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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 September 30 |
Nine Months Ended September 30 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
1999 |
1998 |
1999 |
1998 |
|||||||||
| Net sales | $ | 492,218 | $ | 465,497 | $ | 1,424,084 | $ | 1,387,583 | |||||
| Costs and expenses: | |||||||||||||
| Cost of products sold | 386,256 | 365,808 | 1,113,361 | 1,098,087 | |||||||||
| Selling, general, and administrative expenses | 46,317 | 45,055 | 145,215 | 138,053 | |||||||||
| Research and development | 2,661 | 2,994 | 8,817 | 9,015 | |||||||||
| Interest expense | 5,318 | 5,467 | 15,660 | 16,334 | |||||||||
| Other (income) costs, net | 778 | 535 | 6,085 | (407 | ) | ||||||||
| Minority interest in net income | 936 | 797 | 2,865 | 2,811 | |||||||||
| Income before income taxes | 49,952 | 44,841 | 132,081 | 123,690 | |||||||||
| Provision for income taxes | 18,800 | 17,600 | 50,600 | 48,100 | |||||||||
| Net income | $ | 31,152 | $ | 27,241 | $ | 81,481 | $ | 75,590 | |||||
| Basic earnings per share of common stock | $ | .60 | $ | .51 | $ | 1.56 | $ | 1.42 | |||||
| Diluted earnings per share of common stock | $ | .59 | $ | .51 | $ | 1.55 | $ | 1.41 | |||||
| Cash dividends paid per share of common stock | $ | .23 | $ | .22 | $ | .69 | $ | .66 | |||||
| Average common shares and common stock equivalents outstanding | 52,778 | 53,303 | 52,654 | 53,554 | |||||||||
EXHIBIT 19—FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
| |
Sep 30 1999 |
Dec 31 1998 |
|||||
|---|---|---|---|---|---|---|---|
| ASSETS | |||||||
| Cash |
|
$ |
24,996 |
|
$ |
23,738 |
|
| Accounts receivable -net | 256,077 | 246,676 | |||||
| Inventories | 279,447 | 241,585 | |||||
| Prepaid expenses and deferred charges | 36,418 | 34,912 | |||||
| Total current assets | 596,938 | 546,911 | |||||
| Property and equipment, net | 758,269 | 740,101 | |||||
| Excess of cost of investments in subsidiaries over net assets acquired | 153,173 | 160,819 | |||||
| Other assets | 23,737 | 34,195 | |||||
| Total | 176,910 | 195,014 | |||||
| TOTAL ASSETS | $ | 1,532,117 | $ | 1,482,026 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
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| Current portion of long-term debt |
|
$ |
2,778 |
|
$ |
2,946 |
|
| Short-term borrowings | 4,215 | 3,553 | |||||
| Accounts payable | 208,564 | 193,088 | |||||
| Accrued salaries and wages | 29,797 | 31,629 | |||||
| Accrued income and other taxes | 20,687 | 14,397 | |||||
| Total current liabilities | 266,041 | 245,613 | |||||
| Long-term debt, less current portion | 366,807 | 371,363 | |||||
| Deferred taxes | 86,485 | 84,679 | |||||
| Other liabilities and deferred credits | 60,868 | 54,655 | |||||
| Total liabilities | 780,201 | 756,310 | |||||
| Minority interest | 38,770 | 37,862 | |||||
| Stockholders' equity: | |||||||
| Common stock (59,098,203 and 59,056,047 shares) | 5,910 | 5,906 | |||||
| Capital in excess of par value | 181,957 | 181,908 | |||||
| Retained income | 753,748 | 708,362 | |||||
| Other comprehensive income (loss) | (26,220 | ) | (6,116 | ) | |||
| Common stock held in treasury (6,788,088 and 6,786,889 shares) | (202,249 | ) | (202,206 | ) | |||
| Total stockholders' equity | 713,146 | 687,854 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,532,117 | $ | 1,482,026 | |||
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 |
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|---|---|---|---|---|---|---|---|
| |
1999 |
1998 |
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| Cash flows from operating activities | |||||||
| Net income | $ | 81,481 | $ | 75,590 | |||
| Non-cash items: | |||||||
| Depreciation and amortization | 75,282 | 68,290 | |||||
| Minority interest in net income | 2,865 | 2,811 | |||||
| Deferred income taxes, non-current portion | 2,123 | (59 | ) | ||||
| Undistributed earnings of affiliated companies | 6,981 | 500 | |||||
| (Gain) loss on sale of property and equipment | 136 | (107 | ) | ||||
| Cash provided by operations | 168,868 | 147,025 | |||||
