SSCC Smurfit-Stone Container Corp. Common Stock

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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United States
Securities and Exchange Commission
Washington, D.C. 20549

Form 10-K

Commission file number 1-03439

Smurfit-Stone Container Corporation
(Exact name of registrant as specified in its charter)

Registrant's Telephone Number: (312) 346-6600

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Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ý     No  o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o     No  ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý     No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  o     No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o     No  ý

The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the registrant's most recently completed second fiscal quarter was $2.5 billion, based on the closing price of $24.75 per share of such stock on the New York Stock Exchange on June 30, 2010.

The number of shares outstanding of the registrant's common stock as of February 9, 2011: 93,564,459.

DOCUMENTS INCORPORATED BY REFERENCE:

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SMURFIT-STONE CONTAINER CORPORATION
ANNUAL REPORT ON FORM 10-K
December 31, 2010

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FORWARD-LOOKING STATEMENTS

Except for the historical information contained in this Annual Report on Form 10-K, certain matters discussed herein contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Although we believe that, in making any such statements, our expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those contained in such forward-looking statements. When used in this document, the words "anticipates," "believes," "expects," "intends" and similar expressions as they relate to Smurfit-Stone Container Corporation, its operations or its management are intended to identify such forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. There are important factors that could cause actual results to differ materially from those in forward-looking statements, certain of which are beyond our control. These factors, risks and uncertainties are discussed in Part I, Item 1A, "Risk Factors."

Our actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. Accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do so, what impact they will have on our results of operations or financial condition. We expressly decline any obligation to publicly revise any forward-looking statements that have been made to reflect the occurrence of events after the date hereof.

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PART I

ITEM 1.     BUSINESS

Unless the context otherwise requires, "we," "us," "our," "Company" and "Smurfit-Stone" refer to the business of Smurfit-Stone Container Corporation and its subsidiaries.

GENERAL

Smurfit-Stone Container Corporation ("SSCC" or the "Company"), incorporated in Delaware in 1987, was a holding company with no business operations of its own. SSCC conducted its business operations through its wholly-owned subsidiary, Smurfit-Stone Container Enterprises, Inc. ("SSCE"), a Delaware corporation. On June 30, 2010 ("Effective Date"), SSCC emerged from its Chapter 11 and Companies' Creditors Arrangement Act ("CCAA") bankruptcy proceedings. As of the Effective Date and pursuant to the Plan of Reorganization (as hereafter defined), the Company merged with and into SSCE. SSCE changed its name to Smurfit-Stone Container Corporation and became the Reorganized Smurfit-Stone Container Corporation ("Reorganized Smurfit-Stone").

Smurfit-Stone Container Corporation is one of the industry's leading integrated manufacturers of paperboard and paper-based packaging in North America, including containerboard and corrugated containers, and is one of the world's largest paper recyclers. We have a complete line of graphics capabilities for packaging. For the Successor period six months ended December 31, 2010 and Predecessor period six months ended June 30, 2010, our net sales were $3,262 million and $3,024 million, and our net income attributable to common stockholders was $114 million and $1,320 million, respectively. Net income attributable to common stockholders included bankruptcy related reorganization items income (expense), net of $12 million expense and $1,178 million income for the six months ended December 31, 2010 and June 30, 2010, respectively.

SUBSEQUENT EVENTS

On January 23, 2011, the Company and Rock-Tenn Company ("Rock-Tenn") entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which the Company will merge with and into a subsidiary of Rock-Tenn (the"Merger"). This Merger, unanimously approved by the Boards of Directors of both companies, will create a leader in the North American paperboard packaging market with combined revenues of approximately $9 billion.

For each share of our common stock, our stockholders will be entitled to receive 0.30605 shares of Rock-Tenn common stock and $17.50 in cash, representing 50% cash and 50% stock on the date of the signing of the Merger Agreement. On January 23, 2011, the equity consideration was $35 per our common share or approximately $3.5 billion, consisting of approximately $1.8 billion of cash and the issuance of approximately 30.9 million shares of Rock-Tenn common stock. In addition, Rock-Tenn will assume our liabilities, including debt and underfunded pension liabilities, which were $1,194 million and $1,145 million, respectively, at December 31, 2010. Following the acquisition, Rock-Tenn stockholders will own approximately 56% and our stockholders will own 44% of the combined company.

The transaction is expected to close in the second quarter of 2011 and is subject to customary closing conditions, regulatory approvals, as well as approval by both Rock-Tenn and our stockholders.

BANKRUPTCY PROCEEDINGS

Chapter 11 Bankruptcy Filings

On January 26, 2009 (the "Petition Date"), we and our U.S. and Canadian subsidiaries (collectively, the "Debtors") filed a voluntary petition (the "Chapter 11 Petition") for relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court in

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Wilmington, Delaware (the "U.S. Court"). On the same day, our Canadian subsidiaries also filed to reorganize (the "Canadian Petition") under the CCAA in the Ontario Superior Court of Justice in Canada (the "Canadian Court"). Our operations in Mexico and Asia and certain U.S. and Canadian legal entities (the "Non-Debtor Subsidiaries") were not included in the filings and continued to operate outside of the Chapter 11 and CCAA processes. As described below, on June 21, 2010, the U.S. Court entered an order ("Confirmation Order") approving and confirming the Joint Plan of Reorganization for Smurfit-Stone Container Corporation and its Debtor Subsidiaries and Plan of Compromise and Arrangement for Smurfit-Stone Container Canada Inc. and Affiliated Canadian Debtors ("Plan of Reorganization"). We emerged from our Chapter 11 and CCAA bankruptcy proceedings on June 30, 2010, the Effective Date. As of the Effective Date and pursuant to the Plan of Reorganization, we merged with and into our wholly-owned subsidiary, SSCE. SSCE changed its name to Smurfit-Stone Container Corporation and became the Reorganized Smurfit-Stone.

The term "Predecessor" refers only to us and our subsidiaries prior to the Effective Date, and the term "Successor" refers only to the Reorganized Smurfit-Stone and our subsidiaries subsequent to the Effective Date. Unless the context indicates otherwise, the terms "we", "us", "SSCC" and the "Company" are used interchangeably in this Annual Report on Form 10-K to refer to both the Predecessor and Successor Company.

Until emergence from bankruptcy on the Effective Date, the Debtors were operating as debtors-in-possession under the jurisdiction of the U.S. Court and the Canadian Court (the "Bankruptcy Courts") and in accordance with the applicable provisions of the Bankruptcy Code and the CCAA. In general, as debtors-in-possession, the Debtors were authorized to continue to operate as ongoing businesses, but could not engage in transactions outside the ordinary course of business without the approval of the Bankruptcy Courts.

Debtor-In-Possession ("DIP") Financing

In connection with filing the Chapter 11 Petition and the Canadian Petition on the Petition Date, we and certain of our affiliates entered into a Post-Petition Credit Agreement (the "DIP Credit Agreement") on January 28, 2009. Amendments to the DIP Credit Agreement were entered into on February 25 and 27, 2009.

The DIP Credit Agreement, as amended, provided for borrowings up to an aggregate committed amount of $750 million, consisting of a $400 million U.S. term loan ("U.S. DIP Term Loan") for borrowings by SSCE; a $35 million Canadian term loan ("Canadian DIP Term Loan") for borrowings by Smurfit-Stone Container Canada Inc. ("SSC Canada"); a $250 million U.S. revolving loan ("U.S. DIP Revolver") for borrowings by SSCE and/or SSC Canada; and a $65 million Canadian revolving loan ("Canadian DIP Revolver") for borrowings by SSCE and/or SSC Canada.

Under the DIP Credit Agreement, on January 28, 2009, we borrowed $440 million, consisting of a $400 million U.S. DIP Term Loan, a $35 million Canadian DIP Term loan and $5 million from the Canadian DIP Revolver. In accordance with the terms of the DIP Credit Agreement, in January 2009, we used U.S. DIP Term Loan proceeds of $360 million, net of lenders' fees of $40 million, and Canadian DIP Term Loan proceeds of $30 million, net of lenders' fees of $5 million, to terminate our receivables securitization programs and repay all indebtedness outstanding of $385 million and to pay other expenses of $1 million. In addition, other fees and expenses of $17 million related to the DIP Credit Agreement were paid for with proceeds of $5 million from the Canadian DIP Revolver and available cash.

The outstanding principal amount of the loans under the DIP Credit Agreement, plus interest accrued and unpaid, were due and payable in full at maturity, which was January 28, 2010. As all borrowings under the DIP Credit Agreement were paid in full as of December 31, 2009, we allowed the DIP Credit Agreement to expire on the maturity date of January 28, 2010.

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Reorganization Process

The Bankruptcy Courts approved payment of certain of our pre-petition obligations, including employee wages, salaries and benefits, and the payment of vendors and other providers in the ordinary course for goods received and services rendered subsequent to the filing of the Chapter 11 Petition and Canadian Petition and other business-related payments necessary to maintain the operation of our business. We retained legal and financial professionals to advise us on the bankruptcy proceedings.

Immediately after filing the Chapter 11 Petition and Canadian Petition, we notified all known current or potential creditors of the bankruptcy filings. Subject to certain exceptions under the Bankruptcy Code and the CCAA, our bankruptcy filings automatically enjoined, or stayed, the continuation of any judicial or administrative proceedings or other actions against us or our property to recover, collect or secure a claim arising prior to the filing of the Chapter 11 Petition and Canadian Petition. Thus, for example, most creditor actions to obtain possession of property from us, or to create, perfect or enforce any lien against our property, or to collect on monies owed or otherwise exercise rights or remedies with respect to a pre-petition claim were enjoined unless and until the Bankruptcy Courts lifted the automatic stay.

As required by the Bankruptcy Code, the United States Trustee for the District of Delaware (the "U.S. Trustee") appointed an official committee of unsecured creditors (the "Creditors' Committee"). The Creditors' Committee and its legal representatives had a right to be heard on all matters that came before the U.S. Court with respect to us. A monitor was appointed by the Canadian Court with respect to proceedings before the Canadian Court.

Under the Bankruptcy Code, the Debtors either assumed or rejected pre-petition executory contracts, including real property leases, subject to the approval of the Bankruptcy Courts and certain other conditions. In this context, "assumption" meant that we agreed to perform our obligations and cure all existing defaults under the contract or lease, and "rejection" meant that we were relieved from our obligations to perform further under the contract or lease, but were subject to a pre-petition claim for damages for the breach thereof, subject to certain limitations. Any damages resulting from rejection of executory contracts and unexpired leases, and from the determination of the U.S. Court (or agreement by parties of interest) of allowed claims for contingencies and other disputed amounts, that were permitted to be recovered under the Bankruptcy Code were treated as liabilities subject to compromise unless such claims were secured prior to the Petition Date.

Plan of Reorganization and Exit Credit Facilities

In order for the Debtors to successfully emerge from bankruptcy, the Bankruptcy Courts had to confirm a plan of reorganization that satisfied the requirements of the Bankruptcy Code and the CCAA. A plan of reorganization was required to, among other things, resolve the Debtors' pre-petition obligations, set forth the revised capital structure of the newly reorganized entity and provide for corporate governance subsequent to our exit from bankruptcy.

Plan of Reorganization

On December 1, 2009, the Debtors filed their Plan of Reorganization and Disclosure Statement ("Disclosure Statement") with the U.S. Court. On December 22, 2009, January 27, 2010, and February 4, 2010, the Debtors filed amendments to the Plan of Reorganization and the Disclosure Statement. On March 19, 2010, the Debtors filed a supplement to the Plan of Reorganization, and on May 27, 2010, the Debtors filed the final Plan of Reorganization reflecting the resolution of certain objections by equity security holders and other non-material modifications.

On January 29, 2010, the U.S. Court approved the Debtors' Disclosure Statement as containing adequate information for the holders of impaired claims and equity interests, who were entitled to vote to accept or reject the Plan of Reorganization.

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The Plan of Reorganization was overwhelmingly approved by number and dollar amount of the required classes of creditors of each of the Debtors, with the exception of Stone Container Finance Company of Canada II ("Stone FinCo II"). Stone FinCo II was removed from the Plan of Reorganization. A meeting of creditors was held for the Canadian debtor subsidiaries on April 6, 2010, at which the necessary votes were received to confirm the Plan of Reorganization by all requisite classes of creditors other than Stone FinCo II.

The Bankruptcy Code required the U.S. Court, after appropriate notice, to hold a hearing on confirmation of a plan of reorganization. The confirmation hearing on the Plan of Reorganization began in the U.S. Court on April 15, 2010, and concluded on May 4, 2010. A hearing was conducted in the Canadian Court on May 3, 2010, and the Canadian Court issued an order on May 13, 2010, approving the Plan of Reorganization in the CCAA proceedings in Canada.

On May 24, 2010, the Debtors announced that they reached a resolution with certain holders of the Company's preferred and common stock that had filed objections to the confirmation of the Plan of Reorganization. On May 28, 2010, the U.S. Court approved notice procedures with respect to this resolution. On June 21, 2010, the U.S. Court entered the Confirmation Order which approved and confirmed the Plan of Reorganization. We emerged from our Chapter 11 and CCAA bankruptcy proceedings on June 30, 2010, the Effective Date.

As of the Effective Date, we substantially consummated the various transactions contemplated under the Plan of Reorganization and the Confirmation Order, including the following:

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we merged with and into SSCE, with SSCE being the survivor entity and renaming itself Smurfit-Stone Container Corporation, and becoming the Reorganized Smurfit-Stone. Reorganized Smurfit-Stone is governed by a board of directors that includes Patrick J. Moore, our Chief Executive Officer, Steven J. Klinger, our former President and Chief Operating Officer until he resigned effective December 31, 2010, and nine independent directors, including a non-executive chairman selected by the Creditors' Committee in consultation with the Debtors;



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Reorganized Smurfit-Stone filed the Amended and Restated Certificate of Incorporation of the Company, which authorized Reorganized Smurfit-Stone to issue 160,000,000 shares, consisting of 150,000,000 shares of common stock, par value $.001 per share ("Common Stock") and 10,000,000 shares of preferred stock, par value $.001 per share ("Preferred Stock"). Reorganized Smurfit-Stone issued or reserved for issuance 100,000,000 shares of Common Stock for distribution to creditors and interest holders pursuant to the Plan of Reorganization. Under the Plan of Reorganization, we issued an aggregate of 91,014,189 shares of Common Stock, including 89,854,782 shares of Common Stock issued on June 30, 2010 and an additional 1,159,407 shares of Common Stock subsequently issued through August 13, 2010 (collectively, the "Initial Distribution"). None of the Preferred Stock was issued or outstanding as of the Effective Date;



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all of the existing secured debt of the Debtors was fully repaid with cash;



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substantially all of the general unsecured claims against SSCE, and us, including all of the outstanding unsecured senior notes, were exchanged for Common Stock;



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holders of unsecured claims against SSCE of less than or equal to $10,000 received payment of 100% of such claims in cash, and eligible cash-out participants who so indicated on their ballot received the percentage amount of their allowed claim they elected to receive in cash in lieu of Common Stock;



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holders of our 7% Series A Cumulative Exchangeable Redeemable Convertible preferred stock received a pro-rata distribution of 2,172,166 shares of Common Stock and holders of our

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common stock received a pro-rata distribution of 2,171,935 shares. All shares of common stock and preferred stock of the Predecessor Company were cancelled;

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Reorganized Smurfit-Stone adopted the Equity Incentive Plan, pursuant to which, among other things, it reserved for issuance 8,695,652 shares of Common Stock representing eight percent of the fully diluted new Common Stock. In accordance with the terms of the Equity Incentive Plan, 2,895,909 stock options and 914,498 Restricted Stock Units ("RSU's") were granted to executive officers and other key employees of Reorganized Smurfit-Stone on the Effective Date;



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the assets of the Canadian Debtors, other than Stone FinCo II, were sold to a newly-formed Canadian subsidiary of Reorganized Smurfit-Stone free and clear of existing claims, liens and interests in exchange for (i) the repayment in cash of the secured debt obligations of the Canadian Debtors, (ii) cash to the Canadian Debtors' unsecured creditors and (iii) the assumption of certain liabilities and obligations of the Canadian Debtors;



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Reorganized Smurfit-Stone and its newly-formed Canadian subsidiary assumed all of the existing obligations under the qualified defined benefit pension plans in the United States and Canada sponsored by the Debtors, as well as all of the collective bargaining agreements in the United States and Canada between the Debtors and their labor unions.

On October 29, 2010, we issued an additional 648,363 shares and cancelled 34,000 shares previously issued in the Initial Distribution, leaving approximately 8.4 million shares of Common Stock held in reserve as of December 31, 2010. On January 27, 2011, we issued an additional 1,778,204 shares, leaving approximately 6.6 million shares of Common Stock in reserve.

From the approximately 6.6 million shares of Common Stock remaining in reserve, approximately 3.5 million shares were reserved in the Stone FinCo II Contribution Reserve and approximately 3.1 million shares remain in the SSCE Distribution Reserve for Holders of General Unsecured Claims.

On January 10, 2011, the Bankruptcy Court issued an order that disallowed the claim filed on behalf of the Holders of the Stone FinCo II Contribution Claim. Therefore, the approximately 3.5 million shares in the Stone FinCo II Contribution Reserve will not be distributed to the Holders of the Stone FinCo II Contribution Claim. Instead, the Plan of Reorganization requires that these shares in the Stone FinCo II Contribution Reserve be distributed as follows: (i) 95.5% (approximately 3.3 million shares) to the SSCE Distribution Reserve, to be distributed to the Holders of Allowed General Unsecured Claims under the terms of the Plan of Reorganization; (ii) 2.25% (approximately 75,000 shares) to the Holders of SSCC Preferred Interests; and (iii) 2.25% (approximately 75,000 shares) to the Holders of SSCC Common Interests. We expect to distribute the approximately 150,000 shares for the SSCC Preferred Interests and SSCC Common Interests by March 31, 2011.

Subsequent to the SSCC Preferred Interest and SSCC Common Interest distributions, the SSCE Distribution Reserve will include approximately 6.4 million shares of Common Stock. By March 31, 2011, we expect to distribute a minimum of 3.5 million shares from the SSCE Distribution Reserve on a pro-rata basis to Holders of Allowed General Unsecured Claims who had previously received distributions of shares under the terms of the Plan of Reorganization. The remaining 2.9 million shares in the SSCE Distribution Reserve are being held for Holders of General Unsecured Claims that are still unliquidated or subject to dispute. These shares will be distributed as these claims are liquidated or resolved, in accordance with the Plan of Reorganization. To the extent shares remain after resolution of these claims, these excess shares will also be re-distributed on a pro-rata basis to the Holders of Allowed General Unsecured Claims who had previously received distributions.

