~~Goodwill~~

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

Engineered Materials
Health, Hygiene
& Specialties
Consumer Packaging Total
Balance as of September 30, 2017 $ 545 $ 819 $ 1,411 $ 2,775
Acquisitions, net 4 — — 4
Foreign currency translation adjustment — (2 ) — (2 )
Balance as of December 30, 2017 $ 549 $ 817 $ 1,411 $ 2,777

11.	Contingencies and Commitments

The Company is party to various legal proceedings involving routine claims which are incidental to its business. Although the Company's legal and financial liability with respect to such proceedings cannot be estimated with certainty, management believes that any ultimate liability would not be material to its financial statements.

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

12.	Basic and Diluted Net Income Per Share

Basic net income per share is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net income per share is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method and the if-converted method. For purposes of this calculation, stock options are considered to be common stock equivalents and are only included in the calculation of diluted net income per share when their effect is dilutive. There were no shares excluded from the calculations as the effect of their conversion into shares of our common stock would be antidilutive.

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

	Quarterly Period Ended				Quarterly Period Ended				Two Quarterly Periods Ended
(in millions, except per share amounts)	December 30, 2017		December 31, 2016		March 31, 2018		April 1, 2017		March 31, 2018		April 1, 2017
Numerator
Consolidated net income	$	163	$	51
Net income					$	90	$	72	$	253	$	123
Denominator
Weighted average common shares outstanding - basic		131.0		122.0		131.3		127.7		131.0		124.9
Dilutive shares		5.0		5.8		4.5		5.5		4.9		5.8
Weighted average common and common equivalent shares outstanding - diluted		136.0		127.8		135.8		133.2		135.9		130.7

Per common share income
Basic	$	1.24	$	0.42	$	0.69	$	0.56	$	1.93	$	0.98
Diluted	$	1.20	$	0.40	$	0.66	$	0.54	$	1.86	$	0.94

13. Accumulated Other Comprehensive Loss

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

	Currency Translation			Defined Benefit Pension and Retiree Health Benefit Plans			Interest Rate Swaps			Accumulated Other Comprehensive Loss			Currency Translation			Defined Benefit Pension and Retiree Health Benefit Plans			Interest Rate Swaps			Accumulated Other Comprehensive Loss
Balance at September 30, 2017	$	(48	)	$	(16	)	$	(4	)	$	(68	)	$	(48	)	$	(16	)	$	(4	)	$	(68	)
Other comprehensive income (loss) before reclassifications		(24	)		(1	)		14			(11	)		(17	)		(1	)		35			17
Net amount reclassified from accumulated other comprehensive income (loss)		—			—			3			3			—			—			6			6
Provision for income taxes		—			—			(4	)		(4	)		—			—			(11	)		(11	)
Balance at December 30, 2017	$	(72	)	$	(17	)	$	9		$	(80	)
Balance at March 31, 2018													$	(65	)	$	(17	)	$	26		$	(56	)

Currency Translation Defined Benefit Pension and Retiree Health Benefit Plans Interest Rate Swaps
Accumulated Other
Comprehensive
Loss

Balance at October 1, 2016 $ (82 ) $ (44 ) $ (22 ) $ (148 )
Other comprehensive income (loss) before reclassifications (45 ) — 12 (33 )
Net amount reclassified from accumulated other comprehensive income (loss) — — 5 5
Provision for income taxes — — (6 ) (6 )
Balance at December 31, 2016 $ (127 ) $ (44 ) $ (11 ) $ (182 )

	Currency Translation			Defined Benefit Pension and Retiree Health Benefit Plans			Interest Rate Swaps			Accumulated Other Comprehensive Loss
Balance at October 1, 2016	$	(82	)	$	(44	)	$	(22	)	$	(148	)
Other comprehensive income (loss) before reclassifications		(24	)		13			25			14
Net amount reclassified from accumulated other comprehensive income (loss)		—			—			8			8
Provision for income taxes		—			—			(13	)		(13	)
Balance at April 1, 2017	$	(106	)	$	(31	)	$	(2	)	$	(139	)

14.	Guarantor and Non-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 Note, "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 condensed consolidating financial information for the Parent, Issuer, guarantor subsidiaries and non-guarantor subsidiaries. The Issuer and guarantor financial information includes all of our domestic operating subsidiaries; our non-guarantor subsidiaries include our foreign subsidiaries, certain immaterial domestic subsidiaries and the unrestricted subsidiaries under the Issuer's indentures. The Parent uses the equity method to account for its ownership in the Issuer in the Condensed Consolidating Supplemental Financial Statements. The Issuer uses the equity method to account for its ownership in the guarantor and non-guarantor subsidiaries. All consolidating entries are included in the eliminations column along with the elimination of intercompany balances.

Condensed Supplemental Consolidated Balance Sheet

	December 30, 2017													March 31, 2018
	Parent		Issuer		Guarantor Subsidiaries		Non— Guarantor Subsidiaries		Eliminations			Total		Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Current assets		—		126		1,127		728		—			1,981	$	—	$	198	$	1,260	$	803	$	—		$	2,261
Intercompany receivable		334		2,286		—		—		(2,620	)		—		422		2,177		—		—		(2,599	)		—
Property, plant, and equipment, net		—		73		1,564		726		—			2,363		—		74		1,733		811		—			2,618
Other assets		1,152		5,401		4,555		528		(7,560	)		4,076		1,246		5,997		4,699		521		(8,235	)		4,228
Total assets	$	1,486	$	7,886	$	7,246	$	1,982	$	(10,180	)	$	8,420	$	1,668	$	8,446	$	7,692	$	2,135	$	(10,834	)	$	9,107

Current liabilities		24		279		560		291		—			1,154	$	24	$	252	$	544	$	342	$	—		$	1,162
Intercompany payable		—		—		2,571		49		(2,620	)		—		—		—		2,549		50		(2,599	)		—
Other long-term liabilities		288		5,649		90		65		—			6,092		338		6,142		93		66		—			6,639
Stockholders' equity		1,174		1,958		4,025		1,577		(7,560	)		1,174		1,306		2,052		4,506		1,677		(8,235	)		1,306
Total liabilities and stockholders' equity	$	1,486	$	7,886	$	7,246	$	1,982	$	(10,180	)	$	8,420	$	1,668	$	8,446	$	7,692	$	2,135	$	(10,834	)	$	9,107

September 30, 2017
Parent Issuer
Guarantor
Subsidiaries

Non—
Guarantor
Subsidiaries
Eliminations Total
Current assets — 116 1,113 775 — 2,004
Intercompany receivable 512 2,217 — — (2,729 ) —
Property, plant and equipment, net — 80 1,564 722 — 2,366
Other assets 992 5,335 4,583 533 (7,337 ) 4,106
Total assets $ 1,504 $ 7,748 $ 7,260 $ 2,030 $ (10,066 ) $ 8,476

Current liabilities 36 243 537 318 — 1,134
Intercompany payable — — 2,667 62 (2,729 ) —
Other long-term liabilities 453 5,707 99 68 — 6,327
Stockholders' equity 1,015 1,798 3,957 1,582 (7,337 ) 1,015
Total liabilities and stockholders' equity $ 1,504 $ 7,748 $ 7,260 $ 2,030 $ (10,066 ) $ 8,476

