BEMIS CO INC, 10-K405, 1998-03-31

BEMIS CO INC
10-K405, 1998-03-31
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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 1997
Commission File Number 1-5277

BEMIS COMPANY, INC.
(Exact name of Registrant as specified in its charter)

Missouri 43-0178130
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

222 South 9th Street, Suite 2300, Minneapolis, Minnesota 55402-4099
(Address of principal executive offices)

Registrant's telephone number, including area code: (612) 376-3000

Securities registered pursuant to Section 12(b) of the Act:

Name of Each Exchange
Title of Each Class on Which Registered
- ------------------- -----------------------
<S> <C>
Common Stock, par value $.10 per share New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange

</TABLE>

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark whether the Registrant has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months and has been subject to such filing requirements for the
past 90 days. YES X NO
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant on March 2, 1998, based on a closing price of $45.44 per share as
reported on the New York Stock Exchange, was $2,425,454,000. As of March 2,
1998, the Registrant had 53,380,001 shares of Common Stock issued and
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
1997 Annual Report to Shareholders - Part I and Part II
Proxy Statement - Annual Meeting of Stockholders
May 7, 1998 - Part I and Part III

<PAGE>

ITEM 1 - BUSINESS

Bemis Company, Inc., a Missouri corporation (the "Registrant"),
continues a business formed in 1858. The Registrant was incorporated in 1885
as Bemis Bro. Bag Company with the name changed to Bemis Company, Inc. in
1965. The Registrant is a principal manufacturer of flexible packaging
products and pressure sensitive materials selling to customers throughout the
United States, Canada, and Europe with a growing presence in Southeast Asia,
and Mexico. In 1997, approximately 74 percent of the Registrant's sales were
derived from Flexible Packaging Products and approximately 26 percent were
derived from Pressure Sensitive Materials.

The primary market for its products is the food industry. Other markets
include companies in chemical, agribusiness, medical, pharmaceutical,
sanitary products, printing, and graphic industries. Further information
about the Registrant's operations in different business segments appearing on
page 40 of the accompanying 1997 Annual Report to Shareholders is expressly
incorporated by reference in this Form 10-K Annual Report.

As of December 31, 1997, the Registrant had approximately 9,300
employees, of which an estimated 6,400 were classified as production
employees. Most of the production employees are covered by collective
bargaining contracts involving five different international unions and 20
individual contracts with terms ranging from three to five years. During
1997, five contracts covering approximately 700 employees at five different
locations in the United States were successfully negotiated. During 1998,
two domestic labor agreements are scheduled to expire.

Working capital elements throughout the year fluctuate in relation to
the level of business. Customer and vendor payment terms are split
approximately equal between net 30 days and discountable terms. Discounts
are generally one percent for payment within ten days. Inventory levels
reflect a reasonable balance between raw material pricing and availability,
and the Registrant's commitment to promptly fill customer orders. Backlogs
are not a significant factor in the industries in which the Registrant
operates; most orders placed with the Registrant are for delivery within 90
days or less.

The Registrant owns patents, licenses, trademarks, and trade names on
its products. The loss of any or all patents, licenses, trademarks, or trade
names would not have a materially adverse effect on the Registrant's results
as a whole or either of its segments. The business of each of the segments
is not seasonal to any significant extent. A summary of the Registrant's
business activities reported by its two business segments follows:

FLEXIBLE PACKAGING PRODUCTS

The Registrant and its subsidiaries manufacture a broad range of
consumer and industrial packaging consisting of coated and laminated films,
polyethylene packaging, and consumer and industrial paper packaging.

Coated and laminated film products include flexible polymer film
structures and barrier laminates for food, medical, and personal care
products utilizing controlled and modified

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<PAGE>

atmosphere packaging, with value added through printing. Primary markets are
processed meat, cheese, coffee, condiments, candy, and medical packaging.
Additional products include a full line of blown and cast stretchfilm
products, carton sealing tapes and application equipment for industrial use,
and custom thermoformed plastic packaging. Also included are
electronically-produced film color separations and engravings used in
rotogravure and flexographic printing by the packaging industry. Coated and
laminated films accounted for 36 percent, 33 percent, and 31 percent of
consolidated net sales for the years 1997, 1996, and 1995, respectively.

Polyethylene packaging consists of mono-layer and co-extruded films,
converted packaging and roll stock, and flexographic line and process printed
packaging for bakery products, seed, retail, lawn and garden, ice, fresh and
frozen produce, candy, sanitary products, and disposable diapers; printed
shrink overwrap for the food and beverage industry; extruded products
including wide width sheeting, bags on a roll, balers, and shrink pallet
covers. Polyethylene products accounted for 25 percent, 19 percent, and 17
percent of consolidated net sales for the years 1997, 1996, and 1995,
respectively.

Consumer and industrial paper packaging is made up of multiwall and
small paper bags, balers, printed paper roll stock, and bag closing materials
for consumer and industrial packaging products. Flexographic and rotogravure
printing are enhanced with in-line overlaminating capabilities. Innovations
in bag constructions include inner-ply laminations of odor, grease, and
moisture barriers. Primary markets include pet food, seed, chemicals, dairy
products, fertilizers, feed, minerals, flour, rice, and sugar. Sales of this
product line accounted for 12 percent, 14 percent, and 15 percent of
consolidated net sales for the years 1997, 1996, and 1995, respectively.

PRESSURE SENSITIVE MATERIALS

The Registrant and its subsidiaries manufacture pressure sensitive
materials such as sheet printing products, roll label products, technical
products, and graphic films. Pressure Sensitive Materials accounted for 26
percent, 29 percent, and 28 percent of consolidated net sales for the years
1997, 1996, and 1995, respectively.

Sheet printing products include pressure sensitive paper, film, and foil
sheet printing products and laser printing products for the sheet-fed
printing industry. In addition, the Registrant provides laser printer sheet
stocks, pre-die-cut printing labels, copier labels, data processing labels,
and non-impact printer products, which are designed to run on business
equipment such as laser printers and xerographic copiers.

Roll label products include narrow-web rolls of pressure sensitive film,
paper, and foil printing stocks used in high-speed printing and die-cutting
of primary package labeling, secondary or promotional decoration, and for
high-speed, high-volume data processing (EDP) stocks, bar code inventory
control labels, and numerous laser printing applications.

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<PAGE>

Technical products are pressure sensitive materials that are technically
engineered for performance in varied industrial applications. They include
micro-thin film adhesives used in delicate electronic parts assembly and
pressure sensitives utilizing foam and tape based stocks to perform fastening
and mounting functions.

Graphic films include pressure sensitive films used for decorative
signage through computer-aided plotters and screen printers, and photographic
overlaminate and mounting materials including optically-clear films with
built-in UV inhibitors.

MARKETING, DISTRIBUTION, AND COMPETITION

While the Registrant's sales are made through a variety of distribution
methods, more than 70 percent of each segment's sales are made by the
Registrant's sales force. Sales offices and plants are located throughout
the United States, Canada, United Kingdom, Europe, Scandinavia, Southeast
Asia, and Mexico to provide prompt and economical service to more than 30,000
customers. The Registrant's technically trained sales force is supported by
product development engineers, design technicians, and a customer service
organization.

No single customer accounts for ten percent or more of the Registrant's
total sales. Furthermore, the loss of one or a few major customers would not
have a material adverse effect on their operating results.

The major markets in which the Registrant sells its products are highly
competitive. Areas of competition include price, innovation, quality, and
service. This competition is significant as to both the size and the number
of competing firms.

Major competitors in the Flexible Packaging Products segment include
American National Can Company, Printpack, Inc., Cryovac, a division of W.R.
Grace & Co., Huntsman Chemical Corporation, AEP Industries, Inc., Southern
Bag Corporation, Stone Container Corporation, and Union Camp Corporation. In
the Pressure Sensitive Materials segment major competitors include Avery
Dennison Corporation, Flexcon Co., Inc., Minnesota Mining and Manufacturing
Company, Jackstadt GmbH (Germany), and UPM - Kymmene (Finland).

The Registrant considers itself to be a significant factor in the market
niches it serves; however, due to the diversity of the Flexible Packaging and
Pressure Sensitive Materials segments, the Registrant's precise competitive
position in these markets is not reasonably determinable.

Advertising is limited primarily to business and trade publications
emphasizing the Registrant's packaging and related capabilities and the
individual problem-solving approach to customer problems.

RAW MATERIALS

Plastic resins and films, paper, inks, and chemicals constitute the
basic major raw materials. These are purchased from a variety of industry
sources. While temporary shortages of raw materials may occur occasionally,
these items are currently readily available.

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<PAGE>

RESEARCH AND DEVELOPMENT EXPENSE

Research and development expenditures were as follows:

1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Flexible Packaging Products $ 7,212,000 $ 8,523,000 $ 8,813,000

Pressure Sensitive Materials 4,800,000 5,132,000 4,790,000
----------- ----------- -----------

Total $12,012,000 $13,655,000 $13,603,000
----------- ----------- -----------
----------- ----------- -----------

</TABLE>

The expense reduction experienced in 1997 is principally due to the sale
of machinery manufacturing operations in May 1997.

ENVIRONMENTAL CONTROL

Compliance with federal, state, and local provisions which have been
enacted or adopted regulating discharges of materials into the environment or
otherwise relating to the protection of the environment, is not expected to
have a material effect upon the capital expenditures, earnings, and
competitive position of the Registrant and its subsidiaries.

ITEM 2 - PROPERTIES

Properties utilized by the Registrant and its subsidiaries at December
31, 1997, were as follows:

FLEXIBLE PACKAGING PRODUCTS

The Registrant has 35 manufacturing plants located in 15 states and four
foreign countries, of which 29 are owned directly by the Registrant or its
subsidiaries and six are leased from outside parties. Leases generally
provide for minimum terms of four to 20 years and have one or more renewal
options. The initial terms of leases in effect at December 31, 1997, expire
between 1998 and 2010.

PRESSURE SENSITIVE MATERIALS

The Registrant has nine manufacturing plants located in four states and
two foreign countries, of which seven are owned directly by the Registrant or
its subsidiaries and two are leased from outside parties. Leases generally
provide for minimum terms of three to 25 years and have one or more renewal
options. The initial terms of leases in effect as of December 31, 1997,
expire between 1999 and 2008.

CORPORATE

The executive offices of the Registrant, which are leased, are located
in Minneapolis, Minnesota. The Registrant considers its plants and other
physical properties to be suitable,

- 5 -
<PAGE>

adequate, and of sufficient productive capacity to meet the requirements of
its business. The manufacturing plants operate at varying levels of capacity
depending on the type of operation and market conditions.

ITEM 3 - LEGAL PROCEEDINGS

The Registrant is involved in a number of lawsuits incidental to its
business, including environmental related litigation, the most active of
which is discussed in the following paragraph. Although it is difficult to
predict the ultimate outcome of these cases, management believes, based on
consultation with counsel, that any ultimate liability would not have a
material adverse effect upon the Registrant's financial condition or results
of operations.

In December 1996, the United States brought an action in Federal
District Court for the District of Columbia against the Registrant and its
wholly owned subsidiary, "Pervel Industries." From 1961 to 1973 Pervel
disposed of liquid industrial wastes at the Yaworski Lagoon site in
Canterbury, Connecticut. Pervel entered into a consent decree with the United
States in 1990 guaranteed by the Registrant regarding the clean up of the
Lagoon. The United States alleges that neither Pervel nor the Registrant has
fulfilled its obligations under the consent decree or guarantee. The
Registrant believes both it and Pervel have fulfilled all such obligations
and that both have meritorious defenses to all allegations brought by the
government. In management's opinion, neither a settlement of this matter nor
results following litigation will produce a result having a material adverse
effect on the Registrant's financial condition or results of operations.

The Registrant is a potentially responsible party (PRP) in approximately
fourteen superfund sites around the United States. In substantially all
cases, the Registrant is a "de minimis" PRP and has negotiated a position as
such. The Registrant has reserved an amount that it believes to be adequate
to cover its exposure.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the
fourth quarter of 1997.

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

The information required by this item appearing on pages 1 and 24 of the
accompanying 1997 Annual Report to Shareholders is expressly incorporated by
reference in this Form 10-K Annual Report.

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<PAGE>

ITEM 6 - SELECTED FINANCIAL DATA

The information required by this item appearing on page 25 of the
accompanying 1997 Annual Report to Shareholders is expressly incorporated by
reference in this Form 10-K Annual Report.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item appearing on pages 22 to 24 of the
accompanying 1997 Annual Report to Shareholders is expressly incorporated by
reference in this Form 10-K Annual Report.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.

Not applicable.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements, together with the report thereon of Price
Waterhouse LLP dated January 22, 1998, and the quarterly data appearing on
pages 26 to 42 of the accompanying 1997 Annual Report to Shareholders are
expressly incorporated by reference in this Form 10-K Annual Report. With
the exception of the aforementioned information and the information
incorporated in items 1, 5, 6, and 7 of this Form 10-K, the 1997 Annual
Report to Shareholders is not to be deemed filed as part of this Form 10-K
Annual Report.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required to be submitted in response to this item with
respect to directors is omitted because a definitive proxy statement
containing such information will be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after December 31,
1997, and such information is expressly incorporated herein by reference.

The following sets forth the name, age, and business experience for the
last five years of the principal executive officers of the Registrant. Each
officer has been an employee of the Registrant for the last five years and
the positions described relate to positions with the Registrant.