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Exit Credit Facilities

On January 14, 2010, the U.S. Court entered an order authorizing the Debtors to (i) enter into an exit term loan facility engagement and arrangement letter and fee letters, (ii) pay associated fees and expenses and (iii) furnish related indemnities. On February 1, 2010, we filed a motion with the U.S. Court seeking approval to enter into a senior secured term loan exit facility ("Term Loan Facility").

On February 16, 2010, the U.S. Court granted the motion and authorized us and certain of our affiliates to enter into the Term Loan Facility. On the same date, the U.S. Court also granted our February 3, 2010 motion seeking approval to enter into a commitment letter and fee letters for an asset-based revolving credit facility (the "ABL Revolving Facility") (together with the Term Loan Facility, the "Exit Credit Facilities"). Based on such approvals, on February 22, 2010, we and certain of our subsidiaries entered into the Term Loan Facility that provides for an aggregate term loan commitment of $1,200 million. In addition, we entered into the ABL Revolving Facility with aggregate commitments of $650 million (including a $100 million Canadian Tranche), on April 15, 2010. The ABL Revolving Facility includes a $150 million sub-limit for letters of credit.

On June 30, 2010, the Term Loan Facility was funded and borrowings became available under the ABL Revolving Facility. The proceeds of the borrowings under the Term Loan Facility of $1,200 million, together with available cash, were used to repay our outstanding secured indebtedness under our pre-petition Credit Facility and pay remaining fees, costs and expenses related to and contemplated by the Exit Credit Facilities and the Plan of Reorganization. See Note 1 of the Notes to Consolidated Financial Statements — Fresh Start Accounting. As of December 31, 2010, we had no borrowings under the ABL Revolving Facility and $1,194 million under the Term Loan Facility. Borrowings under the ABL Revolving Facility are available for working capital purposes, capital expenditures, permitted acquisitions and general corporate purposes. As of December 31, 2010, our borrowing base under the ABL Revolving Facility was $618 million and the amount available for borrowings after considering outstanding letters of credit was $534 million.

As of December 31, 2010, the Company also had available unrestricted cash and cash equivalents of $449 million primarily invested in money market funds at a variable interest rate of 0.13%.

Financial Reporting Considerations

Subsequent to the Petition Date, we applied the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 852, "Reorganizations" ("ASC 852"), in preparing the consolidated financial statements. ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the bankruptcy proceedings were recorded in reorganization items in the consolidated statements of operations. In addition, pre-petition obligations that were impacted by the bankruptcy reorganization process were classified on the consolidated balance sheet at December 31, 2009 in liabilities subject to compromise.

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Reorganization Items

Our reorganization items directly related to the process of our reorganizing under Chapter 11 and the CCAA, and our emergence on June 30, 2010, as recorded in our consolidated statements of operations, consist of the following:

In addition, an income tax benefit of $200 million related to the effects of the plan of reorganization and application of fresh start accounting was recorded in the six months ended June 30, 2010, primarily related to adjustments for cancellation of indebtedness, valuation allowances and unrecognized tax benefits.

Professional fees directly related to the reorganization include fees associated with advisors to the Company, the Creditors' Committee and certain secured creditors. During the six months ended December 31, 2010, the Company continued to incur costs related to professional fees that are directly attributable to the reorganization.

Net cash paid for reorganization items related to professional fees for the six months ended December 31, 2010 and June 30, 2010, and the year ended December 31, 2009 totaled $38 million, $32 million, and $41 million, respectively.

Reorganization items exclude employee severance and other restructuring charges recorded during 2010 and 2009.

Interest expense recorded on the Predecessor unsecured debt subsequent to the Petition date was zero for the six months ended June 30, 2010 and $163 million for the year ended December 31, 2009. Contractual interest expense on unsecured debt was $98 million and $196 million for the six months ended June 30, 2010 and the year ended December 31, 2009, respectively. Under the Plan of Reorganization, interest expense on the unsecured senior notes subsequent to the Petition Date was not paid. In the fourth quarter of 2009, we concluded it was not probable that interest expense on the Predecessor unsecured senior notes subsequent to the Petition Date would be an allowed claim. As a result, in December 2009, we recorded income in reorganization items for the reversal of $163 million post-petition unsecured interest expense accrued from the Petition Date through November 30, 2009, and discontinued recording unsecured interest expense.

In addition, in the fourth quarter of 2009, we concluded it was not probable that Preferred Stock dividends that were accrued subsequent to the Petition Date would be allowed claims. Preferred Stock dividends that were accrued post-petition and included in liabilities subject to compromise were reversed in the fourth quarter of 2009. Preferred Stock dividends in arrears were $13 million at the Effective Date and $9 million as of December 31, 2009. The Preferred Stock dividends in arrears since the Petition Date are presented in the Predecessor consolidated statements of operations only to reflect

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preferred stockholders' rights to dividends over common stockholders and are not reflected in the Preferred Stock value in the December 31, 2009 consolidated balance sheet.

Other Bankruptcy Related Costs

Debtor-in-possession debt issuance costs of $63 million were incurred and paid during the first quarter of 2009 in connection with entering into the DIP Credit Agreement, and are separately presented in the 2009 consolidated statements of operations.

Liabilities Subject to Compromise

Liabilities subject to compromise represent pre-petition unsecured obligations that were expected to be settled under the Plan of Reorganization. These liabilities represented the amounts expected to be allowed on known or potential claims to be resolved through the Chapter 11 and CCAA process. Liabilities subject to compromise also included certain items, such as qualified defined benefit pension and retiree medical obligations that were assumed under the Plan of Reorganization, and as such, have been recorded in liabilities under the Reorganized Smurfit-Stone.

We rejected certain executory contracts and unexpired leases with respect to our operations with the approval of the Bankruptcy Courts. Damages resulting from rejection of executory contracts and unexpired leases were generally treated as general unsecured claims and were classified as liabilities subject to compromise.

Liabilities subject to compromise at December 31, 2009 consisted of the following:

For information regarding the discharge of liabilities subject to compromise, see Note 1 of the Notes to Consolidated Financial Statements — Fresh Start Accounting.

Fresh Start Accounting

In accordance with ASC 852, we adopted fresh start accounting as of the close of business on June 30, 2010, because the reorganization value of the assets of the Predecessor Company immediately before the date of confirmation of the Plan of Reorganization was less than the total of all post-petition liabilities and allowed claims, and the holders of the Predecessor Company's voting shares immediately before confirmation of the Plan of Reorganization received less than 50 percent of the voting shares of the Successor Company. Upon adoption of fresh start accounting, the Company became a new entity for financial reporting purposes reflecting the Successor capital structure. As such, a new accounting basis in the identifiable assets and liabilities assumed was established with no retained earnings or accumulated other comprehensive income (loss) ("OCI").

For information regarding fresh start accounting, see Note 1 of the Notes to Consolidated Financial Statements — Fresh Start Accounting.

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FINANCIAL INFORMATION CONCERNING INDUSTRY SEGMENTS

We operate as one segment. For financial information for the last three fiscal years, including our net sales to external customers by country of origin and total long-lived assets by country, see the information set forth in Note 24 of the Notes to Consolidated Financial Statements.

PRODUCTS

Our operations include 12 paper mills (10 located in the United States and two in Canada), 103 container plants (84 located in the United States, 13 in Canada, three in Mexico, two in China and one in Puerto Rico), 30 recycling plants located in the United States and one lamination plant located in Canada. We also operate wood harvesting facilities in Canada and the United States. Our primary products include:

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containerboard;

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corrugated containers;

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market pulp;

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kraft paper; and

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reclaimed fiber

We produce a full range of high-quality corrugated containers designed to protect, ship, store and display products made to our customers' merchandising and distribution specifications. Corrugated containers are sold to a broad range of manufacturers of consumer goods. Our container plants serve local customers and large national accounts. Corrugated containers are used to transport such diverse products as home appliances, electric motors, small machinery, grocery products, produce, books and furniture. We provide customers with innovative packaging solutions to advertise and sell their products. In addition, we manufacture and sell a variety of retail ready, point of purchase displays and a full line of specialty products, including pizza boxes, corrugated clamshells for the food industry, Cordeck® recyclable pallets and custom die-cut boxes to display packaged merchandise on the sales floor. We also provide custom, proprietary and standard automated packaging machines, offering customers turn-key installation, automation, line integration and packaging solutions.

Containerboard and Corrugated Containers

Successor

Our containerboard mills produce a full line of containerboard, which is used primarily in the production of corrugated packaging. We produced 1,619,000 tons of unbleached kraft linerboard, 500,000 tons of white top linerboard and 1,018,000 tons of medium for the six months ended December 31, 2010. Our containerboard mills and corrugated container operations are highly integrated, with the majority of our containerboard used internally by our corrugated container operations. For the six months ended December 31, 2010, our corrugated container plants consumed 2,228,000 tons of containerboard. Net sales of corrugated containers for the six months ended December 31, 2010 represented 63% of our total net sales. Net sales of containerboard to third parties for the six months ended December 31, 2010 represented 20% of our total net sales.

Predecessor

We produced 1,649,000 tons of unbleached kraft linerboard, 474,000 tons of white top linerboard and 1,007,000 tons of medium for the six months ended June 30, 2010. For the six months ended June 30, 2010, our corrugated container plants consumed 2,264,000 tons of containerboard. Net sales of corrugated containers for the six months ended June 30, 2010, and the years ended December 31, 2009 and 2008 represented 65%, 71% and 63%, respectively, of our total net sales. Net sales of

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containerboard to third parties for the six months ended June 30, 2010, and years ended December 31, 2009 and 2008 represented 19%, 17% and 20%, respectively, of our total net sales.

Market Pulp and Kraft Paper

Our paper mills also produce market pulp, solid bleached liner (SBL), kraft paper, and other specialty products. We produce bleached southern hardwood pulp, bleached southern softwood pulp and fluff pulp, which are sold to manufacturers of paper products, including specialty papers, as well as the printing and writing sectors. Kraft paper is used in numerous products, including consumer and industrial bags, grocery and shopping bags, counter rolls, handle stock and refuse bags.

Reclaimed and Brokered Fiber

Our recycling operations procure fiber resources for our paper mills as well as other producers. We operate 30 recycling facilities that collect, sort, grade and bale recovered paper. We also collect aluminum and plastics for resale to manufacturers of these products. In addition, we operate a nationwide brokerage system whereby we purchase and resell recovered paper to our recycled paper mills and other producers on a regional and national contract basis. Our waste reduction services extract additional recyclables from the waste stream by partnering with customers to reduce their waste expenses and increase efficiencies. Brokerage contracts provide bulk purchasing, often resulting in lower prices and cleaner recovered paper. Many of our recycling facilities are located close to our recycled paper mills, ensuring availability of supply with minimal shipping costs. For the six months ended December 31, 2010, our paper mills consumed 1,190,000 tons of the fiber reclaimed and brokered by our recycling operations, representing an integration level of approximately 40%. For the six months ended June 30, 2010, our paper mills consumed 1,252,000 tons of the fiber reclaimed and brokered by our recycling operations, representing an integration level of approximately 43%.

Production for our paper mills, sales volume for our corrugated container facilities and fiber reclaimed and brokered are as follows:

RAW MATERIALS

Wood fiber and reclaimed fiber are the principal raw materials used in the manufacture of our paper products. We satisfy the majority of our need for wood fiber through purchases on the open market or under supply agreements. We satisfy essentially all of our need for reclaimed fiber through our recycling facilities and nationwide brokerage system.

MARKETING AND DISTRIBUTION

Our marketing strategy is to sell a broad range of paper-based packaging products to manufacturers of industrial and consumer products. We seek to meet the quality and service needs of the customers of our converting plants at the most efficient cost, while balancing those needs against the demands of our

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open market paperboard customers. Our converting plants focus on supplying both specialized packaging with high value graphics that enhance a product's market appeal and high-volume commodity products.

We serve a broad customer base, including thousands of accounts from our plants and sell packaging and other products directly to end users and converters, as well as through resellers. Our corrugated container sales organization is centralized and has sales responsibilities for all converting plants. This organizational structure allows us to better focus on revenue growth and assign the appropriate resources to the best opportunities. Marketing of containerboard and pulp to third parties is centralized in our board sales group. Total tons of containerboard and market pulp sold to third parties for the six months ended December 31, 2010 and June 30, 2010, and the years ended December 31, 2009 and 2008, respectively, were 1,177,000 tons, 1,169,000 tons, 2,245,000 tons and 3,024,000 tons.

Our business is not dependent upon a single customer or upon a small number of major customers. We do not believe the loss of any one customer would have a material adverse effect on our business.

COMPETITION

The markets in which we sell our principal products are highly competitive and comprised of many participants. Although no single company is dominant, we do face significant competitors, including large vertically integrated companies as well as numerous smaller companies. The markets in which we compete have historically been sensitive to price fluctuations brought about by shifts in industry capacity and other cyclical industry conditions. While we compete primarily on the basis of price in many of our product lines, other competitive factors include design, quality and service, with varying emphasis depending on product line.

BACKLOG

Demand for our major product lines is relatively constant throughout the year, and seasonal fluctuations in marketing, production, shipments and inventories are not significant. Backlog orders are not a significant factor in the industry. We do not have a significant backlog of orders as most orders are placed for delivery within 30 days.

RESEARCH AND NEW PRODUCT DEVELOPMENT

The majority of our research and new product development activities are performed at our facility located in Carol Stream, Illinois. We use advanced technology to assist all levels of the manufacturing and sales processes, from raw material supply through finished packaging performance. Research programs have provided improvements in coatings and barriers, stiffeners, inks and printing. Our technical staff conducts basic, applied and diagnostic research, develops processes and products and provides a wide range of other technical services. For research and new product development activities, we spent $2 million, $2 million, $3 million and $3 million for the six months ended December 31, 2010 and June 30, 2010, and the years ended December 31, 2009 and 2008, respectively.

INTELLECTUAL PROPERTY

We actively pursue applications for patents on new technologies and designs and attempt to protect our patents against infringement. Nevertheless, we believe our success and growth are more dependent on the quality of our products and our relationships with customers than on the extent of our patent protection. We hold or are licensed to use certain patents, licenses, trademarks and trade names on our products, but do not consider the successful continuation of any material aspect of our business to be dependent upon such intellectual property.

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EMPLOYEES

We had approximately 17,100 employees at December 31, 2010, of which approximately 10,500 (62%) were represented by collective bargaining units. Approximately 13,800 (81%) of our employees are in our U.S. operations. The expiration dates of union contracts for our paper mills are as follows:

•

West Point, Virginia - September 2009

•

Hopewell, Virginia - July 2011

•

Panama City, Florida - March 2012

•

Matane, Quebec, Canada - April 2012

•

Fernandina Beach, Florida - June 2012

•

Coshocton, Ohio - July 2012

•

La Tuque, Quebec, Canada - August 2013

•

Hodge, Louisiana - June 2014

•

Jacksonville, Florida - June 2014

•

Florence, South Carolina - August 2014

A labor agreement covering approximately 400 employees at our West Point, Virginia paper mill expired in 2009. Negotiations to reach a new agreement with the local union bargaining committee at the West Point mill have been unsuccessful, and we have advised the union that we believe negotiations are at an impasse. Absent an agreement by the union members to accept our last contract offer, and barring an unexpected change in their position, we intend to unilaterally implement contract terms in the near future. Our implementation of contract terms could potentially result in a work stoppage by the union, although we intend to continue to operate the mill throughout the duration of any such work stoppage. While a work stoppage by the union could potentially have a negative impact on the mill's production and costs in the short-term, we believe that this matter will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Except as noted above, we believe our employee relations are generally good. While the terms of our collective bargaining agreements may vary, we believe the material terms of the agreements are customary for the industry, the type of facility, the classification of the employees and the geographic location covered thereby.

ENVIRONMENTAL COMPLIANCE

Our operations are subject to extensive environmental regulation by federal, state, local and foreign authorities. In the past, we have made significant capital expenditures to comply with water, air, solid and hazardous waste and other environmental laws and regulations. We expect to make significant expenditures in the future for environmental compliance. Because various environmental standards are subject to change, it is difficult to predict with certainty the amount of capital expenditures that will ultimately be required to comply with future standards.

The U.S. Congress and several states in which we operate are considering legislation that would mandate the reduction of greenhouse gas emissions from facilities in various sectors of the economy, including manufacturing. The United States Environmental Protection Agency ("EPA") also has taken steps to address climate change by issuing new Clean Air Act permitting regulations which apply to facilities that emit greenhouse gases. These new regulations became effective for certain greenhouse gas sources on January 2, 2011, with implementation for other sources to be phased in over the next several years. Enactment of EPA's new greenhouse gas regulations and/or future climate change legislation may require capital expenditures to modify assets to meet greenhouse gas reduction

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requirements, increase energy costs above the level of general inflation, and could result in direct compliance and other costs. It is not currently possible to estimate the costs or timing of compliance with such laws or regulations. We have taken voluntary actions to reduce greenhouse gas emissions from our manufacturing operations and, with our membership in the Chicago Climate Exchange, made a commitment to reduce these emissions by 6% from baseline (emissions from 1998 to 2001) by the end of 2010. We believe we have exceeded the reduction obligation contingent upon review and approval by the Chicago Climate Exchange, which will take place in 2011. We expect that we will not be disproportionately affected by new climate change laws or regulations as compared to our competitors who have comparable, energy-intensive operations in the United States.

In 2004, EPA promulgated a Maximum Achievable Control Technology ("MACT") regulation to limit hazardous air pollutant emissions from certain industrial boilers ("Boiler MACT"). Several of our mills were required to install new pollution control equipment in order to meet the compliance deadline of September 13, 2007. The Boiler MACT rule was challenged by third parties in litigation, and in mid-2007, the United States District Court of Appeals for the D.C. Circuit issued a decision vacating Boiler MACT and remanding the rule to the EPA. All projects required to bring us into compliance with the now vacated Boiler MACT requirements were completed. We spent approximately $80 million on Boiler MACT projects principally through 2007 with insignificant amounts spent in 2008 through 2010. On June 4, 2010, EPA published a new, proposed Boiler MACT rule. Very few existing industrial boilers could comply with the extremely stringent emission limits proposed by the EPA, and we likely would be required to install additional pollution control devices and other equipment on power boilers at many of our mills to comply with the draft rule. The American Forest & Paper Association ("AF&PA") has estimated that the forest products industry as a whole would be required to make approximately $7 billion in capital investments to comply with the proposed Boiler MACT. EPA plans to issue a final Boiler MACT rule in 2011, and the emissions limits and other compliance requirements in the final rule may change from those contained in the proposal. As a result, we are unable to estimate our cost of complying with the forthcoming Boiler MACT rule.

