<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, 1996
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: (1) 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.
52,360,689 shares of Common Stock, $.10 par value on November 5, 1996
<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, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Third Quarter 1996
Net Sales for the third quarter of 1996 were $423.1 million compared to
$372.5 million for the third quarter of 1995, an increase of 13.6 percent or
$50.6 million. Net Income increased 15.4 percent to $24.0 million for the third
quarter of 1996 compared to the same quarter in 1995. Third quarter results
were favorably affected by continuing penetration of key markets, the success of
recent acquisitions and new products, and a good level of demand in the market
place.
Excluding non-comparable operating results of the acquisition of the
Perfecseal Division of Paper Manufacturers Company and the disposition of the
Paper Packaging Machinery Division of Hayssen Manufacturing Company from both
1996 and 1995, third quarter Net Sales showed an increase of $20.5 million or
5.6 percent and operating profit showed an increase of $2.2 million or 5.4
percent. Unit volume growth in the Company's two core businesses, flexible
plastic packaging and pressure-sensitive materials, was significantly higher
than the 5.6 percent base business growth reflecting good demand and market
penetration as well as generally lower raw material and selling price levels in
many product areas compared to a year ago.
Raw material prices were relatively stable during the current quarter with
the exception of polyethylene resin prices which have risen 40 to 50 percent
during the past several months. The size and rapidity of these increases have
made it extremely difficult to adjust selling prices to match these increases on
a timely basis, adversely affecting results during the third quarter of 1996.
This effect may continue somewhat into the fourth quarter. Nevertheless,
prospects for polyethylene packaging, as well as the Company's coated and
laminated film business, are excellent as unit volume growth is very good and
increased penetration of key customers and markets is ongoing.
In other packaging activities, paper packaging results were relatively
flat, reflecting very competitive market and pricing conditions, and packaging
machinery results continue to be affected by cyclical weakness in the industry
and remain well below the strong performance of a year ago. Results in the
Company's pressure sensitive materials business were very strong in the quarter
in comparison to a relatively weak quarter a year ago. Unit volume in the U.S.
continues to improve and business in Europe is doing relatively well in spite of
weak economic conditions there.
- 2 -
<PAGE>
PART I - FINANCIAL INFORMATION
Cost of Products sold increased 12.9 percent compared to Net Sales
increases of 13.6 percent. This favorable comparison results from an improved
raw material price environment compared to a year ago which more than offsets an
increase in manufacturing conversion costs.
Selling, General and Administrative Expenses, expressed as a percent of Net
Sales, were 10.8 percent compared to 11.2 percent in the third quarter of 1995,
on a 13.6 percent increase in Net Sales, continuing to reflect cost control
efforts and economies available through increasing volume.
Increasing debt levels, associated with the acquisition of the Perfecseal
Division of Paper Manufacturers Company, partially offset by lower interest
rates, account for the $1.0 million rise in Interest Expense compared to the
third quarter of 1995.
The $2.0 million decrease in Other Income from the third quarter of 1995
relates to income associated with a minority equity interest, 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 $5.6 million principally due to improvements in
marginal income. Income Tax expense increased $2.4 million or 19.8 percent.
The effective tax rate for the third quarter of 1996 and 1995 was 37.6 percent
and 36.7 percent, respectively.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996
Net Sales for the nine-month period of 1996 increased 8.6 percent to $1.2
billion compared to the same period in 1995. Net Income was $70.9 million for
1996 compared to $58.1 million for the same nine-month period in 1995, an
increase of 22.2 percent.
Cost of Products sold increased 7.5 percent compared to Net Sales increases
of 8.6 percent reflecting a more stable and favorable raw material price
environment.
Increasing debt levels, associated with the acquisition of the Perfecseal
Division of Paper Manufacturers Company, partially offset by lower interest
rates, account for the $1.5 million rise in Interest Expense compared to the
same 1995 period.
Other Income increased $2.0 million largely due to the gain on the sale of
Hayssen's Paper Packaging Machinery Division in January 1996, partially offset
by non-recurring 1995 income associated with a minority equity interest, the
balance of which was purchased in the fourth quarter of 1995. Pretax Income
increased $21.3 million or 23.0 percent on a nine-month Net Sales increase of
$96.3 million or 8.6 percent, reflecting the improving domestic and European
economic climate together with a more stable
- 3 -
<PAGE>
PART I - FINANCIAL INFORMATION
domestic raw material market. The effective tax rate for the nine-month period
of 1996 was 37.7 percent compared to 37.3 percent for the same period in 1995.
