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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 April 4, 1999
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 April 4, 1999 was
101,500,735.
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<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
--------------------------------------------------
QUARTERLY PERIOD ENDED APRIL 4, 1999
------------------------------------
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
BALANCE SHEETS
- --------------
(All dollar amounts in millions)
Apr. 4, Dec. 31,
1999 1998
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 11.9 $ 102.0
Accounts receivable 441.2 414.7
Inventories 518.4 479.5
Other current assets 107.4 90.2
-------- --------
Total current assets 1,078.9 1,086.4
Investments and other assets:
Investees 133.9 127.5
Other assets 564.5 555.6
-------- --------
698.4 683.1
Property, plant and equipment - net 5,752.9 5,741.8
Less accumulated depreciation and
amortization (2,419.1) (2,369.1)
-------- --------
3,333.8 3,372.7
-------- --------
Total assets $5,111.1 $5,142.2
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Notes payable $ 45.5 $
Accounts payable 229.2 275.9
Accrued liabilities 362.1 395.7
Current maturities of long-term debt 27.1 7.9
-------- --------
Total current liabilities 663.9 679.5
Long-term debt 1,345.9 1,367.4
Commitments and contingent liabilities
Deferred items 850.8 843.3
Shareowners' equity:
Common shares 151.4 151.9
Additional paid-in capital 70.3 66.3
Retained earnings 2,069.7 2,076.9
Other comprehensive loss (40.9) (43.1)
-------- --------
2,250.5 2,252.0
-------- --------
Total liabilities and
shareowners' equity $5,111.1 $5,142.2
======== ========
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
--------------------
Apr. 4, Mar. 29,
1999 1998
------- -------
Net sales $863.2 $839.0
Cost of products sold 704.5 661.0
------- -------
Gross profit 158.7 178.0
Selling and administrative expenses 105.3 96.3
------- -------
Earnings from operations 53.4 81.7
Other revenues - net 4.0 2.6
Interest and debt expense (26.7) (26.5)
------- -------
Earnings from continuing operations
before income taxes 30.7 57.8
Income taxes 11.1 21.2
------- -------
Earnings from continuing operations
before equity in net earnings
of investees 19.6 36.6
Equity in net earnings (loss)
of investees 3.3 (3.0)
------- -------
Earnings from continuing operations 22.9 33.6
Discontinued operations (3.0)
------- -------
Net earnings $ 22.9 $ 30.6
======= =======
Earnings per common share - basic
and diluted $ .22 $ .32
Discontinued operations (.03)
------- -------
Net earnings $ .22 $ .29
======= =======
Cash dividends per common share $ .16 $ .16
======= =======
Weighted-average number of common
shares outstanding (millions) -
basic 101.7 103.9
======= =======
Weighted-average number of common
shares outstanding (millions) -
assuming dilution 102.9 105.8
======= =======
See notes to financial statements.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
STATEMENTS OF CASH FLOWS
- ------------------------
(All dollar amounts in millions)
First Quarter Ended
--------------------
Apr. 4, Mar. 29,
1999 1998
------- -------
Cash flows from operating activities:
Net earnings $ 22.9 $30.6
Adjustments to reconcile net earnings to
net cash (used in) operating activities:
Depreciation and depletion of property, plant
and equipment 67.6 61.8
Depreciation and amortization of other assets 10.3 10.6
Deferred income taxes 2.5 4.3
Investees - earnings and dividends (4.7) 2.2
Discontinued operations 3.0
Other 2.4 (.1)
Change in current assets and liabilities:
Accounts receivable (32.4) (14.9)
Inventories (44.8) (86.0)
Other current assets (19.3) (11.3)
Accounts payable and accrued liabilities (77.2) (7.4)
Cash (used in) discontinued operations (12.1)
------- -------
Net cash (used in) operating activities (72.7) (19.3)
Cash flows from investing activities:
Capital expenditures (45.6) (78.1)
Additions to equipment rented to others (6.4) (6.1)
Proceeds from sale of assets 13.6
Other 4.8 (31.2)
------- -------
Net cash (used in) investing activities (33.6) (115.4)
Cash flows from financing activities:
Additional borrowings 15.0 115.7
Payments on borrowings (17.8) (115.0)
Notes payable 45.5 138.4
Cash dividends paid (16.3) (16.6)
Common shares issued 4.7 10.1
Common shares purchased (14.9) (8.7)
------- -------
Net cash provided by financing activities 16.2 123.9
------- -------
(Decrease) in cash and cash equivalents (90.1) (10.8)
Cash and cash equivalents at beginning of year 102.0 29.5
------- -------
Cash and cash equivalents at end of quarter $ 11.9 $18.7
======= =======
See notes to financial statements.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
(All dollar amounts in millions)
A - INTERIM FINANCIAL STATEMENTS
The balance sheet at December 31, 1998, is condensed financial
information taken from the audited balance sheet. Management
believes the unaudited interim financial statements reflect
all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial
position and results of operations for the interim periods
presented.
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):
Apr. 4, Dec. 31,
1999 1998
------- -------
Finished and semi-finished products $335.0 $295.0
Raw materials 107.4 109.2
Stores and supplies 76.0 75.3
------- -------
$518.4 $479.5
======= =======
D - INVESTEES
The summarized operating data for all investees is presented
in the following table:
First Quarter Ended
-------------------
April 4, March 29,
1999 1998
------- -------
Revenues $ 173.0 $ 176.4
======= =======
Gross profit $ 22.7 $ 1.6
======= =======
Net earnings (loss) $ 12.5 $ (2.5)
======= =======
E - EMPLOYEE TERMINATION COSTS
In 1998, the company adopted a plan to make organizational
changes and reduce its workforce, and recorded a charge for
employee severance and related costs. The following is a
summary of the remaining accrual at April 4, 1999 (in
millions):
Balance at December 31, 1998 $ 9.9
Used for intended purpose (2.6)
-------
Balance at April 4, 1999 $ 7.3
=======
<PAGE>
F - SHAREOWNERS' EQUITY
During the first quarter of 1999, the company repurchased
approximately 500,000 common shares on the open market. The
company has outstanding authorization from the Board of
Directors to repurchase up to ten million common shares, of
which 9.3 million shares have been repurchased as of the end
of the first quarter of 1999. Comprehensive earnings for the
quarters ended April 4, 1999 and March 29, 1998, were $25.1
million and $26.7 million.
G - ADDITIONAL INFORMATION ON CASH FLOWS
First Quarter Ended
-------------------
April 4, March 29,
1999 1998
------- -------
Cash paid for:
Interest $ 42.5 $ 42.3
======= =======
Income taxes $ 5.1 $ 7.5
======= =======
H - SEGMENT INFORMATION
First Quarter Ended
-------------------
April 4, March 29,
1999 1998
------- -------
Net sales:
Industry segments:
Paper $ 453.9 $ 433.9
Packaging and Paperboard 347.7 342.9
School & Office Products 61.6 62.2
------- -------
Total $ 863.2 $ 839.0
======= =======
Earnings (loss) from continuing operations
before income taxes:
Industry segments:
Paper $ 46.1 $ 59.7
Packaging and Paperboard 24.6 29.4
School & Office Products 1.4 6.7
Corporate and other (1) (41.4) (38.0)
------- -------
Total $ 30.7 $ 57.8
======= =======
(1) Corporate and other includes the following:
Other revenue $ 4.0 $ 3.0
Interest expense (18.7) (14.5)
Other expenses (26.7) (26.5)
------- -------
Total $ (41.4) $ (38.0)
======= =======
Identifiable assets have not changed significantly at April 4,
1999, compared to December 31, 1998.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
- ---------------------
Net Sales
- ---------
First quarter 1999 net sales were $863.2 million, a 3%
increase over $839.0 million in the first quarter of 1998.
The increase in sales revenue was a result of higher sales
volume for paper, corrugating medium and coated paperboard
compared to the first quarter of 1998. There were six
additional selling days for the company in the first quarter
of 1999 compared to the first quarter of 1998. Average
selling prices were lower for most paper and paperboard
products compared to the same quarter a year ago.
Operating Costs and Expenses
- ----------------------------
Gross profit as a percent of sales decreased to 18.4% for the
first quarter of 1999 from 21.2% in the first quarter of 1998
primarily as a result of lower selling prices for paper and
paperboard.
Selling and administrative expenses totaled $105.3 million in
the first quarter of 1999, an increase of 9% from $96.3
million in the first quarter of 1998. As a percentage of net
sales, these expenses were 12.2% in 1999 compared to 11.5% in
1998. The increase was primarily the result of expenses
related to the initial phases of implementation of
the company's enterprise resource planning system, development
of the company's financial services center.
Interest and Debt Expense
- -------------------------
First quarter interest and debt expense was $26.7 million, up
slightly from $26.5 million in the first quarter of 1998.
Income Taxes
- ------------
The effective tax rate was 36.2% for the first quarter of 1999
compared to 36.7% in the first quarter of 1998.
Equity in Net Earnings of Investees
- -----------------------------------
Mead's investees, consisting primarily of its 50% Northwood
companies, had earnings of $3.3 million in the first quarter
of 1999 compared to a loss of $3.0 million in the same quarter
of 1998. Selling prices were higher for wood products,
including lumber, oriented structural board (OSB) and plywood
compared to the first quarter of 1998. Sales volume increased
for OSB and plywood. Selling prices for pulp were low and
relatively unchanged from the first quarter of 1998. Sales
volume of pulp was lower. Contributing to the improved
operating results were lower log costs and lower Canadian
dollar exchange rates. During the quarter, Northwood reached
a labor agreement at its pulp mill in Prince George, British
Columbia, and it continued to take market-related downtime in
lumber by curtailing sawmill production by 15% or 19 million
board feet during the quarter.
Net Earnings
- ------------
Net earnings for the first quarter of 1999 were $22.9 million
compared to $30.6 million in the first quarter of 1998.
Earnings declined as a result of lower selling prices for
coated and uncoated papers, corrugating medium and school and
office products.
<PAGE>
Financial Data by Business
- --------------------------
Paper segment
First Quarter
----------------------------------
1999 1998 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $453.9 $433.9 4.6%
Segment earnings before taxes 46.1 59.7 (22.8)%
Sales in the paper segment increased slightly as sales volume
increased in coated, uncoated, carbonless and specialty papers
compared to the first quarter of 1998. Earnings for the paper
segment declined from the first quarter of 1998 as a result of
lower selling prices primarily for coated papers. Prices for
coated web grades declined 9% from the first quarter of 1998.
Strong operating performance at the company's three
coated paper mills and at its specialty paper mills partially
offset the impact of price declines. As previously announced,
the company took 25,000 tons of market-related downtime in
coated paper production during the first quarter of 1999 and
expects to continue to take downtime in the second quarter and
in the second half of the year. The Specialty Paper division
completed successful trials to produce overlay papers at its
Potsdam, New York, mill, acquired in the first quarter of
1998.
Packaging and Paperboard segment
First Quarter
-------------------------------------
1999 1998 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $347.7 $342.9 1.4%
Segment earnings before taxes 24.6 29.4 (16.3)%
Sales for the Packaging and Paperboard segment in the first
quarter of 1999 were slightly higher compared to the first
quarter of 1998 as a result of increased sales volume of
corrugating medium. Earnings for the segment declined on lower
pricing for medium. Prices for corrugating medium were 22%
below the level of first quarter of 1998. In the
Containerboard division, production and shipments increased
over the first quarter of 1998 as a result of the mill
expansion completed mid-year 1998. During the quarter,
operating problems affected production on the mill's paper
machines. Continued operating issues with the new recovery and
chemical conversion systems led to operating costs that were
higher than the level of the fourth quarter of 1998, though
below the level of the first quarter of 1998.
Within the Coated Board System, which includes the Packaging
and Coated Board divisions, sales increased to the beverage
packaging industry, primarily in North America. The Mahrt
coated paperboard mill increased shipments, improved
production efficiency and enhanced its overall cost position
compared to the first quarter of 1998.
<PAGE>
School and Office Products segment
First Quarter
-----------------------------
1999 1998 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $61.6 $62.2 (1.0)%
Segment earnings before taxes 1.4 6.7 (79.1)%
Sales for the School and Office Products segment declined
slightly in the first quarter of 1999 compared to the first
quarter of 1998. Earnings declined compared to the first
quarter of 1998 as higher unit sales volume was offset by
reduced selling prices. Sales volume improved for value-added
products compared to the first quarter of 1998, while volume
and prices declined for paper-based products. The segment
built inventory in preparation for the "back-to-school"
selling season, which begins in the second quarter.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Working capital on April 4, 1999 was $415 million compared to
$407 million on December 31, 1998. The current ratio was 1.6
at the end of the first quarter of 1999 and on December 31,
1998. Inventories are generally higher in the first quarter
of the year in preparation for the School and Office Products
segment's "back-to-school" selling season. Inventories
increased slightly over the levels of the first quarter of
1998. Inventories were higher in coated paper and in coated
paperboard. The Paper segment, which took market-related
downtime in coated paper in the first quarter of 1999, is
expected to continue taking downtime in the second quarter and
second half of 1999.
Borrowed capital (long-term debt) as a percentage of total
capital (long-term debt plus shareowner's equity) was 37.4% on
April 4, 1999, down slightly from 37.9% on December 31, 1998.
Capital expenditures totaled $45.6 million for the first
quarter of 1999, a decrease from $78.1 million in the first
quarter of 1998 when the company was in the process of
completing the expansion of the Stevenson containerboard mill.
