<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 Six Months Ended June 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 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
------- -------
Indicate the number of shares outstanding of each of the issurer's classes
of common stock, as of the latest practicable date.
51,490,961 shares of Common Stock, $.10 par value on July 28, 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 six months
ended June 30, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - SECOND QUARTER 1995
Net Sales for the second quarter of 1995 were $383.2 million compared to
$337.7 million for the second quarter of 1994, an increase of 13.5% or $45.5
million. Net Income was $21.1 million for the second quarter of 1995 and $18.7
million for the same quarter in 1994.
Both the Flexible Packaging and the Specialty Coated and Graphics Products
Lines of Business had increases in Sales and Operating Profits over the second
quarter of 1994 as well as the first quarter of 1995. Overall, the level of
business activity is less robust then 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 14.2% compared to Net Sales increases of
13.5%. Sales price increases effected in 1994 and lower manufacturing overhead
compared to 1994 have improved gross margins over the first quarter of 1995.
However, to date we have not fully offset the full impact of multiple raw
material price increases incurred during 1994. While raw material costs
continued to rise in the first half of 1995, the rate of increases has been less
severe than in 1994.
Selling, General, and Administrative Expenses were 11.3% of Net Sales for
the current quarter compared to 11.7% in the second quarter of 1994 on a 13.5%
increase in Net Sales, reflecting cost control efforts and economies available
through increasing volume.
Lower Research and Development expenditures resulted from reduced product
development expense in our Pressure-Sensitive Materials and Packaging Machinery
business segments.
Increasing interest rates account for the $.8 million rise in Interest
Expense compared to the second quarter of 1994.
- 2 -
<PAGE>
PART I - FINANCIAL INFORMATION
Other Income decreased $.1 million largely due to an increase in currency
exchange losses experienced in the second quarter of 1995 versus the second
quarter of 1994.
Minority Interest increases reflect improvements in our Pressure-Sensitive
Materials business segment.
Income Tax expense increased $1.3 million or 11.4%. The effective tax rate
for the second quarter of 1995 and 1994 was 37.5% and 37.9%, respectively.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1995
Net Sales for the six-month period of 1995 were $751.7 million compared to
$661.0 million for the same period in 1994, an increase of 13.7%. Net Income
was $37.2 million for 1995 compared to $32.3 million for the same six-month
period in 1994, an increase of 15.2%.
Cost of Products sold increased 15.0% compared to Net Sales increases of
13.7%. 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 higher average debt level, required to
sustain increased working capital and our capital equipment expenditure program,
account for the $2.2 million rise in Interest Expense.
Other Income increased $.3 million due to reduced currency exchange losses
experienced in the first half of 1995 compared to the same period in 1994.
The increase in Minority Interest reflects the continuing improvements in
our Pressure-Sensitive Materials business segment.
In the third quarter of 1993, a restructuring plan was announced for our
Flexible Packaging Products line of business. The objective of this plan was to
increase profitability through improved operating efficiency. This plan
resulted in a $21 million pretax charge to Other Costs in the third quarter of
1993 and was expected to produce annual pretax savings of $8 million when fully
implemented.
Key aspects of the plan included redeployment of assets in both the
domestic and international packaging machinery businesses ($7.2 million), the
closedown of a U.S. nylon resin production facility ($6.2 million), the
consolidation of two paper packaging plants into larger facilities ($5.0
million), and $2.6 million for all other expenses principally related to the
write-off of nonproductive assets in the coated and laminated film business.
All facility closures and consolidations were essentially completed as of
the end of 1994 with the balance completed in the first half of 1995. The
remaining minor sublease and severance payments are contractual in nature and
have been accrued. We consider the restructuring effort to be completed.
- 3 -
<PAGE>
PART I - FINANCIAL INFORMATION
Of the $21 million estimated restructuring expense, we expected $11.4
million of non-cash cost and $9.6 million of net cash expense, all of which
would be internally generated. Actual cash cost was $5.6 million and total non-
cash cost was $15.3 million. The remaining $.1 million reserve has been
restored to income in June 1995, since this project is complete.
On July 5, 1995, we completed the placement of $100 million of 6.7% Notes
Due July 1, 2005. The total proceeds were used to repay outstanding Commercial
Paper. These debt securities are part of the $200 million registration filed
with the Securities and Exchange Commission on Form S-3 on
June 15, 1995.
