Notes to Consolidated Financial Statements
(Unaudited)
(tables in millions of dollars, except per share data)
The accompanying unaudited Condensed Consolidated Financial Statements of Berry Global Group, Inc. ("the Company," "we," or "Berry") have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included, and all subsequent events up to the time of the filing have been evaluated. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's most recent Form 10-K filed with the Securities and Exchange Commission.
Effective April 2017, the Company changed its name from Berry Plastics Group, Inc. to Berry Global Group, Inc. The new name is reflected throughout this Form 10-Q. Common Shares of the Company stock continue to be traded on the New York Stock Exchange under the symbol BERY. In addition Berry Plastics Corporation, a wholly owned subsidiary, changed its name to Berry Global, Inc.
2.
|
Recently Issued Accounting Pronouncements
|
Changes to GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting standards updates to the FASB's Accounting Standards Codification. During fiscal 2017, with the exception of the below, there have been no developments to the recently adopted accounting pronouncements from those disclosed in the Company's 2016 Annual Report on Form 10-K that are considered to have a material impact on our unaudited consolidated financial statements.
Goodwill
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, Step 2, which was previously used to compute the implied fair value of goodwill, was eliminated. This update requires an entity to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment will be recognized in the amount by which a reporting unit's carrying amount exceeds its fair value. The loss recognized will not exceed the total amount of goodwill allocated to that reporting unit. The new guidance is effective for interim and annual periods beginning after December 15, 2019 and should be applied on a prospective basis. Early adoption is permitted. We will adopt this guidance for our fiscal 2017 goodwill testing.
Retirement Benefits
In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires employers to report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. If a separate line item is used to present the other components of net benefit cost, then the line item used in the income statement to present the other components of net benefit cost must be disclosed. The new guidance is effective for interim and annual periods beginning after December 15, 2017 and should be applied on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this guidance.
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 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 acquisition has been accounted for under the purchase method of accounting, and accordingly, the purchase price has been allocated to the identifiable assets and liabilities based on preliminary fair values at the acquisition date. The results of AEP have been included in the consolidated results of the Company since the date of the acquisition. The Company has not finalized the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed. The Company has recognized Goodwill on this transaction primarily as a result of expected cost synergies, and does not expect Goodwill to be deductible for tax purposes. The following table summarizes the preliminary allocation of purchase price and the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition:
Working capital (a)
|
|
$
|
133
|
|
Property and equipment
|
|
|
222
|
|
Intangible assets
|
|
|
214
|
|
Goodwill
|
|
|
350
|
|
Historical AEP debt assumed
|
|
|
(7
|
)
|
Other assets and long-term liabilities
|
|
|
(121
|
)
|
(a) Includes a $5 million step up of inventory to fair value
|
|
Unaudited pro forma net sales were $1.9 billion for the quarterly period ended July 2, 2016. Unaudited pro forma net sales were $5.5 billion and $5.7 billion for the three quarterly periods ended July 1, 2017 and July 2, 2016, respectively. Unaudited pro forma net income was $102 million for the quarterly period ended July 2, 2016. Unaudited pro forma net income was $232 million and $175 million for the three quarterly periods ended July 1, 2017 and July 2, 2016, respectively. The unaudited pro forma net sales and net income assume that the AEP acquisition had occurred as of the beginning of the period.
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 will be operated within the Engineered Materials segment. To finance the purchase, the Company used existing liquidity. The acquisition has been accounted for under the purchase method of accounting and accordingly, the purchase price has been allocated to the identifiable assets and liabilities based on preliminary values at the acquisition date. The Company expects Goodwill to be deductible for tax purposes.
AVINTIV Inc.
In October 2015, the Company acquired 100% of the capital stock of AVINTIV Inc. ("Avintiv") for a purchase price of $2.26 billion, net of cash acquired. Avintiv is one of the world's leading developers, producers, and marketers of nonwoven specialty materials used in hygiene, infection prevention, personal care, industrial, construction, and filtration applications. To finance the purchase, the Company issued $400 million aggregate principal amount of 6.0% second priority senior secured notes due 2022 and entered into an incremental assumption agreement to increase the commitments under the Company's existing term loan credit agreement by $2.1 billion due 2022. The results of Avintiv have been included in the consolidated results of the Company since the date of acquisition.
4.
|
Restructuring and Impairment Charges
|
The Company incurred restructuring costs related to severance, asset impairment, and facility exit costs. The tables below set forth the significant components of the restructuring charges recognized, by segment:
|
|
Quarterly Period Ended
|
|
|
Three Quarterly Periods Ended
|
|
|
|
July 1, 2017
|
|
|
July 2, 2016
|
|
|
July 1, 2017
|
|
|
July 2, 2016
|
|
Consumer Packaging
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
7
|
|
Health, Hygiene & Specialties
|
|
|
4
|
|
|
|
4
|
|
|
|
8
|
|
|
|
20
|
|
Engineered Materials
|
|
|
2
|
|
|
|
—
|
|
|
|
4
|
|
|
|
2
|
|
Consolidated
|
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
18
|
|
|
$
|
29
|
|
The table below sets forth the activity with respect to the restructuring accrual at July 1, 2017:
|
|
Severance and
termination benefits
|
|
|
Facilities exit
costs and other
|
|
|
Total
|
|
Balance at October 1, 2016
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
13
|
|
Charges
|
|
|
14
|
|
|
|
4
|
|
|
|
18
|
|
Cash payments
|
|
|
(15
|
)
|
|
|
(6
|
)
|
|
|
(21
|
)
|
Balance at July 1, 2017
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
10
|
|
5.
