Prepared by MerrillDirect

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Three Months Ended March 31, 2001
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.)

222 South 9th Street, Suite 2300
Minneapolis, Minnesota	55402-4099
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (612) 376-3000

Indicate by check mark whether the registrant has: (1) 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, and (2) has been subject to such filing requirements for the past 90 days.

YES x NO ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

52,805,495 shares of Common Stock, $.10 par value, on April 30, 2001.

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

The financial statements, enclosed as Exhibit 19, are incorporated by reference in this Form 10-Q. In the opinion of management, the financial statements reflect all adjustments necessary to a fair statement of the results for the three months ended March 31, 2001.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net sales for the first quarter of 2001 were $577.4 million compared to $512.6 million for the first quarter of 2000, an increase of 12.6 percent or $64.8 million. Net income was $29.7 million for the first quarter of 2001 compared to $29.6 million for the same quarter in 2000, an increase of 0.1 percent. Diluted earnings per share for the first quarter of 2001 and 2000 were $0.56 and $0.55, respectively. Excluding the noncomparable operating results of the year 2000 business acquisitions from the first quarter of 2001, net sales increased 1.3 percent while operating profit decreased 1.3 percent.

The strong sales performance for the current quarter was paced by the flexible packaging business segment, which reported a 15.0 percent increase in net sales and 25.6 percent growth in operating profit. Within flexible packaging, high barrier products and polyethylene products led the net sales growth with increases of $44.9 million or 21.9 percent and $13.6 million or 10.3 percent, respectively. Net sales in paper products were flat with the same period last year. The quarter’s operating results benefited from strong results from the year 2000 business acquisitions, increased sales volume with key large customers, and a shift in sales mix to more value added packaging designs. Excluding the noncomparable operating results of the year 2000 business acquisitions from the first quarter of 2001, net sales for the flexible packaging business segment increased 3.9 percent.

The pressure sensitive materials business segment reported a 5.0 percent increase in net sales and 61.6 percent decrease in operating profit. The North American pressure sensitive materials market conditions are extremely competitive. The marketplace in Europe and Asia, although facing softer economic conditions, has not encountered the severe pricing pressures of North America. Although steps are being taken to reduce overhead costs and improve manufacturing efficiencies, substantial margin improvement is not expected until the economy begins to strengthen. Excluding the noncomparable operating results of the year 2000 business acquisitions from the first quarter of 2001, net sales for the pressure sensitive materials business segment decreased 6.9 percent.

Selling, general, and administrative costs increased $5.2 million during the first quarter of 2001 compared to the first quarter of 2000. The selling, general, and administrative costs associated with the three business acquisitions of third quarter 2000 account for the majority of this increase. In addition, the Company recorded a bad debt provision of $1.3 million for the accounts receivable from an international customer. The Company’s debt increase experienced during the second half of 2000, associated with business unit acquisitions, is the principal cause of the $5.0 million increase in interest expense over the same quarter of 2000. Since the majority of the debt is variable rate debt the Company should benefit from a decreasing interest rate environment. The favorable comparison of other cost (income) is principally due to the first quarter 2001 sale of a paper packaging manufacturing site which had been closed in 1998.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain estimates, predictions, and other “forward-looking statements” as that term is defined under 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 Act of 1934. The words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “target”, “may”, “will”, “plan”, “project”, “should”, “continue”, or the negative thereof or other similar expressions, or discussions of future goals or aspirations, which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking statements. 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 the Company operates, projections of future performance, perceived opportunities in the market, and statements regarding the Company’s mission and vision. Forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance, or achievements of the Company to differ materially from anticipated future results, performance, or achievements expressed or implied by such forward-looking statements. The Company undertakes 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 such as inflation, interest rates, and foreign currency exchange rates; results from acquisitions may differ from what we anticipate; competitive conditions within the Company’s markets, including the acceptance of new and existing products offered by the Company; price changes for raw materials and the ability of the Company to pass these price changes on to its customers or otherwise manage commodity price fluctuation risks; the presence of adequate cash available for investment in the Company’s business in order to maintain desired debt levels; unanticipated consequences of the EMU’s conversion to the euro; changes in governmental regulation, especially in the areas of environmental, health and safety matters, and foreign investment; unexpected outcomes in the Company’s current and future litigation proceedings; and changes in the Company’s labor relations. These and other risks, uncertainties, and assumptions identified from time to time in the Company’s filings with the Securities and Exchange Commission, including without limitation, its Annual Report on Form 10-K and its quarterly reports on Form 10-Q, could cause the Company’s actual future results to differ materially from those projected in the forward-looking statements. In addition, the Company’s 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 statements.

