ACQUISITIONS

12 Months Ended

Dec. 31, 2011

ACQUISITIONS

ACQUISITIONS

Note 5 — ACQUISITIONS

Shield Pack

On December 1, 2011, the Company acquired the common stock of Shield Pack, LLC, a Louisiana manufacturer of high barrier liners for bulk container packaging.  The acquisition supports new market applications for bulk liquids and other products requiring barrier packaging.  The preliminary purchase price of approximately $44.5 million was paid in cash and is subject to customary post-closing adjustments.  The preliminary purchase price allocation resulted in goodwill of approximately $24.4 million.  The preliminary fair value of assets and liabilities acquired was $56.1 million and $11.6 million, respectively.

Mayor Packaging

On August 1, 2011, the Company acquired Mayor Packaging, a privately-owned manufacturer of consumer and specialty flexible packaging including a manufacturing facility in Dongguan, China.  The acquisition supports the Company’s strategy to enhance its presence in the Asia-Pacific region.  The purchase price of approximately $96.7 million was financed with commercial paper and is subject to customary post-closing adjustments.  Under the terms of the agreement, the Company may be required to make additional payments to the sellers of up to $13 million over three years if certain conditions are met.  These payments are recorded as compensation expense within selling, general and administrative expenses in the period accrued based on the likelihood of achieving these milestones.  The preliminary allocation of the purchase price resulted in approximately $42.6 million of goodwill.  The preliminary fair value of assets and liabilities acquired was $116.8 million and $20.1 million, respectively.

Alcan Packaging Food Americas

On March 1, 2010, the Company completed its acquisition of the Food Americas operations of Alcan Packaging, a business unit of Rio Tinto plc.  Under the terms of the $1.2 billion transaction, the Company acquired 23 Food Americas flexible packaging facilities in the U.S., Canada, Mexico, Brazil, Argentina, and New Zealand, with 2009 net sales of $1.4 billion.  These facilities produce flexible packaging principally for the food and beverage industries and augment the Company’s product offerings and technological capabilities.

In compliance with regulatory requirements for approval of the transaction in the United States, the Company was obligated to divest a portion of the acquired business, which included two facilities.  This portion of the business was related primarily to sales of flexible packaging for retail natural cheese products and shrink bag packaging for fresh meat products.  The sale of this portion of the business was completed on July 13, 2010 as discussed in Note 6 — Discontinued Operations.  The 2009 annual net sales associated with the sold business were approximately $156 million.  Operating results associated with this sold business have been classified on the consolidated statement of income as income (loss) from discontinued operations, net of tax.

The total purchase price for the acquisition was as follows:

(in thousands)
Cash consideration	$	1,210,491
Assumption of liabilities of seller	7,092
	$	1,217,583

Certain customary working capital adjustments were made to the purchase price in the first quarter of 2011.  The majority of the financing for this transaction was completed during the third quarter of 2009 through the issuance of $800.0 million of public notes and 8.2 million common shares issued in a secondary public stock offering.  The remaining cash purchase price was financed in the commercial paper market in advance of closing.  The Company incurred $59.4 million in acquisition-related fees which were recorded in other operating expense in the consolidated statement of income, of which $15.6 million were incurred in the year ended December 31, 2010 and $43.8 million were incurred in the year ended December 31, 2009.

The allocation of the purchase price to the assets acquired and liabilities assumed is based on the estimated fair values at the date of acquisition.  The allocation resulted in goodwill of approximately $353.3 million, which is attributed to business synergies and intangible assets that do not meet the criteria for separate recognition.  The Company expects that approximately $308.5 million of this goodwill will be deductible for tax purposes.  Other long-term assets include an adjustment of approximately $17.9 million to record assets related to the indemnity provisions of the sale and purchase agreement, and are primarily related to tax matters.  The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the acquisition date:

	March 1,
(in thousands)	2010
Cash and cash equivalents	$	22,090
Accounts receivable, net	145,874
Inventories	179,536
Prepaid expenses and other current assets	8,291
Working capital of discontinued operations	8,452
Property and equipment	458,846
Goodwill	353,296
Other intangible assets	130,300
Long-term assets of discontinued operations	63,985
Other long-term assets	19,693
Accounts payable	(125,678		)
Accrued salaries and wages	(12,088		)
Accrued income and other taxes	139
Deferred income taxes	(2,921		)
Long-term liabilities	(32,232		)
	$	1,217,583

The determination of fair value for acquired intangible assets was primarily based on the discounted expected cash flows.  The determination of useful life was based on historical acquisition experience, economic factors, and future cash flows of the assets acquired.  The amortization expense related to these intangible assets was $7.0 million and $9.1 million for the twelve months ended December 31, 2011 and December 31, 2010, respectively, using straight-line amortization.  The fair values and useful lives that have been assigned to the acquired identifiable intangible assets follow:

(in thousands)	Useful Life	Fair Value
Customer relationships	20 years	$	87,300
Technology	15 years	39,700
Order backlog	One month	3,300
Total		$	130,300

The results of the acquired operations have been included in the consolidated financial statements since the date of acquisition.  In accordance with current accounting guidance, income from discontinued operations does not include depreciation or amortization expense.

The following pro forma financial information for the year ended December 31, 2010 reflects the results of operations as if the acquisition of the Food Americas operations of Alcan Packaging had been completed on January 1, 2010.  No pro forma results are presented for the year ended December 31, 2011, as the results of the acquired company are included in the actual results.  Pro forma adjustments have been made for the elimination of sales of discontinued operations and changes in depreciation and amortization expenses related to the valuation of the acquired fixed and intangible assets and assumed liabilities at fair value, the addition of incremental interest costs related to debt used to finance the acquisition, and the tax benefits related to the increased costs.

(in thousands)	2010
Net sales
Pro forma	$	5,030,956
As reported	4,835,042
Net income attributable to Bemis Company, Inc.
Pro forma	$	211,947
As reported	205,111
Diluted earnings per share
Pro forma	$	1.91
As reported	1.85

The pro forma financial information is presented for informational purposes only.  It is not necessarily indicative of what the Company’s results of operations actually would have been had the Company completed the acquisition as of the beginning of 2010, nor does it purport to project the future operating results of the Company.  It also does not reflect any cost savings, operating synergies or revenue enhancements that may be achieved nor the costs necessary to achieve those cost savings, operating synergies, revenue enhancements, or integration efforts.

Acquisition of South American Rigid Packaging Operations of Huhtamaki Oyj

On June 3, 2009, the Company announced that it acquired the South American rigid packaging operations of Huhtamaki Oyj, a global manufacturer of consumer and specialty packaging.  This rigid packaging business, which includes three facilities in Brazil and one facility in 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 $32.3 million cash on hand, $1.9 million of debt assumed, and an $8.8 million note payable to the seller.  The note payable to seller matured on May 31, 2010 and has been paid.  The fair values of assets and liabilities acquired were $51.7 million and $10.9 million, respectively.