Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 2, 2023

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Table of Contents

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, 2023

or

 

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 October 30, 2023

Common Stock, without par value

BALL

NYSE

315,301,214 shares

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Large accelerated filer

Accelerated filer

Non-accelerated filer

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Table of Contents

Ball Corporation

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, 2023

INDEX

Page
Number

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements

1

Unaudited Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, 2023 and 2022

1

Unaudited Condensed Consolidated Statements of Comprehensive Earnings (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022

2

Unaudited Condensed Consolidated Balance Sheets at September 30, 2023, and December 31, 2022

3

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022

4

Notes to the Unaudited Condensed Consolidated Financial Statements

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

10

Note 6. Business Consolidation and Other Activities

11

Note 7. Supplemental Cash Flow Statement Disclosures

11

Note 8. Receivables, Net

12

Note 9. Inventories, Net

12

Note 10. Property, Plant and Equipment, Net

13

Note 11. Goodwill

13

Note 12. Intangible Assets, Net

13

Note 13. Other Assets

14

Note 14. Leases

14

Note 15. Debt

15

Note 16. Taxes on Income

15

Note 17. Employee Benefit Obligations

16

Note 18. Equity and Accumulated Other Comprehensive Earnings (Loss)

17

Note 19. Earnings and Dividends Per Share

19

Note 20. Financial Instruments and Risk Management

20

Note 21. Contingencies

24

Note 22. Indemnifications and Guarantees

26

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

38

PART II.

OTHER INFORMATION

39

Table of Contents

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)

2023

    

2022

    

2023

    

2022

Net sales

$

3,571

$

3,951

$

10,626

$

11,801

Costs and expenses

Cost of sales (excluding depreciation and amortization)

(2,894)

(3,275)

(8,655)

(9,736)

Depreciation and amortization

(173)

(157)

(509)

(510)

Selling, general and administrative

(132)

(159)

(428)

(506)

Business consolidation and other activities

(47)

163

(61)

(23)

(3,246)

(3,428)

(9,653)

(10,775)

Earnings before interest and taxes

325

523

973

1,026

Interest expense

(122)

(79)

(350)

(216)

Debt refinancing and other costs

(2)

Total interest expense

(122)

(79)

(350)

(218)

Earnings before taxes

203

444

623

808

Tax (provision) benefit

(2)

(38)

(79)

(139)

Equity in results of affiliates, net of tax

3

(12)

13

7

Net earnings

204

394

557

676

Net earnings attributable to noncontrolling interests

1

2

4

12

Net earnings attributable to Ball Corporation

$

203

$

392

$

553

$

664

Earnings per share:

Basic

$

0.64

$

1.25

$

1.76

$

2.09

Diluted

$

0.64

$

1.24

$

1.74

$

2.07

Weighted average shares outstanding: (000s)

Basic

314,983

314,054

314,596

317,296

Diluted

317,296

317,061

316,938

321,222

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)

    

2023

    

2022

    

2023

    

2022

Net earnings

$

204

$

394

$

557

$

676

Other comprehensive earnings (loss):

Currency translation adjustment

(40)

(203)

18

51

Pension and other postretirement benefits

(1)

(1)

8

1

Derivatives designated as hedges

(30)

(129)

14

(148)

Total other comprehensive earnings (loss)

(71)

(333)

40

(96)

Income tax (provision) benefit

11

31

(3)

30

Total other comprehensive earnings (loss), net of tax

(60)

(302)

37

(66)

Total comprehensive earnings

144

92

594

610

Comprehensive earnings attributable to noncontrolling interests

1

2

4

12

Comprehensive earnings attributable to Ball Corporation

$

143

$

90

$

590

$

598

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)

    

2023

    

