SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1994 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-6901
FORT HOWARD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 39-1090992
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1919 South Broadway, Green Bay, Wisconsin 54304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: 414/435-8821
(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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1994
----- ----------------------------
Voting Common Stock, par value $.01 5,861,730
per share
PART I. FINANCIAL INFORMATION
FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
(In thousands, except per share data)
Net sales....................... $315,299 $302,343 $590,629 $587,157
Cost of sales................... 208,566 201,061 397,061 390,361
-------- -------- -------- --------
Gross income.................... 106,733 101,282 193,568 196,796
Selling, general and
administrative................ 27,844 25,836 54,546 51,199
Amortization of goodwill........ -- 14,193 -- 28,385
-------- -------- -------- --------
Operating income................ 78,889 61,253 139,022 117,212
Interest expense................ 83,035 87,702 167,353 174,312
Other expense (income), net..... (286) 249 302 (4)
-------- -------- -------- --------
Loss before taxes............... (3,860) (26,698) (28,633) (57,096)
Income tax credit............... (1,811) (2,885) (11,412) (7,068)
-------- -------- -------- --------
Loss before extraordinary
item.......................... (2,049) (23,813) (17,221) (50,028)
Extraordinary item -- loss
on debt repurchases (net
of income taxes of $14,731
in 1994 and $5,982 in 1993)... -- -- (28,170) (9,760)
-------- -------- -------- --------
Net loss........................ $ (2,049) $(23,813) $(45,391) $(59,788)
======== ======== ======== ========
Loss per share:
Net loss before extraordinary
item........................ $ (0.35) $ (4.06) $ (2.94) $ (8.54)
Extraordinary item............ -- -- (4.80) (1.66)
-------- -------- -------- --------
Net loss...................... $ (0.35) $ (4.06) $ (7.74) $ (10.20)
======== ======== ======== ========
Average shares outstanding...... 5,862 5,863 5,862 5,863
======== ======== ======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1994 1993
-------- ------------
(In thousands)
Assets
Current assets:
Cash and cash equivalents................. $ 784 $ 227
Receivables, less allowances.............. 126,877 105,834
Inventories............................... 120,101 118,269
Deferred income taxes..................... 14,000 14,000
Income taxes receivable................... 11,000 9,500
---------- ----------
Total current assets.................... 272,762 247,830
Property, plant and equipment............... 1,900,999 1,845,052
Less: Accumulated depreciation........... 563,605 516,938
---------- ----------
Net property, plant and equipment....... 1,337,394 1,328,114
Other assets................................ 75,719 73,843
---------- ----------
Total assets............................ $1,685,875 $1,649,787
========== ==========
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable.......................... $ 88,106 $ 101,665
Interest payable.......................... 66,803 54,854
Income taxes payable...................... 546 122
Other current liabilities................. 59,728 70,138
Current portion of long-term debt......... 14,338 112,750
---------- ----------
Total current liabilities............... 229,521 339,529
Long-term debt.............................. 3,325,685 3,109,838
Deferred and other long-term income taxes... 220,224 243,437
Other liabilities........................... 22,968 26,088
Voting Common Stock with put right.......... 11,717 11,820
Shareholders' equity (deficit):
Voting Common Stock....................... 600,471 600,459
Cumulative translation adjustment......... (3,027) (5,091)
Retained earnings (deficit)............... (2,721,684) (2,676,293)
---------- ----------
Total shareholders' equity (deficit).... (2,124,240) (2,080,925)
---------- ----------
Total liabilities and shareholders'
equity (deficit)...................... $1,685,875 $1,649,787
========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
------------------
1994 1993
---- ----
(In thousands)
Cash provided from (used for) operations:
Net loss...................................... $(45,391) $(59,788)
Depreciation and amortization................. 45,779 69,916
Non-cash interest expense..................... 42,816 60,126
Deferred income tax credit.................... (23,627) (13,435)
Pre-tax loss on debt repurchases.............. 42,901 15,742
Increase in receivables....................... (21,043) (12,426)
(Increase) decrease in inventories............ (1,832) 5,193
Increase in income taxes receivable........... (1,500) (3,500)
Decrease in accounts payable.................. (13,559) (27,946)
Increase in interest payable.................. 11,949 20,887
