BEMIS CO INC, 10-K405, 1999-03-30

BEMIS CO INC
10-K405, 1999-03-30
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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, 1998
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
- ------------------- ---------------------
Common Stock, par value $.10 per share New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange

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 nonaffiliates of the
Registrant on March 8, 1999, based on a closing price of $34.38 per share as
reported on the New York Stock Exchange, was $1,798,201,000. As of March 8,
1999, the Registrant had 52,311,314 shares of Common Stock issued and
outstanding.

Documents Incorporated by Reference
-----------------------------------
1998 Annual Report to Shareholders - Part I and Part II
Proxy Statement - Annual Meeting of Stockholders
May 6, 1999 - 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 Asia Pacific, South America, and
Mexico. In 1998, 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 1998 Annual Report to Shareholders is expressly incorporated by
reference in this Form 10-K Annual Report.

As of December 31, 1998, the Registrant had approximately 9,400 employees,
of which an estimated 6,500 were classified as production employees. Most of
the production employees are covered by collective bargaining contracts
involving five different international unions and 18 individual contracts with
terms ranging from three to five years. During 1998, two contracts covering
approximately 970 employees at two different locations in the United States were
successfully negotiated. During 1999, one Canadian and six 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.

The Registrant's business activities are organized around its two
principal business segments, Flexible Packaging Products and Pressure
Sensitive Materials. Both internal and external reporting conform to this
organizational structure. Subdivisions within each principal business segment
are identified to facilitate operating controls and responsibilities.
Aggregated subdivisions within the Flexible Packaging Products segment are
High Barrier Products, Polyethylene Products, and Paper Products. A summary
of the Registrant's business activities reported by its two business segments
follows:

- 2 -
<PAGE>

FLEXIBLE PACKAGING PRODUCTS

The Registrant and its subsidiaries manufacture a broad range of consumer
and industrial packaging consisting of high barrier products, polyethylene
products, and paper products.

High barrier products include flexible polymer film structures and barrier
laminates for food, medical, and personal care products utilizing controlled
and modified atmosphere packaging, with value added through printing.
Primary markets are processed meat, liquids, snacks, cheese, coffee, condiments,
candy, and medical packaging. Additional products include blown and cast
stretchfilm products, carton sealing tapes and application equipment, 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. High barrier products accounted for 39 percent, 36
percent, and 33 percent of consolidated net sales for the years 1998, 1997, and
1996, respectively.

Polyethylene products consists of monolayer and co-extruded films which
have been flexographic printed and converted to bags or roll stock 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, 25 percent, and 19 percent of consolidated net sales for the years
1998, 1997, and 1996, respectively.

Paper products is made up of multiwall and small paper bags, balers,
printed paper roll stock, and bag closing materials for premium dry pet food and
agricultural/chemical 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 products, seed, chemicals, dairy
products, fertilizers, feed, minerals, flour, rice, and sugar. Sales of paper
products line accounted for 10 percent, 12 percent, and 14 percent of
consolidated net sales for the years 1998, 1997, and 1996, 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, 26 percent, and 29 percent of consolidated net sales for the years
1998, 1997, and 1996, respectively.

Sheet printing products are pressure sensitive adhesive coated products
sold primarily through distributors to printers for use in point-of-purchase,
advertising, display, and promotional materials. Roll label products include
narrow-web rolls of pressure sensitive film, paper, and metalized plastic film
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 90 percent of each segment's sales are made by the
Registrant's direct sales force. Sales offices and plants are located
throughout the United States, Canada, United Kingdom, Continental Europe,
Scandinavia, Asia Pacific, South America, 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 the Registrant's operating results.
Nevertheless, business agreements with large customers commit a large portion of
the manufacturing capacity for a few individual manufacturing sites. Any change
in the business arrangement would typically occur over a period of time which
would allow for an orderly transition for both the Registrant's manufacturing
site and customer.

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-Sealed Air
Corporation, Huntsman Corporation, Smurfit Stone Container, and Union Camp
Corporation. In the Pressure Sensitive Materials segment major competitors
include Avery Dennison Corporation, Flexcon Co., Inc., 3M, 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
Products 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 product features and related technical 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.

- 4 -

<PAGE>

RESEARCH AND DEVELOPMENT EXPENSE

Research and development expenditures were as follows:

1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
Flexible Packaging Products $ 6,504,000 $ 7,212,000 $ 8,523,000

Pressure Sensitive Materials 5,720,000 4,800,000 5,132,000
------------ ----------- -----------
Total $12,224,000 $12,012,000 $13,655,000
------------ ----------- -----------
------------ ----------- -----------
</TABLE>

The expense reduction experienced in 1997 is principally due to the sale of
machinery manufacturing operations in May 1997. This impact continued to affect
the 1998 comparison for Flexible Packaging Products. However, an expenditure
increase in excess of 20 percent at U.S. Pressure Sensitive Materials operations
more than offset the absence of the minor machinery operation which was
previously part of this business segment.

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,
1998, were as follows:

FLEXIBLE PACKAGING PRODUCTS

The Registrant has 35 manufacturing plants located in 14 states and five
foreign countries, of which 30 are owned directly by the Registrant or its
subsidiaries and five 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, 1998, expire between 1999 and
2010.

PRESSURE SENSITIVE MATERIALS

The Registrant has ten manufacturing plants located in four states and
three foreign countries, of which seven are owned directly by the Registrant or
its subsidiaries and three are leased from outside parties. Leases generally
provide for minimum terms of three to five years and have one or more renewal
options. The initial terms of leases in effect as of December 31, 1998, expire
between 1999 and 2002.

- 5 -
<PAGE>

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, 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 the opinion of
management and its legal advisors, 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
twenty-one 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 1998.

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 1998 Annual Report to Shareholders is expressly incorporated by
reference in this Form 10-K Annual Report.

- 6 -
<PAGE>

ITEM 6 - SELECTED FINANCIAL DATA

The information required by this item appearing on page 25 of the
accompanying 1998 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 20 to 24 of the
accompanying 1998 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.

The information required by this item appearing on page 41 of the
accompanying 1998 Annual Report to Shareholders is expressly incorporated by
reference in this Form 10-K Annual Report.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated January 22, 1999, and the quarterly data
appearing on pages 26 to 42 of the accompanying 1998 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, 7, and 7A of this Form 10-K, the 1998
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, 1998
and such information is expressly incorporated herein by reference.

- 7 -
<PAGE>

The following sets forth the name, age, and business experience for at
least 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.

Period
The Positions
Name Age Positions Held Were Held
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jeffrey H. Curler 48 President and Chief Operating Officer 1998 to present
President 1996 to 1998
Executive Vice President 1991 to 1995
Chairman - Curwood, Inc. (1) 1995 to present
President - Curwood, Inc. (1) 1982 to 1995
Various positions within the Registrant 1973 to 1982

Benjamin R. Field, III 60 Senior Vice President, Chief
Financial Officer and Treasurer 1992 to present
Vice President and Treasurer 1982 to 1992
Various positions within the Registrant 1963 to 1982

Stanley A. Jaffy 50 Vice President - Tax and
Assistant Controller 1998 to present
Corporate Director of Tax 1987 to 1998

Scott W. Johnson 58 Senior Vice President, General
Counsel and Secretary 1992 to present
Vice President - General Counsel
and Secretary 1988 to 1992
Various positions within the Registrant 1975 to 1978

Robert F. Mlnarik 57 Vice Chairman 1996 to present
Executive Vice President 1991 to 1995
President and Chief Executive
Officer - Morgan Adhesives Co. (2) 1987 to present
Various positions within the Registrant 1972 to 1987

John H. Roe 59 Chairman and Chief Executive Officer 1996 to present
President and Chief Executive Officer 1990 to 1995
Various positions within the Registrant 1964 to 1990

Thomas L. Sall 54 Vice President - Operations 1997 to present
President - Bemis Flexible
Plastic Packaging (4) 1998 to present
President - Curwood Group (3) 1997 to 1998
President - Curwood, Inc. (1) 1995 to 1997
President - Milprint, Inc. (3) 1992 to 1995
Various positions within the Registrant 1979 to 1992

- 8 -
<PAGE>

Gene C. Wulf 48 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 positions within the Registrant 1975 to 1987

</TABLE>
____________
(1) Curwood, Inc. is a 100 percent owned subsidiary of the Registrant.
(2) Morgan Adhesives Co. is an 87 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.
(4) Bemis Flexible Plastic Packaging includes the following 100 percent
owned subsidiaries of the Registrant: Banner Packaging, Inc.,
Bemis Europe Holdings, S.A., Bemis Packaging Ltd (UK), Curwood, Inc.,
MacKay, Inc., Milprint, Inc., and Perfecseal, Inc., together with the
Registrant's Polyethylene Packaging Division and Bemis Custom Products
Division.

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, 1998, and such information is expressly
incorporated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

- 9 -
<PAGE>

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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:

Pages in
Annual Report*
---------------
<S> <C>
Report of Independent Accountants........................................ 26
Consolidated Statement of Income for
the Three Years Ended December 31, 1998.............................. 27
Consolidated Balance Sheet
at December 31, 1998 and 1997........................................ 28-29
Consolidated Statement of Cash Flows for
the Three Years Ended December 31, 1998.............................. 30-31
Consolidated Statement of Stockholders' Equity
for the Three Years Ended December 31, 1998.......................... 32
Notes to Consolidated Financial Statements............................... 33-42
</TABLE>
-------------
* Incorporated by reference from the indicated pages of the
1998 Annual Report to Shareholders, a copy of which is
filed herewith as Exhibit 13.

(2) FINANCIAL STATEMENT SCHEDULES FOR YEARS 1998, 1997, AND 1996

Pages in
Form 10-K
-----------
<S> <C>
Report of Independent Accountants on Financial Statement
Schedules for the Three Years Ended December 31, 1998............. 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

<S> <C>
3(a) Restated Articles of Incorporation of the Registrant, as amended. (1)
3(b) By-Laws of the Registrant, as amended through July 7, 1992. (2)
3(c) Amendment to the By-Laws of the Registrant dated October 29, 1998.
4(a) Rights Agreement, dated as of August 3, 1989, between the
Registrant and Norwest Bank Minnesota, National Association. (3)

- 10 -
<PAGE>

<S> <C>

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 1998 Annual Report to Shareholders.
21 Subsidiaries of the Registrant.
23 Consent of PricewaterhouseCoopers LLP. (7)
27 Financial Data Schedule (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).
(7) Included at page 12 of this Form 10-K Annual Report.

(b) There were no reports on Form 8-K filed during the fourth quarter ended
December 31, 1998.

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<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, 1999, appearing on page 26 of the 1998 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/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
January 22, 1999

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, 1999, appearing on page 26 of the 1998 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/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
March 17, 1999

- 12 -
<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 17, 1999 Date March 17, 1999

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 17, 1999 Date March 17, 1999

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

Date March 17, 1999 Date March 17, 1999

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

Date March 17, 1999 Date March 17, 1999

- 13 -
<PAGE>

EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>

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 through July 7, 1992. (2)
3(c) Amendment to the By-Laws of the Registrant dated October 29, 1998.
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 1998 Annual Report to Shareholders. Electronic/EDGAR
21 Subsidiaries of the Registrant. Electronic/EDGAR
23 Consent of PricewaterhouseCoopers LLP. (7) Electronic/EDGAR
27 Financial Data Schedule (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).
(7) Included at page 12 of this Form 10-K Annual Report.

