UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


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

For the Quarterly Period Ended September 30, ~~2020~~2021


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

Commission file number 001-07349

BALL CORPORATION

State of Indiana

(State or other jurisdiction of incorporation or
organization)

35-0160610

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

9200 West 108th Circle

Westminster, CO

(Address of registrant’s principal executive office)

80021

(Zip Code)

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

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

Class		Trading Symbol		Name of Exchange		Outstanding at October 31, ~~2020~~2021
Common Stock, without par value		BLL		NYSE		~~327,111,668~~323,894,182 shares

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


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

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

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

Table of Contents

Ball Corporation

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, ~~2020~~2021

INDEX

		Page Number

PART I.	FINANCIAL INFORMATION
		1
Item 1.	Financial Statements
		1
	Unaudited Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	1

	Unaudited Condensed Consolidated Statements of Comprehensive Earnings (Loss) for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	2

	Unaudited Condensed Consolidated Balance Sheets at September 30, ~~2020,~~2021, and December 31, ~~2019~~2020	3

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	4

	Notes to the Unaudited Condensed Consolidated Financial Statements	5
	Note 1, Basis of Presentation	5
	Note 2, Accounting Pronouncements	6
	Note 3, Business Segment Information	6
	Note 4, Acquisitions and Dispositions	8
	Note 5, Revenue from Contracts with Customers	8
	Note 6, Business Consolidation and Other Activities	9
	Note 7, Supplemental Cash Flow Statement Disclosures	11
	Note 8, Receivables, Net	12
	Note 9, Inventories, Net	12
	Note 10, Property, Plant and Equipment, Net	12
	Note 11, Goodwill	12
	Note 12, Intangible Assets, Net	13
	Note 13, Other Assets	13
	Note 14, Leases	13
	Note 15, Debt	14
	Note 16, Taxes on Income	15
	Note 17, Employee Benefit Obligations	15
	Note 18, Equity and Accumulated Other Comprehensive Earnings	17
	Note 19, Earnings and Dividends Per Share	19
	Note 20, Financial Instruments and Risk Management	19
	Note 21, Contingencies	24
	Note 22, Indemnifications and Guarantees	26
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
		37
Item 4.	Controls and Procedures	41
		38
PART II.	OTHER INFORMATION	4138

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,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions, except per share amounts)	2020		2019		2020		2019		2021		2020		2021		2020

Net sales	$	3,093	$	2,953	$	8,679	$	8,755	$	3,553	$	3,093	$	10,137	$	8,679

Costs and expenses
Cost of sales (excluding depreciation and amortization)		(2,430)		(2,363)		(6,875)		(7,044)		(2,851)		(2,430)		(8,104)		(6,875)
Depreciation and amortization		(160)		(169)		(499)		(510)		(175)		(160)		(515)		(499)
Selling, general and administrative		(121)		(90)		(363)		(328)		(148)		(121)		(471)		(363)
Business consolidation and other activities		(8)		(133)		(235)		(147)		(141)		(8)		(136)		(235)
		(2,719)		(2,755)		(7,972)		(8,029)		(3,315)		(2,719)		(9,226)		(7,972)

Earnings before interest and taxes		374		198		707		726		238		374		911		707

Interest expense		(68)		(79)		(206)		(237)		(68)		(68)		(201)		(206)
Debt refinancing and other costs		(1)		—		(41)		(4)		(1)		(1)		(1)		(41)
Total interest expense		(69)		(79)		(247)		(241)		(69)		(69)		(202)		(247)

Earnings before taxes		305		119		460		485		169		305		709		460
Tax (provision) benefit		(73)		(32)		(92)		(73)		2		(73)		(146)		(92)
Equity in results of affiliates, net of tax		8		5		(13)		(6)		8		8		18		(13)
Net earnings		240		92		355		406		179		240		581		355
Net (earnings) loss attributable to noncontrolling interests		1		—		3		—		—		1		—		3
Net earnings attributable to Ball Corporation	$	241	$	92	$	358	$	406	$	179	$	241	$	581	$	358


Earnings per share:
Basic	$	0.74	$	0.28	$	1.10	$	1.22	$	0.55	$	0.74	$	1.78	$	1.10
Diluted	$	0.72	$	0.27	$	1.08	$	1.19	$	0.54	$	0.72	$	1.75	$	1.08


Weighted average shares outstanding: (000s)
Basic		326,549		331,148		325,965		332,726		325,876		326,549		327,097		325,965
Diluted		332,654		340,632		332,152		341,702		331,595		332,654		332,938		332,152

See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019		2021		2020		2021		2020

Net earnings	$	240	$	92	$	355	$	406	$	179	$	240	$	581	$	355

Other comprehensive earnings (loss):
Foreign currency translation adjustment		(130)		50		(292)		136
Currency translation adjustment										(17)		(130)		19		(292)
Pension and other postretirement benefits		9		20		(2)		27		193		9		242		(2)
Derivatives designated as hedges		44		16		63		47		16		44		122		63
Total other comprehensive earnings (loss)		(77)		86		(231)		210		192		(77)		383		(231)
Income tax (provision) benefit		(10)		(5)		(14)		(12)		(48)		(10)		(82)		(14)
Total other comprehensive earnings (loss), net of tax		(87)		81		(245)		198		144		(87)		301		(245)

Total comprehensive earnings (loss)		153		173		110		604		323		153		882		110
Comprehensive (earnings) loss attributable to noncontrolling interests		1		—		3		—		—		1		—		3
Comprehensive earnings (loss) attributable to Ball Corporation	$	154	$	173	$	113	$	604	$	323	$	154	$	882	$	113

See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2021		2020

Assets
Current assets
Cash and cash equivalents	$	771	$	1,798	$	1,446	$	1,366
Receivables, net		1,772		1,631		2,489		1,738
Inventories, net		1,309		1,274		1,638		1,353
Other current assets		173		181		344		218
Total current assets		4,025		4,884		5,917		4,675
Noncurrent assets
Property, plant and equipment, net		4,895		4,470		6,170		5,351
Goodwill		4,401		4,419		4,407		4,484
Intangible assets, net		1,897		2,002		1,732		1,883
Other assets		1,754		1,585		1,906		1,859
Total assets	$	16,972	$	17,360	$	20,132	$	18,252

Liabilities and Equity
Current liabilities
Short-term debt and current portion of long-term debt	$	31	$	1,480	$	762	$	17
Accounts payable		2,832		3,136		4,210		3,430
Accrued employee costs		283		285		364		347
Other current liabilities		618		676		795		650
Total current liabilities		3,764		5,577		6,131		4,444
Noncurrent liabilities
Long-term debt		7,679		6,337		7,755		7,783
Employee benefit obligations		1,573		1,486		1,322		1,613
Deferred taxes		589		561		673		634
Other liabilities		414		380		486		441
Total liabilities		14,019		14,341		16,367		14,915

Equity
Common stock (679,001,052 shares issued - 2020; 676,302,319 shares issued - 2019)		1,164		1,178
Common stock (680,667,421 shares issued - 2021; 679,524,325 shares issued - 2020)						1,209		1,167
Retained earnings		6,014		5,803		6,611		6,192
Accumulated other comprehensive earnings (loss)		(1,155)		(910)		(653)		(954)
Treasury stock, at cost (352,022,101 shares - 2020; 351,667,322 shares - 2019)		(3,137)		(3,122)
Treasury stock, at cost (355,842,472 shares - 2021; 351,938,709 shares - 2020)						(3,463)		(3,130)
Total Ball Corporation shareholders' equity		2,886		2,949		3,704		3,275
Noncontrolling interests		67		70		61		62
Total equity		2,953		3,019		3,765		3,337
Total liabilities and equity	$	16,972	$	17,360	$	20,132	$	18,252

See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2021		2020

Cash Flows from Operating Activities
Net earnings	$	355	$	406	$	581	$	355
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization		499		510		515		499
Business consolidation and other activities		235		147		136		235
Deferred tax provision (benefit)		(23)		(16)		34		(23)
Other, net		7		32		(142)		7
Changes in working capital components, net of dispositions		(728)		(423)		(248)		(728)
Cash provided by (used in) operating activities		345		656		876		345
Cash Flows from Investing Activities
Capital expenditures		(683)		(425)		(1,204)		(683)
Business acquisitions, net of cash acquired		(69)		—		—		(69)
Business dispositions, net of cash sold		(17)		(50)		111		(17)
Other, net		18		26		(11)		18
Cash provided by (used in) investing activities		(751)		(449)		(1,104)		(751)
Cash Flows from Financing Activities
Long-term borrowings		2,552		1,098		850		2,552
Repayments of long-term borrowings		(2,792)		(906)		(14)		(2,792)
Net change in short-term borrowings		(3)		131		10		(3)
Proceeds (payments) from issuances of common stock, net of shares used for taxes		(12)		16		31		(12)
Acquisitions of treasury stock		(57)		(614)		(356)		(57)
Common stock dividends		(149)		(133)		(164)		(149)
Other, net		(60)		(10)		(30)		(60)
Cash provided by (used in) financing activities		(521)		(418)		327		(521)

Effect of exchange rate changes on cash		(96)		(20)		(22)		(96)

Change in cash, cash equivalents and restricted cash		(1,023)		(231)		77		(1,023)
Cash, cash equivalents and restricted cash - beginning of period		1,806		728		1,381		1,806
Cash, cash equivalents and restricted cash - end of period	$	783	$	497	$	1,458	$	783

See accompanying notes to the unaudited condensed consolidated financial statements.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation

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

Results of operations for the periods shown are not necessarily indicative of results for the year, particularly in view of the seasonality in the packaging segments and the variability of contract sales in the company’s aerospace segment. These ~~unaudited condensed~~ consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and the notes thereto included in the company’s ~~2019~~2020 Annual Report on Form 10-K filed on February ~~19, 2020,~~17, 2021, pursuant to the Securities Exchange Act of 1934 for the fiscal year ended December 31, ~~2019~~2020 (annual report).

