EX-99.(C) 5 a09-18266_3ex99dc.htm EX-99.(C)

Exhibit 99.(c)

 

Bemis Company, Inc. and Subsidiaries

Unaudited Pro Forma Combined Condensed Financial

Information

 

On July 5, 2009, Bemis Company, Inc. (“Bemis”) entered into a Sale and Purchase Agreement (the “Agreement”) with certain subsidiaries of Rio Tinto plc (the “Sellers”), pursuant to which Bemis agreed to acquire the food packaging business and certain related assets of the Sellers located in the United States, Canada, Argentina, Brazil, Mexico, and New Zealand (“Food Americas”) for approximately $1.2 billion (the “Acquisition”).  The completion of the Acquisition is subject to customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the receipt of approval under the Mexican Federal Law on Economic Competition.  The Acquisition is intended to be financed with a combination of approximately $1.0 billion in debt and $200 million in equity.

 

The unaudited pro forma combined condensed financial information has been prepared to illustrate the effect of the proposed acquisition of Food Americas by Bemis, including the related financing.  The Unaudited Pro Forma Combined Condensed Balance Sheet combines the historical balance sheets of Bemis and Food Americas, giving effect to the Acquisition as if it had occurred on March 31, 2009.  The Unaudited Pro Forma Combined Condensed Statements of Income combine the historical statements of income of Bemis and Food Americas, giving effect to the Acquisition as if it had occurred on January 1, 2008. The historical financial information has been adjusted to give effect to matters that are (1) directly attributable to the Acquisition, (2) factually supportable, and (3) with respect to the statements of income, expected to have a continuing impact on the operating results of the combined company. The unaudited pro forma combined condensed financial information should be read in conjunction with the accompanying Notes to the Unaudited Pro Forma Combined Condensed Financial Statements and:

 

·                  The historical unaudited interim financial statements of Bemis included in  Bemis’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed with the SEC on May 11, 2009;

·                  The audited historical financial statements of Bemis, as of and for the year ended December 31, 2008, included in Bemis’ Current  Report on Form 8-K filed with the SEC on July 20, 2009;

·                  The audited historical combined financial statements of Food Americas as of and for the year ended December 31, 2008 which is filed as an exhibit to this Current Report on Form 8-K; and

·                  The historical unaudited combined interim financial statements of Food Americas as of and for the quarter ended March 31, 2009 which is filed as an exhibit to this Current Report on Form 8-K.

 

The unaudited pro forma combined condensed financial information has been prepared using the acquisition method of accounting. The unaudited pro forma combined

 


 

condensed financial information will differ from our final acquisition accounting for a number of reasons, including the fact that our estimates of fair value are preliminary and subject to change when our formal valuation and other studies are finalized. The differences that will occur between the preliminary estimates and the final acquisition accounting could have a material impact on the accompanying Unaudited Pro Forma Combined Condensed Financial Statements.

 

The unaudited pro forma combined condensed financial information is presented for informational purposes only. It has been prepared in accordance with the regulations of the SEC and is not necessarily indicative of what our financial position or results of operation actually would have been had we completed the acquisition at the dates indicated, nor does it purport to project the future financial position or operating results of the combined company.  It also does not reflect any cost savings, operating synergies or revenue enhancements that we may achieve with respect to the combined company nor the costs necessary to achieve those costs savings, operating synergies, revenue enhancements, or integrate the operations of Bemis and Food Americas.

 


 

BEMIS COMPANY, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA

COMBINED CONDENSED BALANCE SHEET

(dollars in thousands, except per share amounts)

 

 

 

As of March 31, 2009

 

 

 

 

 

 

 

 

 

 

 

Food Americas

 

 

 

 

 

 

 

 

 

Bemis

 

Food

 

Transaction

 

 

 

Assets

 

Pro Forma

 

 

 

Pro Forma

 

 

 

Company, Inc.

