<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934.
[_]  Transition Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934.

For Quarter Ended September 30, 2001
Commission File Number 0-11951



                                   JSCE, Inc.
       ------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              Delaware                                 37-1337160
----------------------------------         ------------------------------------
 (State or other jurisdiction of            (IRS Employer Identification No.)
 incorporation or organization)

               150 North Michigan Avenue, Chicago, Illinois 60601
              ----------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (312) 346-6600
              -----------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not Applicable
             -------------------------------------------------------
             (Former name, former address and former fiscal year, if
                           changed since last report)

     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  X  No __
                                              ---

APPLICABLE ONLY TO CORPORATE ISSUERS:

     As of September 30, 2001, the registrant had outstanding 1,000 shares of
common stock, $.01 par value per share, all of which are owned by Smurfit-Stone
Container Corporation.

<PAGE>

                         PART I - FINANCIAL INFORMATION
                         ------------------------------

Item 1. Financial Statements
        --------------------

                                   JSCE, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                           Three months ended                     Nine months ended
                                                              September 30,                          September 30,
                                                         ------------------------------------------------------------
(In millions)                                            2001              2000                 2001             2000
---------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>              <C>                 <C>               <C>
Net sales ...........................................  $  861           $   969             $  2,630          $ 2,929
Cost of goods sold ..................................     720               817                2,230            2,471
Selling and administrative expenses .................      70                69                  215              216
Restructuring charge ................................                                              4
Loss (gain) on sale of assets .......................       1                (1)                                   (3)
                                                       --------------------------------------------------------------
   Income from operations ...........................      70                84                  181              245
Other income (expense)
 Interest expense, net ..............................     (13)              (27)                 (51)             (82)
 Other, net .........................................       1                                      2                3
                                                       --------------------------------------------------------------
   Income from continuing operations before
    income taxes and extraordinary item .............      58                57                  132              166
Provision for income taxes ..........................     (24)              (24)                 (53)             (68)
                                                       --------------------------------------------------------------
   Income from continuing operations
    before extraordinary item .......................      34                33                   79               98
Discontinued operations
   Gain on disposition of discontinued operations,
    net of income taxes of $4 .......................                                                               6
                                                       --------------------------------------------------------------
   Income before extraordinary item .................      34                33                   79              104
Extraordinary item

   Loss from early extinguishment of debt,
    net of income tax benefit of $2 for the
    nine months ended September 30, 2001 ............                                             (2)
                                                       --------------------------------------------------------------
   Net income .......................................  $   34           $    33             $     77          $   104
---------------------------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.

                                       1

<PAGE>

                                   JSCE, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                       September 30,   December 31,
(In millions, except share data)                                                           2001           2000
-------------------------------------------------------------------------------------------------------------------
Assets                                                                                  (Unaudited)
<S>                                                                                    <C>             <C>
Current assets
 Cash and cash equivalents ...................................................         $     6         $        21
 Receivables, less allowances of $9 in 2001 and 2000 .........................             350                 342
 Inventories
    Work-in-process and finished goods .......................................              85                  93
    Materials and supplies ...................................................             112                 124
                                                                                       ---------------------------
                                                                                           197                 217
 Refundable income taxes .....................................................               3                   7
 Deferred income taxes .......................................................               9                   5
 Prepaid expenses and other current assets ...................................              17                  20
                                                                                       ---------------------------
      Total current assets ...................................................             582                 612
Net property, plant and equipment ............................................           1,231               1,262
Goodwill, less accumulated amortization of $84 in 2001 and $79 in 2000 .......             193                 198
Notes receivable from SSCC ...................................................             482                 439
Other assets .................................................................             155                 156
                                                                                       ---------------------------
                                                                                       $ 2,643         $     2,667
------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholder's Equity (Deficit)

Current liabilities
 Current maturities of long-term debt ........................................         $   148         $        10
 Accounts payable ............................................................             243                 312
 Accrued compensation and payroll taxes ......................................              79                  88
 Interest payable ............................................................              36                  27
 Other current liabilities ...................................................              77                  71
                                                                                       ---------------------------
      Total current liabilities ..............................................             583                 508
Long-term debt, less current maturities ......................................           1,318               1,519
Other long-term liabilities ..................................................             234                 236
Deferred income taxes ........................................................             527                 488
Stockholder's deficit
 Common stock, par value $.01 per share; 1,000
   shares authorized and outstanding
 Additional paid-in capital ..................................................           1,129               1,129
 Retained earnings (deficit) .................................................          (1,142)             (1,213)
 Accumulated other comprehensive income (loss) ...............................              (6)
                                                                                       ---------------------------
      Total stockholder's equity (deficit) ...................................             (19)                (84)
                                                                                       ---------------------------
                                                                                       $ 2,643         $     2,667
------------------------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.

