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 September 30, ~~2020~~2023



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

For the transition period from ~~______________ to ______________~~

__________to __________

Commission File Number: 001-39528

~~________________~~

PACTIV EVERGREEN INC.

(Exact Name of Registrant as Specified in Its Charter)

~~________________~~



Delaware		~~98-1538656~~ 88-0927268
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

1900 W. Field Court

Lake Forest, Illinois 60045

(Address of principal executive offices) (Zip Code)

Telephone: (847) 482-2000

(~~Registrant's~~Registrant’s telephone number, including area code)

~~________________~~

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value	PTVE	The Nasdaq ~~Global Select~~Stock Market 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~~ ☐NoYes ☑

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

~~Large accelerated filer~~ ☐

~~Accelerated~~


Large accelerated filer	☐	Accelerated filer	☑	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

~~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 by Rule 12b-2 of the Exchange Act). Yes ☐No ☑

The registrant had ~~177,157,710~~178,455,556 shares of common stock, $0.001 par value per share, outstanding as of ~~November 6, 2020.~~

October 25, 2023.

Table of Contents



		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2 3
	Condensed Consolidated Statements of Income (Loss) ~~for the three and nine months ended September 30, 2020 and 2019~~	2 3
	Condensed Consolidated Statements of Comprehensive Income (Loss) ~~for the three and nine months ended September 30, 2020 and 2019~~	3 4
	Condensed Consolidated Balance Sheets ~~as of September 30, 2020 and December 31, 2019~~	4 5
	Condensed Consolidated Statements of Equity ~~for the three and nine months ended September 30, 2020 and 2019~~	6
	Condensed Consolidated Statements of Cash Flows ~~for the nine months ended September 30, 2020 and 2019~~	8 7
	Notes to the Condensed Consolidated Financial Statements	10 8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39 27
Item 3.	Quantitative and Qualitative Disclosures ~~About~~ aboutMarket Risk	53 38
Item 4.	Controls and Procedures	53 38
PART II.	OTHER INFORMATION	55 39
Item 1.	Legal Proceedings	55 39
Item 1A.	Risk Factors	55 39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55 39
Item 3.	Defaults Upon Senior Securities	55 39
Item 4.	Mine Safety Disclosures	55 39
Item 5.	Other Information	55 39
Item 6.	Exhibits	56 40
	Signatures	57 41

FORWARD-LOOKING STATEMENTS

This report contains certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies, anticipated trends in our business and anticipated growth in the markets served by our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2022. You should specifically consider these numerous risks. These risks include, among others, those related to:

•

fluctuations in raw material, energy and freight costs;

•

labor shortages and increased labor costs;

•

failure to maintain satisfactory relationships with our major customers;

•

our dependence on suppliers of raw materials and any interruption to our supply of raw materials;

•

the macroeconomic environment globally and in North America, including higher rates of inflation and the risk of recession;

•

the restructuring of our Beverage Merchandising operations;

•

the impact of natural disasters, public health crises and catastrophic events outside of our control;

•

our ability to successfully complete acquisitions, divestitures, investments and other similar transactions that we pursue from time to time;

•

our ability to realize the benefits of our capital investment, acquisitions, restructuring and other cost savings programs;

•

our safety performance;

•

competition in the markets in which we operate;

•

changes in consumer lifestyle, eating habits, nutritional preferences and health-related, environmental and sustainability concerns;

•

the impact of our significant debt on our financial condition and ability to operate our business;

•

compliance with, and liabilities related to, applicable laws and regulations; and

•

the ownership of a majority of the voting power of our common stock by our parent company Packaging Finance Limited, which we refer to as PFL, an entity beneficially owned by Mr. Graeme Hart.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Pactiv Evergreen Inc.

Condensed Consolidated Statements of Income (Loss)

(inIn millions, except per share amounts)

~~(unaudited)~~

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
Net revenues (includes related party net revenues of $89, $72, $259 and $213) $ 1,195
$ 1,306
$ 3,514
$ 3,888
Cost of sales (1,011 ) (1,100 ) (2,982 ) (3,249 )
Gross profit 184
206
532
639
Selling, general and administrative expenses (116 ) (104 ) (358 ) (341 )
Goodwill impairment charges (6 ) (16 ) (6 ) (16 )
Restructuring, asset impairment and other related charges (14 ) (39 ) (18 ) (45 )
Other (expense) income, net (79 ) 2
(48 ) (7 )
Operating (loss) income from continuing operations (31 ) 49
102
230
Non-operating income (expense), net 17
0
50
(2 )
Interest expense, net (87 ) (84 ) (275 ) (312 )
Loss from continuing operations before tax (101 ) (35 ) (123 ) (84 )
Income tax (expense) benefit (42 ) 0
95
(16 )
Loss from continuing operations (143 ) (35 ) (28 ) (100 )
(Loss) income from discontinued operations, net of income taxes (216 ) 91
(234 ) 270
Net (loss) income (359 ) 56
(262 ) 170
Income attributable to non-controlling interests 0
0
(1 ) (1 )
Net (loss) income attributable to Pactiv Evergreen Inc. common stockholders $ (359 ) $ 56
$ (263 ) $ 169

(Loss) earnings per share attributable to Pactiv Evergreen Inc. common stockholders
From continuing operations
Basic $ (1.03 ) $ (0.26 ) $ (0.22 ) $ (0.75 )
Diluted $ (1.03 ) (0.26 ) $ (0.22 ) $ (0.75 )
From discontinued operations
Basic $ (1.56 ) $ 0.67
$ (1.72 ) $ 2.01
Diluted $ (1.56 ) $ 0.67
$ (1.72 ) $ 2.01
Total
Basic $ (2.59 ) $ 0.41
$ (1.94 ) $ 1.26
Diluted $ (2.59 ) $ 0.41
$ (1.94 ) $ 1.26

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net revenues	$	1,379		$	1,609		$	4,236		$	4,744
Cost of sales		(1,098	)		(1,377	)		(3,756	)		(3,972	)
Gross profit		281			232			480			772
Selling, general and administrative expenses		(137	)		(145	)		(403	)		(435	)
Restructuring, asset impairment and other related charges		(28	)		(57	)		(133	)		(58	)
Other (expense) income, net		(3	)		239			1			279
Operating income (loss) from continuing operations		113			269			(55	)		558
Non-operating (expense) income, net		(2	)		44			(6	)		52
Interest expense, net		(61	)		(59	)		(188	)		(158	)
Income (loss) from continuing operations before tax		50			254			(249	)		452
Income tax (expense) benefit		(22	)		(79	)		5			(160	)
Income (loss) from continuing operations		28			175			(244	)		292
Income from discontinued operations, net of income taxes		2			1			2			1
Net income (loss)		30			176			(242	)		293
Income attributable to non-controlling interests		(1	)		—			(2	)		(1	)
Net income (loss) attributable to Pactiv Evergreen Inc. common shareholders	$	29		$	176		$	(244	)	$	292
Earnings (loss) per share attributable to Pactiv Evergreen Inc. common shareholders
From continuing operations
Basic	$	0.15		$	0.98		$	(1.39	)	$	1.63
Diluted	$	0.15		$	0.98		$	(1.39	)	$	1.63
From discontinued operations
Basic	$	0.01		$	0.01		$	0.01		$	0.01
Diluted	$	0.01		$	—		$	0.01		$	—
Total
Basic	$	0.16		$	0.99		$	(1.38	)	$	1.64
Diluted	$	0.16		$	0.98		$	(1.38	)	$	1.63

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(inIn millions)

~~(unaudited)~~

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
Net (loss) income $ (359 ) $ 56
$ (262 ) $ 170
Other comprehensive income (loss), net of income taxes:
Currency translation adjustments 66
(64 ) (29 ) (47 )
Defined benefit plans 0
(1 ) 0
(2 )
Other comprehensive income (loss) 66
(65 ) (29 ) (49 )
Comprehensive (loss) income (293 ) (9 ) (291 ) 121
Comprehensive income attributable to non-controlling interests 0
0
(1 ) (1 )
Comprehensive (loss) income attributable to Pactiv Evergreen Inc. common stockholders $ (293 ) $ (9 ) $ (292 ) $ 120

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net income (loss)	$	30		$	176		$	(242	)	$	293
Other comprehensive (loss) income, net of income taxes:
Currency translation adjustments		(5	)		(6	)		19			(12	)
Defined benefit plans		(1	)		41			(2	)		(62	)
Interest rate derivatives		4			—			12			—
Other comprehensive (loss) income		(2	)		35			29			(74	)
Comprehensive income (loss)		28			211			(213	)		219
Comprehensive income attributable to non-controlling interests		(1	)		—			(2	)		(1	)
Comprehensive income (loss) attributable to Pactiv Evergreen Inc. common shareholders	$	27		$	211		$	(215	)	$	218

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

Condensed Consolidated Balance Sheets

(inIn millions, except share amounts)

~~(unaudited)~~

As of September 30, 2020 As of December 31, 2019
Assets

Cash and cash equivalents $ 1,756
$ 1,155
Accounts receivable, less allowances for doubtful accounts of $5 and $4 425
445
Related party receivables 57
0
Inventories 744
753
Other current assets 172
119
Assets held for sale or distribution 23
1,232
Total current assets 3,177
3,704
Property, plant and equipment, net 1,666
1,703
Operating lease right-of-use assets, net 237
191
Goodwill 1,760
1,766
Intangible assets, net 1,104
1,147
Deferred income taxes 11
21
Related party receivables 0
339
Other noncurrent assets 221
161
Noncurrent assets held for sale or distribution 41
7,143
Total assets $ 8,217
$ 16,175

Liabilities
Accounts payable $ 297
$ 316
Related party payables 21
30
Current portion of long-term debt 2
3,587
Current portion of operating lease liabilities 55
47
Income taxes payable 16
14
Accrued and other current liabilities 342
418
Liabilities held for sale or distribution 8
485
Total current liabilities 741
4,897
Long-term debt 5,196
7,043
Long-term operating lease liabilities 198
157
Deferred income taxes 504
150
Long-term employee benefit obligations 678
730
Other noncurrent liabilities 150
124
Noncurrent liabilities held for sale or distribution 0
992
Total liabilities $ 7,467
$ 14,093
Commitments and contingencies (Note 14)

(Unaudited)


		As of September 30, 2023			As of December 31, 2022
Assets
Cash and cash equivalents		$	233		$	531
Accounts receivable, net of allowances of $2 and $3			470			448
Related party receivables			38			46
Inventories			846			1,062
Other current assets			109			126
Assets held for sale			7			6
Total current assets			1,703			2,219
Property, plant and equipment, net			1,469			1,773
Operating lease right-of-use assets, net			276			262
Goodwill			1,815			1,815
Intangible assets, net			1,019			1,064
Other noncurrent assets			164			173
Total assets		$	6,446		$	7,306
Liabilities
Accounts payable		$	329		$	388
Related party payables			10			6
Current portion of long-term debt			18			31
Current portion of operating lease liabilities			63			65
Income taxes payable			5			6
Accrued and other current liabilities			447			415
Liabilities held for sale			—			3
Total current liabilities			872			914
Long-term debt			3,593			4,105
Long-term operating lease liabilities			225			209
Deferred income taxes			255			319
Long-term employee benefit obligations			59			60
Other noncurrent liabilities			138			146
Total liabilities		$	5,142		$	5,753
Commitments and contingencies (Note 12)
Equity
Common stock, $0.001 par value; 2,000,000,000 shares authorized; 178,452,889 and 177,926,081 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		$	—		$	—
Preferred stock, $0.001 par value; 200,000,000 shares authorized; no shares issued or outstanding			—			—
Additional paid in capital			669			647
Accumulated other comprehensive loss			(73	)		(102	)
Retained earnings			704			1,003
Total equity attributable to Pactiv Evergreen Inc. common shareholders			1,300			1,548
Non-controlling interests			4			5
Total equity			1,304			1,553
Total liabilities and equity	��	$	6,446		$	7,306

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

Condensed Consolidated ~~Balance Sheets~~

Statements of Equity

(inIn millions, except per share amounts)

~~(unaudited)~~

As of September 30, 2020 As of December 31, 2019
Equity
Common stock, $0.001 par value; 2,000,000,000 shares authorized; 175,434,000 and 134,408,000 shares issued and outstanding, respectively 0
0
Preferred stock, $0.001 par value; 200,000,000 shares authorized; no shares issued or outstanding 0
0
Additional paid in capital 580
103
Accumulated other comprehensive loss (386 ) (518 )
Retained earnings 554
2,494
Total equity attributable to Pactiv Evergreen Inc. common stockholders 748
2,079
Non-controlling interests 2
3
Total equity $ 750
$ 2,082
Total liabilities and equity $ 8,217
$ 16,175

(Unaudited)


								Accumulated
					Additional			Other						Non-
	Common Stock				Paid in			Comprehensive			Retained			Controlling			Total
	Shares		Amount		Capital			Loss			Earnings			Interests			Equity
For the Three Months Ended September 30, 2022
Balance as of June 30, 2022		177.7	$	—	$	634		$	(208	)	$	838		$	5		$	1,269
Net income		—		—		—			—			176			—			176
Other comprehensive income, net of income taxes		—		—		—			35			—			—			35
Equity based compensation		—		—		6			—			—			—			6
Vesting of restricted stock units, net of tax withholdings		0.1		—		(1	)		—			—			—			(1	)
Dividends declared - common shareholders ($0.10 per share)		—		—		—			—			(18	)		—			(18	)
Balance as of September 30, 2022		177.8	$	—	$	639		$	(173	)	$	996		$	5		$	1,467

For the Three Months Ended September 30, 2023
Balance as of June 30, 2023		178.4	$	—	$	660		$	(71	)	$	693		$	3		$	1,285
Net income		—		—		—			—			29			1			30
Other comprehensive loss, net of income taxes		—		—		—			(2	)		—			—			(2	)
Equity based compensation		—		—		9			—			—			—			9
Vesting of restricted stock units, net of tax withholdings		0.1		—		—			—			—			—			—
Dividends declared - common shareholders ($0.10 per share)		—		—		—			—			(18	)		—			(18	)
Balance as of September 30, 2023		178.5	$	—	$	669		$	(73	)	$	704		$	4		$	1,304

For the Nine Months Ended September 30, 2022
Balance as of December 31, 2021		177.3	$	—	$	625		$	(99	)	$	758		$	4		$	1,288
Net income		—		—		—			—			292			1			293
Other comprehensive loss, net of income taxes		—		—		—			(74	)		—			—			(74	)
Equity based compensation		—		—		16			—			—			—			16
Vesting of restricted stock units, net of tax withholdings		0.5		—		(2	)		—			—			—			(2	)
Dividends declared - common shareholders ($0.30 per share)		—		—		—			—			(54	)		—			(54	)
Balance as of September 30, 2022		177.8	$	—	$	639		$	(173	)	$	996		$	5		$	1,467

For the Nine Months Ended September 30, 2023
Balance as of December 31, 2022		177.9	$	—	$	647		$	(102	)	$	1,003		$	5		$	1,553
Net (loss) income		—		—		—			—			(244	)		2			(242	)
Other comprehensive income, net of income taxes		—		—		—			29			—			—			29
Equity based compensation		—		—		24			—			—			—			24
Vesting of restricted stock units, net of tax withholdings		0.6		—		(2	)		—			—			—			(2	)
Dividends declared - common shareholders ($0.30 per share)		—		—		—			—			(55	)		—			(55	)
Dividends declared - non-controlling shareholders		—		—		—			—			—			(2	)		(2	)
Disposal of subsidiary		—		—		—			—			—			(1	)		(1	)
Balance as of September 30, 2023		178.5	$	—	$	669		$	(73	)	$	704		$	4		$	1,304

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

Condensed Consolidated Statements of ~~Equity~~

Cash Flows

(inIn millions)

~~(unaudited)~~

Common Stock
Shares Amount Additional Paid In Capital Accumulated Other Comprehensive Loss Retained Earnings Non-controlling Interests Total Equity
For the Three Months Ended September 30, 2019
Balance as of June 30, 2019 134.4
$ 0
$ 103
$ (714 ) $ 2,516
$ 5
$ 1,910
Net income —
—
—
56
—
56
Other comprehensive loss, net of income taxes —
—
(65 ) —
—
(65 )
Balance as of September 30, 2019 134.4
$ 0
$ 103
$ (779 ) $ 2,572
$ 5
$ 1,901

For the Three Months Ended September 30, 2020
Balance as of June 30, 2020 134.4
$ 0
$ 55
$ (624 ) $ 2,603
$ 3
$ 2,037
Net loss —
—
—
(359 ) —
(359 )
Other comprehensive income, net of income taxes —
—
66
—
—
66
Forgiveness of related party balances pre IPO —
—
—
(362 ) —
(362 )
Distribution of Graham Packaging Company Inc.⁽¹⁾
—
(22 ) 172
(1,328 ) —
(1,178 )
Issuance of common stock in connection with initial public offering, net of offering costs, underwriting discounts and commissions 41.0
—
546
—
—
—
546
Stock-based compensation —
1
—
—
—
1
Dividends paid to non-controlling interests —
—
—
—
(1 ) (1 )
Balance as of September 30, 2020 175.4
$ 0
$ 580
$ (386 ) $ 554
$ 2
$ 750

For the Nine Months Ended September 30, 2019
Balance as of December 31, 2018 134.4
$ 0
$ 103
$ (689 ) $ 2,362
$ 9
$ 1,785
Cumulative impact of adopting ASU 2018-02 —
—
(41 ) 41
—
0
Net income —
—
—
169
1
170
Other comprehensive loss, net of income taxes —
—
(49 ) —
—
(49 )
Disposition of non-controlling interest —
—
—
—
(4 ) (4 )
Dividends paid to non-controlling interests —
—
—
—
(1 ) (1 )
Balance as of September 30, 2019 134.4
$ 0
$ 103
$ (779 ) $ 2,572
$ 5
$ 1,901

(Unaudited)


	For the Nine Months Ended September 30,
	2023			2022
Operating Activities:
Net (loss) income	$	(242	)	$	293
Adjustments to reconcile net (loss) income to operating cash flows:
Depreciation and amortization		518			255
Deferred income taxes		(67	)		95
Unrealized losses on derivatives		—			4
Asset impairment and restructuring related non-cash charges (net of reversals)		44			56
Loss (gain) on sale of businesses and noncurrent assets		1			(266	)
Non-cash portion of employee benefit obligations		7			(51	)
Non-cash portion of operating lease expense		60			62
Equity based compensation		24			16
Other non-cash items, net		3			18
Change in assets and liabilities:
Accounts receivable, net		(10	)		(50	)
Inventories		183			(304	)
Accounts payable		(42	)		61
Operating lease payments		(60	)		(61	)
Accrued and other current liabilities		25			125
Other assets and liabilities		9			(12	)
Net cash provided by operating activities		453			241
Investing Activities:
Acquisition of property, plant and equipment		(178	)		(169	)
Disposal of businesses and joint venture equity interests, net of cash disposed		1			364
Other investing activities		10			1
Net cash (used in) provided by investing activities		(167	)		196
Financing Activities:
Long-term debt repayments		(523	)		(17	)
Dividends paid to common shareholders		(54	)		(54	)
Other financing activities		(10	)		(8	)
Net cash used in financing activities		(587	)		(79	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		1			(6	)
(Decrease) increase in cash, cash equivalents and restricted cash		(300	)		352
Cash, cash equivalents and restricted cash, including amounts classified as held for sale, as of beginning of the period		557			238
Cash, cash equivalents and restricted cash as of end of the period	$	257		$	590
Cash, cash equivalents and restricted cash are comprised of:
Cash and cash equivalents	$	233		$	559
Restricted cash classified as other noncurrent assets		24			24
Cash and cash equivalents classified as assets held for sale		—			7
Cash, cash equivalents and restricted cash as of end of the period	$	257		$	590
Cash paid:
Interest	$	177		$	132
Income taxes paid, net		51			64

Significant non-cash investing and financing activities

During the nine months ended September 30, 2023 and 2022, we recognized operating lease right-of-use assets and lease liabilities of $63 million and $49 million, respectively.

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

~~Condensed Consolidated Statements of Equity~~

~~(in millions)~~

~~(unaudited)~~

Common Stock
Shares Amount Additional Paid In Capital Accumulated Other Comprehensive Loss Retained Earnings Non-controlling Interests Total Equity
For the Nine Months Ended September 30, 2020
Balance as of December 31, 2019 134.4
$ 0
$ 103
$ (518 ) $ 2,494
$ 3
$ 2,082
Net (loss) income —
—
—
(263 ) 1
(262 )
Other comprehensive loss, net of income taxes —
—
(29 ) —
—
(29 )
Distribution of Reynolds Consumer Products Inc.⁽¹⁾
—
(48 ) (11 ) 13
—
(46 )
Forgiveness of related party balances pre IPO —
—
—
(362 ) —
(362 )
Distribution of Graham Packaging Company Inc.⁽¹⁾
—
(22 ) 172
(1,328 ) —
(1,178 )
Issuance of common stock in connection with initial public offering, net of offering costs, underwriting discounts and commissions 41.0
—
546
—
—
—
546
Stock-based compensation —
1
—
—
—
1
Dividends paid to non-controlling interests —
—
—
—
(2 ) (2 )
Balance as of September 30, 2020 175.4
$ 0
$ 580
$ (386 ) $ 554
$ 2
$ 750


~~(1)~~	~~Refer to Note 3 - Discontinued Operations.~~

~~See accompanying notes to the condensed consolidated financial statements.~~

~~Pactiv Evergreen Inc.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(in millions)~~

~~(unaudited)~~

For the Nine Months Ended September 30,
2020 2019
Cash provided by (used in) operating activities
Net (loss) income $ (262 ) $ 170
Adjustments to reconcile net (loss) income to operating cash flows:

Depreciation and amortization 391
484
Deferred income taxes 310
3
Unrealized gains on derivatives (3 ) (15 )
Goodwill impairment charges 6
25
Other asset impairment charges 15
98
(Gain) loss on disposal of businesses and other assets (8 ) 23
Non-cash portion of employee benefit obligations (44 ) 9
Non-cash portion of operating lease expense 78
81
Other non-cash items, net (2 ) (2 )
Change in assets and liabilities:
Accounts receivable, net (4 ) (62 )
Inventories (29 ) (85 )
Other current assets 0
33
Accounts payable 24
(31 )
Operating lease payments (75 ) (78 )
Income taxes payable (121 ) (55 )
Accrued and other current liabilities (76 ) 2
Other assets and liabilities 70
(37 )
Net cash provided by operating activities 270
563
Cash provided by (used in) investing activities
Acquisition of property, plant and equipment and intangible assets (329 ) (467 )
Proceeds from sale of property, plant and equipment 1
21
Disposal of businesses, net of cash disposed 8
(4 )
Proceeds from related party loan repayment 0
5
Net cash used in investing activities (320 ) (445 )
Cash provided by (used in) financing activities
Long-term debt proceeds 5,614
0
Long-term debt repayments (5,473 ) (27 )
Financing transaction costs on long-term debt (35 ) 0
Premium on redemption of long-term debt (2 ) 0
Net proceeds from issuance of shares 546
0
Cash held by Reynolds Consumer Products at the time of distribution (31 ) 0
Cash held by Graham Packaging Company at the time of distribution (79 ) 0
Other financing activities (4 ) (2 )
Net cash provided by (used in) financing activities 536
(29 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash (15 ) (3 )
Increase (decrease) in cash, cash equivalents and restricted cash 471
86
Cash, cash equivalents and restricted cash as of beginning of the period 1,294
786
Cash, cash equivalents and restricted cash as of end of the period $ 1,765
$ 872

~~See accompanying notes to the condensed consolidated financial statements.~~

~~Pactiv Evergreen Inc.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(in millions)~~

~~(unaudited)~~

For the Nine Months Ended September 30,
2020 2019
Cash, cash equivalents and restricted cash are comprised of:
Cash and cash equivalents $ 1,756
$ 785
Cash and cash equivalents classified as assets held for sale or distribution 9
85
Restricted cash included within other current assets 0
2
Cash, cash equivalents and restricted cash as of end of the period $ 1,765
$ 872

Cash paid (received):
Interest $ 344
$ 448
Income taxes (refunded) paid (15 ) 71

~~Significant non-cash investing and financing activities~~

During the nine months ended September 30, 2020, we repurchased and canceled 35,791,985 shares from Packaging Finance Limited ("PFL") in exchange for transferring 100% of the shares in Reynolds Consumer Products Inc. ("RCPI") to PFL and 14,036,726 shares from PFL in exchange for transferring 100% of the shares in Graham Packaging Company Inc. ("GPCI") to PFL. Refer to Note 3 - Discontinued Operations. Refer to Note 18 - Related Party Transactions for details of significant non-cash investing and financing activities with related parties.

