SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





[X]            Quarterly Report Pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934





For the
quarterly period ended March 28, 2009


or


[   ]            Transition Report Pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934




Commission
File Number 333-138380


BERRY
PLASTICS CORPORATION


(f/k/a
Berry Plastics Holding Corporation)


(Exact name of registrant as
specified in its charter)


Delaware
              35-1814673(State
      or other jurisdiction
                of
      incorporation or organization)
              (IRS
      employer
                identification
      number)





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 whether the registrants:  (1) have 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 [X]  No
[   ]





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
[   ]  No [   ]





Indicate
by check mark whether the registrants are large accelerated filers, accelerated
filers, or non-accelerated filers.  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 registrants are shell companies (as defined in Rule
12b-2 of the Securities Exchange Act of
1934).  Yes [   ]  No [X]





As of May
10, 2009, all of the outstanding 100 shares of the Common Stock, $.01 par value,
of Berry Plastics Corporation were held by Berry Plastics Group,
Inc.





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, Inc.
            Delaware
            3089
            35-2056610
            (a)Packerware
      Corporation
            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)Tubed
      Products, LLC
            Delaware
            3089
            56-2374082
            (a)Cardinal
      Packaging, Inc.
            Ohio
            3089
            34-1396561
            (a)Landis
      Plastics, LLC
            Delaware
            3089
            36-2471333
            (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
      Holdings, Inc.
            Delaware
            3089
            20-1290475
            (a)Captive
      Plastics, Inc.
            New
      Jersey
            3089
            22-1890735
            (a)Grafco
      Industries Limited Partnership
            Maryland
            3089
            52-1729327
            (a)Rollpak
      Acquisition Corporation
            Indiana
            3089
            03-0512845
            (a)Rollpak
      Corporation
            Indiana
            3089
            35-1582626
            (a)


(a)  101
Oakley Street, Evansville, IN 47710





CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


2





This Form
10-Q 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.  The forward-looking statements include, in particular,
statements about our plans, strategies and prospects under the heading
"Management’s Discussion and Analysis of Financial Condition and Results of
Operations".  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-Q.  Factors that
could cause actual results to differ materially from those expressed or implied
by the forward-looking statements include:





·
            changes
      in prices and availability ofresin and other raw
      materials and our ability to pass on changes inraw material prices
      on a timely basis;


·
            catastrophic
      loss of one of our key manufacturing
facilities;


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


·
            risks
      associated with our substantial indebtedness and debt
    service;


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


·
            performance
      of our business and future operating
results;


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


·
            reliance
      on unpatented know-how and trade
secrets


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


·
            increases
      in the cost of compliance with laws and regulations, including
      environmental laws and regulations;
and


·
            the
      other factors discussed in our Form 10-K for the fiscal year ended
      September 27, 2008 in the section titled “Risk
  Factors.”





Readers
should carefully review the factors discussed in our Form 10-K for the fiscal
year ended September 27, 2008 in the section titled “Risk Factors” and other
risk factors identified from time to time in our periodic filings with the
Securities and Exchange Commission and should not place undue reliance on our
forward-looking statements.  We undertake no obligation to update any
forward-looking statements to reflect changes in underlying assumptions or
factors, new information, future events or other changes.


3


AVAILABLE
INFORMATION





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


























4





Berry
Plastics Corporation





Form
10-Q Index





For
Quarterly Period Ended March 28, 2009













Page No.Part
      I.  Financial InformationItem
      1.
                  Financial
      Statements:Consolidated
      Balance Sheets
                  6Consolidated
      Statements of Operations
                  8Consolidated
      Statements of Changes inStockholders’
      Equity
                  9Consolidated
      Statements of Cash Flows
                  10Notes
      to Consolidated Financial Statements
                  11Item
      2.
                  Management’s
      Discussion and Analysis ofFinancial
      Condition and Results of Operations
                  26Item
      3.
                  Quantitative
      and Qualitative Disclosures about Market Risk
                  39Item
      4.
                  Controls
      and Procedures
                  41Part
      II.  Other InformationItem
      1.
                  Legal
      Proceedings
                  43Item
      1A.
                  Risk
      Factors
                  43Item
      2.
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  44Item
      3.
                  Defaults
      Upon Senior Securities
                  44Item
      4.
                  Submission
      of Matters to a Vote of Security Holders
                  44Item
      5.
                  Other
      Information
                  44Item
      6.
                  Exhibits
                  44Signature
                  
                  45













5





Part
1.   Financial Information


Item
1.   Financial Statements





Berry
Plastics Corporation


Consolidated
Balance Sheets


(In
Millions of Dollars)





March
      28, 2009
                          
                          
                          September
      27, 2008(Unaudited)AssetsCurrent
      assets:Cash and cash
      equivalents
                          
                          $
                          135.3
                          
                          
                          $
                          189.7Accounts receivable (less
      allowance for doubtful accounts of $9.6 at March 28, 2009 and $12.1 at
      September 27, 2008)
                          
                          
                          326.5
                          
                          
                          
                          422.5Inventories, net:Finished goods
                          
                          
                          227.9
                          
                          
                          
                          306.1Raw materials and work in
      process
                          
                          
                          145.0
                          
                          
                          
                          194.2372.9
                          
                          
                          
                          500.3Deferred income
    taxes
                          
                          
                          35.3
                          
                          
                          
                          35.3Prepaid expenses and other
      current assets
                          
                          
                          26.8
                          
                          
                          
                          49.3Total
      current assets
                          
                          
                          896.8
                          
                          
                          
                          1,197.1Property
      and equipment:Land
                          
                          
                          40.0
                          
                          
                          
                          39.1Buildings and
      improvements
                          
                          
                          170.3
                          
                          
                          
                          165.3Equipment and construction in
      progress
                          
                          
                          1,049.6
                          
                          
                          
                          978.51,259.9
                          
                          
                          
                          1,182.9Less accumulated
      depreciation
                          
                          
                          388.4
                          
                          
                          
                          320.1871.5
                          
                          
                          
                          862.8Goodwill,
      intangible assets and deferred costs
                          
                          
                          2,590.0
                          
                          
                          
                          2,662.2Other
      assets
                          
                          
                          2.0
                          
                          
                          
                          2.02,592.0
                          
                          
                          
                          2,664.2Total
      assets
                          
                          $
                          4,360.3
                          
                          
                          $
                          4,724.1


6





Berry
Plastics Corporation


Consolidated
Balance Sheets (continued)


(In
Millions of Dollars)





March
      28,
                        2009
                      
                      
                      September
      27,
                        2008(Unaudited)Liabilities
      and stockholders' equityCurrent
      liabilities:Accounts payable
                      
                      $
                      187.5
                      
                      
                      $
                      253.8Accrued expenses and other
      current liabilities
                      
                      
                      177.4
                      
                      
                      
                      206.6Current portion of long-term
      debt
                      
                      
                      22.4
                      
                      
                      
                      21.4Total
      current liabilities
                      
                      
                      387.3
                      
                      
                      
                      481.8Long-term
      debt, less current portion
                      
                      
                      3,388.9
                      
                      
                      
                      3,578.2Deferred
      income taxes
                      
                      
                      181.2
                      
                      
                      
                      212.3Other
      long-term liabilities
                      
                      
                      109.5
                      
                      
                      
                      99.9Total
      liabilities
                      
                      
                      4,066.9
                      
                      
                      
                      4,372.2Commitments
      and contingenciesStockholders'
      equity:Parent Company
      Investment, net
                      
                      
                      629.0
                      
                      
                      
                      617.2Accumulated
      deficit
                      
                      
                      (289.8
                      )
                      
                      
                      (253.0
                      )Accumulated
      other comprehensive loss
                      
                      
                      (45.8
                      )
                      
                      
                      (12.3
                      )Total stockholders’ equity
                      
                      
                      293.4
                      
                      
                      
                      351.9Total liabilities and stockholders’ equity
                      
                      $
                      4,360.3
                      
                      
                      $
                      4,724.1








See
notes to consolidated financial statements.


7





Berry
Plastics Corporation


Consolidated
Statements of Operations


(Unaudited)


(In
Millions of Dollars)








Thirteen
      Weeks Ended
                      
                      
                      Twenty-Six
      Weeks EndedMarch
      28, 2009
                      
                      
                      March
      29, 2008
                      
                      
                      March
      28, 2009
                      
                      
                      March
      29, 2008Net
      sales
                      
                      $
                      757.8
                      
                      
                      $
                      844.3
                      
                      
                      $
                      1,622.8
                      
                      
                      $
                      1,607.0Cost
      of goods sold
                      
                      
                      635.3
                      
                      
                      
                      731.9
                      
                      
                      
                      1,373.4
                      
                      
                      
                      1,385.8Gross
      profit
                      
                      
                      122.5
                      
                      
                      
                      112.4
                      
                      
                      
                      249.4
                      
                      
                      
                      221.2Operating
      expenses:Selling, general and
      administrative
                      
                      
                      74.0
                      
                      
                      
                      83.6
                      
                      
                      
                      163.5
                      
                      
                      
                      165.4Restructuring and impairment
      charges, net
                      
                      
                      0.2
                      
                      
                      
                      1.7
                      
                      
                      
                      0.8
                      
                      
                      
                      5.2Other operating
      expenses
                      
                      
                      5.8
                      
                      
                      
                      5.9
                      
                      
                      
                      11.2
                      
                      
                      
                      18.9Operating
      income
                      
                      
                      42.5
                      
                      
                      
                      21.2
                      
                      
                      
                      73.9
                      
                      
                      
                      31.7Other
      expenses (income)
                      
                      
                      (18.8
                      )
                      
                      
                      —
                      
                      
                      
                      (14.8
                      )
                      
                      
                      —Interest
      expense, net
                      
                      
                      65.8
                      
                      
                      
                      67.2
                      
                      
                      
                      138.4
                      
                      
                      
                      128.7Loss
      from continuing operations before income taxes
                      
                      
                      (4.5
                      )
                      
                      
                      (46.0
                      )
                      
                      
                      (49.7
                      )
                      
                      
                      (97.0
                      )Income
      tax benefit
                      
                      
                      (1.3
                      )
                      
                      
                      (16.7
                      )
                      
                      
                      (17.1
                      )
                      
                      
                      (36.4
                      )Net
      loss from continuing operations
                      
                      $
                      (3.2
                      )
                      
                      $
                      (29.3
                      )
                      
                      $
                      (32.6
                      )
                      
                      $
                      (60.6
                      )Discontinued
      operations, net of income taxes
                      
                      
                      (4.2
                      )
                      
                      
                      —
                      
                      
                      
                      (4.2
                      )
                      
                      
                      —Net
      loss
                      
                      $
                      (7.4
                      )
                      
                      $
                      (29.3
                      )
                      
                      $
                      (36.8
                      )
                      
                      $
                      (60.6
                      )








See notes to consolidated financial
statements.


8


Berry
Plastics Corporation


Consolidated
Statement of Changes in Stockholders' Equity


For
Twenty-Six Weeks Ended March 28, 2009 and March 29, 2008


(Unaudited)


(In
Millions of Dollars)





Parent
                          Company
      Investment
                        
                        
                        Accumulated
                          Other
      Comprehensive
                          Income
      (Loss)
                        
                        
                        Accumulated
                          Deficit
                        
                        
                        Total
                        
                        
                        Comprehensive
      Income (Loss)Balance
      at September 29, 2007
                        
                        $
                        598.1
                        
                        
                        $
                        3.8
                        
                        
                        $
                        (151.9
                        )
                        
                        $
                        450.0Stock
      compensation expense
                        
                        
                        9.3
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        9.3Net
      transfers from parent
                        
                        
                        (1.7
                        )
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        (1.7
                        )Net
      loss
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        (60.6
                        )
                        
                        
                        (60.6
                        )
                        
                        $
                        (60.6
                        )Currency
      translation
                        
                        
                        —
                        
                        
                        
                        0.1
                        
                        
                        
                        —
                        
                        
                        
                        0.1
                        
                        
                        
                        0.1Derivative
      valuation
                        
                        
                        —
                        
                        
                        
                        (16.7
                        )
                        
                        
                        —
                        
                        
                        
                        (16.7
                        )
                        
                        
                        (16.7
                        )Balance
      at March 29, 2008
                        
                        $
                        605.7
                        
                        
                        $
                        (12.8
                        )
                        
                        $
                        (212.5
                        )
                        
                        $
                        380.4
                        
                        
                        $
                        (77.2
                        )





Parent
                    Company
      Investment
                  
                  
                  Accumulated
                    Other
      Comprehensive
                    Loss
                  
                  
                  Accumulated
                    Deficit
                  
                  
                  Total
                  
                  
                  Comprehensive
      LossBalance
      at September 27, 2008
                  
                  $
                  617.2
                  
                  
                  $
                  (12.3
                  )
                  
                  $
                  (253.0
                  )
                  
                  $
                  351.9Stock
      compensation expense
                  
                  
                  12.0
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  12.0Net
      transfers to parent
                  
                  
                  (0.2
                  )
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (0.2
                  )Net
      loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (36.8
                  )
                  
                  
                  (36.8
                  )
                  
                  $
                  (36.8
                  )Currency
      translation
                  
                  
                  —
                  
                  
                  
                  (32.5
                  )
                  
                  
                  —
                  
                  
                  
                  (32.5
                  )
                  
                  
                  (32.5
                  )Derivative
      valuation
                  
                  
                  —
                  
                  
                  
                  (1.0
                  )
                  
                  
                  —
                  
                  
                  
                  (1.0
                  )
                  
                  
                  (1.0
                  )Balance
      at March 28, 2009
                  
                  $
                  629.0
                  
                  
                  $
                  (45.8
                  )
                  
                  $
                  (289.8
                  )
                  
                  $
                  293.4
                  
                  
                  $
                  (70.3
                  )





See notes to consolidated financial
statements.