The increase in Long-term Debt shown on the Balance Sheet together with the
increase in Excess of Cost of Investments in Subsidiaries over Net Assets
Acquired is primarily due to a business unit acquisition.
FINANCIAL CONDITION
A statement of cash flow for the nine months ended September 30, 1996, is
as follows:
MILLIONS
--------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $70.9
Non-cash items:
Depreciation and amortization. . . . . . . . . . . . . . . 51.5
Minority interest . . . . . . . . . . . . . . . . . . . . 3.2
Deferred income taxes, non-current portion . . . . . . . . 1.6
Net decrease in working capital items . . . . . . . . . . (36.2)
Net change in deferred charges and credits . . . . . . . . 5.3
------
Net cash provided by operating activities. . . . . . . . . . . 96.3
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment . . . . . . . . . . . . (76.5)
Business acquisition . . . . . . . . . . . . . . . . . . . (62.9)
Business divestiture . . . . . . . . . . . . . . . . . . . 12.8
Proceeds from sales of property and equipment . . . . . . . 1.5
-------
Net cash used in investing activities . . . . . . . . . . . . (125.1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt . . . . . . . . . . . . . . . . . 68.5
Change in short-term debt . . . . . . . . . . . . . . . . . .4
Cash dividends paid . . . . . . . . . . . . . . . . . . . (28.4)
Subsidiary dividends to minority stockholders . . . . . . . (1.8)
Common stock purchased for the treasury . . . . . . . . . (8.9)
Net cash provided by financing activities . . . . . . . . . . 29.8
-------
Effect of exchange rates . . . . . . . . . . . . . . . . . . . (1.5)
-------
Net decrease in cash . . . . . . . . . . . . . . . . . . . . . $ (0.5)
========
- 4 -
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no significant changes during the nine months ended
September 30, 1996.
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 the
Registrant 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 the Registrant,
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)
- 5 -
<PAGE>
PART II - OTHER INFORMATION
19 Financial Statements Furnished to Security Holders.
27 Financial Data Schedule (EDGAR electronic filing only).
(b) There were no reports on Form 8-K filed during the third quarter
ended September 30, 1996.
- ------------
*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).
- 6 -
<PAGE>
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 November 5, 1996 LeRoy F. Bazany
----------------- -------------------------
LeRoy F. Bazany, Vice President
and Controller
Date November 5, 1996 Benjamin R. Field, III
----------------- -------------------------
Benjamin R. Field, III, Senior Vice
President, Chief Financial Officer
and Treasurer
- 7 -
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
- -------
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)
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).
- 8 -
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
Net sales.................... $423,089 $372,506 $1,220,545 $1,124,237
Costs and expenses:
Cost of products sold...... 330,479 292,830 949,161 883,172
Selling, general and
administrative expenses.. 45,716 41,648 139,233 130,213
Research and development... 3,772 3,853 10,233 9,961
Interest expense........... 3,705 2,670 9,938 8,437
Other income............... (223) (2,256) (5,018) (3,059)
Minority interest in
net income.............. 1,107 830 3,149 2,962
------- ------- --------- --------
Income before income taxes... 38,533 32,931 113,849 92,551
Taxes based on
income - cash....... 14,250 12,087 41,316 32,079
Taxes based on
income - deferred... 250 13 1,584 2,421
------- -------- --------- ---------
Net income................... $ 24,033 $ 20,831 $ 70,949 $ 58,051
======= ======== ========= =========
Earnings per share of
common stock............... $.45 $.40 $1.33 $1.12
==== ==== ===== =====
Cash dividends paid.......... $.18 $.16 $.54 $.48
==== ==== ===== =====
Average common shares and
common stock equivalents
outstanding................ 53,288 52,040 53,276 51,978
====== ====== ====== ======
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
Sep 30 Dec 31
ASSETS 1996 1995
---- ----
Cash.......................................... $ 21,535 $ 22,032
Accounts receivable - net..................... 215,216 201,725
Inventories................................... 179,170 178,085
Prepaid expenses and deferred charges......... 44,573 40,432
---------- ----------
Total current assets..................... 460,494 442,274
---------- ----------
Property and equipment, net................... 564,130 534,551
Excess of cost of investments in
subsidiaries over net assets acquired...... 94,330 42,437
Other assets.................................. 11,367 11,333
---------- ----------
Total.................................... 105,697 53,770
---------- ----------
TOTAL ASSETS.................................. $1,130,321 $1,030,595
