SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended September 30, 2017
Commission File Number 001-35672
 





BERRY GLOBAL GROUP, INC.

 A Delaware corporation
 101 Oakley Street, Evansville, Indiana, 47710
(812) 424-2904
 IRS employer identification number 20-5234618
  
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share
New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes No    

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YesNo   

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   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 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.
 
Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, or non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): 
Large accelerated filer 
Accelerated filer  
Non-accelerated filer
Small reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.    Yes      No  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).     Yes No

The aggregate market value of the common stock of the registrant held by non-affiliates was approximately $6.3 billion as of April 1, 2017, the last business day of the registrant's most recently completed second fiscal quarter.  This amount excludes shares of the registrant's common stock held by current executive officers, directors, and affiliates whose ownership did not exceed 5% as of such date. The aggregate market value was computed using the $48.57 closing price per share for such stock on the New York Stock Exchange on such date. 

Class
 
Outstanding at November 21, 2017
Common Stock, $.01 par value per share
 
131.0 million shares

Portions of Berry Global Group, Inc.'s Proxy Statement for its 2018 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.


CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Form 10-K includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to our financial condition, results of operations and business and our expectations or beliefs concerning future events.  The forward-looking statements include, in particular, statements about our plans, strategies and prospects under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations".  These statements contain words such as "believes," "expects," "may," "will," "should," "would," "could," "seeks," "approximately," "intends," "plans," "estimates," "outlook," "anticipates" or "looking forward" or similar expressions that relate to our strategy, plans, or intentions.  All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements.  In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments.  These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected.  We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions.  While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.  All forward-looking statements are based upon information available to us on the date of this Form 10-K.
 
All forward-looking information and subsequent written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements.  Some of the factors that we believe could affect our results include:
 
risks associated with our substantial indebtedness and debt service;
 
changes in prices and availability of resin and other raw materials and our ability to pass on changes in raw material prices on a timely basis;
 
performance of our business and future operating results;
 
risks related to acquisitions and integration of acquired businesses;

reliance on unpatented proprietary know-how and trade secrets;
 
increases in the cost of compliance with laws and regulations, including environmental, safety, production and product laws and regulations;
 
risks related to disruptions in the overall economy and the financial markets that may adversely impact our business;
 
risks of catastrophic loss of one of our key manufacturing facilities, natural disasters, and other unplanned business interruptions;

risks related to market acceptance of our developing technologies and products;

general business and economic conditions, particularly an economic downturn;

ability of our insurance to fully cover potential exposures;

risks that our restructuring programs may entail greater implementation costs or result in lower savings than anticipated;
 
risks of competition, including foreign competition, in our existing and future markets; and
 
the other factors discussed in the section titled "Risk Factors."
 
We caution readers that the foregoing list of important factors may not contain all of the material factors that are important to you.  In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Form 10-K may not in fact occur.  Accordingly, investors should not place undue reliance on those statements.  We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

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TABLE OF CONTENTS
FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

 
 
Page
 
PART I
 
     
     
 
PART II
 
 
 
 
     
 
PART III
 
 
 
 
     
 
PART IV
 
 
 
 

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Item 1.
BUSINESS
(In millions of dollars, except as otherwise noted)
 
General
 
Berry Global Group, Inc. ("Berry," "we," or the "Company") is a leading provider of value-added engineered materials, nonwoven specialty materials and consumer packaging with a track record of delivering high-quality customized solutions to our customers.  We sell our products predominantly into stable, consumer-oriented end-markets, such as healthcare, personal care, and food and beverage.  Our customers consist of a diverse mix of leading global, national, mid-sized regional and local specialty businesses.  The size and scope of our customer network allows us to introduce new products we develop or acquire to a vast audience that is familiar with our business.  In fiscal 2017, no single customer represented more than 5% of net sales and our top ten customers represented 16% of net sales.  We believe our manufacturing processes and our ability to leverage our scale to reduce expenses positions us as a low-cost manufacturer relative to our competitors.

Effective April 2017, the Company changed its name from Berry Plastics Group, Inc. to Berry Global Group, Inc.  The new name is reflected throughout this Form 10-K.  Common Shares of the Company stock continue to be traded on the New York Stock Exchange under the symbol BERY.  In addition, Berry Plastics Corporation, a wholly owned subsidiary, changed its name to Berry Global, Inc.

Additional financial information about our business segments is provided in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the "Notes to Consolidated Financial Statements," which are included elsewhere in this Form 10-K.
  
Recent Developments

Clopay Plastic Products Company, Inc.
 
In November 2017, the Company entered into a definitive purchase agreement to acquire all of the outstanding shares of Clopay Plastic Products Company, Inc. ("Clopay") for a purchase price of approximately $475 million which is preliminary and subject to adjustment, and is intended to be funded with existing liquidity or an additional debt offering.  Clopay manufactures printed breathable films and is an innovator in the development of elastic films and laminates with product offerings uniquely designed for applications used in a number of markets including: hygiene, healthcare, construction and industrial protective apparel.  Clopay reported $461 million in sales for its fiscal year ended September 30, 2017 and will be operated within the Health, Hygiene and Specialties segment upon completion of the transaction.  The completion of the Clopay acquisition is subject to certain closing conditions and the terms and conditions of the purchase agreement.  The Company expects to realize annual cost synergies of approximately $20 million from the completion of the Clopay transaction.
 
Euro Swap
 
In November 2017, the Company entered into certain cross-currency swap agreements with a notional amount of 250 million euro to effectively convert a portion of our fixed-rate USD denominated term loans, including the monthly interest payments, to fixed rate euro-denominated debt.  The swap agreements mature May 2022.  The risk management objective is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies and reduce the variability in the functional currency cash flows of a portion of the Company's term loans.   
Segment Overview
 
Engineered Materials
 
The Engineered Materials business primarily includes the following product groups:
 
Stretch and Shrink Films.  We manufacture both hand and machine-wrap stretch films and custom shrink films, which are used to prepare products and packages for storage and shipping.  We sell stretch and shrink film products primarily through distribution to a diverse mix of end users.
 
Converter Films.  We manufacture sealant and barrier films for various flexible packaging converters and consumer packaged goods companies. In addition, certain of our products are used for industrial applications, where converters use our films in finished products for various end market applications such as sheet mold compounding and masking.
 
Institutional Can Liners.  We manufacture trash-can liners and food bags for offices, restaurants, schools, hospitals, hotels, municipalities, and manufacturing facilities.
 
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Tape Products.  We manufacture cloth and foil tape products. Other tape products include high-quality, high-performance liners of splicing and laminating tapes, flame-retardant tapes, vinyl-coated and carton sealing tapes, electrical, double-faced cloth, masking, mounting, OEM, and medical and specialty tapes.  Tape products are sold primarily through distributors and directly to end users for industrial, HVAC, automotive, construction, and retail market applications.
 
In June 2017, the Company acquired Adchem Corp's ("Adchem") tapes business for a purchase price of $49 million.  Adchem was a leader in the development of high performance adhesive tape systems for the automotive, construction, electronics, graphic arts, medical and general tape markets.

Food and Consumer Films.  We manufacture printed film products for the fresh bakery, tortilla, and frozen vegetable markets.  We also manufacture barrier films used for cereal, cookie, cracker and dry mix packages that are sold directly to food manufacturers.

In January 2017, the Company acquired AEP Industries Inc. ("AEP") for a purchase price of $791 million, net of cash acquired.  A portion of the purchase price consisted of issuing 6.4 million of Berry common shares which were valued at $324 million at the time of closing.  AEP manufactures and markets an extensive and diverse line of polyethylene and polyvinyl chloride flexible plastic packaging film products with consumer, industrial, and agricultural applications.

Retail Bags.  We manufacture a diversified portfolio of polyethylene based film products to end users in the retail markets. Our products include drop cloths and retail trash bags. These products are sold primarily through wholesale outlets, hardware stores and home centers, paint stores, and mass merchandisers.
 
PVC Films.  We manufacture polyvinyl chloride ("PVC") films offering a broad array of PVC meat film.  Our products are used primarily to wrap fresh meats, poultry, and produce for supermarket applications.  In addition, we offer a line of boxed products for food service and retail sales.  We service many of the leading supermarket chains, club stores, and wholesalers.

Health, Hygiene & Specialties
 
The Health, Hygiene & Specialties segment is organized by geographic region as follows:
 
North America.  We manufacture a broad collection of components for baby diapers and other absorbent hygiene products, medical garments materials, substrates for dryer sheets, household cleaning wipes, filters, and protective house wrap.  We sell our products into numerous end markets including personal care, infection prevention, filtration, and industrial and construction.
 
South America.  We manufacture components for baby diapers, feminine hygiene, specialty agriculture and industrial products.  The key end markets and application for our products include personal care, hygiene and agriculture.
 
Europe.  We manufacture a broad array of products and components of products for baby diapers, adult incontinence, surgical drapes, face masks, corrosion protection, cable wrap, geosynthetics, and specialty filtration products servicing the hygiene, personal care, infection prevention, and specialty industrial markets.
 
Asia.  We manufacture a wide range of products for baby care, infection prevention, and food and household packaging, predominately serving the global health, personal care and food markets.

Consumer Packaging
 
Our Consumer Packaging segment primarily consists of the following product groups:
 
Containers.  We manufacture a collection of nationally branded container products which range from four ounces to five gallons and are offered in various styles with accompanying lids, bails and handles, as well as a wide array of decorating options.
 
Foodservice.  We manufacture large size thermoformed polypropylene ("PP") and injection-molded plastic drink cups and lids.  We manufacture plastic cups for both hot and cold applications that range in size from 12 to 64 ounces, primarily for quick service and family dining restaurants, convenience stores, stadiums, and retail stores.
 
Closures and Overcaps.  We manufacture closures and overcaps across several of our product lines, including continuous-thread and child-resistant closures, as well as aerosol overcaps.  We sell our closures into numerous end markets, including household chemical, healthcare, food and beverage, and personal care.
 
Bottles and Prescription Vials.  Our bottle and prescription vial businesses service various food and beverage, vitamin and nutritional, and prescription vial markets.
 
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Tubes.  We manufacture a complete line of extruded and laminate tubes in a wide variety of sizes.  The majority of our tubes are sold in the personal care market, but we also sell our tubes in the pharmaceutical and household chemical markets.
 
Marketing, Sales, and Competition
 
We reach our large and diversified customer base through a direct sales force of dedicated professionals and the strategic use of distributors.  Our sales, production and support staff meet with customers to understand their needs and improve our product offerings and services.  Our scale enables us to dedicate certain sales and marketing efforts to particular products or customers, when applicable, which enables us to develop expertise that we believe is valued by our customers.  In addition, because we serve common customers across segments, we have the ability to efficiently utilize our sales and marketing resources to minimize costs.
 
The major markets in which the Company sells its products are highly competitive.  Areas of competition include service, innovation, quality, and price.  This competition is significant as to both the size and the number of competing firms.  Competitors include but are not limited to Silgan, Aptar, Reynolds, Intertape, 3M, Tredegar, Bemis, Avgol, and Fitesa.
 
Research, Product Development and Design
 
We believe our technology base and research and development support are among the best in the industries we serve.  Many of our customers work in partnership with our technical representatives to develop new, more competitive products.  Our design professionals work directly with our customers to develop new styles and use computer-generated graphics to enable our customers to visualize the finished product.  Expenditures for research and development activities were $45 million, $48 million, and $33 million in fiscal 2017, 2016 and 2015, respectively.
 
Raw Materials
 
Our primary raw material is plastic resin.  In addition, we use other materials such as butyl rubber, adhesives, paper and packaging materials, linerboard, rayon, polyester fiber, and foil, in various manufacturing processes.  These raw materials are available from multiple sources and in general we purchase from a variety of global suppliers.  However, in certain regions we may source specific raw materials from a limited number of suppliers or on a sole-source basis.  While temporary shortages of raw materials can occur, we expect to continue to successfully manage raw material supplies without significant supply interruptions.

Employees
 
As of the end of fiscal year 2017, we employed approximately 23,000 employees with approximately 20% of those employees being covered by collective bargaining agreements.  The collective bargaining agreements covering a majority of these employees renew annually and as a result, are due for renegotiation in fiscal 2018.  Our relations with employees under collective bargaining agreements remain satisfactory and there have been no significant work stoppages or other labor disputes during the past three years.
 
Patents, Trademarks and Other Intellectual Property
 
We customarily seek patent and trademark protection for our products and brands while seeking to protect our proprietary know-how.  While important to our business in the aggregate, sales of any one individually patented product are not considered material to any specific segment or the consolidated results.
 
Environmental Matters and Government Regulation
 
Our past and present operations and our past and present ownership and operations of real property are subject to extensive and changing federal, state, local, and foreign environmental laws and regulations pertaining to the discharge of materials into the environment, handling and disposition of waste, and cleanup of contaminated soil and ground water, or otherwise relating to the protection of the environment. We believe that we are in substantial compliance with applicable environmental laws and regulations. However, we cannot predict with any certainty that we will not in the future incur liability with respect to noncompliance with environmental laws and regulations, contamination of sites formerly or currently owned or operated by us (including contamination caused by prior owners and operators of such sites) or the off-site disposal of regulated materials, which could be material.
 
We may from time to time be required to conduct remediation of releases of regulated materials at our owned or operated facilities. None of our pending remediation projects are expected to result in material costs. Like any manufacturer, we are also subject to the possibility that we may receive notices of potential liability in connection with materials that were sent to third-party recycling, treatment, and/or disposal facilities under the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), and comparable state statutes, which impose liability for investigation and remediation of contamination without regard to fault or the legality of the conduct that contributed to the contamination, and for damages to natural resources. Liability under CERCLA is retroactive, and, under certain circumstances, liability for the entire cost of a cleanup can be imposed on any responsible party. We are not aware that any such notices are currently pending which are expected to result in material costs.

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The Food and Drug Administration ("FDA") regulates the material content of direct-contact food and drug packages, including certain packages we manufacture pursuant to the Federal Food, Drug and Cosmetics Act. Certain of our products are also regulated by the Consumer Product Safety Commission ("CPSC") pursuant to various federal laws, including the Consumer Product Safety Act and the Poison Prevention Packaging Act. Both the FDA and the CPSC can require the manufacturer of defective products to repurchase or recall such products and may also impose fines or penalties on the manufacturer. Similar laws exist in some states, cities and other countries in which we sell our products. In addition, laws exist in certain states restricting the sale of packaging with certain levels of heavy metals, imposing fines and penalties for noncompliance. Although we believe that we use FDA approved resins and pigments in our products that directly contact food and drug products, and we believe our products are in material compliance with all applicable requirements, we remain subject to the risk that our products could be found not to be in compliance with such requirements.
  
The plastics industry, including us, is subject to existing and potential federal, state, local and foreign legislation designed to reduce solid waste by requiring, among other things, plastics to be degradable in landfills, minimum levels of recycled content, various recycling requirements, disposal fees, and limits on the use of plastic products. In particular, certain states have enacted legislation requiring products packaged in plastic containers to comply with standards intended to encourage recycling and increased use of recycled materials. In addition, various consumer and special interest groups have lobbied from time to time for the implementation of these and other similar measures. We believe that the legislation promulgated to date and such initiatives to date have not had a material adverse effect on us. There can be no assurance that any such future legislative or regulatory efforts or future initiatives would not have a material adverse effect on us.
 
Available Information
 
We make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments, if any, to those reports through our internet website as soon as practicable after they have been electronically filed with the SEC.  Our internet address is www.berryglobal.com.  The information contained on our website is not being incorporated herein.
 
Item 1A.
RISK FACTORS

Our substantial indebtedness could affect our ability to meet our obligations and may otherwise restrict our activities.

We have a significant amount of indebtedness, which requires significant interest payments.  Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have a material adverse effect on our business, financial condition and results of operations.

Our substantial indebtedness could have important consequences.  For example, it could:

limit our ability to borrow money for our working capital, capital expenditures, debt service requirements or other corporate purposes;
increase our vulnerability to general adverse economic and industry conditions; and
limit our ability to respond to business opportunities, including growing our business through acquisitions.

In addition, the credit agreements and indentures governing our current indebtedness contain, and any future debt instruments would likely contain, financial and other restrictive covenants.  As a result of these covenants, we could be limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.  Furthermore, a failure to comply with these covenants could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition, and results of operations.
 
Increases in resin prices or a shortage of available resin could harm our financial condition and results of operations.
 
To produce our products, we use large quantities of plastic resins.  Plastic resins are subject to price fluctuations, including those arising from supply shortages and changes in the prices of natural gas, crude oil and other petrochemical intermediates from which resins are produced. Historically, we have been able to successfully manage the impact of higher raw material costs by increasing our selling prices.  However, raw material inflation could materially and adversely affect our revenue and profitability in the short term as we attempt to pass through price increases to our customers and in the long term as our customers could seek alternative solutions. We may not be able to arrange for other sources of resin in the event of an industry-wide general shortage of resins used by us, or a shortage or discontinuation of certain types of grades of resin purchased from one or more of our suppliers.  Any such shortage may materially negatively impact our competitive position versus companies that are able to better or more cheaply source resin.
 
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We may not be able to compete successfully and our customers may not continue to purchase our products.
 
We compete with multiple companies in each of our product lines on the basis of a number of considerations, including price, service, quality, product characteristics and the ability to supply products to customers in a timely manner.  Our products also compete with metal, glass, paper, cloth, and other materials.  Some of these competitive products are not subject to the impact of changes in resin prices, which may have a significant and negative impact on our competitive position versus substitute products.  Our competitors may have financial and other resources that are substantially greater than ours and may be better able than us to withstand higher costs.  Competition could result in our products losing market share or our having to reduce our prices, either of which could have a material adverse effect on our business, financial condition and results of operations.  In addition, since we do not have long-term arrangements with many of our customers, these competitive factors could cause our customers to shift suppliers and/or packaging material quickly.  Our success depends, in part, on our ability to respond timely to customer and market changes.
 
We may pursue and execute acquisitions, which could adversely affect our business.
 
As part of our growth strategy, we consider acquisitions that either complement or expand our existing business and create economic value.  We cannot assure you that we will be able to consummate any future acquisitions at acceptable prices and terms.  Acquired businesses may not achieve the levels of revenue, profit, productivity or otherwise perform as we expect.  Acquisitions involve special risks, including the potential assumption of unanticipated liabilities and contingencies as well as difficulties in integrating acquired businesses creating substantial costs, delays or other problems that could adversely affect our business, financial condition and results of operations.  Furthermore, we may not realize all of the synergies we expect to achieve from our current strategic initiatives due to a variety of risks.  If we are unable to achieve the synergies that we expect to achieve from our strategic initiatives, it could adversely affect our business, financial condition and results of operations.  Additionally, while we execute these acquisitions and related integration activities, it is possible that our attention may be diverted from our ongoing operations which may have a negative impact on our ongoing operations.
 
Current and future environmental and other governmental requirements could adversely affect our financial condition and our ability to conduct our business.

While we have not been required historically to make significant capital expenditures in order to comply with applicable environmental laws and regulations, we cannot predict our future capital expenditure requirements because of continually changing compliance standards and environmental technology.  Furthermore, violations or contaminated sites that we do not know about (including contamination caused by prior owners and operators of such sites or newly discovered information) could result in additional compliance or remediation costs or other liabilities, which could be material.  We may also assume significant environmental liabilities in connection with acquisitions.  In addition, federal, state, local, and foreign governments could enact laws or regulations concerning environmental matters that increase the cost of producing, or otherwise adversely affect the demand for, plastic products.  Legislation that would prohibit, tax or restrict the sale or use of certain types of plastic and other containers, and would require diversion of solid waste such as packaging materials from disposal in landfills, has been or may be introduced in the U.S. Congress, state legislatures, and other legislative bodies.  Although we believe that any such laws promulgated to date have not had a material adverse effect on us, there can be no assurance that future legislation or regulation would not have a material adverse effect on us.  Furthermore, a decline in consumer preference for plastic products due to environmental considerations could have a negative effect on our business.
 
Both the FDA and the CPSC can require the manufacturer of defective products to repurchase or recall these products and may also impose fines or penalties on the manufacturer.  Similar laws exist in some states, cities and other countries in which we sell products.  Although we believe our products are in material compliance with all applicable requirements, any fines and penalties imposed in connection with noncompliance or recall of any of our products could have a materially adverse effect on us.  See "Business—Environmental Matters and Government Regulation."
 
In the event of a catastrophic loss of one of our key manufacturing facilities, our business would be adversely affected.
 
While we manufacture our products in a large number of diversified facilities and maintain insurance covering our facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of one of our key manufacturing facilities due to accident, labor issues, weather conditions, natural disaster or otherwise, whether short or long-term, could have a material adverse effect on us.

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Employee slowdowns or strikes or the failure to renew collective bargaining agreements could disrupt our business.
 
As of September 30, 2017, approximately 20% of our employees are represented by labor unions or trade councils and worked under collective bargaining agreements.  We may not be able to maintain constructive relationships with these labor unions or trade councils. We may not be able to successfully negotiate new collective bargaining agreements on satisfactory terms in the future.  The loss of a substantial number of these employees or a prolonged labor dispute could disrupt our business.  Any such disruption could reduce our revenues, increase our costs and result in significant losses.
 
We depend on information technology systems and infrastructure to operate our business, system inadequacies or failures could harm our business.
 
We rely on the efficient and uninterrupted operation of information technology systems and networks.  These systems and networks are potentially vulnerable to damage or interruption from a variety of sources, including energy or telecommunications failures, breakdowns, natural disasters, terrorism, war, computer malware or other malicious intrusions, and random attacks.  To date, system interruptions have been infrequent and have not had a material impact on the business.  However, there can be no assurance that these efforts will prevent future interruptions that would have a material adverse effect on our business.
 
Goodwill and other intangibles represent a significant amount of our net worth, and a future write-off could result in lower reported net income and a reduction of our net worth.
 
We are required to evaluate goodwill and other indefinite lived intangible assets reflected on our balance sheet when circumstances indicate a potential impairment, or at least annually, under the impairment testing guidelines outlined in the standard.  Future changes in the market multiples, cost of capital, expected cash flows, or other factors may cause our goodwill to be impaired, resulting in a non-cash charge against results of operations to write off goodwill or indefinite lived intangible assets for the amount of impairment.  If a future write-off is required, the charge could have a material adverse effect on our consolidated net income in the period of any such write off.
 
Disruptions in the overall economy and the financial markets may adversely impact our business.
 
Our industry is affected by macroeconomic factors, including national, regional, and local economic conditions, employment levels, and shifts in consumer spending patterns.  Disruptions in the overall economy and volatility in the financial markets could reduce consumer confidence in the economy, negatively affecting consumer spending, which could be harmful to our financial position and results of operations.  In such event, decreased cash flow generated from our business may adversely affect our financial position and our ability to fund our operations.  In addition, major macroeconomic disruptions involving the financial markets could adversely affect our ability to access the credit markets and availability of financing for our operations.
 

We are a holding company and rely on dividends and other payments, advances and transfers of funds from our subsidiaries to meet our obligations and pay dividends.
 
Berry Global Group, Inc. has no direct operations and no significant assets other than ownership of 100% of the stock of Berry Global Corporation. Because Berry Global Group, Inc. conducts its operations through its subsidiaries, it depends on those entities for dividends and other payments to generate the funds necessary to meet its financial obligations, and to pay any dividends with respect to our common stock. Legal and contractual restrictions in the agreements governing current and future indebtedness of Berry Global Group, Inc.'s subsidiaries, as well as the financial condition and operating requirements of Berry Global Group, Inc.'s subsidiaries, may limit Berry Global Group, Inc.'s ability to obtain cash from its subsidiaries. The earnings from, or other available assets of, Berry Global Group, Inc.'s subsidiaries may not be sufficient to pay dividends or make distributions or loans to enable Berry Global Group, Inc. to pay dividends going forward.
 
Our international operations pose risks to our business that may not be present with our domestic operations.
 
We may continue to expand operations in foreign countries where we have an existing presence or enter new foreign markets and expect to increase sales of products as disposable income increases in developing markets. Foreign operations are subject to certain risks that are unique to doing business in foreign countries. These risks include fluctuations in foreign currency exchange rates, inflation, economic or political instability, shipping delays in both our products and receiving delays of raw materials, changes in applicable laws, including assessments of income and non-income related taxes, reduced protection of intellectual property and regulatory policies and various trade restrictions including potential changes to export taxes or countervailing and anti-dumping duties for exported products from these countries.  Any of these risks could have a negative impact on our ability to deliver products to customers on a competitive and timely basis. This could reduce or impair our net sales, profits, cash flows and financial position.  We are also subject to the Foreign Corrupt Practices Act and other anti-bribery laws that generally bar bribes or unreasonable gifts to foreign governments or officials. We have implemented safeguards and policies to discourage these practices by our employees and agents. However, our existing safeguards and policies to assure compliance and any future improvements may prove to be less than effective and our employees or agents may engage in conduct for which we might be held responsible. If employees violate our policies, we may be subject to regulatory sanctions. Violations of these laws or regulations could result in sanctions including fines, debarment from export privileges and penalties and could adversely affect our business, financial condition and results of operations.
 
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We hold cash and cash equivalents at various foreign subsidiaries that may not be readily available to meet U.S. cash requirements.
 
Our various foreign subsidiaries hold cash and cash equivalents and these balances held outside the U.S. may not be readily available to meet our domestic cash requirements.  If we are unable to meet our U.S. cash requirements using cash flows from U.S. operations, cash and cash equivalents held in the U.S., or by settling loans receivable with our foreign subsidiaries, it may be necessary for us to consider repatriation of earnings held outside the U.S. This may require us to record additional income tax expense and remit additional taxes, which could have a material effect on our business, financial condition and results of operations.

We may not be successful in protecting our intellectual property rights, including our unpatented proprietary know-how and trade secrets, or in avoiding claims that we infringed on the intellectual property rights of others.
 
In addition to relying on patent and trademark rights, we rely on unpatented proprietary know-how and trade secrets, and employ various methods, including confidentiality agreements with employees and consultants, customers and suppliers to protect our know-how and trade secrets.  However, these methods and our patents and trademarks may not afford complete protection and there can be no assurance that others will not independently develop the know-how and trade secrets or develop better production methods than us.  Further, we may not be able to deter current and former employees, contractors and other parties from breaching agreements and misappropriating proprietary information and it is possible that third parties may copy or otherwise obtain and use our information and proprietary technology without authorization or otherwise infringe on our intellectual property rights.    Furthermore, no assurance can be given that we will not be subject to claims asserting the infringement of the intellectual property rights of third parties seeking damages, the payment of royalties or licensing fees and/or injunctions against the sale of our products.  Any such litigation could be protracted and costly and could have a material adverse effect on our business, financial condition and results of operations.
 
New and stricter legislation and regulations may affect our business and consolidated financial condition and results of operations.
 
Increased legislative and regulatory activity and burdens, and a more stringent manner in which they are applied (particularly in the U.S.), could significantly impact our business and the economy as a whole.  This includes, among other things, proposed tax reform in the U.S. which may result in significant changes to U.S. tax rules, compliance costs and enforcement under the Dodd-Frank Wall Street Reform and Consumer Protection Act, compliance costs and enforcement under the Sarbanes-Oxley Act, and costs associated with complying with the Patient Protection and Affordable Care Act and the regulations promulgated thereunder.
 
We may not be able to achieve cost savings as a result of our restructuring efforts and productivity and cost reduction initiatives.
 
From time to time we enter into cost reduction plans designed to deliver cost savings and improve equipment utilization. Our ability to achieve the anticipated cost savings and other benefits from these initiatives within the expected time frame is subject to many estimates and assumptions. Additionally, there are many factors which affect our ability to achieve savings as a result of productivity and cost reduction initiatives, such as difficult economic conditions, increased costs in other areas, the effects of and costs related to newly acquired entities, mistaken assumptions, and the other risk factors set forth herein. In addition, any actual savings may be balanced by incremental costs that were not foreseen at the time of the restructuring or cost reduction initiatives. As a result, anticipated savings may not be achieved on the timetable desired or at all. Additionally, while we execute these restructuring activities to achieve these savings, it is possible that our attention may be diverted from our ongoing operations which may have a negative impact on our ongoing operations.

The Clopay transaction is subject to conditions that may not be satisfied or completed on a timely basis, if at all; failure to complete the Clopay transaction could negatively impact our stock price and our future financial results.

Completion of the Clopay transaction is subject to a number of conditions, each of which, unless waived, must be fulfilled in order to complete the transaction. The conditions to the closing of the transaction may not be fulfilled in a timely manner or at all, and, accordingly, the transaction may be delayed or may not be completed.  Although we expect to complete the Clopay transaction in early calendar 2018, the actual closing date will depend on the satisfaction or waiver of the applicable closing conditions.  Any delay in the completion of the Clopay transaction would defer our ability to realize the intended benefits of the Clopay transaction.
 
Item 1B. UNRESOLVED STAFF COMMENTS

None
 
9

Item 2.
PROPERTIES
 
Our primary manufacturing facilities by geographic area were as follows at September 30, 2017:

 Geographic Region
 
Total Facilities
 
Leased Facilities
North America
 
98
 
27
Europe, Middle East
 
16
 
5
South America
 
4
 
1
Asia, Australia
 
9
 
2

 
Item 3.
LEGAL PROCEEDINGS
 
Berry is party to various legal proceedings involving routine claims which are incidental to our business. Although our legal and financial liability with respect to such proceedings cannot be estimated with certainty, we believe that any ultimate liability would not be material to the business, financial condition, results of operations or cash flows.
 
Item 4.
MINE SAFETY DISCLOSURES
 
Not applicable.
10


PART II
 
Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
 
Our common stock is listed on the New York Stock Exchange under the symbol "BERY".  The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock reported on the New York Stock Exchange.
 
 
 
Fiscal 2017
   
Fiscal 2016
 
 
 
High
   
Low
   
High
   
Low
 
1st quarter
 
$
51.68
   
$
42.46
   
$
37.59
   
$
28.41
 
2nd quarter
   
52.97
     
47.19
     
36.66
     
27.79
 
3rd quarter
   
58.95
     
47.24
     
40.00
     
34.96
 
4th quarter
   
58.85
     
54.89
     
46.26
     
38.19
 
 
As of the date of this filing there were fewer than 500 active record holders of the common stock, but we estimate the number of beneficial stockholders to be much higher as a number of our shares are held by brokers or dealers for their customers in street name.
 
During fiscal 2016 and 2017 we did not declare or pay any cash dividends on our common stock. Any future determination as to the declaration and payment of dividends, if any, will depend on then existing conditions, contractual requirements and other factors our board of directors may deem relevant.  Our debt instruments and agreements contain covenants that may restrict our ability to pay dividends on our common stock, as well as the ability of our subsidiaries to pay dividends to us.
 
11


Item 6.
SELECTED FINANCIAL DATA
 
 
 
Fiscal 2017
   
Fiscal 2016
   
Fiscal 2015
   
Fiscal 2014
   
Fiscal 2013
 
Statement of Operations Data:
Net sales
 
$
7,095
   
$
6,489
   
$
4,881
   
$
4,958
   
$
4,647
 
Operating income
   
732
     
581
     
408
     
316
     
386
 
Net income
   
340
     
236
     
86
     
62
     
57
 
Net Income Per Share Data:
                                       
Basic, net income per share
 
$
2.66
   
$
1.95
   
$
0.72
   
$
0.53
   
$
0.50
 
Diluted, net income per share
   
2.56
     
1.89
     
0.70
     
0.51
     
0.48
 
Balance Sheet Data:
                                       
Total assets
 
$
8,476
   
$
7,653
   
$
5,028
   
$
5,252
   
$
5,111
 
Long-term debt obligations
   
5,641
     
5,755
     
3,685
     
3,902
     
3,922
 
Statement of Cash Flow Data:
                                       
Net cash from operating activities
 
$
975
   
$
857
   
$
637
   
$
530
   
$
464
 
Net cash from investing activities
   
(774
)
   
(2,579
)
   
(165
)
   
(422
)
   
(245
)
Net cash from financing activities
   
(226
)
   
1,817
     
(365
)
   
(119
)
   
(164
)
 
Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion should be read in conjunction with the consolidated financial statements of Berry Global Group, Inc. and its subsidiaries and the accompanying notes thereto, which information is included elsewhere herein.  This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section.  Our actual results may differ materially from those contained in any forward-looking statements.  Segment level discussion of the results is disclosed in a manner consistent with the organization structure at the end of the presented period.

The Company's fiscal year is based on fifty-two or fifty-three week periods.  Fiscal 2017 and fiscal 2015 were fifty-two week periods and fiscal 2016 was a fifty-three week period. 
 
Overview
 
Berry Global Group, Inc. ("Berry," "we," or the "Company") is a leading provider of value-added engineered materials, nonwoven specialty materials and consumer packaging with a track record of delivering high-quality customized solutions to our customers.  We sell our products predominantly into stable, consumer-oriented end-markets, such as healthcare, personal care, and food and beverage.  Our customers consist of a diverse mix of leading global, national, mid-sized regional and local specialty businesses.  The size and scope of our customer network allows us to introduce new products we develop or acquire to a vast audience that is familiar with our business.  In fiscal 2017, no single customer represented more than 5% of net sales and our top ten customers represented 16% of net sales.  We believe our manufacturing processes and our ability to leverage our scale to reduce expenses positions us as a low-cost manufacturer relative to our competitors.

Executive Summary
 
Business.  The Company's operations are organized into three operating segments: Engineered Materials, Health, Hygiene & Specialties, and Consumer Packaging.  The structure is designed to align us with our customers, provide improved service, and drive future growth in a cost efficient manner.  The Engineered Materials segment primarily consists of tapes and adhesives, polyethylene based film products, can liners, printed films, and specialty coated, and laminated products.  The Health, Hygiene & Specialties segment primarily consists of nonwoven specialty materials and films used in hygiene, infection prevention, personal care, industrial, construction and filtration applications.  The Consumer Packaging segment primarily consists of containers, foodservice items, closures, overcaps, bottles, prescription containers, and tubes.

In October 2016, the Company realigned portions of our operating segments in order to leverage geographic management teams and commercial activities.  The international portion of our Retail & Industrial product line was moved from Engineered Materials to the Specialties product line within Health, Hygiene & Specialties, resulting in a $140 million and $148 million movement in Net sales in fiscal 2016 and fiscal 2015, respectively.  Additionally, to align the newly acquired AEP business with our existing Core Films business, $306 million and $340 million of Net sales were moved from Consumer Packaging to Engineered Materials in the fiscal 2016 and fiscal 2015, respectively.  As result of these organizational realignments, we have recast prior period segment amounts.  

12

Raw Material Trends.  Our primary raw material is plastic resin.  Polypropylene and polyethylene account for approximately 90% of our plastic resin pounds purchased.  Plastic resins are subject to price fluctuations, including those arising from supply shortages and changes in the prices of natural gas, crude oil and other petrochemical intermediates from which resins are produced.  The three month simple average price per pound, as published by the American market indexes, were as follows:
 
 
 
Polyethylene Butene Film
   
Polypropylene
 
 
 
2017
   
2016
   
2015
   
2017
   
2016
   
2015
 
1st quarter
 
$
.75
   
$
.69
   
$
.86
   
$
.69
   
$
.70
   
$
.92
 
2nd quarter
   
.77
     
.66
     
.75
     
.80
     
.75
     
.73
 
3rd quarter
   
.79
     
.73
     
.76
     
.74
     
.71
     
.68
 
4th quarter
   
.81
     
.75
     
.73
     
.75
     
.71
     
.66
 
 
Due to differences in the timing of passing through resin cost changes to our customers on escalator/de-escalator programs, segments are negatively impacted in the short term when plastic resin costs increase and are positively impacted in the short term when plastic resin costs decrease.  This timing lag in passing through raw material cost changes could affect our results as plastic resin costs fluctuate.
 
Outlook.  The Company is impacted by general economic and industrial growth, plastic resin availability and affordability, and general industrial production.  Our business has both geographic and end-market diversity, which reduces the effect of any one of these factors on our overall performance.  Our results are affected by our ability to pass through raw material cost changes to our customers, improve manufacturing productivity and adapt to volume changes of our customers.  We believe there are long term growth opportunities within the health, pharmaceuticals, personal care and food packaging markets existing outside of North America, especially in Asia, where expected per capita consumption increases should result in organic market growth.  In addition, while we continue to believe that long term dynamics of the resin markets will be an advantage to Berry, the short term challenges to regional transportation systems and higher raw material prices for certain inputs as a result of recent storm disruptions, as well as macroeconomic pressures in South America could create modest short-term headwinds for early fiscal 2018.  For fiscal 2018, we project cash flow from operations and adjusted free cash flow of $965 million and $610 million, respectively.  While we expect the recent raw material inflation to result in increases to working capital in the beginning of fiscal 2018, our annual projections assume flat working capital as we believe raw materials will normalize as the year progresses.  Additionally, our capital spending and cash interest costs are forecasted to be $320 million and $250 million, respectively.  Within our adjusted free cash flow guidance, we are also assuming cash taxes to be $210 million, including a $35 million payment in the first quarter under the Company's tax receivable agreement, along with other cash uses of $40 million related to items such as acquisition integration expenses and costs to achieve synergies.  These estimates and assumptions do not include our most recent definitive agreement to acquire Clopay.  For the definition of Adjusted free cash flow and further information related to Adjusted free cash flow as a non-GAAP financial measure, see "Liquidity and Capital Resources."
 
Recent Acquisitions
 
Our acquisition strategy is focused on improving our long-term financial performance, enhancing our market positions, and expanding our existing and complementary product lines. We seek to obtain businesses for attractive post-synergy multiples, creating value for our stockholders from synergy realization, leveraging the acquired products across our customer base, creating new platforms for future growth, and assuming best practices from the businesses we acquire. The Company has included the expected benefits of acquisition integrations and restructuring plans within our unrealized synergies, which are in turn recognized in earnings after an acquisition has been fully integrated or the restructuring plan is completed. While the expected benefits on earnings is estimated at the commencement of each transaction, once the execution of the plan and integration occur, we are generally unable to accurately estimate or track what the ultimate effects have been due to system integrations and movements of activities to multiple facilities. As historical business combinations and restructuring plans have not allowed us to accurately separate realized synergies compared to what was initially identified, we measure the synergy realization based on the overall segment profitability post integration.

Clopay Plastic Products Company, Inc.
 
In November 2017, the Company entered into a definitive purchase agreement to acquire all of the outstanding shares of Clopay Plastic Products Company, Inc. ("Clopay") for a purchase price of approximately $475 million which is preliminary and subject to adjustment and is intended to be funded with existing liquidity or an additional debt offering.  Clopay manufactures printed breathable films and is an innovator in the development of elastic films and laminates with product offerings uniquely designed for applications used in a number of markets including: hygiene, healthcare, construction and industrial protective apparel.  Clopay reported $461 million in sales for its fiscal year ended September 30, 2017 and will be operated within the Health, Hygiene and Specialties segment upon completion of the transaction.  The completion of the Clopay acquisition is subject to certain closing conditions and the terms and conditions of the purchase agreement. The Company expects to realize annual cost synergies of approximately $20 million from the completion of the Clopay transaction.

13

AEP Industries Inc.

In January 2017, the Company acquired AEP Industries Inc. ("AEP") for a purchase price of $791 million, net of cash acquired.  A portion of the purchase price consisted of issuing 6.4 million of Berry common shares which were valued at $324 million at the time of closing.  AEP manufactures and markets an extensive and diverse line of polyethylene and polyvinyl chloride flexible plastic packaging products with consumer, industrial, and agricultural applications.  The acquired business is operated in our Engineered Materials segment.  To finance the purchase, the Company entered into an incremental assumption agreement to increase the commitments under the Company's existing term loan credit agreement by $500 million due 2024.  The Company expects annual cost synergies of approximately $80 million from the AEP transaction with full realization expected in fiscal 2018.

Adchem Corp

In June 2017, the Company acquired Adchem Corp's ("Adchem") tapes business for a purchase price of $49 million.  Adchem is a leader in the development of high performance adhesive tape systems for the automotive, construction, electronics, graphic arts, medical and general tape markets.  The acquired business is operated in our Engineered Materials segment.  To finance the purchase, the Company used existing liquidity.
 
AVINTIV Inc.
 
