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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC  20549**

** **

**FORM 10-K**

** **

**ANNUAL REPORT PURSUANT TO SECTION 13OR 15(d) OF**

**THE SECURITIES EXCHANGE ACT OF1934**

** **

**For the Fiscal Year Ended December 31,2009**

** **

**Commission File Number 1-5277**

 

**BEMIS COMPANY, INC.**

(Exact name of Registrant asspecified in its charter)

 

| **Missouri**                    | ** ** | **43-0178130**      |
|---------------------------------|------------|---------------------|
| (State or other jurisdiction of |       | (I.R.S. Employer    |
| incorporation or organization)  |       | Identification No.) |

 

**One Neenah Center, 4****th**** Floor,P.O. Box 669, Neenah, Wisconsin 54957-0669**

(Address of principal executive offices)

 

Registrant’stelephone number, including area code:   **(920) 727-4100**

 

Securities registered pursuant to Section 12(b) of the Act:

 

| **Title of  Each Class**               | ** ** | **Name of  Each Exchange  on Which Registered** |
|----------------------------------------|------------|-------------------------------------------------|
| Common Stock, par value $.10 per share |       | New York Stock Exchange                         |

 

Securities registeredpursuant to section 12(g) of the Act:  **None**

 

Indicate by check mark ifthe Registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act.   YES x NO o

 

Indicate by checkmark if the Registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act.   YES o  NO x

 

Indicate by checkmark whether the registrant: (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  YES x  NO o

 

Indicate by checkmark whether the registrant has submitted electronically and posted on itscorporate Web site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).    YES o  NOo

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K(§232.405)is notcontained herein, and will not be contained, to the best of the Registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.   x

 

Indicate by check markwhether the Registrant is a large accelerated filer, an accelerated filer, anon-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 theExchange 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 checkmark whether the Registrant is a shell company (as defined in Rule 12b-2of the Act).   YES o  NO x

 

The aggregate marketvalue of the voting and non-voting common equity held by nonaffiliates of theRegistrant on June 30, 2009, based on a closing price of $25.20 per shareas reported on the New York Stock Exchange, was $2,518,321,000.

 

As of February 24,2010, the Registrant had 109,012,133 shares of Common Stock issued andoutstanding.

 

Documents Incorporated by Reference

Portions of theProxy Statement - Annual Meeting of Stockholders May 6, 2010 - Part III

 

 

 

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**BEMIS COMPANY, INC. AND SUBSIDIARIES**

**ANNUAL REPORT ON FORM 10-K**

**TABLE OF CONTENTS**

 
| **Part I**   | ** ** |
|-------------------|------------|
|              | Item 1.    | Business | 3 |
|              | Item 1A.   | Risk Factors | 6 |
|              | Item 1B.   | Unresolved  Staff Comments | 9 |
|              |       |   |   |
|              | Item 2.    | Properties | 9 |
|              | Item 3.    | Legal Proceedings | 9 |
|              | Item 4.    | [Reserved] | 11 |
| ** **        |       |   |
| **Part II**  |       |   |
|              | Item 5.    | Market For  Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity  Securities | 11 |
|              | Item 6.    | Selected Financial  Data | 12 |
|              | Item 7.    | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 13 |
|              | Item 7A.   | Quantitative and  Qualitative Disclosures About Market Risk | 22 |
|              | Item 8.    | Financial  Statements and Supplementary Data | 22 |
|              |       | Management’s Responsibility Statement | 22 |
|              |       | Report of Independent Registered Public Accounting  Firm | 23 |
|              |       | Consolidated Statement of Income | 24 |
|              |       | Consolidated Balance Sheet | 25 |
|              |       | Consolidated Statement of Cash Flows | 26 |
|              |       | Consolidated Statement of Equity | 27 |
|              |       | Notes to Consolidated Financial Statements | 28 |
|              |       |   |   |
|              | Item 9.    | Changes In  and Disagreements With Accountants on Accounting and Financial Disclosure | 46 |
|              | Item 9A.   | Controls and  Procedures | 46 |
|              | Item 9B.   | Other Information | 46 |
| ** **        |       |   |
| **Part III** |       |   |
|              | Item 10.   | Directors,  Executive Officers and Corporate Governance | 47 |
|              | Item 11.   | Executive  Compensation | 48 |
|              |       |   |   |
|              | Item 12.   | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters | 48 |
|              |       |   |   |
|              | Item 13.   | Certain Relationships  and Related Transactions, and Director Independence | 48 |
|              | Item 14.   | Principal  Accountant Fees and Services | 48 |
| ** **        |       |   |
| **Part IV**  |       |   |
|              | Item 15.   | Exhibits and Financial Statement  Schedules | 49 |
|              |       |   |   |
|              |       | Signatures | 50 |
|              |       | Exhibit Index | 51 |
|              |       |   |   |
|              |       | Schedule II — Valuation and Qualifying Accounts and  Reserves | 53 |
|              |       | Report of  Independent Registered Public Accounting Firm on Financial Statement Schedule | 53 |
|              |       |   |   |
|              |       | Exhibit 21  — Subsidiaries of the Registrant | 54 |
|              |       | Exhibit 23  — Consent of PricewaterhouseCoopers LLP | 56 |
|              |       |   |   |
|              |       | Exhibit 31.1  — Certification of Henry J. Theisen, Chief Executive Officer of the Company, pursuant to  Rule 13a-14(a)/15d-14(a), dated March 1, 2010 | 57 |
|              |       |   |   |
|              |       | Exhibit 31.2  — Certification of Gene C. Wulf, Chief Financial Officer of the Company, pursuant to  Rule 13a-14(a)/15d-14(a), dated March 1, 2010 | 58 |
|              |       |   |   |
|              |       | Exhibit 32  — Certification of Henry J. Theisen, Chief Executive Officer of the Company, and Gene C. Wulf, Chief Financial  Officer of the Company, pursuant  to Section 1350, dated March 1, 2010 | 59 |

 

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**PART I — ITEMS 1, 1A, 1B, 2, and 3**

 

**ITEM 1 — BUSINESS**

 

BemisCompany, Inc., a Missouri corporation (the “Registrant” or “Company”),continues a business formed in 1858.  TheCompany was incorporated in 1885 as Bemis Bro. Bag Company with the namechanged to Bemis Company, Inc. in 1965. The Company is a principal manufacturer of flexible packaging productsand pressure sensitive materials, selling to customers throughout the UnitedStates, Canada, Mexico, South America, Europe, and Asia.  In 2009, approximately 85 percent of theCompany’s sales were derived from the Flexible Packaging segment andapproximately 15 percent were derived from the Pressure Sensitive Materialssegment.

 

TheCompany’s products are sold to customers primarily in the food industry.  Other customers include companies in thefollowing types of businesses: chemical, agribusiness, medical, pharmaceutical,personal care, electronics, automotive, construction, graphic industries, andother consumer goods.  Furtherinformation about the Company’s operations in its business segments isavailable at Note 17 to the Consolidated Financial Statements included in Item8 of this Annual Report on Form 10-K.

 

Priorto the acquisition of the Food Americas operations of Alcan Packaging, theCompany had approximately 16,000 employees, about 10,700 of whom wereclassified as production employees.  Manyof the North American production employees are covered by collective bargainingcontracts involving three different international unions, one independentunion, and 16 individual contracts with terms ranging from one to fouryears.  During 2009, six contractscovering 1,520 employees at six different locations in the United States weresuccessfully negotiated while one contract covering 88 employees at onedomestic location continues to be negotiated. Seven domestic labor agreements covering 741 employees are scheduled toexpire in 2010.  Many of the non-NorthAmerican production employees as well as some of the non-North Americansalaried workforce are covered by collective bargaining contracts involving 23different unions with terms ranging from one to two years.

 

Theacquisition of the Food Americas operations of Alcan Packaging on March 1,2010 added approximately 4,400 employees, of which approximately 3,200 areclassified as production employees, bringing the total Company employee countto approximately 20,400 employees.

 

Workingcapital elements fluctuate throughout the year in relation to the level ofcustomer volume and other marketplace conditions.  Inventory levels reflect a reasonable balancebetween raw material pricing and availability, and the Company’s commitment topromptly fill customer orders.  Manufacturingbacklogs are not a significant factor in the industries in which the Companyoperates.  The business of each of thesegments is not seasonal to any significant extent.

 

TheCompany is the owner or licensee of a number of United States and foreignpatents and patent applications that relate to certain of its products,manufacturing processes, and equipment. The Company also has a number of trademarks and trademark registrationsin the United States and in foreign countries. The Company’s patents, licenses, and trademarks collectively provide acompetitive advantage.  However, the lossof any single patent or license alone would not have a material adverse effecton the Company’s results as a whole or those of either of its segments.

 

TheCompany’s business activities are organized around its two business segments,Flexible Packaging and Pressure Sensitive Materials.  Both internal and external reporting conformto this organizational structure.  Asummary of the Company’s business activities reported by its two businesssegments follows.

 

**Flexible Packaging Segment**

Theflexible packaging segment manufactures a broad range of packaging for food,consumer goods, and industrial applications. Multilayer flexible polymer film structures and laminates are sold forfood, medical, and personal care products as well as non-food applicationsutilizing vacuum or modified atmosphere packaging.  Additional products include blown and caststretch film products, carton sealing tapes and application equipment, customthermoformed and injection molded plastic packaging, multiwall paper bags,printed paper roll stock, and bag closing materials.  Markets for our products include processedand fresh meat, liquids, frozen foods, cereals, snacks, cheese, coffee,condiments, candy, pet food, bakery, seed, lawn and garden, tissue, freshproduce, personal care and hygiene, disposable diapers, printed shrink overwrapfor the food and beverage industry, agribusiness, pharmaceutical, minerals, andmedical device packaging.

 

**Pressure Sensitive Materials Segment**

Thepressure sensitive materials segment manufactures pressure sensitive adhesivecoated paper and film substrates sold into label, graphic, and technicalmarkets.  Products for label marketsinclude narrow-web rolls of pressure sensitive paper, film, and metalized filmprinting stocks used in high-speed printing and die-cutting.  Products for graphic markets include pressuresensitive films used for decorative signage through computer-aided plotters,digital and screen printers, and photographic overlaminate and mountingmaterials including optically clear films with built-in UV inhibitors.  Products for technical markets includemicro-thin film adhesives used in delicate electronic parts assembly andpressure sensitive applications utilizing foam and tape based stocks to performfastening and mounting functions.

 

**Marketing, Distribution, and Competition**

Whilethe Company’s sales are made through a variety of distribution methods, morethan 90 percent of each segment’s sales are made by the Company’s direct salesforce.  Sales offices and plants arelocated throughout the United States, Canada, United Kingdom, ContinentalEurope, Scandinavia, Asia, South America, and Mexico to provide prompt andeconomical service to more than 

30,000customers.  The Company’s technicallytrained sales force is supported by product development engineers, designtechnicians, and a customer service organization.

 

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Nosingle customer accounts for ten percent or more of the Company’s totalsales.  Furthermore, the loss of one or afew major customers would not have a material adverse effect on the Company’soperating results.  Nevertheless,business arrangements with large customers require a large portion of themanufacturing capacity at a few individual manufacturing sites.  Any change in the business arrangement wouldtypically occur over a period of time, which would allow for an orderlytransition for both the Company’s manufacturing site and the customer.

 

Themajor markets in which the Company sells its products are highlycompetitive.  Areas of competitioninclude service, innovation, quality, and price.  This competition is significant as to boththe size and the number of competing firms. Major competitors in the Flexible Packaging segment include AmcorLimited, Exopack Company, Hood Packaging Corporation, Bryce Corporation, PliantCorporation, Printpack, Inc., Sealed Air Corporation, Sonoco ProductsCompany, Winpak ltd., and Wihuri OY.  Inthe Pressure Sensitive Materials segment major competitors include 3M, Acucote, Inc.,Avery Dennison Corporation, FLEXcon Corporation, Green Bay Packaging Inc., RicohCompany, Ltd., Ritrama Inc., Spinnaker Industries, Inc., Technicote Inc.,UPM-Kymmene Corporation, and Wausau Coated Products Inc.

 

TheCompany considers itself to be a significant factor in the market niches itserves; however, due to the diversity of the Flexible Packaging and PressureSensitive Materials segments, the Company’s precise competitive position inthese markets is not reasonably determinable. Advertising is limited primarily to business and trade publicationsemphasizing the Company’s product features and related technical capabilitiesand the individual problem-solving approach to customer problems.

 

**Raw Materials**

Polymerresins and films, paper, inks, adhesives, aluminum, and chemicals constitutethe basic major raw materials.  These arepurchased from a variety of global industry sources and the Company is notdependent on any one supplier for its raw materials.  While temporary industry-wide shortages ofraw materials may occur, the Company expects to continue to successfully manageraw material supplies without significant supply interruptions.  Currently, raw materials are readilyavailable.

 

**Research and Development Expense**

Research and development expenditures were as follows:

 
| **(in  thousands)**          | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Flexible Packaging           |       | $        | 17,301     |     | $          | 17,646   |       | $ | 19,477 |   |
| Pressure Sensitive Materials |       | 7,041    |       | 7,364    |       | 6,506    |       |
| Total                        |       | $        | 24,342     |     | $          | 25,010   |       | $ | 25,983 |   |

 

#### **Environmental Control**

Compliancewith federal, state, and local laws, rules, and regulations which have beenenacted or adopted regulating discharges of materials into the environment orotherwise relating to the protection of the environment, is not expected tohave a material effect upon the capital expenditures, earnings, or competitiveposition of the Company and its subsidiaries.

 

#### **Available Information**

TheCompany is a large accelerated filer (as defined in Exchange Act Rule 12b-2)and is also an electronic filer. Electronically filed reports (Forms 4, 8-K, 10-K, 10-Q, S-3, S-8, etc.)can be accessed at the Securities and Exchange Commission (SEC) website(http://www.sec.gov) or by visiting the SEC’s Public Reference Room locatedat 100 F St., N.E., Washington, DC 20549 (call 1-202-551-8090 or 1-800-732-0330for hours of operation). Electronically filed reports can also be accessedthrough the Company’s own website (http://www.bemis.com), under InvestorRelations/SEC Filings or by writing for free information, including SECfilings, to Investor Relations, Bemis Company, Inc., One Neenah Center, 4th Floor, P.O. Box 669, Neenah, Wisconsin54957-0669, or calling (920) 727-4100. In addition, the Company’s Board Committee charters, Principles ofCorporate Governance, and the Company’s code of business conduct and ethics canbe electronically accessed at the Company’s website under Company Overview or,free of charge, by writing directly to the Company, Attention:  Corporate Secretary.  The Company has adopted a Financial Code ofEthics which is filed as an exhibit to this Annual Report on Form 10-K,and is also posted on the Company’s website. The Company intends to post any amendment to, or waiver from, aprovision of the Financial Code of Ethics that applies to our principalexecutive officer, principal financial officer, principal accounting officer,controller and other persons performing similar functions on the InvestorRelations section of its website (www.bemis.com) promptly following the date ofsuch amendment or waiver.

 

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#### **Explanation of TermsDescribing the Company’s Products**

Barrierlaminate — A multilayer plastic film made by laminating twoor more films together with the use of adhesive or a molten plastic to achievea barrier for the planned package contents.

Barrierproducts — Products that provide protection and extend theshelf life of the contents of the package. These products provide this protection by combining different types ofplastics and additives into a multilayered plastic package.  These products protect the contents from suchthings as oxygen, moisture, light, odor, or other environmental factors.

Blownfilm — A plastic film that is extruded through an annular die in the form ofa tube and then expanded by an internal column of air in the manufacturingprocess.

Bundlingfilms — A film manufactured by a modified blown film process that is used forwrapping and holding multipacks of products such as canned goods and bottles ofliquids, replacing corrugate and fiberboard.

Castfilm — A plastic film that is extruded through a straight slot die as a flatsheet during its manufacturing process.

Coextrudedfilm — A blown or cast film extruded with multiple layers extrudedsimultaneously.

Controlledatmosphere packaging — A package which limits the flow of elements, suchas oxygen, carbon dioxide or moisture, into or out of the package.

Decorativeproducts — Pressure sensitive materials used for decorativesignage, promotional items, and displays and advertisements.

EZOpen Packaging — Any one of a series of technologies employed toallow the consumer easy access to a packaged product. Peelable closures, laseror other physical scoring/abrasion of a packaging film may be used. EZ Open canbe combined with reclose features such as plastic zippers or the inclusion ofpressure sensitive materials into the packaging film.

Flexiblepolymer film — A non-rigid plastic film. Generally the shape ofthe package changes as the product contained in it is removed.

Flexographicprinting — The most common flexible packaging printingprocess in North America using a raised rubber or alternative material imagemounted on a printing cylinder.

In-lineoverlamination — The ability to add a protective coating to aprinted material during the printing process.

Labelproducts — Pressure sensitive materials made up and sold inroll form.

Labelstock — Pressuresensitive material designed for the label markets.

Laminate/Barrierlaminate — A multilayer plastic film made by laminating twoor more films together with the use of adhesive or a molten plastic to achievethe distribution and use requirements for the planned package contents.Alternately, a barrier layer can also be included as one of the films or in thelaminating medium to protect the packaged products from such things asmoisture, oxygen or other environmental factors.

Modifiedatmosphere packaging — A package in which the normal atmosphericcomposition of air inside the package has been modified by replacing it with agas such as nitrogen.

Monolayerfilm — A single layer extruded plastic film.

Multiwallpaper bag — A package made from two or more layers, at leastone of which is paper, which have not been laminated.

Pouchesand bags — An option that delivers a semi-finished package,instead of rollstock, to a customer for filling product and sealing/closing thepackage for distribution.

Pressuresensitive material — A material coated with adhesive such that uponcontact with another material it will stick.

Primelabel — A pressure sensitive label used as the primary decorative label orsecondary label, typically on a consumer product.

RigidPackaging — A form of packaging in which the shape of thepackage is retained as its contents are removed in use. Bottles, trays andclamshell packaging are examples.

Rollstock — The principalform in which flexible packaging material is delivered to a customer.  Finished film wound on a core is converted ina process at the end user’s plant that forms, fills, and seals the package ofproduct for delivery to customers.

Rotogravureprinting — A high quality, long run printing processutilizing a metal engraved cylinder.

Sheetproducts — Pressure sensitive materials cut into sheets andsold in sheet form.

Shrinkfilm/ Barrier shrink film— A packaging film consisting of polyethyleneand/or polypropylene resins extruded via a tubular process.  The film is cooled and then reheated andstretched at a temperature near its melting point. The film can be irradiatedwith an electron beam in a second process to cross link the molecules for addedheat resistance and strength.  The filmis made to shrink around a product to be packaged by an application of athermal treatment.  Alternately, a layerof an oxygen barrier material can be included to manufacture a barrier shrinkfilm product.

Stretchfilm — A plastic film with a significant ability to stretch which is used towrap pallets of goods in the shipping process.

Technicalproducts — Technically engineered pressure sensitivematerials used primarily for fastening and mounting functions, for example incell phones, appliances, and electronic devices.

Thermoformedplastic packaging — A package formed by applying heat to a film toshape it into a tray or cavity and then sealing a flat film on top of thepackage after it has been filled.

UVinhibitors — Chemical agents included in a film to protectproducts against ultraviolet rays.

Variableinformation label — A pressure sensitive label that is typicallyprinted with a bar code or other type of variable information.

 

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**ITEM 1A — RISK FACTORS**

 

The following factors, aswell as factors described elsewhere in this Form 10-K, or in other filingsby the Company with the Securities and Exchange Commission, could adverselyaffect the Company’s consolidated financial position, results of operations orcash flows.  Other factors not presentlyknown to us or that we presently believe are not material could also affect ourbusiness operations and financial results.

 

**Acquisitions****—****Wemay not be able to successfully integrate businesses that we acquire.**

Wehave made numerous acquisitions in the past and are actively seeking newacquisitions that we believe will provide meaningful opportunities to grow ourbusiness and improve profitability. Acquired businesses may not achieve the levels of revenue, profit,productivity, or otherwise perform as we expect.  Acquisitions involve special risks,including, without limitation, the potential assumption of unanticipatedliabilities and contingencies as well as difficulties in integrating acquiredbusinesses.  While we believe that ouracquisitions will improve our competitiveness and profitability, we can give noassurance that acquisitions will be successful or accretive to earnings.

 

**Alcan Packaging Food Americas Acquisition.**

 

On March 1, 2010, Bemis completed the acquisition of the FoodAmericas operations of Alcan Packaging (the Food Americas Acquisition), abusiness unit of international mining group Rio Tinto plc, for $1.2billion.  The acquisition will expand ourglobal presence with 23 Food Americas flexible packaging facilities in theU.S., Canada, Mexico, Brazil, Argentina, and New Zealand.  These flexible packaging facilities recordednet sales of $1.4 billion in 2009 to the food and beverage markets and includeexpertise in foil and crystallized polyester technologies.

 

This Food AmericasAcquisition presents additional or increased risk factors as follows:

 

***We may not realize the expected benefits of the Food AmericasAcquisition because of integration difficulties and other challenges.***

 

The success of the FoodAmericas Acquisition will depend, in part, on our ability to realize theanticipated synergies, and cost savings from integrating the Alcan PackagingFood Americas business with our existing businesses. The integration processmay be complex, costly, and time-consuming. The difficulties of integrating theoperations of the Alcan Packaging Food Americas business include, among others:

 

·                  failure toimplement our business plan for the combined business;

 

·                  unanticipatedissues in integrating manufacturing, logistics, information, communications,and other systems;

 

·                  unanticipatedchanges in applicable laws and regulations;

 

·                  failure toretain key employees;

 

·                  operating risksinherent in the Alcan Packaging Food Americas business and our business;

 

·                  the impact onour internal controls and compliance with the regulatory requirements under theSarbanes-Oxley Act of 2002; and

 

·                  unanticipatedissues, expenses, and liabilities.

 

Wemay not accomplish the integration of the Alcan Packaging Food Americasbusiness smoothly, successfully, or within the anticipated costs or timeframe.The diversion of the attention of management from our current operations to theintegration effort and any difficulties encountered in combining operationscould prevent us from realizing the full benefits anticipated to result fromthe Food Americas Acquisition and could adversely affect our business.

 

***We have incurred and will incur significanttransaction and acquisition-related costs in connection with the Food AmericasAcquisition.***

Wehave incurred and will incur significant costs in connection with the FoodAmericas Acquisition. The substantial majority of these costs will benon-recurring expenses related to the Food Americas Acquisition, facilities,and systems consolidation costs.  We mayincur additional costs to maintain employee morale and to retain key employees.We will also incur substantial transaction fees and costs related toformulating integration plans. Additional costs will be incurred in theintegration of the Alcan Packaging Food Americas business. Although we expectthat the elimination of duplicative costs, as well as the realization of otherefficiencies related to the integration of the business, should allow us tomore than offset incremental transaction and acquisition-related costs overtime, this net benefit may not be achieved in the near term, or at all.

 

***Our increased debt obligations incurred tofinance the Food Americas Acquisition could adversely affect our business andlimit our ability to plan for or respond to changes in our business.***

Our increased debtobligations could have important consequences to our business. For example:

 

·                  we may be more vulnerable to general adverseeconomic and industry conditions;

 

·                  we may be required to dedicate a substantialportion of our cash flow from operations to payments on our indebtedness,thereby reducing the availability of our cash flow for other purposes,including business development efforts and mergers and acquisitions;

 

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·                  we are exposed to the risk of increasedinterest rates because a portion of our borrowings is at variable rates ofinterest;

 

·                  our flexibility in planning for, or reactingto, changes in our business and the industry in which we operate may belimited, thereby placing us at a competitive disadvantage compared to ourcompetitors that have less indebtedness.

 

***The transition services to beprovided by Rio Tinto for the Alcan Packaging Food Americas business may bedifficult for us to replace without operational problems and additional costs.***

We have entered into a transition services agreement with Rio Tintopursuant to which Rio Tinto will provide us certain transition services for theAlcan Packaging Food Americas business for certain periods of time followingthe closing date of the Food Americas Acquisition. These services include,among others, certain services relating to finance, administration, humanresources, payroll, and information technology. If, after the expiration of theagreement, we are unable to perform these services for the Alcan Packaging FoodAmericas business or replace them in a timely manner or on terms and conditionsas favorable as those we receive from Rio Tinto, we may experience operationalproblems and an increase in costs. In addition, the costs for such services maybe higher than the allocated costs for such services when the Alcan PackagingFood Americas business was operated as part of Rio Tinto.

 

***We may not be able to generatesufficient cash flows to meet our debt service obligations after the FoodAmericas Acquisition.***

We have incurred and will incur additional debt in connection with theFood Americas Acquisition. Our ability to make payments on and to refinance ourdebt obligations and to fund planned capital expenditures depends on ourability to generate cash from our future operations. This, to a certain extent,is subject to general economic, financial, competitive, legislative,regulatory, and other factors that are beyond our control.

 

If we cannot service our indebtedness, we may have to take actions suchas selling assets, seeking additional equity, or reducing or delaying capitalexpenditures, strategic acquisitions, investments and alliances, any of whichcould impede the implementation of our business strategy for us or prevent usfrom entering into transactions that would otherwise benefit our business.Additionally, we may not be able to effect such actions, if necessary, oncommercially reasonable terms, or at all.

 

***The market price of our common stockmay decline as a result of the Food Americas Acquisition.***

Themarket price of our common stock may decline as a result of the Food AmericasAcquisition if, among other things, we are unable to achieve the expectedgrowth in earnings, or if the operational cost savings estimates in connectionwith the integration of the Alcan Packaging Food Americas business are notrealized, or if the transaction costs related to the Food Americas Acquisitionare greater than expected, or if the value of the cash savings attributable tothe amortization of tax deductible goodwill is less than anticipated. Themarket price of our common stock also may decline if we do not achieve theperceived benefits of the acquisition as rapidly or to the extent anticipatedby financial or industry analysts or if the effect of the acquisition on ourfinancial results is not consistent with the expectations of financial orindustry analysts.

 

**Domestic and international economic conditions.**

Disruption in the domestic and international equityand financial markets has negatively impacted the United States’ economy aswell as international markets in which we conduct business.  We are not able to predict the future impactof other market disruptions on our liquidity and consolidated statements offinancial position, results of operations, and cash flows.

 

**Funded status of pension plans****—****Recognition of pension liabilitiesmay cause a significant reduction in stockholders’ equity.**

Currentaccounting standards issued by the Financial Accounting Standards Board (FASB)require balance sheet recognition of the funded status of our defined benefitpension and postretirement benefit plans. If the fair value of our pension plans’ assets at a future reportingdate decreases or if the discount rate used to calculate the projected benefitobligation (PBO) as of that date decreases, we will be required to record theincremental change in the excess of PBO over the fair value of the assets as areduction of stockholders’ equity.  Theresulting non-cash after-tax charge would not reduce reported earnings as thisamount would represent future expense. It would be recorded directly as a decrease in the Other ComprehensiveIncome component of stockholders’ equity. While we cannot estimate the future funded status of our pensionliability with any certainty at this time, we believe that if the market valueof assets or the discount rate used to calculate our pension liabilitymaterially decreases, the adjustment could significantly reduce ourstockholders’ equity.  A significantreduction in stockholders’ equity may impact our compliance with debt covenantsor could cause a downgrade in our credit ratings that could also adverselyimpact our future cost and speed of borrowing and have an adverse affect on ourfinancial condition, results of operations and liquidity.  We have identified pension assumptions ascritical accounting estimates.  See “Management’sDiscussion and Analysis of Financial Condition and Results ofOperations—Critical Accounting Estimates and Judgments — Pension costs” and “—Pensionassumptions sensitivity analysis” included in Item 7 of this Annual Report on Form 10-K.

 

**Goodwill and other intangible assets****—****A significant write down of goodwilland/or other intangible assets would have a material adverse effect on ourreported results of operations and net worth.**

Inaccordance with current accounting standards, we no longer amortize goodwill,but we review our goodwill balance for impairment at least once a year usingthe business valuation methods required by current accounting standards.  These methods include the use of aweighted-average cost of capital to calculate the present value of the expectedfuture cash flows of our reporting units. Future changes in the cost of capital, expected cash flows, or otherfactors may cause our goodwill and/or other intangible assets to be impaired,resulting in a non-cash charge against results of operations to write downthese assets for the amount of the impairment. If a significant write down is required, the charge would have amaterial adverse effect on our reported results of operations and networth.  We have identified the valuationof intangibles as a critical accounting estimate.  See “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations—Critical Accounting Estimates andJudgments—Intangible assets and goodwill” included in Item 7 of this AnnualReport on Form 10-K.

 

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**Foreign operations****—****Conditionsin foreign countries and changes in foreign currency exchange rates may reduceour reported results of operations.**

Wehave operations in the United States, Canada, Mexico, South America, Europe,and Asia.  In 2009, approximately 35percent of our sales were generated by entities operating outside of the UnitedStates.  Fluctuations in currencies cancause transaction and translation losses. In addition, our revenues and net income may be adversely affected byeconomic conditions, political situations, and changing laws and regulations inforeign countries, as to which we have no control.

 

**Interest rates****—****An increase in interest rates couldreduce our reported results of operations.**

AtDecember 31, 2009, our variable rate borrowings approximated $123.4million.  Fluctuations in interest ratescan increase borrowing costs and have an adverse impact on results ofoperations.  Accordingly, increases inshort-term interest rates will directly impact the amount of interest wepay.  For each one percent increase invariable interest rates, our annual interest expense would increase by $1.2million on the $123.4 million of variable rate debt outstanding as of December 31,2009.

 

**Credit rating****—****Adowngrade in our credit rating could increase our borrowing costs andnegatively affect our financial condition and results of operations.**

Inaddition to using cash provided by operations, we regularly issue commercialpaper to meet our short-term liquidity needs. Our credit ratings are important to our ability to issue commercialpaper at favorable rates of interest.  Adowngrade in our credit rating could increase the cost of borrowing byincreasing the interest rates that we pay for our commercial paper or the feesassociated with our bank credit facility. In addition, our bank credit facility has covenants that include limitson the sale of businesses, minimum net worth calculations, and a maximum ratioof debt to total capitalization.  If forany reason our existing credit arrangements were no longer available to us wewould be required to seek alternative sources of financing.  We would expect to meet our financialliquidity needs by accessing the bank market, which could further increase ourborrowing costs.

 

**Raw materials****—****Rawmaterial cost increases or shortages could adversely affect our results ofoperations.**

Asa manufacturer, our sales and profitability are dependent upon the availabilityand cost of raw materials, which are subject to price fluctuations.  Inflationary and other increases in the costsof raw materials have occurred in the past and are expected to recur, and ourperformance depends in part on our ability to reflect changes in costs inselling prices for our products.  In thepast, we have been generally successful in managing increased raw materialcosts and increasing selling prices when necessary.  Past performance may or may not be replicablein the future.  Natural disasters such ashurricanes, in addition to terrorist activity and government regulation ofenvironmental emissions, may negatively impact the production or deliverycapacity of our raw material suppliers in the chemical and paperindustries.  This could result inincreased raw material costs or supply shortages, which may have a negativeimpact on our profitability if we are unable to pass along the increased costsin our selling prices or, in the case of a shortage, secure raw materials fromalternative sources.

 

**Patents and proprietary technology****—****Our success is dependent on ourability to develop and successfully introduce new products and to acquire andretain intellectual property rights.**

Ourability to develop and successfully market new products and to develop,acquire, and retain necessary intellectual property rights is essential to ourcontinued success, which ability cannot be assured.