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

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

Risks and Uncertainties – Novel Coronavirus (COVID-19)

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

●

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

●

Estimates of recoverability for customer receivables;

●

Estimates of net realizable value for inventory;

●

Estimates regarding the likelihood of forecasted transactions associated with hedge accounting positions at September 30, ~~2020,~~2021, which could impact the company’s ability to satisfy hedge accounting requirements and result in the recognition of income and/or expenses.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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

~~Table of Contents~~

~~Ball Corporation~~

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

2. Accounting Pronouncements

Recently Adopted Accounting Standards

~~Cloud Computing Arrangements~~Income Tax Simplification

In ~~August 2018, amendments to existing accounting~~December 2019, new guidance ~~were~~was issued to ~~clarify~~simplify the accounting for implementation costs related to cloud computing arrangements. The amendments specify that existing guidance for capitalizing implementation costs incurred to develop or obtain internal-use software also applies to capitalizing implementation costs incurred in a hosting arrangement that is a service contract. The guidance was applied prospectively on January 1, 2020, and did not have a material effect on the company’s unaudited condensed consolidated financial statements.

~~Financial Assets~~

Amendments to existing guidance were issued in June 2016, followed by improvements and transition relief in 2018 and 2019, requiring financial assets or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected when finalized. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset.income taxes. Ball adopted this guidance and all related amendments on January 1, ~~2020,~~2021, applying either the retrospective basis, the modified retrospective method, ~~and~~or the prospective method where appropriate. The adoption of this ~~adoption did not have a material effect~~guidance had no impact on the company’s ~~unaudited condensed~~ consolidated financial statements.

~~New Accounting Guidance~~

~~Income Tax Simplification~~

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

3. Business Segment Information

Ball’s operations are organized and reviewed by management along its product lines and geographical areas and presented in the 4 reportable segments outlined below. Effective January 1, 2020, the company implemented changes to its management and internal reporting structure for cost reduction and operational efficiency purposes. As a result of these changes, the company’s plants in Cairo, Egypt, and Manisa, Turkey, are now included in the beverage packaging, Europe, Middle East and Africa (beverage packaging, EMEA), segment. The company’s operations in India and Saudi Arabia are now combined with the former non-reportable beverage packaging, Asia Pacific, operating segment as a new non-reportable beverage packaging, other, operating segment. The company’s segment results and disclosures for the three and nine months ended September 30, 2019, have been retrospectively adjusted to conform to the current year presentation.

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

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

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

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

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

The accounting policies of the segments are the same as those used in the company’s consolidated financial statements as discussed in Note 1. The company also has investments in operations in Guatemala, Panama, the U.S. and Vietnam that are accounted for under the equity method of accounting and, accordingly, those results are not included in segment sales or earnings. In the third quarter of 2021, Ball sold its minority-owned investment in South Korea. Refer to Note 4 for additional details.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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

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

Summary of Business by Segment


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019		2021		2020		2021		2020

Net sales
Beverage packaging, North and Central America	$	1,327	$	1,230	$	3,775	$	3,647	$	1,519	$	1,327	$	4,339	$	3,775
Beverage packaging, EMEA		809		763		2,177		2,215		937		809		2,639		2,177
Beverage packaging, South America		432		392		1,166		1,210		462		432		1,401		1,166
Aerospace		451		374		1,321		1,081		498		451		1,381		1,321
Reportable segment sales		3,019		2,759		8,439		8,153		3,416		3,019		9,760		8,439
Other		74		194		240		602		137		74		377		240
Net sales	$	3,093	$	2,953	$	8,679	$	8,755	$	3,553	$	3,093	$	10,137	$	8,679

Comparable operating earnings
Beverage packaging, North and Central America	$	209	$	157	$	544	$	416	$	186	$	209	$	519	$	544
Beverage packaging, EMEA		117		105		248		277		125		117		349		248
Beverage packaging, South America		64		60		173		193		74		64		245		173
Aerospace		44		35		114		103		46		44		115		114
Reportable segment comparable operating earnings		434		357		1,079		989		431		434		1,228		1,079
Reconciling items
Other (a)		(15)		12		(26)		2		(14)		(15)		(67)		(26)
Business consolidation and other activities		(8)		(133)		(235)		(147)		(141)		(8)		(136)		(235)
Amortization of acquired Rexam intangibles		(37)		(38)		(111)		(118)
Amortization of acquired intangibles										(38)		(37)		(114)		(111)
Earnings before interest and taxes		374		198		707		726		238		374		911		707
Interest expense		(68)		(79)		(206)		(237)		(68)		(68)		(201)		(206)
Debt refinancing and other costs		(1)		—		(41)		(4)		(1)		(1)		(1)		(41)
Total interest expense		(69)		(79)		(247)		(241)		(69)		(69)		(202)		(247)
Earnings before taxes	$	305	$	119	$	460	$	485	$	169	$	305	$	709	$	460

(a)

Includes undistributed corporate expenses, net, of $~~$13~~17 million and $$413 million for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and $3371 million and $4233 million for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

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

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

4. Acquisitions and Dispositions

South Korea Investment

In the third quarter of 2021, Ball sold its minority-owned investment in South Korea. Consideration for the transaction was cash of $120 million, of which $110 million has been received, and is presented in business dispositions in cash flows from investing activities in Ball’s unaudited condensed consolidated statements of cash flows. The remaining $10 million will be received on or before December 31, 2022, and is presented in other assets on Ball’s unaudited condensed consolidated balance sheets. In the second quarter of 2021, the company recorded a loss of $5 million related to the disposal, which is presented in business consolidation and other activities in the unaudited condensed consolidated statement of earnings. See Note 6 for further details.

Brazil Aluminum Aerosol Packaging Business

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

~~Argentina Steel Aerosol Business~~

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

~~Beverage Packaging China~~

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

5. Revenue from Contracts with Customers

Disaggregation of Sales

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

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


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

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

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

Total net sales	$	555	$	2,398	$	2,953	$	1,659	$	7,096	$	8,755
2021													$	603	$	2,950	$	3,553	$	1,837	$	8,300	$	10,137
2020														604		2,489		3,093		1,638		7,041		8,679

~~Table of Contents~~

~~Ball Corporation~~

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

Contract Balances

~~The company enters into contracts to sell beverage packaging, aerosol packaging, and aerospace products and services.~~ The company did not have any contract assets at either September 30, ~~2020,~~2021, or December 31, ~~2019.~~2020. Unbilled receivables, which are not classified as contract assets, represent arrangements in which sales have been recorded prior to billing and right to payment is unconditional.

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


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

Balance at December 31, 2019		87		9
Balance at December 31, 2020					$	108	$	29
Increase (decrease)		5		(1)		118		6
Balance at September 30, 2020	$	92	$	8
Balance at September 30, 2021					$	226	$	35

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

During the nine months ended September 30, ~~2020,~~2021, total contract liabilities increased by $4$124 million, which is net of cash received of ~~$407~~$503 million and amounts recognized as sales of ~~$411~~$379 million, ~~all~~the majority of which related to current contract liabilities. The amount of sales recognized in the nine months ended September 30, ~~2020,~~2021, which were included in the opening contract liabilities balances, was ~~$87~~$108 million, all of which related to current contract liabilities. Current contract liabilities are classified within other current liabilities on the unaudited condensed consolidated balance sheet and noncurrent contract liabilities are classified within other liabilities.

The company also recognized net sales of $7 million and $9 million in the three months ended September 30, 2021 and 2020, respectively, and net sales of $18 million and $12 million in the ~~three and~~ nine months ended September 30, ~~2020, respectively,~~2021 and ~~net sales of $4 million and $10 million in the three and nine months ended September 30, 2019,~~2020, respectively, from performance obligations satisfied (or partially satisfied) in prior periods. These sales amounts are the result of changes in the transaction price of the company’s contracts with customers.

Transaction Price Allocated to Remaining Performance Obligations

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

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


($ in millions)	Next Twelve Months		Thereafter		Total		Next Twelve Months		Thereafter		Total

Sales expected to be recognized on multi-year contracts in place as of September 30, 2020	$	1,354	$	926	$	2,280
Sales expected to be recognized on multi-year contracts in place as of September 30, 2021							$	1,398	$	1,290	$	2,688

~~Table of Contents~~

~~Ball Corporation~~

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

6. Business Consolidation and Other Activities

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019		2021		2020		2021		2020

Beverage packaging, North and Central America	$	—	$	(2)	$	(4)	$	(8)	$	—	$	—	$	(1)	$	(4)
Beverage packaging, EMEA		(2)		(9)		(8)		(24)		(2)		(2)		(5)		(8)
Beverage packaging, South America		3		(14)		(1)		22		(9)		3		11		(1)
Other		(9)		(108)		(222)		(137)		(130)		(9)		(141)		(222)
	$	(8)	$	(133)	$	(235)	$	(147)	$	(141)	$	(8)	$	(136)	$	(235)

2021

Beverage Packaging, North and Central America

During the nine months ended September 30, 2021, the company recorded net charges of $1 million for individually insignificant activities in connection with previously announced closures of certain plants and other activities.

Beverage Packaging, EMEA

During the three and nine months ended September 30, 2021, the company recorded charges of $2 million and $5 million, respectively, for individually insignificant activities in connection with previously announced plant closures, restructuring and other activities.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

Beverage Packaging, South America

During the nine months ended September 30, 2021, the company recorded a $22 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. During the three and nine months ended September 30, 2021, the company recorded charges of $4 million in connection with previously announced plant closures. Additional charges in the three and nine months ended September 30, 2021, were $5 million and $7 million, respectively, for individually insignificant activities.