In October 2015, the Company acquired 100% of the capital stock of AVINTIV Inc. ("Avintiv") for a purchase price of $2.26 billion, net of cash acquired.  Avintiv was one of the world's leading developers, producers, and marketers of nonwoven specialty materials used in hygiene, infection prevention, personal care, industrial, construction, and filtration applications.  With 23 locations in 14 countries, an employee base of over 4,500 people, the broadest range of process technologies in the nonwoven industry, and strategically located manufacturing facilities, Avintiv was positioned as a global supplier to many of the same leading consumer and industrial product manufacturers as Berry's existing business.  To finance the purchase, the Company issued $400 million aggregate principal amount of 6.0% second priority senior secured notes due 2022 and entered into an incremental assumption agreement to increase the commitments under the Company's existing term loan credit agreement by $2.1 billion due 2022.  The results of Avintiv have been included in the consolidated results of the Company since the date of the acquisition.  The Company estimates that approximately $80 million of annual cost synergies were realized from the Avintiv acquisition.
 
Discussion of Results of Operations for Fiscal 2017 Compared to Fiscal 2016

Consistent with historical presentation, acquisition (businesses acquired in the last twelve months) sales and operating income disclosed within this section represents the historical results from acquisitions for the comparable prior year period.  The remaining change disclosed represents the changes from the prior period on a combined basis.  Business integration expenses consist of restructuring and impairment charges, acquisition related costs, and other business optimization costs.  Tables present dollars in millions.
 
Consolidated Overview
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Net sales
 
$
7,095
   
$
6,489
   
$
606
     
9
%
Operating income
 
$
732
   
$
581
   
$
151
     
26
%
Operating income percentage of net sales
   
10
%
   
9
%
               

The net sales increase of $606 million is primarily attributed to acquisition net sales of $788 million and selling price increases of $60 million due to the pass through of higher resin prices, partially offset by a negative $136 million impact from a 2% base volume decline, $98 million from extra days in fiscal 2016, and a slight negative impact from foreign currency changes.
 
The operating income increase of $151 million is primarily attributed to acquisition operating income of $62 million, a $36 million decrease in integration and restructuring costs, a $35 million decrease in selling, general and administrative expense related to synergies and cost reductions, a $24 million improvement in our product mix and price/cost spread, a $16 million decrease in depreciation and amortization, and slight benefits from improved productivity in manufacturing and changes in foreign currency.  These improvements were partially offset by a $20 million impact from the base volume decline and $10 million from extra days in fiscal 2016.
 
Engineered Materials
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Net sales
 
$
2,375
   
$
1,627
   
$
748
     
46
%
Operating income
 
$
316
   
$
182
   
$
134
     
74
%
Operating income percentage of net sales
   
13
%
   
11
%
               
 
14

Net sales in the Engineered Materials segment increased by $748 million primarily attributed to acquisition net sales of $788 million, and selling price increases of $67 million due to the pass through of higher resin prices, partially offset by a $79 million negative impact from base volume declines, and $30 million from extra days in fiscal 2016.  The base volume decline is primarily attributed to our decisions to rationalize certain lower margin products that we acquired from AEP in order to maximize earnings.
 
The operating income increase of $134 million is primarily attributed to acquisition operating income of $62 million, a $71 million improvement in our product mix and price/cost spread, a $13 million decrease in selling, general and administrative expenses, and slight benefits from improved productivity in manufacturing and changes in foreign currency, partially offset by a negative $8 million impact from lower base volumes, a $6 million increase in depreciation and amortization expense, and $4 million from extra days in fiscal 2016.

Health, Hygiene & Specialties
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Net sales
 
$
2,369
   
$
2,400
   
$
(31
)
   
(1
)%
Operating income
 
$
216
   
$
196
   
$
20
     
10
%
Operating income percentage of net sales
   
9
%
   
8
%
               
 
Net sales in the Health, Hygiene & Specialties segment decreased by $31 million primarily attributed to extra days in fiscal 2016 of $25 million, selling price decreases of $23 million, and a slightly negative impact from foreign currency changes, partially offset by a $26 million positive impact from base volume improvements.

The operating income increase of $20 million is primarily attributed to a $27 million decrease in business integration and restructuring costs associated with the Avintiv acquisition, a $13 million improvement in productivity in manufacturing, a $12 million decrease in depreciation and amortization expense, a $5 million impact from base volumes, a $5 million decrease in selling, general and administrative expenses, and a slight benefit from changes in foreign currency. These improvements were partially offset by a $45 million decrease in our product mix and price/cost spread primarily related to inflation and market pressures within our South American business.
Consumer Packaging
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Net sales
 
$
2,351
   
$
2,462
   
$
(111
)
   
(5
)%
Operating income
 
$
200
   
$
203
   
$
(3
)
   
(1
)%
Operating income percentage of net sales
   
9
%
   
8
%
               
 
Net sales in the Consumer Packaging segment decreased by $111 million primarily attributed to an $83 million negative impact from base volumes and $43 million from extra days in fiscal 2016, partially offset by selling price increases of $15 million due to the pass through of higher resin prices.  The volume decline was primarily attributed to general market softness and our continued focus on volume, price, and mix in order to optimize earnings.
 
The operating income decrease of $3 million is primarily attributed to a base volume decline of $17 million, an $11 million negative impact from productivity in manufacturing, $5 million from extra days in fiscal 2016, and a slight decrease in our product mix and price/cost spread, partially offset by a $17 million decrease in selling, general and administrative expenses related to synergies from cost reductions, a $10 million decrease in depreciation and amortization expense, and a $5 million decrease in business integration and restructuring expense.
Debt extinguishment
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Debt extinguishment
 
$
10
   
$
4
   
$
6
     
150
%
 
Debt extinguishment increased by $6 million as a result of the fiscal 2017 term loan modifications.
 
Other expense (income), net
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Other expense (income), net
 
$
4
   
$
(22
)
 
$
26
     
118
%
 
The other expense (income) increase of $26 million is primarily attributed to a $10 million non-cash defined benefit pension plan settlement, a $6 million charge related to a valuation adjustment to the TRA in fiscal 2017, and a year over year decline of $17 million in transactional foreign currency gains related to the remeasurement of non-operating intercompany balances.

Interest expense
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Interest expense, net
 
$
269
   
$
291
   
$
(22
)
   
(8
)%
 
15

The interest expense decrease of $22 million is primarily attributed to reduced interest rates resulting from the term loan modifications.

Income tax expense
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Income tax expense
 
$
109
   
$
72
   
$
37
     
51
%
 
The income tax expense increase of $37 million is primarily attributed to improved income before income taxes.  Our effective tax rate was 24% in fiscal 2017.  Our fiscal 2017 effective tax rate was lower than the U.S. federal statutory rate of 35% primarily due to a 2% benefit from lower tax rates in foreign jurisdictions, a 2% benefit from the U.S. research and development credit, a 7% benefit from share based compensation related to excess tax benefit deductions, and a 1% benefit from the Section 199 deduction.  These favorable items were partially offset by an increase of 1% from the foreign valuation allowance.
 
Comprehensive Income
Fiscal Year
         
 
2017
 
2016
 
$ Change
 
% Change
 
Comprehensive Income
 
$
420
   
$
207
   
$
213
     
103
%

The $213 million increase in comprehensive income is primarily attributed to a $104 million increase in net income, a $47 million increase due to unrealized gains on the Company's pension plans, net of tax, a $35 million increase in currency translation gains, and a $27 million favorable change in the fair value of interest rate hedges, net of tax.  Currency translation gains are primarily related to non-U.S. subsidiaries with a functional currency other than the U.S. Dollar whereby assets and liabilities are translated from the respective functional currency into U.S. Dollars using period-end exchange rates.  The change in currency translation gains were primarily attributed to locations utilizing the Euro, Pound Sterling, and Brazilian Real as their functional currency.  Unrealized gains on pension plans in the current period were primarily attributable to actuarial gains from an increase in the underlying discount rate.  As part of the overall risk management, the Company uses derivative instruments to reduce exposure to changes in interest rates attributed to the Company's floating-rate borrowings and records changes to the fair value of these instruments in Accumulated other comprehensive income.  The change in fair value of these instruments in fiscal 2017 versus fiscal 2016 is primarily attributed to a change in the forward interest curve between measurement dates.
 
Discussion of Results of Operations for Fiscal 2016 Compared to Fiscal 2015

Consistent with historical presentation, acquisition (businesses acquired in the last twelve months) sales and operating income disclosed within this section represents the historical results from acquisitions for the comparable prior year period.  The remaining change disclosed represents the changes from the prior period on a combined basis.  Business integration expenses consist of restructuring and impairment charges, manufacturing inefficiencies associated with cost reduction plans, major innovation start-up and other business optimization costs.  Tables present dollars in millions.
 
Consolidated Overview
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Net sales
 
$
6,489
   
$
4,881
   
$
1,608
     
33
%
Operating income
 
$
581
   
$
408
   
$
173
     
42
%
Operating income percentage of net sales
   
9
%
   
8
%
               
 
The net sales increase of $1,608 million is primarily attributed to acquisition net sales of $1,935 million, partially offset by a $237 million decline in selling prices due to the pass through of lower raw material costs, a negative $29 million impact from a less than 1% base volume decline, and a $61 million negative impact from foreign currency changes.
 
The operating income increase of $173 million is primarily attributed to a $117 million improvement in our product mix and price/cost spread including contribution from sourcing synergies, acquisition operating income of $118 million, and $10 million from net productivity improvements in manufacturing.  These improvements were partially offset by a $55 million increase in depreciation and amortization expense primarily related to purchase accounting adjustments associated with the Avintiv acquisition, a $12 million negative impact from foreign currency changes, a $6 million impact from the less than 1% base volume declines, and a slight increase in selling, general and administrative expenses.

Engineered Materials
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Net sales
 
$
1,627
   
$
1,701
   
$
(74
)
   
(4
)%
Operating income
 
$
182
   
$
149
   
$
33
     
22
%
Operating income percentage of net sales
   
11
%
   
9
%
               
 
16

Net sales in the Engineered Materials segment decreased by $74 million primarily attributed to selling price decreases of $73 million due to the pass through of lower resin prices and an $8 million unfavorable impact from currency translation partially offset by a $9 million impact from a 1.5% base volume improvement.  Increased shipping days in the first quarter had approximately 2.0% impact on fiscal 2016 volumes.
 
The operating income increase of $33 million is primarily attributed to a $39 million improvement in our product mix and price/cost spread, a $2 million improvement in productivity in manufacturing, and a slight decrease in selling, general and administrative expenses, partially offset by a $6 million non-cash legal reserve, and negative impact from foreign currency changes.  The improvement in selling, general and administrative expenses is primarily attributed cost reduction efforts partially offset by increased shipping days in the first quarter and higher accrued performance-based bonus expense.

Health, Hygiene & Specialties
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Net sales
 
$
2,400
   
$
650
   
$
1,750
     
269
%
Operating income
 
$
196
   
$
59
   
$
137
     
232
%
Operating income percentage of net sales
   
8
%
   
9
%
               
 
Net sales in the Health, Hygiene & Specialties segment increased by $1,750 million primarily attributed to acquisition net sales of $1,935 million partially offset by selling price decreases of $86 million due to the pass through of lower resin prices, a $53 million unfavorable impact from foreign currency, and a negative $49 million impact from a 2.0% volume decline.  The volume decline is primarily attributed to a negative impact due to decreased shipping days in Avintiv's prior year December quarter, strategic pricing actions and improvements in the product mix in Europe.

The operating income increase of $137 million is primarily attributed to acquisition operating income of $118 million, a $63 million improvement in our product mix and price/cost spread including contribution from sourcing synergies, an $13 million increase from net productivity improvements in manufacturing, and a $11 million decrease in selling, general and administrative expenses, partially offset by a $40 million increase in depreciation and amortization expense primarily related to purchase accounting adjustments associated with the Avintiv acquisition, $7 million from base volume declines, an $10 million increase in business integration costs, and a $11 million unfavorable impact from foreign currency changes.  The increase in business integration expenses is the result of restructuring costs associated with the Avintiv acquisition and a $2 million impairment charge related to plant shutdowns.

Consumer Packaging
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Net sales
 
$
2,462
   
$
2,530
   
$
(68
)
   
(3
)%
Operating income
 
$
203
   
$
200
   
$
3
     
2
%
Operating income percentage of net sales
   
8
%
   
8
%
               
 
Net sales in the Consumer Packaging segment decreased by $68 million primarily attributed to selling price decreases of $78 million due to the pass through of lower resin prices, partially offset by improved base volumes.  Increased shipping days in the first quarter had approximately 2.0% favorable impact on volumes partially offset by product light-weighting, product redesign and softer consumer packaged food demand.
 
The operating income increase of $3 million is primarily attributed to a $19 million decrease in business integration and restructuring expenses, and a $15 million improvement in our product mix and price/cost spread, partially offset by a $15 million increase in selling, general and administrative expenses primarily attributed to increased shipping days in the first quarter and higher accrued performance-based bonus expense, a $14 million increase in depreciation and amortization expense, and a $4 million decline in operating performance in manufacturing. The decrease in business integration costs is the result of costs associated with the 2014 cost reduction plan recognized in fiscal 2015.  
Debt extinguishment
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Debt extinguishment
 
$
4
   
$
94
   
$
(90
)
   
(96
)%
 
Debt extinguishment decreased by $90 million primarily due to tender and redemption costs associated with the discharge of the 9¾% second priority senior secured notes in fiscal 2015 compared with the amendments of our term loans that occurred in fiscal 2016.
 
Other expense (income), net
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Other expense (income), net
 
$
(22
)
 
$
1
   
$
(23
)
   
(2,300
)%
 
17

The other expense (income) decrease of $23 million is primarily the result of translation gains of $27 million related to the remeasurement of non-operating intercompany balances, partially offset by $5 million in financing fees associated with the Avintiv acquisition.
 
Interest expense
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Interest expense, net
 
$
291
   
$
191
   
$
100
     
52
%
 
Interest expense increased $100 million primarily as the result of the increased borrowings under the term loans and the 6% second priority senior secured notes issued in October 2015 to finance the Avintiv acquisition, partially offset by the net interest savings from the retirement of the 9¾% second priority senior secured notes and corresponding issuance of the 51/8% second priority senior secured notes in June 2015.
 
Income tax expense
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Income tax expense
 
$
72
   
$
36
   
$
36
     
100
%
 
Our effective tax rate was 23% in fiscal 2016.  Our fiscal 2016 effective tax rate was lower than the U.S. federal statutory rate of 35% primarily due to a 5% benefit from the new share-based compensation accounting standard related to excess tax benefit deductions, a 5% benefit from lower tax rates in foreign jurisdictions, a 3% benefit from the U.S. research and development credit, a 3% benefit from a deemed liquidation of an investment which resulted in a worthless stock deduction, and a 3% benefit from the realization of foreign currency losses on the conversion of intercompany debt (not expected to be repaid in the foreseeable future) to equity.  These favorable items were partially offset by increases of 3% from U.S. state income taxes and 2% from the inclusion of foreign income for amounts subject to Subpart F and Section 956 of the U.S. tax code.

Comprehensive Income
Fiscal Year
         
 
2016
 
2015
 
$ Change
 
% Change
 
Comprehensive Income
 
$
207
   
$
10
   
$
197
     
1970
%

The $197 million increase in comprehensive income is primarily attributed to a $150 million increase in net income, a $44 million decrease in currency translation losses, and a $12 million favorable change in the fair value of interest rate hedges, net of tax, partially offset by an increase in unrealized losses on the Company's pension plans of $9 million, net of tax.  Currency translation losses are primarily related to non-U.S. subsidiaries with a functional currency other than the U.S. Dollar whereby assets and liabilities are translated from the respective functional currency into U.S. Dollars using period-end exchange rates.  The change in currency translation losses were primarily attributed to locations utilizing the Euro, Pound Sterling, and Brazilian Real as their functional currency.  Unrealized losses on pension plans in the current period were primarily attributable to actuarial losses from the reduction in the underlying discount rate and application of the new mortality tables.  As part of the overall risk management, the Company uses derivative instruments to reduce exposure to changes in interest rates attributed to the Company's floating-rate borrowings and records changes to the fair value of these instruments in Accumulated other comprehensive income.  The change in fair value of these instruments in fiscal 2016 versus fiscal 2015 is primarily attributed to a change in the forward interest curve between measurement dates.
 
Liquidity and Capital Resources
 
Term Loans

In January 2017, in order to finance the AEP acquisition, the Company entered into an incremental assumption agreement to increase the commitments under the existing term loan credit agreement by $500 million, maturing in January 2024.  Based on market conditions, from time to time, the Company may reprice existing term loans in order to lower interest rates.  As a result of repricing activities, each of the Company's term loans currently bear interest at LIBOR plus 2.25% with a 0% LIBOR floor.  All other terms remain unchanged (see footnote 3 to the Notes to the Consolidated Financial Statements incorporated herein).
Senior Secured Credit Facility
 
We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.  In March 2017, we entered into an agreement to increase our asset-based revolving line of credit that matures in May 2020 by $100 million to $750 million.  At the end of fiscal 2017, there was no outstanding balance on the revolving credit facility.  The Company was in compliance with all covenants at the end of fiscal 2017 (see footnote 3 to the Notes to the Consolidated Financial Statements incorporated herein).
  
18

Contractual Obligations and Off Balance Sheet Transactions
 
Our contractual cash obligations at the end of fiscal 2017 are summarized in the following table which does not give any effect to the tax receivable agreement, or income taxes payable as we cannot reasonably estimate the timing of future cash outflows associated with those commitments.
 
 
 
Payments due by period as of the end of fiscal 2017
 
 
 
Total
   
< 1 year
   
1-3 years
   
4-5 years
   
> 5 years
 
Long-term debt, excluding capital leases
 
$
5,556
   
$
5
   
$
1,010
   
$
824
   
$
3,717
 
Capital leases (a)
   
146
     
33
     
60
     
41
     
12
 
Fixed interest rate payments
   
533
     
87
     
175
     
175
     
96
 
Variable interest rate payments (b)
   
630
     
153
     
270
     
168
     
39
 
Operating leases
   
426
     
64
     
104
     
80
     
178
 
Total contractual cash obligations
 
$
7,291
   
$
342
   
$
1,619
   
$
1,288
   
$
4,042
 
(a)
Includes anticipated interest of $15 million over the life of the capital leases.
(b)
Based on applicable interest rates in effect end of fiscal 2017.

Cash Flows from Operating Activities

Net cash provided by operating activities increased $118 million from fiscal 2016 primarily attributed to improved net income before depreciation, amortization and other non-cash charges.
 
Net cash provided by operating activities increased $220 million from fiscal 2015 primarily attributed to higher net income before depreciation and amortization partially offset by lower debt extinguishment charges.
 
Cash Flows from Investing Activities
 
Net cash used in investing activities decreased $1,805 million from fiscal 2016 primarily attributed to the Avintiv acquisition in fiscal 2016, partially offset by the AEP and Adchem acquisitions in fiscal 2017.
 
Net cash used in investing activities increased $2,414 million from fiscal 2015 primarily attributed to the Avintiv acquisition and higher capital expenditures to support the larger consolidated business.
 
Cash Flows from Financing Activities
 
Net cash from financing activities decreased $2,043 million from fiscal 2016 primarily attributed to 2016 net borrowings related to the Avintiv acquisition and $78 million purchase of noncontrolling interest, partially offset by a higher TRA payment in fiscal 2017.
 
Net cash provided by financing activities increased $2,182 million from fiscal 2015 primarily attributed to incremental financing related to the Avintiv acquisition, partially offset by the $78 million purchase of non-controlling interest and repayment of $524 million on long-term borrowings.

Adjusted Free Cash Flow
 
We define "Adjusted free cash flow" as cash flow from operating activities less net additions to property, plant and equipment and payments of the tax receivable agreement.

Based on our definition, our consolidated adjusted free cash flow is summarized as follows:

   
Years Ended
 
   
September 30, 2017
   
October 1, 2016
   
September 26, 2015
 
Cash flow from operating activities
 
$
975
   
$
857
   
$
637
 
Net additions to property, Additions to property, plant and equipment, net
   
(263
)
   
(283
)
   
(162
)
Payments of tax receivable agreement
   
(111
)
   
(57
)
   
(39
)
Adjusted free cash flow
 
$
601
   
$
517
   
$
436
 

Adjusted free cash flow, as presented in this document, is a supplemental financial measure that is not required by, or presented in accordance with, generally accepted accounting principles in the U.S. ("GAAP").  Adjusted free cash flow is not a GAAP financial measure and should not be considered as an alternative to cash flow from operating activities or any other measure determined in accordance with GAAP.   We use Adjusted free cash flow as a measure of liquidity because it assists us in assessing our company's ability to fund its growth through its generation of cash, and believe it is useful to investors for such purpose. In addition, Adjusted free cash flow and similar measures are widely used by investors, securities analysts and other interested parties in our industry to measure a company's liquidity.  Adjusted free cash flow may be calculated differently by other companies, including other companies in our industry, limiting its usefulness as a comparative measure.

19

Liquidity Outlook
  
At the end of fiscal 2017, our cash balance was $306 million, of which approximately 92% was located outside the U.S.  The Company has deemed cash located outside the U.S. to be indefinitely reinvested and will use for future international expansion.  We believe our existing U.S. based cash and cash flow from U.S. operations, together with available borrowings under our senior secured credit facilities, will be adequate to meet our liquidity needs over the next twelve months.  We do not expect our free cash flow to be sufficient to cover all long-term debt obligations and intend to refinance these obligations prior to maturity.  However, we cannot predict our future results of operations and our ability to meet our obligations involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section in this Form 10-K.
 
Critical Accounting Policies and Estimates
 
We disclose those accounting policies that we consider to be significant in determining the amounts to be utilized for communicating our consolidated financial position, results of operations and cash flows in the first note to our consolidated financial statements included elsewhere herein.  Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.  The preparation of financial statements in conformity with these principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.  Our estimates and judgments are based on historical experience and on various other factors that are believed to be reasonable under the circumstances.  Actual results may differ from these estimates under different assumptions or conditions.
 
Revenue Recognition.  Revenue from the sales of products is recognized at the time title and risks and rewards of ownership pass to the customer (either when the products reach the free-on-board shipping point or destination depending on the contractual terms), there is persuasive evidence of an arrangement, the sales price is fixed and determinable and collection is reasonably assured.
 
Accrued Rebates.  We offer various rebates to our customers in exchange for their purchases.  These rebate programs are individually negotiated with our customers and contain a variety of different terms and conditions.  Certain rebates are calculated as flat percentages of purchases, while others include tiered volume incentives.  These rebates may be payable monthly, quarterly, or annually.  The calculation of the accrued rebate balance involves significant management estimates, especially where the terms of the rebate involve tiered volume levels that require estimates of expected annual sales.  These provisions are based on estimates derived from current program requirements and historical experience.  We use all available information when calculating these reserves.  Our accrual for customer rebates was $58 million and $54 million as of the end of fiscal 2017 and 2016, respectively.
 
Impairments of Long-Lived Assets.  In accordance with the guidance from the FASB for the impairment or disposal of long-lived assets we review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.  Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts.  The impairment loss is measured by comparing the fair value of the asset to its carrying amount.  We recognized non-cash asset impairment of long-lived assets of $2 million, $3 million and $2 million in fiscal 2017, 2016 and 2015, respectively.

Goodwill and Other Indefinite Lived Intangible Assets.  We evaluate goodwill using a qualitative assessment to determine whether it is more likely than not that the fair value of any reporting unit is less that the carrying amount.  If we determine that the fair value of the reporting unit may be less than its carrying amount, we evaluate the goodwill of that reporting unit using the one-step impairment test.  Otherwise, we conclude that no impairment is indicated and no further impairment test is performed.
For purposes of conducting our evaluation, we have seven reporting units, Health, Hygiene & Specialties ("HHS") – North America, HHS – South America, HHS – Europe, HHS – Asia, Consumer Packaging, Engineered Materials, and Tapes.  We determined that each of the components within our respective reporting units should be aggregated and tested at the respective level as one reporting unit.  We reached this conclusion, because within each of our reporting units we have similar products, production processes, markets served, geographic region, and/or management oversight which allows us to share assets and resources across the components.  We regularly re-align our production equipment and manufacturing facilities in order to take advantage of cost savings opportunities, obtain synergies and create manufacturing efficiencies.  We utilize our research and development centers, design center, tool shops, and graphics center which all provide benefits to each of the reporting units and work on new products that can benefit multiple components.  We also believe that the goodwill is recoverable from the overall operations of the unit given the synergies from leveraging the combined resources, common raw materials, common research and development, similar margins, management oversight and similar distribution methodologies.  
20

In conducting a qualitative assessment, we analyze a variety of events or factors that may influence the fair value of the reporting unit, including, but not limited to the results of prior quantitative tests performed; changes in the carrying amount of the reporting unit; operating results; relevant market data for both the Company and its peer companies; industry outlooks; macroeconomic conditions; liquidity; changes in key personnel; and our competitive position.  Significant judgment is used to evaluate the totality of these events and factors to make the determination of whether it is more likely than not that the fair value of the reporting unit is less than its carrying value.
We completed our qualitative screen as of the first day of the fourth fiscal quarter and determined that it was more likely than not that the fair value of each of our reporting, with the exception of HHS-South America and HHS-Asia, was greater than the carrying value.  We reached this conclusion based on the increased valuations within the packaging industry and operating results of our reporting units, in addition to leveraging the step one test performed in fiscal 2016 in conjunction with the Avintiv acquisition and our segment re-alignment.  The identified increased valuations within the plastics industry is supported by the Company's increase in stock price, market capitalization, and total enterprise value.
Based on the results of prior year quantitative tests performed and macroeconomic pressures in South America, we concluded that step one was necessary for the HHS – South America and HHS – Asia reporting units.  The reporting unit's fair value is estimated based on a market approach and a discounted cash flow analysis and is reconciled back to the current market capitalization for Berry Global Group to ensure that the implied control premium is reasonable.  Our forecasts included overall revenue growth of 4-8% through and including the terminal year, which is 4%, and capital expenditure levels consistent with historical spend.  The fair value of the HHS – South America and HHS – Asia reporting unit exceeded their carrying value by 9% and 49%, respectively, and thus no impairment was recorded.  However, an incremental sustained declines of 10%-15% in earnings, or future declines in our peer companies, market capitalizations, or total enterprise value, as well as lower valuation market multiples could impact future impairment tests or may require a more frequent assessment.   
The Company's fair value, carrying value, and goodwill balance for reporting units subject to step 1 of the annual goodwill impairment test for fiscal 2017 are as follows: 
 
 
Fair Value
July 1, 2017
 
Carrying Value July 1, 2017
 
Goodwill as of
September 30, 2017
HHS – South America
 
390
   
359
 
 
107
HHS – Asia
 
530
   
356
 
 
75

We also performed our annual impairment test for fiscal 2017 of our indefinite lived intangible assets, which relates to the "Berry Global," "Reemay," "Typar," and "Chicopee" trade names.  We performed a qualitative screen for the Berry Global tradename, which totaled $207 million at September 30, 2017 and a quantitative assessment for the recently acquired Avintiv tradenames that were valued on October 1, 2015 when acquired.  The fair value is estimated based on the income approach using the revenue streams associated with each trade name. Our forecasted revenue growth for the Berry trade name ranged from 0-3% through and including the terminal year.  In conducting our qualitative screen, we did not observe any changes in our long-term forecasted revenue growth for the Reemay and Typar trade names which ranged from 3-4%, and for the Chicopee trade name which was 1%.  Future declines in revenue or operating performance could impact future impairment tests and our ability to recover the fair value of our indefinite lived tradenames.
 
Deferred Taxes and Effective Tax Rates.  We estimate the effective tax rates ("ETR") and associated liabilities or assets for each of our legal entities of ours in accordance with authoritative guidance.  We use tax planning to minimize or defer tax liabilities to future periods.  In recording ETRs and related liabilities and assets, we rely upon estimates, which are based upon our interpretation of U.S. and local tax laws as they apply to our legal entities and our overall tax structure.  Audits by local tax jurisdictions, including the U.S. Government, could yield different interpretations from our own and cause the Company to owe more taxes than originally recorded.  For interim periods, we accrue our tax provision at the ETR that we expect for the full year.  As the actual results from our various businesses vary from our estimates earlier in the year, we adjust the succeeding interim periods' ETRs to reflect our best estimate for the year-to-date results and for the full year.  As part of the ETR, if we determine that a deferred tax asset arising from temporary differences is not likely to be utilized, we will establish a valuation allowance against that asset to record it at its expected realizable value.  In multiple foreign jurisdictions, the Company believes that it will not generate sufficient future taxable income to realize the related tax benefits.  The Company has provided a full valuation allowance against its foreign net operating losses included within the deferred tax assets in multiple foreign jurisdictions.  The Company has not provided a valuation allowance on its federal net operating losses in the U.S. because it has determined that future reversals of its temporary taxable differences will occur in the same periods and are of the same nature as the temporary differences giving rise to the deferred tax assets.  Changes in our valuation allowance could also impact our tax receivable agreement obligation.  Our valuation allowance against deferred tax assets was $93 million and $82 million as of the end of fiscal 2017 and 2016, respectively.
 
Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our consolidated financial statements provide a meaningful and fair perspective of the Company and its consolidated subsidiaries.  This is not to suggest that other risk factors such as changes in economic conditions, changes in material costs, our ability to pass through changes in material costs, and others could not materially adversely impact our consolidated financial position, results of operations and cash flows in future periods.
 
21

Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Interest Rate Sensitivity

We are exposed to market risk from changes in interest rates primarily through our senior secured credit facilities.  At September 30, 2017, our senior secured credit facilities are comprised of $4.0 billion in term loans and a $750 million revolving credit facility with no borrowings outstanding.  The borrowings under the senior secured credit facilities bear interest at a rate equal to an applicable margin plus LIBOR.  The applicable margin for LIBOR rate borrowings under the revolving credit facility ranges from 1.25% to 1.75%, and the margin for all of the term loans are 2.25% per annum with a 0% LIBOR floor.  At September 30, 2017, the LIBOR rate of approximately 1.23% was applicable to the term loans.  A 0.25% change in LIBOR would increase our annual interest expense by $4 million on variable rate term loans.

We seek to minimize interest rate volatility risk through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. These financial instruments are not used for trading or other speculative purposes.  As of year-end, the Company effectively had (1) a $450 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 2.00%, with an effective date in May 2017 and expiration in May 2022, (2) a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.5190% with an effective date in March 2017 and expiration in June 2019, (3) a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 2.0987% with an effective date in February 2017 and expiration in September 2021.

Foreign Currency Exchange Rates
 
As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, Brazilian real, Argentine peso, Chinese yuan, Canadian dollar and Mexican peso.  Significant fluctuations in currency rates can have a substantial impact, either positive or negative, on our revenue, cost of sales, and operating expenses.  Currency translation gains and losses are primarily related to non-U.S. subsidiaries with a functional currency other than U.S. dollars whereby assets and liabilities are translated from the respective functional currency into U.S. dollars using period-end exchange rates and impact our Comprehensive income.  A 10% decline in foreign currency exchange rates would have a negative $6 million impact on our Net Income.  While future consolidated results of operations could be materially impacted by future fluctuations in currency rates, we may attempt to manage our foreign currency risk on our anticipated cash movements by entering into foreign currency forward contracts to offset potential foreign exchange gains or losses.  As of year-end we had no outstanding foreign currency contracts as these contracts are typically entered into and settled within the given quarter.

In November 2017, we entered into certain cross-currency swap agreements with a notional amount of 250 million euro to effectively convert a portion of our fixed-rate USD denominated term loans, including the monthly interest payments, to fixed rate euro-denominated debt.  The swap agreements mature May 2022.  The risk management objective is to manage foreign currency risk relating to net investments in subsidiaries denominated in euros and reduce the variability in the functional currency cash flows of a portion of our term loans.

Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Index to Financial Statements
 
Reports of Independent Registered Public Accounting Firm
26
Consolidated Statements of Income and Comprehensive Income for fiscal 2017, 2016 and 2015
28
Consolidated Balance Sheets as of fiscal 2017 and 2016
29
Consolidated Statements of Changes in Stockholders' Equity (Deficit) for fiscal 2017, 2016 and 2015
30
Consolidated Statements of Cash Flows for fiscal 2017, 2016 and 2015
31
Notes to Consolidated Financial Statements
32
 
Index to Financial Statement Schedules
 
All schedules have been omitted because they are not applicable or not required or because the required information is included in the consolidated financial statements or notes thereto.
 
22

Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 
Item 9A.
CONTROLS AND PROCEDURES
 
Evaluation of disclosure controls and procedures.
 
We maintain "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

In connection with the preparation of this Form 10-K, management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2017.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of September 30, 2017.
 
Management's Report on Internal Controls over Financial Reporting
 
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013 Framework). The Company acquired AEP and Adchem during fiscal 2017, and management has excluded AEP and Adchem's internal control over financial reporting from our assessment of the effectiveness of our internal control as of September 30, 2017.  AEP and Adchem represent approximately 8% of our consolidated assets as of September 30, 2017 and approximately 11% of our consolidated net sales for fiscal 2017.

Based on this assessment, management concluded that as of September 30, 2017, the Company's internal control over financial reporting was effective.  In addition, Ernst & Young LLP as of September 30, 2017, the Company's independent registered public accounting firm, provided an attestation report on the Company's internal control over financial reporting.  
Changes in Internal Controls over Financial Reporting
 
During fiscal 2017, we developed and implemented new control procedures designed to address the ineffectiveness identified as of the end of fiscal 2016 related to the timeliness of our annual income tax provision process and the adequacy of written documentation around aspects of our foreign tax provisions.  These changes included allocating resources internally to allow us to accelerate the timing of the completion of foreign tax provisions and increasing the level of written documentation related to all aspects of the income tax provision process.

In fiscal 2017, we acquired 100% of the capital stock of AEP which added 14 facilities, 1 of which is located outside the U.S, as well as Adchem Corp's tapes business which added 1 facility.  The Company is in the process of migrating AEP and Adchem's operations into their shared service center, migrating information technology platforms and standardizing control procedures across the overall operations and expect this to continue during fiscal 2018.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described above.
 
Item 9B.
OTHER INFORMATION
 
None.
 
23

PART III
 
Item 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
Except as set forth below, the information required by this Item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2018 Annual Meeting of Stockholders.
 
Code of Ethics
 
We have a Code of Business Ethics that applies to all directors and employees, including our Chief Executive Officer and senior financial officers.  These standards are designed to deter wrongdoing and to promote the highest ethical, moral, and legal conduct of all employees. We also have adopted a Supplemental Code of Ethics, which is in addition to the standards set by our Code of Business Ethics, in order to establish a higher level of expectation for the most senior leaders of the Company.  The Supplemental Code of Ethics sets the expectations as to how our senior leaders conduct themselves in dealings with the Company, customers, suppliers and coworkers and it further defines our commitment to compliance with the Company's policies, procedures and government regulations. Our Code of Business Ethics and Supplemental Code of Ethics can be obtained, free of charge, by contacting our corporate headquarters or can be obtained from the Corporate Governance section of the Investors page on the Company's internet site.
 
Item 11.
EXECUTIVE COMPENSATION
 
The information required by this Item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2018 Annual Meeting of Stockholders.
 
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The information required by this Item, is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2018 Annual Meeting of Stockholders.
 
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
The information required by this Item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2018 Annual Meeting of Stockholders.
 
Item 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
The information required by this Item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2018 Annual Meeting of Stockholders.
 
24

PART IV
 
Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
1.
Financial Statements
 
The financial statements listed under Item 8 are filed as part of this report.
 
2.
Financial Statement Schedules
 
Schedules have been omitted because they are either not applicable or the required information has been disclosed in the financial statements or notes thereto.
 
3.
Exhibits
 
The exhibits listed on the Exhibit Index immediately following the signature page of this annual report are filed as part of this report.

Item 16.
FORM 10-K SUMMARY

None.
25

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Berry Global Group, Inc.
 
We have audited the accompanying consolidated balance sheets of Berry Global Group, Inc. (formerly known as Berry Plastics Group, Inc.) as of September 30, 2017, and October 1, 2016, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity (deficit) and cash flows for each of the three years in the period ended September 30, 2017. 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 in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Berry Global Group, Inc. at September 30, 2017, and October 1, 2016, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2017, in conformity with U.S. generally accepted accounting principles.
  
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Berry Global Group, Inc.'s internal control over financial reporting as of September 30, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission "(2013 framework)" and our report dated November 21, 2017, expressed an unqualified opinion thereon.
 
/s/ Ernst & Young LLP
 
Indianapolis, Indiana
November 21, 2017
 
26

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Berry Global Group, Inc.

We have audited Berry Global Group, Inc.'s (formerly known as Berry Plastics Group, Inc.) internal control over financial reporting as of September 30, 2017, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission "(2013 framework)" (the COSO criteria). Berry Global Group, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management's Report on Internal Controls over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include internal controls of AEP Industries, Inc. and Adchem Corp., which are included in the 2017 consolidated financial statements of Berry Global Group, Inc. and constituted 8% of total assets as of September 30, 2017 and 11% of net sales for the year then ended. Our audit of internal control over financial reporting of Berry Global Group, Inc. also did not include an evaluation of internal control over financial reporting of AEP and Adchem.

In our opinion, Berry Global Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of September 30, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Berry Global Group, Inc. as of September 30, 2017 and October 1, 2016, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity (deficit) and cash flows for each of the three years in the period ended September 30, 2017 of Berry Global Group, Inc. and our report dated November 21, 2017 expressed an unqualified opinion thereon.
 
/s/ Ernst & Young LLP
 
Indianapolis, Indiana
November 21, 2017

27

Berry Global Group, Inc.
Consolidated Statements of Income
(in millions of dollars)

 
 
Fiscal years ended
 
 
 
September 30, 2017
   
October 1, 2016
   
September 26, 2015
 
Net sales
 
$
7,095
   
$
6,489
   
$
4,881
 
Costs and expenses:
                       
Cost of goods sold
   
5,691
     
5,202
     
4,012
 
Selling, general and administrative
   
494
     
531
     
357
 
Amortization of intangibles
   
154
     
143
     
91
 
Restructuring and impairment charges
   
24
     
32
     
13
 
Operating income
   
732
     
581
     
408
 
 
                       
Debt extinguishment
   
10
     
4
     
94
 
Other (income) expense, net
   
4
     
(22
)
   
1
 
Interest expense, net
   
269
     
291
     
191
 
Income before income taxes
   
449
     
308
     
122
 
Income tax expense
   
109
     
72
     
36
 
Net income
 
$
340
   
$
236
   
$
86
 
Net income per share:
                       
Basic (see footnote 14)
 
$
2.66
   
$
1.95
   
$
0.72
 
Diluted (see footnote 14)
 
$
2.56
   
$
1.89
   
$
0.70
 

Berry Global Group, Inc.
Consolidated Statements of Comprehensive Income
(in millions of dollars)

 
 
Fiscal years ended
 
 
 
September 30, 2017
   
October 1, 2016
   
September 26, 2015
 
Net income
 
$
340
   
$
236
   
$
86
 
Currency translation
   
34
     
(1
)
   
(45
)
Defined benefit pension and retiree health benefit plans
   
38
     
(23
)
   
(16
)
Interest rate hedges
   
28
     
(14
)
   
(33
)
Provision for income taxes related to other comprehensive income items
   
(20
)
   
9
     
18
 
Other comprehensive income, net of tax
   
80
     
(29
)
   
(76
)
Comprehensive income
 
$
420
   
$
207
   
$
10
 
 
See notes to consolidated financial statements.
 
28

Berry Global Group, Inc.
Consolidated Balance Sheets
(in millions of dollars)

 
 
September 30, 2017
   
October 1, 2016
 
Assets
           
Current assets:
           
Cash and cash equivalents
 
$
306
   
$
323
 
Accounts receivable, net
   
847
     
704
 
Inventories
   
762
     
660
 
Prepaid expenses and other current assets
   
89
     
105
 
Total current assets
   
2,004
     
1,792
 
Property, plant and equipment, net
   
2,366
     
2,224
 
Goodwill and intangible assets, net
   
4,061
     
3,606
 
Other assets
   
45
     
31
 
Total assets
 
$
8,476
   
$
7,653
 
 
               
Liabilities
               
Current liabilities:
               
Accounts payable
 
$
638
   
$
539
 
Accrued expenses and other current liabilities
   
463
     
449
 
Current portion of long-term debt
   
33
     
43
 
Total current liabilities
   
1,134
     
1,031
 
Long-term debt, less current portion
   
5,608
     
5,712
 
Deferred income taxes
   
419
     
272
 
Other long-term liabilities
   
300
     
417
 
Total liabilities
   
7,461
     
7,432
 
Commitments and contingencies
               
                 
Stockholders' Equity:
               
Common stock: (130.9 and 122.0 shares issued, respectively)
   
1
     
1
 
Additional paid-in capital
   
823
     
449
 
Non-controlling interest
   
3
     
3
 
Retained earnings (deficit)
   
256
     
(84
)
Accumulated other comprehensive loss
   
(68
)
   
(148
)
Total stockholders' equity
   
1,015
     
221
 
Total liabilities and stockholders' equity
 
$
8,476
   
$
7,653
 
  
See notes to consolidated financial statements.
 
