EXHIBIT 99
BEMIS COMPANY, INC.
222 South Ninth Street
Suite 2300
Minneapolis, MN 55402-4099
For additional information please contact:
Melanie E. R. Miller
Vice President, Investor Relations
and Assistant Treasurer
(612) 376-3030
FOR IMMEDIATE RELEASE
MINNEAPOLIS, October 23, 2003 - Bemis Company, Inc. (NYSE-BMS) today reported quarterly diluted earnings of $0.64 per share for the third quarter ended September 30, 2003, including restructuring and related charges of $0.12 per diluted share. Third quarter net sales increased 10 percent to $662 million from $601 million in the prior year. Acquisitions made during the latter half of 2002 accounted for 7 percent of this sales growth, with a positive impact from currency translation providing an additional one percent compared to last year.
Commenting on the results of the quarter, Bemis Company President and Chief Executive Officer, Jeff Curler, said, “We are aggressively implementing our flexible packaging restructuring plan as announced last quarter. We have closed three flexible packaging plants and moved production to our more efficient facilities. We also experienced improved order and production volumes in our high barrier, paper packaging, and North American roll label product lines during the third quarter.”
“With the August termination of our agreement to sell our pressure sensitive materials business, we are re-establishing our commitment to making this business a successful and integral part of Bemis’ portfolio of packaging-related product lines,” Curler continued. “In order to improve manufacturing efficiencies, we have decided to restructure this business segment to improve capacity utilization and cut costs. This restructuring effort will cost approximately $0.07 to $0.11 per diluted share over the next six to nine months.”
“We are also investing in opportunities to introduce new products and services that will fuel future growth in the pressure sensitive materials business segment,” said Curler. “We have entered into an agreement to purchase a Belgian company, Multi-fix NV, which offers additional coating capacity to our higher margin European graphics product line. We expect this transaction to close within the next 30 days and to bring an additional $15 million in annual sales to our European pressure sensitive materials business.”
Flexible packaging, which represents 80 percent of total company third quarter net sales, reported net sales of $533 million in the third quarter, an increase of 12 percent compared to the same quarter in 2002. Acquisitions made during the latter half of 2002 accounted for 9 percent of the sales growth in the third quarter. Operating profit for the third quarter was $62.6 million, a decrease of $13.5 million or 17.7 percent from the third quarter of 2002. As a percentage of net sales, operating profit decreased to 11.8 percent from 15.9 percent a year ago. Operating profit includes $10.8 million of restructuring and related charges for the third quarter of 2003. The remaining $2.7 million decrease reflects increased high barrier operating profits offset by lower results in other product lines. Polyethylene product lines continue to struggle with lower unit volumes while attempting to
implement a shift in product mix toward more value added business. Operating profit in the paper packaging product line remains behind its strong third quarter 2002 level but achieved its highest level to date in 2003. Pension expense has also increased by approximately $3 million from 2002 levels.
In September, Bemis concluded manufacturing activities at three flexible packaging plants as part of a restructuring plan announced in July 2003. Restructuring and related charges totaled $10.8 million during the third quarter and included severance, fixed asset impairments, equipment relocation costs and other related shut down costs. Of the total charge for the third quarter, $5.3 million was classified as cost of goods sold, with the remainder classified in the other income (expense) line on the income statement. During the third quarter, $3.6 million of restructuring costs were paid in cash. Current estimates of future flexible packaging restructuring and related charges range from $0.02 to $0.04 per diluted share for the fourth quarter and from $0.01 to $0.02 in 2004.
“The weakness noted at the end of the second quarter in our high barrier product line has abated and we look forward to solid performance in the future,” Curler explained. “The polyethylene packaging business is working through its third quarter plant closures and expects a seasonally slow fourth quarter, but a less expensive cost structure and an increased focus on value added business mix should deliver improved performance in 2004. Our paper packaging product line has improved profit levels after a disappointing second quarter and is expected to continue to deliver steady to improving profit levels in the future.”
Pressure Sensitive Materials
Third quarter net sales from the pressure sensitive materials business segment were $129 million, a 4.8 percent increase from the third quarter of 2002. The benefits of European currency translation more than offset the impact of a weak operating environment. Higher roll label unit sales volume was partially offset by lower price and mix. Lower volume in the higher margin decorative and technical product lines further reduced sales compared to the prior year. This segment contributed operating profit of $4.0 million or 3.1 percent of net sales for the quarter. These results are below the operating profit of $4.9 million or 4.0 percent of net sales recorded in the third quarter of 2002.
On October 22, 2003, Bemis announced its intention to close its North Las Vegas, Nevada and Brampton, Ontario roll label facilities. The closure of these plants will reduce fixed costs and improve capacity utilization in this business segment. Preliminary estimates of the restructuring and related charges associated with the plant closing activities range from $0.05 to $0.07 per diluted share in the fourth quarter of 2003, and $0.02 to $0.04 per diluted share in the first half of 2004.
