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, 1997 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 10, 1997
----- -----------------------------
Common Stock, par value $.01 74,639,227
per share
PART I. FINANCIAL INFORMATION
FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
-----------------------
1997 1996
---- ----
(In thousands, except
per share data)
Net sales................................. $400,759 $385,747
Cost of sales............................. 229,040 238,369
-------- --------
Gross income.............................. 171,719 147,378
Selling, general and administrative....... 33,482 33,175
-------- --------
Operating income.......................... 138,237 114,203
Interest expense.......................... 57,862 70,773
Other expense, net........................ 780 563
-------- --------
Income before taxes....................... 79,595 42,867
Income taxes.............................. 29,848 15,927
-------- --------
Income before extraordinary item.......... 49,747 26,940
Extraordinary item -- loss on debt
repurchases (net of income taxes
of $867 in 1997)........................ (1,327) --
-------- --------
Net income................................ $ 48,420 $ 26,940
======== ========
Earnings per share:
Net income before extraordinary item.... $ 0.67 $ 0.43
Extraordinary item...................... (0.02) --
-------- --------
Net income.............................. $ 0.65 $ 0.43
======== ========
Average shares outstanding................ 74,531 63,372
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
- 2 -
FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1997 1996
---------- ------------
(In thousands)
Assets
Current assets:
Cash and cash equivalents................. $ 663 $ 759
Receivables, less allowances of $3,484
in 1997 and $3,343 in 1996.............. 70,830 63,194
Inventories............................... 149,301 151,248
Deferred income taxes..................... 54,000 60,000
Income taxes receivable................... 10,121 10,121
---------- ----------
Total current assets.................... 284,915 285,322
Property, plant and equipment............... 2,062,864 2,057,446
Less: Accumulated depreciation........... 831,337 809,650
---------- ----------
Net property, plant and equipment....... 1,231,527 1,247,796
Other assets................................ 64,581 82,262
---------- ----------
Total assets............................ $1,581,023 $1,615,380
========== ==========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable.......................... $ 118,758 $ 131,205
Interest payable.......................... 21,171 60,443
Income taxes payable...................... 21,282 7,700
Other current liabilities................. 68,800 110,357
Current portion of long-term debt......... 11,425 11,972
---------- ----------
Total current liabilities............... 241,436 321,677
Long-term debt.............................. 2,441,446 2,451,373
Deferred and other long-term income taxes... 252,474 247,464
Other liabilities........................... 49,141 49,703
Shareholders' deficit:
Common Stock.............................. 746 744
Additional paid-in capital................ 1,115,323 1,108,976
Cumulative translation adjustment......... 1,311 4,717
Retained deficit.......................... (2,520,854) (2,569,274)
---------- ----------
Total shareholders' deficit............. (1,403,474) (1,454,837)
---------- ----------
Total liabilities and shareholders'
deficit............................... $1,581,023 $1,615,380
========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
- 3 -
FORT HOWARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
----------------------
1997 1996
---- ----
(In thousands)
Cash provided from (used for) operations:
Net income...................................... $ 48,420 $ 26,940
Depreciation.................................... 25,855 25,112
Non-cash interest expense....................... 3,235 3,294
Deferred income taxes........................... 9,829 6,295
Pre-tax loss on debt repurchases................ 2,194 --
Decrease in restricted cash..................... 14,916 --
(Increase) decrease in receivables.............. (7,636) 14,219
Decrease in inventories......................... 1,947 4,729
Decrease in accounts payable.................... (12,447) (8,699)
Decrease in interest payable.................... (39,272) (40,644)
Increase in income taxes payable................ 13,582 8,131
All other, net.................................. (39,311) (27,277)
-------- --------
Net cash provided from operations............. 21,312 12,100
Cash used for investment activity:
Additions to property, plant and equipment...... (14,896) (8,873)
Cash provided from (used for) financing
activities:
Proceeds from long-term borrowings.............. 99,700 22,324
Repayment of long-term borrowings............... (109,505) (26,111)
Issuance of Common Stock........................ 3,293 208
-------- --------
Net cash used for financing activities........ (6,512) (3,579)
-------- --------
Decrease in cash.................................. (96) (352)
Cash at beginning of period....................... 759 946
-------- --------
Cash at end of period........................... $ 663 $ 594
======== ========
Supplemental Cash Flow Disclosures:
Interest paid................................... $ 93,878 $108,082
Income taxes paid - net......................... 2,155 1,182
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, 1996.