9





Berry
Plastics Corporation


Consolidated
Statements of Cash Flows


(Unaudited)


(In
Millions of Dollars)





Twenty-Six
      Weeks EndedMarch
      28, 2009
                          
                          
                          March
      29, 2008Operating
      activitiesNet
      loss
                          
                          $
                          (36.8
                          )
                          
                          $
                          (60.6
                          )Adjustments to reconcile net loss to net cash provided by operating
      activities:Depreciation and
      amortization
                          
                          
                          124.9
                          
                          
                          
                          122.6Non-cash interest
      expense
                          
                          
                          18.0
                          
                          
                          
                          6.4Non-cash
      compensation
                          
                          
                          12.0
                          
                          
                          
                          9.3Other non-cash
      expense
                          
                          
                          8.6
                          
                          
                          
                          —Non-cash gain on
      investment
                          
                          
                          (16.2
                          )
                          
                          
                          —Deferred income tax
      benefit
                          
                          
                          (21.7
                          )
                          
                          
                          (37.9
                          )Changes in operating assets and
      liabilities:Accounts receivable,
      net
                          
                          
                          87.8
                          
                          
                          
                          9.3Inventories
                          
                          
                          121.9
                          
                          
                          
                          (26.3
                          )Prepaid expenses and other
      assets
                          
                          
                          18.7
                          
                          
                          
                          6.2Accounts payable and other
      liabilities
                          
                          
                          (90.3
                          )
                          
                          
                          (28.5
                          )Net
      cash provided by operating activities
                          
                          
                          226.9
                          
                          
                          
                          0.5Investing
      activitiesAdditions
      to property and equipment
                          
                          
                          (98.7
                          )
                          
                          
                          (78.4
                          )Proceeds
      from disposal of assets
                          
                          
                          2.4
                          
                          
                          
                          82.0Acquisition
      of businesses, net of cash acquired
                          
                          
                          (4.6
                          )
                          
                          
                          (577.8
                          )Net
      cash used for investing activities
                          
                          
                          (100.9
                          )
                          
                          
                          (574.2
                          )Financing
      activitiesProceeds
      from long-term borrowings
                          
                          
                          0.8
                          
                          
                          
                          607.4Repayments
      on long-term borrowings
                          
                          
                          (179.4
                          )
                          
                          
                          (13.9
                          )Debt
      financing costs
                          
                          
                          (0.4
                          )
                          
                          
                          (12.9
                          )Transfers
      to parent, net
                          
                          
                          (0.2
                          )
                          
                          
                          (1.7
                          )Net
      cash provided by (used for) financing activities
                          
                          
                          (179.2
                          )
                          
                          
                          578.9Effect
      of exchange rate changes on cash
                          
                          
                          (1.2
                          )
                          
                          
                          (0.3
                          )Net
      increase (decrease) in cash and cash equivalents
                          
                          
                          (54.4
                          )
                          
                          
                          4.9Cash
      and cash equivalents at beginning of period
                          
                          
                          189.7
                          
                          
                          
                          14.6Cash
      and cash equivalents at end of period
                          
                          $
                          135.3
                          
                          
                          $
                          19.5





See
notes to consolidated financial statements.


10


Berry
Plastics Corporation


Notes
to Consolidated Financial Statements


(Unaudited)


(In
millions of dollars, except as otherwise noted)





1.
            Background
      and Nature of Operations





Berry
Plastics Corporation (“Berry” or the “Company”) manufactures and markets plastic
packaging products, plastic film products, specialty adhesives and coated
products.  At March 28, 2009 the Company had 66 production and
manufacturing facilities, with 59 located in the United States.  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. and Graham Partners.  Berry, through its wholly owned
subsidiaries operates in four primary segments:  Rigid Open Top, Rigid
Closed Top, Flexible Films, and Tapes/Coatings.  The Company’s
customers are located principally throughout the United States, without
significant concentration in any one region or with any one
customer.








2.
            Basis
      of Presentation





The
accompanying unaudited Consolidated Financial Statements of Berry have been
prepared in accordance with accounting principles generally accepted in the
United States (“GAAP”) for interim financial information and the instructions
for Form 10-Q and Article 10 of Regulation S-X of the Securities Act of
1934.  Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements.  In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been
included.  Operating results for the periods presented are not
necessarily indicative of the results that may be expected for the full fiscal
year.  The accompanying financial statements include the results of
the Company and its wholly owned subsidiaries.  For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company’s Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended September 27, 2008.  All
intercompany transactions have been eliminated.





Related
Party Transactions and Allocations


The
Company’s operating results for the thirteen and twenty-six week periods ended
March 28, 2009 and March 29, 2008 represent the Consolidated Results of
Operations of the Company.  The balance sheets as of March 28, 2009
and September 27, 2008 represent the Consolidated Balance Sheets of the Company
as of the respective dates.  Berry has recorded expense in their
financial statements of $0.4 million and $4.6 million for the thirteen weeks
ended and $12.0 million and $9.3 million for the twenty-six weeks ended as of
March 28, 2009 and March 29, 2008, respectively, related to stock compensation
of Berry Group.  The Company has recorded management fees of $1.4
million and $1.4 million for the thirteen weeks ended and $2.8 million and $2.7
million for the twenty-six weeks ended March 28, 2009 and March 29, 2008,
respectively, charged by Apollo and other investors to Berry Group and recorded
income taxes to push down the respective amounts that relate to the consolidated
operations of the Company.  Parent Company Investment includes the
equity from Berry Group that was invested in Berry by Apollo and other
shareholders.


11


3.   
Acquisitions and Divestitures





MAC
Closures, Inc.


On
December 19, 2007, the Company acquired 100% of the outstanding common stock of
MAC, a plastic cap and closure manufacturer located in Waterloo, Quebec for
CN$72.0 million.  MAC is a fully integrated manufacturer of injection
molded plastic caps and closures primarily serving the pharmaceutical,
nutraceutical, personal care, amenity, and household and industrial chemical
industries and is included in our Rigid Closed Top Segment.  The
purchase price was funded utilizing proceeds from a sale-leaseback
transaction.  The MAC acquisition has been accounted for using the
purchase method of accounting, and accordingly, the purchase price has been
allocated to working capital, tangible and intangible assets with any excess
allocated to goodwill.


Captive
Holdings, LLC


On
February 5, 2008, the Company completed its purchase of the outstanding capital
stock of Captive Holdings, Inc., the parent company of Captive for $500.0
million, subject to certain post-closing upward or downward
adjustments.  Captive manufactures blow-molded bottles and
injection-molded closures for the food, healthcare, spirits and personal care
end markets and is included in the Company’s Rigid Closed Top
segment.  To finance the purchase, Berry used the proceeds from a
$520.0 million bridge loan facility which was subsequently retired with the
issuance of the Senior Secured First Priority Notes.  A portion of the
goodwill is deductible for tax purposes.  The Company finalized the
purchase accounting and there were no material adjustments made to the
previously presented purchase price allocation.





Erie
County Plastics Corporation


In
November 2008, Berry was the successful bidder to acquire certain assets of Erie
County Plastics Corporation (“Erie Plastics”), a custom injection molder of
plastics packaging and components, for $4.6 million.  Erie Plastics
previously filed for bankruptcy protection on September 29, 2008.





Sale
of Capsol Berry Plastics S.p.a.


In March
2009, the Company sold Capsol Berry Plastics S.p.a.  This business
generated annual net sales of approximately $17.0 million and was included in
our Rigid Closed Top segment.  The sale resulted in a net loss of $4.2
million, net of tax, which is included in discontinued operations.





4.  
 Restructuring





During
fiscal 2007 and 2008, the Company announced various restructuring plans which
included shutting down facilities in the Closed Top, Flexible Films and
Tapes/Coatings divisions.





The table
below sets forth the Company’s estimate of the total cost of the restructuring
programs, the cumulative portion recognized through March 28, 2009 and the
portion expected to be recognized in a future period:


12





Expected
      Total
                      Costs
                    
                    
                    Recognized
      through March 28, 2009
                    
                    
                    To
      be Recognized
                      in
      FutureSeverance
      and termination benefits
                    
                    $
                    8.7
                    
                    
                    $
                    7.8
                    
                    
                    $
                    0.9Facility
      exit costs
                    
                    
                    20.7
                    
                    
                    
                    20.0
                    
                    
                    
                    0.7Asset
      impairment
                    
                    
                    18.1
                    
                    
                    
                    18.1
                    
                    
                    
                    —Other
                    
                    
                    7.0
                    
                    
                    
                    3.6
                    
                    
                    
                    3.4Total
                    
                    $
                    54.5
                    
                    
                    $
                    49.5
                    
                    
                    $
                    5.0





The
Company incurred $0.2 million and $1.7 million for the thirteen weeks ended and
$0.8 million and $5.2 million for the twenty-six weeks ended of restructuring
costs related to severance and facility exit costs as of March 28, 2009 and
March 29, 2008, respectively.





The table
below sets forth the activity with respect to the restructuring accrual at
September 27, 2008 and March 28, 2009:





Employee
                        Severance
                        and
      Benefits
                      
                      
                      Facilities
                        Exit
                        Costs
                      
                      Other
                      
                      
                      TotalBalance
      at September 29, 2007
                      
                      $
                      3.0
                      
                      
                      $
                      10.4
                      
                      
                      $
                      ―
                      
                      
                      $
                      13.4Charges
                      
                      
                      0.3
                      
                      
                      
                      7.9
                      
                      
                      
                      1.4
                      
                      
                      
                      9.6Cash
      payments
                      
                      
                      (3.3
                      )
                      
                      
                      (14.2
                      )
                      
                      
                      (1.4
                      )
                      
                      
                      (18.9
                      )Balance
      at September 27, 2008
                      
                      
                      ―
                      
                      
                      
                      4.1
                      
                      
                      
                      ―
                      
                      
                      
                      4.1Charges
                      
                      
                      ―
                      
                      
                      
                      0.8
                      
                      
                      
                      ―
                      
                      
                      
                      0.8Cash
      payments
                      
                      
                      ―
                      
                      
                      
                      (1.3
                      )
                      
                      
                      ―
                      
                      
                      
                      (1.3
                      )Balance
      at March 28, 2009
                      
                      $
                      ―
                      
                      
                      $
                      3.6
                      
                      
                      $
                      ―
                      
                      
                      $
                      3.6





The
restructuring costs accrued as of March 28, 2009 will result in future cash
outflows. The charges recognized in the quarter ended March 28, 2009 have been
reported as Restructuring expense in the Consolidated Statements of Operations.
The remaining liability as of March 28, 2009 has been included within Accrued
expenses on the Consolidated Balance Sheet.


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:





March
      28, 2009
                
                
                September
      27, 2008
                
                Amortization
      PeriodDeferred financing fees
                
                $
                69.3
                
                
                $
                69.3
                
                Respective
      debtAccumulated amortization
                
                
                (19.8
                )
                
                
                (15.5
                )Deferred financing fees, net
                
                
                49.5
                
                
                
                53.8Goodwill
                
                
                1,432.8
                
                
                
                1,449.3
                
                Indefinite
      livedCustomer relationships
                
                
                1,028.7
                
                
                
                1,033.0
                
                11
      – 20 yearsTrademarks
                
                
                264.7
                
                
                
                265.2
                
                Indefinite
      livedOther intangibles
                
                
                53.4
                
                
                
                53.3
                
                10-20
      yearsAccumulated amortization
                
                
                (239.1
                )
                
                
                (192.4
                )Intangible
      assets, net
                
                
                1,107.7
                
                
                
                1,159.1Total
      Goodwill, Intangible Assets and Deferred Costs
                
                $
                2,590.0
                
                
                $
                2,662.2





6.   
Accrued Expenses and Other Current Liabilities





The
following table sets forth the totals included in Accrued expenses and other
current liabilities on the Consolidated Balance Sheet.





March
      28, 2009
                        
                        
                        September
      27, 2008Employee
      compensation, payroll and other taxes
                        
                        $
                        56.6
                        
                        
                        $
                        62.3Interest
                        
                        
                        19.4
                        
                        
                        
                        27.8Restructuring
                        
                        
                        3.6
                        
                        
                        
                        4.1Rebates
                        
                        
                        39.1
                        
                        
                        
                        51.5Other
                        
                        
                        58.7
                        
                        
                        
                        60.9$
                        177.4
                        
                        
                        $
                        206.6





14


7.      Long-Term
Debt





Long-term
debt consists of the following:





Maturity
      Date
                      
                      March
      28,2009
                      
                      
                      September
      27, 2008Term
      loan
                      April
      3, 2015
                      
                      $
                      1,179.0
                      
                      
                      $
                      1,185.0Revolving
      line of credit
                      April
      3, 2013
                      
                      
                      95.0
                      
                      
                      
                      257.1First
      Priority Senior Secured Floating Rate Notes
                      February
      15, 2015
                      
                      
                      680.6
                      
                      
                      
                      680.6Debt
      discount on First Priority Notes
                      
                      
                      
                      (16.5
                      )
                      
                      
                      (18.0
                      )Second
      Priority Senior Secured Fixed Rate Notes
                      September
      15, 2014
                      
                      
                      525.0
                      
                      
                      
                      525.0Second
      Priority Senior Secured Floating Rate Notes
                      September
      15, 2014
                      
                      
                      225.0
                      
                      
                      
                      225.011%
      Senior Subordinated Notes
                      September
      15, 2016
                      
                      
                      447.8
                      
                      
                      
                      441.210
      1⁄4% Senior Subordinated Notes
                      March
      1, 2016
                      
                      
                      241.0
                      
                      
                      
                      265.0Capital
      leases and other
                      Various
                      
                      
                      34.4
                      
                      
                      
                      38.73,411.3
                      
                      
                      
                      3,599.6Less
      current portion of long-term debt
                      
                      
                      
                      (22.4
                      )
                      
                      
                      (21.4
                      )$
                      3,388.9
                      
                      
                      $
                      3,578.2





The
current portion of long-term debt consists of $12.0 million of quarterly
installments on the term loan and $10.4 million of principal payments related to
capital lease obligations.  The Company was in compliance with its
covenants as of March 28, 2009.