Increase in income taxes payable.............. 424 633
All other, net................................ (14,858) (425)
-------- --------
Net cash provided from operations........... 22,059 54,977
Cash used for investment activity --
Additions to property, plant and equipment.... (50,567) (67,751)
Cash provided from (used for) financing
activities:
Proceeds from long-term borrowings............ 752,600 862,275
Repayment of long-term borrowings............. (701,809) (818,408)
Debt issuance costs........................... (21,635) (31,091)
Purchase of common stock...................... (91) (6)
-------- --------
Net cash provided from
financing activities...................... 29,065 12,770
-------- --------
Increase (decrease) in cash..................... 557 (4)
Cash at beginning of period..................... 227 188
-------- --------
Cash at end of period......................... $ 784 $ 184
======== ========
Supplemental Cash Flow Disclosures:
Interest paid................................. $115,285 $ 96,803
Income taxes paid (refunded) - net............ 1,028 (1,133)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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FORT HOWARD CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements reflect all adjustments
(consisting only of normally recurring accruals, except for extraordinary
items related to debt repurchases) which are, in the opinion of management,
necessary for a fair presentation of the results for the interim periods
presented. Certain reclassifications have been made to conform prior years'
data to the current format. These financial statements should be read in
conjunction with the Company's annual report on Form 10-K for 1993 and the
Company's quarterly report on Form 10-Q for the quarter ended March 31, 1994.
2. LOSS PER SHARE
Loss per share is computed on the basis of the average number of common
shares outstanding during the periods. The average number of shares
outstanding for the three and six month periods ended June 30, 1994 was
5,862,052 and 5,862,342, respectively. The average number of shares
outstanding for the three and six month periods ended June 30, 1993 was
5,862,635 and 5,862,644, respectively. The assumed exercise of all
outstanding stock options has been excluded from the computation of loss per
share for the three and six month periods ended June 30, 1994 and 1993 because
the results were antidilutive.
3. INVENTORIES
Inventories consist of:
June 30, December 31,
1994 1993
-------- ------------
(In thousands)
Raw materials and supplies.............. $ 54,872 $ 61,285
Finished and partly-finished products... 65,229 56,984
-------- --------
$120,101 $118,269
======== ========
4. GOODWILL WRITE-OFF
Low industry operating rates and aggressive competitive pricing among
tissue producers resulting from the 1991-1992 recession, additions to industry
capacity and other factors adversely affected tissue industry operating
conditions and the Company's operating results beginning in 1991 and through
the third quarter of 1993.
As a result of these conditions, during the second quarter of 1993 the
Company commenced an evaluation of the carrying value of its goodwill for
possible impairment. The Company revised its projections and concluded its
evaluation in the third quarter of 1993 determining that its forecasted
cumulative net income before goodwill amortization was inadequate to recover
the future amortization of the Company's goodwill balance over the remaining
amortization period of the goodwill. Accordingly, the Company wrote off its
remaining goodwill balance of $1.98 billion in the third quarter of 1993.
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5. LONG-TERM DEBT
On February 9, 1994, the Company sold $100 million principal amount of
8 1/4% Senior Unsecured Notes due 2002 (the "8 1/4% Notes") and $650 million
principal amount of 9% Senior Subordinated Notes due 2006 (the "9% Notes") in
a registered public offering (collectively, the "1994 Notes"). Proceeds from
the sale of the 1994 Notes have been applied to the repurchase of all the
remaining 12 3/8% Notes at the redemption price of 105% of the principal
amount thereof, to the repurchase of $238 million of 12 5/8% Debentures at the
redemption price of 105% of the principal amount thereof, to the prepayment of
$100 million of the Term Loan, to the repayment of a portion of the Company's
indebtedness under the Revolving Credit Facility and to the payment of fees
and expenses.
The 8 1/4% Notes are senior unsecured obligations of the Company, rank
equally in right of payment with the other senior indebtedness of the Company
and are senior to all existing and future subordinated indebtedness of the
Company. The 9% Notes are subordinated in right of payment to all existing
and future senior indebtedness of the Company, and constitute senior
indebtedness with respect to the 10% Notes, the 12 5/8% Debentures and the
14 1/8% Debentures.
