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
January 23, 1997
Date of Report (Date of earliest event reported)
THE MEAD CORPORATION
(Exact name of Registrant as specified in its charter)
Ohio 1-2267 31-0535759
(State of Commission (IRS Employer
Incorporation) File Identification
Number)
Mead World Headquarters, Courthouse Plaza, Northeast
Dayton, Ohio 45463
(Address of principal executive offices)
937-495-6323
(Registrant's telephone No.)
Not Applicable
(Former name or former address, if changed since last report)
ITEM I. CHANGES IN CONTROL OF REGISTRANT
Not applicable.
ITEM II. ACQUISITION OR DISPOSITION OF ASSETS
Not applicable.
ITEM III. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM IV. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM V. OTHER EVENTS
On January 23, 1997, the Registrant issued a news
release reporting certain financial results for the
year ended December 31, 1996, attached hereto as
Exhibit 1.1.
ITEM VI. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not applicable.
ITEM VII. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Not applicable.
(b) Pro Forma Financial Information:
Not applicable.
(c) Exhibits:
1.1 Press release, dated January 23, 1997.
ITEM VIII. CHANGES IN FISCAL YEAR
Not applicable.
Signatures
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 thereunto duly autho-
rized.
The Mead Corporation
(Registrant)
Date: January 24, 1997 /s/ David L. Santez
Dayton, Ohio David L. Santez, Esq.
Assistant Secretary and
Associate General Counsel
EXHIBIT INDEX
Page
1.1 Press release dated January 23, 1997 6
EXHIBIT 1.1
Corporate Communications Department
World Headquarters
Courthouse Plaza Northeast
Dayton, Ohio 45463
513-495-6323
MEAD REPORTS YEAR-END AND FOURTH-QUARTER RESULTS
DAYTON, Ohio. January 23, 1997--The Mead
Corporation today reported full-year net earnings of
$195.3 million, or $3.67 per share, compared to $350.0
million, or $6.33 per share, in 1995. Net sales for the
year were $4.71 billion compared to $5.18 billion in
1995. While sales volume for many products was ahead of
last year, overall sales and earnings declined on sub-
stantially lower prices for pulp, paper and
containerboard.
"While 1996 was a difficult year in the market,
it was a solid year for Mead," said Steven C. Mason,
chairman and chief executive officer. "It was our third
best year ever in earnings per share from continuing
operations. We significantly strengthened our positions
in coated paper and corrugating medium with major growth
projects. We also advanced our company-wide productivity
initiative, resulting in a compounded productivity in-
crease of 12 percent over the past five years."
For the fourth quarter of 1996, net earnings
were $29.2 million, or 55 cents per share. Comparable
fourth quarter 1995 earnings from continuing operations
were $74.1 million, or $1.37 per share. As reported,
1995 fourth quarter net earnings of $81.6 million, or
$1.51 per share, included a net gain of $7.5 million, or
14 cents per share, resulting from adjustments related to
the sale of Mead's electronic publishing business.
Fourth quarter sales were $1.15 billion, compared to
$1.14 billion in 1995.
Mason said that "demand in some product areas,
such as coated paper and corrugating medium, is improv-
ing. Other areas, such as carbonless and specialty
papers, remain strong. Overall, however, market and
price uncertainties remain."
He added that Mead has been pleased with the
operation of the Rumford, Maine, mill, it acquired for
$640 million in November from Boise Cascade.
"The integration of the Rumford mill into
Mead's paper system is underway, and we are seeing evi-
dence of increased sales volume through our broader
distribution system," Mason said. "Mead has made much
progress during the last five years. However, we are not
satisfied and continue to aggressively seek out opportu-
nities to improve our competitiveness in both strong and
weak markets."
Paper
Lower prices for coated paper led to lower
earnings for the paper segment during the fourth quarter
and the full year. The sales volume of coated, carbon-
less, and specialty papers reached record levels for the
year. Inventories of coated and uncoated paper peaked at
mid-year and declined in the second half as demand
strengthened, ending the year below where they began.
Mead's specialty paper businesses improved in both sales
and earnings for the year, with the Specialty Paper
Division achieving exceptionally strong results. During
the quarter, all of the segment's mills operated well,
and Publishing Paper and Fine Paper shipments were espe-
cially strong.
Packing and Paperboard
Sales and earnings for the segment declined for
the full year and the quarter on sharply lower corrugat-
ing medium prices, negatively affecting the
Containerboard Division. The new Stevenson machine ran
above its rated capacity during the quarter, producing
64,000 tons of medium. The division also sold a record
volume of medium from its other machine.
