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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
Commission File No. 1-2267
THE MEAD CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-0535759
(State of Incorporation) (I.R.S. Employer Identification No.)
MEAD WORLD HEADQUARTERS
COURTHOUSE PLAZA NORTHEAST
DAYTON, OHIO 45463
(Address of principal executive offices)
Registrant's telephone number, including area code: 937-495-6323
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes
X No __ .
The number of Common Shares outstanding at March 30, 1997 was
52,212,302.
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<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
--------------------------------------------------
QUARTERLY PERIOD ENDED MARCH 30, 1997
-------------------------------------
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
BALANCE SHEETS
- --------------
(All dollar amounts in millions)
March 30, Dec. 31,
1997 1996
-------- --------
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 14.7 $ 20.6
Accounts receivable 573.8 578.2
Inventories 582.3 509.3
Other current assets 88.8 81.2
-------- --------
Total current assets 1,259.6 1,189.3
Investments and other assets:
Investees 156.7 154.9
Other assets 529.3 521.3
-------- --------
686.0 676.2
Property, plant and equipment 5,238.4 5,198.5
Less accumulated depreciation and
amortization (2,120.6) (2,078.1)
-------- --------
3,117.8 3,120.4
-------- --------
Total assets $5,063.4 $4,985.9
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
- -----------------------------------
Current liabilities:
Notes payable $ 100.3 $
Accounts payable 336.8 358.9
Accrued liabilities 358.9 371.9
Income taxes payable 2.8 11.8
Current maturities of long-term debt 14.6 15.1
-------- --------
Total current liabilities 813.4 757.7
Long-term debt 1,248.7 1,239.7
Commitments and contingent liabilities
Deferred items 755.9 742.1
Shareowners' equity:
Common shares 155.6 155.5
Additional paid-in capital 20.7 13.2
Foreign currency translation adjustment (8.7) (2.4)
Retained earnings 2,077.8 2,080.1
-------- --------
2,245.4 2,246.4
-------- --------
Total liabilities and
shareowners' equity $5,063.4 $4,985.9
======== ========
See notes to financial statements.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
STATEMENTS OF EARNINGS
- ----------------------
(All dollar amounts in millions, except per share amounts)
First Quarter Ended
--------------------
March 30, March 31,
1997 1996
-------- --------
Net sales $1,135.7 $1,067.2
Cost of products sold 940.5 863.2
-------- --------
Gross profit 195.2 204.0
Selling and administrative
expenses 142.3 134.9
-------- --------
Earnings from operations 52.9 69.1
Other revenues - net 2.6 6.3
Interest and debt expense (23.3) (14.7)
-------- --------
Earnings from continuing operations
before income taxes 32.2 60.7
Income taxes 11.8 22.5
-------- --------
Earnings from continuing operations
before equity in net (loss) of
investees 20.4 38.2
Equity in net (loss) of
investees ( .2) (7.3)
-------- --------
Earnings from continuing operations 20.2 30.9
Discontinued operations (Note G) 5.4
-------- --------
Net earnings $ 20.2 $ 36.3
======== ========
Per common and common equivalent share:
Earnings from continuing operations $ .38 $ .58
Discontinued operations .10
----- -----
Net earnings $ .38 $ .68
===== =====
Cash dividends per common share $ .30 $ .28
===== =====
Average common and common equivalent
shares outstanding (millions) 53.0 53.5
===== =====
See notes to financial statements.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
STATEMENTS OF CASH FLOWS
- ------------------------
(All dollar amounts in millions)
First Quarter Ended
-------------------
March 30, March 31,
1997 1996
------- -------
Cash flows from operating activities:
Net earnings $ 20.2 $36.3
Adjustments to reconcile net earnings to
net cash (used in) operating activities:
Depreciation, amortization and depletion of
property, plant and equipment 60.6 49.2
Depreciation and amortization of other assets 11.6 12.9
Deferred income taxes 3.4 7.1
Investees-earnings and dividends (.2) 6.8
Discontinued operations (5.4)
Other (5.3) (8.7)
Change in assets and liabilities:
Accounts receivable 4.4 69.5
Inventories (73.0) (113.7)
Other current assets (10.0) (13.4)
Accounts payable and accrued liabilities (44.1) (103.6)
Cash (used in) discontinued operations (1.2)
------ ------
Net cash (used in) operating activities (32.4) (64.2)
------ ------
Cash flows from investing activities:
Capital expenditures (66.8) (77.6)
Additions to equipment rented to others (8.9) (13.0)
Proceeds from sale of business 19.6
Other 9.2 (25.8)
------ ------
Net cash (used in) investing activities (66.5) (96.8)
------ ------
Cash flows from financing activities:
Additional borrowings 539.3 32.8
Payments on borrowings (531.8) (1.2)
Notes payable 100.3
Cash dividends paid (15.7) (14.8)
Common shares issued 8.1 2.3
Common shares purchased (7.2) (12.9)
------ ------
Net cash provided by financing activities 93.0 6.2
------ ------
(Decrease) in cash and cash equivalents (5.9) (154.8)
Cash and cash equivalents at beginning of year 20.6 292.6
------ ------
Cash and cash equivalents at end of quarter $ 14.7 $137.8
====== ======
See notes to financial statements.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
(All dollar amounts in millions)
A - FINANCIAL STATEMENTS
The balance sheet at December 31, 1996 is condensed financial information
taken from the audited balance sheet. The interim financial statements
are unaudited. In the opinion of management, all adjustments (which
consist only of normal recurring adjustments) necessary to present fairly
the financial position and results of operations for the interim periods
presented have been made.
B - ACCOUNTING POLICIES
On an interim basis, all costs subject to recurring year-end adjustments
have been estimated and allocated ratably to the quarters. Income taxes
have been provided based on the estimated tax rate for the respective
years after excluding infrequently occurring items whose specific tax
effect is reported during the same interim period as the related
transaction.
C - INVENTORIES
The amount of inventories is (principally last-in, first-out method):
March 30, Dec. 31,
1997 1996
------ ------
Finished and semi-finished products $407.5 $ 337.8
Raw materials 92.1 91.2
Stores and supplies 82.7 80.3
------ ------
$582.3 $ 509.3
====== ======
D - INVESTEES
The summarized operating data for all investees is presented in the
following table:
First Quarter Ended
--------------------
March 30, March 31,
1997 1996
-------- --------
Revenues $179.3 $145.2
====== ======
Gross profit (loss) $ 11.7 $(15.4)
====== ======
Net earnings (loss) $ 2.0 $(13.6)
====== ======
<PAGE>
E - ADDITIONAL INFORMATION ON CASH FLOWS
First Quarter Ended
--------------------
March 30, March 31,
1997 1996
-------- --------
Cash paid (refunded) for:
Interest $ 24.4 $ 22.8
====== ======
Income taxes $ (3.0) $ 7.4
====== ======
F - SHAREOWNERS' EQUITY
During the first quarter of 1997, the Company repurchased 125,000 common
shares on the open market. The Company has outstanding authorization from
the Board of Directors to repurchase up to five million common shares, of
which 2.1 million shares have been repurchased as of the end of the first
quarter of 1997.
G - DISCONTINUED OPERATIONS
Mead sold its previously discontinued Imaging business during the first
quarter of 1996. The sale resulted in a gain of $5.4 million, net of
income tax of $3.2 million.
H - EARNINGS PER SHARE
The Company calculates earnings per share using methods prescribed by
Accounting Principles Board Opinion (APB) No. 15, "Earnings per Share." In
February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share,"
which replaces APB No. 15 and requires adoption for periods ending after
December 31, 1997. The Statement will require dual presentation of basic
and diluted earnings per share on the face of the income statement. For
the periods ended March 30, 1997 and March 31, 1996, the basic and diluted
earnings per share calculated pursuant to SFAS No. 128 are not
materially different from primary earnings per share calculated under APB
No. 15.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
- ---------------------
Net Sales
- ---------
First quarter 1997 net sales were $1.14 billion, a 6% increase over the
$1.07 billion generated for the same quarter of 1996. Excluding the sales
of the Rumford, Maine coated and specialty paper mill acquired in
November, 1996, net sales would have been slightly lower than the prior
year. Sales volume was strong throughout the first quarter of 1997
compared with 1996. Average selling prices were lower in the first
quarter of 1997 for coated paper grades, corrugated containers and
corrugating medium compared with the first quarter of 1996. Mead's
distribution business, Zellerbach, experienced both lower volume and
selling prices in 1997. At the start of the second quarter, backlogs in
coated papers and demand, in general, for most of the Company's products
remain strong.
Operating Costs and Expenses
- ----------------------------
Gross profit as a percent of sales fell to 17.2% for the first quarter of
1997 from 19.1% for the first quarter of 1996 due primarily to lower
selling prices. Most of Mead's divisions operated well during the quarter
and achieved significant productivity gains. The Company has invested
significantly over the last several years to make its operations more
cost-effective. During the second quarter of 1997, the #1 paperboard
machine at the Mahrt, Alabama, coated board mill will be out of production
for a scheduled rebuild. The machine is expected to be out of service for
four weeks, but no interruption in customer service is expected.
Selling and administrative expenses totaled $142.3 million in the first
quarter of 1997, a $7.4 million increase from the same quarter of 1996.
The addition of the Rumford, Maine, coated and specialty paper mill
accounted for a significant portion of the increase. As a percent of net
sales, these expenses were 12.5% in the first quarter of 1997 compared with
12.6% for the same quarter of 1996.
