UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 28, 2020~~April 3, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

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 Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	BERY	New York Stock Exchange LLC

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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~"large~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒

Accelerated Filer ☐

~~Non-accelerated~~Non-Accelerated Filer ☐

Smaller 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 13(a) of the Exchange Act. ☐

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

There were ~~132.5~~134.9 million shares of common stock outstanding at May ~~1, 2020.~~4, 2021.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Information included in or incorporated by reference in Berry Global Group, Inc.’s filings with the U.S. Securities and Exchange Commission (the “SEC”) and press releases or other public statements, contain or may contain forward-looking statements. This ~~Form 10-Q~~report includes ~~"forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,~~“forward-looking” statements 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,” “project”, “outlook,” “anticipates” or “looking forward” or similar expressions that relate to our strategy, plans, intentions, or expectations. 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~~made only as of the date ~~of this Form 10-Q,~~hereof, and 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.

~~Readers should carefully review~~Additionally, we caution readers that the list of important factors discussed in our most recent Form 10-K in the section titled ~~"Risk Factors"~~“Risk Factors” may not contain all of the material factors that are important to you. In addition, in light of these risks and ~~other risk factors identified from time~~uncertainties, the matters referred to ~~time~~ in ~~our periodic filings with~~ the ~~Securities and Exchange Commission.~~forward-looking statements contained in this report may not in fact occur. Accordingly, readers should not place undue reliance on those statements.

Berry Global Group, Inc.

Form 10-Q Index

For Quarterly Period Ended ~~March 28, 2020~~April 3, 2021

Part I.	Financial Information		Page No.
	Item 1.	Financial Statements:
		Consolidated Statements of Income and Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Changes in ~~Stockholders'~~Stockholders’ Equity	6
		Consolidated Statements of Cash Flows	7
		Notes to Consolidated Financial Statements	8
	Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2425
	Item 4.	Controls and Procedures	2426
Part II.	Other Information
	Item 1.	Legal Proceedings	2527
	Item 1A.	Risk Factors	2527
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2627
	Item 6.	Exhibits	2728
	Signature		2829

Part I. Financial Information

Item 1.

Financial Statements

Berry Global Group, Inc.

Consolidated Statements of Income

(Unaudited)

(in millions of dollars, except per share amounts)

	Quarterly Period Ended				Two Quarterly Periods Ended				Quarterly Period Ended				Two Quarterly Periods Ended
	March 28, 2020		March 30, 2019		March 28, 2020		March 30, 2019		April 3, 2021		March 28, 2020		April 3, 2021		March 28, 2020
Net sales	$	2,975	$	1,950	$	5,791	$	3,922	$	3,370	$	2,975	$	6,506	$	5,791
Costs and expenses:
Cost of goods sold		2,391		1,578		4,687		3,197		2,706		2,391		5,224		4,687
Selling, general and administrative		204		143		433		267		220		204		461		433
Amortization of intangibles		77		39		152		81		73		77		147		152
Restructuring and transaction activities		19		5		36		16		38		19		37		36
Operating income		284		185		483		361		333		284		637		483
Other expense, net		—		23		13		23		6		0		31		13
Interest expense, net		111		66		229		130		84		111		181		229
Income before income taxes		173		96		241		208		243		173		425		241
Income tax expense		47		22		68		46		62		47		114		68
Net income	$	126	$	74	$	173	$	162	$	181	$	126	$	311	$	173

Net income per share:
Basic	$	0.95	$	0.57	$	1.31	$	1.24	$	1.35	$	0.95	$	2.32	$	1.31
Diluted		0.94		0.55		1.29		1.21		1.32		0.94		2.28		1.29
Outstanding weighted-average shares:
Basic		132.4		130.5		132.4		130.8
Diluted		134.1		133.8		134.2		133.9

Consolidated Statements of Comprehensive Income

(Unaudited)

(in millions of dollars)

	Quarterly Period Ended						Two Quarterly Periods Ended						Quarterly Period Ended						Two Quarterly Periods Ended
	March 28, 2020			March 30, 2019			March 28, 2020			March 30, 2019			April 3, 2021			March 28, 2020			April 3, 2021		March 28, 2020
Net income	$	126		$	74		$	173		$	162		$	181		$	126		$	311	$	173
Other comprehensive income (loss), net of tax:
Currency translation		(157	)		6			(65	)		2			(73	)		(157	)		105		(65	)
Pension		(1	)		—			(1	)		—			0			(1	)		0		(1	)
Derivative instruments		(109	)		(15	)		(96	)		(32	)		54			(109	)		71		(96	)
Other comprehensive income (loss)		(267	)		(9	)		(162	)		(30	)		(19	)		(267	)		176		(162	)
Comprehensive income (loss)	$	(141	)	$	65		$	11		$	132		$	162		$	(141	)	$	487	$	11

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Balance Sheets

(in millions of dollars)

	March 28, 2020			September 28, 2019			April 3, 2021			September 26, 2020
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	953		$	750		$	843		$	750
Accounts receivable (less allowance of 28 and 28, respectively)		1,537			1,526
Accounts receivable, net								1,682			1,469
Finished goods		801			743			878			708
Raw materials and supplies		565			581			682			560
Prepaid expenses and other current assets		197			157			180			168
Assets held for sale								50			162
Total current assets		4,053			3,757			4,315			3,817
Noncurrent assets:
Property, plant, and equipment		4,467			4,714			4,675			4,561
Goodwill and intangible assets		7,768			7,831			7,626			7,670
Right-of-use assets		574			—			566			562
Other assets		87			167			81			91
Total assets	$	16,949		$	16,469		$	17,263		$	16,701


Liabilities and stockholders' equity
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,231		$	1,159		$	1,412		$	1,115
Accrued employee costs		227			214			321			324
Other current liabilities		672			562			677			644
Current portion of long-term debt		72			104			60			75
Liabilities held for sale								28			25
Total current liabilities		2,202			2,039			2,498			2,183
Noncurrent liabilities:
Long-term debt, less current portion		11,043			11,261			9,822			10,162
Deferred income taxes		608			803			575			601
Employee benefit obligations		316			327			363			368
Operating lease liabilities		479			—			467			464
Other long-term liabilities		650			421			892			831
Total liabilities		15,298			14,851			14,617			14,609

Stockholders' equity:
Common stock (132.5 and 132.3 million shares issued, respectively)		1			1
Stockholders’ equity:
Common stock (134.8 and 133.6 million shares issued, respectively)								1			1
Additional paid-in capital		976			949			1,101			1,034
Retained earnings		1,222			1,054			1,919			1,608
Accumulated other comprehensive loss		(548	)		(386	)		(375	)		(551	)
Total stockholders' equity		1,651			1,618
Total liabilities and stockholders' equity	$	16,949		$	16,469
Total stockholders’ equity								2,646			2,092
Total liabilities and stockholders’ equity							$	17,263		$	16,701

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Statements of Changes in ~~Stockholders'~~Stockholders’ Equity

(Unaudited)

(in millions of dollars)

Quarterly Period Ended	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total			Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings		Total
Balance at January 2, 2021															$	1	$	1,062	$	(356	)	$	1,738	$	2,445
Net income																0		0		0			181		181
Other comprehensive loss																0		0		(19	)		0		(19	)
Share-based compensation																0		7		0			0		7
Proceeds from issuance of common stock																0		32		0			0		32
Balance at April 3, 2021															$	1	$	1,101	$	(375	)	$	1,919	$	2,646

Balance at December 28, 2019	$	1	$	970		$	(281	)	$	1,096		$	1,786		$	1	$	970	$	(281	)	$	1,096	$	1,786
Net income		—		—			—			126			126			0		0		0			126		126
Other comprehensive loss		—		—			(267	)		—			(267	)		0		0		(267	)		0		(267	)
Share-based compensation		—		5			—			—			5			0		5		0			0		5
Proceeds from issuance of common stock		—		1			—			—			1			0		1		0			0		1
Balance at March 28, 2020	$	1	$	976		$	(548	)	$	1,222		$	1,651		$	1	$	976	$	(548	)	$	1,222	$	1,651

Balance at December 29, 2018	$	1	$	876		$	(177	)	$	755		$	1,455
Net income		—		—			—			74			74
Other comprehensive loss		—		—			(9	)		—			(9	)
Share-based compensation		—		14			—			—			14
Proceeds from issuance of common stock		—		15			—			—			15
Common stock repurchased and retired		—		(1	)		—			(17	)		(18	)
Balance at March 30, 2019	$	1	$	904		$	(186	)	$	812		$	1,531

Two Quarterly Periods Ended	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total			Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at September 26, 2020															$	1	$	1,034	$	(551	)	$	1,608		$	2,092
Net income																0		0		0			311			311
Other comprehensive income																0		0		176			0			176
Share-based compensation																0		28		0			0			28
Proceeds from issuance of common stock																0		39		0			0			39
Balance at April 3, 2021															$	1	$	1,101	$	(375	)	$	1,919		$	2,646

Balance at September 28, 2019	$	1	$	949		$	(386	)	$	1,054		$	1,618		$	1	$	949	$	(386	)	$	1,054		$	1,618
Net income		—		—			—			173			173			0		0		0			173			173
Other comprehensive loss		—		—			(162	)		—			(162	)		0		0		(162	)		0			(162	)
Share-based compensation		—		24			—			—			24			0		24		0			0			24
Proceeds from issuance of common stock		—		3			—			—			3			0		3		0			0			3
Adoption of lease accounting standard		—		—			—			(5	)		(5	)		0		0		0			(5	)		(5	)
Balance at March 28, 2020	$	1	$	976		$	(548	)	$	1,222		$	1,651		$	1	$	976	$	(548	)	$	1,222		$	1,651

Balance at September 29, 2018	$	1	$	870		$	(156	)	$	719		$	1,434
Net income		—		—			—			162			162
Other comprehensive loss		—		—			(30	)		—			(30	)
Share-based compensation expense		—		17			—			—			17
Proceeds from issuance of common stock		—		20			—			—			20
Common stock repurchased and retired		—		(3	)		—			(69	)		(72	)
Balance at March 30, 2019	$	1	$	904		$	(186	)	$	812		$	1,531

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in millions of dollars)

	Two Quarterly Periods Ended						Two Quarterly Periods Ended
	March 28, 2020			March 30, 2019			April 3, 2021			March 28, 2020
Cash Flows from Operating Activities:
Net income	$	173		$	162		$	311		$	173
Adjustments to reconcile net cash provided by operating activities:
Depreciation		277			189			280			277
Amortization of intangibles		152			81			147			152
Non-cash interest		9			(3	)		16			9
Loss on foreign exchange forward contracts		—			18
Deferred income tax		12			(2	)		(28	)		12
Share-based compensation expense		24			17			28			24
Other non-cash operating activities, net		33			10			51			33
Changes in working capital		(114	)		(138	)		(156	)		(114	)
Changes in other assets and liabilities		(33	)		(3	)		(11	)		(33	)
Net cash from operating activities		533			331			638			533

Cash Flows from Investing Activities:
Additions to property, plant and equipment, net		(263	)		(167	)		(364	)		(263	)
Divestitures								143			0
Settlement of net investment hedges		246			—			0			246
Other investing activities		(10	)		—
Other								0			(10	)
Net cash from investing activities		(27	)		(167	)		(221	)		(27	)

Cash Flows from Financing Activities:
Proceeds from long-term borrowings		1,202			—			2,316			1,202
Repayments on long-term borrowings		(1,484	)		(122	)		(2,683	)		(1,484	)
Proceeds from issuance of common stock		3			20			39			3
Repurchase of common stock		—			(74	)
Payment of tax receivable agreement		—			(16	)
Debt financing costs		(17	)		—			(16	)		(17	)
Net cash from financing activities		(296	)		(192	)		(344	)		(296	)
Effect of exchange rate changes on cash		(7	)		—			20			(7	)
Net change in cash		203			(28	)		93			203
Cash and cash equivalents at beginning of period		750			381			750			750
Cash and cash equivalents at end of period	$	953		$	353		$	843		$	953

See notes to consolidated financial statements.

