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BEMIS CO INC
10-Q, EX-19, 2000-11-13
CONVERTED PAPER & PAPERBOARD PRODS (NO CONTANERS/BOXES)

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EXHIBIT 19—FINANCIAL STATEMENTS—UNAUDITED

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
				2000			1999			2000			1999
Net sales				$	529,266		$	492,218		$	1,555,244		$	1,424,084
Costs and expenses:
	Cost of products sold				420,390			386,256			1,224,750			1,113,361
	Selling, general, and administrative expenses				46,020			46,317			144,788			145,215
	Research and development				2,374			2,661			7,398			8,817
	Interest expense				8,178			5,318			20,284			15,660
	Other costs, net				198			778			922			6,085
	Minority interest in net income				141			936			344			2,865
Income before income taxes					51,965			49,952			156,758			132,081
Provision for income taxes					19,800			18,800			59,600			50,600
Net income				$	32,165		$	31,152		$	97,158		$	81,481
Basic earnings per share of common stock				$	.61		$	.60		$	1.82		$	1.56
Diluted earnings per share of common stock				$	.60		$	.59		$	1.81		$	1.55
Cash dividends paid per share of common stock				$	.24		$	.23		$	.72		$	.69
Average common shares and common stock equivalents outstanding					53,643			52,778			53,649			52,654

See accompanying notes to consolidated financial statements.

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BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)

ASSETS				Sep 30 2000			Dec 31 1999
Cash				$	27,507		$	18,187
Accounts receivable - net					287,727			257,260
Inventories					293,197			274,597
Prepaid expenses and deferred charges					39,702			33,537
		Total current assets			648,133			583,581
Property and equipment, net					862,003			776,241
Excess of cost of investments in subsidiaries over net assets acquired					339,131			150,496
Other assets					30,000			21,825
		Total			369,131			172,321
TOTAL ASSETS				$	1,879,267		$	1,532,143
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt				$	934		$	1,049
Short-term borrowings					170,446			5,741
Accounts payable					202,075			189,749
Accrued salaries and wages					39,660			39,861
Accrued income and other taxes					18,769			16,868
		Total current liabilities			431,884			253,268
Long-term debt, less current portion					500,822			372,267
Deferred taxes					92,621			89,635
Other liabilities and deferred credits					49,718			51,580
		Total liabilities			1,075,045			766,750
Minority interest					1,437			39,498
Stockholders' equity:
	Common stock (60,876,829 and 59,098,203 shares)				6,088			5,910
	Capital in excess of par value				237,002			181,957
	Retained income				833,792			775,011
	Other comprehensive income (loss)				(42,693	)		(30,644	)
	Common stock held in treasury (7,735,188 and 6,909,488 shares)				(231,404	)		(206,339	)
		Total stockholders' equity			802,785			725,895
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$	1,879,267		$	1,532,143

See accompanying notes to consolidated financial statements.

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BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of dollars)

				Nine Months Ended September 30
				2000			1999
Cash flows from operating activities
Net income				$	97,158		$	81,481
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization					79,985			75,282
	Minority interest in net income				344			2,865
	Deferred income taxes, non-current portion				3,618			2,123
	Losses of unconsolidated affiliated companies				1,742			6,981
	(Gain) loss on sale of property and equipment				(7	)		136
Changes in working capital, net of effects of acquisitions and dispositions					(31,341	)		(37,595	)
Net change in deferred charges and credits					(2,015	)		6,539
Net cash provided by operating activities					149,484			137,812
Cash flows from investing activities
Additions to property and equipment					(74,292	)		(94,428	)
Business acquisitions					(294,103	)		(1,424	)
Proceeds from sale of property and equipment					402			1,006
Other					36			49
Net cash used in investing activities					(367,957	)		(94,797	)
Cash flows from financing activities
Change in long-term debt excluding debt assumed in business acquisitions					128,635			(4,498	)
Change in short-term debt					165,095			661
Cash dividends paid					(38,377	)		(36,095	)
Subsidiary dividends to minority stockholders					(51	)
Common stock purchased for the treasury					(25,065	)		(43	)
Stock incentive programs and related tax effects					374			53
Net cash provided (used) by financing activities					230,611			(39,922	)
Effect of exchange rates on cash					(2,818	)		(1,835	)
Net increase in cash				$	9,320		$	1,258
Cash balance at beginning of year					18,187			23,738
Cash balance at end of period				$	27,507		$	24,996

See accompanying notes to consolidated financial statements.