- 7 -
<PAGE>

Period
The Positions
Name Age Positions Held Were Held
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
1982 to January
LeRoy F. Bazany 65 Vice President and Controller 1998 (retired)

Jeffrey H. Curler 47 President 1996 to present
Executive Vice President 1991 to 1995
Chairman - Curwood, Inc.(1) 1995 to present
President - Curwood, Inc.(1) 1982 to 1995
Various 1973 to 1982

Benjamin R. Field, III 59 Senior Vice President, Chief
Financial Officer and Treasurer 1992 to present
Vice President and Treasurer 1982 to 1992
Various 1963 to 1982

Stanley A. Jaffy 49 Vice President - Tax and
Assistant Controller 1998 to present
Corporate Director of Tax 1987 to 1998

Scott W. Johnson 57 Senior Vice President, General
Counsel and Secretary 1992 to present
Vice President - General Counsel
and Secretary 1988 to 1992
Various 1975 to 1978

Robert F. Mlnarik 56 Vice Chairman 1996 to present
Executive Vice President 1991 to 1995
President and Chief Executive
Officer - Morgan Adhesives Co.(2) 1987 to present
Various 1972 to 1987

John H. Roe 58 Chairman and Chief Executive Officer 1996 to present
President and Chief Executive Officer 1990 to 1995
Various 1964 to 1990

Thomas L. Sall 53 Vice President - Operations 1997 to present
President - Curwood Group(3) 1997 to present
President - Curwood, Inc.(1) 1995 to 1997
President - Milprint, Inc.(3) 1992 to 1995
Various 1979 to 1992

Lawrence E. Schwanke 57 Vice President - Human Resources 1990 to present
Various 1970 to 1990

CONTINUED

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<PAGE>

Period
The Positions
Name Age Positions Held Were Held
- ---------------------------------------------------------------------------------------
Gene C. Wulf 47 Vice President and Controller 1998 to present
Vice President and Assistant May 1997 to
Controller January 1998
Senior Vice President -
Finance and Information
Technology - Curwood, Inc.(1) 1995 to 1997
Vice President - Finance and
Informational Services -
Curwood, Inc.(1) 1987 to 1995
Various 1975 to 1987

</TABLE>

- ----------------
(1) Curwood, Inc. is a 100 percent owned subsidiary of the Registrant.
(2) Morgan Adhesives Co. is an 86.9 percent owned subsidiary of the
Registrant.
(3) Curwood Group includes the following 100 percent owned subsidiaries of the
Registrant: Curwood, Inc., MacKay, Inc., Milprint, Inc., and Perfecseal,
Inc.

ITEM 11 - EXECUTIVE COMPENSATION

The information required to be submitted in response to this item is
omitted because a definitive proxy statement containing such information will
be filed with the Securities and Exchange Commission pursuant to Regulation
14A within 120 days after December 31, 1997, and such information is
expressly incorporated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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<PAGE>

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K

(a) The following documents are filed as part of the report:

(1) FINANCIAL STATEMENTS:

<TABLE>
<CAPTION>
Pages in
Annual Report*
--------------
<S> <C>
Report of Independent Accountants................. 26
Consolidated Statement of Income for
the Three Years Ended December 31, 1997......... 27
Consolidated Balance Sheet
at December 31, 1997 and 1996................... 28-29
Consolidated Statement of Cash Flows for
the Three Years Ended December 31, 1997......... 30-31
Consolidated Statement of Stockholders' Equity
for the Three Years Ended December 31, 1997..... 32
Notes to Consolidated Financial Statements ....... 33-42

</TABLE>

----------------
* Incorporated by reference from the indicated pages of the 1997
Annual Report to Shareholders, a copy of which is filed
herewith as Exhibit 13.

(2) FINANCIAL STATEMENT SCHEDULES FOR YEARS 1997, 1996, AND 1995

<TABLE>
<CAPTION>
Pages in
Form 10-K
---------
<S> <C>
Report of Independent Accountants on Financial Statement
Schedules for the Three Years Ended
December 31, 1997..................................... 12
Schedule II - Valuation and Qualifying Accounts
and Reserves.......................................... 15

</TABLE>

All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes
thereto.

(3) EXHIBITS

<TABLE>
<S> <C>
3(a) Restated Articles of Incorporation of the Registrant, as
amended.(1)
3(b) By-Laws of the Registrant, as amended.(2)
4(a) Rights Agreement, dated as of August 3, 1989, between the
Registrant and Norwest Bank Minnesota, National
Association.(3)
4(b) Form of Indenture dated as of June 15, 1995, between the
Registrant and First Trust National Association, as
Trustee.(4)
10(a) Bemis Company, Inc. 1987 Stock Option Plan.*(5)
10(b) Bemis Company, Inc. 1994 Stock Incentive Plan.*(6)
10(c) Bemis Company, Inc. 1984 Stock Award Plan.*(2)
10(d) Bemis Retirement Plan, as amended effective January 1,
1994.*(2)

CONTINUED

- 10 -
<PAGE>

10(e) Bemis Company, Inc. Supplemental Retirement Plan dated
October 20, 1988.*(2)
10(f) Bemis Executive Incentive Plan dated April 1, 1990.*(2)
10(g) Bemis Company, Inc. Long Term Deferred Compensation
Plan.*(2)
10(h) Bemis Company, Inc. 1997 Executive Officer Performance
Plan.*(1)
10(i) Amended and Restated Credit Agreement among the Registrant,
the Banks Listed therein and Morgan Guaranty Trust
Company of New York, as Agent, originally dated as of
August 1, 1986, Amended and Restated as of August 1, 1991,
as amended by Amendment No. 1 dated as of May 1, 1992, as
amended by Amendment No. 2 dated December 1, 1992, as
amended by Amendment No. 3 dated January 22, 1993, as
amended by Amendment No. 4 dated March 15, 1994, as
amended by Amendment No. 5 dated June 1, 1994, and as
amended by Amendment No. 6 dated February 1, 1995.(2)

13 1997 Annual Report to Shareholders.
22 Subsidiaries of the Registrant.
27.1 Financial Data Schedule (EDGAR electronic filing only).
27.2 Financial Data Schedule - Restated (EDGAR electronic filing
only).
27.3 Financial Data Schedule - Restated (EDGAR electronic filing
only).

</TABLE>
----------------
* Management contract, compensatory plan or arrangement filed
pursuant to Rule 601(b)(10)(iii)(A) of Regulation S-K under
the Securities Exchange Act of 1934.

(1) Incorporated by reference to the Registrant's Definitive Proxy
Statement filed with the Securities and Exchange Commission
on March 18, 1997 (File No. 1-5277).
(2) Incorporated by reference to the Registrant's Annual Report on
Form 10-K/A for the year ended December 31, 1994 (File No.
1-5277).
(3) Incorporated by reference to the Registrant's Registration
Statement on Form 8-A dated August 4, 1989 (File No. 0-1387).
(4) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 30, 1995 (File No. 1-5277).
(5) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-50560).
(6) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-80666).

(b) There were no reports on Form 8-K filed during the fourth quarter ended
December 31, 1997.

- 11 -

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of Bemis Company, Inc.:

Our audits of the consolidated financial statements referred to in our
report dated January 22, 1998, appearing on page 26 of the 1997 Annual Report to
Shareholders of Bemis Company, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of Financial Statement Schedules listed in Item 14(a) of
this Form 10-K. In our opinion, these Financial Statement Schedules present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
January 22, 1998

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (number 2-61796)
and Form S-3 (number 33-60253) of Bemis Company, Inc. of our report dated
January 22, 1998, appearing on page 26 of the 1997 Annual Report to Shareholders
which is incorporated in this Annual Report on Form 10-K. We also consent to
the incorporation by reference of our report on the Financial Statement
Schedules which appears above.

/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
March 3, 1998

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<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

BEMIS COMPANY, INC.

By /s/ Benjamin R. Field, III By /s/ Gene C. Wulf
----------------------------------- ------------------------------------
Benjamin R. Field, III, Senior Vice Gene C. Wulf, Vice President
President, Chief Financial Officer and Controller
and Treasurer

Date March 3, 1998 Date March 3, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ Jeffrey H. Curler /s/ Winslow H. Buxton
- ----------------------------------- ------------------------------------
Jeffrey H. Curler Winslow H. Buxton, Director
President and Director

Date March 3, 1998 Date March 3, 1998

/s/ John H. Roe /s/ Loring W. Knoblauch
- ----------------------------------- ------------------------------------
John H. Roe, Chairman and Chief Loring W. Knoblauch, Director
Executive Officer; Director

Date March 3, 1998 Date March 3, 1998

/s/ Robert A. Greenkorn /s/ Angus Wurtele
- ----------------------------------- ------------------------------------
Robert A. Greenkorn, Director Angus Wurtele, Director

Date March 3, 1998 Date March 3, 1998

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<PAGE>

EXHIBIT INDEX

Exhibits Form of Filing
- -------- --------------
<S> <C> <C>
3(a) Restated Articles of Incorporation of the Registrant, as amended. (1)
3(b) By-Laws of the Registrant, as amended. (2)
4(a) Rights Agreement, dated as of August 3, 1989, between the Registrant
and Norwest Bank Minnesota, National Association. (3)
4(b) Form of Indenture dated as of June 15, 1995, between the Registrant and
First Trust National Association, as Trustee. (4)
10(a) Bemis Company, Inc. 1987 Stock Option Plan. * (5)
10(b) Bemis Company, Inc. 1994 Stock Incentive Plan. * (6)
10(c) Bemis Company, Inc. 1984 Stock Award Plan. * (2)
10(d) Bemis Retirement Plan, as amended effective January 1, 1994. * (2)
10(e) Bemis Company, Inc. Supplemental Retirement Plan dated
October 20, 1988. * (2)
10(f) Bemis Executive Incentive Plan dated April 1, 1990. * (2)
10(g) Bemis Company, Inc. Long Term Deferred Compensation Plan. * (2)
10(h) Bemis Company, Inc. 1997 Executive Officer Performance Plan. * (1)
10(i) Amended and Restated Credit Agreement among the Registrant, the
Banks Listed therein and Morgan Guaranty Trust Company of New York as
Agent, originally dated as of August 1, 1986, Amended and Restated as of
August 1, 1991, as amended by Amendment No. 1 dated as of May 1, 1992,
as amended by Amendment No. 2 dated December 1, 1992, as amended by
Amendment No. 3 dated January 22, 1993, as amended by Amendment No. 4
dated March 15, 1994, as amended by Amendment No. 5 dated June 1, 1994,
and as amended by Amendment No. 6 dated February 1, 1995. (2)
13 1997 Annual Report to Shareholders. Electronic/EDGAR
22 Subsidiaries of the Registrant. Electronic/EDGAR
27.1 Financial Data Schedule (EDGAR electronic filing only). Electronic/EDGAR
27.2 Financial Data Schedule - Restated (EDGAR electronic filing only). Electronic/EDGAR
27.3 Financial Data Schedule - Restated (EDGAR electronic filing only). Electronic/EDGAR

</TABLE>

----------------
* Management contract, compensatory plan or arrangement filed pursuant to
Rule 601(b)(10)(iii)(A) of Regulation S-K under the Securities Exchange Act
of 1934.

(1) Incorporated by reference to the Registrant's Definitive Proxy
Statement filed with the Securities and Exchange Commission on
March 18, 1997 (File No. 1-5277).
(2) Incorporated by reference to the Registrant's Annual Report on Form
10-K/A for the year ended December 31, 1994 (File No. 1-5277).
(3) Incorporated by reference to the Registrant's Registration
Statement on Form 8-A dated August 4, 1989 (File No. 0-1387).
(4) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 30, 1995 (File No. 1-5277).
(5) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-50560).
(6) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-80666).

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<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands of dollars)

YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------------------------
Balance at Additions Acquisitions, Balance
Beginning Charged to Accounts Net Of at Close
of Year Profit & Loss Written Off Divestitures of Year
---------- ------------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C>
Reserves for doubtful
accounts and allowances $11,632 $1,191 $1,302(1) $590 $12,111
------- ------ ------ ---- -------
------- ------ ------ ---- -------

</TABLE>

YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------
Balance at Additions Balance
Beginning Charged to Accounts at Close
of Year Profit & Loss Written Off of Year
---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Reserves for doubtful
accounts and allowances $11,437 $2,766 $2,571(2) $11,632
------- ------ ------ -------
------- ------ ------ -------

</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------
Balance at Additions Balance
Beginning Charged to Accounts at Close
of Year Profit & Loss Written Off of Year
---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Reserve for doubtful
accounts and allowances $11,811 $714 $1,088(3) $11,437
------- ---- ------ -------
------- ---- ------ -------

</TABLE>

(1) Net of $120 collections on accounts previously written off.
(2) Net of $161 collections on accounts previously written off.
(3) Net of $33 collections on accounts previously written off.