 

Americas

 

Adjustments

 

Notes

 

Acquired

 

Adjustments

 

Notes

 

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

73,196

 

$

5,260

 

$

(5,260

)

(2)

 

$

—

 

$

1,008,065

 

(3)

 

$

73,196

 

 

 

 

 

 

 

 

 

 

 

 

 

200,000

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,208,065

)

(1)

 

 

 

Accounts receivable, net

 

417,499

 

129,085

 

(2,768

)

(2)

 

126,317

 

 

 

 

 

543,816

 

Short-term loans receivable

 

 

 

208,771

 

(208,771

)

(2)

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

 

10,112

 

 

 

 

 

10,112

 

(10,112

)

(1)

 

 

 

Inventories

 

403,169

 

178,501

 

 

 

 

 

178,501

 

9,555

 

(1)

 

591,225

 

Prepaid expenses

 

67,741

 

19,178

 

 

 

 

 

19,178

 

 

 

 

 

86,919

 

Total current assets

 

961,605

 

550,907

 

(216,799

)

 

 

334,108

 

(557

)

 

 

1,295,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

1,114,473

 

570,073

 

(1,596

)

(2)

 

568,477

 

54,927

 

(1)

 

1,737,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other long-term assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term loans receivable

 

 

 

13,868

 

(13,868

)

(2)

 

 

 

 

 

 

 

 

 

Goodwill

 

596,804

 

251,970

 

 

 

 

 

251,970

 

(19,838

)

(1)

 

828,936

 

Other intangible assets

 

78,684

 

284,074

 

 

 

 

 

284,074

 

(85,574

)

(1)

 

277,184

 

Deferred charges and other assets

 

25,211

 

9,409

 

(7,559

)

(2)

 

1,850

 

9,775

 

(3)

 

47,538

 

 

 

 

 

 

 

 

 

 

 

 

 

10,702

 

(1)

 

 

 

Total other long-term assets

 

700,699

 

559,321

 

(21,427

)

 

 

537,894

 

(84,935

)

 

 

1,153,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

2,776,777

 

$

1,680,301

 

$

(239,822

)

 

 

$

1,440,479

 

$

(30,565

)

 

 

$

4,186,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

31,443

 

$

11,507

 

$

(11,507

)

(2)

 

 

 

 

 

 

 

$

31,443

 

Short-term borrowings

 

1,200

 

255,224

 

(255,224

)

(2)

 

 

 

 

 

 

 

1,200

 

Accounts payable

 

311,823

 

146,020

 

(18,655

)

(2)

 

127,365

 

 

 

 

 

439,188

 

Accrued salaries and wages

 

63,785

 

39,278

 

(7,365

)

(2)

 

31,913

 

 

 

 

 

95,698

 

Accrued income and other taxes

 

25,707

 

 

 

 

 

 

 

 

 

(11,202

)

(8)

 

14,505

 

Deferred income taxes

 

 

 

356

 

 

 

 

 

356

 

(356

)

(1)

 

 

 

Total current liabilities

 

433,958

 

452,385

 

(292,751

)

 

 

159,634

 

(11,558

)

 

 

582,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current portion

 

584,749

 

367,265

 

(367,265

)

(2)

 

 

 

1,048,115

 

(3)

 

1,632,864

 

Deferred taxes

 

115,206

 

147,372

 

 

 

 

 

147,372

 

(133,372

)

(1)

 

129,206

 

Other liabilities and deferred credits

 

252,901

 

122,738

 

(103,942

)

(2)

 

18,796

 

 

 

 

 

271,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

$

1,386,814

 

$

1,089,760

 

$

(763,958

)

 

 

$

325,802

 

$

903,185

 

 

 

$

2,615,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bemis Company, Inc. stockholders’equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $.10 par value

 

11,729

 

 

 

 

 

 

 

 

 

788

 

(4)

 

12,517

 

Capital in excess of par value

 

349,136

 

 

 

 

 

 

 

 

 

199,212

 

(4)

 

548,348

 

Retained earnings

 

1,612,660

 

 

 

 

 

 

 

 

 

(19,073

)

(8)

 

1,593,587

 

Owners’ net investment

 

 

 

659,270

 

524,136

 

(2)

 

1,183,406

 

(1,183,406

)

