Bemis Company Reports Results for Second Quarter 2003; Earnings of $39 Million, or $0.72 Per Diluted Share.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--July 23, 2003 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 $0.72 per share for the second quarter ended June June: see month. 30, 2003, in line with the company's revised second quarter guidance and down 12 percent from the prior year's earnings of $0.82 per share. Second 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 increased 15 percent to a record $670 million from $585 million in the prior year. Excluding the impact of acquisitions made during 2002, net sales increased by 4 percent. "Changes in sales mix sales mix See product mix. significantly impacted our business during the second quarter," said Jeff Curler, Bemis Company President and Chief Executive Officer. "In our high barrier product line, customers implemented working capital initiatives that slowed sales. Lower volumes in our polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n product lines were driven by a number of factors, including weather related weakness in seasonal packaging needs for bottled water, ice cubes cubes See QQQ. , and lawn and garden markets. Our paper product line also experienced decreased sales in packaging for industrial end markets like cement cement, binding material used in construction and engineering, often called hydraulic cement, typically made by heating a mixture of limestone and clay until it almost fuses and then grinding it to a fine powder. , fertilizer fertilizer, organic or inorganic material containing one or more of the nutrients—mainly nitrogen, phosphorus, and potassium, and other essential elements required for plant growth. and chemicals." "This month, we have made decisions about our capacity needs and have started the process of closing three flexible packaging manufacturing facilities," said Curler. "This restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). effort will reduce fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). , take out monolayer mon·o·lay·er n. 1. A film or layer one molecule thick formed at the interface between water and either oil or air by a substance such as a partially esterified fatty acid that contains both hydrophobic and hydrophilic groups in the same film capacity, and direct production volume to more efficient facilities." BUSINESS SEGMENTS Flexible Packaging Flexible packaging, which represents 79 percent of total company net sales, reported net sales of $532 million in the second quarter, an increase of 16.6 percent compared to the same quarter in 2002. Excluding the impact of acquisitions, net sales increased about 3.5 percent. 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 second quarter was $70 million, down 9.2 percent from the second quarter of 2002. As a percentage of net sales, operating profit decreased to 13.1 percent from 16.9 percent a year ago. Increased raw material costs and competitive pricing pressures coupled with reduced production efficiencies in polyethylene and paper packaging product lines adversely impacted margins this quarter. In addition, pension expense has increased from 2002 levels, and increased sales from less profitable European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. plants reduced margins compared to last year. "Our high barrier product teams continue to do an outstanding job of introducing our new film technology to the marketplace, creating packages that offer superior performance to support our customers," said Curler. "While we are pleased with the unit volume growth in specific high barrier markets, we were disappointed to see margins decrease. We expect high barrier sales volume to increase sequentially during the third quarter as customer inventory adjustments are completed and normal order patterns are restored. "Our polyethylene packaging product line experienced a decrease in unit volume during the second quarter. While some decrease occurred as customers adjusted their order patterns in reaction to second quarter price increases, sales of bottled water overwrap, packaging for ice cubes, and packaging for lawn and garden products were lower than expected. Extruded polyethylene products continued to experience strong price competition and weak demand from industrial markets during the second quarter. We are taking the appropriate steps to reduce costs and improve production efficiencies by taking out capacity where it makes sense. "Paper packaging product orders from industrial market customers were also weaker in the second quarter, but we have seen improvement in the month of July July: see month. and expect sales during the third quarter to strengthen." In July 2003, the Company announced its intention to close three flexible packaging plants: Murphysboro, Illinois Murphysboro is a city in Jackson County, Illinois, United States. The population was 13,295 at the 2000 census. It is the county seat of Jackson CountyGR6. Geography Murphysboro is located at (37. ; Union City, California
