May 5, 2022 - 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, 2022


☐	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, 2022
Common Stock, without par value		BLL		NYSE		319,788,885 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 March 31, 2022

INDEX

		Page Number
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Statements of Earnings for the Three Months Ended March 31, 2022 and 2021	1
	Unaudited Condensed Consolidated Statements of Comprehensive Earnings (Loss) for the Three Months Ended March 31, 2022 and 2021	2
	Unaudited Condensed Consolidated Balance Sheets at March 31, 2022, and December 31, 2021	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	4
	Notes to the Unaudited Condensed Consolidated Financial Statements	5
	Note 1, Basis of Presentation	5
	Note 2, Accounting Pronouncements	6
	Note 3, Business Segment Information	6
	Note 4, Acquisitions and Dispositions	8
	Note 5, Revenue from Contracts with Customers	8
	Note 6, Business Consolidation and Other Activities	9
	Note 7, Supplemental Cash Flow Statement Disclosures	10
	Note 8, Receivables, Net	11
	Note 9, Inventories, Net	11
	Note 10, Property, Plant and Equipment, Net	12
	Note 11, Goodwill	12
	Note 12, Intangible Assets, Net	12
	Note 13, Other Assets	13
	Note 14, Leases	13
	Note 15, Debt	14
	Note 16, Taxes on Income	14
	Note 17, Employee Benefit Obligations	15
	Note 18, Equity and Accumulated Other Comprehensive Earnings	15
	Note 19, Earnings and Dividends Per Share	17
	Note 20, Financial Instruments and Risk Management	17
	Note 21, Contingencies	22
	Note 22, Indemnifications and Guarantees	24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION	34

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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)	2022		2021

Net sales	$	3,716	$	3,125

Costs and expenses
Cost of sales (excluding depreciation and amortization)		(3,016)		(2,493)
Depreciation and amortization		(185)		(168)
Selling, general and administrative		(186)		(157)
Business consolidation and other activities		281		(7)
		(3,106)		(2,825)

Earnings before interest and taxes		610		300

Interest expense		(69)		(67)
Debt refinancing and other costs		—		—
Total interest expense		(69)		(67)

Earnings before taxes		541		233
Tax (provision) benefit		(100)		(32)
Equity in results of affiliates, net of tax		6		(1)
Net earnings		447		200
Net (earnings) loss attributable to noncontrolling interests		(1)		—
Net earnings attributable to Ball Corporation	$	446	$	200


Earnings per share:
Basic	$	1.39	$	0.61
Diluted	$	1.37	$	0.60


Weighted average shares outstanding: (000s)
Basic		320,904		327,811
Diluted		325,916		333,673

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 March 31,
($ in millions)	2022		2021

Net earnings	$	447	$	200

Other comprehensive earnings (loss):
Currency translation adjustment		(92)		(12)
Pension and other postretirement benefits		8		41
Derivatives designated as hedges		67		46
Total other comprehensive earnings (loss)		(17)		75
Income tax (provision) benefit		(12)		(18)
Total other comprehensive earnings (loss), net of tax		(29)		57

Total comprehensive earnings (loss)		418		257
Comprehensive (earnings) loss attributable to noncontrolling interests		(1)		—
Comprehensive earnings (loss) attributable to Ball Corporation	$	417	$	257

See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


	March 31,		December 31,
($ in millions)	2022		2021

Assets
Current assets
Cash and cash equivalents	$	437	$	563
Receivables, net		3,128		2,560
Inventories, net		2,323		1,795
Other current assets		418		305
Total current assets		6,306		5,223
Noncurrent assets
Property, plant and equipment, net		6,683		6,502
Goodwill		4,324		4,378
Intangible assets, net		1,627		1,688
Other assets		1,986		1,923
Total assets	$	20,926	$	19,714

Liabilities and Equity
Current liabilities
Short-term debt and current portion of long-term debt	$	293	$	15
Accounts payable		5,026		4,759
Accrued employee costs		276		349
Other current liabilities		891		830
Total current liabilities		6,486		5,953
Noncurrent liabilities
Long-term debt		8,265		7,722
Employee benefit obligations		1,047		1,205
Deferred taxes		677		665
Other liabilities		494		484
Total liabilities		16,969		16,029

