<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
Commission File Number 1-5277
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 (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
52,862,649 shares of Common Stock, $.10 par value on November 8, 1995
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements (enclosed as Exhibit 19) 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, 1995.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS - THIRD QUARTER 1995
Net Sales for the third quarter of 1995 were $372.5 million compared to
$356.2 million for the third quarter of 1994, an increase of 4.6% or $16.3
million. Net Income increased 13.9% to $20.8 million for the third quarter
of 1995 compared to the same quarter in 1994.
Both the Flexible Packaging and the Specialty Coated and Graphics
Products Lines of Business had increased Sales over the third quarter of 1994
on less unit volume. The 11.3% Operating Profit increase of the Flexible
Packaging Line of Business more than offset the nominal 1.8% drop experienced
in the Specialty Coated and Graphics Products Line of Business. Overall, the
level of business activity continues to be less robust than it was late last
year and early this year, but we continue to successfully penetrate new
accounts and strengthen our competitive position in the marketplace.
Addressing the Statement of Income line item changes of consequence.
Cost of Products sold increased 4.9% compared to Net Sales increases of
4.6%. Sales price increases effected in 1994 have not fully offset the
full impact of multiple raw material price increases incurred during
1994. While some raw material costs have continued to rise in 1995,
the rate of increases has been less severe than in 1994, and we have
recently experienced cost reductions for a few selected raw material
items. We also experienced a slight increase in Variable manufacturing
costs during the third quarter of 1995 compared to 1994.
Selling, General, and Administrative Expenses, expressed as a percent
of Net Sales were 11.2% compared to 11.6% in the third quarter of 1994,
on a 4.6% increase in Net Sales, continuing to reflect cost control
efforts and economies available through increasing volume.
Increased Research and Development expenditures resulted from increased
product development expense in all business segments except Packaging
Machinery.
Increasing interest rates account for the $.6 million increase in Interest
Expense compared to the third quarter of 1994.
- 2 -
<PAGE>
PART I - FINANCIAL INFORMATION
The $1.8 million increase in Other Income over the third quarter of 1994
relates to a combination of increased interest income, lower currency
exchange losses, and income associated with a minority equity interest,
the balance of which was purchased in the fourth quarter of 1995.
Pretax Income increased $3.3 million principally due to improvements in
marginal income. Income Tax expense increased $.8 million or 7.1%. The
effective tax rate for the third quarter of 1995 and 1994 was 36.7% and
38.2%, respectively.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1995
Net Sales for the nine-month period of 1995 increased 10.5% to $1.1
billion compared to the same period in 1994. Net Income was $58.1 million
for 1995 compared to $50.6 million for the same nine-month period in 1994, an
increase of 14.8%.
Cost of Products sold increased 11.5% on Net Sales increases of 10.5%.
Multiple raw material price increases experienced during 1994 and 1995 have
not been fully offset by our own selling price increases.
Reduced Research and Development expenditures occurred principally in
our Packaging Machinery business segment.
Increasing interest rates and a slightly higher average debt level,
required to sustain increased working capital and our capital equipment
expenditure program, account for the $2.8 million rise in Interest Expense.
Other Income increased $2.1 million during the first nine months of 1995
compared to the same period of 1994 primarily due to a combination of
increased interest income, lower currency exchange losses, and income
associated with a minority equity investment, the balance of which was
purchased in the fourth quarter of 1995.
The increase in Minority Interest reflects the continuing improvements
in our Pressure-Sensitive Materials business segment in both Europe and North
America.
Pretax Income increased $10.9 million or 13.3% on a nine-month Net Sales
increase of $107.0 million or 10.5%, reflecting the improving domestic and
European economic climate. The effective tax rate for the none-month period
of 1995 was 37.3% compared to 38.1% for the same period in 1994.
SUBSEQUENT EVENTS
In October 1995 we completed the acquisition of Banner Packaging, Inc.,
a Wisconsin-based flexible packaging manufacturer with annual sales of
approximately $60 million. We expect this excellent manufacturer of quality
flexible plastic packaging will very nicely complement our existing packaging
businesses.