|
Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities
|
The following table sets forth the totals included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets:
|
|
July 1, 2017
|
|
|
October 1, 2016
|
|
Employee compensation, payroll and other
|
|
$
|
128
|
|
|
$
|
152
|
|
Interest
|
|
|
33
|
|
|
|
53
|
|
Rebates
|
|
|
54
|
|
|
|
54
|
|
Restructuring
|
|
|
10
|
|
|
|
13
|
|
Accrued taxes
|
|
|
77
|
|
|
|
40
|
|
Tax receivable agreement obligation
|
|
|
101
|
|
|
|
60
|
|
Accrued operating expenses
|
|
|
95
|
|
|
|
77
|
|
|
|
$
|
498
|
|
|
$
|
449
|
|
The following table sets forth the totals included in Other long-term liabilities on the Consolidated Balance Sheets:
|
|
July 1, 2017
|
|
|
October 1, 2016
|
|
Lease retirement obligation
|
|
$
|
36
|
|
|
$
|
34
|
|
Sale-lease back deferred gain
|
|
|
24
|
|
|
|
26
|
|
Pension liability
|
|
|
82
|
|
|
|
88
|
|
Deferred purchase price
|
|
|
43
|
|
|
|
41
|
|
Tax receivable agreement obligation
|
|
|
22
|
|
|
|
114
|
|
Interest rate swaps
|
|
|
35
|
|
|
|
45
|
|
Other
|
|
|
69
|
|
|
|
69
|
|
|
|
$
|
311
|
|
|
$
|
417
|
|
The Company made $60 million of payments related to the income tax receivable agreement ("TRA") in the December 31, 2016 quarter, of which Apollo Global Management, LLC received $48 million. The TRA provides for an annual payment to TRA holders equal to 85% of the amount of cash savings, if any, in U.S. federal, foreign, state and local income tax that are actually realized as a result of the utilization of our net operating losses attributable to periods prior to the initial public offering.
6.
Long-Term Debt
Long-term debt consists of the following:
|
Maturity Date
|
|
|
July 1, 2017
|
|
|
|
October 1, 2016
|
|
Term loan
|
February 2020
|
|
$
|
1,148
|
|
|
$
|
1,351
|
|
Term loan
|
January 2021
|
|
|
814
|
|
|
|
814
|
|
Term loan
|
October 2022
|
|
|
1,695
|
|
|
|
1,895
|
|
Term loan
|
January 2024
|
|
|
499
|
|
|
|
—
|
|
Revolving line of credit
|
May 2020
|
|
|
50
|
|
|
|
—
|
|
5
1
/
8
% Second Priority Senior Secured Notes
|
July 2023
|
|
|
700
|
|
|
|
700
|
|
5
1
/
2
% Second Priority Senior Secured Notes
|
May 2022
|
|
|
500
|
|
|
|
500
|
|
6% Second Priority Senior Secured Notes
|
October 2022
|
|
|
400
|
|
|
|
400
|
|
Debt discounts and deferred fees
|
|
|
|
(52
|
)
|
|
|
(58
|
)
|
Capital leases and other
|
Various
|
|
|
137
|
|
|
|
153
|
|
Total long-term debt
|
|
|
|
5,891
|
|
|
|
5,755
|
|
Current portion of long-term debt
|
|
|
|
(34
|
)
|
|
|
(43
|
)
|
Long-term debt, less current portion
|
|
|
$
|
5,857
|
|
|
$
|
5,712
|
|
The Company was in compliance with all covenants for all periods presented.
Debt discounts and deferred financing fees are presented net of Long-term debt, less the current portion on the Consolidated Balance Sheets and are amortized to Interest expense through maturity.
Term Loans
In January 2017, the Company entered into an incremental assumption agreement to increase the commitments under the existing term loan credit agreement by $500 million in order to finance the AEP acquisition. The incremental assumption agreement provided for the $500 million incremental term loan to bear interest at LIBOR plus 2.50% per annum with no LIBOR floor, to mature in January 2024 and to be subject to customary amortization. During the March ending quarter the Company executed an amendment to lower the interest rates under certain of the term loans. The term loans maturing in October 2022 bear interest at LIBOR plus 2.50% with no LIBOR floor. The term loans maturing in February 2020 and January 2021 bear interest at LIBOR plus 2.25% with no LIBOR floor.
During fiscal 2017, the Company has made $427 million of repayments on long-term borrowings using existing liquidity. As a result of the current year prepayments and modifications, the Company recorded a $3 million loss on debt extinguishment in Other (income) expense, net, reflecting the write-off of deferred financing fees and debt discounts, net of amortization associated with the portion of the debt that was considered extinguished. Additionally, the Company recognized $9 million of debt discounts and deferred financing fees related to the incremental assumption agreements and amendments.
7.
|
Financial Instruments and Fair Value Measurements
|
In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors. The Company may use derivative financial instruments to help manage market risk and reduce the exposure to fluctuations in interest rates and foreign currencies. These financial instruments are not used for trading or other speculative purposes.
The Company designates derivative instruments that qualify as hedging instruments, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. To the extent hedging relationships are found to be effective, which is evaluated quarterly, changes in the fair value of the derivatives are offset by changes in the fair value of the related hedged item and recorded to Accumulated other comprehensive loss.
The Company records the changes in the fair value of derivatives that are not designated as hedging instruments to the Consolidated Statements of Income.
Foreign Currency Forward Contracts
The primary purpose of the Company's foreign currency hedging activities is to manage the potential changes in value associated with the changes in foreign currencies on future foreign cash movements for certain jurisdictions. The changes in fair value of these derivative contracts are recognized in Other (income) expense, net on the Consolidated Statements of Income and are largely offset by the remeasurement of the underlying intercompany loan. When valuing foreign currency forward contracts the Company utilizes Level 2 (significant observable inputs) fair value measurements. These contracts are typically entered into and settled within the given quarterly reporting period.