Other

During the three months ended September 30, 2021, the company recorded the following amounts:

●

A non-cash settlement loss of $130 million related to the purchase of non-participating group annuity contracts and lump-sum payments to settle the projected pension benefit obligations for certain of Ball’s U.S. defined benefit pension plans, which triggered settlement accounting. The settlement loss primarily reflects the third quarter recognition of unamortized actuarial losses in these U.S. pension plans.

During the nine months ended September 30, 2021, the company recorded the following amounts:

●

A loss of $5 million related to the sale of its minority-owned investment in South Korea. See Note 4 for further details.

●

Charges of $6 million for individually insignificant activities.

2020

Beverage Packaging, North and Central America

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

Beverage Packaging, EMEA

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

Beverage Packaging, South America

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

Other

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

●

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

●

Charges of $4 million for individually insignificant activities.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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

●

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

●

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

●

A non-cash charge of $23 million resulting from the ~~recent~~ deterioration of China’s real estate market in 2020, which led the company to reduce the value of potential future consideration due as part of the 2019 sale of its China beverage packaging business. ~~See Note 4 for further details.~~

~~Table of Contents~~

~~Ball Corporation~~

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

●

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

●

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

●

Charges of $6 million for long-term incentive and other compensation arrangements associated with the 2016 Rexam acquisition.

●

Charges of $25 million for individually insignificant activities.

~~2019~~

~~Beverage Packaging, North and Central America~~

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

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

~~Beverage Packaging, EMEA~~

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

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

~~Beverage Packaging, South America~~

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

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

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

~~Other~~

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

●

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

●

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

●

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 2016 Rexam acquisition and integration.~~

●

~~Charges of $5 million for individually insignificant activities.~~

~~Table of Contents~~

~~Ball Corporation~~

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

~~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 fourth quarter 2019 sale.

●

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.

●

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

●

~~Charges of $11 million for individually insignificant activities.~~

7.	Supplemental Cash Flow Statement Disclosures


	September 30,				September 30,
($ in millions)	2020		2019		2021		2020

Beginning of period:
Cash and cash equivalents	$	1,798	$	721	$	1,366	$	1,798
Current restricted cash (included in other current assets)		8		7		15		8
Total cash, cash equivalents and restricted cash	$	1,806	$	728	$	1,381	$	1,806

End of period:
Cash and cash equivalents	$	771	$	483	$	1,446	$	771
Current restricted cash (included in other current assets)		12		9		12		12
Cash in assets held for sale (included in other current assets)		—		5
Total cash, cash equivalents and restricted cash	$	783	$	497	$	1,458	$	783

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

Noncash investing activities include the acquisition of property, plant and equipment (PP&E) for which payment has not ~~yet~~ been ~~made or obtained through finance leases.~~made. These noncash capital expenditures are excluded from the statement of cash ~~flows and totaled~~flows. The PP&E acquired but not yet paid for amounted to approximately ~~$290~~$550 million at September 30, ~~2020,~~2021, and ~~$224~~$409 million at December 31, ~~2019.~~2020.

8. Receivables, Net


	September 30,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2021		2020

Trade accounts receivable	$	925	$	647	$	1,282	$	825
Unbilled receivables		502		556		702		528
Less allowance for doubtful accounts		(9)		(17)
Less: Allowance for doubtful accounts						(8)		(9)
Net trade accounts receivable		1,418		1,186		1,976		1,344
Other receivables		354		445		513		394
	$	1,772	$	1,631	$	2,489	$	1,738

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

The company has entered into several regional committed and uncommitted accounts receivable factoring programs with various financial institutions for certain of its receivables. The programs are accounted for as true sales of the receivables, without recourse to Ball, and had combined limits of approximately ~~$1.5~~$1.7 billion at September 30, ~~2020,~~2021, and ~~$1.4~~$1.6 billion at December 31, ~~2019.~~2020. A total of ~~$184~~$430 million and ~~$230~~$232 million were available for sale under these programs as of September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively.

~~Table of Contents~~

~~Ball Corporation~~

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

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

9. Inventories, Net


	September 30,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2021		2020

Raw materials and supplies	$	852	$	808	$	1,012	$	889
Work-in-process and finished goods		551		548		716		557
Less: Inventory reserves		(94)		(82)		(90)		(93)
	$	1,309	$	1,274	$	1,638	$	1,353

10. Property, Plant and Equipment, Net


	September 30,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2021		2020

Land	$	160	$	153	$	165	$	163
Buildings		1,533		1,433		1,944		1,653
Machinery and equipment		5,869		5,513		6,736		6,214
Construction-in-progress		734		434		1,130		883
		8,296		7,533		9,975		8,913
Accumulated depreciation		(3,401)		(3,063)		(3,805)		(3,562)
	$	4,895	$	4,470	$	6,170	$	5,351

Depreciation expense amounted to $130 million and $115 million for the three months ended September 30, 2021 and 2020, respectively, and $380 million and $365 million for the ~~three and~~ nine months ended September 30, ~~2020, respectively,~~2021 and ~~$123 million and $368 million for the three and nine months ended September 30, 2019,~~2020, respectively.

11. Goodwill


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

Balance at December 31, 2019	$	1,275	$	1,500	$	1,298	$	40	$	306	$	4,419
Additions		—		—		—		—		49		49
Goodwill impairment		—		—		—		—		(62)		(62)
Balance at December 31, 2020													$	1,275	$	1,573	$	1,298	$	40	$	298	$	4,484
Effects of currency exchange		—		3		—		—		(8)		(5)		—		(64)		—		—		(13)		(77)
Balance at September 30, 2020	$	1,275	$	1,503	$	1,298	$	40	$	285	$	4,401
Balance at September 30, 2021													$	1,275	$	1,509	$	1,298	$	40	$	285	$	4,407

Goodwill in the above table is presented net of accumulated impairment losses of $62 million as of September 30, ~~2020.~~

~~As discussed in Note 4, Ball acquired the share capital of Tubex Industria E Comercio Embalagens Ltda, an aluminum aerosol packaging business in Brazil, in the third quarter of 2020~~2021 and ~~recorded $49 million to goodwill based on preliminary estimates of the fair values of assets and liabilities acquired with the business.~~

~~Table of Contents~~

~~Ball Corporation~~

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

As discussed in Note 3, effective January 1, 2020, Ball changed how its former operating segments composed of beverage packaging operations located in Africa, Middle East and Asia (beverage packaging, AMEA) and beverage packaging operations located in Asia Pacific are managed and reported. These former operating segments had goodwill balances of $102 million and $27 million, respectively, as of December 31, 2019. As shown in the table above, goodwill by segment has been retrospectively adjusted to conform to the current year presentation. Using a relative fair value allocation approach, goodwill of $67 million was allocated to the beverage packaging, EMEA, reportable segment and $62 million of goodwill was allocated to the beverage packaging, other, operating segment.2020.

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

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

12. Intangible Assets, Net


	September 30,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2021		2020

Acquired Rexam customer relationships and other Rexam intangibles (net of accumulated amortization of $677 million at September 30, 2020, and $567 million at December 31, 2019)	$	1,789	$	1,909
Capitalized software (net of accumulated amortization of $189 million at September 30, 2020, and $170 million at December 31, 2019)		82		69
Other intangibles (net of accumulated amortization of $122 million at September 30, 2020, and $116 million at December 31, 2019)		26		24
Acquired customer relationships and other intangibles (net of accumulated amortization of $830 million at September 30, 2021, and $729 million at December 31, 2020)					$	1,642	$	1,785
Capitalized software (net of accumulated amortization of $186 million at September 30, 2021, and $196 million at December 31, 2020)						66		69
Other intangibles (net of accumulated amortization of $96 million at September 30, 2021, and $124 million at December 31, 2020)						24		29
	$	1,897	$	2,002	$	1,732	$	1,883

Total amortization expense of intangible assets amounted to $45 million for the three months ended September 30, 2021 and 2020, and $135 million and $134 million for the ~~three and~~ nine months ended September 30, ~~2020, respectively,~~2021 and ~~$46 million and $142 million for the three and nine months ended September 30, 2019,~~2020, respectively.

13. Other Assets


	September 30,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2021		2020

Long-term pension assets	$	442	$	437	$	569	$	562
Investments in affiliates		304		291		182		321
Right-of-use operating lease assets		291		239		406		302
Long-term deferred tax assets		267		241		154		227
Other		450		377		595		447
	$	1,754	$	1,585	$	1,906	$	1,859

In the third quarter of 2021, Ball sold its minority-owned investment in South Korea for total proceeds of $120 million. See Note 4 for further details. In the first quarter of 2020, the shareholders of Ball Metalpack provided additional equity contributions and loans to Ball Metalpack, of which Ball's share was $30 million, which resulted in Ball recognizing this same level of previously unrecorded equity method losses associated with prior periods. These losses are presented in equity in results of affiliates, net of tax, in the company’s unaudited condensed consolidated statement of earnings. Ball is under no obligation to provide additional equity contributions or loans to Ball Metalpack.

