PENSION PLANS

Total defined benefit, defined contribution, and multiemployer plan pension expense in 2012, 2011, and 2010 was $68.7 million, $50.7 million, and $53.0 million, respectively. The Company sponsors 401(k) savings plans (a defined contribution plan) for substantially all U.S. employees. The Company contributes $0.50 for every pre-tax $1.00 an employee contributes on the first two percent of eligible compensation plus $0.25 for every pre-tax $1.00 an employee contributes on the next six percent of eligible compensation for the plans that include a company match. Company contributions are invested in Company stock and are fully vested after three years of service. Total Company contributions for 2012, 2011, and 2010 were $8.9 million, $8.8 million, and $8.2 million, respectively.

Effective January 1, 2006, the Company’s U.S. defined benefit pension plans were amended for approximately two-thirds of the participant population. For those employees impacted, future pension benefits were replaced with the Bemis Investment Profit Sharing Plan (BIPSP), a defined contribution plan which is subject to achievement of certain financial performance goals of the Company. Total contribution expense for BIPSP and other defined contribution plans (including a multiemployer defined contribution plan ) was $10.7 million in 2012, $11.8 million in 2011, and $17.0 million in 2010. Defined benefit multiemployer plans cover employees at four different manufacturing locations and provide for contributions to union administered defined benefit pension plans. Amounts charged to pension cost and contributed to the multiemployer plans in 2012, 2011, and 2010 totaled $1.3 million, $1.5 million, and $1.3 million, respectively.

The Company’s defined benefit pension plans continue to cover a substantial number of U.S. employees, and the non-U.S. defined benefit plans cover select employees at various international locations. The benefits under the plans are based on years of service and salary levels. Certain plans covering hourly employees provide benefits of stated amounts for each year of service. In addition, the Company also sponsors an unfunded supplemental retirement plan to provide senior management with benefits in excess of limits under the federal tax law and increased benefits to reflect a service adjustment factor.

Net periodic pension cost for defined benefit plans included the following components for the years ended December 31, 2012, 2011, and 2010:



(in millions)	2012			2011			2010
Service cost - benefits earned during the year	$	14.7		$	13.5		$	12.9
Interest cost on projected benefit obligation	33.7			35.2			34.5
Expected return on plan assets	(43.5		)	(40.3		)	(39.9		)
Settlement loss (gain)	12.7			(3.3		)	—
Curtailment gain	—			(2.2		)	—
Amortization of unrecognized transition obligation	0.2			0.2			0.2
Amortization of prior service cost	1.5			2.1			2.6
Recognized actuarial net loss	28.5			23.4			16.2
Net periodic pension cost	$	47.8		$	28.6		$	26.5

In 2012, the Company recognized a $12.7 million pension settlement charge. The supplemental pension plan provides for a lump sum payment option at the time of retirement. The Company recognizes pension settlements when payments exceed the sum of service and interest cost components of net periodic pension cost of the plan for the fiscal year.

Changes in benefit obligations and plan assets, and a reconciliation of the funded status at December 31, 2012 and 2011, were as follows:



	U.S. Pension Plans						Non-U.S. Pension Plans
(in millions)	2012			2011			2012			2011
Change in Benefit Obligation:
Benefit obligation at the beginning of the year	$	728.6		$	612.4		$	76.2		$	69.6
Service cost	11.7			10.5			3.0			3.0
Interest cost	30.1			31.4			3.6			3.9
Participant contributions	—			—			0.8			0.6
Plan amendments	3.4			0.5			—			—
Plan settlements	—			—			(2.9		)	(3.6		)
Plan curtailments	—			—			—			(3.0		)
Benefits paid	(56.3		)	(27.0		)	(3.5		)	(3.5		)
Actuarial loss	32.9			100.8			(0.8		)	4.0
Transfer in	—			—			1.4			7.2
Foreign currency exchange rate changes	—			—			2.6			(2.0		)
Benefit obligation at the end of the year	$	750.4		$	728.6		$	80.4		$	76.2

Accumulated benefit obligation at the end of the year	$	703.0		$	681.5		$	64.3		$	60.0



	U.S. Pension Plans						Non-U.S. Pension Plans
(in millions)	2012			2011			2012			2011
Change in Plan Assets:
Fair value of plan assets at the beginning of the year	$	481.4		$	476.9		$	58.7		$	52.3
Actual return on plan assets	68.6			15.1			4.3			1.9
Employer contributions	61.6			16.4			3.8			3.3
Participant contributions	—			—			0.8			0.6
Plan settlements	—			—			(2.9		)	—
Acquisition	—			—						5.5
Benefits paid	(56.3		)	(27.0		)	(3.5		)	(3.5		)
Foreign currency exchange rate changes	—			—			2.1			(1.4		)
Fair value of plan assets at the end of the year	$	555.3		$	481.4		$	63.3		$	58.7

Unfunded status at year end:	$	(195.1	)	$	(247.2	)	$	(17.1	)	$	(17.5	)



