Berry Global Group Annual Report 2019

Plain-text annual report

ANNUAL REPORT2019Always advancing toprotect what’s important.FINANCIAL HIGHLIGHTS*FISCAL YEARS ENDEDSEPTEMBER 28, 2019SEPTEMBER 29, 2018% CHANGE$100$150$2005 Year Total Return DJUSCP = 140%S&P 500 = 150% Dow Jones US Containers & Packaging IndexBerry Global Group, Inc.S&P 500 Index'15'16'17'18'19$408$581$732$761$974$400$1,000'15'16'17'18'19**Total cumulative return based on $100 invested at beginning of the period vs. the S&P 500 and DJ US Containers & Packaging. Assumes reinvestment of dividends.NET SALES$436$517$601$634$764'15'16'17'18'19$400$800FREE CASH FLOWOPERATING INCOMEOPERATING EBITDA*In millions of dollars, except stock performance data. Operating EBITDA and adjusted free cash ﬂow are non-GAAP ﬁnancial measures. See reconciliation located within this document.STOCK PERFORMANCE**$4,881$6,489$7,095$7,869$8,878$4,500$8,500'15'16'17'18'19$815$1,210$1,327$1,380$1,530$800$1,600'15'16'17'18'19Net Sales $8,878$7,86913%Operating Income 974 761 28%Operating EBITDA 1,530 1,380 11%Free Cash Flow 764 634 21%NON-GAAP FINANCIAL MEASURES**Measurements are in millionsOperating EBITDA and adjusted free cash f low, as presented in this document, are supplemental financial measures that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). Reconciliations of such measures to GAAP financial measures are provided below. Investors are urged to consider carefully the comparable GAAP measures and the reconciliations to those measures provided. For further information, see the accompanying Form 10-K.FISCAL20152016201720182019U.S. GAAP Operating income$408 $581 $732 $761 $974 Add: depreciation and amortization350525521538613 Add: restructuring and impairment13322436 (132) Add: business optimization and other expense4472504575Operating EBITDA$815 $1,210 $1,327 $1,380 $1,530 FISCAL20152016201720182019Cash flow from operating activities$637 $857 $975 $1,004 $1,201 Additions to property, plant, and equipment, net(162)(283)(263)(333)(399)Tax receivable agreement payment(39)(57)(111)(37)(38)Free cash flow$436 $517 $601 $634 $764 (This page is intentionally left blank)UNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONWashington,D.C.20549FORM10-K☒ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934FortheFiscalYearEndedSeptember28,2019OR☐TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFSECURITIESEXCHANGEACTOF1934ForthetransitionperiodfromtoCommissionFileNumber001-35672BERRYGLOBALGROUP,INC.ADelawarecorporation101OakleyStreet,Evansville,Indiana,47710(812)424-2904IRSemployeridentificationnumber20-5234618SecuritiesregisteredpursuanttoSection12(b)oftheAct:TitleofEachClassTradingSymbol(s)NameofEachExchangeonWhichRegisteredCommonStock,$0.01parvaluepershareBERYNewYorkStockExchangeLLCIndicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.Yes☒No☐IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.Yes☐No☒Indicatebycheckmarkwhethertheregistrant:(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)havebeensubjecttosuchfilingrequirementsforthepast90days.Yes☒No☐IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).Yes☒No☐Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”and“emerginggrowthcompany”inRule12b-2oftheExchangeActLargeacceleratedfiler☒Acceleratedfiler☐Non-acceleratedfiler☐Smallreportingcompany☐Emerginggrowthcompany☐Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.Yes☐No☐Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheSecuritiesExchangeActof1934).Yes☐No☒Theaggregatemarketvalueofthecommonstockoftheregistrantheldbynon-affiliateswasapproximately$7.1billionasofMarch29,2019,thelastbusinessdayoftheregistrant’smostrecentlycompletedsecondfiscalquarter.TheaggregatemarketvaluewascomputedusingtheclosingsalepriceasreportedontheNewYorkStockExchange.AsofNovember22,2019,therewere132.3millionsharesofcommonstockoutstanding.DOCUMENTSINCORPORATEDBYREFERENCEPortionsofBerryGlobalGroup,Inc.’sProxyStatementforits2020AnnualMeetingofStockholdersareincorporatedbyreferenceintoPartIIIofthisreport.CAUTIONARYSTATEMENTCONCERNINGFORWARD-LOOKINGSTATEMENTSThisForm10-Kincludes“forward-lookingstatements”withinthemeaningofSection27AoftheSecuritiesActof1933,asamendedandSection21EoftheSecuritiesExchangeActof1934,asamended,withrespecttoourfinancialcondition,resultsofoperationsandbusinessandourexpectationsorbeliefsconcerningfutureevents.Theforward-lookingstatementsinclude,inparticular,statementsaboutourplans,strategiesandprospectsundertheheading“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations”.Thesestatementscontainwordssuchas“believes,”“expects,”“may,”“will,”“should,”“would,”“could,”“seeks,”“approximately,”“intends,”“plans,”“estimates,”“outlook,”“anticipates”or“lookingforward”orsimilarexpressionsthatrelatetoourstrategy,plans,orintentions.Allstatementswemakerelatingtoourestimatedandprojectedearnings,margins,costs,expenditures,cashflows,growthratesandfinancialresultsortoourexpectationsregardingfutureindustrytrendsareforward-lookingstatements.Inaddition,we,throughourseniormanagement,fromtimetotimemakeforward-lookingpublicstatementsconcerningourexpectedfutureoperationsandperformanceandotherdevelopments.Theseforward-lookingstatementsaresubjecttorisksanduncertaintiesthatmaychangeatanytime,and,therefore,ouractualresultsmaydiffermateriallyfromthosethatweexpected.Wederivemanyofourforward-lookingstatementsfromouroperatingbudgetsandforecasts,whicharebaseduponmanydetailedassumptions.Whilewebelievethatourassumptionsarereasonable,wecautionthatitisverydifficulttopredicttheimpactofknownfactors,anditisimpossibleforustoanticipateallfactorsthatcouldaffectouractualresults.Allforward-lookingstatementsarebaseduponinformationavailabletousonthedateofthisForm10-K.Allforward-lookinginformationandsubsequentwrittenandoralforward-lookingstatementsattributabletous,ortopersonsactingonourbehalf,areexpresslyqualifiedintheirentiretybythecautionarystatements.Someofthefactorsthatwebelievecouldaffectourresultsinclude:•risksassociatedwithoursubstantialindebtednessanddebtservice;•changesinpricesandavailabilityofresinandotherrawmaterialsandourabilitytopassonchangesinrawmaterialpricestoourcustomersonatimelybasis;•risksrelatedtoacquisitionsordivestituresandintegrationofacquiredbusinessesandtheiroperations,andrealizationofanticipatedcostsavingsandsynergies;•uncertaintyregardingtheUnitedKingdom’swithdrawalfromtheEuropeanUnionandtheoutcomeoffuturearrangementsbetweentheUnitedKingdomandtheEuropeanUnion;•relianceonunpatentedproprietaryknow-howandtradesecrets;•thephase-outoftheLondonInterbankOfferedRate(LIBOR),orthereplacementofLIBORwithadifferentreferencerateormodificationofthemethodusedtocalculateLIBOR,whichmayadverselyaffectinterestrates;•increasesinthecostofcompliancewithlawsandregulations,includingenvironmental,safety,anti-plasticlegislation,productionandproductlawsandregulations;•employeeshutdownsorstrikesorthefailuretoreneweffectivebargainingagreements;•risksrelatedtodisruptionsintheoveralleconomyandthefinancialmarketsthatmayadverselyimpactourbusiness;•risksofcatastrophiclossofoneofourkeymanufacturingfacilities,naturaldisasters,andotherunplannedbusinessinterruptions;•risksrelatedtothefailureof,inadequacyoforattacksonourinformationtechnologysystemsandinfrastructure;•risksrelatedtomarketacceptanceofourdevelopingtechnologiesandproducts;•generalbusinessandeconomicconditions,particularlyaneconomicdownturn;•abilityofourinsurancetofullycoverpotentialexposures;•risksthatourrestructuringprogramsmayentailgreaterimplementationcostsorresultinlowersavingsthananticipated;•risksrelatedtofuturewrite-offsofsubstantialgoodwill;•risksofcompetition,includingforeigncompetition,inourexistingandfuturemarkets;1•newlegislationornewregulationsandtheCompany’scorrespondinginterpretationsofeithermayaffectourbusinessandconsolidatedfinancialconditionandresultsofoperations;and•theotherfactorsdiscussedinthesectiontitled“RiskFactors.”Wecautionreadersthattheforegoinglistofimportantfactorsmaynotcontainallofthematerialfactorsthatareimportanttoyou.Inaddition,inlightoftheserisksanduncertainties,themattersreferredtointheforward-lookingstatementscontainedinthisForm10-Kmaynotinfactoccur.Accordingly,readersshouldnotplaceunduerelianceonthosestatements.Allforward-lookingstatementsaremadeonlyasofthedatehereof,andweundertakenoobligationtopubliclyupdateorreviseanyforward-lookingstatementasaresultofnewinformation,futureeventsorotherwise,exceptasotherwiserequiredbylaw.2TABLEOFCONTENTSFORM10-KFORTHEFISCALYEARENDEDSEPTEMBER28,2019PagePARTIItem1BUSINESS............................................................4Item1A.RISKFACTORS........................................................8Item1B.UNRESOLVEDSTAFFCOMMENTS........................................11Item2.PROPERTIES..........................................................11Item3.LEGALPROCEEDINGS..................................................11Item4.MINESAFETYDISCLOSURES............................................11PARTIIItem5.MARKETFORREGISTRANT’SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERS,ANDISSUERPURCHASESOFEQUITYSECURITIES.................12Item6.SELECTEDFINANCIALDATA............................................12Item7.MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS...............................................12Item7A.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK.......22Item8.FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA.....................23Item9.CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTINGANDFINANCIALDISCLOSURE...........................................23Item9A.CONTROLSANDPROCEDURES...........................................23Item9B.OTHERINFORMATION.................................................24PARTIIIItem10.DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE..........25Item11.EXECUTIVECOMPENSATION............................................25Item12.SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENTANDRELATEDSTOCKHOLDERMATTERS.................................25Item13.CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONSANDDIRECTORINDEPENDENCE......................................................25Item14.PRINCIPALACCOUNTANTFEESANDSERVICES.............................25PARTIVItem15.EXHIBITSANDFINANCIALSTATEMENTSCHEDULES........................26Item16.FORM10-KSUMMARY..................................................263Item1.BUSINESS(Inmillionsofdollars,exceptasotherwisenoted)GeneralBerryGlobalGroup,Inc.(“Berry,”“we,”orthe“Company”)isaleadingglobalsupplierofabroadrangeofinnovativerigid,flexibleandnon-wovenproductsusedeverydaywithinconsumerandindustrialendmarkets.Wesellourproductspredominantlyintostable,consumer-orientedendmarkets,suchashealthcare,personalcare,andfoodandbeverage.Ourcustomersconsistofadiversemixofleadingglobal,national,mid-sizedregionalandlocalspecialtybusinesses.Thesizeandscopeofourcustomernetworkallowsustointroducenewproductswedeveloporacquiretoavastaudiencethatisfamiliarwithourbusiness.ForthefiscalyearendedSeptember28,2019(“fiscal2019”),nosinglecustomerrepresentedmorethan5%ofnetsalesandourtoptencustomersrepresentedapproximately20%ofnetsales.Webelieveourmanufacturingprocesses,manufacturingfootprintandourabilitytoleverageourscaletoreducecosts,positionsusasalow-costmanufacturerrelativetoourcompetitors.InJuly2019,uponcompletionoftheRPCGroupPlc(“RPC”)acquisition,theCompanyreorganizedintofourreportingsegments:ConsumerPackagingInternational,ConsumerPackagingNorthAmerica,EngineeredMaterialsandHealth,Hygiene&Specialties.Thenewstructureisdesignedtoalignuswithourcustomers,provideimprovedservice,drivefuturegrowth,andtofacilitatefuturecostsavingsynergies.TheCompanyhasrecastallpriorperiodamountstoconformtothisnewreportingstructure.Additionalfinancialinformationaboutoursegmentsisprovidedin“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations”andthe“NotestoConsolidatedFinancialStatements,”whichareincludedelsewhereinthisForm10-K.SegmentOverviewConsumerPackagingInternationalTheConsumerPackagingInternationalsegment,whichincludestheinternationalportionoftherecentlyacquiredRPCGroupPlc(“RPC”)business,primarilyconsistsofthefollowingproductgroups:Recycling.Wehavecapabilitiestorecyclebothrigidandflexibleendoflifematerialsfromindustrialandconsumersourceswithawiderangeofre-useapplicationsacrosspackagingandnon-packagingformats.BottlesandCanisters.Wemanufactureacollectionofnarrowneckblowmoldedandinjection-stretchmoldedpackagingsolutionsforconsumerandindustrialapplicationsacrosspersonalcare,beverage,foodandnon-foodmarkets.Containers.Wemanufactureinjectionmoldedandthermoformedpails,jarsandtubsacrossconsumerandindustrialpackagingendmarkets.ClosuresandDispensingSystems.Wemanufactureawiderangeofclosures,dispensingsystemsandapplicatorsforavarietyofendmarketsspecializinginconvenience,safety,securityande-commerceformats.PharmaceuticalDevicesandPackaging.Wemanufactureinhalersanddosecountersinadditiontocontainersandclosuresforover-the-counterandprescriptionmedicines.Polythenefilms.Wemanufacturepolythenefilmsforadiverserangeofendmarkets,includingagricultureandhorticulture,construction,industrial,healthcareandwasteservicesandfood&non-foodretail.TechnicalComponents.Wemanufacturecomplexhigh-precisionmoldsandmoldedcomponentsincludingtemporarywastestoragesolutionsandproductsmanufacturedusingrotationalmoldingtechnologyformaterialshandlingandspecialtyvehiclesmarkets.ConsumerPackagingNorthAmericaTheConsumerPackagingNorthAmericasegment,whichincludesourlegacyConsumerPackagingbusinessandtheU.S.portionoftherecentlyacquiredRPCbusiness,primarilyconsistsofthefollowingproductgroups:4ContainersandPails.Wemanufactureacollectionofcontainersandpailsfornationallybrandedandprivatelabelcustomers.Theseareofferedinvariousstyleswithaccompanyinglids,bailsandhandles.Containersandlidsareavailabledecoratedwithin-mold-labeling,indirectflexographicprint,digitalprinting,directprint,andotherdecorationtechnologies.Foodservice.Wemanufacturelightweightpolypropylenecupsandlidsforhotandcoldbeverages.Utilizingthermoformingandinjection-molding,weoffermono-materialcupandlidpackagingsolutionsforsimplificationinpost-consumercollectionandcompatibilitywithrecyclingsystems.Ourmarketsincludequickservicerestaurants,fastcasualdining,foodservicedelivery,conveniencestores,stadiums,andretailstores.ClosuresandOvercaps.Wemanufacturechild-resistant,continuous-thread,andtamperevidentclosures,aswellasaerosolovercaps.Wesellourclosuresandovercapsintonumerousendmarkets,includinghouseholdchemical,healthcare,foodandbeverage,andpersonalcare.BottlesandPrescriptionVials.Wemanufacturebottlesandprescriptionvialsutilizingwidelyrecyclablematerialswhichservicevariousspirits,foodandbeverage,vitaminandnutritional,andpersonalcaremarkets.Tubes.Wemanufactureacompletelineofextrudedandlaminatetubesinawidevarietyofsizesandmaterialblendsincludingblendsupto70%post-consumerresin.Themajorityofourtubesaresoldinthepersonalcaremarket,butwealsosellourtubesinthepharmaceuticalandhouseholdchemicalmarkets.EngineeredMaterialsTheEngineeredMaterialssegmentprimarilyincludesthefollowingproductgroups:StretchandShrinkFilms.Wemanufacturebothhandandmachine-wrapstretchfilmsandcustomshrinkfilms,whichareusedtoprepareproductsandpackagesforstorageandshipping.Wesellstretchfilmproductsprimarilythroughdistributionandshrinkfilmdirectlytoadiversemixofendusers.ConverterFilms.Wemanufacturesealantandbarrierfilmsforvariousflexiblepackagingconverterscompanies.Inaddition,certainofourproductsareusedforindustrialapplications,whereconvertersuseourfilmsinfinishedproductsforvariousendmarketapplications.InstitutionalCanLiners.Wemanufacturetrash-canlinersandfoodbagsforoffices,restaurants,schools,hospitals,hotels,municipalities,andmanufacturingfacilities.TapeProducts.Wemanufactureclothandfoiltapeproducts.Othertapeproductsincludehigh-quality,high-performancelinersofsplicingandlaminatingtapes,flame-retardanttapes,flashingandseamingtapes,double-facedcloth,masking,mounting,OEM,andmedicalandspecialtytapes.Tapeproductsaresoldprimarilythroughdistributorsanddirectlytoendusersforindustrial,HVAC,buildingandconstruction,andretailmarketapplications.FoodandConsumerFilms.Wemanufactureprintedfilmproductsforthefreshbakery,tortilla,deli,andfrozenvegetablemarkets.Wealsomanufacturebarrierfilmsusedforcereal,cookie,crackeranddrymixpackagesthataresolddirectlytofoodmanufacturers.RetailBags.Wemanufactureadiversifiedportfolioofpolyethylene-basedfilmproductstoendusersintheretailmarkets.Ourproductsincludedropclothsandretailtrashbags.Theseproductsaresoldprimarilythroughgrocerystores,hardwarestores,homeimprovementcenters,paintstores,andmassmerchandiseroutlets.PVCFilms.Wemanufacturepolyvinylchloride(“PVC”)filmsofferingabroadarrayofPVCmeatfilm.Ourproductsareusedprimarilytowrapfreshmeats,poultry,andproduceforsupermarketapplications.Inaddition,weofferalineofboxedproductsforfoodserviceandretailsales.Weservicemanyoftheleadingsupermarketchains,clubstores,andwholesalers.AgricultureFilms.Wemanufactureagriculturefilmsprimarilyusedinthesilage,greenhouseandmulchapplications.Health,Hygiene&SpecialtiesTheHealth,Hygiene&Specialtiessegmentprimarilyincludesthefollowingproductgroups:HealthProducts.Wemanufacturemedicalgarmentmaterials,surgicaldrapes,householdcleaningwipes,andfacemasks.Thekeyendmarketsandapplicationfortheseproductsisinfectionprevention.5HygieneProducts.Wemanufactureabroadcollectionofcomponentsforbabydiapers,adultincontinenceandotherabsorbenthygieneproducts,elasticfilmsandlaminates,andsubstratesfordryersheets.Theprimaryendmarketfortheseproductsispersonalcare.SpecialtiesProducts.Wemanufactureabroadarrayofproductsandcomponentsforgeosyntheticsandfiltrationproductsservicingthespecialtyindustrialmarkets.Marketing,Sales,andCompetitionWereachourlargeanddiversifiedcustomerbasethroughadirectsalesforceofdedicatedprofessionalsandthestrategicuseofdistributors.Oursales,productionandsupportstaffmeetwithcustomerstounderstandtheirneedsandimproveourproductofferingsandservices.Ourscaleenablesustodedicatecertainsalesandmarketingeffortstoparticularproductsorcustomers,whenapplicable,whichenablesustodevelopexpertisethatwebelieveisvaluedbyourcustomers.Inaddition,becauseweservecommoncustomersacrosssegments,wehavetheabilitytoefficientlyutilizeoursalesandmarketingresourcestominimizecosts.ThemajormarketsinwhichtheCompanysellsitsproductsarehighlycompetitive.Areasofcompetitionincludeservice,innovation,quality,andprice.Thiscompetitionissignificantastoboththesizeandthenumberofcompetingfirms.CompetitorsincludebutarenotlimitedtoAmcor,Silgan,Aptar,Reynolds,Intertape,3M,Tredegar,Avgol,andFitesa.RawMaterialsOurprimaryrawmaterialisplasticresin.Inaddition,weuseothermaterialssuchasbutylrubber,adhesives,paperandpackagingmaterials,linerboard,rayon,polyesterfiber,andfoil,invariousmanufacturingprocesses.Theserawmaterialsareavailablefrommultiplesourcesandingeneralwepurchasefromavarietyofglobalsuppliers.However,incertainregionswemaysourcespecificrawmaterialsfromalimitednumberofsuppliersoronasole-sourcebasis.Whiletemporaryshortagesofrawmaterialscanoccur,weexpecttocontinuetosuccessfullymanagerawmaterialsupplieswithoutsignificantsupplyinterruptions.EmployeesAsoftheendoffiscalyear2019,weemployedapproximately48,000employeeswithapproximately20%ofthoseemployeesbeingcoveredbycollectivebargainingagreements.Thecollectivebargainingagreementscoveringamajorityoftheseemployeesexpireannuallyandasaresult,aredueforrenegotiationinfiscal2020.Ourrelationswithemployeesundercollectivebargainingagreementsremainsatisfactoryandtherehavebeennosignificantworkstoppagesorotherlabordisputesduringthepastthreeyears.Patents,TrademarksandOtherIntellectualPropertyWecustomarilyseekpatentandtrademarkprotectionforourproductsandbrandswhileseekingtoprotectourproprietaryknow-how.Whileimportanttoourbusinessintheaggregate,salesofanyoneindividuallypatentedproductisnotconsideredmaterialtoanyspecificsegmentortheconsolidatedresults.EnvironmentalMattersandGovernmentRegulationOurpastandpresentoperationsandownershipofrealpropertyaresubjecttoextensiveandchangingfederal,state,local,andforeignenvironmentallawsandregulationspertainingtothedischargeofmaterialsintotheenvironment,handlinganddispositionofwaste,andcleanupofcontaminatedsoilandgroundwater,orotherwiserelatingtotheprotectionoftheenvironment.Webelievethatweareinsubstantialcompliancewithapplicableenvironmentallawsandregulations.However,wecannotpredictwithanycertaintythatwewillnotincurliabilitywithrespecttononcompliancewithenvironmentallawsandregulations,contaminationofsitesformerlyorcurrentlyownedoroperatedbyus(includingcontaminationcausedbypriorownersandoperatorsofsuchsites)ortheoff-sitedisposalofregulatedmaterials,whichcouldbematerial.Wemayfromtimetotimeberequiredtoconductremediationofreleasesofregulatedmaterialsatourownedoroperatedfacilities.Noneofourpendingremediationprojectsareexpectedtoresultinmaterialcosts.Thepackagingindustry,includingus,issubjecttoexistingandpotentialfederal,state,localandforeignlegislationdesignedtoreducesolidwastebyrequiring,amongotherthings,productstobedegradableinlandfills,minimumlevelsofrecycledcontent,variousrecyclingrequirements,disposalfees,andnewtaxationandlimitationsontheuseof6variousproducts.Certainjurisdictionsrequirepackagedproductstocomplywithstandardsintendedtoencouragerecyclingandincreaseduseofrecycledmaterials.Inaddition,variousconsumerandspecialinterestgroupshavelobbiedfromtimetotimefortheimplementationoftheseandothersimilarmeasures.Webelievethatthelegislationpromulgatedtodateandsuchinitiativestodatehavenothadamaterialadverseeffectonus.Therecanbenoassurancethatanysuchfuturelegislativeorregulatoryeffortsorfutureinitiativeswouldnothaveamaterialadverseeffectonus.AvailableInformationWemakeavailable,freeofcharge,ourannualreportsonForm10-K,quarterlyreportsonForm10-Q,currentreportsonForm8-Kandamendments,ifany,tothosereportsthroughourinternetwebsiteassoonasreasonablypracticableaftertheyhavebeenelectronicallyfiledwiththeSEC.Ourinternetaddressiswww.berryglobal.com.Theinformationcontainedonourwebsiteisnotbeingincorporatedherein.7Item1A.RISKFACTORSOursubstantialindebtednesscouldaffectourabilitytomeetourobligationsandmayotherwiserestrictouractivities.Wehaveasignificantamountofindebtedness,whichrequiressignificantinterestpayments.Ourinabilitytogeneratesufficientcashflowtosatisfyourdebtobligations,ortorefinanceourobligationsoncommerciallyreasonableterms,wouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Oursubstantialindebtednesscouldhaveimportantconsequences.Forexample,itcould:•makeitmoredifficultforustosatisfyourobligationsunderourindebtedness;•limitourabilitytoborrowmoneyforourworkingcapital,capitalexpenditures,productdevelopment,debtservicerequirementsorothercorporatepurposes;•requireustodedicateasubstantialportionofourcashflowtopaymentsonourindebtedness,whichwouldreducetheamountofcashflowavailabletofundworkingcapital,capitalexpenditures,productdevelopmentandothercorporaterequirements;•increaseourvulnerabilitytogeneraladverseeconomicandindustryconditions;and•limitourabilitytorespondtobusinessopportunities,includinggrowingourbusinessthroughacquisitions.Inaddition,thecreditagreementsandindenturesgoverningourcurrentindebtednesscontain,andanyfuturedebtinstrumentswouldlikelycontain,financialandotherrestrictivecovenants,whichwillimposeoperatingandfinancialrestrictionsontheCompanyandcertainofitssubsidiaries,includingrestrictionsonourabilityto,amongotherthingsincurorguaranteeadditionaldebt,paydividendsandmakeotherrestrictedpayments,repurchaseshares,createorincurcertainliens,makecertaininvestments,engageinsalesofassetsandsubsidiarystock,enterintotransactionswithaffiliates,transferallorsubstantiallyallofitsortheirrespectiveassetsorenterintomergerorconsolidationtransactions,andmakecapitalexpenditures.Asaresultofthesecovenants,wewillbelimitedinthemannerinwhichweconductourbusinessandwemaybeunabletoengageinfavorablebusinessactivitiesorfinancefutureoperationsorcapitalneeds.Furthermore,afailuretocomplywiththesecovenantscouldresultinaneventofdefault,which,ifnotcuredorwaived,couldhaveamaterialadverseeffectonourbusiness,financialcondition,andresultsofoperations.Thephase-outoftheLondonInterbankOfferedRate(LIBOR),orthereplacementofLIBORwithadifferentreferencerateormodificationofthemethodusedtocalculateLIBOR,mayadverselyaffectinterestrateswhichmayhaveanadverseimpactonus.LIBORisaninterestratebenchmarkusedasareferencerateforawiderangeoffinancialtransactions,includingderivativesandloans.InJuly2017,theUnitedKingdom’sFinancialConductAuthority,whichregulatesLIBOR,announcedthatitintendstostopcompellingbankstosubmitLIBORratesafter2021.ItisunclearwhetherornotLIBORwillceasetoexistatthattime(andifso,whatreferenceratewillreplaceit)orifnewmethodsofcalculatingLIBORwillbeestablishedsuchthatitcontinuestoexistafter2021.TheAlternativeReferenceRatesCommittee(“ARRC”)hasproposedthattheSecuredOvernightFinancingRate(“SOFR”)istheratethatrepresentsbestpracticeasthealternativetoLIBORforuseinfinancialandotherderivativescontractsthatarecurrentlyindexedtoUnitedStatesdollarLIBOR.ARRChasproposedapacedmarkettransitionplantoSOFRfromLIBORandorganizationsarecurrentlyworkingonindustrywideandcompanyspecifictransitionplansasitrelatestofinancialandotherderivativecontractsexposedtoLIBOR.UncertaintyexistsastothetransitionprocessandbroadacceptanceofSOFRastheprimaryalternativetoLIBOR.Wehavematerialborrowingcontracts(includingourseniorsecuredcreditfacilities)andderivativesthatareindexedtoLIBOR.Atthistime,wecannotpredictthefutureimpactofadeparturefromLIBORasareferencerate,however,iffutureratesbaseduponthesuccessorreferencerate(oranewmethodofcalculatingLIBOR)arehigherthanLIBORratesascurrentlydetermined,itmayhaveamaterialadverseeffectonourfinancialconditionandresultsofoperations.Increasesinresinpricesorashortageofavailableresincouldharmourfinancialconditionandresultsofoperations.Toproduceourproducts,weuselargequantitiesofplasticresins.Plasticresinsaresubjecttopricefluctuations,includingthosearisingfromsupplyshortagesandchangesinthepricesofnaturalgas,crudeoilandotherpetrochemicalintermediatesfromwhichresinsareproduced.Rawmaterialinflationcouldmateriallyaffectourrevenueandprofitabilityintheshorttermasweattempttopassthroughpriceincreasestoourcustomersandinthelongterm8asourcustomerscouldseekalternativesolutions.Wemaynotbeabletoarrangeforothersourcesofresinintheeventofanindustry-widegeneralshortageofresinsusedbyus,orashortageordiscontinuationofcertaintypesofgradesofresinpurchasedfromoneormoreofoursuppliers.Anysuchshortagemayhaveamaterialadverseeffectonourcompetitivepositionversuscompaniesthatareabletobetterormorecheaplysourceresin.Wemaynotbeabletocompetesuccessfullyandourcustomersmaynotcontinuetopurchaseourproducts.Wecompetewithmultiplecompaniesineachofourproductlinesonthebasisofanumberofconsiderations,includingprice,service,quality,productcharacteristicsandtheabilitytosupplyproductstocustomersinatimelymanner.Ourproductsalsocompetewithmetal,glass,paper,cloth,andothermaterials.Someofthesecompetitiveproductsarenotsubjecttotheimpactofchangesinresinprices,whichmayhaveasignificantandnegativeimpactonourcompetitivepositionversussubstituteproducts.Ourcompetitorsmayhavefinancialandotherresourcesthataresubstantiallygreaterthanoursandmaybebetterablethanustowithstandhighercosts.Competitioncouldresultinourproductslosingmarketshareorourhavingtoreduceourprices,eitherofwhichcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Inaddition,sincewedonothavelong-termarrangementswithmanyofourcustomers,thesecompetitivefactorscouldcauseourcustomerstoshiftsuppliersand/orpackagingmaterialquickly.Oursuccessdepends,inpart,onourabilitytorespondtimelytocustomerandmarketchanges.Wemaypursueandexecuteacquisitionsordivestitures,whichcouldadverselyaffectourbusiness.Aspartofourgrowthstrategy,weconsidertransactionsthateithercomplementorexpandourexistingbusinessandcreateeconomicvalue.Transactionsinvolvespecialrisks,includingthepotentialassumptionofunanticipatedliabilitiesandcontingenciesaswellasdifficultiesinintegratingacquiredbusinessesorcarving-outdivestedbusinesses,whichmayresultinsubstantialcosts,delaysorotherproblemsthatcouldadverselyaffectourbusiness,financialconditionandresultsofoperations.Furthermore,wemaynotrealizeallofthesynergiesweexpecttoachievefromourcurrentstrategicinitiativesduetoavarietyofrisks.Ifweareunabletoachievethebenefitsthatweexpecttoachievefromourstrategicinitiatives,itcouldadverselyaffectourbusiness,financialconditionandresultsofoperations.Additionally,thesetransactionsmayresultinourattentionbeingdivertedfromourongoingoperations,whichmayhaveanegativeimpactonourbusiness.UncertaintyregardingtheUnitedKingdom’s(“UK”)withdrawalfromtheEuropeanUnion(“EU”)andtheoutcomeoffuturearrangementsbetweentheUKandtheEUcouldhaveamaterialadverseimpactonus.FollowingtheUK’sreferendumvotetoleavetheEUinJune2016(commonlyreferredtoas“Brexit”),theUKgovernmentformallynotifiedtheEuropeanCouncilofitsdecisiontoleavetheEU.TheUKwillremainamemberoftheEUuntilthedateonwhichawithdrawalagreementcomesintoforce.WhileitisdifficulttopredicttheeffectofBrexitontheEuropeanandglobaleconomy,uncertaintyregardingnewormodifiedarrangementsbetweentheUKandtheEUcouldhaveamaterialadverseeffectonbusinessactivity(includingthebuyingbehaviorofcommercialandindividualcustomers),thepoliticalstabilityandeconomicconditionsintheUK,theEUandelsewhere.Furthermore,lackofclarityaboutfutureUKlawsandregulations,astheUKdetermineswhichEUlawsandregulationstoreplaceorreplicateintheeventofawithdrawal,mayincreasecostsassociatedwithoperatingineitherorbothoftheUKandEurope.However,untiltheUKceasestobeaMemberStateoftheEU,theUKremainsafullMemberStateoftheEUandalltherightsandobligationsofEUmembershipremaininforce.Anyofthesedevelopments,ortheperceptionthatanyofthesedevelopmentsarelikelytooccur,couldhaveamaterialadverseeffectoneconomicgrowthorbusinessactivityintheUK,theEurozone,ortheEU,andcouldresultintherelocationofbusinesses,causebusinessinterruptions,leadtoeconomicrecessionordepression,andimpactthestabilityofthefinancialmarkets,availabilityofcredit,politicalsystemsorfinancialinstitutionsandthefinancialandmonetarysystem.FollowingtheconsummationoftheRPCacquisition,asignificantportionofourrevenueswillbegeneratedintheUKandEU.Consequently,thesedevelopmentscouldhaveamaterialadverseeffectonourbusiness,financialposition,liquidityandresultsofoperations.Currentandfutureenvironmentalandothergovernmentalrequirementscouldadverselyaffectourfinancialconditionandourabilitytoconductourbusiness.Whilewehavenotbeenrequiredhistoricallytomakesignificantcapitalexpendituresinordertocomplywithapplicableenvironmentallawsandregulations,wecannotpredictourfuturecapitalexpenditurerequirementsbecauseofcontinuallychangingcompliancestandardsandenvironmentaltechnology.Furthermore,violationsorcontaminated9sitesthatwedonotknowabout(includingcontaminationcausedbypriorownersandoperatorsofsuchsitesornewlydiscoveredinformation)couldresultinadditionalcomplianceorremediationcostsorotherliabilities,whichcouldbematerial.Inaddition,federal,state,local,andforeigngovernmentscouldenactlawsorregulationsconcerningenvironmentalmattersthatincreasethecostofproducing,orotherwiseadverselyaffectthedemandfor,plasticproducts.Legislationthatwouldprohibit,taxorrestrictthesaleoruseofcertaintypesofplasticandothercontainers,andwouldrequirediversionofsolidwastesuchaspackagingmaterialsfromdisposalinlandfills,hasbeenormaybeintroduced.Althoughwebelievethatanysuchlawspromulgatedtodatehavenothadamaterialadverseeffectonus,therecanbenoassurancethatfuturelegislationorregulationwouldnothaveamaterialadverseeffectonus.Furthermore,adeclineinconsumerpreferenceforplasticproductsduetoenvironmentalconsiderationscouldresultinsignificantlosses.See“EnvironmentalMattersandGovernmentRegulation.”Intheeventofacatastrophiclossofoneofourkeymanufacturingfacilities,ourbusinesswouldbeadverselyaffected.Whilewemanufactureourproductsinalargenumberofdiversifiedfacilitiesandmaintaininsurancecoveringourfacilities,includingbusinessinterruptioninsurance,acatastrophiclossoftheuseofalloraportionofoneofourkeymanufacturingfacilitiesduetoaccident,laborissues,weatherconditions,naturaldisasterorotherwise,whethershortorlong-term,couldresultinsignificantlosses.Employeeslowdownsorstrikesorthefailuretorenewcollectivebargainingagreementscoulddisruptourbusiness.Wemaynotbeabletomaintainconstructiverelationshipswithlaborunionsortradecouncils.Wemaynotbeabletosuccessfullynegotiatenewcollectivebargainingagreementsonsatisfactorytermsinthefuture.Thelossofasubstantialnumberoftheseemployeesoraprolongedlabordisputecoulddisruptourbusinessandresultinsignificantlosses.Wedependoninformationtechnologysystemsandinfrastructuretooperateourbusiness,andcyberthreats,systeminadequacies,andfailurescouldharmourbusiness.Werelyontheefficientanduninterruptedoperationofinformationtechnologysystemsandnetworks.Thesesystemsandnetworksarepotentiallyvulnerabletodamageorinterruptionfromavarietyofsources,includingcybersecuritythreats,energyinterruptions,telecommunicationsfailures,breakdowns,naturaldisasters,terrorism,war,computermalwareorothermaliciousintrusions,andrandomattacks.Todate,systeminterruptionshavebeeninfrequentandhavenothadamaterialimpactonthebusiness.Whileweattempttomitigatetheserisks,therecanbenoassurancethattheseeffortswillpreventfutureinterruptionsthatcouldresultinsignificantlosses.Goodwillandotherintangiblesrepresentasignificantamountofournetworth,andafuturewrite-offcouldresultinlowerreportednetincomeandareductionofournetworth.Futurechangesinmarketmultiples,costofcapital,expectedcashflows,orotherfactorsmaycauseourgoodwilltobeimpaired,resultinginanon-cashchargeagainstresultsofoperationstowriteoffgoodwillorindefinitelivedintangibleassetsfortheamountofimpairment.Ifafuturewrite-offisrequired,thechargecouldresultinsignificantlosses.Ourinternationaloperationsposeriskstoourbusinessthatmaynotbepresentwithourdomesticoperations.Foreignoperationsaresubjecttocertainrisksthatareuniquetodoingbusinessinforeigncountries.Theserisksincludefluctuationsinforeigncurrencyexchangerates,inflation,economicorpoliticalinstability,shippingdelaysinourproductsandreceivingdelaysofrawmaterials,changesinapplicablelaws,includingassessmentsofincomeandnon-incomerelatedtaxes,reducedprotectionofintellectualproperty,inabilitytoreadilyrepatriatecashtotheU.S.effectively,andregulatorypoliciesandvarioustraderestrictionsincludingpotentialchangestoexporttaxesorcountervailingandanti-dumpingdutiesforexportedproductsfromthesecountries.Anyoftheseriskscoulddisruptourbusinessandresultinsignificantlosses.WearealsosubjecttotheForeignCorruptPracticesActandotheranti-briberyandanti-corruptionlawsthatgenerallybarbribesorunreasonablegiftstoforeigngovernmentsorofficials.Wehaveimplementedsafeguards,trainingandpoliciestodiscouragethesepracticesbyouremployeesandagents.However,ourexistingsafeguards,trainingandpoliciestoassurecomplianceandanyfutureimprovementsmayprovetobelessthaneffectiveandouremployeesoragentsmayengageinconductforwhichwemightbeheldresponsible.Ifemployeesviolateourpolicies,wemaybesubjecttoregulatorysanctions.Violationsoftheselawsorregulationscouldresultinsanctionsincludingfines,debarmentfromexportprivilegesandpenaltiesandcouldadverselyaffectourbusiness,financialconditionandresultsofoperations.10Wemaynotbesuccessfulinprotectingourintellectualpropertyrights,includingourunpatentedproprietaryknow-howandtradesecrets,orinavoidingclaimsthatweinfringedontheintellectualpropertyrightsofothers.Inadditiontorelyingonpatentandtrademarkrights,werelyonunpatentedproprietaryknow-howandtradesecrets,andemployvariousmethods,includingconfidentialityagreementswithemployeesandconsultants,customersandsupplierstoprotectourknow-howandtradesecrets.However,thesemethodsandourpatentsandtrademarksmaynotaffordcompleteprotectionandtherecanbenoassurancethatotherswillnotindependentlydeveloptheknow-howandtradesecretsordevelopbetterproductionmethodsthanus.Further,wemaynotbeabletodetercurrentandformeremployees,contractorsandotherpartiesfrombreachingagreementsandmisappropriatingproprietaryinformationanditispossiblethatthirdpartiesmaycopyorotherwiseobtainanduseourinformationandproprietarytechnologywithoutauthorizationorotherwiseinfringeonourintellectualpropertyrights.Furthermore,noassurancecanbegiventhatwewillnotbesubjecttoclaimsassertingtheinfringementoftheintellectualpropertyrightsofthirdpartiesseekingdamages,thepaymentofroyaltiesorlicensingfeesand/orinjunctionsagainstthesaleofourproducts.Anysuchlitigationcouldbeprotractedandcostlyandcouldresultinsignificantlosses.IfwefailtomaintaineffectiveinternalcontroloverfinancialreportingatareasonableassurancelevelfollowingtheRPCacquisition,itcouldhaveamaterialadverseeffectonouroperations,investorconfidenceinourbusiness,andthetradingpricesofoursecurities.Aswegrowourbusinessoracquireotherbusinesses,includingRPC,ourinternalcontrolsmaybecomemorecomplexandwemayrequiresignificantlymoreresourcestoensuretheyremaineffective.Historically,RPCwasnotsubjecttotherequirementtoobtainanattestationreportfromitsindependentregisteredpublicaccountingfirmoneffectivenessofitsinternalcontroloverfinancialreporting.Ourevaluationandremediationofassesseddeficiencies,ifany,overinternalcontrolscouldrequireustoincursignificantexpense.Item1B.UNRESOLVEDSTAFFCOMMENTSNone.Item2.PROPERTIESOurprimarymanufacturingfacilitiesbygeographicareawereasfollowsatSeptember28,2019:GeographicRegionTotalFacilitiesLeasedFacilitiesNorthAmerica...........................12331Europe,MiddleEast,India,Africa.............14944SouthAmerica...........................72AsiaPacific.............................2413Item3.LEGALPROCEEDINGSBerryispartytovariouslegalproceedingsinvolvingroutineclaimswhichareincidentaltoourbusiness.Althoughourlegalandfinancialliabilitywithrespecttosuchproceedingscannotbeestimatedwithcertainty,webelievethatanyultimateliabilitywouldnotbematerialtothebusiness,financialcondition,resultsofoperationsorcashflows.Item4.MINESAFETYDISCLOSURESNotapplicable.11PARTIIItem5.MARKETFORREGISTRANT’SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERS,ANDISSUERPURCHASESOFEQUITYSECURITIESOurcommonstock“BERY”islistedontheNewYorkStockExchange.Asofthedateofthisfilingtherewerefewerthan500activerecordholdersofthecommonstock,butweestimatethenumberofbeneficialstockholderstobemuchhigherasanumberofoursharesareheldbybrokersordealersfortheircustomersinstreetname.Duringfiscal2018and2019,wedidnotdeclareorpayanycashdividendsonourcommonstock.IssuerPurchasesofEquitySecuritiesDuringthefourthquarteroffiscal2019theCompanydidnotrepurchaseanyshares.AsofSeptember28,2019,$393millionofauthorizedsharesremainedavailabletopurchaseundertheprogram.Item6.SELECTEDFINANCIALDATAThefollowingtablepresentsselectedhistoricalconsolidatedfinancialdataderivedfromtheconsolidatedfinancialstatementsofBerryGlobalGroup,Inc.fortheperiodsindicated.Thefinancialdataforourfiscal2015throughfiscal2019shouldbereadinconjunctionwiththoseconsolidatedfinancialstatements,relatednotestheretoandManagement’sDiscussionandAnalysisofFinancialConditionandResultsofOperations.Thetablepresentedbelowisunaudited.Fiscal2019Fiscal2018Fiscal2017Fiscal2016Fiscal2015StatementofOperationsData:Netsales..........................$8,878$7,869$7,095$6,489$4,881Operatingincome....................974761732581408Netincome........................40449634023686NetIncomePerShareData:Basic,netincomepershare.............$3.08$3.77$2.66$1.95$0.72Diluted,netincomepershare............3.003.672.561.890.70BalanceSheetData:Totalassets.........................$16,469$9,131$8,476$7,653$5,028Long-termdebtobligations.............11,3655,8445,6415,7553,685StatementofCashFlowData:Netcashfromoperatingactivities.........$1,201$1,004$975$857$637Netcashfrominvestingactivities.........(6,251)(1,035)(774)(2,579)(165)Netcashfromfinancingactivities.........5,426113(226)1,817(365)Item7.MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONSThefollowingdiscussionshouldbereadinconjunctionwiththeconsolidatedfinancialstatementsofBerryGlobalGroup,Inc.anditssubsidiariesandtheaccompanyingnotesthereto,whichinformationisincludedelsewhereherein.Thisdiscussioncontainsforward-lookingstatementsandinvolvesnumerousrisksanduncertainties,including,butnotlimitedto,thosedescribedinthe“RiskFactors”section.Ouractualresultsmaydiffermateriallyfromthosecontainedinanyforward-lookingstatements.Segmentleveldiscussionoftheresultsisdisclosedinamannerconsistentwiththeorganizationstructureattheendofthepresentedperiod.OverviewBerryGlobalGroup,Inc.(“Berry,”“we,”orthe“Company”)isaleadingglobalsupplierofabroadrangeofinnovativerigid,flexibleandnon-wovenproductsusedeverydaywithinconsumerandindustrialendmarkets.Wesellourproductspredominantlyintostable,consumer-orientedendmarkets,suchashealthcare,personalcare,andfoodandbeverage.Ourcustomersconsistofadiversemixofleadingglobal,national,mid-sizedregionalandlocalspecialty12businesses.Thesizeandscopeofourcustomernetworkallowsustointroducenewproductswedeveloporacquiretoavastaudiencethatisfamiliarwithourbusiness.ForthefiscalyearendedSeptember28,2019(“fiscal2019”),nosinglecustomerrepresentedmorethan5%ofnetsalesandourtoptencustomersrepresentedapproximately20%ofnetsales.Webelieveourmanufacturingprocesses,manufacturingfootprintandourabilitytoleverageourscaletoreducecosts,positionsusasalow-costmanufacturerrelativetoourcompetitors.ExecutiveSummaryBusiness.InJuly2019,theCompanyreorganizedintofourreportingsegments:ConsumerPackagingInternational,ConsumerPackagingNorthAmerica,EngineeredMaterialsandHealth,Hygiene&Specialties.Thenewstructureisdesignedtoalignuswithourcustomers,provideimprovedservice,drivefuturegrowth,andtofacilitatesynergiesrealization.TheConsumerPackagingInternationalsegmentprimarilyconsistsofcontainers,closures,dispensingsystems,pharmaceuticaldevicesandpackaging,polythenefilms,andtechnicalcomponentsandincludestheinternationalportionoftherecentlyacquiredRPCGroupPlc(“RPC”)business.TheConsumerPackagingNorthAmericasegmentprimarilyconsistsofcontainers,foodserviceitems,closures,overcaps,bottles,prescriptionvials,andtubes.TheEngineeredMaterialssegmentprimarilyconsistsoftapesandadhesives,polyethylene-basedfilmproducts,canliners,andspecialtycoatedandlaminatedproducts.TheHealth,Hygiene&Specialtiessegmentprimarilyconsistsofnonwovenspecialtymaterialsandfilmsusedinhygiene,infectionprevention,personalcare,industrial,construction,andfiltrationapplications.TheCompanyhasrecastallpriorperiodamountstoconformtothisnewreportingstructure.RawMaterialTrends.Ourprimaryrawmaterialisplasticresin.Polypropyleneandpolyethyleneaccountforapproximately90%ofourplasticresinpoundspurchased.Thethree-monthsimpleaveragepriceperpound,aspublishedbytheAmericanmarketindices,wereasfollows:PolyethyleneButeneFilmPolypropylene2019201820172019201820171stquarter..................................$.64$.68$.56$.76$.71$.562ndquarter..................................61.69.58.63.75.673rdquarter...................................63.68.60.62.76.614thquarter...................................59.66.62.62.85.62Duetodifferencesinthetimingofpassingthroughresincostchangestoourcustomersonescalator/de-escalatorprograms,segmentsarenegativelyimpactedintheshorttermwhenplasticresincostsincreaseandarepositivelyimpactedintheshorttermwhenplasticresincostsdecrease.Thistiminglagandcompetitorbehaviorsrelatedtopassingthroughrawmaterialcostchangescouldaffectourresultsasplasticresincostsfluctuate.Outlook.TheCompanyisaffectedbygeneraleconomicandindustrialgrowth,plasticresinavailabilityandaffordability,andgeneralindustrialproduction.Ourbusinesshasbothgeographicandendmarketdiversity,whichreducestheeffectofanyoneofthesefactorsonouroverallperformance.Ourresultsareaffectedbyourabilitytopassthroughrawmaterialandothercostchangestoourcustomers,improvemanufacturingproductivityandadapttovolumechangesofourcustomers.Byprovidingadvantagedproductsintargetedmarkets,webelieveourConsumerPackagingbusinesswillcontinuetogrowandourEngineeredMaterialsandHealth,Hygiene,&Specialtiessegments,willreturntopositivevolumesinfiscal2020.Furthermore,majorinvestmentsinpolyethyleneandpolypropylenegloballyshouldbenefittheCompanyoverthelong-term.Forfiscal2020,weprojectcashflowfromoperationsandfreecashflowof$1,400millionand$800million,respectively.The$800millionoffreecashflowincludes$600millionofcapitalspending,cashtaxesof$160million,cashinterestcostsof$500million,andothercashusesof$90millionrelatedtochangesinworkingcapital,acquisitionintegrationexpensesandcoststoachievesynergies.Forthedefinitionoffreecashflowandfurtherinformationrelatedtofreecashflowasanon-GAAPfinancialmeasure,see“LiquidityandCapitalResources.”RecentAcquisitionsandDispositionsOuracquisitionstrategyisfocusedonimprovingourlong-termfinancialperformance,enhancingourmarketpositions,andexpandingourexistingandcomplementaryproductlines.Weseektoobtainbusinessesforattractivepost-synergymultiples,creatingvalueforourstockholdersfromsynergyrealization,leveragingtheacquiredproductsacrossourcustomerbase,creatingnewplatformsforfuturegrowth,andassumingbestpracticesfromthebusinessesweacquire.13TheCompanyhasincludedtheexpectedbenefitsofacquisitionintegrationsandrestructuringplanswithinourunrealizedsynergies,whichareinturnrecognizedinearningsafteranacquisitionhasbeenfullyintegratedortherestructuringplaniscompleted.Whiletheexpectedbenefitsonearningsareestimatedatthecommencementofeachtransaction,oncetheexecutionoftheplanandintegrationoccur,wearegenerallyunabletoaccuratelyestimateortrackwhattheultimateeffectshavebeenduetosystemintegrationsandmovementsofactivitiestomultiplefacilities.Ashistoricalbusinesscombinationsandrestructuringplanshavenotallowedustoaccuratelyseparaterealizedsynergiescomparedtowhatwasinitiallyidentified,wemeasurethesynergyrealizationbasedontheoverallsegmentprofitabilitypost-integration.RPCGroupPlcInJuly2019,theCompanycompletedtheacquisitionofRPCforaggregateconsiderationof$6.1billion.RPCisaleadingplasticproductdesignandengineeringcompanyforpackagingandselectnon-packagingmarkets,with189sitesin34countries.RPCdevelopsandmanufacturesadiverserangeofproductsforawidevarietyofcustomers,includingmanyhouseholdnames,andenjoysstrongmarketpositionsinmanyoftheendmarketsitservesandthegeographicalareasinwhichitoperates.ItusesawiderangeofpolymerconversiontechniquesandisalsooneofthelargestplasticrecyclersinEurope.TheinternationalbasedfacilitiesareoperatedwithintheConsumerPackagingInternationalsegmentwiththeremainingU.S.basedfacilitiesoperatedwithintheConsumerPackagingNorthAmericasegment.TheCompanyexpectstorealizeannualcostsynergiesof$150millionofwhichanestimated$75millionisexpectedtoberealizedinfiscal2020.SeeNote2totheConsolidatedFinancialStatementsforfurtherdetailsontheacquisitionofRPC.Tofinancetheall-cashpurchase,theCompanyissued$1,250millionaggregateprincipalamountof4.875%firstpriorityseniorsecurednotesdue2026,$500millionaggregateprincipalamountof5.625%secondpriorityseniorsecurednotesdue2027,andenteredintoincrementaltermloansdueJuly2026,tofundtheremainderofthepurchaseprice.InconnectionwiththeclosingoftheRPCacquisitiontheCompanyincurred$99millionrelatedtoforeignexchangeforwardcontractsand$41millionrelatedtocross-currencyswapsrecordedinOtherexpense,netontheConsolidatedStatementsofIncome.Additionally,theCompanyincurred$130millionofcostsassociatedwiththeclosingofthetransaction.SealForLifeInJuly2019,theCompanycompletedthesaleofitsSealForLife(“SFL”)businesswhichwasoperatedinourHealth,Hygiene&Specialtiessegmentfornetproceedsof$326million.Apretaxgainof$214milliononthesalewasrecordedinRestructuringandtransactionactivitiesontheConsolidatedStatementsofIncome.DiscussionofResultsofOperationsforFiscal2019ComparedtoFiscal2018Acquisitionsalesandoperatingincomedisclosedwithinthissectionrepresenttheresultsfromacquisitionsforthecurrentperiod.Businessintegrationexpensesconsistofrestructuringandimpairmentcharges,acquisitionrelatedcosts,andotherbusinessoptimizationcosts.Tablespresentdollarsinmillions.ConsolidatedOverviewFiscalYear20192018$Change%ChangeNetsales........................................$8,878$7,869$1,00913%Operatingincome.................................$974$761$21328%Operatingincomepercentageofnetsales.................11%10%Thenetsalesgrowthisprimarilyattributedtoacquisitionnetsalesof$1,479millionpartiallyoffsetbypriorperioddivestituresalesof$20million,a$48millionunfavorableimpactfromforeigncurrencychanges,lowersellingpricesof$175millionduetothepassthroughoflowerresincosts,a1%declineastheresultofacustomerproducttransitionanda2%basevolumedecline.Theoperatingincomeincreaseisprimarilyattributedtoa$214milliongainonthesaleofourSFLbusiness,acquisitionoperatingincomeof$114million,anda$37milliondecreaseindepreciationandamortization.Theseimprovementswerepartiallyoffsetbyanincreaseinbusinessintegrationcostsof$28million,a$25millionnegativeimpactfrompricecostspread,an$18millionunfavorableimpactfromforeigncurrencychanges,a$39millioninventoryfairvaluestep-up,anda$26millionimpactfromlowerbasevolumes.14ConsumerPackagingInternationalFiscalYear20192018$Change%ChangeNetsales.........................................$1,229$215$1,014472%Operatingincome...................................$12$17$(5)(29)%Operatingincomepercentageofnetsales..................1%8%ThenetsalesgrowthintheConsumerPackagingInternationalsegmentisprimarilyattributedtoacquisitionnetsalesfromtheRPCacquisitionof$1,031million.Theoperatingincomedecreaseisprimarilyattributedtoanincreaseinbusinessintegrationcostsof$52millionanda$36millioninventoryfairvaluestep-uprelatedtotheRPCacquisitionpartiallyoffsetbyacquisitionoperatingincomeof$82million.ConsumerPackagingNorthAmericaFiscalYear20192018$Change%ChangeNetsales........................................$2,636$2,463$1737%Operatingincome.................................$234$190$4423%Operatingincomepercentageofnetsales.................9%8%ThenetsalesgrowthintheConsumerPackagingNorthAmericasegmentisprimarilyattributedtoacquisitionnetsalesof$133millionrelatedtotheU.S.portionoftheacquiredRPCbusinessanda2%basevolumeimprovementpartiallyoffsetbylowersellingpricesduetothepassthroughoflowerresincosts.Theoperatingincomeincreaseisprimarilyattributedtoacquisitionoperatingincomeof$15million,a$23milliondecreaseindepreciationandamortization,anda$13millionincreasefromthehigherbasevolumes.Theseincreaseswerepartiallyoffsetbya$13millionincreaseinbusinessintegrationcostsprimarilyrelatedtotheRPCacquisition.EngineeredMaterialsFiscalYear20192018$Change%ChangeNetsales........................................$2,538$2,633$(95)(4)%Operatingincome.................................$318$365$(47)(13)%Operatingincomepercentageofnetsales.................13%14%ThenetsalesdeclineintheEngineeredMaterialssegmentisprimarilyattributedtolowersellingpricesof$117millionduetothepassthroughoflowerresincostsanda5%basevolumedeclineduetosoftnessinindustrialmarketsandsupplychaindisruptionrelatedtomaterialqualifications.Thesedecreaseswerepartiallyoffsetbyacquisitionnetsalesof$151millionrelatedmainlytotheLaddawnacquisition.Theoperatingincomedecreaseisprimarilyattributedtoa$33millionunfavorableimpactfrompricecostspreadanda$23millionimpactfromthebasevolumedeclinepartiallyoffsetbyacquisitionoperatingincomeof$6million.Health,Hygiene&SpecialtiesFiscalYear20192018$Change%ChangeNetsales........................................$2,475$2,558$(83)(3)%Operatingincome.................................$410$189$221117%Operatingincomepercentageofnetsales.................17%7%ThenetsalesdeclineintheHealth,Hygiene&Specialtiessegmentisprimarilyattributedtolowersellingpricesof$40millionduetothepassthroughoflowerresincosts,a2%declineastheresultofacustomerproducttransition,a3%basevolumedeclineasaresultofweaknessintheNorthAmericanbabycaremarket,prioryearsalesof$20millionrelatedtothedivestedSFLbusinessanda$46millionunfavorableimpactfromforeigncurrencychanges.Thesedeclineswerepartiallyoffsetbyacquisitionnetsalesof$164millionrelatedtotheClopayacquisition.Theoperatingincomeincreaseisprimarilyattributedtoa$214milliongainonthesaleofourSFLbusinessandadecreaseinbusinessintegrationcostsof$30million.Theseimprovementswerepartiallyoffsetbya$15millionunfavorableimpactfromforeigncurrencychangesanda$15millionimpactfromlowerbasevolumes.15Otherexpense,netFiscalYear20192018$Change%ChangeOtherexpense,net....................................$155$25$130520%Theotherexpenseincreaseisprimarilyattributedtolossesrelatedtotheforeignexchangeforwardcontractsof$99millionandcross-currencyswapsof$41millionenteredintofortheclosingoftheRPCacquisition.Interestexpense,netFiscalYear20192018$Change%ChangeInterestexpense,net..................................$329$259$7027%TheinterestexpenseincreaseisprimarilyattributedtotheincrementaldebtfacilitiesenteredintoaspartoftheRPCacquisition.Incometax(benefit)expenseFiscalYear20192018$Change%ChangeIncometax(benefit)expense............................$86$(19)$105(553)%Theincometaxexpenseincreaseisprimarilyattributedtothe$124millionprovisionaltransitionbenefitrecordedinfiscal2018asaresultoftherecentU.S.taxlegislation.Oureffectivetaxrateforfiscal2019was18%andwaspositivelyimpactedby6%fromthesaleofsubsidiaries,2%fromshare-basedcompensationand2%fromresearchanddevelopmentcredits.Thesefavorableitemswerepartiallyoffset2%fromU.S.statetaxes,3%fromforeignvaluationallowances,2%fromforeignratedifferentialandotherdiscreteitems.ComprehensiveIncomeFiscalYear20192018$Change%ChangeComprehensiveIncome................................