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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 20, 1999
THE MEAD CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 1-2267 31-0535759
- --------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
MEAD WORLD HEADQUARTERS, COURTHOUSE PLAZA N.E., DAYTON, OHIO 45463
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (937) 495-6323
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Item 5. Other Events
- ------- ------------
On October 20, 1999, the Registrant issued the press release attached
hereto as Exhibit 20.1 reporting certain financial results for the quarter ended
October 3, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE MEAD CORPORATION
October 25, 1999 By: /s/ Timothy R. McLevish
--------------------------------
Timothy R. McLevish
Vice President, Finance and Treasurer
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
20.1 Press Release issued by The Mead Corporation on
October 20, 1999
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Exhibit 20.1
ADDITIONAL INFORMATION:
Doug Draper
937/495-3319
October 20, 1999
MEAD REPORTS QUARTERLY NET EARNINGS OF 48 CENTS PER SHARE
Third Quarter 1999 Highlights
- - Mead had net earnings of 48 cents per share in the third quarter of
1999 versus 34 cents per share for the same period in 1998.
- - Excluding the impact of special items, Mead reported third quarter 1999
earnings of 46 cents per share compared to 47 cents per share for the
same period in 1998.
- - Third quarter 1999 sales were $982 million, down from $1.01 billion in
the third quarter of 1998. The sales decline was primarily the result
of lower selling prices for most of Mead Paper division's products and
lower prices and volume for School and Office Products.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
(In millions, except for per share amounts)
Third Qtr Ended Three Qtrs Ended
Oct 3 Sept 27 Oct 3 Sept 27
- -------------------------------------------------------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net Sales $982.2 $1,009.3 $2,850.2 $2,899.2
Net Earnings $ 50.8 $ 35.4 $ 118.5 $ 81.2
Net Earnings Per Share
(Diluted) $ 0.48 $ 0.34 $ 1.13 $ .77
Earnings Excluding
Special Items $ 49.1 $ 49.4 $ 126.8 $ 146.1
EPS (Diluted) Excluding
Special Items $ 0.46 $ 0.47 $ 1.20 $ 1.39
</TABLE>
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Mead Reports Third Quarter 1999 Results (page 2)
DAYTON, Ohio. October 20, 1999 -- The Mead Corporation today announced third
quarter 1999 net earnings of $50.8 million or 48 cents per share, up from $35.4
million or 34 cents per share in the same period in 1998. Excluding the impact
of special items, earnings were $49.1 million or 46 cents per share for the
third quarter of 1999 compared to $49.4 million or 47 cents per share for the
same period in 1998. Net sales in the third quarter of 1999 were $982 million
compared to $1.01 billion in the same period in 1998, primarily due to lower
selling prices for most of Mead Paper division's products and lower prices and
lower volume for School and Office Products.
The special items were related to an organizational change and
workforce reduction program announced in 1998. In the third quarter of 1998,
Mead recorded a pretax charge of $22 million, or 13 cents per share, for that
program. Further refinement of the program resulted in a reduction in amounts
previously accrued, increasing third quarter 1999 earnings by $2.7 million
(pretax) or 2 cents per share.
"In the third quarter, coated paper prices declined, impacting our
largest segment. However, as the fourth quarter begins, we anticipate some price
improvement," said Jerry Tatar, Mead chairman, president and chief executive
officer. "When combined with ongoing productivity efforts and continued market
improvement in other segments, we are becoming more optimistic."
Tatar added, "We continue to look for opportunities to grow our company
and enhance shareowner value. Our recent strategic moves included acquiring a
specialty paper mill in England and announcing plans to sell Mead's share of
Northwood Inc. (a Canadian pulp and solid wood products manufacturer) and to
acquire the AT-A-GLANCE group and its popular line of time-management products.
Through these changes, we have gained a specialty manufacturing presence in
Europe, and we will be able to redirect assets from a non-core business and add
new products and distribution channels for the Mead School and Office Products
division."
Paper
Shipments of coated paper increased in the third quarter of 1999
compared to a year ago, but prices remained below prior-year levels and resulted
in lower sales and earnings for the Paper segment. Excluding special items,
earnings in the third quarter of 1999 were $42.2 million, down from $55.6
million for the prior-year quarter. With special items included, earnings were
$43.7 million and $45.7 million in the third quarter of 1999 and 1998,
respectively.
Sales for the Paper segment were $447 million in the third quarter of
1999 compared to $452 million in the same period in 1998. The segment's
continued strong operating performance and higher sales volume partially offset
reduced pricing.
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Mead Reports Third Quarter 1999 Results (page 3)
During the third quarter of 1999, no additional charges were recorded
for the previously announced plans to shutdown four uncoated paper machines at
Mead Paper's Maine operations. In the second quarter of 1999, Mead took pretax
charges of $15.6 million related to this action. Mead expects to take additional
charges in the fourth quarter of 1999. When combined, the total for these pretax
charges will be within Mead's previous estimate of $25 million for the
shutdowns.