- 15 -

<PAGE>

FINANCIAL HIGHLIGHTS BEMIS COMPANY, INC. AND SUBSIDIARIES

(in thousands, except percents, ratios,
per share amounts, stockholders, and employees) 1997 1996 % CHANGE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES AND EARNINGS:
Net Sales.................................. $1,877,237 $1,655,431 13%
Income Before Taxes........................ 174,984 162,781 7
Income Taxes............................... 67,400 61,700
Net Income................................. 107,584 101,081 6

PER SHARE:
Basic Earnings Per Share................... $ 2.03 $ 1.92 6%
Diluted Earnings Per Share................. 2.00 1.90 5
Dividends Paid............................. .80 .72 11
Book Value................................. 12.08 10.83 12

RATIOS:
Net Income to Net Sales.................... 5.7% 6.1%
Return on Average Common Equity............ 17.8% 18.7%
Return on Average Total Capital............ 12.6% 13.7%
Total Debt to Total Capital................ 31.3% 28.3%
Current Ratio.............................. 2.1 2.2

ADDITIONAL INFORMATION:
Cash Flow Provided by Operations................. $ 200,357 $ 179,259 12%
Capital Expenditures............................. 167,520 111,950 50
Stock PE Range................................... 18-23 14-20
Average Common Shares Outstanding
for Computation of Diluted EPS.................. 53,880 53,252 1
Common Shares Outstanding at Year-End............ 52,968 52,361 1
Number of Common Stockholders.................... 5,874 5,947 (1)
Number of Employees.............................. 9,275 8,876 4
</TABLE>

*Reflects a restructuring charge of 25 cents per share and a charge of 3 cents
per share related to FAS 112 in 1993, a gain of 5 cents per share on the sale
of certain machinery operations in 1996, and a gain of 12 cents per share on
the sale of the remaining machinery operations and a restructuring charge of
9 cents per share in 1997.

BEMIS COMPANY, INC.

NET SALES DILUTED DIVIDENDS RETURN ON
EARNINGS PER PAID PER AVERAGE TOTAL
SHARE* COMMON SHARE CAPITAL*

[GRAPH] [GRAPH] [GRAPH] [GRAPH]

Data appearing on bar charts on page one of the 1997 Annual Report.

1993 1994 1995 1996 1997
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>

Net Sales ($ Millions) $1,203 $1,390 $1,523 $1,655 $1,877

Diluted Earnings Per Share $ .86 $ 1.40 $ 1.63 $ 1.90 $ 2.00

Dividends paid Per
Common Share $ .50 $ .54 $ .64 $ .72 $ .80

Return on Average
Total Capital 9.2% 13.4% 13.5% 13.7% 12.6%

</TABLE>

<PAGE>

[GRAPHIC]

YEAR IN REVIEW
- --------------
MANAGEMENT'S DISCUSSION AND ANALYSIS

THREE-YEAR REVIEW OF RESULTS
<TABLE>
<CAPTION>
Percent
-------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Net Sales.................... 100.0% 100.0% 100.0%
Cost of products sold........ 78.9 76.9 77.7
----- ----- -----
Gross margin................. 21.1 23.1 22.3
Selling, general, and
administrative expenses..... 10.1 11.6 11.7
All other expenses........... 1.7 1.7 1.7
----- ----- -----
Income before
income taxes................ 9.3 9.8 8.9
Income taxes................. 3.6 3.7 3.3
----- ----- -----
Net income................... 5.7% 6.1% 5.6%
----- ----- -----
----- ----- -----
Effective tax rate........... 38.5% 37.9% 37.4%
</TABLE>

SUMMARY

In 1997 the Company continued its focus on expanding its core businesses by
both internal investment and acquisitions. Capital expenditures for the year
were a record $168 million, compared to $112 million in 1996, and $94 million
in 1995. The major part of the investment went into the Company's key
flexible plastic packaging and pressure sensitive materials operations, and
were used to expand the capacity and capabilities of these businesses.

In November of 1996, the Company announced the acquisition of Paramount
Packaging. This acquisition was completed effective on January 1, 1997.
Paramount Packaging was a flexible packaging firm with $130 million in sales
and strong market positions in the confectionery and disposable diaper
packaging markets. The integration of Paramount required the moving of
several product lines between plants to align the business for long term
optimal efficiency and the closing of an administrative office and one
manufacturing facility. Those activities were disruptive and costly during
the implementation phase with these activities principally completed by year
end.

In May 1997, the Company sold its packaging machinery businesses comprised of
Accraply, Inc., Bemis Packaging Machinery Co., and Hayssen Manufacturing Co.
These three businesses had combined net sales in 1996 of approximately $93
million.

During the second quarter of 1997 the Company announced the consolidation of
its Paper Packaging business and recorded a $7.8 million charge to absorb the
cost of this effort. This reorganization principally involved the closure of
two manufacturing facilities and realignment of the business organization
into business units targeting specific focused markets in which the Company
anticipates faster growing market segments. With the realigned organization
the Company expects increased market share and enhanced profitability through
reduced product specification and improved plant efficiency.

Overall results for the year produced net sales of $1.88 billion, up 13
percent over 1996, and 23 percent over 1995. Net Income for the same period
totaled $107.6 million, up 6 percent over 1996 and 26 percent over 1995.
Diluted earnings per share for the same comparative period were $2.00 for
1997, $1.90 for 1996, and $1.63 for 1995. Excluding the effects of business
acquisitions and dispositions as well as a 1997 restructuring charge of $7.8
million, 1997 net sales increased 7 percent over 1996 while operating income
increased 11 percent.

Sales for the Flexible Packaging segment increased over the prior year's
results in both 1997 and 1996. Plastic raw material prices generally declined
later in the year while paper raw material costs were generally flat for
1996. Unit sales were quite strong in the plastic packaging businesses while
unit sales in the paper packaging business were down slightly. Sales growth
in 1996 was generally moderated by lower raw material prices as selling price
broadly reflects raw material costs in these businesses. The 1997 sales
volume benefited from the acquisition of Paramount Packaging but was
partially offset by the disposal of the Bemis machinery operations. In 1996
sales volume benefited from the acquisition of Perfecseal.

Sales for the Pressure Sensitive Materials segment increased over the prior
year's results in both 1997 and 1996. Raw material prices were generally
stable to slightly declining during the year for this business segment. Unit
sales growth remained strong but dollar sales volume was adversely affected
by falling European currencies and the stronger U.S. dollar. In 1996 sales
were enhanced by very strong demand late in the year.

Operating profits in both business segments improved in both 1997 and 1996.
Flexible Packaging operating profits were $152.2 million in 1997, or 10.9
percent of sales, compared to $139.1 million, or 11.7 percent of sales in
1996. Operating profit margin for this segment in 1995 was 11.3 percent of
sales. In Pressure Sensitive Materials, operating profits were $67.8 million,
or 14.1 percent of sales, compared to 12.8 percent and 10.6 percent of sales
in 1996 and 1995, respectively. The improvement in operating margins resulted
from a better mix of products and improved plant efficiencies. Our focus on
markets which provide strong growth potential and above average margins is
supported by our world class technology and aggressive investments to upgrade
our Pressure Sensitive Materials manufacturing and distribution facilities
both in the United States and Europe. During 1997, we completed a major
expansion of our manufacturing facility in Belgium to support the growing
demand for marking films.

FORWARD LOOK

Following a year of heavy capital investments in 1997, we are looking for
improvement in the financial performance of the Company in the year ahead. We
have strong positions in our markets, excellent technology throughout our
product lines, efficient manufacturing, and highly talented and capable
people. We will be especially focused on improving our profitability in 1998
and delivering the type of dependable financial performance our stockholders
have come to expect from Bemis Company.

COSTS AND EXPENSES

Cost of Products Sold as a percentage of Net Sales was 78.9 percent for
1997 compared to 76.9 percent for 1996 and

<PAGE>

77.7 percent for 1995. Sharp raw material price increases experienced in 1994
were partially reversed in 1995 and 1996 resulting in improved Cost of
Products Sold percentages in 1996. The disruptive nature of the Paramount
acquisitions and restructuring in 1997 has had a negative impact on Cost of
Products Sold expressed as a percent of Net Sales.

Selling, General, and Administrative Expense increased as a percentage of
sales in 1996 and 1995 but declined in 1997 due to higher sales volume from
existing business units as well as business acquisitions and improving
European business conditions offset by business dispositions. Actual expense
for 1997 decreased $3.2 million or 1.7 percent compared to 1996, and
increased $14.8 million or 8.3 percent for 1996 versus 1995.

Research and Development Expense was $12.0 million in 1997, $13.7 million in
1996, and $13.6 million in 1995. The decrease in 1997 is principally due to
the disposition of the balance of our packaging machinery business.

Higher debt levels have resulted in Interest Expense increasing to $18.9
million for 1997, compared to $13.4 million in 1996 and $11.5 million in
1995. The increasing debt level during the three-year period was due to
higher working capital to support rising business activity and capital
expenditures together with our business acquisition efforts.

Other (Income) Costs reflect income of $4.1 million for 1997 versus $5.5
million in 1996 and $3.1 million in 1995. The gain realized on the sale of a
division of Hayssen packaging machinery business generated the 1996 increase
compared to 1995. The lower income for 1997 compared to 1996 relates
primarily to the gain realized on the 1997 sale of the balance of our
machinery businesses partially offset by a charge for the restructuring
of our Paper Packaging Business.

See Notes 2 and 3 to the Financial Statements for an expanded discussion of
these 1996 and 1997 gains and 1997 restructuring charge.

RETURN ON INVESTMENT

Return on average common stockholders' equity in 1997 was 17.8 percent
compared to 18.7 percent in 1996 and 18.3 percent in 1995.

Operating profit as a percent of average investment, which appears in the
Five-Year Summary on page five of this report, was 20.3 percent in 1997,
compared to 22.5 percent in 1996 and 21.4 percent in 1995.

Operating profit as a percent of average investment for Flexible Packaging
was 17.6 percent in 1997 compared to 20.1 percent in 1996 and 20.0 percent in
1995. This same ratio for Pressure Sensitive Materials was 31.5 percent in
1997 compared to 31.0 percent in 1996 and 26.3 percent in 1995.

Return on average total capital was 12.6 percent in 1997, 13.7 percent in
1996, and 13.5 percent in 1995. Total capital is defined as the sum of all
short-term and long-term debt, including obligations under capital leases,
stockholders' equity, and deferred taxes. Return on capital is based on net
income adjusted for interest expense on an after-tax basis.

CAPITAL EXPENDITURES

Capital expenditures in 1997 were $167.5 million compared to $112.0 million
in 1996 and $93.6 million in 1995, including capitalized interest of $1.3
million, $.8 million, and $.7 million for 1997, 1996, and 1995, respectively.
In 1998, management anticipates expenditures to exceed $120 million. The bulk
of these expenditures, made from internally generated funds, will be for
continued expansion of the Company's growth businesses, with major equipment
purchases planned for both the coated and laminated films and polyethylene
packaging businesses and the expansion for our pressure sensitive materials
business.

CAPITAL STRUCTURE, LIQUIDITY, AND CASH FLOW

Stockholders' equity increased in 1997 to $639.9 million, up from $567.1
million in 1996 and $512.8 million in 1995, due primarily to earnings net of
dividend payments. In 1997, $5.1 million of common stock was repurchased
compared to $9.0 million in 1996 and $8.4 million in 1995. Common stock
totaling $25.1 million was issued in 1997 in connection with the purchase of
Paramount Packaging Corporation.

Total debt increased $75.3 million in 1997 to $321.1 million, making debt as
a percent of total capital equity 31 percent compared to 25 percent in 1996
and 23 percent in 1995. In 1998, total debt is expected to decrease slightly
due to an expected reduction in capital expenditures from record 1997 levels
offset by increases in working capital and an investment in a South American
joint venture.

Working capital (excluding short-term debt) increased by $12.3 million to
$269.5 million in 1997 following an increase of $29.7 million to $257.2
million in 1996, and an increase of $17.0 million to $227.5 million in 1995.
The current ratio was 2.1:1 in 1997 compared to 2.2:1 in 1996 and 2.0:1 1995.

The Company's cash flow remained strong in 1997 as cash provided by
operations was $200.4 million compared to $179.3 million in 1996 and $155.5
million in 1995. The following schedule presents the major sources and uses
of cash for the Company in 1997.

Sources and Uses of Cash
(IN MILLIONS OF DOLLARS)

<TABLE>
<CAPTION>
<S> <C> <C>
Sources: Net Income...................................... $107.6
Depreciation and amortization................... 78.9
Minority Interest............................... 5.5
Deferred income taxes........................... 7.3
Increase in total debt (net of effects
of acquisitions and dispositions)............... 44.6
Business divestitures net of acquisitions....... 30.0
Other........................................... 3.1
------
Total Sources................................... $277.0
------
------
Uses: Capital expenditures............................ $167.5
Increase in working capital* (net of
effects of acquisitions and dispositions)....... 62.0
Common stock repurchases........................ 5.1
Dividends....................................... 42.4
------
Total Uses...................................... $277.0
------
------
</TABLE>
*EXCLUDING SHORT-TERM DEBT.

The Company's pretax interest coverage was 10.3 times in 1997 compared to
13.2 times in 1996 and 12.8 times in 1995. Pretax income increased to $175.0
million in 1997 from $162.8 million in 1996 and $136.1 million in 1995.
Interest expense was $18.9 million in 1997, $13.4 million in 1996, and $11.5
million in 1995.

Following are pretax interest coverage ratios for the last five years:

Pretax Interest Coverage
Coverage of Interest by Pretax Income and Interest
<TABLE>
<CAPTION>

1993 1994 1995 1996 1997
- ------------------------------------------------------
<S> <C> <C> <C> <C>
11.3 15.1 12.8 13.2 10.3
</TABLE>

Substantial credit is available to the Company for future use, including a
$250 million revolving credit agreement with five banks. Bemis is also an
issuer of commercial paper which carries an A1/P1 rating.

