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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 2, 1994
THE MEAD CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 1-2267 31-0535759
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
MEAD WORLD HEADQUARTERS
COURTHOUSE PLAZA NORTHEAST
DAYTON, OHIO 45463
(Address of principal executive offices)
513-495-6323
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 2, 1994, The Mead Corporation, an Ohio corporation
(the "Registrant"), consummated the disposition of its Mead Data Central
division and certain related assets and subsidiaries (the "Business") to
Reed Elsevier plc, an English corporation, and certain of its affiliates
(collectively, "Reed") pursuant to a Purchase Agreement dated as of
October 4, 1994 by and among the Registrant, Reed Elsevier plc and certain
affiliated entities, as amended by an Amendment dated as of December 2,
1994.
The purchase price paid by Reed for the Business was
approximately $1.5 billion, subject to certain post-closing adjustments.
The purchase price was established through arms' length negotiations
following the solicitation, receipt and consideration of proposals from
various interested parties.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Not Applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed statements of earnings
for the three quarters ended October 2, 1994, and the year ended
December 31, 1993, set forth the results of operations of the
Registrant as reported and as adjusted as though the sale of the
Business had been completed at the beginning of the periods
presented. The unaudited condensed statements of earnings reflect
the elimination of interest expense on the debt that is anticipated
to be retired and the related tax benefit as well as the historical
operating results of the Business. No effect of possible uses of
the remaining proceeds is reflected.
The following unaudited pro forma condensed balance sheet as of
October 2, 1994, reflects the financial position of the Registrant
as reported and as adjusted as though the sale of the Business had
been completed at October 2, 1994. The unaudited pro forma
condensed balance sheet reflects the elimination of the assets and
liabilities of the Business, the net proceeds of the sale, and the
redemption and/or repurchase of certain short and long-term debt of
the Registrant.
These unaudited pro forma condensed financial statements have been
prepared by the Registrant based upon assumptions deemed
appropriate. The accompanying pro forma condensed financial
statements should be read in conjunction with the historical
financial statements and notes thereto included in the Registrant's
Quarterly Report on Form 10-Q for the three quarters ended October
2, 1994 and Annual Report on Form 10-K for the year ended December
31, 1993.
These unaudited pro forma financial statements are presented for
illustrative purposes only and are not necessarily indicative of the
financial position or results of operations which would actually
have been reported had the transactions been in effect during the
period reported or which may be reported in the future.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- ---------------------------------------------------
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
- --------------------------------------------
AS OF OCTOBER 2, 1994
- -----------------------
(All dollar amounts in millions)
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
Assets Statements Adjustments Results
- ------ ---------- ---------- ----------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 19.1 $ 481.2 $ 500.3
Accounts receivable 626.3 626.3
Inventories 382.4 382.4
Other current assets 73.1 73.1
---------- ---------- ----------
Total current assets 1,100.9 481.2 1,582.1
Investments and other assets:
Investees 88.9 88.9
Other assets 408.5 408.5
---------- ---------- ----------
497.4 497.4
Property, plant and equipment 4,251.9 4,251.9
Less accumulated depreciation and
amortization (1,922.7) (1,922.7)
---------- ---------- ----------
2,329.2 2,329.2
Net assets of Electronic Publishing segment 362.6 (362.6)
---------- ---------- ----------
Total assets $ 4,290.1 $ 118.6 $ 4,408.7
========== ========== ==========
LIABILITIES AND SHAREOWNERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable $ 76.1 $ (76.1) $
Accounts payable 311.1 311.1
Accrued liabilities 317.7 317.7
Current maturities of long-term debt 11.8 11.8
---------- ---------- ----------
Total current liabilities 716.7 (76.1) 640.6
Long-term debt 1,356.0 (514.5) 841.5
Commitments and contingent liabilities
Deferred items 537.8 91.0 628.8
Shareowners' equity:
Common shares 177.4 177.4
Additional paid-in capital 36.9 36.9
Foreign currency translation adjustment (2.1) (2.1)
Net unrealized gain on securities 4.9 4.9
Retained earnings 1,462.5 618.2 2,080.7
---------- ---------- ----------
