Smurfit-Stone Makes Changes in Container Board Mill, Container Systems

Chicago, IL - Smurfit-Stone Container Corporation announced changes in its containerboard mill and container systems as part of the integration of the recently acquired Stevenson, Alabama, corrugating medium mill and other assets from MeadWestvaco Corporation.

Smurfit-Stone will convert the No. 1 paper machine at its Hodge, Louisiana mill to kraft paper, phasing out corrugating medium production at the mill over the next several months. The No. 1 machine previously produced approximately 150,000 tons per year of corrugating medium.

In addition, Smurfit-Stone has determined that the No. 1 paper machine at its Missoula, Montana, containerboard mill will not be restarted. The No. 1 machine, which has been temporarily idled since March 2001, had the capacity to produce approximately 180,000 tons of linerboard per year. The permanent closure of the Missoula machine will result in a pre-tax restructuring charge of about $10 million in the fourth quarter.

Smurfit-Stone also announced its intention to discontinue operations at three container plants acquired in the MeadWestvaco transaction. The plants, located in Spartanburg, South Carolina; Ft. Smith, Arkansas; and Milwaukee, Wisconsin, significantly overlap existing Smurfit-Stone facilities. The decision to discontinue operations was made after careful review of the plants' operations. Numerous factors were taken into consideration in making the decision, including near- and long-term capital requirements, operating margins, cash flow and strategic fit. A total of 154 hourly and 63 salaried employees will be affected. Operations will be consolidated with other plants in the Smurfit-Stone system, and SSCC will facilitate a smooth transition for its customers. The plants are tentatively scheduled to close first quarter 2003.

The mill reconfiguration is in concert with reductions in supply to the company of about 250,000 tons per year of medium and about 27,000 tons of kraft linerboard. This resulted from the transfer of Smurfit-Stone's ownership in Groveton Paper Board, Inc. and the termination of supply contracts for 170,000 tons of medium from two significant suppliers in the third and fourth quarters.

Smurfit-Stone's acquisition of the Stevenson mill added about 830,000 tons per year of corrugating medium to the company's containerboard capacity. William N. Wandmacher, vice president and general manager, North American Containerboard Mill and Forest Resources division, said the reconfiguration increases net medium supply to Smurfit-Stone's system by approximately 400,000 tons, or about half of the Stevenson mill output. In addition, the reconfiguration creates efficiencies and addresses internal and external needs for containerboard and kraft paper products.