<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 Three Months Ended March 31, 1997
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.
53,002,940 shares of Common Stock, $.10 par value on April 30, 1997.
<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 three months
ended March 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net Sales for the first quarter of 1997 were $475.5 million compared to
$385.5 million for the first quarter of 1996, an increase of 23.3 percent or
$90.0 million. Net Income was $19.9 million, or $.37 per share, for the first
quarter of 1997 compared to $21.7 million, or $.41 per share, for the same
quarter in 1996. Included in the first quarter 1996 net income was a $2.6
million net gain, or $.05 per share, relating to the disposition of the Paper
Packaging Machinery Division of Hayssen Manufacturing, Inc., a wholly-owned
subsidiary of the Company, which was sold in January 1996.
As expected, first quarter results were significantly affected by the
acquisition of Paramount Packaging Corporation in January 1997 which reduced
earnings by approximately $0.05 per share while adding about $35.0 million to
net sales. The impact was primarily due to temporarily high manufacturing and
overhead costs and some reorganization expenses. These high costs are expected
to continue over the near term with these operations expected to become
profitable in the second half of the year.
Net sales growth was spread across both of the Company's major businesses.
In the flexible packaging business, total sales rose 30 percent while sales
excluding acquisitions, increased 9 percent. Strong growth in the coated and
laminated business resulted from increased business with a number of key
customers and continued strength in core markets such as candy, meat, and
cheese. Within the polyethylene packaging group, strength in sanitary packaging
for products such as disposable diapers helped drive sales gains, although
profits were weaker due to short-term pricing issues in lower value-added
product lines. The paper packaging division reported flat sales and lower
operating profits in a continued weak pricing environment.
The specialty coated and graphics business reported 7 percent sales growth
and substantially higher operating profits due to a favorable sales mix, new
products, and manufacturing efficiencies. The major plant expansion in Belgium
is on track to be shipping product to customers during the second quarter.
Addressing the Statement of Income line item changes of consequence:
Cost of Products Sold increased 25.5 percent compared to Net Sales
increases of 23.3 percent. This disproportionate comparison results
principally from an adverse raw material price environment compared to a
year ago and temporarily high manufacturing and overhead costs at the
recently acquired Paramount Packaging operating locations, together with
very competitive sales pricing pressures.
- 2 -
<PAGE>
PART I - FINANCIAL INFORMATION
Higher average debt levels resulting from business unit acquisitions in
1996 and early 1997, account for the 60.7 percent increase in Interest
Expense.
Other Income decreased $4.3 million largely due to the gain on the sale of
Hayssen's Paper Packaging Machinery Division in January 1996.
Minority Interest increases results from improved operating income in the
Company's pressure-sensitive materials business segment.
Pretax Income decreased $2.7 million, or 7.9 percent. Excluding the one-
time gain related to the disposition of Hayssen's Paper Packaging Machinery
Division in January 1996, Pretax Income increased $1.5 million, or 5.0
percent.
The effective tax rate for the first quarter of 1997 and 1996 was 38.2
percent and 37.8 percent, respectively.
FINANCIAL CONDITION
A statement of cash flow for the three months ended March 31, 1997, is as
follows:
<TABLE>
<CAPTION>
Millions
--------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19.9
Non-cash items:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . 20.4
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Deferred income taxes, non-current portion . . . . . . . . . . . . . . 0.4
Net increase in working capital, net of effects of dispositions. . . . (37.8)
Net change in deferred charges and credits . . . . . . . . . . . . . . (14.2)
-------
Net cash used by operating activities . . . . . . . . . . . . . . . . . . . . (10.1)
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment. . . . . . . . . . . . . . . . . . . . (28.2)
Business acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.9)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2
-------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . (28.9)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 59.1
Change is short-term debt. . . . . . . . . . . . . . . . . . . . . . . . . 1.9
Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . (10.6)
Subsidiary dividends to minority stockholders. . . . . . . . . . . . . . . (1.8)
-------
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . 48.6
-------
Effect of exchange rates. . . . . . . . . . . . . . . . . . . . . . . . . . . (1.7)
-------
Net increase in cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7.9
-------
-------
</TABLE>
- 3 -
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no significant changes during the three months ended March
31, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of the report:
3(a) Restated Articles of Incorporation of the Registrant, as amended. (1)
3(b) By-Laws of the Registrant, as amended. (2)
4(a) Rights Agreement, dated as of August 3, 1989, between the Registrant
and Norwest Bank Minnesota, National Association. (3)
4(b) Form of Indenture dated as of June 15, 1995, between the Registrant
and First Trust National Association, as Trustee. (4)
10(a) Bemis Company, Inc. 1987 Stock Option Plan. * (5)
10(b) Bemis Company, Inc. 1994 Stock Incentive Plan. * (6)
10(c) Bemis Company, Inc. 1984 Stock Award Plan. * (2)
10(d) Bemis Retirement Plan, as amended effective January 1, 1994. * (2)
10(e) Bemis Company, Inc. Supplemental Retirement Plan dated October 20,
1988. * (2)
10(f) Bemis Executive Incentive Plan dated April 1, 1990. * (2)
10(g) Bemis Company, Inc. Long Term Deferred Compensation Plan. * (2)
10(h) Bemis Company, Inc. 1997 Executive Officer Performance Plan. * (1)
10(i) 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.(2)