Financial Condition

A statement of cash flow for the three months ended March 31, 2001, is as follows:

	Millions
Cash flows from operating activities:
Net income	$29.7
Non-cash items:
Depreciation and amortization	31.9
Minority interest	0.1
Deferred income taxes, non-current portion	2.3
Losses of unconsolidated affiliated companies	0.7
Net decrease in working capital	1.9
Other	0.1
Net cash provided by operating activities	66.7

Cash flows from investing activities:
Additions to property and equipment	(32.1)
Business acquisition	(0.2)
Other	0.9
Net cash used in investing activities	(31.4)

Cash flows from financing activities:
Change in debt	(15.3)
Cash dividends paid	(13.2)
Stock incentive programs	(0.9)
Net cash provided by financing activities	(29.4)

Effect of exchange rates	0.4
Net increase in cash	6.3

Cash balance at beginning of year	28.9
Cash balance at end of period	$35.2

Explanation of Terms Describing the Registrant’s Products

High Barrier Products – A grouping of Bemis products that provide protection and extend the shelf life of the contents of the package. These products provide this protection by combining different types of plastics and chemicals into a multilayered plastic package. These products protect the contents from such things as moisture, sunlight, odor, or other elements.
Flexible polymer film – A non-rigid plastic film.

Barrier laminate – A multilayer plastic film made by laminating two or more films together with the use of glue or a molten plastic to achieve a barrier for the planned package contents.
Controlled atmosphere packaging – A package which limits the flow of elements, such as oxygen or moisture, into or out of the package.

Modified atmosphere packaging – A package in which the atmosphere inside the package has been modified by a gas such as nitrogen.
Blown film – A plastic film that is extruded through a round die in the form of a tube and then expanded by a column of air in the manufacturing process.

Cast film – A plastic film that is extruded through a straight slot die as a flat sheet during its manufacturing process.
Stretch film – A plastic film used to wrap pallets in the shipping process, which has significant ability to stretch.

Thermoformed plastic packaging – A package formed by applying heat to a film to shape it into a tray or cavity and then placing a flat film on top of the package after it has been filled.
Monolayer film – A single layer extruded plastic film.
Coextruded film – A multiple layer extruded plastic film.
Rotogravure printing – A high quality, long run printing process utilizing a metal cylinder.

Flexographic printing – The most common flexible packaging printing process in North America using a raised rubber or alternative material image mounted on a printing cylinder.
Multiwall paper bag – A package made from two or more layers of paper.
In-line overlaminating capability – The ability to add a protective coating to a printed material during the printing process.

Pressure sensitive material – A material with adhesive such that upon contact with another material it will stick.
Sheet products – Pressure sensitive materials cut into sheets and sold in sheet form.
Roll label products – Pressure sensitive materials made up and sold in roll form.

Technical products – Technically engineered pressure sensitive materials used primarily for fastening and mounting functions.
Graphic films – Pressure sensitive materials used for decorative signage, promotional items, and displays and advertisements. May be either transparent or translucent.
UV inhibitors – Chemicals which protect against ultraviolet rays.