In connection with the sale of the 1994 Notes, the Company amended the
Bank Credit Agreement, the 1993 Term Loan Agreement and the Senior Secured
Note Agreement. Among other changes, the amendments reduced the required
ratio of earnings before non-cash charges, interest and taxes to cash interest
for the four fiscal quarters ending March 31, 1994, to 1.40 to 1.00 from 1.50
to 1.00.
The Company incurred an extraordinary loss of $28 million (net of income
taxes of $15 million) in the first quarter of 1994 representing the redemption
premiums on the repurchases of the 12 3/8% Notes and the 12 5/8% Debentures,
and the write-off of deferred loan costs associated with the repayment of the
$100 million of the Term Loan and the repurchases of the 12 3/8% Notes and the
12 5/8% Debentures.
At June 30, 1994, the available capacity under the Revolving Credit
Facility was $104 million.
6. COMMITMENTS AND CONTINGENCIES
On June 20, 1994, the United States Department of Interior, Fish and
Wildlife Service ("FWS"), a federal natural resources trustee, informed the
Company that it has identified the Company and four other companies with
facilities located along the Fox River in northeast Wisconsin as potentially
responsible parties for purposes of natural resource liability under the
Comprehensive Environmental Response, Compensation and Liability Act and the
Federal Water Pollution Control Act arising from alleged releases of hazardous
substances to the Fox River and Green Bay system. The FWS has stated that it
intends to undertake an assessment to determine and quantify the nature and
extent of injury to natural resources. It is anticipated that the assessment
will require considerable time to complete. It is not possible at this time
to estimate the Company's potential liability in the matter. Based upon all
of the information available, the Company is presently unable to estimate the
financial impact of any future remediation or natural resource damages
liability but cannot conclude that such impact would not be material.
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The Company and its subsidiaries are parties to other lawsuits and state
and federal administrative proceedings incidental to their businesses.
Although the final results in such suits and proceedings cannot be predicted
with certainty, it is the present opinion of management that they will not
have a material adverse effect on the Company's financial condition.
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FORT HOWARD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Second Quarter and First Six Months of 1994 Compared to 1993
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
(In thousands, except percentages)
Net sales:
Domestic tissue............... $267,705 $254,962 $497,177 $496,152
International operations...... 30,163 37,965 62,663 72,250
Eliminations and other........ 17,431 9,416 30,789 18,755
-------- -------- -------- --------
Consolidated.................. $315,299 $302,343 $590,629 $587,157
======== ======== ======== ========
Operating income:
Domestic tissue............... $ 75,284 $ 56,808 $134,408 $110,047
International operations...... 2,429 3,996 2,923 6,490
Eliminations and other........ 1,176 449 1,691 675
-------- -------- -------- --------
Consolidated.................. 78,889 61,253 139,022 117,212
Amortization of purchase
accounting(1)................. 2,897 17,172 5,798 34,353
Employee stock compensation..... -- 294 -- 588
-------- -------- -------- --------
Adjusted operating income... 81,786 78,719 144,820 152,153
Other depreciation.............. 20,784 18,454 39,981 35,563
-------- -------- -------- --------
EBDIAT.......................... $102,570 $ 97,173 $184,801 $187,716
======== ======== ======== ========
Consolidated net loss........... $ (2,049) $(23,813) $(45,391) $(59,788)
======== ======== ======== ========
EBDIAT as a percent of
net sales..................... 32.5% 32.1% 31.3% 32.0%
(1) In 1988, the Company was acquired in a transaction referred to as the
"Acquisition." The Acquisition was accounted for using the purchase method of
accounting resulting, among other things, in an increase of property, plant
and equipment to fair value and the allocation of $2.3 billion of purchase
cost to goodwill. Such increase in property, plant and equipment is amortized
over the lives of the respective assets. The increase in goodwill was
amortized over 40 years until the third quarter of 1993 when the Company wrote
off its remaining goodwill balance of $1.98 billion. See Note 4 to the
unaudited condensed consolidated financial statements.