2. EARNINGS PER SHARE
Earnings 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, 1997 and 1996 were 74,530,556 and 63,372,063, respectively. The
assumed exercise of all outstanding stock options has been excluded from the
computation of earnings per share for the three month periods ended March 31,
1997 and 1996 because the result was not material or was antidilutive.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128"). The Company will adopt SFAS No. 128 effective for the year
ending December 31, 1997. On a pro forma basis, if the Company had adopted
SFAS No. 128 for the three months ended March 31, 1997 and 1996, the effect of
this accounting change on reported earnings per share ("EPS") would be:
Three Months Ended
March 31,
----------------------
1997 1996
---- ----
Earnings Per Share:
BASIC
Income before extraordinary item as reported.. $ 0.67 $ 0.43
Effect of SFAS No. 128........................ -- --
------ ------
Basic income before extraordinary item as
restated.................................... $ 0.67 $ 0.43
====== ======
Net income as reported........................ $ 0.65 $ 0.43
Effect of SFAS No. 128........................ -- --
------ ------
Basic income as restated...................... $ 0.65 $ 0.43
====== ======
DILUTED
Diluted income before extraordinary item (A).. $ 0.66 $ 0.42
====== ======
Diluted income (A)............................ $ 0.64 $ 0.42
====== ======
(A) In accordance with the provisions of APB Opinion No. 15, the Company
currently does not report fully diluted EPS due to immaterial dilution.
- 5 -
3. CASH AND CASH EQUIVALENTS
At December 31, 1996, the Company had $14,916,000 of cash restricted as
collateral under the terms of its 1995 Accounts Receivable Facility. At
March 31, 1997, there was no cash restricted under the terms of this Facility.
4. INVENTORIES
Inventories consist of:
March 31, December 31,
1997 1996
--------- ------------
(In thousands)
Raw materials and supplies.............. $ 66,730 $ 70,595
Finished and partly-finished products... 82,571 80,653
-------- --------
$149,301 $151,248
======== ========
5. CONTINGENCIES
The Company and its subsidiaries are parties to 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, 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.
- 6 -
FORT HOWARD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Quarter 1997 Compared to 1996
Three Months Ended
March 31,
------------------------
1997 1996
---- ----
(In thousands,
except percentages)
Net sales:
Domestic tissue......................... $336,820 $324,908
International operations................ 44,107 43,808
Harmon.................................. 19,832 17,031
-------- --------
Consolidated............................ $400,759 $385,747
======== ========
Operating income:
Domestic tissue......................... $130,520 $106,920
International operations................ 7,115 6,305
Harmon.................................. 602 978
-------- --------
Consolidated............................ $138,237 $114,203
======== ========
Consolidated net income................... $ 48,420 $ 26,940
======== ========
Operating income as a percent of net sales 34.5% 29.6%
Net Sales. Consolidated net sales increased 3.9% to $401 million in the
first quarter of 1997 compared to $386 million in the first quarter of 1996.
Domestic tissue net sales increased 3.7% in the first quarter of 1997 compared
to the first quarter of 1996 due to a 6.3% increase in sales volume offset by
a 2.5% decrease in net selling prices. For the first quarter of 1997, sales
volume of converted products increased 8.6% from the first quarter of 1996.
There were no sales of parent rolls in the first quarter of 1997. Net selling
prices decreased for the first quarter of 1997 compared to the first quarter
of 1996 as a result of price decreases in the consumer market which took
effect in April and June 1996.
Net sales of the Company's international operations increased 0.7% in the
first quarter of 1997 compared to the first quarter of 1996 due to higher
volume and increased exchange rates, offset by a decrease in net selling
prices at the Company's United Kingdom facility. Net sales of the Company's
wastepaper brokerage subsidiary, Harmon Assoc., Corp. ("Harmon"), increased
due to a 20.0% volume increase offset by decreased net selling prices.