FOREIGN CURRENCY EXPOSURES

The Company enters into forward foreign currency exchange contracts to hedge
certain foreign currency denominated receivables and payables, principally at
operations in Belgium, France, Germany, Italy, United Kingdom, Sweden, and
Spain. Exchange gains and losses arising from these transactions are deferred
and recognized when the transaction for which the hedge was obtained is
finalized. At December 31, 1997 and 1996, the Company had outstanding forward
foreign currency exchange contracts aggregating $19,144,000 and $16,562,000,

<PAGE>

respectively. Forward foreign currency exchange contracts generally have
maturities of less than nine months and relate primarily to major Western
currencies. Counterparties to the forward foreign currency exchange contracts
are major financial institutions. Credit loss from counterparty
nonperformance is not anticipated. Based on quoted year-end market prices of
forward foreign currency exchange contracts the Company would have
experienced a $120,000 loss at December 31, 1997, and a $264,000 loss at
December 31, 1996, had outstanding contracts been settled at those respective
dates.

INCOME TAXES

The Company's effective tax rate was 38.5 percent in 1997 versus 37.9 percent
in 1996 and 37.4 percent in 1995. The primary difference between our overall
tax rate and the U.S. statutory tax rate of 35 percent in 1997, 1996, and
1995 relates to state and local income taxes net of the federal income tax
benefit.

ACCOUNTING CHANGES AND YEAR 2000 ISSUE

In 1996, the Company adopted the pro forma disclosure-only provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation." The footnoted pro forma presentation reflects a
$1.1 million charge against Net Income (2 cents per share) for 1997 and 1996
with substantially no impact on 1995. Currently, the Company follows the
requirements of Accounting Principles Board (APB) Opinion 25 issued in
October 1972.

In late-1992, Bemis began to set direction for upgrading all of its
information technology systems. The potential Year 2000 problem was
considered as a part of that overall process. It was the Company's objective
to replace systems in place with hardware and software that reflected the
current state of technology. Since the Company's primary objective was to
upgrade the quality of systems and Year 2000 was a necessary attribute of any
system considered, the Year 2000 cost is not considered to be significant to
the Company. The Company is well into the implementation of these new
systems. The final implementation projects are expected to be completed
before mid-1999. The Company is also soliciting Year 2000 status information
from its suppliers for confirmation that the Year 2000 problem will not
affect our supply chain.

The Emerging Issues Task Force (EITF), at their November 20, 1997, meeting
reached a consensus on issue 97-13, "Accounting for Costs Incurred in
Connection with a Consulting Contract or an Internal Project That Combines
Business Process Reengineering and Information Technology Transformation."
Using the guidance provided by EITF 97-13, we have reviewed the Company-wide
accounting treatment of costs associated with our on-going effort to upgrade
our information technology systems. This review resulted in a minor fourth
quarter 1997 charge which, due to immateriality, was recorded as Selling,
General, and Administrative expense.

MARKET PRICES* AND DIVIDENDS

The Bemis quarterly dividend was increased by 11.1 percent in the first
quarter of 1997 to 20 cents per share from 18 cents. This followed first
quarter increases of 12.5 percent in 1996 to 18 cents per share from 16
cents, and 18.5 percent in 1995 to 16 cents per share from 13.5 cents.

Common dividends for the year were 80 cents per share, up from 72 cents in
1996 and 64 cents in 1995. The 1997 dividend payout ratio was 40 percent
compared to 38 percent in 1996 and 39 percent in 1995. Based on the market
price of $36.88 per share at the beginning of 1997, the dividend yield was
2.2 percent.

Stockholders' equity per common share (book value per share) increased to
$12.08 per share in 1997, up from $10.83 per share in 1996 and $9.76 per
share in 1995. Trading volume in Bemis common stock was 25.6 million shares
in 1997.

In February 1998, the Board of Directors increased the quarterly cash
dividend on common stock to 22 cents per share from 20 cents, a 10 percent
increase.

BEMIS COMMON STOCK PERFORMANCE*

<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------------------------------------------------------------
DIVIDEND DIVIDEND DIVIDEND
HIGH LOW PAID HIGH LOW PAID HIGH LOW PAID
---------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter................... 43 3/8 35 7/8 $.20 33 3/8 26 1/8 $.18 29 1/2 23 3/8 $.16
Second Quarter.................. 43 3/4 36 1/2 .20 36 30 .18 29 3/8 26 .16
Third Quarter................... 47 3/16 43 3/8 .20 36 29 3/8 .18 29 3/4 26 .16
Fourth Quarter.................. 45 1/16 35 13/16 .20 37 1/8 34 .18 27 3/4 24 7/8 .16
</TABLE>
*New York Stock Exchange: BMS

FORWARD LOOKING STATEMENTS

Certain statements made in this annual report are forward-looking statements
that involve risks and uncertainties, and actual results may be materially
different. These forward-looking statements include, but are not limited to,
the expectation that increased market share and enhanced profitability will
result from the reorganization of the Paper Packaging business, the expected
completion date of such reorganization and the total job eliminations
involved, the expectation of improvements in the Company's financial
performance in the upcoming year, the amount and distribution of expected
capital expenditures in 1998, the expectation that total debt will decrease
slightly in 1998, and the opinion of management that resolution of the
Company's current environmental litigation will not produce a material
adverse effect on its financial condition or results of operations.

Factors that could cause actual results to differ from those expected
include, but are not limited to, general economic conditions such as
inflation, interest rates, and foreign currency exchange rates; competitive
conditions within the Company's markets, including the acceptance of new and
existing products offered by the Company; unanticipated expenses; timely
completion of the reorganization of the Paper Packaging business; price
increases for raw materials and the ability of the Company to pass these
price increases on to its customers or otherwise manage commodity price
fluctuation risks; the presence of adequate cash available for investment in
the Company's business in order to maintain desired debt levels; changes in
governmental regulation, especially in the areas of environmental, health and
safety matters, and foreign investment unexpected outcomes in the Company's
current and future litigation proceedings; and changes in the Company's labor
relations.

FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
24

<PAGE>

FIVE YEAR CONSOLIDATED REVIEW BEMIS COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(in millions, except percents,
shares, ratios, per share amounts,
stockholders, and employees) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Net sales.................................. $1,877.2 $1,655.4 $1,523.4 $1,390.5 $1,203.5
Cost of products sold and
other expenses........................... 1,683.3 1,479.2 1,375.8 1,264.0 1,121.9
Interest expense........................... 18.9 13.4 11.5 8.4 7.2
Income before income taxes................. 175.0 162.8 136.1 118.1 74.4
Income taxes............................... 67.4 61.7 50.9 45.3 28.3
Income before effect of changes
in accounting principles................. 107.6 101.1 85.2 72.8 46.1
Cumulative effect of adoption
of FAS 112 in 1993....................... -- -- -- -- (1.8)
Net income................................. 107.6 101.1 85.2 72.8 44.3
Net income as a percent of net sales....... 5.7% 6.1% 5.6% 5.2% 3.7%

COMMON SHARE DATA
Diluted income before effect of changes
in accounting principles................. $2.00 $1.90 $1.63 $1.40 $ .89
Cumulative effect of adoption
of FAS 112 in 1993....................... -- -- -- -- (.03)
Net income................................. 2.00 1.90 1.63 1.40 .86
Dividends per common share................. .80 .72 .64 .54 .50
Book value per common share................ 12.08 10.83 9.76 8.16 7.24
Stock PE ratio range....................... 18-23 14-20 14-18 15-18 24-31
Average common shares and common
share equivalents outstanding
during the year for computation
of diluted earnings per share............ 53,879,948 53,252,250 52,311,421 51,953,210 51,767,064
Common shares outstanding
at year-end.............................. 52,967,511 52,360,699 52,567,349 51,211,326 51,201,326

CAPITAL STRUCTURE AND OTHER DATA
Current ratio.............................. 2.1 2.2 2.0 2.0 1.8
Working capital............................ 265.2 252.5 223.1 208.1 152.8
Total assets............................. 1,362.6 1,168.8 1,030.6 923.3 789.8
Long-term debt........................... 316.8 240.9 166.4 170.7 120.5
Long-term obligations
under capital leases..................... -- 0.2 -- 1.0 2.7
Stockholders' equity....................... 639.9 567.1 512.8 418.0 370.5
Return on average common equity............ 17.8% 18.7% 18.3% 18.5% 12.1%
Return on average total capital............ 12.6% 13.7% 13.5% 13.4% 9.2%
Depreciation and amortization.............. 78.9 66.2 58.0 51.8 47.0
Capital expenditures....................... 167.5 112.0 93.6 93.1 60.7
Number of common shareholders.............. 5,874 5,947 5,711 5,602 5,649
Number of employees........................ 9,275 8,876 8,515 8,120 7,565
Wages and salaries......................... 348.8 314.5 287.0 276.8 251.6
Research and development expense........... 12.0 13.7 13.6 13.1 14.1
</TABLE>

<PAGE>

MANAGEMENT'S RESPONSIBILITY STATEMENT

The management of Bemis Company, Inc., is responsible for the integrity,
objectivity, and accuracy of the financial statements of the Company. The
financial statements are prepared by the Company in accordance with generally
accepted accounting principles using management's best estimates and
judgments, where appropriate. The financial information presented throughout
the Annual Report is consistent with that in the financial statements.

Management is also responsible for maintaining a system of internal
accounting controls and procedures designed to provide reasonable assurance
that the books and records reflect the transactions of the Company, and that
assets are protected against loss from unauthorized use or disposition. Such
a system is maintained through written accounting policies and procedures,
administered by trained Company personnel and updated on a continuing basis
to ensure their adequacy to meet the changing requirements of our business.
The Company also maintains an internal audit department which evaluates the
adequacy of and investigates adherence to these controls and procedures. In
addition, the Company's General Orders require that all of its affairs, as
reflected by the actions of its employees, will be conducted on a high
ethical plane.

Price Waterhouse LLP, independent accountants, are retained to audit the
financial statements. Their audit is conducted in accordance with generally
accepted auditing standards and includes selective reviews of internal
accounting controls.

The Audit Committee of the Board of Directors, which is composed solely
of outside directors, meets periodically with management, internal auditors,
and independent accountants to review the work of each and to satisfy itself
that the respective parties are properly discharging their responsibilities.
Both Price Waterhouse LLP and the internal auditors have had unrestricted
access to the Audit Committee, without the presence of Company management,
for the purpose of discussing the results of their examination and their
opinions on the adequacy of internal accounting controls and the quality of
financial reporting.

/s/ John H. Roe /s/ Benjamin R. Field, III /s/ Gene C. Wulf
John H. Roe Benjamin R. Field, III Gene C. Wulf
Chairman and Senior Vice President, Vice President and
Chief Executive Officer Chief Financial Officer Controller
and Treasurer

REPORT OF INDEPENDENT ACCOUNTANTS
TO THE STOCKHOLDERS AND THE BOARD OF DIRECTORS OF BEMIS COMPANY, INC.:

In our opinion, the accompanying consolidated balance sheet and related
consolidated statements of income, of stockholders' equity, and of cash flows
present fairly, in all material respects, the financial position of Bemis
Company, Inc., and its subsidiaries at December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1997, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

/s/ Price Waterhouse LLP
Price Waterhouse LLP
Minneapolis, Minnesota, January 22, 1998

<PAGE>

CONSOLIDATED STATEMENT OF INCOME BEMIS COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years Ended December 31,
(in thousands of dollars except per share amounts) 1997 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales................................................. $ 1,877,237 $1,655,431 $1,523,390

Costs and expenses:

Cost of products sold............................. 1,480,365 1,273,570 1,183,514

Selling, general, and administrative expenses..... 189,590 192,819 177,971

Research and development.......................... 12,012 13,655 13,603

Interest.......................................... 18,893 13,397 11,549

Other (income) costs, net......................... (4,057) (5,497) (3,138)

Minority interest in net income................... 5,450 4,706 3,781
----------- ---------- ----------

Income before income taxes................................ 174,984 162,781 136,110

Provision for income taxes................................ 67,400 61,700 50,900
----------- ---------- ----------

Net income................................................ $ 107,584 $ 101,081 $ 85,210
----------- ---------- ----------
----------- ---------- ----------

Basic earnings per share of common stock.................. $ 2.03 $ 1.92 $ 1.64
----------- ---------- ----------
----------- ---------- ----------

Diluted earnings per share of common stock................ $ 2.00 $ 1.90 $ 1.63
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
(SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

<PAGE>

CONSOLIDATED BALANCE SHEET BEMIS COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31,
(in thousands of dollars)

ASSETS 1997 1996
- --------------------------------------------------------------------------
<S> <C> <C>
Current assets:

Cash......................................... $ 13,827 $ 10,223

Accounts receivable -- less
$12,110 and $11,632 for doubtful
accounts and allowances...................... 233,547 216,740

Inventories.................................. 221,576 200,397

Prepaid expenses and deferred charges........ 47,443 39,561
---------- ----------

Total current assets..................... 516,393 466,921
---------- ----------

Property and equipment:

Land and land improvements................... 13,563 11,872

Buildings and leasehold improvements......... 204,263 189,978

Machinery and equipment...................... 826,671 694,013
---------- ----------

1,044,497 895,863

Less -- accumulated depreciation............. 359,270 312,372
---------- ----------

685,227 583,491
---------- ----------

Excess of cost of investments in subsidiaries
over net assets acquired..................... 150,632 108,928

Other assets..................................... 10,315 9,455
---------- ----------

160,947 118,383
---------- ----------

Total Assets..................................... $1,362,567 $1,168,795
---------- ----------
---------- ----------
</TABLE>
CONTINUED

(SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

<PAGE>

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:

Current portion of long-term debt................. $ 2,173 $ 1,706

Short-term borrowings............................. 2,105 3,006

Accounts payable.................................. 195,346 164,638

Accrued liabilities:
Salaries and wages............................ 34,892 34,163

Income taxes.................................. 8,445 5,463

Other taxes................................... 8,226 5,469
---------- ----------
Total current liabilities................. 251,187 214,445

Long-term debt, less current portion.................. 316,791 241,077

Deferred taxes........................................ 64,066 56,661

Other liabilities and deferred credits................ 56,876 57,726
---------- ----------
Total liabilities............................. 688,920 569,909
---------- ----------
Minority interest..................................... 33,762 31,789

Commitments and Contingencies

Stockholders' equity:

Common stock, $.10 par value:
Authorized--248,000,000 shares
Issued--58,643,557 and 57,897,316 shares...... 5,864 5,790

Capital in excess of par value.................... 174,562 149,481

Retained income................................... 624,842 561,049

Cumulative translation adjustment................. (4,521) 6,588

Common stock held in treasury,
5,676,046 and 5,536,617 shares, at cost....... (160,862) (155,811)
---------- ----------
Total stockholders' equity.................. 639,885 567,097
---------- ----------
Total liabilities and stockholders' equity............ $1,362,567 $1,168,795
---------- ----------
---------- ----------
</TABLE>

<PAGE>

CONSOLIDATED STATEMENT OF CASH FLOWS BEMIS COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years Ended December 31,
(in thousands of dollars) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:

Net income............................................ $107,584 $101,081 $ 85,210

Non-cash items:

Depreciation and amortization.................... 78,856 66,192 57,954

Minority interest in net income.................. 5,450 4,706 3,781

Deferred income taxes, non-current portion....... 7,312 7,035 8,746

Loss (gain) on sale of property and equipment.... 1,155 245 (211)
-------- -------- --------
Cash provided by operations........................... 200,357 179,259 155,480

Changes in working capital, net of effect
of acquisitions and dispositions:

Accounts receivable.............................. (13,982) (14,062) 3,868

Inventories...................................... (27,880) (25,243) (7,287)

Prepaid expenses and deferred changes............ (7,684) 1,065 1,019

Accounts payable................................. (13,610) (4,520) (1,187)

Accrued salaries and wages....................... (731) 4,180 (3,048)

Accrued income taxes............................. 2,969 (7,817) 4,254

Accrued other taxes.............................. 2,495 (3,825) 304

Changes in other liabilities and deferred credits..... (2,223) 4,612 (1,077)

Changes in deferred charges and other investments..... 4,000 2,563 (1,389)

Other................................................. -- -- (1,158)
-------- -------- --------
Net cash provided by operating activities.................. $143,711 $136,212 $149,779
-------- -------- --------

CONTINUED
30

<PAGE>

CONTINUED 1997 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Investing Activities:

Additions to property, plant, and equipment.......... ($167,520) ($111,950) ($ 93,615)

Business acquisitions, net of cash acquired.......... 2,055 (74,114) (552)

Business divestiture................................. 27,984 12,752 --

Proceeds from sale of property and equipment......... 2,652 1,960 2,135

Other................................................ (22) 37 3
-------- -------- --------

Net cash used by investing activities..................... (134,851) (171,315) (92,029)
-------- -------- --------
Cash flows from financing activities:

Increase in long-term debt........................... 59,628 79,952 579

Repayment of long-term debt.......................... (14,875) (5,310) (11,166)

Change in short-term borrowings...................... (618) 1,926 (591)

Change in current portion of long-term debt.......... 467 (1,699) (748)

Cash dividends paid.................................. (42,418) (37,830) (33,175)

Subsidiary dividends to minority stockholders........ (1,835) (1,841) --

Purchase of common stock for the treasury............ (5,051) (8,962) (8,395)

Stock incentive programs and related tax effects..... 51 312 3,449
-------- -------- --------
Net cash (used) provided by financing activities.......... (4,651) 26,548 (50,047)
-------- -------- --------
Effect of exchange rates.................................. (605) (3,254) 1,603
-------- -------- --------
Net increase (decrease) in cash........................... $ 3,604 ($ 11,809) $ 9,306
-------- -------- --------
-------- -------- --------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Noncash investing and financing activities:

Fair value of assets acquired........................ $ 123,262 $92,218 $ 64,646

Liabilities assumed.................................. 100,213 14,937 21,505

Minority interest acquired........................... -- 1,108 --
-------- -------- --------
Net value acquired................................... 23,049 76,173 43,141

Common stock issued.................................. 25,104 2,059 42,589
-------- -------- --------
Cash used for acquisition............................ ($ 2,055) $74,114 $ 552
-------- -------- --------
-------- -------- --------
Interest paid during the year............................. $ 19,752 $14,268 $ 8,268

Income taxes paid during the year......................... $ 55,813 $60,955 $ 39,296
</TABLE>

(SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

<PAGE>

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
BEMIS COMPANY, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(in thousands of dollars)
Capital in Cumulative Common
Common Excess of Retained Translation Stock Held
Stock Par Value Income Adjustment in Treasury
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994................ $ 5,572 $101,290 $439,364 $ 5,294 ($133,493)

Net income for 1995......................... 85,210

Translation adjustment for 1995............. 5,211

Pension liability adjustment................ 4,853

Cash dividends paid on
common stock, $.64 per share................ (33,175)

Stock incentive programs
and related tax effects..................... 28 3,421

Common stock transactions related to
an acquisition of a subsidiary company...... 181 42,408 (4,961)

Purchase of 330,300 shares
of common stock............................. (8,395)
-------- -------- -------- ------- ---------
Balance at December 31, 1995................ $ 5,781 $147,119 $496,252 $10,505 ($146,849)
-------- -------- -------- ------- ---------
Net income for 1996......................... 101,081

Translation adjustment for 1996............. (3,917)

Pension liability adjustment................ 1,546

Cash dividends paid on
common stock, $.72 per share................ (37,830)

Stock incentive programs
and related tax effects..................... 2 310

Common stock transactions
related to an acquisition of
a subsidiary company........................ 7 2,052

Purchase of 292,000 shares
of common stock............................. (8,962)
-------- -------- -------- ------- ---------
Balance at December 31, 1996................ $ 5,790 $149,481 $561,049 $ 6,588 ($155,811)
-------- -------- -------- ------- ---------
Net income for 1997......................... 107,584

Translation adjustment for 1997............. (11,109)

Pension liability adjustment................ (1,373)

Cash dividends paid on
common stock, $.80 per share................ (42,418)

Stock incentive programs
and related tax effects..................... 4 47

Common stock transactions
related to an acquisition of
a subsidiary company........................ 70 25,034

Purchase of 139,429 shares
of common stock............................. (5,051)
-------- -------- -------- ------- ---------
Balance at December 31, 1997................ $ 5,864 $174,562 $624,842 ($ 4,521) ($160,862)
-------- -------- -------- ------- ---------
-------- -------- -------- ------- ---------
</TABLE>
(SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES 1--ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of the Company and its majority owned subsidiaries. All
significant intercompany transactions and accounts have been eliminated in
consolidation.

REVENUE RECOGNITION: Sales and related cost of sales are recognized primarily
upon shipment of products.

RESEARCH AND DEVELOPMENT: Research and development expenditures are charged
against income as incurred.

EARNINGS PER SHARE: Basic earnings per common share are computed by dividing
net income by the weighted-average number of common shares outstanding during
the year. Diluted earnings per share are computed by dividing net income by
the weighted-average number of common shares outstanding during the year
including common stock equivalents, if dilutive.

INVENTORIES ARE VALUED AT THE LOWER OF COST OR MARKET: Cost is determined by
the last-in, first-out (LIFO) method for essentially all domestic
inventories. Cost for all other inventories is determined using the first-in,
first-out (FIFO) method.

PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Plant and
equipment are depreciated for financial reporting purposes principally using
the straight-line method over the estimated useful lives of assets. For tax
purposes, the Company generally uses accelerated methods of depreciation. The
tax effect of the difference between book and tax depreciation has been
provided as deferred income taxes. On sale or retirement, the asset cost and
related accumulated depreciation are removed from the accounts and any
related gain or loss is reflected in income. Maintenance and repairs which do
not.improve efficiency or extend economic life are expensed currently.
Interest costs are capitalized for major capital expenditures during
construction.

EXCESS OF COST OF INVESTMENTS IN SUBSIDIARIES OVER NET TANGIBLE ASSETS
ACQUIRED: The excess relating to companies acquired prior to 1971 is not
amortized against income unless a loss of value becomes evident. The excess
resulting from investments made subsequent to 1970 is being amortized against
income over various periods up to 40 years. The recoverability of unamortized
goodwill and other intangible assets is assessed on an ongoing basis by
comparing undiscounted cash flows from applicable operations to related net
book value.

TAXES ON UNDISTRIBUTED EARNINGS: No provision is made for U.S. income taxes
on earnings of subsidiary companies which the Company controls but does not
include in the consolidated federal income tax return since it is
management's practice and intent to permanently reinvest the earnings.

TRANSLATION OF FOREIGN CURRENCIES: Assets and liabilities are translated at
the exchange rate as of the balance sheet date. All revenue and expense
accounts are translated at a weighted-average of exchange rates in effect
during the year. Translation adjustments are recorded as a separate component
of equity.

STATEMENT OF CASH FLOWS: For purposes of reporting cash flows, cash includes
cash on hand and demand deposit accounts.

PREFERRED STOCK PURCHASE RIGHTS: On August 3, 1989, the Company's Board of
Directors adopted a Shareholder Rights Plan by declaring a dividend of one
preferred share purchase right for each outstanding share of common stock.
Under certain circumstances, a right may be exercised to purchase one
two-hundredth of a share of Series A Junior Preferred Stock for $60. The
rights become exercisable if a person or group acquires 20 percent or more of
the Company's outstanding common stock, subject to certain exceptions, or
announces an offer which would result in such person acquiring 20 percent or
more of the Company's outstanding common stock. If a person or group acquires
20 percent or more of the Company's outstanding common stock, subject to
certain exceptions, each right will entitle its holder to buy common stock of
the Company having a market value of twice the exercise price of the right.
The rights expire August 22, 1999, and may be redeemed by the Company for 1
cent per right at any time before, or, in certain circumstances, within 30
days (subject to extension) following the announcement that a person has
acquired 20 percent or more of the Company's outstanding common stock. In
connection with the Shareholder Rights Plan, the Company's Board of Directors
authorized 600,000 shares of Series A Junior Preferred Stock with a par value
of $1 per share. At December 31, 1997, none of these shares were issued or
outstanding.

ENVIRONMENTAL COST: The Company is involved in a number of environmental
related disputes and claims. The Company accrues for environmental costs when
it is probable that these costs will be incurred and can be reasonably
estimated. At December 31, 1997 and 1996, reserves were $1,745,000 and
$745,000, respectively. Adjustments to the reserve accounts and costs which
were directly expensed for environmental remediation matters resulted in
charges to the income statements for 1997, 1996, and 1995 of $896,000,
($181,000), and $164,000, net of third party reimbursements totaling
$515,000, $439,000, and $335,000, for 1997, 1996, and 1995, respectively.

ESTIMATES AND ASSUMPTIONS REQUIRED: The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

[LOGO]

FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
33

<PAGE>

NOTES 2--BUSINESS ACQUISITIONS AND DISPOSITIONS

On May 4, 1997, the Company sold the remainder of its Packaging Machinery
Division, which had annual sales of approximately $93 million, to
Barry-Wehmiller Group, Inc. of St. Louis, Missouri. Cash received totaled
approximately $39 million, including the $10.7 million pretax gain which is
included in other income.

On March 14, 1997, the Company, through its subsidiary, Morgan Adhesives
Company, acquired the assets of a division of GPOA, L.P. for a cash payment
of approximately $6 million. This business now serves as a catalog marketing
division for the Company's pressure sensitive labeling products. Results of
operations for this new division subsequent to March 13, 1997, are included
in these financial statements.

Effective January 1, 1997, the Company acquired all of the outstanding common
stock of Paramount Packaging Corporation (Paramount) with annual sales of
approximately $100 million. Paramount, which has facilities in Pennsylvania,
Tennessee, Texas, and England, manufactures flexible packaging for a variety
of markets, but with a strong emphasis on disposable diaper packaging. The
total purchase price, net of cash acquired, of approximately $53 million in
Bemis common stock and the assumption of debt, has been accounted for under
the purchase method of accounting, and results of operations for Paramount
subsequent to December 31, 1996, are included in these financial statements.

Effective December 31, 1996, the Company, through its subsidiary Milprint,
Inc., acquired all of the assets of Paramount Packaging, LLC (Paramount-LLC)
of Lebanon, Pennsylvania, for a combination of cash and the assumption of
debt. Paramount-LLC, with total annual sales of approximately $30 million in
the confectionery packaging market, operates a manufacturing facility in
Lebanon, Pennsylvania. The total purchase price of approximately $11 million
has been accounted for under the purchase method of accounting and results of
operations for Paramount-LLC subsequent to December 31, 1996, are included in
these financial statements.

On April 29, 1996, the Company acquired the Perfecseal Healthcare Packaging
Division (Perfecseal) of Paper Manufacturers Company, Inc. of Philadelphia,
Pennsylvania, for Bemis common stock valued at $2.1 million and $62.9 million
in cash. Perfecseal, with total annual sales of approximately $65 million in
the medical packaging market, operates manufacturing facilities in
Pennsylvania, Northern Ireland, and Puerto Rico. The total purchase price of
$65 million has been accounted for under the purchase method of accounting,
and results of operations for Perfecseal subsequent to April 28, 1996, are
included in these financial statements.

