<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Nine Months Ended September 30, 1994
Commission File Number 0-1387
BEMIS COMPANY, INC.
(Exact name of registrant as specified in its charter)
Missouri 43-0178130
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 South 9th Street, Suite 2300
Minneapolis, Minnesota 55402-4099
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (612) 376-3000
Indicate by check mark whether the registrant has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding 12 months and has been subject to such filing requirements for the
past 90 days.
YES X NO
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Aggregate market value of the voting stock held by non-affiliates of the
registrant
51,211,326 shares at $24.50 per share
as of October 25, 1994 - $1,254,677,000
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements (enclosed as Exhibit 21) are incorporated by
reference in this Form 10-Q.
In the opinion of management, the financial statements reflect all
adjustments necessary to a fair statement of the results for the nine months
ended September 30, 1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THIRD QUARTER 1994
Net Sales for the third quarter of 1994 were $356.2 million compared to
$299.5 million for the third quarter of 1993, an increase of 18.9% or $56.7
million. Net Income was $18.3 million for the third quarter of 1994 and $1.0
million for the same quarter in 1993. Exclusive of a third quarter 1993
restructuring charge of $13.1 million aftertax, Net Income was $14.1 million.
During the third quarter, increased unit volume, the effective penetration
of new accounts and the strengthening our share in key markets were major
factors in our sales and profit increases. In addition, recent acquisitions and
restructuring measures undertaken in 1993 also contributed to our improved
performance. While we have absorbed many raw material price increases this
year, higher unit sales and our own efforts to increase prices have helped
minimize the profit impact. We expect these conditions to continue in the
fourth quarter.
In the first quarter of 1994, the Company completed the acquisitions of
Fitchburg Coated Products and Hargro Health Care Packaging. In addition, during
the third quarter of 1993, the Company recorded a $21 million pretax
restructuring charge. Excluding non-comparable operating results of business
acquisitions and dispositions and restructuring charges from both 1994 and 1993,
third quarter Net Sales showed an increase of $34.9 million or 11.7% and
operating profit showed an increase of $5.5 million or 18.2%.
Net Sales and operating income improved for both the Flexible Packaging and
the Specialty Coated and Graphics Products Lines of Business because of
increased product demand and business acquisitions or dispositions made in the
first quarter of 1994 or 1993, together with our nearly completed restructuring
efforts. Excluding non-comparable operating results from the third quarter of
both 1994 and 1993 shows that Net Sales and operating profit increased 8.9% and
9.4%, respectively, for the Flexible Packaging segment and 20.8% and 53.4%,
respectively for the Specialty Coated and Graphics Products segment.
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PART I - FINANCIAL INFORMATION
Addressing the Statement of Income line item changes of consequence.
Cost of Products sold increased 19.4% on total sales increases of 18.9%.
Improvements in manufacturing efficiencies which resulted in lower
manufacturing cost, expressed as a percent of sales, have not been
sufficient to offset sharply increased material cost.
Selling, General and Administrative Expenses, expressed as a percent of Net
Sales were 11.6% compared to 12.4% in the third quarter of 1993, on an
18.9% increase in Net Sales reflecting cost control efforts and economies
available through increasing volume.
Increased Research and Development expenditures occurred in both Lines of
Business.
Increasing interest rates and a higher debt level have resulted in an
increase in Interest Expense.
The significant decrease in Other Expense is substantially due to the $21
million restructuring charge recorded in the third quarter of 1993.
The increase in Minority Interest in Net Income reflects the improvement in
our pressure-sensitive materials business.
Pretax Income increased $26.7 million. Exclusive of the third quarter 1993
restructuring charge, Pretax Income increased $5.7 million or 23.9%. The
effective tax rate for the third quarter of 1994 and 1993 was 38.2% and
66.1%, respectively, reflecting the retroactive application of tax
legislation enacted in the third quarter of 1993.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1994
Net Sales for the nine-month period of 1994 were $1,017 million compared to
$895.4 million for the same period 1993, an increase of 13.6%. Net Income was
$50.6 million for 1994 compared to $27.2 million for the same nine-month period
in 1993.
