Berry Plastics Group, Inc. Reports September Quarter And Fiscal Year 2012 Results

Berry Plastics Group, Inc. (NYSE:BERY) today reported results for the September quarter and fiscal year 2012:

• Net sales decrease of 2 percent versus September 2011 quarter
• Adjusted free cash flow of $159 million for the September 2012 quarter
• Fiscal year 2012 Adjusted EBITDA of $803 million with the leverage ratio (net debt/Adjusted EBITDA) at 4.9x (pro forma for the IPO), a reduction of 1.2x from fiscal year 2011
• Operating EBITDA increased 13 percent and Operating EBITDA margin increased to 17.6 percent from 15.3 percent in the September 2011 quarter
• Adjusted net income (loss) per share of $0.34 for the quarter compared to ($0.04) in September 2011

“Berry’s improved product mix, aggressive cost reduction initiatives, and lower costs for raw materials, coupled with higher prices in certain of our product segments, allowed us to achieve record earnings and reduce our leverage,” said Jon Rich, Chairman and CEO of Berry Plastics. “While we are pleased with our overall performance, the weakening global economic environment will present challenges to our industry and to Berry.”

September Quarter and Fiscal Year 2012 ResultsFor the quarter ended September 2012, the Company’s net sales declined by 2 percent to $1,204 million from $1,229 million. The decrease in sales was related to the pass through of lower raw material costs and our decision to exit certain low margin business partially offset by sales from acquired businesses and a slight market share gain in certain segments.

						Quarterly Period Ended (Unaudited)
	Net Sales (in millions)					September 29, 2012				October 1, 2011				$ Change					% Change
	Rigid Open Top					$	318			$	356			$	(38	)			(11	%)
	Rigid Closed Top						352				307				45				15	%
	Engineered Materials						352				368				(16	)			(4	%)
	Flexible Packaging						182				198				(16	)			(8	%)
	Total Net Sales					$	1,204			$	1,229			$	(25	)			(2	%)

For fiscal year 2012, net sales increased by 4 percent to $4,766 million from $4,561 million in fiscal year 2011. The increase in sales was primarily related to acquisitions, partially offset by the Company’s decision to exit certain low margin business.

						Fiscal Year Ended (Unaudited)
	Net Sales (in millions)					September 29, 2012				October 1, 2011				$ Change					% Change
	Rigid Open Top					$	1,229			$	1,261			$	(32	)			( 3	%)
	Rigid Closed Top						1,438				1,053				385				37	%
	Engineered Materials						1,362				1,451				(89	)			( 6	%)
	Flexible Packaging						737				796				(59	)			( 7	%)
	Total Net Sales					$	4,766			$	4,561			$	205				4	%

Capital Structure and Adjusted Free Cash FlowIn October 2012 the Company used the proceeds from its IPO to repurchase its 11 percent Senior Subordinated Notes due in September 2016. The ratio of net debt of $3,958 million to the Adjusted EBITDA for the four quarters ended September 29, 2012 of $803 million was 4.9x at the end of the September 2012 quarter when factoring in the impact from the IPO. The actual ratio at the end of September 29, 2012 quarter was 5.5x. Adjusted free cash flow was $159 million for the September 2012 quarter and $279 million for fiscal year 2012.

					September 29, 2012											October 1, 2011
(in millions) (Unaudited)					Actual					Pro Forma
Term loan					$		1,134			$		1,134				$	1,146
Revolving line of credit							73					73					195
First Priority Senior Secured Floating Rate Notes							681					681					681
8¼% First Priority Notes							370					370					370
Second Priority Senior Secured Floating Rate Notes							210					210					210
9½% Second Priority Notes							500					500					500
Senior Unsecured Term Loan							39					39					56
9¾% Second Priority Notes							800					800					800
10¼% Senior Subordinated Notes							127					127					127
11% Senior Subordinated Notes							455					—					455
Debt discount, net							(9	)				(9	)				(13	)
Capital leases and other							91					91					100
Cash and cash equivalents							(87	)				(58	)				(42	)
Net Debt					$		4,384			$		3,958				$	4,585

Outlook“Our strategic actions are allowing us to continue to strengthen the Company’s balance sheet, maintain significant liquidity, and generate substantial free cash flow,” said Rich. “Going forward, we will continue to execute on our strategies to further reduce our overall debt leverage, pursue innovative organic growth opportunities, identify value adding acquisitions that can be accretive to shareholder value, and take steps to grow our business internationally.”