                                        2

<PAGE>

                                   JSCE, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
Nine months ended September 30, (In millions)                              2001           2000
==============================================================================================
<S>                                                                       <C>            <C>
Cash flows from operating activities
 Net income ...........................................................   $  77          $ 104
  Adjustments to reconcile net income to
  net cash provided by operating activities
  Gain on disposition of discontinued operations ......................                    (10)
  Extraordinary loss from early extinguishment of debt ................       4
  Depreciation, depletion and amortization ............................      92             90
  Amortization of deferred debt issuance costs ........................       4              5
  Deferred income taxes ...............................................      40             73
  Gain on sale of assets ..............................................                     (3)
  Non-cash employee benefit income ....................................      (8)           (13)
  Non-cash restructuring charge .......................................       1
  Non-cash interest income from SSCC ..................................     (48)           (39)
  Change in current assets and liabilities
     Receivables ......................................................     (18)            38
     Inventories ......................................................      21              5
     Prepaid expenses and other current assets ........................       4             (1)
     Accounts payable and accrued liabilities .........................     (73)          (109)
     Interest payable .................................................       8             23
     Income taxes .....................................................       3            (30)
     Other, net .......................................................       2
                                                                          --------------------
 Net cash provided by operating activities ............................     109            133
                                                                          --------------------
Cash flows from investing activities
 Property additions ...................................................     (60)           (80)
 Proceeds from property disposals and sale of businesses ..............       4              8
 Notes receivable from SSCC ...........................................       5              7
                                                                          --------------------
 Net cash used for investing activities ...............................     (51)           (65)
                                                                          --------------------
Cash flows from financing activities

 Proceeds from long-term debt .........................................     275
 Net borrowings (repayments) under the accounts
  receivable securitization program ...................................     (12)             3
 Net repayments of debt ...............................................    (326)           (64)
 Deferred debt issuance costs .........................................      (4)
 Dividends paid .......................................................      (6)
                                                                          --------------------
 Net cash used for financing activities ...............................     (73)           (61)
                                                                          --------------------
 Increase (decrease) in cash and cash equivalents .....................     (15)             7
 Cash and cash equivalents
 Beginning of period ..................................................      21             11
                                                                          --------------------
 End of period ........................................................   $   6          $  18
==============================================================================================
</TABLE>

See notes to consolidated financial statements

                                        3

<PAGE>


                                   JSCE, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (Tabular amounts in millions)


1.    Significant Accounting Policies

The accompanying consolidated financial statements and notes thereto of JSCE,
Inc. have been prepared in accordance with the instructions to Form 10-Q and
reflect all adjustments which management believes necessary (which include only
normal recurring accruals) to present fairly the financial position, results of
operations and cash flows. These statements, however, do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. Interim results may not necessarily be
indicative of results which may be expected for any other interim period or for
the year as a whole. These financial statements should be read in conjunction
with the audited consolidated financial statements and footnotes included in the
JSCE, Inc. Annual Report on Form 10-K for the year ended December 31, 2000,
filed March 13, 2001 with the Securities and Exchange Commission.

JSCE, Inc., hereafter referred to as the "Company," is a wholly-owned subsidiary
of Smurfit-Stone Container Corporation ("SSCC"). The Company owns 100% of the
equity interest in Jefferson Smurfit Corporation (U.S.) ("JSC(U.S.)") and is a
guarantor of the senior secured indebtedness of JSC(U.S.). The Company has no
other material operations other than its investment in JSC(U.S.). JSC(U.S.) has
operations throughout the United States.

2.    Reclassifications

Certain prior year amounts have been reclassified to conform to the current year
presentation.

3.    Restructuring and Exit Liabilities

The Company recorded a restructuring charge of $4 million during the second
quarter of 2001 related to the closure of a boxboard paper machine and related
operation and the shutdown of a trucking operation. The assets of these closed
operations were adjusted to the estimated fair value less cost to sell resulting
in a $1 million non-cash write-down. These shutdowns resulted in approximately
75 employees being terminated. The sales and operating losses of these
facilities in 2001 prior to closure were $4 million and $2 million,
respectively.

At December 31, 2000, the Company had $23 million of exit liabilities related
primarily to the restructuring of operations. The Company had $2 million and $4
million of cash disbursements related to prior year and current year exit
liabilities for the three and nine months ended September 30, 2001,
respectively.

4.    Long-Term Debt

Bank Credit Facilities
In April 2001, JSC(U.S.) closed on a $275 million tranche B term loan maturing
in March 2007. The interest rate is, at the option of JSC(U.S.), either (i) the
alternate base rate, as defined, or (ii) LIBOR, in each case plus an additional
margin. The interest rate was LIBOR plus 2.25% (5.88%) at September 30, 2001. In
May 2001, the proceeds of the term loan, along with additional borrowings of
approximately $16 million under the JSC(U.S.) revolving credit facility, were
used to call, at par, the $287 million 11.25% senior notes due in 2004 and pay
related fees and expenses.

During January 2001, JSC(U.S.) prepaid the $65 million tranche B term loan
balance.