During the nine months ended September 30, 2019, we recognized operating lease right-of-use assets of $359 million and operating lease liabilities of $370 million upon the adoption of the new lease accounting requirements on January 1, 2019. In addition, $127 million and $73 million of right-of-use assets and lease liabilities were recorded during the nine months ended September 30, 2020 and 2019, respectively.

~~See accompanying notes to the condensed consolidated financial statements.~~

~~Pactiv Evergreen Inc.~~

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

~~(unaudited)~~

Note ~~1 -~~1. Nature of Operations and Basis of Presentation

The accompanying condensed consolidated financial statements comprise the accounts of Pactiv Evergreen Inc. ~~("PTVE"~~(“PTVE”) ~~(formerly known as Reynolds Group Holdings Limited)~~ and its subsidiaries (“we”, “us”, “our” or the ~~"Company").~~

We are a manufacturer and supplier of fresh food and beverage packaging products, primarily in North America. We report our business in 3 reportable segments: Foodservice, Food Merchandising and Beverage Merchandising. Our Foodservice segment manufactures a broad range of products that enable consumers to eat and drink where they want and when they want with convenience. Our Food Merchandising segment manufactures products that protect and attractively display food while preserving freshness. Our Beverage Merchandising segment manufactures cartons for fresh refrigerated beverage products, primarily serving dairy (including plant-based, organic and specialties), juice and other specialty beverage end-markets.

~~On September 21, 2020, we completed the initial public offering ("IPO"~~“Company”) ~~of our common stock pursuant to a Registration Statement on Form S-1 (File No. 333-248250).~~

~~Prior to the closing of the IPO, we completed the following transactions which resulted in changes to our common stock~~ and ~~issued and outstanding shares:~~

~~On September 16, 2020, the distribution of all of our shares in GPCI to PFL in consideration for the buy-back of 14,036,726 of our outstanding shares;~~

~~On September 17, 2020, the conversion of Reynolds Group Holdings Limited into PTVE, a corporation incorporated in the state of Delaware, with 1,000 shares of common stock issued and outstanding; and~~

On September 21, 2020, the consummation of a stock split pursuant to which each share of our outstanding common stock was reclassified into 134,408 shares of common stock, resulting in 134,408,000 shares issued and outstanding.

~~These transactions have been retrospectively reflected for all periods presented.~~

In the IPO, we sold 41,026,000 shares of common stock at a public offering price of $14.00 per share, with net proceeds of $546 million. On October 20, 2020, we sold 1,723,710 shares of common stock to the underwriters pursuant to their option to purchase additional shares at the public offering price of $14.00 per share, with net proceeds of $23 million.

~~These condensed consolidated financial statements are unaudited and presented in U.S. dollars. They~~ have been prepared in accordance with accounting principles generally accepted in the United States of America (“~~U.S.~~ GAAP”) for interim financial information and ~~pursuant to~~in accordance with the rules and regulations of the United States Securities and Exchange Commission ~~(“SEC”~~(the “SEC”) ~~for interim financial information.~~. Accordingly, they do not include all of the information and footnotes required by ~~U.S.~~ GAAP for complete financial statements. ~~Our~~These unaudited condensed consolidated ~~balance sheet as of December 31, 2019 has been derived from our audited consolidated~~interim financial statements asreflect all normal and recurring adjustments that are, in the opinion of ~~that date. Our condensed consolidated financial statements~~management, necessary for a fair statement of the results for the interim periods and should be read in conjunction with ~~our~~the consolidated financial statements and the related notes thereto included in our latest Annual Report on Form 10-K for the year ended December 31, 2019, which include a complete set of footnote disclosures, including our significant accounting policies. In our opinion, these condensed consolidated financial statements include all normal and recurring adjustments considered necessary2022 filed with the SEC on March 7, 2023. Operating results for ~~a fair statement of our results of operations, financial position and cash flows for the~~interim periods ~~presented. However, our results of operations for any interim period~~ are not necessarily indicative of the results that may be expected for ~~a full fiscal~~the year ~~or for any other future period.~~ending December 31, 2023. All intercompany ~~accounts~~transactions and ~~transactions~~balances have been eliminated in consolidation.

Unless otherwise indicated, information in these notes to the condensed consolidated financial statements relates to our continuing operations. Certain of our operations have been presented as discontinued. We present businesses that represent components as discontinued operations when the components either meet the criteria as held for sale or are sold or distributed, and their expected or actual disposal represents a strategic shift that has, or will have, a major effect on our operations and financial results. As discussed in Note 3 - Discontinued Operations, the assets, liabilities, results of operations and supplemental cash flow information of substantially all of our Closures business, sold in December 2019, all of our former Reynolds Consumer Products ("RCP") segment, distributed in February 2020, and all of our former Graham Packaging ("GPC") segment, distributed in September 2020, are presented as discontinued operations for all periods presented. Sales from our continuing operations to our discontinued operations previously eliminated in consolidation have been recast as external revenues and are included in net revenues within operating income from continuing operations. Refer to ~~Note 18 - Related Party Transactions~~ ~~for further information.~~

~~Pactiv Evergreen Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~Note 2 - Summary of Significant Accounting Policies~~

~~Use of Estimates~~

The preparation of financial statements in conformity with ~~U.S.~~ GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Although our current estimates contemplate current conditions and how we expect them to change in the future, as appropriate, it is reasonably possible that actual conditions could differ from what was anticipated in those estimates, which could materially affect our results of operations, balance sheet and ~~balance sheet.~~cash flows. Among other effects, such changes could result in future impairments of goodwill, intangibles and long-lived assets, and adjustments to reserves for employee benefits and income taxes.

The estimated recoverable amounts associated with asset impairments ~~recognized in all periods presented represents a~~represent Level 3 ~~measurement~~measurements in the fair value hierarchy, which ~~includes~~include inputs that are not based on observable market data.

~~Although our current estimates contemplate current conditions and how~~

Revision to Restricted Cash

During the nine months ended September 30, 2023, we ~~expect them to change in~~revised the ~~future, as appropriate, it is reasonably possible that actual conditions could differ from what was anticipated in those estimates, which could materially affect our results~~presentation of operations and financial condition. For example, the worldwide COVID-19 pandemic has had, and will continue to have, a significant impact on our results of operations, and it may also have additional far-reaching impacts on many aspects of our operations including the impact on customer behaviors, business and manufacturing operations, our employees, and the market in general. The extent to which the COVID-19 pandemic impacts our business, financial condition, results of operations,restricted cash flows and liquidity may differ from management’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, actions taken to contain the virus, as well as, how quickly and to what extent normal economic and operating conditions can resume.

~~Share Repurchases~~

When accounting for a share repurchase and retirement of shares, including in connection with transactions that are deemed to be a reverse stock split, we record the repurchase as a reduction of common stock and additional paid in capital. The reduction in common stock represents the par value of the canceled shares, and the reduction in additional paid in capital is the lower of the excess of the repurchase amount over the par value of the repurchased shares or the pro rata portion of additional paid in capital, based on the number of shares retired as a percentage of total shares outstanding prior to the repurchase. Any residual excess of the repurchase amount over the reduction in additional paid in capital is presented as a reduction to retained earnings.

~~Variable Interest Entities~~

Until termination of our $450 million securitization facility (the “Securitization Facility”) in July 2020, we had a variable interest in 1 variable interest entity ("VIE") related to our non-recourse factoring arrangements in which receivables were sold from certain of our operations to a special purpose trust (“SPE”) in exchange for cash. We were the sole beneficiary of the SPE. The SPE was considered to be a VIE and we were its primary beneficiary as we had the power to direct its activities and the right to receive its benefits. Prior to July 2020, we consolidated the results, assets and liabilities of this SPE for all periods presented in these condensed consolidated financial statements. As a result of consolidating the SPE, we continued to recognize the trade receivables and external borrowings of this entity with carrying values of $789 million (including $469 million presented within assets held for sale or distribution) and $420 million, respectively, as of December 31, 2019. The obligations of the SPE were non-recourse to us and only the assets of the SPE could be used to settle those obligations. For more information regarding the Securitization Facility, refer to Note 10 - Debt.

~~Recently Adopted Accounting Guidance~~

~~In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ ~~and subsequent amendments to the initial guidance: ASU 2019-04,~~ ~~Financial Instruments-Credit Losses (Topic 326)~~, ~~Derivatives and Hedging (Topic 815)~~, ~~and Financial Instruments - Codification Improvements (Topic 825), ASU 2019-05,~~ ~~Financial Instruments - Credit Losses - Targeted Transition Relief (Topic 326),~~ ~~ASU 2019-11,~~ ~~Codification Improvements, Financial Instruments - Credit Losses (Topic 326)~~ ~~and ASU 2020-03,~~ ~~Codification Improvements to Financial Instruments~~. These ASUs modify the impairment model to use an expected loss methodology in place of the currently used incurred loss methodology, which may result in earlier recognition of losses related to financial instruments. These ASUs are effective for fiscal years beginning after December 15, 2019, with early adoption permitted, and require a cumulative effect adjustment to the balance sheet upon adoption. We adopted these standards on January 1, 2020 and they had no material impactbalances on our condensed consolidated ~~financial statements.~~

~~Pactiv Evergreen Inc.~~

~~Notes~~statements of cash flows to include $24 million of noncurrent restricted cash in the ~~Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework - Change~~beginning and ending balances for all periods presented. There was no impact to ~~the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements by removing, modifying~~our operating, investing or financing cash flow activities, and adding certain disclosures. This ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We adopted this guidance on January 1, 2020 and it hadthere was no ~~material~~ impact onto our condensed consolidated ~~financial statements.~~

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract,~~ which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs for internal-use software. This ASU is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted. We adopted this standard on January 1, 2020 and it had no material impact onbalance sheets or our condensed consolidated ~~financial statements.~~

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~statements of income (loss), ~~which is intended to simplify various aspects related to accounting for~~comprehensive income taxes. This ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We early adopted this guidance on January 1, 2020. Certain components of this guidance were adopted on a prospective basis.(loss) or equity. The ~~remaining components were adopted on a modified retrospective basis and had no material~~ impact ~~on our condensed consolidated financial statements and related disclosures.~~

~~Accounting Guidance Issued But Not Yet Adopted~~

~~In August 2018, the FASB issued ASU 2018-14,~~ ~~Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) Disclosure - Framework - Changes to the Disclosure Requirements for Defined Benefit Plans~~. The ASU requires sponsors of defined benefit pension or other postretirement plans to provide additional disclosures, including a narrative description of reasons for any significant gains or losses impacting the benefit obligation for the period. It also eliminates certain previous disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and must be applied on a retrospective basis to all previously reported interim and annual periods ~~presented. The requirements of this guidance are expected to impact our disclosures but have no impact on the measurement and recognition of amounts in our condensed consolidated financial statements.~~was not material.

~~In March 2020, the FASB issued ASU 2020-04,~~ Recent Accounting Pronouncements

~~Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848).~~ This ASU provides temporary optional expedients and exceptions to the 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. This ASU is effective upon issuance and generally can be applied through the end of calendar year 2022. We are currently evaluating the impact and whether we plan to adopt the optional expedients and exceptions provided under this new standard.

We reviewed all ~~other~~ recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our condensed consolidated financial statements.


	Maturity Date	Value Drawn or Utilized		Applicable Interest Rate
Term Tranches
U.S. term loans Tranche B-2	February 5, 2026	$	710	SOFR (floor of 0.000%) + 3.250%
U.S. term loans Tranche B-3	September 24, 2028	$	995	SOFR (floor of 0.500%) + 3.250%
Revolving Tranche(1)
U.S. Revolving Loans	August 5, 2025	$	49		—

(1)

The Revolving Tranche represents a $250 million facility. The amount utilized is in the form of letters of credit.



	~~Currency~~	~~Maturity date~~	~~Value drawn or utilized as of September 30, 2020 (in millions)~~	~~Applicable interest rate as of September 30, 2020~~
~~Term Tranches~~
~~U.S. term loans~~	$	~~February 5, 2023~~	~~2,487~~	~~LIBOR (floor of 0.000%) + 2.750%~~
We repaid a total of $515 million of our U.S. term loans Tranche B-2 during the nine months ended September 30, 2023, of which $225 million was repaid during the third quarter of 2023. The repayments were first applied to the remaining U.S term loans Tranche B-2 quarterly amortization payments, thereby eliminating all remaining quarterly amortization payments for the U.S term loans Tranche B-2, with the residual balance applied to the outstanding principal balance due at maturity. On April 17, 2023, we amended the Credit Agreement, replacing the LIBOR-based reference rate with a Secured Overnight Financing Rate (“SOFR”) based reference rate, effective for interest payments for the period commencing April 28, 2023. Other than the foregoing, the material terms of the Credit Agreement remain unchanged, and our election to use certain practical expedients under Accounting Standards Codification Topic 848: Reference Rate Reform resulted in no material impacts on our condensed consolidated financial statements. On July 26, 2023, we further amended the Credit Agreement to extend the maturity date on our $250 million Revolving Tranche facility from August 5, 2024 to August 5, 2025. There were no other material changes to the terms of the Credit Agreement as a result of this amendment. 13 ~~Revolving Tranche~~⁽¹⁾
~~U.S. Revolving Loans~~	$	~~August 5, 2021~~	47	—

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

~~(unaudited)~~


~~(1)~~	~~The Revolving Tranche represents a $302 million facility. The amount utilized is in the form of letters of credit.~~

(In ~~January 2020, we repaid $18 million of borrowings under the Credit Agreement with the net proceeds from the sale of our North American~~millions, except per share data and ~~Japanese closures businesses.~~

On August 4, 2020, we repaid in full €236 million ($279 million) of borrowings under the European term loans and all obligations under this tranche terminated. The early repayment of these borrowings resulted in a loss on extinguishment of debt of less than $1 million in respect of the write-off of unamortized deferred financing transaction costs, which was recognized in interest expense, net in the condensed consolidated statements of income (loss).

~~On August 4, 2020, we repaid $700 million of borrowings under the U.S. term loans.~~

unless otherwise indicated)

(Unaudited)

The weighted average contractual interest rates related to our U.S. term loans ~~as of~~Tranche B-2 and B-3 for the nine months ended September 30, ~~2020~~2023 and ~~2019,~~2022 were ~~3.71%~~8.18%, 8.24%, 4.47% and ~~5.16%~~4.79%, respectively. Including the impact of interest rate swap agreements, which were entered into in the fourth quarter of 2022, the weighted average rate on our U.S. term loans was 7.77% for the nine months ended September 30, 2023. The effective interest rates of our debt obligations under the Credit Agreement are not materially different from the contractual interest rates.

~~Certain~~ Refer to Note 9, Financial Instruments, for additional details regarding the interest rate swap agreements.

PTVE and certain of ~~our~~its U.S. subsidiaries have guaranteed on a senior basis the obligations under the Credit Agreement ~~and related documents~~ to the extent permitted by law. The borrowers and the guarantors have granted security over substantially all of their assets to support the obligations under the Credit Agreement. This security is expected to be shared on a first priority basis with the ~~note~~ holders ~~under~~of the ~~5.125% Senior Secured Notes due 2023 ("5.125% Notes”).~~

Notes.

Indebtedness under the Credit Agreement may be voluntarily repaid, in whole or in part, and must be mandatorily repaid in certain circumstances. ~~Following the August 4, 2020 $700 million repayment, the borrowers~~We are ~~no longer~~ required to make quarterly amortization payments ~~in respect~~of 0.25% of the principal amount of our U.S. term loans ~~referred to above. The borrowers~~Tranche B-3. Additionally, we are required to make annual prepayments of term loans with up to ~~50%~~50% of excess cash flow (which will be reduced to ~~25%~~25% or 0%0% if specified senior secured first lien leverage ratios are met) as determined in accordance with the Credit Agreement. No excess cash flow prepayments were due ~~in 2019~~ for the year ended December 31, ~~2018 or are due~~2022.

The Credit Agreement contains customary covenants which restrict us from certain activities including, among others, incurring debt, creating liens over assets, selling assets and making restricted payments, in ~~2020 for~~each case except as permitted under the ~~year ended December 31, 2019.~~

Credit Agreement.

Notes

~~Notes~~

~~Outstanding notes, as~~

As of September 30, ~~2020, are summarized below:~~

2023, our outstanding notes were as follows:



~~Description~~	Maturity ~~date~~Date	~~Semi-annual interest payment dates~~ Interest Payment Dates
~~5.125%~~4.000% Senior Secured Notes due ~~2023~~⁽¹⁾2027	~~July~~ October 15, ~~2023~~2027	~~January~~ April 15 and ~~July~~October 15
~~7.000%~~ 4.375% Senior Secured Notes due ~~2024~~2028	~~July~~ October 15, ~~2024~~2028	~~January~~ April 15 and ~~July~~October 15


~~(1)~~	~~$250 million aggregate principal amount of 5.125% Notes were issued at an issue price of 103.500%.~~

The effective interest ~~rate is~~rates of our debt obligations under the Notes are not materially different from the contractual interest rates.

~~Between December 31, 2019~~

PTVE and ~~September 30, 2020, we made the following repayments on our notes:~~

~~In January 2020, we repaid (i) $18 million aggregate principal amount~~certain of 5.750% Senior Secured Notes due 2020; (ii) $1 million aggregate principal amount of Floating Rate Senior Secured Notes due 2021; and (iii) $1 million aggregate principal amount of 5.125% Notes, at face value, with the net proceeds from the sale of our North American and Japanese closures businesses.

On February 4, 2020, we repaid in full the $3.1 billion aggregate principal amount outstanding of our 5.750% Senior Secured Notes due 2020 at face value. The repayment of these borrowings resulted in a $5 million loss on extinguishment of debt. Refer to Note 3 - Discontinued Operations.

On August 4, 2020, we repaid $749 million aggregate principal amount outstanding under the Floating Rate Senior Secured Notes due 2021 at face value. The early repayment of these notes resulted in a loss on extinguishment of debt of $4 million in respect of the write-off of unamortized deferred financing transaction costs and original issue discount, which was recognized in interest expense, net in the condensed consolidated statements of income (loss). On August 7, 2020, we

~~Pactiv Evergreen Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~terminated and settled the outstanding interest rate swap related to the Floating Rate Senior Secured Notes due 2021, resulting in the payment of $7 million to settle the liability.~~

On August 29, 2020, we repaid $150 million aggregate principal amount of the 7.000% Senior Notes due 2024 (“7.000% Notes”) at a price of 101.750%. The early repayment of these notes resulted in a loss on extinguishment of debt of $4 million in respect of the write-off of unamortized deferred financing transaction costs and the premium on redemption, which was recognized in interest expense, net in the condensed consolidated statements of income (loss).

~~Subsequent events related to debt~~

~~In connection with our IPO, but subsequent to September 30, 2020, the following debt transactions and repayments occurred:~~

~~On October 1, 2020 we issued $1,000 million aggregate principal amount of 4.000% Senior Secured Notes maturing on October 15, 2027 (“4.000% Notes”). The notes are~~its U.S. subsidiaries have guaranteed ~~and secured~~ on a senior basis by the same subsidiaries that guarantee and secure the obligations under our Credit Agreement and our 5.125% Notes. The proceeds from the new notes were used to repay indebtedness, as described below, and pay related transaction costs.

On October 1, 2020, we incurred $1,250 million of new term loans maturing on February 5, 2026 and obtained commitments for a new $250 million senior secured revolving credit facility maturing on August 5, 2024. The new term loans have an interest rate equal to one-month LIBOR with a 0.0% floor, plus a margin of 3.25% per annum. The proceeds from the new term loans were used to refinance a portion of our existing term loans, as described below, and to pay related transaction costs. The new revolving credit facility replaced our existing $302 million revolving credit facility.

During October 2020, we repaid an aggregate of $3,400 million principal amount of borrowings from the net proceeds of our IPO, new borrowings described above and cash on hand. These repayments comprised:


◦	~~$650 million of our 7.000% Notes, resulting in the extinguishment of these notes;~~


◦	~~$1,470 million of our 5.125% Notes; and~~


◦	~~$1,280 million of existing term loans maturing in February 2023.~~

~~These repayments will result in a loss of $51 million in respect of the write-off of unamortized deferred transaction costs and call premiums and third party fees recorded in the fourth quarter.~~

On October 23, 2020, we issued a redemption notice to redeem $70 million aggregate principal amount of 5.125% Notes at a price of 101.281%. The redemption payment is scheduled to occur on November 23, 2020.

~~Assets pledged as security for borrowings~~

~~We, and certain of our subsidiaries, have pledged substantially all of our assets as collateral to support~~ the obligations under the ~~Credit Agreement and the 5.125% Notes.~~

~~Guarantee and security arrangements~~

~~All of the guarantors of the Credit Agreement have guaranteed the obligations under the notes~~Notes (as defined below) to the extent permitted by law.