$174$408$(234)(57)%Thedecreaseincomprehensiveincomeisprimarilyattributedtoa$92milliondecreaseinnetincome,a$160millionunfavorablechangeinthefairvalueofinterestratehedges,a$58milliondecreaseinunrealizedgainsontheCompany’spensionplans,partiallyoffsetbya$56millionfavorablechangeincurrencytranslation.Currencytranslationgainsareprimarilyrelatedtonon-U.S.subsidiarieswithafunctionalcurrencyotherthantheU.S.dollarwherebyassetsandliabilitiesaretranslatedfromtherespectivefunctionalcurrencyintoU.S.dollarsusingperiod-endexchangerates.Thechangeincurrencytranslationwasprimarilyattributedtolocationsutilizingtheeuro,Britishpoundsterling,BrazilianrealandChineserenminbiastheirfunctionalcurrency.Aspartoftheoverallriskmanagement,theCompanyusesderivativeinstrumentstoreduceexposuretochangesininterestratesattributedtotheCompany’sfloating-rateborrowingsandrecordschangestothefairvalueoftheseinstrumentsinAccumulatedothercomprehensiveincome(loss).Thechangeinfairvalueoftheseinstrumentsinfiscal2019versusfiscal2018isprimarilyattributedtoachangeintheforwardinterestcurvebetweenmeasurementdates.DiscussionofResultsofOperationsforFiscal2018ComparedtoFiscal2017Acquisitionsalesandoperatingincomedisclosedwithinthissectionrepresenttheresultsfromacquisitionsforthecurrentperiod.Businessintegrationexpensesconsistofrestructuringandimpairmentcharges,acquisitionrelatedcosts,andotherbusinessoptimizationcosts.Tablespresentdollarsinmillions.ConsolidatedOverviewFiscalYear20182017$Change%ChangeNetsales........................................$7,869$7,095$77411%Operatingincome.................................$761$732$294%Operatingincomepercentageofnetsales.................10%10%Thenetsalesgrowthof$774millionisprimarilyattributedtoacquisitionnetsalesof$624million,increasedsellingpricesof$191millionduetothepassthroughofhighercostofgoodssold,anda$58millionfavorableimpactfromforeigncurrencychanges,partiallyoffsetbyamodest1%volumedecline.Theoperatingincomeincreaseof$29millionisprimarilyattributedtoacquisitionoperatingincomeof$62million,a$46milliondecreaseinselling,generalandadministrativeexpenserelatedtosynergiesandlowerincentive16compensation,a$26milliondecreaseindepreciationandamortization,andan$11millionfavorableimpactfromforeigncurrencychanges.Theseimprovementswerepartiallyoffsetbya$96millionnegativeimpactfromunderrecoveryofhighercostofgoodssold,anda$12millionimpactfromthelowervolumes.ConsumerPackagingInternationalFiscalYear20182017$Change%ChangeNetsales........................................$215$200$158%Operatingincome..................................$17$23$(6)(26)%Operatingincomepercentageofnetsales..................8%12%ThenetsalesgrowthintheConsumerPackagingInternationalsegmentisprimarilyattributedtoa$14millionfavorableimpactfromforeigncurrencychanges.Theoperatingincomedecreaseisprimarilyattributedtoa$6millionnegativeimpactfromunderrecoveryofhighercostofgoodssold.ConsumerPackagingNorthAmericaFiscalYear20182017$Change%ChangeNetsales........................................$2,463$2,351$1125%Operatingincome.................................$190$200$(10)(5)%Operatingincomepercentageofnetsales.................8%9%ThenetsalesgrowthintheConsumerPackagingNorthAmericasegmentisprimarilyattributedtoincreasedsellingpricesof$81millionduetothepassthroughofhighercostofgoodssoldanda1%volumeimprovement.Theoperatingincomedecreaseisprimarilyattributedtoa$40millionnegativeimpactfromunderrecoveryofhighercostofgoodssold,partiallyoffsetbya$16milliondecreaseinselling,generalandadministrativeexpenses,a$6millionfavorableimpactfromthevolumeimprovement,anda$6milliondecreaseinbusinessintegrationexpense.EngineeredMaterialsFiscalYear20182017$Change%ChangeNetsales........................................$2,633$2,337$29613%Operatingincome.................................$365$311$5417%Operatingincomepercentageofnetsales.................14%13%ThenetsalesgrowthintheEngineeredMaterialssegmentisprimarilyattributedtoacquisitionnetsalesof$319million,partiallyoffsetbya3%volumedeclineasaresultofbusinessrationalizationswithinlegacyAEPlocations,partiallyoffsetbyincreasedsellingpricesof$59million.Theoperatingincomeincreaseisprimarilyattributedtoacquisitionoperatingincomeof$40million,an$18milliondecreaseindepreciationandamortizationexpense,andan$8milliondecreaseinselling,generalandadministrativeexpenses.Theseimprovementswerepartiallyoffsetbyan$11millionnegativeimpactfromthelowervolumes.Health,Hygiene&SpecialtiesFiscalYear20182017$Change%ChangeNetsales........................................$2,558$2,207$35116%Operatingincome.................................$189$198$(9)(5)%Operatingincomepercentageofnetsales.................7%9%ThenetsalesgrowthintheHealth,Hygiene&Specialtiessegmentisprimarilyattributedtoacquisitionnetsalesof$305million,a$44millionfavorableimpactfromforeigncurrencychanges,andincreasedsellingpricesof$45millionduetothepassthroughofhighercostofgoodssold,partiallyoffsetbya2%volumedecline.Theoperatingincomedecreaseisprimarilyattributedtoa$49millionnegativeimpactfromunderrecoveryofhighercostofgoodssold,a$6millionimpactfromlowervolumes,anda$11millionincreaseinbusinessintegration.Thesedecreaseswerepartiallyoffsetbya$21milliondecreaseinselling,generalandadministrativeexpenses,acquisitionoperatingincomeof$22millionfromtheClopayacquisition,anda$9millionfavorableimpactfromforeigncurrencychanges.17Otherexpense,netFiscalYear20182017$Change%ChangeOtherexpense,net....................................$25$14$1179%Theotherexpenseincreaseisprimarilyattributedtoayearoveryearincreaseof$19millioninunfavorableforeigncurrencychangesrelatedtotheremeasurementofnon-operatingintercompanybalances,partiallyoffsetbyan$8milliondecreaseindebtextinguishmentexpenserelatedtofewertermloanmodificationsin2018comparedto2017.Interestexpense,netFiscalYear20182017$Change%ChangeInterestexpense,net..................................$259$269$(10)(4)%Theinterestexpensedecreaseisprimarilyattributedtoreducedinterestratesresultingfromthetermloanmodifications,partiallyoffsetbyadditionalexpenseattributedtothe$500million4.5%secondpriorityseniorsecurednotes.Incometax(benefit)expenseFiscalYear20182017$Change%ChangeIncometax(benefit)expense............................$(19)$109$(128)(117)%Theincometaxdecreaseisprimarilyattributedtothe$124milliontransitionbenefitrecordedinfiscal2018asaresultoftherecentU.S.taxlegislation.Aftertheexclusionofthetaxreformbenefit,oureffectivetaxrateforfiscal2018was22%andwaspositivelyimpactedby2%fromtheshare-basedcompensationexcesstaxbenefit,2%fromthereleaseofforeignvaluationallowances,1%fromresearchanddevelopmentcredits,anda1%benefitfromthedomesticmanufacturingdeduction.Thesefavorableitemswerepartiallyoffsetbyincreasesof3%fromU.S.statetaxesandotherdiscreteitems.ComprehensiveIncomeFiscalYear20182017$Change%ChangeComprehensiveIncome................................$408$420$(12)(3)%Thedecreaseincomprehensiveincomeisprimarilyattributedtoa$161milliondecreaseincurrencytranslationanda$35milliondecreaseinunrealizedgainsontheCompany’spensionplans,partiallyoffsetbya$156millionincreaseinnetincomeanda$21millionfavorablechangeinthefairvalueofinterestratehedges.Currencytranslationgainsareprimarilyrelatedtonon-U.S.subsidiarieswithafunctionalcurrencyotherthantheU.S.dollarwherebyassetsandliabilitiesaretranslatedfromtherespectivefunctionalcurrencyintoU.S.dollarsusingperiod-endexchangerates.Thechangeincurrencytranslationwasprimarilyattributedtolocationsutilizingtheeuro,Brazilianreal,andCanadiandollarastheirfunctionalcurrency.Thechangeinunrealizedgainsonpensionplansinthecurrentperiodwasprimarilyattributabletoactuariallossesfromanincreaseintheunderlyingdiscountrate.Aspartoftheoverallriskmanagement,theCompanyusesderivativeinstrumentstoreduceexposuretochangesininterestratesattributedtotheCompany’sfloating-rateborrowingsandrecordschangestothefairvalueoftheseinstrumentsinAccumulatedothercomprehensiveincome.Thechangeinfairvalueoftheseinstrumentsinfiscal2018versusfiscal2017isprimarilyattributedtoachangeintheforwardinterestcurvebetweenmeasurementdates.LiquidityandCapitalResourcesSeniorSecuredCreditFacilityWemanageourglobalcashrequirementsconsidering(i)availablefundsamongthemanysubsidiariesthroughwhichweconductbusiness,(ii)thegeographiclocationofourliquidityneeds,and(iii)thecosttoaccessinternationalcashbalances.Wehavea$850millionasset-basedrevolvinglineofcreditthatmaturesinMay2024.Attheendoffiscal2019,theCompanyhadnooutstandingbalanceontherevolvingcreditfacility.TheCompanywasincompliancewithallcovenantsattheendoffiscal2019(seeNote3.Long-TermDebtforfurtherinformation).18ContractualObligationsandOffBalanceSheetTransactionsOurcontractualcashobligationsattheendoffiscal2019aresummarizedinthefollowingtablewhichdoesnotgiveanyeffecttotaxesaswecannotreasonablyestimatethetimingoffuturecashoutflows.Paymentsduebyperiodasoftheendoffiscal2019Total<1year1–3years4–5years>5yearsLong-termdebt,excludingcapitalleases.............$11,356$67$134$3,736$7,419Capitalleases(a)..............................12336542211Fixedinterestratepayments.....................1,120200399307214Variableinterestratepayments(b)..................1,969370723566310Operatingleases..............................554108174103169Totalcontractualcashobligations.................$15,122$781$1,484$4,734$8,123(a)Includesanticipatedinterestof$9millionoverthelifeofthecapitalleases.(b)Basedonapplicableinterestratesineffectendoffiscal2019.InFebruary2016,theFASBissuedASU2016-02,Leases(Topic842),whichincreasestransparencyandcomparabilityamongorganizationsbyrecognizingleaseassetsandleaseliabilitiesonthebalancesheetanddisclosingkeyinformationaboutleasingarrangements.Underthenewstandard,thelesseeofanoperatingleasewillberequiredtodothefollowing:1)recognizearight-of-useassetandaleaseliabilityinthestatementoffinancialposition,2)recognizeasingleleasecostallocatedovertheleasetermgenerallyonastraight-linebasis,and3)classifyallcashpaymentswithinoperatingactivitiesonthestatementofcashflows.Companiesarerequiredtoadoptthisstandardusingamodifiedretrospectivetransitionmethod.TheCompanywilladoptthestandardbeginninginfiscal2020andwillrecognizethecumulativeeffectofapplyingthenewstandardtoretainedearnings,whichtheCompanydoesnotexpecttobematerial.Thestandardprovidesanumberofoptionalpracticalexpedientsintransition.Weexpecttoelectthe“packageofpracticalexpedients”,whichpermitsusnottoreassessunderthestandardourpriorconclusionsaboutleaseidentification,leaseclassificationandinitialdirectcosts.ThestandardalsoprovidespracticalexpedientsfortheCompany’songoingaccounting.Wecurrentlyexpecttoelecttheshort-termleaserecognitionexemptionforallleasesthatqualify.Thismeans,forthoseleasesthatqualify,wewillnotrecognizeright-of-use(“ROU”)assetsorleaseliabilities,andthisincludesnotrecognizingROUassetsorleaseliabilitiesforexistingshort-termleasesofthoseassetsintransition.CashFlowsfromOperatingActivitiesNetcashprovidedbyoperatingactivitiesincreased$197millionfromfiscal2018primarilyattributedtodecreasesinworkingcapitalduetolowerrawmaterialcostspartiallyoffsetbyprofessionalfeesrelatedtotheRPCacquisition.Netcashprovidedbyoperatingactivitiesincreased$29millionfromfiscal2017primarilyattributedtothesettlementofinterestratehedges,improvednetincomebeforedepreciation,amortizationandthenetimpactoftheTaxAct.CashFlowsfromInvestingActivitiesNetcashusedininvestingactivitiesincreased$5,216millionfromfiscal2018primarilyattributedtoincreasedcapitalexpenditures,settlementofacquisitionrelatedderivatives,andhigheracquisitionspendingpartiallyoffsetbythesaleofourSFLbusiness.Netcashusedininvestingactivitiesincreased$261millionfromfiscal2017primarilyattributedtoincreasedcapitalexpendituresandhigheracquisitionspending.CashFlowsfromFinancingActivitiesNetcashfromfinancingactivitiesincreased$5,313millionfromfiscal2018primarilyattributedtoproceedsfromlong-termborrowings,netoffees,tofinancetheRPCacquisition,partiallyoffsetbyhigherrepaymentsonlong-termborrowings.19Netcashfromfinancingactivitiesincreased$339millionfromfiscal2017primarilyattributedtolowerrepaymentsoflong-termborrowingsandalowertaxreceivableagreementpaymentinfiscal2018,partiallyoffsetbyfiscal2018paymentstorepurchasecommonstock.ShareRepurchasesTheCompany’ssharerepurchasestotaled$74millionand$33millioninfiscal2019andfiscal2018,respectively.Therepurchaseswerecompletedusingexistingliquidity.FreeCashFlowWedefine“freecashflow”ascashflowfromoperatingactivitieslessnetadditionstoproperty,plantandequipmentandpaymentsofthetaxreceivableagreement.Basedonourdefinition,ourconsolidatedfreecashflowissummarizedasfollows:YearsEndedSeptember28,2019September29,2018September30,2017Cashflowfromoperatingactivities.................$1,201$1,004$975Additionstoproperty,plantandequipment,net.......(399)(333)(263)Paymentsoftaxreceivableagreement...............(38)(37)(111)Freecashflow...............................$764$634$601Freecashflow,aspresentedinthisdocument,isasupplementalfinancialmeasurethatisnotrequiredby,orpresentedinaccordancewith,generallyacceptedaccountingprinciplesintheU.S.(“GAAP”).FreecashflowisnotaGAAPfinancialmeasureandshouldnotbeconsideredasanalternativetocashflowfromoperatingactivitiesoranyothermeasuredeterminedinaccordancewithGAAP.Weusefreecashflowasameasureofliquiditybecauseitassistsusinassessingourcompany’sabilitytofunditsgrowththroughitsgenerationofcash,andbelieveitisusefultoinvestorsforsuchpurpose.Inaddition,freecashflowandsimilarmeasuresarewidelyusedbyinvestors,securitiesanalystsandotherinterestedpartiesinourindustrytomeasureacompany’sliquidity.Freecashflowmaybecalculateddifferentlybyothercompanies,includingothercompaniesinourindustryorpeergroup,limitingitsusefulnessasacomparativemeasure.LiquidityOutlookAttheendoffiscal2019,ourcashbalancewas$750million,ofwhichapproximately90%waslocatedoutsidetheU.S.WebelieveourexistingU.S.basedcashandcashflowfromU.S.operations,togetherwithavailableborrowingsunderourseniorsecuredcreditfacilities,willbeadequatetomeetourliquidityneedsoverthenexttwelvemonths.TheCompanyhastheabilitytorepatriatethecashlocatedoutsidetheU.S.totheextentnotneededtomeetoperationalandcapitalneedswithoutsignificantrestrictions.Wedonotexpectourfreecashflowtobesufficienttocoveralllong-termdebtobligationsandintendtorefinancetheseobligationspriortomaturity.CriticalAccountingPoliciesandEstimatesWedisclosethoseaccountingpoliciesthatweconsidertobesignificantindeterminingtheamountstobeutilizedforcommunicatingourconsolidatedfinancialposition,resultsofoperationsandcashflowsinthefirstnotetoourconsolidatedfinancialstatementsincludedelsewhereherein.Ourdiscussionandanalysisofourfinancialconditionandresultsofoperationsarebasedonourconsolidatedfinancialstatements,whichhavebeenpreparedinaccordancewithGAAP.Thepreparationoffinancialstatementsinconformitywiththeseprinciplesrequiresmanagementtomakeestimatesandassumptionsthataffectamountsreportedinthefinancialstatementsandaccompanyingnotes.Ourestimatesandjudgmentsarebasedonhistoricalexperienceandonvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances.Actualresultsmaydifferfromtheseestimatesunderdifferentassumptionsorconditions.Acquisitions.Werecordacquisitionsresultingintheconsolidationofanenterpriseusingthepurchasemethodofaccounting.Underthismethod,theCompanyrecordstheassetsacquired,includingintangibleassetsthatcanbeidentifiedandnamed,andliabilitiesassumedbasedontheirestimatedfairvaluesatthedateofacquisition.Thepurchasepriceinexcessofthefairvalueoftheassetsacquiredandliabilitiesassumedisrecordedasgoodwill.Among20othersourcesofrelevantinformation,theCompanyusesindependentappraisalsandactuarialorothervaluationstoassistindeterminingtheestimatedfairvaluesoftheassetsandliabilities.Variousassumptionsareusedinthedeterminationoftheseestimatedfairvaluesincludingdiscountrates,marketandvolumegrowthrates,andotherprospectivefinancialinformation.Transactioncostsassociatedwithacquisitionsareexpensedasincurred.RefertoNote2.AcquisitionsandDispositionsforfurtherinformation.Pensions.Theaccountingforourpensionplansrequiresustorecognizetheoverfundedorunderfundedstatusofthepensionplansonourbalancesheet.Forthesesponsoredplans,therelevantaccountingguidancerequiresthatmanagementmakecertainassumptionsrelatingtothelong-termrateofreturnonplanassets,discountratesusedtodeterminethepresentvalueoffutureobligationsandexpenses,salaryinflationrates,mortalityratesandotherassumptions.Webelievethattheaccountingestimatesrelatedtoourpensionplansarecriticalaccountingestimatesbecausetheyarehighlysusceptibletochangefromperiodtoperiodbasedontheperformanceofplanassets,actuarialvaluations,marketconditionsandcontractedbenefitchanges.Theselectionofassumptionsisbasedonhistoricaltrendsandknowneconomicandmarketconditionsatthetimeofvaluation,aswellasindependentstudiesoftrendsperformedbyouractuaries.However,actualresultsmaydiffersubstantiallyfromtheestimatesthatwerebasedonthecriticalassumptions.Wereviewannuallythediscountrateusedtocalculatethepresentvalueofpensionplanliabilities.Thediscountrateusedateachmeasurementdateissetbasedonahigh-qualitycorporatebondyieldcurve,derivedbasedonbonduniverseinformationsourcedfromreputablethird-partyindices,dataproviders,andratingagencies.Incountrieswherethereisnodeepmarketincorporatebonds,wehaveusedagovernmentbondapproachtosetthediscountrate.Additionally,theexpectedlongtermrateofreturnonplanassetsisderivedforeachbenefitplanbyconsideringtheexpectedfuturelong-termreturnassumptionforeachindividualassetclass.Asinglelong-termreturnassumptionisthenderivedforeachplanbasedupontheplan’stargetassetallocation.RefertoNote8.RetirementPlansforfurtherinformation.GoodwillandOtherIndefiniteLivedIntangibleAssets.Onanannualbasisandatinterimperiodswhencircumstancesrequire,wetesttherecoverabilityofgoodwillandindefinite-livedintangibleassets.Weevaluategoodwillusingaqualitativeassessmenttodeterminewhetheritismorelikelythannotthatthefairvalueofanyreportingunitislessthanthecarryingamount.Ifwedeterminethatthefairvalueofthereportingunitmaybelessthanitscarryingamount,weevaluatethegoodwillofthatreportingunitusingtheone-stepquantitativeimpairmentassessment.Otherwise,weconcludethatnoimpairmentisindicatedandnofurtherimpairmenttestisperformed.Inconductingaqualitativeassessment,weanalyzeavarietyofeventsorfactorsthatmayinfluencethefairvalueofthereportingunit,including,butnotlimitedtotheresultsofpriorquantitativetestsperformed;changesinthecarryingamountofthereportingunit;operatingresults;relevantmarketdataforboththeCompanyanditspeercompanies;industryoutlooks;macroeconomicconditions;liquidity;changesinkeypersonnel;andourcompetitiveposition.Significantjudgmentisusedtoevaluatethetotalityoftheseeventsandfactorstomakethedeterminationofwhetheritismorelikelythannotthatthefairvalueofthereportingunitislessthanitscarryingvalue.Indefinitelivedintangibleassetsaretestedforimpairmentannuallyusingbothqualitativescreensandquantitativeassessmentswhereappropriateandarewrittendowntofairvaluebasedoneitherdiscountedcashflowsorappraisedvalues.RefertoNote1.BasisofPresentationandSummaryofSignificantAccountingPoliciesforfurtherinformation.DeferredTaxesandEffectiveTaxRates.Weestimatetheeffectivetaxrate(“ETR”)andassociatedliabilitiesorassetsforeachofourlegalentitiesofoursinaccordancewithauthoritativeguidance.Weusetaxplanningtominimizeordefertaxliabilitiestofutureperiods.InrecordingETRsandrelatedliabilitiesandassets,werelyuponestimates,whicharebaseduponourinterpretationofU.S.andlocaltaxlawsastheyapplytoourlegalentitiesandouroveralltaxstructure.Auditsbylocaltaxjurisdictions,includingtheU.S.Government,couldyielddifferentinterpretationsfromourownandcausetheCompanytoowemoretaxesthanoriginallyrecorded.Forinterimperiods,weaccrueourtaxprovisionattheETRthatweexpectforthefullyear.Astheactualresultsfromourvariousbusinessesvaryfromourestimatesearlierintheyear,weadjustthesucceedinginterimperiods’ETRstoreflectourbestestimatefortheyear-to-dateresultsandforthefullyear.AspartoftheETR,ifwedeterminethatadeferredtaxassetarisingfromtemporarydifferencesisnotlikelytobeutilized,wewillestablishavaluationallowanceagainstthatassettorecorditatitsexpectedrealizablevalue.Inmultipleforeignjurisdictions,theCompanybelievesthatitwillnotgeneratesufficientfuturetaxableincometorealizetherelatedtaxbenefits.TheCompanyhasprovidedafullvaluationallowanceagainstitsforeignnetoperatinglossesincludedwithinthedeferredtaxassetsinmultipleforeignjurisdictions.TheCompanyhasnotprovidedavaluationallowanceonitsfederalnetoperatinglossesintheU.S.becauseithasdeterminedthat21futurereversalsofitstemporarytaxabledifferenceswilloccurinthesameperiodsandareofthesamenatureasthetemporarydifferencesgivingrisetothedeferredtaxassets.Ourvaluationallowanceagainstdeferredtaxassetswas$141millionand$93millionasoftheendoffiscal2019and2018,respectively.RefertoNote7.IncomeTaxesforfurtherinformation.Basedonacriticalassessmentofouraccountingpoliciesandtheunderlyingjudgmentsanduncertaintiesaffectingtheapplicationofthosepolicies,webelievethatourconsolidatedfinancialstatementsprovideameaningfulandfairperspectiveoftheCompanyanditsconsolidatedsubsidiaries.Thisisnottosuggestthatotherriskfactorssuchaschangesineconomicconditions,changesinmaterialcosts,ourabilitytopassthroughchangesinmaterialcosts,andotherscouldnotmateriallyadverselyimpactourconsolidatedfinancialposition,resultsofoperationsandcashflowsinfutureperiods.Item7A.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISKInterestRateRiskWeareexposedtomarketriskfromchangesininterestratesprimarilythroughourseniorsecuredcreditfacilities.AsofSeptember28,2019,ourseniorsecuredcreditfacilitiesarecomprisedof(i)$7.5billiontermloansand(ii)a$850millionrevolvingcreditfacilitywithnoborrowingsoutstanding.BorrowingsunderourseniorsecuredcreditfacilitiesbearinterestatarateequaltoanapplicablemarginplusLIBOR.TheapplicablemarginforLIBORrateborrowingsundertherevolvingcreditfacilityrangesfrom1.25%to1.50%,andthemarginforthetermloansrangefrom2.00%to2.50%perannum.AsofSeptember28,2019,theLIBORrateofapproximately2.00%wasapplicabletothetermloans.A0.25%changeinLIBORwouldincreaseourannualinterestexpenseby$11milliononvariableratetermloans.Weseektominimizeinterestratevolatilityriskthroughregularoperatingandfinancingactivitiesand,whendeemedappropriate,throughtheuseofderivativefinancialinstruments.Thesefinancialinstrumentsarenotusedfortradingorotherspeculativepurposes.AsofSeptember29,2019,theCompanyeffectivelyhad(i)a$450millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractforafixedannualrateof2.000%,withaneffectivedateinMay2017andexpirationinMay2022,(ii)a$1billioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractforafixedannualrateof2.808%withaneffectivedateinJune2018andexpirationinSeptember2021,(iii)a$400millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractforafixedannualrateof2.533%withaneffectivedateinFebruary2019andexpirationinJuly2023,(iv)a$884millioninterestrateswaptransactionthatswapsaonemonthvariableLIBORcontractplus250basispointspreadforafixedannualrateof4.357%,withaneffectivedateinJuly2019andexpirationinJune2024,and(v)a$473millioninterestrateswaptransactionthatswapsaonemonthvariableLIBORcontractplus250basispointspreadforafixedannualrateof4.550%,withaneffectivedateinJuly2019andexpirationinJune2024.ForeignCurrencyRiskAsaglobalcompany,wefaceforeigncurrencyriskexposurefromfluctuatingcurrencyexchangerates,primarilytheU.S.dollaragainsttheeuro,Britishpoundsterling,Brazilianreal,Chineserenminbi,CanadiandollarandMexicanpeso.Significantfluctuationsincurrencyratescanhaveasubstantialimpact,eitherpositiveornegative,onourrevenue,costofsales,andoperatingexpenses.Currencytranslationgainsandlossesareprimarilyrelatedtonon-U.S.subsidiarieswithafunctionalcurrencyotherthanU.S.dollarswherebyassetsandliabilitiesaretranslatedfromtherespectivefunctionalcurrencyintoU.S.dollarsusingperiod-endexchangeratesandimpactourComprehensiveincome.A10%declineinforeigncurrencyexchangerateswouldhavehadanegative$16millionimpactonfiscal2019Netincome.TheCompanyispartytocertaincross-currencyswapstohedgeaportionofourforeigncurrencyrisk.TheswapagreementsmatureMay2022(€250million)andJune2024(€1,625millionand£700million).Inadditiontothecross-currencyswaps,wehedgeaportionofourforeigncurrencyriskbydesignatingforeigncurrencydenominatedlong-termdebtasnetinvestmenthedgesofcertainforeignoperations.AsofSeptember28,2019,wehadoutstandinglong-termdebtof€1,075millionthatwasdesignatedasahedgeofournetinvestmentincertaineuro-denominatedforeignsubsidiaries.Inthefuture,wemayattempttomanageourforeigncurrencyriskonouranticipatedcashmovementsbyenteringintoforeigncurrencyforwardcontractstooffsetpotentialforeignexchangegainsorlosses.22Item8.FINANCIALSTATEMENTSANDSUPPLEMENTARYDATAIndextoFinancialStatementsPageReportsofIndependentRegisteredPublicAccountingFirm..................................27ConsolidatedStatementsofIncomeandComprehensiveIncomeforfiscal2019,2018and2017..........32ConsolidatedBalanceSheetsasoffiscal2019and2018......................................33ConsolidatedStatementsofChangesinStockholders’Equityforfiscal2019,2018and2017............34ConsolidatedStatementsofCashFlowsforfiscal2019,2018and2017...........................35NotestoConsolidatedFinancialStatements.............................................36IndextoFinancialStatementSchedulesAllscheduleshavebeenomittedbecausetheyarenotapplicableornotrequiredorbecausetherequiredinformationisincludedintheconsolidatedfinancialstatementsornotesthereto.Item9.CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTINGANDFINANCIALDISCLOSURENone.Item9A.CONTROLSANDPROCEDURESEvaluationofdisclosurecontrolsandproceduresWemaintain“disclosurecontrolsandprocedures,”assuchtermisdefinedinRule13a-15(e)undertheExchangeAct,thataredesignedtoensurethatinformationrequiredtobedisclosedbyusinreportsthatwefileorsubmitundertheExchangeActisrecorded,processed,summarizedandreportedwithinthetimeperiodsspecifiedinSECrulesandforms,andthatsuchinformationisaccumulatedandcommunicatedtoourmanagement,includingourChiefExecutiveOfficerandChiefFinancialOfficer,asappropriate,toallowtimelydecisionsregardingrequireddisclosure.Indesigningandevaluatingourdisclosurecontrolsandprocedures,managementrecognizesthatdisclosurecontrolsandprocedures,nomatterhowwellconceivedandoperated,canprovideonlyreasonable,notabsolute,assurancethattheobjectivesofthedisclosurecontrolsandproceduresaremet.Additionally,indesigningdisclosurecontrolsandprocedures,ourmanagementwasrequiredtoapplyitsjudgmentinevaluatingthecost-benefitrelationshipofpossibledisclosurecontrolsandprocedures.InconnectionwiththepreparationofthisForm10-K,managementevaluatedtheeffectivenessofthedesignandoperationofourdisclosurecontrolsandproceduresasofSeptember28,2019.Basedonthisevaluation,ourChiefExecutiveOfficerandChiefFinancialOfficerhaveconcludedthattheCompany’sdisclosurecontrolsandprocedureswereeffectiveasofSeptember28,2019.Management’sReportonInternalControlsoverFinancialReportingManagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionofanyevaluationofeffectivenesstofutureperiodsissubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.Inmakingthisassessment,managementusedthecriteriasetforthbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO)inInternalControlIntegratedFramework(2013Framework).TheCompanyacquiredRPCinJuly2019,andmanagementhasexcludedRPC’sinternalcontroloverfinancialreportingfromourassessmentoftheeffectivenessofourinternalcontrolasofthefiscalyearendedSeptember28,2019.RPCrepresentsapproximately49%ofconsolidatedtotalassetsand13%and10%ofconsolidatednetsalesandnetincome,respectively,forthefiscalyearendedSeptember28,2019.Basedonthisassessment,managementconcludedthatasofSeptember28,2019,theCompany’sinternalcontroloverfinancialreportingwaseffective.TheCompany’sindependentregisteredpublicaccountingfirmprovidedanattestationreportontheCompany’sinternalcontrolsoverfinancialreporting,whichappearsonpage28ofthisForm10-K.23ChangesinInternalControlsoverFinancialReportingTheCompanyisintheprocessofimplementingourstandardizedcontrolprocedureswithinRPCandexpectsthistobecompletedduringfiscal2020.TherewerenootherchangesinourinternalcontroloverfinancialreportingthatoccurredduringthequarterendedSeptember28,2019thathavemateriallyaffected,orarereasonablylikelytomateriallyaffect,ourinternalcontroloverfinancialreporting.Item9B.OTHERINFORMATIONNone.24PARTIIIItem10.DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCEExceptassetforthbelow,theinformationrequiredbythisItemisincorporatedhereinbyreferencetoourdefinitiveProxyStatementtobefiledinconnectionwiththe2020AnnualMeetingofStockholders.CodeofEthicsWehaveaCodeofBusinessEthicsthatappliestoalldirectorsandemployees,includingourChiefExecutiveOfficerandseniorfinancialofficers.Thesestandardsaredesignedtodeterwrongdoingandtopromotethehighestethical,moral,andlegalconductofallemployees.WealsohaveadoptedaSupplementalCodeofEthics,whichisinadditiontothestandardssetbyourCodeofBusinessEthics,inordertoestablishahigherlevelofexpectationforthemostseniorleadersoftheCompany.TheSupplementalCodeofEthicssetstheexpectationsastohowourseniorleadersconductthemselvesindealingswiththeCompany,customers,suppliersandcoworkersanditfurtherdefinesourcommitmenttocompliancewiththeCompany’spolicies,proceduresandgovernmentregulations.OurCodeofBusinessEthicsandSupplementalCodeofEthicscanbeobtained,freeofcharge,bycontactingourcorporateheadquartersorcanbeobtainedfromtheCorporateGovernancesectionoftheInvestorspageontheCompany’sinternetsite.Item11.EXECUTIVECOMPENSATIONTheinformationrequiredbythisItemisincorporatedhereinbyreferencetoourdefinitiveProxyStatementtobefiledinconnectionwiththe2020AnnualMeetingofStockholders.Item12.SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENTANDRELATEDSTOCKHOLDERMATTERSTheinformationrequiredbythisItem,isincorporatedhereinbyreferencetoourdefinitiveProxyStatementtobefiledinconnectionwiththe2020AnnualMeetingofStockholders.Item13.CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONSANDDIRECTORINDEPENDENCETheinformationrequiredbythisItemisincorporatedhereinbyreferencetoourdefinitiveProxyStatementtobefiledinconnectionwiththe2020AnnualMeetingofStockholders.Item14.PRINCIPALACCOUNTANTFEESANDSERVICESTheinformationrequiredbythisItemisincorporatedhereinbyreferencetoourdefinitiveProxyStatementtobefiledinconnectionwiththe2020AnnualMeetingofStockholders.25PARTIVItem15.EXHIBITSANDFINANCIALSTATEMENTSCHEDULES1.FinancialStatementsThefinancialstatementslistedunderItem8arefiledaspartofthisreport.2.FinancialStatementSchedulesScheduleshavebeenomittedbecausetheyareeithernotapplicableortherequiredinformationhasbeendisclosedinthefinancialstatementsornotesthereto.3.ExhibitsTheexhibitslistedontheExhibitIndeximmediatelyfollowingthesignaturepageofthisannualreportarefiledaspartofthisreport.Item16.FORM10-KSUMMARYNone.26ReportofIndependentRegisteredPublicAccountingFirmTotheStockholdersandtheBoardofDirectorsofBerryGlobalGroup,Inc.OpinionontheFinancialStatementsWehaveauditedtheaccompanyingconsolidatedbalancesheetsofBerryGlobalGroup,Inc.(theCompany)asofSeptember28,2019andSeptember29,2018,therelatedconsolidatedstatementsofincome,comprehensiveincome,changesinstockholders’equityandcashflowsforeachofthethreeyearsintheperiodendedSeptember28,2019,andtherelatednotes(collectivelyreferredtoasthe“consolidatedfinancialstatements”).Inouropinion,theconsolidatedfinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCompanyatSeptember28,2019andSeptember29,2018,andtheresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiodendedSeptember28,2019,inconformitywithU.S.generallyacceptedaccountingprinciples.Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theCompany’sinternalcontroloverfinancialreportingasofSeptember28,2019,basedoncriteriaestablishedinInternalControlIntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(2013framework)andourreportdatedNovember22,2019expressedanunqualifiedopinionthereon.BasisforOpinionThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.OurresponsibilityistoexpressanopinionontheCompany’sfinancialstatementsbasedonouraudits.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.Ourauditsincludedperformingprocedurestoassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthefinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatourauditsprovideareasonablebasisforouropinion.CriticalAuditMattersThecriticalauditmatterscommunicatedbelowaremattersarisingfromthecurrentperiodauditofthefinancialstatementsthatwerecommunicatedorrequiredtobecommunicatedtotheauditcommitteeandthat:(1)relatetoaccountsordisclosuresthatarematerialtothefinancialstatementsand(2)involvedourespeciallychallenging,subjectiveorcomplexjudgments.Thecommunicationofcriticalauditmattersdoesnotalterinanywayouropinionontheconsolidatedfinancialstatements,takenasawhole,andwearenot,bycommunicatingthecriticalauditmattersbelow,providingseparateopinionsonthecriticalauditmattersorontheaccountsordisclosurestowhichtheyrelate.ValuationofGoodwillDescriptionoftheMatterAtSeptember28,2019,theCompanyhadagoodwillbalanceof$5.1billion.AsdiscussedinNote1totheconsolidatedfinancialstatements,goodwillistestedforimpairmentatleastannuallyatthereportingunitlevel.TheCompany’sgoodwillisinitiallyassignedtoitsreportingunitsasoftheacquisitiondate.Infiscalyear2019,theCompanyappliedthequalitativeimpairmentassessmentandconcludedthatitwasmorelikelythannotthatthefairvalueofeachreportingunitexceededthecarryingamountexceptfortheirHealth,Hygiene&Specialties—SouthAmerica(HHS-SA)reportingunit,inwhichaquantitativetestwasperformedduetothelowerprioryearamountofexcessoffairvalueovercarryingvalueforthatreportingunit.27Auditingmanagement’sannualgoodwillimpairmenttestfortheHHS-SAreportingunit,inwhichtheone-stepimpairmenttestwasperformed,wascomplexandjudgmentalduetothesignificantestimationrequiredindeterminingthefairvalueofthereportingunit.ThesignificantestimationuncertaintywasprimarilyduetothesensitivityoftherespectivefairvaluetounderlyingassumptionsaboutthefutureoperatingperformanceoftheHHS-SAreportingunit.Inparticular,thefairvalueestimatewassensitivetosignificantassumptionsintheprospectivefinancialinformationsuchastherevenuegrowthrate,EBITDAmargin,andterminalyeargrowthrate,whichareaffectedbyexpectationsaboutfuturemarketoreconomicconditions,particularlythoseinemergingmarkets.HowWeAddressedtheMatterinOurAuditWeobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsthataddresstherisksofmaterialmisstatementovertheCompany’sgoodwillimpairmentreviewprocess,includingcontrolsovermanagement’sreviewofthesignificantassumptionsdescribedabove.TotesttheestimatedfairvalueoftheCompany’sHHS-SAreportingunit,we,alongwithourvaluationspecialists,performedauditproceduresthatincluded,amongothers,assessingmethodologiesandtestingthesignificantassumptionsdiscussedaboveandtheunderlyingdatausedbytheCompanyinitsanalysis.Wecomparedthesignificantassumptionsusedbymanagementtocurrentindustryandeconomictrends,changesintheCompany’sbusinessmodel,customerbaseorproductmix,historicaloperatingresultsandotherrelevantfactors.Weassessedthehistoricalaccuracyofmanagement’sestimatesandperformedsensitivityanalysesofsignificantassumptionstoevaluatethechangesinthefairvalueofthereportingunitthatwouldresultfromchangesintheassumptions.AccountingforRPCGroupPlcBusinessCombinationDescriptionoftheMatterAsdiscussedinNote2totheconsolidatedfinancialstatements,inJuly2019,theCompanycompletedtheacquisitionoftheentireoutstandingsharecapitalofRPCGroupPlc(“RPC”),foraggregateconsiderationof$6.1billion.Theacquisitionwasaccountedforunderthepurchasemethodofaccountingandtheassetsacquiredandliabilitiesassumedhavebeenrecordedbasedonpreliminaryestimatesoffairvalueandissubjecttochangebasedonthefinalizationofthefairvaluesoftheassetsacquiredandliabilitiesassumed.AuditingtheCompany’saccountingforthepreliminaryallocationofthepurchasepriceforitsacquisitionofRPCwascomplexduetotheoverallsignificanceoftheRPCacquisitionandtheestimationuncertaintyindeterminingthefairvalueofproperty,plantandequipmentandidentifiableintangibleassets,whichprincipallyconsistedofcustomerrelationshipsandtradenames.Theestimationuncertaintywasprimarilyduetothesensitivityoftherespectivefairvaluestounderlyingassumptions.Giventhetiming,sizeandinternationalfootprintoftheRPCacquisition,thepurchasepriceallocation,includingthefairvalueestimatesoftheidentifiableintangibleassetsandproperty,plantandequipment,wererecordedonapreliminarybasis.AsignificantassumptionusedbytheCompanytoestimatethepreliminaryfairvalueoftheseassetswasthedeterminationofwhichoftheCompany’shistoricalacquisitionswereofacomparablenaturetobeutilizedasabasisforestimatingthefairvalueofRPC’sidentifiedintangibleassetsandproperty,plantandequipment.ThisdeterminationwasbaseduponananalysisbytheCompanyofRPC’soverallbusiness,operations,productionprocesses,equipment,andcustomerbaseascomparedtotheCompany’shistoricalacquisitions.HowWeAddressedtheMatterinOurAuditWeobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsthataddresstherisksofmaterialmisstatementrelatingtotheestimationofthepreliminaryfairvalueoftheidentifiableintangibleassetsandproperty,plant,andequipment.Forexample,wetestedcontrolsovermanagement’sreviewofthesignificant28assumptions,suchastheirevaluationoftheRPCbusinessversushistoricalacquisitionsexecutedbytheCompanytodeterminesimilaritiesanddifferenceswhichprovidedthebasisfordeterminingwhichofthehistoricaltransactionstouseinestimatingfairvaluesoftheidentifiableintangibleassetsandproperty,plantandequipmentofRPC.Totesttheestimateofthepreliminaryfairvalueoftheacquiredidentifiableintangibleassetsandproperty,plant,andequipment,ourauditproceduresincluded,amongothers,assessingtheappropriatenessoftheotherhistoricalacquisitionsutilizedasabasisinestimatingtheRPCpreliminaryfairvaluesandtestingtheunderlyingdatausedbytheCompany.Forexample,weobtainedanunderstandingofthenatureoftheRPCbusinessthroughauditproceduressuchassitevisits,planttours,reviewoffinancialinformationandmeetingswithRPCpersonnel.Basedonthisunderstanding,wecomparedthenatureoftheRPCbusinessandoperationstothehistoricalacquisitionsoftheCompanyusedinthepreliminaryfairvalueestimates.Wethenevaluatedthereasonablenessoftheactualhistoricalacquisitionfairvalueresultsfortheidentifiableintangibleassetsandproperty,plantandequipmentandcomparedthosetothevaluesassignedtotheequivalentRPCassets.Wealsotestedthemathematicalaccuracyofhistoricalacquisitionaveragesforidentifiableintangibleassetsandproperty,plantandequipment.AccountingforIncomeTaxesrelatedtoRPCGroupPlcDescriptionoftheMatterAsdescribedinNote2totheconsolidatedfinancialstatements,theCompany’sacquisitionofRPCGroupPlc(RPC)expandedtheirinternationalpresence.AsdiscussedinNote2totheconsolidatedfinancialstatements,theRPCacquisitionwasaccountedforunderthepurchasemethodofaccountingandtheassetsacquiredandliabilitiesassumedhavebeenrecordedbasedonpreliminaryestimatesoffairvaluewhichincludedanyRPCincometaxrelatedbalances.AuditingthepreliminaryincometaxaccountbalancesrecordedintheopeningbalancesheetandauditingtheincometaxprovisionrelatedtoRPCwascomplexgiventhejudgmentsrelatedtotheidentificationofthevarioustaxjurisdictionsandthetaximpactsinthosejurisdictions,thecompletenessofthepopulationofthedeferredtaxbalancesanduncertaintaxpositions,andtheevaluationoftherecoverabilityofdeferredtaxassets.HowWeAddressedtheMatterinOurAuditTotesttheRPCincometaxaccounts,we,alongwithourincometaxprofessionals,performedproceduresthatincludedassessingthecompletenessandaccuracyofthenumerousincometaxprovisionsrelatedtoRPC.Ourproceduresincluded,amongothers,testingtheaccuracyoftheunderlyingamountsandinputsusedtocomputetheincometaxprovisions,testingthekeyassumptionsunderlyingtheestimatesofuncertainincometaxpositions,andtestingtheinputsusedtocalculatedeferredincometaxbalancesandanyrelatedvaluationallowances.Forexample,wecomparedpre-taxincomeforthepostacquisitionperiodutilizedineachjurisdictionaltaxprovisiontoRPC’soperatingresults,comparedincometaxratestotheenactedtaxratesspecifictoeachrespectivejurisdictionandassessedtheimpactofanypermanentadjustmentstotesteachrespectivejurisdictionalincometaxprovision.Wetestedthecompletenessandaccuracyofthedeferredtaxbalancesbasedonthehistoricalinformationavailableforbookversusincometaxbasisdifferencesandtestedthevaluationallowancesrecordedbytestingtheassumptionsunderlyingtherealizabilityofthedeferredincometaxassets./s/Ernst&YoungLLPWehaveservedastheCompany’sauditorsince1991.Indianapolis,IndianaNovember22,201929ReportofIndependentRegisteredPublicAccountingFirmTotheStockholdersandtheBoardofDirectorsofBerryGlobalGroup,Inc.OpiniononInternalControloverFinancialReportingWehaveauditedBerryGlobalGroupInc.’sinternalcontroloverfinancialreportingasofSeptember28,2019,basedoncriteriaestablishedinInternalControl—IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(2013framework)(theCOSOcriteria).Inouropinion,BerryGlobalGroup,Inc.(theCompany)maintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofSeptember28,2019,basedontheCOSOcriteria.AsindicatedintheaccompanyingManagement’sReportonInternalControlsoverFinancialReporting,management’sassessmentofandconclusionontheeffectivenessofinternalcontroloverfinancialreportingdidnotincludetheinternalcontrolsofRPCGroupPlc,whichisincludedinthe2019consolidatedfinancialstatementsoftheCompanyandconstituted49%oftotalassets,asofSeptember28,2019and13%and10%ofnetsalesandnetincome,respectively,fortheyearthenended.OurauditofinternalcontroloverfinancialreportingoftheCompanyalsodidnotincludeanevaluationoftheinternalcontroloverfinancialreportingofRPCGroupPlc.Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theconsolidatedbalancesheetsoftheCompanyasofSeptember28,2019andSeptember29,2018,therelatedconsolidatedstatementsofincome,comprehensiveincome,changesinstockholders’equityandcashflowsforeachofthethreeyearsintheperiodendedSeptember28,2019,andtherelatednotesandourreportdatedNovember22,2019expressedanunqualifiedopinionthereon.BasisforOpinionTheCompany’smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreportingincludedintheaccompanyingManagement’sReportonInternalControlOverFinancialReporting.OurresponsibilityistoexpressanopinionontheCompany’sinternalcontroloverfinancialreportingbasedonouraudit.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.DefinitionandLimitationsofInternalControlOverFinancialReportingAcompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.30Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate./s/Ernst&YoungLLPIndianapolis,IndianaNovember22,201931BerryGlobalGroup,Inc.ConsolidatedStatementsofIncome(inmillionsofdollars)FiscalyearsendedSeptember28,2019September29,2018September30,2017Netsales..........................................$8,878$7,869$7,095Costsandexpenses:Costofgoodssold.................................7,2596,4385,691Selling,generalandadministrative......................583480494Amortizationofintangibles...........................194154154Restructuringandtransactionactivities..................(132)3624Operatingincome...................................974761732Otherexpense,net...................................1552514Interestexpense,net..................................329259269Incomebeforeincometaxes............................490477449Incometaxexpense(benefits)...........................86(19)109Netincome........................................$404$496$340Netincomepershare:Basic(seeNote13).................................$3.08$3.77$2.66Diluted(seeNote13)...............................$3.00$3.67$2.56BerryGlobalGroup,Inc.ConsolidatedStatementsofComprehensiveIncome(inmillionsofdollars)FiscalyearsendedSeptember28,2019September29,2018September30,2017Netincome........................................$404$496$340Currencytranslation................................(71)(127)34Pensionandpostretirementbenefits.....................(55)338Derivativeinstruments..............................(111)4928Provisionforincometaxes............................7(13)(20)Othercomprehensive(loss)income,netoftax................(230)(88)80Comprehensiveincome................................$174$408$420Seenotestoconsolidatedfinancialstatements.32BerryGlobalGroup,Inc.ConsolidatedBalanceSheets(inmillionsofdollars)September28,2019September29,2018AssetsCurrentassets:Cashandcashequivalents........................................$750$381Accountsreceivable............................................1,526941Inventories..................................................1,324887Prepaidexpensesandothercurrentassets.............................15776Totalcurrentassets..............................................3,7572,285Property,plantandequipment......................................4,7142,488Goodwillandintangibleassets......................................7,8314,284Otherassets...................................................16774Totalassets....................................................$16,469$9,131LiabilitiesandStockholders’EquityCurrentliabilities:Accountspayable..............................................$1,159$783Accruedemployeecosts.........................................214113Othercurrentliabilities..........................................562303Currentportionoflong-termdebt..................................10438Totalcurrentliabilities............................................2,0391,237Long-termdebt.................................................11,2615,806Deferredincometaxes............................................803365Employeebenefitobligations.......................................32745Otherlong-termliabilities..........................................421244Totalliabilities..................................................14,8517,697Stockholders’equity:Commonstock(132.3and131.4sharesissued,respectively)................11Additionalpaid-incapital........................................949870Retainedearnings.............................................1,054719Accumulatedothercomprehensiveloss...............................(386)(156)Totalstockholders’equity..........................................1,6181,434Totalliabilitiesandstockholders’equity................................$16,469$9,131Seenotestoconsolidatedfinancialstatements.33BerryGlobalGroup,Inc.ConsolidatedStatementsofChangesinStockholders’Equity(inmillionsofdollars)CommonStockAdditionalPaid-inCapitalAccumulatedOtherComprehensiveLossRetainedEarnings(Deficit)TotalBalanceatOctober1,2016...................$1$452$(148)$(84)$221Share-basedcompensationexpense.............—20——20Proceedsfromissuanceofcommonstock.........—31——31Derivatives,netoftax......................——18—18NetincomeattributabletotheCompany.........———340340Currencytranslation.......................——34—34Definedbenefitpensionandretireehealthbenefitplans,netoftax.........................——28—28Equityissuance,net........................—323——323BalanceatSeptember30,2017.................$1$826$(68)$256$1,015Share-basedcompensationexpense.............—23——23Proceedsfromissuanceofcommonstock.........—23——23Commonstockrepurchasedandretired..........—(2)—(33)(35)Derivatives,netoftax......................——36—36NetincomeattributabletotheCompany.........———496496Currencytranslation.......................——(127)—(127)Definedbenefitpensionandretireehealthbenefitplans,netoftax.........................——3—3BalanceatSeptember29,2018.................$1$870$(156)$719$1,434Share-basedcompensationexpense.............—27——27Proceedsfromissuanceofcommonstock.........—55——55Commonstockrepurchasedandretired..........—(3)—(69)(72)Derivatives,netoftax......................——(83)—(83)NetincomeattributabletotheCompany.........———404404Currencytranslation.......................——(104)—(104)Definedbenefitpensionandretireehealthbenefitplans,netoftax.........................——(43)—(43)BalanceatSeptember28,2019.................$1$949$(386)$1,054$1,618Seenotestoconsolidatedfinancialstatements.34BerryGlobalGroup,Inc.ConsolidatedStatementsofCashFlows(inmillionsofdollars)FiscalyearsendedSeptember28,2019September29,2018September30,2017CashFlowsfromOperatingActivities:Netincome........................................$404$496$340Adjustmentstoreconcilenetcashfromoperatingactivities:Depreciation.....................................419384367Amortizationofintangibles...........................194154154Non-cashinterestexpense............................149Share-basedcompensationexpense......................272320Deferredincometax................................(52)(86)5Settlementofderivatives.............................1930—Transactionactivities...............................(38)——Othernon-cashoperatingactivities,net...................(1)1625Changesinoperatingassetsandliabilities:Accountsreceivable...............................150(53)(41)Inventories.....................................99(79)10Prepaidexpensesandotherassets.....................141827Accountspayableandotherliabilities..................(35)9759Netcashfromoperatingactivities........................1,2011,004975CashFlowsfromInvestingActivities:Additionstoproperty,plantandequipment.................(399)(336)(269)Proceedsfromsaleofassets............................—36Divestitureofbusiness................................326——Acquisitionofbusiness...............................(6,079)(702)(515)Acquisitionpurchasepricederivativesandother..............(99)—4Netcashfrominvestingactivities.........................(6,251)(1,035)(774)CashFlowsfromFinancingActivities:Proceedsfromlong-termborrowings......................6,784498495Repaymentoflong-termborrowings......................(1,214)(335)(636)Proceedsfromissuanceofcommonstock...................552331Repurchaseofcommonstock...........................(74)(33)—Paymentoftaxreceivableagreement......................(38)(37)(111)Debtfinancingcosts.................................(87)(3)(5)Netcashfromfinancingactivities........................5,426113(226)Effectofcurrencytranslationoncash.....................(7)(7)8Netchangeincashandcashequivalents....................36975(17)Cashandcashequivalentsatbeginningofperiod.............381306323Cashandcashequivalentsatendofperiod..................$750$381$306Seenotestoconsolidatedfinancialstatements.35BerryGlobalGroup,Inc.NotestoConsolidatedFinancialStatements(inmillionsofdollars,exceptasotherwisenoted)1.BasisofPresentationandSummaryofSignificantAccountingPoliciesBackgroundBerryGlobalGroup,Inc.(“Berry,”“we,”orthe“Company”)isaleadingglobalsupplierofabroadrangeofinnovativenon-woven,flexible,andrigidproductsusedeverydaywithinconsumerandindustrialendmarkets.BasisofPresentationTheCompany’sconsolidatedfinancialstatementshavebeenpreparedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStates(“GAAP”)pursuanttotherulesandregulationsoftheSecuritiesandExchangeCommissions.PeriodspresentedinthesefinancialstatementsincludefiscalperiodsendingSeptember28,2019(“fiscal2019”),September29,2018(“fiscal2018”),andSeptember30,2017(“fiscal2017”).TheCompanyhasrecastcertainpriorperiodamountstoconformtocurrentreporting.Fiscal2019,fiscal2018,andfiscal2017werefifty-twoweekperiods.TheCompanyhasevaluatedsubsequenteventsthroughthedatethefinancialstatementswereissued.TheconsolidatedfinancialstatementsincludetheaccountsofBerryanditssubsidiaries,allofwhichincludesourwhollyownedandmajorityownedsubsidiaries.TheCompanyhascertainforeignsubsidiariesthatreportonacalendarperiodbasiswhichweconsolidateintoourrespectivefiscalperiod.Intercompanyaccountsandtransactionshavebeeneliminatedinconsolidation.RevenueRecognitionOurrevenuesareprimarilyderivedfromthesaleofplasticpackagingproductstocustomers.Revenueisrecognizedwhenperformanceobligationsaresatisfied,inanamountreflectingtheconsiderationtowhichtheCompanyexpectstobeentitled.Weconsiderthepromisetotransferproductstobeoursoleperformanceobligation.Iftheconsiderationagreedtoinacontractincludesavariableamount,weestimatetheamountofconsiderationweexpecttobeentitledtoinexchangefortransferringthepromisedgoodstothecustomerusingthemostlikelyamountmethod.Ourmainsourcesofvariableconsiderationarecustomerrebatesandcashdiscounts.Therearenomaterialinstanceswherevariableconsiderationisconstrainedandnotrecordedattheinitialtimeofsale.Generallyourrevenueisrecognizedatapointintimeforstandardpromisedgoodsatthetimeofshipment,whentitleandriskoflosspasstothecustomer.Asmallnumberofourcontractsareforsalesofproductswhicharecustomerspecificandcannotberepurposed.SalesfortheseproductsqualifyforovertimerecognitionandareimmaterialtotheCompany.Ourrebateprogramsareindividuallynegotiatedwithcustomersandcontainavarietyofdifferenttermsandconditions.Certainrebatesarecalculatedasflatpercentagesofpurchases,whileothersincludetieredvolumeincentives.Theserebatesmaybepayablemonthly,quarterly,orannually.Thecalculationoftheaccruedrebatebalanceinvolvesmanagementestimates,especiallywherethetermsoftherebateinvolvetieredvolumelevelsthatrequireestimatesofexpectedannualsales.Theseprovisionsarebasedonestimatesderivedfromcurrentprogramrequirementsandhistoricalexperience.Theaccrualforcustomerrebateswas$114millionand$58millionatSeptember28,2019andSeptember29,2018,respectively,andisincludedinAccruedexpensesandothercurrentliabilities.Duetothenatureofoursalestransactions,wehaveelectedthefollowingpracticalexpedients:(i)Shippingandhandlingcostsaretreatedasfulfillmentcosts.Accordingly,shippingandhandlingcostsareclassifiedasacomponentofCostofgoodssoldwhileamountsbilledtocustomersareclassifiedasacomponentofNetSales;(ii)Weexcludesalesandsimilartaxesthatareimposedonoursalesandcollectedfromcustomers;(iii)Asourstandardpaymenttermsarelessthanoneyear,wedonotassesswhetheracontracthasasignificantfinancingcomponent.TheCompanydisaggregatesrevenuebasedonreportablebusinesssegment,geography,andsignificantproductline.RefertoNote12.SegmentandGeographicDataforfurtherinformation.PurchasesofRawMaterialsandConcentrationofRiskTheCompany’smostsignificantrawmaterialusedintheproductionofitsproductsisplasticresin.ThelargestsupplieroftheCompany’stotalresinmaterialrequirementsrepresentedapproximately13%ofpurchasesinfiscal2019.TheCompanyusesavarietyofsupplierstomeetitsresinrequirements.36ResearchandDevelopmentResearchanddevelopmentcostsareexpensedwhenincurred.TheCompanyincurredresearchanddevelopmentexpendituresof$50million,$45million,and$45millioninfiscal2019,2018,and2017,respectively.Share-BasedCompensationTheCompanyutilizestheBlack-Scholesoptionvaluationmodelforestimatingthefairvalueofstockoptionsandamortizestheestimatedfairvalueonastraight-linebasisovertherequisiteserviceperiod.Theshare-basedcompensationplanismorefullydescribedinNote11.Stockholders’Equity.ForeignCurrencyForthenon-U.S.subsidiariesthataccountinafunctionalcurrencyotherthanU.S.Dollars,assetsandliabilitiesaretranslatedintoU.S.Dollarsusingperiod-endexchangerates.Salesandexpensesaretranslatedattheaverageexchangeratesineffectduringtheperiod.ForeigncurrencytranslationgainsandlossesareincludedasacomponentofAccumulatedothercomprehensiveincome(loss)withinStockholders’equity.GainsandlossesresultingfromforeigncurrencytransactionsareincludedintheConsolidatedStatementsofIncome.CashandCashEquivalentsAllhighlyliquidinvestmentspurchasedwithamaturityofthreemonthsorlessfromthetimeofpurchaseareconsideredtobecashequivalents.AllowanceforDoubtfulAccountsTheCompany’scustomersarelocatedprincipallythroughouttheU.S.andEurope,withoutsignificantconcentrationwithanyonecustomer.TheCompanyperformsperiodiccreditevaluationsofitscustomers’financialconditionandgenerallydoesnotrequirecollateral.TheCompany’saccountsreceivableandrelatedallowancefordoubtfulaccountsareanalyzedindetailonaquarterlybasisandallsignificantcustomerswithdelinquentbalancesarereviewedtodeterminefuturecollectability.Thedeterminationsarebasedonlegalissues(suchasbankruptcystatus),pasthistory,currentfinancialandcreditagencyreports,andtheexperienceofthecreditrepresentatives.ReservesareestablishedinthequarterinwhichtheCompanymakesthedeterminationthattheaccountisdeemeduncollectible.TheCompanymaintainsadditionalreservesbasedonitshistoricalbaddebtexperience.Thefollowingtablesummarizestheactivityforfiscalyearsendedfortheallowancefordoubtfulaccounts:201920182017Allowancefordoubtfulaccounts,beginning............