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

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

For the ~~quarterly period ended~~ Quarterly Period Ended September 30, ~~2017~~2019


☐	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.)

10 Longs Peak Drive, P.O. Box 5000

Broomfield, CO80021-2510

(Address of registrant’s principal executive office)

80021-2510

(Zip Code)

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

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

Class		Trading Symbol		Name of Exchange		Outstanding at October 31, 2019
Common Stock, without par value		BLL		NYSE		327,129,526 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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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 ☐(~~Do not check if a smaller reporting company~~)◻	Smaller reporting ~~company☐~~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 ☒⌧

~~Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.~~

~~Class~~		~~Outstanding at October 31, 2017~~
~~Common Stock, without par value~~		~~350,055,645 shares~~

Table of Contents

Ball Corporation

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, ~~2017~~2019

INDEX

~~INDEX~~

		Page Number

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	31

	Unaudited Condensed Consolidated Statements of Comprehensive Earnings (Loss) for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	42

	Unaudited Condensed Consolidated Balance Sheets at September 30, ~~2017,~~2019, and December 31, ~~2016~~2018	53

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	64

	Notes to the Unaudited Condensed Consolidated Financial Statements	75

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5643

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6752

Item 4.	Controls and Procedures	6853

PART II.	OTHER INFORMATION	7153

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)	2019		2018		2019		2018

Net sales	$	2,953	$	2,946	$	8,755	$	8,832

Costs and expenses
Cost of sales (excluding depreciation and amortization)		(2,363)		(2,362)		(7,044)		(7,083)
Depreciation and amortization		(169)		(171)		(510)		(529)
Selling, general and administrative		(90)		(113)		(328)		(352)
Business consolidation and other activities		(133)		(32)		(147)		(131)
		(2,755)		(2,678)		(8,029)		(8,095)

Earnings before interest and taxes		198		268		726		737

Interest expense		(79)		(76)		(237)		(226)
Debt refinancing and other costs		—		—		(4)		(1)
Total interest expense		(79)		(76)		(241)		(227)

Earnings before taxes		119		192		485		510
Tax (provision) benefit		(32)		(140)		(73)		(220)
Equity in results of affiliates, net of tax		5		7		(6)		14
Net earnings		92		59		406		304
Net (earnings) loss attributable to noncontrolling interests		—		—		—		(1)
Net earnings attributable to Ball Corporation	$	92	$	59	$	406	$	303


Earnings per share:
Basic	$	0.28	$	0.17	$	1.22	$	0.87
Diluted	$	0.27	$	0.17	$	1.19	$	0.86


Weighted average shares outstanding: (000s)
Basic		331,148		342,982		332,726		347,113
Diluted		340,632		349,709		341,702		353,755

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions, except per share amounts)

2017

2016

2017

2016

Net sales

$
2,908

$
2,752

$
8,236

$
6,537

Costs and expenses

Cost of sales (excluding depreciation and amortization)

(2,338)

(2,275)

(6,583)

(5,288)

Depreciation and amortization

(162)

(147)

(539)

(299)

Selling, general and administrative

(127)

(135)

(398)

(348)

Business consolidation and other activities

(157)

(63)

(253)

(302)

(2,784)

(2,620)

(7,773)

(6,237)

Earnings before interest and taxes

124

132

463

300

Interest expense

(74)

(80)

(216)

(159)

Debt refinancing and other costs

—

(2)

(1)

(108)

Total interest expense

(74)

(82)

(217)

(267)

Earnings before taxes

50

50

246

33

Tax (provision) benefit

(4)

(23)

(48)

174

Equity in results of affiliates, net of tax

5

7

23

6

Net earnings

51

34

221

213

Net earnings attributable to noncontrolling interests

(3)

(3)

(6)

(3)

Net earnings attributable to Ball Corporation

$
48

$
31

$
215

$
210

Earnings per share: (a)

Basic

$
0.14

$
0.09

$
0.61

$
0.69

Diluted

$
0.13

$
0.09

$
0.60

$
0.67

Weighted average shares outstanding: (000s) (a)

Basic

350,327

349,128

350,481

305,756

Diluted

358,556

355,404

358,492

312,176

~~(a)~~

~~Amounts in 2016 have been retrospectively adjusted for the two-for-one stock split that was effective on May 16, 2017.~~

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 September 30,

Nine Months Ended September 30,

($ in millions)

2017

2016

2017

2016

Net earnings

$
51

$
34

$
221

$
213

Other comprehensive earnings (loss):

Foreign currency translation adjustment

3

(17)

16

(17)

Pension and other postretirement benefits

19

5

1

68

Effective financial derivatives

(7)

(17)

9

(6)

Total other comprehensive earnings (loss)

15

(29)

26

45

Income tax (provision) benefit

(20)

5

(9)

(22)

Total other comprehensive earnings (loss), net of tax

(5)

(24)

17

23

Total comprehensive earnings

46

10

238

236

Comprehensive (earnings) loss attributable to noncontrolling interests

(4)

(3)

(7)

(3)

Comprehensive earnings (loss) attributable to Ball Corporation

$
42

$
7

$
231

$
233


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2019		2018		2019		2018

Net earnings	$	92	$	59	$	406	$	304

Other comprehensive earnings (loss):
Foreign currency translation adjustment		50		(47)		136		(157)
Pension and other postretirement benefits		20		49		27		68
Derivatives designated as hedges		16		(28)		47		(48)
Total other comprehensive earnings (loss)		86		(26)		210		(137)
Income tax (provision) benefit		(5)		(7)		(12)		(7)
Total other comprehensive earnings (loss), net of tax		81		(33)		198		(144)

Total comprehensive earnings (loss)		173		26		604		160
Comprehensive (earnings) loss attributable to noncontrolling interests		—		—		—		(1)
Comprehensive earnings (loss) attributable to Ball Corporation	$	173	$	26	$	604	$	159

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30,		December 31,
($ in millions)	2019		2018

Assets
Current assets
Cash and cash equivalents	$	483	$	721
Receivables, net		1,957		1,802
Inventories, net		1,180		1,271
Other current assets		209		146
Total current assets		3,829		3,940
Noncurrent assets
Property, plant and equipment, net		4,320		4,542
Goodwill		4,371		4,475
Intangible assets, net		2,027		2,188
Other assets		1,690		1,409
Total assets	$	16,237	$	16,554

Liabilities and Equity
Current liabilities
Short-term debt and current portion of long-term debt	$	361	$	219
Accounts payable		2,658		3,095
Accrued employee costs		256		289
Other current liabilities		498		492
Total current liabilities		3,773		4,095
Noncurrent liabilities
Long-term debt		6,623		6,510
Employee benefit obligations		1,383		1,455
Deferred taxes		602		645
Other liabilities		391		287
Total liabilities		12,772		12,992

Equity
Common stock (676,051,079 shares issued - 2019; 673,236,720 shares issued - 2018)		1,177		1,157
Retained earnings		5,694		5,341
Accumulated other comprehensive earnings (loss)		(716)		(835)
Treasury stock, at cost (346,854,718 shares - 2019; 337,978,571 shares - 2018)		(2,790)		(2,205)
Total Ball Corporation shareholders' equity		3,365		3,458
Noncontrolling interests		100		104
Total equity		3,465		3,562
Total liabilities and equity	$	16,237	$	16,554

September 30,

December 31,

($ in millions)

2017

2016

Assets

Current assets

Cash and cash equivalents

$
556

$
597

Receivables, net

1,793

1,491

Inventories, net

1,433

1,413

Other current assets

148

152

Total current assets

3,930

3,653

Noncurrent assets

Property, plant and equipment, net

4,525

4,387

Goodwill

4,908

5,095

Intangible assets, net

2,490

1,934

Other assets

1,150

1,104

Total assets

$
17,003

$
16,173

Liabilities and Shareholders' Equity

Current liabilities

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

$
452

$
222

Accounts payable

2,419

2,033

Accrued employee costs

298

315

Other current liabilities

609

399

Total current liabilities

3,778

2,969

Noncurrent liabilities

Long-term debt

7,104

7,310

Employee benefit obligations

1,406

1,497

Deferred taxes

655

439

Other liabilities

422

417

Total liabilities

13,365

12,632

Shareholders' equity

Common stock (670,349,807 shares issued - 2017; 668,504,350 shares issued - 2016) (a)

1,072

1,038

Retained earnings

4,863

4,739

Accumulated other comprehensive earnings (loss)

(925)

(941)

Treasury stock, at cost (320,498,748 shares - 2017; 318,774,098 shares - 2016) (a)

(1,481)

(1,401)

Total Ball Corporation shareholders' equity

3,529

3,435

Noncontrolling interests

109

106

Total shareholders' equity

3,638

3,541

Total liabilities and shareholders' equity

$
17,003

$
16,173

~~(a)~~

~~Amounts in 2016 have been retrospectively adjusted for the two-for-one stock split that was effective on May 16, 2017.~~

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
($ in millions)	2019		2018

Cash Flows from Operating Activities
Net earnings	$	406	$	304
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization		510		529
Business consolidation and other activities		147		131
Deferred tax provision (benefit)		(16)		103
Other, net		32		72
Changes in working capital components, net of dispositions		(423)		(112)
Cash provided by (used in) operating activities		656		1,027
Cash Flows from Investing Activities
Capital expenditures		(425)		(616)
Business dispositions, net of cash sold		(50)		551
Other, net		26		50
Cash provided by (used in) investing activities		(449)		(15)
Cash Flows from Financing Activities
Long-term borrowings		1,098		1,475
Repayments of long-term borrowings		(906)		(1,531)
Net change in short-term borrowings		131		(189)
Proceeds from issuances of common stock, net of shares used for taxes		16		25
Acquisitions of treasury stock		(614)		(464)
Common stock dividends		(133)		(104)
Other, net		(10)		(13)
Cash provided by (used in) financing activities		(418)		(801)

Effect of exchange rate changes on cash		(20)		(59)

Change in cash, cash equivalents and restricted cash		(231)		152
Cash, cash equivalents and restricted cash - beginning of period		728		459
Cash, cash equivalents and restricted cash - end of period	$	497	$	611

Nine Months Ended September 30,
($ in millions)

2017

2016

Cash Flows from Operating Activities

Net earnings

$
221

$
213
Adjustments to reconcile net earnings to cash provided by (used in) continuing operating activities:

Depreciation and amortization

539

299
Business consolidation and other activities

253

302
Deferred tax provision (benefit)

—

(165)
Other, net

(229)

78
Changes in working capital components, net of acquisitions and dispositions (a)

(37)

(1,160)
Cash provided by (used in) operating activities

747

(433)
Cash Flows from Investing Activities

Capital expenditures

(404)

(398)
Business acquisitions, net of cash acquired

—

(3,379)
Business dispositions, net of cash sold

31

2,941
Decrease in restricted cash

—

1,966
Settlement of Rexam acquisition related derivatives

—

(252)
Other, net

3

2
Cash provided by (used in) investing activities

(370)

880
Cash Flows from Financing Activities

Long-term borrowings

440

4,370
Repayments of long-term borrowings

(909)

(4,348)
Net change in short-term borrowings

220

156
Proceeds from issuances of common stock, net of shares used for taxes

18

38
Acquisitions of treasury stock

(103)

(98)
Common stock dividends

(93)

(60)
Other, net

(2)

(15)
Cash provided by (used in) financing activities

(429)

43

Effect of exchange rate changes on cash

11

(69)

Change in cash and cash equivalents

(41)

421
Cash and cash equivalents - beginning of period

597

224
Cash and cash equivalents - end of period

$
556

$
645

~~(a)~~

~~Includes payments of costs associated with the acquisition of Rexam and the sale of the Divestment Business.~~

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

1.1. 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 ~~accounting principles~~ generally accepted ~~in the United States of America (U.S. GAAP),~~accounting principles, have been condensed or omitted for this quarterly presentation.

Results of operations for the periods shown are not necessarily indicative of results ~~expected~~ for the ~~full~~ year, particularly in view of the seasonality in ~~our~~the packaging segments and the variability of contract ~~revenues~~sales in the company’s aerospace ~~segment and the acquisition of Rexam PLC (Rexam) and divestiture of certain assets and liabilities of the combined business (the Divestment Business) on June 30, 2016.~~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 2018 Annual Report on Form 10-K filed on ~~March 2, 2017,~~February 22, 2019, pursuant to ~~Section 13 of~~ the Securities Exchange Act of 1934 for the fiscal year ended December 31, ~~2016~~2018 (annual report).

The preparation of financial statements in conformity with ~~U.S. GAAP~~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 ~~revenues~~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 necessary to fairly state the results of the periods presented.

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

~~Revision~~

2. Accounting Pronouncements

Recently Adopted Accounting Standards

New Lease Accounting Guidance

In February 2016, lease accounting guidance was issued which, for operating leases, requires a lessee to recognize a right-of-use (ROU) asset and a lease liability. The guidance also requires a lessee to recognize a single lease cost, calculated so that the cost of the ~~Third Quarter 2016 Unaudited Condensed Consolidated Financial Statements~~

~~During~~lease is allocated over the ~~third~~lease term, generally on a straight line basis. On January 1, 2019, Ball adopted the new guidance and ~~fourth quarters of 2016, Ball identified errors in~~all related amendments (the new lease standard), applying the ~~determination of the tax basis for the gain on the sale of the Divestment business, the release of deferred taxes related~~modified retrospective method to the acquisition of Rexam for the step-up of inventory value, the amount of gain reported on the sale of the Divestment Business, payroll taxes for compensation arrangements associated with the Rexam acquisition, and net sales and cost of salesall contracts that were ~~recorded gross instead~~not completed as of ~~net~~January 1, 2019. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those prior periods.

As part of adopting the ~~consolidated statement of earnings. The corrections of these errors impacted~~new lease standard, Ball has made the unaudited condensed consolidated financial statements for the second and third quarters of 2016. The company assessed the applicable guidance issued by the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) and concluded these misstatements were not material, individually or in the aggregate, to Ball’s unaudited condensed consolidated financial statements for the aforementioned interim periods. Accordingly, the correction of these immaterial errors was reflected in the quarterly unaudited financial data included within our 2016 annual report. These revisions have been reflected in the comparative 2016 condensed consolidated financial statements.following elections:

●

To carry forward the historical lease determination and classification conclusions as established under the old standard, and not reassess initial direct costs for existing leases;

●

To carry forward its historical accounting treatment for land easements on existing agreements;

●

Not to apply the balance sheet recognition requirements of the new lease standard to leases with a term of one year or less (short-term leases); and

●

For all classes of underlying assets, to account for non-lease components of a contract as part of the single lease component to which they are related.

The following table reconciles the amounts as previously reported in the three and nine months ended September 30, 2016, unaudited condensed consolidated financial statements to the corresponding revised amounts presented herein:

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

($ in millions, except per share amounts)

Three Months Ended September 30, 2016

Nine Months Ended September 30, 2016
2016

As Previously Reported

Adjustments (a)

As Revised

As Previously Reported

Adjustments (a)

As Revised
Net sales

$
2,815

$
(63)

$
2,752

$
6,600

$
(63)

$
6,537
Cost of sales (excluding depreciation and amortization)

(2,338)

63

(2,275)

(5,351)

63

(5,288)
Business consolidation and other activities

(79)

16

(63)

(319)

17

(302)
Earnings before interest and taxes

116

16

132

283

17

300
Earnings before taxes

34

16

50

16

17

33
Tax (provision) benefit

(38)

15

(23)

191

(17)

174
Net earnings

3

31

34

213

—

213
Net earnings attributable to Ball Corporation

—

31

31

210

—

210

Basic earnings per share (b)

—

0.09

0.09

0.69

—

0.69
Diluted earnings per share (b)

—

0.09

0.09

0.67

—

0.67

~~(a)~~

~~The company revised the amounts originally reported for the third quarter of 2016, for the following items:~~

Reduced net sales and cost of sales (excluding depreciation and amortization) by $63 million to present net sales and cost of sales on a net basis associated with intercompany and transactions where the company is acting as an agent.

Reversed $13 million of expense in business consolidation and other activities for payroll tax obligations associated with compensation arrangements for the Rexam acquisition that should have been accrued upon the change of control in the second quarter of 2016. The company identified this error during the third quarter of 2016 and recorded and disclosed the correction in the third quarter of 2016 as an out-of-period adjustment.

Reversed a $3 million charge recorded to the gain on the sale of the Divestment Business in the business consolidation and other activities that was originally recorded in the third quarter of 2016. The charge was to write off an asset that was sold in the Divestment Business.

Recorded a $16 million tax benefit associated with the release of deferred taxes related to the acquisition of Rexam for the step-up of inventory value that flowed through to cost of sales in the third quarter of 2016 and $1 million of tax expense for the tax effects of the adjustments above.

The ~~company revised~~adoption of the ~~amounts originally reported for the first nine months of 2016, for~~new lease standard resulted in the following ~~items:~~impacts on our unaudited consolidated balance sheets:


($ in millions)	Balance at December 31, 2018		Adjustments Due to Adoption		Balance at January 1, 2019

Assets:
Other current assets	$	140	$	(1)	$	139
Operating lease right-of-use assets (a)		—		244		244
Other assets		1,409		(25)		1,384

Liabilities:
Other current liabilities	$	492	$	(3)	$	489
Current operating lease liabilities (b)		—		53		53
Other liabilities		287		(14)		273
Noncurrent operating lease liabilities (b)		—		182		182

(a)

Operating lease right-of-use assets are recognized within other assets in Ball’s unaudited condensed consolidated balance sheets.

(b)

~~Recorded $17 million of additional net gain on the sale of the Divestment Business~~Current and noncurrent operating lease liabilities are recognized within other current liabilities and other liabilities, respectively, in business consolidation and other activities for assets received by the buyer that should have been included in the amount owed to the company and liabilities that should have been derecognized by the company at the date of sale, as well as other insignificant items.

Ball’s unaudited condensed consolidated balance sheets.

Recorded $30 million of additional tax expense associated with using an incorrect tax basis for the gain on the sale of the Divestment Business, a $16 million tax benefit associated with the release of deferred taxes related to the acquisition of Rexam for the step-up of inventory value that flowed through to cost of sales in the third quarter of 2016 and $3 million of tax expense for the tax effects of the adjustments noted above.

~~(b)~~

~~Amounts in 2016 have been retrospectively adjusted for the two-for-one stock split that was effective on May 16, 2017.~~

~~2. Accounting Pronouncements~~

~~Recently Adopted Accounting Standards~~

In January 2017, amendments to existing accounting guidance were issued simplifying an entity’s subsequent goodwill measurement by eliminating Step 2, which requires a hypothetical purchase price allocation, from its annual or interim goodwill impairment test. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

~~goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount~~Ball’s adoption of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is required to be applied prospectively on January 1, 2020, and early adoption is permitted. The company elected to early adopt this guidance effective January 1, 2017, and it did not havenew lease standard had an immaterial impact on Ball’s results of operations in the ~~company’s~~ unaudited condensed consolidated ~~financial statements.~~statements of earnings; an immaterial impact on Ball’s cash flows from operating, financing, and investing activities in the unaudited condensed consolidated statements of cash flows and 0 impact on Ball’s opening retained earnings balance. Ball’s accounting for finance leases remains substantially unchanged as a result of the adoption. See Note 14 for further details regarding Ball’s leases.

Stranded Tax Effects

In ~~March 2016, final~~February 2018, accounting guidance was issued ~~clarifying that~~to permit the ~~assessment~~reclassification from accumulated other comprehensive income to retained earnings of ~~whether~~stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act signed into law in December 2017. Ball adopted this guidance on January 1, 2019, and an ~~embedded contingent put or call option is clearly and closely~~election was made to reclassify on the first day of the period of adoption. The total tax amount reclassified was $79 million. Remaining stranded tax amounts in accumulated other comprehensive income, which are not related to the debt host only requires an analysis of the four-step decision sequence outlined in the accounting standards codification. Consequently, when a contingent put or call option embedded in a debt instrument wouldU.S. Tax Cuts and Jobs Act, are not significant and will be evaluated for possible separate accounting as a derivative instrument, the nature of the exercise contingency would be disregarded. This guidance was applied on a modified retrospective basis on January 1, 2017, and did not have an impact on the company’s unaudited condensed consolidated financial statements.

In March 2016, final accounting guidance was issued eliminating the requirement to retrospectively apply the equity method in previous periods when an investor initially obtains significant influence over an investee. The new guidance requires the investor to apply the equity method prospectively from the date the investment qualifies for the equity method. The investor will add the carrying value of the existing investmentreclassified to the ~~cost~~income statement when the activity leading to the deferral of ~~the additional investment to determine the initial cost basis of the equity method investment. This guidance was applied prospectively on January 1, 2017,~~gains and ~~did not have a material impact on the company’s unaudited condensed consolidated financial statements.~~losses has ceased in full.

In March 2016, amendments to existing accounting guidance were issued to simplify various aspects related to how share-based payments are accounted for and presented in the consolidated financial statements. The company adopted these amendments on January 1, 2017, as discussed below, which did not have a material impact on the company’s unaudited condensed consolidated financial statements.

All excess tax benefits and tax deficiencies that were previously recognized in common stock are now recognized as income tax provisions (benefits) in the income statement as a discrete item. As required, this change was applied prospectively for settlements occurring after the adoption of the guidance on January 1, 2017.

Any prior period excess tax benefits that did not reduce taxes payable in the period in which they arose were required to be recorded on a modified retrospective basis, with a cumulative effect adjustment to opening retained earnings. However, the company was able to reduce taxes payable for all previous excess tax benefits and, therefore, was not required to record a cumulative effect adjustment.

The company elected to use a prospective approach to report all tax-related cash flows resulting from share-based payments as operating activities on the statement of cash flows and, therefore, no adjustments were made to prior periods. Previously, excess tax benefits were reported as part of financing activities.

~~The company elected to account for forfeitures as they occur. No cumulative effect adjustment was required as the amount calculated was immaterial.~~

In March 2016, accounting guidance was issued regarding the effect of derivative contract novations on existing hedge accounting relationships. The amendments clarify that a change in the counterparty to a derivative instrument designated as a hedging instrument does not in and of itself require dedesignation of that hedging relationship, provided that all other hedge accounting criteria continue to be met. The guidance was applied prospectively on January 1, 2017, and it did not have a material impact on the company’s unaudited condensed consolidated financial statements.

New Accounting Guidance

Cloud Computing Arrangements

In August 2017, amendments to existing derivative and hedge accounting guidance were issued to simplify existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. The amendments will more closely align the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. This guidance will be effective for annual reporting periods beginning after December 15, 2018, ~~and early adoption is permitted. The company~~

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~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

is currently evaluating the new guidance, with intentions to early adopt in the fourth quarter of 2017. The company does not expect the amendments to have a material impact on its unaudited condensed consolidated financial statements.

In May 2017, amendments to existing accounting guidance were issued to provide clarity and reduce diversity in practice, cost and complexity when applying guidance in Topic 718, Stock Compensation, regarding modifications to the terms or conditions of a share-based payment award. The amendments specify that all changes to the terms and conditions of a share-based payment award will require an entity to apply modification accounting in Topic 718, unless all of the following are met: (1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified, (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. ~~This guidance will be effective for annual reporting periods beginning on January 1, 2018, and early adoption is permitted.~~ ~~The company does not expect the amendments to have a material impact on its consolidated financial statements, and the company has not elected to early adopt this new accounting standard.~~

~~In March 2017, amendments to existing accounting guidance were issued to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost,~~ which requires employers to report the service cost component in the same line item as other compensation costs arising from services rendered by the associated employees during the period. The other components of net periodic pension and benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments also permit only the service cost component of net benefit cost to be eligible for capitalization. This guidance is required to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component. Employers can elect a practical expedient that permits use of the amounts disclosed in its pension footnote for prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The guidance is effective for Ball on January 1, 2018, and early adoption is permitted. The company has not elected to early adopt the new standard and is currently assessing the impact this guidance will have on its consolidated financial statements.

~~In February 2017,~~ amendments to existing accounting guidance were issued to clarify the ~~scope of ASC Subtopic 610-20, Other Income−Gains and Losses from the Derecognition of Nonfinancial Assets and~~accounting for implementation costs related to ~~add~~cloud computing arrangements. The amendments specify that existing guidance for partial sales of nonfinancial assets. The guidance requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is consideredcapitalizing implementation costs incurred to ~~be in substance real estate. This guidance is required~~develop or obtain internal-use software also applies to ~~be applied on January 1, 2018, using a full retrospective approach or a modified retrospective approach and early adoption is permitted.~~ ~~The company has not elected to early adopt the new standard and is currently assessing the impact that the adoption of this new guidance will have on its consolidated financial statements~~.

In January 2017, amendments to existing accounting guidance were issued to further clarify the definition of a business in determining whether or not a company has acquired or sold a business. The amendments provide a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentratedcapitalizing implementation costs incurred in a ~~single identifiable asset or~~hosting arrangement that is a group of similar identifiable assets, the set is not a business. If the screen is not met, the amendments in this update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments also narrow the definition of the term “output” so that the term is consistent with how outputs are described in Topic 606.service contract. The guidance is ~~required to be applied prospectively~~effective for Ball on January 1, ~~2018,~~2020, and ~~early adoption~~ is ~~permitted. The company has~~ not ~~elected to early adopt the new standard and does not expect these amendments~~expected to have a material ~~impact~~effect on ~~its~~the company’s consolidated financial statements.

In November 2016, accounting guidance was issued that will require the statement of cash flows to explain the change in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. In addition, restricted cash and restricted cash equivalents will need to be included in a cash reconciliation of beginning-of-period and end-of-period

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

~~total amounts shown on the statement of cash flows.~~ ~~This guidance is required~~Financial Assets

Amendments to ~~be applied retrospectively on January 1, 2018.~~ The company expects there to be a material impact on its 2016 and 2015 statements of cash flows due to approximately $2 billion of cash received from the issuance of senior notes in December 2015 that the company elected to restrict in an acquisition escrow account. In July 2016, the funds in the escrow account were used to pay a portion of the cash component of the acquisition price of Rexam. The impacts on the company’s 2017 statement of cash flows are not expected to be material.

~~In October 2016, amendments to~~ existing ~~accounting~~ guidance were issued that will require entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, as opposed to when the asset is sold to an unrelated third party. The amendments also eliminate the exception for an intra-entity transfer of an asset other than inventory. This guidance is required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings on January 1, 2018. ~~The company is currently assessing the impact that the adoption of this new guidance will have on its consolidated financial statements~~.

~~In August~~in June 2016, ~~accounting guidance was issued addressing the following eight specific cash flow issues:~~

~~Debt prepayment or debt extinguishment costs~~

~~Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant~~followed by improvements and transition relief in ~~relation to the effective interest rate of the borrowing~~

~~Contingent consideration payments made after a business combination~~

~~Proceeds from the settlement of insurance claims~~

~~Proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies)~~

~~Distributions received from equity method investees~~

~~Beneficial interests in securitization transactions~~

~~Separately identifiable cash flows and application of the predominance principle~~

~~This guidance is required to be applied retrospectively on January 1,~~ 2018 and ~~the company~~ ~~does not expect the guidance to have a material impact on its consolidated financial statements~~.

~~In June 2016, amendments~~2019, requiring financial assets or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected when finalized. The allowance for credit losses is a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. This guidance ~~affects loans, debt securities,~~is expected to primarily affect Ball’s trade ~~receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables and any~~receivables; however, the guidance applies to other financial assets ~~not excluded from the scope that have the contractual right to receive cash.~~as well. The guidance ~~will be effective on January 1, 2020. The company~~ is ~~currently assessing the impact that the adoption of this new guidance will have on its consolidated financial statements.~~

In February 2016, lease accounting guidance was issued which, for operating leases, will require a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, on its balance sheet. The guidance also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. The guidance will be effective for Ball on January 1, 2019. The company is currently assessing the impact the adoption of this standard will have on its consolidated financial statements and it is expected that a material amount of lease assets and liabilities will be recorded on its consolidated balance sheet.

In January 2016, accounting guidance was issued on the classification and measurement of financial assets and liabilities (equity securities and financial liabilities) under the fair value option and the presentation and disclosure requirements for financial instruments. The guidance modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any related changes in fair value in net income unless the investments qualify for the new practicality exception. An exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under the guidance and, as such, these investments may be measured at cost. The guidance will be

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~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

~~effective on January 1, 2018.~~ ~~The company~~ ~~does not expect the guidance to have a material impact on its consolidated financial statements~~.

~~New Revenue Guidance~~

In May 2014, the FASB and International Accounting Standards Board jointly issued new revenue recognition guidance which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The new guidance contains a more robust framework for addressing revenue issues2020, and is intended to remove inconsistencies in existing guidance and improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB approved the deferral of the effective date of the new revenue recognition guidance by one year. The new standard is now effective for annual reporting periods beginning after December 15, 2017.

In March 2016, the principal versus agent guidance within the new revenue recognition standard was amended to clarify how an entity should identify the unit of accounting for the principal versus agent evaluation. The new standard requires an entity to determine whether it is a principal or an agent in a transaction in which another party is involved in providing goods or services to a customer by evaluating the nature of its promise to the customer. An entity is a principal and records revenue on a gross basis if it controls the promised good or service before transferring the good or service to the customer. An entity is an agent and records as revenue the net amount it retains for its agency services if its role is to arrange for another entity to provide the goods or services.

In May 2016, narrow scope amendments and practical expedients were issued to clarify the new revenue recognition standard. The amendments clarify the collectability criterion of the revenue standard wherein an entity is allowed to recognize revenue in the amount of consideration received when the following criteria are met: the entity has transferred control of the goods or services, the entity has stopped transferring goods or services, or has no obligation under the contract to transfer additional goods or services and the consideration received from the customer is nonrefundable. The amendments also clarify the following: the fair value of noncash consideration should be measured at contract inception when determining the transaction price, allows an entity to make an accounting policy election to exclude from the transaction price certain types of taxes collected from a customer when the company discloses that policy, for contracts to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy U.S. GAAP, and a practical expedient is provided in which an entity can avoid having to evaluate the effects of each contract modification from contract inception through the beginning of the earliest period presented when accounting for contracts that were modified prior to adoption under both the full and modified retrospective transition approach.

In December 2016, technical corrections and improvements were issued on a variety of topics within the new revenue recognition standard. The corrections represent minor corrections or improvements and are not expected to have a ~~significant impact~~material effect on ~~accounting practices. The amendments clarify~~ the following: guarantee fees within the scope of Topic 460 are not within the scope of Topic 606, impairment testing for capitalized contract costs should consider both expected contract renewals and extensions and unrecognized consideration already received along with expected future consideration, the sequence of impairment testing for assets within the scope of different topics, allowance of an accounting policy election to determine the provision for losses at the performance obligation level instead of the contract level, exclude all topics within Topic 944 from the scope of Topic 606, allow exemptions from the disclosures of remaining performance obligations, disclosure of prior-period performance obligations pertains to all performance obligations and is not limited to those with corresponding contract balances, and better aligns accounting guidance and examples within the guidance.company’s consolidated financial statements.

