0000011199-13-000018.txt : 20130506 0000011199-13-000018.hdr.sgml : 20130506 20130506163538 ACCESSION NUMBER: 0000011199-13-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20130331 FILED AS OF DATE: 20130506 DATE AS OF CHANGE: 20130506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEMIS CO INC CENTRAL INDEX KEY: 0000011199 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 430178130 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05277 FILM NUMBER: 13816545 BUSINESS ADDRESS: STREET 1: ONE NEENAH CENTER, 4TH FLOOR STREET 2: P.O. BOX 669 CITY: NEENAH STATE: WI ZIP: 54957-0669 BUSINESS PHONE: (920) 727-4100 MAIL ADDRESS: STREET 1: ONE NEENAH CENTER, 4TH FLOOR STREET 2: P.O. BOX 669 CITY: NEENAH STATE: WI ZIP: 54957-0669 10-Q 1 bms-2013331x10q.htm 10-Q BMS-2013.3.31-10Q


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
     
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 2013
 
Commission File Number 1-5277
 
BEMIS COMPANY, INC.
(Exact name of registrant as specified in its charter)
 
Missouri
 
43-0178130
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
 
 
One Neenah Center
 
 
4th Floor, P.O. Box 669
 
 
Neenah, Wisconsin
 
54957-0669
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code:  (920) 727-4100
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES   ý  NO  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES  ý  NO  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large accelerated filer x
 
Accelerated filer o
 
 
 
Non-accelerated filer o
 
Smaller reporting company o
(Do not check if a smaller reporting company)
 
 
 
Indicate by check mark whether the registrant is a shell company.  YES  o  NO  ý
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  As of April 30, 2013, the registrant had 102,891,508 shares of Common Stock, $0.10 par value, issued and outstanding.





Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains certain estimates, predictions, and other “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995, and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended).  Forward-looking statements are generally identified with the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “target,” “may,” “will,” “plan,” “project,” “should,” “continue,” or the negative thereof or other similar expressions, or discussion of future goals or aspirations, which are predictions of or indicate future events and trends and which do not relate to historical matters.  Such statements are based on information available to management as of the time of such statements and relate to, among other things, expectations of the business environment in which we operate, projections of future performance (financial and otherwise), including those of acquired companies, perceived opportunities in the market and statements regarding our mission and vision.  Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
 
Factors that could cause actual results to differ from those expected include, but are not limited to, general economic conditions caused by inflation, interest rates, consumer confidence, rates of unemployment and foreign currency exchange rates; global economic conditions, including the ongoing sovereign debt crisis and continued uncertainties in Europe; investment performance of assets in our pension plans; competitive conditions within our markets, including the acceptance of our new and existing products; customer contract bidding activity; threats or challenges to our patented or proprietary technologies; raw material costs, availability, and terms, particularly for polymer resins and adhesives; price changes for raw materials and our ability to pass these price changes on to our customers or otherwise manage commodity price fluctuation risks; unexpected energy surcharges; broad changes in customer order patterns; our ability to achieve expected cost savings associated with facility consolidation initiatives; a failure in our information technology infrastructure or applications; changes in governmental regulation, especially in the areas of environmental, health and safety matters, fiscal incentives, and foreign investment; unexpected outcomes in our current and future administrative and litigation proceedings; unexpected outcomes in our current and future tax proceedings; changes in domestic and international tax laws; costs associated with the pursuit of business combinations; unexpected costs associated with the integration of acquired businesses; unexpected costs and timing related to plant closings; changes in our labor relations; and the impact of changes in the world political environment including threatened or actual armed conflict.  These and other risks, uncertainties, and assumptions identified from time to time in our filings with the Securities and Exchange Commission, including without limitation, those described in our Annual Report on Form 10-K for the year ended December 31, 2012 and our quarterly reports on Form 10-Q, could cause actual future results to differ materially from those projected in the forward-looking statements.  In addition, actual future results could differ materially from those projected in the forward-looking statement as a result of changes in the assumptions used in making such forward-looking statement.


2



PART I — FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
 
The unaudited consolidated financial statements and related footnotes, enclosed as Exhibit 19 to this Form 10-Q (the Condensed Consolidated Financial Statements), are incorporated by reference into this Item 1.  In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the financial position and the results of operations as of and for the quarter ended March 31, 2013.
 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Three Months Ended March 31, 2013
 
Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements.
 
Three month review of results
 
Three Months Ended March 31,
(in millions, except per share amounts)
 
2013
 
2012
Net sales
 
$
1,255.0

 
100.0
 %
 
$
1,304.8

 
100.0
 %
Cost of products sold
 
1,013.2

 
80.7

 
1,073.8

 
82.3

Gross profit
 
241.8

 
19.3

 
231.0

 
17.7

 
 
 
 
 
 
 
 
 
Operating expenses
 
 

 
 

 
 

 
 

Selling, general, and administrative expenses
 
130.6

 
10.4

 
129.2

 
9.9

Research and development
 
11.3

 
0.9

 
10.9

 
0.8

Facility consolidation and other costs
 
9.3

 
0.7

 
8.3

 
0.6

Other operating (income) expense, net
 
(1.5
)
 
(0.1
)
 
(5.9
)
 
(0.5
)
Operating income
 
92.1

 
7.3

 
88.5

 
6.8

 
 
 
 
 
 
 
 
 
Interest expense
 
16.6

 
1.3

 
20.5

 
1.6

Other non-operating (income) expense, net
 
4.1

 
0.3

 
0.1

 

Income before income taxes
 
71.4

 
5.7

 
67.9

 
5.2

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
22.1

 
1.8

 
23.9

 
1.8

 
 
 
 
 
 
 
 
 
Net income
 
$
49.3

 
3.9
 %
 
$
44.0

 
3.4
 %
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
 

 
31.0
 %
 
 

 
35.2
 %
 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
0.47

 
 

 
$
0.42

 
 


Overview
 
Bemis Company, Inc. is a leading global manufacturer of packaging and pressure sensitive materials supplying a variety of markets.  Historically, about 65 percent of our total net sales are to customers in the food industry.  Sales of our packaging products are widely diversified among food categories and can be found in nearly every aisle of the grocery store.  Our emphasis on supplying packaging to the food industry has typically provided a more stable market environment for our U.S. Packaging and Global Packaging business segments, which accounted for approximately 89 percent of our net sales in 2012.  Our remaining net sales are from our Pressure Sensitive Materials business segment which, while diversified in end use products, is more exposed to economically sensitive end markets.
 

3



Market Conditions
 
The markets into which our products are sold are highly competitive.  Our leading market positions in packaging for perishable food and medical device products reflect our focus on value-added, proprietary products that provide food safety and sterility benefits.  We also manufacture products for which our technical know-how and economies of scale offer us a competitive advantage.  The primary raw materials for our business segments are polymer resins and films, paper, inks, adhesives, aluminum and chemicals.
 
Over the past several years, global economic conditions have been weak and prices of food products have increased.  While economic growth in Latin America and Asia has exceeded that of North America and Europe, the pace of growth in these regions has slowed over the past 12 months.  As a result, we have generally experienced a slowdown in demand in the various geographic regions in which we operate. 
 
Facility Consolidation
 
To improve efficiencies and reduce fixed costs, we initiated a facility consolidation program during the fourth quarter of 2011 and expanded the program in the second quarter of 2012. In total nine production facilities will be closed and most of the production from these facilities has been transferred to other facilities.  As of March 31, 2013, manufacturing operations had ceased at eight of these manufacturing facilities and the remaining closure is expected to be completed in the second quarter of 2013.  The most current estimate of the total cost of the programs is $141 million, which includes approximately $51 million in employee-related costs, approximately $49 million in fixed asset accelerated depreciation and write-downs, and approximately $41 million in other facility consolidation costs.
 