At March
28, 2009, there was $95.0 million outstanding on the revolving line of credit
and $34.5 million in letters of credit outstanding.  One of the
participants in the Company’s revolving credit facility was Lehman Brothers and
its affiliates, who had committed to fund $18.3 million out of our total $400.0
million credit facility.  Due to the bankruptcy of Lehman Brothers, we
cannot access the full commitment of our credit facility.  At March
28, 2009, the Company had unused borrowing capacity of $252.2 million (reflects
the reduction of Lehman’s commitment) under the revolving line of credit subject
to the solvency of our lenders to fund their obligations and our borrowing base
calculations.





In March 2009 BP Parallel
LLC, a non-guarantor subsidiary of the Company, purchased $24.0 million of the10 1⁄4% Senior Subordinated Notes for $7.6 million in cash, plus accrued
interest.  The purchase resulted in a net gain of $16.2 million, which
is in Other expense (income) in our Consolidated Statement of
Operations.  The Company funded the purchase with cash on
hand.





8.   
Derivative Instruments





As part
of our overall risk management, the Company uses derivative instruments to
reduce exposure to changes in interest rates and resin prices.  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 SFAS No. 133 Accounting for Derivative
Instruments and Hedging Activities, changes in fair
value


15


of the
derivatives are offset by changes in the fair value of the related hedged item
or recorded to other comprehensive income (loss). Management believes hedge
effectiveness is evaluated properly in preparation of the financial
statements.





Interest
rate swaps are entered into to manage interest rate risk associated with the
Company’s floating-rate borrowings.  Forward contracts on plastic
resin, the Company’s primary raw material, are entered into to manage the price
risk associated with forecasted purchases of materials used in the Company’s
manufacturing process.





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 other comprehensive income (loss) and reclassified into
earnings in the same line item associated with the forecasted transaction and in
the same line item associated with the transaction and in the same period or
periods during which the hedged transaction affects earnings.  The
Company’s forward looking derivative agreements related to resin contracts are
currently immaterial.




The
Company entered into three interest rate swap transactions in 2007 and 2008, and
initially designated these hedges as cash flow hedges under SFAS
133.  The Company settled one of these instruments in April 2008 and
is amortizing the remaining balance from Accumulated other comprehensive income
(loss) to Interest expense.  The remaining two hedges were accounted
as cash flow hedges through November 5, 2008, at which time the Company lost
hedge accounting.  The balance in Accumulated other comprehensive
income (loss) is being amortized to Interest expense and the future changes in
the derivative value are being recorded in Other income
(expense).





Liability
      DerivativesMarch
      28, 2009
                  
                  September
      27, 2008Balance
      Sheet Location
                  
                  Fair
      Value
                  
                  Balance
      Sheet Location
                  
                  Fair
      ValueDerivatives
      not designated as hedging instruments
                    under
      Statement 133Interest rate swaps
                  Other
      LT Liabilities
                  
                  $
                  23.7
                  
                  Other
      LT Liabilities
                  
                  $
                  15.0





The effect of the derivative instruments on the Consolidated Statement of
Operations for the three and six months ended March 28, 2009, are as
follows:




Income
      Statement
                    
                    Three
      months ended
                    
                    
                    Six
      months endedLocation
                    
                    March
      28, 2009
                    
                    
                    March
      28, 2009Derivatives
      not designated as hedging instruments
                      under
      Statement 133Interest
      rate swaps
                    Other
      expenses (income)
                    
                    $
                    (2.6
                    )
                    
                    $
                    1.2Interest
      expense
                    
                    $
                    3.5
                    
                    
                    $
                    5.9




Interest
Rate Swaps


In August
2007, the Company entered into two separate interest rate swap transactions to
protect $600.0 million of the outstanding variable rate term loan debt from
future interest rate volatility.  The  16


swap
agreements became effective in November 2007.  The first agreement had
a notional amount of $300.0 million and became effective November 5, 2007 and
swaps three month variable LIBOR contracts for a fixed two year rate of 4.875%
and expires on November 5, 2009.  The second agreement had a notional
amount of $300.0 million and became effective November 5, 2007 and swaps three
month variable LIBOR contracts for a fixed three year rate of 4.920% and expires
on November 5, 2010.  The counterparty to this agreement is a global
financial institution.





On
January 22, 2008, the Company entered into an interest rate swap transaction to
protect $300.0 million of the outstanding variable rate term loan debt from
future interest rate volatility.  The swap agreement became effective
February 5, 2008.  The swap agreement had a notional amount of $300.0
million and swap three month variable LIBOR contracts for a fixed three year
rate of 2.962%.  On April 23, 2008, the Company elected to settle this
derivative instrument and received $2.4 million on April 25, 2008 as a result of
this settlement.  The offset is included in accumulated other
comprehensive income (loss) and is being amortized to interest expense through
February 5, 2011, the original term of the swap agreement.





The
Company’s term loan gives the option to elect different interest rate reset
options.  On November 5, 2008, the Company began and continues to
utilize 1-month LIBOR contracts for the underlying senior secured credit
facility.  The Company’s change in interest rate selection along with
their continued use of this alternative rate caused the Company to lose hedge
accounting on both of our interest rate swaps entered into in August
2007.  The Company has recorded all subsequent changes in fair value
from November 5, 2008 to March 28, 2009 in the statement of operations and is
amortizing the previously recorded unrealized loss in accumulated other
comprehensive income (loss) to interest expense through the end of the
respective swap agreement.  The Company estimates the fair value of
the interest rate swap transactions identified above to be a liability, recorded
in Other long-term liabilities in the Consolidated Balance Sheets, of $23.7
million and $15.0 million as of March 28, 2009 and September 27, 2008,
respectively.








9.    
Fair Value Measurements





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued the
Statement of Financial Accounting Standards (“SFAS”) No. 157 and in
February 2007, issued SFAS No. 159. Both standards address aspects of
the expanding application of fair value accounting.  Effective
September 28, 2008, we adopted SFAS No. 157 and
SFAS No. 159.  In accordance with the provisions of the FASB
Staff Position No. FAS 157-2, we have decided to defer adoption of
SFAS No. 157 for one year for nonfinancial assets and nonfinancial
liabilities that are recognized or disclosed at fair value in the financial
statements on a nonrecurring basis.  There was no adjustment to
accumulated deficit as a result of our adoption of
SFAS No. 157.  SFAS No. 159 permits an entity to
measure certain financial assets and financial liabilities at fair value that
were not previously required to be measured at fair value.  We have
not elected to measure any financial assets or financial liabilities at fair
value that were not previously required to be measured at fair
value.




SFAS No. 157
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.  SFAS 157 also establishes a three-level hierarchy  17


(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.  SFAS 157 requires the consideration of the counterparty’s or
the Company’s nonperformance risk when assessing fair value.  As of March
28, 2009, the Company has interest rate swap liabilities totaling $23.7 million
which the fair value was determined using Level 2 inputs as other significant
observable inputs were available.





10.    Stockholders’
Equity and Stock Option Plans





In
connection with the merger of Berry Group and Covalence Specialty Materials
Holding Corp. in April of 2007, Berry Group modified its outstanding stock
options to provide for (i) the vesting of an additional twenty percent (20%) of
the total number of shares underlying such outstanding options; (ii) the
conversion of options with escalating exercise prices to a fixed priced option,
with no increase in the exercise price as of the date of grant of such
escalating priced option; and (iii) with respect to each outstanding option, the
vesting of which was contingent upon the achievement of performance goals, the
deemed achievement of all such performance goals.  On June 7, 2007,
Berry Group’s Board of Directors declared a special one-time dividend of $77 per
common share and option to shareholders of record as of June 6,
2007.  This dividend reduced Berry Group’s shareholders equity for
owned shares by $530.2 million.  In connection with this dividend
payment, $34.5 million related to unvested stock options was placed in escrow
and was subject to time based vesting through June 7, 2009.





In
December 2008, the Executive Committee of Berry Group modified the vesting
provisions related to the remaining $33.0 million being held in
escrow.  This resulted in the immediate vesting and accelerating the
recognition of the remaining unrecorded stock compensation expense of $11.4
million in selling, general and administrative expenses recorded in the first
fiscal quarter of 2009.





11.    Comprehensive
Income (Loss)





The
details of comprehensive income (loss) are as follows:





Thirteen
      Weeks Ended
                  
                  
                  Twenty-Six
      Weeks EndedMarch
      28,2009
                  
                  
                  March
      29,2008
                  
                  
                  March
      28,2009
                  
                  
                  March
      29,2008Net
      loss
                  
                  $
                  (7.4
                  )
                  
                  $
                  (29.3
                  )
                  
                  $
                  (36.8
                  )
                  
                  $
                  (60.6
                  )Derivative
      instruments
                  
                  
                  3.7
                  
                  
                  
                  (11.1
                  )
                  
                  
                  (1.0
                  )
                  
                  
                  (16.7
                  )Currency
      translation income (loss)
                  
                  
                  (5.5
                  )
                  
                  
                  (2.2
                  )
                  
                  
                  (32.5
                  )
                  
                  
                  0.1Comprehensive
      loss
                  
                  $
                  (9.2
                  )
                  
                  $
                  (42.6
                  )
                  
                  $
                  (70.3
                  )
                  
                  $
                  (77.2
                  )





18


12.
Income Taxes





The
effective tax rate from continuing operations was 28.9% and 36.3% for the
thirteen weeks ended March 28, 2009 and March 29, 2008,
respectively.  A reconciliation of income tax benefit, computed at the
federal statutory rate, to income tax benefit, as provided for in the financial
statements, is as follows:





Thirteen
      Weeks Ended
                  
                  
                  Twenty-Six
      Weeks EndedMarch
      28,2009
                  
                  
                  March
      29,2008
                  
                  
                  March
      28,2009
                  
                  
                  March
      29,2008Income
      tax benefit computed at statutory rate
                  
                  $
                  (1.6
                  )
                  
                  $
                  (16.1
                  )
                  
                  $
                  (17.4
                  )
                  
                  $
                  (34.0
                  )State
      income tax benefit, net of federal taxes
                  
                  
                  (0.2
                  )
                  
                  
                  (0.6
                  )
                  
                  
                  (0.2
                  )
                  
                  
                  (1.3
                  )Expenses
      not deductible for income tax purposes
                  
                  
                  0.2
                  
                  
                  
                  0.2
                  
                  
                  
                  0.3
                  
                  
                  
                  0.3Change
      in valuation allowance
                  
                  
                  0.3
                  
                  
                  
                  —
                  
                  
                  
                  0.3
                  
                  
                  
                  1.0Other
                  
                  
                  —
                  
                  
                  
                  (0.2
                  )
                  
                  
                  (0.1
                  )
                  
                  
                  (2.4
                  )Income
      tax benefit
                  
                  $
                  (1.3
                  )
                  
                  $
                  (16.7
                  )
                  
                  $
                  (17.1
                  )
                  
                  $
                  (36.4
                  )





19


13.
Operating Segments





Berry’s
operations are organized into four reportable segments: Rigid Open Top, Rigid
Closed Top, Flexible Films, and Tapes/Coatings.  The Company has
manufacturing and distribution centers in the United States, Canada, Mexico,
Belgium and India.  The Company evaluates the performance of and
allocates resources to these segments based on revenue and other segment profit
measures.  The North American operation represents 93% of the
Company’s net sales and 97% of the total assets.  Selected information
by reportable segment is presented in the following table:





Thirteen
      Weeks Ended
                        
                        
                        Twenty-Six
      Weeks EndedMarch
      28, 2009
                        
                        
                        March
      29, 2008
                        
                        
                        March
      28, 2009
                        
                        
                        March
      29, 2008Net
      sales:Rigid Open Top
                        
                        $
                        250.2
                        
                        
                        $
                        247.9
                        
                        
                        $
                        527.2
                        
                        
                        $
                        471.1Rigid Closed
Top
                        
                        
                        210.2
                        
                        
                        
                        211.2
                        
                        
                        
                        440.8
                        
                        
                        
                        359.6Flexible Films
                        
                        
                        199.2
                        
                        
                        
                        257.8
                        
                        
                        
                        437.1
                        
                        
                        
                        528.2Tapes/Coatings
                        
                        
                        98.2
                        
                        
                        
                        127.4
                        
                        
                        
                        217.7
                        
                        
                        
                        248.1Total net sales
                        
                        $
                        757.8
                        
                        
                        $
                        844.3
                        
                        
                        $
                        1,622.8
                        
                        
                        $
                        1,607.0Operating
      income (loss):Rigid Open Top
                        
                        $
                        35.4
                        
                        
                        $
                        15.4
                        
                        
                        $
                        55.3
                        
                        
                        $
                        25.5Rigid Closed
Top
                        
                        
                        12.8
                        
                        
                        
                        8.2
                        
                        
                        