| Changes in working capital, net of effects of acquisitions and dispositions | (37,595 | ) | 6,353 | ||||
| Net change in deferred charges and credits | 6,539 | (957 | ) | ||||
| Net cash provided by operating activities | 137,812 | 152,421 | |||||
| Cash flows from investing activities | |||||||
| Additions to property and equipment | (94,428 | ) | (95,456 | ) | |||
| Business acquisition | (1,424 | ) | (46,319 | ) | |||
| Proceeds from sale of property and equipment | 1,006 | 1,868 | |||||
| Other | 49 | ||||||
| Net cash used in investing activities | (94,797 | ) | (139,907 | ) | |||
| Cash flows from financing activities | |||||||
| Change in long-term debt excluding debt assumed in business acquisitions | (4,498 | ) | 62,656 | ||||
| Change in short-term debt | 661 | (305 | ) | ||||
| Cash dividends paid | (36,095 | ) | (35,180 | ) | |||
| Subsidiary dividends to minority stockholders | (1,835 | ) | |||||
| Common stock purchased for the treasury | (43 | ) | (35,693 | ) | |||
| Stock incentive programs and related tax effects | 53 | 7,388 | |||||
| Net cash used by financing activities | (39,922 | ) | (2,969 | ) | |||
| Effect of exchange rates on cash | (1,835 | ) | 189 | ||||
| Net increase in cash | $ | 1,258 | $ | 9,734 | |||
EXHIBIT 19—FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Periods prior to 1998 have been revised to reflect provisions of SFAS No. 130
| (in thousands of dollars) |
Common Stock |
Capital In Excess Of Par Value |
Retained Income |
Other Comprehensive Income (Loss) |
Common Stock Held In Treasury |
Total Stockholder's Equity |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at December 31, 1995 | $ | 5,781 | $ | 147,119 | $ | 529,720 | $ | 8,590 | ($ | 146,849 | ) | $ | 544,361 | ||||||
| Net income for 1996 | 103,037 | 103,037 | |||||||||||||||||
| Translation adjustment for 1996 | (3,917 | ) | (3,917 | ) | |||||||||||||||
| Pension liability adjustment, net of $948 tax benefit | 1,546 | 1,546 | |||||||||||||||||
| Total comprehensive income | 100,666 | ||||||||||||||||||
| Cash dividends paid on common stock, $.72 per share | (37,830 | ) | (37,830 | ) | |||||||||||||||
| Stock incentive programs and related tax effects | 2 | 310 | 312 | ||||||||||||||||
| Common stock transactions related to an acquisition of a subsidiary company | 7 | 2,052 | 2,059 | ||||||||||||||||
| Purchase of 292,000 shares of common stock | (8,962 | ) | (8,962 | ) | |||||||||||||||
| Balance at December 31, 1996 | $ | 5,790 | $ | 149,481 | $ | 594,927 | $ | 6,219 | ($ | 155,811 | ) | $ | 600,606 | ||||||
| Net income for 1997 | 101,424 | 101,424 | |||||||||||||||||
| Translation adjustment for 1997 | (11,109 | ) | (11,109 | ) | |||||||||||||||
| Pension liability adjustment, net of $842 tax benefit | (1,373 | ) | (1,373 | ) | |||||||||||||||
| Total comprehensive income | 88,942 | ||||||||||||||||||
| Cash dividends paid on common stock, $.80 per share | (42,418 | ) | (42,418 | ) | |||||||||||||||
| Stock incentive programs and related tax effects | 4 | 47 | 51 | ||||||||||||||||
| Common stock transactions related to an acquisition of a subsidiary company | 70 | 25,034 | 25,104 | ||||||||||||||||
| Purchase of 139,429 shares of common stock | (5,051 | ) | (5,051 | ) | |||||||||||||||
| Balance at December 31, 1997 | $ | 5,864 | $ | 174,562 | $ | 653,933 | ($ | 6,263 | ) | ($ | 160,862 | ) | $ | 667,234 | |||||
| Net income for 1998 | 101,130 | 101,130 | |||||||||||||||||
| Translation adjustment for 1998 | (72 | ) | (72 | ) | |||||||||||||||
| Pension liability adjustment, net of $102 tax benefit | 219 | 219 | |||||||||||||||||
| Total comprehensive income | 101,277 | ||||||||||||||||||
| Cash dividends paid on common stock, $.88 per share | (46,701 | ) | (46,701 | ) | |||||||||||||||
| Stock incentive programs and related tax effects | 42 | 7,346 | 7,388 | ||||||||||||||||
| Purchase of 1,110,843 shares of common stock | (41,344 | ) | (41,344 | ) | |||||||||||||||
| Balance at December 31, 1998 | $ | 5,906 | $ | 181,908 | $ | 708,362 | ($ | 6,116 | ) | ($ | 202,206 | ) | $ | 687,854 | |||||
| Net income for first nine months of 1999 | 81,481 | 81,481 | |||||||||||||||||
