Washington, D.C. 20549
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.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
See notes to consolidated financial statements.
See notes to consolidated financial statements.
See notes to consolidated financial statements.
See notes to consolidated financial statements.
[CONFORMED COMPLETE COPY, AS AMENDED THROUGH FEBRUARY 14, 2024]
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
BERRY GLOBAL GROUP, INC.
ARTICLE I
The name of the Corporation (hereinafter called the “Corporation”) is:
BERRY GLOBAL GROUP, INC.
ARTICLE II
The address of the Corporation’s registered office in the State of Delaware is c/o National Registered Agents,
Inc., 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent, State of Delaware 19904. The name of the Corporation’s registered agent at such address is National Registered Agents, Inc.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act and activity for which corporations may be
organized and incorporated under the General Corporation Law of the State of Delaware, as the same may be amended and supplemented.
ARTICLE IV
Section 1. Authorized Shares.
The total number of shares of all classes of stock that the Corporation shall have authority to issue is 450,000,000 shares, of which 400,000,000 shares shall be common stock, $0.01 par value (“Common Stock”) and 50,000,000 shares shall be preferred
stock, $0.01 par value (“Preferred Stock”).
Section 2. Common Stock.
Except as otherwise required by applicable law, all shares of Common Stock shall be identical in all respects and shall entitle the holders thereof to the same rights, subject to the same qualifications, limitations and restrictions. The terms of the
Common Stock set forth below shall be subject to the express terms of any series of Preferred Stock.
(a) Voting Rights.
Except as otherwise required by applicable law, the holders of Common Stock shall be entitled to one vote per share on all matters to be voted on by the Corporation’s stockholders. No stockholder of the Corporation shall be entitled to exercise any
right of cumulative voting.
(b) Dividends. The
holders of Common Stock shall be entitled to receive, as, if and when declared by the Board of Directors of the Corporation (the “Board”) out of the funds of the Corporation legally available therefor, such dividends (payable in cash, stock or
otherwise) as the Board may from time to time determine, payable to stockholders of record on such dates, not exceeding 60 days preceding the dividend payment dates, as shall be fixed for such purpose by the Board in advance of payment of each
particular dividend.
(c) Liquidation. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after the distribution or payment of any liabilities and accrued but unpaid dividends and any liquidation preferences on any outstanding Preferred Stock, the
remaining assets of the Corporation available for distribution to stockholders shall be distributed among and paid to the holders of Common Stock ratably in proportion to the number of shares of Common Stock held by them respectively.
Section 3. Preferred Stock.
The Board is authorized to provide for the issuance from time to time of shares of Preferred Stock in one or more series and, by filing a certificate (a “Preferred Stock Certificate of Designation”) pursuant to the applicable provisions of the
Delaware General Corporation Law (the “DGCL”), to establish from time to time the number of shares to be included in each such series, with such powers, designations, preferences and relative, participating, optional or other rights, if any, and
qualifications, limitations or restrictions thereof, if any, as are stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board (as such resolutions may be amended by a resolution or resolutions
subsequently adopted by the Board), and as are not stated and expressed in this Amended and Restated Certificate of Incorporation, including, but not limited to, determination of any of the following:
(a) the distinctive designation of the series, whether by number, letter or title, and the number of shares which
will constitute the series, which number may be increased or decreased (but not below the number of shares then outstanding and except to the extent otherwise provided in the applicable Preferred Stock Certificate of Designation) from time to time by
action of the Board;
(b) the dividend rate, if any, and the times of payment of dividends, if any, on the shares of the series, whether
such dividends will be cumulative and, if so, from what date or dates, and the relation which such dividends, if any, shall bear to the dividends payable on any other class or classes of stock;
(c) the price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed
at the option of the Corporation;
(d) whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be
applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof;
(e) the amounts payable on, and the preferences, if any, of the shares of the series in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;
(f) whether or not the shares of the series will be convertible into, or exchangeable for, any other shares of
stock of the Corporation or other securities and, if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
(g) whether or not the shares of the series will have priority over or be on a parity with or be junior to the
shares of any other series or class of stock in any respect, or will be entitled to the benefit of limitations restricting the issuance of shares of any other series or class of stock, restricting the payment of dividends on or the making of other
distributions in respect of shares of any other series or class of stock ranking junior to the shares of the series as to dividends or assets, or restricting the purchase or redemption of the shares of any such junior series or class, and the terms
of any such restriction;
(h) whether or not the shares of the series will have voting rights in addition to any voting rights provided by
law and, if so, the terms of such voting rights; and
(i) any other terms of the shares of the series.
ARTICLE V
Section 1. General Powers. Except as
otherwise provided by applicable law or this Amended and Restated Certificate of Incorporation, in each case as the same may be amended and supplemented, the business and affairs of the Corporation shall be managed by or under the direction of the
Board.
Section 2. Number of Directors.
The number of directors that shall constitute the whole Board shall be as determined from time to time by a majority of the Board; provided, that in no event
shall the total number of directors constituting the entire Board be less than three (3) nor more than fifteen (15). Election of directors need not be by written ballot.
Section 3. Classes of Directors;
Term of Office. (a) Except as provided in Section 3(b), the Board shall be and is divided into three classes, as nearly equal in number as possible, designated: Class I, Class II and Class III. In case of any increase or decrease, from
time to time, in the number of directors, the number of directors in each class shall be apportioned as nearly equal as possible. No decrease in the number of directors shall shorten the term of any incumbent director.
(b) The terms of the directors shall be as follows: (i) at the annual meeting of stockholders to be held in fiscal
2017, the Directors whose terms expire at that meeting or such directors’ successors shall be elected to hold office for a term expiring at the annual meeting of stockholders to be held in fiscal 2020; (ii) at the annual meeting of stockholders to be
held in fiscal 2018, the directors whose terms expire at that meeting or such directors’ successors shall be elected to hold office for a term expiring at the annual meeting of stockholders to be held in fiscal 2019; (iii) at the annual meeting of
stockholders to be held in fiscal 2019, the directors whose terms expire at that meeting or such directors’ successors shall be elected to hold office for a term expiring at the annual meeting of stockholders to be held in fiscal 2020; and (iv) at
the annual meeting of stockholders to be held in fiscal 2020 and at each annual meeting of stockholders thereafter, all directors shall be elected to hold office for a one year term expiring at the next annual meeting of stockholders. Notwithstanding
the provisions of Section 3(a), beginning at the annual meeting of stockholders to be held in fiscal 2020, the Board will not be divided into classes. Notwithstanding anything to the contrary in the foregoing, the term of each director shall continue
until the election and qualification of his or her successor and be subject to his or her earlier death, resignation or removal.
Section 4. Quorum.
