10-K 1 form10k.htm BERRY GLOBAL GROUP, INC. 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended October 2, 2021

OR

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

For the transition period from __________ to __________

Commission File Number 001-35672
graphic
BERRY GLOBAL GROUP, INC.

 A Delaware corporation
 101 Oakley Street, Evansville, Indiana, 47710
(812) 424-2904
 IRS employer identification number
20-5234618

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

Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share
BERY
New York Stock Exchange LLC

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

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No

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

Large Accelerated Filer 
Accelerated filer
Non-accelerated filer
Small reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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

The aggregate market value of the common stock of the registrant held by non-affiliates was approximately $8.3 billion as of April 3, 2021, the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value was computed using the closing sale price as reported on the New York Stock Exchange. As of November 18, 2021, there were 135.6 million shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Berry Global Group, Inc.’s Proxy Statement for its 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.



CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Information included in or incorporated by reference in this Form 10-K and other filings with the U.S. Securities and Exchange Commission (the “SEC”) and the Company’s press releases or other public statements, contains or may contain forward-looking statements.  This report includes “forward-looking’ statements with respect to our financial condition, results of operations and business and our expectations or beliefs concerning future events.  These statements contain words such as “believes,” “expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “project,” “outlook,” “anticipates,” or “looking forward” or similar expressions that relate to our strategy, plans, intentions, or expectations.  All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates, and financial results or to our expectations regarding future industry trends are forward-looking statements.  In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments.  These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected.  All forward-looking statements are made only as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Additionally, we caution readers that the list of important factors discussed in the section titled “Risk Factors” may not contain all of the material factors that are important to you.  In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur.  Accordingly, readers should not place undue reliance on those statements.

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TABLE OF CONTENTS
FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 2, 2021

 
Page
 
PART I
 
3
6
9
9
9
9
     
 
PART II
 
     
9
Item 6.
REMOVED AND RESERVED
 
10
16
17
18
18
18
18
     
 
PART III
 
     
19
19
19
19
19
     
 
PART IV
 
     
20
20
2


Item 1.  BUSINESS
(In millions of dollars, except as otherwise noted)

General

Berry Global Group, Inc. (“Berry,” “we,” or the “Company”) is a leading global supplier of a broad range of innovative rigid, flexible and non-woven products used every day within consumer and industrial end markets.  We sell our products predominantly into stable, consumer-oriented end markets, such as healthcare, personal care, and food and beverage.  Our customers consist of a diverse mix of leading global, national, mid-sized regional and local specialty businesses. The size and scope of our customer network allows us to introduce new products we develop or acquire to a vast audience that is familiar with our business.  For the fiscal year ended October 2, 2021 (“fiscal 2021”), no single customer represented more than 5% of net sales and our top ten customers represented 15% of net sales.  We believe our manufacturing processes, manufacturing footprint and our ability to leverage our scale to reduce costs, positions us as a low-cost manufacturer relative to our competitors.

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

Segment Overview

The Company’s operations are organized into four reporting segments: Consumer Packaging International, Consumer Packaging North America, Engineered Materials, and Health, Hygiene & Specialties.  The structure is designed to align us with our customers, provide improved service, drive future growth, and to facilitate synergies realization.

Consumer Packaging International
The Consumer Packaging International segment is a manufacturer of rigid products that primarily services non-North American markets.  Product groups within the segment include Closures and Dispensing Systems, Pharmaceutical Devices and Packaging, Bottles and Canisters, Containers, and Technical Components.  In fiscal 2021, Consumer Packaging International accounted for 30% of our consolidated net sales.

Consumer Packaging North America
The Consumer Packaging North America segment is a manufacturer of rigid products that primarily services North American markets.  Product groups within the segment include Containers and Pails, Foodservice, Closures and Overcaps, Bottles and Prescription Vials, and Tubes.  In fiscal 2021, Consumer Packaging North America accounted for 23% of our consolidated net sales.

Engineered Materials
The Engineered Materials segment is a manufacturer of flexible products that services primarily North American and European markets.  Product groups within the segment include Stretch and Shrink Films, Converter Films, Institutional Can Liners, Food and Consumer Films, Retail Bags, and Agriculture Films.  In fiscal 2021, Engineered Materials accounted for 24% of our consolidated net sales.

Health, Hygiene & Specialties
The Health, Hygiene & Specialties segment is a manufacturer of non-woven and related products that services global markets.  Product groups within the segment include Healthcare, Hygiene, Specialties, and Tapes. In fiscal 2021, Health, Hygiene & Specialties accounted for 23% of our consolidated net sales.

Marketing, Sales, and Competition

We reach our large and diversified customer base through a direct sales force of dedicated professionals and the strategic use of distributors.  Our scale enables us to dedicate certain sales and marketing efforts to particular products or customers, when applicable, which enables us to develop expertise that we believe is valued by our customers.

The major markets in which the Company sells its products are highly competitive.  Areas of competition include service, innovation, quality, and price.  This competition is significant as to both the size and the number of competing firms.  Competitors include but are not limited to Amcor, Silgan, Aptar, Pactiv Evergreen, 3M, and Fitesa.

3


Raw Materials

Our primary raw material is polymer resin.  In addition, we use other materials such as butyl rubber, adhesives, paper and packaging materials, linerboard, rayon, polyester fiber, and foil, in various manufacturing processes.  While temporary industry-wide shortages of raw materials have occurred, we have historically been able to manage the supply chain disruption by working closely with our suppliers and customers. Supply shortages can lead to increased raw material price volatility, which we experienced in fiscal 2021. Increases in the price of raw materials are generally able to be passed on to customers through contractual price mechanisms over time and other means. We expect supply chain challenges to continue into fiscal 2022 and will continue to work closely with our suppliers and customers in an effort to minimize any impact.

Patents, Trademarks and Other Intellectual Property

We customarily seek patent and trademark protection for our products and brands while seeking to protect our proprietary know-how.  While important to our business in the aggregate, sales of any one individually patented product is not considered material to any specific segment or the consolidated results.

Environmental and Sustainability

We focus our sustainability efforts on product stewardship, operational excellence, human capital management and community engagement.  We believe there will always be a leading role for Berry’s product offerings due to our ability to promote customer brands by providing superior clarity, protection, design versatility, consumer safety, convenience, cost efficiency, barrier properties, and environmental performance.  Sustainability is comprehensively embedded across our business, from how we run our manufacturing operations more efficiently to the investments we are making in sustainable packaging innovation.  We collaborate with customers, suppliers, and innovators to create industry-leading solutions which offer lighter weight products, enable longer shelf-life, and protect products throughout supply chains.

We believe responsible packaging is the answer to achieving less waste and that responsible packaging requires four things - innovative design, continued development of renewable and advanced raw materials, waste management infrastructure, and consumer participation. Berry is committed to responsible packaging and has (1) targeted 100% reusable, recyclable, or compostable packaging by 2025, (2) significantly increased our use of circular materials by entering into offtake agreements for both mechanically recycled and advanced recycled materials as well as expanded our own recycling operations in North America and Europe in order to meet our targeted 30% circular materials by 2030, and (3) worked to drive greater recycling rates around the world.  With our global scale, deep industry experience, and strong capabilities, we are uniquely positioned to lead the way in the design and development of more sustainable packaging.

We also work globally on continuous improvement of employee safety and engagement, energy usage, water efficiency, waste reduction, recycling as well as reducing our Green House Gas (GHG) emissions.  Our teams are dedicated to improving the circularity and reducing the carbon footprint of our products.  We anticipate higher demand for products with lower emissions intensity where polymer resins based products are inherently well positioned since they typically have lower GHG emissions per functional unit compared to heavier alternatives such as paper, metal and glass.  Additionally, there is also significant work being done on the use of recycled and bio content, which has lower associated GHG emissions compared to other virgin materials.

