The information in this Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Company's condensed consolidated financial statements and related notes set forth in Item 1 of Part I of this quarterly report on Form 10-Q, Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 7 of Part II of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and the Company's consolidated financial statements and related notes set forth in Item 8 of Part II of that Form 10-K. See Part II, Item 1A, "Risk Factors" and "Cautionary Notice Regarding Forward-Looking Statements," below, for a description of risks that the Company faces and important factors that the Company believes could cause actual results to differ materially from those in the Company's forward-looking statements. All amounts and percentages are approximate due to rounding and all dollars are in millions.

Recent Events

On July 19, 2009, the Company redeemed all of its $431.3 million of 3% Convertible Senior Notes due 2033. The Company used net proceeds from its issuance of $400.0 million 7.875% Senior Notes on June 18, 2009 and available cash to redeem the 3% Convertible Senior Notes.

See Note 10, "Debt and Credit Facilities," of Notes to Condensed Consolidated Financials for further information.

During the nine months ended September 30, 2009, the Company declared and paid quarterly cash dividends of $0.12 per common share in each quarter. The Company used available cash totaling $57.1 million to pay these quarterly cash dividends.

On October 22, 2009, the Company's Board of Directors declared a quarterly cash dividend of $0.12 per common share. This dividend is payable on December 18, 2009 to stockholders of record at the close of business on December 4, 2009. The estimated amount of this dividend payment is $19.1 million based on approximately 159.0 million shares of the Company's common stock issued and outstanding as of October 31, 2009.

Highlights of Financial Performance

    Highlights of the Company's financial performance in the third quarter and
first nine months of 2009 compared with the same period of 2008 were:


                           Third Quarter of         %          First Nine Months of        %
                           2009        2008       Change         2009         2008       Change
Net sales:
U.S.                     $   497.9   $   533.2         (7 )%  $   1,464.8   $ 1,632.3        (10 )%
   As a % of total net
   sales                      46.1 %      43.7 %                     47.3 %      44.4 %
International                582.0       685.8        (15 )       1,631.6     2,042.9        (20 )
   As a % of total net
   sales                      53.9 %      56.3 %                     52.7 %      55.6 %

Total net sales          $ 1,079.9   $ 1,219.0        (11 )   $   3,096.4   $ 3,675.2        (16 )

Gross profit             $   311.1   $   293.7          6     $     884.9   $   929.0         (5 )
   As a % of total net
   sales                      28.8 %      24.1 %                     28.6 %      25.3 %
Marketing,
administrative and
development expenses         180.0       193.2         (7 )         515.5       582.9        (12 )
   As a % of total net
   sales                      16.7 %      15.8 %                     16.6 %      15.9 %
Restructuring and
other charges                  0.9        61.3        (99 )           1.2        63.8        (98 )

Operating profit         $   130.2   $    39.2          #     $     368.2   $   282.3         30

   As a % of total net
   sales                      12.1 %       3.2 %                     11.9 %       7.7 %
Net earnings available
to common stockholders   $    60.6   $     9.2          #     $     179.2   $   132.6         35 %

Net earnings per
common share:
   Basic                 $    0.38   $    0.06                $      1.13   $    0.83

   Diluted               $    0.34   $    0.05                $      0.99   $    0.73

The Company's consolidated unit volume results, detailed below, for both the third quarter and the first nine months of 2009 were lower than comparable periods primarily reflecting weak global economic conditions. The Company's Protective Packaging segment and its Specialty Materials business, which combined represent approximately 32% of the Company's consolidated net sales in the period, were the most impacted by the recessionary conditions. These lower unit volumes were judged by management to be consistent with the Company's peers in each segment and with economic indicators of customer demand in each segment and geographic region. The Company continues to believe that the unit volume declines experienced in these businesses do not represent a shift in the Company's competitiveness or in the quality of its products and solutions.

Comparing the third quarter of 2009 with the second quarter of 2009, or sequentially, the Protective Packaging segment and Specialty Materials business experienced a combined 8% reported increase in net sales. Excluding a 3% impact of foreign currency translation, these businesses recorded a 5% increase in net sales. This increase reflected a combination of a seasonal lift, modest customer inventory restocking and, to a lesser extent, new product placements. Sequentially, the Company's Food Packaging and Food Solutions segments experienced a combined 4% reported increase in net sales; however, excluding a 4% impact of foreign currency translation, net sales of these segments were flat, which reflected regional animal production rates and lower meat consumption primarily in some European countries.