14. Leases

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

1413

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

~~14. Leases~~

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

($ in millions)
Balance Sheet Location

September 30, 2020

December 31, 2019

Operating leases:

Operating lease ROU asset
Other assets

$
291

$
239
Current operating lease liabilities
Other current liabilities

61

58
Noncurrent operating lease liabilities
Other liabilities

222

181
Finance leases:

Finance lease ROU assets, net
Property, plant and equipment, net

$
7

$
—
Current finance lease liabilities
Short-term debt and current portion of long-term debt

1

—
Noncurrent finance lease liabilities
Long-term debt

6

—


		September 30,		December 31,
($ in millions)	Balance Sheet Location	2021		2020

Operating leases:
Operating lease ROU asset	Other assets	$	406	$	302
Current operating lease liabilities	Other current liabilities		79		63
Noncurrent operating lease liabilities	Other liabilities		329		232
Finance leases:
Finance lease ROU assets, net	Property, plant and equipment, net	$	10	$	11
Current finance lease liabilities	Short-term debt and current portion of long-term debt		2		2
Noncurrent finance lease liabilities	Long-term debt		8		10

15. Debt

Long-term debt consisted of the following:


	September 30,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2021		2020

Senior Notes
4.375% due December 2020	$	—	$	1,000
3.50%, euro denominated, due December 2020		—		449
5.00% due March 2022		750		750	$	736	$	748
4.00% due November 2023		1,000		1,000		1,000		1,000
4.375%, euro denominated, due December 2023		820		785		811		855
0.875%, euro denominated, due March 2024		879		841		869		916
5.25% due July 2025		1,000		1,000		1,000		1,000
4.875% due March 2026		750		750		750		750
1.50%, euro denominated, due March 2027		645		617		637		672
2.875%, due August 2030		1,300		—
2.875% due August 2030						1,300		1,300
3.125% due September 2031						850		—
Senior Credit Facility (at variable rates)
Term A loan, due March 2024		593		653
Term A loan due March 2024						593		593
Finance lease obligations						10		12
Other (including debt issuance costs)		(57)		(54)		(63)		(60)
		7,680		7,791		8,493		7,786
Less: Current portion of long-term debt		(1)		(1,454)
Less: Current portion						(738)		(3)
	$	7,679	$	6,337	$	7,755	$	7,783

The company’s senior credit facilities include long-term multi-currency revolving facilities that mature in March ~~2024. The revolving facilities~~2024, which provide the company with up to the U.S. dollar equivalent of $1.75 billion. At September 30, ~~2020,~~2021, taking into account outstanding letters of credit, $1.7 billion was available under the company’s ~~existing~~ long-term, revolving credit facilities. In addition to these facilities, the company had approximately ~~$990 million~~$1 billion of short-term uncommitted credit facilities available at September 30, ~~2020,~~2021, of which ~~$30~~$24 million was outstanding and due on demand. At December 31, ~~2019,~~2020, the company had ~~$26~~$14 million outstanding under short-term uncommitted credit facilities.

~~Table of Contents~~

~~Ball Corporation~~

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

In the third quarter of ~~2020,~~2021, Ball issued ~~$1.3 billion~~$850 million of ~~2.875%~~3.125% senior notes due 2031. In the fourth quarter of 2021, Ball redeemed the outstanding 5.00% senior notes due in ~~2030. In the first quarter of 2020, Ball redeemed the outstanding euro-denominated 3.50% senior notes due in 2020~~March 2022 in the amount of ~~€400 million and the outstanding 4.375% senior notes due in 2020 in the amount of $1 billion. The company recorded debt extinguishment costs of $40 million in the first quarter of 2020.~~$736 million.

The fair value of long-term debt was estimated to be ~~$8.1~~$8.9 billion at September 30, ~~2020,~~2021, and $8.3 billion at December 31, ~~2019.~~2020. The fair value reflects the market rates at each period end for debt with credit ratings similar to the company’s ratings and is classified as Level 2 within the fair value hierarchy. Rates currently available to the company for loans with similar terms and maturities are used to estimate the fair value of long-term debt based on discounted cash flows.

Table of Contents

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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. ~~In August 2020, Ball amended certain of its credit agreements which, among other things, modified the~~The company’s most restrictive ~~of the company’s~~ debt ~~covenants. This~~ covenant requires the company to maintain a leverage ratio (as defined) of no greater than 5.0 times as of September 30, ~~2020,~~2021, which ~~changes~~will change to 4.5 times as of December 31, 2022. The company was in compliance with all loan agreements and debt covenants at both September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, and it has met all debt payment obligations.

16. Taxes on Income

The company’s effective tax rate was negative 1.2 percent and 20.6 percent for the three and nine months ended September 30, 2021, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three and nine months ended September 30, 2021, was reduced by 13.9 and 5.8 percentage points, respectively, for federal tax credits, reduced by 3.5 and 3.1 percentage points, respectively, for non-U.S. rate differences net of withholding tax, and reduced by 2.8 and 1.6 percentage points, respectively, for share-based compensation. For the nine months ended September 30, 2021, the effective tax rate was increased by 8.0 percentage points for the U.K.’s enacted tax rate change.

The company’s effective tax rate was 23.9 percent and 20 percent for the three and nine months ended September 30, 2020, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three and nine months ended September 30, 2020, was reduced by 5.8 and 7.0 percentage points, respectively, for federal tax credits, reduced by 2.0 and 7.1 percentage points, respectively, for the benefit of share-based compensation, increased by 5.7 and 3.8 percentage points, respectively, for enacted tax rate changes, increased by 2.1 and 1.5 percentage points, respectively, for ~~foreign~~non-U.S. rate differences and ~~foreign~~ withholding tax, increased by 1.1 and 3.8 percentage points, respectively, for the impact of revaluing certain deferred tax assets due to fluctuations in ~~foreign~~ currency exchange rates and increased by 3.4 percentage points for the nine months ended September 30, 2020, for the impact of the beverage packaging, other, segment goodwill impairment.

17. Employee Benefit Obligations


	September 30,		December 31,		September 30,		December 31,
($ in millions)	2020		2019		2021		2020

Underfunded defined benefit pension liabilities	$	975	$	918	$	718	$	955
Less: Current portion		(24)		(24)		(22)		(24)
Long-term defined benefit pension liabilities		951		894		696		931
Long-term retiree medical liabilities		149		156		148		156
Deferred compensation plans		399		362		417		439
Other		74		74		61		87
	$	1,573	$	1,486	$	1,322	$	1,613

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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


	Three Months Ended September 30,														Three Months Ended September 30,
	2020							2019							2021						2020
($ in millions)	U.S.			Foreign		Total		U.S.		Foreign			Total		U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total

Ball-sponsored plans:
Service cost	$	16		$	4	$	20	$	13	$	2		$	15	$	20	$	4	$	24	$	16	$	4	$	20
Interest cost		18			14		32		26		17			43		12		9		21		18		14		32
Expected return on plan assets		(29)			(22)		(51)		(29)		(26)			(55)		(29)		(17)		(46)		(29)		(22)		(51)
Amortization of prior service cost		—			1		1		1		—			1		—		1		1		—		1		1
Recognized net actuarial loss		10			1		11		5		1			6		12		1		13		10		1		11
Settlement losses(a)		5	(a)		—		5		—		8	(a)		8		130		—		130		5		—		5
Total net periodic benefit cost	$	20		$	(2)	$	18	$	16	$	2		$	18	$	145	$	(2)	$	143	$	20	$	(2)	$	18

(a)	Includes settlement losses related to the purchase of non-participating annuities and lump-sum payments which ~~have been~~were recorded in business consolidation and other activities. See Note 6 for further details.


	Nine Months Ended September 30,														Nine Months Ended September 30,
	2020							2019							2021						2020
($ in millions)	U.S.			Foreign		Total		U.S.		Foreign			Total		U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total

Ball-sponsored plans:
Service cost	$	48		$	12	$	60	$	37	$	8		$	45	$	62	$	10	$	72	$	48	$	12	$	60
Interest cost		56			43		99		76		53			129		38		27		65		56		43		99
Expected return on plan assets		(91)			(64)		(155)		(86)		(81)			(167)		(91)		(49)		(140)		(91)		(64)		(155)
Amortization of prior service cost		1			2		3		1		2			3		1		2		3		1		2		3
Recognized net actuarial loss		30			4		34		16		3			19		36		4		40		30		4		34
Settlement losses(a)		102	(a)		—		102		—		8	(a)		8		130		—		130		102		—		102
Total net periodic benefit cost	$	146		$	(3)	$	143	$	44	$	(7)		$	37	$	176	$	(6)	$	170	$	146	$	(3)	$	143

(a)	Includes settlement losses related to the purchase of non-participating annuities and lump-sum payments which ~~have been~~were recorded in business consolidation and other activities. See Note 6 for further details.

Non-service pension income of $11 million and $7 million for the three months ended September 30, 2021 and 2020, respectively, and income of $32 million and $19 million for the ~~three and~~ nine months ended September 30, ~~2020, respectively,~~2021 and ~~income of $5 million and $16 million for the three and nine months ended September 30, 2019,~~2020, respectively, is included in selling, general, and administrative (SG&A) ~~expenses.~~expenses in the unaudited condensed consolidated statement of earnings.

Contributions to the company’s defined benefit pension plans were $203 million for the first nine months of 2021 compared to $92 million for the first nine months of 2020, ~~compared to $154 million for the first nine months of 2019,~~ and such contributions are expected to be approximately ~~$100~~$215 million for the full year of ~~2020.~~2021. This estimate may change based on changes to the U.S. Pension Protection Act, the effects of the Coronavirus Aid, Relief, and Economic Security Act (CARES) and American Rescue Plan Act (ARPA) and the actual returns achieved on plan assets, among other factors.