PART II – OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are filed as part of the report:

2           Purchase Agreement between Bemis Company, Inc. and Viskase Companies, Inc., and Viskase related companies listed therein, dated July 7, 2000. (1)
2(a)       Amendment No. 1 to Purchase Agreement between Bemis Company, Inc. and Viscase Companies, Inc., and Viskase related companies listed therein, dated August 31, 2000. (2)
3(a)       Restated Articles of Incorporation of the Registrant, as amended. (3)
3(b)      By-Laws of the Registrant, as amended through July 7, 1992. (4)
3(c)       Amendment to the By-Laws of the Registrant dated October 29, 1998. (5)
4(a)       Rights Agreement, dated as of July 29, 1999, between the Registrant and Wells Fargo Bank Minnesota National Association (formerly known as Norwest Bank Minnesota, National Association). (6)
4(b)      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. (7)
10(a)     Bemis Company, Inc. 1987 Amended and Restated Stock Option Plan as of October 29, 1999. * (8)
10(b)    Bemis Company, Inc. 1994 Stock Incentive Plan, Amended and Restated as of August 4, 1999. * (9)
10(c)     Bemis Company, Inc. Form of Management Contract with the Chief Executive Officer and other Executive Officers.* (8)
10(d)    Bemis Retirement Plan, Amended and Restated as of August 25, 2000.* (10)
10(e)     Bemis Company, Inc. Supplemental Retirement Plan, Amended and Restated as of December 31, 1999.* (10)
10(f)     Bemis Executive Officer Incentive Plan as of October 29, 1999.* (8)
10(g)    Bemis Company, Inc. Long Term Deferred Compensation Plan, Amended and Restated as of August 4, 1999.* (9)
10(h)    Bemis Company, Inc. 1997 Executive Officer Performance Plan. * (3)
10(i)      Fourth Amended and Restated Credit Agreement among the Registrant, the Banks Listed therein and Morgan Guaranty Trust Company of New York, as Agent, originally dated as of August 1, 1986, Amended and Restated in Composite Copy as of August 2, 1999. (8)
19         Reports Furnished to Security Holders.

*Management contract, compensatory plan or arrangement filed pursuant to Rule 601(b)(10)(iii)(A) of Regulation S-K under the Securities Exchange Act of 1934.
(1)         Incorporated by reference to the Registrant’s Registration Statement on Form S-3 filed August 11, 2000 (File No. 333-43646).
(2)         Incorporated by reference to the Registrant’s Current Report on Form 8-K filed September 12, 2000 (File No. 1-5277).
(3)         Incorporated by reference to the Registrant’s Definitive Proxy Statement filed with the Securities and Exchange Commission on March 18, 1997 (File No. 1-5277)
(4)         Incorporated by reference to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 1994 (File No. 1-5277).
(5)         Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-5277).
(6)         Incorporated by reference to Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed on August 4, 1999 (File No. 1-5277).
(7)         Incorporated by reference to the Registrant’s Current Report on Form 8-K dated June 30, 1995 (File No. 1-5277).
(8)         Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 (File No. 1-5277).
(9)         Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (File No. 1-5277).
(10)       Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 1-5277).

(b) There were no reports on Form 8-K filed during the first quarter ended March 31, 2001.

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 4, 2001	/s/Gene C. Wulf
	Gene C. Wulf, Vice President
	and Controller




Date May 4, 2001	/s/Benjamin R. Field, III
	Benjamin R. Field, III, Senior Vice
	President, Chief Financial Officer
	and Treasurer

Exhibit Index

Exhibit	Description	Form of Filing
2	Purchase Agreement between Bemis Company, Inc. and Viskase Companies, Inc., and Viskase related companies listed therein, dated July 7, 2000. (1)
2(a)	Amendment No. 1 to Purchase Agreement between Bemis Company, Inc. and Viskase Companies, Inc., and Viskase related companies listed therein, dated August 31, 2000. (2)
3(a)	Restated Articles of Incorporation of the Registrant, as amended. (3)
3(b)	By-Laws of the Registrant, as amended through July 7, 1992. (4)
3(c)	Amendment to the By-Laws of the Registrant dated October 29, 1998 (5)
4(a)	Rights Agreement, dated as of July 29, 1999, between the Registrant and Wells Fargo Bank Minnesota National Association (formerly known as Norwest Bank Minnesota, National Association). (6)
4(b)	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. (7)
10(a)	Bemis Company, Inc. 1987 Amended and Restated Stock Option Plan as of October 29, 1999. * (8)
10(b)	Bemis Company, Inc. 1994 Stock Incentive Plan, Amended and Restated as of August 4, 1999. * (9)
10(c)	Bemis Company, Inc. Form of Management Contract with the Chief Executive Officer and other Executive Officers. * (8)
10(d)	Bemis Retirement Plan, Amended and Restated as of August 25, 2000. * (10)
10(e)	Bemis Company, Inc. Supplemental Retirement Plan, Amended and Restated as of December 31, 1999. * (10)
10(f)	Bemis Executive Officer Incentive Plan as of October 29, 1999. * (8)
10(g)	Bemis Company, Inc. Long Term Deferred Compensation Plan, Amended and Restated as of August 4, 1999. * (9)
10(h)	Bemis Company, Inc. 1997 Executive Officer Performance Plan. * (3)
10(i)	Fourth Amended and Restated Credit Agreement among the Registrant, the Banks Listed therein and Morgan Guaranty Trust Company of New York as Agent, originally dated as of August 1, 1986, Amended and Restated in Composite Copy as of August 2, 1999. (8)
19	Reports Furnished to Securities Holders.	Filed Electronically

