Mead Reports First Quarter Results

First Quarter 2001 Overview



* Mead reported a net operating loss of 37 cents per share in the first

quarter of 2001 compared to net operating income of 22 cents per share

for the same period in 2000.

* Including a charge of 10 cents per share for the cumulative effect of

an accounting change related to Statement of Financial Accounting

Standards No. 133, Mead reported a net loss of 47 cents per share in

the first quarter of 2001. Mead had net earnings of 20 cents per share

for the same period in 2000.

* Net sales were $944.5 million in the first quarter of 2001 compared to

$953.6 million in the first quarter of 2000.

* As announced in March 2001, Mead's results were affected by a slowing

economy, the impacts of rising energy-related costs, a strong U.S.

dollar and significant productivity issues at the company's Ohio mill.



(In millions, except

per share amounts)

First Quarter Ended

April 1 April 2

2001 2000



Net Sales $944.5 $ 953.6

Net Earnings (Loss) $(47.0) $20.8

Earnings Per Share-diluted

Net Earnings (Loss) $(.47) $.20

Earnings (Loss) excluding

accounting change impact $(.37) $.22



Apr 18, 2001, 01:00 ET from The Mead Corporation

    DAYTON, Ohio, April 18 /PRNewswire/ -- The Mead Corporation (NYSE:   MEA)
 today announced a net operating loss of $36.6 million or 37 cents per share in
 the first quarter of 2001 versus net operating income of $23.2 million or
 22 cents per share in the same period a year ago.  Mead reported a net loss of
 $47.0 million or 47 cents per share in the first quarter of 2001 versus net
 income of $20.8 million or 20 cents per share in the first quarter of 2000.
 The net loss included 10 cents per share for the cumulative effect of an
 accounting change related to Statement of Financial Accounting Standards No.
 133.  Net sales for the first quarter of 2001 were $944.5 million compared to
 $953.6 million in 2000.
     "Our first quarter is seasonally weak, but even so it was disappointing.
 Sales and earnings were affected by continued weak market conditions, which
 led to a decline in prices for coated paper and corrugating medium from the
 prior year quarter," said Jerry Tatar, Mead chairman, president and chief
 executive officer.  "Other external factors affecting us included higher
 energy-related costs and the impact of foreign currency exchange rates.  In
 addition, we experienced significant productivity issues at our Ohio mill."
     Tatar added, "We are meeting these challenges head-on by intensifying our
 efforts to improve productivity and customer satisfaction, and we are taking
 prudent measures in capital spending, working capital management, purchasing
 and cost controls."
 
     Paper
     The Paper segment had an operating loss of $6.3 million in the first
 quarter of 2001 compared to earnings of $48.5 million in the first quarter of
 2000.  Sales were $476.3 million versus $468.6 million in the same period a
 year ago.  The segment's loss was primarily due to lower prices for coated
 paper, which  resulted from pricing pressure brought on by rising imports.
     Paper segment results in the first quarter of 2001 included a negative
 impact of $15 million pretax due to operating issues at Mead's Ohio mill.  The
 mill experienced lower productivity related to the conversion to alkaline
 papermaking chemistry on two of the mill's paper machines.
 
     Packaging & Paperboard
     The Packaging & Paperboard segment's first quarter of 2001 earnings were
 $11.9 million compared to $42.2 million in the same period a year ago.  Sales
 for the segment were also lower at $363.2 million in the first quarter of 2001
 versus $388.8 million in the prior year first quarter.
     The segment's results were affected by lower prices for and reduced
 shipments of corrugating medium compared to the first quarter of 2000 and
 costs associated with previously announced market-related downtime.  Mead's
 Stevenson, Alabama, mill took 33,000 tons of downtime in the first quarter of
 2001.  The effect of production downtime was approximately $5 million pretax.
     Mead's Coated Board System business, which includes the Packaging and
 Coated Board divisions, had lower operating earnings in the first quarter of
 2001 versus a year ago.  The decline was due to higher costs for energy and
 raw materials, the impact of foreign currency exchange rates on European
 operations, and lower price and volume on wood products.
 
