-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, I2STSA6zVZ7ohygZQ2tYf5pedMpTbdQmPsVElYcqt1+1Rs7fdYpqBVTFiSdnrpok SySgwYi5H6mpjZ2y4udD5Q== 0000038195-94-000058.txt : 19941031 0000038195-94-000058.hdr.sgml : 19941031 ACCESSION NUMBER: 0000038195-94-000058 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19941028 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FORT HOWARD CORP CENTRAL INDEX KEY: 0000038195 STANDARD INDUSTRIAL CLASSIFICATION: 2621 IRS NUMBER: 391090992 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-51557 FILM NUMBER: 94555616 BUSINESS ADDRESS: STREET 1: 1919 S BROADWAY CITY: GREEN BAY STATE: WI ZIP: 54304 BUSINESS PHONE: 4144358821 MAIL ADDRESS: STREET 1: P O BOX 19130 CITY: GREEN BAY STATE: WI ZIP: 54307-9130 FORMER COMPANY: FORMER CONFORMED NAME: FORT HOWARD PAPER CO/DE DATE OF NAME CHANGE: 19870506 FORMER COMPANY: FORMER CONFORMED NAME: MARYLAND CUP CORP/WI DATE OF NAME CHANGE: 19840612 FORMER COMPANY: FORMER CONFORMED NAME: FORT HOWARD PAPER CO DATE OF NAME CHANGE: 19830926 424B3 1 Filed Pursuant to Rule 424(b)(3) of the Rules and Regulations Under the Securities Act of 1933 Registration Statement Nos. 33-23826, 33-43448, 33-51876 and 33-51557 PROSPECTUS SUPPLEMENT (To Prospectus dated July 6, 1994) FORT HOWARD CORPORATION 12-5/8% Subordinated Debentures Due 2000 14-1/8% Junior Subordinated Discount Debentures Due 2004 9-1/4% Senior Notes Due 2001 10% Subordinated Notes Due 2003 8-1/4% Senior Notes Due 2002 9% Senior Subordinated Notes Due 2006 1991 Pass Through Trust, Pass Through Certificates, Series 1991 - - - - - - - - - - - - - - - RECENT DEVELOPMENTS Attached hereto and incorporated by reference herein is the news release announcing Fort Howard Corporation's financial results for the quarter ended September 30, 1994. - - - - - - - - - - - - - - - This Prospectus Supplement, together with the Prospectus, is to be used by Morgan Stanley & Co. in connection with offers and sales of the above-referenced securities in market-making transactions at negotiated prices related to prevailing market prices at the time of sale. Morgan Stanley & Co. Incorporated may act as principal or agent in such transactions. October 28, 1994 For the third quarter, Fort Howard's net sales increased 10.2% to $340,068,000 compared to third quarter 1993 net sales of $308,611,000. For the first nine months of 1994, net sales were $930,697,000, an increase of 3.9% over 1993 net sales of $895,768,000 for the same period. Operating income for the third quarter of 1994 was $85,184,000 compared to an operating loss of $1,905,301,000 for the third quarter of 1993. The operating loss in the third quarter of 1993 resulted primarily from the write- off of Fort Howard's then remaining goodwill balance of $1.98 billion. Excluding the goodwill write-off and amortization and the reversal of accrued employee stock compensation expense from 1993 results, operating income would have increased 5.3% for the third quarter of 1994 compared to the third quarter of 1993. Operating income was $224,206,000 in the first nine months of 1994 compared to an operating loss of $1,788,089,000 for the first nine months of 1993. Excluding the goodwill write-off and amortization and the reversal of accrued employee stock compensation expense from 1993 results, operating income would have decreased 1.3% for the first nine months of 1994 compared to the first nine months of 1993. For the third quarter of 1994, earnings before depreciation, interest, amortization and taxes (EBDIAT) increased 6.8% to $109,191,000 from $102,259,000 in the third quarter of 1993. For the first nine months of 1994, EBDIAT increased 1.4% to $293,992,000 from $289,975,000 in the first nine months of 1993. Third quarter net sales increased in 1994 due to higher domestic tissue net selling prices and, to a lesser degree, higher domestic tissue sales volume. The net sales increase was also significantly affected by higher net selling prices at the Company's wastepaper brokerage subsidiary. The increase in operating income for the third quarter of 1994 reflects the higher domestic tissue net selling prices and sales volume, offset by rising wastepaper costs both domestically and in the U.K., and the increased proportion of net sales represented by the Company's wastepaper brokerage subsidiary which typically has lower margins than the Company's tissue operations. On October 14, 1994, the company entered into an amendment of its Bank Credit Agreement, 1993 Term Loan Agreement and Senior Secured Note Agreement. Among other things, this amendment adjusted certain financial covenants, including the reduction of the required ratio of earnings before non-cash