(1)

 

 

 

Accumulated other comprehensive income (loss)

 

(122,029

)

(68,729

)

 

 

 

 

(68,729

)

68,729

 

(1)

 

(122,029

)

Common stock held in treasury

 

(498,341

)

 

 

 

 

 

 

 

 

 

 

 

 

(498,341

)

Total Bemis Company, Inc. stockholders’ equity

 

1,353,155

 

590,541

 

524,136

 

 

 

1,114,677

 

(933,750

)

 

 

1,534,082

 

Noncontrolling interest

 

36,808

 

 

 

 

 

 

 

 

 

 

 

 

 

36,808

 

TOTAL EQUITY

 

1,389,963

 

590,541

 

524,136

 

 

 

1,114,677

 

(933,750

)

 

 

1,570,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

$

2,776,777

 

$

1,680,301

 

$

(239,822

)

 

 

$

1,440,479

 

$

(30,565

)

 

 

$

4,186,691

 

 

See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.

 


 

BEMIS COMPANY, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA

COMBINED CONDENSED STATEMENT OF INCOME

(in thousands, except per share amounts)

 

 

 

For the Year Ended December 31, 2008

 

 

 

 

 

 

 

 

 

 

 

Food Americas

 

 

 

 

 

 

 

 

 

Bemis

 

Food

 

Transaction

 

 

 

Assets

 

Pro Forma

 

 

 

Pro Forma

 

 

 

Company, Inc.

 

Americas

 

Adjustments

 

Notes

 

Acquired

 

Adjustments

 

Notes

 

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,779,373

 

$

1,514,319

 

$

(13,511

)

(5)

 

$

1,500,808

 

$

—

 

 

 

$

5,280,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

3,131,341

 

1,302,202

 

(11,673

)

(5)

 

1,290,529

 

(12,179

)

(6)

 

4,409,691

 

Selling, general and administrative expenses

 

342,737

 

141,895

 

(20,198

)

(5)

 

121,697

 

6,000

 

(6)

 

470,434

 

Research and development

 

25,010

 

15,282

 

 

 

 

 

15,282

 

 

 

 

 

40,292

 

Interest expense

 

39,413

 

34,074

 

 

 

 

 

34,074

 

25,913

 

(7)

 

99,400

 

Other costs (income), net

 

(27,653

)

(4,173

)

 

 

 

 

(4,173

)

 

 

 

 

(31,826

)

Other costs – Restructuring Charges

 

 

 

4,575

 

 

 

 

 

4,575

 

 

 

 

 

4,575

 

Other costs – Goodwill impairment charges

 

 

 

184,638

 

 

 

 

 

184,638

 

 

 

 

 

184,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

268,525

 

(164,174

)

18,360

 

 

 

(145,814

)

(19,734

)

 

 

102,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

96,300

 

14,669

 

6,793

 

(9)

 

21,462

 

(7,302

)

(9)

 

110,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

172,225

 

(178,843

)

11,567

 

 

 

(167,276

)

(12,432

)

 

 

(7,483

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: net income attributable to noncontrolling interests

 

6,011

 

 

 

 

 

 

 

 

 

 

 

 

 

6,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Bemis Company, Inc

 

$

166,214

 

$

(178,843

)

$

11,567

 

 

 

$

(167,276

)

$

(12,432

)

 

 

$

(13,494

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

1.61

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.61

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid

 

$

0.880

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

 

103,127

 

 

 

 

 

 

 

 

 

7,879

 

(4)

 

111,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding and unvested employee stock awards

 

103,404

 

 

 

 

 

 

 

 

 

7,879

 

(4)

 

111,283

 

 

See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.

 


 

BEMIS COMPANY, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA

COMBINED CONDENSED STATEMENT OF INCOME

(in thousands, except per share amounts)

 

 

 

For the Three Months Ended March 31, 2009

 

 

 

 

 

 

 

 

 

 

 

Food Americas

 

 

 

 

 

 

 

 

 

Bemis

 

Food

 

Transaction

 

 

 

Assets

 

Pro Forma

 

 

 

Pro Forma

 

 

 

Company, Inc.