During the first quarter of 1999, the company had proceeds
from the sale of assets totaling $13.6 million. The company
sold the merchandising business of its Packaging division and
a sawmill which was part of its Paper segment. Proceeds from
the sale of these assets were approximately the same as the
carrying amount and therefore had no impact on earnings during
the quarter.
Under a Board of Directors authorization, Mead repurchased
500,000 shares of its capital stock in the first quarter of
1999. The 10 million-share repurchase program was 93%
completed by the end of the first quarter 1999.
At the end of the first quarter, Mead paid a fixed rate or
capped rate on 75% of its debt and paid a floating rate of
interest on the remainder. A change of 1% in the floating
rate, on an annual basis, would result in a $.02 change in
earnings per share for the year. The estimated market value
of long-term debt, excluding capital leases, was $66.6 million
more than the book value at the end of the first quarter of
1999.
<PAGE>
OUTLOOK
- -------
Year 2000 Readiness Disclosure
- ------------------------------
The Year 2000 issue concerns the inability of computerized
information and process control systems to properly recognize
and process date-sensitive information as the year 2000
approaches. Mead expects costs associated with the Year 2000
issue will not have a material adverse impact on results of
operations, liquidity or capital resources.
Mead is making progress as it works through a five-step
process in dealing with the Year 2000 issue: inventory;
assessment; corrective action; testing; and implementation.
With regard to its Information Technology (IT) systems within
corporate functions, the Paper and the Packaging and
Paperboard segments, the inventory and assessment phases have
been completed; corrective action is nearing completion;
testing and implementation are in process and expected to be
completed in the third quarter of 1999. For the School and
Office Products segment, inventory and assessment have been
completed, corrective action is underway and testing and
implementation are scheduled for second half of the year. The
company expects the risk to be low that its IT systems will be
disrupted by the Year 2000 issue.
Non-IT systems include process control systems in
manufacturing and converting facilities for monitoring and
regulating power, production, emissions and safety equipment.
Inventory and assessment of non-IT systems in the Paper and
the Packaging and Paperboard segments have been essentially
completed with corrective action, testing and implementation
underway. Mead has engaged a third-party consultant to assist
in this process. By the end of the first quarter,
approximately 60% of the process control systems were Y2K
ready, 10% were being fixed or replaced and 30% were in the
process of being addressed. The company expects corrective
action and testing on non-IT systems to be completed in the
second and third quarters of 1999 for the Paper and Packaging
and Paperboard segments. Some of the corrective action and
testing will be completed during periods of normal maintenance
downtime. In the School and Office Products segment,
corrective action and testing on non-IT systems will be
completed by yearend or by the first quarter of 2000.
Yearend completion of corrective action and testing of non-IT
systems is not as critical to School and Office Products given
the seasonal nature of its business with most orders produced
and shipped in the second and third quarters of the year.
Mead fully expects to complete corrective action and testing
of all critical non-IT systems within its three business
segments in 1999. The company expects the risk to be low that
its non-IT systems will be disrupted by the Year 2000 issue.
The costs associated with the company's remediation of the
Year 2000 issue include amounts for upgrading and replacing
non-compliant software and hardware systems and the costs
related to the use of third-party solution providers. Through
the first quarter of 1999, the total cost of remediation was
$16 million. This total includes approximately $10 million in
repair costs and $6 million in replacement costs. The total
cost Mead expects to incur between 1997 and 2000 related to
the Year 2000 issue is $30 million to $40 million. The
majority of the remaining costs relate to replacement or
modification of process control systems. These costs will be
expensed as incurred, except for new systems that would be
capitalized in accordance with generally accepted accounting
principles.
Mead has completed a detailed review of its critical suppliers
of raw materials, energy, equipment, supplies and
transportation to determine their level of Year 2000
readiness. Based on this review, the company expects there is
a low level of risk related to Year 2000 readiness with most
of these suppliers and with a few suppliers a medium level of
risk. The company is developing plans for alternative sources
of supply where it believes it is necessary. Significant
interruptions caused by suppliers could affect Mead's
<PAGE>
operations overall and its ability to deliver products and
services to its customers.
The company is in the process of preparing contingency plans
within each of its businesses for addressing the greatest
areas of risk of noncompliance or threats to business
operations related to the Year 2000 issue. The company
expects to finalize these plans by the end of the second
quarter of 1999.
THE ESTIMATES AND CONCLUSIONS STATED HERE CONTAIN
FORWARD-LOOKING STATEMENTS AND ARE BASED ON MANAGEMENT'S BEST
ESTIMATES OF FUTURE EVENTS. RISKS TO COMPLETING THE PLAN
INCLUDE THE CONTINUED AVAILABILITY OF RESOURCES FROM SUPPLIERS
AND THIRD-PARTY CONTRACTORS, THE ABILITY OF SUPPLIERS AND
CUSTOMERS TO BE YEAR 2000 COMPLIANT, AND THE ABILITY TO
IDENTIFY AND COMPLETE CONTINGENCY PLANS FOR SYSTEMATIC
FAILURES NOT UNDER COMPANY CONTROL.
CERTAIN STATEMENTS IN THIS REPORT ARE FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS INCLUDE RISKS AND UNCERTAINTIES.
ACTUAL RESULTS MAY DIFFER. CERTAIN FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER ARE DESCRIBED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31 1998.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
No material changes occurred to information
previously provided in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998.
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
In February 1999, Mead received notice from the
Rock-Tenn Company of a demand from the Michigan Department of
Environmental Quality ("MDEQ") concerning Rock-Tenn's Otsego,
MI mill property.
In the notice to Rock-Tenn, MDEQ referred to potential
liability under federal and state environmental laws for
certain discharges to the Kalamazoo River, including
discharges of polychlorinated biphenyls ("PCBs"), and for
environmental response actions that have been or may be
undertaken at the Allied Paper, Inc./Portage Creek/Kalamazoo
River Superfund Site or the Otsgeo mill property because of
the presence of PCBs. In 1987, Mead transferred the Otsego
mill and other assets to Rock-Tenn pursuant to an Asset
Purchase Agreement. Rock-Tenn alleges Mead is legally
responsible for the presence of PCBs at the Otsego mill
and that Rock-Tenn is entitled to indemnification from Mead
for all costs and liabilities associated with the presence or
discharge of PCBs. Mead disputes Rock-Tenn's allegations and
legal conclusions concerning responsibility, based in part on
Rock-Tenn's operations at the Otsego mill since 1987. The
extent of Rock-Tenn's potential liability for contamination in
the Kalamazoo River or at the Otsego mill are not known
at this time. The costs associated with this proceeding are
not reasonably estimable at this time.
In February 1999, Mead received notice from the
Maine Department of Environmental Protection ("MDEP") that it
was considering requiring Mead to do an investigation and
possibly remediate certain solid waste management areas at
Mead's Rumford, Maine mill, including areas that may be a
source of mercury contamination. Prior to Mead's acquisition
of the mill in November 1996 a chlor-alkali facility using
mercury operated on portions of the property. Mead is in
discussions with the MDEP concerning the need for and scope of
any investigation and/or remediation. The costs associated
with this proceeding are not reasonably estimable at this
time.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
(10) Material Contracts:
(1) Corporate Annual Incentive Plan for 1999
in which executive officers participate.
(2) Corporate Long Term Incentive Plan
effective 1999 in which executive
officers participate.
(3) Restated Corporate Executive Capital
Accumulation Plan effective January 1,
1999 in which executive officers
participate.
(4) Restated Directors Capital Accumulation
Plan effective January 1, 1999 in which
directors participate.
(27) Financial Data Schedule Quarter 1, 1999
(b) No current reports on Form 8-K were filed with the
Commission in the first quarter of 1999.
<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, 1999
THE MEAD CORPORATION
- --------------------
(Registrant)
By: TIMOTHY R. MCLEVISH
_________________________
T. R. McLevish
Vice President, Finance
(Chief Accounting Officer)
THE MEAD CORPORATION
CORPORATE ANNUAL INCENTIVE PLAN
-------------------------------
1999
----
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 financial
results.
PARTICIPATION ELIGIBILITY
- -------------------------
All Officers of the Corporation are participants in this plan.
In addition, the formula of this plan provides funding for the
annual incentives of all Corporate Center employees.
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 annual incentive target will be
pro-rated to reflect the months of service.
Provisions detailed in Attachment 1 and forming a part of this
plan govern in the event of a Change in Control of the company.
ANNUAL INCENTIVE TARGET
- -----------------------
The annual 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. The current targets are shown in
Attachment 2.
PAYOUT FUNDING
- --------------
The individual annual incentive target is multiplied by the
Payout Factor under this Plan. This Payout Factor is determined
as:
Payout = Mead ROTC X Mead ROTC
-------------------- -------------
Factor Mead Cost of Capital FP Peers ROTC
where ROTC = (EAT + ((1 - Tax Rate) X Current Interest Expense)) X 100
---------------------------------------------------
(Average Equity + Average Long-Term Debt)
Mead's Forest Products peers (FP Peers) are comprised of those
members of the Paper Industry Compensation Association whose
major business lines are similar to the Mead business segments,
and for which public financial reporting is provided by Value
Line Reports. For the 1998 plan year, these companies are
identified as:
Boise Cascade
Bowater
Champion International
Consolidated Paper
Georgia Pacific
International Paper
Potlatch
Temple-Inland
Westvaco
<PAGE>
Weyerhaeuser
Willamette
The Compensation Committee may alter the membership of this FP
Peer group as corporate structures or market business lines of
the indicated companies changes.
The annual incentive payout is determined as:
Annual Incentive Payout = Annual Incentive Target X Payout Factor
While this formula determines an available pool of annual
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 each individual's contribution to the business
results for the performance period. This assessment for each
Participant shall be determined by that participant's manager,
subject to review of the CEO.
PAYOUT LIMITATIONS
- ------------------
Payout shall be limited on the basis of the following financial
results of the corporation:
1. There shall be no payout to any participant if any
corporate earnings are negative for the calendar year
2. Maximum payout is 75% of target for any financial
performance under 6.0% ROTC
3. Payout is capped at 200% of target, for any level of
performance
ACCOUNTING FOR PAYOUT
- ---------------------
Payout will be estimated periodically and the required corporate
accrual of payout will be booked against earnings during the
year. Approved incentive payments will be prepared and expensed
to earnings at the time of payout.
RECOMMENDATIONS AND APPROVAL
- ----------------------------
The Compensation Committee approves this Plan, and reviews 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 recommended to the Board of Directors by
the Compensation Committee.
The Compensation Committee may also determine if payout will be
in cash, restricted stock, or replaced with stock options, or a
combination thereof. 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.
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.
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
Effect of Change in Control
- ---------------------------
Notwithstanding any foregoing Plan provision to the contrary (and
notwithstanding any lack of satisfaction of any condition or
requirement which would otherwise apply to an award), immediately
upon the occurrence of a Change in Control (as defined in the
next section hereof), (i) if the Change in Control occurs after
the completion of the performance period ending December 31, 1999
(the "Performance Period"), any award with respect to the
Performance Period which has already been determined, but has not
yet been paid or deferred, shall be immediately paid in full in
cash to the respective Participant, (ii) if the Change in Control
occurs after the completion of the Performance Period, if no
awards have been determined with respect to the Performance
Period, the amount (if any) of each such award shall be
immediately determined in accordance with the provisions of the
Plan and shall be immediately paid in full in cash to the
respective Participant, and (iii) if the Change in Control occurs
during the Performance Period (the "Change-in-Control Performance
Period"), each Participant shall immediately be paid a pro-rata
award for the Performance Period, the amount of which shall equal
the product of multiplying the Participant's individual incentive
target by a fraction, the numerator of which shall be the number
of days in the Change-in-Control Performance Period which have
elapsed as of the date of the Change in Control, and the
denominator of which shall be the number of days in the
Performance Period. Notwithstanding the immediately preceding
sentence, no amounts shall be paid pursuant thereto which would,
in the opinion of counsel selected by Mead's independent
auditors, constitute "parachute payments" within the meaning of
Section 280G(b)(2)(A) of the Internal Revenue Code (the "Code")
and, when added to any other "parachute payments" which would be
received by the Participant pursuant to the terms of any other
plan, arrangement or agreement with Mead,any person whose actions
result in a change in control of Mead or any person affiliated
with Mead or such person, would be subject to the tax imposed by
Section 4999 of the Code.
Notwithstanding any provision to the contrary in the Plan, upon
and after the occurrence of a Change in Control, (i) the
Compensation Committee shall have no power to cause a
Participant's award to be paid in any manner other than as a cash
lump sum, (ii) the Board of Directors shall have no power to
require a mandatory deferral of all or any portion of the award,
and (iii) neither the Compensation Committee, the Board of
Directors nor any other person or entity shall have the right to
terminate or amend the Plan in any manner which would adversely
affect the rights or expectancies of a Participant with respect
to payment of an award pursuant to this section, as in effect
immediately before the Change in Control.