     Consumer & Office Products
     The Consumer & Office Products segment had improved operating results and
 higher sales in the first quarter of 2001 compared to the same period in 2000.
 Due to the highly seasonal nature of this business, the segment had an
 operating loss of $8.5 million in the first quarter of 2001 compared to an
 operating loss of $11.9 million in the same period a year ago.  Sales were
 $105.0 million in the first quarter of 2001 and $96.2 million in the first
 quarter of 2000.  Higher sales and operating results were achieved based on
 improved performance across many product lines.
     In the first quarter of 2001, Mead purchased selected assets of Pen-Tab
 Industries, which include a manufacturing facility in Front Royal, Virginia.
 
     Investees
     Mead's share of investees' earnings was $1.2 million in the first quarter
 of 2001 compared to $4.0 million for the same period in 2000.  The decline
 resulted from lower prices and volume for oriented strand board (OSB).
 
     Outlook
     Mead expects energy-related costs to continue to affect earnings across
 the company's businesses.  In the first quarter of 2001, these costs increased
 by approximately $20 million compared to the first quarter of 2000 on a pretax
 basis.  The impact of higher energy-related costs is expected to continue in
 the second quarter of 2001.
     Mead's more cyclical businesses -- containerboard and coated paper -- are
 expected to have lower prices and sales volume versus a year ago as a result
 of a weaker economy.  In the second quarter of 2001, Mead expects to take
 production downtime of approximately 25,000 tons for corrugating medium and
 approximately 5,000 tons for coated paper.
     Mead anticipates unfavorable currency exchange rates will continue to
 impact the results of its international worldwide packaging systems business
 in the second quarter of 2001.
 
     Conference Call
     Mead's first quarter earnings release conference call is scheduled for
 today at 10:15 a.m. (EST) and is accessible through the company's web site.
 To listen to the call, go to www.mead.com and click on Conference Calls under
 the Financial Information banner.  The call will be available live and stored
 on the web site for three months.
 
     Mead Profile
     The Mead Corporation, a forest products company with $4.4 billion in
 annual sales, is one of the leading North American producers of coated paper,
 coated paperboard and consumer and office products, a world leader in multiple
 packaging and specialty paper, and a producer of high-quality corrugating
 medium.  In management of the company's more than two million acres of
 forests, Mead is committed to practicing principled forest stewardship and
 using resources in a responsible and sustainable manner.  For additional
 information about Mead, visit the company's web site at www.mead.com .
     Certain statements in this news release are forward-looking statements.
 These statements include risks and uncertainties.  Actual results may differ.
 Certain additional 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, 2000.
 
                      STATEMENTS OF OPERATIONS (UNAUDITED)
           All dollar amounts in millions, except per share amounts)
 
                                                        First Quarter Ended
                                                      April 1,       April 2,
                                                        2001           2000
 
     Net sales                                         $944.5         $953.6
     Costs and expenses:
       Cost of sales                                    850.7          776.6
       Selling and administrative expenses              113.5          118.6
                                                        964.2          895.2
       Earnings (loss) from operations                  (19.7)          58.4
     Other revenues - net                                  .4            1.5
     Interest and debt expense                          (28.8)         (29.7)
       Earnings (loss) before income taxes              (48.1)          30.2
     Income taxes                                       (10.3)          11.0
       Earnings (loss) before equity in net
         earnings of investees                          (37.8)          19.2
     Equity in net earnings of investees                  1.2            4.0
       Earnings (loss) before cumulative effect
         of change in accounting principle              (36.6)          23.2
     Cumulative effect of change in accounting
         principle                                      (10.4)          (2.4)
 
       Net earnings (loss)                             $(47.0)         $20.8
 
     Earnings (loss) per common share - basic:
     Earnings (loss) before cumulative effect of change
       in accounting principle                          $(.37)          $.22
     Cumulative effect of change in accounting principle (.10)          (.02)
 
       Net earnings (loss)                              $(.47)          $.20
 
     Earnings (loss) per common share - diluted:
     Earnings (loss) before cumulative effect of change
       in accounting principle                          $(.37)          $.22
     Cumulative effect of change in accounting principle (.10)          (.02)
 
       Net earnings (loss)                              $(.47)          $.20
 
     Cash dividends per common share                     $.17           $.17
 
     Average common shares outstanding
      (millions) - basic                                 99.1          102.7
     Average common shares outstanding
      (millions) - diluted                               99.1          104.4
 