Except as otherwise provided by law, this Amended and Restated Certificate of Incorporation or the Bylaws, a majority of the total number of directors then in office shall constitute a quorum for the transaction of business at any meeting of the
Board, but in no event shall less than one-third of the directors constitute a quorum. A majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice.
Section 5. Manner of Acting.
Every act or decision done or made by the majority of the directors present at a meeting at which a quorum is present shall be regarded as the act of the Board unless the act of a greater number is required by law, this Amended and Restated
Certificate of Incorporation or the Bylaws, in each case as the same may be amended and supplemented.
Section 6. Vacancies.
Any vacancy or newly created directorships in the Board, however occurring, shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, except as otherwise provided by law, and
shall not be filled by the stockholders of the Corporation. A director elected to fill a vacancy shall hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of a
successor and to such director’s earlier death, resignation or removal.
If any applicable provision of the DGCL expressly confers power on stockholders to fill such a directorship at a
special meeting of stockholders, such a directorship may be filled at such meeting only by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to cast in any annual election of directors or
class of directors. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor.
Section 7. Removal and Resignation of Directors.
At any time when the Board is divided into classes, directors may be removed only for cause, and only by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to cast in any annual election of
directors or class of directors. At any time when the Board is not divided into classes, directors may be removed with or without cause by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to
cast in any annual election of directors or class of directors. A director may resign at any time by filing his or her written resignation with the secretary of the Corporation.
Section 8. Voting Rights of
Preferred Stock. Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more
such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal, filling of vacancies and other features of such directorships shall be governed by the terms of this Amended and Restated
Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article unless expressly provided
by such terms.
ARTICLE VI
In furtherance and not in limitation of the rights, powers, privileges and discretionary authority granted or
conferred by statute, the Board is expressly authorized to:
(a) make, alter, amend or repeal the Bylaws, without any action on the part of the stockholders of the Corporation
and subject to any limitations that may be contained in such Bylaws, but any Bylaws adopted by the Board may be amended, modified or repealed by the stockholders entitled to vote thereon; and
(b) from time to time to determine whether and to what extent, and at what times and places, and under what
conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to inspection of stockholders; and, except as so determined or as expressly provided in this Amended and Restated Certificate of Incorporation or in
any Preferred Stock Certificate of Designation, no stockholder shall have any right to inspect any account, book or document of the Corporation other than such rights as may be conferred by applicable law.
ARTICLE VII
Any action required or permitted to be taken by the holders of the Common Stock of the Corporation must be effected
at a duly called annual or special meeting of such holders and may not be effected by any consent or consents in writing by stockholders.
ARTICLE VIII
Except as otherwise required by law and subject to the rights of the holders of any series of Preferred Stock,
special meetings of the stockholders of the Corporation may be called by (i) the Chairman of the Board, (ii) a majority of the members of the Board pursuant to a resolution approved by the Board, or (iii) the Secretary of the Corporation, following
his or her receipt of one or more written demands to call a special meeting of the stockholders from stockholders who Own (as such term is defined in the Bylaws), in the aggregate, at least 15% of the Common Stock of the Corporation that is
outstanding as of the record date for determining stockholders entitled to demand a special meeting fixed in accordance with the Bylaws and who otherwise comply with such other requirements and procedures set forth in the Bylaws, as now or
hereinafter in effect. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
ARTICLE IX
To the fullest extent permitted by the DGCL, a director or officer of the Corporation will not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director or officer except for liability (i) for any breach of the director’s or officer’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of law, (iii) of the director under Section 174 of the DGCL (or any successor provision thereto), or (iv) for any transaction from which the director or officer derived any
improper personal benefit. Any repeal or amendment or modification of this Article IX by the stockholders of the Corporation or by changes in applicable law, or the adoption of any provision of this Certificate of Incorporation inconsistent with this
Article IX, will, to the extent permitted by applicable law, be prospective only (except to the extent such amendment or change in applicable law permits the Corporation to provide a broader limitation on a retroactive basis than permitted prior
thereto), and will not adversely affect any limitation on the personal liability of any director or officer of the Corporation at the time of such repeal or amendment or modification or adoption of such inconsistent provision. If any provision of the
DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of our directors or officers will be eliminated or limited to the fullest extent permitted by the DGCL,
as so amended.
ARTICLE X
(a) Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this
Amended and Restated Certificate of Incorporation is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating
thereto exists or is brought), a director or officer of the Corporation or is or was at any such time serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as
a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the
Corporation (and any successor of the Corporation by merger or otherwise) to the fullest extent authorized by the DGCL as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or
modification, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense,
liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by such person in connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided,
however, that except as provided in paragraph (c) of this Article X, the Corporation shall indemnify any such person seeking indemnification in connection with
a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred in this Article X shall include the right, without the need for any action by the
Board, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty
(20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided,
however, that if the DGCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter,
the “undertaking”) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “final disposition”) that such director
or officer is not entitled to be indemnified for such expenses under this Article X or otherwise. The rights conferred upon indemnitees in this Article X shall be contract rights between the Corporation and each indemnitee to whom such rights are
extended that vest at the commencement of such person’s service to or at the request of the Corporation and all such rights shall continue as to an indemnitee who has ceased to be a director or officer of the Corporation or ceased to serve at the
Corporation’s request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of the indemnitee’s heirs, executors and
administrators.
(b) To obtain indemnification under this Article X, a claimant shall submit to the Corporation a written request, including therein or
therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for
indemnification pursuant to the first sentence of this paragraph (b), a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (i) if requested by the claimant, by Independent
Counsel (as hereinafter defined), or (ii) if no request is made by the claimant for a determination by Independent Counsel, (A) by the Board by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), (B) if a
quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the
claimant, or (C) if a quorum of Disinterested Directors so directs, by a majority of the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel
shall be selected by the Board unless there shall have occurred within two years prior to the date of the commencement of the action, suit or proceeding for which indemnification is claimed a “Change of Control” as defined in the Berry Plastics
Group, Inc. 2012 Long-Term Incentive Plan in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board. If it is so determined that the claimant is entitled to
indemnification, payment to the claimant shall be made within ten (10) days after such determination.
(c) If a claim under paragraph (a) of this Article X is not paid in full by the Corporation within thirty (30) days
after a written claim pursuant to paragraph (b) of this Article X has been received by the Corporation (except in the case of a claim for advancement of expenses, for which the applicable period is twenty (20) days), the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such
action that the claimant has not met the standard of conduct which makes it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed or that the claimant is not entitled to the requested advancement of expenses,
but (except where the required undertaking, if any, has not been tendered to the Corporation) the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board, Independent Counsel or
stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Corporation (including its Board, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
(d) If a determination shall have been made pursuant to paragraph (b) of this Article X that the claimant is
entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (c) of this Article X.
(e) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph
(c) of this Article X that the procedures and presumptions of this Article X are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Article X.
