May 7, 2021 - 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 March 31, 2021


☐	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

Securities registered pursuant to section 12(b) of the Act:

Class		Trading Symbol		Name of Exchange		Outstanding at April 30, 2021
Common Stock, without par value		BLL		NYSE		328,254,521 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 ⌧

Table of Contents

Ball Corporation

QUARTERLY REPORT ON FORM 10-Q

For the period ended March 31, 2021

INDEX

		Page Number

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Statements of Earnings for the Three Months Ended March 31, 2021 and 2020	1

	Unaudited Condensed Consolidated Statements of Comprehensive Earnings (Loss) for the Three Months Ended March 31, 2021 and 2020	2

	Unaudited Condensed Consolidated Balance Sheets at March 31, 2021, and December 31, 2020	3

	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	4

	Notes to the Unaudited Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	35

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS


	Three Months Ended March 31,
($ in millions, except per share amounts)	2021		2020

Net sales	$	3,125	$	2,785

Costs and expenses
Cost of sales (excluding depreciation and amortization)		(2,493)		(2,215)
Depreciation and amortization		(168)		(169)
Selling, general and administrative		(157)		(131)
Business consolidation and other activities		(7)		(115)
		(2,825)		(2,630)

Earnings before interest and taxes		300		155

Interest expense		(67)		(71)
Debt refinancing and other costs		—		(40)
Total interest expense		(67)		(111)

Earnings before taxes		233		44
Tax (provision) benefit		(32)		4
Equity in results of affiliates, net of tax		(1)		(25)
Net earnings		200		23
Net (earnings) loss attributable to noncontrolling interests		—		—
Net earnings attributable to Ball Corporation	$	200	$	23


Earnings per share:
Basic	$	0.61	$	0.07
Diluted	$	0.60	$	0.07


Weighted average shares outstanding: (000s)
Basic		327,811		325,346
Diluted		333,673		332,326

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)


	Three Months Ended March 31,
($ in millions)	2021		2020

Net earnings	$	200	$	23

Other comprehensive earnings (loss):
Foreign currency translation adjustment		(12)		(224)
Pension and other postretirement benefits		41		(8)
Derivatives designated as hedges		46		8
Total other comprehensive earnings (loss)		75		(224)
Income tax (provision) benefit		(18)		(5)
Total other comprehensive earnings (loss), net of tax		57		(229)

Total comprehensive earnings (loss)		257		(206)
Comprehensive (earnings) loss attributable to noncontrolling interests		—		—
Comprehensive earnings (loss) attributable to Ball Corporation	$	257	$	(206)

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


	March 31,		December 31,
($ in millions)	2021		2020

Assets
Current assets
Cash and cash equivalents	$	461	$	1,366
Receivables, net		2,115		1,738
Inventories, net		1,399		1,353
Other current assets		262		218
Total current assets		4,237		4,675
Noncurrent assets
Property, plant and equipment, net		5,570		5,351
Goodwill		4,416		4,484
Intangible assets, net		1,813		1,883
Other assets		1,943		1,859
Total assets	$	17,979	$	18,252

Liabilities and Equity
Current liabilities
Short-term debt and current portion of long-term debt	$	766	$	17
Accounts payable		3,355		3,430
Accrued employee costs		277		347
Other current liabilities		586		650
Total current liabilities		4,984		4,444
Noncurrent liabilities
Long-term debt		6,941		7,783
Employee benefit obligations		1,395		1,613
Deferred taxes		616		634
Other liabilities		489		441
Total liabilities		14,425		14,915

Equity
Common stock (680,013,693 shares issued - 2021; 679,524,325 shares issued - 2020)		1,171		1,167
Retained earnings		6,342		6,192
Accumulated other comprehensive earnings (loss)		(897)		(954)
Treasury stock, at cost (351,899,273 shares - 2021; 351,938,709 shares - 2020)		(3,124)		(3,130)
Total Ball Corporation shareholders' equity		3,492		3,275
Noncontrolling interests		62		62
Total equity		3,554		3,337
Total liabilities and equity	$	17,979	$	18,252