 
                           BALANCE SHEETS (UNAUDITED)
                        (All dollar amounts in millions)
 
                                                       April 1,      April 2,
                                                         2001          2000
 
     CURRENT ASSETS:
     Cash and cash equivalents                          $14.4          $12.3
     Accounts receivable                                496.8          471.1
     Inventories                                        655.2          639.4
     Other current assets                               138.8          144.9
       Total current assets                           1,305.2        1,267.7
 
     INVESTMENTS AND OTHER ASSETS:
     Investees                                           33.1           32.9
     Other assets                                     1,098.7        1,051.9
       Total                                          1,131.8        1,084.8
 
     Property, plant and equipment - net              3,242.6        3,313.1
 
       Total assets                                  $5,679.6       $5,665.6
 
     CURRENT LIABILITIES:
     Notes payable                                     $218.2         $291.4
     Accounts payable                                   262.2          246.8
     Accrued liabilities                                429.3          437.4
     Current maturities of long-term debt               112.7           13.6
       Total current liabilities                      1,022.4          989.2
 
     Long-term debt                                   1,337.3        1,334.0
 
     Deferred items                                     967.8          908.0
 
     SHAREOWNERS' EQUITY:
     Common shares                                      147.8          153.3
     Additional paid-in capital                         129.6          127.8
     Retained earnings                                2,109.6        2,181.4
     Other comprehensive loss                           (34.9)         (28.1)
        Total                                         2,352.1        2,434.4
 
     Total liabilities and shareowners' equity       $5,679.6       $5,665.6
 
 
              SALES AND OPERATIONS SEGMENT INFORMATION (UNAUDITED)
                        (All dollar amounts in millions)
 
 
                                                        First Quarter Ended
                                                      April 1,       April 2,
                                                        2001           2000
 
     Industry Segment Sales to Unaffiliated Customers:
 
     Paper                                             $476.3         $468.6
     Packaging and Paperboard                           363.2          388.8
     Consumer and Office Products                       105.0           96.2
     TOTAL NET SALES                                   $944.5         $953.6
 
 
     Industry Segment Earnings (Loss) from Operations
       before Income Taxes:
 
     Paper                                              $(6.3)         $48.5
     Packaging and Paperboard                            11.9           42.2
     Consumer and Office Products                        (8.5)         (11.9)
       Total                                             (2.9)          78.8
 
     Other revenues (expenses) - corporate                (.4)           2.0
     Interest and debt expense                          (28.8)         (29.7)
     General corporate expenses                         (16.0)         (20.9)
 
     Total corporate and other                          (45.2)         (48.6)
 
     EARNINGS (LOSS) FROM OPERATIONS BEFORE
       INCOME TAXES                                    $(48.1)          $30.2
 
 
                      STATEMENTS OF CASH FLOWS (UNAUDITED)
                        (All dollar amounts in millions)
 
                                                        First Quarter Ended
                                                      April 1,        April 2,
                                                        2001            2000
 
     Cash flows from operating activities:
       Net earnings (loss)                              $(47.0)          $20.8
       Adjustments to reconcile net earnings (loss) to
         net cash (used in) operating activities:
         Depreciation, amortization and depletion
           of property, plant and equipment               71.3           69.0
         Depreciation and amortization of other assets    15.7           14.9
         Deferred income taxes                            22.6           17.4
         Investees-earnings and dividends                 (1.9)          (4.2)
         Cumulative effect of change in accounting
           principle                                      10.4            2.4
         Other                                            (5.6)          (6.6)
         Change in current assets and liabilities:
           Accounts receivable                            60.5           60.6
           Inventories                                   (93.7)        (137.3)
           Other current assets                           (7.7)         (10.0)
           Accounts payable and accrued liabilities     (107.9)         (94.3)
 
           Net cash (used in) operating activities       (83.3)         (67.3)
 
     Cash flows from investing activities:
        Capital expenditures                             (45.5)         (32.2)
        Additions to equipment rented to others           (8.0)          (7.5)
        Other                                              1.8          (9.0)
 
          Net cash (used in) investing activities        (51.7)         (48.7)
 