(f) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article X: (i) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Amended and Restated Certificate of Incorporation, Bylaws, agreement,
vote of stockholders or Disinterested Directors or otherwise and (ii) cannot be terminated by the Corporation, the Board or the stockholders of the Corporation with respect to a person’s service prior to the date of such termination. Any amendment,
modification, alteration or repeal of this Article X that in any way diminishes, limits, restricts, adversely affects or eliminates any right of an indemnitee or his or her successors to indemnification, advancement of expenses or otherwise shall be
prospective only and shall not, without the written consent of the indemnitee, in any way diminish, limit, restrict, adversely affect or eliminate any such right with respect to any actual or alleged state of facts, occurrence, action or omission
then or previously existing, or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such actual or alleged state of facts, occurrence, action or omission.
(g) The Corporation may maintain insurance, at its expense, to protect itself and any current or former director,
officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the DGCL. To the extent that the Corporation maintains any policy or policies providing such insurance, each such current or former director or officer, and each such agent or employee to which rights to
indemnification have been granted as provided in paragraph (h) of this Article X, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such current or former
director, officer, employee or agent.
(h) The Corporation may, to the extent authorized from time to time by the Board or the Chief Executive Officer, grant rights to
indemnification, and rights to be paid by the Corporation the expenses incurred in connection with any proceeding in advance of its final disposition, to any current or former employee or agent of the Corporation to the fullest extent of the
provisions of this Article X with respect to the indemnification and advancement of expenses of current or former directors and officers of the Corporation.
(i) If any provision or provisions of this Article X shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Article X (including, without limitation, each portion of any paragraph of this Article X containing any such provision held to be invalid, illegal
or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Article X (including, without limitation, each
such portion of any paragraph of this Article X containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
(j) For purposes of this Article X:
(i) “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in
respect of which indemnification is sought by the claimant.
(ii) “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is
experienced in matters of corporate law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an
action to determine the claimant’s rights under this Article X.
(k) Any notice, request or other communication required or permitted to be given to the Corporation under this
Article X shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and
shall be effective only upon receipt by the Secretary.
ARTICLE XI
Neither any contract or other transaction between the Corporation and any other corporation, partnership, limited
liability company, joint venture, firm, association, or other entity (an “Entity”), nor any other acts of the Corporation with relation to any other Entity will, in the absence of fraud, in any way be invalidated or otherwise affected by the fact
that any one or more of the directors or officers of the Corporation are pecuniarily or otherwise interested in, or are directors, officers, partners, or members of, such other Entity (such directors, officers, and Entities, each a “Related Person”).
Any Related Person may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation, provided, that the
fact that such person is a Related Person is disclosed or is known to the Board or a majority of directors present at any meeting of the Board at which action upon any such contract or transaction is taken; and any director of the Corporation who is
also a Related Person may be counted in determining the existence of a quorum at any meeting of the Board during which any such contract or transaction is authorized and may vote thereat to authorize any such contract or transaction, with like force
and effect as if such person were not a Related Person. Any director of the Corporation may vote upon any contract or any other transaction between the Corporation and any subsidiary or affiliated corporation without regard to the fact that such
person is also a director or officer of such subsidiary or affiliated corporation.
Any contract, transaction or act of the Corporation or of the directors that is ratified at any annual meeting of
the stockholders of the Corporation, or at any special meeting of the stockholders of the Corporation called for such purpose, will, insofar as permitted by applicable law, be as valid and as binding as though ratified by every stockholder of the
Corporation; provided, however, that any failure of the
stockholders to approve or ratify any such contract, transaction or act, when and if submitted, will not be deemed in any way to invalidate the same or deprive the Corporation, its directors, officers or employees, of its or their right to proceed
with such contract, transaction or act.
Any person or entity purchasing or otherwise acquiring any interest in any shares of capital stock of the
Corporation shall be deemed to have notice of and to have consented to the provisions of this Article XI.
ARTICLE XII
The Corporation elects not to be governed by Section 203 of the DGCL.
ARTICLE XIII
The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this
Article.
Notwithstanding anything to the contrary contained in this Amended and Restated Certificate of Incorporation, the
affirmative vote of the holders of at least a majority in voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to modify, amend or repeal, this
Amended and Restated Certificate of Incorporation.
ARTICLE XIV
If any provision or provisions of this Amended and Restated Certificate of Incorporation shall be held to be
invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended and Restated
Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to
be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each such
portion of any paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers,
employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
ARTICLE XV
(a) Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of
the State of Delaware shall be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of the Corporation, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any
director, officer, employee or agent of the Corporation to the Corporation or the Corporation's stockholders, (iii) any action, suit or proceeding asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action, suit or proceeding
asserting a claim governed by the internal affairs doctrine, in each such case subject to such Court of Chancery of the State of Delaware having personal jurisdiction over the indispensable parties named as defendants therein.
(b) Unless the Corporation consents in writing to the selection of an alternative forum, the federal district
courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, including all causes of actions asserted against any defendant to such
complaint.
(c) Any person or entity purchasing or otherwise acquiring any interest in any share of capital stock of the
Corporation shall be deemed to have notice of and consent to the provisions of this Article XV. This Article XV is intended to benefit and may be enforced by the Corporation, its officers and directors, the underwriters to any offering giving rise to
such complaint, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering. Notwithstanding the foregoing, the
provisions of this Article XV shall not apply to suits brought to enforce any liability or duty created by the Exchange Act of 1934, as amended, or any other claim for which the federal courts of the United States have exclusive jurisdiction.
(d) Any person or entity purchasing or otherwise acquiring any interest in any share of capital stock of the Corporation shall be deemed
to have notice of and consent to the provisions of this Article XV.
