Server: Netscape-Commerce/1.1 Date: Friday, 21-Nov-97 00:11:44 GMT Last-modified: Wednesday, 15-Oct-97 21:38:22 GMT Content-length: 15857 Content-type: text/html Mead Reports Third Quarter Results
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Mead Reports Third Quarter Results
DAYTON, Ohio, Oct. 15 /PRNewswire/ -- The Mead Corporation (NYSE: MEA) today 
reported third quarter net earnings of $50.3 million, or 94 cents per share, 
compared to 1996 third quarter earnings of $62.7 million, or $1.18 per share.
    Sales for the quarter were $1.38 billion, an increase of 12 percent from
$1.23 billion in 1996.  The increase primarily reflects Mead's acquisition in
November 1996 of a coated and specialty paper mill in Rumford, Maine.
    Earnings improved over the prior year within the Paper and Paperboard
segments on strong volume.  Pricing, which has been weak for most of the year
in coated paper and corrugating medium, improved during the quarter.  Earnings
within the Distribution and School and Office Products segment were much lower
on reduced margins.
 
    Paper
    Earnings improved over the prior year on volume growth in coated paper,
primarily because of the Rumford mill and strong sales volumes within the
Specialty Paper Division.  Coated paper pricing, which had been very low
earlier this year, strengthened during the quarter.  Carbonless paper volumes
and prices declined slightly from the prior year.  The Paper segment's mills
operated well during the quarter.
 
    Packaging and Paperboard
    Earnings within the segment improved on volume growth in corrugating
medium and strong volume and operations within the Coated Board System.
Within the Coated Board System, beverage volume continued to grow, especially
in North America and Latin America, and earnings improved despite
strengthening of the U.S. dollar against European currencies.  Converting
operations improved over the prior year.  Open market sales of Coated Natural
Kraft(TM) also increased.
    In the Coated Board Division, startup of the rebuilt Number 1 machine at
the Mahrt Mill in Alabama was excellent following its June shutdown.  The
division also reported strong wood operations during the quarter.
    Volume growth in corrugating medium over the prior year was driven by the
Containerboard Division's new machine at the Stevenson mill in Alabama and
strong operations overall.  Medium pricing improved during the quarter from
very low levels earlier this year.  Sales volume at the division's corrugated
container plants also increased, although pricing is below prior-year levels.
Expansion of the new machine and related environmental improvements continue
to be on track for mid-1998 completion.
 
    Distribution and School and Office Products
    Segment earnings declined primarily on weak results within Zellerbach,
Mead's distribution company.  Zellerbach sales improved slightly during the
quarter from the prior-year period but earnings dropped significantly on
reduced margins.  The division is focusing its efforts on increasing sales
volume and is being impacted by increased costs associated with strengthening
its sales force.  Sales increased in the School and Office Products Division,
while earnings declined from the previous year due to sales mix and pressure
on margins.
 
    Northwood Investees
    Earnings for Mead's jointly owned Northwood companies declined from the
prior year but were about even with those of the second quarter.  Prices and
volume for lumber declined from the prior year.  Pulp prices were up slightly
during the quarter and about even with last year's levels.

    Other
    The company repurchased more than 350,000 common shares during the quarter
and has now repurchased nearly 55 percent of the five million shares
authorized for repurchase in April, 1995.
    "We are pleased with our improved results in the Paper and Paperboard
segments, where we have made major investments," said Steven C. Mason,
chairman and CEO.  "Our disappointing performance at Zellerbach is being
aggressively addressed by the new division management specifically through the
strengthening of the sales force."
    Mason, whose October 31 retirement as chairman was previously announced,
said, "We are encouraged by the strong markets for many of our products as
well as the improvement in pricing in a number of our grades.  I have great
confidence in the ability of Mead people to continue the significant progress
they have made in customer satisfaction, productivity improvement and the
building of Mead as a high performance organization."
    Mason will be succeeded as chairman and CEO by Jerome F. Tatar, currently
president and chief operating officer.
    The Mead Corporation produces coated papers for periodicals, catalogs,
books, and commercial printing; carbonless copy paper; uncoated and specialty
papers; and pulp and wood products.  In the packaging and paperboard sector,
the company produces coated paperboard; beverage and food packaging; and
corrugating medium and cartons.  Mead is a major supplier of value-added
school and office products.  Mead's Zellerbach division delivers products and
services for printing, packaging and industrial supply markets.


