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UNITED STATES
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, 2000
Commission File Number 1-5277
BEMIS COMPANY, INC.
(Exact name of registrant as specified in its charter)
| Missouri (State or other jurisdiction of incorporation or organization) |
43-0178130 (I.R.S. Employer Identification No.) |
|
| 222 South 9th Street, Suite 2300 Minneapolis, Minnesota (Address of principal executive offices) |
|
55402-4099 (Zip Code) |
(612) 376-3000
Registrant's telephone number, including area code
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.
53,141,641 shares of Common Stock, $.10 par value on July 27, 2000
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, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations—Second Quarter 2000
Net sales for the second quarter of 2000 were $525.2 million compared to $481.3 million for the second quarter of 1999, an increase of 9.1 percent or $44.0 million. Net income was $35.4 million, or $0.66 per diluted share, for the second quarter of 2000 compared to $31.6 million, or $0.60 per diluted share, for the same quarter in 1999, an increase of 10.0 percent.
The Company's flexible packaging operations reported a 9.0 percent increase in net sales and operating profit growth of 8.9 percent compared to the second quarter of last year paced by strong results in polyethylene products. The pressure sensitive materials operations reported a 9.4 percent increase in net sales and a 22.2 percent increase in operating profits compared with the year earlier quarter, as that business' U.S. operations continue to improve as a result of reorganization efforts begun last year.
Within flexible packaging, net sales of high barrier products increased $8.6 million, or 4.2 percent, $20.3 million, or 17.5 percent for polyethylene packaging products, and $3.7 million, or 8.9 percent, for paper products. Net sales in the pressure sensitive materials business increased $11.4 million or 9.4 percent.
Material cost increases have not been fully offset by improved manufacturing efficiency and selling price increases resulting in a disproportionate increase in cost of sales. Increasing debt levels and interest rates account for the increase in interest expense. In December 1999 the Company was notified of the future receipt of MetLife, Inc. shares from the planned MetLife demutualization. During the second quarter of 2000, those shares were issued as planned and liquidated resulting in a reduction of cost of goods sold by $1.6 million and selling, general, and administrative expense of $.7 million. The $1.2 million decrease in research and development expense occurred principally in the pressure sensitive materials business segment. Losses associated with the Company's flexible packaging joint venture in Brazil account for nearly all of the unfavorable second quarter 2000 change in other costs (income), net, compared to the same 1999 period. The reduction in minority interest is due to the January 2000 purchase of the 13.0 percent minority interest in Morgan Adhesives Company. The effective tax rate for the second quarter of 2000 and 1999 was 38.0 percent and 38.4 percent, respectively.
Results of Operations—Six Months Ended June 30, 2000
Net sales for the six-month period of 2000 were $1.03 billion compared to $931.9 million for the same period in 1999, an increase of 10.1 percent. Net income was $65.0 million for 2000 compared to $50.3 million for the same six-month period in 1999, an increase of 29.1 percent.
Net sales for flexible packaging operations increased 11.8 percent while operating income increased 28.0 percent reflecting continued positive performance by both high barrier plastic products and polyethylene products.
Net sales for pressure sensitive materials increased 5.1 percent while operating income increased 13.8 percent reflecting improving performance in the U.S. operations and continuing strong performance in European operations.
On a comparative year-to-date basis material cost increases account for the disproportionate increase in cost of sales. Increasing debt levels experienced during the first half of 2000 are expected to continue to
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result in increased interest cost. The reduction in other cost reflected for the first half of 2000 compared to the same 1999 period is due to reduced losses at the Company's Brazilian joint venture, of which, approximately one-half was due to the January 1999 Brazilian currency devaluation. The effective tax rates for the first half of 2000 and 1999 was 38.0 percent and 38.7 percent, respectively.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain statements that are "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995, and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934. The words "believe", "expect", "anticipate", "intend", "estimate", "target", "may", "will", "plan", "project", "should", "continue", or the negative thereof or other expressions, which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking statements. Such statements are based on information available to management as of the time of such statements and relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, and statements regarding the Company's mission and vision. Forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance, or achievements of the Company to differ materially from anticipated future results, performance, or achievements expressed or implied by such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Factors that could cause actual results to differ from those expected include, but are not limited to, general economic conditions such as inflation, interest rates, and foreign currency exchange rates; competitive conditions within the Company's markets, including the acceptance of new and existing products offered by the Company; price increases for raw materials and the ability of the Company to pass these price increases on to its customers or otherwise manage commodity price fluctuation risks; the presence of adequate cash available for investment in the Company's business in order to maintain desired debt levels; unanticipated consequences of the EMU's conversion to the euro; changes in governmental regulation, especially in the areas of environmental, health and safety matters, and foreign investment; unexpected outcomes in the Company's current and future litigation proceedings; and changes in the Company's labor relations. These and other risks, uncertainties, and assumptions identified from time to time in the Company's filings with the Securities and Exchange Commission, including without limitation, its annual report on Form 10-K and its quarterly reports on Form 10-Q, could cause the Company's actual future results to differ materially from those projected in the forward- looking statements as a result of the factors set forth in the Company's various filings with the Securities and Exchange Commission and of changes in general economic conditions and changes in the assumptions used in making such forward-looking statements.