Excluding the spending on Boiler MACT projects described above and other one-time compliance costs, for the past three years we spent an average of approximately $5 million annually on capital expenditures for environmental purposes. We anticipate additional capital expenditures related to environmental compliance in the future. Since our principal competitors are subject to comparable environmental standards, it is our opinion, based on current information, that compliance with existing environmental standards should not adversely affect our competitive position or operating results. However, we could incur significant expenditures due to changes in law or the discovery of new information, which could have a material adverse effect on our operating results. See Part I, Item 3. Legal Proceedings — "Environmental Matters."

EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below is certain information relating to our current executive officers:

Matthew T. Denton , age 48, born on December 11, 1962, was appointed Senior Vice President — Business Planning and Analysis on February 1, 2010. He had been Vice President — Business Planning and Analysis since January 2007 and prior to that had been Vice President of Business Transformation since he joined Smurfit-Stone in June 2006. Prior to joining Smurfit-Stone, Mr. Denton was employed by Georgia Pacific Corporation from 1992 to 2006, where he held positions of increasing responsibility, including Vice President of Strategic Sourcing for Georgia Pacific's North American consumer products and bleached pulp and paper operations, and Vice President of Finance for the containerboard and packaging segment and pulp division.

Michael P. Exner , age 56, born on June 20, 1954, was appointed Senior Vice President and General Manager — Containerboard Mill Division on January 1, 2010. Prior to joining Smurfit-Stone, Mr. Exner was employed by International Paper Company, most recently as the Vice President of

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Manufacturing — Containerboard since July 2003, Director of Manufacturing — Commercial Printing and Imaging Papers from February 1997 to June 2003 and Mill Manager from June 1992 to January 1997.

Craig A. Hunt , age 49, born on May 31, 1961, was appointed Chief Administrative Officer and General Counsel on November 1, 2010. He had been Senior Vice President, Secretary and General Counsel since February 2005, and prior to that had been Vice President, Secretary and General Counsel since November 1998.

Paul K. Kaufmann , age 56, born on May 11, 1954, was appointed Senior Vice President and Corporate Controller on February 23, 2005, and prior to that had been Vice President and Corporate Controller since November 1998.

John L. Knudsen , age 53, born on August 29, 1957, was appointed Senior Vice President, Supply Chain and Board Sales on June 1, 2010. He had been Senior Vice President of Corporate Strategy since November 2008. He had been Senior Vice President of Manufacturing for the Container Division since October 2005. He was Vice President of Strategic Planning for the Container Division from April 2005 to October 2005. Prior to that, he was Vice President and Regional Manager for the Container Division from August 2000 to April 2005.

Patrick J. Moore , age 56, born on September 7, 1954, has served as Chief Executive Officer since May 2006. Mr. Moore has announced his intention to retire as Chief Executive Officer within one year after our emergence from bankruptcy. He had been Chairman, President and Chief Executive Officer since May 2003, and prior to that he was President and Chief Executive Officer since January 2002, when he was also elected as a Director. He was Vice President and Chief Financial Officer from November 1998 until January 2002. Mr. Moore is a director of Archer Daniels Midland Company.

Mark R. O'Bryan , age 48, born on January 15, 1963, was appointed Senior Vice President — Strategic Initiatives and Chief Information Officer on April 1, 2007. He had been Senior Vice President — Strategic Initiatives since July 2005 and prior to that had been Vice President — Operational Improvement for the Consumer Packaging Division from April 2004 to July 2005. He was Vice President — Procurement from October 1999 to April 2004.

Michael R. Oswald , age 54, born on October 29, 1956, was appointed Senior Vice President and General Manager of the Recycling Division on August 1, 2005. Prior to that, he was Vice President of Operations for the Recycling Division from January 1997 to August 2005.

Steven C. Strickland , age 58, born on July 12, 1952, was appointed Senior Vice President of Container Operations on November 1, 2008. He had been Senior Vice President of Sales for the Container Division since October 27, 2006. Prior to joining Smurfit-Stone, Mr. Strickland was employed by Unisource, most recently as Senior Vice President of Packaging and Supply from September 2006 to October 2006, Senior Vice President of Packaging from March 2004 to August 2006, Senior Vice President of Operations — East from March 2003 to March 2004 and Vice President of National Sales from September 1999 to March 2003.

AVAILABLE INFORMATION

We make available free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished as required by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), through our Internet Website (www.smurfit-stone.com) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission ("SEC"). You may access these SEC filings via the hyperlink that we provide on our Website to a third-party SEC filings Website.

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ITEM 1A.     RISK FACTORS

We are subject to certain risks and events that, if one or more of them occur, could adversely affect our business, our financial condition and results of operations, and the trading price of our common stock. You should consider the following risk factors, in addition to the other information presented in this report, as well as the other reports and registration statements we file from time to time with the SEC, in evaluating us, our business and an investment in our securities. The risks below are not the only ones we face. Additional risks not currently known to us or that we currently deem immaterial also may adversely impact our business.

Global economic conditions and credit tightening materially and adversely affect our business.

Our business has been materially and adversely affected by changes in regional, national and global economic conditions. Such changes have included or may include reduced consumer spending, reduced availability of capital, inflation, deflation, adverse changes in interest rates, fluctuations in the value of local currency versus the U.S. dollar, reduced energy availability and increased energy costs and government initiatives to manage economic conditions. Continuing instability in financial markets and the deterioration of other national and global economic conditions may have further materially adverse effects on our operations, financial results or liquidity, including the financial stability of our customers or suppliers which may be compromised, which could result in additional bad debts for us or non-performance by suppliers.

Uncertainty about current economic conditions may cause consumers of our products to postpone or refrain from spending in response to tighter credit, negative financial news, declines in income or asset values, or other adverse economic events or conditions, which could reduce demand for our products and materially adversely affect our financial condition and operating results. Further deterioration of economic conditions would likely exacerbate these adverse effects, result in wide-ranging, adverse and prolonged effects on general business conditions, and materially adversely affect our operations, financial results and liquidity.

Our industry is cyclical and highly competitive.

Our operating results reflect the cyclicality of our industry. In addition, the industry is capital intensive, which leads to high fixed costs. These conditions have contributed to substantial price competition and volatility in the industry. The majority of our products have been and are likely to continue to be subject to extreme price competition. Some segments of our industry have capacity in excess of demand, which may require us to take downtime periodically to reduce inventory levels during periods of weak demand.

The paperboard and packaging products industries are highly competitive and are particularly sensitive to price fluctuations as well as other factors including innovation, design, quality and service, with varying emphasis on these factors depending on the product line. To the extent that one or more of our competitors become more successful with respect to any key competitive factor, our ability to attract and retain customers could be materially adversely affected. Some of our competitors are less leveraged, have financial and other resources greater than ours and are more capable to withstand the adverse nature of the business cycle. If our facilities are not as cost efficient as those of our competitors, we may need to temporarily or permanently close such facilities and suffer a resulting reduction in our revenues.

Our Exit Credit Facilities may limit our ability to plan for or respond to changes in our business.

Our Exit Credit Facilities include financial and other covenants that impose restrictions on our financial and business operations and those of our subsidiaries. These covenants could have a material adverse

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impact on our operations. Our failure to comply with any of these covenants could result in an event of default that, if not cured or waived, requires us to repay the borrowings under the Exit Credit Facilities before their due date. The Exit Credit Facilities also contain other events of default customary for similar financings. If we are unable to repay or otherwise refinance our borrowings when due, the lenders could foreclose on our assets. If we are unable to refinance these borrowings on favorable terms, our costs of borrowing could increase significantly.

There can be no assurance that we will have sufficient liquidity to repay or refinance borrowings under the Exit Credit Facilities if such borrowings were accelerated upon an event of default.

Factors beyond our control could hinder our ability to service our debt and meet our operating requirements.

Our ability to meet our obligations and to comply with the terms contained in our debt instruments will largely depend on our future performance. Our performance will be subject to financial, business and other factors affecting us. Many of these factors are beyond our control, such as:

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the state of the economy;



•

the financial markets;



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demand for, and selling prices of, our products;



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performance of our major customers;



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costs of raw materials and energy;



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hurricanes and other major weather-related disruptions; and



•

legislation and other factors relating to the paperboard and packaging products industries generally or to specific competitors.

If operating cash flows, net proceeds from borrowings, divestitures or other financing sources do not provide us with sufficient liquidity to meet our operating and debt service requirements, we will be required to pursue other alternatives to repay debt and improve liquidity. Such alternatives may include:

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sales of assets;



•

cost reductions;



•

deferral of certain discretionary capital expenditures and benefit payments; and



•

amendments or waivers to our debt instruments.

We might not successfully complete any of these measures or they may not generate the liquidity we require to operate our business and service our obligations.

Our pension plans are underfunded and will require additional cash contributions.

We have made substantial contributions to our pension plans in the past five years and expect to make substantial contributions in the coming years in order to ensure that our funding levels remain adequate in light of projected liabilities and to meet the requirements of the Pension Protection Act of 2006 in the U.S. and the applicable funding rules in Canada. Future contributions to our pension and other postretirement plans will be dependent on future regulatory changes, future changes in discount rates and the return performance of our plan assets. These contributions reduce the amount of cash available for us to repay indebtedness or make capital investments.

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At December 31, 2010, the qualified defined benefit pension plans maintained by us were under-funded by approximately $1,132 million. We will likely be required to make significant cash contributions to these plans under applicable U.S. and Canadian laws over the next several years in order to amortize the existing under-funding and satisfy current service obligations under the plans. These contributions will significantly impact future cash flows that might otherwise be available for repayment of debt, capital expenditures, and other corporate purposes. We currently estimate that the cash contributions under the United States and Canadian qualified pension plans will be approximately $109 million in 2011. We currently estimate that contributions will be in the range of approximately $250 million to $340 million annually in 2012 through 2015. Projected pension contributions reflect that we have elected funding relief under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, and also reflect our election of Canada's funding relief measures made in 2009 and 2010. The actual required amounts and timing of such future cash contributions will be highly sensitive to changes in the applicable discount rates and returns on plan assets, and could also be impacted by future changes in the laws and regulations applicable to plan funding.

Price fluctuations in energy costs and raw materials could adversely affect our manufacturing costs.

The cost of producing and transporting our products is highly sensitive to the price of energy. Energy prices, in particular oil and natural gas, have experienced significant volatility in recent years, with a corresponding effect on our production and transportation costs. Energy prices may continue to fluctuate and may rise to higher levels in future years. This could adversely affect our production costs and results of operations.

Wood fiber and reclaimed fiber, the principal raw materials used in the manufacture of our paper products, are purchased in highly competitive, price sensitive markets, which have historically exhibited price and demand cyclicality. Adverse weather, conservation regulations and the shutdown of a number of sawmills have caused, and will likely continue to cause, a decrease in the supply of wood fiber and higher wood fiber costs in some of the regions in which we procure wood fiber. Fluctuations in supply and demand for reclaimed fiber, particularly export demand from Asian producers, have occasionally caused tight supplies of reclaimed fiber. At such times, we may experience an increase in the cost of fiber or may temporarily have difficulty obtaining adequate supplies of fiber. If we are not able to obtain wood fiber and reclaimed fiber at favorable prices or at all, our results of operations may be materially adversely affected.

Work stoppage and other labor relations matters may have an adverse effect on our financial results.

A significant number of our employees in North America are governed by collective bargaining agreements. Expired contracts are in the process of renegotiation. We may not be able to successfully negotiate new union contracts without work stoppages or labor difficulties. If we are unable to successfully renegotiate the terms of any of these agreements or an industry association is unable to successfully negotiate a national agreement when they expire, or if we experience any extended interruption of operations at any of our facilities as a result of strikes or other work stoppages, our results of operations and financial condition could be materially adversely affected.

We are subject to environmental regulations and liabilities that could weaken our operating results and financial condition.

Federal, state, provincial, foreign and local environmental requirements, particularly those relating to air and water quality, are a significant factor in our business. Maintaining compliance with existing environmental laws, as well as complying with requirements imposed by new or changed environmental laws, including EPA's new greenhouse gas regulations and Boiler MACT, may require capital expenditures for compliance. Although we satisfied our potential liability relating to certain third party potentially responsible parties ("PRPs") and formerly owned sites as unsecured claims in our

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bankruptcy proceedings, other ongoing remediation costs and future remediation liability at sites where we may be a PRPs for cleanup activity under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") and analogous state and other laws may materially adversely affect our results of operations and financial condition.

Rock-Tenn Merger Agreement Risk Factors

If the Merger is completed, the combined company may not be able to successfully integrate the business of the Company and Rock-Tenn and therefore may not be able to realize the anticipated benefits of the Merger.

At the effective time of the Merger, each share of our common stock issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive $17.50 in cash and 0.30605 of a share of Rock-Tenn Class A common stock, par value $0.01 per share (collectively, the "Merger Consideration").

Because a portion of the Merger Consideration consists of Rock-Tenn common stock, realization of the anticipated benefits in the Merger will depend, in part, on the combined company's ability to successfully integrate the businesses and operations of Rock-Tenn and us. The combined company will be required to devote significant management attention and resources to integrating its business practices, operations, and support functions. The challenges the combined company may encounter include the following:

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combining diverse product and service offerings, customer plans, and sales and marketing approaches;



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preserving customer, supplier, and other important relationships and resolving potential conflicts that may arise as a result of the merger;



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consolidating and integrating duplicative facilities and operations, including back-office systems;



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addressing differences in business cultures, preserving employee morale, and retaining key employees while maintaining focus on providing consistent, high-quality customer service and meeting its operational and financial goals; and



•

adequately addressing business integration issues.

The process of integrating Rock-Tenn's and our operations could cause an interruption of, or loss of momentum in, the combined company's business and financial performance. The diversion of management's attention and any delays or difficulties encountered in connection with the Merger and the integration of the two companies' operations could have an adverse effect on the business, financial results, financial condition, or stock price of Rock-Tenn (as the combined company following the Merger). The integration process may also result in additional and unforeseen expenses. There can be no assurance that the contemplated expense savings and synergies anticipated from the merger will be realized.

Failure to complete the Merger could negatively impact our stock price, future business and financial results.

Although the parties to the Merger Agreement have agreed to use their reasonable best efforts to obtain stockholder approval of certain proposals relating to the Merger, there is no assurance that these proposals will be approved, and there is no assurance that the necessary regulatory approvals will

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be received or that the other conditions to the completion of the Merger will be satisfied. If the Merger is not completed for any reason, we will be subject to several risks, including the following:

•

possibly being required to pay Rock-Tenn a termination fee of $120 million, which is required under certain circumstances relating to termination of the Merger Agreement;



•

possibly being required to pay Rock-Tenn's costs and expenses relating to the merger, including legal, accounting, and financial advisor expenses, which is required under certain circumstances relating to termination of the Merger Agreement;



•

under the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the Merger which may adversely affect our ability to exercise certain of our business strategies; and



•

having had the focus of our management directed towards the Merger and integration planning instead of our core business and other opportunities that could have been beneficial to us.

In addition, we would not realize any of the expected benefits of having completed the Merger and would continue to have risks that we currently face as an independent company.

If the Merger is not completed, the price of our common stock may decline to the extent that the current market price of the stock reflects a market assumption that the Merger will be completed or as a result of the market's perceptions that the Merger was not consummated due to an adverse change in our business. In addition, our business may be harmed, and the price of our stock may decline as a result, to the extent that employees, customers, suppliers, and others believe that we cannot compete in the marketplace as effectively without the Merger or otherwise remain uncertain about our future prospects in the absence of the Merger.

In addition, if the Merger is not completed and our Board of Directors determines to seek another business combination transaction, there can be no assurance that a transaction creating stockholder value comparable to the value perceived to be created by the Merger will be available to us.

The Merger Agreement limits our ability to pursue an alternative acquisition proposal to the Merger and requires Smurfit-Stone to pay a termination fee of $120 million if it does.

The Merger Agreement prohibits Rock-Tenn and us from soliciting, initiating, encouraging, or facilitating certain alternative acquisition proposals with third parties, subject to exceptions set forth in the Merger Agreement. The Merger Agreement also provides that we are required to pay a termination fee of $120 million if the Merger Agreement is terminated under certain circumstances in connection with a third party initiating a competing acquisition proposal for Smurfit-Stone. These provisions limit our ability to pursue offers from third parties that could result in greater value to our stockholders than the value resulting from the Merger. The termination fee may also discourage third parties from pursuing an acquisition proposal with respect to Smurfit-Stone.

In order to complete the Merger, the Company and Rock-Tenn must obtain certain governmental approvals, and if such approvals are not granted or are granted with burdensome conditions, the completion of the Merger may be jeopardized or the anticipated benefits of the Merger may be reduced.

Completion of the Merger is conditioned upon the receipt of certain governmental clearances or approvals, including, but not limited to, the expiration or termination of the applicable waiting period, or receipt of approval, under each foreign antitrust law that relates to the merger where the failure to obtain such approval or meet such waiting period under the applicable foreign anti-trust law would have a material adverse effect. Although Rock-Tenn and we have agreed in the Merger Agreement to use reasonable best efforts to obtain the requisite governmental approvals, there can be no assurance

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that these approvals will be obtained. In addition, the governmental authorities from which these approvals are required have broad discretion in administering the governing regulations. As a condition to approval of the Merger, these governmental authorities may impose requirements, limitations or costs; or require divestitures; or place restrictions on the conduct of the business of the combined company after the completion of the Merger. Under the terms of the Merger agreement, neither we nor Rock-Tenn are required to undertake any divestiture or hold separate assets to the extent that such action would be reasonably expected to have a material adverse effect on Rock-Tenn or us. However, if, notwithstanding the provisions of the Merger Agreement, either Rock-Tenn or we become subject to any term, condition, obligation or restriction (whether because such term, condition, obligation or restriction does not rise to the specified level of materiality or Rock-Tenn otherwise consents to its imposition), the imposition of such term, condition, obligation or restriction could adversely affect the ability to integrate our operations into Rock-Tenn's operations, reduce the anticipated benefits of the Merger or otherwise adversely affect the combined company's business and results of operations after the completion of the Merger.

Pending litigation against us, Rock-Tenn, and certain of our directors and officers could result in an injunction preventing completion of the Merger, or the payment of damages in the event the Merger is completed and/or may adversely affect the combined company's business, financial condition or results of operations following the Merger.

Since the announcement on January 23, 2011 of the signing of the Merger Agreement, Rock-Tenn and us, as well as certain of our officers and members of the Board of Directors, have been named as defendants in several lawsuits brought by our stockholders challenging the proposed Merger. The lawsuits generally allege, among other things, that the consideration agreed to in the Merger Agreement is inadequate and unfair to our stockholders, that the individual defendants breached their fiduciary duties in approving the Merger Agreement and that those breaches were aided and abetted by Rock-Tenn, among others. The lawsuits seek, among other things, injunctive relief to enjoin the defendants from completing the Merger on the agreed-upon terms, monetary relief and attorneys' fees.