Interest Rate Swaps - Cash Flow Hedges
The primary purpose of our interest rate swaps is to manage cash flow variability associated with our outstanding variable rate term loan debt. At inception these contracts are designed as effective cash flow hedges. When valuing interest rate swaps we utilize derivative Level 2 (significant observable inputs) fair value measurements. For interest rate swaps that are designated and qualify as cash flow hedges, the effective portion of the gain or loss is reported as a component of Accumulated other comprehensive loss.
Cash flow hedge accounting is discontinued when it is determined that an interest rate swap no longer qualifies as an effective hedge. When cash flow hedge accounting is de-designated, the swap is subject to the mark-to-market method of accounting prospectively. Changes in the mark-to-market fair value of the de-designated instrument are recorded to the Consolidated Statements of Income. Unrealized gains and losses that were previously deferred in Accumulated other comprehensive loss are amortized to Interest expense over the remaining term of the swap.
Interest Rate Swap Arrangements
In February 2013, the Company entered into a $1 billion interest rate swap transaction with an effective date of May 2016 and expiration in May 2019. In June 2013, the Company elected to settle this derivative instrument and received $16 million as a result of this settlement. The offset is included in Accumulated other comprehensive loss and is being amortized to Interest expense from May 2016 through May 2019, the original term of the swap agreement.
In March 2014, the Company entered into a $1 billion interest rate swap transaction with an effective date of February 2016 and expiration in February 2019. In February 2017, in conjunction with the term loan modifications, the Company discontinued hedge accounting. Previously unrealized losses in Accumulated other comprehensive loss were being amortized to Interest expense through February 2019, the original term of the swap. In order to offset the impact of future fair value changes of the March 2014 de-designated swap, the Company entered into a mirrored offsetting swap in February 2017 and has not designated it as a hedge.
In September 2015, the Company entered into a $1 billion interest rate swap transaction with an effective date of December 2015 and expiration in June 2019. In February 2017, in conjunction with the term loan modifications, the Company entered into an agreement to modify the terms of the original swap on a prospective basis. At that time, the Company de-designated the hedge and has re-designated the modified swap as an effective cash flow hedge. The amount included in Accumulated other comprehensive loss at the date of de-designation is being amortized to Interest expense through June 2019, the original term of the swap. The modified agreement 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.
In January 2017, the Company entered into 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.
In February 2017, the Company entered into a $1 billion interest rate swap transaction that swaps a one-month variable LIBOR contract for a fixed annual rate of 2.3785% with an effective date in February 2017 and expiration in February 2019.
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 as of the current period are as follows;
Derivatives Instruments
|
Hedge Designation
|
Balance Sheet Location
|
|
July 1, 2017
|
|
|
October 1, 2016
|
|
Foreign currency forward contracts
|
Not designated
|
Other assets
|
|
$
|
3
|
|
|
$
|
3
|
|
Interest rate swaps
|
Not designated
|
Other assets
|
|
|
17
|
|
|
|
—
|
|
Interest rate swaps
|
Designated
|
Other long-term liabilities
|
|
|
18
|
|
|
|
35
|
|
Interest rate swaps
|
Not designated
|
Other long-term liabilities
|
|
|
17
|
|
|
|
—
|
|
The effect of the Company's derivative instruments on the Consolidated Statements of Income is as follows:
|
|
Quarterly Period Ended
|
|
Three Quarterly Periods Ended
|
|
Derivatives instruments
|
Statements of Income Location
|
July 1, 2017
|
|
July 2, 2016
|
|
July 1, 2017
|
|
July 2, 2016
|
|
Interest rate swaps
|
Interest expense, net
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
15
|
|
|
$
|
10
|
|
Foreign currency forward contracts
|
Other (income) expense, net
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
9
|
|
The amortization related to unrealized losses in Accumulated other comprehensive loss is expected to be $2 million in the next 12 months.
Non-recurring Fair Value Measurements
The Company has certain assets that are measured at fair value on a non-recurring basis when impairment indicators are present. The assets are adjusted to fair value only when the carrying values exceed the fair values. The categorization of the framework used to price the assets is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value. These assets include primarily our definite lived and indefinite lived intangible assets, including Goodwill and our property, plant, and equipment. The Company reviews Goodwill and other indefinite lived assets for impairment as of the first day of the fourth fiscal quarter each year, and more frequently if impairment indicators exist. The Company determined Goodwill and other indefinite lived assets were not impaired in our annual fiscal 2016 assessment. No impairment indicators were identified in the current quarter.
Included in the following table are the major categories of assets measured at fair value on a non-recurring basis as of July 1, 2017 and October 1, 2016, along with the impairment loss recognized on the fair value measurement during the period:
|
|
As of July 1, 2017
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Impairment
|
|
Indefinite-lived trademarks
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
248
|
|
|
$
|
—
|
|
Goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
2,782
|
|
|
|
2,782
|
|
|
|
—
|
|
Definite lived intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
1,066
|
|
|
|
1,066
|
|
|
|
—
|
|
Property, plant, and equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
2,375
|
|
|
|
2,375
|
|
|
|
—
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,471
|
|
|
$
|
6,471
|
|
|
$
|
—
|
|
|
|
As of October 1, 2016
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Impairment
|
|
Indefinite-lived trademarks
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
248
|
|
|
$
|
—
|
|
Goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
2,406
|
|
|
|
2,406
|
|
|
|
—
|
|
Definite lived intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
952
|
|
|
|
952
|
|
|
|
—
|
|
Property, plant, and equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
2,224
|
|
|
|
2,224
|
|
|
|
3
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,830
|
|
|
$
|
5,830
|
|
|
$
|
3
|
|
The Company's financial instruments consist primarily of cash and cash equivalents and long-term debt. The fair value of our marketable long-term indebtedness exceeded book value by $76 million as of July 1, 2017. The Company's long-term debt fair values were determined using Level 2 inputs as other significant observable inputs were not available.