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Financial Condition
A statement of cash flow for the six months ended June 30, 2000, is as follows:
| |
Millions |
|||||
|---|---|---|---|---|---|---|
| Cash flows from operating activities: | ||||||
| Net income | $ | 65.0 | ||||
| Non-cash items: | ||||||
| Depreciation and amortization | 52.6 | |||||
| Minority interest | 0.2 | |||||
| Deferred income taxes, non-current portion | 1.6 | |||||
| Net increase in working capital, net of effects of acquisitions | (35.2 | ) | ||||
| Net change in deferred charges and credits | (3.4 | ) | ||||
| Undistributed earnings of affiliated companies | 1.0 | |||||
| Other | (0.1 | ) | ||||
| Net cash provided by operating activities | 81.7 | |||||
| Cash flows from investing activities: | ||||||
| Additions to property and equipment | (51.9 | ) | ||||
| Business acquisitions | (3.3 | ) | ||||
| Other | 0.3 | |||||
| Net cash used in investing activities | (54.9 | ) | ||||
| Cash flows from financing activities: | ||||||
| Change in long-term debt | 37.5 | |||||
| Change in short-term debt | (1.7 | ) | ||||
| Cash dividends paid | (25.6 | ) | ||||
| Common stock purchased for the treasury | (25.1 | ) | ||||
| Other | 0.4 | |||||
| Net cash used by financing activities | (14.5 | ) | ||||
| Effect of exchange rates | (1.8 | ) | ||||
| Net increase in cash | $ | 10.5 | ||||
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
| Name of Candidate |
|
Votes For |
|
Votes Withheld |
|---|---|---|---|---|
| Winslow H. Buxton | 43,964,474 | 1,750,288 | ||
| John G. Bollinger | 43,977,019 | 1,737,743 | ||
| William J. Bolton | 43,983,229 | 1,731,533 |
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
| 3(a) | Restated Articles of Incorporation of the Registrant, as amended. (1) | |
| 3(b) |
|
By-Laws of the Registrant, as amended through July 7, 1992. (2) |
| 3(c) |
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Amendment to the By-Laws of the Registrant dated October 29, 1998. (3) |
| 4(a) |
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Rights Agreement, dated as of July 29, 1999, between the Registrant and Norwest Bank Minnesota, National Association. (4) |
| 4(b) |
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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 Amended and Restated Stock Option Plan as of October 29, 1999. * (6) |
| 10(b) |
|
Bemis Company, Inc. 1994 Stock Incentive Plan, Amended and Restated as of August 4, 1999. * (7) |
| 10(c) |
|
Bemis Company, Inc. Form of Management Contract with the Chief Executive Officer and other Executive Officers. * (6) |
| 10(d) |
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Bemis Retirement Plan, Amended and Restated as of August 4, 1999.* (7) |
| 10(e) |
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Bemis Company, Inc. Supplemental Retirement Plan, Amended and Restated as of October 29, 1999. * (6) |
| 10(f) |
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Bemis Executive Officer Incentive Plan as of October 29, 1999. * (6) |
| 10(g) |
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Bemis Company, Inc. Long Term Deferred Compensation Plan, Amended and Restated as of August 4, 1999. * (7) |
| 10(h) |
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Bemis Company, Inc. 1997 Executive Officer Performance Plan. * (1) |
| 10(i) |
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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 in Composite Copy as of August 2, 1999. (6) |
| 19 |
|
Reports Furnished to Security Holders. |
| 27 |
|
Financial Data Schedule (EDGAR electronic filing only). |
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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 1, 2000 |
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/s/ GENE C. WULF Gene C. Wulf Vice President and Controller |
| Date August 1, 2000 |
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/s/ BENJAMIN R. FIELD, III Benjamin R. Field, III Senior Vice President, Chief Financial Officer and Treasurer |
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| Exhibit |
Description |
Form of Filing |
||
|---|---|---|---|---|
| 3 | (a) | Restated Articles of Incorporation of the Registrant, as amended. (1) | ||
| 3 |
(b) |
By-Laws of the Registrant, as amended through July 7, 1992. (2) |
|
|
| 3 |
(c) |
Amendment to the By-Laws of the Registrant dated October 29, 1998. (3) |
|
|
| 4 |
(a) |
Rights Agreement, dated as of July 29, 1999, between the Registrant and Norwest Bank Minnesota, National Association. (4) |
|
|
| 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 Amended and Restated Stock Option Plan as of October 29, 1999. * (6) |
|
|
| 10 |
(b) |
Bemis Company, Inc. 1994 Stock Incentive Plan, Amended and Restated as of August 4, 1999. * (7) |
|
|
| 10 |
(c) |
Bemis Company, Inc. Form of Management Contract with the Chief Executive Officer and other Executive Officers. * (6) |
|
|
| 10 |
(d) |
Bemis Retirement Plan, Amended and Restated as of August 4, 1999. * (7) |
|
|
| 10 |
(e) |
Bemis Company, Inc. Supplemental Retirement Plan, Amended and Restated as of October 29, 1999. * (6) |
|
|
| 10 |
(f) |
Bemis Executive Officer Incentive Plan as of October 29, 1999. * (6) |
|
|
| 10 |
(g) |
Bemis Company, Inc. Long Term Deferred Compensation Plan, Amended and Restated as of August 4, 1999. * (7) |
|
|
| 10 |
(h) |
Bemis Company, Inc. 1997 Executive Officer Performance Plan. * (1) |
|
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| 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 in Composite Copy as of August 2, 1999. (6) |
|
|
| 19 |
|
Reports Furnished to Security Holders. |
|
Electronic/EDGAR |
| 27 |
|
Financial Data Schedule (EDGAR electronic filing only). |
|
Electronic/EDGAR |
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