- 14 -
<PAGE>

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

YEAR ENDED DECEMBER 31, 1998
---------------------------------------------------------------
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 $12,111 $2,073 $1,321(1) $12,863
------- ------ ------ -------
------- ------ ------ -------
</TABLE>

<TABLE>
<CAPTION>
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(2) $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(3) $11,632
-------- ------- ------- --------
-------- ------- ------- --------
</TABLE>

(1) Net of $152 collections on accounts previously written off.
(2) Net of $120 collections on accounts previously written off.
(3) Net of $161 collections on accounts previously written off.

- 15 -

<PAGE>

EXHIBIT 3(c) - AMENDMENT TO THE BY-LAWS OF BEMIS COMPANY, INC

AMENDMENT TO THE BY-LAWS OF BEMIS COMPANY, INC.

By action of the Board of Directors on October 29, 1998.

RESOLVED, that the By-Laws of Bemis Company, Inc. are hereby amended by adding
the new paragraphs 11 and 12 to Article I of the By-Laws, to read in their
entirety as follows:

11. ADVANCE NOTICE OF NOMINATIONS. Only persons who are nominated in
accordance with the procedures set forth in this paragraph 11 shall be eligible
for election as directors at stockholder meetings. Nominations of persons for
election to the Board of Directors may be made at a meeting of stockholders
(i) by or at the direction of the Board of Directors or (ii) by any stockholder
of the Company entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this paragraph 11.

(a) TIMING OF NOTICE. Nominations by stockholders shall be made pursuant to
timely notice in writing to the Secretary of the Company. To be timely, a
stockholder's notice of nominations to be made at an annual meeting of
stockholders must be delivered to, or mailed and received at, the principal
executive offices of the Company not less than 90 days before the first
anniversary of the date of the preceding year's annual meeting of stockholders.
If, however, the date of the annual meeting is more than 30 days before or after
such anniversary date, notice by a stockholder shall be timely only if so
delivered or so mailed and received not less than 90 days before such annual
meeting or, if later, within 10 days after the first public announcement of the
date of such annual meeting. If a special meeting of stockholders of the
Company is called in accordance with paragraph 3 of this Article I for the
purpose of electing one or more directors to the Board of Directors, for a
stockholder's notice to be timely it must be delivered to, or mailed and
received at, the principal executive office of the Company not less than 90 days
before such special meeting or, if later, within 10 days after the first public
announcement of the date of such special meeting. Except to the extent
otherwise required by law, the adjournment of an annual or special meeting of
stockholders shall not commence a new time period for the giving of a
stockholder's notice as described above.

(b) CONTENT OF NOTICE. A stockholder's notice of nomination for an annual
or special meeting of stockholders shall set forth (x) as to each person whom
the stockholder proposes to nominate for election or re-election as a
director: (i) such person's name, and (ii) all information relating to such
person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required,
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended, and Rule 14a-11 promulgated thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); and (y) as to the stockholder giving the
notice: (i) the name and address, as they appear on the Company's books, of
such stockholder, and (ii) the class and number of shares of the Company that
are beneficially owned by such stockholder. At the request of the Board of
Directors, any person nominated by

CONTINUED

- 16 -
<PAGE>

the Board of Directors for election as a director shall furnish to the Secretary
of the Company the information required to be set forth in a stockholder's
notice of nomination that pertains to a nominee.

(c) CONSEQUENCES OF FAILURE TO GIVE TIMELY NOTICE. Notwithstanding anything in
these By-Laws to the contrary, no person shall be eligible for election as a
director of the Company unless nominated in accordance with the procedures set
forth in this paragraph 11. The Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed in this paragraph 11 and, if the
Chairman should so determine, the Chairman shall so declare to the meeting, and
the defective nomination shall be disregarded.

(d) PUBLIC ANNOUNCEMENT. For purposes of this paragraph 11 and paragraph 12 of
this Article I, "public announcement" means disclosure (i) when made in a press
release reported by the Dow Jones News Service, Associated Press, or comparable
national news service, (ii) when filed in a document publicly filed by the
Company with the Securities and Exchange Commission pursuant to Section 13, 14,
or 15(d) of the Securities Exchange Act of 1934, as amended, or (iii) when
mailed as the notice of the meeting pursuant to paragraph 4 of this Article I.

12. ADVANCE NOTICE OF OTHER BUSINESS. At any annual or special meeting of
stockholders, only such business (other than the nomination and election of
directors) may be conducted as shall have been brought before the meeting (i) by
or at the direction of the Board of Directors, or (ii) by any stockholder of the
corporation entitled to vote at the meeting who complies with the notice
procedures set forth in this paragraph 12.

(a) TIMING OF NOTICE. For such business to be properly brought before any
annual or special meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the Company. To be
timely, a stockholder's notice of any such business to be conducted at an
annual meeting must be delivered to, or mailed and received at, the principal
executive offices of the Company not less than 90 days before the first
anniversary of the date of the preceding year's annual meeting of
stockholders. If, however, the date of the annual meeting is more than 30
days before or after such anniversary date, notice by a stockholder shall be
timely only if so delivered or so mailed and received not less than 90 days
before such annual meeting or, if later, within 10 days after the first
public announcement of the date of such annual meeting. If a special meeting
of stockholders of the Company is called in accordance with paragraph 3 of
this Article I for any purpose other than electing directors to the Board of
Directors, for a stockholder's notice to be timely it must be delivered to,
or mailed and received at, the principal executive office of the Company not
less than 90 days before such special meeting or, if later, within 10 days
after the first public announcement of the date of such special meeting.
Except to the extent otherwise required by law, the adjournment of an annual
or special meeting of stockholders shall not commence a new time period for
the giving of a stockholder's notice as required above.

(b) CONTENT OF NOTICE. A stockholder's notice to the Company shall set forth
as to each

CONTINUED

- 17 -
<PAGE>

matter the stockholder proposes to bring before the annual or special meeting
(w) a brief description of the business desired to be brought before the meeting
and the reasons for conducting such business at the meeting, (x) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business, (y) the class and number of shares of the Company that are
beneficially owned by the stockholder, and (z) any material interest of the
stockholder in such business.

(c) CONSEQUENCES OF FAILURE TO GIVE TIMELY NOTICE. Notwithstanding anything in
these By-Laws to the contrary, no business (other than the nomination and
election of directors) shall be conducted at any annual or special meeting
except in accordance with the procedures set forth in this paragraph 12 and, as
an additional limitation, the business transacted at any special meeting shall
be limited to the purposes stated in the notice of the special meeting pursuant
to paragraph 4 of this Article I. The Chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
paragraph 12 and, if the Chairman should so determine, the Chairman shall so
declare to the meeting, and any such business not properly brought before the
meeting shall not be transacted.

- 18 -

<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PERCENTS, RATIOS, PER SHARE AMOUNTS, STOCKHOLDERS, AND
EMPLOYEES)

<TABLE>
<CAPTION>
1998 1997 Change
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
SALES AND EARNINGS:
Net Sales $1,848,004 $1,877,237 (2%)
Income Before Taxes 181,932 174,984 4
Income Taxes 70,500 67,400 5
Net Income 111,432 107,584 4

- -----------------------------------------------------------------------------
PER SHARE:
Basic Earnings Per Share 2.10 2.03 3%
Diluted Earnings Per Share 2.09 2.00 5
Dividends Paid .88 .80 10
Book Value 12.83 *12.08 6

- -----------------------------------------------------------------------------
RATIOS:
Net Income to Net Sales 6.0% 5.7%
Return on Average Common Equity 17.0% 17.8%
Return on Average Total Capital 11.6% 12.6%
Total Debt to Total Capital 33.6% 31.3%
Current Ratio 2.1% 2.1

- -----------------------------------------------------------------------------
ADDITIONAL INFORMATION:
Cash Flow Provided by Operations $219,173 $200,357 9%
Capital Expenditures 139,833 167,520 (17)
Stock PE Range 16-22 18-23
Average Common Shares Outstanding
for Computation of Diluted EPS 53,324 53,880 (1)
Common Shares Outstanding at Year-end 52,269 52,968 (1)
Number of Common Stockholders 5,721 5,874 (3)
Number of Employees 9,364 9,275 1

</TABLE>

* Reflects 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.

APPENDIX TO THE ELECTRONIC FILING - 1998 FORM 10-K

Data appearing on bar charts on page one of the 1998 Annual Report.

1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Sales ($ millions) $1,390 $1,523 $1,655 $1,877 $ 1,848

Diluted Earnings Per Share* $1.40 $1.63 $1.90 $2.00 $ 2.09

Dividends paid Per
Common Share $.54 $.64 $.72 $.80 $ .88

Return on Average
Total Capital* 13.4% 13.5% 13.7% 12.6% 11.6%

</TABLE>

<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES

FIVE-YEAR SUMMARY

[GRAPH]

TOTAL COMPANY NET SALES WERE $1.85 BILLION IN 1998. OPERATING PROFIT WAS
$224.2 MILLION, OR 12.1 PERCENT OF NET SALES. AVERAGE INVESTMENT FOR THE YEAR
WAS $1,173.8 MILLION, AS THE COMPANY CONTINUED TO INVEST FOR LONG-TERM GROWTH.

BEMIS COMPANY, INC.
BUSINESS SEGMENTS

NOTE: Operating profit is defined as profit before general corporate expense,
interest expense, income taxes, and minority interest

Business Segments (in millions) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FLEXIBLE PACKAGING
Net sales $1,368.2 $1,397.7 $1,188.0 $1,097.6 $988.5
Operating profit* 174.1 152.2 139.1 124.3 109.6
Average investment 953.3 866.5 692.0 621.1 502.5
Operating profit as % of net sales 12.7% 10.9% 11.7% 11.3% 11.1%
Operating profit as % of average investment 18.3% 17.6% 20.1% 20.0% 21.8%

PRESSURE SENSITIVE MATERIALS
Net sales $479.8 $479.5 $467.4 $425.8 $402.0
Operating profit* 50.1 67.8 59.8 45.3 41.7
Average investment 220.5 215.0 193.2 172.4 157.9
Operating profit as % of net sales 10.4% 14.1% 12.8% 10.6% 10.4%
Operating profit as % of average investment 22.7% 31.5% 31.0% 26.3% 26.4%

TOTAL COMPANY
Net sales $1,848.0 $1,877.2 $1,655.4 $1,523.4 $1,390.5
Operating profit* 224.2 220.0 198.9 169.6 151.3
Average investment 1,173.8 1,081.5 885.2 793.5 660.4
Operating profit as % of net sales 12.1% 11.7% 12.0% 11.1% 10.9%
Operating profit as % of average investment 19.1% 20.3% 22.5% 21.4% 22.9%

</TABLE>

* Reflects gains of $10.7 million and $4.3 million in 1997 and 1996,
respectively, realized on the sale of machinery operations and restructuring
charges of $7.8 million in 1997.