The Company's effective tax rate was 26% for the quarterly period and three quarterly periods ended July 1, 2017. Within the quarter, the effective tax rate was favorably impacted by 9% from the discrete item related to share based compensation excess tax benefit. Our year-to-date effective tax rate of 26% was favorably impacted by 9% from the discrete item related to share based compensation excess tax benefit and a 3% state valuation allowance release, partially offset by a negative impact of 2% due to state taxes and a 2% foreign valuation allowance.
9. Operating Segments
The Company's operations are organized into three operating segments: Consumer Packaging, Health, Hygiene & Specialties, and Engineered Materials. The structure is designed to align us with our customers, provide improved service, and drive future growth in a cost efficient manner. In October 2016, the Company realigned portions of our operating segments in order to leverage geographic management teams and commercial activities. The international portion of our Retail & Industrial product line was moved from Engineered Materials to the Specialties product line within Health, Hygiene & Specialties, resulting in a $39 million and $108 million movement in Net sales in the quarterly and three quarterly periods ended July 2, 2016, respectively. Additionally, to align the newly acquired AEP business with our existing Core Films business, $73 million and $230 million of Net sales were moved from Consumer Packaging to Engineered Materials in the quarterly and three quarterly periods ended July 2, 2016, respectively. As result of these organizational realignments, we have recast prior period segment amounts. Selected information by reportable segment is presented in the following tables:
|
|
Quarterly Period Ended
|
|
|
Three Quarterly Periods Ended
|
|
|
|
July 1, 2017
|
|
|
July 2, 2016
|
|
|
July 1, 2017
|
|
|
July 2, 2016
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Packaging
|
|
$
|
614
|
|
|
$
|
631
|
|
|
$
|
1,752
|
|
|
$
|
1,845
|
|
Health, Hygiene & Specialties
|
|
|
606
|
|
|
|
606
|
|
|
|
1,773
|
|
|
|
1,807
|
|
Engineered Materials
|
|
|
686
|
|
|
|
408
|
|
|
|
1,689
|
|
|
|
1,219
|
|
Total net sales
|
|
$
|
1,906
|
|
|
$
|
1,645
|
|
|
$
|
5,214
|
|
|
$
|
4,871
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Packaging
|
|
$
|
60
|
|
|
$
|
58
|
|
|
$
|
150
|
|
|
$
|
156
|
|
Health, Hygiene & Specialties
|
|
|
53
|
|
|
|
69
|
|
|
|
164
|
|
|
|
140
|
|
Engineered Materials
|
|
|
99
|
|
|
|
52
|
|
|
|
219
|
|
|
|
134
|
|
Total operating income
|
|
$
|
212
|
|
|
$
|
179
|
|
|
$
|
533
|
|
|
$
|
430
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Packaging
|
|
$
|
56
|
|
|
$
|
61
|
|
|
$
|
174
|
|
|
$
|
183
|
|
Health, Hygiene & Specialties
|
|
|
46
|
|
|
|
38
|
|
|
|
136
|
|
|
|
143
|
|
Engineered Materials
|
|
|
30
|
|
|
|
21
|
|
|
|
73
|
|
|
|
64
|
|
Total depreciation and amortization
|
|
$
|
132
|
|
|
$
|
120
|
|
|
$
|
383
|
|
|
$
|
390
|
|
|
|
July 1, 2017
|
|
|
October 1, 2016
|
|
Total assets:
|
|
|
|
|
|
|
Consumer Packaging
|
|
$
|
3,268
|
|
|
$
|
3,315
|
|
Health, Hygiene & Specialties
|
|
|
3,441
|
|
|
|
3,504
|
|
Engineered Materials
|
|
|
1,836
|
|
|
|
834
|
|
Total assets
|
|
$
|
8,545
|
|
|
$
|
7,653
|
|
Selected information by geography is presented in the following tables:
|
Quarterly Period Ended
|
|
Three Quarterly Periods Ended
|
|
|
July 1, 2017
|
|
July 2, 2016
|
|
July 1, 2017
|
|
July 2, 2016
|
|
Net sales:
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
1,591
|
|
|
$
|
1,329
|
|
|
$
|
4,289
|
|
|
$
|
3,939
|
|
South America
|
|
|
85
|
|
|
|
88
|
|
|
|
246
|
|
|
|
247
|
|
Europe
|
|
|
165
|
|
|
|
166
|
|
|
|
482
|
|
|
|
505
|
|
Asia
|
|
|
65
|
|
|
|
62
|
|
|
|
197
|
|
|
|
180
|
|
Total net sales
|
|
$
|
1,906
|
|
|
$
|
1,645
|
|
|
$
|
5,214
|
|
|
$
|
4,871
|
|
|
|
July 1, 2017
|
|
|
October 1, 2016
|
|
Long-lived assets:
|
|
|
|
|
|
|
North America
|
|
$
|
5,420
|
|
|
$
|
4,724
|
|
South America
|
|
|
360
|
|
|
|
386
|
|
Europe
|
|
|
459
|
|
|
|
462
|
|
Asia
|
|
|
284
|
|
|
|
289
|
|
Total Long-lived assets
|
|
$
|
6,523
|
|
|
$
|
5,861
|
|
Selected information by product line is presented in the following tables:
|
Quarterly Period Ended
|
|
Three Quarterly Periods Ended
|
(in percentages)
|
July 1, 2017
|
|
July 2, 2016
|
|
July 1, 2017
|
|
July 2, 2016
|
Net sales:
|
|
|
|
|
|
|
|
Rigid Open Top
|
|
44%
|
|
|
43%
|
|
42%
|
|
42%
|
Rigid Closed Top
|
|
56
|
|
|
57
|
|
58
|
|
58
|
Consumer Packaging
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
Health
|
|
22%
|
|
|
21%
|
|
22%
|
|
20%
|
Hygiene
|
|
44
|
|
|
45
|
|
44
|
|
45
|
Specialties
|
|
34
|
|
|
34
|
|
34
|
|
35
|
Health, Hygiene & Specialties
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
Core Films
|
|
43%
|
|
|
72%
|
|
51%
|
|
71%
|
Retail & Industrial
|
|
57
|
|
|
28
|
|
49
|
|
29
|
Engineered Materials
|
|
100%
|
|
|
100%
|
|
100%
|
|
100%
|
Goodwill
In connection with the change in reporting segments, the Company reallocated goodwill to the segments under the provisions of ASC 350. The changes in the carrying amount of goodwill by reportable segment are as follows:
|
|
Consumer
Packaging
|
|
|
Health, Hygiene
& Specialties
|
|
|
Engineered
Materials
|
|
|
Total
|
|
Balance as of October 1, 2016
|
|
$
|
1,520
|
|
|
$
|
801
|
|
|
$
|
85
|
|
|
$
|
2,406
|
|
Segment reorganization
|
|
|
(110
|
)
|
|
|
7
|
|
|
|
103
|
|
|
|
—
|
|
Acquisition, net
|
|
|
—
|
|
|
|
—
|
|
|
|
376
|
|
|
|
376
|
|
Foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance as of July 1, 2017
|
|
$
|
1,410
|
|
|
$
|
808
|
|
|
$
|
564
|
|
|
$
|
2,782
|
|
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, 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.