- 7 -
Gross Income. For the first quarter of 1997, consolidated gross income
increased 16.5% to $172 million from $147 million in the first quarter of 1996
due to higher volume and lower raw material costs partially offset by a
decrease in net selling prices. Consolidated gross margins increased to 42.8%
for the first quarter of 1997 from 38.2% for the first quarter of 1996.
Domestic tissue gross margins increased for the first quarter of 1997 compared
to the first quarter of 1996 due to higher volume and lower wastepaper and
other fiber-based raw material costs. Wastepaper prices began decreasing
significantly in late 1995 and continued to decrease through the first half of
1996, and have been stable since mid-1996.
Gross margins of international operations increased in the first quarter
of 1997 compared to the first quarter of 1996 due to lower wastepaper costs.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses, as a percent of net sales, decreased slightly to 8.4%
for the first quarter of 1997 compared to 8.6% in 1996 principally due to the
impact of higher net sales.
Operating Income. Operating income increased 21.0% to $138 million in
the first quarter of 1997 compared to $114 million in the first quarter of
1996. Operating income as a percent of net sales increased to 34.5% in the
first quarter of 1997 compared to 29.6% in the first quarter of 1996.
Domestic tissue operating income as a percent of net sales increased to 38.8%
in the first quarter of 1997 from 32.9% in the first quarter of 1996 due to
higher volume as well as lower wastepaper and other raw material costs.
International operating income as a percent of sales rose in the first quarter
of 1997 compared to the first quarter of 1996 also due to higher volume and
lower wastepaper costs.
Interest Expense. Interest expense decreased 18.2% to $58 million in the
first quarter of 1997 compared to the first quarter of 1996 due to lower debt
balances resulting from debt repayments using the proceeds from the 1996 sale
of common stock and cash provided from operations.
Extraordinary Loss. The Company's net income in the first quarter of
1997 was decreased by an extraordinary loss of $1.3 million (net of income
taxes of $0.9 million) representing the write-off of deferred loan costs
associated with the prepayment of a portion of the outstanding indebtedness
under the Company's 1995 Bank Credit Agreement.
Net Income. For the first quarter of 1997, net income increased 78% to
$48 million compared to $27 million for the first quarter of 1996.
FINANCIAL CONDITION
For the first three months of 1997, cash decreased $96,000. Capital
additions of $15 million and debt repayments of $110 million were funded
principally by borrowings of $100 million, net proceeds of $3 million from the
sale of common stock pursuant to the exercise of stock options and $21 million
of cash from operations partially offset by seasonal working capital
requirements.
During the first three months of 1997, receivables increased $8 million
due to higher domestic tissue sales in the first quarter of 1997 compared to
the fourth quarter of 1996. Accounts payable decreased $12 million due to
payments made to customers under annual promotion and rebate programs and
- 8 -
lower capital spending during the first quarter of 1996. The liability for
interest payable decreased $39 million due to semi-annual interest payments
made in February and March 1997. Other current liabilities declined
$42 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 $43 million at March 31,
1997 from a deficit of $36 million at December 31, 1996.
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, 1997, the Company had $173 million
in available capacity under the 1995 Revolving Credit Facility.
IMPACT OF NEW ACCOUNTING STANDARD
In February 1997 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128"). The Company will adopt SFAS No. 128 effective for the year
ending December 31, 1997. The Company does not expect SFAS No. 128 to have a
significant impact on its reported earnings per share. See footnote 2 to the
Condensed Consolidated Financial Statements for a pro forma disclosure of the
impact of SFAS No. 128 for the three months ended March 31, 1997, and 1996.
- 9 -
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
None
5. OTHER INFORMATION
None
6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit No. Description
27 Financial Data Schedule for the three months ended
March 31, 1997.
99 News release containing financial results for the
quarter ended March 31, 1997.
b) No reports on Form 8-K were filed by the Company for the quarter
for which this report is filed.
- 10 -
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 21, 1997 /s/ Kathleen J. Hempel
---------------------------------------
Kathleen J. Hempel, Vice Chairman and
Chief Financial Officer and Principal
Accounting Officer
April 21, 1997 /s/ James W. Nellen II
--------------------------------------
James W. Nellen II, Vice President
and Secretary
- 11 -
INDEX TO EXHIBITS
Exhibit No. Description
27 Financial Data Schedule for the three months ended
March 31, 1997.