	September 30, 2017
	Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Current assets	$	—	$	116	$	1,113	$	775	$	—		$	2,004
Intercompany receivable		512		2,217		—		—		(2,729	)		—
Property, plant and equipment, net		—		80		1,564		722		—			2,366
Other assets		992		5,335		4,583		533		(7,337	)		4,106
Total assets	$	1,504	$	7,748	$	7,260	$	2,030	$	(10,066	)	$	8,476

Current liabilities	$	36	$	243	$	537	$	318	$	—		$	1,134
Intercompany payable		—		—		2,667		62		(2,729	)		—
Other long-term liabilities		453		5,707		99		68		—			6,327
Stockholders' equity		1,015		1,798		3,957		1,582		(7,337	)		1,015
Total liabilities and stockholders' equity	$	1,504	$	7,748	$	7,260	$	2,030	$	(10,066	)	$	8,476

Condensed Supplemental Consolidated Statements of ~~Operations~~Income

	Quarterly Period Ended March 31, 2018
	Parent			Issuer			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Total
Net sales	$	—		$	139		$	1,349	$	479	$	—		$	1,967
Cost of goods sold		—			95			1,103		398		—			1,596
Selling, general and administrative		—			18			83		29		—			130
Amortization of intangibles		—			—			31		7		—			38
Restructuring and impairment charges		—			—			9		6		—			15
Operating income		—			26			123		39		—			188
Other expense (income), net		—			—			—		5		—			5
Interest expense, net		—			4			45		17		—			66
Equity in net income of subsidiaries		(117	)		(87	)		—		—		204			—
Income before income taxes		117			109			78		17		(204	)		117
Income tax expense		27			19			1		7		(27	)		27
Net income	$	90		$	90		$	77	$	10	$	(177	)	$	90
Comprehensive net income	$	90		$	94		$	77	$	30	$	(177	)	$	114

Quarterly Period Ended December 30, 2017
Parent Issuer
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Total
Net sales $ — $ 138 $ 1,225 $ 413 $ — $ 1,776
Cost of goods sold — 106 989 352 — 1,447
Selling, general and administrative — 12 80 25 — 117
Amortization of intangibles — — 31 7 — 38
Restructuring and impairment charges — — 7 4 — 11
Operating income — 20 118 25 — 163
Other expense (income), net — 5 7 (3 ) — 9
Interest expense, net — 5 43 14 — 62
Equity in net income of subsidiaries (92 ) (72 ) — — 164 —
Income before income taxes 92 82 68 14 (164 ) 92
Income tax expense (71 ) (81 ) — 10 71 (71 )
Consolidated net income $ 163 $ 163 $ 68 $ 4 $ (235 ) $ 163
Comprehensive net income $ 163 $ 160 $ 68 $ (5 ) $ (235 ) $ 151

Consolidating Statement of Cash Flows
Cash Flow from Operating Activities $ — $ 35 $ 139 $ (21 ) $ — $ 153
Cash Flow from Investing Activities
Additions to property, plant, and equipment — (3 ) (61 ) (30 ) — (94 )
Proceeds from sale of assets — — — 3 — 3
(Contributions) distributions to/from subsidiaries (4 ) 4 — — — —
Intercompany advances (repayments) — 69 — — (69 ) —
Net cash from investing activities (4 ) 70 (61 ) (27 ) (69 ) (91 )

Cash Flow from Financing Activities
Repayments on long-term borrowings — (106 ) (2 ) — — (108 )
Proceeds from issuance of common stock 4 — — — — 4
Payment of tax receivable agreement (37 ) — — — — (37 )
Changes in intercompany balances 37 — (86 ) (20 ) 69 —
Net cash from financing activities 4 (106 ) (88 ) (20 ) 69 (141 )

Effect of exchange rate changes on cash — — — 1 — 1

Net change in cash — (1 ) (10 ) (67 ) — (78 )
Cash and cash equivalents at beginning of period — 18 12 276 — 306
Cash and cash equivalents at end of period $ — $ 17 $ 2 $ 209 $ — $ 228

	Quarterly Period Ended April 1, 2017
	Parent			Issuer			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Total
Net sales	$	—		$	146		$	1,252	$	408		$	—		$	1,806
Cost of goods sold		—			117			1,012		324			—			1,453
Selling, general and administrative		—			(11	)		87		56			—			132
Amortization of intangibles		—			1			31		8			—			40
Restructuring and impairment charges		—			—			6		—			—			6
Operating income		—			39			116		20			—			175
Other expense (income), net		—			10			2		8			—			20
Interest expense, net		—			6			46		15			—			67
Equity in net income of subsidiaries		(88	)		(51	)		—		—			139			—
Income before income taxes		88			74			68		(3	)		(139	)		88
Income tax expense		16			2			—		14			(16	)		16
Net income	$	72		$	72		$	68	$	(17	)	$	(123	)	$	72
Comprehensive net income	$	72		$	81		$	68	$	17		$	(123	)	$	115

Quarterly Period Ended December 31, 2016
Parent Issuer
Guarantor
Subsidiaries

Non—
Guarantor
Subsidiaries
Eliminations Total
Net sales $ — $ 143 $ 979 $ 380 $ — $ 1,502
Cost of goods sold — 116 789 301 — 1,206
Selling, general and administrative — 42 75 (4 ) — 113
Amortization of intangibles — 2 25 6 — 33
Restructuring and impairment charges — — 4 — — 4
Operating income (loss) — (17 ) 86 77 — 146
Other income, net — 4 — (5 ) — (1 )
Interest expense, net — 6 45 17 — 68
Equity in net income of subsidiaries (79 ) (92 ) — — 171 —
Income before income taxes 79 65 41 65 (171 ) 79
Income tax expense 28 14 — 14 (28 ) 28
Consolidated net income $ 51 $ 51 $ 41 $ 51 $ (143 ) $ 51
Comprehensive net income $ 51 $ 62 $ 41 $ 6 $ (143 ) $ 17

																			Two Quarterly Periods Ended March 31, 2018
																			Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Net sales																			$	—		$	277		$	2,574		$	892		$	—		$	3,743
Cost of goods sold																				—			201			2,092			750			—			3,043
Selling, general and administrative																				—			30			163			54			—			247
Amortization of intangibles																				—			—			62			14			—			76
Restructuring and impairment charges																				—			—			16			10			—			26
Operating income																				—			46			241			64			—			351
Other expense (income), net																				—			5			7			2			—			14
Interest expense, net																				—			9			88			31			—			128
Equity in net income of subsidiaries																				(209	)		(159	)		—			—			368			—
Income before income taxes																				209			191			146			31			(368	)		209
Income tax expense																				(44	)		(62	)		1			17			44			(44	)
Net income																			$	253		$	253		$	145		$	14		$	(412	)	$	253
Comprehensive net income																			$	253		$	254		$	145		$	25		$	(412	)	$	265
																																		��
Consolidating Statement of Cash Flows
Cash Flow from Operating Activities	$	—		$	(19	)	$	120		$	42		$	—		$	143		$	—		$	14		$	258		$	13		$	—		$	285
Cash Flow from Investing Activities
Additions to property, plant, and equipment		—			(2	)		(50	)		(13	)		—			(65	)		—			(5	)		(137	)		(42	)		—			(184	)
Proceeds from sale of assets		—			1			1			—			—			2			—			—			—			3			—			3
(Contributions) distributions to/from subsidiaries		(5	)		5			—			—			—			—
Intercompany advances (repayments)		—			39			—			—			(39	)		—
Contributions (to)/from subsidiaries																				(12	)		(462	)		—			—			474			—
Intercompany																				—			137			—			—			(137	)		—
Acquisition of business, net of cash acquired																				—			—			(404	)		(70	)		—			(474	)
Other investing activities, net		—			(1	)		—			—			—			(1	)		—			—			—			—			—			—
Net cash from investing activities		(5	)		42			(49	)		(13	)		(39	)		(64	)		(12	)		(330	)		(541	)		(109	)		337			(655	)