11.
|
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 computed 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 and discussion provide a reconciliation of the numerator and denominator of the basic and diluted net income per share computations.
|
|
Quarterly Period Ended
|
|
|
Three Quarterly Periods Ended
|
|
(in millions, except per share amounts)
|
|
July 1, 2017
|
|
|
July 2, 2016
|
|
|
July 1, 2017
|
|
|
July 2, 2016
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
107
|
|
|
$
|
96
|
|
|
$
|
230
|
|
|
$
|
159
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic
|
|
|
129.9
|
|
|
|
121.1
|
|
|
|
126.6
|
|
|
|
120.5
|
|
Dilutive shares
|
|
|
5.3
|
|
|
|
4.8
|
|
|
|
4.8
|
|
|
|
3.4
|
|
Weighted average common and common equivalent shares outstanding - diluted
|
|
|
135.2
|
|
|
|
125.9
|
|
|
|
131.4
|
|
|
|
123.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.82
|
|
|
$
|
0.79
|
|
|
$
|
1.82
|
|
|
$
|
1.32
|
|
Diluted
|
|
$
|
0.79
|
|
|
$
|
0.76
|
|
|
$
|
1.75
|
|
|
$
|
1.28
|
|
12.
Accumulated Other Comprehensive Income (Loss)
The components and activity of Accumulated other comprehensive income (loss) are as follows:
|
|
Currency Translation
|
|
|
Defined Benefit Pension and Retiree Health Benefit Plans
|
|
|
Interest Rate Swaps Designated as Hedges
|
|
|
Interest Rate Swaps Not Designated as Hedges
|
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
|
Balance at October 1, 2016
|
|
$
|
(82
|
)
|
|
$
|
(44
|
)
|
|
$
|
(31
|
)
|
|
$
|
9
|
|
|
$
|
(148
|
)
|
De-designated hedges
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
|
|
(17
|
)
|
|
|
—
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
4
|
|
|
|
13
|
|
|
|
5
|
|
|
|
—
|
|
|
|
22
|
|
Net amount reclassified from accumulated other comprehensive income (loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
|
|
1
|
|
|
|
18
|
|
Provision for income taxes related to other comprehensive income items
|
|
|
—
|
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
(8
|
)
|
Balance at July 1, 2017
|
|
$
|
(78
|
)
|
|
$
|
(31
|
)
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
$
|
(116
|
)
|
|
|
Currency Translation
|
|
|
Defined Benefit Pension and Retiree Health Benefit Plans
|
|
|
Interest Rate Swaps Designated as Hedges
|
|
|
Interest Rate Swaps Not Designated as Hedges
|
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
|
Balance at September 26, 2015
|
|
$
|
(81
|
)
|
|
$
|
(25
|
)
|
|
$
|
(23
|
)
|
|
$
|
10
|
|
|
$
|
(119
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
39
|
|
|
|
—
|
|
|
|
(30
|
)
|
|
|
—
|
|
|
|
9
|
|
Net amount reclassified from accumulated other comprehensive income (loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
|
|
—
|
|
|
|
10
|
|
Provision for income taxes related to other comprehensive income items
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
—
|
|
|
|
8
|
|
Balance at July 2, 2016
|
|
$
|
(42
|
)
|
|
$
|
(25
|
)
|
|
$
|
(35
|
)
|
|
$
|
10
|
|
|
$
|
(92
|
)
|
13.
