November 6, 2020 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-07349

BALL CORPORATION

State of Indiana

(State or other jurisdiction of incorporation or
organization)

35-0160610

(I.R.S. Employer Identification No.)

9200 West 108th Circle

Westminster, CO

(Address of registrant’s principal executive office)

80021

(Zip Code)

Registrant’s telephone number, including area code: 303/469-3131

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, and the securities registered pursuant to section 12(b) of the Act:

Class		Trading Symbol		Name of Exchange		Outstanding at October 31, 2020
Common Stock, without par value		BLL		NYSE		327,111,668 shares

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company◻
	Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

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Ball Corporation

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, 2020

INDEX

		Page Number

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, 2020 and 2019	1

	Unaudited Condensed Consolidated Statements of Comprehensive Earnings (Loss) for the Three and Nine Months Ended September 30, 2020 and 2019	2

	Unaudited Condensed Consolidated Balance Sheets at September 30, 2020, and December 31, 2019	3

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019	4

	Notes to the Unaudited Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	41

PART II.	OTHER INFORMATION	41

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PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions, except per share amounts)	2020		2019		2020		2019

Net sales	$	3,093	$	2,953	$	8,679	$	8,755

Costs and expenses
Cost of sales (excluding depreciation and amortization)		(2,430)		(2,363)		(6,875)		(7,044)
Depreciation and amortization		(160)		(169)		(499)		(510)
Selling, general and administrative		(121)		(90)		(363)		(328)
Business consolidation and other activities		(8)		(133)		(235)		(147)
		(2,719)		(2,755)		(7,972)		(8,029)

Earnings before interest and taxes		374		198		707		726

Interest expense		(68)		(79)		(206)		(237)
Debt refinancing and other costs		(1)		—		(41)		(4)
Total interest expense		(69)		(79)		(247)		(241)

Earnings before taxes		305		119		460		485
Tax (provision) benefit		(73)		(32)		(92)		(73)
Equity in results of affiliates, net of tax		8		5		(13)		(6)
Net earnings		240		92		355		406
Net (earnings) loss attributable to noncontrolling interests		1		—		3		—
Net earnings attributable to Ball Corporation	$	241	$	92	$	358	$	406


Earnings per share:
Basic	$	0.74	$	0.28	$	1.10	$	1.22
Diluted	$	0.72	$	0.27	$	1.08	$	1.19


Weighted average shares outstanding: (000s)
Basic		326,549		331,148		325,965		332,726
Diluted		332,654		340,632		332,152		341,702

See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019

Net earnings	$	240	$	92	$	355	$	406

Other comprehensive earnings (loss):
Foreign currency translation adjustment		(130)		50		(292)		136
Pension and other postretirement benefits		9		20		(2)		27
Derivatives designated as hedges		44		16		63		47
Total other comprehensive earnings (loss)		(77)		86		(231)		210
Income tax (provision) benefit		(10)		(5)		(14)		(12)
Total other comprehensive earnings (loss), net of tax		(87)		81		(245)		198

Total comprehensive earnings (loss)		153		173		110		604
Comprehensive (earnings) loss attributable to noncontrolling interests		1		—		3		—
Comprehensive earnings (loss) attributable to Ball Corporation	$	154	$	173	$	113	$	604

See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30,		December 31,
($ in millions)	2020		2019

Assets
Current assets
Cash and cash equivalents	$	771	$	1,798
Receivables, net		1,772		1,631
Inventories, net		1,309		1,274
Other current assets		173		181
Total current assets		4,025		4,884
Noncurrent assets
Property, plant and equipment, net		4,895		4,470
Goodwill		4,401		4,419
Intangible assets, net		1,897		2,002
Other assets		1,754		1,585
Total assets	$	16,972	$	17,360

Liabilities and Equity
Current liabilities
Short-term debt and current portion of long-term debt	$	31	$	1,480
Accounts payable		2,832		3,136
Accrued employee costs		283		285
Other current liabilities		618		676
Total current liabilities		3,764		5,577
Noncurrent liabilities
Long-term debt		7,679		6,337
Employee benefit obligations		1,573		1,486
Deferred taxes		589		561
Other liabilities		414		380
Total liabilities		14,019		14,341