One of the conditions to the closing of the Merger is that no order issued by a governmental authority of competent jurisdiction or law or other legal restraint or prohibition making the Merger illegal or permanently restraining, enjoining, or otherwise prohibiting or preventing the consummation of the Merger or the other transactions contemplated by the Merger Agreement be in effect. Consequently, if the plaintiffs secure injunctive or other relief prohibiting, delaying, or otherwise adversely affecting the defendants' ability to complete the Merger, then such injunctive or other relief may prevent the Merger from becoming effective within the expected time frame or at all. If completion of the Merger is prevented or delayed, it could result in substantial costs to us and Rock-Tenn. In addition, we and Rock-Tenn could incur significant costs in connection with the lawsuits, including costs associated with the indemnification of our directors and officers. See Part I, Item 3. Legal Proceedings — "Litigation" for more information about the lawsuits that have been filed related to the Merger.

ITEM 1B.     UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.     PROPERTIES

The manufacturing facilities of our consolidated subsidiaries are located primarily in North America. We believe that our facilities are adequately insured, properly maintained and equipped with machinery suitable for our use. We have invested significant capital in our operations to upgrade or replace corrugators and converting machines, while closing higher cost facilities. See Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — "Restructuring Activities." Our manufacturing facilities as of December 31, 2010 are summarized below:

Our paper mills represent approximately 72% of our investment in property, plant and equipment. In addition to manufacturing facilities, we operate wood harvesting facilities in Canada and the United States. The approximate annual tons of productive capacity of our paper mills at December 31, 2010 were:

Substantially all of our North American operating facilities have been pledged as collateral under our Exit Credit Facilities. See Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — "Net Cash Provided By (Used For) Financing Activities."

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ITEM 3.     LEGAL PROCEEDINGS

LITIGATION

On January 26, 2009, we and our U.S. and Canadian subsidiaries filed the Chapter 11 Petition for relief under Chapter 11 of the Bankruptcy Code in the U.S. Court. On the same day, our Canadian subsidiaries also filed the Canadian Petition under the CCAA in the Canadian Court. Our operations in Mexico and Asia and certain Non-Debtor subsidiaries were not included in the filings and continued to operate outside of the Chapter 11 and CCAA processes. On June 21, 2010, the U.S. Court entered the Findings of Fact, Conclusions of Law and Order Confirming the Joint Plan for Smurfit-Stone Container Corporation and its Debtor Subsidiaries and Plan of Compromise and Arrangement for Smurfit-Stone Container Canada Inc. and Affiliated Canadian Debtors (the "Confirmation Order"), which approved and confirmed the Plan of Reorganization. On June 30, 2010 (the "Effective Date"), the Plan of Reorganization became effective and the Debtors consummated their reorganization through a series of transactions contemplated by the Plan of Reorganization and emerged from Chapter 11 bankruptcy proceedings. See Part I, Item 1. Business — "Bankruptcy Proceedings."

In May 2009, a lawsuit was filed in the United States District Court for the Northern District of Illinois against four individual committee members of the Administrative Committee ("Administrative Committee") of our Savings Plans (the "Savings Plans") and Patrick Moore, our Chief Executive Officer (together, the "Defendants"). During the first quarter of 2010, two additional Employee Retirement Income Security Act ("ERISA") class action lawsuits were filed in the United States District Court for the Western District of Missouri and one in the United States District Court for the District of Delaware. The defendants in these cases are individual committee members of the Administrative Committee, several other of our current and former executives and individual members of the predecessor Company's Board of Directors. The suits were consolidated into one matter in January 2011 in the Northern District of Illinois. The consolidated complaint alleges certain ERISA violations between January 1, 2008 and January 26, 2009. The plaintiffs brought the complaint on behalf of themselves and a class of similarly situated participants and beneficiaries of four of our Savings Plans. The plaintiffs assert that the Defendants breached their fiduciary duties to the Savings Plans' participants and beneficiaries by allegedly making imprudent investments with the Savings Plans' assets, making misrepresentations and failing to disclose material adverse facts concerning our business conditions, debt management and viability, and not taking appropriate action to protect the Savings Plans' assets. Even though we are not a named defendant in the case, management believes that any indemnification obligations to the Defendants would be covered by applicable insurance.

In September 2010, four putative class action complaints (the "Complaints") were filed in the United States District Court for the Northern District of Illinois against us and several other paper and packaging companies (collectively referred to as the "Class Action Defendants"). The Complaints allege that we and the Class Action Defendants engaged in anti-competitive activities and violation of antitrust laws by reaching agreements in restraint of trade that affected the manufacture, sale and pricing of corrugated products. The Complaints seek an unspecified amount of damages arising from the sale of corrugated products from 2005 to the date the lawsuit was filed. A consolidated complaint was filed on November 8, 2010 by the Complainants which contains allegations that limit our liability to conduct that arose subsequent to the bankruptcy Effective Date. Given the limited time period for potential liability, we believe the resolution of these matters will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Four complaints on behalf of the same putative class of our stockholders have been filed in the Circuit Court for Cook County, Illinois challenging the Merger Agreement: (i) Gold v. Smurfit-Stone Container Corp.; (ii) Roseman v. Smurfit-Stone Container Corp.; (iii) Findley v. Smurfit-Stone Container Corp.; and (iv) Czech v. Smurfit-Stone Container Corp. (collectively, the "Illinois Complaints"). The Illinois Complaints were filed against us, Rock-Tenn and its merger subsidiary, and

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the individual members of our Board of Directors (the "Merger Defendants"). The Illinois Complaints allege that our directors breached fiduciary duties in considering and entering into the Merger Agreement, and that the Company, Rock-Tenn and its merger subsidiary aided and abetted such breaches. The Illinois Complaints seek equitable relief, including an injunction prohibiting consummation of the Merger Agreement and imposition of a constructive trust. On February 4, 2011, plaintiffs moved for consolidation of the Illinois Complaints, and on February 10, 2011, all four complaints were consolidated under Gold v. Smurfit-Stone Container Corp., et al.

On February 2, 2011, a putative class action complaint asserting substantially similar claims was filed against the same Merger Defendants in the Delaware Court of Chancery under the caption of Marks v. Smurfit-Stone Container Corp., (the "Delaware Complaint"). The Delaware Complaint also seeks equitable relief, including an injunction prohibiting consummation of the Merger Agreement and an accounting for alleged damages. On February 7, 2011, the plaintiff served a request for production of documents directed to all Merger Defendants. On February 8, 2011, the plaintiff moved for expedited proceedings and a preliminary injunction prohibiting consummation of the Merger Agreement.

We believe the Illinois Complaints and Delaware Complaint are without merit and will vigorously defend against the allegations.

All litigation that arose or may arise out of pre-petition or pre-discharge conduct or acts is subject to the Bankruptcy Discharge Order and is either resolved consistent with all other general unsecured claims in the bankruptcy or subject to dismissal based on failure to properly file a claim. As a result, we believe that these matters will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

We are a defendant in a number of lawsuits and claims arising out of the conduct of our business. While the ultimate results of such suits or other proceedings against us cannot be predicted with certainty, we believe the resolution of these matters will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

ENVIRONMENTAL MATTERS

Federal, state, local and foreign environmental requirements are a significant factor in our business. We employ processes in the manufacture of pulp, paperboard and other products which result in various discharges, emissions and wastes. These processes are subject to numerous federal, state, local and foreign environmental laws and regulations, including reporting and disclosure obligations. We operate and expect to continue to operate under permits and similar authorizations from various governmental authorities that regulate such discharges, emissions and wastes.

On October 1, 2010, our Hopewell, Virginia paperboard mill received a Finding of Violation and Notice of Violation ("NOV") from EPA Region III alleging certain violations of regulations that require treatment of kraft pulping condensates. We strongly disagree with the assertion of the violations in the NOV and plan to vigorously defend ourselves in this matter. Based on information currently available to the Company, we do not believe that this matter will have a material adverse effect on our financial condition, results of operations or cash flows.

We also face potential liability as a result of releases, or threatened releases, of hazardous substances into the environment from various sites owned and operated by third parties at which Company-generated wastes have allegedly been deposited. Generators of hazardous substances sent to off-site disposal locations at which environmental problems exist, as well as the owners of those sites and certain other classes of persons, all of whom are referred to as PRPs, are, in most instances, subject to joint and several liability for response costs for the investigation and remediation of such sites under CERCLA and analogous state laws, regardless of fault or the lawfulness of the original disposal. However, liability for CERCLA sites is typically shared with other PRPs and costs are commonly

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allocated according to relative amounts of waste deposited. Although we satisfied our potential liability relating to certain third party PRP and formerly owned sites as unsecured claims in our bankruptcy proceedings, we may face liability at other ongoing remediation sites and future remediation liability at sites where we may be a PRP for cleanup activity under the CERCLA and analogous state and other laws. In addition to participating in the remediation of sites owned by third parties, we are conducting the investigation and/or remediation of certain of our owned and formerly owned properties.

Based on current information, we believe the costs of the potential environmental enforcement matters discussed above, response costs under CERCLA and similar state laws, and the remediation of owned and formerly owned property will not have a material adverse effect on our financial condition or results of operations. As of December 31, 2010, we had approximately $8 million reserved for environmental liabilities. We believe our liability for these matters was adequately reserved at December 31, 2010, and that the possibility is remote that we would incur any material liabilities for which we have not recorded adequate reserves.

ITEM 4.     RESERVED

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PART II

ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

Prior to February 4, 2009, shares of our Predecessor common stock (the "Predecessor Common Stock") traded on the NASDAQ under the symbol "SSCC." Shares of our Predecessor Common Stock issued and outstanding from February 4, 2009 to June 30, 2010 traded on the Pink Sheets Electronic Quotation Service ("Pink Sheets"). The ticker symbol "SSCCQ.PK" was assigned to our Predecessor Common Stock for over-the-counter quotations. On June 30, 2010, the Predecessor Common Stock was cancelled pursuant to the terms of our Plan of Reorganization and we have no continuing obligations with respect to the Predecessor Common Stock.

Pursuant to the Plan of Reorganization, we issued or reserved for issuance up to 100 million shares of common stock (the "Successor Common Stock"). Upon emergence, the Successor Common Stock was listed on the New York Stock Exchange ("NYSE") and began trading under the ticker symbol "SSCC."

The following table sets forth for the periods indicated, the high and low sales price for our Predecessor Common Stock as reported on the Pink Sheets for the period through June 30, 2010, and for our Successor Common Stock for the period beginning June 30, 2010.

At February 9, 2011, approximately 22,000 stockholders, including stockholders of record and beneficial owners held our common stock. The high and low closing prices of our common stock in 2010 and 2009 were:

DIVIDENDS ON COMMON STOCK

During the period covered by this report, we have not paid cash dividends on our Successor Common Stock and do not intend to pay dividends in the foreseeable future. Our ability to pay dividends in the future is restricted by certain provisions contained in various agreements relating to our outstanding indebtedness.

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STOCK PERFORMANCE GRAPH

The information set forth under this caption shall not be deemed to be "filed" or incorporated by reference into any of our other filings with the SEC.

The following graph compares the cumulative total returns during the period June 30, 2010 to December 31, 2010 of our Successor Common Stock to the Standard & Poor's 500 Stock Index and the Peer Group, which consists of International Paper Company, Packaging Corporation of America, Rock-Tenn Company and Temple-Inland, Inc. The comparison assumes $100 was invested on June 30, 2010 in our Successor Common Stock and the indices and assumes that all dividends were reinvested. Data for periods prior to June 30, 2010 is not shown because we were in bankruptcy and the financial results of the Successor Company are not comparable with the financial results of the Predecessor Company. Our common stock price shown on the following graph is not necessarily indicative of future price performance.

Comparison of Cumulative Total Return

INDEXED RETURNS

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ITEM 6.     SELECTED FINANCIAL DATA

The application of fresh start accounting affected certain assets, liabilities, and expenses. As a result, certain financial information of the Successor as of and for any period after June 30, 2010 is not comparable to Predecessor financial information. Refer to Note 1 to our Notes to Consolidated Financial Statements for additional information on fresh start accounting.

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ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NON-GAAP FINANCIAL MEASURES

In the accompanying analysis of financial information, 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, non-cash foreign currency exchange (gains) losses, interest on Predecessor unsecured debt, restructuring charges, (gain) loss on disposal of assets, a multi-employer pension plan withdrawal charge, goodwill and other intangible assets impairment charges, litigation charges, loss on ineffective interest rate swaps marked-to-market and resolution of income tax matters. EBITDA is defined as net income (loss) before (provision for) benefit from income taxes, goodwill and other intangible assets impairment charges, 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, a multi-employer pension plan withdrawal charge, litigation charges, receivables discount expense and other adjustments.

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 ongoing 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 six months ended December 31, 2010 of the Successor, (2) the six months ended June 30, 2010 of the Predecessor and (3) the years ended December 31, 2009 and 2008 of the Predecessor, as well as the reasons management believes each of these items is not indicative of operating performance:

•

Reorganization items (income) expense — These income and expense items are directly related to the process of our reorganizing under Chapter 11 and the CCAA. 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 ongoing operating performance and are not used by us to assess our operating performance.

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•

Debtor-in-possession 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 ongoing operating performance and are not used by us to assess our operating performance.



•

Alternative fuel mixture tax credits — These amounts represent an excise tax credit for alternative fuel mixtures produced by a taxpayer for sale, or for use as a fuel in a taxpayer's trade or business, through December 31, 2009, at which time the credit expired. These items are not considered indicative of ongoing operating performance and are not used by us to assess our operating performance.



•

Loss on early extinguishment of debt — These losses represent unamortized deferred debt issuance cost and call premiums charged to expense in connection with our financing activities. These losses were not considered indicative of ongoing operating performance because they related to specific financing activities and were not used by us to assess our operating performance.



•

Non-cash foreign currency exchange (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 ongoing operating performance and are not used by us to assess 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 ongoing 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 ongoing operating performance and were excluded by management in assessing 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 ongoing 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 ongoing operating performance and was excluded by management in assessing our operating performance.



•

Goodwill and other intangible assets impairment charges — As the result of the significant decline in value of our equity securities and our debt instruments and downward pressure placed on earnings by the weakening U.S. economy, we recognized impairment charges on goodwill and other intangible assets of $2,757 million, net of income taxes in the fourth quarter of 2008.

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These charges were not considered indicative of future operating performance and were not used by management in assessing our operating performance.

•

Litigation charges — These charges are attributable to certain litigation matters. These amounts represent significant charges during 2008 and do not reflect expected ongoing operating expenses.



•

Loss on ineffective interest rate swaps marked-to-market — This represents a loss recorded in interest expense as a result of our intention to refinance the underlying debt prior to its maturity. This represented a significant charge to interest expense in the fourth quarter of 2008 and was not considered indicative of expected ongoing interest expense.



•

Resolution of income tax matters — These amounts represent the resolution of certain income tax matters. During 2008, we were informed by a foreign taxing authority that certain matters related to our acquisition of a company had been resolved in our favor. Primarily as a result of this favorable ruling, we reduced our liability for unrecognized tax benefits and recorded an income tax benefit of approximately $84 million during 2008. These income tax benefits were not related to the current or past years being presented and were not considered indicative of our ongoing operating performance.



•

Receivables discount expense — This amount represents the loss on sales of receivables for the accounts receivable securitization programs that were terminated on January 28, 2009, in conjunction with the filing of the Chapter 11 Petition and the Canadian Petition (See Note 8). The expense items were not considered indicative of our ongoing operating performance and was excluded by management in assessing our operating performance.



•

Other — These adjustments principally represent amounts accrued under our 2009 long-term incentive plan. These income and expense items were not considered indicative of our ongoing operating performance and were excluded by management in assessing our operating performance.

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.

The following 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

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most directly comparable GAAP financial measures, to adjusted net income (loss) attributable to common stockholders and adjusted net income (loss) per diluted share attributable to common stockholders, respectively. The adjustments to GAAP net income (loss) attributable to common stockholders for the Predecessor period of the year ended December 31, 2008 and the Successor period ended December 31, 2010 were tax effected; however for the Predecessor periods of the six months ended June 30, 2010 and the year ended December 31, 2009, other than reorganization items (income) expense, the adjustments 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. 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 six months ended December 31, 2010, we recorded a provision for income taxes related to the Successor statement of operations. As a result, the Successor period adjustments to net income (loss) attributable to stockholders are presented on a net of tax basis.

A reconciliation of net income (loss) to EBITDA and adjusted EBITDA is also presented.

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Reconciliation to GAAP Financial Measures

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Reconciliation to GAAP Financial Measures

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OVERVIEW

We are an integrated manufacturer of paperboard and paper-based packaging. Our major products are containerboard, corrugated containers, market pulp, reclaimed fiber and kraft paper. We operate in one reportable industry segment. Our mill operations supply paper to our corrugated container converting operations. The products of our converting operations, as well as the mill and recycling tonnage in excess of what is consumed internally, are the main products sold to third parties. Our operating facilities and customers are located primarily in the United States and Canada.

Market conditions and demand for our products are subject to cyclical changes in the economy and changes in industry capacity, both of which can significantly impact selling prices and our profitability. In recent years, the loss of U.S. manufacturing to offshore competition and the changing retail environment in the U.S. has played a key role in reducing growth in domestic packaging demand. The influence of superstores and discount retailing giants, as well as the impact from online shopping, has resulted in a shifting of demand to packaging which is more condensed, lighter weight and less expensive. These factors have greatly influenced the corrugated industry.

For the six months ended December 31, 2010 and June 30, 2010 and the year ended December 31, 2009, we had operating income (loss) of $245 million, $(37) million and $293 million, respectively. Operating income for the six months ended December 31, 2010 and June 30, 2010 was positively impacted by higher segment profits principally due to higher average selling prices for containerboard, higher third-party sales volume of containerboard and corrugated containers and reduced market-related downtime, which were partially offset by higher costs for reclaimed fiber. The 2009 operating profit was positively impacted by other operating income of $633 million related to the alternative fuel tax credits but was negatively impacted by lower average sales prices, lower sales volumes and higher restructuring expenses, due primarily to the closure of two containerboard mills.

Our outlook for 2011 is for business fundamentals and packaging demand to remain stable. While we expect inflation in our fiber, energy and other key input costs, we expect improved earnings in 2011 compared to 2010 due to higher average sales prices and volumes and incremental benefits from our selling and administrative cost reductions.

SUBSEQUENT EVENTS

On January 23, 2011, the Company and Rock-Tenn entered into the Merger Agreement, pursuant to which the Company will merge with and into a subsidiary of Rock-Tenn. This Merger, unanimously approved by the Boards of Directors of both companies, will create a leader in the North American paperboard packaging market with combined revenues of approximately $9 billion.