Commenting on the strategy for this business segment, Curler noted, “After a year of being contractually restricted in our ability to make strategic changes as we waited for resolution of our proposed transaction to sell this business segment, I am very pleased to be able to move forward and implement a long-term plan to develop and grow our pressure sensitive materials business segment. We have committed to our employees and to our customers that we will invest in product and customer service innovation throughout Bemis. This will include investments in our pressure sensitive materials business segment and will lead us to our goal of increasing operating profit in this segment in conjunction with a recovering economy.”
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $62.9 million or 9.5 percent of net sales for the third quarter of 2003 compared to $54.5 million or 9.1 percent of net sales for the comparable prior year period. Legal fees and associated costs related to the terminated transaction with UPM-Kymmene and the ongoing antitrust investigation into the label industry were expensed during the third quarter of 2003 and totaled $0.3 million.
In August, the Company received a subpoena as part of the Department of Justice investigation into competitive practices in the pressure sensitive label industry. Bemis is cooperating with the Department of Justice in their investigation and is in the process of complying with the subpoena. Bemis does not expect future legal costs associated with this industry investigation to be significant.
Pension Contribution
In August, Bemis elected to make a voluntary $40 million contribution to its defined benefit pension trust, without which a contribution in the range of $4 million would have been required in the latter half of 2004. This quarter’s voluntary tax-deductible contribution immediately improves the funded status of the plans and will reduce pension expense in future periods.
Capital Structure
Total debt at September 30, 2003 was $656 million, compared to $724 million at December 31, 2002. Debt to total capitalization of 36 percent at September 30, 2003 reflects an improvement from 40 percent at December 31, 2002, and 37 percent at June 30, 2003. Strong cash flow during the third quarter was used to reduce commercial paper outstanding.
2003 Earnings Outlook
Bemis expects fourth quarter 2003 diluted earnings to range from $0.63 to $0.70 per share, including estimated flexible packaging restructuring and related charges of between $0.02 and $0.04 per diluted share, and estimated pressure sensitive materials restructuring and related charges of between $0.05 and $0.07 per diluted share. Management expects capital expenditures for the total year 2003 to be about $110 million.
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Bemis Company, Inc. will Webcast an investor telephone conference regarding its third quarter 2003 financial results this morning at 10 a.m., Eastern Daylight Time. Individuals may listen to the call on the Internet at www.bemis.com under “Investor Relations”. However, they are urged to check the website ahead of time to ensure their computers are configured for the audio stream. Instructions for obtaining the required, free, downloadable software are available in a pre-event system test on the site.
Bemis Company is a major supplier of flexible packaging and pressure sensitive materials used by leading food, consumer products, manufacturing, and other companies worldwide. Founded in 1858, the Company reported 2002 net sales of $2.4 billion. The Company’s flexible packaging business has a strong technical base in polymer chemistry, film extrusion, coating and laminating, printing and converting. The Company’s pressure sensitive materials business specializes in adhesive technologies. Based in Minneapolis, Minnesota, Bemis employs about 11,600 individuals in 53 manufacturing facilities in 10 countries around the world. More information about the company is available at our website, www.bemis.com.
Statements in this release that are not historical, including statements relating to the expected future performance of the company, are considered “forward-looking” and are presented pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such content is subject to certain risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors which are detailed in the Company’s regular SEC filings including the most recently filed Form 10-K for the year ended December 31, 2002.
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share amounts)
(unaudited)
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| ||||
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Net sales |
| $ | 661,983 |
| $ | 601,019 |
| $ | 1,970,707 |
| $ | 1,738,470 |
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Costs and expenses: |
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Cost of products sold |
| 530,329 |
| 468,740 |
| 1,571,620 |
| 1,345,927 |
| ||||
Selling, general and administrative expenses |
| 62,892 |
| 54,478 |
| 193,211 |
| 170,001 |
| ||||
Research and development |
| 5,202 |
| 4,772 |
| 16,304 |
| 13,088 |
| ||||
Interest expense |
| 3,181 |
| 3,827 |
| 9,842 |
| 11,673 |
| ||||
Other costs (income), net |
| 3,580 |
| (955 | ) | 1,876 |
| (59 | ) | ||||
Minority interest in net income |
| 287 |
| 309 |
| 675 |
| 706 |
| ||||
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Income before income taxes |
| 56,512 |
| 69,848 |
| 177,179 |
| 197,134 |
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Provision for income taxes |
| 21,800 |
| 26,500 |
| 68,200 |
| 74,900 |
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Net income |