Definition of Change in Control
- -------------------------------
A "Change in Control" shall be deemed to have occurred if an
event set forth in any one of the following paragraphs shall have
occurred:
(i) date of expiration of a Tender Offer (as defined below),
other than an offer by Mead,if the offeror acquires Shares (as
defined below) pursuant to such Tender Offer;
(ii) the date of approval by the shareholders of Mead of a
definitive agreement: (x) for the merger or consolidation of Mead
or any direct or indirect subsidiary of Mead into or with another
corporation, other than (1) a merger or consolidation which would
result in the voting securities of Mead outstanding immediately
prior thereto continuing to represent ((i) in the case of a
merger or consolidation of Mead, either by remaining outstanding
or by being converted into voting securities of the surviving
entity or any parent thereof, or (ii) in the case of a merger or
consolidation of any direct or indirect subsidiary of Mead,
either by remaining outstanding if Mead continues as a parent of
the merged or consolidated subsidiary or by being converted into
voting securities of the surviving entity or any parent thereof)
at least 51% of the combined voting power of the voting
securities of Mead or such surviving or parent entity outstanding
<PAGE>
immediately after such merger or consolidation, or (2) a merger
or consolidation effected to implement a recapitalization of Mead
(or similar transaction) in which no Person (as defined below) is
or becomes the Beneficial Owner (as defined below), directly or
indirectly, of securities of Mead (not including in the
securities Beneficially Owned by such Person any securities
acquired directly from Mead or its Affiliates) representing 25%
or more of the combined voting power of Mead's then outstanding
securities, or (y) for the sale or disposition of all or
substantially all of the assets of Mead, other than a sale or
disposition by Mead for all or substantially all of Mead's assets
to an entity, at least 51% of the combined voting power of the
voting securities of which are owned (directly or indirectly) by
shareholders of Mead in substantially the same proportions as
their ownership of Mead immediately prior to such sale or
disposition.
(iii) (x) any Person is or becomes the Beneficial Owner of 25% or
more of the voting power of the then outstanding securities of
Mead (not including in the securities beneficially owned by such
Person any securities acquired directly or indirectly from
Mead or its affiliates), excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in
clause (x)(1) of paragraph (ii) above or (y) the date of
authorization, by both a majority of the voting power of Mead and
a majority of the portion of such voting power excluding the
voting power of interested Shares, of a control share acquisition
(as such term is defined in Chapter 1701 of the Ohio Revised
Code); and
(iv) a change in the composition of the Board of Directors such
that individuals who were members of the Board of Directors on
the date two years prior to such change (and any new directors
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to
the election of directors of Mead) who were elected, or were
nominated for election by Mead's shareholders with the
affirmative vote of at least two-thirds of the directors then
still in office who either were directors at the beginning
of such two year period or whose election or nomination for
election was previously so approved) no longer constitute a
majority of the Board of Directors.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately
following which the record holders of the common stock of Mead
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership
in an entity which owns all or substantially all of the assets of
Mead immediately following such transaction or series of
transactions.
"Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
"Beneficial Owner" shall have the meaning defined in Rule 13d-3
under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) Mead or any
of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of Mead or any of its
Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities , or (iv) a
corporation owned, directly or indirectly, by the shareholders of
Mead in substantially the same proportions as their ownership of
stock of Mead.
<PAGE>
"Shares" shall mean shares of common stock, without par value, of
The Mead Corporation
"Tender Offer" shall mean a tender offer or a request or
invitation for tenders or an exchange offer subject to regulation
under Section 14(d) of the Exchange Act and the rules and
regulations thereunder, as the same may be amended, modified or
superseded from time to time.
<PAGE>
Attachment 2
CORPORATE ANNUAL INCENTIVE PLAN
-------------------------------
PAYOUT TARGETS
--------------
1999
-----
1999 1999 Annual Policy
Grade Midpoint Incentive Target TCC Target
- ----- -------- ---------------- ----------
33 $809,928 $823,600 $1,633,528
32 712,524 683,600 1,396,124
31 621,720 563,400 1,185,120
30 544,032 461,800 1,005,832
29 475,632 378,100 853,732
28 415,584 310,000 725,584
27 363,084 255,300 618,384
26 317,196 210,100 527,296
25 277,236 173,900 451,136
24 241,992 146,100 387,992
23 211,020 125,800 336,820
22 187,476 108,160 295,636
21 164,448 91,160 255,608
THE MEAD CORPORATION
THE CORPORATE LONG TERM INCENTIVE PLAN
--------------------------------------
1999
----
OBJECTIVE
- ---------
The objective of the Corporate Long Term Incentive Plan is to
reward senior executives for adding value to the Corporation
by delivering shareholder value that is that ranks high
relative to shareholder value achieved by the S&P 500 index and
by Mead's Forest Products peers.
TERM OF THE PLAN
- ----------------
This Corporate Long Term Incentive Plan is a two year plan
spanning 1998 and 1999, with the performance period ending
December 31, 1999. The next Long Term Incentive Plan covers
the period 1999 and 2000, with the performance period ending
December 31, 2000. All eligible executives are thus
participants in two plan cycles at any time.
Provisions detailed in Attachment 1 and forming a part of this
plan govern in the event of a Change in Control of the company.
PARTICIPATION ELIGIBILITY
- -------------------------
All Officers of the Corporation, Division Presidents and
Executives of salary grade 23 or above are participants in the
plan.
PAYOUT ELIGIBILITY
- ------------------
Participants must be employees of the company, an affiliate or
a subsidiary at the end of the two-year plan performance
period 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 second
year of the performance period. In such cases, the incentive
target will be pro-rated to reflect the months of service.
There will be no such adjustment for death, disability, or
retirement during the first year of the performance period.
LONG TERM INCENTIVE TARGET
- --------------------------
The 1999 Long Term Incentive Target by grade is shown in
Attachment 2. This Target will be adjusted annually, based on
competitive data.
TOTAL PAYOUT DETERMINATION
- --------------------------
This plan uses as the key performance measure, the 2-year
Total Shareholder Return - TSR - (stock price growth plus
dividend reinvestment) of Mead relative to two comparator groups:
1. The S&P 500 Index
2. Mead's Forest Products peers (FP Peers), comprising of
those members of the Paper Industry Compensation
Association whose major business lines are similar to
the Mead business segments, and for which public
financial reporting is provided by Value Line Reports.
For the plan cycle ending December 31, 1999, these
companies are identified as:
Boise Cascade
Bowater
Champion International
Consolidated Paper
Georgia Pacific
<PAGE>
International Paper
Potlatch
Smurfit/Stone Container
Temple-Inland
Westvaco
Weyerhaeuser
Willamette
For the current plan period, the TSR is measured on December
31, 1997 and December 31, 1999.
A single matrix (Attachment 3) determines the Payout Factor on
the basis of Mead's TSR relative to the TSR of each of the
above comparator groups.
The long term incentive payout is determined as:
L. T. Incentive Payout = L.T. Incentive Target X Payout Factor
INDIVIDUAL PAYOUT DETERMINATION
- -------------------------------
The above calculation will not normally be further adjusted
for any Participant on the basis of individual contribution,
except by approval of the Compensation Committee.
PAYOUT LIMITATIONS
- ------------------
Payout shall be limited on the basis of the following
financial results for the corporation:
1. The Committee may, but is not obligated to, determine a
ZERO payout if Mead TSR is negative, even if Mead TSR
exceeds either or both comparator groups
2. There shall be no payout to any participant if
corporate earnings are negative in the final year of
the performance period
3. Payout is capped at 200% of target, for any level of
performance
ACCOUNTING FOR PAYOUT
- ---------------------
Payout will be estimated periodically and the required
corporate accrual of payout will be booked against earnings
during the year. Approved incentive awards will be prepared
and expensed to earnings at the time of payout. Restricted
stock certificates will be issued by the Transfer Agent of the
corporation.
RECOMMENDATIONS AND APPROVAL
- ----------------------------
The Compensation Committee approves this Plan, and reviews
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 100% 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.
<PAGE>
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.
<PAGE>
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
Effect of Change in Control
- ---------------------------
Notwithstanding any foregoing Plan provision to the contrary
(and notwithstanding any lack of satisfaction of any condition
or requirement which would otherwise apply to an award),
immediately upon the occurrence of a Change in Control (as
defined in the next section hereof), (i) if the Change in
Control occurs after the completion of the performance period
ending December 31, 1999 (the "Performance Period"), any award
with respect to the Performance Period which has already been
determined, but has not yet been paid or deferred, shall be
immediately paid in full in cash to the respective Participant,
(ii) if the Change in Control occurs after the completion of the
Performance Period, if no awards have been determined with
respect to the Performance Period, the amount (if any) of each
such award shall be immediately determined in accordance with the
provisions of the Plan and shall be immediately paid in full in
cash to the respective Participant, and (iii) if the Change in
Control occurs during the Performance Period (the
"Change-in-Control Performance Period"), each Participant shall
immediately be paid a pro-rata award for the Performance Period,
the amount of which shall equal the product of multiplying the
Participant's individual incentive target by a fraction, the
numerator of which shall be the number of days in the
Change-in-Control Performance Period which have elapsed as of the
date of the Change in Control, and the denominator of which shall
be the number of days in the Performance Period. Notwithstanding
the immediately preceding sentence, no amounts shall be paid
pursuant thereto which would, in the opinion of counsel selected
by Mead's independent auditors, constitute "parachute payments"
within the meaning of Section 280G(b)(2)(A) of the Internal
Revenue Code (the "Code") and, when added to any other "parachute
payments" which would be received by the Participant pursuant to
the terms of any other plan, arrangement or agreement with Mead,
any person whose actions result in a change in control of Mead or
any person affiliated with Mead or such person, would be subject
to the tax imposed by Section 4999 of the Code.
Notwithstanding any provision to the contrary in the Plan, upon
and after the occurrence of a Change in Control, (i)
the Compensation Committee shall have no power to cause a
Participant's award to be paid in any manner other than as a cash
lump sum, (ii) the Board of Directors shall have no power to
require a mandatory deferral of all or any portion of the award,
and (iii) neither the Compensation Committee, the Board of
Directors nor any other person or entity shall have the right to
terminate or amend the Plan in any manner which would adversely
affect the rights or expectancies of a Participant with respect
to payment of an award pursuant to this section, as in effect
immediately before the Change in Control.
Definition of Change in Control
- -------------------------------
A "Change in Control" shall be deemed to have occurred if an
event set forth in any one of the following paragraphs shall
have occurred:
(i) date of expiration of a Tender Offer (as defined below),
other than an offer by Mead, if the offeror acquires Shares
(as defined below) pursuant to such Tender Offer;
(ii) the date of approval by the shareholders of Mead of a
definitive agreement: (x) for the merger or consolidation of
Mead or any direct or indirect subsidiary of Mead into or with
another corporation, other than (1) a merger or consolidation
which would result in the voting securities of Mead outstanding
immediately prior thereto continuing to represent ((i) in the
case of a merger or consolidation of Mead, either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof, or (ii) in the case of a
merger or consolidation of any direct or indirect subsidiary of
Mead, either by remaining outstanding if Mead continues as a
parent of the merged or consolidated subsidiary or by being
converted into voting securities of the surviving entity or any
parent thereof) at least 51% of the combined voting power of the
voting securities of Mead or such surviving or parent entity
outstanding
<PAGE>
immediately after such merger or consolidation, or (2) a merger
or consolidation effected to implement a recapitalization of Mead
(or similar transaction) in which no Person (as defined below) is
or becomes the Beneficial Owner (as defined below), directly or
indirectly, of securities of Mead (not including in the
securities Beneficially Owned by such Person any securities
acquired directly from Mead or its Affiliates) representing 25%
or more of the combined voting power of Mead's then outstanding
securities, or (y) for the sale or disposition of all or
substantially all of the assets of Mead, other than a sale or
disposition by Mead for all or substantially all of Mead's assets
to an entity, at least 51% of the combined voting power of the
voting securities of which are owned (directly or indirectly) by
shareholders of Mead in substantially the same proportions as
their ownership of Mead immediately prior to such sale or
disposition.
(iii) (x) any Person is or becomes the Beneficial Owner of 25%
or more of the voting power of the then outstanding securities
of Mead (not including in the securities beneficially owned by
such Person any securities acquired directly or indirectly from
Mead or its affiliates), excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in
clause (x)(1) of paragraph (ii) above or (y) the date of
authorization, by both a majority of the voting power of Mead and
a majority of the portion of such voting power excluding the
voting power of interested Shares, of a control share acquisition
(as such term is defined in Chapter 1701 of the Ohio Revised
Code); and
(iv) a change in the composition of the Board of Directors such
that individuals who were members of the Board of Directors on
the date two years prior to such change (and any new directors
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to
the election of directors of Mead) who were elected, or were
nominated for election by Mead's shareholders with the
affirmative vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of
such two year period or whose election or nomination for election
was previously so approved) no longer constitute a majority of
the Board of Directors.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately
following which the record holders of the common stock of Mead
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership
in an entity which owns all or substantially all of the assets of
Mead immediately following such transaction or series of
transactions.
"Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
"Beneficial Owner" shall have the meaning defined in Rule 13d-3
under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) Mead or any
of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of Mead or any of its
Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities , or (iv) a
corporation owned, directly or indirectly, by the shareholders of
Mead in substantially the same proportions as their ownership of
stock of Mead.
"Shares" shall mean shares of common stock, without par value, of
The Mead Corporation
<PAGE>
"Tender Offer" shall mean a tender offer or a request or
invitation for tenders or an exchange offer subject to regulation
under Section 14(d) of the Exchange Act and the rules and
regulations thereunder, as the same may be amended, modified or
superseded from time to time.