Financial Instruments and Fair Value Measurements (Tables)
|
6 Months Ended |
Mar. 30, 2024 |
|---|
| Financial Instruments and Fair Value Measurements [Abstract] |
|
| Fair Value of Derivatives and Location on Consolidated Balance Sheets |
The Company records the fair value positions of all derivative financial instruments on a net basis by counterparty for
which a master netting arrangement is utilized. Balances on a gross basis are as follows:
|
Derivative Instruments
|
Hedge Designation
|
Balance Sheet Location
|
|
March 30, 2024
|
|
|
September 30, 2023
|
|
|
Cross-currency swaps
|
Designated
|
Other current liabilities
|
|
|
104
|
|
|
|
66
|
|
|
Cross-currency swaps
|
Designated
|
Other long-term liabilities
|
|
|
58
|
|
|
|
19
|
|
|
Interest rate swaps
|
Designated
|
Other assets
|
|
|
2
|
|
|
|
36
|
|
|
Interest rate swaps
|
Designated
|
Other long-term liabilities
|
|
|
34
|
|
|
|
—
|
|
|
Interest rate swaps
|
Not designated
|
Other assets
|
|
|
—
|
|
|
|
8
|
|
|
Interest rate swaps
|
Not designated
|
Other long-term liabilities
|
|
|
81
|
|
|
|
104
|
|
|
| Effect of Derivatives on Consolidated Statements of Income |
The effect of the Company’s derivative instruments on the Consolidated Statements of Income is as follows:
| |
|
|
Quarterly Period Ended
|
|
|
Two Quarterly Periods Ended
|
|
|
Derivative Instruments
|
Statements of Income Location
|
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
Cross-currency swaps
|
Interest expense
|
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
|
$
|
(20
|
)
|
|
$
|
(21
|
)
|
|
Interest rate swaps
|
Interest expense
|
|
|
(21
|
)
|
|
|
(11
|
)
|
|
|
(42
|
)
|
|
|
(17
|
)
|
|
| Assets Measured at Fair Value on Non-recurring Basis |
Included in the following table are the major categories of assets measured at fair value on a non-recurring basis as of March 30, 2024 and September 30, 2023, along
with the impairment loss recognized on the fair value measurement during the period:
| |
|
As of March 30, 2024
|
|
| |
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Impairment
|
|
|
Indefinite-lived trademarks
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
248
|
|
|
$
|
—
|
|
|
Goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
4,988
|
|
|
|
4,988
|
|
|
|
—
|
|
|
Definite lived intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
1,353
|
|
|
|
1,353
|
|
|
|
—
|
|
|
Property, plant, and equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
4,576
|
|
|
|
4,576
|
|
|
|
4
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,165
|
|
|
$
|
11,165
|
|
|
$
|
4
|
|
| |
|
As of September 30, 2023
|
|
| |
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Impairment
|
|
|
Indefinite-lived trademarks
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
248
|
|
|
$
|
—
|
|
|
Goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
4,981
|
|
|
|
4,981
|
|
|
|
—
|
|
|
Definite lived intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
1,455
|
|
|
|
1,455
|
|
|
|
—
|
|
|
Property, plant, and equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
4,576
|
|
|
|
4,576
|
|
|
|
8
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,260
|
|
|
$
|
11,260
|
|
|
$
|
8
|
|
The Company’s financial instruments consist primarily of cash and cash equivalents,
long-term debt, interest rate and cross-currency swap agreements, and finance lease obligations. The book value of our marketable long-term indebtedness exceeded fair value by $221 million as of March 30, 2024.
The Company’s long-term debt fair values were determined using Level 2 inputs (substantially observable).
8. Income Taxes
On a year-to-date comparison to the statutory rate, the lower effective tax rate was positively impacted by share-based stock compensation, foreign rate
differential, and other discrete items.
9. Segment and Geographic Data
The Company’s operations are organized into four
reporting segments: Consumer Packaging International, Consumer Packaging North America, Health, Hygiene & Specialties, and Flexibles. The structure is designed to align
us with our customers, provide optimal service, drive future growth, and to facilitate synergies realization.
Selected information by reportable segment is presented in the following tables:
| |
|
Quarterly Period Ended
|
|
|
Two Quarterly Periods Ended
|
|
| |
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Packaging International
|
|
$
|
968
|
|
|
$
|
1,059
|
|
|
$
|
1,885
|
|
|
$
|
1,995
|
|
|
Consumer Packaging North America
|
|
|
751
|
|
|
|
774
|
|
|
|
1,451
|
|
|
|
1,537
|
|
|
Health, Hygiene & Specialties
|
|
|
646
|
|
|
|
677
|
|
|
|
1,248
|
|
|
|
1,340
|
|
|
Flexibles
|
|
|
711
|
|
|
|
778
|
|
|
|
1,345
|
|
|
|
1,476
|
|
|
Total net sales
|
|
$
|
3,076
|
|
|
$
|
3,288
|
|
|
$
|
5,929
|
|
|
$
|
6,348
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Packaging International
|
|
$
|
3
|
|
|
$
|
75
|
|
|
$
|
34
|
|
|
$
|
121
|
|
|
Consumer Packaging North America
|
|
|
77
|
|
|
|
93
|
|
|
|
140
|
|
|
|
164
|
|
|
Health, Hygiene & Specialties
|
|
|
33
|
|
|
|
34
|
|
|
|
30
|
|
|
|
68
|
|
|
Flexibles
|
|
|
95
|
|
|
|
99
|
|
|
|
161
|
|
|
|
158
|
|
|
Total operating income
|
|
$
|
208
|
|
|
$
|
301
|
|
|
$
|
365
|
|
|
$
|
511
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Packaging International
|
|
$
|
81
|
|
|
$
|
77
|
|
|
$
|
161
|
|
|
$
|
151
|
|
|
Consumer Packaging North America
|
|
|
57
|
|
|
|
54
|
|
|
|
114
|
|
|
|
105
|
|
|
Health, Hygiene & Specialties
|
|
|
45
|
|
|
|
44
|
|
|
|
91
|
|
|
|
88
|
|
|
Flexibles
|
|
|
31
|
|
|
|
25
|
|
|
|
62
|
|
|
|
55
|
|
|
Total depreciation and amortization
|
|
$
|
214
|
|
|
$
|
200
|
|
|
$
|
428
|
|
|
$
|
399
|
|
Selected information by geographical region is presented in the following tables:
| |
|
Quarterly Period Ended
|
|
|
Two Quarterly Periods Ended
|
|
| |
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States and Canada
|
|
$
|
1,672
|
|
|
$
|
1,751
|
|
|
$
|
3,233
|
|
|
$
|
3,447
|
|
|
Europe
|
|
|
1,125
|
|
|
|
1,237
|
|
|
|
2,136
|
|
|
|
2,286
|
|
|
Rest of world
|
|
|
279
|
|
|
|
300
|
|
|
|
560
|
|
|
|
615
|
|
|
Total net sales
|
|
$
|
3,076
|
|
|
$
|
3,288
|
|
|
$
|
5,929
|
|
|
$
|
6,348
|
|
10. Contingencies and Commitments
The Company is party to various legal proceedings involving routine claims which are incidental to its business. Although the Company’s legal and financial
liability with respect to such proceedings cannot be estimated with certainty, we believe that any ultimate liability would not be material to our financial position, results of operations or cash flows.
The Company has various purchase commitments for raw materials, supplies, and property and equipment incidental to the ordinary conduct of business.
11.
Basic and Diluted Earnings Per Share
Basic net income or earnings per share ("EPS") is calculated by dividing the net income attributable to common stockholders by the weighted-average number of
common shares outstanding during the period, without consideration for common stock equivalents.
Diluted EPS includes the effects of options and restricted stock units, if dilutive.