For each share of our common stock, our stockholders will be entitled to receive 0.30605 shares of Rock-Tenn common stock and $17.50 in cash, representing 50% cash and 50% stock on the date of the signing of the Merger Agreement. On January 23, 2011, the equity consideration was $35 per our common share or approximately $3.5 billion, consisting of approximately $1.8 billion of cash and the issuance of approximately 30.9 million shares of Rock-Tenn common stock. In addition, Rock-Tenn will assume our liabilities, including debt and underfunded pension liabilities, which were $1,194 million and $1,145 million, respectively, at December 31, 2010. Following the acquisition, Rock-Tenn stockholders will own approximately 56% and our stockholders will own 44% of the combined company.

The transaction is expected to close in the second quarter of 2011 and is subject to customary closing conditions, regulatory approvals, as well as approval by both Rock-Tenn and our stockholders.

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REORGANIZATION ITEMS AND OTHER BANKRUPTCY COSTS

For the six months ended December 31, 2010, we recorded reorganization items expense of $12 million as we continued to incur costs related to professional fees that are directly attributable to the reorganization.

Reorganization items income of $1,178 million for the six months ended June 30, 2010, include a gain from the bankruptcy emergence plan effects of $580 million and a gain on fresh start accounting adjustments of $742 million, which were partially offset by other reorganization charges including provision for rejected/settled executory contracts and leases and professional fees. The gain due to plan effects represents the net gains recorded as a result of implementing the Plan of Reorganization, including eliminating approximately $2,439 million of debt. The gain due to fresh start accounting represents the net gains recognized as a result of adjusting all assets and liabilities to fair value.

During 2009, we recorded income for reorganization items of $40 million which was directly related to the process of our reorganizing under Chapter 11 and the CCAA. Debtor-in-possession debt issuance costs of $63 million were incurred and paid during 2009 in connection with entering into the DIP Credit Agreement, and are separately disclosed in the consolidated statements of operations. For additional information, see Part I, Item 1. Business — Bankruptcy Proceedings — Financial Reporting Considerations-"Reorganization Items" and "Other Bankruptcy Related Costs."

ALTERNATIVE FUEL TAX CREDIT

The U.S. Internal Revenue Code allowed 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. In May 2009, we were notified that our registration as an alternative fuel mixer was approved by the Internal Revenue Service. We subsequently submitted refund claims of approximately $654 million for 2009 related to production at ten of our U.S. mills. We received refund claims of $595 million in 2009 and $59 million during the first quarter of 2010. We recorded other operating income of $633 million, net of fees and expenses, in our consolidated statements of operations related to this matter during 2009. In March 2010, we recorded other operating income of $11 million relating to an adjustment of refund claims submitted in 2009. We expect to receive the $11 million refund claim during the first quarter of 2011.

RESTRUCTURING ACTIVITIES

We continue to review and evaluate various restructuring and other alternatives to streamline our operations, improve efficiencies and reduce costs. These actions will subject us to additional short-term costs, which may include facility shutdown costs, asset impairment charges, lease commitment costs, severance costs and other closing costs.

For the six months ended December 31, 2010, we closed two converting facilities and sold four previously closed facilities. In addition, we initiated a plan to reduce our selling and administrative costs, primarily through reductions in our workforce in these functions. We recorded restructuring charges of $25 million, primarily for severance and benefits related to the closure of these facilities and the reduction in selling and administrative workforce. Restructuring charges included non-cash charges totaling $3 million of which $4 million was due to the acceleration of stock compensation expense from the reductions in workforce, offset by a $1 million non-qualified pension plan curtailment gain. We reduced our overall headcount by approximately 960 employees. The net sales of the closed converting facilities in 2010 prior to closure and for the years ended December 31, 2009 and 2008 were $53 million, $44 million, and $31 million, respectively. The majority of these net sales are expected to be transferred to other operating facilities. We expect to realize net savings of more than $50 million in our selling and administrative costs in 2011 compared to 2010 and have identified opportunities for additional savings impacting 2012.

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For the six months ended June 30, 2010, we closed four converting facilities and sold five previously closed facilities. As a result of these closure activities and other ongoing initiatives, we reduced our headcount by approximately 900 employees. We recorded restructuring charges of $15 million, including a $12 million gain related to the sale of previously closed facilities, of which $8 million resulted from the legal release of environmental liability obligations. Restructuring charges included non-cash charges of $11 million related to the acceleration of depreciation for converting equipment abandoned or taken out of service. The remaining charges of $16 million were for severance and benefits, lease commitments and facility closure costs. The net sales of these closed converting facilities in 2010 prior to closure and for the years ended December 31, 2009 and 2008 were $21 million, $97 million, and $125 million, respectively. The majority of these net sales are expected to be transferred to other operating facilities.

In 2009, we closed 11 converting facilities and permanently ceased production at the Ontonagon, Michigan medium mill and the Missoula, Montana linerboard mill. As a result of these closures and other ongoing initiatives, we reduced our headcount by approximately 2,350 employees. We recorded restructuring charges of $319 million, net of gains of $4 million from the sale of properties related to previously closed facilities. Restructuring charges included non-cash charges of $254 million related to the write-down of assets, primarily property, plant and equipment, to estimated net realizable values and the acceleration of depreciation for converting equipment expected to be abandoned or taken out of service. The remaining charges of $69 million were primarily for severance and benefits. The net sales of the closed converting facilities in 2009 prior to closure and for the year ended December 31, 2008 were $62 million and $217 million, respectively. The Ontonagon, Michigan medium mill had annual production capacity of 280,000 tons and the Missoula, Montana linerboard mill had annual production capacity of 620,000 tons.

In 2008, we closed eight converting facilities, announced the closure of two additional converting facilities and permanently ceased operations of our containerboard machine at the Snowflake, Arizona mill and production at the Pontiac pulp mill located in Portage-du-Fort, Quebec. As a result of these closures and other ongoing initiatives, we reduced our headcount by approximately 1,230 employees. We recorded restructuring charges of $67 million, net of a gain of $2 million from the sale of a previously closed facility. Restructuring charges included non-cash charges of $23 million related to the write-down of assets, primarily property, plant and equipment, to estimated net realizable values and the acceleration of depreciation for mill and converting equipment expected to be abandoned or taken out of service. The remaining charges of $46 million were primarily for severance and benefits. The net sales of the announced and closed converting facilities in 2008 prior to closure were $264 million. The Snowflake, Arizona containerboard machine had the capacity to produce 135,000 tons of medium annually. The Pontiac pulp mill had annual production capacity of 253,000 tons of northern bleached hardwood kraft paper-grade pulp, which was non-core to our primary business.

GOODWILL AND OTHER INTANGIBLE ASSETS IMPAIRMENT CHARGES IN 2008

As the result of the significant decline in value of our equity securities and our debt instruments and downward pressure placed on earnings by the weakening U.S. economy, we evaluated the carrying amount of our goodwill and other intangible assets for potential impairment in the fourth quarter of 2008. We obtained third-party valuation reports as of December 31, 2008 that indicated the carrying amounts of our goodwill and other intangible assets were fully impaired based on declines in current and projected operating results and cash flows due to the current economic conditions. As a result, we recognized pretax impairment charges on goodwill and other intangible assets of $2,727 million and $34 million, respectively, during 2008. The goodwill consisted primarily of amounts recorded in connection with our merger with Stone Container Corporation in November of 1998.

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RESULTS OF OPERATIONS

Recently Adopted Accounting Standards

Effective January 1, 2010, we adopted the amendments to ASC 860, "Transfers and Servicing" ("ASC 860"). The amendments removed the concept of a qualifying special-purpose entity and the related impact on consolidation, thereby potentially requiring consolidation of such special-purpose entities previously excluded from the consolidated financial statements. The amendments to ASC 860 did not impact our consolidated financial statements.

Effective January 1, 2010, we adopted the amendments to ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"). The amendments require new disclosures for transfers in and out of fair value hierarchy Levels 1 and 2 and activity within fair value hierarchy Level 3. The amendments also clarify existing disclosures regarding the disaggregation for each class of assets and liabilities, and the disclosures about inputs and valuation techniques. The amendments to ASC 820 did not have a material impact on our consolidated financial statements.

Financial Data

2010 COMPARED TO 2009

Effect of Fresh Start Accounting

The application of fresh start accounting affected certain assets, liabilities, and expenses. As a result, certain financial information of the Successor as of and for the period after June 30, 2010 is not comparable to Predecessor financial information. Therefore, for comparative purposes, we did not combine certain financial information for the Successor period July 1, 2010 through December 31, 2010 with the Predecessor period January 1, 2010 through June 30, 2010. Because net sales were not affected

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by fresh start accounting, for the purpose of the following discussion, we have combined our net sales for the Successor and Predecessor periods of 2010. Refer to Note 1 to our Notes to Consolidated Financial Statements for additional information on fresh start accounting.

Combined Net Sales

Net sales increased 12.8% in 2010 compared to last year. Net sales were positively impacted by higher average selling prices ($504 million) for containerboard, corrugated containers and reclaimed material in 2010. The average price for old corrugated containers ("OCC") increased approximately $80 per ton compared to last year. Net sales were also favorably impacted by $208 million in 2010 as a result of higher third-party sales volume of containerboard, corrugated containers and reclaimed material. Third party shipments of containerboard were higher due primarily to stronger demand in the domestic market.

Cost of Goods Sold

Our cost of goods sold as a percentage of net sales for the six months ended December 31, 2010 was positively impacted by higher average selling prices. Our containerboard mills operated at 97.4%, 98.7% and 85.4% of capacity for the six months ended December 31, 2010 and June 30, 2010, and the year ended 2009, respectively. Due to market conditions we took approximately 22,000 tons, zero tons and 1,029,000 tons of containerboard market related downtime for the six months ended December 31, 2010 and June 30, 2010, and the year ended December 31, 2009, respectively.

Selling and Administrative Expenses

Selling and administrative expenses for the six months ended December 31, 2010 were favorably impacted by the initiation of our plan to reduce our selling and administrative costs, primarily through reductions in our workforce in these functions. Selling and administrative expenses for the six months ended June 30, 2010 were unfavorably impacted by amounts accrued under our 2009 long-term incentive plan and higher benefit cost in the first half of the year due to timing.

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Other

Interest expense, net was $45 million for the six months ended December 31, 2010, including amortization of deferred debt issuance costs and original issue discount of $5 million. Average borrowings under the Successor Exit Credit Facilities were $1,198 million, with an overall average effective interest rate of approximately 6.75%.

Interest expense, net was $23 million and $265 million for the six months ended June 30, 2010 and the year ended December 31, 2009, respectively. Average borrowings under the Predecessor credit facilities were $3,801 million and $4,095 million, including average secured borrowings of $1,362 million and $1,656 million, for the six months ended June 30, 2010 and the year ended December 31, 2009, respectively. Our overall average effective interest rate, excluding unsecured debt, was approximately 3.5% and 5.4% for the six months ended June 30, 2010 and the year ended December 31, 2010, respectively. For the year ended December 31, 2009, we recorded interest expense of $163 million on unsecured debt from the Petition Date through November 30, 2009. In December 2009, we discontinued recording interest expense on unsecured debt when the Proposed Plan of Reorganization was issued, and 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. In December 2009, we recorded income in reorganization items for the reversal of $163 million post-petition unsecured interest expense accrued from the Petition Date through November 30, 2009, and discontinued recording unsecured interest expense.

In 2009, we recorded a loss on early extinguishment of debt of $20 million for the non-cash write off of deferred issuance costs related to the Stevenson, Alabama mill industrial revenue bonds, which were repaid.

We recorded non-cash foreign currency exchange gains of $3 million and losses of $14 million for the six months ended June 30, 2010 and the year ended December 31, 2009, respectively. Upon emergence, we reviewed the primary economic indicators for our Canadian operations under the Reorganized Smurfit-Stone and determined the functional currency for our Canadian operations to be the local currency. As a result, effective July 1, 2010, translation gains or losses are included with stockholders' equity as part of OCI.

For the six months ended June 30, 2010, we recorded an income tax benefit of $199 million primarily due to the $200 million income tax benefit related to the effects of the plan of reorganization and application of fresh start accounting which principally includes adjustments for cancellation of indebtedness, valuation allowances and unrecognized tax benefits.

For the six months ended December 31, 2010, we recorded an income tax provision of $76 million. The provision for income taxes differed from the amount computed by applying the statutory U.S. federal income tax rate to income before income taxes due primarily to income adjustments resulting from reconciling filed tax returns to the recorded tax provision, state income taxes, and the effects of foreign tax rates.

2009 COMPARED TO 2008

We had a net loss attributable to common stockholders of $3 million, or $0.01 per share, compared to a net loss of $2,830 million, or $11.01 per share, for 2008. The 2009 results benefited from the alternative fuel tax credit income of $633 million and lower costs, but were negatively impacted by higher restructuring expense of $252 million and lower sales prices and sales volume for corrugated containers and containerboard. The 2008 loss includes goodwill and other intangible assets impairment charges of $2,761 million, or $10.74 per share, but includes a benefit of $84 million, or $0.33 per share, from the resolution of Canadian income tax examination matters and $36 million of foreign currency exchange gains.

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Net sales decreased 20.8% in 2009 compared to last year. Net sales were $846 million lower in 2009, as a result of lower third-party sales volume of containerboard, corrugated containers and reclaimed fiber. Third-party shipments of containerboard were lower due primarily to weaker demand in the markets in which we operate. North American shipments of corrugated containers in 2009 were negatively impacted by weaker market conditions and container plant closures. Net sales were also impacted by lower average selling prices ($622 million) for containerboard, corrugated containers and reclaimed fiber. The average price for OCC decreased approximately $45 per ton compared to last year.

Our containerboard mills operated at 85.4% of capacity in 2009, compared to 95.5% in 2008. Containerboard production was 12.0% lower compared to 2008 due primarily due to the market related downtime taken by our mills as a result of lower demand in 2009. In response to the weaker market conditions in 2009, we took approximately 1,029,000 tons of containerboard market related downtime compared to 245,000 tons in 2008. Production of market pulp decreased by 37.4% compared to last year due primarily to the closure of the Pontiac pulp mill in October 2008. Production of kraft paper decreased 24.1% compared to last year due primarily to lower demand, which resulted in market related downtime incurred during the first half of 2009. Total tons of fiber reclaimed and brokered decreased 19.8% compared to last year due to the lower containerboard production and weaker demand.

Cost of goods sold as a percent of net sales in 2009 was 90.1%, comparable to 90.0% in 2008. Cost of goods sold decreased from $6,338 million in 2008 to $5,023 million in 2009 due primarily to lower sales volumes ($761 million) for containerboard, corrugated containers and reclaimed materials and lower costs as a result of the additional market related downtime taken in 2009. In addition, we had lower costs of reclaimed material ($268 million), freight ($64 million) and energy ($53 million).

Selling and administrative expense decreased $76 million in 2009 compared to 2008 primarily due to cost reductions from ongoing and prior year initiatives. In addition, 2008 includes the impact of the Calpine Corrugated charges totaling $22 million (See Note 6 of the Notes to Consolidated Financial Statements). Selling and administrative expense as a percent of net sales increased to 10.2% in 2009 from 9.2% in 2008 due primarily to the lower sales volume.

Interest expense, net was $265 million in 2009. The $3 million increase compared to 2008 was impacted by higher average borrowings ($35 million), which were partially offset by lower average interest rates ($20 million) in 2009. The higher average borrowings in 2009 were primarily due to borrowings under the DIP Credit Agreement, which were repaid in the second half of 2009. Our overall average effective interest rate in 2009 was lower than 2008 by 0.50%. For the year ended December 31, 2009, we recorded interest expense of $163 million on unsecured debt from the Petition Date through November 30, 2009. In December 2009, we discontinued recording interest expense on unsecured debt when the Proposed Plan of Reorganization was issued and 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. In December 2009, we recorded income in reorganization items for the reversal of $163 million of accrued post-petition unsecured interest expense in the consolidated statement of operations. For additional information on reorganization items, see Part I, Item 1. Business — Bankruptcy Proceedings — Financial Reporting Considerations — "Reorganization Items." In 2008, a portion of our interest rate swap contracts were deemed to be ineffective and were marked-to-market, resulting in $12 million of additional interest expense.

In 2009, we recorded a loss on early extinguishment of debt of $20 million for the non-cash write-off of deferred debt issuance costs related to the Stevenson, Alabama mill industrial revenue bonds, which were repaid.

In 2009, we recorded non-cash foreign currency exchange losses of $14 million compared to gains of $36 million for the same period in 2008.

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For 2009, we recorded a gain of $40 million related to the process of reorganizing under Chapter 11 and the CCAA. For additional information on reorganization items, see Part I, Item 1. Business — Bankruptcy Proceedings — Financial Reporting Considerations — "Reorganization Items."

The benefit from income taxes for the year ended December 31, 2009 of $23 million differed from the amount computed by applying the statutory U.S. federal income tax rate to loss before income taxes due primarily to the effect of refunds for previously unrecognized alternative minimum tax credits that we expect to receive in 2010.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2010, we had cash and cash equivalents of $449 million compared to $704 million at December 31, 2009. Related to our Plan of Reorganization, our debt was reduced from $3,793 million at December 31, 2009 to $1,194 million upon emergence at June 30, 2010. Long-term debt at December 31, 2010 was $1,194 million. As of December 31, 2010, the amount available for borrowings under the ABL Revolving Facility after considering outstanding letters of credit was $534 million.

The following table presents a summary of our cash flows for the noted periods:

Net Cash Provided By (Used For) Operating Activities

Successor

The net cash provided by operating activities for the six months ended December 31, 2010 of $211 million benefited from higher selling prices and operating income. Operating cash flows were unfavorably impacted by pension contributions of $185 million, including a discretionary pension contribution of $105 million.

Predecessor

The net cash used for operating activities for the six months ended June 30, 2010 of $85 million was impacted by payments of $202 million to settle prepetition liabilities, excluding debt.

Net cash provided by operating activities in 2009 of $1,094 million was primarily due to alternative fuel tax credit receipts of $595 million and the impact of the bankruptcy filing. Our cash flow from operating activities was favorably impacted by the stay of payment of liabilities subject to compromise, including accounts payable and interest payable, resulting from the bankruptcy filings.

Net Cash Provided By (Used For) Investing Activities

Successor

Net cash used for investing activities was $97 million for the six months ended December 31, 2010. Expenditures for property, plant and equipment were $106 million. The amount expended for property,

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plant and equipment included $104 million for projects related to upgrades, cost reductions and ongoing initiatives and $2 million for environmental projects. During the six months ended December 31, 2010, we received proceeds of $9 million primarily related to the sales of previously closed facilities.