Equity
Common stock (681,735,732 shares issued - 2022; 680,944,867 shares issued - 2021)		1,226		1,220
Retained earnings		7,224		6,843
Accumulated other comprehensive earnings (loss)		(611)		(582)
Treasury stock, at cost (361,097,206 shares - 2022; 360,101,024 shares - 2021)		(3,941)		(3,854)
Total Ball Corporation shareholders' equity		3,898		3,627
Noncontrolling interests		59		58
Total equity		3,957		3,685
Total liabilities and equity	$	20,926	$	19,714

See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended March 31,
($ in millions)	2022		2021

Cash Flows from Operating Activities
Net earnings	$	447	$	200
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization		185		168
Business consolidation and other activities		(281)		7
Deferred tax provision (benefit)		48		(2)
Other, net		(199)		(147)
Changes in working capital components, net of dispositions		(1,004)		(703)
Cash provided by (used in) operating activities		(804)		(477)

Cash Flows from Investing Activities
Capital expenditures		(362)		(363)
Business dispositions, net of cash sold		298		1
Other, net		18		14
Cash provided by (used in) investing activities		(46)		(348)

Cash Flows from Financing Activities
Long-term borrowings		601		—
Repayments of long-term borrowings		(1)		(6)
Net change in short-term borrowings		277		7
Proceeds (payments) from issuances of common stock, net of shares used for taxes		1		5
Acquisitions of treasury stock		(98)		(10)
Common stock dividends		(65)		(50)
Cash provided by (used in) financing activities		715		(54)

Effect of exchange rate changes on cash		2		(31)

Change in cash, cash equivalents and restricted cash		(133)		(910)
Cash, cash equivalents and restricted cash - beginning of period		579		1,381
Cash, cash equivalents and restricted cash - end of period	$	446	$	471

See accompanying notes to the unaudited condensed consolidated financial statements.

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1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (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 consolidated 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 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 2021 Annual Report on Form 10-K filed on February 16, 2022, pursuant to the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2021 (annual report).

The preparation of consolidated 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 consolidated 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 consolidated 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

Russian Invasion of Ukraine

The current global business environment is being impacted directly and indirectly by the effects of the Russian invasion of Ukraine, and it is not possible to accurately predict all future impacts of the invasion. Ball has suspended future investments in Russia and is pursuing the sale of its aluminum beverage packaging business located in Russia. As of March 31, 2022, Ball’s Russian aluminum packaging business does not meet the requirements for held for sale presentation in Ball’s consolidated financial statements. Additionally, Russia’s invasion of Ukraine has the potential to increase Ball’s vulnerabilities to near-term, severe impacts related to its Russian business and facilities. The Russian government has made warnings to companies that cease operations during its invasion of Ukraine and the potential exists that Ball’s operations in Russia could be negatively impacted. As such, Russia’s invasion of Ukraine and the resulting effects have the potential to impact significant estimates used by Ball in the preparation of its consolidated financial statements, which could result in impairments.

Ball has determined that the Russian invasion of Ukraine constitutes a triggering event for its Russian long-lived asset group. Ball performed a step one recoverability analysis for the long-lived asset group of Ball’s Russian business, which indicated that the carrying value of the asset group was recoverable as of March 31, 2022, and as a result, no impairment was deemed necessary at this time.

Ball’s Russian business, which is presented in its beverage packaging, EMEA, reportable operating segment, represented approximately 4 percent of the company's total net sales and 8 percent of the company's total comparable operating earnings for the twelve months ended December 31, 2021. In addition, our plants in Russia accounted for approximately 5 percent of the company's 112.5 billion global beverage can unit shipments for the twelve months ended December 31, 2021. As of March 31, 2022, Ball’s Russian business had net assets of $435 million, which consisted primarily of working capital, property, plant and equipment, and finite-lived intangible assets. As of March 31, 2022, Ball also had cumulative currency translation losses of $211 million recorded in equity that could be subject to release upon the liquidation of its Russian business. These values are subject to change based on the Russian ruble exchange rate.

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Novel Coronavirus (COVID-19)

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; and

●

Estimates regarding the likelihood of forecasted transactions associated with hedge accounting positions at March 31, 2022, 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 consolidated 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.

2. Accounting Pronouncements

New Accounting Guidance

Government Assistance Disclosure

In 2021, new guidance was issued related to the disclosure of government assistance. The company is currently assessing the impact that the adoption of this new guidance will have on its consolidated financial statements.

Reference Rate Reform

In 2020, new guidance was issued related to global reference rates reform. The company is currently evaluating the impact that the transition from its LIBOR-based interest rate agreements to Secured Overnight Financing Rate (SOFR) based interest rate agreements will have on its consolidated financial statements. Based on our current understanding, the LIBOR to SOFR transition is not expected to have a material impact on our financial condition, results of operations or cash flows.

