**SECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549



**FORM 10-K/A**

****

[X]       Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year endedOctober 1, 2011or[  ]    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period fromto



Commission File Number 003-75706-01**BERRY PLASTICS CORPORATION**(exact name of registrant as specified in charter)





|Delaware                                                           | 35-1814673                              
|------------------------------------------------------------------ | ----------------------------------------
|(State or other jurisdiction

   of incorporation or organization) | (IRS employer

   identification number)
|101 Oakley Street

   Evansville, Indiana                          | 47710                                   
|(Address of principal executive offices)                           | (Zip code)                              

*SEE TABLE OF ADDITIONAL REGISTRANT GUARANTORS*




Registrant’s telephone number, including area code:  (812) 424-2904



Securities registered pursuant to Section 12(b) of the Act:  None



Securities registered pursuant to Section 12(g) of the Act:  None



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



Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.  Yes [X]  No [   ]



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



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes [ X]  No [  ]



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A:  Not applicable.



Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, or non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [     ]                        Accelerated filer  [     ]                                   Non-accelerated filer [  X  ]



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



As of December 19,  2011, all of the outstanding 100 shares of the Common Stock, $.01 par value, of Berry Plastics Corporation were held by Berry Plastics Group, Inc.



DOCUMENTS INCORPORATED BY REFERENCE

None



1




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Table of Additional Registrant Guarantors Exact Name

   Jurisdiction of Organization

   Primary Standard Industrial Classification Code Number

   I.R.S. Employer Identification No.

   Name, Address and Telephone Number of Principal Executive OfficesAerocon, LLC

   Delaware

   3089

   35-1948748

   (a)Berry Iowa, LLC

   Delaware

   3089

   42-1382173

   (a)Berry Plastics Design, LLC

   Delaware

   3089

   62-1689708

   (a)Berry Plastics Technical Services, Inc.

   Delaware

   3089

   57-1029638

   (a)Berry Sterling Corporation

   Delaware

   3089

   54-1749681

   (a)CPI Holding Corporation

   Delaware

   3089

   34-1820303

   (a)Knight Plastics, LLC

   Delaware

   3089

   35-2056610

   (a)Packerware, LLC

   Delaware

   3089

   48-0759852

   (a)Pescor, Inc.

   Delaware

   3089

   74-3002028

   (a)Poly-Seal, LLC

   Delaware

   3089

   52-0892112

   (a)Venture Packaging, Inc.

   Delaware

   3089

   51-0368479

   (a)Venture Packaging Midwest, Inc.

   Delaware

   3089

   34-1809003

   (a)Berry Plastics Acquisition Corporation III

   Delaware

   3089

   37-1445502

   (a)Berry Plastics Opco, Inc.

   Delaware

   3089

   30-0120989

   (a)Berry Plastics Acquisition Corporation V

   Delaware

   3089

   36-4509933

   (a)Berry Plastics Acquisition Corporation VIII

   Delaware

   3089

   32-0036809

   (a)Berry Plastics Acquisition Corporation IX

   Delaware

   3089

   35-2184302

   (a)Berry Plastics Acquisition Corporation X

   Delaware

   3089

   35-2184301

   (a)Berry Plastics Acquisition Corporation XI

   Delaware

   3089

   35-2184300

   (a)Berry Plastics Acquisition Corporation XII

   Delaware

   3089

   35-2184299

   (a)Berry Plastics Acquisition Corporation XIII

   Delaware

   3089

   35-2184298

   (a)Berry Plastics Acquisition Corporation XV, LLC

   Delaware

   3089

   35-2184293

   (a)Kerr Group, LLC

   Delaware

   3089

   95-0898810

   (a)Saffron Acquisition, LLC

   Delaware

   3089

   94-3293114

   (a)Setco, LLC

   Delaware

   3089

   56-2374074

   (a)Sun Coast Industries, LLC

   Delaware

   3089

   59-1952968

   (a)Cardinal Packaging, Inc.

   Ohio

   3089

   34-1396561

   (a)Covalence Specialty Adhesives LLC

   Delaware

   2672

   20-4104683

   (a)Covalence Specialty Coatings LLC

   Delaware

   2672

   20-4104683

   (a)Caplas LLC

   Delaware

   3089

   20-3888603

   (a)Caplas Neptune, LLC

   Delaware

   3089

   20-5557864

   (a)Captive Plastics Holdings, LLC

   Delaware

   3089

   20-1290475

   (a)Captive Plastics, LLC

   Delaware

   3089

   22-1890735

   (a)Grafco Industries Limited Partnership

   Maryland

   3089

   52-1729327

   (a)Rollpak Corporation

   Indiana

   3089

   35-1582626

   (a)Pliant, LLC

   Delaware

   2673

   43-2107725

   (a)Pliant Corporation International

   Utah

   2673

   87-0473075

   (a)Uniplast Holdings, LLC

   Delaware

   2673

   13-3999589

   (a)Uniplast U.S., Inc.

   Delaware

   2673

   04-3199066

   (a)Berry Plastics SP, Inc.

   Virginia

   3089

   52-1444795

   (a)Berry Plastics Filmco, Inc.

   Delaware

   3089

   34-1848686

   (a)BPRex Closure Systems, LLC

   Delaware

   3089

   27-4588544

   (a)BPRex Closures, LLC

   Delaware

   3089

   27-4579074

   (a)BPRex Delta, Inc.

   Delaware

   3089

   71-0725503

   (a)BPRex Closures Kentucky, Inc.

   Delaware

   3089

   56-2209554

   (a)
 (a)  101 Oakley Street, Evansville, IN 47710   2


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EXPLANATORY NOTE  Berry Plastics Corporation (“Berry” or the Company) is filing this amendment to its Annual Report on Form 10-K for the year ended October 1, 2011 (this “Amendment” or “Form 10K/A”) as originally filed with the Securities and Exchange Commission (the “SEC”) on December 19, 2011 (the “Original Filing”), to amend the following items:  ·Disclosure in our Management’s Discussion and Analysis (MD&A)  critical accounting policy Goodwill and Other Indefinite Lived Intangible Assets, which we are revising to provide additional discussion about our non-cash goodwill impairment; ·Disclosure in our MD&A, which we are revising to provide our readers with a more quantitative analysis and additional discussion around the results from our operations; ·The presentation of out Guarantor and Non-Guarantor Financial Information.  The Company has notes outstanding which are fully, jointly, severally, and unconditionally guaranteed by substantially all of Berry’s domestic subsidiaries.  Separate narrative information or financial statements of the guarantor subsidiaries have not been included because they are 100% wholly owned by the parent company and the guarantor subsidiaries unconditionally guarantee such debt on a joint and several basis.  Our guarantor financial information includes substantially all of our domestic operating subsidiaries and our non-guarantor subsidiaries include our foreign subsidiaries and BP Parallel, LLC, a domestic non-guarantor subsidiary that was established to repurchase debt obligations of the Company and Berry Plastics Group, Inc., the parent company of the Company.  These debt repurchases were all made in open-market transactions with third parties.  See footnotes three and eleven for additional discussion of these transactions.  The Company has revised its presentation for the Guarantor and Non-Guarantor Financial Information in this Amendment.  The Company uses the equity method to account for its investment in its subsidiaries.  The revised presentation separates the intercompany receivable balance that was previously included in our Parent Company – Investment in Subsidiary line item on the balance sheet.  The revised presentation also separates the intercompany payable from total equity.  There is no stated redemption date on these intercompany balances, so they are recorded as a current asset and a current liability in our balance sheet.  We have also revised the presentation of our statement of cash flows and reclassified the activity for our Parent Company from Operating Activities to Investing Activities and for our Guarantor and Non-Guarantor subsidiaries from Operating Activities to Investing and Financing Activities.  The principal elimination entries eliminate investments in subsidiaries, intercompany balances and repurchases of debt obligations of Berry Plastics Corporation by BP Parallel, LLC.  This Amendment amends the following sections of the Original Filing:  Item 7 -     Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 8 -     Financial Statements and Supplementary Data. Item 9A - Controls and Procedures Item 15 - Exhibits to Financial Statements and Schedules  In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications in connection with this Amendment No. 1 (Exhibits 31.1, 31.2, 32.1, and 32.2).  Except as described above, no other amendments have been made to the Original Filing.  This amendment does not reflect any events that have occurred subsequent to the date of the Original Filing and speaks only as of such date.          3


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS  This Form 10-K/A for the fiscal period ending October 1, 2011 (“fiscal 2011”) and comparable periods October 2, 2010 (“fiscal 2010”), and September 26, 2009 (“fiscal 2009”) includes "forward-looking statements," within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect to our financial condition, results of operations and business and our expectations or beliefs concerning future events.  Such statements include, in particular, statements about our plans, strategies and prospects under the headings "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and "Business."  You can identify certain forward-looking statements by our use of forward-looking terminology such as, but not limited to, "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "likely," "will," "would," "could" and similar expressions that identify forward-looking statements.  All forward-looking statements involve risks and uncertainties.  Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our operations.  The occurrence of the events described and the achievement of the expected results depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from the forward-looking statements contained in this Form 10-K/A.  Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements 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 laws and regulations; ·risks related to disruptions in the overall economy and the financial markets may adversely impact our business; ·catastrophic loss of one of our key manufacturing facilities; ·risks of competition, including foreign competition, in our existing and future markets; ·general business and economic conditions, particularly an economic downturn; and ·the other factors discussed in the “Risk Factors” section of our Form 10-K  We caution you 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-K/A may not in fact occur. 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.   4


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TABLE OF CONTENTS  FORM 10-K/A FOR THE FISCAL YEAR ENDED OCTOBER 1, 2011  PageItem 7.

   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   6Item 8.

   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   19Item 9A.

   CONTROLS AND PROCEDURES

   19Item 15.

   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

   21
  5


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Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   You should read the following discussion in conjunction with the consolidated financial statements of Berry and its subsidiaries and the accompanying notes thereto, which information is included elsewhere herein.  This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section.  Our actual results may differ materially from those contained in any forward-looking statements.  Overview  We believe we are one of the world’s leading manufacturers and marketers of plastic packaging products, plastic film products, specialty adhesives and coated products. We manufacture a broad range of innovative, high quality packaging solutions using our collection of proprietary molds and an extensive set of internally developed processes and technologies. Our principal products include containers, drink cups, bottles, closures and overcaps, tubes and prescription containers, trash bags, stretch films, engineered films, and tapes which we sell into a diverse selection of attractive and stable end markets, including food and beverage, healthcare, personal care, quick service and family dining restaurants, custom and retail, agricultural, horticultural, institutional, industrial, construction, aerospace, and automotive. We sell our packaging solutions to over 13,000 customers, ranging from large multinational corporations to small local businesses comprised of a favorable balance of leading national blue-chip customers as well as a collection of smaller local specialty businesses. We believe that we are one of the largest global purchasers of polyethylene resin. We believe that our proprietary tools and technologies, low-cost manufacturing capabilities and significant operating and purchasing scale provide us with a competitive advantage in the marketplace. Our unique combination of leading market positions, proven management team, product and customer diversity and manufacturing and design innovation provides access to a variety of growth opportunities. Our top 10 customers represented 17% of our fiscal 2011 net sales with no customer accounting for more than 3% of our fiscal 2011 net sales.  Executive Summary  Business.We organize our business into four operating segments: Rigid Open Top, Rigid Closed Top, Specialty Films, and Tapes, Bags and Coatings.  The Rigid Open Top segment sells products in three categories including containers, foodservice items and home and party.  The Rigid Closed Top segment sells products in three categories including closures and overcaps, bottles and prescription containers and tubes.  The Specialty Films segment sells primarily agricultural film, stretch film, shrink film, engineered film, personal care film, flexible packaging products and PVC film to the agricultural, horticultural institutional, foodservice, personal care, industrial and retail markets.  Our Tapes, Bags and Coatings segment sells specialty adhesive products, flexible packaging, trash bags and building materials to a variety of different industries including building and construction, retail, automotive, industrial and medical markets.  Raw Material Trends. Our primary raw material is plastic resin.  Polypropylene and polyethylene account for more than 90% of our plastic resin purchases based on the pounds purchased.  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 average industry prices, as published in Chem Data, per pound were as follows by fiscal year: Polyethylene Butene Film

   

   Polypropylene2011

   

   2010

   

   2009

   

   2011

   

   2010

   

   20091st quarter

   

   $ .68

   

   $ .71

   

   $.67

   

   $.78

   

   $.70

   

   $.562nd quarter

   

   .72

   

   .67

   

   .59

   

   .95

   

   .82

   

   .463rd quarter

   

   .79

   

   .68

   

   .64

   

   1.08

   

   .84

   

   .534th quarter

   

   .73

   

   .62

   

   .68

   

   .98

   

   .77

   

   .67
  We expect that plastic resin cost volatility will continue in calendar year 2012 as prices are expected to increase in the first half of the year before returning to more normalized levels.  Substantial increases in most commodity grades have


been announced for the second fiscal quarter, with large increases expected in polypropylene, which is seasonally affected by winter turnarounds at the refineries.  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.  During fiscal 2011, the Company made progress towards shortening these timing lags, but we still have a number of customers whose prices adjust quarterly based on various index prices.  This timing lag in passing through raw material increases could negatively affect our results if plastic resin costs increase.  6


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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 pass through raw material cost changes to our customers, improve manufacturing productivity and adapt to volume changes of our customers.  We seek to improve our overall profitability by implementing cost reduction programs for our manufacturing, selling and general and administrative expenses in order to manage inflationary cost pressures. We continue to believe that both the Rexam Specialty Beverage and Closures (“Rexam SBC”) and LINPAC Packaging Filmco, Inc. (“Filmco”) acquisitions completed at the end of fiscal 2011 will be accretive to our operations.  The integration of each of these businesses remains on track and is in line with our expectations.  The Filmco business is scheduled to be converted to the Berry IT platform during the first fiscal quarter of 2012, and the domestic Rexam SBC facilities are expected to be completely converted by the end of the first fiscal quarter of 2013.  We believe that both acquisitions are a fit with our existing product platforms, and we look forward to developing additional opportunities in both businesses throughout fiscal 2012. Recent Developments  In October 2011, the Company received the resignation of Ira G. Boots as Director of Berry Plastics Group, Inc.  Mr. Boots will continue to serve in a consulting role.  Concurrent with Mr. Boots resignation, the Company announced the appointment of B. Evan Bayh, former U.S. Senator and Indiana Governor, to the Board of Directors.  Mr. Bayh was a member of the U.S. Senate from the state of Indiana from 1998 until his retirement in 2011.  While in the Senate, he served on a variety of committees including the Banking, Housing and Urban Affairs Committee, and the Committee on Small Business and Entrepreneurship.  Prior to serving in the Senate, Mr. Bayh served as Indiana Governor from 1988 to 1997.  Beginning January 1, 2012, we are reorganizing our flexible films businesses, which include our Tapes, Bags and Coatings, and Specialty Films divisions, into two new operating divisions.  These new divisions will be named Flexible Packaging and Engineered Materials.  The purpose of structuring our businesses in this manner is to significantly enhance our current product portfolio in the finished flexible packaging space.  This move will allow us to leverage our unique innovation capabilities at the interface of rigid and flexible technologies and to serve our customers with innovative packaging solutions.  Acquisitions, Disposition and Facility Rationalizations  We maintain a selective and disciplined acquisition strategy, which is focused on improving our long term financial performance, enhancing our market positions and expanding our product lines or, in some cases, providing us with a new or complementary product line.  Most businesses we have acquired had profit margins that are lower than that of our existing business, which resulted in a temporary decrease in our margins.  We have historically achieved significant reductions in manufacturing and overhead costs of acquired companies by introducing advanced manufacturing processes, exiting low-margin businesses or product lines, reducing headcount, rationalizing facilities and machinery, applying best practices and capitalizing on economies of scale.  In connection with our acquisitions, we have in the past and may in the future incur charges related to these reductions and rationalizations. The Company has a long history of acquiring and integrating companies.  The Company has been able to achieve these synergies by eliminating duplicative costs and rationalizing facilities and integrating the production into the most efficient operating facility.  While the expected benefits on earnings are 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 on future earnings have been due to systems integrations and movement of activities to multiple facilities.  The


historical business combinations have not allowed the Company to accurately separate realized synergies compared to what was initially identified during the due diligence phase of each acquisition.  7


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The Company has included the expected benefits of acquisition integrations within our unrealized synergies which are in turn recognized in earnings after an acquisition has been fully integrated.  While the expected benefits on earnings is estimated at the commencement of each transaction, due to the nature of the matters 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.  LINPAC Packaging Filmco, Inc. In August 2011, the Company acquired 100% of the common stock of Filmco from LINPAC USA Holdings, Inc., a subsidiary of the UK-based LINPAC Group for a purchase price of $19.  Filmco is a manufacturer of PVC stretch film packaging for fresh meats, produce, freezer and specialty applications.The newly added business will be operated in the Company’s Specialty Films reporting segment.To finance the purchase, the Company used cash on hand and existing credit facilities.  The Filmco 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 estimated fair values at the acquisition date. Rexam Specialty and Beverage Closures In September 2011, the Company acquired 100% of the capital stock of Rexam SBC pursuant to an Equity Purchase Agreement by and among Rexam Inc., Rexam Closures and Containers Inc., Rexam Closure Systems Inc., Rexam Plastic Packaging Inc., Rexam Brazil Closure Inc., Rexam Beverage Can South America S.A. and the Company.  The aggregate purchase price was $351 ($347, net of cash acquired).  Rexam SBC’s primary products include plastic closures, fitments and dispensing closure systems, and jars.The newly added business will be operated in the Company’s Rigid Closed Top reporting segment.To finance the purchase, the Company used cash on hand and existing credit facilities.  The Rexam SBC 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 estimated fair values at the acquisition date. Plant Rationalizations The Company has included the expected impact of restructuring plans within our unrealized synergies which are in turn recognized in earnings after the restructuring plans are completed.  While the expected benefits on earnings is estimated at the commencement of each plan, due to the nature of the matters we are generally unable to accurately estimate or track what the ultimate effects have been.  The Company intends to fund these restructuring plans with cash from operations.  During 2011,the Company announced the intention to shut down five facilities within its Specialty Films division.  The affected Specialty Films business accounted for approximately $130 of annual net sales with the majority of the operations transferred to other facilities.  The Company also announced its intention to shut down a manufacturing location within its Rigid Closed Top division.  The affected Rigid Closed Top business accounted for approximately $14 of annual net sales with the majority of the operations transferred to other facilities.  Discussion of Results of Operations for Fiscal 2011 Compared to Fiscal 2010  Net Sales.  Net sales increased to $4,561 for fiscal 2011 from $4,257 for fiscal 2010.  This increase is primarily attributed to increased selling prices of 9% as a result of higher plastic resin costs as noted in the “Raw Material Trends” section above and the company pursuing a strategy to improve product profitability in markets with historically lower margins and acquisition volume growth of 5% partially offset by a base volume decline of 7%.  The following discussion in this section provides a comparison of net sales by business segment.  8


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Fiscal years ended2011

   2010

   $ Change

   % ChangeNet sales:Rigid Open Top

   $1,291

   $1,192

   $ 99

   8%Rigid Closed Top

   1,053

   970

   83

   9%Specialty Films

   1,609

   1,433

   176

   12%Tapes, Bags and Coatings

   608

   662

   (54)

   (8%)Total net sales

   $4,561

   $4,257

   $304

   7%
  Net sales in the Rigid Open Top business increased from $1,192 in fiscal 2010 to $1,291 in fiscal 2011 as a result of net selling price increases of 9% due to the factors noted above and acquisition growth attributed to Superfos of 1% partially offset by a base volume decline.  The base volume decline is primarily attributed to a decrease in sales volumes in various container products due to market softness partially offset by continued volume growth in thermoforming drink cups as capital investments from prior periods provided additional capacity.  Net sales in the Rigid Closed Top business increased from $970 in fiscal 2010 to $1,053 in fiscal 2011 as a result of net selling price increases of 6% due to the factors noted above and acquisition volume growth attributed to Rexam SBC of 4% partially offset by a base volume decline.  The base volume decline is primarily attributed to a decrease in sales volumes in closures and tubes due to softness in the personal care market.  Net sales in the Specialty Films business increased from $1,433 in fiscal 2010 to $1,609 in fiscal 2011 as a result of net selling price increases of 11% and acquisition volume growth of 12% partially offset by a 10% base volume decline.The base volume decline is primarily attributed to a decrease in sales volumes in institutional can liners, personal care films, barrier films and stretch film due to the Company strategically addressing products with profitability that was lower than the value we believed our product provided to our customers.Net sales in the Tapes, Bags and Coatings business decreased from $662 in fiscal 2010 to $608 in fiscal 2011 primarily as a result of base volume declines of 15% partially offset by net selling price increases of 7%.The base volume decline is primarily attributed to a decrease in sales volumes in bags and sheeting due to the loss of the private label Wal-Mart waste bag business and our decision to exit certain sheeting businesses during fiscal 2010.  Operating Income.Operating income decreased from $124 in fiscal 2010 to $42 in fiscal 2011.  This decrease is primarily attributed to a $165 non-cash goodwill impairment, $11 increase in integration and business optimization expenses excluding acquisition activity for periods without comparable prior year activity, $9 of operating losses from acquisitions for periods without comparable prior year activity, $15 increase in depreciation expense excluding acquisition activity for periods without comparable prior year activity and $13 from base volume decline described above partially offset by $61 from the relationship of net selling price to raw material costs, $5 decrease in amortization expense excluding acquisition activity for periods without comparable prior year activity and $48 of improved operating performance.  The operating loss from acquisition for periods without comparable prior year activity includes $2 of selling, general and administrative expenses and $4 of amortization expense.  The following discussion in this section provides a comparison of operating income by business segment.  Fiscal years ended2011

   2010

   $ Change

   % ChangeOperating income (loss):Rigid Open Top

   $156

   $124

   $ 32

   26%Rigid Closed Top

   77

   73

   4

   5%Specialty Films

   (187)

   (54)

   (133)

   (246%)Tapes, Bags and Coatings

   (4)

   (19)

   15

   79%Total operating income

   $ 42

   $124

   $(82)

