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TheStreet Open House

Bemis Company Reports Record Results For Third Quarter 2012

Stocks in this article: BMS

PRESENTATION OF NON-GAAP INFORMATIONThis press release refers to non-GAAP financial measures: adjusted operating profit, adjusted operating profit as a percentage of net sales, net debt to adjusted EBITDA, and adjusted diluted earnings per share. These non-GAAP financial measures adjust for factors that are unusual or unpredictable. These measures exclude the impact of certain amounts related to facility consolidation activities including employee-related costs, lease termination payments, accelerated depreciation, and the write-down of equipment. These measures also exclude acquisition-related expenses including transaction expenses, due diligence expenses, professional and legal fees, purchase accounting adjustments for inventory and order backlog, integration expenses, the cash portion of any acquisition earnout payments recorded as compensation expenses, changes in fair value of deferred acquisition payments, and goodwill and intangible asset impairment charges. This adjusted information should not be construed as an alternative to results determined in accordance with accounting principles generally accepted in the United States of America (GAAP). It is provided solely to assist in an investor's understanding of the impact of these items on the comparability of the Company's on-going business operations.

FORWARD LOOKING STATEMENTSStatements 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, including but not limited to future changes in cost or availability of raw materials, our ability to adjust selling prices, consumer buying patterns, changes in customer order patterns, the results of competitive bid processes, unexpected costs associated with plant closures and facility consolidation activities, a failure in our information technology infrastructure or applications, foreign currency fluctuations, changes in working capital requirements, changes in interest rates, changes in government regulations, and the availability and related cost of financing from banks and capital markets. 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, 2011.

INVESTOR CONFERENCE CALLBemis Company, Inc. will webcast an investor telephone conference regarding its third quarter 2012 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.” Listeners 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.

ABOUT BEMIS COMPANY, INC.Bemis Company, Inc. is a major supplier of flexible packaging and pressure sensitive materials used by leading food, consumer products, healthcare, and other companies worldwide. Founded in 1858, the Company is included in the S&P 500 index of stocks and reported 2011 net sales of $5.3 billion. The Company's flexible packaging business has a strong technical base in polymer chemistry, film extrusion, coating and laminating, printing, and converting. Headquartered in Neenah, Wisconsin, Bemis employs approximately 20,000 individuals worldwide. More information about the Company is available at our website, www.bemis.com.

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(in millions, except per share amounts)

(unaudited)

   
Three Months Ended Nine Months Ended
September 30, September 30,
2012     2011 2012     2011
Net sales $ 1,287.8 $ 1,357.9 $ 3,905.3 $ 4,052.5
Cost of products sold 1,040.7   1,134.2   3,193.9   3,361.0  
Gross Profit 247.1 223.7 711.4 691.5
Operating expenses:
Selling, general and administrative expenses 128.4 111.6 381.6 364.5
Research and development 10.2 10.6 31.5 28.2
Facility consolidation and other costs 21.4 49.4
Other operating (income) expense, net (2.8 ) (2.7 ) (12.3 ) (13.9 )
 
Operating Income 89.9 104.2 261.2 312.7
 
Interest expense 17.0 18.4 54.8 54.8
Other non-operating (income) expense, net (1.3 ) (1.4 ) (2.2 )  
 
Income before income taxes 74.2 87.2 208.6 257.9
 
Provision for income taxes 26.8   31.0   74.9   93.3  
 
Net income 47.4 56.2 133.7 164.6
 
Less: Net income attributable to noncontrolling interests   0.3     3.3  
 
Net income attributable to Bemis Company, Inc. $ 47.4   $ 55.9   $ 133.7   $ 161.3  
 
Basic earnings per share $ 0.46   $ 0.53   $ 1.28   $ 1.51  
 
Diluted earnings per share $ 0.45   $ 0.53   $ 1.27   $ 1.51  
 
Cash dividends paid per share $ 0.25 $ 0.24 $ 0.75 $ 0.72
 
Weighted average shares outstanding (including participating securities):
Basic 104.2 104.8 104.3 106.8
Diluted 104.9 105.3 105.0 107.2
 

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)

(unaudited)

   

September 30,

December 31,

2012

2011

ASSETS

 
Cash and cash equivalents $ 123.3 $ 109.8
Accounts receivable, net 687.5 665.4
Inventories 653.6 646.0
Prepaid expenses and other current assets 125.1   127.8  
Total current assets 1,589.5   1,549.0  
 
Property and equipment, net 1,364.8   1,440.9  
 
Goodwill 1,035.6 1,048.4
Other intangible assets, net 205.8 222.5
Deferred charges and other assets 81.2   59.6  
Total other long-term assets 1,322.6   1,330.5  
 
TOTAL ASSETS $ 4,276.9   $ 4,320.4  
 

LIABILITIES

 
Current portion of long-term debt $ 0.2 $ 13.4
Short-term borrowings 6.4 1.7
Accounts payable 407.3 415.8
Accrued salaries and wages 122.4 95.8
Accrued income and other taxes 34.9 23.9
Other current liabilities 126.9   131.4  
Total current liabilities 698.1 682.0
 
Long-term debt, less current portion 1,494.4 1,554.8
Deferred taxes 179.9 175.5
Other liabilities and deferred credits 286.9   326.0  
 
TOTAL LIABILITIES 2,659.3   2,738.3  
 

EQUITY

 
Bemis Company, Inc. shareholders’ equity:
Common stock issued (127.2 and 126.9 shares) 12.7 12.7
Capital in excess of par value 540.7 532.4
Retained earnings 1,887.3 1,832.9
Accumulated other comprehensive loss (117.9 ) (90.7 )
Common stock held in treasury (24.0 shares at cost) (705.2 ) (705.2 )
TOTAL EQUITY 1,617.6   1,582.1  
 