Predecessor

For the six months ended June 30, 2010, net cash used for investing activities was $73 million including expenditures for property, plant and equipment of $83 million, which were partially offset by net proceeds of $10 million from sales of previously closed facilities.

Net cash used for investing activities was $139 million in 2009. Expenditures for property, plant and equipment were $172 million. During 2009, we received proceeds of $48 million primarily related to the sale of our Canadian timberlands ($27 million) and previously closed facilities. Advances to affiliates, net in 2009 of $15 million were principally related to funding an obligation pertaining to a guarantee for a previously non-consolidated affiliate.

Net Cash Provided By (Used For) Financing Activities

Successor

Net cash used for financing activities for the six months ended December 31, 2010 was $7 million. During the six months ended December 31, 2010, we paid $6 million on the Term Loan as required under the Term Loan Facility.

Predecessor

Net cash used for financing activities for the six months ended June 30, 2010 was $206 million. We obtained proceeds of $1,188 million (net of $12 million original issue discount) under the Term Loan Facility, which together with available cash, were used to repay Predecessor debt of $1,347 million and pay debt issuance costs on exit credit facilities and other financing costs of $47 million.

Exit Credit Facilities

Pursuant to the approval of the U.S. Court on February 22, 2010, we and certain of our subsidiaries entered into the Term Loan Facility that provides for an aggregate term loan commitment of $1,200 million. In addition, we entered into the ABL Revolving Facility with aggregate commitments of $650 million (including a $100 million Canadian Tranche) on April 15, 2010. The ABL Revolving Facility includes a $150 million sub-limit for letters of credit.

We are permitted, subject to obtaining lender commitments, to add one or more incremental facilities to the Term Loan Facility in an aggregate amount up to $400 million. Each incremental facility is conditioned on (a) there existing no defaults, (b) in the case of incremental term loans, such loans have a final maturity no earlier than, and a weighted average life no shorter than, the Term Loan Facility, and (c) after giving effect to one or more incremental facilities, the consolidated senior secured leverage ratio shall be less than 3.00 to 1.00. If the interest rate spread applicable to any incremental facility exceeds the interest rate spread applicable to the Term Loan Facility by more than 0.25%, then the interest rate spread applicable to the Term Loan Facility will be increased to equal the interest rate spread applicable to the incremental facility.

We are permitted, subject to obtaining lender commitments, to add incremental commitments under the ABL Revolving Facility in an aggregate amount up to $150 million. Each incremental commitment is conditioned on (a) there existing no defaults, (b) any new lender providing an incremental commitment shall require the consent of the Administrative Agent, each Issuing Lender, the Swingline Lender and the Fronting Lender, (c) the minimum amount of any increase must be at least $25 million,

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(d) we shall not increase the commitments more than three times in the aggregate, (e) if the interest rate margins and commitment fees with respect to the incremental commitments are higher than those applicable to the existing commitments under the ABL Revolving Facility, then the interest rate margins and commitment fees for the existing commitments under the ABL Revolving Facility will be increased to match those for the incremental commitments, and (f) the satisfaction of other customary closing conditions.

On June 30, 2010, the Term Loan Facility was funded and borrowings became available under the ABL Revolving Facility. The proceeds of the borrowings under the Term Loan Facility of $1,200 million, together with available cash, were used to repay our outstanding secured indebtedness under our pre-petition Credit Facility and pay remaining fees, costs and expenses related to and contemplated by the Exit Credit Facilities and the Plan of Reorganization. As of December 31, 2010 we had no borrowings under the ABL Revolving Facility and $1,194 million under the Term Loan Facility. As a result of Excess Cash Flows, as defined in our Term Loan Facility, during the six months ended December 31, 2010, we are required to pay $23 million in March 2011 on the Term Loan Facility. Borrowings under the ABL Revolving Facility are available for working capital purposes, capital expenditures, permitted acquisitions and general corporate purposes. As of December 31, 2010, our borrowing base under the ABL Revolving Facility was $618 million and the amount available for borrowings after considering outstanding letters of credit was $534 million.

For additional information on the Exit Credit Facilities, see Part I, Item 1. Business — Bankruptcy Proceedings — Proposed Plan of Reorganization and Exit Credit Facilities — "Exit Credit Facilities."

FUTURE CASH FLOWS

Contractual Obligations and Commitments

In addition to our debt commitments at December 31, 2010, we had other commitments and contractual obligations that require us to make specified payments in the future. The table indicates the years in which payments are due under the contractual obligations.

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We expect further improvement in our cash flow from operations in 2011. We expect that our cash flow from operations and our unused borrowing capacity under the Exit Credit Facilities, in combination, will be sufficient to meet our obligations and commitments, including debt service, pension funding, costs related to environmental compliance, and other capital expenditures.

Contingent Obligations

We issue standby letters of credit primarily for performance bonds and for self-insurance. Letters of credit are issued under our revolving credit facilities, generally have a one-year maturity and are renewed annually. As of December 31, 2010, we had approximately $84 million of letters of credit outstanding.

We have certain woodchip processing contracts, which provide for guarantees of third party contractors' debt outstanding, with a security interest in the chipping equipment. Guarantee payments would be triggered in the event of a loan default by any of the contractors. The maximum potential amount of future payments related to all of such arrangements as of December 31, 2010 was $22 million. Cash proceeds received from liquidation of the chipping equipment would be based on market conditions at the time of sale, and we may not recover in full the guarantee payments made.

Pension Obligations

At December 31, 2010, the qualified defined pension benefit plans, which were assumed under the Plan of Reorganization, were underfunded by approximately $1,132 million based on actual asset values and the discount rates effective on December 31, 2010. The weighted average discount rates used at December 31, 2010 for the U.S. and Canadian qualified defined benefit pension plans were 5.32% and 5.21%, respectively. We currently estimate that the cash contributions under the U.S. and Canadian qualified pension plans will be approximately $109 million in 2011. We currently estimate that contributions will be in the range of approximately $250 million to $340 million annually in 2012 through 2015. Projected pension contributions reflect that we have elected funding relief under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, and also reflect our election of Canada's funding relief measures made in 2009 and 2010. The actual required amounts and timing of such future cash contributions will be highly sensitive to changes in the applicable discount rates and returns on plan assets.

Exit Liabilities

Successor

We recorded restructuring charges of $25 million for the six months ended December 31, 2010, primarily for severance and benefits related to the closure of facilities and the reduction in our selling and administrative workforce.

We had $25 million of exit liabilities as of June 30, 2010, related to the restructuring of our operations. For the six months ended December 31, 2010, we incurred cash expenditures of $20 million for these exit liabilities. The exit liabilities remaining as of December 31, 2010, including the 2010 restructuring activities, totaled $27 million. Future cash outlays, principally for severance and benefits cost and

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long-term lease commitments and facility closure cost, are expected to be $26 million in 2011, insignificant amounts in 2012 and 2013, and $1 million thereafter. We intend to continue funding exit liabilities through operations as originally planned.

Predecessor

We recorded restructuring charges of $15 million for the six months ended June 30, 2010, net of gains of $12 million from the sale of properties related to previously closed facilities, of which $8 million resulted from the legal release of environmental liability obligations. Restructuring charges include non-cash charges of $11 million related to the acceleration of depreciation for converting equipment abandoned or taken out of service. The remaining charges of $16 million were for severance and benefits, lease commitments and facility closure costs.

We had $54 million of exit liabilities as of December 31, 2009, related to the restructuring of our operations. For the six months ended June 30, 2010, we incurred $23 million of cash disbursements, primarily severance and benefits, related to these exit liabilities. In addition, these exit liabilities were reduced by $8 million resulting from the release of environmental liability obligations upon the sale of previously closed facilities and $3 million due to the reclassification of multi-employer pension plan liabilities to liabilities subject to compromise. During the six months ended June 30, 2010, we incurred $11 million of cash disbursements, primarily severance and benefits, related to exit liabilities established during 2010.

Environmental Matters

As discussed in Part I, Item 1. Business, "Environmental Compliance," we completed all projects required to bring us into compliance with the now vacated Boiler MACT. However, we could incur significant expenditures due to changes in law or discovery of new information. In addition, it is not yet known when greenhouse gas emission laws or regulations may come into effect, nor is it currently possible to estimate the cost of compliance with such laws or regulations. Excluding spending on Boiler MACT projects and other one-time compliance costs, we have spent an average of approximately $5 million in each of the last three years on capital expenditures for environmental purposes and, we expect to spend approximately $3 million in 2011.

OFF-BALANCE SHEET ARRANGEMENT

At December 31, 2010, we had one off-balance sheet financing arrangement.

We sold 980,000 acres of owned and leased timberland in October 1999. The final purchase price, after adjustments, was $710 million. We received $225 million in cash and $485 million in the form of installment notes. Under our program to monetize the installment notes receivable, the notes were sold, without recourse, to Timber Note Holdings LLC ("TNH"), a non-consolidated variable interest entity under the provisions of ASC 860, for $430 million in cash proceeds and a residual interest in the notes. The residual interest included in other assets in the accompanying consolidated balance sheet was $21 million at December 31, 2010 (See Note 8 of the Notes to Consolidated Financial Statements). TNH and its creditors have no recourse to us in the event of a default on the installment notes.

EFFECTS OF INFLATION

While inflationary increases in certain input costs, such as fiber, energy and freight costs, have an impact on our operating results, changes in general inflation have had minimal impact on our operating results in each of the last three years. Fiber, energy and freight cost increases are strongly influenced by supply and demand factors including competition in global markets and from hurricanes or other natural disasters in certain regions of the United States, and when supplies become tight, we have experienced increases in the cost of these items. We continue to seek ways to mitigate the impact of

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such cost increases and, to the extent permitted by competition, pass the increased cost on to customers by increasing sales prices over time.

We used the last-in, first-out method of accounting for approximately 56% of our inventories at December 31, 2010. Under this method, the cost of goods sold reported in the financial statements approximates current cost and thus provides a closer matching of revenue and expenses in periods of increasing costs.

Upon emergence from Chapter 11 and CCAA bankruptcy proceedings, property, plant and equipment was valued at fair value which approximates replacement costs of existing fixed assets.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of financial statements in accordance with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our estimates and assumptions are based on historical experiences and changes in the business environment. However, actual results may differ from these estimates. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial condition and results and require management's most subjective judgments. Our most critical accounting policies and use of estimates are described below.

Fresh-Start Accounting

Upon emergence from Chapter 11, we adopted fresh start accounting as prescribed by ASC 852, which required us to revalue our assets and liabilities to fair value. ASC 852, among other things, defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements.

Fresh start accounting provides, among other things, for a determination of the value to be assigned to the equity of the emerging company as of a date selected for financial reporting purposes. In conjunction with the bankruptcy proceedings, a third party financial advisor provided an enterprise value of the Company of approximately $3,145 million to $3,445 million with a midpoint of $3,295 million. Enterprise value of the Company was estimated using various valuation methods including: (i) comparable public company analysis, (ii) discounted cash flow analysis ("DCF") and (iii) precedent transaction analysis. The preliminary equity value set forth by the third party was $2,360 million, using the midpoint enterprise value of $3,295 million and adjusting for expected cash and debt balances upon emergence and expected cash proceeds from the sale of non-operating assets. The final equity value of $2,352 was determined consistent with the third party methodology using the midpoint enterprise value of $3,295 million.

The Company's reorganization value was allocated to its assets and liabilities in conformity with the procedures specified by ASC 805, "Business Combinations." As a result of adopting fresh start accounting, the Company recorded goodwill of $93 million which represents the excess of reorganization value over amounts assigned to the other assets.

All estimates, assumptions and financial projections, including the fair value adjustments, the financial projections, and the enterprise value and reorganization value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there can be no assurance that the estimates, assumptions and financial projections will be realized, and actual results could vary materially.

For the impact that the adoption of fresh start accounting had on our consolidated balance sheet, see Note 1 of the Notes to the Consolidated Financial Statements.

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Long-Lived Assets Including Goodwill and Other Intangible Assets

We conduct impairment reviews of long-lived assets in accordance with ASC 360-10, "Impairment or Disposal of Long-Lived Assets" and ASC 350, "Intangibles-Goodwill and Other." Based upon our review as of December 31, 2010, we determined that there was no impairment of long-lived assets, including goodwill. Such reviews require us to make estimates of future cash flows and fair values. Our cash flow projections include significant assumptions about economic conditions, demand and pricing for our products and costs. Our estimates of fair value are determined using a variety of valuation techniques, including cash flows. While significant judgment is required, we believe that our estimates of future cash flows and fair value are reasonable. However, should our assumptions change in future years, our fair value models could indicate lower fair values for long-lived assets, including goodwill and other intangible assets, which could materially affect the carrying value of these assets and results of operations.

Restructurings

In recent years, we have closed a number of operating facilities, including paper mills, and exited non-core businesses. Identifying and calculating the cost to exit these businesses requires certain assumptions to be made, the most significant of which are anticipated future liabilities, including leases and other contractual obligations, and the adjustment of property, plant and equipment to net realizable value. We believe our estimates are reasonable, considering our knowledge of the paper industry, previous experience in exiting activities and valuations received from independent third parties in the calculation of such estimates. Although our estimates have been reasonably accurate in the past, significant judgment is required, and these estimates and assumptions may change as additional information becomes available and facts or circumstances change.

Allowance for Doubtful Accounts

We evaluate the collectibility of accounts receivable on a case-by-case basis and make adjustments to the bad debt reserve for expected losses. We also estimate reserves for bad debts based on historical experience and past due status of the accounts. We perform credit evaluations and adjust credit limits based upon each customer's payment history and credit worthiness. While credit losses have historically been within our expectations and the provisions established, actual bad debt write-offs may differ from our estimates, resulting in higher or lower charges in the future for our allowance for doubtful accounts.

Pension and Postretirement Benefits

We have significant long-term liabilities related to our defined benefit pension and postretirement benefit plans. The determination of pension obligations and expense is dependent upon our selection of certain assumptions, the most significant of which are the expected long-term rate of return on plan assets and the discount rates applied to plan liabilities. Consulting actuaries assist us in determining these assumptions, which are described in Note 15 of the Notes to Consolidated Financial Statements.

At June 30, 2010, in conjunction with fresh start accounting, we updated our mortality rate table assumptions which increased our employer benefit liabilities by approximately $58 million.

For the six months ended December 31, 2010 and June 30, 2010, and the year ended December 31, 2009, the expected long-term rate of return on our U.S. plan assets was 8.50%. For the six months ended December 31, 2010 and June 30, 2010, and the year ended December 31, 2009 the expected long-term rates of return on our Canadian plan assets were 6.30%, 6.30% and 7.50%, respectively. The weighted average discount rates used to determine the qualifed defined benefit obligations for the U.S. and foreign retirement plans at December 31, 2010 were 5.32% and 5.21%, respectively. The assumed rate for the long-term return on plan assets was determined based upon target asset allocations and

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expected long-term rates of return by asset class. For determination of the discount rate, the present value of the cash flows as of the measurement date is determined using the spot rates from the Mercer Yield Curve. A decrease in the assumed rate of return of 0.50% would increase pension expense by approximately $10 million. An increase in the discount rate of 0.50% would increase our pension expense by approximately $5 million and decrease our pension benefit obligations by approximately $201 million.

Effective January 1, 2011, the expected long-term rate of return on our U.S. plan assets was reduced to 7.75%. The assumed rate for the long-term return on plan assets was determined based upon target asset allocations and expected long-term rates of return by asset class.

Related to our postretirement benefit plans, we make assumptions for future trends for medical care costs. The effect of a 1% change in the assumed health care cost trend rate would increase our accumulated postretirement benefit obligation as of December 31, 2010 by $12 million and would increase the annual net periodic postretirement benefits cost by an immaterial amount.

Income Taxes

We apply the provisions of ASC 740, "Income Taxes" ("ASC 740"), which creates a single model to address accounting for uncertainty in tax positions and clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Under the provisions of ASC 740, we elected to classify interest and penalties related to our unrecognized tax benefits in the income tax provision (See Note 14 of the Notes to Consolidated Financial Statements).

At December 31, 2010, we had $279 million of net unrecognized tax benefits. The primary differences between gross unrecognized tax benefits and net unrecognized tax benefits are associated with the U.S. federal tax benefit from state tax deductions. (See Note 14 of the Notes to Consolidated Financial Statements for a reconciliation of 2010 activity).

For the six months ended December 31, 2010, and June 30, 2010, no interest or penalties were recorded related to tax positions taken during the current and prior years. At December 31, 2010, no interest or penalties were recognized in the consolidated balance sheet. All net unrecognized tax benefits, if recognized, would affect our effective tax rate.

Deferred tax assets and liabilities reflect our assessment of future taxes to be paid in the jurisdictions in which we operate. These assessments involve temporary differences resulting from differing treatment of items for tax and accounting purposes. In addition, unrecognized tax benefits under the provisions of ASC 740 reflect estimates of our current tax exposures. Based on our evaluation of our tax positions, we believe we were adequately reserved for these matters at December 31, 2010.

At December 31, 2010, we had deferred tax assets of $849 million. A valuation allowance of $30 million has been established on a portion of these deferred tax assets based on the expected timing of deferred tax liability reversals and the expiration dates of the tax loss carryforwards. The valuation allowance decreased during 2010, primarily to reflect our ability to utilize net operating losses in future years due to our emergence from bankruptcy and adoption of fresh start accounting. At December 31, 2010, we expect our deferred tax assets, net of the valuation allowance, will be fully realized through the reversal of net taxable temporary differences and utilization of net operating losses.

As previously disclosed, the Canada Revenue Agency ("CRA") was examining our income tax returns for tax years 1999 through 2005. In connection with the examination, the CRA had issued assessments of additional income taxes, interest and penalties related to transfer prices of inventory sold by our Canadian subsidiaries to our U.S. subsidiaries. Additionally, the CRA was considering certain significant adjustments related principally to taxable income related to our acquisition of a Canadian company. Pursuant to the Plan of Reorganization, we entered into an agreement with the CRA and

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other provincial tax authorities that took effect upon our emergence from bankruptcy which settled the open Canadian income tax matters through January 26, 2009. As a result of this agreement, we reported a $39 million net income tax benefit related to the final settlement of the Canadian tax claims and the release of the previously accrued unrecognized tax benefits related to the Canadian audit for the six months ended June 30, 2010.

The U.S. federal statute of limitations is closed through 2006. There are currently no federal examinations in progress. In addition, we file tax returns in numerous states. The states' statutes of limitations are generally open for the same years as the federal statute of limitations.

Federal income taxes have not been provided on undistributed earnings of our foreign subsidiaries during 2010, as we intend to indefinitely reinvest such earnings into our foreign subsidiaries. At December 31, 2010, undistributed earnings for our foreign subsidiaries were $9 million.