Other Revenues
- --------------
Other revenues were not significant in either the first quarter of 1997 or
the first quarter of 1996.
Interest and Debt Expense
- -------------------------
First quarter 1997 interest and debt expense was $23.3 million, a 59%
increase over the $14.7 million incurred in the first quarter of 1996.
The increase is attributed to additional debt levels in 1997, primarily
associated with the addition of the Rumford, Maine, mill.
Income Taxes
- ------------
The effective tax rate was 36.6% for the first quarter of 1997 compared
with 37.1% for the comparable quarter of 1996.
Equity in Net Earnings of Investees
- -----------------------------------
Mead's investees, consisting primarily of its 50% owned Northwood
companies, recorded a loss of $.2 million in the first quarter of 1997
compared with a loss of $7.3 million in the same quarter of 1996. In the
first quarter of 1996, Northwood experienced rapidly falling selling
prices, weakening demand for pulp and wood products, and severe weather-
related operating problems. Furthermore, it recorded an inventory write-
down in the first quarter of 1996 and took several days of downtime for
both pulp and wood operations in the first and second quarters of 1996.
In 1997, prices for pulp and oriented structural board (OSB) have
averaged, respectively, about 20% and 30% lower than a year ago. Sales
volume of pulp is significantly higher in the first quarter of 1997
compared with the same period of 1996 while sales of OSB are slightly
ahead of last year. Lumber prices have rebounded significantly from the
first quarter of 1996, but volume is below last year's levels. Overall,
Northwood's lumber and pulp mills have operated better in 1997 than in the
first quarter of 1996. Northwood's pulp mill labor contracts expired on
April 30, 1997 and the wood products contracts expire at the end of June
1997. Negotiations are in progress, but no agreements have been reached.
<PAGE>
Along with the Rumford, Maine, coated and specialty paper mill, Mead
acquired a 30% ownership interest in a limited partnership which operates
a cogeneration facility at that mill. This partnership contributed about
$1 million to earnings in the first quarter of 1997.
Discontinued Operations
- -----------------------
Mead sold its Imaging business during the first quarter of 1996. The sale
resulted in an after-tax gain of $5.4 million, or $.10 per share.
Financial Data by Business
- --------------------------
Paper Segment
First Quarter
--------------------------------
1997 1996 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $393.5 $269.4 46.1%
Segment earnings before taxes 41.8 46.6 (10.3)%
The 1997 increase in net sales over those generated in the first quarter
of 1996 was due primarily to the acquisition of the Rumford, Maine, paper
mill but, also, due to improved volume in coated papers and at Mead's
specialty mills in Menasha, Wisconsin, and South Lee, Massachusetts.
Selling prices, however, were below first quarter 1996 levels in all major
grades, the effect of which was felt most severely at the Escanaba,
Michigan, publishing paper mill. First quarter 1997 earnings from the
Chillicothe, Ohio, fine paper mill were significantly higher than in the
prior year's first quarter, helped by the higher 1997 sales volume.
Chillicothe's 1996 first quarter earnings were negatively impacted by
temporary operating problems and severance related expenses. Earnings at
the South Lee specialty mill also improved over the first quarter of 1996
partly due to the growth in a wear resistant overlay product that is used
in flooring materials. Demand for this type of product is growing in
Europe and it is also becoming popular in the U.S. Going into the second
quarter of 1997, backlogs in the Paper segment are strong but prices for
coated papers remain depressed.
Packaging and Paperboard segment
First Quarter
------------------------------
1997 1996 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $315.5 $325.8 (3.2)%
Segment earnings before taxes 21.5 29.2 (26.4)%
<PAGE>
First quarter 1997 prices for corrugating medium, produced at the
Stevenson, Alabama, mill, averaged about 40% below first quarter 1996
levels, causing this segment's sales and earnings to be below those of the
prior year. The Stevenson mill has operated well during 1997 with the new
#2 machine continuing to operate at above rated capacity with the lighter
weight medium being well received by customers.
First quarter 1997 sales and earnings are each up slightly from the same
period of 1996 for Mead's Coated Board and Packaging businesses. Strong
volume in North America offset decreased demand overseas at Mead
Packaging. At Mead Coated Board, sales tonnage, including amounts shipped
to Mead Packaging, are about 10% higher than they were a year ago. Open
market volume was level with the first quarter of 1996, but prices are
down almost 10%. During the second quarter of 1997, the #1 machine at
the Mahrt, Alabama, coated board mill will be down for approximately four
weeks for the completion of a scheduled rebuild. The division increased
inventory levels during the past several months in anticipation of the
shutdown and expects customer service to be unaffected.
Distribution and School and Office Products segment
First Quarter
------------------------------
1997 1996 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $426.7 $472.0 (9.6)%
Segment earnings before taxes 3.1 8.0 (61.3)%
First quarter 1997 sales and earnings for this segment declined due to
lower selling prices and sales volume at Zellerbach, Mead's distribution
business. This sales decline occurred in all three of the division's
businesses: printing; packaging; and industrial supplies. Soft market
conditions are expected to continue throughout the second quarter. 1997
sales for Mead School and Office Products are even with those posted in
the first quarter of 1996, and earnings are slightly ahead.
Traditionally, the first quarter of the year is a slow period for this
division and the "Back-to-School" season begins to accelerate in the
second quarter.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Working capital at March 30, 1997 was $446.2 million compared to $431.6
million at December 31, 1996. The current ratio dipped slightly to 1.5 at
the end of the first quarter 1997 from 1.6 at the prior fiscal year end.
As is normally the case in the first quarter of each year, inventories
grow in anticipation of the Mead School and Office Products "Back-to-
School" season. Part of this inventory build is financed through short-
term notes payable. Inventories of Coated Natural Kraft have also been
increased to satisfy customer needs while the machine at the Alabama plant
is being rebuilt.
Borrowed capital (long-term debt) as a percent of total capital (long-term
debt plus shareowners' equity) was 35.7% at March 30, 1997 and was 35.6%
at December 31, 1996. During the first quarter, the Company refinanced
$550 million of debt with a series of notes and debentures that carry
interest rates from 6.60% to 7.55% and have maturities ranging from five
to fifty years.
Capital expenditures totaled $66.8 million for the first quarter of 1997
compared with $77.6 million in the first quarter of 1996. Major projects
in both time periods were at the Stevenson, Alabama, corrugating medium
mill.
Under a Board of Directors' authorization, Mead repurchased 125,000 shares
of its capital stock in the first quarter of 1997. By March 30, 1997, the
five million share repurchase program was about 43% completed.
At the end of the first quarter, Mead paid a fixed rate or a capped rate
on 80% of its debt and paid a floating rate of interest on the remainder.
A change of 1% in the floating interest rate, on an annual basis, would
result in a $.04 change in earnings per share for the year. The estimated
market value of long-term debt, excluding capital leases, was $12.9
million less than the book value at the end of the first quarter of 1997.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
(10) Material Contracts:
(1) Corporate Annual Incentive Plan for 1997 in which
executive officers participate.
(2) Corporate Long Term Incentive Plan effective 1997
in which executive officers participate.
(3) Supplemental Executive Retirement Plan amended
and restated effective January 1, 1997 in which
executive officers participate.
(4) First Amendment of Executive Accumulation Plan
effective March 1, 1997 in which executive
officers participate.
(11.1), (11.2) Calculations of Net Earnings per Share.
(27) Financial Data Schedule
(b) Reports on Form 8-K
(1) A Form 8-K was filed on January 24, 1997 reporting under
Item 5 certain financial results of Registrant for the
year ended December 31, 1996. Also filed as an exhibit
was a copy of a Press Release dated January 23, 1997.
(2) A Form 8-K was filed on February 6, 1997 reporting under
Item 5 Registrant's execution of a Pricing Agreement,
dated February 4, 1997, in connection with the proposed
issuance and sale of 6.60% Notes due March 1, 2002,
7.35% Debentures due March 1, 2017, 6.84% Debentures due
March 1, 2037 and 7.55% Debentures due March 1, 2047.
Also filed as exhibits were copies of an Underwriting
Agreement, Pricing Agreement and opinions of counsel.
<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 thereunto duly authorized.
Date: May 12, 1997
THE MEAD CORPORATION
- --------------------
(Registrant)
By: G. T. GESWEIN
_________________________
G. T. Geswein
Vice President, Controller and
Chief Accounting Officer
WP\H:\WORK\SEC\10Q\97\033097
040897dlw
Exhibit 10(1)
THE MEAD CORPORATION
CORPORATE ANNUAL INCENTIVE PLAN
------------------------------
1997
----
OBJECTIVE
- ---------
The objective of the Corporate Annual Incentive Plan is to recognize and
reward Mead's key executive officers and division leaders for achieving
and sustaining superior business results.
PARTICIPATION ELIGIBILITY
- -------------------------
All Corporate Executives grade 23 and above, Officers of the Corporation
and Division Presidents are participants in this plan.
PAYOUT ELIGIBILITY
- ------------------
Participants must be employees of the company, an affiliate or a
subsidiary at the end of the plan year to receive payout from this plan.
An appropriate proration of earned awards may be made in case of death,
disability, retirement, hire or transfer during the plan year. In such
cases, the incentive target will be pro-rated to reflect the months of
service.
INCENTIVE TARGET
- ----------------
The Incentive Target for each grade is the difference between Mead's
policy total cash compensation target and the midpoint. This Target will
be adjusted annually, based on market total cash compensation data. In
addition, the Compensation Committee may increase the incentive targets in
any plan year, to reflect Mead's competitive base salary position. For
the 1997 plan year, incentive targets for all grades have been increased
by 3%. The current year incentive targets are shown in Attachment 1.