Berry Global Group, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(tables in millions of dollars, except per share data)

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of Berry Global Group, Inc. ("(“the Company,~~" "we,"~~” “we,” or ~~"Berry"~~“Berry”) have been prepared in accordance with accounting principles generally accepted in the United States ~~("GAAP"~~(“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates. The Company’s U.S. based results for fiscal 2021 and fiscal 2020 are based on a fifty-three and fifty-two week period, respectively. The extra week in fiscal 2021 occurred in the first quarter. In October 2020, the Company reorganized portions of its 4 operating segments in order to better align our various businesses for future growth. The Company has recast ~~certain~~all prior period amounts to conform to ~~current reporting.~~this new reporting structure. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included, and all subsequent events up to the time of the filing have been evaluated. For further information, refer to the ~~Company's~~Company’s most recent Form 10-K filed with the Securities and Exchange Commission.

2. Recent Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting standards updates to the FASB's Accounting Standards Codification. During fiscal 2020, with the exception of the below, there have been no developments to the recently adopted accounting pronouncements from those disclosed in the Company's 2019 Annual Report on Form 10-K that are considered to have a material impact on our unaudited consolidated financial statements.

~~Leases~~

Effective September 29, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), including all related amendments, using the modified retrospective approach and recognized the cumulative effect of adoption to retained earnings. Under the new standard, the lessee of an operating lease is required to: 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. See Note 6. Leases for more information.

Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) and issued subsequent amendments to the initial guidance. The new standard requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model, which includes historical experience, current conditions, and reasonable and supportable forecasts. The new standard also requires enhanced disclosure. The Company adopted the new standard ~~will be effective for the Company~~ beginning fiscal ~~2021. The Company is in~~2021 with no material impact to the ~~process of evaluating this new standard, however, the Company does not anticipate this to have a material impact.~~Company’s consolidated financial statements. See Note 3. Revenue and Accounts Receivable.

Defined Benefit Plans

In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans. The new standard removes requirements to disclose the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year and the effects of a one-percentage-point changes in assumed health care cost trend rates. The standard also adds requirements to disclose the reasons for significant gains and losses related to changes in the benefit obligations for the period and the accumulated benefit obligation ~~("ABO"~~(“ABO”) for plans with ABOs in excess of plan assets. The new standard will be effective for the Company beginning fiscal 2022. The Company is currently evaluating the impact of the adoption of this standard to our disclosures.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740). The new guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The new standard will be effective for the Company beginning fiscal 2022. The Company is currently evaluating the impact of the adoption of this ~~new standard.~~standard to the Company’s consolidated financial statements.

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This standard provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. ASU 2020-04 is effective upon issuance and generally can be applied through the end of calendar year 2022. The Company is currently evaluating the impact and whether it plans to adopt the optional expedients and exceptions provided under this new standard.

3. Revenue and Accounts Receivable

Our revenues are primarily derived from the sale of plastic packaging products to customers. Revenue is recognized when performance obligations are satisfied, in an amount reflecting the consideration to which the Company expects to be entitled. We consider the promise to transfer products to be our sole performance obligation. If the consideration agreed to in a contract includes a variable amount, we estimate the amount of ~~consideration~~consideration we expect to be entitled to in exchange for transferring the promised goods to the customer using the most likely amount method. Our main source of variable consideration ~~are~~is customer rebates. There are no material instances where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment, when title and risk of loss pass to the customer. The accrual for customer rebates was ~~$121~~$90 million and ~~$114~~$104 million at ~~March 28, 2020~~April 3, 2021 and September ~~28, 2019,~~26, 2020, respectively, and is included in Other current liabilities on the Consolidated Balance Sheets. The Company disaggregates revenue based on reportable business segment, geography, and significant product line. Refer to Note 10. Segment and Geographic Data for further information.

Accounts receivable, net are presented net of allowance for credit losses of $21 million and $25 million at April 3, 2021 and September 26, 2020, respectively. The Company records its current expected credit losses based on a variety of factors including historical loss experience, current conditions including the COVID-19 pandemic, and customer financial condition. The changes to our current expected credit losses, write-off activity, and recoveries were not material for any of the periods presented.

The Company has entered into various qualifying factoring agreements to sell certain receivables to third-party financial institutions. The transfer of receivables is accounted for as a sale, without recourse. Net sales available under qualifying U.S. based programs were ~~$236~~$257 million and ~~$203~~$236 million for the quarterly ~~period~~periods ended April 3, 2021 and March 28, 2020, ~~and March 30, 2019,~~ respectively. Net sales available under qualifying U.S. based programs were ~~$458~~$504 million and ~~$415~~$458 million for the two quarterly periods ended April 3, 2021 and March 28, 2020 ~~and March 30, 2019,~~, respectively. There were 0 amounts outstanding from financial institutions related to these programs. The fees associated with the transfer of receivables for all programs were not material for any of the periods presented.

4. ~~Acquisitions and~~ Dispositions

~~RPC Group Plc~~

~~In July 2019,~~During fiscal 2021, the Company completed the ~~acquisition~~sale of its U.S. Flexible Packaging Converting business which was primarily operated in the ~~entire outstanding share capital~~Engineered Materials segment for net proceeds of RPC Group Plc (“RPC”), for aggregate consideration of $6.1 billion. RPC is a leading plastic product design and engineering company for packaging and select non-packaging markets, with 189 sites in 34 countries. RPC develops and manufactures a diverse range of products for a wide variety of customers, including many household names, and enjoys strong market positions in many of the end markets it serves and the geographical areas in which it operates. It uses a wide range of polymer conversion techniques in both rigid and flexible plastics manufacture,$140 million and is one of the largest plastic converters in Europe. The international based facilities are operated within the Consumer Packaging International segment with the remaining U.S. based facilities operated within the Consumer Packaging North America segment. The results of RPC have been included in the consolidated results of the Company since the date of the acquisition.

Net sales and operating income of RPC included in the Consolidated Statements of Income for the quarterly period ended March 28, 2020 were $1,174 million and $81 million, respectively. The majority of RPC activity for the quarter ended March 28, 2020, net sales of $1,045 million and operating income of $65 million,divesting a non-core Czech Republic Reaction Injection Molding business which is operated in the Consumer Packaging International ~~segment. Net~~segment for an estimated sales price of approximately $22 million. A net pretax loss on the divestitures of $22 million was recorded in fiscal 2021 within Restructuring and ~~operating income of RPC included in~~transaction activities on the Consolidated Statements of ~~Income for~~Income. The U.S. Flexible Packaging Converting business and the ~~two quarterly periods ended March 28,~~Czech Republic Reaction Injection Molding business recorded net sales during fiscal 2020 ~~were $2,256~~of $203 million and ~~$135~~$41 million, respectively. ~~The majority~~For the period ended April 3, 2021, the Company has classified assets of ~~RPC activity for the two quarterly periods ended March 28, 2020, net sales of $2,006~~$50 million and ~~operating income~~liabilities of ~~$107~~$28 million ~~is operated in the Consumer Packaging International segment.~~as held for sale.

The acquisition has been accounted for under the purchase method of accounting. Under this method, the assets acquired and liabilities assumed have been recorded based on preliminary valuation estimates of fair value. The final purchase accounting allocations for the RPC acquisition will depend on a number of factors, including the final valuation of our long-lived tangible and identified intangible assets acquired and liabilities assumed, and finalization of income tax effects of the opening balance sheet. The actual fair values of RPC’s assets acquired, liabilities assumed and resulting goodwill may differ materially once finalized. The Company has recognized goodwill on this transaction primarily as a result of expected cost synergies, and expects goodwill to be partially deductible for tax purposes.

The preliminary purchase price allocation has been updated for certain measurement period adjustments based on a preliminary valuation report resulting in a $211 million decrease in the property, plant and equipment, a $47 million decrease in intangible assets, a $19 million increase in inventory and a $89 million decrease in deferred tax liabilities. These adjustments resulted in corresponding increases to goodwill.

The following table summarizes the preliminary purchase price allocation and resulting measurement period adjustments from the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition (in millions):

Consideration
Cash $ 6,079
Total consideration transferred 6,079

Identifiable assets acquired and liabilities assumed
Working capital^(a)
721
Property, plant and equipment 2,164
Identifiable intangible assets 1,665
Other assets 4
Other long-term liabilities (837 )
Goodwill 2,362
Net assets acquired and liabilities assumed $ 6,079
^(a) Includes a $58 million step up of inventory to fair value

To finance the purchase, the Company issued $1,250 million aggregate principal amount of first priority senior secured notes due 2026, $500 million aggregate principal amount of second priority senior secured notes due 2027, and entered into incremental term loans due July 2026, to fund the remainder of the purchase price.

When including RPC results for the periods prior to the acquisition date, unaudited pro forma net sales and net income were $3.1 billion and $61 million, respectively, for the quarterly period ended March 30, 2019 and $6.3 billion and $169 million, respectively, for the two quarterly periods ended March 30, 2019. The unaudited pro forma net sales and net income assume that the RPC acquisition had occurred as of the beginning of the period.

~~Seal For Life~~

In July 2019, the Company completed the sale of its Seal For Life ("SFL") business which was operated in our Health, Hygiene & Specialties reporting segment for net proceeds of $325 million. SFL recorded $96 million in net sales during fiscal 2019.

5. Restructuring and Transaction Activities

The table below includes the significant components of restructuring and transaction activities, by reporting segment:

	Quarterly Period Ended				Two Quarterly Periods Ended				Quarterly Period Ended				Two Quarterly Periods Ended
	March 28, 2020		March 30, 2019		March 28, 2020		March 30, 2019		April 3, 2021		March 28, 2020		April 3, 2021			March 28, 2020
Consumer Packaging International	$	14	$	—	$	24	$	—	$	38	$	14	$	41		$	24
Consumer Packaging North America		3		2		4		3		0		3		1			4
Health, Hygiene & Specialties										0		1		0			4
Engineered Materials		1		1		4		1		0		1		(5	)		4
Health, Hygiene & Specialties		1		2		4		12
Consolidated	$	19	$	5	$	36	$	16	$	38	$	19	$	37		$	36

The table below sets forth the activity with respect to the restructuring and transaction activities accrual at ~~March 28, 2020:~~April 3, 2021:

Restructuring

Employee Severance
and Benefits

Facility
Exit Costs

Non-cash
Impairment Charges

Transaction
Activities
Total
Balance as of September 28, 2019 $ 2 $ 5 $ — $ — $ 7
Charges 17 — 2 17 36
Non-cash items — — (2 ) — (2 )
Cash payments (12 ) (1 ) — (17 ) (30 )
Balance as of March 28, 2020 $ 7 $ 4 $ — $ — $ 11

	Restructuring
	Employee Severance and Benefits			Facility Exit Costs			Non-cash Impairment Charges			Transaction Activities			Total
Balance as of September 26, 2020	$	10		$	7		$	0		$	0		$	17
Charges		4			2			2			29			37
Non-cash items		0			0			(2	)		(29	)		(31	)
Cash		(9	)		(3	)		0			0			(12	)
Balance as of April 3, 2021	$	5		$	6		$	0		$	0		$	11

6. Leases

~~During the first quarter of fiscal 2020, the Company adopted ASU 2016-02, Leases (Topic 842).~~ The Company leases certain manufacturing facilities, warehouses, office space, manufacturing equipment, office equipment, and automobiles.