2022

Assets

Current assets

Cash and cash equivalents

$

1,335

$

548

Receivables, net

2,059

2,594

Inventories, net

1,688

2,179

Other current assets

326

168

Total current assets

5,408

5,489

Noncurrent assets

Property, plant and equipment, net

7,264

7,053

Goodwill

4,222

4,235

Intangible assets, net

1,315

1,417

Other assets

1,723

1,715

Total assets

$

19,932

$

19,909

Liabilities and Equity

Current liabilities

Short-term debt and current portion of long-term debt

$

2,108

$

1,408

Accounts payable

3,294

4,383

Accrued employee costs

310

236

Other current liabilities

1,003

981

Total current liabilities

6,715

7,008

Noncurrent liabilities

Long-term debt

7,483

7,540

Employee benefit obligations

813

847

Deferred taxes

445

540

Other liabilities

468

447

Total liabilities

15,924

16,382

Equity

Common stock (682,896,369 shares issued - 2023; 682,144,408 shares issued - 2022)

1,304

1,260

Retained earnings

7,673

7,309

Accumulated other comprehensive earnings (loss)

(642)

(679)

Treasury stock, at cost (367,662,311 shares - 2023; 368,036,369 shares - 2022)

(4,397)

(4,429)

Total Ball Corporation shareholders' equity

3,938

3,461

Noncontrolling interests

70

66

Total equity

4,008

3,527

Total liabilities and equity

$

19,932

$

19,909

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)

    

2023

    

2022

Cash Flows from Operating Activities

Net earnings

$

557

$

676

Adjustments to reconcile net earnings to cash provided by (used in) operating activities:

Depreciation and amortization

509

510

Business consolidation and other activities

61

23

Deferred tax provision (benefit)

(87)

(23)

Pension contributions

(13)

(113)

Other, net

71

(165)

Changes in working capital components, net of dispositions

29

(1,132)

Cash provided by (used in) operating activities

1,127

(224)

Cash Flows from Investing Activities

Capital expenditures

(830)

(1,262)

Business dispositions, net of cash sold

748

Other, net

4

62

Cash provided by (used in) investing activities

(826)

(452)

Cash Flows from Financing Activities

Long-term borrowings

1,700

3,401

Repayments of long-term borrowings

(913)

(2,446)

Net change in short-term borrowings

(135)

463

Acquisitions of treasury stock

(3)

(617)

Common stock dividends

(189)

(191)

Other, net

30

13

Cash provided by (used in) financing activities

490

623

Effect of exchange rate changes on cash

(30)

Change in cash, cash equivalents and restricted cash

791

(83)

Cash, cash equivalents and restricted cash - beginning of period

558

579

Cash, cash equivalents and restricted cash - end of period

$

1,349

$

496

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 2022 Annual Report on Form 10-K filed on February 21, 2023, pursuant to the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2022 (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 revenues 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

Global Economic Environment

Recent data has indicated continued high inflation in the regions where we operate. Current and future inflationary effects may continue to be impacted by, among other things, supply chain disruptions, governmental stimulus or fiscal policies, changes in interest rates, and changing demand for certain goods and services as recovery from the COVID-19 pandemic continues. We cannot predict with any certainty the impact that rising interest rates, a global or any regional recession, or higher inflation may have on our customers or suppliers. Additionally, we are unable to predict the potential effects that any future pandemic, or the continuation or escalation of global conflicts, including the conflict between Russia and Ukraine and the rising instability in the Middle East, and related sanctions or market disruptions, may have on our business. It remains uncertain how long any of these conditions may last or how severe any of them may become.

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 the current global economic environment 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 September 30, 2023, which could impact the company’s ability to satisfy hedge accounting requirements and result in the recognition of income and/or expenses.

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Table of Contents

In addition to the above potential impacts on the estimates used in preparing the consolidated financial statements, the current global economic environment 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 the current global economic environment 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

Recently Adopted Accounting Standards

Supplier Finance Programs

In 2022, new guidance was issued by the FASB with the goal of enhancing transparency around supplier finance programs. On January 1, 2023, Ball adopted all required disclosures effective for 2023, on a retrospective basis. The company will adopt the rollforward disclosure requirements, on a prospective basis, when they become effective in 2024.