1,679.6 618.2 2,297.8
---------- ---------- ----------
Total liabilities and
shareowners' equity $ 4,290.1 $ 118.6 $ 4,408.7
========== ========== ==========
</TABLE>
See notes to unaudited pro forma condensed financial statements
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- ---------------------------------------------------
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF EARNINGS
- -----------------------------------------------------
(All amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Quarters Ended Year Ended
October 2, 1994 December 31, 1993
---------------------------------- ----------------------------------
Historical Historical
Statements Statements
Excluding Excluding
Discontinued Pro Forma Pro Forma Discontinued Pro Forma Pro Forma
Operations Adjustments Results Operations Adjustments Results
------------ ---------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 3,381.7 $ $ 3,381.7 $ 4,239.0 $ $ 4,239.0
Cost of products sold 2,813.3 2,813.3 3,550.7 3,550.7
------------ ---------- ------------ ------------ ---------- ----------
Gross profit 568.4 568.4 688.3 688.3
Selling, administrative and
research expenses 379.9 379.9 467.7 467.7
------------ ---------- ------------ ------------ ---------- ----------
Earnings from operations 188.5 188.5 220.6 220.6
Other revenues .4 .4 9.0 9.0
Interest and debt expense (77.6) 27.4 (50.2) (94.6) 28.9 (65.7)
------------ ---------- ------------ ------------ ---------- ----------
Earnings from continuing operations
before income taxes 111.3 27.4 138.7 135.0 28.9 163.9
Income taxes 44.5 11.0 55.5 57.7 11.6 69.3
------------ ---------- ------------ ------------ ---------- ----------
Earnings from continuing operations
before equity in earnings of investees 66.8 16.4 83.2 77.3 17.3 94.6
Equity in net earnings of investees 35.4 35.4 18.4 18.4
------------ ---------- ------------ ------------ ---------- ----------
Earnings from continuing operations $ 102.2 $ 16.4 $ 118.6 $ 95.7 $ 17.3 $ 113.0
============ ========== ============ ============ ========== ==========
Earnings from continuing operations
per common and common equivalent share $1.70 $1.98 $1.61 $1.89
Average common and common equivalent
shares outstanding 62.5 (2.6) 59.9 59.6 59.6
</TABLE>
See notes to unaudited pro forma condensed financial statements
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
- -----------------------------------------------------------
(All dollar amounts in millions)
A. The sale of Mead Data Central (MDC) will result in cash proceeds
of approximately $1,500 and a related after tax gain of
approximately $631. Adjustments have been recorded in the
unaudited pro forma balance sheet to reflect the receipt of the
proceeds, the recognition of the anticipated gain, payment of
related income taxes and other expenses and the disposition of the
net assets of MDC. The gain is not expected to change
significantly when the recording of the sale is finalized.
MDC was presented as a discontinued operation in the Quarterly
Report on Form 10-Q for the quarterly period ended October 2,
1994. As such, the only adjustment made to the historical results
presented in the pro forma historical statement of earnings is the
omission of earnings from discontinued operations. For the
historical statement of earnings for the year ended December 31,
1993, the results of MDC's operations have been removed. The
corresponding adjustments required are the following:
Historical
Statements as
Discontinued Adjusted for
Historical Operations Discontinued
Statements Adjustments Operations
---------- ------------ -----------
Net sales $ 4,790.3 $(551.3) $ 4,239.0
Cost of products sold 3,834.5 (283.8) 3,550.7
---------- ------------ -----------
Gross profit 955.8 (267.5) 688.3
Selling, administrative and
research expenses 685.1 (217.4) 467.7
---------- ------------ -----------
Earnings from operations 270.7 (50.1) 220.6
Other revenues 9.3 (.3) 9.0
Interest and debt expense (96.2) 1.6 (94.6)
---------- ------------ -----------
Earnings before income taxes 183.8 (48.8) 135.0
Income taxes 78.1 (20.4) 57.7
---------- ------------ -----------
Earnings before equity in
net earnings of investees 105.7 (28.4) 77.3
Equity in net earnings
of investees 18.4 18.4
---------- ------------ -----------
Earnings from continuing
operations $ 124.1 $ (28.4) $ 95.7
========== ============ ===========
<PAGE>
B. The Registrant has called its 6-3/4% convertible subordinated
debentures and 9% debentures. In addition, the company intends to
pay off all of its short term borrowings including those classified
as long term. Adjustments made to the pro forma balance sheet
reflect elimination of the debt and the recording of an
extraordinary loss on extinguishment of the debt, net of tax.
Adjustments made to the pro forma statements of earnings reflect
elimination of interest expense on the debt and the related tax
benefit.