29

Berry Global Group, Inc.
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
(in millions of dollars)
 
 
 
Common Stock
   
Additional Paid-in Capital
   
Non-Controlling Interest
   
Accumulated Other Comprehensive Loss
   
Retained Earnings (Deficit)
   
Total
 
Balance at September 27, 2014
 
$
1
   
$
367
   
$
3
   
$
(43
)
 
$
(442
)
 
$
(114
)
Stock compensation expense
   
     
21
     
     
     
     
21
 
Proceeds from issuance of common stock
   
     
18
     
     
     
     
18
 
Interest rate hedge, net of tax
   
     
     
     
(21
)
   
     
(21
)
Net income attributable to the Company
   
     
     
     
     
86
     
86
 
Currency translation
   
     
     
     
(45
)
   
     
(45
)
Defined benefit pension and retiree health benefit plans, net of tax
   
     
     
     
(10
)
   
     
(10
)
Balance at September 26, 2015
 
$
1
   
$
406
   
$
3
   
$
(119
)
 
$
(356
)
 
$
(65
)
Stock compensation expense
   
     
20
     
     
     
     
20
 
Cumulative effect of excess tax benefit from the adoption of ASU 2016-09
   
     
     
     
     
36
     
36
 
Proceeds from issuance of common stock
   
     
26
     
     
     
     
26
 
Interest rate hedge, net of tax
   
     
     
     
(9
)
   
     
(9
)
Net income attributable to the Company
   
     
     
     
     
236
     
236
 
Currency translation
   
     
     
     
(1
)
   
     
(1
)
Defined benefit pension and retiree health benefit plans, net of tax
   
     
     
     
(19
)
   
     
(19
)
Other equity
   
     
(3
)
   
     
     
     
(3
)
Balance at October 1, 2016
 
$
1
   
$
449
   
$
3
   
$
(148
)
 
$
(84
)
 
$
221
 
Stock compensation expense
   
     
20
     
     
     
     
20
 
Proceeds from issuance of common stock
   
     
31
     
     
     
     
31
 
Interest rate hedge, net of tax
   
     
     
     
18
     
     
18
 
Net income attributable to the Company
   
     
     
     
     
340
     
340
 
Currency translation
   
     
     
     
34
     
     
34
 
Defined benefit pension and retiree health benefit plans, net of tax
   
     
     
     
28
     
     
28
 
Equity issuance, net (see Footnote 2)
   
     
323
     
     
     
     
323
 
Balance at September 30, 2017
 
$
1
   
$
823
   
$
3
   
$
(68
)
 
$
256
   
$
1,015
 
 
See notes to consolidated financial statements.

30

Berry Global Group, Inc.
   Consolidated Statements of Cash Flows
(in millions of dollars)

 
 
Fiscal years ended
 
 
 
September 30, 2017
   
October 1, 2016
   
September 26, 2015
 
 
                 
Cash Flows from Operating Activities:
                 
Net income
 
$
340
   
$
236
   
$
86
 
 
                       
Adjustments to reconcile net cash from operating activities:
                       
Depreciation
   
367
     
382
     
259
 
Amortization of intangibles
   
154
     
143
     
91
 
Non-cash interest expense
   
9
     
9
     
6
 
Debt extinguishment
   
10
     
4
     
94
 
Stock compensation expense
   
20
     
20
     
21
 
Deferred income tax
   
5
     
31
     
26
 
Other non-cash operating activities, net
   
15
     
(13
)
   
2
 
Changes in operating assets and liabilities:
                       
Accounts receivable, net
   
(41
)
   
(34
)
   
46
 
Inventories
   
10
     
9
     
74
 
Prepaid expenses and other assets
   
27
     
21
     
(8
)
Accounts payable and other liabilities
   
59
     
49
     
(60
)
Net cash from operating activities
   
975
     
857
     
637
 
 
                       
Cash Flows from Investing Activities:
                       
Additions to property, plant and equipment
   
(269
)
   
(288
)
   
(180
)
Proceeds from sale of assets
   
6
     
5
     
18
 
Acquisition of business, net of cash acquired
   
(515
)
   
(2,283
)
   
(3
)
Other investing activities, net
   
4
     
(13
)
   
 
Net cash from investing activities
   
(774
)
   
(2,579
)
   
(165
)
 
                       
Cash Flows from Financing Activities:
                       
Proceeds from long-term borrowings
   
495
     
2,490
     
693
 
Repayment of long-term borrowings
   
(636
)
   
(524
)
   
(951
)
Proceeds from issuance of common stock
   
31
     
26
     
18
 
Payment of tax receivable agreement
   
(111
)
   
(57
)
   
(39
)
Debt financing costs
   
(5
)
   
(40
)
   
(86
)
Purchase of non-controlling interest
   
     
(78
)
   
 
Net cash from financing activities
   
(226
)
   
1,817
     
(365
)
Effect of currency translation on cash
   
8
     
     
(8
)
Net change in cash and cash equivalents
   
(17
)
   
95
     
99
 
Cash and cash equivalents at beginning of period
   
323
     
228
     
129
 
Cash and cash equivalents at end of period
 
$
306
   
$
323
   
$
228
 

See notes to consolidated financial statements.

31

 
Berry Global Group, Inc.
Notes to Consolidated Financial Statements
(in millions of dollars, except as otherwise noted)
 
1.  Basis of Presentation and Summary of Significant Accounting Policies
 
Background
 
Berry Global Group, Inc. ("Berry," "we," or the "Company") is a leading provider of value-added engineered materials, nonwoven specialty materials and consumer packaging with a track record of delivering high-quality customized solutions to our customers.  We sell our products predominantly into stable, consumer-oriented end-markets, such as healthcare, personal care, and food and beverage.  Our customers consist of a diverse mix of leading global, national, mid-sized regional and local specialty businesses.  The size and scope of our customer network allows us to introduce new products we develop or acquire to a vast audience that is familiar with our business.  

Effective April 2017, the Company changed its name from Berry Plastics Group, Inc. to Berry Global Group, Inc.  The new name is reflected throughout this Form 10-K.  Common Shares of the Company stock continue to be traded on the New York Stock Exchange under the symbol BERY.  In addition, Berry Plastics Corporation, a wholly owned subsidiary, changed its name to Berry Global, Inc.

Basis of Presentation
 
Periods presented in these financial statements include fiscal periods ending September 30, 2017 ("fiscal 2017"), October 1, 2016 ("fiscal 2016"), and September 26, 2015 ("fiscal 2015").  The Company's customers are located principally throughout the U.S., without significant concentration with any one customer.  The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral.  Fiscal 2017 and fiscal 2015 were fifty-two week periods, and fiscal 2016 was a fifty-three week period.  The Company has evaluated subsequent events through the date the financial statements were issued.
 
The consolidated financial statements include the accounts of Berry and its subsidiaries, all of which includes our wholly owned and majority owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.  Where our ownership of consolidated subsidiaries is less than 100% the non-controlling interests are reflected in Non-controlling interest.
 
Revenue Recognition
 
Revenue from the sales of products is recognized at the time title and risks and rewards of ownership pass to the customer, there is persuasive evidence of an arrangement, the sales price is fixed and determinable and collection is reasonably assured.  Provisions for certain rebates, sales incentives, trade promotions, coupons, product returns and discounts to customers are accounted for as reductions in gross sales to arrive at net sales.  In accordance with the Revenue Recognition standards of the Accounting Standards Codification ("Codification" or "ASC"), the Company provides for these items as reductions of revenue at the later of the date of the sale or the date the incentive is offered.  These provisions are based on estimates derived from current program requirements and historical experience.
 
Shipping, handling, purchasing, receiving, inspecting, warehousing, and other costs of distribution are presented in Cost of goods sold in the Consolidated Statements of Income.  The Company classifies amounts charged to its customers for shipping and handling in Net sales in the Consolidated Statements of Income.
 
Purchases of Raw Materials and Concentration of Risk
 
The Company's most significant raw material used in the production of its products is plastic resin.  The largest supplier of the Company's total resin material requirements represented approximately 15% of purchases in fiscal 2017.  The Company uses a variety of suppliers to meet its resin requirements.
 
Research and Development
 
Research and development costs are expensed when incurred.  The Company incurred research and development expenditures of $45 million, $48 million, and $33 million in fiscal 2017, 2016, and 2015, respectively.
 

Stock-Based Compensation
 
The compensation guidance of the FASB requires that the compensation cost relating to share-based payment transactions be recognized in financial statements based on alternative fair value models.  The share-based compensation cost is measured based on the fair value of the equity or liability instruments issued.  The Company's share-based compensation plan is more fully described in Note 12.  The Company recorded total stock compensation expense of $20 million, $20 million, and $21 million for fiscal 2017, 2016, and 2015, respectively.
 
32

The Company utilizes the Black-Scholes option valuation model for estimating the fair value of the stock options.  The model allows for the use of a range of assumptions.  Expected volatilities utilized in the Black-Scholes model are based on implied volatilities from traded stocks of peer companies. Similarly, the dividend yield is based on historical experience and the estimate of future dividend yields.  The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant.  The Company's options have a ten year contractual life.  For purposes of the valuation model in fiscal years 2017, 2016, and 2015, the Company used the simplified method for determining the granted options expected lives (see footnote 12).
 
Foreign Currency
 
For the non-U.S. subsidiaries that account in a functional currency other than U.S. Dollars, assets and liabilities are translated into U.S. Dollars using period-end exchange rates.  Sales and expenses are translated at the average exchange rates in effect during the period.  Foreign currency translation gains and losses are included as a component of Accumulated other comprehensive income (loss) within stockholders' equity.  Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Income.
 
Cash and Cash Equivalents
 
All highly liquid investments purchased with a maturity of three months or less from the time of purchase are considered to be cash equivalents.
 
Allowance for Doubtful Accounts
 
The Company's accounts receivable and related allowance for doubtful accounts are analyzed in detail on a quarterly basis and all significant customers with delinquent balances are reviewed to determine future collectability.  The determinations are based on legal issues (such as bankruptcy status), past history, current financial and credit agency reports, and the experience of the credit representatives.  Reserves are established in the quarter in which the Company makes the determination that the account is deemed uncollectible.  The Company maintains additional reserves based on its historical bad debt experience.  The following table summarizes the activity for fiscal years ended for the allowance for doubtful accounts:

 
 
2017
   
2016
   
2015
 
Allowance for doubtful accounts, beginning
 
$
8
   
$
3
   
$
3
 
Acquisition allowance for doubtful accounts
   
5
     
6
     
 
Bad debt expense
   
1
     
1
     
2
 
Write-offs against allowance
   
(1
)
   
(2
)
   
(2
)
Allowance for doubtful accounts, ending
 
$
13
   
$
8
   
$
3
 
 
Accounts Receivable Factoring Agreements

The Company has entered into various factoring agreements, both in the U.S. and at a number of foreign subsidiaries, to sell certain receivables to unrelated third-party financial institutions. The Company accounts for these transactions in accordance with ASC 860, "Transfers and Servicing" ("ASC 860").  ASC 860 allows for the ownership transfer of accounts receivable to qualify for sale treatment when the appropriate criteria is met, which permits the Company to present the balances sold under the program to be excluded from Accounts receivable, net on the Consolidated Balance Sheets.  Receivables are considered sold when (i) they are transferred beyond the reach of the Company and its creditors, (ii) the purchaser has the right to pledge or exchange the receivables, and (iii) the Company has surrendered control over the transferred receivables.  In addition, the Company provides no other forms of continued financial support to the purchaser of the receivables once the receivables are sold.

There were no amounts outstanding from financial institutions related to U.S. based programs at September 30, 2017 or October 1, 2016.  Gross amounts factored under these U.S. based programs at September 30, 2017 and October 1, 2016 were $129 million and $118 million, respectively.  The fees associated with transfer of receivables for all programs were not material for any of the periods presented.
 
Inventories
 
Inventories are stated at the lower of cost or market and are valued using the first-in, first-out method.  Management periodically reviews inventory balances, using recent and future expected sales to identify slow-moving and/or obsolete items. The cost of spare parts is charged to cost of goods sold when purchased.  We evaluate our reserve for inventory obsolescence on a quarterly basis and review inventory on-hand to determine future salability.  We base our determinations on the age of the inventory and the experience of our personnel.  We reserve inventory that we deem to be not salable in the quarter in which we make the determination.  We believe, based on past history and our policies and procedures, that our net inventory is salable.  Inventory as of fiscal 2017 and 2016 was:
33

 

Inventories:
 
2017
   
2016
 
Finished goods
 
$
428
   
$
397
 
Raw materials
   
334
     
263
 
 
 
$
762
   
$
660
 

Property, Plant and Equipment
 
Property, plant and equipment are stated at cost.  Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets ranging from 5 to 25 years for buildings and improvements, 2 to 10 years for machinery, equipment, and tooling and over the term of the agreement for capital leases.  Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the lease term.  Repairs and maintenance costs are charged to expense as incurred.  The Company capitalized interest of $7 million, $6 million, and $6 million in fiscal 2017, 2016, and 2015, respectively.  Property, plant and equipment as of fiscal 2017 and 2016 was:

Property, plant and equipment:
 
2017
   
2016
 
Land, buildings and improvements
 
$
792
   
$
667
 
Equipment and construction in progress
   
3,895
     
3,552
 
 
   
4,687
     
4,219
 
Less accumulated depreciation
   
(2,321
)
   
(1,995
)
 
 
$
2,366
   
$
2,224
 
 
Long-lived Assets
 
Long-lived assets, including property, plant and equipment and definite lived intangible assets are reviewed for impairment in accordance with ASC 360, "Property, Plant and Equipment," whenever facts and circumstances indicate that the carrying amount may not be recoverable.  Specifically, this process involves comparing an asset's carrying value to the estimated undiscounted future cash flows the asset is expected to generate over its remaining life.  If this process were to result in the conclusion that the carrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations.  Fair value is determined based upon discounted cash flows or appraisals as appropriate.  Long-lived assets that are held for sale are reported at the lower of the assets' carrying amount or fair value less costs related to the assets' disposition.  We recorded impairment charges totaling $2 million, $3 million, and $2 million to property, plant and equipment assets to their net realizable valuables in connection with facility shutdowns during fiscal years 2017, 2016, and 2015, respectively.
 
Goodwill
 
The Company follows the principles provided by ASC 350, "Intangibles - Goodwill and Other."  Goodwill is not amortized but rather reviewed annually for impairment.  In connection with the Company's segment re-alignment, the Company performed a goodwill assessment before and after the segment realignment to determine if any impairment was present, noting that in each case the fair value of the reporting unit for each of historical reporting units exceeded its carrying value.  The Company performed their annual impairment evaluation on the first day of the fourth fiscal quarter.  For purposes of conducting our annual goodwill impairment test, the Company determined that we have seven reporting units, Health, Hygiene & Specialties ("HHS") – North America, HHS – South America, HHS – Europe, HHS – Asia, Consumer Packaging, Engineered Materials, and Tapes.  We determined that each of the components within our respective reporting units should be aggregated for our Consumer Packaging, Engineered Materials and Tapes reporting units.  We reached this conclusion because within each of these three reporting units, we have similar products, management oversight, production processes, markets served, and/or common geographic region which allow us to share resources across the product lines.  We regularly re-align our production equipment and manufacturing facilities in order to take advantage of cost savings opportunities, obtain synergies and create manufacturing efficiencies.  In addition, we utilize our research and development centers, design center, tool shops, and graphics center which all provide benefits to each of the reporting units and work on new products that can benefit multiple product lines.  We also believe that the goodwill is recoverable from the overall operations of the unit given our synergies from leveraging the combined resources, common raw materials, common research and development, similar margins and similar distribution methodologies.  In our HHS segment, we operate in four geographical regions where our management teams for each geography oversee the operations and allocate the resources across the entire region.  In fiscal year 2017, the Company applied the qualitative assessment to determine whether it is more likely than not that the fair value of the reporting units may be less than the carrying amount, and concluded that it was more likely than not that the fair value of each reporting unit exceeded the carrying amount except for the HHS-South America and HHS-Asia reporting units due to prior year quantitative tests performed and macroeconomic pressures in South America.  The Company completed step 1 in fiscal 2017, which concluded the fair value of the HHS – South America and HHS – Asia reporting units exceeded their carrying value by 9% and 49%, respectively, and thus no impairment was recorded.  However, an incremental sustained decline of 10%-15% in earnings, or future declines in our peer companies, market capitalizations, or total enterprise value, as well as lower valuation market multiples could impact future impairment tests or may require a more frequent assessment.  In fiscal year 2016, due to the segment realignment, the Company opted to perform a step 1 quantitative evaluation in accordance with ASC 350 to establish a baseline for the fair value of each reporting unit.  The Company utilizes a combination of the discounted cash flow analysis and comparable company valuation methods to determine the fair values of its reporting units in accordance with ASC 820.  The Company determined that the fair value of each reporting unit exceeded its carrying amount.  In fiscal 2015, the Company applied the qualitative assessment and determined that it is more likely than not that the fair value of each reporting unit exceeded its carrying amount.  The Company has recognized cumulative goodwill impairment charges of $165 million, which occurred in fiscal 2011.
34

 
 
The changes in the carrying amount of goodwill by reportable segment are as follows: 
 
 
Consumer
Packaging
   
Health,
Hygiene &
Specialties
   
Engineered
Materials
   
Total
 
Balance as of fiscal 2015
 
$
1,520
   
$
48
   
$
84
   
$
1,652
 
Foreign currency translation adjustment
   
     
13
     
1
     
14
 
Acquisitions, net
   
     
740
     
     
740
 
Balance as of fiscal 2016
 
$
1,520
   
$
801
   
$
85
   
$
2,406
 
Segment re-alignment
   
(110
)
   
7
     
103
     
 
Foreign currency translation adjustment
   
1
     
11
     
(1
)
   
11
 
Acquisitions, net
   
     
     
358
     
358
 
Balance as of fiscal 2017
 
$
1,411
   
$
819
   
$
545
   
$
2,775
 
 
Deferred Financing Fees
 
Deferred financing fees are amortized to interest expense using the effective interest method over the lives of the respective debt agreements.  Pursuant to ASC 835-30 the Company presents $48 million of debt issuance and deferred financing costs on the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge.  In addition, the remaining $3 million of deferred charges, which relate to the Company's revolving line of credit, are presented in Other assets.
 
Intangible Assets
 
Customer relationships are being amortized using an accelerated amortization method which corresponds with the customer attrition rates used in the initial valuation of the intangibles over the estimated life of the relationships which range from 5 to 15 years. Definite lived trademarks are being amortized using the straight-line method over the estimated life of the asset which is not more than 15 years.  Other intangibles, which include technology and licenses, are being amortized using the straight-line method over the estimated life of the asset which ranges from 5 to 14 years.  The Company evaluates the remaining useful life of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining useful life.  Trademarks that are expected to remain in use, which are indefinite lived intangible assets, are required to be reviewed for impairment annually.  The Company has certain trademarks that total approximately $248 million that are indefinite lived and we test annually for impairment on the first day of the fourth quarter.  We completed the annual impairment test of our indefinite lived trade names utilizing the relief from royalty method on the first day of the fourth quarter for each of our indefinite lived assets and noted no impairment in fiscal 2017, 2016 and 2015.
 
 
 
Customer
Relationships
   
Trademarks
   
Other
Intangibles
   
Accumulated
Amortization
   
Total
 
Balance as of fiscal 2015
 
$
1,159
   
$
281
   
$
106
   
$
(853
)
 
$
693
 
Adjustment for income taxes
   
(3
)
   
     
     
     
(3
)
Foreign currency translation adjustment
   
11
     
     
1
     
(2
)
   
10
 
Amortization expense
   
     
     
     
(143
)
   
(143
)
Acquisition intangibles
   
523
     
45
     
75
     
     
643
 
Balance as of fiscal 2016
 
$
1,690
   
$
326
   
$
182
   
$
(998
)
 
$
1,200
 
 
                                       
Adjustment for income taxes
   
     
1
     
     
     
1
 
Foreign currency translation adjustment
   
6
     
(1
)
   
1
     
(3
)
   
3
 
Amortization expense
   
     
     
     
(154
)
   
(154
)
Acquisition intangibles
   
226
     
9
     
1
     
     
236
 
Balance as of fiscal 2017
 
$
1,922
   
$
335
   
$
184
   
$
(1,155
)
 
$
1,286
 
 
 
35

Insurable Liabilities
 
The Company records liabilities for the self-insured portion of workers' compensation, health, product, general and auto liabilities.  The determination of these liabilities and related expenses is dependent on claims experience.  For most of these liabilities, claims incurred but not yet reported are estimated based upon historical claims experience.

Income Taxes

The Company accounts for income taxes under the asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the Company's financial statements or income tax returns.  Income taxes are recognized during the period in which the underlying transactions are recorded.  Deferred taxes, with the exception of non-deductible goodwill, are provided for temporary differences between amounts of assets and liabilities as recorded for financial reporting purposes and such amounts as measured by tax laws.  If the Company determines that a deferred tax asset arising from temporary differences is not likely to be utilized, the Company will establish a valuation allowance against that asset to record it at its expected realizable value.  The Company recognizes uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position.  The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.  The Company's effective tax rate is dependent on many factors including:  the impact of enacted tax laws in jurisdictions in which the Company operates; the amount of earnings by jurisdiction, due to varying tax rates in each country; and the Company's ability to utilize foreign tax credits related to foreign taxes paid on foreign earnings that will be remitted to the U.S.
 
Comprehensive Income (Loss)
 
Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss).  Other comprehensive losses include net unrealized gains or losses resulting from currency translations of foreign subsidiaries, changes in the value of our derivative instruments and adjustments to the pension liability.
 
The accumulated balances related to each component of other comprehensive income (loss) were as follows (amounts below are net of taxes):

   
Currency Translation
   
Defined Benefit Pension and Retiree Health Benefit Plans
   
Interest Rate Swaps
   
Accumulated Other Comprehensive Loss
 
Balance as of fiscal 2014
 
$
(36
)
 
$
(15
)
 
$
8
   
$
(43
)
Other comprehensive loss
   
(45
)
   
(16
)
   
(33
)
   
(94
)
Provision for income taxes
   
     
6
     
12
     
18
 
Balance as of fiscal 2015
 
$
(81
)
 
$
(25
)
 
$
(13
)
 
$
(119
)
Other comprehensive loss
   
(1
)
   
(25
)
   
(30
)
   
(56
)
Net amount reclassified from accumulated other comprehensive income (loss)
   
     
2
     
16
     
18
 
Provision for income taxes
   
     
4
     
5
     
9
 
Balance as of fiscal 2016
 
$
(82
)
 
$
(44
)
 
$
(22
)
 
$
(148
)
Other comprehensive income
   
34
     
25
     
7
     
66
 
Net amount reclassified from accumulated other comprehensive income (loss) (a)
   
     
13
     
21
     
34
 
Provision for income taxes
   
     
(10
)
   
(10
)
   
(20
)
Balance as of fiscal 2017
 
$
(48
)
 
$
(16
)
 
$
(4
)
 
$
(68
)

(a) See footnote 4 for further discussion on amounts reclassified out of accumulated other comprehensive income (loss) related to interest rate swaps and footnote 9 for amounts reclassified related to pensions.  

36

Accrued Rebates
 
The Company offers various rebates to customers based on purchases.  These rebate programs are individually negotiated with customers and contain a variety of different terms and conditions.  Certain rebates are calculated as flat percentages of purchases, while others included tiered volume incentives.  These rebates may be payable monthly, quarterly, or annually.  The calculation of the accrued rebate balance involves significant management estimates, especially where the terms of the rebate involve tiered volume levels that require estimates of expected annual sales.  These provisions are based on estimates derived from current program requirements and historical experience.  The accrual for customer rebates was $58 million and $54 million at the end of fiscal 2017 and 2016, respectively and is included in Accrued expenses and other current liabilities.
 
Pension
 
Pension benefit costs include assumptions for the discount rate, retirement age, and expected return on plan assets.  Retiree medical plan costs include assumptions for the discount rate, retirement age, and health-care-cost trend rates.  Periodically, the Company evaluates the discount rate and the expected return on plan assets in its defined benefit pension and retiree health benefit plans.  In evaluating these assumptions, the Company considers many factors, including an evaluation of the discount rates, expected return on plan assets and the health-care-cost trend rates of other companies; historical assumptions compared with actual results; an analysis of current market conditions and asset allocations; and the views of advisers.
 
Net Income Per Share
 
The Company calculates basic net income per share based on the weighted-average number of outstanding common shares.  The Company calculates diluted net income per share based on the weighted-average number of outstanding common shares plus the effect of dilutive securities.
 
Use of Estimates
 
The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make extensive use of estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of sales and expenses.  Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the event or circumstances giving rise to such changes occur.
 
Recently Issued Accounting Pronouncements
 
Revenue Recognition
 
In May 2014, the Financial Accounting Standards Board (FASB) issued a final standard on revenue recognition. Under the new standard, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In order to do so, an entity would follow the five-step process for in-scope transactions: 1) identify the contract with a customer, 2) identify the separate performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the separate performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. For public entities, the provisions of the new standard are effective for annual reporting periods beginning after December 15, 2017 and interim periods therein.  Early adoption for annual reporting periods beginning after December 15, 2016 is permitted. An entity can apply the new revenue standard on a full retrospective approach to each prior reporting period presented or on a modified retrospective approach with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings. The Company plans to the adopt this new standard using the modified retrospective approach, and is currently evaluating the anticipated impact to the consolidated financial statements which will not be effective for the Company until fiscal 2019.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  Under the new standard, the lessee of an operating lease will be required to do the following: 1) recognize a right-of-use asset and a lease liability in the statement of financial position, 2) recognize a single lease cost allocated over the lease term generally on a straight-line basis, and 3) classify all cash payments within operating activities on the statement of cash flows.  Companies will be required to adopt this standard on a modified retrospective approach, and amendments in this guidance are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company is currently evaluating the impact of this guidance, which will not be effective for the Company until fiscal 2020.

37

Goodwill

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment.  To simplify the subsequent measurement of goodwill, Step 2, which was previously used to compute the implied fair value of goodwill, was eliminated.  This update requires an entity to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.  An impairment will be recognized in the amount by which a reporting unit's carrying amount exceeds its fair value.  The loss recognized will not exceed the total amount of goodwill allocated to that reporting unit.  The new guidance is effective for interim and annual periods beginning after December 15, 2019 and should be applied on a prospective basis.  Early adoption is permitted.  The Company adopted this guidance for our fiscal 2017 goodwill testing.  There was no impact to the consolidated financial statements as a result of the adoption of this guidance.

Retirement Benefits

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires employers to report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations.  If a separate line item is used to present the other components of net benefit cost, then the line item used in the income statement to present the other components of net benefit cost must be disclosed.  The new guidance is effective for interim and annual periods beginning after December 15, 2017 and should be applied on a retrospective basis.  Early adoption is permitted.  The Company is currently evaluating the impact of this guidance.

Hedges

In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities in order to more closely align the results of hedge accounting with risk management activities through changes to the designation and measurement guidance.  The new guidance is effective for interim and annual periods beginning after December 15, 2018.  The effect of adoption should be reflected on all active hedges as of the beginning of the fiscal year of adoption.  Early adoption is permitted.  The Company has chosen to early adopt this guidance for fiscal 2018, and does not expect a material impact on any of its active hedges.

2.  Acquisition
 
AEP Industries Inc.

In January 2017, the Company acquired AEP Industries Inc. ("AEP") for a purchase price of $791 million, net of cash acquired.  A portion of the purchase price consisted of issuing 6.4 million of Berry common shares which were valued at $324 million at the time of closing.  AEP manufactures and markets an extensive and diverse line of polyethylene and polyvinyl chloride flexible plastic packaging products with consumer, industrial, and agricultural applications.  The acquired business is operated in our Engineered Materials segment.  To finance the purchase, the Company entered into an incremental assumption agreement to increase the commitments under the Company's existing term loan credit agreement by $500 million due 2024.
The acquisition has been accounted for under the purchase method of accounting, and accordingly, the purchase price has been allocated to the identifiable assets and liabilities based on fair values at the acquisition date.  The results of AEP have been included in the consolidated results of the Company since the date of the acquisition.  The Company has not finalized the allocations of the purchase price to the fair value of deferred taxes (including assessment of uncertain tax positions), fixed assets, and certain working capital accounts.  The Company has recognized Goodwill on this transaction primarily as a result of expected cost synergies, and does not expect Goodwill to be deductible for tax purposes.  The following table summarizes the allocation of purchase price and the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition:
Working capital (a)
 
$
140
 
Property and equipment
   
223
 
Intangible assets
   
214
 
Goodwill
   
343
 
Historical AEP debt assumed
   
(7
)
Other assets and long-term liabilities
   
(122
)
(a) Includes a $5 million step up of inventory to fair value
 

The Company has allocated the purchase price based on a preliminary fair value analysis to working capital, long-term assets and liabilities, property and equipment, intangible assets (customer relationships, technology & tradenames), pension, deferred income taxes and goodwill.  The Company has utilized variations of the income method for purposes of valuing the intangible assets and considered various methods for the real and personal property including the new cost, replacement cost and current cost estimates to determine the preliminary fair value.

38

Adchem Corp

In June 2017, the Company acquired Adchem Corp's ("Adchem") tapes business for a purchase price of $49 million.  Adchem was a leader in the development of high performance adhesive tape systems for the automotive, construction, electronics, graphic arts, medical and general tape markets.  The acquired business is operated in our Engineered Materials segment.  To finance the purchase, the Company used existing liquidity.  The acquisition has been accounted for under the purchase method of accounting and accordingly, the purchase price has been allocated to the identifiable assets and liabilities based on preliminary estimates of fair value at the acquisition date.  The assets and assumed liabilities consisted of working capital of $10 million, property and equipment of $2 million, intangible assets of $22 million, and goodwill of $15 million.  The Company has recognized goodwill on this transaction primarily as a result of expected cost synergies, and expects goodwill to be deductible for tax purposes.

AVINTIV Inc.
 
In October 2015, the Company acquired 100% of the capital stock of AVINTIV Inc. ("Avintiv") for a purchase price of $2.26 billion, net of cash acquired.  Avintiv is one of the world's leading developers, producers, and marketers of nonwoven specialty materials used in hygiene, infection prevention, personal care, industrial, construction, and filtration applications.  To finance the purchase, the Company issued $400 million aggregate principal amount of 6.0% second priority senior secured notes due 2022 and entered into an incremental assumption agreement to increase the commitments under the Company's existing term loan credit agreement by $2.1 billion due 2022.  The results of Avintiv have been included in the consolidated results of the Company since the date of acquisition.

When accounting for the Avintiv and AEP acquisitions, unaudited pro forma net sales were $7.4 billion, $7.6 billion, and $7.9 billion for fiscal 2017, fiscal 2016, and fiscal 2015, respectively.  Unaudited pro forma net income (loss) was $338 million, $250 million, and $(34) million for fiscal 2017, fiscal 2016, and fiscal 2015, respectively.  The unaudited pro forma net sales and net income assume that the acquisitions had occurred as of the beginning of the period.

The unaudited pro forma information presented above is for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the Avintiv or AEP acquisitions been consummated at the beginning of the period, nor is it necessarily indicative of future operating results.  Further, the information reflects only pro forma adjustments for additional interest expense, depreciation, and amortization, net of the applicable income tax effects.

3.  Long-Term Debt
    
Long-term debt consists of the following:

Maturity Date
 
September 30, 2017
   
October 1, 2016
 
Term loan
February 2020
 
$
1,000
   
$
1,351
 
Term loan
January 2021
   
814
     
814
 
Term loan
October 2022
   
1,645
     
1,895
 
Term loan
January 2024
   
498
     
 
Revolving line of credit
May 2020
   
     
 
5 1/8% Second Priority Senior Secured Notes
July 2023
   
700
     
700
 
5 1/2% Second Priority Senior Secured Notes
May 2022
   
500
     
500
 
6% Second Priority Senior Secured Notes
October 2022
   
400
     
400
 
Debt discounts and deferred fees
 
   
(48
)
   
(58
)
Capital leases and other
Various
   
132
     
153
 
Total long-term debt
 
   
5,641
     
5,755
 
Current portion of long-term debt
 
   
(33
)
   
(43
)
Long-term debt, less current portion
 
 
$
5,608
   
$
5,712
 
 
Fiscal 2017 Activity
 
In January 2017, in order to finance the AEP acquisition, the Company entered into an incremental assumption agreement to increase the commitments under the existing term loan credit agreement by $500 million, maturing in January 2024.
In March 2017, the Company entered into an agreement to increase our asset-based revolving line of credit that matures in May 2020 by $100 million to $750 million.

39

Berry Global, Inc. Senior Secured Credit Facility
 
Our wholly owned subsidiary Berry Global, Inc.'s senior secured credit facilities consist of $4.0 billion of term loans and a $750 million asset-based revolving line of credit.  The availability under the revolving line of credit is the lesser of $750 million or based on a defined borrowing base which is calculated based on available accounts receivable and inventory.
 
The borrowings under the senior secured credit facilities bear interest at a rate equal to an applicable margin plus, as determined at the Company's option, either (a) a base rate determined by reference to the higher of (1) the prime rate of Credit Suisse, Cayman Islands Branch, as administrative agent, in the case of the term loan facility or Bank of America, N.A., as administrative agent, in the case of the revolving credit facility and (2) the U.S. federal funds rate plus 1/of 1% or (b) LIBOR determined by reference to the costs of funds for eurodollar deposits in dollars in the London interbank market for the interest period relevant to such borrowing Bank Compliance for certain additional costs.  The applicable margin for LIBOR rate borrowings under the revolving credit facility ranges from 1.25% to 1.75%.

Based on market conditions, from time to time, the Company may reprice existing term loans in order to lower interest rates.  As a result of repricing activities, each of the Company's term loans currently bear interest at LIBOR plus 2.25% with a 0% LIBOR floor.  Related to these repricings, the Company recorded a $10 million and $4 million loss on debt extinguishment in fiscal 2017 and fiscal 2016, respectively.
 
The term loan facility requires minimum quarterly principal payments, with the remaining amount payable upon maturity.  The Company may voluntarily repay outstanding loans under the senior secured credit facilities at any time without premium or penalty, other than customary "breakage" costs with respect to eurodollar loans.  The senior secured credit facilities contain various restrictive covenants that, among other things and subject to specified exceptions, prohibit the Company from prepaying other indebtedness, and restrict its ability to incur indebtedness or liens, make investments or declare or pay any dividends.  All obligations under the senior secured credit facilities are unconditionally guaranteed by the Company and, subject to certain exceptions, each of the Company's existing and future direct and indirect domestic subsidiaries. The guarantees of those obligations are secured by substantially all of the Company's assets as well as those of each domestic subsidiary guarantor.  During fiscal 2017, the Company has made $636 million of repayments on long-term borrowings using existing liquidity. 
 
Despite not having financial maintenance covenants, our debt agreements contain certain negative covenants.  We are in compliance will all covenants as of September 30, 2017.  The failure to comply with these negative covenants could restrict our ability to incur additional indebtedness, effect acquisitions, enter into certain significant business combinations, make distributions or redeem indebtedness. 
 
Future maturities of long-term debt as of fiscal year end 2017 are as follows:
 
Fiscal Year
 
Maturities
 
2018
 
$
33
 
2019
   
33
 
2020
   
1,033
 
2021
   
839
 
2022
   
21
 
Thereafter
   
3,730
 
 
 
$
5,689
 
 
Interest paid was $288 million, $276 million, and $191 million in fiscal 2017, 2016, and 2015, respectively.
 
Debt discounts and deferred financing fees are presented net of Long-term debt, less the current portion in the Consolidated Balance Sheet and are amortized to Interest expense through maturity.

4.  Financial Instruments and Fair Value Measurements
 
In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors.  The Company may use derivative financial instruments to help manage market risk and reduce the exposure to fluctuations in interest rates and foreign currencies.  These financial instruments are not used for trading or other speculative purposes.  For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.

To the extent hedging relationships are found to be effective, as determined by FASB guidance, changes in the fair value of the derivatives are offset by changes in the fair value of the related hedged item and recorded to Accumulated other comprehensive loss. Any identified ineffectiveness, or changes in the fair value of a derivative not designated as a hedge, are recorded to the Consolidated Statements of Income.

40

Foreign Currency Forward Contracts
 
The primary purpose of the Company's foreign currency hedging activities is to manage the potential changes in value associated with the changes in foreign currencies on future foreign cash movements for certain jurisdictions.  The changes in fair value of these derivative contracts are recognized in Other (income) expense, net on the Consolidated Statements of Income and are largely offset by the remeasurement of the underlying intercompany loan.  When valuing foreign currency forward contracts the Company utilizes Level 2 inputs (substantially observable).  These contracts are typically entered into and settled within the given quarterly reporting period.

Interest Rate Swaps

The primary purpose of the Company's interest rate swap activities is to manage cash flow variability associated with our outstanding variable rate term loan debt.  When valuing interest rate swaps the Company utilizes Level 2 inputs (substantially observable).
 
In February 2013, the Company entered into a $1 billion interest rate swap transaction with an effective date of May 2016 and expiration in May 2019.  In June 2013, the Company elected to settle this derivative instrument and received $16 million as a result of this settlement.  The offset is included in Accumulated other comprehensive loss and is being amortized to Interest expense from May 2016 through May 2019, the original term of the swap agreement.

During fiscal 2017 the Company modified various term loan rates and maturities.  In conjunction with these modifications the Company realigned existing swap agreements which resulted in the de-designation of the original hedge and re-designation of the modified swaps as an effective cash flow hedges.  The amounts included in Accumulated other comprehensive loss at the date of de-designation are being amortized to Interest expense through the terms of the original swaps.
 
As of year-end, the Company effectively had (1) a $450 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 2.00%, with an effective date in May 2017 and expiration in May 2022, (2) a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.5190% with an effective date in March 2017 and expiration in June 2019, (3) a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 2.0987% with an effective date in February 2017 and expiration in September 2021.

The Company records the fair value positions of all derivative financial instruments on a net basis by counterparty for which a master netting arrangement is utilized. Balances on a gross basis as of the current period are as follows;

Derivatives Instruments
Hedge Designation
Balance Sheet Location
 
2017
   
2016
 
Foreign currency forward contracts
Not designated
Other assets
 
$
   
$
3
 
Interest rate swaps
Designated
Other assets
   
1
     
 
Interest rate swaps
Not designated
Other assets
   
13
     
 
Interest rate swaps
Designated
Other long-term liabilities
   
15
     
48
 
Interest rate swaps
Not designated
Other long-term liabilities
   
13
     
 

The effect of the Company's derivative instruments on the Consolidated Statement of Income is as follows:
 
 
  
Fiscal years Ended
 
Derivatives instruments
Statement of Income Location
September 30, 2017
 
October 1, 2016
 
September 26, 2015
 
Interest rate swaps
Interest expense, net
 
$
24
   
$
16
   
$
 
Foreign currency swaps
Other (income) expense
 
$
(2
)
 
$
13
   
$
 
 
The amortization related to unrealized losses in Accumulated other comprehensive loss is expected to be approximately $5 million in the next 12 months.  The Company's financial instruments consist primarily of cash and cash equivalents, long-term debt, interest rate swap agreements and capital lease obligations.  The fair value of our long-term indebtedness exceeded book value by $81 million as of fiscal 2017, and $56 million as of fiscal 2016.  The Company's long-term debt fair values were determined using Level 2 inputs as other significant observable inputs were not available.
 
41

Non-recurring Fair Value Measurements
 
The Company has certain assets that are measured at fair value on a non-recurring basis when impairment indicators are present or when the Company completes an acquisition.  See Note 2 for discussion of our acquisitions and the non-recurring fair value measurement considerations that were utilized in the purchase price allocation.  The Company adjusts certain long-lived assets to fair value only when the carrying values exceed the fair values. The categorization of the framework used to value the assets is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 5 for additional discussion).  These assets that are subject to our annual impairment analysis primarily include our definite lived and indefinite lived intangible assets, including Goodwill and our property, plant and equipment.  The Company reviews Goodwill and other indefinite lived assets for impairment as of the first day of the fourth fiscal quarter each year, and more frequently if impairment indicators exist.  The Company determined Goodwill and other indefinite lived assets were not impaired in our annual fiscal 2017, 2016, and 2015 assessments and no impairment indicators existed in the current year.
 