PAYOUT FUNDING
- --------------
Payout funding under this Plan is the sum of the incentive target
multiplied by the Competitive Industry Factor (CIF) to determine the final
payout. The CIF is determined as:
Competitive = Mead ROTC X Mead ROTC
----------------- --------------------
Industry Factor All Industry ROTC Forest Products ROTC
ROTC = (EAT + ((1 - Tax Rate) X Current Interest Expense)) X 100
---------------------------------------------------
(Average Equity + Average Long-Term Debt)
The incentive payout is determined as:
Incentive Payout = Incentive Target X CIF
While this formula determines an available pool of incentive dollars,
allocation of incentive awards to individuals is based solely on the
criteria for "Individual Payout Determination" defined in the following
section.
INDIVIDUAL PAYOUT DETERMINATION
- -------------------------------
Payout under this Plan for all Participants will be determined by an
assessment of:
1. Business Contract - the degree to which the Division or
Corporate functional unit has achieved its operational goals
and produced the expected financial results, and
2. Stretch Goals - the establishment and progress of management
objectives that demonstrate the executive's leadership through
innovation, and
<PAGE>
3. Corporate Perspective - the contribution of the executive to
the synergy of the corporation, in balance to his or her
division or functional priorities, and
4. Mead Values - the climate that executive fosters within his or
her management team to encourage and reward others for high
performance: taking risks, develop innovative ideas, make hard
management decisions.
This assessment for each Participant shall be determined by the CEO.
Payout for Corporate executives and officers will be determined solely on
the basis of the plan; payout for Division Presidents will be based 50% on
this plan and 50% on the respective division incentive plan results.
PAYOUT THRESHOLD
- ----------------
Senior Executives in grades 26 and above will not be eligible for payout
unless Mead's annual ROTC is 5% or higher. Other participants will not be
eligible for payout unless there are corporate earnings for the year.
ADMINISTRATION
- --------------
The Plan is administered by the Compensation Committee of the Board. The
Compensation Committee has delegated administration to the Corporate Vice
President, Human Resources.
RECOMMENDATIONS AND APPROVAL
- ----------------------------
The Compensation Committee reviews and approves total funding and
individual payouts under the plan, and the amount, use and replenishment
of any reserve funds. The Compensation Committee may also determine if
payout will be in cash, restricted stock, replaced with stock options, or
a combination thereof.
The CEO recommends all individual payouts to the Compensation Committee of
the Board of Directors for approval. Payout for the CEO and the COO is
recommended to the Board of Directors by the Compensation Committee.
RESERVED RIGHTS
- ---------------
The Mead Corporation reserves the right to alter, amend, suspend or
terminate any or all provisions of this Corporate Annual Incentive Plan,
except such actions shall neither inhibit nor hinder the rights of any
individual with respect to earned and credited awards which have been
deferred. Designation of a position as eligible for participation neither
guarantees the individual a right to an incentive payment nor a right to
continued employment.
<PAGE>
Attachment 1
CORPORATE ANNUAL INCENTIVE PLAN
------------------------------
PAYOUT TARGETS
--------------
1997
----
1997 Policy Policy 1997 Annual
Grade Midpoint Annual Target TCC Target Incentive Target*
- ----- -------- ------------- ---------- -----------------
33 $744,864 $663,000 $1,407,900 $685,400
32 657,144 552,500 1,209,600 572,200
31 571,800 466,500 1,038,300 483,700
30 498,852 382,000 880,900 397,000
29 436,692 316,600 753,300 329,700
28 383,868 261,700 645,600 273,200
27 336,744 216,200 552,900 226,300
26 294,516 178,000 472,500 186,800
25 257,844 146,900 404,700 154,600
24 225,348 119,000 344,300 125,700
23 196,81 294,700 291,500 100,600
22 175,05 673,340 248,400 78,600
*For 1997 the above Incentive Targets include an addition of 3% of
Midpoint.
Exhibit 10(2)
THE MEAD CORPORATION
THE CORPORATE LONG TERM INCENTIVE PLAN
--------------------------------------
1997
----
OBJECTIVE
- ---------
The objective of the Corporate Long Term Incentive Plan is to reward
executives for adding value to the Corportion by providing a return that
is above the cost of capital, while strategically managing capital growth.
TERM OF THE PLAN
- ----------------
This Corporate Long Term Incentive Plan is a two year plan, with the
performance period ending December 31, 1997.
PARTICIPATION ELIGIBILITY
- -------------------------
All corporate executives grade 23 and above, officers of the corporation
and division presidents are participants in the plan.
PAYOUT ELIGIBILITY
- ------------------
Participants must be employees of the company, an affiliate or a
subsidiary at the end of each plan year to receive payout from this plan.
An appropriate proration of earned awards may be made in case of death,
disability, retirement, hire or transfer during the year. In such cases,
the incentive target will be pro-rated to reflect the months of service.
INCENTIVE TARGET
- ----------------
The 1997 Incentive Target by grade is shown in Attachment 1. This Target
will be adjusted annually, based on competitive data.
TOTAL PAYOUT DETERMINATION
- --------------------------
This plan measures compound capital growth over 2 years, and the ROTC
achieved in the second year of this two year plan.
A single matrix (Attachment 2) determines the Mead Performance Factor
(MPF), which is based on Return on Total Capital and Growth in Capital.
The MPF is then multiplied by the Competitive Industry Factor (CIF) to
determine the final payout. The CIF is determined as:
Competitive = Mead ROTC X Mead ROTC
----------------- -------------------
Industry Factor All Industry ROTC Forest Products ROTC
where ROTC=(EAT + ((1-Tax Rate) X Current Interest Expense) X 100
------------------------------------------------
(Average Equity + Average Long-Term Debt)
The incentive payout is determined as:
Incentive Payout = Incentive Target X MPF X CIF
The above calculation shall not be further adjusted for any Participant on
the basis of individual contribution or in any other manner unless so
defined under the proration provisions herein.
ADMINISTRATION
- --------------
The Plan is administered by the Compensation Committee of the Board. The
Compensation Committee has delegated administration to the Corporate Vice
President, Human Resources.
ACCOUNTING FOR PAYOUT
- ---------------------
Payout will be estimated periodically and required corporate accrual of
payout will be booked against earnings during the year. Approved
incentive checks will be prepared and expensed to earnings at the time of
payout.
<PAGE>
RECOMMENDATIONS AND APPROVAL
- ----------------------------
The Compensation Committee reviews and approves total funding and
individual payouts under the plan, and the amount, use and replenishment
of any reserve funds.
The CEO recommends all individual payouts to the Compensation Committee of
the Board of Directors for approval. Payouts for the CEO and the COO are
approved by the Board of Directors.
Form of payout will be determined by the Compensation Committee. Payout
will normally be delivered to all participants as 50% cash and 50%
restricted stock (with a 6-month vesting period). The Board of Directors
may require a mandatory deferral of all or any portion of the payout to
ensure full deductibility of compensation to any executive.
RESERVED RIGHTS
- ---------------
The Mead Corporation reserves the right to alter, amend, suspend or
terminate any or all provisions of this Corporate Long Term Incentive
Plan, except such actions shall neither inhibit nor hinder the rights of
any individual with respect to earned and credited awards which have been
deferred. Designation of a position as eligible for participation neither
guarantees the individual a right to an incentive payment nor a right to
continued employment.
<PAGE>
Attachment 1
THE CORPORATE LONG TERM INCENTIVE PLAN
--------------------------------------
PAYOUT TARGETS
--------------
1997
Grade Incentive Target
----- ----------------
33 $ 663,000
32 552,500
31 466,500
30 382,000
29 316,600
28 261,700
27 216,200
26 178,000
25 146,900
24 119,000
23 94,700
22 73,340
<PAGE>
Mead Corporate Long Term Incentive Plan
---------------------------------------
Mead Performance Factor
(% of Target)
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 0 0 13 26 42 59 68 76 85 93
9 0 10 22 34 46 59 67 75 83 91
8 6 16 27 38 48 59 67 74 82 90
7 11 21 31 41 50 59 66 73 81 88
6 16 25 34 43 51 59 66 73 79 86
2-Yr 5 20 28 37 45 52 59 65 72 78 84
Compound 4 24 30 38 46 52 59 65 71 77 83
Growth 3 28 34 41 47 53 59 64 70 75 81
in 2 32 36 42 48 53 59 64 69 74 79
Capital 1 35 38 44 49 54 59 64 68 73 77
(%) 0 38 41 46 50 54 59 63 67 71 75
-1 41 43 47 51 55 59 62 66 69 73
-2 44 46 49 52 55 59 62 64 67 70
-3 47 49 51 53 56 59 61 63 65 67
-4 49 52 53 54 56 59 60 62 63 64
-5 51 53 54 55 57 59 60 61 62 63
5 6 7 8 9
10 107 121 139 158 182 206 230 254 277 300 323
9 104 117 135 153 175 198 221 243 264 285 305
8 102 114 131 148 169 191 212 233 253 272 290
7 100 111 127 143 163 184 204 225 243 261 278
6 97 108 123 139 158 178 197 217 234 252 268
2-Yr 5 95 105 120 134 153 171 190 209 226 243 259
Compound 4 92 102 116 130 148 165 183 201 217 234 250
Growth 3 90 99 112 125 142 159 176 193 209 225 240
in 2 88 96 109 121 137 153 169 185 200 216 231
Capital 1 85 93 105 117 132 147 162 177 192 207 222
(%) 0 83 90 101 111 126 140 154 168 182 196 211
-1 79 86 96 106 119 132 145 158 172 185 199
-2 76 81 90 99 111 123 135 148 160 173 186
-3 72 77 85 93 104 115 126 137 148 160 172
-4 68 73 80 87 97 106 116 126 137 148 159
-5 67 70 77 83 93 102 112 121 131 141 152
10 Cost 11 12 13 14 15
of
Cap
</TABLE>
Return on Total Capital (ROTC) - %
Notes:
1. Total Capital defined as Equity plus Long Term Debt (growth is compounded
over 2-year period).