5
- --------------------------------------------------------------------------------

<PAGE>
YEAR IN REVIEW

MANAGEMENT'S DISCUSSION AND ANALYSIS

<TABLE>
<CAPTION>
THREE-YEAR REVIEW OF RESULTS
- ---------------------------------------------------------------------------------
Percent
- ---------------------------------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>

Net Sales ............................ 100.0% 100.0% 100.0%
Cost of products sold ................ 78.0 78.9 76.9
------ ------ ------
Gross margin ......................... 22.0 21.1 23.1
Selling, general, and administrative
expenses ........................... 10.1 10.1 11.6
All other expenses ................... 2.1 1.7 1.7
------ ------ ------
Income before income taxes ........... 9.8 9.3 9.8
Income taxes ......................... 3.8 3.6 3.7
------ ------ ------
Net income ........................... 6.0% 5.7% 6.1%
------ ------ ------
------ ------ ------
Effective tax rate .................. 38.8% 38.5% 37.9%
</TABLE>

SUMMARY

Capital expenditures for 1998 were $139.8 million compared to $167.5
million in 1997 and $112.0 million in 1996. Throughout this three-year period,
the Company has focused on building and expanding its manufacturing capacity to
support its technological strengths. This continuing investment in efficient,
technologically-advanced manufacturing capacity provides the solid platform
required to continue to introduce new products which will meet the needs of both
our domestic and international customers.

Effective June 30, 1998, the Company completed the acquisition of Techy
International S.A., a manufacturer of flexible packaging materials based in
Charleroi, Belgium. This acquisition added manufacturing and sales locations in
Belgium, France, and the United Kingdom and provides a platform for growth in
the European market for the Flexible Packaging business segment.

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, the largest supplier of flexible
packaging in South America, creates an organization strong in market knowledge
and leading technology to service the needs of the South American marketplace.
During 1998, this joint venture, ITAP/Bemis Ltda., began the consolidation of
its manufacturing facilities at a newly constructed business campus in Londrina,
Parana-, Brazil. ITAP/Bemis Ltda. serves a variety of markets in Brazil and the
Mercosul, the Southern Cone Common Market. This joint venture has strong
relationships with the major consumer goods companies in the markets it serves.
Since Bemis did not purchase a controlling interest in the company, the
investment and earnings are recorded on the equity basis of accounting.

During 1998, the Company completed the reorganization of its paper products
product line which was announced mid-1997, and returned to income $0.5 million
of the $7.8 million charge originally recorded to absorb the cost of this
effort. This reorganization principally involved the closure of two
manufacturing facilities and realignment of the organization into operating
units targeting specific focused markets in which the Company anticipates faster
growing market segments.

Two other smaller, strategic changes were accomplished in the international
arena during 1998. To speed up delivery and service to our valued Asian
customers, especially for coated and thermoformed medical packaging products,
the Company, through its subsidiary, Perfecseal Inc., started up operations in
the recently formed Malaysian company, Perfecseal (Asia Pacific) Sdn Bhd. In
addition, the Company, through its subsidiary, Morgan Adhesives Company, formed
a sales subsidiary in Brazil, Morgan Adhesives America do Sul, Ltda., to pursue
sales opportunities for our pressure sensitive materials business throughout
South America and Central America.

Overall results for the year produced net sales of $1.85 billion compared
to $1.88 billion and $1.66 billion for 1997 and 1996 respectively. The sales
decline of 1.6 percent in 1998, which occurred exclusively in the Flexible
Packaging segment, is principally due to the sale of the machinery business in
1997, lower paper products sales following the reorganization of the paper
products product line, and lower raw material costs which tend to drive down
selling prices. Net income for 1998 totaled $111.4 million compared with $107.6
million and $101.1 for 1997 and 1996 respectively. Diluted earnings per share
were $2.09 for 1998, $2.00 for 1997, and $1.90 for 1996. Excluding the effects
of business acquisitions and dispositions as well as the 1997 restructuring
charge of $7.8 million, 1998 net sales decreased 0.2 percent from 1997 while
operating profit increased 5.1 percent over the 1997 level.

Sales for the Flexible Packaging segment declined 2.1 percent from the very
strong level achieved in 1997 while remaining more than 15.1 percent over the
1996 sales level. Very strong unit sales increases in high barrier products and
polyethylene products helped to offset the impact of the reorganization of paper
products, lower plastic raw material prices,

CONTINUED

20
- --------------------------------------------------------------------------------
<PAGE>

and the sale of the machinery business. The 1997 sales volume benefited from
the acquisition of Paramount Packaging. Flexible Packaging operating profits
were $174.1 million in 1998, or 12.7 percent of sales, compared to $152.2
million, or 10.9 percent of sales in 1997, and $139.1 million, or 11.7 percent
of sales in 1996. Increasing unit sales and a lower cost structure largely
account for the 1998 improvements in operating profit.

Sales for the Pressure Sensitive Materials segment increased slightly over
the 1997 level. Operating profit, however, was lower as this business segment
faced less favorable economic conditions around the globe, increased price
competition in certain markets, and inefficiencies in manufacturing operations
brought on by changes in sales mix and volumes. Pressure Sensitive Materials
operating profits were $50.1 million in 1998, or 10.4 percent of sales, compared
to $67.8 million, or 14.1 percent of sales in 1997, and $59.8 million, or 12.8
percent of sales in 1996. The 1997 improvement in operating margins resulted
from a better mix of products and improved plant efficiencies.

FORWARD LOOK

Heavy capital investments during the past several years together with an
ongoing product development effort well position the Company to efficiently
provide superior packaging solutions to the marketplace. We have strong
positions in our markets, excellent technology throughout our product lines,
efficient manufacturing, and highly talented and capable people. The recently
announced efforts to reorganize the Pressure Sensitive Materials segment to more
effectively align its products, markets, and customers are expected to enhance
its future performance. This process will, however, result in additional costs
in 1999 which are expected to keep operating profits in the Pressure Sensitive
Materials business essentially flat with 1998, leading to substantially better
results in 2000 and beyond. The Company's packaging operations are expected to
remain strong while market conditions are expected to be less favorable in 1999
than in 1998.

COSTS AND EXPENSES

Cost of products sold as a percentage of net sales was 78.0 percent for
1998 compared to 78.9 percent for 1997 and 76.9 percent for 1996. The favorable
experience in 1998 is largely due to a lower cost structure and the absence, in
1998, of the disruptive nature of the Paramount acquisition and the paper
products product line restructuring in 1997.

Selling, general, and administrative expense decreased in absolute dollars
in 1998 and 1997 as a result of improved cost control and business unit
dispositions. Actual expense for 1998 decreased $3.7 million or 2.0 percent
compared to 1997, and decreased $3.2 million or 1.7 percent for 1997 versus
1996.

Research and development expense was $12.2 million in 1998, $12.0 million
in 1997, and $13.7 million in 1996. The disposition of the balance of our
packaging machinery business reduced costs in 1997 and 1998. However, that
impact was more than offset in 1998 by increased product development efforts
within the Pressure Sensitive Materials business segment.

Higher debt levels have resulted in interest expense increasing to $21.9
million for 1998 compared to $18.9 million in 1997 and $13.4 million in 1996.
The increasing debt level during the three-year period was due to modestly
higher working capital to support rising business activity, common stock
repurchases, capital expenditures, and our business acquisition efforts.

Other costs (income) reflect expense of $0.3 million for 1998 versus income
of $4.1 million and $5.5 million in 1997 and 1996, respectively. Gains realized
on the sale of business units in 1996 and 1997 were not repeated in 1998. Also
included in 1998 were losses at our Brazilian joint venture. The lower income
for 1997 compared to 1996 relates primarily to the charge for the restructuring
of our paper products organization. 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 1998 was 17.0 percent
compared to 17.8 percent in 1997 and 18.7 percent in 1996.

Operating profit as a percent of average investment, which appears in the
Five-Year Summary on page five of this report, was 19.1 percent in 1998,
compared to 20.3 percent in 1997 and 22.5 percent in 1996.

Operating profit as a percent of average investment for Flexible Packaging
was 18.3 percent in 1998 compared to 17.6 percent in 1997 and 20.1 percent in
1996. This same ratio for Pressure Sensitive Materials was 22.7 percent in
1998 compared to 31.5 percent in 1997 and 31.0 percent in 1996.

Return on average total capital was 11.6 percent in 1998, 12.6 percent in
1997, and 13.7 percent in 1996. 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 1998 were $139.8 million compared to $167.5 million
in 1997 and $112.0 million in 1996, including capitalized interest of $1.3
million, $1.3 million, and $.8 million for 1998, 1997, and 1996, respectively.
In 1999, management anticipates expenditures to be slightly less than 1998
levels. 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 the Flexible Packaging segment in both the high
barrier products and polyethylene products and the expansion of our Pressure
Sensitive Materials segment.

CAPITAL STRUCTURE, LIQUIDITY, AND CASH FLOW

Stockholders' equity increased in 1998 to $670.8 million, up from $639.9
million in 1997 and $567.1 million in 1996, due primarily to earnings net of
dividend payments and common stock repurchases. In 1998, $41.3 million of
common stock was repurchased compared to $5.1 million in 1997 and $9.0 million
in 1996. Common stock totaling $7.4 million was issued in 1998 in connection
with employee stock incentive programs.

Total debt increased $56.8 million in 1998 to $377.9 million, making total
debt as a percent of total capital 34 percent compared to 31 percent in 1997 and
28 percent in 1996. In 1999, total debt is expected to decrease due to an
expected reduction in common stock repurchases and capital expenditures from
1998 and 1997 levels offset by increases in working capital attributable to an
expected increase in sales levels.

Working capital (excluding short-term debt) increased by $12.2 million to
$281.7 million in 1998 following an increase of $12.3 million to $269.5 million
in 1997, and an increase of $29.6 million to $257.2 million in 1996. The
current ratio was 2.1:1 in 1998 compared to 2.1:1 in 1997 and 2.2:1 1996.

The Company's cash flow remained strong in 1998 as cash provided by
operations was $219.2 million compared to $200.4 million in 1997 and $179.3
million in 1996. The following schedule presents the major sources and uses of
cash for the Company in 1998.

CONTINUED

21
- --------------------------------------------------------------------------------
<PAGE>

SOURCES AND USES OF CASH
(IN MILLIONS OF DOLLARS)

<TABLE>
<S> <C>
SOURCES: Net Income .............................................. $ 111.4
Depreciation and amortization ........................... 88.9
Minority Interest ....................................... 4.4
Deferred income taxes ................................... 12.9
Increase in total debt (net of effects
of acquisitions and dispositions) ....................... 56.4
Other ................................................... 11.6
--------
Total Sources ........................................... $ 285.6
--------
--------
USES: Capital expenditures ...................................... $ 139.8
Business acquisitions, net of cash acquired ............... 50.2
Increase in working capital* (net of
effects of acquisitions and dispositions) ................. 7.6
Common stock repurchases .................................. 41.3
Dividends ................................................. 46.7
--------
Total Uses ................................................ $ 285.6
--------
--------
</TABLE>
*EXCLUDING SHORT-TERM DEBT.

