EXHIBIT 99
NEWS
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For further information contact:
[Logo] Fort Howard
Corporation
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 EARNINGS PER SHARE
INCREASE 53% FROM SECOND QUARTER
GREEN BAY, WI - October 25, 1995 - Fort Howard Corporation today reported
that increasing prices and firm sales volume led to record net sales and
significantly improved earnings for the third quarter. Results also
represented a third consecutive quarterly net sales record for the company.
"Our successful strategies to increase selling prices contributed to our
positive results for the quarter," said Donald H. DeMeuse, Fort Howard
Chairman and Chief Executive Officer. "Tightening industry operating rates,
continuing benefits from recent price increases and positive short-term
wastepaper cost trends make us optimistic about the remainder of the year and
1996."
Third Quarter Results
---------------------
For the third quarter ended September 30, 1995, net sales rose to a
record $426,116,000, a 25.3% increase over the $340,068,000 reported in the
third quarter of 1994. Domestic tissue sales increased 25.1% for the same
periods, principally due to higher selling prices.
"We are particularly pleased with the volume gains we've seen in our
consumer business," DeMeuse said. "Our share growth in that business is
unprecedented; increasing from approximately a 7% share in 1989 to over 10%
this year."
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Net income for the quarter was $14,500,000 or $0.23 per share. That
compares to net income of $290,000 or $0.01 per share in the third quarter of
1994, and $7,619,000 or $0.12 per share for the second quarter of 1995. Third
quarter earnings per share represent a 53% increase over second quarter pro
forma earnings per share of $0.15.
Operating income increased 12.0% for the period to $95,369,000 versus
$85,184,000 for the third quarter of 1994. Operating margins in domestic
tissue operations improved to 25.6% in the third quarter of 1995 from 22.9% in
the first quarter of 1995.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
increased 10.0% to $120,100,000 compared to $109,191,000 in the same period of
1994.
The company's Fort Sterling subsidiary, based in Manchester, England,
reported a 27.7% increase in sales and an operating income increase of 64.3%
for the third quarter compared to the third quarter of 1994.
Nine Month Results
------------------
Net sales for the first nine months were a record $1,205,602,000 an
increase of 29.5% versus 1994 net sales of $930,697,000.
The company reported a net loss of $6,147,000 for the period compared to
a net loss of $45,101,000 for the first nine months of 1994. Net income per
share before extraordinary items was $0.22 per share in 1995 compared to net
loss of $(0.44) per share in 1994. Net loss after extraordinary items was
$(0.11) for the first nine months compared to a loss of $(1.18) per share for
same period last year.
The company completed a recapitalization, including an IPO of 25 million
shares of common stock, on April 15, 1995. Had the recapitalization been
completed on January 1, 1995, the net income per share for the first nine
months would have been $0.36 on a pro forma basis.
Operating income increased 13.4% to $254,235,000 in the first nine months
versus $224,206,000 for the period in 1994. The increase resulted from higher
sales and was partially offset by significantly higher wastepaper costs both
domestically and in the company's international operations.
EBITDA increased 11.6% to $327,986,000 in the first nine months compared
to $293,992,000 for the first three quarters of 1994.
Joint Venture in China
----------------------
On October 23, 1995, Fort Howard announced that it had entered into a
memorandum of understanding with a joint venture partner to manufacture
sanitary tissue products in the People's Republic of China. The plant,
located near Shanghai, will produce napkins, and bath and facial tissue.
According to DeMeuse, the venture represents a key step in the company's
international growth strategy. The company and its partner, CIMIC Holdings,
Ltd., expect to start up converting operations in the Pudong New area of
Shanghai in the first quarter of 1996.
Annual Shareholder Meeting Scheduled
-------------------------------------
Fort Howard will hold its annual shareholder meeting on May 14, 1996, at
the Metropolitan Club, Sears Tower, 233 S. Wacker Drive, Chicago, IL.
Fort Howard is a leading marketer and manufacturer of tissue products for
both the away-from-home and consumer market place in the United States and
United Kingdom. In the domestic consumer 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.