2. Payout from this Table is subject to the application of the Competitive
Industry Factor.
THE MEAD CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
---------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION 1 - GENERAL . . . . . . . . . . . . . . . . . . . 1
1.1 History and Effective Date. . . . . . . . . . . 1
1.2 Purpose of Plan . . . . . . . . . . . . . . . . 1
1.3 Purpose of Restatement. . . . . . . . . . . . . 1
1.4 Plan Funding and Administration . . . . . . . . 2
1.5 Applicable Law. . . . . . . . . . . . . . . . . 2
1.6 Gender and Number . . . . . . . . . . . . . . . 2
1.7 Assignment. . . . . . . . . . . . . . . . . . . 2
1.8 Notices . . . . . . . . . . . . . . . . . . . . 2
SECTION 2 - PARTICIPATION . . . . . . . . . . . . . . . . 3
2.1 Eligibility for Participation . . . . . . . . . 3
2.2 Participation Not Contract of Employment. . . . 3
SECTION 3 - BASIC BENEFIT . . . . . . . . . . . . . . . . 3
3.1 Eligibility for Basic Benefit . . . . . . . . . 3
3.2 Amount of Basic Benefit . . . . . . . . . . . . 3
3.3 Form and Time of Payment of Basic Benefit . . . 4
3.4 Final Average Earnings. . . . . . . . . . . . . 4
3.5 Earnings. . . . . . . . . . . . . . . . . . . . 4
3.6 Other Benefits. . . . . . . . . . . . . . . . . 5
SECTION 4 - EARLY BENEFIT . . . . . . . . . . . . . . . . 5
4.1 Eligibility for Early Benefit . . . . . . . . . 5
4.2 Amount of Early Benefit . . . . . . . . . . . . 6
4.3 Form and Time of Payment of Early Benefit . . . 6
SECTION 5 - PRE-AGE 55 BENEFIT. . . . . . . . . . . . . . 6
5.1 Eligibility for Pre-Age 55 Benefit. . . . . . . 6
5.2 Amount of Pre-Age 55 Benefit. . . . . . . . . . 6
5.3 Form and Time of Payment of Pre-Age 55
Benefit. . . . . . . . . . . . . . . . . . . . . . . 7
5.4 Involuntary Termination . . . . . . . . . . . . 7
5.5 Termination for Cause . . . . . . . . . . . . . 8
SECTION 6 - DISABILITY BENEFIT. . . . . . . . . . . . . . 8
6.1 Eligibility for Disability Benefit. . . . . . . 8
6.2 Amount of Disability Benefit. . . . . . . . . . 9
6.3 Form and Time of Payment of Disability
Benefit. . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7 - OPTIONAL FORMS OF BENEFIT PAYMENT . . . . . . 9
7.1 Request for Optional Payment Form . . . . . . . 9
7.2 Optional Forms of Benefit Payment . . . . . . . 9
7.3 Limitations on Optional Forms of Payment. . . . 10
SECTION 8 - DEATH BENEFIT . . . . . . . . . . . . . . . . 10
8.1 Eligibility for Death Benefit . . . . . . . . . 10
8.2 Amount of Death Benefit . . . . . . . . . . . . 10
8.3 Beneficiary . . . . . . . . . . . . . . . . . . 10
SECTION 9 - SPOUSAL SURVIVOR BENEFIT. . . . . . . . . . . 11
9.1 Eligibility for Spousal Survivor Benefit. . . . 11
9.2 Amount of Spousal Survivor Benefit. . . . . . . 11
<PAGE>
9.3 Form and Time of Payment of Spousal Survivor
Benefit. . . . . . . . . . . . . . . . . . . . . . . 11
9.4 Reduction for Spousal Survivor Benefit. . . . . 12
SECTION 10 - SPECIAL PROVISIONS AFFECTING PAYMENT OF
BENEFITS . . . . . . . . . . . . . . . . . . . . . . 12
10.1 Competition . . . . . . . . . . . . . . . . . . 12
10.2 Termination for Cause . . . . . . . . . . . . . 13
10.3 Payments After a Change in Control. . . . . . . 13
10.4 Emergency Payments. . . . . . . . . . . . . . . 14
10.5 ECAP Credit in Lieu of Distribution . . . . . . 15
10.6 Payment to Incapacitated Persons. . . . . . . . 15
10.7 Withholding . . . . . . . . . . . . . . . . . . 15
SECTION 11 - DISPUTE RESOLUTION . . . . . . . . . . . . . 15
11.1 Notice of Denial. . . . . . . . . . . . . . . . 15
11.2 Notice of Appeal. . . . . . . . . . . . . . . . 16
11.3 Decision on Appeal. . . . . . . . . . . . . . . 16
11.4 Records, Data and Information . . . . . . . . . 16
SECTION 12 - AMENDMENT AND TERMINATION. . . . . . . . . . 17
12.1 Amendment and Termination . . . . . . . . . . . 17
12.2 Contingencies Affecting the Employers . . . . . 17
12.3 Protected Benefits. . . . . . . . . . . . . . . 17
<PAGE>
THE MEAD CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
-----------------------------------------------------------
SECTION 1 - GENERAL
- -------------------
1.1 History and Effective Date. Effective January 1,
--------------------------
1982, THE MEAD CORPORATION, an Ohio corporation ("Mead")
established THE MEAD CORPORATION SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN, then known as "The Mead Management Income
Parity Plan," (the "Plan"). The Plan was subsequently
amended and restated, effective January 1, 1985, amended,
effective November 1, 1986, October 1, 1987, October 28,
1989 and February 28, 1991 and again amended and restated,
effective July 1, 1992. The following provisions constitute
a further amendment and restatement of the Plan, effective
January 1, 1997. The Plan is intended to be a "top hat
plan" (within the meaning of the Employee Retirement Income
Security Act of 1974).
1.2 Purpose of Plan. The purpose of the Plan is to
----------------
supplement the amount of the "Pension" (as defined in The
Mead Retirement Plan) payable from The Mead Retirement Plan
to or on account of any executive of Mead or of certain
"Affiliates" (as defined below) of Mead and, thereby,
enhance Mead's ability to:
(a) recruit mid-career executives;
(b) retain and motivate employed executives;
and
(c) permit earlier than normal retirement of
executives when it is found to be desirable.
The term "Affiliate" means any entity during the period that
it is, along with Mead, a member of a controlled group of
corporations, a controlled group of trades and businesses,
an affiliated service group or any other entity designated
by the Secretary of the Treasury as described in sections
414(b), 414(c), 414(m), and 414(o), respectively, of the
Internal Revenue Code of 1986 (the "Code"). Mead and any
Affiliate designated by the Compensation Committee of
Mead's Board of Directors (the "Committee") and employing a
"Participant" (as described in subsection 2.1) hereunder are
sometimes referred to below, individually, as an "Employer"
and, collectively, as the "Employers."
1.3 Purpose of Restatement. The purpose of this
----------------------
amendment and restatement is to clarify certain Plan
provisions, to incorporate previously applicable Plan
interpretations and to reflect the restructuring of The Mead
Excess Benefit Plan. The amendment and restatement is not
intended to, and does not, reduce the benefits of any person
accrued as of June 30, 1996. It is specifically intended
that the rights and benefits of any Participant who had
attained age 55 on or before June 30, 1992 shall be
determined in accordance with the provisions of the Plan as
in effect on that date.
1.4 Plan Funding and Administration. The benefits
-------------------------------
payable under the Plan are unfunded and are payable, when
due, from the general assets of the Employers or, in the
sole discretion of the Committee, from the assets of a
benefit trust the assets of which shall be subject to the
claims of the unsecured general creditors of the Employers.
Notwithstanding the foregoing, in the event of a "Potential
Change in Control" (as defined in Section 3.02 of Benefit
Trust Agreement, a trust agreement established August 27,
1996 by and between Mead and Key Trust Company of Ohio,
N.A., a national banking association,) the provisions of
Benefit Trust Agreement shall become operative with respect
to the Plan. The Plan shall be administered by the Vice-
President-Human Resources of Mead or such other person as is
hereafter named by the Committee (the "Administrator") who
shall have the rights, powers and duties with respect to the
Plan that are hereinafter set forth and the authority to
establish such rules, regulations and interpretations with
respect to the Plan as are reasonably necessary to
administer the Plan. Any such rules, regulations and
interpretations shall be uniformly applied to all persons
similarly situated.
<PAGE>
1.5 Applicable Law. The Plan will be construed and
--------------
administered in accordance with the laws of the State of
Ohio to the extent that those laws are not preempted by the
laws of the United States of America.
1.6 Gender and Number. Where the context admits,
-----------------
words in any gender include any other gender, words in the
singular will include the plural and words in the plural
include the singular.