| Translation adjustment for first nine months of 1999 | (20,104 | ) | (20,104 | ) | |||||||||||||||
| Total comprehensive income | 61,377 | ||||||||||||||||||
| Cash dividends paid on common stock, $.69 per share | (36,095 | ) | (36,095 | ) | |||||||||||||||
| Stock incentive programs and related tax effects | 4 | 49 | 53 | ||||||||||||||||
| Purchase of 1,199 shares of common stock | (43 | ) | (43 | ) | |||||||||||||||
| Balance at September 30, 1999 | $ | 5,910 | $ | 181,957 | $ | 753,748 | ($ | 26,220 | ) | ($ | 202,249 | ) | $ | 713,146 | |||||
EXHIBIT 19—FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Inventory Accounting Change
Inventories are valued at the lower of cost, using the first-in, first-out (FIFO) method, or market. During the second quarter of 1999, the Company changed its method of determining the cost of inventories from the last-in, first-out (LIFO) method to the FIFO valuation method. Management believes the change from LIFO to FIFO inventory valuation method benefits the Company by providing the best matching of the applicable raw material cost of a unit of product to the product's selling price and, therefore, presents a clearer picture of operating results. The accounting change has been applied to prior years by retroactively restating the financial statements, which are available by reference to the Company's August 1999, Form 8-K filing with the United States Securities and Exchange Commission. All financial statements and data included in this September 30, 1999, Form 10-Q filing, reflect the impact of this accounting principle change.
Note 2. 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, 1998.
Note 3. Taxes Based On Income
The Company's 1999 effective tax rate of 38% differs from the federal statutory rate of 35% primarily due to state and local income taxes.
Note 4. Segments of Business
The Registrant's business activities are organized around its two principal business segments, Flexible Packaging and Pressure Sensitive Materials. Both internal and external reporting conform to this organizational structure with no significant differences in accounting policies applied. The Registrant evaluates the performance of its segments and allocates resources to them based on operating profit which is defined as profit before general corporate expense, interest expense, income taxes, and minority interest. A summary of the Registrant's business activities reported by its two business segments follows:
| |
For Nine Months Ended September 30, |
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|---|---|---|---|---|---|---|---|
| Business Segments (in millions of dollars) |
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| 1999 |
1998 |
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| Net Sales to Unaffiliated Customers: | |||||||
| Flexible Packaging | $ | 1,066.9 | $ | 1,031.8 | |||
| Pressure Sensitive Materials | 357.4 | 356.1 | |||||
| Intersegment Sales: |
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| Flexible Packaging | (0.2 | ) | (0.2 | ) | |||
| Pressure Sensitive Materials | (0.0 | ) | (0.1 | ) | |||
| Total | $ | 1,424.1 | $ | 1,387.6 | |||
| Operating Profit and Pretax Profit: | |||||||
| Flexible Packaging | $ | 133.3 | $ | 116.6 | |||
| Pressure Sensitive Materials | 31.6 | 37.5 | |||||
| Total operating profit | 164.9 | 154.1 | |||||
| General corporate expenses |
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(14.2 |
) |
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(11.3 |
) |
| Interest expense | (15.7 | ) | (16.3 | ) | |||
| Minority interest in net income | (2.9 | ) | (2.8 | ) | |||
| Income before income taxes | $ | 132.1 | $ | 123.7 | |||
| Identifiable Assets: | |||||||
| Flexible Packaging | $ | 1,169.7 | $ | 1,111.6 | |||
| Pressure Sensitive Materials | 317.3 | 295.2 | |||||
| Total identifiable assets | 1,487.0 | 1,406.8 | |||||
| Corporate assets | 45.1 | 49.3 | |||||
| Total | $ | 1,532.1 | $ | 1,456.1 | |||
EXHIBIT 19—FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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