	* Management contract, compensatory plan or arrangement filed pursuant to Rule 601(b)(10)(iii)(A) of Regulation S-K under the Securities Exchange Act of 1934.
	(1) Incorporated by reference to the Registrant’s Registration Statement on Form S-3 filed August 11, 2000 (File No. 333-43646).
	(2) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed September 12, 2000 (File No. 1-5277)
	(3) Incorporated by reference to the Registrant’s Definitive Proxy Statement filed with the Securities and Exchange Commission on March 18, 1997 (File No. 1-5277).
	(4) Incorporated by reference to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 1994 (File No. 1-5277).
	(5) Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-5277).
	(6) Incorporated by reference to Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed on August 4, 1999 (File No. 1-5277).
	(7) Incorporated by reference to the Registrant’s Current Report on Form 8-K dated June 30, 1995 (File No. 1-5277).
	(8) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 (File No. 1-5277).
	(9) Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (File No. 1-5277).
	(10) Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 1-5277).

EXHIBIT 19 - - FINANCIAL STATEMENTS - UNAUDITED

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

	Three Months Ended March 31,
	2001	2000

Net sales	$577,395	$512,616
Costs and expenses:
Cost of products sold	460,208	405,063
Selling, general, and administrative expenses	56,094	50,854
Research and development	2,484	2,576
Interest expense	10,681	5,723
Other costs (income), net	(358)	611
Minority interest in net income	99	46
Income before income taxes	48,187	47,743
Provision for income taxes	18,500	18,100
Net income	$29,687	$29,643

Basic earnings per share of common stock	$.56	$.55

Diluted earnings per share of common stock	$.56	$.55

Cash dividends paid per share of common stock	$.25	$.24

Weighted-average common stock outstanding	52,803	53,475

Weighted-average common shares and common stock equivalents outstanding	52,959	53,687

See accompanying notes to consolidated financial statements.

EXHIBIT 19 - - FINANCIAL STATEMENTS - UNAUDITED

BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)

ASSETS	March 31, 2001	December 31, 2000

Cash	$35,163	$28,910
Accounts receivable - net	300,921	301,974
Inventories	297,128	274,323
Prepaid expenses and deferred charges	31,850	34,752
Total current assets	665,062	639,959
Property and equipment, net	832,396	825,754
Goodwill	291,617	297,898
Intangible assets, deferred charges, and other assets	126,748	125,032
Total	418,365	422,930
TOTAL ASSETS	$1,915,823	$1,888,643
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt	$202,054	$227,459
Short-term borrowings	4,994	7,353
Accounts payable	223,556	207,115
Accrued salaries and wages	31,614	43,661
Accrued income and other taxes	20,112	9,509
Total current liabilities	482,330	495,097
Long-term debt, less current portion	449,881	437,952
Deferred taxes	106,200	103,621
Other liabilities and deferred credits	55,193	51,646
Total liabilities	1,093,604	1,088,316
Minority interest	1,618	1,570
Stockholders' equity:
Common stock issued and outstanding (61,175,883 and 60,972,802 shares)	6,117	6,097
Capital in excess of par value	242,302	237,100
Retained income	870,990	854,506
Other comprehensive loss	(49,717)	(49,855)
Common stock held in treasury at cost (8,370,388 and 8,370,388 shares)	(249,091)	(249,091)
Total stockholders' equity	820,601	798,757

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$1,915,823	$1,888,643

See accompanying notes to consolidated financial statements.

