Exhibit 99
NEWS
______________________________________________________________________________
For further information contact:
FORT HOWARD CORPORATION Media:
P. O. Box 19130 Cliff Bowers, Ext. 4087
Green Bay, WI 54307-9130 Financial:
414/435-8821 Mike Lempke, Ext. 2492
FOR RELEASE: IMMEDIATELY
FORT HOWARD EPS HITS $0.53 FOR 2ND QUARTER --
UP MORE THAN THREEFOLD,
OPERATING INCOME JUMPS 41.6%
GREEN BAY, WI - July 24, 1996 - Fort Howard Corporation today
reported net income per share (before an extraordinary item related to debt
repayment) of $0.53 for the second quarter ending June 30, 1996, compared to
net income per share of $0.12 in the second quarter of 1995.
"Our very strong consumer business, positive order patterns in our
commercial market and significantly lower recovered fiber costs were the
centerpieces of a very good quarter for Fort Howard," said Chairman and CEO,
Donald H. DeMeuse.
Fort Howard's operating income rose 41.6% in the second quarter of
1996 compared to the second quarter of 1995, and its operating income margin
for the quarter was 31.0% compared to 21.4% for the second quarter of 1995 and
29.6% for the first quarter of 1996.
-- More --
-- Ad One --
Significant Debt Reduction
"The strong business fundamentals and successful strategies that
helped to increase operating income 41% also enabled us to make significant
reductions in our long-term debt," according to DeMeuse.
As a result of the application of free cash flow and proceeds from
the company's May 1996 public equity offering, Fort Howard's long-term debt
has been reduced to $2.63 billion. That is by far the lowest point since the
company's 1988 LBO. Debt is currently down approximately $333 million from
the close of 1995.
Quarterly Sales Increase
Domestic tissue sales increased 6.8% for the second quarter of 1996
compared to second quarter 1995 due primarily to increased volume in consumer
products. Also, net sales of the company's international operations increased
3.3% for the second quarter of 1996 compared to second quarter 1995
principally due to higher selling prices. Offsetting sales increases at
domestic and international tissue operations were lower sales from the
company's recovered fiber brokerage operations resulting from lower prices.
For the second quarter, Fort Howard's consolidated net sales decreased 2.4% to
$402,397,000 compared to second quarter 1995 net sales of $412,110,000.
Domestic tissue sales increased 8.6% for the first six months of 1996
compared to 1995 due to a 8.7% increase in net selling prices on flat volume.
Net sales of the company's international operations increased 11.6% for the
first half of 1996 compared to 1995 due to an 11.4% increase in net selling
prices on flat volume at the company's United Kingdom facilities. Offsetting
sales increases at domestic and international tissue operations were lower
sales from the company's recovered fiber brokerage operations resulting from
lower prices. First half 1996 consolidated net sales were $788,144,000, an
increase of 1.1% over 1995 net sales of $779,486,000 for the same period.
-- More --
-- Ad Two --
Operating Income Increases
Operating income increased 41.6% to $124,699,000 for the second
quarter compared to $88,091,000 for the second quarter of 1995. Operating
income increased 50.4% to $238,902,000 in the first six months of 1996
compared to $158,866,000 for the first six months of 1995. The increase was
due to higher net selling prices and lower recovered fiber costs in both the
company's domestic and international operations.
For the second quarter of 1996, net income was $33,037,000 resulting
in net income for the first six months of 1996 of $59,977,000 compared to net
income of $7,619,000 and net loss of $20,647,000 for the same periods in 1995,
respectively. The net income per share before an extraordinary item was $0.53
and $0.96 per share for the second quarter and first six months of 1996,
compared to $0.12 per share for the second quarter of 1995 and a net loss per
share before an extraordinary item of $0.04 for the first six months of 1995.
Net income per share after an extraordinary item for the second quarter and
first six months of 1996 were $0.48 and $0.91 while net loss per share after
extraordinary items for the first six months of 1995 was $0.39.
In April 1995, the company completed a recapitalization, including an
IPO of 25 million shares of common stock. Had the recapitalization been
completed on January 1, 1995, net income per share for the second quarter and
first six months of 1995 would have been $0.15 and $0.13 per share on a pro
forma basis based on 63,371,000 shares outstanding.
Extraordinary losses related to debt repurchases in 1996 and 1995
(see Notes to Financial Information) impacted the company's financial
performance during the second quarter and first six months of 1996 and during
the first six months of 1995.
-- More --
-- Ad Three --
New Product Development Strategy
"We're intent on continuing Fort Howard's strong momentum in new
product development," DeMeuse said. "In the second quarter, we continued to
play out that core growth strategy with the introduction of four new or
improved product lines for the commercial market. This builds on the strong
first quarter entry into the premium segment with our PREFERENCE Ultra line."
Highlighting the second quarter product introductions is the new
Preference line of bath and facial tissue products targeted at the large mid-
range or "near-premium" segment of the away-from-home market.
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 consumer
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.
(Financial information and notes follow on separate pages. The notes are an
integral part of these statements.)