Equity
Common stock (679,001,052 shares issued - 2020; 676,302,319 shares issued - 2019)		1,164		1,178
Retained earnings		6,014		5,803
Accumulated other comprehensive earnings (loss)		(1,155)		(910)
Treasury stock, at cost (352,022,101 shares - 2020; 351,667,322 shares - 2019)		(3,137)		(3,122)
Total Ball Corporation shareholders' equity		2,886		2,949
Noncontrolling interests		67		70
Total equity		2,953		3,019
Total liabilities and equity	$	16,972	$	17,360

See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
($ in millions)	2020		2019

Cash Flows from Operating Activities
Net earnings	$	355	$	406
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization		499		510
Business consolidation and other activities		235		147
Deferred tax provision (benefit)		(23)		(16)
Other, net		7		32
Changes in working capital components, net of dispositions		(728)		(423)
Cash provided by (used in) operating activities		345		656
Cash Flows from Investing Activities
Capital expenditures		(683)		(425)
Business acquisitions, net of cash acquired		(69)		—
Business dispositions, net of cash sold		(17)		(50)
Other, net		18		26
Cash provided by (used in) investing activities		(751)		(449)
Cash Flows from Financing Activities
Long-term borrowings		2,552		1,098
Repayments of long-term borrowings		(2,792)		(906)
Net change in short-term borrowings		(3)		131
Proceeds (payments) from issuances of common stock, net of shares used for taxes		(12)		16
Acquisitions of treasury stock		(57)		(614)
Common stock dividends		(149)		(133)
Other, net		(60)		(10)
Cash provided by (used in) financing activities		(521)		(418)

Effect of exchange rate changes on cash		(96)		(20)

Change in cash, cash equivalents and restricted cash		(1,023)		(231)
Cash, cash equivalents and restricted cash - beginning of period		1,806		728
Cash, cash equivalents and restricted cash - end of period	$	783	$	497

See accompanying notes to the unaudited condensed consolidated financial statements.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Ball Corporation and its controlled affiliates, including its consolidated variable interest entities (collectively Ball, the company, we or our), and have been prepared by the company. Certain information and footnote disclosures, including critical and significant accounting policies normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted for this quarterly presentation.

Results of operations for the periods shown are not necessarily indicative of results for the year, particularly in view of the seasonality in the packaging segments and the variability of contract sales in the company’s aerospace segment. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and the notes thereto included in the company’s 2019 Annual Report on Form 10-K filed on February 19, 2020, pursuant to the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2019 (annual report).

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires Ball’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of sales and expenses during the reporting periods. These estimates are based on historical experience and various assumptions believed to be reasonable under the circumstances. Ball’s management evaluates these estimates on an ongoing basis and adjusts or revises the estimates as circumstances change. As future events and their impacts cannot be determined with precision, actual results may differ from these estimates. In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and are necessary to fairly state the results of the periods presented.

Certain prior year amounts have been reclassified in order to conform to the current year presentation.

Risks and Uncertainties – Novel Coronavirus (COVID-19)

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management’s judgement about the outcome of future events. The current global business environment is being impacted directly and indirectly by the effects of the novel coronavirus (COVID-19), and it is not possible to accurately estimate the impacts of COVID-19. However, Ball management has reviewed the estimates used in preparing the company’s consolidated financial statements and the following have a reasonably possible likelihood of being affected, to a material extent, by the direct and indirect impacts of COVID-19 in the near term.

●

Estimates regarding the future financial performance of the business used in the impairment tests for goodwill, long-lived assets, equity method investments, recoverability of deferred tax assets and estimates regarding cash needs and associated indefinite reinvestment assertions;

●

Estimates of recoverability for customer receivables;

●

Estimates of net realizable value for inventory;

●

Estimates regarding the likelihood of forecasted transactions associated with hedge accounting positions at September 30, 2020, which could impact the company’s ability to satisfy hedge accounting requirements and result in the recognition of income and/or expenses.