Human Capital and Employees

Overview
Never before in Berry’s long history has our mission of ‘Always Advancing to Protect What’s Important’ been more critical as we are proud to work alongside our customers to supply products that are truly essential to everyday life. The safety and supply of necessities such as food, medicines, sanitizing products, and protective healthcare apparel has never been more vital.  We continue to prioritize the health and well-being of the communities we serve as well as our employees and their families, as our global teams remain dedicated to continuingly working seamlessly with our business partners to ensure critical key supply chains remain uninterrupted and operational.

Health and Safety
Employee safety is our number one core value at Berry.  We believe when it comes to employee safety, our best should always be our standard.   It is through the adherence to our global Environment, Health, and Safety principles we have been able to identify and eliminate operational risks and drive continuous improvement, resulting in an OSHA incident rate below 1.0 which is significantly lower than the industry average.

4


Specifically related to Berry’s internal COVID-19 protocols, our rigorous precautionary measures have included the formation of global and regional response teams that maintain contact with authorities and experts, quarantine protocols, disinfection measures and other actions designed to help protect employees.  Additionally, while many do not realize the crucial role our products play in infection prevention and protecting from the spread of disease and contamination, we are proud to be a part of the fight and are privileged to support the growing need for many of our products as communities across the globe continue to struggle through the COVID-19 pandemic.

Talent and Development
We seek to attract, develop and retain the best talent throughout the company. During the past decade, we established and expanded our recruiting and talent functions.  Our succession management strategy focuses on structured succession framework based on Learning Agility and multiple years of performance. Our holistic approach to developing key managers and identifying future leaders includes challenging assignments, formal development plans and professional coaching.  Resources to support employees in their personal and professional development include:

Leadership Foundations;
Operations Development Programs;
Core & Advanced Selling Programs;
Partnering for the Planet;
University Partnerships;
Internal e-learning and development platforms;
Annual compliance, antitrust, bribery, corruption, business code of conduct and ethics training for key management level; and
Various other tuition reimbursement programs, apprenticeship and instructional programs.

Employee Engagement
We seek to ensure that everyone is motivated to perform their best work every day. To further that objective, our engagement approach focuses on clear communication and recognition. We communicate through regular employee meetings, at both the corporate and operating division levels, with business and market updates and information on production, safety, quality and other operating metrics. We have many recognition-oriented awards throughout our company, including our corporate and divisional awards of excellence. We conduct company-wide engagement surveys which have generally indicated high levels of engagement and trust in Berry’s leadership, key strategies and initiatives.  Resources to support employee communication and engagement include:

Leadership sharing global perspectives, innovation, and company direction;
Peer groups sharing and supporting of common interests and partnership among emerging leaders;
Town halls fostering the “OneBerry” culture; and
Various other internal business updates, communications, bulletins, digital signage and newsletters.

Inclusion and Diversity
As the world’s leading global packaging company, we strive to build a safe and inclusive culture where every employee feels valued and treated with respect.  We believe inclusion helps drive engagement, innovation and organizational growth.  Our focus to date has been on providing training for our global workforce, expanding our employee resource groups, and increasing awareness about the importance of having a culture of inclusion.  Resource groups to support employee acceptance and inclusion including US Veterans, employees with disabilities, women led alliances, employees of African descent, and sexual orientation.

Ethics
Good corporate governance and transparency are fundamental to achieving our vision of becoming the premier packaging solutions provider in all our markets. Our employees are expected to act with integrity and objectivity and to always strive to enhance our reputation and performance.  We maintain a Global Code of Business Ethics which is attested by every Berry employee and provides the Company's framework for ethical business. We provide targeted annual training across the globe to reinforce our commitment to ethics and drive adherence to the laws in each jurisdiction in which we operate.

Available Information

We make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments, if any, to those reports through our internet website as soon as reasonably practicable after they have been electronically filed with the SEC.  Our internet address is www.berryglobal.com.  The information contained on our website is not being incorporated herein.

5


Item 1A.  RISK FACTORS

Operational Risks

Effectively managing change and growth.

Our future revenue and operating results will depend on our ability to effectively manage the anticipated growth and managing customer timelines. We are continuously investing in growth areas and expanding our operations, increasing our headcount and expanding into new product offerings. This growth has placed significant demands on our management as well as our financial and operational resources, and continued growth presents several challenges, including:

expanding manufacturing capacity, maintaining quality and increasing production;
identifying, attracting and retaining qualified personnel; and
increasing our regulatory compliance capabilities, particularly in new lines of business or product offerings.

A failure to adequately manage these and other risks related to our growth could adversely affect our business, financial condition and results of operations.

Raw material inflation or shortage of available materials could harm our financial condition and results of operations.

Raw materials are subject to price fluctuations and availability, due to external factors, such as the COVID-19 pandemic, weather-related events, or other supply chain challenges, that are beyond our control.  Temporary industry-wide shortages of raw materials have occurred in fiscal 2021, which has led to increased raw material price volatility and which could continue into fiscal 2022.  Additionally, our suppliers could experience cost increases to produce raw material due to increases in carbon pricing.  Historically we have been able to manage the impact of higher costs by increasing our selling prices.  We have generally been well positioned to capture additional market share as our primarily raw material, polymer resin, is typically a lower cost and more versatile substrate compared to alternatives.  However, raw material shortages or our inability to timely pass through increased costs to our customers may adversely affect our business, financial condition and results of operations.

We may not be able to compete successfully and our customers may not continue to purchase our products.

We compete with multiple companies in each of our product lines on the basis of a number of considerations, including price, service, quality, product characteristics and the ability to supply products to customers in a timely manner.  Our products also compete with various other substrates.  Some of these competitive products are not subject to the impact of changes in resin prices, which may have a significant and negative impact on our competitive position versus substitute products.  Additionally, consumer's view on environmental consideration could potentially impact demand for our products that utilize fossil fuel based materials in their manufacturing.  Our competitors may have financial and other resources that are substantially greater than ours and may be better able than us to withstand higher costs.  Competition and product preference changes could result in our products losing market share or our having to reduce our prices, either of which could have a material adverse effect on our business, financial condition and results of operations.  In addition, since we do not have long-term arrangements with many of our customers, these competitive factors could cause our customers to shift suppliers and/or packaging material quickly.  Our success depends, in part, on our ability to respond timely to customer and market changes.

We may pursue and execute acquisitions or divestitures, which could adversely affect our business.

As part of our growth strategy, we consider transactions that either complement or expand our existing business and create economic value.  Transactions involve special risks, including the potential assumption of unanticipated liabilities and contingencies as well as difficulties in integrating acquired businesses or carving-out divested businesses, which may result in substantial costs, delays or other problems that could adversely affect our business, financial condition and results of operations.  Furthermore, we may not realize all of the synergies we expect to achieve from our current strategic initiatives due to a variety of risks.  If we are unable to achieve the benefits that we expect to achieve from our strategic initiatives, it could adversely affect our business, financial condition and results of operations.

In the event of a catastrophic loss of one of our key manufacturing facilities, our business would be adversely affected.

While we manufacture our products in a large number of diversified facilities and maintain insurance covering our facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of one of our key manufacturing facilities due to accident, labor issues, weather conditions, natural disaster, pandemic or otherwise, whether short or long-term, could result in significant losses.
6


Employee retention, labor cost inflation or the failure to renew collective bargaining agreements could disrupt our business.

As of the end of fiscal 2021, we employed approximately 47,000 employees with approximately 20% of those employees being covered by collective bargaining agreements.  The collective bargaining agreements covering a majority of these employees expire annually and as a result, are due for renegotiation in fiscal year ending 2022 (“fiscal 2022”).  Our relations with employees under collective bargaining agreements remain satisfactory and there have been no significant work stoppages or other labor disputes during the past three years.  However, we may not be able to maintain constructive relationships with labor unions or trade councils and may not be able to successfully negotiate new collective bargaining agreements on satisfactory terms in the future.

Labor is subject to cost inflation and availability, due to external factors, such as the COVID-19 pandemic and workforce participation rates, that are beyond our control.  As a result, there can be no assurance we will be able to recruit, train, assimilate, motivate and retain employees in the future.  The loss of a substantial number of these employees or a prolonged labor dispute could disrupt our business and result in significant losses.