   (66%)
  Operating income for the Rigid Open Top business increased from $124 (10% of net sales) for fiscal 2010 to $156 (12% of net sales) in fiscal 2011.  This increase is primarily attributed to $19 of improved operating performance in manufacturing, $22 from the relationship of net selling price to raw material costs and $4 reduction of business optimization expense partially offset by $9 of higher selling, general and administrative expenses attributed to increased accrued performance compensation and $8 of higher depreciation and amortization expense.  Operating income for the Rigid Closed Top business increased from $73 (8% of net sales) for fiscal 2010 to $77 (7% of net sales) in fiscal 2011.  This increase is primarily attributed to $16 of improved operating performance in manufacturing and $4 of operating income from acquisitions partially offset by a $2 negative relationship of net selling price to raw material costs, $3 of higher selling, general and administrative costs attributed to increased accrued performance compensation, $5 increase


in restructuring costs and $4 decline from base volume.  Specialty Films operating loss increased from $54 (negative 4% of net sales) in fiscal 2010 to $187 (negative 12% of net sales) in fiscal 2011.  This increase is primarily attributed to an $165 non-cash goodwill impairment charge, $13 from base volume decline described above as the majority of the segment’s costs are variable and $5 increase in depreciation partially offset by $3 of improved operating performance, $33 improvement from the relationship of net selling price to raw material costs, $9 of lower selling, general and administrative expenses and $5 from acquisitions.  Operating loss for the Tapes, Bags and Coatings business decreased from $19 (negative 3% of net sales) for fiscal 2010 to $4 (negative 1% of net sales) in fiscal 2011.  This improvement is primarily attributed to $8 improvement in the relationship of net selling price to raw material costs, $10 from improved operating performance, $3 of lower depreciation partially offset by increased restructuring charges of $7.  9


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Other Expense (Income), net.Other expense of $61 recorded in fiscal 2011 is primarily attributed to a loss on extinguishment of debt attributed to the write-off of deferred financing fees, debt discount and the premiums paid related to the debt extinguishment of the Company’s87⁄8%Second Priority Senior Secured Notes compared to other income in fiscal 2010 that was primarily attributed to a gain attributed to the fair value adjustment for our interest rate swaps.  Interest Expense.Interest expense increased from $308 in fiscal 2010 to $324 in fiscal 2011 primarily as a result of increased borrowings to fund acquisitions.  Interest Income.Interest income increased from $76 in fiscal 2010 to $103 in fiscal 2011 primarily attributed to non-cash interest and interest accretion income from our investments in Berry Group’s senior unsecured term loan.  Income Tax Benefit.For fiscal 2011, we recorded an income tax benefit of $11 or an effective tax rate of 5% compared to an income tax benefit of $21 or an effective tax rate of 24% in fiscal 2010.  The effective tax rate is less than the statutory rate primarily attributed to the goodwill impairment which is not tax deductible and the establishment of a valuation allowance for certain foreign operating losses where the benefits are not expected to be realized.  Net Loss.  Net loss was $229 for fiscal 2011 compared to $68 for fiscal 2010 for the reasons discussed above.  Discussion of Results of Operations for Fiscal 2010 Compared to Fiscal 2009  Net Sales.  Net sales increased to $4,257 for fiscal 2010 from $3,187 for fiscal 2009.  This increase includes base volume growth of 7% due to the company electing to aggressively protect market share during a soft economic period and acquisition volume growth of 27% attributed to Pliant and Superfos.  The following discussion in this section provides a comparison of net sales by business segment.  Fiscal years ended2010

   2009

   $ Change

   % ChangeNet sales:Rigid Open Top

   $1,192

   $1,063

   $129

   12%Rigid Closed Top

   970

   857

   113

   13%Specialty Films

   1,433

   551

   882

   160%Tapes, Bags and Coatings

   662

   716

   (54)

   (8%)Total net sales

   $4,257

   $3,187

   $1,070

   34%
  Net sales in the Rigid Open Top business increased from $1,063 in fiscal 2009 to $1,192 in fiscal 2010 as a result of base volume growth of 9% and acquisition growth attributed to Superfos.The base volume growth is primarily attributed to increased sales volumes in various container products and continued volume growth in thermoforming drink cups resulting in the company electing to expand our thermoformed drink cup capacity with significant capital investment in fiscal 2010.Net sales in the Rigid Closed Top business increased from $857 in fiscal 2009 to $970 in fiscal 2010 as a result of base volume growth of 14% partially offset by net selling price decreases of 1%.The base volume growth is primarily attributed to increased sales volumes in closures and bottles due to factors listed above.Net sales in the Specialty Films business increased from $551 in fiscal 2009 to $1,433 in fiscal 2010 as a result of net selling price increases of 4%, acquisition volume growth attributed to Pliant and base volume growth of 8% due to factors listed above.  Net sales in the Tapes, Bags and Coatings business decreased from $716 in fiscal 2009 to $662 in


fiscal 2010 primarily as a result of net selling price decreases of 3% and base volume decline of 4%due to factors listed above.  10


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Operating Income.Operating income decreased from $186 in fiscal 2009 to $124 in fiscal 2010.  This decrease is primarily attributed to $13 increase integration and business optimization expenses excluding acquisition activity for periods without comparable prior year activity, $31 of operating losses from acquisitions for periods without comparable prior year activity, $11 increase in depreciation expense excluding acquisition activity for periods without comparable prior year activity and $72 from the relationship of net selling price to raw material costs partially offset by $47 from base volume growth described above, $6 decrease in amortization expense excluding acquisition activity for periods without comparable prior year activity, $6 of lower selling general and administrative expense excluding the impact of acquisition activity for periods without comparable prior year activity and $3 of improved operating performance.  The operating loss from acquisition for periods without comparable prior year activity includes $49 of selling, general and administrative expenses, $40 of integration and business optimization expense and $17 of amortization expense.  The following discussion in this section provides a comparison of operating income by business segment.  Fiscal years ended2010

   2009

   $ Change

   % ChangeOperating income (loss):Rigid Open Top

   $124

   $118

   $ 6

   5%Rigid Closed Top

   73

   59

   14

   24%Specialty Films

   (54)

   (10)

   (44)

   (440%)Tapes, Bags and Coatings

   (19)

   19

   (38)

   (200%)Total operating income

   $124

   $186

   $(62)

   (33%)
  Operating income for the Rigid Open Top business increased from $118 (11% of net sales) for fiscal 2009 to $124 (10% of net sales) in fiscal 2010.  The increase is attributed to $21 increase from base volume growth, $5 of lower selling, general and administrative expenses, $18 reduction of integration and business optimization expense and $6 from acquisitions partially offset by a $30 negative relationship of net selling price to raw material cost, $6 increase in depreciation expense and an $8 decline in operations.  Operating income for the Rigid Closed Top business increased from $59 (7% of net sales) for fiscal 2009 to $73 (8% of net sales) in fiscal 2010.  The increase is primarily attributable to $27 from base volume growth and $2 from improved operating performance in manufacturing partially offset by a $12 negative relationship of net selling price to raw material cost.  Operating loss for the Specialty Films business increased from $10 (negative 2% of net sales) for fiscal 2009 to $54 (negative 4% of net sales) in fiscal 2010.  The increased operating loss is primarily attributable to $37 from acquisitions, including $22 of transaction costs, $11 negative relationship of net selling price to raw material cost and $12 increase of integration and business optimization expense partially offset by $1 lower depreciation and amortization expense, $4 from base volume growth, $4 from improved operating performance in manufacturing partially and $2 of lower selling, general and administrative expenses.  Tapes, Bags and Coatings business declined from $19 (3% of net sales) of operating income for fiscal 2009 to $19 (negative 3% of net sales) of operating loss in fiscal 2010.  The increased operating loss is primarily attributable to $5 decline from base volume loss, $18 increase of integration and business optimization expense and $19 negative relationship of net selling price to raw material cost partially offset by a $4 improvement in operations.  Other Income.Other income recorded in fiscal 2010 is attributed to a $5 gain related to the repurchase of debt and a gain attributed to the fair value adjustment for our interest rate swaps.  Interest Expense.Interest expense increased by $45 in the fiscal 2010 primarily as a result of increased borrowings partially offset by a decline in borrowing rates on variable rate debt partially attributed to the swap agreement that expired in November 2009.  Interest Income.Interest income increased $58 in fiscal 2010 primarily attributed to non-cash interest and interest accretion income from our investments in Berry Group’s senior unsecured term loan.  Income Tax Benefit.For fiscal 2010, we recorded an income tax benefit of $21 or an effective tax rate of 24%, which is a change of $15 from the income tax benefit of $6 or an effective tax rate of 22% in fiscal 2009.  The effective tax rate is less than the statutory rate primarily attributed to the relative impact to permanent items and establishment of valuation allowance for certain foreign operating losses where the benefits are not expected to be realized.  11


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Net Loss.  Net loss was $68 for fiscal 2010 compared to a net loss of $26 for fiscal 2009 for the reasons discussed above.  Income Tax Matters  At fiscal year-end 2011, the Company has unused federal operating loss carryforwards of $593 which begin to expire in 2021 and $33 of foreign operating loss carryforwards.  Alternative minimum tax credit carryforwards of $8 are available to the Company indefinitely to reduce future years’ federal income taxes.  The net operating losses are subject to an annual limitation under guidance from the Internal Revenue Code, however the annual limitation is in excess of the net operating loss, so effectively no limitation exists.  As part of the effective tax rate calculation, if we determine that a deferred tax asset arising from temporary differences is not likely to be utilized, we will establish a valuation allowance against that asset to record it at its expected realizable value.  The Company has not provided a valuation allowance on its net federal net operating loss carryforwards in the United States because it has determined that future rewards of its temporary taxable differences will occur in the same periods and are of the same nature as the temporary differences giving rise to the deferred tax assets.  Our valuation allowance against deferred tax assets was $43 and $47 at the end of fiscal 2011 and 2010, respectively, related to certain foreign and state operating loss carryforwards.  Liquidity and Capital Resources  Senior Secured Credit Facility The Company’s senior secured credit facilities consist of $1,200 term loan and $650 asset based revolving line of credit (“Credit Facility”).  The term loan matures in April 2015 and the revolving line of credit matures in June 2016, subject to certain conditions.  The availability under the revolving line of credit is the lesser of $650 or based on a defined borrowing base which is calculated based on available accounts receivable and inventory.  The revolving line of credit allows up to $130 of letters of credit to be issued instead of borrowings under the revolving line of credit.  At the end of fiscal 2011, the Company had $42 of cash and $195 was outstanding on the revolving credit facility providing unused borrowing capacity of $417 under the revolving line of credit subject to our borrowing base calculations.  The Company was in compliance with all covenants at the end of fiscal 2011.  Our fixed charge coverage ratio, as defined in the revolving credit facility, is calculated based on a numerator consisting of adjusted EBITDA less pro forma adjustments, income taxes paid in cash and capital expenditures, and a denominator consisting of scheduled principal payments in respect of indebtedness for borrowed money, interest expense and certain distributions.  We are obligated to sustain a minimum fixed charge coverage ratio of 1.0 to 1.0 under the revolving credit facility at any time when the aggregate unused capacity under the revolving credit facility is less than 10% of the lesser of the revolving credit facility commitments and the borrowing base (and for 10 business days following the date upon which availability exceeds such threshold) or during the continuation of an event of default.  At the end of fiscal 2011, the Company had unused borrowing capacity of $417 under the revolving credit facility subject to a borrowing base and thus was not subject to the minimum fixed charge coverage ratio covenant.  Our fixed charge ratio was 1.6 to 1.0 at the end of fiscal 2011.  Despite not having financial maintenance covenants, our debt agreements contain certain negative covenants.  The failure to comply with these negative covenants could restrict our ability to incur additional indebtedness, effect acquisitions, enter into certain significant business combinations, make distributions or redeem indebtedness.  The term loan facility contains a negative covenant first lien secured leverage ratio covenant of 4.0 to 1.0 on a pro forma basis for a proposed transaction, such as an acquisition or incurrence of additional first lien debt.  Our first lien secured leverage ratio was 3.3 to 1.0 at the end of fiscal 2011.  A key financial metric utilized in the calculation of the first lien leverage ratio is adjusted EBITDA as defined in the Company’s senior secured credit facilities.  The following table reconciles our adjusted EBITDA for fiscal 2011 to net loss.   12


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Fiscal 2011Adjusted EBITDA

   $ 750Net interest expense

   (221)Depreciation and amortization

   (344)Income tax benefit

   11Business optimization expense

   (37)Restructuring and impairment(a)

   (221)87⁄8% Second Priority Notes extinguishment (b)

   (68)Other

   (5)Pro forma acquisitions

   (55)Unrealized cost savings

   (39)Net loss

   $(229)


Cash flow from operating activities

   $ 326Cash flow from investing activities

   $(523)Cash flow from financing activities

   $91








(a)Includes $165 of non-cash goodwill impairment and $35 of non-cash asset impairments.

(b)Includes $14 of non-cash write off of deferred financing fees, $17 of non-cash write off of debt discount and $37 of premiums paid for extinguishment of debt.



For comparison purposes, the following table reconciles our adjusted EBITDA for the quarterly period ended October 1, 2011, and October 2, 2010, to net loss.



Quarterly Period EndedOctober 1, 2011

   October 2, 2010Adjusted EBITDA

   $ 200

   $ 191Net interest expense

   (53)

   (63)Depreciation and amortization

   (92)

   (85)Income tax (expense) benefit

   (17)

   2Business optimization expense

   (14)

   (13)Restructuring and impairment(a)

   (185)

   (14)Other

   2

   7Pro forma acquisitions

   (7)

   (18)Unrealized cost savings

   (5)

   (20)Net loss

   ($171)

   $(13)




Cash flow from operating activities

   $ 121

   $ 90Cash flow from investing activities

   $(397)

   $ (59)Cash flow from financing activities

   $147

   $ (69)




(a)2011 includes $165 non-cash goodwill impairment and $17 of non-cash asset impairments.



While the determination of appropriate adjustments in the calculation of adjusted EBITDA is subject to interpretation under the terms of the Credit Facility, management believes the adjustments described above are in accordance with the covenants in the Credit Facility.  Adjusted EBITDA should not be considered in isolation or construed as an alternative to our net income (loss) or other measures as determined in accordance with GAAP.  In addition, other companies in our industry or across different industries may calculate bank covenants and related definitions differently than we do, limiting the usefulness of our calculation of adjusted EBITDA as a comparative measure.



In fiscal 2011, BP Parallel LLC invested $39 to purchase $41 aggregate principal amount of our 10 1⁄4% Senior Subordinated Notes and $2 aggregate principal amount of our Second Priority Floating Rate Senior Secured Notes.  The repurchases resulted in a net gain of $4 which is included in Other income in our Consolidated Statement of Operations.



13


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Berry Group Indebtedness In June 2007, Berry Group entered into a $500 senior unsecured term loan agreement (“Senior Unsecured Term Loan”) with a syndicate of lenders.  The Senior Unsecured Term Loan matures in June 2014.  Interest on the agreement is payable on a quarterly basis and bears interest at the Company’s option based on (1) a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Credit Suisse as its “prime rate” plus 525 basis points or (2) LIBOR (0.37% at the end of fiscal 2011) plus 625 basis points.  The Senior Unsecured Term Loan contains a payment in kind (“PIK”) option which allows Berry Group to forgo paying cash interest and to add the PIK interest to the outstanding balance of the loan.  This option expires on the five year anniversary of the loan and if elected increases the rate per annum by 75 basis points for the specific interest period.  Berry Group at its election may make the quarterly interest payments in cash, may make the payments by paying 50% of the interest in cash and 50% in PIK interest or 100% in PIK interest for the first five years.  The Senior Unsecured Term Loan is unsecured and there are no guarantees by Berry or any of its subsidiaries and therefore this financial obligation is not recorded in the Consolidated Financial Statements of Berry.  Berry Group elected to exercise the PIK interest option during fiscal 2009, 2010 and 2011.  Berry Group at its election may call the notes up to the first anniversary date for 100% of the principal balance plus accrued and unpaid interest and an applicable premium.  Berry Group’s call option for the notes between the one year and two year and two year and three year anniversary dates changes to 102% and 101% of the outstanding principal balance plus accrued and unpaid interest, respectively.  The notes also contain a put option which allows the lender to require Berry Group to repay any principal and applicable PIK interest that has accrued if Berry Group has an applicable high yield discount obligation (“AHYDO”) within the definition outlined in the Internal Revenue Code, section 163(i)(1) at each payment period subsequent to the five year anniversary date.  As of October 1, 2011, BP Parallel had invested $191 to purchase assignments of $548 of the Berry Group Senior Unsecured Term Loan.  In fiscal 2010, BP Parallel LLC invested $25 to purchase assignments of $33 principal of the Senior Unsecured Term Loan.  BP Parallel did not purchase assignments in 2011.  We have the intent and ability to hold the security to maturity.  The investment is stated at amortized cost and the discount is being accreted under the effective interest method to interest income until the maturity of the debt in June 2014.  We have recorded the investment in Other assets in the Consolidated Balance Sheet with the fair value of the investments exceeding book value by $159 at fiscal year-end 2011.  We record the interest income and the income from the discount on the purchase of Senior Unsecured Term Loan in Interest income in the Consolidated Statements of Operations.  We have recognized $102 and $75 of interest and accretion income in fiscal 2011 and fiscal 2010, respectively.  The remaining balance outstanding at the end of fiscal 2011 of Senior Unsecured Term Loan was $56.  Contractual Obligations and Off Balance Sheet Transactions  Our contractual cash obligations at the end of fiscal 2011 are summarized in the following table.  Payments due by period as of the end of fiscal 2011Total

   < 1 year

   1-3 years

   4-5 years

   > 5 yearsLong-term debt, excluding capital leases

   $4,486

   $ 12

   $ 235

   $2,937

   $1,302Capital leases (a)

   120

   27

   48

   33

   12Fixed interest rate payments (b)

   1,536

   248

   473

   402

   413Variable interest rate payments (c)

   208

   52

   123

   33

   —Operating leases

   247

   47

   63

   46

   91Funding of pension and other postretirement obligations (d)

   8

   8

   —

   —

   —Total contractual cash obligations

   $6,605

   $394

   $942

   $3,451

   $1,818
  (a)Includes anticipated interest of $22 over the life of the capital leases. (b)Includes variable rate debt subject to interest rate swap agreements. (c)Based on applicable interest rates in effect end of fiscal 2011. (d)Pension and other postretirement contributions have been included in the above table for the next year.  The amount is the estimated contributions to our defined benefit plans.  The assumptions used by the actuary in calculating the projection includes weighted average return on pension assets of approximately 8% for 2011.  The estimation may vary based on the actual return on our plan assets.  See


footnote 9 to the Consolidated or Combined Financial Statements of this Annual Report 10-K for more information on these obligations.  14


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Cash Flows from Operating Activities  Net cash provided by operating activities was $326 for fiscal 2011 compared to $112 of cash flows provided by operating activities for fiscal 2010.  The change is primarily the result of a $115 improvement in working capital and improved profitability, excluding non-cash charges.  Net cash provided by operating activities was $112 for fiscal 2010 compared to $414 of cash flows provided by operating activities for fiscal 2009.  The change is primarily the result of a $250 change in working capital and acquisition costs incurred of $22.  The working capital change is primarily attributed to higher volumes and increased raw material costs.  Net cash provided by operating activities was $414 for fiscal 2009 compared to $10 of cash flows provided by operating activities for fiscal 2008.  The change is primarily the result of a $323 change in working capital primarily due to declining resin costs and improved operating performance primarily driven by realization of synergies and the effect of cost reduction efforts.  Cash Flows from Investing Activities  Net cash used for investing activities was $523 for fiscal 2011 compared to net cash used of $877 for fiscal 2010.  The change is primarily a result of the acquisitions of Pliant and Superfos and higher capital spending in fiscal 2010 partially offset by the acquisitions of Rexam SBC and Filmco in fiscal 2011.Our capital expenditures are forecasted to be approximately $210 for fiscal 2012 and will be funded from cash flows from operating activities and existing liquidity.   Net cash used for investing activities was $877 for fiscal 2010 compared to net cash used of $364 for fiscal 2009.  The changeis primarily a result of the acquisition of Pliant and Superfos partially offset by a reduction in the investment in Berry Group’s Senior Unsecured Term Loan.  Net cash used for investing activities was $364 for fiscal 2009 compared to net cash used of $655 for fiscal 2008.  The changeis primarily a result of the acquisition ofCaptive Plastics, Inc. (“Captive”)in fiscal 2008 partially offset by increased capital spending and the investment in Berry Group’s Senior Unsecured Term Loan in fiscal 2009.  Cash Flows from Financing Activities  Net cash provided by financing activities was $91 for fiscal 2011 compared to net cash provided by financing activities of $903 for fiscal 2010.  This change is primarily attributed to the $1,120 of private placements that was completed in fiscal 2010partially offset by borrowing on the existing line of credit to fund the Rexam SBC acquisition in fiscal 2011.  Net cash provided by financing activities was $903 for fiscal 2010 compared to net cash used for financing activities of $230 for fiscal 2009.  This change is primarily attributed the $620 private placement that was completed in November 2009, in order to fund thePliant acquisition, and $500 private debt placement that was completed in April 2010.  Net cash used for financing activities was $230 for fiscal 2009 compared to net cash provided by financing activities of $820 for fiscal 2008.  This change is primarily attributed to the repayments on the revolving line of credit in fiscal 2009 and the borrowing in fiscal 2008 to fund the Captive acquisition.  Based on our current level of operations, we believe that cash flow from operations and available cash, together with available borrowings under our senior secured credit facilities, will be adequate to meet our short-term liquidity needs over the next twelve months.  We base such belief on historical experience and the funds available under the senior secured credit facility.  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 in this Form 10-K.  In particular, increases in the cost of resin which we are unable to pass through to our customers on a timely basis or significant acquisitions could severely impact our liquidity.  At the end of fiscal 2011, our cash balance was $42, and we had unused borrowing capacity of $417 under our revolving line of credit.  15


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Accounts Receivable and Inventory  2011

   2010Pro Forma Net Sales (last 12 months)

   $4,996

   $4,257Average Accounts Receivable

   514

   409AR Turnover Rate (a)

   9.7

   10.4Pro Forma Cost of Goods Sold (last 12 months)

   $4,248

   $3,667Average Inventory

   581

   479Inventory Turnover Rate (b)