Net Sales. Consolidated net sales for the second quarter and first six
months of 1994 increased 4.3% and 0.6% compared to 1993, respectively.
Domestic tissue net sales for the second quarter of 1994 increased 5.0%
compared to 1993 principally due to higher net selling prices in both the
commercial and consumer markets, offset by slightly lower volume in the
commercial market, while volume in the consumer market held flat. Although
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business conditions remain extremely competitive in 1994, in the commercial
market, price increases were implemented in the second quarter of 1994 and the
second quarter volume shortfall compared to prior year was less than the first
quarter shortfall. Consumer market pricing held flat from the first to the
second quarters of 1994. For the first six months of 1994, domestic tissue
net sales increased 0.2%, due to the higher net selling prices that were
largely offset by volume decreases, principally in the commercial market. The
Company's decision to implement net selling price increases in the commercial
market during each of the first three quarters of 1993 led to the decline in
commercial volume during the first half of 1994. Net sales of the Company's
international operations decreased 20.6% and 13.3% for the second quarter and
first six months of 1994 compared to 1993, respectively, primarily due to
significantly lower net selling prices while volume held flat. International
net selling prices continued to decline due to product mix changes and
continued competitive conditions.
Gross Income. For the second quarter of 1994, consolidated gross margins
increased slightly to 33.9% from 33.5% in 1993. The domestic tissue gross
margin increased for the second quarter of 1994 compared to 1993 primarily due
to the increased net selling prices. During the second quarter of 1994,
depreciation expense increased as a result of the start-up of a new paper
machine at the Muskogee mill late in the first quarter of 1994. Wastepaper
and other raw material costs also increased slightly late in the second
quarter of 1994 and are expected to increase further during the second half of
1994 due to tightening demand conditions. For the first six months of 1994,
consolidated gross margins decreased to 32.8% from 33.5% in 1993. Domestic
tissue gross margins remained flat for the first six months of 1994 compared
to 1993 as the effects of the higher net selling prices were offset by higher
unit manufacturing costs attributable to the underabsorption of fixed costs
resulting from lower converting volume. Higher depreciation expense and
higher repair material costs also affected gross margins during this period.
Gross margins of international operations declined in both the second quarter
and first six months of 1994 compared to 1993 principally due to the lower net
selling prices. International gross margins increased from the first to the
second quarters of 1994 due to cost reduction initiatives in spite of lower
net selling prices.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses, as a percent of net sales, increased to 8.8% and 9.2%
for the second quarter and first six months of 1994 compared to 8.5% and 8.7%
for the second quarter and first six months of 1993, respectively. The
increases occurred principally due to the effects of lower sales volume.
Amortization of Goodwill. As a result of the goodwill write-off in the
third quarter of 1993, there was no amortization of goodwill in the second
quarter and first six months of 1994 compared to $14 million and $28 million
in the second quarter and first six months of 1993, respectively.
Operating Income. Operating income increased to $79 million and
$139 million for the second quarter and first six months of 1994 from
$61 million and $117 million for the second quarter and first six months of
1993, respectively. The depreciation of asset write-ups to fair market value
in purchase accounting is charged against the Company's cost of sales and
selling, general and administrative expenses. Excluding this purchase
accounting depreciation and amortization of goodwill, adjusted operating
income (as reported in the preceding table) increased to $82 million for the
second quarter of 1994 from $79 million for the second quarter of 1993
principally due to the effects of higher domestic net selling prices.
Adjusted operating income decreased to $145 million for the first six months
of 1994 from $152 million for the first six months of 1993 principally due to
- 9 -
the effects of lower domestic sales volume and lower net selling prices of
international operations.
EBDIAT. Earnings before depreciation, interest, amortization and taxes
("EBDIAT") increased 5.6% to $103 million for the second quarter of 1994 from
$97 million for the second quarter of 1993. For the first six months of 1994,
EBDIAT decreased 1.6% to $185 million from $188 million in the first six
months of 1993. EBDIAT is reported by the Company, not as a measure of
operating results, but rather as a measure of the Company's debt service
ability. Certain financial and other restrictive covenants in the Company's
Bank Credit Agreement, the Senior Secured Note Agreement and other instruments
governing the Company's indebtedness are based on the Company's EBDIAT,
subject to certain adjustments.