<PAGE>
Attachment 2
THE CORPORATE LONG TERM INCENTIVE PLAN
--------------------------------------
PAYOUT TARGETS
--------------
1999
Grade Incentive Target
----- -----------------
33 $ 823,600
32 683,600
31 563,400
30 461,800
29 378,100
28 310,000
27 255,300
26 210,100
25 173,900
24 146,000
23 125,800
22 75,700
21 59,300
<PAGE>
Mead Long Term Incentive Payout
------------------------------
Restricted Stock Grant
(% of Target)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mead 2-Yr +35% 1.70 0% 170% 187% 200% 200% 200% 200% 200%
TSR +30% 1.60 0% 160% 176% 192% 200% 200% 200% 200%
Relative +25% 1.50 0% 150% 165% 180% 195% 200% 200% 200%
to S&P 500 +20% 1.40 0% 140% 154% 168% 182% 196% 200% 200%
+15% 1.30 0% 130% 143% 156% 169% 182% 195% 200%
+10% 1.20 0% 120% 132% 144% 156% 168% 180% 192%
+5% 1.10 0% 110% 121% 132% 143% 154% 165% 176%
Average 1.00 0% 100% 110% 120% 130% 140% 150% 160%
-5% 0.90 0% 90% 99% 108% 117% 126% 135% 144%
-10% 0.80 0% 80% 88% 96% 104% 112% 120% 128%
-15% 0.70 0% 70% 77% 84% 91% 98% 105% 112%
-20% 0.60 0% 60% 66% 72% 78% 84% 90% 96%
-25% 0.50 0% 50% 55% 60% 65% 70% 75% 80%
-30% 0.40 0% 40% 44% 48% 52% 56% 60% 64%
-35% 0.30 0% 30% 33% 36% 39% 42% 45% 48%
-40% 0.20 0% 20% 22% 24% 26% 28% 30% 32%
-45% 0.10 0% 10% 11% 12% 13% 14% 15% 16%
-50 0.00 0% 0% 0% 0% 0% 0% 0% 0%
Multipliers 0 1.00 1.10 1.20 1.30 1.40 1.50 1.60
8-13 7 6 5 4 3 2 1
Median Top
</TABLE>
Max Payout: 200% Mead vs. Forest Products
Ranking of 2-Year Total Shareholder Return (TSR)
<PAGE>
<PAGE>
THE MEAD CORPORATION
EXECUTIVE CAPITAL ACCUMULATION PLAN
-----------------------------------
(As Amended and Restated Effective January 1, 1999)
<PAGE>
TABLE OF CONTENTS
SECTION 1 - GENERAL . . . . . . . . . . . . . . . . . . . . . .1
1.1 Purpose and Effective Date . . . . . . . . . . . . .1
1.2 Plan Funding and Administration. . . . . . . . . . .1
1.3 Applicable Law . . . . . . . . . . . . . . . . . . .2
1.4 Gender and Number. . . . . . . . . . . . . . . . . .2
1.5 Assignment . . . . . . . . . . . . . . . . . . . . .2
1.6 Plan Year. . . . . . . . . . . . . . . . . . . . . .2
SECTION 2 - PARTICIPATION . . . . . . . . . . . . . . . . . . .2
2.1 Participation Requirement . . . . . . . . . . . . .2
2.2 Continued Participation . . . . . . . . . . . . . .3
2.3 Participation Not Contract of Employment. . . . . .3
SECTION 3 - DEFERRAL OF INCOME. . . . . . . . . . . . . . . . .3
3.1 Deferred Income Amount. . . . . . . . . . . . . . .3
3.2 Certain Conditions Relating to Income Deferral. . .5
3.3 Annual Election to Participate. . . . . . . . . . .6
SECTION 4 - PARTICIPANT ACCOUNTS. . . . . . . . . . . . . . . .7
SECTION 5 - ROLLOVERS . . . . . . . . . . . . . . . . . . . . .7
5.1 ICEP Rollovers. . . . . . . . . . . . . . . . . . .7
5.2 SERP Rollovers. . . . . . . . . . . . . . . . . . .7
5.3 Excess Plan Rollovers . . . . . . . . . . . . . . .7
5.4 415 Plan Rollovers. . . . . . . . . . . . . . . . .8
SECTION 6 - CREDITING OPTIONS . . . . . . . . . . . . . . . . .8
6.1 Establishment of Crediting Options. . . . . . . . .8
6.2 Participant Change of Crediting Options . . . . . .9
SECTION 7 - ADJUSTMENT OF PARTICIPANT ACCOUNTS. . . . . . . . .9
7.1 Adjustment of Participants' Participant Accounts. .9
7.2 Matching Amount . . . . . . . . . . . . . . . . . 10
7.3 Quarterly Statement of Participant Accounts 11
Balances
SECTION 8 - DISTRIBUTION OF PARTICIPANT ACCOUNTS TO
PARTICIPANTS. . . . . . . . . . . . . . . . . . . .11
8.1 Annual Distributions . . . . . . . . . . . . . . . .11
8.2 Interim Distributions. . . . . . . . . . . . . . . .12
8.3 Emergency Distributions. . . . . . . . . . . . . . .12
8.4 Elective Distributions . . . . . . . . . . . . . . .13
8.5 Change in Control Distributions 13
8.6 Withholding. . . . . . . . . . . . . . . . . . . . .13
SECTION 9 - DISTRIBUTION OF PARTICIPANT ACCOUNTS TO
BENEFICIARIES . . . . . . . . . . . . . . . . . . .14
9.1 Distribution to Beneficiary. . . . . . . . . . . . .14
9.2 Beneficiary. . . . . . . . . . . . . . . . . . . . .14
SECTION 10 - DISTRIBUTIONS TO INCAPACITATED PERSONS . . . . . .14
SECTION 11 - SECTION 162(m) LIMITATION ON DISTRIBUTIONS . . . .15
<PAGE>
11.1 Tentative Section 162(m) Determination . . . . . . 15
11.2 Tentative Determination Amount Not in Excess of
162(m) Limit . . . . . . . . . . . . . . . . . . . 15
11.3 Tentative Determination Amount in Excess of 162(m)
Limit . . . . . . . . . . . . . . . . . . . . . . .16
11.4 Change in Control. . . . . . . . . . . . . . . . . 16
11.5 Certain Definitions. . . . . . . . . . . . . . . . 18
SECTION 12 - DISPUTE RESOLUTION . . . . . . . . . . . . . . . 19
12.1 Notice of Denial . . . . . . . . . . . . . . . . . 19
12.2 Notice of Appeal . . . . . . . . . . . . . . . . . .19
12.3 Decision on Appeal . . . . . . . . . . . . . . . . .20
SECTION 13 - AMENDMENT AND TERMINATION. . . . . . . . . . . . 20
EXHIBIT I - CREDITING OPTIONS
<PAGE>
THE MEAD CORPORATION
EXECUTIVE CAPITAL ACCUMULATION PLAN
-----------------------------------
SECTION 1 - GENERAL
- -------------------
1.1 Purpose and Effective Date. Effective
--------------------------
January 1, 1995, The Mead Corporation ("Mead"), an Ohio
Corporation, established The Mead Corporation Executive Capital
Accumulation Plan (the "Plan"). The Plan was subsequently
amended from time to time and the following provisions
constitute a further amendment, restatement and continuation of
the Plan, effective January 1, 1999. The purpose of the Plan
continues to be to provide recurring annual opportunities for the
deferment of payment of certain amounts otherwise currently
payable to its "Eligible Employees" (as defined below) and those
of any "Affiliate" (as defined below) who meet the requirements
to become a "Participant" set forth in subsection 2.1. Mead and
such Affiliates are sometimes referred to below, individually, as
an "Employer" and, collectively, as the "Employers". The term
"Eligible Employee" means any employee of an Employer:
(a) who is employed in the United States of
America or to whom the Plan has been
extended by the Compensation Committee
of the Board of Directors of Mead (the
"Committee") or its delegate; and
(b) who either:
(i) is compensated by his Employer at a
salary grade at least equivalent to
Mead's salary grade 19; or
(ii) has compensation that exceeds an
amount equal to the amount taken
into account for purposes ofsection
415 of the Internal Revenue Service
Code of 1986 (the "Code") and who
is designated by the Committee or
its delegate as an Eligible
Employee, but only for such period
as the Committee or its delegate
shall decide.
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 Code.
1.2 Plan Funding and Administration. The
-------------------------------
benefits payable under the Plan are unfunded and are payable,
when due, from the general assets of Mead; provided, however,
that Mead, in its discretion, may establish or maintain a trust
to pay such amounts, which trust shall be subject to the claims
of Mead's unsecured general creditors in the event of Mead's
bankruptcy or insolvency; and provided, further, that Mead shall
remain responsible for the payment of any such amounts which are
not so paid by any such trust. The Plan shall be administered by
a "Plan Administrator" who is appointed by, and serves at the
pleasure of, the Committee and who has the rights, powers and
duties with respect to the Plan that are hereinafter set forth
and such other rights, powers and duties as are reasonably
necessary for the administration of the Plan. As of the effective
date, the Plan Administrator is the Vice President-Human
Resources of Mead except as to distributions and dispute
resolution matters relating to him.
1.3 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.
<PAGE>
1.4 Gender and Number. Where the context admits,
-----------------
words in any gender will include any other gender, words in the
singular will include the plural and the plural will include the
singular.
1.5 Assignment. No Plan right or interest of any
----------
Participant or Beneficiary 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 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 his Employer to be a trust treated as a grantor trust within
the meaning of section 671 of the Code.
1.6 Plan Year. The term "Plan Year" means the
---------
calendar year.
SECTION 2 - PARTICIPATION
- -------------------------
2.1 Participation Requirement. An
-------------------------
employee of the Employers who is a Participant in the Plan on
January 1, 1999 will continue as such, subject to the
terms and conditions of the Plan. Each other employee of the
Employers will become a Participant in the Plan as of January 1,
1999, or on any subsequent January 1, if on such January 1 he:
(a) is an Eligible Employee;
(b) has executed an Annual
Participation Election form
(as described in subsection
3.3); and
(c) has executed such forms as the
Plan Administrator may
determine necessary to permit
Mead (at its discretion and
expense) to maintain a policy
of insurance on his life under
the terms of which Mead shall
be the policyholder, owner and
beneficiary.
Each employee of the Employers who becomes an Eligible Employee
on or after January 1, 1999 will become a Participant in the Plan
(on a prospective basis) on the earlier of the date on which the
Plan Administrator has received his executed Annual Participation
Election form if that date is within 30 days of the date he
becomes an Eligible Employee or on any subsequent January 1 if he
then meets the requirements set forth in paragraphs (a) through
(c) above.
2.2 Continued Participation. Until
-----------------------
distribution of the entire balances of a Participant's
"Participant Accounts" (as described in Section 4) has
been made, a Participant or, in the event of his death, any
"Beneficiary" (as defined in subsection 9.2) of any of the
Participant's undistributed Participant Accounts, as the case may
be, will be considered and treated as a Participant for all
purposes of the Plan, except that any additional compensation
(other than severance benefits) deferral or "401(k) Top-Up
Contribution" (each as described in subsection 3.1) shall cease:
(a) as of the first day of the
month next following the date
on which he is no longer an
Eligible Employee; and
(b) for any period during which
his right to make "Before-tax
Contributions" under The Mead
401(k) Plan (the"401(k) Plan")
is suspended by reason of a
Financial Hardship
distribution made to him under
the terms of that plan.
<PAGE>
2.3 Participation Not Contract of
-----------------------------
Employment. The Plan does not constitute acontract of employment
- -----------
and participation in the Plan does not give any employee the
right to be retained in the employ of the Employers 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 - DEFERRAL OF INCOME
- ------------------------------
3.1 Deferred Income Amount. Subject to
----------------------
the provisions of subsection 3.2, by entering into a written
Annual Election to Participate as provided by subsection 2.1, a
Participant may elect:
(a) to defer a portion of the
amount of the base salary, the
annual incentive pay (which,
for purposes of the Plan,
shall include any spot bonus)
and the cash portion of the
long-term incentive pay, that
would otherwise be payable to
him for services performed
during the period that the
Annual Election to Participate
is effective;
(b) whether or not he has made an
election pursuant to paragraph
(a) above, a Participant who
has elected to make the
maximum Before-tax
Contribution that he is
permitted under the 401(k)
Plan for the period for which
the Annual Election to
Participate is effective may
elect to make a 401(k) Top-Up
Contribution for that period;
and
(c) to defer a retention bonus or
a severance benefit.
The term "401(k) Top-Up Contribution" means an additional
deferral amount which begins in the month that the maximum
Before-tax contribution allowed under the 401(k) Plan is reached.
The monthly amount of the additional deferral is calculated by
multiplying the deferral percentage elected under the 401(k) Plan
by the salary and incentive compensation that would be eligible
for Before-tax Contributions to the 401(k) Plan (but for section
402(g) of the Code and any 401(k) Plan limitations) for the month
and subtracting from such product the amount, if any, of
Before-tax Contributions to the 401(k) Plan for such month. The
deferral percentage used for purposes of the 401(k) Top-Up
Contribution is the percentage currently elected under the
401(k) Plan for Before-tax Contributions. Subject to the
provisions of paragraph 7.1(d), a Participant's 401(k) Top-Up
Contribution and a portion of his other additional deferral
during any month shall be credited with a "Matching Amount" (as
described in subsection 7.2).