The Company's pretax interest coverage was 9.3 times in 1998 compared to
10.3 times in 1997 and 13.2 times in 1996. Pretax income increased to $181.9
million in 1998 from $175.0 million in 1997 and $162.8 million in 1996.
Interest expense was $21.9 million in 1998, $18.9 million in 1997, and $13.4
million in 1996. Following are pretax interest coverage ratios for the last
five years:

Coverage of Pretax Interest by Pretax Income and Interest

Substantial credit is available to the Company for future use, including a
$327 million revolving credit agreement with seven 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, 1998 and 1997, the Company had outstanding forward
foreign currency exchange contracts aggregating $19,736,000 and $19,144,000,
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 $26,000 loss at
December 31, 1998, and a $120,000 loss at December 31, 1997, had outstanding
contracts been settled at those respective dates.

In mid-January 1999, the Brazilian Government reversed a policy which will
have a negative impact on the Company in the first quarter of 1999. Previously,
the Brazilian Government controlled their currency by pegging it to a narrow
band as it relates to the U.S. dollar. This policy was dropped in favor of
allowing the Brazilian currency, the real, to float against the U.S. dollar.
The immediate effect was a devaluation of the real against the U.S. dollar. The
Company has a one-third interest in a Brazilian joint venture, ITAP/Bemis Ltda.
The joint venture has foreign denominated debt exposures which are only
partially hedged. Net conversion losses on the debt will be recorded as an
expense.

INCOME TAXES

The Company's effective tax rate was 38.8 percent in 1998 versus 38.5
percent in 1997 and 37.9 percent in 1996. The primary difference between our
overall tax rate and the U.S. statutory tax rate of 35 percent in 1998, 1997,
and 1996 relates to state and local income taxes net of the federal income tax
benefit.

NEW ACCOUNTING PRONOUNCEMENTS

In 1998, the Company adopted, as required, the provisions of Statement of
Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This SFAS requires disclosure of selected
financial information based on the "operating segments" of the enterprise rather
than "industry segments" standard required by superseded authoritative
requirements. No significant changes were required upon adoption of this SFAS
No. 131. For many years the Company's business activities have been organized
around its two principal business segments, Flexible Packaging and Pressure
Sensitive Materials.

In 1998, the Company adopted, as required, the expanded disclosure
provisions of SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." The additional disclosure requirements are included
in the Notes to the Consolidated Financial Statements which are part of the
Company's annual financial statements.

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133 "Accounting for Derivative Instruments and Hedging Activities." This
statement, which is required to be adopted for annual periods beginning after
June 15, 1999, establishes standards for recognition and measurement of
derivatives and hedging activities. The Company will implement this statement
in the year 2000 as required. The adoption of SFAS No. 133 is not expected to
have a material effect on the Company's financial position or results of
operations.

MARKET PRICES AND DIVIDENDS

The Bemis quarterly dividend was increased by 10.0 percent in the first
quarter of 1998 to 22 cents per share from 20 cents. This followed first quarter
increases of 11.1 percent in 1997 to 20 cents per share from 18 cents, and 12.5
percent in 1996 to 18 cents per share from 16 cents in 1995.

Common dividends for the year were 88 cents per share, up from 80 cents in
1997 and 72 cents in 1996. The 1998 dividend payout ratio was 42 percent
compared to 40 percent in 1997 and 38 percent in 1996. Based on the market
price of $44.06 per share at the beginning of 1998, the dividend yield was 2.0
percent.

Stockholders' equity per common share (book value per share) increased to
$12.83 per share in 1998, up from $12.08 per share in 1997 and $10.83 per share
in 1996. Trading volume in Bemis common stock was 25.5 million shares in 1998.

In February 1999, the Board of Directors increased the quarterly cash
dividend on common stock to 23 cents per share from 22 cents, a 4.5 percent
increase.

CONTINUED

22
- --------------------------------------------------------------------------------
<PAGE>

EUROPEAN COMMON CURRENCY (EURO)

The European Economic and Monetary Union (EMU) and a new currency, the
"euro", began in Europe on January 1, 1999. This is a significant and critical
element in the European Union's (EU) plan to blend the economies of the EU's
member states into one integrated market, with unrestricted and unencumbered
trade and commerce across borders. Eleven of the fifteen member EU countries
are initially participating. Other member states may join in the years to come.

On January 1, 1999, the European Central Bank (ECB) established fixed
conversion rates between the euro and existing currencies (legacy currencies) of
participating member countries of the EMU. The euro now trades on currency
exchanges and is available for noncash transactions on a "no compulsion, no
prohibition" basis. The euro will coexist with the legacy currencies through
January 1, 2002. During this transition period, currency conversion rates no
longer will be computed directly from one legacy currency to another. Instead,
a "triangulation" process must be applied with any amount denominated in a
legacy currency first converted into a euro amount and then into the second
legacy currency. Beginning on January 1, 2002, the ECB will issue
euro-denominated bills and coins for use in cash transactions. On or before
July 1, 2002, the participating countries will withdraw all legacy bills and
coins and use the euro as their legal currency.

The principal impact on the Company will be experienced by its operations
whose functional currency is the existing currency (legacy currency) of a
participating member country of the EMU. The "triangulation" process and the
resulting single currency denomination (the euro) will impact the information
technology infrastructure, accounting record keeping requirements, and
cross-border purchasing and selling. The Company recognizes that failure to
timely resolve internal euro issues could result, in a worst case, in the
Company's European operations' inability to obtain raw materials in a timely
manner; reductions, delays, or cancellations of customer orders; delays in
payments by customers for products shipped; or a general inability to record,
track, and consummate business transactions. Any or all of these events
could have a material adverse effect on the Company's business, financial
condition, and results of operations.

The Company has selected and installed new computer software which is
euro-compliant (also Year 2000 compliant) and expects that the initial
positive experience during the first few weeks of 1999 will continue as
actual utilization of the new software more fully tests its functionality
over a longer period of time. The cost of these efforts is expected to total
$1.5 million of which approximately $1.0 million was incurred in 1998 for
both expense and capital items. The overall effect on the Company's
international operations, principally its Pressure Sensitive Materials
business segment, is not expected to be material. In addition, the increased
"price and cost transparency" expected to result from a single currency for a
larger integrated market, is expected to lower material cost and lower costs
associated with currency transactions, however, selling prices may be
adversely affected. The experience during the first few weeks of 1999 has
not been out of the ordinary and the Company expects this transition
experience to continue.

YEAR 2000 ISSUE

In late-1992, the Company began to set direction for upgrading all of its
information technology (IT) systems with a focus on significant enhancement of
IT support at the division level. It was the Company's intention to replace
legacy IT systems with hardware and software that reflected the current state of
technology. Principal objectives of this major effort were to significantly
improve the quality and usefulness of computerized information management
systems, to improve employee and manufacturing efficiencies, and to notably
enhance the quality of service to customers, suppliers, and employees. "Year
2000 compliant," was one of many necessary attributes of any system considered.
Computers and related equipment, computer software, and other office and
manufacturing equipment utilizing microprocessors that use only two digits to
identify a year in a date field may be unable to accurately process certain
date-based information at or after the Year 2000. This is commonly referred to
as the "Year 2000 issue."

The Company, like commerce in general, is highly dependent on computerized
systems or controls for the administrative recording of business transactions,
for the administrative control and actual manufacture of products it sells, and
for the efficient interaction between third parties such as suppliers,
customers, banks, and employees. The Company recognizes that failure to timely
resolve internal Year 2000 issues could result, in a worst case, in the
Company's inability to obtain raw materials in a timely manner; reductions in
the quality or quantity of materials obtained; reductions, delays, or
cancellations of customer orders; delays in payments by customers for products
shipped; or a general inability to record, track, and consummate business
transactions. Any or all of these events could have a material adverse effect
on the Company's business, financial condition, and results of operations.

The Company is addressing its Year 2000 issue in three areas: (1) IT
system applications, (2) non-IT systems, including engineering and manufacturing
equipment applications, and (3) relationships with third parties.

The Company has conducted an assessment of its company-wide Year 2000
issue surrounding its IT systems. Since the initial assessment in late-1992,
concurrent efforts have been underway to evaluate, select, and implement
third party supplied or internally developed software for company-wide or
division-wide applications. Currently, a portion of all new major software
applications is in daily operation. Internally developed software is Year
2000 compliant, and where third party supplied software is not Year 2000
compliant the Company has received assurance of such compliance once the
updated software version is released and installed in 1999. While the
current stages of completion for these concurrent efforts vary, the Company
believes that implementation will be complete and Year 2000 compliant by
mid-1999.

The Company has completed the initial assessment of the Year 2000 issue
surrounding its non-IT systems, including engineering and manufacturing
equipment applications. Year 2000 remediation and testing efforts, which are
continuing throughout the Company, are more than 50 percent complete. This
Company-wide effort is being centrally coordinated with actual assessment,
remediation, and implementation assigned to identified individuals at each
manufacturing, warehouse, or office site. While the degree of effort and
extensiveness of remediation will vary by site, it is expected that all sites
will be Year 2000 compliant by mid-1999.

Finally, the Company is continuing to examine its relationship with third
parties whose failure to become Year 2000 compliant in a timely manner, if at
all, could have a material effect on the Company. The Company has been in
contact with significant vendors and customers with respect to such companies'
Year 2000 compliance programs and status. In addition, follow-up conversations
have been conducted with key customers and vendors. The Company is continuing
to evaluate this effort and expects to request more detailed and updated
information from its principal suppliers and customers over the next several
months.

CONTINUED

23
- --------------------------------------------------------------------------------
<PAGE>

The Company is developing contingency plans to address the effects of the
failure of the Company or any of its principal suppliers, customers, or other
third parties to become Year 2000 compliant in a timely manner. While the
initial contingency plan development is expected to be completed during the
first quarter of 1999, it is expected that this plan will be updated throughout
1999 as required by changes in events, facts, and circumstances surrounding the
Company's Year 2000 compliance efforts as well as that of its principal
suppliers, customers, and other third parties.

Most business units meet at least monthly to review progress and plans.
Senior level representatives from the various concurrent implementation and
remediation teams meet at least quarterly with senior level Company management
to assess progress, to assure a coordinated effort where required, and to verify
a continued Company-wide focus toward a satisfactory resolution of the Company's
Year 2000 issue. The Company is utilizing both internal and external resources
to meet its timetable for becoming Year 2000 compliant.

Since late-1992, when the Company began to set direction for upgrading all
of its IT systems in the normal course of business, the Company has made capital
investments in certain third party software and hardware systems to address the
financial and operational needs of the business. These systems, which will
improve the efficiencies and productivity of the replaced systems, have been, or
will be certified Year 2000 compliant by the vendors and have been or will be
installed by mid-1999. To date all of these capital projects were part of the
Company's long term strategic capital plan and their timing was not accelerated
as a result of the Year 2000 issue. Total expenditures for the remediation of
"embedded chip exposures" in manufacturing equipment and facilities together
with the unexpected replacement of selected computer equipment is estimated to
total $2.6 million, of which approximately $0.3 million has been incurred in
1998. This effort is expected to be completed by mid-1999. All expenditures
are made from internally generated funds and have not had a negative impact on
the Company's capital expenditure program.

