-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OKrtNni3pTflwSRLCLvNVsU5bIR2AAqCE0JRkI9dvJ7PpO0sG44yrKk8HGKmSYFF 7bULnGbWljrQUJVrE+P08Q== 0000094610-97-000011.txt : 19970702 0000094610-97-000011.hdr.sgml : 19970702 ACCESSION NUMBER: 0000094610-97-000011 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970627 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STONE CONTAINER CORP CENTRAL INDEX KEY: 0000094610 STANDARD INDUSTRIAL CLASSIFICATION: 2631 IRS NUMBER: 362041256 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03439 FILM NUMBER: 97631570 BUSINESS ADDRESS: STREET 1: 150 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3123466600 MAIL ADDRESS: STREET 1: 18TH FL, CORPORATE ACCOUNTING STREET 2: 150 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60601 11-K 1 STONE CONTAINER CORPORATION DEFERRED INCOME SAVINGS PLAN FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 STONE CONTAINER CORPORATION DEFERRED INCOME SAVINGS PLAN INDEX Page Report of Independent Accountants 1 Financial Statements: Statement of Net Assets Available for Benefits as of December 31, 1996 and 1995 2 Statement of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1996 and 1995 3 Notes to Financial Statements 4 Note: Supplementary schedules have been omitted because they are not applicable. Report of Independent Accountants June 23, 1997 To the Participants and Administrator of the Stone Container Corporation Deferred Income Savings Plan In our opinion, the accompanying statement of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Stone Container Corporation Deferred Income Savings Plan (the Plan) at December 31, 1996 and 1995, and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. STONE CONTAINER CORPORATION DEFERRED INCOME SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 1996 AND 1995
1996 1995 Cash and cash equivalents $ - $ 2,868,559 Fixed investment contracts - 43,968,431 Pooled investment funds - 11,576,430 Mutual funds - 48,842,837 Common stock - 18,813,957 Investment in Stone Container Corporation Defined Contribution Master Trust 160,456,872 - Total investments 160,456,872 126,070,214 Contributions receivable: Employee - 4,540 Employer 1,151,094 534,554 Due from broker - 943,830 Accrued income 926,759 11,517 Total assets 162,534,725 127,564,655 Due to broker - 943,830 Total liabilities - 943,830 Net assets available for benefits $162,534,725 $126,620,825 The accompanying notes are an integral part of these statements.
STONE CONTAINER CORPORATION DEFERRED INCOME SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995 Sources of assets: Contributions: Employee $ 14,300,054 $ 13,069,571 Employer 1,151,094 534,554 Net investment income in the Stone Container Corporation Defined Contribution Master Trust 16,927,852 - Interest and dividend income - 6,771,903 Net appreciation in fair value of investments - 3,157,992 Transfers of assets from other plan 14,939,684 - Other 20,701 106,927 47,339,385 23,640,947 Application of assets: Participant withdrawals 10,610,680 7,336,622 Common stock distributed to participants 780,735 1,922,121 Other 34,070 100,419 11,425,485 9,359,162 Increase in net assets available for benefits 35,913,900 14,281,785 Net assets available for benefits: Beginning of period 126,620,825 112,339,040 End of period $162,534,725 $126,620,825 The accompanying notes are an integral part of these statements.
STONE CONTAINER CORPORATION DEFERRED INCOME SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 NOTE 1 - DESCRIPTION OF THE PLAN: The following description of the Stone Container Corporation Deferred Income Savings Plan (the Plan) is provided for general informational purposes only. Participants should refer to the Plan document for complete information. General The Plan was adopted by the Board of Directors of Stone Container Corporation (Stone or the Company) to offer eligible employees of the Company an opportunity to invest a portion of their income in the Plan on a regular basis through salary reduction under the provisions of section 401(k) of the Internal Revenue Code of 1986 (IRC). The Plan is administered by a committee of three individuals appointed by the Company and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's year end is December 31. Eligibility All salaried employees of the Company are eligible to participate in the Plan on any January 1 or July 1 enrollment date by filing written elections indicating their elective contributions (or by other procedure established by the Plan administrator for this purpose). Contributions Employee salary reduction contributions are to be not less than one percent or greater than ten percent of compensation up to the maximum contribution as permitted by the IRC. Compensation is defined as the total of wages, bonuses, commissions and overtime pay. Participants may change their contribution percentages and fund investment alternatives at specified dates during the year. Contributions may be suspended at any time by notifying the Plan Administrator. Contributions and earnings on participants' contributions are fully vested and nonforfeitable at all times. The Company matches participant contributions in an amount equal to $.50 for each $1 of contribution made by participants up to a maximum employer contribution of $300 per participant, per year. Prior to January 1, 1996, the Company matched participant