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 aluminum 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 aluminum beverage containers throughout those countries.

Beverage packaging, South America: Consists of operations in Brazil, Argentina, Paraguay and Chile that manufacture and sell aluminum 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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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 recloseable aluminum bottles across multiple consumer categories as well as aluminum slugs (aerosol packaging) throughout North America, South America, Europe, and Asia; a non-reportable operating segment that manufactures and sells aluminum cups (aluminum cups); undistributed corporate expenses; and 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, 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. In 2021, Ball sold its minority-owned investment in South Korea. In January 2022, Ball sold its remaining equity method investment in Ball Metalpack. Refer to Note 4 for additional details on both transactions.

Summary of Business by Segment


	Three Months Ended March 31,
($ in millions)	2022		2021

Net sales
Beverage packaging, North and Central America	$	1,609	$	1,296
Beverage packaging, EMEA		942		796
Beverage packaging, South America		494		487
Aerospace		504		424
Reportable segment sales		3,549		3,003
Other		167		122
Net sales	$	3,716	$	3,125

Comparable operating earnings
Beverage packaging, North and Central America	$	174	$	140
Beverage packaging, EMEA		100		100
Beverage packaging, South America		78		93
Aerospace		43		35
Reportable segment comparable operating earnings		395		368
Reconciling items
Other (a)		(29)		(23)
Business consolidation and other activities		281		(7)
Amortization of acquired intangibles		(37)		(38)
Earnings before interest and taxes		610		300
Interest expense		(69)		(67)
Earnings before taxes	$	541	$	233

(a)	Includes undistributed corporate expenses, net, of $33 million and $26 million for the three months ended March 31, 2022 and 2021, respectively.

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

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4. Acquisitions and Dispositions

Ball Metalpack Investment

During the first quarter of 2022, Ball sold its remaining 49 percent owned equity method investment in Ball Metalpack to Sonoco, a global provider of consumer, industrial, healthcare and protective packaging, for total consideration of approximately $305 million, net of customary closing adjustments, of which $298 million in cash was received in the first quarter of 2022. The remaining $7 million is subject to customary closing adjustments and is presented in receivables, net. Ball’s carrying value of the investment before the sale was zero; therefore, a gain from the sale, net of customary closing adjustments, of $305 million is reported in business consolidation and other activities in the unaudited condensed consolidated statements of earnings. Cash proceeds of $298 million related to the sale are presented in business dispositions, net of cash sold, in the unaudited condensed consolidated statement of cash flows.

Ball also received proceeds from Ball Metalpack for the repayment of an outstanding promissory note and accrued interest of approximately $16 million, which was recorded as a gain in business consolidation and other activities in the unaudited condensed consolidated statements of earnings.

South Korea Investment

In the third quarter of 2021, Ball sold its minority-owned investment in South Korea. Consideration for the transaction was cash of $120 million, of which $110 million has been received, and is presented in business dispositions in cash flows from investing activities in Ball’s unaudited condensed consolidated statements of cash flows. The remaining $10 million will be received on or before December 31, 2022, and is presented in receivables, net on Ball’s unaudited condensed consolidated balance sheets. In the second quarter of 2021, the company recorded a loss of $5 million related to the disposal, which was presented in business consolidation and other activities in the unaudited condensed consolidated statement of earnings.

5. Revenue from Contracts with Customers

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


	Three Months Ended March 31,
Years Ended March 31,	Point in Time		Over Time		Total

2022	$	601	$	3,115	$	3,716
2021		610		2,515		3,125

Contract Balances

The company did not have any contract assets at either March 31, 2022, or December 31, 2021. 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, 2021	$	272	$	38
Increase (decrease)		(38)		(21)
Balance at March 31, 2022	$	234	$	17

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During the three months ended March 31, 2022, total contract liabilities decreased by $59 million, which is net of cash received of $131 million and amounts recognized as sales of $190 million, the majority of which related to current contract liabilities. The amount of sales recognized in the three months ended March 31, 2022, which were included in the opening contract liabilities balances, was $190 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 $7 million in the three months ended March 31, 2022 and 2021, 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, 2022	$	1,491	$	1,669	$	3,160

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)	2022		2021

Beverage packaging, North and Central America	$	1	$	1
Beverage packaging, EMEA		(1)		(2)
Beverage packaging, South America		(1)		(1)
Other		282		(5)
	$	281	$	(7)

2022

Beverage Packaging, North and Central America

During the three months ended March 31, 2022, the company recorded charges of $1 million for individually insignificant activities.