 

Americas

 

Adjustments

 

Notes

 

Acquired

 

Adjustments

 

Notes

 

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

843,393

 

$

359,141

 

$

(3,169

)

(5)

 

$

355,972

 

$

—

 

 

 

$

1,199,365

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

679,361

 

310,714

 

(2,934

)

(5)

 

307,780

 

(2,832

)

(6)

 

984,309

 

Selling, general and administrative expenses

 

88,755

 

37,683

 

(5,864

)

(5)

 

31,819

 

1,500

 

(6)

 

122,074

 

Research and development

 

6,042

 

3,754

 

 

 

 

 

3,754

 

 

 

 

 

9,796

 

Interest expense

 

6,023

 

4,258

 

 

 

 

 

4,258

 

10,739

 

(7)

 

21,020

 

Other costs (income), net

 

4,564

 

211

 

 

 

 

 

211

 

(9,055

)

(8)

 

(4,280

)

Other costs – Restructuring charges

 

—

 

516

 

 

 

 

 

516

 

 

 

 

 

516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

58,648

 

2,005

 

5,629

 

 

 

7,634

 

(352

)

 

 

65,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

21,300

 

1,392

 

2,083

 

(9)

 

3,475

 

(130

)

(9)

 

24,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

37,348

 

613

 

3,546

 

 

 

4,159

 

(222

)

 

 

41,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: net income attributable to noncontrolling interests

 

638

 

—

 

 

 

 

 

—

 

 

 

 

 

638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Bemis Company, Inc

 

$

36,710

 

$

613

 

$

3,546

 

 

 

$

4,159

 

$

(222

)

 

 

$

40,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid

 

$

0.225

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

 

103,190

 

 

 

 

 

 

 

 

 

7,879

 

(4)

 

111,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding and unvested employee stock awards

 

103,299

 

 

 

 

 

 

 

 

 

7,879

 

(4)

 

111,178

 

 

See accompanying notes to Unaudited Pro Forma Combined Condensed Financial Statements.

 


 

NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED

FINANCIAL STATEMENTS

(dollar amounts in thousands)

 

Note 1 — Preliminary Purchase Price Allocation

 

The aggregate purchase price for the Acquisition is $1,213,000 payable at closing, subject to certain customary adjustments both at and post closing (the “Purchase Price”). Bemis may, subject to certain conditions, pay up to $200,000 of the Purchase Price in Bemis stock with the balance of the Purchase Price to be paid in cash.

 

Total purchase consideration paid for the Acquisition is expected to be approximately $1,208,065, calculated as follows:

 

Purchase Price

 

$

1,213,000

 

Less: Adjustments relating to liabilities assumed

 

(4,935

)

Total Purchase Consideration

 

$

1,208,065

 

 

The estimated purchase consideration of $1,208,065 has been allocated to the assets acquired and liabilities assumed as follows:

 

Accounts Receivable

 

$

126,317

 

Inventories

 

188,056

 

Prepaid Expenses

 

19,178

 

Property and Equipment

 

623,404

 

Other Intangible Assets

 

198,500

 

Goodwill

 

232,132

 

Other Assets

 

12,552

 

Accounts Payable

 

(127,365

)

Accrued Salaries and Wages

 

(31,913

)

Other Liabilities

 

(18,796

)

Deferred Income Taxes

 

(14,000

)

Total Purchase Consideration

 

$

1,208,065

 

 

For the purpose of preparing the unaudited pro forma combined condensed financial information, certain of the assets acquired and liabilities assumed have been measured at their estimated fair values as of March 31, 2009.  A final determination of fair values will be based on the actual net tangible and intangible assets and liabilities of Food Americas that will exist on the date of the closing of the Acquisition and on our formal valuation and other studies when they are finalized. Accordingly, the fair values of the assets and liabilities included in the table above are preliminary and subject to change pending additional information that may become known to Bemis. An increase in the fair value of inventory, property, plant and equipment or any identifiable intangible assets will reduce the amount of goodwill in the combined condensed financial information, and may result in increased depreciation and/or amortization expense.