C. Due to the retirement of the debt in Note B, common stock
equivalents were excluded from the calculation of earnings per share
for the three quarters ended October 2, 1994, and year ended
December 31, 1993. For the three quarters ended October 2, 1994,
the retirement had the effect of decreasing average common and
common equivalent shares outstanding by approximately 2.6 million shares.
The retirement had no effect on the year ended December 31, 1993,
calculation as the common stock equivalents were anti-dilutive.
(c) Exhibits
1. Purchase Agreement dated as of October 4, 1994 by and among the
Registrant, Reed Elsevier plc and certain affiliated entities is
incorporated by reference to exhibit (10)(1) to the Quarterly Report
on Form 10-Q filed by the Registrant with the Securities and Exchange
Commission on November 10, 1994.
2. Amendment dated as of December 2, 1994 by and among the Registrant,
Reed Elsevier plc and certain affiliated entities.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
THE MEAD CORPORATION
By: WILLIAM R. GRABER
----------------------
William R. Graber
Vice-President and Chief
Financial Officer
Date: December 14, 1994
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
1. Purchase Agreement dated as of October 4, 1994
by and among The Mead Corporation, Reed
Elsevier plc and certain affiliated entities is
incorporated by reference to exhibit (10)(1) to
the Quarterly Report on Form 10-Q filed by The
Mead Corporation with the Securities and Exchange
Commission on November 10, 1994.
2. Amendment dated as of December 2, 1994 by and
among The Mead Corporation, Reed Elsevier plc and
certain affiliated entities.
<PAGE>
Exhibit 2
AMENDMENT
---------
AMENDMENT, dated as of December 2, 1994, by and among Seller, Parent
and Buyers.
WHEREAS, pursuant to the terms and conditions of the Purchase
Agreement (the "Purchase Agreement") dated as of October 4, 1994, by and
among Seller, Parent and Buyers, Seller has agreed to sell to Buyers, and
Buyers have agreed to purchase from Seller, the Business as a going
concern, as more fully described in the Purchase Agreement; and
WHEREAS, Seller, Parent and Buyers desire to amend the Purchase
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, agreements and conditions hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree as follows:
1. Capitalized terms which are used but not defined in this
Amendment shall have the meanings ascribed to such terms in the Purchase
Agreement.
2. The phrase "Closing Date", as it appears on the sixth
and seventh lines of Section 1.3 of the Purchase Agreement, is hereby
deleted and replaced with "December 2, 1994".
3. A new Section 1.7 is hereby added to Article I of the
Purchase Agreement, which Section 1.7 reads as follows:
"Section 1.7 Closing Date. The parties agree that for
------------
purposes of (i) Section 1.6 hereof and (ii) the definition of
"Statement" found in Article X hereof and Section 1.6 of the
Disclosure Schedule only, the Closing Date shall be deemed to be the
close of business on November 30, 1994. For all other purposes of
this Purchase Agreement, including, without limitation, Article IX
hereof, the Closing shall be deemed to have taken place on, and the
Closing Date is, December 2, 1994. The parties further agree that
notwithstanding any provision of this Purchase Agreement or the
Related Agreements, Buyers shall be entitled to all cash received
with respect to the operation of the Business after the close of
business on November 30, 1994 and that Buyers shall be responsible
for, and shall indemnify Seller with respect to, all expenses or
other costs incurred in the ordinary course of the Business
(including, without limitation, all Taxes incurred in the ordinary
course of the Business, but excluding Taxes attributable to the
transactions contemplated by this Agreement, the treatment of which
will continue to be governed by the other provisions of this
Agreement) incurred with respect to the operations of the Business
after such date."
<PAGE>
4. Section 2.3 of the Purchase Agreement is hereby deleted
in its entirety and replaced with the following:
"Section 2.3 No Ongoing or Transition Services. Except (i)
----------------------------------
for certain services (collectively, the "Services") to be provided
pursuant to a transition services agreement in substantially the
form attached hereto (the "Transition Services Agreement"), (ii) for
certain services related to employee benefits to be provided
pursuant to an Employee Benefits Transition Services Agreement in
substantially the form attached hereto, (iii) as identified in
Section 2.3 of the Disclosure Schedule and (iv) as otherwise agreed
to by Seller and Buyers, at the Closing, all data processing
services, real estate and construction services activities, cash
management and property and casualty insurance activities,
purchasing and logistics services, corporate-wide productivity
improvement programs regarding benefits administration and certain
financial matters and other products or services provided (x) to
MDC, any of the Other Divisions or any of the Companies by Seller or
any affiliates of Seller (other than MDC, any of the Other Divisions
or any of the Companies by Seller or any affiliates of Seller (other
than MDC, any of the Other Divisions or any of the Companies) or (y)
to Seller or any affiliates of Seller (other than MDC, any of the
Other Divisions or any of the Companies) by MDC, any of the Other
Divisions or any of the Companies including any agreements or
understandings (written or oral) with respect thereto, will
terminate."