Ball completed the purchase of non-participating group annuity contracts totaling approximately $325 million and lump-sum payments for ~~a portion~~certain of ~~the company’s~~its U.S. pension benefit obligations ~~in the second quarter of 2020 and for the company’s Canadian pension plans~~that were transferred to an insurance company in the third quarter of ~~2019, totaling approximately $245 million and $32 million, respectively. These purchases~~2021. The annuity purchase triggered settlement accounting and resulted in the recognition of settlement losses recorded of $130 million in business consolidation and other activities in the unaudited condensed consolidated statement of $102 million in 2020 and $8 million in 2019. The company’s pension obligations were remeasured during the second quarter of 2020 for the impacted plans, and the 2019 annuity purchase settled Ball’s Canadian defined benefit pension obligation in full.earnings.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

18. Equity and Accumulated Other Comprehensive Earnings

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


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

Balance at June 30, 2020	678,484	$	1,153	(352,102)	$	(3,145)	$	5,822	$	(1,068)	$	68	$	2,830
Balance at June 30, 2021															680,246	$	1,195	(353,475)	$	(3,255)	$	6,496	$	(797)	$	62	$	3,701
Net earnings	—		—	—		—		241		—		(1)		240	—		—	—		—		179		—		—		179
Other comprehensive earnings (loss), net of tax	—		—	—		—		—		(87)		—		(87)	—		—	—		—		—		144		—		144
Common dividends, net of tax benefits	—		—	—		—		(49)		—		—		(49)
Common dividends															—		—	—		—		(66)		—		—		(66)
Treasury stock purchases	—		—	—		—		—		—		—		—	—		—	(2,429)		(219)		—		—		—		(219)
Treasury shares reissued	—		—	80		7		—		—		—		7	—		—	62		9		—		—		—		9
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	517		11	—		—		—		—		—		11	421		14	—		—		—		—		—		14
Other activity	—		—	—		1		—		—		—		1	—		—	—		2		2		—		(1)		3
Balance at September 30, 2020	679,001	$	1,164	(352,022)	$	(3,137)	$	6,014	$	(1,155)	$	67	$	2,953
Balance at September 30, 2021															680,667	$	1,209	(355,842)	$	(3,463)	$	6,611	$	(653)	$	61	$	3,765


	Common Stock			Treasury Stock					Accumulated Other						Common Stock			Treasury Stock					Accumulated Other
	Number of			Number of			Retained		Comprehensive		Noncontrolling		Total		Number of			Number of			Retained		Comprehensive		Noncontrolling		Total
($ in millions; share amounts in thousands)	Shares	Amount		Shares	Amount		Earnings		Earnings (Loss)		Interest		Equity		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
Balance at June 30, 2020															678,484	$	1,153	(352,102)	$	(3,145)	$	5,822	$	(1,068)	$	68	$	2,830
Net earnings	—		—	—		—		92		—		—		92	—		—	—		—		241		—		(1)		240
Other comprehensive earnings (loss), net of tax	—		—	—		—		—		36		—		36	—		—	—		—		—		(87)		—		(87)
Currency translation recognized in earnings as a result of the sale of the Argentine steel aerosol business	—		—	—		—		—		45		—		45
Common dividends, net of tax benefits	—		—	—		—		(49)		—		—		(49)
Treasury stock purchases	—		—	(3,296)		(232)		—		—		—		(232)
Common dividends															—		—	—		—		(49)		—		—		(49)
Treasury shares reissued	—		—	64		7		—		—		—		7	—		—	80		7		—		—		—		7
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	588		7	—		—		—		—		—		7	517		11	—		—		—		—		—		11
Other activity	—		(2)	—		1		—		—		(4)		(5)	—		—	—		1		—		—		—		1
Balance at September 30, 2019	676,051	$	1,177	(346,855)	$	(2,790)	$	5,694	$	(716)	$	100	$	3,465

Balance at September 30, 2020															679,001	$	1,164	(352,022)	$	(3,137)	$	6,014	$	(1,155)	$	67	$	2,953


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

Balance at December 31, 2019	676,302	$	1,178	(351,667)	$	(3,122)	$	5,803	$	(910)	$	70	$	3,019
Net earnings (loss)	—		—	—		—		358		—		(3)		355
Balance at December 31, 2020															679,524	$	1,167	(351,939)	$	(3,130)	$	6,192	$	(954)	$	62	$	3,337
Net earnings															—		—	—		—		581		—		—		581
Other comprehensive earnings (loss), net of tax	—		—	—		—		—		(245)		—		(245)	—		—	—		—		—		301		—		301
Common dividends, net of tax benefits	—		—	—		—		(148)		—		—		(148)
Common dividends															—		—	—		—		(164)		—		—		(164)
Treasury stock purchases	—		—	(775)		(54)		—		—		—		(54)	—		—	(4,201)		(368)		—		—		—		(368)
Treasury shares reissued	—		—	420		21		—		—		—		21	—		—	298		25		—		—		—		25
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	2,699		(14)	—		—		—		—		—		(14)	1,143		42	—		—		—		—		—		42
Other activity	—		—	—		18		1		—		—		19	—		—	—		10		2		—		(1)		11
Balance at September 30, 2020	679,001	$	1,164	(352,022)	$	(3,137)	$	6,014	$	(1,155)	$	67	$	2,953
Balance at September 30, 2021															680,667	$	1,209	(355,842)	$	(3,463)	$	6,611	$	(653)	$	61	$	3,765


	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, 2019	676,302	$	1,178	(351,667)	$	(3,122)	$	5,803	$	(910)	$	70	$	3,019
Net earnings	—		—	—		—		358		—		(3)		355
Other comprehensive earnings (loss), net of tax	—		—	—		—		—		(245)		—		(245)
Common dividends	—		—	—		—		(148)		—		—		(148)
Treasury stock purchases	—		—	(775)		(54)		—		—		—		(54)
Treasury shares reissued	—		—	420		21		—		—		—		21
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	2,699		(14)	—		—		—		—		—		(14)
Other activity	—		—	—		18		1		—		—		19
Balance at September 30, 2020	679,001	$	1,164	(352,022)	$	(3,137)	$	6,014	$	(1,155)	$	67	$	2,953

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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 sale of the Argentine steel aerosol business

—

—

—

—

—

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

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)		Derivatives Designated as Hedges (Net of Tax)		Accumulated Other Comprehensive Earnings (Loss)		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, 2019	$	(340)	$	(558)	$	(12)	$	(910)
Balance at December 31, 2020										(555)		(466)		67		(954)
Other comprehensive earnings (loss) before reclassifications		(293)		(109)		6		(396)		19		55		159		233
Amounts reclassified from accumulated other comprehensive earnings (loss) into earnings		—		106		45		151
Balance at September 30, 2020	$	(633)	$	(561)	$	39	$	(1,155)
Reclassification of net deferred (gains) losses into earnings										—		129		(61)		68
Balance at September 30, 2021									$	(536)	$	(282)	$	165	$	(653)

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)	2021		2020		2021		2020

Gains (losses) on cash flow hedges:
Commodity contracts recorded in net sales	$	(28)	$	(4)	$	(89)	$	33
Commodity contracts recorded in cost of sales		53		(27)		95		(62)
Currency exchange contracts recorded in selling, general and administrative		27		(30)		66		(23)
Cross-currency swaps recorded in selling, general and administrative		—		—		—		(1)
Interest rate contracts recorded in interest expense		—		(2)		—		(5)
Total before tax effect		52		(63)		72		(58)
Tax benefit (expense) on amounts reclassified into earnings		(9)		15		(11)		13
Recognized gain (loss), net of tax	$	43	$	(48)	$	61	$	(45)

Amortization of pension and other postretirement benefits: (a)
Actuarial gains (losses)	$	(12)	$	(10)	$	(39)	$	(30)
Prior service income (expense)		(1)		—		(3)		(1)
Effect of pension settlements		(130)		(5)		(130)		(109)
Total before tax effect		(143)		(15)		(172)		(140)
Tax benefit (expense) on amounts reclassified into earnings		35		3		43		34
Recognized gain (loss), net of tax	$	(108)	$	(12)	$	(129)	$	(106)

(a)	These components are included in the computation of net periodic benefit cost detailed in Note 17.

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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)

2020

2019

2020

2019

Gains (losses) on cash flow hedges:

Commodity contracts recorded in net sales

$
(4)

$
6

$
33

$
12
Commodity contracts recorded in cost of sales

(27)

(11)

(62)

(27)
Currency exchange contracts recorded in selling, general and administrative

(30)

6

(23)

5
Cross-currency swaps recorded in selling, general and administrative

—

32

(1)

41
Interest rate contracts recorded in interest expense

(2)

2

(5)

10
Total before tax effect

(63)

35

(58)

41
Tax benefit (expense) on amounts reclassified into earnings

15

(7)

13

(10)
Recognized gain (loss), net of tax

$
(48)

$
28

$
(45)

$
31

Amortization of pension and other postretirement benefits: (a)

Prior service income (expense)

$
—

$
(1)

$
(1)

$
(1)
Actuarial gains (losses)

(10)

$
(4)

(30)

$
(14)
Effect of pension settlements

(5)

(8)

(109)

(8)
Total before tax effect

(15)

(13)

(140)

(23)
Tax benefit (expense) on amounts reclassified into earnings

3

(4)

34

(1)
Recognized gain (loss), net of tax

$
(12)

$
(17)

$
(106)

$
(24)

~~(a)~~

~~These~~ ~~components include the computation of net periodic benefit cost detailed~~ ~~in Note 17.~~

In May 2019, in a privately negotiated transaction, Ball entered into an accelerated share repurchase agreement to buy $250 million of its common shares using cash on hand and available borrowings. The company purchased 3.8 million shares at an average price paid per share of $65.93.

19. Earnings and Dividends Per Share


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions, except per share amounts; shares in thousands)	2020		2019		2020		2019		2021		2020		2021		2020

Net earnings attributable to Ball Corporation	$	241	$	92	$	358	$	406	$	179	$	241	$	581	$	358

Basic weighted average common shares		326,549		331,148		325,965		332,726		325,876		326,549		327,097		325,965
Effect of dilutive securities		6,105		9,484		6,187		8,976		5,719		6,105		5,841		6,187
Weighted average shares applicable to diluted earnings per share		332,654		340,632		332,152		341,702		331,595		332,654		332,938		332,152

Per basic share	$	0.74	$	0.28	$	1.10	$	1.22	$	0.55	$	0.74	$	1.78	$	1.10
Per diluted share	$	0.72	$	0.27	$	1.08	$	1.19	$	0.54	$	0.72	$	1.75	$	1.08

Certain outstanding options are excluded from the diluted earnings per share calculation because they are anti-dilutive (i.e., their assumed conversion into common stock would increase rather than decrease earnings per share). The options excluded totaled 1one million for the three and nine months ended September 30, ~~2020. There were 0 anti-dilutive options for the three~~2021 and ~~nine months ended September 30, 2019.~~2020.