Cash Flow from Financing Activities
Proceeds from long-term debt																				—			497			—			—			—			497
Repayments on long-term borrowings		—			(9	)		(1	)		—			—			(10	)		—			(113	)		(4	)		—			—			(117	)
Proceeds from issuance of common stock		5			—			—			—			—			5			12			—			—			—			—			12
Payment of tax receivable agreement		(60	)		—			—			—			—			(60	)		(37	)		—			—			—			—			(37	)
Contribution from Parent																				—			—			404			70			(474	)		—
Debt financing costs																				—			(1	)		—			—			—			(1	)
Changes in intercompany balances		60			—			(67	)		(32	)		39			—			37			—			(116	)		(58	)		137			—
Net cash from financing activities		5			(9	)		(68	)		(32	)		39			(65	)		12			383			284			12			(337	)		354

Effect of exchange rate changes on cash		—			—			—			(6	)		—			(6	)		—			—			—			1			—			1

Net change in cash		—			14			3			(9	)		—			8			—			67			1			(83	)		—			(15	)
Cash and cash equivalents at beginning of period		—			102			5			216			—			323			—			18			12			276			—			306
Cash and cash equivalents at end of period	$	—		$	116		$	8		$	207		$	—		$	331		$	—		$	85		$	13		$	193		$	—		$	291

~~15. Subsequent Events~~

In January 2018, the Company issued $500 million aggregate principal amount of 4.50% second priority senior secured notes due 2026 (the "Notes") through a private placement offering. The net proceeds from the Notes were used to fund the acquisition of Clopay Plastic Products Company, Inc. ("Clopay").

In February 2018, the Company acquired Clopay for a purchase price of $475 million, which is preliminary and subject to adjustment. Clopay manufactures printed breathable films and is an innovator in the development of elastic films and laminates with product offerings uniquely designed for applications used in a number of markets including: hygiene, healthcare, construction and industrial protective apparel. Clopay will be operated within the Health, Hygiene and Specialties segment.

	Two Quarterly Periods Ended April 1, 2017
	Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Net sales	$	—		$	289		$	2,231		$	788		$	—		$	3,308
Cost of goods sold		—			233			1,801			625			—			2,659
Selling, general and administrative		—			31			162			52			—			245
Amortization of intangibles		—			3			56			14			—			73
Restructuring and impairment charges		—			—			10			—			—			10
Operating income		—			22			202			97			—			321
Other expense (income), net		—			14			2			3			—			19
Interest expense, net		—			12			91			32			—			135
Equity in net income of subsidiaries		(167	)		(143	)		—			—			310			—
Income before income taxes		167			139			109			62			(310	)		167
Income tax expense		44			16			—			28			(44	)		44
Net income	$	123		$	123		$	109		$	34		$	(266	)	$	123
Comprehensive net income	$	123		$	143		$	109		$	23		$	(266	)	$	132

Consolidating Statement of Cash Flows
Cash Flow from Operating Activities	$	—		$	24		$	212		$	97		$	—		$	333
Cash Flow from Investing Activities
Additions to property, plant, and equipment		—			(8	)		(97	)		(30	)		—			(135	)
Proceeds from sale of assets		—			1			3			—			—			4
Contributions (to)/from subsidiaries		(15	)		(443	)		—			—			458			—
Intercompany		—			94			—			—			(94	)		—
Acquisition of business, net of cash acquired		—			—			(458	)		—			—			(458	)
Other investing activities, net		—			(1	)		—			—			—			(1	)
Net cash from investing activities		(15	)		(357	)		(552	)		(30	)		364			(590	)

Cash Flow from Financing Activities
Proceeds from long-term debt		—			595			—			—			—			595
Repayments on long-term borrowings		—			(314	)		(2	)		(1	)		—			(317	)
Proceeds from issuance of common stock		15			—			—			—			—			15
Payment of tax receivable agreement		(60	)		—			—			—			—			(60	)
Debt financing costs		—			(4	)		—			—			—			(4	)
Contribution from parent		—			—			458			—			(458	)		—
Changes in intercompany balances		60			—			(114	)		(40	)		94			—
Net cash from financing activities		15			277			342			(41	)		(364	)		229

Effect of exchange rate changes on cash		—			—			—			(2	)		—			(2	)

Net change in cash		—			(56	)		2			24			—			(30	)
Cash and cash equivalents at beginning of period		—			102			5			216			—			323
Cash and cash equivalents at end of period	$	—		$	46		$	7		$	240		$	—		$	293

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

This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in our most recent Form 10-K in the section titled "Risk Factors" and other risk factors identified from time to time in our periodic filings with the Securities and Exchange Commission. As a result, our actual results may differ materially from those contained in any forward-looking statements. The forward-looking statements referenced within this report should be read with the explanation of the qualifications and limitations included herein. Fiscal 2017 and fiscal 2018 are fifty-two week periods.

Executive Summary

Business. The Company's operations are organized into three operating segments: Engineered Materials, Health, Hygiene & Specialties, and Consumer Packaging. The structure is designed to align us with our customers, provide optimal service, and drive future growth in a cost efficient manner. The Engineered Materials segment primarily consists of tapes and adhesives, polyethylene based film products, can liners, printed films, and specialty coated, and laminated products. The Health, Hygiene & Specialties segment primarily consists of nonwoven specialty materials and films used in hygiene, healthcare, infection prevention, personal care, industrial, construction and filtration applications. The Consumer Packaging segment primarily consists of containers, foodservice items, closures, overcaps, bottles, prescription containers, and tubes.

Acquisitions. Our acquisition strategy is focused on improving our long-term financial performance, enhancing our market positions, and expanding our existing and complementary product lines. We seek to obtain businesses for attractive post-synergy multiples, creating value for our stockholders from synergy realization, leveraging the acquired products across our customer base, creating new platforms for future growth, and assuming best practices from the businesses we acquire. While the expected benefits on earnings is estimated at the commencement of each transaction, once the execution of the plan and integration occur, we are generally unable to accurately estimate or track what the ultimate effects have been due to system integrations and movements of activities to multiple facilities. As historical business combinations and restructuring plans have not allowed us to accurately separate realized synergies compared to what was initially identified, we attempt to measure the synergy realization based on the overall segment profitability post integration.

AEP Industries Inc.