                        24.3
                        
                        
                        
                        15.2Flexible Films
                        
                        
                        (4.7
                        )
                        
                        
                        (3.2
                        )
                        
                        
                        (4.4
                        )
                        
                        
                        (8.8
                        )Tapes/Coatings
                        
                        
                        (1.0
                        )
                        
                        
                        0.8
                        
                        
                        
                        (1.3
                        )
                        
                        
                        (0.2
                        )Total operating
      income
                        
                        $
                        42.5
                        
                        
                        $
                        21.2
                        
                        
                        $
                        73.9
                        
                        
                        $
                        31.7Depreciation
      and amortization:Rigid Open Top
                        
                        $
                        20.3
                        
                        
                        $
                        20.3
                        
                        
                        $
                        40.2
                        
                        
                        $
                        43.6Rigid Closed
Top
                        
                        
                        23.8
                        
                        
                        
                        22.5
                        
                        
                        
                        45.9
                        
                        
                        
                        38.6Flexible Films
                        
                        
                        10.8
                        
                        
                        
                        11.1
                        
                        
                        
                        22.2
                        
                        
                        
                        22.1Tapes/Coatings
                        
                        
                        8.3
                        
                        
                        
                        9.1
                        
                        
                        
                        16.6
                        
                        
                        
                        18.3Total depreciation and
      amortization
                        
                        $
                        63.2
                        
                        
                        $
                        63.0
                        
                        
                        $
                        124.9
                        
                        
                        $
                        122.6








March
      28,2009
                                                    
                                                    
                                                    September
      27, 2008Total
      assets:Rigid Open Top
                                                    
                                                    $
                                                    1,920.4
                                                    
                                                    
                                                    $
                                                    2,019.6Rigid Closed
Top
                                                    
                                                    
                                                    1,540.5
                                                    
                                                    
                                                    
                                                    1,648.8Flexible Films
                                                    
                                                    
                                                    519.0
                                                    
                                                    
                                                    
                                                    637.8Tapes/Coatings
                                                    
                                                    
                                                    380.4
                                                    
                                                    
                                                    
                                                    417.9Total assets
                                                    
                                                    $
                                                    4,360.3
                                                    
                                                    
                                                    $
                                                    4,724.1





20





14.     Condensed
Consolidating Financial Information





The
Company has Senior Secured First Priority Notes, Second Priority Fixed and
Floating Rate Notes and 10 1⁄4% Senior Subordinated 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.  Presented below is condensed consolidating financial
information for the parent company, guarantor subsidiaries and non-guarantor
subsidiaries.  The equity method has been used with respect to
investments in subsidiaries.  The principal elimination entries
eliminate investments in subsidiaries and intercompany balances and
transactions.





March
      28, 2009Parent
                  Company
                
                
                Guarantor
      Subsidiaries
                
                
                Non-guarantor
      Subsidiaries
                
                
                Eliminations
                
                
                ConsolidatedConsolidating
      Balance SheetCurrent
      assets
                
                $
                277.2
                
                
                $
                551.3
                
                
                $
                68.3
                
                
                $
                —
                
                
                $
                896.8Net
      property and equipment
                
                
                199.3
                
                
                
                639.8
                
                
                
                32.4
                
                
                
                —
                
                
                
                871.5Other
      noncurrent assets
                
                
                3,329.4
                
                
                
                2,338.6
                
                
                
                52.5
                
                
                
                (3,128.5
                )
                
                
                2,592.0Total
      assets
                
                $
                3,805.9
                
                
                $
                3,529.7
                
                
                $
                153.2
                
                
                $
                (3,128.5
                )
                
                $
                4,630.3Current
      liabilities
                
                $
                97.1
                
                
                $
                271.9
                
                
                $
                18.3
                
                
                $
                —
                
                
                $
                387.3Noncurrent
      liabilities
                
                
                3,415.4
                
                
                
                262.5
                
                
                
                9.4
                
                
                
                (7.7
                )
                
                
                3,679.6Equity
      (deficit)
                
                
                293.4
                
                
                
                2,995.3
                
                
                
                125.5
                
                
                
                (3,120.8
                )
                
                
                293.4Total
      liabilities and equity (deficit)
                
                $
                3,805.9
                
                
                $
                3,529.7
                
                
                $
                153.2
                
                
                $
                (3,128.5
                )
                
                $
                4,630.3





September
      27, 2008Parent
      Company
                
                
                Guarantor
      Subsidiaries
                
                
                Non-guarantor
      Subsidiaries
                
                
                Eliminations
                
                
                ConsolidatedConsolidating
      Balance SheetCurrent
      assets
                
                $
                433.2
                
                
                $
                672.2
                
                
                $
                91.7
                
                
                $
                —
                
                
                $
                1,197.1Net
      property and equipment
                
                
                201.2
                
                
                
                610.9
                
                
                
                50.7
                
                
                
                —
                
                
                
                862.8Other
      noncurrent assets
                
                
                3,442.8
                
                
                
                2,378.3
                
                
                
                67.7
                
                
                
                (3,224.6
                )
                
                
                2,664.2Total
      assets
                
                $
                4,077.2
                
                
                $
                3,661.4
                
                
                $
                210.1
                
                
                $
                (3,224.6
                )
                
                $
                4,724.1Current
      liabilities
                
                $
                145.3
                
                
                $
                308.6
                
                
                $
                27.9
                
                
                $
                —
                
                
                $
                481.8Noncurrent
      liabilities
                
                
                3,580.0
                
                
                
                296.7
                
                
                
                13.7
                
                
                
                —
                
                
                
                3,890.4Equity
      (deficit)
                
                
                351.9
                
                
                
                3,056.1
                
                
                
                168.5
                
                
                
                (3,224.6
                )
                
                
                351.9Total
      liabilities and equity (deficit)
                
                $
                4,077.2
                
                
                $
                3,661.4
                
                
                $
                210.1
                
                
                $
                (3,224.6
                )
                
                $
                4,724.1


21





Thirteen
      Weeks Ended March 28, 2009Parent
      Company
                
                
                Guarantor
      Subsidiaries
                
                
                Non-guarantor
      Subsidiaries
                
                
                Eliminations
                
                
                ConsolidatedConsolidating
      Statement of OperationsNet
      sales
                
                $
                175.3
                
                
                $
                532.9
                
                
                $
                49.6
                
                
                $
                —
                
                
                $
                757.8Cost
      of goods sold
                
                
                166.5
                
                
                
                427.2
                
                
                
                41.6
                
                
                
                —
                
                
                
                635.3Gross
      profit
                
                
                8.8
                
                
                
                105.7
                
                
                
                8.0
                
                
                
                —
                
                
                
                122.5Selling,
      general, and administrative expense
                
                
                14.6
                
                
                
                54.2
                
                
                
                5.2
                
                
                
                —
                
                
                
                74.0Restructuring
      and impairment charges
                
                
                0.2
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                0.2Other
      operating expenses
                
                
                1.7
                
                
                
                3.9
                
                
                
                0.2
                
                
                
                —
                
                
                
                5.8Operating
      income (loss)
                
                
                (7.7
                )
                
                
                47.6
                
                
                
                2.6
                
                
                
                —
                
                
                
                42.5Other
      expenses
                
                
                (25.3
                )
                
                
                6.5
                
                
                
                —
                
                
                
                —
                
                
                
                (18.8
                )Interest
      expense (income), net
                
                
                75.5
                
                
                
                (12.7
                )
                
                
                3.0
                
                
                
                —
                
                
                
                65.8Equity
      in net income of subsidiary
                
                
                57.0
                
                
                
                —
                
                
                
                —
                
                
                
                (57.0
                )
                
                
                —Income
      (loss) from continuing operations before income taxes
                
                
                (0.9
                )
                
                
                53.8
                
                
                
                (0.4
                )
                
                
                (57.0
                )
                
                
                (4.5
                )Income
      tax expense (benefit)
                
                
                2.3
                
                
                
                (4.1
                )
                
                
                0.5
                
                
                
                —
                
                
                
                (1.3
                )Net
      income (loss) from continuing operations
                
                
                (3.2
                )
                
                
                57.9
                
                
                
                (0.9
                )
                
                
                (57.0
                )
                
                
                (3.2
                )Discontinued
      operations, net of income taxes
                
                
                4.2
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                4.2Net
      income (loss)
                
                $
                (7.4
                )
                
                $
                57.9
                
                
                $
                (0.9
                )
                
                $
                (57.0
                )
                
                $
                (7.4
                )








Thirteen
      Weeks Ended March 29, 2008Parent
      Company
                  
                  
                  Guarantor
      Subsidiaries
                  
                  
                  Non-guarantor
      Subsidiaries
                  
                  
                  Eliminations
                  
                  
                  ConsolidatedConsolidating
      Statement of OperationsNet
      sales
                  
                  $
                  236.8
                  
                  
                  $
                  542.4
                  
                  
                  $
                  65.1
                  
                  
                  $
                  —
                  
                  
                  $
                  844.3Cost
      of goods sold
                  
                  
                  220.0
                  
                  
                  
                  453.9
                  
                  
                  
                  58.0
                  
                  
                  
                  —
                  
                  
                  
                  731.9Gross
      profit
                  
                  
                  16.8
                  
                  
                  
                  88.5
                  
                  
                  
                  7.1
                  
                  
                  
                  —
                  
                  
                  
                  112.4Selling,
      general, and administrative expense
                  
                  
                  23.0
                  
                  
                  
                  53.9
                  
                  
                  
                  6..7
                  
                  
                  
                  —
                  
                  
                  
                  83.6Restructuring
      and impairment charges
                  
                  
                  1.7
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1.7Other
      operating expenses
                  
                  
                  0.2
                  
                  
                  
                  4.0
                  
                  
                  
                  1.7
                  
                  
                  
                  —
                  
                  
                  
                  5.9Operating
      income (loss)
                  
                  
                  (8.1
                  )
                  
                  
                  30.6
                  
                  
                  
                  (1.3
                  )
                  
                  
                  —
                  
                  
                  
                  21.2Interest
      expense (income), net
                  
                  
                  74.7
                  
                  
                  
                  (10.1
                  )
                  
                  
                  2.6
                  
                  
                  
                  —
                  
                  
                  
                  67.2Equity
      in net income of subsidiary
                  
                  
                  53.6
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (53.6
                  )
                  
                  
                  —Income
      (loss) before income tax
                  
                  
                  (29.2
                  )
                  
                  
                  40.7
                  
                  
                  
                  (3.9
                  )
                  
                  
                  (53.6
                  )
                  
                  
                  (46.0
                  )Income
      tax expense (benefit)
                  
                  
                  0.1
                  
                  
                  
                  (17.0
                  )
                  
                  
                  0.2
                  
                  
                  
                  —
                  
                  
                  
                  (16.7
                  )Net
      income (loss)
                  
                  $
                  (29.3
                  )
                  
                  $
                  57.7
                  
                  
                  $
                  (4.1
                  )
                  
                  $
                  (53.6
                  )
                  
                  $
                  (29.3
                  )














22





Twenty-Six
      Weeks Ended March 28, 2009Parent
      Company
                
                
                Guarantor
      Subsidiaries
                
                
                Non-guarantor
      Subsidiaries
                
                
                Eliminations
                
                
                ConsolidatedConsolidating
      Statement of OperationsNet
      sales
                
                $
                389.7
                
                
                $
                1,128.5
                
                
                $
                104.6
                
                
                $
                —
                
                
                $
                1,622.8Cost
      of goods sold
                
                
                361.8
                
                
                
                922.3
                
                
                
                89.3
                
                
                
                —
                
                
                
                1,373.4Gross
      profit
                
                
                27.9
                
                
                
                206.2
                
                
                
                15.3
                
                
                
                —
                
                
                
                249.4Selling,
      general, and administrative expense
                
                
                42.9
                
                
                
                109.5
                
                
                
                11.1
                
                
                
                —
                
                
                
                163.5Restructuring
      and impairment charges
                
                
                0.7
                
                
                
                0.1
                
                
                
                —
                
                
                
                —
                
                
                
                0.8Other
      operating expenses
                
                
                2.6
                
                
                
                8.0
                
                
                
                0.6
                
                
                
                —
                
                
                
                11.2Operating
      income (loss)
                
                
                (18.3
                )
                
                
                88.6
                
                
                
                3.6
                
                
                
                —
                
                
                
                73.9Other
      expenses
                
                
                (21.3
                )
                
                
                6.5
                
                
                
                —
                
                
                
                —
                
                
                
                (14.8
                )Interest
      expense (income), net
                
                
                159.3
                
                
                
                (26.5
                )
                
                
                5.6
                
                
                
                —
                
                
                
                138.4Equity
      in net income of subsidiary
                
                
                126.0
                
                
                
                —
                
                
                
                —
                
                
                
                (126.0
                )
                
                
                —Gain
      (loss) from continuing operations before income taxes
                
                
                (30.3
                )
                
                
                108.6
                
                
                
                (2.0
                )
                
                
                (126.0
                )
                
                
                (49.7
                )Income
      tax expense (benefit)
                
                
                2.3
                
                
                
                (20.1
                )
                
                
                0.7
                
                
                
                —
                
                
                
                (17.1
                )Income
      (loss) from continuing operations
                
                
                (32.6
                )
                
                
                128.7
                
                
                
                (2.7
                )
                
                
                (126.0
                )
                
                
                (32.6
                )Discontinued
      operations, net of income taxes
                
                
                4.2
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                4.2Net
      income (loss)
                
                $
                (36.8
                )
                
                $
                128.7
                
                
                $
                (2.7
                )
                