3.2 Certain Conditions Relating to
-------------------------------
Income Deferral. Deferrals of income permitted by subsection
- ---------------
3.1 are subject to the following:
(a) The amount of a Participant's
annual base salary deferral:
(i) shall not exceed 80
percent of the amount of
that salary, determined
as of the last day of the
month during which the
election is made;
(ii) shall, at a Participant's
election made on his
Annual Written Election
to Participate, be
automatically increased
by an amount equal to all
or any part of the amount
of the income realized by
the Participant on the
exercise of non-qualified
stock options granted to
him by an Employer and
held by him for at least
5 years, subject to the
limitations of paragraph
(i) next above and to the
following:
<PAGE> (A) the amount of
increased deferral
shall:
(1) not exceed an
amount equal to
the
Participant's
remaining
unpaid annual
base salary for
the year of
exercise;
(2) be made in
equal monthly
increments,
beginning with
the calendar
month next
following the
month of
exercise of the
non-qualified
stock option
and continuing
for the
remainder of
the calendar
year;
(B) a Participant may
not elect an
increased deferral
with respect to
income realized on
account of his
exercise of a
non-qualified stock
option during the
month of December of
any calendar year;
and
(C) if a Participant is
subject to stock
ownership guidelines
established by Mead,
the increased
deferral
contemplated by this
paragraph 3.2(a) is
conditioned on the
Participant's
conformance with
those guidelines.
(b) a Participant may defer up to
80 percent of the amount of
his annual incentive pay and
of any spot bonus paid in lieu
of incentive pay;
(c) a Participant may defer up to
100 percent of the amount of
the cash portion of his
long-term incentive pay, spot
bonuses (other than spot
bonuses paid in lieu of
incentive pay), retention
bonuses and severance
benefits;
(d) all deferrals shall be
expressed in multiples of 1
percent; and
(e) in no event shall any portion
of the amount of any excess
Before-tax Contribution
returned to a Participant in
accordance with the terms of
the 401(k) Plan be subject to
deferral under this Plan.
3.3 Annual Election to Participate.
------------------------------
The term "Annual Election to Participate" means a written
agreement, in a form furnished by the Plan Administrator, entered
into by and between a Participant and his Employer with respect
to a calendar year and setting forth:
(a) the deferral percentages
elected by the Participant in
accordance with paragraphs
3.1(a) and (b) for that
calendar year;
(b) the percentage of his total
deferral that is allocated to
each of the "Crediting
Options" (as described in
subsection 6.1) selected by
him;
(c) the "Distribution Period" (as
defined below) that he elects
to be applicable with respect
to the amounts deferred
pursuant to that Annual
Election to Participate and,
if applicable, the "Interim
Distribution" amount or
percentage that he elects to
have applicable to such
amounts as permitted by
subsection 8.2;
<PAGE>
(d) subject to the provisions of
paragraph 8.1(b), the calendar
year in which the Distribution
Period is to commence; and
(e) the Beneficiary who is to
receive the remaining balance
of the Participant Accounts
established for the
Participant by reason of that
Annual Election to Participate
in the event of the
Participant's death prior to
distribution of the entire
balance of that Account to
him.
Each Annual Election to Participate shall be irrevocable by the
Participant after the last day of the calendar month preceding
its effective date. The term "Distribution Period" means, with
respect to any Participant Account, a period of 5, 10, 15 or 20
calendar years as elected by the Participant for whom the Account
is maintained.
3.4 Additional Elections to Defer. A
-----------------------------
written agreement, in a form furnished by the Plan Administrator,
can be entered into by and between a Participant and his Employer
to defer amounts listed in paragraph 3.1(c). The election to
defer any such amount must be made by one of the following dates
that is applicable:
(a) with respect to retention
bonuses, within 30 days
after the employee is notified
that he is eligible for such
bonus, but before such amount
becomes payable; and
(b) with respect to a severance
benefit, before such benefit
has been agreed.
SECTION 4 - PARTICIPANT ACCOUNTS
- --------------------------------
For each calendar year, the Plan Administrator
shall cause a Participant Account to be established and
maintained by Mead in the name of each Participant to reflect the
amount of any deferrals that are the subject of the Participant's
Annual Election to Participate for that calendar year and of any
Matching Amounts attributable thereto. A Participant's
Participant Accounts shall be adjusted monthly as provided
in subsection 7.1 and shall be distributed to a Participant in
accordance with the provisions of Section 8 or, in the event of
the Participant's death, to his Beneficiary in accordance with
the provisions of Section 9.
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
<PAGE>
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.
SECTION 6 - CREDITING OPTIONS
- -----------------------------
6.1 Establishment of Crediting Options.
----------------------------------
The Committee shall designate "Crediting Options" (in such number
and of such asset character as it shall decide), the investment
experience of which shall be applied in adjusting Participants'
Participant Accounts, as provided in subsection 7.1. The
Crediting Options available as of January 1, 1999 are set
forth on Exhibit I of the Plan. On advance written notice to the
Participants, the Committee may cause any Crediting Option to be
prospectively deleted and may designate other Crediting Options.
In no event shall the assets of a Crediting Option be constituted
of securities of any Employer or Affiliate. Should any Employer
determine to invest any of its funds in the asset or assets
constituting a Crediting Option, amounts representing such
investment shall be the sole property of that Employer and shall
be subject to the claims of its general creditors. No
Participant or Beneficiary shall have any claim or right with
respect to any such amounts. Notwithstanding the foregoing
provisions of this subsection 6.1, upon and after the occurrence
of a Change in Control, the Committee shall have no power to
eliminate any Crediting Option which was available immediately
prior to the Change in Control and, if any Crediting Option shall
be eliminated through circumstances beyond the control of the
Committee, the Committee shall immediately add a Crediting Option
which will provide an investment return equal to
one-hundred-twenty percent (120%) of the long-term Federal
interest rate determined monthly under section 1274(d) of the
Code, compounded semi-annually.
6.2 Participant Change of Crediting
-------------------------------
Options. By writing filed with the Plan Administrator on or
- -------
before the last business day of February, May, August or November
to be effective as of the first day of the following calendar
quarter, a Participant may elect:
<PAGE>
(a) with respect to amounts to be credited
to any Participant Account on and after
that day pursuant to subsection 3.1, the
portion (expressed as a multiple of 1
percent) thereof that is to be adjusted
pursuant to subsection 7.1 to reflect
the investment experience of any
Crediting Option (referred to below as
an "Adjustment Portion"); and
(b) that all or a portion (expressed as a
multiple of 1 percent) of the balance of
any Participant Accounts then maintained
for his benefit that constitutes an
Adjustment Portion be changed to another
Adjustment Portion.
SECTION 7 - ADJUSTMENT OF PARTICIPANT ACCOUNTS
- ----------------------------------------------
7.1 Adjustment of Participants'
---------------------------
Participant Accounts. As of each "Accounting Date" (as defined
- --------------------
below), the Plan Administrator shall cause each Participant
Accounts to be adjusted as follows:
(a) first, by charging to the
-----
proper Participant Accounts of
each Participant the amount of
any distribution made to, or
on account of, the Participant
from the Account since the
last preceding Accounting Date
and with the amount of any
forfeiture resulting from an
Elective Distribution made to
him pursuant to the provisions
of subsection 8.4, which
charges shall be made, pro
rata, according to the
Adjustment Portions of that
Participant Accounts;
(b) next, by adjusting each
----
Participant Account maintained
on behalf of a Participant,
upward or downward, as the
case may be, so that the
balance of the Participant
Accounts equals the aggregate
investment experience for the
month ended on that Accounting
Date of the Adjustment
Portions elected by him and
applicable to that Participant
Account as of that date;
(c) next, by crediting the last
----
Participant Account
established on behalf of
each Participant with the
amount of any deferrals made
by him during the month ending
on that date, and with any
Matching Amount to be credited
for that month, which amounts
shall be credited, pro rata,
according to Adjustment
Portions elected by the
Participant under that
Participant Account;
(d) next, if the Accounting Date
is December 31 and if the
Participant hasnot made
Before-Tax Contributions under
the 401(k) Plan for the
calendar year ended on that
date equal to the lesser of
the amount permitted under
section 402(g) of the Code for
that year or the amount
permitted by the terms of the
401(k) Plan for that year, by
debiting the Participant
Account established on behalf
of the Participant for the
calendar year ending on that
December 31 with an amount
equal to the Matching Amount
previously credited to that
Account, plus any increment
attributable thereto;
(e) next, if the Accounting Date
----
is December 31, by charging
the Participant Account
established on behalf of each
Participant for the calendar
year ending on that December
31 with an annual
administrative fee of $100,
which administrative fee shall
be charged, pro rata,
according to the Adjustment
Portions of that Participant
Account; and
<PAGE>
(f) finally, if the Accounting
-------
Date is the last day of a
calendar quarter, by executing
the Adjustment Portion change
elections made pursuant to the
provisions of subsection 6.2
that are to be effective as of
first day the next following
calendar quarter.
The term "Accounting Date" means the last business day of each
calendar month.
7.2 Matching Amount. A portion of the
---------------
amount deferred, including the 401(k) Top-Up Contributions, is
eligible for a "Matching Amount." Subject to the provisions of
paragraph 7.1(d), the Matching Amount is made monthly with
respect to a deferred amount which is equal to the product
obtained by multiplying the deferral percentage elected under the
401(k) Plan by the gross salary and other cash compensation
(except for long term incentive compensation and severance
benefits) payable during a month and subtracting from such
product the portion of the Before-tax Contribution transferred to
the 401(k) Plan for such month and that is eligible for a
Matching Contribution thereunder. The deferral percentage used
for purposes of calculating the Matching Amount is the monthly
percentage in effect under the 401(k) Plan for Before-tax
Contributions and for months after the maximum contribution to
the 401(k) Plan is reached, the deferral percentage currently
elected under the 401(k) Plan for the month that the maximum
contribution is reached, provided that the deferral percentage
-------------
cannot exceed the maximum percentage eligible for Matching
Contributions pursuant to the 401(k) Plan. The term "Matching
Amount" means a credit with respect to the deferral amount, as
determined pursuant to this subsection 7.2. The Matching Amount
is equal to the Matching Contribution that would have been made
on the eligible deferred amount as described in this subsection
7.2 had such deferral been made under the 401(k) Plan.
7.3 Quarterly Statement of Participant
----------------------------------
Accounts Balances. As soon as practicable, but not more than 30
- -----------------
days after the last day of each calendar quarter, the Plan
Administrator shall provide each Participant with a statement of
the balances of his Participant Accounts as of that day.
SECTION 8 - DISTRIBUTION OF PARTICIPANT ACCOUNTS TO PARTICIPANTS
- ----------------------------------------------------------------
8.1 Annual Distributions. Except as
--------------------
otherwise provided in this Section 8, if a Participant's
employment with the Employers and Affiliates is terminated
for any reason other than his death, and on the June 30 preceding
his initial "Distribution Payment Date" (as defined below) the
aggregate balances of his Participant Accounts equal at least
$50,000, each of the Participant's Participant Accounts will be
distributed to him in annual "Installment Distributions" (in the
annual amount determined as provided below), made on or about
each Distribution Payment Date, beginning:
(a) in the case of a Participant
whose employment terminates at
any age on account of
"disability" (as determined by
the Plan Administrator) or for
any reason at or after
reaching age 55 years, on or
about the Distribution Payment
Date of the calendar year
elected by him; and
(b) in all other cases, and
notwithstanding any previous
election, on or about the
Distribution Payment Date of
the calendar year next
following the calendar year
during which his termination
of employment occurs;
and continuing for the number of calendar years constituting the
Distribution Period he has irrevocably elected with respect to
that Participant Account. If on the June 30 preceding his
initial Distribution Payment Date the aggregate balances of a
Participant's Participant Accounts is an amount that is less than
<PAGE>
$50,000, those balances shall be distributed to him on or about
his initial Distribution Payment Date in a single lump sum. The
amount of the annual "Installment Distribution" from a
Participant Account for a calendar year shall be equal to the
balance of that Participant Account as of June 30 of that year,
divided by the number of calendar years remaining in the
Distribution Period elected by the Participant with respect to
that Account. Notwithstanding any of the foregoing to the
contrary, if a Participant with respect to whom a Participant
Account has been established for calendar year 1995 or 1996 has
elected a Distribution Period that is less than 10 calendar
years, then, at any time, but at least one year prior to his
initial Distribution Payment Date, he may elect to have his
Distribution Period with respect to any such Participant Account
occur over a period of 10 or more years commencing on the
previously elected initial Distribution Payment Date. The term
"Distribution Payment Date" means July 20 of each year.
8.2 Interim Distributions. Subject to
---------------------
the following provisions of this subsection 8.2, at the time that
a Participant enters into an Annual Participation Election form,
he may elect to receive, as of any Distribution Payment Date
occurring at least 7 years after the effective date of that
Agreement, an Interim Distribution of any portion of the balance
of the Participant Account established by that Agreement,
determined as of the June 30 immediately preceding that
Distribution Payment Date. If a Participant becomes entitled to
receive an Interim Distribution from a Participant Account on or
after the initial Distribution Payment Date applicable to that
Account, no Interim Distribution shall be made to him and his
Installment Distributions being made pursuant to subsection 8.1
shall continue. A Participant shall express his election of an
Interim Distribution as a flat dollar amount or as a percentage
of the balance of his Participant Account, determined as of the
June 30 immediately preceding the date as of which the Interim
Distribution is to be made. Any Interim Distribution election
made by a Participant shall be automatically cancelled on the
date of his death. Notwithstanding any of the foregoing to the
contrary, if a Participant has elected to receive an Interim
Distribution with respect to a Participant Account established
for calendar years 1995 and 1996, then, at any time, but at
least one year prior to such Interim Distribution, he may elect
to reduce such Interim Distribution payable.