Beverage Packaging, EMEA

During the three months ended March 31, 2022, the company recorded charges of $1 million for individually insignificant activities.

Beverage Packaging, South America

During the three months ended March 31, 2022, the company recorded charges of $1 million for individually insignificant activities.

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Other

During the three months ended March 31, 2022, the company recorded the following amounts:

●

A gain of $305 million related to the sale of Ball’s remaining equity method investment in Ball Metalpack. See Note 4 for further details.

●

A charge related to a donation of $30 million to The Ball Foundation, a non-profit philanthropic organization with efforts to build a better world.

●

A gain of $16 million from Ball Metalpack’s repayment of a loan which was formerly fully reserved.

●

Currency losses of $9 million associated with market conditions preventing the company from effectively entering into currency derivative positions to minimize currency exposures associated with the Russian ruble.

2021

Beverage Packaging, North and Central America

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

7.	Supplemental Cash Flow Statement Disclosures


	March 31,
($ in millions)	2022		2021

Beginning of period:
Cash and cash equivalents	$	563	$	1,366
Current restricted cash (included in other current assets)		16		15
Total cash, cash equivalents and restricted cash	$	579	$	1,381

End of period:
Cash and cash equivalents	$	437	$	461
Current restricted cash (included in other current assets)		9		10
Total cash, cash equivalents and restricted cash	$	446	$	471

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.

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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. A summary of the PP&E acquired but not yet paid for is as follows:


	March 31,
($ in millions)	2022		2021

Beginning of period:
PP&E acquired but not yet paid	$	540	$	409

End of period:
PP&E acquired but not yet paid	$	528	$	515

8. Receivables, Net


	March 31,		December 31,
($ in millions)	2022		2021

Trade accounts receivable	$	1,664	$	1,304
Unbilled receivables		839		727
Less: Allowance for doubtful accounts		(8)		(9)
Net trade accounts receivable		2,495		2,022
Other receivables		633		538
	$	3,128	$	2,560

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 $2 billion and $1.7 billion at March 31, 2022, and December 31, 2021, respectively. A total of $892 million and $308 million were available for sale under these programs as of March 31, 2022, and December 31, 2021, respectively.

Other receivables include income and sales tax receivables, aluminum scrap sale receivables and other miscellaneous receivables, including remaining amounts related to sales of the company’s equity method investments as detailed in Note 4.

9. Inventories, Net


	March 31,		December 31,
($ in millions)	2022		2021

Raw materials and supplies	$	1,200	$	1,064
Work-in-process and finished goods		1,214		821
Less: Inventory reserves		(91)		(90)
	$	2,323	$	1,795

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10. Property, Plant and Equipment, Net


	March 31,		December 31,
($ in millions)	2022		2021

Land	$	184	$	167
Buildings		2,134		2,081
Machinery and equipment		7,016		6,876
Construction-in-progress		1,245		1,179
		10,579		10,303
Accumulated depreciation		(3,896)		(3,801)
	$	6,683	$	6,502

Depreciation expense amounted to $140 million and $123 million for the three months ended March 31, 2022 and 2021, respectively.

11. Goodwill


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

Balance at December 31, 2021	$	1,275	$	1,483	$	1,298	$	40	$	282	$	4,378
Effects of currency exchange		—		(60)		—		—		6		(54)
Balance at March 31, 2022	$	1,275	$	1,423	$	1,298	$	40	$	288	$	4,324

Goodwill in the above table is presented net of accumulated impairment losses of $61 million and $62 million as of March 31, 2022 and December 31, 2021, respectively.

12. Intangible Assets, Net


	March 31,		December 31,
($ in millions)	2022		2021

Acquired customer relationships and other intangibles (net of accumulated amortization of $883 million at March 31, 2022, and $862 million at December 31, 2021)	$	1,529	$	1,593
Capitalized software (net of accumulated amortization of $193 million at March 31, 2022, and $187 million at December 31, 2021)		76		74
Other intangibles (net of accumulated amortization of $98 million at March 31, 2022, and $97 million at December 31, 2021)		22		21
	$	1,627	$	1,688

Total amortization expense of intangible assets amounted to $45 million for the three months ended March 31, 2022 and 2021.