 

**Information technology****—****A failure in our informationtechnology infrastructure or applications could negatively affect our business.**

Wedepend on information technology to record and process customers’ orders,manufacture and ship products in a timely manner, and maintain the financialaccuracy of our business records.  We arein the process of developing and implementing a global Enterprise ResourcePlanning (ERP) system that will redesign and deploy new processes and a commoninformation system across our plants over a period of several years.  There can be no certainty that this systemwill deliver the expected benefits.  Thefailure to achieve our goals may impact our ability to (1) processtransactions accurately and efficiently and (2) remain in step with thechanging needs of the trade, which could result in the loss of customers.  In addition, the failure to either deliverthe application on time, or anticipate the necessary readiness and trainingneeds, could lead to business disruption and loss of customers andrevenue.  Finally, failure or abandonmentof the ERP system could result in a write-off of part or all of the costs that havebeen capitalized on the project.

 

Ourinformation systems could also be penetrated by outside parties intent onextracting information, corrupting information, or disrupting businessprocesses.  Such unauthorized accesscould disrupt our business and could result in the loss of assets.

 

**Numerous other factors over which we may have limitedor no control may affect our performance and profitability.**

Otherfactors that may influence our earnings, financial position, and liquidityinclude:  legal and administrative casesand proceedings (whether civil, such as environmental or product related, orcriminal), settlements, judgments, and investigations; developments orassertions by or against us relating to intellectual property rights andintellectual property licenses; adoption of new, or changes in, accountingpolicies or practices and the application of such policies and practices;changes in business mix; customer and supplier business reorganizations orcombinations; increase in cost of debt; ability to retain adequate levels ofinsurance coverage at acceptable rates; fluctuations in pension and employeebenefit costs; loss of significant contract(s); risks and uncertaintiesrelating to investment in development activities and new facilities; timelydevelopment and successful market acceptance of new products; pricing ofcompetitive products; disruptions in transportation networks; increasedparticipation in potentially less stable emerging markets; reliability ofutility services; impact of computer viruses; general or specific economicconditions and the ability and willingness of purchasers to substitute otherproducts for the products that we manufacture; financial condition andinventory strategies of customers and suppliers; credit risks; changes incustomer order patterns; employee work stoppages at plants; increasedcompetition; changes in government regulations and the impact of changes in theworld political environment, including the ability to estimate the impact offoreign currency exchange rates on financial results; the impact of epidemiologicalevents on the economy and on our customers and suppliers; and acts of war,terrorism, weather, and other natural disasters.

 

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**ITEM 1B — UNRESOLVED STAFF COMMENTS**

 

None.

 

**ITEM 2 — PROPERTIES**

 

Propertiesutilized by the Company at March 1, 2010, were as follows:

 

**Flexible Packaging Segment**

Priorto the acquisition of the Food Americas operations of Alcan Packaging, thissegment had 53 manufacturing plants located in 13 states and ten non-USAcountries, of which 46 are owned directly by the Company or its subsidiariesand seven are leased from outside parties. Initial lease terms generally provide for minimum terms of five to 15years and have one or more renewal options. The initial term of leases in effect at December 31, 2009, expirebetween 2010 and 2018.

 

Theacquisition of the Food Americas operations of Alcan Packaging added 23flexible packaging facilities in the U.S., Canada, Mexico, Brazil, Argentina,and New Zealand.  We now have 76worldwide manufacturing plants for the flexible packaging segment.

 

**Pressure Sensitive Materials Segment**

Thissegment has seven manufacturing plants located in three states and two non-USAcountries, all of which are owned directly by the Company or its subsidiaries.

 

**Corporate and General**

TheCompany considers its plants and other physical properties to be suitable,adequate, and of sufficient productive capacity to meet the requirements of itsbusiness.  The manufacturing plantsoperate at varying levels of utilization depending on the type of operation andmarket conditions.  The executive officesof the Company, which are leased, are located in Neenah, Wisconsin.

 

**ITEM 3 — LEGAL PROCEEDINGS**

The Company is involved in a number oflawsuits incidental to its business, including environmental relatedlitigation.  Although it is difficult to predict the ultimate outcome ofthese cases, management believes, except as discussed below, that any ultimateliability would not have a material adverse effect upon the Company’sconsolidated financial condition or results of operations.

 

*Environmental Matters*

The Company is a potentially responsible party (PRP) pursuant to theComprehensive Environmental Response, Compensation and Liability Act of 1980(commonly known as “Superfund”) and similar state laws in proceedingsassociated with seventeen sites around the United States.  These proceedings were instituted by theUnited States Environmental Protection Agency and certain state environmentalagencies at various times beginning in 1983. Superfund and similar state laws create liability for investigation andremediation in response to releases of hazardous substances in the environment.Under these statutes, joint and several liability may be imposed on wastegenerators, site owners and operators, and others regardless of fault.  Although these regulations could require theCompany 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 andnon-use values, we expect the Company’s liability in these proceedings to belimited to monetary damages. The Company expects its future liability relativeto these sites to be insignificant, individually and in the aggregate. The Company has reserved an amount that it believes to be adequate to cover itsexposure.

 

*Alcan Packaging Acquisition*

In compliance with regulatoryrequirements for approval of our acquisition of the Food Americas operations ofAlcan Packaging in the United States, we have entered into a Consent Decreewith the United States Department of Justice. Under the terms of the Consent Decree, we are obligated to divestcertain Alcan Packaging Food Americas packaging assets in the United Stateswithin a specified time period after the closing date.  The packaging assets that will be divestedproduced annual sales of approximately $100 million in 2009 and includemanufacturing equipment used to produce shrink bags used for fresh meatproducts and flexible packaging used for natural cheese products.

 

*São Paulo Tax Dispute*

Dixie Toga S.A., acquired by the Company on January 5,2005, is involved in a tax dispute with the City of São Paulo, Brazil. The City imposes a tax on the rendering of printing services.  The Cityhas assessed this city services tax on the production and sale of printedlabels and packaging products.  Dixie Toga, along with a number of otherpackaging companies, disagree and contend that the city services tax is notapplicable to its products and that the products are subject only to the statevalue added tax (VAT).  Under Brazilian law, state VAT and city servicestax are mutually exclusive and the same transaction can be subject to only oneof those taxes.  Based on a ruling from the State of São Paulo, advicefrom legal counsel, and long standing business practice, Dixie Toga appealedthe city services tax and instead continued to collect and pay only the stateVAT.

 

TheCity of São Paulo disagreed and assessed Dixie Toga the city services tax forthe years 1991-1995.  The assessments forthose years are estimated to be approximately $62.9 million at the date theCompany acquired Dixie Toga, translated to U.S. dollars at the December 31,2009 exchange rate.  Dixie Togachallenged the assessments and ultimately litigated the issue in two annulmentactions filed on November 24, 1998 and August 16, 1999 in the LowerTax Court in the city of São Paulo.  Adecision by the Lower Tax Court in the city of São Paulo in 2002 cancelled allof the assessments for the years 1991-1995. The City of São Paulo, the State of São Paulo, and Dixie Toga have eachappealed parts of the lower court decision. In the event of an adverse resolution, the estimated amount for theseyears could be substantially increased for additional interest, monetaryadjustments and costs from the date of acquisition.

 

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TheCity has also asserted the applicability of the city services tax for thesubsequent years 1996-2001 and has issued assessments for those years for DixieToga and for Itap Bemis Ltda., a Dixie Toga subsidiary.  The assessments for those years were upheldat the administrative level and are being challenged by the companies.  The assessments at the date of acquisitionfor these years for tax and penalties (exclusive of interest and monetaryadjustments) are estimated to be approximately $9.5 million for Itap Bemis and$30.6 million for Dixie Toga, translated to U.S. dollars at the December 31,2009 exchange rate.  In the event of anadverse resolution, the estimated amounts for these years could be increased by$40.1 million for Itap Bemis and $115.6 million for Dixie Toga for interest,monetary adjustments and costs.

 

The1996-2001 assessments for Dixie Toga are currently being challenged in thecourts.  In pursuing its challengethrough the courts, taxpayers are generally required, in accordance with courtprocedures, to pledge assets as security for its lawsuits.  Under certain circumstances, taxpayers mayavoid the requirement to pledge assets. Dixie Toga has secured a court injunction that avoids the current requirementto pledge assets as security for its lawsuit related to the 1996-2001assessments.

 

Recently,the City has also asserted the applicability of the city services tax for thesubsequent years 2004-2009.  The assessments issued by the City for theseyears have been received and are being challenged by the Company at theadministrative level.  The assessments for tax and penalties are estimatedto be approximately $23.4 million, translated to U.S. dollars at the December 31,2009 exchange rate.

 

The Company strongly disagrees with the City’sposition and intends to vigorously challenge any assessments by the City of SãoPaulo.  The Company is unable at this time to predict the ultimate outcomeof the controversy and as such has not recorded any liability related to thismatter.  An adverse resolution could be material to the consolidatedresults of operations and/or cash flows of the period in which the matter isresolved.

 

*Brazil Investigation*

On September 18, 2007, the Secretariat ofEconomic Law (SDE), a governmental agency in Brazil, initiated an investigationinto possible anti-competitive practices in the Brazilian flexible packagingindustry against a number of Brazilian companies including a Dixie Togasubsidiary.  The investigation relates to periods prior to the Company’sacquisition of control of Dixie Toga and its subsidiaries.  Given thepreliminary nature of the proceedings the Company is unable at the present timeto predict the outcome of this matter.

 

*Labelstock Class Actions*

TheCompany and its subsidiary, Morgan Adhesives Company, were named as defendantsin thirteen civil lawsuits related to an investigation that was initiatedand subsequently closed by the U.S. Department of Justice without any furtheraction.  Six of these lawsuits purported to represent a nationwideclass of labelstock purchasers, and each alleged a conspiracy to fix priceswithin the self-adhesive labelstock industry.  The first of these lawsuitswas filed on May 27, 2003.  In theselawsuits, the plaintiffs sought actual damages for the period of the allegedconspiracy (January 1, 1996 through July 25, 2003) trebled, plus anaward of attorneys’ fees and costs.  On November 5,2003, the Judicial Panel on MultiDistrict Litigation issued a decisionconsolidating all of the federal class actions for pretrial purposes in theUnited States District Court for the Middle District of Pennsylvania, beforethe Honorable Chief Judge Vanaskie.  On November 20, 2007, the Courtgranted plaintiffs’ motion for class certification.  On June 24,2008, the Court in the consolidated federal class actions issued a decisiondismissing the Company from those actions. On January 27, 2009, the defendants filed a motion to decertify theclass based on new case law in the Third Circuit.  On May 26, 2009, the Company and MorganAdhesives Company entered into a settlement with the plaintiff class, pursuantto which the Company agreed to pay $1.25 million in return for a full andcomplete release of all claims in the federal class actions.  The Companyagreed to pay this settlement amount to avoid the expense of furtherlitigation.  On June 10, 2009, Judge Vanaskie granted preliminaryapproval to the settlement.  On September 17, 2009, Judge Vanaskiegranted final approval of the settlement, and dismissed the class actionagainst Morgan Adhesives with prejudice.

 

The Companyand Morgan Adhesives Company have also been named in three lawsuits filed inthe California Superior Court in San Francisco. These three lawsuits, whichhave been consolidated, seek to represent a class of all California indirectpurchasers of labelstock and each alleges a conspiracy to fix prices within theself-adhesive labelstock industry.

 

Finally,the Company has been named in one lawsuit in Vermont, seeking to represent aclass of all Vermont indirect purchasers of labelstock, one lawsuit inNebraska seeking to represent a class of all Nebraska indirect purchasers oflabelstock, one lawsuit in Kansas seeking to represent a class of all Kansasindirect purchasers of labelstock, and one lawsuit in Tennessee, seeking torepresent a class of purchasers of labelstock in various jurisdictions, allalleging a conspiracy to fix prices within the self-adhesive labelstockindustry.  On November 20, 2009, the Company and Morgan AdhesivesCompany entered into a settlement with the plaintiffs in the class actionsfiled in Nebraska, Kansas, Tennessee, and Vermont, pursuant to which theCompany agreed to pay $90,000 in return for a full and complete release of allclaims in those class actions.  TheCompany agreed to pay this settlement amount to avoid the expense of furtherlitigation.  On November 24, 2009,the Court granted preliminary approval to the settlement of the class actionsfiled in Nebraska, Kansas, Tennessee, and Vermont.  The Company and Morgan Adhesives Companyintend to vigorously defend the remaining state class actions.

 

Giventhe ongoing status of the remaining class-action civil lawsuit, the Company isunable to predict the outcome of these matters although the effect could be materialto the results of operations and/or cash flows of the period in which thematter is resolved.  The Company is currently not otherwise subject to anypending litigation other than routine litigation arising in the ordinary courseof business, none of which is expected to have a material adverse effect on thebusiness, results of operations, financial position, or liquidity of theCompany.

 

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**ITEM 4 — [RESERVED]**

 

**PART II — ITEMS 5, 6, 7, 7A, 8, 9, 9A, and 9B**

 

**ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY,**

**RELATED STOCKHOLDER MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIES**

 

TheCompany’s common stock is traded on the New York Stock Exchange under thesymbol BMS.  On December 31, 2009,there were 3,870 registered holders of record of our common stock.  The Company did not repurchase any of itsequity securities in the fourth quarter of the fiscal year ended December 31,2009.  As of December 31, 2009,under authority granted by the Board of Directors, the Company may repurchasean additional 4,074,886 shares of its common stock.

 

Dividendspaid and the high and low common stock prices per share were as follows:

 
| **For  the Quarterly Periods Ended:** | ** ** | **March 31** | ** ** | **June 30** | ** ** | **September 30** | ** ** | **December 31** | ** ** |
|---------------------------------------|------------|-------------------|------------|------------------|------------|-----------------------|------------|----------------------|------------|
| 2009                                  |       |              |       |             |       |                  |       |                 |       |
| Dividend paid per common share        |       | $                 | 0.225      |             | $          | 0.225                 |       | $                    | 0.225      |   | $ | 0.225 |   |
| Common stock price per share          |       |              |       |             |       |                  |       |                 |       |
| High                                  |       | $                 | 26.27      |             | $          | 26.32                 |       | $                    | 27.65      |   | $ | 31.41 |   |
| Low                                   |       | $                 | 16.85      |             | $          | 20.34                 |       | $                    | 23.88      |   | $ | 24.92 |   |
| 2008                                  |       |              |       |             |       |                  |       |                 |       |
| Dividend paid per common share        |       | $                 | 0.22       |             | $          | 0.22                  |       | $                    | 0.22       |   | $ | 0.22 |   |
| Common stock price per share          |       |              |       |             |       |                  |       |                 |       |
| High                                  |       | $                 | 27.87      |             | $          | 27.86                 |       | $                    | 29.70      |   | $ | 27.02 |   |
| Low                                   |       | $                 | 22.50      |             | $          | 22.40                 |       | $                    | 21.82      |   | $ | 20.62 |   |
| 2007                                  |       |              |       |             |       |                  |       |                 |       |
| Dividend paid per common share        |       | $                 | 0.21       |             | $          | 0.21                  |       | $                    | 0.21       |   | $ | 0.21 |   |
| Common stock price per share          |       |              |       |             |       |                  |       |                 |       |
| High                                  |       | $                 | 36.53      |             | $          | 34.81                 |       | $                    | 34.53      |   | $ | 29.92 |   |
| Low                                   |       | $                 | 31.92      |             | $          | 31.95                 |       | $                    | 28.01      |   | $ | 25.53 |   |

 

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**ITEM 6 — SELECTED FINANCIAL DATA**

 

**FIVE-YEARCONSOLIDATED REVIEW**

*(dollarsin millions, except per share amounts)*

 
| **Years  Ended December 31,**                                                | ** ** | **2009**    | ** ** | **2008**    | ** ** | **2007**    | ** ** | **2006**    | ** ** | **2005**    | ** ** |
|-----------------------------------------------------------------------------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|
| **Operating Data**                                                                |       |        |       |        |       |        |       |        |       |        |       |
| Net sales                                                                         |       | $           | 3,514.6    |        | $          | 3,779.4     |       | $           | 3,649.3    |        | $          | 3,639.4 |   | $ | 3,474.0 |   |
| Cost of products soldand other expenses                                           |       | 3,232.2     |       | 3,471.5     |       | 3,309.4     |       | 3,300.8     |       | 3,153.0     |       |
| Interest expense                                                                  |       | 42.1        |       | 39.4        |       | 50.3        |       | 49.3        |       | 38.7        |       |
| Income before income taxes                                                        |       | 240.3       |       | 268.5       |       | 289.6       |       | 289.3       |       | 282.3       |       |
| Provision for income taxes                                                        |       | 87.8        |       | 96.3        |       | 104.3       |       | 109.5       |       | 113.9       |       |
| Net income                                                                        |       | 152.5       |       | 172.2       |       | 185.3       |       | 179.8       |       | 168.4       |       |
| Less: net income attributable tononcontrolling interests                          |       | 5.3         |       | 6.0         |       | 3.7         |       | 3.5         |       | 5.9         |       |
| Net income attributable to Bemis Company, Inc.                               |       | 147.2       |       | 166.2       |       | 181.6       |       | 176.3       |       | 162.5       |       |
| Net income attributable to Bemis Company, Inc.as a percent of net sales      |       | 4.2         | %          | 4.4         | %          | 5.0         | %          | 4.8         | %          | 4.7         | %          |
|                                                                              |       |        |       |        |       |        |       |        |       |        |       |
| **Common Share Data**                                                             |       |        |       |        |       |        |       |        |       |        |       |
| Basic earnings per share                                                          |       | $           | 1.38       |        | $          | 1.61        |       | $           | 1.71       |        | $          | 1.63 |   | $ | 1.48 |   |
| Diluted earnings per share                                                        |       | 1.38        |       | 1.61        |       | 1.70        |       | 1.62        |       | 1.48        |       |
| Dividends per share                                                               |       | 0.90        |       | 0.88        |       | 0.84        |       | 0.76        |       | 0.72        |       |
| Book value per share                                                              |       | 17.11       |       | 13.87       |       | 15.93       |       | 14.32       |       | 13.08       |       |
| Weighted-average sharesoutstanding for computation of diluted  earnings per share |       | 106,924,919 |       | 103,404,199 |       | 106,758,469 |       | 108,549,573 |       | 109,960,169 |       |
| Common shares outstanding at December 31,                                    |       | 108,223,740 |       | 99,708,191  |       | 100,518,355 |       | 104,841,576 |       | 105,305,975 |       |
|                                                                              |       |        |       |        |       |        |       |        |       |        |       |
| **Capital Structure and Other  Data**                                             |       |        |       |        |       |        |       |        |       |        |       |
| Current ratio                                                                     |       | 3.8         | x          | 2.3         | x          | 2.1         | x          | 2.0         | x          | 2.1         | x          |
| Working capital                                                                   |       | $           | 1,480.5    |        | $          | 560.9       |       | $           | 602.4      |        | $          | 538.3 |   | $ | 513.5 |   |
| Total assets                                                                      |       | 3,928.7     |       | 2,822.3     |       | 3,191.4     |       | 3,039.0     |       | 2,964.6     |       |
| Short-term debt                                                                   |       | 31.3        |       | 26.6        |       | 67.8        |       | 67.6        |       | 54.0        |       |
| Long-term debt                                                                    |       | 1,227.5     |       | 660.0       |       | 775.5       |       | 722.2       |       | 790.1       |       |
| Total equity                                                                      |       | 1,851.7     |       | 1,382.5     |       | 1,601.3     |       | 1,501.2     |       | 1,377.0     |       |
| Return on average total equity                                                    |       | 9.1         | %          | 11.1        | %          | 11.7        | %          | 12.3        | %          | 12.1        | %          |
| Return on average total capital                                                   |       | 6.4         | %          | 8.0         | %          | 8.5         | %          | 8.6         | %          | 8.4         | %          |
| Depreciation and amortization                                                     |       | $           | 159.3      |        | $          | 162.0       |       | $           | 158.5      |        | $          | 152.4 |   | $ | 150.8 |   |
| Capital expenditures                                                              |       | 89.2        |       | 120.5       |       | 178.9       |       | 158.8       |       | 187.0       |       |
| Number of common stockholders                                                     |       | 3,870       |       | 3,920       |       | 4,111       |       | 4,192       |       | 4,359       |       |
| Number of employees                                                               |       | 20,400      |       | 15,394      |       | 15,678      |       | 15,736      |       | 15,903      |       |

 

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**ITEM 7 — MANAGEMENT’S DISCUSSIONAND ANALYSIS OF**

**FINANCIAL CONDITION AND RESULTSOF OPERATIONS**

 

***Management’s Discussion and Analysis***

 

## ***Three Years Ended December 31, 2009***

Management’sDiscussion and Analysis should be read in conjunction with the ConsolidatedFinancial Statements and related Notes included in Item 8 of this Annual Reporton Form 10-K.

 

## **Three-year review of results**

## ** **

| **(dollars  in millions)**                               | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net sales                                                |       | $        | 3,514.6    |     | 100.0      | %        | $          | 3,779.4 |   | 100.0 | % | $ | 3,649.3 |   | 100.0 | % |
| Cost of products sold                                    |       | 2,814.4  |       | 80.1     |       | 3,131.4  |       | 82.9 |   | 2,973.3 |   | 81.5 |   |
| Gross margin                                             |       | 700.2    |       | 19.9     |       | 648.0    |       | 17.1 |   | 676.0 |   | 18.5 |   |
| Selling, general, and administrative expenses            |       | 370.9    |       | 10.5     |       | 342.7    |       | 9.0 |   | 341.6 |   | 9.4 |   |
| All other expenses                                       |       | 89.0     |       | 2.5      |       | 36.8     |       | 1.0 |   | 44.8 |   | 1.2 |   |
| Income before income taxes                               |       | 240.3    |       | 6.8      |       | 268.5    |       | 7.1 |   | 289.6 |   | 7.9 |   |
| Provision for income taxes                               |       | 87.8     |       | 2.5      |       | 96.3     |       | 2.5 |   | 104.3 |   | 2.8 |   |
| Net income                                               |       | 152.5    |       | 4.3      |       | 172.2    |       | 4.6 |   | 185.3 |   | 5.1 |   |
| Less: net income attributable toNoncontrolling interests |       | 5.3      |       | 0.1      |       | 6.0      |       | 0.2 |   | 3.7 |   | 0.1 |   |
| Net income attributable to Bemis Company, Inc.      |       | $        | 147.2      |     | 4.2        | %        | $          | 166.2 |   | 4.4 | % | $ | 181.6 |   | 5.0 | % |
| Effective income tax rate                                |       |     |       | 36.5     | %          |     |       | 35.9 | % |   |   | 36.0 | % |

 

# **Overview**

BemisCompany, Inc. is a leading global manufacturer of flexible packaging andpressure sensitive materials supplying a variety of markets.  Approximately 60 percent of our total companynet sales are to customers in the food industry.  Sales of our flexible packaging products arewidely diversified among food categories and can be found in nearly every aisleof the grocery store.  Other markets intowhich we sell our flexible packaging products include applications for medicaldevices, personal care, and lawn and garden. Our emphasis on supplying packaging to the food industry hashistorically provided a more stable market environment for our flexiblepackaging business segment, which accounts for about 85 percent of our netsales. The remaining 15 percent of our net sales is from the pressure sensitivematerials business segment which, while diversified in end use products, isless focused on food industry applications and more exposed to economicallysensitive end markets such as advertising, housing, and automotive.

 

Themarkets into which our products are sold are highly competitive.  Our leading flexible packaging marketpositions in North and South America reflect our focus on expanding ouroffering of value-added, proprietary products. We also manufacture products that are less unique but for which ourtechnical know-how and economies of scale offer us a competitiveadvantage.  The primary raw materials forour business segments are polymer resins and films, paper, inks, adhesives,aluminum, and chemicals.

 

## **Market Conditions**

Theglobal financial crisis which started late in 2008 continued to dampen consumerdemand in many regions around the world during 2009.  While the majority of our products are soldfor more resilient food applications, our customers who operate in theadvertising, automotive, housing, and industrial product markets experiencedweakness in demand for their products throughout the year.  In the food and grocery products markets, weexperienced lower unit sales volumes but benefited from consumer trends thathave prioritized value added products.

 

Polymerresins, the primary raw materials used in our flexible packaging businesssegment, experienced significant volatility in recent years.  Our 2009 operating performance benefited froma temporary margin increase as raw material costs decreased ahead ofcontractual selling price adjustments. During the last half of 2009, resin costs were relatively stable and themajority of our contract selling prices had adjusted to reflect the change ininput costs.

 

## **Subsequent Event - Acquisition of Alcan Packaging Food Americas**

On March 1, 2010, Bemis completed the acquisition of the FoodAmericas operations of Alcan Packaging, a business unit of international mininggroup Rio Tinto plc, for $1.2 billion. The acquisition will expand our global presence with 23 Food Americasflexible packaging facilities in the U.S., Canada, Mexico, Brazil, Argentina,and New Zealand.  These flexiblepackaging facilities, while owned by Rio Tinto plc, recorded net sales of $1.4billion in 2009 to the food and beverage markets and include expertise in foiland crystallized polyester technologies.

 

In compliance with regulatory requirements for approval of thetransaction in the United States, Bemis is obligated to divest certain AlcanPackaging Food Americas packaging assets in the United States within aspecified time period after the closing date. The packaging assets that will be divested produced annual sales of approximately$100 million in 2009 and include manufacturing equipment used to producepackaging for fresh meat and retail natural cheese products.

 

Themajority of the financing for this transaction was completed during the thirdquarter of 2009 through the issuance of $800.0 million of public bonds and 8.2million common shares issued in a secondary public stock offering.  The remaining cash purchase price wasfinanced in the commercial paper market in advance of closing.

 

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# **Results of Operations**

## ***Consolidated Overview***

* *
| **(in  millions, except per share amounts)**        | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-----------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net sales                                           |       | $        | 3,514.6    |     | $          | 3,779.4  |       | $ | 3,649.3 |   |
| Net income attributable to Bemis Company, Inc. |       | 147.2    |       | 166.2    |       | 181.6    |       |
| Diluted earnings per share                          |       | 1.38     |       | 1.61     |       | 1.70     |       |
|                                                     |            |          |            |          |            |          |            |  |  |  |

 

***2009 versus 2008***

Forthe year ended December 31, 2009, net sales decreased 7.0 percent.  The effect of currency translation decreasednet sales by 3.3 percent in 2009, while the June 2009 acquisition of aflexible packaging company in South America contributed 1.3 percent to netsales growth.  Net of these impacts, thedecline in net sales during 2009 primarily reflects lower unit sales volumes inboth business segments.

 

Dilutedearnings per share were $1.38 for 2009, a 14.3 percent decrease compared to$1.61 per share for 2008.  For the yearended December 31, 2009, diluted earnings per share included a $0.50 pershare charge representing the impact of acquisition related professional fees,acquisition financing, an administrative sales tax assessment, and severancecharges, partially offset by a $0.02 per share gain on the sale of anasset.  Operating results for the yearended December 31, 2009 benefited from an increased proportion of netsales of value added products and decreasing input costs during the first halfof the year.

 

***2008 versus 2007***

Forthe year ended December 31, 2008, net sales increased 3.6 percent,reflecting increased raw material costs incorporated into higher selling pricesduring the year.   Unit volume sold intocertain food packaging markets increased compared to 2007, while unit volumesdeclined in advertising, display film, and construction-related markets thatare more sensitive to economic conditions. Currency translation benefits increased net sales by 1.7 percent.

 

Dilutedearnings per share were $1.61 for 2008, a 5.3 percent decrease compared to$1.70 per share for 2007.  In 2007,diluted earnings per share included $0.02 per share tax benefit related todividends from foreign subsidiaries. Higher raw material costs in 2008 negatively impacted gross margins.

 

# ***Flexible Packaging Business Segment***

Ourflexible packaging business segment provides packaging to a variety of endmarkets, including packaging for products such as meat and cheese, dairy andliquids, confectionery and snack, frozen foods, lawn and garden, health andhygiene, beverages, medical devices, bakery, and dry foods.  The most significant raw materials used inthis business segment are polymer resins, which we use to develop andmanufacture multilayer film products. Our method of passing on input cost changes to customers throughregularly adjusted contractual selling prices normally occurs with a severalmonth lag.  This methodology creates ashort-term, negative impact on operating profit margins during periods of rapidraw material cost increases and a short-term, positive impact on operatingprofit margins during periods of rapid raw materials cost declines.  Raw material costs have been quite volatileover the past few years.  During thefirst half of 2008, raw material costs increased substantially, negativelyimpacting operating margins during 2008. This was followed by rapid decreases in raw material costs whichbenefited operating margins during the first half of 2009.  Raw material costs were relatively stableduring the latter half of 2009.

 

*Acquisition of South AmericanRigid Packaging Operations of Huhtamaki Oyj*

OnJune 3, 2009, Bemis acquired the South American rigid packaging operationsof Huhtamaki Oyj, a globalmanufacturer of consumer and specialty packaging.  This rigid packaging business, which includesthree facilities in Brazil and one facility in Argentina, recorded annual netsales of approximately $86 million in 2008, primarily to dairy and food servicemarkets.  The purchase price of $43.0million was paid with a combination of $32.3 million cash on hand, $1.9 millionof debt assumed, and an $8.8 million note payable to the seller, the majorityof which was paid during 2009.

 
| **(dollars  in millions)**                                              | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net sales                                                               |       | $        | 2,983.4    |     | $          | 3,153.2  |       | $ | 3,001.8 |   |
| Operating profit (See Note 17 tothe Consolidated Financial  Statements) |       | 385.3    |       | 315.9    |       | 346.6    |       |
| Operating profit as a percentage of net sales                           |       | 12.9     | %          | 10.0     | %          | 11.5     | %          |
|                                                                         |            |          |            |          |            |          |            |  |  |  |

 

***2009 versus 2008***

Netsales in our flexible packaging business segment decreased 5.4 percent in2009.  Currency effects accounted for asales decline of 3.3 percent compared to 2008 and the operations of HuhtamakiOyj, acquired in June 2009, accounted for $49.6 million of 2009 net salesfollowing the acquisition, increasing net sales by 1.6 percent.  The remaining 3.7 percent decrease in netsales reflects both lower selling prices and unit sales volume.  Generally lower net sales of flexiblepackaging for markets such as meat and cheese, confectionery and snack, petfood, bakery products, overwrap for bottled beverages, health and hygiene, andindustrial products reflects decreased consumer demand for products in thoseareas.  These market segment applicationsrepresent approximately 70 percent of our total flexible packaging net salesand offset modestly higher net sales of value added packaging applications inother market segments such as dairy, liquids, and medical products.

 

Operatingprofit as a percentage of net sales increased to 12.9 percent in 2009 from 10.0percent in 2008.  This improvementreflects the combined impact of improved sales mix and production efficiencyinitiatives, as well as lower input costs experienced during the first half of2009.  The improvement in sales mixduring 2009 is attributable to an increased proportion of net sales representedby value added packaging which incorporates consumer convenience features andextends shelf life.  Net sales ofpackaging for less complex

 

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applicationsgenerally experienced the largest unit volume decrease during 2009.  In comparison, operating margins during 2008were negatively impacted by dramatic increases in raw material costs during thesummer months.