                $
                (126.0
                )
                
                $
                (36.8
                )





Consolidating
      Statement of Cash FlowsNet
      cash flow from operating activities
                
                
                160.1
                
                
                
                60.9
                
                
                
                5.9
                
                
                $
                —
                
                
                $
                226.9Investing
      activities:Purchase
      of property, plant, and equipment
                
                
                (26.8
                )
                
                
                (70.1
                )
                
                
                (1.8
                )
                
                
                —
                
                
                
                (98.7
                )Proceeds
      from disposal of assets
                
                
                —
                
                
                
                2.4
                
                
                
                —
                
                
                
                —
                
                
                
                2.4Acquisition
      of business net of cash acquired
                
                
                (4.6
                )
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (4.6
                )Net
      cash flow from investing activities
                
                
                (31.4
                )
                
                
                (67.7
                )
                
                
                (1.8
                )
                
                
                —
                
                
                
                (100.9
                )Financing
      activities:Proceeds
      from long-term borrowings
                
                
                0.8
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                0.8Payments
      on long-term borrowings
                
                
                (179.1
                )
                
                
                —
                
                
                
                (0.3
                )
                
                
                —
                
                
                
                (179.4
                )Debt
      financing costs
                
                
                (0.4
                )
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (0.4
                )Equity
      contributions (distributions), net
                
                
                (0.2
                )
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (0.2
                )Net
      cash flow from financing activities
                
                
                (178.9
                )
                
                
                —
                
                
                
                (0.3
                )
                
                
                —
                
                
                
                (179.2
                )Effect
      of exchange rate changes on cash
                
                
                —
                
                
                
                —
                
                
                
                (1.2
                )
                
                
                —
                
                
                
                (1.2
                )Net
      increase (decrease) in cash and cash equivalents
                
                
                (50.2
                )
                
                
                (6.8
                )
                
                
                2.6
                
                
                
                —
                
                
                
                54.4Cash
      and cash equivalents at beginning of period
                
                
                172.6
                
                
                
                8.7
                
                
                
                8.4
                
                
                
                —
                
                
                
                189.7Cash
      and cash equivalents at end of period
                
                $
                122.4
                
                
                $
                1.9
                
                
                $
                11.0
                
                
                $
                —
                
                
                $
                135.3







23







Twenty-Six
      Weeks Ended March 29, 2008Parent
      Company
                  
                  
                  Guarantor
      Subsidiaries
                  
                  
                  Non-guarantor
      Subsidiaries
                  
                  
                  Eliminations
                  
                  
                  ConsolidatedConsolidating
      Statement of OperationsNet
      sales
                  
                  $
                  479.2
                  
                  
                  $
                  1,011.7
                  
                  
                  $
                  116.1
                  
                  
                  $
                  —
                  
                  
                  $
                  1,607.0Cost
      of goods sold
                  
                  
                  439.0
                  
                  
                  
                  841.2
                  
                  
                  
                  105.6
                  
                  
                  
                  —
                  
                  
                  
                  1,385.8Gross
      profit
                  
                  
                  40.2
                  
                  
                  
                  170.5
                  
                  
                  
                  10.5
                  
                  
                  
                  —
                  
                  
                  
                  221.2Selling,
      general, and administrative expense
                  
                  
                  47.9
                  
                  
                  
                  106.6
                  
                  
                  
                  10.9
                  
                  
                  
                  —
                  
                  
                  
                  165.4Restructuring
      and impairment charges
                  
                  
                  5.2
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  5.2Other
      operating expenses
                  
                  
                  9.3
                  
                  
                  
                  7.3
                  
                  
                  
                  2.3
                  
                  
                  
                  —
                  
                  
                  
                  18.9Operating
      income (loss)
                  
                  
                  (22.2
                  )
                  
                  
                  56.6
                  
                  
                  
                  (2.7
                  )
                  
                  
                  —
                  
                  
                  
                  31.7Interest
      expense (income), net
                  
                  
                  152.4
                  
                  
                  
                  (27.3
                  )
                  
                  
                  3.6
                  
                  
                  
                  —
                  
                  
                  
                  128.7Equity
      in net income of subsidiary
                  
                  
                  114.2
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (114.2
                  )
                  
                  
                  —Income
      (loss) before income tax
                  
                  
                  (60.4
                  )
                  
                  
                  83.9
                  
                  
                  
                  (6.3
                  )
                  
                  
                  (114.2
                  )
                  
                  
                  (97.0
                  )Income
      taxes (benefit)
                  
                  
                  0.2
                  
                  
                  
                  (37.7
                  )
                  
                  
                  1.1
                  
                  
                  
                  —
                  
                  
                  
                  (36.4
                  )Net
      income (loss)
                  
                  $
                  (60.6
                  )
                  
                  $
                  121.6
                  
                  
                  $
                  (7.4
                  )
                  
                  $
                  (114.2
                  )
                  
                  $
                  (60.6
                  )





Consolidating
      Statement of Cash FlowsNet
      cash flow from operating activities
                
                $
                7.8
                
                
                $
                (16.5
                )
                
                $
                9.2
                
                
                $
                —
                
                
                $
                0.5Investing
      activities:Purchase
      of property, plant, and equipment
                
                
                (23.9
                )
                
                
                (53.4
                )
                
                
                (1.1
                )
                
                
                —
                
                
                
                (78.4
                )Proceeds
      from disposal of assets
                
                
                —
                
                
                
                82.0
                
                
                
                —
                
                
                
                —
                
                
                
                82.0Acquisition
      of business net of cash acquired
                
                
                (577.8
                )
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (577.8
                )Net
      cash flow from investing activities
                
                
                (601.7
                )
                
                
                28.6
                
                
                
                (1.1
                )
                
                
                —
                
                
                
                (574.2
                )Financing
      activities:Proceeds
      from long-term borrowings
                
                
                607.4
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                607.4Payments
      on long-term borrowings
                
                
                —
                
                
                
                (13.4
                )
                
                
                (0.5
                )
                
                
                —
                
                
                
                (13.9
                )Debt
      financing costs
                
                
                (12.9
                )
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (12.9
                )Equity
      contributions (distributions), net
                
                
                (1.7
                )
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (1.7
                )Net
      cash flow from financing activities
                
                
                592.8
                
                
                
                (13.4
                )
                
                
                (0.5
                )
                
                
                —
                
                
                
                578.9Effect
      of exchange rate changes on cash
                
                
                —
                
                
                
                —
                
                
                
                (0.3
                )
                
                
                —
                
                
                
                (0.3
                )Net
      increase (decrease) in cash and cash equivalents
                
                
                (1.1
                )
                
                
                (1.3
                )
                
                
                7.3
                
                
                
                —
                
                
                
                4.9Cash
      and cash equivalents at beginning of period
                
                
                0.9
                
                
                
                7.7
                
                
                
                6.0
                
                
                
                —
                
                
                
                14.6Cash
      and cash equivalents at end of period
                
                $
                (0.2
                )
                
                $
                6.4
                
                
                $
                13.3
                
                
                $
                —
                
                
                $
                19.5





24


15.     Contingencies
and Commitments





The
Company is party to various legal proceedings involving routine claims which are
incidental to the business.  Although the 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 the
business, financial condition, results of operations or cash flows of the
Company.  The Company has recorded retirement obligations related to
operating leases in accordance with FASB Statement No. 13 “Accounting for
Leases” and FASB Statement No. 143, “Accounting for Asset Retirement
Obligations” on 33 facilities, none of which are individually material to the
Company.





16.     Recent
Financial Accounting Standards





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations.”  This statement replaces FASB Statement No. 141,
“Business Combinations.” This statement retains the fundamental requirements in
SFAS 141 that the acquisition method of accounting (which SFAS 141 called
the purchase method) be used for all business combinations and for an acquirer
to be identified for each business combination.  This statement
defines the acquirer as the entity that obtains control of one or more
businesses in the business combination and establishes the acquisition date as
the date that the acquirer achieves control. This statement requires an acquirer
to recognize the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree at the acquisition date, measured at
their fair values as of that date, with limited exceptions specified in the
statement.  This statement applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. 
The
adoption of SFAS 141 did not have a material impact on the Company’s results of
operations or financial position in the current Form
10-Q.




In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements”, which is an amendment of Accounting Research
Bulletin (“ARB”) No. 51.  This statement clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements.  This statement changes the way the consolidated
income statement is presented, thus requiring consolidated net income to be
reported at amounts that include the amounts attributable to both parent and the
noncontrolling interest.  This statement is effective for the fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. The adoption of SFAS 160 did not have a material impact on
the Company’s results of operations or financial position in the current Form
10-Q.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities”, which is an amendment of FASB Statement No.
133.  This statement requires enhanced disclosures about an entity’s
derivative and hedging activities and thereby improves the transparency of
financial reporting.  This statement is effective for the fiscal
years, and interim periods within those fiscal years, beginning on or after
November 15, 2008.  The disclosure provision of SFAS No. 161 are
included in Note 8.


25


17.
Subsequent Events





In March
2009, BP Parallel
LLC agreed in aggregate to invest approximately $134 million to purchase
assignments of $415 million principal of the Company’s parent, Berry Plastics
Group, Inc., senior unsecured term loan.  As of May 8, 2009, the
Company had closed on $105.9 million of these assignments and expects to close
on the remaining in the third quarter of fiscal 2009.





In April
2009, BP Parallel
LLC agreed to invest approximately $13 million to purchase assignments of
$57.9 million principal of the Company’s parent, Berry Plastics Group, Inc.,
senior unsecured term loan.  The Company expects to close in the third
quarter of fiscal 2009.

























26


Item
      2.


Management’s
Discussion and Analysis of Financial Condition and


Results
of Operations





Unless
the context requires otherwise, references in this Management's Discussion and
Analysis of Financial Condition and Results of Operations to “Company” refer to
Berry Plastics Corporation, references to “we,” “our” or “us” refer to Berry
Plastics Corporation together with its consolidated subsidiaries, after giving
effect to the transactions described in the next paragraph.  You
should read the following discussion in conjunction with the consolidated
financial statements of the Company and its subsidiaries and the accompanying
notes thereto, which information is included elsewhere herein.  The
Company is a wholly owned subsidiary of Berry Plastics Group,
Inc.  This discussion contains forward-looking statements and involves
numerous risks and uncertainties, including, but not limited to, those described
in our Form 10-K filed with the SEC for the fiscal year ended September 27, 2008
section titled “Risk Factors” and other risk factors identified from time to
time in our periodic filings with the Securities and Exchange
Commission.  Our actual results may differ materially from those
contained in any forward-looking statements.  You should read the
explanation of the qualifications and limitations on these forward-looking
statements starting on page 4 of this report.





On April
3, 2007, Berry Plastics Group, Inc. (“Old Berry Group”) completed a
stock-for-stock merger (the “Berry Covalence Merger”) with Covalence Specialty
Materials Holding Corp. (“Old Covalence Holding”). The resulting company
retained the name Berry Plastics Group, Inc. (“Berry
Group”).  Immediately following the Berry Covalence Merger, Berry
Plastics Holding Corporation (“Old Berry Holding”) and Covalence Specialty
Materials Corp. (“Old Covalence”) were combined as a direct subsidiary of Berry
Group.  The resulting company retained the name Berry Plastics Holding
Corporation which was subsequently changed to Berry Plastics Corporation on
December 29, 2007 (“Berry” or the “Company”).  The combination was
accounted for as a merger of entities under common control.  We
believe the combination of these entities will provide us with significant
opportunities for growth through increased operational efficiencies, reduced
fixed costs, optimization of manufacturing assets and improvement
in the efficiency of capital spending.





Acquisitions





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


27




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.




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 available on hand.





Recent
Developments





The
Company has been able to estimate expected benefits on earnings from the
acquired entities at the commencement of each transaction, however once the
execution of the plan and integration occur, we are generally unable to
accurately estimate or track what the ultimate effect on future earnings have
been due to systems integrations and movement of activities to multiple
facilities.





Acquisition
of MAC Closures, Inc.


On
December 19, 2007, the Company acquired 100% of the outstanding common stock of
MAC, a plastic cap and closure manufacturer with operations located in Waterloo,
Quebec for CN$72.0 million.  MAC had 2007 sales of $37.1 million and
is included in our Rigid Closed Top segment.  The purchase price was
funded utilizing cash on hand from a sale-leaseback
transaction.  Synergies identified as a result of the MAC acquisition
were $2.4 million.





Acquisition
of Captive Holdings, Inc.


On
February 5, 2008, the Company completed its acquisition of 100% of the
outstanding capital stock of Captive Holdings, Inc., which is the sole
stockholder of Captive.  Captive is a manufacturer of blow-molded
bottles and injection-molded closures for the food, healthcare, spirits and
personal care end markets with annual net sales of $290.3 million in calendar
2007.  The purchase price was funded utilizing the proceeds of a
senior secured bridge loan facility which in turn was repaid with the proceeds
from the Senior Secured First Priority Notes discussed in the Notes to the
Consolidated Financial Statements section of this Form 10-Q.  Synergies identified from
the Captive acquisition were $16.0 million.





Acquisition
of Assets of Erie County Plastics Corporation


In
November 2008, Berry was the successful bidder to acquire certain assets of Erie
County Plastics Corporation, a custom injection molder of plastics packaging and
components for $4.6 million.  Erie Plastics previously filed for
bankruptcy protection on September 29, 2008.  Synergies identified
from the Erie acquisition were $4.0 million.


28


Sale
of Capsol Berry Plastics S.p.a.


