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 March 31, 1996 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: 0-20473
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
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 April 15, 1996
----- -----------------------------
Common Stock, par value $.01 63,447,097
per share
PART I. FINANCIAL INFORMATION
<TABLE>
FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION> Three Months Ended
March 31,
--------------------
1996 1995
---- ----
(In thousands, except
per share data)
<S> <C> <C>
Net sales................................. $385,747 $367,376
Cost of sales............................. 238,369 267,856
-------- --------
Gross income.............................. 147,378 99,520
Selling, general and administrative....... 33,175 28,745
-------- --------
Operating income.......................... 114,203 70,775
Interest expense.......................... 70,773 86,770
Other (income) expense, net............... 563 (224)
-------- --------
Income (loss) before taxes................ 42,867 (15,771)
Income taxes (credit)..................... 15,927 (6,253)
-------- --------
Income (loss) before extraordinary item... 26,940 (9,518)
Extraordinary item -- loss on debt
repurchases (net of income taxes
of $11,986 in 1995)..................... -- (18,748)
-------- --------
Net income (loss)......................... $ 26,940 $(28,266)
======== =========
Earnings (loss) per share:
Net income (loss) before
extraordinary item.................... $ 0.43 $ (0.22)
Extraordinary item...................... -- (0.44)
-------- --------
Net income (loss)....................... $ 0.43 $ (0.66)
======== ========
Average shares outstanding................ 63,372 42,546
======== ========
(/table>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
- 2
</TABLE>
<TABLE>
FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION> March 31, December 31,
1996 1995
---------- ------------
(In thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents................. $ 594 $ 946
Receivables, less allowances of $2,994
in 1996 and $2,883 in 1995.............. 83,488 97,707
Inventories............................... 158,347 163,076
Deferred income taxes..................... 38,000 29,000
Income taxes receivable................... 700 700
---------- ----------
Total current assets.................... 281,129 291,429
Property, plant and equipment............... 1,976,841 1,971,641
Less: Accumulated depreciation........... 729,804 706,394
---------- ----------
Net property, plant and equipment....... 1,247,037 1,265,247
Other assets................................ 93,608 95,761
---------- ----------
Total assets............................ $1,621,774 $1,652,437
========== ==========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable.......................... $ 103,685 $ 112,384
Interest payable.......................... 23,731 64,375
Income taxes payable...................... 9,470 1,339
Other current liabilities................. 59,099 85,351
Current portion of long-term debt......... 84,109 62,720
---------- ----------
Total current liabilities............... 280,094 326,169
Long-term debt.............................. 2,877,638 2,903,299
Deferred and other long-term income taxes... 240,322 225,043
Other liabilities........................... 35,976 36,355
Shareholders' deficit:
Common Stock.............................. 634 634
Additional paid-in capital................ 895,860 895,652
Cumulative translation adjustment......... (3,819) (2,844)
Retained deficit.......................... (2,704,931) (2,731,871)
---------- ----------
Total shareholders' deficit............. (1,812,256) (1,838,429)
---------- ----------
Total liabilities and shareholders'
deficit............................... $1,621,774 $1,652,437
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
- 3 -
<TABLE>
FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION> Three Months Ended
March 31,
------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Cash provided from (used for) operations:
Net income (loss)............................... $ 26,940 $(28,266)
Depreciation.................................... 25,112 24,331
Non-cash interest expense....................... 3,294 3,223
Deferred income taxes (credit).................. 6,295 (16,191)
Pre-tax loss on debt repurchases................ -- 30,734
(Increase) decrease in receivables.............. 14,219 (16,134)
(Increase) decrease in inventories.............. 4,729 (14,468)
Increase in income taxes receivable............. -- (3,000)
Increase (decrease) in accounts payable......... (8,699) 25,828
Decrease in interest payable.................... (40,644) (21,081)
Increase (decrease) in income taxes payable..... 8,131 (112)
All other, net.................................. (27,277) (30,281)
-------- --------
Net cash provided from (used for) operations.. 12,100 (45,417)
Cash used for investment activity:
Additions to property, plant and equipment...... (8,873) (10,845)
Cash provided from (used for) financing
activities:
Proceeds from long-term borrowings.............. 22,324 655,800
Repayment of long-term borrowings............... (26,111) (832,596)
Debt issuance costs............................. -- (48,201)
Issuance of Common Stock, net of offering costs. 208 281,047
-------- --------
Net cash provided from (used for)
financing activities........................ (3,579) 56,050
-------- --------
Decrease in cash................................. (352) (212)
Cash at beginning of period....................... 946 422
-------- --------
Cash at end of period........................... $ 594 $ 210
======== ========
Supplemental Cash Flow Disclosures:
Interest paid................................... $108,082 $104,755
Income taxes paid - net......................... 1,182 956
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
- 4 -
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) 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 the year
ended December 31, 1995.
2. EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is computed on the basis of the weighted
average number of common shares outstanding during the periods. The weighted
average number of common shares outstanding for the three month periods ended
March 31, 1996 and 1995 were 63,372,063 and 42,545,683, respectively. The
assumed exercise of all outstanding stock options has been excluded from the
computation of earnings (loss) per share for the three month periods ended
March 31, 1996 and 1995 because the result was not material or was
antidilutive.
3. INVENTORIES
Inventories consist of:
March 31, December 31,
1996 1995
--------- ------------
(In thousands)
Raw materials and supplies.............. $ 72,453 $ 80,134
Finished and partly-finished products... 85,894 82,942
-------- --------
$158,347 $163,076
======== ========
4. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to lawsuits and state and
federal administrative proceedings in connection with their businesses.
Although the final results in such suits and proceedings cannot be predicted
with certainty, the Company currently believes that the ultimate resolution of
all such lawsuits and proceedings, after taking into account the liabilities
accrued with respect to such matters, will not have a material adverse effect
on the Company's financial condition or on its results of operations.
- 5 -
FORT HOWARD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Quarter 1996 Compared to 1995
<TABLE>
<CAPTION> Three Months Ended
March 31,
--------------------
1996 1995
---- ----
(In thousands,
except percentages)
<S> <C> <C>
Net sales:
Domestic tissue......................... $324,908 $293,928
International operations................ 43,808 36,187
Harmon.................................. 17,031 37,261
-------- --------
Consolidated............................ $385,747 $367,376
======== ========
Operating income:
Domestic tissue......................... $106,920 $ 67,364
International operations................ 6,305 1,972
Harmon.................................. 978 1,439
-------- --------
Consolidated............................ 114,203 70,775
======== ========
Consolidated net income (loss)............ $ 26,940 $(28,266)
======== ========
Operating income as a percent of net sales 29.6% 19.3%
</TABLE>
Net Sales. Consolidated net sales increased 5.0% to $386 million in the
first quarter of 1996 compared to $367 million in the first quarter of 1995.
Domestic tissue net sales increased 10.5% in the first quarter of 1996
compared to the first quarter of 1995 due to a 17.6% increase in net selling
prices offset by a 6.0% decrease in sales volume. Although consumer volume
increased significantly during the first quarter of 1996, units sold to
commercial customers decreased from the first quarter of 1995 when volume may
have been affected by inventory buildups by the Company's distributors in
anticipation of the implementation of the Company and industry announced price
increases. Net selling prices increased significantly in both the commercial
and consumer markets for the first quarter of 1996 compared to the first
quarter of 1995 in response to rising raw material costs in late 1994 and
early 1995. Accordingly, the Company implemented price increases in both
markets in 1995. From the fourth quarter of 1995 through the first quarter of
1996, overall domestic net selling prices declined slightly. In the first
quarter, modest price discounting occurred in the marketplace. Also, in March
and April 1996, certain of the Company's competitors announced price decreases
as a result of lower fiber costs.
- 6 -
Net sales of the Company's international operations increased 21.1% in
the first quarter of 1996 compared to the first quarter of 1995 due to a
significant increase in net selling prices and a higher volume of converted
products, while parent roll volume was reduced. The 54.3% decrease in net
sales of the Company's wastepaper brokerage subsidiary, Harmon Assoc., Corp.
("Harmon"), principally reflects lower wastepaper selling prices.
Gross Income. For the first quarter of 1996, consolidated gross income
increased 48.1% to $147 million from $100 million for the first quarter of
1995 due to higher net selling prices and lower raw material costs, partially
offset by lower sales volume. Consolidated gross margins increased to 38.2%
for the first quarter of 1996 from 27.1% for the first quarter of 1995.