 

***2008 versus 2007***

Netsales in our flexible packaging business segment increased 5.0 percent in 2008,principally reflecting the impact of higher selling prices.  Currency effects accounted for sales growthof 1.4 percent during 2008. Increases in net sales of packaging for meat andcheese, dairy and liquids, bakery products, and medical products marketsreflected higher unit volume.  Thesemarkets represent approximately 48 percent of total flexible packaging netsales.  Net sales also increased inpackaging for dry foods, health and hygiene, and industrial product markets,driven primarily by higher selling prices. These markets represent approximately 22 percent of flexible packagingnet sales.  We experienced lower netsales in the remaining 30 percent of our flexible packaging market categoriesas a result of lower unit volume.  Theselower volume markets include confectionery and snack markets, pet products,overwrap film for bottled water, frozen foods, lawn and garden, and protectivedisplay films.  Non-discretionary foodmarkets have historically provided defensive characteristics during times ofeconomic weakness.  Markets for protectivedisplay films and packaging for discretionary food and consumer products havebeen negatively impacted during the recent economic downturn.

 

Operatingprofit as a percentage of net sales decreased to 10.0 percent in 2008 from 11.5percent in 2007.  Restructuring andrelated activities increased 2007 operating income by $1.5 million.  Raw material prices increased substantiallyduring the first eight months of 2008, and many specialty materials used in ourfood packaging products maintained those prices through the end of the year.

 

# ***Pressure Sensitive MaterialsBusiness Segment***

Thepressure sensitive materials business segment offers adhesive products throughthree product lines:  prime and variableinformation labels, which include roll label stock used in a wide variety oflabel markets; graphic design, used to create signage and decorations; andtechnical pressure sensitive components for industries such as the electronics,automotive, construction and medical industries.

 

Paperand adhesive are the primary raw materials used in our pressure sensitivematerials business segment.  For the lastseveral years, general economic conditions and competitive pressures have had agreater influence on selling prices and operating performance than raw materialcosts.

 
| **(dollars  in millions)**                                              | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net sales                                                               |       | $        | 531.2      |     | $          | 626.2    |       | $ | 647.5 |   |
| Operating profit (See Note 17 tothe Consolidated Financial  Statements) |       | 13.6     |       | 34.3     |       | 40.3     |       |
| Operating profit as a percentage of net sales                           |       | 2.6      | %          | 5.5      | %          | 6.2      | %          |
|                                                                         |            |          |            |          |            |          |            |  |  |  |

 

***2009 versus 2008***

Ourpressure sensitive materials business segment reported a net sales decrease of15.2 percent in 2009.  Currency effectsaccounted for a net sales decline of 3.2 percent.  The balance of the decrease reflectsdramatically lower unit sales volumes compared to 2008.  The markets for our graphic and technicalproducts, which represent about 40 percent of total business segment sales,have experienced significant demand declines in light of weak global economicconditions, resulting in net sales declines for those products in excess of20.0 percent.

 

Operatingprofit as a percent of net sales was lower in 2009 compared to 2008, reflectingthe decline in unit sales volumes, particularly in high value added graphic andtechnical product lines.  Operatingprofit in 2009 includes severance charges totaling $2.6 million related toworkforce reductions intended to better match capacity levels with currentproduction needs.

 

***2008 versus 2007***

Ourpressure sensitive materials business segment reported a net sales decrease of3.3 percent in 2008, reflecting a benefit from currency translation of 2.8percent which was more than offset by lower unit sales.  Unit volumes declined in each of our pressuresensitive product lines, partially offset by increased label products pricesand improved sales mix for technical products. Our label and graphic product lines represent 88 percent of our 2008pressure sensitive materials net sales. Operating profit as a percent of net sales was lower in 2008 compared to2007, reflecting decreased unit sales volumes across all product lines.

 

# **Consolidated Gross Margin**

# ** **

| **(dollars  in millions)**                | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Gross margin                              |       | $        | 700.2      |     | $          | 648.0    |       | $ | 676.0 |   |
| Gross margin as a percentage of net sales |       | 19.9     | %          | 17.1     | %          | 18.5     | %          |
|                                           |            |          |            |          |            |          |            |  |  |  |

 

Improvedsales mix, production efficiency initiatives, and decreasing input costs duringthe first half of the year, each contributed to the improved gross margin in2009.  Input costs moderated during thesecond half of 2009, reducing the positive impact of the contractual lag inselling price adjustments.  Improvedsales mix throughout 2009 was driven by increased sales of value added flexiblepackaging products.  Gross margins in2008 were negatively impacted by dramatic, short-lived raw material costincreases during the year.

 

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# **Consolidated Selling, General and AdministrativeExpenses**

# ** **

| **(dollars  in millions)**                               | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Selling, general and administrative expenses  (SG&A) |       | $        | 370.9      |     | $          | 342.7    |       | $ | 341.6 |   |
| SG&A as a percentage of net sales                    |       | 10.5     | %          | 9.0      | %          | 9.4      | %          |
|                                                          |            |          |            |          |            |          |            |  |  |  |

 

Selling,general, and administrative expenses increased in 2009 primarily as a result ofhigher benefit and incentive plan costs during the year.  The increase in the ratio of these expensesto net sales in 2009 was magnified by lower sales levels for the year ended December 31,2009.

 

**OtherExpenses**

 
| **(dollars  in millions)**           | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Research and development (R&D)   |       | $        | 24.3       |     | $          | 25.0     |       | $ | 26.0 |   |
| R&D as a percentage of net sales |       | 0.7      | %          | 0.7      | %          | 0.7      | %          |
|                                 |       |     |       |     |       |     |       |
| Interest expense                     |       | 42.1     |       | 39.4     |       | 50.3     |       |
| Effective interest rate              |       | 4.3      | %          | 4.8      | %          | 5.9      | %          |
|                                 |       |     |       |     |       |     |       |
| Other costs (income), net            |       | 22.6     |       | (27.7    | )          | (31.5    | )          |
|                                 |       |     |       |     |       |     |       |
| Income taxes                         |       | 87.8     |       | 96.3     |       | 104.3    |       |
| Effective tax rate                   |       | 36.5     | %          | 35.9     | %          | 36.0     | %          |
|                                      |            |          |            |          |            |          |            |  |  |  |

 

# **Research and Development**

Ourefforts to introduce new products continue at a steady pace and are an integralpart of our daily plant operations.  Ourresearch and development engineers work directly on commercial productionequipment, bringing new products to market without the use of pilotequipment.  We believe this approachsignificantly improves the efficiency, effectiveness, and relevance of ourresearch and development activities and results in earlier commercialization ofnew products.  Expenditures that are notdistinctly identifiable as research and development costs are included in costsof products sold.

 

# **Interest Expense**

Interestexpense increased by $2.7 million during 2009. Interest expense includes interest costs of $21.3 million associatedwith public bonds issued in July of 2009 to finance the acquisition of theAlcan Packaging Food Americas business. The percentage of variable rate debt included in total debt is 13percent in 2009, 55 percent in 2008, and 64 percent in 2007.  Variable interest rates remained low in 2009,and we dedicated our excess cash flow to debt reduction throughout the year.

 

# **Other Costs (Income), Net**

Forthe year ended December 31, 2009, other costs and income included $44.8million of acquisition related professional fees and related expensesassociated with the acquisition of the Alcan Packaging Food Americasbusiness.  Financial income recorded in2009 was $20.2 million, compared to $33.5 million for the year ended December 31,2008.  The decrease in financial incomeprimarily reflects a decline in interest income from lower cash balancesinvested outside of the United States in 2009. Financial income also includes fiscal incentives for certain flexiblepackaging locations and is considered as a part of flexible packaging operatingprofit.  These fiscal incentives areassociated with net sales in South America and are expected to continue overthe next few years in conjunction with sales growth in that region.  Net foreign exchange gains totaled $1.4million in 2009 compared to a net foreign exchange loss of $6.8 million in2008.  During 2009, other costs andincome also included a $5.1 million accrual for an administrative sales taxassessment and a gain of $3.6 million on the sale of a property.  In 2007, other costs (income) included $28.3million of financial income, about half of which related to interest income oncash held at non-U.S. locations.

 

# **Income Taxes**

The difference between ouroverall tax rate of 36.5 percent in 2009, 35.9 percent in 2008, and 36.0percent in 2007 and the U.S. statutory rate of 35 percent in each of the threeyears presented principally relates to state and local income taxes net offederal income tax benefits.

 

**NetIncome Attributable to Noncontrolling Interests**

Noncontrollinginterest primarily represents the outstanding preferred shares of Dixie Toga,our Brazilian flexible packaging subsidiary.

 

# **Liquidity and Capital Resources**

## ***Debt to Total Capitalization***

Debtto total capitalization (which includes total debt, long-term deferred taxliabilities, and equity) was 38.8 percent at December 31, 2009, comparedto 31.5 percent at December 31, 2008, and 32.4 percent at December 31,2007.  Total debt was $1,258.8 million,$686.6 million, and $843.3 million at December 31, 2009, 2008 and 2007,respectively.  The increase in debtduring 2009 reflects $800.0 million of public bonds issued in July 2009 inanticipation of the Alcan Packaging Food Americas acquisition, net of areduction in commercial paper and other debt outstanding.

 

## ***Credit Rating***

## **Our capital structure and financial practices haveearned Bemis Company long-term investment grade credit ratings of “BBB” fromStandard & Poor’s and “Baa1” from Moody’s Investors Service, and a creditrating of “A-2” and “Prime-2” for our commercial paper program from Standard &Poor’s and Moody’s Investor Service, respectively.  Our ratings have been revised to reflect theimpact of**

 

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## **theadditional debt issued to finance the acquisition of Alcan Packaging FoodAmericas.  These credit ratings areimportant to our ability to issue commercial paper at favorable rates ofinterest.**

## ** **

## ***Net Cash Flow from Operations***

Netcash provided by operations was $475.8 million for the year ended December 31,2009, compared to $293.6 million in 2008 and $406.2 million in 2007.  During 2009, an emphasis on aggressive costmanagement, production efficiency, and working capital management allcontributed to this improvement in cash flow. Net cash provided by operations was reduced by a voluntary pensioncontribution to our U.S. pension plans of $30.0 million in 2009.  Contributions of $2.3 million and $1.1million were made to our U.S. pension plans in 2008 and 2007,respectively.  We expect to contributeapproximately $20 million to our U.S. pension plans in 2010.  We expect to fund this contribution with cashprovided by operations.

 

## ***Acquisition Financing***

OnJuly 27, 2009, we issued $400.0 million of bonds due in 2014 with a fixedinterest rate of 5.7 percent and $400.0 million of bonds due in 2019 with afixed interest rate of 6.8 percent.  Theproceeds of these bonds were used as partial funding of the acquisition of theAlcan Packaging Food Americas business completed on March 1, 2010.

 

During the third quarter of2009, we issued 8.2 million shares of common stock through a public stockoffering.  The $202.8 million of net proceedsfrom this stock offering was also used as partial funding of the AlcanPackaging Food Americas business.  Theremaining cash purchase price was financed in the commercial paper market inadvance of closing.

 

***Available Financing***

Inaddition to using cash provided by operations, we issue commercial paper tomeet our short-term liquidity needs.  Atyear-end, our commercial paper debt outstanding was $90.5 million.  Based upon our current credit rating, weenjoy ready access to the commercial paper markets.

 

Asof December 31, 2009, Bemis had available from its banks a $425.0 millionrevolving credit facility.  This creditfacility is used principally as back-up for our commercial paper program.  Our revolving credit facility is supported bya group of major U.S. and international banks. Covenants imposed by the revolving credit facility include limits on thesale of businesses, minimum net worth calculations, and a maximum ratio of debtto total capitalization.  The revolvingcredit agreement includes a combined $100 million multicurrency limit tosupport the financing needs of our international subsidiaries.  Upon completion of the Alcan Packaging FoodAmericas business acquisition on March 1, 2010, an amendment to therevolving credit facility became effective, increasing credit available andtherefore total commercial paper capacity from $425.0 million to $625.0million.  If this revolving creditfacility were no longer available to us, we would expect to meet our financialliquidity needs by accessing the bank market, which would increase ourborrowing costs.  Borrowings under thecredit agreement are subject to a variable interest rate.

 

Commercialpaper outstanding at December 31, 2009, has been classified as long-termdebt in accordance with our intention and ability to refinance such obligationson a long-term basis.  The relatedback-up credit agreement expires on April 28, 2013.

 

## ***Liquidity Outlook***

OnDecember 31, 2009, our revolving credit facilities supported totalcommercial paper outstanding of $90.5 million, industrial revenue bondsoutstanding of $8.0 million, and multicurrency loans outstanding of $17.7million.  As a result, we had thecapacity to borrow an additional $308.8 million under the credit facility as ofDecember 31, 2009.  In connectionwith the completion of the acquisition of Alcan Packaging Food Americas on March 1,2010, an amendment to our existing revolving credit facility became effectiveand increased our available credit by $200.0 million.  This amended balance of available credit,combined with future cash flows from operations, are expected to providesufficient liquidity to meet our cash obligations projected for 2010, includingacquisition related payments.

 

Managementexpects cash flow from operations and available liquidity described above to besufficient to support operations going forward. We do not expect our liquidity needs to be materially impacted by thecompletion of the Alcan Packaging Food Americas acquisition.  There can be no assurance, however, that thecost or availability of future borrowings will not be impacted by futurecapital market disruptions.  In addition,substantial increases in raw material costs could increase our short termliquidity needs.

 

## **Capital Expenditures**

Capitalexpenditures were $89.2 million during 2009, compared to $120.5 million in2008, and $178.9 million in 2007. Spending levels for 2008 and 2009 reflect the positive impact ofimproved capacity utilization initiatives combined with a general slowdown insales volume.  During 2007, we completeda multiyear investment for new facilities and equipment for the medical andpharmaceutical markets, a platform for formable, rigid packaging products,additional converting equipment in our Malaysian operation, and proprietaryfilm production capacity for European markets. Over the long-term, we expect average annual capital expenditures to beapproximately equivalent to total annual depreciation and amortizationexpenses.  We expect to fund 2010 capitalexpenditures with cash provided by operating activities.

 

## **Dividends**

Weincreased our quarterly cash dividend by 2.3 percent during the first quarterof 2009 to 22.5 cents per share.  Thisfollows increases of 4.8 percent in 2008 and 10.5 percent in 2007.  In February 2010, the Board of Directorsapproved the 27th consecutive annual increase in the quarterlycash dividend on common stock to 23 cents per share, a 2.2 percent increase.

 

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## **Share Repurchases**

No shares were repurchased during 2009.  During 2008, we purchased 1.0 million sharesof common stock.  During 2007, wepurchased 5.15 million shares of common stock. As of December 31, 2009, we were authorized to purchase up to 4.1million additional shares of common stock for the treasury.

 

***Contractual Obligations***

The following table provides a summary of contractualobligations including our debt payment obligations, operating leaseobligations, and certain other purchase obligations as of December 31,2009.  Capital leases are insignificant.

 

# **ContractualPayments Due by Period**

# ** **

| ** **                      | ** ** | ** ** | ** ** | **Less than** | ** ** | **1 to 3** | ** ** | **3 to 5** | ** ** | **More than** | ** ** |
|---------------------------------|------------|------------|------------|---------------|------------|------------|------------|------------|------------|---------------|------------|
| **(in millions)**               | ** ** | **Total**  | ** ** | **1 year**    | ** ** | **years**  | ** ** | **years**  | ** ** | **5 years**   | ** ** |
| Long-term debt obligations  (1) |       | $          | 1,251.8    |          | $          | 22.5       |       | $          | 321.1      |          | 508.2      |   | $ | 400.0 |   |
| Interest expense (2)            |       | 404.7      |       | 67.2          |       | 121.6      |       | 90.7       |       | 125.2         |       |
| Operating leases (3)            |       | 23.5       |       | 6.4           |       | 7.8        |       | 4.5        |       | 4.8           |       |
| Purchase obligations (4)        |       | 178.1      |       | 176.9         |       | 0.3        |       | 0.1        |       | 0.8           |       |
| Postretirement obligations  (5) |       | 54.5       |       | 5.1           |       | 16.7       |       | 12.6       |       | 20.1          |       |
|                                 |            |            |            |               |            |            |            |            |            |               |            |  |  |  |  |

 

Pursuant to current authoritative accounting guidance, the Company hasaccrued income tax liabilities associated with uncertain tax positions.  These liabilities have been excluded from thetable above due to the high degree of uncertainty as to amounts and timingregarding future payments.  See Note 13of the Consolidated Financial Statements for additional information.

 

(1)          These amounts are included inour Consolidated Balance Sheet.  Aportion of this debt is commercial paper backed by a bank credit facility thatexpires on April 28, 2013.

 

(2)          A portion of the interestexpense disclosed is subject to variable interest rates.   The amounts disclosed above assume thatvariable interest rates are equal to rates at December 31, 2009.

 

(3)          We enter into operatingleases in the normal course of business. Substantially all lease agreements have fixed payment terms based on thepassage of time.  Some lease agreementsprovide us with the options to renew the lease. Our future operating lease obligations would change if we exercisedthese renewal options and if we entered into additional operating leaseagreements.

 

(4)          Purchase obligationsrepresent contracts or commitments for the purchase of raw materials,utilities, capital equipment and various other goods and services.

 

(5)          Postretirement obligationsrepresent contracts or commitments for postretirement healthcare benefits andbenefit payments for the unfunded Bemis Supplemental Retirement Plan.  See Note 9 to the Consolidated FinancialStatements for additional information about our postretirement benefitobligations.

 

## ***Interest Rate Swaps***

In September 2001, we entered into interest rateswap agreements with two U.S. banks, which increased our exposure to variablerates.  These interest rate swapagreements, which expired on the date the related notes matured in August 2008,reduced the interest cost of the notes from 6.5 percent to about 6.0 percent in2008 and 2007.

 

## ***Market Risks and Foreign CurrencyExposures***

We enter into contractual arrangements (derivatives)in the ordinary course of business to manage foreign currency exposure andinterest rate risks.  We do not enterinto derivative transactions for trading purposes.  Our use of derivative instruments is subjectto internal policies that provide guidelines for control, counterparty risk,and ongoing reporting.  These derivativeinstruments are designed to reduce the income statement volatility associatedwith movement in foreign exchange rates and to achieve greater exposure tovariable interest rates.

 

A portion of the interest expense on our outstandingdebt is subject to short-term interest rates. As such, increases in short-term interest rates will directly impact theamount of interest we pay.  For each onepercent increase in variable interest rates, the annual interest expense on$123.4 million of variable rate debt outstanding would increase by $1.2million.

 

Our international operations enter into forwardforeign currency exchange contracts to manage foreign currency exchange rateexposures associated with certain foreign currency denominated receivables andpayables.  At December 31, 2009 and2008, we had outstanding forward exchange contracts with notional amountsaggregating $18.3 million and $5.0 million, respectively.  Forward exchange contracts generally havematurities of less than six months. Counterparties to the forward exchange contracts are major financialinstitutions.  Credit loss fromcounterparty nonperformance is not anticipated. We have not designated these derivative instruments as hedginginstruments.  The net settlement amount(fair value) related to the active forward foreign currency exchange contractsis insignificant and recorded on the balance sheet within current liabilitiesand as an element of other costs (income), net, which offsets the relatedtransactions gains and losses on the related foreign denominated asset orliability.

 

Our business in Brazil holds U.S. dollar denominateddebt which creates exposure to changes in currency rates when compared to itsfunctional currency of the Brazilian real. In order to hedge this exposure, we enter into currency swaps withmaturities that match the underlying debt, effectively converting a portion ofthe U.S. denominated debt to the local currency.  We have not designated these

 

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derivativeinstruments as hedging instruments.  At December 31,2009 and 2008, we had outstanding currency swap contracts with notional amountsaggregating $18.4 million and $24.6 million, respectively.  The net settlement amounts (fair value)related to active swap contracts is recorded on the balance sheet as part ofthe underlying debt and as an expense element of other costs (income), net,which offsets the related transaction gains or losses and were not significantat December 31, 2009 and 2008.

 

The operating results of our international operationsare recorded in local currency and translated into U.S. dollars forconsolidation purposes.  The impact offoreign currency translation on net sales was a decrease of $125.8 million in2009 and an increase of $60.5 million in 2008. Operating profit decreased by approximately $9.4 million in 2009 andimproved by $5.9 million in 2008 as a result of foreign currency translation.

 

Stockholders’ equity includes adjustments to othercomprehensive income for changes in currency translation for consolidatedbalance sheet accounts.  The impact ofcurrency translation during 2009 was an increase in stockholders’ equitytotaling $158.6 million.

 

# **CriticalAccounting Estimates and Judgments**

Our discussion and analysis of our financialcondition and results of operations is based upon our consolidated financialstatements, which have been prepared in accordance with GAAP.  The preparation of these financial statementsrequires us to make estimates and assumptions that affect the reported amountsof assets and liabilities and the disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts ofexpenses during the reporting period.  Onan ongoing basis, management evaluates its estimates and judgments, includingthose related to retirement benefits, intangible assets, goodwill, and expectedfuture performance of operations.  Ourestimates and judgments are based upon historical experience and on variousother factors that are believed to be reasonable under the circumstances.  Actual results may differ from theseestimates under different assumptions or conditions.

 

We believe the following are critical accountingestimates used in the preparation of our consolidated financial statements.

 

·                  The calculation of annualpension costs and related assets and liabilities; and

·                  The valuation and usefullives of intangible assets and goodwill.

 

### ***Pensioncosts***

Amounts related to our defined benefit pension plansthat are recognized in our financial statements are determined on an actuarialbasis.  The accounting for our pensionplans requires us to recognize the overfunded or underfunded status of thepension plans on our balance sheet.  Asubstantial portion of our pension amounts relate to our defined benefit plansin the United States.  Net periodicpension cost recorded in 2009 was $18.8 million, compared to pension cost of$10.5 million in 2008 and $15.2 million in 2007.

 

One element used in determining annual pension incomeand expense in accordance with accounting rules is the expected return onplan assets. For the year 2009, we maintained a target allocation to equityinvestments of 70 percent of total assets and an expected long-term rate ofreturn on plan assets of 8.25 percent.

 

To develop the expected long-term rate of return onassets assumption, we considered compound historical returns and futureexpectations based upon our target asset allocation.  For the historical long-term investmentperiods of 10, 15, 20 and 25 years ending December 31, 2009, our pensionplan assets earned annualized rates of return of 0.7 percent, 8.0 percent, 8.1percent, and 9.3 percent, respectively. Using our target asset allocation of plan assets of 70 percent equitysecurities and 30 percent fixed income securities, our outside actuaries haveused their independent economic model to calculate a range of expectedlong-term rates of return and have determined our assumptions to be reasonable.

 

This assumed long-term rate of return on assets isapplied to a calculated value of plan assets, which recognizes changes in thefair value of plan assets in a systematic manner over approximately threeyears.  This process calculates theexpected return on plan assets that is included in pension income orexpense.  The difference between thisexpected return and the actual return on plan assets is generally deferred andrecognized over subsequent periods.  Thenet deferral of asset gains and losses affects the calculated value of pensionplan assets and, ultimately, future pension income and expense.

 

At the end of each year, we determine the discountrate to be used to calculate the present value of pension planliabilities.  This discount rate is anestimate of the current interest rate at which the pension liabilities could beeffectively settled at the end of the year. In estimating this rate, we look to changes in rates of return on highquality, fixed income investments that receive one of the two highest ratingsgiven by a recognized ratings agency.  AtDecember 31, 2009, for our U.S. defined benefit pension plans wedetermined this rate to be 5.75 percent, a decrease of one quarter of onepercent from the 6.00 percent rate used at December 31, 2008.

 

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#### ***Pension assumptionssensitivity analysis***

Based upon current assumptions of 5.75 percent forthe discount rate and 8.25 percent for the expected rate of return on pensionplan assets, we expect pension expense before the effect of income taxes for2010 to be in a range of $23 million to $27 million.  The following charts depict the sensitivityof estimated 2010 pension expense to incremental changes in the discount rateand the expected long-term rate of return on assets.

 
| ** **                                     | ** ** | **Total increase (decrease)** | ** ** | ** **                                     | ** **   | **Total increase (decrease)** | ** ** |
|------------------------------------------------|------------|-------------------------------|------------|------------------------------------------------|--------------|-------------------------------|------------|
| ** **                                     | ** ** | **to  pension expense**       | ** ** | ** **                                     | ** **   | **to pension expense**        | ** ** |
| **(dollars in millions)**                      | ** ** | **from current assumptions**  | ** ** | ** **                                     | ** **   | **from current assumptions**  | ** ** |
| **Discount rate**                              | ** ** | ** **                    | ** ** | **Rate of  Return on Plan Assets**             | ** **   | ** **                    | ** ** |
| 5.00  percent                                  |       | $                             | 3.6        |                                           | 7.50 percent |                          | $          | 3.3 |   |
| 5.25  percent                                  |       | 2.4                           |       | 7.75 percent                                   |         | 2.3                           |       |
| 5.50  percent                                  |       | 1.2                           |       | 8.00 percent                                   |         | 1.1                           |       |
| **5.75 percent —****Current  Assumption** | ** ** | **0.0**                       | ** ** | **8.25 percent  — Current****Assumption** | ** **   | **0.0**                       | ** ** |
| 6.00  percent                                  |       | (1.1                          | )          | 8.50 percent                                   |         | (1.1                          | )          |
| 6.25  percent                                  |       | (2.2                          | )          | 8.75 percent                                   |         | (2.3                          | )          |
| 6.50 percent                                   |       | (3.3                          | )          | 9.00 percent                                   |         | (3.3                          | )          |
|                                                |            |                               |            |                                                |              |                               |            |  |  |

 

The amount by which the fair value of plan assetsdiffers from the projected benefit obligation of a pension plan must berecorded on the Consolidated Balance Sheet as an asset, in the case of anoverfunded plan, or as a liability, in the case of an underfunded plan.  The gains or losses and prior service costsor credits that arise but are not recognized as components of pension cost are recordedas a component of other comprehensive income. The following chart depicts the sensitivity of the total pensionadjustment to other comprehensive income to changes in the assumed discountrate.

 
| ** **                                  | ** ** | **Total increase (decrease) in  Accumulated Other Comprehensive** | ** ** |
|---------------------------------------------|------------|-------------------------------------------------------------------|------------|
| **(dollars in millions)**                   | ** ** | **Income, net of taxes, from  current assumptions**               | ** ** |
| **Discount rate**                           |       |                                                              |       |
| 5.00 percent                                |       | $                                                                 | (49.0      | ) |
| 5.25 percent                                |       | (32.1                                                             | )          |
| 5.50 percent                                |       | (15.7                                                             | )          |
| **5.75  percent — Current Assumption** | ** ** | **0.0**                                                           | ** ** |
| 6.00 percent                                |       | 14.8                                                              |       |
| 6.25 percent                                |       | 29.1                                                              |       |
| 6.50 percent                                |       | 42.6                                                              |       |
|                                             |            |                                                                   |            |  |

 

### ***Intangibleassets and goodwill***

The purchase price of each new acquisition isallocated to tangible assets, identifiable intangible assets, liabilitiesassumed, and goodwill.  Determining theportion of the purchase price allocated to identifiable intangible assets andgoodwill requires us to make significant estimates.  The amount of the purchase price allocated tointangible assets is generally determined by estimating the future cash flowsof each asset and discounting the net cash flows back to their presentvalues.  The discount rate used isdetermined at the time of the acquisition in accordance with accepted valuationmethods.

 

Goodwill represents the excess of the aggregatepurchase price over the fair value of net assets acquired, including intangibleassets.  We review our goodwill forimpairment annually and assess whether significant events or changes in thebusiness circumstances indicate that the carrying value of the goodwill may notbe recoverable. The test for impairment requires us to make estimates about fairvalue, most of which are based on projected future cash flows.  Our estimates associated with the goodwillimpairment tests are considered critical due to the amount of goodwill recordedon our consolidated balance sheet and the judgment required in determining fairvalue amounts, including projected future cash flows.  None of our reporting units with significantgoodwill were at risk of failing step one of the goodwill impairment test.  Goodwill was $646.9 million as of December 31,2009.

 

Intangible assets consist primarily of purchasedtechnology, customer relationships, patents, trademarks, and tradenames and areamortized using the straight-line method over their estimated useful lives,which range from one to 30 years, when purchased.  We review these intangible assets forimpairment as changes in circumstances or the occurrence of events suggest thatthe remaining value is not recoverable. The test for impairment requires us to make estimates about fair value,most of which are based on projected future cash flows.  These estimates and projections requirejudgments as to future events, condition, and amounts of future cash flows.

 

# **NewAccounting Pronouncements**

***Accounting Guidance Adopted in the Year Ended December 31, 2009***

*BusinessCombinations*

InDecember 2007, the FASB issued authoritative guidance to establishprinciples and requirements for how an acquirer in a business combinationrecognizes and measures in its financial statements, the identifiable assetsacquired, the liabilities assumed, and any noncontrolling interest in theacquiree.  Guidance was also provided forrecognizing and measuring the goodwill acquired in the business combination anddetermines what information to disclose to enable users of the financialstatements to evaluate the nature and financial effects of businesscombinations.  This guidance waseffective on a prospective basis for financial statements issued for fiscalyears beginning after December 15, 2008. During the second half of 2008, we incurred accounting, legal, and otherprofessional fees associated with the Company’s due diligence effort related tothe Huhtamaki Oyj acquisition and the Alcan Packaging Food Americasacquisition.  These costs were deferredin 2008 under the then existing accounting standards.  Upon the adoption of this guidance on January 1,2009, these costs were expensed.  Weincurred additional costs during the year ended December 31, 2009 whichwere expensed.  The total

 

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impact to our earnings forthe year ended December 31, 2009, as a result of this due diligence effortwas a pretax charge of $31.8 million, or a reduction in earnings per share of$0.19.

 

*DefinedBenefit Retirement Plan Disclosures*

InDecember 2008, the FASB issued authoritative guidance regarding anemployer’s disclosures about plan assets of a defined benefit pension or otherpostretirement plan.  This guidancerequires employers to disclose fair value measurements of plan assets,investment policies and strategies, and significant concentrations ofrisk.  The guidance was effective forfiscal years ending after December 15, 2009, and has expanded thedisclosures related to our benefit plan assets.

 

*EarningsPer Share*

InJune 2008, the FASB issued authoritative guidance which clarified thatunvested share-based payment awards that contain nonforfeitable rights toreceive dividends or dividend equivalents (whether paid or unpaid) are participatingsecurities, and thus, must be included in the two-class method of computingearnings per share.  As discussed in Note15, “Earnings Per Share Computations,” we adopted this guidance on January 1,2009.  The calculation of basic anddiluted earnings per share for prior years presented has been recast to reflectthis guidance.  The impact of thismodification was a $0.04 per share decrease in diluted earnings per share foreach of the years ended December 31, 2008 and 2007.

 

*NoncontrollingInterests*

InDecember 2007, the FASB issued authoritative guidance to establishaccounting and reporting standards for the noncontrolling interest in asubsidiary and for the deconsolidation of a subsidiary.  The guidance was adopted by the Company on January 1,2009.  As required, the presentation ofminority interest is now referred to as noncontrolling interest andrepositioned in the consolidated financial statements.  In the consolidated statement of income,noncontrolling interest is now presented following a subtotal entitled “Netincome”.  In the consolidated balancesheet, noncontrolling interest is now presented as a component of total equitywith a corresponding presentation in the consolidated statement of equity.  Prior periods have been recast to conform tothe current year presentation in conformity with the requirements.