Income Taxes. The income tax credits for 1994 and 1993 principally
reflect the reversal of previously provided deferred income taxes.
Extraordinary Loss. The Company's net loss in the first six months of
1994 was increased by an extraordinary loss of $28 million (net of income
taxes of $15 million) representing the redemption premiums on the repurchases
of all the Company's remaining 12 3/8% Notes at the redemption price of 105%
of the principal amount thereof and of $238 million of 12 5/8% Debentures at
the redemption price of 105% of the principal amount thereof on March 11,
1994, and the write off of deferred loan costs associated with the repayment
of $100 million of the Term Loan on February 10, 1994, and the repurchases of
the 12 3/8% Notes and the 12 5/8% Debentures. The Company's net loss in the
first six months of 1993 was increased by an extraordinary loss of $10 million
(net of income taxes of $6 million) representing the write off of deferred
loan costs associated with the repayment of $250 million of Term Loan on
March 23, 1993 and the repurchase of all the Company's 14-5/8% Debentures on
April 21, 1993.
Net Loss. For the second quarter and first six months of 1994, the
Company's net loss decreased to $2 million and $45 million compared to
$24 million and $60 million for the second quarter and first six months of
1993, respectively.
FINANCIAL CONDITION
For the first six months of 1994, cash increased $557,000. Capital
additions of $51 million and debt repayments of $702 million, including the
repayment of $100 million of the Term Loan and the repurchases of all the
12 3/8% Notes and of $238 million of the 12 5/8% Debentures, were funded by
cash provided by operations of $22 million, net proceeds of the sale of 8 1/4%
Senior Notes and 9% Senior Subordinated Notes of $728 million and net
Revolving Credit Facility borrowings of $3 million.
Receivables increased $21 million during the first six months of 1994 due
principally to a seasonal increase in net sales during the second quarter of
1994 and higher domestic net selling prices. Accounts payable declined $14
million during this period due to payments of Muskogee mill expansion
liabilities and the liability for interest payable increased $12 million due
to the accrual of interest to semiannual payment dates. Other current
liabilities declined $10 million during this period due to payment of annual
employee bonuses and profit sharing contributions and other annual payments to
customers. As a result of all these changes and the repayment of $100 million
of the $107 million scheduled 1994 Term Loan payment from the proceeds of the
1994 Notes (described below), net working capital increased to $43 million at
June 30, 1994 from a deficit of $92 million at December 31, 1993.
- 10 -
Cash provided from operations declined in the first six months of 1994
compared to 1993 principally due to increased interest payments resulting from
the 1993 repurchases of all the 14 5/8% Debentures (which accrued interest in
kind) from the proceeds of the 1993 Notes (which accrue interest in cash), the
acceleration of interest payments resulting from the 1994 debt repurchases
from the proceeds of the 1994 Notes, and higher floating interest rates. Cash
provided from operations was further impacted by the increase in receivables
and decreases in accounts payable and other current liabilities, and lower
EBDIAT.
On February 9, 1994 the Company sold $100 million principal amount of
8 1/4% Senior Unsecured Notes due 2002 (the "8 1/4% Notes") and $650 million
principal amount of 9% Senior Subordinated Notes due 2006 (the "9% Notes") in
a registered public offering (collectively, the "1994 Notes"). Proceeds from
the sale of the 1994 Notes have been applied to the repurchase of all the
remaining 12 3/8% Notes at the redemption price of 105% of the principal
amount thereof, to the repurchase of $238 million of 12 5/8% Debentures at the
redemption price of 105% of the principal amount thereof, to the prepayment of
$100 million of the Term Loan, to the repayment of a portion of the Company's
indebtedness under the Revolving Credit Facility and to the payment of fees
and expenses.