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13. Other Assets


	March 31,		December 31,
($ in millions)	2022		2021

Long-term pension assets	$	565	$	579
Right-of-use operating lease assets		443		420
Investments in affiliates		190		184
Long-term deferred tax assets		88		126
Other		700		614
	$	1,986	$	1,923

Investments in affiliates primarily includes the company’s 50 percent ownership interest in an entity in Guatemala, a 50 percent ownership interest in an entity in Panama, a 50 percent ownership interest in an entity in Vietnam and an ownership interest of 50 percent in an entity in the U.S.

In 2021, Ball sold its minority-owned investment in South Korea. In the first quarter of 2022, Ball sold its remaining equity method investment in Ball Metalpack for total consideration of $305 million. See Note 4 for further details of both transactions.

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	2022		2021

Operating leases:
Operating lease ROU asset	Other assets	$	443	$	420
Current operating lease liabilities	Other current liabilities		86		80
Noncurrent operating lease liabilities	Other liabilities		360		340
Finance leases:
Finance lease ROU assets, net	Property, plant and equipment, net		13		14
Current finance lease liabilities	Short-term debt and current portion of long-term debt		2		2
Noncurrent finance lease liabilities	Long-term debt		12		12

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15. Debt

Long-term debt consisted of the following:


	March 31,		December 31,
($ in millions)	2022		2021

Senior Notes
4.00% due November 2023	$	1,000	$	1,000
4.375%, euro denominated, due December 2023		775		796
0.875%, euro denominated, due March 2024		830		853
5.25% due July 2025		1,000		1,000
4.875% due March 2026		750		750
1.50%, euro denominated, due March 2027		609		625
2.875% due August 2030		1,300		1,300
3.125% due September 2031		850		850
Senior Credit Facility (at variable rates)
Term A loan due March 2024		593		593
U.S. dollar revolver due March 2024		600		—
Finance lease obligations		14		14
Other (including debt issuance costs)		(52)		(56)
		8,269		7,725
Less: Current portion		(4)		(3)
	$	8,265	$	7,722

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, 2022, taking into account outstanding letters of credit, $1.1 billion was available under the company’s long-term, revolving credit facilities. In addition to these facilities, the company had approximately $890 million of short-term uncommitted credit facilities available at March 31, 2022, of which $289 million was outstanding and due on demand. At December 31, 2021, the company had $12 million outstanding under short-term uncommitted credit facilities.

The fair value of long-term debt was estimated to be $8.2 and $8 billion at March 31, 2022 and December 31, 2021, respectively. 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, 2022, 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, 2022, and December 31, 2021, and it has met all debt payment obligations.

16. Taxes on Income

The company’s effective tax rate was 18.5 percent and 13.7 percent for the three months ended March 31, 2022 and 2021, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three months ended March 31, 2022, was reduced by 2.3 percentage points for share-based compensation, reduced by 1.5 percentage points for changes in deferred taxes on the investment in its Russian business, and increased by 1.3 percentage points for the sale of the Ball Metalpack equity method investment. 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 non-U.S. rate differences net of withholding tax, 2.6 percentage points for share-based compensation, and 2.4 percentage points for federal tax credits.

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17. Employee Benefit Obligations


	March 31,		December 31,
($ in millions)	2022		2021

Underfunded defined benefit pension liabilities	$	503	$	582
Less: Current portion		(21)		(21)
Long-term defined benefit pension liabilities		482		561
Long-term retiree medical liabilities		133		135
Deferred compensation plans		398		441
Other		34		68
	$	1,047	$	1,205

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


	Three Months Ended March 31,
	2022						2021
($ in millions)	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total

Ball-sponsored plans:
Service cost	$	22	$	3	$	25	$	21	$	3	$	24
Interest cost		13		13		26		13		9		22
Expected return on plan assets		(27)		(17)		(44)		(31)		(16)		(47)
Amortization of prior service cost		—		1		1		—		1		1
Recognized net actuarial loss		7		1		8		13		1		14
Total net periodic benefit cost	$	15	$	1	$	16	$	16	$	(2)	$	14

Non-service pension income of $9 million and $10 million for the three months ended March 31, 2022 and 2021, respectively, is included in selling, general, and administrative (SG&A) expenses in the unaudited condensed consolidated statement of earnings.

Contributions to the company’s defined benefit pension plans were $104 million for the first three months of 2022 compared to $162 million for the first three months of 2021, and such contributions are expected to be approximately $

Form: 10-Q

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