 


 

Of the $198,500 of acquired intangible assets, $105,000 was assigned to Customer Relationships with an estimated economic life of 20 years, $75,000 was allocated to Technology with an estimated economic life of 15 years, $15,000 was allocated to Tradenames with an economic life of 20 years, and $3,500 was allocated to Order Backlog with an economic life of less than 1 year. The determination of fair value for these assets was primarily based upon the expected discounted cash flows. The determination of useful life was based upon historical acquisition experience, economic factors, and future cash flows of the combined company.  The estimated annual amortization expense for these acquired intangible assets is approximately $11,000, using straight-line amortization, and has been included in the Unaudited Pro Forma Combined Condensed Statements of Income.  This amount does not include $3,500 related to Order Backlog which has not been included in the Unaudited Pro Forma Combined Condensed Statements of Income as it is considered non-recurring.

 

Inventories reflect an adjustment of $9,555 to record the inventory at its estimated fair market value. This amount is recorded in the March 31, 2009 Unaudited Pro Forma Combined Condensed Balance Sheet.  The increased inventory valuation will temporarily impact Bemis’ cost of sales after closing and therefore it is considered non-recurring and is not included in the Unaudited Pro Forma Combined Condensed Statements of Income.

 

Property, Plant and Equipment reflects an adjustment of $54,927 to record at estimated fair market value.

 

A preliminary net deferred tax liability of $14,000 has been recognized in accordance with accounting for income taxes. This amount relates to $7,718 assumed as part of the transaction, plus $6,282 relating to the tax effect on differences between the values assigned and the estimated tax basis of assets and liabilities acquired.

 

Other assets reflect an adjustment of $10,702 to record assets related to the indemnity provisions of the Agreement, and are primarily related to environmental and tax matters.

 

Note 2 — Balance Sheet Transaction Adjustments

 

These adjustments represent assets not acquired and liabilities not assumed pursuant to the terms of the Agreement. Excluded assets and liabilities primarily include cash and cash equivalents, third-party debt, loans receivable from and loans payable to Seller-related entities, and pension, post-retirement and other employee benefit plan liabilities.

 


 

Note 3 — Debt Financing for the Acquisition

 

These adjustments reflect the expected debt financing required to fund the Acquisition and related transaction costs.  For purposes of these Unaudited Pro Forma Combined Condensed Financial Statements, we have assumed that we will complete a debt financing by the time the transaction closes.  The assumed debt financing is as follows:

 

·                  Commercial paper of $248,115 at a current average interest rate of 0.7% (based on rates as of July 15, 2009)

·                  Notes payable due in 2014 and 2019 totaling $800,000 at a blended interest rate of approximately 7%

 

On July 5, 2009, we also expanded the commitments under our existing $425,000 revolving credit facility by $200,000, as described in the Form 8-K filed on July 9, 2009.  We do not expect to draw on the revolving facility on the assumption that the commercial paper market is available at the time the transaction closes. We expect to incur, and thus assumed the payment of, approximately $9,775 of financing fees associated with the debt financing, which will be amortized over periods of four to ten years in line with the maturity of the debt.

 

On July 5, 2009, we also entered into a commitment letter with certain lenders that have committed to provide up to $800,000 under a 364-day unsecured bridge loan facility to finance of a portion of the purchase price for the Acquisition.  For purposes of these Unaudited Pro Forma Combined Condensed Financial Statements we have assumed that we will not need to draw on this facility given the financing plan described above.  In connection with this bridge loan facility, we incurred  $10,000 of fees which, for purposes of the Unaudited Pro Forma Combined Condensed Balance Sheet, has been reflected as a cash payment and reduction to retained earnings of $6,300  (after tax).  Bemis did not assume any further fees related to the bridge facility as it is assumed that the bridge facility will not be drawn upon.  The fees paid under the bridge facility could increase significantly should Bemis need to draw on this facility.

