Bemis Company (BMS)

Current quarter comparability was impacted by $16.0 million or $0.09 per share of expenses associated with the planned acquisition of Alcan Packaging Food Americas announced on July 5, 2009.  In addition, current quarter results were reduced by a total of $0.08 per share related to the impact of acquisition financing raised through the issuance of public bonds and common stock during the quarter.  These added costs were partially offset by a $3.6 million gain on the sale of property which added $0.02 per share to results for the quarter.

Net sales were $898.9 million for the third quarter of 2009, an 8.7 percent decrease from $984.3 million for the same period of 2008.  Currency effects reduced net sales by 3.6 percent compared to the third quarter of 2008.  The positive net sales impact of the June 2009 acquisition of the South American rigid packaging operations of Huhtamaki Oyj was 1.9 percent during the quarter.  The remaining 7.0 percent decrease in net sales reflects lower unit volume and selling prices offset by improved sales mix compared to the third quarter of 2008.

“Improved operating performance in our flexible packaging business segment delivered strong results this quarter,” said Henry Theisen, Bemis Company’s President and Chief Executive Officer.  “Our business model prioritizes material science and innovation to drive sales and operating profit growth.  While overall flexible packaging volumes have decreased and selling prices have declined to reflect lower raw material costs, improved sales mix reflects increased sales volumes in value-added product lines and increased profitability.  In addition, our business teams are delivering the benefits of our cost management initiatives directly to the bottom line.  While currency was still a headwind this quarter, our operations in Europe and Latin America have each delivered strong operating profit improvement from 2008 levels.  Our pressure sensitive materials business has been negatively impacted by the soft global economic conditions, but aggressive cost control measures are achieving sequential improvement in operating results for this business segment.  We are increasing our 2009 total year guidance to reflect the results of the first nine months and our confidence that profit levels will continue to be strong for the remainder of the year.”

Net sales were $866.4 million for the second quarter of 2009, an 11.6 percent decrease from $980.0 million for the same period of 2008.  Currency effects reduced net sales by 6.7 percent compared to the second quarter of 2008.  The remaining 4.9 percent decrease in net sales reflects lower unit volume partially offset by a favorable price and mix impact compared to the second quarter of 2008.

“Bemis continues to enjoy strong operating performance in this challenging economic environment,” said Henry Theisen, Bemis Company’s President and Chief Executive Officer.  “Our cost management initiatives have successfully reduced operating costs and generated savings that benefit the bottom line and cash flow.  Our disciplined business model provided margin benefit throughout the second quarter in light of lower raw material costs.  While the soft global economy is reflected in our order volume from certain end markets, the majority of our packaging is sold into the food and beverage markets which tend to benefit from consumer trends toward eating at home.  As global economies improve, we expect to benefit from increased production volumes and continue to benefit from the improvements in our manufacturing operations.”

For the year ended December 31, 2008, Alcan Packaging Food Americas recorded net sales of $1.5 billion and adjusted EBITDA of approximately $166 million.  The purchase price represents an adjusted EBITDA multiple of approximately 6.7 times when taking into account the estimated $100 million of tax benefits related to the structuring of much of the transaction as a purchase of assets.  Further adjusting the valuation for estimated annual run-rate synergies of $65 million results in an adjusted EBITDA multiple of approximately 4.8 times.  The transaction is expected to close by the end of 2009, subject to customary closing conditions and regulatory review.

“We are very pleased to add Alcan Packaging’s Food Americas business to the Bemis organization,” said Henry Theisen, Bemis President and Chief Executive Officer.  “Both Bemis and Alcan Packaging have strong, collaborative relationships with renowned food and consumer products customers.  We each have a long history of dedication to outstanding quality and manufacturing excellence.  In pooling our resources, we will diversify our existing technologies and product lines which will broaden our product offering and augment our technical capabilities.  This acquisition provides value from all angles and is a prudent investment in Bemis’ future.”

Highlights of the transaction:

·                  Increased global presence:  Bemis’ pro forma 2008 net sales increase 40 percent to approximately $5.3 billion with the percentage of net sales to the resilient food packaging space increasing from 57 percent to approximately 70 percent of total Bemis net sales.  The transaction also adds nearly 4,600 employees to Bemis’ global workforce for a total of over 20,000 employees at 84 manufacturing locations worldwide.