The following tables provide a reconciliation of the numerator and denominator of the basic and diluted EPS calculations:
| |
|
Quarterly Period Ended
|
|
|
Two Quarterly Periods Ended
|
|
|
(in millions, except per share amounts)
|
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
$
|
116
|
|
|
$
|
174
|
|
|
$
|
175
|
|
|
$
|
280
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic
|
|
|
115.6
|
|
|
|
120.7
|
|
|
|
115.6
|
|
|
|
122.2
|
|
|
Dilutive shares
|
|
|
2.6
|
|
|
|
1.8
|
|
|
|
2.9
|
|
|
|
1.1
|
|
|
Weighted average common and common equivalent shares outstanding - diluted
|
|
|
118.2
|
|
|
|
122.5
|
|
|
|
118.5
|
|
|
|
123.3
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.00
|
|
|
$
|
1.44
|
|
|
$
|
1.51
|
|
|
$
|
2.29
|
|
|
Diluted
|
|
$
|
0.98
|
|
|
$
|
1.42
|
|
|
$
|
1.48
|
|
|
$
|
2.27
|
|
2.2 million and 2.3 million shares were excluded from the diluted EPS calculation for the quarterly and two quarterly periods ended March 30, 2024 as their effect would be anti-dilutive.
1.2 million and 2.6 million shares
were excluded for the quarterly and two quarterly periods ended April 1, 2023.
12. Accumulated Other Comprehensive Loss
The components and activity of Accumulated other comprehensive loss are as follows:
|
Quarterly Period Ended
|
|
Currency
Translation
|
|
|
Defined Benefit
Pension and Retiree
Health Benefit Plans
|
|
|
Derivative
Instruments
|
|
|
Accumulated Other
Comprehensive Loss
|
|
|
Balance at December 30, 2023
|
|
$
|
(201
|
)
|
|
$
|
(84
|
)
|
|
$
|
11
|
|
|
$
|
(274
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
(70
|
)
|
|
|
—
|
|
|
|
27
|
|
|
|
(43
|
)
|
|
Net amount reclassified
|
|
|
—
|
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|
Balance at March 30, 2024
|
|
$
|
(271
|
)
|
|
$
|
(84
|
)
|
|
$
|
29
|
|
|
$
|
(326
|
)
|
| |
|
Currency
Translation
|
|
|
Defined Benefit
Pension and Retiree
Health Benefit Plans
|
|
|
Derivative
Instruments
|
|
|
Accumulated Other
Comprehensive Loss
|
|
|
Balance at December 31, 2022
|
|
$
|
(314
|
)
|
|
$
|
(32
|
)
|
|
$
|
83
|
|
|
$
|
(263
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
60
|
|
|
|
—
|
|
|
|
(21
|
)
|
|
|
39
|
|
|
Net amount reclassified
|
|
|
—
|
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
(10
|
)
|
|
Balance at April 1, 2023
|
|
$
|
(254
|
)
|
|
$
|
(32
|
)
|
|
$
|
52
|
|
|
$
|
(234
|
)
|
|
Two Quarterly Periods Ended
|
|
Currency
Translation
|
|
|
Defined Benefit
Pension and Retiree
Health Benefit Plans
|
|
|
Derivative
Instruments
|
|
|
Accumulated Other
Comprehensive Loss
|
|
|
Balance at September 30, 2023
|
|
$
|
(340
|
)
|
|
$
|
(84
|
)
|
|
$
|
88
|
|
|
$
|
(336
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
69
|
|
|
|
—
|
|
|
|
(38
|
)
|
|
|
31
|
|
|
Net amount reclassified
|
|
|
—
|
|
|
|
—
|
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
Balance at March 30, 2024
|
|
$
|
(271
|
)
|
|
$
|
(84
|
)
|
|
$
|
29
|
|
|
$
|
(326
|
)
|
| |
|
Currency
Translation
|
|
|
Defined Benefit
Pension and Retiree
Health Benefit Plans
|
|
|
Derivative
Instruments
|
|
|
Accumulated Other
Comprehensive Loss
|
|
|
Balance at October 1, 2022
|
|
$
|
(455
|
)
|
|
$
|
(32
|
)
|
|
$
|
84
|
|
|
$
|
(403
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
201
|
|
|
|
—
|
|
|
|
(16
|
)
|
|
|
185
|
|
|
Net amount reclassified
|
|
|
—
|
|
|
|
—
|
|
|
|
(16
|
)
|
|
|
(16
|
)
|
|
Balance at April 1, 2023
|
|
$
|
(254
|
)
|
|
$
|
(32
|
)
|
|
$
|
52
|
|
|
$
|
(234
|
)
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
Business. The Company’s operations
are organized into four operating segments: Consumer Packaging International, Consumer Packaging North America, Health, Hygiene & Specialties, and Flexibles. The structure is designed to align us with our customers, provide improved service, drive
future growth, and to facilitate synergies realization. The Consumer Packaging International segment primarily consists of closures and dispensing systems, pharmaceutical devices and packaging, bottles and canisters, and containers. The Consumer
Packaging North America segment primarily consists of containers and pails, foodservice, closures, bottles, prescription vials, and tubes. The Health, Hygiene & Specialties segment primarily consists of healthcare, hygiene, specialties, and
tapes. The Flexibles segment primarily consists of stretch and shrink films, converter films, institutional can liners, food and consumer films, retail bags, and agriculture films.
Raw Material Trends. Our primary raw material is polymer resin. In addition, we use other materials such as colorants, linerboard, and packaging materials 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. Changes in the price of raw
materials are generally passed on to customers through contractual price mechanisms over time, during contract renewals and other means.
Outlook. The Company is affected by general economic and industrial growth, raw material availability, cost inflation, supply chain disruptions, and general industrial production. Our business has both
geographic and end market diversity, which reduces the effect of any one of these factors on our overall performance. Our results are affected by our ability to pass through raw material and other cost changes to our customers, improve manufacturing
productivity, and adapt to volume changes of our customers. Despite global macro-economic challenges in the short-term attributed to continued rising inflation and general market softness, we continue to believe our underlying long-term fundamentals in
all divisions remain strong. For fiscal 2024, we project cash flow from operations between $1.35 to $1.45 billion and free cash flow between
$800 to $900 million. Projected fiscal 2024 free cash flow assumes $550 million of capital spending. For the calculation of free cash flow
and further information related to free cash flow as a non-GAAP financial measure, see “Liquidity and Capital Resources.”