The issuers and the guarantors have granted security over substantially all of their assets to support the obligations under the ~~5.125%~~ Notes. This security is expected to be shared on a first priority basis with the creditors under the Credit Agreement.

~~On February 4, 2020~~

The respective indentures governing the 4.000% Senior Secured Notes due 2027 (“4.000% Notes”) and ~~August 4, 2020,~~ the ~~relevant legal entities within RCP~~4.375% Senior Secured Notes due 2028 (together with the 4.000% Notes, the “Notes”) contain customary covenants which restrict us from certain activities including, among others, incurring debt, creating liens over assets, selling assets and ~~GPC, respectively, were released~~making restricted payments, in each case except as ~~borrowers~~permitted under the ~~Credit Agreement, unconditionally released as guarantors~~respective indentures governing the Notes.

Under the respective indentures governing the Notes, we can, at our option, elect to redeem the Notes under terms and conditions specified in the indentures. Under the respective indentures governing the Notes, in certain circumstances which would constitute a change in control, the holders of the ~~Credit Agreement, and released as guarantors of~~Notes have the ~~notes. In connection with such releases,~~right to require us to repurchase the ~~security granted by such entities was also released.~~

Notes at a premium.

Pactiv Debentures

As of September 30, ~~2020, we had~~2023, our outstanding ~~the following~~ debentures (together, the “Pactiv Debentures”):

were as follows:



~~Description~~	Maturity ~~date~~Date	~~Semi-annual interest payment dates~~ Interest Payment Dates
~~7.950%~~ 7.950% Debentures due 2025	December 15, 2025	June 15 and December 15
~~8.375%~~ 8.375% Debentures due 2027	April 15, 2027	April 15 and October 15

~~Pactiv Evergreen Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(unaudited)~~

The effective interest rates of our debt obligations under the Pactiv Debentures are not materially different from the contractual interest rates.

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

The Pactiv Debentures are not guaranteed and are unsecured.

The indentures governing the Pactiv Debentures contain a negative pledge clause limiting the ability of certain of our entities, subject to certain exceptions, to (i) incur or guarantee debt that is secured by liens on “principal manufacturing properties” (as such term is defined in the indentures governing the Pactiv Debentures) or on the capital stock or debt of certain subsidiaries that own or lease any such principal manufacturing property and (ii) sell and then take an immediate lease back of such principal manufacturing property.

The 8.375% Debentures due 2027 may be redeemed at any time at our option, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus a make-whole premium, if any, plus accrued and unpaid interest to the date of the redemption.

Other borrowings

Other borrowings ~~include~~represented finance lease obligations of ~~$13~~$43 million and ~~$15~~$49 million as of September 30, ~~2020~~2023 and December 31, ~~2019,~~2022, respectively.

Scheduled maturities

Below is a schedule of required future repayments on our debt outstanding as of September 30, ~~2020:~~2023:



2023	$	5
2024		17
2025		233
2026		726
2027		1,183
Thereafter		1,468
Total principal amount of borrowings	$	3,632

(in millions)
2020 $ 1
2021 2
2022 3
2023 4,087
2024 651
Thereafter 481
Total principal amount of borrowings $ 5,225

Fair value of our long-term debt

The fair value of our long-term debt as of September 30, ~~2020~~2023 and December 31, ~~2019~~2022 is a Level 2 fair value measurement. Below is a schedule of carrying values and fair values of our debt ~~outstanding as of September 30, 2020 and December 31, 2019:~~outstanding:


	As of September 30, 2023				As of December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Credit Agreement	$	1,696	$	1,706	$	2,217	$	2,206
Notes:
4.000% Senior Secured Notes due 2027		994		889		993		890
4.375% Senior Secured Notes due 2028		496		435		496		447
Pactiv Debentures:
7.950% Debentures due 2025		216		217		215		210
8.375% Debentures due 2027		166		167		166		162
Other		43		43		49		49
Total	$	3,611	$	3,457	$	4,136	$	3,964

As of September 30, 2020 As of December 31, 2019
Carrying
value Fair
value Carrying
value Fair
value
(in millions)
Securitization Facility $ 0
$ 0
$ 418
$ 420
Credit Agreement 2,479
2,487
3,476
3,487
Notes:
5.750% Senior Secured Notes due 2020 0
0
3,130
3,144
Floating Rate Senior Secured Notes due 2021 0
0
739
753
5.125% Senior Secured Notes due 2023 1,592
1,620
1,591
1,641
7.000% Senior Notes due 2024 644
662
791
828
Pactiv Debentures:
7.950% Debentures due 2025 272
301
272
311
8.375% Debentures due 2027 198
213
198
220
Other 13
13
15
15
Total $ 5,198
$ 5,296
$ 10,630
$ 10,819

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

~~(unaudited)~~

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

Interest expense, net

Interest expense, net consisted of the following:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Interest expense:
Credit Agreement	$	41		$	32		$	127		$	76
Notes		15			15			46			46
Pactiv Debentures		8			11			24			30
Interest income		(3	)		(1	)		(10	)		(2	)
Amortization of DIC and OID		1			2			3			4
Realized derivative gains		(3	)		—			(6	)		—
Net foreign currency exchange losses		—			—			—			1
Other		2			—			4			3
Interest expense, net	$	61		$	59		$	188		$	158

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Interest expense:
Notes $ 36
$ 48
$ 123
$ 147
Pactiv Debentures 11
11
30
30
Credit Agreement 21
44
87
134
Securitization Facility 0
4
6
13
Interest income, related party⁽¹⁾
(3 ) (4 ) (9 ) (12 )
Interest income, other 0
(5 ) (6 ) (11 )
Amortization of deferred transaction costs⁽²⁾
3
3
12
9
Derivative losses 1
3
15
20
Net foreign currency exchange losses (gains) 6
(23 ) 0
(24 )
Other⁽³⁾
12
3
17
6
Interest expense, net⁽⁴⁾
$ 87
$ 84
$ 275
$ 312


~~(1)~~	~~Refer to Note 18 - Related Party Transactions for additional information.~~


~~(2)~~	~~The amount for the nine months ended September 30, 2020 includes an adjustment of $5 million related to prior periods.~~


~~(3)~~	~~Amounts primarily include write-offs of unamortized debt issuance costs and original issue discount premium, as well as redemption premiums.~~


~~(4)~~	Amounts presented in the above table exclude interest expense and amortization of deferred transaction costs related to our 5.750% Notes repaid in conjunction with the distribution of RCP, as well as interest and transaction costs related to debt held by GPCI; also excludes a $5 million loss on extinguishment of debt from the repayment of corporate level debt on February 4, 2020.

~~Covenants~~

~~As of September 30, 2020, we were in compliance with all of our covenants.~~

~~Pactiv Evergreen Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Note ~~11 -~~9. Financial Instruments

~~Fair Value of Derivative Instruments~~

We had the following derivative instruments recorded at fair value in our condensed consolidated balance sheets:


	As of September 30, 2023					As of December 31, 2022
	Asset Derivatives		Liability Derivatives			Asset Derivatives		Liability Derivatives
Commodity swap contracts	$	—	$	(5	)	$	—	$	(5	)
Interest rate derivatives		15		—			8		(9	)
Total fair value	$	15	$	(5	)	$	8	$	(14	)
Classification:
Other current assets	$	12	$	—		$	7	$	—
Other noncurrent assets		3		—			1		—
Accrued and other current liabilities		—		(4	)		—		(3	)
Other noncurrent liabilities		—		(1	)		—		(11	)
Total fair value	$	15	$	(5	)	$	8	$	(14	)

As of September 30, 2020 As of December 31, 2019
Asset
derivatives Liability
derivatives Asset
derivatives Liability
derivatives
(in millions)
Interest rate swap derivatives $ 0
$ 0
$ 7
$ 0
Commodity swap contracts 2
(2 ) 1
(5 )
Total fair value $ 2
$ (2 ) $ 8
$ (5 )

Recorded in:
Other current assets $ 2
$ 0
$ 6
$ 0
Other noncurrent assets 0
0
2
0
Accrued and other current liabilities 0
(2 ) 0
(5 )
Total fair value $ 2
$ (2 ) $ 8
$ (5 )

Our derivatives ~~comprise~~are comprised of commodity ~~swaps~~ and ~~previously included~~ interest rate swaps. All derivatives represent Level 2 financial assets and liabilities. Our derivatives are valued using an income approach based on the observable market index prices less the contract rate multiplied by the notional amount or based on pricing models that rely on market observable inputs such as commodity ~~prices.~~prices and interest rates. Our calculation of the fair value of these financial instruments takes into consideration the risk of non-performance, including counterparty credit risk. The majority of our derivative contracts do not have a legal right of set-off. We manage the credit risk in connection with our derivatives by limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties.

During the fourth quarter of 2022, we entered into derivative financial instruments with several large financial institutions which swapped the LIBO rate for a weighted average fixed rate of 4.120% for an aggregate notional amount of $1,000 million to hedge a portion of the interest rate exposure resulting from our U.S. term loans. These instruments are classified as cash flow hedges and mature in October 2025. In April 2023, we amended our interest rate swap agreements to replace the interest rate benchmark from LIBOR to SOFR, effective for swap payments for the period commencing April 28, 2023. Other than the foregoing, the material terms of the interest rate swap agreements remain unchanged, including the weighted average fixed rate of 4.120%, and our election to use certain practical expedients under Accounting Standards Codification Topic 848: Reference Rate Reform resulted in no material impacts on our condensed consolidated financial statements.

During the three months ended September 30, 2023, we recognized an unrealized gain of $1 million in cost of sales, for our commodity swap contracts. There was no unrealized gain or loss during the nine months ended September 30, 2023 for our commodity swap contracts. During the three and nine months ended September 30, ~~2020,~~2022, we recognized unrealized ~~gains~~losses of $1$10 million and $3$4 million, respectively, ~~compared to an unrealized loss of $1 million and an unrealized gain of $6 million in the comparable prior year periods,~~ in cost of sales, infor our commodity swap contracts.

Pactiv Evergreen Inc.

Notes to the ~~condensed consolidated statements~~Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

During the three and nine months ended September 30, 2023, we recognized realized gains of $3 million and $6 million, respectively, within interest expense, net and unrealized gains of $8 million and $22 million, respectively, within other comprehensive income (loss).

for our interest rate derivatives. At September 30, 2023, we expected to reclassify $9 million of gains, net of tax, from accumulated other comprehensive loss (“AOCL”) to earnings over the next twelve months. The actual amount that will be reclassified to future earnings may vary from this amount as a result of changes in market conditions.

The following table provides the detail of outstanding commodity derivative contracts as of September 30, ~~2020:~~

Type Unit of measure Contracted volume Contracted price range Contracted date of maturity
Natural gas swaps million BTU 1,963,628 $2.40 - $2.94 Nov 2020 - Dec 2021
Polymer-grade propylene swaps pound 39,250,071 $0.29 - $0.39 Oct 2020 - May 2021
Benzene swaps U.S. liquid gallon 5,251,376 $1.08 - $2.42 Nov 2020 - Jun 2021
Diesel swaps U.S. liquid gallon 936,628 $2.41 - $3.26 Oct 2020 - Dec 2021
Low-density polyethylene swaps pound 15,000,000 $0.52 - $0.71 Oct 2020 - Dec 2021
Ethylene swaps pound 2,105,278 $0.26 Oct 2020 - Apr 2021

2023:

~~Pactiv Evergreen Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(unaudited)~~


Type	Unit of Measure	Contracted Volume		Contracted Price Range	Contracted Date of Maturity
Natural gas swaps	Million BTU		3,511,030	$3.94 - $5.37	Nov 2023 - Dec 2025

Note ~~12 -~~10. Employee Benefits

Net periodic benefit (expense) income ~~(cost)~~ for our defined benefit pension plans and other post-employment benefit plans consisted of the following:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Service cost	$	—		$	—		$	(1	)	$	(1	)
Interest cost		(13	)		(17	)		(38	)		(54	)
Expected return on plan assets		10			14			30			49
Amortization of actuarial gains		1			—			2			—
Ongoing net periodic benefit cost		(2	)		(3	)		(7	)		(6	)
Income due to settlements(1)		—			47			—			57
Total net periodic benefit (expense) income	$	(2	)	$	44		$	(7	)	$	51

(1)

Refer to the Pension Partial Settlement Transactions section below for additional details.

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Service cost $ (2 ) $ (2 ) $ (5 ) $ (6 )
Interest cost (35 ) (45 ) (105 ) (136 )
Expected return on plan assets 52
45
155
134
Amortization of prior service cost (1 ) 0
(1 ) 0
Amortization of actuarial gains (losses) 1
0
1
0
Total net periodic benefit income (cost) $ 15
$ (2 ) $ 45
$ (8 )

Net periodic benefit (expense) income ~~(cost)~~ for defined benefit pension plans and other post-employment benefit plans ~~has been~~was recognized ~~in our condensed consolidated statements of income (loss)~~ as follows:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2023			2022		2023			2022
Cost of sales	$	—		$	—	$	(1	)	$	(1	)
Non-operating (expense) income, net		(2	)		44		(6	)		52
Total net periodic benefit (expense) income	$	(2	)	$	44	$	(7	)	$	51

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Cost of sales $ (1 ) $ (1 ) $ (4 ) $ (3 )
Selling, general and administrative expenses (1 ) (1 ) (1 ) (3 )
Non-operating income (expense), net 17
0
50
(2 )
Total net periodic benefit income (cost) $ 15
$ (2 ) $ 45
$ (8 )

~~On October 2, 2020, we made a contribution of $121 million~~

Contributions to the Pension Plan for Pactiv Evergreen ~~Pension Plan (the “PEPP”~~(“PPPE”) ~~(formerly known as~~during the ~~Reynolds Group Pension Plan). NaN further contributions to the PEPP~~year ending December 31, 2023 are expected to be ~~made~~less than $1 million.

Pension Partial Settlement Transactions

On September 20, 2022 and February 24, 2022, using PPPE assets, we purchased non-participating group annuity contracts from insurance companies and transferred $656 million and $1,257 million, respectively, of the PPPE’s projected benefit obligations. In each instance, the respective insurance companies have assumed responsibility for pension benefits and annuity administration. These transactions resulted in ~~2020.~~the recognition of non-cash, pre-tax settlement gains.

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

Note ~~13 -~~11. Other (Expense) Income, Net

Other (expense) income, net consisted of the following:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2023			2022		2023			2022
Gain (loss) on sale of businesses and noncurrent assets	$	—		$	239	$	(1	)	$	266
Gain on legal settlement(1)		—			—		—			15
Other		(3	)		—		2			(2	)
Other (expense) income, net	$	(3	)	$	239	$	1		$	279

(1)

Reflects a gain, net of costs, arising from the settlement of a historical legal action.

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Related party management fee⁽¹⁾
$ (44 ) $ (3 ) $ (49 ) $ (8 )
Loss on sale of businesses and noncurrent assets (1 ) (13 ) (1 ) (24 )
Foreign exchange (losses) gains on cash⁽²⁾
(42 ) 17
(14 ) 17
Transition service agreement income⁽¹⁾
5
0
15
1
Other 3
1
1
7
Other (expense) income, net $ (79 ) $ 2
$ (48 ) $ (7 )


~~(1)~~	~~See Note 18 - Related Party Transactions for additional information.~~


~~(2)~~	~~Primarily arose from holding U.S. dollars in non-U.S. dollar functional currency entities.~~

~~Pactiv Evergreen Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(unaudited)~~

Note ~~14 -~~12. Commitments and Contingencies

We are from time to time party to litigation, legal proceedings and tax examinations arising from our operations. Most of these matters involve allegations of damages against us relating to employment matters, personal injury and commercial or contractual disputes. We are also involved in various administrative and other proceedings relating to environmental matters that arise in the normal course of business, and we may become involved in similar matters in the future. We record estimates for claims and proceedings that constitute a present obligation when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of such obligation can be made. While it is not possible to predict the outcome of any of these matters, based on our assessment of the facts and circumstances, we do not believe any of these matters, individually or in the aggregate, will have a material adverse effect on our balance sheet, results of operations or cash flows. However, actual outcomes may differ from those expected and could have a material effect on our balance sheet, results of operations or cash flows in a future period. Except for amounts provided, there were no legal proceedings pending other than those for which we have determined that the possibility of a material outflow is remote.

Indemnities

As part of the agreements for the sale of various businesses, we have provided certain warranties and indemnities to the respective purchasers as set out in the respective sale agreements. These warranties and indemnities are subject to various terms and conditions affecting the duration and total amount of the indemnities. ~~As of September 30, 2020, we are not aware of any material~~Any claims ~~under~~pursuant to these ~~agreements that would give rise to an additional liability. However,~~warranties and indemnities, if ~~such claims arise in the future, they~~successful, could have a material effect on our balance sheet, results of operations ~~and~~or cash flows.

We previously disclosed a contingency for the payment of a management fee to related parties of up to $22 million in respect of the 2009 and 2010 financial years. This management fee has now been recognized and paid in the three and nine months ended September 30, 2020. Refer to Note

18 ~~- Related Party Transactions for further information.~~

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

~~(unaudited)~~

Note ~~15 -~~13. Accumulated Other Comprehensive ~~Income (Loss)~~

Loss

The following table summarizes the changes in our balances of each component of ~~accumulated other comprehensive loss ("AOCL"):~~

AOCL:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Currency translation adjustments:
Balance as of beginning of period	$	(165	)	$	(213	)	$	(189	)	$	(207	)
Currency translation adjustments		(5	)		(6	)		19			(12	)
Other comprehensive (loss) income		(5	)		(6	)		19			(12	)
Balance as of end of period	$	(170	)	$	(219	)	$	(170	)	$	(219	)
Defined benefit plans:
Balance as of beginning of period	$	87		$	5		$	88		$	108
Net actuarial gain (loss) arising during year(1)		—			101			—			(25	)
Deferred tax (expense) benefit on net actuarial gain (loss)		—			(25	)		—			6
Loss (gain) reclassified from AOCL:
Reclassification upon sale of businesses(2)		—			1			—			1
Amortization of experience gains		(1	)		—			(2	)		—
Defined benefit plan settlement gain		—			(47	)		—			(57	)
Deferred tax expense on reclassification		—			11			—			13
Other comprehensive (loss) income		(1	)		41			(2	)		(62	)
Balance as of end of period	$	86		$	46		$	86		$	46
Interest rate derivatives:
Balance as of beginning of period	$	7		$	—		$	(1	)	$	—
Net derivative gain		8			—			22			—
Deferred tax expense on net derivative gain		(2	)		—			(6	)		—
Gain reclassified from AOCL		(3	)		—			(6	)		—
Deferred tax expense on reclassification		1			—			2			—
Other comprehensive income		4			—			12			—
Balance as of end of period	$	11		$	—		$	11		$	—
AOCL
Balance as of beginning of period	$	(71	)	$	(208	)	$	(102	)	$	(99	)
Other comprehensive (loss) income		(2	)		35			29			(74	)
Balance as of end of period	$	(73	)	$	(173	)	$	(73	)	$	(173	)

(1)

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Currency translation adjustments:
Balance as of beginning of period $ (447 ) $ (425 ) $ (354 ) $ (442 )
Currency translation adjustments 65
(77 ) (30 ) (67 )
Amounts reclassified from AOCL 1
13
1
20
Other comprehensive income (loss) 66
(64 ) (29 ) (47 )
Distribution of RCP and GPC⁽¹⁾
171
0
173
0
Balance as of end of period $ (210 ) $ (489 ) $ (210 ) $ (489 )

Defined benefit plans:
Plans associated with continuing operations
Balance as of beginning of period $ (176 ) $ (302 ) $ (176 ) $ (258 )
Cumulative impact of adopting ASU 2018-02 0
0
0
(44 )
Balance as of end of period $ (176 ) $ (302 ) $ (176 ) $ (302 )
Plans held for sale or distribution
Balance as of beginning of period $ (1 ) $ 13
$ 12
$ 11
(Gains) and losses reclassified from AOCL:
Amortization of actuarial gain⁽²⁾
0
(1 ) 0
(2 )
Other comprehensive loss 0
(1 ) 0
(2 )
Cumulative impact of adopting ASU 2018-02 0
0
0
3
Distribution of RCP and GPC⁽³⁾
1
0
(12 ) 0
Balance as of end of period $ 0
$ 12
$ 0
$ 12

AOCL
Balance as of beginning of period $ (624 ) $ (714 ) $ (518 ) $ (689 )
Other comprehensive income (loss) 66
(65 ) (29 ) (49 )
Cumulative impact of adopting ASU 2018-02 0
0
0
(41 )
Distribution of RCP and GPC⁽¹⁾⁽³⁾
172
0
161
0
Balance as of end of period $ (386 ) $ (779 ) $ (386 ) $ (779 )


~~(1)~~	Currency translation adjustment reclassifications associated with the distribution of RCP are recorded directly to additional paid in capital. Currency translation adjustment reclassifications associated with the distribution of GPC are recorded directly to retained earnings. See Note 3 - Discontinued Operations for additional details.


~~(2)~~	~~Amortization of actuarial gain associated with plans related to our discontinued operations is recorded in income from discontinued operations.~~


~~(3)~~	~~Defined benefit plan reclassifications associated with the distribution of RCP and GPC are recorded directly to retained earnings.~~

~~Pactiv Evergreen Inc.~~

~~Notes~~Net actuarial gain (loss) relates to the ~~Condensed Consolidated Financial Statements~~

~~(unaudited)~~

interim remeasurements of the PPPE due to the pension partial settlement transactions completed in September 2022 and February 2022. Net actuarial gain arising during the three months ended September 30, 2022 was primarily due to an increase in the discount rate utilized in measuring plan obligations, reflecting changes in market rates, partially offset by asset returns. Net actuarial loss arising during the nine months ended September 30, 2022 was primarily due to asset returns, partially offset by an increase in the discount rate utilized in measuring plan obligations, reflecting changes in market rates. Refer to Note 10, Employee Benefits, for additional details.

(2)

Reclassifications upon sale of businesses are recorded in other (expense) income, net.

We also lease a portion of two facilities to RCPI and are party to an information technology services agreement with RCPI. We do not trade with ~~GPC~~Graham Packaging Company Inc. (“GPCI”) on an ongoing basis. We ~~have entered into~~also are party to a transition services agreement ~~to provide ongoing agreed~~with GPCI.