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt............. $ 1,706 $ 3,405
Short-term borrowings......................... 3,188 1,080
Accounts payable.............................. 153,112 163,692
Accrued salaries and wages.................... 31,449 29,128
Accrued income and other taxes................ 17,836 21,910
---------- ----------
Total current liabilities................ 207,291 219,215
Long-term debt, less current portion.......... 234,890 166,435
Deferred taxes................................ 51,396 49,758
Other liabilities and deferred credits........ 59,240 53,943
---------- ----------
Total liabilities........................ 552,817 489,351
---------- ----------
Minority interest............................. 30,652 28,436
STOCKHOLDERS' EQUITY:
Common stock (57,897,316 and
57,811,966 shares)....................... 5,790 5,781
Capital in excess of par value............ 149,284 147,119
Retained income........................... 538,796 496,252
Cumulative translation adjustment......... 8,793 10,505
Common stock held in treasury
(5,536,627 and 5,244,617 shares)......... (155,811) (146,849)
---------- ----------
Total stockholders' equity............... 546,852 512,808
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.... $1,130,321 $1,030,595
========== ==========
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
Nine Months Ended
September 30
-----------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................. $ 70,949 $ 58,051
NON-CASH ITEMS:
Depreciation and amortization...................... 51,464 44,311
Minority interest.................................. 3,149 2,962
Deferred income taxes, non-current portion......... 1,584 2,457
Loss (gain) on sale of property and equipment...... 51 (214)
--------- --------
Cash provided by operations............................ 127,197 107,567
Net change in receivables, inventories,
prepaid expenses and payables........................ (36,186) 3,499
Net change in deferred charges and credits............. 5,307 607
Other.................................................. 0 314
--------- --------
Net cash provided by operating activities.............. 96,318 111,987
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment ................... (76,459) (69,035)
Business acquisition................................... (62,914)
Business divestiture................................... 12,752
Proceeds from sale of property and equipment........... 1,535 1,984
Change in long-term receivables........................ 12 (14)
--------- --------
Net cash used in investing activities.................. (125,074) (67,065)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in long-term debt............................... 68,455 (13,642)
Change in short-term debt ............................. 409 (668)
Cash dividends paid.................................... (28,405) (24,716)
Subsidiary dividends to minority stockholders.......... (1,841)
Common stock purchased for the treasury................ (8,962)
Stock incentive programs............................... 115 3,449
--------- --------
Net cash (used) provided by financing activities....... 29,771 (35,577)
--------- --------
Effect of exchange rates on cash....................... (1,512) 1,078
--------- --------
Net decrease in cash................................... $ (497) $ 10,423
========= ========
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
footnotes necessary for a comprehensive presentation of financial position and
results of operation.
It is management's opinion, however, that all material adjustments
(consisting of normal recurring accruals) have been made which are necessary for
a fair financial statement presentation. The results for the interim period are
not necessarily indicative of the results to be expected for the year.
For further information, refer to the consolidated financial statements and
footnotes included in the Company's annual report on Form 10-K for the year
ended December 31, 1995.
TAXES BASED ON INCOME
The Company's 1996 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
SEPTEMBER 30, 1996, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED BALANCE
SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 21,535
<SECURITIES> 0
<RECEIVABLES> 215,216
<ALLOWANCES> 0
<INVENTORY> 179,170
<CURRENT-ASSETS> 440,494
<PP&E> 879,347
<DEPRECIATION> (315,217)
<TOTAL-ASSETS> 1,130,321
<CURRENT-LIABILITIES> 207,291
<BONDS> 234,890
0
0
<COMMON> 5,790
<OTHER-SE> 541,062
<TOTAL-LIABILITY-AND-EQUITY> 1,130,321
<SALES> 1,220,545
<TOTAL-REVENUES> 1,220,545
<CGS> 949,161
<TOTAL-COSTS> 949,161
<OTHER-EXPENSES> (5,018)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,938
<INCOME-PRETAX> 113,849
<INCOME-TAX> 42,900
<INCOME-CONTINUING> 70,949
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,949
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
</TABLE>
