Bemis Company Reports Record Quarterly Sales and Delivers Solid Results for Third Quarter

Business Wire, Oct 23, 2002

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--Oct. 23, 2002

Bemis Company, Inc. (NYSE:BMS) today reported diluted earnings of $0.81 per share for the third quarter ended September 30, 2002, a 19 percent increase from $0.68 per share in the same period a year ago. Net sales for the third quarter were $601 million, a 4.4 percent increase over last year's third quarter sales of $576 million and a quarterly sales record for the company. Effective January 1, 2002, Bemis adopted the reporting requirements of SFAS 142, "Goodwill and Other Intangible Assets". This new accounting standard requires that goodwill no longer be amortized into earnings but instead be reviewed for impairment. If this standard had been in effect for 2001, diluted earnings per share for the third quarter of 2001 would have been increased by $0.05 per share.

"I am very pleased to report record sales and solid profit margins this quarter," said Jeff Curler, Bemis Company President and Chief Executive Officer. "Our transition teams have been focused on the integration of two independent acquisitions as well as the pending sale of our pressure sensitive materials business segment, while our business leaders continue to deliver solid performance. With the completion of these three transactions, Bemis will enter 2003 a leading global flexible packaging company with a strong balance sheet, high quality plant assets, and a dedication to packaging technology and innovation."

Business Segments

Net sales for the flexible packaging business segment were $478 million for the quarter, an increase of 4.6 percent compared with $457 million during the third quarter of 2001. This increase includes acquisition related net sales of $15 million from Bemis Clysar acquired on July 31, 2002 and an estimated $10 million from Duralam acquired on September 7, 2001. Solid net sales increases in other high barrier product lines were offset by decreases in Polyethylene and Paper Packaging products. Operating profit for flexible packaging increased 9 percent to $76 million from the third quarter of 2001. As a percent of net sales, operating profit increased to 15.9 percent from 15.4 percent a year ago.

"Our core flexible packaging businesses continue to deliver strong results," said Curler. "We transitioned the Bemis Clysar business during the third quarter and are working to integrate it into our high barrier product line. We completed the purchase of the Walki Films business from UPM-Kymmene on October 2nd, more than doubling our European flexible packaging market presence. Both of these businesses are profitable, well-run organizations that use film technology familiar to our other Bemis businesses, and I am excited about the opportunities to broaden our product lines and end markets.

Our high barrier product lines continue to deliver outstanding performance and seek out opportunities to improve even further. Our polyethylene packaging product lines are focused on improving sales and operating profit with initiatives on cost control and operating efficiencies. New printing presses being installed during the fourth quarter are also expected to improve production efficiencies. While sales volumes of more complex, specialty polyethylene packages continue to increase, sales of polyethylene packaging to industrial markets remain at low levels and are not expected to recover until the general economy improves."

Third quarter net sales for the pressure sensitive materials business segment increased 3.9 percent from $119 million for the third quarter of 2001 to $123 million, primarily due to stronger business in Europe. North American roll label sales volume continued to show modest increases compared with last year but was offset by competitive pricing pressures during the quarter. Operating profit increased to $4.9 million or 4.0 percent of sales compared with $2.0 million or 1.7 percent of sales last year.

"We recently received approval from the European regulatory authorities for the sale of our pressure sensitive materials business to UPM- Kymmene," Curler noted. "We continue to exchange information with the U.S. regulatory authorities. Upon U.S. regulatory approval, we would anticipate being prepared to close the transaction within 30 days. As we discussed in an earlier press release, our decision to sell this business is based upon a desire to focus our resources on our core flexible packaging business."

Commenting on the results for this business segment, Curler said, "Third quarter results from the pressure sensitive materials business were in line with our expectations of 4 to 6 percent operating profits in 2002. Our employees have made substantial improvements in operating efficiency and cost control since the third quarter of last year, and I am pleased that they have been able to sustain that level of profitability during a time of pending change."

Interest expense decreased from the third quarter of 2001 due primarily to lower interest rates. During the third quarter of 2002, Bemis acquired the Clysar business of DuPont for $142.5 million in cash. Subsequent to the end of the third quarter, on October 2, 2002, Bemis completed the acquisition of Walki Films from UPM-Kymmene for $68.5 million. Both of these transactions were financed with commercial paper. Fourth quarter interest expense will be impacted by the timing of the pending sale of the pressure sensitive materials business, the net proceeds of which will be used to pay down outstanding commercial paper.