In addition to the above potential impacts on the estimates used in preparing financial statements, COVID-19 has the potential to increase Ball’s vulnerabilities to near-term severe impacts related to certain concentrations in its business. In line with other companies in the packaging and aerospace industries, Ball makes the majority of its sales and significant purchases to or from a relatively small number of global, or large regional, customers and suppliers. Furthermore, Ball makes the majority of its sales from a small number of product lines. The potential of COVID-19 to affect a significant customer or supplier, or to affect demand for certain products to a significant degree, heightens the vulnerability of Ball to these concentrations.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

2. Accounting Pronouncements

Recently Adopted Accounting Standards

Cloud Computing Arrangements

In August 2018, amendments to existing accounting guidance were issued to clarify the accounting for implementation costs related to cloud computing arrangements. The amendments specify that existing guidance for capitalizing implementation costs incurred to develop or obtain internal-use software also applies to capitalizing implementation costs incurred in a hosting arrangement that is a service contract. The guidance was applied prospectively on January 1, 2020, and did not have a material effect on the company’s unaudited condensed consolidated financial statements.

Financial Assets

Amendments to existing guidance were issued in June 2016, followed by improvements and transition relief in 2018 and 2019, requiring financial assets or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected when finalized. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. Ball adopted this guidance and all related amendments on January 1, 2020, applying the modified retrospective method, and this adoption did not have a material effect on the company’s unaudited condensed consolidated financial statements.

New Accounting Guidance

Income Tax Simplification

In December 2019, accounting guidance was issued to simplify the accounting for income taxes. The guidance is effective for Ball on January 1, 2021, and the company is currently assessing the impact that the adoption of this new guidance will have on its consolidated financial statements.

3. Business Segment Information

Ball’s operations are organized and reviewed by management along its product lines and geographical areas and presented in the four reportable segments outlined below. Effective January 1, 2020, the company implemented changes to its management and internal reporting structure for cost reduction and operational efficiency purposes. As a result of these changes, the company’s plants in Cairo, Egypt, and Manisa, Turkey, are now included in the beverage packaging, Europe, Middle East and Africa (beverage packaging, EMEA), segment. The company’s operations in India and Saudi Arabia are now combined with the former non-reportable beverage packaging, Asia Pacific, operating segment as a new non-reportable beverage packaging, other, operating segment. The company’s segment results and disclosures for the three and nine months ended September 30, 2019, have been retrospectively adjusted to conform to the current year presentation.

Beverage packaging, North and Central America: Consists of operations in the U.S., Canada and Mexico that manufacture and sell metal beverage containers throughout those countries.

Beverage packaging, EMEA: Consists of operations in numerous countries throughout Europe, including Russia, as well as Egypt and Turkey, that manufacture and sell metal beverage containers throughout those regions.

Beverage packaging, South America: Consists of operations in Brazil, Argentina, Paraguay and Chile that manufacture and sell metal beverage containers throughout most of South America.

Aerospace: Consists of operations that manufacture and sell aerospace and other related products and provide services used in the defense, civil space and commercial space industries.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

As presented in the table below, Other consists of a non-reportable operating segment (beverage packaging, other) that manufactures and sells aluminum beverage containers in India, Saudi Arabia and throughout the Asia Pacific region; a non-reportable operating segment that manufactures and sells extruded aluminum aerosol containers and aluminum slugs (aerosol packaging); a non-reportable operating segment that manufactures and sells aluminum cups (aluminum cups); undistributed corporate expenses; intercompany eliminations and other business activities.

The accounting policies of the segments are the same as those used in the company’s consolidated financial statements as discussed in Note 1. The company also has investments in operations in Guatemala, Panama, South Korea, the U.S. and Vietnam that are accounted for under the equity method of accounting and, accordingly, those results are not included in segment sales or earnings.

Summary of Business by Segment


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019

Net sales
Beverage packaging, North and Central America	$	1,327	$	1,230	$	3,775	$	3,647
Beverage packaging, EMEA		809		763		2,177		2,215
Beverage packaging, South America		432		392		1,166		1,210
Aerospace		451		374		1,321		1,081
Reportable segment sales		3,019		2,759		8,439		8,153
Other		74		194		240		602
Net sales	$	3,093	$	2,953	$	8,679	$	8,755

Comparable operating earnings
Beverage packaging, North and Central America	$	209	$	157	$	544	$	416
Beverage packaging, EMEA		117		105		248		277
Beverage packaging, South America		64		60		173		193
Aerospace		44		35		114		103
Reportable segment comparable operating earnings		434		357		1,079		989
Reconciling items
Other (a)		(15)		12		(26)		2
Business consolidation and other activities		(8)		(133)		(235)		(147)
Amortization of acquired Rexam intangibles		(37)		(38)		(111)		(118)
Earnings before interest and taxes		374		198		707		726
Interest expense		(68)		(79)		(206)		(237)
Debt refinancing and other costs		(1)		—		(41)		(4)
Total interest expense		(69)		(79)		(247)		(241)
Earnings before taxes	$	305	$	119	$	460	$	485

(a)	Includes undistributed corporate expenses, net, of $13 million and $4 million for the three months ended September 30, 2020 and 2019, respectively, and $33 million and $42 million for the nine months ended September 30, 2020 and 2019, respectively.