 

***Accounting Guidance Not Yet Adopted***

*Fair ValueMeasurements and Disclosures*

InJanuary 2010, the FASB issued additional authoritative guidance regardingfair value measurements and disclosures. This guidance requires some new disclosures and provides clarificationson certain existing disclosure requirements. The majority of the guidance is effective for the Company for interimand annual reporting periods beginning after December 15, 2009.  A portion of the guidance related to expandeddisclosures in the roll forward of Level 3 activity is effective for interimand annual reporting periods beginning after December 15, 2010.  This guidance will expand the Company’sdisclosures and will not impact its financial position or results ofoperations.

 

# **Forward-lookingStatements**

This Annual Report contains certain estimates,predictions, and other “forward-looking statements” (as defined in the PrivateSecurities Litigation Reform Act of 1995, and within the meaning of Section 27Aof the Securities Act of 1933, as amended, and Section 21E of theSecurities 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, ordiscussion of future goals or aspirations, which are predictions of or indicatefuture events and trends and which do not relate to historical matters.  Such statements are based on informationavailable to management as of the time of such statements and relate to, amongother things, expectations of the business environment in which we operate,projections of future performance (financial and otherwise), including those ofacquired companies, perceived opportunities in the market and statementsregarding our mission and vision. Forward-looking statements involve known and unknown risks,uncertainties and other factors, which may cause actual results, performance orachievements to differ materially from anticipated future results, performanceor achievements expressed or implied by such forward-looking statements.  We undertake no obligation to publicly updateor revise any forward-looking statement, whether as a result of newinformation, future events, or otherwise.

 

Factors that could causeactual results to differ from those expected include, but are not limited to,general economic conditions caused by inflation, interest rates, consumerconfidence, rates of unemployment and foreign currency exchange rates;investment performance of assets in our pension plans; competitive conditionswithin our markets, including the acceptance of our new and existing products; threatsor challenges to our patented or proprietary technologies; raw material costsand availability, particularly for polymer resins and adhesives; the magnitudeand volatility of price changes for raw materials and our ability to pass theseprice changes on to our customers in selling prices or otherwise managecommodity price fluctuation risks; changes in the availability of financing;the presence of adequate cash available for investment in our business in orderto maintain desired debt levels; unexpected costs or manufacturing issuesrelated to the implementation of an enterprise resource system; costsassociated with the pursuit of business combinations, unexpected costsassociated with acquisitions or divestitures; the inability to complete a plannedacquisition or divestiture; changes in governmental regulations, especially inthe areas of environmental, health and safety matters, and foreign investment;unexpected outcomes in our current and future litigation proceedings and anyrelated proceedings or civil lawsuits; unexpected outcomes in our current andfuture domestic and international tax proceedings; changes in our laborrelations; and the impact of changes in the world political environmentincluding threatened or actual armed conflict. These and other risks, uncertainties, and assumptions identified fromtime to time in our filings with the Securities and Exchange Commission,including without limitation, those described under Item 1A “Risk Factors” ofthis Annual Report on Form 10-K and our quarterly reports on Form 10-Q,could cause actual future results to differ materially from those projected inthe forward-looking statements.  Inaddition, actual future results could differ materially from those projected inthe forward-looking statement as a result of changes in the assumptions used inmaking such forward-looking statement.

 

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**ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK**

 

The information required by this Item 7A is includedin Note 6 to the Consolidated Financial Statements included in Item 8 of thisAnnual Report on Form 10-K, and under the caption “Market Risks and ForeignCurrency Exposures” which is part of Management’s Discussion and Analysisincluded in Item 7 of this Annual Report on Form 10-K.  Based on a sensitivity analysis (assuming a10 percent adverse change in market rates) of our foreign exchange, currencyswaps, and interest rate derivatives and other financial instruments, changesin exchange rates or interest rates would not materially affect our financialposition and liquidity.  The effect onour results of operations would be substantially offset by the impact of thehedged items.

 

**ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

** **

**Management’s Responsibility Statement**

The management of Bemis Company, Inc. isresponsible for the integrity, objectivity, and accuracy of the financialstatements of the Company.  The financialstatements are prepared by the Company in accordance with accounting principlesgenerally accepted in the United States of America, and using management’s bestestimates and judgments, where appropriate. The financial information presented throughout this Annual Report on Form 10-Kis consistent with that in the financial statements.

 

Themanagement of Bemis Company, Inc. is responsible for establishing andmaintaining adequate internal control over financial reporting, as such term isdefined in Exchange Act Rule 13a-15(f). Under the direction, supervision, and participation of the ChiefExecutive Officer and the Chief Financial Officer, the Company’s managementconducted an evaluation of the effectiveness of internal control over financialreporting based on the framework in *InternalControl - Integrated Framework*issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO-Framework).  Based on the results of this evaluationmanagement has concluded that internal control over financial reporting waseffective as of December 31, 2009. Item 9A of this Annual Report on Form 10-K contains management’sfavorable assessment of internal controls over financial reporting based ontheir review and evaluation utilizing the COSO-Framework criteria.

 

The Audit Committee of the Board of Directors, whichis composed solely of outside directors, meets quarterly with management, theInternal Audit Director, the Director of Global Financial Compliance, andindependent accountants to review the work of each and to satisfy itself thatthe respective parties are properly discharging their responsibilities.  PricewaterhouseCoopers LLP, the Director ofGlobal Financial Compliance, and the Internal Audit Director have had andcontinue to have unrestricted access to the Audit Committee, without thepresence of Company management.

 
| Henry J. Theisen            |       | Gene C. Wulf                |       | Stanley A. Jaffy   |
|-----------------------------|------------|-----------------------------|------------|--------------------|
| President and               |       | Senior Vice President and   |       | Vice President and |
| **Chief Executive Officer** | ** ** | **Chief Financial Officer** | ** ** | **Controller**     |

 

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### **Report of Independent Registered Public AccountingFirm**

Tothe Board of Directors of Bemis Company, Inc.:

 

Inour opinion, the accompanying consolidated balance sheets and the relatedconsolidated statements of income, of equity and of cash flows present fairly,in all material respects, the financial position of Bemis Company, Inc.and its subsidiaries at December 31, 2009 and 2008, and the results oftheir operations and their cash flows for each of the three years in the periodended December 31, 2009 in conformity with accounting principles generallyaccepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,effective internal control over financial reporting as of December 31,2009, based on criteria established in Internal Control - Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).  The Company’s management isresponsible for these financial statements, for maintaining effective internalcontrol over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in “Management’s Report onInternal Control over Financial Reporting” appearing under Item 9A in thisAnnual Report.  Our responsibility is toexpress opinions on these financial statements and on the Company’s internalcontrol over financial reporting based on our integrated audits.  We conducted our audits in accordance withthe standards of the Public Company Accounting Oversight Board (UnitedStates).  Those standards require that weplan and perform the audits to obtain reasonable assurance about whether thefinancial statements are free of material misstatement and whether effectiveinternal control over financial reporting was maintained in all materialrespects.  Our audits of the financialstatements included examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, and evaluatingthe overall financial statement presentation. Our audit of internal control over financial reporting includedobtaining an understanding of internal control over financial reporting,assessing the risk that a material weakness exists, and testing and evaluatingthe design and operating effectiveness of internal control based on theassessed risk.  Our audits also includedperforming such other procedures as we considered necessary in thecircumstances. We believe that our audits provide a reasonable basis for ouropinions.

 

Asdescribed in Note 13 to the consolidated financial statements, effective January 1,2007, the Company changed the manner in which it accounts for uncertain taxpositions.  As described in Note 2 to theconsolidated financial statements, in 2009 the Company changed the manner inwhich it accounts for noncontrolling interests, accounts for business combinations,and calculates earnings per share.

 

Acompany’s internal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal control over financial reporting includes thosepolicies and procedures that (i) pertain to the maintenance of recordsthat, in reasonable detail, accurately and fairly reflect the transactions anddispositions of the assets of the company; (ii) provide reasonableassurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles,and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (iii) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have amaterial effect on the financial statements.

 

Becauseof its inherent limitations, internal control over financial reporting may notprevent or detect misstatements.  Also,projections of any evaluation of effectiveness to future periods are subject tothe risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures maydeteriorate.

 

PricewaterhouseCoopersLLP

Minneapolis,Minnesota

March 1,2010

 

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**BEMIS COMPANY, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENT OF INCOME**

***(in thousands, except per share amounts)***

 
| **For  the years ended December 31,**               | ** ** | **2009**  | ** ** | **2008**  | ** ** | **2007**  | ** ** |
|----------------------------------------------------------|------------|-----------|------------|-----------|------------|-----------|------------|
|                                                     |       |      |       |      |       |      |       |
| Net sales                                                |       | $         | 3,514,586  |      | $          | 3,779,373 |       | $ | 3,649,281 |   |
|                                                     |       |      |       |      |       |      |       |
| Costs and expenses:                                      |       |      |       |      |       |      |       |
| Cost of products sold                                    |       | 2,814,412 |       | 3,131,341 |       | 2,973,329 |       |
| Selling, general, and administrative expenses            |       | 370,926   |       | 342,737   |       | 341,551   |       |
| Research and development                                 |       | 24,342    |       | 25,010    |       | 25,983    |       |
| Interest expense                                         |       | 42,052    |       | 39,413    |       | 50,268    |       |
| Other costs (income), net                                |       | 22,544    |       | (27,653   | )          | (31,455   | )          |
|                                                     |       |      |       |      |       |      |       |
| Income before income taxes                               |       | 240,310   |       | 268,525   |       | 289,605   |       |
|                                                     |       |      |       |      |       |      |       |
| Provision for income taxes                               |       | 87,800    |       | 96,300    |       | 104,300   |       |
|                                                     |       |      |       |      |       |      |       |
| Net income                                               |       | 152,510   |       | 172,225   |       | 185,305   |       |
|                                                     |       |      |       |      |       |      |       |
| Less: net income attributable tononcontrolling interests |       | 5,289     |       | 6,011     |       | 3,751     |       |
|                                                     |       |      |       |      |       |      |       |
| Net income attributable to Bemis Company, Inc            |       | $         | 147,221    |      | $          | 166,214   |       | $ | 181,554 |   |
|                                                     |       |      |       |      |       |      |       |
| Basic earnings per share                                 |       | $         | 1.38       |      | $          | 1.61      |       | $ | 1.71 |   |
|                                                     |       |      |       |      |       |      |       |
| Diluted earnings per share                               |       | $         | 1.38       |      | $          | 1.61      |       | $ | 1.70 |   |

 

*See accompanying notes to consolidated financial statements.*

 

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**BEMIS COMPANY, INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEET**

***(dollars in thousands, except share amounts)***

 
| **As of  December 31,**                             | ** ** | **2009**  | ** ** | **2008**  | ** ** |
|----------------------------------------------------------|------------|-----------|------------|-----------|------------|
|                                                     |       |      |       |      |       |
| **ASSETS**                                               |       |      |       |      |       |
| Current assets:                                          |       |      |       |      |       |
| Cash and cash equivalents                                |       | $         | 1,065,687  |      | $          | 43,454 |   |
| Accounts receivable, net                                 |       | 467,988   |       | 426,888   |       |
| Inventories                                              |       | 399,067   |       | 435,667   |       |
| Prepaid expenses                                         |       | 72,606    |       | 76,649    |       |
| Total current assets                                     |       | 2,005,348 |       | 982,658   |       |
|                                                     |       |      |       |      |       |
| Property and equipment:                                  |       |      |       |      |       |
| Land and land improvements                               |       | 45,562    |       | 43,662    |       |
| Buildings and leasehold improvements                     |       | 489,632   |       | 466,863   |       |
| Machinery and equipment                                  |       | 1,575,452 |       | 1,499,621 |       |
| Total property and equipment                             |       | 2,110,646 |       | 2,010,146 |       |
| Less accumulated depreciation                            |       | (953,453  | )          | (874,664  | )          |
| Net property and equipment                               |       | 1,157,193 |       | 1,135,482 |       |
|                                                     |       |      |       |      |       |
| Other long-term assets:                                  |       |      |       |      |       |
| Goodwill                                                 |       | 646,852   |       | 595,466   |       |
| Other intangible assets                                  |       | 85,299    |       | 80,773    |       |
| Deferred charges and other assets                        |       | 34,013    |       | 27,935    |       |
| Total other long-term assets                             |       | 766,164   |       | 704,174   |       |
| TOTAL ASSETS                                             |       | $         | 3,928,705  |      | $          | 2,822,314 |   |
|                                                     |       |      |       |      |       |
| **LIABILITIES**                                          |       |      |       |      |       |
| Current liabilities:                                     |       |      |       |      |       |
| Current portion of long-term debt                        |       | $         | 22,527     |      | $          | 18,651 |   |
| Short-term borrowings                                    |       | 8,795     |       | 7,954     |       |
| Accounts payable                                         |       | 380,017   |       | 323,142   |       |
| Accrued liabilities:                                     |       |      |       |      |       |
| Salaries and wages                                       |       | 89,988    |       | 63,227    |       |
| Income taxes                                             |       | 15,742    |       | 561       |       |
| Other                                                    |       | 7,786     |       | 8,246     |       |
| Total current liabilities                                |       | 524,855   |       | 421,781   |       |
|                                                     |       |      |       |      |       |
| Long-term debt, less current portion                     |       | 1,227,514 |       | 659,984   |       |
| Deferred taxes                                           |       | 134,676   |       | 111,832   |       |
| Other liabilities and deferred credits                   |       | 189,977   |       | 246,174   |       |
| Total liabilities                                        |       | 2,077,022 |       | 1,439,771 |       |
|                                                     |       |      |       |      |       |
| Commitments and contingencies                            |       |      |       |      |       |
|                                                     |       |      |       |      |       |
| **EQUITY**                                               |       |      |       |      |       |
| Bemis Company, Inc. stockholders’ equity:      |       |      |       |      |       |
| Common stock, $.10 par value:                            |       |      |       |      |       |
| Authorized — 500,000,000 shares                     |       |      |       |      |       |
| Issued — 125,646,511 and 117,130,962 shares         |       | 12,565    |       | 11,713    |       |
| Capital in excess of par value                           |       | 567,247   |       | 345,982   |       |
| Retained earnings                                        |       | 1,649,804 |       | 1,599,178 |       |
| Accumulated other comprehensive (loss) income            |       | 72,457    |       | (112,001  | )          |
| Common stock held in treasury,17,422,771 shares, at cost |       | (498,341  | )          | (498,341  | )          |
| Total Bemis Company, Inc. stockholders’ equity |       | 1,803,732 |       | 1,346,531 |       |
| Noncontrolling interests                                 |       | 47,951    |       | 36,012    |       |
| TOTAL EQUITY                                             |       | 1,851,683 |       | 1,382,543 |       |
|                                                     |       |      |       |      |       |
| TOTAL LIABILITIES AND EQUITY                             |       | $         | 3,928,705  |      | $          | 2,822,314 |   |

 

*Seeaccompanying notes to consolidated financial statements.*

 

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**BEMIS COMPANY, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENT OF CASHFLOWS**

***(in thousands)***

 
| **For  the years ended December 31,**                                         | ** ** | **2009**  | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------|------------|----------|------------|----------|------------|
| Cash flows from operating activities:                                              |       |      |       |     |       |     |       |
| Net income                                                                         |       | $         | 152,510    |     | $          | 172,225  |       | $ | 185,305 |   |
| Adjustments to reconcile net income to net cash  provided byoperating  activities: |       |      |       |     |       |     |       |
| Depreciation and amortization                                                      |       | 159,274   |       | 162,004  |       | 158,546  |       |
| Excess tax benefit from share-based payment  arrangements                          |       | (509      | )          | (209     | )          | (5,773   | )          |
| Share-based compensation                                                           |       | 19,020    |       | 18,058   |       | 16,849   |       |
| Deferred income taxes                                                              |       | 4,956     |       | 15,666   |       | 5,803    |       |
| Income of unconsolidated affiliated companies                                      |       | (2,163    | )          | (919     | )          | (933     | )          |
| (Gain) loss on sale of property and equipment                                      |       | (1,149    | )          | 967      |       | (2,055   | )          |
| Non-cash restructuring related activities                                          |       |      |       |     |       | 2,483    |       |
| Changes in operating assets and liabilities, net of  acquisitions:                 |       |      |       |     |       |     |       |
| Accounts receivable                                                                |       | 16,704    |       | (25,015  | )          | 32,007   |       |
| Inventories                                                                        |       | 67,508    |       | 8,584    |       | 11,705   |       |
| Prepaid expenses                                                                   |       | 10,632    |       | (20,607  | )          | 5,350    |       |
| Accounts payable                                                                   |       | 15,034    |       | (26,717  | )          | (21,672  | )          |
| Accrued salaries and wages                                                         |       | 21,087    |       | (3,222   | )          | (27,218  | )          |
| Accrued income taxes                                                               |       | 16,459    |       | 616      |       | 5,310    |       |
| Accrued other taxes                                                                |       | (1,605    | )          | 349      |       | 1,370    |       |
| Changes in other liabilities and deferred credits                                  |       | (21,488   | )          | (12,341  | )          | (8,014   | )          |
| Changes in deferred charges and other assets                                       |       | 19,543    |       | 4,111    |       | 47,165   |       |
| Net cash provided by operating activities                                          |       | 475,813   |       | 293,550  |       | 406,228  |       |
|                                                                               |       |      |       |     |       |     |       |
| Cash flows from investing activities:                                              |       |      |       |     |       |     |       |
| Additions to property and equipment                                                |       | (89,154   | )          | (120,513 | )          | (178,852 | )          |
| Business acquisitions, net of cash acquired                                        |       | (30,343   | )          |     |       |     |       |
| Proceeds from sales of property, equipment, and  other assets                      |       | 10,921    |       | 2,429    |       | 7,405    |       |
| Proceeds from sale of restructuring related assets                                 |       |      |       |     |       | 3,639    |       |
| Net cash used in investing activities                                              |       | (108,576  | )          | (118,084 | )          | (167,808 | )          |
|                                                                               |       |      |       |     |       |     |       |
| Cash flows from financing activities:                                              |       |      |       |     |       |     |       |
| Proceeds from issuance of long-term debt                                           |       | 823,088   |       | 16,334   |       | 25,061   |       |
| Repayment of long-term debt                                                        |       | (24,154   | )          | (267,327 | )          | (60,546  | )          |
| Net borrowing (repayment) of commercial paper                                      |       | (240,295  | )          | 169,295  |       | 80,800   |       |
| Net borrowing (repayment) of short-term debt                                       |       | (10,894   | )          | (62,956  | )          | (9,977   | )          |
| Cash dividends paid to stockholders                                                |       | (96,595   | )          | (90,695  | )          | (89,809  | )          |
| Proceeds from issuance of common stock                                             |       | 202,809   |       |     |       |     |       |
| Common stock purchased for the treasury                                            |       |      |       | (26,771  | )          | (153,953 | )          |
| Excess tax benefit from share-based payment  arrangements                          |       | 509       |       | 209      |       | 5,773    |       |
| Stock incentive programs and related withholdings                                  |       | (3,186    | )          | (2,196   | )          | (14,745  | )          |
| Net cash provided (used) by financing activities                                   |       | 651,282   |       | (264,107 | )          | (217,396 | )          |
|                                                                               |       |      |       |     |       |     |       |
| Effect of exchange rates on cash and cash  equivalents                             |       | 3,714     |       | (15,314  | )          | 14,225   |       |
|                                                                               |       |      |       |     |       |     |       |
| Net increase (decrease) in cash and cash  equivalents                              |       | 1,022,233 |       | (103,955 | )          | 35,249   |       |
| Cash and cash equivalents balance at beginning of  year                            |       | 43,454    |       | 147,409  |       | 112,160  |       |
|                                                                               |       |      |       |     |       |     |       |
| Cash and cash equivalents balance at end of year                                   |       | $         | 1,065,687  |     | $          | 43,454   |       | $ | 147,409 |   |
|                                                                               |       |      |       |     |       |     |       |
| Interest paid during the year                                                      |       | $         | 19,990     |     | $          | 39,909   |       | $ | 48,132 |   |
| Income taxes paid during the year                                                  |       | $         | 65,286     |     | $          | 76,905   |       | $ | 83,621 |   |

 

**Supplementalinformation of noncash investing and financing activities**

TheCompany acquired the South American rigid packaging operations of Huhtamaki Oyjfor $43 million. In conjunction with the acquisition, cash paid and notespayable issued to finance the acquisition were $32.3 million and $8.8 millionrespectively. The fair value of assets and liabilities acquired was $51.7million and $10.9 million respectively.

 

*Seeaccompanying notes to consolidated financial statements*

 

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**BEMIS COMPANY, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENT OF EQUITY**

***(dollars in thousands, except per share amounts)***

 
| ** **                                                         | ** ** | **Bemis  Company, Inc. Stockholders** | ** ** | ** **      | ** ** | ** **   | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------|------------|-----------------|------------|--------------|------------|
| ** **                                                         | ** ** | ** **                                 | ** ** | ** **      | ** ** | ** **   | ** ** | **Accumulated** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                         | ** ** | ** **                                 | ** ** | **Capital  In** | ** ** | ** **   | ** ** | **Other** | ** ** | **Common** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                         | ** ** | **Common**                                 | ** ** | **Excess  of**  | ** ** | **Retained** | ** ** | **Comprehensive** | ** ** | **Stock  Held** | ** ** | **Noncontrolling** | ** ** | ** ** | ** ** |
| ** **                                                         | ** ** | **Stock**                                  | ** ** | **Par  Value**  | ** ** | **Earnings** | ** ** | **Income  (Loss)** | ** ** | **In  Treasury** | ** ** | **Interests** | ** ** | **Total** | ** ** |
| Balance  at December 31, 2006                                 |       | $                                          | 11,611     |            | $          | 317,177      |       | $ | 1,431,747 |   | $ | 29,098 |   | $ | (317,617 | ) | 29,185 |   | $ | 1,501,201 |   |
|                                                               |       |                                       |       |            |       |         |       |   |   |   |   |   |   |   |   |
| Net  income                                                        |       |                                       |       |            |       | 181,554      |       |   |   |   |   | 3,751 |   | 185,305 |   |
|                                                               |       |                                       |       |            |       |         |       |   |   |   |   |   |   |   |   |
| Unrecognized  gain reclassified to earnings, net of tax $(337)     |       |                                       |       |            |       |         |       | (527 | ) |   |   |   |   | (527 | ) |
| Translation  adjustment                                            |       |                                       |       |            |       |         |       | 122,387 |   |   |   | 5,990 |   | 128,377 |   |
| Pension  liability adjustment, net of tax effect $(11,942)         |       |                                       |       |            |       |         |       | 20,204 |   |   |   |   |   | 20,204 |   |
| Total  comprehensive income                                        |       |                                       |       |            |       |         |       |   |   |   |   |   |   | 333,359 |   |
| Adjustment  to initially apply FIN No. 48                     |       |                                       |       |            |       | 167          |       |   |   |   |   |   |   | 167 |   |
| Cash  dividends paid on common stock $0.84 per share               |       |                                       |       |            |       | (89,809      | )          |   |   |   |   |   |   | (89,809 | ) |
| Stock  incentive programs and related tax effects (826,779 shares) |       | 83                                         |       | (14,745         | )          |         |       |   |   |   |   |   |   | (14,662 | ) |
| Excess  tax benefit from share-based Compensation arrangements     |       |                                       |       | 6,908           |       |         |       |   |   |   |   |   |   | 6,908 |   |
| Share-based  compensation                                          |       |                                       |       | 18,047          |       |         |       |   |   |   |   |   |   | 18,047 |   |
| Purchase  5,150,000 shares                                         |       |                                       |       |            |       |         |       |   |   |   |   |   |   |   |   |
| of  common stock                                                   |       |                                       |       |            |       |         |       |   |   | (153,953 | ) |   |   | (153,953 | ) |
| Balance  at December 31, 2007                                 |       | 11,694                                     |       | 327,387         |       | 1,523,659    |       | 171,162 |   | (471,570 | ) | 38,926 |   | 1,601,258 |   |
|                                                               |       |                                       |       |            |       |         |       |   |   |   |   |   |   |   |   |
| Net  income                                                        |       |                                       |       |            |       | 166,214      |       |   |   |   |   | 6,011 |   | 172,225 |   |
| Unrecognized  gain reclassified to earnings, net of tax $(305)     |       |                                       |       |            |       |         |       | (527 | ) |   |   |   |   | (527 | ) |
| Translation  adjustment                                            |       |                                       |       |            |       |         |       | (183,175 | ) |   |   | (8,925 | ) | (192,100 | ) |
| Pension  liability adjustment, net of tax effect $(57,616)         |       |                                       |       |            |       |         |       | (99,461 | ) |   |   |   |   | (99,461 | ) |
| Total  comprehensive income                                        |       |                                       |       |            |       |         |       |   |   |   |   |   |   | (119,863 | ) |
| Cash  dividends paid on common stock $0.88 per share               |       |                                       |       |            |       | (90,695      | )          |   |   |   |   |   |   | (90,695 | ) |
| Stock  incentive programs and related tax effects (189,836 shares) |       | 19                                         |       | (2,196          | )          |         |       |   |   |   |   |   |   | (2,177 | ) |
| Excess  tax benefit from share-based compensation arrangements     |       |                                       |       | 960             |       |         |       |   |   |   |   |   |   | 960 |   |
| Share-based  compensation                                          |       |                                       |       | 19,831          |       |         |       |   |   |   |   |   |   | 19,831 |   |
| Purchase  1,000,000 shares of common stock                         |       |                                       |       |            |       |         |       |   |   | (26,771 | ) |   |   | (26,771 | ) |
| Balance  at December 31, 2008                                 |       | 11,713                                     |       | 345,982         |       | 1,599,178    |       | (112,001 | ) | (498,341 | ) | 36,012 |   | 1,382,543 |   |
|                                                               |       |                                       |       |            |       |         |       |   |   |   |   |   |   |   |   |
| Net  income                                                        |       |                                       |       |            |       | 147,221      |       |   |   |   |   | 5,289 |   | 152,510 |   |
| Unrecognized  gain reclassified to earnings, net of tax $(337)     |       |                                       |       |            |       |         |       | (526 | ) |   |   |   |   | (526 | ) |
| Translation  adjustment                                            |       |                                       |       |            |       |         |       | 158,631 |   |   |   | 6,650 |   | 165,281 |   |
| Pension  liability adjustment, net of tax effect $(15,148)         |       |                                       |       |            |       |         |       | 26,353 |   |   |   |   |   | 26,353 |   |
| Total  comprehensive income                                        |       |                                       |       |            |       |         |       |   |   |   |   |   |   | 343,618 |   |
| Cash  dividends paid on common stock $0.90 per share               |       |                                       |       |            |       | (96,595      | )          |   |   |   |   |   |   | (96,595 | ) |
| Stock  incentive programs and related tax effects (340,549 shares) |       | 34                                         |       | (3,186          | )          |         |       |   |   |   |   |   |   | (3,152 | ) |
| Excess  tax benefit from share-based compensation arrangements     |       |                                       |       | 1,856           |       |         |       |   |   |   |   |   |   | 1,856 |   |
| Share-based  compensation                                          |       |                                       |       | 20,604          |       |         |       |   |   |   |   |   |   | 20,604 |   |
| Common  stock issued (8,175,000 shares)                            |       | 818                                        |       | 201,991         |       |         |       |   |   |   |   |   |   | 202,809 |   |
|                                                               |       |                                       |       |            |       |         |       |   |   |   |   |   |   |   |   |
| Balance  at December 31, 2009                                 |       | $                                          | 12,565     |            | $          | 567,247      |       | $ | 1,649,804 |   | $ | 72,457 |   | $ | (498,341 | ) | $ | 47,951 |   | $ | 1,851,683 |   |
|                                                                    |            |                                            |            |                 |            |              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

* *

*Seeaccompanying notes to consolidated financial statements.*

 

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

 

### **Note 1** — BUSINESSDESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

***Description of the business: ***Bemis Company, Inc.,a Missouri corporation, was founded in 1858 and incorporated in 1885 as BemisBro. Bag Company.  In 1965 the name waschanged to Bemis Company, Inc. (the Company).  Based in Neenah, Wisconsin, the Companyemploys approximately 20,400 individuals and has 83 manufacturingfacilities.  The Company manufactures andsells flexible packaging products and pressure sensitive materials throughoutthe Americas, Europe, and Asia.

 

TheCompany’s business activities are organized around its two business segments,Flexible Packaging, which accounted for approximately 85 percent of 2009 netsales, and Pressure Sensitive Materials, which accounted for the remaining netsales.  The Company’s flexible packagingbusiness has a strong technical base in polymer chemistry, film extrusion,coating, laminating, printing, and converting. The Company’s pressure sensitive materials business specializes inadhesive technologies.  The primarymarkets for the Company’s products are in the food industry, which accountedfor approximately 60 percent of 2009 net sales. The Company’s flexible packaging products are widely diversified amongfood categories and can be found in nearly every aisle of the grocerystore.  Other markets include chemical,agribusiness, medical, pharmaceutical, personal care products, electronics,automotive, construction, graphic industries, and other consumer goods.  All markets are considered to be highlycompetitive as to price, innovation, quality, and service.

 

***Principles of consolidation: ***The consolidatedfinancial statements include the accounts of the Company and its majority ownedsubsidiaries.  All intercompanytransactions and accounts have been eliminated. Joint ventures which are not majority controlled are accounted for bythe equity method of accounting with earnings of $2,163,000, $919,000, and$933,000 in 2009, 2008, and 2007, respectively, included in other costs(income), net, on the accompanying consolidated statement of income.  Investments in joint ventures are included indeferred charges and other assets on the accompanying consolidated balancesheet.

 

***Noncontrolling interests:***  As of December 31, 2009, the Companyheld 54% of the outstanding non-voting preferred stock of Dixie Toga S.A.  The remaining non-voting preferred shares notheld by the Company are traded publicly on the Brazilian Bovespa Stock Exchangein São Paulo, Brazil, and represent the most significant component ofnoncontrolling interests included on our consolidated balance sheet.

 

***Estimates and assumptions required:***  The preparation of financial statements inconformity with accounting principles generally accepted in the United Statesof America requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period.  Actual results coulddiffer from those estimates.

 

***Translation of foreign currencies:***** **The Company considers thelocal currency to be the functional currency for all foreign subsidiaries.  Assets and liabilities are translated at theexchange rate as of the balance sheet date. All revenue and expense accounts are translated at average exchangerates in effect during the year. Translation gains or losses are recorded in the foreign currencytranslation component in accumulated other comprehensive income (loss) instockholders’ equity.  Foreign currencytransaction gains (losses) of $1,359,000, $(6,755,000), and $2,445,000, in2009, 2008, and 2007, respectively, are included as a component of other costs(income), net.

 

***Revenue recognition:***** **Sales and related costs of sales are recognized when persuasive evidenceof an arrangement exists, title and risk of ownership have been transferred tothe customer, the sales price is fixed or determinable, and collectability isreasonably assured.  These conditions aretypically fulfilled upon shipment of products. All costs associated with revenue, including customer volume discounts,are recognized at the time of sale.  Customervolume discounts are accrued in accordance with current authoritativeaccounting guidance and recorded as a reduction to sales.  Shipping and handling costs are classified asa component of costs of sales while amounts billed to customers for shippingand handling are classified as a component of sales.  The Company accrues for estimated warrantycosts when specific issues are identified and the amounts are determinable.

 

***Environmental cost:***** **The Company is involved in a number of environmental related disputesand claims.  The Company accruesenvironmental costs when it is probable that these costs will be incurred andcan be reasonably estimated.  Our reservefor environmental liabilities at December 31, 2009 and 2008 was $401,000for both years.  Adjustments to thereserve accounts and costs which were directly expensed for environmentalremediation matters resulted in charges to the income statements for 2009,2008, and 2007 of $42,000, $306,000, and $111,000 respectively.  There were no third party reimbursements forany of the years presented.