     Cash flows from financing activities:
       Additional borrowings                             113.9              -
       Payments on borrowings                              (.3)         (21.7)
       Notes payable                                      17.9          105.2
       Cash dividends paid                               (16.3)         (17.4)
       Common shares issued                                4.8            5.8
 
         Net cash provided by financing activities       120.0           71.9
 
     (Decrease) in cash and cash equivalents             (15.0)         (44.1)
 e    Cash and cash equivalents at beginning of year       29.4           56.4
     Cash and cash equivalents at end of quarter         $14.4          $12.3
 
 

SOURCE The Mead Corporation
    DAYTON, Ohio, April 18 /PRNewswire/ -- The Mead Corporation (NYSE:   MEA)
 today announced a net operating loss of $36.6 million or 37 cents per share in
 the first quarter of 2001 versus net operating income of $23.2 million or
 22 cents per share in the same period a year ago.  Mead reported a net loss of
 $47.0 million or 47 cents per share in the first quarter of 2001 versus net
 income of $20.8 million or 20 cents per share in the first quarter of 2000.
 The net loss included 10 cents per share for the cumulative effect of an
 accounting change related to Statement of Financial Accounting Standards No.
 133.  Net sales for the first quarter of 2001 were $944.5 million compared to
 $953.6 million in 2000.
     "Our first quarter is seasonally weak, but even so it was disappointing.
 Sales and earnings were affected by continued weak market conditions, which
 led to a decline in prices for coated paper and corrugating medium from the
 prior year quarter," said Jerry Tatar, Mead chairman, president and chief
 executive officer.  "Other external factors affecting us included higher
 energy-related costs and the impact of foreign currency exchange rates.  In
 addition, we experienced significant productivity issues at our Ohio mill."
     Tatar added, "We are meeting these challenges head-on by intensifying our
 efforts to improve productivity and customer satisfaction, and we are taking
 prudent measures in capital spending, working capital management, purchasing
 and cost controls."
 
     Paper
     The Paper segment had an operating loss of $6.3 million in the first
 quarter of 2001 compared to earnings of $48.5 million in the first quarter of
 2000.  Sales were $476.3 million versus $468.6 million in the same period a
 year ago.  The segment's loss was primarily due to lower prices for coated
 paper, which  resulted from pricing pressure brought on by rising imports.
     Paper segment results in the first quarter of 2001 included a negative
 impact of $15 million pretax due to operating issues at Mead's Ohio mill.  The
 mill experienced lower productivity related to the conversion to alkaline
 papermaking chemistry on two of the mill's paper machines.
 
     Packaging & Paperboard
     The Packaging & Paperboard segment's first quarter of 2001 earnings were
 $11.9 million compared to $42.2 million in the same period a year ago.  Sales
 for the segment were also lower at $363.2 million in the first quarter of 2001
 versus $388.8 million in the prior year first quarter.
     The segment's results were affected by lower prices for and reduced
 shipments of corrugating medium compared to the first quarter of 2000 and
 costs associated with previously announced market-related downtime.  Mead's
 Stevenson, Alabama, mill took 33,000 tons of downtime in the first quarter of
 2001.  The effect of production downtime was approximately $5 million pretax.
     Mead's Coated Board System business, which includes the Packaging and
 Coated Board divisions, had lower operating earnings in the first quarter of
 2001 versus a year ago.  The decline was due to higher costs for energy and
 raw materials, the impact of foreign currency exchange rates on European
 operations, and lower price and volume on wood products.
 
     Consumer & Office Products
     The Consumer & Office Products segment had improved operating results and
 higher sales in the first quarter of 2001 compared to the same period in 2000.
 Due to the highly seasonal nature of this business, the segment had an
 operating loss of $8.5 million in the first quarter of 2001 compared to an
 operating loss of $11.9 million in the same period a year ago.  Sales were
 $105.0 million in the first quarter of 2001 and $96.2 million in the first
 quarter of 2000.  Higher sales and operating results were achieved based on
 improved performance across many product lines.
     In the first quarter of 2001, Mead purchased selected assets of Pen-Tab
 Industries, which include a manufacturing facility in Front Royal, Virginia.
 