STATEMENT OF EARNINGS (All dollar amounts in millions, except per share amounts)
Third Qtr Ended Three Qtrs Ended Sept 28, Sept 29, Sept 28, Sept 29, 1997 1996 1997 1996 Net sales $1,375.6 $1,231.1 $3,833.6 $3,556.8 Cost of products sold 1,134.9 995.1 3,163.6 2,858.7 Gross profit 240.7 236.0 670.0 698.1 Selling & administrative expenses 146.2 141.5 428.1 416.4 Earnings from operations 94.5 94.5 241.9 281.7 Other revenues 2.8 3.5 4.5 11.5 Interest & debt expense (25.9) (12.9) (73.9) (40.3) Earnings from continuing operations before income taxes 71.4 85.1 172.5 252.9 Income taxes 25.8 31.2 63.1 92.7 Earnings from continuing operations before equity in net earnings of investees 45.6 53.9 109.4 160.2 Equity in net earnings of investees 4.7 8.8 8.9 .5 Earnings from continuing operations 50.3 62.7 118.3 160.7 Discontinued operations -- -- -- 5.4 Net earnings $50.3 $62.7 $118.3 $166.1 Per common & common equivalent share: Earnings from continuing operations $.94 $1.18 $2.22 $3.02 Discontinued operations -- -- -- .10 Net earnings $.94 $1.18 $2.22 $3.12 Cash dividends per common share $.30 $.30 $.90 $.88 Average common & common equivalent shares outstanding (millions) 53.6 53.0 53.3 53.2
BALANCE SHEETS (All dollar amounts in millions)
Sept 28, Sept 29, 1997 1996 Current assets: Cash and cash equivalents $20.4 $121.9 Accounts receivable 689.0 640.0 Inventories 477.7 412.0 Other current assets 84.4 91.8 Total current assets 1,271.5 1,265.7 Investments and other assets: Investees 159.4 136.6 Other assets 558.0 523.9 Total 717.4 660.5 Property, plant and equipment - net 3,229.1 2,478.6 Total assets $5,218.0 $4,404.8 Current liabilities: Notes payable $114.2 $-- Accounts payable 337.3 300.1 Accrued liabilities 387.5 380.7 Current maturities of long-term debt 9.7 7.3 Total current liabilities 848.7 688.1 Long-term debt 1,273.5 720.6 Commitments and contingent liabilities Deferred items 791.2 755.3 Shareowners' equity: Common shares 156.2 155.8 Additional paid-in capital 52.1 11.0 Foreign currency translation adjustment (15.8) (1.7) Retained earnings 2,112.1 2,075.7 Total 2,304.6 2,240.8 Total liabilities and shareowners' equity $5,218.0 $4,404.8
SALES AND EARNINGS SEGMENT INFORMATION (All dollar amounts in millions)
Third Qtr Ended Three Qtrs Ended Sept 28, Sept 29, Sept 28, Sept 29, 1997 1996 1997 1996 Industry Segment Sales to Unaffiliated Customers: Paper 412.8 302.7 1,183.4 875.6 Packaging and Paperboard 369.4 342.9 1,063.1 1,045.7 Distribution and School and Office Products 593.4 585.5 1,587.1 1,635.5 TOTAL NET SALES $1,375.6 $1,231.1 $3,833.6 $3,556.8 Third Qtr Ended Three Qtrs Ended Sept 28, Sept 29, Sept 28, Sept 29, 1997 1996 1997 1996 Industry Segment Earnings from Operations: Paper 54.7 49.7 141.1 142.3 Packaging and Paperboard 42.5 40.0 94.1 118.4 Distribution and School and Office Products 8.5 21.6 43.6 70.0 Total 105.7 111.3 278.8 330.7 Other revenue - corporate 3.4 1.7 6.6 8.0 General corporate expense (11.8) (15.0) (39.0) (45.5) Interest and debt expense (25.9) (12.9) (73.9) (40.3) Total corporate and other (34.3) (26.2) (106.3) (77.8) EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $71.4 $85.1 $172.5 $252.9
STATEMENT OF CASH FLOWS (All dollar amounts in millions)
Three Quarters Ended Sept 28, Sept 29, 1997 1996 Cash flows from operating activities: Net earnings $118.3 $166.1 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and depletion of property, plant and equipment 179.9 145.3 Amortization of other assets 34.1 36.4 Deferred income taxes 24.3 39.9 Investees - earnings and dividends (4.4) 5.3 Discontinued operations -- (5.4) Other (15.4) (18.7) Change in current assets and liabilities: Accounts receivable (110.8) (54.3) Inventories 31.6 (1.5) Other current assets 3.4 (6.9) Accounts payable and accrued liabilities (17.8) (71.3) Cash (used in) discontinued operations -- (1.5) Net cash provided by operating activities: 243.2 233.4 Cash flows from investing activities: Capital expenditures (297.1) (278.0) Additions to equipment rented to others (24.8) (31.3) Proceeds from sale of business -- 19.6 Other (15.3) 11.1 Net cash (used in) investing activities (337.2) (278.6) Cash flows from financing activities: Additional borrowings 564.2 32.8 Payments on borrowings (537.9) (73.8) Notes payable 114.2 -- Cash dividends paid (47.1) (46.2) Common shares issued 41.9 11.9 Common shares purchased (41.5) (50.2) Net cash provided by (used in) financing activities 93.8 (125.5) (Decrease) in cash and cash equivalents (.2) (170.7) Cash and cash equivalents at beginning of year 20.6 292.6 Cash and cash equivalents at end of third quarter $20.4 $121.9 SOURCE The Mead Corporation
CONTACT: Media, Mark Feighery, 937-495-3319, or Analysts, Mark
Pomerlau, 937-495-3456, both of The Mead Corporation


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