We recorded $9.3 million and $8.3 million of charges associated with the facility consolidation programs during the three months ended March 31, 2013 and 2012, respectively.  These costs have been recorded on the consolidated statement of income as facility consolidation and other costs.  We expect the remaining costs of approximately $25 million to be expensed during 2013.  Cash payments for these programs in the three months ended March 31, 2013 and 2012, respectively, totaled $10.8 million and $8.0 million.  Cash payments in the remainder of 2013 are expected to be approximately $40 million. 

 

Acquisitions
 
Australia and New Zealand Distributors
    
On August 22, 2012, we acquired flexible packaging businesses in Australia and New Zealand. The acquisition of these businesses supports our strategy to enhance our presence in the Asia Pacific region. The combined purchase price was approximately $19.1 million, subject to customary post-closing adjustments.



4



Results of Operations — First Quarter 2013
 
Consolidated Overview 
(in millions, except per share amounts)
 
2013
 
2012
Net sales
 
$
1,255.0

 
$
1,304.8

Net income
 
49.3

 
44.0

Diluted earnings per share
 
0.47

 
0.42

 
Net sales for the first quarter of 2013 decreased 3.8 percent from the same period of 2012. The impact of currency translation reduced net sales by 2.0 percent. Acquisitions increased first quarter 2013 net sales by an estimated 0.2 percent.  The remaining decrease in net sales reflects the impact of lower overall unit volume partially offset by higher selling prices.
 
Diluted earnings per share for the first quarter of 2013 were $0.47 compared to $0.42 reported in the same quarter of 2012.  Results for the first quarter of 2013 included $0.06 of charges associated with facility consolidation and other costs. Results for the first quarter of 2012 included a $0.05 charge associated with facility consolidation and other costs and $0.02 of charges associated with acquisition-related earnout and transaction payments.

U.S. Packaging Business Segment
(dollars in millions)
 
2013
 
2012
Net sales
 
$
746.0

 
$
765.1

Operating profit (See Note 11 to the Condensed Consolidated Financial Statements)
 
86.0

 
82.0

Operating profit as a percentage of net sales
 
11.5
%
 
10.7
%

U.S. Packaging net sales decreased 2.5 percent in the quarter ended March 31, 2013 compared to the same period of 2012.  Lower net sales in 2013 reflect generally lower unit sales volumes of packaging for certain non-barrier packaging, partially offset by increased unit sales volumes of packaging for products such as refrigerated foods where barrier technology is a requirement. Lower unit sales volume is partially attributable to the reduction of certain low margin sales in conjunction with the facility consolidation program. In addition, cooler weather in many parts of the United States this spring has delayed the start of the normally strong season for certain grocery products that we package.

Operating profit for the first quarter of 2013 was $86.0 million, or 11.5 percent of net sales, compared to $82.0 million, or 10.7 percent of net sales in 2012. Operating profit in 2013 and 2012 was negatively impacted by $9.4 million and $7.6 million of facility consolidation and other costs, respectively. The improved operating profit levels in 2013 primarily reflect the cost savings associated with facility consolidation activities which were completed in 2012.
  

Global Packaging Business Segment
(dollars in millions)
 
2013
 
2012
Net sales
 
$
368.5

 
$
394.4

Operating profit (See Note 11 to the Condensed Consolidated Financial Statements)
 
25.9

 
25.9

Operating profit as a percentage of net sales
 
7.0
%
 
6.6
%

Global Packaging net sales decreased 6.6 percent in the quarter ended March 31, 2013 compared to the same period of 2012.  Acquisitions increased net sales by approximately 0.7 percent, which was more than offset by a 6.5 percent decrease in net sales related to currency translation. Excluding the impact of acquisitions and currency translation, net sales decreased modestly reflecting the impact of lower unit sales volumes substantially offset by higher selling prices. Three low margin facilities in the global packaging business segment were closed during 2012 as part of the facility consolidation program.
 
    

5



Operating profit for the first quarter of 2013 was $25.9 million, or 7.0 percent of net sales, compared to $25.9 million, or 6.6 percent, of net sales in 2012. Operating profit in 2013 was positively impacted by $0.1 million related to facility consolidation and other costs and $0.5 million related to the reversal of accruals of acquisition-related earnout payments. The net effect of currency translation decreased operating profit during the first quarter of 2013 by $2.2 million. Operating profit for the first quarter of 2012 was negatively impacted by $0.7 million of facility consolidation costs and $1.7 million of acquisition-related earnout payments.


Pressure Sensitive Materials Business Segment
(in millions)
 
2013
 
2012
Net sales
 
$
140.5

 
$
145.3

Operating profit (See Note 11 to the Condensed Consolidated Financial Statements)
 
7.7

 
9.7

Operating profit as a percentage of net sales
 
5.5
%
 
6.7
%
 
Pressure Sensitive Materials net sales decreased 3.3 percent in the first quarter of 2013 compared to the same quarter of 2012.  The impact of currency translation increased net sales by 0.3 percent. Higher unit sales volumes of label products substantially offset lower unit volumes for both graphic and technical products, resulting in a less favorable sales mix and lower operating profit margins during the quarter. The sales declines are primarily related to continuing weakness in the European market.
 
 
Consolidated Gross Profit
(in millions)
 
2013
 
2012
Gross profit
 
$
241.8

 
$
231.0

Gross profit as a percentage of net sales
 
19.3
%
 
17.7
%
 
Consolidated gross profit as a percent of net sales increased in the first quarter of 2013, reflecting the benefits of cost reductions associated with facility consolidation and other costs activities, increases in selling prices and improvements in raw material cost management.
 

Consolidated Selling, General, and Administrative Expenses
(in millions)
 
2013
 
2012
Selling, general and administrative expenses (SG&A)
 
$
130.6

 
$
129.2

SG&A as a percentage of net sales
 
10.4
%
 
9.9
%
 
Consolidated selling, general and administrative expenses reflect inflationary increases partially offset by the impact of currency translation. The increase in SG&A as a percentage of net sales is primarily due to the decline in net sales.


Consolidated Other Operating (Income) Expense, Net
(in millions)
 
2013
 
2012
Other operating (income) expense, net
 
$
(1.5
)
 
$
(5.9
)
 
For the first quarter of 2013, other operating income and expense included $2.9 million of fiscal government incentive income, compared to $5.2 million for the first quarter of 2012. Fiscal government incentives are associated with net sales and manufacturing activities in certain Brazilian operations and are included in global packaging segment operating profit. The decrease in fiscal incentive income reflects lower sales volumes as well as reductions of available fiscal incentives.

 

6



Consolidated Interest Expense
(in millions)
 
2013
 
2012
Interest expense
 
$
16.6

 
$
20.5

Effective interest rate
 
4.5
%
 
5.2
%
 
Fixed-rate public notes totaling $300 million matured on April 1, 2012 and have been refinanced with variable-rate borrowings, reducing both the effective interest rate and the interest expense in the first quarter of 2013 compared to the same quarter of 2012.
 

Other Non-operating (Income) Expense, Net
(in millions)
 
2013
 
2012
Other non-operating (income) expense, net
 
$
4.1

 
$
0.1

 
We recognized $4.5 million of expense in 2013 for the write-off of indemnification receivables as the offsetting tax liability was reversed in the first quarter (see below). These equal and offsetting items had no impact on operating profit, net income or earnings per share.
    