Investor Conference CallThe Company will host a conference call on Tuesday, November 27, 2012, at 9:00 a.m. CST to discuss its September quarter and fiscal year 2012 results. The telephone number to access the conference call is [phone] (domestic), or [phone] (international), and use conference ID 1596079. The call will last approximately one hour. Interested parties are invited to listen to a live webcast by visiting the Company’s Investor Relations page at www.berryplastics.com. Replay of the conference call can also be accessed on the Investor Relations page of the website.

About Berry PlasticsBerry Plastics Group, Inc. is a leading provider of value-added plastic consumer packaging and engineered materials delivering high-quality customized solutions to our customers with annual net sales of $4.8 billion in fiscal 2012. With world headquarters in Evansville, Indiana, the Company’s common stock is listed on the New York Stock Exchange under the ticker symbol BERY. For additional information, visit the Company’s website at www.berryplastics.com.

Forward Looking Statements Statements in this release that are not historical, including statements relating to the expected future performance of the Company, are considered “forward looking” and are presented pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company’s plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends, and other information that is not historical information. Actual results in future periods may differ materially from forward-looking statements made today because of a number of risks and uncertainties, including various economic and competitive factors, the Company’s ability to pass through raw material price increases to its customers, its ability to service debt, the availability and cost of plastic resin, the impact of changing environmental laws, changes in the level of the Company’s capital investment, the results and integration of acquired business, our reliance on unpatented know-how and trade secrets and the risks set forth in the “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements” and other sections of our reports filed or furnished with the Securities Exchange Commission. You 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. Additional important information about the Company’s business is set forth in the Company’s various filings with the SEC and the information discussed today should be considered alongside the information contained in those filings.

Berry Plastics Group, Inc. Consolidated Statements of Operations (Unaudited) (in millions, except per share data)
					Quarterly Period Ended									Fiscal Year Ended
					September 29, 2012				October 1,2011					September 29, 2012				October 1,2011
Net sales					$	1,204			$	1,229				$	4,766			$	4,561
Costs and expenses:
Cost of goods sold						977				1,037					3,949				3,878
Selling, general and administrative						81				75					308				275
Amortization of intangibles						28				26					109				106
Restructuring and impairment charges						1				185					31				221
Other operating expenses						10				13					44				39
Operating income (loss)						107				(107	)				325				42
Other expense (income)						(6	)			(6	)				(7	)			61
Interest expense, net						81				84					328				327
Net income (loss) before income taxes						32				(185	)				4				(346	)
Income tax expense (benefit)						9				7					2				(47	)
Net income (loss)					$	23			$	(192	)			$	2			$	(299	)
Net income (loss) per share:
Basic					$	0.28			$	(2.29	)			$	0.02				(3.55	)
Diluted						0.26				(2.29	)				0.02				(3.55	)
Weighted-average number of shares outstanding: (in thousands)
Basic						83,202				83,876					83,435				84,121
Diluted						89,131				83,876					86,644				84,121

Berry Plastics Group, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in millions)
					September 29, 2012					October 1,2011
Assets:
Cash and cash equivalents					$	87				$	42
Accounts receivable, net						455					543
Inventories						535					578
Other current assets						90					92
Property, plant and equipment, net						1,216					1,250
Goodwill, intangibles and other assets						2,642					2,712
Total assets					$	5,025				$	5,217
Liabilities and stockholders' deficit
Current liabilities, excluding debt						606					638
Current and long-term debt						4,471					4,627
Other liabilities						400					403
Redeemable shares						23					16
Stockholders’ deficit						(475	)				(467	)
Total liabilities and stockholders' deficit					$	5,025				$	5,217

Berry Plastics Group, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions)
					Fiscal Year Ended
					September 29, 2012					October 1,2011
Net cash from operating activities					$	479				$	327
Cash Flows from Investing Activities:
Additions to property, plant and equipment						(230	)				(160	)
Proceeds from sale of assets						30					5
Acquisitions of business, net of cash acquired						(55	)				(368	)
Net cash from investing activities						(255	)				(523	)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings						2					995
Purchase of common stock						(6	)				(2	)
Repayment of long-term borrowings						(175	)				(880	)
Debt financing costs						—					(23	)
Net cash from financing activities						(179	)				90
Effect of currency translation on cash						—					—
Net increase (decrease) in cash and cash equivalents						45					(106	)
Cash and cash equivalents at beginning of period						42					148
Cash and cash equivalents at end of period					$	87				$	42