The company does not disclose total assets by segment as it is not provided to the chief operating decision maker.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

4. Acquisitions and Dispositions

Brazil Aluminum Aerosol Packaging Business

In August 2020, the company acquired the entire share capital of Tubex Industria E Comercio de Embalagens Ltda, an aluminum aerosol packaging business with a plant in Itupeva, Brazil, for the purchase price of $80 million, subject to customary closing adjustments, including initial cash consideration of $69 million plus potential additional consideration not to exceed $30 million in total over the next three years. The business is part of Ball’s aerosol packaging operating segment. The transaction broadens the geographic reach of Ball’s aluminum aerosol packaging business, serving the growing Brazilian personal care market.

Argentina Steel Aerosol Business

In October 2019, the company sold its Argentine steel aerosol packaging business, which included facilities in Garin and San Luis, Argentina, and recorded a loss on disposal of $52 million, which included the write-off of cumulative translation adjustments of $45 million related to the Argentina business that had been previously recorded in accumulated other comprehensive income. The loss on disposal was recorded in the fourth quarter of 2019 within business consolidation and other activities in the unaudited condensed consolidated statement of earnings.

Beverage Packaging China

In September 2019, the company completed the sale of its metal beverage packaging business in China for upfront consideration of approximately $213 million, subject to customary closing adjustments, plus potential additional consideration related to the relocation of an existing facility in China in the coming years, the value of which was fully impaired in the first quarter of 2020, as described in Note 6. The upfront proceeds from this sale were received in the fourth quarter of 2019. The loss on disposal of $45 million was recorded in the third quarter of 2019 within business consolidation and other activities in the unaudited condensed consolidated statement of earnings.

5. Revenue from Contracts with Customers

Disaggregation of Sales

The company disaggregates net sales by reportable segments as disclosed in Note 3, and based on the timing of transfer of control for goods and services as explained below. The transfer of control for goods and services may occur at a point in time or over time. As disclosed in Note 3, the company’s business consists of four reportable segments, which encompass disaggregated product lines and geographical areas: (1) beverage packaging, North and Central America; (2) beverage packaging, EMEA; (3) beverage packaging, South America; and (4) aerospace.

The following table disaggregates the company’s net sales based on the timing of transfer of control:


	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
($ in millions)	Point in Time		Over Time		Total		Point in Time		Over Time		Total

Total net sales	$	604	$	2,489	$	3,093	$	1,638	$	7,041	$	8,679

	Three Months Ended September 30, 2019						Nine Months Ended September 30, 2019
($ in millions)	Point in Time		Over Time		Total		Point in Time		Over Time		Total

Total net sales	$	555	$	2,398	$	2,953	$	1,659	$	7,096	$	8,755

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Contract Balances

The company enters into contracts to sell beverage packaging, aerosol packaging, and aerospace products and services. The company did not have any contract assets at either September 30, 2020, or December 31, 2019. Unbilled receivables, which are not classified as contract assets, represent arrangements in which sales have been recorded prior to billing and right to payment is unconditional.

The opening and closing balances of the company’s current and noncurrent contract liabilities are as follows:


	Contract		Contract
	Liabilities		Liabilities
($ in millions)	(Current)		(Noncurrent)

Balance at December 31, 2019		87		9
Increase (decrease)		5		(1)
Balance at September 30, 2020	$	92	$	8

During the nine months ended September 30, 2020, total contract liabilities increased by $4 million, which is net of cash received of $407 million and amounts recognized as sales of $411 million, all of which related to current contract liabilities. The amount of sales recognized in the nine months ended September 30, 2020, which were included in the opening contract liabilities balances, was $87 million, all of which related to current contract liabilities. Current contract liabilities are classified within other current liabilities on the unaudited condensed consolidated balance sheet and noncurrent contract liabilities are classified within other liabilities.

