Mead Announces First Quarter Earnings Expectations
Press release from the issuing company
DAYTON, Ohio. March 20, 2001 – The Mead Corporation today announced that it expects to report a first quarter 2001 after-tax operating loss in the range of 35 cents to 40 cents per share. Mead’s overall net loss for the quarter, which includes a charge of 10 cents per share for an accounting change related to the adoption of Statement of Financial Accounting Standards No. 133, is expected to be in the range of 45 cents to 50 cents per share. Consistent with the outlook contained in Mead’s fourth quarter 2000 earnings announcement, the company’s businesses continue to show signs of a slowing economy and the impacts of rising energy-related costs and a strong U.S. dollar.
“Our more cyclical businesses of containerboard and coated paper continue to be affected by the slowing economy, resulting in price declines from the prior quarter and prior year levels,” said Jerry Tatar, Mead chairman, president and chief executive officer. “In addition, the first quarter is a seasonally slow period for our beverage packaging business and for the school products and time management businesses of the Consumer & Office Products segment.”
In the first quarter, continued weak market conditions have led to a decline in prices for coated paper from the prior quarter and prior year. Paper segment results have also been affected by operating issues, primarily at Mead’s Ohio mill related to the conversion to alkaline papermaking on two machines. In the Packaging and Paperboard segment, prices and shipments of corrugating medium have weakened from prior quarter and prior year, and costs related to previously announced market-related downtime and a slowdown in production as part of the company’s move to demand-paced manufacturing. Other factors affecting company results include higher energy-related costs, the impact of foreign currency exchange rates, lower prices for wood products and the negative effect of a lower tax rate in a quarter with an operating loss.
For the full year 2001, Mead’s earnings would be in the range of 65 cents to 80 cents per share if the following assumptions were made for calibration purposes:
* Current market conditions continue;
* Prices for corrugating medium and coated paper remain at current levels;
* Approximately 50,000 tons of production downtime are taken for both corrugating medium and coated paper during the remainder of the year related to the company’s demand-paced manufacturing discipline;
* Foreign exchange rates hold at average first quarter levels; and
* Modest improvement occurs in energy-related costs.
“We are faced with a challenging economic environment,” Tatar added. “To reduce the impact of market conditions, we are intensifying our efforts to improve productivity and customer satisfaction, and we are taking prudent measures in capital spending, working capital management, purchasing and cost control.”
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