|
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, as a result of the holders of certain other indebtedness foreclosing on a pledge of the shares of a guarantor subsidiary or 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
|
|
July 1, 2017
|
|
|
|
Parent
|
|
|
Issuer
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
Current assets
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
1,188
|
|
|
$
|
754
|
|
|
$
|
—
|
|
|
$
|
2,022
|
|
Intercompany receivable
|
|
|
518
|
|
|
|
2,512
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,030
|
)
|
|
|
—
|
|
Property, plant, and equipment, net
|
|
|
—
|
|
|
|
74
|
|
|
|
1,591
|
|
|
|
710
|
|
|
|
—
|
|
|
|
2,375
|
|
Other assets
|
|
|
868
|
|
|
|
5,217
|
|
|
|
4,578
|
|
|
|
523
|
|
|
|
(7,038
|
)
|
|
|
4,148
|
|
Total assets
|
|
$
|
1,386
|
|
|
$
|
7,883
|
|
|
$
|
7,357
|
|
|
$
|
1,987
|
|
|
$
|
(10,068
|
)
|
|
$
|
8,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
101
|
|
|
$
|
167
|
|
|
$
|
563
|
|
|
$
|
282
|
|
|
$
|
—
|
|
|
$
|
1,113
|
|
Intercompany payable
|
|
|
—
|
|
|
|
66
|
|
|
|
2,819
|
|
|
|
145
|
|
|
|
(3,030
|
)
|
|
|
—
|
|
Other long-term liabilities
|
|
|
437
|
|
|
|
5,976
|
|
|
|
105
|
|
|
|
66
|
|
|
|
—
|
|
|
|
6,584
|
|
Stockholders' equity (deficit)
|
|
|
848
|
|
|
|
1,674
|
|
|
|
3,870
|
|
|
|
1,494
|
|
|
|
(7,038
|
)
|
|
|
848
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,386
|
|
|
$
|
7,883
|
|
|
$
|
7,357
|
|
|
$
|
1,987
|
|
|
$
|
(10,068
|
)
|
|
$
|
8,545
|
|
|
|
October 1, 2016
|
|
|
|
Parent
|
|
|
Issuer
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
Current assets
|
|
$
|
—
|
|
|
$
|
161
|
|
|
$
|
945
|
|
|
$
|
686
|
|
|
$
|
—
|
|
|
$
|
1,792
|
|
Intercompany receivable
|
|
|
364
|
|
|
|
2,797
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,161
|
)
|
|
|
—
|
|
Property, plant and equipment, net
|
|
|
—
|
|
|
|
76
|
|
|
|
1,434
|
|
|
|
714
|
|
|
|
—
|
|
|
|
2,224
|
|
Other assets
|
|
|
302
|
|
|
|
4,101
|
|
|
|
4,094
|
|
|
|
557
|
|
|
|
(5,417
|
)
|
|
|
3,637
|
|
Total assets
|
|
$
|
666
|
|
|
$
|
7,135
|
|
|
$
|
6,473
|
|
|
$
|
1,957
|
|
|
$
|
(8,578
|
)
|
|
$
|
7,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
60
|
|
|
$
|
207
|
|
|
$
|
480
|
|
|
$
|
284
|
|
|
$
|
—
|
|
|
$
|
1,031
|
|
Intercompany payable
|
|
|
—
|
|
|
|
—
|
|
|
|
2,992
|
|
|
|
169
|
|
|
|
(3,161
|
)
|
|
|
—
|
|
Other long-term liabilities
|
|
|
385
|
|
|
|
5,822
|
|
|
|
126
|
|
|
|
68
|
|
|
|
—
|
|
|
|
6,401
|
|
Stockholders' equity (deficit)
|
|
|
221
|
|
|
|
1,106
|
|
|
|
2,875
|
|
|
|
1,436
|
|
|
|
(5,417
|
)
|
|
|
221
|
|
Total liabilities and stockholders' equity
|
|
$
|
666
|
|
|
$
|
7,135
|
|
|
$
|
6,473
|
|
|
$
|
1,957
|
|
|
$
|
(8,578
|
)
|
|
$
|
7,653
|
|
Condensed Supplemental Consolidated Statements of Income
|
|
Quarterly Period Ended July 1, 2017
|
|
|
|
Parent
|
|
|
Issuer
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
Net sales
|
|
$
|
—
|
|
|
$
|
152
|
|
|
$
|
1,325
|
|
|
$
|
429
|
|
|
$
|
—
|
|
|
$
|
1,906
|
|
Cost of goods sold
|
|
|
—
|
|
|
|
100
|
|
|
|
1,059
|
|
|
|
359
|
|
|
|
—
|
|
|
|
1,518
|
|
Selling, general and administrative
|
|
|
—
|
|
|
|
14
|
|
|
|
89
|
|
|
|
25
|
|
|
|
—
|
|
|
|
128
|
|
Amortization of intangibles
|
|
|
—
|
|
|
|
2
|
|
|
|
31
|
|
|
|
7
|
|
|
|
—
|
|
|
|
40
|
|
Restructuring and impairment charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
—
|
|
|
|
8
|
|
Operating income
|
|
|
—
|
|
|
|
36
|
|
|
|
146
|
|
|
|
30
|
|
|
|
—
|
|
|
|
212
|
|
Other expense (income), net
|
|
|
—
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
Interest expense, net
|
|
|
—
|
|
|
|
5
|
|
|
|
47
|
|
|
|
16
|
|
|
|
—
|
|
|
|
68
|
|
Equity in net income of subsidiaries
|
|
|
(145
|
)
|
|
|
(109
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
254
|
|
|
|
—
|
|
Income before income taxes
|
|
|
145
|
|
|
|
139
|
|
|
|
100
|
|
|
|
15
|
|
|
|
(254
|
)
|
|
|
145
|
|
Income tax expense
|
|
|
38
|
|
|
|
32
|
|
|
|
—
|
|
|
|
6
|
|
|
|
(38
|
)
|
|
|
38
|
|
Net income
|
|
$
|
107
|
|
|
$
|
107
|
|
|
$
|
100
|
|
|
$
|
9
|
|
|
$
|
(216
|
)
|
|
$
|
107
|
|
Comprehensive net income
|
|
$
|
107
|
|
|
$
|
102
|
|
|
$
|
100
|
|
|
$
|
37
|
|
|
$
|
(216
|
)
|
|
$
|
130
|
|
|
|
Quarterly Period Ended July 2, 2016
|
|
|
|
Parent
|
|
|
Issuer
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
Net sales
|
|
$
|
—
|
|
|
$
|
150
|
|
|
$
|