Excluding the operating results of the acquisition and dispositions and
restructuring charges from both 1994 and 1993, Net Sales for the first nine
months of 1994 increased $65.1 million or 7.4% from the same period of 1993,
while pretax income increased $15.1 million or 24.8%.
Cost of Products sold increased 13.6% on Net Sales increases of 13.6%.
Improvements in manufacturing efficiencies which resulted in lower manufacturing
cost, expressed as a percent of sales, have offset increased material cost.
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<PAGE>
PART I - FINANCIAL INFORMATION
Increased Research and Development expenditures have occurred in both
business segments, principally in coated and laminated products and pressure-
sensitive materials products.
The significant change in Other Income is principally due to the $21
million restructuring charge recorded in the third quarter of 1993 partially
offset by non-recurring gains on minor business sales which occurred in 1993.
Pretax Income increased $37.3 or 84.2% reflecting the improving domestic
and European economic climate together with ongoing internal efforts to
restructure and streamline business operations.
In the third quarter of 1993, the Company incurred a pretax restructuring
charge of $21 million related primarily to the planned closedown of its Nylon
Resin production facility ($6.2 million), the realignment of assets in both the
domestic and international packaging machinery business ($7.2 million), the
consolidation of two paper packaging plants into larger facilities ($5.0
million) and selected other actions to improve operating efficiency throughout
the Company ($2.6 million). When completed, these actions were expected to
result in the elimination of 264 jobs in the U.S. and Europe and the relocation
of an additional 27 employees.
As of September 30, 1994, we have finalized all of the planned plant
closures and 90% of job reductions and employee relocations. The balance should
be completed prior to year end.
Of the $21 million total restructuring expenses, we expected $11.4 million
of non-cash cost and $9.6 million of net cash expense, all of which would be
internally generated. Through September 30, 1994, our cash costs have totalled
$2.3 million and non-cash costs $14.1 million. The majority of the remaining
cash and non-cash expenses are expected to be incurred in the fourth quarter of
this year with the possible exception of finalizing one sale and one lease
cancellation on the closed facilities.
As stated in our 1993 third quarter report, when fully implemented, these
restructuring costs should produce annual savings of approximately $8.0 million
pretax (10 cents per share).
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PART I - FINANCIAL INFORMATION
FINANCIAL CONDITION
A statement of cash flow for the nine months ended September 30, 1994, is
as follows:
<TABLE>
<CAPTION>
Millions
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Cash flows from operating activities:
-------------------------------------
<S> <C>
Net income $ 50.6
Non-cash items:
Depreciation and amortization 40.6
Minority interest 2.3
Deferred income taxes, non-current portion 1.3
Net increase in working capital items,
net of affects of business acquisitions (13.4)
Net change in deferred charges and credits (2.2)
Loss on sale of property and equipment 0.4
Other 1.8
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Net cash provided by operating activities 81.4
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (72.1)
Business acquisitions (33.2)
Other 3.3
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Net cash used in investing activities (102.0)
------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt 49.1
Increase in short-term debt 0.3
Cash dividends paid (20.7)
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Net cash provided by financing activities 28.7
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Effect of exchange rates 2.3
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Net increase in cash $ 10.4
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</TABLE>
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no significant changes during the nine months ended
September 30, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 21 - Financial Statements Furnished to Security Holders
SIGNATURES
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.
BEMIS COMPANY, INC.