 

***Research and development: ***Research anddevelopment expenditures are expensed as incurred.

 

***Cash and cash equivalents:***** **The Company considers all highly liquid temporary investments with amaturity of three months or less when purchased to be cash equivalents.  Cash equivalents include certificates ofdeposit that can be readily liquidated without penalty at the Company’soption.  Cash equivalents are carried atcost which approximates fair market value.

 

***Accounts receivable:***** **Trade accounts receivable are stated at the amount the Company expectsto collect, which is net of an allowance for doubtful accounts for estimatedlosses resulting from the inability of its customers to make required payments.  The following factors are considered whendetermining the collectibility of specific customer accounts:  customer creditworthiness, past transactionhistory with the customer, and changes in customer payment terms or practices.  In addition, overall historical collectionexperience, current economic industry trends, and a review of the currentstatus of trade accounts receivable are considered when determining therequired allowance for doubtful accounts. Based on management’s assessment, the Company provides for estimateduncollectible amounts through a charge to earnings and a credit to valuationallowance.  Balances that remainoutstanding after the Company has used reasonable collection efforts arewritten off through a charge to the valuation allowance and a credit toaccounts receivable.  Accounts receivableare presented net of an allowance for doubtful accounts of $21,078,000 and$16,262,000 at December 31, 2009 and 2008, respectively.

 

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***Inventory valuation:*** Inventories are valued at the lower of cost,as determined by the first-in, first-out (FIFO) method, or market.  Inventories are summarized at December 31,as follows:

 
| **(in  thousands)**                | ** ** | **2009** | ** ** | **2008** | ** ** |
|------------------------------------|------------|----------|------------|----------|------------|
| Raw materials and supplies         |       | $        | 139,821    |     | $          | 161,451 |   |
| Work in process and finished goods |       | 280,975  |       | 293,132  |       |
| Total inventories, gross           |       | 420,796  |       | 454,583  |       |
| Less inventory write-downs         |       | (21,729  | )          | (18,916  | )          |
| Total inventories, net             |       | $        | 399,067    |     | $          | 435,667 |   |

 

***Property and equipment: ***Property andequipment are stated at cost. Maintenance and repairs that do not improve efficiency or extendeconomic life are expensed as incurred. Plant and equipment are depreciated for financial reporting purposesprincipally using the straight-line method over the estimated useful lives ofassets as follows:  land improvements,15-30 years; buildings, 15-45 years; leasehold and building improvements, thelesser of the lease term or 8-20 years; and machinery and equipment, 3-16years.  For tax purposes, the Companygenerally uses accelerated methods of depreciation.  The tax effect of the difference between bookand tax depreciation has been provided as deferred income taxes.  Depreciation expense was $150,808,000,$152,962,000, and $149,852,000 for 2009, 2008, and 2007, respectively.  On sale or retirement, the asset cost andrelated accumulated depreciation are removed from the accounts and any related gainor loss is reflected in income.  Interestcosts which are capitalized during the construction of major capital projectstotaled $1,111,000 in 2009, $2,557,000 in 2008, and $4,220,000 in 2007.

 

TheCompany reviews its long-lived assets for impairment when events or changes incircumstances indicate that the carrying amount of the assets may not berecoverable.  If impairment indicatorsare present and the estimated future undiscounted cash flows are less than thecarrying value of the assets, the carrying values are reduced to the estimatedfair value.

 

TheCompany capitalizes direct costs (internal and external) of materials andservices used in the development and purchase of internal-use software.  Amounts capitalized are amortized on astraight-line basis over a period of three to twelve years and are reported asa component of machinery and equipment within property and equipment.

 

TheCompany is in the process of developing and implementing a new EnterpriseResource Planning (ERP) system.  Certaincosts incurred during the application development stage are being capitalizedin accordance with authoritative accounting guidance related to accounting forcosts of computer software developed or obtained for internal use.  These costs are being amortized over thesystem’s estimated useful life as the ERP system is placed in service.

 

***Goodwill:***** **Goodwillrepresents the excess of cost over the fair value of net assets acquired inbusiness combinations.  Goodwill and indefinite-lived intangible assetsare not amortized, but are reviewed at least annually for impairment andwhenever there is an impairment indicator, using a fair-value based approach.

 

***Intangible assets: ***Contractual orseparable intangible assets that have finite useful lives are being amortizedagainst income using the straight-line method over their estimated usefullives, with original periods ranging from one to 30 years. The straight-linemethod of amortization reflects an appropriate allocation of the costs of theintangible assets to earnings in proportion to the amount of economic benefitsobtained by the Company in each reporting period.  The Company tests finite-lived intangibleassets for impairment whenever there is an impairment indicator.  Intangible assets are tested for impairmentby comparing anticipated undiscounted future cash flows from operations to netbook value.

 

***Financial instruments:***** **The Company recognizes all derivative instruments on the balance sheetat fair value.  Derivatives that are nothedges are adjusted to fair value through income.  If the derivative is a hedge, depending onthe nature of the hedge, changes in the fair value of derivatives are eitheroffset against the change in fair value of the hedged assets, liabilities, orfirm commitments through earnings or recognized in stockholders’ equity throughother comprehensive income until the hedged item is recognized.  Gains or losses, if any, related to theineffective portion of any hedge are recognized through earnings in the currentperiod.  Note 6 contains expanded detailsrelating to specific derivative instruments included on the Company’s balancesheet, such as forward foreign currency exchange contracts, currency swapcontracts, and interest rate swap arrangements.

 

***Treasury stock:***** **Repurchased common stock is stated at cost and is presented as aseparate reduction of stockholders’ equity. At December 31, 2009, 4.1 million common shares can be repurchased,at management’s discretion, under authority granted by the Company’s Board ofDirectors in 2008.

 

***Preferred stock purchase rights:***  On July 29, 1999, the Company’s Board ofDirectors adopted a Shareholder Rights Plan by declaring a dividend of onepreferred share purchase right for each outstanding share of common stock.  Under certain circumstances, a right may havebeen exercised to purchase one four-hundredth of a share of Series AJunior Preferred Stock for $60, subject to adjustment.  The rights would have become exercisable if,subject to certain exceptions, a person or group acquired beneficial ownershipof 15 percent or more of the Company’s outstanding common stock or announced anoffer which would result in such person acquiring beneficial ownership of 15percent or more of the Company’s outstanding common stock.  If a person or group acquired beneficialownership of 15 percent or more of the Company’s outstanding common stock,subject to certain exceptions, each right would have entitled its holder to buyfrom the Company, common stock of the Company having a market value of twicethe exercise price of the right.  Thepreferred stock purchase rights expired July 8, 2009 and were not renewed.

 

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**Note 2 —NEW ACCOUNTING GUIDANCE**

***Accounting Guidance Adopted in the Year Ended December 31,2009***

*Fair Value Measurements and Disclosures*

In August 2009, the Financial Accounting Standards Board (FASB)issued additional authoritative guidance for the measurement of liabilities atfair value emphasizing the use of observable inputs when quoted prices are notavailable.  The guidance was effectivefor the Company’s reporting period ended December 31, 2009.  Adoption of the guidance did not have anyimpact on our consolidated financial statements.

 

In April 2009, the FASB issued additional authoritative guidancefor estimating fair value when the market activity for an asset or liabilityhas decreased significantly.  Thisguidance assists both issuers and users of financial statements in determiningwhether a market is active or inactive, and whether a transaction isdistressed.  The guidance was effectivefor the Company for the quarter ended June 30, 2009 and did not have amaterial impact on our consolidated financial position or results ofoperations.

 

InSeptember 2006, the FASB issued authoritative guidance for fair valuemeasurements which defines fair value, establishes a framework for measuringfair value, and expands disclosures about fair value measurements.  This guidance will apply whenever assets orliabilities are required (or permitted) to be measured at fair value.  The guidance does not expand the use of fairvalue to any new circumstances.  In early2008, the FASB issued additional guidance which delayed by one year theeffective date of the September 2006 guidance for all non-financial assetsand non-financial liabilities, except those that are recognized or disclosed atfair value in the financial statements on at least an annual basis.  The Company adopted the new guidance on January 1,2008, and on January 1, 2009, as required, each with no effect on themeasurement of the Company’s assets and liabilities or on its consolidatedfinancial position and results of operations.

 

*Accounting Standards Codification*

In June 2009, the FASB issued authoritative guidance which definesthe new hierarchy for U.S. generally accepted accounting principles (GAAP) andexplains how the FASB will use its Accounting Standards Codification (ASC) asthe sole source for all authoritative guidance. This guidance was effective for the Company’s interim quarterly periodbeginning July 1, 2009 and did not have any impact on our consolidatedfinancial position or results of operations.

 

*Subsequent Events*

In May 2009, the FASB issued authoritative guidance for subsequentevents which establishes general standards of accounting and disclosure forevents that occur after the balance sheet date but before the financialstatements are issued.  This guidance waseffective for interim or annual financial periods ending after June 15,2009, and did not have a material impact on our consolidated financial positionor results of operations.

 

*Business Combinations*

InApril 2009, the FASB issued additional authoritative guidance regardingaccounting for assets acquired and liabilities assumed in a businesscombination that arise from contingencies. This guidance amends and clarifies earlier guidance to addressapplication issues on initial recognition and measurement, subsequentmeasurement and accounting, and disclosure of assets and liabilities arisingfrom contingencies in a business combination. The guidance was effective for the Company on January 1, 2009, andapplies to business combinations with an acquisition date on or after theguidance became effective.

 

InDecember 2007, the FASB issued authoritative guidance to establishprinciples and requirements for how an acquirer in a business combinationrecognizes and measures in its financial statements, the identifiable assetsacquired, the liabilities assumed, and any noncontrolling interest in theacquiree.  Guidance was also provided forrecognizing and measuring the goodwill acquired in the business combination anddetermines what information to disclose to enable users of the financial statementsto evaluate the nature and financial effects of business combinations.  This guidance was effective on aprospective basis for financial statements issued for fiscal years beginningafter December 15, 2008.  During thesecond half of 2008, we incurred accounting, legal, and other professional feesassociated with the Company’s due diligence effort related to the Huhtamaki OyjSouth American Rigid Packaging acquisition and the Alcan Packaging FoodAmericas acquisition.  These costs weredeferred in 2008 under the then existing accounting standards.  Upon the adoption of this guidance on January 1,2009, these costs were expensed.  Weincurred additional costs during the year ended December 31, 2009 whichwere expensed.  The total impact to ourearnings for the year ended December 31, 2009, as a result of this duediligence effort was a pretax charge of $31.8 million, or a reduction inearnings per share of $0.19.

 

*Defined Benefit Retirement Plan Disclosures*

InDecember 2008, the FASB issued authoritative guidance regarding anemployer’s disclosures about plan assets of a defined benefit pension or otherpostretirement plan.  This guidancerequires employers to disclose fair value measurements of plan assets,investment policies and strategies and significant concentrations of risk.  The guidance was effective for fiscal yearsending after December 15, 2009, and has expanded the disclosures relatedto our benefit plan assets.

 

*Earnings Per Share*

InJune 2008, the FASB issued authoritative guidance which clarified thatunvested share-based payment awards that contain nonforfeitable rights toreceive dividends or dividend equivalents (whether paid or unpaid) areparticipating securities, and thus, must be included in the two-class method ofcomputing earnings per share.  Asdiscussed in Note 15, “Earnings Per Share Computations,” we adopted thisguidance on January 1, 2009.  Thecalculation of basic and diluted earnings per share for both of the yearspresented has been recast to reflect the guidance, effective January 1,2009.  The impact of this modificationwas a $0.04 per share decrease in diluted earnings per share for each of theyears ended December 31, 2008 and 2007.

 

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*Useful Lives of Intangible Assets*

InApril 2008, the FASB issued authoritative guidance which amends thefactors that should be considered in developing renewal or extensionassumptions used to determine the useful life of a recognized intangibleasset.  The guidance was effective forthe Company on January 1, 2009.  Asthis guidance applies only to assets we may acquire in the future, we are notable to predict the impact, if any, on our consolidated financial statements.

 

*Derivatives and Hedging*

InMarch 2008, the FASB issued authoritative guidance which requires enhanceddisclosures about (a) how and why an entity uses derivative instruments, (b) howderivative instruments and related hedged items are accounted for*,* and (c) how derivative instruments and related hedgeditems affect an entity’s financial position, financial performance, and cashflows.  As discussed in Note 6, “DerivativeInstruments,” we adopted the guidance on January 1, 2009.

 

*Noncontrolling Interests*

InDecember 2007, the FASB issued authoritative guidance to establishaccounting and reporting standards for the noncontrolling interest in asubsidiary and for the deconsolidation of a subsidiary.  The guidance was adopted by the Company on January 1,2009.  As required, the presentation ofminority interest is now referred to as noncontrolling interest andrepositioned in the consolidated financial statements.  In the consolidated statement of income,noncontrolling interest is now presented following a subtotal entitled “Netincome”.  In the consolidated balancesheet, noncontrolling interest is now presented as a component of total equitywith a corresponding presentation in the consolidated statement of equity.  Prior periods have been recast to conform tothe current year presentation in conformity with the requirements.

 

***Accounting Guidance Not Yet Adopted***

*Fair Value Measurements and Disclosures*

InJanuary 2010, the FASB issued additional authoritative guidance regardingfair value measurements and disclosures. This guidance requires some new disclosures and provides clarificationson certain existing disclosure requirements. The majority of the guidance is effective for the Company for interimand annual reporting periods beginning after December 15, 2009.  A portion of the guidance related to expandeddisclosures in the roll forward of Level 3 activity is effective for interimand annual reporting periods beginning after December 15, 2010.  This guidance will expand the Company’sdisclosures and will not impact its financial position or results ofoperations.

 

**Note 3 — ACQUISITIONS**

***Acquisition of South AmericanRigid Packaging Operations of Huhtamaki Oyj***

OnJune 3, 2009, the Company announced that it acquired the South Americanrigid packaging operations of Huhtamaki Oyj, a global manufacturer of consumerand specialty packaging.  This rigidpackaging business, which includes three facilities in Brazil and one facilityin Argentina, recorded annual net sales of approximately $86.0 million in 2008,primarily to dairy and food service markets. The purchase price of $43.0 million was paid with a combination of $32.3million cash on hand, $1.9 million of debt assumed, and an $8.8 million notepayable to the seller.  As of December 31,2009, $1.6 million remained outstanding on the note payable to seller which isdue May 31, 2010.  The fair value ofassets and liabilities acquired was $51.7 million and $10.9 millionrespectively.

 

**Note 4 —SUBSEQUENT EVENT — ACQUISITION OF ALCAN PACKAGING FOOD AMERICAS**

On March 1, 2010, Bemis completed the acquisition of the FoodAmericas operations of Alcan Packaging, a business unit of international mininggroup Rio Tinto plc, for $1.2 billion. The acquisition will expand our global presence with 23 Food Americasflexible packaging facilities in the U.S., Canada, Mexico, Brazil, Argentina,and New Zealand.  These flexiblepackaging facilities, while owned by Rio Tinto plc, recorded net sales of $1.4billion in 2009 to the food and beverage markets and include expertise in foiland crystallized polyester technologies.

 

In compliance with regulatory requirements for approval of thetransaction in the United States, Bemis is obligated to divest certain AlcanPackaging Food Americas packaging assets in the United States within aspecified time period after the closing date. The packaging assets that will be divested produced annual sales ofapproximately $100 million in 2009 and include manufacturing equipment used toproduce packaging for fresh meat and retail natural cheese products.

 

Themajority of the financing for this transaction was completed during the thirdquarter of 2009 through the issuance of $800.0 million of public bonds and 8.2million common shares issued in a secondary public stock offering.  The remaining cash purchase price wasfinanced in the commercial paper market in advance of closing.

 

Theinitial accounting for this business combination was incomplete as of the dateof the filing of this Form 10-K as the acquisition was completed after ourreporting date of December 31, 2009. Accordingly, the financial information contained herein does not includepro forma disclosures, acquisition-date fair values, or purchase priceallocation information.

 

**Note 5 —FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE**

Thefair values of the Company’s financial assets and financial liabilities listedbelow reflect the amounts that would be received to sell the assets or paid totransfer the liabilities in an orderly transaction between market participantsat the measurement date (exit price).

 

TheCompany’s non-derivative financial instruments included cash and cashequivalents, accounts receivable, accounts payable, short-term borrowings, andlong-term debt.  At December 31,2009 and 2008, the carrying value of these financial instruments, excluding

 

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long-termdebt, approximates fair value because of the short-term maturities of theseinstruments.  The fair value of theCompany’s long-term debt, including current maturities but excludingcapitalized leases, was estimated to be $1,303,760,000 and $700,945,000 at December 31,2009 and December 31, 2008, respectively, using discounted cash flowanalyses and based on the incremental borrowing rates currently available tothe Company for similar debt with similar terms and maturity.

 

Thefair values for derivatives are based on inputs other than quoted prices thatare observable for the asset or liability. These inputs include foreign currency exchange rates and interestrates.  The financial assets andfinancial liabilities are primarily valued using standard calculations / modelsthat use as their basis readily observable market parameters.  Industry standard data providers are theprimary source for forward and spot rate information for both interest ratesand currency rates, with resulting valuations periodically validated throughthird-party or counterparty quotes.

 
| ** **                                                        | ** ** | **Significant Other Observable Inputs (Level 2)** | ** ** |
|-------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| **(in  thousands)**                                               | ** ** | **December 31, 2009**                        | ** ** | **December 31, 2008** | ** ** |
| Currency swaps — net asset (liability) position              |       | $                                                 | (2,693     | ) | $ | 4,944 |   |
| Forward exchange contracts — net asset (liability)  position |       | $                                                 | 29         |   | $ | (112 | ) |

 

**Note 6 —DERIVATIVE INSTRUMENTS**

OnJanuary 1, 2009, we adopted the authoritative accounting guidance issuedby the FASB which requires enhanced disclosures about (a) how and why anentity uses derivative instruments, (b) how derivative instruments andrelated hedged items are accounted for, and (c) how derivative instrumentsand related hedged items affect an entity’s financial position, financialperformance, and cash flows.

 

TheCompany enters into derivative transactions to manage exposures arising in thenormal course of business.  The Companyrecognizes all derivative instruments on the balance sheet at fair value.  Derivatives that are not hedges are adjustedto fair value through income.  If thederivative is a hedge, depending on the nature of the hedge, changes in the fairvalue of derivatives are either offset against the change in fair value of thehedged assets, liabilities, or firm commitments through earnings or recognizedin stockholders’ equity through other comprehensive income until the hedgeditem is recognized.  Gains or losses, ifany, related to the ineffective portion of any hedge are recognized throughearnings in the current period.

 

TheCompany enters into currency swap contracts to manage changes in the fair valueof U.S. dollar denominated debt held in Brazil, effectively converting aportion of that debt to the functional currency of its Brazilianoperation.  Currency swap contractsgenerally have maturities that match the maturities of the underlying debt.  The Company has not designated these derivativeinstruments as hedging instruments.  At December 31,2009 and 2008, the Company had outstanding currency swap contracts withnotional amounts aggregating $18,435,000 and $24,587,000, respectively.  The fair value related to active swapcontracts is recorded on the balance sheet as either a current or long-termasset or liability and as an element of other costs (income), net, whichoffsets the related transaction gains or losses.

 

TheCompany enters into forward exchange contracts to manage foreign currencyexchange rate exposures associated with certain foreign currency denominatedreceivables and payables.  Forwardexchange contracts generally have maturities of less than six months and relateprimarily to major Western European currencies for our European operations, andthe U.S. dollar for our Brazilian operations. The Company has not designated these derivative instruments as hedginginstruments.  At December 31, 2009,and December 31, 2008, the Company had outstanding forward exchangecontracts with notional amounts aggregating $18,284,000 and $5,044,000,respectively.  The net settlement amount(fair value) related to active forward exchange contracts is recorded on thebalance sheet as either a current or long-term asset or liability and as an elementof other costs (income), net, which offsets the related transaction gains orlosses.

 

TheCompany is exposed to credit loss in the event of non-performance bycounterparties in currency swap and forward exchange contracts.  Collateral is generally not required of thecounterparties or of the Company.  In theevent a counterparty fails to meet the contractual terms of a currency swap orforward exchange contract, the Company’s risk is limited to the fair value ofthe instrument.  The Company actively monitorsits exposure to credit risk through the use of credit approvals and creditlimits, and by selecting major international banks and financial institutionsas counterparties.  The Company has nothad any historical instances of non-performance by any counterparties, nor doesit anticipate any future instances of non-performance.

 

Thefair values and balance sheet presentation of derivative instruments notdesignated as hedging instruments at December 31, 2009 and December 31,2008 are presented in the tables below:

 
| ** **                                                     | ** ** | ** **                         | ** ** | **Fair Value**             | ** ** | **Fair Value**             | ** ** |
|----------------------------------------------------------------|------------|------------------------------------|------------|----------------------------|------------|----------------------------|------------|
| ** **                                                     | ** ** | ** **                         | ** ** | **As of**                  | ** ** | **As of**                  | ** ** |
| **(in  thousands)**                                            | ** ** | **Balance Sheet Location**         | ** ** | **December 31, 2009** | ** ** | **December 31, 2008** | ** ** |
| **Asset Derivatives**                                          |       |                               |       |                       |       |                       |       |
| Currency swaps                                                 |       | Accounts  receivable               |       | $                          | 7,122      |                       | $          | 1,303 |   |
|                                                           |       | Deferred  charges and other assets |       |                       |       | 3,706                      |       |
| Forward exchange contracts                                     |       | Accounts  receivable               |       | 33                         |       | 306                        |       |
| Total asset derivatives not designated as hedging  instruments | ** ** |                               |       | **$**                      | 7,155      |                       | $          | 5,315 |   |

 

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| ** **                                                         | ** ** | ** **                             | ** ** | **Fair Value**             | ** ** | **Fair Value**             | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------------|------------|----------------------------|------------|----------------------------|------------|
| ** **                                                         | ** ** | ** **                             | ** ** | **As of**                  | ** ** | **As of**                  | ** ** |
| **(in  thousands)**                                                | ** ** | **Balance Sheet Location**             | ** ** | **December 31, 2009** | ** ** | **December 31, 2008** | ** ** |
| **Liability Derivatives**                                          |       |                                   |       |                       |       |                       |       |
| Currency swaps                                                     |       | Accounts  payable                      |       | 9,815                      |       |                       |       |
|                                                               |       | Other liabilities and deferred credits |       |                       |       | 66                         |       |
| Forward exchange contracts                                         |       | Accounts  payable                      |       | 4                          |       | 418                        |       |
| Total liability derivatives not designated as  hedging instruments |       |                                   |       | $                          | 9,819      |                       | $          | 484 |   |
|                                                                    |            |                                        |            |                            |            |                            |            |  |  |

 

Theincome statement impact of derivatives not designated as hedging instrumentsfor the twelve months ended December 31, 2009 is presented in the tablebelow:

 
| ** **                 | ** ** | **Location of Gain (Loss)** | ** ** | **Amount of Gain (Loss) Recognized in Income on Derivatives** | ** ** |
|----------------------------|------------|-----------------------------|------------|---------------------------------------------------------------|------------|
| ** **                 | ** ** | **Recognized in Income**    | ** ** | **Twelve Months Ended**                                       | ** ** |
| **(in  thousands)**        | ** ** | **on Derivatives**          | ** ** | **December 31, 2009**                                    | ** ** |
| Currency swap contracts    |       | Other costs (income), net   |       | $                                                             | (7,919     | ) |
| Forward exchange contracts |       | Other costs (income), net   |       | 3,964                                                         |       |
| Total                      |       |                        |       | $                                                             | (3,955     | ) |

 

**Note 7 —GOODWILL AND OTHER INTANGIBLE ASSETS**

Changesin the carrying amount of goodwill attributable to each reportable businesssegment follow:

 
| ** **                                 | ** ** | **Flexible Packaging** | ** ** | **Pressure Sensitive** | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|------------------------|------------|------------------------|------------|------------|------------|
| **(in  thousands)**                        | ** ** | **Segment**            | ** ** | **Materials Segment**  | ** ** | **Total**  | ** ** |
| Reported balance at December 31, 2007 |       | $                      | 589,589    |                   | $          | 52,918     |       | $ | 642,507 |   |
|                                       |       |                   |       |                   |       |       |       |
| Currency translation                       |       | (46,611                | )          | (430                   | )          | (47,041    | )          |
| Reported balance at December 31, 2008 |       | 542,978                |       | 52,488                 |       | 595,466    |       |
|                                       |       |                   |       |                   |       |       |       |
| Currency translation                       |       | 51,320                 |       | 66                     |       | 51,386     |       |
| Reported balance at December 31, 2009 |       | $                      | 594,298    |                   | $          | 52,554     |       | $ | 646,852 |   |

 

Thecomponents of amortized intangible assets follow:

 
| ** **             | ** ** | **December 31, 2009** | ** ** | **December 31, 2008** | ** ** |
|------------------------|------------|----------------------------|------------|----------------------------|------------|
| **(in  thousands)**    | ** ** | **Gross Carrying**         | ** ** | **Accumulated**            | ** ** | **Gross Carrying** | ** ** | **Accumulated** | ** ** |
| **Intangible  Assets** | ** ** | **Amount**                 | ** ** | **Amortization**           | ** ** | **Amount** | ** ** | **Amortization** | ** ** |
| Contract based         |       | $                          | 15,447     |                       | $          | (11,368 | ) | $ | 15,447 |   | $ | (10,268 | ) |
| Technology based       |       | 51,694                     |       | (24,389                    | )          | 51,422 |   | (21,623 | ) |
| Marketing related      |       | 25,962                     |       | (11,470                    | )          | 20,435 |   | (7,768 | ) |
| Customer based         |       | 72,451                     |       | (33,028                    | )          | 54,688 |   | (21,560 | ) |
| Reported balance       |       | $                          | 165,554    |                       | $          | (80,255 | ) | $ | 141,992 |   | $ | (61,219 | ) |

 

Amortizationexpense for intangible assets during 2009, 2008, and 2007 was $9.3 million,$9.7 million, and $9.6 million, respectively. Estimated annual amortization expense is $9.3 million for 2010 and $9.0million for 2011, $7.9 million for 2012, $6.6 million for 2013, and $6.6million for 2014.  The Company completedits annual impairment tests in the fourth quarter of 2009 with no indicationsof impairment of goodwill found.  TheCompany does not have any accumulated impairment losses.

 

**Note 8 —PENSION PLANS**

 

Totalmultiemployer plan, defined contribution, and defined benefit pension expensein 2009, 2008, and 2007 was $29,079,000, $16,909,000, and $26,311,000,respectively.  The Company sponsors a 401(k) savingsplan (a defined contribution plan) for substantially all U.S. employees.  The Company contributes $0.50 for everypre-tax $1.00 an employee contributes on the first two percent of eligiblecompensation plus $0.25 for every pre-tax $1.00 an employee contributes on thenext six percent of eligible compensation. Company contributions are invested in Company stock and are fully vestedafter three years of service.  TotalCompany contributions for 2009, 2008, and 2007 were $6,590,000, $6,417,000, and$5,993,000, respectively.

 

Effective January 1, 2006, our U.S.defined benefit pension plans were amended for approximately two-thirds of theparticipant population.  For thoseemployees impacted, future pension benefits were replaced with the BemisInvestment Profit Sharing Plan (BIPSP), a defined contribution plan which issubject to achievement of certain financial performance goals of theCompany.  Total contribution expense forBIPSP and previously existing defined contribution plans was $9,514,000 in2009, $5,661,000 in 2008, and $10,394,000 in 2007.  Multiemployer plans cover employees at twodifferent manufacturing locations and provide for contributions to a unionadministered defined benefit pension plan. Amounts charged to pension cost and contributed to the multiemployerplans in 2009, 2008, and 2007 totaled $782,000, $780,000, and $749,000,respectively.

 

TheCompany’s defined benefit pension plans continue to cover a substantial numberof U.S. employees, and the non-U.S. defined benefit plans cover selectemployees at various international locations. The benefits under the plans are based on years of service and salarylevels.  Certain plans covering hourlyemployees provide benefits of stated amounts for each year of service.  In addition, the Company also sponsors an unfundedsupplemental retirement plan to provide senior management with benefits inexcess of limits under the federal tax law and increased benefits to reflect aservice adjustment factor.