In January 2017, the Company acquired AEP Industries Inc. ("AEP") for a purchase price of $791 million, net of cash acquired. A portion of the purchase price consisted of issuing 6.4 million of Berry common shares which were valued at $324 million at the time of closing. AEP manufactures and markets an extensive and diverse line of polyethylene and polyvinyl chloride flexible plastic packaging products ~~with~~for consumer, industrial, and agricultural applications. The acquired business is operated in our Engineered Materials segment. To finance the purchase, the Company entered into an incremental assumption agreement to increase the commitments under the Company's existing term loan credit agreement by $500 million due 2024. The Company expects annual cost synergies of approximately $80 million from the AEP transaction with full realization expected in fiscal 2018.

Adchem Corp.

In June 2017, the Company acquired Adchem Corp.'s ("Adchem") tapes business for a purchase price of $49 million. Adchem is a leader in the development of high performance adhesive tape systems for the automotive, construction, electronics, graphic arts, medical and general tape markets. The acquired business is operated in our Engineered Materials segment. To finance the purchase, the Company used existing liquidity.

Clopay Plastic Products Company, Inc.

In February 2018, the Company acquired Clopay Plastic Products Company, Inc. ("Clopay") for a purchase price of ~~$475~~$474 million, which is preliminary and subject to adjustment. Clopay ~~manufactures printed breathable films and~~ is an innovator in the development of printed breathable films, elastic films, and laminates with product offerings uniquely designed for applications used in a number of markets including: hygiene, healthcare, construction and industrial protective apparel. Clopay ~~will be~~is operated ~~within the~~in our Health, Hygiene ~~and~~& Specialties segment. The Company expects to realize annual cost synergies of approximately ~~$20 million from the completion of the Clopay transaction.~~$40 million. To finance the purchase, the Company used the proceeds from the $500 million ~~Notes~~second priority senior secured notes (see ~~footnote 15)~~Note 7).

Raw Material Trends. Our primary raw material is plastic resin consisting primarily of ~~polypropylene~~polyethylene and ~~polyethylene.~~polypropylene. Plastic resins are subject to price fluctuations, including those arising from supply shortages and changes in the prices of natural gas, crude oil and other petrochemical intermediates from which resins are produced. The three month simple average price per pound, as published by U.S. market indexes, ~~was~~were as follows:

1819

Polyethylene Butene Film Polypropylene
2018 2017 2016 2018 2017 2016
1st quarter $ .87 $ .75 $ .69 $ .84 $ .69 $ .70
2nd quarter — .77 .66 — .80 .75
3rd quarter — .79 .73 — .74 .71
4th quarter — .81 .75 — .75 .71

	Polyethylene Butene Film				Polypropylene
Fiscal quarter	2018		2017		2018		2017
1st quarter	$	.68	$	.56	$	.71	$	.56
2nd quarter		.69		.58		.75		.67
3rd quarter		—		.60		—		.61
4th quarter		—		.62		—		.62

Due to differences in the timing of passing through resin cost changes to our customers on escalator/de-escalator programs, segments are negatively impacted in the short term when plastic resin costs increase and are positively impacted when plastic resin costs decrease. This timing lag in passing through raw material cost changes could affect our results as plastic resin costs fluctuate.

Outlook. The Company is impacted by general economic and industrial growth, plastic resin availability and affordability, 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 cost changes to our customers, improve manufacturing productivity and adapt to volume changes of our customers. We believe there are long term growth opportunities within the health, pharmaceuticals, personal care and food packaging markets existing in developing countries, where expected per capita consumption increases should result in organic market growth. In addition, while we continue to believe that long term dynamics of the resin markets will be an advantage to Berry, the short term challenges to regional transportation systems and higher raw material prices in part as a result of resin supply disruptions, as well as macroeconomic pressures in South America ~~could create~~has created short-term headwinds ~~for early~~in the first half of fiscal 2018. The Company is anticipating a benefit in the second half of the year as a result of partial relief from these inflationary pressures and improvement in price/cost spread. For fiscal 2018, including the impact from the recent Clopay transaction, we project cash flow from operations and ~~adjusted~~Adjusted free cash flow of $1,007 million and $630 million, respectively. Our fiscal 2018 projections assume negative $40 million in working capital due to the recent raw material inflation, $340 million of capital spending and cash interest costs of $250 million. Within our ~~adjusted~~Adjusted free cash flow guidance, we are also assuming cash taxes to be ~~$160~~$130 million, including the $37 million payment made in the first quarter under the Company's tax receivable agreement and an estimated $50 million of cash tax savings related to the Tax Cuts and Jobs Act, ~~( the "Tax Act"),~~ along with other cash uses of $50 million related to items such as acquisition integration expenses and costs to achieve synergies. For the definition of Adjusted free cash flow and further information related to Adjusted free cash flow as a non-GAAP financial measure, see "Liquidity and Capital Resources."

Results of Operations

Comparison of the Quarterly Period Ended ~~December 30, 2017~~March 31, 2018 (the "Quarter") and the Quarterly Period Ended ~~December 31, 2016~~April 1, 2017 (the "Prior Quarter")

Acquisition ~~(businesses acquired in the last twelve months)~~(AEP, Adchem, Clopay) sales and operating income disclosed within this section represents the results from acquisitions for the current period. Business integration expenses consist of restructuring and impairment charges, acquisition related costs, and other business optimization costs. Tables present dollars in millions.

Consolidated Overview
	Quarter				Prior Quarter				$ Change			% Change			Quarter				Prior Quarter				$ Change			% Change
Net sales		$	1,776			$	1,502			$	274		18	%		$	1,967			$	1,806			$	161		9	%
Operating income		$	163			$	146			$	17		12	%		$	188			$	175			$	13		7	%
Operating income percentage of net sales			9	%			10	%									10	%			10	%

~~The net~~Net sales ~~increase of $274~~increased by $161 million from the Prior Quarter is primarily attributed to acquisition net sales of ~~$267~~$106 million, ~~an $18~~selling price increases of $59 million ~~favorable impact from currency translation, and increases in selling prices~~ due to the pass through of higher resin ~~prices. These~~prices, and a $34 million favorable impact from foreign currency changes, partially offset by a 2% base volume decline.

The operating income increase ~~are~~of $13 million from the Prior Quarter was primarily attributed to acquisition operating income of $20 million, a $13 million decrease in selling, general and administrative expense due to synergies and cost reductions, a $7 million decrease in depreciation and amortization, and a $5 million favorable impact from foreign currency changes, partially offset by a $22 million negative impact from under recovery of higher cost of goods sold, and a $7 million negative impact from lower base volumes, and a $3 million increase in business integration expenses.

Engineered Materials
	Quarter				Prior Quarter				$ Change			% Change
Net sales		$	655			$	620			$	35		6	%
Operating income		$	94			$	67			$	27		40	%
Percentage of net sales			14	%			11	%

Net sales in the Engineered Materials segment increased by $35 million from the Prior Quarter primarily attributed to acquisition net sales of $34 million, selling price increases of $19 million due to the pass through of higher resin prices, and a $3 million favorable impact from foreign currency changes, partially offset by a 3% base volume decline.

The operating income increase of $27 million from the Prior Quarter was primarily attributed to acquisition operating income of $15 million, a $4 million decrease in selling, general and administrative expense, an $8 million decrease in business integration expenses, and a $3 million decrease in depreciation and amortization, partially offset by a $4 negative million impact from lower base volumes.