Consolidated Income Taxes
(in millions)
 
2013
 
2012
Income taxes
 
$
22.1

 
$
23.9

Effective tax rate
 
31.0
%
 
35.2
%
 
The effective tax rate for the quarter was 31.0 percent. During the quarter, a $4.5 million tax benefit was recognized for the reversal of non-U.S. tax liabilities that were assumed in a past acquisition. We also recognized an equal amount of non-operating expense for the write-off of related receivables (see above). These equal and offsetting items had no impact on operating profit, net income or earnings per share. We expect the effective income tax rate for the remaining quarters of 2013 to be approximately 35.3 percent.


Liquidity and Capital Resources
 
Net Debt to Total Capitalization
 
Net debt to total capitalization (which includes total debt net of cash balances divided by total debt net of cash balances plus equity) was 45.8 percent and 44.4 percent at March 31, 2013 and December 31, 2012, respectively.  Total debt as of March 31, 2013 and December 31, 2012 was $1.6 billion and $1.4 billion, respectively.
 
Cash Flow
 
Net cash provided by operating activities was $8.4 million for the first three months of 2013, compared to $48.8 million for the first three months of 2012. Increased levels of working capital at the end of the quarter reflect generally higher inventory levels in anticipation of increased shipments during the seasonally strong second quarter. In addition, cooler weather in many parts of the United States this spring has delayed the start of the normally strong season for certain grocery products that we package, resulting in higher inventory levels.  

Net cash used in investing activities was $26.7 million for the first three months of 2013, compared to $22.4 million for the same period of 2012


7



Net cash provided by financing activities was $53.8 million for the first three months of 2013, compared to $23.5 million cash used in financing activities for the same period of 2012. Net cash provided by financing activities for the first three months of 2013 included a $129.2 million increase in commercial paper outstanding, partially offset by the purchase of 1.0 million shares of our common stock for $35.6 million.
   
Available Financing
 
In addition to using cash provided by operating activities, we issue commercial paper to meet our short-term liquidity needs.  As of March 31, 2013, our commercial paper debt outstanding was $333.0 million.  Based on our current credit rating, we enjoy ready access to the commercial paper markets.
 
Under the terms of our revolving credit agreement, we have the capacity to borrow up to $800 million.  This facility is principally used as back-up for our commercial paper program.  Our revolving credit facility is supported by a group of major U.S. and international banks.  Covenants imposed by the revolving credit facility include limits on the sale of businesses, minimum net worth calculations, and a maximum ratio of debt to total capitalization.  The revolving credit agreement includes a $100 million multicurrency limit to support the financing needs of our international subsidiaries.  As of March 31, 2013, there was $333.0 million of debt outstanding supported by this credit facility, leaving $467.0 million of available credit.  If we were not able to issue commercial paper, we would expect to meet our financial liquidity needs by accessing the bank market, which would increase our borrowing costs.  Borrowings under the credit agreement are subject to a variable interest rate.

Liquidity Outlook
 
We expect cash flow from operations and available liquidity described above to be sufficient to support future operating activities.  There can be no assurance, however, that the cost or availability of future borrowings will not be impacted by future capital market disruptions.  In addition, increases in raw material costs would increase our short-term liquidity needs.
 
Dividends
 
In February 2013, the Board of Directors approved the 30th consecutive annual increase in the quarterly cash dividend on common stock to $0.26 per share, a 4.0 percent increase.


New Accounting Pronouncements
 
There has been no new accounting guidance issued or effective during the first three months of 2013 that is expected to have a material impact on our consolidated financial position, results of operations, or cash flows.
 
Critical Accounting Estimates and Judgments
 
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).  The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.  On an ongoing basis, management evaluates its estimates and judgments, including those related to retirement benefits, intangible assets, goodwill, and expected future performance of operations.  Our estimates and judgments are based on historical experience and on various other factors that are believed to be reasonable under the circumstances.  Actual results may differ from these estimates under different assumptions or conditions.  These critical accounting estimates are discussed in detail in “Management’s Discussion and Analysis — Critical Accounting Estimates and Judgments” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
 
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
There have been no material changes in the Company’s market risk during the three month period ended March 31, 2013.  For additional information, refer to Note 3 and Note 4 to the Condensed Consolidated Financial Statements in Exhibit 19 and to Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
 


8



ITEM 4.  CONTROLS AND PROCEDURES
 
The Company’s management, under the direction, supervision, and involvement of the Chief Executive Officer and the Chief Financial Officer, has carried out an evaluation, as of the end of the period covered by this report, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) of the Company.  Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that disclosure controls and procedures in place at the Company are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As previously disclosed in prior periods, we are in the process of implementing a new enterprise resource planning (ERP) system which is being completed in phases. For the most recent phase, which was completed during the first quarter of 2013, several of the Company’s operations implemented certain modules of the new ERP system which resulted in some changes in internal controls. There were no other changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 


9



PART II — OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS
 
The material set forth in Note 10 of the Notes to Condensed Consolidated Financial Statements is incorporated herein by reference.
 
ITEM 1A.  RISK FACTORS
 
Information about our risk factors is contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. We believe that at March 31, 2013 there has been no material change to this information.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
 
 
(a)
 
(b)
 
(c)
 
(d)
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
January 1 - 31, 2013
 
549,800

 
$
34.79

 
549,800

 
 
February 1 - 28, 2013
 
425,997

 
36.57

 
425,997

 
 
March 1 - 31, 2013
 
24,203

 
37.12

 
24,203

 
 
 
 
 
 
 
 
 
 
 
Total
 

 
35.60

 
1,000,000

 
3,543,800

    
During the first quarter, the Company repurchased 1,000,000 shares of Bemis common stock in the open market at an average purchase price of $35.60 per share. On November 4, 2010, the Board of Directors increased the authority to repurchase the Company's common stock to a total of ten million shares. As of March 31, 2013, under authority granted by the Board of Directors, the Company had authorization to repurchase an additional 3,543,800 shares of its common stock.
 
ITEM 6.  EXHIBITS
 
The Exhibit Index is incorporated herein by reference.
 

10



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
BEMIS COMPANY, INC.
 
 
 
Date
May 6, 2013
 
/s/ Scott B. Ullem
 
 
 
Scott B. Ullem, Vice President and Chief Financial Officer
 
 
 
 
Date
May 6, 2013
 
/s/ Jerry S. Krempa
 
 
Jerry S. Krempa, Vice President and Controller


11



Exhibit Index
 
Pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), we have filed certain agreements as exhibits to this Quarterly Report on Form 10-Q.  These agreements may contain representations and warranties by the parties thereto.  These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments, which may not be fully reflected in our public disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors.  Accordingly, these representations and warranties may not describe our actual state of affairs at the date hereof and should not be relied upon.
 
Exhibit
 
Description
 
Form of Filing
3(a)
 
Restated Articles of Incorporation of the Registrant, as amended. (1)
 
Incorporated by Reference
3(b)
 
By-Laws of the Registrant, as amended through November 26, 2012. (2)
 
Incorporated by Reference
4(a)
 
Form of Indenture dated as of June 15, 1995, between the Registrant and U.S. Bank Trust National Association (formerly known as First Trust National Association), as Trustee. Copies of constituent instruments defining rights of holders of long-term debt of the Company and Subsidiaries, other than the Indenture specified herein, are not filed herewith, pursuant to Instruction (b)(4)(iii)(A) to Item 601 of Regulation S-K, because the total amount of securities Authorized under any such instrument does not exceed 10% of the total assets of the Company and Subsidiaries on a consolidated basis. The registrant hereby agrees that it will, upon request by the SEC, furnish to the SEC a copy of each such instrument. (3)
 
Incorporated by Reference
10
 
Amendment No. 1 to Credit Agreement (4)
 
Incorporated by Reference
19
 
Reports Furnished to Security Holders.
 