$13$13$8Acquisitionallowancefordoubtfulaccounts............1325Baddebtexpense...............................211Write-offsagainstallowance.......................—(3)(1)Allowancefordoubtfulaccounts,ending..............$28$13$13AccountsReceivableFactoringAgreementsTheCompanyhasenteredintovariousfactoringagreements,bothintheU.S.andatanumberofforeignsubsidiaries,tosellcertainreceivablestounrelatedthird-partyfinancialinstitutions.TheCompanyaccountsforthesetransactionsinaccordancewithASC860,“TransfersandServicing”(“ASC860”).ASC860allowsfortheownershiptransferofaccountsreceivabletoqualifyforsaletreatmentwhentheappropriatecriteriaismet,whichpermitstheCompanytopresentthebalancessoldundertheprogramtobeexcludedfromAccountsreceivableontheConsolidatedBalanceSheets.Receivablesareconsideredsoldwhen(i)theyaretransferredbeyondthereachoftheCompanyanditscreditors,(ii)thepurchaserhastherighttopledgeorexchangethereceivables,and(iii)theCompanyhassurrenderedcontroloverthetransferredreceivables.Inaddition,theCompanyprovidesnootherformsofcontinuedfinancialsupporttothepurchaserofthereceivablesoncethereceivablesaresold.TherewerenoamountsoutstandingfromfinancialinstitutionsrelatedtoU.S.basedprogramsatSeptember28,2019orSeptember29,2018.GrossamountsfactoredundertheseU.S.basedprogramsatSeptember28,2019andSeptember29,2018were$284millionand$162million,respectively.Thefeesassociatedwithtransferofreceivablesforallprogramswerenotmaterialforanyoftheperiodspresented.37InventoriesInventoriesarestatedatthelowerofcostornetrealizablevalueandarevaluedusingthefirst-in,first-outmethod.Managementperiodicallyreviewsinventorybalances,usingrecentandfutureexpectedsalestoidentifyslow-movingand/orobsoleteitems.Thecostofsparepartsischargedtocostofgoodssoldwhenpurchased.Weevaluateourreserveforinventoryobsolescenceonaquarterlybasisandreviewinventoryon-handtodeterminefuturesalability.Webaseourdeterminationsontheageoftheinventoryandtheexperienceofourpersonnel.Wereserveinventorythatwedeemtobenotsalableinthequarterinwhichwemakethedetermination.Webelieve,basedonpasthistoryandourpoliciesandprocedures,thatournetinventoryissalable.Inventoryasoffiscal2019and2018was:20192018Inventories:Finishedgoods........................................$743$503Rawmaterials........................................581384$1,324$887Property,PlantandEquipmentProperty,plantandequipmentarestatedatcost.Depreciationiscomputedprimarilybythestraight-linemethodovertheestimatedusefullivesoftheassetsrangingfrom15to40yearsforbuildingsandimprovements,2to20yearsformachinery,equipment,andtooling,andoverthetermoftheagreementforcapitalleases.Leaseholdimprovementsaredepreciatedovertheshorteroftheusefullifeoftheimprovementortheleaseterm.Repairsandmaintenancecostsarechargedtoexpenseasincurred.TheCompanycapitalizedinterestof$10million,$9million,and$7millioninfiscal2019,2018,and2017,respectively.Property,plantandequipmentasoffiscal2019and2018was:20192018Property,plantandequipment:Land,buildingsandimprovements..........................$1,549$875Equipmentandconstructioninprogress......................6,0904,2427,6395,117Lessaccumulateddepreciation.............................(2,925)(2,629)$4,714$2,488Long-livedAssetsLong-livedassets,includingproperty,plantandequipmentanddefinitelivedintangibleassetsarereviewedforimpairmentinaccordancewithASC360,“Property,PlantandEquipment,”wheneverfactsandcircumstancesindicatethatthecarryingamountmaynotberecoverable.Specifically,thisprocessinvolvescomparinganasset’scarryingvaluetotheestimatedundiscountedfuturecashflowstheassetisexpectedtogenerateoveritsremaininglife.Ifthisprocessweretoresultintheconclusionthatthecarryingvalueofalong-livedassetwouldnotberecoverable,awrite-downoftheassettofairvaluewouldberecordedthroughachargetooperations.Fairvalueisdeterminedbasedupondiscountedcashflowsorappraisalsasappropriate.Long-livedassetsthatareheldforsalearereportedattheloweroftheassets’carryingamountorfairvaluelesscostsrelatedtotheassets’disposition.TheCompanyrecordedimpairmentchargestotaling$8milliontoproperty,plantandequipmentassetsinfiscal2019.Thecompanyrecordednoimpairmentchargesinfiscal2018.TheCompanyrecordedimpairmentchargestotaling$2milliontoproperty,plantandequipmentassetsinfiscal2017.ImpairmentchargesarerecordedinRestructuringandtransactionactivitiesontheConsolidatedStatementsofIncome.GoodwillTheCompanyfollowstheprinciplesprovidedbyASC350,“Intangibles—GoodwillandOther.”Goodwillisnotamortizedbutratherreviewedannuallyforimpairment.TheCompanyperformeditsannualimpairmentevaluationonthefirstdayofthefourthfiscalquarter.Forpurposesofconductingourannualgoodwillimpairmenttest,theCompanydeterminedthatwehavesevenreportingunits,Health,Hygiene&Specialties(“HHS”)–NorthAmerica(“NA”),HHS–SouthAmerica(“SA”),HHS–Europe(“EU”),HHS–Asia(“AS”),ConsumerPackaging,Tapes,and38EngineeredMaterials.Wedeterminedthateachofthecomponentswithinourrespectivereportingunitshavesimilareconomiccharacteristicsandthereforeshouldbeaggregated.Wereachedthisconclusionbecausewithineachofourreportingunits,wehavesimilarproducts,managementoversight,productionprocesses,marketsserved,and/orcommongeographicregionwhichallowustoshareresourcesacrossthemanufacturingfacilities.Weregularlyre-alignourproductionequipmentandmanufacturingfacilitiesinordertotakeadvantageofcostsavingsandmanufacturingefficiencyopportunities,andtorealizecostsynergies.Inaddition,weutilizeourresearchanddevelopmentcenters,designcenter,toolshops,andgraphicscenterwhichallprovidebenefitstoeachofthereportingunitsandworkonnewproductsthatcanbenefitmultipleproductlines.Wealsobelievethatthegoodwillisrecoverablefromtheoveralloperationsoftheunitgivenoursynergiesfromleveragingthecombinedresources,commonrawmaterials,commonresearchanddevelopment,similarmarginsandsimilardistributionmethodologies.InourHHSsegment,weoperateinfourgeographicalregionswheredistinctmanagementteamsoverseeoperationsandallocateresourcesacrosstheentireregion.Infiscalyear2019,theCompanyappliedthequalitativeassessmentandconcludedthatitwasmorelikelythannotthatthefairvalueofeachreportingunitexceededthecarryingamountexceptfortheHHS-SAreportingunitduetoprioryearstep-oneresults.TheHHS-SAreportingunit’sfairvalueisestimatedbasedonamarketapproachandadiscountedcashflowanalysisandisreconciledbacktothecurrentmarketcapitalizationforBerrytoensurethattheimpliedcontrolpremiumisreasonable.Ourforecastsincludedoverallrevenuegrowthof2%increasingto4%intheterminalyear,marginsconsistentwithhistoricalresults,adiscountrateof13.5%appliedtotheforecastedcashflows,andcapitalexpenditurelevelsconsistentwithhistoricalspend.ThefairvalueoftheHHS-SAreportingunitexceededitscarryingvalueby25%andthusnoimpairmentwasrecorded.Additionally,basedonprioryearannualimpairmentevaluationstheCompanyconcludedthatnoimpairmentexistedinfiscal2018andfiscal2017.However,futuredeclinesinvaluationmarketmultiples,sustainedlowerearnings,ormacroeconomicchallengescouldimpactfutureimpairmenttests.InJuly2019,afterthecompletionoftheRPCacquisition,theCompanyreorganizedintofourreportingsegmentsinanefforttobetteralignwithourcustomers,provideimprovedservice,drivefuturegrowth,andfacilitatecostsavingsynergies.Postrealignment,theCompanycompletedaqualitativeassessmentanddetermineditismorelikelythannotthatthefairvalueofeachreportingunitexceededitscarryingamount.TheCompanyhasrecognizedcumulativegoodwillimpairmentchargesof$165million,whichoccurredinfiscal2011.Thechangesinthecarryingamountofgoodwillbyreportablesegmentareasfollows:ConsumerPackagingInternationalConsumerPackagingNorthAmericaEngineeredMaterialsHealth,Hygiene&SpecialtiesTotalBalanceasoffiscal2017...............$48$1,411$542$774$2,775Foreigncurrencytranslationadjustment....(2)(2)—(23)(27)Acquisitions........................——87109196Balanceasoffiscal2018...............$46$1,409$629$860$2,944Foreigncurrencytranslationadjustment....(73)(1)—7(67)Acquisitions........................1,705500922,216Dispositions........................———(42)(42)Balanceasoffiscal2019...............$1,678$1,908$638$827$5,051DeferredFinancingFeesDeferredfinancingfeesareamortizedtointerestexpenseusingtheeffectiveinterestmethodoverthelivesoftherespectivedebtagreements.PursuanttoASC835-30theCompanypresents$112millionand$43millionasoffiscal2019andfiscal2018,respectively,ofdebtissuanceanddeferredfinancingcostsonthebalancesheetasadeductionfromthecarryingamountoftherelateddebtliabilityinsteadofadeferredcharge.IntangibleAssetsCustomerrelationshipsarebeingamortizedusinganacceleratedamortizationmethodwhichcorrespondswiththecustomerattritionratesusedintheinitialvaluationoftheintangiblesovertheestimatedlifeoftherelationshipswhichrangefrom5to15years.Definitelivedtrademarksarebeingamortizedusingthestraight-linemethodoverthe39estimatedlifeoftheassetwhichisnotmorethan15years.Otherintangibles,whichincludetechnologyandlicenses,arebeingamortizedusingthestraight-linemethodovertheestimatedlifeoftheassetswhichrangefrom5to14years.TheCompanyevaluatestheremainingusefullifeofintangibleassetsonaperiodicbasistodeterminewhethereventsandcircumstanceswarrantarevisiontotheremainingusefullife.Certaintrademarksthatareexpectedtoremaininuse,whichareindefinitelivedintangibleassets,arerequiredtobereviewedforimpairmentannually.TheCompanyhastrademarksthattotalapproximately$248millionthatareindefinitelivedandwetestannuallyforimpairmentonthefirstdayofthefourthquarter.Wecompletedtheannualimpairmenttestofourindefinitelivedtradenamesutilizingtherelieffromroyaltymethodandnotednoimpairmentinfiscal2019,2018and2017.CustomerRelationshipsTrademarksOtherIntangiblesAccumulatedAmortizationTotalBalanceasoffiscal2017.................$1,922$335$184$(1,155)$1,286Foreigncurrencytranslationadjustment......(17)(1)(2)8(12)Amortizationexpense...................———(154)(154)Acquisitionintangibles..................177934—220Nettingoffullyamortizedintangibles........(200)(50)(31)281—Balanceasoffiscal2018.................$1,882$293$185$(1,020)$1,340Foreigncurrencytranslationadjustment......(56)(4)(2)4(58)Amortizationexpense...................———(194)(194)Acquisition/dispositionintangibles..........1,590108(22)161,692Nettingoffullyamortizedintangibles........(9)——9—Balanceasoffiscal2019.................$3,407$397$161$(1,185)$2,780InsurableLiabilitiesTheCompanyrecordsliabilitiesfortheself-insuredportionofworkers’compensation,health,product,generalandautoliabilities.Thedeterminationoftheseliabilitiesandrelatedexpensesisdependentonclaimsexperience.Formostoftheseliabilities,claimsincurredbutnotyetreportedareestimatedbaseduponhistoricalclaimsexperience.IncomeTaxesTheCompanyaccountsforincometaxesundertheassetandliabilityapproach,whichrequirestherecognitionofdeferredtaxassetsandliabilitiesfortheexpectedfuturetaxconsequenceofeventsthathavebeenrecognizedintheCompany’sfinancialstatementsorincometaxreturns.Incometaxesarerecognizedduringtheperiodinwhichtheunderlyingtransactionsarerecorded.Deferredtaxes,withtheexceptionofnon-deductiblegoodwill,areprovidedfortemporarydifferencesbetweenamountsofassetsandliabilitiesasrecordedforfinancialreportingpurposesandsuchamountsasmeasuredbytaxlaws.IftheCompanydeterminesthatadeferredtaxassetarisingfromtemporarydifferencesisnotlikelytobeutilized,theCompanywillestablishavaluationallowanceagainstthatassettorecorditatitsexpectedrealizablevalue.TheCompanyrecognizesuncertaintaxpositionswhenitismorelikelythannotthatthetaxpositionwillbesustaineduponexaminationbyrelevanttaxingauthorities,basedonthetechnicalmeritsoftheposition.Theamountrecognizedismeasuredasthelargestamountofbenefitthatisgreaterthan50%likelyofbeingrealizeduponultimatesettlement.TheCompany’seffectivetaxrateisdependentonmanyfactorsincluding:theimpactofenactedtaxlawsinjurisdictionsinwhichtheCompanyoperates;theamountofearningsbyjurisdiction,duetovaryingtaxratesineachcountry;andtheCompany’sabilitytoutilizeforeigntaxcreditsrelatedtoforeigntaxespaidonforeignearningsthatwillberemittedtotheU.S.ComprehensiveIncome(Loss)Comprehensiveincome(loss)iscomprisedofnetincomeandothercomprehensiveincome(loss).Othercomprehensivelossesincludenetunrealizedgainsorlossesresultingfromcurrencytranslationsofforeignsubsidiaries,changesinthevalueofourderivativeinstrumentsandadjustmentstothepensionliability.40Theaccumulatedbalancesrelatedtoeachcomponentofothercomprehensiveincome(loss)wereasfollows:CurrencyTranslationDefinedBenefitPensionandRetireeHealthBenefitPlansDerivativeInstrumentsAccumulatedOtherComprehensiveLossBalanceasoffiscal2016..............$(82)$(44)$(22)$(148)Othercomprehensiveloss.............3425766Netamountreclassifiedfromaccumulatedothercomprehensiveincome(loss).....—132134Provisionforincometaxes............—(10)(10)(20)Balanceasoffiscal2017..............$(48)$(16)$(4)$(68)Othercomprehensiveincome...........(127)946(72)Netamountreclassifiedfromaccumulatedothercomprehensiveincome(loss).....—(6)3(3)Provisionforincometaxes............——(13)(13)Balanceasoffiscal2018..............$(175)$(13)$32$(156)Othercomprehensiveincome...........(71)(3)(135)(209)Netamountreclassifiedfromaccumulatedothercomprehensiveincome(loss)(a)....—(52)24(28)Provisionforincometaxes............(33)12287Balanceasoffiscal2019..............$(279)$(56)$(51)$(386)(a)SeeNote4forfurtherdiscussiononamountsreclassifiedoutofaccumulatedothercomprehensiveincome(loss)relatedtointerestrateswapsandNote8foramountsreclassifiedrelatedtopensions.PensionPensionbenefitcostsincludeassumptionsforthediscountrate,retirementage,andexpectedreturnonplanassets.Retireemedicalplancostsincludeassumptionsforthediscountrate,retirementage,andhealth-care-costtrendrates.Periodically,theCompanyevaluatesthediscountrateandtheexpectedreturnonplanassetsinitsdefinedbenefitpensionandretireehealthbenefitplans.Inevaluatingtheseassumptions,theCompanyconsidersmanyfactors,includinganevaluationofthediscountrates,expectedreturnonplanassetsandthehealth-care-costtrendratesofothercompanies;historicalassumptionscomparedwithactualresults;ananalysisofcurrentmarketconditionsandassetallocations;andtheviewsofadvisers.NetIncomePerShareTheCompanycalculatesbasicnetincomepersharebasedontheweighted-averagenumberofoutstandingcommonshares.TheCompanycalculatesdilutednetincomepersharebasedontheweighted-averagenumberofoutstandingcommonsharesplustheeffectofdilutivesecurities.UseofEstimatesThepreparationofthefinancialstatementsinconformitywithU.S.generallyacceptedaccountingprinciplesrequiresmanagementtomakeextensiveuseofestimatesandassumptionsthataffectthereportedamountofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesandthereportedamountsofsalesandexpenses.Actualresultscoulddiffermateriallyfromtheseestimates.Changesinestimatesarerecordedinresultsofoperationsintheperiodthattheeventorcircumstancesgivingrisetosuchchangesoccur.RecentlyIssuedAccountingPronouncementsRevenueRecognitionInMay2014,theFASBissuedafinalstandardonrevenuerecognition.Underthenewstandard,anentityshouldrecognizerevenuetodepictthetransferofpromisedgoodsorservicestocustomersinanamountthatreflectsthe41considerationtowhichtheentityexpectstobeentitledinexchangeforthosegoodsorservices.TheCompanyadoptedthenewstandardeffectiveforfiscal2019usingthemodifiedretrospectiveapproach.TheadoptionofthisstandarddidnothaveamaterialimpactontheCompany’sconsolidatedfinancialstatements.LeasesInFebruary2016,theFASBissuedASU2016-02,Leases(Topic842),whichincreasestransparencyandcomparabilityamongorganizationsbyrecognizingleaseassetsandleaseliabilitiesonthebalancesheetanddisclosingkeyinformationaboutleasingarrangements.Underthenewstandard,thelesseeofanoperatingleasewillberequiredtodothefollowing:1)recognizearight-of-useassetandaleaseliabilityinthestatementoffinancialposition,2)recognizeasingleleasecostallocatedovertheleasetermgenerallyonastraight-linebasis,and3)classifyallcashpaymentswithinoperatingactivitiesonthestatementofcashflows.Companiesarerequiredtoadoptthisstandardusingamodifiedretrospectivetransitionmethod.TheCompanywilladoptthestandardbeginninginfiscal2020andwillrecognizethecumulativeeffectofapplyingthenewstandardtoretainedearnings,whichtheCompanydoesnotexpecttobematerial.Thestandardprovidesanumberofoptionalpracticalexpedientsintransition.Weexpecttoelectthe“packageofpracticalexpedients”,whichpermitsusnottoreassessunderthestandardourpriorconclusionsaboutleaseidentification,leaseclassificationandinitialdirectcosts.ThestandardalsoprovidespracticalexpedientsfortheCompany’songoingaccounting.Wecurrentlyexpecttoelecttheshort-termleaserecognitionexemptionforallleasesthatqualify.Thismeans,forthoseleasesthatqualify,wewillnotrecognizeright-of-use(“ROU”)assetsorleaseliabilities,andthisincludesnotrecognizingROUassetsorleaseliabilitiesforexistingshort-termleasesofthoseassetsintransition.WeanticipaterecognizingROUassetsandrelatedleaseliabilitiesofapproximately$600millionuponadoptionofthestandard.CreditLossesInJune2016,theFASBissued2016-13,FinancialInstruments—CreditLosses(Topic326)andissuedsubsequentamendmentstotheinitialguidance.Thenewstandardrequiresentitiestomeasureallexpectedcreditlossesformostfinancialassetsheldatthereportingdatebasedonanexpectedlossmodel,whichincludeshistoricalexperience,currentconditions,andreasonableandsupportableforecasts.Thenewstandardalsorequiresenhanceddisclosure.ThenewstandardiseffectiveforinterimandannualperiodsbeginningafterDecember15,2019.TheCompanyisintheprocessofevaluatingthisnewstandard,however,theCompanydoesnotexpecttheimpacttobematerial.RetirementBenefitsInMarch2017,theFASBissuedASU2017-07,Compensation—RetirementBenefits(Topic715),ImprovingthePresentationofNetPeriodicPensionCostandNetPeriodicPostretirementBenefitCost,whichrequiresemployerstoreporttheservicecostcomponentinthesamelineitemasothercompensationcostsarisingfromservicesrenderedbythepertinentemployeesduringtheperiod.Theothercomponentsofnetbenefitcostarerequiredtobepresentedintheincomestatementseparatelyfromtheservicecostcomponentandoutsideasubtotalofincomefromoperations.Ifaseparatelineitemisnotusedtopresenttheothercomponentsofnetbenefitcost,thenthelineitemusedintheincomestatementtopresenttheothercomponentsofnetbenefitcostmustbedisclosed.ThenewstandardiseffectiveforinterimandannualperiodsbeginningafterDecember15,2017andshouldbeappliedonaretrospectivebasis.Earlyadoptionispermitted.TheCompanyadoptedthenewstandardinfiscal2019,theresultofwhichdidnothaveamaterialimpactonourdisclosures.StrandedTaxEffectsInFebruary2018,theFASBissuedASU2018-02,IncomeStatement-ReportingComprehensiveIncome(Topic220):ReclassificationofCertainTaxEffectsfromAccumulatedOtherComprehensiveIncome.Thecurrentstandard,ASCTopic740—IncomeTaxes,requiresdeferredtaxliabilitiesandassetstobeadjustedfortheeffectofachangeintaxlawsorrateswiththeeffectincludedinincomefromcontinuingoperationsinthereportingperiodthatincludestheenactmentdate.Thisincludesthetaxeffectsofitemsinaccumulatedothercomprehensiveincome(“AOCI”)thatwereoriginallyrecognizedinothercomprehensiveincome,subsequentlycreatingstrandedtaxeffects.ASU2018-02allowsareclassificationfromAOCItoretainedearningsforstrandedtaxeffectsspecificallyresultingfromtheU.S.federal42government’srecentlyenactedtaxbill,theTaxCutsandJobsAct.TheguidanceiseffectiveforfiscalyearsbeginningafterDecember15,2018,includinginterimperiodswithinthoseperiods.Earlyadoptionispermitted.TheCompanyadoptedASU2018-02infiscal2018,theresultsofwhichdidnothaveamaterialimpactontheconsolidatedfinancialstatements.FairValueInAugust2018,theFASBissuedASU2018-13,ChangestotheDisclosureRequirementsforFairValueMeasurement.ThenewstandardmodifiesdisclosurerequirementsincludingremovingrequirementstodisclosethevaluationprocessforLevel3measurementsandaddingrequirementstodisclosethechangesinunrealizedgainsandlossesfortheperiodincludedinothercomprehensiveincomeforrecurringLevel3fairvaluemeasurementsandtherangeandweightedaverageofsignificantunobservableinputsusedtodevelopLevel3measurements.ThenewstandardiseffectiveforinterimandannualperiodsbeginningafterDecember15,2019.TheCompanyiscurrentlyevaluatingtheimpactoftheadoptionofthisstandardtoourdisclosures.DefinedBenefitPlansInAugust2018,theFASBissuedASU2018-14,ChangestotheDisclosureRequirementsforDefinedBenefitPlans.Thenewstandardremovesrequirementstodisclosetheamountsinaccumulatedothercomprehensiveincomeexpectedtoberecognizedascomponentsofnetperiodicbenefitcostoverthenextfiscalyearandtheeffectsofaone-percentage-pointchangesinassumedhealthcarecosttrendrates.Thestandardalsoaddsrequirementstodisclosethereasonsforsignificantgainsandlossesrelatedtochangesinthebenefitobligationsfortheperiodandtheaccumulatedbenefitobligation(ABO)forplanswithABOsinexcessofplanassets.ThenewstandardwillbeeffectiveforfiscalyearsendingafterDecember15,2020.TheCompanyiscurrentlyevaluatingtheimpactoftheadoptionofthisstandardtoourdisclosures.2.AcquisitionsandDispositionsRPCGroupPlcInJuly2019,theCompanycompletedtheacquisitionoftheentireoutstandingsharecapitalofRPCGroupPlc(“RPC”),foraggregateconsiderationof$6.1billion.RPCisaleadingplasticproductdesignandengineeringcompanyforpackagingandselectnon-packagingmarkets,with189sitesin34countries.RPCdevelopsandmanufacturesadiverserangeofproductsforawidevarietyofcustomers,includingmanyhouseholdnames,andenjoysstrongmarketpositionsinmanyoftheendmarketsitservesandthegeographicalareasinwhichitoperates.Itusesawiderangeofpolymerconversiontechniquesinbothrigidandflexibleplasticsmanufacture,andisoneofthelargestplasticconvertersinEurope.TheinternationalbasedfacilitiesareoperatedwithintheConsumerPackagingInternationalsegmentwiththeremainingU.S.basedfacilitiesoperatedwithintheConsumerPackagingNorthAmericasegment.TheresultsofRPChavebeenincludedintheconsolidatedresultsoftheCompanysincethedateoftheacquisition.Theacquisitionhasbeenaccountedforunderthepurchasemethodofaccounting.Underthismethod,theassetsacquiredandliabilitiesassumedhavebeenrecordedbasedonpreliminaryestimatesoffairvalue.Thepreliminaryfairvalueestimatesweredeterminedbasedonourhistoricalacquisitionexperience.Specifically,weestimatedthefairvaluesoftheseassetstobeconsistentwiththepercentageofthepurchasepricethatwasassignedtosimilarassetsinourhistoricalpurchaseaccountingofpreviousacquisitions.InaccordancewithU.S.GAAP,fairvalueisdefinedasthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.ThefinalpurchaseaccountingallocationsfortheRPCacquisitionwillbedeterminedwithinoneyearfromtheacquisitiondateanddependonanumberoffactors,includingthefinalvaluationofourlong-livedtangibleandidentifiedintangibleassetsacquiredandliabilitiesassumed,andfinalizationofincometaxeffectsoftheopeningbalancesheet.TheactualfairvaluesofRPC’sassetsacquired,liabilitiesassumedandresultinggoodwillmaydiffermateriallyfromtheadjustmentssetforthinthisForm10-K.TheCompanyhasnotfinalizedtheallocationofthepurchasepricetothefairvalueoftheassetsacquiredandliabilitiesassumed.Thepreliminaryestimatedfairvalueofassetsacquiredandliabilitiesassumedconsistedofworkingcapitalof$700million,propertyandequipmentof$2,375million,intangibleassetsof$1,712million,goodwillof$2,205millionandotherassetsandlong-termliabilitiesof$922million.Theworkingcapitalincludesa$39millionstepupofinventorytofairvalue.TheCompanyhasrecognizedgoodwillonthistransactionprimarilyasaresultofexpectedcostsynergies,andexpectsgoodwilltobepartiallydeductiblefortaxpurposes.43Tofinancetheall-cashpurchase,theCompanyissued$1,250millionaggregateprincipalamountof4.875%firstpriorityseniorsecurednotesdue2026,$500millionaggregateprincipalamountof5.625%secondpriorityseniorsecurednotesdue2027,andenteredintoincrementaltermloansdueJuly2026,tofundtheremainderofthepurchaseprice.InconnectionwiththeclosingoftheRPCacquisition,theCompanyincurred$99millionrelatedtoforeignexchangeforwardcontractsand$41millionrelatedtocross-currencyswapsrecordedinOtherexpense,netontheConsolidatedStatementsofIncome.Additionally,theCompanyincurred$70millionofcostsassociatedwiththeclosingofthetransaction.SealForLifeInJuly2019,theCompanycompletedthesaleofitsSealForLife(“SFL”)businesswhichwasoperatedinourHealth,Hygiene&Specialtiesreportingsegmentfornetproceedsof$326million.Apretaxgainonsaleof$214millionwasrecordedinfiscal2019,withinRestructuringandtransactionactivitiesontheConsolidatedStatementsofIncome.Laddawn,Inc.InAugust2018,theCompanyacquiredLaddawn,Inc.