- 3 -
<PAGE>
PART I - FINANCIAL INFORMATION
FINANCIAL CONDITION
A statement of cash flow for the nine months ended September 30, 1995,
is as follows:
<TABLE>
<CAPTION>
Millions
--------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................... $ 58.1
Non-cash items:
Depreciation and amortization............................................... 44.3
Minority interest........................................................... 3.0
Deferred income taxes, non-current portion.................................. 2.5
Net increase in working capital items....................................... 3.5
Net change in deferred charges and credits.................................. .6
-------
Net cash provided by operating activities...................................... 112.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment........................................... (69.1)
Proceeds from sales of property and equipment................................. 2.0
-------
Net cash used in investing activities.......................................... (67.1)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt...................................................... (13.7)
Change in short-term debt..................................................... (.7)
Cash dividends paid........................................................... (24.7)
Stock incentive programs...................................................... 3.5
Net cash provided by financing activities...................................... (35.6)
-------
Effect of exchange rates....................................................... 1.1
-------
Net increase in cash........................................................... $ 10.4
-------
</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, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
(a) The following documents are filed as part of this report:
3(a) Articles of Incorporation of the Registrant, as amended. (1)
3(b) By-Laws of the Registrant, as amended. (4)
4(a) Rights Agreement, dated as of August 3, 1989, between Bemis
Company, Inc. and Norwest Bank Minnesota, National
Association. (2)
4(b) Form of Indenture dated as of June 15, 1995, between the
Registrant and First Trust National Association, as
Trustee. (5)
10(a) Bemis Company, Inc. 1987 Stock Option Plan. *(1)
10(b) Bemis Company, Inc. 1994 Stock Incentive Plan. *(3)
10(c) Bemis Company, Inc. 1984 Stock Award Plan .*(4)
10(d) Bemis Retirement Plan, as amended effective January 1,
1994.*(4)
10(e) Bemis Company, Inc. Supplemental Retirement Plan dated
October 20, 1988.*(4)
10(f) Bemis Executive Incentive Plan dated April 1, 1990.*(4)
10(g) Bemis Company, Inc. Long Term Deferred Compensation
Plan.*(4)
10(h) Amended and Restated Credit Agreement among Bemis Company,
Inc., the Banks Listed therein and Morgan Guaranty Trust
Company of New York, as Agent, originally dated as of
August 1, 1986, Amended and Restated as of August 1, 1991,
as amended by amendment No. 1 dated as of May 1, 1992, as
amended by Amendment No. 2 dated December 1, 1992, as
amended by Amendment No. 3 dated January 22, 1993, as
amended by Amendment No. 4 dated March 15, 1994, as amended
by Amendment No. 5 dated June 1, 1994; and as amended by
Amendment No. 6 dated February 1, 1995. (4)
10(i) Form of Underwriting Agreement dated June 28, 1995. (5)
- 5 -
<PAGE>
PART II - OTHER INFORMATION
19 Financial Statements Furnished to Security Holders
27 Financial Data Schedule (EDGAR electronic filing only).
_____________
* Management contract, compensatory plan or arrangement filed
pursuant to Rule 601(b)(10)(iii)(A) of Regulation S-K under
the Securities Exchange Act of 1934.
(1) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-50560).
(2) Incorporated by reference to the Registrant's Registration
Statement on Form 8-A dated August 4, 1989 (File No. 0-1387).
(3) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-80666).
(4) Incorporated by reference to the Registrant's Annual Report
on Form 10-K/A for the year ended December 31, 1994 (File
No. 1-5277).
(5) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated June 30, 1995 (File No. 1-5277).