8.3 Emergency Distributions. If, on
-----------------------
written application of a Participant, it is determined (as
provided below) that the Participant has experienced an
"Unforeseeable Emergency" (as defined below), then, as of the
first day of any calendar month, the Participant may elect to
receive an Emergency Distribution from one or more of his
Participant Accounts, provided that the aggregate amount of any
such distribution shall not exceed the amount reasonably needed
to satisfy the Participant's emergency need. The term
"Unforeseeable Emergency" means severe financial hardship to
the Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a "dependent" (as defined in
section 152(a) of the Code) of the Participant, loss of the
Participant's property due to a casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. In determining
whether an Emergency Distribution should be made to a Participant
consideration may be given to the extent to which his
Unforeseeable Emergency can be relieved:
(a) through reimbursement or
compensation by insurance or
otherwise;
(b) by liquidation of the
Participant's assets, to the
extent the liquidation of such
assets would not itself cause
severe financial hardship;
(c) by cessation of deferrals
under the Plan; or
<PAGE>
(d) other distributions to be made
to the Participant from the
Plan.
A determination with respect to whether a Participant has
experienced an Unforeseeable Emergency shall be made:
(a) in the case of a Participant
employed, or last employed, by
an Employer at a salary grade
below salary grade 24
(exclusive of an elected
officer of an Employer) and
his Beneficiary, the Plan
Administrator; and
(b) in the case of a Participant
employed, or last employed, by
an Employer at salary grade 24
or above or as an elected
officer of an Employer and
their Beneficiaries, the
Committee.
The provisions of Section 12 of the Plan shall not be applicable
with respect to any determination made pursuant to this
subsection 8.3.
8.4 Elective Distributions. As of the first day
----------------------
of any calendar month a Participant may elect, by writing filed
with the Plan Administrator, to receive an Elective Distribution
from one or more of his Participant Accounts, provided, however,
that if a Participant receives an Elective Distribution he shall
forfeit an amount equal to 20 percent of the amount of that
Elective Distribution, which amount shall be charged to
his Participant Accounts as provided in paragraph 7.1(a).
8.5 Change in Control Distributions.
-------------------------------
In connection with, but prior to, a "Change in Control" (as
defined in subsection 11.4), the Committee, in its sole
discretion, may authorize a Participant's Participant Accounts to
be distributed to him in a single lump sum.
8.6 Withholding. A Participant's
-----------
Employer shall withhold from the non-deferred portion of his
compensation for any period all Social Security Taxes as
required by sections 3101, 3102 and 3121(v) of the Code to be
paid with respect to the amount of his deferrals under the Plan
for that period. The Plan Administrator shall cause to be
withheld from any distribution made pursuant to the terms of the
Plan any other amount required to be withheld by federal, state
or local law.
SECTION 9 - DISTRIBUTION OF PARTICIPANT ACCOUNTS TO BENEFICIARIES
- -----------------------------------------------------------------
9.1 Distribution to Beneficiary. If a
---------------------------
Participant dies (either prior to or following his termination of
employment with the Employers and Affiliates) the undistributed
balance of each of his Participant Accounts will:
(a) if distribution has commenced
prior to his death, continue
to be distributed in annual
Installment Distributions, to
the deceased Participant's
Beneficiary with respect to
the Participant Account during
the remainder of the
Distribution Period applicable
to that Account as if the
deceased Participant had
lived; and
(b) if distribution has not
commenced prior to his death,
be distributed in annual
Installment Distributions
commencing on the Distribution
Payment Date and over the
Distribution Period elected by
the deceased Participant with
respect to that Participant
Account.
9.2 Beneficiary. The term
-----------
"Beneficiary" means, with respect to any Participant (or a
Participant's Beneficiary), such natural or legal person or
<PAGE>
persons as may be designated by him (who may be designated
contingently or successively) to receive the remaining balance of
one or more of his Participant Accounts if he dies before a total
distribution of the balance is made to him. A Beneficiary
designation will be effective with respect to a Participant
Account only when a signed and dated Beneficiary designation form
applicable to that Account is filed with the Plan Administrator
while the Participant is alive, which form will cancel any
Beneficiary designation form relating to that Participant
Account signed and filed earlier. The same also applies to a
Beneficiary designation filed by a Beneficiary. If a Beneficiary
survives a Participant and such Beneficiary dies before a total
distribution of his Participant Accounts (without a contingent or
successive Beneficiary designated by a Participant), the balance
of such Account will be made to any person designated by such
Beneficiary. If a Participant (or his Beneficiary) is not
survived by any Beneficiary of a Participant Account, the Plan
Administrator shall distribute the balance of that Participant
Account to the legal representative or representatives of the
estate of the Participant (or his Beneficiary).
SECTION 10 - DISTRIBUTIONS TO INCAPACITATED PERSONS
- ---------------------------------------------------
Notwithstanding any other provision of the Plan,
if a Participant or other person entitled to a distribution 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 Plan Administrator shall make distributions to
such conservator or other person. Any distribution made in
accordance with this Section shall fully acquit and discharge
all persons from all further liability on account thereof.
SECTION 11 - SECTION 162(m) LIMITATION ON DISTRIBUTIONS.
- -------------------------------------------------------
11.1 Tentative Section 162(m)
----------------------
Determination. Notwithstanding any other provision of the Plan
- ------------- to the contrary, prior to a Participant's
Distribution Payment Date for any calendar year, the Chairperson
of the Committee may, in the Chairperson's discretion, make a
tentative determination as to whether the sum of:
(a) amounts otherwise
distributable to the
Participant under the Plan as
of that Distribution Payment
Date; and
(b) all other compensation
expected to be payable to the
Participant and deductible by
the Employers for that
calendar year;
will exceed the maximum deductible amount permitted with respect
to the Participant for that calendar year by section 162(m) of
the Code. Based on the Chairperson's tentative decision, the
provisions of subsection 11.2 or 11.3, as the case may be, shall
become applicable with respect to the Participant.
Notwithstanding the foregoing, the provisions of this Section
shall not be applicable with respect to any distribution
payable from the Plan during any calendar year following the
calendar year in which a "Change in Control" (as defined in
subsection 11.4) occurs.
11.2 Tentative Determination Amount Not in Excess
---------------------------------------------
of 162(m) Limit. If the Chairperson of the Committee tentatively
- --------------- determines that the sum of the amounts described
in paragraphs 11.1(a) and (b) payable to a Participant for a
calendar year will be fully deductible by the Employers for that
year, distribution from his Participant Accounts shall be made to
the Participant in accordance with the provisions of Section 8 of
the Plan as of his Distribution Payment Date. However, during
the month of December of that calendar year, the Chairperson of
the Committee shall make a final determination with respect to
<PAGE>
whether the amounts described in paragraphs 11.1(a) and (b) are
fully deductible by the Employers, within the limitation of
section 162(m) of the Code. If he determines that they are not,
any amount distributed from a Participant's Participant Accounts
during the calendar year that is not deductible by the Employers
shall constitute a loan to the Participant and shall be repaid to
the Employers, with interest (at the rate provided by section
1274(d) of the Code), on or before the last day of that calendar
year. Any such repaid amount shall be credited to the
Participant's Participant Account from which it was distributed
as of the Accounting Date coincident with or next following the
date on which it is repaid.
11.3 Tentative Determination Amount in Excess of
-------------------------------------------
162(m) Limit. If the Chairperson of the Committee tentatively
- ------------
determines that the sum of the amounts described in paragraphs
11.1(a) and (b) payable to a Participant for a calendar year will
not be fully deductible by the Employers for that year, the
Chairperson of the Committee may direct that all or any portion
of the balances of the Participant's Participant Accounts
otherwise distributable as of his Distribution Payment Date for
that calendar year be retained under the terms of the Plan.
However, during the month of December of that calendar year, the
Chairperson of the Committee shall make a final determination
with respect to whether any portion of such retained amount will
be fully deductible to the Employer for that calendar year if
distributed to the Participant and such portion that is fully
deductible, if any, shall be distributed to the Participant on or
before that last day of that calendar year. Any such distribution
shall be charged to the Participant's Participant Account from
which it was distributed as of the Accounting Date coincident
with or next following the date of distribution.
11.4 Change in Control. A "Change in Control"
-----------------
shall be deemed to have occurred if an event set forth in any one
of the following paragraphs shall have occurred:
(a) date of expiration of a Tender
Offer (other than an offer by
Mead), if the offeror acquires
Shares pursuant to such Tender
Offer;
(b) the date of approval by the
shareholders of Mead of a
definitive agreement:
(i) for the merger or
consolidation of Mead or
any direct or indirect
subsidiary of Mead into
or with another
corporation, other than:
(A) a merger or
consolidation which
would result in the
voting securities of
Mead outstanding
immediately prior
thereto continuing
to represent,
(I) in the case of
a merger or
consolidation
of Mead, either
by remaining
outstanding or
by being
converted into
voting
securities of
the surviving
entity or
any parent
thereof, or
(II) in the case of
a merger or
consolidation
of any direct
or indirect
subsidiary of
Mead, either by
remaining
outstanding if
Mead continues
as a parent
of the merged
or consolidated
subsidiary or
by being
converted into
<PAGE>
voting
securities of
the surviving
entity or any
parent thereof;
at least 51 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
(B) a merger or
consolidation
effected to
implement a
recapitalization of
Mead (or similar
transaction) in
which no Person (as
defined below) is or
becomes the
Beneficial Owner (as
defined below)
directly or
indirectly, of
securities of Mead
(not including in
the securities
Beneficially Owned
by such Person any
securities acquired
directly from Mead
or its Affiliates)
representing 25
percent or more of
the combined voting
power or Mead's then
outstanding
securities, or
(ii) for the sale or
disposition of all or
substantially all of the
assets of Mead, other
than a sale or
disposition by Mead of
all or substantially all
of Mead's assets to an
entity, at least 51
percent of the combined
voting power of the
voting securities of
which are owned (directly
or indirectly) by
shareholders of Mead in
substantially the same
proportions as their
ownership of Mead
immediately prior to
such sale or disposition;
(c) any Person is or becomes the
Beneficial Owner of 25 percent
or more of the voting power of
the then outstanding
securities of Mead (not
including in the securities
beneficially owned by such
Person any securities acquired
directly from Mead or its
affiliates), excluding any
Person who becomes such a
Beneficial Owner in connection
with a transaction described
in subparagraph (b)(i)(A) or
the date of authorization, by
both a majority of the voting
power of Mead and a majority
of the portion of such voting
power excluding the voting
power of interested Shares,
of a control share acquisition
(as such term is defined in
Chapter 1701 of the Ohio
Revised Code); and
(d) a change in the composition of
the Board of Directors such
that individuals who were
members of the Board of
Directors on the date two
years prior to such change
(and any new directors (other
than a director whose initial
assumption of office is in
connection with an actual or
threatened election contest,
including but not limited to a
consent solicitation, relating
to the election of directors
of Mead) who were elected, or
were nominated for election,
by Mead's shareholders with
the affirmative vote of at
least two-thirds of the
directors then still in office
who either were directors at
the beginning of such two year
period or whose election or
nomination for election was
previously so approved) no
longer constitute a majority
of the Board of Directors.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately
<PAGE>
following which the record holders of the common stock of Mead
immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership
in an entity which owns all or substantially all of the assets of
Mead immediately following such transaction or series of
transactions.
11.5 Certain Definitions. The
-------------------
following definitions shall be applicable with respect to
subsection 11.4:
(a) Affiliate shall have the meaning
---------
set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange
Act.
(b) Beneficial Owner shall have the
----------------
meaning defined in Rule 13d-3 under
the Exchange Act.
(c) Exchange Act shall mean the
Securities Exchange Act of 1934, as
amended from time to time.
(d) Person shall have the meaning given
in Section 3(a)(9) of the Exchange
Act, as modified and used in
Sections 13(d) and 14(d) thereof,
except that such term shall not
include:
(i) Mead or any of its
subsidiaries,
(ii) a trustee or other fiduciary
holding securities under an
employee benefit plan of Mead
or any of its Affiliates,
(iii) an underwriter temporarily
holding securities pursuant to
an offering of such
securities, or
(iv) a corporation owned, directly
or indirectly, by the
shareholders of Mead in
substantially the same
proportions as their ownership
of stock of Mead.
(e) Shares shall mean shares of common
------
stock, without par value, of The
Mead Corporation.
(f) Tender Offer shall mean a tender
------------
offer or a request or invitation
for tenders or an exchange offer
subject to regulation under Section
14(d) of the Exchange Act and the
rules and regulations thereunder,
as the same may be amended,
modified or superseded from time to
time.
SECTION 12 - DISPUTE RESOLUTION
- -------------------------------
12.1 Notice of Denial. If any dispute arises
----------------
with respect to a Participant or Beneficiary (a "Claimant") under
the Plan, Mead 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 Mead 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 Mead fails to take any action on
the Claimant's initial application within 90 days after receipt,
<PAGE>
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.