                                       4

<PAGE>


An extraordinary loss of $2 million (net of tax of $2 million) was recorded due
to the early extinguishment of the $287 million 11.25% senior notes and the $65
million tranche B term loan balance.

JSC(U.S.) Accounts Receivable Securitization Program

In March 2001, the JSC(U.S.) Securitization Program was amended to (i) reduce
the borrowings available through the issuance of commercial paper or under the
revolving credit facility from $300 million to $214 million and (ii) extend the
final maturity on these borrowings from February 2002 to February 2004. A $15
million term loan remains outstanding with a February 2002 maturity date,
bringing the total program size to $229 million.

5.   Derivative Instruments and Hedging Activities

Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended by SFAS No. 137 and
SFAS No. 138 requires that all derivatives be recorded on the consolidated
balance sheets at fair value. Changes in the fair value of derivatives not
qualifying as hedges are recorded each period in earnings. Changes in the fair
value of derivatives qualifying as hedges are either offset against the change
in fair value of the hedged item through earnings or recognized in Other
Comprehensive Income ("OCI") until the hedged item is recognized in earnings,
depending on the nature of the hedge. The ineffective portion of the change in
fair value of all derivatives is recognized in earnings. Hedges related to
anticipated transactions are designated and documented at hedge inception as
cash flow hedges and evaluated for hedge effectiveness quarterly.

The Company's derivative instruments and hedging activities relate to minimizing
exposures to fluctuations in the price of commodities used in its operations.

Commodity Future Contracts
The Company uses exchange traded futures contracts to manage fluctuations in
cash flows resulting from commodity price risk in the procurement of natural
gas. The objective is to fix the price of a portion of the Company's forecasted
purchases of natural gas used in the manufacturing process. The changes in the
market value of such contracts have historically been, and are expected to
continue to be, highly effective at offsetting changes in price movements of the
hedged item. As of September 30, 2001, the maximum length of time over which the
Company is hedging its exposure to the variability in future cash flows
associated with natural gas forecasted transactions is approximately one year.
For the three and nine month periods ended September 30, 2001, the Company
reclassified a $4 million loss and a $3 million loss, respectively, from OCI to
cost of goods sold when the hedged items were recognized. The fair value of the
Company's futures contracts at September 30, 2001 is an $11 million liability.

The Company recorded a $1 million loss in cost of goods sold on commodity
futures contracts during the second quarter related to the ineffective portion
of the change in fair value of certain contracts and contracts not qualifying as
hedges.

The cumulative deferred hedge loss is $6 million (net of tax of $4 million) at
September 30, 2001. The company expects to reclassify $6 million into earnings
during the next twelve months.

                                       5

<PAGE>



6.   Comprehensive Income (Loss)

Comprehensive income (loss) is as follows:

<TABLE>
<CAPTION>
                                                       Three months ended           Nine months ended
                                                          September 30,                September 30,
                                                     ---------------------------------------------------
                                                        2001       2000             2001         2000
                                                        ----       ----            -----        -----
<S>                                                   <C>         <C>              <C>          <C>
  Net income .....................................    $    34     $    33          $    77      $  104
  Other comprehensive income (loss), net of tax:
   Deferred hedge loss ...........................         (2)                          (6)
   Foreign currency translation adjustment .......          1
                                                      -------     -------          -------      ------
  Comprehensive income ...........................    $    33     $    33          $    71      $  104
                                                      =======     =======          =======      ======
</TABLE>


7.   Business Segment Information

The Company has three reportable segments: (1) Containerboard and Corrugated
Containers, (2) Consumer Packaging and (3) Reclamation. The Containerboard and
Corrugated Containers segment is highly integrated. It includes a system of
mills and plants that produces a full line of containerboard that is converted
into corrugated containers. Corrugated containers are used to transport such
diverse products as home appliances, electric motors, small machinery, grocery
products, produce, books, tobacco and furniture. The Consumer Packaging segment
is also highly integrated. It includes a system of mills and plants that
produces a broad range of coated recycled boxboard that is converted into
folding cartons and packaging labels. Folding cartons are used primarily to
protect products such as food, fast food, detergents, paper products, beverages,
health and beauty aids and other consumer products, while providing point of
purchase advertising. Flexible packaging, paper and metalized paper and heat
transfer labels are used in a wide range of consumer applications. The
Reclamation segment collects recovered paper generated by industrial, commercial
and residential sources which is used as raw material for the Company's
containerboard and boxboard mills as well as sales to third party mills.

Other includes corporate related items and one nonreportable segment, Specialty
Packaging. Corporate related items include the elimination of intercompany
profit and income and expense not allocated to reportable segments including
corporate expenses, restructuring charges, goodwill amortization, interest
expense and the adjustment to record inventory at LIFO.