(Financial information and notes follow on separate pages. The notes are
an integral part of these statements.)
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FORT HOWARD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------
1995 1994 1995 1994
---- ---- ---- ----
(In thousands, except per share amounts)
Net sales $426,116 $340,068 $1,205,602 $930,697
Cost of sales 299,974 227,338 865,474 624,399
-------- -------- ---------- --------
Gross income 126,142 112,730 340,128 306,298
Selling, general and
administrative 30,773 27,546 85,893 82,092
-------- -------- ---------- --------
Operating income 95,369 85,184 254,235 224,206
Interest expense 74,177 84,209 237,258 251,562
Other (income)
expense, net (1,600) (87) (2,537) 215
-------- -------- ---------- --------
Income (loss) before
taxes 22,792 1,062 19,514 (27,571)
Income tax expense
(credit) 8,292 772 6,913 (10,640)
-------- -------- ---------- --------
Net income (loss) before
extraordinary item 14,500 290 12,601 (16,931)
Extraordinary item -
loss on debt
repurchases, net -- -- (18,748) (28,170)
-------- -------- ---------- --------
Net income (loss) $ 14,500 $ 290 $ (6,147) $(45,101)
======== ======== ========== ========
Net income (loss) per share:
Before extraordinary
item $ 0.23 $ 0.01 $ 0.22 $ (0.44)
Extraordinary item -- -- (0.33) (0.74)
-------- -------- ---------- --------
Net income (loss) $ 0.23 $ 0.01 $ (0.11) $ (1.18)
======== ======== ========== ========
FORT HOWARD CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1995 1994
------------ ------------
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 441 $ 422
Receivables, less allowances of $1,836 in 1995
and $1,589 in 1994 105,178 123,150
Inventories 172,663 130,843
Deferred income taxes 20,000 20,000
Income taxes receivable 700 5,200
---------- ----------
Total current assets 298,982 279,615
Property, plant and equipment 1,961,925 1,932,713
Less: Accumulated depreciation 683,619 611,762
---------- ----------
Net property, plant and equipment 1,278,306 1,320,951
Other assets 94,944 80,332
---------- ----------
Total assets $1,672,232 $1,680,898
========== ==========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 127,604 $ 100,981
Interest payable 25,735 84,273
Income taxes payable 653 224
Other current liabilities 68,013 75,450
Current portion of long-term debt 55,488 116,203
---------- ----------
Total current liabilities 277,493 377,131
Long-term debt 3,010,613 3,189,644
Deferred and other long-term income taxes 205,601 209,697
Other liabilities 36,696 41,162
Common Stock with put right -- 11,711
Shareholders' deficit:
Common Stock 634 381
Additional paid-in capital 895,652 600,090
Cumulative translation adjustment (1,722) (2,330)
Retained deficit (2,752,735) (2,746,588)
---------- ----------
Total shareholders' deficit (1,858,171) (2,148,447)
---------- ----------
Total liabilities and shareholders' deficit $1,672,232 $1,680,898
========== ==========
FORT HOWARD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
--------------------
1995 1994
---- ----
(In thousands)
Cash provided from (used for) operations:
Net loss $ (6,147) $ (45,101)
Depreciation 73,751 69,786
Non-cash interest expense 9,634 64,759
Deferred income tax credit (3,967) (19,698)
Pre-tax loss on debt repurchases 30,734 42,901
(Increase) decrease in receivables 17,972 (26,897)
Increase in inventories (41,820) (5,622)
Decrease in income taxes receivable 4,500 3,900
Increase in accounts payable 26,623 1,086
Decrease in interest payable (58,538) (19,770)
Increase in income taxes payable 429 776
All other, net (12,228) (8,321)
--------- ---------
Net cash provided from operations 40,943 57,799
Cash used for investment activity -
Additions to property, plant and equipment (32,150) (64,674)
Cash provided from (used for) financing activities:
Proceeds from long-term borrowings 1,438,900 750,000
Repayment of long-term borrowings (1,682,623) (721,034)
Debt issuance costs (49,155) (21,584)
Issuance (repurchase) of Common Stock,
net of offering costs 284,104 (97)
--------- ---------
Net cash provided from (used for) financing
activities (8,774) 7,285
--------- ---------
Increase in cash 19 410
Cash at beginning of period 422 227
--------- ---------
Cash at end of period $ 441 $ 637
========= =========
*****
FORT HOWARD CORPORATION
NOTES TO FINANCIAL INFORMATION
(Unaudited)
1. On April 15, 1995, the company completed a recapitalization plan (the
"Recapitalization") to prepay or redeem a substantial portion of its
indebtedness in order to reduce the level and overall cost of its debt,
extend certain debt maturities, increase shareholders' equity and enhance
its access to capital markets.