| $ | 34,712 |
| $ | 43,348 |
| $ | 108,979 |
| $ | 122,234 |
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Basic earnings per share of common stock |
| $ | .65 |
| $ | .82 |
| $ | 2.05 |
| $ | 2.31 |
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Diluted earnings per share of common stock |
| $ | .64 |
| $ | .81 |
| $ | 2.02 |
| $ | 2.28 |
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Cash dividends paid |
| $ | .28 |
| $ | .26 |
| $ | .84 |
| $ | .78 |
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Weighted average common shares outstanding |
| 53,113 |
| 52,942 |
| 53,081 |
| 52,933 |
| ||||
Weighted average common shares and common stock equivalents outstanding |
| 53,898 |
| 53,749 |
| 53,845 |
| 53,708 |
| ||||
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
(unaudited)
|
| Sept 30, |
| Dec 31, |
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ASSETS |
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Cash |
| $ | 86,605 |
| $ | 56,401 |
|
Accounts receivable, net |
| 319,793 |
| 321,790 |
| ||
Inventories, net |
| 324,308 |
| 308,344 |
| ||
Prepaid expenses |
| 37,349 |
| 35,120 |
| ||
Total current assets |
| 768,055 |
| 721,655 |
| ||
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Property and equipment, net |
| 899,498 |
| 909,953 |
| ||
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Goodwill |
| 451,854 |
| 448,009 |
| ||
Other intangible assets, net |
| 71,612 |
| 76,176 |
| ||
Deferred charges and other assets |
| 64,379 |
| 100,857 |
| ||
Total |
| 587,845 |
| 625,042 |
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TOTAL ASSETS |
| $ | 2,255,398 |
| $ | 2,256,650 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current portion of long-term debt |
| $ | 1,027 |
| $ | 3,516 |
|
Short-term borrowings |
| 5,778 |
| 1,714 |
| ||
Accounts payable |
| 237,333 |
| 230,468 |
| ||
Accrued salaries and wages |
| 72,709 |
| 71,610 |
| ||
Accrued income and other taxes |
| 15,629 |
| 18,545 |
| ||
Total current liabilities |
| 332,476 |
| 325,853 |
| ||
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Long-term debt, less current portion |
| 648,763 |
| 718,277 |
| ||
Deferred taxes |
| 124,447 |
| 106,050 |
| ||
Deferred credits and other liabilities |
| 81,951 |
| 143,056 |
| ||
Total liabilities |
| 1,187,637 |
| 1,293,236 |
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Minority interest |
| 5,246 |
| 4,440 |
| ||
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Stockholders’ equity: |
|
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Common stock issued (61,513,910 and 61,344,887 shares) |
| 6,151 |
| 6,134 |
| ||
Capital in excess of par value |
| 254,672 |
| 248,206 |
| ||
Retained income |
| 1,116,858 |
| 1,052,475 |
| ||
Other comprehensive income (loss) |
| (64,822 | ) | (97,497 | ) | ||
Treasury common stock (8,401,149 and 8,401,149 shares) |
| (250,344 | ) | (250,344 | ) | ||
Total stockholders’ equity |
| 1,062,515 |
| 958,974 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 2,255,398 |
| $ | 2,256,650 |
|
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
|
| Nine Months Ended |
| ||||
|
| 2003 |
| 2002 |
| ||
Cash flows from operating activities |
|
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Net income |
| $ | 108,979 |
| $ | 122,234 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
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Depreciation and amortization |
| 97,728 |
| 88,678 |
| ||
Minority interest in net income |
| 675 |
| 706 |
| ||
Stock award compensation |
| 8,180 |
| 11,366 |
| ||
Deferred income taxes |
| 17,404 |
| 7,748 |
| ||
Loss (income) of unconsolidated affiliated companies |
| (1,824 | ) | 539 |
| ||
Loss (gain) on sales of property and equipment |
| 180 |
| 948 |
| ||
Restructuring related activities |
| 7,188 |
|
|
| ||
Changes in working capital, net of effects of acquisitions |
| 5,547 |
| (14,821 | ) | ||
Net change in deferred charges and credits |
| (31,505 | ) | (12,275 | ) | ||
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Net cash provided by operating activities |
| 212,552 |
| 205,123 |
| ||
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Cash flows from investing activities |
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Additions to property and equipment |
| (76,137 | ) | (59,959 | ) | ||
Business acquisition adjustments, net of cash acquired |
| (1,185 | ) | (141,860 | ) | ||
Proceeds from sales of property and equipment |
| 298 |
| 547 |
| ||
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Net cash used in investing activities |
| (77,024 | ) | (201,272 | ) | ||
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Cash flows from financing activities |
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Change in long-term debt |
| (66,790 | ) | 64,143 |
| ||
Change in short-term debt |
| 1,372 |
| (3,667 | ) | ||
Cash dividends paid to stockholders |
| (44,596 | ) | (41,272 | ) | ||
Common stock recovered from business acquisition adjustment |
|
|
| (27 | ) | ||
Stock incentive programs |
| 213 |
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Net cash (used) provided in financing activities |
| (109,801 | ) | 19,177 |
| ||
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Effect of exchange rates on cash |
| 4,477 |
| 1,341 |
| ||
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Net increase in cash |
| 30,204 |
| 24,369 |
| ||
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Cash balance at beginning of year |
| 56,401 |
| 35,101 |
| ||
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Cash balance at end of period |
| $ | 86,605 |
| $ | 59,470 |
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