Bemis Company Reports 2006 Results.Total Year Earnings per share increase 9.3 percent; Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. hits record high of $338 million NEENAH, Wis adv. 1. Certainly; really; indeed. v. t. 1. To think; to suppose; to imagine; - used chiefly in the first person sing. present tense, I wis. See the Note under Ywis. . -- Bemis Company Bemis Company, Inc. is an American manufacturer of flexible packaging products and pressure-sensitive materials, which are distributed worldwide. Bemis is part of the S&P 500 index. References
See: New York Stock Exchange :BMS BMS abbr. Bachelor of Marine Science ) today reported quarterly diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings of $0.39 per share for the fourth quarter ended December 31, 2006. Excluding the impact of $0.03 per share of restructuring and related charges, diluted earnings would have been $0.42 per share for the fourth quarter of 2006. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the full year 2006 were $1.65, a 9.3 percent increase from $1.51 per share reported in 2005. Excluding the effect of special items from 2005 and 2006 as described in the attached schedule, "Reconciliation of Non-GAAP Data," diluted earnings per share for the year ended December 31, 2006, would have increased by 17.8 percent. Commenting on the results of 2006, Jeff Curler, Bemis Company's Chairman, President and Chief Executive Officer, said, "We have accomplished a great deal in 2006. Sales and earnings growth are back on track. We have improved our cost structure with our 2006 restructuring activities. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses reached a record high. We have managed costs well and improved production efficiencies in 2006, and we have additional opportunities for cost improvement in 2007. More importantly, we are delivering new, innovative products to our customers and marketing our proprietary products on a global basis. Bemis is well positioned to participate in the growing global economies, and we are looking forward to expanding into new markets such as case-ready meat and pharmaceutical packaging." CONSOLIDATED RESULTS Quarter Ended December 31, 2006 Quarterly diluted earnings per share were $0.39 for the fourth quarter ended December 31, 2006. Results include a $0.03 per share impact from restructuring and related charges. Results for the quarter reflect a lower income tax rate attributable primarily to the final determination of the benefits provided under The American Jobs Creation Act of 2004. Quarterly diluted earnings per share were $0.42 for the fourth quarter ended December 31, 2005. In 2005, the year-end of the European subsidiary in our pressure sensitive materials business segment changed from November 30 to December 31, adding $0.02 per share to the results of the quarter. Results for the fourth quarter of 2005 also include the impact of additional tax expense of approximately $0.06 per share related to the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of international subsidiary earnings under The American Jobs Creation Act of 2004, partially offset by a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of $0.03 per share related to adjustments for the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of the Dixie Toga purchase accounting. (See attached schedule: "Reconciliation of Non-GAAP Data".) The effect of currency translation was not significant to either period. Bemis recorded fourth quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $900.6 million in 2006 compared to $892.0 million in the fourth quarter of 2005, a 1.0 percent increase. Excluding the impact of the 2005 change in year-end for a foreign subsidiary, net sales for the fourth quarter of 2006 would have increased by 3.8 percent. Currency translation increased net sales for the quarter by about 2.4 percent. Year Ended December 31, 2006 For the full year 2006, Bemis reported diluted earnings of $1.65 per share. This result includes restructuring and related charges of $0.18 per share. Earnings per share results for the full year 2005 totaled $1.51, including approximately $0.05 per share of tax charges related to the international earnings repatriation. (See attached schedule: "Reconciliation of Non-GAAP Data".) Excluding the impact of restructuring activities and special tax charges, earnings per share increased 17.8 percent in 2006. This year's net sales of $3.6 billion increased 4.8 percent over net sales in 2005 of $3.5 billion. Excluding the impact of the change in year-end of the European subsidiary included in 2005, net sales in 2006 increased 5.3 percent. The impact of currency translation was a benefit to net sales growth in 2006 of 1.8 percent. BUSINESS SEGMENTS Flexible Packaging Flexible packaging, which represented about 82 percent of total Company net sales during the quarter, reported net sales of $743.3 million in the fourth quarter, an increase of 3.2 percent compared to the same quarter in 2005. Currency effects accounted for sales growth of 2.0 percent. Segment operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the fourth quarter of 2006 was $83.6 million, or 11.2 percent of net sales, which included restructuring and related charges of $4.1 million. Restructuring and related charges reflect the costs associated with our previously announced facility consolidation and capacity reduction efforts. Segment operating profit for the fourth quarter of 2005 was $93.1 million, including a $5.4 million favorable impact related to the finalization of purchase accounting. (See attached schedule: "Reconciliation of Non-GAAP Data.") Excluding restructuring and related charges from 2006 and the purchase accounting adjustment from the fourth quarter of 2005, segment operating profit as a percentage of net sales would have decreased to 11.8 percent from 12.2 percent a year ago. Currency translation increased operating profit by $1.2 million in the fourth quarter of 2006. For the total year, net sales of flexible packaging increased 5.1 percent to $3.0 billion. Currency effects accounted for sales growth of 2.1 percent. Operating profit increased to $335.1 