The new guidance will be effective for Ball on January 1, 2018, and will supersede the current revenue recognition guidance, including industry-specific guidance. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. We currently anticipate adopting the standard on January 1, 2018, using the modified retrospective method.

We established a cross-functional implementation team, which includes representatives from all of our business segments. We utilized a bottoms-up approach to analyze the impact of the new standard on our contracts with customers

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~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

by reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to revenues arising from such contracts. In addition, we are in the process of identifying the appropriate changes to our business processes, systems and controls to support recognition and disclosure under the standard upon adoption.

We believe the most significant impact will be in the way we account for revenue in our global metal beverage packaging segments and, to a lesser extent, in our food and aerosol packaging segment. We currently recognize revenue from many of our contracts in these segments when the four established criteria of revenue recognition under the current guidance have been met, generally occurring upon shipment or delivery of goods. Under the new guidance we expect to recognize revenue from many of these contracts over time, which will accelerate the timing of revenue recognition from these arrangements, such that some portion of revenue will be recognized prior to shipment or delivery of goods. In addition to accelerating the timing of recording revenue, we expect corresponding decreases in inventories with an offsetting increase to unbilled receivables to the extent the amounts have not yet been invoiced to the customer.

Relative to the aerospace segment, at this time we do not expect the implementation of the new standard to materially impact the manner in which we currently recognize revenue as the standard supports the recognition of revenue over time under the “cost-to-cost” method, which is consistent with the current revenue recognition model utilized for the majority of our contracts in this segment. We expect revenue arising from the majority of our contracts to continue to be recognized over time because of the continuous transfer of control to the customer. However, due to the complexity of most of our aerospace contracts, the actual revenue recognition treatment required under the new standard will be dependent on contract-specific terms and may vary in some instances from recognition over time.

During the remainder of 2017, Ball will continue to design and implement changes to processes, systems and internal controls to be in a position to report under the new accounting standard upon adoption in the first quarter of 2018.

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~~Ball Corporation~~

~~Notes to the 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 ~~five~~4 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.~~containers throughout those countries.

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

Beverage packaging, Europe: Consists of operations in numerous countries in Europe, including Russia, that manufacture and sell metal beverage ~~containers.~~containers throughout most of Europe.

~~Food and aerosol packaging~~Aerospace:~~Consists of operations in the U.S., Europe, Canada, Mexico, Argentina and India that manufacture and sell steel food and aerosol containers, extruded aluminum aerosol containers and aluminum slugs.~~

~~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 non-reportable segments located in Africa, Middle East and Asia ~~(AMEA)~~(beverage packaging, AMEA) and Asia Pacific (beverage packaging, Asia Pacific) that manufacture and sell metal beverage containers; a non-reportable segment that manufactures and sells aerosol containers, extruded aluminum aerosol containers and aluminum slugs (aerosol packaging); undistributed corporate ~~expenses,~~expenses; intercompany eliminations and other business activities.

The accounting policies of the segments are the same as those in the company’s consolidated financial statements ~~and are~~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.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Summary of Business by Segment


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2019		2018		2019		2018

Net sales
Beverage packaging, North and Central America	$	1,230	$	1,237	$	3,647	$	3,513
Beverage packaging, South America		392		391		1,210		1,229
Beverage packaging, Europe		699		683		2,052		1,995
Aerospace		374		283		1,081		837
Reportable segment sales		2,695		2,594		7,990		7,574
Other		258		352		765		1,258
Net sales	$	2,953	$	2,946	$	8,755	$	8,832

Comparable operating earnings
Beverage packaging, North and Central America	$	157	$	153	$	416	$	423
Beverage packaging, South America		60		71		193		235
Beverage packaging, Europe		90		84		241		219
Aerospace		35		26		103		75
Reportable segment comparable operating earnings		342		334		953		952
Reconciling items
Other (a)		27		6		38		40
Business consolidation and other activities		(133)		(32)		(147)		(131)
Amortization of acquired Rexam intangibles		(38)		(40)		(118)		(124)
Earnings before interest and taxes		198		268		726		737
Interest expense		(79)		(76)		(237)		(226)
Debt refinancing and other costs		—		—		(4)		(1)
Total interest expense		(79)		(76)		(241)		(227)
Earnings before taxes	$	119	$	192	$	485	$	510

Three Months Ended September 30,

Nine Months Ended September 30,
($ in millions)

2017

2016

2017

2016

Net sales

Beverage packaging, North and Central America

$
1,080

$
1,076

$
3,180

$
2,653
Beverage packaging, South America

425

318

1,145

577
Beverage packaging, Europe

651

624

1,824

1,459
Food and aerosol packaging

321

329

867

911
Aerospace

241

204

734

577
Reportable segment sales

2,718

2,551

7,750

6,177
Other

190

201

486

360
Net sales

$
2,908

$
2,752

$
8,236

$
6,537

Comparable operating earnings

Beverage packaging, North and Central America

$
121

$
145

$
400

$
356
Beverage packaging, South America

78

60

205

100
Beverage packaging, Europe

74

72

184

184
Food and aerosol packaging

30

31

76

84
Aerospace

23

24

70

61
Reportable segment comparable operating earnings

326

332

935

785
Reconciling items

Other (a)

(13)

(21)

(65)

(67)
Business consolidation and other activities

(157)

(63)

(253)

(302)
Amortization of acquired Rexam intangibles

(37)

(33)

(120)

(33)
Catch-up depreciation and amortization for 2016 from finalization of Rexam valuation

5

—

(34)

—
Cost of sales associated with Rexam inventory step-up

—

(83)

—

(83)
Earnings before interest and taxes

124

132

463

300
Interest expense

(74)

(80)

(216)

(159)
Debt refinancing and other costs

—

(2)

(1)

(108)
Total interest expense

(74)

(82)

(217)

(267)
Earnings before taxes

50

50

246

33
Tax (provision) benefit

(4)

(23)

(48)

174
Equity in results of affiliates, net of tax

5

7

23

6
Net earnings

51

34

221

213
Net earnings attributable to noncontrolling interests

(3)

(3)

(6)

(3)
Net earnings attributable to Ball Corporation

$
48

$
31

$
215

$
210

(a)

~~(a)~~

Includes undistributed corporate expenses, net, of ~~$29~~$5 million and ~~$43~~$21 million for the ~~third quarter of 2017~~three months ended September 30, 2019 and ~~2016,~~2018, respectively, and ~~$106~~$44 million and ~~$78~~$64 million for the ~~first~~ nine months ~~of 2017~~ended September 30, 2019 and ~~2016,~~2018, respectively.

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

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

4. Acquisitions and Dispositions

~~Rexam~~Argentina Steel Aerosol Business

~~On June 30, 2016, Ball acquired 100 percent~~In August 2019, the company announced an agreement to sell its Argentina steel aerosol packaging business which has facilities in Garin and San Luis, Argentina. As the transaction closed in October 2019, the assets and liabilities of the outstanding shares of Rexam PLC (Rexam), a U.K. based beverage container manufacturer, for the purchase price of £2.9 billion ($3.8 billion) in cash, and 64.5 million treasury shares of Ball Corporation common stock (valued at $35.70 per share, as adjusted for the two-for-one stock split, for a total share consideration of $2.3 billion). Additionally, the company recorded $24 million of consideration for stock-based compensation. The common shares were valued using the price on the date of acquisition and werebusiness have been presented as ~~a reduction~~held for sale as of ~~treasury stock. The cash portion~~September 30, 2019. Upon reclassification of the ~~acquisition price was paid in July 2016 using proceeds from restricted cash~~assets and liabilities to held ~~in escrow and borrowings under~~for sale, the ~~$1.4 billion and €1.1 billion Term A loan facilities obtained in March 2016.~~

~~The consummation~~carrying value of the acquisition was subject to, among other things, approval from Ball’s shareholders, approval from Rexam’s shareholders, certain regulatory approvals and satisfaction of other customary closing conditions. In order to satisfy certain regulatory requirements, the company was required to sell a portion of Ball’s existing beverage packaging business and select beverage can assets of the Divestment Business. The sale of the Divestment Business to Ardagh Group S.A. (Ardagh) was completed concurrently on June 30, 2016, for $3.42 billion, subject to customary closing adjustments and certain transaction service arrangements between Ball and Ardagh during a transition period. The sale agreement with Ardagh in respect of the Divestment Business contains customary representations, warranties, covenants and provisions allocating liabilities, as well as indemnification obligations to and from Ardagh, pursuant to which claims may be made when applicable. A pretax gain on sale of $330 million was recorded within business consolidation and other activities and is subject to finalization of working capital and other items. The company also entered into a supply agreement with Ardagh to manufacture and sell can ends to the Divestment Business in Brazil in exchange for proceeds of $103 million.

As a condition of the sale of the Divestment Business to Ardagh, the company guaranteed a minimum volume of sales for the Divestment Business in 2017, whereby the company was required to pay Ardagh up to $75 million based upon any shortfall of 2017 sales relative to an agreed-upon minimum threshold. During the third quarter of 2017, and pending regulatory approval, the company entered into an agreement with Ardagh to settle all remaining assets, liabilities and other items in the sale of the Divestment Business and concurrently obtained Ardagh’s agreement to the removal of the company’s guarantees of Ardagh’s 2017 sales volumes and any related penalties that could result. Regulatory approval of these agreements was obtained during the fourth quarter of 2017 and,disposal group as a ~~result, the company will recognize additional pretax income from the sale of the Divestment Business in the fourth quarter of 2017 of approximately$60 million.~~

In connection with the sale of the Divestment Business to Ardagh on June 30, 2016, the company provided indemnifications for the uncertain tax positions of the Divestment Business sold to Ardagh. These indemnifications were accounted for as guarantees and the company initially recognized a liability equalwhole was compared to the fair value of the ~~indemnities. There~~business less costs to sell. Following this review, an allowance of $7 million was applied to the carrying value of assets held for sale, resulting in assets held for sale totaling $16 million and liabilities held for sale totaling $13 million, which are ~~no limitations on~~included in other current assets and other current liabilities, respectively, in the ~~maximum potential future payments~~unaudited condensed consolidated balance sheets. In addition, cumulative translation adjustments of $45 million related to the Argentina business that had been previously recorded in accumulated other comprehensive income were recognized as a charge to earnings upon classification of the business as held for sale. Both charges have been presented in business consolidation and other activities in the unaudited condensed consolidated statements of earnings.

Beverage Packaging China

In September 2019, the company ~~could be obligated to make and, based on~~completed the ~~nature~~sale of the ~~indemnified items,~~its metal beverage packaging business in China for upfront consideration of approximately $213 million, subject to customary closing adjustments, plus potential additional consideration related to the ~~company~~relocation of an existing facility in China in the coming years. The upfront proceeds from this sale are expected to be received in the fourth quarter of 2019 and are included in receivables in the unaudited condensed consolidated balance sheet as of September 30, 2019; the potential additional consideration is ~~unable to reasonably estimate its potential exposure under these items.~~included in other long-term assets.

~~During the first nine months of 2017, the~~The company recorded ~~$34~~a loss on disposal of $45 million in business consolidation and other activities ~~for an increase~~ in the ~~estimated amount~~unaudited condensed consolidated statement of earnings. The loss occurred during the third quarter as a result of a decline in the local real estate market associated with the potential facility relocation, adverse foreign exchange movements and finalization of customary closing adjustments.

U.S. Steel Food and Steel Aerosol Business

On July 31, 2018, Ball sold its U.S. steel food and steel aerosol packaging business and formed a joint venture, Ball Metalpack. In exchange for the sale of this business, Ball received approximately $600 million of cash proceeds, subject to customary closing adjustments completed as of December 31, 2018, as well as a 49 percent ownership interest in Ball Metalpack. This investment is reported in other assets as an equity method investment in Ball’s unaudited condensed consolidated balance sheets.

Ball recorded a loss of $41 million in connection with this sale. This loss was recorded in business consolidation and other activities in the unaudited condensed consolidated statement of earnings.

The assets of the ~~claims covered by indemnifications for tax matters provided to the buyer~~sold business included 9 plants that manufacture and sell steel food and steel aerosol containers. The manufacturing plants were located in ~~relation to the Divestment Business. The estimated value~~Canton and Columbus, Ohio; Milwaukee and Deforest, Wisconsin; Chestnut Hill, Tennessee; Horsham, Pennsylvania; Springdale, Arkansas; and Oakdale, California.

5. Revenue from Contracts with Customers

Disaggregation of ~~the claims under these indemnities is $57 million at September 30, 2017, and the liabilities have been recorded in other current liabilities.~~Sales

The ~~portion~~company disaggregates net sales by reportable segments as disclosed in Note 3, and based on the timing of transfer of control for goods and services as explained below. The transfer of control for goods and services may occur at a point in time or over time. As disclosed in Note 3, the ~~Divestment Business composed~~company’s business consists of ~~Ball's legacy~~4 reportable segments, which encompass disaggregated product lines and geographical areas: (1) beverage packaging, businesses had earnings before taxes as shown below. These earnings before taxes may not be indicative of the earnings before taxes that would be generated by these components of the Divestment Business in future periods. Additionally, due to complexities associated with how Ball's legacyNorth and Central America; (2) beverage packaging, ~~businesses included in the Divestment Business were integrated~~

South America; (3) beverage packaging, Europe; and (4) aerospace.

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

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

	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
($ in millions)	Point in Time		Over Time		Total		Point in Time		Over Time		Total

Total net sales	$	665	$	2,281	$	2,946	$	2,082	$	6,750	$	8,832

Contract Balances

The company enters into ~~Ball Corporation~~contracts to sell beverage packaging, aerosol packaging, and aerospace products and services. The company did not have any contract assets at either September 30, 2019, or December 31, 2018. Unbilled receivables, which are not classified as contract assets, represent arrangements in ~~historical periods, these earnings before taxes may not be indicative~~which sales have been recorded prior to billing and right to payment is unconditional.

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


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

Balance at December 31, 2017	$	45	$	—
Increase		—		8
Balance at December 31, 2018	$	45	$	8
Increase		12		—
Balance at September 30, 2019	$	57	$	8

During the nine months ended September 30, 2019, contract liabilities increased by $12 million, which is net of ~~these Divestment Business components had they been operated~~cash received of $171 million and amounts recognized as ~~a stand-alone business or businesses:~~

Nine Months Ended
($ in millions)

September 30, 2016

Earnings before taxes

$
104
Earnings before taxes attributable to Ball Corporation

104

sales of $159 million, all of which related to current contract liabilities. The ~~Rexam portion~~amount of sales recognized in the ~~Divestment Business is not~~nine months ended September 30, 2019, which were included in the ~~table above as the financial information is not included in Ball’s historical results.~~

~~A total~~opening contract liabilities balances, was $45 million, all of 54 manufacturing facilities were acquired from Rexam, including 17 in North America, 20 in Europe, 12 in South America and five in the AMEA region. A total of 22 manufacturing facilities were sold as part of the Divestment Business, including 12 Ball facilities and 10 Rexam facilities. Of these 22 facilities, eightwhich related to current contract liabilities. Current contract liabilities are located in North America, 12 are located in Europe and two are located in Brazil. The company had a total of 75 beverage manufacturing facilities and joint ventures after the completion of the Rexam acquisition and sale of the Divestment Business.

This acquisition aligns with Ball’s Drive for 10 vision, including the company’s long-standing capital allocation strategy and EVA philosophy. The combination created the world’s largest supplier of beverage containers allowing the company to better serve its customers with its enhanced geographic footprint and innovative product offerings. In particular, Ball expects the acquisition to continue to deliver long-term shareholder value through optimizing global sourcing, reducing general and administrative expenses, sharing best practices to improve production efficiencies and leveraging its footprint to lower freight, logistics and warehousing costs. In addition, further value can continue to be created through balance sheet improvements with a focusclassified within other current liabilities on ~~working capital and inventory management and sustainability priorities as a result of the larger plant network.~~

The acquisition was accounted for as a business combination and its results of operations have been included in the company’s consolidated statements of earnings and cash flows from the date of acquisition. In total, pretax charges of $216 million have been incurred for transaction costs associated with the acquisition which, in accordance with current accounting guidance, were expensed as incurred. The transaction costs are included in the business consolidation and other activities line of the unaudited condensed consolidated ~~statement~~balance sheet and noncurrent contract liabilities are classified within other liabilities.

The company also recognized sales of ~~earnings.~~

~~In connection with the acquisition, Ball assumed Rexam debt of approximately $2.8 billion of which approximately $2.7 billion was extinguished during July~~$4 million and ~~August 2016. The proceeds from the sale of the Divestment Business were partially used to extinguish the assumed Rexam debt.~~

~~During the second quarter of 2017, the company finalized the allocation of the purchase price for the Rexam acquisition.~~ The measurement period adjustments to the acquisition fair values and useful lives for acquired identifiable intangible assets and fixed assets were due to the refinement of our valuation models, assumptions and inputs. The updated assumptions and inputs incorporated additional information obtained subsequent to the closing of the transaction related to facts and circumstances that existed as of the acquisition date. ~~The final purchase price allocation changes during the second quarter of 2017 included an increase of $590~~$10 million in the ~~value~~three and nine months ended September 30, 2019, respectively, and $3 million and $8 million for the three and nine months ended September 30, 2018, respectively, from performance obligations satisfied (or partially satisfied) in prior periods. These sales amounts are the result of ~~intangible assets, an increase of $31 million~~changes in the value of investments in affiliates and a decrease of $384 million in the value of goodwill. Long-term deferred tax liabilities also increased by $221 million primarily due to the tax effect of these changes to the final purchasetransaction price ~~allocation.~~

~~The cumulative impacts of all adjustments have been reflected in the unaudited condensed consolidated financial statements as~~ of the ~~six months ended June 30, 2017, which are summarized in the table below:~~company’s contracts with customers.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

June 30,
($ in millions)

2016

Cash

$
450
Receivables, net

778
Inventories, net

782
Other current assets

165
Assets held for sale (sold to Ardagh on June 30, 2016)

911
Total current assets

3,086

Property, plant and equipment

2,301
Goodwill

3,415
Intangible assets

2,478
Restricted cash

174
Other assets

490
Total assets acquired

11,944

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

2,792
Accounts payable

858
Accrued employee costs

135
Liabilities held for sale (sold to Ardagh on June 30, 2016)

7
Other current liabilities

373
Total current liabilities

4,165

Long-term debt

28
Employee benefit obligations

508
Deferred taxes and other liabilities

993
Total liabilities assumed

5,694

Net assets acquired

6,250

Noncontrolling interests

(90)
Aggregate value of consideration paid

$
6,160

Transaction Price Allocated to Remaining Performance Obligations

In the context of the revenue recognition standard, enforceable contracts are those that have an enforceable right to payment, which Ball typically has once a binding forecast or purchase order (or similar contract) is in place and Ball produces under the contract. Within Ball’s packaging segments, enforceable contracts as defined all have a duration of less than one year. Contracts that have an original duration of less than one year are excluded from the requirement to disclose remaining performance obligations based on the company’s election to use the practical expedient.

The ~~following~~ table ~~details~~below discloses: (1) the ~~identifiable intangible assets acquired, their fair values~~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 ~~estimated useful lives:~~(2) when the company expects to record sales on these multi-year contracts.

($ in millions)

Fair Value

Weighted-
Average
Estimated
Useful Life (in
Years)

Customer relationships

$
2,437

17

Trademarks

41

3

$
2,478


($ in millions)	Next Twelve Months		Thereafter		Total

Sales expected to be recognized on multi-year contracts in place as of September 30, 2019	$	1,300	$	868	$	2,168

Because the acquisition of Rexam was a stock purchase, neither the goodwill nor the intangible assets acquired are deductible under local country corporate tax laws but will generally be deductible in computing earnings and profits for U.S. tax purposes.

The ~~following unaudited pro forma consolidated results~~contracts with an original duration of ~~operations (pro forma information) have been prepared as if~~less than one year, which are excluded from the ~~acquisition of Rexam and sale~~table above based on the company’s election of the ~~Divestment Business had occurred as of January 1, 2015. The pro forma information combines the historical results of Ball and Rexam. The pro forma results~~practical expedient, are ~~not necessarily indicative of the~~

~~Table of Contents~~

~~Ball Corporation~~

~~Notes~~primarily related to contracts where control will be fully transferred to the ~~Unaudited Condensed Consolidated Financial Statements~~customers in less than one year.

~~actual results that would have occurred had the acquisition been in effect for the periods presented, nor are they necessarily indicative of the results that may be obtained in the future.~~

Nine Months Ended
($ in millions, except per share amounts)

September 30, 2016

Net sales (1)

$
7,931
Net earnings attributable to Ball Corporation (2)

187
Basic earnings per share

0.54
Diluted earnings per share

0.53

~~(1)~~

~~Net sales were adjusted to include net sales of Rexam. The company also excluded the net sales attributable to the Divestment Business.~~

~~(2)~~

~~Pro forma adjustments to net earnings attributable to Ball Corporation were adjusted as follows:~~

~~Excludes acquisition-related transaction costs and debt refinancing costs incurred in the first nine months of 2016.~~

~~Includes interest expense associated with the new debt utilized to finance the acquisition.~~

~~Includes depreciation and amortization expense based on the increased fair value of property, plant and equipment and amortizable intangible assets acquired.~~

~~Excludes net earnings attributable to the Divestment Business for the first six months of 2016.~~

~~Excludes the gain on sale of the Divestment Business for the first nine months of 2016.~~

All of these pro forma adjustments were adjusted for the applicable income tax impacts. Ball has applied enacted statutory tax rates in the U.K. during the period indicated above. Ball used a tax rate of 20 percent to calculate the financing and acquisition adjustments for the nine months ended September 30, 2016; however, the tax impact on acquisition-related transaction costs already incurred was recorded at a U.S. statutory rate of approximately 37 percent as these transaction costs were incurred in the U.S. These rates may not be reflective of Ball’s effective tax rate for future periods after consummation of the acquisition and sale of the Divestment Business.

~~Food and Aerosol Paint and General Line Plant~~

~~In March 2017, the company sold its paint and general line can manufacturing facility in Hubbard, Ohio, for approximately $32 million in cash and recorded a $15 million gain on the sale.~~

~~Wavefront Technologies (Wavefront)~~

In January 2016, the company acquired Wavefront located in Annapolis Junction, Maryland, for total cash consideration of $36 million, net of cash acquired. Wavefront provides systems and network engineering, software development software and analytical services for cyber and mission-focused programs to the U.S. government and commercial industry. The financial results of Wavefront have been included in our aerospace segment from the date of acquisition. The acquisition is not material to the company.

~~Food and Aerosol Specialty Tin Business~~

~~In October 2016, the company sold its specialty tin manufacturing facility in Baltimore, Maryland, for approximately $24 million in cash and recorded a $9 million gain on the sale.~~

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

5.6. Business Consolidation and Other Activities

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


	Three Months Ended September 30,				Nine Months Ended September 30,

									Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2017		2016		2017		2016		2019		2018		2019		2018


Beverage packaging, North and Central America	$	(34)	$	(6)	$	(45)	$	(12)	$	(2)	$	(14)	$	(8)	$	(16)
Beverage packaging, South America		(4)		(6)		(4)		(15)		(14)		12		22		11
Beverage packaging, Europe		(62)		(10)		(69)		(19)		(9)		(3)		(24)		(17)
Food and aerosol packaging		(2)		(4)		7		(21)
Other		(55)		(37)		(142)		(235)		(108)		(27)		(137)		(109)
	$	(157)	$	(63)	$	(253)	$	(302)
									$	(133)	$	(32)	$	(147)	$	(131)

~~2017~~2019

Beverage Packaging, North and Central America

During the ~~third quarter of 2017,~~three and nine months ended September 30, 2019, the company recorded charges of $1 million and $7 million, respectively, for revised estimates of charges recorded in prior periods in connection with the previously announced ~~the closure~~closures of its beverage can manufacturing facilities in Chatsworth, California, and Longview, Texas, and its beverage end manufacturing facility in Birmingham, Alabama. The Birmingham ~~and Longview plants are currently expected to cease~~facility ceased production ~~by the end of~~during the second quarter of 2018, and the Chatsworth ~~plant is currently expected to cease~~and Longview facilities ceased production ~~by the end of~~during the third quarter of 2018. Ball sold the Chatsworth facility during the fourth quarter of 2018.

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

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Beverage Packaging, South America

During the ~~third quarter,~~nine months ended September 30, 2019, the company recorded a $56 million gain related to indirect tax gain contingencies in Brazil as these amounts are now estimable and realizable. The company’s Brazilian subsidiaries filed lawsuits in 2014 and 2015 to challenge the Brazilian tax authorities regarding the computation of certain indirect taxes, claiming amounts were overpaid to the tax authorities because the tax base included a “tax on tax” component. See Note 21 for further details. The amounts recorded in business consolidation and other activities relate to periods prior to 2019. In the event other comparable cases are resolved and the amounts claimed become estimable and realizable, the company will record gains, which may result in material reimbursements to the company in future periods.

During the three and nine months ended September 30, 2019, the company recorded charges of $13 million and $29 million, ~~for employee severance and benefits and $4 million for~~respectively, composed of facility shutdown costs, asset impairment, accelerated depreciation and other costs related to restructuring activities.

Charges in the ~~closures. The majority~~three and nine months ended September 30, 2019, included $1 million and $5 million of ~~these charges are expected to be paid during the remainder of 2017 and by the end of the third quarter of 2018.~~expense, respectively, for individually insignificant activities.

~~In December 2016, the company announced the closure of its beverage packaging facility in Reidsville, North Carolina, which ceased production during the second quarter of 2017.~~ Beverage Packaging, Europe

During the ~~first~~three and nine months ~~of 2017,~~ended September 30, 2019, the company recorded charges of $6 million and $17 million, respectively, for asset impairments, accelerated depreciation and inventory impairments related to previously announced plant closures and restructuring activities.

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

Other

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

●

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

●

Charges of $7 million related to the fair value of the assets and liabilities of the Argentina steel aerosol packaging business being presented as held for sale as of September 30, 2019, and charges of $45 million related to cumulative translation adjustments previously recorded in accumulated other comprehensive income.

●

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

●

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

●

Charges of $5 million for individually insignificant activities.

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

●

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

●

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

●

Charges of $11 million for individually insignificant activities.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

2018

Beverage Packaging, North and Central America

During the three months ended September 30, 2018, the company recorded $9 million of expense for employee severance and benefits, facility shutdown costs, asset impairment, accelerated depreciation and other costs in connection with the previously announced closures of its beverage can manufacturing facilities in Chatsworth, California, and Longview, Texas, and its beverage end manufacturing facility in Birmingham, Alabama. Expense for the nine months ended September 30, 2018, included the same costs and was partially offset by the reversal of $5 million of expense for revised estimates of charges recorded in prior periods.

During the nine months ended September 30, 2018, the company recorded charges of $2 million related to the closure of its Reidsville, North Carolina, ~~plant.~~plant, which ceased production in 2017.

Other income and charges in the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2018, included ~~$1 million and~~ $5 million ~~respectively,~~ of ~~individually insignificant activities.~~

~~Beverage Packaging, South America~~

~~Charges in the third quarter~~expense and ~~first nine months~~$10 million of ~~2017 included $4 million and $4 million,~~expense, respectively, for individually insignificant activities.

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Beverage Packaging, ~~Europe~~South America

~~During the first quarter of 2017, the company announced its intent to close its beverage packaging facility in Recklinghausen, Germany, which ceased production on July 31, 2017.~~ During the third quarter of ~~2017,~~2018, the company recorded ~~charges of $55~~a $16 million ~~for employee severance~~gain related to indirect tax gain contingencies in Brazil as these amounts became realizable.

Charges in the three and ~~benefits~~nine months ended September 30, 2018, included $4 million and ~~$7 million for facility shutdown costs, asset impairment, accelerated depreciation and other costs. The company expects to incur approximately $30~~$5 million of ~~additional~~ expense, ~~related to the closure. The majority of these charges are expected to be paid during the remainder of 2017 and by the end of 2018.~~respectively, for individually insignificant activities.

Beverage Packaging, Europe

During the ~~first~~three and nine months ~~of 2017,~~ended September 30, 2018, the company recorded charges of $2 million ~~for professional services~~ and ~~other costs associated with the acquisition of Rexam.~~

~~Other charges in the first nine months of 2017 included $5 million for individually insignificant activities.~~

~~Food and Aerosol Packaging~~

~~During the third quarter and first nine months of 2017, the company recorded charges of $1 million and $6~~$15 million, respectively, for employee severance and benefits, facility shutdown costs and ~~accelerated depreciation for~~other costs in connection with the closure of its ~~Weirton, West Virginia,~~Recklinghausen, Germany, plant, which ceased production during the ~~first~~third quarter of 2017.

~~In March 2017, the company sold its food and aerosol packaging paint and general line can plant in Hubbard, Ohio, and recorded a gain on sale of $15 million.~~

Other charges in the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2018, included $1 million and $2 million of expense, respectively, for individually insignificant activities.

Other

During the ~~third quarter of 2017,~~three months ended September 30, 2018, the company recorded the following amounts:

●

A settlement loss of ~~$41~~$14 million primarily related to the purchase of non-participating group annuity contracts to settle a portion of the projected pension benefit obligations in certain Ball U.S. defined benefit pension plans which triggered settlement accounting. The settlement loss primarily represented a pro rata portion of the aggregate unamortized actuarial loss in these pension plans.

●

A $3 reduction to the estimated loss recorded as of June 30, 2018, related to the sale of the U.S. steel food and steel aerosol packaging business.

~~Expense~~●

Charges of $5$4 million for long-term incentive and other compensation arrangements associated with the Rexam acquisition.

●

~~Expense~~Charges of $2$6 million for professional services and other costs associated with the ~~acquisition~~sale of ~~Rexam.~~

the U.S. steel food and steel aerosol packaging business.

●

~~Expense~~Charges of $7$6 million for individually insignificant activities.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

During the ~~first~~ nine months ~~of 2017,~~ended September 30, 2018, the company recorded the following amounts:

●

~~Expense of $34~~A $38 million ~~for the estimated amount of claims covered by the indemnification for certain tax matters provided to the buyer in~~loss on the sale of the ~~Divestment Business.~~

U.S. steel food and steel aerosol packaging business.

●

~~Expense~~Charges of ~~$22~~$19 million for long-term incentive and other compensation arrangements associated with the Rexam acquisition.

●

~~A $14~~Charges of $4 million ~~reduction in the gain recognized in connection with the sale of the Ball portion of the Divestment Business.~~

for employee severance and benefits, accelerated depreciation and inventory impairment related to manufacturing cost rationalization.

●

~~Expense~~Charges of ~~$12~~$10 million for professional services and other costs associated with the ~~acquisition~~sale of ~~Rexam.~~

the U.S. steel food and steel aerosol packaging business.

●

~~Expense~~Charges of ~~$19~~$24 million for individually insignificant activities.

7.	Supplemental Cash Flow Statement Disclosures


	September 30,
($ in millions)	2019		2018

Beginning of period:
Cash and cash equivalents	$	721	$	448
Current restricted cash (included in other current assets)		7		10
Noncurrent restricted cash (included in other assets)		—		1
Total cash, cash equivalents and restricted cash	$	728	$	459

End of period:
Cash and cash equivalents	$	483	$	598
Current restricted cash (included in other current assets)		9		13
Cash in assets held for sale (included in other current assets)		5		—
Total cash, cash equivalents and restricted cash	$	497	$	611

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.