Effective January 1, 1996, the Company's subsidiary, Hayssen Manufacturing
Company, sold its Paper Packaging Machinery Division, which had annual sales
of approximately $30 million, to Paper Converting Machine Company of Green
Bay, Wisconsin. Cash received totaled approximately $17 million, including
the $4.3 million pre-tax gain which is included in other income.

On October 5, 1995, the Company acquired Banner Packaging, Inc., for Bemis
common stock valued at $42.6 million and $.5 million in cash. Banner, with
total annual sales of approximately $60 million, operates a large
manufacturing facility in Oshkosh, Wisconsin, producing co-extruded films,
flexographic printing, and bag conversion. The total purchase price of $43.1
million has been accounted for under the purchase method of accounting, and
results of operations for Banner subsequent to October 4, 1995, are included
in these financial statements.

Supplemental pro forma results of operations giving effect to the
acquisitions and dispositions are not presented because they are not material.

NOTES 3--RESTRUCTURING OF OPERATIONS

During the second quarter of 1997, the Company announced the consolidation of
its Paper Bag Division and recorded a $7.8 million charge to absorb the cost
of this effort. The reorganization principally involved the closure of two
manufacturing facilities and the realignment of the business organization
into business units targeting specific focused markets in which the company
anticipates faster growing market segments. With the realigned organization
the Company expects increased market share and enhanced profitability through
reduced product specification and improved plant efficiency.

The restructuring effort is expected to result in the elimination of 289 jobs
in the U.S. in conjunction with the closing of two manufacturing facilities
which is expected to be completed during 1998. Cost associated with the
integration of equipment, business, and people from closed facilities into
the remaining business units will be expensed when incurred.

EMPLOYEE SEPARATIONS-RESTRUCTURING

<TABLE>
<CAPTION>
HOURLY SALARIED TOTAL
- -----------------------------------------------------
<S> <C> <C> <C>
Planned Employee
Reductions 236 53 289
--- -- ---
--- -- ---
Actual Employee
Reductions-1997 135 23 158
--- -- ---
Cumulative Total 135 23 158
--- -- ---
--- -- ---
</TABLE>

ANALYSIS OF RESTRUCTURING RESERVE

<TABLE>
<CAPTION>
OTHER
EMPLOYEE ASSET EXIT
(IN THOUSANDS OF DOLLARS) COSTS WRITE-DOWNS COSTS TOTAL CASH NON-CASH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reserve balance at June 30, 1997............. ($3,004) ($1,798) ($2,972) ($7,774) ($6,201) ($1,573)
1997 Reserve charges......................... 351 523 164 1,038 517 521
------ ------ ------ ------ ------ ------
Reserve balance at December 31, 1997......... ($2,653) ($1,275) ($2,808) ($6,736) ($5,684) ($1,052)
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
</TABLE>

FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
34

<PAGE>

NOTES 4--INVENTORIES

The Company utilizes the LIFO method of inventory valuation for essentially
all domestic inventories. Approximately 81 percent of the December 31, 1997,
and 80 percent of the December 31, 1996, inventories are valued using the
last-in, first-out (LIFO) method. All other inventories are valued using the
first-in, first-out (FIFO) method.

Inventories are summarized at December 31, as follows:

(IN THOUSANDS OF DOLLARS) 1997 1996
- -------------------------------------------------------------
<S> <C> <C>
Raw materials and supplies............... $101,104 $ 91,439
Work in process and finished goods....... 166,443 165,033
-------- --------
267,547 256,472

Excess of current cost
over LIFO inventory value................ (45,971) (56,075)
-------- --------
Total inventories........................ $221,576 $200,397
-------- --------
-------- --------
</TABLE>

NOTES 5--PENSION PLANS

Total pension expense in 1997, 1996, and 1995 was $8,351,000, $9,912,000, and
$8,516,000, respectively.

Defined contribution plans cover employees at five different manufacturing or
administrative locations and provide for contributions ranging from 2 percent
to 6 percent of covered employees' salaries or wages and totaled $688,000 in
1997, $1,390,000 in 1996, and $1,099,000 in 1995. Multiemployer plans cover
employees at two different manufacturing locations and provide for
contributions to a union administered defined benefit pension plan. Amounts
charged to pension cost and contributed to the plan in 1997, 1996, and 1995
totaled $1,186,000, $1,114,000, and $1,000,000, respectively.

The Company has defined benefit pension plans covering the majority of U.S.
employees. The benefits under the plans are based on years of service and
salary levels. Certain plans covering hourly employees provide benefits of
stated amounts for each year of service. In addition, the Company also
sponsors an unfunded supplemental retirement plan to provide senior
management with benefits in excess of limits under the federal tax law and
increased benefits to reflect a service adjustment factor.

Pension cost for defined benefit plans included the following components:

(IN THOUSANDS OF DOLLARS) 1997 1996 1995
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned
during the year.................... $ 6,634 $ 6,320 $ 5,928
Interest cost on projected
benefit obligation................. 17,622 16,443 15,611
Actual return on plan assets......... (63,419) (35,743) (43,589)
Net amortization and deferral........ 44,773 19,579 27,641
-------- -------- --------
Net pension expense.................. $ 5,610 $ 6,599 $ 5,591
-------- -------- --------
-------- -------- --------
</TABLE>

The funded status of the defined benefit plans at December 31, 1997, is as
follows:

Plans With Plans With
Assets in Accumulated
Excess of Benefits in
Accumulated Excess
(IN THOUSANDS OF DOLLARS) Benefits Assets
- ------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value
of benefit obligations:
Vested benefit obligation................... $214,571 $ 8,493
Nonvested benefit obligation................ 15,815 721
-------- -------
Accumulated benefit obligation.............. $230,386 $ 9,214
-------- -------
-------- -------
Projected benefit obligation................... $250,236 $12,539
Plan assets at fair value...................... 301,038 0
-------- -------
Projected benefit obligations
less than (in excess of) plan assets........ 50,802 (12,539)
Unrecognized net obligation.................... 5,743 0
Unrecognized prior service cost................ 5,158 906
Unrecognized net (gain) loss................... (69,274) 6,136
-------- -------
(Pension liability) or prepaid pension cost.... $ (7,571) $(5,497)
-------- -------
-------- -------
</TABLE>

The Company has recorded the following amounts pursuant to Statement of
Financial Accounting Standards No. 87, "Employers' Accounting for Pensions,"
to reflect the minimum pension obligation at December 31:

(IN THOUSANDS OF DOLLARS) 1997 1996
- -----------------------------------------------------------
<S> <C> <C>
Intangible asset......................... $ 906 $ 6,000
Prepaid tax.............................. 1,068 226
Pension liability........................ (3,716) (6,595)
------- -------
Reduction in stockholders' equity........ $(1,742) $ (369)
------- -------
------- -------
</TABLE>

The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 7.0 percent and 5.5 percent, respectively.
The expected long-term rate of return on assets was 9.4 percent for 1997 and
9.0 percent for 1996.

[LOGO]

FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
35

<PAGE>

NOTES 6--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company sponsors several defined benefit postretirement plans that cover
more than 50 percent of salaried and nonsalaried employees. These plans
provide health care benefits and, in some instances, provide life insurance
benefits. Except for one closed-group plan, which is noncontributory,
postretirement health care plans are contributory, with retiree contributions
adjusted annually; life insurance plans are noncontributory.

The table below sets forth the plans' combined funded status reconciled with
the amount shown in the Company's statement of financial position at December
31:

(IN THOUSANDS OF DOLLARS) 1997 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees and beneficiaries................ $ 8,842 $ 9,574 $ 8,839
Fully eligible active
plan participants......................... 822 1,101 1,064
Other active plan participants............ 1,709 1,670 1,797
------- ------- -------
Accumulated postretirement
benefit obligation in excess
of plan assets.......................... 11,373 12,345 11,700
Unrecognized prior service costs............. (114) -- --
Unrecognized net gain or (loss)
from past experience different
from that assumed......................... 5,240 4,988 6,119
------- ------- -------
Accrued postretirement benefit cost.......... $16,499 $17,333 $17,819
------- ------- -------
------- ------- -------
</TABLE>

Net periodic postretirement benefit costs for 1997, 1996, and 1995 included the
following components:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1997 1996 1995
- --------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned
during the year........................ $ 176 $ 151 $ 206
Interest cost on accumulated
postretirement benefit obligation...... 843 792 944
Net amortization and deferral............ (329) (371) (159)
---- ---- ----
Net periodic postretirement
benefit cost........................... $ 690 $ 572 $ 991
---- ---- ----
---- ---- ----
</TABLE>

For measurement purposes, a 10 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1998; the rate
was assumed to decrease gradually to 5.5 percent by the year 2003 and remain
at that level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by 1 percentage point in each year would
increase the accumulated postretirement benefit obligation as of December 31,
1997, by $970,000 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for the year then
ended by $107,000. The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.0 percent.

NOTES 7--STOCK OPTION AND INCENTIVE PLANS

Since 1983, the Company's stock option and stock award plans have provided
for the issuance of up to 6,800,000 shares of common stock to key employees.
As of December 31, 1997, 1996, and 1995, respectively, 1,025,501, 1,657,447,
and 1,939,984 shares were available for future grants under these plans.

Options are granted at prices equal to 100 percent of the market price on the
date of the grant and are exercisable over varying periods up to ten years
from the date of grant. Shares subject to options granted but not exercised
become available for future grants. Option holders may deliver shares of
common stock of the Company in lieu of cash payment for shares purchased upon
the exercise of options under such plans.

At December 31, 1997, fifteen participants hold options with expiration dates
ranging from 1999 to 2007 at option prices ranging from $12.63 to $45.03 per
share with a weighted-average price of $24.18 per share.

Details of the stock option plans at December 31, 1997, 1996, and 1995, are:

<TABLE>
<CAPTION>
Weighted-
Per Share Average
Number Option Price Price
of Shares Range Per Share
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at
December 31, 1994
and December 31, 1995......... 889,766 $05.75-$24.63 $16.54
Granted....................... 255,117 32.31 32.31
Exercised..................... (20,000) 5.75 5.75
- ----------------------------------------------------------------------
Outstanding at
December 31, 1996............. 1,124,883 $12.63-$32.31 $20.31
Granted....................... 155,000 37.34-45.03 44.78
Exercised..................... (100,000) 12.63 12.63
- ----------------------------------------------------------------------
Outstanding at
December 31, 1997............. 1,179,883 $12.63-$45.03 $24.18
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Exercisable at
December 31, 1997............. 859,805 $12.63-$37.34 $18.93
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
</TABLE>
CONTINUED

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FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
36

<PAGE>

NOTES 7--STOCK OPTION AND INCENTIVE PLANS CONTINUED

In 1984, the Company adopted a Stock Award Plan for certain key executive
employees. Distribution of the shares will be made not less than three years
nor more than seven years from the date of grant. All shares granted under
the plan are subject to restrictions as to continuous employment, except in
the case of death, permanent disability, or retirement. In addition,
cash payments are made during the grant period equal to the dividend on Bemis
common stock. The cost of the awards is charged to income over the period of
the grant: $4,230,000 was expensed in 1997, $4,291,000 in 1996, and
$3,954,000 in 1995.

Details of the stock award plan at December 31, 1997, 1996, and 1995, are:

<TABLE>
<CAPTION>
Number
of Shares
- --------------------------------------------------------
<S> <C>
Outstanding at December 31, 1994............ 1,095,316
Granted................................... 436,500
Paid...................................... (431,316)
Canceled.................................. (29,632)
---------
Outstanding at December 31, 1995............ 1,070,868
Granted................................... 59,557
Canceled.................................. (32,137)
---------
Outstanding at December 31, 1996............ 1,098,288
Granted................................... 538,278
Canceled.................................. (61,332)
---------
Outstanding at December 31, 1997............ 1,575,234
---------
---------
</TABLE>

The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for the
stock option plan. Had compensation cost for the Company's stock-based
compensation plans been determined based on the fair value at the grant date
for stock options and awards in 1997, 1996, and 1995 consistent with the
provisions of SFAS No. 123, the Company's net earnings and earnings per share
would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings--
as reported................. $107,584,000 $101,081,000 $85,210,000
Net earnings--
pro forma................... $106,528,000 $ 99,944,000 $85,201,000
Diluted earnings
per share--
as reported................. $2.00 $1.90 $1.63
Diluted earnings
per share--
pro forma................... $1.98 $1.88 $1.63
Dividend yield................ 1.9% 2.2% 2.3%
Expected volatility........... 27.0% 27.3% 27.7%
Risk-free interest rate....... 7.0% 7.0% 7.0%
Expected lives................ 9.0 YEARS 9.1 years 5.3 years
</TABLE>

The fair value of each grant made in 1997, 1996, or 1995 is estimated on the
date of grant using the Black-Scholes option-pricing model using the above
indicated weighted-average assumptions for dividend yield, expected
volatility, risk-free interest rate, and expected lives.

NOTES 8--LEASES

All noncancelable leases have been categorized as capital or operating
leases. The Company has leases for manufacturing plants, warehouses,
machinery and equipment, and administrative offices with terms (including
renewal options) ranging from one to 25 years. Under most leasing
arrangements, the Company pays the property taxes, insurance, maintenance,
and expenses related to the leased property. Total rental expense under
operating leases was $14,129,000 in 1997, $9,664,000 in 1996, and $9,242,000
in 1995.