Union City is a city in Alameda County, California, United States. As of the 2000 census, the city had a total population of 66,869 but the current population is about 70,300. ; and Prattville, Alabama Prattville is a city located in Autauga County, in the U.S. state of Alabama. As of 2006 Census Bureau estimates, the population of the city is 31,119.[1] The city is the county seat of Autauga County, Alabama. . The closure of these plants will reduce fixed costs and improve capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. elsewhere in the company. Preliminary estimates of restructuring and related charges associated with the plant closing activities range from $11 to $13 million, or $0.12 to $0.15 per diluted share, for the third quarter; $2 to $3 million, or $0.02 to $0.03 per diluted share, for the fourth quarter; and approximately $1 million in 2004. Pressure Sensitive Materials Second quarter net sales from the pressure sensitive materials business segment were $138 million, a 7.4 percent increase from the second quarter of 2002 primarily reflecting the benefits of translation of European currency. This segment contributed operating profit of $6.0 million or 4.3 percent of net sales for the quarter. These results are lower than the operating profit of $7.2 million or 5.6 percent of net sales recorded in the second quarter of 2002. On August 21, 2002, the Company announced an agreement to sell its pressure sensitive materials business segment to UPM-Kymmene for $420 million. The European regulatory agency regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. approved the transaction on October October: see month. 16, 2002. On April 15, 2003, the U.S. Department of Justice filed a civil complaint to block the proposed sale of this business to UPM-Kymmene, citing their concern that the sale would reduce competition in the production of bulk paper labelstock for use in variable information printing and prime labeling. The companies are awaiting the results of a hearing that was completed in mid-June n. 1. the middle part of June. Noun 1. mid-June - the middle part of June period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" related to the Department of Justice complaint. A decision is expected in the near future. Commenting on the results of the pressure sensitive materials business segment, Curler said, "This business continues to operate in a very competitive environment. The uncertainties of the pending transaction have hampered our ability to maximize our return in this business segment. If the court permits the transaction with UPM-Kymmene, it is our intent to close the transaction as soon as practical. If the court grants the Department of Justice an injunction injunction, in law, order of a court directing a party to perform a certain act or to refrain from an act or acts. The injunction, which developed as the main remedy in equity, is used especially where money damages would not satisfy a plaintiff's claim, or to to block our transaction, Bemis Bemis may refer to:
Capital Structure Total debt at June 30, 2003 was $692 million, compared to $724 million at December December: see month. 31, 2002. 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. of 37 percent at June 30, 2003 reflects an improvement from 40 percent at December 31, 2002 and 39 percent at March 31, 2003. Strong cash flow during the second quarter was used to reduce commercial paper outstanding. Selling, General and Administrative Expenses Selling, general and administrative expenses were $64.5 million or 9.6 percent of net sales for the second quarter of 2003 compared to $60.4 million or 10.3 percent of net sales for the comparable prior year period. Legal fees and associated costs of $2.5 million related to the ongoing efforts to complete the transaction with UPM-Kymmene were expensed during the second quarter of 2003. 2003 Earnings Outlook Bemis expects third quarter 2003 diluted earnings to range from $0.60 to $0.68 per share, including estimated restructuring and related charges of $0.12 to $0.15 per diluted share. For the full year 2003, management expects to deliver 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 in the $2.72 to $2.86 range, including restructuring and related charges ranging from $0.14 to $0.18 per diluted share. These estimates include a full year of operating results for the pressure sensitive materials business segment. Management continues to expect capital expenditures for 2003 to range from $110 to $120 million. These expenditures include investments in new high barrier product capacity that will position the Company to meet customer demand for new technology and achieve its objectives for sales and earnings growth in the future. Bemis Company, Inc. will Webcast an investor telephone conference regarding its second quarter 2003 financial results this morning at 10 a.m., Eastern Daylight Time. Individuals may listen to the call on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the 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 2002 net sales of $2.4 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 adhesive, substance capable of sticking to surfaces of other substances and bonding them to one another. The term adhesive cement is sometimes used in place of adhesive, especially when referring to a synthetic adhesive. technologies. Based in Minneapolis, Minnesota “Minneapolis” redirects here. For other uses, see Minneapolis (disambiguation). Minneapolis (pronounced IPA: /ˌmɪniˈæpəlɪs/) is the largest city in the U.S. , Bemis employs about 12,000 individuals in 56 manufacturing facilities in 10 countries around the world. More information about the company is available at our website, www.bemis.com. 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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " 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. 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, 2002.