21Noncash 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 $124 million at September 30, 2019, and $127 million at December 31, 2018.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

~~2016~~

~~Beverage Packaging, North and Central America~~

During the third quarter and first nine months of 2016, the company recorded charges of $2 million and $3 million, respectively, for professional services and other costs associated with the acquisition of Rexam.

~~During the third quarter and first nine months of 2016, the company recorded charges of $3 million and $4 million, respectively, related to the plant closure in Bristol, Virginia.~~

~~Other charges in the third quarter and first nine months of 2016 included $1 million and $5 million, respectively, of individually insignificant activities.~~

~~Beverage Packaging, South America~~

During the third quarter and first nine months of 2016, the company recorded charges of $2 million and $11 million, respectively, for professional services and other costs associated with the acquisition of Rexam.

~~Other charges in the third quarter and first nine months of 2016 included $4 million of individually insignificant activities.~~

~~Beverage Packaging, Europe~~

~~During the first nine months of 2016, the company recorded charges of $7 million for professional services and other costs associated with the acquisition of Rexam.~~

~~Other charges in the third quarter and first nine months of 2016 included $10 million and $12 million, respectively, of individually insignificant activities.~~

~~Food and Aerosol Packaging~~

During the third quarter and first nine months of 2016, the company recorded charges of $3 million and $14 million, respectively, for employee severance and benefits, facility shutdown costs and asset impairment and disposal costs for the closure of its Weirton, West Virginia, plant.

~~Other charges in the third quarter and first nine months of 2016, included $1 million and $7 million, respectively, of individually insignificant activities.~~

~~Other~~

~~During the third quarter of 2016, the company recorded the following amounts:~~

~~Expense of $22 million for compensation arrangements related to the Rexam acquisition primarily for severance payments to terminated or divested personnel.~~

~~Expense of $33 million for professional services and other costs associated with the acquisition of Rexam.~~

Foreign currency gains of $22 million from the revaluation of foreign currency denominated restricted cash and intercompany loans related to the cash component of the Rexam acquisition purchase price, the sale of the Divestment Business and the revaluation of the euro-denominated debt issuance in December 2015.

~~Expense of $4 million for individually insignificant activities.~~

~~During the first nine months of 2016, the company recorded the following charges:~~

~~A gain of $344 million in connection with the sale of the Ball portion of the Divestment Business.~~

~~Expense of $289 million for professional services and other costs associated with the acquisition of Rexam.~~

~~Table of Contents~~8. Receivables, Net

~~Ball Corporation~~


	September 30,		December 31,
($ in millions)	2019		2018

Trade accounts receivable	$	922	$	812
Unbilled receivables		491		478
Less allowance for doubtful accounts		(8)		(10)
Net trade accounts receivable		1,405		1,280
Other receivables		552		522
	$	1,957	$	1,802

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Foreign currency losses of $174 million from the revaluation of foreign currency denominated restricted cash and intercompany loans related to the cash component of the Rexam acquisition purchase price, the sale of the Divestment Business, and the revaluation of the euro-denominated debt issuance in December 2015.

~~Expense of $106 million for compensation arrangements related to the Rexam acquisition.~~

~~Expense of $10 million for individually insignificant activities.~~

~~Following is a summary by segment for the restructuring liabilities recorded in connection with business consolidation activities:~~

($ in millions)

Beverage Packaging, North & Central America

Beverage Packaging, South America

Beverage Packaging, Europe

Food & Aerosol Packaging

Other

Total

Balance at December 31, 2016

$
8

$
—

$
4

$
6

$
2

$
20
Charges in earnings

18

2

55

7

1

83
Cash payments and other activity

(6)

—

(13)

(12)

(2)

(33)
Balance at September 30, 2017

$
20

$
2

$
46

$
1

$
1

$
70

~~6. Receivables~~

September 30,

December 31,
($ in millions)

2017

2016

Trade accounts receivable

$
1,435

$
1,169
Less allowance for doubtful accounts

(10)

(11)
Net trade accounts receivable

1,425

1,158
Other receivables

368

333

$
1,793

$
1,491

The company has entered into several regional committed and uncommitted accounts receivable factoring programs with various financial institutions for certain ~~receivables~~ of ~~the company.~~its receivables. The programs are accounted for as true sales of the receivables, without recourse to Ball, and had combined limits of approximately $1$1.3 billion at September 30, ~~2017.~~2019, and $1.2 billion at December 31, 2018. A total of ~~$646~~$155 million and ~~$596~~$178 million were ~~sold~~available for sale under ~~such~~these programs as of September 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, respectively.

7.Other receivables include income and sales tax receivables, the receivable of $213 million for the proceeds from the sale of the China beverage packaging business, related party receivables and other miscellaneous receivables.

9. Inventories, Net


	September 30,		December 31,

					September 30,		December 31,
($ in millions)	2017		2016		2019		2018


Raw materials and supplies	$	654	$	607	$	720	$	727
Work-in-process and finished goods		820		839		541		614
Less inventory reserves		(41)		(33)		(81)		(70)
	$	1,433	$	1,413
					$	1,180	$	1,271

10.Property, Plant and Equipment, Net


	September 30,		December 31,
($ in millions)	2019		2018

Land	$	148	$	159
Buildings		1,352		1,359
Machinery and equipment		5,203		5,250
Construction-in-progress		508		509
		7,211		7,277
Accumulated depreciation		(2,891)		(2,735)
	$	4,320	$	4,542

23Depreciation expense amounted to $123 million and $368 million for the three and nine months ended September 30, 2019, and $121 million and $375 million for the three and nine months ended September 30, 2018, respectively.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

11. Goodwill

8.~~Property, Plant and Equipment~~


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

Balance at December 31, 2018	$	1,275	$	1,299	$	1,435	$	40	$	426	$	4,475
Business dispositions		—		—		—		—		(51)		(51)
Transfer to assets held for sale		—		—		—		—		(1)		(1)
Effects of currency exchange		—		—		(47)		—		(5)		(52)
Balance at September 30, 2019	$	1,275	$	1,299	$	1,388	$	40	$	369	$	4,371

September 30,

December 31,
($ in millions)

2017

2016

Land

$
173

$
105
Buildings

1,377

1,301
Machinery and equipment

5,075

4,723
Construction-in-progress

549

503

7,174

6,632
Accumulated depreciation

(2,649)

(2,245)

$
4,525

$
4,387

Property, plant and equipment are stated at historical or acquired cost. Depreciation expense amounted to $113 million and $373 million for the third quarter and first nine months of 2017, respectively, and $105 million and $237 million for the comparable periods in 2016, respectively. During 2017, cumulative catch-up depreciation recorded as a result of changes in the values and useful lives of fixed assets associated with the finalization of the valuation for the Rexam acquisition was $19 million related to last six months of 2016.

~~9. Goodwill~~

($ in millions)


Beverage
Packaging,
North & Central
America


Beverage
Packaging,
South America


Beverage
Packaging,
Europe

Food
&
Aerosol
Packaging


Aerospace

Other

Total

Balance at December 31, 2016

$
1,614

$
970

$
1,632

$
599

$
40

$
240

$
5,095
Opening balance sheet adjustments

(337)

329

(276)

—

—

(68)

(352)
Business dispositions

—

—

—

(9)

—

—

(9)
Effects of currency exchange rates

—

—

150

17

—

7

174
Balance at September 30, 2017

$
1,277

$
1,299

$
1,506

$
607

$
40

$
179

$
4,908

During the second quarter of 2017, the company finalized the allocation of the purchase price for the Rexam acquisition. The decrease related to goodwill is a result of changes in the fair values and useful lives of fixed assets for the finalization of the valuation of the Rexam acquisition. The company’s annual goodwill impairment test completed in the fourth quarter of ~~2016~~2018 indicated the fair value of the beverage packaging, ~~Asia (Beverage Asia)~~AMEA (beverage AMEA), reporting unit exceeded its carrying amount by approximately 2315 percent. The ~~current supply of metal beverage packaging exceeds demand~~worsening business climate in ~~China, resulting~~Saudi Arabia has resulted in ~~pricing pressure and~~ negative impacts onto the profitability of our ~~Beverage Asia~~beverage AMEA reporting unit. If it becomes an expectation that this ~~oversupply~~ situation will continue for an extended period of time, the company may be required to record a noncash impairment ~~charge~~charges for some or all of the goodwill associated with the ~~Beverage Asia~~beverage AMEA reporting unit, the total balance of which was ~~$78~~$102 million at September 30, ~~2017.~~2019.

~~Table~~As disclosed in Note 4, the company completed the sale of ~~Contents~~its China beverage packaging business in September 2019, and this disposition included $51 million of goodwill related to this business. The remaining goodwill balance associated with the beverage packaging, Asia Pacific, reporting unit is $27 million as of September 30, 2019.

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

~~10.~~12. Intangible Assets, Net

September 30,

December 31,
($ in millions)

2017

2016

Acquired Rexam intangibles (net of accumulated amortization of $203 million at September 30, 2017, and $62 million at December 31, 2016)

$
2,327

$
1,766
Capitalized software (net of accumulated amortization of $116 million at September 30, 2017, and $87 million at December 31, 2016)

82

79
Other intangibles (net of accumulated amortization of $160 million at September 30, 2017, and $143 million at December 31, 2016)

81

89

$
2,490

$
1,934


	September 30,		December 31,
($ in millions)	2019		2018

Acquired Rexam customer relationships and other Rexam intangibles (net of accumulated amortization of $512 million at September 30, 2019, and $399 million at December 31, 2018)	$	1,932	$	2,073
Capitalized software (net of accumulated amortization of $163 million at September 30, 2019, and $148 million at December 31, 2018)		69		82
Other intangibles (net of accumulated amortization of $112 million at September 30, 2019, and $112 million at December 31, 2018)		26		33
	$	2,027	$	2,188

Total amortization expense of intangible assets amounted to ~~$49~~$46 million and ~~$166~~$142 million for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019, respectively, and ~~$42~~$50 million and ~~$62~~$154 million for the ~~comparable periods in 2016,~~three and nine months ended September 30, 2018, respectively. ~~During~~

13. Other Assets


	September 30,		December 31,
($ in millions)	2019		2018

Long-term deferred tax assets	$	203	$	237
Long-term pension assets		561		559
Investments in affiliates		282		302
Right-of-use operating lease assets		242		—
Other		402		311
	$	1,690	$	1,409

Table of Contents

Ball Corporation

Notes to the ~~second quarter of 2017, cumulative catch-up amortization recorded as~~Unaudited Condensed Consolidated Financial Statements

14. Leases

Under the new lease standard, a ~~result~~contract is a lease or contains one when (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the ~~change~~economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration. The company assesses whether an arrangement is a lease, or contains a lease, upon inception of the contract.

The company enters into operating leases for buildings, warehouses, office equipment, production equipment, aircraft, land and other types of equipment. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the ~~value of intangible assets associated with~~lease. Otherwise, the ~~finalization~~company uses its incremental borrowing rate based on the information available at lease commencement. The company’s finance and short-term leases are immaterial.

Many of the ~~valuation~~company’s leases include one or more renewal and/or termination options at the company’s discretion, which are included in the determination of the lease term if the company is reasonably certain to exercise the option. The company also enters into lease agreements that have variable payments, such as those related to usage or adjustments to certain indexes. Variable lease payments are recognized in the period in which those payments are incurred. Certain leases also include residual value guarantees; however, these amounts are not probable to be owed and are not included in the calculation of the lease liability.

The company subleases all or portions of certain building and warehouse leases to third parties, all of which are classified as operating leases. Some of these arrangements offer the lessee renewal options.

The components of lease expense were as follows:


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

Operating lease expense	$	(17)	$	(50)
Variable lease expense		3		(7)
Sublease income		1		3
Net lease expense	$	(13)	$	(54)

Supplemental cash flow information related to leases was as follows:


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

Cash paid for amounts included in the measurements of lease liabilities - Operating cash outflows for operating leases	$	(11)	$	(47)
ROU assets obtained in exchange for operating lease obligations		18		41

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Supplemental balance sheet information related to operating leases was as follows:


($ in millions)	Balance Sheet Location	September 30, 2019

Operating lease ROU asset	Other assets	$	242
Current operating lease liabilities	Other current liabilities		56
Noncurrent operating lease liabilities	Other liabilities		186

Weighted average remaining lease term and weighted average discount rate for the ~~Rexam acquisition was $15 million related~~company’s operating leases were as follows:


	September 30, 2019

Weighted average remaining lease term in years	10
Weighted average discount rate (%)	4.3

Maturities of lease liabilities are as follows:


($ in millions)	Operating Leases

2019 (excluding the nine months ended September 30, 2019)	$	15
2020		55
2021		46
2022		39
2023		30
Thereafter		108
Future value of lease liabilities		293
Less: Imputed interest		(51)
Present value of lease liabilities	$	242

Total noncancellable operating leases in effect at December 31, 2018, as reported under previous lease accounting guidance, required rental payments of the following amounts in each of the following periods:


($ in millions)

2019	$	66
2020		52
2021		41
2022		34
2023		25
Thereafter		87
Total future lease payments	$	305

Table of Contents

Ball Corporation

Notes to the ~~last six months of 2016.~~Unaudited Condensed Consolidated Financial Statements

15. Debt

~~11. Other Assets~~

September 30,

December 31,
($ in millions)

2017

2016

Long-term deferred tax assets

$
409

$
443
Long-term pension asset

172

147
Investments in affiliates

257

204
Company and trust-owned life insurance

168

146
Other

144

164

$
1,150

$
1,104

~~12. Debt and Interest Costs~~

Long-term debt consisted of the following:


	September 30,		December 31,

					September 30,		December 31,
($ in millions)	2017		2016		2019		2018


Senior Notes
5.25% due July 2025	$	1,000	$	1,000	$	1,000	$	1,000
4.375% due December 2020		1,000		1,000		1,000		1,000
4.00% due November 2023		1,000		1,000		1,000		1,000
4.375%, euro denominated, due December 2023		827		736		763		803
5.00% due March 2022		750		750		750		750
4.875% due March 2026						750		750
3.50%, euro denominated, due December 2020		473		421		436		459
Senior Credit Facilities, due March 2021 (at variable rates)
Term A loan, due June 2021		1,330		1,383
Term A loan, euro denominated, due June 2021		592		954
Multi-currency, U.S. dollar revolver, due March 2021		250		190
Senior Credit Facility (at variable rates)
Term A loan, due March 2024						788		797
U.S. dollar revolver due March 2024 at variable rate						205		—
Other (including debt issuance costs)		(40)		(45)		(41)		(41)
		7,182		7,389
						6,651		6,518
Less: Current portion of long-term debt		(78)		(79)		(28)		(8)
	$	7,104	$	7,310
					$	6,623	$	6,510

On March 25,

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to~~ 2019, the ~~Unaudited Condensed Consolidated Financial Statements~~

~~Following is a summary of debt refinancing and other costs included in the unaudited condensed consolidated statements of earnings:~~

Three Months Ended September 30,

Nine Months Ended September 30,
($ in millions)

2017

2016

2017

2016

Debt Refinancing and Other Costs:

Interest expense on 3.5% and 4.375% senior notes

$
—

$
—

$
—

$
(49)
Refinance of bridge and revolving credit facilities

—

—

—

(30)
Economic hedge - interest rate risk

—

—

—

(20)
Amortization of unsecured, committed bridge facility financing fees

—

—

—

(7)
Individually insignificant items

—

(2)

(1)

(2)

$
—

$
(2)

$
(1)

$
(108)

~~The senior~~company refinanced its existing credit facilities ~~include long-term, multi-currency committed~~with a U.S. dollar term loan facility, a U.S. dollar revolving ~~credit~~facility and a multicurrency revolving facility that mature in March 2024. The revolving facilities ~~that~~ provide the company with up to the U.S. dollar equivalent of ~~$1.5~~$1.75 billion. At September 30, ~~2017,~~2019, taking into account outstanding letters of credit, approximately ~~$1.2~~$1.5 billion was available under the company’s existing long-term, revolving credit facilities. In addition to these facilities, the company had approximately ~~$936~~$978 million of short-term uncommitted credit facilities available at September 30, ~~2017,~~2019, of which ~~$374~~$333 million was outstanding and due on demand. At December 31, ~~2016,~~2018, the company had ~~$143~~$211 million outstanding under short-term uncommitted credit facilities.

The fair value of long-term debt was estimated to be ~~$7.5~~$7.1 billion at September 30, ~~2017,~~2019, and ~~$7.7~~$6.6 billion at December 31, ~~2016.~~2018. 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.

Ball provides letters of credit in the ordinary course of business to secure liabilities recorded in connection with certain self-insurance arrangements. Letters of credit outstanding were ~~$34~~$38 million at September 30, ~~2017,~~2019, and ~~$32~~$28 million at December 31, ~~2016.~~2018.

The company’s senior notes and senior credit facilities are guaranteed on a full, unconditional and joint and several basis by certain of the company’s material subsidiaries. Each of the guarantor subsidiaries is 100 percent owned by Ball Corporation. These guarantees are required in support of these notes and credit facilities, are coterminous with the terms of the respective note indentures and would require performance upon certain events of default referred to in the respective guarantees. Note 19 includes further details about the company’s debt guarantees and Note 20 contains further details, as well as required unaudited condensed consolidating financial information for the company, segregating the guarantor subsidiaries and non-guarantor subsidiaries as defined in the debt agreements.

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 most restrictive covenant is in the company’s bank credit agreement and requires the company to maintain a net ~~debt to EBITDA~~leverage ratio (as defined) of no greater than 54.5 times at September 30, ~~2017, which changes to 4 times at December 31, 2017.~~

2019. The company was in compliance with all loan agreements and debt covenants at September 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, and has met all debt payment obligations.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

16. Taxes on Income

~~13.~~

The effective tax rate was 26.9 percent for the three months ended September 30, 2019, and 15.1 percent for the nine months ended September 30, 2019. As compared to the statutory U.S. tax rate, the effective tax rate for the three and nine months ended September 30, 2019, was increased by 8.5 percentage points and 2.1 percentage points, respectively, for the discrete impact of the settlement of certain defined benefit pension plans, reduced by 6.3 percentage points and 6.4 percentage points, respectively, for the impact of share-based compensation, increased by 5.5 percentage points and 1.4 percentage points, respectively, for the impact of the sale of the China metal beverage packaging business and presentation of the Argentina steel aerosol business as held for sale, reduced by 4.7 percentage points and 2.0 percentage points, respectively, for the effect of certain non-taxable income in the U.S., increased by 4.5 percentage points and 1.9 percentage points, respectively, for the impact of global intangible low-taxed income (GILTI) net of foreign derived intangible income (FDII), and reduced by 2.0 percentage points and 1.2 percentage points, respectively, for federal tax credits.

17. Employee Benefit Obligations


	September 30,		December 31,

					September 30,		December 31,
($ in millions)	2017		2016		2019		2018


Underfunded defined benefit pension liabilities	$	877	$	963	$	834	$	954
Less: Current portion		(26)		(25)		(24)		(25)
Long-term defined benefit pension liabilities		851		938		810		929
Retiree medical and other postemployment benefits		213		226
Long-term retiree medical liabilities						157		157
Deferred compensation plans		279		272		377		291
Other		63		61		39		78
	$	1,406	$	1,497
					$	1,383	$	1,455

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


	Three Months Ended September 30,
	2019							2018
($ in millions)	U.S.		Foreign			Total		U.S.			Foreign		Total

Ball-sponsored plans:
Service cost	$	13	$	2		$	15	$	13		$	3	$	16
Interest cost		26		17			43		25			18		43
Expected return on plan assets		(29)		(26)			(55)		(27)			(27)		(54)
Amortization of prior service cost		1		—			1		—			—		—
Recognized net actuarial loss		5		1			6		9			2		11
Settlement losses		—		8	(a)		8		14	(a)		—		14
Total net periodic benefit cost	$	16	$	2		$	18	$	34		$	(4)	$	30

Three Months Ended September 30,

2017

2016
($ in millions)

U.S.

Foreign

Total

U.S.

Foreign

Total

Ball-sponsored plans:

Service cost

$
13

$
4

$
17

$
17

$
4

$
21
Interest cost

29

22

51

33

25

58
Expected return on plan assets

(31)

(26)

(57)

(35)

(31)

(66)
Amortization of prior service cost

1

—

1

—

1

1
Recognized net actuarial loss

8

1

9

8

1

9
Curtailment and settlement losses including special termination benefits

43
(a)

—

43

—

—

—
Total net periodic benefit cost

$
63

$
1

$
64

$
23

$
—

$
23

(a)

~~(a)~~

Includes settlement losses related to the purchase of non-participating annuities, plant shutdown benefits and other settlements that occur in the normal course of business, which have been recorded in business consolidation and other activities.

Nine Months Ended September 30,

2017

2016

($ in millions)

U.S.

Foreign

Total

U.S.

Foreign

Total

Ball-sponsored plans:

Service cost

$
37

$
12

$
49

$
41

$
10

$
51

Interest cost

95

66

161

63

34

97

Expected return on plan assets

(97)

(78)

(175)

(71)

(40)

(111)

Amortization of prior service cost

1

—

1

(1)

—

(1)

Recognized net actuarial loss

26

3

29

24

4

28

Curtailment and settlement losses including special termination benefits

43
(a)

—

43

—

80
(b)

80

Net periodic benefit cost for Ball sponsored plans

105

3

108

56

88

144

Net periodic benefit cost for multi-employer plans

2

—

2

1

—

1

Total net periodic benefit cost

$
107

$
3

$
110

$
57

$
88

$
145

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements


	Nine Months Ended September 30,
	2019							2018
($ in millions)	U.S.		Foreign			Total		U.S.			Foreign		Total

Ball-sponsored plans:
Service cost	$	37	$	8		$	45	$	40		$	11	$	51
Interest cost		76		53			129		73			54		127
Expected return on plan assets		(86)		(81)			(167)		(82)			(81)		(163)
Amortization of prior service cost		1		2			3		1			—		1
Recognized net actuarial loss		16		3			19		28			4		32
Settlement losses		—		8	(a)		8		14	(a)		—		14
Net periodic benefit cost for Ball sponsored plans		44		(7)			37		74			(12)		62
Net periodic benefit cost for multi-employer plans		—		—			—		1			—		1
Total net periodic benefit cost	$	44	$	(7)		$	37	$	75		$	(12)	$	63

(a)

~~(a)~~

~~(b)~~

~~Amount relates to plans transferred to the Divestment Business.~~

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

In ~~August 2017,~~July 2019 and September 2018, Ball completed the purchase of non-participating group annuity contracts that ~~have~~were transferred to an insurance company for benefit obligations related to the company’s Canadian and U.S. pension plans, respectively. These July 2019 and September 2018 annuity contract purchases totaled approximately $32 million and $176 million, respectively. The July 2019 annuity contract purchase settled Ball’s Canadian defined benefit pension obligation ~~totaling approximately $224 million~~ in ~~the U.S.~~full. The purchase of the annuity contracts triggered settlement ~~accounting.~~accounting in both years. Regular lump sums paid in the normal course of plan operations ~~are~~were also included in ~~the~~these total settlement ~~amount. Both of these~~amounts. These transactions resulted in the recognition of ~~a loss~~settlement losses recorded in business consolidation and other activities ~~from the settlement~~ of ~~$41~~$8 million ~~from accumulated other comprehensive income.~~in 2019 and $14 million in 2018. The company’s U.S. pension ~~obligation was also~~obligations were remeasured during the third quarter of 2018 for the impacted plans, ~~impacted.~~given the partial settlements involved.

Non-service pension income totaling $5 million and $16 million for the three and nine months ended September 30, 2019, respectively, and $3 million for the nine months ended September 30, 2018, is included in selling, general, and administrative (SG&A) expenses.

Contributions to the company’s defined benefit pension plans ~~not including unfunded German, Swedish and certain U.S. plans,~~ were ~~$182~~$154 million infor the first nine months of ~~2017~~2019 compared to ~~$246~~$53 million infor the first nine months of ~~2016~~2018, and such contributions are expected to be ~~in the range of $190~~approximately $168 million for the full year of ~~2017.~~2019. This estimate may change based on ~~any~~ changes to the U.S. Pension Protection Act and actual plan asset performance, among other factors. ~~Included in~~

Table of Contents

Ball Corporation

Notes to the 2017 contributions were contributions to acquired Rexam defined benefit pension plans. Payments to participants in the unfunded German, Swedish and certain U.S. plans were $19 million in the first nine months of 2017 compared to $18 million in the first nine months of 2016 and are expected to be in the range of $22 million for the full year of 2017.Unaudited Condensed Consolidated Financial Statements

~~14. Shareholders’~~18. Equity and Accumulated Other Comprehensive Earnings

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


	Ball Corporation and Subsidiaries
	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 June 30, 2019	675,463	$	1,172	(343,623)	$	(2,566)	$	5,651	$	(797)	$	104	$	3,564
Net earnings	—		—	—		—		92		—		—		92
Other comprehensive earnings (loss), net of tax	—		—	—		—		—		36		—		36
Currency translation recognized in earnings as a result of the transfer of the Argentina steel aerosol business to held for sale	—		—	—		—		—		45		—		45
Common dividends, net of tax benefits	—		—	—		—		(49)		—		—		(49)
Treasury stock purchases	—		—	(3,296)		(232)		—		—		—		(232)
Treasury shares reissued	—		—	64		7		—		—		—		7
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	588		7	—		—		—		—		—		7
Other activity	—		(2)	—		1		—		—		(4)		(5)
Balance at September 30, 2019	676,051	$	1,177	(346,855)	$	(2,790)	$	5,694	$	(716)	$	100	$	3,465


	Ball Corporation and Subsidiaries
	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 June 30, 2018	672,070	$	1,120	(325,459)	$	(1,663)	$	5,199	$	(767)	$	106	$	3,995
Net earnings	—		—	—		—		59		—		—		59
Other comprehensive earnings (loss), net of tax	—		—	—		—		—		(33)		—		(33)
Common dividends, net of tax benefits	—		—	—		—		(34)		—		—		(34)
Treasury stock purchases	—		—	(6,731)		(269)		—		—		—		(269)
Treasury shares reissued	—		—	172		7		—		—		—		7
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	629		21	—		—		—		—		—		21
Other activity	—		1	—		(1)		—		—		(1)		(1)
Balance at September 30, 2018	672,699	$	1,142	(332,018)	$	(1,926)	$	5,224	$	(800)	$	105	$	3,745


	Ball Corporation and Subsidiaries
	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, 2018	673,237	$	1,157	(337,979)	$	(2,205)	$	5,341	$	(835)	$	104	$	3,562
Net earnings	—		—	—		—		406		—		—		406
Other comprehensive earnings (loss), net of tax	—		—	—		—		—		153		—		153
Currency translation recognized in earnings as a result of the transfer of the Argentina steel aerosol business to held for sale	—		—	—		—		—		45		—		45
Reclassification of stranded tax effects	—		—	—		—		79		(79)		—		—
Common dividends, net of tax benefits	—			—		—		(133)		—		—		(133)
Treasury stock purchases	—		—	(9,470)		(612)		—		—		—		(612)
Treasury shares reissued	—		—	594		19		—		—		—		19
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	2,814		22	—		—		—		—		—		22
Other activity	—		(2)	—		8		1		—		(4)		3
Balance at September 30, 2019	676,051	$	1,177	(346,855)	$	(2,790)	$	5,694	$	(716)	$	100	$	3,465

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements


	Ball Corporation and Subsidiaries
	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, 2017, as adjusted	670,576	$	1,084	(320,695)	$	(1,474)	$	5,024	$	(655)	$	105	$	4,084
Net earnings	—		—	—		—		303		—		1		304
Other comprehensive earnings (loss), net of tax	—		—	—		—		—		(144)		—		(144)
Common dividends, net of tax benefits	—		—	—		—		(104)		—		—		(104)
Treasury stock purchases	—		—	(11,990)		(471)		—		—		—		(471)
Treasury shares reissued	—		—	667		18		—		—		—		18
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	2,123		57	—		—		—		—		—		57
Other activity	—		1	—		1		1		(1)		(1)		1
Balance at September 30, 2018	672,699	$	1,142	(332,018)	$	(1,926)	$	5,224	$	(800)	$	105	$	3,745

In April 2017, the company’s board of directors declared a two-for-one split of Ball Corporation’s common stock and increased the quarterly cash dividend by 54 percent to 10 cents on a post-split basis. The stock split was effective as of May ~~16, 2017.~~

~~In August 2017,~~2019, in a privately negotiated transaction, Ball entered into an accelerated share repurchase agreement to buy ~~$100~~$250 million of its common shares using cash on hand and available borrowings. The company ~~advanced the $100 million in August 2017, and received 2.2~~purchased 3.8 million shares ~~which represented approximately 85 percent~~at an average price paid per share of $65.93.

On January 23, 2019, the Board authorized the repurchase by the company of up to a total of 50 million shares. ~~The agreement is expected to settle during the fourth quarter of 2017.~~This repurchase authorization replaced all previous authorizations.