~~Table of Contents~~

~~Ball Corporation~~

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

The company declared and paid dividends of ~~$0.15~~$0.20 per share and $0.50 per share for the three and nine months ended September 30, 2021, respectively, and $0.15 per share and $0.45 per share for the three and nine months ended September 30, 2020, respectively ~~and $0.15 per share and $0.40 per share for the three and nine months ended September 30, 2019, respectively.~~.

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 2 different methods. First, the company enters into container sales contracts that include ~~aluminum ingot-based~~aluminum-based pricing terms 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, 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, 2020, the company had aluminum contracts limiting its aluminum exposure with notional amounts of approximately $1.4 billion, substantially all of which received hedge accounting treatment. Cash flow hedges relate to forecasted transactions that will occur within the next four years. Included in shareholders’ equity at September 30, 2020, within accumulated other comprehensive earnings (loss), is a net after-tax gain of $3 million associated with these contracts. A net loss of $2 million is expected to be recognized in earnings during the next 12 months, the majority of which will be offset by pricing changes in sales and purchase contracts, thus resulting in little or no earnings impact to Ball.

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 its overall borrowing costs. To achieve these objectives, the company may use a variety of interest rate swaps, collars and options to manage its mix of floating and fixed-rate debt. ~~At September 30, 2020, the company had outstanding interest rate swap and option contracts with notional amounts of approximately $1.3 billion paying fixed rates expiring within the next 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. At September 30, 2020, the company had outstanding exchange rate forward and option contracts with notional amounts totaling approximately $3.4 billion. Approximately $37 million of net after-tax gain related to these contracts is included in accumulated other comprehensive earnings at September 30, 2020, of which a net gain of $18 million is expected to be recognized in earnings during the next 12 months. The contracts outstanding at September 30, 2020, expire within the next ~~four years.~~

~~Additionally,~~19

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Ball Corporation

Notes to 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.~~ Unaudited Condensed Consolidated Financial Statements

The ~~company fully settled this contract during 2019. Approximately $1 million of net after-tax loss~~following table provides additional information related to ~~this contract is included in accumulated other comprehensive earnings at September 30, 2020, and is expected to be recognized in earnings during~~ the ~~next 12 months.~~commercial risk management instruments described above:


($ in millions)	September 30, 2021
Commercial risk area	Commodity			Currency		Interest Rate

Notional amount of contracts	$	1,692	(a)	$	2,803	$	1,795
Net gain (loss) included in AOCI, after-tax		138	(b)		27		—
Net gain (loss) included in AOCI, after-tax, expected to be recognized in net earnings within the next 12 months		130	(b)		19		—

Longest duration of forecasted cash flow hedge transactions in years		3			3		2

(a)	Substantially all aluminum contracts received hedge accounting treatment as of September 30, 2021.

(b)	Substantially all of this gain (loss) will be offset by pricing changes in sales and purchase contracts.

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 ~~May 2021~~March 2022 and have a combined notional value of ~~2.8~~2.6 million shares. Based on the current number of shares in the program, each $1 change in the company’s stock price ~~has~~would have an insignificant impact on pretax earnings, net of the impact of related derivatives.

Collateral Calls

The company’s agreements with its financial counterparties require the ~~posting of~~company to post 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, ~~2020,~~2021, and December 31, ~~2019,~~2020, the aggregate fair value of all derivative instruments with credit-risk-related contingent features ~~that were in~~was a net liability position ~~was $54~~of $7 million and ~~$35~~$52 million, respectively, and 0 collateral was required to be posted.

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Notes to the Unaudited Condensed Consolidated Financial Statements

Fair Value Measurements

Ball has classified all applicable financial derivative assets and liabilities as Level 2 within the fair value hierarchy as of September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, and presented those values in the tables below. The 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, 2020							September 30, 2021
($ in millions)	Balance Sheet Location	Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments		Total		Balance Sheet Location	Derivatives Designated as Hedging Instruments		Derivatives not Designated as Hedging Instruments		Total

Assets:
Commodity contracts		$	29	$	—	$	29		$	188	$	—	$	188
Foreign currency contracts			—		11		11
Currency contracts										4		19		23
Other contracts			—		6		6			—		2		2
Total current derivative contracts	Other current assets	$	29	$	17	$	46	Other current assets	$	192	$	21	$	213

Commodity contracts		$	6	$	—	$	6		$	11	$	—	$	11
Foreign currency contracts			31		1		32
Currency contracts										47		—		47
Total noncurrent derivative contracts	Other noncurrent assets	$	37	$	1	$	38	Other noncurrent assets	$	58	$	—	$	58

Liabilities:
Commodity contracts		$	29	$	1	$	30		$	45	$	—	$	45
Foreign currency contracts			2		60		62
Currency contracts										—		5		5
Other contracts			1		—		1			—		9		9
Total current derivative contracts	Other current liabilities	$	32	$	61	$	93	Other current liabilities	$	45	$	14	$	59

Commodity contracts		$	1	$	—	$	1
Foreign currency contracts			—		2		2
Currency contracts									$	—	$	3	$	3
Total noncurrent derivative contracts	Other noncurrent liabilities	$	1	$	2	$	3	Other noncurrent liabilities	$	—	$	3	$	3

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Notes to the Unaudited Condensed Consolidated Financial Statements


		December 31, 2019							December 31, 2020
		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		$	7	$	1	$	8		$	50	$	—	$	50
Foreign currency contracts			4		43		47
Other contracts			2		—		2
Total current derivative contracts	Other current assets	$	13	$	44	$	57

Foreign currency contracts		$	15	$	—	$	15
Other contracts			1		—		1
Total noncurrent derivative contracts	Other noncurrent assets	$	16	$	—	$	16

Liabilities:
Commodity contracts		$	26	$	1	$	27
Foreign currency contracts			—		18		18
Currency contracts										3		27		30
Other contracts			—		19		19			—		2		2
Total current derivative contracts	Other current liabilities	$	26	$	38	$	64	Other current assets	$	53	$	29	$	82

Commodity contracts		$	1	$	—	$	1		$	8	$	—	$	8
Total noncurrent derivative contracts	Other noncurrent liabilities	$	1	$	—	$	1	Other noncurrent assets	$	8	$	—	$	8

Liabilities:
Commodity contracts									$	17	$	—	$	17
Currency contracts										—		63		63
Other contracts										—		4		4
Total current derivative contracts								Other current liabilities	$	17	$	67	$	84

Currency contracts									$	8	$	2	$	10
Total noncurrent derivative contracts								Other noncurrent liabilities	$	8	$	2	$	10

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. The company values each of its financial instruments either internally using a single valuation technique, from a reliable observable market source, or from the use of third-party software. 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. The present value discounting factor is based on the comparable time period LIBOR rate or 12-month LIBOR. Ball performs validations of the company’s internally derived fair values reported for the company’s financial instruments on a quarterly basis utilizing counterparty valuation statements. The company additionally evaluates counterparty creditworthiness and, as of September 30, ~~2020,~~2021, has not identified any circumstances requiring the reported values of the company’s financial instruments be adjusted.

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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,									Three Months Ended September 30,
		2020				2019					2021				2020
($ 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	$	(4)	$	—	$	6	$	—	Net sales	$	(28)	$	—	$	(4)	$	—
Commodity contracts - manage exposure to supplier pricing	Cost of sales		(27)		(7)		(11)		(1)	Cost of sales		53		3		(27)		(7)
Interest rate contracts - manage exposure for outstanding debt	Interest expense		(2)		—		2		—	Interest expense		—		—		(2)		—
Foreign currency contracts - manage currency exposure	Selling, general and administrative		(30)		(51)		6		90
Cross-currency swaps - manage intercompany currency exposure	Selling, general and administrative		—		—		32		—
Currency contracts - manage currency exposure										Selling, general and administrative		27		12		(30)		(51)
Equity contracts	Selling, general and administrative		—		37		—		7	Selling, general and administrative		—		23		—		37
Total		$	(63)	$	(21)	$	35	$	96		$	52	$	38	$	(63)	$	(21)


		Nine Months Ended September 30,
		2021				2020
($ 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	$	(89)	$	—	$	33	$	1
Commodity contracts - manage exposure to supplier pricing	Cost of sales		95		9		(62)		2
Interest rate contracts - manage exposure for outstanding debt	Interest expense		—		—		(5)		—
Currency contracts - manage currency exposure	Selling, general and administrative		66		32		(23)		(11)
Cross-currency swaps - manage intercompany currency exposure	Selling, general and administrative		—		—		(1)		—
Equity contracts	Selling, general and administrative		—		(11)		—		47
Total		$	72	$	30	$	(58)	$	39

Nine Months Ended September 30,

2020

2019

($ 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

$
33

$
1

$
12

$
—

Commodity contracts - manage exposure to supplier pricing

Cost of sales

(62)

2

(27)

2

Interest rate contracts - manage exposure for outstanding debt

Interest expense

(5)

—

10

—

Foreign currency contracts - manage currency exposure

Selling, general and administrative

(23)

(11)

5

133

Cross-currency swaps - manage intercompany currency exposure

Selling, general and administrative

(1)

—

41

—

Equity contracts

Selling, general and administrative

—

47

—

70

Total

$
(58)