1.7 Assignment. No Plan right or interest of any
----------
person under the Plan shall be assignable or transferable,
in whole or in part, either directly or otherwise, including
without limitation thereto, by execution, levy, attachment,
garnishment, pledge or in any other manner, but excluding
transfers by reason of death or mental incompetency; no
attempted assignment or transfer thereof shall be effective;
and no such right or interest shall be liable for, or
subject to, any obligation or liability of any Participant
or Beneficiary; except that a Participant may direct that
payments be made during his lifetime, when due, to a trust
established by him and evidenced to the Administrator to be
a trust created as a grantor trust within the meaning of
section 671 of the Code.
1.8 Notices. Any notice required or permitted to be
-------
given to any person under the Plan will be properly given if
delivered or mailed, postage prepaid, to that person at his
last post office address as shown on his Employer's records.
Any notice to the Committee or the Plan Administrator shall
be properly given if delivered or mailed, postage prepaid,
to the Corporate Secretary of The Mead Corporation at its
principal place of business. Any notice required under the
Plan may be waived by the person entitled to notice.
SECTION 2 - PARTICIPATION
- -------------------------
2.1 Eligibility for Participation. Each individual
-----------------------------
who was a participant in the Plan on December 31, 1995 shall
continue as a Participant, subject to the terms and
conditions of the Plan. Each other full-time, domestic,
executive employee of the Employers will become a
Participant in the Plan on the first day of the month next
following the date on which he:
(a) is a Participant in The Mead Retirement
Plan;
(b) is employed in a job classification
designated by the Committee;
(c) has been employed in such a job
classification for 36 consecutive months; and
(d) has executed such forms and supplied the
Plan
Administrator with such documents, evidence, data
and information as the Committee may require.
Subject to the terms and conditions of the Plan, an
individual who has once become a Participant in the Plan
shall continue as such, notwithstanding his transfer to
employment with an Employer in a non-designated job
classification or with an Affiliate.
2.2 Participation Not Contract of Employment. The
----------------------------------------
Plan does not constitute a contract of employment and
participation in the Plan will not give any employee the
right to be retained in the employ of the Employers or
Affiliates nor give any person any right or claim to any
benefit under the terms of the Plan unless such right or
claim has specifically accrued under the terms of the Plan.
SECTION 3 - BASIC BENEFIT
- -------------------------
<PAGE>
3.1 Eligibility for Basic Benefit. If a Participant's
-----------------------------
employment with the Employers and the Affiliates is
terminated (for a reason other than his death) at or after
he has attained age 62 years, he shall be entitled to
receive a "Basic Benefit" in an amount determined pursuant
to the provisions of subsection 3.2 and paid in the form and
at the time provided in subsection 3.3.
3.2 Amount of Basic Benefit. A Participant's Basic
-----------------------
Benefit is an amount that, when expressed as an annual
amount payable as a single life annuity commencing on the
first day of the calendar month coincident with or next
following the date of his termination of employment, is
equal to:
(a) 55 percent of his "Final Average
Earnings" (as defined in subsection 3.4);
REDUCED BY
----------
(b) the amount of the Participant's "Other
Benefits" (as defined in subsection 3.6); and
FURTHER REDUCED BY
------------------
(c) the reduction, if any, required by
subsection 9.4 which relates to "Spousal Survivor Benefits"
(as described in subsection 9.1).
3.3 Form and Time of Payment of Basic Benefit. Except
-----------------------------------------
as otherwise specifically provided by Section 7, relating to
optional forms of payment, the "Actuarial Present Value" (as
defined in The Mead Retirement Plan) of the amount of a
Participant's Basic Benefit will be distributed to him in
the form of a single, lump sum payment, on or as soon as
practicable after the date on which the Participant's
employment with the Employers and the Affiliates is
terminated.
3.4 Final Average Earnings. The term "Final Average
----------------------
Earnings" means, with respect to any Participant, the
average of his annual "Earnings" (as defined in subsection
3.5) for the highest 3 calendar years of his employment with
the Employers (or his average monthly Earnings if less than
3 calendar years of such employment) selected from the 11
calendar years during which he received Earnings commencing
with the earlier of the calendar year in which the
Participant attains age 62 years or terminates his
employment with the Employers and the 10 preceding calendar
years. Notwithstanding the foregoing, for purposes of
determining the amount of a Spousal Survivor Benefit payable
pursuant to Section 9 on account of a Participant who has
not attained age 55 years on the date of his death, it shall
be assumed that the amount of his Final Average Earnings is
equal to the amount of his "Earnings" (as defined in The
Mead Retirement Plan) during the calendar year next
preceding the year of his death.
3.5 Earnings. For any calendar year, the term
--------
"Earnings" means, with respect to any Participant, the cash
remuneration and the value of property given to him in lieu
of cash (without regard to any restriction or risk of
forfeiture), payable to him in that year by the Employers in
the form of base pay, bonuses, short term incentive
compensation and amounts payable in lieu of short term
incentive compensation in that year (and any portion of any
such amounts deferred by the Participant pursuant to the
terms of any deferred compensation arrangement maintained by
the Employers). In no event shall a Participant's Earnings:
(a) include payments from long term
incentive compensation plans, stock option plans, stock
appreciation rights, severance payments, special
agreements, contracts or payments, expense
reimbursements or relocation allowances; or
(b) exceed 2 times his base pay.
3.6 Other Benefits. The term "Other Benefits" means,
--------------
with respect to any Participant, the sum of:
<PAGE>
(a) 50 percent of the annual primary Social
Security benefit payable (or, in the case of a
Participant whose Benefit is being determined
prior to the date he attains age 62 years,
estimated by the Plan Administrator, in his
absolute discretion, to be payable) to the
Participant at age 62;
(b) disregarding any reduction on account of
a "qualified domestic relations order" (as defined
in section 414(p) of the Code), the annual amounts
(expressed as single life annuities) determined to
be payable to the Participant under The Mead
Retirement Plan, The Mead Section 415 Excess Plan
and The Mead Excess Compensation Plan (the "Mead
Plans") as of his termination date, or such other
determination date as is specifically provided with
respect to a particular Plan Benefit; and
(c) disregarding any reduction on account of
a qualified domestic relations order, the annual
amount (expressed as a single life annuity) payable
to the Participant from the employer funded portion
of any deferred, vested or lump sum benefit earned
under a "Prior Retirement Plan" (that is any
defined benefit plan or other similar primary
retirement plan intended to meet the requirements
of section 401(a) of the Code (including any
governmental plan) maintained by any previous
employer of the Participant) prior to age 55 and
payable no earlier than 10 years prior to the date
on which the Participant was employed by the
Employers and Affiliates.
SECTION 4 - EARLY BENEFIT
- -------------------------
4.1 Eligibility for Early Benefit. If a Participant's
-----------------------------
employment with the Employers and the Affiliates is
terminated (for a reason other than his death) at or after
he has attained age 55 years, but prior to the date on which
he attains age 62 years, he shall be entitled to receive an
"Early Benefit" in an amount determined pursuant to the
provisions of subsection 4.2 and paid in the form and at the
time provided in subsection 4.3.
4.2 Amount of Early Benefit. A Participant's Early
-----------------------
Benefit is an amount determined in accordance with the
provisions of subsection 3.2, but computed by reducing the
percentage "55 percent" found in paragraph 3.2(a) by 1/4 of
one percent for each full month by which the commencement of
payment of the Participant's Early Benefit precedes the
first day of the calendar month coincident with, or next
following, the date on which he attains age 62 years.
4.3 Form and Time of Payment of Early Benefit. Except
-----------------------------------------
as otherwise specifically provided by Section 7, relating to
optional forms of payment, the amount of a Participant's
Early Benefit shall be payable monthly, in the form of a
single life annuity, from the first day of the calendar
month next following his termination of employment through
the calendar month during which the Participant attains age
62 years. As of the first day of the calendar month next
following the date on which the Participant attains age 62
years, an amount equal to the Actuarial Present Value of his
Early Benefit, (which Actuarial Present Value shall be
reduced by the aggregate amount of the monthly payments
previously made to him and increased by interest on the
undistributed portion of his Early Benefit calculated from
his termination date to the payment date), determined as of
his termination date, will be distributed to the Participant
in the form of a single, lump sum payment.
SECTION 5 - PRE-AGE 55 BENEFIT
- ------------------------------
5.1 Eligibility for Pre-Age 55 Benefit. If a
----------------------------------
Participant's employment with the Employers and the
Affiliates is "Involuntarily Terminated" (as described in
subsection 5.4) prior to the date on which he attains age 55
years, or if his employment is terminated prior to that date
for any other reason approved for purposes of the Plan by
Mead's Chief Executive Officer, he shall be entitled to
receive a "Pre-Age 55 Benefit" in an amount determined
pursuant to the provisions of subsection 5.2 and paid in the
form and at the time provided in subsection 5.3.
<PAGE>
5.2 Amount of Pre-Age 55 Benefit. A Participant's
----------------------------
Pre-Age 55 Benefit is an amount determined in accordance
with the provisions of subsection 3.2 as of the date he
attains age 62, but computed by:
(a) reducing the percentage "55 percent"
found in paragraph 3.2(a) by 1/4 of one percent for each
full month by which the date of the Participant's
termination of employment with the Employers and
the Affiliates precedes the first day of the calendar
month coincident with, or next following, the date
on which he will attain age 62 years; and
(b) by assuming, for purposes of determining
the amount of his Other Benefits attributable to the
Mead Plans, that he will continue as a Participant
under those Plans until the date on which he will
attain age 55 years and that his benefits under The
Mead Plans will be payable on that date.