EXHIBIT 19 - - FINANCIAL STATEMENTS - UNAUDITED

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

	Three Months Ended March 31,
	2001	2000
Cash flows from operating activities
Net income	$29,687	$29,643
Non-cash items:
Depreciation and amortization	31,947	26,402
Minority interest in net income	99	46
Deferred income taxes, non-current portion	2,338	655
Losses of unconsolidated affiliated companies	693	623
Tax benefits related to stock incentive programs	920	(7)
Loss (gain) on sale of property and equipment	46	(11)
Changes in working capital, net of effects of acquisitions and dispositions	1,915	(1,322)
Net change in deferred charges and credits	(966)	(5,854)
Net cash provided by operating activities	66,679	50,175
Cash flows from investing activities
Additions to property and equipment	(32,135)	(27,814)
Business acquisitions	(200)	(3,355)
Proceeds from sale of property and equipment	968	195
Other	(28)	1
Net cash used in investing activities	(31,395)	(30,973)
Cash flows from financing activities
Change in long-term debt excluding debt assumed in business acquisition	12,234	22,946
Change in short-term debt	(27,536)	(1,140)
Cash dividends paid	(13,203)	(12,870)
Common stock purchased for the treasury		(25,065)
Stock incentive programs	(920)	7
Net cash used by financing activities	(29,425)	(16,122)
Effect of exchange rates on cash	394	(755)
Net increase in cash	6,253	2,325
Cash balance at beginning of year	28,910	18,187
Cash balance at end of period	$35,163	$20,512

See accompanying notes to consolidated financial statements.

EXHIBIT 19 - FINANCIAL STATEMENTS - UNAUDITED

BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(dollars in thousands, except per share amounts)	Common Stock	Capital In Excess Of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Common Stock Held In Treasury	Total Stockholders' Equity
Balance at December 31, 1998	$5,906	$181,908	$708,362	$(6,116)	$(202,206)	$687,854
Net income for 1999			114,775			114,775
Translation adjustment for 1999				(24,353)		(24,353)
Pension liability adjustment, net of $(536) tax benefit				(175)		(175)
Total comprehensive income						90,247
Cash dividends paid on common stock $.92 per share			(48,126)			(48,126)
Stock incentive programs and related tax effects	4	49				53
Purchase of 122,599 shares of common stock					(4,133)	(4,133)
Balance at December 31, 1999	5,910	181,957	775,011	(30,644)	(206,339)	725,895
Net income for 2000			130,602			130,602
Translation adjustment for 2000				(19,178)		(19,178)
Pension liability adjustment, net of $(642) tax benefit				(33)		(33)
Total comprehensive income						111,391
Cash dividends paid on common stock $.96 per share			(51,107)			(51,107)
1,730,952 shares of common stock issued in acquisition of minority interest	173	54,676				54,849
Stock incentive programs and related tax effects	14	467				481
Purchase of 1,460,900 shares of common stock					(42,752)	(42,752)
Balance at December 31, 2000	6,097	237,100	854,506	(49,855)	(249,091)	798,757
Net income for first three months of 2001			29,687			29,687
Translation adjustment for the first three months of 2001				138		138
Total comprehensive income*						29,825
Cash dividends paid on common stock, $.25 per share			(13,203)			(13,203)
Stock incentive programs and related tax effects	20	5,202				5,222
Balance at March 31, 2001	$6,117	$242,302	$870,990	$(49,717)	$(249,091)	$820,601

*Total comprehensive income for the first three months of 2000 was $27,374.

See accompanying notes to consolidated financial statements.

EXHIBIT 19 - - FINANCIAL STATEMENTS - UNAUDITED

BEMIS COMPANY, INC. AND SUBSIDIARIES
NOTES TO 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 generally accepted accounting principles for interim financial information 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. The results for the interim period are not necessarily indicative of the results to be expected for the year.