Included in the following tables are the major categories of assets and their current carrying values that were measured at fair value on a non-recurring basis in the current year, along with the impairment loss recognized on the fair value measurement for the fiscal years then ended:
 
 
 
As of the end of fiscal 2017
 
 
 
Level 1
   
Level 2
   
Level 3
   
Total
   
Impairment
 
Indefinite-lived trademarks
 
$
   
$
   
$
248
   
$
248
   
$
 
Goodwill
   
     
     
2,775
     
2,775
     
 
Definite lived intangible assets
   
     
     
1,038
     
1,038
     
 
Property, plant and equipment
   
     
     
2,366
     
2,366
     
2
 
Total
 
$
   
$
   
$
6,427
   
$
6,427
   
$
2
 

 
 
As of the end of fiscal 2016
 
 
 
Level 1
   
Level 2
   
Level 3
   
Total
   
Impairment
 
Indefinite-lived trademarks
 
$
   
$
   
$
248
   
$
248
   
$
 
Goodwill
   
     
     
2,406
     
2,406
     
 
Definite lived intangible assets
   
     
     
952
     
952
     
 
Property, plant and equipment
   
     
     
2,224
     
2,224
     
3
 
Total
 
$
   
$
   
$
5,830
   
$
5,830
   
$
3
 

 
 
As of the end of fiscal 2015
 
 
 
Level 1
   
Level 2
   
Level 3
   
Total
   
Impairment
 
Indefinite-lived trademarks
 
$
   
$
   
$
207
   
$
207
   
$
 
Goodwill
   
     
     
1,652
     
1,652
     
 
Definite lived intangible assets
   
     
     
486
     
486
     
 
Property, plant and equipment
   
     
     
1,294
     
1,294
     
2
 
Total
 
$
   
$
   
$
3,639
   
$
3,639
   
$
2
 

Valuation of Goodwill and Indefinite Lived Intangible Assets
 
ASC Topic 350 requires the Company to test goodwill for impairment at least annually.  The Company conducted the impairment test on the first day of the fourth fiscal quarter, unless indications of impairment exist during an interim period.  When assessing its goodwill for impairment, the Company utilizes a comparable company market approach weighted equally with a discounted cash flow analysis to determine the fair value of their reporting units and corroborate the fair values.  The Company utilizes a relief from royalty method to value their indefinite lived trademarks and uses the forecasts that are consistent with those used in the reporting unit analysis.  The Company has seven reporting units more fully discussed in Note 1.  
 
Valuation of Property, Plant and Equipment and Definite Lived Intangible Assets
 
The Company periodically realigns their manufacturing operations which results in facilities being closed and shut down and equipment transferred to other facilities or equipment being scrapped or sold.  The Company utilizes appraised values to corroborate the fair value of the facilities and has utilized a scrap value based on prior facility shut downs to estimate the fair value of the equipment, which has approximated the actual value that was received.  When impairment indicators exist, the Company will also perform an undiscounted cash flow analysis to determine the recoverability of the Company's long-lived assets.  The Company incurred impairment charges of $2 million, $3 million, and 2 million related to property, plant and equipment in fiscal years 2017, 2016, or 2015, respectively.  The impairment charges were calculated based on the estimated proceeds that were expected based on the market for used equipment and past sales of equipment less the carrying value.  The Company did not incur an impairment charge on definite lived intangible assets in fiscal 2017, 2016, or 2015.
 
42

5.  Goodwill and Intangible Assets
 
The following table sets forth the gross carrying amount and accumulated amortization of the Company's goodwill and intangible assets as of the fiscal year end:
 
 
 
2017
   
2016
 
Amortization
Period
Goodwill
 
$
2,775
   
$
2,406
 
Indefinite lived
 
               
      
Customer relationships
   
1,922
     
1,690
 
5 – 15 years
Trademarks (indefinite lived)
   
248
     
248
 
Indefinite lived
Trademarks (definite lived)
   
87
     
78
 
Not more than 15 years
Other intangibles
   
184
     
182
 
5 – 14 years
Accumulated amortization
   
(1,155
)
   
(998
)
 
Intangible assets, net
   
1,286
     
1,200
 
 
Total goodwill and intangible assets, net
 
$
4,061
   
$
3,606
 
 
 
Future amortization expense for definite lived intangibles as of fiscal 2017 for the next five fiscal years is $143 million, $131 million, $121 million, $110 million, and $99 million each year for fiscal years ending 2018, 2019, 2020, 2021, and 2022, respectively.
 
6.  Lease and Other Commitments and Contingencies
 
The Company leases certain property, plant and equipment under long-term lease agreements.  Property, plant, and equipment under capital leases are reflected on the Company's balance sheet in property and equipment.  The Company entered into new capital lease obligations totaling $5 million, $51 million, and $29 million during fiscal 2017, 2016, and 2015, respectively, with various lease expiration dates through 2025.  The Company records amortization of capital leases in Cost of goods sold in the Consolidated Statement of Income.  Assets under operating leases are not recorded on the Company's balance sheet.  Operating leases expire at various dates in the future with certain leases containing renewal options.  The Company had minimum lease payments or contingent rentals of $27 million and $26 million and asset retirement obligations of $9 million and $9 million as of fiscal 2017 and 2016, respectively. Total rental expense from operating leases was $67 million, $60 million, and $53 million in fiscal 2017, 2016, and 2015, respectively.
 
Future minimum lease payments for capital leases and non-cancellable operating leases with initial terms in excess of one year as of fiscal year end 2017 are as follows:
 
 
 
Capital Leases
   
Operating Leases
 
2018
 
$
33
   
$
64
 
2019
   
32
     
57
 
2020
   
28
     
47
 
2021
   
24
     
43
 
2022
   
17
     
37
 
Thereafter
   
13
     
178
 
 
   
147
   
$
426
 
Less: amount representing interest
   
(15
)
       
Present value of net minimum lease payments
 
$
132
         
 
The Company has entered into a series of sale-leaseback transactions, pursuant to which it sold certain facilities and is leasing these facilities back. The Company has a total deferred gain on these sale-leaseback transactions of $24 million at the end of fiscal 2017, and is amortizing this over the respective lease of the facility.

The Company also has various purchase commitments for raw materials, supplies and property and equipment incidental to the ordinary conduct of business.

Litigation
 
The Company is party to various legal proceedings in addition to the above involving routine claims which are incidental to its business.  Although the Company's legal and financial liability with respect to such proceedings cannot be estimated with certainty, the Company believes that any ultimate liability would not be material to its financial position, results of operations or cash flows.  
 
43

Collective Bargaining Agreements
 
At the end of fiscal 2017, we employed approximately 23,000 employees, and approximately 20% of those employees are covered by collective bargaining agreements.  The majority of these agreements are due for renegotiation in fiscal 2018.  Our relations with employees under collective bargaining agreements remain satisfactory and there have been no significant work stoppages or other labor disputes during the past three years.
 
7.  Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities
 
The following table sets forth the totals included in Accrued expenses and other current liabilities as of fiscal year end.

 
 
2017
   
2016
 
Employee compensation, payroll, and other
 
$
147
   
$
152
 
Interest
   
36
     
53
 
Rebates
   
58
     
54
 
Restructuring
   
19
     
13
 
Accrued taxes
   
90
     
40
 
Tax receivable agreement obligation
   
35
     
60
 
Other
   
78
     
77
 
 
 
$
463
   
$
449
 
 
The following table sets forth the totals included in Other long-term liabilities as of fiscal year end.
 
 
 
2017
   
2016
 
Lease retirement obligation
 
$
37
   
$
34
 
Sale-lease back deferred gain
   
24
     
26
 
Pension liability
   
56
     
88
 
Deferred purchase price
   
46
     
41
 
Tax receivable agreement obligation
   
34
     
114
 
Interest rate swaps
   
27
     
45
 
Other
   
76
     
69
 
 
 
$
300
   
$
417
 
  
8.  Income Taxes
 
The Company is being taxed at the U.S. corporate level as a C-Corporation and has provided U.S. Federal, State and foreign income taxes.
 
Significant components of income tax expense for the fiscal years ended are as follows:
 
 
 
2017
   
2016
   
2015
 
Current
                 
U.S.
                 
Federal
 
$
40
   
$
   
$
 
State
   
6
     
5
     
3
 
Non-U.S.
   
58
     
36
     
7
 
Total current
   
104
     
41
     
10
 
Deferred:
                       
U.S.
                       
Federal
   
34
     
35
     
31
 
State
   
(10
)
   
3
     
(4
)
Non-U.S.
   
(19
)
   
(7
)
   
(1
)
Total deferred
   
5
     
31
     
26
 
Expense for income taxes
 
$
109
   
$
72
   
$
36
 
 
44

U.S. income from continuing operations before income taxes was $313 million, $168 million, and $99 million for fiscal 2017, 2016, and 2015, respectively.  Non-U.S. income from continuing operations before income taxes was $136 million, $140 million, and $23 million for fiscal 2017, 2016, and 2015, respectively.
 
The reconciliation between U.S. Federal income taxes at the statutory rate and the Company's benefit for income taxes on continuing operations for fiscal year end is follows:
 
 
 
2017
   
2016
   
2015
 
U.S. Federal income tax expense at the statutory rate
 
$
157
   
$
108
   
$
43
 
Adjustments to reconcile to the income tax provision:
                       
U.S. state income tax expense
   
6
     
8
     
7
 
Changes in state valuation allowance
   
(9
)
   
2
     
(7
)
Research and development credits
   
(7
)
   
(8
)
   
(5
)
Share-based compensation
   
(33
)
   
(15
)
   
 
Permanent differences
   
2
     
2
     
 
Changes in foreign valuation allowance
   
3
     
(1
)
   
 
Foreign income taxed in the U.S.
   
     
7
     
 
Manufacturing tax benefits
   
(6
)
   
     
 
Deduction of worthless investment
   
     
(9
)
   
 
Permanent foreign currency differences
   
(1
)
   
(8
)
   
 
Rate differences between U.S. and foreign
   
(11
)
   
(14
)
   
(2
)
Other
   
8
     
     
 
Expense for income taxes
 
$
109
   
$
72
   
$
36
 
 
Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.  The components of the net deferred income tax liability as of fiscal year end are as follows:
 
 
 
2017
   
2016
 
Deferred tax assets:
           
Allowance for doubtful accounts
 
$
7
   
$
7
 
Deferred gain on sale-leaseback
   
10
     
11
 
Accrued liabilities and reserves
   
89
     
129
 
Inventories
   
6
     
10
 
Net operating loss carryforward
   
292
     
371
 
Alternative minimum tax (AMT) credit carryforward
   
11
     
10
 
Research and development credit carryforward
   
18
     
36
 
Federal and state tax credits
   
9
     
2
 
Other
   
14
     
6
 
Total deferred tax assets
   
456
     
582
 
Valuation allowance
   
(93
)
   
(82
)
Total deferred tax assets, net of valuation allowance
   
363
     
500
 
Deferred tax liabilities:
               
Property, plant and equipment
   
277
     
282
 
Intangible assets
   
475
     
435
 
Debt extinguishment
   
27
     
53
 
Other
   
3
     
2
 
Total deferred tax liabilities
   
782
     
772
 
Net deferred tax liability
 
$
(419
)
 
$
(272
)
 
After Internal Revenue Code Section 382 ("Section 382") limitations, the Company has $425 million of U.S. federal net operating loss carryforwards as of fiscal 2017, which will be available to offset future taxable income.  As of fiscal year end 2017, the Company had state and foreign net operating loss carryforwards of $1,299 million and $349 million, respectively, which will be available to offset future taxable income.  If not used, the federal net operating loss carryforwards will expire in future years beginning 2024 through 2035.  AMT credit carryforwards totaling $11 million are available to the Company indefinitely to reduce future years' federal income taxes.  The state net operating loss carryforwards will expire in future years beginning in 2018 through 2036.  The foreign net operating loss carryforwards will expire in future years beginning in 2018 while a portion remains available indefinitely.  The Company has $10 million and $8 million of federal and state Research and Development tax credits, respectively, that will expire in future years beginning 2027 through 2037. In addition, the Company has $9 million of other state tax credits that will expire in future years beginning in 2018 through 2020.
 
45

In connection with the initial public offering, the Company entered into an income tax receivable agreement that provides for the payment to pre-initial public offering stockholders, option holders and holders of our stock appreciation rights, 85% of the amount of cash savings, if any, in U.S. federal, foreign, state and local income tax that are actually realized (or are deemed to be realized in the case of a change of control) as a result of the utilization of our and our subsidiaries' net operating losses attributable to periods prior to the initial public offering.  Based on the Company's assumptions using various items, including valuation analysis and current tax law, the Company recorded an obligation of $313 million which was recognized as a reduction of Paid-in capital on the Consolidated Balance Sheets.  The Company made payments of $111 million, $57 million, and $39 million in fiscal years 2017, 2016, and 2015, respectively.  The balance at the end of fiscal 2017 was $69 million, and the Company expects to make an income tax receivable payment of $35 million in December 2017.
 
The Company believes that it will not generate sufficient future taxable income to realize the tax benefits in certain foreign jurisdictions related to the deferred tax assets.  The Company also has certain state net operating losses that may expire before they are fully utilized.  Therefore, the Company has provided a full valuation allowance against certain of its foreign deferred tax assets and a valuation allowance against certain of its state deferred tax assets included within the deferred tax assets.
 
The change in ownership of Avintiv created limitations under Sec. 382 of the Internal Revenue Code on annual usage of Avintiv's net operating loss carryforwards.  All of the Company's Federal net operating loss carryforwards should be available for use within the next 16 years and are not expected to expire unutilized.  Prior to the Company's acquisition of Avintiv, Avintiv was subject to certain ownership changes that resulted in the effective loss of certain NOLs.  The NOLs effectively lost have been excluded from the opening balance sheet of Avintiv.  As part of the effective tax rate calculation, if we determine that a deferred tax asset arising from temporary differences is not likely to be utilized, we will establish a valuation allowance against that asset to record it at its expected realizable value.  The Company has not provided a valuation allowance on its federal net operating loss carryforwards in the U.S. because it has determined that future reversals of its temporary taxable differences will occur in the same periods and are of the same nature as the temporary differences giving rise to the deferred tax assets.  Our valuation allowance against deferred tax assets was $93 million and $82 million as of fiscal year end 2017 and 2016, respectively, related to the foreign and U.S. state operations.  The Company paid cash taxes of $41 million, $43 million, and $9 million in fiscal 2017, 2016, and 2015, respectively.

Uncertain Tax Positions
 
We adopted the provisions of the Income Taxes standard of the Codification.  This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with guidance provide by FASB and prescribes a recognition threshold of more-likely-than-not to be sustained upon examination. Our policy to include interest and penalties related to gross unrecognized tax benefits within our provision for income taxes did not change.
 
The following table summarizes the activity related to our gross unrecognized tax benefits for fiscal year end:
 
 
 
2017
   
2016
 
Beginning unrecognized tax benefits
 
$
62
   
$
13
 
Gross increases – tax positions in prior periods
   
1
     
4
 
Gross increases – current period tax positions
   
4
     
1
 
Gross increases – from acquisitions
   
     
48
 
Gross decreases – tax positions in prior periods
   
(1
)
   
 
Settlements
   
(3
)
   
(1
)
Lapse of statute of limitations
   
(4
)
   
(3
)
Ending unrecognized tax benefits
 
$
59
   
$
62
 
 
As of fiscal year end 2017, the amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate was $55 million and we had $20 million accrued for payment of interest and penalties related to our uncertain tax positions.  Our penalties and interest related to uncertain tax positions are included in income tax expense.
 
We and our subsidiaries are routinely examined by various taxing authorities. Although we file U.S. federal, U.S. state, and foreign tax returns, our major tax jurisdiction is the U.S. The IRS has completed an examination of our 2003, 2010 and 2011 tax years. Our 2004 – 2009, and 2012 – 2016 tax years remain subject to examination by the IRS.  Avintiv's pre-acquisition U.S. federal tax returns for the years 2004 – 2015 remain subject to examination by the IRS.  Companhia Providência Indústria e Comércio ("Providência") was subject to certain tax claims at the time Providência was acquired by Avintiv and have been accounted for in the financial statements as a deferred purchase price liability.  There are various other on-going audits in various other jurisdictions that are not material to our financial statements.
 
As of the end of fiscal 2017, we had unremitted earnings from foreign subsidiaries that are permanently reinvested for continued use in foreign operations, accordingly, no provision for U.S. federal or state income taxes has been provided thereon.  If distributed, those earnings would result in additional income tax expense at approximately the U.S. statutory rate.  Determination of the amount of unrecognized deferred US income tax liability is not practicable due to the complexities associated with its hypothetical calculation.
 
46

9.  Retirement Plans
 
The Company maintains defined benefit pension plans globally, which cover certain manufacturing facilities.  The Company also maintains retiree health plans, which cover certain healthcare and life insurance benefits for certain retired employees and their spouses.  Each of the defined benefit and retiree health plans are frozen plans.  The Company uses fiscal year end as a measurement date for the retirement plans.
 
The Company also sponsors defined contribution 401(k) retirement plans covering substantially all employees.  Contributions are based upon a fixed dollar amount for employees who participate and percentages of employee contributions at specified thresholds.  Contribution expense for these plans was $18 million, $10 million, and $7 million for fiscal 2017, 2016, and 2015, respectively.
 
The projected benefit obligations of the Company's plans presented herein are equal to the accumulated benefit obligations of such plans. The net amount of liability recognized is included in Other long-term liabilities on the Consolidated Balance Sheets.
 
 
 
Defined Benefit Pension Plans
   
Retiree Health Plans
 
 
 
2017
   
2016
   
2017
   
2016
 
Change in Projected Benefit Obligations (PBO)
                       
 
                       
PBO at beginning of period
 
$
492
   
$
193
   
$
7
   
$
2
 
Acquisitions
   
     
256
     
     
5
 
Service cost
   
     
3
     
     
 
Interest cost
   
11
     
15
     
     
 
Actuarial loss (gain)
   
(15
)
   
44
     
     
 
Currency impact
   
     
1
     
     
 
Plan conversion (a)
   
(139
)
   
     
     
 
Benefit settlements
   
(3
)
   
     
     
 
Benefits paid
   
(16
)
   
(20
)
   
     
 
PBO at end of period
 
$
330
   
$
492
   
$
7
   
$
7
 
 
                               
Change in Fair Value of Plan Assets
                               
 
                               
Plan assets at beginning of period
 
$
418
   
$
142
   
$
   
$
 
Acquisitions
   
     
253
     
     
 
Currency impact
   
     
1
     
     
 
Actual return on plan assets
   
22
     
37
     
     
 
Company contributions
   
7
     
5
     
1
     
 
Plan conversion (a)
   
(136
)
   
     
     
 
Benefit settlements
   
(2
)
   
     
     
 
Benefits paid
   
(18
)
   
(20
)
   
(1
)
   
 
Plan assets at end of period
   
291
     
418
     
     
 
Net amount recognized
 
$
(39
)
 
$
(74
)
 
$
(7
)
 
$
(7
)
 
(a) During fiscal 2017, the Company contributed assets from a foreign defined benefit pension plan in order to convert the plan into a defined contribution plan.  As a result of the transaction, the Company recognized a loss of $10 million related to the reclassification of amount previously deferred in Accumulated other comprehensive loss to the Consolidated Statements of Income.

At the end of fiscal 2017 the Company had $35 million of net unrealized losses recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets.  The Company expects $2 million to be realized in fiscal 2018, and the remaining to be recognized over the next 11 fiscal years.
 
47

The following table presents significant weighted-average assumptions used to determine benefit obligation and benefit cost for the fiscal years ended:
 
 
Defined Benefit Pension Plans
 
Retiree Health Plan
 
(Percents)
2017
 
2016
 
2017
 
2016
 
Weighted-average assumptions:
               
Discount rate for benefit obligation
   
3.5
     
2.7
     
3.3
     
2.9
 
Discount rate for net benefit cost
   
3.2
     
3.5
     
2.9
     
3.5
 
Expected return on plan assets for net benefit costs
   
6.4
     
5.3
     
     
 
 
In evaluating the expected return on plan assets, Berry considered its historical assumptions compared with actual results, an analysis of current market conditions, asset allocations, and the views of advisors.  The return on plan assets is derived from target allocations and historical yield by asset type.  Health-care-cost trend rates were assumed to increase at an annual rate of 7.0%.  A one-percentage-point change in these assumed health care cost trend rates would not have a material impact on our postretirement benefit obligation.
 
In accordance with the guidance from the FASB for employers' disclosure about postretirement benefit plan assets the table below discloses fair values of each pension plan asset category and level within the fair value hierarchy in which it falls. There were no material changes or transfers between level 3 assets and the other levels, with the exception of the contribution of assets and conversion of the foreign defined benefit pension plan as described above.

Fiscal 2017 Asset Category
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Cash and cash equivalents
 
$
6
   
$
   
$
   
$
6
 
U.S. large cap comingled equity funds
   
     
61
     
     
61
 
U.S. mid cap equity mutual funds
   
57
     
     
     
57
 
U.S. small cap equity mutual funds
   
3
     
     
     
3
 
International equity mutual funds
   
14
     
     
     
14
 
Real estate equity investment funds
   
4
     
     
     
4
 
Corporate bond mutual funds
   
17
     
     
     
17
 
Corporate bonds
   
     
114
     
     
114
 
Guaranteed investment account
   
     
     
9
     
9
 
International fixed income funds
   
6
     
     
     
6
 
Total
 
$
107
   
$
175
   
$
9
   
$
291
 
 
Fiscal 2016 Asset Category
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Cash and cash equivalents
 
$
9
   
$
   
$
   
$
9
 
U.S. large cap comingled equity funds
   
     
55
     
     
55
 
U.S. mid cap equity mutual funds
   
45
     
     
     
45
 
U.S. small cap equity mutual funds
   
3
     
     
     
3
 
International equity mutual funds
   
13
     
     
     
13
 
Real estate equity investment funds
   
4
     
     
     
4
 
Corporate bond mutual funds
   
20
     
     
     
20
 
Corporate bonds
   
     
114
     
     
114
 
Guaranteed investment account
   
     
     
10
     
10
 
International fixed income funds
   
6
     
     
     
6
 
International insurance contracts
   
     
     
139
     
139
 
Total
 
$
100
   
$
169
   
$
149
   
$
418
 
 
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the fiscal year end:
 
 
 
Defined Benefit Pension Plans
   
Retiree Health Plan
 
2018
 
$
18
   
$
1
 
2019
   
18
     
1
 
2020
   
18
     
1
 
2021
   
19
     
 
2022
   
19
     
 
2023-2027
   
96
     
2
 
 
48

Net pension and retiree health benefit expense included the following components as of fiscal year end:
 
 
 
2017
   
2016
   
2015
 
Service cost
 
$
   
$
3
   
$
1
 
Interest cost
   
11
     
16
     
8
 
Amortization of net actuarial loss
   
3
     
2
     
1
 
Settlement charge
   
     
     
2
 
Expected return on plan assets
   
(17
)
   
(20
)
   
(12
)
Net periodic benefit cost
 
$
(3
)
 
$
1
   
$
 
 
Our defined benefit pension plan asset allocations as of fiscal year end are as follows:
 
 
 
2017
   
2016
 
Asset Category
           
Equity securities and equity-like instruments
   
48
%
   
29
%
Debt securities and debt-like
   
47
     
33
 
International insurance contracts
   
     
33
 
Other
   
5
     
5
 
Total
   
100
%
   
100
%
 
The Company's retirement plan assets are invested with the objective of providing the plans the ability to fund current and future benefit payment requirements while minimizing annual Company contributions.  The retirement plans held $51 million of the Company's stock at the end of fiscal 2017.  The Company re-addresses the allocation of its investments on a regular basis.
 
10.  Restructuring and Impairment Charges
 
The Company has announced various restructuring plans in the last three fiscal years which included shutting down facilities in all three of the Company's operating segments. In all instances, the majority of the operations from rationalized facilities was transferred to other facilities within the respective division.
 
During fiscal 2015, the Company announced the intention to shut down two facilities, one each in the Consumer Packaging and Engineered Materials divisions.  The affected Consumer Packaging and Engineered Materials businesses accounted for approximately $24 million and $16 million of annual net sales, respectively.

During fiscal 2016, the Company shut down one facility in the Consumer Packaging division and announced the intention to shut down one additional Consumer Packaging facility.  The two facilities accounted for approximately $36 million of annual net sales.

During fiscal 2017, the Company shut down one facility in the Health, Hygiene & Specialties division, which accounted for approximately $5 million of annual net sales, and completed the previously announced facility shut down in the Consumer Packaging division, which accounted for approximately $12 million of annual net sales.

Since 2015, total expected costs attributed to restructuring programs total $72 million with $3 million remaining to be recognized in the future.
 
 
 
Expected Total Costs
   
Cumulative charges through Fiscal 2017
   
To be Recognized in Future
 
Severance and termination benefits
 
$
45
   
$
45
   
$
 
Facility exit costs
   
20
     
17
     
3
 
Asset impairment
   
7
     
7
     
 
Total
 
$
72
   
$
69
   
$
3
 
 
The tables below sets forth the significant components of the restructuring charges recognized for the fiscal years ended, by segment:
 
 
 
2017
   
2016
   
2015
 
Consumer Packaging
 
$
8
   
$
9
   
$
11
 
Health, Hygiene & Specialties
   
11
     
20
     
 
Engineered Materials
   
5
     
3
     
2
 
Consolidated
 
$
24
   
$
32
   
$
13
 
 
49

The table below sets forth the activity with respect to the restructuring charges and the impact on our accrued restructuring reserves:
 
 
 
Employee Severance and Benefits
   
Facility Exit Costs
   
Non-cash impairment charges
   
Total
 
Balance as of fiscal 2015
 
$
2
   
$
8
   
$
   
$
10
 
Charges
   
23
     
6
     
3
     
32
 
Non-cash asset impairment
   
     
     
(3
)
   
(3
)
Cash payments
   
(18
)
   
(8
)
   
     
(26
)
Balance as of fiscal 2016
 
$
7
   
$
6
   
$
   
$
13
 
Acquisition
   
13
     
     
     
13
 
Charges
   
18
     
4
     
2
     
24
 
Non-cash asset impairment
   
     
     
(2
)
   
(2
)
Cash payments
   
(24
)
   
(5
)
   
     
(29
)
Balance as of fiscal 2017
 
$
14
   
$
5
   
$
   
$
19
 
 
11.  Related Party Transactions
 
The Company made payments related to the income tax receivable agreement of $111 million and $57 million in fiscal 2017 and fiscal 2016, respectively, of which Apollo Global Management, LLC received $89 million and $46 million, respectively.  Mr. Robert V. Seminara, a member of the Company's Board of Directors, has been employed by Apollo since 2003.  Mr. Evan Bayh, a member of the Company's Board of Directors, has been employed by Apollo since 2011.
 
12.  Stockholders' Equity
 
Equity Incentive Plans
 
In fiscal 2016, the Company adopted the 2015 Berry Plastics Group, Inc. Long-Term Incentive Plan ("2015 Plan") to align its incentive plans with plans of similar public companies by permitting for, among other things, the issuance of performance-based awards.  The 2015 Plan authorized the issuance of 7.5 million shares, an increase of approximately 5 million over the remaining available for grant at the time of adoption.  As of the adoption of the 2015 Plan, no shares were permitted to be issued under any of the other previous Incentive Plans.
 
The Company recognized total stock-based compensation expense of $20 million, $20 million, and $21 million for fiscal 2017, 2016, and 2015, respectively.  The intrinsic value of options exercised in fiscal 2017 was $114 million.
 
Information related to the equity incentive plans as of the fiscal year end is as follows:
 
 
 
2017
   
2016
 
 
 
Number of Shares
(in thousands)
   
Weighted Average Exercise Price
   
Number of Shares
(in thousands)
   
Weighted Average Exercise Price
 
Options outstanding, beginning of period
   
11,716
   
$
21.44
     
11,351
   
$
17.71
 
Options granted
   
1,820
     
49.53
     
2,805
     
30.27
 
Options exercised
   
(2,562
)
   
12.07
     
(2,061
)
   
12.57
 
Options forfeited or cancelled
   
(214
)
   
33.52
     
(379
)
   
23.37
 
Options outstanding, end of period
   
10,760
   
$
28.18
     
11,716
   
$
21.44
 
 
                               
Option price range at end of period
 
$
3.04-49.53
           
$
3.04-45.62
         
Options exercisable at end of period
   
4,108
             
4,573
         
Options available for grant at period end
   
2,875
             
4,695
         
Weighted average fair value of options granted during period
 
$
15.52
           
$
8.68
         
 
The fair value for options granted has been estimated at the date of grant using a Black-Scholes model, generally with the following weighted average assumptions:
 
 
2017
 
2016
 
2015
 
Risk-free interest rate
   
2.2
%
   
1.2
%
   
1.6
%
Dividend yield
   
0.00
%
   
0.00
%
   
0.00
%
Volatility factor
   
.26
     
.26
     
.30
 
Expected option life
7 years
 
7 years
 
7 years
 
 
50

The following table summarizes information about the options outstanding as of fiscal 2017:
 
Range of
Exercise Prices
   
Number
Outstanding
(in thousands)
 
Intrinsic Value
of Outstanding
(in millions)
 
Weighted Remaining Contractual Life
Weighted
Exercise Price
 
Number
Exercisable
(in thousands)
 
Intrinsic Value
of Exercisable
(in millions)
 
Unrecognized
Compensation
(in millions)
 
Weighted
Recognition Period
 
$
3.04-49.53
     
10,760
   
$
306
 
7 years
 
$
28.18
     
4,108
   
$
146
   
$
35
 
2 years
 
13.  Segment and Geographic Data
 
Berry's operations are organized into three reportable segments: Consumer Packaging, Health, Hygiene & Specialties, and Engineered Materials.  The structure is designed to align us with our customers, provide improved service, and drive future growth in a cost efficient manner.  In October 2016, the Company realigned portions of our operating segments in order to leverage geographic management teams and commercial activities.  The international portion of our Retail & Industrial product line was moved from Engineered Materials to the Specialties product line within Health, Hygiene & Specialties, resulting in a $140 million and $148 million movement in Net sales in fiscal 2016 and fiscal 2015, respectively.  Additionally, to align the newly acquired AEP business with our existing Core Films business, $306 million and $340 million of Net sales were moved from Consumer Packaging to Engineered Materials in fiscal 2016 and fiscal 2015, respectively.  As result of these organizational realignments, we have recast prior period segment amounts.  

The Company has manufacturing and distribution centers in the U.S., Canada, Mexico, Belgium, France, Spain, United Kingdom, Italy, Germany, Australia, Brazil, Argentina, Colombia, Malaysia, India, China, and the Netherlands.  The North American operation represents 82% of the Company's net sales, 82% of total long-lived assets, and 81% of the total assets.  Selected information by reportable segment is presented in the following tables:
 
 
 
2017
   
2016
   
2015
 
Net sales
                 
Consumer Packaging
 
$
2,351
   
$
2,462
   
$
2,530
 
Health, Hygiene & Specialties
   
2,369
     
2,400
     
650
 
Engineered Materials
   
2,375
     
1,627
     
1,701
 
Total
 
$
7,095
   
$
6,489
   
$
4,881
 
 
                       
Operating income
                       
Consumer Packaging
 
$
200
   
$
203
   
$
200
 
Health, Hygiene & Specialties
   
216
     
196
     
59
 
Engineered Materials
   
316
     
182
     
149
 
Total
 
$
732
   
$
581
   
$
408
 
 
                       
Depreciation and amortization
                       
Consumer Packaging
 
$
231
   
$
244
   
$
230
 
Health, Hygiene & Specialties
   
184
     
199
     
39
 
Engineered Materials
   
106
     
82
     
81
 
Total
 
$
521
   
$
525
   
$
350
 
 

 
 
2017
   
2016
 
Total assets:
           
Consumer Packaging
 
$
3,177
   
$
3,315
 
Health, Hygiene & Specialties
   
3,496
     
3,504
 
Engineered Materials
   
1,803
     
834
 
Total assets
 
$
8,476
   
$
7,653
 
Goodwill:
               
Consumer Packaging
 
$
1,411
   
$
1,410
 
Health, Hygiene & Specialties
   
819
     
808
 
Engineered Materials
   
545
     
188
 
Total goodwill
 
$
2,775
   
$
2,406
 
 
51

Selected information by geography is presented in the following tables:
 
 
 
2017
   
2016
   
2015
 
Net sales:
                 
North America
 
$
5,850
   
$
5,250
   
$
4,692
 
South America
   
333
     
336
     
6
 
Europe
   
646
     
661
     
118
 
Asia
   
266
     
242
     
65
 
Total net sales
 
$
7,095
   
$
6,489
   
$
4,881
 

 
 
2017
   
2016
 
Long-lived assets:
           
North America
 
$
5,303
   
$
4,724
 
South America
   
418
     
386
 
Europe
   
467
     
452
 
Asia
   
284
     
299
 
Total Long-lived assets
 
$
6,472
   
$
5,861
 

Selected information by product line is presented in the following tables:

(in percentages)
2017
 
2016
   
2015
 
Net sales:
             
Rigid Open Top
     
43
%
     
42
%
   
42
%
Rigid Closed Top
 
   
57
 
 
   
58
     
58
 
Consumer Packaging
     
100
%
     
100
%
   
100
%
                         
Health
     
22
%
     
20
%
   
27
%
Hygiene
 
   
44
 
 
   
45
     
43
 
Specialties
 
   
34
 
 
   
35
     
30
 
Health, Hygiene & Specialties
     
100
%
     
100
%
   
100
%
                         
Core Films
     
49
%
     
72
%
   
72
%
Retail & Industrial
 
   
51
 
 
   
28
     
28
 
Engineered Materials
     
100
%
     
100
%
   
100
%

14.  Net Income per Share
 
Basic net income per share is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.  Diluted net income per share is computed by dividing the net income attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method and the if-converted method.  For purposes of this calculation, stock options are considered to be common stock equivalents and are only included in the calculation of diluted net income per share when their effect is dilutive.  There were no shares excluded from the calculations as the effect of their conversion into shares of our common stock would be antidilutive.
 
The following tables and discussion provide a reconciliation of the numerator and denominator of the basic and diluted net income per share computations.  
 
(in millions, except per share amounts)
 
2017
   
2016
   
2015
 
Numerator
                 
Net income attributable to the Company
 
$
340
   
$
236
   
$
86
 
Denominator
                       
Weighted average common shares outstanding - basic
   
127.6
     
120.8
     
119.1
 
Dilutive shares
   
5.0
     
4.2
     
4.3
 
Weighted average common and common equivalent shares outstanding - diluted
   
132.6
     
125.0
     
123.4
 
 
                       
Per common share income
                       
Basic
 
$
2.66
   
$
1.95
   
$
0.72
 
Diluted
 
$
2.56
   
$
1.89
   
$
0.70
 
 
52

15.  Purchase of Non-controlling Interest
 
At the time of our acquisition, Avintiv owned a 71.25% controlling interest in Providência, their Brazilian subsidiary.  In 2016, the Company acquired the remaining 28.75% non-controlling ownership interest of Providência for $66 million.  As a result of this transaction, Providência became a wholly-owned subsidiary and the Company recorded $3 million to Additional paid-in capital.
 
16.  Guarantor and Non-Guarantor Financial Information
 
Berry Plastics Corporation ("Issuer") has notes outstanding which are fully, jointly, severally, and unconditionally guaranteed by its parent, Berry Plastics Group, Inc. (for purposes of this Note, "Parent") and substantially all of Issuer's domestic subsidiaries.  Separate narrative information or financial statements of the guarantor subsidiaries have not been included because they are 100% owned by Parent and the guarantor subsidiaries unconditionally guarantee such debt on a joint and several basis.  A guarantee of a guarantor subsidiary of the securities will terminate upon the following customary circumstances:  the sale of the capital stock of such guarantor if such sale complies with the indentures, the designation of such guarantor as an unrestricted subsidiary, the defeasance or discharge of the indenture, as a result of the holders of certain other indebtedness foreclosing on a pledge of the shares of a guarantor subsidiary or if such guarantor no longer guarantees certain other indebtedness of the issuer.  The guarantees of the guarantor subsidiaries are also limited as necessary to prevent them from constituting a fraudulent conveyance under applicable law and guarantees guaranteeing subordinated debt are subordinated to certain other of the Company's debts.  Parent also guarantees the Issuer's term loans and revolving credit facilities. The guarantor subsidiaries guarantee our term loans and are co-borrowers under our revolving credit facility.  Presented below is condensed consolidating financial information for the Parent, Issuer, guarantor subsidiaries and non-guarantor subsidiaries.  The Issuer and guarantor financial information includes all of our domestic operating subsidiaries; our non-guarantor subsidiaries include our foreign subsidiaries and the unrestricted subsidiaries under the Issuer's indentures.  The Parent uses the equity method to account for its ownership in the Issuer in the Condensed Consolidating Supplemental Financial Statements.  The Issuer uses the equity method to account for its ownership in the guarantor and non-guarantor subsidiaries.  All consolidating entries are included in the eliminations column along with the elimination of intercompany balances.  In the fourth fiscal quarter of 2016, the Company eliminated intercompany loans between the guarantor and non-guarantor entities and liquidated some foreign subsidiaries.  This resulted in the recognition of gains and losses between our guarantor and non-guarantor subsidiaries, which have been reflected in the condensed supplemental financial statements.
 