We depend on information technology systems and infrastructure to operate our business, and increased cybersecurity threats, system inadequacies, and failures could disrupt our operations, compromise customer, employee, vendor and other data which could negatively affect our business.

We rely on the efficient and uninterrupted operation of information technology systems and networks.  These systems and networks are vulnerable to increased cybersecurity threats and more sophisticated computer crime, energy interruptions, telecommunications failures, breakdowns, natural disasters, terrorism, war, computer malware or other malicious intrusions.

We also maintain and have access to sensitive, confidential or personal data or information that is subject to privacy and security laws, regulations, and customer controls.  Despite our efforts to protect such information, security breaches, misplaced or lost data and programming damages could result in production downtimes, operational disruptions, transaction errors, loss of business opportunities, violation of privacy laws and legal liability, fines, penalties or negative publicity could result in a negative impact on the business.  While we have not had material system interruptions historically associated with these risks, there can be no assurance that these advanced and persistent threats will prevent future interruptions that could result in significant losses.

Financial and Legal Risks

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

We have a significant amount of indebtedness, which requires significant interest payments.  Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have a material adverse effect on our business, financial condition and results of operations.  Additionally, servicing the interest obligations of our existing indebtedness could limit our ability to respond to business opportunities, including growing our business through acquisitions or increased levels of capital expenditures.

Goodwill and other intangibles represent a significant amount of our net worth, and a future write-off could result in lower reported net income and a reduction of our net worth.

We have a substantial amount of goodwill.  Future changes in market multiples, cost of capital, expected cash flows, or other external factors, may adversely affect our business and cause our goodwill to be impaired, resulting in a non-cash charge against results of operations to write off goodwill or indefinite lived intangible assets for the amount of impairment.  If a future write-off is required, the charge could result in significant losses.

7


Our international operations pose risks to our business that may not be present with our domestic operations.

Foreign operations are subject to certain risks that are unique to doing business in foreign countries. These risks include fluctuations in foreign currency exchange rates, inflation, economic or political instability, shipping delays in our products and receiving delays of raw materials, changes in applicable laws, including assessments of income and non-income related taxes, reduced protection of intellectual property, inability to readily repatriate cash to the U.S. effectively, and regulatory policies and various trade restrictions including potential changes to export taxes or countervailing and anti-dumping duties for exported products from these countries. Any of these risks could disrupt our business and result in significant losses. We are also subject to the Foreign Corrupt Practices Act and other anti-bribery and anti-corruption laws that generally bar bribes or unreasonable gifts to foreign governments or officials. We have implemented safeguards, training and policies to discourage these practices by our employees and agents. However, our existing safeguards, training and policies to assure compliance and any future improvements may prove to be less than effective and our employees or agents may engage in conduct for which we might be held responsible. If employees violate our policies, we may be subject to regulatory sanctions. Violations of these laws or regulations could result in sanctions including fines, debarment from export privileges and penalties and could adversely affect our business, financial condition and results of operations.

Current and future environmental and other governmental requirements could adversely affect our financial condition and our ability to conduct our business.

While we have not been required historically to make significant capital expenditures in order to comply with applicable environmental laws and regulations, we cannot predict our future capital expenditure requirements because of continually changing compliance standards and environmental technology.  Furthermore, violations or contaminated sites that we do not know about (including contamination caused by prior owners and operators of such sites or newly discovered information) could result in additional compliance or remediation costs or other liabilities, which could be material.  In addition, federal, state, local, and foreign governments could enact laws or regulations concerning environmental matters, such as greenhouse gas emissions, that increase the cost of producing, or otherwise adversely affect the demand for, packaging products.  Legislation that would prohibit, tax or restrict the sale or use of certain types of products would require diversion of solid waste such as packaging materials from disposal in landfills, has been or may be introduced.  For example, the European Union ("EU") recently introduced a non-recycled polymer resin packaging waste bloc-wide levy.  While each member state is evaluating how to fund the levy which ranges from taxing the sector or passing costs down the line to all businesses and end consumers, we believe that any such laws promulgated to date have not had a material adverse effect on us, as we have historically been able to manage the impact of higher costs by increasing our selling prices.  However, there can be no assurance that future legislation or regulation would not have a material adverse effect on us.

Changes in tax laws or changes in our geographic mix of earnings could have a material impact on our financial condition and results of operation.

We are subject to income and other taxes in the many jurisdictions in which we operate. Tax laws and regulations are complex and the determination of our global provision for income taxes and current and deferred tax assets and liabilities requires judgment and estimation. We are subject to routine examinations of our income tax returns, and tax authorities may disagree with our tax positions and assess additional tax. Our future income taxes could also be negatively impacted by our mix of earnings in the jurisdictions in which we operate being different than anticipated given differences in statutory tax rates in the countries in which we operate. In addition, tax policy efforts to raise global corporate tax rates could adversely impact our tax rate and subsequent tax expense.

We may not be successful in protecting our intellectual property rights, including our unpatented proprietary know-how and trade secrets, or in avoiding claims that we infringed on the intellectual property rights of others.

In addition to relying on patent and trademark rights, we rely on unpatented proprietary know-how and trade secrets, and employ various methods, including confidentiality agreements with employees and consultants, customers and suppliers to protect our know-how and trade secrets. However, these methods and our patents and trademarks may not afford complete protection and there can be no assurance that others will not independently develop the know-how and trade secrets or develop better production methods than us. Further, we may not be able to deter current and former employees, contractors and other parties from breaching agreements and misappropriating proprietary information and it is possible that third parties may copy or otherwise obtain and use our information and proprietary technology without authorization or otherwise infringe on our intellectual property rights. Furthermore, no assurance can be given that we will not be subject to claims asserting the infringement of the intellectual property rights of third parties seeking damages, the payment of royalties or licensing fees and/or injunctions against the sale of our products. Any such litigation could be protracted and costly and could result in significant losses.

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Item 1B.  UNRESOLVED STAFF COMMENTS

None.

Item 2.  PROPERTIES

Our primary manufacturing facilities by geographic area were as follows:

Geographic Region
 
Total Facilities
 
Leased Facilities
US and Canada
 
109
 
20
Europe
 
128
 
26
Rest of world
 
45
 
28

Item 3.  LEGAL PROCEEDINGS

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

Item 4.  MINE SAFETY DISCLOSURES

Not applicable.

PART II
 
Item 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock “BERY” is listed on the New York Stock Exchange. As of the date of this filing there were fewer than 500 active record holders of the common stock, but we estimate the number of beneficial stockholders to be much higher as a number of our shares are held by brokers or dealers for their customers in street name. During fiscal 2020 and 2021, we did not declare or pay any cash dividends on our common stock.

Issuer Purchases of Equity Securities

During the fourth quarter of fiscal 2021, the Company did not repurchase shares. As of October 2, 2021, $393 million of authorized shares remained available for purchase under the current repurchase program which has no expiration date and may be suspended at any time.

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Item 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Outlook

The Company is affected by general economic and industrial growth, raw material availability, cost inflation, supply chain disruptions, and general industrial production.  The COVID-19 pandemic has resulted in both advantaged and disadvantaged products within all segments.  During fiscal 2022, we anticipate a headwind as the advantaged products, particularly in our Health, Hygiene & Specialties segment, related to the COVID-19 pandemic moderate while recovery of disadvantaged products lags with the ultimate impact being affected by both the duration certain products remain advantaged and timing of when disadvantaged products normalize. Our business has both geographic and end market diversity, which reduces the effect of any one of these factors on our overall performance.  Our results are affected by our ability to pass through raw material and other cost changes to our customers, improve manufacturing productivity and adapt to volume changes of our customers.  By providing advantaged products in targeted markets, we continue to believe our underlying long-term demand fundamental in all divisions will remain strong as we focus on delivering protective solutions that enhance consumer safety and execute on the Company’s mission statement of “Always Advancing to Protect What’s Important.”  For fiscal 2022, we project cash flow from operations between $1.8 to $1.7 billion, which includes the benefit from the lag in recovery of fiscal 2021 inflation, and free cash flow between $1 billion to $900 million.  Projected fiscal 2022 free cash flow assumes $800 million of capital spending.  For the definition of free cash flow and further information related to free cash flow as a non-GAAP financial measure, see “Liquidity and Capital Resources.”