(“Laddawn”)forapurchasepriceof$241million.Laddawnisacustombagandfilmmanufacturerwithaunique-to-industrye-commercesalesplatform.TheacquiredbusinessisoperatedinourEngineeredMaterialssegment.Tofinancethepurchase,theCompanyusedexistingliquidity.Theacquisitionhasbeenaccountedforunderthepurchasemethodofaccountingandaccordingly,thepurchasepricehasbeenallocatedtotheidentifiableassetsandliabilitiesbasedonthefairvalueattheacquisitiondate.TheresultsofLaddawnhavebeenincludedintheconsolidatedresultsoftheCompanysincethedateoftheacquisition.Theassetsacquiredandliabilitiesassumedconsistedofworkingcapitalof$27million,propertyandequipmentof$39million,intangibleassetsof$84million,andgoodwillof$91million.Theworkingcapitalincludesa$3millionstepupofinventorytofairvalue.TheCompanyhasrecognizedgoodwillonthistransactionprimarilyasaresultofexpectedcostsynergies,andexpectsgoodwilltobedeductiblefortaxpurposes.ClopayPlasticProductsCompany,Inc.InFebruary2018,theCompanyacquiredClopayPlasticProductsCompany,Inc.(“Clopay”)forapurchasepriceof$475million.Clopayisaninnovatorinthedevelopmentofprintedbreathablefilms,elasticfilms,andlaminateswithproductofferingsuniquelydesignedforapplicationsusedinanumberofmarketsincluding:hygiene,healthcare,constructionandindustrialprotectiveapparel.TheacquiredbusinessisoperatedwithinourHealth,Hygiene&Specialtiessegment.Tofinancethepurchase,theCompanyissued$500millionaggregateprincipalamountof4.5%secondprioritynotesthroughaprivateplacementoffering.Theacquisitionhasbeenaccountedforunderthepurchasemethodofaccounting,andaccordingly,thepurchasepricehasbeenallocatedtotheidentifiableassetsandliabilitiesbasedonfairvaluesattheacquisitiondate.TheresultsofClopayhavebeenincludedintheconsolidatedresultsoftheCompanysincethedateoftheacquisition.Theassetsacquiredandliabilitiesassumedconsistofworkingcapitalof$70million,propertyandequipmentof$164million,intangibleassetsof$125million,goodwillof$111million,andotherassetsandlong-termliabilitiesof$5million.Theworkingcapitalincludesa$3millionstepupofinventorytofairvalue.TheCompanyhasrecognizedgoodwillonthistransactionprimarilyasaresultofexpectedcostsynergies,andexpectsgoodwilltobedeductiblefortaxpurposes.WhenincludingRPCresultsforperiodspriortotheacquisitiondate,unauditedproformanetsaleswere$12.6billionforfiscal2019andfiscal2018.Unauditedproformanetincomewas$344millionand$501million,forfiscal2019andfiscal2018,respectively.Theunauditedproformanetsalesandnetincomeassumethattheacquisitionhadoccurredasofthebeginningoftheperiod.TheunauditedproformainformationpresentedaboveisforinformationalpurposesonlyandisnotnecessarilyindicativeoftheoperatingresultsthatwouldhaveoccurredhadtheRPCacquisitionbeenconsummatedatthebeginningoftheperiod,norisitnecessarilyindicativeoffutureoperatingresults.Further,theinformationreflectsonlyproformaadjustmentsforadditionalinterestexpense,depreciation,andamortization,netoftheapplicableincometaxeffects.443.Long-TermDebtLong-termdebtconsistsofthefollowing:FacilityMaturityDateSeptember28,2019September29,2018Termloan........................................October2022$1,545$1,545Termloan........................................January2024489493Termloan........................................July20264,250—Termloan–eurodenominated..........................July20261,176—Revolvinglineofcredit...............................May2024——5.50%SecondPrioritySeniorSecuredNotes................May20225005006.00%SecondPrioritySeniorSecuredNotes................October20224004005.125%SecondPrioritySeniorSecuredNotes...............July20237007004.50%SecondPrioritySeniorSecuredNotes................February20265005004.875%FirstPrioritySeniorSecuredNotes.................July20261,250—5.625%SecondPrioritySeniorSecuredNotes...............July2027500—Debtdiscountsanddeferredfees........................(112)(43)Capitalleasesandother...............................Various167135Retireddebt.......................................Various—1,614Totallong-termdebt.................................11,3655,844Currentportionoflong-termdebt.......................(104)(38)Long-termdebt,lesscurrentportion......................$11,261$5,806Fiscal2019ActivityInJuly2019,theCompanyenteredintoanincrementalassumptionagreementtoprovideincremental$4,250millionand€1,075milliontermloans,dueJuly2026.TheCompanyissued$1,250millionaggregateprincipalamountof4.875%firstpriorityseniorsecurednotesdue2026and$500millionaggregateprincipalamountof5.625%secondpriorityseniorsecurednotesdue2027.ProceedswereusedtofundtheRPCacquisitionaswellasrefinancingtheCompany’sexistingtermloandueFebruary2020.RevolvingLineofCreditInMay2019,theCompanyamendedandextendeditsexistingrevolvinglineofcredittotalcapacityto$850millionmaturinginMay2024.BerryGlobal,Inc.SeniorSecuredCreditFacilityOurwhollyownedsubsidiaryBerryGlobal,Inc.’sseniorsecuredcreditfacilitiesconsistof$7.5billionoftermloansanda$850millionasset-basedrevolvinglineofcredit.Theavailabilityundertherevolvinglineofcreditisthelesserof$850millionorbasedonadefinedborrowingbasewhichiscalculatedbasedonavailableaccountsreceivableandinventory.Basedonmarketconditions,fromtimetotime,theCompanymayrepriceexistingtermloansinordertolowerinterestrates.Relatedtotheserepricings,theCompanyrecordedalossondebtextinguishmentof$2millionand$10millioninfiscal2018,and2017,respectively,inOtherexpense,netontheConsolidatedStatementsofIncome.TheCompanyhadnorepricinginfiscal2019.Thetermloanfacilityrequiresminimumquarterlyprincipalpayments,withtheremainingamountpayableuponmaturity.TheCompanymayvoluntarilyrepayoutstandingloansundertheseniorsecuredcreditfacilitiesatanytimewithoutpremiumorpenalty,otherthancustomary“breakage”costswithrespecttoeurodollarloans.AllobligationsundertheseniorsecuredcreditfacilitiesareunconditionallyguaranteedbytheCompanyand,subjecttocertainexceptions,eachoftheCompany’sexistingandfuturedirectandindirectdomesticsubsidiaries.TheguaranteesofthoseobligationsaresecuredbysubstantiallyalloftheCompany’sassetsaswellasthoseofeachdomesticsubsidiaryguarantor.45Despitenothavingfinancialmaintenancecovenants,ourdebtagreementscontaincertainnegativecovenants.WeareincompliancewithallcovenantsasofSeptember28,2019.Thefailuretocomplywiththesenegativecovenantscouldrestrictourabilitytoincuradditionalindebtedness,effectacquisitions,enterintocertainsignificantbusinesscombinations,makedistributionsorredeemindebtedness.Futurematuritiesoflong-termdebtasoffiscalyearend2019areasfollows:FiscalYearMaturities2020......................................................$1042021......................................................942022......................................................902023......................................................2,5222024......................................................1,234Thereafter..................................................7,433$11,477Interestpaidwas$330million,$253million,and$288millioninfiscal2019,2018,and2017,respectively.DebtdiscountsanddeferredfinancingfeesarepresentednetofLong-termdebt,lessthecurrentportionintheConsolidatedBalanceSheetandareamortizedtoInterestexpensethroughmaturity.4.FinancialInstrumentsandFairValueMeasurementsInthenormalcourseofbusiness,theCompanyisexposedtocertainrisksarisingfrombusinessoperationsandeconomicfactors.TheCompanymayusederivativefinancialinstrumentstohelpmanagemarketriskandreducetheexposuretofluctuationsininterestratesandforeigncurrencies.Thesefinancialinstrumentsarenotusedfortradingorotherspeculativepurposes.Forthosederivativeinstrumentsthataredesignatedandqualifyashedginginstruments,theCompanymustdesignatethehedginginstrument,basedupontheexposurebeinghedged,asafairvaluehedge,cashflowhedge,orahedgeofanetinvestmentinaforeignoperation.Totheextenthedgingrelationshipsarefoundtobeeffective,changesinthefairvalueofthederivativesareoffsetbychangesinthefairvalueoftherelatedhedgeditemandrecordedtoAccumulatedothercomprehensiveloss.Anyidentifiedineffectiveness,orchangesinthefairvalueofaderivativenotdesignatedasahedge,arerecordedtotheConsolidatedStatementsofIncome.Cross-CurrencySwapsTheCompanyispartytocertaincross-currencyswapstohedgeaportionofourforeigncurrencyrisk.TheswapagreementsmatureMay2022(€250million)andJune2024(€1,625millionand£700million).Inadditiontothecross-currencyswaps,wehedgeaportionofourforeigncurrencyriskbydesignatingforeigncurrencydenominatedlong-termdebtasnetinvestmenthedgesofcertainforeignoperations.AsofSeptember28,2019,wehadoutstandinglong-termdebtof€1,075millionthatwasdesignatedasahedgeofournetinvestmentincertaineuro-denominatedforeignsubsidiaries.Inthefuture,wemayattempttomanageourforeigncurrencyriskonouranticipatedcashmovementsbyenteringintoforeigncurrencyforwardcontractstooffsetpotentialforeignexchangegainsorlosses.Whenvaluingcross-currencyswapstheCompanyutilizesLevel2inputs(substantiallyobservable).InterestRateSwapsTheprimarypurposeoftheCompany’sinterestrateswapactivitiesistomanageinterestexpensevariabilityassociatedwithouroutstandingvariableratetermloandebt.WhenvaluinginterestrateswapstheCompanyutilizesLevel2inputs(substantiallyobservable).Duringfiscal2018,theCompanyelectedtosettletwoofitsderivativeinstrumentswithexpirationdatesinJune2019andSeptember2021,andreceived$9millionand$21million,respectively.TheoffsetisincludedinAccumulatedothercomprehensivelossandisbeingamortizedtoInterestexpensethroughtheoriginalexpirationdatesforofeachoftheswapagreements.TheCompanyalsoenteredintoa$1billioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractforafixedannualrateof2.808%withaneffectivedateofJune2018andexpirationinSeptember2021.46Duringfiscal2019,theCompanyenteredinto(i)a$400millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractforafixedannualrateof2.533%withaneffectivedateofFebruary2019andexpirationinJuly2023;(ii)a$884millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractplus250basispointspreadforafixedannualrateof4.357%,withaneffectivedateinJuly2019andexpirationinJune2024,and(iii)a$473millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractplus250basispointspreadforafixedannualrateof4.550%,withaneffectivedateinJuly2019andexpirationinJune2024.AsofSeptember29,2019,theCompanyeffectivelyhad(i)a$450millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractforafixedannualrateof2.000%,withaneffectivedateinMay2017andexpirationinMay2022,(ii)a$1billioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractforafixedannualrateof2.808%withaneffectivedateinJune2018andexpirationinSeptember2021,(iii)a$400millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractforafixedannualrateof2.533%withaneffectivedateinFebruary2019andexpirationinJuly2023,(iv)a$884millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractplus250basispointspreadforafixedannualrateof4.357%,withaneffectivedateinJuly2019andexpirationinJune2024,and(v)a$473millioninterestrateswaptransactionthatswapsaone-monthvariableLIBORcontractplus250basispointspreadforafixedannualrateof4.550%,withaneffectivedateinJuly2019andexpirationinJune2024.TheCompanyrecordsthefairvaluepositionsofallderivativefinancialinstrumentsonanetbasisbycounterpartyforwhichamasternettingarrangementisutilized.Balancesonagrossbasisareasfollows:DerivativesInstrumentsHedgeDesignationBalanceSheetLocation20192018Cross-currencyswaps......................DesignatedOtherassets$88$—Cross-currencyswaps......................DesignatedOtherlong-termliabilities—11Interestrateswaps........................DesignatedOtherassets—16Interestrateswaps........................DesignatedOtherlong-termliabilities81—Interestrateswaps........................NotdesignatedOtherlong-termliabilities—1TheeffectoftheCompany’sderivativeinstrumentsontheConsolidatedStatementsofIncomeisasfollows:FiscalyearsendedDerivativesinstrumentsStatementsofIncomeLocationSeptember28,2019September29,2018September30,2017Cross-currencyswaps(a)........Interestexpense,net$(19)$(5)$—Cross-currencyswaps(b)........Otherexpense,net41—(2)Foreignexchangeforwardcontracts................Otherexpense,net99——Interestrateswaps...........Interestexpense,net2(1)24(a)Designated(b)NotdesignatedTheamortizationrelatedtounrealizedlossesinAccumulatedothercomprehensivelossisexpectedtobe$5millioninthenext12months.TheCompany’sfinancialinstrumentsconsistprimarilyofcashandcashequivalents,long-termdebt,interestrateswapagreements,cross-currencyswapagreementsandcapitalleaseobligations.Thefairvalueofourlong-termindebtednessexceededbookvalueby$77millionasoffiscal2019,and$5millionasoffiscal2018.TheCompany’slong-termdebtfairvaluesweredeterminedusingLevel2inputsasothersignificantobservableinputswerenotavailable.Non-recurringFairValueMeasurementsTheCompanyhascertainassetsthataremeasuredatfairvalueonanon-recurringbasiswhenimpairmentindicatorsarepresentorwhentheCompanycompletesanacquisition.SeeNote2.AcquisitionsandDispositionsfordiscussionofouracquisitionsandthenon-recurringfairvaluemeasurementconsiderationsthatwereutilizedinthepurchasepriceallocation.TheCompanyadjustscertainlong-livedassetstofairvalueonlywhenthecarryingvaluesexceedthefairvalues.ThecategorizationoftheframeworkusedtovaluetheassetsisconsideredLevel3,duetothesubjective47natureoftheunobservableinputsusedtodeterminethefairvalue.Theseassetsthataresubjecttoourannualimpairmentanalysisprimarilyincludeourdefinitelivedandindefinitelivedintangibleassets,includingGoodwillandourproperty,plantandequipment.TheCompanyreviewsGoodwillandotherindefinitelivedassetsforimpairmentasofthefirstdayofthefourthfiscalquartereachyear,andmorefrequentlyifimpairmentindicatorsexist.TheCompanydeterminedGoodwillandotherindefinitelivedassetswerenotimpairedinourannualfiscal2019,2018,and2017assessments.Includedinthefollowingtablesarethemajorcategoriesofassetsandtheircurrentcarryingvaluesthatweremeasuredatfairvalueonanon-recurringbasisinthecurrentyear,alongwiththeimpairmentlossrecognizedonthefairvaluemeasurementforthefiscalyearsthenended:Asoftheendoffiscal2019Level1Level2Level3TotalImpairmentIndefinitelivedtrademarks..............$—$—$248$248$—Goodwill..........................——5,0515,051—Definitelivedintangibleassets...........——2,5322,532—Property,plantandequipment...........——4,7144,7148Total.............................$—$—$12,545$12,545$8Asoftheendoffiscal2018Level1Level2Level3TotalImpairmentIndefinitelivedtrademarks..............$—$—$248$248$—Goodwill..........................——2,9442,944—Definitelivedintangibleassets...........——1,0921,092—Property,plantandequipment...........——2,4882,488—Total.............................$—$—$6,772$6,772$—Asoftheendoffiscal2017Level1Level2Level3TotalImpairmentIndefinitelivedtrademarks..............$—$—$248$248$—Goodwill..........................——2,7752,775—Definitelivedintangibleassets...........——1,0381,038—Property,plantandequipment...........——2,3662,3662Total.............................$—$—$6,427$6,427$2ValuationofGoodwillandIndefiniteLivedIntangibleAssetsASCTopic350requirestheCompanytotestgoodwillforimpairmentatleastannually.TheCompanyconductedtheimpairmenttestonthefirstdayofthefourthfiscalquarter,unlessindicationsofimpairmentexistduringaninterimperiod.Whenassessingitsgoodwillforimpairmentusingthequantitativetest,theCompanyutilizesacomparablecompanymarketapproachweightedequallywithadiscountedcashflowanalysistodeterminethefairvalueoftheirreportingunitsandcorroboratethefairvalues.TheCompanyutilizesarelieffromroyaltymethodtovaluetheirindefinitelivedtrademarksandusestheforecaststhatareconsistentwiththoseusedinthereportingunitanalysis(Note1.BasisofPresentationandSummaryofSignificantAccountingPoliciesforfurtherinformation).ValuationofProperty,PlantandEquipmentandDefiniteLivedIntangibleAssetsTheCompanyperiodicallyrealignstheirmanufacturingoperationswhichresultsinfacilitiesbeingclosedandshutdownandequipmenttransferredtootherfacilitiesorequipmentbeingscrappedorsold.TheCompanyutilizesappraisedvaluestocorroboratethefairvalueofthefacilitiesandhasutilizedascrapvaluebasedonpriorfacilityshutdownstoestimatethefairvalueoftheequipment,whichhasapproximatedtheactualvaluethatwasreceived.Whenimpairmentindicatorsexist,theCompanywillalsoperformanundiscountedcashflowanalysistodeterminetherecoverabilityoftheCompany’slong-livedassets.TheCompanyincurredimpairmentchargesof$8millionand48$2millionrelatedtoproperty,plantandequipmentinfiscalyear2019andfiscal2017,respectively.Noimpairmentchargeswereincurredinfiscal2018relatedtoproperty,plantandequipment.TheCompanydidnotincuranimpairmentchargeondefinitelivedintangibleassetsinfiscal2019,2018,or2017.5.GoodwillandIntangibleAssetsThefollowingtablesetsforththegrosscarryingamountandaccumulatedamortizationoftheCompany’sgoodwillandintangibleassetsasofthefiscalyearsended:20192018AmortizationPeriodGoodwill....................................$5,051$2,944IndefinitelivedCustomerrelationships...........................3,4061,8825–15yearsTrademarks(indefinitelived)......................248248IndefinitelivedTrademarks(definitelived)........................15045Notmorethan15yearsOtherintangibles...............................1611855–14yearsAccumulatedamortization........................(1,185)(1,020)Intangibleassets,net............................2,7801,340Totalgoodwillandintangibleassets,net...............$7,831$4,284Futureamortizationexpensefordefinitelivedintangiblesasoffiscal2019forthenextfivefiscalyearsis$296million,$284million,$272million,$263million,and$249millioneachyearforfiscalyearsending2020,2021,2022,2023,and2024,respectively.6.LeaseandOtherCommitmentsandContingenciesTheCompanyleasescertainproperty,plantandequipmentunderlong-termleaseagreements.Property,plant,andequipmentundercapitalleasesarereflectedontheCompany’sbalancesheetinpropertyandequipment.TheCompanyenteredintonewcapitalleaseobligationstotaling$31million,and$5millionduringfiscal2018and2017,respectively,withvariousleaseexpirationdatesthrough2027.Therewerenonewcapitalleaseobligationsenteredintoinfiscal2019.TheCompanyrecordsamortizationofcapitalleasesinCostofgoodssoldontheConsolidatedStatementsofIncome.AssetsunderoperatingleasesarenotrecordedontheCompany’sbalancesheet.Operatingleasesexpireatvariousdatesinthefuturewithcertainleasescontainingrenewaloptions.TheCompanyhadminimumleasepaymentsorcontingentrentalsof$31millionand$29millionandassetretirementobligationsof$10millionand$10millionasoffiscal2019and2018,respectively.Totalrentalexpensefromoperatingleaseswas$83million,$72million,and$67millioninfiscal2019,2018,and2017,respectively.Futureminimumleasepaymentsforcapitalleasesandnon-cancellableoperatingleaseswithinitialtermsinexcessofoneyearasoffiscalyearend2019areasfollows:CapitalLeasesOperatingLeases2020.................................................$38$1082021.................................................29962022.................................................25782023.................................................14592024.................................................944Thereafter.............................................11169126$554Less:amountrepresentinginterest............................(9)Presentvalueofnetminimumleasepayments....................$117TheCompanyhasenteredintoaseriesofsale-leasebacktransactions,pursuanttowhichitsoldcertainfacilitiesandisleasingthesefacilitiesback.TheCompanyhasatotaldeferredgainonthesesale-leasebacktransactionsof$19millionattheendoffiscal2019,andisamortizingthisovertherespectiveleasetermofthefacility.49TheCompanyalsohasvariouspurchasecommitmentsforrawmaterials,suppliesandpropertyandequipmentincidentaltotheordinaryconductofbusiness.LitigationTheCompanyispartytovariouslegalproceedingsinvolvingroutineclaimswhichareincidentaltoitsbusiness.AlthoughtheCompany’slegalandfinancialliabilitywithrespecttosuchproceedingscannotbeestimatedwithcertainty,theCompanybelievesthatanyultimateliabilitywouldnotbematerialtoitsfinancialposition,resultsofoperationsorcashflows.CollectiveBargainingAgreementsAttheendoffiscal2019,weemployedapproximately48,000employees,andapproximately20%ofthoseemployeeswerecoveredbycollectivebargainingagreements.Themajorityoftheseagreementsaredueforrenegotiationinfiscal2020.Ourrelationswithemployeesundercollectivebargainingagreementsremainsatisfactoryandtherehavebeennosignificantworkstoppagesorotherlabordisputesduringthepastthreeyears.7.IncomeTaxesTheCompanyisbeingtaxedattheU.S.corporatelevelasaC-CorporationandhasprovidedU.S.Federal,Stateandforeignincometaxes.InDecember2017,theU.S.governmentenactedcomprehensivetaxlegislationcommonlyreferredtoastheTaxCutsandJobsAct(the“TaxAct”).TheTaxActsignificantlyrevisesthefutureongoingU.S.corporateincometaxby,amongotherthings,loweringU.S.corporateincometaxrates.AstheCompanyhasaSeptemberfiscalyear-end,thelowercorporateincometaxratewasphasedinduringfiscal2018andis21%in2019andsubsequentyears.Partiallyoffsettingthelowercorporateincometax,theTaxActalsoeliminatescertaindomesticdeductionsthatwerepreviouslyincludedinourestimatedannualtaxrate.Aspartofthetransitiontothenewtaxsystem,theTaxAct(i)imposedaone-timerepatriationtaxondeemedrepatriationofhistoricalearningsofforeignsubsidiaries(ii)requiredtheCompanytorevalueourU.S.netdeferredtaxliabilitypositiontothelowerfederalbaserateof21%,and(iii)introducedamendmentsrestrictingtheCompany’sabilitytoimmediatelyutilizethebenefitofinterestexpensededuction,and(iv)imposedataxonglobalintangiblelow-taxedincomeprovisions(“GILTI”),whichisapplicablebeginninginfiscal2019.ThetransitionalimpactsoftheTaxActresultedinatransitionbenefitof$124million,whichincludedarepatriationtaxchargeof$21million(comprisedoftheU.S.repatriationtaxesandforeignwithholdingtaxes)andanetbenefitof$145millionfromallotherchanges,includingthebenefitfromrevaluingdeferredtaxestothelowerrate.Significantcomponentsofincometaxexpenseforthefiscalyearsendedareasfollows:201920182017CurrentU.S.Federal..................................$60$19$40State....................................1186Non-U.S....................................674058Totalcurrent..................................13867104Deferred:U.S.Federal..................................(47)(72)34State....................................(3)12(10)Non-U.S....................................(2)(26)(19)Totaldeferred.................................(52)(86)5Expenseforincometaxes.........................$86$(19)$109U.S.incomefromcontinuingoperationsbeforeincometaxeswas$229million,$373million,and$313millionforfiscal2019,2018,and2017,respectively.Non-U.S.incomefromcontinuingoperationsbeforeincometaxeswas$261million,$104million,and$136millionforfiscal2019,2018,and2017,respectively.50TheCompanyrecordedtheimpactoftheGILTItaxinthecurrentperiod.UnderU.S.GAAP,theCompanyispermittedtomakeanaccountingpolicyelectiontoeithertreatfutureU.S.taxgeneratedbytheGILTIrulesasacurrent-periodexpensewhenincurredortofactorsuchamountsintotheCompany’smeasurementofitsdeferredtaxes.TheCompanyhastreatedGILTIasacurrent-periodexpense.ThereconciliationbetweenU.S.FederalincometaxesatthestatutoryrateandtheCompany’sbenefitforincometaxesoncontinuingoperationsforfiscalyearsendedareasfollows:201920182017U.S.Federalincometaxexpenseatthestatutoryrate...............$103$117$157Adjustmentstoreconciletotheincometaxprovision:U.S.stateincometaxexpense..............................9126Changesinstatevaluationallowance........................——(9)Researchanddevelopmentcredits..........................(8)(7)(7)Share-basedcompensation...............................(12)(8)(33)U.S.taxreform.......................................—(124)—Permanentdifferences...................................——2Changesinforeignvaluationallowance.......................13(10)3ForeignincometaxedintheU.S............................3——Manufacturingtaxbenefits...............................—(6)(6)Permanentforeigncurrencydifferences.......................——(1)RatedifferencesbetweenU.S.andforeign.....................73(11)Saleofsubsidiary......................................(38)——Other..............................................948Expenseforincometaxes..................................$86$(19)$109Deferredincometaxesresultfromtemporarydifferencesbetweentheamountofassetsandliabilitiesrecognizedforfinancialreportingandtaxpurposes.Thecomponentsofthenetdeferredincometaxliabilityasoffiscalyearsendedareasfollows:20192018Deferredtaxassets:Allowancefordoubtfulaccounts...................................$3$4Deferredgainonsale-leaseback....................................56Accruedliabilitiesandreserves.....................................6428Inventories..................................................99Netoperatinglosscarryforward....................................348212Interestexpensecarryforward.....................................35—Alternativeminimumtax(AMT)creditcarryforward.....................—8Researchanddevelopmentcreditcarryforward.........................1213Federalandstatetaxcredits.......................................1110Other......................................................4019Totaldeferredtaxassets.........................................527309Valuationallowance............................................(141)(93)Totaldeferredtaxassets,netofvaluationallowance......................386216Deferredtaxliabilities:Property,plantandequipment.....................................487239Intangibleassets...............................................597306Other......................................................635Totaldeferredtaxliabilities.....................................1,147550Netdeferredtaxliability.........................................