~~Under the new standard, we~~We recognize right-of-use assets and lease liabilities for leases with original lease terms greater than one year based on the present value of lease payments over the lease term using our incremental borrowing rate on a collateralized basis. Short-term leases, with original lease terms of less than one year, are not recognized on the balance sheet. We are party to certain leases, namely for manufacturing facilities, which offer renewal options to extend the original lease term. Renewal options are included in the right-of-use asset and lease liability based on our assessment of the probability that the options will be exercised.

We have elected the package of practical expedients which allows the Company to not reassess: (i) whether any expired or existing contracts are or contain leases (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. Additionally, we have elected the practical expedient to not separate lease and non-lease components for all asset classes.

Supplemental lease information is as follows:

Leases Classification March 28, 2020
Assets
Operating lease right-of-use assets Right-of-use assets $ 574
Finance lease right-of-use assets Property, plant, and equipment 99
Current liabilities
Operating lease liabilities Other current liabilities $ 112
Finance lease liabilities Current portion of long-term debt 19
Non-current liabilities
Operating lease liabilities Operating lease liabilities $ 479
Finance lease liabilities Long-term debt, less current portion 81

Leases	Classification	April 3, 2021		September 26, 2020
Operating leases:
Operating lease right-of-use assets	Right-of-use assets	$	566	$	562
Current operating lease liabilities	Other current liabilities		116		115
Noncurrent operating lease liabilities	Operating lease liability		467		464
Finance leases:
Finance lease right-of-use assets	Property, plant, and equipment, net	$	64	$	78
Current finance lease liability	Current portion of long-term debt		13		17
Noncurrent finance lease liabilities	Long-term debt, less current portion		49		59

Lease cost
Quarterly Period Ended
March 28, 2020

Two Quarterly Periods Ended
March 28, 2020

Operating lease cost $ 28 $ 57
Finance lease cost:
Amortization of right-of-use assets 4 8
Interest on lease liabilities 1 2
Total finance lease cost 5 10
Short-term lease cost 4 8
Total lease cost $ 37 $ 75

Cash paid for amounts included in lease liabilities
Two Quarterly Periods Ended
March 28, 2020

Operating cash flows from operating leases $ 57
Operating cash flows from finance leases 1
Financing cash flows from finance leases 17

	~~March 28, 2020~~
~~Weighted-average remaining lease term - operating leases~~	~~8 years~~
~~Weighted-average remaining lease term - finance leases~~	~~4 years~~
~~Weighted-average discount rate - operating leases~~		~~4.5~~	%
~~Weighted-average discount rate - finance leases~~		~~3.7~~	%

Cash paid for amounts included in lease liabilities	Two Quarterly Periods Ended April 3, 2021		Two Quarterly Periods Ended March 28, 2020
Operating cash flows from operating leases	$	57	$	57
Operating cash flows from finance leases		1		1
Financing cash flows from finance leases		16		17

Right-of-use assets obtained in exchange for new operating lease liabilities were $5$23 million and ~~$13~~$34 million for the quarterly and two quarterly periods ended ~~March 28, 2020,~~April 3, 2021, respectively.

~~At March 28, 2020, annual lease commitments were as follows:~~

Fiscal Year Operating Leases Finance Leases
Remainder of 2020 $ 59 $ 19
2021 111 27
2022 97 26
2023 84 13
2024 70 7
Thereafter 303 15
Total lease payments 724 107
Less: Interest (133 ) (7 )
Present value of lease liabilities $ 591 $ 100

1110

7. Long-Term Debt

Long-term debt consists of the following:

Facility Maturity Date March 28, 2020 September 28, 2019
Term loan October 2022 $ 1,545 $ 1,545
Term loan January 2024 451 489
Term loan July 2026 4,229 4,250
Term loan^(a)
July 2026 — 1,176
Revolving line of credit May 2024 — —
5.50% Second Priority Senior Secured Notes May 2022 500 500
6.00% Second Priority Senior Secured Notes October 2022 200 400
5.125% Second Priority Senior Secured Notes July 2023 700 700
1.00% First Priority Senior Secured Notes^(a)
July 2025 779 —
4.50% Second Priority Senior Secured Notes February 2026 500 500
4.875% First Priority Senior Secured Notes July 2026 1,250 1,250
5.625% Second Priority Senior Secured Notes July 2027 500 500
1.50% First Priority Senior Secured Notes^(a)
July 2027 417 —
Debt discounts and deferred fees (98 ) (112 )
Finance leases and other Various 142 167
Total long-term debt 11,115 11,365
Current portion of long-term debt (72 ) (104 )
Long-term debt, less current portion $ 11,043 11,261

^(a) ~~Euro denominated~~

Facility	Maturity Date	April 3, 2021			September 26, 2020
Term loan	July 2026	$	3,840			4,208
Revolving line of credit	May 2024		0			0
0.95% First Priority Senior Secured Notes	February 2024		800			0
1.00% First Priority Senior Secured Notes ^(a)	July 2025		823			814
1.57% First Priority Senior Secured Notes	January 2026		1,525			0
4.875% First Priority Senior Secured Notes	July 2026		1,250			1,250
1.50% First Priority Senior Secured Notes ^(a)	July 2027		441			436
5.125% Second Priority Senior Secured Notes	July 2023		200			300
4.50% Second Priority Senior Secured Notes	February 2026		500			500
5.625% Second Priority Senior Secured Notes	July 2027		500			500
Debt discounts and deferred fees			(87	)		(85	)
Finance leases and other	Various		90			121
Retired debt	Various		0			2,193
Total long-term debt			9,882			10,237
Current portion of long-term debt			(60	)		(75	)
Long-term debt, less current portion		$	9,822			10,162

^(a)	Euro denominated

In ~~January 2020,~~fiscal 2021, the Company ~~(i)~~ issued ~~€700~~$800 million aggregate principal amount of ~~1.00%~~0.95% first priority senior secured notes due ~~2025~~2024, and ~~€375~~$1,525 million aggregate principal amount of ~~1.50%~~1.57% first priority senior secured notes due ~~2027 (the “Euro notes”) and (ii) refinanced its existing $4.25 billion Term loan maturing in July 2026, resulting in a 50 basis point interest rate reduction.~~2026. The proceeds ~~of the Euro notes~~ were used to prepay a portion of the ~~entire~~ outstanding ~~amount of our existing euro denominated~~ Term ~~loan.~~ loans.

Debt extinguishment costs of ~~$18~~$14 million, primarily comprised of deferred debt discount and financing fees, were recorded in Other expense, net on the Consolidated Statements of Income upon the extinguishment of a portion of the ~~euro~~ Term ~~loan.~~

~~The Company was in compliance with all debt covenants for all periods presented.~~loans.

Debt discounts and deferred financing fees are presented net of Long-term debt, less the current portion on the Consolidated Balance Sheets and are amortized to Interest expense, net on the Consolidated Statements of Income through maturity.

8. 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.

Cross-Currency Swaps

The Company is party to certain cross-currency swaps to hedge a portion of our foreign currency risk. The swap agreements mature May 2022 (€250 million) ~~and~~, June 2024 (€1,625 ~~million~~million) and ~~£700~~July 2027 (£700 million). In addition to cross-currency swaps, we hedge a portion of our foreign currency risk by designating foreign currency denominated long-term debt as net investment hedges of certain foreign operations. As of ~~March 28, 2020,~~April 3, 2021, we had outstanding long-term debt of ~~€1,075~~€785 million that was designated as a hedge of our net investment in certain euro-denominated foreign subsidiaries. When valuing cross-currency swaps the Company utilizes Level 2 inputs (substantially observable).

In March 2020, the Company entered into transactions to cash settle existing cross-currency swaps and received proceeds of $246 million. The swap settlement impact has been included as a component of Currency translation within Accumulated other comprehensive loss. Following the settlement of the existing cross-currency swaps, we entered into new cross-currency swaps with matching notional amounts and maturity dates of the original swaps.

1211

Interest Rate Swaps

The primary purpose of the Company’s interest rate swap activities is to manage interest expense variability associated with our outstanding variable rate term loan debt. When valuing interest rate swaps the Company utilizes Level 2 inputs (substantially observable).

As of ~~March 28, 2020,~~April 3, 2021, the Company effectively had (i) a $450 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.398%, with an expiration in June 2026, (ii) a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.835% with an expiration in June 2026, (iii) a $400 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.916% with an expiration in June 2026, (iv) a $884 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.857%, with an expiration in June 2024, and (v) a $473 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 2.050%, with an expiration in June 2024.

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 are as follows:

Derivative Instruments

Hedge Designation

Balance Sheet Location

March 28, 2020

September 28, 2019

Hedge Designation

Balance Sheet Location

April 3, 2021

September 26, 2020

Cross-currency swaps

Designated

Other assets

Designated

Other long-term liabilities

423

270

Cross-currency swaps

Designated

Other long-term liabilities

101

—

Interest rate swaps

Designated

Other long-term liabilities

208

Designated

Other long-term liabilities

138

226

The effect of the ~~Company's~~Company’s derivative instruments on the Consolidated Statements of Income is as follows:

		Quarterly Period Ended						Two Quarterly Periods Ended							Quarterly Period Ended						Two Quarterly Periods Ended
Derivative Instruments	Statements of Income Location	March 28, 2020			March 30, 2019			March 28, 2020			March 30, 2019			Statements of Income Location	April 3, 2021			March 28, 2020			April 3, 2021			March 28, 2020
Cross-currency swaps	Interest expense, net	$	(1	)	$	(1	)	$	(3	)	$	(3	)	Interest expense, net	$	(1	)	$	(1	)	$	(4	)	$	(3	)
Foreign exchange forward contracts	Other expense, net		—			18			—			18
Interest rate swaps	Interest expense, net		17			(5	)		34			(9	)	Interest expense, net		17			17			34			34

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. 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. 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 ~~2019~~2020 assessment. ~~While~~No impairment indicators were ~~not~~ identified ~~during~~in the quarter that warranted impairment testing, the ongoing COVID-19 pandemic has created market volatility which we believe is short-term in nature. However, if we experience sustained declines in valuation market multiples, sustained lower earnings, or escalating macroeconomic challenges, the need for future impairment tests may arise.current quarter.