19 Reports Furnished to Security Holders.
27 Financial Data Schedule (EDGAR electronic filing only).
- 4 -
<PAGE>
PART II - OTHER INFORMATION
(b) There were no reports on Form 8-K filed during the first quarter ended
March 31, 1997.
-------------
* 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 Definitive Proxy
Statement filed with the Securities and Exchange Commission on
March 18, 1997 (File No. 1-5277).
(2) 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).
(3) Incorporated by reference to the Registrant's Registration
Statement on Form 8-A dated August 4, 1989 (File No. 0-1387).
(4) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 30, 1995 (File No. 1-5277).
(5) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-50560).
(6) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-80666).
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 May 9, 1997 /s/ LeRoy F. Bazany
-------------------- -----------------------------------
LeRoy F. Bazany, Vice President
and Controller
Date May 9, 1997 /s/ Benjamin R. Field, III
-------------------- -----------------------------------
Benjamin R. Field, III, Senior Vice
President, Chief Financial Officer
and Treasurer
- 5 -
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
3(a) RestatedArticles of Incorporation of the Registrant, as amended. (1)
3(b) By-Laws of the Registrant, as amended. (2)
4(a) Rights Agreement, dated as of August 3, 1989, between the Registrant
and Norwest Bank Minnesota, National Association. (3)
4(b) Form of Indenture dated as of June 15, 1995, between the Registrant
and First Trust National Association, as Trustee. (4)
10(a) Bemis Company, Inc. 1987 Stock Option Plan. * (5)
10(b) Bemis Company, Inc. 1994 Stock Incentive Plan. * (6)
10(c) Bemis Company, Inc. 1984 Stock Award Plan. * (2)
10(d) Bemis Retirement Plan, as amended effective January 1, 1994. * (2)
10(e) Bemis Company, Inc. Supplemental Retirement Plan dated October 20,
1988. * (2)
10(f) Bemis Executive Incentive Plan dated April 1, 1990. * (2)
10(g) Bemis Company, Inc. Long Term Deferred Compensation Plan. * (2)
10(h) Bemis Company, Inc. 1997 Executive Officer Performance Plan. * (1)
10(i) 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. (2)
19 Reports 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 Definitive Proxy
Statement filed with the Securities and Exchange Commission on
March 18, 1997 (File No. 1-5277).
(2) 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).
(3) Incorporated by reference to the Registrant's Registration
Statement on Form 8-A dated August 4, 1989 (File No. 0-1387).
(4) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 30, 1995 (File No. 1-5277).
(5) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-50560).
(6) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-80666).