Filed Electronically
31.1
 
Rule 13a-14(a)/15d-14(a) Certification of CEO.
 
Filed Electronically
31.2
 
Rule 13a-14(a)/15d-14(a) Certification of CFO.
 
Filed Electronically
32
 
Section 1350 Certification of CEO and CFO.
 
Filed Electronically
101
 
Interactive data files.
 
Filed Electronically

(1)
Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 (File No. 1-5277).
(2)
Incorporated by reference to the Registrant’s Form 8-K filed November 26, 2012 (File No. 1-5277).
(3)
Incorporated by reference to the Registrant’s Current Report on Form 8-K dated June 30, 1995 (File No. 1-5277).
(4)
Incorporated by reference to the Registrant’s Current Report on Form 8-K dated May 3, 2012 (File No. 1-5277).



12
EX-19 2 bms-2013331x10qxexx19.htm EXHIBIT 19 BMS-2013.3.31-10Q-Ex-19
Exhibit 19
FINANCIAL STATEMENTS - UNAUDITED

BEMIS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share amounts) 



 
Three Months Ended
 
March 31,
 
2013
 
2012
Net sales
$
1,255.0

 
$
1,304.8

Cost of products sold
1,013.2

 
1,073.8

Gross profit
241.8

 
231.0

 
 
 
 
Operating expenses:
 

 
 

Selling, general and administrative expenses
130.6

 
129.2

Research and development
11.3

 
10.9

Facility consolidation and other costs
9.3

 
8.3

Other operating (income) expense, net
(1.5
)
 
(5.9
)
 
 
 
 
Operating income
92.1

 
88.5

 
 
 
 
Interest expense
16.6

 
20.5

Other non-operating (income) expense, net
4.1

 
0.1

 
 
 
 
Income before income taxes
71.4

 
67.9

 
 
 
 
Provision for income taxes
22.1

 
23.9

 
 
 
 
Net income
$
49.3

 
$
44.0

 
 
 
 
Basic earnings per share
$
0.48

 
$
0.42

 
 
 
 
Diluted earnings per share
$
0.47

 
$
0.42

 
 
 
 
Cash dividends paid per share
$
0.26

 
$
0.25

 
 
 
 
 
See accompanying notes to consolidated financial statements.


1

BEMIS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions) 


 
 
Three Months Ended
 
 
March 31
 
 
2013
 
2012
Net income
 
$
49.3

 
$
44.0

Other comprehensive income:
 
 
 
 
Unrecognized gain reclassified to earnings, net of tax
 

 
(0.1
)
Translation adjustments
 
8.4

 
35.9

Pension and other postretirement liability adjustments, net of tax of $2.6 and $3.7, respectively
 
4.2

 
6.5

Other comprehensive income
 
12.6

 
42.3

Total comprehensive income
 
$
61.9

 
$
86.3


See accompanying notes to consolidated financial statements.



2

BEMIS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)


 
March 31, 2013
 
December 31, 2012
ASSETS
 

 
 

 
 
 
 
Cash and cash equivalents
$
152.7

 
$
114.1

Accounts receivable, net
709.7

 
645.2

Inventories
698.0

 
661.9

Prepaid expenses and other current assets
105.7

 
103.8

Total current assets
1,666.1

 
1,525.0

Property and equipment, net
1,330.9

 
1,351.3

Goodwill
1,038.6

 
1,034.3

Other intangible assets, net
198.1

 
201.2

Deferred charges and other assets
71.7

 
73.9

Total other long-term assets
1,308.4

 
1,309.4

 
 
 
 
TOTAL ASSETS
$
4,305.4

 
$
4,185.7

 
 
 
 
LIABILITIES
 

 
 

 
 
 
 
Current portion of long-term debt
$
0.2

 
$
0.3

Short-term borrowings
8.4

 
8.6

Accounts payable
406.6

 
382.1

Accrued salaries and wages
88.5

 
107.9

Accrued income and other taxes
45.4

 
34.3

Other current liabilities
92.5

 
109.8

Total current liabilities
641.6

 
643.0

 
 
 
 
Long-term debt, less current portion
1,542.8

 
1,417.6

Deferred taxes
207.9

 
198.3

Other liabilities and deferred credits
281.9

 
285.9

Total liabilities
2,674.2

 
2,544.8

 
 
 
 
EQUITY
 

 
 

 
 
 
 
Bemis Company, Inc. shareholders’ equity:
 

 
 

Common stock issued (127.8 and 127.2 shares, respectively)
12.8

 
12.7

Capital in excess of par value
536.2

 
545.4

Retained earnings
1,923.3

 
1,900.9

Accumulated other comprehensive loss
(100.3
)
 
(112.9
)
Common stock held in treasury (25.0 and 24.0 shares at cost, respectively)
(740.8
)
 
(705.2
)
Total equity
1,631.2

 
1,640.9

 
 
 
 
TOTAL LIABILITIES AND EQUITY
$
4,305.4

 
$
4,185.7

 
See accompanying notes to consolidated financial statements.

3

BEMIS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions) 

 
Three Months Ended
 
March 31,
 
2013
 
2012
Cash flows from operating activities
 

 
 

Net income
$
49.3

 
$
44.0

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation and amortization
49.2

 
55.0

Excess tax expense from share-based payment arrangements

 
0.2

Share-based compensation
4.5

 
4.9

Deferred income taxes
5.8

 
2.4

Income of unconsolidated affiliated company
(0.6
)
 
(0.7
)
Loss (gain) on sale of property and equipment
0.2

 
(0.3
)
Net facility consolidation and other costs
(1.7
)
 
0.3

Changes in working capital, excluding effect of acquisitions
(100.7
)
 
(62.4
)
Net change in deferred charges and credits
2.4

 
5.4

 
 
 
 
Net cash provided by operating activities
8.4

 
48.8

 
 
 
 
Cash flows from investing activities
 

 
 

Additions to property and equipment
(27.2
)
 
(23.7
)
Business acquisitions and adjustments, net of cash acquired
0.2

 

Proceeds from sale of property and equipment
0.3

 
1.3

 
 
 
 
Net cash used in investing activities
(26.7
)
 
(22.4
)
 
 
 
 
Cash flows from financing activities
 

 
 

Repayment of long-term debt

 
(1.1
)
Net borrowing of commercial paper
129.2

 
4.5

Net borrowing of short-term debt
0.1

 
1.0

Cash dividends paid to shareholders
(27.2
)
 
(26.1
)
Common stock purchased for the treasury
(35.6
)
 

Excess tax expense from share-based payment arrangements

 
(0.2
)
Stock incentive programs and related tax withholdings
(12.7
)
 
(1.6
)
 
 
 
 
Net cash provided by (used in) financing activities
53.8

 
(23.5
)
 
 
 
 
Effect of exchange rates on cash and cash equivalents
3.1

 
0.3

 
 
 
 
Net increase in cash and cash equivalents
38.6

 
3.2

 
 
 
 
Cash and cash equivalents balance at beginning of year
114.1

 
109.8

 
 
 
 
Cash and cash equivalents balance at end of period
$
152.7

 
$
113.0


See accompanying notes to consolidated financial statements.