Included in the following table are the major categories of assets measured at fair value on a non-recurring basis as of ~~March 28, 2020~~April 3, 2021 and September ~~28, 2019,~~26, 2020, along with the impairment loss recognized on the fair value measurement during the period:

	As of March 28, 2020										As of April 3, 2021
	Level 1		Level 2		Level 3		Total		Impairment		Level 1		Level 2		Level 3		Total		Impairment
Indefinite-lived trademarks	$	—	$	—	$	248	$	248	$	—	$	0	$	0	$	248	$	248	$	0
Goodwill		—		—		5,162		5,162		—		0		0		5,229		5,229		0
Definite lived intangible assets		—		—		2,358		2,358		—		0		0		2,149		2,149		0
Property, plant, and equipment		—		—		4,467		4,467		2		0		0		4,675		4,675		2
Total	$	—	$	—	$	12,235	$	12,235	$	2	$	0	$	0	$	12,301	$	12,301	$	2

	As of September 26, 2020
	Level 1		Level 2		Level 3		Total		Impairment
Indefinite-lived trademarks	$	0	$	0	$	248	$	248	$	0
Goodwill		0		0		5,173		5,173		0
Definite lived intangible assets		0		0		2,249		2,249		0
Property, plant, and equipment		0		0		4,561		4,561		2
Total	$	0	$	0	$	12,231	$	12,231	$	2

1312

As of September 28, 2019
Level 1 Level 2 Level 3 Total Impairment
Indefinite-lived trademarks $ — $ — $ 248 $ 248 $ —
Goodwill — — 5,051 5,051 —
Definite lived intangible assets — — 2,532 2,532 —
Property, plant, and equipment — — 4,714 4,714 8
Total $ — $ — $ 12,545 $ 12,545 $ 8

The ~~Company's~~Company’s financial instruments consist primarily of cash and cash equivalents, long-term debt, interest rate and cross-currency swap agreements, and finance lease obligations. The ~~book~~fair value of our marketable long-term indebtedness exceeded ~~fair~~book value by ~~$163~~$101 million as of ~~March 28, 2020.~~April 3, 2021. The ~~Company's~~Company’s long-term debt fair values were determined using Level 2 inputs ~~as other significant observable inputs were not available.~~(substantially observable).

9. Income Taxes

~~The~~In comparison to the statutory rate, the higher effective tax rate for the quarter and year-to-date ~~period~~ was negatively impacted by ~~2% from uncertain tax positions recognized in the quarter~~divestitures and ~~2% from~~ global intangible low-taxed income provisions.

10. Segment and Geographic Data

The ~~Company's~~Company’s operations are organized into 4 reporting segments: Consumer Packaging International, Consumer Packaging North America, Engineered Materials, and Health, Hygiene & Specialties. The structure is designed to align us with our customers, provide optimal service, drive future growth, and to facilitate synergies realization.In October 2020, the Company realigned portions of our operating segments. As a result of these organizational realignments, we have recast prior period segment amounts resulting in the following Net sales movements for the two quarterly periods ended March 28, 2020: (1.) Tapes business: $138 million from Engineered Materials to Health, Hygiene & Specialties, (2.) North American Healthcare: $142 million from Consumer Packaging North America to Consumer Packaging International and (3.) European Films: $347 million from Consumer Packaging International to Engineered Materials.

Selected information by reportable segment is presented in the following tables:

	Quarterly Period Ended					Two Quarterly Periods Ended					Quarterly Period Ended				Two Quarterly Periods Ended
	March 28, 2020		March 30, 2019			March 28, 2020		March 30, 2019			April 3, 2021		March 28, 2020		April 3, 2021		March 28, 2020
Net sales:
Consumer Packaging International	$	1,095	$	50		$	2,105	$	101		$	1,060	$	970	$	2,048	$	1,900
Consumer Packaging North America		706		639			1,386		1,240			731		633		1,417		1,244
Health, Hygiene & Specialties												781		644		1,521		1,254
Engineered Materials		598		619			1,183		1,280			798		728		1,520		1,393
Health, Hygiene & Specialties		576		642			1,117		1,301
Total net sales	$	2,975	$	1,950		$	5,791	$	3,922		$	3,370	$	2,975	$	6,506	$	5,791
Operating income:
Consumer Packaging International	$	61	$	(5	)	$	105	$	(1	)	$	59	$	53	$	135	$	96
Consumer Packaging North America		83		62			133		95			77		69		136		113
Health, Hygiene & Specialties												114		66		210		113
Engineered Materials		88		74			159		167			83		96		156		161
Health, Hygiene & Specialties		52		54			86		100
Total operating income	$	284	$	185		$	483	$	361		$	333	$	284	$	637	$	483
Depreciation and amortization:
Consumer Packaging International	$	80	$	4		$	161	$	8		$	87	$	79	$	170	$	161
Consumer Packaging North America		64		53			129		106			54		60		111		116
Health, Hygiene & Specialties												42		46		87		93
Engineered Materials		25		29			54		60			29		28		59		59
Health, Hygiene & Specialties		44		46			85		96
Total depreciation and amortization	$	213	$	132		$	429	$	270		$	212	$	213	$	427	$	429

Selected information by geographical region is presented in the following tables:

Quarterly Period Ended Two Quarterly Periods Ended
March 28, 2020 March 30, 2019 March 28, 2020 March 30, 2019
Net sales:
United States and Canada $ 1,705 $ 1,595 $ 3,218 $ 3,200
Europe 981 210 1,984 414
Rest of world 289 145 589 308
Total net sales $ 2,975 $ 1,950 $ 5,791 $ 3,922

	Quarterly Period Ended				Two Quarterly Periods Ended
	April 3, 2021		March 28, 2020		April 3, 2021		March 28, 2020
Net sales:
United States and Canada	$	1,728	$	1,705	$	3,405	$	3,218
Europe		1,257		981		2,350		1,984
Rest of world		385		289		751		589
Total net sales	$	3,370	$	2,975	$	6,506	$	5,791

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

Quarterly Period Ended Two Quarterly Periods Ended
March 28, 2020 March 30, 2019 March 28, 2020 March 30, 2019
Net sales:
Packaging 83 100 82 100
Non-packaging 17 — 18 —
Consumer Packaging International 100 % 100 % 100 % 100 %

Rigid Open Top 44 43 45 44
Rigid Closed Top 56 57 55 56
Consumer Packaging North America 100 % 100 % 100 % 100 %

Core Films 38 40 37 39
Retail & Industrial 62 60 63 61
Engineered Materials 100 % 100 % 100 % 100 %

Health 17 14 17 14
Hygiene 53 54 54 55
Specialties 30 32 29 31
Health, Hygiene & Specialties 100 % 100 % 100 % 100 %

	Quarterly Period Ended						Two Quarterly Periods Ended
	April 3, 2021			March 28, 2020			April 3, 2021			March 28, 2020
Net sales:
Packaging		81			83			81			83
Non-packaging		19			17			19			17
Consumer Packaging International		100	%		100	%		100	%		100	%

Rigid Open Top		54			55			55			56
Rigid Closed Top		46			45			45			44
Consumer Packaging North America		100	%		100	%		100	%		100	%

Health		19			15			19			14
Hygiene		45			47			45			48
Specialties		36			38			36			38
Health, Hygiene & Specialties		100	%		100	%		100	%		100	%

Core Films		64			63			61			61
Retail & Industrial		36			37			39			39
Engineered Materials		100	%		100	%		100	%		100	%

11. Contingencies and Commitments

The Company is party to various legal proceedings involving routine claims which are incidental to its business. Although the ~~Company's~~Company’s 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 our financial statements.

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

12. Share Repurchase Program

NaN shares were repurchased during the two quarterly periods ended ~~March 28, 2020.~~April 3, 2021. Authorized share repurchases of $393 million remain available to the Company.

13. Basic and Diluted 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 calculated 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. For the ~~three and~~ six months ended ~~March 28, 2020, 7.1~~April 3, 2021, ~~million and~~ ~~7.1~~3.2 million shares ~~respectively,~~ were excluded from the diluted net income per share calculation as their effect would be anti-dilutive. NaN shares were excluded from the diluted net income per share calculation for the three months ended April 3, 2021. For the three and six months ended March 28, 2020, 7.1 million and 7.1 million shares, respectively, were excluded.

The following tables provide a reconciliation of the numerator and denominator of the basic and diluted net income per share calculations.

	Quarterly Period Ended				Two Quarterly Periods Ended				Quarterly Period Ended				Two Quarterly Periods Ended
(in millions, except per share amounts)	March 28, 2020		March 30, 2019		March 28, 2020		March 30, 2019		April 3, 2021		March 28, 2020		April 3, 2021		March 28, 2020
Numerator
Consolidated net income	$	126	$	74	$	173	$	162	$	181	$	126	$	311	$	173
Denominator
Weighted average common shares outstanding - basic		132.4		130.5		132.4		130.8		134.3		132.4		133.9		132.4
Dilutive shares		1.7		3.3		1.8		3.1		2.5		1.7		2.7		1.8
Weighted average common and common equivalent shares outstanding - diluted		134.1		133.8		134.2		133.9		136.8		134.1		136.6		134.2

Per common share income
Basic	$	0.95	$	0.57	$	1.31	$	1.24	$	1.35	$	0.95	$	2.32	$	1.31
Diluted	$	0.94	$	0.55	$	1.29	$	1.21	$	1.32	$	0.94	$	2.28	$	1.29

14. Accumulated Other Comprehensive Loss

The components and activity of Accumulated other comprehensive loss are as follows:

Quarterly Period Ended
Currency
Translation

Defined Benefit
Pension and Retiree
Health Benefit Plans

Derivative
Instruments

Accumulated Other
Comprehensive Loss

Balance at December 28, 2019 $ (187 ) $ (56 ) $ (38 ) $ (281 )
Other comprehensive loss before reclassifications (109 ) (1 ) (181 ) (291 )
Net amount reclassified from accumulated other comprehensive loss — — 35 35
Provision for income taxes (48 ) — 37 (11 )
Balance at March 28, 2020 $ (344 ) $ (57 ) $ (147 ) $ (548 )

Quarterly Period Ended	Currency Translation			Defined Benefit Pension and Retiree Health Benefit Plans			Derivative Instruments			Accumulated Other Comprehensive Loss
Balance at January 2, 2021	$	(100	)	$	(116	)	$	(140	)	$	(356	)
Other comprehensive income (loss) before reclassifications		(73	)		0			52			(21	)
Net amount reclassified from accumulated other comprehensive loss		0			0			2			2
Balance at April 3, 2021	$	(173	)	$	(116	)	$	(86	)	$	(375	)

Currency
Translation

Defined Benefit
Pension and Retiree
Health Benefit Plans

Derivative
Instruments

Accumulated Other
Comprehensive Loss

Balance at December 29, 2018 $ (179 ) $ (13 ) $ 15 $ (177 )
Other comprehensive income (loss) before reclassifications 6 — (16 ) (10 )
Net amount reclassified from accumulated other comprehensive loss — — (4 ) (4 )
Provision for income taxes — — 5 5
Balance at March 30, 2019 $ (173 ) $ (13 ) $ — $ (186 )

	Currency Translation			Defined Benefit Pension and Retiree Health Benefit Plans			Derivative Instruments			Accumulated Other Comprehensive Loss
Balance at December 28, 2019	$	(187	)	$	(56	)	$	(38	)	$	(281	)
Other comprehensive loss before reclassifications		(157	)		(1	)		(144	)		(302	)
Net amount reclassified from accumulated other comprehensive loss		0			0			35			35
Balance at March 28, 2020	$	(344	)	$	(57	)	$	(147	)	$	(548	)