	U.S. Pension Plans						Non-U.S. Pension Plans
(in millions)	2012			2011			2012			2011
Amount recognized in consolidated balance sheet consists of:
Prepaid benefit cost, non-current	$	—		$	—		$	0.9		$	0.2
Accrued benefit liability, current	(2.0		)	(29.9		)	(0.7		)	(0.3		)
Accrued benefit liability, non-current	(193.1		)	(217.3		)	(17.3		)	(17.4		)
Sub-total	(195.1		)	(247.2		)	(17.1		)	(17.5		)
Deferred tax asset	121.0			129.1			2.7			4.1
Accumulated other comprehensive loss (income)	191.6			218.0			6.3			6.9
Net amount related to pension plans	$	117.5		$	99.9		$	(8.1	)	$	(6.5	)

Accumulated other comprehensive loss (income) related to pension benefit plans is as follows:



	U.S. Pension Plans						Non-U.S. Pension Plans
(in millions)	2012			2011			2012			2011
Unrecognized net actuarial losses	$	304.9		$	341.3		$	6.9		$	8.6
Unrecognized net prior service costs	7.7			5.8			0.5			0.6
Unrecognized net transition costs	—			—			1.6			1.8
Tax benefit	(121.0		)	(129.1		)	(2.7		)	(4.1		)
Accumulated other comprehensive loss (income), end of year	$	191.6		$	218.0		$	6.3		$	6.9

Estimated amounts in accumulated other comprehensive income expected to be reclassified to net period cost during 2013 are as follows:



			Non-U.S.
(in millions)	U.S. Pension Plans		Pension Plans
Net actuarial losses	$	26.0	$	0.3
Net prior service costs	1.7		0.1
Net transition costs	—		0.2
Total	$	27.7	$	0.6

The accumulated benefit obligation for all defined benefit pension plans was $767.3 million and $741.5 million at December 31, 2012, and 2011, respectively.

Presented below are the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets and pension plans with accumulated benefit obligations in excess of plan assets as of December 31, 2012 and 2011.



	Projected Benefit Obligation Exceeds the Fair Value of Plan’s Assets								Accumulated Benefit Obligation Exceeds the Fair Value of Plan’s Assets
	U.S. Plans				Non-U.S. Plans				U.S. Plans				Non-U.S. Plans
(in millions)	2012		2011		2012		2011		2012		2011		2012		2011
Projected benefit obligation	$	750.4	$	728.6	$	37.3	$	76.2	$	750.4	$	728.6	$	37.3	$	34.8
Accumulated benefit obligation	703.0		681.5		26.1		60.0		703.0		681.5		26.1		25.3
Fair value of plan assets	555.2		481.4		19.3		58.6		555.2		481.4		19.3		21.2

The Company’s general funding policy is to make contributions as required by applicable regulations and when beneficial to the Company for tax purposes. The employer contributions for the years ended December 31, 2012 and 2011, were $65.4 million and $19.7 million, respectively. Total expected cash contributions for 2013 are $41.0 million which are expected to satisfy plan and regulatory funding requirements.

For each of the years ended December 31, 2012 and 2011, the U.S. pension plans represented approximately 90 percent of the Company’s total plan assets and approximately 90 percent of the Company’s total projected benefit obligation. Considering the significance of the U.S. pension plans in comparison with the Company’s total pension plans, the critical pension assumptions related to the U.S. pension plans and the non-U.S. pension plans are separately presented and discussed below.

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



	U.S. Pension Plans				Non-U.S. Pension Plans
	2012		2011		2012		2011
Weighted-average discount rate	4.00	%	4.25	%	3.89	%	4.68	%
Rate of increase in future compensation levels	3.75	%	4.25	%	3.65	%	3.73	%

The weighted-average discount rates, expected returns on plan assets, and rates of increase in future compensation levels used to determine the net benefit cost for the years ended December 31 are as follows:



	U.S. Pension Plans						Non-U.S. Pension Plans
	2012		2011		2010		2012		2011		2010
Weighted-average discount rate	4.25	%	5.25	%	5.75	%	4.68	%	5.28	%	5.42	%
Expected return on plan assets	8.00	%	8.25	%	8.25	%	6.32	%	6.34	%	6.25	%
Rate of increase in future compensation levels	4.25	%	4.25	%	4.25	%	3.67	%	3.93	%	3.90	%

The Pension Investment Committee appointed by the Company’s Board of Directors is responsible for overseeing the investments of the pension plans. The overall investment strategy is to achieve a long-term rate of return that maintains an adequate funded ratio and minimizes the need for future contributions through diversification of asset types, investment strategies, and investment managers. A target asset allocation policy is used to balance investments in equity securities with investments in fixed income securities. The majority of pension plan assets relate to U.S. plans and employ a target asset allocation of 60 percent equity securities and 40 percent fixed income securities. Equity securities primarily include investments in diversified portfolios of domestic large cap and small cap companies. Fixed income securities include diversified investments across a broad spectrum of primarily investment-grade debt securities.