The company has several regional supplier finance programs, all of which have substantially similar characteristics, with various financial institutions that act as the paying agent for certain payables of the company. The company establishes these programs through agreements with the financial institutions to enable more efficient payment processing to our suppliers while also providing our suppliers a potential source of liquidity to the extent they enter into a factoring agreement with the financial institutions. Our suppliers’ participation in the programs is voluntary, and the company is not involved in negotiations of the suppliers’ arrangements with the financial institutions to sell their receivables, and our rights and obligations to our suppliers are not impacted by our suppliers’ decisions to sell amounts under these programs. Under these supplier finance programs, the company pays the financial institutions the stated amount of confirmed invoices from its participating suppliers on the original maturity dates of the invoices, which vary based on the negotiated terms with each supplier. All payment terms are short-term in nature and are not dependent on whether the suppliers participate in the supplier finance programs or if the suppliers elect to receive early payment from the financial institutions. Our supplier finance programs do not include any of the following: guarantees to the financial institutions, assets pledged as securities or interest accruing on the obligation prior to the due date.

Based on the review of the facts and circumstances of our supplier finance programs, including but not limited to those noted above, the company has concluded that the characteristics of the obligations due under our supplier finance programs have not changed and remain those of standard accounts payables, rather than indicative of debt.

The amount of obligations outstanding that the company confirmed as valid to the financial institutions under the company's programs was $512 million and $930 million at September 30, 2023 and December 31, 2022, respectively. These amounts are classified within accounts payable on the unaudited condensed consolidated balance sheets, and the associated payments are reflected in the cash flows from operating activities section of the unaudited condensed consolidated statements of 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, as well as Egypt and Turkey, that manufacture and sell aluminum beverage containers throughout those countries. Ball sold its former operations located in Russia during the third quarter of 2022. See Note 4 for further details. Ball’s operations and results of its former Russian aluminum beverage packaging business are included in the results of the beverage packaging, EMEA, business through the date of the disposal in the third quarter of 2022.

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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. In the third quarter of 2023, Ball entered into a Stock Purchase Agreement with BAE Systems, Inc., to sell all of the outstanding equity interests in Ball’s aerospace business to BAE. See Note 4 for further details.

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 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 the first quarter of 2022, Ball sold its remaining equity method investment in Ball Metalpack. Refer to Note 4 for additional details.

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Table of Contents

Summary of Business by Segment

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions)

    

2023

    

2022

    

2023

    

2022

Net sales

Beverage packaging, North and Central America

$

1,541

$

1,800

$

4,582

$

5,184

Beverage packaging, EMEA

902

1,031

2,656

3,106

Beverage packaging, South America

489

466

1,344

1,494

Aerospace

460

477

1,467

1,471

Reportable segment sales

3,392

3,774

10,049

11,255

Other

179

177

577

546

Net sales

$

3,571

$

3,951

$

10,626

$

11,801

Comparable operating earnings

Beverage packaging, North and Central America

$

196

$

205

$

554

$

543

Beverage packaging, EMEA

103

82

274

311

Beverage packaging, South America

61

67

141

197

Aerospace

46

47

160

126

Reportable segment comparable operating earnings

406

401

1,129

1,177

Reconciling items

Other (a)

(8)

7

(26)

Business consolidation and other activities

(47)

163

(61)

(23)

Amortization of acquired intangibles

(34)

(33)

(102)

(102)

Earnings before interest and taxes

325

523

973

1,026

Interest expense

(122)

(79)

(350)

(216)

Debt refinancing and other costs

(2)

Total interest expense

(122)

(79)

(350)

(218)

Earnings before taxes

$

203

$

444

$

623

$

808

(a) Includes undistributed corporate expenses, net, of $18 million and $25 million for the three months ended September 30, 2023 and 2022, respectively, and $60 million and $73 million for the nine months ended September 30, 2023 and 2022, respectively.