   7.3

   7.7
  Note: Pro Forma Net Sales and Pro Forma Cost of Goods Sold have included the full-year effect of the Rexam SBC acquisition for 2011.  (a) Accounts Receivable Turnover Rate = Pro forma revenue for the last twelve months divided by average accounts receivable. (b) Inventory Turnover Rate = Pro forma cost of goods sold for the last twelve months divided by average ending inventory.  Critical Accounting Policies and Estimates  We disclose those accounting policies that we consider to be significant in determining the amounts to be utilized for communicating our consolidated financial position, results of operations and cash flows in the second note to our consolidated financial statements included elsewhere herein.  Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of financial statements in conformity with these principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.  Actual results are likely to differ from these estimates, but management does not believe such differences will materially affect our financial position or results of operations.  We believe that the following accounting policies are the most critical because they have the greatest impact on the presentation of our financial condition and results of operations.  Revenue Recognition.Revenue from the sales of products is recognized at the time title and risks and rewards of ownership pass to the customer (either when the products reach the free-on-board shipping point or destination depending on the contractual terms), there is persuasive evidence of an arrangement, the sales price is fixed and determinable and collection is reasonably assured. Accrued Rebates.We offer various rebates to our customers in exchange for their purchases.  These rebate programs are individually negotiated with our customers and contain a variety of different terms and conditions.  Certain rebates are calculated as flat percentages of purchases, while others included tiered volume incentives.  These rebates may be payable monthly, quarterly, or annually.  The calculation of the accrued rebate balance involves significant management estimates, especially where the terms of the rebate involve tiered volume levels that require estimates of expected annual sales.These provisions are based on estimates derived from current program requirements and historical experience.We use all available information when calculating these reserves.  Our accrual for customer rebates was $60 and $50as of fiscal year-end 2011 and 2010, respectively.  Impairments of Long-Lived Assets.  In accordance with the guidancefrom the FASBfor the impairment or disposal of long lived assets we review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.  Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.  The impairment loss is measured by comparing the fair value of the asset to its carrying amount.  We recognized non-cash asset impairment of long-lived assets of $35 and $19 in fiscal 2011 and fiscal 2010, respectively.  Goodwill and Indefinite Lived Intangibles.We are required to perform a review for impairment of goodwill and other indefinite lived intangibles to evaluate whether events and circumstances have occurred that may indicate a potential impairment, or on an annual basis. Goodwill is considered to be impaired if we determine that the carrying value of the


reporting unit exceeds its fair value. Other indefinite lived intangibles are considered to be impaired if the carrying value exceeds the fair value.  16


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In accordance with our policy, we completed our most recent annual evaluation for impairment of goodwill as of the first day of the fourth fiscal quarter of 2011. We utilized a six year discounted cash flow analysis with a terminal year in combination with a comparable company market approach to determine the fair value of our reporting units. As of October 2, 2011, we had four operating segments, Rigid Open Top, Rigid Closed Top, Specialty Films and Tapes, Bags & Coatings. Each of the operating segments has goodwill with the exception of the Tapes, Bags & Coatings segment. For purposes of conducting our annual goodwill impairment test, we have determined that our operating segments are the same as our reporting units. We determined that each of the components within each of our respective operating segments have similar economic characteristics and therefore should be aggregated into one reporting unit. We reached this conclusion because within each of our operating segments, we have similar products and production processes which allow us to share assets and resources across the product lines. We regularly realign our production equipment and manufacturing facilities in order to take advantage of cost savings opportunities, obtain synergies and create manufacturing efficiencies.  In addition, we utilize our research and development centers, design center, tool shops, and graphics center which all provide benefits to each of the operating segments and work on new products that can not only benefit one product line, but can benefit multiple product lines. We also believe that the goodwill is recoverable from the overall operations of the segment given the similarity in production processes, synergies from leveraging the combined resources, common raw materials, common research and development, similar margins and similar distribution methodologies.  The Company’s goodwill, fair value and carrying value of our reporting units are as follows:  Goodwill as of(in millions)

   

   Fair Value as of July 2, 2011

   

   Carrying Value as of July 2, 2011

   

   October 1, 2011

   

   October 2, 2010Rigid Open Top

   

   $ 2,110

   

   $ 1,719

   

   $ 690

   

   $ 691Rigid Closed Top

   

   1,800

   

   1,542

   

   819

   

   771Specialty Films

   

   865

   

   982

   

   86

   

   238$ 1,595

   

   $ 1,700
   In connection with our annual impairment test in fiscal 2011, despite generating positive free cash flow in fiscal 2011, we determined that the estimated carrying value of the Specialty Films reporting unit calculated as part of the Step 1 impairment test declined by approximately $225 resulting in the reporting unit’s estimated carrying value exceeding its fair value. This determination required us to perform a Step 2 impairment analysis under ASC 350. Based on our valuation on the Step 2 impairment test, we recorded a goodwill impairment charge of $165. Following our impairment charge, the carrying value of our Specialty Films reporting unit was $817.  In fiscal 2011, we experienced a base volume decline of 11% in our Specialty Films segment. This base volume decline of 11% occurred because of a pricing strategy that we implemented in our second fiscal quarter and continued throughout the remainder of fiscal 2011.  This base volume decline of 11% compares to base volume growth of 4% used in our fiscal 2010 annual impairment test. The volume declines we experienced impacted most of our product lines, which included products acquired as part of the Pliant acquisition and integrated into our combined Specialty Films product lines. These price increases drove declines in our overall volumes when comparing fiscal 2011 to fiscal 2010. Since Pliant was acquired out of bankruptcy in the first quarter of fiscal 2010, we did not have a full year of operating results in fiscal 2010 and this resulted in an increase in our 2011 segment net sales of 12% due to the full year impact which offset this 11% loss in volume.  We assumed a 2011 net sales growth rate of 4% for Pliant within our fiscal 2010 annual impairment test compared to a 2% decline in Pliant’s actual net sales on a pro forma basis. This volume decline resulted in net sales of $1.5 billion for fiscal 2011 (as adjusted for selling price changes, primarily due to the fluctuation in the cost of plastics resins, our primary raw material input, which is largely passed through to customers) compared to the projected net sales of $1.7 billion used in our 2010 annual impairment test. This decline in net sales volume resulted in our assuming a lower sales volume base to grow future earnings during year one through year six of our discounted cash flow model, as we do not anticipate recovering the volume lost to competition as a result of the strategy mentioned above. As a result, the estimated carrying value of the Specialty Films Segment was reduced by approximately $65.   17


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In addition, as a result of a more complete understanding of the Pliant business post integration and the focus on higher margin business noted above, we believe a higher level of capital investment is required in order to achieve desired segment margins. In our fiscal 2011 annual impairment test we estimated a required level of capital investment of 3-4% of sales in years one through six and a terminal year capital investment rate of 4% of sales compared to 2-3% of sales in years one through six and a terminal year capital investment rate of 3% of sales assumed in our fiscal 2010 annual impairment test.  When comparing our fiscal 2010 annual impairment test to our fiscal 2011 annual impairment test the increased levels of capital investment assumed in years one through six of our discounted cash flow model resulted in an estimated carrying value decline of approximately $85.  When comparing our fiscal 2010 annual impairment test to our fiscal 2011 annual impairment test the increased level of capital investment coupled with a lower sales base to grow future earnings mentioned above resulted in a terminal year reduction in the segment’s discounted future cash flows of approximately $75.  We expect to grow our Specialty Films segment in the future at 2-3% through the terminal year, where we have estimated that our terminal growth rate will remain at 3%. We believe the volume declines experienced in fiscal 2011 are primarily attributed to the pricing strategy mentioned above and are not an accurate reflection of the reporting unit’s long term growth rates. The goodwill in our Specialty Films segment consisted of goodwill from our Pliant acquisition ($226) and other previous flexible film acquisitions. If we continue to experience significant volume declines in future years, this could result in additional impairment charges to goodwill in our Specialty Films segment. In addition, if we are unable to maintain or improve our operating margin for our Specialty Films segment, this could also lead to additional impairment charges. A volume decline of greater than 3% in our Specialty Films segment could result in a future impairment.  We also completed our annual impairment test for our Rigid Open Top and Rigid Closed Top reporting units. The fair value of our Rigid Open Top and Rigid Closed Top reporting units substantially exceeded the carrying value of the reporting units by 23% and 17%, respectively for fiscal 2011. Our forecasts for Rigid Open Top and Rigid Closed Top include overall growth of 3-4% through and including the terminal year, which is 3%. Growth by reporting unit varies from year-to-year between segments. A significant decline in our revenue and earnings could result in an impairment charge; however, our Rigid Open Top and Rigid Closed Top reporting units have historically provided consistent operating cash flows excluding the restructuring charges and acquisition integrations that we have undertaken. We also performed our annual impairment test for fiscal 2011 of our indefinite lived intangible assets, which primarily relate to our Rigid Packaging business. The cash flow assumptions, growth rates and risks to these cash flows are similar to those used in our analysis to determine the fair value of our combined Rigid Packaging businesses. The annual impairment test did not result in any impairment as the fair value exceeded the carrying value. A decline of greater than 10% in the fair value of our trademarks could result in future impairments.  Given the uncertainty in economic trends, revenue and earnings growth, the cost of capital and other risk factors discussed under the heading “Risk Factors”, there can be no assurance that when we complete our future annual or other periodic reviews for impairment of goodwill that an additional material impairment charge will not be recorded as a result. In addition, historically we have grown our business by acquiring and integrating companies into our existing operations. We may not, however, achieve the expected benefits of integrating such acquisitions into our business that we anticipated at the time of the transaction or at the time that we performed our annual impairment tests, which may impact the overall recoverability of our goodwill and indefinite lived intangible assets in future periods. We believe based on our current forecasts and estimates that we will not recognize any future impairment charge, but given the current uncertainty in the economic trends, our forecasts and estimates could change quickly and materially in future periods and differ substantially from actual results.  Goodwill totaled $1,595 and $1,700 at the end of fiscal 2011 and 2010, respectively. Indefinite lived trademarks totaled $220 at the end of fiscal 2011 and 2010, respectively. Deferred Taxes and Effective Tax Rates.We estimate the effective tax rates (“ETR”) and associated liabilities or assets for each legal entity of ours in accordance with authoritative guidance.  We use tax-planning to minimize or defer tax liabilities to future periods. In recording ETR’s and related liabilities and assets, we rely upon estimates, which are based upon our interpretation of United States and local tax laws as they apply to our legal entities and our overall tax structure.  Audits by local tax jurisdictions, including the United States Government, could yield different interpretations from our own and cause the Company to owe more taxes than originally recorded.  For interim periods, we accrue our tax provision at the ETR that we expect for the full year.  As the actual results from our various businesses vary from our estimates earlier in the year, we adjust the succeeding interim periods’ ETR’s to reflect our best estimate for the year-to-date results and for the full year.  As part of the ETR, if we determine that a deferred tax asset arising from temporary differences is not likely to be utilized, we will establish a valuation allowance against that asset to record it at its expected realizable value.  The Company believes that it will not generate sufficient future taxable income to realize the tax benefits in multiple foreign jurisdictions,


the Company has provided a full valuation allowance against its foreign net operating losses included within the deferred tax assets in multiple foreign jurisdictions.  The Company has not provided a valuation allowance on its net operating losses in the United States because it has determined that future reversals of its temporary taxable differences will occur in the same periods and are of the same nature as the temporary differences giving rise to the deferred tax assets.  Our valuation allowance against deferred tax assets was $43 and $47 as of fiscal year-end 2011 and 2010, respectively.  18


---



Restructuring.Our restructuring charges consist of four primary costs: workforce reduction or severance, lease termination, non-cash asset impairments and other facility exit costs.  We estimate severance costs when we have an established severance policy, statutory requirements dictate the severance amounts, or we have an established pattern of paying by a specific formula.  Where we have provided notice of cancellation pursuant to a lease agreement or abandoned space and have no intention of reoccupying it, we recognize a loss. The loss reflects our best estimate of the net present value of the future cash flows associated with the lease at the date we vacate the property or sign a sublease arrangement. To determine the loss, we estimate sublease income based on current market quotes for similar properties. When we finalize definitive agreements with the sublessee, we adjust our sublease losses for actual outcomes.  We record non-cash asset impairments on property and equipment that we have no intention of redeploying elsewhere within our Company.  To determine the loss, we estimate fair value based on market knowledge for similar properties and equipment.  We recognize other facility exit costs associated with exit and disposal activities as they are incurred, including moving costs and consulting and legal fees. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our consolidated financial statements provide a meaningful and fair perspective of the Company and its consolidated subsidiaries.  This is not to suggest that other risk factors such as changes in economic conditions, changes in material costs, our ability to pass through changes in material costs, and others could not materially adversely impact our consolidated financial position, results of operations and cash flows in future periods.  Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  Index to Financial StatementsReport of Independent Registered Public Accounting Firm

   F- 1Consolidated Balance Sheets at fiscal year-end 2011 and 2010

   F- 3Consolidated Statements of Operations for the fiscal years ended 2011, 2010 and 2009

   F- 4Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Income (Loss) for the fiscal years ended 2011, 2010 and 2009

   F- 5Consolidated Statements of Cash Flows for the fiscal years ended 2011, 2010 and 2009

   F- 6Notes to Consolidated Financial Statements

   F- 7Index to Financial Statement SchedulesAll schedules have been omitted because they are not applicable or not required or because the required information is included in the consolidated financial statements or notes thereto.
  Item 9A.CONTROLS AND PROCEDURES  (a)Evaluation of disclosure controls and procedures.  Under applicable SEC 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-K) is recorded, processed, summarized, and reported on a timely basis.  19


---



Based on the evaluation of the aggregate deficiencies, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were not effective to ensure that information required to be disclosed was reported at the acceptable level of detail for the period covered by this report.  The following deficient disclosures were identified:  ·Critical Accounting Policy and Estimates:Goodwill and Other Indefinite Lived Intangible Assets.We did not provide readers with sufficient information explaining the factors that led to the recognition of the goodwill impairment charge, along with the future implications to our business. ·Management’s Discussion and Analysis of Financial Condition and Results of Operations.  We did not provide readers with sufficient informative narrative explanations of our financial statements. ·Condensed Consolidating Financial Statement.We did not provide appropriate disclosure and presentation of certain intercompany activity in our condensed consolidating financial statements.  Plans to Remediate Deficiency in Disclosure Controls and Procedures.  In addition to our historical disclosure controls and procedures, the Company will begin a more comprehensive review and approval procedure of disclosures performed by our General Counsel, SEC Counsel, Corporate Controller and Chief Financial Officer.  This will include ensuring the level of information we disclose provides readers with a sufficient detail to understand these policies and estimates related to our critical accounting policies, the significant changes in our financial statements  within MD&A and ensuring intercompany activity is appropriately presented in the condensed consolidating financial statements..  We believe that these actions, when implemented, will remediate the deficiency in our disclosure controls and procedures.  Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management’s assessment of internal control over financial reporting was conducted using the criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring  Organizations of the Treadway Commission (“COSO”).  For purposes of the evaluation, management excluded the disclosure controls and procedures of Rexam SBC and Filmco, which were acquired by the Company in September 2011 and in August 2011, respectively.  See footnote 2 to the Consolidated Financial Statements for further discussion of these acquisitions.  This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only Management’s report in this Annual Report.  A material weakness is a control deficiency, or combination of control deficiencies, that results in the reasonable possibility that there is more than a remote likelihood that a misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or detected in a timely manner. In connection with management’s assessment of our internal control over financial reporting, including considering the revisions included in this amended Form 10-K, the Company evaluated whether each deficiency in disclosure controls and procedures was also a deficiency in our internal control over financial reporting, and if so, whether that deficiency, taken with any other deficiencies that were determined to be in our internal controls over financial reporting, would be a material weakness.  We determined that the deficient review controls associated with the disclosures included in MD&A, including related to our impairment charge and explanation of our financial statements, were not internal controls over financial reporting and therefore did not affect our conclusion related to the effectiveness of our internal controls over financial reporting. With respect to the deficiencies identified related to the condensed consolidating financial statements, in accordance


with our standard procedures for such evaluation, we have concluded that we do not believe that there is a reasonable possibility that the deficiency with our review controls could have resulted in a material misstatement in our financial statements.  As such, management has concluded that our internal control over financial reporting was effective at the end of fiscal 2011, and that there were no material weaknesses in our internal control over financial reporting as of that date.  20


---



(b)Changes in internal controls.  The changes that could materially affect or are reasonably likely to materially affect the Company’s internal control over financial reporting are discussed under “Plans to Remediate Deficiency in Disclosure Controls and Procedures” in Item 9A(a) above.  Item 15.EXHIBITS  Exhibits  The exhibits listed on the accompanying Exhibit Index are filed as part of this report.   21


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Board of Directors and Stockholders Berry Plastics Corporation  We have audited the accompanying consolidated balance sheets of Berry Plastics Corporation (a wholly owned subsidiary of Berry Plastics Group, Inc.) as of October 1, 2011 and October 2, 2010, and the related consolidated statements of operations, changes in stockholders' equity and comprehensive loss, and cash flows for each of the three years in the period ended October 1, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.  In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Berry Plastics Corporation at October 1, 2011 and October 2, 2010, and the consolidated results of its operations and its cash flows for the three years in the period ended October 1, 2011, in conformity with U.S. generally accepted accounting principles.  /s/ Ernst and Young LLP  Indianapolis, Indiana December 19, 2011


---



Berry Plastics Corporation Consolidated Balance Sheets (In Millions of Dollars) October 1, 2011

   

   October 2, 2010AssetsCurrent assets:Cash and cash equivalents

   $ 42

   

   $ 148Accounts receivable (less allowance for doubtful accounts of $4 at fiscal year-end 2011 and 2010)

   543

   

   485Inventory

   578

   

   583Deferred income taxes

   62

   

   53Prepaid expenses and other current assets

   30

   

   46Total current assets

   1,255

   

   1,315Property, plant and equipment

   1,250

   

   1,146Goodwill, intangible assets and deferred costs

   2,704

   

   2,872Other assets

   396

   

   297Total assets

   $5,605

   

   $5,630
  Liabilities and stockholders' equityCurrent liabilities:Accounts payable

   $ 352

   

   $ 362Accrued expenses and other current liabilities

   285

   

   270Current portion of long-term debt

   34

   

   29Total current liabilities

   671

   

   661Long-term debt, less current portion

   4,537

   

   4,345Deferred income taxes

   204

   

   223Other long-term liabilities

   187

   

   144Total liabilities

   5,599

   

   5,373Commitments and contingenciesStockholders' equity:Parent company investment, net

   627

   

   627Non controlling interest

   3

   

   —Accumulated deficit

   (576)

   

   (347)Accumulated other comprehensive loss

   (48)

   

   (23)Total stockholders’ equity

   6

   

   257Total liabilities and stockholders' equity

   $5,605

   

   $5,630
 See notes to consolidated financial statements.   Berry Plastics Corporation Consolidated Statements of Operations


---



(In Millions of Dollars)   Fiscal years endedOctober 1, 2011

   

   October 2, 2010

   

   September 26, 2009Net sales

   $4,561

   

   $4,257

   

   $3,187Costs and expenses:Cost of goods sold

   3,878

   

   3,667

   

   2,641Selling, general and administrative

   381

   

   379

   

   325Restructuring and impairment charges

   221

   

   41

   

   11Other operating expenses

   39

   

   46

   

   24Operating income

   42

   

   124

   

   186Other expense (income)

   61

   

   (19)

   

   (31)Interest expense

   324

   

   308

   

   263Interest income

   (103)

   

   (76)

   

   (18)Net loss from continuing operations before income taxes

   (240)

   

   (89)

   

   (28)Income tax benefit

   (11)

   

   (21)

   

   (6)Net loss from continuing operations

   (229)

   

   (68)

   

   (22)Discontinued operations, net of tax

   —

   

   —

   

   4Net loss

   $ (229)

   

   $ (68)

   

   $ (26)
  See notes to consolidated financial statements.


---



Berry Plastics Corporation Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Loss (In Millions of Dollars)  Parent Company Investment, net

   Non Controlling Interest

   Accumulated Deficit

   

   Accumulated Other Comprehensive Loss

   

   Total

   

   Comprehensive LossBalance at September 27, 2008

   

   $ 617

   $ —

   $ (253)

   

   $ (12)

   

   $ 352Stock compensation expense

   

   12

   —

   —

   

   —

   

   12Derivative instruments

   

   —

   —

   —

   

   8

   

   8Net loss

   

   —

   —

   (26)

   

   —

   

   (26)

   

   (26)Currency translation

   

   —

   —

   —

   

   (16)

   

   (16)

   

   (16)Interest rate hedges, net of tax

   

   —

   —

   —

   

   (4)

   

   (4)

   

   (4)Defined benefit pension and retiree health benefit plans, net of tax

   

   —

   —

   —

   

   (4)

   

   (4)

   

   (4)Balance at September 26, 2009

   

   $ 629

   $ —

   $ (279)

   

   $ (28)

   

   $ 322

   

   $ (50)Stock compensation expense

   

   1

   —

   —

   

   —

   

   1Net transfers to parent

   

   (3)

   —

   —

   

   —

   

   (3)Derivative instruments

   

   —

   —

   —

   

   4

   

   4Net loss

   

   —

   —

   (68)

   

   —

   

   (68)

   

   (68)Currency translation

   

   —

   —

   —

   

   6

   

   6

   

   6Defined benefit pension and retiree health benefit plans, net of tax

   

   —

   —

   —

   

   (5)

   

   (5)

   

   (5)Balance at October 2, 2010

   

   $ 627

   $ —

   $ (347)

   

   $ (23)

   

   $ 257

   

   $ (67)Stock compensation expense

   

   1

   —

   —

   

   —

   

   1Non controlling interest

   

   —

   3

   —

   

   —

   

   3Net transfers to parent

   

   (1)

   —

   —

   

   —

   

   (1)Net loss

   

   —

   —

   (229)

   

   —

   

   (229)

   

   (229)Currency translation

   

   —

   —

   —

   

   (10)

   

   (10)

   

   (10)Interest rate hedges, net of tax

   

   —

   —

   —

   

   (6)

   

   (6)

   

   (6)Defined benefit pension and retiree health benefit plans, net of tax

   

   —

   —

   —

   

   (9)

   

   (9)

   

   (9)Balance at October 1, 2011

   

   $ 627

   $ 3

   $ (576)

   

   $ (48)

   

   $ 6

   

   $ (254)
  See notes to consolidated financial statements.