Accumulated Other Comprehensive Earnings (Loss)

The activity related to accumulated other comprehensive earnings (loss) was as follows:

($ in millions)

Foreign
Currency
Translation
(Net of Tax)

Pension and
Other Postretirement
Benefits
(Net of Tax)

Effective
Derivatives
(Net of Tax)

Accumulated
Other
Comprehensive
Earnings (Loss)

Balance at December 31, 2016

$
(329)

$
(590)

$
(22)

$
(941)
Other comprehensive earnings (loss) before reclassifications

—

(52)

(38)

(90)
Amounts reclassified from accumulated other comprehensive earnings (loss)

—

41

65

106
Balance at September 30, 2017

$
(329)

$
(601)

$
5

$
(925)


($ in millions)	Foreign Currency Translation (Net of Tax)		Pension and Other Postretirement Benefits (Net of Tax)		Derivatives Designated as Hedges (Net of Tax)		Accumulated Other Comprehensive Earnings (Loss)

Balance at December 31, 2018	$	(504)	$	(277)	$	(54)	$	(835)
Other comprehensive earnings (loss) before reclassifications		88		4		68		160
Amounts reclassified from accumulated other comprehensive earnings (loss) into earnings		—		24		(31)		(7)
Currency translation recognized in earnings from the transfer of the Argentina steel aerosol business to held for sale		45		—		—		45
Stranded tax effects reclassified into retained earnings		—		(76)		(3)		(79)
Balance at September 30, 2019	$	(371)	$	(325)	$	(20)	$	(716)

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

The following table provides additional details of the amounts recognized into net earnings from accumulated other comprehensive earnings (loss):


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2019		2018		2019		2018

Gains (losses) on cash flow hedges:
Commodity contracts recorded in net sales	$	6	$	2	$	12	$	(2)
Commodity contracts recorded in cost of sales		(11)		19		(27)		47
Currency exchange contracts recorded in selling, general and administrative		6		—		5		1
Cross-currency swaps recorded in selling, general and administrative		32		7		41		37
Cross-currency swaps recorded in interest expense		3		4		11		10
Interest rate contracts recorded in interest expense		(1)		—		(1)		—
Total before tax effect		35		32		41		93
Tax benefit (expense) on amounts reclassified into earnings		(7)		(8)		(10)		(21)
Recognized gain (loss), net of tax	$	28	$	24	$	31	$	72

Amortization of pension and other postretirement benefits: (a)
Prior service income (expense)	$	(1)	$	—	$	(1)	$	—
Actuarial gains (losses)		(4)		(1)		(14)		(20)
Effect of pension settlements (b)		(8)		(14)		(8)		(14)
Total before tax effect		(13)		(15)		(23)		(34)
Tax benefit (expense) on amounts reclassified into earnings		(4)		4		(1)		9
Recognized gain (loss), net of tax	$	(17)	$	(11)	$	(24)	$	(25)

Three Months Ended September 30,

Nine Months Ended September 30,
($ in millions)

2017

2016

2017

2016

Gains (losses) on cash flow hedges:

Commodity contracts recorded in net sales

$
—

$
(1)

$
(3)

$
2
Commodity contracts recorded in cost of sales

12

2

34

(8)
Currency exchange contracts recorded in selling, general and administrative

1

5

(2)

3
Currency exchange contracts recorded in business consolidation and other activities

(3)

—

—

—
Cross-currency swaps recorded in selling, general and administrative

(35)

(7)

(119)

(6)
Cross-currency swaps recorded in interest expense

3

—

13

—
Interest rate contracts recorded in interest expense

—

(1)

—

(1)
Commodity and currency exchange contracts attributable to the divestment business recorded in business consolidation and other activities

—

—

—

(4)
Total before tax effect

(22)

(2)

(77)

(14)
Tax benefit (expense) on amounts reclassified into earnings

15

2

12

2
Recognized gain (loss)

$
(7)

$
—

$
(65)

$
(12)

Amortization of pension and other postretirement benefits: (a)

Prior service income (expense)

$
(1)

$
—

$
(1)

$
3
Actuarial gains (losses) (b)

(48)

(9)

(65)

(108)
Total before tax effect

(49)

(9)

(66)

(105)
Tax benefit (expense) on amounts reclassified into earnings

19

3

25

29
Recognized gain (loss)

$
(30)

$
(6)

$
(41)

$
(76)

(a)

~~(a)~~

The pension components are included in the computation of net periodic benefit cost ~~included~~disclosed in Note ~~13.~~

17.

(b)

~~(b)~~

~~Includes curtailment~~2019 and 2018 amounts include pretax settlement ~~losses.~~losses related to the purchase of non-participating group annuity contracts. Refer to Note 1317 for further ~~detail.~~

details.

19.Earnings and Dividends Per Share

~~15. Stock-Based Compensation Programs~~


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions, except per share amounts; shares in thousands)	2019		2018		2019		2018

Net earnings attributable to Ball Corporation	$	92	$	59	$	406	$	303

Basic weighted average common shares		331,148		342,982		332,726		347,113
Effect of dilutive securities		9,484		6,727		8,976		6,642
Weighted average shares applicable to diluted earnings per share		340,632		349,709		341,702		353,755

Per basic share	$	0.28	$	0.17	$	1.22	$	0.87
Per diluted share	$	0.27	$	0.17	$	1.19	$	0.86

The company has shareholder-approved stock plans under which options and stock-settled appreciation rights (SSARs) have been granted to employees at the market value of the company’s stock at the date of grant. In general, options and SSARs are exercisable in four equal installments commencing one year from the date of grant and terminating 10 years from the date of grant. There were 1.1 million stock options and SSARs granted in January 2017 and 1.3 million in April 2017 (on a post-stock split basis). These options and SSARs cannot be traded in any equity market. However, based on the Black-Scholes option pricing model, options and SSARs granted in April 2017, January 2017, July 2016 and January 2016 have estimated weighted average fair values at the date of grant of $7.21 per share, $8.54 per share, $8.35 per share and $9.29 per share, respectively (reflects the two-for-one stock split effective May 16, 2017). The actual value an employee may realize will depend on the excess of the stock price over the exercise price on the date the option or SSAR is exercised. Consequently, there is no assurance the value realized by an employee will approximate the value estimated. The fair values were estimated using the following weighted average assumptions:

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

April 2017

January 2017

July 2016

January 2016


Expected dividend yield

1.06
%
0.68
%
0.73
%
0.79
%
Expected stock price volatility

18.89
%
20.49
%
24.14
%
29.25
%
Risk-free interest rate

1.95
%
2.07
%
1.22
%
1.57
%
Expected life of options (in years)

5.94
years
5.94
years
6.10
years
5.94
years

During the first quarter of 2017 and 2016, the company’s board of directors granted 237,452 and 237,510 performance-contingent restricted stock units (PCEQs) (on a post-stock split basis), respectively, to key employees. These PCEQs vest three years from the date of grant, and the number of shares available at the vesting date is based on the company’s growth in economic value added (EVA®) dollars in excess of the EVA® dollars generated in the calendar year prior to the grant as the minimum threshold, and can range from zero to 200 percent of each participant’s assigned PCEQ award. If the minimum performance goals are not met, the PCEQ will be forfeited. Grants under the plan are being accounted for as equity awards and compensation expense is recorded based upon the most probable outcome using the closing market price of the shares at the grant date. On a quarterly and annual basis, the company reassesses the probability of the goals being met and adjusts compensation expense as appropriate.

Also during the first quarter of 2017, the company’s board of directors granted 1.1 million performance-contingent restricted stock units (on a post-stock split basis) to employees related to the Special Acquisition-Related Incentive Plan. The number of shares issued at the vesting date in January 2020 will be based on the company’s achievement of cumulative EVA® and Cash Flow performance goals through the vesting date and can range from zero to 200 percent of each participant’s assigned award. If the minimum performance goals are not met, the awards will be forfeited. Grants under the plan are being accounted for as equity awards and compensation expense is recorded based upon the most probable outcome using the closing market price of the shares at the grant date. On a quarterly basis, the company reassesses the probability of the goals being met and adjusts compensation expense as appropriate.

~~16.Earnings and Dividends Per Share~~

Three Months Ended September 30,

Nine Months Ended September 30,
($ in millions, except per share amounts; shares in thousands)

2017

2016

2017

2016

Net earnings attributable to Ball Corporation

$
48

$
31

$
215

$
210

Basic weighted average common shares (a)

350,327

349,128

350,481

305,756
Effect of dilutive securities (a)

8,229

6,276

8,011

6,420
Weighted average shares applicable to diluted earnings per share (a)

358,556

355,404

358,492

312,176

Per basic share (a)

$
0.14

$
0.09

$
0.61

$
0.69
Per diluted share (a)

$
0.13

$
0.09

$
0.60

$
0.67

~~(a)~~

~~Amounts in 2016 have been retrospectively adjusted for the two-for-one stock split that was effective on May 16, 2017.~~

Certain outstanding options were excluded from the diluted earnings per share calculation because they were anti-dilutive (i.e., their assumed conversion into common stock would increase rather than decrease earnings per share). The options excluded totaled ~~3 million and 5~~4 million for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017, respectively. The~~ended September 30, 2018. There were no anti-dilutive options ~~excluded totaled 2 million and 4 million, respectively,~~outstanding for the ~~third quarter~~three and ~~first~~ nine months ~~of 2016.~~ended September 30, 2019.

The company declared and paid dividends of ~~$0.10~~$0.15 per share ~~in both the third quarter~~ and ~~second quarter of 2017. The company declared and paid dividends of $0.065~~$0.40 per share in the ~~first quarter of 2017~~three and ~~each of~~nine months ended September 30, 2019, respectively, and $0.10 per share and $0.30 per share in the ~~first~~ three ~~quarters of 2016, respectively.~~and nine months ended September 30, 2018.

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

~~17.~~20. Financial Instruments and Risk Management

Policies and Procedures

The company employs established risk management policies and procedures, which seek to reduce the company’s commercial risk exposure to fluctuations in commodity prices, interest rates, currency exchange rates and prices of the company’s common stock with regard to common share repurchases and the company’s deferred compensation stock plan. However, there can be no assurance these policies and procedures will be successful. Although the instruments utilized involve varying degrees of credit, market and interest risk, the counterparties to the agreements are expected to perform fully under the terms of the agreements. The company monitors counterparty credit risk, including lenders, on a regular basis, but Ball cannot be certain that all risks will be discerned or that its risk management policies and procedures will always be effective. Additionally, in the event of default under the company’s master derivative agreements, the non-defaulting party has the option to offset any amounts owed with regard to open derivative positions.

Commodity Price Risk

Aluminum

The company manages commodity price risk in connection with market price fluctuations of aluminum ingot through ~~two~~2 different methods. First, the company enters into container sales contracts that include aluminum ingot-based pricing terms ~~that~~which generally reflect the same price fluctuations under commercial purchase contracts for aluminum sheet. The terms include fixed, floating or pass through aluminum ingot component pricing. Second, the company uses certain derivative instruments, ~~such as~~including option and forward contracts as economic and cash flow hedges of commodity price risk where there are material differences between sales and purchase contracted pricing and volume.

At September 30, ~~2017,~~2019, the company had aluminum contracts limiting its aluminum exposure with notional amounts of approximately ~~$732 million, all~~$1.3 billion, of which $1.2 billion received hedge accounting treatment.The aluminum contracts, which are recorded at fair value, include economic derivative instruments that are undesignated, as well as cash flow hedges that offset sales and purchase contracts of various terms and lengths. Cash flow hedges relate to forecasted transactions that will occur within the next three years. Included in shareholders’ equity at September 30, ~~2017,~~2019, within accumulated other comprehensive earnings (loss), is a net after-tax ~~gain~~loss of $24 million associated with these ~~contracts. A net after-tax gain~~contracts, $21 million of ~~$19 million~~which is expected to be recognized in ~~the consolidated statement of~~ earnings during the next 12 ~~months, the~~months. The majority of ~~which~~this amount will be offset by pricing changes in sales and purchase contracts, thus resulting in little or no earnings impact to Ball.

~~Steel~~

Most sales contracts involving our steel products either include provisions permitting the company to pass through some or all steel cost changes incurred, or they incorporate annually negotiated steel prices.

Interest Rate Risk

The company’s objective in managing exposure to interest rate changes is to minimize the impact of interest rate changes on earnings and cash flows and to lower ~~our~~its overall borrowing costs. To achieve these objectives, the company may use a variety of interest rate swaps, collars and options to manage ~~our~~its mix of floating and fixed-rate debt. At September 30, ~~2017,~~2019, the company had outstanding interest rate swap and option contracts with notional amounts of approximately $1$1.3 billion paying fixed rates expiring within the next ~~year.~~two years.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Currency Exchange Rate Risk

The company’s objective in managing exposure to currency fluctuations is to limit the exposure of cash flows and earnings from changes associated with currency exchange rate changes through the use of various derivative contracts. In addition, at times the company manages earnings translation volatility through the use of currency option strategies, and the change in the fair value of those options is recorded in the company’s net earnings. The company’s currency translation risk results from the currencies in which we transact business. The company faces currency exposures in its global operations as a result of various factors including intercompany currency denominated loans, selling our products

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

in various currencies, purchasing raw materials and equipment in various currencies and tax exposures not denominated in the functional currency. Sales contracts are negotiated with customers to reflect cost changes and, where there is not an exchange pass-through arrangement, the company uses forward and option contracts to manage currency exposures. At September 30, ~~2017,~~2019, the company had outstanding exchange rate forward ~~contracts~~ and option contracts with notional amounts totaling approximately $2$3.8 billion. Approximately $3$10 million of net after-tax gain related to these contracts is included in accumulated other comprehensive earnings at September 30, ~~2017,~~2019, $3 million of which ~~a net gain of $2 million~~ is expected to be recognized in ~~the unaudited condensed consolidated statement of~~ earnings during the next 12 months. The contracts outstanding at September 30, ~~2017,~~2019, expire within the next ~~two~~five years.

Additionally, the company entered into a $1 billion cross-currency swap contract to partially mitigate the risk associated with foreign currency denominated intercompany debt incurred in 2016. During the ~~third quarter~~nine months ended September 30, 2019, the company settled portions of ~~2016.~~this contract with a notional value of $750 million, which left $250 million in place as of September 30, 2019. The remaining amount was terminated in October 2019 and is no longer in place. Approximately ~~$22~~$6 million of net after-tax loss related to this contract is included in accumulated other comprehensive earnings at September 30, ~~2017, the amount~~2019, all of which ~~is expected to be~~was recognized ~~during the next 12 months is dependent on fluctuations~~ in ~~currency exchange rates. As of September 30, 2017, the fair value of the cross-currency swap was a $96 million loss. The contract expires in December 2020.~~October 2019 upon termination.

Common Stock Price Risk

The company’s deferred compensation stock program is subject to variable plan accounting and, accordingly, is marked to fair value using the company’s closing stock price at the end of the related reporting period. The company entered into total return swaps to reduce the company’s earnings exposure to these fair value fluctuations that will be outstanding through ~~June 2018~~May 2020 and ~~that~~ have a combined notional value of ~~2.7~~2.9 million shares. Based on the current number of shares in the program, each $1 change in the company’s stock price has an insignificant impact on pretax earnings, net of the impact of related derivatives. ~~As of September 30, 2017, the fair value of the swap was a $2 million gain.~~

Collateral Calls

The company’s agreements with its financial counterparties require the ~~company to post~~posting of collateral in certain circumstances when the negative mark to fair value of the derivative contracts exceeds specified levels. Additionally, the company has collateral posting arrangements with certain customers on these derivative contracts. The cash flows of the margin calls, if any, are shown within the investing section of the company’s unaudited condensed consolidated statements of cash flows. As of September 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, the aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position was ~~$15~~$32 million and ~~$44~~$46 million, respectively, and no0 collateral was required to be posted.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Fair Value Measurements

The company has classified all applicable financial derivative assets and liabilities as Level 2 within the fair value hierarchy as of September 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, and ~~presented~~ those values are presented in the tables below. The

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.


		September 30, 2019
($ in millions)	Balance Sheet Location	Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments		Total

Assets:
Commodity contracts		$	10	$	—	$	10
Foreign currency contracts			2		48		50
Cross-currency and other contracts			1		—		1
Total current derivative contracts	Other current assets	$	13	$	48	$	61

Foreign currency contracts		$	31	$	—	$	31
Interest rate and other contracts			3		—		3
Total noncurrent derivative contracts	Other noncurrent assets	$	34	$	—	$	34

Liabilities:
Commodity contracts		$	35	$	—	$	35
Foreign currency contracts			—		1		1
Cross-currency and other contracts			1		7		8
Total current derivative contracts	Other current liabilities	$	36	$	8	$	44

Commodity contracts		$	3	$	—	$	3
Total noncurrent derivative contracts	Other noncurrent liabilities	$	3	$	—	$	3

September 30, 2017

December 31, 2016
($ in millions)

Derivatives
Designated
as Hedging
Instruments

Derivatives not
Designated as
Hedging
Instruments

Total

Derivatives
Designated
as Hedging
Instruments

Derivatives not
Designated as
Hedging
Instruments

Total

Assets:

Commodity contracts

$
38

$
2

$
40

$
17

$
1

$
18
Foreign currency contracts

3

7

10

1

—

1
Interest rate and other contracts

—

2

2

—

21

21
Total current derivative contracts

$
41

$
11

$
52

$
18

$
22

$
40

Commodity contracts

$
6

$
—

$
6

$
7

$
—

$
7
Interest rate and other contracts

1

—

1

39

—

39
Total noncurrent derivative contracts

$
7

$
—

$
7

$
46

$
—

$
46

Liabilities:

Commodity contracts

$
13

$
1

$
14

$
3

$
—

$
3
Foreign currency contracts

1

16

17

—

22

22
Total current derivative contracts

$
14

$
17

$
31

$
3

$
22

$
25

Total noncurrent foreign currency derivative contracts

$
96

$
—

$
96

$
—

$
—

$
—

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements


		December 31, 2018
		Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments		Total

Assets:
Commodity contracts		$	9	$	1	$	10
Foreign currency contracts			—		21		21
Cross-currency and other contracts			—		5		5
Total current derivative contracts	Other current assets	$	9	$	27	$	36

Liabilities:
Commodity contracts		$	42	$	11	$	53
Foreign currency contracts			2		4		6
Cross-currency and other contracts			1		2		3
Total current derivative contracts	Other current liabilities	$	45	$	17	$	62

Commodity contracts		$	2	$	—	$	2
Cross-currency and other contracts			62		—		62
Total noncurrent derivative contracts	Other noncurrent liabilities	$	64	$	—	$	64

The company uses closing spot and forward market prices as published by the London Metal Exchange, the Chicago Mercantile Exchange, Reuters and Bloomberg to determine the fair value of any outstanding aluminum, currency, energy, inflation and interest rate spot and forward contracts. Option contracts are valued using a Black-Scholes model with observable market inputs for aluminum, currency and interest rates. ~~We value~~The company values each of ~~our~~its financial instruments either internally using a single valuation technique or from a reliable observable market source. The company does not adjust the value of its financial instruments except in determining the fair value of a trade that settles in the future by discounting the value to its present value using a 12-month LIBOR ~~as the discount factor.~~rate. Ball performs validations of ~~our~~its internally derived fair values reported for our financial instruments on a quarterly basis utilizing counterparty valuation statements. Additionally, the company evaluates counterparty creditworthiness and, as of September 30, ~~2017,~~2019, has not identified any circumstances requiring the reported values of ~~our~~its financial instruments to be adjusted.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

The following table provides the effects of derivative instruments in the consolidated statement of earnings and on accumulated other comprehensive earnings (loss):


		Three Months Ended September 30,
		2017				2016

											Three Months Ended September 30,
											2019				2018
($ in millions)	Location of Gain (Loss) Recognized in Earnings on Derivatives	Cash Flow Hedge - Reclassified Amount from Accumulated Other Comprehensive Earnings (Loss)		Gain (Loss) on Derivatives not Designated as Hedge Instruments		Cash Flow Hedge - Reclassified Amount from Accumulated Other Comprehensive Earnings (Loss)		Gain (Loss) on Derivatives not Designated as Hedge Instruments		Location of Gain (Loss) Recognized in Earnings on Derivatives	Cash Flow Hedge - Reclassified Amount from Accumulated Other Comprehensive Earnings (Loss)		Gain (Loss) on Derivatives not Designated as Hedge Instruments		Cash Flow Hedge - Reclassified Amount from Accumulated Other Comprehensive Earnings (Loss)		Gain (Loss) on Derivatives not Designated as Hedge Instruments


Commodity contracts - manage exposure to customer pricing	Net sales	$	—	$	(1)	$	(1)	$	—	Net sales	$	6	$	—	$	2	$	—
Commodity contracts - manage exposure to supplier pricing	Cost of sales		12		(2)		2		(4)	Cost of sales		(11)		(1)		19		2
Interest rate contracts - manage exposure for outstanding debt	Interest expense		—		—		(1)		—	Interest expense		(1)		—		—		—
Foreign currency contracts - manage general exposure with the business	Selling, general and administrative		1		(34)		5		(18)
Foreign currency contracts - manage exposure for proposed acquisition of Rexam	Business consolidation and other activities		(3)		—		—		(12)
Cross-currency swaps - manage intercompany currency exposure within the business	Selling, general and administrative		(35)		—		(7)		—
Cross-currency swaps - manage intercompany currency exposure within the business	Interest expense		3		—		—		—
Equity and inflation contracts	Selling, general and administrative		—		(3)		—		10
Foreign currency contracts - manage currency exposure										Selling, general and administrative		6		90		—		16
Cross-currency swaps - manage intercompany currency exposure										Selling, general and administrative		32		—		7		—
Cross-currency swaps - manage intercompany currency exposure										Interest expense		3		—		4		—
Equity contracts										Selling, general and administrative		—		7		—		21
Total		$	(22)	$	(40)	$	(2)	$	(24)		$	35	$	96	$	32	$	39

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Nine Months Ended September 30,

2017

2016
($ in millions)

Location of Gain (Loss)
Recognized in Earnings
on Derivatives

Cash Flow
Hedge -
Reclassified
Amount from
Accumulated
Other
Comprehensive
Earnings (Loss)

Gain (Loss) on
Derivatives not
Designated as
Hedge
Instruments

Cash Flow
Hedge -
Reclassified
Amount from
Accumulated
Other
Comprehensive
Earnings (Loss)

Gain (Loss) on
Derivatives not
Designated as
Hedge
Instruments

Commodity contracts - manage exposure to customer pricing

Net sales

$
(3)

$
(3)

$
2

$
—
Commodity contracts - manage exposure to supplier pricing

Cost of sales

34

(5)

(8)

(4)
Interest rate contracts - manage exposure for outstanding debt

Interest expense

—

—

(1)

—
Interest rate contracts - manage exposure for forecasted Rexam financing

Debt refinancing and other costs

—

—

—

(20)
Foreign currency contracts - manage general exposure with the business

Selling, general and administrative

(2)

(63)

3

18
Foreign currency contracts - manage exposure for acquisition of Rexam

Business consolidation and other activities

—

—

—

(191)
Cross-currency swaps - manage exposure for acquisition of Rexam

Business consolidation and other activities

—

—

—

(4)
Cross-currency swaps - manage intercompany currency exposure within the business

Selling, general and administrative

(119)

—

(6)

—
Cross-currency swaps - manage intercompany currency exposure within the business

Interest expense

13

—

—

—
Commodity contracts and currency exchange contracts - attributed to the Divestment Business

Business consolidation and other activities

—

—

(4)

—
Equity contracts

Selling, general and administrative

—

8

—

9
Total

$
(77)

$
(63)

$
(14)

$
(192)


		Nine Months Ended September 30,
		2019				2018
($ in millions)	Location of Gain (Loss) Recognized in Earnings on Derivatives	Cash Flow Hedge - Reclassified Amount from Accumulated Other Comprehensive Earnings (Loss)		Gain (Loss) on Derivatives not Designated as Hedge Instruments		Cash Flow Hedge - Reclassified Amount from Accumulated Other Comprehensive Earnings (Loss)		Gain (Loss) on Derivatives not Designated as Hedge Instruments

Commodity contracts - manage exposure to customer pricing	Net sales	$	12	$	—	$	(2)	$	1
Commodity contracts - manage exposure to supplier pricing	Cost of sales		(27)		2		47		6
Interest rate contracts - manage exposure for outstanding debt	Interest expense		(1)		—		—		—
Foreign currency contracts - manage currency exposure	Selling, general and administrative		5		133		1		73
Cross-currency swaps - manage intercompany currency exposure	Selling, general and administrative		41		—		37		—
Cross-currency swaps - manage intercompany currency exposure	Interest expense		11		—		10		—
Equity contracts	Selling, general and administrative		—		70		—		14
Total		$	41	$	205	$	93	$	94

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

The changes in accumulated other comprehensive earnings (loss) for ~~effective~~ derivatives designated as hedges were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,

									Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2017		2016		2017		2016		2019		2018		2019		2018


Amounts reclassified into earnings:
Commodity contracts	$	(12)	$	(1)	$	(31)	$	6	$	5	$	(21)	$	15	$	(45)
Cross-currency swap contracts		32		7		106		6		(35)		(11)		(52)		(47)
Interest rate contracts		—		1		—		1		1		—		1		—
Commodity and currency exchange contracts attributed to the divestment business		—		—		—		4
Currency exchange contracts		2		(5)		2		(3)		(6)		—		(5)		(1)
Change in fair value of cash flow hedges:
Commodity contracts		14		1		43		7		(5)		(11)		(10)		1
Interest rate contracts		—		—		1		(1)		(1)		—		(1)		—
Cross-currency swap contracts		(47)		(23)		(116)		(28)		41		13		81		45
Currency exchange contracts		3		3		4		3		14		1		18		(2)
Foreign currency and tax impacts		(2)		9		18		7		(2)		6		(10)		12
	$	(10)	$	(8)	$	27	$	2
Stranded tax effects reclassified into retained earnings:
Commodity contracts										—		—		2		—
Cross-currency swap contracts										—		—		(5)		—
									$	12	$	(23)	$	34	$	(37)

Table of Contents

~~18.~~Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

21. Contingencies

Ball is subject to numerous lawsuits, claims or proceedings arising out of the ordinary course of business, including actions related ~~to:~~to product ~~liability,~~liability; personal ~~injury,~~injury; the use and performance of company products; warranty matters; patent, trademark or other intellectual property infringement; contractual ~~liability,~~liability; the conduct of the company’s business; tax reporting in domestic and foreign jurisdictions; workplace safety and environmental and other matters. The company has also been identified as a potentially responsible party (PRP) at several waste disposal sites under U.S. federal and related state environmental statutes and regulations and may have joint and several liability for any investigation and remediation costs incurred with respect to such sites. In addition, we have received claims alleging that employees in certain plants have suffered damages due to exposure to alleged workplace hazards. Some of these lawsuits, claims and proceedings involve substantial amounts, including as described below, and some of the environmental proceedings involve potential monetary costs or sanctions that may be material. Ball has denied liability with respect to many of these lawsuits, claims and proceedings and is vigorously defending such lawsuits, claims and proceedings. The company carries various forms of commercial, property and casualty, and other forms of insurance; however, such insurance may not be applicable or adequate to cover the costs associated with a judgment against Ball with respect to these lawsuits, claims and proceedings. The company estimates that potential liabilities for all currently known and estimable environmental matters are approximately ~~$45~~$28 million in the aggregate, and such amounts have been included in other current liabilities and other noncurrent liabilities at September 30, ~~2017.~~2019.

As previously reported, the U.S. Environmental Protection Agency (USEPA) considers the company a PRP with respect to the Lowry Landfill site located east of Denver, Colorado. In 1992, the company was served with a lawsuit filed by the City and County of Denver (Denver) and Waste Management of Colorado, Inc., seeking contributions from the company and approximately 38 other companies. The company filed its answer denying the allegations of the complaint. Subsequently in 1992, the company was served with a third-party complaint filed by S.W. Shattuck Chemical Company, Inc., seeking contribution from the company and other companies for the costs associated with cleaning up the Lowry Landfill. The company denied the allegations of the complaint.

Also in 1992, Ball entered into a settlement and indemnification agreement with Chemical Waste Management, Inc., and Waste Management of Colorado, Inc. (collectively Waste Management) and Denver pursuant to which Waste Management and Denver dismissed their lawsuit against the company, and Waste Management agreed to defend, indemnify and hold harmless the company from claims and lawsuits brought by governmental agencies and other parties relating to actions seeking contributions or remedial costs from the company for the clean-up of the site. Waste Management, Inc., has agreed to guarantee the obligations of Waste Management. Waste Management and Denver may

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

seek additional payments from the company if the response costs related to the site exceed $319 million. In 2003 Waste Management, Inc., indicated that the cost of the site clean-up might exceed $319 million in 2030, approximately three years before the projected completion of the project. In January 2015, Waste Management reported that total project costs to date were approximately $140 million. The company might also be responsible for payments (based on 1992 dollars) for any additional wastes that may have been disposed of by the company at the site but which are identified after the execution of the settlement agreement. While remediating the site, contaminants were encountered, which could add an additional clean-up cost of approximately $10 million. This additional clean-up cost could, in turn, add approximately $1 million to total site costs for the PRP group. At this time, there are no Lowry Landfill actions in which the company is actively involved. Based on the information available to the company at this time, we do not believe that this matter will have a material adverse effect upon the liquidity, results of operations or financial condition of the company.

In November 2012, the USEPA wrote to the company asserting that it is one of at least 50 PRPs with respect to the Lower Duwamish site located in Seattle, Washington, based on the company’s ownership of a glass container plant prior to 1995, and notifying the company of a proposed remediation action plan. ~~An allocator has been~~A site was selected to begin data review on over 30 industrial companies and government entities and at least ~~two~~2 PRP groups have ~~begun to discuss~~been discussing various allocation ~~proposals, and this process may last approximately one more year. During the third quarter of 2014, the PRP groups voted to include 20 new members.~~proposals. The USEPA issued the site Record of Decision (ROD) onin December 2, 2014. Ball submitted its initial responses to the allocator’s questionnaire in March 2015, and after reviewing submissions from the PRPs alleging deficiencies in certain of Ball’s responses, the allocator denied certain of the allegations and directed the company to answer others, to which Ball responded during the fourth quarter of 2016. A group of de minimis PRPs, including Ball, ~~have~~ retained a technical consultant to assist with their positions vis-à-vis larger ~~PRPs.~~PRPs, and further presentations were made to the site allocator during the fourth quarter of 2017 and the first quarter of 2018. Total site remediation costs of $342 million, to cover remediation of approximately 200 acres of river bottom, are expected according to the proposed remediation action plan, which does not include $100 million that has already been spent, and which will be allocated among the numerous PRPs in due course. Based on the information available to the company at this time, ~~we do~~the company does not believe that this matter will have a material adverse effect upon the liquidity, results of operations or financial condition of the company.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

In February 2012, Ball Metal Beverage Container Corp. (BMBCC) filed an action against Crown Packaging Technology, Inc. (Crown) in the U.S. District Court for the Southern District of Ohio (the Court) seeking a declaratory judgment that the manufacture, sale and use of certain ends by BMBCC and its customers do not infringe certain claims of Crown’s U.S. patents. Crown subsequently filed a counterclaim alleging infringement of certain claims in these patents seeking unspecified monetary damages, fees and declaratory and injunctive relief. The District Court issued a claim construction order at the end of December 2015 and held a scheduling conference on February 10, 2016, to determine the timeline for future steps in the litigation. The case was stayed by mutual agreement of the parties into the third quarter of 2016, during which Crown made preparations for its discovery with respect to certain ends previously produced by Rexam’s U.S. subsidiary, Rexam ~~and such~~Beverage Can Company (RBCC). Such discovery began during the first half of ~~2017.~~2017 and concluded in the fourth quarter of 2018. The parties attempted to mediate the case on August 1, 2017, but no progress was made, and the case ~~continues~~continued as scheduled. In December, 2018, BMBCC and RBCC filed a motion for summary judgment that the Crown patents at issue are invalid and that the applicable ends supplied by BMBCC and RBCC did not infringe the patents. Crown did not file a motion for summary judgment. Oral argument on the motion filed by BMBCC and RBCC was completed in January 2019. On June 21, 2019, the District Court issued an order sustaining the BMBCC/RBCC motion as to invalidity, declining to rule on the other grounds as moot, and indicating that an expanded opinion and an appealable order would be forthcoming. The expanded opinion was docketed on July 22, 2019. The final, appealable order was issued by the Court on September 25, 2019, and the expanded opinion was unsealed. On October 22, 2019, Crown filed a Notice of Appeal of the decision of the Court to the Court of Appeals for the Federal Circuit. Based on the information available to the company at the present time, the company does not believe that this matter will have a material adverse effect upon the liquidity, results of operations or financial condition of the company.

