effect | Fresh Start | Successor | |||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ 721 | $ (381) | $ | $ 340 | |||||
Restricted cash | 18 | (11) | 7 | ||||||
Receivables | 750 | 750 | |||||||
Inventories | 449 | 47 | 496 | ||||||
Refundable income taxes | 24 | 7 | 31 | ||||||
Prepaid expenses and other current assets | 42 | 5 | 47 | ||||||
Total current assets | 2,004 | (385) | 52 | 1,671 | |||||
Net property, plant and equipment | 2,979 | 1,426 | 4,405 | ||||||
Deferred income taxes | 22 | 148 | (170) | ||||||
Goodwill | 126 | 126 | |||||||
Intangible assets, net | 77 | 77 | |||||||
Other assets | 75 | 31 | 15 | 121 | |||||
$ 5,080 | $ (206) | $ 1,526 | $ 6,400 | ||||||
Liabilities and Stockholders' Equity (Deficit) | |||||||||
Liabilities not subject to compromise | |||||||||
Current liabilities | |||||||||
Current maturities of long-term debt | $ 1,352 | $ (1,334) | $ | $ 18 | |||||
Accounts payable | 488 | 27 | 515 | ||||||
Accrued compensation and payroll taxes | 139 | 34 | 3 | 176 | |||||
Interest payable | 12 | (7) | 5 | ||||||
Other current liabilities | 141 | (59) | (1) | 81 | |||||
Total current liabilities | 2,132 | (1,339) | 2 | 795 | |||||
Long-term debt, less current maturities | 1,176 | 12 | 1,188 | ||||||
Pension and postretirement benefits, net of current portion | 1,179 | 460 | 1,639 | ||||||
Other long-term liabilities | 116 | 24 | 140 | ||||||
Deferred income taxes | 286 | 286 | |||||||
Total liabilities not subject to compromise | 2,248 | 1,016 | 784 | 4,048 | |||||
Liabilities subject to compromise | 4,354 | (4,354) | |||||||
Total liabilities | 6,602 | (3,338) | 784 | 4,048 | |||||
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) | 2,352 | ||||||
Retained earnings (deficit) | (5,081) | 4,971 | 110 | ||||||
Accumulated other comprehensive income (loss) | (632) | 632 | |||||||
Total stockholders' equity (deficit) | (1,522) | 3,132 | 742 | 2,352 | |||||
$ 5,080 | $ (206) | $ 1,526 | $ 6,400 | ||||||
SMURFIT-STONE CONTAINER CORPORATION | |||||||
ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE | |||||||
(In Millions, Except Per Share Data) | |||||||
(Unaudited) | |||||||
2Q 10 | 2Q 09 | 1Q 10 | 1H 10 | 1H 09 | |||
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) | ||
2Q 10 | 2Q 09 | 1Q 10 | 1H 10 | 1H 09 | |||
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) | ||
Note 1: Exclusive of reorganization items (income) expense, debtor-in-possession financing costs, alternative fuel mixture | |||||||
Diluted earnings per common share computations for the three and six months ended June 30, 2010 were adjusted to reflect | |||||||
SMURFIT-STONE CONTAINER CORPORATION | |||||||
EBITDA, As Defined Below | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
2Q 10 | 1Q 10 | 2Q 09 | |||||
Net Sales | $ 1,563 | $ 1,461 | $ 1,407 | ||||
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 | ||||
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) | ||||
Adjusted EBITDA | $ 102 | $ 46 | $ 103 | ||||
Adjusted EBITDA Margin | 6.5% | 3.1% | 7.3% | ||||
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 | ||||
"EBITDA" is defined as net income (loss) before (benefit from) provision for income | |||||||
SMURFIT-STONE CONTAINER CORPORATION | |||||||||
STATISTICAL INFORMATION | |||||||||
2010 | 2009 | ||||||||
1st Qtr | 2nd Qtr | June YTD | 1st Qtr | 2nd Qtr | June YTD | ||||
Containerboard System | |||||||||
North American Mill Operating Rates (Containerboard Only) | 100.0% | 97.1% | 98.9% | 82.4% | 85.0% | 83.7% | |||
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 | |||
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 | |||
Total Maintenance Downtime Tons - M Tons | 20 | 76 | 96 | 46 | 50 | 96 | |||
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 | |||
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
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.
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. 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.
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 June 30, 2010 and 2009, as well as the reasons management believes each of these items is not indicative of 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
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