5.3 Form and Time of Payment of Pre-Age 55 Benefit.
----------------------------------------------
Except as otherwise specifically provided by Section 7, an
amount equal to the Actuarial Present Value of a
Participant's Pre-Age 55 Benefit will be distributed to the
Participant, in a single, lump sum payment as of the first
day of the calendar month coincident with or next following
the date on which the Participant attains age 62 years.
5.4 Involuntary Termination. The term "Involuntary
------------------------
Termination" means, with respect to any Participant, the
termination of the Participant's employment with the
Employers and the Affiliates, either:
(a) at the option of his employer, for a
reason other than "Cause" (as defined in subsection 5.5);
or
(b) at the Participant's option, exercised
within the 24-month period following the occurrence,
without the express consent of the Participant, of
any one or more of the following events:
(i) the assignment of duties to the
Participant which are substantially
inconsistent with the Participant's duties,
responsibilities and status at the time of the
assignment, or that constitute a substantial
reduction or alteration in the nature or status
of such duties and responsibilities;
(ii) a reduction in the amount of the
Participant's base pay;
(iii) the transfer of the work location
of the Participant to a place that is in excess
of 25 miles from his work location at the time
the transfer is made;
(iv) the failure of the Participant's
Employer or Affiliate employer to continue in
effect any of its employee benefit plans,
policies, practices or arrangements,
including, but not limited to, those plans,
policies and arrangements maintained solely for
the benefit of key management personnel in
which the Participant participates, or the
failure of it to continue the Participant's
participation therein on substantially the
same basis, both in terms of the amount of
benefits provided and the level of
participation relative to other participants,
unless such benefits, policies and
arrangements are replaced by one or more
alternative or substitute plans, policies or
arrangements providing substantially equivalent
benefits in the aggregate.
<PAGE>
The determination of whether an event described in paragraph
(b) above has occurred shall be made by the Committee, based
on its comparison of circumstances existing after the
alleged occurrence with the circumstances prevailing
immediately prior thereto.
5.5 Termination for Cause. For purposes of the Plan,
---------------------
a termination of a Participant's employment for "Cause"
shall mean termination as a result of the Participant's:
(a) willful and continued failure to perform
duties with the Employers and Affiliates (other
than any such failure resulting from an
Involuntary Termination) after a written demand for
substantial performance has been delivered to the
Participant specifically identifying the manner in
which the Employer or Affiliate, as the case may
be, believes the Participant has not substantially
performed such duties and the Participant has failed
to resume substantial performance on a continuous
basis within 14 days of receiving such demand;
(b) willfully engaging in conduct which the
Committee determines is demonstrably and
materially injurious to the Employers or
Affiliates, monetarily or otherwise; or
(c) conviction of a felony, or conviction of
a misdemeanor which impairs the Participant's
ability to perform his duties with the Employer or
Affiliate employing him.
SECTION 6 - DISABILITY BENEFIT
- ------------------------------
6.1 Eligibility for Disability Benefit. If a
----------------------------------
Participant's employment with the Employers and the
Affiliates is terminated by reason of his becoming
"Disabled" (as defined in The Mead Retirement Plan) prior to
the date on which he attains age 62 years and he continues
to be Disabled until age 62, he shall be eligible to receive
a "Disability Benefit" in an amount determined pursuant to
the provisions of subsection 6.2 and paid in the form and at
the time provided in subsection 6.3.
6.2 Amount of Disability Benefit. A Participant's
----------------------------
Disability Benefit is an amount determined in accordance
with the provisions of subsection 3.2, but expressed as a
single life annuity commencing as of the later of the date
the Participant attains age 62 or the date as of which
Pension payments to him commence under The Mead Retirement
Plan.
6.3 Form and Time of Payment of Disability Benefit.
----------------------------------------------
Except as otherwise specifically provided by Section 7,
relating to optional forms of payment, the Actuarial Present
Value of the amount of a Participant's Disability Benefit
will be distributed to him in the form of a single, lump sum
payment as soon as practicable after the later of the date
on which the Participant attains age 62 years or the date as
of which Pension payments to him commence under The Mead
Retirement Plan.
SECTION 7 - OPTIONAL FORMS OF BENEFIT PAYMENT
- ---------------------------------------------
7.1 Request for Optional Payment Form. A Participant,
----------------------------------
by writing filed with the Plan Administrator at least one
year prior to his termination date (or within 60 days after
becoming Disabled) in such form as the Plan Administrator
may require, may request to have his Plan Benefit paid in an
optional form permitted by subsection 7.2. Any such request
shall be deemed to be approved by the Plan Administrator
unless disapproved within 15 days of its receipt. Any such
approved request shall be void and of no force or effect if
the Participant dies before payment in the optional form
requested begins.
7.2 Optional Forms of Benefit Payment. Subject to the
---------------------------------
provisions of subsection 7.3, the optional forms of payment
under the Plan are:
<PAGE>
(a) a single life annuity in the amount
calculated under subsection 3.2, 4.2, 5.2 or 6.2,
whichever is applicable, payable commencing at the
time permitted under subsection 3.3, 4.3, 5.3 or
6.3, whichever is applicable;
(b) any optional form of benefit permitted
(assuming, for this purpose, that election of an
optional form of Disability Pension is permitted)
under the provisions of The Mead Retirement Plan at
the time the request is made, the amount of which
shall be determined by applying the actuarial
assumptions utilized under that plan; and
(c) in the case of an Early Benefit payable
monthly pursuant to subsection 4.3, by foregoing
those monthly amounts and instead receiving the
Actuarial Present Value of the Early Benefit
computed as of age 62, but without regard to the
percentage reduction otherwise required by
subsection 4.2, payable in a single, lump sum
distribution as of the first day of the month
coincident with, or next following, the date on
which the Participant attains age 62 years.
7.3 Limitations on Optional Forms of Payment. No
----------------------------------------
optional form of payment shall permit:
(a) payment of any single, lump sum amount
to a Participant prior to the first day of the month
coincident with, or next following, the date on
which the Participant attains age 62 years; or
(b) payment of a Disability Benefit prior to
the time specified in subsection 6.3.
SECTION 8 - DEATH BENEFIT
- -------------------------
8.1 Eligibility for Death Benefit. If a Participant
-----------------------------
dies after payment of monthly amounts of his Early Benefit
begins under subsection 4.3 and prior to receiving his
entire Early Benefit, a Death Benefit, in an amount
determined under subsection 8.2, shall be paid, as soon as
practicable, in a single, lump sum, to his "Beneficiary" (as
defined in subsection 8.3). Except as specifically provided
by an optional form of payment permitted by subsection 7.2
and by Section 9, relating to "Spousal Survivor Benefits,"
no other amount shall be payable to any person from the Plan
on account of the death of a Participant.
8.2 Amount of Death Benefit. The Death Benefit
-----------------------
payable on account of a deceased Participant shall be an
amount equal to the Actuarial Present Value of his Early
Benefit (which Actuarial Present Value shall reduced by the
aggregate amount of the monthly payments previously made to
him and increased by interest on the undistributed portion
of his Early Benefit calculated from his termination date to
the payment date), determined as of his termination date.
8.3 Beneficiary. The term "Beneficiary" means, with
-----------
respect to any Participant, such natural or legal person or
persons as may be designated by him (who may be designated
contingently or successively) to receive the Death Benefit
payable if he dies before a total payment of his Early
Benefit is made to him. A Beneficiary designation will be
effective with respect to a Participant only when a signed
and dated beneficiary designation form is filed with the
Committee while the Participant is alive, which form will
cancel any beneficiary designation form signed and filed
earlier. If a Participant is not survived by a Beneficiary
the Committee shall pay the Death Benefit to his "Spouse"
(as defined in The Mead Retirement Plan) or, if he is not
survived by a Spouse, to the legal representative or
representatives of the estate of the Participant.
<PAGE>
SECTION 9 - SPOUSAL SURVIVOR BENEFIT
- ------------------------------------
9.1 Eligibility for Spousal Survivor Benefit. Subject
----------------------------------------
to the reduction required by subsection 9.4, if a
Participant dies while employed by the Employers or after
his termination of employment with the Employers, but, prior
to the date on which he is first receives payment of a
Benefit to which he is entitled under Section 3, 4 or 5, his
Spouse, if any, shall be eligible to receive a Spousal
Survivor Benefit, in an amount determined under subsection
9.2, if she has a right to receive a Pre-Retirement Survivor
Pension under The Mead Retirement Plan and has not waived
that right.
9.2 Amount of Spousal Survivor Benefit. The Spousal
----------------------------------
Survivor Benefit payable to a Spouse on account of a
deceased Participant is an amount determined by:
(a) calculating the amount, expressed as a
joint and survivor annuity of 50, 66 2/3 or 75 percent
(whichever is payable to the Spouse as a Pre-
Retirement Survivor Pension under The Mead
Retirement Plan), which is of Actuarial Equivalent
Value to a single life annuity computed with respect
to the deceased Participant pursuant to subsection
3.1, 4.1 or 5.1, whichever is applicable; and
(b) then determining the annual amount that
would be payable to the surviving Spouse on the basis of
the joint and survivor annuity computed under
paragraph (a) above.
