Sealed Air Annual Report 2009

It’s not just what we make, Sealed Air Corporation it’s what we 2009 Annual Report make happen. SEALED AIR—2009 Annual Report INNOVATING for 50 Y E A RS QUICK FACTS OUR BUSINESS STRATEGIES FOUNDED—1960 in Hawthorne, NJ, USA • Innovation leadership with ongoing WORLD HEADQUARTERS—Elmwood Park, NJ, USA solution and service development NYSE—SEE • Growth in developing regions 2009 NET SALES—$4.2 billion • Focus on cash flow and return on assets 2009 NET EARNINGS—$244 million • Optimize processes and operations to maximize profitability EMPLOYEES—16,200 • Sustainability GLOBAL REACH—51 countries • Develop our people INNOVATOR—advanced material science, manufacturing processes, automation and integration TOTAL SYSTEMS APPROACH—service, materials, equipment & integration TOP 5 GROWTH AREAS 2009 NET SALES: By Geographic Region: By Business Area: 1—Developing regions 50% :: North America 43% :: Food Packaging 2—Advanced material science and automation 28% :: EMEA 28% :: Protective Packaging 3—Services and non-packaging applications 13% :: Asia-Pacific 21% :: Food Solutions 4—Food service applications 9% :: Latin America 8% :: Other 5—Medical and pharmaceutical applications Dear Fellow Stockholders: Despite the turmoil in the global economy in 2009, we maintained a balanced approach of focusing on both short- and long-term goals. We were diligent in our execution and resolve in achieving our 2009 operational and financial goals. We also remained focused on our longer-term strategies for sustainable growth, which include: • Staying focused on the customer; • Innovation leadership with ongoing solution and service development in both core and new market applications; • Capitalizing on growth in developing regions; • Focusing on cash flow and return on assets; • Driving efficiencies and productivity in our business to maximize profitability; • Sustainability in everything we do; and • Developing our people. During the year, we remained confident about our business model, our performance and our prospects. Our view is reinforced by our experience in emerging from economic downturns as a stronger organization, having a platform that is in place and optimized for more profitable and accelerated growth in developing regions, our solid cash flow generation, leading industry brands that are valued worldwide, extensive intellec- tual property, and a business driven by a diverse, talented and passionate team—16,200 strong. This year’s annual report theme, “It’s not just what we make, it’s what we make happen,” succinctly describes our business model and how it sets us apart in the marketplace: our innovative leadership, the positive impact our solutions have made in the world, and in the measurable value we have created for customers. It is especially fitting as we celebrate our 50th anniversary of incorporation and the 50th anniversary of the invention of our iconic Bubble Wrap® brand cushioning. This year’s highlighted achievements exemplify the benefits of a balanced approach: • Performed steadily in our food and medical businesses, which helped to partially offset volume declines in our industrial businesses due primarily to the difficult macroeconomic environment; • Innovated and launched over 25 new products and won several industry awards worldwide; • Streamlined our operations, reduced our cost structure and discretionary spending, and successfully operated our global network on a new, “one instance” SAP enterprise system; • Achieved record safety, quality and customer service performance levels; • Opened 2 new facilities, which concludes the construction phase of our Global Manufacturing Strategy, giving us a manufacturing network well-positioned for long-term growth in developing regions; • Increased our profitability with a 320 basis point year-over-year improvement in our gross margin and a 340 basis point year-over-year improvement in our operating margin; • Reported record free cash flow of $501 million1; • Continued to return value to stockholders through dividends and a reduction in net debt1; and • Recognized for best-in-class governance practices by GovernanceMetrics International®. Expanding Profitability We generated $4.2 billion in sales, and while we experienced a 12% decline versus the prior year (which includes 5% from foreign exchange), we saw sequential sales growth in the second half of the year across most of our businesses. The sales decline in 2009 primarily reflected an 8% decline in volumes, which was largely attributable to our industrial businesses who were most impacted by economic weakness. Despite the volume declines, we held our gross profit relatively steady, while increasing our gross margin by 320 basis points to 28.7%. We did achieve a 24% increase in operating profit, as well as a 340 basis point increase in our operating margin to 11.6% (or 12.0% on an adjusted basis)1—bringing us closer to our operating margin goal of 1) Please refer to the definition and reconciliation pages located before the presentation of the Form 10-K for reconciliations of non-U.S. GAAP financial measures. 