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended March 31,
($ in millions)	2021		2020

Cash Flows from Operating Activities
Net earnings	$	200	$	23
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization		168		169
Business consolidation and other activities		7		115
Deferred tax provision (benefit)		(2)		(36)
Other, net		(147)		58
Changes in working capital components, net of dispositions		(703)		(1,037)
Cash provided by (used in) operating activities		(477)		(708)
Cash Flows from Investing Activities
Capital expenditures		(363)		(213)
Business dispositions, net of cash sold		1		(17)
Other, net		14		(4)
Cash provided by (used in) investing activities		(348)		(234)
Cash Flows from Financing Activities
Long-term borrowings		—		1,252
Repayments of long-term borrowings		(6)		(1,547)
Net change in short-term borrowings		7		493
Proceeds (payments) from issuances of common stock, net of shares used for taxes		5		(31)
Acquisitions of treasury stock		(10)		(57)
Common stock dividends		(50)		(51)
Other, net		—		(34)
Cash provided by (used in) financing activities		(54)		25

Effect of exchange rate changes on cash		(31)		(78)

Change in cash, cash equivalents and restricted cash		(910)		(995)
Cash, cash equivalents and restricted cash - beginning of period		1,381		1,806
Cash, cash equivalents and restricted cash - end of period	$	471	$	811

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

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 2020 Annual Report on Form 10-K filed on February 17, 2021, pursuant to the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2020 (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 company’s 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 March 31, 2021, 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.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

2. Accounting Pronouncements

Recently Adopted Accounting Standards

Income Tax Simplification

In December 2019, new guidance was issued to simplify the accounting for income taxes. Ball adopted this guidance and all related amendments on January 1, 2021, applying either the retrospective basis, the modified retrospective method, or the prospective method where appropriate. The adoption of this guidance had no impact on the company’s unaudited condensed 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.

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.

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.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Summary of Business by Segment


	Three Months Ended March 31,
($ in millions)	2021		2020

Net sales
Beverage packaging, North and Central America	$	1,296	$	1,181
Beverage packaging, EMEA		796		669
Beverage packaging, South America		487		405
Aerospace		424		432
Reportable segment sales		3,003		2,687
Other		122		98
Net sales	$	3,125	$	2,785

Comparable operating earnings
Beverage packaging, North and Central America	$	140	$	146
Beverage packaging, EMEA		100		68
Beverage packaging, South America		93		63
Aerospace		35		40
Reportable segment comparable operating earnings		368		317
Reconciling items
Other (a)		(23)		(10)
Business consolidation and other activities		(7)		(115)
Amortization of acquired intangibles		(38)		(37)
Earnings before interest and taxes		300		155
Interest expense		(67)		(71)
Debt refinancing and other costs		—		(40)
Total interest expense		(67)		(111)
Earnings before taxes	$	233	$	44

(a)	Includes undistributed corporate expenses, net, of $26 million and $14 million for the three months ended March 31, 2021 and 2020, respectively.

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

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.

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.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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


	Three Months Ended March 31,
($ in millions)	Point in Time		Over Time		Total

2021	$	610	$	2,515	$	3,125
2020		503		2,282		2,785

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 March 31, 2021, or December 31, 2020. 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, 2020	$	108	$	29
Increase (decrease)		(19)		(1)
Balance at March 31, 2021	$	89	$	28

During the three months ended March 31, 2021, total contract liabilities decreased by $20 million, which is net of cash received of $103 million and amounts recognized as sales of $123 million, all of which related to current contract liabilities. The amount of sales recognized in the three months ended March 31, 2021, which were included in the opening contract liabilities balances, was $108 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 $7 million and $9 million in the three months ended March 31, 2021 and 2020, 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

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 March 31, 2021	$	1,387	$	746	$	2,133

Table of Contents

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 March 31,
($ in millions)	2021		2020

Beverage packaging, North and Central America	$	1	$	(3)
Beverage packaging, EMEA		(2)		(3)
Beverage packaging, South America		(1)		(1)
Other		(5)		(108)
	$	(7)	$	(115)

2021

Beverage Packaging, North and Central America

During the three months ended March 31, 2021, the company recorded credits of $1 million for individually insignificant activities in connection with previously announced closures of certain plants and other activities.