Health, Hygiene & Specialties
	Quarter				Prior Quarter				$ Change				% Change
Net sales		$	706			$	597			$	109			18	%
Operating income		$	41			$	52			$	(11	)		(21	%)
Percentage of net sales			6	%			9	%

Net sales in the Health, Hygiene & Specialties segment increased $109 million from the Prior Quarter primarily attributed to acquisition net sales of $72 million, selling price increases of $15 million due to the pass through of higher resin prices, and a $31 million favorable impact from foreign currency changes, partially offset by a 1% base volume decline.

The operating income ~~increase~~decrease of ~~$17~~$11 million from the Prior Quarter is primarily attributed to acquisition operating income of $26 million, and an $11 million decrease in selling, general, and administrative expenses from cost reductions, and a $7 million decrease in depreciation and amortization. These increases are partially offset by an $18 million unfavorable impact from under recovery of higher cost of goods sold, a $5 million increase in business integration and restructuring costs, and a $4 million unfavorable impact from the volume decline.

Engineered Materials
Quarter Prior Quarter $ Change % Change
Net sales $ 648 $ 383 $ 265 69 %
Operating income $ 88 $ 53 $ 35 66 %
Percentage of net sales 14 % 14 %

Net sales in the Engineered Materials segment increased by $265 million from Prior Quarter primarily attributed to acquisition net sales of $267 million and a $6 million increase in selling prices due to the pass through of higher resin prices, partially offset by a 2% base volume decline.

The operating income increase of $35 million from Prior Quarter is primarily attributed to acquisition operating income of $26 million, a $4 million favorable impact from improvement in price cost spread, and a $4 million decrease in depreciation and amortization.

Health, Hygiene & Specialties
Quarter Prior Quarter $ Change % Change
Net sales $ 577 $ 570 $ 7 1 %
Operating income $ 37 $ 59 $ (22 ) (37 %)
Percentage of net sales 6 % 10 %

~~Net sales in the Health, Hygiene & Specialties segment increased by $7 million from Prior Quarter~~was primarily attributed to a ~~$16 million favorable impact from currency translation, partially offset by a 1% base volume decline.~~

~~The operating income decrease of $22 million from Prior Quarter is primarily attributed to a $17~~$13 million negative impact from under recovery of higher cost of goods sold, ~~related to inflation~~ and ~~market pressure in South America, a $6~~an $11 million increase in business integration ~~and restructuring costs, and a slight increase in depreciation and amortization expense,~~expenses related to the Clopay acquisition, partially offset by acquisition operating income of $5 million, a $5 million favorable impact from foreign currency changes, and a $4 million decrease in selling, general, and administrative ~~expenses.~~expense.

Consumer Packaging
	Quarter				Prior Quarter				$ Change			% Change			Quarter				Prior Quarter				$ Change				% Change
Net sales		$	551			$	549			$	2		0	%		$	606			$	589			$	17			3	%
Operating income		$	38			$	34			$	4		12	%		$	53			$	56			$	(3	)		(5	)%
Percentage of net sales			7	%			6	%									9	%			10	%

Net sales in the Consumer Packaging segment increased by $2$17 million from the Prior Quarter primarily attributed to ~~an $8 million impact from~~ selling price increases of $25 million due to the pass through of higher resin prices, partially offset by a 1% base volume decline.

The operating income ~~increase~~decrease of $4$3 million from the Prior Quarter iswas primarily attributed to a $5$10 million ~~decrease in depreciation and amortization expense and~~negative impact from under recovery of higher cost of goods sold, partially offset by a $5 million decrease in selling, general and administrative expense ~~partially offset by~~and a $5$3 million ~~unfavorable impact from under recovery of higher cost of goods sold.~~decrease in depreciation and amortization.

Other expense (income), net
Quarter Prior Quarter $ Change % Change
Other expense (income), net $ 9 $ (1 ) $ 10 1,000 %

Other expense, net
	Quarter			Prior Quarter			$ Change				% Change
Other expense, net		$	5		$	20		$	(15	)		75	%

The other expense ~~(income), net increase~~decrease of ~~$10~~$15 million from the Prior Quarter iswas primarily attributed to ~~a $4~~non-recurring prior year charges of $19 million, ~~tax receivable agreement revaluation as a result of tax reform, a $3 million loss on asset disposal in the Quarter and~~partially offset by unfavorable foreign currency changes related to the remeasurement of non-operating intercompany balances.

Interest expense, net
	Quarter			Prior Quarter			$ Change				% Change			Quarter			Prior Quarter			$ Change				% Change
Interest expense, net		$	62		$	68		$	(6	)		(9	%)		$	66		$	67		$	(1	)		(1	%)

The interest expense decrease of $6$1 million from the Prior Quarter iswas primarily attributed to ~~lower~~reduced interest rates ~~on our term loans as a result of~~resulting from the term loan modifications, ~~and reduced indebtedness.~~partially offset by additional expense attributed to the $500 million 4.5% second priority senior secured notes (see Note 7).

Income tax expense (benefit)
Quarter Prior Quarter $ Change % Change
Income tax expense (benefit) $ (71 ) $ 28 $ (99 ) (354 %)

Income tax expense
	Quarter			Prior Quarter			$ Change			% Change
Income tax expense		$	27		$	16		$	11		69	%

The income tax expense ~~(benefit) decrease~~increase of ~~$99~~$11 million from the Prior Quarter iswas primarily attributed to ~~the $95 million provisional transition benefit recorded in the Quarter~~increased net income before income taxes, partially offset by a lower statutory rate as a result of the recent U.S. tax legislation more fully described in ~~footnote~~Note 9. ~~After exclusion of the transitional benefit, the~~The effective tax rate was ~~26%~~23% for the Quarter and was positively impacted by 3% from the share-based compensation excess tax benefit deduction, 1% from research and development credits, and a 2% benefit from the domestic manufacturing deduction. These favorable items were partially offset by increases of 3% from U.S. state income taxes, 2% from foreign valuation allowance, ~~1% from higher tax rates in foreign jurisdictions,~~ and other discrete items.

2021

Changes in Comprehensive Income ~~(Loss)~~

The ~~$134~~$1 million ~~improvement~~decline in ~~Comprehensive~~comprehensive income ~~(loss)~~ from the Prior Quarter iswas primarily attributed to a ~~$112~~$14 million ~~improvement in Net income and a $21 million favorable change~~decrease in currency translation, which is primarily related to lower exposure related to our euro denominated locations as a result of the cross-currency swap, and a $13 million change due to a non-cash defined benefit pension plan settlement in the Prior Quarter, partially offset by an $18 million improvement in net income and an $8 million change in interest rate hedges, net of ~~a negative $15 million related to the cross-currency swap.~~tax. Currency translation gains and losses are primarily related to non-U.S. subsidiaries with a functional currency other than U.S. ~~Dollars~~dollars whereby assets and liabilities are translated from the respective functional currency into U.S. ~~Dollars~~dollars using period-end exchange rates. The change in currency translation in the Quarter was primarily attributed to locations utilizing the euro, Brazilian real, and renminbi as the functional currency. As part of the overall risk management, the Company uses derivative instruments to reduce exposure to ~~(i)~~ changes in interest rates attributed to the Company's floating-rate borrowings and ~~(ii) currency risk related~~records changes to ~~net investments in foreign subsidiaries. The change in~~the fair value of these instruments ~~is included~~ in Accumulated other comprehensive ~~loss.~~income (loss). The ~~$2 million~~ favorable change in fair value of these instruments in the Quarter versus Prior Quarter is primarily attributed to an increase in the forward interest curve between measurement dates.