1 15% by the 2012 to 2013 timeframe. These increases were driven by stabilized input costs and our successful management of price/mix, combined with $80 million of benefits from our global manufacturing strategy and cost reduction and productivity programs. Making a Global Impact Over the course of the year, we saw an accelerated rate of volume demand in our developing regions—with “BRIC” country sales improving 18% in the fourth quarter versus the prior year period, which includes 6% of foreign exchange. This growth expanded our developing region sales to 17% of our total net sales in that quarter. This growth continues our long term expansion into international markets where we see the growth of disposable incomes, urbanization and increased demand for higher quality, packaged foods as growth drivers for each of our businesses. Contributing to our growth in developing regions, were the three new green-field sites that we launched under our Global Manufacturing Strategy (GMS). This included the launch of our third and final site in Poland, in early 2009. This launch marks the completion of the construction phase of GMS, as well as bringing in-house the production of our Ethafoam® polyethylene foams for our specialty materials business. The benefits associated with these new sites, as well as the limited closures and consolidations among our existing platform, brought the program’s full benefit run-rate to $45 million in 2009, which we expect to increase to $55 million in 2010. Additionally, line expansions and technology upgrades in facilities in Brazil, Russia and Hungary continue to position us for profitable growth in these economies as we expect the recovery in developing regions to outpace advanced regions in the years ahead. Making a Difference with Innovation Our commitment to innovation did not waver in 2009. We launched over 25 new solutions, received ongoing industry recognition of our developments, and enjoyed a successful first full year in our new Americas Packforum® facility based in Atlanta, Georgia hosting over 200 customer visits and events. We remained focused on sustainability as a component of packaging solution development. We introduced our Ethafoam® HRC foam, which uses a minimum of 65% recycled content, as well as our new Cryovac® CT-301™ shrink film, which leverages a new proprietary and patent-pending manufacturing process that allows us to deliver film up to 50% thinner than comparable solutions, while maintaining and even exceeding performance metrics. Of course, these are only 2 of many packaging solutions that we launched this year— with many others highlighted in our 2009 Annual Review. Making It Happen through Supply Chain Excellence Our best-in-class supply chain organization continued to advance our operational and financial performance with the use of continuous improvement methodologies and by leveraging our one instance of SAP, which now covers 90% of our revenue worldwide. These efforts and investments resulted in a number of notable achievements: • Improved our quality performance by 7%; • Reduced our total recordable incident rate to 1.04 versus our goal of 1.40; • Reduced our inventory levels by $95 million; • Generated measurable benefits from our “cost to serve” analysis in our European food businesses by leveraging our one instance of SAP to reduce our costs and process complexities. This program is now being rolled out to other regions as part of our ongoing dedication to continuous improvement; 2 • Developed a proprietary, patent-pending new manufacturing technique that enables significant source reduction—used initially in our CT-301™ shrink film; and • Successfully launched 2 new facilities, expanded line capacity and upgraded technology in several others, while seamlessly consolidating or closing certain operations without service disruption. Generating Cash and Liquidity We generated a record $501 million in free cash flow in the year. This achievement was largely due to a $120 million improvement in working capital items and a $100 million reduction in capital expenditures following the completion of the construction phase of our GMS program. Additionally, we finished the year with approximately $700 million in cash and cash equivalents and approximately $700 million in committed credit facilities. We also reduced our net debt balance by nearly $400 million during the year. We achieved this by generating solid cash flows from operations, raising $700 million in new

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