Berry Plastics Group, Inc. Condensed Consolidated Financial Statements Segment Information (Unaudited) (in millions)
					Quarterly Period Ended								Fiscal Year Ended
					September 29, 2012			October 1,2011					September 29, 2012			October 1,2011
Net Sales:
Rigid Open Top					$	318		$	356				$	1,229		$	1,261
Rigid Closed Top						352			307					1,438			1,053
Engineered Materials						352			368					1,362			1,451
Flexible Packaging						182			198					737			796
Total					$	1,204		$	1,229				$	4,766		$	4,561
Operating Income (Loss):
Rigid Open Top					$	46		$	53				$	159		$	155
Rigid Closed Top						32			20					95			77
Engineered Materials						28			(85	)				70			(71	)
Flexible Packaging						1			(95	)				1			(119	)
Total					$	107		$	(107	)			$	325		$	42
Depreciation and Amortization:
Rigid Open Top					$	23		$	28				$	90		$	102
Rigid Closed Top						34			26					135			95
Engineered Materials						20			17					71			72
Flexible Packaging						16			20					59			75
Total					$	93		$	91				$	355		$	344
Restructuring and Impairment Charges:
Rigid Open Top					$	—		$	1				$	—		$	2
Rigid Closed Top						1			6					10			8
Engineered Materials						—			101					21			124
Flexible Packaging						—			77					—			87
Total					$	1		$	185				$	31		$	221
Other Operating Expenses:
Rigid Open Top					$	1		$	(10	)			$	6		$	(13	)
Rigid Closed Top						4			2					28			18
Engineered Materials						4			10					13			23
Flexible Packaging						2			17					13			21
Total					$	11		$	19				$	60		$	49
Operating EBITDA:
Rigid Open Top					$	70		$	72				$	255		$	246
Rigid Closed Top						71			54					268			198
Engineered Materials						52			43					175			148
Flexible Packaging						19			19					73			64
Total					$	212		$	188				$	771		$	656

Berry Plastics Group, Inc. Reconciliation Schedules (Unaudited) (in millions)
					Quarterly Period Ended									Fiscal Year Ended
					September 29, 2012				October 1,2011					September 29, 2012				October 1,2011
Net income (loss)					$	23			$	(192	)			$	2			$	(299	)
Add: interest expense						81				84					328				327
Add: income tax expense (benefit)						9				7					2				(47	)
EBIT					$	113				(101	)			$	332				(19	)
Add: depreciation and amortization						93				91					355				344
Add: restructuring and impairment						1				185					31				221
Add: other expense						5				13					53				110
Operating EBITDA (1)					$	212				188				$	771				656
Add: pro forma acquisitions						—									6
Add: unrealized cost savings						3									26
Adjusted EBITDA (1)					$	215								$	803
Cash flow from operating activities					$	201			$	122				$	479			$	327
Additions to property, plant, and equipment, net						(42	)			(31	)				(200	)			(155	)
Adjusted free cash flow					$	159			$	91				$	279			$	172
Net income (loss) per share-diluted:					$	0.26			$	(2.29	)
Restructuring and impairment charges (net of tax)						0.01				2.11
Other operating expenses (net of tax)						0.07				0.14
Adjusted net income (loss) per share					$	0.34			$	(0.04	)

⁽¹⁾ Adjusted EBITDA should not be considered in isolation or construed as an alternative to our net income (loss) or other measures as determined in accordance with GAAP. In addition, other companies in our industry or across different industries may calculate Adjusted EBITDA and the related definitions differently than we do, limiting the usefulness of our calculation of Adjusted EBITDA as a comparative measure. EBIT, Operating EBITDA and Adjusted EBITDA are among the indicators used by the Company’s management to measure the performance of the Company’s operations and thus the Company’s management believes such information may be useful to investors. Such measures are also among the criteria upon which performance-based compensation may be based.

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