Condensed Supplemental Consolidated Statements of Operations
 
 
 
Fiscal 2017
 
 
 
Parent
   
Issuer
   
Guarantor
Subsidiaries
   
Non-
Guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
   
$
587
   
$
4,861
   
$
1,647
   
$
   
$
7,095
 
Cost of goods sold
   
     
438
     
3,920
     
1,333
     
     
5,691
 
Selling, general and administrative
   
     
55
     
335
     
104
     
     
494
 
Amortization of intangibles
   
     
6
     
120
     
28
     
     
154
 
Restructuring and impairment charges
   
     
     
14
     
10
     
     
24
 
Operating income
   
     
88
     
472
     
172
     
     
732
 
Debt extinguishment
   
     
10
     
     
     
     
10
 
Other (income) expense, net
   
     
(2
)
   
(1
)
   
7
     
     
4
 
Interest expense, net
   
     
12
     
229
     
28
     
     
269
 
Equity in net income of subsidiaries
   
(449
)
   
(341
)
   
     
     
790
     
 
Income (loss) before income taxes
   
449
     
409
     
244
     
137
     
(790
)
   
449
 
Income tax expense (benefit)
   
109
     
69
     
     
40
     
(109
)
   
109
 
Net income (loss)
 
$
340
   
$
340
   
$
244
   
$
97
   
$
(681
)
 
$
340
 
Currency translation
   
34
     
     
     
34
     
(34
)
   
34
 
Interest rate hedges
   
28
     
28
     
     
     
(28
)
   
28
 
Defined benefit pension and retiree health benefit plans
   
38
     
25
     
     
13
     
(38
)
   
38
 
Provision for income taxes related to other comprehensive income items
   
(20
)
   
(20
)
   
     
     
20
     
(20
)
Comprehensive  income (loss)
 
$
420
   
$
373
   
$
244
   
$
144
   
$
(761
)
 
$
420
 
 
53

 
 
Fiscal 2016
 
 
 
Parent
   
Issuer
   
Guarantor
Subsidiaries
   
Non-
Guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
   
$
599
   
$
4,220
   
$
1,670
   
$
   
$
6,489
 
Cost of goods sold
   
     
476
     
3,388
     
1,338
     
     
5,202
 
Selling, general and administrative
   
     
72
     
324
     
135
     
     
531
 
Amortization of intangibles
   
     
8
     
107
     
28
     
     
143
 
Restructuring and impairment charges
   
     
     
28
     
4
     
     
32
 
Operating income
   
     
43
     
373
     
165
     
     
581
 
Debt extinguishment
   
     
4
     
     
     
     
4
 
Other (income) expense, net
   
     
11
     
(211
)
   
178
     
     
(22
)
Interest expense, net
   
     
36
     
205
     
50
     
     
291
 
Equity in net income of subsidiaries
   
(308
)
   
(279
)
   
     
     
587
     
 
Income (loss) before income taxes
   
308
     
271
     
379
     
(63
)
   
(587
)
   
308
 
Income tax expense (benefit)
   
72
     
34
     
8
     
29
     
(71
)
   
72
 
Net income (loss)
 
$
236
   
$
237
   
$
371
   
$
(92
)
 
$
(516
)
 
$
236
 
Currency translation
   
(1
)
   
     
     
(1
)
   
1
     
(1
)
Interest rate hedges
   
(14
)
   
(14
)
   
     
     
14
     
(14
)
Defined benefit pension and retiree health benefit plans
   
(23
)
   
(10
)
   
     
(13
)
   
23
     
(23
)
Provision for income taxes related to other comprehensive income items
   
9
     
9
     
     
     
(9
)
   
9
 
Comprehensive  income (loss)
 
$
207
   
$
222
   
$
371
   
$
(106
)
 
$
(487
)
 
$
207
 
 
 
 
Fiscal 2015
 
 
 
Parent
   
Issuer
   
Guarantor
Subsidiaries
   
Non-
Guarantor
Subsidiaries
   
Eliminations
   
Total
 
Net sales
 
$
   
$
622
   
$
3,807
   
$
452
   
$
   
$
4,881
 
Cost of goods sold
   
     
526
     
3,128
     
358
     
     
4,012
 
Selling, general and administrative
   
     
64
     
244
     
49
     
     
357
 
Amortization of intangibles
   
     
8
     
75
     
8
     
     
91
 
Restructuring and impairment charges
   
     
     
13
     
     
     
13
 
Operating income
   
     
24
     
347
     
37
     
     
408
 
Debt extinguishment
   
     
94
     
     
     
     
94
 
Other (income) expense, net
   
(3
)
   
     
3
     
1
     
     
1
 
Interest expense, net
   
     
25
     
148
     
18
     
     
191
 
Equity in net income of subsidiaries
   
(119
)
   
(210
)
   
     
     
329
     
 
Income (loss) before income taxes
   
122
     
115
     
196
     
18
     
(329
)
   
122
 
Income tax expense (benefit)
   
36
     
25
     
     
4
     
(29
)
   
36
 
Net income (loss)
 
$
86
   
$
90
   
$
196
   
$
14
   
$
(300
)
 
$
86
 
Currency translation
   
(45
)
   
     
     
(45
)
   
45
     
(45
)
Interest rate hedges
   
(33
)
   
(33
)
   
     
     
33
     
(33
)
Defined benefit pension and retiree health benefit plans
   
(16
)
   
(16
)
   
     
     
16
     
(16
)
Provision for income taxes related to other comprehensive income items
   
18
     
18
     
     
     
(18
)
   
18
 
Comprehensive  income (loss)
 
$
10
   
$
59
   
$
196
   
$
(31
)
 
$
(224
)
 
$
10
 
 
54

Condensed Supplemental Consolidated Balance Sheet
As of fiscal year end 2017
 
 
 
Parent
   
Issuer
   
Guarantor
Subsidiaries
   
Non-
Guarantor
Subsidiaries
   
Eliminations
   
Total
 
Assets
                                   
Current assets:
                                   
Cash and cash equivalents
 
$
   
$
18
   
$
12
   
$
276
   
$
   
$
306
 
Accounts receivable, net
   
     
49
     
503
     
295
     
     
847
 
Intercompany receivable
   
512
     
2,217
     
     
     
(2,729
)
   
 
Inventories
   
     
42
     
567
     
153
     
     
762
 
Prepaid expenses and other current
   
     
7
     
31
     
51
     
     
89
 
Total current assets
   
512
     
2,333
     
1,113
     
775
     
(2,729
)
   
2,004
 
Property, plant and equipment, net
   
     
80
     
1,564
     
722
     
     
2,366
 
Goodwill and intangible assets, net
   
     
79
     
3,476
     
506
     
     
4,061
 
Investment in subsidiaries
   
992
     
5,240
     
1,105
     
     
(7,337
)
   
 
Other assets
   
     
16
     
2
     
27
     
     
45
 
Total assets
 
$
1,504
   
$
7,748
   
$
7,260
   
$
2,030
   
$
(10,066
)
 
$
8,476
 
Liabilities and equity
                                               
Current liabilities:
                                               
Accounts payable
 
$
   
$
43
   
$
356
   
$
239
   
$
   
$
638
 
Accrued expenses and other current liabilities
   
36
     
168
     
181
     
78
     
     
463
 
Intercompany payable
   
     
     
2,667
     
62
     
(2,729
)
   
 
Current portion of long-term debt
   
     
32
     
     
1
     
     
33
 
Total current liabilities
   
36
     
243
     
3,204
     
380
     
(2,729
)
   
1,134
 
Long-term debt, less current portion
   
     
5,579
     
29
     
     
     
5,608
 
Deferred income taxes
   
419
     
     
     
     
     
419
 
Other long-term liabilities
   
34
     
128
     
70
     
68
     
     
300
 
Total long-term liabilities
   
453
     
5,707
     
99
     
68
     
     
6,327
 
Total liabilities
   
489
     
5,950
     
3,303
     
448
     
(2,729
)
   
7,461
 
 
                                               
Total equity (deficit)
   
1,015
     
1,798
     
3,957
     
1,582
     
(7,337
)
   
1,015
 
Total liabilities and equity (deficit)
 
$
1,504
   
$
7,748
   
$
7,260
   
$
2,030
   
$
(10,066
)
 
$
8,476
 
 
Condensed Supplemental Consolidated Balance Sheet
As of fiscal year end 2016
 
 
 
Parent
   
Issuer
   
Guarantor
Subsidiaries
   
Non-
Guarantor
Subsidiaries
   
Eliminations
   
Total
 
Assets
                                   
Current assets:
                                   
Cash and cash equivalents
 
$
   
$
102
   
$
5
   
$
216
   
$
   
$
323
 
Accounts receivable, net
   
     
(2
)
   
423
     
283
     
     
704
 
Intercompany receivable
   
364
     
2,797
     
     
     
(3,161
)
   
 
Inventories
   
     
46
     
477
     
137
     
     
660
 
Prepaid expenses and other current
   
     
15
     
40
     
50
     
     
105
 
Total current assets
   
364
     
2,958
     
945
     
686
     
(3,161
)
   
1,792
 
Property, plant and equipment, net
   
     
76
     
1,434
     
714
     
     
2,224
 
Goodwill and intangible assets, net
   
     
85
     
2,988
     
533
     
     
3,606
 
Investment in subsidiaries
   
302
     
4,010
     
1,105
     
     
(5,417
)
   
 
Other assets
   
     
6
     
1
     
24
     
     
31
 
Total assets
 
$
666
   
$
7,135
   
$
6,473
   
$
1,957
   
$
(8,578
)
 
$
7,653
 
Liabilities and equity
                                               
Current liabilities:
                                               
Accounts payable
 
$
   
$
(7
)
 
$
327
   
$
219
   
$
   
$
539
 
Accrued expenses and other current liabilities
   
60
     
172
     
153
     
64
     
     
449
 
Intercompany payable
   
     
     
2,992
     
169
     
(3,161
)
   
 
Current portion of long-term debt
   
     
42
     
     
1
     
     
43
 
Total current liabilities
   
60
     
207
     
3,472
     
453
     
(3,161
)
   
1,031
 
Long-term debt, less current portion
   
     
5,681
     
29
     
2
     
     
5,712
 
Deferred income taxes
   
272
     
     
     
     
     
272
 
Other long-term liabilities
   
113
     
141
     
97
     
66
     
     
417
 
Total long-term liabilities
   
385
     
5,822
     
126
     
68
     
     
6,401
 
Total liabilities
   
445
     
6,029
     
3,598
     
521
     
(3,161
)
   
7,432
 
 
   
     
     
     
     
     
 
Total equity (deficit)
   
221
     
1,106
     
2,875
     
1,436
     
(5,417
)
   
221
 
Total liabilities and equity (deficit)
 
$
666
   
$
7,135
   
$
6,473
   
$
1,957
   
$
(8,578
)
 
$
7,653
 

55

Condensed Supplemental Consolidated Statements of Cash Flows

 
 
Fiscal 2017
 
 
 
Parent
   
Issuer
   
Guarantor
Subsidiaries
   
Non-
Guarantor
Subsidiaries
   
Eliminations
   
Total
 
Cash Flow from Operating Activities
 
$
   
$
128
   
$
647
   
$
200
   
$
   
$
975
 
 
                                               
Cash Flow from Investing Activities
                                               
Additions to property, plant and equipment
   
     
(19
)
   
(209
)
   
(41
)
   
     
(269
)
Proceeds from sale of assets
   
     
1
     
5
     
     
     
6
 
Investment in Parent
   
     
     
     
     
     
 
(Contributions) distributions to/from subsidiaries
   
(31
)
   
(484
)
   
     
     
515
     
 
Intercompany advances (repayments)
   
     
428
     
     
     
(428
)
   
 
Acquisition of business, net of cash acquired
   
     
     
(515
)
   
     
     
(515
)
Other investing activities, net
   
     
4
     
     
     
     
4
 
Net cash from investing activities
   
(31
)
   
(70
)
   
(719
)
   
(41
)
   
87
     
(774
)
 
                                               
Cash Flow from Financing Activities
                                               
Proceeds from long-term borrowings
   
     
495
     
     
     
     
495
 
Repayment of long-term borrowings
   
     
(632
)
   
(3
)
   
(1
)
   
     
(636
)
Proceed from issuance of common stock
   
31
     
     
     
     
     
31
 
Payment of tax receivable agreement
   
(111
)
   
     
     
     
     
(111
)
Debt financing costs
   
     
(5
)
   
     
     
     
(5
)
Purchase of non-controlling interest
   
     
     
     
     
     
 
Changes in intercompany balances
   
111
     
     
(433
)
   
(106
)
   
428
     
 
Contribution from Parent
   
     
     
515
     
     
(515
)
   
 
Net cash from financing activities
   
31
     
(142
)
   
79
     
(107
)
   
(87
)
   
(226
)
Effect of currency translation on cash
   
     
     
     
8
     
     
8
 
Net change in cash and cash equivalents
   
     
(84
)
   
7
     
60
     
     
(17
)
Cash and cash equivalents at beginning of period
   
     
102
     
5
     
216
     
     
323
 
Cash and cash equivalents at end of period
 
$
   
$
18
   
$
12
   
$
276
   
$
   
$
306
 

 
 
Fiscal 2016
 
 
 
Parent
   
Issuer
   
Guarantor
Subsidiaries
   
Non-
Guarantor
Subsidiaries
   
Eliminations
   
Total
 
Cash Flow from Operating Activities
 
$
   
$
103
   
$
566
   
$
188
   
$
   
$
857
 
 
                                               
Cash Flow from Investing Activities
                                               
Additions to property, plant and equipment
   
     
(13
)
   
(239
)
   
(36
)
   
     
(288
)
Proceeds from sale of assets
   
     
     
5
     
     
     
5
 
Investment in Parent
   
     
     
     
     
     
 
(Contributions) distributions to/from subsidiaries
   
(26
)
   
(2,234
)
   
     
     
2,260
     
 
Intercompany advances (repayments)
   
     
96
     
     
     
(96
)
   
 
Acquisition of business, net of cash acquired
   
     
     
(368
)
   
(1,915
)
   
     
(2,283
)
Other investing activities, net
   
     
(13
)
   
     
     
     
(13
)
Net cash from investing activities
   
(26
)
   
(2,164
)
   
(602
)
   
(1,951
)
   
2,164
     
(2,579
)
 
                                               
Cash Flow from Financing Activities
                                               
Proceeds from long-term borrowings
   
     
2,490
     
     
     
     
2,490
 
Repayment of long-term borrowings
   
     
(450
)
   
(23
)
   
(51
)
   
     
(524
)
Proceed from issuance of common stock
   
26
     
     
     
     
     
26
 
Payment of tax receivable agreement
   
(57
)
   
     
     
     
     
(57
)
Debt financing costs
   
     
(40
)
   
     
     
     
(40
)
Purchase of non-controlling interest
   
     
     
(66
)
   
(12
)
   
     
(78
)
Changes in intercompany balances
   
57
     
     
(238
)
   
85
     
96
     
 
Contribution from Parent
   
     
     
368
     
1,892
     
(2,260
)
   
 
Net cash from financing activities
   
26
     
2,000
     
41
     
1,914
     
(2,164
)
   
1,817
 
Effect of currency translation on cash
   
     
     
     
     
     
 
Net change in cash and cash equivalents
   
     
(61
)
   
5
     
151
     
     
95
 
Cash and cash equivalents at beginning of period
   
     
163
     
     
65
     
     
228
 
Cash and cash equivalents at end of period
 
$
   
$
102
   
$
5
   
$
216
   
$
   
$
323
 

56

 
 
Fiscal 2015
 
 
 
Parent
   
Issuer
   
Guarantor
Subsidiaries
   
Non-
Guarantor
Subsidiaries
   
Eliminations
   
Total
 
Cash Flow from Operating Activities
 
$
   
$
60
   
$
542
   
$
34
   
$
1
   
$
637
 
 
                                               
Cash Flow from Investing Activities
                                               
Additions to property, plant and equipment
   
     
(13
)
   
(164
)
   
(3
)
   
     
(180
)
Proceeds from sale of assets
   
     
     
18
     
     
     
18
 
Investment in Parent
   
     
     
     
     
     
 
(Contributions) distributions to/from subsidiaries
   
(18
)
   
18
     
     
     
     
 
Intercompany advances (repayments)
   
     
368
     
     
     
(368
)
   
 
Acquisition of business, net of cash acquired
   
     
     
(3
)
   
     
     
(3
)
Net cash from investing activities
   
(18
)
   
373
     
(149
)
   
(3
)
   
(368
)
   
(165
)
 
                                               
Cash Flow from Financing Activities
                                               
Proceeds from long-term borrowings
   
     
693
     
     
     
     
693
 
Repayment of long-term borrowings
   
     
(947
)
   
     
(4
)
   
     
(951
)
Proceeds from issuance of common stock
   
18
     
     
     
     
     
18
 
Payment of tax receivable agreement
   
(39
)
   
     
     
     
     
(39
)
Debt financing costs
   
     
(86
)
   
     
     
     
(86
)
Changes in intercompany balances
   
39
     
     
(408
)
   
2
     
367
     
 
Net cash from financing activities
   
18
     
(340
)
   
(408
)
   
(2
)
   
367
     
(365
)
Effect of currency translation on cash
   
     
     
     
(8
)
   
     
(8
)
Net change in cash and cash equivalents
   
     
93
     
(15
)
   
21
     
     
99
 
Cash and cash equivalents at beginning of period
   
     
70
     
15
     
44
     
     
129
 
Cash and cash equivalents at end of period
 
$
   
$
163
   
$
   
$
65
   
$
   
$
228
 
 
17.  Quarterly Financial Data (Unaudited)
 
The following table contains selected unaudited quarterly financial data for fiscal years ended.
 
 
 
2017
   
2016
 
 
 
First
   
Second
   
Third
   
Fourth
   
First
   
Second
   
Third
   
Fourth
 
 
                                               
Net sales
 
$
1,502
   
$
1,806
   
$
1,906
   
$
1,881
   
$
1,612
   
$
1,614
   
$
1,645
   
$
1,618
 
Cost of goods sold
   
1,206
     
1,453
     
1,518
     
1,514
     
1,320
     
1,269
     
1,296
     
1,317
 
Gross profit
   
296
     
353
     
388
     
367
     
292
     
345
     
349
     
301
 
 
                                                               
Net income
 
$
51
   
$
72
   
$
107
   
$
110
   
$
4
   
$
59
   
$
96
   
$
77
 
                                                                 
Net income per share:
                                                               
Basic
   
0.42
     
0.56
     
0.82
     
0.84
     
0.03
     
0.49
     
0.79
     
0.63
 
Diluted
   
0.40
     
0.54
     
0.79
     
0.81
     
0.03
     
0.47
     
0.76
     
0.61
 
 
57

18.  Subsequent Events

In November 2017, the Company entered into a definitive purchase agreement to acquire all of the outstanding shares of Clopay Plastic Products Company, Inc. ("Clopay") for a purchase price of approximately $475 million which is preliminary and subject to adjustment and is intended to be funded with existing liquidity or an additional debt offering.  Clopay manufactures printed breathable films and is an innovator in the development of elastic films and laminates with product offerings uniquely designed for applications used in a number of markets including: hygiene, healthcare, construction and industrial protective apparel.  Clopay reported $461 million in sales for its fiscal year ended September 30, 2017 and will be operated within the Health, Hygiene and Specialties segment upon completion of the transaction.  The completion of the Clopay acquisition is subject to certain closing conditions and the terms and conditions of the purchase agreement.
 
In November 2017, the Company entered into certain cross-currency swap agreements with a notional amount of 250 million euro to effectively convert a portion of our fixed-rate USD denominated term loans, including the monthly interest payments, to fixed rate euro-denominated debt.  The swap agreements mature May 2022.  The risk management objective is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies and reduce the variability in the functional currency cash flows of a portion of the Company's term loans.

58


Exhibit No
 
Description of Exhibit
 
 
 
 
 
Agreement and Plan of Merger, dated as of July 30, 2015, by and among AVINTIV Inc., Berry Plastics Group, Inc., Berry Plastics Acquisition Corporation IX and Blackstone Capital Partners (Cayman) V L.P., as the security holder representative (the Exhibits and Disclosure Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the SEC upon request) (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on August 5, 2015).
        
 
 
 
 
 
Agreement and Plan of Merger, dated as of August 24, 2016, by and among Berry Plastics Group, Inc., Berry Plastics Corporation, Berry Plastics Acquisition Corporation XVI, Berry Plastics Acquisition Corporation XV, LLC and AEP Industries Inc. (the Exhibits and Disclosure Schedules have been omitted pursuant to Item 601(b)(2) of Regulation SK and will be provided to the SEC upon request) (incorporated by reference to Annex A Amendment No. 1 to the Company's Registration Statement S-4 (Reg. No. 333-2138030 filed on November 8, 2016).
     
  
 
 
 
 
Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 7, 2016, by and among Berry Plastics Group, Inc., Berry Plastics Corporation, Berry Plastics Acquisition Corporation XVI, Berry Plastics Acquisition Corporation XV, LLC and AEP Industries Inc. (incorporated by reference to Annex A of Amendment No. 2 to Berry's Registration Statement on Form S-4 (Reg. No. 333-213803) filed on December 9, 2016).
       
 
 
Amended and Restated Certificate of Incorporation of Berry Plastics Group, Inc., as amended through April 13, 2017.
     
  
 
 
 
Amended and Restated Bylaws of Berry Plastics Group, Inc., as amended and restated on March 2, 2017. (incorporated by reference to Exhibit 3.2 to the Company's Form 8-K filed on March 3, 2017).
 
 
 
 
Indenture, dated as of May 12, 2014, by and among Berry Plastics Corporation, the guarantors party thereto and U.S. Bank National Association, as Trustee, relating to the 5.50% second priority senior secured notes due 2022 (incorporated herein by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K filed on May 13, 2014).
     
  
 
 
 
 
Indenture, dated as of June 5, 2015, by and among Berry Plastics Corporation, the guarantors party thereto and U.S. Bank National Association, as Trustee, relating to the 5.125% second priority senior secured notes due 2023  (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed on June 5, 2015).
     
  
 
 
 
 
Indenture, dated as of October 1, 2015, by and between Berry Plastics Escrow Corporation, as Issuer, and U.S. Bank National Association, as Trustee, relating to the 6.00% second priority senior secured notes due 2022 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on October 6, 2015).
     
  
 
 
 
 
 
 
First Supplemental Indenture, dated as of October 1, 2015, by and between Berry Plastics Corporation, Berry Plastics Group, Inc., the subsidiaries of Berry Plastics Corporation party thereto, Berry Plastics Escrow Corporation, and U.S. Bank National Association, as Trustee, relating to the Indenture, by and between Berry Plastics Escrow Corporation, as Issuer, and U.S. Bank, National Association, as Trustee, relating to the 6.00% second priority senior secured notes due 2022, dated October 1, 2015 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on October 6, 2015).
     
  
 
 
 
 
 
Registration Rights Agreement, dated as of October 1, 2015, by and between Berry Plastics Corporation, Berry Plastics Group, Inc., each subsidiary of Berry Plastics Corporation identified therein, and Goldman, Sachs & Co., and Credit Suisse, on behalf of themselves and as representatives of the initial purchasers, relating to the 6.00% second priority senior secured notes due 2022 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on October 6, 2015).
     
  
 
 
 
 
 
 
$650,000,000 Second Amended and Restated Revolving Credit Agreement, dated as of May 14, 2015, by and among Berry Plastics Corporation., Berry Plastics Group, Inc., certain domestic subsidiaries party thereto from time to time, Bank of America, N.A., as collateral agent and administrative agent, the lenders party thereto from time to time, and the financial institutions party thereto, which is attached to Amendment No. 4 to Amended and Restated Revolving Credit Agreement dated as of April 3, 2007 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 20, 2015).
     
  
 
 
 
 
Amendment No. 5 to the Amended and Restated Credit Agreement, dated as of March 24, 2017, by and among Berry Plastics Group, Inc., Berry Plastics Corporation, certain domestic subsidiaries party thereto, Bank of America, N.A., as collateral agent and administrative agent, and the lenders party thereto.
        
 
 
 
 
Amendment No. 6 to the Amended and Restated Credit Agreement, dated as of March 24, 2017, by and among Berry Plastics Group, Inc., Berry Plastics Corporation, certain domestic subsidiaries party thereto, Bank of America, N.A., as collateral agent and administrative agent, and the lenders party thereto.
 
59

        
 
 
 
Amendment No. 7 to the Amended and Restated Credit Agreement, dated as of March 24, 2017, by and among Berry Plastics Group, Inc., Berry Plastics Corporation, certain domestic subsidiaries party thereto, Bank of America, N.A., as collateral agent and administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on March 27, 2017).
       
 
 
 
 
 
U.S. $1,200,000,000 Second Amended and Restated Credit Agreement, dated as of April 3, 2007, by and among Berry Plastics Corporation formerly known as Berry Plastics Holding Corporation, Berry Plastics Group, Inc., Credit Suisse, Cayman Islands Branch, as collateral and administrative agent, the lenders party thereto from time to time, and the other financial institutions party thereto (incorporated herein by reference to Exhibit 10.1(b) to Berry Plastics Corporation's (File No. 033-75706-01) Current Report on Form 8-K filed on April 10, 2007).
     
  
 
 
 
 
 
Second Amended and Restated Intercreditor Agreement, dated as of February 5, 2008, by and among Berry Plastics Group, Inc., Berry Plastics Corporation, certain subsidiaries identified as parties thereto, Bank of America, N.A. and Credit Suisse, Cayman Islands Branch as first lien agents, and U.S. Bank National Association, as successor in interest to Wells Fargo Bank, N.A., as trustee (incorporated herein by reference to Exhibit 10.3 to the Company's Form 10-K filed on November 23, 2015).
       
 
 
 
 
 
U.S. $1,147,500,000 and $814,375,000 Incremental Assumption Agreement, dated as of February 10, 2017 by and among Berry Plastics Group, Inc., Berry Plastics Corporation and certain of its subsidiaries referenced therein, Credit Suisse AG, Cayman Islands Branch, as administrative agent for the lenders under the term loan credit agreement referenced therein, Citibank, N.A., as initial Term I lender and Citibank, N.A., as incremental term J lender therein.
       
 
 
 
 
 
U.S. $1,644,750,000 and $498,750,000 Incremental Assumption Agreement, dated as of August 10, 2017, by and among Berry Plastics Group, Inc., Berry Plastics Corporation and certain of its subsidiaries referenced therein, Credit Suisse AG, Cayman Islands Branch, as administrative agent for the lenders under the term loan credit agreement referenced therein, Wells Fargo Bank, National Association, as initial Term M lender and  Wells Fargo Bank, National Association, as initial Term N lender therein.
       
 
 
 
Equipment Lease Agreement, dated as of June 24, 2010, between Gossamer Holdings, LLC, as Lessor, and Chicopee, Inc., as Lessee (incorporated by reference to Exhibit 10.1 to AVINTIV Specialty Materials Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 17, 2010).
        
 
 
 
 
Amendment and Waiver to Equipment Lease Agreement, dated as of January 19, 2011, between Chicopee, Inc., as Lessee and Gossamer Holdings, LLC, as Lessor (incorporated by reference to Exhibit 10.16 to AVINTIV Specialty Materials Inc.'s Registration Statement Form S-4 (Reg. No. 333-177497) filed on October 25, 2011).
        
 
 
 
 
Second Amendment to Equipment Lease Agreement, dated as of October 7, 2011, between Chicopee, Inc., as Lessee and Gossamer Holdings, LLC, as Lessor (incorporated by reference to Exhibit 10.17 to AVINTIV Specialty Materials Inc.'s Registration Statement Form S-4 (Reg. No. 333-177497) filed on October 25, 2011).
        
 
 
 
Third Amendment to Equipment Lease Agreement, dated as of February 28, 2012, between Chicopee, Inc., as Lessee and Gossamer Holdings, LLC, as Lessor (incorporated by reference to Exhibit 10.1 to AVINTIV Specialty Materials Inc.'s Quarterly Report on Form 10-Q filed on May 15, 2012).
        
 
 
 
Fourth Amendment to Equipment Lease Agreement, dated as of March 22, 2013, between Chicopee, Inc., as Lessee and Gossamer Holdings, LLC, as Lessor (incorporated by reference to Exhibit 10.1 to AVINTIV Specialty Materials Inc.'s Quarterly Report on Form 10-Q filed May 9, 2013).
        
 
 
 
2006 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.8 to Berry Plastics Corporation's Registration Statement Form S-4 (Reg. No. 333-138380) filed on November 2, 2006).
     
  
 
 
 
Amendment No. 2 to the Berry Plastics Group, Inc., 2006 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.9 to the Company's Form 10-K filed on December 11, 2013).
     
  
 
 
 
Amendment No. 3 to Berry Plastics Group, Inc. 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on March 10, 2015).
60

 
        
 
 
 
Form of 2016 Omnibus Amendment to Awards Granted Under the Berry Plastics Group, Inc. 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on July 22, 2016).
     
  
 
 
 
Omnibus amendment to awards granted under the Berry Plastics Group, Inc., 2006 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.10 to the Company's Form 10-K filed on December 11, 2013).
     
  
 
 
 
Form of Performance-Based Stock Option Agreement of Berry Plastics Group, Inc. (incorporated herein by reference to Exhibit 10.9 to Berry Plastics Corporation's Registration Statement Form S-4 (Reg. No. 333-138380) filed on November 2, 2006).
     
  
 
 
 
Form of Accreting Stock Option Agreement of Berry Plastics Group, Inc. (incorporated herein by reference to Exhibit 10.10 to Berry Plastics Corporation's Registration Statement Form S-4 (Reg. No. 333-138380) filed on November 2, 2006).
     
  
 
 
 
Form of Time-Based Stock Option Agreement of Berry Plastics Group, Inc. (incorporated herein by reference to Exhibit 10.11 to Berry Plastics Corporation's Registration Statement Form S-4 (Reg. No. 333-138380) filed on November 2, 2006).
       
 
 
 
Form of Performance-Based Stock Appreciation Rights Agreement of Berry Plastics Group, Inc. (incorporated herein by reference to Exhibit 10.12 to Berry Plastics Corporation's Registration Statement Form S-4 (Reg. No. 333-138380) filed on November 2, 2006).
       
  10.23†  
Employment Agreement of Thomas E. Salmon (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on February 6, 2017).
       
   
Offer Letter of Jonathan D. Rich (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on February 6, 2017).
       
 
 
 
Form of common stock certificate of Berry Plastics Group, Inc. (incorporated by reference to Exhibit 4.27 of Amendment No. 5 to the Company's Registration Statement on Form S-1 (File No. 333-180294) filed on September 19, 2012).
       
 
 
Income Tax Receivable Agreement, dated as of November 29, 2012, by and among Berry Plastics Group, Inc. and Apollo Management Fund VI, L.P. (incorporated herein by reference to Exhibit 10.25 to the Company's Form 10-K filed on December 27, 2012).
       
 
 
 
Berry Plastics Group, Inc. Executive Bonus Plan, amended and restated December 22, 2015, effective as of September 27, 2015 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on December 28, 2015).
       
 
 
 
Berry Plastics Group, Inc. 2012 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.27 to the Company's Form 10-K filed on December 27, 2012).
       
 
 
Amendment No. 1 to the Berry Plastics Group, Inc. 2012 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.31 to the Company's Form 10-K filed on December 11, 2013).
       
 
  Omnibus amendment to awards granted under the Berry Plastics Group, Inc., 2012 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.32 to the Company's Form 10-K filed on December 11, 2013).
       
 
  Amendment No. 2 to the Berry Plastics Group, Inc. 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on March 10, 2015).
       
 
   Form of 2016 Omnibus Amendment to Awards Granted Under the Berry Plastics Group, Inc. 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed on July 22, 2016).
       
 
 
2015 Berry Plastics Group, Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed on March 10, 2015).
       
 
 
Form of 2016 Omnibus Amendment to Awards Granted Under the Berry Plastics Group, Inc. 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company's Form 8-K filed on July 22, 2016).
       
 
 
 
Fourth Amended and Restated Stockholders Agreement, by and among Berry Plastics Group, Inc., and the stockholders of the Corporation listed on schedule A thereto, dated as of January 15, 2015 (incorporated herein by reference to Exhibit 10.1 to the Company's Form 10-Q filed on January 30, 2015).
       
 
 
 
Employment Agreement, dated January 1, 2002, between the Berry Plastics Corporation and Curtis Begle (incorporated herein by reference to Exhibit 10.1 to the Company's Form 10-Q filed on January 31, 2014).
 
61

 
 
Amendment No. 1 to Employment Agreement, dated as of September 13, 2006, by and between the Berry Plastics Corporation and Curtis Begle (incorporated herein by reference to Exhibit 10.3 to the Company's Form 10-Q filed on January 31, 2014).
 
Amendment No. 2 to Employment Agreement, dated December 31, 2008, by and between the Berry Plastics Corporation and Curtis Begle (incorporated herein by reference to Exhibit 10.4 to the Company's Form 10-Q filed on January 31, 2014).
   
 
Amendment No. 3 to Employment Agreement, dated August 1, 2010, by and between the Berry Plastics Corporation and Curtis L. Begle (incorporated herein by reference to Exhibit 10.5 to the Company's Form 10-Q filed on January 31, 2014).
   
 
Amendment No. 4 to Employment Agreement, dated December 16, 2011, by and between the Berry Plastics Corporation and Curtis L. Begle (incorporated herein by reference to Exhibit 10.6 to the Company's Form 10-Q filed on January 31, 2014).
   
Employment Agreement, dated February 28, 1998, between Berry Plastics Corporation and Mark Miles, together with amendments dated February 28, 2003, September 13, 2006, December 31, 2008, and December 31, 2011 (incorporated herein by reference to Exhibit 10.40 to the Company's Form 10-K filed on November 30, 2016).
 
Form of Amendment to Employment Agreement by and between Berry Plastics Corporation and each of Curtis L Begle, Mark W. Miles, and Thomas E. Salmon (incorporated herein by reference to Exhibit 10.1 to the Company's Form 8-K filed on July 22, 2016).
 
 
Computation of Ratio of Earnings to Fixed Charges.
 
 
Subsidiaries of the Registrant.
 
 
Consent of Independent Registered Public Accounting Firm
 
 
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
 
 
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
 
 
Section 1350 Certification of the Chief Executive Officer
 
 
Section 1350 Certification of the Chief Financial Officer
 
 
101.*
Interactive Data Files

*
Filed herewith.
Management contract or compensatory plan or arrangement.

62

SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) 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, on the 21st day of November, 2017.
 
 
BERRY GLOBAL GROUP, INC.
 
 
 
 
 
By
/s/ Thomas E. Salmon
 
 
 
Thomas E. Salmon
 
 
 
Chief Executive Officer
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature
 
Title
Date
 
 
 
 
/s/ Thomas E. Salmon
 
Chief Executive Officer and Director (Principal Executive Officer)
November 21, 2017
Thomas E. Salmon
 
 
 
 
 
 
 
/s/ Mark W. Miles
 
Chief Financial Officer (Principal Financial Officer)
November 21, 2017
Mark W. Miles
 
 
 
 
 
 
 
/s/ James M. Till
 
Executive Vice President and Controller (Principal Accounting Officer)
November 21, 2017
James M. Till
 
 
 
 
 
 
 
/s/ Jonathan D. Rich
 
Chairman of the Board of Directors and Director
November 21, 2017
Jonathan D. Rich
 
 
 
       
/s/ B. Evan Bayh
 
Director
November 21, 2017
B. Evan Bayh
 
 
 
 
 
 
 
/s/ Jonathan F. Foster
 
Director
November 21, 2017
Jonathan F. Foster
 
 
 
 
 
 
 
/s/ Stephen E. Sterrett
 
Director
November 21, 2017
Stephen E. Sterrett
 
 
 
 
 
 
 
/s/ Idalene F. Kesner
 
Director
November 21, 2017
Idalene F. Kesner
 
 
 
 
 
 
 
/s/ Carl J. Rickertsen
 
Director
November 21, 2017
Carl J. Rickertsen
 
 
 
 
 
 
 
/s/ Ronald S. Rolfe
 
Director
November 21, 2017
Ronald S. Rolfe
 
 
 
 
 
 
 
/s/ Robert V. Seminara
 
Director
November 21, 2017
Robert V. Seminara
 
 
 
 
 
 
 
/s/ Robert A. Steele
 
Director
November 21, 2017
Robert A. Steele
 
 
 
       
/s/ Scott B. Ullem
 
Director
November 21, 2017
Scott B. Ullem
     
 
63
 

EXHIBIT 12.1
 
 
Earnings to Fixed Charges
                             
 
                             
 
 
2013
   
2014
   
2015
   
2016
   
2017
 
Earnings:
                             
Income (loss) before taxes
   
85
     
67
     
122
     
308
     
449
 
Interest
   
244
     
221
     
191
     
291
     
269
 
Interest portion of rental expense
   
18
     
18
     
17
     
19
     
22
 
 
   
347
     
306
     
330
     
618
     
740
 
 
                                       
Fixed Charges:
                                       
Interest
   
244
     
221
     
191
     
291
     
269
 
Interest capitalized
   
5
     
6
     
6
     
6
     
7
 
Interest portion of rental expense
   
18
     
18
     
17
     
19
     
22
 
 
   
267
     
245
     
214
     
316
     
298
 
 
                                       
Ratio
   
1.3
     
1.2
     
1.5
     
2.0
     
2.5
 
 

 

BERRY PLASTICS GROUP, INC.
LIST OF SUBSIDIARIES


AeroCon, LLC
Aspen Industrial S.A. de C.V.
Berry Plastics (Australia) Pty Ltd.
Berry Plastics Acquisition Corporation V
Berry Plastics Acquisition Corporation XI
Berry Plastics Acquisition Corporation XII
Berry Plastics Acquisition Corporation XIII
Berry Plastics Acquisition Corporation XIV, LLC
Berry Plastics Acquisition Corporation XV, LLC
Berry Plastics Acquisition Corporation XVI
Berry Plastics Acquisition LLC II
Berry Plastics Acquisition LLC X
Berry Plastics Asia Pacific Limited
Berry Plastics Asia Pte. Ltd.
Berry Plastics Beheer B.V.
Berry Plastics Canada, Inc.
Berry Plastics Canada Holdings, LLC
Berry Global, Inc.
Berry Plastics de Mexico, S. de R.L. de C.V.
Berry Plastics Design, LLC
Berry Global Dutch Holding BV
Berry Plastics Escrow Corporation
Berry Plastics Escrow, LLC
Berry Plastics Filmco, Inc.
Berry Plastics France Holdings SAS
Berry Plastics GmbH
Berry Global Group, Inc.
Berry Plastics Holding GmbH & Co. KG
Berry Plastics Hong Kong Limited
Berry Plastics IK, LLC
Berry Plastics International B.V.
Berry Plastics International C.V.
Berry Plastics International GmbH
Berry Plastics International, LLC
Berry Plastics Malaysia SDN BHD
Berry Plastics Opco, Inc.
Berry Plastics Qingdao Limited
Berry Plastics SP, Inc.
Berry Plastics Technical Services, Inc.
Berry Sterling Corporation
BP Parallel, LLC
BPRex Brazil Holding Inc.
BPRex Closure Systems, LLC
BPRex Closures and Packaging Services Ltd.
BPRex Closures Kentucky Inc.
BPRex Closures, LLC
BPRex de Mexico S.A. de R.L. de CV
BPRex Delta Inc.
BPRex Healthcare Brookville Inc.
BPRex Healthcare Offranville
BPRex Healthcare Packaging, Inc.
BPRex Partipacoes Ltda
BPRex Plastic Packaging (India) Limited



BPRex Plastic Packaging de Mexico S.A. de C.V.
BPRex Plastic Packaging, Inc.
BPRex Plastic Services Company Inc.
BPRex Plasticos Do Brasil Ltda
BPRex Product Design & Engineering Inc.
BPRex Singapore Pte. Ltd.
BPRex Specialty Products Puerto Rico Inc.
Caplas LLC
Caplas Neptune, LLC
Captive Plastics Holdings, LLC
Captive Plastics, LLC
Cardinal Packaging, Inc.
Covalence Specialty Adhesives LLC
Covalence Specialty Coatings LLC
CPI Holding Corporation
CSM Mexico SPV LLC
Dongguan First First Packaging Co. Limited
Fortunes Best Trading Limited
Frans Nooren Afdichtingssystemen B.V.
Genius World Holding Ltd
Grafco Industries Limited Partnership
Grupo de Servicios Berpla, S. de R.L. de C.V.
Jacinto Mexico, S.A. de C.V.
Kerr Group, LLC
Knight Plastics, LLC
Packerware, LLC
Pescor, Inc.
Pfizer Investment Ltd
Pliant Corporation International
Pliant de Mexico S.A. de C.V.
Pliant, LLC
Poly-Seal, LLC
Prime Label & Screen Incorporated
Rafypak, S.A. de C.V.
BPREX Pharma Packaging India Private Limited
Rollpak Corporation
Saffron Acquisition, LLC
Seal for Life India Private Limited
Seal for Life Industries Beta LLC
Seal for Life Industries BVBA
Seal for Life Industries Tijuana LLC
Seal for Life Industries, LLC
Seal for Life Technologies & Services B.V.
Setco, LLC
Stopaq B.V.
Stopaq Saudi Factory LLC
Sun Coast Industries, LLC
Tyco Acquisition Alpha LLC
Dongguan United Packaging Co., Limited
Jiagmen United Packaging Co., Limited
Uniplast Holdings, LLC
Uniplast U.S., Inc.
Venture Packaging Midwest, Inc.
Venture Packaging, Inc.
159422 Canada Inc.
AVINTIV  Inc.
AVINTIV Acquisition Corporation



AVINTIV Specialty Materials, Inc.
Boddington International Limited
Bonlam, S.A. DE C.V.
Bonlam Holdings B.V.
Chicopee, Inc.
Chicopee Asia, Limited
Chicopee Holdings B.V.
Chicopee Holdings C.V.
Companhai Providencia Industria e Comercio
Cordustex Manufacturing (PTY) Limited
Cordustex (PTY) Limited
DT Acquisition Inc.
DIFCO Performance Fabrics, Inc.
Dominion Textile Inc.
Dominion Textile Mauritius Inc.
Dominion Textile (USA), LLC
Dounor SAS
Fabrene, LLC
Fabrene, Inc.
Fiberweb, LLC
Fiberweb Ltd.
Fiberweb Asia Pacific Limited
Fiberweb Berlin GmbH
Fiberweb France SAS
Fiberweb Geos, Inc.
Fiberweb Geosynthetiques Sarl
Fiberweb Geosynthetics Limited
Fiberweb Holdings Ltd
Fiberweb Holdings Deutschland GmbH
Fiberweb Italia SpA
Fiberweb Technical Fabrics (Shanghai) Company Limited
Fiberweb Terno D'Isola Srl
Fiberweb (Tianjin) Specialty Nonwovens Company Limited
Fiberweb UK Limited
Fiberweb US Holdings Limited
Geca-Tapes B.V.
Korma SpA
Nanhai Nanxin Non-Woven Co. Ltd
Old Hickory Steamworks, LLC
PGI Acquisition Limited
PGI Argentina S.A.
PGI Colombia LTDA
PGI Europe, Inc.
PGI France SAS
PGI France Holdings SAS
PGI Holdings BV



PGI Netherlands Holdings B.V.
PGI Netherlands Holdings (NO. 2) B.V.
PGI Nonwovens (Mauritius)
PGI Nonwovens B.V.
PGI Nonwovens Germany GmbH
PGI Nonwovens Limited
PGI Non-Woven (China) Co. Ltd
PGI Non-Woven (Foshan) Co. Ltd
PGI Polimeros Do Brazil S.A.
PGI Polymer, Inc.
PGI Spain S.L. U
Polymer Group Holdings C.V.
Pristine Brands Corporation
Providencia USA, Inc.
SCI Vertuquet
Terram Defencell Limited
Terram Limited
Terram Geosynthetics Private Limited
Tesalca Polska SP ZO.O
Tubex Limited
 AEP Canada
 AEP Industries
 Berry Specialty Tapes, LLC
 Seal for Life Industriest Mexico, S. de R.L. de C.V.