4

BEMIS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(in millions) 



 
Common
Stock
 
Capital In
Excess of
Par Value
 
Retained
Earnings
 
Accumulated Other Comprehensive Loss
 
Common
Stock Held
In Treasury
 
Total
Balance at December 31, 2011
$
12.7

 
$
532.4

 
$
1,832.9

 
$
(90.7
)
 
$
(705.2
)
 
$
1,582.1

 
 
 
 
 
 
 
 
 
 
 
 
Net income
 

 
 

 
44.0

 
 

 
 

 
44.0

Other comprehensive income
 

 
 

 
 

 
42.3

 
 

 
42.3

Cash dividends declared on common stock
 

 
 

 
(26.5
)
 
 

 
 

 
(26.5
)
Stock incentive programs and related tax withholdings (0.1 shares)


 
(1.6
)
 
 

 
 

 
 

 
(1.6
)
Tax shortfall expense from share-based payment arrangements
 

 
(0.2
)
 
 

 
 

 
 

 
(0.2
)
Share-based compensation
 

 
4.9

 
 

 
 

 
 

 
4.9

 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2012
$
12.7

 
$
535.5

 
$
1,850.4

 
$
(48.4
)
 
$
(705.2
)
 
$
1,645.0

 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2012
$
12.7

 
$
545.4

 
$
1,900.9

 
$
(112.9
)
 
$
(705.2
)
 
$
1,640.9

 
 
 
 
 
 
 
 
 
 
 
 
Net income
 

 
 

 
49.3

 
 

 
 

 
49.3

Other comprehensive income
 

 
 

 
 

 
12.6

 
 

 
12.6

Cash dividends declared on common stock
 

 
 

 
(26.9
)
 
 

 
 

 
(26.9
)
Stock incentive programs and related tax withholdings (0.6 shares)
0.1

 
(12.8
)
 
 

 
 

 
 

 
(12.7
)
Tax shortfall expense from share-based payment arrangements
 

 
(0.9
)
 
 

 
 

 
 

 
(0.9
)
Share-based compensation
 

 
4.5

 
 

 
 

 
 

 
4.5

Purchase of 1.0 shares of common stock for the treasury
 
 
 
 
 
 
 
 
(35.6
)
 
(35.6
)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2013
$
12.8

 
$
536.2

 
$
1,923.3

 
$
(100.3
)
 
$
(740.8
)
 
$
1,631.2


See accompanying notes to consolidated financial statements.

5

BEMIS COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Note 1 — Basis of Presentation
 
The accompanying unaudited consolidated financial statements have been prepared by Bemis Company, Inc. (the "Company") in accordance with accounting principles for interim financial information generally accepted in the United States 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 operations.  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.  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, 2012.
 

Note 2 — Facility Consolidation and Other Costs
 
2011 Program
 
During the fourth quarter of 2011, the Company initiated a facility consolidation and other costs program (“2011 Program”) to improve efficiencies and reduce fixed costs.  As a part of this program, the Company announced the planned closure of five facilities. As of March 31, 2013, manufacturing operations had ceased at four of these manufacturing facilities.  Most of the production from these five facilities has been transferred to other facilities.  The total estimated 2011 Program costs are approximately $91 million including $33 million in employee costs, $32 million in fixed asset accelerated depreciation and write-downs, and $26 million in other facility consolidation costs.  These amounts exclude any potential gain to be recognized on the sale of property. Expenses in the first quarter of 2013 were $5.9 million, primarily consisting of equipment relocation ($3.2 million) and accelerated depreciation ($1.0 million). The estimated 2011 Program costs by reportable segment follow: 
(in millions)
 
U.S. Packaging
 
Global Packaging
 
Pressure Sensitive
 
Corporate
 
Total Facility
Consolidation and Other Costs
2011 net expense accrued
 
$
26.3

 
$
8.6

 
$
2.7

 
$
0.8

 
$
38.4

2012 net expense accrued
 
29.4

 
5.0

 

 

 
34.4

2013 year-to-date net expense accrued
 
5.9

 

 

 

 
5.9

Expense incurred through March 31, 2013
 
61.6

 
13.6

 
2.7

 
0.8

 
78.7

Estimated future expense
 
12.4

 

 

 

 
12.4

Total estimated costs
 
$
74.0

 
$
13.6

 
$
2.7

 
$
0.8

 
$
91.1

 
An analysis of the 2011 Program accruals follows: 
(in millions)
 
Employee Costs
 
Fixed
Asset Related
 
Other Costs
 
Total Facility
Consolidation and Other Costs
Reserve balance at December 31, 2012
 
$
14.6

 
$

 
$

 
$
14.6

Net expense accrued
 
1.1

 
0.8

 
4.0

 
5.9

Utilization (cash payments or otherwise settled)
 
(3.1
)
 
(0.8
)
 
(4.0
)
 
(7.9
)
Translation adjustments and other
 
(0.2
)
 

 

 
(0.2
)
Reserve balance at March 31, 2013
 
$
12.4

 
$

 
$

 
$
12.4

 

6


2012 Program
 
During the second quarter of 2012, the Company expanded its facility consolidation and other costs program (“2012 Program”) to further improve efficiencies and reduce costs within its U.S. and Global Packaging segments.  As a part of this program, the Company announced the planned closure of an additional four production locations, including three facilities outside of the United States, and the relocation of the majority of the production to other facilities. As of March 31, 2013, manufacturing operations had ceased at all of these manufacturing facilities.  The total estimated 2012 Program costs of approximately $50 million include $18 million in employee-related costs, $17 million in fixed asset accelerated depreciation and write-downs, and $15 million in other facility consolidation costs.  Expenses in the first quarter of 2013 were $3.4 million, which is net of a $1.4 million gain on the sale of equipment which occurred during the first quarter. Expenses in 2013 consisted primarily of equipment relocation ($2.0 million) and accelerated depreciation ($0.8 million). The estimated 2012 Program costs by reportable segment follow: 
(in millions)
 
U.S. Packaging
 
Global Packaging
 
Total Facility
Consolidation and Other Costs
2012 net expense accrued
 
$
12.7

 
$
21.6

 
$
34.3

2013 year-to-date net expense accrued
 
3.5

 
(0.1
)
 
3.4

Expense incurred through March 31, 2013
 
16.2

 
21.5

 
37.7

Estimated future expense
 
7.9

 
4.7

 
12.6

Total estimated costs
 
$
24.1

 
$
26.2

 
$
50.3

 
An analysis of the 2012 Program accruals follows:
(in millions)
 
Employee Costs
 
Fixed
Asset Related
 
Other Costs
 
Total Facility
Consolidation and Other Costs
Reserve balance at December 31, 2012
 
$
10.0

 
$

 
$
0.1

 
$
10.1

Expense accrued
 
0.9

 
0.3

 
2.9

 
4.1

Utilization (cash payments or otherwise settled)
 
(2.0
)
 
(0.4
)
 
(2.9
)
 
(5.3
)
Translation adjustments and other
 
(0.8
)
 

 

 
(0.8
)
Reserve balance at March 31, 2013
 
$
8.1

 
$
(0.1
)
 
$
0.1

 
$
8.1

 
Cash payments for these facility consolidation programs in the three months ended March 31, 2013 and 2012 totaled $10.8 million and $8.0 million, respectively.  Cash payments in 2013 are net of proceeds of $1.4 million received for the sale of equipment. Cash payments for the balance of 2013 are expected to be approximately $40 million.  These amounts exclude any potential cash proceeds to be received on the sale of property. The costs related to facility consolidation activities have been recorded on the consolidated statement of income as facility consolidation and other costs. Included in employee-related costs is a partial withdrawal liability provision which represents the Company’s best estimate for the cost to exit a multiemployer pension plan.  The accruals related to facility consolidation activities have been recorded on the consolidated balance sheet as other current liabilities.



7


Note 3 — Financial Assets and Financial Liabilities Measured at Fair Value
 
The fair values of the Company’s financial assets and financial liabilities listed below reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price).
 
The Company’s non-derivative financial instruments include cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings, and long-term debt.  At March 31, 2013 and December 31, 2012, the carrying value of these financial instruments, excluding long-term debt, approximates fair value because of the short-term maturities of these instruments.
 