                                       6

<PAGE>


<TABLE>
<CAPTION>
                                          Container-
                                           board &
                                          Corrugated     Consumer      Recla-
                                          Containers     Packaging     mation      Other        Total
                                         --------------------------------------------------------------
<S>                                      <C>             <C>           <C>         <C>          <C>
Three months ended September 30,
-------------------------------
    2001
    ----
    Revenues from external
       customers .....................       $   470     $   253      $    86      $   52     $    861
    Intersegment revenues ............            10           8           16           3           37
    Segment profit (loss) ............            47          23            1         (13)          58

    2000
    ----
    Revenues from external
       customers .....................       $   503     $   269      $   143      $   54     $    969
    Intersegment revenues ............            13           7           22           3           45
    Segment profit (loss) ............            45          30            4         (22)          57

Nine months ended September 30,
------------------------------
    2001
    ----
    Revenues from external
       customers .....................       $ 1,447     $   744      $   285      $  154     $  2,630
    Intersegment revenues ............            34          18           46           7          105
    Segment profit (loss) ............           119          68            3         (58)         132

    2000
    ----
    Revenues from external
       customers .....................       $ 1,519     $   762      $   488      $  160     $  2,929
    Intersegment revenues ............            35          20           99           7          161
    Segment profit (loss) ............           163          73           22         (92)         166
</TABLE>

8.     Contingencies

The Company's past and present operations include activities which are subject
to federal, state and local environmental requirements, particularly relating to
air and water quality. The Company faces potential environmental liability as a
result of violations of permit terms and similar authorizations that have
occurred from time to time at its facilities. In addition, the Company faces
potential liability for response costs at various sites for which it has
received notice as being a potentially responsible party ("PRP") concerning
hazardous substance contamination. In estimating its reserves for environmental
remediation and future costs, the Company's estimated liability reflects only
the Company's expected share after consideration for the number of other PRPs at
each site, the identity and financial condition of such parties, the uncertainty
due to the joint and several nature of the Company's liabilities and experience
regarding similar matters.

The Company is a defendant in a number of lawsuits and claims arising out of the
conduct of its business, including those related to environmental matters. While
the ultimate results of such suits or other proceedings against the Company
cannot be predicted with certainty, the management of the Company believes that
the resolution of these matters will not have a material adverse effect on its
consolidated financial condition or results of operations.

                                       7

<PAGE>


9.   Prospective Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets," effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill (and intangible assets deemed to have indefinite lives) will
no longer be amortized, but will be subject to an annual impairment test. Other
intangible assets will continue to be amortized over their useful lives.

The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
non-amortization provision of the Statement is expected to result in an increase
in net income of approximately $7 million per year. During 2002, the Company
will perform the first of the required impairment tests of goodwill and
indefinite lived intangible assets as of January 1, 2002. The Company has not
yet determined what the effect of these tests will be on its earnings and
financial position.

                                       8

<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
of Operations
-------------

Forward-Looking Statements

Some information included in this report may contain forward-looking statements
within the meaning of Section 21 E 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 statement may be
influenced by factors that could cause actual outcomes and results to be
materially different from those projected. When used in this document, the words
"anticipates," "believes," "expects," "intends" and similar expressions, as they
relate to JSCE, Inc. 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
include the following:

 .   the impact of general economic conditions where we and our subsidiaries do
    business;
 .   general industry conditions, including competition and product and raw
    material prices;
 .   fluctuations in exchange rates and currency values;
 .   capital expenditure requirements;
 .   interest rates;
 .   legislative or regulatory requirements;
 .   fluctuations in energy prices; and
 .   access to capital markets.

Our actual results, performance or achievement could differ materially from
those expressed in, or implied by, these forward-looking statements.
Accordingly, no assurances can be given 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.

                                        9

<PAGE>

Results of Operations - Third Quarter 2001 Compared to Third Quarter 2000

<TABLE>
<CAPTION>
                                                                                    Three months ended
 (In millions)                                                                         September 30,
                                                                                 ------------------------
                                                                                    2001          2000
                                                                                 ---------     ----------
<S>                                                                              <C>           <C>
Net sales
    Containerboard and corrugated containers ..................................  $     470     $      503
    Consumer packaging ........................................................        253            269
    Reclamation ...............................................................         86            143
    Other operations ..........................................................         52             54
                                                                                 ---------     ----------
         Total operations .....................................................  $     861     $      969
                                                                                 =========     ==========

Profit (loss)
    Containerboard and corrugated containers ..................................  $      47     $       45
    Consumer packaging ........................................................         23             30
    Reclamation ...............................................................          1              4
    Other operations ..........................................................          3              2
    Corporate related items ...................................................         (3)             2
    Gain (loss) on sale of assets .............................................         (1)             1
    Interest expense, net .....................................................        (13)           (27)
    Other, net ................................................................          1
                                                                                 ---------     ----------
         Income from continuing operations before income taxes and
             extraordinary item ...............................................  $      58     $       57
                                                                                 =========     ==========
</TABLE>

Net sales decreased 11% due primarily to lower average sales prices for
reclamation products, containerboard and corrugated containers and lower sales
volumes for corrugated containers and folding cartons because of the impacts of
the slowing U.S. economy.