     Investees
     Mead's share of investees' earnings was $1.2 million in the first quarter
 of 2001 compared to $4.0 million for the same period in 2000.  The decline
 resulted from lower prices and volume for oriented strand board (OSB).
 
     Outlook
     Mead expects energy-related costs to continue to affect earnings across
 the company's businesses.  In the first quarter of 2001, these costs increased
 by approximately $20 million compared to the first quarter of 2000 on a pretax
 basis.  The impact of higher energy-related costs is expected to continue in
 the second quarter of 2001.
     Mead's more cyclical businesses -- containerboard and coated paper -- are
 expected to have lower prices and sales volume versus a year ago as a result
 of a weaker economy.  In the second quarter of 2001, Mead expects to take
 production downtime of approximately 25,000 tons for corrugating medium and
 approximately 5,000 tons for coated paper.
     Mead anticipates unfavorable currency exchange rates will continue to
 impact the results of its international worldwide packaging systems business
 in the second quarter of 2001.
 
     Conference Call
     Mead's first quarter earnings release conference call is scheduled for
 today at 10:15 a.m. (EST) and is accessible through the company's web site.
 To listen to the call, go to www.mead.com and click on Conference Calls under
 the Financial Information banner.  The call will be available live and stored
 on the web site for three months.
 
     Mead Profile
     The Mead Corporation, a forest products company with $4.4 billion in
 annual sales, is one of the leading North American producers of coated paper,
 coated paperboard and consumer and office products, a world leader in multiple
 packaging and specialty paper, and a producer of high-quality corrugating
 medium.  In management of the company's more than two million acres of
 forests, Mead is committed to practicing principled forest stewardship and
 using resources in a responsible and sustainable manner.  For additional
 information about Mead, visit the company's web site at www.mead.com .
     Certain statements in this news release are forward-looking statements.
 These statements include risks and uncertainties.  Actual results may differ.
 Certain additional 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, 2000.
 
                      STATEMENTS OF OPERATIONS (UNAUDITED)
           All dollar amounts in millions, except per share amounts)
 
                                                        First Quarter Ended
                                                      April 1,       April 2,
                                                        2001           2000
 
     Net sales                                         $944.5         $953.6
     Costs and expenses:
       Cost of sales                                    850.7          776.6
       Selling and administrative expenses              113.5          118.6
                                                        964.2          895.2
       Earnings (loss) from operations                  (19.7)          58.4
     Other revenues - net                                  .4            1.5
     Interest and debt expense                          (28.8)         (29.7)
       Earnings (loss) before income taxes              (48.1)          30.2
     Income taxes                                       (10.3)          11.0
       Earnings (loss) before equity in net
         earnings of investees                          (37.8)          19.2
     Equity in net earnings of investees                  1.2            4.0
       Earnings (loss) before cumulative effect
         of change in accounting principle              (36.6)          23.2
     Cumulative effect of change in accounting
         principle                                      (10.4)          (2.4)
 
       Net earnings (loss)                             $(47.0)         $20.8
 
     Earnings (loss) per common share - basic:
     Earnings (loss) before cumulative effect of change
       in accounting principle                          $(.37)          $.22
     Cumulative effect of change in accounting principle (.10)          (.02)
 
       Net earnings (loss)                              $(.47)          $.20
 
     Earnings (loss) per common share - diluted:
     Earnings (loss) before cumulative effect of change
       in accounting principle                          $(.37)          $.22
     Cumulative effect of change in accounting principle (.10)          (.02)
 
       Net earnings (loss)                              $(.47)          $.20
 
     Cash dividends per common share                     $.17           $.17
 
     Average common shares outstanding
      (millions) - basic                                 99.1          102.7
     Average common shares outstanding
      (millions) - diluted                               99.1          104.4
 
 
                           BALANCE SHEETS (UNAUDITED)
                        (All dollar amounts in millions)
 
                                                       April 1,      April 2,
                                                         2001          2000
 
     CURRENT ASSETS:
     Cash and cash equivalents                          $14.4          $12.3
     Accounts receivable                                496.8          471.1
     Inventories                                        655.2          639.4
     Other current assets                               138.8          144.9
       Total current assets                           1,305.2        1,267.7
 