Fair value disclosures are classified based on the fair value hierarchy.  Level 1 fair value measurements represent exchange-traded securities which are valued at quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date.  Level 2 fair value measurements are determined using input prices that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.  Level 3 fair value measurements are determined using unobservable inputs, such as internally developed pricing models for the asset or liability due to little or no market activity for the asset or liability.
 
The fair value measurements of the Company’s long-term debt, including current maturities, represent non-active market exchange-traded securities which are valued at quoted prices or using input prices that are directly observable or indirectly observable through corroboration with observable market data.  The carrying values and estimated fair values of long-term debt, including current maturities, at March 31, 2013 and December 31, 2012 follow:
 
 
 
March 31, 2013
 
December 31, 2012
(in millions)
 
Carrying Value
 
Fair Value (Level 2)
 
Carrying Value
 
Fair Value (Level 2)
Total long-term debt
 
$
1,542.7

 
$
1,686.3

 
$
1,417.5

 
$
1,561.2

 
The fair values for derivatives are based on inputs other than quoted prices that are observable for the asset or liability.  These inputs include interest rates.  The financial assets and financial liabilities are primarily valued using standard calculations / models that use as their basis readily observable market parameters.  Industry standard data providers are the primary source for forward and spot rate information for both interest rates and currency rates, with resulting valuations periodically validated through third-party or counterparty quotes.
 
 
 
Fair Value As of
 
Fair Value As of
 
 
March 31, 2013
 
December 31, 2012
(in millions)
 
(Level 2)
 
(Level 2)
Interest rate swaps — net asset position
 
$
12.8

 
$
17.0




8


Note 4 — Derivative Instruments
 
The Company enters into derivative transactions to manage exposures arising in the normal course of business.  The Company does not enter into derivative transactions for speculative or trading purposes.  The Company recognizes all derivative instruments on the balance sheet at fair value.  Derivatives not designated as hedging instruments are adjusted to fair value through income.  Depending on the nature of derivatives designated as hedging instruments, changes in the fair value are either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in shareholders’ equity through other comprehensive income until the hedged item is recognized.  Gains or losses, if any, related to the ineffective portion of any hedge are recognized through earnings in the current period.
 
The Company enters into interest rate swap contracts to economically convert a portion of the Company’s fixed-rate debt to variable rate debt.  During the fourth quarter of 2011, the Company entered into four interest rate swap agreements with a total notional amount of $400 million.  These contracts were designated as fair value hedges of the Company’s $400 million 4.50 percent fixed-rate debt due in 2021.  The variable rate for each of the interest rate swaps is based on the six-month London Interbank Offered Rate (LIBOR), set in arrears, plus a fixed spread.  The variable rates are reset semi-annually at each net settlement date.  Fair values of these interest rate swaps are determined using discounted cash flow or other appropriate methodologies.  Asset positions are included in deferred charges and other assets with a corresponding increase in long-term debt.  Liability positions are included in other liabilities and deferred credits with a corresponding decrease in long-term debt.

The Company enters into forward exchange contracts to manage foreign currency exchange rate exposures associated with certain foreign currency denominated receivables and payables.  Forward exchange contracts generally have maturities of less than six months and relate primarily to major Western European currencies for the Company’s European operations, the U.S. dollar for the Company’s Brazilian operations, and the U.S. and Australian dollars for the Company’s New Zealand and Australian operations.  The Company has not designated these derivative instruments as hedging instruments.  At March 31, 2013, and December 31, 2012, the Company had outstanding forward exchange contracts with notional amounts aggregating $7.3 million and $6.1 million, respectively.  The net settlement amount (fair value) related to active forward exchange contracts is recorded on the balance sheet as either a current or long-term asset or liability and as an element of other operating (income) expense, net, which offsets the related transaction gains or losses. The net settlement amounts were immaterial for all periods presented.
 
The Company is exposed to credit loss in the event of non-performance by counterparties in forward exchange contracts and interest rate swap contracts.  Collateral is generally not required of the counterparties or of the Company.  In the event a counterparty fails to meet the contractual terms of a currency swap or forward exchange contract, the Company’s risk is limited to the fair value of the instrument.  The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions as counterparties.  The Company has not had any historical instances of non-performance by any counterparties, nor does it anticipate any future instances of non-performance.
 
The fair values, balance sheet presentation, and the hedge designation status of derivative instruments at March 31, 2013 and December 31, 2012 are presented in the table below: 
 
 
 
 
Fair Value (Level 2) as of
(in millions)
 
Balance Sheet Location
 
March 31, 2013
 
December 31, 2012
Asset Derivatives
 
 
 
 

 
 

Interest rate swaps — designated as hedge
 
Deferred charges and other assets
 
$
12.8

 
$
17.0

 
The income statement impact of derivatives are presented in the table below:
 
 
 
 
Amount of Gain (Loss) Recognized in Income on Derivatives
 
 
 
 
Three Months Ended March 31,
(in millions)
 
Location of Gain (Loss) Recognized in Income on Derivatives
 
2013
 
2012
Designated as hedges
 
 
 
 
 
 
Interest rate swaps
 
Interest expense
 
$
2.0

 
$
1.8

Not designated as hedges
 
 
 
 
 
 
Forward exchange contracts
 
Other operating (income) expense, net
 

 
0.5

Total
 
 
 
$
2.0

 
$
2.3



9


Note 5 — Inventories
 
Inventories are valued at the lower of cost, as generally determined by the first-in, first-out (FIFO) method, or market.  Inventory values using the FIFO method of accounting approximate replacement cost.  Inventories are summarized as follows:
 
(in millions)
 
March 31,
2013
 
December 31,
2012
Raw materials and supplies
 
$
224.3

 
$
210.7

Work in process and finished goods
 
473.7

 
451.2

Total inventories
 
$
698.0

 
$
661.9

 
Note 6 — Goodwill and Other Intangible Assets
 
Changes in the carrying amount of goodwill attributable to each reportable business segment follow:
(in millions)
 
U.S. Packaging Segment
 
Global Packaging Segment
 
Pressure Sensitive Materials Segment
 
Total
Reported balance at December 31, 2012
 
$
637.8

 
$
343.9

 
$
52.6

 
$
1,034.3

Acquisition adjustments
 

 
(0.2
)
 

 
(0.2
)
Currency translation
 
(0.3
)
 
4.7

 
0.1

 
4.5

Reported balance at March 31, 2013
 
$
637.5

 
$
348.4

 
$
52.7

 
$
1,038.6

 

The components of amortized intangible assets follow: 
 
 
March 31, 2013
 
December 31, 2012
(in millions)
 
Gross Carrying
 
Accumulated
 
Gross Carrying
 
Accumulated
Intangible Assets
 
Amount
 
Amortization
 
Amount
 
Amortization
Contract based
 
$
21.1

 
$
(13.9
)
 
$
21.0

 
$
(13.8
)
Technology based
 
91.4

 
(42.2
)
 
91.3

 
(40.8
)
Marketing related
 
25.1

 
(14.6
)
 
24.9

 
(14.4
)
Customer based
 
198.1

 
(66.9
)
 
197.1

 
(64.1
)
Reported balance
 
$
335.7

 
$
(137.6
)
 
$
334.3

 
$
(133.1
)
 
Amortization expense for intangible assets was $3.9 million and $4.6 million during the first three months of 2013 and 2012, respectively.  Estimated amortization expense for the remainder of 2013 is $11.8 million; $15.7 million for 2014 and 2015; and $15.6 million for 2016; $15.3 million for 2017; and $15.1 million for 2018.  The Company does not have any accumulated impairment losses.
 