---



Berry Plastics Corporation Consolidated Statements of Cash Flows (In Millions of Dollars)  Fiscal years endedOctober 1, 2011

   

   October 2, 2010

   

   September 26, 2009Cash Flows from Operating Activities:Net loss

   $ (229)

   

   $ (68)

   

   $ (26)Adjustments to reconcile net cash from operating activities:Depreciation

   238

   

   210

   

   158Amortization of intangibles

   106

   

   107

   

   96Non-cash interest expense

   18

   

   25

   

   37Non-cash interest income

   (103)

   

   (76)

   

   (18)Write-off of deferred financing fees

   68

   

   1

   

   1Non-cash gain on debt repurchase

   (4)

   

   (5)

   

   (26)Deferred income taxes benefit

   (13)

   

   (24)

   

   (8)Impairment of fixed assets and goodwill

   200

   

   19

   

   8Discontinued operations, net of income taxes

   —

   

   —

   

   4Other non-cash items

   (5)

   

   (12)

   

   3Changes in operating assets and liabilities:Accounts receivable, net

   (11)

   

   (41)

   

   85Inventories

   59

   

   (118)

   

   123Prepaid expenses and other assets

   25

   

   12

   

   17Accounts payable and other liabilities

   (23)

   

   82

   

   (40)Net cash from operating activities

   326

   

   112

   

   414Cash Flows from Investing Activities:Additions to property, plant and equipment

   (160)

   

   (223)

   

   (194)Proceeds from disposal of assets

   5

   

   29

   

   4Investment in Berry Plastics Group debt securities

   —

   

   (25)

   

   (169)Acquisitions of business, net of cash acquired

   (368)

   

   (658)

   

   (5)Net cash from investing activities

   (523)

   

   (877)

   

   (364)Cash Flows from Financing Activities:Proceeds from long-term borrowings

   995

   

   1,097

   

   4Transfers to parent, net

   (1)

   

   (3)

   

   —Repayment of long-term debt

   (880)

   

   (153)

   

   (233)Debt financing costs

   (23)

   

   (38)

   

   (1)Net cash from financing activities

   91

   

   903

   

   (230)Effect of currency translation on cash

   —

   

   —

   

   —Net increase (decrease) in cash and cash equivalents

   (106)

   

   138

   

   (180)Cash and cash equivalents at beginning of period

   148

   

   10

   

   190Cash and cash equivalents at end of period

   $ 42

   

   $ 148

   

   $ 10
  See notes to consolidated financial statements.


---



Berry Plastics Corporation Notes to Consolidated Financial Statements (In millions of dollars, except as otherwise noted)  1. 
Basis of Presentation and Summary of Significant Accounting Policies  Background  Berry
Plastics Corporation (“Berry” or the “Company”) is one of the world’s leading
manufacturer and marketers of plastic packaging products, plastic film
products, specialty adhesives and coated products.  Berry’s key principal
productsinclude containers,
drink cups, bottles, closures and overcaps, tubes and prescription containers,
trash bags, stretch films and tapes which we sell into a diverse selection of
attractive and stable end markets, including food and beverage, healthcare,
personal care, quick service and family dining restaurants, custom and retail,
agricultural, horticultural, institutional, industrial, construction,
aerospace, and automotive.  Basis of Presentation  Berry is a wholly-owned subsidiary
of Berry Plastics Group, Inc. (“Berry Group”).  Berry Group is primarily owned
by affiliates of Apollo Management, L.P. (“Apollo”) and Graham Partners (“Graham”).  Periods presented in these financial
statements include fiscal periods ending October 1, 2011 (“fiscal 2011”), October
2, 2010 (“fiscal 2010”), and September 26, 2009 (“fiscal 2009”).  Berry, through its wholly-owned subsidiaries operates in four primary segments:  Rigid Open
Top, Rigid Closed Top, Specialty Films, and Tapes, Bags and Coatings.  The
Company’s customers are located principally throughout the United States, without significant concentration in any one region or with any one customer.  The
Company performs periodic credit evaluations of its customers’ financial
condition and generally does not require collateral.  The Company’s fiscal year
is based on fifty-two or fifty three week periods.  Fiscal 2010 represents a
fifty three week period. The Company has evaluated subsequent events through the
date the financial statements were issued.  The Company has
recorded stock compensation expense of Berry Group in our financial statements
of $1 for the fiscal years ended 2011 and 2010 and $12 for the fiscal year
2009, management fees of $9, $8 and $6 for the fiscal years ended 2011, 2010
and 2009, respectively, charged by Apollo and other investors to Berry Group
and income taxes to push down the respective amounts that relate to the
consolidated or combined operations of the Company.  See footnote 11 for
further discussion of related party transactions.  Consolidation  The consolidated
financial statements include the accounts of Berry and its subsidiaries, all of
which includes our wholly owned and majority owned subsidiaries. Intercompany
accounts and transactions have been eliminated in consolidation.  Where our ownership
of consolidated subsidiaries is less than 100% the non controlling interests
are reflected in stockholders equity.  Revenue Recognition  Revenue from the sales of products is recognized at the
time title and risks and rewards of ownership pass to the customer (either when
the products reach the free-on-board shipping point or destination depending on
the contractual terms), there is persuasive evidence of an arrangement, the
sales price is fixed and determinable and collection is reasonably assured.  Provisions
for certain rebates, sales incentives, trade promotions, coupons, product
returns and discounts to customers are accounted for as reductions in gross
sales to arrive at net sales.  In accordance with the Revenue Recognition
standards of the Accounting Standards Codification (“Codification” or “ASC”),
the Company provides for these items as reductions of revenue at the later of
the date of the sale or the date the incentive is offered.  These provisions
are based on estimates derived from current program requirements and historical
experience.  Shipping, handling, purchasing, receiving, inspecting,
warehousing, and other costs of distribution are presented in cost of goods
sold in the statements of operations.  The Company classifies amounts charged
to its customers for shipping and handling in Net sales in the Consolidated
Statement of Operations.


---



Vendor Rebates, Purchases of Raw Materials and Concentration of Risk  The Company
receives consideration in the form of rebates from certain vendors.  The
Company accrues these as a reduction of inventory cost as earned under existing
programs, and reflects as a reduction of cost of goods sold at the time that
the related underlying inventory is sold to customers.  The largest supplier of the Company’s total resin
material requirements represented 31% of purchases in fiscal 2011.  The Company
uses a variety of dependable suppliers to meet its resin requirements.  Research and
Development  Research and development costs are expensed when
incurred.  The Company incurred research and development expenditures of $20, $21,
and $16 in fiscal 2011, 2010, and 2009, respectively.  Stock-Based
Compensation  The compensation guidance of the FASB requires that the
compensation cost relating to share-based payment transactions be recognized in
financial statements based on alternative fair value models.  The share-based
compensation cost is measured based on the fair value of the equity or
liability instruments issued.  At fiscal year-end 2011, the Company has one share-based
compensation plan, the 2006 Equity Incentive Plan, which is more fully
described in footnote 12.  During fiscal 2007 a one-time
dividend was paid.  Holders of vested stock options received $14, while an
additional $35 was paid to nonvested option holders on the second anniversary
of the dividend grant date.  In December 2008, the Executive Committee of Berry
Group modified the vesting provisions related to the amounts held in escrow. 
This resulted in the immediate vesting and accelerating the recognition of the
remaining unrecorded stock compensation expense of $11 in fiscal 2009.  The Company recorded total stock compensation expense of $1 for fiscal
years 2011 and 2010 and $12 in fiscal year 2009.  The Company utilizes the Black-Scholes option valuation
model for estimating the fair value of the stock options.  The model allows for
the use of a range of assumptions.  Expected volatilities utilized in the
Black-Scholes model are based on implied volatilities from traded stocks of
peer companies. Similarly, the dividend yield is based on historical experience
and the estimate of future dividend yields.  The risk-free interest rate is
derived from the U.S. Treasury yield curve in effect at the time of
grant.  The expected lives of the grants are derived from historical experience
and expected behavior.  The fair value for options granted have been estimated
at the date of grant using a Black-Scholes model, with the following weighted
average assumptions:  Fiscal year2011
 2010
 2009Risk-free interest rate
 1.3%
 2.6%
 1.7-2.5%Dividend yield
 0.0%
 0.0%
 0.0%Volatility factor
 .32 - .34
 .33
 .36 - .37Expected option life
 5 years
 5 years
 5 years
  Foreign
Currency  For the non-U.S.
subsidiaries that account in a functional currency other than U.S. Dollars,
assets and liabilities are translated into U.S. Dollars using period-end
exchange rates.  Sales and expenses are translated at the average exchange
rates in effect during the period.  Foreign currency translation gains and
losses are included as a component of Accumulated other comprehensive income (loss)
within stockholders’ equity.  Gains and losses resulting from foreign currency
transactions, the amounts of which are not material in any period presented are
included in the Consolidated Statements of Operations.  Cash and Cash
Equivalents  All highly liquid investments purchased with a maturity
of three months or less from the time of purchase are considered to be cash
equivalents.  Investment
Policy  All of our material
investments are classified as held-to-maturity. The Company makes investments
in securities for strategic purposes or for long-term returns on cash.  The
Company evaluates the investment guidance of the Financial
Accounting Standard Board ("FASB") in determining how
to classify our securities.  We have the intent and ability
to hold the security to
maturity.  Held-to-maturity securities are stated at amortized cost and with any discount being accreted under the effective interest method to interest income.  The Company has recorded these investments in Other assets in the Consolidated Balance Sheet.  See footnote 11 for further discussion of investments.


---



Allowance for Doubtful Accounts  The Company’s accounts receivable and related allowance for doubtful accounts are analyzed in detail on a quarterly basis and all significant customers with delinquent balances are reviewed to determine future collectibility.  The determinations are based on legal issues (such as bankruptcy status), past history, current financial and credit agency reports, and the experience of the credit representatives.  Reserves are established in the quarter in which the Company makes the determination that the account is deemed uncollectible.  The Company maintains additional reserves based on its historical bad debt experience.  The following table summarizes the activity for the fiscal years 2011, 2010 and 2009 for the allowance for doubtful accounts:  2011

   2010

   2009Allowance for doubtful accounts, beginning

   4

   3

   4Bad debt expense

   1

   2

   3Write-offs against allowance

   (1)

   (1)

   (4)Allowance for doubtful accounts, ending

   4

   4

   3
   Inventories  Inventories are stated at the lower of cost or market and are valued using the first-in, first-out method.  Management periodically reviews inventory balances, using recent and future expected sales to identify slow-moving and/or obsolete items. The cost of spare parts inventory is charged to manufacturing overhead expense when incurred.We evaluate our reserve for inventory obsolescence on a quarterly basis and review inventory on-hand to determine future salability.  We base our determinations on the age of the inventory and the experience of our personnel.  We reserve inventory that we deem to be not salable in the quarter in which we make the determination.  We believe, based on past history and our policies and procedures, that our net inventory is salable.Inventory at fiscal year-end 2011 and fiscal year-end 2010 was:  Inventories:

   2011

   

   2010Finished goods

   338

   

   316Raw materials and supplies

   240

   

   267578

   

   583
  Property, Plant and Equipment  Property, plant and equipment are stated at cost.  Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets ranging from 15 to 25 years for buildings and improvements and two to 10 years for machinery, equipment, and tooling.  Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the lease term.  Repairs and maintenance costs are charged to expense as incurred.  The Company capitalized interest of $3 in 2011 and $2 in fiscal 2010 and 2009.  Property, plant and equipment at fiscal year-end 2011 and fiscal year-end 2010 was:  Property, plant and equipment:

   2011

   

   2010Land, buildings and improvements

   268

   

   261Equipment and construction in progress

   1,836

   

   1,5462,104

   

   1,807Less accumulated depreciation

   854

   

   6611,250

   

   1,146
   Long-lived Assets  Long-lived assets, including property, plant and equipment and definite lived intangible assets are reviewed for impairment in accordance with the Property, Plant and Equipment standard of the ASC whenever facts and circumstances indicate that the carrying amount may not be recoverable.  Specifically, this process involves comparing an asset’s carrying value to the


estimated undiscounted future cash flows the asset is expected to generate over its remaining life.  If this process were to result in the conclusion that the carrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations.  Fair value is determined based upon discounted cash flows or appraisals as appropriate.  Long-lived assets that are held for sale are reported at the lower of the assets’ carrying amount or fair value less costs related to the assets’ disposition.  In connection with our facility rationalizations, werecorded impairment charges totaling $35, $19, and $8 to write-down fixed assets to their net realizable valuables in connection with facility rationalizationsduring fiscal years 2011, 2010, and 2009 respectively.


---



Goodwill  The Company follows the principles provided by the Goodwill and Other Intangibles standard of the ASC. Goodwill is not amortized but rather tested annually for impairment. The Company performs their annual impairment test on the first day of the fourth quarter in each respective fiscal year.  The Company is organized in four operating segments, Rigid Open Top, Rigid Closed Top, Specialty Films and Tapes, Bags and Coatings under the Segment Reporting standard of the ASC. Based on the fact that each reporting unit constitutes a business, has discrete financial information with similar economic characteristics, and the operating results of the component are regularly reviewed by management, the Company applies the provisions set forth by the guidance of the Goodwill and Other Intangibles standard of the ASC and performs the necessary goodwill impairment tests at the reporting unit level.  The Company completed the annual impairmentand determined the carrying value of the Specialty Films division exceeded its fair value.  The Company performed the second step of its evaluation to calculate the impairment and as a result recorded a goodwill impairment charge of $165 in Restructuring and impairment charges on the Consolidated Statement of Operations in fiscal 2011.  The changes to fair value that triggered the impairment charge were primarily attributed to continued softness of market conditions along with base volume declines experienced in fiscal 2011.  The changes in the carrying amount of goodwill by reportable segment are as follows (in millions):  Rigid

   

   Rigid

   

   SpecialtyOpen Top

   

   Closed Top

   

   Films

   

   TotalBalance at fiscal year-end 2009

   

   $ 646

   

   $ 768

   

   $ 17

   

   $ 1,431Adjustment for income taxes

   

   —

   

   —

   

   (2)

   

   (2)Foreign currency translation adjustment

   

   —

   

   3

   

   —

   

   3Goodwill from acquisitions

   

   45

   

   —

   

   223

   

   268Balance at fiscal year-end 2010

   

   $ 691

   

   $ 771

   

   $ 238

   

   $ 1,700Adjustment for income taxes

   

   —

   

   6

   

   4

   

   10Foreign currency translation adjustment

   

   —

   

   (1)

   

   —

   

   (1)Impairment of goodwill

   

   —

   

   —

   

   (165)

   

   (165)Goodwill from acquisitions

   

   (1)

   

   43

   

   9

   

   51Balance at fiscal year-end 2011

   

   $ 690

   

   $ 819

   

   $ 86

   

   $ 1,595
  Deferred Financing Fees  Deferred financing fees are being amortized to interest expense using the effective interest method over the lives of the respective debt agreements.


---



Intangible Assets  Customer relationships are being amortized using an accelerated amortization method which corresponds with the customer attrition rates used in the initial valuation of the intangibles over the estimated life of the relationships which range from 11 to 20 years.  Technology intangibles are being amortized using the straight-line method over the estimated life of the technology which is 11 years.  License intangibles are being amortized using the straight-line method over the life of the license which is 10 years.  Patent intangibles are being amortized using the straight-line method over the shorter of the estimated life of the technology or the patent expiration date ranging from 10 to 20 years, with a weighted-average life of 15 years.  The Company evaluates the remaining useful life of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining useful life.  Trademarks that are expected to remain in use, which are indefinite lived intangible assets, are required to be reviewed for impairment annually.  We completed the annual impairment test of tradenames and noted no impairment.  Cutstomer Relationships

   Trademarks

   Other Intangibles

   Accumulated Amortization

   TotalBalance at fiscal year-end 2009

   

   $ 1,032

   $ 265

   $ 53

   $ (287)

   $ 1,063Amortization expense

   

   —

   —

   —

   (109)

   (109)Acquisition Intangibles

   

   113

   12

   23

   —

   148Balance at fiscal year-end 2010

   

   $ 1,145

   $ 277

   $ 76

   $ (396)

   $ 1,102Adjustment for income taxes

   

   —

   —

   (4)

   —

   (4)Amortization expense

   

   —

   —

   —

   (106)

   (106)Acquisition Intangibles

   

   33

   9

   10

   —

   52Balance at fiscal year-end 2011

   

   $ 1,178

   $ 286

   $ 82

   $ (502)

   $ 1,044
    Insurable Liabilities  The Company records liabilities for the self-insured portion of workers’ compensation, health, product, general and auto liabilities.  The determination of these liabilities and related expenses is dependent on claims experience.  For most of these liabilities, claims incurred but not yet reported are estimated by utilizing actuarial valuations based upon historical claims experience.  Income Taxes  The Company accounts for income taxes under the asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the Company’s financial statements or income tax returns.  Income taxes are recognized during the period in which the underlying transactions are recorded.  Deferred taxes, with the exception of non-deductible goodwill, are provided for temporary differences between amounts of assets and liabilities as recorded for financial reporting purposes and such amounts as measured by tax laws.  If the Company determines that a deferred tax asset arising from temporary differences is not likely to be utilized, the Company will establish a valuation allowance against that asset to record it at its expected realizable value.  The Company recognizes uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.  The Company’s effective tax rate is dependent on many factors including:  the impact of enacted tax laws in jurisdictions in which the Company operates; the amount of earnings by jurisdiction, due to varying tax rates in each country; and the Company’s ability to utilize foreign tax credits related to foreign taxes paid on foreign earnings that will be remitted to the U.S.  Comprehensive Loss  Comprehensive loss is comprised of net loss and other comprehensive losses.  Other comprehensive losses include net unrealized gains or losses resulting from currency translations of foreign subsidiaries, changes in the value of our derivative instruments and adjustments to the pension liability.


---



Accrued Rebates  The Company offers various rebates to customers based on purchases.  These rebate programs are individually negotiated with customers and contain a variety of different terms and conditions.  Certain rebates are calculated as flat percentages of purchases, while others included tiered volume incentives.  These rebates may be payable monthly, quarterly, or annually.  The calculation of the accrued rebate balance involves significant management estimates, especially where the terms of the rebate involve tiered volume levels that require estimates of expected annual sales.  These provisions are based on estimates derived from current program requirements and historical experience.  The accrual for customer rebates was $60 and $50 at the end of fiscal 2011 and 2010, respectively and is included in Accrued expenses and other current liabilities.  Pension  Pension benefit costs include assumptions for the discount rate, retirement age, and expected return on plan assets.  Retiree medical plan costs include assumptions for the discount rate, retirement age, and health-care-cost trend rates.  Periodically, the Company evaluates the discount rate and the expected return on plan assets in its defined benefit pension and retiree health benefit plans.  In evaluating these assumptions, the Company considers many factors, including an evaluation of the discount rates, expected return on plan assets and the health-care-cost trend rates of other companies; historical assumptions compared with actual results; an analysis of current market conditions and asset allocations; and the views of advisers.  Use of Estimates  The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make extensive use of estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of sales and expenses.  Actual results could differ materially from these estimates.  Changes in estimates are recorded in results of operations in the period that the event or circumstances giving rise to such changes occur.  Reclassifications  Certain amounts in the prior year financial statements and related notes have been reclassified to conform to the current year presentation.  Recently Issued Accounting Pronouncements  In December 2007, the FASB issued authoritative guidance that establishes accounting and reporting standards that require (i) noncontrolling interests to be reported as a component of equity; (ii) changes in a parent's ownership interest while the parent retains its controlling interest to be accounted for as equity transactions; and (iii) any retained noncontrolling equity investment upon the deconsolidation of a subsidiary to be initially measured at fair value.  The guidance is to be applied prospectively at the beginning of the first annual reporting period on or after December 15, 2008. We implemented the new standard effective in fiscal 2010. The adoption did not have a material impact on our consolidated financial statements.  In January 2010, the FASB issued an amendment to standard “Fair Value Measurements and Disclosure,” to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. We implemented the new standard effective in fiscal 2011.  The adoption did not have an impact on our consolidated financial statements.  In June 2011, the FASB issuedAccounting Standards Update No. 2011-05: Comprehensive Income(“ASU 2011-05”). ASU 2011-05 amends current presentation guidance by eliminating the option for an entity to present the components of comprehensive income as part of the statement of changes in stockholder's equity and requires presentation of comprehensive income in a single continuous financial statement or in two separate but consecutive financial statements. The amendments in ASU 2011-05 do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 will be effective for the Company on January 1, 2012. The Company is currently assessing the impact of ASU 2011-05 to the presentation of its Statement of Comprehensive Income within its consolidated financial statements.


---



In September 2011, the FASB issuedAccounting Standards Update No. 2011-08: Testing for Goodwill Impairment (“ASU 2011-08”). ASU 2011-08 amends current goodwill impairment testing guidance by providing entities with an option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. ASU 2011-08 will be effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  The adoption of ASU 2011-08 is not expected to have a material impact on the Company's consolidated financial statements.  2. Acquisitions  The Company maintains a selective and disciplined acquisition strategy, which is focused on improving our long term financial performance, enhancing our market positions and expanding our product lines or, in some cases, providing us with a new or complementary product line.  Most businesses we have acquired had profit margins that are lower than that of our existing business, which resulted in a temporary decrease in our margins.  The Company has historically achieved significant reductions in manufacturing and overhead costs of acquired companies by introducing advanced manufacturing processes, exiting low-margin businesses or product lines, reducing headcount, rationalizing facilities and machinery, applying best practices and capitalizing on economies of scale.  In connection with our acquisitions, we have in the past and may in the future incur charges related to these reductions and rationalizations.  The Company has a long history of acquiring and integrating companies.  The Company has been able to achieve these synergies by eliminating duplicative costs and rationalizing facilities and integrating the production into the most efficient operating facility.  While the expected benefits on earnings are estimated at the commencement of each transaction, once the execution of the plan and integration occur, the Company is generally unable to accurately estimate or track what the ultimate effects on future earnings have been due to systems integrations and movement of activities to multiple facilities.  The historical business combinations have not allowed the Company to accurately separate realized synergies compared to what was initially identified during the due diligence phase of each acquisition.  Rexam Specialty and Beverage Closures In September 2011, the Company acquired 100% of the capital stock of Rexam Closures Kentucky Inc., Rexam Delta Inc., Rexam Closures LLC, Rexam Closure Systems LLC, Rexam de Mexico S. de R.L. de C.V., Rexam Singapore PTE Ltd., Rexam Participacoes Ltda. and Rexam Plasticos do Brasil Ltda. (collectively, “Rexam SBC”) pursuant to an Equity Purchase Agreement by and among Rexam Inc., Rexam Closures and Containers Inc., Rexam Closure Systems Inc., Rexam Plastic Packaging Inc., Rexam Brazil Closure Inc., Rexam Beverage Can South America S.A. and the Company.  The aggregate purchase price was $351 ($347, net of cash acquired).  Rexam SBC’s primary products include plastic closures, fitments and dispensing closure systems, and jars.The newly added business is operated in the Company’s Rigid Closed Top reporting segment.To finance the purchase, the Company used cash on hand and existing credit facilities.  The Rexam SBC 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 estimated fair values at the acquisition date. The acquisition was accounted for as a business combination using the purchase method of accounting. The Company has not finalized the purchase price allocation and it is subject to change.  The Company is finalizing their allocation of the purchase price to the fair value on fixed assets, deferred income taxes and reviewing all of the working capital acquired.  The Company has recognized goodwill on this transaction as a result of expected synergies.  A portion of the goodwill will not 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

   $74Property and equipment

   199Intangible assets

   43Goodwill

   50Other long-term liabilities

   (15)Net assets acquired

   $351
  LINPAC Packaging Filmco, Inc. In August 2011, the Company acquired 100% of the common stock of LINPAC Packaging Filmco, Inc. (“Filmco”) from LINPAC USA Holdings, Inc., a subsidiary of the UK-based LINPAC Group for a purchase price of $19.  Filmco is a


manufacturer of PVC stretch film packaging for fresh meats, produce, freezer and specialty applications.The newly added business is operated in the Company’s Specialty Films reporting segment.To finance the purchase, the Company used cash on hand and existing credit facilities.  The Filmco acquisition has been accounted for under the purchase method of accounting, and accordingly, the preliminary purchase price has been allocated to the identifiable assets and liabilities based on estimated fair values at the acquisition date.  The Company has primarily allocated the purchase price to property, plant and equipment, intangible assets, working capital and goodwill.