     INVESTMENTS AND OTHER ASSETS:
     Investees                                           33.1           32.9
     Other assets                                     1,098.7        1,051.9
       Total                                          1,131.8        1,084.8
 
     Property, plant and equipment - net              3,242.6        3,313.1
 
       Total assets                                  $5,679.6       $5,665.6
 
     CURRENT LIABILITIES:
     Notes payable                                     $218.2         $291.4
     Accounts payable                                   262.2          246.8
     Accrued liabilities                                429.3          437.4
     Current maturities of long-term debt               112.7           13.6
       Total current liabilities                      1,022.4          989.2
 
     Long-term debt                                   1,337.3        1,334.0
 
     Deferred items                                     967.8          908.0
 
     SHAREOWNERS' EQUITY:
     Common shares                                      147.8          153.3
     Additional paid-in capital                         129.6          127.8
     Retained earnings                                2,109.6        2,181.4
     Other comprehensive loss                           (34.9)         (28.1)
        Total                                         2,352.1        2,434.4
 
     Total liabilities and shareowners' equity       $5,679.6       $5,665.6
 
 
              SALES AND OPERATIONS SEGMENT INFORMATION (UNAUDITED)
                        (All dollar amounts in millions)
 
 
                                                        First Quarter Ended
                                                      April 1,       April 2,
                                                        2001           2000
 
     Industry Segment Sales to Unaffiliated Customers:
 
     Paper                                             $476.3         $468.6
     Packaging and Paperboard                           363.2          388.8
     Consumer and Office Products                       105.0           96.2
     TOTAL NET SALES                                   $944.5         $953.6
 
 
     Industry Segment Earnings (Loss) from Operations
       before Income Taxes:
 
     Paper                                              $(6.3)         $48.5
     Packaging and Paperboard                            11.9           42.2
     Consumer and Office Products                        (8.5)         (11.9)
       Total                                             (2.9)          78.8
 
     Other revenues (expenses) - corporate                (.4)           2.0
     Interest and debt expense                          (28.8)         (29.7)
     General corporate expenses                         (16.0)         (20.9)
 
     Total corporate and other                          (45.2)         (48.6)
 
     EARNINGS (LOSS) FROM OPERATIONS BEFORE
       INCOME TAXES                                    $(48.1)          $30.2
 
 
                      STATEMENTS OF CASH FLOWS (UNAUDITED)
                        (All dollar amounts in millions)
 
                                                        First Quarter Ended
                                                      April 1,        April 2,
                                                        2001            2000
 
     Cash flows from operating activities:
       Net earnings (loss)                              $(47.0)          $20.8
       Adjustments to reconcile net earnings (loss) to
         net cash (used in) operating activities:
         Depreciation, amortization and depletion
           of property, plant and equipment               71.3           69.0
         Depreciation and amortization of other assets    15.7           14.9
         Deferred income taxes                            22.6           17.4
         Investees-earnings and dividends                 (1.9)          (4.2)
         Cumulative effect of change in accounting
           principle                                      10.4            2.4
         Other                                            (5.6)          (6.6)
         Change in current assets and liabilities:
           Accounts receivable                            60.5           60.6
           Inventories                                   (93.7)        (137.3)
           Other current assets                           (7.7)         (10.0)
           Accounts payable and accrued liabilities     (107.9)         (94.3)
 
           Net cash (used in) operating activities       (83.3)         (67.3)
 
     Cash flows from investing activities:
        Capital expenditures                             (45.5)         (32.2)
        Additions to equipment rented to others           (8.0)          (7.5)
        Other                                              1.8          (9.0)
 
          Net cash (used in) investing activities        (51.7)         (48.7)
 
     Cash flows from financing activities:
       Additional borrowings                             113.9              -
       Payments on borrowings                              (.3)         (21.7)
       Notes payable                                      17.9          105.2
       Cash dividends paid                               (16.3)         (17.4)
       Common shares issued                                4.8            5.8
 
         Net cash provided by financing activities       120.0           71.9
 
     (Decrease) in cash and cash equivalents             (15.0)         (44.1)
 e    Cash and cash equivalents at beginning of year       29.4           56.4
     Cash and cash equivalents at end of quarter         $14.4          $12.3
 
 SOURCE  The Mead Corporation