Two Quarterly Periods Ended
Currency
Translation

Defined Benefit
Pension and Retiree
Health Benefit Plans

Derivative
Instruments

Accumulated Other
Comprehensive Loss

Balance at September 28, 2019 $ (279 ) $ (56 ) $ (51 ) $ (386 )
Other comprehensive loss before reclassifications (42 ) (1 ) (180 ) (223 )
Net amount reclassified from accumulated other comprehensive loss — — 52 52
Provision for income taxes (23 ) — 32 9
Balance at March 28, 2020 $ (344 ) $ (57 ) $ (147 ) $ (548 )

Two Quarterly Periods Ended	Currency Translation			Defined Benefit Pension and Retiree Health Benefit Plans			Derivative Instruments			Accumulated Other Comprehensive Loss
Balance at September 26, 2020	$	(278	)	$	(116	)	$	(157	)	$	(551	)
Other comprehensive income before reclassifications		105			0			67			172
Net amount reclassified from accumulated other comprehensive loss		0			0			4			4
Balance at April 3, 2021	$	(173	)	$	(116	)	$	(86	)	$	(375	)

Currency
Translation

Defined Benefit
Pension and Retiree
Health Benefit Plans

Derivative
Instruments

Accumulated Other
Comprehensive Loss

Balance at September 29, 2018 $ (175 ) $ (13 ) $ 32 $ (156 )
Other comprehensive income (loss) before reclassifications 2 — (38 ) (36 )
Net amount reclassified from accumulated other comprehensive loss — — (5 ) (5 )
Provision for income taxes — — 11 11
Balance at March 30, 2019 $ (173 ) $ (13 ) $ — $ (186 )

	Currency Translation			Defined Benefit Pension and Retiree Health Benefit Plans			Derivative Instruments			Accumulated Other Comprehensive Loss
Balance at September 28, 2019	$	(279	)	$	(56	)	$	(51	)	$	(386	)
Other comprehensive loss before reclassifications		(65	)		(1	)		(148	)		(214	)
Net amount reclassified from accumulated other comprehensive loss		0			0			52			52
Balance at March 28, 2020	$	(344	)	$	(57	)	$	(147	)	$	(548	)

Item 2. ~~Management's~~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 our most recent Form 10-K in the section titled "Risk Factors", Item 1A of the our Quarterly Report on Form 10-Q for the quarter ended March 28, 2020, and other risk factors identified from time to time in our subsequent periodic filings with the Securities and Exchange Commission. As a result, our actual results may differ materially from those contained in any forward-looking statements. The forward-looking statements referenced within this report should be read with the explanation of the qualifications and limitations included herein. Fiscal 2019 and fiscal 2020 are fifty-two week periods.

Executive Summary

~~COVID-19.~~ The ongoing pandemic has impacted various businesses and supply chains, including travel restrictions and the extended shutdown of certain industries in various countries. Due to the nature of the majority of our products, geographic footprint and end market diversity, on a consolidated operational basis we have been somewhat negatively impacted with lower customer demand in food service and industrials being partially offset by higher consumer demand in our healthcare, hygiene and food product categories. Additionally, the impact of travel and safety restriction related to the pandemic has negatively impacted various integration activities and back office functions. The Company will continue to evaluate the potential impacts and closely monitor developments as they arise.

Business. The ~~Company's~~Company’s operations are organized into four ~~reporting~~operating segments: Consumer Packaging International, Consumer Packaging North America, ~~Engineered Materials and~~ Health, Hygiene & ~~Specialties.~~Specialties, and Engineered Materials in order to better align our various businesses for future growth. The structure is designed to align us with our customers, provide ~~optimal~~improved service, drive future growth, and to facilitate synergies realization. The Consumer Packaging International segment primarily consists of containers, closures, dispensing systems, pharmaceutical devices and packaging, ~~polythene films,~~ and technical ~~components and includes the international portion of the recently acquired RPC Group Plc (“RPC”) business.~~components. The Consumer Packaging North America segment primarily consists of containers, foodservice items, closures, overcaps, bottles, ~~prescription vials,~~ and tubes. ~~The Engineered Materials segment primarily consists of tapes and adhesives, polyethylene-based film products, can liners, and specialty coated and laminated products.~~ The Health, Hygiene & Specialties segment primarily consists of nonwoven specialty materials, tapes and adhesives, and films used in hygiene, infection prevention, personal care, industrial, construction, and filtration applications. The Engineered Materials segment primarily consists of polyethylene-based film products, and can liners.

~~Acquisitions.~~Acquisitions and Dispositions. 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. 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~~estimate the synergy realization based on the overall segment profitability post integration.

~~RPC Group Plc~~

In July 2019, the Company completed the acquisition of RPC for aggregate consideration of $6.1 billion. RPC is a leading plastic product design and engineering company for packaging and select non-packaging markets, with 189 sites in 34 countries. RPC develops and manufactures a diverse range of products for a wide variety of customers, including many household names, and enjoys strong market positions in many of the end markets it serves and the geographical areas in which it operates. It uses a wide range of polymer conversion techniques and is also one of the largest plastic recyclers in Europe. The international based facilities are operated within the Consumer Packaging International segment with the remaining U.S. based facilities operated within the Consumer Packaging North America segment. The Company expects to realize annual cost synergies of $150 million of which an estimated $75 million is expected to be realized inDuring fiscal ~~2020. See Note 4 to the Consolidated Financial Statements for further details on the acquisition of RPC.~~

~~Seal For Life~~

~~In July 2019,~~2021, the Company completed the sale of ~~our Seal For Life ("SFL")~~its U.S. Flexible Packaging Converting business which was primarily operated in ~~our Health, Hygiene & Specialties~~the Engineered Materials segment for net proceeds of ~~$325~~$140 million and is divesting a non-core Czech Republic Reaction Injection Molding business which is operated in the Consumer Packaging International segment for an estimated sales price of approximately $22 million. ~~SFL~~A net pretax loss on the divestitures of $22 million was recorded ~~$96 million~~ in fiscal 2021 within Restructuring and transaction activities on the Consolidated Statements of Income. The U.S Flexible Packaging Converting business and the Czech Republic Reaction Injection Molding business recorded net sales during fiscal ~~2019.~~

2020 of $203 million and $41 million, respectively.

Raw Material Trends. Our primary raw material is plastic resin. Polypropylene and polyethylene account for approximately 90% of our plastic resin pounds purchased. The three month simple average price per pound, as published by U.S. market indices, were as follows:

Polyethylene Butene Film Polypropylene
2020 2019 2018 2020 2019 2018
1st quarter $ .58 $ .64 $ .68 $ .58 $ .76 $ .71
2nd quarter .59 .61 .69 .53 .63 .75
3rd quarter — .63 .68 — .62 .76
4th quarter — .59 .66 — .62 .85

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 when plastic resin costs decrease. This timing lag and competitor behaviors related to passing through raw material cost changes could affect our results as plastic resin costs fluctuate. 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 we purchase from a variety of global suppliers. While temporary shortages of raw materials can occur, we expect to continue to successfully manage raw materials supplies without significant supply interruptions.

Outlook. The Company is affected by general economic and industrial growth, plastic resin availability and affordability, and general industrial production. COVID-19 pandemic has resulted in both advantaged and disadvantaged products within all segments. Our results are affected by both the duration certain products remain advantaged and timing of when disadvantage products normalize. 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 and other cost changes to our customers, improve manufacturing productivity and adapt to volume changes of our ~~customers, including those changes being impacted~~customers. In the near term, recent resin inflation will create a headwind for the Company, which we believe will be offset by the ~~current~~continued favorable product mix associated with pivoting our assets to produce products related to COVID-19 ~~pandemic. Based on current market conditions~~protection. By providing advantaged products in targeted markets, we believe both of our Consumer Packaging segments and our Engineered Materials segment will see negative volumes in the near-term as they are more highly indexed to food service and industrials markets as well as experiencing temporary delays in various project launches. We also believe our Health, Hygiene, & Specialties segment will continue to ~~have strong volumes for the duration of fiscal 2020 as a result of strong demand for healthcare products. Despite some near-term pressures we~~ believe our underlying long-term demand ~~fundamentals~~fundamental in all divisions ~~remains intact~~will remain strong as we ~~continue our~~ focus on delivering protective solutions that enhance consumer safety and execute on the Company’s mission ~~statement~~ of “~~Always~~“Always Advancing to Protect What’s ~~Important~~Important.”. For fiscal ~~2020,~~2021, we project cash flow from operations ~~and free cash flow of at least $1,400~~between $1,675 to $1,575 million and ~~$800 million, respectively. The free cash flow floor assumes an estimated $600~~$700 million of capital spending, cash taxes of $150 million, cash interest costs of $430 million, and other cash uses of $50 million related to changes in working capital, acquisition integration expenses and costs to achieve synergies. For the definition of free cash flow and further information related to free cash flow as a non-GAAP financial measure, see “Liquidity and Capital Resources”.spending.

Results of Operations

Comparison of the Quarterly Period Ended April 3, 2021 (the “Quarter”) and the Quarterly Period Ended March 28, 2020 (the ~~"Quarter") and the Quarterly Period Ended March 30, 2019 (the "Prior Quarter"~~“Prior Quarter”)

~~Acquisition sales and operating income disclosed within this section represents the results from acquisitions for the current period.~~ Business integration expenses consist of restructuring and impairment charges, acquisition and divestiture related costs, and other business optimization costs. Tables present dollars in millions.

Consolidated Overview
	Quarter			Prior Quarter			$ Change		% Change			Quarter		Prior Quarter		$ Change		% Change
Net sales	$	2,975		$	1,950		$	1,025		53	%	$	3,370	$	2,975	$	395		13	%
Cost of goods sold													2,706		2,391		315		13	%
Other operating expenses													331		300		31		10	%
Operating income	$	284		$	185		$	99		54	%	$	333	$	284	$	49		17	%
Operating income percentage of net sales		10	%		9	%

Net Sales: The net sales growth is primarily attributed to ~~acquisition net sales of $1,174 million and a base volume increase of 2%. These increases were partially offset by lower~~increased selling prices of ~~$148~~$192 million due to the pass through of ~~lower~~higher resin costs, organic volume growth of 5%, and a $92 million favorable impact from foreign currency changes. These increases were partially offset by Prior Quarter divestiture sales of ~~$24~~$53 million.The organic volume growth was primarily due to organic growth investments, modest recovery of certain markets that had previously been facing COVID-19 headwinds, and higher demand in our advantaged health and hygiene products as the result of COVID-19.

Cost of goods sold:The cost of goods sold increase is attributed to the organic volume growth, product mix, higher resin costs and a $74 million increase from foreign currency changes. These increases were partially offset by Prior Quarter divestiture cost of goods sold of $42 million and a $19 million inventory step-up.

Other operating ~~income~~expenses: The other operating expenses increase is primarily attributed to ~~acquisition operating income of $81~~a $21 million ~~a $11 million decrease~~increase in business integration ~~costs,~~expense and a $9$15 million ~~decrease~~increase in selling, general, and administrative ~~expenses~~ expense.

Operating Income: The operating income increase is primarily attributed to a $35 million increase from the organic volume growth, a $19 million inventory step-up in the Prior Quarter related to ~~timing of issuing annual option awards to employees and an $8~~the RPC acquisition, a $16 million ~~decrease in depreciation and amortization. These improvements were partially offset by a $9 million negative~~favorable impact from price cost spread including synergies and ~~Prior Quarter divestiture operating income of $7 million.~~product mix, and a $16 million favorable impact from foreign currency, partially offset by a $21 million increase in business integration expense, and a $15 million increase in selling, general, and administrative expense.