Cost of goods sold decreased due primarily to the lower sales volume and lower
wastepaper cost. Energy cost was higher by $5 million. Cost of goods sold as a
percent of net sales was 84%, comparable to last year. Selling and
administrative expense as a percent of net sales was 8% compared to 7% last year
due primarily to lower average sales prices.

Interest expense, net was $14 million lower due to the favorable impact of $7
million from lower overall average interest rates, $3 million from lower average
borrowings and $4 million from higher interest income earned on our intercompany
loan to Smurfit-Stone.

Provision for income taxes differed from the federal statutory tax rate due to
several factors, the most significant of which, was state income taxes.

Increases (Decreases) in Net Sales
----------------------------------

<TABLE>
<CAPTION>
                                             Container-
                                               board &
                                             Corrugated      Consumer                          Other
(In millions)                                Containers     Packaging       Reclamation     Operations        Total
                                             ----------     ----------      -----------     ----------        -----
<S>                                           <C>            <C>            <C>              <C>            <C>
Sales price and product mix ................  $   (21)       $     2        $   (50)         $     1        $   (68)
Sales volume ...............................       (9)           (18)            (2)              (3)           (32)
Closed plants ..............................       (3)                           (5)                             (8)
                                              --------       -------        --------         -------        --------
    Total ..................................  $   (33)       $   (16)       $   (57)         $    (2)       $  (108)
                                              ========       ========       ========         ========       ========
</TABLE>

Containerboard and Corrugated Containers Segment
------------------------------------------------
Net sales decreased by 7% due primarily to lower average sales prices and lower
sales volumes for corrugated containers. Shipments of corrugated containers
decreased 3%. Containerboard production

                                       10

<PAGE>

increased 10%. Containerboard market related downtime in the third quarter of
2001 was 67,000 tons compared to 102,000 tons last year. On average, corrugated
container sales prices decreased by 3% and linerboard sales prices were lower by
7%. For solid bleached sulfate, the average sales price decreased 2% and
production was lower by 2%.

Profits increased by $2 million due primarily to the lower levels of market
related downtime and lower reclaimed fiber cost. Cost of goods sold as a percent
of net sales decreased to 83% compared to 84% last year due to the lower levels
of market related downtime and lower fiber cost.

Consumer Packaging Segment
--------------------------
Net sales decreased by 6% due primarily to lower sales volumes for folding
cartons. Folding carton shipments decreased 8%. On average, folding carton sales
prices were 2% higher, coated boxboard sales prices were 6% lower and uncoated
boxboard sales prices were 12% lower. Production of coated boxboard decreased 1%
and production of uncoated boxboard production, excluding the closure of our Los
Angeles boxboard machine, was 3% lower.

Profits decreased by $7 million due primarily to the lower sales volume for
folding cartons and higher energy cost. Profits were favorably impacted by lower
reclaimed fiber cost. Cost of goods sold as a percent of net sales decreased
from 83% to 82% compared to last year due primarily to higher average folding
carton sales prices and lower reclaimed fiber cost.

Reclamation Segment
-------------------
Net sales decreased by 40% and profits declined by $3 million. Demand for
reclaimed fiber, particularly for old corrugated containers, commonly known as
OCC, the primary grade used by recycled containerboard mills, was weak and sales
prices declined. The average price of OCC was lower by approximately $15 per ton
and the average price of old newsprint was lower by approximately $25 per ton.
Total tons of fiber reclaimed and brokered decreased 4%. Cost of goods sold as a
percent of net sales was 92%, comparable to last year.


                                       11

<PAGE>

Results of Operations - Nine Months 2001 Compared to Nine Months 2000

<TABLE>
<CAPTION>
                                                                                   Nine months ended
 (In millions)                                                                       September 30,
                                                                                  --------------------
                                                                                     2001         2000
                                                                                  -----------   ------
<S>                                                                               <C>           <C>
Net sales
    Containerboard and corrugated containers....................................  $   1,447     $    1,519
    Consumer packaging .........................................................        744            762
    Reclamation ................................................................        285            488
    Other operations ...........................................................        154            160
                                                                                  ---------     ----------
         Total operations ......................................................  $   2,630     $    2,929
                                                                                  =========     ==========

Profit (loss)
    Containerboard and corrugated containers ...................................  $     119     $      163
    Consumer packaging .........................................................         68             73
    Reclamation ................................................................          3             22
    Other operations ...........................................................          8             10
    Corporate related items ....................................................        (13)           (26)
    Gain on sale of assets .....................................................                         3
    Restructuring ..............................................................         (4)
    Interest expense, net ......................................................        (51)           (82)
    Other, net .................................................................          2              3
                                                                                  ---------     ----------
         Income from continuing operations before income taxes and
             extraordinary item ................................................  $     132     $      166
                                                                                  =========     ==========
</TABLE>


Net sales decreased 10% due primarily to lower average sales prices for
reclamation products and lower sales volumes for corrugated containers and
folding cartons because of the impacts from the slowing U.S. economy.