Results of Operations
Comparison of the Quarterly Period Ended March 30, 2024 (the “Quarter”) and the Quarterly Period Ended April 1, 2023 (the “Prior Quarter”)
Business integration expenses consist of restructuring and impairment charges, divestiture related costs, and other business optimization
costs. Tables present dollars in millions.
|
Consolidated Overview
|
|
|
|
|
|
|
|
|
|
| |
|
Quarter
|
|
|
Prior Quarter
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
3,076
|
|
|
$
|
3,288
|
|
|
$
|
(212
|
)
|
|
|
(6
|
)%
|
|
Cost of goods sold
|
|
|
2,509
|
|
|
|
2,682
|
|
|
|
(173
|
)
|
|
|
(6
|
)%
|
|
Other operating expenses
|
|
|
359
|
|
|
|
305
|
|
|
|
54
|
|
|
|
18
|
%
|
|
Operating income
|
|
$
|
208
|
|
|
$
|
301
|
|
|
$
|
(93
|
)
|
|
|
(31
|
)%
|
Net Sales: The net sales decline is primarily attributed to decreased selling prices of $153 million due to the pass through of lower polymer costs and a 2% volume decline partially offset by a favorable impact from foreign
currency changes. The volume decline is primarily attributed to continued general market softness.
Cost of goods sold: The cost of goods sold decrease is
primarily attributed to lower raw material prices and the volume decline, partially offset by foreign currency changes.
Other operating expenses: The other operating expenses increase is primarily attributed to a $57 million loss from divestitures.
Operating Income: The operating income decrease is primarily attributed to a $15 million unfavorable impact from the volume decline, a $57 million loss from divestitures, a $15 million increase in depreciation and amortization expense and a $10 million unfavorable
impact from price cost spread.
|
Consumer Packaging International
|
|
|
|
|
|
|
|
|
|
| |
|
Quarter
|
|
|
Prior Quarter
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
968
|
|
|
$
|
1,059
|
|
|
$
|
(91
|
)
|
|
|
(9
|
)%
|
|
Operating income
|
|
$
|
3
|
|
|
$
|
75
|
|
|
$
|
(72
|
)
|
|
|
(96
|
)%
|
Net sales: The net sales decline in the Consumer Packaging International segment is primarily attributed to decreased selling prices of $75 million and a $20 million decline from divestures in the quarter.
Operating income: The operating income decrease is primarily attributed to a $57 million loss from divestitures, an increase in depreciation and amortization expense.
|
Consumer Packaging North America
|
|
|
|
|
|
|
|
|
|
| |
|
Quarter
|
|
|
Prior Quarter
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
751
|
|
|
$
|
774
|
|
|
$
|
(23
|
)
|
|
|
(3
|
)%
|
|
Operating income
|
|
$
|
77
|
|
|
$
|
93
|
|
|
$
|
(16
|
)
|
|
|
(17
|
)%
|
Net sales: The net sales decline in the Consumer Packaging North America segment is primarily attributed to a 3% volume decline from continued general market softness and decreased selling prices of $11 million, partially offset by acquisition sales of $12 million.
Operating income: The operating income decrease is primarily attributed to a $12 million unfavorable impact from price cost spread and an unfavorable impact from the volume decline partially offset by earnings
from acquisition.
|
Health, Hygiene & Specialties
|
|
|
|
|
|
|
|
|
|
| |
|
Quarter
|
|
|
Prior Quarter
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
646
|
|
|
$
|
677
|
|
|
$
|
(31
|
)
|
|
|
(5
|
)%
|
|
Operating income
|
|
$
|
33
|
|
|
$
|
34
|
|
|
$
|
(1
|
)
|
|
|
(3
|
)%
|
Net sales: The net sales decline in the Health, Hygiene
& Specialties segment is primarily attributed to decreased selling prices of $25 million and a 2% volume decline, partially offset by a favorable impact from foreign
currency changes.
Operating income: The operating income decrease is primarily attributed to a slightly unfavorable impact from price cost spread.
|
Flexibles
|
|
|
|
|
|
|
|
|
|
| |
|
Quarter
|
|
|
Prior Quarter
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
711
|
|
|
$
|
778
|
|
|
$
|
(67
|
)
|
|
|
(9
|
)%
|
|
Operating income
|
|
$
|
95
|
|
|
$
|
99
|
|
|
$
|
(4
|
)
|
|
|
(4
|
)%
|
Net sales: The net sales decline in the Flexibles
segment is primarily attributed to decreased selling prices of $41 million and a 4% volume decline in our North American transportation and shrink film markets.
Operating income: The operating income decrease is primarily attributed to the unfavorable impact from lower volumes and an increase in depreciation and amortization expense, partially offset by a favorable impact
from price cost spread.
Changes in Comprehensive Income
The $139 million decline in comprehensive income from the Prior Quarter is primarily attributed to a $130 million unfavorable change in currency translation and a $49 million favorable change in the fair
value of derivative instruments, net of tax, partially offset by a $58 million decline in net income. Currency translation changes 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 in the Quarter was primarily attributed to locations utilizing the Euro and British pound sterling as their
functional currency. As part of the overall risk management, the Company uses derivative instruments to (i) reduce our exposure to changes in interest rates attributed to the Company’s borrowings and (ii) reduce foreign currency exposure to
translation of certain foreign operations. The Company records changes to the fair value of these instruments in Accumulated other comprehensive loss. The change in fair value of these instruments in fiscal 2024 versus fiscal 2023 is primarily attributed to the change in the
forward interest and foreign exchange curves between measurement dates.
Comparison of the Two Quarterly Periods Ended March 30, 2024 (the “YTD”) and the Two Quarterly Periods Ended April 1, 2023 (the “Prior YTD”)
Business integration expenses consist of restructuring and impairment charges, divestiture related costs, and other business optimization
costs. Tables present dollars in millions.
|
Consolidated Overview
|
|
|
|
|
|
|
|
|
|
| |
|
YTD
|
|
|
Prior YTD
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
5,929
|
|
|
$
|
6,348
|
|
|
$
|
(419
|
)
|
|
|
(7
|
)%
|
|
Cost of goods sold
|
|
|
4,888
|
|
|
|
5,224
|
|
|
|
(336
|
)
|
|
|
(6
|
)%
|
|
Other operating expenses
|
|
|
676
|
|
|
|
613
|
|
|
|
63
|
|
|
|
10
|
%
|
|
Operating income
|
|
$
|
365
|
|
|
$
|
511
|
|
|
$
|
(146
|
)
|
|
|
(29
|
)%
|
Net Sales: The net sales decline is primarily attributed to decreased selling prices of $342 million due to the pass through of lower polymer costs and a 3% volume decline partially offset by a $92 million favorable impact from
foreign currency changes. The volume decline is primarily attributed to continued general market softness.
Cost of goods sold: The cost of goods sold decrease is
primarily attributed to lower raw material prices and the volume decline, partially offset by foreign currency changes.
Other operating expenses: The other operating expenses increase is primarily attributed to a $57 million loss from divestitures and costs associated with the announced spin-off and merger of our Health, Hygiene &
Specialties Global Nonwovens and Films business with Glatfelter.