---



Pliant Corporation  In December 2009, the Company obtained control of 100% of the capital stock of Pliant Corporation (“Pliant”) upon Pliant’s emergence from reorganization pursuant to a proceeding under Chapter 11 of the Bankruptcy Code for a purchase price of $600 ($574, net of cash acquired).   Pliant is a leading manufacturer of value-added films and flexible packaging for food, personal care, medical, agricultural and industrial applications.The newly added business is operated in the Company’s Specialty Films reporting segment.The acquisition was accounted for as a business combination using the purchase method of accounting.  The Company has recognized goodwill on this transaction as a result of expected synergies.  Goodwill will not be deductible for tax purposes.  The following table summarizes the final allocation of purchase price and the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition: Working capital

   $126Property and equipment

   242Intangible assets

   119Goodwill

   226Other long-term liabilities

   (113)Net assets acquired

   $600
  Superfos Packaging, Inc.  In December 2009, the Company acquired 100% of the outstanding common stock of Superfos Packaging, Inc., a manufacturer of injection molded plastic rigid open top containers and other plastic packaging products primarily for food, industrial and personal care end markets.  The newly added business is primarily operated in the Company’s Rigid Open Top reporting segment.  The purchase price was $82 ($80, net of cash acquired) and was funded from cash on hand and the revolving line of credit.  Pro forma net sales were $4,996 and $4,943 and pro forma net losses were $237 and $141 for fiscal 2011 and fiscal 2010, respectively.  The pro forma net sales and net loss assume that the Rexam SBC and Pliant acquisition had occurred as of the beginning of the respective periods.  The pro forma information presented above is for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the Rexam SBC acquisition been consummated at the beginning of the respective period, nor is it necessarily indicative of future operating results.  Further, the information reflects only pro forma adjustments for additional interest expense, amortization and closing expenses, net of the applicable income tax effects.


---



3.  Long-Term Debt  Long-term debt consists of the following as of fiscal year-end 2011 and 2010:  Maturity Date

   2011

   

   2010Term loan

   April 2015

   $ 1,146

   

   $ 1,158Revolving line of credit

   June 2016

   195

   

   ―First Priority Senior Secured Floating Rate Notes

   February 2015

   681

   

   68181⁄4% First Priority Notes

   November 2015

   370

   

   37087⁄8% Second Priority Notes

   September 2014

   ―

   

   773Second Priority Senior Secured Floating Rate Notes

   September 2014

   210

   

   21291/2% Second Priority Notes

   May 2018

   500

   

   50093⁄4% Second Priority Notes

   January 2021

   800

   

   ―101⁄4% Senior Subordinated Notes

   March 2016

   127

   

   16811% Senior Subordinated Notes

   September 2016

   455

   

   455Debt discount, net

   

   (13)

   

   (33)Capital leases and other

   Various

   100

   

   904,571

   

   4,374Less current portion of long-term debt

   

   (34)

   

   (29)$ 4,537

   

   $ 4,345
  Senior Secured Credit Facility  In fiscal 2007, the Company entered into senior secured credit facilities that include a term loan in the principal amount of $1,200 term loan and a revolving credit facility (“Credit Facility”), which was amended in June 2011 to increase the commitments under its revolving credit facility by $150 to a total of $650 and extended the maturity to June 2016, subject to certain conditions.  The Credit Facility provides borrowing availability equal to the lesser of (a) $650 or (b) the borrowing base, which is a function, among other things, of the Company’s accounts receivable and inventory.  The borrowings under the senior secured credit facilities bear interest at a rate equal to an applicable margin plus, as determined at the Company’s option, either (a) a base rate determined by reference to the higher of (1) the prime rate of Credit Suisse, Cayman Islands Branch, as administrative agent, in the case of the term loan facility or Bank of America, N.A., as administrative agent, in the case of the revolving credit facility and (2) the U.S. federal funds rate plus 1/2 of 1% or (b) LIBOR (0.37% for the term loan at fiscal year-end 2011) determined by reference to the costs of funds for eurodollar deposits in dollars in the London interbank market for the interest period relevant to such borrowing Bank Compliance for certain additional costs.  The applicable margin for LIBOR rate borrowings under the revolving credit facility range from 1.75% to 2.25% and for the term loan is 2.00%.  The initial applicable margin for base rate borrowings under the revolving credit facility is 0% and under the term loan is 1.00%.  The term loan facility requires minimum quarterly principal payments of $3 for the first eight years, which commenced in June 2007, with the remaining amount payable in April 2015. In addition, the Company must prepay the outstanding term loan, subject to certain exceptions, with (1) beginning with the Company’s first fiscal year after the closing, 50% (which percentage is subject to a minimum of 0% upon the achievement of certain leverage ratios) of excess cash flow (as defined in the credit agreement); and (2) 100% of the net cash proceeds of all non-ordinary course asset sales and casualty and condemnation events, if the Company does not reinvest or commit to reinvest those proceeds in assets to be used in its business or to make certain other permitted investments within 15 months, subject to certain limitations.  In addition to paying interest on outstanding principal under the senior secured credit facilities, the Company is required to pay a commitment fee to the lenders under the revolving credit facilities in respect of the unutilized commitments thereunder at a rate equal to 0.375% to 0.50% per annum depending on the average daily available unused borrowing capacity. The Company also pays a customary letter of credit fee, including a fronting fee of 0.125% per annum of the stated amount of each outstanding letter of credit, and customary agency fees.  The Company may voluntarily repay outstanding loans under the senior secured credit facilities at any time without premium or penalty, other than customary “breakage” costs with respect to eurodollar loans.  The senior secured credit facilities contain


various restrictive covenants that, among other things and subject to specified exceptions, prohibit the Company from prepaying other indebtedness, and restrict its ability to incur indebtedness or liens, make investments or declare or pay any dividends.  All obligations under the senior secured credit facilities are unconditionally guaranteed by Berry Group and, subject to certain exceptions, each of the Company’s existing and future direct and indirect domestic subsidiaries. The guarantees of those obligations are secured by substantially all of the Company’s assets as well as those of each domestic subsidiary guarantor.


---



The Company’s fixed charge coverage ratio, as defined in the revolving credit facility, is calculated based on a numerator consisting of adjusted EBITDA less pro forma adjustments, income taxes paid in cash and capital expenditures, and a denominator consisting of scheduled principal payments in respect of indebtedness for borrowed money, interest expense and certain distributions.  We are obligated to sustain a minimum fixed charge coverage ratio of 1.0 to 1.0 under the revolving credit facility at any time when the aggregate unused capacity under the revolving credit facility is less than 10% of the lesser of the revolving credit facility commitments and the borrowing base (and for 10 business days following the date upon which availability exceeds such threshold) or during the continuation of an event of default.  At the end of fiscal 2011, the Company had unused borrowing capacity of $417 under the revolving credit facility subject to a borrowing base and thus was not subject to the minimum fixed charge coverage ratio covenant.  The fixed charge ratio was 1.6 to 1.0, at the end of fiscal 2011. Despite not having financial maintenance covenants, our debt agreements contain certain negative covenants.  The failure to comply with these negative covenants could restrict our ability to incur additional indebtedness, effect acquisitions, enter into certain significant business combinations, make distributions or redeem indebtedness.  The term loan facility contains a negative covenant first lien secured leverage ratio covenant of 4.0 to 1.0 on a pro forma basis for a proposed transaction, such as an acquisition or incurrence of additional first lien debt.  Our first lien secured leverage ratio was 3.3 to 1.0 at the end of fiscal 2011.  At fiscal year-end 2011, there was $195 outstanding on the revolving line of credit and $38 in letters of credit outstanding.  At fiscal year-end 2011, the Company had unused borrowing capacity of $417 under the revolving line of credit subject to the Company’s borrowing base calculations.  93⁄4% Second Priority Senior Secured Notes  In November 2010, the Company completed a private placement of $800 aggregate principal amount of 93⁄4% Second Priority Senior Secured Notes due in January 2021. In connection with the private placement we conducted tender offers to purchase, for cash, our 87⁄8% Second Priority Senior Secured Notes due in 2014.  The private placement resulted in the Company recording non-cash write offs of $14 for deferred financing fees, $17 of debt discounts and cash premiums of $37 included in Other operating expenses on the Consolidated Statement of Operations.  The proceeds of this offering were used to fund the repurchase of the 87⁄8% Second Priority Senior Secured Notes pursuant to the tender offers and subsequent redemption of such notes.  The Company’s $800 in aggregate principal amount of 93⁄4% Second Priority Senior Secured Notes mature in January 2021.  No principal payments are required prior to maturity.  Interest on the notes is due semi-annually on January 15 and July 15, commencing in July 2011.  The notes are guaranteed on a second priority secured basis by substantially all of the Company’s existing and future guarantor subsidiaries that secure its obligations under its senior secured credit facilities, subject to certain exceptions and rank equally in right of payment to all existing and future senior secured indebtedness.  The Company was in compliance with all covenantsat fiscal year-end 2011.  Future maturities of long-term debt as of fiscal year-end 2011 are as follows:  2012

   $ 342013

   332014

   2402015

   1,8112016

   1,156Thereafter

   1,310$ 4,584
  Interest paid was $300 in fiscal 2011, $244 in fiscal 2010, and $236 in fiscal 2009.


---



In fiscal 2011, BP Parallel LLC, a non-guarantor subsidiary of the Company, purchased $41 of 10 1⁄4% Senior Subordinated Notes for $38 in cash, plus accrued interest.  The repurchase resulted in a net gain, which is recorded in Other income in our Consolidated Statements of Operations.  The Company funded the purchases with cash on hand.  BP Parallel LLC, a non-guarantor subsidiary of the Company, purchased $2 and $13 of Second Priority Senior Secured Floating Rate Notes for $1 and $11 in cash, plus accrued interest, in fiscal 2011 and fiscal 2010, respectively.  The repurchase resulted in gains which are recorded in Other income in our Consolidated Statements of Operations.  The Company funded the purchases with cash on hand.   4. Financial Instruments and Fair Value Measurements  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.  For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, 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, as determined by FASB guidance, changes in fair value of the derivatives are offset by changes in the fair value of the related hedged item are recorded to Accumulated other comprehensive loss. Management believes hedge effectiveness is evaluated properly in preparation of the financial statements.  Cash Flow Hedging Strategy For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of Accumulated other comprehensive loss and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.  In August 2007, the Company entered into two separate interest rate swap transactions to manage cash flow variability associated with $600 of the outstanding variable rate term loan debt (the “2007 Swaps”).  The swap agreements became effective in November 2007.  The first agreement had a notional amount of $300 and became effective in November 2007 and swaps three month variable LIBOR contracts for a fixed two year rate of 4.875% and expired in November 2009.  The second agreement had a notional amount of $300 and became effective in November 2007 and swaps three month variable LIBOR contracts for a fixed three year rate of 4.920% and expired in November 2010.  In 2008, the Company began utilizing 1-month LIBOR contracts for the underlying senior secured credit facility.  The Company’s change in interest rate selection caused the Company to lose hedge accounting on both of the interest rate swaps.  The Company recorded changes in fair value in the Consolidated Statement of Operations.  In November 2010, the Company entered into two separate interest rate swap transactions to manage cash flow variability associated with $1 billion of the outstanding variable rate term loan debt (the “2010 Swaps”).  The first agreement had a notional amount of $500 and became effective in November 2010.  The agreement swaps three month variable LIBOR contracts for a fixed three year rate of 0.8925% and expires in November 2013.  The second agreement had a notional amount of $500 and became effective in December 2010.  The agreement swaps three month variable LIBOR contracts for a fixed three year rate of 1.0235% and expires in November 2013.  In August 2011, the Company began utilizing 1-month LIBOR contracts for the underlying senior secured credit facility.  The Company’s change in interest rate selection caused the Company to lose hedge accounting on both of the interest rate swaps.  The Company recorded changes in fair value in the Consolidated Statement of Operations and will amortize the previously recorded unrealized losses of $9 as fiscal year-end  2011 to Interest expense through the end of the respective swap agreements.  Liability DerivativesDerivatives not designated as hedging instruments under FASB guidance

   Balance Sheet Location

   2011

   

   2010Interest rate swaps – 2007 Swaps

   Accrued exp and other current liabilities

   $–

   

   $1Interest rate swaps – 2010 Swaps

   Other long-term liabilities

   $8

   

   $–


---



The effect of the derivative instruments on the Consolidated Statement of Operations are as follows:  Statement of Operations Location

   2011

   2010Derivatives not designated as hedging instruments under FASB guidanceInterest rate swaps – 2007 Swaps

   Other income

   $(1)

   $(13)Interest expense

   $ 1

   $ 7Interest rate swaps – 2010 Swaps

   Other income

   $(2)

   $–Interest expense

   $ 1

   $–
  The Fair Value Measurements and Disclosures section of the Accounting Standards Codification (“Codification” or “ASC”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework for measuring fair value.  This section also establishes a three-level hierarchy (Level 1, 2 or 3) for fair value measurements based upon the observability of inputs to the valuation of an asset or liability as of the measurement date.  This section also requires the consideration of the counterparty’s or the Company’s nonperformance risk when assessing fair value.  The Company’s interest rate swap fair values were determined using Level 2 inputs as other significant observable inputs were not available.  The Company’s financial instruments consist primarily of cash and cash equivalents, investments, long-term debt, interest rate swap agreements and capital lease obligations.  The fair value of our investments exceeded book value at fiscal year-end 2011 and 2010, by $159 and $172, respectively.  The following table summarizes our long-term indebtedness for which the book value was in excess of the fair value:  2011

   

   2010First Priority Senior Secured Floating Rate Notes

   61

   

   3487⁄8% Second Priority Notes

   –

   

   179 1⁄2% Second Priority Notes

   83

   

   3193⁄4% Second Priority Notes

   140

   

   –Second Priority Senior Secured Floating Rate Notes

   38

   

   3211% Senior Subordinated Notes

   64

   

   3410 1⁄4% Senior Subordinated Notes

   18

   

   13
  5.  Goodwill, Intangible Assets and Deferred Costs  The following table sets forth the gross carrying amount and accumulated amortization of the Company’s goodwill, intangible assets and deferred costs as of the fiscal year-end 2011 and 2010:  2011

   

   2010

   Amortization PeriodDeferred financing fees

   $ 100

   

   $ 106

   Respective debtAccumulated amortization

   (35)

   

   (36)Deferred financing fees, net

   65

   

   70Goodwill

   1,595

   

   1,700

   Indefinite livedCustomer relationships

   1,178

   

   1,145

   11 – 20 yearsTrademarks

   286

   

   277

   Indefinite livedOther intangibles

   82

   

   76

   10-20 yearsAccumulated amortization

   (502)

   

   (396)Intangible assets, net

   1,044

   

   1,102Total Goodwill, Intangible Assets and Deferred Costs

   $ 2,704

   

   $ 2,872


---



The Company recorded a goodwill impairment charge in the Specialty Films segment in fiscal 2011.  See footnote 1 for further discussion. Future amortization expense for definite lived intangibles at fiscal year-end 2011 for the next five fiscal years is $107, $100, $94, $86 and $80 each year for fiscal years ending 2012, 2013, 2014, 2015, and 2016, respectively.  6.  Lease and Other Commitments and Contingencies  The Company leases certain property, plant and equipment under long-term lease agreements.  Property, plant and equipment under capital leases are reflected on the Company’s balance sheet as owned.  The Company did not enter into any new capital leases during fiscal 2009 and entered into new capital lease obligations totaling $45 and $29 during fiscal 2010 and fiscal 2011, respectively, with various lease expiration dates through 2018.  The Company records amortization of capital leases in Cost of goods sold in the Consolidated Statement of Operations.  Assets under operating leases are not recorded on the Company’s balance sheet.  Operating leases expire at various dates in the future with certain leases containing renewal options.  The Company had minimum lease payments or contingent rentals of $14 and $12 and asset retirement obligations of $6 and $7 at fiscal year-end 2011 and fiscal year-end 2010, respectively.  Total rental expense from operating leases was $59 in fiscal 2011 and $56 for fiscal 2010 and 2009.  Future minimum lease payments for capital leases and noncancellable operating leases with initial terms in excess of one year as of fiscal year-end 2011, are as follows:  Capital Leases

   

   Operating Leases2012

   $ 27

   

   $ 472013

   27

   

   362014

   21

   

   272015

   23

   

   242016

   10

   

   22Thereafter

   12

   

   91120

   

   $ 247Less: amount representing interest

   (22)Present value of net minimum lease payments

   $ 98
  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, the Company believes that any ultimate liability would not be material to its financial position, results of operations or cash flows.  The Company has various purchase commitments for raw materials, supplies and property and equipment incidental to the ordinary conduct of business.  At the end of fiscal 2011, we employed over 16,000 employees. Approximately 11% of our employees are covered by collective bargaining agreements. Four of our twelve agreements, covering approximately 1,200 employees, are scheduled for renegotiation in fiscal 2012.  The remaining agreements expire after fiscal 2012.  7.  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 as of fiscal year-end 2011 and 2010.  2011

   

   2010Employee compensation, payroll and other taxes

   $ 101

   

   $ 80Interest

   62

   

   54Rebates

   60

   

   50Other

   62

   

   86$ 285

   

   $ 270


---



The following table sets forth the totals included in Other long-term liabilities as of fiscal year-end 2011 and 2010.  2011

   

   2010Lease retirement obligation

   $ 20

   

   $ 19Sale-lease backdeferred gain

   35

   

   37Pension liability

   74

   

   67Other

   58

   

   21$ 187

   

   $ 144
  8.  Income Taxes  The Company is being taxed at the U.S. corporate level as a C-Corporation and has provided U.S. Federal, State and foreign income taxes.  Significant components of income tax benefit for the fiscal years ended 2011, 2010 and 2009 are as follows:  2011

   

   2010

   

   2009CurrentUnited StatesFederal

   $—

   

   $ —

   

   $ —State

   1

   

   3

   

   2Non-U.S.

   3

   

   —

   

   —Current income tax provision

   4

   

   3

   

   2Deferred:United StatesFederal

   (22)

   

   (12)

   

   (6)State

   8

   

   (9)

   

   (1)Non-U.S.

   (1)

   

   (3)

   

   (1)Deferred income tax benefit

   (15)

   

   (24)

   

   (8)Benefit for income taxes

   $(11)

   

   $(21)

   

   $(6)
  U.S. loss from continuing operations before income taxes was $(236), $(67) and$(15)for the fiscal years ended 2011, 2010 and 2009, respectively.Non-U.S. loss from continuing operations before income taxes was $(4), $(22) and$(13)for the fiscal years ended 2011, 2010 and 2009, respectively.  The reconciliation between U.S. Federal income taxes at the statutory rate and the Company’s benefit for income taxes on continuing operations for the fiscal years ended 2011, 2010, and 2009 are as follows:  2011

   

   2010

   

   2009U.S. Federal income tax benefit at the statutory rate

   $(84)

   

   $(31)

   

   $(10)Adjustments to reconcile to the income tax provision:U.S. State income tax expense, net of valuation allowance

   9

   

   (6)

   

   (1)Impairment of goodwill

   58

   

   —

   

   —Permanent differences

   1

   

   2

   

   —Transaction costs

   1

   

   3

   

   —Changes in Foreign Valuation Allowance

   3

   

   3

   

   3Rate differences between U.S. and Foreign

   1

   

   4

   

   1FIN 48

   1

   

   —

   

   —Other

   (1)

   

   4

   

   —Benefit for income taxes

   $(11)

   

   $(21)

   

   $(7)


---



Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.  The components of the net deferred income tax liability at fiscal year-end 2011 and 2010 are as follows:  2011

   

   2010Deferred tax assets:Allowance for doubtful accounts

   $ 4

   

   $ 4Deferred gain on sale-leaseback

   15

   

   20Accrued liabilities and reserves

   58

   

   51Inventories

   8

   

   7Net operating loss carryforward

   294

   

   305Alternative minimum tax (AMT) credit carryforward

   8

   

   12Other

   15

   

   5Total deferred tax assets

   402

   

   404Valuation allowance

   (43)

   

   (47)Total deferred tax assets, net of valuation allowance

   359

   

   357Deferred tax liabilities:Property and equipment

   143

   

   152Intangible assets

   346

   

   344Debt extinguishment

   9

   

   8Other

   4

   

   7Total deferred tax liabilities

   502

   

   511Net deferred tax liability

   $ (143)

   

   $ (154)
  In the U.S. the Company had $593 of Federal net operating loss carryforwards.  As of fiscal year-end 2011, the Company had foreign net operating loss carryforwards of $33.  The Federal net operating loss carryforwards will expire in future years beginning 2021.  AMT credit carryforwards totaling $8 are available to the Company indefinitely to reduce future years’ Federal income taxes.  The Company believes that it will not generate sufficient future taxable income to realize the tax benefits in certain foreign jurisdictions related to the deferred tax assets.  The Company also has certain State net operating losses that may expire before they are fully utilized.  Therefore, the Company has provided a full valuation allowance against certain of its foreign net operating losses and a valuation allowance against certain of its state net operating losses included within the deferred tax assets.  Prior changes in ownership have created limitations under Sec. 382 of the internal revenue code on annual usage of net operating loss carryforwards.  However, the Company’s Federal net operating loss carryforwards are available for immediate use.  As part of the effective tax rate calculation, if we determine that a deferred tax asset arising from temporary differences is not likely to be utilized, we will establish a valuation allowance against that asset to record it at its expected realizable value.  The Company has not provided a valuation allowance on its Federal net operating loss carryforwards in the United States because it has determined that future rewards of its temporary taxable differences will occur in the same periods and are of the same nature as the temporary differences giving rise to the deferred tax assets.  Our valuation allowance against deferred tax assets was $43 and $47 as of fiscal year-end 2011 and 2010, respectively, related to the foreign operating loss carryforwards, U.S. State operating loss carryforwards, and foreign tax credit carryforwards.  The Company paid cash taxes of $2, $3 and $4 in fiscal 2011, fiscal 2010 and fiscal 2009, respectively. Uncertain Tax Positions We adopted the provisions of the Income Taxes standard of the Codification. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with guidance provide by FASB


and prescribes a recognition threshold of more-likely-than-not to be sustained upon examination. Our policy to include interest and penalties related to gross unrecognized tax benefits within our provision for income taxes did not change. There was no adjustment to retained earnings upon adoption.