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BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

(in thousands of dollars except per share amounts)			Common Stock			Capital In Excess Of Par Value			Retained Income			Other Comprehensive Income (loss)			Common Stock Held In Treasury			Total Stockholder's Equity
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 1999										114,775									114,775
Translation adjustment for 1999													(24,353	)					(24,353	)
Pension liability adjustment, net of $536 tax benefit													(175	)					(175	)
Total comprehensive income																			90,247
Cash dividends paid on common stock, $.92 per share										(48,126	)								(48,126	)
Stock incentive programs and related tax effects				4			49												53
Purchase of 122,599 shares of common stock																(4,133	)		(4,133	)
Balance at December 31, 1999			$	5,910		$	181,957		$	775,011		$	(30,644	)	$	(206,339	)	$	725,895
Net income for first nine months of 2000										97,158									97,158
Translation adjustment for the first nine months of 2000													(12,049	)					(12,049	)
Total comprehensive income*																			85,109
Cash dividends paid on common stock, $.72 per share										(38,377	)								(38,377	)
Stock incentive programs and related tax effects				5			369												374
Common stock transactions related to acquisition of minority interest in a subsidiary company				173			54,676												54,849
Purchase of 825,700 shares of common stock																(25,065	)		(25,065	)
Balance at September 30, 2000			$	6,088		$	237,002		$	833,792		$	(42,693	)	$	(231,404	)	$	802,785

*

Total comprehensive income for the third quarters of 2000 and 1999 was $27,258 and $30,816, respectively, and was $61,377 for the first nine months of 1999.

See accompanying notes to consolidated financial statements.

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BEMIS COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. 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, 1999.

Note 2—Inventories

    The Company's inventories are valued at the lower of cost, determined by the first-in, first-out (FIFO) method, or market. Inventories are summarized as follows:

Note 3—Earnings Per Share Computations

		Three Months Ended September 30,						Nine Months Ended September 30,
		2000			1999			2000			1999
Income available to common stockholders (numerator)		$	32,165,000		$	31,152,000		$	97,158,000		$	81,481,000
Weighted-average common shares outstanding (denominator)			53,141,641			52,310,115			53,251,519			52,308,091
Basic earnings per share of common stock		$	0.61		$	0.60		$	1.82		$	1.56
Dilutive effects of stock option and stock awards, net of windfall tax benefits			501,668			467,969			397,010			346,123
Weighted-average common shares and common stock equivalents outstanding (denominator)			53,643,309			52,778,084			53,648,529			52,654,214
Diluted earnings per share of common stock		$	0.60		$	0.59		$	1.81		$	1.55

Note 4. Taxes Based On Income

    The Company's 2000 effective tax rate of 38% differs from the federal statutory rate of 35% primarily due to state and local income taxes.

Note 5. 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

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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,
Business Segments (in millions of dollars)				2000			1999
Net Sales to Unaffiliated Customers:
	Flexible Packaging			$	1,187.0		$	1,066.9
	Pressure Sensitive Materials				369.5			357.4
Intersegment Sales:
	Flexible Packaging				(1.2	)		(0.2	)
	Pressure Sensitive Materials				(0.1	)		(0.0	)
		Total		$	1,555.2		$	1,424.1
Operating Profit and Pretax Profit:
	Flexible Packaging			$	158.4		$	133.3
	Pressure Sensitive Materials				32.3			31.6
		Total operating profit			190.7			164.9
	General corporate expenses				(13.3	)		(14.2	)
	Interest expense				(20.3	)		(15.7	)
	Minority interest in net income				(0.3	)		(2.9	)
	Income before income taxes			$	156.8		$	132.1
Identifiable Assets:
	Flexible Packaging			$	1,472.4		$	1,169.7
	Pressure Sensitive Materials				360.0			317.3
		Total identifiable assets			1,832.4			1,487.0
	Corporate assets				46.9			45.1
		Total		$	1,879.3		$	1,532.1

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BEMIS COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (in thousands except per share amounts)
BEMIS COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in thousands of dollars)
BEMIS COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands of dollars)
BEMIS COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
BEMIS COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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