Comparison of the Two Quarterly Periods Ended March 31, 2018 (the "YTD") and the Two Quarterly Periods Ended April 1, 2017 (the "Prior YTD")

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

Consolidated Overview
	YTD				Prior YTD				$ Change			% Change
Net sales		$	3,743			$	3,308			$	435		13	%
Operating income		$	351			$	321			$	30		9	%
Operating income percentage of net sales			9	%			10	%

The net sales increase of $435 million from the Prior YTD was primarily attributed to acquisition net sales of $372 million, selling price increases of $63 million due to the pass through of higher resin prices, and a $52 million favorable impact from foreign currency changes, partially offset by a 2% base volume decline.

The operating income increase of $30 million from the Prior YTD was primarily attributed to acquisition operating income of $45 million, a $24 million decrease in selling, general and administrative expense related to synergies and cost reductions, a $14 million decrease in depreciation and amortization, and a $7 million favorable impact from foreign currency changes. These improvements were partially offset by a $43 million negative impact from under recovery of higher cost of goods sold, a $9 million increase in business integration, and an $8 million impact from lower base volumes.

Engineered Materials
	YTD				Prior YTD				$ Change			% Change
Net sales		$	1,303			$	1,003			$	300		30	%
Operating income		$	182			$	120			$	62		52	%
Operating income percentage of net sales			14	%			12	%

Net sales in the Engineered Materials segment increased by $300 million from the Prior YTD primarily attributed to acquisition net sales of $300 million, selling price increases of $25 million due to the pass through of higher resin prices, and a $5 million favorable impact from foreign currency changes, partially offset by a 3% base volume decline.

The operating income increase of $62 million from the Prior YTD was primarily attributed to acquisition operating income of $40 million, a $9 million decrease in depreciation and amortization, an $8 million decrease in business integration expenses, a $5 million improvement in our product mix and price/cost spread, and a $5 million decrease in selling, general and administrative expense, partially offset by a negative $6 million impact from lower base volumes.

Health, Hygiene & Specialties
	YTD				Prior YTD				$ Change				% Change
Net sales		$	1,283			$	1,167			$	116			10	%
Operating income		$	78			$	111			$	(33	)		(30	%)
Operating income percentage of net sales			6	%			10	%

Net sales in the Health, Hygiene & Specialties segment increased by $116 million from the Prior YTD primarily attributed to acquisition net sales of $72 million, selling price increases of $12 million due to the pass through of higher resin prices, and a $47 million favorable impact from foreign currency changes, partially offset by a 1% base volume decline.

The operating income decrease of $33 million from the Prior YTD was primarily attributed to a $30 million negative impact from under recovery of higher cost of goods sold and market pressure in South America, and a $19 million increase in business integration expenses primarily attributed to the Clopay acquisition, partially offset by a $9 million decrease in selling, general and administrative expense, a $6 million favorable impact from foreign currency changes, and acquisition operating income of $5 million.

Consumer Packaging
	YTD				Prior YTD				$ Change			% Change
Net sales		$	1,157			$	1,138			$	19		2	%
Operating income		$	91			$	90			$	1		1	%
Operating income percentage of net sales			8	%			8	%

Net sales in the Consumer Packaging segment increased by $19 million from the Prior YTD primarily attributed to selling price increases of $26 million due to the pass through of higher resin prices, partially offset by a 1% base volume decline.

The operating income increase of $1 million from the Prior YTD was primarily attributed to a $10 million decrease in selling, general and administrative expense related to synergies from cost reductions, and an $8 million decrease in depreciation and amortization, partially offset by a negative $18 million impact from under recovery of higher cost of goods sold.

Other expense, net
	YTD			Prior YTD			$ Change				% Change
Other expense, net		$	14		$	19		$	(5	)		26	%

The other expense decrease of $5 million from the Prior YTD was primarily attributed to non-recurring prior year charges of $19 million, partially offset by unfavorable foreign currency changes related to the remeasurement of non-operating intercompany balances and a $4 million tax receivable agreement revaluation as a result of tax reform.

Interest expense, net
	YTD			Prior YTD			$ Change				% Change
Interest expense, net		$	128		$	135		$	(7	)		(5	%)

The interest expense decrease of $7 million from the Prior YTD was primarily attributed to reduced interest rates resulting from term loan modifications, partially offset by additional expense attributed to the $500 million 4.5% second priority senior secured notes (see Note 7).

Income tax expense
	YTD				Prior YTD			$ Change				% Change
Income tax expense		$	(44	)		$	44		$	(88	)		(200	%)

The income tax expense decrease of $88 million from the Prior YTD was primarily attributed to the $95 million provisional transition benefit recorded in the Company's first fiscal Quarter as a result of the recent U.S. tax legislation more fully described in Note 9. After the exclusion of the tax reform benefit, our year-to-date effective tax rate was 24% and was positively impacted by 3% from the share-based compensation excess tax benefit, 1% from research and development credits, and a 2% benefit from the domestic manufacturing deduction. These favorable items were partially offset by increases of 3% from U.S. state taxes, 2% from foreign valuation allowance, and other discrete items.

Changes in Comprehensive Income

The $133 million improvement in comprehensive income from the Prior YTD was primarily attributed to a $130 million improvement in net income, a $10 million favorable change in the fair value of interest rate hedges, net of tax, and a $7 million favorable change in currency translation, partially offset by a $14 million change due to a non-cash defined benefit pension plan settlement in the Prior YTD. Currency translation gains and losses are primarily related to non-U.S. subsidiaries with a functional currency other than U.S. dollars whereby assets and liabilities are translated from the respective functional currency into U.S. dollars using period-end exchange rates. The change in currency translation in the YTD was primarily attributed to locations utilizing the euro, Brazilian real, and renminbi as the 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 favorable change in fair value of these instruments in the YTD versus Prior YTD is primarily attributed to an increase in the forward interest curve 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. We have a $750 million asset-based revolving line of credit that matures in May 2020. At the end of the Quarter, the Company had no outstanding balance on the revolving credit facility. The Company was in compliance with all covenants at the end of the Quarter (see ~~footnote 7 to the Notes to the Consolidated Financial Statements incorporated herein)~~Note 7).

Cash Flows

Net cash from operating activities ~~increased $10~~decreased $48 million from the Prior ~~Quarter~~YTD primarily attributed to an increase in working capital due to higher raw material costs, partially offset by improved net income before depreciation, amortization and the net impact of the recently announced U.S. tax ~~legislation, partially offset by an increase in working capital due to higher raw material costs.~~legislation.

Net cash from investing activities ~~increased $27~~decreased $65 million from the Prior ~~Quarter~~YTD primarily attributed to increased capital expenditures and acquisition spending compared to the Prior ~~Quarter.~~YTD.

Net cash from financing activities increased ~~$76~~$125 million from the Prior ~~Quarter~~YTD primarily attributed to increased long-term borrowings, net of repayments, ~~on our term loans partially offset by~~and lower tax receivable agreement payments.