 

Note 4 - Equity Financing for the Acquisition

 

Prior to the closing of the Acquisition, we intend to issue approximately $200,000 in common stock in a public offering (net of underwriting fees of approximately $9,424) to fund a portion of the purchase price.   Shares to be issued of 7,879,100 were calculated using the Bemis closing share price as of July 15, 2009, which was $26.58.  If the Bemis share price increases or decreases by $1 per share, the number of shares required to be issued would decrease by 285,678 shares or increase by 308,100 shares, respectively.

 

As described in our Form  8-K filed on July 9, 2009, in connection with the execution of the Agreement we entered into a Share Purchase Agreement with an affiliate of the Sellers, pursuant to which we have agreed, but are not obligated, to sell at the closing of

 


 

the Acquisition, up to $200,000 in shares of common stock of the Company, at a per share purchase price equal to 95% of the ten-day volume-weighted average of the per share prices of the Company’s common stock ending at the close of the trading day prior to the closing of the Acquisition.  For purposes of these Unaudited Pro Forma Combined Condensed Financial Statements we have assumed that we will not have to issue shares pursuant to this arrangement.

 

Note 5 — Statement of Income Transaction Adjustments

 

Represents the income statement impact of certain aspects of the Agreement.  It consists primarily of (i) the elimination of  royalty payments to affiliates of the Seller that will cease upon the closing of the Acquisition and the transfer of  the related patents to us ($20,198 and $5,864 in year ended December 31, 2008 and three months ended March 31, 2009, respectively), and  (ii) the net impact of certain product sales that are not included in the Food Americas historical financial statements that will transfer to us after Closing, and certain product sales that are included in the Food Americas historical financial statements that will remain with Seller.

 

Note 6 — Statement of Income Adjustments to Reflect Purchase Price Allocation

 

Represents the estimated adjustments to amortization and depreciation expense related to the fair value adjustments of certain intangible assets and property, plant and equipment.  Depreciation expense relating to property, plant and equipment and amortization expense relating to Technology are included in Cost of Products Sold, and amortization expense relating to Customer Relationships and Tradenames are included in Selling, general and administrative expenses.

 

Note 7 – Statement of Income Adjustments to Reflect Financing

 

This adjustment reflects interest expense relating to approximately $1,048,115 of debt issued to fund the Acquisition as further described in Note 3, partially offset by the elimination of Food America’s historical interest expense relating to debt not assumed.  This incremental interest expense includes approximately $2,000 over the next 12 months of amortization expense relating to deferred financing fees expected to be incurred at the time of close.

 

The actual rates of interest can change from those that are assumed in Note 3.  If the actual interest rates that are incurred when the debt is actually drawn were to increase or decrease by .125% from the rates we have assumed in estimating the pro forma interest adjustment, pro forma interest expense could increase or decrease by approximately $1,300 per year.

 

Note 8 — Non-recurring Acquisition Expenses

 

This adjustment represents acquisition expenses reported by us  in our Form 10-Q for the quarter ended March 31, 2009.  We have reversed these expenses from the Unaudited Pro Forma Combined Condensed Statements of Income on the basis that they are non-

 


 

recurring.  No adjustment was made for the annual period as all costs were capitalized in accordance with accounting guidance effective at that time.  In the first quarter of 2009, in accordance with the revised acquisition accounting guidelines, all historically capitalized costs were expensed and all costs incurred during the quarter were also expensed.

 

We expect to incur additional transaction costs, including financial and legal advisory fees, of approximately $20,275 through the transaction close date. As referenced in Note 3, we also incurred a $10,000 bridge financing fee.  The total of these costs has been recorded as a cash outlay of $30,275, a reduction to retained earnings of $19,073 and  a reduction to accrued income and other taxes of $11,202 on the Unaudited Pro Forma Combined Condensed Balance Sheet.  These costs are excluded from the Unaudited Pro Forma Combined Condensed Statements of Income as they are considered non-recurring.

 

Note 9 — Tax Adjustments

 

For purposes of these Unaudited Pro Forma Combined Condensed Financial Statements, a blended statutory rate of 37% has been used for all periods and dates presented. This rate is an estimate and does not take into account any possible future tax events that may occur for the combined company.