5. The last sentence of Section 5.4(b) of the Purchase
Agreement is hereby deleted in its entirety and replaced with the
following:
"Notwithstanding the foregoing, Buyer and Seller acknowledge
that, in full satisfaction of Seller's obligations under this
Section 5.4(b), Buyer shall be entitled to $24,000,000, $21,000,000
of which shall be payable at the Closing and offset against the
Purchase Price and $3,000,000 of which shall be used to offset the
costs incurred by Buyer pursuant to the Transition Services
Agreement."
6. Section 6.10 of the Purchase Agreement is hereby deleted
in its entirety and replaced with the following:
"Section 6.10 Prepaid Subscriptions. Seller and Buyers agree
---------------------
that an amount of accounts receivable (net of reserves) equal to the
Prepaid Subscriptions of Seller on the Closing Date shall be treated
as transferred by Seller in consideration of the assumption by
Buyers of the obligation to fulfill the Prepaid Subscriptions. For
the purposes of the preparation and filing of all Tax Returns, the
actual cost to fulfill the Prepaid Subscriptions of the Seller on
the Closing Date shall be an amount equal to the sum of (i) 100% of
the prepaid subscription amount relating to law school customers and
(ii) 22% of the prepaid subscription amount relating to non-law
school customers."
7. The definition of "Buyers" in Article X of the Purchase
Agreement is hereby deleted in its entirety and replaced with the
following:
<PAGE>
"Buyers" means REI, Reed Elsevier Properties Inc., a Delaware
corporation, Reed Elsevier (UK) Limited, an English limited company,
Butterworths Canada Ltd., an Ontario corporation, Lexis Document
Services Inc., a Delaware corporation, Reed Exhibition Companies
Inc., an Ontario corporation, and Werk-Verlag Dr. Edmund
Banachewski, a German limited company, collectively, or, as the
context indicates, company, collectively, or, as the context
indicates, one or more of Buyers as purchaser of the relevant Assets
or as successors to the relevant portion of the Business. All of
the Buyers are indirectly wholly-owned subsidiaries of Parent."
8. Section 1.1(a) of the Disclosure Schedule is hereby
deleted in its entirety and replaced with the following:
<PAGE>
ASSETS TO BE ACQUIRED BY EACH BUYER
Section 1.1 (a)
---------------
Buyer Asset Description1 Comments
- ---------------------- --------------------- -------------------
REI<F2> 1.1(a)(1) Other than the owned
property located at
5072 North 300 West,
Provo, Utah
REI 1.1(a)(ii) See footnote 3
REUKL<F4> 1.1(a)(ii) See footnote 5
BCL<F6> 1.1(a)(ii) See footnote 7
LDS<F8> 1.1(a)(ii) See footnote 9
------------------------
[FN]
1 References are to provisions of the Purchase Agreement dated as of
October 4, 1994 and as amended hereby (the "Agreement")
2 REI = Reed Elsevier Inc. (Massachusetts corporation). REI is also
acquiring, pursuant to Section 1.1(b) of the Agreement, the entire
issued shared capital of each of Reman and Derman from Mead Realty.
3 To extent the assets are not used in the UK or Canadian branches
of MDC International, or the Lexis Document Services division of
Mead.
4 REUKL = Reed Elsevier (U.K.) Limited (English company).
5 To extent such assets are used in UK branch of MDC International
(UK branch assets to be acquired by REUKL).
6 BCL = Butterworths Canada Ltd. (Canadian company).
7 To extent such assets are used in Canadian branch of MDC
International (Canadian branch assets to be acquired by BCL).
8 LDS = Lexis Document Services Inc. (Delaware corporation).
<PAGE>
Buyer Asset Description Comments
- ---------------------- ---------------------- ----------------------
REI 1.1(a)(iii)
REI 1.1(a)(iv)
REI 1.1(a)(v) See footnote 3
REUKL 1.1(a)(v) See footnote 5
BCL 1.1(a)(v) See footnote 7
LDS 1.1(a)(v) See footnote 9
REI 1.1(a)(vi)
REI 1.1(a)(viii) Folio and LCC shares
REPI<F10> 1.1(a)(viii) Shares of Lexis, Inc.;
Nexis, Inc.; The
Michie Company;
Jurisoft Licensing
Corp.