In March
2009, the Company sold Capsol Berry Plastics S.p.a.  This business
generated annual net sales of approximately $17.0 million and was included in
our Rigid Closed Top segment.





Executive
Summary





Business.The
Company is organized into four operating segments: Rigid Open Top, Rigid Closed
Top, Flexible Films and Tapes/Coatings.  The Rigid Open Top division
sells products in three categories including containers, foodservice items and
home and party.  The Rigid Closed Top division sells products in three
categories including closures and overcaps, bottles and prescription containers
and tubes.  The Flexible Films division sells primarily plastic trash
bags, stretch film and plastic sheeting to the agricultural, horticultural
institutional, foodservice and retail markets.  Our Tapes/Coatings
division sells specialty adhesive products and flexible packaging 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 and it accounts for approximately 45% of
our total cost of sales.  Polypropylene and polyethylene account for
more than 80% of our plastic resin purchases based on the pounds
purchased.  The average industry prices, as published in industry
sources, per pound were as follows:





Polyethylene
      Butene Film
                
                
                Polypropylene2009
      Projected
                
                
                2008
                
                
                2007
                
                
                2009
      Projected
                
                
                2008
                
                
                20071st
      quarter
                
                $
                .67
                
                
                $
                .82
                
                
                $
                .64
                
                
                $
                .56
                
                
                $
                .85
                
                
                $
                .712nd
      quarter
                
                
                .59
                
                
                
                .84
                
                
                
                .63
                
                
                
                .46
                
                
                
                .80
                
                
                
                .713rd
      quarter
                
                
                .60
                
                
                
                .91
                
                
                
                .69
                
                
                
                .51
                
                
                
                .89
                
                
                
                .774th
      quarter
                
                
                .57
                
                
                
                1.00
                
                
                
                .75
                
                
                
                .57
                
                
                
                .99
                
                
                
                .79





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.  As
changes in resin prices occur, our Rigid Open Top and Rigid Closed Top segments
are positively impacted in the short term when raw material prices decrease and
are negatively impacted in the short term when raw material prices
increase.





Outlook.The Company is impacted
by general economic and industrial growth, housing starts, automotive builds,
plastic resin availability and affordability, and general industrial production.
Our business has both geographic and end market diversity which reduces the
impact of any one of these factors on our overall performance. We are impacted
by our ability to maintain selling price increases, raw material pricing and
volume growth of our customers.  We expect continued strength in our
thermoforming product lines, which would have a positive impact on volumes in
our Rigid Open Top segment.  We continually focus on improving our
overall profitability by implementing cost reduction programs for our
manufacturing, selling, general and administrative expenses on an annual
basis.  We have continued this in 2009 to help counteract some of the
volume declines we have seen in the marketplace.  We anticipate
continued softness in U.S. housing starts in 2009 that


29


will
impact our volume in both our Tapes/Coatings and Flexible Films
segments.  We also anticipate continued softness in 2009 in North
American automotive build rates will continue to exert downward volume pressure
on certain product lines that are included in our Tapes/Coating
segment.





Results
of Operations





Comparison
of the 13 Weeks Ended March 28, 2009 (the “Quarter”) and the 13 Weeks Ended
March 29, 2008 (the “Prior Quarter”)





Net Sales.  Net
sales decreased by 10% to $757.8 million for the Quarter from $844.3 million for
the Prior Quarter.  This $86.5 million decrease includes a volume
contraction of 8% and net selling price decreases of 4% offset by acquisition
volume growth of 2%.  The following discussion in this section
provides a comparison of net sales by business segment.





Thirteen
      Weeks EndedMarch
      28, 2009
                        
                        
                        March
      29, 2008Net
      sales:Rigid Open Top
                        
                        $
                        250.2
                        
                        
                        $
                        247.9Rigid Closed
Top
                        
                        
                        210.2
                        
                        
                        
                        211.2Flexible Films
                        
                        
                        199.2
                        
                        
                        
                        257.8Tapes/Coatings
                        
                        
                        98.2
                        
                        
                        
                        127.4Total net sales
                        
                        $
                        757.8
                        
                        
                        $
                        844.3





Net sales
in the Rigid Open Top segment increased from $247.9 million in the Prior Quarter
to $250.2 million in the Quarter as a result of base volume growth of
1%.  Base volume growth is primarily attributed to increased sales in
various container product lines and thermoformed drink cups partially offset by
reduced volumes in our injection drink cups and houseware product
lines.  Net sales in the Rigid Closed Top business decreased from
$211.2 million in the Prior Quarter to $210.2 million in the Quarter as a result
of base volume decline of 6% and net selling price decreases of 4% partially
offset by acquisition volume growth attributed to Captive and Erie Plastics of
10% for the Quarter. The base volume reduction is primarily attributed to
decreased sales in our overcaps and tubes product lines as a result of
contracting end use markets.  The Flexible Films business net sales
decreased from $257.8 million in the Prior Quarter to $199.2 million in the
Quarter as a result of decline in base volume of 10% and net selling price
decreases of 13%.  The base volume decline is primarily attributed to
the slowness in the housing sector partially offset by strong demand in our
stretch business.  Net sales in the Tapes/Coatings business decreased
from $127.4 million in the Prior Quarter to $98.2 million in the Quarter
primarily as a result of base volume decline of 24% partially offset by net
selling price increases of 1%.The base volume decline
was primarily driven by softness in the new home construction and automotive
markets.





Gross
Profit.  Gross profit increased by $10.1 million to $122.5
million (16% of net sales) for the Quarter from $112.4 million (13% of net
sales) for the Prior Quarter.  This increase is primarily attributed
to a timing lag of passing through raw material costs to our customers in our
Rigid Open Top and Closed Top segments partially offset by lower
volumes.





Operating
Expenses.  Selling, general and administrative expenses
decreased by $9.6 million to $74.0 million for the Quarter from $83.6 million
for the Prior Quarter as a result of a $4.2 million decrease


30


in stock
compensation expense related to the special one-time dividend which fully vested
in December 2008 and the Company’s recently implemented initiatives to reduce
costs.  Restructuring and impairment charges decreased to $0.2 million
in the Quarter compared to $1.7 million in the Prior Quarter as a result of a
decrease in costs associated with the plant consolidations within the Flexible
Films and Tapes/Coatings segments.  Other expenses decreased from $5.9
million in the Prior Quarter to $5.8 million for the Quarter.





Operating
Income. Operating income increased $21.3 million from $21.2 million
in the Prior Quarter to $42.5 million in the Quarter.  The following
discussion in this section provides a comparison of operating income by business
segment.





Thirteen
      Weeks EndedMarch
      28, 2009
                    
                    
                    March
      29, 2008Operating
      income (loss):Rigid Open Top
                    
                    $
                    35.4
                    
                    
                    $
                    15.4Rigid Closed
Top
                    
                    
                    12.8
                    
                    
                    
                    8.2Flexible Films
                    
                    
                    (4.7
                    )
                    
                    
                    (3.2
                    )Tapes/Coatings
                    
                    
                    (1.0
                    )
                    
                    
                    0.8Total operating
      income
                    
                    $
                    42.5
                    
                    
                    $
                    21.2





Operating
income for the Rigid Open Top business increased from $15.4 million for the
Prior Quarter to $35.4 million in the Quarter.  The increase of $20.0
million is primarily attributable to a timing lag of passing through a reduction
in raw material costs to our customers.  Operating income for the
Rigid Closed Top business increased from $8.2 million for the Prior Quarter to
$12.8 million in the Quarter.  The increase of $4.6 million is
primarily attributable to acquisition of Captive and Erie
Plastics.  Operating loss for the Flexible Film business increased
from $3.2 million for the Prior Quarter to $4.7 million in the
Quarter.  The increase of $1.5 million is primarily attributable to
lower sales volumes and selling prices.  Operating income for the
Tapes/Coatings business decreased from an operating income of $0.8 million for
the Prior Quarter to an operating loss of $1.0 million in the
Quarter.  The decrease of $1.8 million is primarily attributable to
lower sales volumes.





Other Expense (Income).Other
expense (income) recorded in the Quarter consists of  a $16.2 million
gain related to the repurchase of the 10 1⁄4% Senior Subordinated Notes and gain
attributed to the fair value adjustment for our interest rate
swaps.





Interest Expense,
Net.  Net interest expense decreased $1.4 million to $65.8
million for the Quarter from $67.2 million in the Prior Quarter primarily as a
result of a decline in borrowing costs of our variable rate debt instruments
partially offset by amortization of previously recorded unrealized loss in
accumulated other comprehensive income (loss) attributed our interest rate
swaps.





Income Tax
Benefit.For the Quarter, we recorded an income tax benefit on
continued operations of $1.3 million or an effective tax rate of 28.9%, as
compared to an income tax benefit of $16.7 million or an effective tax rate of
36.3% in the Prior Quarter primarily due to a reduction in our loss before
income taxes.  The effective tax rate is less then the statutory rate
due to the loss and relative impact of permanent items and establishment of
valuation allowance for certain foreign operating losses where the benefits are
not expected to be realized.


31


Discontinued Operations, Net of
Income Taxes.  The Company recorded a loss of $4.2 million, net
of income taxes of $2.2 million, as a result of the sale of Capsol
Berry Plastics S.p.a.  The results of operation of Capsol Berry
Plastics S.p.a are not material.





Net Loss.  Net loss
was $7.4 million for the Quarter compared to a net loss of $29.3 million for the
Prior Quarter for the reasons discussed above.





26
Weeks Ended March 28, 2009 (“YTD”) Compared to the 26 Weeks Ended March 29, 2008
(“Prior YTD”)





Net Sales.  Net
sales increased by 1% to $1,622.8 million for the YTD from $1,607.0 million for
the Prior YTD.  This $15.8 million increase includes a sales volume
reductio of 7% offset by net selling price increases of 2% and acquisition
volume growth of 6%.  The following discussion in this section
provides a comparison of net sales by business segment.





Twenty-Six
      Weeks EndedMarch
      28, 2009
                      
                      
                      March
      29, 2008Net
      sales:Rigid Open Top
                      
                      $
                      527.2
                      
                      
                      $
                      471.1Rigid Closed
Top
                      
                      
                      440.8
                      
                      
                      
                      359.6Flexible Films
                      
                      
                      437.1
                      
                      
                      
                      528.2Tapes/Coatings
                      
                      
                      217.7
                      
                      
                      
                      248.1Total net sales
                      
                      $
                      1,622.8
                      
                      
                      $
                      1,607.0





Net sales
in the Rigid Open Top business increased from $471.1 million in the Prior YTD to
$527.2 million in the YTD as a result of base volume growth in the Rigid Open
Top business of 5% and net selling price increases of 7%.  Base volume
growth is primarily attributed to growth in our thermoformed drink
cups.  Net sales in the Rigid Closed Top business increased from
$359.6 million in the Prior YTD to $440.8 million in the YTD as a result of
acquisition volume growth attributed to Captive, MAC and Erie Plastics of 27%
partially offset by an base volume decline of 3% and net selling price decreases
of 1%.  The base volume reduction is primarily attributed to the
decline in our overcaps and tubes product lines as a result of contracting end
use markets.  The Flexible Films business net sales decreased from
$528.2 million in the Prior YTD to $437.1 million in the YTD as a result of base
volume decline of 16% and net selling price decreases of 1%.  The base
volume decline is primarily attributed to the slowness in the housing
sector.  Net sales in the Tapes/Coatings business decreased from
$248.1 million in the Prior YTD to $217.7 million in the YTD primarily as a
result of base volume decline of 15% partially offset by net selling price
increases of 3%.The base volume decline
is being primarily driven by softness in the new home construction and
automotive markets.





Gross
Profit.  Gross profit increased by $28.2 million to $249.4
million (15% of net sales) for the YTD from $221.2 million (14% of net sales)
for the Prior YTD.  This increase is primarily attributed to a timing
lag of passing through changes in raw material costs to our customers and
cost reduction programs.





Operating
Expenses.  Selling, general and administrative expenses
decreased by $1.9 million to $163.5 million for the YTD from $165.4 million for
the Prior YTD.  Restructuring and impairment charges decreased to $0.8
million in the YTD compared to $5.2 million in the Prior YTD as a
result


32


of a
decrease in costs associated with the plant consolidations within the Flexible
Films and Tapes/Coatings segments.  Other expenses decreased from
$18.9 million in the Prior YTD to $11.2 million for the YTD primarily as a
result of a decrease in business optimization expenses.





Operating
Income. Operating income increased $42.2 million from $31.7 million
in the Prior YTD to $73.9 million in the YTD.  The following
discussion in this section provides a comparison of operating income by business
segment.





Twenty-Six
      Weeks EndedMarch
      28, 2009
                    
                    
                    March
      29, 2008Operating
      income (loss):Rigid Open Top
                    
                    $
                    55.3
                    
                    
                    $
                    25.5Rigid Closed
Top
                    
                    
                    24.3
                    
                    
                    
                    15.2Flexible Films
                    
                    
                    (4.4
                    )
                    
                    
                    (8.8
                    )Tapes/Coatings
                    
                    
                    (1.3
                    )
                    
                    
                    (0.2
                    )Total operating
      income
                    
                    $
                    73.9
                    
                    
                    $
                    31.7





Operating
income for the Rigid Open Top business increased from $25.5 million for the
Prior YTD to $55.3 million in the YTD.  The increase of $29.8 million
is primarily attributable to a timing lag of passing through changes in raw
material costs to our customers.  Operating income for the Rigid
Closed Top business increased from $15.2 million for the Prior YTD to $24.3
million in the YTD.  The increase of $9.0 million is primarily
attributable to acquisition of Captive and Erie Plastics in addition to a
decrease in selling, general and administrative expense.  Operating
loss for the Flexible Film business decreased from $8.8 million for the Prior
YTD to $4.4 million in the YTD primarily due to decreased business optimization
and restructuring expense.  Operating loss for the Tapes/Coatings
business increased from an operating loss of $0.2 million for the Prior YTD to
an operating loss of $1.3 million in the YTD.  The increase of $1.1
million is primarily attributable to lower volume.