While coated board shipments were down slightly
for the year, 1996 earnings for the Coated Board system
improved on a modest increase in beverage packaging
prices, more efficient converting operations, strong
results in wood products, and cost reductions and higher
operating efficiencies at the Mahrt mill in Alabama.
Packaging sales growth for the full year was stronger in
North America and Latin America. For the quarter, Coated
Board sales were unchanged from the prior year period,
while earnings were down. Overall Packaging sales im-
proved for the fourth quarter and earnings were up
slightly.
Distribution and School and Office Products
Overall, when compared with 1995, segment
performance improved in the fourth quarter, but declined
for the year. The School and Office Products Division
concluded a very strong year. It achieved an increase in
sales volume of its value-added school products for the
year and recorded a strong operating performance. The
division experienced a normal seasonal loss during the
quarter following an excellent back to school season.
Zellerbach's sales in 1996 were below last
year's as a result of lower prices for paper and reduced
volume in its three business units. The division contin-
ued to improve its operating processes. Zellerbach's
operating margin rates improved over the prior year.
Sales continued to be weak during the fourth quarter.
Northwood Investees
While full-year earnings declined for Mead's
jointly owned Northwood companies, demand for pulp
strengthened in the second half as prices firmed and
Northwood returned to profitability following two nega-
tive quarters. For the year, lower average pulp prices
were offset somewhat by higher prices for wood products
and lower purchased wood fiber costs. Northwood took
15.5 days of maintenance and holiday-related downtime
during the quarter.
Other
Mead repurchased 168,000 outstanding shares
during the quarter. The company has now repurchased two
million shares under its continuing five million share
authorization of April, 1995.
Following the acquisition of the Rumford mill,
Mead's total-debt-to-total-capital ratio stands at just
under 36 percent, well within the company's stated objec-
tives.
The Mead Corporation produces coated papers for
periodicals, catalogs, books, and commercial printing;
carbonless copy paper; uncoated and specialty papers; and
pulp and wood products. In the packaging and paperboard
sector, the company produces coated paperboard; beverage
and food packaging; and corrugating medium and cartons.
Mead is a major supplier of value-added school and office
products. Mead's Zellerbach division delivers products
and services for printing, packaging and industrial
supply markets.
STATEMENTS OF EARNINGS
(All dollar amounts in millions, except EPS)
Fourth Quarter
Ended Full Year Ended
------------------ ----------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31
1996 1995 1996 1995
Net sales $1,149.7 $1,144.0 $4,706.5 $5,179.4
Cost of products sold 945.2 901.8 3,803.9 4,104.0
-------- -------- -------- --------
Gross profit 204.5 242.2 902.6 1,075.4
Selling & administrative
expenses 147.6 132.5 564.0 552.0
-------- -------- -------- --------
Earnings from operations 56.9 109.7 338.6 523.4
Other revenues 2.2 6.8 13.7 33.7
Interest & debt expense (17.4) (15.9) (57.7) (69.4)
-------- -------- -------- --------
Earnings from continuing
operations before income
taxes 41.7 100.6 294.6 487.7
Income Taxes 16.3 36.0 109.0 184.2
-------- -------- -------- --------
Earnings from continuing
operations before
equity in net earnings
of investees 25.4 64.6 185.6 303.5
Equity in net earnings
of investees 3.8 9.5 4.3 39.0
-------- -------- -------- --------
Earnings from continuing
operations 29.2 74.1 189.9 342.5
Discontinued operations 7.5 5.4 7.5
-------- -------- -------- --------
Net earnings $ 29.2 $ 81.6 $ 195.3 $ 350.0
Per common & common
equivalent share:
Earnings from continuing
operations $ .55 $ 1.37 $ 3.57 $ 6.19
Discontinued operations .14 .10 .14