FORWARD-LOOKING STATEMENTS

The following "Safe Harbor Statement" is made pursuant to the Private
Securities Litigation Reform Act of 1995. Certain of the statements contained
in the body of this report are forward-looking statements (rather than
historical facts). With respect to such forward-looking statements, the Company
seeks the protections afforded by the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements are based on management's current
plans and expectations and are subject to a number of uncertainties and risks
that could cause actual results to differ materially from those described in
such statements. These forward-looking statements include, but are not limited
to, the following: the successful reorganization of the Pressure Sensitive
Materials segment; the expectation that packaging operations will remain strong
in 1999; the success of the Company in expanding its international business; the
amount and distribution of expected capital expenditures in 1999; the
expectation that total debt will decrease slightly in 1999; the cost and success
of the Company's Year 2000 compliance program and euro conversion program; 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; 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; unanticipated consequences of the Year 2000, including
noncompliance by the Company's customers or suppliers; unanticipated
consequences of the EMU's conversion to the euro; 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.

BEMIS COMMON STOCK PERFORMANCE*

<TABLE>
<CAPTION>
1998 1997 1996
------------------------------------------------------------------------------------------------
DIVIDEND Dividend Dividend
HIGH LOW PAID High Low Paid High Low Paid
------------------------------------ -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter 46 15/16 40 1/4 $.22 43 3/8 35 7/8 $.20 33 3/8 26 1/8 $.18
Second Quarter 46 40 5/8 .22 43 3/4 36 1/2 .20 36 30 .18
Third Quarter 41 34 15/16 .22 47 3/16 43 3/8 .20 36 29 3/8 .18
Fourth Quarter 42 3/16 33 15/16 .22 45 1/16 35 13/16 .20 37 1/8 34 .18
</TABLE>
*New York Stock Exchange: BMS

24
- --------------------------------------------------------------------------------
<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES

FIVE-YEAR CONSOLIDATED REVIEW
(IN MILLIONS, EXCEPT PERCENTS, SHARES, RATIOS,
PER SHARE AMOUNTS, STOCKHOLDERS, AND EMPLOYEES)

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Net sales ................................ $ 1,848.0 $ 1,877.2 $ 1,655.4 $ 1,523.4 $ 1,390.5
Cost of products sold and other expenses . 1,644.2 1,683.3 1,479.2 1,375.8 1,264.0
Interest expense ......................... 21.9 18.9 13.4 11.5 8.4
Income before income taxes ............... 181.9 175.0 162.8 136.1 118.1
Income taxes ............................. 70.5 67.4 61.7 50.9 45.3
Net income ............................... 111.4 107.6 101.1 85.2 72.8
Net income as a percent of net sales ..... 6.0% 5.7% 6.1% 5.6% 5.2%

COMMON SHARE DATA
Diluted earnings per share ............... $ 2.09 $ 2.00 $ 1.90 $ 1.63 $ 1.40
Dividends per common share ............... .88 .80 .72 .64 .54
Book value per common share .............. 12.83 12.08 10.83 9.76 8.16
Stock PE ratio range ..................... 16-22 18-23 14-20 14-18 15-18
Average common shares and common
share equivalents outstanding
during the year for computation
of diluted earnings per share .......... 53,323,704 53,879,948 53,252,250 52,311,421 51,953,210
Common shares outstanding at year-end .... 52,269,158 52,967,511 52,360,699 52,567,349 51,211,326

CAPITAL STRUCTURE AND OTHER DATA
Current ratio ............................ 2.1 2.1 2.2 2.0 2.0
Working capital .......................... 275.2 265.2 252.5 223.1 208.1
Total assets ........................... 1,453.1 1,362.6 1,168.8 1,030.6 923.3
Long-term debt ......................... 371.4 316.8 240.9 166.4 170.7
Long-term obligations under capital leases 0.2 1.0
Stockholders' equity ..................... 670.8 639.9 567.1 512.8 418.0
Return on average common equity .......... 17.0% 17.8% 18.7% 18.3% 18.5%
Return on average total capital .......... 11.6% 12.6% 13.7% 13.5% 13.4%
Depreciation and amortization ............ 88.9 78.9 66.2 58.0 51.8
Capital expenditures ..................... 139.8 167.5 112.0 93.6 93.1
Number of common stockholders ............ 5,721 5,874 5,947 5,711 5,602
Number of employees ...................... 9,364 9,275 8,876 8,515 8,120
Wages and salaries ....................... 351.2 348.8 314.5 287.0 276.8
Research and development expense ......... 12.2 12.0 13.7 13.6 13.1
</TABLE>

25
- --------------------------------------------------------------------------------
<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES

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.

PricewaterhouseCoopers 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
PricewaterhouseCoopers 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 Chief Senior Vice President, Vice President and Controller
Executive Officer Chief Financial Officer
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 the 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, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, 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/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Minneapolis, Minnesota, January 22, 1999

26
- --------------------------------------------------------------------------------
<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME
YEARS ENDED DECEMBER 31,
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1998 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales ............................................... $ 1,848,004 $ 1,877,237 $ 1,655,431

Costs and expenses:

Cost of products sold .......................... 1,441,391 1,480,365 1,273,570

Selling, general, and administrative expenses .. 185,841 189,590 192,819

Research and development ....................... 12,224 12,012 13,655

Interest ....................................... 21,866 18,893 13,397

Other costs (income), net ...................... 332 (4,057) (5,497)

Minority interest in net income ................ 4,418 5,450 4,706
----------- ----------- -----------
Income before income taxes .............................. 181,932 174,984 162,781

Provision for income taxes .............................. 70,500 67,400 61,700
----------- ----------- -----------

Net income .............................................. $ 111,432 $ 107,584 $ 101,081
----------- ----------- -----------
----------- ----------- -----------

Basic earnings per share of common stock ................ $ 2.10 $ 2.03 $ 1.92
----------- ----------- -----------
----------- ----------- -----------

Diluted earnings per share of common stock .............. $ 2.09 $ 2.00 $ 1.90
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

(SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

27
- --------------------------------------------------------------------------------
<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
DECEMBER 31, (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
ASSETS 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C>
Current assets:

Cash ................................... $ 23,738 $ 13,827

Accounts receivable - less
$12,863 and $12,110 for doubtful
accounts and allowances ................ 246,676 233,547

Inventories ............................ 212,613 221,576

Prepaid expenses and deferred charges .. 34,912 47,443
---------- ----------
Total current assets .......... 517,939 516,393
---------- ----------

Property and equipment:

Land and land improvements ............. 14,811 13,563

Buildings and leasehold improvements ... 219,055 204,263

Machinery and equipment ................ 918,782 826,671
---------- ----------
1,152,648 1,044,497

Less - accumulated depreciation ........ 412,547 359,270
---------- ----------
740,101 685,227
---------- ----------

Excess of cost of investments in subsidiaries
over net assets acquired ............... 160,819 150,632

Other assets .................................... 34,195 10,315
---------- ----------
195,014 160,947
---------- ----------
Total Assets .................................... $1,453,054 $1,362,567
---------- ----------
---------- ----------
</TABLE>

(SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

CONTINUED

28
- --------------------------------------------------------------------------------
<PAGE>

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:

Current portion of long-term debt ................. $ 2,946 $ 2,173

Short-term borrowings ............................. 3,553 2,105

Accounts payable .................................. 193,088 195,346

Accrued liabilities:
Salaries and wages ....................... 31,629 34,892

Income taxes ............................. 2,927 8,445

Other taxes .............................. 8,645 8,226
----------- -----------
Total current liabilities ....... 242,788 251,187

Long-term debt, less current portion ....................... 371,363 316,791

Deferred taxes ............................................. 76,204 64,066

Other liabilities and deferred credits ..................... 54,655 56,876
----------- -----------
Total liabilities ........................ 745,010 688,920
----------- -----------
Minority interest .......................................... 37,237 33,762

Commitments and Contingencies...............................

Stockholders' equity:

Common stock, $.10 par value:
Authorized-248,000,000 shares
Issued-59,056,047 and 58,643,557 shares .. 5,906 5,864

Capital in excess of par value .................... 181,908 174,562

Retained income ................................... 691,315 626,584

Other comprehensive income (loss) ................. (6,116) (6,263)

Common stock held in treasury,
6,786,889 and 5,676,046 shares, at cost... (202,206) (160,862)
----------- -----------
Total stockholders' equity ............... 670,807 639,885
----------- -----------
Total liabilities and stockholders' equity ................. $ 1,453,054 $ 1,362,567
----------- -----------
----------- -----------
</TABLE>

29
- --------------------------------------------------------------------------------
<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:

Net income ............................................... $ 111,432 $ 107,584 $ 101,081

Noncash items:

Depreciation and amortization ................... 88,910 78,856 66,192

Minority interest in net income ................. 4,418 5,450 4,706

Deferred income taxes, noncurrent portion ....... 12,941 7,312 7,035

Undistributed earnings of affiliated companies .. 1,546

(Gain) loss on sale of property and equipment ... (74) 1,155 245
--------- --------- ---------
Cash provided by operations .............................. 219,173 200,357 179,259

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

Accounts receivable ............................. (9,816) (13,982) (14,062)

Inventories ..................................... 11,508 (27,880) (25,243)

Prepaid expenses and deferred changes ........... 12,565 (7,684) 1,065

Accounts payable ................................ (3,141) (13,610) (4,520)

Accrued salaries and wages ...................... (3,780) (731) 4,180

Accrued income taxes ............................ (5,493) 2,969 (7,817)

Accrued other taxes ............................. 429 2,495 (3,825)

Changes in other liabilities and deferred credits ........ (2,002) (2,223) 4,612

Changes in deferred charges and other investments ........ 1,497 4,000 2,563
--------- --------- ---------
Net cash provided by operating activities ......................... $ 220,940 $ 143,711 $ 136,212
--------- --------- ---------
</TABLE>
(SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

CONTINUED

30
- --------------------------------------------------------------------------------
<PAGE>

<TABLE>
<CAPTION>
CONTINUED 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from investing activities:

Additions to property, plant, and equipment ....... $(139,833) $(167,520) $(111,950)

Business acquisitions, net of cash acquired ....... (50,206) 2,055 (74,114)

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

Proceeds from sale of property and equipment ...... 3,993 2,652 1,960

Other ............................................. 11 (22) 37
--------- --------- ---------
Net cash used by investing activities ...................... (186,035) (134,851) (171,315)
--------- --------- ---------
Cash flows from financing activities:

Increase in long-term debt ........................ 56,946 59,628 79,952

Repayment of long-term debt ....................... (2,374) (14,875) (5,310)

Change in short-term borrowings ................... 1,272 (618) 1,926

Change in current portion of long-term debt ....... 574 467 (1,699)

Cash dividends paid ............................... (46,701) (42,418) (37,830)

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

Purchase of common stock for the treasury ......... (41,344) (5,051) (8,962)

Stock incentive programs and related tax effects .. 7,388 51 312
--------- --------- ---------
Net cash (used) provided by financing activities ........... (26,074) (4,651) 26,548
--------- --------- ---------
Effect of exchange rates ................................... 1,080 (605) (3,254)
--------- --------- ---------
Net increase (decrease) in cash ............................ $ 9,911 $ 3,604 $ (11,809)
--------- --------- ---------
--------- --------- ---------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Noncash investing and financing activities:

Fair value of assets acquired ..................... $ 54,180 $ 123,262 $ 92,218

Liabilities assumed ............................... 3,974 100,213 14,937

Minority interest acquired ........................ 1,108
--------- --------- ---------
Net value acquired ................................ 50,206 23,049 76,173

