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
October 15, 1997
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Date of Report (Date of earliest event reported)
THE MEAD CORPORATION
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(Exact name of Registrant as specified in its charter)
Ohio 1-2267 31-0535759
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(State of Commission (IRS Employer
Incorporation) File Identification
Number)
Mead World Headquarters, Courthouse Plaza, Northeast
Dayton, Ohio 45463
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(Address of principal executive offices)
937-495-6323
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(Registrant's telephone No.)
Not Applicable
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(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 October 15, 1997, the Registrant issued a news
release reporting certain financial results for the
quarter ended September 28, 1997, 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 October 15, 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
authorized.
The Mead Corporation
(Registrant)
Date: October 17, 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 October 15, 1997 6
EXHIBIT 1.1
Corporate Communications Department
World Headquarters
Courthouse Plaza Northeast
Dayton, Ohio 45463
513-495-6323
MEAD REPORTS THIRD QUARTER RESULTS
DAYTON, Ohio. October 15, 1997 -- The Mead Corporation today reported
third quarter net earnings of $50.3 million, or 94 cents per share,
compared to 1996 third quarter earnings of $62.7 million, or $1.18 per
share.
Sales for the quarter were $1.38 billion, an increase of 12 percent
from $1.23 billion in 1996. The increase primarily reflects Mead's
acquisition in November 1996 of a coated and specialty paper mill in
Rumford, Maine.
Earnings improved over the prior year within the Paper and
Paperboard segments on strong volume. Pricing, which has been weak for
most of the year in coated paper and corrugating medium, improved during
the quarter. Earnings within the Distribution and School and Office
Products segment were much lower on reduced margins.
Paper
Earnings improved over the prior year on volume growth in coated
paper, primarily because of the Rumford mill and strong sales volumes
within the Specialty Paper Division. Coated paper pricing, which had been
very low earlier this year, strengthened during the quarter. Carbonless
paper volumes and prices declined slightly from the prior year. The Paper
segment's mills operated well during the quarter.
Packaging and Paperboard
Earnings within the segment improved on volume growth in
corrugating medium and strong volume and operations within the Coated
Board System. Within the Coated Board System, beverage volume continued
to grow, especially in North America and Latin America, and earnings
improved despite strengthening of the U.S. dollar against European
currencies. Converting operations improved over the prior year. Open
market sales of Coated Natural Kraft (TM) also increased.
In the Coated Board Division, startup of the rebuilt Number 1
machine at the Mahrt Mill in Alabama was excellent following its June
shutdown. The division also reported strong wood operations during the
quarter.
Volume growth in corrugating medium over the prior year was driven
by the Containerboard Division's new machine at the Stevenson mill in
Alabama and strong operations overall. Medium pricing improved during the
quarter from very low levels earlier this year. Sales volume at the
division's corrugated container plants also increased, although pricing
is below prior-year levels. Expansion of the new machine and related
environmental improvements continue to be on track for mid-1998
completion.
Distribution and School and Office Products
Segment earnings declined primarily on weak results within
Zellerbach, Mead's distribution company. Zellerbach sales improved
slightly during the quarter from the prior-year period but earnings
dropped significantly on reduced margins. The division is focusing its
efforts on increasing sales volume and is being impacted by increased
costs associated with strengthening its sales force. Sales increased in
the School and Office Products Division, while earnings declined from the
previous year due to sales mix and pressure on margins.
Northwood Investees
Earnings for Mead's jointly owned Northwood companies declined from
the prior year but were about even with those of the second quarter.
Prices and volume for lumber declined from the prior year. Pulp prices
were up slightly during the quarter and about even with last year's
levels.
Other
The company repurchased more than 350,000 common shares during the
quarter and has now repurchased nearly 55 percent of the five million
shares authorized for repurchase in April, 1995.
"We are pleased with our improved results in the Paper and
Paperboard segments, where we have made major investments," said Steven
C. Mason, chairman and CEO. "Our disappointing performance at Zellerbach
is being aggressively addressed by the new division management
specifically through the strengthening of the sales force."
Mason, whose October 31 retirement as chairman was previously
announced, said, "We are encouraged by the strong markets for many of our
products as well as the improvement in pricing in a number of our grades.
I have great confidence in the ability of Mead people to continue the
significant progress they have made in customer satisfaction,
productivity improvement and the building of Mead as a high performance
organization."
Mason will be succeeded as chairman and CEO by Jerome F. Tatar,
currently president and chief operating officer.
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.
