ACQUISITIONS

Australia and New Zealand Distributors

On August 22, 2012, the Company acquired two flexible packaging businesses in Australia and New Zealand. The acquisition of these businesses supports the Company’s strategy to enhance its presence in the Asia-Pacific region. The combined purchase price of approximately $19.1 million was financed with commercial paper and is subject to customary post-closing adjustments. Pro forma results of operations and other disclosures for the acquisitions noted above have not been presented, as they were immaterial to the reported results.

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 purchase price of approximately $45 million was financed with commercial paper. The purchase price allocation resulted in goodwill of approximately $24.9 million. The 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. 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. During 2012, $7 million was paid to the sellers for meeting the conditions for the first year. 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 allocation of the purchase price resulted in approximately $42.6 million of goodwill. The 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 from discontinued operations, net of tax.

The total purchase price for the acquisition was as follows:



(in millions)
Cash consideration	$	1,210.5
Assumption of liabilities of seller	7.1
	$	1,217.6

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:



(in millions)	March 1, 2010
Cash and cash equivalents	$	22.1
Accounts receivable, net	145.9
Inventories	179.5
Prepaid expenses and other current assets	8.3
Working capital of discontinued operations	8.5
Property and equipment	458.8
Goodwill	353.3
Other intangible assets	130.3
Long-term assets of discontinued operations	64.0
Other long-term assets	19.7
Accounts payable	(125.7		)
Accrued salaries and wages	(12.1		)
Accrued income and other taxes	0.1
Deferred income taxes	(2.9		)
Long-term liabilities	(32.2		)
	$	1,217.6

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 $8.3 million, $7.0 million, and $9.1 million for the twelve months ended December 31, 2012, 2011 and 2010, respectively, using straight-line amortization. The fair values and useful lives that have been assigned to the acquired identifiable intangible assets follow:



(in millions)	Useful Life	Fair Value
Customer relationships	6 years	$	87.3
Technology	15 years	39.7
Order backlog	One month	3.3
Total		$	130.3

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 years ended December 31, 2012 or 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 millions)	2010
Net sales
Pro forma	$	5,031.0
As reported	4,835.0

Net income attributable to Bemis Company, Inc.
Pro forma	211.9
As reported	205.1

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.