Beverage Packaging, EMEA

During the three months ended March 31, 2021, the company recorded charges of $2 million for individually insignificant activities in connection with previously announced plant closures, restructuring and other activities.

Beverage Packaging, South America

During the three months ended March 31, 2021, the company recorded charges of $1 million for individually insignificant activities.

Other

During the three months ended March 31, 2021, the company recorded charges of $5 million for individually insignificant activities.

2020

Beverage Packaging, North and Central America

During the three months ended March 31, 2020, the company recorded charges of $3 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 months ended March 31, 2020, the company recorded charges of $3 million for individually insignificant activities in connection with previously announced plant closures, restructuring and other activities.

Beverage Packaging, South America

During the three months ended March 31, 2020, the company recorded charges of $1 million for individually insignificant activities.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Other

During the three months ended March 31, 2020, the company recorded the following amounts:

●

A non-cash impairment charge of $62 million related to the goodwill of the beverage packaging, other, operating segment.

●

A non-cash charge of $23 million resulting from the deterioration of China’s real estate market in 2020, which led the company to reduce the value of potential future consideration due as part of the 2019 sale of its China beverage packaging business.

●

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

●

A credit of $11 million related to the reversal of reserves against working capital recorded in 2019 in the 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 2016 Rexam acquisition.

●

Charges of $13 million for individually insignificant activities.

7.	Supplemental Cash Flow Statement Disclosures


	March 31,
($ in millions)	2021		2020

Beginning of period:
Cash and cash equivalents	$	1,366	$	1,798
Current restricted cash (included in other current assets)		15		8
Total cash, cash equivalents and restricted cash	$	1,381	$	1,806

End of period:
Cash and cash equivalents	$	461	$	801
Current restricted cash (included in other current assets)		10		10
Total cash, cash equivalents and restricted cash	$	471	$	811

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 been made. These noncash capital expenditures are excluded from the statement of cash flows. The PP&E acquired but not yet paid for amounted to approximately $515 million at March 31, 2021, and $409 million at December 31, 2020.

8. Receivables, Net


	March 31,		December 31,
($ in millions)	2021		2020

Trade accounts receivable	$	1,012	$	825
Unbilled receivables		637		528
Less: Allowance for doubtful accounts		(9)		(9)
Net trade accounts receivable		1,640		1,344
Other receivables		475		394
	$	2,115	$	1,738

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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 $1.6 billion at March 31, 2021, and December 31, 2020. A total of $348 million and $232 million were available for sale under these programs as of March 31, 2021, and December 31, 2020, respectively.

Other receivables include income and sales tax receivables and other miscellaneous receivables.

9. Inventories, Net


	March 31,		December 31,
($ in millions)	2021		2020

Raw materials and supplies	$	868	$	889
Work-in-process and finished goods		624		557
Less: Inventory reserves		(93)		(93)
	$	1,399	$	1,353

10. Property, Plant and Equipment, Net


	March 31,		December 31,
($ in millions)	2021		2020

Land	$	161	$	163
Buildings		1,708		1,653
Machinery and equipment		6,338		6,214
Construction-in-progress		990		883
		9,197		8,913
Accumulated depreciation		(3,627)		(3,562)
	$	5,570	$	5,351

Depreciation expense amounted to $123 million and $124 million for the three months ended March 31, 2021 and 2020, respectively.