---



The following table summarizes the activity related to our gross unrecognized tax benefits from year-end fiscal 2010 to year-end fiscal 2011: 2011

   2010Beginning unrecognized tax benefits

   $ 34

   $ 30Gross increases – tax positions in prior periods

   3

   1Gross decreases – tax positions in prior periods

   (4)

   —Gross increases – from acquisitions

   2

   3Gross increases – current period tax positions

   1

   1Settlements

   (2)

   —Lapse of statute of limitations

   (1)

   (1)Ending unrecognized tax benefits

   $ 33

   $ 34
 The amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate was $9 and $8 for fiscal year-end 2010 and 2011, respectively. As of fiscal year-end 2011, we have $1 accrued for payment of interest and penalties related to our uncertain tax positions.  Our penalties and interest related to uncertain tax positions are included in income tax expense. We and our subsidiaries are routinely examined by various taxing authorities. Although we file U.S. Federal, U.S. State, and foreign tax returns, our major tax jurisdiction is the U.S. The IRS has completed an examination of our 2003 tax year. Our 2004 - 2010 tax years remain subject to examination by the IRS for U.S. Federal tax purposes.  There are various other on-going audits in various other jurisdictions that are not material to our financial statements. At November 1, 2011, we had unremitted earnings from foreign subsidiaries including earnings that have been or are intended to be permanently reinvested for continued use in foreign operations and that, if distributed, would result in additional income tax expense at approximately the U.S. statutory rate.  We have identified non U.S. funds from Germany, Australia, Belgium and India that are not permanently reinvested and have recognized deferred tax liabilities for additional tax expense that we expect to incur upon repatriation of earnings that are not sourced from previously taxed income. We have not recognized a deferred tax liability for temporary differences related to these investments since such determination is not practical nor considered to be material.   9.  Retirement Plan  The Company maintains nine defined benefit pension plans which cover certain manufacturing facilities.  The Company also maintains a retiree health plan, which covers certain healthcare and life insurance benefits for certain retired employees and their spouses.  Eight of the nine defined benefit plans and the retiree health plan are frozen plans.  The Company uses fiscal year-end as a measurement date for the retirement plans.  The Company sponsors two defined contribution 401(k) retirement plans covering substantially all employees.  Contributions are based upon a fixed dollar amount for employees who participate and percentages of employee contributions at specified thresholds.  Contribution expense for these plans was $6 for fiscal 2011 and 2010 and $1 for fiscal 2009. The Company participates in one multiemployer plan. Contributions to the plan are based on specific percentages of employee compensation and are immaterial. The projected benefit obligations of the Company’s plans presented herein are equal to the accumulated benefit obligations of such plans.  The net amount of liability recognized is included in Other long-term liabilities on the Consolidated Balance Sheets.


---



Defined Benefit Pension Plans

   

   Retiree Health Plan2011

   2010

   

   2011

   2010Change in Projected Benefit Obligations (PBO)PBO at beginning of period

   $ 175

   $ 59

   

   $ 4

   $5Service cost

   —

   —

   

   —

   —Business combinations

   —

   107

   

   —

   —Interest cost

   8

   7

   

   —

   —Actuarial loss (gain)

   4

   9

   

   —

   (1)Benefits paid

   (8)

   (7)

   

   —

   —PBO at end of period

   $179

   $175

   

   $4

   $4Change in Fair Value of Plan AssetsPlan assets at beginning of period

   $ 112

   $ 39

   

   $ —

   $ —Actual return on plan assets

   (2)

   7

   

   —

   —Business combinations

   —

   67

   

   —

   —Company contributions

   7

   6

   

   —

   1Benefits paid

   (8)

   (7)

   

   —

   (1)Plan assets at end of period

   109

   112

   

   —

   —Net amount recognized

   $(70)

   $(63)

   

   $(4)

   $(4)
  At the end of fiscal 2011 the Company had $38 of net unrealized losses recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets.  The Company expects $2 to be realized in fiscal 2012.  The following table presents significant weighted-average assumptions used to determine benefit obligation and benefit cost for the fiscal years ended:  Defined Benefit Pension Plans

   

   Retiree Health Plan(Percents)

   2011

   2010

   

   2011

   2010Weighted-average assumptions:Discount rate for benefit obligation

   4.42

   4.84

   

   4.5

   5.0Discount rate for net benefit cost

   4.84

   5.25

   

   5.0

   5.0Expected return on plan assets for net benefit costs

   8.0

   8.0

   

   8.0

   8.0
   In evaluating the expected return on plan assets, Berry considered its historical assumptions compared with actual results, an analysis of current market conditions, asset allocations, and the views of advisers.  The return on plan assets is derived from target allocations and historical yield by asset type.  Health-care-cost trend rates were assumed to increase at an annual rate of 7.0% in 2011 and thereafter.  A one-percentage-point change in these assumed health care cost trend rates would not have a material impact on our postretirement benefit obligation.  In accordance with the guidancefrom the FASBfor employers’ disclosure about postretirement benefit plan assets the table below disclosesfair values of each pension plan asset category and level within the fair value hierarchy in which it falls. There was no material changes or transfers between level 3 assets and the other levels.


---



Fiscal 2011 Asset Category

   Level 1

   Level 2

   Level 3

   

   TotalCash and cash equivalents

   $ 4

   $ —

   $ —

   

   $ 4U.S. large cap comingled equity funds

   —

   28

   —

   

   28U.S. mid cap equity mutual funds

   10

   —

   —

   

   10U.S. small cap equity mutual funds

   5

   —

   —

   

   5International equity mutual funds

   11

   —

   —

   

   11Real estate equity investment funds

   3

   —

   —

   

   3Corporate bond mutual funds

   30

   —

   —

   

   30Guaranteed investment account

   —

   —

   12

   

   12Other

   6

   —

   —

   

   6Total

   $69

   $ 28

   $ 12

   

   $109
    Fiscal 2010 Asset Category

   Level 1

   Level 2

   Level 3

   

   TotalCash and cash equivalents

   $ 3

   $ —

   $ —

   

   $ 3U.S. large cap comingled equity funds

   —

   23

   —

   

   23U.S. mid cap equity mutual funds

   11

   —

   —

   

   11U.S. small cap equity mutual funds

   6

   —

   —

   

   6International equity mutual funds

   11

   —

   —

   

   11Real estate equity investment funds

   3

   —

   —

   

   3Corporate bond mutual funds

   37

   —

   —

   

   37Guaranteed investment account

   —

   —

   12

   

   12Other

   5

   —

   1

   

   6Total

   $ 76

   $ 23

   $ 13

   

   $112
   The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the fiscal years ending as follows:  Defined Benefit Pension Plans

   

   Retiree Health Plan2012

   $ 9

   

   $12013

   9

   

   —2014

   9

   

   —2015

   9

   

   —2016

   10

   

   —2017-2021

   51

   

   1
  In fiscal 2012, Berry expects to contribute $8 to its retirement plans to satisfy minimum funding requirements for the year.  Net pension and retiree health benefit expense included the following components as of fiscal 2011 and 2010:  2011

   

   2010Defined Benefit Pension PlansService cost

   $—

   

   $—Interest cost

   9

   

   8Amortization

   1

   

   1Expected return on plan assets

   (9)

   

   (8)Net periodic benefit cost

   $ 1

   

   $ 1


---



Our defined benefit pension plan asset allocations as of fiscal year-end 2011 and 2010 are as follows:  2011

   

   2010Asset CategoryEquity securities and equity-like instruments

   

   53%

   

   49%Debt securities

   

   32

   

   40Other

   

   15

   

   11Total

   

   100%

   

   100%
  The Company’s retirement plan assets are invested with the objective of providing the plans the ability to fund current and future benefit payment requirements while minimizing annual Company contributions.  The plans’ asset allocation strategy reflects a long-term growth strategy with approximately 40-50% allocated to growth investments and 40-50% allocated to fixed income investments and 5-10% in other, including cash. The retirement plansheld $5 principal of the Company’s 10 1⁄4% Senior Subordinated Notes at the end of fiscal 2011 and 2010, respectively.The Company re-addresses the allocation of its investments on an annual basis.  10.  Restructuring and Impairment Charges  The Company announced various restructuring plans in the last three fiscal years which included shutting down facilities in all four of the Company’s operating segments.  During fiscal 2009, the Company announced the intention to shut down one manufacturing facility within its Specialty Films division and one manufacturing facility within its Rigid Open Top division.  The $8 of non-cash asset impairment costs recognized in fiscal 2009 related to these restructuring plans has been reported as Restructuring and impairment charges in the Consolidated Statements of Operations. The remaining liability has been included within Accrued expenses and other current liabilities on the Consolidated Balance Sheet.  The affected business accounted for less than $65of annual net sales with majority of the operations transferred to other facilities.  During fiscal 2010, the Company announced the intention to shut down three manufacturing facility within its Tapes, Bags, & Coatings division.  The affected Tapes, Bags & Coatings business accounted for $83 of annual net sales with majority of the operations transferred to other facilities.  The Company also announced the intention to shut down two manufacturing facilities within its Specialty Films division.  The affected Specialty Films business accounted for less than $30 of annual net sales with majority of the operations transferred to other facilities.  The Company recorded $19 of non-cash asset impairment costs in fiscal 2010 related to these restructuring plans and has been reported as Restructuring and impairment charges in the Consolidated Statements of Operations.  These impairments were for building and equipment that exceeded net realizable value as of the valuation dates.  During fiscal 2011, the Company announced the intention to shut down five facilities within its Specialty Films division.  The affected Specialty Films business accounted for approximately $130 of annual net sales with the majority of the operations transferred to other facilities.  The Company also announced its intention to shut down a manufacturing location within its Rigid Closed Top division.  The affected Rigid Closed Top business accounted for approximately $14 of annual net sales with the majority of the operations transferred to other facilities.  The Company recorded $35 of non-cash asset impairment costs in fiscal 2011 related to these restructuring plans and has been reported as Restructuring and impairment charges in the Consolidated Statements of Operations.  These impairments were for building and equipment that exceeded net realizable value as of the valuation dates.


---



The table below sets forth the Company’s estimate of the total cost of the restructuring programs since 2007, the portion recognized through fiscal year-end 2011 and the portion expected to be recognized in a future period:  Expected Total Costs

   

   Cumulative charges through Fiscal 2011

   

   To be Recognized in FutureSeverance and termination benefits

   

   $ 27

   

   $ 27

   

   $—Facility exit costs

   

   49

   

   46

   

   3Asset impairment

   

   80

   

   80

   

   —Other

   

   4

   

   4

   

   —Total

   

   $160

   

   $157

   

   $3
  The tables below sets forth the significant components of the restructuring charges recognized for the fiscal years ended 2011 2010 and 2009, by segment:  Fiscal Year2011

   

   2010

   

   2009Rigid Open TopSeverance & termination benefits

   

   $2

   

   $–

   

   $–Facility exit costs

   

   –

   

   2

   

   2Non-cash asset impairment

   

   –

   

   –

   

   5Total

   

   $2

   

   $2

   

   $7Rigid Closed TopSeverance & termination benefits

   

   $3

   

   $–

   

   $–Facility exit costs

   

   1

   

   3

   

   –Non-cash asset impairment

   

   4

   

   –

   

   –Total

   

   $8

   

   $3

   

   $–Specialty FilmsSeverance & termination benefits

   

   $ 5

   

   $ 7

   

   $–Facility exit costs

   

   4

   

   8

   

   1Non-cash asset impairment

   

   20

   

   11

   

   3Total

   

   $29

   

   $26

   

   $4Tapes, Bags and CoatingsSeverance & termination benefits

   

   $1

   

   $–

   

   $–Facility exit costs

   

   5

   

   2

   

   –Non-cash asset impairment

   

   11

   

   8

   

   –Total

   

   $17

   

   $10

   

   $–ConsolidatedSeverance & termination benefits

   

   $ 11

   

   $ 7

   

   $–Facility exit costs

   

   10

   

   15

   

   3Non-cash asset impairment

   

   35

   

   19

   

   8Total

   

   $56

   

   $41

   

   $11


---



The table below sets forth the activity with respect to the restructuring accrual at fiscal year-end 2011 and 2010:  EmployeeSeveranceand Benefits

   

   FacilitiesExitCosts

   

   Non-cash charges

   

   TotalBalance at fiscal year-end 2009

   $―

   

   $3

   

   $―

   

   $ 3Charges

   8

   

   14

   

   19

   

   41Non-cash asset impairment

   ―

   

   ―

   

   (19)

   

   (19)Acquisition liability assumed

   1

   

   ―

   

   ―

   

   1Cash payments

   (6)

   

   (14)

   

   ―

   

   (20)Balance at fiscal year-end 2010

   3

   

   3

   

   ―

   

   6Charges

   11

   

   10

   

   35

   

   56Non-cash asset impairment

   ―

   

   ―

   

   (35)

   

   (35)Cash payments

   (10)

   

   (10)

   

   ―

   

   (20)Balance at fiscal year-end 2011

   $ 4

   

   $ 3

   

   $―

   

   $ 7
  The restructuring costs accrued as of fiscal year-end 2011 will result in future cash outflows, which are not expected to be material.  11.  Related Party Transactions  Management Fee  The Company is charged a management fee by an affiliate of its principal stockholder and Graham for the provision of management consulting and advisory services provided throughout the year.  The management fee is the greater of $3 or 1.25% of adjusted EBITDA.In addition, Apollo and Graham have the right to terminate the agreement at any time, in which case Apollo and Graham will receive additional consideration equal to the present value of $21 less the aggregate amount of annual management fees previously paid to Apollo and Graham, and the employee stockholders will receive a pro rata payment based on such amount.  Total management fees charged by Apollo and Graham were $9 in fiscal 2011, $8 in fiscal 2010 and $6 in fiscal 2009.  The Company paid $6 and $5 to entities affiliated with Apollo and $1 to entities affiliated with Graham for fiscal 2011 and 2010, respectively.  Berry Group Indebtedness  In June 2007, the Company’s parent, Berry Group, entered into a $500 senior unsecured term loan agreement (“Senior Unsecured Term Loan”) with a syndicate of lenders.  The Senior Unsecured Term Loan matures in June 2014 and was sold at a 1% discount, which is being amortized over the life of the loan.  Interest on the agreement is payable on a quarterly basis and bears interest at the Company’s option based on (1) a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Credit Suisse as its “prime rate” plus 525 basis points or (2) LIBOR (0.37% at fiscal year-end 2011) plus 625 basis points.  The Senior Unsecured Term Loan contains a payment in kind (“PIK”) option which allows Berry Group to forgo paying cash interest and to add the PIK interest to the outstanding balance of the loan.  This option expires on the five year anniversary of the loan and if elected increases the rate per annum by 75 basis points for the specific interest period.  Berry Group at its election may make the quarterly interest payments in cash, may make the payments by paying 50% of the interest in cash and 50% in PIK interest or 100% in PIK interest for the first five years.  The Senior Unsecured Term Loan is unsecured and there are no guarantees by Berry or any of its subsidiaries and therefore this financial obligation is not recorded in the Consolidated Financial Statements of Berry.  Berry Group elected to exercise the PIK interest option during 2010 and 2011.  Berry Group at its election may call the notes up to the first anniversary date for 100% of the principal balance plus accrued and unpaid interest and an applicable premium.  Berry Group’s call option for the notes between the one year and two year and two year and three year anniversary dates changes to 102% and 101% of the outstanding principal balance plus accrued and unpaid interest, respectively.  The notes also contain a put option which allows the lender to require Berry Group to repay any principal and applicable PIK interest that has accrued if Berry Group has an applicable high yield discount obligation (“AHYDO”) within the definition outlined in the Internal Revenue Code, section 163(i)(1) at each payment period subsequent to the five year anniversary date.


---



As of October 1, 2011 BP Parallel had invested $191 to purchase assignments of $548 of the Senior Unsecured Term Loan.  In fiscal 2010, BP Parallel LLC invested $25 to purchase assignments of $33 principal of the Senior Unsecured Term Loan.  BP Parallel did not purchase assignments in 2011.  The Company has the intent and ability to hold the security to maturity.  The investment is stated at amortized cost and the discount is being accreted under the effective interest method to interest income until the maturity of the debt in June 2014.  The Company has recorded the investment in Other assets in the Consolidated Balance Sheet with the fair value of total Senior Unsecured Term Loan investments exceeding book value by $159 at fiscal year-end 2011.  The Company recorded the interest income and the income from the discount on the purchase of Senior Unsecured Term Loan in Interest income in the Consolidated Statements of Operations.  The Company has recognized $102 and $75 of interest and accretion income in fiscal 2011 and fiscal 2010, respectively.  The remaining balance outstanding at the end of fiscal 2011 of Senior Unsecured Term Loan net of the amount owned by BP Parallel is $56.  Other Related Party Transactions  Certain of our management, stockholders and related parties and its affiliates have independently acquired and held financial debt instruments of the Company as of October 2, 2010.  During fiscal 2010, interest expense includes $8 related to this debt.  12.  Stockholders’ Equity  The Company has 100 common shares which are issued and outstanding for each of the periods presented.  All of these shares are owned by Berry Group.  The total Berry Group investment is included in Parent company investment, net on the Consolidated Balance Sheet.  2006 Equity Incentive Plan  In connection with Apollo’s acquisition of the Company, Berry Group adopted an equity incentive plan pursuant to which options to acquire up to 577,252 shares of Group’s common stock may be granted.  Prior to fiscal 2011, the plan was amended to allow for an additional 430,000 options to be granted.  Options granted under the 2006 Equity Incentive Plan may not be assigned or transferred, except to Berry Group or by will or the laws of descent or distribution.  The 2006 Equity Incentive Plan terminates ten years after adoption and no options may be granted under the plan thereafter.  The 2006 Equity Incentive Plan allows for the issuance of non-qualified options, options intended to qualify as “incentive stock options” within the meaning of the Internal Revenue Code of 1986, as amended, and stock appreciation rights.  The employees participating in the 2006 Equity Incentive Plan receive options and stock appreciation rights under the 2006 Equity Incentive Plan pursuant to individual option and stock appreciation rights agreements, the terms and conditions of which are substantially identical.  Each option agreement provides for the issuance of options to purchase common stock of Berry Group.  Options granted under the 2006 Equity Incentive Plan had an exercise price per share that either (1) was fixed at the fair market value of a share of common stock on the date of grant or (2) commenced at the fair market value of a share of common stock on the date of grant and increases at the rate of 15% per year during the term.  Some options granted under the plan become vested and exercisable over a five-year period based on continued service.  Other options become vested and exercisable based on the achievement by the Company of certain financial targets.  Upon a change in control, the vesting schedule with respect to certain options accelerate for a portion of the shares subject to such options.  Since Berry Group’s common stock is not highly liquid, except in certain limited circumstances, the stock options may not be redeemable.  During fiscal 2007 a one-time dividend was paid.  Holders of vested stock options received $14, while an additional $35 was paid to nonvested option holders on the second anniversary of the dividend grant date.  In December 2008, the Executive Committee of Berry Group modified the vesting provisions related to the amounts held in escrow.  This resulted in the immediate vesting and accelerating the recognition of the remaining unrecorded stock compensation expense of $11 in selling, general and administrative expenses recorded in fiscal 2009.  The Company recognized total stock based compensation of $1 for fiscal 2011 and 2010 and $12 for the fiscal 2009.


---



Information related to the 2006 Equity Incentive Plan as of the fiscal year-end 2011 and 2010 is as follows:  2011

   

   2010Number

   Of

   Shares

   Weighted

   Average

   Exercise

   Price

   

   Number

   Of

   Shares

   Weighted

   Average

   Exercise

   PriceOptions outstanding, beginning of period

   866,521

   $ 95.27

   

   801,003

   $ 99.45Options granted

   126,728

   75.10

   

   127,234

   75.33Options exercised or cash settled

   ―

   ―

   

   ―

   ―Options forfeited or cancelled

   (109,475)

   97.25

   

   (61,716)

   103.76Options outstanding, end of period

   883,774

   $94.37

   

   866,521

   $95.27Option price range at end of period

   $37.21 - $112.80

   

   $37.21 - $112.80Options exercisable at end of period

   597,416

   

   494,352Options available for grant at period end

   123,478

   

   140,731Weighted average fair value of options granted during period

   $23

   

   $26
  The fair value for options granted have been estimated at the date of grant using a Black-Scholes model, generally with the following weighted average assumptions:  2011

   

   2010

   

   2009Risk-free interest rate

   1.3%

   

   2.6%

   

   1.7 - 2.5%Dividend yield

   0.0%

   

   0.0%

   

   0.0%Volatility factor

   .32 - .34

   

   .33

   

   .36 - .37Expected option life

   5 years

   

   5 years

   

   5 years
  The following table summarizes information about the options outstanding at fiscal year-end 2011:  Range of ExercisePrices

   Number Outstanding

   Weighted AverageRemaining ContractualLife

   WeightedAverageExercisePrice

   NumberExercisable$37.21 - $112.80

   883,774

   5 years

   $94.37

   597,416
  Notes Receivable from Management  Berry Group has adopted an employee stock purchase program pursuant to which a number of non-executive employees had the opportunity to invest in Berry Group on a leveraged basis. In the event that an employee defaults on a promissory note used to purchase such shares, Berry Group’s only recourse is to the shares of Berry Group securing the note. In this manner, non-executive management acquired 98,052 shares in the aggregate.  Certain of these amounts were repaid by the employees in connection with the special one-time dividend.  The receivable was $2 at the end of fiscal 2011 and 2010.