The Company's product price/mix results declined sequentially, and in the third quarter of 2009 compared with the same period of 2008, which reflected selected selling price reductions in some areas of the business attributable to the impact of lower input costs, the timing of price increases in 2008 and, to a lesser extent, competitive situations. These declines were partially offset by the benefits of the Company's pricing initiatives in 2008 primarily realized in the first half of 2009.

See the discussion below for further details about the changes in net sales by the Company's segment reporting structure and by geographic region and operating profit by the Company's segment reporting structure and further details of the material factors that contributed to the changes.

Net Sales by the Company's Segment Reporting Structure

    The following table presents the Company's net sales by the Company's
segment reporting structure:


                            Third Quarter of         %          First Nine Months of        %
                            2009        2008       Change         2009         2008       Change
 Net sales:
   Food Packaging         $   463.4   $   479.7         (3 )%  $   1,336.1   $ 1,466.9         (9 )%
      As a % of total
      net sales                42.9 %      39.4 %                     43.1 %      39.9 %
   Food Solutions             229.6       255.9        (10 )         655.0       751.0        (13 )
      As a % of total
      net sales                21.3 %      21.0 %                     21.2 %      20.4 %
   Protective Packaging       306.1       377.2        (19 )         868.0     1,141.7        (24 )
      As a % of total
      net sales                28.3 %      30.9 %                     28.0 %      31.1 %
   Other                       80.8       106.2        (24 )         237.3       315.6        (25 )
      As a % of total
      net sales                 7.5 %       8.7 %                      7.7 %       8.6 %

 Total                    $ 1,079.9   $ 1,219.0        (11 )%  $   3,096.4   $ 3,675.2        (16 )%

The following tables present the components of change in net sales for the third quarter of 2009 and first nine months of 2009 as compared with the same periods of 2008. The Company also presents the change in net sales excluding the impact of foreign currency translation, a non-U.S. GAAP measure, which the Company defines as "constant dollar." The Company believes using constant dollar comparisons aids in the comparability with other periods.

                                Food                Food              Protective                                   Total
Third Quarter of 2009        Packaging            Solutions            Packaging              Other               Company
Volume-Units              $  25.0      5.2 %  $  (3.9 )    (1.5 )% $ (44.5 )   (11.8 )% $ (26.3 )   (24.8 )% $  (49.7 )    (4.1 )%
Volume-Acquired
businesses, net of
dispositions                    -        -          -         -          -         -       (0.2 )    (0.1 )      (0.2 )       -
Product price/mix            (5.4 )   (1.1 )     (5.4 )    (2.1 )    (12.4 )    (3.3 )      5.6       5.1       (17.6 )    (1.4 )
Foreign currency
translation                 (35.9 )   (7.5 )    (17.0 )    (6.7 )    (14.2 )    (3.7 )     (4.5 )    (4.2 )     (71.6 )    (5.9 )

    Total Change (U.S.
    GAAP)                 $ (16.3 )   (3.4 )% $ (26.3 )   (10.3 )% $ (71.1 )   (18.8 )% $ (25.4 )   (24.0 )% $ (139.1 )   (11.4 )%

Add: Foreign currency
translation               $  35.9      7.5 %  $  17.0       6.7 %  $  14.2       3.7 %  $   4.5       4.2 %  $   71.6       5.9 %

    Total constant
    dollar change
    (Non-U.S. GAAP)       $  19.6      4.1 %  $  (9.3 )    (3.6 )% $ (56.9 )   (15.1 )% $ (20.9 )   (19.8 )% $  (67.5 )    (5.5 )%

                                    Food                 Food               Protective                                   Total
First Nine Months of 2009         Packaging            Solutions            Packaging               Other               Company
Volume-Units                  $  (40.0 )   (2.7 )% $ (31.5 )    (4.2 )% $ (199.4 )   (17.5 )% $ (75.2 )   (23.8 )% $ (346.1 )    (9.4 )%
Volume-Acquired businesses,
net of dispositions                  -        -          -         -         2.2       0.2          -         -         2.2       0.1
Product price/mix                 50.4      3.4        6.9       0.9       (16.4 )    (1.4 )     14.8       4.6        55.7       1.5
Foreign currency
translation                     (141.2 )   (9.6 )    (71.4 )    (9.5 )     (60.1 )    (5.3 )    (17.9 )    (5.7 )    (290.6 )    (7.9 )