11. Goodwill


($ in millions)	Beverage Packaging, North & Central America		Beverage Packaging, EMEA		Beverage Packaging, South America		Aerospace		Other		Total

Balance at December 31, 2020	$	1,275	$	1,573	$	1,298	$	40	$	298	$	4,484
Effects of currency exchange		—		(56)		—		—		(12)		(68)
Balance at March 31, 2021	$	1,275	$	1,517	$	1,298	$	40	$	286	$	4,416

Goodwill in the above table is presented net of accumulated impairment losses of $62 million as of March 31, 2021, and December 31, 2020.

In the first quarter of 2020, Ball recorded a non-cash impairment charge of $62 million related to the goodwill associated with the beverage packaging, other, reporting unit as the carrying amount of this reporting unit exceeded its fair value. The impairment review was triggered by the restructuring of the company’s reporting units which was made in connection with a January 1, 2020 change in segment management and internal reporting structure.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

12. Intangible Assets, Net


	March 31,		December 31,
($ in millions)	2021		2020

Acquired customer relationships and other intangibles (net of accumulated amortization of $756 million at March 31, 2021, and $729 million at December 31, 2020)	$	1,721	$	1,785
Capitalized software (net of accumulated amortization of $201 million at March 31, 2021, and $196 million at December 31, 2020)		66		69
Other intangibles (net of accumulated amortization of $93 million at March 31, 2021, and $124 million at December 31, 2020)		26		29
	$	1,813	$	1,883

Total amortization expense of intangible assets amounted to $45 million and $45 million for the three months ended March 31, 2021, and 2020, respectively.

13. Other Assets


	March 31,		December 31,
($ in millions)	2021		2020

Long-term pension assets	$	572	$	562
Investments in affiliates		306		321
Right-of-use operating lease assets		380		302
Long-term deferred tax assets		192		227
Other		493		447
	$	1,943	$	1,859

In the first quarter of 2020, the shareholders of Ball Metalpack provided additional equity contributions and loans to Ball Metalpack, of which Ball's share was $30 million, which resulted in Ball recognizing this same level of previously unrecorded equity method losses associated with prior periods. These losses are presented in equity in results of affiliates, net of tax, in the company’s unaudited condensed consolidated statement of earnings. Ball is under no obligation to provide additional equity contributions or loans to Ball Metalpack.

14. Leases

The company enters into operating leases for buildings, warehouses, office equipment, production equipment, aircraft, land and other types of equipment. The company also enters into finance leases for certain plant equipment.

Supplemental balance sheet information related to the company’s leases follows:


		March 31,		December 31,
($ in millions)	Balance Sheet Location	2021		2020

Operating leases:
Operating lease ROU asset	Other assets	$	380	$	302
Current operating lease liabilities	Other current liabilities		73		63
Noncurrent operating lease liabilities	Other liabilities		301		232
Finance leases:
Finance lease ROU assets, net	Property, plant and equipment, net	$	10	$	11
Current finance lease liabilities	Short-term debt and current portion of long-term debt		2		2
Noncurrent finance lease liabilities	Long-term debt		9		10

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

15. Debt

Long-term debt consisted of the following:


	March 31,		December 31,
($ in millions)	2021		2020

Senior Notes
5.00% due March 2022	$	743	$	748
4.00% due November 2023		1,000		1,000
4.375%, euro denominated, due December 2023		821		855
0.875%, euro denominated, due March 2024		880		916
5.25% due July 2025		1,000		1,000
4.875% due March 2026		750		750
1.50%, euro denominated, due March 2027		645		672
2.875% due August 2030		1,300		1,300
Senior Credit Facility (at variable rates)
Term A loan due March 2024		593		593
Finance lease obligations		11		12
Other (including debt issuance costs)		(57)		(60)
		7,686		7,786
Less: Current portion		(745)		(3)
	$	6,941	$	7,783

The company’s senior credit facilities include long-term multi-currency revolving facilities that mature in March 2024, which provide the company with up to the U.S. dollar equivalent of $1.75 billion. At March 31, 2021, taking into account outstanding letters of credit, $1.7 billion was available under the company’s long-term, revolving credit facilities. In addition to these facilities, the company had approximately $1 billion of short-term uncommitted credit facilities available at March 31, 2021, of which $21 million was outstanding and due on demand. At December 31, 2020, the company had $14 million outstanding under short-term uncommitted credit facilities.