10


Note 7 — Components of Net Periodic Benefit Cost
 
Benefit costs for defined benefit pension plans are shown below.  The funding policy and assumptions disclosed in the Company’s 2012 Annual Report on Form 10-K are expected to continue unchanged throughout 2013.
 
 
 
Three Months Ended March 31,
(in millions)
 
2013
 
2012
Service cost - benefits earned during the period
 
$
3.5

 
$
3.6

Interest cost on projected benefit obligation
 
8.1

 
8.5

Expected return on plan assets
 
(12.0
)
 
(10.9
)
Settlement loss
 

 
3.1

Amortization of unrecognized transition obligation
 
0.1

 
0.1

Amortization of prior service cost
 
0.4

 
0.4

Recognized actuarial net loss
 
6.6

 
7.1

Net periodic benefit cost
 
$
6.7

 
$
11.9

 
Costs for defined contribution pension plans were $5.0 million for the three months ended March 31, 2013 and were $5.3 million for the three months ended March 31, 2012.  Benefit costs for other post retirement plans were not significant during the periods presented.

Note 8 — Accumulated Other Comprehensive Loss
 
On January 1, 2013, the Company adopted changes required by the Financial Accounting Standards Board ("FASB") to the reporting of amounts reclassified out of accumulated other comprehensive loss. These changes require an entity to report the effect of significant reclassifications out of accumulated other comprehensive loss on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about those amounts. Other than the additional disclosure requirements (see below), the adoption of these changes had no impact on the Condensed Consolidated Financial Statements. The components and activity of accumulated other comprehensive loss are as follows as of: 
(in millions)
 
Foreign currency translation
 
Pension and other postretirement liability adjustment
 
Accumulated other comprehensive loss
December 31, 2012
 
$
80.5

 
$
(193.4
)
 
$
(112.9
)
Other comprehensive income before reclassifications
 
8.4

 

 
8.4

Amounts reclassified from accumulated other comprehensive loss
 

 
4.2

 
4.2

Net current period other comprehensive income
 
8.4

 
4.2

 
12.6

March 31, 2013
 
$
88.9

 
$
(189.2
)
 
$
(100.3
)

Accumulated other comprehensive loss associated with pension and other postretirement liability adjustments are net of tax effects of $118.3 million and $120.9 million as of March 31, 2013 and December 31, 2012, respectively. Reclassifications from accumulated other comprehensive loss are included in the computation of net periodic benefit cost (Refer to Note 7 - Components of Net Periodic Benefit Cost for additional details.)


11


Note 9 — Earnings Per Share Computations
 
The Company considers unvested share-based payment awards that contain nonforfeitable rights to receive dividends or dividend equivalents (whether paid or unpaid) to be participating securities, and thus includes them in the two-class method of computing earnings per share.  Participating securities include a portion of the Company’s unvested employee stock awards, which receive nonforfeitable cash payments equal to the dividend on the Company’s common stock.  The calculation of earnings per share for common stock shown below excludes the income attributable to the participating securities from the numerator and excludes the dilutive impact of those awards from the denominator.
 
 
 
Three Months Ended March 31,
(in millions, except per share amounts)
 
2013
 
2012
Numerator
 
 

 
 

Net income attributable to Bemis Company, Inc.
 
$
49.3

 
$
44.0

Income allocated to participating securities
 

 
(0.5
)
Net income available to common shareholders (1)
 
$
49.3

 
$
43.5

 
 
 
 
 
Denominator
 
 

 
 

Weighted average common shares outstanding — basic
 
103.2

 
103.1

Dilutive shares
 
1.1

 
0.6

Weighted average common and common equivalent shares outstanding — diluted
 
104.3

 
103.7

 
 
 
 
 
Per common share income
 
 

 
 

Basic
 
$
0.48

 
$
0.42

Diluted
 
$
0.47

 
$
0.42

 
 
 
 
 
 
(1
)
Basic weighted average common shares outstanding
 
103.2

 
103.1

 
Basic weighted average common shares outstanding and participating securities
 
103.3

 
104.4

 
Percentage allocated to common shareholders
 
99.9
%
 
98.8
%

     Certain stock options and stock awards outstanding were not included in the computation of diluted earnings per share above because they would not have had a dilutive effect. The excluded stock options and stock awards represented an aggregate of 0.1 million shares for the three months ending March 31, 2012. There were no anti-dilutive stock options or stock awards outstanding for the three months ending March 31, 2013.

 

Note 10 — Legal Proceedings
 
The Company is involved in a number of lawsuits incidental to its business, including environmental-related litigation and routine litigation arising in the ordinary course of business.  Although it is difficult to predict the ultimate outcome of these cases, the Company believes, except as discussed below, that any ultimate liability would not have a material adverse effect on the Company’s consolidated financial condition or results of operations.
 
Environmental Matters
 
The Company is a potentially responsible party ("PRP") pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (commonly known as "Superfund") and similar state and foreign laws in proceedings associated with seventeen sites around the United States and one in Brazil.  These proceedings were instituted by the United States Environmental Protection Agency and certain state and foreign environmental agencies at various times beginning in 1983.  Superfund and similar state and foreign laws create liability for investigation and remediation in response to releases of hazardous substances in the environment. Under these statutes, joint and several liability may be imposed on waste generators, site owners and operators, and others regardless of fault.  Although these regulations could require the Company to remove or mitigate the effects on the environment at various sites, perform remediation work at such sites, or pay damages for loss of use and non-use values, the Company expects its liability in these proceedings to be limited to monetary damages. The Company

12


expects its future liability relative to these sites to be insignificant, individually and in the aggregate.  The Company has accrued an amount that it believes to be adequate to cover its exposure.
 

São Paulo Tax Dispute
 
Dixie Toga Ltda ("Dixie Toga"), acquired by the Company on January 5, 2005, is involved in a tax dispute with the City of São Paulo, Brazil ("City").  The City imposes a tax on the rendering of printing services.  The City has assessed this city services tax on the production and sale of printed labels and packaging products.  Dixie Toga, along with a number of other packaging companies, disagree and contend that the city services tax is not applicable to its products and that the products are subject only to the state value added tax ("VAT").  Under Brazilian law, state VAT and city services tax are mutually exclusive and the same transaction can be subject to only one of those taxes.  Based on a ruling from the State of São Paulo, advice from legal counsel, and long standing business practice, Dixie Toga appealed the city services tax and instead continued to collect and pay only the state VAT.
 
The City of São Paulo disagreed and assessed Dixie Toga the city services tax for the years 1991-1995.  The assessments for those years are estimated to be approximately $54.5 million at the date the Company acquired Dixie Toga, translated to U.S. dollars at the March 31, 2013 exchange rate.  Dixie Toga challenged the assessments and ultimately litigated the issue.  A decision by the Lower Tax Court in the city of São Paulo canceled all of the assessments for the years 1991-1995.  The City of São Paulo, the State of São Paulo, and Dixie Toga had each appealed parts of the lower court decision.  On February 8, 2010, the São Paulo Court of Justice issued a Decision in favor of Dixie Toga.  This Decision has been appealed by the City of São Paulo.  In the event of a successful appeal by the City and an adverse resolution, the estimated amount for these years could be substantially increased for additional interest, monetary adjustments and costs from the date of acquisition.
 
The City has also assessed Dixie Toga and Itap Bemis Ltda., a Dixie Toga subsidiary, the city services tax for the years 1996-2001.  The assessments for those years were upheld at the administrative level and are being challenged by the companies.  The assessments at the date of acquisition for these years for tax and penalties (exclusive of interest and monetary adjustments) are estimated to be approximately $8.2 million for Itap Bemis and $26.4 million for Dixie Toga, translated to U.S. dollars at the March 31, 2013 exchange rate.  In the event of an adverse resolution, the estimated amounts for these years could be increased by $52.2 million for Itap Bemis and $151.8 million for Dixie Toga for interest, monetary adjustments and costs.  
 