99 News release containing financial results for the
quarter ended March 31, 1997.
- 12 -
<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, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 663
<SECURITIES> 0
<RECEIVABLES> 74,314
<ALLOWANCES> 3,484
<INVENTORY> 149,301
<CURRENT-ASSETS> 284,915
<PP&E> 2,062,864
<DEPRECIATION> 831,337
<TOTAL-ASSETS> 1,581,023
<CURRENT-LIABILITIES> 241,436
<BONDS> 2,441,446
<COMMON> 746
0
0
<OTHER-SE> (1,404,220)
<TOTAL-LIABILITY-AND-EQUITY> 1,581,023
<SALES> 400,759
<TOTAL-REVENUES> 400,759
<CGS> 229,040
<TOTAL-COSTS> 229,040
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,862
<INCOME-PRETAX> 79,595
<INCOME-TAX> 29,848
<INCOME-CONTINUING> 49,747
<DISCONTINUED> 0
<EXTRAORDINARY> (1,327)
<CHANGES> 0
<NET-INCOME> 48,420
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
</TABLE>
Exhibit 99
-----------
NEWS
For further information contact:
Media:
Cliff Bowers, Ext. 4087
(FORT HOWARD LOGO here)
P. O. Box 19130 Financial:
Green Bay, WI 54307-9130 Mike Lempke, Ext. 2492
414/435-8821
FOR RELEASE: IMMEDIATELY
FORT HOWARD EARNINGS PER SHARE
INCREASE 56% FOR FIRST QUARTER
GREEN BAY, WI - April 21, 1997 - Fort Howard Corporation today reported
that net income per share reached $0.67 before an extraordinary item for the
first quarter ending March 31, 1997, an increase of 56% compared to $0.43 in
the same period of 1996.
Net sales, operating income, operating margin and earnings per share all
increased in the first quarter of 1997. Quarterly operating income increased
year-on-year for the ninth consecutive quarter.
"Every aspect of our business is performing superbly," said Fort Howard
Chairman, President and CEO, Michael T. Riordan. "Our results confirm our
strategies as a successful consumer products business and distinguish us from
the broader paper and forest products sector.
"As we look through the balance of this year, raw material costs,
pricing, operating rates and overall economic growth appear positive. In
light of this strong environment, we believe Fort Howard can continue to
perform at very high levels," Riordan said.
- More -
- Ad One -
Operating Income Increases
Operating income increased 21% to $138,237,000 for the first quarter
compared to $114,203,000 for the first quarter of 1996. The increase was due
to higher sales volume and lower wastepaper costs in both the company's
domestic and international operations. Fort Howard's operating income margin
for the quarter was 34.5% compared to 29.6% for the first quarter of 1996 and
31.3% in the fourth quarter of 1996 before the 1996 environmental charge.
Net Income
For the first quarter of 1997, net income before an extraordinary item
was $49,747,000, an increase of 85% compared to first quarter 1996 net income
of $26,940,000. The net income after an extraordinary item was $0.65 per
share in the first quarter of 1997 compared to $0.43 per share in the first
quarter of 1996. Extraordinary losses related to debt prepayments in 1997 (see
Note to Financial Information) impacted the company's financial performance in
the first quarter of 1997.
Net Sales Performance
For the first quarter, Fort Howard's net sales increased 3.9% to
$400,759,000 compared to first quarter 1996 net sales of $385,747,000.
Domestic tissue sales increased 3.7% for the first quarter of 1997 compared to
first quarter 1996. Sales volume of converted products increased 8.6% but
this was partially offset by lower selling prices resulting from industry-wide
price decreases in the at-home tissue market which occurred in mid-1996.
Also, net sales of the company's international operations and the company's
wastepaper brokerage operations increased for the first quarter of 1997
compared to first quarter 1996.
- More -
- Ad Two -
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 holds 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. Prominent away-from-home market brands include the
Preference Ultra line of premium products, Preference near-premium products,
and the Envision line of environmentally positioned products.
(Financial information and note follow on separate pages. The note is an
integral part of these statements.)