Legal and Environmental Contingencies

Accruals for legal and environmental matters are recorded when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Such liabilities are developed based on currently available information and require judgments as to probable outcomes. Assumptions are based on historical experience and recommendations of legal counsel. Environmental estimates include assumptions and judgments about particular sites, remediation alternatives and environmental regulations. We believe our accruals are adequate. However, due to uncertainties associated with these assumptions and judgments, as well as potential changes to governmental regulations and environmental technologies, actual costs could differ materially from the estimated amounts.

Self-Insurance

We self-insure a majority of our workers' compensation costs. Other workers' compensation and general liability costs are subject to specific retention levels for certain policies and coverage. Losses above these retention levels are transferred to insurance companies. In addition, we self-insure the majority of our group health care costs. All of the workers' compensation, general liability and group health care claims are handled by third-party administrators. Consulting actuaries and administrators assist us in determining our liability for self-insured claims. Losses are accrued based upon the aggregate self-insured claims determined by the third-party administrators, actuarial assumptions and our historical experience. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our workers' compensation, general liability and group health care costs.

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ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including commodity price risk, foreign currency risk and interest rate risk. To manage the volatility related to these risks, we have on a periodic basis entered into various derivative contracts. The majority of these contracts are settled in cash. However, such settlements have not had a significant effect on our liquidity in the past, nor are they expected to be significant in the future. We do not use derivatives for speculative or trading purposes.

On January 26, 2009, the Chapter 11 Petition and the Canadian Petition effectively terminated all existing derivative instruments. Termination fair values were calculated based on the potential settlement value. Our termination value related to our remaining derivative liabilities was approximately $59 million. These derivative liabilities were stayed due to the filing of the Chapter 11 Petition and the Canadian Petition at which time, these liabilities were adjusted through OCI for derivative instruments qualifying for hedge accounting and cost of goods sold for derivative instruments not qualifying for hedge accounting. Subsequently, the amounts adjusted through OCI were recorded in earnings when the underlying transaction was recognized or when the underlying transaction was no longer expected to occur. As of June 30, 2010, all amounts in OCI were recognized through earnings. On June 30, 2010, the derivative contract termination liabilities of $59 million were paid in connection with our emergence from our Chapter 11 and CCAA bankruptcy proceedings. See Note 10 of the Notes to Consolidated Financial Statements.

Commodity Price Risk

Prior to filing for bankruptcy, we used financial derivative instruments, including fixed price swaps, to manage fluctuations in cash flows resulting from commodity price risk in the procurement of natural gas and other commodities. Our objective was to fix the price of a portion of the purchases of these commodities used in the manufacturing process. The changes in the market value of such derivative instruments historically offset the changes in price of the hedged item. Excluding the impact of derivative instruments, the change in our 2010 and 2009 natural gas cost, based upon our expected annual usage and unit cost, resulting from a hypothetical 10% adverse price change, would be approximately $7 million and $9 million, respectively. The changes in energy cost discussed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" include the impact of the natural gas derivative instruments. See Note 10 of the Notes to Consolidated Financial Statements.

Foreign Currency Risk

Our principal foreign exchange exposure is the Canadian dollar. Assets and liabilities outside the United States are primarily located in Canada.

Prior to emerging from bankruptcy, the functional currency for our Canadian operations was the U.S. dollar. Fluctuations in Canadian dollar monetary assets and liabilities resulted in gains or losses which were credited or charged to income. Upon emergence, we reviewed the primary economic indicators for our Canadian operations under the Reorganized Smurfit-Stone, including cash flow indicators, sales price indicators, sales market indicators, expense indicators, financing indicators and intercompany transactions as required by ASC 830, "Foreign Currency Matters." Based on our analysis, including current operations and financing availability within Canada, we determined the functional currency for our Canadian operations to be the local currency. As a result, effective July 1, 2010, the assets and liabilities for the Canadian operations are translated at the exchange rate in effect at the balance sheet date and income and expenses are translated at average exchange rates prevailing during the year. Translation gains or losses are included within stockholders' equity as part of OCI.

For the Predecessor periods, we used financial derivative instruments, including forward contracts and options, primarily to protect against Canadian currency exchange risk associated with expected future

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cash flows. The Canadian dollar as of June 30, 2010, compared to December 31, 2009 weakened 1.3% against the U.S. dollar. The Canadian dollar as of December 31, 2009, compared to December 31, 2008, strengthened 7.1%. We recognized non-cash foreign currency exchange gains of $3 million for the six month period ended June 30, 2010, and a loss of $14 million for the year ended December 31, 2009.

During the Successor period ended December 31, 2010, the Canadian dollar as of December 31, 2010 compared to June 30, 2010 strengthened 6.2% against the U.S. dollar, and as a result, we recorded a $7 million gain (net of tax) in OCI related to the translation of our Canadian operations.

We performed a sensitivity analysis that measures the potential OCI loss from a hypothetical 10% adverse change in quoted foreign currency exchange rate of the Canadian dollar relative to the U.S. dollar with all other variables held constant. Excluding the impact of derivative instruments, the potential impact from a hypothetical 10% adverse change in the Canadian dollar exchange rate as of December 31, 2010 would be $15 million (net of tax).

During the six months ended December 31, 2010, we entered into foreign currency exchange derivative contracts to minimize the exposure to currency exchange rate fluctuations on a $255 million Canadian dollar denominated inter-company note established upon emergence between a U.S. subsidiary and a Canadian subsidiary, whereby the U.S subsidiary is the lender. The inter-company note, which is denominated in Canadian dollars, matures on June 29, 2015 and the interest is payable quarterly. The derivative contracts are monthly or quarterly instruments with a notional amount equal to the inter-company note principal, plus accrued interest. The derivative contracts are marked-to-market through earnings on a monthly or quarterly basis.

For the six months ended December 31, 2010, our U.S subsidiary recorded a $10 million foreign currency gain (net of tax) in other, net in the consolidated statements of operations related to the revaluation of the inter-company note. We recorded a $10 million loss (net of tax) in other, net in the consolidated statements of operations on the settlement of the derivative contracts. We recorded $1 million loss (net of tax) in other, net in the consolidated statements of operations related to the change in fair value of the derivative contracts.

Interest Rate Risk

Our earnings and cash flow are significantly affected by the amount of interest on our indebtedness. Upon emergence, our financing arrangements included variable rate debt. A change in the interest rate on the variable rate debt will impact interest expense and cash flows. Our objective is to mitigate interest rate volatility and reduce or cap interest expense within acceptable levels of market risk. We may enter into interest rate swaps, caps or options to hedge interest rate exposure and manage risk within Company policy. Any derivative would be specific to the debt instrument, contract or transaction, which would determine the specifics of the hedge (See Note 10 of the Notes to Consolidated Financial Statements).

We performed a sensitivity analysis that measures the change in interest expense on our variable rate debt arising from a hypothetical 100 basis point adverse movement in interest rates. Based on our outstanding variable rate debt as of December 31, 2010, a hypothetical 100 basis point change in interest rates would not impact our interest expense because the adjusted LIBOR rate as of December 31, 2010 was 0.30% compared to our minimum Term Loan Facility adjusted LIBOR rate of 2.00% per annum according to the Term Loan agreement.

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The following table presents principal amounts for our debt obligations and related average interest rates based on the weighted average interest rates at the end of the period. Variable interest rates disclosed do not attempt to project future interest rates. This information should be read in conjunction with Note 9 of the Notes to Consolidated Financial Statements.

Short and Long-Term Debt

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ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

All other schedules specified under Regulation S-X have been omitted because they are not applicable, because they are not required or because the information required is included in the financial statements or notes thereto.

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Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for Smurfit-Stone Container Corporation, as such term is defined in Rule 13a-15(f) under the Exchange Act. As required by Rule 13a-15(c) under the Exchange Act, we carried out an evaluation, with the participation of our principal executive officer and principal financial officer, of the effectiveness of our internal control over financial reporting as of the end of the latest fiscal year. The framework on which such evaluation was based is contained in the report entitled "Internal Control — Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Although there are inherent limitations in the effectiveness of any system of internal control over financial reporting, based on our evaluation, we have concluded that our internal control over financial reporting was effective as of December 31, 2010.

The effectiveness of our internal control over financial reporting as of December 31, 2010 has been audited by Ernst & Young LLP, our independent registered public accounting firm. Their report, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2010, is included herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of
Smurfit-Stone Container Corporation, Inc.

We have audited Smurfit-Stone Container Corporation, Inc.'s (the Company's) internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Smurfit-Stone Container Corporation, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010 (Successor), based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2010 (Successor) and 2009 (Predecessor), and the related consolidated statements of operations, stockholders' equity, and cash flows for the six-month period ended December 31, 2010 (Successor), six-month period ended June 30, 2010 (Predecessor) and years ended December 31, 2009 and 2008 (Predecessor). Our report dated February 15, 2011, expressed an unqualified opinion thereon.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of
Smurfit-Stone Container Corporation, Inc.

We have audited the accompanying consolidated balance sheets of Smurfit-Stone Container Corporation, Inc. (the Company) as of December 31, 2010 (Successor) and 2009 (Predecessor), and the related consolidated statements of operations, stockholders' equity, and cash flows for the six-month period ended December 31, 2010 (Successor), six-month period ended June 30, 2010 (Predecessor) and years ended December 31, 2009 and 2008 (Predecessor). Our audits also included the financial statement schedule listed in the Index at item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Smurfit-Stone Container Corporation, Inc. at December 31, 2010 (Successor) and 2009 (Predecessor), and the consolidated results of its operations and its cash flows for the six-month period ended December 31, 2010 (Successor), six-month period ended June 30, 2010 (Predecessor) and years ended December 31, 2009 and 2008 (Predecessor), in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, on June 21, 2010, the Bankruptcy Court entered an order confirming the Plan of Reorganization, which became effective on June 30, 2010. Accordingly, the accompanying consolidated financial statements have been prepared in conformity with Accounting Standards Codification 852-10, Reorganizations , for the Successor Company as a new entity with assets, liabilities and a capital structure having carrying amounts not comparable with prior periods, as described in Note 1.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Smurfit-Stone Container Company, Inc.'s internal control over financial reporting as of December 31, 2010 (Successor), based on criteria established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 15, 2011, expressed an unqualified opinion thereon.

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SMURFIT-STONE CONTAINER CORPORATION
CONSOLIDATED BALANCE SHEETS

See notes to consolidated financial statements.

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SMURFIT-STONE CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

See notes to consolidated financial statements.

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SMURFIT-STONE CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

See notes to consolidated financial statements.

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SMURFIT-STONE CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to consolidated financial statements.

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SMURFIT-STONE CONTAINER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in millions, except share data)

1.     Bankruptcy Proceedings

Chapter 11 Bankruptcy Filings

On January 26, 2009 (the "Petition Date"), Smurfit-Stone Container Corporation ("SSCC" or the "Company") and its U.S. and Canadian subsidiaries (collectively, the "Debtors") filed a voluntary petition (the "Chapter 11 Petition") for relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court in Wilmington, Delaware (the "U.S. Court"). On the same day, the Company's Canadian subsidiaries also filed to reorganize (the "Canadian Petition") under the Companies' Creditors Arrangement Act (the "CCAA") in the Ontario Superior Court of Justice in Canada (the "Canadian Court"). The Company's operations in Mexico and Asia and certain U.S. and Canadian legal entities (the "Non-Debtor Subsidiaries") were not included in the filings and continued to operate outside of the Chapter 11 and CCAA processes. As described below, on June 21, 2010, the U.S. Court entered an order ("Confirmation Order") approving and confirming the Joint Plan of Reorganization for Smurfit-Stone Container Corporation and its Debtor Subsidiaries and Plan of Compromise and Arrangement for Smurfit-Stone Container Canada Inc. and Affiliated Canadian Debtors ("Plan of Reorganization"). The Company emerged from its Chapter 11 and CCAA bankruptcy proceedings on June 30, 2010 ("Effective Date"). As of the Effective Date and pursuant to the Plan of Reorganization, the Company merged with and into its wholly-owned subsidiary, Smurfit-Stone Container Enterprises, Inc. ("SSCE"). SSCE changed its name to Smurfit-Stone Container Corporation and became the Reorganized Smurfit-Stone Container Corporation ("Reorganized Smurfit-Stone").

The term "Predecessor" refers only to the Company and its subsidiaries prior to the Effective Date, and the term "Successor" refers only to the Reorganized Smurfit-Stone and its subsidiaries subsequent to the Effective Date. Unless the context indicates otherwise, the terms "SSCC" and the "Company" are used interchangeably in this Annual Report on Form 10-K to refer to both the Predecessor and Successor Company.

Until emergence on the Effective Date, the Debtors were operating as debtors-in-possession under the jurisdiction of the U.S. Court and the Canadian Court (the "Bankruptcy Courts") and in accordance with the applicable provisions of the Bankruptcy Code and the CCAA. In general, as debtors-in-possession, the Debtors were authorized to continue to operate as ongoing businesses, but could not engage in transactions outside the ordinary course of business without the approval of the Bankruptcy Courts.

Debtor-In-Possession ("DIP") Financing

In connection with filing the Chapter 11 Petition and the Canadian Petition on the Petition Date, the Company and certain of its affiliates entered into a Post-Petition Credit Agreement (the "DIP Credit Agreement") on January 28, 2009. Amendments to the DIP Credit Agreement were entered into on February 25 and 27, 2009.

The DIP Credit Agreement, as amended, provided for borrowings up to an aggregate committed amount of $750 million, consisting of a $400 million U.S. term loan ("U.S. DIP Term Loan") for borrowings by SSCE; a $35 million Canadian term loan ("Canadian DIP Term Loan") for borrowings by Smurfit-Stone Container Canada Inc. ("SSC Canada"); a $250 million U.S. revolving loan ("U.S. DIP Revolver") for borrowings by SSCE and/or SSC Canada; and a $65 million Canadian revolving loan ("Canadian DIP Revolver") for borrowings by SSCE and/or SSC Canada.

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Under the DIP Credit Agreement, on January 28, 2009, the Company borrowed $440 million, consisting of a $400 million U.S. DIP Term Loan, a $35 million Canadian DIP Term loan and $5 million from the Canadian DIP Revolver. In accordance with the terms of the DIP Credit Agreement, in January 2009 the Company used U.S. DIP Term Loan proceeds of $360 million, net of lenders' fees of $40 million, and Canadian DIP Term Loan proceeds of $30 million, net of lenders' fees of $5 million, to terminate the receivables securitization programs and repay all indebtedness outstanding under the programs of $385 million and to pay other expenses of $1 million. In addition, other fees and expenses of $17 million related to the DIP Credit Agreement were paid for with proceeds of $5 million from the Canadian DIP Revolver and available cash.

The outstanding principal amount of the loans under the DIP Credit Agreement, plus interest accrued and unpaid, were due and payable in full at maturity, which was January 28, 2010. As all borrowings under the DIP Credit Agreement were paid in full as of December 31, 2009, the Company allowed the DIP Credit Agreement to expire on the maturity date of January 28, 2010.

Reorganization Process

The Bankruptcy Courts approved payment of certain of the Company's pre-petition obligations, including employee wages, salaries and benefits, and the payment of vendors and other providers in the ordinary course for goods received and services rendered subsequent to the filing of the Chapter 11 Petition and Canadian Petition and other business-related payments necessary to maintain the operation of the Company's business. The Company retained legal and financial professionals to advise it on the bankruptcy proceedings.

Immediately after filing the Chapter 11 Petition and Canadian Petition, the Company notified all known current or potential creditors of the bankruptcy filings. Subject to certain exceptions under the Bankruptcy Code and the CCAA, the Company's bankruptcy filings automatically enjoined, or stayed, the continuation of any judicial or administrative proceedings or other actions against the Company or its property to recover, collect or secure a claim arising prior to the filing of the Chapter 11 Petition and Canadian Petition. Thus, for example, most creditor actions to obtain possession of property from the Company, or to create, perfect or enforce any lien against its property, or to collect on monies owed or otherwise exercise rights or remedies with respect to a pre-petition claim were enjoined unless and until the Bankruptcy Courts lifted the automatic stay.

As required by the Bankruptcy Code, the United States Trustee for the District of Delaware (the "U.S. Trustee") appointed an official committee of unsecured creditors (the "Creditors' Committee"). The Creditors' Committee and its legal representatives had a right to be heard on all matters that came before the U.S. Court with respect to the Debtors. A monitor was appointed by the Canadian Court with respect to proceedings before the Canadian Court.

Under the Bankruptcy Code, the Debtors either assumed or rejected pre-petition executory contracts, including real property leases, subject to the approval of the Bankruptcy Courts and certain other conditions. In this context, "assumption" meant that the Company agreed to perform its obligations and cure all existing defaults under the contract or lease, and "rejection" meant that it was relieved from its obligations to perform further under the contract or lease, but was subject to a pre-petition claim for damages for the breach thereof, subject to certain limitations. Any damages resulting from rejection of executory contracts and unexpired leases, and from the determination of the U.S. Court (or agreement by parties in interest) of allowed claims for contingencies and other disputed amounts, that were permitted to be recovered under the Bankruptcy Code were treated as liabilities subject to compromise unless such claims were secured prior to the Petition Date.

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Plan of Reorganization and Exit Credit Facilities

In order for the Debtors to successfully emerge from bankruptcy, the Bankruptcy Courts had to confirm a plan of reorganization that satisfied the requirements of the Bankruptcy Code and the CCAA. A plan of reorganization was required to, among other things, resolve the Debtors' pre-petition obligations, set forth the revised capital structure of the newly reorganized entity and provide for corporate governance subsequent to the Company's exit from bankruptcy.

Plan of Reorganization

On December 1, 2009, the Debtors filed their Plan of Reorganization and Disclosure Statement ("Disclosure Statement") with the U.S. Court. On December 22, 2009, January 27, 2010, and February 4, 2010, the Debtors filed amendments to the Plan of Reorganization and the Disclosure Statement. On March 19, 2010, the Debtors filed a supplement to the Plan of Reorganization, and on May 27, 2010, the Debtors filed the final Plan of Reorganization reflecting the resolution of certain objections by equity security holders and other non-material modifications.

On January 29, 2010, the U.S. Court approved the Debtors' Disclosure Statement as containing adequate information for the holders of impaired claims and equity interests, who were entitled to vote to accept or reject the Plan of Reorganization.

The Plan of Reorganization was overwhelmingly approved by number and dollar amount of the required classes of creditors of each of the Debtors, with the exception of Stone Container Finance Company of Canada II ("Stone FinCo II"). Stone FinCo II was removed from the Plan of Reorganization. A meeting of creditors was held for the Canadian debtor subsidiaries on April 6, 2010, at which the necessary votes were received to confirm the Plan of Reorganization by all requisite classes of creditors other than Stone FinCo II.