# # # # #
FORT HOWARD CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
(In thousands, except per share amounts)
Net sales $402,397 $412,110 $788,144 $779,486
Cost of sales 243,487 297,644 481,856 565,500
-------- -------- -------- --------
Gross income 158,910 114,466 306,288 213,986
Selling, general and
administrative 34,211 26,375 67,386 55,120
-------- -------- -------- --------
Operating income 124,699 88,091 238,902 158,866
Interest expense 66,201 76,311 136,974 163,081
Other expense
(income), net 475 (713) 1,038 (937)
-------- -------- -------- --------
Income (loss) before
taxes 58,023 12,493 100,890 (3,278)
Income tax expense
(credit) 21,646 4,874 37,573 (1,379)
-------- -------- -------- --------
Net income (loss) before
extraordinary item 36,377 7,619 63,317 (1,899)
Extraordinary item -
loss on debt
repurchases, net (3,340) -- (3,340) (18,748)
-------- -------- -------- --------
Net income (loss) $ 33,037 $ 7,619 $ 59,977 $(20,647)
======== ======== ======== ========
Net income (loss) per share:
Before extraordinary
item $ 0.53 $ 0.12 $ 0.96 $ (0.04)
Extraordinary item (0.05) -- (0.05) (0.35)
-------- -------- -------- --------
Net income (loss) $ 0.48 $ 0.12 $ 0.91 $ (0.39)
======== ======== ======== ========
FORT HOWARD CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1996 1995
------------ ------------
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 732 $ 946
Receivables, less allowances of $3,160 in 1996
and $2,883 in 1995 87,068 97,707
Inventories 135,623 163,076
Deferred income taxes 47,000 29,000
Income taxes receivable 700 700
---------- ----------
Total current assets 271,123 291,429
Property, plant and equipment 1,993,548 1,971,641
Less: Accumulated depreciation 754,638 706,394
---------- ----------
Net property, plant and equipment 1,238,910 1,265,247
Other assets 84,633 95,761
---------- ----------
Total assets $1,594,666 $1,652,437
========== ==========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 103,615 $ 112,384
Interest payable 60,984 64,375
Income taxes payable 2,621 1,339
Other current liabilities 77,121 85,351
Current portion of long-term debt 34,372 62,720
---------- ----------
Total current liabilities 278,713 326,169
Long-term debt 2,598,850 2,903,299
Deferred and other long-term income taxes 254,994 225,043
Other liabilities 35,184 36,355
Shareholders' deficit:
Common Stock 740 634
Additional paid-in capital 1,100,864 895,652
Cumulative translation adjustment (2,785) (2,844)
Retained deficit (2,671,894) (2,731,871)
---------- ----------
Total shareholders' deficit (1,573,075) (1,838,429)
---------- ----------
Total liabilities and shareholders' deficit $1,594,666 $1,652,437
========== ==========
FORT HOWARD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
--------------------
1996 1995
---- ----
(In thousands)
Cash provided from (used for) operations:
Net income (loss) $ 59,977 $ (20,647)
Depreciation 50,231 49,020
Non-cash interest expense 6,645 6,429
Deferred income tax (credit) expense 11,975 (11,774)
Pre-tax loss on debt repurchases 5,519 30,734
(Increase) decrease in receivables 10,639 (27,410)
(Increase) decrease in inventories 27,453 (33,284)
Increase in income taxes receivable -- 4,500
Increase (decrease) in accounts payable (8,769) 19,605
Decrease in interest payable (3,391) (21,440)
Increase (decrease) in income taxes payable 1,282 (180)
All other, net (8,891) (21,044)
--------- ---------
Net cash provided from (used for) operations 152,670 (25,491)
Cash used for investment activity:
Additions to property, plant and equipment (24,384) (23,119)
Cash provided from (used for) financing activities:
Proceeds from long-term borrowings 192 1,428,800
Repayment of long-term borrowings (332,529) (1,616,001)
Debt issuance costs (1,481) (48,421)
Issuance of Common Stock, net of offering costs 205,318 284,104
--------- ---------
Net cash provided from (used for)
financing activities (128,500) 48,482
--------- ---------
Decrease in cash (214) (128)
Cash at beginning of period 946 422
--------- ---------
Cash at end of period $ 732 $ 294
========= =========
*****
FORT HOWARD CORPORATION
NOTES TO FINANCIAL INFORMATION
(Unaudited)
1. In May and June 1996 the company sold 10.52 million primary shares of
common stock in a registered public offering. The net proceeds of the
offering were used to reduce outstanding bank debt. Also included in the
offering were 6.52 million secondary shares of common stock sold by certain
shareholders of Fort Howard. The company did not receive any of the proceeds
from the sale of shares by the selling shareholders. In connection with the
offering in the second quarter of 1996, the company reported an extraordinary
loss of $3 million (net of income taxes of $2 million) representing write-offs
of deferred loan costs associated with the prepayment of indebtedness
outstanding under the company's 1995 Bank Credit Agreement on May 15, 1996.
2. The company completed a recapitalization, including an IPO of 25
million shares of common stock, in April 1995.
A. In connection with the April 1995 recapitalization, 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% Subordinated 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 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 second quarter and
first six months of 1995, pro forma interest expense would
have decreased $2.6 million and $16.2 million from amounts
reported to $74 million and $147 million respectively. After
adjusting the income tax (credit) for the decrease in interest
expense at an effective rate of 38.5%, the pro forma net
income before extraordinary item and pro forma net income per
share before extraordinary item (assuming that 63,371,000
weighted average shares were
outstanding for the periods) would have been $9.2 million and
$0.15 per share for the second quarter of 1995 and $8.1
million and $0.13 per share for the first six months of 1995,
respectively.
# # # # #