The present values of minimum future obligations shown in the following chart
are calculated based on an interest rate of 11 1/4 percent determined to be
applicable at the inception of the lease. Interest expense on the outstanding
obligations under capital leases was $2,000 in 1997, $2,000 in 1996, and
$21,000 in 1995.

Minimum future obligations on leases in effect at December 31, 1997, are:

<TABLE>
<CAPTION>
Capital Operating
(IN THOUSANDS OF DOLLARS) Leases Leases
- ---------------------------------------------------------------------------
<S> <C> <C>
1998............................................... $193 $11,202
1999............................................... 104 8,838
2000............................................... 5 6,235
2001............................................... 0 4,187
2002............................................... 0 2,164
Thereafter......................................... 0 10,778
---- -------
Total minimum obligations.......................... $302 $43,404
Less amount representing interest.................. 52 -------
---- -------
Present value of net minimum obligations........... 250
Less current portion............................... 159
----
Long-term obligations.............................. $ 91
----
----
</TABLE>

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FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
37

<PAGE>

NOTES 9--LONG-TERM DEBT

Long-term debt maturing in years 1998 through 2001 is $1,931,000, $1,931,000,
$234,000, and $7,618,000, respectively.

Under the terms of a revolving credit agreement with five banks, the Company
may borrow up to $250,000,000 through August 1, 2002. The Company must pay a
facility fee of 1/10 of 1 percent annually on the entire amount of the
commitment. There were no borrowings outstanding under this agreement at
December 31, 1997. Debt consisted of the following at December 31,

(IN THOUSANDS OF DOLLARS) 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial paper payable through 1998 at an interest rate of 5.9%(1)........................... $199,000 $117,200
Note payable in 2005 at an interest rate of 6.7%............................................... 100,000 100,000
Industrial revenue bonds payable through 2012 at interest rates of 4 3/8% to 6%................ 15,500 20,250
Debt of subsidiary companies payable through 2001 at an interest rate of 4 3/8% to 7 1/2%...... 4,214 5,100
Obligations under capital leases............................................................... 250 233
-------- --------
318,964 242,783
Less current portion........................................................................... 2,173 1,706
-------- --------
$316,791 $241,077
-------- --------
-------- --------
</TABLE>

(1) THE COMMERCIAL PAPER HAS BEEN CLASSIFIED AS LONG-TERM DEBT IN ACCORDANCE
WITH THE COMPANY'S INTENTION AND ABILITY TO REFINANCE SUCH OBLIGATIONS ON A
LONG-TERM BASIS. THE INTEREST RATE OF COMMERCIAL PAPER OUTSTANDING AT
DECEMBER 31, 1997, WAS 5.9 PERCENT. THE MAXIMUM OUTSTANDING AT ANY MONTH-END
DURING 1997 WAS $218,699,000, AND THE AVERAGE OUTSTANDING DURING 1997 WAS
$184,429,000. THE WEIGHTED-AVERAGE INTEREST RATE DURING 1997 WAS 5 5/8
PERCENT.

NOTES 10--INCOME TAXES

(IN THOUSANDS OF DOLLARS) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. income before income taxes........................................ $154,937 $143,149 $119,880
Non-U.S. income before income taxes.................................... 24,273 23,468 19,130
Consolidating eliminations............................................. (4,226) (3,836) (2,900)
-------- ------- -------
Income before income taxes............................................. $174,984 $162,781 $136,110
-------- ------- -------
-------- ------- -------
Income tax expense consists of the following components:
Current tax expense:
U.S. federal................................................... $ 47,237 $40,922 $34,496
Foreign........................................................ 6,697 6,903 5,665
State and local................................................ 7,206 6,451 5,755
-------- ------- -------
Total current tax expense................................... 61,140 54,276 45,916
-------- ------- -------
Deferred (prepaid) tax expense:
U.S. federal................................................... 4,179 6,937 5,071
Foreign........................................................ 1,387 (306) (333)
State.......................................................... 694 793 246
-------- ------- -------
Total deferred (prepaid) tax expense........................ 6,260 7,424 4,984
-------- ------- -------
Total income tax expense................................ $ 67,400 $61,700 $50,900
-------- ------- -------
-------- ------- -------

CONTINUED
</TABLE>

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FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
38

<PAGE>

NOTES 10--INCOME TAXES CONTINUED

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below.

(IN THOUSANDS OF DOLLARS) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to
allowances for returns and doubtful accounts................................ $ 4,443 $ 5,410 $ 7,158
Inventories, principally due to additional costs inventoried for
tax purposes pursuant to the Tax Reform Act of 1986......................... 4,766 7,392 6,883
Employee compensation and benefits accrued
for financial reporting purposes............................................ 15,714 13,537 14,033
Restructuring costs............................................................ 2,694
Other.......................................................................... 2,165 2,176 1,834
------- ------- -------
Deferred tax assets (included in prepaid expenses and deferred charges)........ $29,782 $28,515 $29,908
------- ------- -------
------- ------- -------
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation,
capitalized interest, and capitalized overhead.............................. $79,645 $73,772 $65,296
Noncurrent employee compensation and benefits
accrued for financial reporting purposes.................................... (16,936) (16,326) (15,052)
Other.......................................................................... 1,357 (785) (486)
------- ------- -------
Deferred tax liabilities....................................................... $64,066 $56,661 $49,758
------- ------- -------
------- ------- -------
</TABLE>

The Company's effective tax rate differs from the federal statutory rate due to
the following items:

(IN THOUSANDS OF DOLLARS) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
% of Income % of Income % of Income
Amount Before Tax Amount Before Tax Amount Before Tax
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense on
income before taxes at statutory rate......................... $61,244 35.0% $56,973 35.0% $47,639 35.0%

Increase (decrease) in taxes resulting from:
State and local income taxes net
of federal income tax benefit............................ 5,135 2.9 4,709 2.9 3,901 2.9

Foreign tax rate differential............................ (471) (0.3) (1,719) (1.1) (1,716) (1.3)

Minority interest........................................ 1,908 1.1 1,647 1.0 1,323 1.0

Miscellaneous items...................................... (416) (0.2) 90 0.1 (247) (0.2)
------- ---- ------- ---- ------- ----
Actual income tax expense..................................... $67,400 38.5% $61,700 37.9% $50,900 37.4%
------- ---- ------- ---- ------- ----
------- ---- ------- ---- ------- ----
</TABLE>

The Company's federal income tax returns for the years prior to 1995 have
been audited and completely settled.

Provision has not been made for U.S. or additional foreign taxes on
$101,458,000 of undistributed earnings of foreign subsidiaries because those
earnings are considered to be permanently reinvested in the operations of
those subsidiaries. It is not practicable to estimate the amount of tax that
might be payable on the eventual remittance of such earnings.

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FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
39

<PAGE>

NOTES 11--SEGMENTS OF BUSINESS

The Company operates principally in two businesses (Flexible Packaging
Products and Pressure Sensitive Materials) and three geographical areas
(U.S., Canada, and Europe). A description of the Company's lines of business
begins on page five of the Annual Report.

LINES OF BUSINESS

(IN MILLIONS OF DOLLARS) 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES TO UNAFFILIATED CUSTOMERS:
Flexible Packaging.......................... $1,398.6 $1,189.8 $1,098.1
Pressure Sensitive Materials................ 479.7 467.9 426.0

INTERSEGMENT SALES:
Flexible Packaging.......................... (0.9) (1.8) (0.5)
Pressure Sensitive Materials................ (0.2) (0.5) (0.2)
-------- -------- --------
Total.................................... $1,877.2 $1,655.4 $1,523.4
-------- -------- --------
-------- -------- --------
OPERATING PROFIT AND PRETAX PROFIT:
Flexible Packaging.......................... $152.2 $ 139.1 $ 124.3
Pressure Sensitive Materials................ 67.8 59.8 45.3
-------- -------- --------
Total operating profit(1)............... . 220.0 198.9 169.6

General corporate expenses.................. (20.7) (18.0) (18.1)
Interest expense............................ (18.9) (13.4) (11.6)
Minority interest in net income............. (5.4) (4.7) (3.8)
-------- -------- --------
Income before income taxes............... $ 175.0 $ 162.8 $ 136.1
-------- -------- --------
-------- -------- --------

IDENTIFIABLE ASSETS:
Flexible Packaging.......................... $1,030.0 $ 841.6 $ 738.2
Pressure Sensitive Materials................ 285.1 271.4 238.5
-------- -------- --------
Total identifiable assets(2)............. 1,315.1 1,113.0 976.7
Corporate assets(3)......................... 47.5 55.8 53.9
-------- -------- --------
Total.................................... $1,362.6 $1,168.8 $1,030.6
-------- -------- --------
-------- -------- --------

DEPRECIATION AND AMORTIZATION:
Flexible Packaging.......................... $ 62.3 $ 52.1 $ 43.5
Pressure Sensitive Materials................ 15.6 12.9 13.3
Corporate................................... 1.0 1.2 1.2
-------- -------- --------
Total.................................... $ 78.9 $ 66.2 $ 58.0
-------- -------- --------
-------- -------- --------

EXPENDITURES FOR PROPERTY.AND EQUIPMENT:
Flexible Packaging.......................... $ 139.3 $ 66.1 $ 78.9
Pressure Sensitive Materials................ 25.5 43.9 14.0
Corporate................................... 2.7 2.0 0.7
-------- -------- --------
Total.................................... $ 167.5 $ 112.0 $ 93.6
-------- -------- --------
-------- -------- --------
</TABLE>

OPERATIONS BY GEOGRAPHIC AREAS

(IN MILLIONS OF DOLLARS) 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES TO UNAFFILIATED CUSTOMERS:
United States.............................. $1,615.3 $1,408.8 $1,292.2
Canada..................................... 61.4 54.5 47.1
Europe..................................... 193.7 187.6 183.6
Other...................................... 6.8 4.5 0.5
-------- -------- --------
Total................................... $1,877.2 $1,655.4 $1,523.4
-------- -------- --------
-------- -------- --------
OPERATING PROFIT:
United States.............................. $ 192.3 $ 173.2 $ 148.4
Canada..................................... 10.6 9.3 6.2
Europe..................................... 16.5 16.2 15.2
Other...................................... 0.6 0.2 (0.2)
-------- -------- --------
Total................................... $ 220.0 $ 198.9 $ 169.6
-------- -------- --------
-------- -------- --------
IDENTIFIABLE ASSETS:
United States.............................. $1,122.7 $ 939.8 $ 824.5
Canada..................................... 28.0 28.6 25.2
Europe..................................... 160.9 141.7 126.5
Other...................................... 3.5 2.9 0.5
-------- -------- --------
Total................................... $1,315.1 $1,113.0 $ 976.7
-------- -------- --------
-------- -------- --------
</TABLE>

(1) OPERATING PROFIT IS DEFINED AS PROFIT BEFORE GENERAL CORPORATE EXPENSE,
INTEREST EXPENSE, INCOME TAXES, AND MINORITY INTEREST.

(2) IDENTIFIABLE ASSETS BY LINES OF BUSINESS INCLUDE ONLY THOSE ASSETS THAT
ARE SPECIFICALLY IDENTIFIED WITH EACH SEGMENT'S OPERATIONS.

(3) CORPORATE ASSETS ARE PRINCIPALLY CASH AND SHORT-TERM INVESTMENTS, PREPAID
EXPENSES, AND CORPORATE PROPERTY.

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FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
40

<PAGE>

NOTES 12--CONTINGENCIES

The Company is a defendant in lawsuits incidental to its business. The
management of the Company believes, however, that the disposition of these
lawsuits will not have any material impact on the financial position or
operating results of the Company.

In December 1996, the United States brought an action in Federal District
Court for the District of Columbia against the Company and its wholly owned
subsidiary Pervel Industries in relation to Pervel's disposal of liquid
industrial wastes at the Yaworski Lagoon site in Canterbury, Connecticut. The
Company believes both it and Pervel have fulfilled all obligations required
by the 1990 consent decree or guarantee, which is the subject of this
litigation, and that both have meritorious defenses. In management's opinion,
neither a settlement of this matter nor results following litigation will
produce a result having a material adverse effect on the Company's financial
condition or results of operations.

NOTES 13--FOREIGN OPERATIONS

The foreign countries in which the Company conducts operations generally
impose no significant restrictions on transfers of funds. Amounts
attributable to foreign operations included in the consolidated statements
are as follows:

(IN THOUSANDS OF DOLLARS) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales of consolidated foreign subsidiaries...................... $ 262,241 $246,405 $231,940
Net income of consolidated foreign subsidiaries..................... 14,850 15,002 12,618
Foreign earnings in excess of amounts received...................... 11,706 11,167 9,718
Equity in net assets................................................ 117,500 105,200 94,329
Equity in total assets.............................................. $ 185,450 $168,185 $150,932
</TABLE>

NOTES 14--FINANCIAL INSTRUMENTS

The Company enters into forward foreign currency exchange contracts to hedge
certain foreign currency denominated receivables and payables. Exchange gains
and losses arising from these transactions are deferred and recognized when
the transaction for which the hedge was obtained is finalized. At December
31, 1997 and 1996, the Company had outstanding forward foreign currency
exchange contracts aggregating $19,144,000 and $16,562,000, respectively.
Forward foreign currency exchange contracts generally have maturities of less
than nine months and relate primarily to major Western currencies.
Counterparties to the forward foreign currency exchange contracts are major
financial institutions. Credit loss from counterparty nonperformance is not
anticipated. Based on quoted year-end market prices of forward foreign
currency exchange contracts the Company would have experienced a $120,000
loss at December 31, 1997, and a $264,000 loss at December 31, 1996, had
outstanding contracts been settled at those respective dates.