    Total Change (U.S.
    GAAP)                     $ (130.8 )   (8.9 )% $ (96.0 )   (12.8 )% $ (273.7 )   (24.0 )% $ (78.3 )   (24.9 )% $ (578.8 )   (15.7 )%

Add: Foreign currency
translation                   $  141.2      9.6 %  $  71.4       9.5 %  $   60.1       5.3 %  $  17.9       5.7 %  $  290.6       7.9 %

    Total constant dollar
    change (Non-U.S. GAAP)    $   10.4      0.7 %  $ (24.6 )    (3.3 )% $ (213.6 )   (18.7 )% $ (60.4 )   (19.2 )% $ (288.2 )    (7.8 )%

The strengthening of the U.S. dollar relative to foreign currencies contributed to the unfavorable foreign currency translation impact in both the third quarter and first nine months of 2009 as compared with the same periods in 2008.

The following net sales discussions below are on a constant dollar basis.

Food Packaging Segment Net Sales

Third Quarter 2009 compared with 2008

The $19.6 million, or 4%, increase in net sales in 2009 compared with 2008 was primarily due to:

º •
º an increase in unit volume in the United States of $28.2 million, or 14%;

partially offset by:

º •
º the unfavorable impact of product price/mix in the United States of $15.1 million, or 8%.

The increase in unit volume in the United States was primarily due to a favorable comparison to the third quarter of 2008 as customers purchased products in the second quarter of 2008 that would have normally been purchased in the third quarter of 2008. These purchases were made in advance of the Company's enterprise software launch in the United States on July 1, 2008. Also contributing to this increase, but to a lesser extent, was higher local meat production in this region during the third quarter of 2009.

The unfavorable impact of product price/mix in the United States was primarily due to selected selling price reductions on new and renewed contracts in the third quarter of 2009 for some Food Packaging products, which reflected lower input costs (as discussed in Cost of Sales below).

First Nine Months of 2009 compared with 2008

The $10.4 million, or 1%, increase in net sales in 2009 compared with 2008 was primarily due to:

º •
º the favorable impacts of product price/mix in Europe of $11.3 million, or 4%, and in the United States of $7.9 million, or 1%;

partially offset by:

º •
º decreases in unit volume in the United States of $12.5 million, or 2%, and in Europe of $16.8 million, or 5%.

The favorable impacts of product price/mix in Europe and the United States were primarily attributable to the timing of price increases in 2008.

The decreases in unit volume in the United States and Europe were primarily due to declines in local meat production during the first nine months of 2009 and, to a lesser extent, lower equipment sales, both of which reflected the continuing economic weakness in these regions.

Food Solutions Segment Net Sales

Third Quarter 2009 compared with 2008

The $9.3 million, or 4%, decrease in net sales in 2009 compared with 2008 was primarily due to a decline in unit volume in Europe of $11.0 million, or 10%, primarily due to the unfavorable impact of reduced meat consumption in some countries reflecting the continuing economic weakness in this region, which in turn resulted in lower sales of the Company's case-ready packaging products.

Also contributing to this decrease was an unfavorable impact of product price/mix in the United States of $4.0 million, or 4%, which was primarily due to selling price adjustments implemented in the third quarter of 2009 primarily for outsourced trays that have formula pricing terms. These price adjustments were implemented in response to lower input costs (as discussed in Cost of Sales below).

First Nine Months of 2009 compared with 2008

The $24.6 million, or 3%, decrease in net sales in 2009 compared with 2008 was primarily due to a decline in unit volume in Europe of $33.0 million, or 11%, partially offset by the favorable impact of product price/mix in this region of $9.4 million, or 3%. The decline in unit volume was primarily due to the unfavorable impact of reduced consumption of certain meats in some countries reflecting the continuing economic weakness in this region, which in turn resulted in lower sales of the Company's case-ready packaging products. The favorable impact of product price/mix was primarily attributed to the timing of price increases in 2008.

Protective Packaging Segment Net Sales

Third Quarter 2009 compared with 2008

The $56.9 million, or 15%, decrease in net sales in 2009 compared with 2008 was primarily due to declines in unit volumes in North America of $25.5 million, or 12%, and in Europe of $16.2 million, or 15%, which were principally attributable to continuing economic weakness in these regions, which were consistent with external manufacturing output and export and shipping trends.

First Nine Months of 2009 compared with 2008

The $213.6 million, or 19%, decrease in net sales in 2009 compared with 2008 was primarily due to declines in unit volumes in North America of $108.5 million, or 17%, and in Europe of $64.8 million, or 19%, which were principally attributable to the items mentioned above.