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 11/14/95 /s/ LeRoy F. Bazany
--------------------- ---------------------------------------
LeRoy F. Bazany, Vice President
and Controller
Date 11/14/95 /s/ Benjamin R. Field, III
--------------------- ---------------------------------------
Benjamin R. Field, III, Senior Vice President,
Chief Financial Officer and Treasurer
- 6 -
<PAGE>
EXHIBIT INDEX
Exhibit Form of Filing
- ------- --------------
3(a) Articles of Incorporation of the Registrant, as
amended. (1)
3(b) By-Laws of the Registrant, as amended. (4)
4(a) Rights Agreement, dated as of August 3, 1989, between
Bemis Company, Inc. and Norwest Bank Minnesota,
National Association. (2)
4(b) Form of Indenture dated as of June 15, 1995, between
the Registrant and First Trust National Association,
as Trustee. (5)
10(a) Bemis Company, Inc. 1987 Stock Option Plan. *(1)
10(b) Bemis Company, Inc. 1994 Stock Incentive Plan. *(3)
10(c) Bemis Company, Inc. 1984 Stock Award Plan .*(4)
10(d) Bemis Retirement Plan, as amended effective January 1,
1994.*(4)
10(e) Bemis Company, Inc. Supplemental Retirement Plan dated
October 20, 1988.*(4)
10(f) Bemis Executive Incentive Plan dated April 1, 1990.*(4)
10(g) Bemis Company, Inc. Long Term Deferred Compensation
Plan.*(4)
10(h) Amended and Restated Credit Agreement among Bemis Company,
Inc., the Banks Listed therein and Morgan Guaranty Trust
Company of New York, as Agent, originally dated as of
August 1, 1986, Amended and Restated as of August 1,
1991, as amended by amendment No. 1 dated as of May 1,
1992, as amended by Amendment No. 2 dated December 1,
1992, as amended by Amendment No. 3 dated January 22,
1993, as amended by Amendment No. 4 dated March 15,
1994, as amended by Amendment No. 5 dated June 1,
1994; and as amended by Amendment No. 6 dated
February 1, 1995. (4)
10(i) Form of Underwriting Agreement dated June 28, 1995. (5)
19 Financial Statements Furnished to Security Holders Electronic
Transmission
27 Financial Data Schedule (EDGAR electronic filing only). Electronic
Transmission
----------
*Management contract, compensatory plan or arrangement filed pursuant
to Rule 601(b)(10)(iii)(A) of Regulation S-K under the Securities
Exchange Act of 1934.
(1) Incorporated by reference to the Registrant's Registration Statement
on Form S-8 (File No. 33-50560).
(2) Incorporated by reference to the Registrant's Registration Statement
on Form 8-A dated August 4, 1989 (File No. 0-1387).
(3) Incorporated by reference to the Registrant's Registration Statement
on Form S-8 (File No. 33-80666).
(4) Incorporated by reference to the Registrant's Annual Report on
Form 10-K/A for the year ended December 31, 1994 (File No. 1-5277).
(5) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 30, 1995 (File No. 1-5277).
<PAGE>
EXHIBIT 19 - 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
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales............................................ $372,506 $356,243 $1,124,237 $1,017,264
Costs and expenses:
Cost of products sold............................. 292,830 279,109 883,172 792,387
Selling, general and
administrative expenses......................... 41,648 41,463 130,213 125,428
Research and development.......................... 3,853 3,597 9,961 10,846
Interest expense.................................. 2,670 2,111 8,437 5,643
Other income...................................... (2,256) (461) (3,059) (1,004)
Minority interest in net income................... 830 832 2,962 2,300
-------- -------- --------- ----------
Income before income taxes........................... 32,931 29,592 92,551 81,664
Taxes based on income - cash...................... 12,087 10,943 32,079 29,771
Taxes based on income - deferred.................. 13 357 2,421 1,329
-------- -------- --------- ----------
Net income........................................... $ 20,831 $ 18,292 $ 58,051 $ 50,564
-------- -------- --------- ----------
-------- -------- --------- ----------
Earnings per share of common stock................... $.40 $.35 $1.12 $.97
--- --- ---- ---
--- --- ---- ---
Cash dividends paid.................................. $.16 $.135 $.48 $.405
--- ---- ---- ----
--- ---- ---- ----
Average common shares and common
stock equivalents outstanding..................... 52,040 51,977 51,978 51,936
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
<PAGE>
EXHIBIT 19 - 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 1995 1994
---- ----
<S> <C> <C>
Cash................................................................ $ 23,149 $ 12,726
Accounts receivable - net........................................... 201,199 197,164
Inventories......................................................... 165,608 168,153
Prepaid expenses and deferred charges............................... 41,127 40,829
--------- ---------
Total current assets........................................... 431,083 418,872
--------- ---------
Property and equipment, net......................................... 487,947 461,316
Excess of cost of investments in
subsidiaries over net assets acquired............................. 29,185 29,743
Other assets........................................................ 14,806 13,408
--------- ---------