-------- -------- -------- --------
Net earnings $ .55 $ 1.51 $ 3.67 $ 6.33
Cash dividends per
common share $ .30 $ .28 $ 1.18 $ 1.09
Average common &
common equivalent
shares outstanding
(millions) 53.0 54.2 53.2 55.3
BALANCE SHEETS
(All dollar amounts in millions)
Dec. 31, Dec. 31,
1996 1995
--------- ----------
Current assets:
Cash and cash equivalents $ 20.6 $ 292.6
Accounts receivable 578.2 585.7
Inventories 509.3 410.5
Other current assets 81.2 78.5
--------- ----------
Total current assets 1,189.3 1,367.3
Investments and other assets:
Investees 154.9 141.0
Other assets 521.3 500.4
--------- ----------
676.2 641.4
Property, plant and equipment
- net 3,120.4 2,364.1
--------- ----------
Total assets $4,985.9 $4,372.8
Current liabilities:
Accounts payable $ 358.9 $ 380.5
Accrued liabilities 383.7 368.3
Current maturities of
longterm debt 15.1 73.0
Total current liabilities 757.7 821.8
Long-term debt 1,239.7 694.8
Commitments and contingent
liabilities
Deferred items 742.1 696.0
Shareowners' equity:
Common shares 155.5 157.8
Additional paid-in capital 13.2
Foreign currency translation
adjustment (2.4) (.8)
Retained earnings 2,080.1 2,003.2
--------- ----------
2,246.4 2,160.2
--------- ----------
Total liabilities and
shareowners' equity $4,985.9 $4,372.8
STATEMENTS OF CASH FLOWS
(All dollar amounts in millions)
Year Ended
Dec. 31, Dec. 31,
1996 1995
-------- ---------
Cash flows from operating
activities:
Net earnings $195.3 $350.0
Adjustments to reconcile net
earnings to net cash
provided by operating
activities:
Depreciation, amortization
and depletion of property,
plant and equipment 203.0 190.7
Depreciation and amortization
of other assets 47.4 46.0
Deferred income taxes 54.2 89.1
Investees-earnings and
dividends 7.1 ( 29.5)
Discontinued operations ( 5.4) ( 7.5)
Other ( 16.2) ( 65.1)
Change in assets and liabilities,
excluding effects of
acquisitions and dispositions:
Accounts receivable 49.0 20.9
Inventories ( 25.8) ( 52.7)
Other current assets 6.6 ( 23.4)
Accounts payable and accrued
liabilities ( 49.2) (325.8)
Cash (used in) discontinued
operations ( 40.5) ( 5.8)
Net cash provided by operating
activities 425.5 186.9
Cash flows from investing
activities:
Capital expenditures (433.4) (263.0)
Additions to equipment rented to
others ( 40.6) ( 56.0)
Payments for acquired businesses (640.4)
Proceeds from sale of businesses 19.6 39.8
Restricted funds 461.0
Other 19.2 20.1
Net cash proved by (used
in) investing activities (1,075.6) 201.9
Cash flows from financing
activities:
Additional borrowings 561.1 6.0
Payments on borrowings ( 75.5) (213.5)
Cash dividends paid ( 61.9) ( 59.6)
Common shares issued 14.3 41.6
Common shares purchased ( 59.9) (354.7)
Net cash provided by
(used in) financing
activities 378.1 (580.2)
Decrease in cash & cash
equivalents (272.0) (191.4)
Cash & cash equivalents
at beginning of year 292.6 484.0
Cash & cash equivalents
at end of year $ 20.6 $292.6
SALES AND EARNINGS SEGMENT REPORTING
(All dollar amounts in millions)
Fourth Qtr. Ended Full Year Ended
----------------- ---------------
Dec. Dec. Dec. Dec.
31, 31, 31, 31
1996 1995 1996 1995
Industry Segment Sales to
Unaffiliated Customers:
Paper $ 375.7 $ 278.3 $1,251.3 $1,243.3
Packaging & Paperboard 325.7 347.8 1,371.4 1,428.8
Dist. & School & Office 448.3 517.9 2,083.8 2,507.3
TOTAL NET SALES $1,149.7 $1,144.0 $4,706.5 $5,179.4
Fourth Qtr. Ended Full Year Ended
Dec. Dec. Dec. Dec.
31, 31, 31, 31
1996 1995 1996 1995
Industry Segment Earnings
from Operations:
Paper $51.5 $ 88.0 $193.8 $330.8
Packaging & Paperboard 20.2 37.5 138.6 184.9
Dist. & School & Office (.7) ( 5.2) 69.3 77.3
$71.0 $120.3 $401.7 $593.0
Other revenues - corp. 2.7 8.3 10.7 25.9
General corporate expense (14.6) ( 12.1) ( 60.1) ( 61.8)
Interest & debt expense (17.4) ( 15.9) ( 57.7) ( 69.4)
Total corporate & other (29.3) ( 19.7) (107.1) (105.3)
EARNINGS FROM CONTINING
OPERATIONS BEFORE
INCOME TAXES $41.7 $100.6 $294.6 $487.7
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