Notwithstanding the provisions of paragraph 3.2(b) to the
contrary, in computing the amount of a "Spousal Survivor
Benefit" with respect to the surviving Spouse of a deceased
Participant who had not attained age 55 years on the date of
his death, the Other Benefit attributable to The Mead
Retirement Plan shall be an amount equal to the
Participant's "Accrued Benefit" (as defined under that plan)
as of the date of his death, assuming that the amount of his
Final Average Earnings used in computing his Accrued Benefit
equalled the "Earnings" (as defined in The Mead Retirement
Plan) payable to him by the Employers during his last full
calendar year of employment by them and that his "Pension"
under The Mead Retirement Plan would be payable at the date
the deceased Participant would have attained age 55 years.
9.3 Form and Time of Payment of Spousal Survivor
--------------------------------------------
Benefit.
- -------
The Actuarial Present Value (determined taking into
account the date on which a Benefit would have commenced
under Section 3, 4 or 5, whichever would have been
applicable, and the surviving Spouse's age on that date) of
the amount determined under paragraph 9.2(b) will be
distributed to the surviving Spouse, in the form of a
single, lump sum payment, as soon as practicable after the
date of the Participant's death.
9.4 Reduction for Spousal Survivor Benefit. As
--------------------------------------
provided by paragraph 3.2(c), the amount of a Participant's
Plan Benefit will be reduced by a percentage thereof,
determined in accordance with the following table, for the
portion of the calendar period beginning on the date on
which the Participant attains age 55 years and ending on the
earlier of the date payment of his Benefit begins or the
date on which he attains age 62 years, during which his
Spouse is eligible to receive a Pre-Retirement Survivor
Pension under The Mead Retirement Plan. The percentage
reduction will be computed on a pro rata basis for completed
months of coverage which are less than a whole year.
Percentage Reduction
Percentage of Benefit for Each Full Year
Payable to Spouse of Coverage
--------------------- --------------------
50 percent 1/2 of one percent
66 2/3 percent 2/3 of one percent
75 percent 3/4 of one percent
Notwithstanding the foregoing table, in no event will a
percentage reduction under this Plan be greater than the
percentage reduction for a Pre-Retirement Survivor Pension
of a like amount under The Mead Retirement Plan.
<PAGE>
SECTION 10 - SPECIAL PROVISIONS AFFECTING PAYMENT OF
BENEFITS.
- -------------------------------------------------------------
10.1 Competition. Subject to his right of appeal under
-----------
Section 11, if the Committee determines that a Participant,
without the express prior written consent of Mead, directly
or indirectly, individually or as an agent, officer,
director, employee, shareholder (other than being the holder
of any stock which represents a less than one percent
interest in a corporation), partner or in any other capacity
whatsoever, after termination of employment and prior to
attainment of age 62, has engaged, or is engaging, in any
activity competitive with or adverse to the Employer's and
Affiliate's businesses or in the sale, distribution,
production, or attempted sale, distribution or production,
of any goods, products or services then sold or being
developed by any Employer or Affiliate, all Benefits
otherwise payable at any time under the Plan shall be
permanently forfeited and payment of Benefits, if commenced,
shall cease. This subsection 10.1 shall not apply to a
Participant whose employment with the Employers and
Affiliates terminates on or after a "Change in Control" (as
defined in subsection 10.3) of Mead.
10.2 Termination for Cause. Subject to his right of
---------------------
appeal under Section 11, if the employment of a Participant
with the Employers and Affiliates is terminated for Cause,
all Benefits otherwise payable to any person, at any time,
under the Plan shall be automatically and permanently
forfeited.
10.3 Payments After a Change in Control. If the
----------------------------------
employment of an employee who is a Participant on the date
of a Change in Control of Mead (or of any other employee
who, but for the requirement of paragraph 2.1(c), would have
been a Participant on that date) is terminated within 24
months after that date for a reason other than death or
Cause, he shall be entitled to receive a "Termination
Benefit," payable within 30 days after his termination date.
A Participant's "Termination Benefit" is a single lump sum
amount equal to the Actuarial Present Value (determined for
purposes of this Section by applying the actuarial
assumptions utilized for that purpose on the day prior to
the date of the Change in Control under The Mead Retirement
Plan) of the amount that would have been his Plan Benefit if
determined as of the day preceding the date of the Change in
Control. For purposes of computing the amount of that Plan
Benefit:
(a) a Participant who has not attained age 55
years on the day preceding the date of a Change in Control will
be deemed to have had his employment with the Employers
and Affiliates Involuntarily Terminated on that day; and
(b) in the case of a Participant terminated on
account of becoming Disabled, it shall be assumed that he will
continue to be Disabled until he attains age 62 years.
If a Participant, surviving Spouse or Beneficiary is
receiving payment of periodic Plan Benefits on the date of a
Change in Control, the Actuarial Present Value of any
remaining payments (determined as of the day immediately
preceding that date) shall be payable to him, in a single,
lump sum, within 30 days of the date of the Change in
Control. For purposes of the Plan, the term "Change in
Control" of Mead means a change in control of a nature that
would be required to be reported in response to Item 6(e)
(or any successor thereto) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), whether or not Mead is then
subject to such reporting requirement; provided, that,
without limitation, such a Change in Control shall be deemed
to have occurred if:
(i) any "person" (as defined in
Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Mead
representing 25 percent or more of the combined
voting power of Mead's then outstanding
securities;
<PAGE>
(ii) during any period of 2 consecutive
years (not including any period prior to the date
of adoption of this restated Plan) there shall
cease to be a majority of the Board of
Directors of Mead ("the Board") comprised as
follows: individuals who at the beginning of
such period constitute the Board and any new
director or directors whose election by the
Board or nomination for election by Mead's
stockholders was approved by a vote of at least
two-thirds of the directors then still in
office who either were directors at the
beginning of the period or whose election or
nomination for election was previously so
approved; or
(c) either:
(i) the shareholders of Mead approve a
merger or consolidation of Mead with any
other corporation, other than a merger or
consolidation which would result in the
voting securities of Mead outstanding
immediately prior thereto continuing to
represent (either by remaining outstanding or
by being converted into voting securities of
the surviving or parent entity) at least 80
percent of the combined voting power of the
voting securities of Mead or such surviving
or parent entity outstanding immediately
after such merger or consolidation; or
(ii) the shareholders of Mead approve a
plan of complete liquidation of Mead or an
agreement for the sale or disposition by Mead
of all or substantially all of Mead's assets.
10.4 Emergency Payments. If it is determined (as
------------------
provided below) that a Participant or Beneficiary has
experienced an "Unforeseeable Emergency" (as defined below),
the terms and manner of payment of Benefits provided in the
Plan or selected by a Participant may be changed to the
extent appropriate to satisfy the Participant's or
Beneficiary's emergency need. The term "Unforeseeable
Emergency" means severe financial hardship to the
Participant or Beneficiary resulting from a sudden and
unexpected illness or accident of the Participant or
Beneficiary or of a "dependent" (as defined in section
152(a) of the Code) of the Participant or Beneficiary, loss
of the Participant's or Beneficiary's property due to a
casualty, or other similar extra-ordinary and unforeseeable
circumstances arising as a result of events beyond the
control of the Participant or Beneficiary. A determination
with respect to whether a Participant or Beneficiary has
experienced an Unforeseeable Emergency shall be made:
(a) in the case of a Participant employed,
or last employed, by an Employer as other than an
elected officer of the Employer and his Beneficiary,
the Chairperson of the Committee; and
(b) in the case of a Participant employed,
or last employed, by an Employer as an elected
officer of the Employer and his Beneficiary, the
Committee.
The provisions of Section 11 of the Plan shall not be
applicable with respect to any determination made pursuant
to this subsection 10.4.
10.5 ECAP Credit in Lieu of Distribution. With the
-----------------------------------
approval of the Committee, which approval shall
automatically be revoked by the Committee's exercise of its
discretion under subsection 10.4, a Participant who is also
a Participant in The Mead Corporation Executive Capital
Accumulation Plan ("ECAP") may irrevocably elect to waive
his right to receive any amount otherwise distributable to
him pursuant to the provisions of the Plan and to have the
same amount credited for his benefit and subsequently
distributed to him under the terms of the ECAP. An election
made by a Participant in accordance with the provisions of
this subsection must be in such written form as the
Committee shall decide and filed with the Plan Administrator
at least one year in advance of the date of the
Participant's termination of employment with the Employers
and Affiliates. In no event shall this subsection be
applicable to any amount distributable to any person other
than a Participant.
<PAGE>
10.6 Payment to Incapacitated Persons. Notwithstanding
--------------------------------
any other provision of the Plan, if a Participant or other
person entitled to a Benefit payment under the Plan is
determined by a court of competent jurisdiction to be
physically, mentally or legally incapacitated and unable to
manage his financial affairs and claim is made by a
conservator or other person legally charged by such court
with the care of his person, the Committee shall make
distributions to such conservator or other person. Any
distribution made in accordance with this subsection shall
fully acquit and discharge all persons from all further
liability on account thereof.
10.7 Withholding. The Plan Administrator shall cause
-----------
to be withheld from the amount of any Benefit paid to a
Participant or Beneficiary pursuant to the terms of the Plan
any amount required to be withheld by federal, state or
local law.
SECTION 11 - DISPUTE RESOLUTION
- -------------------------------
11.1 Notice of Denial. If any dispute arises with
----------------
respect to a Participant, Spouse or Beneficiary (a
"Claimant") under the Plan, the Plan Administrator will
provide the Claimant with a written notice of its resolution
of the dispute setting forth:
(a) the provisions of the Plan upon which
the resolution was based; and
(b) an explanation of this claims procedure.