Domestic tissue gross margins increased for the first quarter of 1996 compared
to the first quarter of 1995 primarily due to higher net selling prices and
lower wastepaper costs. Wastepaper prices began to decline in the third
quarter of 1995, declined sharply in the fourth quarter of 1995 and continued
to decline moderately in the first quarter of 1996. The direction of
wastepaper price trends in succeeding quarters is uncertain due to general
economic factors, virgin market pulp price trends and changes in demand for
wastepaper arising from export markets and scheduled start-ups of deinked
market pulp mills.
Gross margins of international operations increased in the first quarter
of 1996 compared to the first quarter of 1995 due to higher net selling prices
and lower wastepaper costs. Consolidated gross margins were positively
affected for the first quarter of 1996 compared to the first quarter of 1995
because net sales of Harmon (which typically has very low margins compared to
either domestic or international tissue operations) were a smaller proportion
of total net sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses, as a percent of net sales, increased to 8.6% for the
first quarter of 1996 compared to 7.8% in 1995 principally due to the impact
of the Company's strong earnings performance on employee compensation plans
and higher selling expenses resulting from increased sales in the Company's
consumer market segment.
Operating Income. Operating income increased 61.4% to $114 million in
the first quarter of 1996 compared to $71 million in the first quarter of
1995. Operating income as a percent of net sales increased to 29.6% in the
first quarter of 1996 compared to 19.3% in the first quarter of 1995.
Domestic tissue operating income as a percent of net sales increased to 32.9%
in the first quarter of 1996 from 22.9% in the first quarter of 1995 due to
higher net selling prices and lower wastepaper costs. International operating
income as a percent of sales rose significantly in the first quarter of 1996
compared to the first quarter of 1995 also due to higher net selling prices
and lower wastepaper costs. In addition, consolidated operating income
increased as a percent of net sales because net sales of Harmon (which
typically has very low operating income margins compared to either domestic or
international tissue operations) were a smaller proportion of total net sales.
Extraordinary Loss. The Company's net loss in the first quarter of 1995
was increased by an extraordinary loss of $19 million (net of income taxes of
$12 million) from debt repurchases.
- 7 -
Net Income (Loss). For the first quarter of 1996, net income was
$27 million compared to a net loss of $28 million for the first quarter of
1995.
FINANCIAL CONDITION
For the first three months of 1996, cash decreased $352,000. Capital
additions of $9 million and debt repayments of $26 million were funded
principally by borrowings of $22 million and $12 million of cash from
operations provided by strong operating results, partially offset by seasonal
working capital requirements.
During the first three months of 1996, receivables decreased $14 million
due to seasonally lower domestic tissue sales in the first quarter of 1996
compared to the fourth quarter of 1995. Inventories decreased by $5 million
due to lower raw material costs partially offset by higher quantities in
anticipation of seasonal sales requirements. Accounts payable decreased
$9 million due to falling wastepaper costs. The liability for interest
payable decreased $41 million due to semi-annual interest payments made in
February and March 1996. Other current liabilities declined $26 million
resulting from the payment of obligations due on an annual basis, including
employee bonuses and customer incentive payments. As a result of all these
changes, net working capital increased to $1 million at March 31, 1996 from a
deficit of $35 million at December 31, 1995.
The 1995 Revolving Credit Facility of the Company's 1995 Bank Credit
Agreement, which may be used for general corporate purposes, has a final
maturity of March 16, 2002. At March 31, 1996, the Company had $203 million
in available capacity under the 1995 Revolving Credit Facility.
The Company has filed a registration statement with the Securities and
Exchange Commission in connection with a proposed offering of 10 million
shares of its common stock. If the offering is completed, the Company intends
to use the net proceeds to prepay a portion of the outstanding indebtedness
under the 1995 Bank Credit Agreement.
- 8 -
PART II. OTHER INFORMATION
1. LEGAL PROCEEDINGS
None
2. CHANGES IN SECURITIES
None
3. DEFAULTS UPON SENIOR SECURITIES
None
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
5. OTHER INFORMATION
None
6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit No. Description
10 Form of Amendment No. 2 to Supplemental Retirement
Agreements for certain directors and officers.