contributions in an amount equal to $.25 for each $1 of contribution made by participants up to a maximum employer contribution of $150 per participant, per year. Employer contributions are made annually subsequent to the Plan year end. Participants are also fully vested, at all times, in the Company's matching contributions and earnings thereon. Distributions The balance in a participant's account is distributable upon termination of the participant's employment for any reason, including death, retirement, permanent disability, resignation or dismissal. Participant balances in the Company stock fund are distributable in shares of Stone common stock valued as of the end of the accounting period during which the distribution is requested. Participants who have not terminated employment are entitled to distributions of their account balances upon attainment of age 59-1/2. Participants must commence distribution of their account balances no later than April 1 of the calendar year following the calendar year in which they attain age 70-1/2. All distributions are made in the form of lump-sum payments. Upon request, an annuity option is also available. Prior to normal distribution of benefits, participants who demonstrate financial hardship may request a withdrawal of all or a portion of their employer and salary reduction contributions account as of December 31, 1988, plus their aggregate salary reduction contributions, but not earnings thereon, made on or after January 1, 1989. All hardship requests are evaluated and subject to approval by the Plan Administrator. Such withdrawals are subject to a $250 minimum and are not allowed more frequently than once in a twelve-month period. Investment alternatives Participants have the option to invest their balances in a fixed income fund, a balanced fund, an equity fund, an international equity fund, a small company growth fund and a Company stock fund. Prior to 1989, certain participants also had the option to invest in a money market fund. Investment decisions for each fund are made by the Bankers Trust Company (the Trustee) or the investment managers selected by the Plan Administrator. Prior to April 1, 1995, Harris Trust and Savings Bank acted as the Plan's trustee. Participants may elect to invest their contributions and the matching Company contributions in the various funds in increments of one percent. All contributions received are held and invested in the short-term investment fund until it is administratively possible for the Trustee to invest such contributions and earnings thereon pursuant to the participants' investment elections. No contributions and earnings thereon shall be held in the short-term investment fund longer than the following accounting date. Termination of the Plan The Company anticipates and believes that the Plan will continue without interruption, but reserves the right to discontinue the Plan at any time. If the Plan is terminated, the assets of the Plan shall be allocated among participants and beneficiaries in accordance with the applicable provisions of ERISA and the IRC. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of accounting The financial statements of the Plan are presented on the accrual basis of accounting. Accordingly, investment income is recognized when earned and expenses are recognized when incurred. Effective January 1, 1996, the Plan participates in the Stone Container Corporation Defined Contribution Master Trust (the Master Trust). The financial statements of the Plan disclose only the Plan's allocated share of the assets and the investment earnings and losses of the Master Trust (Note 6). During 1996, the Master Trust included four other defined contribution plans that are sponsored by the Company. Allocation of Master Trust assets and transactions In order to preserve for participating plans an interest in the combined assets of the Master Trust, the Trustee computes the beneficial interest in the Master Trust for each defined contribution plan by fund. The current month's Master Trust investment transactions are allocated based on each plan's computed share in the applicable Master Trust fund at the end of the prior month, adjusted for the current month's contributions less payments to beneficiaries and certain administrative expenses. These allocated amounts are then added to or subtracted from the prior month's computed shares, as adjusted, to determine computed shares at the end of the current month. Master Trust investment transactions allocated to the Plan include dividend and interest income and net appreciation (depreciation) in the fair value of investments. These amounts, net of allocated administrative expenses, represent the Plan's share of gain or loss on investment in the Master Trust and are presented on the Statement of Changes in Net Assets Available for Benefits. Investment valuation Mutual fund investments are valued at the last reported sales prices on the last business day of the year. Fixed investment contracts and pooled investment funds are valued at contract values plus accrued interest, which approximates market values. The Company's common stock is valued at the closing price on the last business day of the year. The sum of realized gains and losses and the net change in unrealized appreciation or depreciation in the fair value of investments is presented in the Statement of