The company also recognized net sales of $9 million and $12 million in the three and nine months ended September 30, 2020, respectively, and net sales of $4 million and $10 million in the three and nine months ended September 30, 2019, respectively, from performance obligations satisfied (or partially satisfied) in prior periods. These sales amounts are the result of changes in the transaction price of the company’s contracts with customers.

Transaction Price Allocated to Remaining Performance Obligations

Ball typically enters into master agreements with customers, which establish the terms and conditions for subsequent orders of goods. These master agreements do not create enforceable rights and obligations on a stand-alone basis. In the context of the revenue recognition standard, enforceable contracts are those that have an enforceable right to payment, which Ball typically has once a binding forecast or purchase order (or similar contract) is in place and Ball produces under the contract. Within Ball’s packaging segments, these enforceable contracts all have a duration of less than one year. Contracts that have an original duration of less than one year are excluded from the requirement to disclose remaining performance obligations based on the company’s election to use the practical expedient.

The table below discloses: (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period for contracts with an original duration of greater than one year, and (2) when the company expects to record sales on these multi-year contracts.


($ in millions)	Next Twelve Months		Thereafter		Total

Sales expected to be recognized on multi-year contracts in place as of September 30, 2020	$	1,354	$	926	$	2,280

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

6. Business Consolidation and Other Activities

The following is a summary of business consolidation and other activity (charges)/income included in the unaudited condensed consolidated statements of earnings:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019

Beverage packaging, North and Central America	$	—	$	(2)	$	(4)	$	(8)
Beverage packaging, EMEA		(2)		(9)		(8)		(24)
Beverage packaging, South America		3		(14)		(1)		22
Other		(9)		(108)		(222)		(137)
	$	(8)	$	(133)	$	(235)	$	(147)

2020

Beverage Packaging, North and Central America

During the nine months ended September 30, 2020, the company recorded charges of $4 million for individually insignificant activities in connection with previously announced closures of certain beverage can and end manufacturing facilities and other activities.

Beverage Packaging, EMEA

During the three and nine months ended September 30, 2020, the company recorded charges of $2 million and $8 million, respectively, for individually insignificant activities in connection with previously announced plant closures, restructuring and other activities.

Beverage Packaging, South America

During the three and nine months ended September 30, 2020, the company recorded credits of $3 million and charges of $1 million, respectively, for individually insignificant activities.

Other

During the three months ended September 30, 2020, the company recorded the following amounts:

●

Settlement charges of $5 million associated with lump-sum payments made to settle the projected pension benefit obligations for certain of Ball’s U.S. defined pension plans.

●

Charges of $4 million for individually insignificant activities.

During the nine months ended September 30, 2020, the company recorded the following amounts:

●

A non-cash settlement loss of $102 million related to the purchase of non-participating group annuity contracts and lump-sum payments to settle the projected pension benefit obligations for certain of Ball’s U.S. defined pension plans, which triggered settlement accounting. The settlement loss primarily reflects the second quarter recognition of aggregate unamortized actuarial losses in these U.S. pension plans.

●

A non-cash impairment charge of $62 million related to the goodwill of the new beverage packaging, other, operating segment. See Note 11 for further details.

●

A non-cash charge of $23 million resulting from the recent deterioration of China’s real estate market, which led the company to reduce the value of potential future consideration due as part of the sale of its China beverage packaging business. See Note 4 for further details.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

●

Charges of $15 million resulting from an adjustment to the selling price of the company’s steel food and aerosol business.

●

A credit of $11 million related to the reversal of reserves against working capital recorded in the fourth quarter of 2019 in the new beverage packaging, other, segment, as previously at-risk balances were subsequently collected.

●

Charges of $6 million for long-term incentive and other compensation arrangements associated with the Rexam acquisition.

●

Charges of $25 million for individually insignificant activities.

2019

Beverage Packaging, North and Central America

During the three and nine months ended September 30, 2019, the company recorded charges of $1 million and $7 million, respectively, in connection with previously announced closures in 2018 of certain beverage can and end manufacturing facilities.

Other charges in the three and nine months ended September 30, 2019, included $1 million of expense for individually insignificant activities.

Beverage Packaging, EMEA

During the three and nine months ended September 30, 2019, the company recorded charges of $6 million and $17 million, respectively, in connection with previously announced closures of certain beverage can and end manufacturing facilities and other activities.