Other Net Sales

Third Quarter 2009 compared with 2008

The $20.9 million, or 20%, decrease in net sales in 2009 compared with 2008 was primarily due to declines in unit volumes in North America of $12.3 million, or 31%, and in Europe of $10.3 million, or 22%. The declines in unit volumes in North America and in Europe were primarily attributed to lower unit volumes for some of the Company's Specialty Materials products, which were principally the result of continuing economic weakness in these regions consistent with external manufacturing output and export and shipping trends.

First Nine Months of 2009 compared with 2008

The $60.4 million, or 19%, decrease in net sales in 2009 compared with 2008 was primarily due to declines in unit volumes in North America of $35.0 million, or 30%, and in Europe of $29.7 million, or 20%. The declines in unit volumes in North America and in Europe were primarily due to lower unit volumes in some of the Company's Specialty Materials products, which were principally attributable to the factors mentioned above.

     Net Sales by Geographic Region

    The following table shows net sales by geographic region:


                           Third Quarter of         %          First Nine Months of        %
                           2009        2008       Change         2009         2008       Change
 Net sales:
 U.S.                    $   497.9   $   533.2         (7 )%  $   1,464.8   $ 1,632.3        (10 )%
     As a % of total
     net sales                46.1 %      43.7 %                     47.3 %      44.4 %
 International               582.0       685.8        (15 )       1,631.6     2,042.9        (20 )
     As a % of total
     net sales                53.9 %      56.3 %                     52.7 %      55.6 %

 Total net sales         $ 1,079.9   $ 1,219.0        (11 )   $   3,096.4   $ 3,675.2        (16 )

By geographic region, the components of the decrease in net sales for the third quarter of 2009 compared with the same period of 2008 were as follows:

Third Quarter of 2009                     U.S.            International         Total Company
Volume-Units                        $  (6.7 )   (1.3 )% $  (43.0 )    (6.3 )% $  (49.7 )    (4.1 )%
Volume-Acquired businesses, net
of dispositions                           -        -        (0.2 )       -        (0.2 )       -
Product price/mix                     (28.6 )   (5.4 )      11.0       1.6       (17.6 )    (1.4 )
Foreign currency translation              -        -       (71.6 )   (10.4 )     (71.6 )    (5.9 )

          Total                     $ (35.3 )   (6.7 )% $ (103.8 )   (15.1 )% $ (139.1 )   (11.4 )%

The components of the decrease in net sales for the first nine months of 2009 compared with the same period of 2008 were as follows:

First Nine Months of 2009                 U.S.             International         Total Company
Volume-Units                       $ (158.8 )    (9.7 )% $ (187.3 )    (9.2 )% $ (346.1 )    (9.4 )%
Volume-Acquired businesses, net
of dispositions                         2.2       0.1           -         -         2.2       0.1
Product price/mix                     (10.9 )    (0.7 )      66.6       3.3        55.7       1.5
Foreign currency translation              -         -      (290.6 )   (14.2 )    (290.6 )    (7.9 )

           Total                   $ (167.5 )   (10.3 )% $ (411.3 )   (20.1 )% $ (578.8 )   (15.7 )%

Cost of Sales

    The following table shows the Company's cost of sales:


                            Third Quarter of        %         First Nine Months of        %
                             2009       2008      Change        2009         2008       Change
  Cost of sales            $   768.8   $ 925.3        (17 )  $   2,211.5   $ 2,746.2        (19 )
    As a % of net sales         71.2 %    75.9 %                    71.4 %      74.7 %

Third Quarter of 2009 compared with 2008

Excluding a favorable impact of foreign currency translation of $52.9 million, cost of sales would have decreased $103.6 million in 2009 compared with 2008. This decline was primarily due to the impact of lower unit volumes mentioned above as well as lower input costs, including lower average petrochemical-based raw material costs of approximately $60.0 million and lower freight and energy costs of approximately $14.0 million.

First Nine Months of 2009 compared with 2008

Excluding a favorable impact of foreign currency translation of $221.7 million, cost of sales would have decreased $313.0 million in 2009 compared with 2008. This decline was primarily due to the impact of lower unit volumes mentioned above as well as lower input costs, including lower average petrochemical-based raw material costs of approximately $170.0 million and lower freight and energy costs of approximately $30.0 million.