 

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Netperiodic pension cost for defined benefit plans included the followingcomponents for the years ended December 31, 2009, 2008, and 2007:

 
| **(in  thousands)**                                | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Service cost - benefits earned during the year     |       | $        | 12,584     |     | $          | 13,109   |       | $ | 13,868 |   |
| Interest cost on projected benefit obligation      |       | 33,776   |       | 34,217   |       | 32,497   |       |
| Expected return on plan assets                     |       | (40,780  | )          | (44,233  | )          | (45,274  | )          |
| Settlement (gain) loss                             |       | (5       | )          | 29       |       | 3,726    |       |
| Amortization of unrecognized transition obligation |       | 247      |       | 261      |       | 240      |       |
| Amortization of prior service cost                 |       | 2,367    |       | 2,355    |       | 2,290    |       |
| Recognized actuarial net (gain) or loss            |       | 10,594   |       | 4,730    |       | 7,820    |       |
| Net periodic pension cost                          |       | $        | 18,783     |     | $          | 10,468   |       | $ | 15,167 |   |

 

Changesin benefit obligations and plan assets, and a reconciliation of the fundedstatus at December 31, 2009 and 2008, are as follows:

 
| ** **                                                        | ** ** | **U.S. Pension Plans** | ** ** | **Non-U.S. Pension Plans** | ** ** |
|-------------------------------------------------------------------|------------|------------------------|------------|----------------------------|------------|
| **(in  thousands)**                                               | ** ** | **2009**               | ** ** | **2008**                   | ** ** | **2009** | ** ** | **2008** | ** ** |
| **Change in Benefit Obligation:**                                 |       |                   |       |                       |       |   |   |   |   |
| Benefit obligation at the beginning of the year                   |       | $                      | 517,779    |                       | $          | 500,152 |   | $ | 59,296 |   | $ | 68,009 |   |
| Service cost                                                      |       | 9,840                  |       | 9,844                      |       | 2,744 |   | 3,265 |   |
| Interest cost                                                     |       | 30,275                 |       | 30,507                     |       | 3,501 |   | 3,710 |   |
| Participant contributions                                         |       |                   |       |                       |       | 571 |   | 634 |   |
| Plan amendments                                                   |       | 1,461                  |       | 76                         |       |   |   |   |   |
| Plan settlements                                                  |       |                   |       |                       |       | (610 | ) |   |   |
| Acquisitions                                                      |       |                   |       |                       |       |   |   | 2,555 |   |
| Benefits paid                                                     |       | (24,140                | )          | (23,077                    | )          | (3,232 | ) | (2,559 | ) |
| Actuarial (gain) or loss                                          |       | 18,143                 |       | 277                        |       | 3,324 |   | (4,916 | ) |
| Foreign currency exchange rate changes                            |       |                   |       |                       |       | 4,505 |   | (11,402 | ) |
| Benefit obligation at the end of the year                         |       | $                      | 553,358    |                       | $          | 517,779 |   | $ | 70,099 |   | $ | 59,296 |   |
|                                                              |       |                   |       |                       |       |   |   |   |   |
| Accumulated benefit obligation at the end of the  year            |       | $                      | 513,661    |                       | $          | 480,525 |   | $ | 57,585 |   | $ | 47,421 |   |
|                                                              |       |                   |       |                       |       |   |   |   |   |
| **Change in Plan Assets:**                                        |       |                   |       |                       |       |   |   |   |   |
| Fair value of plan assets at the beginning of the  year           |       | $                      | 338,043    |                       | 481,889    |   | $ | 42,573 |   | $ | 53,937 |   |
| Actual return on plan assets                                      |       | 88,982                 |       | (123,041                   | )          | 4,394 |   | (2,834 | ) |
| Employer contributions                                            |       | 31,121                 |       | 2,271                      |       | 3,269 |   | 3,450 |   |
| Participant contributions                                         |       |                   |       |                       |       | 571 |   | 635 |   |
| Plan settlements                                                  |       |                   |       |                       |       | (713 | ) | (29 | ) |
| Benefits paid                                                     |       | (24,140                | )          | (23,076                    | )          | (3,232 | ) | (2,559 | ) |
| Foreign currency exchange rate changes                            |       |                   |       |                       |       | 3,692 |   | (10,027 | ) |
| Fair value of plan assets at the end of the year                  |       | $                      | 434,006    |                       | $          | 338,043 |   | $ | 50,554 |   | $ | 42,573 |   |
|                                                              |       |                   |       |                       |       |   |   |   |   |
| **Funded (unfunded) status at year  end:**                        |       | $                      | (119,352   | )                          | $          | (179,736 | ) | $ | (19,545 | ) | $ | (16,724 | ) |
|                                                              |       |                   |       |                       |       |   |   |   |   |
| **Amount recognized in consolidated  balance sheet consists of:** |       |                   |       |                       |       |   |   |   |   |
| Prepaid benefit cost, non-current                                 |       | $                      |       |                       | $          |   |   | $ | 195 |   | $ |   |   |
| Accrued benefit liability, current                                |       | (4,311                 | )          | (3,383                     | )          | (293 | ) | (276 | ) |
| Accrued benefit liability, non-current                            |       | (115,041               | )          | (176,353                   | )          | (19,447 | ) | (16,448 | ) |
| Sub-total                                                         |       | (119,352               | )          | (179,736                   | )          | (19,545 | ) | (16,724 | ) |
| Deferred tax asset                                                |       | 87,719                 |       | 104,371                    |       | 3,222 |   | 2,506 |   |
| Accumulated other comprehensive loss (income)                     |       | 152,608                |       | 180,173                    |       | 5,605 |   | 4,327 |   |
| Net amount recognized in consolidated balance sheet               |       | $                      | 120,975    |                       | $          | 104,808 |   | $ | (10,718 | ) | $ | (9,891 | ) |

 

Accumulated other comprehensive income related to pension benefit plansis as follows:

 
| ** **                                                | ** ** | **U.S. Pension Plans** | ** ** | **Non-U.S. Pension Plans** | ** ** |
|-----------------------------------------------------------|------------|------------------------|------------|----------------------------|------------|
| **(in  thousands)**                                       | ** ** | **2009**               | ** ** | **2008**                   | ** ** | **2009** | ** ** | **2008** | ** ** |
| Unrecognized net actuarial losses                         |       | $                      | 230,857    |                       | $          | 274,230 |   | $ | 5,563 |   | $ | 3,412 |   |
| Unrecognized net prior service costs                      |       | 9,470                  |       | 10,314                     |       | 713 |   | 709 |   |
| Unrecognized net transition costs                         |       |                   |       |                       |       | 2,551 |   | 2,712 |   |
| Tax benefit                                               |       | (87,719                | )          | (104,371                   | )          | (3,222 | ) | (2,506 | ) |
| Accumulated other comprehensive loss (income),end of year |       | $                      | 152,608    |                       | $          | 180,173 |   | $ | 5,605 |   | $ | 4,327 |   |

 

Estimated amounts in accumulated other comprehensive income expected tobe reclassified to net period cost during 2010 are as follows:

 

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| ** **              | ** ** | ** **             | ** ** | **Non-U.S.**      | ** ** |
|-------------------------|------------|------------------------|------------|-------------------|------------|
| ** **              | ** ** | **U.S. Pension Plans** | ** ** | **Pension Plans** | ** ** |
| **(in  thousands)**     | ** ** | **2009**               | ** ** | **2009**          | ** ** |
| Net actuarial losses    |       | $                      | 16,153     |              | $          | 71 |   |
| Net prior service costs |       | 2,526                  |       | 67                |       |
| Net transition costs    |       |                   |       | 257               |       |
| Total                   |       | $                      | 18,679     |              | $          | 395 |   |

 

Theaccumulated benefit obligation for all defined benefit pension plans was$571,246,000 and $527,946,000 at December 31, 2009, and 2008,respectively.

 

Presentedbelow are the projected benefit obligation, accumulated benefit obligation, andfair value of plan assets for pension plans with projected benefit obligationsin excess of plan assets and pension plans with accumulated benefit obligationsin excess of plan assets as of December 31, 2009 and 2008.

 
| ** **                     | ** ** | **Projected Benefit Obligation**                 | ** ** | **Accumulated Benefit Obligation**               | ** ** |
|--------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                     | ** ** | **Exceeds the Fair Value of Plan’s Assets** | ** ** | **Exceeds the Fair Value of Plan’s Assets** | ** ** |
| ** **                     | ** ** | **U.S. Plans**                                   | ** ** | **Non-U.S. Plans**                               | ** ** | **U.S. Plans** | ** ** | **Non-U.S. Plans** | ** ** |
| **(in  thousands)**            | ** ** | **2009**                                         | ** ** | **2008**                                         | ** ** | **2009** | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** |
| Projected benefit obligation   |       | $                                                | 553,358    |                                             | $          | 517,779 |   | $ | 67,904 |   | $ | 59,296 |   | $ | 553,358 |   | $ | 517,779 |   | $ | 67,904 |   | $ | 34,769 |   |
| Accumulated benefit obligation |       | 513,661                                          |       | 480,525                                          |       | 55,389 |   | 47,421 |   | 513,661 |   | 480,525 |   | 55,389 |   | 25,210 |   |
| Fair value of plan assets      |       | 434,006                                          |       | 338,043                                          |       | 48,164 |   | 42,573 |   | 434,006 |   | 338,043 |   | 48,164 |   | 19,821 |   |
|                                |            |                                                  |            |                                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

TheCompany’s general funding policy is to make contributions as required byapplicable regulations and when beneficial to the Company for taxpurposes.  The employer contributions forthe years ended December 31, 2009 and 2008, were $34,390,000 and$5,722,000, respectively.  The expectedcash contribution for 2010 is $22,585,000 which is expected to satisfy plan fundingrequirements and regulatory funding requirements.

 

Foreach of the years ended December 31, 2009 and 2008, the U.S. pension plansrepresented approximately 89 percent of the Company’s total plan assets andapproximately 89 percent of the Company’s total projected benefitobligation.  Considering the significanceof the U.S. pension plans in comparison with the Company’s total pension plans,we separately present and discuss the critical pension assumptions related tothe U.S. pension plans and the non-U.S. pension plans.

 

TheCompany’s actuarial valuation date is December 31.  The weighted-average discount rates and ratesof increase in future compensation levels used in determining the actuarialpresent value of the projected benefit obligation for the years ended December 31are as follows:

 
| ** **                                     | ** ** | **U.S. Pension Plans** | ** ** | **Non-U.S. Pension Plans** | ** ** |
|------------------------------------------------|------------|------------------------|------------|----------------------------|------------|
| ** **                                     | ** ** | **2009**               | ** ** | **2008**                   | ** ** | **2009** | ** ** | **2008** | ** ** |
| Weighted-average discount rate                 |       | 5.75                   | %          | 6.00                       | %          | 5.39 | % | 5.80 | % |
| Rate of increase in future compensation levels |       | 4.25                   | %          | 4.25                       | %          | 3.92 | % | 3.90 | % |

 

Theweighted-average discount rates, expected returns on plan assets, and rates ofincrease in future compensation levels used to determine the net benefit costfor the years ended December 31 are as follows:

 
| ** **                                     | ** ** | **U.S. Pension Plans** | ** ** | **Non-U.S. Pension Plans** | ** ** |
|------------------------------------------------|------------|------------------------|------------|----------------------------|------------|
| ** **                                     | ** ** | **2009**               | ** ** | **2008**                   | ** ** | **2007** | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
| Weighted-average discount rate                 |       | 6.00                   | %          | 6.25                       | %          | 5.75 | % | 5.82 | % | 5.60 | % | 4.81 | % |
| Expected return on plan assets                 |       | 8.25                   | %          | 8.50                       | %          | 8.75 | % | 6.16 | % | 6.18 | % | 6.44 | % |
| Rate of increase in future compensation levels |       | 4.25                   | %          | 4.75                       | %          | 4.75 | % | 3.90 | % | 3.98 | % | 3.83 | % |

 

ThePension Investment Committee appointed by our Board of Directors is responsiblefor overseeing the investments of the pension plans.  The overall investment strategy is to achievea long term rate of return that maintains an adequate funded ratio andminimizes the need for future contributions through diversification of assettypes, investment strategies, and investment managers.  A target asset allocation policy is used tobalance investments in equity securities with investments in fixed incomesecurities.  The majority of pension planassets relate to U.S. plans and employ a target asset allocation of 70% equitysecurities and 30% fixed income securities. Equity securities primarily include investments in diversified portfoliosof domestic large cap and small cap firms. Fixed income securities include diversified investments across a broadspectrum of primarily investment-grade debt securities.

 

Thepension plan assets measured at fair value at December 31, 2009 follow:

 

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| ** **                                   | ** ** | **U.S. Pension Plans *** | ** ** | **Non-U.S. Pension Plans** | ** ** |
|----------------------------------------------|------------|--------------------------|------------|----------------------------|------------|
| ** **                                   | ** ** | **Quoted Prices**        | ** ** | ** **                 | ** ** | ** ** | ** ** | **Quoted Prices** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                   | ** ** | **In Active**            | ** ** | **Significant**            | ** ** | ** ** | ** ** | **In Active** | ** ** | **Significant** | ** ** | ** ** | ** ** |
| ** **                                   | ** ** | **Markets for**          | ** ** | **Other**                  | ** ** | **Significant** | ** ** | **Markets for** | ** ** | **Other** | ** ** | **Significant** | ** ** |
| ** **                                   | ** ** | **Identical**            | ** ** | **Observable**             | ** ** | **Unobservable** | ** ** | **Identical** | ** ** | **Observable** | ** ** | **Unobservable** | ** ** |
| ** **                                   | ** ** | **Assets**               | ** ** | **Inputs**                 | ** ** | **Inputs** | ** ** | **Assets** | ** ** | **Inputs** | ** ** | **Inputs** | ** ** |
| **(in  thousands)**                          | ** ** | **(Level 1)**            | ** ** | **(Level 2)**              | ** ** | **(Level 3)** | ** ** | **(Level 1)** | ** ** | **(Level 2)** | ** ** | **(Level 3)** | ** ** |
| Cash and cash equivalents                    |       | $                        | 437        |                       | $          | 13,819 |   | $ |   |   | $ |   |   | $ |   |   | $ |   |   |
| Corporate debt securities                    |       |                     |       | 55,660                     |       | 2,767 |   |   |   |   |   |   |   |
| U.S. Government debt securities              |       |                     |       | 34,689                     |       | 7,981 |   |   |   |   |   |   |   |
| State and municipal debt securities          |       |                     |       | 13,309                     |       |   |   |   |   |   |   |   |   |
| Corporate common stock                       |       | 271,572                  |       |                       |       |   |   |   |   |   |   |   |   |
| Registered investment company funds (a) |       | 26,434                   |       |                       |       |   |   | 26,557 |   |   |   |   |   |
| Common trust funds (b)                       |       |                     |       | 14,080                     |       |   |   |   |   | 4,269 |   |   |   |
| General insurance account (c)                |       |                     |       |                       |       |   |   |   |   |   |   | 19,728 |   |
| Balance at December 31, 2009            |       | $                        | 298,443    |                       | $          | 131,557 |   | $ | 10,748 |   | $ | 26,557 |   | $ | 4,269 |   | $ | 19,728 |   |

 

----

(a)          This categoryincludes mutual funds that are actively traded on public exchanges.  The funds are invested in equity and debtsecurities that are actively traded on public exchanges.

(b)         Common trustfunds consist of shares in commingled funds that are not publicly traded.  The funds are invested in equity and debtsecurities that are actively traded on public exchanges.

(c)          The generalinsurance account is primarily comprised of insurance contracts that guaranteea minimum return.

 

Level1 fair value measurements represent exchange-traded securities which are valuedat quoted prices (unadjusted) in active markets for identical assets that wehave the ability to access as of the reporting date.  Level 2 fair value measurements aredetermined using input prices that are directly observable for the asset orliability or indirectly observable through corroboration with observable marketdata.  Level 3 fair value measurementsare determined using unobservable inputs, such as internally developed pricingmodels for the asset or liability due to little or no market activity for theasset or liability.

 

*The table presenting the fair value of plan assets does not include a $6.7million liability related to the U.S. pension plans’ participation in asecurities lending program.  Thesecurities lending program authorizes the pension plan trustee to lendsecurities, which are assets of the pension plans, to approved borrowers.  The trustee requires that borrowers, pursuantto a securities lending agreement, deliver collateral to secure each loan.  Cash collateral received is invested incollateral funds comprised primarily of high quality, short term investments.  As of December 31, 2009, the value ofthe loans outstanding exceeded the value of the invested collateral by $6.7million.

 

Thereconciliation of the beginning and ending balances of the fair valuemeasurements using significant unobservable inputs (Level 3) is as follows:

 
| ** **                                              | ** ** | **U.S. Pension Plans** | ** ** | **Non-U.S. Pension Plans** | ** ** |
|---------------------------------------------------------|------------|------------------------|------------|----------------------------|------------|
| ** **                                              | ** ** | **(Level 3)**          | ** ** | **(Level 3)**              | ** ** |
| **(in  thousands)**                                     | ** ** | **2009**               | ** ** | **2009**                   | ** ** |
| Fair value of plan assets at the beginning of the  year |       | $                      | 14,877     |                       | $          | 18,164 |   |
| Actual return on plan assets                            |       | 333                    |       | 1,019                      |       |
| Purchases, sales and settlements, net                   |       | 6,784                  |       | (126                       | )          |
| Transfers into (out of) Level 3                         |       | (11,246                | )          |                       |       |
| Foreign currency exchange rate changes                  |       |                   |       | 671                        |       |
| Fair value of plan assets at the end of the year        |       | $                      | 10,748     |                       | $          | 19,728 |   |

 

The following benefit payments, which reflect expected future service,as appropriate, are expected to be paid:

 
| **(in  thousands)** | ** ** | **U.S. Pension Plans** | ** ** | **Non-U.S. Pension Plans** | ** ** |
|---------------------|------------|------------------------|------------|----------------------------|------------|
| 2010                |       | $                      | 29,139     |                       | $          | 2,645 |   |
| 2011                |       | 36,085                 |       | 2,362                      |       |
| 2012                |       | 32,694                 |       | 1,648                      |       |
| 2013                |       | 34,115                 |       | 4,352                      |       |
| 2014                |       | 35,998                 |       | 5,050                      |       |
| Years 2015-2019     |       | 187,258                |       | 29,328                     |       |
|                     |            |                        |            |                            |            |  |  |

 

Asof January 1, 2010, we have assumed that the expected long-term annualrate of return on plan assets will be 8.25 percent, which is unchanged from ourJanuary 1, 2009 assumption.  Todevelop the expected long-term rate of return on assets assumption, weconsidered historical returns and future expectations.  Using historical long-term investment periodsof 10, 15, 20, and 25 years ended December 31, 2009, our pension planassets have earned annualized rates of return of 0.7 percent, 8.0 percent, 8.1percent, and 9.3 percent, respectively. Using our target asset allocation for plan assets of 70 percent equitysecurities and 30 percent fixed income securities, our outside actuaries haveused their independent economic model to calculate a range of expectedlong-term rates of return and have determined our assumptions to be reasonable.

 

Atthe end of each year, we determine the discount rate to be used to calculatethe present value of our U.S. pension plan liabilities.  This discount rate is an estimate of thecurrent interest rate at which pension liabilities could be effectively settledat the end of the year.  In estimatingthis rate, we look to rates of return on high quality, fixed income investmentsthat receive one of the two highest

 

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ratingsgiven by a recognized ratings agency. For the years ended December 31, 2009 and 2008, we determined thisrate to be 5.75 percent and 6.00 percent, respectively. For our non-U.S.pension plans, we follow similar methodologies in determining the appropriateexpected rates of return on assets and discount rates to be used in ouractuarial calculations in each individual country.

 

**Note 9 —POSTRETIREMENT BENEFITS OTHER THAN PENSIONS**

 

TheCompany sponsors several defined postretirement benefit plans that cover amajority of salaried and a portion of nonunion hourly employees.  These plans provide health care benefits and,in some instances, provide life insurance benefits.  Except for one closed-group plan, which isnoncontributory, postretirement health care plans are contributory, withretiree contributions adjusted annually. Life insurance plans are noncontributory.

 

Netperiodic postretirement benefit costs included the following components for theyears ended December 31, 2009, 2008, and 2007.

 
| **(in  thousands)**                                             | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-----------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Service cost - benefits earned during the year                  |       | $        | 224        |     | $          | 221      |       | $ | 904 |   |
| Interest cost on accumulated postretirement benefit  obligation |       | 610      |       | 688      |       | 1,178    |       |
| Amortization of prior service cost                              |       | (454     | )          | (455     | )          | 215      |       |
| Recognized actuarial net (gain) or loss                         |       | (524     | )          | (501     | )          | (62      | )          |
| Net periodic postretirement benefit (income) cost               |       | $        | (144       | )        | $          | (47      | )          | $ | 2,235 |   |

 

Changesin benefit obligation and plan assets, and a reconciliation of the fundedstatus at December 31, 2009 and 2008, are as follows:

 
| **(in  thousands)**                                               | ** ** | **2009** | ** ** | **2008** | ** ** |
|-------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **Change in Benefit Obligation**                                  |       |     |       |     |       |
| Benefit obligation at the beginning of the year                   |       | $        | 10,651     |     | $          | 11,510 |   |
| Service cost                                                      |       | 224      |       | 221      |       |
| Interest cost                                                     |       | 610      |       | 688      |       |
| Participant contributions                                         |       | 485      |       | 439      |       |
| Plan amendments                                                   |       | (882     | )          |     |       |
| Actuarial (gain) or loss                                          |       | 624      |       | (737     | )          |
| Benefits paid                                                     |       | (1,725   | )          | (1,470   | )          |
| Benefit obligation at the end of the year                         |       | $        | 9,987      |     | $          | 10,651 |   |
|                                                              |       |     |       |     |       |
| **Change in Plan Assets**                                         |       |     |       |     |       |
| Fair value of plan assets at the beginning of the  year           |       | $        | 0          |     | $          | 0 |   |
| Employee contributions                                            |       | 485      |       | 439      |       |
| Employer contribution                                             |       | 1,240    |       | 1,031    |       |
| Benefits paid                                                     |       | (1,725   | )          | (1,470   | )          |
| Fair value of plan assets at the end of the year                  |       | $        | 0          |     | $          | 0 |   |
|                                                              |       |     |       |     |       |
| **Funded (unfunded) status at  year end:**                        |       | $        | (9,987     | )        | $          | (10,651 | ) |
|                                                              |       |     |       |     |       |
| **Amount recognized in consolidated  balance sheet consists of:** |       |     |       |     |       |
| Prepaid benefit cost, non-current                                 |       | $        | 0          |     | $          | 0 |   |
| Accrued benefit liability, current                                |       | (826     | )          | (977     | )          |
| Accrued benefit liability, non-current                            |       | (9,161   | )          | (9,674   | )          |
| Deferred tax                                                      |       | (3,971   | )          | (4,255   | )          |
| Accumulated other comprehensive income                            |       | (6,909   | )          | (7,346   | )          |
| Net amount recognized in consolidated balance sheet               |       | $        | (20,867    | )        | $          | (22,252 | ) |

 

Accumulated othercomprehensive income related to other postretirement benefit plans is asfollows:

 
| **(in thousands)**                                        | ** ** | **2009** | *** *** | ***2*****008** | *** *** |
|-----------------------------------------------------------|------------|----------|--------------|----------------|--------------|
| Unrecognized net actuarial losses (gains)                 |       | $        | (6,640       | )              | $            | (7,788 | ) |
| Unrecognized net prior service costs (benefits)           |       | (4,240   | )            | (3,813         | )            |
| Tax expense (benefit)                                     |       | 3,971    |         | 4,255          |         |
| Accumulated other comprehensive loss (income),end of year |       | $        | (6,909       | )              | $            | (7,346 | ) |

 

Estimated amounts in accumulated other comprehensive income expected tobe reclassified to net period cost during 2010 are as follows:

 

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| **(in  thousands)**                | ** ** | **2009** | ** ** |
|------------------------------------|------------|----------|------------|
| Net actuarial (gains) losses       |       | $        | (449       | ) |
| Net prior service costs (benefits) |       | (552     | )          |
| Total                              |       | $        | (1,001     | ) |

 

The following benefit payments, which reflect expected future service,as appropriate, are expected to be paid:

 
| **(in  thousands)** | ** ** | **Benefit Payments** | ** ** |
|---------------------|------------|----------------------|------------|
| 2010                |       | $                    | 826        |   |
| 2011                |       | 893                  |       |
| 2012                |       | 898                  |       |
| 2013                |       | 918                  |       |
| 2014                |       | 922                  |       |
| Years 2015-2019     |       | 4,455                |       |
|                     |            |                      |            |  |

 

Theemployer contributions for the years ended December 31, 2009 and 2008,were $1,240,000 and $1,031,000, respectively. The expected contribution for 2010 is $826,000 which is expected tosatisfy plan funding requirements.

 

Thehealth care cost trend rate assumption affects the amounts reported.  For measurement purposes, the assumed annualrate of increase in the per capita cost of covered health care benefits was 7.5percent for 2009 and was 8.0 percent for 2008; each year’s estimated rate wasassumed to decrease gradually to 5.0 percent and remain at that levelthereafter.  The annual incrementaldecrease was assumed to be one-half percent for both 2009 and 2008.  A one-percentage point change in assumedhealth care trends would have the following effects:

 
| ** **                                                             | ** ** | **One Percentage** | ** ** | **One Percentage** | ** ** |
|------------------------------------------------------------------------|------------|--------------------|------------|--------------------|------------|
| **(in  thousands)**                                                    | ** ** | **Point Increase** | ** ** | **Point Decrease** | ** ** |
| Effect on total of service and interest cost  components for 2009      |       | $                  | 14         |               | $          | (13 | ) |
| Effect on postretirement benefit obligation at  December 31, 2009 |       | $                  | 196        |               | $          | (177 | ) |

 

TheCompany’s actuarial valuation date is December 31.  The weighted-average discount rates used todetermine the actuarial present value of the net postretirement projectedbenefit obligation for the years ended December 31, 2009 and 2008 are 5.75percent and 6.00 percent, respectively. The weighted-average discount rates used to determine the netpostretirement benefit cost was 6.00 percent, 6.25 percent, and 5.75 percentfor the years ended December 31, 2009, 2008, and 2007, respectively.

 

**Note 10 —STOCK OPTION AND INCENTIVE PLANS**

 

The1994, 2001, and 2007 (adopted in 2006) Stock Incentive Plans provide for theissuance of up to 15,000,000 shares of common stock to key employees.  Each Plan expires 10 years after itsinception, at which point no further stock options or performance units(commonly referred to as restricted stock) may be granted.  As of December 31, 2009, 2008, and 2007,respectively, 5,674,004, 5,915,585, and 6,146,961, shares were available forfuture grants under these plans.  Sharesforfeited by an employee become available for future grants.

 

Stockoption awards have not been granted since 2003 and all stock optionsoutstanding at December 31, 2009, are fully vested.  The fair value of each stock option grant wasestimated on the date of grant using the Black-Scholes option-pricingmodel.  Stock options were granted atprices equal to fair market value on the date of the grant and are exercisable,upon vesting, over varying periods up to ten years from the date of grant.  Options for directors vested immediately,while options for Company employees generally vested over three years(one-third per year).  Details of thestock option plans at December 31, 2009, 2008, and 2007, are:

 
| ** **                            | ** ** | **Aggregate** | ** ** | ** **    | ** ** | **Per Share**    | ** **      | **Weighted-Average** | ** ** |
|---------------------------------------|------------|---------------|------------|---------------|------------|------------------|-----------------|----------------------|------------|
| ** **                            | ** ** | **Intrinsic** | ** ** | **Number of** | ** ** | **Option Price** | ** **      | **Exercise Price**   | ** ** |
| ** **                            | ** ** | **Value**     | ** ** | **Options**   | ** ** | **Range**        | ** **      | **Per Share**        | ** ** |
| Exercisable at December 31, 2006 |       | $             | 28,356,000 |          | 2,021,178  |             | $15.86 - $26.95 |                 | $          | 19.95 |   |
|                                  |       |          |       |          |       |             |            |                 |       |
| Exercised in 2007                     |       | $             | 3,494,000  |          | (337,096   | )                | $18.67 - $22.52 |                 | $          | 22.10 |   |
| Exercisable at December 31, 2007 |       | $             | 13,238,000 |          | 1,684,082  |             | $15.86 - $26.95 |                 | $          | 19.52 |   |
|                                  |       |          |       |          |       |             |            |                 |       |
| Exercised in 2008                     |       | $             | 2,385,000  |          | (287,346   | )                | $15.88 - $18.81 |                 | $          | 18.45 |   |
| Forfeited in 2008                     |       | $             | 46,000     |          | (7,398     | )                | $18.81          |                 | $          | 18.81 |   |
| Exercisable at December 31, 2008 |       | $             | 5,467,000  |          | 1,389,338  |             | $15.86 - $26.95 |                 | $          | 19.75 |   |
|                                  |       |          |       |          |       |             |            |                 |       |
| Exercised in 2009                     |       | $             | 4,906,000  |          | (563,156   | )                | $15.86 - $17.44 |                 | $          | 17.40 |   |
| Exercisable at December 31, 2009 |       | $             | 6,860,000  |          | 826,182    |             | $16.78 - $26.95 |                 | $          | 21.35 |   |

 

The following table summarizes information about outstanding andexercisable stock options at December 31, 2009.

 

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| ** **          | ** ** | **Options Outstanding and Exercisable** | ** ** |
|---------------------|------------|-----------------------------------------|------------|
| ** **          | ** ** | **Number**                              | ** ** | **Weighted-Average** | ** ** |
| **Range  of**       | ** ** | **Outstanding**                         | ** ** | **Remaining** | ** ** | **Weighted-Average** | ** ** |
| **Exercise Prices** | ** ** | **at  12/31/09**                        | ** ** | **Contractual  Life** | ** ** | **Exercise  Price** | ** ** |
| $16.78 - $18.81     |       | 401,712                                 |       | 0.7 years |   | $ | 17.79 |   |
| $22.04 - $26.95     |       | 424,470                                 |       | 2.6 years |   | $ | 24.71 |   |
|                |       | 826,182                                 |       | 1.7 years |   | $ | 21.35 |   |

 

Distributionof the performance units is made in the form of shares of the Company’s commonstock on a one for one basis. Distribution of the shares will normally be made not less than threeyears, nor more than six years, from the date of the performance unit grant.  All performance units granted under the planare subject to restrictions as to continuous employment, except in the case ofdeath, permanent disability, or retirement. Approximately 50 percent of the performance units granted in 2009 is alsosubject to the degree to which specified total shareholder return conditionsare satisfied.  In addition, cashpayments are made during the grant period on outstanding performance unitsequal to the dividend on Bemis common stock. The cost of the award is based on the fair market value of the stock onthe date of grant and is charged to income over the requisite service period.

 

Totalcompensation expense related to Stock Incentive Plans was $18,822,000 in 2009,$18,058,000 in 2008, and $16,849,000 in 2007.

 

Asof December 31, 2009, the unrecorded compensation cost for performanceunits is $26,635,000 and will be recognized over the remaining vesting periodfor each grant which ranges between January 1, 2010 and December 31,2013.  The remaining weighted-averagelife of all performance units outstanding is 1.6 years.  These awards are considered equity-basedawards and are therefore classified as a component of additional paid-incapital.

 

Thefollowing table summarizes annual restricted stock unit activity for the threeyears ended December 31, 2009:

 
| ** **                                                   | ** ** | **2009**  | ** ** | **2008**  | ** ** | **2007**   | ** ** |
|--------------------------------------------------------------|------------|-----------|------------|-----------|------------|------------|------------|
| Outstanding units granted at the beginning of the  year      |       | 3,342,414 |       | 3,296,583 |       | 3,200,437  |       |
| Units Granted                                                |       | 285,470   |       | 318,441   |       | 1,302,800  |       |
| Units Paid (in shares)                                       |       | (280,858  | )          | (182,943  | )          | (1,146,821 | )          |
| Units Canceled                                               |       | (43,889   | )          | (89,667   | )          | (59,833    | )          |
| Outstanding units granted at the end of the year             |       | 3,303,137 |       | 3,342,414 |       | 3,296,583  |       |
|                                                         |       |      |       |      |       |       |       |
| Aggregate intrinsic value at year end of  outstanding awards |       | $         | 97,938,000 |      | $          | 79,148,000 |       | $ | 90,260,000 |   |
|                                                              |            |           |            |           |            |            |            |  |  |  |

 

**Note 11 —LONG-TERM DEBT**

 

Debtconsisted of the following at December 31,

 
| **(dollars  in thousands)**                                                            | ** ** | **2009**  | ** ** | **2008** | ** ** |
|----------------------------------------------------------------------------------------|------------|-----------|------------|----------|------------|
| Commercial paper payable through 2010at a weighted-average  interest rate of 0.3%      |       | $         | 90,500     |     | $          | 330,795 |   |
| Notes payable in 2012 at an interest rate of 4.9%                                      |       | 300,000   |       | 300,000  |       |
| Industrial revenue bond payable through 2012 at an  interest rate of 1.6%              |       | 8,000     |       | 8,000    |       |
| Notes payable in 2014, at an interest rate of 5.7%  less unamortized discount of $620  |       | 399,380   |       |     |       |
| Notes payable in 2019, at an interest rate of 6.8%less unamortized discount  of $1,184 |       | 398,816   |       |     |       |
| Debt of subsidiary companies payable through2013 at interest rates of  0.6% to 21.5%   |       | 53,334    |       | 39,775   |       |
| Obligations under capital leases                                                       |       | 11        |       | 65       |       |
|                                                                                   |       |      |       |     |       |
| Total debt                                                                             |       | 1,250,041 |       | 678,635  |       |
| Less current portion                                                                   |       | 22,527    |       | 18,651   |       |
| Total long-term debt                                                                   |       | $         | 1,227,514  |     | $          | 659,984 |   |

 

Thecommercial paper has been classified as long-term debt, to the extent ofavailable long-term backup credit agreements, in accordance with the Company’sintent and ability to refinance such obligations on a long-term basis.  The weighted-average interest rate ofcommercial paper outstanding at December 31, 2009, was 0.3 percent.  The maximum outstanding during 2009 was$340,795,000, and the average outstanding during 2009 was $243,252,912.  The weighted-average interest rate during2009 was 0.7 percent.