The pension plan assets measured at fair value at December 31, 2012 and 2011 follow:



	2012
	U.S. Pension Plans						Non-U.S. Pension Plans
	Quoted Price In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Quoted Price In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in millions)	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	4.0	$	10.4	$	—	$	—	$	—	$	—
Corporate debt securities	—		123.1		—		—		—		—
U.S. government debt securities	2.2		—		—		—		—		—
State and municipal debt securities	—		19.1		—		—		—		—
Corporate common stock	265.0		19.7		—		—		—		—
Registered investment company funds	22.4		74.5		—		39.9		—		—
Common trust funds	—		14.8		—		—		4.4		—
General insurance account	—		—		—		—		—		19.0
Balance at December 31, 2012	$	293.6	$	261.6	$	—	$	39.9	$	4.4	$	19.0



	2011
	U.S. Pension Plans						Non-U.S. Pension Plans
	Quoted Price In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Quoted Price In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in millions)	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	1.6	$	10.2	$	—	$	—	$	—	$	—
Corporate debt securities	—		65.6		2.7		—		—		—
U.S. government debt securities	18.3		40.7		—		—		—		—
State and municipal debt securities	—		13.0		—		—		—		—
Corporate common stock	265.1		19.6		—		—		—		—
Registered investment company funds	23.8		—		—		35.5		—		—
Common trust funds	—		20.8		—		—		4.1		—
General insurance account	—		—		—		—		—		19.1
Balance at December 31, 2011	$	308.8	$	169.9	$	2.7	$	35.5	$	4.1	$	19.1

Cash and cash equivalents. This category consists of direct cash holdings and institutional short-term investment vehicles. Direct cash holdings are valued based on cost, which approximates fair value and are classified as Level 1. Institutional short-term investment vehicles are valued daily and are classified as Level 2.

Corporate, U.S. government, state, and municipal debt securities. These securities are valued using market inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data including market research publications. Inputs may be prioritized differently at certain times based on market conditions.

Corporate common stock. This category includes common and preferred stocks and index mutual funds that track U.S. and foreign indices. Fair values for the common and preferred stocks are based on quoted prices in active markets and were therefore classified within Level 1 of the fair value hierarchy. The mutual funds were valued at the unit prices established by the funds' sponsors based on the fair value of the assets underlying the funds. Since the units of the funds are not actively traded, the fair value measurements have been classified within Level 2 of the fair value hierarchy.

Registered investment company funds. This category includes mutual funds that are actively traded on public exchanges. The funds are invested in equity and debt securities that are actively traded on public exchanges.

Common trust funds. Common trust funds consist of shares in commingled funds that are not publicly traded. The funds are invested in equity and debt securities that are actively traded on public exchanges.

General insurance account. The general insurance account is primarily comprised of insurance contracts that guarantee a minimum return.

The reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) for the years ended December 31, 2012 and 2011 follows:



(in millions)	U.S. Govt. Debt Securities			Corporate Debt Securities			General Insurance Account
Fair value of plan assets at December 31, 2010	$	1.0		$	0.6		$	18.2
Actual return on plan assets	—			0.9			1.3
Purchases, sales and settlements, net	—			0.7			0.3
Transfers into (out of) Level 3 *	(1.0		)	0.5			—
Foreign currency exchange rate changes	—			—			(0.7		)
Fair value of plan assets at December 31, 2011	—			2.7			19.1
Actual return on plan assets	—			(0.1		)	0.8
Purchases, sales and settlements, net	—			(2.5		)	(1.2		)
Transfers into (out of) Level 3 *	—			(0.1		)	—
Foreign currency exchange rate changes	—			—			0.3
Fair value of plan assets at December 31, 2012	$	—		$	—		$	19.0

* Transfers into and out of Level 3 are due to availability of observable market data for the same or similar securities.

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



(in millions)	U.S. Pension Plans		Non-U.S. Pension Plans
2013	$	31.3	$	3.8
2014	32.4		3.3
2015	34.1		2.2
2016	35.4		7.8
2017	36.8		1.7
Years 2018-2022	205.5		17.0

As of January 1, 2013, the expected long-term annual rate of return on plan assets was assumed to be 8.00 percent. To develop the expected long-term rate of return on assets assumption, the Company considered historical returns and future expectations. Using historical long-term investment periods of 10, 15, 20, and 25 years ended December 31, 2012, the Company’s pension plan assets have earned annualized rates of return of 7.1 percent, 5.6 percent, 7.8 percent, and 8.7 percent, respectively. Using the Company’s 2013 target asset allocation for plan assets of 60 percent equity securities and 40 percent fixed income securities, the Company’s outside actuaries have used their independent economic model to calculate a range of expected long-term rates of return and, based on their results, the Company has determined these assumptions to be reasonable.

At the end of each year, the Company determines the discount rate to be used to calculate the present value of its U.S. pension plan liabilities. This discount rate is an estimate of the current interest rate at which pension liabilities could be effectively settled at the end of the year. In estimating this rate, the Company looks to rates of return on high quality, fixed income investments that receive one of the two highest ratings given by a recognized ratings agency. For the years ended December 31, 2012 and 2011, the Company determined this rate to be 4.00 percent and 4.25 percent, respectively. For non-U.S. pension plans, similar methodologies are followed in determining the appropriate expected rates of return on assets and discount rates to be used in the actuarial calculations in each individual country.