The fair value of long-term debt was estimated to be $8.1 billion at March 31, 2021, and $8.3 billion at December 31, 2020. The fair value reflects the market rates at each period end for debt with credit ratings similar to the company’s ratings and is classified as Level 2 within the fair value hierarchy. Rates currently available to the company for loans with similar terms and maturities are used to estimate the fair value of long-term debt based on discounted cash flows.

The U.S. note agreements and bank credit agreement contain certain restrictions relating to dividend payments, share repurchases, investments, financial ratios, guarantees and the incurrence of additional indebtedness. The company’s most restrictive debt covenant requires the company to maintain a leverage ratio (as defined) of no greater than 5.0 times as of March 31, 2021, which will change to 4.5 times as of December 31, 2022. The company was in compliance with all loan agreements and debt covenants at both March 31, 2021, and December 31, 2020, and it has met all debt payment obligations.

16. Taxes on Income

The company’s effective tax rate was 13.7 percent and negative 9.1 percent for the three months ended March 31, 2021 and 2020, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three months ended March 31, 2021, was reduced by 5 percentage points for foreign tax rate differences including tax holidays, 2.6 percentage points for share-based compensation, and 2.4 percentage points for federal tax credits. Also, as compared to the statutory U.S. tax rate, the effective tax rate for the three months ended March 31, 2020, was reduced by 51 percentage points for the benefit of share-based compensation, reduced by 13.8 percentage points for the benefit of losses in equity in results of affiliates, and increased by 35.3 percentage points for the impact of the beverage packaging, other, goodwill impairment.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

17. Employee Benefit Obligations


	March 31,		December 31,
($ in millions)	2021		2020

Underfunded defined benefit pension liabilities	$	809	$	955
Less: Current portion		(23)		(24)
Long-term defined benefit pension liabilities		786		931
Long-term retiree medical liabilities		152		156
Deferred compensation plans		399		439
Other		58		87
	$	1,395	$	1,613

Components of net periodic benefit cost associated with the company’s defined benefit pension plans were as follows:


	Three Months Ended March 31,
	2021						2020
($ in millions)	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total

Ball-sponsored plans:
Service cost	$	21	$	3	$	24	$	16	$	4	$	20
Interest cost		13		9		22		20		14		34
Expected return on plan assets		(31)		(16)		(47)		(31)		(21)		(52)
Amortization of prior service cost		—		1		1		—		1		1
Recognized net actuarial loss		13		1		14		10		1		11
Total net periodic benefit cost	$	16	$	(2)	$	14	$	15	$	(1)	$	14

Non-service pension income of $10 million and $6 million for the three months ended March 31, 2021 and 2020, respectively, is included in selling, general, and administrative (SG&A) expenses.

Contributions to the company’s defined benefit pension plans were $162 million for the first three months of 2021 compared to $11 million for the first three months of 2020, and such contributions are expected to be approximately $185 million for the full year of 2021. This estimate may change based on changes to the U.S. Pension Protection Act, the effects of the Coronavirus Aid, Relief, and Economic Security (CARES) and American Rescue Plan Act (ARPA) Acts and the actual returns achieved on plan assets, among other factors.

18. Equity and Accumulated Other Comprehensive Earnings

The following tables provide additional details of the company’s equity activity:


	Common Stock			Treasury Stock					Accumulated Other
	Number of			Number of			Retained		Comprehensive		Noncontrolling		Total
($ in millions; share amounts in thousands)	Shares	Amount		Shares	Amount		Earnings		Earnings (Loss)		Interest		Equity

Balance at December 31, 2020	679,524	$	1,167	(351,939)	$	(3,130)	$	6,192	$	(954)	$	62	$	3,337
Net earnings (loss)	—		—	—</

Form: 10-Q

Documents