 

Asof December 31, 2009, Bemis had available from its banks a $425.0 millionrevolving credit facility.  This creditfacility is used principally as back-up for our commercial paper program.  Our revolving credit facility is supported bya group of major U.S. and international banks. Covenants imposed by the revolving credit facility include limits on thesale of businesses, minimum net worth calculations, and a maximum ratio of debtto total capitalization.  The revolvingcredit agreement includes a combined $100 million multicurrency limit tosupport the financing needs of our international subsidiaries.  Upon completion of the Alcan Packaging FoodAmericas business acquisition on March 1, 2010, an amendment to the revolvingcredit facility became effective, increasing credit available and thereforetotal commercial paper capacity from $425.0 million to $625.0 million.

 

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OnJuly 27, 2009, we issued $400.0 million of bonds due in 2014 with a fixedinterest rate of 5.7 percent and $400.0 million of bonds due in 2019 with afixed interest rate of 6.8 percent.  Theproceeds of these bonds were used as partial funding of the acquisition of theAlcan Packaging Food Americas business.

 

Theindustrial revenue bond has a variable interest rate which is determined weeklyby a “Remarketing Agent” based on similar debt then available.  The interest rate at December 31, 2009,was 1.6 percent and the weighted-average interest rate during 2009 was 1.1percent.

 

TheCompany entered into two interest rate swap agreements with a total notionalamount of $250.0 million in the third quarter of 2001, effectively converting aportion of the Company’s fixed interest rate exposure to a variable rate basisto hedge against the risk of higher borrowing costs in a declining interestrate environment.  During 2008 theseswaps matured and were net settled, concurrent with the repayment of theunderlying $250.0 million debt.  TheCompany does not enter into interest rate swap contracts for speculative ortrading purposes.

 

Long-termdebt maturing in years 2010 through 2014 is $22,516,000, $1,021,000,$320,050,000, $108,247,000, and $400,000,000, respectively.  The Company is in compliance with all debtcovenants.

 

**Note 12 —LEASES**

 

TheCompany has operating leases for manufacturing plants, land, warehouses,machinery and equipment, and administrative offices that expire at varioustimes over the next 32 years.  Under mostleasing arrangements, the Company pays the property taxes, insurance,maintenance, and other expenses related to the leased property.  Total rental expense under operating leaseswas approximately $10,649,000 in 2009, $11,542,000 in 2008, and $10,378,000 in2007.  Capital leases are insignificant.

 

Minimumfuture obligations on leases in effect at December 31, 2009, are:

 
| ** **                | ** ** | **Operating** | ** ** |
|---------------------------|------------|---------------|------------|
| **(in  thousands)**       | ** ** | **Leases**    | ** ** |
| 2010                      |       | $             | 6,409      |   |
| 2011                      |       | 4,356         |       |
| 2012                      |       | 3,500         |       |
| 2013                      |       | 3,112         |       |
| 2014                      |       | 1,382         |       |
| Thereafter                |       | 4,778         |       |
| Total minimum obligations |       | $             | 23,537     |   |

 

**Note 13 —INCOME TAXES**

 
| **(in  thousands)**                                       | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-----------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| U.S. income before income taxes                           |       | $        | 148,447    |     | $          | 180,719  |       | $ | 206,544 |   |
| Non-U.S. income before income taxes                       |       | 91,863   |       | 87,806   |       | 83,061   |       |
| Income before income taxes                                |       | $        | 240,310    |     | $          | 268,525  |       | $ | 289,605 |   |
|                                                      |       |     |       |     |       |     |       |
| Income tax expense consists of the following  components: |       |     |       |     |       |     |       |
| Current tax expense:                                      |       |     |       |     |       |     |       |
| U.S. federal                                              |       | $        | 51,921     |     | $          | 42,963   |       | $ | 59,538 |   |
| Foreign                                                   |       | 26,019   |       | 28,579   |       | 29,588   |       |
| State and local                                           |       | 4,904    |       | 9,092    |       | 9,371    |       |
| Total current tax expense                                 |       | 82,844   |       | 80,634   |       | 98,497   |       |
| Deferred tax expense:                                     |       |     |       |     |       |     |       |
| U.S. federal                                              |       | (22      | )          | 17,171   |       | 4,711    |       |
| Foreign                                                   |       | 4,232    |       | (803     | )          | (744     | )          |
| State                                                     |       | 746      |       | (702     | )          | 1,836    |       |
| Total deferred tax expense                                |       | 4,956    |       | 15,666   |       | 5,803    |       |
| Total income tax expense                                  |       | $        | 87,800     |     | $          | 96,300   |       | $ | 104,300 |   |

 

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The tax effects of temporary differences that give rise to the deferredtax assets and deferred tax liabilities are presented below.

 
| **(in  thousands)**                                                                                                | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Deferred Tax Assets:**                                                                                           |       |     |       |     |       |     |       |
| Accounts receivable, principally due to allowances  for returns and doubtful accounts                              |       | $        | 6,978      |     | $          | 5,900    |       | $ | 5,759 |   |
| Inventories, principally due to additional costs  inventoried for tax purposes                                     |       | 14,417   |       | 15,884   |       | 14,898   |       |
| Employee compensation and benefits accrued for  financial reporting purposes                                       |       | 88,227   |       | 106,673  |       | 45,006   |       |
| Foreign net operating losses                                                                                       |       | 16,614   |       | 11,587   |       | 12,308   |       |
| Other                                                                                                              |       | 4,024    |       | 5,042    |       | 4,377    |       |
| Total deferred tax assets                                                                                          |       | 130,260  |       | 145,086  |       | 82,348   |       |
| Less valuation allowance                                                                                           |       | (13,474  | )          | (9,242   | )          | (7,059   | )          |
| Total deferred tax assets, after valuation  allowance                                                              |       | $        | 116,786    |     | $          | 135,844  |       | $ | 75,289 |   |
|                                                                                                               |       |     |       |     |       |     |       |
| **Deferred Tax Liabilities:**                                                                                      |       |     |       |     |       |     |       |
| Plant and equipment, principally due todifferences in  depreciation, capitalizedinterest, and capitalized overhead |       | $        | 134,192    |     | $          | 141,222  |       | $ | 128,471 |   |
| Goodwill and intangible assets, principallydue to differences in  amortization                                     |       | 66,581   |       | 63,866   |       | 55,228   |       |
| Other                                                                                                              |       | 5,531    |       | 465      |       | 6,419    |       |
| Total deferred tax liabilities                                                                                     |       | 206,304  |       | 205,553  |       | 190,118  |       |
|                                                                                                               |       |     |       |     |       |     |       |
| Deferred tax liabilities, net                                                                                      |       | $        | 89,518     |     | $          | 69,709   |       | $ | 114,829 |   |

 

The net deferred tax liabilities are reflected in the balance sheet asfollows:

 
| **(in  thousands)**                               | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|---------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Deferred tax assets (included in prepaid expense) |       | $        | 45,158     |     | $          | 42,123   |       | $ | 41,042 |   |
| Deferred tax liabilities                          |       | 134,676  |       | 111,832  |       | 155,871  |       |
| Net deferred tax liabilities                      |       | $        | 89,518     |     | $          | 69,709   |       | $ | 114,829 |   |

 

TheCompany’s effective tax rate differs from the federal statutory rate due to thefollowing items:

 
| ** **                                                                                | ** ** | **2009**   | ** ** | **2008**       | ** ** | **2007**   | ** ** |
|-------------------------------------------------------------------------------------------|------------|------------|------------|----------------|------------|------------|------------|
| ** **                                                                                | ** ** | ** ** | ** ** | **% of**       | ** ** | ** ** | ** ** | **% of** | ** ** | ** ** | ** ** | **% of** | ** ** |
| ** **                                                                                | ** ** | ** ** | ** ** | **Income**     | ** ** | ** ** | ** ** | **Income** | ** ** | ** ** | ** ** | **Income** | ** ** |
| **(dollars  in thousands)**                                                               | ** ** | **Amount** | ** ** | **Before Tax** | ** ** | **Amount** | ** ** | **Before Tax** | ** ** | **Amount** | ** ** | **Before Tax** | ** ** |
| Computed “expected” taxexpense on income beforetaxes at federal statutory  rate |       | $          | 84,109     |           | 35.0       | %          | $          | 93,984 |   | 35.0 | % | $ | 101,362 |   | 35.0 | % |
| Increase (decrease) in taxes resulting from:                                              |       |       |       |           |       |       |       |   |   |   |   |   |   |
| State and local income taxes net of federalincome tax benefit                             |       | 3,672      |       | 1.5            |       | 5,454      |       | 2.0 |   | 7,285 |   | 2.5 |   |
| Foreign tax rate differential                                                             |       | (2,181     | )          | (0.9           | )          | (3,635     | )          | (1.3 | ) | (1,464 | ) | (0.5 | ) |
| Manufacturing tax benefits                                                                |       | (3,710     | )          | (1.5           | )          | (2,345     | )          | (0.9 | ) | (4,200 | ) | (1.5 | ) |
| Other                                                                                     |       | 5,910      |       | 2.4            |       | 2,842      |       | 1.1 |   | 1,317 |   | 0.5 |   |
| Actual income tax expense                                                                 |       | $          | 87,800     |           | 36.5       | %          | $          | 96,300 |   | 35.9 | % | $ | 104,300 |   | 36.0 | % |

 

Asof December 31, 2009, the Company had foreign net operating losscarryovers of approximately $47.3 million that are available to offset futuretaxable income.  Approximately $18.7million of the carryover expires over the period 2014-2023.  The balance has no expiration.  FASB authoritative guidance**requires that a valuation allowance beestablished when it is more likely than not that all or a portion of deferredtax assets will not be realized.  TheCompany’s management determined that a valuation allowance of $13.5 millionagainst deferred tax assets primarily associated with the foreign net operatingloss carryover was necessary at December 31, 2009.

 

Provisionhas not been made for U.S. or additional foreign taxes on $198.9 million ofundistributed earnings of foreign subsidiaries because those earnings areconsidered to be indefinitely reinvested in the operations of thosesubsidiaries.  It is not practical toestimate the amount of tax that might be payable on the eventual remittance ofsuch earnings.

 

TheCompany adopted FASB authoritative guidance related to accounting foruncertainty in income taxes on January 1, 2007. The Company recognized nomaterial adjustments as a result of the implementation of this policy.

 

TheCompany had total unrecognized tax benefits of $11.6 million, $11.9 million,and $9.1 million for the years ended December 31, 2009, 2008, and 2007,respectively. The approximate amount of unrecognized tax benefits that wouldimpact the effective

 

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incometax rate if recognized in any future periods was $7.7 million, $8.0 million,and $6.4 million for the years ended December 31, 2009, 2008, and 2007,respectively.

 

Areconciliation of the beginning and ending amount of unrecognized tax benefits,in millions, is as follows:

 
| ** **                                                    | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|---------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance at beginning of year                                  |       | $        | 11.9       |     | $          | 9.1      |       | $ | 13.9 |   |
| Additions based on tax positions related to the  current year |       | 1.0      |       | 2.0      |       | 1.0      |       |
| Additions for tax positions of prior years                    |       | 5.5      |       | 3.8      |       | 2.5      |       |
| Reductions for tax positions of prior years                   |       | (0.5     | )          | (1.6     | )          | (0.3     | )          |
| Reductions due to a lapse of the statute of  limitations      |       | (0.8     | )          | (0.6     | )          | (0.4     | )          |
| Settlements                                                   |       | (5.5     | )          | (0.8     | )          | (7.6     | )          |
|                                                          |       |     |       |     |       |     |       |
| Balance at end of year                                        |       | $        | 11.6       |     | $          | 11.9     |       | $ | 9.1 |   |

 

TheCompany does not expect significant changes to the balance of unrecognized taxbenefits within the next 12 months.

 

TheCompany recognizes interest and penalties related to unrecognized tax benefitsas components of income tax expense. The Company had approximately $1.0million, $1.4 million, and $1.3 million accrued for interest and penalties at December 31,2009, 2008, and 2007, respectively.

 

TheCompany and its subsidiaries are subject to U.S. federal and state income taxas well as income tax in multiple international jurisdictions.  The Company’s U.S. federal income tax returnsfor the years prior to 2008 have been audited and completely settled.  With few exceptions, the Company is no longersubject to examinations by tax authorities for years prior to 2004 in thesignificant jurisdictions in which it operates.

 

**Note 14 —TOTAL COMPREHENSIVE INCOME**

Thecomponents of total other comprehensive income (loss) are as follows:

 
| ** **                                                            | ** ** | **Three Months Ended** | ** ** | **Twelve Months Ended** | ** ** |
|-----------------------------------------------------------------------|------------|------------------------|------------|-------------------------|------------|
| ** **                                                            | ** ** | **December 31,**  | ** ** | **December 31,**   | ** ** |
| **(in  thousands)**                                                   | ** ** | **2009**               | ** ** | **2008**                | ** ** | **2009** | ** ** | **2008** | ** ** |
| Comprehensive income (loss) attributable to Bemis  Company, Inc. |       | $                      | 58,977     |                    | $          | (189,365 | ) | $ | 331,679 |   | $ | (116,949 | ) |
| Comprehensive income (loss) attributable to  Noncontrolling interest  |       | (815                   | )          | (4,526                  | )          | 11,939 |   | (2,914 | ) |
| Total comprehensive income (loss)                                     |       | $                      | 58,162     |                    | $          | (193,891 | ) | $ | 343,618 |   | $ | (119,863 | ) |

 

**Note 15 —EARNINGS PER SHARE COMPUTATIONS**

OnJanuary 1, 2009, the Company adopted the authoritative accounting guidanceissued by the FASB which clarified that unvested share-based payment awardsthat contain nonforfeitable rights to receive dividends or dividend equivalents(whether paid or unpaid) are participating securities, and thus, should beincluded in the two-class method of computing earnings per share (EPS).Participating securities under this statement include our unvested employeestock awards, which receive nonforfeitable cash payments equal to the dividendon Bemis common stock.  The calculationof earnings per share for common stock shown below excludes the incomeattributable to the unvested employee stock awards from the numerator andexcludes the dilutive impact of those awards from the denominator. All priorperiod EPS data presented have been adjusted retrospectively (includingsummaries of earnings and selected financial data) to conform to the provisionsof this guidance.

 
| **(dollars  in thousands, except per share amounts)**                            | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Numerator**                                                                    |       |     |       |     |       |     |       |
| Net income attributable to Bemis Company, Inc.                              |       | $        | 147,221    |     | $          | 166,214  |       | $ | 181,554 |   |
| Income allocated to participating securities                                     |       | (4,583   | )          | (5,399   | )          | (5,660   | )          |
| Net income available to common shareholders (1)                                  |       | $        | 142,638    |     | $          | 160,815  |       | $ | 175,894 |   |
|                                                                             |       |     |       |     |       |     |       |
| **Denominator**                                                                  |       |     |       |     |       |     |       |
| Weighted-average common shares outstanding — basic                          |       | 103,447  |       | 99,777   |       | 102,992  |       |
| Dilutive shares                                                                  |       | 154      |       | 277      |       | 453      |       |
| Weighted-average common and common equivalent  shares outstanding — diluted |       | 103,601  |       | 100,054  |       | 103,445  |       |
|                                                                             |       |     |       |     |       |     |       |
| **Earnings per share**                                                           |       |     |       |     |       |     |       |
| Basic                                                                            |       | $        | 1.38       |     | $          | 1.61     |       | $ | 1.71 |   |
| Diluted                                                                          |       | $        | 1.38       |     | $          | 1.61     |       | $ | 1.70 |   |

 

----

| (1)    | Basic  weighted-average common shares outstanding                                    |   | 103,447 |   | 99,777  |   | 102,992 |   |
|--------|--------------------------------------------------------------------------------------|--------|---------|--------|---------|--------|---------|--------|
|   | Basic weighted-average common shares outstanding  and unvested employee stock awards |   | 106,771 |   | 103,127 |   | 106,306 |   |
|   | Percentage  allocated to common shareholders                                         |   | 96.9    | %      | 96.8    | %      | 96.9    | %      |

 

Certainoptions outstanding at December 31, 2009, 2008, and 2007 (-0-, 410,720,and -0- shares, respectively) were not included in the computation of dilutedearnings per share above because they would not have had a dilutive effect.

 

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** **

**Note 16 —COMMITMENTS AND CONTINGENCIES**

The Company is involved in a number oflawsuits incidental to its business, including environmental relatedlitigation.  Although it is difficult to predict the ultimate outcome ofthese cases, management believes, except as discussed below, that any ultimateliability would not have a material adverse effect upon the Company’sconsolidated financial condition or results of operations.

 

*Environmental Matters*

The Company is a potentially responsible party (PRP) pursuant to theComprehensive Environmental Response, Compensation and Liability Act of 1980(commonly known as “Superfund”) and similar state laws in proceedings associatedwith seventeen sites around the United States. These proceedings were instituted by the United States EnvironmentalProtection Agency and certain state environmental agencies at various timesbeginning in 1983.  Superfund and similarstate laws create liability for investigation and remediation in response toreleases of hazardous substances in the environment. Under these statutes,joint and several liability may be imposed on waste generators, site owners andoperators, and others regardless of fault. Although these regulations could require the Company to remove ormitigate the effects on the environment at various sites, perform remediationwork at such sites, or pay damages for loss of use and non-use values, weexpect the Company’s liability in these proceedings to be limited to monetarydamages. The Company expects its future liability relative to these sites to beinsignificant, individually and in the aggregate.  The Company hasreserved an amount that it believes to be adequate to cover its exposure.

 

*Alcan Packaging Acquisition*

In compliance with regulatoryrequirements for approval of our acquisition of the Food Americas operations ofAlcan Packaging in the United States, we have entered into a Consent Decreewith the United States Department of Justice. Under the terms of the Consent Decree, we are obligated to divestcertain Alcan Packaging Food Americas packaging assets in the United Stateswithin a specified time period after the closing date.  The packaging assets that will be divested producedannual sales of approximately $100 million in 2009 and include manufacturingequipment used to produce shrink bags used for fresh meat products and flexiblepackaging used for natural cheese products.

 

*São Paulo Tax Dispute*

Dixie Toga S.A., acquired by the Company on January 5,2005, is involved in a tax dispute with the City of São Paulo, Brazil. The City imposes a tax on the rendering of printing services.  The Cityhas assessed this city services tax on the production and sale of printedlabels and packaging products.  Dixie Toga, along with a number of otherpackaging companies, disagree and contend that the city services tax is notapplicable to its products and that the products are subject only to the statevalue added tax (VAT).  Under Brazilian law, state VAT and city servicestax are mutually exclusive and the same transaction can be subject to only oneof those taxes.  Based on a ruling from the State of São Paulo, advicefrom legal counsel, and long standing business practice, Dixie Toga appealedthe city services tax and instead continued to collect and pay only the stateVAT.

 

TheCity of São Paulo disagreed and assessed Dixie Toga the city services tax forthe years 1991-1995.  The assessments forthose years are estimated to be approximately $62.9 million at the date theCompany acquired Dixie Toga, translated to U.S. dollars at the December 31,2009 exchange rate.  Dixie Togachallenged the assessments and ultimately litigated the issue in two annulmentactions filed on November 24, 1998 and August 16, 1999 in the LowerTax Court in the city of São Paulo.  Adecision by the Lower Tax Court in the city of São Paulo in 2002 cancelled allof the assessments for the years 1991-1995. The City of São Paulo, the State of São Paulo, and Dixie Toga have eachappealed parts of the lower court decision. In the event of an adverse resolution, the estimated amount for theseyears could be substantially increased for additional interest, monetaryadjustments and costs from the date of acquisition.

 

TheCity has also asserted the applicability of the city services tax for thesubsequent years 1996-2001 and has issued assessments for those years for DixieToga and for Itap Bemis Ltda., a Dixie Toga subsidiary.  The assessments for those years were upheldat the administrative level and are being challenged by the companies.  The assessments at the date of acquisitionfor these years for tax and penalties (exclusive of interest and monetaryadjustments) are estimated to be approximately $9.5 million for Itap Bemis and$30.6 million for Dixie Toga, translated to U.S. dollars at the December 31,2009 exchange rate.  In the event of anadverse resolution, the estimated amounts for these years could be increased by$40.1 million for Itap Bemis and $115.6 million for Dixie Toga for interest,monetary adjustments and costs.

 

The1996-2001 assessments for Dixie Toga are currently being challenged in thecourts.  In pursuing its challengethrough the courts, taxpayers are generally required, in accordance with courtprocedures, to pledge assets as security for its lawsuits.  Under certain circumstances, taxpayers mayavoid the requirement to pledge assets. Dixie Toga has secured a court injunction that avoids the currentrequirement to pledge assets as security for its lawsuit related to the1996-2001 assessments.

 

Recently,the City has also asserted the applicability of the city services tax for thesubsequent years 2004-2009.  The assessments issued by the City for theseyears have been received and are being challenged by the Company at theadministrative level.  The assessments for tax and penalties are estimatedto be approximately $23.4 million, translated to U.S. dollars at the December 31,2009 exchange rate.

 

The Company strongly disagrees with the City’sposition and intends to vigorously challenge any assessments by the City of SãoPaulo.  The Company is unable at this time to predict the ultimate outcomeof the controversy and as such has not recorded anyliability related to thismatter.  An adverse resolution could be material to the consolidatedresults of operations and/or cash flows of the period in which the matter isresolved.

 

*Brazil Investigation*

On September 18, 2007, the Secretariat ofEconomic Law (SDE), a governmental agency in Brazil, initiated an investigationinto possible anti-competitive practices in the Brazilian flexible packagingindustry against a number of Brazilian companies including a

 

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DixieToga subsidiary.  The investigation relates to periods prior to theCompany’s acquisition of control of Dixie Toga and its subsidiaries. Given the preliminary nature of the proceedings the Company is unable at thepresent time to predict the outcome of this matter.

 

*Labelstock Class Action*

TheCompany and its subsidiary, Morgan Adhesives Company, were named as defendantsin thirteen civil lawsuits related to an investigation that was initiatedand subsequently closed by the U.S. Department of Justice without any furtheraction.  Six of these lawsuits purported to represent a nationwideclass of labelstock purchasers, and each alleged a conspiracy to fix priceswithin the self-adhesive labelstock industry.  The first of these lawsuitswas filed on May 27, 2003.  In theselawsuits, the plaintiffs sought actual damages for the period of the allegedconspiracy (January 1, 1996 through July 25, 2003) trebled, plus anaward of attorneys’ fees and costs.  On November 5,2003, the Judicial Panel on MultiDistrict Litigation issued a decisionconsolidating all of the federal class actions for pretrial purposes in theUnited States District Court for the Middle District of Pennsylvania, beforethe Honorable Chief Judge Vanaskie.  On November 20, 2007, the Courtgranted plaintiffs’ motion for class certification.  On June 24,2008, the Court in the consolidated federal class actions issued a decisiondismissing the Company from those actions. On January 27, 2009, the defendants filed a motion to decertify theclass based on new case law in the Third Circuit.  On May 26, 2009, the Company and MorganAdhesives Company entered into a settlement with the plaintiff class, pursuantto which the Company agreed to pay $1.25 million in return for a full andcomplete release of all claims in the federal class actions.  The Companyagreed to pay this settlement amount to avoid the expense of furtherlitigation.  On June 10, 2009, Judge Vanaskie granted preliminaryapproval to the settlement.  On September 17, 2009, Judge Vanaskiegranted final approval of the settlement, and dismissed the class actionagainst Morgan Adhesives with prejudice.

 

The Companyand Morgan Adhesives Company have also been named in three lawsuits filed inthe California Superior Court in San Francisco. These three lawsuits, whichhave been consolidated, seek to represent a class of all California indirectpurchasers of labelstock and each alleges a conspiracy to fix prices within theself-adhesive labelstock industry.

 

Finally,the Company has been named in one lawsuit in Vermont, seeking to represent aclass of all Vermont indirect purchasers of labelstock, one lawsuit inNebraska seeking to represent a class of all Nebraska indirect purchasers oflabelstock, one lawsuit in Kansas seeking to represent a class of all Kansasindirect purchasers of labelstock, and one lawsuit in Tennessee, seeking torepresent a class of purchasers of labelstock in various jurisdictions, allalleging a conspiracy to fix prices within the self-adhesive labelstockindustry.  On November 20, 2009, the Company and Morgan AdhesivesCompany entered into a settlement with the plaintiffs in the class actionsfiled in Nebraska, Kansas, Tennessee, and Vermont, pursuant to which the Companyagreed to pay $90,000 in return for a full and complete release of all claimsin those class actions.  The Companyagreed to pay this settlement amount to avoid the expense of furtherlitigation.  On November 24, 2009,the Court granted preliminary approval to the settlement of the class actionsfiled in Nebraska, Kansas, Tennessee, and Vermont.  The Company and Morgan Adhesives Companyintend to vigorously defend the remaining state class actions.

 

Giventhe ongoing status of the class-action civil lawsuits, the Company is unable topredict the outcome of these matters although the effect could be material tothe results of operations and/or cash flows of the period in which the matteris resolved.  The Company is currently not otherwise subject to anypending litigation other than routine litigation arising in the ordinary courseof business, none of which is expected to have a material adverse effect on thebusiness, results of operations, financial position, or liquidity of theCompany.

 

**Note 17 —SEGMENTS OF BUSINESS**

TheCompany’s business activities are organized around and aggregated into its twoprincipal business segments, Flexible Packaging and Pressure SensitiveMaterials.  Both internal and externalreporting conform to this organizational structure, with no significantdifferences in accounting policies applied. Minor intersegment sales are generally priced to reflect nominalmarkups.  The Company evaluates the performanceof its segments and allocates resources to them based primarily on operatingprofit, which is defined as profit before general corporate expense, interestexpense, income taxes, and noncontrolling interests.   While there are similarities in selectedtechnology and manufacturing processes utilized between the Company’s businesssegments, notable differences exist in products, application and distributionof products, and customer base.

 

Productsproduced within the Flexible Packaging business segment service packagingapplications for markets such as food, medical devices, personal care,agribusiness, chemicals, pet food, and tissue. Products produced within the Pressure Sensitive Materials businesssegment include film, paper, and metalized plastic film printing stocks usedfor primary package labeling, promotional decoration, bar code inventorycontrol labels, and laser printing for administrative office and promotionalapplications.  This segment also includesmicro-thin film adhesives used in delicate electronic parts assembly and graphicfilms for decorative signage.

 

Asummary of the Company’s business activities reported by its two businesssegments follows:

 
| **BUSINESS  SEGMENTS (in millions)** | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Net Sales:**                       |       |     |       |     |       |     |       |
| Flexible Packaging                   |       | $        | 2,986.2    |     | $          | 3,154.4  |       | $ | 3,002.5 |   |
| Pressure Sensitive Materials         |       | 537.4    |       | 632.2    |       | 653.0    |       |
|                                 |       |     |       |     |       |     |       |
| **Intersegment Sales:**              |       |     |       |     |       |     |       |
| Flexible Packaging                   |       | (2.8     | )          | (1.2     | )          | (0.7     | )          |
| Pressure Sensitive Materials         |       | (6.2     | )          | (6.0     | )          | (5.5     | )          |
| Net Sales to Unaffiliated Customers  |       | $        | 3,514.6    |     | $          | 3,779.4  |       | $ | 3,649.3 |   |

 

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| **BUSINESS  SEGMENTS (Continued) (in millions)** | ** ** | **2009**   | ** ** | **2008**   | ** ** | **2007**   | ** ** |
|--------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Operating Profit and Pretax  Profit:**         |       |       |       |       |       |       |       |
| Flexible Packaging                               |       | $          | 385.3      |       | $          | 315.9      |       | $ | 346.6 |   |
| Pressure Sensitive Materials                     |       | 13.6       |       | 34.3       |       | 40.3       |       |
| Total operating profit (1)                       |       | 398.9      |       | 350.2      |       | 386.9      |       |
| General corporate expenses                       |       | (116.5     | )          | (42.3      | )          | (47.0      | )          |
| Interest expense                                 |       | (42.1      | )          | (39.4      | )          | (50.3      | )          |
| Income before income taxes                       |       | $          | 240.3      |       | $          | 268.5      |       | $ | 289.6 |   |
|                                             |       |       |       |       |       |       |       |
| **Total Assets:**                                |       |       |       |       |       |       |       |
| Flexible Packaging                               |       | $          | 2,483.3    |       | $          | 2,343.8    |       | $ | 2,672.7 |   |
| Pressure Sensitive Materials                     |       | 303.0      |       | 339.0      |       | 358.0      |       |
| Total identifiable assets (2)                    |       | 2,786.3    |       | 2,682.8    |       | 3,030.7    |       |
| Corporate assets (3)                             |       | 1,142.4    |       | 139.5      |       | 160.7      |       |
| Total                                            |       | $          | 3,928.7    |       | $          | 2,822.3    |       | $ | 3,191.4 |   |
|                                             |       |       |       |       |       |       |       |
| **Depreciation and Amortization:**               |       |       |       |       |       |       |       |
| Flexible Packaging                               |       | $          | 143.1      |       | $          | 147.2      |       | $ | 144.2 |   |
| Pressure Sensitive Materials                     |       | 13.6       |       | 13.7       |       | 13.4       |       |
| Corporate                                        |       | 2.6        |       | 1.1        |       | 0.9        |       |
| Total                                            |       | $          | 159.3      |       | $          | 162.0      |       | $ | 158.5 |   |
|                                             |       |       |       |       |       |       |       |
| **Expenditures for Property and  Equipment:**    |       |       |       |       |       |       |       |
| Flexible Packaging                               |       | $          | 66.7       |       | $          | 86.3       |       | $ | 139.3 |   |
| Pressure Sensitive Materials                     |       | 7.6        |       | 11.9       |       | 16.0       |       |
| Corporate                                        |       | 14.9       |       | 22.3       |       | 23.6       |       |
| Total                                            |       | $          | 89.2       |       | $          | 120.5      |       | $ | 178.9 |   |

 
| **OPERATIONS BY GEOGRAPHIC AREA (in millions)** | ** ** | **2009** | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Net Sales to Unaffiliated  Customers:**(4)    |       |     |       |     |       |     |       |
| United States                                   |       | $        | 2,272.0    |     | $          | 2,429.4  |       | $ | 2,352.2 |   |
| Canada                                          |       | 9.9      |       | 12.3     |       | 15.6     |       |
| Europe                                          |       | 545.9    |       | 656.5    |       | 647.6    |       |
| South America                                   |       | 591.7    |       | 582.4    |       | 539.9    |       |
| Other                                           |       | 95.1     |       | 98.8     |       | 94.0     |       |
| Total                                           |       | $        | 3,514.6    |     | $          | 3,779.4  |       | $ | 3,649.3 |   |
|                                            |       |     |       |     |       |     |       |
| **Long-Lived Assets:**(5)                       |       |     |       |     |       |     |       |
| United States                                   |       | $        | 734.3      |     | $          | 772.1    |       | $ | 820.6 |   |
| Canada                                          |       | 0.3      |       | 0.4      |       | 0.7      |       |
| Europe                                          |       | 156.0    |       | 150.9    |       | 178.3    |       |
| South America                                   |       | 264.8    |       | 207.2    |       | 270.0    |       |
| Other                                           |       | 23.2     |       | 25.1     |       | 29.4     |       |
| Total                                           |       | $        | 1,178.6    |     | $          | 1,155.7  |       | $ | 1,299.0 |   |

 

----

(1)                                  Operating profitis defined as profit before general corporate expense, interest expense, incometaxes, and noncontrolling interests.

(2)                                  Identifiableassets by business segment include only those assets that are specificallyidentified with each segment’s operations.