27 Financial Data Schedule for the three months ended
March 31, 1996.
99 News release containing financial results for the
quarter ended March 31, 1996.
b) No reports on Form 8-K were filed by the Company for the quarter
for which this report is filed.
- 9 -
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
April 23, 1996 /s/ Kathleen J. Hempel
---------------------------------------
Kathleen J. Hempel, Vice Chairman and
Chief Financial Officer and Principal
Accounting Officer
April 23, 1996 /s/ James W. Nellen II
--------------------------------------
James W. Nellen II, Vice President
and Secretary
- 10 -
INDEX TO EXHIBITS
Exhibit No. Description
10 Form of Amendment No. 2 to Supplemental Retirement
Agreements for certain directors and officers.
27 Financial Data Schedule for the three months ended
March 31, 1996.
99 News release containing financial results for the
quarter ended March 31, 1996.
- 11 -
Exhibit 10
----------
FORM OF AMENDMENT NO. 2
SUPPLEMENTAL RETIREMENT AGREEMENT
WHEREAS, Paragraph _____ of the Supplemental Retirement Agreement
entered into between ________________________ (the "PARTICIPANT") and
Fort Howard Corporation (the "COMPANY") effective __________
(the "AGREEMENT") provides that the AGREEMENT may be amended by the
PARTICIPANT and the COMPANY in accordance with the terms of such
Paragraph; and
WHEREAS, the PARTICIPANT desires to amend the AGREEMENT to
increase the PARTICIPANT'S percentage of base salary deferred during
each calendar year;
NOW, THEREFORE, the PARTICIPANT and the COMPANY hereby agree to
amend the AGREEMENT effective April 1, 1996 as follows:
The words "eight percent (8%)" contained in the first sentence of
Paragraph 2 of the AGREEMENT are deleted and the words "ten percent
(10%)" are inserted in place thereof.
This amendment is hereby entered into as of the ___ day of March,
1996.
FORT HOWARD CORPORATION
Witness: _______________________ By: _________________________
Title:
Witness: _______________________ _________________________
Participant
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORT HOWARD CORPORATION'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000038195
<NAME> FORT HOWARD CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 594
<SECURITIES> 0
<RECEIVABLES> 86,482
<ALLOWANCES> 2,994
<INVENTORY> 158,347
<CURRENT-ASSETS> 281,129
<PP&E> 1,976,841
<DEPRECIATION> 729,804
<TOTAL-ASSETS> 1,621,774
<CURRENT-LIABILITIES> 280,094
<BONDS> 2,877,638
<COMMON> 634
0
0
<OTHER-SE> (1,812,890)
<TOTAL-LIABILITY-AND-EQUITY> 1,621,774
<SALES> 385,747
<TOTAL-REVENUES> 385,747
<CGS> 238,369
<TOTAL-COSTS> 238,369
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70,773
<INCOME-PRETAX> 42,867
<INCOME-TAX> 15,927
<INCOME-CONTINUING> 26,940
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,940
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
Exhibit 99
NEWS ----------
______________________________________________________________________________
For further information contact:
(Fort Howard logo here) Media:
Cliff Bowers, Ext. 4087
P. O. Box 19130 Financial:
Green Bay, WI 54307-9130 Mike Lempke, Ext. 2492
414/435-8821
FOR RELEASE: IMMEDIATELY
FORT HOWARD OPERATING INCOME
INCREASES 61% FOR FIRST QUARTER
GREEN BAY, WI - April 23, 1996 - Fort Howard Corporation today reported
increased sales, operating income and margin for the first quarter of 1996.
"Our strategies to extend Fort Howard's market penetration and
profitability are paying off," said Fort Howard Chairman and CEO, Donald H.
DeMeuse. "Proof of that is our 61.4% increase in operating income compared to
the first three months of last year."
Fort Howard's operating income margin for the quarter was 29.6% compared
to 19.3% for the first quarter of 1995 and 25.5% in the fourth quarter of
1995.
"Improved pricing in both the consumer and commercial markets, lower
wastepaper costs, and the continuing growth of our branded and private label
consumer products all contributed to our strong start for the year compared to
the first quarter of '95," DeMeuse said.