12.2 Notice of Appeal. Within 60 days after
----------------
the receipt of Mead's notice ofresolution, 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 Claims Reviewer 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) in the case of a Participant
employed, or last employed, by an
Employer at a salary grade below
salary grade 24 (exclusive of an
elected officer of an Employer) and
of his Beneficiary, a panel of 3
persons appointed by the Plan
Administrator; and
(b) in the case of a Participant
employed, or last employed, by an
Employer at salary grade 24 or
above or as an elected officer of
an Employer their Beneficiaries,
the Chairperson of the Committee.
12.3 Decision on Appeal. The panel referred
------------------
to in paragraph 12.2(a) or the Chairperson, as the case may be,
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.
SECTION 13 - AMENDMENT AND TERMINATION
- --------------------------------------
The Committee reserves the right to amend the Plan
at any time, except that no amendment shall reduce a
Participant's Participant Account balances to less than the
amounts that he would have been entitled to receive on the later
of the effective date of the amendment or the date on which the
amendment is adopted. The Plan will terminate on the date on
which it is terminated by the Committee, provided, however, that:
(a) at least two Crediting Options
shall be maintained until the
aggregate balances of all
Participant Accounts have been
distributed; and
(b) distributions from the Plan shall
continue to be made under Section 8
or Section 9, as the case may be,
pursuant to elections previously
made by Participants or as
otherwise provided under Section 8
or 9.
<PAGE>
EXHIBIT I
TO
THE MEAD CORPORATION
EXECUTIVE CAPITAL ACCUMULATION PLAN
-----------------------------------
The Crediting Options available under the Plan as of January 1,
1999 are:
Type Fund Managed By
--------- ----------
(1) Money Market PacMutual
(2) Managed Bond PIMCO
(3) Multi Strategy J.P. Morgan
(4) Equity Income J.P. Morgan
(5) Equity Index Bankers Trust
(6) Growth Cap Guardian Trust
(7) Growth L.T. Janus Capital
(8) International Morgan Stanley
<PAGE>
THE MEAD CORPORATION
DIRECTORS CAPITAL ACCUMULATION PLAN
-----------------------------------
(As Amended and Restated Effective January 1, 1999)
<PAGE>
TABLE OF CONTENTS
SECTION 1 - GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Purpose and Effective Date . . . . . . . . . . . . . . . . . . . 1
1.2 Plan Funding and Administration. . . . . . . . . . . . . . . . . 1
1.3 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2 - PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.1 Participation Requirement. . . . . . . . . . . . . . . . . . . . 2
2.2 Continued Participation. . . . . . . . . . . . . . . . . . . . . 2
SECTION 3 - DEFERRAL OF INCOME. . . . . . . . . . . . . . . . . . . . . . . .3
3.1 Deferred Income Amount . . . . . . . . . . . . . . . . . . . . . 3
3.2 Annual Election to Participate . . . . . . . . . . . . . . . . . 3
SECTION 4 - PARTICIPANT ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . .3
SECTION 5 - DCPD ROLLOVERS. . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 6 - CREDITING OPTIONS . . . . . . . . . . . . . . . . . . . . . . . .4
6.1 Establishment of Crediting Options . . . . . . . . . . . . . . . 4
6.2 Participant Change of Crediting Options. . . . . . . . . . . . . 5
SECTION 7 - ADJUSTMENT OF PARTICIPANT ACCOUNTS. . . . . . . . . . . . . . . .5
7.1 Adjustment of Participants' Participant
Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
7.2 Quarterly Statement of Participant Accounts. . . . . . . . . . . 6
Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8 - DISTRIBUTION OF PARTICIPANT ACCOUNTS TO
PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8.1 Annual Distributions . . . . . . . . . . . . . . . . . . . . . . 6
8.2 Emergency Distributions. . . . . . . . . . . . . . . . . . . . . 7
SECTION 9 - DISTRIBUTION OF PARTICIPANT ACCOUNTS TO
BENEFICIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . 8
9.1 Distribution to Beneficiary. . . . . . . . . . . . . . . . . . . 8
9.2 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 10 - DISTRIBUTIONS TO INCAPACITATED PERSONS . . . . . . . . . . . . .9
SECTION 11 - CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . . . . .9
11.1 In General. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11.2 Certain Definitions . . . . . . . . . . . . . . . . . . . . . .11
SECTION 12 - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . .12
EXHIBIT I - CREDITING OPTIONS
<PAGE>
THE MEAD CORPORATION
DIRECTORS CAPITAL ACCUMULATION PLAN
-----------------------------------
SECTION 1 - GENERAL
- -------------------
1.1 Purpose and Effective Date. Effective January 1,
--------------------------
1995, The Mead Corporation ("Mead"), an Ohio Corporation,
established The Mead Corporation Directors Capital
Accumulation Plan (the "Plan"). The Plan was subsequently
amended from time to time and the following provisions
constitute a further amendment, restatement and continuation
of the Plan, effective January 1, 1999. The purpose of the
Plan continues to be to provide recurring annual
opportunities for the deferment of payment of certain
amounts otherwise currently payable to its "Eligible
Directors" (as defined below) who meet the requirements to
become a "Participant" set forth in subsection 2.1. The
term "Eligible Director" means any member of the Board of
Directors of Mead who is not employed by it.
1.2 Plan Funding and Administration. The benefits
-------------------------------
payable under the Plan are unfunded and are payable, when
due, from the general assets of Mead, or, in the sole
discretion of the "Committee" (as described below) from the
assets of a benefit trust established and maintained by
Mead, which trust shall be subject to the claims of Mead's
unsecured general creditors in the event of Mead's
bankruptcy or insolvency; and provided, further, that Mead
shall remain responsible for the payment of any such amounts
which are not so paid by any such trust. The Plan shall be
administered by a "Plan Administrator" who is appointed by,
and serves at the pleasure of, the Compensation Committee of
Mead's Board of Directors (the "Committee") and who has the
rights, powers and duties with respect to the Plan that are
hereinafter set forth and such other rights, powers and
duties as are reasonably necessary for the administration of
the Plan. As of the effective date, the Plan Administrator
is the Vice President - Human Resources of Mead.
1.3 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.
1.4 Gender and Number. Where the context admits,
-----------------
words in any gender will include any other gender, words in
the singular will include the plural and the plural will
include the singular.
1.5 Assignment. No Plan right or interest of any
----------
Participant or Beneficiary 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 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 Plan
Administrator to be a trust treated as a grantor trust
within the meaning of section 671 of the Internal Revenue
Code of 1986, as amended (the "Code").
1.6 Plan Year. The term "Plan Year" means the
---------
calendar year.
<PAGE>
SECTION 2 - PARTICIPATION
- -------------------------
2.1 Participation Requirement. A Director of Mead who
-------------------------
is a Participant in the Plan on January 1, 1999 will
continue as such, subject to the terms and conditions of the
Plan. Each other Director of Mead will become a Participant
in the Plan as of January 1, 1999, or on any subsequent
January 1, if on such January 1 he:
(a) is an Eligible Director;
<PAGE>
(b) has executed an Annual Participation Election
form (as described in subsection 3.2); and
(c) has executed such forms as the Plan
Administrator may determine necessary to
permit Mead (at its discretion and expense)
to maintain a policy of insurance on his life
under the terms of which Mead shall be the
policyholder, owner and beneficiary.
Each individual who becomes an Eligible Director on or after
January 1, 1999 will become a Participant in the Plan (on a
prospective basis) on the earlier of the date on which the
Plan Administrator has received his executed Annual
Participation Election form if that date is within 30 days
of the date he becomes an Eligible Director or on any
subsequent January 1 if he then meets the requirements set
forth in paragraphs (a) through (c) above.
2.2 Continued Participation. Until distribution of
-----------------------
the entire balances of a Participant's "Participant
Accounts" (as described in Section 4) has been made, a
Participant or, in the event of his death, any "Beneficiary"
(as defined in subsection 9.2) of any of the Participant's
undistributed Participant Accounts, as the case may be, will
be considered and treated as a Participant for all purposes
of the Plan, except that any additional compensation
deferral (as described in subsection 3.1) shall cease as of
the first day of the month next following the date on which
he is no longer an Eligible Director.
SECTION 3 - DEFERRAL OF INCOME
- ------------------------------
3.1 Deferred Income Amount. Subject to the provisions
----------------------
of subsection 3.2, by entering into a written Annual
Election to Participate as provided by subsection 2.1, a
Participant may elect to defer any portion or all of the
amount of the meeting fees and of the cash portion of the
retainer fee that would otherwise be payable to him for
services performed during the period that the Annual
Election to Participate is effective.
3.2 Annual Election to Participate. The term "Annual
------------------------------
Election to Participate" means a written agreement, in a
form furnished by the Plan Administrator, entered into by
and between a Participant and Mead with respect to a
calendar year and setting forth:
(a) the deferral percentages elected by the
Participant in accordance with subsection 3.1
for that calendar year;
(b) the percentage of his total deferral that is
allocated to each of the "Crediting Options"
(as described in subsection 6.1) selected by
him;
(c) the "Distribution Period" (as defined below)
that he elects to be applicable with respect
to the amounts deferred pursuant to that
Annual Election to Participate;
<PAGE>
(d) subject to the provisions of paragraph
8.1(b), the calendar year in which the
Distribution Period is to commence; and
(e) the Beneficiary who is to receive the
remaining balance of the Participant Accounts
established for the Participant by reason of
that Annual Election to Participate in the
event of the Participant's death prior to
distribution of the entire balance of that
Account to him.
Each Annual Election to Participate shall be irrevocable by
the Participant after the last day of the calendar month
preceding its effective date. The term "Distribution
Period" means, with respect to any Participant Account, a
period of 5, 10, 15 or 20 calendar years as elected by the
Participant for whom the Account is maintained.
SECTION 4 - PARTICIPANT ACCOUNTS
- --------------------------------
For each calendar year, the Plan Administrator shall
cause a Participant Account to be established and maintained
by Mead in the name of each Participant to reflect the
amount of any deferrals that are the subject of the
Participant's Annual Election to Participate for that
calendar year. A Participant's Participant Accounts shall
be adjusted monthly as provided in subsection 7.1 and shall
be distributed to a Participant in accordance with the
provisions of Section 8 or, in the event of the
Participant's death, to his Beneficiary in accordance with
the provisions of Section 9.
SECTION 5 - DCPD ROLLOVERS
- --------------------------
Notwithstanding any provision of the Plan to the
contrary, a Participant for whose benefit a balance is
maintained under the Deferred Compensation Plan for
Directors (the "DCPD") 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 "DCPD
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 DCPD.
(b) No DCPD rollover to the Plan shall be
permitted after January 1, 1995.
(c) A Participant's Distribution Period with
respect to his DCPD Participant Account shall
commence on the date on which payment of his
balance under the DCPD would have commenced.
(d) To the extent necessary for self-employment
tax purposes, the Committee shall maintain a
Participant's DCPD Participant Account in the
form of sub-accounts.
SECTION 6 - CREDITING OPTIONS
- -----------------------------
6.1 Establishment of Crediting Options. The Committee
----------------------------------
shall designate "Crediting Options" (in such number and of
such asset character as it shall decide), the investment
experience of which shall be applied in adjusting
Participants' Participant Accounts, as provided in
subsection 7.1. The Crediting Options available as of
January 1, 1999 are set forth on Exhibit I of the Plan. On
advance written notice to the Participants, the Committee
may cause any Crediting Option to be prospectively deleted
and may designate other Crediting Options. In no event
shall the assets of a Crediting Option be constituted of
securities of Mead. Should Mead determine to invest any of
its funds in the asset or assets constituting a Crediting
<PAGE>
Option, amounts representing such investment shall be the
sole property of Mead and shall be subject to the claims of
its general creditors. No Participant or Beneficiary shall
have any claim or right with respect to any such amounts.
Notwithstanding the foregoing provisions of this subsection
6.1, upon and after the occurrence of a Change in Control,
(as defined in Section 11), the Committee shall have no
power to eliminate any Crediting Option which was available
immediately prior to the Change in Control and, if any
Crediting Option shall be eliminated through circumstances
beyond the control of the Committee, the Committee shall
immediately add a Crediting Option which will provide an
investment return equal to one-hundred-twenty percent (120%)
of the long-term Federal interest rate determined monthly
under section 1274(d) of the Code, compounded semi-annually.
6.2 Participant Change of Crediting Options. By
---------------------------------------
writing filed with the Plan Administrator on or before the
last business day of February, May, August or November to be effective as of the
first day of the following calendar quarter, a Participant may elect:
(a) with respect to amounts to be credited to any
Participant Account on and after that day
pursuant to subsection 3.1, the portion
(expressed as a multiple of 1 percent)
thereof that is to be adjusted pursuant to
subsection 7.1 to reflect the investment
experience of any Crediting Option (referred
to below as an "Adjustment Portion"); and
(b) that all or a portion (expressed as a
multiple of 1 percent) of the balance of any
Participant Accounts then maintained for his
benefit that constitutes an Adjustment
Portion be changed to another Adjustment
Portion.