During 2000, the Financial Accounting Standards Board (FASB) through its Emerging Issues Task Force (EITF) reached a consensus that amounts billed for shipping and handling should be included in revenue and costs incurred by the seller for shipping and handling should be classified as cost of products sold. Accordingly, net sales and cost of products sold have been restated. Previously, the Company had recorded both revenue and costs of shipping and handling in net sales.

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, 2000.

Note 2. New Accounting Pronouncements

Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138. This new accounting standard requires that all derivative instruments be recorded on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships. The effect of adopting this standard was not material to the Company’s consolidated financial statements. Upon adoption, the Company recorded the immaterial impact as interest expense.

The Company enters into forward foreign currency exchange contracts to offset movements in certain foreign currency denominated receivables and payables. Forward foreign currency exchange contracts generally have maturities of less than nine months and relate primarily to major Western European currencies. Counterparties to the forward foreign currency exchange contracts are major financial institutions. Credit loss from counterparty nonperformance is not anticipated.

The Company has elected to not use hedge accounting for their current derivative instruments and, therefore, the gains or losses on the derivative instruments are recognized currently in earnings. This income statement impact for the quarter ended March 31, 2001, is immaterial.

Note 3 - Segments of Business

The Company’s business activities are organized around its two principal business segments, Flexible Packaging and Pressure Sensitive Materials. Both internal and external reporting conform to this organizational structure with no significant differences in accounting policies applied. The Company evaluates the performance of its segments and allocates resources to them based on operating profit, which is defined as profit before general corporate expense, interest expense, income taxes, and minority interest. A summary of the Company’s business activities reported by its two business segments follows:

	For the Quarter Ended March 31,
Business Segments (in millions)	2001	2000
Net Sales to Unaffiliated Customers:
Flexible Packaging	$451.3	$392.5
Pressure Sensitive Materials	126.5	120.6
Intersegment Sales:
Flexible Packaging	(0.4)	(0.4)
Pressure Sensitive Materials		(0.1)
Total	$577.4	$512.6
Operating Profit and Pretax Profit:
Flexible Packaging	$ 61.9	$49.3
Pressure Sensitive Materials	4.4	11.4
Total operating profit	66.3	60.7
General corporate expenses	(7.3)	(7.2)
Interest expense	(10.7)	(5.7)
Minority interest in net income	(.1)	(0.1)
Income before income taxes	$48.2	$47.7
Identifiable Assets:
Flexible Packaging	$1,498.9	$1,204.8
Pressure Sensitive Materials	361.9	323.5
Total identifiable assets	1,860.8	1,528.3
Corporate assets	55.0	44.5
Total	$1,915.8	$1,572.8

Note 4 - Taxes Based On Income

The Company's 2001 effective tax rate of 38% differs from the federal statutory rate of 35% primarily due to state and local income taxes.

Note 5 - Inventories

The Company’s inventories are valued at the lower of cost, determined by the first-in, first-out (FIFO) method, or market. Inventories are summarized as follows:

(in thousands)	March 31, 2001	December 31, 2000

Raw materials and supplies	$94,941	$84,867
Work in process and finished goods	202,187	189,456
Total inventories	$297,128	$274,323

Note 6 - Earnings Per Share Computations

	Three Months Ended March 31,
	2001	2000

Income available to common stockholders (numerator)	$29,687,000	$29,643,000
Weighted-average common shares outstanding (denominator)	52,803,239	53,474,831
Basic earnings per share of common stock	$0.56	$0.55
Dilutive effects of stock option and stock awards, net of windfall tax benefits	155,496	211,692
Weighted-average common shares and common stock equivalents outstanding (denominator)	52,958,735	53,686,523
Diluted earnings per share of common stock	$0.56	$0.55

Certain options outstanding at March 31, 2001 and 2000, were not included in the computation of diluted earnings per share because they would not have had a dilutive effect (832,251 shares of common stock for the three months ended March 31, 2001; 880, 316 shares of common stock for the three months ended March 31, 2000).