-- More --
-- Ad One --
For the first quarter of 1996, net income was $26,940,000 compared to a
net loss for the first quarter of 1995 of $28,266,000. The net income was
$0.43 per share in the first quarter of 1996 compared to a net loss before
extraordinary items of $(0.22) per share in the first quarter of 1995.
The company completed a recapitalization, including an IPO of 25 million
shares of common stock, in April 1995. Had the recapitalization been
completed on January 1, 1995, net loss per share before extraordinary items
for the first quarter of 1995 would have been $(0.02) on a pro forma basis.
"We're focused on continuing this momentum," DeMeuse said. "Our first-
quarter entry into the premium segment of the commercial market with our
Preference Ultra product line is part of our core strategy for building
shareholder value. The early reaction of the marketplace to these products
has been very positive."
In addition, the company's joint venture project in Shanghai, China,
began shipping tissue products during the first quarter, DeMeuse said.
For the first quarter, Fort Howard's net sales increased 5.0% to
$385,747,000 compared to first quarter 1995 net sales of $367,376,000.
Domestic tissue sales increased 10.5% for the first quarter of 1996 compared
to first quarter 1995. Also, net sales of the company's international
operations increased 21.1% for the first quarter of 1996 compared to first
quarter 1995. Offsetting sales increases at domestic and international tissue
operations were lower sales from the company's wastepaper brokerage operations
resulting from lower wastepaper prices.
Operating income increased to $114,203,000 for the first quarter compared
to $70,775,000 for the first quarter of 1995. The increase was due to higher
net selling prices and lower wastepaper costs in both the company's domestic
and international operations.
-- More --
-- Ad Two --
Extraordinary losses related to debt repurchases in 1995 (see Note to
Financial Information) impacted the company's financial performance in the
first quarter of 1995.
On March 14, 1996, the company announced that, subject to market
conditions, it intends to sell approximately 10 million primary shares of
common stock in a registered public offering. The net proceeds of the
offering, which is expected to take place in the second quarter and will be
made only by means of a prospectus, will be used to reduce outstanding bank
debt. It is also anticipated that the offering will include up to
approximately 6 million additional secondary shares of common stock which may
be sold by certain shareholders of Fort Howard. The company will not receive
any proceeds from the sale of shares by the selling shareholders.
Fort Howard is a leading manufacturer and marketer of consumer tissue
products for both the away-from-home and at-home markets in the United States
and United Kingdom. In the domestic at-home market, its principal brands
include Mardi Gras printed napkins (which hold the leading domestic market
position) and paper towels, Soft 'n Gentle bath and facial tissue, So-Dri
paper towels, and Green Forest, the leading domestic line of environmentally
positioned recycled tissue paper products.
-- More --
-- Ad Three --
(Financial information and note follow on separate pages. The note is an
integral part of these statements.)
A registration statement relating to the company's common stock has been
filed with the Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor any offers to buy be accepted
prior to the time of the registration statement becoming effective. This
financial release shall not constitute an offer to sell or a solicitation of
an offer to buy nor shall there by any sale of these securities in any State
in which such offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities law of such State.