Other charges in the three and nine months ended September 30, 2019, included $3 million and $7 million, respectively, of expense for individually insignificant activities.

Beverage Packaging, South America

During the nine months ended September 30, 2019, the company recorded a $56 million gain related to indirect tax gain contingencies in Brazil as these amounts were determined to be estimable and realizable. See Note 21 for further details.

During the three and nine months ended September 30, 2019, the company recorded charges of $13 million and $29 million, respectively, composed of facility shutdown costs, asset impairment, accelerated depreciation and other costs related to restructuring activities.

Charges in the three and nine months ended September 30, 2019, included $1 million and $5 million of expense, respectively, for individually insignificant activities.

Other

During the three months ended September 30, 2019, the company recorded the following amounts:

●

A $45 million loss on the sale of the metal beverage packaging business in China.

●

A loss of $52 million related to the sale of the Argentina steel aerosol packaging business, including $45 million related to cumulative translation adjustments previously recorded in accumulated other comprehensive earnings.

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A settlement loss of $8 million primarily related to the purchase of non-participating group annuity contracts to settle the projected pension benefit obligations in Ball’s Canadian defined benefit pension plan, which triggered settlement accounting. The settlement loss primarily represented the aggregate unamortized actuarial loss in these pension plans.

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Income of $2 million for revised estimates related to long-term incentive and other compensation arrangements associated with the 2016 Rexam acquisition and integration.

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Charges of $5 million for individually insignificant activities.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

During the nine months ended September 30, 2019, the company recorded the following amounts:

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A $45 million loss on the sale of the metal beverage packaging business in China and charges of $16 million for estimated employee severance costs and professional services associated with the fourth quarter 2019 sale.

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A settlement loss of $8 million primarily related to the purchase of non-participating group annuity contracts to settle the projected pension benefit obligations in Ball’s Canadian defined benefit pension plan which triggered settlement accounting. The settlement loss primarily represented the aggregate unamortized actuarial loss in these pension plans.

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Charges of $5 million for long-term incentive and other compensation arrangements associated with the 2016 Rexam acquisition and integration.

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Charges of $11 million for individually insignificant activities.

7.	Supplemental Cash Flow Statement Disclosures


	September 30,
($ in millions)	2020		2019

Beginning of period:
Cash and cash equivalents	$	1,798	$	721
Current restricted cash (included in other current assets)		8		7
Total cash, cash equivalents and restricted cash	$	1,806	$	728

End of period:
Cash and cash equivalents	$	771	$	483
Current restricted cash (included in other current assets)		12		9
Cash in assets held for sale (included in other current assets)		—		5
Total cash, cash equivalents and restricted cash	$	783	$	497

The company’s restricted cash is primarily related to receivables factoring programs and represents amounts collected from customers that have not yet been remitted to the banks as of the end of the reporting period.

Noncash investing activities include the acquisition of property, plant and equipment (PP&E) for which payment has not yet been made or obtained through finance leases. These noncash capital expenditures are excluded from the statement of cash flows and totaled approximately $290 million at September 30, 2020, and $224 million at December 31, 2019.

8. Receivables, Net


	September 30,		December 31,
($ in millions)	2020		2019

Trade accounts receivable	$	925	$	647
Unbilled receivables		502		556
Less allowance for doubtful accounts		(9)		(17)
Net trade accounts receivable		1,418		1,186
Other receivables		354		445
	$	1,772	$	1,631

The company has entered into several regional committed and uncommitted accounts receivable factoring programs with various financial institutions for certain of its receivables. The programs are accounted for as true sales of the receivables, without recourse to Ball, and had combined limits of approximately $1.5 billion at September 30, 2020, and $1.4 billion at December 31, 2019. A total of $184 million and $230 million were available for sale under these programs as of September 30, 2020, and December 31, 2019, respectively.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Other receivables include income and sales tax receivables, related party receivables and other miscellaneous receivables.

9. Inventories, Net


	September 30,		December 31,
($ in millions)	2020		2019

Raw materials and supplies	$	852	$	808
Work-in-process and finished goods		551		548
Less: Inventory reserves		(94)		(82)
	$	1,309	$	1,274

10. Property, Plant and Equipment, Net


	September 30,	December 31,
($ in millions)	2020

Form: 10-Q

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