Also contributing to the decrease in cost of sales in both periods of 2009 compared with 2008 were realized total incremental benefits estimated to be approximately $10.0 million in the third quarter of 2009 and $30.0 million in the first nine months of 2009 from the Company's global manufacturing strategy and the 2008 cost reduction and productivity program.

Marketing, Administrative and Development Expenses

    The following table shows the Company's marketing, administrative and
development expenses:

                                             Third                      First Nine
                                          Quarter of          %          Months of          %
                                        2009      2008     Change     2009      2008      Change
Marketing, administrative and
development expenses                   $ 180.0   $ 193.2        (7 ) $ 515.5   $ 582.9        (12 )
    As a % of net sales                   16.7 %    15.8 %              16.6 %    15.9 %

Third Quarter of 2009 compared with 2008

Excluding a favorable impact of foreign currency translation of $9.4 million, these expenses would have decreased $3.8 million, which was primarily due to:

º •
º lower employee salary and benefits costs of approximately $6.0 million in 2009 primarily related to the reduction of headcount from the Company's 2008 cost reduction and productivity program; and

º •
º reduced expenses due to the favorable impact of expense control initiatives in 2009, including a decrease in travel and entertainment expenses of approximately $2.6 million.

These items were partially offset by higher accruals for management incentive compensation expenses of approximately $5.0 million in 2009 as a result of management's progress towards meeting its 2009 financial performance goals. This compares with lower accruals in 2008 as a result of the Company not being on track to meet its 2008 financial performance goals.

First Nine Months of 2009 compared with 2008

Excluding a favorable impact of foreign currency translation of $37.4 million, these expenses would have decreased $30.0 million, which was primarily due to:

º •
º lower employee salary and benefits costs of approximately $20.0 million in 2009 primarily related to the reduction of headcount from the Company's 2008 cost reduction and productivity program; and

º •
º reduced expenses due to the favorable impact of expense control initiatives in 2009, including a decrease in travel and entertainment expenses of approximately $13.2 million.

These items were partially offset by higher accruals for management incentive compensation expenses of approximately $11.0 million in 2009 as a result of management's progress towards meeting its 2009 financial performance goals. This compares with lower accruals in 2008 as a result of the Company not being on track to meet its 2008 financial performance goals.

Cost Reduction and Productivity Program and Global Manufacturing Strategy

Cost Reduction and Productivity Program

    In the third quarter of 2008, the Company implemented a cost reduction and
productivity program. The components of the restructuring accrual, which was
primarily for termination benefits, through September 30, 2009 and the accrual
balance remaining at September 30, 2009 related to this program are included in
the table below. The Company expects to incur additional modest costs associated
with this program in the remainder of 2009.

              Restructuring accrual at December 31, 2008    $  43.7
              Cash payments made during 2009                  (31.9 )
              Additional accrual for termination benefits       0.5
              Effect of changes in foreign currency rates      (0.4 )

              Restructuring accrual at September 30, 2009   $  11.9

The Company expects to pay $11.7 million of the accrual balance remaining at September 30, 2009 within the next 12 months. This amount is included in other current liabilities on the condensed consolidated balance sheet at September 30, 2009. The remaining accrual of $0.2 million is expected to be paid by the end of 2010 and is included in other liabilities on the condensed consolidated balance sheet at September 30, 2009.

See "Cost of Sales" and "Marketing, Administrative and Development Expenses" above, for a discussion of the benefits realized from this program in 2009.

Global Manufacturing Strategy

The Company's global manufacturing strategy, when fully implemented, will expand production in regions where demand for the Company's products and services has been growing significantly. At the same time, the Company is optimizing certain manufacturing platforms in North America and Europe into centers of excellence. The goals of this multi-year program are to expand capacity in growing markets, further improve the Company's operating efficiencies, and implement new technologies more effectively. By taking advantage of new technologies and streamlining production on a global scale, the Company expects to continue to enhance its profitable growth and its global leadership position and produce meaningful savings.

The Company announced the first phase of this multi-year global manufacturing strategy in July 2006. At the end of 2008, the construction phase of the program was substantially complete. The Company has realized approximately $25.0 million of benefits from this program for the full year 2008, and these benefits are expected to increase to annual benefits of $45.0 million in 2009 and to $55.0 million in 2010 and thereafter. The Company anticipates full year 2009 pre-tax charges related to this program to be approximately $20.0 million. The actual timing of future capital expenditures and related costs is subject to change due to a variety of factors that may . . .