In August, Mead Specialty Paper acquired Devon Valley Industries, a
specialty paper mill in southwest England. In September, Mead Paper started up a
coated paper machine at its Maine operations that had been idled for about one
year.
Packaging and Paperboard
The Packaging and Paperboard segment's third quarter of 1999 earnings
(excluding special items) declined to $41.4 million from $46.7 million in the
same period in 1998. With special items included, the segment had earnings of
$42.2 million in the third quarter of 1999 and $39.6 million for the same period
a year ago. Sales in the third quarter of 1999 were slightly higher at $389
million versus $388 million for that quarter the prior year.
Increased sales in the Mead Containerboard division were offset by a
sales decline in the Coated Board System, including beverage packaging. The
segment's lower earnings (excluding special items) resulted from its higher
operating costs and the impact of lower volume for the Coated Board System.
As previously announced, the Mead Coated Board division took normal
maintenance downtime during the third quarter and an additional 20,000 tons of
market downtime at its Mahrt mill in Alabama. The Mead Containerboard division
made progress in resolving operational difficulties at its Stevenson, Alabama
mill and additional improvement is expected.
School and Office Products
Sales and earnings for the School and Office Products segment were
below prior-year levels in the third quarter of 1999 due to lower sales volume
and prices. Excluding special items, School and Office Products had earnings of
$9.1 million in the third quarter of 1999 versus $13.1 million a year ago. Third
quarter earnings, with special items included, were $9.2 million in 1999 and
$9.0 million in 1998. Sales were $146 million in the third quarter of 1999, down
from $170 million in the prior-year third quarter.
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Mead Reports Third Quarter 1999 Results (page 4)
Recently, the Mead School and Office Products division announced plans
to acquire the AT-A-GLANCE Group, a leading producer and marketer of dated and
time management products. The division also signed new licensing agreements with
Nike, Inc. and M&M's/MARS to manufacture school and office products that feature
their appealing consumer brands. Securing access to these brands is part of the
division's efforts to improve sales and earnings in 2000 and beyond.
Investees
Mead's share of investees' earnings was $16.0 million in the third
quarter of 1999, up from $2.8 million for the same period in 1998. Most of these
earnings came from the company's primary investees, Northwood Inc. and Northwood
Panelboard Company, which had improved results primarily on the strength of
higher prices for wood products. As mentioned earlier, Mead is divesting its
share of Northwood Inc., with the transaction expected to close in late 1999.
Mead's share of Northwood Inc.'s earnings was $11.3 million in the third quarter
of 1999 versus a loss of $1.4 million in the same period in 1998.
Other
Mead did not repurchase any shares during the third quarter, but the
company expects to complete its current 10 million share repurchase
authorization by year-end. To date, the total number of shares acquired under
this program is 9.8 million.
The Mead Corporation, headquartered in Dayton, Ohio, is one of the
world's leading paper and forest products companies.
Certain statements in this news release 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 and in
quarterly reports on Form 10-Q and 8-K filed in 1999.
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Mead Reports Third Quarter 1999 Results (page 5)
STATEMENTS OF EARNINGS
(All dollar amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
Third Qtr Ended Three Qtrs Ended
-------------------- ---------------------
Oct. 3, Sept. 27, Oct. 3, Sept. 27,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $982.2 $1,009.3 $2,850.2 $2,899.2
Cost of products sold 808.1 811.7 2,336.3 2,326.1
------ -------- -------- --------
Gross profit 174.1 197.6 513.9 573.1
Selling and administrative expenses 94.0 120.9 301.8 318.5
------ -------- -------- --------
Earnings from operations 80.1 76.7 212.1 254.6
Other revenues (expenses) (.1) (.5) 8.7 3.7
Interest and debt expense (25.6) (27.1) (77.4) (82.5)
------ -------- -------- --------
Earnings from continuing operations
before income taxes 54.4 49.1 143.4 175.8
Income taxes 19.6 16.5 51.7 65.9
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Earnings from continuing operations
before equity in net earnings
(loss) of investees 34.8 32.6 91.7 109.9
Equity in net earnings (loss) of investees 16.0 2.8 26.8 (.7)
------ -------- -------- --------
Earnings from continuing operations 50.8 35.4 118.5 109.2
Discontinued operations (28.0)
------ -------- -------- --------
Net earnings $ 50.8 $ 35.4 $ 118.5 $ 81.2
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Per common share - basic:
Earnings from continuing operations $ .50 $ .34 $ 1.16 $ 1.05
Discontinued operations (.27)
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Net earnings $ .50 $ .34 $ 1.16 $ .78
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Per common share - diluted:
Earnings from continuing operations $ .48 $ .34 $ 1.13 $ 1.04
Discontinued operations (.27)
------ -------- -------- --------