SECTION 7 - ADJUSTMENT OF PARTICIPANT ACCOUNTS
- ----------------------------------------------
7.1 Adjustment of Participants' Participant Accounts.
------------------------------------------------
As of each "Accounting Date" (as defined below), the Plan
Administrator shall cause each Participant Accounts to be
adjusted as follows:
(a) first, by charging to the proper Participant
-----
Accounts of each Participant the amount of
any distribution made to, or on account of,
the Participant from the Account since the
last preceding Accounting Date, which charges
shall be made, pro rata, according to the
Adjustment Portions of that Participant
Accounts;
(b) next, by adjusting each Participant Account
----
maintained on behalf of a Participant, upward
or downward, as the case may be, so that the
balance of the Participant Accounts equals
the aggregate investment experience for the
month ended on that Accounting Date of the
Adjustment Portions elected by him and
applicable to that Participant Account as of
that date;
(c) next, by crediting the last Participant
----
Account established on behalf of each
Participant with the amount of any deferrals
made by him during the month ending on that
date, which amount shall be credited, pro
rata, according to Adjustment Portions
elected by the Participant under that
Participant Account;
(d) next, if the Accounting Date is December 31,
----
by charging the Participant Account
established on behalf of each Participant for
the calendar year ending on that December 31
<PAGE>
with an annual administrative fee of $100,
which administrative fee shall be charged,
pro rata, according to the Adjustment
Portions of that Participant Account; and
(e) finally, if the Accounting Date is the last
-------
day of a calendar quarter, by executing the
Adjustment Portion change elections made
pursuant to the provisions of subsection 6.2
that are to be effective as of first day the
next following calendar quarter.
The term "Accounting Date" means the last business day of
each calendar month.
7.2 Quarterly Statement of Participant Accounts
--------------------------------------------
Balances.
- --------
As soon as practicable, but not more than 30 days after the
last day of each calendar quarter, the Plan Administrator
shall provide each Participant with a statement of the
balances of his Participant Accounts as of that day.
<PAGE>
SECTION 8 - DISTRIBUTION OF PARTICIPANT ACCOUNTS TO
- ---------------------------------------------------
PARTICIPANTS
- ------------
8.1 Annual Distributions. Except as otherwise
--------------------
provided in this Section 8, if a Participant's service as a
Director of Mead is terminated for any reason other than his
death, and on the June 30 preceding his initial
"Distribution Payment Date" (as defined below) the aggregate
balances of his Participant Accounts equal at least $50,000,
each of the Participant's Participant Accounts will be
distributed to him in annual "Installment Distributions" (in
the annual amount determined as provided below), made on or
about each Distribution Payment Date, beginning:
(a) in the case of a Participant whose service as
a Director terminates at any age on account
of "disability" (as determined by the
Committee) or for any reason at or after
reaching age 55 years, on or about the
Distribution Payment Date of the calendar
year elected by him; and
(b) in all other cases, and notwithstanding any
previous election, on or about the
Distribution Payment Date of the calendar
year next following the calendar year during
which his termination of service as a
Director occurs;
and continuing for the number of calendar years constituting
the Distribution Period he has irrevocably elected with
respect to that Participant Account. If on the June 30
preceding his initial Distribution Payment Date the
aggregate balances of a Participant's Participant Accounts
is an amount that is less than $50,000, those balances shall
be distributed to him on or about his initial Distribution
Payment Date in a single lump sum. The amount of the annual
"Installment Distribution" from a Participant Account for a
calendar year shall be equal to the balance of that
Participant Account as of June 30 of that year, divided by
the number of calendar years remaining in the Distribution
Period elected by the Participant with respect to that
Account. Notwithstanding any of the foregoing to the
contrary, if a Participant with respect to whom a
Participant Account has been established for calendar year
1995 or 1996 has elected a Distribution Period that is less
than 10 calendar years, then, at any time, but at least one
year prior to his initial Distribution Payment Date, he may
elect to have his Distribution Period with respect to any
such Participant Account occur over a period of 10 or more
years commencing on the previously elected initial
Distribution Payment Date. The term "Distribution Payment
Date" means July 20 of each year.
8.2 Emergency Distributions. If, on written
-----------------------
application of a Participant, it is determined (as provided
below) that the Participant has experienced an
<PAGE>
"Unforeseeable Emergency" (as defined below), then, as of
the first day of any calendar month, the Participant may
elect to receive an Emergency Distribution from one or more
of his Participant Accounts, provided that the aggregate
amount of any such distribution shall not exceed the amount
reasonably needed to satisfy the Participant's emergency
need. The term "Unforeseeable Emergency" means severe
financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant
or of a "dependent" (as defined in section 152(a) of the
Code) of the Participant, loss of the Participant's property
due to a casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events
beyond the control of the Participant. In determining
whether an Emergency Distribution should be made to a
Participant consideration may be given to the extent to
which his Unforeseeable Emergency can be relieved:
(a) through reimbursement or compensation by
insurance or otherwise;
(b) by liquidation of the Participant's assets,
to the extent the liquidation of such assets
would not itself cause severe financial
hardship;
<PAGE>
(c) by cessation of deferrals under the Plan; or
(d) other distributions to be made to the
Participant from the Plan.
A determination with respect to whether a Participant has
experienced an Unforeseeable Emergency shall be made by the
Committee.
SECTION 9 - DISTRIBUTION OF PARTICIPANT ACCOUNTS TO
- ---------------------------------------------------
BENEFICIARIES
- -------------
9.1 Distribution to Beneficiary. If a Participant
---------------------------
dies (either prior to or following his termination of
service as a Director) the undistributed balance of each of
his Participant Accounts will:
(a) if distribution has commenced prior to his
death, continue to be distributed in annual
Installment Distributions, to the deceased
Participant's Beneficiary with respect to the
Participant Account during the remainder of
the Distribution Period applicable to that
Account as if the deceased Participant had
lived; and
(b) if distribution has not commenced prior to
his death, be distributed in annual
Installment Distributions to the deceased
Participant's Beneficiary commencing on the
Distribution Payment Date and over the
Distribution Period elected by the deceased
Participant with respect to that Participant
Account.
9.2 Beneficiary. The term "Beneficiary" means, with
-----------
respect to any Participant (or a Participant's Beneficiary),
such natural or legal person or persons as may be designated
by him (who may be designated contingently or successively)
to receive the remaining balance of one or more of his
Participant Accounts if he dies before a total distribution
of the balance is made to him. A Beneficiary designation
will be effective with respect to a Participant Account only
when a signed and dated Beneficiary designation form
applicable to that Account is filed with the Plan
Administrator while the Participant is alive, which form
will cancel any Beneficiary designation form relating to
that Participant Account signed and filed earlier. The same
also applies to a Beneficiary designation filed by a
Beneficiary. If a Beneficiary survives a Participant and
such Beneficiary dies before a total distribution of his
<PAGE>
Participant Accounts (without a contingent or successive
Beneficiary designated by a Participant), the balance of
such Account will be made to any person designated by such
Beneficiary. If a Participant (or his Beneficiary) is not
survived by any Beneficiary of a Participant Account, the
Plan Administrator shall distribute the balance of that
Participant Account to the legal representative or
representatives of the estate of the Participant (or his
Beneficiary).
SECTION 10 - DISTRIBUTIONS TO INCAPACITATED PERSONS
- ---------------------------------------------------
Notwithstanding any other provision of the Plan, if a
Participant or other person entitled to a distribution 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 Plan Administrator shall
make distributions to such conservator or other person. Any
distribution made in accordance with this Section shall
fully acquit and discharge all persons from all further
liability on account thereof.
SECTION 11 - CHANGE IN CONTROL
- ------------------------------
11.1 In General. A "Change in Control" shall be deemed
----------
to have occurred if an event set forth in any one of the
following paragraphs shall have occurred:
(a) date of expiration of a Tender Offer (other than
an offer by Mead), if the offeror acquires Shares
pursuant to such Tender Offer;
(b) the date of approval by the shareholders of Mead
of a definitive agreement;
(i) for the merger of consolidation of Mead or
any direct or indirect subsidiary of Mead
into or with another corporation, other than:
(A) a merger or consolidation which would
result in the voting securities of Mead
outstanding immediately prior thereto
continuing to represent,
(I) in the case of a merger or
consolidation of Mead, either by
remaining outstanding or by being
converted into voting securities of
the surviving entity or any parent
thereof, or
(II) in the case of a merger or
consolidation of any direct or
indirect subsidiary of Mead, either
by remaining outstanding if Mead
continues as a parent of the merged
or consolidated subsidiary or by
being converted into voting
securities of the surviving entity
or any parent thereof;
at least 51 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
(B) a merger or consolidation effected to
implement a recapitalization of Mead (or
similar transaction) in which no Person
(as defined below) is or becomes the
Beneficial Owner (as defined below)
directly or indirectly, of securities of
<PAGE>
Mead (not including in the securities
Beneficially Owned by such Person any
securities acquired directly from Mead
or its Affiliates) representing 25
percent or more of the combined voting
power or Mead's then outstanding
securities, or
(ii) for the sale or disposition of all or
substantially all of the assets of Mead,
other than a sale or disposition by Mead of
all or substantially all of Mead's assets to
an entity, at least 51 percent of the
combined voting power of the voting
securities of which are owned (directly or
indirectly) by shareholders of Mead in
substantially the same proportions as their
ownership of Mead immediately prior to such
sale or disposition;
(c) any Person is or becomes the Beneficial Owner of
25 percent or more of the voting power of the then
outstanding securities of Mead (not including in
the securities beneficially owned by such Person
any securities acquired directly from Mead or its
affiliates), excluding any Person who becomes such
a Beneficial Owner in connection with a
transaction described in subparagraph (b) (i) (A)
or the date of authorization, by both a majority
of the voting power of Mead and a majority of the
portion of such voting power excluding the voting
power of interested Shares, of a control share
acquisition (as such term is defined in Chapter
1701 of the Ohio Revised Code); and
(d) a change in the composition of the Board of
Directors such that individuals who were members
of the Board of Directors on the date two years
prior to such change (and any new directors (other
than a director whose initial assumption of office
is in connection with an actual or threatened
election contest, including but not limited to a
consent solicitation, relating to the election of
directors of Mead) who were elected, or were
nominated for election, by Mead's shareholders
with the affirmative vote of at least two-thirds
of the directors then still in office who either
were directors at the beginning of such two year
period or whose election or nomination for
election was previously so approved) no longer
constitute a majority of the Board of Directors.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to have occurred by virtue of the consummation of
any transaction of series of integrated transactions
immediately following which the record holders of the common
stock of Mead immediately prior to such transaction or
series of transactions continue to have substantially the
same proportionate ownership in an entity which owns all or
substantially all of the assets of Mead immediately
following such transaction or series of transactions.
11.2 Certain Definitions. The following definitions
-------------------
shall be applicable with respect to subsection 11.1:
(a) Affiliate shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange
Act.
(b) Beneficial Owner shall have the meaning defined in
Rule 13d-3 under the Exchange Act.
(c) Exchange Act shall mean the Securities Exchange
Act of 1934, as amended from time to time.
<PAGE>
(d) Person shall have the meaning given in Section
3(a) (9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that
such term shall not include:
(i) Mead or any of its subsidiaries,
(ii) a trustee or other fiduciary holding
securities under an employee benefit plan of
Mead or any of its Affiliates.
(iii) an underwriter temporarily holding
securities pursuant to an offering of
such securities, or
(iv) a corporation owned, directly or indirectly,
by the shareholders of Mead in substantially
the same proportions as their ownership of
stock of Mead.
(e) Shares shall mean shares of common stock, without
par value, of Mead Corporation.
(f) Tender Offer shall mean a tender offer or a
request or invitation for tenders or an exchange
offer subject to regulation under Section 14(d) of
the Exchange Act and the rules and regulations
thereunder, as the same may be amended, modified
or superseded from time to time.
SECTION 12 - AMENDMENT AND TERMINATION
- --------------------------------------
The Committee reserves the right to amend the Plan
at any time, except that no amendment shall reduce a
Participant's Participant Account balances to less than the
amounts that he would have been entitled to receive on the
later of the effective date of the amendment or the date on
which the amendment is adopted. The Plan will terminate on
the date on which it is terminated by the Committee,
provided, however, that:
(a) at least two Crediting Options shall
be maintained until the aggregate
balances of all Participant Accounts
have been distributed; and
(b) distributions from the Plan shall
continue to be made under Section 8 or
Section 9, as the case may be,
pursuant to elections previously made
by Participants or as otherwise
provided under Section 8 or 9.
<PAGE>
EXHIBIT I
TO
THE MEAD CORPORATION
EXECUTIVE CAPITAL ACCUMULATION PLAN
-----------------------------------
The Crediting Options available under the Plan as
of January 1, 1999 are:
Type Fund Managed By
--------- ----------
(1) Money Market PacMutual
(2) Managed Bond PIMCO
(3) Multi Strategy J.P. Morgan
(4) Equity Income J.P. Morgan
(5) Equity Index Bankers Trust
(6) Growth Cap Guardian Trust
(7) Growth L.T. Janus Capital
(8) International Morgan Stanley
<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 APRIL 4, 1999 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-31-1998
<PERIOD-END> APR-04-1999
<CASH> 12
<SECURITIES> 0
<RECEIVABLES> 441
<ALLOWANCES> 0
<INVENTORY> 518
<CURRENT-ASSETS> 1,079
<PP&E> 5,753
<DEPRECIATION> 2,419
<TOTAL-ASSETS> 5,111
<CURRENT-LIABILITIES> 664
<BONDS> 1,346
0
0
<COMMON> 151
<OTHER-SE> 2,099
<TOTAL-LIABILITY-AND-EQUITY> 5,111
<SALES> 0
<TOTAL-REVENUES> 863
<CGS> 0
<TOTAL-COSTS> 705
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27
<INCOME-PRETAX> 31
<INCOME-TAX> 11
<INCOME-CONTINUING> 23
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