Other Expense
(Income).Other expense (income) recorded YTD consists of
$16.2 million gain related to the repurchase of the 10 1⁄4% Senior Subordinated
Notes partially offset by the loss attributed to the fair value adjustment for
our interest rate swaps.





Interest Expense,
Net.  Net interest expense increased $9.7 million to $138.4
million for the YTD from $128.7 million primarily as a result of increased
borrowings to finance the Captive acquisition and amortization of previously
recorded unrealized loss in accumulated other comprehensive income (loss)
attributed to our interest rate swaps in the Prior YTD offset by a decline in
borrowing costs of our variable rate debt.





Income Tax
Benefit.For the YTD, we recorded an income tax benefit of
$17.1 million or an effective tax rate of 34.4%, which is a change of $19.3
million from the income tax benefit of $36.4 million or an effective tax rate of
37.6% in the Prior YTD.  The effective tax rate is less than the
statutory rate primarily due to the loss and relative impact to permanent items
and establishment of valuation allowance for certain foreign operating losses
where the benefits are not expected to be realized.


33


Discontinued Operations, Net of
Income Taxes.  The Company recorded a loss of $4.2 million, net
of income taxes of $2.2 million, as a result of the sale of Capsol Berry
Plastics S.p.a.  The results of operation of Capsol Berry Plastics
S.p.a are not material.





Net Loss.  Net loss
was $36.8 million for the YTD compared to a net loss of $60.6 million for the
Prior YTD for the reasons discussed above.





Liquidity
and Capital Resources





Senior
Secured Credit Facility


The
Company’s senior secured credit facilities consist of $1,200.0 million term loan
and $381.7 million asset based revolving line of credit, net of defaulting
lenders.  The availability under the revolving line of credit is the
lesser of $400.0 million or based on a defined borrowing base which is
calculated based on available accounts receivable and
inventory.  Under the revolving line of credit, the Company is
required to maintain a consolidated fixed charge coverage ratio of at least 1.00
to 1.00 during any period when availability falls below 10% and for ten
consecutive days after availability exceeds 10%.  The term loan
matures on April 3, 2015 and the revolving line of credit matures on April 3,
2013.  The LIBOR rate on the term loan and the line of credit were
0.47% and 0.62% at March 28, 2009, respectively, determined by reference to the
costs of funds for eurodollar deposits in dollars in the LIBOR for the interest
period relevant to such borrowing plus the applicable margin.  The
applicable margin for LIBOR rate borrowings under the revolving credit facility
ranges from 1.00% to 1.75% and for the term loan is 2.00%.  The line
of credit is also subject to an unused commitment fee for unused borrowings
ranging from 0.25% to 0.35% per annum and a letter of credit fee of 0.125% per
annum for each letter of credit that is issued.  The revolving line of
credit allows up to $100.0 million of letters of credit to be issued instead of
borrowings under the revolving line of credit.  At March 28, 2009, the
Company had $34.5 million under the revolving credit facility in letters of
credit outstanding and $95.0 million was outstanding on the revolving line of
credit.  At March 28, 2009, the Company had unused borrowing capacity
of $252.2 million under the revolving line of credit subject to the solvency of
our lenders to fund their obligations and our borrowing base
calculations.  The Company was in compliance with all covenants at
March 28, 2009.





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 March 28, 2009, the Company had unused borrowing capacity
of $252.2 million 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 as of March 28, 2009 was 1.0 to
1.0.


34


Despite
not having any 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 of a first lien secured leverage ratio of equal to or less
than 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 3.6 to 1.0 as of March 28, 2009.





A key
financial metric utilized in the calculation of the first lien leverage ratio is
Adjusted EBITDA.  The following table reconciles our Adjusted EBITDA
of $509.1 million for the twelve months ended March 28, 2009 to net
loss.





12
      months ended
                        March
      28, 2009Adjusted EBITDA
                      
                      $
                      509.1Net interest
      expense
                      
                      
                      (271.4
                      )Depreciation and
      amortization
                      
                      
                      (259.1
                      )Income tax
    benefit
                      
                      
                      29.1Business optimization
      expense
                      
                      
                      (17.7
                      )Restructuring and
      impairment
                      
                      
                      (5.2
                      )Stock based
      compensation
                      
                      
                      (22.3
                      )Management fees
                      
                      
                      (6.1
                      )Other non-cash income
      (expense)
                      
                      
                      7.0Pro forma cost
      reductions
                      
                      
                      (17.6
                      )Pro forma synergies (a)
                      
                      
                      (23.9
                      )Net loss
                      
                      $
                      (77.3
                      )


Cash flow from operating
      activities
                    
                    $
                    236.2Cash flow from investing
      activities
                    
                    $
                    (182.3
                    )Cash flow from financing
      activities
                    
                    $
                    62.9





(a)
              Represents synergies related to the following: Covalence
      ($10.1 million), Captive ($9.4 million), MAC ($0.6 million) and Erie ($3.8
      million).





35


(b)
            For
      comparison purposes, the following table reconciles our Adjusted EBITDA
      for thirteen weeks ended March 29, 2009 and March 29,
    2008.





Thirteen
      Weeks EndedMarch
      28, 2009
                      
                      
                      March
      29, 2008Adjusted EBITDA
                      
                      $
                      120.3
                      
                      
                      $
                      122.8Net interest
      expense
                      
                      
                      (65.8
                      )
                      
                      
                      (67.2
                      )Depreciation and
      amortization
                      
                      
                      (63.2
                      )
                      
                      
                      (63.0
                      )Income tax
    benefit
                      
                      
                      1.3
                      
                      
                      
                      16.7Business optimization
      expense
                      
                      
                      (4.0
                      )
                      
                      
                      (3.9
                      )Restructuring and
      impairment
                      
                      
                      (0.2
                      )
                      
                      
                      (1.7
                      )Stock based
      compensation
                      
                      
                      (0.4
                      )
                      
                      
                      (4.6
                      )Management fees
                      
                      
                      (1.4
                      )
                      
                      
                      (1.4
                      )Other non-cash income
      (expense)
                      
                      
                      14.2
                      
                      
                      
                      (3.0
                      )Pro forma
      acquisitions
                      
                      
                      —
                      
                      
                      
                      (4.7
                      )Pro forma cost
      reductions
                      
                      
                      (4.1
                      )
                      
                      
                      (4.5
                      )Pro forma
    synergies
                      
                      
                      (4.1
                      )
                      
                      
                      (14.8
                      )Net loss
                      
                      $
                      (7.4
                      )
                      
                      $
                      (29.3
                      )





Cash flow from operating
      activities
                  
                  $
                  115.3
                  
                  
                  $
                  (20.2
                  )Cash flow from investing
      activities
                  
                  $
                  (53.5
                  )
                  
                  $
                  (544.1
                  )Cash flow from financing
      activities
                  
                  $
                  (96.8
                  )
                  
                  $
                  564.3





While the
determination of appropriate adjustments in the calculation of Adjusted EBITDA
is subject to interpretation under the terms of the our senior secured credit
facilities, management believes the adjustments described above are in
accordance with the covenants in the senior secured credit
facilities.  Adjusted EBITDA should not be considered in isolation or
construed as an alternative to our net loss, operating cash flows 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.





10
1⁄4% Senior Subordinated Notes


The
Company’s $265.0 million in aggregate principal amount of 10 1⁄4% senior
subordinated notes (“10 1⁄4% Senior Subordinated Notes”) mature on March 1,
2016.  The notes are senior subordinated obligations of the Company
and rank junior to all other senior indebtedness that does not contain similar
subordination provisions.  No principal payments are required with
respect to the 10 1⁄4% Senior Subordinated Notes prior to
maturity.  Interest on the 10 1⁄4% Senior Subordinated Notes is due
semi-annually on March 1 and September 1.  In March 2009 BP Parallel
LLC, a non-guarantorsubsidiary of the Company, purchased $24.0 million of the10 1⁄4% Senior
Subordinated Notes for $7.6 million in cash, plus accrued
interest.  The repurchase resulted in a net gain of $16.2 million,
which is in Other expense (income) in our Consolidated Statement of
Operations.  The Company funded the purchase with cash on
hand.





36


Berry
Group Indebtedness


On June
5, 2007, the Company’s parent, Berry Plastics Group, Inc. (“Berry Group”),
entered into a $500.0 million senior unsecured term loan agreement (“Senior
Unsecured Term Loan”) with a syndicate of lenders.  The Senior
Unsecured Term Loan matures on June 5, 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 (1.16% at March 28, 2009) 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.  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 notes are unsecured and
there are no guarantees by Berry Plastics Corporation or any of its subsidiaries
and therefore this financial obligation is not recorded in the Consolidated
Financial Statements of Berry Plastics Corporation.  Berry Group
elected to exercise the PIK interest option during 2008 and the first and second
quarters of 2009, which resulted in the balance on the loan increasing to $580.1
million as of March 28, 2009.





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.





In March
2009, BP Parallel
LLC agreed in aggregate to invest approximately $134 million to purchase
assignments of $415 million principal of the Company’s parent, Berry Plastics
Group, Inc., senior unsecured term loan.  As of May 8, 2009, the
Company had closed on $105.9 million of these assignments and expects to close
on the remaining in the third quarter of fiscal 2009.





In April
2009, BP Parallel
LLC agreed to invest approximately $13 million to purchase assignments of
$57.9 million principal of the Company’s parent, Berry Plastics Group, Inc.,
senior unsecured term loan.  The Company expects to close in the third
quarter of fiscal 2009.





Cash
Flows


Net cash
provided by operating activities was $226.9 million for the YTD compared to $0.5
million for the Prior YTD.  This increase of $226.4 million is
primarily the result of a $177.4 million change in working capital primarily due
to declining resin costs and improved operating performance primarily driven by
realization of synergies and the timing lag of passing through reduction of raw
material costs in our Rigid Open Top and Closed Top Segments.


37


Net cash
used for investing activities decreased from $574.2 million for the Prior YTD to
$100.9 million for the YTD primarily as a result of the acquisition of Captive
and disposal of assets related to a sale-leaseback transaction in the Prior YTD
partially offset by increased capital spending in the YTD.  Our
capital expenditures are forecasted to be approximately $195 million for fiscal
2009 and will be funded from cash flows from operating activities and
availability under our revolving credit facilities.





Net cash
used for financing activities was $179.2 million for the YTD compared to net
cash provided by financing activities of $578.9 million for the Prior
YTD.  This change of $758.1million is primarily attributed to the
reduction of revolving line of credit and the borrowing of the Senior Secured
Bridge Loan to fund the Captive acquisition in the Prior YTD.





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 of our Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended September 27, 2008.  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 March 28, 2009, our cash balance was $135.3
million, and we had unused borrowing capacity of $252.2 million (reflects the
reduction of Lehman’s commitment) under our revolving line of
credit.





Accounts
Receivable and Inventory





March
      28, 2009
                  
                  
                  September
      27, 2008Net
      Sales (last 12 months)
                  
                  $
                  3,528.9
                  
                  
                  $
                  3,513.1Average
      Accounts Receivable
                  
                  
                  362.1
                  
                  
                  
                  397.5AR
      Turnover Rate  (a)
                  
                  
                  9.7
                  
                  
                  
                  8.8Cost
      of Goods Sold (last 12 months)
                  
                  $
                  3,006.9
                  
                  
                  $
                  3,019.3Average
      Inventory
                  
                  
                  412.1
                  
                  
                  
                  442.8Inventory
      Turnover Rate  (b)
                  
                  
                  7.3
                  
                  
                  
                  6.8


(a)
Accounts Receivable Turnover Rate = Revenue for the last twelve months divided
by average accounts receivable.


(b) Inventory Turnover Rate = Cost of goods sold divided for the last
twelve months divided by average ending inventory.


38


Critical
Accounting Policies





We
disclosed 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 Form 10-K filed
with the SEC for the fiscal year ended September 27, 2008.  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, although no assurance can be given
as to such affect.  The following critical accounting policies have
been updated for the period ended March 28, 2009.




Goodwill. We are
required to perform a review for impairment of goodwill in accordance with
Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets(SFAS 142). Goodwill is considered to be impaired if we determine that
the carrying value of the reporting unit exceeds its fair value. In addition to
the annual review, an interim review is required if an event occurs or
circumstances change that would more likely than not reduce the fair value of a
reporting unit below its carrying amount. Examples of such events or
circumstances could include, but are not limited to: a significant decline in
our earnings, a significant decline in the total value of our Company,
unanticipated competition or a loss of key personnel.