Common stock issued ............................... 25,104 2,059
--------- --------- ---------
Cash used for acquisition ......................... $ 50,206 $ (2,055) $ 74,114
--------- --------- ---------
--------- --------- ---------
Interest paid during the year .............................. $ 22,900 $ 19,752 $ 14,268

Income taxes paid during the year .......................... $ 48,897 $ 55,813 $ 60,955
</TABLE>

31
- --------------------------------------------------------------------------------
<PAGE>

BEMIS COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
Capital in Other Common Total
Common Excess of Retained Comprehensive Stock Held Stockholders'
Stock Par Value Income Income (Loss) in Treasury Equity
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 . . . . . $5,781 $147,119 $498,167 $ 8,590 $(146,849) $512,808

Net income for 1996. . . . . . . . . . 101,081 101,081

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

Pension liability adjustment,
net of $948 tax benefit. . . . . . . . 1,546 1,546
--------
Total comprehensive income . . . . . . 98,710
--------
Cash dividends paid on
common stock, $.72 per share . . . . . (37,830) (37,830)

Stock incentive programs
and related tax effects. . . . . . . . 2 310 312

Common stock transactions related to
an acquisition of a subsidiary
company. . . . . . . . . . . . . . . . 7 2,052 2,059

Purchase of 292,000 shares
of common stock. . . . . . . . . . . . (8,962) (8,962)
------ -------- -------- ------- --------- --------
Balance at December 31, 1996 . . . . . $5,790 $149,481 $561,418 $ 6,219 $(155,811) $567,097
------ -------- -------- ------- --------- --------
Net income for 1997. . . . . . . . . . 107,584 107,584

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

Pension liability adjustment,
net of $842 tax benefit. . . . . . . . (1,373) (1,373)
--------
Total comprehensive income . . . . . . 95,102
--------
Cash dividends paid on
common stock, $.80 per share . . . . . (42,418) (42,418)

Stock incentive programs
and related tax effects. . . . . . . . 4 47 51

Common stock transactions
related to an acquisition of
a subsidiary company . . . . . . . . . 70 25,034 25,104

Purchase of 139,429 shares
of common stock. . . . . . . . . . . . (5,051) (5,051)
------ -------- -------- ------- --------- --------
Balance at December 31, 1997 . . . . . $5,864 $174,562 $626,584 $(6,263) $(160,862) $639,885
------ -------- -------- ------- --------- --------

Net income for 1998. . . . . . . . . . 111,432 111,432

Translation adjustment for 1998. . . . (72) (72)

Pension liability adjustment,
net of $102 tax benefit. . . . . . . . 219 219
--------
Total comprehensive income . . . . . . 111,579
--------
Cash dividends paid on
common stock, $.88 per share . . . . . (46,701) (46,701)

Stock incentive programs
and related tax effects. . . . . . . . 42 7,346 7,388

Purchase of 1,110,843 shares
of common stock. . . . . . . . . . . . (41,344) (41,344)
------ -------- -------- ------- --------- --------
Balance at December 31, 1998 . . . . . $5,906 $181,908 $691,315 $(6,116) $(202,206) $670,807
------ -------- -------- ------- --------- --------
------ -------- -------- ------- --------- --------
</TABLE>

(SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

32
- --------------------------------------------------------------------------------
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 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 most 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 ranging from 20 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 average 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, 1998, none
of these shares were issued or outstanding.

BUSINESS SEGMENT INFORMATION: In 1998, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The "operating" approach required by SFAS
No. 131 supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise," which focused on an "industry segment" approach. No significant
change in disclosure was required by the Company as a result of the adoption of
SFAS No. 131.

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, 1998 and 1997, reserves were $1,971,000 and
$1,745,000, respectively. Adjustments to the reserve accounts and costs
which were directly expensed for environmental remediation matters resulted
in charges to the income statements for 1998, 1997, and 1996 of $169,000,
$896,000, and ($181,000), net of third party reimbursements totaling
$186,000, $515,000, and $439,000, for 1998, 1997, and 1996, 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.

CONTINUED

33
- --------------------------------------------------------------------------------
<PAGE>

NOTE 2 - BUSINESS ACQUISITIONS AND DISPOSITIONS

On June 4, 1998, the Company formed Bemis Europe Holdings, S.A. to acquire
the Techy group, a European manufacturer of flexible packaging. The
acquisition, which was effective on June 30, 1998, and was accounted for under
the purchase method of accounting, added manufacturing and sales locations in
Belgium, France, and the United Kingdom. Approximately $11.3 million was paid
at closing to acquire 100% control.

Effective February 1, 1998, the Company purchased a one-third interest in a
newly formed Brazilian joint venture, ITAP/Bemis Ltda. for $38.9 million. This
joint venture between the Company and Dixie Toga, S.A., the largest supplier of
flexible packaging in South America, creates an organization that is strong in
market knowledge and presence to serve the needs of the South American
marketplace. Since Bemis did not purchase a controlling interest in the
company, this investment and future earnings are being recorded on the equity
basis of accounting.

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 distribution
channel 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, with a strong emphasis on disposable diaper
packaging and other sanitary products. 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
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.

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

NOTE 3 - RESTRUCTURING OF OPERATIONS

During the second quarter of 1997, the Company announced the reorganization
of its paper products operations 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 operating 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 was expected to result in the elimination of 289
jobs in the U.S. in conjunction with the closing of two manufacturing
facilities. Other costs associated with the integration of equipment, business,
and people from closed facilities into the remaining business units was expensed
as incurred. At the close of the project, actual employee reductions totaled 278
with 11 employee relocations.

Both manufacturing facility closures and the realignment of the business
organization were completed as of the end of 1998. Of the $7.8 million
estimated restructuring expense, actual cash cost was $4.8 million and total
non-cash cost was $2.5 million. The remaining $.5 million reserve was restored
to income in 1998, since the project was completed.

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

Actual Employee
Reductions-1998 102 18 120

Employee Relocations 2 9 11
--- -- ---
Cumulative Total 239 50 289
--- -- ---
--- -- ---
</TABLE>
CONTINUED

34
- --------------------------------------------------------------------------------
<PAGE>

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)
1998 Reserve charges .................. 2,339 2,024 1,864 6,227 4,227 2,000
------- ------- ------- ------- ------- -------
Reserve balance at December 31, 1998 .. $ (314) $ 749 $ (944) $ (509)(A) $(1,457) $ 948
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
(A) Restored to income in the fourth quarter of 1998.

NOTE 4 - INVENTORIES

The Company utilizes the LIFO method of inventory valuation for most
domestic inventories. Approximately 77 percent of the December 31, 1998, and 81
percent of the December 31, 1997, 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:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997
- ---------------------------------------------------------------
<S> <C> <C>
Raw materials and supplies ........... $ 87,242 $ 101,104
Work in process and finished goods ... 154,518 166,443
--------- ---------
241,760 267,547
Excess of current cost
over LIFO inventory value ............ (29,147) (45,971)
--------- ---------
Total inventories .................... $ 212,613 $ 221,576
--------- ---------
--------- ---------
</TABLE>

NOTE 5 - PENSION PLANS

Total pension expense in 1998, 1997, and 1996 was $3,525,000, $8,351,000,
and $9,912,000, 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 $733,000 in
1998, $688,000 in 1997, and $1,390,000 in 1996. 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 1998, 1997, and 1996
totaled $1,267,000, $1,186,000, and $1,114,000, 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.

Net periodic pension cost for defined benefit plans included the
following components:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the year ................. $ 7,575 $ 6,634 $ 6,320
Interest cost on projected
benefit obligation .............. 17,891 17,622 16,443
Expected return on plan assets ...... (26,045) (20,796) (18,237)
Amortization of unrecognized
transition obligation ........... 1,060 1,216 1,327
Amortization of prior service cost .. 662 490 468
Recognized net (gain) or loss ....... (429) 444 278
-------- -------- --------
Net periodic pension cost ........... $ 714 $ 5,610 $ 6,599
-------- -------- --------
-------- -------- --------
</TABLE>

Changes in benefit obligation and plan assets, and a reconciliation of the
funded status at December 31, 1998 and 1997, are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997
- -----------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATIONS
- -----------------------------------------------------------------------
<S> <C> <C>
Benefit obligation at the
beginning of the year .................... $ 262,775 $ 255,465
Service cost ............................. 7,575 6,634
Interest Cost ............................ 17,891 17,622
Plan amendments .......................... 1,626 2,270
Curtailment (gain) or loss ............... 0 (2,504)
Special termination benefits ............. 336 0
Actuarial (gain) or loss ................. 13,069 (5,085)
Acquisition .............................. (11) 2,975
Benefits paid ............................ (15,519) (14,606)
Foreign currency exchange rate changes ... (90) 4
--------- ---------
Benefit obligation at the end of the year .... $ 287,652 $ 262,775
--------- ---------
--------- ---------
<CAPTION>
CHANGE IN PLAN ASSETS
- -----------------------------------------------------------------------
<S> <C> <C>
Fair value of plan assets at the
beginning of the year .................... $ 301,038 $ 248,730
Actual return on plan assets ............. 84,086 63,419
Acquisition .............................. 0 3,303
Employer contribution .................... 249 117
Benefits Paid ............................ (15,519) (14,606)
Foreign currency exchange rate changes ... (250) 75
--------- ---------
Fair value of plan assets at the end of the
year ..................................... $ 369,604 $ 301,038
--------- ---------
--------- ---------
<CAPTION>
RECONCILIATION OF FUNDED STATUS
- -----------------------------------------------------------------------
<S> <C> <C>
Funded status ................................. $ 81,952 $ 38,263
Unrecognized net (gain) or loss ............... (106,782) (63,138)
Unrecognized transition (asset) or obligation . 4,287 5,743
Unrecognized prior service cost ............... 7,027 6,064
--------- ---------
Accrued pension liability .................... $ (13,516) $ (13,068)
--------- ---------
--------- ---------
</TABLE>

CONTINUED

35
- --------------------------------------------------------------------------------
<PAGE>

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:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997
- ---------------------------------------------------------
<S> <C> <C>
Intangible asset ................... $ 749 $ 906
Prepaid tax ........................ 966 1,068
Pension liability .................. (3,238) (3,716)
------- -------
Reduction in stockholders' equity .. $(1,523) $(1,742)
------- -------
------- -------
</TABLE>

Presented below are the projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plan with accumulated
benefit obligations in excess of plan assets at December 31:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997
- ---------------------------------------------------------
<S> <C> <C>

Projected benefit obligation ....... $14,393 $12,539
Accumulated benefit obligation ..... 10,566 9,214
Fair value of assets ............... 0 0
</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 together with the expected long-term rate of return
on assets is presented below.

<TABLE>
<CAPTION>
1998 1997
- --------------------------------------------------------------------
<S> <C> <C>
Weighted-average discount rate .................. 6.75% 7.0%
Rate of increase in future compensation levels .. 5.25% 5.5%
Expected long-term rate of return on assets ..... 10.00% 9.4%
</TABLE>

NOTE 6 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company sponsors several defined benefit postretirement plans that
cover a majority of salaried and a portion of nonunion hourly 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.