TOTAL LIABILITIES AND EQUITY $ 4,276.9   $ 4,320.4  
 

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions)

(unaudited)

 
Nine Months Ended
September 30,
2012   2011

Cash flows from operating activities

Net income $ 133.7 $ 164.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 157.2 166.7
Excess tax benefit from share-based payment arrangements (0.3 ) (1.2 )
Share-based compensation 13.1 13.5
Deferred income taxes (3.3 ) 15.7
Income of unconsolidated affiliated company (2.1 ) (2.1 )
Cash dividends received from unconsolidated affiliated company 4.3
Loss (gain) on sale of property and equipment 0.2 (0.5 )
Net facility consolidation and other costs 27.0
Changes in working capital, excluding effect of acquisitions (20.8 ) (117.0 )
Net change in deferred charges and credits (14.5 ) 6.5  
 
Net cash provided by operating activities 290.2   250.5  
 

Cash flows from investing activities

Additions to property and equipment (92.4 ) (92.2 )
Business acquisitions and adjustments, net of cash acquired (19.1 ) (102.7 )
Proceeds from sale of property and equipment 4.0   3.7  
 
Net cash used in investing activities (107.5 ) (191.2 )
 

Cash flows from financing activities

Proceeds from issuance of long-term debt 6.6
Repayment of long-term debt (313.6 ) (4.3 )
Net borrowing of commercial paper 222.5 316.0
Net borrowing of short-term debt 5.1 1.0
Cash dividends paid to shareholders (78.3 ) (76.8 )
Common stock purchased for the treasury (161.1 )
Purchase of subsidiary shares of noncontrolling interests (89.7 )
Excess tax benefit from share-based payment arrangements 0.3 1.2
Stock incentive programs and related tax withholdings (5.1 ) (4.0 )
 
Net cash used in financing activities (169.1 ) (11.1 )
 
Effect of exchange rates on cash and cash equivalents (0.1 ) (10.7 )
 
Net increase in cash and cash equivalents 13.5 37.5
 
Cash and cash equivalents balance at beginning of year 109.8   60.4  
 
Cash and cash equivalents balance at end of period $ 123.3   $ 97.9  
 

BEMIS COMPANY, INC. AND SUBSIDIARIES

OPERATING PROFIT AND PRETAX PROFIT

(in millions)

(unaudited)

   
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
Flexible Packaging operating profit $ 131.7 $ 117.4 $ 363.8 $ 350.0
Flexible Packaging facility consolidation and other costs (21.4 )   (49.3 )  
Net Flexible Packaging operating profit 110.3 117.4 314.5 350.0
 
Pressure Sensitive Materials operating profit 7.7   8.0   28.3   29.6  
 
Segment operating profit 118.0 125.4 342.8 379.6
 
General corporate expenses (28.1 ) (21.2 ) (81.6 ) (66.9 )
 
Operating income 89.9 104.2 261.2 312.7
 
Interest expense 17.0 18.4 54.8 54.8
 
Other non-operating (income) expense, net (1.3 ) (1.4 ) (2.2 )  
 
Income before income taxes $ 74.2   $ 87.2   $ 208.6   $ 257.9  
 

BEMIS COMPANY, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP DATA

(in millions, except per share amounts)

(unaudited)

   
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011

Reconciliation of GAAP to Non-GAAP Operating Profit and Operating Profit as a Percentage of Net Sales by Segment

 
Flexible Packaging
Net Sales $ 1,152.4   $ 1,216.1   $ 3,482.7   $ 3,614.2  
 
Operating Profit as reported 110.3 117.4 314.5 350.0
 
Non-GAAP adjustments:
Acquisition-related integration costs (1) 1.1 1.2 4.6 1.2
Facility consolidation and other costs (2) 21.4 49.3
Purchase accounting for inventory and order backlog (3)   0.5     0.5  
 
Operating Profit as adjusted $ 132.8   $ 119.1   $ 368.4   $ 351.7  
 
Operating Profit as a percentage of Net Sales
As Reported 9.6 % 9.7 % 9.0 % 9.7 %
As Adjusted 11.5 % 9.8 % 10.6 % 9.7 %
 
Pressure Sensitive Materials
Net Sales $ 135.4   $ 141.8   $ 422.6   $ 438.3  
 
Operating Profit as reported $ 7.7   $ 8.0   $ 28.3   $ 29.6  
 
Operating Profit as a percentage of Net Sales as reported 5.7 % 5.6 % 6.7 % 6.8 %
 

Reconciliation of GAAP to Non-GAAP Earnings per Share

 
Diluted earnings per share, as reported $ 0.45 $ 0.53 $ 1.27 $ 1.51
 
Non-GAAP adjustments per share, net of taxes:
Acquisition-related integration costs (1) 0.01 0.01 0.04 0.01
Facility consolidation and other costs (2) 0.14 0.32
Transaction related costs (4)   0.02     0.02  
 
Diluted earnings per share, as adjusted $ 0.60   $ 0.56   $ 1.63   $ 1.54  
 
(1)   Acquisition-related integration costs include earnout payments treated as compensation expense related to the Mayor Packaging acquisition.
(2) Facility consolidation and other costs includes employee-related costs, accelerated depreciation, write down of equipment and other costs related to the company's facility consolidation program.
(3) Expenses related to the purchase accounting impact of the fair value write-up of inventory and a charge for the fair value of the customer order backlog in the Mayor Packaging acquisition.
(4) Transaction related costs are related primarily to our acquisition of Mayor Packaging. These costs consist of legal, accounting, and other professional fees.




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