Changes in Net Assets Available for Benefits as net appreciation or depreciation in fair value of investments. Administrative expenses Investment manager expenses for the fixed income fund are paid by the Plan. The investment manager expenses for the fixed income fund for the year ended December 31, 1996 and 1995 were $22,738 and $12,208, respectively. The majority of other administrative expenses are paid by the Company. Beginning in 1996 when the Plan began participating in the Master Trust, certain trustee fees are also paid by the Plan. Such fees for the year ended December 31, 1996 were $3,671. Payments to withdrawing participants The Plan records payments to withdrawing participants at the time of disbursement, in accordance with generally accepted accounting principles. Under the rules for preparation of its Form 5500, the Plan reflects an accrual for the amount to be paid to participants who have withdrawn from the Plan prior to year end. Amounts payable to participants at December 31, 1996 and 1995 were $359,583 and $1,419,808, respectively. The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500: December 31, 1996 1995 Net assets available for benefits per the financial statements $162,534,725 $126,620,825 Amounts payable to withdrawing participants (359,583) (1,419,808) Net assets available for benefits per the Form 5500 $162,175,142 $125,201,017 The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500: Year ended December 31, 1996 1995 Benefits paid to participants per the financial statements $11,391,415 $9,258,743 Add: Amounts payable to withdrawing participants at December 31, 1996 and 1995 359,583 1,419,808 Less: Amounts payable to withdrawing participants at December 31, 1995 and 1994 (1,419,808) (2,244,219) Benefits paid to participants per the Form 5500 $10,331,190 $8,434,332 Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and related notes to the financial statements. Changes in such estimates may affect amounts reported in future periods. NOTE 4 - PLAN MERGER Effective January 1, 1996, the Stone Container Corporation Frozen Savings Plan (the Frozen Plan) merged into the Plan. At that time, participants of the Frozen Plan became participants of the Plan and the Frozen Plan was terminated. The net assets of the Frozen Plan were transferred to the Plan's Trustee. NOTE 5 - TAX STATUS OF THE PLAN: The Internal Revenue Service has determined and informed the Company by letter dated March 29, 1996 that the Plan is designed in accordance with the applicable sections of the IRC. The Plan administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plan's financial statements. NOTE 6 - PARTICIPATION IN THE MASTER TRUST As described in Note 2, the Plan's investment assets are included with the assets of several of the Company's defined contribution plans in the Master Trust. The Trustee determines the Plan's proportionate share of trust assets and related changes in trust assets, as described in Note 2, and such amounts are reflected in the Plan's Statements of Net Assets Available for Benefits and of Changes in Net Assets Available for Benefits. At December 31, 1996, the Plan's interest in the net assets of the Master Trust was approximately 69 percent. The following table presents the net assets held by the Master Trust as of December 31, 1996. 1996 Investments, at fair value: Cash and cash equivalents $ 7,510,768 Mutual funds 119,806,503 Common stock 20,087,230 Fixed income funds 62,938,266 Pooled investment funds 21,399,468 Total investments 231,742,235 Accrued income 2,520,445 Total assets 234,262,680 Due to broker 1,661,815 Total liabilities 1,661,815 Net assets held by Master Trust $232,600,865 The following table presents investment income for the Master Trust for the year ended December 31, 1996. 1996 Net appreciation in fair value of investments $ 9,126,639 Dividends 7,149,986 Interest 9,751,826 Total investment income 26,028,451 Administrative expenses 38,748 Net investment income $25,989,703 The following table presents the change in the net appreciation in fair value of investments (including gains and losses on investments sold during the year and unrealized gains and losses on investments purchased and held during the year) held by the Master Trust for the year ended December 31, 1996. 1996 Mutual funds $7,941,245 Common stock 1,185,394 Net appreciation in fair value of investments $9,126,639 NOTE 7 - SIGNIFICANT INVESTMENTS: Investments with fair values in excess of 5 percent of net assets available for benefits at either December 31, 1996 or 1995 were: 1996 1995 Investment in Stone Container Corporation Defined Contribution Master Trust $160,456,872 $ - Stone Container Corporation Common Stock - 18,813,957 Participation in Neuberger & Berman Guardian Fund - 12,854,892 Participation in American Balanced Fund, Inc. - 13,462,912 Participation in American Mutual Fund, Inc. - 11,023,750 Participation in Vanguard U.S. Growth Fund - 11,501,281 Hawaiian Trust Co. Pooled GIC Fund - 10,151,531 The following table presents changes in the net appreciation or depreciation in fair value of investments (including gains and losses on investments sold during the year and unrealized gains and losses on investments purchased and held during the year) held by the Plan for the year ended December 31, 1995. 