WVDEB<F11> 1.1(a)(vii) Shares of Mead Data
Central International
GmbH
REC<F12> 1.1(a)(ix)
REI 1.1(a)(x) See footnote 3
REUKL 1.1(a)(x) See footnote 5
BCL 1.1(a)(x) See footnote 7
REI 1.1(a)(xi) See footnote 3
------------------------
[FN]
9 To extent such assets are used in Lexis Document Services division
of Mead.
10 REPI = Reed Elsevier Properties Inc. (Delaware corporation).
11 WVDEB = Werk-Verlag Dr. Edmund Banachewski GmbH (German company).
12 REC = Reed Exhibition Companies Inc. (Canadian company)
<PAGE>
Buyer Asset Description Comments
- ---------------------- ---------------------- ----------------------
REUKL 1.1(a)(xi) See footnote 5
BCL 1.1(a)(xi) See footnote 7
LDS 1.1(a)(xi) See footnote 9
REPI 1.1(a)(xii) All trademarks,
registered Michie
copyrights (and
pending applications
for registration of
Michie copyrights)
REI 1.1(a)(xii) All patents,
applications for
patents, MDC-
registered copyrights
(and pending
applications for
registration of MDC
copyrights), and all
other intellectual
property and
proprietary rights not
otherwise transferred
to REPI
REI 1.1(a)(xiii) See footnote 3
REUKL 1.1(a)(xiii) See footnote 5
BCL 1.1(a)(xiii) See footnote 7
LDS 1.1(a)(xiii) See footnote 9
REI 1.1(a)(xiv) See footnote 3
REUKL 1.1(a)(xiv) See footnote 5
BCL 1.1(a)(xiv) See footnote 7
LDS 1.1(a)(xiv) See footnote 9
REI 1.1(a)(xv)
REI 1.1(a)(xvi) See footnote 3
<PAGE>
Buyer Asset Description Comments
- ---------------------- ---------------------- ----------------------
REUKL 1.1(a)(xvi) See footnote 5
BCL 1.1(a)(xvi) See footnote 7
LDS 1.1(a)(xvi) See footnote 9
REI 1.1(a)(xvii) See footnote 3
REUKL 1.1(a)(xvii) See footnote 5
BCL 1.1(a)(xvii) See footnote 7
LDS 1.1(a)(xvii) See footnote 9
All Buyers 1.1(a)(xviii) Allocated per underly-
ing Assets
All Buyers 1.1(a)(xix) Allocated per underly-
ing Assets
REI 1.1(a)(xx)
<PAGE>
9. Except as otherwise expressly set forth herein, the
Purchase Agreement shall remain unaffected and in full force and effect in
accordance with the terms and conditions thereof. All references to the
term "Agreement" shall be deemed to refer to the Purchase Agreement as
originally executed and as amended hereby.
10. This Amendment may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York (regardless of laws that
might otherwise govern under applicable principles of conflicts of laws
thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the
date first above written.
THE MEAD CORPORATION
By: THOMAS E. PALMER
---------------------------------------
Thomas E. Palmer
Vice President
REED ELSEVIER PLC
By: HERMAN J. BRUGGINK
---------------------------------------
Herman J. Bruggink
Director
REED ELSEVIER INC.
By: HERMAN J. BRUGGINK
--------------------------------------
Herman J. Bruggink
Vice Chairman
REED ELSEVIER PROPERTIES INC.
By: MARK L. SEELEY
--------------------------------------
Mark L. Seeley
President
REED ELSEVIER (U.K.) LIMITED
By: HERMAN J. BRUGGINK
--------------------------------------
Herman J. Bruggink
Authorized Representative
BUTTERWORTHS CANADA LTD.
By: HERMAN J. BRUGGINK
-------------------------------------
Herman J. Bruggink
Authorized Representative
WERK-VERLAG DR EDMUND BANACHEWSKI GmbH
By: HERMAN J. BRUGGINK
--------------------------------------
Herman J. Bruggink
Authorized Representative
REED EXHIBITION COMPANIES INC.
By: HERMAN J. BRUGGINK
---------------------------------------
Herman J. Bruggink
Authorized Representative
LEXIS DOCUMENT SERVICES INC.
By: HERMAN J. BRUGGINK
--------------------------------------
Herman J. Bruggink
President