# # # # #
FORT HOWARD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
Three Months Ended
March 31,
--------------------
1997 1996
---- ----
(In thousands, except per share amounts)
<S> <C> <C>
Net sales $400,759 $385,747
Cost of sales 229,040 238,369
-------- --------
Gross income 171,719 147,378
Selling, general and administrative 33,482 33,175
-------- --------
Operating income 138,237 114,203
Interest expense 57,862 70,773
Other expense, net 780 563
-------- --------
Income before taxes 79,595 42,867
Income tax expense 29,848 15,927
-------- --------
Income before extraordinary item 49,747 26,940
Extraordinary item - loss on
debt repurchases, net (1,327) --
-------- --------
Net income $ 48,420 $ 26,940
======== ========
Net income per share:
Before extraordinary item $ 0.67 $ 0.43
Extraordinary item (0.02) --
-------- --------
Net income $ 0.65 $ 0.43
======== ========
Average shares outstanding 74,531 63,372
======== ========
</TABLE>
FORT HOWARD CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
March 31, December 31,
1997 1996
------------ ------------
(In thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 663 $ 759
Receivables, less allowances of $3,484 in 1997
and $3,343 in 1996 70,830 63,194
Inventories 149,301 151,248
Deferred income taxes 54,000 60,000
Income taxes receivable 10,121 10,121
---------- ----------
Total current assets 284,915 285,322
Property, plant and equipment 2,062,864 2,057,446
Less: Accumulated depreciation 831,337 809,650
---------- ----------
Net property, plant and equipment 1,231,527 1,247,796
Other assets 64,581 82,262
---------- ----------
Total assets $1,581,023 $1,615,380
========== ==========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 118,758 $ 131,205
Interest payable 21,171 60,443
Income taxes payable 21,282 7,700
Other current liabilities 68,800 110,357
Current portion of long-term debt 11,425 11,972
---------- ----------
Total current liabilities 241,436 321,677
Long-term debt 2,441,446 2,451,373
Deferred and other long-term income taxes 252,474 247,464
Other liabilities 49,141 49,703
Shareholders' deficit:
Common Stock 746 744
Additional paid-in capital 1,115,323 1,108,976
Cumulative translation adjustment 1,311 4,717
Retained deficit (2,520,854) (2,569,274)
---------- ----------
Total shareholders' deficit (1,403,474) (1,454,837)
---------- ----------
Total liabilities and shareholders' deficit $1,581,023 $1,615,380
========== ==========
</TABLE>
FORT HOWARD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Three Months Ended
March 31,
--------------------
1997 1996
---- ----
(In thousands)
<S> <C> <C>
Cash provided from (used for) operations:
Net income $ 48,420 $ 26,940
Depreciation 25,855 25,112
Non-cash interest expense 3,235 3,294
Deferred income tax expense 9,829 6,295
Pre-tax loss on debt repurchases 2,194 --
Decrease in restricted cash 14,916 --
(Increase) decrease in receivables (7,636) 14,219
Decrease in inventories 1,947 4,729
Decrease in accounts payable (12,447) (8,699)
Decrease in interest payable (39,272) (40,644)
Increase in income taxes payable 13,582 8,131
All other, net (39,311) (27,277)
--------- ---------
Net cash provided from operations 21,312 12,100
Cash used for investment activity:
Additions to property, plant and equipment (14,896) (8,873)
Cash provided from (used for) financing activities:
Proceeds from long-term borrowings 99,700 22,324
Repayment of long-term borrowings (109,505) (26,111)
Issuance of Common Stock 3,293 208
--------- ---------
Net cash used for financing activities (6,512) (3,579)
--------- ---------
Decrease in cash (96) (352)
Cash at beginning of period 759 946
--------- ---------
Cash at end of period $ 663 $ 594
========= =========
</TABLE>
*****
FORT HOWARD CORPORATION
NOTE TO FINANCIAL INFORMATION
(Unaudited)
1. The Company's net income in the first quarter of 1997 was decreased by an
extraordinary loss of $1.3 million (net of income taxes of $0.9 million)
representing the write-off of deferred loan costs associated with the
prepayment of a portion of the outstanding indebtedness under the 1995
Bank Credit Agreement.
# # # # #