Recent Dispositions

During fiscal 2021, the Company completed the sale of its U.S. Flexible Packaging Converting business which was primarily operated in the Engineered Materials segment for net proceeds of $140 million and its non-core Czech Republic Reaction Injection Molding business which was operated in the Consumer Packaging International segment for net proceeds of $22 million.  A net pretax loss on the divestitures of $22 million was recorded in fiscal 2021 within Restructuring and transaction activities on the Consolidated  Statements of Income.  The U.S Flexible Packaging Converting business and the Czech Republic Reaction Injection Molding business recorded net sales during fiscal 2020 of $203 million and $41 million, respectively.

Discussion of Results of Operations for Fiscal 2021 Compared to Fiscal 2020

The Company's U.S. based results for fiscal 2021 and fiscal 2020 are based on a fifty-three and fifty-two week period, respectively.  Business integration expenses consist of restructuring and impairment charges, acquisition and divestiture related costs, and other business optimization costs.  Tables present dollars in millions. A discussion and analysis regarding our results of operations for fiscal year 2020 compared to fiscal year 2019 can be found on Form 8-K, Exhibit 99.1 filed with the SEC on September 2, 2021.

Consolidated Overview
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Net sales
 
$
13,850
   
$
11,709
   
$
2,141
     
18
%
Cost of goods sold
   
11,352
     
9,301
     
2,051
     
22
%
Other operating expenses
   
1,206
     
1,229
     
(23
)
   
(2
)%
Operating income
 
$
1,292
   
$
1,179
   
$
113
     
10
%

Net sales:  The net sales growth is primarily attributed to increased selling prices of $1,429 million due to the pass through of inflation, organic volume growth of 4%, a $331 million favorable impact from foreign currency changes, and a $131 million increase from extra shipping days in fiscal 2021.  These increases were partially offset by fiscal 2020 divestiture sales of $190 million.  The organic volume growth was primarily due to organic growth investments, continued recovery of certain markets that had previously been facing COVID-19 headwinds, and higher demand in our advantaged health and hygiene products as the result of COVID-19.

Cost of goods sold:  The cost of goods sold increase is primarily attributed to organic volume growth, product mix, inflation, an increase from foreign currency changes, and extra shipping days in fiscal 2021.  These increases were partially offset by fiscal 2020 divestiture cost of goods sold of $157 million.

Operating Income:  The operating income increase is primarily attributed to a $100 million increase from the organic volume growth, a $55 million favorable impact from foreign currency changes, a $37 million decrease in business integration, and a $22 million benefit from extra shipping days in fiscal 2021.  These improvements are partially offset by a $75 million impact from inflation and product mix, a $19 million increase in depreciation and amortization, and fiscal 2020 divestiture operating income of $18 million.
10


 Consumer Packaging International
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Net sales
 
$
4,242
   
$
3,789
   
$
453
     
12
%
Cost of goods sold
   
3,416
     
3,000
     
416
     
14
%
Other operating expenses
   
509
     
516
     
(7
)
   
(1
)%
Operating income
 
$
317
   
$
273
   
$
44
     
16
%

Net sales:  The net sales growth in the Consumer Packaging International segment is primarily attributed to increased selling prices of $130 million due to the pass through of inflation, organic volume growth of 3%, and a $227 million favorable impact from foreign currency changes, partially offset by fiscal 2020 divestiture sales of $22 million.  The organic volume growth was primarily due to organic growth investments and recovery of certain markets that had previously been facing COVID-19 headwinds.

Cost of goods sold:  The cost of goods sold increase is attributed to inflation, organic volume growth, an increase from foreign currency changes, and an increase in depreciation, partially offset by a decrease in business integration activities and fiscal 2020 divestiture cost of goods sold.

Operating Income: The operating income increase is primarily attributed to a $23 million increase from the organic volume growth, a $40 million favorable impact from foreign currency, and an $18 million decrease in business integration activities, partially offset by a $33 million unfavorable impact from price cost spread.

Consumer Packaging North America
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Net sales
 
$
3,141
   
$
2,560
   
$
581
     
23
%
Cost of goods sold
   
2,632
     
2,051
     
581
     
28
%
Other operating expenses
   
233
     
234
     
(1
)
   
 
Operating income
 
$
276
   
$
275
   
$
1
     
0
%

Net sales:  The net sales growth in the Consumer Packaging North America segment is primarily attributed to organic volume growth of 4%, increased selling prices of $439 million due to the pass through of inflation, and a $40 million increase from extra shipping days in fiscal 2021.  The organic volume growth was primarily due to organic growth investments and advantaged foodservice products as the result of COVID-19.

Cost of goods sold:  The cost of goods sold increase is attributed to inflation, organic volume growth, and an increase from extra shipping days in fiscal 2021.

Operating Income:  The operating income being flat is primarily attributed to a $27 million increase from the organic volume growth, an $11 million decrease in business integration activities, and a decrease in depreciation and amortization, partially offset by a $43 million unfavorable impact from price cost spread.

 Engineered Materials
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Net sales
 
$
3,309
   
$
2,766
   
$
543
     
20
%
Cost of goods sold
   
2,794
     
2,209
     
585
     
26
%
Other operating expenses
   
214
     
221
     
(7
)
   
(3
)%
Operating income
 
$
301
   
$
336
   
$
(35
)
   
(10
)%

Net sales:  The net sales growth in the Engineered Materials segment is primarily attributed to increased selling prices of $475 million due to the pass through of inflation, organic volume growth of 4%, a $63 million favorable impact from foreign currency changes, and a $44 million increase from extra shipping days in fiscal 2021, partially offset by fiscal 2020 divestiture sales of $134 million.  The organic volume growth was primarily due to organic growth investments and recovery of certain markets that had previously been facing COVID-19 headwinds.

Cost of goods sold:  The cost of goods sold increase is attributed to inflation, organic volume growth, an increase from foreign currency changes, and an increase from extra shipping days in fiscal 2021.  These increases were partially offset by Fiscal 2020 divestiture cost of goods sold of $110 million.

Operating Income: The operating income decrease is primarily attributed to a $49 million unfavorable impact from price cost spread and Fiscal 2020 divestiture operating income of $14 million, partially offset by a $14 million improvement from the organic volume growth and a $6 million benefit from extra shipping days in fiscal 2021.
11


Health, Hygiene & Specialties
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Net sales
 
$
3,158
   
$
2,594
   
$
564
     
22
%
Cost of goods sold
   
2,510
     
2,041
     
469
     
23
%
Other operating expenses
   
250
     
258
     
(8
)
   
(3
)%
Operating income
 
$
398
   
$
295
   
$
103
     
35
%

Net sales:  The net sales growth in the Health, Hygiene & Specialties segment is primarily attributed to organic volume growth of 5%, increased selling prices of $385 million due to the pass through of inflation, a $42 million increase from extra shipping days in fiscal 2021, and a $41 million favorable impact from foreign currency changes, partially offset by fiscal 2020 divestiture sales of $34 million.  The organic volume growth was primarily due to organic growth investments and higher demand in our advantaged health and hygiene products as the result of COVID-19.

Cost of goods sold:  The cost of goods sold increase is attributed to inflation, organic volume growth, an increase from extra shipping days in fiscal 2021, and an increase from foreign currency changes.

Operating Income:  The operating income increase is primarily attributed to a $36 million increase from the organic volume growth, a $48 million favorable impact from price cost spread, an $8 million benefit from extra shipping days in fiscal 2021, and a favorable impact from foreign currency changes.