---



13.  Segment and Geographic Data  Berry’s operations are organized into four reportable segments: Rigid Open Top, Rigid Closed Top, Specialty Films, and Tapes, Bags and Coatings.  The Company has manufacturing and distribution centers in the United States, Canada, Mexico, Belgium, Australia, Germany, Brazil, Malaysia and India.  The North American operation represents 92% of the Company’s net sales, 99% of total long-lived assets, and 96% of the total assets.  Selected information by reportable segment is presented in the following table.  2011

   2010

   2009Net SalesRigid Open Top

   

   $1,291

   $1,192

   $1,063Rigid Closed Top

   

   1,053

   970

   857Specialty Films

   

   1,609

   1,433

   551Tapes, Bags and Coatings

   

   608

   662

   716$4,561

   $4,257

   $3,187Operating income (loss)Rigid Open Top

   

   $156

   $124

   $118Rigid Closed Top

   

   77

   73

   59Specialty Films

   

   (187)

   (54)

   (10)Tapes, Bags and Coatings

   

   (4)

   (19)

   19$42

   $124

   $186
   Depreciation and amortization

   

   2011

   2010

   2009Rigid Open Top

   

   $103

   $95

   $83Rigid Closed Top

   

   95

   91

   93Specialty Films

   

   104

   86

   34Tapes, Bags and Coatings

   

   42

   45

   44$344

   $317

   $254
   Total Assets

   

   2011

   

   2010Rigid Open Top

   

   $1,937

   

   $2,019Rigid Closed Top

   

   2,039

   

   1,647Specialty Films

   

   1,150

   

   1,410Tapes, Bags and Coatings

   

   479

   

   554$5,605

   

   $5,630Goodwill

   

   2011

   

   2010Rigid Open Top

   

   $690

   

   $691Rigid Closed Top

   

   819

   

   771Specialty Films

   

   86

   

   238Tapes, Bags and Coatings

   

   —

   

   —$1,595

   

   $1,700


---



14.  Guarantor and Non-Guarantor Financial Information  The Company has notes outstanding which are fully, jointly, severally, and unconditionally guaranteed by substantially all of Berry’s domestic subsidiaries.  Separate narrative information or financial statements of the guarantor subsidiaries have not been included because they are 100% owned by the parent company and the guarantor subsidiaries unconditionally guarantee such debt on a joint and several basis.  A guarantee of a guarantor 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 indenture, 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 are also limited as necessary to prevent them from constituting a fraudulent conveyance under applicable law and guarantees guaranteeing subordinated debt are subordinated to certain other of the Company’s debts.  Presented below is condensed consolidating financial information for the parent company, guarantor subsidiaries and non-guarantor subsidiaries.  Our guarantor financial information includes all of our domestic operating subsidiaries and our non-guarantor subsidiaries include our foreign subsidiaries and BP Parallel, LLC, a domestic non-guarantor subsidiary that was established to repurchase debt obligations of the Company and Berry Plastics Group, Inc., the parent company of Berry Plastics Corporation.  See footnotes three and eleven for additional discussion of these transactions.  The Company has revised its presentation for the Guarantor and Non-Guarantor Financial Information from what was initially filed in our Form 10-K on December 19, 2011.  The Company uses the equity method to account for its investment in its subsidiaries.  The revised presentation separates intercompany receivable balance that was previously included in our Parent Company – Investment in Subsidiary line item on the balance sheet.  The revised presentation also separates the intercompany payable from total equity.  There is no stated redemption date on these intercompany balances, so they are recorded as a current asset and a current liability in our balance sheet.  We have also revised the presentation of our statement of cash flows and reclassified the activity for our Parent Company from Operating Activities to Investing Activities and for our Guarantor and Non-Guarantor subsidiaries from Operating Activities to Investing and Financing Activities.  The principal elimination entries eliminate investments in subsidiaries, intercompany balances and repurchases of debt obligations of Berry Plastics Corporation by BP Parallel, LLC.  The below tables represent changes from our originally filed Condensed Supplemental Consolidated Financials:


---



Condensed Supplemental Consolidated Balance SheetAs of Fiscal Year end 2011Parent

   Company

   Guarantor

   Subsidiaries

   Non-Guarantor

   Subsidiaries

   Eliminations

   TotalIntercompany receivable

   4,016

   -

   -

   (4,016)

   -Investment in Subsidiaries

   (4,016)

   -

   -

   4,016

   -Total Assets

   $ -

   $ -

   $ -

   $ -

   $ -Intercompany payable

   -

   3,956

   60

   (4,016)

   -Total equity

   -

   ( 3,956)

   (60)

   4,016

   -Total Liabilities & Equity

   $ -

   $ -

   $ -

   $ -

   $ -Condensed Supplemental Consolidated Balance SheetAs of Fiscal Year end 2010Parent

   Company

   Guarantor

   Subsidiaries

   Non-Guarantor

   Subsidiaries

   Eliminations

   TotalIntercompany receivable

   3,691

   -

   -

   (3,691)

   -Investment in Subsidiaries

   (3,691)

   -

   -

   3,691

   -Total Assets

   $ -

   $ -

   $ -

   $ -

   $ -Intercompany payable

   -

   3,638

   53

   (3,691)

   -Total equity

   -

   ( 3,638)

   (53)

   3,691

   -Total Liabilities & Equity

   $ -

   $ -

   $ -

   $ -

   $ -
  Condensed Supplemental Consolidated Statement of Cash FlowsFiscal 2011Parent

   Company

   Guarantor

   Subsidiaries

   Non-Guarantor

   Subsidiaries

   Eliminations

   TotalCash Flow from Operating Activities

   

   $ (166)

   $ 186

   $ (20)

   $ -

   $ -Cash Flow from Investing

   

   

   

   

   

   -(Contributions) distributions to/from subsidiaries

   

   (39)

   -

   -

   39

   -Changes in intercompany balances

   

   166

   -

   -

   (166)

   -Investment in Berry Plastics debt securities

   

   -

   -

   (39)

   39

   -Net cash used in investing activities

   

   127

   -

   (39)

   (88)

   -Cash Flow from FinancingRepayment of long-term debt

   

   39

   -

   -

   (39)

   -Changes in intercompany balances

   

   -

   (186)

   20

   166

   -Contribution from Parent

   

   -

   -

   39

   (39)

   -Net cash provided by financing activities

   

   39

   (186)

   59

   88

   -Condensed Supplemental Consolidated Statement of Cash FlowsFiscal 2010Parent

   Company

   Guarantor

   Subsidiaries

   Non-Guarantor

   Subsidiaries

   Eliminations

   TotalCash Flow from Operating Activities

   

   $ 71

   $ (23)

   $ (48)

   $ -

   $ -Cash Flow from Investing

   

   

   

   

   

   -(Contributions) distributions to/from subsidiaries

   

   (81)

   -

   -

   81

   -Changes in intercompany balances

   

   (71)

   -

   -

   71

   -Investment in Berry Plastics debt securities

   

   -

   -

   (56)

   56

   -Net cash used in investing activities

   

   (152)

   -

   (56)

   208

   -Cash Flow from FinancingRepayment of long-term debt

   

   56

   -

   -

   (56)

   -Equity contributions

   

   25

   -

   (25)

   -

   -Changes in intercompany balances

   

   -

   23

   48

   (71)

   -Contribution from Parent

   

   -

   -

   81

   (81)

   -Net cash provided by financing activities

   

   81

   23

   104

   (208)

   -Condensed Supplemental Consolidated Statement of Cash FlowsFiscal 2009Parent

   Company

   Guarantor

   Subsidiaries

   Non-Guarantor

   Subsidiaries

   Eliminations

   TotalCash Flow from Operating Activities

   

   $ (199)

   $ 184

   $ 15

   $ -

   $ -Cash Flow from Investing

   

   

   

   

   

   -(Contributions) distributions to/from subsidiaries

   

   (190)

   -

   -

   190

   -Changes in intercompany balances

   

   (199)

   -

   -

   (199)

   -Investment in Berry Plastics debt securities

   

   -

   -

   (21)

   21

   -Net cash used in investing activities

   

   9

   -

   (21)

   12

   -Cash Flow from FinancingRepayment of long-term debt

   

   21

   -

   -

   (21)

   -Equity contributions

   

   169

   -

   (169)

   -

   -Changes in intercompany balances

   

   -

   (184)

   (15)

   199

   -Contribution from Parent

   

   -

   -

   190

   (190)

   -Net cash provided by financing activities

   

   190

   (184)

   6

   (12)

   -


---



The tables below represent our Condensed Supplemental Consolidate Financials:  Condensed Supplemental Consolidated Statements of Operations Fiscal 2011ParentCompany

   

   GuarantorSubsidiaries

   

   Non-GuarantorSubsidiaries

   

   Eliminations

   

   TotalNet sales

   $ 695

   

   $3,503

   

   $363

   

   —

   

   $4,561Cost of sales

   626

   

   2,937

   

   315

   

   —

   

   3,878Selling, general and administrative expenses

   56

   

   295

   

   30

   

   —

   

   381Restructuring and impairment charges, net

   30

   

   190

   

   1

   

   —

   

   221Other operating expenses

   —

   

   11

   

   28

   

   —

   

   39Operating income (loss)

   (17)

   

   70

   

   (11)

   

   —

   

   42Other income

   62

   

   (1)

   

   —

   

   —

   

   61Interest expense, net

   49

   

   249

   

   (77)

   

   —

   

   221Equity in net income of subsidiaries

   85

   

   —

   

   —

   

   (85)

   

   —Gain (loss) from continuing operations before income taxes

   (213)

   

   (178)

   

   66

   

   85

   

   (240)Income tax expense (benefit)

   16

   

   (29)

   

   2

   

   —

   

   (11)Net income (loss)

   $(229)

   

   $ (149)

   

   $64

   

   $85

   

   $ (229)
  Condensed Supplemental Consolidated Statements of OperationsFiscal 2010ParentCompany

   

   GuarantorSubsidiaries

   

   Non-GuarantorSubsidiaries

   

   Eliminations

   

   TotalNet sales

   $ 758

   

   $3,166

   

   $333

   

   —

   

   $4,257Cost of sales

   709

   

   2,666

   

   292

   

   —

   

   3,667Selling, general and administrative expenses

   63

   

   285

   

   31

   

   —

   

   379Restructuring and impairment charges, net

   15

   

   24

   

   2

   

   —

   

   41Other operating expenses

   12

   

   17

   

   17

   

   —

   

   46Operating income (loss)

   (41)

   

   174

   

   (9)

   

   —

   

   124Other income

   (19)

   

   —

   

   —

   

   —

   

   (19)Interest expense, net

   54

   

   229

   

   (51)

   

   —

   

   232Gain (loss) from continuing operations before income taxes

   (76)

   

   (55)

   

   42

   

   

   

   (89)Income tax expense (benefit)

   (8)

   

   (17)

   

   4

   

   —

   

   (21)Net income (loss)

   $(68)

   

   $ (38)

   

   $38

   

   —

   

   $ (68)
   Condensed Supplemental Consolidated Statements of OperationsFiscal 2009ParentCompany

   

   GuarantorSubsidiaries

   

   Non-GuarantorSubsidiaries

   

   Eliminations

   

   TotalNet sales

   $ 736

   

   $2,252

   

   $199

   

   —

   

   $3,187Cost of sales

   670

   

   1,802

   

   169

   

   —

   

   2,641Selling, general and administrative expenses

   75

   

   230

   

   20

   

   —

   

   325Restructuring and impairment charges, net

   4

   

   —

   

   7

   

   —

   

   11Other operating expenses

   5

   

   15

   

   4

   

   —

   

   24Operating income (loss)

   (18)

   

   205

   

   (1)

   

   —

   

   186Other (income) expense

   (37)

   

   6

   

   —

   

   —

   

   (31)Interest expense, net

   60

   

   186

   

   (1)

   

   —

   

   245Equity in net income of subsidiaries

   (21)

   

   —

   

   —

   

   21

   

   —Gain (loss) from continuing operations before income taxes

   (20)

   

   13

   

   —

   

   (21)

   

   (28)Income tax expense (benefit)

   2

   

   (12)

   

   4

   

   —

   

   (6)Income (loss) from continuing operations

   (22)

   

   25

   

   (4)

   

   (21)

   

   (22)Discontinued operations, net of income taxes

   4

   

   —

   

   —

   

   —

   

   4Net income (loss)

   $(26)

   

   $ 25

   

   $ (4)

   

   (21)

   

   $ (26)


---



Condensed Supplemental Consolidated Balance Sheet As of fiscal year-end 2011($ in millions) ParentCompany

   

   GuarantorSubsidiaries

   

   Non-GuarantorSubsidiaries

   

   Eliminations

   

   TotalAssetsCurrent assets:Cash and cash equivalents

   $ 20

   

   $ 5

   

   $ 17

   

   $ —

   

   $ 42Accounts receivable, net of allowance

   80

   

   411

   

   52

   

   —

   

   543Inventories

   98

   

   445

   

   35

   

   —

   

   578Prepaid expenses and other current

   72

   

   9

   

   11

   

   —

   

   92Intercompany receivable

   4,016

   

   —

   

   —

   

   (4,016)

   

   —Total current assets

   4,286

   

   870

   

   115

   

   (4,016)

   

   1,255Property, plant and equipment, net

   129

   

   1,048

   

   73

   

   —

   

   1,250Intangible assets, net

   207

   

   2,447

   

   52

   

   (2)

   

   2,704Investment in Subsidiaries

   417

   

   —

   

   —

   

   (417)

   

   —Other assets

   —

   

   7

   

   511

   

   (122)

   

   396Total Assets

   $5,039

   

   $4,372

   

   $751

   

   **$(4,557)**

   

   $5,605Liabilities and EquityCurrent liabilities:Accounts payable

   $ 98

   

   $ 231

   

   $ 23

   

   $ —

   

   $ 352Accrued and other current liabilities

   147

   

   126

   

   13

   

   (1)

   

   285Long-term debt—current portion

   32

   

   —

   

   2

   

   —

   

   34Intercompany payable

   —

   

   3,956

   

   60

   

   (4,016)

   

   —Total current liabilities

   277

   

   4,313

   

   98

   

   (4,017)

   

   671Long-term debt

   4,688

   

   —

   

   3

   

   (154)

   

   4,537Deferred tax liabilities

   —

   

   194

   

   10

   

   —

   

   204Other long term liabilities

   68

   

   114

   

   5

   

   —

   

   187Total long-term liabilities

   4,756

   

   308

   

   18

   

   (154)

   

   4,928Total Liabilities

   5,033

   

   4,621

   

   116

   

   (4,171)

   

   5,599Total Equity

   6

   

   (249)

   

   635

   

   (386)

   

   6Total Liabilities and Equity

   $5,039

   

   $4,372

   

   $751

   

   **$(4,557)**

   

   $5,605


---



Condensed Supplemental Consolidated Balance Sheet As of fiscal year-end 2010($ in millions) ParentCompany

   

   GuarantorSubsidiaries

   

   Non-GuarantorSubsidiaries

   

   Eliminations

   

   TotalAssetsCurrent assets:Cash and cash equivalents

   $ 132

   

   $ 2

   

   $ 14

   

   $ —

   

   $ 148Accounts receivable, net of allowance

   89

   

   341

   

   55

   

   —

   

   485Inventories

   116

   

   430

   

   37

   

   —

   

   583Prepaid expenses and other current

   68

   

   15

   

   16

   

   —

   

   99Intercompany receivable

   3,691

   

   —

   

   —

   

   (3,691)

   

   —Total current assets

   4,096

   

   788

   

   122

   

   (3,691)

   

   1,315Property, plant and equipment, net

   179

   

   894

   

   73

   

   —

   

   1,146Intangible assets, net

   224

   

   2,595

   

   55

   

   (2)

   

   2,872Investment in Subsidiaries

   429

   

   —

   

   —

   

   (429)

   

   —Other assets

   4

   

   2

   

   373

   

   (82)

   

   297Total Assets

   $4,932

   

   $4,279

   

   $623

   

   $(4,204)

   

   $5,630Liabilities and EquityCurrent liabilities:Accounts payable

   $ 118

   

   $ 215

   

   $ 29

   

   $ —

   

   $ 362Accrued and other current liabilities

   134

   

   121

   

   16

   

   (1)

   

   270Long-term debt—current portion

   12

   

   17

   

   —

   

   —

   

   29Intercompany payable

   —

   

   3,638

   

   53

   

   (3,691)

   

   —Total current liabilities

   264

   

   3,991

   

   98

   

   (3,692)

   

   661Long-term debt

   4,383

   

   66

   

   7

   

   (111)

   

   4,345Deferred tax liabilities

   —

   

   213

   

   10

   

   —

   

   223Other long term liabilities

   28

   

   109

   

   7

   

   —

   

   144Total long-term liabilities

   4,411

   

   388

   

   24

   

   (111)

   

   4,712Total Liabilities

   4,675

   

   4,379

   

   122

   

   (3,803)

   

   5,373Total Equity

   257

   

   (100)

   

   501

   

   (401)

   

   257Total Liabilities and Equity

   $4,932

   

   $4,279

   

   $623

   

   $(4,204)

   

   $5,630


---



Condensed Supplemental Consolidated Statements of Cash Flows Fiscal 2011ParentCompany

   

   GuarantorSubsidiaries

   

   Non-GuarantorSubsidiaries

   

   Eliminations

   

   TotalCash Flow from Operating Activities

   

   $

   15

   

   $

   322

   

   $

   (11)

   

   $

   —

   

   $

   326Cash Flow from Investing ActivitiesAdditions to property, plant, and equipment

   

   

   (16)

   

   

   (138)

   

   

   (6)

   

   

   —

   

   

   (160)Proceeds from disposal of assets

   

   

   —

   

   

   5

   

   

   —

   

   

   —

   

   

   5(Contributions) distributions to/from subsidiaries

   

   

   (39)

   

   

   —

   

   

   —

   

   

   39

   

   

   —Intercompany advances (redemptions)

   

   

   166

   

   

   —

   

   

   —

   

   

   (166)

   

   

   —Investment in Berry Plastics debt

   

   

   —

   

   

   —

   

   

   (39)

   

   

   39

   

   

   —Acquisition of business net of cash acquired

   

   

   (368)

   

   

   —

   

   

   —

   

   

   —

   

   

   (368)Net cash used in investing activities

   

   

   (257)

   

   

   (133)

   

   

   (45)

   

   

   (88)

   

   

   (523)Cash Flow from Financing ActivitiesProceeds from long-term debt

   

   

   995

   

   

   —

   

   

   —

   

   

   —

   

   

   995Equity contributions

   

   

   (1)

   

   

   —

   

   

   —

   

   

   —

   

   

   (1)Repayment of long-term debt

   

   

   (841)

   

   

   —

   

   

   —

   

   

   (39)

   

   

   (880)Changes in intercompany balances

   

   

   —

   

   

   (186)

   

   

   20

   

   

   166

   

   

   —Contribution from Parent

   

   

   —

   

   

   —

   

   

   39

   

   

   (39)

   

   

   —Deferred financing costs

   

   

   (23)

   

   

   —

   

   

   —

   

   

   —

   

   

   (23)Net cash provided by (used in) financing activities

   

   

   130

   

   

   (186)

   

   

   59

   

   

   88

   

   

   91Net increase in cash and cash equivalents

   

   

   (112)

   

   

   3

   

   

   3

   

   

   —

   

   

   (106)Cash and cash equivalents at beginning of period

   

   

   132

   

   

   2

   

   

   14

   

   

   —

   

   

   148Cash and cash equivalents at end of period

   

   $

   20

   

   $

   5

   

   $

   17

   

   $

   —

   

   $

   42


---



Condensed Supplemental Consolidated Statements of Cash FlowsFiscal 2010ParentCompany

   

   GuarantorSubsidiaries

   

   Non-GuarantorSubsidiaries

   

   Eliminations

   

   TotalCash Flow from Operating Activities

   

   $

   37

   

   $

   100

   

   $

   (25)

   

   $

   —

   

   $

   112Cash Flow from Investing ActivitiesAdditions to property, plant, and equipment

   

   

   (61)

   

   

   (150)

   

   

   (12)

   

   

   —

   

   

   (223)Proceeds from disposal of assets

   

   

   —

   

   

   29

   

   

   —

   

   

   —

   

   

   29Investment in Berry Group debt

   

   

   —

   

   

   —

   

   

   (25)

   

   

   —

   

   

   (25)(Contributions) distributions to/from subsidiaries

   

   

   (81)

   

   

   —

   

   

   —

   

   

   81

   

   

   —Intercompany advances (redemptions)

   

   

   (71)

   

   

   —

   

   

   —

   

   

   71

   

   

   —Investment in Berry Plastics debt

   

   

   —

   

   

   —

   

   

   (56)

   

   

   56

   

   

   —Acquisition of business net of cash acquired

   

   

   (658)

   

   

   —

   

   

   —

   

   

   —

   

   

   (658)Net cash used in investing activities

   

   

   (871)

   

   

   (121)

   

   

   (93)

   

   

   208

   

   

   (877)Cash Flow from Financing ActivitiesProceeds from long-term debt

   

   

   1,097

   

   

   —

   

   

   —

   

   

   —

   

   

   1,097Equity contributions

   

   

   (3)

   

   

   —

   

   

   —

   

   

   —

   

   

   (3)Repayment of long-term debt

   

   

   (97)

   

   

   —

   

   

   —

   

   

   (56)

   

   

   (153)Changes in intercompany balances

   

   

   —

   

   

   23

   

   

   48

   

   

   (71)

   

   

   —Contribution from Parent

   

   

   —

   

   

   —

   

   

   81

   

   

   (81)

   

   

   —Deferred financing costs

   

   

   (38)

   

   

   —

   