Date October 26, 1994 S\ LeRoy F. Bazany
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LeRoy F. Bazany, Vice President
and Controller
Date October 26, 1994 S\ B. R. Field, III
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Benjamin R. Field, III, Senior Vice
President, Chief Financial Officer
and Treasurer
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EXHIBIT 21 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $356,243 $299,541 $1,017,264 $895,420
Costs and expenses:
Cost of products sold 279,109 233,736 792,387 697,222
Selling, general and
administrative expenses 41,463 37,050 125,428 118,684
Research and development 3,597 3,246 10,846 9,930
Interest expense 2,111 1,735 5,643 5,522
Other (income) expense (461) 20,454 (1,004) 18,048
Minority interest in net income 832 445 2,300 1,677
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Income before income taxes 29,592 2,875 81,664 44,337
Taxes based on income - cash 10,943 9,450 29,771 27,643
Taxes based on income - deferred 357 (7,550) 1,329 (10,543)
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Net income $ 18,292 $ 975* $ 50,564 $ 27,237*
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Earnings per share of common stock $ .35 $ .02* $ .97 $ .53*
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Cash dividends paid $ .135 $ .125 $ .405 $ .375
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Average common shares and common
stock equivalents outstanding 51,977 51,759 51,936 51,755
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<FN>
* A restructuring charge of $13,100 or 25 cents per share was recorded during
the third quarter of 1993. Exclusive of this charge, earnings for the third
quarter and nine months of 1993 would have been $14,075 or 27 cents per share
and $40,337 or 78 cents per share, respectively.
</TABLE>
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EXHIBIT 21 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Sep 30 Dec 31
ASSETS 1994 1993
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<S> <C> <C>
Cash $ 19,337 $ 8,911
Accounts receivable - net 189,345 161,695
Inventories 156,767 127,123
Prepaid expenses and deferred charges 43,410 39,280
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Total current assets 408,859 337,009
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Property and equipment, net 453,640 414,888
Excess of cost of investments in
subsidiaries over net assets acquired 29,053 24,814
Other assets 13,812 13,056
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Total 42,865 37,870
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TOTAL ASSETS $ 905,364 $ 789,767
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LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 1,671 $
Current portion of long-term debt 3,054 4,035
Accounts payable 159,214 138,243
Accrued salaries and wages 29,559 22,015
Accrued income and other taxes 17,889 19,896
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Total current liabilities 211,387 184,189
Long-term debt, less current portion 173,402 123,215
Deferred taxes 37,168 35,813
Other liabilities and deferred credits 53,009 54,602
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Total liabilities 474,966 397,819
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Minority interest 24,512 21,409
STOCKHOLDERS' EQUITY:
Common stock (55,723,731 and 55,713,731 shares) 5,572 5,571
Capital in excess of par value 101,235 101,153
Retained income 427,745 397,922
Cumulative translation adjustment 4,827 (614)
Common stock held in treasury (4,512,405 shares) (133,493) (133,493)
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Total stockholders' equity 405,886 370,539
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 905,364 $ 789,767
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</TABLE>
<PAGE>
EXHIBIT 21 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-----------------------
1994 1993
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 50,564 $ 27,237
NON-CASH ITEMS:
Depreciation and amortization 40,568 36,711
Minority interest 2,300 1,677
Deferred income taxes, non-current portion 1,328 (2,831)
Loss on sale of property and equipment 383 865
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Cash provided by operations 95,143 63,659
Net change in receivables, inventories,
prepaid expenses and payables (13,352) 3,804
Net change in deferred charges and credits (2,206) 8,148
Other 1,822 (753)
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Net cash provided by operating activities 81,407 74,858
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (72,112) (45,255)
Business acquisitions, net of divestitures (33,248) (7,684)
Proceeds from sale of property and equipment 3,137 871
Change in long-term receivables 210 267
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Net cash used in investing activities (102,013) (51,801)
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CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term debt 49,108 13,000
Change in short-term debt 300 (1,351)
Cash dividends paid (20,741) (19,187)
Purchase of common stock for the treasury (1,262)
Subsidiary cash dividends to minority shareholders (1,703)
Stock incentive programs 83 1,115
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Net cash provided (used) by financing activities 28,750 (9,388)
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Effect of exchange rates on cash 2,282 (1,124)
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Net increase in cash $ 10,426 $ 12,545
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</TABLE>
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EXHIBIT 21 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TAXES BASED ON INCOME
The Company's 1994 effective tax rate of 38% differs from the federal
statutory rate of 35% primarily due to state and local income taxes.