Net periodic postretirement benefit costs for 1998, 1997, and
1996 included the following components:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997 1996
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned
during the year ......................... $ 195 $ 176 $ 151
Interest cost on accumulated
postretirement benefit obligation ....... 765 843 792
Amortization of prior service cost .......... 12 11 0
Recognized net (gain) or loss ............... (342) (340) (371)
----- ----- -----
Net periodic postretirement benefit cost .... $ 630 $ 690 $ 572
----- ----- -----
----- ----- -----
</TABLE>

For measurement purposes, a 9.0 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1999; the rate was
assumed to decrease gradually to 5.5 percent by the year 2003 and remain at that
level thereafter. The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 6.75 percent in 1998 and 7.0
percent in 1997.

Changes in benefit obligations and plan assets, and a reconciliation of the
funded status at December 31, 1998 and 1997, are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997
- ----------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATIONS
- ----------------------------------------------------------------------
<S> <C> <C>
Benefit obligation at the
beginning of the year .................... $ 11,373 $ 12,345
Service cost ............................. 195 176
Interest Cost ............................ 765 843
Actuarial (gain) or loss ................. 781 (822)
Benefits paid ............................ (880) (1,169)
-------- --------
Benefit obligation at the end of the year .... $ 12,234 $ 11,373
-------- --------
-------- --------
<CAPTION>
CHANGE IN PLAN ASSETS
- ----------------------------------------------------------------------
<S> <C> <C>
Fair value of plan assets at the
beginning of the year .................... $ 0 $ 0
Employer contribution .................... 880 1,169
Benefits Paid ............................ (880) (1,169)
-------- --------
Fair value of plan assets at the end of the
year ..................................... $ 0 $ 0
-------- --------
-------- --------
<CAPTION>
RECONCILIATION OF FUNDED STATUS
- ----------------------------------------------------------------------
<S> <C> <C>
Funded status ................................ $ 12,234 $ 11,373
Unrecognized net (gain) or loss .............. (4,117) (5,240)
Unrecognized prior service cost .............. 103 114
-------- --------
Accrued postretirement benefit liability ..... $(16,248) $(16,499)
-------- --------
-------- --------
</TABLE>

The health care cost trend rate assumption has a significant effect on the
amounts reported. A one percentage point change in assumed health care trends
would have the following effects:

<TABLE>
<CAPTION>
1 Percentage 1 Percentage
Point Increase Point Decrease
- ----------------------------------------------------------------------
<S> <C> <C>
Effect on total of service and
interest cost components ....... $ 103,000 $ (86,000)
Effect on postretirement
benefit obligation ............. $1,029,000 $ (900,000)
</TABLE>

CONTINUED

36
- --------------------------------------------------------------------------------
<PAGE>

NOTE 7 - STOCK OPTION AND INCENTIVE PLANS

Since 1987, the Company's stock option and stock award plans have provided
for the issuance of up to 4,400,000 shares of common stock to key employees. As
of December 31, 1998, 1997, and 1996, respectively, 922,179, 1,025,501, and
1,657,447 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, 1998, fourteen participants held 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 $24.32
per share.

Details of the stock option plans at December 31, 1998, 1997, and 1996,
are:
<TABLE>
<CAPTION>
Numbers Per Share Option Weighted - Average
of Shares Price Range Price Per Share
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at December 31, 1995 . 889,766 $ 5.75 - $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
Exercised ..................... (39,756) 18.72 - 24.63 20.17
- -----------------------------------------------------------------------------------------
Outstanding at December 31, 1998 .. 1,140,127 $ 12.63 - 45.03 $ 24.32
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Exercisable at December 31, 1998 .. 955,088 $ 12.63 - 45.03 $ 21.44
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>

In 1994, the Company adopted a Stock Incentive Plan for certain key
executive employees. Since its adoption, all of the grants of either stock
options or performance units (commonly referred to as restricted stock) have
been made under this plan. Distribution of the performance units is normally
made in the form of shares of Bemis common stock on a one for one basis.
Distribution of the shares will normally be made not less than four years nor
more than six years from the date of the performance unit grant. All
performance units 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 on
outstanding performance units equal to the dividend on Bemis common stock. The
cost of the awards is charged to income over the period of the grant:
$7,012,000 was expensed in 1998, $4,230,000 in 1997, and $4,291,000 in 1996.

Details of the stock award plan at December 31, 1998, 1997, and 1996, are:

<TABLE>
<CAPTION>
Number
of Shares
- -------------------------------------------------
<S> <C>
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
Granted ....................... 185,438
Paid .......................... (626,399)
Canceled ...................... (82,116)
---------
Outstanding at December 31, 1998 .. 1,052,157
---------
---------
</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 1998, 1997, and 1996
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>
1998 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings-
as reported ........ $ 111,432,000 $ 107,584,000 $ 101,081,000

Net earnings-
pro forma .......... $ 109,185,000 $ 106,528,000 $ 99,944,000

Diluted earnings
per share-
as reported ........ $ 2.09 $ 2.00 $ 1.90

Diluted earnings
per share-
pro forma .......... $ 2.05 $ 1.98 $ 1.88
Dividend yield ......... 2.0% 1.9% 2.2%
Expected volatility .... 27.1% 27.0% 27.3%
Risk-free interest rate. 7.0% 7.0% 7.0%
Expected lives ......... 5.9 YEARS 9.0 years 9.1 years
</TABLE>

The fair value of each grant made in 1998, 1997, or 1996 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.

CONTINUED

37
- --------------------------------------------------------------------------------
<PAGE>

NOTE 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 $13,095,000 in 1998, $14,129,000 in 1997, and $9,664,000 in 1996.

The present values of minimum future obligations shown in the
following chart are calculated based on interest rates ranging from 11-1/4
percent to 23-3/4 percent determined to be applicable at the inception of the
lease. Interest expense on the outstanding obligations under capital
leases was $31,000 in 1998, $2,000 in 1997, and $2,000 in 1996.

Minimum future obligations on leases in effect at December 31,
1998, are:

<TABLE>
<CAPTION>
Capital Operating
(IN THOUSANDS OF DOLLARS) Leases Leases
- -----------------------------------------------------------------
<S> <C> <C>
1999 ..................................... $ 94 $10,440
2000 ..................................... 2 6,928
2001 ..................................... 0 4,620
2002 ..................................... 0 2,529
2003 ..................................... 0 2,033
-------
Thereafter ................................ 0 3,484
------- -------
Total minimum obligations ................. 96 $30,034
-------
-------
Less amount representing interest ......... 9
-------
Present value of net minimum obligations .. 87
Less current portion ...................... 83
-------
Long-term obligations ..................... $ 4
-------
-------
</TABLE>

NOTE 9 - LONG-TERM DEBT

Long-term debt maturing in years 1999 through 2002 is $2,946,000,
$1,237,000, $8,688,000, and $720,000, respectively.

Under the terms of a revolving credit agreement with seven banks, the
Company may borrow up to $327,000,000 through August 1, 2003. The
Company must pay a facility fee ranging from 6/10 of 1 percent to 8/10 of 1
percent annually on the entire amount of the commitment. There were no
borrowings outstanding under this agreement at December 31, 1998. Debt
consisted of the following at December 31,

(IN THOUSANDS OF DOLLARS) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Commercial paper payable through 1999 at an
interest rate of 5.2%(1) ............................. $252,000 $199,000
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 4.2% to 5.4% ............... 15,500 15,500
Debt of subsidiary companies payable
through 2007 at interest rates of 4.1% to 9.3% ....... 6,722 4,214
Obligations under capital leases ......................... 87 250
-------- --------
374,309 318,964
Less current portion ..................................... 2,946 2,173
-------- --------
$371,363 $316,791
-------- --------
-------- --------
</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, 1998, was 5.2 percent. The maximum outstanding during 1998 was
$286,000,000, and the average outstanding during 1998 was $251,436,000. The
weighted-average interest rate during 1998 was 5.6 percent.

NOTE 10 - INCOME TAXES

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. income before income taxes ................................. $ 166,819 $ 154,937 $ 143,149
Non-U.S. income before income taxes ............................. 17,288 24,273 23,468
Consolidating eliminations ...................................... (2,175) (4,226) (3,836)
--------- --------- ---------
Income before income taxes ...................................... $ 181,932 $ 174,984 $ 162,781
--------- --------- ---------
--------- --------- ---------
Income tax expense consists of the following components:
Current tax expense
U.S. Federal ............................................ $ 44,009 $ 47,237 $ 40,922
Foreign ................................................. 3,413 6,697 6,903
State and local ......................................... 7,535 7,206 6,451
--------- --------- ---------
Total current tax expense ........................... 54,957 61,140 54,276
--------- --------- ---------
Deferred (prepaid) tax expense:
U.S. Federal ............................................ 12,065 4,179 6,937
Foreign ................................................. 1,721 1,387 (306)
State and local ......................................... 1,757 694 793
--------- --------- ---------
Total deferred (prepaid) tax expense ................ 15,543 6,260 7,424
--------- --------- ---------
Total income tax expense ............................ $ 70,500 $ 67,400 $ 61,700
--------- --------- ---------
--------- --------- ---------
</TABLE>

CONTINUED

38
- --------------------------------------------------------------------------------
<PAGE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below.
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to
allowances for returns and doubtful accounts ... $ 4,574 $ 4,443 $ 5,410
Inventories, principally due to additional
costs inventoried for tax purposes pursuant
to the Tax Reform Act of 1986 .................. 4,646 4,766 7,392
Employee compensation and benefits accrued
for financial reporting purposes ............... 15,115 15,714 13,537
Restructuring costs................................. 2,694
Other .............................................. 1,687 2,165 2,176
-------- -------- --------
Deferred tax assets (included in prepaid
expenses and deferred charges) ................. $ 26,022 $ 29,782 $ 28,515
-------- -------- --------
-------- -------- --------
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation, capitalized
interest, and capitalized overhead ............. $ 90,087 $ 79,645 $ 73,772
Noncurrent employee compensation and benefits
accrued for financial reporting purposes ....... (16,127) (16,936) (16,326)
Other .............................................. 2,244 1,357 (785)
-------- -------- --------
Deferred tax liabilities ........................... $ 76,204 $ 64,066 $ 56,661
-------- -------- --------
-------- -------- --------
</TABLE>

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

(IN THOUSANDS OF DOLLARS) 1998 1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
% 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 ......... $ 63,676 35.0% $61,244 35.0% $ 56,973 35.0%

Increase (decrease) in taxes resulting from:
State and local income taxes net
of federal income tax benefit ............. 6,040 3.3 5,135 2.9 4,709 2.9

Foreign tax rate differential ............. (1,113) (0.6) (471) (0.3) (1,719) (1.1)

Minority interest ......................... 1,546 0.9 1,908 1.1 1,647 1.0

Miscellaneous items ....................... 351 0.2 (416) (0.2) 90 0.1
-------- ----- -------- ----- -------- -----
Actual income tax expense ..................... $ 70,500 38.8% $ 67,400 38.5% $ 61,700 37.9%
-------- ----- -------- ----- -------- -----
-------- ----- -------- ----- -------- -----
</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
$111,996,000 of undistributed earnings of foreign subsidiaries because those
earnings are considered to be permanently reinvested in the operation of those
subsidiaries. It is not practicable to estimate the amount of tax that might be
payable on the eventual remittance of such earnings.