 

Exhibit 23.1
 

Consent of Independent Registered Public Accounting Firm
 
We consent to the incorporation by reference in the following Registration Statements:
 
(1)  
Registration Statement (Form S-3ASR No. 333-194030) of Berry Plastics Group, Inc., and
 
(2)  
Registration Statement (Form S-8 No. 333-184522) pertaining to the Berry Plastics Group, Inc. 2006 Equity Incentive Plan and the Berry Plastics Group, Inc. 2012 Long-Term Incentive Plan; and
 
(3)  
Registration Statement (Form S-8 No. 333-203173) pertaining to the Berry Plastics Group, Inc. 2015 Long-Term Incentive Plan;
 
of our reports dated November 21, 2017, with respect to the consolidated financial statements of Berry Global Group, Inc. (formerly known as Berry Plastics Group, Inc.) and the effectiveness of internal control over financial reporting of Berry Global Group, Inc. included in this Annual Report (Form 10-K) of Berry Global Group, Inc. for the year ended September 30, 2017.


   
 
 
Indianapolis, Indiana
November 21, 2017
 
/s/ Ernst &Young LLP
 
 
 
 
 
 
 
     

 

EXHIBIT 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION
 
I, Thomas E. Salmon, Chief Executive Officer of Berry Global Group, Inc., certify that:
 
1.  I have reviewed this annual report on Form 10-K of Berry Global Group, Inc. (the "Registrant");
 
2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
4.  The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
 
(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)  Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)  Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
 
5.  The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
 
(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
 
(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
 
 
By:
/s/ Thomas E. Salmon
Date: November 21, 2017
 
Thomas E. Salmon
 
 
Chief Executive Officer
 

EXHIBIT 31.2
 
CHIEF FINANCIAL OFFICER CERTIFICATION
 
 
I, Mark W. Miles, Chief Financial Officer of Berry Global Group, Inc., certify that:
 
1.  I have reviewed this annual report on Form 10-K of Berry Global Group, Inc. (the "Registrant");
 
2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
4.  The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
 
(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)  Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)  Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
 
5.  The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
 
(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
reporting.
 
 
By:
/s/ Mark W. Miles
Date:  November 21, 2017
 
Mark W. Miles
 
 
Chief Financial Officer



 

EXHIBIT 32.1
 
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the annual report of Berry Global Group, Inc. (the "Registrant") on Form 10-K for the fiscal year ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas E. Salmon, Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
/s/ Thomas E. Salmon
Thomas E. Salmon
Chief Executive Officer
 
Date: November 21, 2017

 

EXHIBIT 32.2
 
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the annual report of Berry Global Group, Inc. (the "Registrant") on Form 10-K for the fiscal year ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark W. Miles, the Chief Financial Officer and Treasurer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
/s/ Mark W. Miles
Mark W. Miles
Chief Financial Officer
 
Date:  November 21, 2017





EXHIBIT 10.2
AMENDMENT NO. 5 TO THE
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This AMENDMENT NO. 5 TO THE AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of October 1, 2015 (this "Amendment"), is entered into by and among BERRY PLASTICS GROUP, INC., a Delaware corporation ("Holdings"), BERRY PLASTICS CORPORATION, a Delaware corporation (the "Company"), certain domestic subsidiaries of the Company party hereto as additional borrowers (together with the Company, the "Borrowers"), certain other subsidiaries of the Company party hereto, the Lenders party hereto, and BANK OF AMERICA, N.A., as administrative agent (in such capacity, the "Administrative Agent") and collateral agent (in such capacity, the "Collateral Agent").
PRELIMINARY STATEMENTS:
(1) Holdings, the Company, the Borrowers, the Lenders from time to time party thereto, the Administrative Agent, the Collateral Agent and the other agents party thereto, entered into that certain Amended and Restated Revolving Credit Agreement, dated as of April 3, 2007 (as amended by Amendment No. 1 to the Amended and Restated Revolving Credit Agreement, dated as of December 14, 2007, Amendment No. 2 to the Amended and Restated Revolving Credit Agreement, dated as of January 11, 2008, the Incremental Assumption Agreement, dated as of December 23, 2009, Amendment No. 3 to the Amended and Restated Revolving Credit Agreement, dated as of June 28, 2011, and Amendment No. 4 to the Amended and Restated Revolving Credit Agreement, dated as of May 14, 2015, the "Unamended Credit Agreement");
(2) The Company has requested that the Lenders approve certain amendments to the Una-mended Credit Agreement specified herein (the Unamended Credit Agreement, as modified by the amendments set forth in this Amendment, the "Credit Agreement");
(3) In connection with the Avintiv Merger (as defined below) the Company is, on the Amendment Effective Date (as defined below) entering into an Incremental Assumption Agreement and Amendment (the "Term Loan Amendment") to the Term Loan Credit Agreement (as in effect immediately prior to the effectiveness of the Term Loan Amendment, the "Existing Term Loan Credit Agreement"); and
(4) Pursuant to Section 9.08 of the Unamended Credit Agreement, the Loan Parties and the Required Lenders may, and hereby express their desire to, amend the Unamended Credit Agreement for certain purposes as set forth below.
NOW, THEREFORE, in consideration of the premises and in order to induce the parties hereto to enter into the transactions described herein and the Lenders to extend credit and other financial accommodations to the Borrowers pursuant to the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Administrative Agent, the Lenders, the Borrowers and the other Loan Parties hereby covenant and agree as follows:
 
1

 
SECTION 1.  Definitions. Each capitalized term used herein shall have the meaning provided below or in the introduction hereto:
"Avintiv" means AVINTIV Inc., a Delaware corporation
"Avintiv Merger" means the merger of Merger Sub with and into Avintiv in accordance with the Avintiv Merger Agreement.
"Avintiv Merger Agreement" means that agreement and plan of merger (together with the schedules and exhibits thereto"), dated as of July 30, 2015, by and among Holdings, Berry Plastics Acquisition Corporation IX, a wholly-owned subsidiary of the Company ("Merger Sub"), Avintiv and the securityholder representative identified therein.
"Avintiv Transactions" means (i) the Avintiv Merger, (ii) the execution of the Term Loan Amendment and the borrowing of up to $1.900 billion aggregate principal amount of Term F Loans under the Term Loan Credit Agreement, and (iii) the issuance and sale by the Company of up to $600 million aggregate principal amount of second lien secured notes.
All capitalized terms not otherwise defined herein shall have the meanings attributed thereto in the Credit Agreement.
SECTION 2. Amendments of Unamended Credit Agreement. Effective on the Effective Date and subject to the satisfaction of the terms and conditions set forth herein:
(a) the following definitions shall be inserted in Section 1.01 of the Unamended Credit Agreement in alphabetical order:
"Limited Condition Acquisition" means any acquisition, including by way of merger, amalgamation or consolidation, by one or more of the Company or its Restricted Subsidiaries of any assets, business or Person permitted by this Agreement whose consummation is not conditioned on the availability of, or on obtaining, third party acquisition financing and which is designated as a Limited Condition Acquisition by the Company in writing to the Administrative Agent and Lenders.
"Specified Event of Default" means an Event of Default under Section 7.01(b), (c), (h) or (i).
(b) Clause (i) of the definition of "Permitted Business Acquisition" in Section 1.01 of the Unamended Credit Agreement shall be amended by adding the following to the end thereof: "(or, in connection with a Limited Condition Acquisition, no Specified Event of Default shall have occurred and be continuing or would result therefrom)".
(c) The first sentence of Section 2.21(a) of the Unamended Credit Agreement shall be amended by replacing "$60 million" with "$100 million"
2

 
(d) Section 6.01(r) of the Unamended Credit Agreement shall be amended by (I) in clause (i)(A), adding the following to the end thereof: " (or, if the proceeds of such Indebtedness is are being used to fund a Limited Condition Acquisition, at the time of the incurrence of such Indebtedness and after giving effect thereto, no Specified Event of Default shall have occurred and be continuing or would result therefrom)" and (II) in clause (i)(C), deleting "3.75 to 1.00" and replacing it with "4.00 to 1.00".
(e) Section 6.02(u) of the Unamended Credit Agreement shall be amended by (I) in clause (i) of the proviso, deleting "3.75 to 1.00" and replacing it with "4.00 to 1.00" and (II), in clause (ii) of the proviso, adding the following to the end thereof: " (or, if the proceeds of such Indebtedness is are being used to fund a Limited Condition Acquisition, at the time of the incurrence of such Indebtedness and after giving effect thereto, no Specified Event of Default shall have occurred and be continuing or would result therefrom)".
SECTION 3. Effect of Amendment.
(a) The Unamended Credit Agreement and each of the other Loan Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.
(b) On and after the effectiveness of this Amendment, each reference in the Unamended Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Unamended Credit Agreement, shall mean and be a reference to the Unamended Credit Agreement, as amended by, and after giving effect to, this Amendment.
(c) Each Loan Document, after giving effect to this Amendment, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed, except that, on and after the effectiveness of this Amendment, each reference in each of the Loan Documents (including the Collateral Agreement and the other Security Documents) to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Unamended Credit Agreement shall mean and be a reference to the Unamended Credit Agreement, as amended by, and after giving effect to, this Amendment. Without limiting the generality of the foregoing, the Security Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, as amended by, and after giving effect to, this Amendment (in the case of the Mortgages, subject to any limitations contained in the Mortgages on maximum indebtedness or maximum indebtedness permitted to be secured thereby), in each case subject to the terms thereof.
(d) Each Loan Party hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Agreement) and confirms that such liens and security interests continue to secure the Obligations under the Loan Documents, in each case subject to the terms thereof and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to Article II of the Collateral Agreement.
(e) This Amendment is limited as written and is not a consent to any other amendment, restatement or waiver or other modification, whether or not similar and, except as expressly provided herein or in any other Loan Document, all terms and conditions of the Loan Documents remain in full force and effect unless otherwise specifically amended hereby or by any other Loan Document.
(f) This Amendment shall be a Loan Document.
(g) The parties hereto acknowledge and agree that the Avintiv Merger shall constitute a Limited Condition Acquisition under the terms of the Credit Agreement.
SECTION 4. Conditions of Effectiveness. This Amendment shall become effective in the order and in the manner herein described, as of the first date upon which each of the conditions precedent set forth below in this Section 4 shall be satisfied or waived in accordance with Section 9.08 of the Una-mended Credit Agreement (such date, the "Amendment Effective Date"):
(a) The Term Loan Amendment shall have become effective in accordance with its terms.
(b) The Administrative Agent (or its counsel) shall have received from Holdings, the Company, the other Borrowers and each Subsidiary Loan Party, the Administrative Agent, and the Lenders party hereto either (i) a counterpart of this Amendment signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Amendment) that such party has signed a counterpart of this Amendment.
(c) The Loan Parties shall have delivered a certificate to the Administrative Agent representing and warranting that: (a) the execution, delivery and performance by Holdings, the Company and each of the Subsidiary Loan Parties of this Amendment are permitted under, and do not conflict with or violate, the terms of the Unamended Credit Agreement, the Existing Term Loan Credit Agreement, the Intercreditor Agreement or the Senior Lender Intercreditor Agreement, (b) both before and after giving effect to this Amendment, no default exists under the Unamended Credit Agreement, the Credit Agreement, the Existing Term Loan Credit Agreement, the Term Loan Credit Agreement, or any indenture or supplemental indenture governing the senior notes issued by the Company and outstanding on the Amendment Effective Date, and (c) no action, consent or approval of, registration or filing with, or any other action by any Governmental Authority is or will be required in connection with this Amendment.
(d) The Agents shall have received all fees payable thereto or to any Lender on or prior to the Amendment Effective Date and, to the extent invoiced at least 2 Business Days prior to the Amendment Effective Date, all other amounts due and payable pursuant to the Loan Documents on or prior to the Amendment Effective Date, including, to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses (including reasonable fees, charges and disbursements of Cahill Gordon & Rein-del LLP and local counsel) required to be reimbursed or paid by the Loan Parties hereunder or under any Loan Document.
SECTION 5. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier or other electronic means shall be effective as delivery of a manually executed counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the state of New York.
SECTION 7. WAIVER OF JURY TRIAL EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.
SECTION 8. Jurisdiction; Consent to Service of Process.
(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof (collectively, "New York Courts"), in any action or proceeding arising out of or relating to this Amendment or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Amendment shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Amendment or any of the other Loan Documents in the courts of any jurisdiction, except that each of the Loan Parties agrees that (a) it will not bring any such action or proceeding in any court other than New York Courts (it being acknowledged and agreed by the parties hereto that any other forum would be inconvenient and inappropriate in view of the fact that more of the Lenders who would be affected by any such action or proceeding have contacts with the State of New York than any other jurisdiction), and (b) in any such action or proceeding brought against any Loan Party in any other court, it will not assert any cross-claim, counterclaim or setoff, or seek any other affirmative relief, except to the extent that the failure to assert the same will preclude such Loan Party from asserting or seeking the same in the New York Courts.
(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Amendment or the other Loan Documents in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first written above.
BERRY PLASTICS CORPORATION
 
By: /s/ Jason K. Greene 
Name:  Jason K. Greene
Title:  Executive Vice President, General
Counsel and Secretary
 
 
BERRY PLASTICS GROUP, INC.
 
By: /s/ Jason K. Greene 
Name:  Jason K. Greene
Title:  Executive Vice President, General
Counsel and Secretary

Amendment No. 5 Signature Page

BERRY PLASTICS ACQUISITION CORPORATION V
BERRY PLASTICS ACQUISITION CORPORATION IX
BERRY PLASTICS ACQUISITION CORPORATION XI
BERRY PLASTICS ACQUISITION CORPORATION XII
BERRY PLASTICS ACQUISITION CORPORATION XIII
BERRY PLASTICS FILMCO, INC.
BERRY PLASTICS OPCO, INC.
BERRY PLASTICS SP, INC.
BERRY PLASTICS TECHNICAL SERVICES, INC.
BERRY STERLING CORPORATION
BPREX CLOSURES KENTUCKY INC.
BPREX DELTA INC.
BPREX BRAZIL HOLDING INC.
BPREX HEALTHCARE BROOKVILLE INC.
BPREX HEALTHCARE PACKAGING INC.
BPREX PLASTIC PACKAGING INC.
BPREX PLASTICS SERVICES COMPANY INC.
BPREX PRODUCT DESIGN AND ENGINEERING INC.
BPREX SPECIALTY PRODUCTS PUERTO RICO INC.
CARDINAL PACKAGING, INC.
CPI HOLDING CORPORATION
PESCOR, INC.
PLIANT CORPORATION INTERNATIONAL
PRIME LABEL & SCREEN INCORPORATED
ROLLPAK CORPORATION
VENTURE PACKAGING, INC.
VENTURE PACKAGING MIDWEST, INC.
UNIPLAST U.S., INC.
 
 
By: /s/ Jason K. Greene 
Name:  Jason K. Greene
Title:  Executive Vice President, General Counsel and Secretary

Amendment No. 5 Signature Page

AEROCON, LLC
BERRY PLASTICS ACQUISITION CORPORATION XV,
LLC
BERRY PLASTICS ACQUISITION LLC X
BERRY PLASTICS DESIGN, LLC
BERRY PLASTICS IK, LLC
BPREX CLOSURES, LLC
BPREX CLOSURE SYSTEMS, LLC
CAPLAS, LLC
CAPLAS NEPTUNE, LLC
CAPTIVE PLASTICS, LLC
CAPTIVE PLASTICS HOLDINGS, LLC
COVALENCE SPECIALTY ADHESIVES LLC
COVALENCE SPECIALTY COATINGS LLC
KERR GROUP, LLC
KNIGHT PLASTICS, LLC
PACKERWARE, LLC
PLIANT, LLC
POLY-SEAL, LLC
SAFFRON ACQUISITION, LLC
SEAL FOR LIFE INDUSTRIES, LLC
SETCO, LLC
SUN COAST INDUSTRIES, LLC
UNIPLAST HOLDINGS, LLC
 
 
By: /s/ Jason K. Greene 
Name:  Jason . Greene
Title:  Executive Vice President, General Counsel and Secretary

Amendment No. 5 Signature Page

GRAFCO INDUSTRIES LIMITED PARTNERSHIP
 
By: CAPLAS NEPTUNE, LLC
its General Partner
 
 
By: /s/ Jason K. Greene 
Name:  Jason K. Greene
Title:  Executive Vice President, General Counsel and Secretary

Amendment No. 5 Signature Page

BANK OF AMERICA, N.A.,
as Administrative Agent and Collateral Agent,
 
 
By: /s/ Robert Q. Mahoney 
Name: Robert Q. Mahoney
Title:  Sr. Vice President

Amendment No. 5 Signature Page

Bank of America, N.A.,
as Lender
 
 
By: /s/ Robert Q. Mahoney 
Name: Robert Q. Mahoney
Title:  Sr. Vice President

Amendment No. 5 Signature Page

JPMORGAN CHASE BANK, N.A.,
as Lender
 
By: /s/ Raymond Gage 
Name:  Raymond Gage
Title:  Authorized Officer


Amendment No. 5 Signature Page

U.S. Bank National Association,
as Lender
 
By: /s/ David Lawrence 
Name: David Lawrence
Title: Vice President

Amendment No. 5 Signature Page

WELLS FARGO BANK, NATIONAL
ASSOCIATION
as Lender
 
By: /s/ Michael P. Henry 
Name: Michael P. Henry
Title: Duly Authorized Signatory

Amendment No. 5 Signature Page

Barclays Bank PLC
as Lender
 
By: /s/ Daniel Hunter
Name: Daniel Hunter
Title: Authorized Signatory

Amendment No. 5 Signature Page

GOLDMAN SACHS BANK USA, as Lender
 
By: /s/ Michelle Latzoni 
Name: Michelle Latzoni
Title: Authorized Signatory

Amendment No. 5 Signature Page

BMO Harris Bank N.A.,
as Lender
 
By: /s/ Quinn Heiden 
Name: Quinn Heiden
Title: Director

Amendment No. 5 Signature Page

CITIBANK, N.A,.
as Lender
 
By: /s/ David Smith 
Name: David Smith
Title: VP

Amendment No. 5 Signature Page

CITY NATIONAL BANK,
as Lender
 
By: /s/ Mia Bolin 
Name: Mia Bolin
Title: Vice President

Amendment No. 5 Signature Page

DEUTSCHE BANK AG NEW YORK
BRANCH
as Lender
 
By: /s/ Peter Cucchiara 
Name: Peter Cucchiara
Title: Vice President
 
 
By: /s/ Michael Winters 
Name: Michael Winters
Title: Vice President

Amendment No. 5 Signature Page


EXHIBIT 10.3
AMENDMENT NO. 6 TO THE
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This AMENDMENT NO. 6 TO THE AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of March 15, 2017 (this "Amendment"), is entered into by and among BERRY PLASTICS GROUP, INC., a Delaware corporation ("Holdings"), BERRY PLASTICS CORPORATION, a Delaware corporation (the "Company"), certain domestic subsidiaries of the Company party hereto as additional borrowers (together with the Company, the "Borrowers"), certain other subsidiaries of the Company party hereto, the Lenders party hereto, and BANK OF AMERICA, N.A., as administrative agent (in such capacity, the "Administrative Agent") and collateral agent (in such capacity, the "Collateral Agent").
PRELIMINARY STATEMENTS:
(1) Holdings, the Company, the Borrowers, the Lenders from time to time party thereto, the Administrative Agent, the Collateral Agent and the other agents party thereto, entered into that certain Amended and Restated Revolving Credit Agreement, dated as of April 3, 2007 (as amended by Amendment No. 1 to the Amended and Restated Revolving Credit Agreement, dated as of December 14, 2007, Amendment No. 2 to the Amended and Restated Revolving Credit Agreement, dated as of January 11, 2008, the Incremental Assumption Agreement, dated as of December 23, 2009, Amendment No. 3 to the Amended and Restated Revolving Credit Agreement, dated as of June 28, 2011, Amendment No. 4 to the Amended and Restated Revolving Credit Agreement, dated as of May 14, 2015, and Amendment No. 5 to the Amended and Restated Revolving Credit Agreement, dated as of October 1, 2015, the "Unamended Credit Agreement");
(2) The Company has requested that the Lenders approve certain amendments to the Una-mended Credit Agreement specified herein (the Unamended Credit Agreement, as modified by the amendments set forth in this Amendment, the "Credit Agreement"); and
(3) Pursuant to Section 9.08 of the Unamended Credit Agreement, the Loan Parties and the Required Lenders may, and hereby express their desire to, amend the Unamended Credit Agreement for certain purposes as set forth below.
NOW, THEREFORE, in consideration of the premises and in order to induce the parties hereto to enter into the transactions described herein and the Lenders to extend credit and other financial accommodations to the Borrowers pursuant to the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Administrative Agent, the Lenders, the Borrowers and the other Loan Parties hereby covenant and agree as follows:
 

 
SECTION 1. Definitions. Each capitalized term used herein shall have the meaning provided below or in the introduction hereto:
All capitalized terms not otherwise defined herein shall have the meanings attributed thereto in the Credit Agreement.
SECTION 2. Amendments of Unamended Credit Agreement. Effective on the Effective Date and subject to the satisfaction of the terms and conditions set forth herein:
(a) the following definitions shall be deleted from Section 1.01 of the Unamended Credit Agreement:
"Additional Mortgage" shall have the meaning assigned to such term in Section 5.10(c).
"Mortgaged Properties" shall mean the Real Properties owned in fee by the Loan Parties that are set forth on Schedule 1.01(c) and each additional Real Property encumbered by a Mortgage pursuant to Section 5.10.
"Mortgages" shall mean the mortgages, trust deeds, deeds of trust, deeds to secure debt, assignments of leases and rents, and other security documents delivered with respect to Mortgaged Properties, each in form and substance reasonably satisfactory to the Administrative Agent and the Company, as amended, supplemented or otherwise modified from time to time. For the avoidance of doubt, Mortgages may include mortgages delivered under the Existing Credit Agreement to the extent amended to be in a form otherwise satisfactory to the Administrative Agent.
(b) the following definitions shall be added to Section 1.01 of the Unamended Credit Agreement:
"Bail-In Action" means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
"Bail-In Legislation" means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
"EEA Financial Institution" means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent;
"EEA Member Country" means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
"EEA Resolution Authority" means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
 

 
"EU Bail-In Legislation Schedule" means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
"Write-Down and Conversion Powers" means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
(c) The definition of "Collateral" in Section 1.01 of the Unamended Credit Agreement shall be amended by deleting the following in the definition thereof: "and shall also include the Mortgaged Properties".
(d) The definition of "Collateral and Guarantee Requirement" in Section 1.01 of the Una-mended Credit Agreement shall be amended by replacing subclauses (h), (i), and (j) thereto with "[reserved]".
(e) The definition of "Defaulting Lender" in Section 1.01 of the Unamended Credit Agreement shall be amended by adding "or (iii) become the subject of a Bail-in Action" immediately before the proviso in such definition.
(f) The definition of "Security Documents" in Section 1.01 of the Unamended Credit Agreement shall be amended by deleting the following in the definition thereof: "the Mortgages,".
(g) Section 2.21(c)(ii) of the Unamended Credit Agreement is hereby amended and restated in its entirety as follows: "the Administrative Agent shall have received legal opinions, board resolutions and other closing certificates and documentation as required by the relevant Incremental Assumption Agreement and, to the extent required by the Administrative Agent, consistent with those delivered on the Closing Date under Section 4.02 and such additional documents and filings (including amendments to the Security Documents) as the Administrative Agent may reasonably require to assure that the Revolving Loans in respect of Incremental Revolving Facility Commitments are secured by the Collateral ratably with all other Revolving Loans."
(h) Section 2.23(a)(iv) of the Unamended Credit Agreement shall be amended by adding "and subject to Section 9.28," immediately before "no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender."
(i) Section 3.04 of the Unamended Credit Agreement shall be amended by replacing sub-clause (c) thereof with "[reserved]".
 

 
(j) Section 3.07 of the Unamended Credit Agreement shall be amended by (i) deleting "(including all Mortgaged Properties)" in subclause (a) thereof and (ii) replacing subclauses (c) and (d) thereto with "[reserved]".
(k) Section 3.09 of the Unamended Credit Agreement shall be amended by deleting the following in subclause (b) thereof: "or any restriction of record or agreement affecting any Mortgaged Property".
(l) Section 3.17 of the Unamended Credit Agreement shall be amended by replacing sub-clause (d) thereof with "[reserved]".
(m) Section 5.02 of the Unamended Credit Agreement shall be amended by replacing sub-clause (b) thereof with "[reserved]".
(n) Section 5.10 of the Unamended Credit Agreement is hereby amended and restated in its entirety as follows:
"SECTION 5.10 Further Assurances; Additional Security
(a) Execute any and all further documents, financing statements, agreements and in-struments, and take all such further actions (including the filing and recording of financing state-ments and other documents and recordings of Liens in stock registries), that may be required under any applicable law, or that the Collateral Agent may reasonably request, to satisfy the Collateral and Guarantee Requirement and to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties and provide to the Collateral Agent, from time to time upon reasonable request, evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Security Doc-uments.
(b) If any asset that has an individual fair market value in an amount greater than $5 million is acquired by the Company or any other Loan Party after the Closing Date or owned by an entity at the time it becomes a Subsidiary Loan Party (in each case other than (x) assets consti-tuting Collateral under a Security Document that become subject to the Lien of such Security Document upon acquisition thereof and (y) assets that are not required to become subject to Liens in favor of the Collateral Agent pursuant to Section 5.10(g) or the Security Documents) (i) notify the Collateral Agent thereof and (ii) cause such asset to be subjected to a Lien securing the Obli-gations and take, and cause the Subsidiary Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section, all at the expense of the Loan Parties, subject to paragraph (g) below.
(c) [reserved].
(d) If any additional direct or indirect Subsidiary of the Company is formed or acquired after the Closing Date (with any Subsidiary Redesignation resulting in an Unrestricted Subsidiary becoming a Subsidiary being deemed to constitute the acquisition of a Subsidiary) and if such Subsidiary is a Subsidiary Loan Party, within five Business Days after the date such Subsidiary is formed or acquired, notify the Collateral Agent and the Lenders thereof and, within 20 Business Days after the date such Subsidiary is formed or acquired or such longer period as the Collateral Agent shall agree, cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary and with respect to any Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan Party, subject to paragraph (g) below.
 

 
(e) If any additional Foreign Subsidiary of the Company is formed or acquired after the Closing Date (with any Subsidiary Redesignation resulting in an Unrestricted Subsidiary becoming a Subsidiary being deemed to constitute the acquisition of a Subsidiary) and if such Subsidiary is a "first tier" Foreign Subsidiary, within five Business Days after the date such Foreign Subsidiary is formed or acquired, notify the Collateral Agent and the Lenders thereof and, within 20 Business Days after the date such Foreign Subsidiary is formed or acquired or such longer period as the Collateral Agent shall agree, cause the Collateral and Guarantee Requirement to be satisfied with respect to any Equity Interest in such Foreign Subsidiary owned by or on behalf of any Loan Party, subject to paragraph (g) below.
(f) (i) Furnish to the Collateral Agent prompt written notice of any change (A) in any Loan Party's corporate or organization name, (B) in any Loan Party's identity or organizational structure or (C) in any Loan Party's organizational identification number; provided, that the Borrowers shall not effect or permit any such change unless all filings have been made, or will have been made within any statutory period, under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral for the benefit of the Secured Parties and (ii) promptly notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed.
(g) The Collateral and Guarantee Requirement and the other provisions of this Section 5.10 need not be satisfied with respect to (i) any Real Property, (ii) any vehicle, (iii) except as required pursuant to Section 5.14, cash, deposit account and security accounts (provided that this clause (iii) shall not affect the Collateral Agent's right to claim a security interest in proceeds of Accounts and Inventory), (iv) any Equity Interests acquired after the Closing Date (other than Equity Interests in the Company or, in the case of any person which is a Subsidiary, Equity Interests in such person issued or acquired after such person became a Subsidiary) in accordance with this Agreement if, and to the extent that, and for so long as (A) such Equity Interests constitute less than 100% of all applicable Equity Interests of such person and the person holding the remainder of such Equity Interests are not Affiliates, (B) doing so would violate applicable law or a contractual obligation binding on such Equity Interests and (C) with respect to such contractual obligations, such obligation existed at the time of the acquisition thereof and was not created or made binding on such Equity Interests in contemplation of or in connection with the acquisition of such Subsidiary, (v) any assets acquired after the Closing Date, to the extent that, and for so long as, taking such actions would violate an enforceable contractual obligation binding on such assets that existed at the time of the acquisition thereof and was not created or made binding on such assets in contemplation or in connection with the acquisition of such assets (except in the case of assets acquired with Indebtedness permitted pursuant to Section 6.01(i) that is secured by a Permitted Lien) or (vi) those assets as to which the Collateral Agent shall reasonably determine that the costs of obtaining or perfecting such a security interest are excessive in relation to the value of the security to be afforded thereby; provided, that, upon the reasonable request of the Collateral Agent, the Company shall, and shall cause any applicable Subsidiary to, use commercially reasonable efforts to have waived or eliminated any contractual obligation of the types described in clauses (iv) and (v) above."
 

 
(o) Section 6.02 of the Unamended Credit Agreement shall be amended by deleting the following from subclause (b) thereof: "or permitted in respect of any Mortgaged Property by the terms of the applicable Mortgage".
(p) A new Section 9.28 shall be added to the Unamended Credit Agreement as follows:
SECTION 9.28 Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b) the effects of any Bail-in Action on any such liability, including, if applicable:
(i)
a reduction in full or in part or cancellation of any such liability;
(ii)
a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii)
the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
(q) Schedule 1.01(c) attached to the Unamended Credit Agreement shall be deleted and the reference thereto in the list of Exhibits and Schedules to the Credit Agreement shall be amended to read "Reserved".
SECTION 3. Effect of Amendment and Certain Consents.
(a) The Unamended Credit Agreement and each of the other Loan Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.
(b) On and after the effectiveness of this Amendment, each reference in the Unamended Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Unamended Credit Agreement, shall mean and be a reference to the Unamended Credit Agreement, as amended by, and after giving effect to, this Amendment.
(c) Each Loan Document, after giving effect to this Amendment, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed, except that, on and after the effectiveness of this Amendment, each reference in each of the Loan Documents (including the Collateral Agreement and the other Security Documents) to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Unamended Credit Agreement shall mean and be a reference to the Unamended Credit Agreement, as amended by, and after giving effect to, this Amendment. Without limiting the generality of the foregoing, the Security Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, as amended by, and after giving effect to, this Amendment, in each case subject to the terms thereof.
(d) Each Loan Party hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Agreement) and confirms that such liens and security interests continue to secure the Obligations under the Loan Documents, in each case subject to the terms thereof and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to Article II of the Collateral Agreement.
(e) This Amendment is limited as written and is not a consent to any other amendment, restatement or waiver or other modification, whether or not similar and, except as expressly provided herein or in any other Loan Document, all terms and conditions of the Loan Documents remain in full force and effect unless otherwise specifically amended hereby or by any other Loan Document.
(f) This Amendment shall be a Loan Document.
(g) Each Lender party hereto hereby consents to the release of Liens granted prior to the Amendment Effective Date in favor of the Collateral Agent and/or the other Secured Parties encumbering any Real Property comprising Mortgaged Property.
SECTION 4. Conditions of Effectiveness. This Amendment shall become effective in the order and in the manner herein described, as of the first date upon which the conditions precedent set forth below in this Section 4 shall be satisfied or waived in accordance with Section 9.08 of the Una-mended Credit Agreement (such date, the "Amendment Effective Date"): the Administrative Agent (or its counsel) shall have received from Holdings, the Company, the other Borrowers and each Subsidiary Loan Party, the Administrative Agent, and the Lenders party hereto either (i) a counterpart of this Amendment signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Amendment) that such party has signed a counterpart of this Amendment..
SECTION 5. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier or other electronic means shall be effective as delivery of a manually executed counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the state of New York.
SECTION 7. WAIVER OF JURY TRIAL EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.
SECTION 8. Jurisdiction; Consent to Service of Process.
(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof (collectively, "New York Courts"), in any action or proceeding arising out of or relating to this Amendment or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Amendment shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Amendment or any of the other Loan Documents in the courts of any jurisdiction, except that each of the Loan Parties agrees that (a) it will not bring any such action or proceeding in any court other than New York Courts (it being acknowledged and agreed by the parties hereto that any other forum would be inconvenient and inappropriate in view of the fact that more of the Lenders who would be affected by any such action or proceeding have contacts with the State of New York than any other jurisdiction), and (b) in any such action or proceeding brought against any Loan Party in any other court, it will not assert any cross-claim, counterclaim or setoff, or seek any other affirmative relief, except to the extent that the failure to assert the same will preclude such Loan Party from asserting or seeking the same in the New York Courts.
(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Amendment or the other Loan Documents in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
[Remainder of Page Intentionally Left Blank]
 

 
AEROCON, LLC
AVINTIV ACQUISITION CORPORATION
AVINTIV INC.
AVINTIV SPECIALTY MATERIALS INC.
BERRY PLASTICS ACQUISITION CORPORATION V
BERRY PLASTICS ACQUISITION CORPORATION XI
BERRY PLASTICS ACQUISITION CORPORATION XII
BERRY PLASTICS ACQUISITION CORPORATION XIII
BERRY GLOBAL FILMS, LLC
BERRY PLASTICS ACQUISITION LLC X
BERRY PLASTICS DESIGN, LLC
BERRY PLASTICS FILMCO, INC.
BERRY PLASTICS 1K, LLC
BERRY PLASTICS OPCO, INC.
BERRY PLASTICS SP, INC.
BERRY PLASTICS TECHNICAL SERVICES, INC.
BERRY STERLING CORPORATION
BPREX BRAZIL HOLDING INC.
BPREX CLOSURE SYSTEMS, LLC
BPREX CLOSURES KENTUCKY INC.
BPREX CLOSURES, LLC
BPREX DELTA INC.
BPREX HEALTHCARE BROOKVILLE INC.
BPREX HEALTHCARE PACKAGING INC.
BPREX PLASTIC PACKAGING INC.
BPREX PLASTICS SERVICES COMPANY INC.
BPREX PRODUCT DESIGN AND ENGINEERING INC.
BPREX SPECIALTY PRODUCTS PUERTO RICO INC.
CAPLAS, LLC
CAPLAS NEPTUNE, LLC
CAPTIVE PLASTICS HOLDINGS, LLC
CAPTIVE PLASTICS, LLC
CARDINAL PACKAGING, INC.
CHICOPEE, INC.
COVALENCE SPECIALTY ADHESIVES LLC
COVALENCE SPECIALTY COATINGS LLC
CPI HOLDING CORPORATION
By: /s/ Jason K. Greene 
Name: Jason K. Green
Title: Executive Vice President, General Counsel and Secretary
Amendent No. 6 Signature Page


AEROCON, LLC
AVINTIV ACQUISITION CORPORATION
AVINTIV INC.
AVINTIV SPECIALTY MATERIALS INC.
BERRY PLASTICS ACQUISITION CORPORATION V
BERRY PLASTICS ACQUISITION CORPORATION XI
BERRY PLASTICS ACQUISITION CORPORATION XII
BERRY PLASTICS ACQUISITION CORPORATION XIII
BERRY GLOBAL FILMS, LLC
BERRY PLASTICS ACQUISITION LLC X
BERRY PLASTICS DESIGN, LLC
BERRY PLASTICS FILMCO, INC.
BERRY PLASTICS 1K, LLC
BERRY PLASTICS OPCO, INC.
BERRY PLASTICS SP, INC.
BERRY PLASTICS TECHNICAL SERVICES, INC.
BERRY STERLING CORPORATION
BPREX BRAZIL HOLDING INC.
BPREX CLOSURE SYSTEMS, LLC
BPREX CLOSURES KENTUCKY INC.
BPREX CLOSURES, LLC
BPREX DELTA INC.
BPREX HEALTHCARE BROOKVILLE INC.
BPREX HEALTHCARE PACKAGING INC.
BPREX PLASTIC PACKAGING INC.
BPREX PLASTICS SERVICES COMPANY INC.
BPREX PRODUCT DESIGN AND ENGINEERING INC.
BPREX SPECIALTY PRODUCTS PUERTO RICO INC.
CAPLAS, LLC
CAPLAS NEPTUNE, LLC
CAPTIVE PLASTICS HOLDINGS, LLC
CAPTIVE PLASTICS, LLC
CARDINAL PACKAGING, INC.
CHICOPEE, INC.
COVALENCE SPECIALTY ADHESIVES LLC
COVALENCE SPECIALTY COATINGS LLC
CPI HOLDING CORPORATION
By: /s/ Jason K. Greene 
Name: Jason K. Green
Title: Executive Vice President, General Counsel and Secretary
 
Amendent No. 6 Signature Page


DOMINION TEXTILE (USA), L.L.C.
FABRENE, L.L.C.
FIBERWEB GEOS, INC.
FIBERWEB, LLC
KERR GROUP, LLC
KNIGHT PLASTICS, LLC
OLD HICKORY STEAMWORKS, LLC
PACKERWARE, LLC
PESCOR, INC.
PGI EUROPE, INC.
PGI POLYMER, INC.
PLIANT INTERNATIONAL, LLC
PLIANT, LLC
POLY-SEAL, LLC
PRIME LABEL & SCREEN INCORPORATED
PRISTINE BRANDS CORPORATION
PROVIDENCIA USA, INC.
ROLLPAK CORPORATION
SAFFRON ACQUISITION, LLC
SEAL FOR LIFE INDUSTRIES, LLC
SETCO, LLC
SUN COAST INDUSTRIES, LLC
UNIPLAST HOLDINGS, LLC
UNIPLAST U.S., INC.
VENTURE PACKAGING, INC.
By: /s/ Jason K. Greene 
Name: Jason K. Green
Title: Executive Vice President, General Counsel and Secretary
Amendent No. 6 Signature Page


DOMINION TEXTILE (USA), L.L.C.
FABRENE, L.L.C.
FIBERWEB GEOS, INC.
FIBERWEB, LLC
KERR GROUP, LLC
KNIGHT PLASTICS, LLC
OLD HICKORY STEAMWORKS, LLC
PACKERWARE, LLC
PESCOR, INC.
PGI EUROPE, INC.
PGI POLYMER, INC.
PLIANT INTERNATIONAL, LLC
PLIANT, LLC
POLY-SEAL, LLC
PRIME LABEL & SCREEN INCORPORATED
PRISTINE BRANDS CORPORATION
PROVIDENCIA USA, INC.
ROLLPAK CORPORATION
SAFFRON ACQUISITION, LLC
SEAL FOR LIFE INDUSTRIES, LLC
SETCO, LLC
SUN COAST INDUSTRIES, LLC
UNIPLAST HOLDINGS, LLC
UNIPLAST U.S., INC.
VENTURE PACKAGING, INC.
By: /s/ Jason K. Greene 
Name: Jason K. Green
Title: Executive Vice President, General Counsel and Secretary
Amendent No. 6 Signature Page


GRAFCO INDUSTRIES LIMITED PARTNERSHIP
By: CAPLAS NEPTUNE, LLC
its General Partner
By: /s/ Jason K. Greene 
Name: Jason K. Green
Title: Executive Vice President, General Counsel and Secretary
Amendent No. 6 Signature Page


GRAFCO INDUSTRIES LIMITED PARTNERSHIP
By: CAPLAS NEPTUNE, LLC
its General Partner
By: /s/ Jason K. Greene 
Name: Jason K. Green
Title: Executive Vice President, General Counsel and Secretary
Amendent No. 6 Signature Page