Consumer Packaging International
	Quarter			Prior Quarter			$ Change		% Change			Quarter		Prior Quarter		$ Change		% Change
Net sales	$	1,095		$	50		$	1,045		2,090	%	$	1,060	$	970	$	90		9	%
Operating income (loss)	$	61		$	(5	)	$	66		(1,320	)%
Operating income percentage of net sales		6	%		(10	)%
Cost of goods sold													842		785		57		7	%
Other operating expenses													159		132		27		20	%
Operating income												$	59	$	53	$	6		11	%

Net Sales: The net sales ~~and operating income~~ growth in the Consumer Packaging International segment is primarily attributed to ~~the RPC acquisition.~~organic volume growth of 4%, and a $71 million favorable impact from foreign currency changes. The organic volume growth was primarily due to recovery in emerging markets.

Cost of goods sold: The cost of goods sold increase is attributed to the organic volume growth and a $57 million increase from foreign currency changes. These increases were partially offset by change in product mix and the Prior Quarter $19 million inventory step-up.

Other operating expenses: The other operating expenses increase is primarily attributed to a $24 million increase in business integration activities.

Operating Income: The operating income increase is primarily attributed to a $12 million favorable impact from foreign currency, an $11 million increase from the organic volume growth, and a $19 million inventory step-up in the Prior Quarter, partially offset by a $24 million increase in business integration activities, and an increase in depreciation and amortization.

Consumer Packaging North America
	Quarter			Prior Quarter			$ Change		% Change			Quarter		Prior Quarter		$ Change		% Change
Net sales	$	706		$	639		$	67		10	%	$	731	$	633	$	98		15	%
Cost of goods sold													597		508		89		18	%
Other operating expenses													57		56		1		2	%
Operating income	$	83		$	62		$	21		34	%	$	77	$	69	$	8		12	%
Operating income percentage of net sales		12	%		10	%

Net Sales: The net sales growth in the Consumer Packaging North America segment is primarily attributed to ~~acquisition net sales of $123 million related to the U.S. portion of the acquired RPC business, partially offset by lower~~increased selling prices of ~~$56~~$60 million due to the pass through of ~~lower~~higher resin costs and organic volume growth of 5%. The organic volume growth was primarily due to continued strength in closures, bottles and containers.

Cost of goods sold: The cost of goods sold increase is attributed to the organic volume growth, product mix and higher resin costs.

~~The operating income increase is primarily attributed to acquisition operating income of $16 million and a $3 million decrease in depreciation and amortization.~~

Engineered Materials
Quarter Prior Quarter $ Change % Change
Net sales $ 598 $ 619 $ (21 ) (3 )%
Operating income $ 88 $ 74 $ 14 19 %
Operating income percentage of net sales 15 % 12 %

The net sales decrease in the Engineered Materials segment is primarily attributed to lower selling prices of $39 million due to the pass through of lower resin costs, partially offset by a 2% base volume increase.

Operating Income: The operating income increase is primarily attributed to a $4$9 million increase from the organic volume growth and a decrease in depreciation and amortization, partially offset by a ~~$4 million decrease in selling, general and administrative expenses, and a favorable~~negative impact from price cost spread.

Health, Hygiene & Specialties
	Quarter			Prior Quarter			$ Change			% Change			Quarter		Prior Quarter		$ Change			% Change
Net sales	$	576		$	642		$	(66	)		(10	)%	$	781	$	644	$	137			21	%
Cost of goods sold														609		519		90			17	%
Other operating expenses														58		59		(1	)		(2	)%
Operating income	$	52		$	54		$	(2	)		(4	)%	$	114	$	66	$	48			73	%
Operating income percentage of net sales		9	%		8	%

Net Sales: The net sales ~~decrease~~growth in the Health, Hygiene & Specialties segment is primarily attributed to ~~lower~~organic volume growth of 8%, and increased selling prices of ~~$52~~$83 million due to the pass through of ~~lower~~higher resin costs. The organic volume growth was primarily due to organic growth investments and higher demand in our advantage health and hygiene products as the result of COVID-19.

Cost of goods sold: The cost of goods sold increase is attributed to the organic volume growth, product mix and higher resin costs.

Operating Income: The operating income increase is primarily attributed to a $12 million impact from the organic volume growth and a $31 million favorable impact from price cost spread and product mix.

Engineered Materials
	Quarter		Prior Quarter		$ Change			% Change
Net sales	$	798	$	728	$	70			10	%
Cost of goods sold		658		579		79			14	%
Other operating expenses		57		53		4			8	%
Operating income	$	83	$	96	$	(13	)		(14	)%

Net Sales: The net sales growth in the Engineered Materials segment is primarily attributed to increased selling prices of $69 million due to the pass through of higher resin costs, organic volume growth of 3%, and a $15 million favorable impact from foreign currency changes, partially offset by Prior Quarter divestiture sales of $43 million.

Cost of goods sold: The cost of goods sold increase is attributed to the organic volume growth, product mix, higher resin costs, and ~~Prior Quarter sales of $24~~a $13 million ~~related to the divested SFL business.~~increase from foreign currency changes. These ~~decreases are~~increases were partially offset by ~~a 3% base volume increase.~~Prior Quarter divestiture cost of goods sold of $35 million.

Operating Income: The operating income decrease is primarily attributed to ~~an $8~~a $10 million ~~unfavorable~~negative impact from price cost spread and Prior Quarter divestiture operating ~~income of $7 million related~~income.

Other expense, net
	Quarter		Prior Quarter		$ Change		% Change
Other expense, net	$	6	$	—	$	6		N/A

The other expense is primarily attributed to ~~the divested SFL business. These decreases were~~debt extinguishment costs partially offset by ~~a $6 million decrease in business integration costs and a $3 million favorable impact from the base volume increase.~~

Other expense, net
Quarter Prior Quarter $ Change % Change
Other expense, net $ — $ 23 $ (23 ) (100 )%

Other expense in the Quarter includes $20 million of debt extinguishment costs, primarily a result of the prepayment of the entire outstanding amount of our existing euro denominated term loan, offset by favorable foreign currency changes ~~associated with~~related to the remeasurement of non-operating intercompany balances. ~~The Prior Quarter contains non-recurring, unfavorable foreign currency changes related to the foreign exchange forward contracts entered into as a part of the RPC acquisition.~~

Interest expense, net
	Quarter		Prior Quarter		$ Change		% Change			Quarter		Prior Quarter		$ Change			% Change
Interest expense, net	$	111	$	66	$	45		68	%	$	84	$	111	$	(27	)		(24	)%

The interest expense ~~increase~~decrease is primarily ~~attributed to~~ the ~~incremental debt facilities entered into as part~~result of ~~the RPC acquisition.~~

Income tax expense
Quarter Prior Quarter $ Change % Change
Income tax expense $ 47 $ 22 $ 25 114 %

~~The effective tax rate was 27% for the quarter~~repayments on long-term borrowings in fiscal 2020 and ~~was negatively impacted by 3% from U.S. state income taxes, 2% from uncertain tax positions, 2% from global intangible low-taxed income provisions, and was partially offset by other discrete items.~~

recent refinancing activities (see Note 7).

Changes in Comprehensive Income

The ~~$206~~$303 million ~~decline~~improvement in comprehensive income from the Prior Quarter was primarily attributed to a ~~$94~~$55 million ~~unfavorable~~improvement in net income, a $163 million favorable change in the fair value of derivative instruments, net of tax, and ~~a $163~~an $84 million ~~unfavorable~~favorable change in currency translation, partially offset by a $52 million improvement in net income. 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. The change in currency translation in the Quarter was primarily attributed to locations utilizing the euro, British pound sterling, Brazilian real, Canadian dollar, Chinese renminbi and Mexican peso as the functional currency.translation. As part of the overall risk management, the Company uses derivative instruments to (i) reduce our exposure to changes in interest rates attributed to the Company’s borrowings and (ii) reduce foreign currency exposure to translation of certain foreign operations. The Company records changes to the fair value of these instruments in Accumulated other comprehensive loss. The change in fair value of these instruments in fiscal ~~2020~~2021 versus fiscal ~~2019~~2020 is primarily attributed to the change in the forward interest and foreign exchange curves between measurement dates.

Comparison of the Two Quarterly Periods Ended ~~March 28, 2020~~April 3, 2021 (the ~~"YTD"~~“YTD”) and the Two Quarterly Periods Ended March ~~30, 2019~~28, 2020 (the ~~"Prior YTD"~~“Prior YTD”)

~~Acquisition sales and operating income disclosed within this section represents the~~The Company’s U.S. based results ~~from acquisitions~~ for the ~~current period.~~YTD and Prior YTD are based on a twenty-seven and twenty-six week period, respectively. Business integration expenses consist of restructuring and impairment charges, acquisition and divestiture related costs, and other business optimization costs. Tables present dollars in millions.

Consolidated Overview
	YTD			Prior YTD			$ Change		% Change			YTD		Prior YTD		$ Change		% Change
Net sales	$	5,791		$	3,922		$	1,869		48	%	$	6,506	$	5,791	$	715		12	%
Cost of goods sold													5,224		4,687		537		11	%
Other operating expenses													645		621		24		4	%
Operating income	$	483		$	361		$	122		34	%	$	637	$	483	$	154		32	%
Operating income percentage of net sales		8	%		9	%

Net Sales: The net sales growth is primarily attributed to ~~acquisition net sales~~organic volume growth of ~~$2,256 million, partially offset by lower~~6%, increased selling prices of ~~$330~~$181 million due to the pass through of ~~lower~~higher resin costs, ~~Prior YTD divestiture sales of $52~~a $142 million ~~and a $13 million unfavorable~~favorable impact from foreign currency ~~changes.~~changes, and a $131 million increase from extra shipping days in the YTD. These increases were partially offset by Prior Quarter divestiture sales of $68 million. The organic volume growth was primarily due to organic growth investments, modest recovery of certain markets that had previously been facing COVID-19 headwinds, and higher demand in our advantaged health and hygiene products as the result of COVID-19.

Cost of goods sold: The cost of goods sold increase is attributed to the organic volume growth, product mix, higher resin costs, a $114 million increase from foreign currency changes, and a $101 million increase from extra shipping day in the YTD. These increases were partially offset by Prior YTD divestiture cost of goods sold of $55 million and a $19 million inventory step-up.

Other operating expenses: The other operating expenses increase is primarily attributed to an $11 million increase in selling, general, and administrative expenses and an increase from extra shipping days in the YTD.

Operating Income: The operating income increase is primarily attributed to ~~acquisition operating income of $135~~an $81 million increase from the organic volume growth, a ~~$17~~$33 million ~~decrease in business integration costs, a $16 million decrease in depreciation and amortization. These improvements were partially offset by a $29 million negative~~favorable impact from price cost spread including synergies and product mix, a $23 million favorable impact from foreign currency, a $22 million benefit from extra shipping days in the YTD, and a $19 million inventory step-up in the Prior YTD related to the RPC acquisition, partially offset by an $11 million increase in selling, general, and administrative expenses, and Prior YTD divestiture operating ~~income of $16 million.~~income.