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

4.     Acquisitions and Dispositions

Aerospace

In the third quarter of 2023, Ball entered into a Stock Purchase Agreement (Agreement) with BAE Systems, Inc. (BAE) and, for the limited purposes set forth therein, BAE Systems plc, to sell all of the outstanding equity interests in Ball’s aerospace business to BAE for a purchase price of approximately $5.6 billion in cash, which sale, if consummated, would result in an estimated $4.5 billion in after-tax proceeds and an estimated pre-tax gain in excess of $4.5 billion. These estimates are subject to customary closing adjustments to the purchase price under the terms of the Agreement. The closing of the transaction is subject to the approvals, clearances, or waiting period expirations or terminations required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and from the Committee on Foreign Investment in the United States, among other regulatory approvals, and other customary closing conditions. As of September 30, 2023, we are in the process of seeking such regulatory approvals, clearances, and waiting period expirations or terminations but cannot yet assert that it is probable that such approvals, clearances, and waiting period expirations or terminations will be obtained or the other closing conditions will be satisfied. Due to these conditions, as of September 30, 2023, Ball’s aerospace business does not meet the requirements for held for sale presentation in Ball’s consolidated financial statements.

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Table of Contents

Russia

In the first quarter of 2022, the company announced that it was pursuing the sale of its aluminum beverage packaging business located in Russia. In the second quarter of 2022, Ball experienced deteriorating conditions and determined this constituted a triggering event for its Russian long-lived asset group. As a result, Ball recorded an impairment loss of $435 million during the second quarter of 2022. In the third quarter of 2022, the company completed the sale of its Russian aluminum beverage packaging business for total cash consideration of $530 million and recorded a gain on disposal of $222 million. When considering the impairment loss recorded during the second quarter 2022 of $435 million, the impairment loss net of gain on the sale of the Russian business was $213 million for the nine months ended September 30, 2022, and for the year ended December 31, 2022. The impairment loss in the second quarter and the gain on sale in the third quarter were recorded in business consolidation and other activities in the unaudited condensed consolidated statements of earnings. Cash proceeds from the sale of $455 million, net of the cash on the disposed business, were received in the third quarter of 2022 and were presented in business dispositions, net of cash sold, in the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2022, and in the consolidated statements of cash flows for the year ended December 31, 2022.

In connection with this sale, Ball entered into a call option agreement that is contingently exercisable between September 2025 and September 2032, and if it becomes exercisable, will provide Ball the right to repurchase the business subject to the status of sanctions and certain other contingencies outside of Ball’s control. The option price, if exercised, would provide a customary compounded annual rate of return to the purchaser based on defined cash flows associated with the purchase and operation of the business from the purchase date through the exercise date of the option. Because the option strike price could limit the residual returns generated by the purchaser, if exercised, the option represents a variable interest retained by Ball in the Russian business. Based on the terms of the option relative to current market conditions in Russia, we determined that the option had an immaterial value at the date of sale. Neither the option nor any other terms in the sales agreement resulted in Ball being the primary beneficiary of the business and, therefore, it was deconsolidated.

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 $298 million, all of which was received in cash in the first quarter of 2022. Ball’s carrying value of the investment before the sale was zero; therefore, a gain from the sale of $298 million was 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 statements 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.

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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 September 30,

Nine Months Ended September 30,

($ in millions)

Point in Time

Over Time

Total

 

Point in Time

Over Time

Total

2023

$

632

$

2,939

$

3,571

$

1,736

$

8,890

$

10,626

2022

725

3,226

3,951

2,031

9,770

11,801

Contract Balances

The company did not have any contract assets at either September 30, 2023, or December 31, 2022. 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, 2022

$

316

$

12

Increase (decrease)

(9)

(3)

Balance at September 30, 2023

$

307

$

9

During the nine months ended September 30, 2023, contract liabilities decreased by $12 million, which is net of cash received of $734 million and amounts recognized as sales of $746 million, the majority of which related to current contract liabilities. The amount of sales recognized in the nine months ended September 30, 2023, that was included in the opening contract liabilities balance, was $316 million, all of which related to current contract liabilities. Current contract liabilities are classified within other current liabilities on the unaudited condensed consolidated balance sheets and noncurrent contract liabilities are classified within other liabilities.