Cost of goods sold decreased due primarily to the lower sales volumes and lower
wastepaper cost. Cost of goods sold as a percent of net sales was 85% compared
to 84% last year. The percent for 2001 was negatively impacted by the effects of
lower sales prices, higher levels of market related downtime and higher energy
cost of $30 million. Selling and administrative expense as a percent of net
sales was 8% compared to 7% last year due to the lower sales.

Interest expense, net was $31 million lower due to the favorable impact of $13
million from lower overall average interest rates, $8 million from lower average
borrowings and $10 million from higher interest income earned on our
intercompany loan to Smurfit-Stone.

Provision for income taxes differed from the federal statutory tax rate due to
several factors, the most significant of which, was state income taxes.

Increases (Decreases) in Net Sales
----------------------------------

<TABLE>
<CAPTION>
                                             Container-
                                               board &
                                             Corrugated      Consumer                          Other
(In millions)                                Containers     Packaging       Reclamation     Operations        Total
                                             ----------     ----------      -----------     ----------        -----
<S>                                          <C>            <C>            <C>              <C>            <C>
Sales price and product mix..............    $   (10)       $    18        $  (222)         $     1        $  (213)
Sales volume ............................        (59)           (36)            24               (7)           (78)
Closed plants ...........................         (3)                           (5)                             (8)
                                             --------       --------       --------         -------        --------
    Total ...............................    $   (72)       $   (18)       $  (203)         $    (6)       $  (299)
                                             ========       ========       ========         ========       ========
</TABLE>

                                       12

<PAGE>

Containerboard and Corrugated Containers Segment
------------------------------------------------
Net sales decreased by 5% due primarily to lower sales volumes for corrugated
containers. Shipments of corrugated containers decreased 5%. Containerboard
production decreased 6% due to the extensive market related downtime taken in
2001 to balance supply with demand. Containerboard market related downtime in
the nine month period of 2001 was 196,000 tons compared to 137,000 tons last
year. On average, corrugated container sales prices were flat and linerboard
sales prices were lower by 3%. For solid bleached sulfate, the average sales
price was flat and production was lower by 2%.

Profits declined by $44 million due primarily to higher energy costs and the
higher levels of market related downtime. Lower reclaimed fiber cost favorably
impacted profits. Cost of goods sold as a percent of net sales increased to 85%
compared to 83% last year due primarily to the higher levels of market related
downtime and energy cost.

Consumer Packaging Segment
--------------------------
Net sales decreased 2% compared to last year due primarily to lower sales
volumes. Folding carton shipments decreased 6%. On average, folding carton sales
prices were 4% higher, while coated boxboard sales prices were 5% lower and
uncoated boxboard sales prices were 3% lower. Production of coated boxboard
decreased 3% and production of uncoated boxboard production, excluding the
closure of our Los Angeles boxboard machine, was 7% lower.

Profits decreased by $5 million due primarily to the lower sales volumes for
folding cartons and higher energy cost. Cost of goods sold as a percent of net
sales was 83%, comparable to last year.

Reclamation Segment
-------------------
Net sales decreased by 42% and profits declined by $19 million. Demand for
reclaimed fiber, particularly for OCC was weak and sales prices declined. The
average price of OCC was lower by approximately $45 per ton and the average
price of old newsprint was lower by approximately $25 per ton. Total tons of
fiber reclaimed and brokered were comparable to last year. Cost of goods sold as
a percent of net sales increased to 92% compared to 91% last year as a result of
the lower average sales prices.

Statistical Data

<TABLE>
<CAPTION>
(In thousands of tons, except as noted)                       Three months ended              Nine months ended
                                                                 September 30,                  September 30,
                                                            -----------------------         ---------------------
                                                             2001            2000            2001           2000
                                                            ------         --------         ------        -------
<S>                                                         <C>            <C>              <C>            <C>
Mill production:........................................
    Containerboard .....................................      343             312           1,001          1,064
    Solid bleached sulfate .............................       50              51             143            146
    Coated boxboard ....................................      143             144             427            440
    Uncoated boxboard ..................................       31              44             100            131
Corrugated containers sold (billion sq. ft.) ...........      6.7             7.0            20.4           21.6
Folding cartons sold ...................................      135             146             399            422
Fiber reclaimed and brokered ...........................    1,642           1,705           5,025          5,036
</TABLE>

Restructuring

During the second quarter of 2001, we recorded a pretax restructuring charge of
$4 million for the closure of a paper machine and related operation that
produced approximately 50,000 tons of uncoated recycled boxboard annually and
the shutdown of a trucking operation. Approximately 75 employees were
terminated. As of September 30, 2001, $1 million of the expected $2 million cash
expenditures related to the closures were incurred.