On September 16, 1971, Rexham Corporation (Rexham) was incorporated as a wholly owned subsidiary of Riegel Paper Company (Riegel). On September 23, 1971, Riegel, Federal Paper Board Company (Federal) and Rexham entered into an Agreement and Plan of Reorganization (the 1971 Agreement) pursuant to which Riegel spun-off its packaging business into the newly formed Rexham. Federal retained Riegel’s paper group pursuant to a merger with Riegel. International Paper Company (International Paper) and Georgia Pacific Corporation (Georgia Pacific) are successors to Riegel. Image Products Group, LLC (IPG) is the successor to Rexham. Rexam Inc. (RI) sold IPG to Sun Coating Acquisition Corp. (Sun) in 2002 and agreed to indemnify Sun and IPG for certain environmental liabilities of Rexham.

On November 4, 2011, International Paper and Georgia Pacific filed a complaint against RI and IPG alleging that pursuant to the 1971 Agreement, IPG and RI are liable for 50 percent of the clean-up costs at the Crown Vantage Landfill (the Site). The Site is an inactive industrial landfill on the Delaware River in Hunterdon County, New Jersey, that was operated by Riegel and its successors from the 1930s to the 1970s. The USEPA conducted an emergency clean-up at the Site after a 2004 flood exposed drums and other waste. Georgia Pacific took over the clean-up at the Site.

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Georgia Pacific later sued International Paper as a successor to Riegel. Georgia Pacific and International Paper entered into a settlement agreement under which International Paper accepted responsibility for the Site. The litigation against IPG and RI centers on the interpretation of the 1971 Agreement and whether it allocated the Site liabilities to the paper group of Riegel, which merged with and into Federal, a predecessor of International Paper, or to the packaging group of Riegel, which was spun off to Rexham.

Georgia Pacific and International Paper claim they have incurred past costs at the Site of approximately $14 million, and that Rexam’s share of these costs is approximately $7 million. Georgia Pacific and International Paper have also asserted that they have incurred approximately $30 million in remediation costs at the Curtis Specialty Papers Superfund site, the former paper mill adjacent to the Site. In addition, Georgia Pacific, International Paper and the EPA have claimed that Rexam is responsible for certain other non-material amounts associated with the Curtis Papers site and related former paper mill sites.

In the fourth quarter of 2016, representatives of Ball/Rexam and Georgia Pacific and International Paper participated in a court ordered mediation in an attempt to resolve this matter. No resolution was reached. During the second quarter of 2017, the court placed the case on administratively terminated status pending ongoing discussions among the parties. In October 2017, the parties concluded a settlement agreement pursuant to which the litigation was dismissed and Georgia Pacific and International Paper released Rexam Inc., IPG and their respective affiliates from all remediation and clean-up costs and other environmental claims and liabilities in respect of the Crown Vantage Landfill, the Curtis Papers Superfund site and other former Riegel paper mill properties in New Jersey, and these matters are now substantially concluded.

A former Rexam Personal Care site in Annecy, France, was found in 2003 to be contaminated following a leak of chlorinated solvents (TCE) from an underground feedline. The site underwent extensive investigation and an active remediation treatment system was put in place in 2006. The business operating from the site was sold to Albea in 2013 and in turn to a French company CATIDOM (operating as Reboul). Reboul vacated the site in September 2014, and the site reverted back to Rexam during the first quarter of 2015. As part of the site closure regulatory requirements, a new regulatory permit (Prefectoral Order) was issued in June 2016, which includes requirements to undertake a cost-benefit analysis and pilot studies of further treatment for the known residual solvent contamination following the shutdown of the current on-site treatment system. A new management plan ~~will be~~was proposed to the French Environmental Authorities (DREAL) ~~later this year or~~ during ~~2018.~~2018 and is the subject of ongoing discussions ahead of a final plan for the site being addressed. Based on the information available to the company at this time, ~~we do~~the company does not believe that this matter will have a material adverse effect upon the liquidity, results of operations or financial condition of the company.

The company’s operations in Brazil are involved in various governmental assessments, principally related to claims for taxes on the internal transfer of inventory, gross ~~revenue~~sales taxes and indirect tax incentives. The company does not believe that the ultimate resolution of these matters will materially impact the company’s results of operations, financial position or cash flows. Under customary local regulations, the company’s Brazilian subsidiaries may need to post cash or other collateral if the process to challenge any administrative assessment proceeds to the Brazilian court system; however, the level of any potential cash or collateral required would not significantly impact the liquidity of those subsidiaries or Ball Corporation.

~~19.~~During the first quarter of 2017, the Brazilian Supreme Court (the Court) ruled against the Brazilian tax authorities in a leading case related to the computation of certain indirect taxes. The Court ruled that the indirect tax base should not include a value-added tax known as “ICMS.” By removing the ICMS from the tax base, the Court effectively eliminated a “tax on tax.” The Court decision, in principle, affects all applicable judicial proceedings in progress. However, after publication of the decision in October 2017, the Brazilian tax authorities filed an appeal seeking clarification of certain matters, including the amount of ICMS to which taxpayers would be entitled in order to reduce their indirect tax base (i.e., the gross rate or net rate). The appeal also requested a modulation of the decision’s effects, which may limit its impact on taxpayers.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

The company’s Brazilian subsidiaries paid to the Brazilian tax authorities the gross amounts of certain indirect taxes (which included ICMS in their tax base) and filed lawsuits in 2014 and 2015 to challenge the legality of these tax on tax amounts. Pursuant to these lawsuits, the company requested reimbursement of prior excess tax payments and entitlement to retain amounts not remitted. During the third quarter of 2018, the company learned of a further decision of the Court indicating that lawsuits filed prior to the trial resulting in its 2017 decision, such as those filed by the company, would likely be upheld. The company also noted that other Brazilian companies, including customers of its Brazilian subsidiaries, which had timely filed equivalent lawsuits, were recording income based on the applicable ICMS amounts retained. During the second quarter of 2019, the company received additional favorable court rulings and completed its analysis of certain prior year overpayments related to ICMS. As these gain contingency amounts are now estimable and realizable, the company recorded $56 million of prior year collections in business consolidation and other activities within the company’s condensed consolidated statement of earnings. The company is currently seeking reimbursement for additional ICMS-related amounts previously paid to the Brazilian government; however, such amounts cannot be estimated at this time. In the event other comparable cases are resolved and the amounts claimed become estimable and realizable, the company will record gains, which may result in material reimbursements to the company in future periods.

22. Indemnifications and Guarantees

General Guarantees

The company ~~or its appropriate~~and certain consolidated direct or indirect ~~subsidiaries, including Rexam and its~~ subsidiaries have made certain indemnities, commitments and guarantees under which the specified entity may be required to make payments in relation to certain ~~transactions.~~transactions or other obligations. These indemnities, commitments and guarantees include indemnities to the customers of the subsidiaries in connection with the sales of their packaging and aerospace products and services; guarantees to suppliers of subsidiaries of the company guaranteeing the performance of the respective entity under a purchase agreement or other agreement, construction contract or other commitment; guarantees in respect of certain foreign subsidiaries’ pension plans; indemnities for liabilities associated with the infringement of ~~third party~~third-party patents, trademarks or copyrights under various types of agreements; indemnities to various lessors in connection with facility, equipment, furniture and other personal property leases for certain claims arising from such leases; indemnities to governmental agencies in

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

connection with the issuance of a permit or license to the company or a subsidiary; indemnities pursuant to agreements relating to certain joint ventures; indemnities in connection with the sale of businesses or substantially all of the assets and specified liabilities of businesses; and indemnities to directors, officers and employees of the company to the extent permitted under the laws of the State of Indiana and the United States of America. The duration of these indemnities, commitments and guarantees varies and, in certain cases, is indefinite.

In addition, many of these indemnities, commitments and guarantees do not provide for any limitation on the maximum potential future payments the company could be obligated to make. As such, the company is unable to reasonably estimate its potential exposure under these items.

Other than the indemnifications provided in connection with the ~~sale of the Divestment Business,~~Rexam acquisition, the company has not recorded any material liabilities for these indemnities, commitments and guarantees in the accompanying consolidated balance sheets. The company does, however, accrue for payments under promissory notes and other evidences of incurred indebtedness and for losses for any known contingent liability, including those that may arise from indemnifications, commitments and guarantees, when future payment is both reasonably estimable and probable. Finally, the company carries specific and general liability insurance policies and has obtained indemnities, commitments and guarantees from ~~third party~~third-party purchasers, sellers and other contracting parties, which the company believes would, in certain circumstances, provide recourse to ~~any~~certain claims arising from these indemnifications, commitments and guarantees.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Debt Guarantees

The company’s and its subsidiaries’ obligations under the senior notes and senior credit facilities (or, in the case of U.S. domiciled foreign subsidiaries under the senior credit facilities, the obligations of foreign credit parties only) are guaranteed on a full, unconditional and joint and several basis by certain of the company’s domestic subsidiaries and the domestic subsidiary borrowers, and obligations of other guarantors and the subsidiary borrowers under the senior credit facilities are guaranteed by the company, in each case with certain ~~exceptions and subject to grace periods.~~exceptions. These guarantees are required in support of the senior notes and senior credit facilities referred to above, are coterminous with the terms of the respective note indentures, senior notes and credit agreement and could be enforced by the holders of the obligations thereunder during the continuation of an event of default under the note indentures, the senior notes and/or the credit ~~agreement or any other loan document in respect thereof.~~agreement. The maximum potential amounts which could be required to be paid under such guarantees are essentially equal to the then outstanding obligations under the respective senior notes or the credit agreement (or, in the case of U.S. domiciled foreign subsidiaries under the senior credit facilities, the obligations of foreign credit parties only), with certain exceptions. All obligations under the guarantees of the senior credit facilities are secured, with certain exceptions, ~~and subject to certain grace periods,~~ by a valid first priority perfected lien or pledge on (i) 100 percent of the capital stock of each of the company's material wholly owned domestic subsidiaries directly owned by the company or any of its wholly owned domestic subsidiaries and

(ii) 65 percent of the capital stock of each of the company's material wholly owned first-tier foreign subsidiaries directly owned by the company or any of its wholly owned domestic subsidiaries. In addition, the obligations of certain foreign borrowers and foreign pledgors under the loan documents will be secured, with certain exceptions, ~~and subject to certain grace periods,~~ by a valid first priority perfected lien or pledge on 100 percent of the capital stock of certain of the company's material wholly owned foreign subsidiaries and material wholly owned U.S. domiciled foreign subsidiaries directly owned by the company or any of its wholly owned material subsidiaries. The company is not in default under the above senior notes or senior credit facilities. The ~~unaudited~~required condensed consolidating financial information for the guarantor and non-guarantor subsidiaries is presented in Note ~~20.~~23. Separate financial statements for the guarantor subsidiaries and the non-guarantor subsidiaries are not presented because management has determined that such financial statements are not required byunder the ~~current~~Securities and Exchange Commission (SEC) regulations.

~~20.~~23. Subsidiary Guarantees of Debt

The following unaudited condensed consolidating financial information is presented in accordance with SEC Regulations ~~S‑X~~S-X Rule 3-10, ~~unaudited~~ Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered, and comprises two separate and distinct presentations. Amounts for the third quarter and first nine months of 2016, have been revised for the adjustments identified and recorded as of December 31, 2016. Refer to Note 1for further details.

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Registered. For purposes of ~~each~~the presentation of unaudited condensed consolidating financial information, the subsidiaries of the company providing the guarantees are referred to as the guarantor subsidiaries, and subsidiaries of the company other than the guarantor subsidiaries are referred to as the non-guarantor subsidiaries. The eliminating adjustments substantively consist of intercompany transactions and the elimination of equity investments and earnings of subsidiaries. Separate financial statements for the guarantor subsidiaries and the non-guarantor subsidiaries are not presented because management has determined that such financial statements are not ~~required.~~required under SEC regulations.

~~Guarantees Relating to Shelf Registration Statement~~

The ~~first presentation of unaudited condensed consolidating financial information relates to the Registration Statement~~company’s senior notes are guaranteed on ~~Form S-3 registering debt securities of the company and the~~a full and unconditional, joint and several guarantees of such debt securities by certain 100 percent owned domestic subsidiaries of the company. The following is unaudited condensed consolidating financial information for the company, segregating the guarantor subsidiaries and non-guarantor subsidiaries, as of September 30, 2017, and December 31, 2016, and for the third quarter and first nine months of 2017 and 2016. The unaudited condensed consolidating financial information presented below is not necessarily indicative of the financial position, results of operations, earnings or cash flows of the company or any of the company’s subsidiaries on a stand-alone basis.

Unaudited Condensed Consolidating Statement of Earnings

Three Months Ended September 30, 2017

($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Net sales
$
—

$
1,232

$
1,694

$
(18)

$
2,908

Cost and expenses

Cost of sales (excluding depreciation and amortization)

—

(1,003)

(1,353)

18

(2,338)

Depreciation and amortization

(1)

(38)

(123)

—

(162)

Selling, general and administrative

(41)

(40)

(46)

—

(127)

Business consolidation and other activities

(18)

(35)

(104)

—

(157)

Equity in results of subsidiaries

72

(29)

—

(43)

—

Intercompany

79

(42)

(37)

—

—

91

(1,187)

(1,663)

(25)

(2,784)

Earnings (loss) before interest and taxes

91

45

31

(43)

124

Interest expense

(71)

1

(4)

—

(74)

Debt refinancing and other costs

—

—

—

—

—

Total interest expense

(71)

1

(4)

—

(74)

Earnings (loss) before taxes

20

46

27

(43)

50

Tax (provision) benefit

28

(19)

(13)

—

(4)

Equity in results of affiliates, net of tax

—

—

5

—

5

Net earnings (loss)

48

27

19

(43)

51

Less net earnings attributable to noncontrolling interests

—

—

(3)

—

(3)

Net earnings (loss) attributable to Ball Corporation
$
48

$
27

$
16

$
(43)

$
48

Comprehensive earnings (loss) attributable to Ball Corporation
$
42

$
21

$
13

$
(34)

$
42

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Unaudited Condensed Consolidating Statement of Earnings

Three Months Ended September 30, 2016

($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Net sales
$
—

$
1,214

$
1,626

$
(88)

$
2,752

Cost and expenses

Cost of sales (excluding depreciation and amortization)

—

(992)

(1,371)

88

(2,275)

Depreciation and amortization

(2)

(33)

(112)

—

(147)

Selling, general and administrative

(31)

(43)

(61)

—

(135)

Business consolidation and other activities

(154)

(7)

98

—

(63)

Equity in results of subsidiaries

339

39

—

(378)

—

Intercompany

78

(44)

(34)

—

—

230

(1,080)

(1,480)

(290)

(2,620)

Earnings (loss) before interest and taxes

230

134

146

(378)

132

Interest expense

(66)

—

(14)

—

(80)

Debt refinancing and other costs

—

—

(2)

—

(2)

Total interest expense

(66)

—

(16)

—

(82)

Earnings (loss) before taxes

164

134

130

(378)

50

Tax (provision) benefit

(133)

56

54

—

(23)

Equity in results of affiliates, net of tax

—

1

6

—

7

Net earnings (loss)

31

191

190

(378)

34

Less net earnings attributable to noncontrolling interests

—

—

(3)

—

(3)

Net earnings (loss) attributable to Ball Corporation
$
31

$
191

$
187

$
(378)

$
31

Comprehensive earnings (loss) attributable  to Ball Corporation
$
7

$
171

$
167

$
(338)

$
7

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Unaudited Condensed Consolidating Statement of Earnings

Nine Months Ended September 30, 2017

($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Net sales
$
—

$
3,620

$
4,698

$
(82)

$
8,236

Cost and expenses

Cost of sales (excluding depreciation and amortization)

—

(2,972)

(3,693)

82

(6,583)

Depreciation and amortization

(5)

(111)

(423)

—

(539)

Selling, general and administrative

(141)

(118)

(139)

—

(398)

Business consolidation and other activities

(82)

(38)

(133)

—

(253)

Equity in results of subsidiaries

343

(23)

—

(320)

—

Intercompany

241

(129)

(112)

—

—

356

(3,391)

(4,500)

(238)

(7,773)

Earnings (loss) before interest and taxes

356

229

198

(320)

463

Interest expense

(205)

4

(15)

—

(216)

Debt refinancing and other costs

—

—

(1)

—

(1)

Total interest expense

(205)

4

(16)

—

(217)

Earnings (loss) before taxes

151

233

182

(320)

246

Tax (provision) benefit

64

(83)

(29)

—

(48)

Equity in results of affiliates, net of tax

—

1

22

—

23

Net earnings

215

151

175

(320)

221

Less net earnings attributable to noncontrolling interests

—

—

(6)

—

(6)

Net earnings attributable to Ball Corporation
$
215

$
151

$
169

$
(320)

$
215

Comprehensive earnings (loss) attributable  to Ball Corporation
$
231

$
137

$
146

$
(283)

$
231

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Unaudited Condensed Consolidating Statement of Earnings

Nine Months Ended September 30, 2016
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Net sales
$
—

$
3,495

$
3,213

$
(171)

$
6,537

Cost and expenses

Cost of sales (excluding depreciation and amortization)

—

(2,854)

(2,605)

171

(5,288)

Depreciation and amortization

(4)

(104)

(191)

—

(299)

Selling, general and administrative

(63)

(126)

(159)

—

(348)

Business consolidation and other activities

355

(30)

(627)

—

(302)

Equity in results of subsidiaries

(57)

359

—

(302)

—

Intercompany

189

(131)

(58)

—

—

420

(2,886)

(3,640)

(131)

(6,237)

Earnings (loss) before interest and taxes

420

609

(427)

(302)

300

Interest expense

(141)

(1)

(17)

—

(159)

Debt refinancing and other costs

(97)

—

(11)

—

(108)

Total interest expense

(238)

(1)

(28)

—

(267)

Earnings (loss) before taxes

182

608

(455)

(302)

33

Tax (provision) benefit

28

6

140

—

174

Equity in results of affiliates, net of tax

—

—

6

—

6

Net earnings

210

614

(309)

(302)

213

Less net earnings attributable to noncontrolling interests

—

—

(3)

—

(3)

Net earnings attributable to Ball Corporation
$
210

$
614

$
(312)

$
(302)

$
210

Comprehensive earnings (loss) attributable  to Ball Corporation
$
233

$
651

$
(306)

$
(345)

$
233

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Unaudited Condensed Consolidating Balance Sheet

September 30, 2017

($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Assets

Current assets

Cash and cash equivalents
$
6

$
—

$
550

$
—

$
556

Receivables, net

69

416

1,308

—

1,793

Intercompany receivables

45

120

959

(1,124)

—

Inventories, net

—

545

888

—

1,433

Other current assets

32

32

84

—

148

Total current assets

152

1,113

3,789

(1,124)

3,930

Noncurrent assets

Property, plant and equipment, net

21

1,193

3,311

—

4,525

Investment in subsidiaries

8,147

2,242

79

(10,468)

—

Goodwill

—

981

3,927

—

4,908

Intangible assets, net

17

68

2,405

—

2,490

Other assets

38

22

1,090

—

1,150

Total assets
$
8,375

$
5,619

$
14,601

$
(11,592)

$
17,003

Liabilities and Shareholders' Equity

Current liabilities

Short-term debt and current portion of long-term debt
$
293

$
—

$
159

$
—

$
452

Accounts payable

13

887

1,519

—

2,419

Intercompany payables

1,014

46

64

(1,124)

—

Accrued employee costs

26

116

156

—

298

Other current liabilities

187

67

355

—

609

Total current liabilities

1,533

1,116

2,253

(1,124)

3,778

Noncurrent liabilities

Long-term debt

6,497

—

607

—

7,104

Employee benefit obligations

343

345

718

—

1,406

Intercompany long-term notes

(3,372)

85

3,287

—

—

Deferred taxes

(353)

206

802

—

655

Other liabilities

197

14

211

—

422

Total liabilities

4,845

1,766

7,878

(1,124)

13,365

Common stock

1,072

635

4,426

(5,061)

1,072

Preferred stock

—

—

5

(5)

—

Retained earnings

4,864

4,045

2,758

(6,804)

4,863

Accumulated other comprehensive earnings (loss)

(925)

(827)

(575)

1,402

(925)

Treasury stock, at cost

(1,481)

—

—

—

(1,481)

Total Ball Corporation shareholders' equity

3,530

3,853

6,614

(10,468)

3,529

Noncontrolling interests

—

—

109

—

109

Total shareholders' equity

3,530

3,853

6,723

(10,468)

3,638

Total liabilities and shareholders' equity
$
8,375

$
5,619

$
14,601

$
(11,592)

$
17,003

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Unaudited Condensed Consolidating Balance Sheet

December 31, 2016

($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Assets

Current assets

Cash and cash equivalents
$
2

$
(11)

$
606

$
—

$
597

Receivables, net

96

450

945

—

1,491

Intercompany receivables

39

125

963

(1,127)

—

Inventories, net

—

516

897

—

1,413

Other current assets

40

33

79

—

152

Total current assets

177

1,113

3,490

(1,127)

3,653

Noncurrent assets

Property, plant and equipment, net

23

1,087

3,277

—

4,387

Investment in subsidiaries

7,815

2,289

79

(10,183)

—

Goodwill

—

990

4,105

—

5,095

Intangible assets, net

18

76

1,840

—

1,934

Other assets

94

20

990

—

1,104

Total assets
$
8,127

$
5,575

$
13,781

$
(11,310)

$
16,173

Liabilities and Shareholders' Equity

Current liabilities

Short-term debt and current portion of long-term debt
$
141

$
—

$
81

$
—

$
222

Accounts payable

18

771

1,244

—

2,033

Intercompany payables

1,010

52

65

(1,127)

—

Accrued employee costs

25

135

155

—

315

Other current liabilities

138

65

196

—

399

Total current liabilities

1,332

1,023

1,741

(1,127)

2,969

Noncurrent liabilities

Long-term debt

6,337

—

973

—

7,310

Employee benefit obligations

347

440

710

—

1,497

Intercompany long-term notes

(3,142)

178

2,964

—

—

Deferred taxes

(308)

198

549

—

439

Other liabilities

127

20

270

—

417

Total liabilities

4,693

1,859

7,207

(1,127)

12,632

Common stock

1,038

635

4,426

(5,061)

1,038

Preferred stock

—

—

5

(5)

—

Retained earnings

4,739

3,893

2,589

(6,482)

4,739

Accumulated other comprehensive earnings (loss)

(942)

(812)

(552)

1,365

(941)

Treasury stock, at cost

(1,401)

—

—

—

(1,401)

Total Ball Corporation shareholders' equity

3,434

3,716

6,468

(10,183)

3,435

Noncontrolling interests

—

—

106

—

106

Total shareholders' equity

3,434

3,716

6,574

(10,183)

3,541

Total liabilities and shareholders' equity
$
8,127

$
5,575

$
13,781

$
(11,310)

$
16,173

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Unaudited Condensed Consolidating Statement of Cash Flows

Nine Months Ended September 30, 2017

($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Consolidated
Total

Cash provided by (used in) operating activities
$
266

$
282

$
199

$
747

Cash flows from investing activities

Capital expenditures

(5)

(232)

(167)

(404)

Business dispositions, net of cash sold

—

31

—

31

Other, net

1

27

(25)

3

Cash provided by (used in) investing activities

(4)

(174)

(192)

(370)

Cash flows from financing activities

Long-term borrowings

440

—

—

440

Repayments of long-term borrowings

(433)

—

(476)

(909)

Net change in short-term borrowings

151

—

69

220

Proceeds from issuances of common stock, net of shares used for taxes

18

—

—

18

Acquisitions of treasury stock

(103)

—

—

(103)

Common stock dividends

(93)

—

—

(93)

Intercompany

(231)

(95)

326

—

Other, net

—

(2)

—

(2)

Cash provided by (used in) financing activities

(251)

(97)

(81)

(429)

Effect of exchange rate changes on cash

(7)

—

18

11

Change in cash and cash equivalents

4

11

(56)

(41)

Cash and cash equivalents – beginning of period

2

(11)

606

597

Cash and cash equivalents – end of period
$
6

$
—

$
550

$
556

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

Unaudited Condensed Consolidating Statement of Cash Flows

Nine Months Ended September 30, 2016

($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Consolidated
Total

Cash provided by (used in) operating activities
$
(385)

$
155

$
(203)

$
(433)

Cash flows from investing activities

Capital expenditures

(10)

(170)

(218)

(398)

Business acquisition, net of cash acquired

2,303

(36)

(5,646)

(3,379)

Business dispositions, net of cash sold

1,010

—

1,931

2,941

Decrease in restricted cash

1,966

—

—

1,966

Settlement of Rexam acquisition related derivatives

(252)

—

—

(252)

Other, net

—

7

(5)

2

Cash flows from investing continuing operations

5,017

(199)

(3,938)

880

Cash flows from financing activities

Long-term borrowings

2,610

—

1,760

4,370

Repayments of long-term borrowings

(921)

—

(3,427)

(4,348)

Net change in short-term borrowings

200

—

(44)

156

Proceeds from issuances of common stock, net of shares used for taxes

38

—

—

38

Acquisitions of treasury stock

(98)

—

—

(98)

Common stock dividends

(60)

—

—

(60)

Intercompany

(6,351)

46

6,305

—

Other, net

(5)

(1)

(9)

(15)

Cash provided by (used in) financing activities

(4,587)

45

4,585

43

Effect of exchange rate changes on cash

4

—

(73)

(69)

Change in cash and cash equivalents

49

1

371

421

Cash and cash equivalents – beginning of period

5

—

219

224

Cash and cash equivalents – end of period
$
54

$
1

$
590

$
645

~~Table of Contents~~

~~Ball Corporation~~

~~Notes to the Unaudited Condensed Consolidated Financial Statements~~

~~Guarantees Relating to Senior Notes~~

The second presentation of unaudited condensed consolidating financial information relates to the existing senior notes issued by the company and the full and unconditional guarantee of such senior notes on a joint and several basis by certain domestic subsidiaries of the company. Each of the guarantor subsidiaries is 100 percent owned by the company. As described in the supplemental indentures governing the company’s existing senior notes, the senior notes are ~~to be~~ guaranteed by any of the company’s domestic subsidiaries that guarantee any other indebtedness of the company. The following is unaudited condensed consolidating financial information for the company, segregating the guarantor subsidiaries and non-guarantor subsidiaries, as of September 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, and for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2019 and ~~2016.~~2018. The unaudited condensed ~~unaudited~~ consolidating financial information presented below is not necessarily indicative of the financial position, results of operations, earnings or cash flows of the company or any of the company’s subsidiaries on a stand-alone basis.

Unaudited Condensed Consolidating Statement of Earnings

Three Months Ended September 30, 2017
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Net sales
$
—

$
1,232

$
1,694

$
(18)

$
2,908

Cost and expenses

Cost of sales (excluding depreciation and amortization)

—

(1,003)

(1,353)

18

(2,338)
Depreciation and amortization

(1)

(38)

(123)

—

(162)
Selling, general and administrative

(41)

(31)

(55)

—

(127)
Business consolidation and other activities

(18)

(37)

(102)

—

(157)
Equity in results of subsidiaries

72

(52)

(28)

8

—
Intercompany

79

(40)

(39)

—

—

91

(1,201)

(1,700)

26

(2,784)

Earnings (loss) before interest and taxes

91

31

(6)

8

124
Interest expense

(71)

1

(4)

—

(74)
Debt refinancing and other costs

—

—

—

—

—
Total interest expense

(71)

1

(4)

—

(74)
Earnings (loss) before taxes

20

32

(10)

8

50
Tax (provision) benefit

28

(19)

(13)

—

(4)
Equity in results of affiliates, net of tax

—

—

5

—

5
Net earnings (loss)

48

13

(18)

8

51
Less net earnings attributable to noncontrolling interests

—

—

(3)

—

(3)
Net earnings (loss) attributable to Ball Corporation
$
48

$
13

$
(21)

$
8

$
48

Comprehensive earnings (loss) attributable to Ball Corporation
$
42

$
12

$
(25)

$
13

$
42

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements


	Unaudited Condensed Consolidating Statement of Earnings
	Three Months Ended September 30, 2019
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Adjustments		Consolidated Total

Net sales	$	—	$	1,680	$	1,480	$	(207)	$	2,953

Cost and expenses
Cost of sales (excluding depreciation and amortization)		—		(1,443)		(1,127)		207		(2,363)
Depreciation and amortization		(2)		(51)		(116)		—		(169)
Selling, general and administrative		41		(84)		(47)		—		(90)
Business consolidation and other activities		(7)		(2)		(124)		—		(133)
Equity in results of subsidiaries		80		(37)		—		(43)		—
Intercompany		49		(24)		(25)		—		—
		161		(1,641)		(1,439)		164		(2,755)

Earnings (loss) before interest and taxes		161		39		41		(43)		198
Interest expense		(80)		1		—		—		(79)
Debt refinancing and other costs		—		—		—		—		—
Total interest expense		(80)		1		—		—		(79)
Earnings (loss) before taxes		81		40		41		(43)		119
Tax (provision) benefit		11		(13)		(30)		—		(32)
Equity in results of affiliates, net of tax		—		1		4		—		5
Net earnings (loss)		92		28		15		(43)		92
Less net earnings attributable to noncontrolling interests		—		—		—		—		—
Net earnings (loss) attributable to Ball Corporation	$	92	$	28	$	15	$	(43)	$	92

Comprehensive earnings (loss) attributable to Ball Corporation	$	173	$	84	$	89	$	(173)	$	173

Unaudited Condensed Consolidating Statement of Earnings

Three Months Ended September 30, 2016
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Net sales
$
—

$
1,214

$
1,626

$
(88)

$
2,752

Cost and expenses

Cost of sales (excluding depreciation and amortization)

—

(992)

(1,371)

88

(2,275)
Depreciation and amortization

(2)

(33)

(112)

—

(147)
Selling, general and administrative

(31)

(46)

(58)

—

(135)
Business consolidation and other activities

(154)

(10)

101

—

(63)
Equity in results of subsidiaries

339

258

91

(688)

—
Intercompany

78

(52)

(26)

—

—

230

(875)

(1,375)

(600)

(2,620)

Earnings (loss) before interest and taxes

230

339

251

(688)

132
Interest expense

(66)

—

(14)

—

(80)
Debt refinancing and other costs

—

—

(2)

—

(2)
Total interest expense

(66)

—

(16)

—

(82)
Earnings (loss) before taxes

164

339

235

(688)

50
Tax (provision) benefit

(133)

(56)

166

—

(23)
Equity in results of affiliates, net of tax

—

1

6

—

7
Net earnings (loss)

31

284

407

(688)

34
Less net earnings attributable to noncontrolling interests

—

—

(3)

—

(3)
Net earnings (loss) attributable to Ball Corporation
$
31

$
284

$
404

$
(688)

$
31

Comprehensive earnings (loss) attributable  to Ball Corporation
$
7

$
265

$
386

$
(651)

$
7

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Unaudited Condensed Consolidating Statement of Earnings

Nine Months Ended September 30, 2017
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Net sales
$
—

$
3,620

$
4,698

$
(82)

$
8,236

Cost and expenses

Cost of sales (excluding depreciation and amortization)

—

(2,973)

(3,692)

82

(6,583)
Depreciation and amortization

(5)

(111)

(423)