(3)                                  Corporate assetsare principally cash and cash equivalents, prepaid expenses, prepaid incometaxes, prepaid pension benefit costs, fair value of the interest rate swapagreements, and corporate tangible and intangible property.

(4)           Net sales are attributed to countriesbased on location of the Company’s manufacturing or selling operation.

(5)           Long-lived assets include netproperty and equipment, long-term receivables, and deferred charges.

 

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**Note 18 —QUARTERLY FINANCIAL INFORMATION — UNAUDITED**

 
| ** **                                   | ** ** | **Quarter Ended** | ** ** |
|----------------------------------------------|------------|-------------------|------------|
| **(in  millions, except per share amounts)** | ** ** | **March 31** | ** ** | **June 30** | ** ** | **September 30** | ** ** | **December 31** | ** ** | **Total** | ** ** |
| 2009                                         |       |              |       |   |   |   |   |   |   |   |   |
| Net sales                                    |       | $                 | 843.4      |   | $ | 866.4 |   | $ | 898.9 |   | $ | 905.9 |   | $ | 3,514.6 |   |
| Gross profit                                 |       | 164.0             |       | 178.4 |   | 180.1 |   | 177.7 |   | 700.2 |   |
| Net income                                   |       | 36.7              |       | 48.5 |   | 35.8 |   | 26.2 |   | 147.2 |   |
| Basic earnings per common share              |       | 0.36              |       | 0.47 |   | 0.33 |   | 0.23 |   | 1.38 |   |
| Diluted earnings per common share            |       | 0.36              |       | 0.47 |   | 0.33 |   | 0.23 |   | 1.38 |   |
|                                         |       |              |       |   |   |   |   |   |   |   |   |
| 2008                                         |       |              |       |   |   |   |   |   |   |   |   |
| Net sales                                    |       | $                 | 947.3      |   | $ | 980.0 |   | $ | 984.2 |   | $ | 867.9 |   | $ | 3,779.4 |   |
| Gross profit                                 |       | 163.0             |       | 172.5 |   | 165.9 |   | 146.6 |   | 648.0 |   |
| Net income                                   |       | 42.3              |       | 46.4 |   | 44.3 |   | 33.2 |   | 166.2 |   |
| Basic earnings per common share              |       | 0.41              |       | 0.45 |   | 0.43 |   | 0.32 |   | 1.61 |   |
| Diluted earnings per common share            |       | 0.41              |       | 0.45 |   | 0.43 |   | 0.32 |   | 1.61 |   |

 

Thesummation of quarterly earnings per share may not equate to the calculation forthe full year as quarterly calculations are performed on a discrete basis.

 

**ITEM 9 — CHANGES IN ANDDISAGREEMENTS WITH ACCOUNTANTSON ACCOUNTING AND FINANCIAL DISCLOSURE**

 

Not applicable.

 

**ITEM 9A — CONTROLS AND PROCEDURES**

 

**(a) Management’s Conclusion Regarding the Effectiveness of Disclosure Controls andProcedures**

The Company’s management,under the direction, supervision, and involvement of the Chief ExecutiveOfficer and the Chief Financial Officer, has carried out an evaluation, as ofthe end of the period covered by this report, of the effectiveness of thedesign and operation of the disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) under the Securities Exchange Act of1934 (the “Exchange Act”)) of the Company. Based on this evaluation, the Chief Executive Officer and the ChiefFinancial Officer have concluded that disclosure controls and procedures inplace at the Company are effective to ensure that information required to bedisclosed by the Company in the reports that it files or submits under theExchange Act is recorded, processed, summarized, and reported within the timeperiods specified by the Securities and Exchange Commission’s rules andforms.

 

**(b) Management’s Report on Internal Control Over Financial Reporting**

The management of BemisCompany, Inc. is responsible for establishing and maintaining adequateinternal control over financial reporting, as such term is defined in ExchangeAct Rule 13a-15(f).  Under thedirection, supervision, and participation of the Chief Executive Officer andthe Chief Financial Officer, the Company’s management conducted an evaluationof the effectiveness of internal control over financial reporting based on theframework in *Internal Control - IntegratedFramework*issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO-Framework). Based on the results of this evaluation, management has concluded thatinternal control over financial reporting was effective as of December 31,2009.

 

The effectiveness of ourinternal control over financial reporting as of December 31, 2009, hasbeen audited by PricewaterhouseCoopers LLP, an independent registered publicaccounting firm, as stated in their report, which appears on page 23 ofthis Form 10-K.

 

**(c)  Changes in InternalControl Over Financial Reporting**

There was no change in theCompany’s internal control over financial reporting during the most recentfiscal quarter that has materially affected, or is reasonably likely tomaterially affect, the Company’s internal control over financial reporting.

 

**ITEM 9B — OTHER INFORMATION**

Notapplicable.

 

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**PART  III — ITEMS 10, 11, 12, 13, and 14**

 

**ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

 

Theinformation required to be submitted in response to this item with respect todirectors is omitted because a definitive proxy statement containing suchinformation will be filed with the Securities and Exchange Commission pursuantto Regulation 14A within 120 days after December 31, 2009, and suchinformation is expressly incorporated herein by reference.

 

Thefollowing sets forth the name, age, and business experience for at least thelast five years of the principal executive officers of the Company.  Unless otherwise indicated, positions shownare with the Company.

 
| **Name  (Age)**                    | ** ** | **Positions  Held**                                                                                | ** ** | **Period The Position Was Held**     |
|------------------------------------|------------|----------------------------------------------------------------------------------------------------|------------|--------------------------------------|
|                               |       |                                                                                               |       |                                 |
| William  F. Austen (51)            |       | Vice  President — Operations                                                                  |       | 2004 to present                      |
|                               |       | President  and Chief Executive Officer — Morgan Adhesives Company (1)                         |       | 2000 to present                      |
|                               |       |                                                                                               |       |                                 |
| Jeffrey  H. Curler (59)            |       | Executive  Chairman and Chairman of the Board                                                      |       | 2008 to present                      |
|                               |       | Chief  Executive Officer and Chairman of the Board                                                 |       | 2007 to 2008                         |
|                               |       | President,  Chief Executive Officer and Chairman of the Board                                      |       | 2005 to 2007                         |
|                               |       | President  and Chief Executive Officer                                                             |       | 2000 to 2005                         |
|                               |       | President  and Chief Operating Officer                                                             |       | 1998 to 2000                         |
|                               |       | President                                                                                          |       | 1996 to 1998                         |
|                               |       | Director                                                                                           |       | 1992 to Present                      |
|                               |       | Executive  Vice President                                                                          |       | 1991 to 1995                         |
|                               |       | Various  R&D and management positions within the Company                                       |       | 1973 to 1991                         |
|                               |       |                                                                                               |       |                                 |
| Timothy  S. Fliss (47)             |       | Vice  President — Human Resources                                                             |       | 2010 to present                      |
|                               |       | Executive  Vice President — Human Resources, Schneider National, Inc.                    |       | 2003 to 2009                         |
|                               |       | Vice  President — Human Resources, Schneider National, Inc.                              |       | 1995 to 2003                         |
|                               |       | Various  operational positions within Schneider National, Inc.                                |       | 1990 to 1995                         |
|                               |       |                                                                                               |       |                                 |
| Robert  F. Hawthorne (60)          |       | Vice  President — Operations                                                                  |       | 2007 to present                      |
|                               |       | Vice  President — Operations (Paper Packaging Division and Bemis Clysar, Inc.  (1))      |       | 2005 to 2007                         |
|                               |       | President  — Curwood, Inc. (1)                                                           |       | 2003 to 2005                         |
|                               |       | Various  sales, marketing, and management positions within the Company                             |       | 1985 to 2003                         |
|                               |       |                                                                                               |       |                                 |
| Stanley  A. Jaffy (61)             |       | Vice  President and Controller                                                                     |       | 2002 to present                      |
|                               |       | Vice  President — Tax and Assistant Controller                                                |       | 1998 to 2002                         |
|                               |       | Various  finance management positions within the Company                                           |       | 1987 to 1998                         |
|                               |       |                                                                                               |       |                                 |
| Melanie  E.R. Miller (46)          |       | Vice  President, Investor Relations and Treasurer                                                  |       | 2005 to present                      |
|                               |       | Vice  President, Investor Relations and Assistant Treasurer                                        |       | 2002 to 2005                         |
|                               |       | Various  finance management positions within the Company                                           |       | 2000 to 2002                         |
|                               |       |                                                                                               |       |                                 |
| James  W. Ransom (50)              |       | Vice  President — Operations                                                                  |       | 2007 to present                      |
|                               |       | President  — Curwood, Inc. (1)                                                           |       | 2005 to present                      |
|                               |       | President  — Banner Packaging, Inc. (1)                                                  |       | 2002 to 2005                         |
|                               |       |                                                                                               |       |                                 |
| Eugene  H. Seashore, Jr. (60) |       | Senior  Vice President  Vice President — Human Resources                                      |       | 2010 to present  2000 to 2010        |
|                               |       | Various  human resource and management positions within the Company                                |       | 1980 to 2000                         |
|                               |       |                                                                                               |       |                                 |
| James  J. Seifert (53)             |       | Vice  President, General Counsel and Secretary                                                     |       | 2002 to present                      |
|                               |       |                                                                                               |       |                                 |
| Henry  J. Theisen (56)             |       | President  and Chief Executive Officer                                                             |       | 2008 to present                      |
|                               |       | President  and Chief Operating Officer                                                             |       | 2007 to 2008                         |
|                               |       | Director                                                                                           |       | 2006 to present                      |
|                               |       | Executive  Vice President and Chief Operating Officer                                              |       | 2003 to 2007                         |
|                               |       | Vice  President — Operations                                                                  |       | 2002 to 2003                         |
|                               |       | Various  R&D, marketing, and management positions within the Company                           |       | 1976 to 2002                         |
|                               |       |                                                                                               |       |                                 |
| Scott  B. Ullem (43)               |       | Vice  President, Finance                                                                           |       | 2008 to present                      |
|                               |       | Managing  Director, Banc of America Securities LLC                                                 |       | 2005 to 2008                         |
|                               |       | Various  investment banking positions leading to Managing Director, Goldman,  Sachs & Co. |       | 1989 to 1992 & 1994 to 2005 |

 

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| **Name  (Age)**    | ** ** | **Positions  Held**                                            | ** ** | **Period The Position Was Held** |
|--------------------|------------|----------------------------------------------------------------|------------|----------------------------------|
|               |       |                                                           |       |                             |
| Gene  C. Wulf (59) |       | Director                                                       |       | 2006 to present                  |
|               |       | Senior  Vice President and Chief Financial Officer             |       | 2005 to present                  |
|               |       | Vice  President, Chief Financial Officer and Treasurer         |       | 2002 to 2005                     |
|               |       | Vice  President and Controller                                 |       | 1998 to 2002                     |
|               |       | Vice  President and Assistant Controller                       |       | 1997 to 1998                     |
|               |       | Various  financial and management positions within the Company |       | 1975 to 1997                     |

 

----

(1)             Identifiedoperation is a 100 percent owned subsidiary or division of the Company.

 

TheCompany’s annual CEO certification to the NYSE for the previous year wassubmitted to the NYSE on May 21, 2009. The Company’s CEO and CFO executed the certifications required by Section 302of the Sarbanes-Oxley Act of 2002 which are filed as Exhibits 31.1 and 31.2 tothis Annual Report on Form 10-K.  Noqualifications were taken with respect to any of the certifications.

 

**ITEM 11 — EXECUTIVE COMPENSATION**

 

Theinformation required to be submitted in response to this item is omittedbecause a definitive proxy statement containing such information will be filedwith the Securities and Exchange Commission pursuant to Regulation 14A within120 days after December 31, 2009, and such information is expresslyincorporated herein by reference.

 

**ITEM 12 — SECURITY OWNERSHIP OFCERTAIN BENEFICIAL OWNERSAND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

 

Equitycompensation plans as of December 31, 2009, were as follows:

 
| ** **                                                  | ** ** | ** **                     | ** ** | ** **               | ** ** | **Number of securities**      | ** ** |
|-------------------------------------------------------------|------------|--------------------------------|------------|--------------------------|------------|-------------------------------|------------|
| ** **                                                  | ** ** | ** **                     | ** ** | ** **               | ** ** | **remaining available for**   | ** ** |
| ** **                                                  | ** ** | **Number of securities to be** | ** ** | **Weighted-average**     | ** ** | **future issuance under**     | ** ** |
| ** **                                                  | ** ** | **issued upon exercise of**    | ** ** | **exercise price of**    | ** ** | **equity compensation plans** | ** ** |
| ** **                                                  | ** ** | **outstanding options,**       | ** ** | **outstanding options,** | ** ** | **(excluding securities**     | ** ** |
| ** **                                                  | ** ** | **warrants and rights**        | ** ** | **warrants and rights**  | ** ** | **reflected in column (a))**  | ** ** |
| **Plan Category**                                           | ** ** | **(a)**                        | ** ** | **(b)**                  | ** ** | **(c)**                       | ** ** |
| Equity compensation plans  approved by security holders     |       | 4,129,319                      | (1)        | $                        | 21.35      | (2)                           | 5,674,004  | (3) |
| Equity compensation plans  not approved by security holders |       | -0-                            |       | N/A                      |       | -0-                           |       |
| Total                                                       |       | 4,129,319                      | (1)        | $                        | 21.35      | (2)                           | 5,674,004  | (3) |

 

----

(1)   Includes outstanding options and restrictedstock units.

(2)   Represents weighted-average exercise price ofoutstanding options only.  Restrictedstock units do not have an exercise price.

(3)   May be issued as options or restrictedstock units.

 

Theadditional information required to be submitted in response to this item isomitted because a definitive proxy statement containing such information willbe filed with the Securities and Exchange Commission pursuant to Regulation 14Awithin 120 days after December 31, 2009, and such information is expresslyincorporated herein by reference.

 

**ITEM 13 — CERTAIN RELATIONSHIPSAND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

 

Theinformation required to be submitted in response to this item is omittedbecause a definitive proxy statement containing such information will be filedwith the Securities and Exchange Commission pursuant to Regulation 14A within120 days after December 31, 2009, and such information is expresslyincorporated herein by reference.

 

**ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

Theinformation required to be submitted in response to this item is omittedbecause a definitive proxy statement containing such information will be filedwith the Securities and Exchange Commission pursuant to Regulation 14A within120 days after December 31, 2009, and such information is expresslyincorporated herein by reference.

 

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**PART  IV — ITEM 15**

 

**ITEM 15 — EXHIBITS AND FINANCIALSTATEMENT SCHEDULES**

 

(a)           The following documents are filed aspart of Item 8 of this Annual Report on Form 10-K:

 
| ** **                                                                                                                                           | ** ** | **Pages in**  | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|
| ** **                                                                                                                                           | ** ** | **Form 10-K** | ** ** |
| (1)  **Financial Statements**                                                                                                                   |       |               |       |
| Management’s Responsibility Statement                                                                                                           |       | 22                 |       |
| Report of Independent Registered Public Accounting  Firm                                                                                             |       | 23                 |       |
| Consolidated Statement of Income for each of the Three  Years Ended December 31, 2009                                                           |       | 24                 |       |
| Consolidated Balance Sheet at December 31, 2009  and 2008                                                                                       |       | 25                 |       |
| Consolidated Statement of Cash Flows for each of the  Three Years Ended December 31, 2009                                                       |       | 26                 |       |
| Consolidated Statement of Equity for each of the Three  Years Ended December 31, 2009                                                           |       | 27                 |       |
| Notes to Consolidated Financial Statements                                                                                                           |       | 28-46              |       |
|                                                                                                                                                 |       |               |       |
| (2)  **Financial Statement  Schedule for Years 2009, 2008, and 2007**                                                                           |       |               |       |
| Schedule II - Valuation and Qualifying Accounts and  Reserves                                                                                        |       | 53                 |       |
| Report  of Independent Registered Public Accounting Firm on Financial Statement Schedule for each of the  Three Years Ended December 31, 2009   |       | 53                 |       |
|                                                                                                                                                 |       |               |       |
| All other schedules are omitted because they are  not applicable or the required information is shown in the financial statements  or notes thereto. |       |
|                                                                                                                                                 |       |               |       |
| (3)   **Exhibits**                                                                                                                              |       |               |       |
| The Exhibit Index is incorporated herein by  reference.                                                                                         |       |               |       |

 

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**SIGNATURES**

 

Pursuant to the requirements of Section 13 of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.

 
|                                                                                                                                                                                                             |                                     | BEMIS COMPANY, INC. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|---------------------|
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             |                                     |                |   |   |
| By                                                                                                                                                                                                               | /s/  Gene C. Wulf                        |                | By | /s/  Stanley A. Jaffy |
|                                                                                                                                                                                                             | Gene C. Wulf, Senior Vice President      |                |   | Stanley A. Jaffy, Vice President |
|                                                                                                                                                                                                             | and Chief Financial Officer              |                |   | and Controller |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             |                                     |                |   |   |
| Pursuant  to the requirements of the Securities Exchange Act of 1934, this report has  been signed below by the following persons on behalf of the Registrant and in  the capacities and on the dates indicated. |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             | /s/  Gene C. Wulf                        |                |   | /s/  Stanley A. Jaffy |
|                                                                                                                                                                                                             | Gene C. Wulf, Senior Vice President      |                |   | Stanley A. Jaffy, Vice President |
|                                                                                                                                                                                                             | and Chief Financial Officer              |                |   | and Controller (principal accounting officer) |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             | /s/  Jeffrey H. Curler                   |                |   | /s/  William J. Bolton |
|                                                                                                                                                                                                             | Jeffrey H. Curler, Chairman of the Board |                |   | William J. Bolton, Director |
|                                                                                                                                                                                                             | and Executive Chairman                   |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   |   |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             | /s/  David S. Haffner                    |                |   | /s/  Barbara L. Johnson |
|                                                                                                                                                                                                             | David S. Haffner, Director               |                |   | Barbara L. Johnson, Director |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             | /s/  Timothy M. Manganello               |                |   | /s/  Roger D. O’Shaughnessy |
|                                                                                                                                                                                                             | Timothy M. Manganello, Director          |                |   | Roger D. O’Shaughnessy, Director |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             | /s/  Paul S. Peercy                      |                |   | /s/  Edward N. Perry |
|                                                                                                                                                                                                             | Paul S. Peercy, Director                 |                |   | Edward N. Perry, Director |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             | /s/  William J. Scholle                  |                |   | /s/  Henry J. Theisen |
|                                                                                                                                                                                                             | William J. Scholle, Director             |                |   | Henry J. Theisen, Director, President |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   | and Chief Executive Officer |
|                                                                                                                                                                                                             |                                     |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             | /s/  Holly Van Deursen                   |                |   | /s/  Philip G. Weaver |
|                                                                                                                                                                                                             | Holly Van Deursen, Director              |                |   | Philip G. Weaver, Director |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                             |                                     |                |   |   |
|                                                                                                                                                                                                             | /s/  Gene C. Wulf,                       |                |   | /s/  Jeffrey H. Curler |
|                                                                                                                                                                                                             | Gene C. Wulf, Director                   |                |   | Jeffrey H. Curler, Director |
|                                                                                                                                                                                                             | Date March 1, 2010                  |                |   | Date March 1, 2010 |
|                                                                                                                                                                                                                  |                                          |                     |  |  |  |

 

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**Exhibit Index**

 

Pursuantto the rules and regulations of the Securities and Exchange Commission, wehave filed certain agreements as exhibits to this Annual Report on Form 10-K.  these agreements may contain representationsand warranties by the parties thereto. These representations and warranties have been made solely for thebenefit of the other party or parties to such agreements and (i) may havebeen qualified by disclosures made to such other party or parties, (ii) weremade only as of the date of such agreements or such other date(s) as maybe specified in such agreements and are subject to more recent developments,which may not be fully reflected in our public disclosure, (iii) mayreflect the allocation of risk among the parties to such agreements and (iv) mayapply materiality standards different from what may be viewed as material toinvestors.  Accordingly, theserepresentations and warranties may not describe our actual state of affairs atthe date hereof and should not be relied upon.

 
| **Exhibit** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | ** ** | **Form of Filing**   |
|-------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------|
| 2(a)        |       | Sale and Purchase  Agreement between Bemis Company, Inc. as buyer and Alcan Holdings Switzerland  AG, Alcan Corporation, and certain Rio Tinto Alcan Group Companies as sellers,  dated as of July 5, 2009 and amended and restated as of February 26,  2010, portions have been omitted pursuant to the request for confidential  treatment filed with the Securities and Exchange Commission concurrent with  this filing (excluding certain schedules and exhibits referred to in the  agreement, as amended, which the Registrant agrees to furnish supplementally  to the Securities and Exchange Commission upon request). (1)                                                                                                                     |       | Incorporated by Reference |
| 2(b)        |       | Sale  and Purchase Agreement between Bemis Company, Inc. as buyer and Alcan  Holdings Switzerland AG and Alcan Corporation as sellers, dated July 5,  2009, as amended by that certain Letter agreement between Bemis  Company, Inc., as buyer and Alcan Corporation and Pechiney Plastic  Packaging, Inc. as sellers, dated July 29, 2009, (excluding all  schedules and exhibits referred to in the agreement, as amended, which the  Registrant agrees to furnishsupplementally to the Securities and  Exchange Commission (SEC) upon request). (2)                                                                                                                                                                                         |       | Incorporated by Reference |
| 3(a)        |       | Restated  Articles of Incorporation of the Registrant, as amended. (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       | Incorporated by Reference |
| 3(b)        |       | By-Laws  of the Registrant, as amended through May 6, 2004. (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       | Incorporated by Reference |
| 4(a)        |       | Form of  Indenture dated as of June 15, 1995, between the Registrant and U.S.  Bank TrustNational Association  (formerly known as First Trust National Association), as Trustee. (4) 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 theSEC, furnish to the SEC a copy of each such  instrument. |       | Incorporated by Reference |
| 10(a)       |       | Bemis  Retirement Plan, Amended and Restated as of January 1, 2009.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       | Filed Electronically      |
| 10(b)       |       | Commitment  Letter among the Registrant, JPMorgan Chase Bank, N.A. (“JPMorgan”), Wells  Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A.  (“Bank of America”) and BNP Paribas dated July 5, 2009. (As reported by  the Registrant on a current Report on Form 8-K, filed with the SEC on  July 31, 2009, this agreement was terminated. It is being filed herewith  in accordance with the requirements of Regulation S-K, Item 601(b)(10)). (2)                                                                                                                                                                                                                                                    |       | Incorporated by Reference |
| 10(c)       |       | Credit  Facility Amendment No. 1 to Amended and Restated Long-Term Credit  Agreement among the Registrant, JPMorgan, Wells Fargo, Bank of America, BNP  Paribas and certain subsidiaries of the Registrant, dated July 5, 2009.  (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       | Incorporated by Reference |
| 10(d)       |       | Share  Purchase Agreement between the Company and Pechiney Plastic  Packaging, Inc., dated July 5, 2009. (As reported by the Registrant  on a current Report on Form 8-K, filed with the SEC on July 31,  2009, this agreement was terminated. It is being filed herewith in accordance  with the requirements of Regulation S-K, Item 601(b)(10)). (2)                                                                                                                                                                                                                                                                                                                                                                                             |       | Incorporated by Reference |
| 10(e)       |       | Bemis  Deferred Compensation Plan, as amended Effective January 1, 2009.* (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       | Incorporated by Reference |
| 10(f)       |       | Bemis  Company, Inc. 2001 Stock Incentive Plan, Amended and Restated as of  January 1, 2008.* (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |       | Incorporated by Reference |
| 10(g)       |       | Bemis  Company, Inc. Supplemental Retirement Plan, Amended and Restated as of  January 1, 2008.* (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       | Incorporated by Reference |
| 10(h)       |       | Bemis  Company, Inc. Supplemental Retirement Plan for Senior Officers, Amended  and Restated as of January 1, 2008.* (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       | Incorporated by Reference |
| 10(i)       |       | Bemis  Company, Inc. 2007 Stock Incentive Plan, Amended and Restated as of  January 1, 2008.* (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |       | Incorporated by Reference |
| 10(j)       |       | Bemis  Supplemental BIPSP, as Established Effective January 1, 2006.* (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       | Incorporated by Reference |
| 10(k)       |       | Bemis  Company, Inc. 1994 Stock Incentive Plan, Amended and Restated as of  August 4, 1999.* (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       | Incorporated by Reference |
| 10(l)       |       | Bemis  Company, Inc. Long Term Deferred Compensation Plan,Amended and Restated as of  August 4, 1999.* (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       | Incorporated by Reference |
| 10(m)       |       | Bemis  Company, Inc. Form of Management Contract with Principal Executive  Officers.* (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |       | Incorporated by Reference |
| 10(n)       |       | Bemis  Executive Officer Incentive Plan as of October 29, 1999.* (8)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       | Incorporated by Reference |
| 10(o)       |       | Bemis  Company, Inc. 1997 Executive Officer Performance Plan.* (9)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | Incorporated by Reference |
| 10(p)       |       | Credit  Agreement dated as of August 14, 2008, among the Registrant, the various  banks listed therein, and JPMorgan Chase Bank, NA, as Administrative Agent.  (10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       | Incorporated by Reference |
| 10(q)       |       | Bemis  Investment Incentive Plan, Amended and Restated Effective as of  January 1, 2006.* (11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |       | Incorporated by Reference |
| 10(r)       |       | Amended  and Restated Long-Term Credit Agreement dated as of April 29, 2008,  among the Registrant, the various banks listed therein, and JPMorgan Chase  Bank, as Administrative Agent. (12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       | Incorporated by Reference |
| 10(s)       |       | Amended  and Restated 364-Day Credit Agreement dated as of April 29, 2008, among  the Registrant, the various banks listed therein, and JPMorgan Chase Bank, as  Administrative Agent. (12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | Incorporated by Reference |
| 10(t)       |       | Bemis  Company, Inc. Form of Management Contract with Principal Executive Officers effective  January 1, 2009.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | Filed Electronically      |
| 14          |       | Financial  Code of Ethics. (13)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | Incorporated by Reference |
| 21          |       | Subsidiaries  of the Registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | Filed Electronically      |
| 23          |       | Consent  of PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | Filed Electronically      |

 

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| **Exhibit** | ** ** | **Description**                                           | ** ** | **Form of  Filing** |
|-------------|------------|-----------------------------------------------------------|------------|--------------------------|
| 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     |

 

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*                    Managementcontract, compensatory plan or arrangement filed pursuant to Rule 601(b)(10)(iii)(A) ofRegulation S-K under the Securities Exchange Act of 1934.

 
| (1)  | Incorporated  by reference to the Registrant’s Form 8-K filed March 1, 2010 (File  No. 1-5277).                                                                                      |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Incorporated  by reference to the Registrant’s Quarterly Report on Form 10-Q for the  quarter ended September 30, 2009 (File No. 1-5277).                                       |
| (3)  | Incorporated  by reference to the Registrant’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 2004 (File No. 1-5277).                                            |
| (4)  | Incorporated  by reference to the Registrant’s Current Report on Form 8-K dated  June 30, 1995 (File No. 1-5277).                                                               |
| (5)  | Incorporated  by reference to the Registrant’s Annual Report on Form 10-K for the year  ended December 31, 2008 (File No. 1-5277).                                              |
| (6)  | Incorporated  by reference to the Registrant’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 1999 (File No. 1-5277).                                            |
| (7)  | Incorporated  by reference to the Registrant’s Quarterly Report on Form 10-Q for the  quarter ended September 30, 2005 (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 Exhibit B to the Registrant’s Definitive Proxy Statement  filed with the Securities and Exchange Commission on March 21, 2005  (File No. 1-5277). |
| (10) | Incorporated  by reference to the Registrant’s Quarterly Report on Form 10-Q for the  quarter ended September 30, 2008 (File No. 1-5277).                                       |
| (11) | Incorporated  by reference to the Registrant’s Annual Report on Form 10-K for the year  ended December 31, 2005 (File No. 1-5277).                                              |
| (12) | Incorporated  by reference to the Registrant’s Quarterly Report on Form 10-Q for the  quarter ended March 31, 2008 (File No. 1-5277).                                           |
| (13) | Incorporated  by reference to the Registrant’s Annual Report on Form 10-K for the year  ended December 31, 2003 (File No. 1-5277).                                              |

 

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###### SCHEDULEII — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

*(in thousands)*

 
| ** **                                                    | ** ** | **Balance at** | ** ** | **Additions**              | ** ** | ** **     | ** ** | **Foreign**  | ** ** | ** ** | ** ** | **Balance**  | ** ** |
|---------------------------------------------------------------|------------|----------------|------------|----------------------------|------------|----------------|------------|--------------|------------|------------|------------|--------------|------------|
| **Year  Ended**                                               | ** ** | **Beginning**  | ** ** | **Charged to**             | ** ** | ** **     | ** ** | **Currency** | ** ** | ** ** | ** ** | **at Close** | ** ** |
| **December 31,**                                         | ** ** | **of Year**    | ** ** | **Profit & Loss** | ** ** | **Write-offs** | ** ** | **Impact**   | ** ** | **Other**  | ** ** | **of Year**  | ** ** |
|                                                          |       |           |       |                       |       |           |       |         |       |       |       |         |       |
| RESERVES FOR DOUBTFUL ACCOUNTS, SALES RETURNS, AND ALLOWANCES |       |           |       |                       |       |
| 2009                                                          |       | $              | 16,262     |                       | $          | 18,674         |       | $            | (15,321)   | (1)        | $          | 1,383        |       | $ | 80 | (4) | $ | 21,078 |   |
| 2008                                                          |       | $              | 19,311     |                       | $          | 17,073         |       | $            | (15,317)   | (2)        | $          | (1,534       | )          | $ | (3,271) | (5) | $ | 16,262 |   |
| 2007                                                          |       | $              | 20,287     |                       | $          | 7,385          |       | $            | (9,252)    | (3)        | $          | 891          |       |   |   | $ | 19,311 |   |
|                                                          |       |           |       |                       |       |           |       |         |       |       |       |         |       |
| RESERVES FOR INVENTORY                                        |       |           |       |                       |       |           |       |         |       |       |       |         |       |
| 2009                                                          |       | $              | 18,916     |                       | $          | 3,812          |       | $            | (1,611     | )          | $          | 612          |       |   |   | $ | 21,729 |   |
| 2008                                                          |       | $              | 19,718     |                       | $          | 4,858          |       | $            | (4,681     | )          | $          | (979         | )          |   |   | $ | 18,916 |   |
| 2007                                                          |       | $              | 19,203     |                       | $          | 4,907          |       | $            | (4,703     | )          | $          | 311          |       |   |   | $ | 19,718 |   |

 

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(1) Netof $310 collections on accounts previously written off.

(2) Netof $220 collections on accounts previously written off.

(3) Netof $396 collections on accounts previously written off.

(4) Customer receivable accrual related to a South American rigidpackaging acquisition.

(5) Customer rebates accrual reclassified to accounts payable.

 

**REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM ON FINANACIAL STATEMENT SCHEDULE**

 

## **To the Board of Directors of Bemis Company, Inc.:**

## ** **

Ouraudits of the consolidated financial statements and of the effectiveness ofinternal control over financial reporting referred to in our report dated March 1,2010 appearing in Item 8 of this Form 10-K also included an audit of thefinancial statement schedule listed in Item 15(a)(2) of this Form 10-K.  In our opinion, this financial statementschedule presents fairly, in all material respects, the information set forththerein when read in conjunction with the related consolidated financialstatements.

 

 

PricewaterhouseCoopersLLP

Minneapolis,Minnesota

March 1,2010

 

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