(3)

These charges are for various costs incurred including services ~~to GPC, as requested. We have also entered into~~provided under a ~~tax matters~~transition services agreement, an insurance sharing agreement and an investment advisory agreement with GPC. We have recognized a receivable of $8 million under the tax matters agreement in relation to GPC’s estimated share of U.S. federal taxes in respect of the period from January 1, 2020 through to September 16, 2020.Rank Group Limited (“Rank”). All amounts are unsecured, non-interest bearing and settled on normal trade terms.


~~(c)~~	~~Represents payments received or made for tax losses transferred between our entities and other entities controlled by Mr. Graeme Hart.~~

~~(d)~~

Represents certain costs paid on our behalf that were subsequently recharged to us. These charges are for various costs incurred including services provided, financing and other activities. All amounts are unsecured, non-interest bearing and settled on normal trade terms. As part of our IPO, we have entered into a transition services agreement with Rank Group Limited ("Rank") under which Rank will, upon our request, continue to provide certain administrative and support services to us, and we will

~~Pactiv Evergreen Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(unaudited)~~

~~provide support services to Rank upon request. All services provided will be charged at an agreed hourly rate plus any third party costs.~~


~~(e)~~	~~In connection with our IPO, $15 million of current related party receivables owed by Rank was forgiven. We recognized this forgiveness as a reduction in retained earnings.~~

~~(f)~~

The loan with Rank, which was included in noncurrent related party receivables, accrued interest at a rate based on the average 90-day New Zealand bank bill rate, set quarterly, plus a margin of 3.25%. During the three and nine months ended September 30, 2020, interest was charged at 3.550% and 3.458% to 4.275%, respectively. During the three and nine months ended September 30, 2019, interest was charged at 4.567% and 4.567% to 5.149%, respectively. In preparation for our IPO, the loan receivable was forgiven. We recognized this forgiveness as a reduction in retained earnings.

~~(g)~~

Our financing agreements permit the payment of management fees to related parties for management, consulting, monitoring and advising services. The management fees were paid pursuant to a services agreement with Rank. In connection with our IPO, we (i) paid an additional management fee of $22 million, in respect of the 2009 and 2010 financial years and (ii) paid a termination fee of $45 million for the termination of, and release from, the Rank services agreement, which included the $8 million management fee payable for the period January 1, 2020 to the date of termination of September 16, 2020 which was previously accrued. During the three and nine months ended September 30, 2020, management fees of $44 million and $49 million, respectively, were recognized in other (expense) income, net, with the remainder in discontinued operations. During the three and nine months ended September 30, 2019, management fees of $3 million and $8 million, respectively, were recognized in other (expense) income, net, with the remainder in discontinued operations. The services agreement with Rank was terminated in connection with our IPO, and we will no longer be charged a management fee.

Note ~~19 - Stock-based~~16. Equity Based Compensation

~~In conjunction with our IPO, we~~

We established the Pactiv Evergreen Inc. Equity Incentive Plan ~~(the “Equity Incentive Plan”)~~ for purposes of granting ~~stock- and cash-based~~stock or other equity based compensation awards to our employees (including our senior management), directors, consultants and advisors. ~~The maximum number~~

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

Equity based compensation costs were $9 million, $24 million, $6million and $16 million for the three and nine months ended September 30, 2023 and 2022, respectively, substantially all of ~~shares of common stock initially available for issuance under our Equity Incentive Plan~~which was ~~9,079,395 shares.~~

recognized in selling, general and administrative expenses.

Restricted Stock Units

During ~~2019 and 2020, in anticipation of our IPO,~~the nine months ended September 30, 2023, we granted ~~297,296~~ restricted stock units (“RSUs”) to certain members of management which included a performance condition that required the Company to complete an IPO. Certain of these RSUs vest over three years, with one-third of an employee’s RSUs vesting on each anniversary from the dateand certain members of our ~~IPO, subject~~Board of Directors. These RSUs require future service to be provided and vest in annual installments over a period ranging from one to three years beginning on the ~~employee’s continued employment through the applicable vesting date. The remaining portion~~first anniversary of the grant date. During the vesting period, the RSUs ~~vests~~carry dividend-equivalent rights, but the RSUs do not have voting rights. The RSUs and any related dividend-equivalent rights are forfeited in the event the holder is no longer an employee on ~~December 31, 2021, subject~~the vesting date, unless the holder satisfies certain retirement-eligibility criteria. The following table summarizes RSU activity during 2023:


(In thousands, except per share amounts)	Number of RSUs			Weighted Average Grant Date Fair Value
Non-vested, at January 1		1,983		$	11.89
Granted(1)		1,744			9.64
Forfeited		(233	)		12.08
Vested		(653	)		12.89
Non-vested, at September 30		2,841		$	10.26

(1)

Includes 86 thousand shares reserved for issuance upon the settlement of dividend-equivalent rights carried by the reported RSUs concurrently with the settlement of such RSUs for shares.

Unrecognized compensation cost related to ~~the employee’s continued employment through this vesting date. We~~unvested RSUs as of September 30, 2023 was $11 million, which is expected to be recognized ~~approximately $1 million~~over a weighted average period of ~~stock-based compensation expense~~2.1 years. The total vest date fair value of shares that vested during the ~~three and~~ nine months ended September 30, ~~2020 related to these grants. There~~2023 was ~~0 stock-based compensation expense recorded during~~$6 million.

Performance Share Units

During the ~~three and~~ nine months ended September 30, ~~2019.~~2023, we granted performance share units (��PSUs”) to certain members of management which vest on the third anniversary of the grant date. Based on the achievement of a company performance target during a performance period set by our Compensation Committee of our Board of Directors, upon vesting, the PSUs are exchanged for a number of shares of common stock equal to the number of PSUs multiplied by a factor between 0% and 200%. We use our stock price on the grant date to estimate the fair value of our PSUs. We adjust the expense based on the likelihood of future achievement of performance metrics. If any of the performance targets are not achieved, the awards are forfeited. During the vesting period, the PSUs carry dividend-equivalent rights, but the PSUs do not have voting rights. The PSUs and any related dividend-equivalent rights are forfeited in the event the holder is no longer an employee on the vesting date, unless the holder satisfies certain retirement-eligibility criteria. The following table summarizes PSU activity during 2023:


(In thousands, except per share amounts)	Number of PSUs			Weighted Average Grant Date Fair Value
Non-vested, at January 1		1,155		$	9.29
Granted(1)		1,729			9.37
Forfeited		(91	)		9.54
Non-vested, at September 30		2,793		$	9.33

(1)

Includes 168 thousand shares reserved for issuance upon the settlement of dividend-equivalent rights carried by the reported PSUs concurrently with the settlement of such PSUs for shares.

Unrecognized compensation cost related to unvested PSUs as of September 30, ~~2020, we had 8,782,099 shares available under the Equity Incentive Plan.~~2023 was $21 million, which is expected to be recognized over a weighted average period of 2.2 years.

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

~~(unaudited)~~

Note ~~20 -~~17. Earnings Per Share

AEarnings (loss) per share, including a reconciliation of the number of shares used for our earnings (loss) ~~earnings~~ per share calculation, was as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023			2022
Numerator
Net earnings (loss) attributable to common shareholders - continuing operations	$	27	$	175	$	(246	)	$	291
Less: dividend-equivalents declared for equity based awards		—		—		(2	)		(1	)
Net earnings (loss) available to common shareholders - continuing operations		27		175		(248	)		290
Net earnings attributable to common shareholders - discontinued operations		2		1		2			1
Total net earnings (loss) available to common shareholders	$	29	$	176	$	(246	)	$	291
Denominator
Weighted average number of shares outstanding - basic		178.7		177.9		178.5			177.7
Effect of dilutive securities		1.0		0.8		—			0.6
Weighted average number of shares outstanding - diluted		179.7		178.7		178.5			178.3
Earnings (loss) per share attributable to Pactiv Evergreen Inc. common shareholders
From continuing operations
Basic	$	0.15	$	0.98	$	(1.39	)	$	1.63
Diluted	$	0.15	$	0.98	$	(1.39	)	$	1.63
From discontinued operations
Basic	$	0.01	$	0.01	$	0.01		$	0.01
Diluted	$	0.01	$	—	$	0.01		$	—
Total
Basic	$	0.16	$	0.99	$	(1.38	)	$	1.64
Diluted	$	0.16	$	0.98	$	(1.38	)	$	1.63

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
(in millions, except per share amounts)
Net (loss) income attributable to Pactiv Evergreen Inc. common stockholders
From continuing operations $ (143 ) $ (35 ) $ (29 ) $ (101 )
From discontinued operations (216 ) 91
(234 ) 270
Total $ (359 ) $ 56
$ (263 ) $ 169

Weighted average number of shares outstanding
Basic 138.9
134.4
135.9
134.4
Effect of dilutive securities 0
0
0
0
Diluted 138.9
134.4
135.9
134.4

(Loss) earnings per share attributable to Pactiv Evergreen Inc. common stockholders
From continuing operations
Basic $ (1.03 ) $ (0.26 ) $ (0.22 ) $ (0.75 )
Diluted $ (1.03 ) $ (0.26 ) $ (0.22 ) $ (0.75 )
From discontinued operations
Basic $ (1.56 ) $ 0.67
$ (1.72 ) $ 2.01
Diluted $ (1.56 ) $ 0.67
$ (1.72 ) $ 2.01
Total
Basic $ (2.59 ) $ 0.41
$ (1.94 ) $ 1.26
Diluted $ (2.59 ) $ 0.41
$ (1.94 ) $ 1.26

There were

no anti-dilutive potential common shares excluded from the calculation above for the three months ended September 30, 2023. The weighted average number of anti-dilutive potential common shares ~~outstanding prior to our IPO reflects PTVE’s conversion to a Delaware incorporated entity~~excluded from the calculation above was 0.8 million for the nine months ended September 30, 2023 and ~~the subsequent stock split, as detailed in Note 1 - Nature of Operations~~0.2 million shares and ~~Basis of Presentation. The stock split has been retroactively reflected, resulting in 134.4~~0.7 million ~~weighted average number of~~ shares ~~outstanding~~ for the three and nine months ended September 30, ~~2019. The weighted average number~~2022, respectively.

On October 31, 2023, our Board of ~~shares outstanding during~~Directors declared a dividend of $0.10 per share to be paid on December 15, 2023 to shareholders of record as of November 30, 2023.

Note 18. Segment Information

In the ~~three~~second quarter of 2023, in conjunction with the Beverage Merchandising Restructuring, we implemented a new operating and ~~nine months ended September 30, 2020 reflects~~reporting structure resulting in the ~~weighted average number of shares outstanding, as described above, including the weighted average shares issued on September 21, 2020 as part~~combination of our ~~IPO.~~

legacy Food Merchandising and Beverage Merchandising segments, creating our Food and Beverage Merchandising segment. Refer to Note ~~21 - Subsequent Events~~

~~Except as described elsewhere in this document, there~~3, Restructuring, Asset Impairment and Other Related Charges, for additional details. We also reorganized the management of certain product lines from our Foodservice segment to our Food and Beverage Merchandising segment.

As of the end of the second quarter of 2023, we analyzed the results of our business through our Foodservice and Food and Beverage Merchandising segments. All prior periods have been ~~no events subsequent~~recast to ~~September 30, 2020~~reflect the current reportable segment structure and the change in the management of certain product lines. These reportable segments reflect our operating structure and the manner in which our Chief Operating Decision Maker (“CODM”), who is our President and Chief Executive Officer, assesses information for decision-making purposes. The key factors used to identify these reportable segments are the organization of our internal operations and the nature of our products. This reflects how our CODM

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

monitors performance, allocates capital and makes strategic and operational decisions. Our reportable segments are described as follows:

Foodservice - Manufactures a broad range of products that ~~would require accrual or disclosure in these condensed consolidated financial statements.~~

~~FORWARD-LOOKING STATEMENTS~~

~~This Quarterly Report on Form 10-Q contains certain statements~~enable consumers to eat and drink where they want and when they want with convenience. Foodservice manufactures food containers, drinkware (hot and cold cups and lids), tableware, serviceware and other products which make eating on-the-go more enjoyable and easy to do.

Food and Beverage Merchandising - Manufactures products that ~~constitute "forward-looking statements" within~~protect and attractively display food and beverages while preserving freshness. Food and Beverage Merchandising products include cartons for fresh refrigerated beverage products, primarily serving dairy (including plant-based, organic and specialties), juice and other specialty beverage end-markets, clear rigid-display containers, containers for prepared and ready-to-eat food, trays for meat and poultry and egg cartons. It also produces fiber-based liquid packaging board for its internal requirements and to sell to other fresh beverage carton manufacturers. Prior to June 2023, it also produced a range of paper-based products which it sold to paper and packaging converters.

Other/Unallocated - In addition to our reportable segments, we had other operating segments that did not meet the ~~meaning~~threshold for presentation as a reportable segment. These operating segments comprised the remaining components of our former closures business, which generated revenue from the sale of caps and closures, and are presented as “Other.” As of March 31, 2023, we had disposed of all of the ~~Private Securities Litigation Reform Act~~remaining components of ~~1995. In some cases, you can identify these statements by forward-looking words~~our former closures business. Unallocated includes corporate costs, primarily relating to general and administrative functions such as ~~“may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,”~~finance, tax and legal and the ~~negative~~effects of ~~these terms~~the PPPE.

Information by Segment

We present reportable segment Adjusted EBITDA as this is the financial measure by which management and our CODM allocate resources and analyze the performance of our reportable segments.

A segment’s Adjusted EBITDA represents its earnings before interest, tax, depreciation and amortization and is further adjusted to exclude certain items, including but not limited to restructuring, asset impairment and other ~~comparable terminology. These forward-looking statements, which are subject~~related charges, gains or losses on the sale of businesses and noncurrent assets, non-cash pension income or expense, operational process engineering-related consultancy costs, business acquisition and integration costs and purchase accounting adjustments, unrealized gains or losses on derivatives, foreign exchange gains or losses on cash and gains or losses on certain legal settlements.

Pactiv Evergreen Inc.

Notes to ~~risks, uncertainties~~the Condensed Consolidated Financial Statements

(In millions, except per share data and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies, anticipated trends in our business and anticipated growth in the markets served by our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed in the "Risk Factors" section of our final prospectus filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4). You should specifically consider the numerous risks outlined in the final prospectus. Refer also to Part II, Item 1A. “Risk Factors.” These risks include, among others, those related to:unless otherwise indicated)

(Unaudited)


	Foodservice		Food and Beverage Merchandising		Reportable Segment Total
For the Three Months Ended September 30, 2023
Net revenues	$	675	$	704	$	1,379
Intersegment revenues		—		8		8
Total reportable segment net revenues		675		712		1,387
Adjusted EBITDA		117		130		247

For the Three Months Ended September 30, 2022
Net revenues	$	713	$	870	$	1,583
Intersegment revenues		—		50		50
Total reportable segment net revenues		713		920		1,633
Adjusted EBITDA		107		102		209

For the Nine Months Ended September 30, 2023
Net revenues	$	1,945	$	2,289	$	4,234
Intersegment revenues		—		78		78
Total reportable segment net revenues		1,945		2,367		4,312
Adjusted EBITDA		351		340		691

For the Nine Months Ended September 30, 2022
Net revenues	$	2,115	$	2,554	$	4,669
Intersegment revenues		—		123		123
Total reportable segment net revenues		2,115		2,677		4,792
Adjusted EBITDA		378		303		681

~~future costs of raw materials, energy and freight, including the impact of tariffs, trade sanctions and similar matters;~~

~~competition in the markets in which we operate;~~

~~changes in consumer lifestyle, eating habits, nutritional preferences and health-related and environmental and sustainability concerns;~~

~~failure to maintain satisfactory relationships with our major customers;~~

~~the impact of a loss of any of our key manufacturing facilities;~~

~~the uncertain economic, operational and financial impacts~~

Reportable segment assets consisted of the ~~COVID-19 pandemic;~~following:


	Foodservice		Food and Beverage Merchandising		Reportable Segment Total
As of September 30, 2023	$	1,279	$	1,485	$	2,764
As of December 31, 2022		1,385		1,884		3,269

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

~~compliance with,~~

The following table presents a reconciliation of reportable segment Adjusted EBITDA to consolidated income (loss) from continuing operations before income taxes:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Reportable segment Adjusted EBITDA	$	247		$	209		$	691		$	681
Other		—			1			—			3
Unallocated		(20	)		(23	)		(58	)		(66	)
		227			187			633			618
Adjustments to reconcile to income (loss) from continuing operations before income taxes
Interest expense, net		(61	)		(59	)		(188	)		(158	)
Depreciation and amortization (excluding restructuring-related charges)		(81	)		(85	)		(247	)		(255	)
Beverage Merchandising Restructuring charges		(32	)		—			(435	)		—
Other restructuring and asset impairment charges (reversals)		—			(57	)		—			(58	)
Gain (loss) on sale of businesses and noncurrent assets		—			239			(1	)		266
Non-cash pension (expense) income		(2	)		44			(6	)		52
Operational process engineering-related consultancy costs		—			(3	)		—			(7	)
Business integration costs		—			—			—			(6	)
Unrealized gains (losses) on commodity derivatives		1			(10	)		—			(4	)
Foreign exchange losses on cash		(2	)		—			(4	)		(2	)
Executive transition charges		—			—			—			(2	)
(Losses) gains on legal settlements		—			—			(1	)		15
Costs associated with legacy facility		—			—			—			(6	)
Other		—			(2	)		—			(1	)
Income (loss) from continuing operations before tax	$	50		$	254		$	(249	)	$	452

The following table presents a reconciliation of reportable segment assets to consolidated assets:


	As of September 30, 2023		As of December 31, 2022
Reportable segment assets(1)	$	2,764	$	3,269
Unallocated(2)		3,682		4,037
Total assets	$	6,446	$	7,306

(1)

Reportable segment assets represent trade receivables, inventory and ~~liabilities~~property, plant and equipment.

(2)

Unallocated is comprised of cash and cash equivalents, other current assets, assets held for sale, entity-wide property, plant and equipment, operating lease right-of-use assets, goodwill, intangible assets, related ~~to, environmental, health and safety laws, regulations and permits;~~

~~impact of government regulations and judicial decisions affecting products we produce or the products contained in the products we produce;~~

~~any non-compliance with the Foreign Corrupt Practices Act or similar laws;~~

~~our dependence on suppliers of raw materials and any interruption to our supply of raw materials;~~

~~our ability to realize the benefits of our capital investment, restructuring~~party receivables and other ~~cost savings programs;~~noncurrent assets.

Pactiv Evergreen Inc.

Notes to the Condensed Consolidated Financial Statements

(In millions, except per share data and unless otherwise indicated)

(Unaudited)

Information in Relation to Products

Net revenues by product line are as follows:

~~seasonality~~


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Foodservice
Drinkware	$	324		$	322		$	892		$	934
Containers		233			256			700			798
Tableware		72			76			215			214
Serviceware and other		46			59			138			169
Food and Beverage Merchandising
Cartons for fresh beverage products		177			197			554			644
Bakery/snack/produce/fruit containers		123			148			389			435
Meat trays		108			103			323			278
Liquid packaging board		68			152			317			388
Tableware		103			112			309			325
Prepared food trays		38			42			110			124
Egg cartons		33			30			103			87
Paper products		—			73			74			213
Other		62			63			188			183
Reportable segment net revenues		1,387			1,633			4,312			4,792
Other / Unallocated
Other		—			26			2			75
Intersegment eliminations		(8	)		(50	)		(78	)		(123	)
Net revenues	$	1,379		$	1,609		$	4,236		$	4,744

For all product lines, there is a relatively short time period between the receipt of the order and ~~cyclicality.~~

~~Although we believe~~ the ~~expectations reflected in~~transfer of control over the ~~forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for~~goods to the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform our prior statements to actual results or revised expectations.customer.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our discussion and analysis is intended to help the reader understand our results of operations and financial condition and is provided as an addition to, and should be read in connection with, our condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q.

~~Description of the~~

Our Company ~~and its Business Segments~~

We are a leading manufacturer and distributor of fresh foodservice and food merchandising products and fresh beverage cartons in North America. We produce a broad range of on-trend and feature-rich products that protect, package and display ~~fresh~~ food and beverages for ~~consumers who want~~today’s consumers. Our products include containers, drinkware (such as hot and cold cups and lids), cartons for fresh refrigerated beverage products, tableware, meat and poultry trays, liquid packaging board, serviceware, prepared food trays and egg cartons. Our products, many of which are made with recycled, recyclable or renewable materials, are sold to ~~eat or drink fresh, prepared or ready-to-eat food and beverages conveniently and with confidence. We supply our products to~~ a ~~broad and~~ diversified mix of ~~companies,~~customers, including ~~full service~~ restaurants, ~~(“FSRs”) and quick service restaurants (“QSRs”),~~ foodservice distributors, ~~supermarkets, grocery and healthy eating~~ retailers, ~~other food stores,~~ food and beverage producers, packers and ~~food~~ processors.

~~Our operations consist~~

Change in Segments

In the second quarter of ~~manufacturing~~2023, in conjunction with the Beverage Merchandising Restructuring, we implemented a new operating and ~~selling products through three reportable segments organized across three broad categories:~~

•

~~Foodservice.~~ Our Foodservice segment manufactures a broad range of products that enable consumers to eat and drink what they want, where they want and when they want with convenience. Products include food containers, hot and cold cups, lids, dinnerware and other products which make eating on-the-go more enjoyable and easy to do. Foodservice’s customer base includes chain restaurants, FSRs, established and emerging QSRs, distributors, institutional foodservice (e.g. airports, schools and hospitals) and convenience stores.

•

~~Food Merchandising~~. Our Food Merchandising segment manufactures products that protect and attractively display food while preserving freshness. Products include clear rigid-display containers, containers for prepared and ready-to-eat food, trays for meat and poultry and molded fiber cartons. Food Merchandising’s customers include supermarkets, grocery and healthy eating retailers and other food stores as well as meat, egg, agricultural and consumer packaged goods processors.

•

~~Beverage Merchandising~~. Our Beverage Merchandising segment manufactures cartons for fresh refrigerated beverage products, primarily serving dairy (including plant-based, organic and specialties), juice and other specialty beverage end-markets. Products include integrated fresh carton systems, which include printed cartons with high-impact graphics, spouts and filling machines. Beverage Merchandising also produces fiber-based liquid packaging board for its internal requirements and to sell to other fresh beverage carton manufacturers, as well as a range of paper-based products which it sells to paper and packaging converters. Beverage Merchandising’s customers include dairy, juice and specialty beverage producers, cup, plate and container manufacturers, and other beverage carton manufacturers.

~~Our Initial Public Offering and Corporate Reorganization~~

~~On September 21, 2020, we completed an initial public offering~~reporting structure resulting in the combination of our ~~common stock (“IPO”).~~ legacy Food Merchandising and Beverage Merchandising segments, creating our Food and Beverage Merchandising segment. We also reorganized the management of certain product lines from our Foodservice segment to our Food and Beverage Merchandising segment.