   

   —

   

   

   —

   

   

   (38)Net cash provided by (used in) financing activities

   

   

   959

   

   

   23

   

   

   129

   

   

   (208)

   

   

   903Net increase in cash and cash equivalents

   

   

   125

   

   

   2

   

   

   11

   

   

   —

   

   

   138Cash and cash equivalents at beginning of period

   

   

   7

   

   

   —

   

   

   3

   

   

   —

   

   

   10Cash and cash equivalents at end of period

   

   $

   132

   

   $

   2

   

   $

   14

   

   $

   —

   

   $

   148


---



Condensed Supplemental Consolidated Statements of Cash FlowsFiscal 2009ParentCompany

   

   GuarantorSubsidiaries

   

   Non - GuarantorSubsidiaries

   

   Eliminations

   

   TotalCash Flow from Operating Activities

   

   $

   89

   

   $

   317

   

   $

   8

   

   $

   —

   

   $

   414Cash Flow from Investing ActivitiesAdditions to property, plant, and equipment

   

   

   (47)

   

   

   (143)

   

   

   (4)

   

   

   —

   

   

   (194)Proceeds from disposal of assets

   

   

   —

   

   

   1

   

   

   3

   

   

   —

   

   

   4Investment in Berry Group

   

   

   —

   

   

   —

   

   

   (169)

   

   

   —

   

   

   (169)(Contributions) distributions to/from subsidiaries

   

   

   (190)

   

   

   —

   

   

   —

   

   

   190

   

   

   —Intercompany advances (redemptions)

   

   

   199

   

   

   —

   

   

   —

   

   

   (199)

   

   

   —Investment in Berry Plastics debt

   

   

   —

   

   

   —

   

   

   (21)

   

   

   21

   

   

   —Acquisition of business net of cash acquired

   

   

   (5)

   

   

   —

   

   

   —

   

   

   —

   

   

   (5)Net cash used in investing activities

   

   

   (43)

   

   

   (142)

   

   

   (191)

   

   

   —

   

   

   (364)Cash Flow from Financing ActivitiesProceeds from long-term debt

   

   

   —

   

   

   —

   

   

   4

   

   

   —

   

   

   4Repayment of long-term debt

   

   

   (211)

   

   

   —

   

   

   (1)

   

   

   (21)

   

   

   (233)Changes intercompany balances

   

   

   —

   

   

   (184)

   

   

   (15)

   

   

   199

   

   

   —Contribution from Parent

   

   

   —

   

   

   —

   

   

   190

   

   

   (190)

   

   

   —Deferred financing costs

   

   

   (1)

   

   

   —

   

   

   —

   

   

   —

   

   

   (1)Net cash provided by (used in) financing activities

   

   

   (212)

   

   

   (184)

   

   

   178

   

   

   (12)

   

   

   (230)Net increase in cash and cash equivalents

   

   

   (166)

   

   

   (9)

   

   

   (5)

   

   

   —

   

   

   (180)Cash and cash equivalents at beginning of period

   

   

   173

   

   

   9

   

   

   8

   

   

   —

   

   

   190Cash and cash equivalents at end of period

   

   $

   7

   

   $

   —

   

   $

   3

   

   $

   —

   

   $

   10
  15.  Quarterly Financial Data (Unaudited)  The following table contains selected unaudited quarterly financial data for fiscal years 2011 and 2010.  2011

   

   2010First(b)

   

   Second

   

   Third

   

   Fourth(a)

   

   First

   

   Second

   

   Third

   

   FourthNet sales

   $1,041

   

   $1,104

   

   $1,187

   

   $1,229

   

   $880

   

   $1,056

   

   $1,167

   

   $1,154Cost of sales

   902

   

   939

   

   1,000

   

   1,037

   

   747

   

   913

   

   1,022

   

   985Gross profit

   $139

   

   $165

   

   $187

   

   $194

   

   $133

   

   $143

   

   $145

   

   $169Net income (loss)

   $(69)

   

   $(2)

   

   $13

   

   $(171)

   

   $(29)

   

   $(4)

   

   $(22)

   

   $(13)(a)Includes a goodwill impairment charge of $165 in fiscal 2011
 (b)    Includes a loss on extinguishment of debt of $68 in fiscal 2011  16.Subsequent Events  Beginning January 1, 2012, the Company will be reorganizing its flexible films businesses, which include the Tapes, Bags and Coatings, and Specialty Films divisions, into two new operating divisions.  These new divisions will be named Flexible Packaging and Engineered Materials.  The purpose of structuring the businesses in this manner is to significantly enhance the Company’s current product portfolio in the finished flexible packaging space.  This move will allow the


Company to leverage its unique innovation capabilities at the interface of rigid and flexible technologies and to serve customers with innovative packaging solutions.


---



SIGNATURES  Pursuant to the requirements of Section 13 or 15(d) 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, on the 7thday of September, 2012.  BERRY PLASTICS CORPORATION    By/s/ Jonathan D. Rich       ____ Jonathan D. Rich Chairman and Chief Executive Officer


---



ExhibitNo.

   Description of Exhibit2.1

   Agreement and Plan of Merger and Corporate Reorganization, dated as of March 9, 2007, between Covalence Specialty Materials Holding Corp. and Berry Plastics Group, Inc. (incorporated herein by reference to our Registration Statement Form S-4, filed on May 14, 2007)2.2

   Equity Purchase Agreement, dated June 19, 2011, by and among Rexam Inc., Rexam Closures and Containers Inc., Rexam Closure Systems Inc., Rexam Plastic Packaging Inc., Rexam Brazil Closure Inc., Rexam Beverage Can South America S.A. and Berry Plastics Corporation. (incorporated herein by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on June 23, 2011)2.3

   Stock Purchase Agreement, by and between LINPAC USA Holdings, Inc. and Berry Plastics Corporation, dated as of August 19, 2011 (incorporated herein by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed on September 2, 2011).3.1

   Amended and Restated Certificate of Incorporation of Berry Plastics Holding Corporation (incorporated herein by reference to Exhibit 3.1 to our Registration Statement Form S-4, filed on November 2, 2006)3.2

   Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Berry Plastics Holding Corporation (incorporated herein by reference to Exhibit 3.2 to our Registration Statement Form S-4, filed on November 2, 2006)3.3

   Amended and Restated By-laws of Berry Plastics Holding Corporation (incorporated herein by reference to Exhibit 3.3 to our Registration Statement Form S-4, filed on November 2, 2006)3.4

   Board Consent amending the Amended and Restated By-laws of BPC Holding Corporation, dated October 24, 2006 (incorporated herein by reference to Exhibit 3.4 to our Registration Statement Form S-4, filed on November 2, 2006)4.1

   Supplemental Indenture, dated November 19, 2010, to the Indenture dated as of September 20, 2006, respecting Berry’s 8 7/8% Second Priority Senior Secured Fixed Rate Notes due 2014, among Berry Plastics Corporation, the guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated herein by reference to Exhibit 4.01 to our Current Report on Form 8-K, filed on November 19, 2010).4.2

   Supplemental Indenture, dated November 19, 2010, to the Indenture dated as of November 12, 2009, respecting Berry’s 8 7/8% Second Priority Senior Secured Notes due 2014, among Berry Plastics Corporation, the guarantors party thereto and U.S. Bank National Association, as Trustee (incorporated herein by reference to Exhibit 4.02 to our Current Report on Form 8-K, filed on November 19, 2010).4.3

   Indenture, by and among Berry Plastics Corporation, each Subsidiary of Berry Plastics Corporation identified therein and U.S. Bank National Association, as Trustee, relating to 9.75% second priority senior secured notes due 2021, dated November 19, 2010 (incorporated herein by reference to Exhibit 4.03 to our Current Report on Form 8-K, filed on November 19, 2010).4.4

   Additional Secured Creditor Consent, by and between Berry Plastics Corporation, each Subsidiary of Berry Plastics Corporation signatory thereto and U.S. Bank National Association, as Authorized Representative and Collateral Agent, relating to 9.75% second priority senior secured notes due 2021, dated November 19, 2010 (incorporated herein by reference to Exhibit 4.04 to our Current Report on Form 8-K, filed on November 19, 2010).4.5

   Registration Rights Agreement, by and between Berry Plastics Corporation, each Subsidiary of Berry Plastics Corporation identified therein and Credit Suisse Securities (USA) LLC, as representatives of the Initial Purchasers, relating to 9.75% second priority senior secured notes due 2021, dated November 19, 2010 (incorporated herein by reference to Exhibit 4.05 to our Current Report on Form 8-K, filed on November 19, 2010).4.6

   Indenture, by and among Berry Plastics Corporation, each Subsidiary of Berry Plastics Corporation identified therein and U.S. Bank National Association, as Trustee, relating to 91⁄2% second priority senior secured notes due 2018, dated April 30, 2010 (incorporated herein by reference to Exhibit 4.01 to our Current Report on Form 8-K, filed on May 4, 2010) (incorporated herein by reference to Exhibit 4.01 to our Current Report on Form 8-K, filed on November 19, 2010).4.7

   Additional Secured Creditor Consent, by and between Berry Plastics Corporation, each Subsidiary of Berry Plastics Corporation signatory thereto and U.S. Bank National Association, as Authorized Representative and Collateral Agent, relating to 91⁄2% second priority senior secured notes due 2018, dated April 30, 2010 (incorporated herein by reference to Exhibit 4.02 to our Current Report on Form 8-K, filed on May 4, 2010).4.8

   Indenture, by and between Berry Plastics Escrow Corporation and Berry Plastics Escrow LLC, as Issuers, and U.S. Bank National Association, as Trustee, relating to 8 1 / 4 % first priority senior secured notes due 2015, dated November 12, 2009 (incorporated herein by reference to Exhibit 4.01 to our Current Report on Form 8-K, filed on December 8, 2009).4.9

   First Supplemental Indenture, dated as of December 3, 2009, by and between Berry Plastics Corporation, the subsidiaries of Berry Plastics Corporation party thereto, Berry Plastics Escrow LLC, Berry Plastics Escrow Corporation, and U.S. Bank National Association, as Trustee, relating to the Indenture, by and between Berry Plastics Escrow Corporation and Berry Plastic Escrow LLC, as Issuers, and U.S. Bank, National Association, as Trustee, relating to 8 1 / 4 % first priority senior secured notes due 2015, dated November 12, 2009 (incorporated herein by reference to Exhibit 4.02 to our Current Report on Form 8-K, filed on December 8, 2009).4.10

   Indenture, by and between Berry Plastics Escrow Corporation and Berry Plastic Escrow LLC, as Issuers, and U.S. Bank National Association, as Trustee, relating to 8 7 / 8 % second priority senior secured notes due 2014, dated November 12, 2009 (incorporated herein by reference to Exhibit 4.03 to our Current Report on Form 8-K, filed on December 8, 2009).4.11

   First Supplemental Indenture, dated as of December 3, 2009, by and between Berry Plastics Corporation, the subsidiaries of Berry Plastics Corporation party thereto, Berry Plastics Escrow LLC, Berry Plastics Escrow Corporation, and U.S. Bank National Association, as Trustee, relating to the Indenture, by and between Berry Plastics Escrow Corporation and Berry Plastic Escrow LLC, as Issuers, and U.S. Bank National Association, as Trustee, relating to 8 7 / 8 % second priority senior secured notes due 2014, dated November 12, 2009 (incorporated herein by reference to Exhibit 4.04 to our Current Report on Form 8-K, filed on December 8, 2009).4.12

   Collateral Agreement, by and between Berry Plastics Corporation, each Subsidiary of Berry Plastics Corporation identified therein and U.S. Bank National Association, as Collateral Agent, relating to 8 1 / 4 % first priority senior secured notes due 2015, dated December 3, 2009 (incorporated herein by reference to Exhibit 4.05 to our Current Report on Form 8-K, filed on December 8, 2009).4.13

   Additional Secured Creditor Consent, by and between Berry Plastics Corporation, each Subsidiary of Berry Plastics Corporation signatory thereto and U.S. Bank National Association, as Authorized Representative and Collateral Agent, relating to 8 7 / 8 % second priority senior secured notes due 2014, dated December 3, 2009 (incorporated herein by reference to Exhibit 4.06 to our Current Report on Form 8-K, filed on December 8, 2009).4.14

   Indenture, by and between Berry Plastics Corporation, as Issuer, certain Guarantors and Wells Fargo Bank, National Association, as Trustee, relating to first priority floating rate senior secured notes due 2015, dated as of April 21, 2008 (incorporated herein by reference to Exhibit 4.1 to our Current Report on Form 8-K, filed on April 22, 2008)4.15

   Collateral Agreement, by and between Berry Plastics Corporation, each Subsidiary of the Company identified therein and Wells Fargo Bank, National Association, as Collateral Agent, dated as of April 21, 2008 (incorporated herein by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on April 22, 2008)4.16

   Indenture, by and between BPC Acquisition Corp. (and following the merger of BPC Acquisition Corp. with and into BPC Holding Corporation, BPC Holding Corporation, as Issuer, and certain Guarantors) and Wells Fargo Bank, National Association, as Trustee, relating to 11% Senior Subordinated Notes due 2016, dated as of September 20, 2006 (incorporated herein by reference to Exhibit 10.4 to our Registration Statement Form S-4, filed on November 2, 2006)4.17

   First Supplemental Indenture, by and among BPC Holding Corporation, certain Guarantors, BPC Acquisition Corp., and Wells Fargo Bank, National Association, as Trustee, dated as of September 20, 2006 (incorporated herein by reference to Exhibit 10.5 to our Registration Statement Form S-4, filed on November 2, 2006)4.18

   Indenture dated as of  February 16, 2006, among Covalence Specialty Materials Corp., the Guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 10.1(e) to our Current Report on Form 8-K, filed on April 10, 2007).4.19

   First Supplemental Indenture dated as of  April 3, 2007, among Covalence Specialty Materials Corp. (or its successor), the Guarantors identified on the signature pages thereto and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 10.1(f) to our Current Report on Form 8-K, filed on April 10, 2007)4.20

   Second Supplemental Indenture dated as of  April 3, 2007, among Covalence Specialty Materials Corp. (or its successor), Berry Plastics Holding Corporation, the Guarantors identified on the signature pages thereto and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 10.1(g) to our Current Report on Form 8-K, filed on April 10, 2007)4.21

   Second Supplemental Indenture dated as of April 3, 2007, among Berry Plastics Holding Corporation (or its successor), the existing Guarantors identified on the signature pages thereto, the new Guarantors identified on the signature pages thereto and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 10.1(h) to our Current Report on Form 8-K, filed on April 10, 2007)4.22

   Second Supplemental Indenture dated as of April 3, 2007, among Berry Plastics Holding Corporation (or its successor), the existing Guarantors identified on the signature pages thereto, the new Guarantors identified on the signature pages thereto and Wells Fargo Bank, National Association, as trustee (incorporated herein by reference to Exhibit 10.1(i) to our Current Report on Form 8-K, filed on April 10, 2007)4.23

   Supplement No. 1 dated as of April 3, 2007 to the Collateral Agreement dated as of September 20, 2006 among Berry Plastics Holding Corporation, each subsidiary identified therein as a party and Wells Fargo Bank, National Association, as collateral agent (incorporated herein by reference to Exhibit 10.1(j) to our Current Report on Form 8-K, filed on April 10, 2007)4.24

   Indenture, by and between BPC Acquisition Corp. (and following the merger of BPC Acquisition Corp. with and into BPC Holding Corporation, BPC Holding Corporation, as Issuer, and certain Guarantors) and Wells Fargo Bank, National Association, as Trustee, relating to $525,000,000 7/8%Second Priority Senior Secured Fixed Rate Notes due 2014 and $225,000,000 Second Priority Senior Secured Floating Rate Notes due 2014, dated as of September 20, 2006 (incorporated herein by reference to Exhibit 4.1 to our Registration Statement Form S-4, filed on November 2, 2006)4.25

   First Supplemental Indenture, by and among BPC Holding Corporation, certain Guarantors, BPC Acquisition Corp., and Wells Fargo Bank, National Association, as Trustee, dated as of September 20, 2006 (incorporated herein by reference to Exhibit 4.2 to our Registration Statement Form S-4, filed on November 2, 2006)4.26

   Collateral Agreement, by and among BPC Acquisition Corp., as Borrower, each Subsidiary of the Borrower identified therein, and Wells Fargo Bank, N.A., as Collateral Agent, dated as of September 20, 2006 (incorporated herein by reference to Exhibit 4.4 to our Registration Statement Form S-4, filed on November 2, 2006)10.1

   U.S. $400,000,000 Amended and Restated Credit Agreement, dated as of April 3, 2007, by and among Covalence Specialty Materials Corp., Berry Plastics Group, Inc., certain domestic subsidiaries party thereto from time to time, Bank of America, N.A., as collateral agent and administrative agent, the lenders party thereto from time to time, and the financial institutions party thereto (incorporated herein by reference to Exhibit 10.1(a) to our Current Report on Form 8-K, filed on April 10, 2007)10.2

   U.S. $1,200,000,000 Second Amended and Restated Credit Agreement, dated as of April 3, 2007, by and among Covalence Specialty Materials Corp., Berry Plastics Group, Inc., Credit Suisse, Cayman Islands Branch, as collateral and administrative agent, the lenders party thereto from time to time, and the other financial institutions party thereto (incorporated herein by reference to Exhibit 10.1(b) to our Current Report on Form 8-K, filed on April 10, 2007).10.3

   Amended and Restated Intercreditor Agreement by and among Berry Plastics Group, Inc., Covalence Specialty Materials Corp., certain subsidiaries identified as parties thereto, Bank of America, N.A. and Credit Suisse, Cayman Islands Branch  as first lien agents, and Wells Fargo Bank, N.A., as trustee (incorporated herein by reference to Exhibit 10.1(d) to our Current Report on Form 8-K, filed on April 10, 2007)10.4

   Employment Agreement dated May 26, 2006 between Covalence Specialty Materials Corp. and Layle K. Smith (incorporated herein by reference to Exhibit 10.1(k) to our Current Report on Form 8-K, filed on April 10, 2007).10.5

   Management Agreement, among Berry Plastics Corporation, Berry Plastics Group, Inc., Apollo Management VI, L.P., and Graham Partners, Inc., dated as of September 20, 2006. (incorporated herein by reference to our Registration Statement Form S-4, filed on May 14, 2007)10.6

   Termination Agreement, by and among Covalence Specialty Materials Holding Corp., Covalence Specialty Materials Corp., and Apollo Management V, L.P., dated as of April 3, 2007. (incorporated herein by reference to our Registration Statement Form S-4, filed on May 14,2007)10.7

   2006 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.8 to our Registration Statement Form S-4, filed on November 2, 2006)10.8

   Form of Performance-Based Stock Option Agreement of Berry Plastics Group, Inc. (incorporated herein by reference to Exhibit 10.9 to our Registration Statement Form S-4, filed on November 2, 2006)10.9

   Form of Accreting Stock Option Agreement of Berry Plastics Group, Inc. (incorporated herein by reference to Exhibit 10.10 to our Registration Statement Form S-4, filed on November 2, 2006)10.10

   Form of Time-Based Stock Option Agreement of Berry Plastics Group, Inc. (incorporated herein by reference to Exhibit 10.11 to our Registration Statement Form S-4, filed on November 2, 2006)10.11

   Form of Performance-Based Stock Appreciation Rights Agreement of Berry Plastics Group, Inc. (incorporated herein by reference to Exhibit 10.12 to our Registration Statement Form S-4, filed on November 2, 2006)10.12

   Employment Agreement, dated September 20, 2006, between Berry Plastics Corporation and Ira G. Boots (incorporated herein by reference to Exhibit 10.13 to our Registration Statement Form S-4, filed on November 2, 2006)10.13

   Employment Agreement, dated September 20, 2006, between Berry Plastics Corporation and James M. Kratochvil (incorporated herein by reference to Exhibit 10.14 to our Registration Statement Form S-4, filed on November 2, 2006)10.14

   Employment Agreement, dated September 20, 2006, between Berry Plastics Corporation and R. Brent Beeler (incorporated herein by reference to Exhibit 10.15 to our Registration Statement Form S-4, filed on November 2, 2006)10.15

   Employment Agreement, dated November 22, 1999 between Berry Plastics Corporation and G. Adam Unfried (incorporated herein by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2006)10.16

   Amendment No. 1 to Employment Agreement, dated November 22, 1999 between Berry Plastics Corporation and G. Adam Unfried dated November 23, 2004 (incorporated herein by reference to Exhibit 10.24 of the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2006)10.17

   Amendment No. 2 to Employment Agreement, dated November 22, 1999 between Berry Plastics Corporation and G. Adam Unfried dated March 10, 2006 (incorporated herein by reference to Exhibit 10.25 of the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2006)10.18

   Amendment No. 3 to Employment Agreement, dated November 22, 1999 between Berry Plastics Corporation and G. Adam Unfried dated September 20, 2006. (incorporated herein by reference to our Registration Statement Form S-4, filed on May 14,2007)10.19

   Employment Agreement, dated April 3, 2007 between Berry Plastics Corporation and Thomas E. Salmon (incorporated herein by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K filed with the SEC on September 27, 2008)10.20

   Purchase and Sale Agreement, dated as of December 15, 2008, by and between BP Parallel Corporation, a Delaware corporation, and Apollo Management VI, L.P., a Delaware limited partnership (incorporated herein by reference to Exhibit 10.21 of the Company’s Annual Report on Form 10-K filed with the SEC on September 27, 2008)10.21

   Letter Agreement, dated September 30, 2010, between Berry Plastics Corporation and Ira G. Boots (incorporated herein by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on October 6, 2010).10.22

   Employment Agreement, dated October 1, 2010, between the Company and Jonathan Rich (incorporated herein by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on October 6, 2010).10.23

   Amendment dated as of June 28, 2011 to U.S. $400,000,000 Amended and Restated Credit Agreement, dated as of April 3, 2007, by and among Covalence Specialty Materials Corp., Berry Plastics Group, Inc., certain domestic subsidiaries party thereto from time to time, Bank of America, N.A., as collateral agent and administrative agent, the lenders party thereto from time to time, and the financial institutions party thereto12.1

   Computation of Ratio of Earnings to Fixed Charges21.1

   Subsidiaries of the Registrant31.1*

   Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer31.2*

   Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer32.1*

   Section 1350 Certification of the Chief Executive Officer32.2*

   Section 1350 Certification of the Chief Financial Officer
  *      Filed herewith.


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