Other expense, net
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Other expense, net
 
$
51
   
$
31
   
$
20
     
65
%

The Other expense increase is primarily attributed to foreign currency changes related to the remeasurement of non-operating intercompany balances.

Interest expense, net
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Interest expense, net
 
$
336
   
$
435
   
$
(99
)
   
(23
)%

The interest expense decrease is primarily the result of repayments on long-term borrowings and recent refinancing activities (see Note 3).

Income tax expense
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Income tax expense
 
$
172
   
$
154
   
$
18
     
12
%

The income tax expense increase is primarily attributed to higher pre-tax book income.  Our effective tax rate for fiscal 2021 was 19% and was positively impacted by 3% from permanent foreign currency differences and 2% from change in foreign valuation allowance. These favorable items were partially offset by other discrete items. Refer to Note 6. Income Taxes for further information.

Comprehensive Income
 
Fiscal Year
             
   
2021
   
2020
   
$ Change
   
% Change
 
Comprehensive Income
 
$
988
   
$
394
   
$
594
     
151
%

The increase in comprehensive income is primarily attributed to a $174 million increase in net income, a $123 million favorable change in currency translation, a $188 million favorable change in the fair value of interest rate hedges and a $109 million favorable change from unrealized gains on the Company’s pension plans.  Currency translation gains are primarily related to non-U.S. subsidiaries with a functional currency other than the U.S. dollar whereby assets and liabilities are translated from the respective functional currency into U.S. dollars using period-end exchange rates.  The change in currency translation was primarily attributed to locations utilizing the euro, British pound sterling, Brazilian real and Chinese renminbi as their functional currency.  As part of the overall risk management, the Company uses derivative instruments to reduce exposure to changes in interest rates attributed to the Company’s floating-rate borrowings and records changes to the fair value of these instruments in Accumulated other comprehensive income (loss).  The change in fair value of these instruments in fiscal 2021 versus fiscal 2020 is primarily attributed to a change in the forward interest curve between measurement dates.

12


Liquidity and Capital Resources

Senior Secured Credit Facility

We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct our business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.  We have an $850 million asset-based revolving line of credit that matures in May 2024.  At the end of fiscal 2021, the Company had no outstanding balance on the revolving credit facility.  The Company was in compliance with all covenants at the end of fiscal 2021.  Refer to Note 3. Long-Term Debt for further information.

Cash Flows from Operating Activities

Net cash provided by operating activities increased $50 million from fiscal 2020 primarily attributed to improved net income prior to non-cash activities, partially offset by working capital inflation.

Cash Flows from Investing Activities

Net cash used in investing activities increased $195 million from fiscal 2020 primarily attributed to increased capital expenditures and proceeds from the settlement of cross-currency derivatives in fiscal 2020, partially offset for the divestiture of business in fiscal 2021.

Cash Flows from Financing Activities

Net cash used in financing activities decreased $479 million from fiscal 2020 primarily attributed to lower net repayments on long-term borrowings.

Share Repurchases

The Company did not have any share repurchases in fiscal 2021 or 2020.

Free Cash Flow

We define "free cash flow" as cash flow from operating activities less net additions to property, plant and equipment.  Based on our definition, our consolidated free cash flow is summarized as follows:

 
Fiscal years ended
 
   
October 2,
2021
   
September 26,
2020
 
Cash flow from operating activities
 
$
1,580
   
$
1,530
 
Additions to property, plant and equipment, net
   
(676
)
   
(583
)
Free cash flow
 
$
904
   
$
947
 

We use free cash flow as a supplemental measure of liquidity as it assists us in assessing our ability to fund growth through generation of cash.  Free cash flow may be calculated differently by other companies, including other companies in our industry or peer group, limiting its usefulness.  Free cash flow is not a generally accepted accounting principles (“GAAP’) financial measure and should not be considered as an alternative to any other measure determined in accordance with GAAP.

Liquidity Outlook

At the end of fiscal 2021, our cash balance was $1,091 million, which was primarily located outside the U.S.  We believe our existing and future U.S. based cash and cash flow from U.S. operations, together with available borrowings under our senior secured credit facilities, will be adequate to meet our short-term and long-term liquidity needs with the exception of funds needed to cover all long-term debt obligations which we intend to refinance prior to maturity.  The Company has the ability to repatriate the cash located outside the U.S. to the extent not needed to meet operational and capital needs without significant restrictions.  Our unremitted foreign earnings were $1.1 billion at the end of fiscal 2021.  The computation of the deferred tax liability associated with unremitted earnings is not practicable.

13


Summarized Guarantor Financial Information

Berry Global, Inc. (“Issuer”) has notes outstanding which are fully, jointly, severally, and unconditionally guaranteed by its parent, Berry Global Group, Inc. (for purposes of this section, “Parent”) and substantially all of Issuer’s domestic subsidiaries. Separate narrative information or financial statements of the guarantor subsidiaries have not been included because they are 100% owned by Parent and the guarantor subsidiaries unconditionally guarantee such debt on a joint and several basis.  A guarantee of a guarantor subsidiary of the securities will terminate upon the following customary circumstances: the sale of the capital stock of such guarantor if such sale complies with the indentures, the designation of such guarantor as an unrestricted subsidiary, the defeasance or discharge of the indenture or in the case of a restricted subsidiary that is required to guarantee after the relevant issuance date, if such guarantor no longer guarantees certain other indebtedness of the issuer.  The guarantees of the guarantor subsidiaries are also limited as necessary to prevent them from constituting a fraudulent conveyance under applicable law and any guarantees guaranteeing subordinated debt are subordinated to certain other of the Company’s debts. Parent also guarantees the Issuer’s term loans and revolving credit facilities.  The guarantor subsidiaries guarantee our term loans and are co-borrowers under our revolving credit facility.

Presented below is summarized financial information for the Parent, Issuer and guarantor subsidiaries on a combined basis, after intercompany transactions have been eliminated.

 
Year Ended
 
   
October 2, 2021
 
Net sales
 
$
7,070
 
Gross profit
   
1,503
 
Earnings from continuing operations
   
318
 
Net income
 
$
318
 

Includes $15 million of income associated with intercompany activity with non-guarantor subsidiaries.

 
October 2, 2021
   
September 26, 2020
 
Assets
           
Current assets
 
$
2,293
   
$
1,417
 
Noncurrent assets
   
5,979
     
6,153
 
                 
Liabilities
               
Current liabilities
 
$
1,533
   
$
841
 
Intercompany payable
   
629
     
572
 
Noncurrent liabilities
   
11,083
     
11,936
 

14

Critical Accounting Policies and Estimates

We disclose those accounting policies that we consider to be significant in determining the amounts to be utilized for communicating our consolidated financial position, results of operations and cash flows in the first note to our consolidated financial statements included elsewhere herein.  Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP.  The preparation of financial statements in conformity with these principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.  Actual results may differ from these estimates under different assumptions or conditions.

Pensions.  The accounting for our pension plans requires us to recognize the overfunded or underfunded status of the pension plans on our balance sheet. For these sponsored plans, the relevant accounting guidance requires that management make certain assumptions relating to the long-term rate of return on plan assets, discount rates used to determine the present value of future obligations and expenses, salary inflation rates, mortality rates and other assumptions. We believe that the accounting estimates related to our pension plans are critical accounting estimates because they are highly susceptible to change from period to period based on the performance of plan assets, actuarial valuations, market conditions and contracted benefit changes. The selection of assumptions is based on historical trends and known economic and market conditions at the time of valuation, as well as independent studies of trends performed by our actuaries.

We review annually the discount rate used to calculate the present value of pension plan liabilities. The discount rate used at each measurement date is set based on a high-quality corporate bond yield curve, derived based on bond universe information sourced from reputable third-party indices, data providers, and rating agencies. In countries where there is no deep market in corporate bonds, we have used a government bond approach to set the discount rate.  Additionally, the expected long term rate of return on plan assets is derived for each benefit plan by considering the expected future long-term return assumption for each individual asset class. A single long-term return assumption is then derived for each plan based upon the plan’s target asset allocation.  Refer to Note 7. Retirement Plans for further information.