In ~~connection~~addition, we provided certain unaudited recast financial information for the years ended December 31, 2022 and 2021, the four quarters of the year ended December 31, 2022 and the three months ended March 31, 2023 in a Current Report on Form 8-K filed with the ~~IPO,~~U.S. Securities and Exchange Commission on ~~September 16, 2020,~~August 2, 2023.

Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, and Note 18, Segment Information, for additional details.

Business Environment

During 2023, we ~~distributed all~~experienced a continued moderation in consumer demand for certain of our ~~shares~~products, primarily driven by sustained high levels of inflation and general macroeconomic uncertainty. While we have not seen a material economic contraction to-date, these pressures may continue to impact consumer demand and thus our customers’ purchasing decisions and order patterns throughout the remainder of 2023 and into 2024.

Our input costs have largely stabilized and have begun to moderate in ~~Graham Packaging Company Inc.~~certain circumstances as compared to ~~PFL,~~recent periods. We believe our ~~sole shareholder, prior~~pricing strategy provides us with flexibility to ~~completion~~manage our market position through cost recovery mechanisms and strategic competitive pricing. In this dynamic environment, we remain focused on servicing our customers and improving manufacturing productivity across our business.

During the second quarter of ~~the IPO (the “GPC Separation”). As a result of the GPC Separation, Graham Packaging Company Inc. and its subsidiaries have~~2023, we ceased ~~to be wholly-owned subsidiaries of the Company. Following the IPO, we also completed following transactions:~~

On October 1, 2020 we issued $1,000 million aggregate principal amount of 4.000% Senior Secured Notes maturing on October 15, 2027 (“4.000% Notes”). The notes are guaranteed and secured on a senior basis by the same subsidiaries that guarantee and secure the obligations underoperations at our ~~Credit Agreement~~Canton, North Carolina mill and our ~~5.125% Notes. The proceeds~~converting facility in Olmsted Falls, Ohio, and production from the ~~new notes~~Olmsted Falls facility was reallocated to other sites. We expect these actions will allow us to solidify our leadership position in large, growing end markets while prioritizing our distinctive core strengths.

Elevated interest rates, sustained high levels of inflation, geopolitical factors and the resulting volatility within the capital markets over the last year have created uncertainty with respect to the economic outlook. If economic conditions were ~~used~~ to ~~repay indebtedness, as described below,~~deteriorate, a further decline in consumer spending may result, which could lead to a meaningful decline in demand for our products in the remainder of 2023 and ~~pay~~beyond.

Recent Developments and Items Impacting Comparability

Beverage Merchandising Restructuring

On March 6, 2023, we announced the Beverage Merchandising Restructuring, a plan approved by our Board of Directors to take significant restructuring actions related ~~transaction~~to our Beverage Merchandising operations. We expect these actions to increase our production efficiency, streamline our management structure and reduce our ongoing capital expenditures and overhead costs.

~~On October 1, 2020, we incurred $1,250 million of new term loans maturing on February 5, 2026~~

We expect that the Beverage Merchandising Restructuring will enable us to maintain our strong position in the liquid packaging market by increasing our overall productivity over time and obtained commitments for a new $250 million senior secured revolving credit facility maturing on August 5, 2024. The new term loans have an interest rate equal to one-month LIBOR with a 0.0% floor, plus a margin of 3.25% per annum. The proceedsoptimizing our manufacturing footprint. It also resulted in our exit from the ~~new term loans were used~~uncoated freesheet paper market.

We also continue to ~~refinance~~explore strategic alternatives for our Pine Bluff, Arkansas mill and our Waynesville, North Carolina facility. We have not set a ~~portion of our existing term loans, as described below, and~~timetable in relation to ~~pay related transaction costs.~~ this process.

The ~~new revolving credit facility replaced our existing $302 million revolving credit facility.~~


▪	~~$650 million of our 7.000% Notes, resulting in the extinguishment of these notes;~~


▪	~~$1,470 million of our 5.125% Notes; and~~


▪	~~$1,280 million of existing term loans maturing in February 2023.~~

~~Impact of COVID-19~~

~~On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization, which recommended containment and mitigation measures worldwide. Our~~ operations ~~sales, and, to a lesser extent, our supply chain have been~~ impacted by the ~~pandemic,~~Beverage Merchandising Restructuring did not qualify for presentation as discontinued operations.

Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details.

Dispositions

On January 4, 2022, we entered into a definitive agreement with SIG Schweizerische Industrie-Gesellschaft GmbH to sell Beverage Merchandising Asia. The transaction closed on August 2, 2022, and we ~~expect that impact~~received proceeds of $336 million. We recognized a gain on sale of $239 million during the three months ended September 30, 2022. Sales of liquid packaging board to ~~continue.~~

~~Although many jurisdictions have implemented, for various periods~~our former Beverage Merchandising Asia operations, which were previously eliminated in consolidation, are recorded as external net revenues subsequent to the transaction’s completion.

During the third quarter of ~~time, stay-at-home,~~2022, we committed to a plan to sell our remaining closures ~~or similar measures designed to limit the spread of COVID-19, resulting~~businesses included in the ~~temporary closing~~Other operating segment and recognized a charge to earnings of ~~many~~$56 million within restructuring, asset impairment and other related charges. We completed the sale of a substantial portion of these businesses ~~these orders include exemptions~~on October 31, 2022, and the remaining operations on March 1, 2023, all for ~~“essential businesses.” All~~an immaterial amount.

On March 29, 2022, we completed the sale of our ~~operations fall within those exemptions~~equity interests in Naturepak Beverage, our 50% joint venture with Naturepak Limited, to affiliates of Elopak ASA. We received proceeds of $47 million and ~~have remained open. Some~~recognized a gain on the sale of our ~~facilities, however, operate in communities that have had high incident rates~~equity interests of COVID-19, resulting in many persons out sick or in quarantine, which has impacted production at some plants. We have implemented several policies designed to protect our employees and our customers including screening employees for all symptoms of COVID-19 (including increased temperature checking), ensuring social distancing is observed, providing physical barriers and personal protective equipment where employees work closely together, tracking and tracing of COVID-19 positive employees to identify close contacts and locations frequented, engagement of third-party vendors to deep-clean and sanitize facilities and enhancing pay and leave policies to ensure employees experiencing symptoms of COVID-19 stay at home. While certain of these measures taken have increased our costs, we remain committed to adapting our policies and procedures to ensure the safety of our employees and compliance with federal, state and local regulations while the pandemic continues. We have taken actions to reduce non-essential spending, including the furlough of certain of our employees, reducing working capital in areas affected by lower sales and reducing non-essential capital spending.

~~The COVID-19 pandemic has had a significant impact to our results of operations for~~$27 million during the nine months ended September 30, ~~2020, with the largest impact occurring in the second quarter~~2022.

None of these dispositions qualified for presentation as discontinued operations.

Pension Partial Settlement Transactions

On September 20, 2022 and toFebruary 24, 2022, using PPPE assets, we purchased non-participating group annuity contracts from insurance companies and transferred a lesser extent in the third quarter. Our Foodservice segment experienced a significant decline in net revenue due to the closure or reduced activity of restaurants and other food-serving institutions. Our Foodservice customers have adapted to COVID-19 restrictions and changes in consumer behavior by offering more take-out and online ordering options. Consistent with the easing of restrictions, towards the latter partportion of the ~~second quarter of 2020~~PPPE’s projected benefit obligations. In each instance, the respective insurance companies have assumed responsibility for pension benefits and into the third quarter we experienced an increase in volumes and net revenues in our Foodservice segment. Our Food Merchandising segment has experienced a strong market demand for many of our products as people continue to eat more at home, while there has been a decline in demand for other products, such as bakery and snack containers typically used in many of the group gatherings that were either canceled or scaled back due to restrictions and concerns over COVID-19. Within our Beverage Merchandising segment, sales of fresh beverage cartons have remained relatively constant with declines in sales of school milk cartons being offset by higher demand in the retail segment, while sales in the paper markets have declined due to a decrease in demand of printed publications and advertising and demand for liquid packaging board has softened.

We expect that the COVID-19 pandemic will continue to negatively impact our results of operations in future periods as the macroeconomic environment changes and consumer behavior continues to evolve. However, the general effects of the COVID-19 pandemic continue to change and remain unpredictable. We make no assurances as to the future results of our business.

In facilities that manufacture, warehouse and distribute products with softening demand, we have taken measures to reduce spending and production accordingly. To date, we have not experienced significant issues within our supply chain, including the sourcing of materials and logistics service providers. However, this may change the longer the pandemic continues.

~~We believe the increased demand for certain of our products results~~annuity administration. The following table provides details regarding each transaction:


		(In millions)
Transaction Date	Reporting Period	Assets Transferred		Projected Benefit Obligations Transferred		Settlement Gain Recognized		Number of Participants Impacted
September 20, 2022	Q3 2022	$	629	$	656	$	47		10,200
February 24, 2022	Q1 2022		1,260		1,257		10		13,300

Non-GAAP Measures – Adjusted EBITDA from more people eating at home due to the pandemic. We cannot predict if, or for how long, such increased demand will continue. For those products with decreased demand, we do not expect to recover the sales lost during the pandemic, and certain industries we serve, primarily the restaurant industry, are experiencing severe impacts and may not return to pre-pandemic strength for a significant period of time. The duration of the COVID-19 pandemic remains unknown, and its ongoing impact on our operations may not be consistent with our experiences to date.

In addition, we have experienced volatility in the net liability for our pension plans, with the value of plan assets and liabilities impacted by changes in financial markets in connection with the COVID-19 pandemic.

At this time, we are unable to predict with any certainty the nature, timing or magnitude of any changes in future sales and/or earnings attributable to the spread of COVID-19. See “Risk Factors” in our final prospectus filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4).

~~CARES Act~~

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted in March 2020. Retroactive provisions of the CARES Act entitle us to utilize additional deferred interest deductions, which lower our taxable income for the year ended December 31, 2019. The CARES Act also increases the allowable interest deductions for the year ending December 31, 2020. We recognized a tax benefit in continuing operations in the nine months ended September 30, 2020 of $132 million which was primarily driven by adjusting our taxable income for the year ended December 31, 2019 as a result of the CARES Act.

~~How We Assess the Performance of Our Business and Use of Non-GAAP Measures~~

Continuing Operations

In addition to financial measures determined in accordance with GAAP, we make use of the non-GAAP financial measure Adjusted EBITDA from continuing operations ~~in evaluating~~to evaluate and manage our ~~consolidated past results~~business and ~~our consolidated future prospects.~~

~~Adjusted EBITDA from continuing operations~~

to plan and make near-term and long-term operating and strategic decisions.

Adjusted EBITDA from continuing operations is defined as net income (loss) from continuing operations calculated in accordance with GAAP, plus the sum of income tax expense, net interest expense, depreciation and amortization and further adjusted to exclude certain items, ~~of a significant or unusual nature,~~ including but not limited to ~~foreign exchange gains or losses on cash,~~restructuring, asset impairment and other related ~~party management fees, unrealized gains or losses on derivatives,~~charges, gains or losses on the sale of businesses and noncurrent assets, ~~restructuring, asset impairment and other related charges,~~non-cash pension income or expense, operational process engineering-related consultancy costs, ~~non-cash pension income~~business acquisition and integration costs and purchase accounting adjustments, unrealized gains or ~~expense~~losses on derivatives, foreign exchange gains or losses on cash and ~~strategic review and transaction-related costs.~~

gains or losses on certain legal settlements.

We present Adjusted EBITDA from continuing operations because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, ~~and~~ make strategic ~~decisions.~~decisions and incentivize and reward our employees. Accordingly, we believe that Adjusted EBITDA from continuing operations provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and ~~board~~Board of ~~directors.~~ Directors. We also believe that using Adjusted EBITDA from continuing operations facilitates operating performance comparisons on a period-to-period basis because it excludes variations primarily caused by changes in the items noted above.

In addition, our chief operating decision maker, who is our President and Chief Executive Officer, uses Adjusted EBITDA of each reportable segment to evaluate the operating performance of such segments.

Our use of Adjusted EBITDA from continuing operations has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Instead, you should consider it alongside other financial performance measures, including our net income (loss) from continuing operations and other GAAP results. In addition, in evaluating Adjusted EBITDA from continuing operations, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments made in deriving Adjusted EBITDA from continuing operations, and you should not infer from our presentation of Adjusted EBITDA from continuing operations that our future results will not be affected by these expenses or any unusual or non-recurring items. The following is a reconciliation of our net income (loss) from continuing operations, the most directly comparable GAAP financial measure, to Adjusted EBITDA from continuing operations for each of the periods indicated:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(In millions)	2023			2022			2023			2022
Net income (loss) from continuing operations (GAAP)	$	28		$	175		$	(244	)	$	292
Income tax expense (benefit)		22			79			(5	)		160
Interest expense, net		61			59			188			158
Depreciation and amortization (excluding restructuring-related charges)		81			85			247			255
Beverage Merchandising Restructuring charges(1)		32			—			435			—
Other restructuring and asset impairment charges (reversals)(2)		—			57			—			58
(Gain) loss on sale of businesses and noncurrent assets(3)		—			(239	)		1			(266	)
Non-cash pension expense (income)(4)		2			(44	)		6			(52	)
Operational process engineering-related consultancy costs(5)		—			3			—			7
Business integration costs(6)		—			—			—			6
Unrealized (gains) losses on commodity derivatives		(1	)		10			—			4
Foreign exchange losses on cash		2			—			4			2
Executive transition charges(7)		—			—			—			2
Losses (gains) on legal settlements(8)		—			—			1			(15	)
Costs associated with legacy facility(9)		—			—			—			6
Other		—			2			—			1
Adjusted EBITDA from continuing operations (Non-GAAP)	$	227		$	187		$	633		$	618

(1)

Reflects charges related to the Beverage Merchandising Restructuring, including $4 million and $271 million of accelerated depreciation expense during the three and nine months ended September 30, 2023, respectively. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details.

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
(in millions)
Net loss from continuing operations (GAAP) $ (143 ) $ (35 ) $ (28 ) $ (100 )
Income tax expense (benefit) 42
—
(95 ) 16
Interest expense, net 87
84
275
312
Depreciation and amortization 73
68
213
198
Goodwill impairment charges⁽¹⁾
6
16
6
16
Restructuring, asset impairment and other related charges⁽²⁾
14
39
18
45
Loss on sale of businesses and noncurrent assets⁽³⁾
1
13
1
24
Non-cash pension income⁽⁴⁾
(18 ) —
(55 ) (2 )
Operational process engineering-related consultancy costs⁽⁵⁾
3
5
12
18
Related party management fee⁽⁶⁾
44
3
49
8
Strategic review and transaction-related costs⁽⁷⁾
24
1
39
2
Foreign exchange losses (gains) on cash⁽⁸⁾
42
(17 ) 14
(17 )
Unrealized (gains) losses on derivatives⁽⁹⁾
(1 ) 1
(3 ) (6 )
Other (1 ) (1 ) (1 ) 4
Adjusted EBITDA from continuing operations (Non-GAAP) $ 173
$ 177
$ 445
$ 518
(2)

Reflects other restructuring and asset impairment charges (reversals) not related to the Beverage Merchandising Restructuring. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details.

(3)

Reflects the (gain) loss from the sale of businesses and noncurrent assets, primarily related to the sale of Beverage Merchandising Asia and the sale of our equity interests in Naturepak Beverage in 2022. Refer to Note 2, Dispositions, for additional details.


~~(1)~~	Reflects goodwill impairment charges in respect of our remaining closures operations in 2020 and 2019. For further information, refer to Note 5 - Impairment, Restructuring and Other Related Charges in our condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q.


~~(2)~~	Reflects asset impairment, restructuring and other related charges primarily associated with the remaining closures businesses that are not reported within discontinued operations. For further information, refer to Note 5 - Impairment, Restructuring and Other Related Charges in our condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q.


~~(3)~~	Reflects the loss from the sale of businesses and noncurrent assets, primarily in our Other segment. For further information, refer to Note 13 - Other (Expense) Income, Net in our condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q.


~~(4)~~	~~Reflects the non-cash pension (income) expense related to our PEPP.~~


~~(5)~~	~~Reflects the costs incurred to evaluate and improve the efficiencies of our manufacturing and distribution operations.~~


~~(6)~~	Reflects the related party management fee charged by Rank to us and a fee to terminate this arrangement. For further information, refer to Note 18 - Related Party Transactions in our condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q. Following our IPO, we are no longer charged the related party management fee.


~~(7)~~	~~Reflects costs incurred for strategic reviews of our businesses, as well as costs related to our IPO that cannot be offset against the proceeds of the IPO.~~


~~(8)~~	~~Reflects foreign exchange (gains) losses on cash, primarily on U.S. dollar amounts held in non-U.S. dollar functional currency entities.~~


~~(9)~~	Reflects the mark-to-market movements in our commodity derivatives. For further information, refer to Note 11 - Financial Instruments in our condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q.

(4)

Reflects the non-cash pension expense (income) related to our employee benefit plans, including the pension settlement gains of $47 million and $57 million recognized during the three and nine months ended September 30, 2022, respectively. Refer to Note 10, Employee Benefits, for additional details.

(5)

Reflects the costs incurred to evaluate and improve the efficiencies of our manufacturing and distribution operations.

(6)

Reflects integration costs related to Fabri-Kal.

(7)

Reflects charges relating to key executive retirement and separation agreements.

(8)

Reflects losses (gains), net of costs, arising from the settlement of certain historical legal actions.

(9)

Reflects costs related to a closed facility that was sold prior to our acquisition of the entity.

Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Detailed comparisons of revenue and results are presented in the discussions of the operating segments, which follow our consolidated results discussion.

Three Months Ended September 30, ~~2020 Compared with the Three Months Ended September 30, 2019~~

~~Reportable Segment Net Revenue~~2023 and ~~Adjusted EBITDA~~

(In millions) Foodservice Food Merchandising Beverage Merchandising
Net revenues
2020 $ 473
$ 354
$ 361
2019 $ 546
$ 351
$ 401
Adjusted EBITDA
2020 $ 81
$ 72
$ 24
2019 $ 89
$ 56
$ 45

~~Total Pactiv Evergreen Inc.~~

For the Three Months Ended September 30,
(In millions, except for %) 2020 % of revenue 2019 % of revenue Change % change
Net revenues $ 1,195
100 % $ 1,306
100 % $ (111 ) (8 )%
Cost of sales (1,011 ) (85 )% (1,100 ) (84 )% 89
8 %
Gross profit 184
15 % 206
16 % (22 ) (11 )%
Selling, general and administrative expenses (116 ) (10 )% (104 ) (8 )% (12 ) (12 )%
Goodwill impairment charges (6 ) (1 )% (16 ) (1 )% 10
63 %
Restructuring, asset impairment and other related charges (14 ) (1 )% (39 ) (3 )% 25
64 %
Other (expense) income, net (79 ) (7 )% 2
— % (81 ) NM
Operating (loss) income from continuing operations (31 ) (3 )% 49
4 % (80 ) NM
Non-operating income, net 17
1 % —
— % 17
NM
Interest expense, net (87 ) (7 )% (84 ) (6 )% (3 ) (4 )%
Loss from continuing operations before tax (101 ) (8 )% (35 ) (3 )% (66 ) NM
Income tax expense (42 ) (4 )% —
— % (42 ) NM
Loss from continuing operations (143 ) (12 )% (35 ) (3 )% (108 ) NM
(Loss) income from discontinued operations, net of income taxes (216 ) NM
91
NM
(307 ) NM
Net (loss) income $ (359 ) NM
$ 56
NM
$ (415 ) NM
Adjusted EBITDA from continuing operations⁽¹⁾
$ 173
14 % $ 177
14 % $ (4 ) (2 )%

2022

Consolidated Results


	For the Three Months Ended September 30,
(In millions, except for %)	2023			% of Revenue			2022			% of Revenue			Change			% Change
Net revenues	$	1,379			100	%	$	1,609			100	%	$	(230	)		(14	)%
Cost of sales		(1,098	)		(80	)%		(1,377	)		(86	)%		279			20	%
Gross profit		281			20	%		232			14	%		49			21	%
Selling, general and administrative expenses		(137	)		(10	)%		(145	)		(9	)%		8			6	%
Restructuring, asset impairment and other related charges		(28	)		(2	)%		(57	)		(4	)%		29			51	%
Other (expense) income, net		(3	)		—	%		239			15	%		(242	)	NM
Operating income from continuing operations		113			8	%		269			17	%		(156	)		58	%
Non-operating (expense) income, net		(2	)		—	%		44			3	%		(46	)	NM
Interest expense, net		(61	)		(4	)%		(59	)		(4	)%		(2	)		(3	)%
Income from continuing operations before tax		50			4	%		254			16	%		(204	)		80	%
Income tax expense		(22	)		(2	%)		(79	)		(5	)%		57			72	%
Income from continuing operations		28			2	%		175			11	%		(147	)		84	%
Income from discontinued operations, net of income taxes		2						1						1
Net income	$	30					$	176					$	(146	)
Adjusted EBITDA from continuing operations(1)	$	227			16	%	$	187			12	%	$	40			21	%

NM indicates that the calculation is ~~not meaningful.~~“not meaningful”.

(1)

Adjusted EBITDA from continuing operations is a non-GAAP measure. For details, refer to Non-GAAP Measures - Adjusted EBITDA from Continuing Operations, including a reconciliation between net income (loss) from continuing operations and Adjusted EBITDA from continuing operations.


~~(1)~~	Adjusted EBITDA from continuing operations is a non-GAAP measure. See “— How We Assess the Performance of Our Business and Use of Non-GAAP Measures” for details, including a reconciliation between net income and Adjusted EBITDA from continuing operations.

Components of Change in Reportable Segment Net Revenues ~~for the Three Months Ended September 30, 2020 Compared with the Three Months Ended September 30, 2019~~

Price/Mix Volume FX Total
Net revenues (1)% (7)% —% (8)%
By reportable segment:
Foodservice (3)% (10)% —% (13)%
Food Merchandising 3% (1)% (1)% 1%
Beverage Merchandising (2)% (8)% —% (10)%


	Price/Mix			Volume			Dispositions / Mill Closure			FX			Total
Net revenues		(2	)%		(4	)%		(9	)%		1	%		(14	)%
By reportable segment:
Foodservice		(5	)%		—	%		—	%		—	%		(5	)%
Food and Beverage Merchandising		—	%		(6	)%		(18	)%		1	%		(23	)%

Net Revenues. Net revenues for the three months ended September 30, ~~2020~~2023 decreased by ~~$111~~$230 million, or 8%14%, to ~~$1,195~~$1,379 million compared to the ~~three months ended September 30, 2019.~~prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill during the second quarter of 2023, lower sales volume ~~across all segments,~~and unfavorable pricing due to lower material costs. Lower sales volume was largely due to a focus on value over volume and the ~~unfavorable impact from the COVID-19 pandemic, as well as lower pricing, mainly due to lower raw material costs passed through to customers.~~market softening amid inflationary pressures within our Food and Beverage Merchandising segment.