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first written above.
BERRY PLASTICS CORPORATION
By: /s/ Mark W. Miles 
Name: Mark W. Miles
Title: Chief Financial Officer
BERRY PLASTICS GROUP, INC.
By: /s/ Mark W. Miles 
Name: Mark W. Miles
Title: Chief Financial Officer
Amendent No. 6 Signature Page


BANK OF AMERICA, N.A.
as Administrative Agent and Collateral
Agent, and as a Lender
By: /s/ Robert Q. Mahoney 
Name: Robert Q. Mahoney
Title: Sr. Vice President
Amendent No. 6 Signature Page

BARCLAYS BANK PLC,
as Lender
By: /s/ Graeme Palmer 
Name: Graeme Palmer
Title: Assistant Vice President
Amendent No. 6 Signature Page


CITIBANK, N.A,
as Lender
By: /s/ David L. Smith 
Name: David L. Smith
Title: Vice President and Director
Amendent No. 6 Signature Page


CITY NATIONAL BANK, a national banking associa-
tion, as Lender
as Lender
By: /s/ Mia Bolin 
Name: Mia Bolin
Title: Senior Vice President
Amendent No. 6 Signature Page


DEUTSCHE BANK AG NEW YORK BRANCH,
as Lender
By: /s/ Peter Cucchiara 
Name: Peter Cucchiara
Title: Vice President
By: /s/ Benjamin Souh 
Name: Benjamin Souh
Title: Vice President
Amendent No. 6 Signature Page


U.S. BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ David Lawrence 
Name: David Lawrence
Title: Vice President
Amendent No. 6 Signature Page


WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ Tony Leadbetter 
Name: Tony Leadbetter
Title: Duly Authorized Signatory
Amendent No. 6 Signature Page


GOLDMAN SACHS BANK USA,
as Lender
By: /s/ Ushma Dedhiya 
Name: Ushma Dedhiya
Title: Authorized Signatory
Amendent No. 6 Signature Page


JPMORGAN CHASE BANK, N.A.,
as Lender
By: /s/ Hilda C. Carbajal 
Name: Hilda C. Carbajal
Title: Authorized Officer




Amendent No. 6 Signature Page

Exhibit 10.7

EXECUTION VERSION

INCREMENTAL ASSUMPTION AGREEMENT
Dated as of February 10, 2017
among
BERRY PLASTICS GROUP, INC.,
BERRY PLASTICS CORPORATION
and
CERTAIN SUBSIDIARIES OF BERRY PLASTICS CORPORATION
as Loan Parties,
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
as Administrative Agent,
CITIBANK, N.A.
as Initial Term K Lender
and
CITIBANK, N.A.
as Initial Term L Lender

10926872

INCREMENTAL ASSUMPTION AGREEMENT
THIS INCREMENTAL ASSUMPTION AGREEMENT (this "Agreement"), dated as of February 10, 2017, is among BERRY PLASTICS CORPORATION, a Delaware corporation (the "Borrower"), BERRY PLASTICS GROUP, INC., a Delaware corporation ("Holdings"), each Subsidiary of the Borrower listed on the signature pages hereto (together with Holdings and Borrower, the "Loan Parties"), Citibank, N.A., as an Incremental Term Lender (as defined in the Credit Agreement referred to below) with respect to the Term K Loans (in such capacity, the "Initial Term K Lender"), Citibank, N.A., as an Incremental Term Lender with respect to the Term L Loans (in such capacity, the "Initial Term L Lender"), and Credit Suisse AG, Cayman Islands Branch (formerly known as Credit Suisse, Cayman Islands Branch), as administrative agent (in such capacity, the "Administrative Agent") for the Lenders under the Credit Agreement.
PRELIMINARY STATEMENTS:
(1) The Loan Parties, the Administrative Agent and the other agents and lenders party thereto are parties to the Second Amended and Restated Term Loan Credit Agreement dated as of April 3, 2007 (as modified by that certain Incremental Assumption Agreement, dated as of February 8, 2013, that certain Incremental Assumption Agreement, dated as of January 6, 2014, that certain Incremental Assumption Agreement and Amendment, dated as of October 1, 2015, that certain Incremental Assumption Agreement and Amendment, dated as of June 15, 2016 and that certain Incremental Assumption Agreement, dated as of January 19, 2017 (collectively, the "Prior Incremental Assumption Agreements"), the "Credit Agreement"). Capitalized terms not otherwise defined in this Agreement have the same meanings as specified in the Credit Agreement.
(2) The Borrower has requested that the Initial Term K Lender provide an Incremental Term Loan Commitment (and Incremental Term Loans consisting of Other Term Loans) in the amount of $1,147,500,000 (such commitment, the "Term K Loan Commitment" and such Incremental Term Loans, the "Term K Loans"), and the Initial Term K Lender is willing to provide the Term K Loan Commitment and Term K Loans, subject in each case to the terms and conditions set forth herein.
(3) The Borrower has requested that the Initial Term L Lender provide an Incremental Term Loan Commitment (and Incremental Term Loans consisting of Other Term Loans) in the amount of $814,375,000 (such commitment, the "Term L Loan Commitment" and such Incremental Term Loans, the "Term L Loans"), and the Initial Term L Lender is willing to provide the Term L Loan Commitment and Term L Loans, subject in each case to the terms and conditions set forth herein.
(4) The Loan Parties, the Initial Term K Lender, the Initial Term L Lender and the Administrative Agent are entering into this Agreement in order to evidence the Term K Loan Commitment and Term K Loans and the Term L Loan Commitment and Term L Loans in accordance with Section 2.21 of the Credit Agreement.
SECTION 1. New Commitments and New Loans
(a)
Pursuant to Section 2.21 of the Credit Agreement, and subject to the satisfaction of the conditions set forth in Section 4 hereof:
(i)
The Initial Term K Lender agrees to make a single loan to the Borrower on the Effective Date (as defined below) in a principal amount equal to the amount set forth with respect to the Initial Term K Lender on Schedule 1A hereto.
(ii)
The Initial Term L Lender agrees to make a single loan to the Borrower on the Effective Date in a principal amount equal to the amount set forth with respect to the Initial Term L Lender on Schedule 1B hereto.
(b)
The Administrative Agent hereby approves of each of the Initial Term K Lender and the Initial Term L Lender as Incremental Term Lenders under the Credit Agreement and approves of the terms of the Term K Loans as set forth in Section 2 hereof and the terms of the Term L Loans as set forth in Section 3 hereof.
(c)
For purposes of this Agreement, the following terms have the meanings ascribed below:
(i)
"Amendment Lead Arrangers" means Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA (through itself or one of its affiliates), Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any of its designated affiliates) and Wells Fargo Securities, LLC.
SECTION 2. Terms of the Term K Loans
Pursuant to Section 2.21 of the Credit Agreement, the Term K Loans shall be Other Term Loans, the terms of which shall be as follows:
(a)
The aggregate principal amount of the Term K Loans and Term K Loan Commitment shall be $1,147,500,000.
(b)
The final maturity date of the Term K Loans shall be February 8, 2020.
(c)
The Applicable Margin with respect to the Term K Loans shall be 2.25% per annum in the case of any Eurocurrency Loan that is a Term K Loan and shall be 1.25% for any ABR Loan that is a Term K Loan.
(d)
Solely for the purposes of calculation of interest payable in respect of Term K Loans, the term "ABR" shall mean, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as announced from time to time by Credit Suisse as its "prime rate" at its principal office in New York, New York and notified to the Borrower (the "Prime Rate") and (c) the daily ICE LIBOR (as defined below) (provided that, for the avoidance of doubt, the ICE LIBOR for any day shall be based on the rate determined on such day at approximately 11:00 a.m., London time) for a one month interest period plus 1% (the "Adjusted LIBO Rate"). Any change in the ABR due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.
(e)
Solely for the purposes of calculation of interest payable in respect of Term K Loans, the term "LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, the greater of (a) 0.00% per annum and (b) the rate per annum equal to the ICE Benchmark Administration ("ICE LIBOR"), as published by Bloomberg (or other commercially available source providing quotations of ICE LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; provided, that if such rate is not available at such time for any reason, then the "LIBO Rate" for such Interest Period shall be the Interpolated Rate.
(f)
Solely for the purposes of calculation of interest payable in respect of Term K Loans, the term "Interpolated Rate" shall mean, in relation to the Eurocurrency Loan for any Loan, the rate which results from interpolating on a linear basis between: (a) the ICE Benchmark Administration's Interest Settlement Rates for deposits in Dollars for the longest period (for which that rate is available) which is less than the Interest Period and (b) the ICE Benchmark Administration's Interest Settlement Rates for deposits in Dollars for the shortest period (for which that rate is available) which exceeds the Interest Period, each as of approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.
(g)
Notwithstanding anything herein or in the Credit Agreement to the contrary, in the event that, on or prior to the six-month anniversary of the Effective Date, there occurs any Term K Loan Repricing Event (as defined below) or in connection with a Term K Loan Repricing Event constituting an amendment or conversion of Term K Loans, any Lender is required to assign its Term K Loans pursuant to Section 2.19(c) of the Credit Agreement, the Borrower shall on the date of such Term K Loan Repricing Event pay to the Administrative Agent, for the account of each Lender with such Term K Loans that are subject to such Term K Loan Repricing Event or are required to be so assigned, a fee equal to 1.00% of the principal amount of the Term K Loans subject to such Term K Loan Repricing Event or required to be so assigned; provided that any prepayment of any Term K Loans made in connection with a Change in Control shall not require the payment of the 1.00% premium otherwise provided for in this paragraph.
For purposes of this Section 2(g), "Term K Loan Repricing Event" shall mean any prepayment or repayment of Term K Loans with the proceeds of, or any conversion or amendment of Term K Loans into, any new or replacement tranche of term loans bearing interest with an "effective yield" (taking into account, for example, upfront fees, interest rate spreads, interest rate benchmarks floors and original interest discount, but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all lenders or holders of such new or replacement loans and without taking into account any fluctuations in the Adjusted LIBO Rate or comparable rate) less than the "effective yield" applicable to the Term K Loans (as such comparative yields are determined consistent with generally accepted financial practices) (it being understood that (x) in each case, the yield shall exclude any structuring, commitment and arranger fees or other fees unless such similar fees are paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans and shall include any rate floors and any upfront or similar fees paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans or original issue discount payable with respect to such new or replacement tranche of term loans and (y) any such repayment, prepayment or conversion shall only constitute a Term K Loan Repricing Event to the extent the primary purpose of such repayment, prepayment, conversion or amendment, as reasonably determined by the Borrower in good faith, is to reduce the "effective yield" on the Term K Loans).
(h)
All other terms not described herein and relating to the Term K Loans shall be the same as the terms of the Term D Loans in effect immediately prior to the Effective Date.
SECTION 3. Terms of the Term L Loans
Pursuant to Section 2.21 of the Credit Agreement, the Term L Loans shall be Other Term Loans, the terms of which shall be as follows:
(a)
The aggregate principal amount of the Term L Loans and Term L Loan Commitment shall be $814,375,000.
(b)
The final maturity date of the Term L Loans shall be January 6, 2021.
(c)
The Applicable Margin with respect to the Term L Loans shall be 2.25% per annum in the case of any Eurocurrency Loan that is a Term L Loan and shall be 1.25% for any ABR Loan that is a Term L Loan.
(d)
Solely for the purposes of calculation of interest payable in respect of Term L Loans, the term "LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, the greater of (a) 0.00% per annum and (b) the rate per annum equal to ICE LIBOR at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; provided, that if such rate is not available at such time for any reason, then the "LIBO Rate" for such Interest Period shall be the Interpolated Rate.
(e)
Notwithstanding anything herein or in the Credit Agreement to the contrary, in the event that, on or prior to the six-month anniversary of the Effective Date, there occurs any Term L Loan Repricing Event (as defined below) or in connection with a Term L Loan Repricing Event constituting an amendment or conversion of Term L Loans, any Lender is required to assign its Term L Loans pursuant to Section 2.19(c) of the Credit Agreement, the Borrower shall on the date of such Term L Loan Repricing Event pay to the Administrative Agent, for the account of each Lender with such Term L Loans that are subject to such Term L Loan Repricing Event or are required to be so assigned, a fee equal to 1.00% of the principal amount of the Term L Loans subject to such Term L Loan Repricing Event or required to be so assigned; provided that any prepayment of any Term L Loans made in connection with a Change in Control shall not require the payment of the 1.00% premium otherwise provided for in this paragraph.
For purposes of this Section 3(e), "Term L Loan Repricing Event" shall mean any prepayment or repayment of Term L Loans with the proceeds of, or any conversion or amendment of Term L Loans into, any new or replacement tranche of term loans bearing interest with an "effective yield" (taking into account, for example, upfront fees, interest rate spreads, interest rate benchmarks floors and original interest discount, but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all lenders or holders of such new or replacement loans and without taking into account any fluctuations in the Adjusted LIBO Rate or comparable rate) less than the "effective yield" applicable to the Term L Loans (as such comparative yields are determined consistent with generally accepted financial practices) (it being understood that (x) in each case, the yield shall exclude any structuring, commitment and arranger fees or other fees unless such similar fees are paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans and shall include any rate floors and any upfront or similar fees paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans or original issue discount payable with respect to such new or replacement tranche of term loans and (y) any such repayment, prepayment or conversion shall only constitute a Term L Loan Repricing Event to the extent the primary purpose of such repayment, prepayment, conversion or amendment, as reasonably determined by the Borrower in good faith, is to reduce the "effective yield" on the Term L Loans).
(f)
All other terms not described herein and relating to the Term L Loans shall be the same as the terms of the Term G Loans in effect immediately prior to the Effective Date.
SECTION 4. Conditions to Effectiveness.
The (x) Initial Term K Lender agrees to make its Term K Loans to the Borrower in an aggregate principal amount equal to its Term K Loan Commitment and (y) Initial Term L Lender agrees to make its Term L Loans to the Borrower in an aggregate principal amount equal to its Term L Loan Commitment, in each case on and as of the date (the "Effective Date") on which the following conditions shall have been satisfied:
(a)
The Administrative Agent (or its counsel) shall have received from each party hereto prior to giving effect to this Agreement either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.
(b)
The Administrative Agent shall have received, on behalf of itself and the Lenders, a favorable written opinion of (i) Bryan Cave LLP, special counsel for the Loan Parties, (ii) Jason Greene, in-house counsel for the Loan Parties, (iii) Faegre Baker Daniels, LLP, Minnesota counsel for certain of the Loan Parties, (iv) Gess Gess & Wallace, New Jersey counsel for certain of the Loan Parties, (v) Godfrey & Kahn, S.C., Wisconsin counsel for certain of the Loan Parties, (vi) Venable LLP, Maryland counsel for certain of the Loan Parties, and (vii) Gentry Locke Rakes & Moore, Virginia counsel for certain of the Loan Parties, in each case, each (A) dated the Effective Date, (B) addressed to the Administrative Agent, the Collateral Agent and the Lenders and (C) customary in form and substance for transactions of the type contemplated hereby and reasonably satisfactory to the Administrative Agent and covering such matters as are customary for transactions of the type contemplated hereby and consistent with the opinions delivered in connection with the Prior Incremental Assumption Agreements (to the extent applicable).
(c)
The Administrative Agent shall have received in the case of each Loan Party each of the items referred to in clauses (i), (ii), (iii) and (iv) below:
(i)
a bringdown confirmation, dated not more than one Business Day prior to the Effective Date, as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each such Loan Party from the Secretary of State (or other similar official) of the jurisdiction of its organization;
(ii)
a certificate of the Secretary or Assistant Secretary or similar officer of each Loan Party dated the Effective Date and certifying,
(A)
that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or equivalent governing body) of such Loan Party (or its managing general partner or managing member) authorizing the execution, delivery and performance of this Agreement and, in the case of the Borrower, the borrowing of Term K Loans and Term L Loans, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Effective Date,
(B)
that (1) except as amended by any amendment attached to such Secretary's or Assistant Secretary's certificate, neither the certificate or articles of incorporation, certificate of limited partnership or certificate of formation (as applicable) of such Loan Party, nor the by-laws, limited liability company, partnership agreement or other equivalent governing documents (as applicable) of such Loan Party, has been amended since the date of the last amendment thereto (x) attached to the Secretary's Certificate of Borrower and Guarantors dated as of January 19, 2017 (except in the case of Berry Global Films, LLC), or in the case of Holdings, attached to the Secretary's Certificate of Holdings dated as of January 19, 2017, in each case delivered to the Administrative Agent in connection with the consummation of the financing transactions described in the Incremental Assumption Agreement dated as of January 19, 2017, or (y) in the case of Berry Global Films, LLC, attached to the Secretary's Certificate of Berry Global Films, LLC, dated as of January 20, 2017, delivered to the Administrative Agent in connection with the merger of AEP Industries, Inc. with and into Berry Plastics Acquisition Corporation XV, LLC, of which Berry Global Films, LLC is the surviving company (as so amended, collectively, the "Loan Party Organizational Documents"), and (2) the Loan Party Organizational Documents have been in effect at all times since the date of the resolutions described in clause (A) above, and remain in effect on the Effective Date,
(C)
as to the incumbency and specimen signature of each officer executing this Agreement or any other document delivered in connection herewith on behalf of such Loan Party; and
(D)
as to the absence of any pending proceeding for the dissolution or liquidation of such Loan Party or, to the knowledge of such person, threatening the existence of such Loan Party;
(iii)
certification of a director or another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate delivered pursuant to Section 4(c)(ii); and
(iv)
a certificate of a Responsible Officer of the Borrower as to satisfaction of the condition set forth in Section 4(f) hereof.
(d)
the Administrative Agent, Amendment Lead Arrangers, the Initial Term K Lender and the Initial Term L Lender shall have received, to the extent invoiced at least three business days prior to the Effective Date, reimbursement or payment of (i) all reasonable expenses related to syndication of this Agreement, the Term K Loans and the Term L Loans and (ii) the reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP, counsel to the Administrative Agent and Amendment Lead Arrangers, in each case, required to be reimbursed or paid by the Loan Parties on or prior to the Effective Date, whether hereunder, under that certain Engagement Letter, dated as of January 31, 2017 among the Borrower, Citi (as defined therein), Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC, Barclays Bank PLC, Goldman Sachs Bank USA, Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any of its affiliates designated to act thereunder) and Wells Fargo Securities, LLC, or under any Loan Document.
(e)
[Reserved].
(f)
The representations and warranties set forth in Article III of the Credit Agreement shall be true and correct in all material respects as of the Effective Date, in each case, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), and immediately after giving effect to the Borrowing of the Term K Loans and the Term L Loans, no Event of Default or Default shall have occurred and be continuing or would result therefrom.
(g)
The Administrative Agent shall have received a certificate from the chief financial officer of the Borrower in the form attached as Annex A hereto certifying that the Borrower and its subsidiaries, on a consolidated basis after giving effect to the transactions contemplated hereby, are solvent.
(h)
The Amendment Lead Arrangers shall have received, at least three business days prior to the Effective Date, all documentation and other information required by regulatory authorities under applicable "know your customer" and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, to the extent requested in writing at least 10 days prior to the Effective Date.
(i)
The Administrative Agent shall have received a Borrowing Request in respect of each of the Term K Loans and the Term L Loans as required by Section 2.03 of the Credit Agreement.
(j)
The Administrative Agent shall have received a "Life-of-Loan" flood hazard determination notice for each real property encumbered by a Mortgage, and if such real property is located in a special flood hazard area, (x) a notice about special flood hazard area status and flood disaster assistance duly executed by the Borrower and the applicable Loan Party and (y) certificates of flood insurance evidencing any such insurance required by the Credit Agreement.
(k)
Substantially concurrently with the making by the Initial Term K Lender of its Term K Loans to the Borrower on the Effective Date, all of the principal, interest, fees and other amounts due and payable in respect of the Term D Loans under the Credit Agreement shall have been paid by the Borrower.
(l)
Substantially concurrently with the making by the Initial Term L Lender of its Term L Loans to the Borrower on the Effective Date, all of the principal, interest, fees and other amounts due and payable in respect of the Term G Loans under the Credit Agreement shall have been paid by the Borrower.
SECTION 5. Post Effective Date Security Documentation. The Borrower shall and shall cause each Material Subsidiary to, within 120 days after the Effective Date (or such longer period as the Administrative Agent may determine), deliver to the Administrative Agent, each in form and substance reasonably acceptable to the Administrative Agent, (w) amendments to the Mortgages ("Mortgage Amendments"), (x) date down endorsements to the existing title insurance policies relating to the property subject to such Mortgage Amendment, (y) any documents required in connection with the recording of such Mortgage Amendments and (z) opinions of local counsel with respect to the enforceability, due authorization, execution and delivery of the Mortgage Amendments and other such other matters customarily included in such opinions.
SECTION 6. Representations and Warranties. On the Effective Date, the Loan Parties represent and warrant to the Administrative Agent, the Initial Term K Lender and the Initial Term L Lender that: (a) the execution, delivery and performance by Holdings, the Borrower and each of the Subsidiary Loan Parties of this Agreement and the incurrence of the Term K Loans and the Term L Loans hereunder and under the Credit Agreement (as amended hereby) are permitted under, and do not conflict with or violate, the terms of the Credit Agreement, the Existing ABL Credit Agreement, the Intercreditor Agreement or the Senior Lender Intercreditor Agreement, (b) no default shall exist under the Credit Agreement, the Existing ABL Credit Agreement, and any indenture and supplemental indenture governing the senior notes issued by the Borrower and outstanding on the Effective Date, (c) no action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with this Agreement or the incurrence by the Borrower of the Term K Loans and the Term L Loans, except for the actions contemplated by Section 5 above, (d) the proceeds of the Term K Loans will be used substantially simultaneously by the Borrower to repay all of the outstanding Term D Loans and (e) the proceeds of the Term K Loans will be used substantially simultaneously by the Borrower to repay all of the outstanding Term G Loans.
SECTION 7. Reference to and Effect on the Credit Agreement; Confirmation of Guarantors.
(a)
On and after the effectiveness of this Agreement, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by, and after giving effect to, this Agreement.
(b)
Each Loan Document, after giving effect to this Agreement, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed, except that, on and after the effectiveness of this Agreement, each reference in each of the Loan Documents (including the Collateral Agreement and the other Security Documents) to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended by, and after giving effect to, this Agreement, and each reference to "Lender" therein shall, for the avoidance of doubt, include each holder of any Term K Loans, including the Initial Term K Lender, and each holder of any Term L Loans, including the Initial Term L Lender, respectively. Without limiting the generality of the foregoing, the Security Documents (in the case of the Mortgages, after giving effect to any amendments thereto required in connection with the Term K Loans and the Term L Loans) and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, as amended by, and after giving effect to, this Agreement (in the case of the Mortgages, subject to any limitations contained in the Mortgages on maximum indebtedness or maximum indebtedness permitted to be secured thereby), in each case subject to the terms thereof.
(c)
Each Loan Party hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Agreement) and confirms that (in the case of the Mortgages, if any after giving effect to any amendments required in connection with the Term K Loans and the Term L Loans) such liens and security interests continue to secure the Obligations under the Loan Documents, including, without limitation, all Obligations resulting from or incurred pursuant to the Term K Loans and Term L Loans (in the case of the Mortgages, subject to any limitations contained in the Mortgages on maximum indebtedness or maximum indebtedness permitted to be secured thereby), in each case subject to the terms thereof and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to Article II of the Collateral Agreement.
(d)
The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, or constitute a waiver of any provision of any of the Loan Documents.
(e)
This Agreement is a Loan Document.
SECTION 8. Initial Term K Lender and Initial Term L Lender.
(a)
Each of the Initial Term K Lender and the Initial Term L Lender (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 5.04 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) represents and warrants that its name set forth on its signature page hereto is its legal name; (iv) confirms that it is not the Borrower or any of its Subsidiaries or an Affiliate of any of them; (v) appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to such Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (vi) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vii) attaches any U.S. Internal Revenue Service forms required under Section 2.17 of the Credit Agreement.
(b)
On and after the Effective Date, each of the Initial Term K Lender and the Initial Term L Lender shall be a party to the Credit Agreement as a Lender and shall have all of the rights and obligations of a Lender thereunder. All notices and other communications provided for hereunder or under the Loan Documents to the Initial Term K Lender or to the Initial Term L Lender shall be to its address as set forth in the administrative questionnaire such Lender has furnished to the Administrative Agent.
SECTION 9. Costs, Expenses. The Borrower agrees to pay all reasonable out-of-pocket costs and expenses (including Other Taxes) incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Agreement and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 9.05 of the Credit Agreement.
SECTION 10. No Novation. This Agreement shall not extinguish the Obligations for the payment of money outstanding under the Credit Agreement or discharge or release the Lien or priority of any Loan Document or any other security therefor or any guarantee thereof, and the Liens and security interests existing immediately prior to the Effective Date in favor of the Administrative Agent for the benefit of the Secured Parties securing payment of the Obligations are in all respects continuing and in full force and effect with respect to all Obligations. Nothing herein contained shall be construed as a novation of any of the Loan Documents or a substitution or novation of the Obligations outstanding under the Credit Agreement or instruments guaranteeing or securing the same, which instruments shall remain and continue in full force and effect. Nothing expressed or implied in this Agreement or any other document contemplated hereby shall be construed as a release or other discharge of any Loan Party under the Credit Agreement or any other Loan Document from any of its obligations and liabilities thereunder, and except as expressly provided, such obligations and liabilities are in all respects continuing with only the terms being modified as provided in this Agreement.
SECTION 11. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 4. Delivery of an executed counterpart to this Agreement by facsimile transmission (or other electronic transmission pursuant to procedures approved by the Administrative Agent) shall be effective as delivery of a manually signed original.
SECTION 12. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
[Remainder of page intentionally left blank]


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
BERRY PLASTICS CORPORATION
 
By: /s/ Mark W. Miles
Name: Mark W. Miles
Title: Chief Financial Officer
 
BERRY PLASTICS GROUP, INC.
 
By: /s/ Mark W. Miles
Name: Mark V. Miles
Title: Chief Financial Officer
[Signature Page for Incremental Assumption Agreement]


AEROCON, LLC
AVINTIV ACQUISITION CORPORATION
AVINTIV INC.
AVINTIV SPECIALTY MATERIALS INC.
BERRY PLASTICS ACQUISITION CORPORATION V
BERRY PLASTICS ACQUISITION CORPORATION XI
BERRY PLASTICS ACQUISITION CORPORATION XII
BERRY PLASTICS ACQUISITION CORPORATION XIII
BERRY GLOBAL FILMS, LLC
BERRY PLASTICS ACQUISITION LLC X
BERRY PLASTICS DESIGN, LLC
BERRY PLASTICS FILMCO, INC.
BERRY PLASTICS 1K, LLC
BERRY PLASTICS OPCO, INC.
BERRY PLASTICS SP, INC.
BERRY PLASTICS TECHNICAL SERVICES, INC.
BERRY STERLING CORPORATION
BPREX BRAZIL HOLDING INC.
BPREX CLOSURE SYSTEMS, LLC
BPREX CLOSURES KENTUCKY INC.
BPREX CLOSURES, LLC
BPREX DELTA INC.
BPREX HEALTHCARE BROOKVILLE INC.;
BPREX HEALTHCARE PACKAGING INC.
BPREX PLASTIC PACKAGING INC.
BPREX PLASTICS SERVICES. COMPANY INC.
BPREX PRODUCT DESIGN AND ENGINEERING INC.
BPREX SPECIALTY PRODUCTS PUERTO RICO INC.
CAPLAS, LLC
CAPLAS NEPTUNE, LLC
CAPTIVE PLASTICS HOLDINGS, LLC
CAPTIVE PLASTICS, LLC
CARDINAL PACKAGING, INC.
CHICOPEE, INC.
COVALENCE SPECIALTY ADHESIVES LLC
COVALENCE SPECIALTY COATINGS LLC
CPI HOLDING CORPORATION
 
 
By: /s/ Jason K. Greene 
Name: Jason K. Greene
Title: Executive Vice President, General Counsel and Secretary
[Signature Page for Incremental Assumption Agreement]


DOMINION TEXTILE (USA), L.L.C.
FABRENE, L.L.C.
FIBERWEB GEOS, INC.
FIBERWEB, LLC
KERR GROUP, LLC
KNIGHT PLASTICS, LLC
OLD HICKORY STEAMWORKS, LLC
PACKERWARE, LLC
PESCOR, INC.
PGI EUROPE, INC.
PGI POLYMER, INC.
PLIANT INTERNATIONAL, LLC
PLIANT, LLC
POLY-SEAL, LLC
PRIME LABEL & SCREEN INCORPORATED
PRISTINE BRANDS CORPORATION
PROVIDENCIA USA, INC.
ROLLPAK CORPORATION
SAFFRON ACQUISITION, LLC
SEAL FOR LIFE INDUSTRIES, LLC
SETCO, LLC
SUN COAST INDUSTRIES, LLC
UNIPLAST HOLDINGS, LLC
UNIPLAST U.S., INC.
VENTURE PACKAGING, INC.
VENTURE PACKAGING MIDWEST, INC.
 
 
By: /s/ Jason K. Greene 
Name: Jason K. Greene
Title: Executive Vice President, General Counsel and Secretary
[Signature Page for Incremental Assumption Agreement]


GRAFCO INDUSTRIES LIMITED PARTNERSHIP
 
By:  CAPLAS NEPTUNE, LLC
its General Partner
 
 
By: /s/ Jason K. Greene 
Name: Jason K. Greene
Title: Executive Vice President, General Counsel and Secretary
[Signature Page for Incremental Assumption Agreement]


CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH, as Administrative Agent
 
By: /s/ Robert Hetu 
Name: Robert Hetu
Title: Authorized Signatory
 
By: /s/ Nicholas Goss 
Name: Nicholas Goss
Title: Authorized Signatory
[Signature Page for Incremental Assumption Agreement]


CITIBANK, N.A., as Initial Term K Lender
 
By: /s/ Scott Siavik 
Name: Scott Siavik
Title: Vice President
 
CITIBANK, N.A., as Initial Term L Lender
 
By: /s/ Scott Siavik 
Name: Scott Siavik
Title: Vice President

[Signature Page for Incremental Assumption Agreement]

Schedule 1A
Initial Term K Lender Term K Loan Commitment
Citibank, N.A. $1,147,500,000
Schedule 1B
Initial Term L Lender Term L Loan Commitment
Citibank, N.A. $ 814,375,000



Annex A
SOLVENCY CERTIFICATE
[ ], 2017
Reference is made to the Second Amended and Restated Term Loan Credit Agreement dated as of April 3, 2007 by and among Holdings, the Borrower, the Lenders and other parties thereto and Credit Suisse AG, Cayman Islands Branch (formerly known as Credit Suisse, Cayman Islands Branch), as administrative agent (as modified by that certain Incremental Assumption Agreement, dated as of February 8, 2013, that certain Incremental Assumption Agreement, dated as of January 6, 2014, that certain Incremental Assumption Agreement and Amendment, dated as of October 1, 2015, that certain Incremental Assumption Agreement and Amendment, dated as of June 15, 2016, that certain Incremental Assumption Agreement, dated as of January 19, 2017, and the Incremental Assumption Agreement dated as of the date hereof (the "Amendment"), the "Credit Agreement"); unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement or the Amendment, as applicable.
I, the undersigned, solely in my capacity as the Chief Financial Officer of the Borrower, and not in my individual capacity, do hereby certify that, on the Effective Date after giving effect to the transactions contemplated by the Amendment:
(a)  the fair value of the property of the Borrower and its Subsidiaries (taken as a whole) is greater than the total amount of liabilities, including contingent liabilities, of the Borrower and its Subsidiaries (taken as a whole) (it being understood that the amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability);
(b)  the present fair salable value of the assets of the Borrower and its Subsidiaries (taken as a whole) is not less than the amount that will be required to pay the probable liability of the Borrower and its Subsidiaries (taken as a whole) on their debts as they become absolute and matured;
(c)  the Borrower and its Subsidiaries do not intend to, and do not believe that they will, incur debts or liabilities beyond their ability to pay such debts and liabilities as they become absolute and matured; and
(d)  the Borrower and its Subsidiaries are not engaged in any business, as conducted on the Effective Date and as proposed to be conducted following the Effective Date, for which the property of the Borrower and its Subsidiaries (taken as a whole) would constitute an unreasonably small capital.
IN WITNESS WHEREOF, I have delivered this certificate as of the date first written above.
BERRY PLASTICS CORPORATION
By 
Name:
Title:  Chief Financial Officer

Annex A-10


Exhibit 10.8

EXECUTION VERSION
INCREMENTAL ASSUMPTION AGREEMENT
Dated as of August 10, 2017,
among
BERRY GLOBAL GROUP, INC.,
BERRY GLOBAL, INC.
and
CERTAIN SUBSIDIARIES OF BERRY GLOBAL, INC.
as Loan Parties,
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
as Administrative Agents,
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Initial Term M Lender
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Initial Term N Lender