Deferred Taxes and Effective Tax Rates.  We estimate the effective tax rate (“ETR”) and associated liabilities or assets for each of our legal entities in accordance with authoritative guidance.  We utilize tax planning to minimize or defer tax liabilities to future periods.  In recording ETRs and related liabilities and assets, we rely upon estimates, which are based upon our interpretation of U.S. and local tax laws as they apply to our legal entities and our overall tax structure.  Audits by local tax jurisdictions, including the U.S. Government, could yield different interpretations from our own and cause the Company to owe more taxes than originally recorded.  As part of the ETR, if we determine that a deferred tax asset arising from temporary differences is not likely to be utilized, we will establish a valuation allowance against that asset to record it at its expected realizable value.  In multiple foreign jurisdictions, the Company believes that it will not generate sufficient future taxable income to realize the related tax benefits.  The Company has provided a full valuation allowance against its foreign net operating losses included within the deferred tax assets in multiple foreign jurisdictions.  The Company has not provided a valuation allowance on its federal net operating losses in the U.S. because it has determined that future reversals of its temporary taxable differences will occur in the same periods and are of the same nature as the temporary differences giving rise to the deferred tax assets.  Refer to Note 6. Income Taxes for further information.

15

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to market risk from changes in interest rates primarily through our senior secured credit facilities. As of October 2, 2021, our senior secured credit facilities are comprised of (i) $3.4 billion term loans and (ii) an $850 million revolving credit facility with no borrowings outstanding. Borrowings under our senior secured credit facilities bear interest at a rate equal to an applicable margin plus LIBOR. The applicable margin for LIBOR rate borrowings under the revolving credit facility ranges from 1.25% to 1.50%, and the margin for the term loans is 1.75% per annum. As of October 2, 2021, the LIBOR rate of approximately 0.08% was applicable to the term loans. A 0.25% change in LIBOR would increase our annual interest expense by $3 million on variable rate term loans.

We seek to minimize interest rate volatility risk through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. These financial instruments are not used for trading or other speculative purposes. As of October 2, 2021, the Company effectively had (i) a $450 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.398%, with an expiration in June 2026, (ii) a $400 million interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.916% with an expiration in June 2026, (iii) an $884 million interest rate swap transaction that swaps a one month variable LIBOR contract for a fixed annual rate of 1.857%, with an expiration in June 2024, and (iv) a $473 million interest rate swap transaction that swaps a one month variable LIBOR contract for a fixed annual rate of 2.050%, with an expiration in June 2024.

Foreign Currency Risk

As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, British pound sterling, Brazilian real, Chinese renminbi, Canadian dollar and Mexican peso. Significant fluctuations in currency rates can have a substantial impact, either positive or negative, on our revenue, cost of sales, and operating expenses.  Currency translation gains and losses are primarily related to non-U.S. subsidiaries with a functional currency other than U.S. dollars whereby assets and liabilities are translated from the respective functional currency into U.S. dollars using period-end exchange rates and impact our Comprehensive income. A 10% decline in foreign currency exchange rates would have had a $44 million unfavorable impact on fiscal 2021 Net income.

The Company is party to certain cross-currency swaps to hedge a portion of our foreign currency risk. The swap agreements mature May 2022 (€250 million) and June 2024 (€1,625 million) and July 2027 (£700 million). In addition to the cross-currency swaps, we hedge a portion of our foreign currency risk by designating foreign currency denominated long-term debt as net investment hedges of certain foreign operations. As of October 2, 2021, we had outstanding long-term debt of €785 million that was designated as a hedge of our net investment in certain euro-denominated foreign subsidiaries.
16


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

Page
21
23
Consolidated Balance Sheets as of fiscal 2021 and 2020
24
25
Consolidated Statements of Cash Flows for fiscal 2021, 2020 and 2019
26
27

Index to Financial Statement Schedules

All schedules have been omitted because they are not applicable or not required or because the required information is included in the consolidated financial statements or notes thereto.

17


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In connection with the preparation of this Form 10-K, management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of October 2, 2021.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of October 2, 2021.

Management’s Report on Internal Controls over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s internal controls over financial reporting were effective as of October 2, 2021.

The effectiveness of our internal control over financial reporting as of October 2, 2021, has been audited by the Company’s independent registered public accounting firm, as stated in their report, which is included herein.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended October 2, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.  OTHER INFORMATION

None.

Item 9C.  DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

18


PART III

Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Except as set forth below, the information required by this Item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2022 Annual Meeting of Stockholders.

We have a Global Code of Business Ethics that applies to all directors and employees, including our Chief Executive Officer and senior financial officers.  We also have adopted a Supplemental Code of Ethics, which is in addition to the standards set by our Global Code of Business Ethics, in order to establish a higher level of expectation for the most senior leaders of the Company.  Our Global Code of Business Ethics and Supplemental Code of Ethics can be obtained, free of charge, by contacting our corporate headquarters or can be obtained from the Corporate Governance section of the Investors page on the Company’s internet site.  In the event that we make changes in, or provide waivers from, the provision of the Code of Business Ethics that the SEC requires us to disclose, we will disclose these events in the corporate governance section of our website within four business days following the date of such amendment or waiver.

Item 11.  EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2022 Annual Meeting of Stockholders.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item, is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2022 Annual Meeting of Stockholders.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2022 Annual Meeting of Stockholders.

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with the 2022 Annual Meeting of Stockholders.

19


PART IV

Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1.
Financial Statements

The financial statements listed under Item 8 are filed as part of this report.

2.
Financial Statement Schedules

Schedules have been omitted because they are either not applicable or the required information has been disclosed in the financial statements or notes thereto.

3.
Exhibits

The exhibits listed on the Exhibit Index immediately following the signature page of this annual report are filed as part of this report.

Item 16.  FORM 10-K SUMMARY

None.

20

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Berry Global Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Berry Global Group, Inc. (the Company) as of October 2, 2021 and September 26, 2020, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended October 2, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 2, 2021 and September 26, 2020, and the results of its operations and its cash flows for each of the three years in the period ended October 2, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of October 2, 2021, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 18, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

   
United Kingdom Defined Benefit Pension Obligation
     
Description of the Matter
 
At October 2, 2021 the aggregate United Kingdom (UK) defined benefit pension obligation was $888 million and exceeded the fair value of pension plan assets of $828 million, resulting in an underfunded defined benefit pension obligation of $60 million. As disclosed in Notes 1 and 8 to the consolidated financial statements, the Company recognizes the overfunded or underfunded status of its pension plans in the consolidated balance sheet. The obligations for these plans are actuarially determined and affected by assumptions, including discount rates and mortality rates.
 
Auditing the UK defined benefit pension obligation is complex and required the involvement of our actuarial specialists due to the highly judgmental nature of actuarial assumptions (e.g., discount rates and mortality rates) used in the measurement process. These assumptions have a significant effect on the projected benefit obligation.
     
How We Addressed the Matter in Our Audit
 
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the measurement and valuation of the UK defined benefit pension obligation. This included management’s review of the UK defined benefit pension obligation calculations and the significant actuarial assumptions used by management.
 
To test the UK defined benefit pension obligation, we performed audit procedures that included, among others, evaluating the methodology used and the significant actuarial assumptions described above and testing the completeness and accuracy of the underlying data, including the participant data used by management. We involved our actuarial specialists to assist with our audit procedures. We compared the actuarial assumptions used by management to historical trends and evaluated the change in the defined benefit pension obligation from prior year due to the change in service cost, interest cost, actuarial gains and losses, benefit payments, contributions and other activities. In addition, we evaluated management’s methodology for determining the discount rate that reflects the maturity and duration of the benefit payments and is used to measure the defined benefit pension obligation. As part of this assessment, we compared management’s selected discount rate to an independently developed range of reasonable discount rates. To evaluate the mortality rate assumption, we assessed whether the information is consistent with publicly available information, and whether any market data adjusted for entity-specific factors were applied.
     
/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1991.