Cost of Sales. Cost of sales for the three months ended September 30, ~~2020~~2023 decreased by ~~$89~~$279 million, or 8%20%, to ~~$1,011~~$1,098 million compared to the ~~three months ended September 30, 2019.~~prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill, lower material costs and lower sales ~~volume and lower raw material costs, partially offset by higher manufacturing costs driven by planned mill outages within the Beverage Merchandising segment in the current year period.~~volume.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended September 30, ~~2020 increased~~2023 decreased by ~~$12~~$8 million, or ~~12%~~6%, to ~~$116~~$137 million compared to the ~~three months ended September 30, 2019.~~prior year period. The ~~increase~~decrease was primarily due to ~~higher strategic and transaction-related costs, partially offset by~~ lower ~~employee~~employee-related costs.

~~Goodwill Impairment Charges.~~ 30

Goodwill impairment charges for the three months ended September 30, 2020 decreased by $10 million to $6 million compared to the three months ended September 30, 2019. The goodwill impairment charges in both periods related to our remaining closures business. For additional information, refer to Note 5 - Impairment, Restructuring and Other Related Charges of our interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Restructuring, Asset Impairment and Other Related ~~Charges~~Charges.. Restructuring, asset impairment and other related charges for the three months ended September 30, ~~2020~~2023 decreased by ~~$25~~$29 million, or ~~64%~~51%, to ~~$14~~$28 million compared to the prior year period. The current period expense related to activities associated with the Beverage Merchandising Restructuring. The prior year period expense was primarily due to a $56 million impairment charge related to the decision to exit our remaining closures businesses. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details.

Other (Expense) Income, Net. During the three months ended September 30, 2019. The decrease reflects different initiatives across our segments. For additional information, refer to Note 5 - Impairment, Restructuring and Other Related Charges of our interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

~~Other (Expense) Income, Net.~~ ~~Other expense, net for the three months ended September 30, 2020 changed by $81 million to $79~~2023, we recognized $3 million of expense compared to $2$239 million of income for the three months ended September 30, ~~2019.~~2022. The change was primarily attributable to ~~an unfavorable change in foreign exchange losses, largely~~the $239 million gain on ~~U.S. dollar cash balances held by entities with a non-U.S. dollar functional currency, and an increase~~the sale of Beverage Merchandising Asia in the ~~related party management fee, partially offset by a decrease in losses on sale of businesses and other noncurrent assets.~~prior year period.

Non-operating (Expense) Income, ~~(Expense),~~ Net. Non-operating ~~income,~~expense, net, for the three months ended September 30, ~~2020 increased to $17~~2023 was $2 million of expense compared to ~~nil~~$44 million of income for the three months ended September 30, ~~2019.~~2022. The ~~increase~~change was primarily due to a ~~decrease in interest cost on benefit plans, largely as a result of a decrease in interest rates, and an increase~~$47 million pension settlement gain recognized in the ~~expected return on pension plan assets.~~prior year period. Refer to Note 10,

Employee Benefits, for additional details.

Interest Expense, Net. Interest expense, net, for the three months ended September 30, ~~2020~~2023 increased by $3$2 million, or 4%3%, to ~~$87~~$61 million, compared to the ~~three months ended September 30, 2019.~~prior year period. The increase was primarily due to an ~~unfavorable change of $29 million~~increase in ~~net foreign currency losses and a $10 million loss~~the interest rate on ~~extinguishment of debt,~~our floating rate term loans, partially offset by a ~~$23 million~~ reduction in interest expense on our Credit Agreement and a $12 million reduction in interest expense on our notes. The lower interest expense on our Credit Agreement reflects a reduction in the underlying LIBO reference rate on the U.S. term loan, which was 0.16% as of September 30, 2020 comparedtotal debt outstanding. Refer to ~~2.04% as of September 30, 2019. The decrease in interest expense on our notes is primarily attributable to the repayment of $345 million of the 6.875% notes in November 2019.~~Note 8

,Debt, for additional details.

Income Tax Benefit (Expense) ~~Benefit.~~ .During the three months ended September 30, ~~2020,~~2023, we recognized a tax expense of ~~$42~~$22 million on ~~a loss~~income from continuing operations before tax of ~~$101~~$50 million, compared to no tax expense of $79 million on ~~a loss~~income from continuing operations before tax of ~~$35~~$254 million for the ~~three months ended September 30, 2019.~~prior year period. The effective tax rate during the ~~three months ended September 30, 2020~~current year period was driven primarily ~~attributable~~by the inability to recognize a ~~$105 million discrete increase in our valuation allowance for deferred~~tax benefit on all interest ~~deductions following the reassessment of the recoverability of our deferred interest deductions as a result of the distribution of Graham Packaging in September 2020.~~expense. The effective tax rate during the ~~three months ended September 30, 2019~~prior year period was primarily attributable to ~~additional valuation allowances, mainly in relation to~~tax impacts from the ~~deductibility~~sale of deferred interest deductions, and the mix of book income and losses among the jurisdictions in which we operate, offset by a discrete benefit as a result of filing amended returns to claim a foreign tax credit in lieu of a foreign tax deduction.our businesses.

~~(Loss)~~ Income from ~~Discontinued Operations, Net of~~ Continuing Operations. Income ~~Taxes. Loss~~ from discontinued operations, net of income taxes for the three months ended September 30, 2020 changed by $307 million, resulting in a loss of $216 million compared to the three months ended September 30, 2019. The three months ended September 30, 2020 included only two and half months of results of our former Graham Packaging segment, while the results for the three months ended September 30, 2019 include the three months of results of our former RCP, closures and Graham Packaging segments. Additionally, the income tax provision related to our discontinuedcontinuing operations for the three months ended September 30, ~~2020~~2023 decreased $147 million, or 84%, to $28 million compared to the prior year period. The prior year period included a $239 million gain on the sale of Beverage Merchandising Asia and a $47 million pension settlement gain, partially offset by a $56 million impairment charge due to the decision to exit our remaining closures businesses. The change in income from continuing operations was ~~not materially~~also impacted by a $57 million decrease in tax expense, largely driven by the ~~new provisions~~discrete tax effect of the ~~CARES Act~~gain on sale in the prior year period, a $49 million increase in gross profit, primarily from lower material and ~~thus was attributed a disproportionately higher estimated annualized effective rate. This interim tax expense will largely reverse during~~transportation costs, partially offset by $28 million in current year period charges related to the remainder of the year ending December 31, 2020. Refer to Note 3 - Discontinued Operations of our interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.Beverage Merchandising Restructuring.

Adjusted EBITDA from Continuing Operations. Adjusted EBITDA from continuing operations for the three months ended September 30, ~~2020 decreased~~2023 increased by $4$40 million, or 2%21%, to ~~$173~~$227 million compared to the ~~three months ended September 30, 2019.~~prior year period. The ~~decrease~~increase was primarily ~~due~~attributable to ~~higher manufacturing costs driven by planned mill outages,~~ lower ~~volume due to the impact of COVID-19 and lower pricing, partially offset by favorable raw~~ material costs, net of ~~lower~~ costs passed through, ~~to customers, favorable net logistics costs~~ and lower ~~employee-related costs.~~transportation and manufacturing costs, partially offset by the closure of our Canton, North Carolina mill and lower sales volume.

Segment Information

Foodservice


	For the Three Months Ended September 30,
(In millions, except for %)	2023			2022			Change			% Change
Total segment net revenues	$	675		$	713		$	(38	)		(5	)%
Segment Adjusted EBITDA	$	117		$	107		$	10			9	%
Segment Adjusted EBITDA margin(1)		17	%		15	%

(1)

~~Foodservice~~

For each segment, segment Adjusted EBITDA margin is calculated as segment Adjusted EBITDA divided by total segment net revenues.

For the Three Months Ended September 30,
(In millions, except for %) 2020 2019 Change % change
Total segment net revenues $ 473
$ 546
$ (73 ) (13 )%
Segment Adjusted EBITDA $ 81
$ 89
$ (8 ) (9 )%
Segment Adjusted EBITDA Margin 17 % 16 %

Total Segment Net Revenues. Foodservice total segment net revenues for the three months ended September 30, ~~2020~~2023 decreased by ~~$73~~$38 million, or ~~13%~~5%, to ~~$473~~$675 million compared to the ~~three months ended September 30, 2019.~~prior year period. The decrease was ~~primarily~~mainly due to ~~lower sales volume due to market contraction from the impact of the COVID-19 pandemic, as well as lower~~unfavorable pricing, primarily due to lower ~~raw~~ material ~~costs passed through to customers.~~costs.

Adjusted EBITDA. Foodservice Adjusted EBITDA for the three months ended September 30, ~~2020 decreased~~2023 increased by $8$10 million, or 9%, to ~~$81~~$117 million compared to the ~~three months ended September 30, 2019.~~prior year period. The ~~decrease~~increase was primarily due to lower ~~sales volume due to the impact of the COVID-19 pandemic~~transportation and ~~higher manufacturing costs, partially offset by lower raw~~ material costs, net of costs passed through.

Food and ~~lower logistics costs due to lower sales volume and favorable freight rates.~~Beverage Merchandising

~~Food Merchandising~~

For the Three Months Ended September 30,
(In millions, except for %) 2020 2019 Change % change
Total segment net revenues $ 354
$ 351
$ 3
1 %
Segment Adjusted EBITDA $ 72
$ 56
$ 16
29 %
Segment Adjusted EBITDA Margin 20 % 16 %


	For the Three Months Ended September 30,
(In millions, except for %)	2023			2022			Change			% Change
Total segment net revenues	$	712		$	920		$	(208	)		(23	)%
Segment Adjusted EBITDA	$	130		$	102		$	28			27	%
Segment Adjusted EBITDA margin		18	%		11	%

Total Segment Net Revenues. Food Merchandising total segment net revenues for the three months ended September 30, 2020 increased by $3 million, or 1%, to $354 million compared to the three months ended September 30, 2019. The increase was primarily due to favorable pricing, partially offset by lower costs passed through to customers, an unfavorable foreign currency impact and ~~lower volume.~~

~~Adjusted EBITDA~~. Food Merchandising Adjusted EBITDA for the three months ended September 30, 2020 increased $16 million, or 29%, to $72 million compared to the three months ended September 30, 2019. The increase was primarily due to favorable material costs, net of lower costs passed through to customers, partially offset by lower sales volume.

~~Beverage Merchandising~~

For the Three Months Ended September 30,
(In millions, except for %) 2020 2019 Change % change
Total segment net revenues $ 361
$ 401
$ (40 ) (10 )%
Segment Adjusted EBITDA $ 24
$ 45
$ (21 ) (47 )%
Segment Adjusted EBITDA Margin 7 % 11 %

~~Total Segment Net Revenues~~. Beverage Merchandising total segment net revenues for the three months ended September 30, ~~2020~~2023 decreased by ~~$40~~$208 million, or ~~10%~~23%, to ~~$361~~$712 million compared to the ~~three months ended September 30, 2019.~~prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill and lower sales volume. Sales volume was lower mainly due to a focus on value over volume and ~~lower pricing due to~~ the ~~impact of the COVID-19 pandemic.~~market softening amid inflationary pressures.

Adjusted EBITDA. Food and Beverage Merchandising Adjusted EBITDA for the three months ended September 30, ~~2020 decreased~~2023 increased by ~~$21~~$28 million, or ~~47%~~27%, to ~~$24~~$130 million compared to the ~~three months ended September 30, 2019.~~prior year period. The ~~decrease~~increase was primarily due to lower ~~pricing~~material costs, net of costs passed through, and lower transportation and manufacturing costs, partially offset by the closure of our Canton, North Carolina mill and lower sales volume due to the impact of the COVID-19 pandemic, as well as increased manufacturing costs due to planned mill outages in the current year quarter. These items were partially offset by lower raw material costs, driven by wood supply as markets have returned to historical normalized levels from prior year weather-related increases and lower employee-related expenses.volume.

Nine Months Ended September 30, ~~2020 Compared with the Nine Months Ended September 30, 2019~~

2023 and 2022

Consolidated Results


	For the Nine Months Ended September 30,
(In millions, except for %)	2023			% of Revenue			2022			% of Revenue			Change			% Change
Net revenues	$	4,236			100	%	$	4,744			100	%	$	(508	)		(11	)%
Cost of sales		(3,756	)		(89	)%		(3,972	)		(84	)%		216			5	%
Gross profit		480			11	%		772			16	%		(292	)		(38	)%
Selling, general and administrative expenses		(403	)		(10	)%		(435	)		(9	)%		32			7	%
Restructuring, asset impairment and other related charges		(133	)		(3	)%		(58	)		(1	)%		(75	)		(129	)%
Other income, net		1			—	%		279			6	%		(278	)		(100	)%
Operating (loss) income from continuing operations		(55	)		(1	)%		558			12	%		(613	)	NM
Non-operating (expense) income, net		(6	)		—	%		52			1	%		(58	)	NM
Interest expense, net		(188	)		(4	)%		(158	)		(3	)%		(30	)		(19	)%
(Loss) income from continuing operations before tax		(249	)		(6	)%		452			10	%		(701	)	NM
Income tax benefit (expense)		5			—	%		(160	)		(3	)%		165		NM
(Loss) income from continuing operations		(244	)		(6	)%		292			6	%		(536	)	NM
Income from discontinued operations, net of income taxes		2						1						1
Net (loss) income	$	(242	)				$	293					$	(535	)
Adjusted EBITDA from continuing operations(1)	$	633			15	%	$	618			13	%	$	15			2	%

(1)

~~Reportable Segment Net Revenue~~Adjusted EBITDA from continuing operations is a non-GAAP measure. For details, refer to Non-GAAP Measures - Adjusted EBITDA from Continuing Operations, including a reconciliation between net income (loss) from continuing operations and Adjusted EBITDA

from continuing operations.

(In millions) Foodservice Food Merchandising Beverage Merchandising
Net revenues
2020 $ 1,351
$ 1,046
$ 1,106
2019 $ 1,630
$ 1,037
$ 1,188
Adjusted EBITDA
2020 $ 170
$ 186
$ 112
2019 $ 262
$ 161
$ 142

~~Total Pactiv Evergreen Inc.~~

For the Nine Months Ended September 30,
(In millions, except for %) 2020 % of revenue 2019 % of revenue Change % change
Net revenues $ 3,514
100 % $ 3,888
100 % $ (374 ) (10 )%
Cost of sales (2,982 ) (85 )% (3,249 ) (84 )% 267
8 %
Gross profit 532
15 % 639
16 % (107 ) (17 )%
Selling, general and administrative expenses (358 ) (10 )% (341 ) (9 )% (17 ) (5 )%
Goodwill impairment charges (6 ) — % (16 ) — % 10
63 %
Restructuring, asset impairment and other related charges (18 ) (1 )% (45 ) (1 )% 27
60 %
Other (expense) income, net (48 ) (1 )% (7 ) — % (41 ) NM
Operating income from continuing operations 102
3 % 230
6 % (128 ) (56 )%
Non-operating income (expense), net 50
1 % (2 ) — % 52
NM
Interest expense, net (275 ) (8 )% (312 ) (8 )% 37
12 %
(Loss) income from continuing operations before tax (123 ) (4 )% (84 ) (2 )% (39 ) (46 )%
Income tax benefit (expense) 95
3 % (16 ) — % 111
NM
Net (loss) from continuing operations (28 ) (1 )% (100 ) (3 )% 72
72 %
(Loss) income from discontinued operations, net of income taxes (234 ) NM
270
NM
(504 ) NM
Net (loss) income $ (262 ) NM
$ 170
NM
$ (432 ) NM
Adjusted EBITDA from continuing operations⁽¹⁾
$ 445
13 % $ 518
13 % $ (73 ) (14 )%

~~NM indicates that the calculation is not meaningful.~~


~~(1)~~	Adjusted EBITDA from continuing operations is a non-GAAP measure. See “— How We Assess the Performance of Our Business and Use of Non-GAAP Measures” for details, including a reconciliation between net income and Adjusted EBITDA from continuing operations.

Components of Change in Reportable Segment Net Revenues ~~for the Nine Months Ended September 30, 2020 Compared with the Nine Months Ended September 30, 2019~~

Price/Mix Volume FX Total
Net revenues (2)% (8)% —% (10)%
By reportable segment:
Foodservice (3)% (14)% —% (17)%
Food Merchandising 3% (1)% (1)% 1%
Beverage Merchandising (2)% (5)% —% (7)%


	Price/Mix			Volume			Dispositions / Mill Closure			FX			Total
Net revenues		—	%		(4	)%		(7	)%		—	%		(11	)%
By reportable segment:
Foodservice		(4	)%		(4	)%		—	%		—	%		(8	)%
Food and Beverage Merchandising		4	%		(5	)%		(12	)%		1	%		(12	)%

Net Revenues. Net revenues for the nine months ended September 30, ~~2020~~2023 decreased by ~~$374~~$508 million, or ~~10%~~11%, to ~~$3,514~~$4,236 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill during the second quarter of 2023, lower sales volume ~~across all segments, largely~~and the disposition of Beverage Merchandising Asia on August 2, 2022. Lower sales volume was mainly due to a focus on value over volume and the market softening amid inflationary pressures. Favorable pricing in our Food and Beverage Merchandising segment, driven by pricing actions, was offset by unfavorable pricing in our Foodservice segment, mainly due to the ~~unfavorable impact from the COVID-19 pandemic, as well as~~contractual pass-through of lower ~~pricing mainly due to lower raw~~ material ~~costs passed through to customers.~~costs.

Cost of Sales. Cost of sales for the nine months ended September 30, ~~2020~~2023 decreased by ~~$267~~$216 million, or 8%5%, to ~~$2,982~~$3,756 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill, lower sales volume, lower ~~raw~~ material costs, the disposition of Beverage Merchandising Asia and lower ~~logistics costs,~~transportation costs. This decrease was partially offset by $298 million of charges related to the Beverage Merchandising Restructuring as well as higher manufacturing costs. Refer to Note 3

, Restructuring, Asset Impairment and Other Related Charges, for additional details of the Beverage Merchandising Restructuring.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the nine months ended September 30, ~~2020 increased~~2023 decreased by ~~$17~~$32 million, or 5%7%, to ~~$358~~$403 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The ~~increase~~decrease was primarily due to ~~higher strategic review~~lower employee-related costs, ~~partially offset by lower employee costs.~~

~~Goodwill Impairment Charges.~~ ~~Goodwill impairment charges for~~including the ~~nine months ended September 30, 2020 decreased by $10 million to $6 million compared to~~impact of cost savings from the ~~nine months ended September 30, 2019. The goodwill impairment charges in both periods related to our remaining closures business. For additional information, refer to Note 5 - Impairment,~~Beverage Merchandising Restructuring and ~~Other Related Charges~~the sale of ~~our interim condensed consolidated financial statements included elsewhere~~Beverage Merchandising Asia in ~~this Quarterly Report on Form 10-Q.~~the prior year.

Restructuring, Asset Impairment and Other Related ~~Charges~~Charges.. Restructuring, asset impairment and other related charges for the nine months ended September 30, ~~2020 decreased~~2023 increased by ~~$27~~$75 million, or ~~60%~~129%, to ~~$18~~$133 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The ~~decrease reflects different initiatives across~~current year period expense arose from Beverage Merchandising Restructuring charges. The prior year period expense was primarily related to an impairment charge related to the decision to exit our ~~segments. For additional information, refer~~remaining closures businesses Refer to Note ~~5 -~~3, Restructuring, Asset Impairment ~~Restructuring~~ and Other Related Charges ~~of our interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.~~

, for additional details.

Other ~~(Expense)~~ Income, Net. Other ~~expense, net~~Income, Net, for the nine months ended September 30, ~~2020 increased~~2023 decreased by ~~$41~~$278 million to ~~$48~~$1 million, compared to $7the prior year period. The prior year period included a $239 million ~~for~~gain on the nine months ended September 30, 2019. The increase was primarily attributable to an increase in the related party management fee and an unfavorable change in foreign exchange losses, largely on U.S. dollar cash balances held by entities with a non-U.S. dollar functional currency, partially offset by a decrease in losses on sale of ~~businesses~~Beverage Merchandising Asia, a $27 million gain on the sale of our equity interests in Naturepak Beverage and ~~other noncurrent assets and an increase in transition service agreement income.~~a gain of $15 million, net of costs, related to the settlement of a historical legal action.

Non-operating (Expense) Income, ~~(Expense),~~ Net. Non-operating (expense) income, net, for the nine months ended September 30, ~~2020 changed by~~2023 was $6 million of expense compared to $52 million ~~to $50 million~~ of income ~~compared to $2 million of expense~~ for the nine months ended September 30, ~~2019.~~2022. The change was ~~primarily~~principally due to ~~a decrease in interest cost on benefit plans, largely as a result~~$57 million of ~~a decrease in interest rates, and an increase~~pension settlement gains recognized in the ~~expected return on pension plan assets.~~prior year period. Refer to Note 10,

Employee Benefits, for additional details.

Interest Expense, Net. Interest expense, net, for the nine months ended September 30, ~~2020 decreased~~2023 increased by ~~$37~~$30 million, or ~~12%~~19%, to ~~$275~~$188 million, compared to the ~~nine months ended September 30, 2019.~~prior year period. The ~~decrease~~increase was primarily due to ~~a $47 million reduction~~an increase in the interest ~~expense~~rate on our ~~Credit Agreement and a $24 million reduction in interest expense on our notes,~~floating rate term loans, partially offset by ~~an unfavorable change in net foreign currency exchange gains. The lower interest expense on our Credit Agreement is primarily attributable to~~ a reduction in ~~the underlying LIBO reference rate on the U.S. term loan, which was 0.16% as of September 30, 2020 compared~~total debt outstanding. Refer to ~~2.04% as of September 30, 2019. The decrease in interest expense on our notes is primarily attributable to the repayment of $345 million of the 6.875% notes in November 2019.~~Note 8

,Debt, for additional details.