$
39

$
41

$
205

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Notes to the Unaudited Condensed Consolidated Financial Statements

The changes in accumulated other comprehensive earnings (loss) for 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)	2020		2019		2020		2019		2021		2020		2021		2020

Amounts reclassified into earnings:
Commodity contracts	$	31	$	5	$	29	$	15	$	(25)	$	31	$	(6)	$	29
Cross-currency swap contracts		—		(32)		1		(41)		—		—		—		1
Interest rate contracts		2		(2)		5		(10)		—		2		—		5
Currency exchange contracts		30		(6)		23		(5)		(27)		30		(66)		23
Change in fair value of cash flow hedges:
Commodity contracts		21		(5)		(8)		(10)		44		21		137		(8)
Interest rate contracts		1		(1)		(3)		(1)		(1)		1		(1)		(3)
Cross-currency swap contracts		(1)		41		—		81		—		(1)		—		—
Currency exchange contracts		(39)		14		16		18		26		(39)		58		16
Foreign currency and tax impacts		(9)		(2)		(12)		(10)
Stranded tax effects reclassified into retained earnings:
Commodity contracts		—		—		—		2
Cross-currency swap contracts		—		—		—		(5)
Currency and tax impacts										(1)		(9)		(24)		(12)
	$	36	$	12	$	51	$	34	$	16	$	36	$	98	$	51

21. Contingencies

Ball is subject to numerous lawsuits, claims or proceedings arising out of the ordinary course of business, including actions related to product liability; personal injury; the use and performance of company products; warranty matters; patent, trademark or other intellectual property infringement; contractual liability; the conduct of the company’s business; tax reporting in domestic and ~~foreign~~non-U.S. 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, the company has 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 ~~$28~~$26 million in the aggregate, and such amounts have been included in other current liabilities and other noncurrent liabilities at September 30, ~~2020.~~2021.

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Notes to the Unaudited Condensed Consolidated Financial Statements

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. A site was selected to begin data review on over 30 industrial companies and government entities and at least 2 PRP groups have been discussing various allocation proposals. The USEPA issued the site Record of Decision (ROD) in December 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, retained a technical consultant to assist with their positions vis-à-vis larger 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 at this time, the company does not believe that this matter will have a material adverse effect upon its liquidity, results of operations or financial condition.

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 Beverage Can Company (RBCC). Such discovery began during the first half of 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 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. ~~Crown filed its appeal brief on February 4,~~On December 31, 2020, ~~BMBCC’s reply brief was filed on May 5, 2020,~~the Court of Appeals vacated the decision of the District Court and ~~Crown’s reply brief was filed on June 30, 2020.~~remanded the case for further proceedings. The ~~appellate court is scheduled to hear oral arguments by~~District Court held a telephonic hearing with counsel for the parties in ~~December 2020.~~March 2021 to discuss the scope of the proceedings on remand and initial position statement regarding remand which was submitted by each party. The District Court also directed each party to submit a document in response to the initial position statement of the other party in April 2021. The parties submitted their position statements to the District Court on April 21, 2021, and are currently waiting on the District Court to advise regarding further proceedings. Based on the information available at the present time, the company does not believe that this matter will have a material adverse effect upon its liquidity, results of operations or financial condition.

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 was proposed to the French Environmental Authorities (DREAL) during 2018 and is the subject of ongoing discussions ahead of a final plan for the site being addressed. Based on the information available at this time, the company does not believe that this matter will have a material adverse effect upon its liquidity, results of operations or financial condition.

~~Table of Contents~~

~~Ball Corporation~~

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

The company’s operations in Brazil are involved in various governmental assessments, ~~principally~~which have historically mainly related to claims for taxes on the internal transfer of inventory, gross ~~sales~~revenue taxes, and indirect tax ~~incentives.~~incentives and deductibility of goodwill. In addition, 1 of the company’s Brazilian subsidiaries received an income tax assessment focused on the disallowance of deductions associated with the acquisition price paid to a third party for a portion of its operations. The company does not believe that the ultimate resolution of these matters will materially impact ~~the company’s~~its 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.

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Notes to the Unaudited Condensed Consolidated Financial Statements

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.~~

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 third quarter of~~ 2020 and ~~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 were determined to be estimable and realizable, the company recorded $4 million of prior year collections in business consolidation and ~~$56~~other activities within its third quarter 2020 unaudited condensed consolidated statement of earnings. Due to a favorable ruling by the Brazilian Supreme Court in June 2021, the company recorded an additional $22 million of prior year collections in business consolidation and other activities within ~~the company’s respective third quarter 2020 and~~its second quarter ~~2019~~2021 unaudited condensed consolidated ~~statements~~statement of earnings. ~~The company is currently seeking reimbursement for~~As of September 30, 2021, the Company has no 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 mayclaims outstanding that would result in material ~~reimbursements to the company in future periods.~~reimbursements.

22. Indemnifications and Guarantees

General Guarantees

The company or its appropriate 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. 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, construction contract, renewable energy purchase contract or other commitment; guarantees in respect of certain ~~foreign~~non-U.S. subsidiaries’ pension plans; indemnities for liabilities associated with the infringement of 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 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.

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~~Ball Corporation~~

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

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~~26

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Notes to the ~~indemnifications provided in connection with the 2016 Rexam acquisition, the~~Unaudited Condensed Consolidated Financial Statements

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 purchasers, sellers and other contracting parties, which the company believes would, in certain circumstances, provide recourse to certain claims arising from these indemnifications, commitments and guarantees.

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~~non-U.S. subsidiaries under the senior credit facilities, the obligations of ~~foreign~~non-U.S. 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. 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. 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~~non-U.S. subsidiaries under the senior credit facilities, the obligations of ~~foreign~~non-U.S. credit parties only), with certain exceptions. All obligations under the guarantees of the senior credit facilities are secured, with certain exceptions, 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~~non-U.S. subsidiaries directly owned by the company or any of its wholly owned domestic subsidiaries. In addition, the obligations of certain ~~foreign~~non-U.S. borrowers and ~~foreign~~non-U.S. pledgors under the loan documents will be secured, with certain exceptions, 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~~non-U.S. subsidiaries and material wholly owned U.S. domiciled ~~foreign~~non-U.S. 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 required combined summarized financial information of the issuer of the company’s senior notes and the subsidiaries that guarantee the notes (the obligor group) is presented within Item 2 of this report.

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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 (consolidated financial statements) and accompanying notes included in Item 1 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 aluminum packaging suppliers. 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 aluminum 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, including national defense hardware, antenna and video tactical solutions, civil and operational space hardware and system engineering services.

We sell our aluminum packaging products mainly to large, multinational beverage, 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 significant portion of our packaging products to major companies and brands, as well as to numerous regional customers. The overall global aluminum beverage and aerosol container industries are growing and are expected to continue to grow in the medium to long 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 aluminum through the inclusion of provisions in contracts covering the majority of our volumes to pass through aluminum price changes, 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.

The majority of the aerospace 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 company’s aerospace and defense industry where it is common for work on major programs to be shared among a number of companies. A company competing to be a prime contractor may, upon ultimate award of the contract to a competitor, become a subcontractor for 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 expanding container production across our global plant network to meet current demand and improving efficiencies in our beverage container and end facilities in North America, South America and ~~Europe, and expanding specialty container production across our global plant network to meet current demand;~~Europe; leveraging plant floor and integrated planning systems ~~in our beverage facilities~~ to reduce costs and manage contractual provisions across our diverse customer base; successfully acquiring and integrating a large global aluminum beverage business and regional aluminum aerosol facility while also divesting underperforming steel food and steel aerosol packaging assets in North and South America and four beverage packaging facilities in China; and in the remaining aluminum aerosol business, installing new extruded aluminum aerosol lines in our European, Mexican and Indian facilities while also implementing cost-out and value-in initiatives across all of our businesses;

●

Expanding further into new products and capabilities through commercializing our new lightweight, infinitely recyclable aluminum cup and providing next-generation extruded aluminum aerosol packaging that utilizes proprietary technology to significantly lightweight the can; and successfully introducing new specialty beverage cans and 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 approximately 4345 percent of our global beverage packaging mix; aligning with spiked seltzer and craft brewers, sparkling and still water fillers, wine producers and other new beverage producers who continue to use aluminum beverage containers to grow their business; and in our new aluminum cup business, utilizing online platforms and North American retailers to provide infinitely recyclable aluminum cups directly to consumers;

●

Broadening our geographic reach with our acquisition of Rexam and our new investments in beverage manufacturing facilities in the United States, Brazil, Paraguay, Spain, Mexico, Myanmar and Panama, as well as an extruded aluminum aerosol manufacturing facility in India and ~~construction~~successful start-up of a dedicated aluminum cup manufacturing facility in the U.S.; and

●

Leveraging our technological expertise in packaging innovation, including the introduction of our new proprietary, brandable lightweight aluminum cup and providing next-generation aluminum bottle-shaping technologies and the increased production of lightweight ReAl® containers, which utilize technology that increases the strength of aluminum used in the manufacturing process while lightweighting the can by up to 20 percent over a standard aluminum aerosol can, as well as our investment in cyber, data analytics methane monitoring, 5G and LIDAR capabilities to further enhance our aerospace technical expertise across a broader customer portfolio.

These ongoing business developments help us stay close to our customers while expanding and/or sustaining our industry positions and global reach with major beverage, personal care, household products and aerospace customers. In order to successfully execute our strategy and reach our goals, we realize the importance of excelling in the following areas: customer focus, operational excellence, innovation and business development, people and culture focus and sustainability.

RESULTS OF CONSOLIDATED OPERATIONS

Management’s discussion and analysis for 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.