$(761)$(334)51AsofSeptember28,2019,theCompanyhad$42millionofnetdeferredtaxassetsrecordedinOtherassets,and$803millionofnetdeferredtaxliabilitiesrecordedinDeferredincometaxesontheConsolidatedBalanceSheets.AfterInternalRevenueCodeSection382(“Section382”)limitations,theCompanyhad$373millionofU.S.federalnetoperatinglosscarryforwardsasoffiscal2019,whichwillbeavailabletooffsetfuturetaxableincome.Asoffiscalyearend2019,theCompanyhadstateandforeignnetoperatinglosscarryforwardsof$994millionand$896million,respectively,whichwillbeavailabletooffsetfuturetaxableincome.Ifnotused,thefederalnetoperatinglosscarryforwardswillexpireinfutureyearsbeginning2024through2035.Thestatenetoperatinglosscarryforwardswillexpireinfutureyearsbeginningin2019through2038.Theforeignnetoperatinglosscarryforwardswillexpireinfutureyearsbeginningin2019whileaportionremainsavailableindefinitely.TheCompanyhas$12millionofstateResearchandDevelopmenttaxcreditsthatwillexpireinfutureyearsbeginning2028through2038.Inaddition,theCompanyhas$8millionofotherstatetaxcreditsthatwillexpirein2020.Inconnectionwiththeinitialpublicoffering,theCompanyenteredintoanincometaxreceivableagreementthatprovidesforthepaymenttopre-initialpublicofferingstockholders,optionholdersandholdersofourstockappreciationrights,85%oftheamountofcashsavings,ifany,inU.S.federal,foreign,stateandlocalincometaxthatareactuallyrealized(oraredeemedtoberealizedinthecaseofachangeofcontrol)asaresultoftheutilizationofourandoursubsidiaries’netoperatinglossesattributabletoperiodspriortotheinitialpublicoffering.During2019,theCompanynegotiatedthefinalsettlementpayment,therebyterminatingthetaxreceivableagreementandallamountsowedthereunder.TheCompanybelievesthatitwillnotgeneratesufficientfuturetaxableincometorealizethetaxbenefitsincertainforeignjurisdictionsrelatedtothedeferredtaxassets.TheCompanyalsohascertainstatenetoperatinglossesthatmayexpirebeforetheyarefullyutilized.Therefore,theCompanyhasprovidedavaluationallowanceagainstcertainofitsforeigndeferredtaxassetsandavaluationallowanceagainstcertainofitsstatedeferredtaxassetsincludedwithinthedeferredtaxassets.ThechangeinownershipofAvintivcreatedlimitationsunderSec.382oftheInternalRevenueCodeonannualusageofAvintiv’snetoperatinglosscarryforwards.AlloftheCompany’sFederalnetoperatinglosscarryforwardsshouldbeavailableforusewithinthenext15yearsandarenotexpectedtoexpireunutilized.PriortotheCompany’sacquisitionofAvintiv,AvintivwassubjecttocertainownershipchangesthatresultedintheeffectivelossofcertainNOLs.TheNOLseffectivelylosthavebeenexcludedfromtheopeningbalancesheetofAvintiv.Aspartoftheeffectivetaxratecalculation,ifwedeterminethatadeferredtaxassetarisingfromtemporarydifferencesisnotlikelytobeutilized,wewillestablishavaluationallowanceagainstthatassettorecorditatitsexpectedrealizablevalue.TheCompanyhasnotprovidedavaluationallowanceonitsfederalnetoperatinglosscarryforwardsintheU.S.becauseithasdeterminedthatfuturereversalsofitstemporarytaxabledifferenceswilloccurinthesameperiodsandareofthesamenatureasthetemporarydifferencesgivingrisetothedeferredtaxassets.Ourvaluationallowanceagainstdeferredtaxassetswas$141millionand$93millionasofthefiscalyearsended2019and2018,respectively,relatedtotheforeignandU.S.stateoperations.TheCompanypaidcashtaxesof$115million,$60million,and$41millioninfiscal2019,2018,and2017,respectively.TheCompanyispermanentlyreinvestedexcepttotheextenttheforeignearningsarepreviouslytaxedortotheextentthatwehavesufficientbasisinournon-U.S.subsidiariestorepatriateearningsonataxfreebasis.UncertainTaxPositionsASC740prescribesarecognitionthresholdofmore-likely-thannottobesustaineduponexaminationasitrelatestotheaccountingforuncertaintyinincometaxesrecognizedinanenterprise’sfinancialstatements.TheCompany’spolicyistoincludeinterestandpenaltiesrelatedtogrossunrecognizedtaxbenefitswithinourprovisionforincometaxes.Thefollowingtablesummarizestheactivityrelatedtoourgrossunrecognizedtaxbenefitsforfiscalyearsended:20192018Beginningunrecognizedtaxbenefits..........................$74$59Grossincreases–taxpositionsinpriorperiods.................21Grossincreases–currentperiodtaxpositions..................619Grossincreases–fromRPCacquisition......................88—Settlements..........................................(1)—Lapseofstatuteoflimitations.............................(4)(5)Endingunrecognizedtaxbenefits............................$165$7452Asoffiscalyearend2019,theamountofunrecognizedtaxbenefitthat,ifrecognized,wouldaffectoureffectivetaxratewas$141millionandwehad$36millionaccruedforpaymentofinterestandpenaltiesrelatedtoouruncertaintaxpositions.Ourpenaltiesandinterestrelatedtouncertaintaxpositionsareincludedinincometaxexpense.Weandoursubsidiariesareroutinelyexaminedbyvarioustaxingauthorities.AlthoughwefileU.S.federal,U.S.state,andforeigntaxreturns,ourmajortaxjurisdictionistheU.S.TheIRShascompletedanexaminationofour2003,2010and2011taxyears.Our2004–2009,and2012–2017taxyearsremainsubjecttoexaminationbytheIRS.TheIRShascompleteditsauditofAvintiv’s2015pre-acquisitionU.S.federaltaxreturn.Avintiv’syears2004–2014remainsubjecttoexaminationbytheIRS.CompanhiaProvidênciaIndústriaeComércio(“Providência”)wassubjecttocertaintaxclaimsatthetimeProvidênciawasacquiredbyAvintivandhavebeenaccountedforinthefinancialstatementsasadeferredpurchasepriceliability.Therearevariousotheron-goingauditsinvariousotherjurisdictionsthatarenotmaterialtoourfinancialstatements.8.RetirementPlansTheCompanysponsorsdefinedcontribution401(k)retirementplanscoveringsubstantiallyallemployees.Contributionsarebaseduponafixeddollaramountforemployeeswhoparticipateandpercentagesofemployeecontributionsatspecifiedthresholds.Contributionexpensefortheseplanswas$26million,$20million,and$18millionforfiscal2019,2018,and2017,respectively.TheNorthAmericandefinedbenefitpensionplans,whichcovercertainmanufacturingfacilities,areclosedtofutureentrants.ThemajorityoftheretirementbenefitobligationsintheUnitedKingdom(“UK”),assumedthroughtheRPCacquisition,aredefinedbenefitpensionplans,andareclosedtofutureentrants.Theassetsofalltheplansareheldinaseparatetrusteeadministeredfundtomeetlong-termliabilitiesforpastandpresentemployees.AlsoacquiredwiththeRPCacquisition,mostoftheCompany’sGermanoperationsprovidenon-contributorypensionplans.ThereisnoexternalfundingfortheseplansalthoughtheyaresecuredbyinsolvencyinsurancerequiredunderGermanlaw.Ingeneral,theplansprovideafixedretirementbenefitnotrelatedtosalariesandareclosedtonewentrants.Germanyrepresents$99millionofMainlandEurope’stotalunderfundedstatus.ThenetamountofliabilityrecognizedisincludedinEmployeeBenefitObligationsontheConsolidatedBalanceSheets.TheCompanyusesfiscalyearendasameasurementdatefortheretirementplans.Fiscal2019Fiscal2018ChangeinProjectedBenefitObligations(PBO)NorthAmericaUKMainlandEuropeTotalNorthAmericaUKMainlandEuropeTotalBeginningofperiod..............$307$—$—$307$330$—$—$330Acquisition....................—8102091,019————Servicecost....................——22————Interestcost....................12——1211——11Assumptionchange..............—415————Currency......................—(24)(10)(34)————Actuarialloss(gain)..............4244894(17)——(17)Benefitspaid...................(17)(7)(4)(28)(17)——(17)Endofperiod..................$344$827$206$1,377$307$—$—$307Fiscal2019Fiscal2018ChangeinFairValueofPlanAssetsNorthAmericaUKMainlandEuropeTotalNorthAmericaUKMainlandEuropeTotalBeginningofperiod..............$277$—$—$277$291$—$—$291Acquisition....................—70270772————Currency......................—(22)(3)(25)————Returnonassets.................951262————Contributions..................—5273——3Benefitspaid...................(17)(7)(4)(28)(17)——(17)Endofperiod..................$269$729$67$1,065$277$—$—$277Underfundedstatus..............$(75)$(98)$(139)$(312)$(30)$—$—$(30)53Attheendoffiscal2019,theCompanyhad$89millionofnetunrealizedlossesrecordedinAccumulatedothercomprehensivelossontheConsolidatedBalanceSheets.TheCompanyexpects$5milliontoberealizedinfiscal2020.Thefollowingtablepresentssignificantweighted-averageassumptionsusedtodeterminebenefitobligationandbenefitcostforthefiscalyearsended:Fiscal2019(Percentages)NorthAmericaUKMainlandEuropeWeighted-averageassumptions:Discountrateforbenefitobligation............................2.91.80.7Discountratefornetbenefitcost.............................4.02.31.0Expectedreturnonplanassetsfornetbenefitcosts.................6.14.31.7Fiscal2018(Percentages)NorthAmericaUKMainlandEuropeWeighted-averageassumptions:Discountrateforbenefitobligation............................4.0——Discountratefornetbenefitcost.............................3.5——Expectedreturnonplanassetsfornetbenefitcosts.................6.1——Inevaluatingtheexpectedreturnonplanassets,Berryconsidereditshistoricalassumptionscomparedwithactualresults,ananalysisofcurrentmarketconditions,assetallocations,andtheviewsofadvisors.Thereturnonplanassetsisderivedfromtargetallocationsandhistoricalyieldbyassettype.AonequarterofapercentagepointreductionofexpectedreturnonpensionassetsordiscountrateappliedtothepensionliabilitywouldresultinanimmaterialchangetotheCompany’spensionexpenseinfiscal2019.InaccordancewiththeguidancefromtheFASBforemployers’disclosureaboutpostretirementbenefitplanassetsthetablebelowdisclosesfairvaluesofeachpensionplanassetcategoryandlevelwithinthefairvaluehierarchyinwhichitfalls.Therewerenomaterialchangesortransfersbetweenlevel3assetsandtheotherlevels,withtheexceptionoftheadditionofRPCassetsthroughtheacquisition.Fiscal2019AssetCategoryLevel1Level2Level3TotalCashandcashequivalents....................$15$89$—$104U.S.largecapcomingledequityfunds............—124—124U.S.midcapequitymutualfunds...............42——42U.S.smallcapequitymutualfunds..............3——3Internationalequitymutualfunds...............1894—112Realestateequityinvestmentfunds..............317975257Corporatebondmutualfunds..................12——12Corporatebonds...........................—16414178Guaranteedinvestmentaccount................——88Internationalfixedincomefunds................7393—166Internationalinsurancepolicies................——5959Total...................................$166$743$156$1,06554Fiscal2018AssetCategoryLevel1Level2Level3TotalCashandcashequivalents....................$6$—$—$6U.S.largecapcomingledequityfunds............—67—67U.S.midcapequitymutualfunds...............50——50U.S.smallcapequitymutualfunds..............3——3Internationalequitymutualfunds...............15——15Realestateequityinvestmentfunds..............3——3Corporatebondmutualfunds..................11——11Corporatebonds...........................—108—108Guaranteedinvestmentaccount................——88Internationalfixedincomefunds................6——6Total...................................$94$175$8$277Thefollowingbenefitpayments,whichreflectexpectedfutureservice,asappropriate,areexpectedtobepaidforthefiscalyearend:Fiscal2019NorthAmericaUKMainlandEuropeTotal2020..............................................$19$28$7$542021..............................................19297552022..............................................19297552023..............................................19306552024..............................................19318582025–2029.........................................9615839293Netpensionexpenseincludedthefollowingcomponentsasoffiscalyearsended:201920182017Servicecost.....................................................$2$—$—Interestcost....................................................121111Amortizationofnetactuarialloss.....................................623Expectedreturnonplanassets.......................................(24)(17)(17)Netperiodicbenefitexpense(income)..................................$(4)$(4)$(3)Ourdefinedbenefitpensionplanassetallocationsasoffiscalyearsendedareasfollows:AssetCategory20192018Equitysecuritiesandequity-likeinstruments...................................50%50%Debtsecuritiesanddebt-like..............................................3345Internationalinsurancepolicies............................................6—Other..............................................................115Total...............................................................100%100%TheCompany’sretirementplanassetsareinvestedwiththeobjectiveofprovidingtheplanstheabilitytofundcurrentandfuturebenefitpaymentrequirementswhileminimizingannualCompanycontributions.Theretirementplansheld$35millionoftheCompany’sstockattheendoffiscal2019.TheCompanyre-addressestheallocationofitsinvestmentsonaregularbasis.9.RestructuringandTransactionActivitiesTheCompanyhasannouncedvariousrestructuringplansinthelastthreefiscalyearswhichincludedshuttingdownfacilitiesinalloftheCompany’ssegments.Inallinstances,themajorityoftheoperationsfromrationalizedfacilitieswastransferredtootherfacilitieswithintherespectivedivision.55Duringfiscal2017,theCompanyshutdownonefacilityintheHealth,Hygiene&Specialtiesdivision,whichaccountedforapproximately$5millionofannualnetsales,andcompletedthepreviouslyannouncedfacilityshutdownintheConsumerPackagingNorthAmericadivision,whichaccountedforapproximately$12millionofannualnetsales.Duringfiscal2018,theCompanyshutdownonefacilityineachoftheEngineeredMaterials,Health,Hygiene&Specialties,andConsumerPackagingNorthAmericadivisions,whichaccountedforapproximately$10million,$30million,and$15millionofannualnetsales,respectively.Duringfiscal2019,theCompanydidnotshutdownanyfacilities.Since2017,totalexpectedcostsattributedtorestructuringprogramstotal$85millionwith$3millionremainingtoberecognizedinthefuture.ExpectedTotalCostsCumulativeChargesthroughFiscal2019TobeRecognizedinFutureSeveranceandterminationbenefits..................$62$62$—Facilityexitcosts...............................13103Assetimpairment..............................1010—Total.......................................$85$82$3Thetablebelowsetsforththesignificantcomponentsoftherestructuringandtransactionactivitychargesrecognizedforthefiscalyearsended,bysegment:201920182017ConsumerPackagingInternational..................$54$—$—ConsumerPackagingNorthAmerica.................1238EngineeredMaterials............................265Health,Hygiene&Specialties......................(200)2711Consolidated..................................$(132)$36$24Thetablebelowsetsforththeactivitywithrespecttotherestructuringchargesandtheimpactonouraccruedrestructuringreserves:EmployeeSeveranceandBenefitsFacilityExitCostsNon-cashImpairmentChargesTransactionActivities(a)TotalBalanceasoffiscal2017...............$14$5$—$—$19Charges...........................342——36Cash.............................(39)(3)——(42)Balanceasoffiscal2018...............$9$4$—$—$13Charges...........................1048(146)(124)Non-cashassetimpairment.............——(8)—(8)Cash.............................(17)(3)—146126Balanceasoffiscal2019...............$2$5$—$—$7(a)Consistsof$214milliongainonthesaleofourSFLbusinessoffsetbyprofessionalfeesandothercostsrelatedtotheRPCacquisition.10.RelatedPartyTransactionsTheCompanymadepaymentsrelatedtotheincometaxreceivableagreementwhichwasterminatedinfiscal2019of$38millionand$37millioninfiscal2019andfiscal2018,respectively.ApolloGlobalManagement,LLC(“Apollo”)received$29millionofthefiscal2019payment.Mr.EvanBayh,amemberoftheCompany’sBoardofDirectors,hasbeenemployedbyApollosince2011.5611.Stockholders’EquityShareRepurchasesInAugust2018,theCompanyannouncedthatitsBoardauthorizeda$500millionsharerepurchaseprogram.Sharerepurchaseswillbemadethroughopenmarketpurchases,privatelynegotiatedtransactions,Rule10b5-1plans,orothertransactionsinaccordancewithapplicablesecuritieslawsandinsuchamountsatsuchtimesaswedeemappropriatebaseduponprevailingmarketandbusinessconditionsandotherfactors.Thesharerepurchaseprogramhasnoexpirationdateandmaybesuspendedatanytime.Duringfiscal2019,theCompanyrepurchasedapproximately1,512thousandsharesfor$72million,atanaveragepriceof$47.64.Allsharerepurchaseswereimmediatelyretired.Commonstockwasreducedbythenumberofsharesretiredat$0.01parvaluepershare.TheCompanyallocatestheexcesspurchasepriceoverparvaluebetweenadditionalpaid-incapitalandretainedearnings.EquityIncentivePlansInfiscal2018,theCompanyamendedthe2015BerryGlobalGroup,Inc.Long-TermIncentivePlantoauthorizetheissuanceof12.5millionshares,anincreaseof5millionsharesfromthepreviousauthorization.TheCompanyrecognizedtotalshare-basedcompensationexpenseof$27million,$23million,and$20millionforfiscal2019,2018,and2017,respectively.Theintrinsicvalueofoptionsexercisedinfiscal2019was$43million.Informationrelatedtotheequityincentiveplansasofthefiscalyearsendedareasfollows:20192018NumberofSharesWeightedAverageExercisePriceNumberofSharesWeightedAverageExercisePrice(inthousands)(inthousands)Optionsoutstanding,beginningofperiod.......10,744$32.4010,760$28.18Optionsgranted.........................2,25947.661,45354.33Optionsexercised........................(2,476)22.41(1,176)18.62Optionsforfeitedorcancelled...............(264)46.07(293)41.30Optionsoutstanding,endofperiod...........10,263$37.8210,744$32.40Optionpricerangeatendofperiod...........$3.04–54.33$3.04–54.33Optionsexercisableatendofperiod...........4,7205,154Optionsavailableforgrantatperiodend........5,0997,094Weightedaveragefairvalueofoptionsgrantedduringperiod.........................$15.34$17.84ThefairvalueforoptionsgrantedhasbeenestimatedatthedateofgrantusingaBlack-Scholesmodel,generallywiththefollowingweightedaverageassumptions:201920182017Risk-freeinterestrate..................................2.5%2.7%2.2%Dividendyield.......................................0.0%0.0%0.0%Volatilityfactor.......................................26.3%26.1%26.0%Expectedoptionlife...................................6.5years6.5years6.5yearsForpurposesofthevaluationmodelinfiscalyears2019,2018,and2017,theCompanyusedthesimplifiedmethodduetothelackofhistoricaldatauponwhichtoestimatetheexpectedterm.Thefollowingtablesummarizesinformationabouttheoptionsoutstandingasoffiscal2019:RangeofExercisePricesNumberOutstandingIntrinsicValueofOutstandingWeightedRemainingContractualLifeWeightedExercisePriceNumberExercisableIntrinsicValueofExercisableUnrecognizedCompensationWeightedRecognitionPeriod(inthousands)(inmillions)(inthousands)(inmillions)(inmillions)$3.04–54.33........10,263$696.5years$37.824,720$54$52.1years5712.SegmentandGeographicDataBerry’soperationsareorganizedintofourreportingsegments:ConsumerPackagingInternational,ConsumerPackagingNorthAmerica,EngineeredMaterials,andHealth,Hygiene&Specialties.Thestructureisdesignedtoalignuswithourcustomers,provideimprovedservice,anddrivefuturegrowthinacostefficientmanner.Selectedinformationbyreportablesegmentispresentedinthefollowingtables:201920182017NetsalesConsumerPackagingInternational.................$1,229$215$200ConsumerPackagingNorthAmerica...............2,6362,4632,351EngineeredMaterials..........................2,5382,6332,337Health,Hygiene&Specialties....................2,4752,5582,207Total......................................$8,878$7,869$7,095OperatingincomeConsumerPackagingInternational...............$12$17$23ConsumerPackagingNorthAmerica.............234190200EngineeredMaterials.........................318$365311Health,Hygiene&Specialties...................410189198Total......................................$974$761$732DepreciationandamortizationConsumerPackagingInternational...............$93$15$14ConsumerPackagingNorthAmerica.............216229231EngineeredMaterials.........................116108101Health,Hygiene&Specialties...................188186175Total......................................$613$538$52120192018Totalassets:ConsumerPackagingInternational..........................$7,085$203ConsumerPackagingNorthAmerica........................4,2433,220EngineeredMaterials...................................1,8621,968Health,Hygiene&Specialties.............................3,2793,740Totalassets.........................................$16,469$9,131Selectedinformationbygeographicalregionispresentedinthefollowingtables:201920182017Netsales:NorthAmerica..............................$6,465$6,474$5,850SouthAmerica...............................297332333Europe,MiddleEast,India,Africa.................1,720807646AsiaPacific.................................396256266Totalnetsales..............................$8,878$7,869$7,0955820192018Long-livedassets:NorthAmerica.......................................$6,921$5,764SouthAmerica........................................307320Europe,MiddleEast,India,Africa..........................4,780463AsiaPacific..........................................704299TotalLong-livedassets................................$12,712$6,846Selectedinformationbyproductlineispresentedinthefollowingtables:(inpercentages)201920182017Netsales:Packaging..................................67%100%100%Non-packaging..............................33——ConsumerPackagingInternational...............100%100%100%RigidOpenTop..............................45%44%43%RigidClosedTop.............................555657ConsumerPackagingNorthAmerica.............100%100%100%CoreFilms.................................40%41%44%Retail&Industrial............................605956EngineeredMaterials.........................100%100%100%Health.....................................15%18%19%Hygiene....................................535145Specialties..................................323136Health,Hygiene&Specialties...................100%100%100%13.NetIncomeperShareBasicnetincomepershareiscalculatedbydividingthenetincomeattributabletocommonstockholdersbytheweighted-averagenumberofcommonsharesoutstandingduringtheperiod,withoutconsiderationforcommonstockequivalents.Dilutednetincomepershareiscomputedbydividingthenetincomeattributabletocommonstockholdersbytheweighted-averagenumberofcommonshareequivalentsoutstandingfortheperioddeterminedusingthetreasury-stockmethodandtheif-convertedmethod.Forpurposesofthiscalculation,stockoptionsareconsideredtobecommonstockequivalentsandareonlyincludedinthecalculationofdilutednetincomepersharewhentheireffectisdilutive.Therewere5millionsharesexcludedfromthefiscal2019dilutednetincomepersharecalculationastheireffectwouldbeanti-dilutive.Therewerenosharesexcludedfromthefiscal2018andfiscal2017calculations.Thefollowingtablesanddiscussionprovideareconciliationofthenumeratoranddenominatorofthebasicanddilutednetincomepersharecomputations.(inmillions,exceptpershareamounts)201920182017NumeratorNetincomeattributabletotheCompany.....................$404$496$340DenominatorWeightedaveragecommonsharesoutstanding–basic............131.3131.4127.6Dilutiveshares.......................................3.33.85.0Weightedaveragecommonandcommonequivalentsharesoutstanding–diluted.................................134.6135.2132.6PercommonshareincomeBasic..............................................$3.08$3.77$2.66Diluted............................................$3.00$3.67$2.565914.GuarantorandNon-GuarantorFinancialInformationBerryGlobal,Inc.(“Issuer”)hasnotesoutstandingwhicharefully,jointly,severally,andunconditionallyguaranteedbyitsparent,BerryGlobalGroup,Inc.(forpurposesofthisNote,“Parent”)andsubstantiallyallofIssuer’sdomesticsubsidiaries.Separatenarrativeinformationorfinancialstatementsoftheguarantorsubsidiarieshavenotbeenincludedbecausetheyare100%ownedbyParentandtheguarantorsubsidiariesunconditionallyguaranteesuchdebtonajointandseveralbasis.Aguaranteeofaguarantorsubsidiaryofthesecuritieswillterminateuponthefollowingcustomarycircumstances:thesaleofthecapitalstockofsuchguarantorifsuchsalecomplieswiththeindentures,thedesignationofsuchguarantorasanunrestrictedsubsidiary,thedefeasanceordischargeoftheindentureorinthecaseofarestrictedsubsidiarythatisrequiredtoguaranteeaftertherelevantissuancedate,ifsuchguarantornolongerguaranteescertainotherindebtednessoftheissuer.TheguaranteesoftheguarantorsubsidiariesarealsolimitedasnecessarytopreventthemfromconstitutingafraudulentconveyanceunderapplicablelawandanyguaranteesguaranteeingsubordinateddebtaresubordinatedtocertainotheroftheCompany’sdebts.ParentalsoguaranteestheIssuer’stermloansandrevolvingcreditfacilities.Theguarantorsubsidiariesguaranteeourtermloansandareco-borrowersunderourrevolvingcreditfacility.PresentedbelowiscondensedconsolidatingfinancialinformationfortheParent,Issuer,guarantorsubsidiariesandnon-guarantorsubsidiaries.TheIssuerandguarantorfinancialinformationincludesallofourdomesticoperatingsubsidiaries;ournon-guarantorsubsidiariesincludeourforeignsubsidiaries,certainimmaterialdomesticsubsidiariesandtheunrestrictedsubsidiariesundertheIssuer’sindentures.TheParentusestheequitymethodtoaccountforitsownershipintheIssuerintheCondensedConsolidatingSupplementalFinancialStatements.TheIssuerusestheequitymethodtoaccountforitsownershipintheguarantorandnon-guarantorsubsidiaries.Allconsolidatingentriesareincludedintheeliminationscolumnalongwiththeeliminationofintercompanybalances.60CondensedSupplementalConsolidatedStatementsofOperationsFiscal2019ParentIssuerGuarantorSubsidiariesNon-GuarantorSubsidiariesEliminationsTotalNetsales........................$—$561$5,390$2,927$—$8,878Costofgoodssold.................—3814,5002,378—7,259Selling,generalandadministrative......—66333184—583Amortizationofintangibles...........——13559—194Restructuringandimpairmentcharges...——52(184)—(132)Operatingincome..................—114370490—974Other(income)expense,net...........—163—(8)—155Interestexpense,net................—2021990—329Equityinnetincomeofsubsidiaries.....(490)(496)——986—Income(loss)beforeincometaxes.......490427151408(986)490Incometaxexpense(benefits)..........8623(2)65(86)86Netincome(loss)..................$404$404$153$343$(900)$404Currencytranslation................(71)136—(207)71(71)Pensionandpostretirementbenefit......(55)(48)—(7)55(55)Derivativeinstruments..............(111)(108)—(3)111(111)Provisionforincometaxes............77——(7)7Comprehensiveincome(loss)..........$174$391$153$126$(670)$17461Fiscal2018ParentIssuerGuarantorSubsidiariesNon-GuarantorSubsidiariesEliminationsTotalNetsales........................$—$574$5,465$1,830$—$7,869Costofgoodssold.................—3464,5581,534—6,438Selling,generalandadministrative......—63309108—480Amortizationofintangibles...........—112726—154Restructuringandimpairmentcharges...——2016—36Operatingincome..................—164451146—761Other(income)expense,net...........—889—25Interestexpense,net................—822526—259Equityinnetincomeofsubsidiaries.....(477)(307)——784—Income(loss)beforeincometaxes.......477455218111(784)477Incometaxexpense(benefit)..........(19)(41)(2)2419(19)Netincome(loss)..................$496$496$220$87$(803)$496Currencytranslation................(127)(11)(3)(113)127(127)Pensionandpostretirementbenefit......3——3(3)3Derivativeinstruments..............4949——(49)49Provisionforincometaxes............(13)(13)——13(13)Comprehensiveincome(loss)..........$408$521$217$(23)$(715)$40862Fiscal2017ParentIssuerGuarantorSubsidiariesNon-GuarantorSubsidiariesEliminationsTotalNetsales........................$—$587$4,861$1,647$—$7,095Costofgoodssold.................—4383,9201,333—5,691Selling,generalandadministrative......—55335104—494Amortizationofintangibles...........—612028—154Restructuringandimpairmentcharges...——1410—24Operatingincome..................—88472172—732Other(income)expense,net...........—8(1)7—14Interestexpense,net................—1222928—269Equityinnetincomeofsubsidiaries.....(449)(341)——790—Income(loss)beforeincometaxes.......449409244137(790)449Incometaxexpense(benefit)..........10969—40(109)109Netincome(loss)..................$340$340$244$97$(681)$340Currencytranslation................34——34(34)34Pensionandpostretirementbenefit......3825—13(38)38Derivativeinstruments..............2828——(28)28Provisionforincometaxes............(20)(20)——20(20)Comprehensiveincome(loss)..........$420$373$244$144$(761)$42063CondensedSupplementalConsolidatedBalanceSheetsAsoffiscalyearend2019ParentIssuerGuarantorSubsidiariesNon-GuarantorSubsidiariesEliminationsTotalAssetsCurrentassets:Cashandcashequivalents..........$—$42$2$706$—$750Accountsreceivable..............