Income Tax Benefit (Expense) ~~Benefit.~~ .During the nine months ended September 30, ~~2020,~~2023, we recognized a tax benefit of ~~$95~~$5 million on a loss from continuing operations before tax of ~~$123~~$249 million, compared to tax expense of ~~$16~~$160 million on ~~a loss~~income from continuing operations before tax of ~~$84~~$452 million ~~during~~for the ~~nine months ended September 30, 2019. In both periods, the effective tax rate~~

~~reflects the mix of book income and losses taxed at varying rates.~~prior year period. The effective tax rate ~~for~~during the ~~nine months ended September 30, 2020 also includes~~current year period was driven primarily by the inability to recognize a tax benefit ~~of the CARES Act, primarily enabling the utilization of additional deferred~~on all interest ~~deductions.~~expense. The ~~year to date~~ effective tax rate ~~also includes~~during the prior year period was driven primarily by the inability to recognize a ~~$132 million return to provision~~tax benefit on all interest expense and the tax impacts from ~~our 2019 federal return, partially offset by a $105 million discrete adjustment for additional valuation allowance. The return to provision benefit was primarily attributable to~~ the ~~retroactive provisions of the CARES Act, enabling the utilization of additional deferred interest deductions. The increase in the valuation allowance reflects the reassessment of the recoverability~~sales of our ~~deferred interest deductions following the distribution of Graham Packaging in September 2020.~~

businesses.

(Loss) Income from ~~Discontinued Operations, Net of Income Taxes~~Continuing Operations. ~~. Loss~~(Loss) income from discontinued operations, net of income taxes for the nine months ended September 30, 2020 changed by $504 million, resulting in a loss of $234 million compared to the nine months ended September 30, 2019. The nine months ended September 30, 2020 included only approximately one month of results of our former RCP segment and eight and half months of results of our former Graham Packaging segment, while the results for the nine months ended September 30, 2019 included all of the results of our former RCP, closures and Graham Packaging segments. The income tax provision related to our discontinuedcontinuing operations for the nine months ended September 30, ~~2020~~2023 was ~~not materially~~a loss of $244 million compared to income of $292 million for the nine months ended September 30, 2022. The change was impacted by $435 million of current year period charges related to the ~~new provisions of the CARES Act~~Beverage Merchandising Restructuring and ~~thus was attributed~~ a ~~disproportionately higher estimated annualized effective rate. This interim~~$165 million decrease in tax expense, ~~will~~ largely ~~reverse during~~driven by the ~~remainder~~discrete tax effects of restructuring charges in the current year ~~ending December 31, 2020. Refer~~period and gains on sales in the prior year period. In addition, the prior year period included $266 million of gains on the sale of businesses and $57 million of pension settlement gains, partially offset by a $56 million impairment charge due to ~~Note 3 - Discontinued Operations of~~the decision to exit our ~~interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.~~remaining closures businesses.

Adjusted EBITDA from Continuing Operations. Adjusted EBITDA from continuing operations for the nine months ended September 30, ~~2020 decreased~~2023 increased by ~~$73~~$15 million, or ~~14%~~2%, to ~~$445~~$633 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The ~~decrease was primarily due to~~increase reflects lower ~~sales volume due to the impact of the COVID-19 pandemic, higher manufacturing costs and lower pricing. These items were partially offset by favorable~~ material costs, net of ~~lower~~ costs passed through, ~~to customers,~~ and lower ~~logistics costs.~~transportation costs, partially offset by higher manufacturing costs, lower sales volume as well as the impact from the closure of our Canton, North Carolina mill and the disposition of Beverage Merchandising Asia.

Segment Information

Foodservice

For the Nine Months Ended September 30,
(In millions, except for %) 2020 2019 Change % change
Total segment net revenues $ 1,351
$ 1,630
$ (279 ) (17 )%
Segment Adjusted EBITDA $ 170
$ 262
$ (92 ) (35 )%
Segment Adjusted EBITDA Margin 13 % 16 %


	For the Nine Months Ended September 30,
(In millions, except for %)	2023			2022			Change			% Change
Total segment net revenues	$	1,945		$	2,115		$	(170	)		(8	)%
Segment Adjusted EBITDA	$	351		$	378		$	(27	)		(7	)%
Segment Adjusted EBITDA margin		18	%		18	%

Total Segment Net Revenues. Foodservice total segment net revenues for the nine months ended September 30, ~~2020~~2023 decreased by ~~$279~~$170 million, or ~~17%~~8%, to ~~$1,351~~$1,945 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The decrease was mainly due to unfavorable pricing, largely due to lower material costs, and lower sales volume, primarily due to ~~lower sales volume due to market contraction from~~ the cumulative impact of ~~the COVID-19 pandemic, as well as lower pricing primarily due to lower raw material costs passed through to customers.~~our strategy focused on value over volume.

Adjusted EBITDA. Foodservice Adjusted EBITDA for the nine months ended September 30, ~~2020~~2023 decreased by ~~$92~~$27 million, or ~~35%~~7%, to ~~$170~~$351 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The decrease was primarily due to ~~lower sales volume due to the impact of the COVID-19 pandemic,~~ higher manufacturing costs ~~due to measures put in place to continue to operate during the pandemic~~ and lower ~~production, and lower pricing. These items were~~sales volume, partially offset by lower ~~logistics~~transportation and material costs, ~~due to lower sales volume~~net of costs passed through.

Food and ~~favorable freight rates.~~Beverage Merchandising

~~Food Merchandising~~

For the Nine Months Ended September 30,
(In millions, except for %) 2020 2019 Change % change
Total segment net revenues $ 1,046
$ 1,037
$ 9
1 %
Segment Adjusted EBITDA $ 186
$ 161
$ 25
16 %
Segment Adjusted EBITDA Margin 18 % 16 %


	For the Nine Months Ended September 30,
(In millions, except for %)	2023			2022			Change			% Change
Total segment net revenues	$	2,367		$	2,677		$	(310	)		(12	)%
Segment Adjusted EBITDA	$	340		$	303		$	37			12	%
Segment Adjusted EBITDA margin		14	%		11	%

Total Segment Net Revenues. Food Merchandising total segment net revenues for the nine months ended September 30, 2020 increased by $9 million, or 1%, to $1,046 million compared to the nine months ended September 30, 2019. The increase was

~~primarily due to favorable pricing, partially offset by lower sales volume, lower costs passed through to customers~~ and an unfavorable currency impact. The lower sales volume was primarily driven by lower demand from certain large customers that had increased inventory levels due to accelerated purchases in the fourth quarter of 2019 and an unfavorable net impact from the COVID-19 pandemic.

~~Adjusted EBITDA~~. Food Merchandising Adjusted EBITDA for the nine months ended September 30, 2020 increased by $25 million, or 16%, to $186 million compared to the nine months ended September 30, 2019. The increase was primarily due to favorable material costs, net of lower costs passed through to customers, higher pricing and lower logistics costs, partially offset by lower sales volume and an unfavorable currency impact.

~~Beverage Merchandising~~

For the Nine Months Ended September 30,
(In millions, except for %) 2020 2019 Change % change
Total segment net revenues $ 1,106
$ 1,188
$ (82 ) (7 )%
Segment Adjusted EBITDA $ 112
$ 142
$ (30 ) (21 )%
Segment Adjusted EBITDA Margin 10 % 12 %

~~Total Segment Net Revenues~~. Beverage Merchandising total segment net revenues for the nine months ended September 30, ~~2020~~2023 decreased by ~~$82~~$310 million, or 7%12%, to ~~$1,106~~$2,367 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill, lower sales volume and ~~lower~~the disposition of Beverage Merchandising Asia. Lower sales volume was driven by a focus on value over volume and the market softening amid inflationary pressures. The decrease was partially offset by favorable pricing, due to pricing actions taken to offset higher input costs, including pricing benefit from the ~~impact~~extension of key business, and the ~~COVID-19 pandemic.~~contractual pass-through of higher material costs.

Adjusted EBITDA. Food and Beverage Merchandising Adjusted EBITDA for the nine months ended September 30, ~~2020 decreased~~2023 increased by ~~$30~~$37 million, or ~~21%~~12%, to ~~$112~~$340 million compared to the ~~nine months ended September 30, 2019.~~prior year period. The ~~decrease~~increase was primarily due to ~~increased~~favorable pricing, net of material costs passed through, and lower transportation costs, partially offset by higher manufacturing costs, ~~due to production inefficiencies, higher costs and unfavorable impacts from planned mill outages, as well as lower pricing and~~ lower sales volume, ~~due~~the closure of our Canton, North Carolina mill and the disposition of Beverage Merchandising Asia.

Liquidity and Capital Resources

We manage our capital structure in an effort to ~~the impact of the COVID-19 pandemic. These items were partially offset by lower raw material costs, driven by wood supply as markets~~most effectively execute our strategic priorities and maximize shareholder value. We believe that we have ~~returned~~sufficient liquidity to ~~historical normalized levels from prior year weather-related increases~~support our ongoing operations and ~~lower employee-related expenses.~~

~~Historical Cash Flows~~

~~Nine months ended~~ ~~September 30, 2020 and 2019~~

~~The following table discloses~~to re-invest in our business to drive future growth. Our projected operating cash flows, cash on-hand and available capacity under our revolving credit facility are our primary sources of liquidity for the ~~periods presented:~~

For the Nine Months Ended September 30,
(In millions) 2020 2019
Net cash provided by operating activities $ 270
$ 563
Net cash used in investing activities (320 ) (445 )
Net cash provided by (used in) financing activities 536
(29 )
Net increase (decrease) in cash, cash equivalents and restricted cash, excluding the effect of exchange rate changes $ 486
$ 89

next 12 months. We expect our liquidity to fund capital expenditures, payments of interest and principal on our debt, cash-based restructuring charges and distributions to shareholders that require approval by our Board of Directors. Additionally, we may continue to utilize portions of our excess cash to repurchase certain amounts of our long-term debt prior to maturity depending on market conditions, among other factors.

Cash ~~provided by operating activities~~

~~Net~~flows

Our cash ~~provided by operating activities decreased by $293 million, or 52%, to $270 million~~flows for the nine months ended September 30, ~~2020~~2023 and 2022 were as follows:


	For the Nine Months Ended September 30,
(In millions)	2023			2022
Net cash provided by operating activities	$	453		$	241
Net cash (used in) provided by investing activities		(167	)		196
Net cash used in financing activities		(587	)		(79	)
Effect of exchange rate on cash, cash equivalents and restricted cash		1			(6	)
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(300	)	$	352

Net cash flows were an outflow of $300 million in the current year period compared to ~~$563~~an inflow of $352 million ~~for~~in the ~~nine months ended September 30, 2019. The decrease is~~prior year period primarily ~~attributable~~due to $515 million of early debt repayments during 2023 and proceeds received from the ~~change in~~sale of Beverage Merchandising Asia and Naturepak Beverage during the prior year, partially offset by higher net cash provided by operating activities from our discontinued operations, which decreased from an inflow of $523 million during the nine months ended September 30, 2019 to an inflow of $175 million during the nine months ended September 30, 2020. The closures operations were sold in December 2019, RCP was distributed on February 4, 2020 and GPC was distributed on September 16, 2020. Excluding the contribution from discontinued operations, netactivities. Net cash provided by operating activities increased by $55 million, or 138%, to $95 million for the nine months ended September 30, 2020 compared to $40 million for the nine months ended September 30, 2019. This $55 million increase in net cash provided by operating activities is primarily ~~attributable~~due to favorable changes in ~~accounts receivables, inventories, and trade and other payables,~~inventory balances, driven in part by the strategic inventory build during the prior year that did not recur, partially offset by ~~lower~~ cash ~~earnings. These changes were primarily as a result of the impact of the COVID-19 pandemic.~~

~~Cash used in investing activities~~

Net cash used in investing activities decreased by $125 million, or 28%, to $320 million for the nine months ended September 30, 2020 compared to $445 million for the nine months ended September 30, 2019. The decrease is primarily attributablepayments made related to the ~~change in~~Beverage Merchandising Restructuring, higher incentive compensation payments and higher cash used in investing activities by our discontinued operations, which decreased by $92 million, to $122 million for the nine months ended September 30, 2020 compared to $214 million for the nine months ended September 30, 2019 as a result of the sale of the closures operations in December 2019, the distribution of RCP on February 4, 2020 and the distribution of GPC on September 16, 2020. Excluding the impact of discontinued operations, net cash used in investing activities decreased by $33 million, or 14%, to $198 million for the nine months ended September 30, 2020 compared to $231 million for the nine months ended September 30, 2019. The reduction in cash used in investing activities was primarily due to lower capital expenditures as a result of the impact of the COVID-19 pandemic.

interest payments.

During the nine months ended September 30, ~~2020, we spent $76~~2023, our primary source of cash was $453 million ~~on our strategic investment program.~~

~~Cash provided by (used in) financing activities~~

~~Net~~of net cash provided by ~~financing~~operating activities. The net cash provided by operating activities ~~was $536~~reflects income from operations, partially offset by $177 million of cash interest payments and $51 million of cash taxes. Our primary uses of cash for the ~~nine months ended September 30, 2020 compared to cash used in financing activities~~same period were $515 million of ~~$29~~early debt repayments, $178 million ~~for the nine months ended September 30, 2019.~~ of capital expenditures and $54 million of dividends paid.

During the nine months ended September 30, ~~2020, we repaid $5,473~~2022, our primary sources of cash were $364 million ~~of outstanding borrowings and received $5,614 million of~~in combined proceeds ~~from new borrowings primarily attributable~~related to the ~~incurrences~~sale of ~~debt by RPC~~Beverage Merchandising Asia and ~~GPC prior to their distributions. Additionally, we received $546~~our equity interests in Naturepak Beverage and $241 million of net ~~proceeds related~~cash provided by operating activities. The net cash provided by operating activities reflects income from operations, partially offset by $132 million of cash interest payments and $64 million of cash taxes. Our primary uses of cash for the same period were $169 million of capital expenditures and $54 million of dividends paid.

Dividends

During each of the nine months ended September 30, 2023 and 2022, we paid cash dividends of $54 million. On October 31, 2023, our Board of Directors declared a dividend of $0.10 per share to be paid on December 15, 2023 to shareholders of record as of November 30, 2023.

Our Credit Agreement and Notes limit the ability to make dividend payments, subject to specified exceptions. Our Board of Directors must review and approve future dividend payments and will determine whether to declare additional dividends based on our ~~initial public offering.~~

~~Liquidity~~operating performance, expected future cash flows, debt levels, liquidity needs and ~~Capital Resources~~

~~Our principal sources of liquidity are our existing cash~~investment opportunities.

Financing and capital resources ~~and cash flow from operations. In addition, we may utilize borrowing capacity under our revolving credit facility and local working capital facilities.~~

As of September 30, ~~2020,~~2023, we had ~~$5,225~~$3,632 million of total principal amount of borrowings. Refer to Note 8, Debt, for additional details. Of our total debt, $1,705 million is subject to variable interest rates, representing borrowings drawn under our Credit Agreement.

On April 17, 2023, we amended the Credit Agreement, replacing the LIBOR-based reference rate with a SOFR-based reference rate, effective for interest payments for the period commencing April 28, 2023. As of September 30, 2023, the underlying one-month SOFR for amounts borrowed under our Credit Agreement was 5.43%.

On July 26, 2023, we further amended the Credit Agreement to extend the maturity date on our $250 million Revolving Tranche facility from August 5, 2024 to August 5, 2025. There were no other material changes to the terms of the Credit Agreement as a result of this ~~report, which takes~~amendment.

During the nine months ended September 30, 2023, we repaid an aggregate of $515 million of our U.S. term loans Tranche B-2.

During the fourth quarter of 2022, we entered into ~~account~~derivative financial instruments with large institutions that fixed the ~~debt transactions occurring~~LIBO rate at a weighted average rate of 4.12% for an aggregate notional amount of $1,000 million to hedge a portion of the interest rate exposure resulting from our U.S. term loans and classified the instruments as cash flow hedges. Our cash flow hedge contracts mature in October 2025. During the second quarter of 2023, we amended our interest rate swap agreements, replacing the LIBOR-based reference rate with a SOFR-based reference rate, effective for swap payments for the period commencing April 28, 2023. The weighted average fixed rate of 4.12% for our interest rate swap agreements was unchanged as a result of these amendments.

Based on the one-month SOFR as of September 30, 2023, and ~~expected to occur in November 2020 as described in Note 10 - Debt in~~including the impact of our ~~condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we had $4,005 million of total principal amount of borrowings, as follows:~~

(in millions)
Credit Agreement $ 2,457
Notes:
5.125% Senior Secured Notes due 2023 59
4.000% Senior Secured Notes due 2027 1,000
Pactiv Debentures:
7.950% Debentures due 2025 276
8.375% Debentures due 2027 200
Other 13
Total principal amount of borrowings $ 4,005

~~Our 2020~~interest rate swap agreements, our 2023 annual cash interest obligations ~~from continuing operations~~ on our borrowings ~~including borrowings that have been repaid,~~ are expected to be approximately ~~$285~~$257 million. We currently expect our interest expense on our borrowings, after taking into account the aforementioned October and November 2020 debt transactions, to be approximately $160 million for the fiscal year 2021. This assumes that interest on our floating rate debt continues to accrue at the current interest rates. As of September 30, 2020, the underlying one month LIBO rate for amounts under our Credit Agreement was 0.16%.

As of September 30, 2020, we had $1,765 million of cash and cash equivalents on hand and $255 million available for drawing under our revolving credit facility. As of October 31, 2020, we had $493 million of cash and cash equivalents and $207 million available for drawing under our new revolving credit facility. We believe that our existing cash resources, projected cash flows generated from operations together with our borrowing availability under our revolving credit facility are sufficient to fund our principal debt payments, interest expense, our working capital needs and our expected capital expenditures for the next 12 months. Our next significant near term maturity of borrowings is $1,207 million of U.S. term loans due in February 2023. We also have our first quarterly amortization principal payment of $3 million on our new term loan tranche due in March 2021. We currently

anticipate incurring between $240 million and $280 million of capital expenditures during fiscal year 2020 for continuing operations. We do not currently anticipate that the COVID-19 pandemic will materially impact our liquidity over the next 12 months.

Our ability to borrow under our revolving credit facility or our local working capital facilities or to incur additional indebtedness may be limited by the terms of such indebtedness or other indebtedness, including the Credit Agreement and the Notes. The Credit Agreement and the indentures governing the Notes generally allow subsidiaries of PTVE to transfer funds in the form of cash dividends, loans or advances within the Company.

Under the Credit Agreement, we may incur additional indebtedness either by satisfying certain incurrence tests or by incurring such additional indebtedness under certain specific categories of permitted debt. Incremental senior secured indebtedness under the Credit Agreement and senior secured or unsecured notes in lieu thereof are permitted to be incurred up to an aggregate principal amount of $750 million subject to pro forma compliance with the Credit Agreement’s total secured leverage ratio covenant. In addition, we may incur ~~incremental~~ senior secured indebtedness ~~under the Credit Agreement and senior secured notes~~ in an unlimited amount as long as our total secured leverage ratio does not exceed 4.50 to 1.00 on a pro forma basis, and (in the case of incremental senior secured indebtedness under the Credit Agreement only) we are in pro forma compliance with the Credit Agreement’s total secured leverage ratio covenant. The incurrence of unsecured indebtedness, including the issuance of senior notes, and unsecured subordinated indebtedness is also permitted (subject to the terms of the Credit Agreement) if the fixed charge coverage ratio is at least 2.00 to 1.00 on a pro forma basis.

Under the respective indentures governing the ~~notes,~~Notes, we may incur additional indebtedness either by satisfying certain incurrence tests or by incurring such additional indebtedness under certain specific categories of permitted debt. Indebtedness may be incurred under the incurrence tests if the fixed charge coverage ratio is at least 2.00 to 1.00 on a pro forma basis ~~and, (i) under~~or the ~~indenture governing the 5.125% Notes, the liens securing first lien secured indebtedness do not exceed a 4.50~~consolidated total leverage ratio is no greater than 5.50 to 1.00 ~~senior secured first lien leverage ratio~~ and ~~(ii) under the indenture governing the 4.000% Notes,~~ the liens securing first lien secured indebtedness do not exceed a 4.10 to 1.00 consolidated secured first lien leverage ratio.

~~For further information regarding~~

We are required to make annual prepayments of term loans with up to 50% of excess cash flow (which will be reduced to 25% or 0% if specified senior secured first lien leverage ratios are met) as determined in accordance with the ~~terms~~Credit Agreement. No excess cash flow prepayments were due for the year ended December 31, 2022.

Liquidity and working capital

Our liquidity position is summarized in the table below:


(In millions, except for current ratio)	As of September 30, 2023		As of December 31, 2022
Cash and cash equivalents(1)	$	233	$	531
Availability under revolving credit facility		201		200
	$	434	$	731
Working capital(2)		831		1,305
Current ratio		2.0		2.4

(1)

Excludes $24 million of ~~our Notes and Credit Agreement, refer to Note 10 - Debt in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.~~

~~Contractual Obligations~~

~~The following table summarizes certain material contractual obligations~~restricted cash classified as other noncurrent assets as of September 30, ~~2020, on a historical basis.~~ 2023 and December 31, 2022 and also excludes $2 million of cash classified as held for sale as of December 31, 2022.

(2)

Includes $7 million of assets as of September 30, 2023 and $6 million of assets and $3 million of liabilities as of December 31, 2022 classified as held for sale.

As ~~detailed~~of September 30, 2023, we had $233 million of cash and cash equivalents on-hand. We also had $201 million available under our revolving credit facility, net of $49 million utilized in the ~~notes~~form of letters of credit under the facility. Our next debt maturity is $217 million of Pactiv Debentures due in December 2025, excluding amortization payments related to our U.S. term loans Tranche B-3 under our Credit Agreement.

We believe that we have sufficient liquidity to support our ongoing operations in the ~~table, subsequent~~next 12 months and to invest in future growth to create further value for our shareholders. Our primary drivers of decreased liquidity for the nine months ended September 30, ~~2020, we have repaid an aggregate of $3,400~~2023 were $515 million of ~~principal on our outstanding borrowings and incurred $2,250~~debt repayments, $178 million of ~~new principal borrowings:~~

Total Less than one year One to three years Three to five years Greater than five years
(in millions)
Long-term debt^(1)(2)(3)
$ 6,060
$ 239
$ 4,520
$ 775
$ 526
Operating lease liabilities⁽⁴⁾
357
76
125
77
79
Unconditional capital expenditure obligations 94
94
—
—
—
Total contractual obligations $ 6,511
$ 409
$ 4,645
$ 852
$ 605

~~(1)~~

During October 2020, we repaid an aggregate of $3,400 million principal amount of borrowings and $28 million of accrued interest, which is presented in the one to three year and the three to five year columns in the above table. In addition, we issued a redemption notice to redeem $70 million aggregate principal amount of 5.125% Notes with the payment scheduled to occur on November 23, 2020, which is presented in the one to three year column in the table above. For further details, refer to Note 10 - Debt of our interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for details regarding changes in our debt subsequent to September 30, 2020.