Indianapolis, Indiana
November 18, 2021
21

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Berry Global Group, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Berry Global Group, Inc.’s internal control over financial reporting as of October 2, 2021, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Berry Global Group, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 2, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 2, 2021 and September 26, 2020, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended October 2, 2021, and the related notes and our report dated November 18, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

/s/ Ernst & Young LLP

Indianapolis, Indiana
November 18, 2021
22


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

 
Fiscal years ended
 
   
October 2,
2021
   
September 26,
2020
   
September 28,
2019
 
Net sales
 
$
13,850
   
$
11,709
   
$
8,878
 
Costs and expenses:
                       
Cost of goods sold
   
11,352
     
9,301
     
7,259
 
Selling, general and administrative
   
867
     
850
     
583
 
Amortization of intangibles
   
288
     
300
     
194
 
Restructuring and transaction activities
   
51
     
79
     
(132
)
Operating income
   
1,292
     
1,179
     
974
 
                         
Other expense
   
51
     
31
     
155
 
Interest expense
   
336
     
435
     
329
 
Income before income taxes
   
905
     
713
     
490
 
Income tax expense
   
172
     
154
     
86
 
Net income
 
$
733
   
$
559
   
$
404
 
Net income per share (refer to Note 11):
                       
Basic
 
$
5.45
   
$
4.22
   
$
3.08
 
Diluted
 
$
5.30
   
$
4.14
   
$
3.00
 




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

 
Fiscal years ended
 
   
October 2,
2021
   
September 26,
2020
   
September 28,
2019
 
Net income
 
$
733
   
$
559
   
$
404
 
Currency translation
   
124
     
1
     
(104
)
Pension and postretirement benefits
   
49
     
(60
)
   
(43
)
Derivative instruments
   
82
     
(106
)
   
(83
)
Other comprehensive income (loss)
   
255
     
(165
)
   
(230
)
Comprehensive income
 
$
988
   
$
394
   
$
174
 

See notes to consolidated financial statements.

23


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

 
October 2,
2021
   
September 26,
2020
 
Assets
           
Current assets:
           
Cash and cash equivalents
 
$
1,091
   
$
750
 
Accounts receivable
   
1,879
     
1,469
 
Inventories
   
1,907
     
1,268
 
Prepaid expenses and other current assets
   
217
     
330
 
Total current assets
   
5,094
     
3,817
 
Property, plant and equipment
   
4,677
     
4,561
 
Goodwill and intangible assets
   
7,434
     
7,670
 
Right-of-use assets
   
562
     
562
 
Other assets
   
115
     
91
 
Total assets
 
$
17,882
   
$
16,701
 
                 
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Accounts payable
 
$
2,041
   
$
1,115
 
Accrued employee costs
   
336
     
324
 
Other current liabilities
   
788
     
669
 
Current portion of long-term debt
   
21
     
75
 
Total current liabilities
   
3,186
     
2,183
 
Long-term debt
   
9,439
     
10,162
 
Deferred income taxes
   
568
     
601
 
Employee benefit obligations
   
276
     
368
 
Operating lease liabilities
   
466
     
464
 
Other long-term liabilities
   
767
     
831
 
Total liabilities
   
14,702
     
14,609
 
                 
Stockholders’ equity:
               
Common stock (135.5 and 133.6 shares issued, respectively)
   
1
     
1
 
Additional paid-in capital
   
1,134
     
1,034
 
Retained earnings
   
2,341
     
1,608
 
Accumulated other comprehensive loss
   
(296
)
   
(551
)
Total stockholders’ equity
   
3,180
     
2,092
 
Total liabilities and stockholders’ equity
 
$
17,882
   
$
16,701
 

See notes to consolidated financial statements.

24


Berry Global Group, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
(in millions of dollars)

 
Common Stock
   
Additional
Paid-in Capital
   
Accumulated Other
Comprehensive Loss
   
Retained
Earnings
   
Total
 
Balance at September 29, 2018
 
$
1
   
$
870
   
$
(156
)
 
$
719
   
$
1,434
 
Net income
   
     
     
     
404
     
404
 
Other comprehensive loss
   
     
     
(230
)
   
     
(230
)
Share-based compensation
   
     
27
     
     
     
27
 
Proceeds from issuance of common stock
   
     
55
     
     
     
55
 
Common stock repurchased and retired
   
     
(3
)
   
     
(69
)
   
(72
)
Balance at September 28, 2019
 
$
1
   
$
949
   
$
(386
)
 
$
1,054
   
$
1,618
 
Net income
   
     
     
     
559
     
559
 
Other comprehensive loss
   
     
     
(165
)
   
     
(165
)
Share-based compensation
   
     
33
     
     
     
33
 
Proceeds from issuance of common stock
   
     
30
     
     
     
30
 
Acquisition(a)
   
     
22
     
     
     
22
 
Adoption of ASC 842
   
     
     
     
(5
)
   
(5
)
Balance at September 26, 2020
 
$
1
   
$
1,034
   
$
(551
)
 
$
1,608
   
$
2,092
 
Net income
   
     
     
     
733
     
733
 
Other comprehensive income
   
     
     
255
     
     
255
 
Share-based compensation
   
     
40
     
     
     
40
 
Proceeds from issuance of common stock
   
     
60
     
     
     
60
 
Balance at October 2, 2021
 
$
1
   
$
1,134
   
$
(296
)
 
$
2,341
   
$
3,180
 

(a)
Represents noncontrolling interest

See notes to consolidated financial statements.

25


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

 
Fiscal years ended
 
   
October 2,
2021
   
September 26,
2020
   
September 28,
2019
 
                   
Cash Flows from Operating Activities:
                 
Net income
 
$
733
   
$
559
   
$
404
 
                         
Adjustments to reconcile net cash from operating activities:
                       
Depreciation
   
566
     
545
     
419
 
Amortization of intangibles
   
288
     
300
     
194
 
Non-cash interest expense
   
32
     
27
     
1
 
Share-based compensation expense
   
40
     
33
     
27
 
Deferred income tax
   
(73
)
   
(96
)
   
(52
)
Settlement of derivatives
   
     
11
     
19
 
Transaction activities
   
     
     
(38
)
Other non-cash operating activities, net
   
49
     
42
     
(1
)
Changes in operating assets and liabilities:
                       
Accounts receivable
   
(331
)
   
49
     
150
 
Inventories
   
(639
)
   
48
     
99
 
Prepaid expenses and other assets
   
(30
)
   
(12
)
   
14
 
Accounts payable and other liabilities
   
945
     
24
     
(35
)
Net cash from operating activities
   
1,580
     
1,530
     
1,201
 
                         
Cash Flows from Investing Activities:
                       
Additions to property, plant and equipment, net
   
(676
)
   
(583
)
   
(399
)
Divestiture of businesses
   
165
     
     
326
 
Acquisition of business and purchase price derivatives
   
     
(14
)
   
(6,178
)
Settlement of net investment hedges
   
     
281
     
 
Net cash from investing activities
   
(511
)
   
(316
)
   
(6,251
)
                         
Cash Flows from Financing Activities:
                       
Proceeds from long-term borrowings
   
2,716
     
1,202
     
6,784
 
Repayment of long-term borrowings
   
(3,496
)
   
(2,436
)
   
(1,214
)
Proceeds from issuance of common stock
   
60
     
30
     
55
 
Repurchase of common stock
   
     
     
(74
)
Payment of tax receivable agreement
   
     
     
(38
)
Debt financing costs
   
(21
)
   
(16
)
   
(87
)
Net cash from financing activities
   
(741
)
   
(1,220
)
   
5,426
 
Effect of currency translation on cash
   
13
     
6
     
(7
)
Net change in cash and cash equivalents
   
341
     
     
369
 
Cash and cash equivalents at beginning of period
   
750
     
750
     
381
 
Cash and cash equivalents at end of period
 
$
1,091
   
$
750
   
$
750
 

See notes to consolidated financial statements.