BEMIS COMPANY, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
(in thousands, except per share amounts)
(unaudited)
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------
2003 2002 2003 2002
-------------------------------------------
Net sales $670,165 $584,774 $1,308,724 $1,137,451
Costs and expenses:
Cost of products sold 533,932 444,734 1,041,291 877,187
Selling, general and
administrative
expenses 64,489 60,438 130,319 115,523
Research and development 6,046 4,724 11,102 8,316
Interest expense 3,235 3,774 6,661 7,846
Other costs (income), net (1,211) (146) (1,704) 896
Minority interest in net
income 181 257 388 397
-------------------------------------------
Income before income taxes 63,493 70,993 120,667 127,286
Provision for income taxes 24,700 27,000 46,400 48,400
-------------------------------------------
Net income $38,793 $43,993 $74,267 $78,886
===========================================
Basic earnings per share
of common stock $.73 $.83 $1.40 $1.49
===========================================
Diluted earnings per share
of common stock $.72 $.82 $1.38 $1.47
===========================================
Cash dividends paid $0.28 $.26 $.56 $.52
===========================================
Weighted average common
shares outstanding 53,106 52,942 53,065 52,929
Weighted average common
shares and common stock
equivalents outstanding 53,829 53,773 53,818 53,688
BEMIS COMPANY, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED BALANCE SHEET
--------------------------
(dollars in thousands)
(unaudited)
----------------------------------------------------------------------
June 30, Dec 31,
ASSETS 2003 2002
------ -----------------------
Cash $85,556 $56,401
Accounts receivable, net 340,240 321,790
Inventories, net 325,114 308,344
Prepaid expenses 37,856 35,120
-----------------------
Total current assets 788,766 721,655
-----------------------
Property and equipment, net 907,415 909,953
Goodwill 451,280 448,009
Other intangible assets, net 73,773 76,176
Deferred charges and other assets 107,545 100,857
-----------------------
Total 632,598 625,042
-----------------------
TOTAL ASSETS $2,328,779 $2,256,650
=======================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current portion of long-term debt $1,017 $3,516
Short-term borrowings 6,605 1,714
Accounts payable 233,352 230,468
Accrued salaries and wages 62,847 71,610
Accrued income and other taxes 25,102 18,545
-----------------------
Total current liabilities 328,923 325,853
Long-term debt, less current portion 684,100 718,277
Deferred taxes 110,300 106,050
Deferred credits and other liabilities 149,660 143,056
-----------------------
Total liabilities 1,272,983 1,293,236
-----------------------
Minority interest 5,219 4,440
Stockholders' equity:
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 1,097,018 1,052,475
Other comprehensive income (loss) (56,920) (97,497)
Treasury common stock (8,401,149 and
8,401,149 shares) (250,344) (250,344)
-----------------------
Total stockholders' equity 1,050,577 958,974
-----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,328,779 $2,256,650
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BEMIS COMPANY, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(in thousands)
(unaudited)
----------------------------------------------------------------------
Six Months Ended
June 30,
---------------------
2003 2002
---------------------
Cash flows from operating activities
------------------------------------
Net income $74,267 $78,886
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 65,573 58,615
Minority interest in net income 388 397
Stock award compensation 6,177 7,792
Deferred income taxes 3,525 5,398
Loss (income) of unconsolidated affiliated
companies (688) 1,360
Loss (gain) on sales of property and equipment 141 404
Changes in working capital, net of effects of
acquisitions (14,963) (12,190)
Net change in deferred charges and credits 2,642 (8,650)
---------------------
Net cash provided by operating activities 137,062 132,012
---------------------
Cash flows from investing activities
------------------------------------
Additions to property and equipment (46,930) (32,645)
Business acquisition adjustments, net of cash
acquired (1,185) 62
Proceeds from sales of property and equipment 75 151
---------------------
Net cash used in investing activities (48,040) (32,432)
---------------------
Cash flows from financing activities
------------------------------------
Change in long-term debt (39,777) (56,317)
Change in short-term debt 2,229 (3,572)
Cash dividends paid to stockholders (29,724) (27,508)
Stock incentive programs 213
---------------------
Net cash used in financing activities (67,059) (87,397)
---------------------
Effect of exchange rates on cash 7,192 1,401
---------------------
Net increase in cash 29,155 13,584
Cash balance at beginning of year 56,401 35,101
---------------------
Cash balance at end of period $85,556 $48,685
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