~~(2)~~

During October 2020, we issued $1,000 million aggregate principal amount of 4.000% Senior Secured Notes maturing on October 15, 2027 and we incurred $1,250 million of new term loans maturing on February 5, 2026. The impact of these transactions are not presented in the table above. For further details, refer to Note 10 - Debt of our interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for details regarding changes in our debt subsequent to September 30, 2020.


~~(3)~~	Total obligations for long-term debt consist of the principal amounts and interest obligations. The interest rate on our floating rate debt has been assumed to be the same as the rate in effect as of September 30, 2020, which was 0.16% in respect of the U.S. term loans under our Credit Agreement.


~~(4)~~	~~Total repayments of operating leases exclude short-term leases which were not significant in the aggregate.~~

~~Except as noted above, there has been no other material change~~capital expenditures and $54 million of dividends paid. These drivers of decreased liquidity were partially offset by net operating cash flows of $453 million during the same period. We currently anticipate cash payments of approximately $280 million for capital expenditures and approximately $120 million for restructuring charges during 2023.

During the nine months ended September 30, 2023, our working capital decreased $474 million, or 36%, primarily due to our use of cash for $515 million of early debt repayments, capital expenditures and dividend payments, and reductions of our inventory levels which were partially offset by income from continuing operations. Our working capital position provides us the flexibility for further consideration of strategic initiatives, including reinvestment in our ~~contractual obligations~~business and ~~commitments since our fiscal year ended December 31, 2019. The ultimate timing~~deleveraging of our ~~liabilities for pensions and uncertain tax positions continues to be undeterminable and therefore~~balance sheet. As a result, we may continue to utilize portions of our excess cash to repurchase certain amounts of our long-term debt prior to maturity depending on market conditions, among other factors.

Our ability to borrow under our revolving credit facility or to incur additional indebtedness may be ~~excluded from~~limited by the ~~table above. During October 2020, we made a $121 million contribution~~terms of such indebtedness or other indebtedness, including the Credit Agreement and the Notes. The Credit Agreement and the respective indentures governing the Notes generally allow our subsidiaries to transfer funds in the ~~PEPP and do not expect to make additional contributions in 2020 to~~form of cash dividends, loans or advances within the PEPP. Future contributions will be dependent on future plan asset returns and interest rates and are highly sensitive to timing. See our final prospectus filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4) for additional information regarding our contractual obligations.

~~Off-Balance Sheet Arrangements~~

Company.

Other than short-term leases ~~entered into~~executed in the normal course of business, we have no material off-balance sheet obligations.

Critical Accounting Policies, Estimates and Assumptions

Accounting policies and estimates are considered critical when they require management to make subjective and complex judgments, estimates and assumptions about matters that have a material impact on the presentation of our financial statements and accompanying notes. For a description of our

The most critical accounting policies and estimates ~~see~~are those that are most important to the portrayal of our ~~final prospectus filed with~~financial condition and results of operations and require us to make the ~~Securities~~most difficult and ~~Exchange Commission~~subjective judgments, often estimating the outcome of future events that are inherently uncertain. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements in our Annual Report on ~~September 18, 2020 pursuant to Rule 424(b)(4).~~

Form 10-K for the year ended December 31, 2022. Our critical accounting estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements

New accounting ~~guidance~~standards that we have recently adopted, as well as accounting ~~guidance~~standards that ~~has~~have been recently issued but not yet adopted by us, is included in Note ~~2 — Summary~~1, Nature of ~~Significant Accounting Policies~~Operations and Basis of ~~our condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q.~~

Presentation.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

~~Interest Rate Risk~~

We had significant debt commitments outstanding as of September 30, 2020. These on-balance sheet financial instruments, to the extent they accrue interest at variable interest rates, expose us to interest rate risk. Our interest rate risk arises primarily on significant borrowings that are denominated in U.S. dollars drawn under our Credit Agreement. As of September 30, 2020, the Credit Agreement included interest rate floors of 0.0% per annum on the U.S. term loan and the revolving loan.

The underlying rate for our Credit Agreement is the one-month LIBOR, and as of September 30, 2020, the applicable rate was 2.91%. Based on our outstanding debt commitments as of September 30, 2020, a one-year timeframe and all other variables remaining constant, a 100 basis point increase in interest rates would result in a $25 million increase in interest expense on the U.S. term loan under our Credit Agreement. A 100 basis point decrease in interest rates would result in a $4 million decrease in interest expense on the U.S. term loan under our Credit Agreement.

Interest rates may fluctuate if LIBOR ceases to exist or if new methods of calculating LIBOR will be established. See "Risk Factors—Certain of our long-term indebtedness bears interest at variable interest rates, primarily based on LIBOR, which may be subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to fluctuate or cause other unanticipated consequences” in our final prospectus filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4).

~~Foreign Currency Exchange Rate Risk~~

As a result of our international operations, we are exposed to foreign currency exchange risk arising from sales, purchases, assets and borrowings that are denominated in currencies other than the functional currencies of the respective entities. We are also exposed to foreign currency exchange risk on certain intercompany borrowings between certain of our entities with different functional currencies. In accordance with our treasury policy, we take advantage of natural offsets to the extent possible. On a limited basis, we use contracts to hedge residual foreign currency exchange risk arising from receipts and payments denominated in foreign currencies. We generally do not hedge our exposure to translation gains or losses in respect of our non-U.S. dollar functional currency assets or liabilities. Additionally, when considered appropriate, we may enter into forward exchange contracts to hedge foreign currency exchange risk arising from specific transactions. We had

There have been no ~~foreign currency derivative contracts as of September 30, 2020.~~

~~Commodity Risk~~

We are exposed to commodity and other price risk principally from the purchase of resin, natural gas, electricity, raw wood, wood chips and diesel. We use various strategies to manage cost exposures on certain material purchases with the objective of obtaining more predictable costs for these commodities. We generally enter into commodity financial instruments or derivatives to hedge commodity prices related to resin (and its components), diesel and natural gas.

We enter into futures and swaps to reduce our exposure to commodity price fluctuations. These derivatives are implemented to either (a) mitigate the impact of the lag in timing between when material costs change and when we can pass through these changes to our ~~customers or (b) fix our input costs for a period. Refer to Note 11 - Financial Instruments for details of our commodity derivative contracts as of September 30, 2020.~~

~~The fair values of commodity derivative contracts are derived from inputs based on quoted~~ market ~~prices or traded exchange market prices and represent~~risk during the estimated amounts that we would pay or receive to terminate the contracts. As of September 30, 2020, the estimated fair values of the outstanding commodity derivative contracts were a net liability less than $1 million. During the three and nine months ended September 30, ~~2020, we recognized unrealized gains of $1 million~~2023. For additional information, refer to Item 7A, Quantitative and ~~$3 million, respectively, in cost of sales~~Qualitative Disclosures about Market Risk, in our condensed consolidated statements of income (loss) related to commodity derivatives. A 10% upward (downward) movement in the price curve used to value the commodity derivative contracts, applied as of September 30, 2020, would have resulted in an immaterial change in the unrealized gains / losses recognized in the condensed consolidated statements of income (loss)Annual Report on Form 10-K for the ~~three and nine months~~year ended ~~September 30, 2020, respectively, assuming all other variables remain constant.~~

December 31, 2022.

Item 4. Controls and Procedures.

~~Pactiv Evergreen Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(unaudited)~~

a) Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”))~~Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. In connection with the preparation of this report, management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, ~~2020.~~2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, ~~2020,~~2023, our disclosure controls and procedures were effective.

b) Changes in Internal Control over Financial Reporting

There were no material changes in our internal control over financial reporting that occurred during the three months ended September 30, ~~2020~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The information required to be set forth under this heading is incorporated by reference from Note ~~14 -~~ 12, Commitments and Contingencies, to the interim ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements included in Part I, Item 1.

1 of this Quarterly Report on Form 10-Q.

Item 1A. Risk ~~Factors~~

Factors.

There have been no material changes to the risk factors described in our ~~final prospectus filed with~~Annual Report on Form 10-K for the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4), which are incorporated herein by reference. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, results of operations, financial condition or future results.

year ended December 31, 2022.

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

~~Use of Proceeds~~

On September 21, 2020, we completed our IPO, in which we sold 41,026,000 shares of common stock at a public offering price of $14.00 per share for an aggregate price of approximately $574 million. We received net proceeds of $546 million in the IPO, after deducting underwriting discounts and commissions of $25 million and other expenses of $3 million. The offer and sale of the shares in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S-1 (File No. 333-248250), which was declared effective by the SEC on September 16, 2020. Additionally, on October 20, 2020, 1,723,710 shares of common stock were purchased by the underwriters pursuant to their option to purchase additional shares at a public offering price of $14.00 per share, which resulted in net proceeds of $23 million. There has been no material change in the use of proceeds from our IPO as described in our final prospectus filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4). None of the underwriting discounts and commissions or other expenses were paid directly or indirectly to any director, officer, or general partner of ours or to their associates, persons owning 10% or more of any class of our equity securities, or to any of our affiliates.

~~Credit Suisse Securities (USA) LLC and Citigroup Global Markets Inc. acted as representatives of the several underwriters for the offering.~~

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~None.~~

During the three months ended September 30, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and/or any “non-Rule 10b5-1 trading arrangement.”

Item 6. Exhibits.

~~Exhibit Number~~

~~Description of Exhibit~~

31.1*

The following exhibits are filed as part of, or are incorporated by reference in, this report:


				Incorporated by Reference
Exhibit	Exhibit Title	Filed Herewith	Furnished Herewith	Form	Exhibit No.	Date Filed
3.1	Amended and Restated Certificate of Incorporation of the Registrant.			8-K	3.1	Sept. 21, 2020
3.2	Amended and Restated Bylaws of the Registrant.			8-K	3.2	Sept. 21, 2020
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		X
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		X
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 Data File (embedded within the Inline XBRL document)

SIGNATURES

~~Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

31.2*

~~Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32.1*

~~Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

32.2*

~~Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~

~~XBRL Instance Document~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~

~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~

~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~

~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document~~

* Furnished herewith

~~SIGNATURES~~

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.

~~PACTIV EVERGREEN INC.~~

~~(Registrant)~~

~~By:~~


			PACTIV EVERGREEN INC.
			(Registrant)

	By:		/s/ Jonathan H. Baksht
			Jonathan H. Baksht
			Chief Financial Officer (principal financial officer and principal accounting officer)
			November 1, 2023

~~/s/ MICHAEL J. RAGEN~~

~~Michael J. Ragen~~

~~Chief Financial Officer/Chief Operating Officer~~

~~November 12, 2020~~



	RCP As of February 4, 2020		GPC As of September 16, 2020
	(in millions)
Assets
Cash, cash equivalents and restricted cash	$	31	$	79
Current assets	699		448
Noncurrent assets	3,630		3,461
	$	4,360	$	3,988
Liabilities
Current liabilities	$	1,467	$	292
Noncurrent liabilities	2,847		2,518
	$	4,314	$	2,810
Net assets distributed	$	46	$	1,178


	For the Three Months Ended September 30, 2023		For the Nine Months Ended September 30, 2023		Total Expected Charges(1)(2)
Non-cash:
Accelerated property, plant and equipment depreciation	$	4	$	271	$	280
Other non-cash charges(3)		1		44	45 - 50
Total non-cash charges		5		315	325 - 330
Cash:
Severance, termination and related costs		3		42		45
Exit, disposal and other transition costs(4)		24		78	105 - 115
Total cash charges		27		120	150 - 160
Total Beverage Merchandising Restructuring charges	$	32	$	435	$ 475 - 490



	As of September 30, 2020			As of December 31, 2019
	(in millions)
Land and land improvements	$	85		$	92
Buildings and building improvements	518			551
Machinery and equipment	3,043			2,973
Construction in progress	229			204
Property, plant and equipment, at cost	3,875			3,820
Less: accumulated depreciation	(2,209		)	(2,117		)
Property, plant and equipment, net	$	1,666		$	1,703


	As of September 30, 2023			As of December 31, 2022
Land and land improvements	$	72		$	72
Buildings and building improvements		676			661
Machinery and equipment		3,632			3,485
Construction in progress		156			189
Property, plant and equipment, at cost		4,536			4,407
Less: accumulated depreciation		(3,067	)		(2,634	)
Property, plant and equipment, net	$	1,469		$	1,773



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019
Net revenues (includes related party net revenues of $89, $72, $259 and $213)	$	1,195		$	1,306		$	3,514		$	3,888
Cost of sales	(1,011		)	(1,100		)	(2,982		)	(3,249		)
Gross profit	184			206			532			639
Selling, general and administrative expenses	(116		)	(104		)	(358		)	(341		)
Goodwill impairment charges	(6		)	(16		)	(6		)	(16		)
Restructuring, asset impairment and other related charges	(14		)	(39		)	(18		)	(45		)
Other (expense) income, net	(79		)	2			(48		)	(7		)
Operating (loss) income from continuing operations	(31		)	49			102			230
Non-operating income (expense), net	17			0			50			(2		)
Interest expense, net	(87		)	(84		)	(275		)	(312		)
Loss from continuing operations before tax	(101		)	(35		)	(123		)	(84		)
Income tax (expense) benefit	(42		)	0			95			(16		)
Loss from continuing operations	(143		)	(35		)	(28		)	(100		)
(Loss) income from discontinued operations, net of income taxes	(216		)	91			(234		)	270
Net (loss) income	(359		)	56			(262		)	170
Income attributable to non-controlling interests	0			0			(1		)	(1		)
Net (loss) income attributable to Pactiv Evergreen Inc. common stockholders	$	(359	)	$	56		$	(263	)	$	169

(Loss) earnings per share attributable to Pactiv Evergreen Inc. common stockholders
From continuing operations
Basic	$	(1.03	)	$	(0.26	)	$	(0.22	)	$	(0.75	)
Diluted	$	(1.03	)	(0.26		)	$	(0.22	)	$	(0.75	)
From discontinued operations
Basic	$	(1.56	)	$	0.67		$	(1.72	)	$	2.01
Diluted	$	(1.56	)	$	0.67		$	(1.72	)	$	2.01
Total
Basic	$	(2.59	)	$	0.41		$	(1.94	)	$	1.26
Diluted	$	(2.59	)	$	0.41		$	(1.94	)	$	1.26


~~(1)~~	Includes interest expense and amortization of deferred transaction costs related to debt repaid in conjunction with the distribution of RCP, as well as interest and transaction costs related to debt incurred by GPCI in August 2020; also includes a $5 million loss on extinguishment of debt from the repayment of corporate level debt on February 4, 2020.



	Goodwill impairment		Other asset impairment		Employee terminations		Total
	(in millions)
Foodservice	$	0	$	0	$	1	$	1
Food Merchandising	0		1		0		1
Other	6		12		0		18
Total	$	6	$	13	$	1	$	20


	December 31, 2022		Charges to Earnings		Cash Paid			September 30, 2023
Severance, termination and related costs	$	—	$	42	$	(29	)	$	13
Exit, disposal and other transition costs		—		78		(48	)		30
Total(1)	$	—	$	120	$	(77	)	$	43



	December 31, 2019		Charges to earnings		Cash paid			September 30, 2020
	(in millions)
Employee termination costs	$	1	$	3	$	(3	)	$	1
Total	$	1	$	3	$	(3	)	$	1


	As of September 30, 2023		As of December 31, 2022
Raw materials	$	206	$	260
Work in progress		87		101
Finished goods		455		596
Spare parts		98		105
Inventories	$	846	$	1,062



	Foodservice⁽¹⁾		Food Merchandising⁽¹⁾		Beverage Merchandising		Other⁽²⁾			Total
	(in millions)
Balance as of December 31, 2019	$	924	$	770	$	66	$	6		$	1,766
Impairment charges	0		0		0		(6		)	(6		)
Balance as of September 30, 2020	$	924	$	770	$	66	$	0		$	1,760
Accumulated impairment losses	$	0	$	0	$	0	$	22		$	22


~~(1)~~	~~The information presented above reflects the retrospective application of the March 2020 change in segments. See Note 17 - Segment Information for further details.~~


~~(2)~~	~~Other includes operations that do not meet the quantitative threshold for reportable segments.~~



	As of September 30, 2020							As of December 31, 2019
	Gross carrying amount		Accumulated amortization			Net		Gross carrying amount		Accumulated amortization			Net
	(in millions)
Finite-lived intangible assets
Customer relationships	$	1,015	$	(525	)	$	490	$	1,026	$	(494	)	$	532
Other	20		(18		)	2		21		(18		)	3
Total finite-lived intangible assets	$	1,035	$	(543	)	$	492	$	1,047	$	(512	)	$	535

Indefinite-lived intangible assets
Trademarks	$	554	$	—		$	554	$	554	$	—		$	554
Other	58		—			58		58		—			58
Total indefinite-lived intangible assets	$	612	$	—		$	612	$	612	$	—		$	612
Total intangible assets	$	1,647	$	(543	)	$	1,104	$	1,659	$	(512	)	$	1,147


	As of September 30, 2023							As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Finite-lived intangible assets
Customer relationships	$	1,060	$	(682	)	$	378	$	1,060	$	(639	)	$	421
Trademarks		42		(14	)		28		42		(12	)		30
Other		7		(7	)		—		7		(7	)		—
Total finite-lived intangible assets	$	1,109	$	(703	)	$	406	$	1,109	$	(658	)	$	451
Indefinite-lived intangible assets
Trademarks	$	554	$	—		$	554	$	554	$	—		$	554
Other		59		—			59		59		—			59
Total indefinite-lived intangible assets	$	613	$	—		$	613	$	613	$	—		$	613
Total intangible assets	$	1,722	$	(703	)	$	1,019	$	1,722	$	(658	)	$	1,064


	As of September 30, 2023		As of December 31, 2022
Rebates and credits	$	117	$	108
Personnel costs		122		160
Restructuring costs(1)		41		—
Interest		40		17
Other(2)		127		130
Accrued and other current liabilities	$	447	$	415


	As of			As of
	September 30,			December 31,
	2023			2022
Credit Agreement	$	1,705		$	2,227
Notes:
4.000% Senior Secured Notes due 2027		1,000			1,000
4.375% Senior Secured Notes due 2028		500			500
Pactiv Debentures:
7.950% Debentures due 2025		217			217
8.375% Debentures due 2027		167			167
Other		43			49
Total principal amount of borrowings		3,632			4,160
Deferred debt issuance costs (“DIC”)		(13	)		(14	)
Original issue discounts, net of premiums (“OID”)		(8	)		(10	)
		3,611			4,136
Less: current portion		(18	)		(31	)
Long-term debt	$	3,593		$	4,105



	(in millions)
2020	$	1
2021	2
2022	3
2023	4,087
2024	651
Thereafter	481
Total principal amount of borrowings	$	5,225



Type	Unit of measure	Contracted volume	Contracted price range	Contracted date of maturity
Natural gas swaps	million BTU	1,963,628	$2.40 - $2.94	Nov 2020 - Dec 2021
Polymer-grade propylene swaps	pound	39,250,071	$0.29 - $0.39	Oct 2020 - May 2021
Benzene swaps	U.S. liquid gallon	5,251,376	$1.08 - $2.42	Nov 2020 - Jun 2021
Diesel swaps	U.S. liquid gallon	936,628	$2.41 - $3.26	Oct 2020 - Dec 2021
Low-density polyethylene swaps	pound	15,000,000	$0.52 - $0.71	Oct 2020 - Dec 2021
Ethylene swaps	pound	2,105,278	$0.26	Oct 2020 - Apr 2021


~~(1)~~	Unallocated includes unallocated assets, which are comprised of cash and cash equivalents, other current assets, assets held for sale or distribution, entity-wide property, plant and equipment, operating lease right-of-use assets, goodwill, intangible assets, deferred income taxes, related party receivables and other noncurrent assets.


	Income (expense) for the						Income (expense) for the
	Three Months Ended September 30,						Nine Months Ended September 30,						Balance Outstanding as of
	2023			2022			2023			2022			September 30, 2023			December 31, 2022
Joint ventures
Included in other current assets													$	2		$	3
Sale of goods and services(1)	$	1		$	2		$	5		$	12
Other common controlled entities
Related party receivables(2)														38			46
Sale of goods and services(2)		92			107			291			313
Transition services agreements and rental income(2)		3			—			4			1
Charges(3)		1			1			5			4
Related party payables(2)														(10	)		(6	)
Purchase of goods(2)		(21	)		(29	)		(58	)		(77	)
Charges(3)		(3	)		(3	)		(10	)		(9	)



	Transaction value for the Three Months Ended September 30,						Transaction value for the Nine Months Ended September 30,						Balance outstanding as of
	2020			2019			2020			2019			September 30, 2020			December 31, 2019
	(in millions)
Balances and transactions with joint ventures
Included in other current assets													$	7		$	8
Sale of goods and services^(a)	$	5		$	3		$	23		$	19
Balances and transactions with other entities controlled by Mr. Graeme Hart
Current related party receivables													57			0
Sale of goods and services^(b)	89			72			259			213
Transition services agreement and rental income^(b)	3			0			11			0
Tax loss transfer^(c)	0			0			13			0
Recharges^(d)	1			0			2			4
Forgiveness of a balance^(e)	(15		)	0			(15		)	0
Noncurrent related party receivables^(f)													0			339
Interest income	3			4			9			12
Loan forgiveness	(347		)	0			(347		)	0
Related party payables													(21		)	(30		)
Purchase of goods^(b)	(28		)	(36		)	(91		)	(114		)
Recharges^(d)	(1		)	(6		)	(11		)	(16		)
Management fee^(g)	(57		)	(8		)	(65		)	(21		)
Tax loss transfer^(c)	(10		)	0			(11		)	(2		)


~~(a)~~	All transactions with joint ventures are settled in cash. Sales of goods and services are negotiated on a cost-plus basis allowing a margin ranging from 3% to 6%. All amounts are unsecured, non-interest bearing and repayable on demand.



	(in millions)
Credit Agreement	$	2,457
Notes:
5.125% Senior Secured Notes due 2023	59
4.000% Senior Secured Notes due 2027	1,000
Pactiv Debentures:
7.950% Debentures due 2025	276
8.375% Debentures due 2027	200
Other	13
Total principal amount of borrowings	$	4,005



	Total		Less than one year		One to three years		Three to five years		Greater than five years
	(in millions)
Long-term debt^(1)(2)(3)	$	6,060	$	239	$	4,520	$	775	$	526
Operating lease liabilities⁽⁴⁾	357		76		125		77		79
Unconditional capital expenditure obligations	94		94		—		—		—
Total contractual obligations	$	6,511	$	409	$	4,645	$	852	$	605