26


Berry Global Group, Inc.
Notes to Consolidated Financial Statements
(in millions of dollars, except as otherwise noted)

1.  Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

Berry Global Group, Inc.'s (“Berry,” “we,” or the “Company”) consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commissions.  Periods presented in these financial statements include fiscal periods ending October 2, 2021 (“fiscal 2021”), September 26, 2020 (“fiscal 2020”), and September 28, 2019 (“fiscal 2019”).  The Company's U.S. based results for fiscal 2021 are based on a fifty-three week period.  Fiscal 2020 and fiscal 2019 were fifty-two week periods.  In October 2020, the Company reorganized portions of its four operating segments in order to better align our various businesses for future growth.  The Company has recast all prior period amounts to conform to this new reporting structure.  The Company has evaluated subsequent events through the date the financial statements were issued.

The consolidated financial statements include the accounts of Berry and its subsidiaries, all of which includes our wholly owned and majority owned subsidiaries. The Company has certain foreign subsidiaries that report on a calendar period basis which we consolidate into our respective fiscal period.  Intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition and Accounts Receivable

Our revenues are primarily derived from the sale of non-woven, flexible and rigid products to customers.  Revenue is recognized when performance obligations are satisfied, in an amount reflecting the consideration to which the Company expects to be entitled.  We consider the promise to transfer products to be our sole performance obligation.  If the consideration agreed to in a contract includes a variable amount, we estimate the amount of consideration we expect to be entitled to in exchange for transferring the promised goods to the customer using the most likely amount method.  Our main sources of variable consideration are customer rebates.  There are no material instances where variable consideration is constrained and not recorded at the initial time of sale.  Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment, when title and risk of loss pass to the customer.  The accrual for customer rebates was $104 million and $104 million at October 2, 2021 and September 26, 2020, respectively, and is included in Other current liabilities on the Consolidated Balance Sheets.  The Company disaggregates revenue based on reportable business segment, geography, and significant product line.  Refer to Note 10. Segment and Geographic Data for further information.

Accounts receivable are presented net of allowance for credit losses of $21 million and $25 million at October 2, 2021 and September 26, 2020, respectively. The Company records its current expected credit losses based on a variety of factors including historical loss experience and current customer financial condition. The changes to our current expected credit losses, write-off activity, and  recoveries were not material for any of the periods presented.

The Company has entered into various factoring agreements, including customer-based supply chain financing programs, to sell certain receivables to third-party financial institutions.  Agreements which result in true sales of the transferred receivables, which occur when receivables are transferred without recourse to the Company, are reflected as a reduction of trade receivables, net on the consolidated balance sheets and the proceeds are included in the cash flows from operating activities in the consolidated statements of cash flows.  The fees associated with transfer of receivables for all programs were not material for any of the periods presented.

Research and Development

Research and development costs are expensed when incurred.  The Company incurred research and development expenditures of $90 million, $79 million, and $50 million in fiscal 2021, 2020, and 2019, respectively.

Share-Based Compensation

The Company utilizes the Black-Scholes option valuation model for estimating the fair value of stock options and amortizes the estimated fair value on a straight-line basis over the requisite service period.  The share-based compensation plan is more fully described in Note 9. Stockholders’ Equity.

27

Foreign Currency

For the non-U.S. subsidiaries that account in a functional currency other than U.S. dollars, assets and liabilities are translated into U.S. dollars using period-end exchange rates.  Sales and expenses are translated at the average exchange rates in effect during the period.  Foreign currency translation gains and losses are included as a component of Accumulated other comprehensive income (loss) within Stockholders’ equity.  Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Income.

Cash and Cash Equivalents

All highly liquid investments purchased with a maturity of three months or less from the time of purchase are considered to be cash equivalents.

Inventories

Inventories are stated at the lower of cost or net realizable value and are valued using the first-in, first-out method.  Management periodically reviews inventory balances, using recent and future expected sales to identify slow-moving and/or obsolete items. The cost of spare parts is charged to cost of goods sold when purchased.  We evaluate our reserve for inventory obsolescence on a quarterly basis and review inventory on-hand to determine future salability.  We base our determinations on the age of the inventory and the experience of our personnel.  We reserve inventory that we deem to be not salable in the quarter in which we make the determination.  We believe, based on past history and our policies and procedures, that our net inventory is salable.  Inventory as of fiscal 2021 and 2020 was:

Inventories:
 
2021
   
2020
 
Finished goods
 
$
960
   
$
708
 
Raw materials
   
947
     
560
 
   
$
1,907
   
$
1,268
 

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets ranging from 15 to 40 years for buildings and improvements, 2 to 20 years for machinery, equipment, and tooling, and over the term of the agreement for capital leases.  Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the lease term.  Repairs and maintenance costs are charged to expense as incurred.  Property, plant and equipment as of fiscal 2021 and 2020 was:

Property, plant and equipment:
 
2021
   
2020
 
Land, buildings and improvements
 
$
1,699
   
$
1,669
 
Equipment and construction in progress
   
6,800
     
6,213
 
     
8,499
     
7,882
 
Less accumulated depreciation
   
(3,822
)
   
(3,321
)
   
$
4,677
   
$
4,561
 

Long-lived Assets

Long-lived assets, including property, plant and equipment and definite lived intangible assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment,” whenever facts and circumstances indicate that the carrying amount may not be recoverable.  Specifically, this process involves comparing an asset’s carrying value to the estimated undiscounted future cash flows the asset is expected to generate over its remaining life.  If this process were to result in the conclusion that the carrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations.

28

Goodwill

The changes in the carrying amount of goodwill by reportable segment are as follows:

 
Consumer Packaging
International
   
Consumer Packaging
North America
   
Engineered
Materials
   
Health, Hygiene
& Specialties
   
Total
 
Balance as of fiscal 2019
 
$
1,664
   
$
1,691
   
$
733
   
$
963
   
$
5,051
 
Foreign currency translation adjustment
   
32
     
     
     
(16
)
   
16
 
Final RPC purchase price valuation
   
303
     
(151
)
   
7
     
     
159
 
Held for sale
   
     
     
(40
)
   
(13
)
   
(53
)
Balance as of fiscal 2020
 
$
1,999
   
$
1,540
   
$
700
   
$
934
   
$
5,173
 
Foreign currency translation adjustment
   
36
     
1
     
(1
)
   
2
     
38
 
Dispositions
   
(19
)
   
     
     
     
(19
)
Balance as of fiscal 2021
 
$
2,016
   
$
1,541
   
$
699
   
$
936
   
$
5,192
 

In fiscal year 2021, the Company completed a qualitative analysis to evaluate impairment of goodwill and concluded that it was more likely than not that the fair value for each reporting unit exceeded the carrying amount.  We reached this conclusion based on the strong valuations within the packaging industry and operating results of our reporting units, in addition to leveraging the quantitative test performed in fiscal 2020.  As a result of our annual impairment evaluations the Company concluded that no impairment existed in fiscal 2021.

Deferred Financing Fees

Deferred financing fees are amortized to interest expense using the effective interest method over the lives of the respective debt agreements.  Pursuant to ASC 835-30, the Company presents $77 million and $85 million as of fiscal 2021 and fiscal 2020, respectively, of debt issuance and deferred financing costs on the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge.

Intangible Assets

The changes in the carrying amount of intangible assets are as follows:

   
Customer
Relationships
   
Trademarks
   
Other
Intangibles
   
Accumulated
Amortization
   
Total
 
Balance as of fiscal 2019
 
$
3,407
   
$
397
   
$
161
   
$
(1,185
)
 
$
2,780
 
Foreign currency translation adjustment
   
53
     
7
     
3
     
(2
)
   
61
 
Amortization expense
   
     
     
     
(300
)
   
(300
)
Final RPC purchase price valuation
   
(137
)
   
118
     
(25
)
   
     
(44
)
Netting of fully amortized intangibles
   
     
     
(10
)
   
10
     
 
Balance as of fiscal 2020
 
$
3,323
   
$
522
   
$
129
   
$
(1,477
)
 
$
2,497