Consumer Packaging International
	YTD			Prior YTD			$ Change		% Change			YTD		Prior YTD		$ Change		% Change
Net sales	$	2,105		$	101		$	2,004		1,984	%	$	2,048	$	1,900	$	148		8	%
Cost of goods sold													1,634		1,535		99		6	%
Other operating expenses													279		269		10		4	%
Operating income	$	105		$	(1	)	$	106		(10,600	)%	$	135	$	96	$	39		41	%
Operating income percentage of net sales		5	%		(1	)%

Net Sales: The net sales ~~and operating income~~ growth in the Consumer Packaging International segment is primarily attributed to organic volume growth of 4% and a $115 million favorable impact from foreign currency changes, partially offset by lower selling prices of $48 million. The organic volume growth was primarily due to recovery in emerging markets.

Cost of goods sold: The cost of goods sold increase is attributed to the ~~RPC acquisition.~~organic volume growth and a $93 million increase from foreign currency changes. These increases were partially offset by change in product mix and a $19 million inventory step-up in the Prior YTD.

Consumer Packaging North America
YTD Prior YTD $ Change % Change
Net sales $ 1,386 $ 1,240 $ 146 12 %
Operating income $ 133 $ 95 $ 38 40 %
Operating income percentage of net sales 10 % 8 %

Other operating expenses: The other operating expenses increase is primarily attributed to an increase in business integration expense.

Operating Income: The operating income increase is primarily attributed to an $18 million increase from the organic volume growth, an $18 million favorable impact from foreign currency, and a $19 million inventory step-up in the Prior YTD related to the RPC acquisition, partially offset by an $18 million increase in business integration activities.

Consumer Packaging North America
	YTD		Prior YTD		$ Change		% Change
Net sales	$	1,417	$	1,244	$	173		14	%
Cost of goods sold		1,155		1,017		138		14	%
Other operating expenses		126		114		12		11	%
Operating income	$	136	$	113	$	23		20	%

Net Sales: The net sales growth in the Consumer Packaging North America segment is primarily attributed to ~~acquisition net sales~~organic volume growth of ~~$239 million related to the U.S. portion of the acquired RPC business and a 2% base volume improvement, partially offset by lower~~6%, increased selling prices of ~~$111~~$56 million, and a $40 million increase from extra shipping days in the YTD. The organic volume growth was primarily due to ~~the pass through of lower resin costs.~~continued strength in closures, bottles and containers.

Cost of goods sold: The cost of goods sold increase is attributed to the organic volume growth, product mix, higher resin costs, and a $30 million increase from extra shipping day in the YTD.

Other operating expenses: The other operating expenses increase is primarily attributed an increase in selling, general, and administrative expense.

Operating Income: The operating income increase is primarily attributed to ~~acquisition~~a $22 million increase from the organic volume growth and a $7 million benefit from extra shipping days in the YTD, partially offset by increased selling, general, and administrative expense.

Health, Hygiene & Specialties
	YTD		Prior YTD		$ Change		% Change
Net sales	$	1,521	$	1,254	$	267		21	%
Cost of goods sold		1,182		1,013		169		17	%
Other operating expenses		129		128		1		1	%
Operating income	$	210	$	113	$	97		86	%

Net Sales: The net sales growth in the Health, Hygiene & Specialties segment is primarily attributed to organic volume growth of 12%, increased selling prices of $90 million due to the pass through of higher resin costs, and a $42 million increase from extra shipping days in the YTD, partially offset by Prior YTD divestiture sales of $14 million. The organic volume growth was primarily due to organic growth investments and higher demand in our advantage health and hygiene products as the result of COVID-19.

Cost of goods sold: The cost of goods sold increase is attributed to the organic volume growth, product mix, higher resin costs, and a $31 million increase from extra shipping day in the YTD. These increases were partially offset by Prior YTD divestiture cost of goods sold.

Operating Income: The operating income ~~of $27~~increase is primarily attributed to a $36 million ~~and~~ increase from the organic volume growth, a $5$47 million favorable impact from price cost ~~spread.~~spread including synergies and product mix, and a benefit from extra shipping days in the YTD.

Engineered Materials
	YTD			Prior YTD			$ Change			% Change			YTD		Prior YTD		$ Change			% Change
Net sales	$	1,183		$	1,280		$	(97	)		(8	)%	$	1,520	$	1,393	$	127			9	%
Cost of goods sold														1,253		1,122		131			12	%
Other operating expenses														111		110		1			1	%
Operating income	$	159		$	167		$	(8	)		(5	)%	$	156	$	161	$	(5	)		(3	)%
Operating income percentage of net sales		13	%		13	%

Net Sales: The net sales ~~decrease~~growth in the Engineered Materials segment is primarily attributed to ~~lower~~increased selling prices of ~~$100~~$83 million due to the pass through of ~~lower~~higher resin ~~costs.~~costs, a $44 million increase from extra shipping days in the YTD, organic volume growth of 2%, and a $22 million favorable impact from foreign currency changes, partially offset by Prior YTD divestiture sales of $54 million.

Cost of goods sold: The cost of goods sold increase is attributed to the organic volume growth, product mix, higher resin costs, an $18 million increase from foreign currency changes, and a $35 million increase from extra shipping day in the YTD. These increases were partially offset by Prior YTD divestiture cost of goods sold of $45 million.

Operating Income: The operating income decrease is primarily attributed to a $15 million unfavorable impact from price cost spread and Prior YTD divestiture operating income. These decreases were partially offset by an improvement from the organic volume growth, and a ~~$6 million decrease~~benefit from extra shipping days in ~~depreciation and amortization.~~the YTD.

Health, Hygiene & Specialties
YTD Prior YTD $ Change % Change
Net sales $ 1,117 $ 1,301 $ (184 ) (14 )%
Operating income $ 86 $ 100 $ (14 ) (14 )%
Operating income percentage of net sales 8 % 8 %

The net sales decrease in the Health, Hygiene & Specialties segment is primarily attributed to lower selling prices of $119 million due to the pass through of lower resin costs and Prior YTD sales of $52 million related to the divested SFL business.

The operating income decrease is primarily attributed to a $19 million unfavorable impact from price cost spread and Prior YTD operating income of $16 million related to the divested SFL business. These decreases are partially offset by a $15 million decrease in business integration costs and an $8 million decrease in depreciation and amortization.

Other expense, net
	YTD		Prior YTD		$ Change			% Change			YTD		Prior YTD		$ Change		% Change
Other expense, net	$	13	$	23	$	(10	)		(100	)%	$	31	$	13	$	18		138	%

The other expense ~~decrease~~increase is primarily attributed to ~~non-recurring, unfavorable~~ foreign currency changes related to the ~~foreign exchange forward contracts entered into as a part~~remeasurement of ~~the RPC acquisition in the Prior YTD.~~non-operating intercompany balances.

Interest expense, net
	YTD		Prior YTD		$ Change		% Change			YTD		Prior YTD		$ Change			% Change
Interest expense, net	$	229	$	130	$	99		76	%	$	181	$	229	$	(48	)		(21	)%

The interest expense ~~increase~~decrease is primarily ~~attributed to~~ the ~~incremental debt facilities entered into as part~~result of ~~the RPC acquisition.~~repayments on long-term borrowings in fiscal 2020 and recent refinancing activities.

Income tax expense
YTD Prior YTD $ Change % Change
Income tax expense $ 68 $ 46 $ 22 48 %

The effective tax rate was 28% for the YTD and was negatively impacted by 3% from U.S. state income taxes, 2% from uncertain tax positions, 2% from global intangible low-taxed income provisions, and other discrete items.

Changes in Comprehensive Income

The ~~$121~~$476 million ~~decline~~improvement in comprehensive income from the Prior YTD was primarily attributed to a ~~$64~~$138 million ~~unfavorable~~improvement in net income, a $170 million favorable change in currency translation, and a $167 million favorable change in the fair value of derivative instruments, net of ~~tax, and a $67 million unfavorable change in currency translation, partially offset by an $11 million improvement in net income.~~tax. 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. The change in currency translation in the YTD was primarily attributed to locations utilizing the euro, British pound sterling, Brazilian real, Canadian dollar, Chinese renminbi and Mexican peso as the functional currency. As part of the overall risk management, the Company uses derivative instruments to (i) reduce our exposure to changes in interest rates attributed to the Company’s borrowings and (ii) reduce foreign currency exposure to translation of certain foreign operations. The Company records changes to the fair value of these instruments in Accumulated other comprehensive loss. The change in fair value of these instruments in fiscal ~~2020~~2021 versus fiscal ~~2019~~2020 is primarily attributed to the change in the forward interest and foreign exchange curves between measurement dates.

Liquidity and Capital Resources

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. At the end of the Quarter, the Company had no outstanding balance on its $850 million asset-based revolving line of credit that matures in May 2024. The Company was in compliance with all covenants at the end of the ~~Quarter~~Quarter. (see Note 7).

Cash Flows

Net cash from operating activities increased ~~$202~~$105 million from the Prior YTD primarily attributed to improved net income prior to non-cash ~~activities related to the RPC acquisition.~~activities.

Net cash used in investing activities ~~decreased $140~~increased $194 million from the Prior YTD primarily attributed to increased capital expenditures and proceeds from the settlement of cross-currency derivatives in the Prior YTD, partially offset by ~~increased capital expenditures as a result~~proceeds from the divestiture of business in the ~~RPC acquisition.~~YTD.

Net cash used in financing activities increased ~~$104~~$48 million from the Prior YTD primarily attributed to higher net debt repayments, partially offset by ~~lower share repurchase activity.~~higher proceeds from issuance of common stock.

Share Repurchases

No shares were repurchased during the quarter. Authorized share repurchases of $393 million remain available to the Company.

~~Free Cash Flow~~

~~We define "Free cash flow" as cash flow from operating activities less net additions to property, plant and equipment.~~

~~Based on our definition, our consolidated Free cash flow is summarized as follows:~~

Two Quarterly Periods Ended
March 28, 2020
Cash flow from operating activities $ 533
Additions to property, plant and equipment, net (263 )
Free cash flow $ 270

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"). 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 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, 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. Free cash flow may be calculated differently by other companies, including other companies in our industry, limiting its usefulness as a comparative measure.

Liquidity Outlook

At ~~March 28, 2020,~~April 3, 2021, our cash balance was ~~$953~~$843 million, of which approximately ~~65%~~80% was located outside the U.S. 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 of our most recent Form 10-K filed with the Securities and Exchange Commission and in this Form 10-Q, if any.

2223

Summarized Guarantor Financial Information

Berry Global, Inc. (“Issuer”) has notes outstanding which are fully, jointly, severally, and unconditionally guaranteed by its parent, Berry Global Group, Inc. (for purposes of this section, “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 or in the case of a restricted subsidiary that is required to guarantee after the relevant issuance date, if such guarantor no longer guarantees certain other indebtedness of ~~the issuer.~~Issuer. The guarantees of the guarantor subsidiaries are also limited as necessary to prevent them from constituting a fraudulent conveyance under applicable law and any 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 summarized financial information for the Parent, Issuer and guarantor subsidiaries on a combined basis, after intercompany transactions have been eliminated.

	Two Quarterly Periods Ended		Two Quarterly Periods Ended
	March 28, 2020		April 3, 2021
Net sales	$	2,848	$	3,278
Gross profit		626		641
Earnings from continuing operations		92		167
Net income	$	92	$	167

Includes $12 million of income associated with intercompany activity ~~from~~with non-guarantor subsidiaries.