Adjusted Free Cash Flow

We define "Adjusted free cash flow" as cash flow from operating activities less net additions to property, plant and equipment and payments of the tax receivable agreement.

Based on our definition, our YTD consolidated ~~adjusted~~Adjusted free cash flow is summarized as follows:

	Quarterly Period Ended
	December 30, 2017			December 31, 2016			March 31, 2018			April 1, 2017
Cash flow from operating activities	$	153		$	143		$	285		$	333
Additions to property, plant and equipment, net		(91	)		(63	)		(181	)		(131	)
Payments of tax receivable agreement		(37	)		(60	)		(37	)		(60	)
Adjusted free cash flow	$	25		$	20		$	67		$	142

Adjusted free cash flow, as presented in this document, is a supplemental financial measure that is not required by, or presented in accordance with, generally accepted accounting principles in the U.S. ("GAAP"). Adjusted free cash flow is not a GAAP financial measure and should not be considered as an alternative to cash flow from operating activities or any other measure determined in accordance with GAAP. We use Adjusted free cash flow as a measure of liquidity because it assists us in assessing our company's ability to fund its growth through its generation of cash, and believe it is useful to investors for such purpose. In addition, Adjusted free cash flow and similar measures are widely used by investors, securities analysts and other interested parties in our industry to measure a company's liquidity. Adjusted free cash flow may be calculated differently by other companies, including other companies in our industry, limiting its usefulness as a comparative measure.

Liquidity Outlook

At ~~December 30, 2017,~~March 31, 2018, our cash balance was ~~$228~~$291 million, of which approximately ~~90%~~70% was located outside the U.S. We believe our existing U.S. based cash and cash flow from U.S. operations, together with available borrowings under our senior secured credit facilities, will be adequate to meet our liquidity needs over the next twelve months. We do not expect our free cash flow to be sufficient to cover all long-term debt obligations and intend to refinance these obligations prior to maturity. However, we cannot predict our future results of operations and our ability to meet our obligations involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of our most recent Form 10-K filed with the Securities and Exchange Commission and in this Form 10-Q, if any.

2224

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Sensitivity

We are exposed to market risk from changes in interest rates primarily through our senior secured credit facilities. At ~~December 30, 2017,~~March 31, 2018, our senior secured credit facilities are comprised of (i) $3.9 billion term loans and (ii) a $750 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 1.75%, and the margin for each of the term loans ~~range from~~is 2.00% ~~to 2.25%~~ per annum with a 0% LIBOR floor. At ~~December 30, 2017,~~March 31, 2018, the LIBOR rate of approximately ~~1.56%~~1.88% was applicable to the term loans. A 0.25% change in LIBOR would increase our annual interest expense by $4 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 ~~December 30, 2017,~~March 31, 2018, 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 2.00%, with an effective date in May 2017 and expiration in May 2022, (ii) a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 1.5190% with an effective date in March 2017 and expiration in June 2019, (iii) a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 2.0987% with an effective date in February 2017 and expiration in September 2021.

Foreign Currency Exchange Rates

As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, Brazilian real, Argentine peso, Chinese ~~yuan,~~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 a negative $6$5 million impact on our annual Net ~~Income.~~income.

In November 2017, the Company entered into certain cross-currency swap agreements with a notional amount of 250 million euro to effectively convert a portion of our fixed-rate U.S. dollar denominated term loans, including the monthly interest payments, to fixed rate euro-denominated debt. The swap agreements mature May 2022. The risk management objective is to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in foreign currencies and reduce the variability in the functional currency cash flows of a portion of the Company's term loans. In the future, we may attempt to manage our foreign currency risk on our anticipated cash movements by entering into foreign currency forward contracts to offset potential foreign exchange gains or losses.

2325

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 ~~December 30, 2017.~~March 31, 2018. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~December 30, 2017,~~March 31, 2018, the design and operation of our disclosure controls and procedures were effective at the reasonable assurance level.

(b)	Changes in internal controls.

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~December 30, 2017~~March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2426

Part II. Other Information

Item 1.

Legal Proceedings

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

Item 1A.

Risk Factors

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

The final impacts of the Tax Cuts and Jobs Act could be materially different from our current estimates.

The Tax Cuts and Jobs Act was signed into law in December 2017. The new law made numerous changes to federal corporate tax law that we expect will significantly reduce our effective tax rate in future periods. The changes included in the Tax Act are broad and ~~complex.~~complex (See Note 9). The final transition impacts of the Tax Act may differ from our current estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the Company has utilized to calculate the transition impacts.

Forward-looking Statements and Other Factors Affecting Future Results.

All forward-looking information and subsequent written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:

●	risks associated with our substantial indebtedness and debt service;

●	changes in prices and availability of resin and other raw materials and our ability to pass on changes in raw material prices on a timely basis;

●	performance of our business and future operating results;

●	risks related to our acquisition strategy and integration of acquired businesses;

●	reliance on unpatented know-how and trade secrets;

●	increases in the cost of compliance with laws and regulations, including environmental, safety, and production and product laws and regulations;

●	risks related to disruptions in the overall economy and the financial markets that may adversely impact our business;

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

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

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

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

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

●	the ability of our insurance to cover fully our potential exposures;

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

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

We caution readers that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Form 10-Q may not in fact occur. Accordingly, investors should not place undue reliance on those statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

2527

Item 6.	Exhibits

~~3.1~~	~~Amended and Restated Bylaws of Berry Global Group, Inc., effective November 30, 2017 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on November 30, 2017).~~
4.1	Indenture, by and between Berry Global, Inc., Berry Global Group, Inc., the subsidiaries of Berry Global, Inc. party thereto, and U.S. Bank National Association, as Trustee, relating to the 4.500% second priority senior secured notes due 2026, dated January 26, 2018 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on January 29, 2018).
10.1*10.1	~~U.S. $900,000,000~~2015 Long-Term Incentive Plan, as amended effective March 1, 2018 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on March 6, 2018).
10.2*	$1,644,750,000 and ~~$814,375,000~~$496,250,000 Incremental Assumption Agreement and Amendment, dated as of ~~November 27, 2017,~~February 12, 2018, by and among Berry Global Group, Inc., Berry Global, Inc. and certain of its subsidiaries referenced therein, Credit Suisse AG, Cayman Islands Branch, as administrative agent for the lenders under the term loan credit agreement referenced therein, Citibank, N.A., as initial Term OQ lender, and Citibank, N.A., as initial Term ~~P lender therein.~~
10.2*	Senior Executive Employment Contract dated as of September 30, 2015 between PGI Specialty Materials Inc. and Jean Marc Galvez, together with the International Assignment Letter dated December 18, 2016 from Berry Global, Inc. (f/k/a Berry Plastics Corporation). R lender.
31.1*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
32.1*	Section 1350 Certification of the Chief Executive Officer.
32.2*	Section 1350 Certification of the Chief Financial Officer.
101.	Interactive Data Files.

*	Filed herewith.

2628

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Berry Global Group, Inc.