As explained in our Annual Report on Form 10-K for the year ended December 31,
2000, the restructuring of our operations in connection with the Stone Container
merger was completed in 2000. The remaining

                                       13

<PAGE>

cash expenditures in connection with the restructuring will be funded through
operations as originally planned. For the nine months ended September 30, 2001,
$3 million of the $4 million anticipated cash expenditures for 2001 were
incurred.

Liquidity and Capital Resources

For the nine months ended September 30, 2001, new borrowings of $275 million,
cash from operating activities of $109 million, proceeds of $4 million from the
sale of assets, $5 million from an increase in an intercompany loan with
Smurfit-Stone and available cash of $15 million were used to fund net debt
payments of $338 million, property additions of $60 million, dividends of $6
million and financing fees of $4 million.

In January 2001, Jefferson Smurfit (U.S.) prepaid its $65 million tranche B term
loan with borrowings under the revolving credit facility.

In March 2001, the Jefferson Smurfit (U.S.) accounts receivable securitization
program was amended to (i) reduce the borrowings available through the issuance
of commercial paper or under the revolving credit facility from $300 million to
$214 million and (ii) extend the final maturity on these borrowings from
February 2002 to February 2004. A $15 million term loan remains outstanding with
a February 2002 maturity date, bringing the total program size to $229 million.

In March 2001, Jefferson Smurfit (U.S.) amended its existing credit agreement to
(i) permit a $275 million new tranche B term loan and (ii) waive the requirement
to make a $59 million term loan prepayment due March 31, 2001, resulting from
excess cash flows generated in 2000.

In April 2001, Jefferson Smurfit (U.S.) closed on a new $275 million tranche B
term loan maturing in March 2007. The interest rate is, at the option of
Jefferson Smurfit (U.S.), either (i) the alternate base rate, as defined, or
(ii) LIBOR, in each case plus an additional margin. The interest rate was LIBOR
plus 2.25% (5.88%) at September 30, 2001. In May 2001, the proceeds of the term
loan, along with additional borrowings of approximately $16 million under the
Jefferson Smurfit (U.S.) revolving credit facility, were used to call, at par,
the $287 million 11.25% senior notes due in 2004 and pay related fees and
expenses.

The obligations under the Jefferson Smurfit (U.S.) credit agreement are
unconditionally guaranteed by us, Smurfit-Stone and certain subsidiaries of
Jefferson Smurfit (U.S.). The obligations under the Jefferson Smurfit (U.S.)
credit agreement are secured by a security interest in substantially all of the
assets of Jefferson Smurfit (U.S.) and its subsidiaries. The credit agreement
contains various covenants and restrictions including, among other things, (i)
limitations on dividends, redemptions and repurchases of capital stock, (ii)
limitations on the incurrence of indebtedness, liens, leases and sale-leaseback
transactions, (iii) limitations on capital expenditures and (iv) maintenance of
certain financial covenants. The credit agreement also requires prepayments of
the term loans from excess cash flow, as defined, and proceeds from certain
asset sales, insurance, and incurrence of certain indebtedness. Such
restrictions, together with our highly leveraged position, could restrict
corporate activities, including our ability to respond to market conditions, to
provide for unanticipated capital expenditures or to take advantage of business
opportunities.

We expect that internally generated cash flows and existing financing resources
will be sufficient for the next several years to meet our obligations, including
debt service, restructuring payments, expenditures related to environmental
compliance and other capital expenditures. Scheduled debt payments for the last
three months of 2001 and for the year ending 2002 total $2 million and $173
million, respectively, with increasing amounts thereafter. We intend to hold
capital expenditures for 2001 significantly below our anticipated annual
depreciation level of $112 million. As of September 30, 2001, we had authorized
commitments for capital expenditures of $65 million, including $18 million for
environmental projects, $7 million to maintain competitiveness and $40 million
for upgrades, modernization and expansion. We expect to use any excess cash
provided by operations to make further debt reductions. As of September 30,
2001, Jefferson Smurfit

                                       14

<PAGE>

(U.S.) had $437 million of unused borrowing capacity under the bank credit
facility and $13 million of unused borrowing capacity under the $229 million
accounts receivable securitization program, subject to Jefferson Smurfit
(U.S.)'s level of eligible accounts receivable.

Environmental Compliance

The United States Environmental Protection Agency (EPA) has finalized
significant portions of its comprehensive rule governing the pulp, paper and
paperboard industry, known as the "Cluster Rule". Phase I of the Cluster Rule
required us to convert our bleached linerboard mill at Brewton, Alabama to an
elemental chlorine free bleaching process, to install systems at several of our
mills for the collection and destruction of low volume, high concentration gases
and to implement best management practices, such as spill controls. These
projects have been substantially completed at a cost of approximately $75
million as of September 30, 2001 (of which approximately $5 million has been
spent in 2001). Phase II of the Cluster Rule will require the implementation of
systems to collect high volume, low concentration gases at various mills and has
a compliance date of 2006. Phase III of the Cluster Rule will require control of
particulate from recovery boilers, smelt tanks and lime kilns and has a
compliance date of 2005. We continue to study possible means of compliance with
Phases II and III of the Cluster Rule. Based on currently available information,
we estimate that the compliance cost of Phases II and III of the Cluster Rule is
likely to be in the range of $30 to $35 million and that such cost will be
incurred over the next five years.