—

(539)
Selling, general and administrative

(141)

(88)

(169)

—

(398)
Business consolidation and other activities

(82)

(42)

(129)

—

(253)
Equity in results of subsidiaries

343

(35)

(29)

(279)

—
Intercompany

241

(123)

(118)

—

—

356

(3,372)

(4,560)

(197)

(7,773)

Earnings (loss) before interest and taxes

356

248

138

(279)

463
Interest expense

(205)

4

(15)

—

(216)
Debt refinancing and other costs

—

—

(1)

—

(1)
Total interest expense

(205)

4

(16)

—

(217)
Earnings (loss) before taxes

151

252

122

(279)

246
Tax (provision) benefit

64

(83)

(29)

—

(48)
Equity in results of affiliates, net of tax

—

1

22

—

23
Net earnings

215

170

115

(279)

221
Less net earnings attributable to noncontrolling interests

—

—

(6)

—

(6)
Net earnings attributable to Ball Corporation
$
215

$
170

$
109

$
(279)

$
215

Comprehensive earnings (loss) attributable  to Ball Corporation
$
231

$
166

$
90

$
(256)

$
231


	Unaudited Condensed Consolidating Statement of Earnings
	Three Months Ended September 30, 2018
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Adjustments		Consolidated Total

Net sales	$	—	$	1,666	$	1,481	$	(201)	$	2,946

Cost and expenses
Cost of sales (excluding depreciation and amortization)		—		(1,405)		(1,158)		201		(2,362)
Depreciation and amortization		(1)		(49)		(121)		—		(171)
Selling, general and administrative		(244)		179		(48)		—		(113)
Business consolidation and other activities		(53)		13		8		—		(32)
Equity in results of subsidiaries		369		8		—		(377)		—
Intercompany		52		(6)		(46)		—		—
		123		(1,260)		(1,365)		(176)		(2,678)

Earnings (loss) before interest and taxes		123		406		116		(377)		268
Interest expense		(79)		3		—		—		(76)
Debt refinancing and other costs		—		—		—		—		—
Total interest expense		(79)		3		—		—		(76)
Earnings (loss) before taxes		44		409		116		(377)		192
Tax (provision) benefit		15		(103)		(52)		—		(140)
Equity in results of affiliates, net of tax		—		3		4		—		7
Net earnings (loss)		59		309		68		(377)		59
Less net earnings attributable to noncontrolling interests		—		—		—		—		—
Net earnings (loss) attributable to Ball Corporation	$	59	$	309	$	68	$	(377)	$	59

Comprehensive earnings (loss) attributable to Ball Corporation	$	26	$	313	$	8	$	(321)	$	26

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Unaudited Condensed Consolidating Statement of Earnings

Nine Months Ended September 30, 2016
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Net sales
$
—

$
3,495

$
3,213

$
(171)

$
6,537

Cost and expenses

Cost of sales (excluding depreciation and amortization)

—

(2,854)

(2,605)

171

(5,288)

Depreciation and amortization

(4)

(104)

(191)

—

(299)

Selling, general and administrative

(63)

(129)

(156)

—

(348)

Business consolidation and other activities

355

(32)

(625)

—

(302)

Equity in results of subsidiaries

(57)

(247)

(721)

1,025

—

Intercompany

189

(136)

(53)

—

—

420

(3,502)

(4,351)

1,196

(6,237)

Earnings (loss) before interest and taxes

420

(7)

(1,138)

1,025

300

Interest expense

(141)

(1)

(17)

—

(159)

Debt refinancing and other costs

(97)

—

(11)

—

(108)

Total interest expense

(238)

(1)

(28)

—

(267)

Earnings (loss) before taxes

182

(8)

(1,166)

1,025

33

Tax (provision) benefit

28

(108)

254

—

174

Equity in results of affiliates, net of tax

—

—

6

—

6

Net earnings

210

(116)

(906)

1,025

213

Less net earnings attributable to noncontrolling interests

—

—

(3)

—

(3)

Net earnings attributable to Ball Corporation
$
210

$
(116)

$
(909)

$
1,025

$
210

Comprehensive earnings (loss) attributable  to Ball Corporation
$
233

$
(85)

$
(901)

$
986

$
233


	Unaudited Condensed Consolidating Statement of Earnings
	For the Nine Months Ended September 30, 2019
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Adjustments		Consolidated Total

Net sales	$	—	$	4,966	$	4,408	$	(619)	$	8,755

Cost and expenses
Cost of sales (excluding depreciation and amortization)		—		(4,295)		(3,368)		619		(7,044)
Depreciation and amortization		(4)		(150)		(356)		—		(510)
Selling, general and administrative		(20)		(172)		(136)		—		(328)
Business consolidation and other activities		(23)		(9)		(115)		—		(147)
Equity in results of subsidiaries		467		108		—		(575)		—
Intercompany		176		(88)		(88)		—		—
		596		(4,606)		(4,063)		44		(8,029)

Earnings (loss) before interest and taxes		596		360		345		(575)		726
Interest expense		(240)		4		(1)		—		(237)
Debt refinancing and other costs		(4)		—		—		—		(4)
Total interest expense		(244)		4		(1)		—		(241)
Earnings (loss) before taxes		352		364		344		(575)		485
Tax (provision) benefit		54		(52)		(75)		—		(73)
Equity in results of affiliates, net of tax		—		(12)		6		—		(6)
Net earnings		406		300		275		(575)		406
Less net earnings attributable to noncontrolling interests		—		—		—		—		—
Net earnings attributable to Ball Corporation	$	406	$	300	$	275	$	(575)	$	406

Comprehensive earnings (loss) attributable to Ball Corporation	$	604	$	506	$	442	$	(948)	$	604

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements


	Unaudited Condensed Consolidating Statement of Earnings
	For the Nine Months Ended September 30, 2018
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Adjustments		Consolidated Total

Net sales	$	—	$	5,003	$	4,428	$	(599)	$	8,832

Cost and expenses
Cost of sales (excluding depreciation and amortization)		—		(4,235)		(3,447)		599		(7,083)
Depreciation and amortization		(4)		(153)		(372)		—		(529)
Selling, general and administrative		(278)		65		(139)		—		(352)
Business consolidation and other activities		(70)		(41)		(20)		—		(131)
Equity in results of subsidiaries		634		61		—		(695)		—
Intercompany		228		(158)		(70)		—		—
		510		(4,461)		(4,048)		(96)		(8,095)

Earnings (loss) before interest and taxes		510		542		380		(695)		737
Interest expense		(235)		10		(1)		—		(226)
Debt refinancing and other costs		(1)		—		—		—		(1)
Total interest expense		(236)		10		(1)		—		(227)
Earnings (loss) before taxes		274		552		379		(695)		510
Tax (provision) benefit		29		(135)		(114)		—		(220)
Equity in results of affiliates, net of tax		—		1		13		—		14
Net earnings		303		418		278		(695)		304
Less net earnings attributable to noncontrolling interests		—		—		(1)		—		(1)
Net earnings attributable to Ball Corporation	$	303	$	418	$	277	$	(695)	$	303

Comprehensive earnings (loss) attributable to Ball Corporation	$	159	$	309	$	105	$	(414)	$	159

Unaudited Condensed Consolidating Balance Sheet

September 30, 2017
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Assets

Current assets

Cash and cash equivalents
$
6

$
—

$
550

$
—

$
556
Receivables, net

69

417

1,307

—

1,793
Intercompany receivables

45

510

959

(1,514)

—
Inventories, net

—

545

888

—

1,433
Other current assets

32

38

78

—

148
Total current assets

152

1,510

3,782

(1,514)

3,930
Noncurrent assets

Property, plant and equipment, net

21

1,193

3,311

—

4,525
Investment in subsidiaries

8,147

4,235

403

(12,785)

—
Goodwill

—

981

3,927

—

4,908
Intangible assets, net

17

67

2,406

—

2,490
Other assets

38

300

812

—

1,150
Total assets
$
8,375

$
8,286

$
14,641

$
(14,299)

$
17,003

Liabilities and Shareholders' Equity

Current liabilities

Short-term debt and current portion of long-term debt
$
293

$
—

$
159

$
—

$
452
Accounts payable

13

887

1,519

—

2,419
Intercompany payables

1,014

47

453

(1,514)

—
Accrued employee costs

26

126

146

—

298
Other current liabilities

187

71

351

—

609
Total current liabilities

1,533

1,131

2,628

(1,514)

3,778
Noncurrent liabilities

Long-term debt

6,497

—

607

—

7,104
Employee benefit obligations

343

641

422

—

1,406
Intercompany long-term notes

(3,372)

1,959

1,414

(1)

—
Deferred taxes

(353)

239

769

—

655
Other liabilities

197

29

196

—

422
Total liabilities

4,845

3,999

6,036

(1,515)

13,365

Common stock

1,072

1,128

6,293

(7,421)

1,072
Preferred stock

—

—

5

(5)

—
Retained earnings

4,864

4,001

2,769

(6,771)

4,863
Accumulated other comprehensive earnings (loss)

(925)

(842)

(571)

1,413

(925)
Treasury stock, at cost

(1,481)

—

—

—

(1,481)
Total Ball Corporation shareholders' equity

3,530

4,287

8,496

(12,784)

3,529
Noncontrolling interests

—

—

109

—

109
Total shareholders' equity

3,530

4,287

8,605

(12,784)

3,638
Total liabilities and shareholders' equity
$
8,375

$
8,286

$
14,641

$
(14,299)

$
17,003

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Unaudited Condensed Consolidating Balance Sheet

December 31, 2016
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Eliminating
Adjustments

Consolidated
Total

Assets

Current assets

Cash and cash equivalents
$
2

$
(11)

$
606

$
—

$
597
Receivables, net

96

450

945

—

1,491
Intercompany receivables

39

467

963

(1,469)

—
Inventories, net

—

516

897

—

1,413
Other current assets

40

39

73

—

152
Total current assets

177

1,461

3,484

(1,469)

3,653
Noncurrent assets

Property, plant and equipment, net

23

1,087

3,277

—

4,387
Investment in subsidiaries

7,815

4,291

423

(12,529)

—
Goodwill

—

985

4,110

—

5,095
Intangible assets, net

18

76

1,840

—

1,934
Other assets

94

306

704

—

1,104
Total assets
$
8,127

$
8,206

$
13,838

$
(13,998)

$
16,173

Liabilities and Shareholders' Equity

Current liabilities

Short-term debt and current portion of long-term debt
$
141

$
—

$
81

$
—

$
222
Accounts payable

18

772

1,243

—

2,033
Intercompany payables

1,010

53

408

(1,471)

—
Accrued employee costs

25

152

138

—

315
Other current liabilities

138

69

192

—

399
Total current liabilities

1,332

1,046

2,062

(1,471)

2,969
Noncurrent liabilities

Long-term debt

6,337

—

973

—

7,310
Employee benefit obligations

347

760

390

—

1,497
Intercompany long-term notes

(3,142)

2,018

1,122

2

—
Deferred taxes

(308)

232

515

—

439
Other liabilities

127

35

255

—

417
Total liabilities

4,693

4,091

5,317

(1,469)

12,632

Common stock

1,038

1,120

6,301

(7,421)

1,038
Preferred stock

—

—

5

(5)

—
Retained earnings

4,739

3,832

2,661

(6,493)

4,739
Accumulated other comprehensive earnings (loss)

(942)

(837)

(552)

1,390

(941)
Treasury stock, at cost

(1,401)

—

—

—

(1,401)
Total Ball Corporation shareholders' equity

3,434

4,115

8,415

(12,529)

3,435
Noncontrolling interests

—

—

106

—

106
Total shareholders' equity

3,434

4,115

8,521

(12,529)

3,541
Total liabilities and shareholders' equity
$
8,127

$
8,206

$
13,838

$
(13,998)

$
16,173


	Unaudited Condensed Consolidating Balance Sheet
	September 30, 2019
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Adjustments		Consolidated Total

Assets
Current assets
Cash and cash equivalents	$	7	$	—	$	476	$	—	$	483
Receivables, net		9		594		1,354		—		1,957
Intercompany receivables		103		237		1,711		(2,051)		—
Inventories, net		—		506		674		—		1,180
Other current assets		37		39		133		—		209
Total current assets		156		1,376		4,348		(2,051)		3,829
Noncurrent assets
Property, plant and equipment, net		34		1,403		2,883		—		4,320
Investment in subsidiaries		11,678		2,589		(99)		(14,168)		—
Goodwill		—		1,191		3,180		—		4,371
Intangible assets, net		18		383		1,626		—		2,027
Other assets		315		299		1,076		—		1,690
Total assets	$	12,201	$	7,241	$	13,014	$	(16,219)	$	16,237

Liabilities and Equity
Current liabilities
Short-term debt and current portion of long-term debt	$	239	$	—	$	122	$	—	$	361
Accounts payable		17		949		1,692		—		2,658
Intercompany payables		2,379		123		156		(2,658)		—
Accrued employee costs		49		119		88		—		256
Other current liabilities		136		142		220		—		498
Total current liabilities		2,820		1,333		2,278		(2,658)		3,773
Noncurrent liabilities
Long-term debt		6,620		—		3		—		6,623
Employee benefit obligations		822		293		268		—		1,383
Intercompany long-term notes		(1,263)		(1,764)		2,420		607		—
Deferred taxes		(247)		247		602		—		602
Long-term deferred tax and other liabilities		84		128		179		—		391
Total liabilities		8,836		237		5,750		(2,051)		12,772

Common stock		1,177		2,523		3,900		(6,423)		1,177
Preferred stock		—		—		5		(5)		—
Retained earnings		5,694		4,939		3,553		(8,492)		5,694
Accumulated other comprehensive earnings (loss)		(716)		(458)		(294)		752		(716)
Treasury stock, at cost		(2,790)		—		—		—		(2,790)
Total Ball Corporation equity		3,365		7,004		7,164		(14,168)		3,365
Noncontrolling interests		—		—		100		—		100
Total equity		3,365		7,004		7,264		(14,168)		3,465
Total liabilities and equity	$	12,201	$	7,241	$	13,014	$	(16,219)	$	16,237

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Unaudited Condensed Consolidating Statement of Cash Flows

Nine Months Ended September 30, 2017
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Consolidated
Total

Cash provided by (used in) operating activities
$
266

$
290

$
191

$
747

Cash flows from investing activities

Capital expenditures

(5)

(232)

(167)

(404)
Proceeds from dispositions, net of cash sold

—

31

—

31
Other, net

1

33

(31)

3
Cash provided by (used in) investing activities

(4)

(168)

(198)

(370)

Cash flows from financing activities

Long-term borrowings

440

—

—

440
Repayments of long-term borrowings

(433)

—

(476)

(909)
Net change in short-term borrowings

151

—

69

220
Proceeds from issuances of common stock, net of shares used for taxes

18

—

—

18
Acquisitions of treasury stock

(103)

—

—

(103)
Common stock dividends

(93)

—

—

(93)
Intercompany

(231)

(109)

340

—
Other, net

—

(2)

—

(2)
Cash provided by (used in) financing activities

(251)

(111)

(67)

(429)

Effect of exchange rate changes on cash

(7)

—

18

11

Change in cash and cash equivalents

4

11

(56)

(41)
Cash and cash equivalents – beginning of period

2

(11)

606

597
Cash and cash equivalents – end of period
$
6

$
—

$
550

$
556


	Unaudited Condensed Consolidating Balance Sheet
	December 31, 2018
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Adjustments		Consolidated Total

Assets
Current assets
Cash and cash equivalents	$	4	$	—	$	717	$	—	$	721
Receivables, net		21		613		1,168		—		1,802
Intercompany receivables		66		495		1,657		(2,218)		—
Inventories, net		—		527		744		—		1,271
Other current assets		32		35		79		—		146
Total current assets		123		1,670		4,365		(2,218)		3,940
Noncurrent assets
Property, plant and equipment, net		24		1,378		3,140		—		4,542
Investment in subsidiaries		11,145		3,779		(99)		(14,825)		—
Goodwill		—		1,191		3,284		—		4,475
Intangible assets, net		18		409		1,761		—		2,188
Other assets		213		215		981		—		1,409
Total assets	$	11,523	$	8,642	$	13,432	$	(17,043)	$	16,554

Liabilities and Equity
Current liabilities
Short-term debt and current portion of long-term debt	$	173	$	—	$	46	$	—	$	219
Accounts payable		50		1,178		1,867		—		3,095
Intercompany payables		2,310		49		466		(2,825)		—
Accrued employee costs		39		144		106		—		289
Other current liabilities		153		119		220		—		492
Total current liabilities		2,725		1,490		2,705		(2,825)		4,095
Noncurrent liabilities
Long-term debt		6,504		—		6		—		6,510
Employee benefit obligations		871		286		298		—		1,455
Intercompany long-term notes		(1,977)		3		1,368		606		—
Deferred taxes		(172)		169		648		—		645
Other liabilities		114		45		128		—		287
Total liabilities		8,065		1,993		5,153		(2,219)		12,992

Common stock		1,157		2,523		5,314		(7,837)		1,157
Preferred stock		—		—		5		(5)		—
Retained earnings		5,341		4,712		3,316		(8,028)		5,341
Accumulated other comprehensive earnings (loss)		(835)		(586)		(460)		1,046		(835)
Treasury stock, at cost		(2,205)		—		—		—		(2,205)
Total Ball Corporation equity		3,458		6,649		8,175		(14,824)		3,458
Noncontrolling interests		—		—		104		—		104
Total equity		3,458		6,649		8,279		(14,824)		3,562
Total liabilities and equity	$	11,523	$	8,642	$	13,432	$	(17,043)	$	16,554

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Unaudited Condensed Consolidating Statement of Cash Flows

Nine Months Ended September 30, 2016
($ in millions)
Ball
Corporation

Guarantor
Subsidiaries

Non-Guarantor
   Subsidiaries

Consolidated
Total

Cash provided by (used in) operating activities
$
(385)

$
144

$
(192)

$
(433)

Cash flows from investing activities

Capital expenditures

(10)

(170)

(218)

(398)
Business acquisition, net of cash acquired

2,303

(1,674)

(4,008)

(3,379)
Proceeds from dispositions, net of cash sold

1,010

—

1,931

2,941
Decrease in restricted cash

1,966

—

—

1,966
Settlement of Rexam acquisition related derivatives

(252)

—

—

(252)
Other, net

—

7

(5)

2
Cash provided by (used in) investing activities

5,017

(1,837)

(2,300)

880

Cash flows from financing activities

Long-term borrowings

2,610

—

1,760

4,370
Repayments of long-term borrowings

(921)

—

(3,427)

(4,348)
Net change in short-term borrowings

200

(30)

(14)

156
Proceeds from issuances of common stock, net of shares used for taxes

38

—

—

38
Acquisitions of treasury stock

(98)

—

—

(98)
Common stock dividends

(60)

—

—

(60)
Intercompany

(6,351)

1,722

4,629

—
Other, net

(5)

(1)

(9)

(15)
Cash provided by (used in) financing activities

(4,587)

1,691

2,939

43

Effect of exchange rate changes on cash

4

3

(76)

(69)

Change in cash and cash equivalents

49

��
1

371

421
Cash and cash equivalents – beginning of period

5

—

219

224
Cash and cash equivalents – end of period
$
54

$
1

$
590

$
645


	Unaudited Condensed Consolidating Statement of Cash Flows
	For the Nine Months Ended September 30, 2019
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidated Total

Cash provided by (used in) operating activities	$	(332)	$	256	$	732	$	656

Cash flows from investing activities
Capital expenditures		(12)		(186)		(227)		(425)
Proceeds from dispositions, net of cash sold		—		—		(50)		(50)
Other, net		(2)		10		18		26
Cash provided by (used in) investing activities		(14)		(176)		(259)		(449)

Cash flows from financing activities
Long-term borrowings		1,095		—		3		1,098
Repayments of long-term borrowings		(900)		—		(6)		(906)
Net change in short-term borrowings		47		—		84		131
Proceeds from issuances of common stock, net of shares used for taxes		16		—		—		16
Acquisitions of treasury stock		(614)		—		—		(614)
Common stock dividends		(133)		—		—		(133)
Intercompany		849		(80)		(769)		—
Other, net		(10)		—		—		(10)
Cash provided by (used in) financing activities		350		(80)		(688)		(418)

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

Change in cash, cash equivalents and restricted cash		4		—		(235)		(231)
Cash, cash equivalents and restricted cash – beginning of period		3		—		725		728
Cash, cash equivalents and restricted cash – end of period	$	7	$	—	$	490	$	497

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements


	Unaudited Condensed Consolidating Statement of Cash Flows
	For the Nine Months Ended September 30, 2018
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidated Total

Cash provided by (used in) operating activities	$	(103)	$	148	$	982	$	1,027

Cash flows from investing activities
Capital expenditures		(5)		(356)		(255)		(616)
Proceeds from dispositions, net of cash sold		(53)		604		—		551
Other, net		(1)		18		33		50
Cash provided by (used in) investing activities		(59)		266		(222)		(15)

Cash flows from financing activities
Long-term borrowings		1,475		—		—		1,475
Repayments of long-term borrowings		(1,525)		—		(6)		(1,531)
Net change in short-term borrowings		(138)		—		(51)		(189)
Proceeds from issuances of common stock, net of shares used for taxes		25		—		—		25
Acquisitions of treasury stock		(464)		—		—		(464)
Common stock dividends		(104)		—		—		(104)
Intercompany		905		(413)		(492)		—
Other, net		(12)		(1)		—		(13)
Cash provided by (used in) financing activities		162		(414)		(549)		(801)

Effect of exchange rate changes on cash		—		—		(59)		(59)

Change in cash, cash equivalents and restricted cash		—		—		152		152
Cash, cash equivalents and restricted cash – beginning of period		5		—		454		459
Cash, cash equivalents and restricted cash – end of period	$	5	$	—	$	606	$	611

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes included in Item 21 of this Quarterly Report on Form 10-Q, which include additional information about our accounting policies, practices and the transactions underlying our financial results. The preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires us to make estimates and assumptions that affect the reported amounts in our unaudited condensed consolidated financial statements and the accompanying notes including various claims and contingencies related to lawsuits, taxes, environmental and other matters arising during the normal course of business. We apply our best judgment, our knowledge of existing facts and circumstances and actions that we may undertake in the future in determining the estimates that affect our consolidated financial statements. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision, actual results may differ from these estimates. Ball Corporation and its subsidiaries are referred to collectively as “Ball Corporation,” “Ball,” “the company,” “we” or “our” in the following discussion and analysis.

OVERVIEW

Business Overview and Industry Trends

Ball Corporation is one of the world’s leading suppliers of metal packaging to the beverage, ~~food,~~ personal care and household products industries. Our packaging products are produced for a variety of end uses, are manufactured in facilities around the world and are competitive with other substrates, such as plastics and glass. In the rigid packaging industry, sales and earnings can be increased by reducing costs, increasing prices, developing new products, expanding volumes and making strategic acquisitions. We also provide aerospace and other technologies and services to governmental and commercial ~~customers.~~customers, including national defense hardware, antenna and video tactical solutions, civil and operational space hardware and system engineering services.

We sell our packaging products mainly to large, multinational beverage, ~~food,~~ personal care and household products companies with which we have developed long-term relationships. This is evidenced by our high customer retention and our large number of long-term supply contracts. While we have a diversified customer base, we sell a ~~majority~~significant portion of our packaging products to ~~relatively few~~ major companies ~~in North, Central~~ and ~~South America, Europe, Asia, the Middle East and Africa,~~brands, as ~~do our equity joint ventures in Guatemala, Panama, South Korea, the U.S. and Vietnam.~~well as to numerous regional customers. The overall global beverage and aerosol metal container ~~industry is~~industries are growing ~~globally~~ and isare expected to continue to grow in the medium to long ~~term despite the North American industry seeing a continued decline in standard-sized aluminum beverage packaging for the carbonated soft drink market.~~term. The primary customers for the products and services provided by our aerospace segment are U.S. government agencies or their prime contractors.

We purchase our raw materials from relatively few suppliers. We also have exposure to inflation, in particular the rising costs of raw materials, as well as other direct cost inputs. We mitigate our exposure to the changes in the costs of metal through the inclusion of provisions in contracts covering the majority of our volumes to pass through metal price changes, ~~and freight costs,~~ as well as through the use of derivative instruments. The pass-through provisions generally result in proportional increases or decreases in sales and costs with a greatly reduced impact, if any, on net earnings. Because of our customer and supplier concentration, our business, financial condition and results of operations could be adversely affected by the loss, insolvency or bankruptcy of a major customer or supplier or a change in a supply agreement with a major customer or supplier, although our contract provisions generally mitigate the risk of customer loss, and our long-term relationships represent a known, stable customer base.

~~We recognize sales under long-term contracts in~~The majority of the aerospace ~~segment using percentage-of-completion~~business involves work under contracts, generally from one to five years in duration, as a prime contractor or subcontractor for various U.S. government agencies. Intense competition and long operating cycles are key characteristics of the ~~cost-to-cost method~~company’s aerospace and defense industry where it is common for work on major programs to be shared among a number of ~~accounting. Throughout~~companies. A company competing to be a prime contractor may, upon ultimate award of the ~~period of~~ contract performance, we regularly reevaluate and, if necessary, revise our estimates of aerospace total contract revenue, total contract cost and progress toward completion. Because of contract payment schedules, limitations on funding and other contract terms, our sales and accounts receivableto a competitor, become a subcontractor for ~~this segment include amounts that have been earned but not yet billed.~~the ultimate prime contracting company.

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Corporate Strategy

Our Drive for 10 vision encompasses five strategic levers that are key to growing our business and achieving long-term success. Since launching Drive for 10 in 2011, we have made progress on each of the levers as follows:

●

Maximizing value in our existing businesses by rationalizing standard beverage container and end capacity in North America, South America and Europe, and expanding specialty container production to meet current demand; leveraging plant floor systems in our beverage facilities to improve efficiencies and reduce costs; consolidating and/or closing multiple beverage ~~and food and aerosol~~ packaging facilities to gain efficiencies; and in the aerosol business, installing new extruded aluminum aerosol lines in our ~~existing Devizes, U.K.,~~European, Mexican and ~~Czech Republic~~Indian facilities while also implementing cost-out and value-in initiatives across all of our businesses;

●

Expanding further into new products and capabilities through ~~our acquisition of Sonoco’s metal end and closure manufacturing facilities in Canton, Ohio, in February 2015; successfully~~ commercializing extruded aluminum aerosol packaging that utilizes ~~a significant amount of recycled material;~~proprietary technology to significantly lightweight the can; and successfully commercializing the ~~next generation~~next-generation aluminum bottle-shaping technology;

●

Aligning ourselves with the right customers and markets by investing capital to meet continued growth for specialty beverage containers throughout our global network, which represent ~~more than 35~~approximately 40 percent of our global beverage packaging mix; aligning with craft brewers, sparkling water fillers, wine producers and ~~wine~~other new beverage producers who continue to use beverage containers to grow their business;

●

Broadening our geographic reach with our acquisition of Rexam and our new investments in a beverage manufacturing ~~facility~~facilities in Spain, Mexico, Myanmar and Panama, as well as an extruded aluminum aerosol manufacturing facility in ~~India~~India; and ~~the construction of a beverage can and end facility in Monterrey, Mexico; and~~

●

Leveraging our technological expertise in packaging innovation, including the introduction of next-generation aluminum bottle-shaping technologies ~~the introduction of a new two-piece, lightweight steel aerosol can, G3, technology in our Chestnut Hill, Tennessee, facility~~ and the increased production of lightweight ReAl® containers, ~~with 25~~which utilize technology that increases the strength of aluminum used in the manufacturing process while lightweighting the can by up to 20 percent ~~recycled~~over a standard aluminum ~~content and~~aerosol can, as well as our investment in cyber, ~~and~~ data analytics and LIDAR capabilities to further enhance our aerospace technical expertise across a broader customer portfolio.

These ongoing business developments and the successful acquisition of Rexam ~~completed on June 30,~~in 2016 help us stay close to our customers while expanding and/or sustaining our industry positions and global reach with major beverage, ~~food,~~ personal care, household products and aerospace customers.

RESULTS OF CONSOLIDATED OPERATIONS

Management’s discussion and analysis for ~~the~~our results of operations on a consolidated and segment basis include a quantification of factors that had a material impact. Other factors that did not have a material impact, but that are significant to understand the results, are qualitatively described.

Consolidated Sales and Earnings


	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2019			2018			2019			2018

Net sales	$	2,953		$	2,946		$	8,755		$	8,832
Net earnings attributable to Ball Corporation		92			59			406			303
Net earnings attributable to Ball Corporation as a % of consolidated net sales		3	%		2	%		5	%		3	%

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions)

2017

2016

2017

2016

Net sales

$
2,908

$
2,752

$
8,236

$
6,537

Net earnings attributable to Ball Corporation

48

31

215

210

Net earnings attributable to Ball Corporation as a % of consolidated net sales

2
%

1
%

3
%

3
%

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Sales ~~for~~in the ~~third quarter of 2017 were higher~~three months ended September 30, 2019, increased compared to the same period in ~~2016~~2018 primarily ~~as a result of~~due to higher volumes in our beverage packaging segments and increased sales in our aerospace segment, partially offset by the pass through of lower aluminum prices, the loss of sales from our former U.S. steel food and steel aerosol business, which was divested in the third quarter of 2018, the conclusion of the South America segment’s end sales associated with the Rexam acquisition and unfavorable exchange rates for our Europe segment. Net earnings for the three months ended September 30, 2019, increased compared to the same period in 2018 primarily due to higher volumes ~~for~~in our beverage packaging segments and lower income tax expense, partially offset by the conclusion of our South America segment’s end sales agreement associated with the Rexam acquisition, unfavorable U.S. aluminum scrap rates, manufacturing inefficiencies experienced in our North and ~~Europe segments, favorable product mix~~Central America segment and increased business consolidation costs.

Sales in the nine months ended September 30, 2019, decreased compared to the same period in 2018 primarily due to the pass through of lower aluminum prices, the loss of sales from our former U.S. steel food and steel aerosol business, the conclusion of the South America segment’s end sales associated with the Rexam acquisition and unfavorable exchange rates for our ~~South~~Europe segment, partially offset by higher beverage can unit volumes and higher pricing for our Europe and North and Central America ~~segment~~segments and increased sales in the aerospace segment. Net earnings for the ~~third quarter of 2017 were higher~~nine months ended September 30, 2019, increased compared to the same period in ~~2016~~2018 primarily due to ~~increased earnings related to~~ higher ~~sales~~beverage can unit volumes, ~~in the South America segment, lower corporate costs, $83 million in cost of sales for the step-up of inventory related to the acquired Rexam business included~~

~~Table of Contents~~

~~in the third quarter of 2016 and $19 million of lower taxes, which were partially offset by $94 million higher business consolidation and other activities in the third quarter of 2017.~~

Sales for the first nine months of 2017 were higher compared to the same period in 2016 primarily as a result of 2017 including nine months of sales volumes from the acquired Rexam business while 2016 included six months of sales volumes from the company’s legacy business, a significant portion of which was sold with the Divestment Business, and three months of sales volumes from the acquired Rexam business, increased sales volumes during the third quarter of 2017 in the South America and Europe segments and $157 million of increased sales in the aerospace segment. Net earnings for the first nine months of 2017 were higher compared to the same period in 2016 primarily due 2017 including nine months of earnings from the acquired Rexam business while 2016 included six months ofsegment and lower earnings from the company’s legacy business, the significant portion of which was sold with the Divestment Business, and three months of earnings from the acquired Rexam business, $107 million lower debt refinancing and other costs in 2017, $83 million in cost of sales for inventory related to the acquired Rexam business included in the third quarter of 2016, and $49 million lower business consolidation and other activities in 2017. These impacts on net earnings wereincome tax expense, partially offset by ~~a $222 million higher tax provision in 2017, due to income tax benefits in 2016~~the conclusion of our South America segment’s end sales agreement associated with the ~~restructure of Brazil legal entities as a result of the sale of the Divestment Business, the tax benefit on the transaction costs and derivative costs of the~~ Rexam acquisition, unfavorable U.S. aluminum scrap rates and ~~sale of the Divestment Business~~manufacturing inefficiencies experienced in ~~2016~~our North and ~~$57 million higher interest expense in 2017 associated with higher average debt levels for the acquisition of Rexam.~~Central America segment.