1,081
|
|
|
$
|
414
|
|
|
$
|
—
|
|
|
$
|
1,645
|
|
Cost of goods sold
|
|
|
—
|
|
|
|
140
|
|
|
|
834
|
|
|
|
322
|
|
|
|
—
|
|
|
|
1,296
|
|
Selling, general and administrative
|
|
|
—
|
|
|
|
6
|
|
|
|
93
|
|
|
|
30
|
|
|
|
—
|
|
|
|
129
|
|
Amortization of intangibles
|
|
|
—
|
|
|
|
2
|
|
|
|
27
|
|
|
|
6
|
|
|
|
—
|
|
|
|
35
|
|
Restructuring and impairment charges
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
5
|
|
|
|
—
|
|
|
|
6
|
|
Operating income
|
|
|
—
|
|
|
|
2
|
|
|
|
126
|
|
|
|
51
|
|
|
|
—
|
|
|
|
179
|
|
Other expense (income), net
|
|
|
—
|
|
|
|
8
|
|
|
|
(4
|
)
|
|
|
(18
|
)
|
|
|
—
|
|
|
|
(14
|
)
|
Interest expense, net
|
|
|
—
|
|
|
|
9
|
|
|
|
63
|
|
|
|
1
|
|
|
|
—
|
|
|
|
73
|
|
Equity in net income of subsidiaries
|
|
|
(120
|
)
|
|
|
(119
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
239
|
|
|
|
—
|
|
Income before income taxes
|
|
|
120
|
|
|
|
104
|
|
|
|
67
|
|
|
|
68
|
|
|
|
(239
|
)
|
|
|
120
|
|
Income tax expense
|
|
|
24
|
|
|
|
4
|
|
|
|
1
|
|
|
|
14
|
|
|
|
(19
|
)
|
|
|
24
|
|
Net income
|
|
$
|
96
|
|
|
$
|
100
|
|
|
$
|
66
|
|
|
$
|
54
|
|
|
$
|
(220
|
)
|
|
$
|
96
|
|
Comprehensive net income
|
|
$
|
96
|
|
|
$
|
98
|
|
|
$
|
65
|
|
|
$
|
38
|
|
|
$
|
(220
|
)
|
|
$
|
77
|
|
|
|
Three Quarterly Periods Ended July 1, 2017
|
|
|
|
Parent
|
|
|
Issuer
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
Net sales
|
|
$
|
—
|
|
|
$
|
441
|
|
|
$
|
3,556
|
|
|
$
|
1,217
|
|
|
$
|
—
|
|
|
$
|
5,214
|
|
Cost of goods sold
|
|
|
—
|
|
|
|
333
|
|
|
|
2,860
|
|
|
|
984
|
|
|
|
—
|
|
|
|
4,177
|
|
Selling, general and administrative
|
|
|
—
|
|
|
|
45
|
|
|
|
251
|
|
|
|
77
|
|
|
|
—
|
|
|
|
373
|
|
Amortization of intangibles
|
|
|
—
|
|
|
|
5
|
|
|
|
87
|
|
|
|
21
|
|
|
|
—
|
|
|
|
113
|
|
Restructuring and impairment charges
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
|
|
8
|
|
|
|
—
|
|
|
|
18
|
|
Operating income
|
|
|
—
|
|
|
|
58
|
|
|
|
348
|
|
|
|
127
|
|
|
|
—
|
|
|
|
533
|
|
Other expense (income), net
|
|
|
—
|
|
|
|
15
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
18
|
|
Interest expense, net
|
|
|
—
|
|
|
|
17
|
|
|
|
138
|
|
|
|
48
|
|
|
|
—
|
|
|
|
203
|
|
Equity in net income of subsidiaries
|
|
|
(312
|
)
|
|
|
(252
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
564
|
|
|
|
—
|
|
Income before income taxes
|
|
|
312
|
|
|
|
278
|
|
|
|
209
|
|
|
|
77
|
|
|
|
(564
|
)
|
|
|
312
|
|
Income tax expense
|
|
|
82
|
|
|
|
48
|
|
|
|
—
|
|
|
|
34
|
|
|
|
(82
|
)
|
|
|
82
|
|
Net income
|
|
$
|
230
|
|
|
$
|
230
|
|
|
$
|
209
|
|
|
$
|
43
|
|
|
$
|
(482
|
)
|
|
$
|
230
|
|
Comprehensive net income
|
|
$
|
230
|
|
|
$
|
245
|
|
|
$
|
209
|
|
|
$
|
60
|
|
|
$
|
(482
|
)
|
|
$
|
262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operating Activities
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
420
|
|
|
$
|
129
|
|
|
$
|
—
|
|
|
$
|
580
|
|
Cash Flow from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant, and equipment
|
|
|
—
|
|
|
|
(11
|
)
|
|
|
(160
|
)
|
|
|
(30
|
)
|
|
|
—
|
|
|
|
(201
|
)
|
Proceeds from sale of assets
|
|
|
—
|
|
|
|
1
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Contributions (to)/from subsidiaries
|
|
|
(26
|
)
|
|
|
(489
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
515
|
|
|
|
—
|
|
Intercompany
|
|
|
—
|
|
|
|
280
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(280
|
)
|
|
|
—
|
|
Acquisition of business, net of cash acquired
|
|
|
—
|
|
|
|
—
|
|
|
|
(515
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(515
|
)
|
Other investing activities, net
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
Net cash from investing activities
|
|
|
(26
|
)
|
|
|
(220
|
)
|
|
|
(672
|
)
|
|
|
(30
|
)
|
|
|
235
|
|
|
|
(713
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
—
|
|
|
|
545
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
545
|
|
Proceeds from issuance of common stock
|
|
|
26
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26
|
|
Payment of tax receivable agreement
|
|
|
(60
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(60
|
)
|
Repayments on long-term borrowings
|
|
|
—
|
|
|
|
(423
|
)
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(427
|
)
|
Contribution from Parent
|
|
|
—
|
|
|
|
—
|
|
|
|
515
|
|
|
|
—
|
|
|
|
(515
|
)
|
|
|
—
|
|
Debt financing costs