The 8 1/4% Notes are senior unsecured obligations of the Company, rank
equally in right of payment with the other senior indebtedness of the Company
and are senior to all existing and future subordinated indebtedness of the
Company. The 9% Notes are subordinated in right of payment to all existing
and future senior indebtedness of the Company, and constitute senior
indebtedness with respect to the 10% Notes, the 12 5/8% Debentures and the
14 1/8% Debentures.
In connection with the sale of the 1994 Notes, the Company amended the
Bank Credit Agreement, the 1993 Term Loan Agreement and the Senior Secured
Note Agreement. Among other changes, the amendments reduced the required
ratio of earnings before non-cash charges, interest and taxes to cash interest
for the four fiscal quarters ending March 31, 1994, to 1.40 to 1.00 from 1.50
to 1.00.
The Company incurred an extraordinary loss of $28 million (net of income
tax credits of $15 million) in the first quarter of 1994 representing the
redemption premiums on the repurchases of the 12 3/8% Notes and the 12 5/8%
Debentures, and the write off of deferred loan costs associated with the
repayment of the $100 million of the Term Loan and the repurchases of the
12 3/8% Notes and the 12 5/8% Debentures.
The Company believes that cash provided from operations and access to
debt financing in the public and private markets will be sufficient to enable
it to fund maintenance and modernization capital expenditures and meet its
debt service requirements for the foreseeable future. However, in the absence
of improved financial results, the Company may be required to seek a waiver of
the cash interest coverage covenant under the Bank Credit Agreement, the 1993
Term Loan Agreement and the Senior Secured Note Agreement as early as the
fourth quarter of 1994, because the Company's 14 1/8% Debentures will accrue
interest in cash commencing on November 1, 1994 and will require payments of
interest in cash on May 1, 1995. Although the Company believes that it will
be able to obtain appropriate waivers from its lenders, there can be no
assurance that this will be the case.
The Company has a Revolving Credit Facility under the Company's Bank
Credit Agreement with a final maturity of December 31, 1996, which may be used
for general corporate purposes. At June 30, 1994, the Company had
$104 million in available capacity under the Revolving Credit Facility.
- 11 -
PART II. OTHER INFORMATION
1. LEGAL PROCEEDINGS
On June 20, 1994, the United States Department of Interior, Fish and
Wildlife Service ("FWS"), a federal natural resources trustee, informed the
Company that it has identified the Company and four other companies with
facilities located along the Fox River in northeast Wisconsin as potentially
responsible parties for purposes of natural resource liability under the
Comprehensive Environmental Response, Compensation and Liability Act and the
Federal Water Pollution Control Act arising from alleged releases of hazardous
substances to the Fox River and Green Bay system. The FWS alleges that
natural resources including endangered species, fish, birds and tribal lands
or lands held by the United States in trust for various tribes have been
exposed to PCBs (polychlorinated biphenyls) that were released from facilities
located along a 38 mile segment of the Fox River. The FWS has stated that it
intends to undertake an assessment to determine and quantify the nature and
extent of injury to natural resources. The FWS has invited the Company and
the four other companies to participate in the development of the type and
scope of the assessment and in the performance of the assessment, pursuant to
federal regulations. It is anticipated that the assessment will require
considerable time to complete. It is not possible at this time to estimate
the Company's potential liability in the matter. Based upon all of the
information available, the Company is presently unable to estimate the
financial impact of any future remediation or natural resource damages
liability but cannot conclude that such impact would not be material.
2. CHANGES IN SECURITIES
None
3. DEFAULTS UPON SENIOR SECURITIES
None
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
5. OTHER INFORMATION
None
6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: None
b) No reports on Form 8-K were filed by the Company for the quarter for
which this report is filed.
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FORT HOWARD CORPORATION
SIGNATURES
Pursuant to the requirement 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.
FORT HOWARD CORPORATION
Registrant
August 11, 1994 /s/ Kathleen J. Hempel
----------------------------------------
Kathleen J. Hempel, Vice Chairman and
Chief Financial Officer
August 11, 1994 /s/ James W. Nellen II
---------------------------------------
James W. Nellen II, Vice President
and Secretary
August 11, 1994 /s/ Charles L. Szews
---------------------------------------
Charles L. Szews
Controller (Principal
Accounting Officer)
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