At December 31, 1997 and 1996, the carrying value approximates the fair value
of financial instruments such as cash, trade receivables and payables, and
short-term debt because of the short-term maturities of these instruments.
The fair value of the Company's long-term debt, including current maturities
but excluding capitalized leases, is estimated to be $325,395,000 and
$250,717,000 at December 31, 1997 and 1996, respectively, using discounted
cash flow analyses, based on the incremental borrowing rates currently
available to the Company for similar debt with similar terms and maturity.

The Company is also a party to letters of credit totaling $4,275,000 and
$4,290,000 at December 31, 1997 and 1996, respectively. In the Company's past
experience, virtually no claims have been made against these financial
instruments. Management does not expect any material losses to result from
these off-balance-sheet instruments because performance is not expected to be
required, and, therefore, is of the opinion that the fair value of these
instruments is zero.

Concentrations of credit risk with respect to trade accounts receivable are
limited due to the large number of entities comprising the Company's customer
base and their dispersion across many different industries and countries. As
of December 31, 1997 and 1996, the Company had no significant concentrations
of credit risk.

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FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
41

<PAGE>

NOTES 15--EARNINGS PER SHARE COMPUTATIONS

For Years Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
Income Shares Per-Share Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
-------------------------------- -------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common stockholders............ $107,584,000 53,010,999 $2.03 $101,081,000 52,522,016 $1.92 $85,210,000 51,808,466 $1.64
Dilutive effects of stock
options and stock awards net
of windfall tax benefits....... 868,949 730,234 502,955
--------------------------------- ------------------------------- ------------------------------
Diluted EPS
Income available to
common stockholders plus
assumed conversions............ $107,584,000 53,879,948 $2.00 $101,081,000 53,252,250 $1.90 $85,210,000 52,311,421 $1.63
--------------------------------- ------------------------------- ------------------------------
--------------------------------- ------------------------------- ------------------------------
</TABLE>

NOTES 16--SUBSEQUENT EVENT

Effective February 1, 1998, the Company acquired, for cash, one-third of all
outstanding shares of Dixie Toga, S.A.'s flexible packaging business located
in Brazil. This joint venture between Bemis, the largest supplier of flexible
packaging in North America, and Dixie Toga, one of the largest suppliers of
flexible packaging in South America, will create an organization strong in
market knowledge and leading technology to service the needs of the South
American marketplace. Dixie Toga has recently consolidated its three flexible
packaging businesses, Dixie Toga Flexible Packaging, Itap Flexiveis, and BMT,
into a single business entity with annual sales of approximately $133
million. This recently consolidated business will be named Itap/Bemis Ltda.
This business, which currently has Brazilian manufacturing sites in Sao Paulo
and Cambe, Parana, will be consolidating manufacturing sites onto a new
business campus in Londrina, Parana. Itap/Bemis Ltda. serves a variety of
markets in Brazil and the Mercosul, the Southern Cone Common Market. This
Dixie Toga business unit has strong relationships with the major packaged
food companies in the markets it serves. Since Bemis did not purchase a
controlling interest in the company, the investment and future earnings will
be recorded on the equity basis of accounting.

NOTES 17--QUARTERLY FINANCIAL INFORMATION--UNAUDITED

(IN MILLIONS OF DOLLARS EXCEPT EPS) Net Sales Gross Profit Net Income Diluted Earnings Per Share
- -----------------------------------------------------------------------------------------------------------------------------------
% % % %
Quarter 1997 1996 Change 1997 1996 Change 1997 1996 Change 1997 1996 Change
- --------------------- ----------------------------- ------------------------ ------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First................ $ 475.5 $ 385.5 23% $ 95.4 $ 82.8 15% $ 19.9 $ 21.7 (8%) $ .37 $ .41 (10%)
Second............... 481.3 411.9 17 102.2 96.0 6 28.0 25.2 11 .52 .47 11
Third................ 465.5 423.1 10 93.0 92.6 -- 25.4 24.0 6 .47 .45 4
Fourth............... 454.9 434.9 5 106.3 110.5 (4) 34.3 30.2 14 .64 .57 12
----------------------------- ------------------------ ------------------------ -----------------------
Total................ $1,877.2 $1,655.4 13% $396.9 $381.9 4% $107.6 $101.1 6% $2.00 $1.90 5%
----------------------------- ------------------------ ------------------------ -----------------------
----------------------------- ------------------------ ------------------------ -----------------------
</TABLE>

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FOCUSED STRATEGIES - COMPETITIVE ADVANTAGE - ENHANCED SHAREHOLDER VALUE
42

<PAGE>

EXHIBIT 22 - PARENT AND SUBSIDIARIES OF THE REGISTRANT

The Company has no parent. The following were subsidiaries of the Company
as of December 31, 1997.

Percentage of
Jurisdiction Voting Securities
of Owned By
Name Organization Immediate Parent
- --------------------------------------------------------------------------------------
<S> <C> <C>
Bemis Company, Inc. (the "Registrant")

Banner Packaging, Inc. Wisconsin 100%

Bemis Export Company Ltd. Jamaica 80%

Bolsas Bemis S.A. de C.V. Mexico 50%

Curwood, Inc. Delaware 100%
Curwood Packaging (Canada) Limited Canada 100%
Perfecseal, Inc Delaware 100%
Perfecseal Internacional de Puerto
Rico, Inc. Delaware 100%
Perfecseal International Ltd. Delaware 100%
Perfecseal Limited United Kingdom 100%

Hayco Liquidation Company Delaware 100%
Bemis U.K. Limited United Kingdom 50%
Hayssen Europa Limited United Kingdom 100%
Hayssen Europa GmbH Germany 100%
Hayssen Europa S.p.A. in liquidazione Italy 100%
Hayssen Mexico S.A. de C.V. Mexico 98%

Hayssen Mexico S.A. de C.V. Mexico 2%

MacKay, Inc. Kentucky 100%

Milprint, Inc. Wisconsin 100%

CONTINUED

- 16 -
<PAGE>

MACtac Engineered Products, Inc. Ohio 100%

Bemis Coordination Center S.A. Belgium 33%

Bemis Export Company Ltd. Jamaica 20%

Bemis U.K. Limited United Kingdom 50%
MACtac U.K. Limited United Kingdom 100%

Electronic Printing Products, Inc. Ohio 100%

Enterprise Software, Inc. Ohio 100%

MACtac Europe S.A. Belgium 89%
Bemis Coordination Center S.A. Belgium 67%
Bemis Technologies S.A. Belgium 100%
MACtac Asia-Pacific Self-
Adhesive Products Pte Ltd. Singapore 100%
MACtac Deutschland GmbH Germany 100%
MACtac France S.A.R.L. France 100%

MACtac Scandinavia A.B. Sweden 100%

MACtac Canada Limited/Limitee Canada 100%
MACtac Europe S.A. Belgium 11%

MACtac A.G. Switzerland 100%

MACtac Mexico S.A. de C.V. Mexico 49%

MACtac, Inc. Ohio 100%

CONTINUED

- 17 -
<PAGE>

Percentage of
Jurisdiction Voting Securities
of Owned By
Name Organization Immediate Parent
- --------------------------------------------------------------------------------------

Paramount Packaging Corporation Delaware 100%

Bemis Packaging Limited United Kingdom 100%

Paramount Packaging Canada, Inc. Canada 100%

Paramount Packaging Corporation -
Tennessee Tennessee 100%

Paramount Packaging Corporation -
Texas Texas 100%

PPC Royalty, Inc. Delaware 100%

Pervel Industries, Inc. Delaware 100%

</TABLE>

- 18 -
<PAGE>

BEMIS COMPANY, INC.

222 South Ninth Street, Suite 2300

Minneapolis, Minnesota

55402-4099

(612) 376-3000

Benjamin R. Field, III
Senior Vice President, Chief
Financial Officer and Treasurer

Robert F. Kleiber
Director of Investor Relations

- 19 -

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1997, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 13,827
<SECURITIES> 0
<RECEIVABLES> 233,547
<ALLOWANCES> 0
<INVENTORY> 221,576
<CURRENT-ASSETS> 516,393
<PP&E> 1,044,497
<DEPRECIATION> 359,270
<TOTAL-ASSETS> 1,362,567
<CURRENT-LIABILITIES> 251,187
<BONDS> 316,791
0
0
<COMMON> 5,864
<OTHER-SE> 634,021
<TOTAL-LIABILITY-AND-EQUITY> 1,362,567
<SALES> 1,877,237
<TOTAL-REVENUES> 1,877,237
<CGS> 1,480,365
<TOTAL-COSTS> 1,480,365
<OTHER-EXPENSES> (4,057)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,893
<INCOME-PRETAX> 174,984
<INCOME-TAX> 67,400
<INCOME-CONTINUING> 107,584
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,584
<EPS-PRIMARY> 2.03
<EPS-DILUTED> 2.00

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31,1995, MARCH 31, 1996, JUNE 30, 1996, SEPTEMBER 30, 1996, AND
DECEMBER 31,1996, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED BALANCE
SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> 12-MOS 12-MOS 3-MOS 6-MOS
9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996 DEC-31-1996 DEC-31-1996
DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996 JAN-01-1996 JAN-01-1996
JAN-01-1996
<PERIOD-END> DEC-31-1995 DEC-31-1996 MAR-31-1996 JUN-30-1996
SEP-30-1996
<CASH> 22,032 10,223 22,407 27,046
21,535
<SECURITIES> 0 0 0 0
0
<RECEIVABLES> 201,725 216,740 201,200 217,112
215,216
<ALLOWANCES> 0 0 0 0
0
<INVENTORY> 178,085 200,397 177,280 183,790
179,170
<CURRENT-ASSETS> 442,274 466,921 443,394 469,028
460,494
<PP&E> 819,318 895,863 820,964 850,475
879,347
<DEPRECIATION> 284,767 312,372 282,960 298,611
315,217
<TOTAL-ASSETS> 1,030,595 1,168,795 1,034,706 1,127,828
1,130,321
<CURRENT-LIABILITIES> 219,215 214,445 210,870 214,801
207,291
<BONDS> 166,435 241,077 167,403 235,160
234,890
0 0 0 0
0
0 0 0 0
0
<COMMON> 5,781 5,790 5,781 5,790
5,795
<OTHER-SE> 507,027 561,307 517,917 533,480
541,057
<TOTAL-LIABILITY-AND-EQUITY> 1,030,595 1,168,795 1,034,706 1,127,828
1,130,321
<SALES> 1,523,390 1,655,431 385,511 797,456
1,220,545
<TOTAL-REVENUES> 1,523,390 1,655,431 385,511 797,456
1,220,545
<CGS> 1,181,219 1,273,570 302,721 618,682
949,161
<TOTAL-COSTS> 1,181,219 1,273,570 302,721 618,682
949,161
<OTHER-EXPENSES> (3,138) (5,497) (4,538) (4,795)
(5,018)
<LOSS-PROVISION> 0 0 0 0
0
<INTEREST-EXPENSE> 11,549 13,397 2,749 6,233
9,938
<INCOME-PRETAX> 136,110 162,781 34,900 75,316
113,849
<INCOME-TAX> 50,900 61,700 13,200 28,400
42,900
<INCOME-CONTINUING> 85,210 101,081 21,700 46,916
70,949
<DISCONTINUED> 0 0 0 0
0
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> 85,210 101,081 21,700 46,916
70,949
<EPS-PRIMARY> 1.64 1.92 0.41 0.89
1.35
<EPS-DILUTED> 1.63 1.90 0.41 0.88
1.33

</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31,1997, JUNE 30, 1997, AND SEPTEMBER 30,1997, CONSOLIDATED STATEMENT OF
INCOME AND CONSOLIDATED BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 18,097 16,589 19,307
<SECURITIES> 0 0 0
<RECEIVABLES> 257,868 243,475 229,518
<ALLOWANCES> 0 0 0
<INVENTORY> 216,252 200,589 205,736
<CURRENT-ASSETS> 537,898 500,130 501,214
<PP&E> 971,422 997,260 1,035,890
<DEPRECIATION> 350,639 362,612 380,175
<TOTAL-ASSETS> 1,324,071 1,299,004 1,319,432
<CURRENT-LIABILITIES> 245,616 235,401 251,102
<BONDS> 339,439 308,075 302,697
0 0 0
0 0 0
<COMMON> 5,864 5,864 5,864
<OTHER-SE> 588,381 601,352 611,468
<TOTAL-LIABILITY-AND-EQUITY> 1,324,071 1,299,004 1,319,432
<SALES> 475,473 956,807 1,422,340
<TOTAL-REVENUES> 475,473 956,807 1,422,340
<CGS> 380,058 759,171 1,131,660
<TOTAL-COSTS> 380,058 759,171 1,131,660
<OTHER-EXPENSES> (205) (414) (837)
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 4,418 9,272 14,175
<INCOME-PRETAX> 32,158 77,851 119,063
<INCOME-TAX> 12,300 30,000 45,800
<INCOME-CONTINUING> 19,858 47,851 73,263
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 19,858 47,851 73,263
<EPS-PRIMARY> 0.37 0.90 1.38
<EPS-DILUTED> 0.37 0.89 1.36

</TABLE>