Bemis Company 2007 Annual Report - IR Solutions

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Shareholders A MESSAGE TO OUR This year, we are proud to celebrate our sesquicentennial; 150 years in business. Throughout our history, our business culture has been one that values integrity, ingenuity and an entrepreneurial spirit. Founded in 1858 as a packaging company, Bemis quickly achieved recognition as a leader in the industry, prospering through the Civil War, vertically integrating in 1870 to secure quality raw materials, and expanding its products and facilities across North America during the late 19th century. Bemis Bemis employees have always been encouraged to develop pride in their company. Company newsletters of the early 1900s urged them to “get into the spirit of business to such an extent that the spirit at last gets into you!” contributed extensively to the evolution of food packaging through the 20th century, introducing innovative products that have resulted in many of the modern conveniences that consumers have grown to expect today. In the 21st century, Bemis continues to be a technology leader in our industry on a global scale. 2007 RESULTS Our business faced numerous challenges in 2007. Raw material costs increased throughout the year. Demand for food, consumer products, and industrial products was negatively impacted by increased pressure on consumer budgets, primarily caused by higher prices for energy and food and the negative impact of the soft housing market. As a result, we experienced a general softness in volume for flexible packaging products sold to many of the food and consumer product markets. In our pressure sensitive materials segment, additional industry capacity negatively affected our label products business, and difficult market conditions reduced 6 demand from technical product customers in certain housing and medical product markets. While our cost management initiatives continued to gain 2007 Annual Report momentum in 2007, much of the benefit will be realized in future periods, when stronger volume levels will improve manufacturing cost absorption and reflect the benefits of improved efficiency. Our cost management efforts successfully offset the impact of inflationary costs in 2007, and we are pleased to report record cash provided by operations of $406 million. In addition to funding our increased dividend payments in 2007, we invested $179 million in capital projects that we expect to create near-term growth opportunities for Bemis. Another $154 million was used to repurchase 5.2 million shares of Bemis common stock.
BUSINESS STRATEGY Our long-term business strategy continues to strengthen our competitive position in each of the markets we serve. Our innovative packaging products promote our customers’ latest ideas with extended shelf life, new opening and closing features, and better shelf appeal. Our unique expertise in polyester technology offers consumers freshness and convenience in one high-performance package. We customize many of our products for a particular application, such as a barrier cheese package that needs to allow gas to escape as the cheese naturally ages, or a label that must adhere to a porous surface in adverse weather conditions. Our customer-focused solutions address specific package and adhesive performance needs, and we work side by side with our customers’ marketing and product development teams. As a result, we are often involved early in the product development process, allowing our research and development efforts to remain relevant and efficient. Customer Focus Technology & Innovation Manufacturing Excellence As we continue to strengthen our competitive advantage through technology and innovation, we simultaneously increase the complexity of our manufacturing processes. In this environment, manufacturing excellence is essential, ensuring that our core products deliver improving profitability and our new products remain affordable. In order to maintain these high standards, our business teams have implemented a variety of cost management and process improvement programs over the past several years. We are pleased with the progress that we have observed throughout the business, and we anticipate continued improvement each year as our efforts gain momentum. INVESTMENTS SUPPORT NEW TECHNOLOGY AND MARKETS In 2007, we completed several multiyear investment projects that will create growth opportunities beginning in 2008. We developed a platform for rigid polyester packaging, a unique product that utilizes Bemis’ technical expertise to maximize performance. We also completed the expansion of our medical device packaging operations. With additional capacity in our Northern Ireland, Malaysian, and Wisconsin locations, we are well prepared to accommodate double-digit growth in this market. The new equipment installed in our Wisconsin medical device packaging facility in 2007 will also support packaging for the pharmaceutical market. In 2008, we are continuing to expand our capabilities for the medical device packaging market by constructing a converting plant in Suzhou, China. This facility will import our proprietary materials for conversion in close proximity to our existing customers in that region. 7 Celebrating 150 Years Many of the proprietary Bemis film structures that have boosted our competitive position in the United States over the past decade are now being produced in Europe, on the new extrusion lines that we have installed there over the past several years. This provides our European customers with unique
Page 1 and 2: 2007 ANNUAL REPORT
Page 3 and 4: FINANCIAL HIGHLIGHTS Years Ended De
Page 5 and 6: In 1900, in order to secure a depen
Page 7: In the 1960s, Bemis embarked on an
Page 11 and 12: Pictured from left to right are Hen
Page 13 and 14: PRESSURE SENSITIVE MATERIALS In 195
Page 15 and 16: This pizza package utilizes our ICE
Page 17 and 18: This pizza package utilizes our ICE
Page 19 and 20: BEMIS OFFICERS & DIRECTORS Director
Page 21 and 22: $0.94 $1.54 $0.40 $0.52 $144 $287 D
Page 23 and 24: UNITED STATES SECURITIES AND EXCHAN
Page 25 and 26: PART I - ITEMS 1, 1A, 1B, 2, 3, and
Page 27 and 28: Blown film - A plastic film that is
Page 29 and 30: and the application of such policie
Page 31 and 32: Equity compensation plans as of Dec
Page 33 and 34: Diluted earnings per share were $1.
Page 35 and 36: Research and Development Our effort
Page 37 and 38: (5) Purchase obligations represent
Page 39 and 40: Total increase (decrease) in Accumu
Page 41 and 42: Report of Independent Registered Pu
Page 43 and 44: BEMIS COMPANY, INC. AND SUBSIDIARIE
Page 45 and 46: BEMIS COMPANY, INC. AND SUBSIDIARIE
Page 47 and 48: Taxes on undistributed earnings: No
Page 49 and 50: In early 2008, the FASB issued Staf
Page 51 and 52: Also in January 2006, the Company c
Page 53 and 54: Accumulated other comprehensive inc
Page 55 and 56: (in thousands) 2007 2006 Change in
Page 57 and 58: Note 9 - LONG-TERM DEBT Debt consis
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that a valuation allowance of $7.1
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(in millions) 2007 2006 2005 Identi
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ITEM 9 - CHANGES IN AND DISAGREEMEN
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PART IV - ITEM 15 ITEM 15 - EXHIBIT
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Exhibit Index Exhibit Description F
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EXHIBIT 21 - SUBSIDIARIES OF THE RE
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EXHIBIT 23 - CONSENT OF PRICEWATERH
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SHAREHOLDER & CORPORATE Information
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