—64482980—1,526Intercompanyreceivable...........5031,401—381(2,285)—Inventories....................—51568705—1,324Prepaidexpensesandothercurrentassets.......................—1513129—157Totalcurrentassets...............5031,5731,0652,901(2,285)3,757Property,plantandequipment.......—781,6452,991—4,714Goodwillandintangibleassets.......—783,6004,153—7,831Investmentinsubsidiaries..........1,91812,7281,105—(15,751)—Otherassets....................—67199—167Totalassets....................$2,421$14,524$7,416$10,144$(18,036)$16,469LiabilitiesandequityCurrentliabilities:Accountspayable................$—$47$329$783$—$1,159Accruedexpensesandothercurrentliabilities....................—203179394—776Intercompanypayable.............——1,859426(2,285)—Currentportionoflong-termdebt....—995——104Totalcurrentliabilities............—3492,3721,603(2,285)2,039Long-termdebt,lesscurrentportion..—11,1841166—11,261Deferredincometaxes............803————803Otherlong-termliabilities..........—28162405—748Totallong-termliabilities..........80311,46573471—12,812Totalliabilities..................80311,8142,4452,074(2,285)14,851Totalequity(deficit)..............1,6182,7104,9718,070(15,751)1,618Totalliabilitiesandequity(deficit)....$2,421$14,524$7,416$10,144$(18,036)$16,46964Asoffiscalyearend2018ParentIssuerGuarantorSubsidiariesNon-GuarantorSubsidiariesEliminationsTotalAssetsCurrentassets:Cashandcashequivalents...........$—$133$4$244$—$381Accountsreceivable,net.............—42555344—941Intercompanyreceivable.............2961,907—49(2,252)—Inventories......................—56664167—887Prepaidexpensesandothercurrentassets........................—181741—76Totalcurrentassets................2962,1561,240845(2,252)2,285Property,plantandequipment........—791,684725—2,488Goodwillandintangibleassets........—793,742463—4,284Investmentinsubsidiaries............1,5136,1511,105—(8,769)—Otherassets.....................3117224—74Totalassets......................$1,840$8,482$7,773$2,057$(11,021)$9,131LiabilitiesandequityCurrentliabilities:Accountspayable.................$—$42$468$273$—$783Accruedexpensesandothercurrentliabilities......................1814615993—416Intercompanypayable..............——2,252—(2,252)—Currentportionoflong-termdebt......—308——38Totalcurrentliabilities..............182182,887366(2,252)1,237Long-termdebt,lesscurrentportion....—5,782231—5,806Deferredincometaxes..............365————365Otherlong-termliabilities............231634558—289Totallong-termliabilities............3885,9456859—6,460Totalliabilities....................4066,1632,955425(2,252)7,697——————Totalequity(deficit)................1,4342,3194,8181,632(8,769)1,434Totalliabilitiesandequity(deficit)......$1,840$8,482$7,773$2,057$(11,021)$9,13165CondensedSupplementalConsolidatedStatementsofCashFlowsFiscal2019ParentIssuerGuarantorSubsidiariesNon-GuarantorSubsidiariesEliminationsTotalCashFlowfromOperatingActivities...$—$89$693$419$—$1,201CashFlowfromInvestingActivitiesAdditionstoproperty,plantandequipment....................——(235)(164)—(399)Divestitureofbusiness.............———326—326Acquisitionpurchasepricederivatives..—(99)———(99)(Contributions)distributionsto/fromsubsidiaries...................19(6,090)——6,071—Intercompanyadvances(repayments)..—517——(517)—Acquisitionofbusiness............——(8)(6,071)—(6,079)Netcashfrominvestingactivities.....19(5,672)(243)(5,909)5,554(6,251)CashFlowfromFinancingActivitiesProceedsfromlong-termborrowings...—6,784———6,784Repaymentoflong-termborrowings...—(1,205)(7)(2)—(1,214)Proceedsfromissuanceofcommonstock.......................55————55Repurchaseofcommonstock........(74)————(74)Paymentoftaxreceivableagreement...(38)————(38)Debtfinancingcosts..............—(87)———(87)Changesinintercompanybalances....38—(445)(110)517—ContributionfromParent...........———6,071(6,071)—Netcashfromfinancingactivities.....(19)5,492(452)5,959(5,554)5,426Effectofcurrencytranslationoncash..———(7)—(7)Netchangeincashandcashequivalents.—(91)(2)462—369Cashandcashequivalentsatbeginningofperiod.....................—1334244—381Cashandcashequivalentsatendofperiod.......................$—$42$2$706$—$75066Fiscal2018ParentIssuerGuarantorSubsidiariesNon-GuarantorSubsidiariesEliminationsTotalCashFlowfromOperatingActivities...........$—$133$651$220$—$1,004CashFlowfromInvestingActivitiesAdditionstoproperty,plantandequipment.....—(5)(241)(90)—(336)Proceedsfromsaleofassets................——3——3(Contributions)distributionsto/fromsubsidiaries..........................10(715)——705—Intercompanyadvances(repayments)..........—538——(538)—Acquisitionofbusiness...................——(632)(70)—(702)Netcashfrominvestingactivities.............10(182)(870)(160)167(1,035)CashFlowfromFinancingActivitiesProceedsfromlong-termborrowings..........—498———498Repaymentoflong-termborrowings..........—(331)(3)(1)—(335)Proceedsfromissuanceofcommonstock.......23————23Repurchaseofcommonstock...............(33)————(33)Paymentoftaxreceivableagreement..........(37)————(37)Debtfinancingcosts.....................—(3)———(3)Changesinintercompanybalances...........37—(418)(157)538—ContributionfromParent..................——63273(705)—Netcashfromfinancingactivities............(10)164211(85)(167)113Effectofcurrencytranslationoncash.........———(7)—(7)Netchangeincashandcashequivalents........—115(8)(32)—75Cashandcashequivalentsatbeginningofperiod..............................—1812276—306Cashandcashequivalentsatendofperiod......$—$133$4$244$—$38167Fiscal2017ParentIssuerGuarantorSubsidiariesNon-GuarantorSubsidiariesEliminationsTotalCashFlowfromOperatingActivities...........$—$128$647$200$—$975CashFlowfromInvestingActivitiesAdditionstoproperty,plantandequipment.....—(19)(209)(41)—(269)Proceedsfromsaleofassets.................—15——6(Contributions)distributionsto/fromsubsidiaries..........................(31)(484)——515—Intercompanyadvances(repayments)..........—428——(428)—Acquisitionofbusiness....................——(515)——(515)Otherinvestingactivities,net................—4———4Netcashfrominvestingactivities.............(31)(70)(719)(41)87(774)CashFlowfromFinancingActivitiesProceedsfromlong-termborrowings..........—495———495Repaymentoflong-termborrowings..........—(632)(3)(1)—(636)Proceedsfromissuanceofcommonstock.......31————31Paymentoftaxreceivableagreement..........(111)————(111)Debtfinancingcosts......................—(5)———(5)Changesinintercompanybalances............111—(433)(106)428—ContributionfromParent..................——515—(515)—Netcashfromfinancingactivities............31(142)79(107)(87)(226)Effectofcurrencytranslationoncash.........———8—8Netchangeincashandcashequivalents........—(84)760—(17)Cashandcashequivalentsatbeginningofperiod..............................—1025216—323Cashandcashequivalentsatendofperiod......$—$18$12$276$—$30615.QuarterlyFinancialData(Unaudited)Thefollowingtablecontainsselectedunauditedquarterlyfinancialdataforfiscalyearsended.20192018FirstSecondThirdFourthFirstSecondThirdFourthNetsales.......................$1,972$1,950$1,937$3,019$1,776$1,967$2,072$2,054Costofgoodssold................1,6191,5781,5512,5111,4471,5961,6901,705Grossprofit.....................353372386508329371382349Netincome.....................$88$74$13$229$163$90$110$133Netincomepershare:Basic........................$0.67$0.57$0.10$1.74$1.24$0.69$0.83$1.01Diluted.......................$0.66$0.55$0.10$1.69$1.20$0.66$0.81$0.99Thefourthfiscalquarterfor2019includescertainunusual,nonrecurringitemsrelatedtotheacquisitionofRPCanddivestitureofourSFLbusiness.RefertoNote2.AcquisitionsandDispositionsforfurtherinformation.68ExhibitNoDescriptionofExhibit2.1AgreementandPlanofMerger,datedasofJuly30,2015,byandamongAVINTIVInc.,BerryPlasticsGroup,Inc.,BerryPlasticsAcquisitionCorporationIXandBlackstoneCapitalPartners(Cayman)VL.P.,asthesecurityholderrepresentative(theExhibitsandDisclosureScheduleshavebeenomittedpursuanttoItem601(b)(2)ofRegulationS-KandwillbeprovidedtotheSECuponrequest)(incorporatedbyreferencetoExhibit2.1totheCompany’sForm8-KfiledonAugust5,2015).2.2AgreementandPlanofMerger,datedasofAugust24,2016,byandamongBerryPlasticsGroup,Inc.,BerryPlasticsCorporation,BerryPlasticsAcquisitionCorporationXVI,BerryPlasticsAcquisitionCorporationXV,LLCandAEPIndustriesInc.(theExhibitsandDisclosureScheduleshavebeenomittedpursuanttoItem601(b)(2)ofRegulationSKandwillbeprovidedtotheSECuponrequest)(incorporatedbyreferencetoAnnexAAmendmentNo.1totheCompany’sRegistrationStatementS-4filedonNovember8,2016).2.3AmendmentNo.1totheAgreementandPlanofMerger,datedasofDecember7,2016,byandamongBerryPlasticsGroup,Inc.,BerryPlasticsCorporation,BerryPlasticsAcquisitionCorporationXVI,BerryPlasticsAcquisitionCorporationXV,LLCandAEPIndustriesInc.(incorporatedbyreferencetoAnnexAofAmendmentNo.2toBerry’sRegistrationStatementonFormS-4filedonDecember9,2016).2.4Rule2.7Announcement,datedasofMarch8,2019(incorporatedbyreferencetoExhibit2.1totheCompany’sCurrentReportonForm8-KfiledonMarch14,2019).2.5Co-OperationAgreement,datedasofMarch8,2019,byandamongBerryGlobalGroup,Inc.,BerryGlobalInternationalHoldingsLimitedandRPCGroupPlc(incorporatedbyreferencetoExhibit2.2totheCompany’sCurrentReportonForm8-KfiledonMarch14,2019).3.1AmendedandRestatedCertificateofIncorporationofBerryGlobalGroup,Inc.,asamendedthroughMarch6,2019(incorporatedbyreferencetoExhibit3.1totheCompany’sQuarterlyReportonForm10-QfiledonMay2,2019).3.2AmendedandRestatedBylawsofBerryGlobalGroup,Inc.,asamendedandrestatedeffectiveasofMarch6,2019(incorporatedbyreferencetoExhibit3.2totheCompany’sCurrentReportonForm8-KfiledonMarch8,2019).4.1Indenture,datedasofMay12,2014,byandamongBerryPlasticsCorporation,theguarantorspartytheretoandU.S.BankNationalAssociation,asTrustee,relatingtothe5.50%secondpriorityseniorsecurednotesdue2022(incorporatedbyreferencetoExhibit4.2oftheCompany’sCurrentReportonForm8-KfiledonMay13,2014).4.2Indenture,datedasofJune5,2015,byandamongBerryPlasticsCorporation,theguarantorspartytheretoandU.S.BankNationalAssociation,asTrustee,relatingtothe5.125%secondpriorityseniorsecurednotesdue2023(incorporatedbyreferencetoExhibit4.2totheCompany’sForm8-KfiledonJune5,2015).4.3Indenture,datedasofOctober1,2015,byandbetweenBerryPlasticsEscrowCorporation,asIssuer,andU.S.BankNationalAssociation,asTrustee,relatingtothe6.00%secondpriorityseniorsecurednotesdue2022(incorporatedbyreferencetoExhibit4.1totheCompany’sForm8-KfiledonOctober6,2015).4.4FirstSupplementalIndenture,datedasofOctober1,2015,byandbetweenBerryPlasticsCorporation,BerryPlasticsGroup,Inc.,thesubsidiariesofBerryPlasticsCorporationpartythereto,BerryPlasticsEscrowCorporation,andU.S.BankNationalAssociation,asTrustee,relatingtotheIndenture,byandbetweenBerryPlasticsEscrowCorporation,asIssuer,andU.S.Bank,NationalAssociation,asTrustee,relatingtothe6.00%secondpriorityseniorsecurednotesdue2022,datedOctober1,2015(incorporatedbyreferencetoExhibit4.1totheCompany’sForm8-KfiledonOctober6,2015).69ExhibitNoDescriptionofExhibit4.5RegistrationRightsAgreement,datedasofOctober1,2015,byandbetweenBerryPlasticsCorporation,BerryPlasticsGroup,Inc.,eachsubsidiaryofBerryPlasticsCorporationidentifiedtherein,andGoldman,Sachs&Co.,andCreditSuisse,onbehalfofthemselvesandasrepresentativesoftheinitialpurchasers,relatingtothe6.00%secondpriorityseniorsecurednotesdue2022(incorporatedbyreferencetoExhibit4.1totheCompany’sForm8-KfiledonOctober6,2015).4.6FormofcommonstockcertificateofBerryPlasticsGroup,Inc.(incorporatedbyreferencetoExhibit4.27ofAmendmentNo.5totheCompany’sRegistrationStatementonFormS-1filedonSeptember19,2012).4.7Indenture,byandbetweenBerryGlobalEscrowCorporationandU.S.BankNationalAssociation,asTrusteeandCollateralAgent,relatingtothe4.875%FirstPrioritySeniorSecuredNotesdue2026,datedJune5,2019(incorporatedbyreferencetoExhibit4.1totheCompany’sForm8-KfiledonJune6,2019).4.7ASupplementalIndenture,amongBerryGlobalGroup,Inc.,BerryGlobal,Inc.,BerryGlobalEscrowCorporation,eachofthepartiesidentifiedasaSubsidiaryGuarantorthereon,andU.S.BankNationalAssociation,asTrustee,relatingtothe4.875%FirstPrioritySeniorSecuredNotesdue2026,datedJuly1,2019(incorporatedbyreferencetoExhibit4.1totheCompany’sForm8-KfiledonJuly2,2019).4.8Indenture,byandbetweenBerryGlobalEscrowCorporationandU.S.BankNationalAssociation,asTrusteeandCollateralAgent,relatingtothe5.625%SecondPrioritySeniorSecuredNotesdue2027,datedJune5,2019(incorporatedbyreferencetoExhibit4.2totheCompany’sForm8-KfiledonJune6,2019).4.8ASupplementalIndenture,amongBerryGlobalGroup,Inc.,BerryGlobal,Inc.,BerryGlobalEscrowCorporation,eachofthepartiesidentifiedasaSubsidiaryGuarantorthereon,andU.S.BankNationalAssociation,asTrustee,relatingtothe5.625%SecondPrioritySeniorSecuredNotesdue2027,datedJuly1,2019(incorporatedbyreferencetoExhibit4.2totheCompany’sForm8-KfiledonJuly2,2019).4.9*DescriptionofSecurities10.1$850,000,000ThirdAmendedandRestatedRevolvingCreditAgreement,datedasofMay1,2019,byandamongBerryGlobal,Inc.,BerryGlobalGroup,Inc.,thelenderspartythereto,BankofAmerica,N.A.,ascollateralagentandadministrativeagent,andthefinancialinstitutionspartythereto(incorporatedbyreferencetoExhibit10.1totheCompany’sCurrentReportonForm8-KfiledonMay6,2019).10.2U.S.$1,200,000,000SecondAmendedandRestatedCreditAgreement,datedasofApril3,2007,byandamongBerryPlasticsCorporationformerlyknownasBerryPlasticsHoldingCorporation,BerryPlasticsGroup,Inc.,CreditSuisse,CaymanIslandsBranch,ascollateralandadministrativeagent,thelenderspartytheretofromtimetotime,andtheotherfinancialinstitutionspartythereto(incorporatedbyreferencetoExhibit10.1(b)toBerryPlasticsCorporation’sCurrentReportonForm8-KfiledonApril10,2007).10.3SecondAmendedandRestatedIntercreditorAgreement,datedasofFebruary5,2008,byandamongBerryPlasticsGroup,Inc.,BerryPlasticsCorporation,certainsubsidiariesidentifiedaspartiesthereto,BankofAmerica,N.A.andCreditSuisse,CaymanIslandsBranchasfirstlienagents,andU.S.BankNationalAssociation,assuccessorininteresttoWellsFargoBank,N.A.,astrustee(incorporatedbyreferencetoExhibit10.3totheCompany’sForm10-KfiledonNovember23,2015).10.4U.S.$1,147,500,000and$814,375,000IncrementalAssumptionAgreement,datedasofFebruary10,2017byandamongBerryPlasticsGroup,Inc.,BerryPlasticsCorporationandcertainofitssubsidiariesreferencedtherein,CreditSuisseAG,CaymanIslandsBranch,asadministrativeagentforthelendersunderthetermloancreditagreementreferencedtherein,Citibank,N.A.,asinitialTermIlenderandCitibank,N.A.,asincrementaltermJlendertherein.(incorporatedbyreferencetoExhibit10.7totheCompany’sAnnualReportonForm10-KfiledonNovember21,2017).70ExhibitNoDescriptionofExhibit10.5U.S.$1,644,750,000and$498,750,000IncrementalAssumptionAgreement,datedasofAugust10,2017,byandamongBerryPlasticsGroup,Inc.,BerryPlasticsCorporationandcertainofitssubsidiariesreferencedtherein,CreditSuisseAG,CaymanIslandsBranch,asadministrativeagentforthelendersunderthetermloancreditagreementreferencedtherein,WellsFargoBank,NationalAssociation,asinitialTermMlenderandWellsFargoBank,NationalAssociation,asinitialTermNlendertherein(incorporatedbyreferencetoExhibit10.8totheCompany’sAnnualReportonForm10-KfiledonNovember21,2017).10.6U.S.$900,000,000and$814,375,000IncrementalAssumptionAgreement,datedasofNovember27,2017,byandamongBerryGlobalGroup,Inc.,BerryGlobal,Inc.andcertainofitssubsidiariesreferencedtherein,CreditSuisseAG,CaymanIslandsBranch,asadministrativeagentforthelendersunderthetermloancreditagreementreferencedtherein,Citibank,N.A.,asinitialTermOLender,andCitibank,N.A.,asinitialTermPLendertherein.(incorporatedbyreferencetoExhibit10.1totheCompany’sQuarterlyReportonForm10-QfiledonFebruary7,2018).10.7U.S.$1,644,750,000and$496,250,000IncrementalAssumptionAgreementandAmendment,datedasofFebruary12,2018,byandamongBerryGlobalGroup,Inc.,BerryGlobal,Inc.andcertainofitssubsidiariesreferencedtherein,CreditSuisseAG,CaymanIslandsBranch,asadministrativeagentforthelendersunderthetermloancreditagreementreferencedtherein,Citibank,N.A.,asinitialTermQlender,andCitibank,N.A.,asinitialTermRlendertherein(incorporatedbyreferencetoExhibit10.2totheCompany’sQuarterlyReportonForm10-QfiledonMay3,2018).10.8U.S.$800,000,000and$814,375,000IncrementalAssumptionAgreement,datedasofMay16,2018,byandamongBerryGlobalGroup,Inc.,BerryGlobal,Inc.andcertainofitssubsidiariesreferencedtherein,CreditSuisseAG,CaymanIslandsBranch,asadministrativeagentforthelendersunderthetermloancreditagreementreferencedtherein,Citibank,N.A.,asinitialTermSlender,andCitibank,N.A.,asinitialTermTlendertherein(incorporatedbyreferencetoExhibit10.1totheCompany’sQuarterlyReportonForm10-QfiledonAugust3,2018).10.9IncrementalAssumptionAgreementandAmendment,amongBerryGlobalGroup,Inc.,BerryGlobal,Inc.andcertainsubsidiariesofBerryGlobal,Inc.,asLoanParties,CreditSuisseAG,CaymanIslandsBranch,asAdministrativeAgent,GoldmanSachsBankUSA,asInitialTermULender,andGoldmanSachsBankUSA,asInitialTermVLender,datedasofJuly1,2019(incorporatedbyreferencetoExhibit10.1totheCompany’sCurrentReportonForm8-KfiledonJuly2,2019).10.10AmendmentandWaivertoEquipmentLeaseAgreement,datedasofJanuary19,2011,betweenChicopee,Inc.,asLesseeandGossamerHoldings,LLC,asLessor(incorporatedbyreferencetoExhibit10.16toAVINTIVSpecialtyMaterialsInc.’sRegistrationStatementFormS-4filedonOctober25,2011).10.11SecondAmendmenttoEquipmentLeaseAgreement,datedasofOctober7,2011,betweenChicopee,Inc.,asLesseeandGossamerHoldings,LLC,asLessor(incorporatedbyreferencetoExhibit10.17toAVINTIVSpecialtyMaterialsInc.’sRegistrationStatementFormS-4filedonOctober25,2011).10.12ThirdAmendmenttoEquipmentLeaseAgreement,datedasofFebruary28,2012,betweenChicopee,Inc.,asLesseeandGossamerHoldings,LLC,asLessor(incorporatedbyreferencetoExhibit10.1toAVINTIVSpecialtyMaterialsInc.’sQuarterlyReportonForm10-QfiledonMay15,2012).10.13FourthAmendmenttoEquipmentLeaseAgreement,datedasofMarch22,2013,betweenChicopee,Inc.,asLesseeandGossamerHoldings,LLC,asLessor(incorporatedbyreferencetoExhibit10.1toAVINTIVSpecialtyMaterialsInc.’sQuarterlyReportonForm10-QfiledonMay9,2013).10.14†2006EquityIncentivePlan(incorporatedbyreferencetoExhibit10.8toBerryPlasticsCorporation’sRegistrationStatementFormS-4filedonNovember2,2006).10.15†AmendmentNo.2totheBerryPlasticsGroup,Inc.,2006EquityIncentivePlan(incorporatedbyreferencetoExhibit10.9totheCompany’sForm10-KfiledonDecember11,2013).71ExhibitNoDescriptionofExhibit10.16†AmendmentNo.3toBerryPlasticsGroup,Inc.2006EquityIncentivePlan(incorporatedbyreferencetoExhibit10.1totheCompany’sForm8-KfiledonMarch10,2015).10.17†Formof2016OmnibusAmendmenttoAwardsGrantedUndertheBerryPlasticsGroup,Inc.2006EquityIncentivePlan(incorporatedbyreferencetoExhibit10.2totheCompany’sForm8-KfiledonJuly22,2016).10.18†OmnibusamendmenttoawardsgrantedundertheBerryPlasticsGroup,Inc.,2006Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.10totheCompany’sForm10-KfiledonDecember11,2013).10.19†FormofPerformance-BasedStockOptionAgreementofBerryPlasticsGroup,Inc.(incorporatedbyreferencetoExhibit10.9toBerryPlasticsCorporation’sRegistrationStatementFormS-4filedonNovember2,2006).10.20†FormofAccretingStockOptionAgreementofBerryPlasticsGroup,Inc.(incorporatedbyreferencetoExhibit10.10toBerryPlasticsCorporation’sRegistrationStatementFormS-4filedonNovember2,2006).10.21†FormofTime-BasedStockOptionAgreementofBerryPlasticsGroup,Inc.(incorporatedbyreferencetoExhibit10.11toBerryPlasticsCorporation’sRegistrationStatementFormS-4filedonNovember2,2006).10.22†FormofPerformance-BasedStockAppreciationRightsAgreementofBerryPlasticsGroup,Inc.(incorporatedbyreferencetoExhibit10.12toBerryPlasticsCorporation’sRegistrationStatementFormS-4filedonNovember2,2006).10.23†EmploymentAgreementofThomasE.Salmon(incorporatedbyreferencetoExhibit10.1totheCompany’sForm8-KfiledonFebruary6,2017).10.24†IncomeTaxReceivableAgreement,datedasofNovember29,2012,byandamongBerryPlasticsGroup,Inc.andApolloManagementFundVI,L.P.(incorporatedbyreferencetoExhibit10.25totheCompany’sForm10-KfiledonDecember17,2012).10.25†BerryPlasticsGroup,Inc.ExecutiveBonusPlan,amendedandrestatedDecember22,2015,effectiveasofSeptember27,2015(incorporatedbyreferencetoExhibit10.1totheCompany’sForm8-KfiledonDecember28,2015).10.26†BerryPlasticsGroup,Inc.2012Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.27totheCompany’sForm10-KfiledonDecember17,2012).10.27†AmendmentNo.1totheBerryPlasticsGroup,Inc.,2012Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.31totheCompany’sForm10-KfiledonDecember11,2013).10.28†OmnibusamendmenttoawardsgrantedundertheBerryPlasticsGroup,Inc.,2012Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.32totheCompany’sForm10-KfiledonDecember11,2013).10.29†AmendmentNo.2totheBerryPlasticsGroup,Inc.2012Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.2totheCompany’sForm8-KfiledonMarch10,2015).10.30†Formof2016OmnibusAmendmenttoAwardsGrantedUndertheBerryPlasticsGroup,Inc.2012Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.3totheCompany’sForm8-KfiledonJuly22,2016).10.31†2015BerryPlasticsGroup,Inc.Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.3totheCompany’sForm8-KfiledonMarch10,2015.72ExhibitNoDescriptionofExhibit10.32†FirstAmendmentto2015BerryPlasticsGroup,Inc.Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.1totheCompany’sForm8-KfiledonMarch6,2018).10.33†Formof2016OmnibusAmendmenttoAwardsGrantedUndertheBerryPlasticsGroup,Inc.2015Long-TermIncentivePlan(incorporatedbyreferencetoExhibit10.4totheCompany’sForm8-KfiledonJuly22,2016).10.34†FourthAmendedandRestatedStockholdersAgreement,byandamongBerryPlasticsGroup,Inc.,andthestockholdersoftheCorporationlistedonscheduleAthereto,datedasofJanuary15,2015(incorporatedbyreferencetoExhibit10.1totheCompany’sForm10-QfiledonJanuary30,2015).10.35†EmploymentAgreement,datedJanuary1,2002,betweentheBerryPlasticsCorporationandCurtisBegle(incorporatedbyreferencetoExhibit10.1totheCompany’sForm10-QfiledonJanuary31,2014).10.36†AmendmentNo.1toEmploymentAgreement,datedasofSeptember13,2006,byandbetweentheBerryPlasticsCorporationandCurtisBegle(incorporatedbyreferencetoExhibit10.3totheCompany’sForm10-QfiledonJanuary31,2014).10.37†AmendmentNo.2toEmploymentAgreement,datedDecember31,2008,byandbetweentheBerryPlasticsCorporationandCurtisBegle(incorporatedbyreferencetoExhibit10.4totheCompany’sForm10-QfiledonJanuary31,2014).10.38†AmendmentNo.3toEmploymentAgreement,datedAugust1,2010,byandbetweentheBerryPlasticsCorporationandCurtisL.Begle(incorporatedbyreferencetoExhibit10.5totheCompany’sForm10-QfiledonJanuary31,2014).10.39†AmendmentNo.4toEmploymentAgreement,datedDecember16,2011,byandbetweentheBerryPlasticsCorporationandCurtisL.Begle(incorporatedbyreferencetoExhibit10.6totheCompany’sForm10-QfiledonJanuary31,2014).10.40†EmploymentAgreement,datedFebruary28,1998,betweenBerryPlasticsCorporationandMarkMiles,togetherwithamendmentsdatedFebruary28,2003,September13,2006,December31,2008,andDecember31,2011(incorporatedbyreferencetoExhibit10.40totheCompany’sForm10-KfiledonNovember30,2016).10.41†FormofAmendmenttoEmploymentAgreementbyandbetweenBerryPlasticsCorporationandeachofCurtisLBegle,MarkW.Miles,andThomasE.Salmon(incorporatedbyreferencetoExhibit10.1totheCompany’sForm8-KfiledonJuly22,2016).10.42†SeniorExecutiveEmploymentContractdatedasofSeptember30,2015byandbetweenPGISpecialtyMaterialsInc.andJeanMarcGalvez,togetherwiththeInternationalAssignmentLetterdatedDecember18,2016fromBerryGlobal,Inc.(f/k/aBerryPlasticsCorporation)(incorporatedbyreferencetoExhibit10.2totheCompany’sQuarterlyReportonForm10-QfiledonFebruary7,2018).21.1*SubsidiariesoftheRegistrant.23.1*ConsentofIndependentRegisteredPublicAccountingFirm31.1*Rule13a-14(a)/15d-14(a)CertificationoftheChiefExecutiveOfficer31.2*Rule13a-14(a)/15d-14(a)CertificationoftheChiefFinancialOfficer32.1*Section1350CertificationoftheChiefExecutiveOfficer32.2*Section1350CertificationoftheChiefFinancialOfficer101.INSInlineXBRLInstanceDocument(theinstancedocumentdoesnotappearintheInteractiveDataFilebecauseitsXBRLtagsareembeddedwithintheInlineXBRLdocument)101.SCHInlineXBRLTaxonomyExtensionSchemaDocument73ExhibitNoDescriptionofExhibit101.CALInlineXBRLTaxonomyExtensionCalculationLinkbaseDocument101.DEFInlineXBRLTaxonomyExtensionDefinitionLinkbaseDocument101.LABInlineXBRLTaxonomyExtensionLabelLinkbaseDocument101.PREInlineXBRLTaxonomyExtensionPresentationLinkbaseDocument104CoverPageInteractiveDateFile(formattedasInlineXBRLandcontainedinExhibit101)*Filedherewith.†Managementcontractorcompensatoryplanorarrangement.74SIGNATURESPursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized,onthe22nddayofNovember,2019.BERRYGLOBALGROUP,INC.By/s/ThomasE.SalmonThomasE.SalmonChiefExecutiveOfficerPursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreporthasbeensignedbythefollowingpersonsonbehalfoftheregistrantandinthecapacitiesandonthedatesindicated:SignatureTitleDate/s/ThomasE.SalmonThomasE.SalmonChiefExecutiveOfficerandChairmanoftheBoardofDirectorsandDirector(PrincipalExecutiveOfficer)November22,2019/s/MarkW.MilesMarkW.MilesChiefFinancialOfficer(PrincipalFinancialOfficer)November22,2019/s/JamesM.TillJamesM.TillExecutiveVicePresidentandController(PrincipalAccountingOfficer)November22,2019/s/B.EvanBayhB.EvanBayhDirectorNovember22,2019/s/JonathanF.FosterJonathanF.FosterDirectorNovember22,2019/s/IdaleneF.KesnerIdaleneF.KesnerDirectorNovember22,2019/s/CarlJ.RickertsenCarlJ.RickertsenDirectorNovember22,2019/s/RonaldS.RolfeRonaldS.RolfeDirectorNovember22,2019/s/PaulaSneedPaulaSneedDirectorNovember22,2019/s/RobertA.SteeleRobertA.SteeleDirectorNovember22,2019/s/StephenE.SterrettStephenE.SterrettDirectorNovember22,2019/s/ScottB.UllemScottB.UllemDirectorNovember22,201975STOCKHOLDER INFORMATIONCORPORATE HEADQUARTERSBerry Global Group, Inc. 101 Oakley Street Evansville, Indiana 47710 812.424.2904 berryglobal.comINVESTOR RELATIONS CONTACT Dustin Stilwell 812.306.2964 ir@berryglobal.comANNUAL MEETING OF SHAREHOLDERSMarch, 4, 2020, at 10:00 a.m. Central Time, Tropicana—Room Walnut D 450 NW Riverside Dr., Evansville, Indiana 47708REGISTRAR AND TRANSFER AGENTComputershare P.O. Box 505000 Louisville, KY 40233 800.962.4284INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMErnst & Young LLPADDITIONAL INFORMATIONYou can access ﬁnancial and other information about Berry Global Group, Inc. at ir.berryglobal.com, including press releases, Forms 10-K, 10-Q, and 8-K as ﬁled with the Securities and Exchange Commission; and information on Corporate Governance such as charters of Board Committees, our Code of Business Ethics and Corporate Governance Guidelines. You can also request that any of these materials be mailed to you at no charge by writing us at the address above.Please visit our website, berryglobal.com, to view our most recent Corporate Sustainability Report.65641.877.662.3779 | berryglobal.com

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