STATEMENT OF EARNINGS
(All dollar amounts in millions, except per share amounts)
Third Qtr Ended Three Qtrs Ended
-------------------- --------------------
Sept 28, Sept 29, Sept 28, Sept 29,
1997 1996 1997 1996
Net sales $1,375.6 $1,231.1 $3,833.6 $3,556.8
Cost of products sold 1,134.9 995.1 3,163.6 2,858.7
--------- --------- --------- ---------
Gross profit 240.7 236.0 670.0 698.1
Selling & administrative
expenses 146.2 141.5 428.1 416.4
--------- --------- --------- ---------
Earnings from operations 94.5 94.5 241.9 281.7
Other revenues 2.8 3.5 4.5 11.5
Interest & debt expense (25.9) (12.9) (73.9) (40.3)
--------- --------- --------- ---------
Earnings from continuing
operations before
income taxes 71.4 85.1 172.5 252.9
Income taxes 25.8 31.2 63.1 92.7
--------- --------- --------- ---------
Earnings from continuing
operations before
equity in net earnings
of investees 45.6 53.9 109.4 160.2
Equity in net earnings
of investees 4.7 8.8 8.9 .5
--------- --------- --------- ---------
Earnings from continuing
operations 50.3 62.7 118.3 160.7
Discontinued operations 5.4
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Net earnings $ 50.3 $ 62.7 $ 118.3 $ 166.1
========= ========= ========= =========
Per common & common
equivalent share:
Earnings from continuing
operations $ .94 $ 1.18 $ 2.22 $ 3.02
Discontinued operations .10
--------- --------- --------- ---------
Net earnings $ .94 $ 1.18 $ 2.22 $ 3.12
========= ========= ========= =========
Cash dividends per
common share $ .30 $ .30 $ .90 $ .88
========= ========= ========= =========
Average common & common
equivalent shares
outstanding (millions) 53.6 53.0 53.3 53.2
========= ========= ========= =========
BALANCE SHEETS
(All dollar amounts in millions)
Sept 28, Sept 29,
-------- --------
1997 1996
Current assets:
Cash and cash equivalents $ 20.4 $ 121.9
Accounts receivable 689.0 640.0
Inventories 477.7 412.0
Other current assets 84.4 91.8
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Total current assets 1,271.5 1,265.7
Investments and other assets:
Investees 159.4 136.6
Other assets 558.0 523.9
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717.4 660.5
Property, plant and equipment - net 3,229.1 2,478.6
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Total assets $ 5,218.0 $ 4,404.8
========== ==========
Current liabilities:
Notes payable $ 114.2 $
Accounts payable 337.3 300.1
Accrued liabilities 387.5 380.7
Current maturities of long-term debt 9.7 7.3
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Total current liabilities 848.7 688.1
Long-term debt 1,273.5 720.6
Commitments and contingent liabilities
Deferred items 791.2 755.3
Shareowners' equity:
Common shares 156.2 155.8
Additional paid-in capital 52.1 11.0
Foreign currency translation adjustment (15.8) (1.7)
Retained earnings 2,112.1 2,075.7
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2,304.6 2,240.8
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Total liabilities and shareowners'
equity $ 5,218.0 $ 4,404.8
========== ==========
SALES AND EARNINGS SEGMENT INFORMATION
(All dollar amounts in millions)
Third Qtr Ended Three Qtrs Ended
-------------------- --------------------
Sept 28, Sept 29, Sept 28, Sept 29,
1997 1996 1997 1996
Industry Segment Sales
to Unaffiliated Customers:
Paper 412.8 302.7 1,183.4 875.6
Packaging and Paperboard 369.4 342.9 1,063.1 1,045.7
Distribution and School
and Office Products 593.4 585.5 1,587.1 1,635.5
-------- -------- -------- --------
TOTAL NET SALES $1,375.6 $1,231.1 $3,833.6 $3,556.8
======== ======== ======== ========
Third Qtr Ended Three Qtrs Ended
-------------------- --------------------
Sept 28, Sept 29, Sept 28, Sept 29,
1997 1996 1997 1996
Industry Segment Earnings
from Operations:
Paper 54.7 49.7 141.1 142.3
Packaging and Paperboard 42.5 40.0 94.1 118.4
Distribution and School
and Office Products 8.5 21.6 43.6 70.0
-------- -------- -------- --------
105.7 111.3 278.8 330.7
Other revenue
- corporate 3.4 1.7 6.6 8.0
General corporate expense (11.8) (15.0) (39.0) (45.5)
Interest and debt
expense (25.9) (12.9) (73.9) (40.3)
-------- -------- -------- --------
Total corporate and
other (34.3) (26.2) (106.3) (77.8)
-------- -------- -------- --------
EARNINGS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES $ 71.4 $ 85.1 $ 172.5 $ 252.9
======== ======== ======== ========
STATEMENT OF CASH FLOWS
(All dollar amounts in millions)
Three Quarters Ended
---------------------
Sept 28, Sept 29,
1997 1996
Cash flows from operating activities:
Net earnings $ 118.3 $ 166.1
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and depletion of
property, plant and equipment 179.9 145.3
Amortization of other assets 34.1 36.4
Deferred income taxes 24.3 39.9
Investees - earnings and dividends (4.4) 5.3
Discontinued operations (5.4)
Other (15.4) (18.7)
Change in current assets and liabilities:
Accounts receivable (110.8) (54.3)
Inventories 31.6 (1.5)
Other current assets 3.4 (6.9)
Accounts payable and accrued liabilities (17.8) (71.3)
Cash (used in) discontinued operations (1.5)
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Net cash provided by operating activities: 243.2 233.4
Cash flows from investing activities:
Capital expenditures (297.1) (278.0)
Additions to equipment rented to others (24.8) (31.3)
Proceeds from sale of business 19.6
Other (15.3) 11.1
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Net cash (used in) investing activities (337.2) (278.6)
Cash flows from financing activities:
Additional borrowings 564.2 32.8
Payments on borrowings (537.9) (73.8)
Notes payable 114.2
Cash dividends paid (47.1) (46.2)
Common shares issued 41.9 11.9
Common shares purchased (41.5) (50.2)
------- -------
Net cash provided by (used in) financing
activities 93.8 (125.5)
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(Decrease) in cash and cash equivalents (.2) (170.7)
Cash and cash equivalents at beginning of year 20.6 292.6
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Cash and cash equivalents at end of third
quarter $ 20.4 $ 121.9
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