1995 Common stock ($4,431,028) Mutual funds 7,589,020 Net appreciation in fair value of investments $3,157,992 NOTE 8 - CONFEDERATION LIFE The Plan maintained insurance contracts with Confederation Life Insurance Company (Confederation Life) during 1996. These contracts were held as investments in the fixed income fund until the Plan merged into the Master Trust at which time the contracts were segregated from the fixed income fund and participants were prohibited from making contributons, transfers or withdrawals to and from these contracts. The investment contracts with Confederation Life held as of December 31, 1996 were: Original Original Carrying Crediting Maturity Value Rate Date Confederation Life #62630 $1,201,371 7.68% 1/31/97 Confederation Life CIC #62618 1,199,497 7.45% 2/19/97 Confederation Life #62639 1,198,565 7.72% 9/26/96 Confederation Life #62640 1,199,649 7.76% 11/26/96 __________ $4,799,082 ========== In August 1994, following the placement of Confederation Life's Candian operations under the regulatory control of the Canadian government, Michigan insurance regulators filed an order of rehabilitation against the United States branch of Confederation Life. In response to the seizure of Confederation Life, the Plan ceased accruing interest on the investments effective August 31, 1994. In October 1996, the Confederation Life rehabilitation plan was approved by the courts and in November 1996, the rehabilitation plan with finalized. In accordance with the rehabilitation plan, the Plan elected to receive its contract payments including accrued interest in installments commencing in April 1997. As of May 30, 1997, the Plan has received contract payments totaling $5,725,841 from Confederation Life and state guaranty associations, and additional payments are expected to be minor. The excess of contract payments received as compared to the carrying value of the Confederation Life contracts at December 31, 1996 is due to the cessation of interest accrued by the Plan. This excess has been recorded as income in the 1996 financial statements. NOTE 9 - INFORMATION BY FUND: Net asset balances as of December 31, 1996 and 1995, and employee contributions, employer contributions, net investment income, transfers of assets from other plans, participant withdrawals and common stock distributed to participants and transfers from (to) associated funds for the year ended December 31, 1996 and 1995, by fund are as follows: As of As of Net asset balance: 12/31/96 12/31/95 Fixed Income Fund $ 65,441,053 $ 55,299,963 Equity Fund 51,545,524 37,372,087 Company Stock Fund 19,960,119 18,663,904 Money Market Fund 213,398 270,228 Balanced Fund 21,732,009 15,014,643 International Equity Fund 1,300,643 - Small Company Growth Fund 2,341,979 - $162,534,725 $126,620,825 Year ended Year ended Employee contributions: 12/31/96 12/31/95 Fixed Income Fund $ 4,818,728 $ 5,523,398 Equity Fund 4,978,209 3,468,127 Company Stock Fund 1,943,037 2,219,986 Money Market Fund - - Balanced Fund 2,408,602 1,858,060 International Equity Fund 59,314 - Small Company Growth Fund 92,164 - $14,300,054 $13,069,571 Year ended Year ended Employer contributions: 12/31/96 12/31/95 Fixed Income Fund $ 310,795 $220,491 Equity Fund 425,905 150,869 Company Stock Fund 138,131 81,632 Money Market Fund - - Balanced Fund 207,197 81,562 International Equity Fund 34,533 - Small Company Growth Fund 34,533 - $1,151,094 $534,554 Year Ended Year Ended Net investment income: 12/31/96 12/31/95 Fixed Income Fund $ 4,848,810 $3,643,235 Equity Fund 8,242,552 7,971,867 Company Stock Fund 1,402,942 (4,000,409) Money Market Fund 12,441 22,293 Balanced Fund 2,326,077 2,292,909 International Equity Fund 65,121 - Small Company Growth Fund 29,909 - $16,927,852 $9,929,895 Year Ended Year Ended Transfers of assets from other plan: 12/31/96 12/31/95 Fixed Income Fund $11,972,903 $ - Equity Fund 2,186,452 - Company Stock Fund - - Money Market Fund - - Balanced Fund 780,329 - International Equity Fund - - Small Company Growth Fund - - $14,939,684 $ Participant withdrawals and common Year Ended Year Ended stock distributed to participants: 12/31/96 12/31/95 Fixed Income Fund $ 7,051,101 $4,788,051 Equity Fund 2,456,567 1,982,122 Company Stock Fund 780,735 1,948,373 Money Market Fund 17,601 9,857 Balanced Fund 1,085,052 530,340 International Equity Fund - - Small Company Growth Fund 359 - $11,391,415 $9,258,743 Year Ended Year Ended Transfers from (to) associated funds: 12/31/96 12/31/95 Fixed Income Fund ($4,743,217) ($5,363,542) Equity Fund 845,125 4,941,178 Company Stock Fund (1,407,623) (2,965,335) Money Market Fund (101,337) (14,518) Balanced Fund 2,079,647 3,402,217 International Equity Fund 1,141,673 - Small Company Growth Fund 2,185,732 - $ - $ - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee and administrators of the plan have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. STONE CONTAINER CORPORATION DEFERRED INCOME SAVINGS PLAN By:THOMAS P. CUTILLETTA June 27, 1997 Thomas P. Cutilletta Senior Vice President, Administration and Corporate Controller EX-23 2 EXHIBIT 23 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-33784) of Stone Container Corporation of our report dated June 23, 1997 appearing in the Annual Report of the Stone Container Corporation Deferred Income Savings Plan on Form 11-K for the year ended December 31, 1996. PRICE WATERHOUSE LLP Chicago, Illinois June 27, 1997 -----END PRIVACY-ENHANCED MESSAGE-----