Bemis 10-Q 2000 Q2 Quarterly report

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 June 30					Six Months Ended June 30
		2000		1999			2000		1999
Net sales		$	525,230	$	481,259		$	1,025,978	$	931,866
Costs and expenses:
	Cost of products sold		411,165		372,956			804,360		727,105
	Selling, general and administrative expenses		47,914		48,049			98,768		98,898
	Research and development		2,448		3,653			5,024		6,156
	Interest expense		6,383		5,198			12,106		10,342
	Other costs (income)		113		(864	)		724		5,307
	Minority interest in net income		157		976			203		1,929
Income before income taxes			57,050		51,291			104,793		82,129
	Provision for income taxes		21,700		19,700			39,800		31,800
Net income		$	35,350	$	31,591		$	64,993	$	50,329
Basic earnings per share of common stock		$	.67	$	.60		$	1.22	$	.96
Diluted earnings per share of common stock		$	.66	$	.60		$	1.21	$	.96
Cash dividends paid per share of common stock		$	.24	$	.23		$	.48	$	.46
Average common shares and common stock equivalents outstanding			53,617		52,616			53,652		52,592

EXHIBIT 19—FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands of dollars)

			Jun 30 2000			Dec 31 1999
ASSETS
Cash			$	28,712		$	18,187
Accounts receivable—net				281,352			257,260
Inventories				280,655			274,597
Prepaid expenses and deferred charges				35,490			33,537
		Total current assets		626,209			583,581
Property and equipment, net				773,604			776,241
Excess of cost of investments in subsidiaries over net assets acquired				167,461			150,496
Other assets				21,391			21,825
		Total		188,852			172,321
TOTAL ASSETS			$	1,588,665		$	1,532,143
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt			$	984		$	1,049
Short-term borrowings				3,623			5,741
Accounts payable				190,986			189,749
Accrued salaries and wages				35,906			39,861
Accrued income and other taxes				18,703			16,868
		Total current liabilities		250,202			253,268
Long-term debt, less current portion				409,761			372,267
Deferred taxes				90,821			89,635
Other liabilities and deferred credits				48,352			51,580
		Total liabilities		799,136			766,750
Minority interest				1,249			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			814,380			775,011
	Other comprehensive income (loss)			(37,786	)		(30,644	)
	Common stock held in treasury (7,735,188 and 6,909,488 shares)			(231,404	)		(206,339	)
		Total stockholders' equity		788,280			725,895
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	1,588,665		$	1,532,143

EXHIBIT 19—FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands of dollars)

		Six Months Ended June 30
		2000			1999
Cash flows from operating activities
Net income		$	64,993		$	50,329
Non-cash items:
	Depreciation and amortization		52,601			50,561
	Minority interest in net income		203			1,929
	Deferred income taxes, non-current portion		1,587			1,097
	Losses of unconsolidated affiliated companies		989			5,729
	(Gain) loss on sale of property and equipment		(15	)		125
Cash provided by operations			120,358			109,770
Change in working capital, net of effects of acquisitions and dispositions			(35,239	)		(32,400	)
Net change in deferred charges and credits			(3,401	)		4,732
Net cash provided by operating activities			81,718			82,102
Cash flows from investing activities
Additions to property and equipment			(51,890	)		(58,349	)
Business acquisitions			(3,277	)		(1,424	)
Proceeds from sale of property and equipment			247			974
Other			10			16
Net cash used in investing activities			(54,910	)		(58,783	)
Cash flows from financing activities
Change in long-term debt excluding debt assumed in business acquisitions			37,530			(2,070	)
Change in short-term debt			(1,707	)		169
Cash dividends paid			(25,624	)		(24,063	)
Common stock purchased for the treasury			(25,065	)		(43	)
Stock incentive programs and related tax effects			374			53
Net cash used by financing activities			(14,492	)		(25,954	)
Effect of exchange rates on cash			(1,791	)		(1,609	)
Net (decrease) increase in cash		$	10,525		$	(4,244	)

EXHIBIT 19—FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' 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 six months of 2000						64,993									64,993
Translation adjustment for the first six months of 2000									(7,142	)					(7,142	)
Total comprehensive income															57,851
Cash dividends paid on common stock, $.48 per share						(25,624	)								(25,624	)
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 June 30, 2000	$	6,088	$	237,002	$	814,380		$	(37,786	)	$	(231,404	)	$	788,280

EXHIBIT 19—FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS

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:

(in thousands of dollars)	June 31 2000		Dec 31 1999
Raw materials and supplies	$	95,255	$	93,539
Work in process and finished goods		185,400		181,058
Total inventories	$	280,655	$	274,597

Note 3—Earnings Per Share Computations

	Three Months Ended June 30,				Six Months Ended June 30,
	2000		1999		2000		1999
Income available to common stockholders (numerator)	$	35,350,000	$	31,591,000	$	64,993,000	$	50,329,000
Weighted-average common shares outstanding (denominator)		53,139,293		52,311,195		53,307,062		52,307,062
Basic earnings per share of common stock	$	0.67	$	0.60	$	1.22	$	0.96
Dilutive effects of stock option and stock awards, net of windfall tax benefits		477,669		305,073		344,681		285,200
Weighted-average common shares and common stock equivalents outstanding (denominator)		53,616,962		52,616,268		53,651,743		52,592,262
Diluted earnings per share of common stock	$	0.66	$	0.60	$	1.21	$	0.96

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 Company'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 Company 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 Company's business activities reported by its two business segments follows:

			For the Quarter Ended June 30,
Business Segments (in millions of dollars)			2000			1999
Net Sales to Unaffiliated Customers:
	Flexible Packaging		$	776.3		$	693.8
	Pressure Sensitive Materials			250.6			238.2
Intersegment Sales:
	Flexible Packaging			(0.8	)		(0.1	)
	Pressure Sensitive Materials			(0.1	)		(0.0	)
		Total	$	1,026.0		$	931.9
Operating Profit and Pretax Profit:
	Flexible Packaging		$	104.5		$	81.6
	Pressure Sensitive Materials			25.5			22.4
		Total operating profit		130.0			104.0
	General corporate expenses			(12.9	)		(9.7	)
	Interest expense			(12.1	)		(10.3	)
	Minority interest in net income			(0.2	)		(1.9	)
		Income before income taxes	$	104.8		$	82.1
Identifiable Assets:
	Flexible Packaging		$	1,215.3		$	1,159.2
	Pressure Sensitive Materials			328.6			295.4
		Total identifiable assets		1,543.9			1,454.6
	Corporate assets			44.8			44.6
		Total	$	1,588.7		$	1,499.2