Cost of Sales (Excluding Depreciation and Amortization)

Cost of sales, excluding depreciation and amortization, was ~~$2,338~~$2,363 million and ~~$6,583~~$7,044 million for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019, respectively, compared to ~~$2,275~~$2,362 million and ~~$5,288~~$7,083 million for the same periods in ~~2016.~~2018. These amounts represented 80 percent of consolidated net sales for ~~both~~ the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019 and ~~83 percent and 81 percent for the same periods in 2016. Cost of sales in the third quarter of 2016 included $83 million for the step-up of inventory related to the acquired Rexam business.~~2018.

Depreciation and Amortization

Depreciation and amortization expense was ~~$162~~$169 million and ~~$539~~$510 million for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017, respectively,~~ended September 30, 2019 compared to ~~$147~~$171 million and ~~$299~~$529 million for the same periods in ~~2016.~~2018. These amounts represented 6 percent ~~and 7 percent~~ of consolidated net sales ~~in the third quarter and first nine months of 2017, respectively, and 5 percent for each of the same periods in 2016. The increase in depreciation and amortization~~ for the ~~third quarter~~three and first nine months of 2017, was the result of increased depreciation of fixed assets and amortization of intangible assets following the Rexam acquisition. During the second quarter of 2017, the company finalized the valuation of the assets acquired in the Rexam acquisition. As a result, depreciation and amortization for the nine months ended September 30, ~~2017, included a cumulative catch-up adjustment of $34 million related to the last six months of 2016.~~2019 and 2018.

Selling, General and Administrative

Selling, general and administrative (SG&A) expenses were ~~$127~~$90 million and ~~$398~~$328 million for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~,ended September 30, 2019, respectively, compared to ~~$135~~$113 million and ~~$348~~$352 million for the same periods in ~~2016.~~ 2018. These amounts represented 43 percent and 54 percent of consolidated net sales for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019, respectively, and 54 percent ~~for both~~ of ~~the same periods in 2016. The increase in SG&A costs~~consolidated net sales for the ~~first~~three and nine months ~~of 2017, was primarily due to additional SG&A from the acquired Rexam business which is being reduced over time.~~ended September 30, 2018.

Business Consolidation Costs and Other Activities

Business consolidation and other activities were ~~$157~~$133 million and ~~$253~~$147 million for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019, respectively, ~~compared to $63~~and $32 million and ~~$302~~$131 million for the ~~same periods in 2016.~~three and nine months ended September 30, 2018. These amounts represented 5 percent and 32 percent of consolidated net sales for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019, respectively, and ~~2 percent and 5~~1 percent for the ~~same periods in 2016.~~

three and nine months ended September 30, 2018. The ~~year-over-year~~ increase ~~in business consolidation and other activities~~ for the ~~third quarter of 2017, compared to the same period in 2016,~~three and nine months ended September 30, 2019, was primarily due to ~~an increase of $92 million related to completed and pending plant closures and an increase of $41 million~~charges related to the ~~settlement~~sale of ~~certain Ball U.S. defined benefit pension plans, which were~~

~~Table~~the China beverage packaging business and the transfer of ~~Contents~~

the Argentina steel aerosol business to held for sale, partially offset by a ~~decrease of $52 million~~gain on indirect taxes in ~~Rexam transaction related costs and Rexam acquisition related compensation arrangements.~~Brazil.

The year-over-year decrease in business consolidation and other activities for the first nine months of 2017, compared to the same period in 2016, was primarily due to a decrease of $377 million in Rexam transaction costs and Rexam acquisition related compensation arrangements and a decrease of $174 million in currency exchange losses associated with the Rexam acquisition. These impacts were partially offset by a decrease of $330 million in the gain recognized in connection with the sale of the Ball portion of the Divestment Business, an increase of $99 million related to completed and pending plant closures, an increase of $41 million related to the settlement of certain Ball U.S. defined benefit pension plans and an increase of $34 million for indemnification of certain tax matters provided to the buyer in the sale of the Divestment Business.

Interest Expense

Total interest expense was ~~$74~~$79 million and ~~$217~~$241 million for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019, respectively, compared to ~~$82~~$76 million and ~~$267~~$227 million for the same periods in ~~2016.~~2018. Interest expense ~~excluding debt refinancing and other costs,~~ as a percentage of average monthly borrowings was 4 percent for ~~both~~ the three and nine months ended September 30 ~~2017, compared to 4 percent for each~~2019 and 2018.

Table of ~~the same periods in 2016.~~Contents

Debt refinancing and other costs were $1 million for the first nine months of 2017, compared to $108 million for the same period in 2016. The amount for the first nine months of 2016, consisted mainly of charges to fund a portion of the cash component of the Rexam acquisition purchase price as follows: (1) interest expense of $49 million on the 3.5 percent and 4.375 percent senior notes, (2) fair value changes of $20 million on derivative instruments designed to mitigate risks of interest rate changes with debt issuances, (3) refinancing of the bridge and revolving credit facilities of $30 million and (4) the amortization of $7 million in deferred financing fees on the Bridge Facility.

Income Taxes

The company’s effective tax rate is affected by recurring items such as income earned in foreign jurisdictions with tax rates that differ from the U.S. tax rate and by discrete items that may occur in any given year but are not consistent from year to year. The effective ~~income~~ tax rate for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019, was 826.9 percent and 2015.1 percent, respectively, compared to 4672.9 percent and ~~negative 527~~43.1 percent for the same periods in ~~2016.~~

~~For~~2018. The decrease of 46 percentage points and 28 percentage points for the ~~third quarter~~three and ~~first~~ nine months ended September 30, 2019, respectively, was primarily due to the impact of ~~2017,~~the U.S. steel food and steel aerosol business sale in 2018, the impact of excess tax benefits for share-based compensation in 2019, and the impact of tax planning in 2019, partially offset by the tax impact of the sale of the China metal beverage packaging business, presentation of the Argentina steel aerosol business as held for sale and the settlement of certain defined benefit pension plans in 2019.

As compared to the statutory U.S. tax rate, the effective tax rate ~~was reduced by 9 percent and 7 percent, respectively,~~ for the discrete tax benefit associated with the adoption in the first quarter of 2017 of amendments to existing accounting guidance for stock-based compensation. This item will continue to create a discrete tax impact in future reporting periods based upon the amount of share-based payments madethree and nine months ended September 30, 2019, was increased by ~~the company. The effective tax rate was further reduced by 34 percent~~8.5 percentage points and ~~11 percent,~~2.1 percentage points, respectively, for the impact of the ~~foreign tax rate differential versus~~settlement of certain defined benefit pension plans, reduced by 6.3 percentage points and 6.4 percentage points, respectively, for the ~~U.S. tax rate~~impact of share-based compensation, increased by 5.5 percentage points and ~~by 3 percent and 2 percent,~~1.4 percentage points, respectively, for the impact of the ~~U.S. R&D credit. The effective tax rate was increased~~sale of the China metal beverage packaging business and presentation of the Argentina steel aerosol business as held for sale, reduced by ~~21 percent~~4.7 percentage points and ~~6 percent,~~2.0 percentage points, respectively, for various other one-time items, primarily related to discrete transactions which are not expected to recur in future periods. The full-year 2017 effective income tax rate is expected to be approximately 23 percent.

In the ~~third quarter and the first nine months~~effect of ~~2016, the effective tax rate increased 19 percent and 29 percent, respectively as it was determined that the post-acquisition taxable~~certain non-taxable income in the ~~U.K. will not be sufficient to allow~~U.S., increased by 4.5 percentage points and 1.9 percentage points, respectively, for the ~~recording~~impact of aglobal intangible low-taxed income (GILTI) net of foreign derived intangible income (FDII), and reduced by 2.0 percentage points and 1.2 percentage points, respectively, for federal tax ~~benefit with respect to the interest expense on the Rexam acquisition indebtedness.~~credits.

In the second quarter of 2016, a number of legal entities in Brazil were restructured resulting in a tax benefit from an increase in the local tax value of various assets. The impact on the effective tax rate was a reduction of 438 percent in the first nine months of 2016.

The company completed the acquisition of Rexam and the divestiture of certain assets and liabilities of the combined business on June 30, 2016. Gains on the Ball portion of the non-U.S. divestitures were either exempt from tax or subject to tax at rates lower than the U.S. tax rates. The impact on the effective tax rate was a reduction of 585 percent in the first nine months of 2016.

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The items above were partially offset by a variety of factors with the most significant being non-deductible transaction costs associated with the completion of the Rexam acquisition in the second quarter, which resulted in the recording of an estimate of the non-deductible portion of the transaction costs incurred. The impact on the effective tax rate was an increase of 176 percent in the first nine months of 2016.

RESULTS OF BUSINESS SEGMENTS

Segment Results

Ball’s operations are organized and reviewed by management along its product lines and geographical areas and presented in the ~~five~~four reportable segments discussed below.

Beverage Packaging, North and Central America


	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2019			2018			2019			2018

Net sales	$	1,230		$	1,237		$	3,647		$	3,513

Comparable operating earnings	$	157		$	153		$	416		$	423
Business consolidation and other activities (a)		(2)			(14)			(8)			(16)
Amortization of acquired Rexam intangibles		(7)			(7)			(22)			(23)
Total segment earnings	$	148		$	132		$	386		$	384
Comparable operating earnings as a % of segment net sales		13	%		12	%		11	%		12	%

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions)

2017

2016

2017

2016


Net sales

$
1,080

$
1,076

$
3,180

$
2,653

Comparable operating earnings

$
121

$
145

$
400

$
356

Business consolidation and other activities (a)

(34)

(6)

(45)

(12)

Amortization of acquired Rexam intangibles

(7)

(6)

(23)

(6)

Catch-up depreciation and amortization for 2016 from finalization of Rexam valuation (b)

—

—

(6)

—

Cost of sales associated with Rexam inventory step-up

—

(10)

—

(10)

Total segment earnings

$
80

$
123

$
326

$
328

Comparable operating earnings as a % of segment net sales

11
%

13
%

13
%

13
%

(a)

~~(a)~~

Further details of these items are included in Note 56 to the unaudited condensed consolidated financial statements within Item 1 of this report.

~~(b)~~

Catch-up depreciation and amortization of $6 million related to the last six months of 2016, was recorded during 2017, as a result of the finalization of fixed asset and intangible asset valuations and useful lives for the Rexam acquisition during the second quarter of 2017.

The beverage packaging, North and Central America, segment consists of operations located in the U.S., Canada and Mexico that manufacture aluminum containers used in beverage ~~packaging. During the first quarter of 2016, our beverage manufacturing facility~~packaging in ~~Monterrey, Mexico, began production. Our beverage end manufacturing facility in Bristol, Virginia, ceased production at the end of June 2016.~~those countries. Our beverage can manufacturing facility in ~~Reidsville, North Carolina,~~Birmingham, Alabama, ceased production atduring the ~~end~~second quarter of ~~June 2017.~~ 2018 and the Chatsworth, California, and Longview, Texas, facilities ceased production during the third quarter of 2018. In order to serve growing customer demand for specialty cans in the southwestern U.S., the company constructed a four-line beverage packaging facility in Goodyear, Arizona, which began production in the second quarter of 2018.

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Segment sales for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2019, respectively, were $4$7 million lower and ~~$527~~$134 million higher ~~respectively,~~ compared to the same periods in ~~2016.~~2018. The decrease for the three months ended September 30, 2019, was primarily due to the pass through of lower aluminum prices, partially offset by higher volumes and customer sales mix. The increase ~~in sales~~ for the ~~third quarter of 2017,~~nine months ended September 30, 2019, was primarily due to higher ~~metal input~~volumes of $159 million and higher pricing, partially offset by the pass through of lower aluminum prices. ~~The first nine months of 2017 included nine months of sales volumes from the acquired Rexam business, compared to 2016 which included three months of sales volumes from the acquired Rexam business.~~

Comparable operating earnings for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2019, respectively, were ~~$24 million lower and $44~~$4 million higher ~~respectively,~~and $7 million lower compared to the same ~~period~~periods in ~~2016.~~2018. The increase for the three months ended September 30, 2019, was primarily due to higher sales volumes, partially offset by unfavorable U.S. aluminum scrap rates and manufacturing inefficiencies experienced during peak season. The decrease ~~in earnings~~ for the ~~third quarter of 2017~~nine months ended September 30, 2019, was primarily due to unfavorable ~~product mix~~U.S. aluminum scrap rates and ~~unfavorable manufacturing performance and~~increased ramp-up costs at our new Goodyear, Arizona, facility, partially offset by higher freight costs caused by two U.S. hurricanes in the quarter. The first nine months of 2017 included nine months of earnings from the acquired Rexam business, compared to 2016 which included three months of earnings from the acquired Rexam business.sales volumes.

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Beverage Packaging, South America


	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2019			2018			2019			2018

Net sales	$	392		$	391		$	1,210		$	1,229

Comparable operating earnings	$	60		$	71		$	193		$	235
Business consolidation and other activities (a)		(14)			12			22			11
Amortization of acquired Rexam intangibles		(14)			(14)			(42)			(42)
Total segment earnings	$	32		$	69		$	173		$	204
Comparable operating earnings as a % of segment net sales		15	%		18	%		16	%		19	%

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions)

2017

2016

2017

2016


Net sales

$
425

$
318

$
1,145

$
577

Comparable operating earnings

$
78

$
60

$
205

$
100

Business consolidation and other activities (a)

(4)

(6)

(4)

(15)

Amortization of acquired Rexam intangibles

(13)

(9)

(42)

(9)

Catch-up depreciation and amortization for 2016 from finalization of Rexam valuation (b)

—

—

(14)

—

Cost of sales associated with Rexam inventory step-up

—

(20)

—

(20)

Total segment earnings

$
61

$
25

$
145

$
56

Comparable operating earnings as a % of segment net sales

18
%

19
%

18
%

17
%

(a)

~~(a)~~

Further details of these items are included in Note 56 to the unaudited condensed consolidated financial statements within Item 1 of this report.

~~(b)~~

Catch-up depreciation and amortization of $14 million related to the last six months of 2016, was recorded during 2017, as a result of the finalization of fixed asset and intangible asset valuations and useful lives for the Rexam acquisition during the second quarter of 2017.

The beverage packaging, South America, segment consists of operations located in Brazil, Argentina and Chile that manufacture aluminum containers used in beverage ~~packaging.~~packaging in most countries in South America. To support contracted volumes for aluminum beverage packaging across Paraguay, Argentina and Bolivia, the company constructed a one-line beverage can and end manufacturing facility in Paraguay which began production in the fourth quarter of 2019, and is adding capacity to our Buenos Aires, Argentina, and Santiago, Chile, facilities.

Segment sales for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017,~~ended September 30, 2019, respectively, were ~~$107 million and $568~~$1 million higher ~~respectively,~~and $19 million lower compared to the same periods in ~~2016.~~2018. The increase for the ~~third quarter of 2017~~three months ended September 30, 2019, was primarily due to ~~an increase of $107 million in~~higher can and end volumes, offset by the pass through of lower aluminum prices, the conclusion of the end sales agreement associated with the Rexam acquisition and ~~favorable product~~ regional price/mix. The ~~first~~decrease for the nine months ended September 30, 2019, was primarily due to the pass through of ~~2017 included nine months~~lower aluminum prices, the conclusion of the end sales ~~volumes from the acquired Rexam business while the first nine months of 2016 included six months of sales volumes from the company’s legacy business, the significant portion of which was sold~~agreement associated with the ~~Divestment Business~~Rexam acquisition and three months of sales volumes from the acquired Rexam business. The increased sales volumes during the third quarter of 2017, also contributed to the increase in sales during the first nine months of 2017.regional price/mix, partially offset by higher can and end volumes.

Comparable operating earnings for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2019, respectively, were ~~$18~~$11 million lower and ~~$105~~$42 million ~~higher, respectively,~~lower compared to the same periods in ~~2016.~~2018. The ~~increase~~decreases for the ~~third quarter of 2017 was~~three and nine months ended September 30, 2019, were primarily due to ~~an increase~~the conclusion of ~~$20 million in~~the end sales agreement associated with the Rexam acquisition, regional price/mix and unfavorable currency exchange rates, partially offset by higher can and end volumes. The first nine months of 2017 included nine months of earnings from the acquired Rexam business while the first nine months of 2016 included six months of earnings from the company’s legacy business, the significant portion of which was sold with the Divestment Business and three months of earnings from the acquired Rexam business.

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Beverage Packaging, Europe


	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2019			2018			2019			2018

Net sales	$	699		$	683		$	2,052		$	1,995

Comparable operating earnings	$	90		$	84		$	241		$	219
Business consolidation and other activities (a)		(9)			(3)			(24)			(17)
Amortization of acquired Rexam intangibles		(15)			(17)			(48)			(53)
Total segment earnings	$	66		$	64		$	169		$	149
Comparable operating earnings as a % of segment net sales		13	%		12	%		12	%		11	%

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions)

2017

2016

2017

2016


Net sales

$
651

$
624

$
1,824

$
1,459

Comparable operating earnings

$
74

$
72

$
184

$
184

Business consolidation and other activities (a)

(62)

(10)

(69)

(19)

Amortization of acquired Rexam intangibles

(16)

(15)

(50)

(15)

Catch-up depreciation and amortization for 2016 from finalization of Rexam valuation (b)

—

—

(18)

—

Cost of sales associated with Rexam inventory step-up

—

(46)

—

(46)

Total segment earnings

$
(4)

$
1

$
47

$
104

Comparable operating earnings as a % of segment net sales

11
%

12
%

10
%

13
%

(a)

~~(a)~~

Further details of these items are included in Note 56 to the unaudited condensed consolidated financial statements within Item 1 of this report.

~~(b)~~

Catch-up depreciation and amortization of $18 million related to the last six months of 2016, was recorded during 2017, as a result of the finalization of fixed asset and intangible asset valuations and useful lives for the Rexam acquisition during the second quarter of 2017.

The beverage packaging, Europe, segment includes the manufacture and sale of metal beverage containers in facilities located throughout Europe, including Russia. To support growth for beverage cans in the Iberian Peninsula, the company ~~is constructing~~constructed a two-line, aluminum beverage can manufacturing facility near Madrid, Spain, with a majority of the facility’s capacity secured under a long-term customer contract. The facility ~~is expected to be~~became fully operational in the fourth quarter of 2018 and ~~will produce~~produces multiple can ~~sizes. On July 31, 2017,~~sizes utilizing both lines. In December 2018, we closed our beverage packaging ~~container and end production facilities~~facility located in ~~Recklinghausen, Germany, ceased production.~~San Martino, Italy.

Segment sales for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2019, respectively, were ~~$27~~$16 million and ~~$365~~$57 million higher ~~respectively,~~ compared to the same periods in ~~2016.~~2018. The increase in sales for the ~~third quarter of 2017~~three months ended September 30, 2019, was primarily related to ~~increased~~higher sales volumes ~~and favorable~~of $56 million, partially offset by unfavorable currency exchange ~~effects.~~rates of $29 million and the pass through of lower aluminum prices. The ~~first~~increase in sales for the nine months ~~of 2017 included nine months of~~ended September 30, 2019, was primarily related to higher sales volumes ~~from~~of $192 million, partially offset by unfavorable currency exchange rates of $135 million and the ~~acquired Rexam business while the first nine months~~pass through of 2016 included six months of sales volumes from the company’s legacy European business, the significant portion of which was sold with the Divestment Business and three months of sales volumes from the acquired Rexam business.lower aluminum prices.

Comparable operating earnings for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2019, respectively, were $2$6 million ~~higher~~ and ~~flat, respectively,~~$22 million higher compared to the same periods in ~~2016.~~2018. The ~~increase~~increases for the ~~third quarter of 2017 was~~three and nine months ended September 30, 2019, were primarily due to increased sales volumes ~~which were~~and operational efficiencies from plant network optimization, partially offset by lower net pricing. The first nine months of 2017 included nine months of earnings from the acquired Rexam business while the first nine months of 2016 included six months of earnings from the company’s legacy European business, the significant portion of which was sold with the Divestment Business. Additionally, the first nine months of 2017 included $24 million of increased depreciation related to the finalization of the fixed asset valuations and useful lives for the Rexam acquisition and three months of earnings from the acquired Rexam business.unfavorable currency exchange rates.

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Aerospace

~~Food and Aerosol Packaging~~


	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2019			2018			2019			2018

Net sales	$	374		$	283		$	1,081		$	837
Comparable operating earnings		35			26			103			75
Comparable operating earnings as a % of segment net sales		9	%		9	%		10	%		9	%

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions)

2017

2016

2017

2016


Net sales

$
321

$
329

$
867

$
911

Comparable operating earnings

$
30

$
31

$
76

$
84

Business consolidation and other activities (a)

(2)

(4)

7

(21)

Total segment earnings

$
28

$
27

$
83

$
63

Comparable operating earnings as a % of segment net sales

9
%

9
%

9
%

9
%

~~(a)~~

~~Further details of these items are included in Note 5 to the unaudited condensed consolidated financial statements within Item 1 of this report.~~

~~The food and aerosol packaging segment consists of operations located in the U.S., Europe, Canada, Mexico, Argentina and India that manufacture and sell steel food and~~ ~~aerosol containers, extruded aluminum aerosol containers and slugs.~~

Segment sales for the third quarter and first nine months of 2017 were $8 million and $44 million lower, respectively, compared to the same periods in 2016. The decrease in the third quarter of 2017 was due primarily to lower food can sales volumes which were partially offset by higher metal input prices. The decrease in the first nine months of 2017 was due primarily to lower food can sales volumes and the sale of the company’s Baltimore, Maryland, and Hubbard, Ohio, plants.

Comparable operating earnings for the third quarter and first nine months of 2017 were flat and $8 million lower, respectively, compared to the same periods in 2016. The third quarter of 2017 remained flat, primarily due to higher manufacturing efficiencies from our aerosol production, partially offset by lower food can volumes. The decrease in the first nine months of 2017 was primarily due to further food can volume and price erosion and startup costs for our new flat sheet operations in Canton, Ohio, during the first six months of 2017, which were partially offset by favorable aerosol product mix.

~~Aerospace~~

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions)

2017

2016

2017

2016


Net sales

$
241

$
204

$
734

$
577

Comparable operating earnings

23

24

70

61

Comparable operating earnings as a % of segment net sales

10
%

12
%

10
%

11
%

The aerospace segment consists of the manufacture and sale of aerospace and other related products and services provided for the defense, civil space and commercial space industries.

Segment sales for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017~~ended September 30, 2019, respectively, were ~~$37~~$91 million and ~~$157~~$244 million higher ~~respectively,~~ compared to the same periods in ~~2016,~~2018 and comparable operating earnings for the three and nine months ended September 30, 2019, respectively, were ~~flat~~$9 million and $8$28 million higher ~~respectively.~~compared to the same periods in 2018. The ~~increase in~~higher sales and comparable earnings for the ~~third quarter~~three and ~~first~~ nine months ~~of 2017 was~~ended September 30, 2019, were primarily the result of an increase in sales from significant U.S. national defense contracts.

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The aerospace sales contract mix for the ~~first~~ nine months ~~of 2017~~ended September 30, 2019, consisted of 6367 percent cost-type contracts, which are billed at our costs plus an agreed upon and/or earned profit component, and 3231 percent fixed-price contracts. The remaining sales were for time and materials contracts. Contracted backlog was ~~$1.2~~$2.2 billion at September 30, ~~2017, compared to $1.4 billion at~~2019, and December 31, ~~2016, and $1.4 billion at September 30, 2016.~~2018. The backlog at September 30, ~~2017,~~2019, consisted of 7465 percent cost-type contracts. Comparisons of backlog are not necessarily indicative of the trend of future operations due to the nature of varying delivery and milestone schedules on contracts, funding of programs and the uncertainty of timing of future contract awards.

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Additional Segment Information

For additional information regarding our segments, see the business segment information in Note 3 accompanying the unaudited condensed consolidated financial statements included within Item 1 of this report. The charges and income recorded for business consolidation and other activities were based on estimates by management and were developed from information available at the time the amounts were recognized. If actual outcomes vary from ~~the~~these estimates, the differences will be reflected in current period earnings in the statement of earnings and identified as business consolidation gains and losses. Additional details about our business consolidation and other activities, as well as the associated costs, are provided in Note 56 to the unaudited condensed consolidated financial statements included within Item 1 of this report on Form 10-Q.

NEW ACCOUNTING PRONOUNCEMENTS

For information regarding recent accounting pronouncements, see Note 2 to the unaudited condensed consolidated financial statements within Item 1 of this report on Form 10-Q.

Management Performance Measures

Management internally uses various measures to evaluate company performance such as comparable operating earnings (earnings before interest, taxes and business consolidation and other non-comparable costs); comparable net earnings (earnings before business consolidation costs and other non-comparable costs ~~after-tax)~~after tax); comparable diluted earnings per share (comparable net earnings divided by diluted weighted average shares outstanding); return on average invested capital (net operating earnings after tax over the relevant performance period divided by average invested capital over the same period); economic value added (EVA®) dollars (net operating earnings after tax less a capital charge on average invested capital employed); earnings before interest and taxes (EBIT); earnings before interest, taxes, depreciation and amortization (EBITDA); and diluted earnings per share. Management also uses free cash flow (generally defined by the company as cash flow from operating activities less capital expenditures) as a measure to evaluate the company’s liquidity. We believe this information is also useful to investors as it provides insight into the earnings and cash flow criteria management uses to make strategic decisions. These financial measures may be adjusted at times for items that affect comparability between periods such as business consolidation costs and gains or losses on acquisitions and dispositions.

Nonfinancial measures in the packaging businesses include production efficiency and spoilage rates; quality control figures; environmental, health and safety statistics; production and sales volumes; asset utilization rates and measures of sustainability. Additional measures used to evaluate financial performance in the aerospace segment include contract revenue realization, award and incentive fees realized, proposal win rates and backlog (including awarded, contracted and funded backlog).

The following financial measurements are presented on a non-U.S. GAAP basis and should be considered in connection with the unaudited condensed consolidated financial statements within Item 1 of this report. Non-U.S. GAAP measures should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S. GAAP. A presentation of earnings in accordance with U.S. GAAP is available in Item 1 of this report.

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Based on the above definitions, our calculation of comparable operating earnings is summarized below:

Three Months Ended September 30,

Nine Months Ended September 30,
($ in millions)

2017

2016

2017

2016

Net earnings attributable to Ball Corporation

$
48

$
31

$
215

$
210
Add: Net earnings attributable to noncontrolling interests

3

3

6

3
Net earnings

51

34

221

213
Less: Equity in results of affiliates, net of tax

(5)

(7)

(23)

(6)
Add: Tax provision (benefit)

4

23

48

(174)
Earnings before taxes, as reported

50

50

246

33
Add: Total interest expense

74

82

217

267
Earnings before interest and taxes

124

132

463

300
Add: Business consolidation and other activities

157

63

253

302
Add: Amortization of acquired Rexam intangibles (a)

37

33

120

33
Add: Catch-up depreciation and amortization for 2016 from finalization of Rexam valuation

(5)

—

34

—
Add: Cost of sales associated with Rexam inventory step-up

—

83

—

83
Comparable operating earnings

$
313

$
311

$
870

$
718

~~(a)~~

Catch-up depreciation and amortization of $34 million related to the last six months of 2016, was recorded during 2017, as a result of the finalization of fixed asset and intangible asset valuations and useful lives for the Rexam acquisition during the second quarter of 2017.


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2019		2018		2019		2018

Net earnings attributable to Ball Corporation	$	92	$	59	$	406	$	303
Add: Net earnings attributable to noncontrolling interests		—		—		—		1
Net earnings		92		59		406		304
Less: Equity in results of affiliates, net of tax		(5)		(7)		6		(14)
Add: Tax provision (benefit)		32		140		73		220
Earnings before taxes, as reported		119		192		485		510
Add: Total interest expense		79		76		241		227
Earnings before interest and taxes		198		268		726		737
Add: Business consolidation and other activities		133		32		147		131
Add: Amortization of acquired Rexam intangibles		38		40		118		124
Comparable operating earnings	$	369	$	340	$	991	$	992

Our calculation of comparable net earnings is summarized below:

Three Months Ended September 30,

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

2017

2016

2017

2016

Net earnings attributable to Ball Corporation

$
48

$
31

$
215

$
210
Add: Business consolidation and other activities

157

63

253

302
Add: Amortization of acquired Rexam intangibles (a)

37

33

120

33
Add: Catch-up depreciation and amortization for 2016 from finalization of Rexam valuation

(5)

—

34

—
Add: Cost of sales associated with Rexam inventory step-up

—

83

—

83
Add: Debt refinancing and other costs

—

2

1

108
Less: Tax effect on above items

(49)

(41)

(108)

(329)
Comparable net earnings

$
188

$
171

$
515

$
407

Per diluted share, as reported (b)

$
0.13

$
0.09

$
0.60

$
0.67
Per diluted share, comparable basis (b)

$
0.52

$
0.48

$
1.44

$
1.30

~~(a)~~

~~(b)~~

~~Amounts in 2016 have been retrospectively adjusted for the two-for-one stock split that was effective on May 16, 2017.~~


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions, except per share amounts)	2019		2018		2019		2018

Net earnings attributable to Ball Corporation	$	92	$	59	$	406	$	303
Add: Business consolidation and other activities		133		32		147		131
Add: Amortization of acquired Rexam intangibles		38		40		118		124
Add: Share of equity method affiliate non-comparable costs		—		—		16		—
Add: Debt refinancing and other costs		—		—		4		1
Less: Noncomparable taxes		(26)		66		(68)		25
Comparable net earnings	$	237	$	197	$	623	$	584

Diluted earnings per share, as reported	$	0.27	$	0.17	$	1.19	$	0.86
Comparable diluted earnings per share	$	0.70	$	0.56	$	1.82	$	1.65

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flows and Capital Expenditures

Our primary sources of liquidity are cash provided by operating activities and external borrowings. We believe that cash flows from operations and cash provided by short-term, long-term and committed revolver borrowings, when necessary,

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will be sufficient to meet our ongoing operating requirements, scheduled principal and interest payments on debt, dividend payments, anticipated share repurchases and anticipated capital expenditures. The following summarizes our cash flows:


	Nine Months Ended September 30,
($ in millions)	2019		2018

Cash flows provided by (used in) operating activities	$	656	$	1,027
Cash flows provided by (used in) investing activities		(449)		(15)
Cash flows provided by (used in) financing activities		(418)		(801)

Nine Months Ended September 30,
($ in millions)

2017

2016

Cash flows provided by (used in) operating activities

$
747

$
(433)
Cash flows provided by (used in) investing activities

(370)

880
Cash flows provided by (used in) financing activities

(429)

43

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Cash flows provided by operations were ~~higher~~lower in ~~2017~~2019 compared to ~~2016,~~2018, primarily due to ~~improved~~higher working ~~capital. Also,~~capital outflows and higher pension contributions, partially offset by higher earnings. The impact of changes in working capital on operating cash flows for the nine months ended September 30, ~~2016, included additional working capital requirements~~2019, was a $423 million outflow. Excluding the impact of the ~~acquired Rexam businesses of approximately $300 million; payments of professional fees and employee costs related to the acquisition of Rexam and~~ sale of the ~~Divestment Business of approximately $315 million; $64 million of additional pension funding; $90 million of payments to settle derivatives associated with~~U.S. steel food and steel aerosol packaging business in 2018, the ~~acquired Rexam business; and $50 million of additional interest payments associated with the financing~~sale of the ~~Rexam acquisition, which were partially offset by increased funding~~China beverage packaging business and the transfer of ~~pensions during 2017. Working~~the Argentina steel aerosol business assets and liabilities to held for sale in 2019, our working capital ~~changes in 2017 included lower annualized receivables~~movements reflect an increase of days sales outstanding ~~in 2017 of 45 days compared to 48~~from 42 days in ~~2016, lower annualized inventory days on hand of 53~~2018 to 49 days in ~~2017 compared to 57 days~~2019 and a decrease in ~~2016 and higher annualized~~ days payable outstanding ~~of 89~~from 112 days in ~~2017 compared~~2018 to 75104 days in ~~2016.~~2019.