~~February 7,~~May 3, 2018	By:	/s/ Mark W. Miles
		Mark W. Miles
		Chief Financial Officer

Class		Outstanding at ~~February 7,~~May 3, 2018
Common Stock, $.01 par value per share		~~131.2~~131.7 million shares

	December 30, 2017			September 30, 2017			March 31, 2018			September 30, 2017
Assets	(Unaudited)						(Unaudited)

Current assets:
Cash and cash equivalents	$	228		$	306		$	291		$	306
Accounts receivable (less allowance of $13)		780			847			918			847
Inventories:
Finished goods		498			428			562			428
Raw materials and supplies		380			334			389			334
		878			762			951			762
Prepaid expenses and other current assets		95			89			101			89
Total current assets		1,981			2,004			2,261			2,004
Property, plant, and equipment, net		2,363			2,366			2,618			2,366
Goodwill and intangible assets, net		4,024			4,061			4,160			4,061
Other assets		52			45			68			45
Total assets	$	8,420		$	8,476		$	9,107		$	8,476

Liabilities

Current liabilities:
Accounts payable	$	666		$	638		$	718		$	638
Accrued expenses and other current liabilities		454			463			410			463
Current portion of long-term debt		34			33			34			33
Total current liabilities		1,154			1,134			1,162			1,134
Long-term debt, less current portion		5,502			5,608			5,992			5,608
Deferred income taxes		276			419			325			419
Other long-term liabilities		314			300			322			300
Total liabilities		7,246			7,461			7,801			7,461

Stockholders' equity

Common stock (131.1 and 130.9 million shares issued, respectively)		1			1
Common stock (131.6 and 130.9 million shares issued, respectively)								1			1
Additional paid-in capital		831			823			849			823
Non-controlling interest		3			3			3			3
Retained earnings		419			256			509			256
Accumulated other comprehensive loss		(80	)		(68	)		(56	)		(68	)
Total stockholders' equity		1,174			1,015			1,306			1,015
Total liabilities and stockholders' equity	$	8,420		$	8,476		$	9,107		$	8,476

Working capital (a)	$	139
Property and equipment		223
Intangible assets		214
Goodwill		347
Historical AEP debt assumed		(7	)
Other assets and long-term liabilities		(125	)
(a) Includes a $5 million step up of inventory to fair value

Working capital (a)	$	70
Property and equipment		239
Intangible assets		91
Goodwill		76
Other assets and long-term liabilities		(2	)
(a) Includes a $3 million step up of inventory to fair value

	Maturity Date	December 30, 2017			September 30, 2017			Maturity Date	March 31, 2018			September 30, 2017
Term loan	February 2020	$	900		$	1,000		February 2020	$	900		$	1,000
Term loan	January 2021		814			814		January 2021		814			814
Term loan	October 2022		1,645			1,645		October 2022		1,645			1,645
Term loan	January 2024		496			498		January 2024		495			498
Revolving line of credit	May 2020		—			—		May 2020		—			—
5 ¹/₈% Second Priority Senior Secured Notes	July 2023		700			700
5 ¹/₂% Second Priority Senior Secured Notes	May 2022		500			500		May 2022		500			500
6% Second Priority Senior Secured Notes	October 2022		400			400		October 2022		400			400
5 ¹/₈% Second Priority Senior Secured Notes								July 2023		700			700
4 ¹/₂% Second Priority Senior Secured Notes								February 2026		500			—
Debt discounts and deferred fees			(46	)		(48	)			(48	)		(48	)
Capital leases and other	Various		127			132		Various		120			132
Total long-term debt			5,536			5,641				6,026			5,641
Current portion of long-term debt			(34	)		(33	)			(34	)		(33	)
Long-term debt, less current portion		$	5,502		$	5,608			$	5,992		$	5,608

Part I.	Financial Information		Page No.
	Item 1.	Financial Statements:
		Consolidated Statements of Income and Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Cash Flows	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1819
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2325
	Item 4.	Controls and Procedures	2426
Part II.	Other Information
	Item 1.	Legal ~~Proceeding~~Proceedings	2527
	Item 1A.	Risk Factors	2527
	Item 6.	Exhibits	2628
	Signature		2729

	Employee Severance and Benefits			Facility Exit Costs			Total			Employee Severance and Benefits			Facility Exit Costs			Total
Balance at September 30, 2017	$	14		$	5		$	19		$	14		$	5		$	19
Charges		10			1			11			25			1			26
Cash payments		(7	)		(1	)		(8	)		(17	)		(2	)		(19	)
Balance at December 30, 2017	$	17		$	5		$	22
Balance at March 31, 2018										$	22		$	4		$	26

Derivatives Instruments	Hedge Designation	Balance Sheet Location	December 30, 2017		September 30, 2017
Derivative Instruments							Hedge Designation	Balance Sheet Location	March 31, 2018		September 30, 2017
Cross-currency swaps	Designated	Other long-term liabilities	$	15	$	—	Designated	Other long-term liabilities	$	28	$	—
Interest rate swaps	Designated	Other assets		7		1	Designated	Other assets		30		1
Interest rate swaps	Not designated	Other assets		8		13	Not designated	Other assets		3		13
Interest rate swaps	Designated	Other long-term liabilities		1		15	Designated	Other long-term liabilities		—		15
Interest rate swaps	Not designated	Other long-term liabilities		10		13	Not designated	Other long-term liabilities		5		13

	As of December 30, 2017										As of March 31, 2018
	Level 1		Level 2		Level 3		Total		Impairment		Level 1		Level 2		Level 3		Total		Impairment
Indefinite-lived trademarks	$	—	$	—	$	248	$	248	$	—	$	—	$	—	$	248	$	248	$	—
Goodwill		—		—		2,777		2,777		—		—		—		2,857		2,857		—
Definite lived intangible assets		—		—		999		999		—		—		—		1,055		1,055		—
Property, plant, and equipment		—		—		2,363		2,363		—		—		—		2,618		2,618		—
Total	$	—	$	—	$	6,387	$	6,387	$	—	$	—	$	—	$	6,778	$	6,778	$	—

	As of September 30, 2017
	Level 1		Level 2		Level 3		Total		Impairment
Indefinite-lived trademarks	$	—	$	—	$	248	$	248	$	—
Goodwill		—		—		2,775		2,775		—
Definite lived intangible assets		—		—		1,038		1,038		—
Property, plant, and equipment		—		—		2,366		2,366		2
Total	$	—	$	—	$	6,427	$	6,427	$	2

	December 30, 2017		September 30, 2017
Total assets:
Engineered Materials	$	1,753	$	1,803
Health, Hygiene & Specialties		3,475		3,496
Consumer Packaging		3,192		3,177
Total assets	$	8,420	$	8,476

	March 31, 2018		September 30, 2017
Long-lived assets:
North America	$	5,647	$	5,350
South America		389		371
Europe		516		467
Asia		294		284
Total Long-lived assets	$	6,846	$	6,472

	Engineered Materials		Health, Hygiene & Specialties			Consumer Packaging		Total
Balance as of September 30, 2017	$	545	$	819		$	1,411	$	2,775
Acquisitions, net		4		—			—		4
Foreign currency translation adjustment		—		(2	)		—		(2	)
Balance as of December 30, 2017	$	549	$	817		$	1,411	$	2,777

Income tax expense (benefit)
	Quarter				Prior Quarter			$ Change				% Change
Income tax expense (benefit)		$	(71	)		$	28		$	(99	)		(354	%)