·                  Substantial synergy opportunity: Bemis expects over $65 million of annual run-rate pre-tax synergies to be achieved by the end of the second year following the acquisition date.  Of this total improvement, nearly 50 percent is expected to be achieved within 12 months of completing the transaction.  These improvements will be achieved primarily by optimizing product mix, improving operational and supply chain efficiencies, and reducing duplicate administrative costs.

·                  Financing structure preserves solid investment grade credit rating: Management intends to fund the purchase price with a combination of $1.0 billion in debt and $200 million in equity.  Management is confident that the combined companies will generate strong free cash flow to support diligent debt repayment and an investment grade credit rating.

“Bemis has historically maintained a strong balance sheet to ensure our ability to take advantage of opportunities like this,” said Theisen.  “Alcan Packaging Food Americas has demonstrated a commitment to investing in their operations and their workforce.  The combined companies are expected to generate cash flow sufficient to rapidly reduce debt outstanding while maintaining our combined portfolio of world class manufacturing facilities, investing in growth opportunities, and supporting Bemis’ historic dividend

Net sales were $843.4 million for the first quarter of 2009, an 11.0 percent decrease from $947.3 million for the same period of 2008.  Currency effects reduced net sales by 8.3 percent compared to the first quarter of 2008.  The remaining 2.7 percent decrease in net sales reflects lower unit volume partially offset by a favorable price and mix impact compared to the first quarter of 2008.

“I am pleased to report strong first quarter performance results in such a challenging market environment,” said Henry Theisen, Bemis Company’s President and Chief Executive Officer.  “Our manufacturing agility along with our disciplined cost management strategies have served us well in this global recession.  We are controlling expenses, working capital, and manufacturing waste while maintaining our focus on customer service and quality.  Our business teams are facing an environment of broad economic and market uncertainty in 2009, and we are meeting each challenge with a strategy that we expect to deliver long-term value to Bemis Company.”

Diluted earnings per share for the full year 2008 were $1.65, a decrease of 5.2 percent from $1.74 per share reported in 2007.  The net effect of currency translation and foreign exchange losses reduced earnings per share for 2008 by about $0.02 when compared to 2007.  The 2007 results include the tax benefit of $0.02 per share discussed above.  For the full year 2008, net sales were $3.8 billion, an increase of 3.6 percent compared to net sales of $3.6 billion in 2007.  Currency benefits increased net sales by 1.7 percent in 2008.

Commenting on the results of 2008, Henry Theisen, Bemis Company’s President and Chief Executive Officer, said, “Our business experienced volatility from many fronts during 2008.  During the second and third quarters, we saw record increases in raw material costs.  In the fourth quarter, the global financial crisis and weakening economy caused many customers to destock inventories in order to conserve cash and limit exposure to unpredictable changes in consumer buying patterns.  Consumers reduced discretionary spending, which impacted sales volumes in our pressure sensitive materials and display film product lines during the fourth quarter.  Currency fluctuations negatively impacted our results in the fourth quarter as the U.S. dollar strengthened against other currencies around the world.  At Bemis, our disciplined pricing strategy and strong balance sheet have been valuable assets to our business in this challenging environment.  We continue to focus our efforts on aggressively managing costs and improving the flexibility of our operations to respond to slowing demand in certain markets.”

“Approximately half of the shortfall relates to adverse currency effects on fourth quarter net income,” said Henry Theisen, President and Chief Executive Officer of Bemis Company, Inc.  “The remainder is principally the result of sales volume decreases in certain product lines with exposure to non-food applications such as North American roll label products and protective display films.”

Bemis will provide further details on results of operations when it announces its fourth quarter and total year 2008 results in a news release that will be available to the media and on the Bemis website on Tuesday, January 27, before the market opens.  Bemis will webcast an investor telephone conference regarding its completed 2008 financial results on January 27, 2009 at 10 a.m., Eastern Time.  Individuals may listen to the call on the Internet at www.bemis.com under “Investor Relations”.  Listeners are urged to check the website ahead of time to ensure their computers are configured for the audio stream.  Instructions for obtaining the required, free, downloadable software are available in a pre-event system test on the site.