The City has also assessed the city services tax for the subsequent years 2004-2009.  The assessments are being challenged at the administrative level.  The assessments for tax, penalties, and interest are estimated to be approximately $50.7 million, translated to U.S. dollars at the March 31, 2013 exchange rate.
 
The Company strongly disagrees with the City’s position and intends to vigorously challenge any assessments by the City of São Paulo. The Company is unable at this time to predict the ultimate outcome of the controversy and as such has not recorded any liability related to this matter. An adverse resolution could be material to the consolidated results of operations and/or cash flows of the period in which the matter is resolved.
 
Brazil Investigation

     On September 18, 2007, the Secretariat of Economic Law ("SDE"), a governmental agency in Brazil, initiated an investigation into possible anti-competitive practices in the Brazilian flexible packaging industry against a number of Brazilian companies including a Dixie Toga subsidiary. The investigation relates to periods prior to the Company’s acquisition of control of Dixie Toga and its subsidiaries. Given the nature of the proceedings, the Company is unable at the present time to predict the outcome of this matter.
 
Multiemployer Defined Benefit Pension Plans
 
The Company contributes to three multiemployer defined benefit pension plans based on obligations arising under collective bargaining agreements covering union-represented employees.  The Company does not directly manage these multiemployer pension plans, which are generally managed by boards of trustees, half of whom are appointed by the unions and the other half by employers contributing to the plans.  Based on the information provided by the plan administrators, the Company is aware that three of these plans are underfunded.  In addition, pension-related legislation requires underfunded pension plans to improve their funding ratios within prescribed intervals based on the level of their underfunding.  As a result, the Company expects its contributions to these plans to increase in the future.
 

13


Under current law regarding multiemployer defined benefit plans, a plan’s termination, the Company’s voluntary partial or full withdrawal, or the mass withdrawal of all contributing employers from any underfunded multiemployer pension plan would require the Company to make payments to the plan for the Company’s proportionate share of the multiemployer pension plan’s unfunded vested liabilities. In addition, if a multiemployer defined benefit pension plan fails to satisfy certain minimum funding requirements, the IRS may impose a nondeductible excise tax of 5 percent on the amount of the accumulated funding deficiency for those employers contributing to the fund.
 
The Company recorded charges related to the planned withdrawal from the GCIU — Employee Retirement Fund in the fourth quarter of 2011 and the second quarter of 2012 as part of the Company’s 2011 and 2012 facility consolidation program. The expense recorded represents the Company’s best estimate of the expected settlement of these planned withdrawal liabilities.  While it is not possible to quantify the potential impact of future actions, further reductions in participation or withdrawal from these multiemployer pension plans could have a material adverse impact on the Company’s consolidated annual results of operations, financial position, or cash flows.



14


Note 11 — Segments of Business
 
The Company's business activities are organized around and aggregated into three principal business segments based on their similar economic characteristics, products, production process, types of customers, and distribution methods. Both internal and external reporting conforms to this organizational structure, with no significant differences in accounting policies applied. Minor intersegment sales are generally priced to reflect nominal markups. The Company evaluates the performance of its segments and allocates resources to them based primarily on operating profit, which is defined as profit before general corporate expense, interest expense, other non-operating (income) expense, income taxes, and noncontrolling interests.
 
A summary of the Company’s business activities reported by its three business segments follows:
 
 
Three Months Ended March 31,
Business Segments (in millions)
 
2013
 
2012
Sales including intersegment sales:
 
 
 
 

U.S. Packaging
 
$
753.0

 
$
770.6

Global Packaging
 
374.3

 
398.7

Pressure Sensitive Materials
 
140.8

 
145.5

 
 
 
 
 
Intersegment sales:
 
 
 
 
U.S. Packaging
 
(7.0
)
 
(5.5
)
Global Packaging
 
(5.8
)
 
(4.3
)
Pressure Sensitive Materials
 
(0.3
)
 
(0.2
)
Total net sales
 
$
1,255.0

 
$
1,304.8

 
 
 
 
 
U.S. Packaging
 
 
 
 

Operating profit before facility consolidation and other costs
 
$
95.4

 
$
89.6

Facility consolidation and other costs
 
(9.4
)
 
(7.6
)
Operating profit
 
86.0

 
82.0

 
 
 
 
 
Global Packaging
 
 
 
 
Operating profit before facility consolidation and other costs
 
25.8

 
26.6

Facility consolidation and other costs
 
0.1

 
(0.7
)
Operating profit
 
25.9

 
25.9

 
 
 
 
 
Pressure Sensitive Materials
 
 
 
 
Operating profit
 
7.7

 
9.7

 
 
 
 
 
Corporate
 
 
 
 
General corporate expenses
 
(27.5
)
 
(29.1
)
 
 
 
 
 
Operating income
 
92.1

 
88.5

 
 
 
 
 
Interest expense
 
(16.6
)
 
(20.5
)
Other non-operating income (expense)
 
(4.1
)
 
(0.1
)
 
 
 
 
 
Income from continuing operations before income taxes
 
$
71.4

 
$
67.9



15


Business Segments (in millions)
 
March 31, 2013
 
December 31, 2012
Total assets:
 
 

 
 

U.S. Packaging
 
$
2,171.6

 
$
2,100.7

Global Packaging
 
1,459.5

 
1,425.4

Pressure Sensitive Materials
 
329.6

 
325.5

Total identifiable assets (1)
 
3,960.7

 
3,851.6

Corporate assets (2)
 
344.7

 
334.1

Total
 
$
4,305.4

 
$
4,185.7

(1)    Total assets by business segment include only those assets that are specifically identified with each segment’s operations.
(2)  Corporate assets are principally cash and cash equivalents, prepaid expenses, prepaid income taxes, prepaid pension benefit costs, and corporate tangible and intangible property.

16
EX-31.1 3 bms-2013331xexhibit311.htm EXHIBIT 31.1 BMS-2013.3.31-Exhibit 31.1


EXHIBIT 31.1
 
RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CEO
 
I, Henry J. Theisen, certify that:
1.
I have reviewed this report on Form 10-Q of Bemis Company, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 
Date
May 6, 2013
 
By
/s/ Henry J. Theisen
 
 
 
 
Henry J. Theisen, President and Chief Executive Officer
 



1
EX-31.2 4 bms-2013331xexhibit312.htm EXHIBIT 31.2 BMS-2013.3.31-Exhibit 31.2


EXHIBIT 31.2
 
RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CFO
 
I, Scott B. Ullem, certify that:
1.
I have reviewed this report on Form 10-Q of Bemis Company, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions)
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date
May 6, 2013
 
By
/s/ Scott B. Ullem
 
 
 
 
Scott B. Ullem, Vice President and Chief Financial Officer
 

 



1
EX-32 5 bms-2013331xexhibit32.htm EXHIBIT 32 BMS-2013.3.31-Exhibit 32


EXHIBIT 32
 
SECTION 1350 CERTIFICATIONS OF CEO AND CFO
 
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that the quarterly report on Form 10-Q of Bemis Company, Inc. for the quarter ended March 31, 2013 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Bemis Company, Inc.
  
/s/ Henry J. Theisen
 
/s/ Scott B. Ullem
Henry J. Theisen, President and
 
Scott B. Ullem, Vice President and
  Chief Executive Officer
 
  Chief Financial Officer
May 6, 2013
 
May 6, 2013
 



1
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