The Bankruptcy Code required the U.S. Court, after appropriate notice, to hold a hearing on confirmation of a plan of reorganization. The confirmation hearing on the Plan of Reorganization began in the U.S. Court on April 15, 2010, and concluded on May 4, 2010. A hearing was conducted in the Canadian Court on May 3, 2010, and the Canadian Court issued an order on May 13, 2010, approving the Plan of Reorganization in the CCAA proceedings in Canada.

On May 24, 2010, the Debtors announced that they reached a resolution with certain holders of the Company's preferred and common stock that had filed objections to the confirmation of the Plan of Reorganization. On May 28, 2010, the U.S. Court approved notice procedures with respect to this resolution. On June 21, 2010, the U.S. Court entered the Confirmation Order which approved and confirmed the Plan of Reorganization. The Company emerged from its Chapter 11 and CCAA bankruptcy proceedings on June 30, 2010, the Effective Date.

As of the Effective Date, the Company substantially consummated the various transactions contemplated under the Plan of Reorganization and the Confirmation Order, including the following:

•

the Company merged with and into SSCE, with SSCE being the survivor entity and renaming itself Smurfit-Stone Container Corporation, and becoming the Reorganized Smurfit-Stone. Reorganized Smurfit-Stone is governed by a board of directors that includes Patrick J. Moore, the Company's Chief Executive Officer, Steven J. Klinger, the Company's former President and Chief Operating Officer until he resigned effective December 31, 2010, and nine independent directors, including a non-executive chairman selected by the Creditors' Committee in consultation with the Debtors;



•

Reorganized Smurfit-Stone filed the Amended and Restated Certificate of Incorporation of the Company, which authorized Reorganized Smurfit-Stone to issue 160,000,000 shares, consisting of 150,000,000 shares of common stock, par value $.001 per share ("Common Stock") and 10,000,000 shares of preferred stock, par value $.001 per share ("Preferred Stock"). Reorganized

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Smurfit-Stone issued or reserved for issuance 100,000,000 shares of Common Stock for distribution to creditors and interest holders pursuant to the Plan of Reorganization. Under the Plan of Reorganization, the Company issued an aggregate of 91,014,189 shares of Common Stock, including 89,854,782 shares of Common Stock issued on June 30, 2010 and an additional 1,159,407 shares of Common Stock subsequently issued through August 13, 2010 (collectively, the "Initial Distribution"). None of the Preferred Stock was issued or outstanding as of the Effective Date;

•

all of the existing secured debt of the Debtors was fully repaid with cash;



•

substantially all of the general unsecured claims against SSCE, and the Company, including all of the outstanding unsecured senior notes, were exchanged for Common Stock;



•

holders of unsecured claims against SSCE of less than or equal to $10,000 received payment of 100% of such claims in cash, and eligible cash-out participants who so indicated on their ballot received the percentage amount of their allowed claim they elected to receive in cash in lieu of Common Stock;



•

holders of the Company's 7% Series A Cumulative Exchangeable Redeemable Convertible preferred stock received a pro-rata distribution of 2,172,166 shares of Common Stock and holders of the Company's common stock received a pro-rata distribution of 2,171,935 shares. All shares of common stock and preferred stock of the Predecessor Company were cancelled;



•

Reorganized Smurfit-Stone adopted the Equity Incentive Plan, pursuant to which, among other things, it reserved for issuance 8,695,652 shares of Common Stock representing eight percent of the fully diluted new Common Stock. In accordance with the terms of the Equity Incentive Plan, 2,895,909 stock options and 914,498 Restricted Stock Units ("RSUs") were granted to executive officers and other key employees of Reorganized Smurfit-Stone on the Effective Date;



•

the assets of the Canadian Debtors, other than Stone FinCo II, were sold to a newly-formed Canadian subsidiary of Reorganized Smurfit-Stone free and clear of existing claims, liens and interests in exchange for (i) the repayment in cash of the secured debt obligations of the Canadian Debtors, (ii) cash to the Canadian Debtors' unsecured creditors and (iii) the assumption of certain liabilities and obligations of the Canadian Debtors;



•

Reorganized Smurfit-Stone and its newly-formed Canadian subsidiary assumed all of the existing obligations under the qualified defined benefit pension plans in the United States and Canada sponsored by the Debtors, as well as all of the collective bargaining agreements in the United States and Canada between the Debtors and their labor unions.

On October 29, 2010, we issued an additional 648,363 shares and cancelled 34,000 shares previously issued in the Initial Distribution, leaving approximately 8.4 million shares of Common Stock held in reserve as of December 31, 2010. On January 27, 2011, the Company issued an additional 1,778,204 shares, leaving approximately 6.6 million shares of Common Stock in reserve.

From the approximately 6.6 million shares of Common Stock remaining in reserve, approximately 3.5 million shares were reserved in the Stone FinCo II Contribution Reserve and approximately 3.1 million shares remain in the SSCE Distribution Reserve for Holders of General Unsecured Claims.

On January 10, 2011, the Bankruptcy Court issued an order that disallowed the claim filed on behalf of the Holders of the Stone FinCo II Contribution Claim. Therefore, the approximately 3.5 million shares in the Stone FinCo II Contribution Reserve will not be distributed to the Holders of the Stone FinCo II Contribution Claim. Instead, the Plan of Reorganization requires that these shares in the Stone FinCo II Contribution Reserve be distributed as follows: (i) 95.5% (approximately 3.3 million shares) to the SSCE Distribution Reserve, to be distributed to the Holders of Allowed General Unsecured Claims under the terms of the Plan of Reorganization; (ii) 2.25% (approximately 75,000 shares) to the Holders

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of SSCC Preferred Interests; and (iii) 2.25% (approximately 75,000 shares) to the Holders of SSCC Common Interests. The Company expects to distribute the approximately 150,000 shares for the SSCC Preferred Interests and SSCC Common Interests by March 31, 2011.

Subsequent to the SSCC Preferred Interest and SSCC Common Interest distributions, the SSCE Distribution Reserve will include approximately 6.4 million shares of Common Stock. By March 31, 2011, the Company expects to distribute a minimum of 3.5 million shares from the SSCE Distribution Reserve on a pro-rata basis to Holders of Allowed General Unsecured Claims who had previously received distributions of shares under the terms of the Plan of Reorganization. The remaining 2.9 million shares in the SSCE Distribution Reserve are being held for Holders of General Unsecured Claims that are still unliquidated or subject to dispute. These shares will be distributed as these claims are liquidated or resolved, in accordance with the Plan of Reorganization. To the extent shares remain after resolution of these claims, these excess shares will also be re-distributed on a pro-rata basis to the Holders of Allowed General Unsecured Claims who had previously received distributions.

Exit Credit Facilities

On January 14, 2010, the U.S. Court entered an order authorizing the Debtors to (i) enter into an exit term loan facility engagement and arrangement letter and fee letters, (ii) pay associated fees and expenses and (iii) furnish related indemnities. On February 1, 2010, the Company filed a motion with the U.S. Court seeking approval to enter into a senior secured term loan exit facility (the "Term Loan Facility").

On February 16, 2010, the U.S. Court granted the motion and authorized the Company and certain of its affiliates to enter into the Term Loan Facility. On the same date, the U.S. Court also granted the Company's February 3, 2010 motion seeking approval to enter into a commitment letter and fee letters for an asset-based revolving credit facility (the "ABL Revolving Facility") (together with the Term Loan Facility, the "Exit Credit Facilities"). Based on such approvals, on February 22, 2010, the Company and certain of its subsidiaries entered into the Term Loan Facility that provides for an aggregate term loan commitment of $1,200 million. In addition, the Company entered into the ABL Revolving Facility with aggregate commitments of $650 million (including a $100 million Canadian Tranche) on April 15, 2010. The ABL Revolving Facility includes a $150 million sub-limit for letters of credit.

On June 30, 2010, the Term Loan Facility was funded and borrowings became available under the ABL Revolving Facility. The proceeds of the borrowings under the Term Loan Facility of $1,200 million, together with available cash, were used to repay the Company's outstanding secured indebtedness under its pre-petition Credit Facility and pay remaining fees, costs and expenses related to and contemplated by the Exit Credit Facilities and the Plan of Reorganization. See "Fresh Start Accounting" below for sources and uses of funds. As of December 31, 2010, the Company had no borrowings under the ABL Revolving Facility and $1,194 million under the Term Loan Facility. Borrowings under the ABL Revolving Facility are available for working capital purposes, capital expenditures, permitted acquisitions and general corporate purposes. As of December 31, 2010, the Company's borrowing base under the ABL Revolving Facility was $618 million and the amount available for borrowings after considering outstanding letters of credit was $534 million.

As of December 31, 2010, the Company also had available unrestricted cash and cash equivalents of $449 million primarily invested in money market funds at a variable interest rate of 0.13%.

Financial Reporting Considerations

Subsequent to the Petition Date, the Company applied the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 852, "Reorganizations" ("ASC 852"), in preparing the consolidated financial statements. ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing

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operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the bankruptcy proceedings were recorded in reorganization items in the consolidated statements of operations. In addition, pre-petition obligations that were impacted by the bankruptcy reorganization process were classified on the consolidated balance sheet at December 31, 2009 in liabilities subject to compromise.

Reorganization Items

The Company's reorganization items directly related to the process of reorganizing the Company under Chapter 11 and the CCAA, and its emergence on June 30, 2010, as recorded in its consolidated statements of operations, consist of the following:

In addition, an income tax benefit of $200 million related to the effects of the plan of reorganization and application of fresh start accounting was recorded in the six months ended June 30, 2010, primarily related to adjustments for cancellation of indebtedness, valuation allowances and unrecognized tax benefits.

Professional fees directly related to the reorganization include fees associated with advisors to the Company, the Creditors' Committee and certain secured creditors. During the six months ended December 31, 2010, the Company continued to incur costs related to professional fees that are directly attributable to the reorganization.

Net cash paid for reorganization items related to professional fees for the six months ended December 31, 2010 and June 30, 2010, and the year ended December 31, 2009 totaled $38 million, $32 million, and $41 million, respectively.

Reorganization items exclude employee severance and other restructuring charges recorded during 2010 and 2009.

Interest expense recorded on the Predecessor unsecured debt subsequent to the Petition Date was zero for the six months ended June 30, 2010 and $163 million for the year ended December 31, 2009. Contractual interest expense on unsecured debt was $98 million and $196 million for the six months ended June 30, 2010 and the year ended December 31, 2009, respectively. Under the Plan of Reorganization, interest expense on the unsecured senior notes subsequent to the Petition Date was not paid. In the fourth quarter of 2009, the Company concluded it was not probable that interest expense on the Predecessor unsecured senior notes subsequent to the Petition Date would be an allowed claim. As a result, in December 2009, the Company recorded income in reorganization items for the reversal of $163 million post-petition unsecured interest expense accrued from the Petition Date through November 30, 2009, and discontinued recording unsecured interest expense.

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In addition, in the fourth quarter of 2009, the Company concluded it was not probable that Preferred Stock dividends that were accrued subsequent to the Petition Date would be allowed claims. Preferred Stock dividends that were accrued post-petition and included in liabilities subject to compromise were reversed in the fourth quarter of 2009. Preferred Stock dividends in arrears were $13 million at the Effective Date and $9 million as of December 31, 2009. The Preferred Stock dividends in arrears since the Petition Date are presented in the Predecessor consolidated statements of operations only to reflect preferred stockholders' rights to dividends over common stockholders and are not reflected in the Preferred Stock value in the December 31, 2009 consolidated balance sheet.

Other Bankruptcy Related Costs

Debtor-in-possession debt issuance costs of $63 million were incurred and paid during the first quarter of 2009 in connection with entering into the DIP Credit Agreement, and are separately presented in the 2009 consolidated statements of operations.

Liabilities Subject to Compromise

Liabilities subject to compromise represent pre-petition unsecured obligations that were expected to be settled under the Plan of Reorganization. These liabilities represented the amounts expected to be allowed on known or potential claims to be resolved through the Chapter 11 and CCAA process. Liabilities subject to compromise also included certain items, such as qualified defined benefit pension and retiree medical obligations that were assumed under the Plan of Reorganization, and as such, have been recorded in liabilities under the Reorganized Smurfit-Stone.

The Company rejected certain executory contracts and unexpired leases with respect to the Company's operations with the approval of the Bankruptcy Courts. Damages resulting from rejection of executory contracts and unexpired leases were generally treated as general unsecured claims and were classified as liabilities subject to compromise.

Liabilities subject to compromise at December 31, 2009 consisted of the following:

For information regarding the discharge of liabilities subject to compromise, see "Fresh Start Accounting" below.

Fresh Start Accounting

The Company, in accordance with ASC 852, adopted fresh start accounting as of the close of business on June 30, 2010, because the reorganization value of the assets of the Predecessor Company immediately before the date of confirmation of the Plan of Reorganization was less than the total of all post-petition liabilities and allowed claims, and the holders of the Predecessor Company's voting shares immediately before confirmation of the Plan of Reorganization received less than 50 percent of the voting shares of the Successor Company. Upon adoption of fresh start accounting, the Company

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became a new entity for financial reporting purposes reflecting the Successor capital structure. As such, a new accounting basis in the identifiable assets and liabilities assumed was established with no retained earnings or accumulated other comprehensive income (loss) ("OCI").

The Successor reorganized consolidated balance sheet as of June 30, 2010, included herein, reflects the implementation of the Plan of Reorganization, including the discharge of liabilities subject to compromise and the adoption of fresh start accounting. The Predecessor results of operations of the Company for the six months ended June 30, 2010 include $1,178 million of reorganization items, net, including a pre-tax emergence gain on plan effects of $580 million, a gain related to fresh start accounting adjustments of $742 million, and other reorganization expenses of $144 million. In addition, the benefit from income taxes includes a $200 million benefit related to the plan effect adjustments.

Fresh start accounting provides, among other things, for a determination of the value to be assigned to the equity of the emerging company as of a date selected for financial reporting purposes. In conjunction with the bankruptcy proceedings, a third party financial advisor provided an enterprise value of the Company of approximately $3,145 million to $3,445 million with a midpoint of $3,295 million. The preliminary equity value set forth by the third party was $2,360 million, using the midpoint enterprise value of $3,295 million and adjusting for expected cash and debt balances upon emergence and expected cash proceeds from the sale of non-operating assets.

The final equity value of $2,352 was determined consistent with the third party methodology using the midpoint enterprise value of $3,295 million. See reconciliation of the enterprise value to the final equity value below in Note 10 of the Explanatory Notes to the reorganized consolidated balance sheet. Reorganization value, comprised of equity and debt, represents the amount of resources available for the satisfaction of post-petition liabilities and allowed claims, as negotiated between the Debtors and creditors. Reorganization value is intended to approximate the amount a willing buyer would pay for the assets of the Company immediately after reorganization.

Enterprise value of the Company was estimated using various valuation methods including: (i) comparable public company analysis, (ii) discounted cash flow analysis ("DCF") and (iii) precedent transaction analysis. Due to the Company's significant pension obligations, the comparable company and DCF valuations included scenarios designed to account for the Company's pension liabilities and expense.

The comparable public company analysis identified a group of comparable companies giving considerations to lines of business, markets, similar business risks, growth prospects, maturity of business and size and scale of business. This analysis involved the selection of the appropriate earnings before interest, taxes, depreciation and amortization ("EBITDA") market multiples to be the most relevant when analyzing the peer group. A range of valuation multiples was then identified and applied to the Company's projections to derive a range of implied enterprise value.

The basis of the discounted cash flow analysis used in developing the enterprise value was based on Company prepared projections which included a variety of estimates and assumptions. While the Company considers such estimates and assumptions reasonable, they are inherently subject to significant business, economic and competitive uncertainties, many of which are beyond the Company's control and, therefore, may not be realized. Changes in these estimates and assumptions may have had a significant effect on the determination of the Company's enterprise value. The assumptions used in the calculations for the discounted cash flow analysis included projected revenue, cost and cash flows for the years ending December 31, 2010 through 2014 and represented the Company's best estimates at the time the analysis was prepared. The DCF analysis was completed using discount rates of 9.0% through 11.0%. There can be no assurance that the estimates, assumptions and values reflected in the valuations will be realized and actual results could vary materially.

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The precedent transactions analysis identified relevant merger and acquisition transactions in the paperboard and containerboard industry. This analysis involved calculating the total enterprise value of the acquired company as a multiple of EBITDA for the last twelve months prior to announcement. A range of valuation multiples was then identified and applied to the Company's projected EBITDA for the 12 month period ended April 30, 2010, to determine an estimate of enterprise values.

The Company's reorganization value was allocated to its assets and liabilities in conformity with the procedures specified by ASC 805, "Business Combinations." The significant assumptions related to the valuation of the Company's assets and liabilities in connection with fresh start accounting include the following:

Inventories — Raw materials were valued at current replacement cost. Work-in-process was valued at estimated selling prices of finished goods less the sum of costs to complete, selling costs, shipping costs and a reasonable profit allowance for completing and selling effort based on profit for similar finished goods. Finished goods were valued at estimated selling prices less the sum of selling costs, shipping costs and a reasonable profit allowance for the selling effort.

Prior to emerging from bankruptcy, the Company recorded long-lived storeroom supplies as an inventory item and charged expense when the storeroom item was issued from the storeroom into production. Under fresh start accounting, the Company determined the long-lived storeroom supplies principally represent critical spares which have the physical characteristics of property, plant, and equipment. As a result, new purchases of long-lived storeroom supplies will be classified as property, plant and equipment on the consolidated balance sheet and depreciated over 12 years. Upon emergence, the Company included long-lived storeroom supplies with a fair value of approximately $36 million in property, plant and equipment with a depreciable life of seven years.

Property, plant and equipment — Property, plant and equipment was valued at fair value of $4,405 million as of June 30, 2010 based on a third party valuation. In establishing fair value for the vast majority of the Company's property, plant and equipment, the cost approach was utilized. The cost approach considers the amount required to replace an asset by constructing or purchasing a new asset with similar utility, adjusted for depreciation as of the appraisal date as described below:

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Physical depreciation — the loss in value or usefulness attributable solely to the use of the asset and physical causes such as wear and tear and exposure to the elements.



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Functional obsolescence — the loss in value due to changes in technology, discovery of new materials and improved manufacturing processes.



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Economic obsolescence — the loss in value caused by external forces such as legislative enactments, overcapacity in the industry, low commodity pricing, changes in the supply and demand relationships in the marketplace and other market inadequacies.

The cost approach relies on management's assumptions regarding current material and labor costs required to rebuild and repurchase significant components of the Company's property, plant and equipment along with assumptions regarding the age and estimated useful lives of the Company's property, plant and equipment.

For property, plant and equipment existing at June 30, 2010, the depreciable lives were revised to reflect the estimated remaining useful lives as follows:

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