	March 28, 2020		September 28, 2019		April 3, 2021		September 26, 2020
Assets
Current assets	$	1,671	$	856	$	1,712	$	1,417
Noncurrent assets		5,353		5,469		5,926		6,153

Liabilities
Current liabilities	$	953	$	436	$	1,048	$	841
Noncurrent liabilities		12,502		12,341		11,619		11,936

Includes ~~$416~~$715 million ~~of current intercompany receivables due from non-guarantor subsidiaries as of March 28, 2020~~ and ~~$45~~$572 million of ~~current~~ intercompany payables due to non-guarantor subsidiaries as of April 3, 2021 and September ~~28, 2019.~~26, 2020, respectively.

2324

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

We are exposed to market risk from changes in interest rates primarily through our senior secured credit facilities. Our senior secured credit facilities are comprised of (i) ~~$6.2~~$3.8 billion term loans and (ii) a $850 million revolving credit facility with no borrowings outstanding. Borrowings under our 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 1.50%, and the margin for term loans is ~~2.00%~~1.75% per annum. As of period end, the LIBOR rate of approximately ~~1.00%~~0.12% was applicable to the term loans. A 0.25% change in LIBOR would increase our annual interest expense by $8$2 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. At period end, the Company effectively had (i) a $450 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.398%, with an expiration in June 2026, (ii) a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.835% with an expiration in June 2026, (iii) a $400 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.916% with an expiration in June 2026, (iv) a $884 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.857%, with an expiration in June 2024, and (v) a $473 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 2.050%, with an expiration in June 2024.

Foreign Currency Risk

As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, British pound sterling, Brazilian real, Chinese renminbi, 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 had ~~a $12~~an $18 million unfavorable impact on our Net income for the two quarterly periods ended ~~March 28, 2020.~~April 3, 2021.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Under applicable Securities and Exchange Commission regulations, management of a reporting company, with the participation of the principal executive officer and principal financial officer, must periodically evaluate the ~~company's "disclosure~~company’s “disclosure controls and procedures,"” which are defined generally as controls and other procedures of a reporting company designed to ensure that information required to be disclosed by the reporting company in its periodic reports filed with the commission (such as this Form 10-Q) is recorded, processed, summarized, and reported on a timely basis.

The ~~Company's~~Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.

(b) Changes in internal ~~controls.~~

~~The impact of travel and safety restriction related to the COVID-19 pandemic has negatively impacted various integration activities including the ongoing process of implementing standardized internal~~ control ~~procedures~~ over financial ~~reporting within the recently acquired RPC business. We will continue to evaluate the potential impacts and closely monitor developments as they arise and will continue to respond accordingly.~~reporting.

There were no ~~other~~ changes in our internal control over financial reporting that occurred during the quarter ended that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2426

Part II. Other Information

Item 1. Legal Proceedings

There have been no material changes in legal proceedings from the items disclosed in our Form 10-K filed with the Securities and Exchange Commission.

Item 1A. Risk Factors

Before investing in our securities, we recommend that investors carefully consider the risks described in our most recent Form 10-K filed with the Securities and Exchange Commission, including those under the heading ~~"Risk Factors" and other information contained in this Quarterly Report.~~“Risk Factors”. Realization of any of these risks could have a material adverse effect on our business, financial condition, cash flows and results of operations.

~~The ongoing COVID-19 pandemic could continue to have an adverse impact on our business, financial condition, liquidity, and results~~Additionally, we caution readers that the list of ~~operations, which may be material.~~

~~The ongoing COVID-19 pandemic has impacted demand for some of our products and we may not be successful~~ risk factors discussed in allocating resources to address rapidly shifting demand among our product lines. Additionally, the impact of travel and safety restrictions related to the COVID-19 pandemic has negatively impacted certain integration activities, including the ongoing process of implementing standardized internal control procedures within the recently acquired RPC business. The extent to which the ongoing COVID-19 pandemic adversely impacts our business, financial condition, liquidity and results of operations will depend on future developments that are highly uncertain and cannot be predicted, including, but not limited to, the duration of the pandemic, the severity of the COVID-19 virus, potential actions taken by various governmental authorities in response to the pandemic, and the timing of recovery of the global economy. As a result, we cannot at this time predict the overall impact of the COVID-19 pandemic, but it could have a material adverse impact on our business, financial condition, liquidity, and results of operations. To the extent the COVID-19 pandemic adversely affects our business, financial condition, liquidity, or results of operations, it may also have the effect of heightening many of the other risks described in the “Risk Factors” section of our most recent Form ~~10-K.~~

~~Forward-looking Statements and Other Factors Affecting Future Results.~~

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 to our customers on a timely basis;~~

●

~~risks related to acquisitions or divestitures and integration of acquired businesses and their operations, and realization of anticipated cost savings and synergies;~~

●

risk related to international business, including as a result of the RPC transaction, including foreign currency exchange rate risk and the risks of compliance with applicable export controls, sanctions, anti-corruption laws and regulations;

●

~~uncertainty regarding the United Kingdom’s withdrawal from the European Union and the outcome of future arrangements between the United Kingdom and the European Union;~~

●

~~reliance on unpatented proprietary know-how and trade secrets;~~

●

the phase-out of the London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with a different reference rate or modification of the method used to calculate LIBOR, which may adversely affect interest rates;

●

~~increases in the cost of compliance with laws and regulations, including environmental, safety, anti-plastic legislation, production and product laws and regulations;~~

●

~~employee shutdowns or strikes or the failure to renew effective bargaining agreements;~~

●

~~risks related to disruptions in the overall economy and the financial markets that may adversely impact our business, including as a result of the COVID-19 pandemic;~~

●

~~risk of catastrophic loss of one of our key manufacturing facilities, natural disasters, and other unplanned business interruptions;~~

●

~~risks related to the failure of, inadequacy of, or attacks on our information technology systems and infrastructure;~~

●

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

●

~~general business and economic conditions, particularly an economic downturn;~~

●

~~risks that our restructuring programs may entail greater implementation costs or result in lower cost savings than anticipated;~~

●

~~ability of our insurance to fully cover potential exposures;~~

●

~~risks related to future write-offs of our substantial goodwill;~~

●

~~risks of competition, including foreign competition, in our existing and future markets;~~

●

~~new legislation or new regulations and the Company's corresponding interpretations of either may affect our business and consolidated financial condition and results of operations; and~~

●

~~the other factors discussed in our most recent Form 10-K and in this Form 10-Q in the section titled "Risk Factors."~~

~~We caution readers that the foregoing list of important factors~~ 10-K 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-Q~~report may not in fact occur. Accordingly, ~~investors~~readers 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.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases of Equity Securities

During the quarter, the Company did not repurchase any shares. As of ~~March 28, 2020,~~April 3, 2021, $393 million of authorized shares remained available to purchase under the program.

2627

Item 6. Exhibits

Exhibit No.		Description of Exhibit
3.1		Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Berry Global Group, Inc., dated February 24, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 25, 2021).
3.2		Amended and Restated Bylaws of Berry Global Group, Inc., as amended and restated effective as of ~~March 6, 2019~~February 24, 2021 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on ~~March 8, 2019) [corrected hyperlink]~~February 25, 2021).
4.1		Indenture, among Berry Global, Inc., certain guarantors party thereto, U.S. Bank National Association, as Trustee and Collateral Agent, ~~and Elavon Financial Services DAC, as Paying Agent, Transfer Agent and Registrar,~~ relating to the ~~1.00%~~0.95% First Priority Senior Secured Notes due ~~2025~~2024, dated January 15, 2021 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 15, 2021).
4.2		Registration Rights Agreement, by and ~~1.50%~~between Berry Global, Inc., Berry Global Group, Inc., each subsidiary of Berry Global, Inc. identified therein, and Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, on behalf of themselves and as representatives of the initial purchasers, relating to the 0.95% First Priority Senior Secured Notes due ~~2027,~~2024 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on January 15, 2021).
4.3		First Supplemental Indenture, among Berry Global, Inc., certain guarantors party thereto, U.S. Bank National Association, as Trustee and Collateral Agent, relating to the 1.57% First Priority Senior Secured Notes due 2026, dated ~~January 2, 2020~~March 4, 2021 (incorporated by reference to Exhibit 4.1 to the ~~Company's~~Company’s Current Report on Form 8-K filed on ~~January 2, 2020)~~March 5, 2021).
4.4		Registration Rights Agreement, dated March 4, 2021, by and between Berry Global, Inc., Berry Global Group, Inc., each subsidiary of Berry Global, Inc. identified therein, and Citigroup Global Markets Inc. Goldman Sachs & Co. LLC and Wells Fargo Securities, LLC, on behalf of themselves and as representatives of the initial purchasers, relating to the 1.57% First Priority Senior Secured Notes due 2026 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on March 5, 2021).
10.1		Amended and Restated Berry Global Group, Inc. 2015 Long-Term Incentive Plan, effective February 24, 2021(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 25, 2021).
22*		Subsidiary Guarantors
31.1*		Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
31.2*		Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
32.1**		Section 1350 Certification of the Chief Executive Officer.
32.2**		Section 1350 Certification of the Chief Financial Officer.
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith

**	Furnished herewith

2728

SIGNATURE

Pursuant to the requirements 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.

	Berry Global Group, Inc.

May ~~1, 2020~~4, 2021	By:	/s/ Mark W. Miles
		Mark W. Miles
		Chief Financial Officer

2829

Consideration
Cash	$	6,079
Total consideration transferred		6,079

Identifiable assets acquired and liabilities assumed
Working capital^(a)		721
Property, plant and equipment		2,164
Identifiable intangible assets		1,665
Other assets		4
Other long-term liabilities		(837	)
Goodwill		2,362
Net assets acquired and liabilities assumed	$	6,079
^(a) Includes a $58 million step up of inventory to fair value

Lease cost	Quarterly Period Ended March 28, 2020		Two Quarterly Periods Ended March 28, 2020
Operating lease cost	$	28	$	57
Finance lease cost:
Amortization of right-of-use assets		4		8
Interest on lease liabilities		1		2
Total finance lease cost		5		10
Short-term lease cost		4		8
Total lease cost	$	37	$	75

Fiscal Year	Operating Leases			Finance Leases
Remainder of 2020	$	59		$	19
2021		111			27
2022		97			26
2023		84			13
2024		70			7
Thereafter		303			15
Total lease payments		724			107
Less: Interest		(133	)		(7	)
Present value of lease liabilities	$	591		$	100

	As of September 28, 2019
	Level 1		Level 2		Level 3		Total		Impairment
Indefinite-lived trademarks	$	—	$	—	$	248	$	248	$	—
Goodwill		—		—		5,051		5,051		—
Definite lived intangible assets		—		—		2,532		2,532		—
Property, plant, and equipment		—		—		4,714		4,714		8
Total	$	—	$	—	$	12,545	$	12,545	$	8

	Polyethylene Butene Film						Polypropylene
	2020		2019		2018		2020		2019		2018
1st quarter	$	.58	$	.64	$	.68	$	.58	$	.76	$	.71
2nd quarter		.59		.61		.69		.53		.63		.75
3rd quarter		—		.63		.68		—		.62		.76
4th quarter		—		.59		.66		—		.62		.85

	Two Quarterly Periods Ended
	March 28, 2020
Cash flow from operating activities	$	533
Additions to property, plant and equipment, net		(263	)
Free cash flow	$	270