 
INCREMENTAL ASSUMPTION AGREEMENT
THIS INCREMENTAL ASSUMPTION AGREEMENT (this "Agreement"), dated as of August 10, 2017, is among BERRY GLOBAL, INC. (formerly known as Berry Plastics Corporation), a Delaware corporation (the "Borrower"), BERRY GLOBAL GROUP, INC. (formerly known as Berry Plastics Group, Inc.), a Delaware corporation ("Holdings"), each Subsidiary of the Borrower listed on the signature pages hereto (together with Holdings and Borrower, the "Loan Parties"), Wells Fargo Bank, National Association, as an Incremental Term Lender (as defined in the Credit Agreement referred to below) with respect to the Term M Loans (in such capacity, the "Initial Term M Lender"), Wells Fargo Bank, National Association, as an Incremental Term Lender with respect to the Term N Loans (in such capacity, the "Initial Term N Lender"), and Credit Suisse AG, Cayman Islands Branch (formerly known as Credit Suisse, Cayman Islands Branch), as administrative agent (in such capacity, the "Administrative  Agent") for the Lenders under the Credit Agreement.
PRELIMINARY STATEMENTS:
(1) The Loan Parties, the Administrative Agent and the other agents and lenders party thereto are parties to the Second Amended and Restated Term Loan Credit Agreement dated as of April 3, 2007 (as modified by that certain Incremental Assumption Agreement, dated as of February 8, 2013, that certain Incremental Assumption Agreement, dated as of January 6, 2014, that certain Incremental Assumption Agreement and Amendment, dated as of October 1, 2015, that certain Incremental Assumption Agreement and Amendment, dated as of June 15, 2016, that certain Incremental Assumption Agreement, dated as of January 19, 2017 and that certain Incremental Assumption Agreement, dated as of February 10, 2017 (collectively, the "Prior Incremental Assumption Agreements"), the "Credit Agreement"). Capitalized terms not otherwise defined in this Agreement have the same meanings as specified in the Credit Agreement.
(2) The Borrower has requested that the Initial Term M Lender provide an Incremental Term Loan Commitment (and Incremental Term Loans consisting of Other Term Loans) in the amount of $1,644,750,000.00 (such commitment, the "Term M Loan Commitment" and such Incremental Term Loans, the "Term M Loans"), and the Initial Term M Lender is willing to provide the Term M Loan Commitment and Term M Loans, subject in each case to the terms and conditions set forth herein.
(3) The Borrower has requested that the Initial Term N Lender provide an Incremental Term Loan Commitment (and Incremental Term Loans consisting of Other Term Loans) in the amount of $498,750,000.00 (such commitment, the "Term N Loan Commitment" and such Incremental Term Loans, the "Term N Loans"), and the Initial Term N Lender is willing to provide the Term N Loan Commitment and Term N Loans, subject in each case to the terms and conditions set forth herein.
(4) The Loan Parties, the Initial Term M Lender, the Initial Term N Lender and the Administrative Agent are entering into this Agreement in order to evidence the Term M Loan Commitment and Term M Loans and the Term N Loan Commitment and Term N Loans in accordance with Section 2.21 of the Credit Agreement.
SECTION 1. New Commitments and New Loans
(a)
Pursuant to Section 2.21 of the Credit Agreement, and subject to the satisfaction of the conditions set forth in Section 4 hereof:
(i)
The Initial Term M Lender agrees to make a single loan to the Borrower on the Effective Date (as defined below) in a principal amount equal to the amount set forth with respect to the Initial Term M Lender on Schedule 1A hereto.
(ii)
The Initial Term N Lender agrees to make a single loan to the Borrower on the Effective Date in a principal amount equal to the amount set forth with respect to the Initial Term N Lender on Schedule 1B hereto.
(b)
The Administrative Agent hereby approves of each of the Initial Term M Lender and the Initial Term N Lender as Incremental Term Lenders under the Credit Agreement and approves of the terms of the Term M Loans as set forth in Section 2 hereof and the terms of the Term N Loans as set forth in Section 3 hereof
(c)
For purposes of this Agreement, the following terms have the meanings ascribed below:
(i)
"Amendment Lead Arrangers" means Wells Fargo Securities, LLC, Barclays Bank PLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Lending Partners (through itself or one of its affiliates), JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any of its affiliates designated to act in such capacity).
SECTION 2. Terms of the Term M Loans
Pursuant to Section 2.21 of the Credit Agreement, the Term M Loans shall be Other Term Loans, the terms of which shall be as follows:
(a)
The aggregate principal amount of the Term M Loans and Term M Loan Commitment shall be $1,644,750,000.00.
(b)
The final maturity date of the Term M Loans shall be October 1, 2022.
(c)
The Applicable Margin with respect to the Term M Loans shall be 2.25% per annum in the case of any Eurocurrency Loan that is a Term M Loan and shall be 1.25% for any ABR Loan that is a Term M Loan.
(d)
Notwithstanding anything herein or in the Credit Agreement to the contrary, in the event that, on or prior to the six-month anniversary of the Effective Date, there occurs any Term M Loan Repricing Event (as defined below) or in connection with a Term M Loan Repricing Event constituting an amendment or conversion of Term M Loans, any Lender is required to assign its Term M Loans pursuant to Section 2.19(c) of the Credit Agreement, the Borrower shall on the date of such Term M Loan Repricing Event pay to the Administrative Agent, for the account of each Lender with such Term M Loans that are subject to such Term M Loan Repricing Event or are required to be so assigned, a fee equal to 1.00% of the principal amount of the Term M Loans subject to such Term M Loan Repricing Event or required to be so assigned; provided that any prepayment of any Term M Loans made in connection with a Change in Control shall not require the payment of the 1.00% premium otherwise provided for in this paragraph.
For purposes of this Section 2(d), "Term M Loan Repricing Event" shall mean any prepayment or repayment of Term M Loans with the proceeds of, or any conversion or amendment of Term M Loans into, any new or replacement tranche of term loans bearing interest with an "effective yield" (taking into account, for example, upfront fees, interest rate spreads, interest rate benchmarks floors and original interest discount, but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all lenders or holders of such new or replacement loans and without taking into account any fluctuations in the Adjusted LIBO Rate or comparable rate) less than the "effective yield" applicable to the Term M Loans (as such comparative yields are determined consistent with generally accepted financial practices) (it being understood that (x) in each case, the yield shall exclude any structuring, commitment and arranger fees or other fees unless such similar fees are paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans and shall include any rate floors and any upfront or similar fees paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans or original issue discount payable with respect to such new or replacement tranche of term loans and (y) any such repayment, prepayment or conversion shall only constitute a Term M Loan Repricing Event to the extent the primary purpose of such repayment, prepayment, conversion or amendment, as reasonably determined by the Borrower in good faith, is to reduce the "effective yield" on the Term M Loans).
(e)
All other terms not described herein and relating to the Term M Loans shall be the same as the terms of the Term I Loans in effect immediately prior to the Effective Date.
SECTION 3. Terms of the Term N Loans
Pursuant to Section 2.21 of the Credit Agreement, the Term N Loans shall be Other Term Loans, the terms of which shall be as follows:
(a)
The aggregate principal amount of the Term N Loans and Term N Loan Commitment shall be $498,750,000.00.
(b)
The final maturity date of the Term N Loans shall be January 19, 2024.
(c)
The Applicable Margin with respect to the Term N Loans shall be 2.25% per annum in the case of any Eurocurrency Loan that is a Term N Loan and shall be 1.25% for any ABR Loan that is a Term N Loan.
(d)
Notwithstanding anything herein or in the Credit Agreement to the contrary, in the event that, on or prior to the six-month anniversary of the Effective Date, there occurs any Term N Loan Repricing Event (as defined below) or in connection with a Term N Loan Repricing Event constituting an amendment or conversion of Term N Loans, any Lender is required to assign its Term N Loans pursuant to Section 2.19(c) of the Credit Agreement, the Borrower shall on the date of such Term N Loan Repricing Event pay to the Administrative Agent, for the account of each Lender with such Term N Loans that are subject to such Term N Loan Repricing Event or are required to be so assigned, a fee equal to 1.00% of the principal amount of the Term N Loans subject to such Term N Loan Repricing Event or required to be so assigned; provided that any prepayment of any Term N Loans made in connection with a Change in Control shall not require the payment of the 1.00% premium otherwise provided for in this paragraph.
For purposes of this Section 3(d), "Term N Loan Repricing Event" shall mean any prepayment or repayment of Term N Loans with the proceeds of, or any conversion or amendment of Term N Loans into, any new or replacement tranche of term loans bearing interest with an "effective yield" (taking into account, for example, upfront fees, interest rate spreads, interest rate benchmarks floors and original interest discount, but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all lenders or holders of such new or replacement loans and without taking into account any fluctuations in the Adjusted LIBO Rate or comparable rate) less than the "effective yield" applicable to the Term N Loans (as such comparative yields are determined consistent with generally accepted financial practices) (it being understood that (x) in each case, the yield shall exclude any structuring, commitment and arranger fees or other fees unless such similar fees are paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans and shall include any rate floors and any upfront or similar fees paid to all lenders generally in the primary syndication of such new or replacement tranche of term loans or original issue discount payable with respect to such new or replacement tranche of term loans and (y) any such repayment, prepayment or conversion shall only constitute a Term N Loan Repricing Event to the extent the primary purpose of such repayment, prepayment, conversion or amendment, as reasonably determined by the Borrower in good faith, is to reduce the "effective yield" on the Term N Loans).
(e)
All other terms not described herein and relating to the Term N Loans shall be the same as the terms of the Term J Loans in effect immediately prior to the Effective Date.
SECTION 4. Conditions to Effectiveness.
The (x) Initial Term M Lender agrees to make its Term M Loans to the Borrower in an aggregate principal amount equal to its Term M Loan Commitment and (y) Initial Term N Lender agrees to make its Term N Loans to the Borrower in an aggregate principal amount equal to its Term N Loan Commitment, in each case on and as of the date (the "Effective Date") on which the following conditions shall have been satisfied:
(a)
The Administrative Agent (or its counsel) shall have received from each party hereto prior to giving effect to this Agreement either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.
(b)
The Administrative Agent shall have received, on behalf of itself and the Lenders, a favorable written opinion of (i) Bryan Cave LLP, special counsel for the Loan Parties, (ii) Jason Greene, in-house counsel for the Loan Parties, and (iii) Godfrey & Kahn, S.C., Wisconsin counsel for certain of the Loan Parties, in each case, each (A) dated the Effective Date, (B) addressed to the Administrative Agent, the Collateral Agent and the Lenders and (C) customary in form and substance for transactions of the type contemplated hereby and reasonably satisfactory to the Administrative Agent and covering such matters as are customary for transactions of the type contemplated hereby and consistent with the opinions delivered in connection with the Prior Incremental Assumption Agreements (to the extent applicable).
(c)
The Administrative Agent shall have received in the case of each Loan Party each of the items referred to in clauses (i), (ii), (iii) and (iv) below:
(i)
a bringdown confirmation, dated not more than one Business Day prior to the Effective Date, as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each such Loan Party from the Secretary of State (or other similar official) of the jurisdiction of its organization;
(ii)
a certificate of the Secretary or Assistant Secretary or similar officer of each Loan Party dated the Effective Date and certifying,
(A)
that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or equivalent governing body) of such Loan Party (or its managing general partner or managing member) authorizing the execution, delivery and performance of this Agreement and, in the case of the Borrower, the borrowing of Term M Loans and Term N Loans, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Effective Date,
(B)
that (1) except as amended by any amendment attached to such Secretary's or Assistant Secretary's certificate, neither the certificate or articles of incorporation, certificate of limited partnership or certificate of formation (as applicable) of such Loan Party, nor the by-laws, limited liability company, partnership agreement or other equivalent governing documents (as applicable) of such Loan Party, has been amended since the date of the last amendment thereto attached to the Secretary's Certificate of Borrower and Guarantors dated as of February 10, 2017, or in the case of Holdings, attached to the Secretary's Certificate of Holdings dated as of February 10, 2017, in each case delivered to the Administrative Agent in connection with the consummation of the financing transactions described in the Incremental Assumption Agreement dated as of February 10, 2017 (as so amended, collectively, the "Loan Party Organizational Documents"), and (2) the Loan Party Organizational Documents have been in effect at all times since the date of the resolutions described in clause (A) above, and remain in effect on the Effective Date,
(C)
as to the incumbency and specimen signature of each officer executing this Agreement or any other document delivered in connection herewith on behalf of such Loan Party; and
(D)
as to the absence of any pending proceeding for the dissolution or liquidation of such Loan Party or, to the knowledge of such person, threatening the existence of such Loan Party;
(iii)
certification of a director or another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate delivered pursuant to Section 4(c)(ii); and
(iv)
a certificate of a Responsible Officer of the Borrower as to satisfaction of the condition set forth in Section 4(f) hereof
(d)
the Administrative Agent, Amendment Lead Arrangers, the Initial Term M Lender and the Initial Term N Lender shall have received, to the extent invoiced at least three business days prior to the Effective Date, reimbursement or payment of (i) all reasonable expenses related to syndication of this Agreement, the Term M Loans and the Term N Loans and (ii) the reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP, counsel to the Administrative Agent and Amendment Lead Arrangers, in each case, required to be reimbursed or paid by the Loan Parties on or prior to the Effective Date, whether hereunder, under that certain Amended & Restated Engagement Letter, dated as of June 15, 2017 (the "Engagement Letter"), among the Borrower, Wells Fargo Securities, LLC, Barclays Bank PLC ,Citi (as defined therein), Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Lending Partners, JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any of its affiliates designated to act in such capacity), or under any Loan Document.
(e)
[Reserved].
(f)
The representations and warranties set forth in Article III of the Credit Agreement shall be true and correct in all material respects as of the Effective Date, in each case, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), and immediately after giving effect to the Borrowing of the Term M Loans and the Term N Loans, no Event of Default or Default shall have occurred and be continuing or would result therefrom.
(g)
The Administrative Agent shall have received a certificate from the chief financial officer of the Borrower in the form attached as Annex A hereto certifying that the Borrower and its subsidiaries, on a consolidated basis after giving effect to the transactions contemplated hereby, are solvent.
(h)
The Amendment Lead Arrangers shall have received, at least three business days prior to the Effective Date, all documentation and other information required by regulatory authorities under applicable "know your customer" and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, to the extent requested in writing at least 10 days prior to the Effective Date.
(i)
The Administrative Agent shall have received a Borrowing Request in respect of each of the Term M Loans and the Term N Loans as required by Section 2.03 of the Credit Agreement.
(j)
The Administrative Agent shall have received a "Life-of-Loan" flood hazard determination notice for each real property encumbered by a Mortgage, and if such real property is located in a special flood hazard area, (x) a notice about special flood hazard area status and flood disaster assistance duly executed by the Borrower and the applicable Loan Party and (y) certificates of flood insurance evidencing any such insurance required by the Credit Agreement.
(k)
Substantially concurrently with the making by the Initial Term M Lender of its Term M Loans to the Borrower on the Effective Date, all of the principal, interest, fees and other amounts due and payable in respect of the Term I Loans under the Credit Agreement shall have been paid by the Borrower.
(l)
Substantially concurrently with the making by the Initial Term N Lender of its Term N Loans to the Borrower on the Effective Date, all of the principal, interest, fees and other amounts due and payable in respect of the Term J Loans under the Credit Agreement shall have been paid by the Borrower.
SECTION 5. Post Effective Date Security Documentation. The Borrower shall and shall cause each Material Subsidiary to, within 120 days after the Effective Date (or such longer period as the Administrative Agent may determine), deliver to the Administrative Agent, each in form and substance reasonably acceptable to the Administrative Agent
(1)
written confirmation (which confirmation may be provided in the form of an electronic mail acknowledgment in form and substance reasonably satisfactory to the Administrative Agent) from local counsel in the jurisdiction in which the Mortgaged Property (which are set forth on Schedule 2 hereto) is located substantially to the effect that: (x) the recording of the existing Mortgage is the only filing or recording necessary to give constructive notice to third parties of the lien created by such Mortgage as security for the Obligations, including the Obligations evidenced by the Credit Agreement, as amended pursuant to this Amendment, for the benefit of the Secured Parties; and (y) no other documents, instruments, filings, recordings, re-recordings, re-filings or other actions, including, without limitation, the payment of any mortgage recording taxes or similar taxes, are necessary or appropriate under applicable law in order to maintain the continued enforceability, validity or priority of the lien created by such Mortgage as security for the Obligations, including the Obligations evidenced by the Credit Agreement, as amended pursuant to this Amendment, for the benefit of the Secured Parties;
OR
(2)
(w) amendments to the Mortgages ("Mortgage Amendments"), (x) date down endorsements to the existing title insurance policies relating to the property subject to such Mortgage Amendment, (y) any documents required in connection with the recording of such Mortgage Amendments and (z) opinions of local counsel with respect to the enforceability, due authorization, execution and delivery of the Mortgage Amendments and other such other matters customarily included in such opinions.
SECTION 6. Representations and Warranties. On the Effective Date, the Loan Parties represent and warrant to the Administrative Agent, the Initial Term M Lender and the Initial Term N Lender that: (a) the execution, delivery and performance by Holdings, the Borrower and each of the Subsidiary Loan Parties of this Agreement and the incurrence of the Term M Loans and the Term N Loans hereunder and under the Credit Agreement (as amended hereby) are permitted under, and do not conflict with or violate, the terms of the Credit Agreement, the Existing ABL Credit Agreement, the Intercreditor Agreement or the Senior Lender Intercreditor Agreement, (b) no default shall exist under the Credit Agreement, the Existing ABL Credit Agreement, and any indenture and supplemental indenture governing the senior notes issued by the Borrower and outstanding on the Effective Date, (c) no action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with this Agreement or the incurrence by the Borrower of the Term M Loans and the Term N Loans, except for the actions contemplated by Section 5 above, (d) the proceeds of the Term M Loans will be used substantially simultaneously by the Borrower to repay all of the outstanding Term I Loans and (e) the proceeds of the Term N Loans will be used substantially simultaneously by the Borrower to repay all of the outstanding Term J Loans.
SECTION 7. Reference to and Effect on the Credit Agreement; Confirmation of Guarantors.
(a)
On and after the effectiveness of this Agreement, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by, and after giving effect to, this Agreement.
(b)
Each Loan Document, after giving effect to this Agreement, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed, except that, on and after the effectiveness of this Agreement, each reference in each of the Loan Documents (including the Collateral Agreement and the other Security Documents) to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended by, and after giving effect to, this Agreement, and each reference to "Lender" therein shall, for the avoidance of doubt, include each holder of any Term M Loans, including the Initial Term M Lender, and each holder of any Term N Loans, including the Initial Term N Lender, respectively. Without limiting the generality of the foregoing, the Security Documents (in the case of the Mortgages, after giving effect to any amendments thereto required in connection with the Term M Loans and the Term N Loans) and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, as amended by, and after giving effect to, this Agreement (in the case of the Mortgages, subject to any limitations contained in the Mortgages on maximum indebtedness or maximum indebtedness permitted to be secured thereby), in each case subject to the terms thereof
(c)
Each Loan Party hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Agreement) and confirms that (in the case of the Mortgages, if any after giving effect to any amendments required in connection with the Term M Loans and the Term N Loans) such liens and security interests continue to secure the Obligations under the Loan Documents, including, without limitation, all Obligations resulting from or incurred pursuant to the Term M Loans and Term N Loans (in the case of the Mortgages, subject to any limitations contained in the Mortgages on maximum indebtedness or maximum indebtedness permitted to be secured thereby), in each case subject to the terms thereof and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to Article II of the Collateral Agreement.
(d)
The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, or constitute a waiver of any provision of any of the Loan Documents.
(e)
This Agreement is a Loan Document.
SECTION 8. Initial Term M Lender and Initial Term N Lender.
(a)
Each of the Initial Term M Lender and the Initial Term N Lender (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 5.04 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) represents and warrants that its name set forth on its signature page hereto is its legal name; (iv) confirms that it is not the Borrower or any of its Subsidiaries or an Affiliate of any of them; (v) appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to such Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (vi) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vii) attaches any U.S. Internal Revenue Service forms required under Section 2.17 of the Credit Agreement.
(b)
On and after the Effective Date, each of the Initial Term M Lender and the Initial Term N Lender shall be a party to the Credit Agreement as a Lender and shall have all of the rights and obligations of a Lender thereunder. All notices and other communications provided for hereunder or under the Loan Documents to the Initial Term M Lender or to the Initial Term N Lender shall be to its address as set forth in the administrative questionnaire such Lender has furnished to the Administrative Agent.
SECTION 9. Costs, Expenses. The Borrower agrees to pay all reasonable out-of-pocket costs and expenses (including Other Taxes) incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Agreement and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent (subject to any applicable limitations in the Engagement Letter)) in accordance with the terms of Section 9.05 of the Credit Agreement.
SECTION 10. No Novation. This Agreement shall not extinguish the Obligations for the payment of money outstanding under the Credit Agreement or discharge or release the Lien or priority of any Loan Document or any other security therefor or any guarantee thereof, and the Liens and security interests existing immediately prior to the Effective Date in favor of the Administrative Agent for the benefit of the Secured Parties securing payment of the Obligations are in all respects continuing and in full force and effect with respect to all Obligations. Nothing herein contained shall be construed as a novation of any of the Loan Documents or a substitution or novation of the Obligations outstanding under the Credit Agreement or instruments guaranteeing or securing the same, which instruments shall remain and continue in full force and effect. Nothing expressed or implied in this Agreement or any other document contemplated hereby shall be construed as a release or other discharge of any Loan Party under the Credit Agreement or any other Loan Document from any of its obligations and liabilities thereunder, and except as expressly provided, such obligations and liabilities are in all respects continuing with only the terms being modified as provided in this Agreement.
SECTION 11. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 4.  Delivery of an executed counterpart to this Agreement by facsimile transmission (or other electronic transmission pursuant to procedures approved by the Administrative Agent) shall be effective as delivery of a manually signed original.
SECTION 12. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
[Remainder of page intentionally left blank]

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
BERRY GLOBAL, INC.
 
 
By: /s/ Mark W. Miles 
Name: Mark W. Miles
Title: Chief Financial Officer
 
BERRY GLOBAL GROUP, INC.
 
 
By: /s/ Mark W. Miles 
Name: Mark W. Miles
Title: Chief Financial Officer



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By: /s/ Jason K. Greene 
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Title: Executive Vice President, General Counsel and Secretary



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BERRY PLASTICS ACQUISITION CORPORATION V
BERRY PLASTICS ACQUISITION CORPORATION XI
BERRY PLASTICS ACQUISITION CORPORATION XII
BERRY PLASTICS ACQUISITION CORPORATION XIII
BERRY GLOBAL FILMS, LLC
BERRY PLASTICS ACQUISITION LLC X
BERRY PLASTICS DESIGN, LLC
BERRY PLASTICS FILMCO, INC.
BERRY PLASTICS 1K, LLC
BERRY PLASTICS OPCO, INC.
BERRY PLASTICS SP, INC.
BERRY PLASTICS TECHNICAL SERVICES, INC.
BERRY STERLING CORPORATION
BPREX BRAZIL HOLDING INC.
BPREX CLOSURE SYSTEMS, LLC
BPREX CLOSURES KENTUCKY INC.
BPREX CLOSURES, LLC
BPREX DELTA INC.
BPREX HEALTHCARE BROOKVILLE INC.
BPREX HEALTHCARE PACKAGING INC.
BPREX PLASTIC PACKAGING INC.
BPREX PLASTICS SERVICES COMPANY INC.
BPREX PRODUCT DESIGN AND ENGINEERING INC.
BPREX SPECIALTY PRODUCTS PUERTO RICO INC.
CAPLAS, LLC
CAPLAS NEPTUNE, LLC
CAPTIVE PLASTICS HOLDINGS, LLC
CAPTIVE PLASTICS, LLC
CARDINAL PACKAGING, INC.
CHICOPEE, INC.
COVALENCE SPECIALTY ADHESIVES LLC
COVALENCE SPECIALTY COATINGS LLC
CPI HOLDING CORPORATION
 
 
By: /s/ Jason K. Greene 
Name: Jason K. Greene
Title: Executive Vice President, General Counsel and Secretary



GRAFCO INDUSTRIES LIMITED PARTNERSHIP
 
By: CAPLAS NEPTUNE, LLC
its General Partner
 
 
By: /s/ Jason K. Greene 
Name: Jason K. Greene
Title: Executive Vice President, General Counsel and Secretary



CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH, as Administrative Agent
 
 
By: /s/ Mikhail Faybusovich 
Name: Mikhail Faybusovich
Title: Authorized Signatory
 
 
By: /s/ Whitney Gaston 
Name: Whitney Gaston
Title: Authorized Signatory



WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Initial Term M Lender
 
 
By: /s/ Thomas P. Trail 
Name: Thomas P. Trail
Title: Managing Director
 
 
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Initial Term N Lender
 
 
By: /s/ Thomas P. Trail 
Name: Thomas P. Trail
Title: Managing Director



Schedule 1A
Initial Term M Lender Term M Loan Commitment
Wells Fargo Bank, National Association $1,644,750,000.00
Schedule 1B
Initial Term N Lender Term N Loan Commitment
Wells Fargo Bank, National Association $498,750,000.00



Schedule 2
1. 111 Excellence Lane, Mooresville, NC 28115
2. 1020 Shenandoah Village Dr., Waynesboro, VA 22980
3. 1203 Chicopee Road, Benson, NC 27504
4. 20 Elmwood Ave., Mountain Top, PA 18707
5. 70 Old Hickory Blvd., Old Hickory, TN 37138



Annex A
SOLVENCY CERTIFICATE
[ ], 2017
Reference is made to the Second Amended and Restated Term Loan Credit Agreement dated as of April 3, 2007 by and among Holdings, the Borrower, the Lenders and other parties thereto and Credit Suisse AG, Cayman Islands Branch (formerly known as Credit Suisse, Cayman Islands Branch), as administrative agent (as modified by that certain Incremental Assumption Agreement, dated as of February 8, 2013, that certain Incremental Assumption Agreement, dated as of January 6, 2014, that certain Incremental Assumption Agreement and Amendment, dated as of October 1, 2015, that certain Incremental Assumption Agreement and Amendment, dated as of June 15, 2016, that certain Incremental Assumption Agreement, dated as of January 19, 2017, that certain Incremental Assumption Agreement, dated as of February 10, 2017, and the Incremental Assumption Agreement dated as of the date hereof (the "Amendment"), the "Credit Agreement"); unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement or the Amendment, as applicable.
I, the undersigned, solely in my capacity as the Chief Financial Officer of the Borrower, and not in my individual capacity, do hereby certify that, on the Effective Date after giving effect to the transactions contemplated by the Amendment:
(a)  the fair value of the property of the Borrower and its Subsidiaries (taken as a whole) is greater than the total amount of liabilities, including contingent liabilities, of the Borrower and its Subsidiaries (taken as a whole) (it being understood that the amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability);
(b)  the present fair salable value of the assets of the Borrower and its Subsidiaries (taken as a whole) is not less than the amount that will be required to pay the probable liability of the Borrower and its Subsidiaries (taken as a whole) on their debts as they become absolute and matured;
(c)  the Borrower and its Subsidiaries do not intend to, and do not believe that they will, incur debts or liabilities beyond their ability to pay such debts and liabilities as they become absolute and matured; and
(d)  the Borrower and its Subsidiaries are not engaged in any business, as conducted on the Effective Date and as proposed to be conducted following the Effective Date, for which the property of the Borrower and its Subsidiaries (taken as a whole) would constitute an unreasonably small capital.



IN WITNESS WHEREOF, I have delivered this certificate as of the date first written above.
BERRY GLOBAL, INC.
 
By  
Name:
 Title: Chief Financial Officer






Exhibit 3.1
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF
BERRY PLASTICS GROUP, INC.

BERRY PLASTICS GROUP, INC. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "DGCL"), does hereby certify:

FIRST: That pursuant to a unanimous written consent of the Board of Directors of the Corporation in lieu of a meeting, resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of the Corporation, declaring said amendment to be advisable.  The resolution setting forth the proposed amendment is as follows:
RESOLVED, that Article I of the Certificate of Incorporation of this corporation be, and hereby is amended in its entirety and shall hereafter read as follows:
ARTICLE I
The name of the Corporation (hereinafter called the "Corporation") is:
BERRY GLOBAL GROUP, INC.
RESOLVED, that all other references in the Certificate of Incorporation to "Berry Plastics Group, Inc." be, and hereby are, amended to state "Berry Global Group, Inc."
SECOND: That thereafter, pursuant to Sections 242(a)(1) and 242(b)(1), the Board of Directors determined that consent of the stockholders of the Corporation to the said amendment is not required by statute.
THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the DGCL by the unanimous written consent of the Board of Directors of the Corporation.
FOURTH: This Certificate of Amendment of Certificate of Incorporation of the Corporation (and the said amendment referenced herein) shall be effective April 13, 2017.


[Signature page follows]


IN WITNESS WHEREOF, said corporation has caused this Certificate of Amendment of Certificate of Incorporation to be signed by an authorized officer, the 12th day of April, 2017.


   
BERRY PLASTICS GROUP, INC., a Delaware corporation
   
 
 
 
By:/s/ Jason Green 
  Jason Greene
         Executive Vice President
 



CERTIFICATE OF AMENDMENT OF
THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF BERRY PLASTICS GROUP, INC.

Berry Plastics Group, Inc. (the "Corporation"), a corporation organized and existing under the laws and by virtue of the General Corporation Law of the State of Delaware,
 DOES HEREBY CERTIFY:
1.
This Certificate of Amendment (the "Certificate of Amendment") amends the Amended and Restated Certificate of Incorporation of the Corporation (the "Amended and Restated Certificate of Incorporation") filed with the Secretary of State of the State of Delaware on March 6, 2015, and has been duly adopted by the Board of Directors of the Corporation by unanimous written consent in lieu of a meeting in accordance with Sections 141(f) and 242 of the General Corporation Law of the State of Delaware (the "DGCL") and by the stockholders of the Corporation in accordance with Section 242 of the DGCL at an annual meeting held on March 2, 2017.

2.
Section 3 of Article V of the Amended and Restated Certificate of Incorporation is hereby deleted in its entirety and replaced with the following:

"Section 3.  Classes of Directors; Term of Office.  (a) Except as provided in Section 3(b), the Board shall be and is divided into three classes, as nearly equal in number as possible, designated: Class I, Class II and Class III.  In case of any increase or decrease, from time to time, in the number of directors, the number of directors in each class shall be apportioned as nearly equal as possible.  No decrease in the number of directors shall shorten the term of any incumbent director.

(b) The terms of the directors shall be as follows:  (i) at the annual meeting of stockholders to be held in fiscal 2017, the Directors whose terms expire at that meeting or such directors' successors shall be elected to hold office for a term expiring at the annual meeting of stockholders to be held in fiscal 2020; (ii) at the annual meeting of stockholders to be held in fiscal 2018, the directors whose terms expire at that meeting or such directors' successors shall be elected to hold office for a term expiring at the annual meeting of stockholders to be held in fiscal 2019; (iii) at the annual meeting of stockholders to be held in fiscal 2019, the directors whose terms expire at that meeting or such directors' successors shall be elected to hold office for a term expiring at the annual meeting of stockholders to be held in fiscal 2020; and (iv) at the annual meeting of stockholders to be held in fiscal 2020 and at each annual meeting of stockholders thereafter, all directors shall be elected to hold office for a one year term expiring at the next annual meeting of stockholders.  Notwithstanding the provisions of Section 3(a), beginning at the annual meeting of stockholders to be held in fiscal 2020, the Board will not be divided into classes.  Notwithstanding anything to the contrary in the foregoing, the term of each director shall continue until the election and qualification of his or her successor and be subject to his or her earlier death, resignation or removal."

3.
Section 7 of Article V of the Amended and Restated Certificate of Incorporation is hereby deleted in its entirety and replaced with the following:

"Section 7.  Removal and Resignation of Directors.  At any time when the Board is divided into classes, directors may be removed only for cause, and only by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors.  At any time when the Board is not divided into classes, directors may be removed with or without cause by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors.  A director may resign at any time by filing his or her written resignation with the secretary of the Corporation."


4.
Except as amended hereby, all other provisions of the Amended and Restated Certificate of Incorporation shall remain in full force and effect.

[Remainder of this page intentionally left blank]



IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by Jason K. Greene, its Executive Vice President, Chief Legal Officer and Secretary, this 2nd day of March, 2017.
BERRY PLASTICS GROUP, INC.


By: /s/ Jason K. Greene 
Name:  Jason K. Greene
Title:  Executive Vice President, Chief Legal Officer and    Secretary



AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BERRY PLASTICS GROUP, INC.

Berry Plastics Group, Inc. (the "Corporation"), a corporation organized and existing under the laws and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. The name of the Corporation is BERRY PLASTICS GROUP, INC.
2. The Corporation was originally incorporated under the name TP&A Acquisition Corporation.  The date of filing of the original Certificate of Incorporation of the Corporation with the Secretary of State of the State of Delaware was November 18, 2005.  The Corporation most recently filed the Amended and Restated Certificate of Incorporation of the Corporation with the Secretary of State of the State of Delaware on October 10, 2012.
3. This Amended and Restated Certificate of Incorporation amends and restates the Certificate of Incorporation of the Corporation, as most recently amended by the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on October 10, 2012, and has been duly adopted by the Board of Directors of the Corporation by unanimous written consent in lieu of a meeting in accordance with Sections 141(f), 242 and 245 of the General Corporation Law of the State of Delaware (the "DGCL") and by the stockholders of the Corporation in accordance with Sections 242 and 245 of the DGCL at an annual meeting held on March 4, 2015.
4. The Certificate of Incorporation of the Corporation, as amended and restated hereby, shall, upon the effectiveness hereof, read in its entirety, as follows:

ARTICLE I
The name of the Corporation (hereinafter called the "Corporation") is:
BERRY PLASTICS GROUP, INC.
ARTICLE II
The address of the Corporation's registered office in the State of Delaware is c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent, State of Delaware 19904. The name of the Corporation's registered agent at such address is National Registered Agents, Inc.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act and activity for which corporations may be organized and incorporated under the General Corporation Law of the State of Delaware, as the same may be amended and supplemented.
ARTICLE IV
Section 1. Authorized Shares.  The total number of shares of all classes of stock that the Corporation shall have authority to issue is 450,000,000 shares, of which
400,000,000 shares shall be common stock, $0.01 par value ("Common Stock") and 50,000,000 shares shall be preferred stock, $0.01 par value ("Preferred Stock").
Section 2. Common Stock.  Except as otherwise required by applicable law, all shares of Common Stock shall be identical in all respects and shall entitle the holders thereof to the same rights, subject to the same qualifications, limitations and restrictions.  The terms of the Common Stock set forth below shall be subject to the express terms of any series of Preferred Stock.
(a) Voting Rights.  Except as otherwise required by applicable law, the holders of Common Stock shall be entitled to one vote per share on all matters to be voted on by the Corporation's stockholders.  No stockholder of the Corporation shall be entitled to exercise any right of cumulative voting.
(b) Dividends.  The holders of Common Stock shall be entitled to receive, as, if and when declared by the Board of Directors of the Corporation (the "Board") out of the funds of the Corporation legally available therefor, such dividends (payable in cash, stock or otherwise) as the Board may from time to time determine, payable to stockholders of record on such dates, not exceeding 60 days preceding the dividend payment dates, as shall be fixed for such purpose by the Board in advance of payment of each particular dividend.
(c) Liquidation.  In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after the distribution or payment of any liabilities and accrued but unpaid dividends and any liquidation preferences on any outstanding Preferred Stock, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among and paid to the holders of Common Stock ratably in proportion to the number of shares of Common Stock held by them respectively.
Section 3. Preferred Stock.  The Board is authorized to provide for the issuance from time to time of shares of Preferred Stock in one or more series and, by filing a certificate (a "Preferred Stock Certificate of Designation") pursuant to the applicable provisions of the Delaware General Corporation Law (the "DGCL"), to establish from time to time the number of shares to be included in each such series, with such powers, designations, preferences and relative, participating, optional or other rights, if any, and qualifications, limitations or restrictions thereof, if any, as are stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board (as such resolutions may be amended by a resolution or resolutions subsequently adopted by the Board), and as are not stated and expressed in this Amended and Restated Certificate of Incorporation, including, but not limited to, determination of any of the following:
(a) the distinctive designation of the series, whether by number, letter or title, and the number of shares which will constitute the series, which number may be increased or decreased (but not below the number of shares then outstanding and except to the extent otherwise provided in the applicable Preferred Stock Certificate of Designation) from time to time by action of the Board;
(b) the dividend rate, if any, and the times of payment of dividends, if any, on the shares of the series, whether such dividends will be cumulative and, if so, from what date or dates, and the relation which such dividends, if any, shall bear to the dividends payable on any other class or classes of stock;
(c) the price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the Corporation;
(d) whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof;
(e) the amounts payable on, and the preferences, if any, of the shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;
(f) whether or not the shares of the series will be convertible into, or exchangeable for, any other shares of stock of the Corporation or other securities and, if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;
(g) whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or class of stock in any respect, or will be entitled to the benefit of limitations restricting the issuance of shares of any other series or class of stock, restricting the payment of dividends on or the making of other distributions in respect of shares of any other series or class of stock ranking junior to the shares of the series as to dividends or assets, or restricting the purchase or redemption of the shares of any such junior series or class, and the terms of any such restriction;
(h) whether or not the shares of the series will have voting rights in addition to any voting rights provided by law and, if so, the terms of such voting rights; and
(i) any other terms of the shares of the series.

ARTICLE V
Section 1. General Powers.  Except as otherwise provided by applicable law or this Amended and Restated Certificate of Incorporation, in each case as the same may be amended and supplemented, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

Section 2. Number of Directors.  The number of directors that shall constitute the whole Board shall be as determined from time to time by a majority of the Board; provided, that in no event shall the total number of directors constituting the entire Board be less than three (3) nor more than fifteen (15).  Election of directors need not be by written ballot.

Section 3. Classes of Directors; Term of Office.  The Board shall be and is divided into three classes, as nearly equal in number as possible, designated:  Class I, Class II and Class III.  In case of any increase or decrease, from time to time, in the number of directors, the number of directors in each class shall be apportioned as nearly equal as possible.  No decrease in the number of directors shall shorten the term of any incumbent director.
Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, that each director initially appointed to Class I shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2013; each director initially appointed to Class II shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2014; and each director initially appointed to Class III shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2015; provided, further, that the term of each director shall continue until the election and qualification of his successor and be subject to his earlier death, resignation or removal.
Section 4. Quorum.  Except as otherwise provided by law, this Amended and Restated Certificate of Incorporation or the Bylaws, a majority of the total number of directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board, but in no event shall less than one-third of the directors constitute a quorum. A majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice.
Section 5. Manner of Acting.  Every act or decision done or made by the majority of the directors present at a meeting at which a quorum is present shall be regarded as the act of the Board unless the act of a greater number is required by law, this Amended and Restated Certificate of Incorporation or the Bylaws, in each case as the same may be amended and supplemented.
Section 6. Vacancies.  Any vacancy or newly created directorships in the Board, however occurring, shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, except as otherwise provided by law, and shall not be filled by the stockholders of the Corporation.  A director elected to fill a vacancy shall hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of a successor and to such director's earlier death, resignation or removal.
If any applicable provision of the DGCL expressly confers power on stockholders to fill such a directorship at a special meeting of stockholders, such a directorship may be filled at such meeting only by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors.  Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor.
Section 7. Removal and Resignation of Directors.  Directors may be removed only for cause, and only by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors.  A director may resign at any time by filing his written resignation with the secretary of the Corporation.
Section 8. Voting Rights of Preferred Stock. Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal, filling of vacancies and other features of such directorships shall be governed by the terms of this Amended and Restated Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article unless expressly provided by such terms.
ARTICLE VI
In furtherance and not in limitation of the rights, powers, privileges and discretionary authority granted or conferred by statute, the Board is expressly authorized to:
(a) make, alter, amend or repeal the Bylaws, without any action on the part of the stockholders of the Corporation and subject to any limitations that may be contained in such Bylaws, but any Bylaws adopted by the Board may be amended, modified or repealed by the stockholders entitled to vote thereon; and
(b) from time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to inspection of stockholders; and, except as so determined or as expressly provided in this Amended and Restated Certificate of Incorporation or in any Preferred Stock Certificate of Designation, no stockholder shall have any right to inspect any account, book or document of the Corporation other than such rights as may be conferred by applicable law.
ARTICLE VII
Any action required or permitted to be taken by the holders of the Common Stock of the Corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent or consents in writing by stockholders.
ARTICLE VIII
Except as otherwise required by law and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Chairman of the Board or a majority of the members of the Board pursuant to a resolution approved by the Board, and special meetings may not be called by any other person or persons.  Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
ARTICLE IX
To the extent permitted by the DGCL, a director of the Corporation will not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (or any successor provision thereto), or (iv) for any transaction from which the director derived any improper personal benefit.  Any repeal or amendment or modification of this Article IX by the stockholders of the Corporation or by changes in applicable law, or the adoption of any provision of this Certificate of Incorporation inconsistent with this Article IX, will, to the extent permitted by applicable law, be prospective only (except to the extent such amendment or change in applicable law permits the Corporation to provide a broader limitation on a retroactive basis than permitted prior thereto), and will not adversely affect any limitation on the personal liability of any director of the Corporation at the time of such repeal or amendment or modification or adoption of such inconsistent provision.  If any provision of the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
ARTICLE X
(a) Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this Amended and Restated Certificate of Incorporation is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought), a director or officer of the Corporation or is or was at any such time serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor of the Corporation by merger or otherwise) to the fullest extent authorized by the DGCL as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in paragraph (c) of this Article X, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board.  The right to indemnification conferred in this Article X shall include the right, without the need for any action by the Board, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the DGCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the "undertaking") by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a "final disposition") that such director or officer is not entitled to be indemnified for such expenses under this Article X or otherwise.  The rights conferred upon indemnitees in this Article X shall be contract rights between the Corporation and each indemnitee to whom such rights are extended that vest at the commencement of such person's service to or at the request of the Corporation and all such rights shall continue as to an indemnitee who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporation's request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of the indemnitee's heirs, executors and administrators.
(b)  To obtain indemnification under this Article X, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification.  Upon written request by a claimant for indemnification pursuant to the first sentence of this paragraph (b), a determination, if required by applicable law, with respect to the claimant's entitlement thereto shall be made as follows:  (i) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (ii) if no request is made by the claimant for a determination by Independent Counsel, (A) by the Board by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), (B) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the claimant, or (C) if a quorum of Disinterested Directors so directs, by a majority of the stockholders of the Corporation.  In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected by the Board unless there shall have occurred within two years prior to the date of the commencement of the action, suit or proceeding for which indemnification is claimed a "Change of Control" as defined in the Berry Plastics Group, Inc. 2012 Long-Term Incentive Plan in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board.  If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within ten (10) days after such determination.
(c)
If a claim under paragraph (a) of this Article X is not paid in full by the Corporation within thirty (30) days after a written claim pursuant to paragraph (b) of this
Article X has been received by the Corporation (except in the case of a claim for advancement of expenses, for which the applicable period is twenty (20) days), the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim.  It shall be a defense to any such action that the claimant has not met the standard of conduct which makes it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed or that the claimant is not entitled to the requested advancement of expenses, but (except where the required undertaking, if any, has not been tendered to the Corporation) the burden of proving such defense shall be on the Corporation.  Neither the failure of the Corporation (including its Board, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
(d)
If a determination shall have been made pursuant to paragraph (b) of this
Article X that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (c) of this Article X.
(e)
The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (c) of this Article X that the procedures and presumptions of this Article X are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Article X.
(f)
The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article X:  (i) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Amended and Restated Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise and (ii) cannot be terminated by the Corporation, the Board or the stockholders of the Corporation with respect to a person's service prior to the date of such termination.  Any amendment, modification, alteration or repeal of this Article X that in any way diminishes, limits, restricts, adversely affects or eliminates any right of an indemnitee or his or her successors to indemnification, advancement of expenses or otherwise shall be prospective only and shall not, without the written consent of the indemnitee, in any way diminish, limit, restrict, adversely affect or eliminate any such right with respect to any actual or alleged state of facts, occurrence, action or omission then or previously existing, or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such actual or alleged state of facts, occurrence, action or omission.
(g)
The Corporation may maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.  To the extent that the Corporation maintains any policy or policies providing such insurance, each such current or former director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in paragraph (h) of this Article X, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such current or former director, officer, employee or agent.
(h)
The Corporation may, to the extent authorized from time to time by the Board or the Chief Executive Officer, grant rights to indemnification, and rights to be paid by the Corporation the expenses incurred in connection with any proceeding in advance of its final disposition, to any current or former employee or agent of the Corporation to the fullest extent of the provisions of this Article X with respect to the indemnification and advancement of expenses of current or former directors and officers of the Corporation.
(i)
If any provision or provisions of this Article X shall be held to be invalid, illegal or unenforceable for any reason whatsoever:  (i) the validity, legality and enforceability of the remaining provisions of this Article X (including, without limitation, each portion of any paragraph of this Article X containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Article X (including, without limitation, each such portion of any paragraph of this Article X containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
(j)
For purposes of this Article X:
(i)
"Disinterested Director" means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.
(ii)
"Independent Counsel" means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporate law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant's rights under this Article X.
(k) Any notice, request or other communication required or permitted to be given to the Corporation under this Article X shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.
ARTICLE XI
Neither any contract or other transaction between the Corporation and any other corporation, partnership, limited liability company, joint venture, firm, association, or other entity (an "Entity"), nor any other acts of the Corporation with relation to any other Entity will, in the absence of fraud, in any way be invalidated or otherwise affected by the fact that any one or more of the directors or officers of the Corporation are pecuniarily or otherwise interested in, or are directors, officers, partners, or members of, such other Entity (such directors, officers, and Entities, each a "Related Person").  Any Related Person may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation, provided, that the fact that such person is a Related Person is disclosed or is known to the Board or a majority of directors present at any meeting of the Board at which action upon any such contract or transaction is taken; and any director of the Corporation who is also a Related Person may be counted in determining the existence of a quorum at any meeting of the Board during which any such contract or transaction is authorized and may vote thereat to authorize any such contract or transaction, with like force and effect as if such person were not a Related Person.  Any director of the Corporation may vote upon any contract or any other transaction between the Corporation and any subsidiary or affiliated corporation without regard to the fact that such person is also a director or officer of such subsidiary or affiliated corporation.
Any contract, transaction or act of the Corporation or of the directors that is ratified at any annual meeting of the stockholders of the Corporation, or at any special meeting of the stockholders of the Corporation called for such purpose, will, insofar as permitted by applicable law, be as valid and as binding as though ratified by every stockholder of the Corporation; provided, however, that any failure of the stockholders to approve or ratify any such contract, transaction or act, when and if submitted, will not be deemed in any way to invalidate the same or deprive the Corporation, its directors, officers or employees, of its or their right to proceed with such contract, transaction or act.
Any person or entity purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article XI.
ARTICLE XII
The Corporation elects not to be governed by Section 203 of the DGCL.
ARTICLE XIII
The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article.
Notwithstanding anything to the contrary contained in this Amended and Restated Certificate of Incorporation, the affirmative vote of the holders of at least a majority in voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to modify, amend or repeal, this Amended and Restated Certificate of Incorporation.
ARTICLE XIV
If any provision or provisions of this Amended and Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever:  (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
ARTICLE XV
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation's stockholders, (c) any action asserting a claim arising pursuant to any provision of the DGCL, or (d) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.  Any person or entity purchasing or otherwise acquiring any interest in any share of capital stock of the Corporation shall be deemed to have notice of and consent to the provisions of this Article XV.
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IN WITNESS WHEREOF, BERRY PLASTICS GROUP, INC. has caused this Amended and Restated Certificate of Incorporation to be signed by Jason K. Greene, General Counsel and Secretary, this 6th day of March, 2015.

BERRY PLASTICS GROUP, INC.
   
By:
/s/ Jason K. Greene
 
 
Name:   Jason K. Greene
Title:     General Counsel and Secretary