CONTINUED

39
- --------------------------------------------------------------------------------
<PAGE>

NOTE 11- SEGMENTS OF BUSINESS

The Company's business activities are organized around its
two principal business segments, Flexible Packaging and Pressure Sensitive
Materials. Both internal and external reporting conform to this organizational
structure with no significant differences in accounting policies applied. The
Company evaluates the performance of its segments and allocates resources to
them based on operating profit which is defined as profit
before general corporate expense, interest expense, income taxes, and minority
interest. While there are similarities in selected technology and
manufacturing processes utilized, notable differences exist in products,
application of products, and customer base. Products produced within the
Flexible Packaging business include high barrier, polyethylene, and
paper products for food, medical, personal care products, fertilizers, seeds,
chemicals, pet food, and minerals. Products produced within the Pressure
Sensitive Materials business segment include film, paper, and metalized plastic
film printing stocks used for primary package labeling, promotional decoration,
bar code inventory control labels, and laser printing for administrative office
and promotional applications. This segment also includes micro-thin film
adhesives used in delicate electronic parts assembly and graphic films for
decorative signage. A summary of the Registrant's
business activities reported by its two business segments follows:

BUSINESS SEGMENTS

<TABLE>
<CAPTION>
(IN MILLIONS OF DOLLARS) 1998 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES TO UNAFFILIATED CUSTOMERS:
Flexible Packaging .................. $ 1,368.4 $ 1,398.6 $ 1,189.8
Pressure Sensitive Materials ........ 480.0 479.7 467.9

INTERSEGMENT SALES:
Flexible Packaging .................. (0.2) (0.9) (1.8)
Pressure Sensitive Materials ........ (0.2) (0.2) (0.5)
---------- ---------- ----------
Total ........................... $ 1,848.0 $ 1,877.2 $ 1,655.4
---------- ---------- ----------
---------- ---------- ----------

OPERATING PROFIT AND PRETAX PROFIT:
Flexible Packaging .................. $ 174.1 $ 152.2 $ 139.1
Pressure Sensitive Materials ........ 50.1 67.8 59.8
---------- ---------- ----------
Total operating profit(1) ....... 224.2 220.0 198.9

General corporate expenses .......... (16.0) (20.7) (18.0)
Interest expense .................... (21.9) (18.9) (13.4)
Minority interest in net income ..... (4.4) (5.4) (4.7)
---------- ---------- ----------
Income before income taxes .............. $ 181.9 $ 175.0 $ 162.8
---------- ---------- ----------
---------- ---------- ----------
IDENTIFIABLE ASSETS:
Flexible Packaging .................. $ 1,123.2 $ 1,030.0 $ 841.6
Pressure Sensitive Materials ........ 282.0 285.1 271.4
---------- ---------- ----------
Total identifiable assets(2)..... 1,405.2 1,315.1 1,113.0
Corporate assets(3) ................. 47.9 47.5 55.8
---------- ---------- ----------
Total ........................... $ 1,453.1 $ 1,362.6 $ 1,168.8
---------- ---------- ----------
---------- ---------- ----------
DEPRECIATION AND AMORTIZATION:
Flexible Packaging .................. $ 69.5 $ 62.3 $ 52.1
Pressure Sensitive Materials ........ 18.6 15.6 12.9
Corporate ........................... .8 1.0 1.2
---------- ---------- ----------
Total ........................... $ 88.9 $ 78.9 $ 66.2
---------- ---------- ----------
---------- ---------- ----------
EXPENDITURES FOR PROPERTY
AND EQUIPMENT:
Flexible Packaging .................. $ 115.7 $ 139.3 $ 66.1
Pressure Sensitive Materials ........ 22.1 25.5 43.9
Corporate ........................... 2.0 2.7 2.0
---------- ---------- ----------
Total ........................... $ 139.8 $ 167.5 $ 112.0
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

OPERATIONS BY GEOGRAPHIC AREAS

<TABLE>
<CAPTION>
(IN MILLIONS OF DOLLARS) 1998 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES TO UNAFFILIATED CUSTOMERS:(4)
United States ....................... $ 1,575.4 $ 1,615.3 $ 1,408.8
Canada .............................. 64.4 61.4 54.5
Europe .............................. 192.8 193.7 187.6
Other ............................... 15.4 6.8 4.5
---------- ---------- ----------
Total ........................... $ 1,848.0 $ 1,877.2 $ 1,655.4
---------- ---------- ----------
---------- ---------- ----------
IDENTIFIABLE ASSETS:
United States ....................... $ 1,143.1 $ 1,122.7 $ 939.8
Canada .............................. 28.5 28.0 28.6
Europe .............................. 195.2 160.9 141.7
Other ............................... 38.4 3.5 2.9
---------- ---------- ----------
Total ........................... $ 1,405.2 $ 1,315.1 $ 1,113.0
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

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

(2) IDENTIFIABLE ASSETS BY BUSINESS SEGMENT 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.

(4) NET SALES ARE ATTRIBUTED TO COUNTRIES BASED ON THE LOCATION OF THE
COMPANY'S MANUFACTURING OR SELLING OPERATION.

CONTINUED

40
- --------------------------------------------------------------------------------
<PAGE>

NOTE 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.

NOTE 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:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) 1998 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales of consolidated foreign subsidiaries ... $277,572 $262,241 $246,405
Net income of consolidated foreign subsidiaries .. 11,456 14,850 15,002
Foreign earnings in excess of amounts received ... 9,281 11,706 11,167
Equity in net assets ............................. 136,330 117,500 105,200
Equity in total assets ........................... $211,553 $185,450 $168,185
</TABLE>

NOTE 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, 1998 and 1997, the Company had outstanding forward foreign currency exchange
contracts aggregating $19,736,000 and $19,144,000, 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 $26,000 loss at December 31, 1998, and a
$120,000 loss at December 31, 1997, had outstanding contracts been settled at
those respective dates.

At December 31, 1998 and 1997, 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 $384,563,000 and $325,395,000
at December 31, 1998 and 1997, 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
$4,275,000 at December 31, 1998 and 1997, 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. The
Company has a loan due from ITAP/Bemis Ltda, a flexible packaging joint venture
in Brazil in which the Company holds a one-third interest, for $7,000,000. The
loan is denominated in U.S. dollars with a 10 percent interest rate compounded
annually. The principal and interest totaling $7,700,000 are due one year from
the loan date which was October 1, 1998. This is the only significant
concentration of credit risk as of December 31, 1998. There were no significant
concentrations of credit risk as of December 31, 1997.

CONTINUED

41
- --------------------------------------------------------------------------------
<PAGE>

NOTE 15 - EARNINGS PER SHARE COMPUTATIONS

<TABLE>
<CAPTION>
For Years Ended
December 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
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 ..... $111,432,000 53,029,779 $ 2.10 $107,584,000 53,010,999 $2.03 $101,081,000 52,522,016 $1.92

Dilutive effects
of stock options
and stock awards
net of windfall
tax benefits ..... 293,925 868,949 730,234
------------------------------------ ------------------------------------- ----------------------------------
Diluted EPS
Income available
to common
stockholders plus
assumed
conversions....... $111,432,000 53,323,704 $ 2.09 $107,584,000 53,879,948 $2.00 $101,081,000 53,252,250 $1.90
------------------------------------ ------------------------------------- ----------------------------------
------------------------------------ ------------------------------------- ----------------------------------
</TABLE>

NOTE 16 - QUARTERLY FINANCIAL INFORMATION - UNAUDITED

<TABLE>
<CAPTION>
(IN MILLIONS
OF DOLLARS
EXCEPT EPS) Net Sales Gross Profit Net Income Diluted Earnings Per Share
- -----------------------------------------------------------------------------------------------------------------------------
% % % %
Quarter 1998 1997 Change 1998 1997 Change 1998 1997 Change 1998 1997 Change
- --------- ---------------------------- ------------------------ ------------------------ --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First ... $ 451.5 $ 475.5 (5%) $ 90.8 $ 95.4 (5%) $ 21.9 $ 19.9 10% $ .41 $ .37 11%
Second .. 470.6 481.3 (2) 105.3 102.2 3 30.2 28.0 8 .56 .52 8
Third ... 465.5 465.5 -- 100.4 93.0 8 27.8 25.4 9 .52 .47 11
Fourth .. 460.4 454.9 1 110.1 106.3 4 31.5 34.3 (8) .60 .64 (6)
--------------------------- ------------------------ ------------------------ -------------------------
Total ... $1,848.0 $1,877.2 (2%) $406.6 $396.9 2% $111.4 $107.6 4% $2.09 $2.00 5%
--------------------------- ------------------------ ------------------------ -------------------------
--------------------------- ------------------------ ------------------------ -------------------------
</TABLE>

42
- --------------------------------------------------------------------------------

<PAGE>

EXHIBIT 21 - PARENT AND SUBSIDIARIES OF THE REGISTRANT

The Company has no parent. The following were subsidiaries of the Company
as of December 31, 1998.

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 Europe Holdings, S.A. Belgium 100%
Techy Marketing S.A. Belgium 100%
Techy Bemis S.A. Belgium 78%
Techy Bemis S.A. Belgium 22%
Techy France E.U.R.L. France 100%

Bemis Export Company Ltd. Jamaica 80%

Bolsas Bemis S.A. de C.V. Mexico 51%

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%
Perfecseal (Asia
Pacific) Sdn Bhd Malaysia 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%

CONTINUED

- 19 -
<PAGE>

<CAPTION>
Percentage of
Jurisdiction Voting Securities
of Owned By
Name Organization Immediate Parent
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
MacKay, Inc. Kentucky 100%

Milprint, Inc. Wisconsin 100%

Morgan Adhesives Company Ohio 87%

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 E.U.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 51%

Morgan Adhesives America do Sul, Ltda. Brazil 100%

CONTINUED

- 20 -

<PAGE>

Percentage of
Jurisdiction Voting Securities
of Owned By
Name Organization Immediate Parent
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Paramount Packaging Corporation Delaware 100%

Bemis Packaging Limited United Kingdom 100%

Paramount Packaging Canada, Inc. Canada 100%

Bemis Custom Products
Shelbyville, Inc. Tennessee 100%

Bemis Custom Products, Inc. Texas 100%

PPC Royalty, Inc. Delaware 100%

Pervel Industries, Inc. Delaware 100%

</TABLE>

- 21 -

<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

- 22 -

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31,1998, 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 23,738
<SECURITIES> 0
<RECEIVABLES> 246,676
<ALLOWANCES> 0
<INVENTORY> 212,613
<CURRENT-ASSETS> 517,939
<PP&E> 1,152,648
<DEPRECIATION> 412,547
<TOTAL-ASSETS> 1,453,054
<CURRENT-LIABILITIES> 242,788
<BONDS> 371,363
0
0
<COMMON> 5,906
<OTHER-SE> 664,901
<TOTAL-LIABILITY-AND-EQUITY> 1,453,054
<SALES> 1,848,004
<TOTAL-REVENUES> 1,848,004
<CGS> 1,441,391
<TOTAL-COSTS> 1,441,391
<OTHER-EXPENSES> 332
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,866
<INCOME-PRETAX> 181,932
<INCOME-TAX> 70,500
<INCOME-CONTINUING> 111,432
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,432
<EPS-PRIMARY> 2.10
<EPS-DILUTED> 2.09

</TABLE>