# # # # #
<TABLE>
FORT HOWARD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION> Three Months Ended
March 31,
----------------------
1996 1995
---- ----
In thousands, except per share amounts)
<S> <C> <C>
Net sales $385,747 $367,376
Cost of sales 238,369 267,856
-------- --------
Gross income 147,378 99,520
Selling, general and administrative 33,175 28,745
-------- --------
Operating income 114,203 70,775
Interest expense 70,773 86,770
Other (income) expense, net 563 (224)
-------- --------
Income (loss) before taxes 42,867 (15,771)
Income taxes (credit) 15,927 (6,253)
-------- --------
Income (loss) before extraordinary item 26,940 (9,518)
Extraordinary item - loss on debt
repurchases, net -- (18,748)
-------- --------
Net income (loss) $ 26,940 $(28,266)
======== ========
Net income (loss) per share:
Before extraordinary item $ 0.43 $ (0.22)
Extraordinary item -- (0.44)
-------- --------
Net income (loss) $ 0.43 $ (0.66)
======== ========
</TABLE>
<TABLE>
FORT HOWARD CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION> March 31, December 31,
1996 1995
------------ ------------
(In thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 594 $ 946
Receivables, less allowances of $2,994 in 1996
and $2,883 in 1995 83,488 97,707
Inventories 158,347 163,076
Deferred income taxes 38,000 29,000
Income taxes receivable 700 700
---------- ----------
Total current assets 281,129 291,429
Property, plant and equipment 1,976,841 1,971,641
Less: Accumulated depreciation 729,804 706,394
---------- ----------
Net property, plant and equipment 1,247,037 1,265,247
Other assets 93,608 95,761
---------- ----------
Total assets $1,621,774 $1,652,437
========== ==========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 103,685 $ 112,384
Interest payable 23,731 64,375
Income taxes payable 9,470 1,339
Other current liabilities 59,099 85,351
Current portion of long-term debt 84,109 62,720
---------- ----------
Total current liabilities 280,094 326,169
Long-term debt 2,877,638 2,903,299
Deferred and other long-term income taxes 240,322 225,043
Other liabilities 35,976 36,355
Shareholders' deficit:
Common Stock 634 634
Additional paid-in capital 895,860 895,652
Cumulative translation adjustment (3,819) (2,844)
Retained deficit (2,704,931) (2,731,871)
---------- ----------
Total shareholders' deficit (1,812,256) (1,838,429)
---------- ----------
Total liabilities and shareholders' deficit $1,621,774 $1,652,437
========== ==========
</TABLE>
<TABLE>
FORT HOWARD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION> Three Months Ended
March 31,
--------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Cash provided from (used for) operations:
Net income (loss) $ 26,940 $ (28,266)
Depreciation 25,112 24,331
Non-cash interest expense 3,294 3,223
Deferred income tax credit 6,295 (16,191)
Pre-tax loss on debt repurchases -- 30,734
(Increase) decrease in receivables 14,219 (16,134)
(Increase) decrease in inventories 4,729 (14,468)
Increase in income taxes receivable -- (3,000)
Increase (decrease) in accounts payable (8,699) 25,828
Decrease in interest payable (40,644) (21,081)
Increase (decrease) in income taxes payable 8,131 (112)
All other, net (27,277) (30,281)
--------- ---------
Net cash provided from (used for) operations 12,100 (45,417)
Cash used for investment activity:
Additions to property, plant and equipment (8,873) (10,845)
Cash provided from (used for) financing activities:
Proceeds from long-term borrowings 22,324 655,800
Repayment of long-term borrowings (26,111) (832,596)
Debt issuance costs -- (48,201)
Issuance of Common Stock, net of offering costs 208 281,047
--------- ---------
Net cash provided from (used for)
financing activities (3,579) 56,050
--------- ---------
Decrease in cash (352) (212)
Cash at beginning of period 946 422
--------- ---------
Cash at end of period $ 594 $ 210
========= =========
</TABLE>
*****
FORT HOWARD CORPORATION
NOTE TO FINANCIAL INFORMATION
(Unaudited)
1. The company completed a recapitalization, including an IPO of 25 million
shares of common stock, in April 1995.
A. In connection with the recapitalization in the first quarter of
1995, the company reported an extraordinary loss of $19 million
(net of income taxes of $12 million) representing the redemption
premiums on the repurchases of all of the company's outstanding 12
5/8% Subordinated Debentures at a redemption price of 102.5% of the
principal amount thereof and write-offs of deferred loan costs
associated with the prepayment or repurchases of all indebtedness
outstanding under the company's 1988 Bank Credit Agreement, the
1993 Term Loan and the Senior Secured Floating Rate Notes on
March 16, 1995, and the repurchase of all outstanding 12 5/8%
Subordinated Debentures and 14 1/8% Junior Subordinated Discount
Debentures on April 15, 1995.
B. Assuming that all components of the recapitalization had been
consummated as of January 1, 1995, for the first quarter of 1995,
pro forma interest expense would have decreased $14 million from
amounts reported to $73 million. After adjusting income taxes
(credit) for the decrease in interest expense at an effective rate
of 39%, the pro forma net loss before extraordinary item and pro
forma net loss per share before extraordinary item (assuming that
63,101,239 weighted average shares were outstanding for the quarter)
would have been $1 million and $0.02 per share for the first quarter
of 1995, respectively.
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