If the Plan Administrator rejects a Claimant's application
for failure to furnish certain necessary materials or
information, the written notice to the Claimant will explain
what additional material is needed and why, and advise the
Claimant that he may refile a proper application. In the
event that the Plan Administrator fails to take any action
on the Claimant's initial application within 90 days after
receipt, the application will be deemed denied, and the
Claimant's appeal rights under subsection 11.2 will be in
effect as of the end of such period.
11.2 Notice of Appeal. Within 60 days after the
----------------
receipt of the Plan Administrator's notice of resolution,
the Claimant may file a written notice of appeal of the
resolution with the "Claims Reviewer" (as defined below).
In addition, within such appeal period, the Claimant may
review pertinent documents at such reasonable times and
places as the Committee may specify and may submit any
additional written material pertinent to the appeal not set
forth in the notice of appeal. The appeal shall be
determined by the Claims Reviewer, and the Claimant shall be
entitled to appear before the Claims Reviewer to present his
claim. The term "Claims Reviewer" means a 3 member panel
appointed by the Committee.
11.3 Decision on Appeal. The panel will make a written
------------------
decision on the appeal not later than 60 days after its
receipt of the notice of appeal unless special circumstances
require an extension of time, in which case a decision will
be given as soon as possible, but not later that 120 days
after receipt of the notice of appeal. The decision on the
appeal will be in writing and shall include specific reasons
for the decision, making specific reference to the provision
of the Plan upon which the decision was based.
11.4 Records, Data and Information. Unless proven to
-----------------------------
the satisfaction of the Plan Administrator to be in error,
the records, data and information of the Employers,
Affiliates and Administrators of the Mead Plans shall be
conclusive on all Participants, surviving Spouses and
Beneficiaries with respect to all matters relating to the
Plan.
SECTION 12 - AMENDMENT AND TERMINATION
- --------------------------------------
12.1 Amendment and Termination. Mead expects the Plan
-------------------------
to be permanent, but since future conditions affecting Mead
cannot be anticipated or foreseen, Mead must necessarily and
does hereby reserve the right to amend, modify or terminate
the Plan at any time by action of its Board of Directors.
<PAGE>
12.2 Contingencies Affecting the Employers. In the
-------------------------------------
event of a merger or consolidation of the Employer, or the
transfer of substantially all of the assets of the Employer
to another corporation, such successor corporation shall be
substituted for the Employer under the terms and provisions
of the Plan.
12.3 Protected Benefits. If the Plan is terminated,
------------------
revoked, or amended so as to decrease benefits provided
under the Plan, the full benefits earned by each terminated
Participant and Beneficiary shall not be reduced. A
Participant who is in active service at the time of a Plan
termination, revocation or amendment shall be entitled to
full Benefits under the prior provisions of the Plan;
provided, however, that his Earnings for periods subsequent
to such termination, revocation or amendment shall not be
used in determining the amount of benefits based on Final
Average Earnings that are protected by this subsection. Any
employee who would be a Participant but for the 36 month
requirement of paragraph 2.1(c) shall be treated as a
Participant for purposes of this subsection if the employee
satisfies such requirement after the termination,
revocation, or amendment of the Plan. The time and manner
of payment of Benefits protected by this subsection shall
remain subject to the prior terms and conditions of the
Plan.
FIRST AMENDMENT
OF
THE MEAD CORPORATION EXECUTIVE CAPITAL ACCUMULATION PLAN
-------------------------------------------------------
WHEREAS, The Mead Corporation maintains The Mead Corporation
Executive Capital Accumulation Plan (the "Plan"), and amendment
of the Plan is now considered thereunder;
Now, THEREFORE, the Plan be, and it hereby is, amended,
effective March 1, 1997, by substituting the following for
Section 5 thereof.
SECTION 5 - ROLLOVERS
- ---------------------
5.1 ICEP Rollovers. Notwithstanding any provision of the
--------------
Plan to the contrary, a Participant for whose benefit a balance
is maintained under the Incentive Compensation Election Plan (the
"ICEP") may elect, during December, 1994, to have that balance
transferred to the Plan and credited to a separate Participant
Account (to be identified as his "ICEP Participant Account")
established hereunder as of January 1, 1995, subject to the
following:
(a) In no event may a Participant elect to transfer to
this Plan any amount credited under the Supplement
to the ICEP.
(b) No ICEP rollover to the Plan shall be permitted
after January 1, 1995.
(c) A Participant's Distribution Period with respect
to his ICEP Participant Account shall commence on
the date on which payment of his balance under the
ICEP would have commenced.
5.2 SERP Rollovers. Notwithstanding any provision of the
--------------
Plan to the contrary, if a Participant who is also a Participant
under The Mead Corporation Supplemental Executive Retirement Plan
(the "SERP") has elected, at the time and in the manner permitted
by the SERP, to have any amount otherwise payable to him under
the terms of the SERP transferred to this Plan and credited to a
separate Participant Account then such an Account (to be
identified as his "SERP Participant Account"), will be
established hereunder as of the date payment would have been made
to him under the provisions of the SERP, subject to the
Participant's entering into an agreement setting forth the
matters described in paragraphs 3.3(b) through (e) of this Plan.
5.3 Excess Plan Rollovers. Notwithstanding any provision
---------------------
of the Plan to the contrary, if a Participant who is also a
Participant under The Mead Corporation Excess Earnings Benefit
Plan (the "Excess Plan") has elected, at the time and in the
manner permitted by the Excess Plan, to have any amount otherwise
payable to him under the terms of the Excess Plan transferred to
this Plan and credited to a separate Participant Account then
such an Account (to be identified as his "Excess Plan Participant
Account") will be established hereunder as of the date payment
would have been made to him under the provisions of the Excess
Plan, subject to the Participant's entering into an agreement
setting forth the matters described in paragraphs 3.3(b) through
(e) of this Plan.
5.4 415 Plan Rollovers. Notwithstanding any provision of
------------------
the Plan to the contrary, if a Participant who is also a
Participant under The Mead Corporation Section 415 Excess Benefit
Plan (the "415 Plan") has elected, at the time and in the manner
permitted by the 415 Plan, to have any amount otherwise payable
to him under the terms of the 415 Plan transferred to this Plan
and credited to a separate Participant Account then such an
Account (to be identified as his "415 Plan Participant Account")
will be established hereunder as of the date payment would have
been made to him under the provisions of the 415 Plan, subject to
the Participant's entering into an agreement setting forth the
matters described in paragraphs 3.3(b) through (e) of this Plan.
EXHIBIT (11.1)
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
CALCULATION OF PRIMARY NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
- --------------------------------------------------------------------------
(All amounts in thousands, except per share amounts)
First Quarter Ended
--------------------
March 30, March 31,
1997 1996
------- -------
NET EARNINGS APPLICABLE TO COMMON AND COMMON
EQUIVALENT SHARES $ 20,177 $ 36,346
======= =======
AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING:
Average number of common shares outstanding 52,217 52,779
Dilutive effect of stock options after
application of treasury stock method 827 693
------- -------
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 53,044 53,472
======= =======
PRIMARY NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $ .38 $ .68
======= =======
EXHIBIT (11.2)
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
CALCULATION OF FULLY DILUTED NET EARNINGS PER COMMON AND COMMON
- ---------------------------------------------------------------
EQUIVALENT SHARE (1)
- --------------------
(All amounts in thousands, except per share amounts)
First Quarter Ended
--------------------
March 30, March 31,
1997 1996
------- -------
NET EARNINGS APPLICABLE TO COMMON AND COMMON
EQUIVALENT SHARES $ 20,177 $ 36,346
======= =======
AVERAGE NUMBER OF SHARES OUTSTANDING ON A
FULLY DILUTED BASIS:
Shares used in calculating primary earnings
per share 53,044 53,472
Additional dilutive effect of stock options after
application of treasury stock method 25
------- -------
AVERAGE NUMBER OF SHARES OUTSTANDING ON A
FULLY DILUTED BASIS 53,044 53,497
======= =======
FULLY DILUTED NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ .38 $ .68
======= =======
(1) This calculation is submitted in accordance with 17 CFR 229.601(b)(11)
although not required by APB Opinion No. 15 because it results in dilution
of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q OF THE MEAD CORPORATION FOR THE QUARTERLY PERIOD
ENDED MARCH 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
THIS SCHEDULE SHALL NOT BE DEEMED TO BE FILED FOR PURPOSES OF SECTION 11 OF THE
SECURITIES ACT OF 1933, SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934 AND
SECTION 323 OF THE TRUST INDENTURE ACT OF 1939, OR OTHERWISE SUBJECT TO THE
LIABILITIES OF SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART OF ANY
REGISTRATION STATEMENT TO WHICH IT RELATES.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-30-1997
<CASH> 15
<SECURITIES> 0
<RECEIVABLES> 574
<ALLOWANCES> 0
<INVENTORY> 582
<CURRENT-ASSETS> 1,260
<PP&E> 5,238
<DEPRECIATION> 2,121
<TOTAL-ASSETS> 5,063
<CURRENT-LIABILITIES> 813
<BONDS> 1,249
0
0
<COMMON> 156
<OTHER-SE> 2,090
<TOTAL-LIABILITY-AND-EQUITY> 5,063
<SALES> 0
<TOTAL-REVENUES> 1,136
<CGS> 0
<TOTAL-COSTS> 941
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> 32
<INCOME-TAX> 12
<INCOME-CONTINUING> 20
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20
<EPS-PRIMARY> .38
<EPS-DILUTED> 0
</TABLE>