Operating Income: The operating income decrease is primarily attributed to a $31 million unfavorable impact from the volume decline, a $57 million loss from divestitures, a $28 million increase in depreciation and amortization expense, a $27 million unfavorable
impact from price cost spread and a $13 million unfavorable impact from hyperinflation in our Argentinian subsidiary, partially offset by a $14 million favorable impact from
foreign currency changes.
|
Consumer Packaging International
|
|
|
|
|
|
|
|
|
|
| |
|
YTD
|
|
|
Prior YTD
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
1,885
|
|
|
$
|
1,995
|
|
|
$
|
(110
|
)
|
|
|
(6
|
)%
|
|
Operating income
|
|
$
|
34
|
|
|
$
|
121
|
|
|
$
|
(87
|
)
|
|
|
(72
|
)%
|
Net sales: The net sales decline in the Consumer Packaging International segment is primarily attributed to decreased selling prices of $106 million, a 3% volume decline and a $20 million decline from divestures in the YTD partially offset by a $55 million favorable impact from foreign currency changes.
Operating income: The operating income decrease is primarily attributed to a $57 million loss from divestitures, an $11 million increase in depreciation and amortization expense, an $11 million unfavorable impact
from price cost spread and unfavorable impact from the volume decline, partially offset by an $8 million favorable impact from foreign currency changes.
|
Consumer Packaging North America
|
|
|
|
|
|
|
|
|
|
| |
|
YTD
|
|
|
Prior YTD
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
1,451
|
|
|
$
|
1,537
|
|
|
$
|
(86
|
)
|
|
|
(6
|
)%
|
|
Operating income
|
|
$
|
140
|
|
|
$
|
164
|
|
|
$
|
(24
|
)
|
|
|
(15
|
)%
|
Net sales: The net sales decline in the Consumer Packaging North America segment is primarily attributed to decreased selling prices of $57 million and a 3% volume decline from general market softness, partially offset
by acquisition sales of $23 million.
Operating income: The operating income decrease is primarily attributed to a $14 million unfavorable impact from price cost spread, an $11 million unfavorable impact from the volume decline and an increase in
depreciation and amortization expense, partially offset by earnings from acquisition.
|
Health, Hygiene & Specialties
|
|
|
|
|
|
|
|
|
|
| |
|
YTD
|
|
|
Prior YTD
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
1,248
|
|
|
$
|
1,340
|
|
|
$
|
(92
|
)
|
|
|
(7
|
)%
|
|
Operating income
|
|
$
|
30
|
|
|
$
|
68
|
|
|
$
|
(38
|
)
|
|
|
(56
|
)%
|
Net sales: The net sales decline in the Health, Hygiene
& Specialties segment is primarily attributed to decreased selling prices of $89 million and a 2% volume decline from softness in our hygiene and specialty markets, partially
offset by a $25 million favorable impact from foreign currency changes.
Operating income: The operating income decrease is primarily attributed to a $16 million unfavorable impact from price cost spread, a $13 million unfavorable impact from hyperinflation in our Argentinian
subsidiary, and a $9 million increase in business optimization expense related to both plant rationalizations and costs associated with the announced spin-off and merger of our Health, Hygiene & Specialties Global Nonwovens and Films business with
Glatfelter.
|
Flexibles
|
|
|
|
|
|
|
|
|
|
| |
|
YTD
|
|
|
Prior YTD
|
|
|
$ Change
|
|
|
% Change
|
|
|
Net sales
|
|
$
|
1,345
|
|
|
$
|
1,476
|
|
|
$
|
(131
|
)
|
|
|
(9
|
)%
|
|
Operating income
|
|
$
|
161
|
|
|
$
|
158
|
|
|
$
|
3
|
|
|
|
2
|
%
|
Net sales: The net sales decline in the Flexibles
segment is primarily attributed to decreased selling prices of $90 million and a 4% volume decline, partially offset by a favorable impact from foreign currency changes.
Operating income: The operating income increase is primarily attributed to a $14 million favorable impact from price cost spread partially offset by a $10 million unfavorable impact from lower volumes.
Changes in Comprehensive Income
The $264 million decline in comprehensive income from the Prior YTD was primarily attributed to a $132 million unfavorable change in currency translation, a $27 million unfavorable change in the fair
value of derivative instruments, net of tax, and a $105 million decline in net income. Currency translation changes 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 in the YTD was primarily attributed to locations utilizing the Euro and British pound sterling as their functional
currency. As part of the overall risk management, the Company uses derivative instruments to (i) reduce our exposure to changes in interest rates attributed to the Company’s borrowings and (ii) reduce foreign currency exposure to translation of
certain foreign operations. The Company records changes to the fair value of these instruments in Accumulated other comprehensive loss. The change in fair value of these instruments in fiscal 2024 versus fiscal 2023 is primarily attributed to the change in the forward
interest and foreign exchange curves between measurement dates.
Liquidity and Capital Resources
Senior Secured Credit Facility
We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic
location of our liquidity needs, and (iii) the cost to access international cash balances. At the end of the Quarter, the Company had no
outstanding balance on its $1,000 million asset-based revolving line of credit that matures in June 2028. The Company was in compliance with all
covenants at the end of the Quarter.
Cash Flows
Net cash from operating activities decreased $168
million from the Prior YTD primarily attributed to higher working capital.
Net cash used in investing activities decreased
$187 million from the Prior YTD primarily attributed to the acquisition of Pro-Western in the Prior YTD compared to the proceeds from business divestitures in the YTD.
Net cash used in financing activities decreased $16 million from the Prior YTD primarily attributed to higher repayments of long-term debt in the YTD, partially offset by lower share repurchases.
Dividend Payments
The Company declared and paid a cash dividend of $0.2755 per share during each of the first fiscal quarter ended December 30, 2023, and the second fiscal
quarter ended March 30, 2024.
Share Repurchases
YTD fiscal 2024, the Company repurchased
approximately 1.5 million shares for $88
million. Authorized share repurchases of $353 million remain available to the Company.
Free Cash Flow
Our consolidated free cash flow for the YTD and Prior YTD are summarized as follows:
| |
|
March 30, 2024
|
|
|
April 1, 2023
|
|
|
Cash flow from operating activities
|
|
$
|
—
|
|
|
$
|
168
|
|
|
Additions to property, plant and equipment, net
|
|
|
(333
|
)
|
|
|
(385
|
)
|
|
Free cash flow
|
|
$
|
(333
|
)
|
|
$
|
(217
|
)
|
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 on a comparative basis. Free cash flow is not a financial measure presented in accordance with generally accepted
accounting principles ("GAAP") and should not be considered as an alternative to any other measure determined in accordance with GAAP.