FINANCIAL CONDITION
A statement of cash flow for the six months ended June 30, 1995, is as
follows:
<TABLE>
<CAPTION>
Millions
--------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . $ 37.2
Non-cash items:
Depreciation and amortization . . . . . . . . . . . . . 29.8
Minority interest . . . . . . . . . . . . . . . . . . . 2.1
Deferred income taxes, non-current portion. . . . . . . 2.4
Net increase in working capital items . . . . . . . . . (12.1)
Net change in deferred charges and credits. . . . . . . 1.7
Other. . . . . . . . . . . . . . . . . . . . . . . . . 0.5
-------
Net cash provided by operating activities . . . . . . . . . 61.6
-------
Cash flows from investing activities:
Additions to property and equipment . . . . . . . . . . . . (48.1)
Proceeds from sale of property and equipment. . . . . . . . 1.7
-------
Net cash used in investing activities. . . . . . . . . . . . . (46.4)
-------
Cash flows from financing activities:
Change in long-term debt. . . . . . . . . . . . . . . . . . (0.2)
Change in short-term debt . . . . . . . . . . . . . . . . . (0.6)
Cash dividends paid . . . . . . . . . . . . . . . . . . . . (16.5)
Stock incentive programs. . . . . . . . . . . . . . . . . . 3.5
-------
Net cash provided by financing activities. . . . . . . . . . . (13.8)
-------
Effect of exchange rates . . . . . . . . . . . . . . . . . . . 2.0
-------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . $ 3.4
-------
-------
</TABLE>
- 4 -
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no significant changes during the six months ended
June 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)
19 Financial Statements Furnished to Security Holders.
27 Financial Data Schedule (EDGAR electronic filing only).
- 5 -
<PAGE>
PART II - OTHER INFORMATION
(b) A Form 8-K was filed June 30, 1995, reporting the following:
On June 28, 1995, the Registrant agreed to sell $100,000,000
principal amount of its 6.70% Notes Due 2005 (the "Notes"), pursuant
to the Underwriting Agreement dated June 28, 1995, among the
Registrant, Goldman, Sachs & Co. and J. P. Morgan Securities, Inc.
The Notes are the subject of a Registrant Statement on Form S-3 (File
No. 33-60253) filed by the Registrant with the Securities and Exchange
Commission.
_____________
*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 August 10, 1995 S\ LeRoy F. Bazany
----------------- -----------------------------------
LeRoy F. Bazany, Vice President
and Controller
Date August 10, 1995 S\ B. R. Field, III
----------------- -----------------------------------
Benjamin R. Field, III, Senior Vice
President, Chief Financial Officer
and Treasurer
- 6 -
<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 Six Months Ended
June 30 June 30
------------------ --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . $383,180 $337,744 $751,731 $661,021
Costs and expenses:
Cost of products sold . . . . . . . . . . . . . 299,650 262,300 590,342 513,278
Selling, general and
administrative expenses . . . . . . . . . . . 43,232 39,471 88,565 83,965
Research and development. . . . . . . . . . . . 2,851 3,451 6,108 7,249
Interest expense. . . . . . . . . . . . . . . . 2,738 1,916 5,767 3,532
Other (income). . . . . . . . . . . . . . . . . (265) (344) (803) (543)
Minority interest in net income . . . . . . . . 1,144 866 2,132 1,468
-------- -------- -------- --------
Income before income taxes . . . . . . . . . . . 33,830 30,084 59,620 52,072
Taxes based on income - cash. . . . . . . . . 12,404 10,866 19,992 18,828
Taxes based on income - deferred. . . . . . . 296 534 2,408 972
-------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . . $ 21,130 $ 18,684 $ 37,220 $ 32,272
-------- -------- -------- --------
-------- -------- -------- --------
Earnings per share of common stock . . . . . . . . $.41 $ .36 $.72 $.62
---- ----- ---- ----
---- ----- ---- ----
Cash dividends paid. . . . . . . . . . . . . . . . $.16 $.135 $.32 $.27
---- ----- ---- ----
---- ----- ---- ----
Average common shares and common
stock equivalents outstanding . . . . . . . . . 52,018 51,941 51,948 51,916
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Jun 30 Dec 31
ASSETS 1995 1994
---- ----
<S> <C> <C>
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,137 $ 12,726
Accounts receivable - net. . . . . . . . . . . . . . . 202,210 197,164
Inventories. . . . . . . . . . . . . . . . . . . . . . 165,189 168,153
Prepaid expenses and deferred charges. . . . . . . . . 42,325 40,829