Total.......................................................... 43,991 43,151
--------- ---------
TOTAL ASSETS........................................................ $ 963,021 $ 923,339
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings............................................... $ 1,641 $ 1,671
Current portion of long-term debt................................... 5 753
Accounts payable.................................................... 166,089 159,272
Accrued salaries and wages.......................................... 26,555 31,956
Accrued income and other taxes...................................... 20,698 17,166
--------- ---------
Total current liabilities...................................... 214,988 210,818
Long-term debt, less current portion................................ 158,274 171,728
Deferred taxes...................................................... 42,597 40,013
Other liabilities and deferred credits.............................. 60,445 58,823
--------- ---------
Total liabilities.............................................. 476,304 481,382
--------- ---------
Minority interest................................................... 27,461 23,930
STOCKHOLDERS' EQUITY:
Common stock (56,003,366 and 55,723,731 shares)................... 5,600 5,572
Capital in excess of par value.................................... 104,711 101,290
Retained income................................................... 472,699 439,364
Cumulative translation adjustment................................. 9,739 5,294
Common stock held in treasury (4,512,405 shares).................. (133,493) (133,493)
--------- ---------
Total stockholders' equity..................................... 459,256 418,027
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................... $ 963,021 $ 923,339
--------- ---------
--------- ---------
</TABLE>
<PAGE>
EXHIBIT 19 - 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
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................................... $ 58,051 $ 50,564
NON-CASH ITEMS:
Depreciation and amortization.............................................. 44,311 40,568
Minority interest.......................................................... 2,962 2,300
Deferred income taxes, non-current portion................................. 2,457 1,328
(Gain) loss on sale of property and equipment.............................. (214) 383
-------- ---------
Cash provided by operations.................................................. 107,567 95,143
Net change in receivables, inventories,
prepaid expenses and payables.............................................. 3,499 (13,352)
Net change in deferred charges and credits................................... 607 (2,206)
Other........................................................................ 314 1,822
-------- ---------
Net cash provided by operating activities.................................... 111,987 81,407
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment.......................................... (69,035) (72,112)
Business acquisitions........................................................ (33,248)
Proceeds from sale of property and equipment................................. 1,984 3,137
Change in long-term receivables.............................................. (14) 210
-------- ---------
Net cash used in investing activities........................................ (67,065) (102,013)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in long-term debt..................................................... (13,642) 49,108
Change in short-term debt ................................................... (668) 300
Cash dividends paid.......................................................... (24,716) (20,741)
Stock incentive programs..................................................... 3,449 83
-------- ---------
Net cash (used) provided by financing activities............................. (35,577) 28,750
-------- ---------
Effect of exchange rates on cash............................................. 1,078 2,282
-------- ---------
Net increase in cash......................................................... $ 10,423 $ 10,426
-------- ---------
-------- ---------
</TABLE>
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TAXES BASED ON INCOME
The Company's 1995 effective tax rate of 37% differs from the federal
statutory rate of 35% primarily due to state and local income taxes.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
September 30, 1995, Consolidated Statement of Income and Consolidated Balance
Sheet and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> $23,149
<SECURITIES> 0
<RECEIVABLES> 201,199
<ALLOWANCES> 0
<INVENTORY> 165,608
<CURRENT-ASSETS> 431,083
<PP&E> 769,370
<DEPRECIATION> (281,423)
<TOTAL-ASSETS> 963,021
<CURRENT-LIABILITIES> 214,988
<BONDS> 158,274
<COMMON> 5,600
0
0
<OTHER-SE> 453,656
<TOTAL-LIABILITY-AND-EQUITY> 963,021
<SALES> 1,124,237
<TOTAL-REVENUES> 1,124,237
<CGS> 883,172
<TOTAL-COSTS> 883,172
<OTHER-EXPENSES> (3,059)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,437
<INCOME-PRETAX> 92,551
<INCOME-TAX> 34,500
<INCOME-CONTINUING> 58,051
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,051
<EPS-PRIMARY> $1.12
<EPS-DILUTED> $1.12
</TABLE>