The
following table presents carrying value as of our most recent evaluation for
impairment of goodwill compared to Goodwill by reportable segment:
 
 Carrying
      Value as of
                          
                          
                          Goodwill
      as ofJune
      30, 2008
                          
                          
                          March
      28, 2009
                          
                          
                          September
      27, 2008Rigid Open Top
                          
                          $
                          1,433.4
                          
                          
                          $
                          646.3
                          
                          
                          $
                          646.3Rigid Closed
Top
                          
                          
                          1,470.6
                          
                          
                          
                          763.8
                          
                          
                          
                          773.9Flexible Films
                          
                          
                          462.4
                          
                          
                          
                          16.9
                          
                          
                          
                          23.3Tapes/Coatings
                          
                          
                          336.9
                          
                          
                          
                          5.8
                          
                          
                          
                          5.8Total
                          
                          $
                          3,703.3
                          
                          
                          $
                          1,432.8
                          
                          
                          $
                          1,449.3
  In
accordance with our policy, we completed our most recent annual evaluation for
impairment of goodwill as of June 30, 2008 and determined that no goodwill
impairment existed. Our evaluation included management estimates of cash flow
projections based on an internal strategic review. Key assumptions from this
strategic review included EBITDA growth.  For purposes of this test,
we held our EBITDA as a percentage of revenue at approximately 13.5% which has
been consistent with our historical experience.  Growth by reporting
unit varies in 2009 as the Rigid Open Top and Rigid Closed Top segments is
driving the majority of the increase and the Flexible Films and Tapes/Coatings
segments are expecting to have inflationary type earnings growth in
2009.  For the purposes of this test, the Company has forecasted
overall growth of only 3.5% in the following three years and has further reduced
this to 3.0% in the terminal year.  We assumed that the Company would
maintain its capital spending of approximately $200 million to continue to
increase efficiencies in production and have assumed that these efficiencies
would be offset by other rising costs in selling, general and administrative
expenses.  All of these assumptions were utilized to calculate
our


39


discounted
cash flows for each reporting unit in order to determine that no goodwill was
impaired.  Finally, we performed sensitivity analysis by changing the
weighted average cost of capital by 10% which still resulted in no goodwill
impairment.  We also performed a calculation of our total enterprise
value utilizing comparable EBITDA multiples of our peer companies to corroborate
that the fair value that was derived from discounted cash flow analysis was
consistent with our market peers.   Given the uncertainty in
economic trends, we cannot guarantee that when we complete our future annual or
other periodic reviews for impairment of goodwill that a material impairment
charge will not be recorded. Goodwill totaled $1.4 billion at March 28, 2009
with substantially all of our Goodwill relating to our Rigid Open Top and Closed
Top segments.




Deferred Taxes and Effective Tax
Rates. We
estimate the effective tax rates and associated liabilities or assets for each
legal entity of ours in accordance with SFAS No. 109.  We use
tax-planning to minimize or defer tax liabilities to future periods. In
recording effective tax rates and related liabilities and assets, we rely upon
estimates, which are based upon our interpretation of United States, foreign,
state, 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 effective tax rate 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’ effective tax rates to reflect our best estimate for the
year-to-date results and for the full year.  As part of the effective
tax rate, 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 foreign jurisdictions
related to the deferred tax assets of Ociesse S.r.l. and Berry Plastics de
Mexico.  Therefore, the company has provided a full valuation
allowance against its foreign net operating losses included within the deferred
tax assets for Ociesse S.r.l. and Berry Plastics de Mexico.  The
Company fully anticipates realization of the full tax benefit generated by of
U.S operations due to reversal of our deferred tax liabilities offset by
deferred assets which are for the same jurisdiction and
character.  Our valuation allowance against deferred tax assets was
$5.3 million and $5.0 million as of March 28, 2009 and September 27, 2008,
respectively.


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.  These assumptions have a significant effect on the amounts
reported.  In addition to the analysis below, see the notes to the
Consolidated Financial Statements for additional information regarding our
retirement benefits.  Periodically, we evaluate the discount rate and
the expected return on plan assets in our defined benefit pension and retiree
health benefit plans.  In evaluating these assumptions, we consider
many factors, including an evaluation of the discount rates, expected return on
plan assets, health-care-cost trend rates of other companies, our historical
assumptions compared with actual results, an analysis of asset allocations based
on current market conditions and the views of advisers.  In evaluating
our expected retirement age assumption, we consider the retirement ages of our
past employees eligible for pension and medical benefits together with our
expectations of future retirement ages.  We believe our pension and
retiree medical plan assumptions are appropriate based upon the above
factors.  A one percent


40


increase
or decrease in our health-care-cost trend rates would not have a material impact
on the results of operations of the Company.  Also, a one quarter
percentage point change in our discount rate or expected return on plan assets
would not have a material impact on the results of operations of the
Company.  Due to volatility in the credit markets, our investment
assets that are held by our various pension plans have declined in
value.  The fair value of our pension plan assets have decreased from
approximately $41.2 million as of September 29, 2007 to $33.2 million as of
March 28, 2009.  This decrease in the fair value of the pension assets
has increased our potential funding obligations of these plans which is not
expected to be material in any one year.





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
3.    Quantitative and Qualitative Disclosures about Market
Risk





Interest
Rate Risk


We are
exposed to market risk from changes in interest rates primarily through our
senior secured credit facilities, senior secured first priority notes and second
priority senior secured notes.  Our senior secured credit facilities
are comprised of (i) a $1,200.0 million term loan and (ii) a $400.0
million revolving credit facility.  At March 28, 2009, $95.0 million
was outstanding on the revolving credit facility.  The net outstanding
balance of the term loan at March 28, 2009 was $1,179.0
million.  Borrowings under our senior secured credit facilities bear
interest, at our option, at either an alternate base rate or an adjusted
LIBOR rate for a one-, two-, three- or six month interest period, or a nine- or
twelve-month period, if available to all relevant lenders, in each case, plus an
applicable margin.  The alternate base rate is the mean
the greater of (i) Credit Suisse’s prime rate and (ii) one-half
of 1.0% over the weighted average of rates on overnight Federal Funds as
published by the Federal Reserve Bank of New York.  Our $680.6 million
of senior secured first priority notes accrue interest at a rate per annum,
reset quarterly, equal to LIBOR plus 4.75%. Our second priority senior secured
notes are comprised of (i) $525.0 million fixed rate notes and (ii) $225.0
million floating rate notes.  The floating rate notes bear interest at
a rate of LIBOR plus 3.875% per annum, which resets quarterly.





At March
28, 2009, the LIBOR rate of 0.47% was applicable to the term loan and 1.09% was
applicable to the senior secured first priority notes and second priority
floating rate notes.  If the LIBOR rate increases 0.25% and 0.5%, we
estimate an annual increase in our interest expense of $3.9 million and $7.9
million, respectively.


41


In August
2007, Berry entered into two separate interest rate swap transactions to protect
$600.0 million of the outstanding variable rate term loan debt from future
interest rate volatility.  The swap agreements became effective in
November 2007.  The first agreement had a notional amount of $300.0
million and became effective November 5, 2007 and swaps three month variable
LIBOR contracts for a fixed two year rate of 4.875% and expires on November 5,
2009.  The second agreement had a notional amount of $300.0 million
and became effective November 5, 2007 and swaps three month variable LIBOR
contracts for a fixed three year rate of 4.920% and expires on November 5,
2010.  The Company’s term loan gives them the option to elect
different interest rate reset options.  On November 5, 2008, the
Company began and continues to utilize 1-month LIBOR contracts for the
underlying senior term loan.  The Company’s change in interest rate
selection along with their continued use of this alternative rate caused the
Company to lose hedge accounting.  The Company has recorded all
subsequent changes in fair value from November 5, 2008 to March 28, 2009 in the
income statement and is amortizing the interest rate swap balance in accumulated
other comprehensive income to interest expense through the end of the respective
swap agreement.  The Company estimates the fair value of the interest
rate swap transactions identified above to be a liability of $23.7 million and
$15.0 million as of March 28, 2009 and September 27, 2008,
respectively.  The fair value of these interest rate swaps is subject
to movements in LIBOR and may fluctuate in future periods.  A .25%
change in LIBOR would not have a material impact on the fair value of the
interest rate swaps.





Plastic
Resin Cost Risk


We are
exposed to market risk from changes in plastic resin prices that could impact
our results of operations and financial condition.  We manage our
exposure to these market risks through our normal operations with purchasing
negotiation, mechanical hedging, switching between certain resin products and,
when deemed appropriate, by using derivative financial instruments in accordance
with established policies and procedures. The derivative financial instruments
generally used are forward contracts.  The derivative financial
instruments utilized by the Company in its hedging activities are considered
risk management tools and are not used for trading purposes.





Item
4.    Controls and Procedures





(a)
            Evaluation
      of disclosure controls and
procedures.





Our
management team is responsible for the preparation and integrity of the
Consolidated Financial Statements appearing in this Form
10-Q.  Berry’s principal executive officer and principal financial
officer have concluded that Berry’s disclosure controls and procedures (as
defined in Exchange Act Rule 13a-15(e) under the Securities Exchange Act of
1934, as amended), based on their evaluation of these controls and procedures as
of the end of the period covered by this Form 10-Q, are effective at the
reasonable assurance level as discussed below to ensure that information
required to be disclosed by Berry in the reports under the Securities and
Exchange Act of 1934, as amended, is recorded, processed , summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission and that such information is accumulated and
communicated to Berry’s management, including its principal executive officer
and principal financial officer as appropriate to allow timely decisions
regarding required disclosure.  The Company has established disclosure
controls and procedures to ensure that material information relating to the
Company, including consolidated subsidiaries, is made known to members of senior
management and the Board of Directors.  As required by Rule 13a-15
under the Securities Exchange Act of 1934, within the 90 days prior to the date
of this report, we carried out an evaluation under the supervision and with the
participation of our management team, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures.  The Company's


42


management,
with the participation of the Chief Executive Officer and the Chief Financial
Officer, carried out an evaluation of the effectiveness of the design and
operation of the disclosure controls and procedures as of March 28,
2009.  Based on the identification and the evaluation of the material
weaknesses in internal control over financial reporting described below, the
Company’s Chief Executive Officer and Chief Financial Officer concluded that, as
of March 28, 2009, the Company’s disclosure controls and procedures were not
effective.





Management’s
Report on Internal Control over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act. Internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America. 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.





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. A control deficiency exists when the design or operation of
a control does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect misstatements on a
timely basis. A design deficiency exists when a control necessary to meet the
control objective is missing or an existing control is not properly designed so
that, even if the control operates as designed, the control objective is not
always met.  In connection with Management’s assessment of the
Company’s internal control over financial reporting, Management identified the
following material weaknesses in the Company’s internal control over financial
reporting as of March 28, 2009.





·
            The
      Company has completed the Flex Films segment transition from Old
      Covalence’s financial system to Berry’s new financial
      system.  Due to the timing of transition, the Company was unable
      to complete testing of controls over financial reporting for the Flex
      Films segment as of March 28, 2009.  This resulted in Management
      being unable to accurately assess the effectiveness of the Flex Film’s
      controls over financial reporting.




·
            Ineffective
      review of account reconciliations to ensure that account balances were
      accurate and agreed to appropriate supporting detail, calculations or
      other documentation.






·
            Ineffective
      review of the Company’s tax provision to ensure that deferred tax balances
      were properly stated.




43


Plans
to Remediate Material Weaknesses in Internal Control over Financial
Reporting





In light
of the material weaknesses described above, the Company performed additional
analysis and other procedures to ensure that the Consolidated Financial
Statements included in this report were prepared in accordance with accounting
principles generally accepted in the United States ("GAAP").  These
procedures included additional testing of certain balances and accounts as of
March 28, 2009 to ensure the accuracy of the annual financial
statements.





Management
has engaged in, and continues to engage in, substantial efforts to address the
material weaknesses in the Company’s internal control over financial
reporting.  The Company is currently transitioning and converting the
legacy Old Covalence Holding systems to the Old Berry Group systems which will
result in cohesive disclosure controls and procedures.  The Company is
also in the process of implementing new account reconciliation procedures to
ensure that the balances were accurate and agreed to appropriate supporting
detail, calculations or other documentation.  In addition, the Company
is also designing new procedures to ensure their book to tax differences are
properly identified and all deferred tax balances are properly
stated.





While the
Company believes that these remedial actions will result in correcting the
material weaknesses in its internal control over financial reporting, the exact
timing of when the conditions will be corrected is dependent upon future
events.







(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 Remediation of Material Weaknesses in
Internal Control over Financial Reporting” in Item 9A(a)
above.





Part
II.  Other Information





Item
1.            Legal
Proceedings





There has
been no material changes in legal proceedings from the items disclosed in our
Form 10-K filed with the Securities and Exchange Commission for the fiscal year
ended September 27, 2008.





Item
1A.        Risk Factors





You
should carefully consider the risks described in our Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended September 27, 2008,
including those under the heading “Risk Factors” and other information contained
in this Quarterly Report before investing in our securities. Realization of any
of these risks could have a material adverse effect on our business, financial
condition, cash flows and results of operations.  There were no
material changes in the Company’s risk factors since


44


described
in our Form 10-K filed with the Securities and Exchange Commission for the
fiscal year ended September 27, 2008.





Item
2.          Unregistered Sales
of Equity Securities and Use of Proceeds





Not Applicable





Item
3.          Defaults Upon
Senior Securities





Not Applicable





Item
4.          Submission of
Matters to a Vote of Security Holders





Not Applicable











Item
5.          Other
Information





Not Applicable





Item
6.                        Exhibits





31.1
            Rule
      13a-14(a)/15d-14(a) Certification of the Chief Executive
      Officer





31.2
            Rule
      13a-14(a)/15d-14(a) Certification of the Chief Financial
      Officer





32.1
            Section
      1350 Certification of the Chief Executive
  Officer





32.2           Section
1350 Certification of the Chief Financial Officer


45





SIGNATURE





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





Berry Plastics
Corporation





May 11,
2009








By: /s/ James M.
Kratochvil


James M.
Kratochvil




Executive Vice President, Chief Financial Officer,


Treasurer
and Secretary (Principal Financial and


Accounting
Officer)





46