-------- --------
Total current assets . . . . . . . . . . . . . . . . 425,861 418,872
-------- --------
Property and equipment, net. . . . . . . . . . . . . . 482,266 461,316
Excess of cost of investments in
subsidiaries over net assets acquired . . . . . . . 29,372 29,743
Other assets . . . . . . . . . . . . . . . . . . . . . 13,551 13,408
-------- --------
Total. . . . . . . . . . . . . . . . . . . . . . . . 42,923 43,151
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . $951,050 $923,339
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings. . . . . . . . . . . . . . . . . $ 1,671 $ 1,671
Current portion of long-term debt. . . . . . . . . . . 5 753
Accounts payable . . . . . . . . . . . . . . . . . . . 151,469 159,272
Accrued salaries and wages . . . . . . . . . . . . . . 25,509 31,956
Accrued income and other taxes . . . . . . . . . . . . 21,819 17,166
-------- --------
Total current liabilities. . . . . . . . . . . . . . 200,473 210,818
Long-term debt, less current portion . . . . . . . . . 171,810 171,728
Deferred taxes . . . . . . . . . . . . . . . . . . . . 42,576 40,013
Other liabilities and deferred credits . . . . . . . . 60,345 58,823
-------- --------
Total liabilities. . . . . . . . . . . . . . . . . . 475,204 481,382
-------- --------
Minority interest. . . . . . . . . . . . . . . . . . . 26,993 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. . . . . . . . . . . . . . . . . . 460,107 439,364
Cumulative translation adjustment. . . . . . . . . 11,928 5,294
Common stock held in treasury (4,512,405 shares) . (133,493) (133,493)
-------- --------
Total stockholders' equity . . . . . . . . . . . . . 448,853 418,027
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . $951,050 $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>
Six Months Ended
June 30
------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,220 $ 32,272
NON-CASH ITEMS:
Depreciation and amortization. . . . . . . . . . . . . . 29,822 26,882
Minority interest. . . . . . . . . . . . . . . . . . . . 2,132 1,468
Deferred income taxes, non-current portion . . . . . . . 2,443 971
Loss on sale of property and equipment . . . . . . . . . 20 305
-------- --------
Cash provided by operations. . . . . . . . . . . . . . . . . 71,637 61,898
-------- --------
Net change in receivables, inventories,
prepaid expenses and payables . . . . . . . . . . . . . . (12,176) (5,134)
Net change in deferred charges and credits . . . . . . . . . 1,646 (2,713)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 482 53
-------- --------
Net cash provided by operating activities. . . . . . . . . . 61,589 54,104
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment. . . . . . . . . . . . . (48,143) (50,796)
Business acquisitions. . . . . . . . . . . . . . . . . . . . (33,248)
Proceeds from sale of property and equipment . . . . . . . . 1,752 433
Change in long-term receivables. . . . . . . . . . . . . . . (17) 106
-------- --------
Net cash used in investing activities. . . . . . . . . . . . (46,408) (83,505)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in long-term debt . . . . . . . . . . . . . . . . . . (163) 48,543
Change in short-term debt. . . . . . . . . . . . . . . . . . (630) 203
Cash dividends paid. . . . . . . . . . . . . . . . . . . . . (16,477) (13,827)
Stock incentive programs . . . . . . . . . . . . . . . . . . 3,449 83
-------- --------
Net cash (used) provided by financing activities . . . . . . (13,821) 35,002
-------- --------
Effect of exchange rates on cash . . . . . . . . . . . . . . 2,051 1,248
-------- --------
Net increase in cash . . . . . . . . . . . . . . . . . . . . $ 3,411 $ 6,849
-------- --------
-------- --------
</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 38% 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 JUNE 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 16,137
<SECURITIES> 0
<RECEIVABLES> 202,210
<ALLOWANCES> 0
<INVENTORY> 165,189
<CURRENT-ASSETS> 425,861
<PP&E> 750,610
<DEPRECIATION> (268,344)
<TOTAL-ASSETS> 951,050
<CURRENT-LIABILITIES> 200,473
<BONDS> 171,810
<COMMON> 5,600
0
0
<OTHER-SE> 443,253
<TOTAL-LIABILITY-AND-EQUITY> 951,050
<SALES> 751,731
<TOTAL-REVENUES> 751,731
<CGS> 590,342
<TOTAL-COSTS> 590,342
<OTHER-EXPENSES> (803)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,767
<INCOME-PRETAX> 59,620
<INCOME-TAX> 22,400
<INCOME-CONTINUING> 37,220
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,220
<EPS-PRIMARY> .72
<EPS-DILUTED> .72
</TABLE>