In recent years, the EPA has undertaken significant air quality initiatives
associated with nitrogen oxide emissions, regional haze and national ambient air
quality standards. Several of our mills are located in states affected by these
EPA initiatives. When regulatory requirements for new and changing standards are
finalized, we will add any resulting future cost projections to our expenditure
forecast.

 In addition to Cluster Rule compliance, we anticipate additional capital
expenditures related to environmental compliance. Excluding the spending on
Cluster Rule projects described above, for the past three years, we have spent
an average of approximately $3 million annually on capital expenditures for
environmental purposes. Since our principal competitors are subject to
comparable environmental standards, including the Cluster Rule, management is of
the opinion, based on current information, that compliance with environmental
standards should not adversely affect our competitive position. However, we
could incur significant expenditures due to changes in law or the discovery of
new information, which expenditures could have a material adverse effect on our
operation results.

Prospective Accounting Standards

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, "Business Combinations," and No. 142,
"Goodwill and Other Intangible Assets," effective for fiscal years beginning
after December 15, 2001. Under the new rules, goodwill (and intangible assets
deemed to have indefinite lives) will no longer be amortized, but will be
subject to annual impairment test. Other intangible assets will continue to be
amortized over their useful lives.

We will apply the new rules on accounting for goodwill and other intangible
assets beginning in the first quarter of 2002. Application of the
non-amortization provision of the Statement is expected to result in an increase
in net income of approximately $7 million per year. During 2002, we will perform
the first of the required impairment tests of goodwill and indefinite lived
intangible assets as of January 1, 2002. We have not yet determined what the
effect of these tests will be on our earnings and financial position.

                                       15

<PAGE>

Item 3.    Quantitative and Qualitative Disclosures About Market Risk
           ----------------------------------------------------------

We are exposed to various market risks, including interest rate risk and
commodity price risk. To manage the volatility related to these risks, we enter
into various derivative contracts. We do not use derivatives for speculative or
trading purposes.

Earnings and cash flows are significantly affected by the amount of interest on
our indebtedness.Management's objective is to protect JSCE, Inc. from interest
rate volatility and reduce or cap interest expense within acceptable levels of
market risk. We may periodically 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. There were no interest rate
derivatives outstanding at September 30, 2001.

We periodically enter into exchange traded futures contracts to manage
fluctuations in cash flows resulting from commodity price risk in the
procurement of natural gas. As of September 30, 2001, we have futures contracts
to hedge approximately 85% to 100% of our expected natural gas requirements for
the months of October 2001 through December 2001. We have futures contracts to
hedge approximately 20% to 50% of our expected natural gas requirements for the
months of January 2002 through October 2002. Management's objective is to fix
the price of a portion of our forecasted purchases of natural gas used in the
manufacturing process. The increases in energy cost discussed in Part I, Item 2
above include the impact of the natural gas futures contracts.

                                       16

<PAGE>
                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1.   Legal Proceedings
          -----------------

In 1998, seven putative class action complaints were filed in the United States
District Court for the Northern District of Illinois and in the United States
District Court for the Eastern District of Pennsylvania. These complaints
alleged that Stone Container reached agreements in restraint of trade that
affected the manufacture, sale and pricing of corrugated products in violation
of antitrust laws. The complaints have been amended to name several other
defendants, including Jefferson Smurfit (U.S.) and Smurfit-Stone. The suits seek
an unspecified amount of damages arising out of the sale of corrugated products
for the period from October 1,1993 through March 31, 1995. Under the provisions
of the applicable statutes, any award of actual damages could be trebled. The
complaints have been consolidated in the United States District Court for the
Eastern District of Pennsylvania, which has certified two plaintiff classes
comprised of purchasers of corrugated sheets and corrugated boxes, respectively.
We are vigorously defending these cases.

Item 2.   Changes in Securities
          ---------------------

          None

Item 3.   Defaults Upon Senior Securities
          -------------------------------

          None

Item 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

          None

Item 6.   Exhibits and Reports on Form 8-K
          --------------------------------

a)    The following exhibits are included in this Form 10-Q:

      None

b)    Reports on Form 8-K:

      There were no Form 8-K filings during the three months ended September 30,
2001.

                                       17

<PAGE>

                                   Signatures
                                   ----------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
                                                        JSCE, Inc.
                                               ----------------------------
                                                        (Registrant)






Date:      November 13, 2001                    /s/ Paul K. Kaufmann
       -------------------------               ----------------------------
                                                      Paul K. Kaufmann
                                                     Vice President and
                                                    Corporate controller
                                               (Principal Accounting Officer)

                                       18