charges, interest and taxes to cash interest through December 31, 1995. The ratio was adjusted because of the company's higher aggregate cash interest expense which will result from the company's 14 1/8% Debentures accruing interest in cash beginning on November 1, 1994, with cash interest payments commencing on May 1, 1995. Extraordinary losses related to debt repurchases in 1994 and 1993 (See Notes to Financial Information) impacted the company's financial performance in the first nine months of 1994 and 1993. The company reported net income of $290,000 during the third quarter of 1994 compared to a net loss of $1,986,260,000 for the third quarter of 1993. For the first nine months of 1994, the net loss decreased to $45,101,000 from $2,046,048,000 for the first nine months of 1993. The large losses in 1993 resulted primarily from the write-off of Fort Howard's then remaining goodwill balance of $1.98 billion. (Financial information and notes follow on separate pages. The notes are an integral part of this statement.) # # # # # FORT HOWARD CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1994 1993 1994 1993 ---- ---- ---- ---- (In thousands) Net Sales $340,068 $ 308,611 $930,697 $ 895,768 Cost of Sales 227,338 199,786 624,399 590,147 -------- ----------- -------- ----------- Gross Income 112,730 108,825 306,298 305,621 Selling, General and Administrative--Note 3 27,546 19,508 82,092 70,707 Amortization of Goodwill-- Note 2 -- 14,191 -- 42,576 Goodwill Write-off--Note 2 -- 1,980,427 -- 1,980,427 -------- ----------- -------- ----------- Operating Income (Loss) 85,184 (1,905,301) 224,206 (1,788,089) Interest Expense 84,209 84,845 251,562 259,157 Other Expense (Income), Net--Note 4 (87) (5,471) 215 (5,475) -------- ----------- -------- ----------- Income (loss) Before Taxes 1,062 (1,984,675) (27,571) (2,041,771) Income Taxes (Credit) 772 1,585 (10,640) (5,483) -------- ----------- -------- ----------- Income (loss) Before Extraordinary Item 290 (1,986,260) (16,931) (2,036,288) Extraordinary Item -- Losses on Debt Repurchases, Net--Note 1 -- -- (28,170) (9,760) -------- ----------- -------- ----------- Net Income (Loss) $ 290 $(1,986,260) $(45,101) $(2,046,048) ======== =========== ======== =========== ***** FORT HOWARD CORPORATION NOTES TO FINANCIAL INFORMATION 1. In the first nine months 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 Bank Credit Agreement on February 10, 1994 and the repurchases of all the company's remaining 12 3/8% Senior Subordinated Notes and $238 million of the company's 12 5/8% Subordinated Debentures on March 11, 1994. In the first nine months of 1993, the company reported 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 indebtedness under the company's Bank Credit Agreement on March 23, 1993 and the repurchases of all the company's Junior Subordinated Debentures on April 21, 1993. 2. The Company's goodwill balance was originally recorded as an intangible asset at the time of its leveraged buyout in 1988. In the third quarter of 1993, the Company concluded its previously announced study to evaluate the carrying value of its goodwill. Low industry operating rates, aggressive competitive activity, overcapacity, adverse economic conditions and other factors had been adversely affecting tissue industry operating conditions and the Company's operating results from 1991 through the third quarter of 1993. Accordingly, the Company revised its projections as of September 30, 1993 and determined that its projected results would not support the future amortization of the Company's remaining goodwill balance of approximately $1.98 billion at September 30, 1993. As a result, the Company wrote-off its remaining goodwill balance in the third quarter of 1993. 3. Also in 1993, due to the effects of adverse tissue industry operating conditions on its long-term earnings forecast as of September 30, 1993, the Company decreased the estimated fair market valuation of its common stock and, as a result, reversed all previously accrued employee stock compensation expense in the third quarter of 1993. The reversal of accrued employee stock compensation expense resulted in a reduction of selling, general and administrative expenses of $8.4 million and $7.8 million for the third quarter and first nine months of 1993, respectively. 4. Other income in the third quarter of 1993 includes a $5.1 million gain upon the disposition of the Company's then remaining equity interest in Sweetheart Holdings Inc. ("Sweetheart"), the Company's former North American cup operations. The Company had previously reduced the carrying value of its investment in Sweetheart to zero in 1991. ##### -----END PRIVACY-ENHANCED MESSAGE-----