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
Changes in intercompany balances
|
|
|
60
|
|
|
|
—
|
|
|
|
(255
|
)
|
|
|
(85
|
)
|
|
|
280
|
|
|
|
—
|
|
Net cash from financing activities
|
|
|
26
|
|
|
|
118
|
|
|
|
257
|
|
|
|
(86
|
)
|
|
|
(235
|
)
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
—
|
|
|
|
(71
|
)
|
|
|
5
|
|
|
|
18
|
|
|
|
—
|
|
|
|
(48
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
102
|
|
|
|
5
|
|
|
|
216
|
|
|
|
—
|
|
|
|
323
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
10
|
|
|
$
|
234
|
|
|
$
|
—
|
|
|
$
|
275
|
|
|
|
Three Quarterly Periods Ended July 2, 2016
|
|
|
|
Parent
|
|
|
Issuer
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
Net sales
|
|
$
|
—
|
|
|
$
|
442
|
|
|
$
|
3,143
|
|
|
$
|
1,286
|
|
|
$
|
—
|
|
|
$
|
4,871
|
|
Cost of goods sold
|
|
|
—
|
|
|
|
373
|
|
|
|
2,490
|
|
|
|
1,022
|
|
|
|
—
|
|
|
|
3,885
|
|
Selling, general and administrative
|
|
|
—
|
|
|
|
89
|
|
|
|
251
|
|
|
|
81
|
|
|
|
—
|
|
|
|
421
|
|
Amortization of intangibles
|
|
|
—
|
|
|
|
6
|
|
|
|
77
|
|
|
|
23
|
|
|
|
—
|
|
|
|
106
|
|
Restructuring and impairment charges
|
|
|
—
|
|
|
|
—
|
|
|
|
23
|
|
|
|
6
|
|
|
|
—
|
|
|
|
29
|
|
Operating income
|
|
|
—
|
|
|
|
(26
|
)
|
|
|
302
|
|
|
|
154
|
|
|
|
—
|
|
|
|
430
|
|
Other expense (income), net
|
|
|
—
|
|
|
|
19
|
|
|
|
(11
|
)
|
|
|
(25
|
)
|
|
|
—
|
|
|
|
(17
|
)
|
Interest expense, net
|
|
|
—
|
|
|
|
27
|
|
|
|
158
|
|
|
|
37
|
|
|
|
—
|
|
|
|
222
|
|
Equity in net income of subsidiaries
|
|
|
(225
|
)
|
|
|
(258
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
483
|
|
|
|
—
|
|
Income before income taxes
|
|
|
225
|
|
|
|
186
|
|
|
|
155
|
|
|
|
142
|
|
|
|
(483
|
)
|
|
|
225
|
|
Income tax expense
|
|
|
66
|
|
|
|
23
|
|
|
|
2
|
|
|
|
36
|
|
|
|
(61
|
)
|
|
|
66
|
|
Net income
|
|
$
|
159
|
|
|
$
|
163
|
|
|
$
|
153
|
|
|
$
|
106
|
|
|
$
|
(422
|
)
|
|
$
|
159
|
|
Comprehensive net income
|
|
$
|
159
|
|
|
$
|
152
|
|
|
$
|
152
|
|
|
$
|
145
|
|
|
$
|
(422
|
)
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operating Activities
|
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
382
|
|
|
$
|
162
|
|
|
$
|
—
|
|
|
$
|
567
|
|
Cash Flow from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant, and equipment
|
|
|
—
|
|
|
|
(13
|
)
|
|
|
(181
|
)
|
|
|
(34
|
)
|
|
|
—
|
|
|
|
(228
|
)
|
Proceeds from sale of assets
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Contributions (to)/from subsidiaries
|
|
|
(20
|
)
|
|
|
(2,240
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,260
|
|
|
|
—
|
|
Intercompany
|
|
|
—
|
|
|
|
11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11
|
)
|
|
|
—
|
|
Acquisition of business, net of cash acquired
|
|
|
—
|
|
|
|
—
|
|
|
|
(291
|
)
|
|
|
(1,992
|
)
|
|
|
—
|
|
|
|
(2,283
|
)
|
Other investing activities, net
|
|
|
—
|
|
|
|
(11
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11
|
)
|
Net cash from investing activities
|
|
|
(20
|
)
|
|
|
(2,253
|
)
|
|
|
(468
|
)
|
|
|
(2,026
|
)
|
|
|
2,249
|
|
|
|
(2,518
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
—
|
|
|
|
2,490
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,490
|
|
Repayments on long-term borrowings
|
|
|
—
|
|
|
|
(356
|
)
|
|
|
—
|
|
|
|
(34
|
)
|
|
|
—
|
|
|
|
(390
|
)
|
Proceeds from issuance of common stock
|
|
|
20
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
Payment of tax receivable agreement
|
|
|
(57
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(57
|
)
|
Contribution from parent
|
|
|
—
|
|
|
|
—
|
|
|
|
291
|
|
|
|
1,969
|
|
|
|
(2,260
|
)
|
|
|
—
|
|
Debt financing costs
|
|
|
—
|
|
|
|
(38
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(38
|
)
|
Purchase of non-controlling interest
|
|
|
—
|
|
|
|
—
|
|
|
|
(66
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(66
|
)
|
Changes in intercompany balances
|
|
|
57
|
|
|
|
—
|
|
|
|
(110
|
)
|
|
|
42
|
|
|
|
11
|
|
|
|
—
|
|
Net cash from financing activities
|
|
|
20
|
|
|
|
2,096
|
|
|
|
115
|
|
|
|
1,977
|
|
|
|
(2,249
|
)
|
|
|
1,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
—
|
|
|
|
(134
|
)
|
|
|
29
|
|
|
|
113
|
|
|
|
—
|
|
|
|
8
|
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
163
|
|
|
|
—
|
|
|
|
65
|
|
|
|
—
|
|
|
|
228
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
178
|
|
|
$
|
—
|
|
|
$
|
236
|
|