million, or 11.2 percent of net sales, including restructuring and related charges of $29.0 million. Excluding restructuring and related charges, total year segment operating profit would have been $364.1 million or 12.1 percent of net sales compared to $333.3 million, or 11.7 percent of net sales in 2005. The impact of currency translation was a $6.5 million benefit to operating profit for 2006. Commenting on the flexible packaging business segment results for the quarter, Curler said, "This year we reported healthy sales growth in nearly all of our flexible packaging markets. Total year operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: have improved, benefiting from restructuring related savings, improved cost management, enhanced production efficiencies and better sales mix sales mix See product mix. . The fourth quarter ended weaker than we had expected as orders and shipments slowed down during the month of December. We attribute slower orders to a sharp decline in energy prices, motivating some customers to delay orders in an attempt to obtain lower pricing. We also believe that slower shipping in December may reflect year-end inventory de-stocking by certain customers. We expect this weakness to be short-lived as customers begin to rebuild inventory levels to meet seasonally stronger demand for products early in 2007. In 2006, our product teams worked closely with customers to support their growth initiatives with value-added packaging that incorporates consumer convenience features and high performance film structures. In 2007, our customers will experience another strong year of new products from Bemis. We are expanding our product reach with the introduction of a broad array of new products and packaging features that will further strengthen our competitive position and improve sales mix." Pressure Sensitive Materials Fourth quarter net sales from the pressure sensitive materials business segment were $157.3 million. During the fourth quarter of 2005, the year-end of the European subsidiary in this segment was changed, creating a 13-month reporting period in 2005. Excluding the impact of the change in the reporting period during the fourth quarter of 2005, net sales for the fourth quarter of 2006 would have increased 6.8 percent from the prior year. Currency effects accounted for sales growth of 4.3 percent. Segment operating profit of $9.2 million or 5.8 percent of net sales compared to the fourth quarter of 2005 when segment operating profit was $14.7 million or 8.6 percent of net sales. Operating profit in the fourth quarter of 2005 included a restructuring gain of $0.5 million. Excluding the impact of the extra month included in 2005 and restructuring and related charges and gains from operating profit of both periods, operating profit would have been $9.2 million or 5.9 percent of net sales in the fourth quarter of 2006, compared to $11.0 million or 7.4 percent of net sales for the fourth quarter of 2005. The impact of currency translation was insignificant to fourth quarter operating profit in 2006. Operating profit was negatively impacted by higher raw material costs in the fourth quarter of 2006. For the total year, net sales of pressure sensitive materials were $639.3 million, a 3.4 percent increase from the net sales of 2005. Excluding the impact of the additional month of sales of the European subsidiary included in 2005, net sales in 2006 increased 6.6 percent, reflecting strong growth in each of the three product lines. Currency effects accounted for sales growth of 0.7 percent. Operating profit was $50.1 million or 7.8 percent of net sales in 2006, including restructuring and related charges of $1.0 million. This compares to operating profit of $41.3 million or 6.7 percent of net sales in 2005, which included restructuring and related gains of $1.5 million. Excluding the impact of restructuring and related activities from each year and the extra month of European subsidiary results in 2005, operating profit as a percent of net sales would have been 8.0 percent in 2006 and 6.5 percent in 2005. This profit improvement reflects the improved sales mix and effective cost management efforts during the year. The impact of currency translation was insignificant to operating profit in 2006. Commenting on the results of the pressure sensitive materials business segment, Curler noted, "This business continues to strengthen as we execute a growth strategy that incorporates customer-focused innovation with six sigma-driven manufacturing excellence. This year we have improved our competitive position in label products, and we're growing our value-added graphic and technical product lines. In 2007, we will be introducing new innovative products that will improve performance and reduce costs. We are adding capacity in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe for our higher margin graphic and technical product lines. Growth in these product lines will further improve profitability in this segment." Restructuring and Related Charges In January of 2006, the Company announced the planned closure of five flexible packaging facilities and one pressure sensitive materials facility in order to consolidate production capacity and improve overall cost structure and efficiency. These efforts were substantially complete as of December 31, 2006. Restructuring and related charges incurred during the fourth quarter totaled $5.7 million, of which $0.9 million primarily reflects accelerated depreciation Accelerated Depreciation Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. Notes: The straight-line depreciation method spreads the cost evenly over the life of an asset. and is recorded as a component of cost of products sold. The remaining $4.8 million primarily reflects employee-related costs and is recorded as a component of other costs (income). Other Costs (Income), Net For the fourth quarter of 2006, other costs and income primarily includes $4.8 million of costs resulting from the 2006 restructuring activities which are more than offset by $5.4 million of financial income. Capital Structure Total debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. was 