The Recapitalization included the following components:
(1) The offer and sale by the company of 25,000,000 shares of Common
Stock on March 16, 1995 and 269,555 shares of Common Stock on
April 12, 1995 at $12.00 per share (the "Offering");
(2) Entering into a bank credit agreement (the "New Bank Credit
Agreement") consisting of a $300 million revolving credit facility
(the "1995 Revolving Credit Facility"), an $810 million term loan
(the "1995 Term Loan A") and a $330 million term loan (the "1995
Term Loan B" and, together with the 1995 Term Loan A, the "New Term
Loans"); and entering into a receivables credit agreement consisting
of a $60 million term loan (the "1995 Receivables Facility");
(3) The application on March 16, 1995 of the net proceeds of the sale of
25,000,000 shares of Common Stock pursuant to the Offering, together
with borrowings under the New Term Loans, to prepay or redeem all
the Company's indebtedness outstanding under the 1988 Bank Credit
Agreement, 1993 Term Loan and Senior Secured Notes.
(4) The application on April 15, 1995 of borrowings under the New Term
Loans, the 1995 Receivables Facility and the 1995 Revolving Credit
Facility to redeem all outstanding 14 1/8% Debentures (at par) and
12 5/8% Debentures (at 102.5% of the principal amount thereof).
2. 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 the company's outstanding
12 5/8% Debentures at the 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 Notes on March 16, 1995, and the repurchase of all outstanding
12 5/8% Debentures and 14 1/8% Debentures on April 15, 1995. In the
first quarter of 1994, the company reported an extraordinary loss of
$28 million (net of income taxes of $15 million) representing the
redemption premiums and write-offs of deferred loan costs associated with
the repayment of $100 million of term loan indebtedness under the
company's 1988 Bank Credit Agreement on February 10, 1994 and the
repurchases of all the company's remaining 12 3/8% Notes and $238 million
of the company's 12 5/8% Debentures on March 11, 1994.
3. In September 1995, the company entered into account receivable sales
agreements which segregate certain domestic tissue receivables from the
company's other assets and liabilities in order to achieve a lower cost
of funds based on the credit quality of the receivables. As a result,
accounts receivable was reduced $60 million, the 1995 Receivables
Facility was repaid, and the interest cost on the 1995 Receivables
Facility of 2.5% over LIBOR has been effectively replaced by financing
costs equal to 0.25% to 0.65% over LIBOR on $60 million. In connection
with these agreements, additional revolving funds of up to $25 million
may be available to the company, resulting in further decreases in
accounts receivable and interest costs. On October 5, 1995, the company
made its initial draw under the revolving agreements of $8 million.
4. Assuming that all components of the Recapitalization had been consummated
as of January 1, 1995, for the first nine months of 1995, pro forma
interest expense would have decreased $16 million from $237 million to
$221 million. After adjusting the income tax (credit) for the decrease
in interest expense at an effective rate of 38.5%, the pro forma net
income (loss) before extraordinary item and pro forma net income (loss)
per share before extraordinary item (assuming that 63,371,000 weighted
average shares were outstanding for the period) would have been $22.6
million and $0.36 per share for the first nine months of 1995,
respectively.
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