We have entered into several regional committed and uncommitted accounts receivable factoring programs with various financial institutions for certain ~~receivables~~ of ~~the company.~~our receivables. The programs are accounted for as true sales of the receivables, without recourse to Ball, and had combined limits of approximately $1$1.3 billion and $1.2 billion at September 30, ~~2017.~~2019, and December 31, 2018. A total of ~~$646~~$155 million and ~~$596~~$178 million were ~~sold~~available for sale under such programs as of September 30, ~~2017,~~2019, and December 31, ~~2016,~~2018, respectively.

Contributions to the company’s defined benefit pension plans ~~not including unfunded German, Swedish and certain U.S. plans,~~ were ~~$182~~$154 million in the first nine months of ~~2017~~2019 compared to ~~$246~~$53 million in the first nine months of ~~2016~~2018 and such contributions are expected to be ~~in the range of $190~~approximately $168 million for the full year of ~~2017.~~2019. This estimate may change based on ~~any~~ changes to the U.S. Pension Protection Act and actual plan asset performance, among other factors. Included in the 2017 contributions were contributions to acquired Rexam defined benefit pension plans. Payments to participants in the unfunded German, Swedish and certain U.S. plans were $19 million in the first nine months of 2017 compared to $18 million in the first nine months of 2016 and are expected to be in the range of $22 million for the full year of 2017.

We expect ~~2017~~2019 capital expenditures for property, plant and equipment to ~~be in the range of $550~~exceed $600 million and approximately ~~$450~~$430 million was contractually committed as of September 30, ~~2017.~~2019. Capital expenditures are expected to be funded by cash flows from operations.

As of September 30, ~~2017,~~2019, approximately ~~$550~~$480 million of our cash was held outside of the U.S. In the event ~~that~~ we ~~would~~ need to utilize any of the cash held outside of the U.S. for purposes within the U.S., there are no material legal or other economic restrictions regarding the repatriation of cash from any of the countries outside the U.S. where we have cash, other than market liquidity constraints that may limit the ability to convert ~~the U.S. dollar equivalent of $39 million~~ Egyptian pounds held by the company in Egypt with a U.S. dollar equivalent value of $42 million into other currencies. The company believes its U.S. operating cash ~~flows; the $1.2 billion available~~flows, as well as availability under ~~the company’s~~its long-term, revolving credit ~~facilities; the $188 million available under other U.S.-based~~facilities, uncommitted short-term credit ~~facilities;~~facilities and ~~availability under U.S.-based~~ committed and uncommitted accounts receivable factoring programs will be sufficient to meet the cash requirements of the U.S. portion of ~~the company’s~~our ongoing operations, scheduled principal and interest payments on U.S. debt, dividend payments, capital expenditures and other U.S. cash requirements. If foreign funds ~~would be~~are needed for our U.S. cash requirements and we are unable to provide the funds through intercompany financing arrangements, we ~~will~~would be required ~~to accrue and pay U.S. taxes, net of applicable foreign tax credits,~~ to repatriate funds from foreign locations where the company has previously asserted indefinite reinvestment of funds outside the U.S. ~~However, it continues~~

Based on its indefinite reinvestment assertion, the company has not provided deferred taxes on earnings in certain non-U.S. subsidiaries because such earnings are intended to be indefinitely reinvested in its international operations. It is not practical to estimate the ~~company’s intent~~additional taxes that may become payable if these earnings were remitted to ~~permanently reinvest these foreign amounts outside~~ the U.S.~~, and our current plans do not demonstrate a need to repatriate the foreign amounts to fund our U.S. cash requirements.~~

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Share Repurchases

The company’s share repurchases, net of issuances, totaled ~~$85~~$598 million induring the ~~first~~ nine months ended September 30, 2019, compared to $439 million of ~~2017, and $60 million in~~repurchases, net of issuances, during the same period of ~~2016.~~2018. Share repurchases are completed using cash on hand and available borrowings. Additional details about our share repurchase activities are provided in Note 18 to the unaudited condensed consolidated financial statements within Item 1 of this quarterly report.

In ~~August 2017,~~May 2019, in a privately negotiated transaction, Ball entered into an accelerated share repurchase agreement to buy ~~$100~~$250 million of its common shares using cash on hand and available borrowings. The company ~~advanced the $100 million in August 2017, and received 2.2~~purchased 3.8 million shares ~~which represented approximately 85 percent~~at an average price paid per share of ~~the total shares. The agreement is expected to settle during the fourth quarter of 2017.~~$65.93.

Debt Facilities and Refinancing

Given our cash flow projections and unused credit facilities that are available until March ~~2021,~~2024, our liquidity is strong and is expected to meet our ongoing cash and debt service requirements. Interest-bearing debt of ~~$7.6~~$7.0 billion and $6.7 billion was outstanding at ~~both~~ September 30, ~~2017,~~2019, and December 31, ~~2016.~~2018, respectively.

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On March 25, 2019, the company refinanced its existing credit facilities with a U.S. dollar term loan facility, a U.S. dollar revolving facility and a multicurrency revolving facility that mature in March 2024. The revolving facilities provide the company with up to the U.S. dollar equivalent of $1.75 billion. At September 30, ~~2017,~~2019, taking into account our outstanding letters of credit, approximately ~~$1.2~~$1.5 billion was available under existing long-term, revolving credit facilities. In addition to these facilities, the company had approximately ~~$936 million~~$978 billion of short-term uncommitted credit facilities available atas of September 30, ~~2017,~~2019, of which ~~$374~~$333 million was outstanding and due on demand. At December 31, ~~2016,~~2018, the company had ~~$143~~$211 million outstanding under short-term uncommitted credit facilities.

In March 2018, Ball issued $750 million of 4.875 percent senior notes and used the proceeds to repay $315 million of its Term A loan and outstanding multi-currency revolver and short-term credit facility borrowings.

While ongoing financial and economic conditions in certain areas may raise concerns about credit risk with counterparties to derivative transactions, the company mitigates its exposure by allocating the risk among various counterparties and limiting exposure to any one party. We also monitor the credit ratings of our suppliers, customers, lenders and counterparties on a regular basis.

We were in compliance with all loan agreements at September 30, ~~2017,~~2019, and for all prior years presented, and we have met all debt payment obligations. The U.S. note agreements and bank credit agreement contain certain restrictions relating to dividends, investments, financial ratios, guarantees and the incurrence of additional indebtedness. The most restrictive covenant is in the company’s bank credit agreement and requires the company to maintain a ~~net debt to EBITDA~~leverage ratio (as defined) of no greater than 54.5 times at September 30, ~~2017, which changes to 4 times at December 31, 2017.~~2019. As of September 30, ~~2017,~~2019, approximately $1.5 billion of the amounts disclosed as available under the company’s long-term multi-currency committed revolving facilities and short-term uncommitted credit facilities are available without violating our existing debt covenants. Additional details ~~about~~regarding our debt are available in Note 1215 accompanying the unaudited condensed consolidated financial statements within Item 1 of this report.

CONTINGENCIES, INDEMNIFICATIONS AND GUARANTEES

Details about the company’s contingencies, indemnifications and guarantees are available in Notes 1821 and 1922 accompanying the unaudited condensed consolidated financial statements included within Item 1 of this report. The company is routinely subject to litigation incident to operating its businesses, and has been designated by various federal and state environmental agencies as a potentially responsible party, along with numerous other companies, for the clean-up of several hazardous waste sites, including in respect of sites related to alleged activities of certain Rexam subsidiaries. The company believes the matters identified will not have a material adverse effect upon the liquidity, results of operations or financial condition of the company. ~~Details of the company’s legal proceedings are included in Note 22 to the consolidated financial statements within Item 8 of the company’s Annual Report on Form 10-K.~~

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the ordinary course of business, the company employs established risk management policies and procedures, which seek to reduce our exposure to fluctuations in commodity prices, interest rates, exchange currencies and prices of the company’s common stock in regard to common share repurchases and the company’s deferred compensation stock plan, although there can be no assurance that these policies and procedures will be successful. The company mitigates its exposure by spreading the risk among various counterparties, thus limiting exposure with any one party. The company also monitors the credit ratings of its suppliers, customers, lenders and counterparties on a regular basis. Further details are available in Item 7A within Ball’s ~~2016 annual report~~2018 Annual Report on Form 10-K filed on ~~March 2, 2017,~~February 22, 2019, and in Note 1720 accompanying the

~~Table of Contents~~

unaudited condensed consolidated financial statements included within Item 1 of this report.

~~In November 2016, Egypt’s central bank elected to allow their currency, the Egyptian pound, to float more freely in the market resulting in a devaluation~~52

Table of the Egyptian pound from 8.9 to approximately 17 per U.S. dollar, an approximate 90 percent devaluation. The currency market for the Egyptian pound continues to be volatile and the actual impact that will be recorded in the company’s results will change based on the movement in the exchange rate and changes in the ongoing business activities.Contents

Item 4. CONTROLS AND PROCEDURES

~~Disclosure Controls~~Our chief executive officer and ~~Procedures~~

~~Ball Corporation has established~~chief financial officer participated in management’s evaluation of our disclosure controls and procedures, ~~to ensure that information required to be disclosed~~as defined by ~~us in the reports that we file or submit under~~ the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and that such information is accumulated and communicated to management of the company, including its Chief Executive Officer (CEO) and Chief Financial Officer (CFO)Commission (SEC), ~~as appropriate to allow timely decisions regarding required disclosure.~~

Ball Corporation, under the supervision of the CEO and CFO of the company, has conducted an evaluation of the effectiveness of the design and operation of the company’s disclosure controls and procedures as of the end of the period covered by this ~~Form 10-Q. Based on this evaluation, the CEO~~report and ~~the CFO have~~ concluded that our ~~disclosure~~ controls and procedures were ~~not effective because of the material weakness described in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2016, which continued~~effective. There were no changes to ~~exist as of September 30, 2017.~~

~~Management has concluded that, notwithstanding the material weakness described above,~~internal controls during the company’s ~~unaudited condensed consolidated financial statements in this Form 10-Q fairly stated, in all material respects, our financial position, results~~third quarter of ~~operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.~~

~~Inherent Limitations of Internal Controls~~

Our management, including the CEO and CFO, believes that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of internal control are met. Further, the design of internal controls must consider the benefits of controls relative to their costs. Inherent limitations within internal controls include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by unauthorized override of controls. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. While the objective of the design of any system of controls is to provide reasonable assurance of the effectiveness of controls, such design is also based in part upon certain assumptions about the likelihood of future events and such assumptions, while reasonable, may not take into account all potential future conditions. Thus, even effective internal control over financial reporting can only provide reasonable assurance of achieving their objectives. Therefore, because of the inherent limitations in cost effective internal controls, misstatements due to error or fraud may occur and may not be prevented or detected.

~~Remediation Plan for Material Weakness~~

During 2017, our management, with the oversight of the Audit Committee of our board of directors, has been engaged in efforts to remediate the material weakness identified. While certain remedial actions are in process, remedial controls have now been designed and implemented to address any future transactions that meet these criteria. The remediation efforts taken in 2017, outlined below, are intended to both address the identified material weakness and enhance our overall financial control environment.



Enhance our income tax controls to include specific activities to assess basis differences in reporting units where the currency utilized for local tax purposes differs from the reporting unit’s functional currency.

~~Table of Contents~~

~~Remediation Activity~~

Management has performed a review of all locations to determine where the currency utilized for local tax purposes differs from the reporting unit’s functional currency under U.S. GAAP and has compiled an inventory of all the locations that could have significant basis differences resulting from currency fluctuations which could be realizable through significant and unusual/infrequent transactions. Further, management will monitor this list for completeness on a recurring basis.



~~Ensure that statutory tax provisions are completed and reviewed timely.~~

~~Remediation Activity~~

~~Management has designed and implemented a new control to ensure that statutory tax provisions are completed and reviewed timely following significant, unusual and/or infrequent transactions.~~


			Additional reviews and approvals of the quarterly effective tax rate calculations have been added with regard to significant, unusual or significant, infrequently occurring transactions to ensure such discrete tax items are appropriately identified and accounted for accurately.

~~Remediation Activity~~

Beginning in the quarter ended March 31, 2017, we implemented enhanced control procedures, including additional reviews and approvals, over our quarterly effective tax rate calculation. This includes additional scrutiny over significant and unusual/infrequently occurring transactions that may cause discrete tax matters.



~~Enhance the company’s tax accounting resources.~~

~~Remediation Activity~~

Management has evaluated the tax accounting resource requirements and has taken remedial action to ensure the appropriate combination of personnel and technology are deployed to address the remediation activities outlined above.

The material weakness will not be considered fully remediated until the applicable remedial controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

We are designing and implementing the measures described above with the goal of remediation of the control deficiencies we have identified and strengthening our internal control over financial reporting.Management is committed to continuous improvement of the company’s internal control over financial reporting and will continue to diligently review the company’s internal control over financial reporting. As management continues to evaluate and work to improve internal control over financial reporting, the company may determine to take additional measures to address control deficiencies or determine to modify certain of the remediation measures described above.

~~Changes in Internal Control Over Financial Reporting~~

~~As described above under~~ ~~Remediation Plan for Material Weakness,~~ ~~we are in the process of implementing changes to our internal control over financial reporting that occurred during the quarter ended September 30, 2017,~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

This report contains ~~“forward-looking”~~"forward-looking" statements concerning future events and financial performance. Words such as ~~“expects,” “anticipates,” “estimates,” “believes,” “targets,” “likely”~~"expects," "anticipates," "estimates," "believes," "targets," "likely," "positions" and similar expressions typically identify forward-looking statements, which are generally any statements other than statements of historical fact. Such statements are based on current expectations or views of the future and are subject to risks and uncertainties, which could cause actual results or events to differ materially from those expressed or implied. ~~Readers of this report~~You should therefore not place undue reliance upon any forward-looking statements and any of such statements should be read in conjunction with, and, qualified in their entirety by, the cautionary statements referenced below. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or

~~Table of Contents~~

otherwise. Key factors, risks and uncertainties that could cause actual outcomes and results to be different are summarized in filings with the Securities and Exchange Commission, including Exhibit 99 in our Form 10-K, which are available on our website and at ~~www.sec.gov. Some~~www.sec.gov. Additional factors that ~~could cause the company’s actual results or outcomes to differ materially from those discussed include, but are not limited to the following:~~might affect: a) in our packaging ~~segments:~~segments include product demand fluctuations; availability/cost of raw ~~materials;~~materials and logistics; competitive packaging, pricing and substitution; changes in climate and weather; ~~competitive activity;~~footprint adjustments and other manufacturing changes, including the startup of new facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; mandatory deposit or other restrictive packaging laws; customer and supplier ~~consolidation,~~consolidation; power and supply chain ~~influence;~~interruptions; potential delays and tariffs related to the U.K’s departure from the EU; changes in major customer or supplier contracts or a loss of a major customer or supplier; political instability and sanctions; currency controls; ~~and~~ changes in foreign exchange or tax rates; b)and tariffs, trade actions, or other governmental actions in any country affecting goods produced by us or in our supply chain, including imported raw materials, such as pursuant to Section 232 of the U.S. Trade Expansion Act of 1962 or Section 301 of Trade Act of 1974; b) our aerospace ~~segment:~~segment include funding, authorization, availability and returns of government and commercial contracts; and delays, extensions and technical uncertainties affecting segment contracts; c) in the company as a whole include those listed plus: the extent to which sustainability-related opportunities arise and can be capitalized upon; changes in senior management; regulatory action or issues including tax, environmental, health and workplace safety, including U.S. FDA and other actions or public concerns affecting products filled in our containers, or chemicals or substances used in raw materials or in the manufacturing process; technological developments and innovations; litigation; strikes; labor cost changes; rates of return on assets of the company's defined benefit retirement plans; pension changes; uncertainties surrounding geopolitical events and governmental policies both in the U.S. and in other countries, including the U.S. government elections, budget, sequestration and debt limit; reduced cash flow; ~~ability to achieve cost-out initiatives and synergies;~~ interest rates affecting our debt; and successful or unsuccessful joint ventures, acquisitions and divestitures, including with respect to the Rexam PLC acquisition, ~~and~~ its integration, or the associated ~~divestiture; the effect of the acquisition or the~~ divestiture, and their effects on our ~~business relationships,~~ operating results and business generally.

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There were no events required to be reported under Item 1 for the ~~third quarter of 2017,~~three months ended September 30, 2019, except as discussed in Note 1821 to the unaudited condensed consolidated financial statements within Part I, Item 1 ~~within~~of this report.

Item 1A. Risk Factors

Risk factors affecting the company can be found within Item 1A of the company’s 2018 Annual Report on Form 10-K ~~(annual report)~~filed on February 22, 2019, for the year ended December 31, ~~2016.~~2018.

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Item 2. Changes in Securities

The following table summarizes the company’s repurchases of its common stock during the third quarter of ~~2017.~~2019.


Purchases of Securities
($ in millions)	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (b)

July 1 to July 31, 2019	—	$	—	—	45,531,907
August 1 to August 31, 2019	1,335,476		76.94	1,335,476	44,196,431
September 1 to September 30, 2019	1,960,743		74.92	1,960,743	42,235,688
Total	3,296,219		75.74	3,296,219

Purchases of Securities
($ in millions)

Total
Number of
Shares
Purchased

Average
Price
Paid per
Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (a)

Maximum Number of
Shares that May Yet
Be Purchased Under
the Plans or Programs
(b)

July 1 to July 30, 2017

—

$
—

—

20,649,074
August 1 to August 31, 2017

2,201,824

40.56

2,201,824

18,447,250
September 1 to September 30, 2017

—

—

—

18,447,250
Total

2,201,824

—

2,201,824

(a)

~~(a)~~

Includes open market purchases (on a trade-date basis), share repurchase agreements and/or shares retained by the company to settle employee withholding tax liabilities. ~~These amounts include the company’s approved two-for-one stock split which was effective May 16, 2017.~~

(b)

~~(b)~~

The company has an ongoing repurchase program for which shares are authorized from time to time by Ball’s ~~board~~Board of ~~directors. These amounts include~~Directors. On January 23, 2019, the ~~company’s approved two-for-one stock split which was effective May 16, 2017.~~

Board authorized the repurchase by the company of up to a total of 50 million shares. This repurchase authorization replaced all previous authorizations.

Item 3. Defaults Upon Senior Securities

There were no events required to be reported under Item 3 for the ~~third quarter of 2017.~~three months ended September 30, 2019.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

There were no events required to be reported under Item 5 for the ~~third quarter of 2017.~~three months ended September 30, 2019.

7154

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Item 6. Exhibits

10.1	Ball Corporation Deposit Share Program for United States Participants, amended and restated as of July 27, 2016 (filed herewith).
31.1	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) by John A. Hayes, Chairman, President and Chief Executive Officer of Ball Corporation.

31.2		Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) by Scott C. Morrison, Senior Vice President and Chief Financial Officer of Ball Corporation.

32.1		Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code by John A. Hayes, Chairman, President and Chief Executive Officer of Ball Corporation.

32.2		Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code by Scott C. Morrison, Senior Vice President and Chief Financial Officer of Ball Corporation.

99		Cautionary statement for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.

~~101~~ 101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema Document.

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definitions Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	The ~~following materials from~~cover page of the company’s quarterly report on Form 10-Q for the quarter ended September 30, ~~2017,~~2019, formatted in Inline XBRL ~~(Extensible Business Reporting Language)~~(contained in Exhibit 101), the: (i) Unaudited Condensed Consolidated Statement of Earnings, (ii) Unaudited Statement of Comprehensive Earnings, (iii) Unaudited Condensed Consolidated Balance Sheet, (iv) Unaudited Condensed Consolidated Statement of Cash Flows and (v) Notes to the Unaudited Condensed Consolidated Financial Statements.

Table of Contents

~~Ball Corporation and Subsidiaries~~

~~QUARTERLY REPORT ON FORM 10-Q~~

~~September 30, 2017~~

~~EXHIBIT INDEX~~

~~Description~~		~~Exhibit~~

~~Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) by John A. Hayes, Chairman, President and Chief Executive Officer of Ball Corporation (Filed herewith.)~~		~~EX-31.1~~

~~Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) by Scott C. Morrison, Senior Vice President and Chief Financial Officer of Ball Corporation (Filed herewith.)~~		~~EX-31.2~~

Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code by John A. Hayes, Chairman, President and Chief Executive Officer of Ball Corporation (Furnished herewith.)		~~EX-32.1~~

Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code by Scott C. Morrison, Senior Vice President and Chief Financial Officer of Ball Corporation (Furnished herewith.)		~~EX-32.2~~

~~Cautionary statement for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. (Filed herewith.)~~		~~EX-99~~

The following materials from the company’s quarterly report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language) the: (i) Unaudited Condensed Consolidated Statement of Earnings, (ii) the Unaudited Statement of Comprehensive Earnings, (iii) Unaudited Condensed Consolidated Balance Sheet, (iv) Unaudited Condensed Consolidated Statement of Cash Flows and (v) Notes to the Unaudited Condensed Consolidated Financial Statements ~~(Filed herewith.)~~		~~EX-101~~

~~Table of Contents~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Ball Corporation
(Registrant)


By:	/s/ Scott C. Morrison
	Scott C. Morrison
	Senior Vice President and Chief Financial Officer


Date:	November ~~6, 2017~~1, 2019

7456


($ in millions, except per share amounts)	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016
2016	As Previously Reported		Adjustments (a)		As Revised		As Previously Reported		Adjustments (a)		As Revised
Net sales	$	2,815	$	(63)	$	2,752	$	6,600	$	(63)	$	6,537
Cost of sales (excluding depreciation and amortization)		(2,338)		63		(2,275)		(5,351)		63		(5,288)
Business consolidation and other activities		(79)		16		(63)		(319)		17		(302)
Earnings before interest and taxes		116		16		132		283		17		300
Earnings before taxes		34		16		50		16		17		33
Tax (provision) benefit		(38)		15		(23)		191		(17)		174
Net earnings		3		31		34		213		—		213
Net earnings attributable to Ball Corporation		—		31		31		210		—		210

Basic earnings per share (b)		—		0.09		0.09		0.69		—		0.69
Diluted earnings per share (b)		—		0.09		0.09		0.67		—		0.67


	Nine Months Ended
($ in millions)	September 30, 2016

Earnings before taxes	$	104
Earnings before taxes attributable to Ball Corporation		104


	June 30,
($ in millions)	2016

Cash	$	450
Receivables, net		778
Inventories, net		782
Other current assets		165
Assets held for sale (sold to Ardagh on June 30, 2016)		911
Total current assets		3,086

Property, plant and equipment		2,301
Goodwill		3,415
Intangible assets		2,478
Restricted cash		174
Other assets		490
Total assets acquired		11,944

Short-term debt and current portion of long-term debt		2,792
Accounts payable		858
Accrued employee costs		135
Liabilities held for sale (sold to Ardagh on June 30, 2016)		7
Other current liabilities		373
Total current liabilities		4,165

Long-term debt		28
Employee benefit obligations		508
Deferred taxes and other liabilities		993
Total liabilities assumed		5,694

Net assets acquired		6,250

Noncontrolling interests		(90)
Aggregate value of consideration paid	$	6,160


($ in millions)	Beverage Packaging, North & Central America		Beverage Packaging, South America		Beverage Packaging, Europe		Food & Aerosol Packaging		Other		Total

Balance at December 31, 2016	$	8	$	—	$	4	$	6	$	2	$	20
Charges in earnings		18		2		55		7		1		83
Cash payments and other activity		(6)		—		(13)		(12)		(2)		(33)
Balance at September 30, 2017	$	20	$	2	$	46	$	1	$	1	$	70


($ in millions)	Foreign Currency Translation (Net of Tax)		Pension and Other Postretirement Benefits (Net of Tax)		Effective Derivatives (Net of Tax)		Accumulated Other Comprehensive Earnings (Loss)

Balance at December 31, 2016	$	(329)	$	(590)	$	(22)	$	(941)
Other comprehensive earnings (loss) before reclassifications		—		(52)		(38)		(90)
Amounts reclassified from accumulated other comprehensive earnings (loss)		—		41		65		106
Balance at September 30, 2017	$	(329)	$	(601)	$	5	$	(925)


	April 2017		January 2017		July 2016		January 2016

Expected dividend yield	1.06	%	0.68	%	0.73	%	0.79	%
Expected stock price volatility	18.89	%	20.49	%	24.14	%	29.25	%
Risk-free interest rate	1.95	%	2.07	%	1.22	%	1.57	%
Expected life of options (in years)	5.94	years	5.94	years	6.10	years	5.94	years


	September 30, 2017						December 31, 2016
($ in millions)	Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments		Total		Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments		Total

Assets:
Commodity contracts	$	38	$	2	$	40	$	17	$	1	$	18
Foreign currency contracts		3		7		10		1		—		1
Interest rate and other contracts		—		2		2		—		21		21
Total current derivative contracts	$	41	$	11	$	52	$	18	$	22	$	40

Commodity contracts	$	6	$	—	$	6	$	7	$	—	$	7
Interest rate and other contracts		1		—		1		39		—		39
Total noncurrent derivative contracts	$	7	$	—	$	7	$	46	$	—	$	46

Liabilities:
Commodity contracts	$	13	$	1	$	14	$	3	$	—	$	3
Foreign currency contracts		1		16		17		—		22		22
Total current derivative contracts	$	14	$	17	$	31	$	3	$	22	$	25

Total noncurrent foreign currency derivative contracts	$	96	$	—	$	96	$	—	$	—	$	—


	Unaudited Condensed Consolidating Statement of Earnings
	Three Months Ended September 30, 2017
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Adjustments		Consolidated Total

Net sales	$	—	$	1,232	$	1,694	$	(18)	$	2,908

Cost and expenses
Cost of sales (excluding depreciation and amortization)		—		(1,003)		(1,353)		18		(2,338)
Depreciation and amortization		(1)		(38)		(123)		—		(162)
Selling, general and administrative		(41)		(40)		(46)		—		(127)
Business consolidation and other activities		(18)		(35)		(104)		—		(157)
Equity in results of subsidiaries		72		(29)		—		(43)		—
Intercompany		79		(42)		(37)		—		—
		91		(1,187)		(1,663)		(25)		(2,784)

Earnings (loss) before interest and taxes		91		45		31		(43)		124
Interest expense		(71)		1		(4)		—		(74)
Debt refinancing and other costs		—		—		—		—		—
Total interest expense		(71)		1		(4)		—		(74)
Earnings (loss) before taxes		20		46		27		(43)		50
Tax (provision) benefit		28		(19)		(13)		—		(4)
Equity in results of affiliates, net of tax		—		—		5		—		5
Net earnings (loss)		48		27		19		(43)		51
Less net earnings attributable to noncontrolling interests		—		—		(3)		—		(3)
Net earnings (loss) attributable to Ball Corporation	$	48	$	27	$	16	$	(43)	$	48

Comprehensive earnings (loss) attributable to Ball Corporation	$	42	$	21	$	13	$	(34)	$	42


	Unaudited Condensed Consolidating Statement of Earnings
	Nine Months Ended September 30, 2017
($ in millions)	Ball Corporation		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Adjustments		Consolidated Total

Net sales	$	—	$	3,620	$	4,698	$	(82)	$	8,236

Cost and expenses
Cost of sales (excluding depreciation and amortization)		—		(2,972)		(3,693)		82		(6,583)
Depreciation and amortization		(5)		(111)		(423)		—		(539)
Selling, general and administrative		(141)		(118)		(139)		—		(398)
Business consolidation and other activities		(82)		(38)		(133)		—		(253)
Equity in results of subsidiaries		343		(23)		—		(320)		—
Intercompany		241		(129)		(112)		—		—
		356		(3,391)		(4,500)		(238)		(7,773)

Earnings (loss) before interest and taxes		356		229		198		(320)		463
Interest expense		(205)		4		(15)		—		(216)
Debt refinancing and other costs		—		—		(1)		—		(1)
Total interest expense		(205)		4		(16)		—		(217)
Earnings (loss) before taxes		151		233		182		(320)		246
Tax (provision) benefit		64		(83)		(29)		—		(48)
Equity in results of affiliates, net of tax		—		1		22		—		23
Net earnings		215		151		175		(320)		221
Less net earnings attributable to noncontrolling interests		—		—		(6)		—		(6)
Net earnings attributable to Ball Corporation	$	215	$	151	$	169	$	(320)	$	215

Comprehensive earnings (loss) attributable to Ball Corporation	$	231	$	137	$	146	$	(283)	$	231


Purchases of Securities
($ in millions)	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (b)

July 1 to July 30, 2017	—	$	—	—	20,649,074
August 1 to August 31, 2017	2,201,824		40.56	2,201,824	18,447,250
September 1 to September 30, 2017	—		—	—	18,447,250
Total	2,201,824		—	2,201,824

($ in millions)

Fair Value

Weighted-
Average
Estimated
Useful Life (in
Years)

Customer relationships

Trademarks