33.0 percent at December 31, 2006, compared to 35.8 percent at December 31, 2005. Total debt as of December 31, 2006 was $789.8 million, a decrease of $54.3 million from the balance of $844.1 million at December 31, 2005. Effective December 31, 2006, Bemis adopted Statement of Financial Accounting Standards No. 158, "Accounting for Pensions," which had the effect of reducing stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. by $63.8 million and deferred taxes by $40.0 million. This adjustment increased the ratio of debt to total capitalization at December 31, 2006 by 1.2 percent. Cash flow from operating activities totaled a record $338.3 million in 2006, a 21 percent increase from 2005. Strong cash flows throughout 2006 were used to support increased dividend payments, a $158.8 million capital expenditures program, a $17.8 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, and $54.3 million of debt reduction. During the fourth quarter of 2006, Bemis made tax-deductible, voluntary pension contributions totaling $24.0 million to its U.S. pension plans. 2007 Earnings Outlook The 2006 initiatives that focused on quality-oriented cost reduction efforts and productivity initiatives to improve return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). are expected to continue to drive improved profitability in 2007. Bemis expects first quarter 2007 diluted earnings per share to be in the range of $0.44 to $0.46. The first quarter is historically the slowest sales volume quarter of the year for Bemis' markets. For the full year 2007, management expects diluted earnings per share to be in the $1.98 to $2.08 range. Capital Expenditures Total capital expenditures for 2006 were $158.8 million, considerably below the capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. levels of 2005 and the original estimate for 2006. This decrease reflects the timing of expenditures and a shift of spending into 2007. The expansion of Bemis' medical packaging capacity in North America, Northern Ireland Northern Ireland: see Ireland, Northern. Northern Ireland Part of the United Kingdom of Great Britain and Northern Ireland occupying the northeastern portion of the island of Ireland. Area: 5,461 sq mi (14,144 sq km). Population (2001): 1,685,267. and Malaysia is scheduled to be completed during 2007. In addition, investments in new capacity in high growth product lines will align production capacity with expected demand in 2007. Including the remaining capital spending for 2006 projects, capital expenditures for 2007 are anticipated to be in the $175 to $185 million range. Presentation of Non-GAAP Information Some of the information presented in this press release reflects adjustments to "As reported" results to exclude certain amounts related to the Company's restructuring initiative. This adjusted information should not be construed as an alternative to the reported results determined in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). It is provided solely to assist in an investor's understanding of the impact of the Company's restructuring initiative on the comparability of the Company's operations. A reconciliation of the GAAP amounts to the non-GAAP amounts is included with this press release. Additional details related to these non-GAAP disclosures are provided in the Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. that the Company filed with the Securities and Exchange Commission on the date of this press release. Forward Looking Statements Statements in this release that are not historical, including statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the expected future performance of the Company, are considered "forward-looking" and are presented pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995. Such content is subject to certain risks and uncertainties, including but not limited to future changes in cost or availability of raw materials, changes in customer order patterns, the timing of installation of new capacity, market acceptance of new products, the results of competitive bid processes, estimates of restructuring and related charges, foreign currency fluctuations and changes in prevailing market interest rates. Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. depending on a variety of factors which are detailed in the Company's regular SEC filings including the most recently filed Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005. Bemis Company, Inc. will Webcast an investor telephone conference regarding its fourth quarter 2006 financial results this morning at 10 a.m., Eastern Time. Individuals may listen to the call on the Internet at www.bemis.com under "Investor Relations Investor relations The process by which the corporation communicates with its investors. ." However, they are urged to check the website ahead of time to ensure their computers are configured con·fig·ure tr.v. con·fig·ured, con·fig·ur·ing, con·fig·ures To design, arrange, set up, or shape with a view to specific applications or uses: 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 2006 net sales of $3.6 billion. The Company's flexible packaging business has a strong technical base in polymer chemistry Polymer chemistry or macromolecular chemistry is a multidisciplinary science that deals with the chemical synthesis and chemical properties of polymers or macromolecules. , film extrusion, coating and laminating lam·i·nate v. lam·i·nat·ed, lam·i·nat·ing, lam·i·nates v.tr. 1. To beat or compress into a thin plate or sheet. 2. To divide into thin layers. 3. , printing and converting. The Company's pressure sensitive materials business specializes in adhesive technologies. Headquartered in Neenah, Wisconsin Neenah is a city on Lake Winnebago in Winnebago County, Wisconsin, United States. The population was 24,507 at the 2000 census. The city is surrounded by, but is politically independent of, the Town of Neenah. , Bemis employs about 16,000 individuals in 56 manufacturing facilities in 10 countries around the world. More information about the Company is available at our website, www.bemis.com. 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