Liquidity Outlook
At March 30, 2024, our cash balance was $494 million, which was primarily located outside the U.S. We believe our existing U.S. based cash and cash flow from U.S. operations, together with
available borrowings under our senior secured credit facilities, will be adequate to meet our 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.
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 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 Issuer’s term loans and revolving credit facilities. The guarantor subsidiaries guarantee our term loans and are co-borrowers
under our revolving credit facility.
Presented below is summarized financial information for the Parent, Issuer and guarantor subsidiaries on a combined basis, after intercompany transactions have
been eliminated.
| |
|
Two Quarterly Periods Ended
|
|
| |
|
March 30, 2024
|
|
|
Net sales
|
|
$
|
3,120
|
|
|
Gross profit
|
|
|
625
|
|
|
Earnings from continuing operations
|
|
|
185
|
|
|
Net income
|
|
$
|
185
|
|
Includes $2 million of income associated with
intercompany activity with non-guarantor subsidiaries.
| |
|
March 30, 2024
|
|
|
September 30, 2023
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
1,411
|
|
|
$
|
1,975
|
|
|
Noncurrent assets
|
|
|
5,805
|
|
|
|
5,997
|
|
| |
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
976
|
|
|
$
|
1,363
|
|
|
Intercompany payable
|
|
|
874
|
|
|
|
754
|
|
|
Noncurrent liabilities
|
|
|
9,953
|
|
|
|
10,271
|
|
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We are exposed to market risk from changes in interest rates primarily through our senior secured credit facilities and accounts receivable supply chain finance
factoring programs. Our senior secured credit facilities are comprised of (i) $2.3 billion term loans and (ii) a $1.0 billion 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 SOFR. The applicable margin for SOFR 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 period end, the SOFR rate of approximately 5.34% was applicable to the term loans. A change of 0.25% on these floating interest rate exposures would increase our annual interest expense by approximately $1 million.
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. (See Note 7.)
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 $2 million unfavorable
impact on our Net income for the two quarterly periods ended March 30, 2024. (See Note 7.)
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Under applicable Securities and Exchange Commission regulations, management of a reporting company, with the participation of the principal executive officer
and principal financial officer, must periodically evaluate the company’s “disclosure controls and procedures,” which are defined generally as controls and other procedures of a reporting company designed to ensure that information required to be
disclosed by the reporting company in its periodic reports filed with the commission (such as this Form 10-Q) is recorded, processed, summarized, and reported on a timely basis.
The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness
of the design and operation of the disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our
disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.
(b) Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting that occurred during the Quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
There have been no material changes in legal proceedings from the items disclosed in our most recent Form 10-K filed with the Securities and Exchange
Commission.
Item 1A. Risk Factors
Before investing in our securities, we recommend that investors carefully consider the risks described in our most recent Form 10-K and subsequent periodic
reports filed with the Securities and Exchange Commission, including those under the heading “Risk Factors” and other information contained in this Quarterly Report. Realization of any of these risks could have a material adverse effect on our
business, financial condition, cash flows and results of operations.
Additionally, we caution readers that the list of risk factors discussed in our
most recent Form 10-K and subsequent periodic reports 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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Repurchases of Equity Securities
The following table summarizes the Company's repurchases of its common stock during the Quarterly Period ended March 30, 2024.
|
Fiscal Period
|
|
Total Number of
Shares Purchased
|
|
|
Average Price
Paid Per Share
|
|
|
Total Number of Shares
Purchased as Part of Publicly
Announced Programs
|
|
|
Dollar Value of Shares that
May Yet be Purchased Under
the Program (in millions) (a)
|
|
|
January
|
|
|
63,682
|
|
|
$
|
65.97
|
|
|
|
63,682
|
|
|
$
|
431
|
|
|
February
|
|
|
672,644
|
|
|
|
58.27
|
|
|
|
672,644
|
|
|
|
391
|
|
|
March
|
|
|
635,800
|
|
|
|
59.49
|
|
|
|
635,800
|
|
|
|
353
|
|
|
Total
|
|
|
1,372,126
|
|
|
$
|
59.19
|
|
|
|
1,372,126
|
|
|
$
|
353
|
|
| (a) |
All open market purchases during the quarter were made under the 2023 authorization from our board of directors.
|
Item 5. Other Information
Rule 10b5-1 Plan Elections
No officers or directors, as defined in Rule 16a-1(f), adopted,
modified and/or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as defined in Regulation S-K Item
408, during the second quarter of fiscal 2024.
Item 6. Exhibits
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
RMT Transaction Agreement, dated February 6, 2024, by and among Berry Global Group, Inc., Treasure Holdco, Inc., Glatfelter Corporation, Treasure Merger
Sub I, Inc. and Treasure Merger Sub II, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 12, 2024).
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Separation and Distribution Agreement, dated February 6, 2024, by and among Berry Global Group, Inc., Treasure Holdco, Inc. and Glatfelter Corporation
(incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on February 12, 2024).
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Amended and Restated Certificate of Incorporation of Berry Global Group, Inc., as amended through February 14, 2024.
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Amended and Restated Bylaws of Berry Global Group, Inc., effective February 14, 2024 (incorporated by reference to Exhibit 3.2 to the Company’s Current
Report on Form 8-K filed on February 15, 2024).
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Indenture, among Berry Global, Inc., certain guarantors party thereto, U.S. Bank Trust Company, National Association, as Trustee and Collateral Agent,
relating to the 5.650% First Priority Senior Secured Notes due 2034, dated January 17, 2024 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 17, 2024).
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Registration Rights Agreement, by and among Berry Global, Inc., Berry Global Group, Inc., each subsidiary of Berry Global, Inc. identified therein, and
Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, on behalf of themselves and as representatives of the initial purchasers, relating to the 5.650% First Priority Senior Secured Notes due 2034, dated
January 17, 2024 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on January 17, 2024).
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Tax Matters Agreement, dated February 6, 2024, by and among Berry Global Group, Inc., Treasure Holdco, Inc. and Glatfelter Corporation (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 12, 2024).
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Employee Matters Agreement, dated February 6, 2024, by and among Berry Global Group, Inc., Treasure Holdco, Inc. and Glatfelter Corporation
(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 12, 2024).
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Subsidiary Guarantors.
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Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
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Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
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Section 1350 Certification of the Chief Executive Officer.
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Section 1350 Certification of the Chief Financial Officer.
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101.INS
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Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline
XBRL document).
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101.SCH
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Inline XBRL Taxonomy Extension Schema Document.
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document.
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document.
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document.
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104
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Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101).
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Certain schedules (or similar attachments) have been omitted pursuant to Item 601(a)(5) or Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish copies of
such schedules (or similar attachments) to the U.S. Securities and Exchange Commission upon request.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
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Berry Global Group, Inc.
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May 9, 2024
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By:
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/s/ Mark W. Miles
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Mark W. Miles
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Chief Financial Officer
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