- 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
March 31
-----------------------
1997 1996
---- ----
<S> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $475,473 $385,511
Costs and expenses:
Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . 380,058 302,721
Selling, general, and administrative expenses . . . . . . . . . . . 54,388 45,141
Research and development. . . . . . . . . . . . . . . . . . . . . . 3,434 3,645
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . 4,418 2,749
Other (income) costs, net . . . . . . . . . . . . . . . . . . . . . (205) (4,538)
Minority interest in net income . . . . . . . . . . . . . . . . . . 1,222 893
-------- --------
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . 32,158 34,900
Taxes based on income - cash. . . . . . . . . . . . . . . . . . . . 12,125 12,841
Taxes based on income - deferred. . . . . . . . . . . . . . . . . . 175 359
-------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,858 $ 21,700
-------- --------
-------- --------
Earnings per share of common stock . . . . . . . . . . . . . . . . . . . $.37 $.41
-------- --------
-------- --------
Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . . $.20 $.18
-------- --------
-------- --------
Average common shares and common
stock equivalents outstanding . . . . . . . . . . . . . . . . . . . . 53,939 53,202
-------- --------
-------- --------
</TABLE>
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Mar 31 Dec 31
ASSETS 1997 1996
---- ----
<S> <C> <C>
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,097 $ 10,223
Accounts receivable - net. . . . . . . . . . . . . . . . . . . . . . . . 257,868 216,740
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216,252 200,397
Prepaid expenses and deferred charges. . . . . . . . . . . . . . . . . . 45,681 39,561
---------- ----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . 537,898 466,921
---------- ----------
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . 620,783 583,491
Excess of cost of investments in
subsidiaries over net assets acquired . . . . . . . . . . . . . . . . 148,557 108,928
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,833 9,455
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,390 118,383
---------- ----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,324,071 $1,168,795
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . $ 4,992 $ 1,706
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . 1,488 3,006
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187,074 164,638
Accrued salaries and wages . . . . . . . . . . . . . . . . . . . . . . . 31,651 34,163
Accrued income and other taxes . . . . . . . . . . . . . . . . . . . . . 20,411 10,932
---------- ----------
Total current liabilities.. . . . . . . . . . . . . . . . . . . . . 245,616 214,445
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . 339,439 241,077
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,331 56,661
Other liabilities and deferred credits . . . . . . . . . . . . . . . . . 57,388 57,726
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 699,774 569,909
---------- ----------
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,052 31,789
STOCKHOLDERS' EQUITY:
Common stock (58,643,557 and 57,897,316 shares). . . . . . . . . . . 5,864 5,790
Capital in excess of par value . . . . . . . . . . . . . . . . . . . 174,561 149,481
Retained income. . . . . . . . . . . . . . . . . . . . . . . . . . . 570,287 561,049
Cumulative translation adjustment. . . . . . . . . . . . . . . . . . (656) 6,588
Common stock held in treasury (5,536,617 and 5,536,617 shares) . . . (155,811) (155,811)
---------- ----------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . 594,245 567,097
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . $1,324,071 $1,168,795
---------- ----------
---------- ----------
</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>
Three Months Ended
March 31
------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,858 $21,700
NON-CASH ITEMS:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . 20,455 16,944
Minority interest in net income. . . . . . . . . . . . . . . . . . . 1,222 893
Deferred income taxes, non-current portion . . . . . . . . . . . . . 384 358
Loss on sale of property and equipment . . . . . . . . . . . . . . . 4 5
--------- -------
Cash provided by operations. . . . . . . . . . . . . . . . . . . . . . . 41,923 39,900
Changes in working capital, net of effects
of acquisitions and dispositions. . . . . . . . . . . . . . . . . . . (37,798) (14,098)
Net change in deferred charges and credits . . . . . . . . . . . . . . . (14,200) 1,339
--------- -------
Net cash provided by operating activities. . . . . . . . . . . . . . . . (10,075) 27,141
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment. . . . . . . . . . . . . . . . . . . (28,158) (25,050)
Business acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . (875)
Business divestiture . . . . . . . . . . . . . . . . . . . . . . . . . . 12,752
Proceeds from sale of property and equipment . . . . . . . . . . . . . . 179 86
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34) 12
--------- -------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . (28,888) (12,200)
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in long-term debt excluding debt
assumed in business acquisition. . . . . . . . . . . . . . . . . . . . 59,103 968
Change in short-term debt. . . . . . . . . . . . . . . . . . . . . . . . 1,869 (1,699)
Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . . (10,620) (9,461)
Subsidiary dividends to minority stockholders. . . . . . . . . . . . . . (1,835) (1,841)
Stock incentive programs . . . . . . . . . . . . . . . . . . . . . . . . 51
--------- -------
Net cash provided (used) by financing activities . . . . . . . . . . . . 48,568 (12,033)
--------- -------
Effect of exchange rates on cash . . . . . . . . . . . . . . . . . . . . (1,731) (2,533)
--------- -------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,874 $ 375
--------- -------
--------- -------
</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 1997 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 March
31, 1997, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 18,097
<SECURITIES> 0
<RECEIVABLES> 257,868
<ALLOWANCES> 0
<INVENTORY> 216,252
<CURRENT-ASSETS> 537,898
<PP&E> 971,422
<DEPRECIATION> (350,639)
<TOTAL-ASSETS> 1,324,071
<CURRENT-LIABILITIES> 245,616
<BONDS> 339,439
0
0
<COMMON> 5,864
<OTHER-SE> 588,381
<TOTAL-LIABILITY-AND-EQUITY> 1,324,071
<SALES> 457,473
<TOTAL-REVENUES> 475,473
<CGS> 380,058
<TOTAL-COSTS> 380,058
<OTHER-EXPENSES> (205)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,418
<INCOME-PRETAX> 32,158
<INCOME-TAX> 12,300
<INCOME-CONTINUING> 19,858
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,858
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