Net earnings $ .48 $ .34 $ 1.13 $ .77
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Cash dividends per common share $ .16 $ .16 $ .48 $ .48
====== ======== ======== ========
Average common shares outstanding
(millions) - basic 102.6 103.3 102.2 103.7
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Average common shares outstanding
(millions) - diluted 105.4 104.5 104.9 105.4
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</TABLE>
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Mead Reports Third Quarter 1999 Results (page 6)
BALANCE SHEETS
(All dollar amounts in millions)
<TABLE>
<CAPTION>
Oct 3, Sept 27,
1999 1998
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 139.0 $ 38.2
Accounts receivable 515.6 520.3
Inventories 438.5 454.4
Other current assets 86.0 94.0
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Total current assets 1,179.1 1,106.9
INVESTMENTS AND OTHER ASSETS:
Investees 146.3 131.7
Other assets 595.4 509.0
-------- --------
741.7 640.7
Property, plant and equipment - net 3,303.1 3,354.3
Net assets of discontinued operations 15.5
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Total assets $5,223.9 $5,117.4
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CURRENT LIABILITIES:
Accounts payable $ 260.3 $ 238.8
Accrued liabilities 390.8 399.5
Current maturities of long-term debt 35.1 6.7
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Total current liabilities 686.2 645.0
Long-term debt 1,333.2 1,364.8
Commitments and contingent liabilities
Deferred items 864.2 844.9
SHAREOWNERS' EQUITY:
Common shares 153.1 153.2
Additional paid-in capital 117.8 65.1
Retained earnings 2,112.6 2,084.0
Other comprehensive loss (43.2) (39.6)
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2,340.3 2,262.7
Total liabilities and shareowners' equity $5,223.9 $5,117.4
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</TABLE>
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Mead Reports Third Quarter 1999 Results (page 7)
SALES AND EARNINGS SEGMENT INFORMATION
(All dollar amounts in millions)
<TABLE>
<CAPTION>
Third Qtr Ended Three Qtrs Ended
--------------------- ---------------------
Oct 3, Sept 27, Oct 3, Sept 27,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Industry Segment Sales
to Unaffiliated Customers:
Paper $447.3 $ 451.5 $1,335.0 $1,330.6
Packaging and Paperboard 389.1 388.0 1,140.5 1,139.4
School and Office Products 145.8 169.8 374.7 429.2
------ -------- -------- --------
TOTAL NET SALES $982.2 $1,009.3 $2,850.2 $2,899.2
====== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Third Qtr Ended Three Qtrs Ended
-------------------- -------------------
Oct 3, Sept 27, Oct 3, Sept 27,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Industry Segment Earnings from Continuing
Operations before Income Taxes:
Paper 43.7 45.7 105.0 152.4
Packaging and Paperboard 42.2 39.6 126.1 106.8
School and Office Products 9.2 9.0 33.0 47.3
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95.1 94.3 264.1 306.5
Other revenues - corporate 1.3 .6 10.6 5.1
General corporate expenses (16.4) (18.7) (53.9) (53.3)
Interest and debt expense (25.6) (27.1) (77.4) (82.5)
----- ----- ------ ------
Total corporate and other (40.7) (45.2) (120.7) (130.7)
----- ----- ------ ------
EARNINGS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES $54.4 $49.1 $143.4 $175.8
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</TABLE>
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Mead Reports Third Quarter 1999 Results (page 8)
STATEMENT OF CASH FLOWS
(All dollar amounts in millions)
<TABLE>
<CAPTION>
Three Quarters Ended
--------------------
Oct 3, Sept 27,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 118.5 $ 81.2
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation, amortization and depletion of property,
plant and equipment 198.2 192.0
Depreciation and amortization of other assets 30.9 32.1
Deferred income taxes 7.1 28.4
Investees - earnings and dividends (13.3) 9.5
Discontinued operations 28.0
Other 11.0 9.2
Change in current assets and liabilities:
Accounts receivable (100.8) (97.6)
Inventories 39.6 (26.9)
Other current assets 10.1 (4.2)
Accounts payable and accrued liabilities (26.6) (15.1)
Cash (used in) discontinued operations (7.8)
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Net cash provided by operating activities: 274.7 228.8
Cash flows from investing activities:
Capital expenditures (142.5) (277.1)
Additions to equipment rented to others (24.0) (23.7)
Payment for acquired business (23.5) (13.6)
Proceeds from sale of assets 21.4 262.5
Other (30.6) (20.2)
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Net cash (used in) investing activities (199.2) (72.1)
Cash flows from financing activities:
Additional borrowings 15.0 140.5
Payments on borrowings (23.4) (200.6)
Cash dividends paid (49.1) (49.8)
Common shares issued 55.1 13.4
Common shares purchased (36.1) (51.5)
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Net cash (used in) financing activities (38.5) (148.0)
------- -------
Increase in cash and cash equivalents 37.0 8.7
Cash and cash equivalents at beginning of year 102.0 29.5
------- -------
Cash and cash equivalents at end of third quarter $ 139.0 $ 38.2
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</TABLE>
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