Acquisitions

6 Months Ended

Jun. 30, 2011

Acquisitions

Acquisitions

Note 4 — Acquisitions

Acquisition of Alcan Packaging Food Americas

On March 1, 2010, Bemis 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, Bemis 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 Bemis’ 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 5 — 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 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 bonds 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 upon the discounted expected cash flows.  The determination of useful life was based upon historical acquisition experience, economic factors, and future cash flows of the assets acquired.  The amortization expense related to these intangible assets was $3.5 million and $5.6 million for the six months ended June 30, 2011 and June 30, 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 three months and six months ended June 30, 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 three months and six months ended June 30, 2011 as the results of the acquired company are included in the actual three month and six month 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.

	Three Months Ended		Six Months Ended
(in thousands)	June 30, 2010		June 30, 2010
Net sales
Pro forma	$	1,270,215	$	2,487,858
As reported	1,270,215		2,291,944
Net income attributable to Bemis Company, Inc.
Pro forma	$	61,943	$	97,258
As reported	59,639		90,422
Diluted earnings per share
Pro forma	$	0.56	$	0.87
As reported	0.54		0.81

The pro forma financial information is presented for informational purposes only.  It is not necessarily indicative of what our results of operations actually would have been had we 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 we may achieve nor the costs necessary to achieve those cost savings, operating synergies, revenue enhancements, or integration efforts.