The company also recorded additional net sales of $2 million and $17 million in the three and nine months ended September 30, 2023, respectively, and a reduction in net sales of $5 million and no impact in the three and nine months ended September 30, 2022, 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 September 30, 2023

$

1,378

$

1,473

$

2,851

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6.     Business Consolidation and Other Activities

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)

    

2023

    

2022

    

2023

    

2022

Beverage packaging, North and Central America

$

(10)

$

(36)

$

(27)

$

(37)

Beverage packaging, EMEA

1

214

6

(225)

Beverage packaging, South America

(6)

(9)

(7)

(31)

Other

(32)

(6)

(33)

270

$

(47)

$

163

$

(61)

$

(23)

2023

The charges of $47 million and $61 million during the three and nine months ended September 30, 2023, respectively, were primarily composed of transaction costs related to the potential sale of the company’s aerospace business and facility closure costs. See Note 4 for further details on the potential sale. The charges for the three and nine months ended September 30, 2023, also include costs recorded to reflect the damage to assets, less anticipated insurance receipts, incurred as a result of the fire at the company’s Verona, Virginia extruded aluminum slug manufacturing facility. During future periods, the company anticipates receiving additional insurance proceeds for replacement costs and business interruption coverage which will be recorded as a gain.

2022

During the three months ended September 30, 2022, the income of $163 million primarily related to the company completing the sale of its Russian aluminum beverage packaging business and recording a gain on disposal of $222 million, partially offset by facility closure costs of $42 million. The charges of $23 million during the nine months ended September 30, 2022, primarily related to the impairment losses on Russia’s long-lived asset group net of gain on the sale of $213 million, facility closure costs of $42 million and a charge related to a donation of $30 million to The Ball Foundation, partially offset by a gain of $298 million for the sale of Ball’s remaining equity method investment in Ball Metalpack. See Note 4 for further details on the Russia and Ball Metalpack transactions.

7.

Supplemental Cash Flow Statement Disclosures

September 30,

($ in millions)

2023

    

2022

    

Beginning of period:

    

Cash and cash equivalents

$

548

    

$

563

Current restricted cash (included in other current assets)

10

    

16

Total cash, cash equivalents and restricted cash

$

558

    

$

579

    

End of period:

    

Cash and cash equivalents

$

1,335

    

$

473

Current restricted cash (included in other current assets)

14

    

23

Total cash, cash equivalents and restricted cash

$

1,349

    

$

496

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 unaudited condensed consolidated statements of cash flows. A summary of the PP&E acquired but not yet paid for is as follows:

September 30,

($ in millions)

2023

    

2022

    

Beginning of period:

    

PP&E acquired but not yet paid

$

392

    

$

540

End of period:

    

PP&E acquired but not yet paid

$

207

    

$

461

8.     Receivables, Net

September 30,

December 31,

($ in millions)

2023

    

2022

Trade accounts receivable

$

883

$

1,373

Unbilled receivables

789

746

Less: Allowance for doubtful accounts

(12)

(12)

Net trade accounts receivable

1,660

2,107

Other receivables

399

487

$

2,059

$

2,594

The company has entered into several regional committed and uncommitted accounts receivable factoring programs with various financial institutions for certain receivables of the company. The programs are accounted for as true sales of the receivables and had combined limits of approximately $2.00 billion and $2.04 billion at September 30, 2023, and December 31, 2022, respectively. A total of $162 million and $488 million were available for sale under these programs as of September 30, 2023, and December 31, 2022, respectively. The company has recorded expense related to its factoring programs of $30 million and $17 million for the three months ended September 30, 2023 and 2022, respectively, and $72 million and $41 million for the nine months ended September 30, 2023 and 2022, respectively, and has presented these amounts in selling, general and administrative in its unaudited condensed consolidated statements of earnings.

Other receivables include income and indirect tax receivables, aluminum scrap sale receivables and other miscellaneous receivables.

9.     Inventories, Net

September 30,

December 31,

($ in millions)

    

2023

    

2022

Raw materials and supplies

$

1,251

$

1,541

Work-in-process and finished goods

537

729

Less: Inventory reserves

(100)

(91)

$

1,688

$

2,179

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10.     Property, Plant and Equipment, Net

September 30,

December 31,

($ in millions)

    

2023

    

2022

Land

$

217

$

187

Buildings

2,349

2,159

Machinery and equipment

7,916

7,277

Construction-in-progress

1,209

1,504

11,691

11,127

Accumulated depreciation

(4,427)

(4,074)

$

7,264

$

7,053

Depreciation expense amounted to $133 million and $11