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Novel Coronavirus (COVID-19)

The ongoing novel coronavirus (COVID-19) pandemic had a material effect upon the global business environment during the three and nine months ended September 30, 2021 and the year ended December 31, 2020. Ball provides key products and services to the consumer beverage and household markets and the U.S. aerospace markets and, consequently, the operations of Ball and of its principal customers and suppliers have been designated as essential across our key markets. This designation ~~has~~ allowed ~~and continues to allow~~ Ball to operate its manufacturing facilities throughout the ~~first~~ nine months ofended September 30, 2021 and the year ended December 31, 2020, and ~~thereafter.~~it is expected that Ball will continue to operate its facilities without disruption in the foreseeable future. However, ~~countries~~jurisdictions around the globe have issued stay-at-home orders, ~~and~~ mandated operational closures of non-essential businesses and other restrictions, which has impacted certain of our customers by constraining some supply of products to certain consumers. The risks that COVID-19 ~~continues~~and its emerging variants continue to present to Ball’s business have been outlined in Note 1 of these consolidated financial statements and within Item ~~1a.~~1. Risk Factors ~~and Note 1 of these unaudited condensed consolidated financial statements.~~in the company’s 2020 Annual Report on Form 10-K filed on February 17, 2021.

Consolidated Sales and Earnings


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019			2021			2020			2021			2020

Net sales	$	3,093		$	2,953		$	8,679		$	8,755		$	3,553		$	3,093		$	10,137		$	8,679
Net earnings attributable to Ball Corporation		241			92			358			406			179			241			581			358
Net earnings attributable to Ball Corporation as a % of net sales		8	%		3	%		4	%		5	%		5	%		8	%		6	%		4	%

Sales in the three months ended September 30, ~~2020,~~2021, increased compared to the same ~~period~~periods in ~~2019~~2020 primarily due to increased sales volumes, pass through of higher aluminum prices, improved price/mix in our beverage packaging segments and ~~increased sales~~favorable exchange rates in our ~~aerospace segment, partially offset by the pass through of lower aluminum prices, the sale of the China~~ beverage packaging, ~~can business in the third quarter of 2019 and the sale of the Argentine steel aerosol business in the fourth quarter of 2019.~~EMEA, segment. Sales in the nine months ended September 30, ~~2020, decreased~~2021, increased compared to the same ~~period~~periods in ~~2019~~2020 primarily due to ~~the~~increased sales volumes, pass through of ~~lower~~higher aluminum prices, ~~the sale of the China~~improved price/mix in our beverage packaging ~~can business in the third quarter of 2019~~segments and ~~the sale of the Argentine steel aerosol business in the fourth quarter of 2019, partially offset by increased sales~~favorable exchange rates in our ~~aerospace segment and higher~~ beverage packaging, ~~sales volumes.~~EMEA, segment.

Net earnings for the three months ended September 30, ~~2020, increased~~2021, decreased compared to the same ~~period~~periods in ~~2019~~2020 primarily due to higher business consolidation and other activities, higher personnel, startup, and other costs to support growth investments, and the timing of contractual non-aluminum input cost recovery, partially offset by increased sales volumes ~~lower business consolidation costs, lower interest expense~~in our beverage packaging, North and Central America, and beverage packaging, EMEA, segments, favorable price/mix in our beverage packaging segments, and a lower effective tax rate.

Net earnings for the nine months ended September 30, ~~2020, decreased~~2021, increased compared to the same periods in ~~2019~~2020 primarily due to ~~higher~~increased sales volumes and favorable price/mix in our beverage packaging segments, lower business consolidation and ~~debt refinancing costs and a higher effective tax rate, partially offset by~~other activities, lower total interest expense, and higher ~~comparable operating~~ earnings ~~for reportable segments.~~from equity in results of affiliates, partially offset by the tax effect of higher earnings and higher personnel, startup, and other costs to support growth investments, and the timing of contractual non-aluminum input cost recovery.

Cost of Sales (Excluding Depreciation and Amortization)

Cost of sales, excluding depreciation and amortization, was $2,851 million and $2,430 million for the three months ended September 30, 2021 and 2020, respectively, and $8,104 million and $6,875 million for the nine months ended September 30, 2021 and 2020, respectively. These amounts represented 80 percent of consolidated net sales for the three and nine months ended September 30, ~~2020, respectively, compared to $2,363 million~~2021, and ~~$7,044 million~~79 percent of consolidated net sales for the three and nine months ended September 30, 2019, respectively. These amounts represented 79 percent of consolidated net sales for both the three and nine months ended September 30, 2020, and 80 percent of consolidated net sales for both the three and nine months ended September 30, 2019.2020.

Depreciation and Amortization

Depreciation and amortization expense was $175 million and $160 million for the three months ended September 30, 2021 and 2020, respectively, and $515 million and $499 million for the nine months ended September 30, 2021 and 2020, respectively. These amounts represented 5 percent of consolidated net sales for the three and nine months ended September 30, ~~2020, respectively, compared to $169 million~~2021, and ~~$510 million for the three and nine months ended September 30, 2019, respectively. These amounts represented~~ 5 percent and 6 percent of consolidated net sales for the three and nine months ended September 30, 2020, ~~respectively, and 6 percent of consolidated net sales for the three and nine months ended September 30, 2019.~~ respectively.

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Selling, General and Administrative

Selling, general and administrative (SG&A) expenses were $148 million and $121 million for the three months ended September 30, 2021 and 2020, respectively, and $471 million and $363 million for the ~~three and~~ nine months ended September 30, ~~2020, respectively, compared to $90 million~~2021 and ~~$328 million for the three and nine months ended September 30, 2019,~~2020, respectively. These amounts represented 4 percent and 5 percent of consolidated net sales for the three and nine months ended September 30, ~~2020, and 3 percent~~2021, respectively, and 4 percent of consolidated net sales for the three and nine months ended September 30, ~~2019, respectively.~~2020. The increase in SG&A expenses was primarily due to higher personnel and other costs to support growth investments.

Business Consolidation Costs and Other Activities

Business consolidation and other activities were charges of $141 million and $8 million for the three months ended September 30, 2021 and 2020, respectively, and $136 million and $235 million for the three and nine months ended September 30, 2020, respectively, compared to $133 million and $147 million for the three and nine months ended September 30, 2019, respectively. These amounts represented less than one percent and 3 percent of consolidated net sales for the three and nine months ended September 30, 2020, respectively, and 5 percent and 2 percent of consolidated net sales for the three and nine months ended September 30, 2019, respectively. The increase for the nine months ended September 30, 2021 and 2020, ~~was~~respectively. The amounts in 2021 are primarily ~~due to~~the result of a non-cash pension settlement charge of $130 million, partially offset by gains resulting from Brazilian indirect tax rulings of $22 million. The charges in 2020 included a non-cash pension settlement charge of $102 million, a non-cash impairment charge of $62 million related to the goodwill of the beverage packaging, other, reporting unit, an adjustment to the selling price of the company’s former steel food and steel aerosol business and a full ~~write off~~write-off of the potential future consideration related to the 2019 sale of the company’s former China beverage packaging business.

Interest Expense

Total interest expense was $69 million and ~~$247~~$69 million for the three months ended September 30, 2021 and 2020, respectively, and $202 million and $247 million for the nine months ended September 30, 2021 and 2020, ~~respectively, compared to $79 million~~respectively. Interest expense, excluding the effect of debt refinancing and ~~$241 million~~other costs, as a percentage of average borrowings decreased 10 basis points from 3.5 percent for the three ~~and nine~~ months ended September 30, ~~2019, respectively. Interest expense included $41 million of debt extinguishment costs in~~2020, to 3.4 percent for the three months ended September 30, 2021, and decreased 20 basis points from 3.6 percent for the nine months ended September 30, 2020, ~~and $4 million of refinance costs in~~to 3.4 percent for the nine months ended September 30, ~~2019. Interest expense as a percentage of average monthly borrowings was 4 percent for~~2021, due to the ~~three and nine months ended September 30, 2020 and 2019.~~drop in global interest rates.

Income Taxes

The effective tax rate for the three and nine months ended September 30, ~~2020,~~2021, was negative 1.2 percent and 20.6 percent, respectively, compared to 23.9 percent and 20 ~~percent, respectively, compared to 26.9 percent and 15.1~~ percent for the same periods in ~~2019.~~ 2020.

The decrease of 325.1 percentage points for the three months ended September 30, ~~2020~~2021, was primarily due to ~~expenses~~an increase in ~~2019 from business dispositions~~federal tax credits, non-U.S. rate differences net of withholding tax, and ~~pension settlements that did not recur, partially offset by a~~the revaluation of deferred tax ~~liabilities~~balances in the U.K. due to a tax rate change ~~and further offset by the revaluation of deferred tax assets~~occurring in ~~Brazil as a result of fluctuations in foreign currency exchange rates.~~2020. Similar impacts may occur in future periods, but given their inherent uncertainty, the company is unable to reasonably estimate their potential future impacts.

~~On March 27, 2020,~~The increase of 0.6 percentage points for the ~~CARES Act~~nine months ended September 30, 2021 was ~~signed into law, which, among other things, includes provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds and modifications~~primarily due to the ~~net interest deduction limitations. The company has continued~~decreased tax benefits for share-based compensation, and increased tax expense related to ~~assess~~ the ~~impact~~revaluation of ~~this new legislation and, at present, does not expect it~~deferred tax balances in the U.K. due to ~~have a material impact on our 2020 effective~~ tax rate changes, which were partially offset by non-U.S. rate differences net of withholding tax. Similar impacts may occur in future periods, but given their inherent uncertainty, the company is unable to reasonably estimate their potential future impacts. For 2020, tax expense was increased by a charge for the impairment of non tax-deductible goodwill within the beverage packaging, other, operating segment which is not expected to impact tax expense in future periods..

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 four reportable segments discussed below. Effective January 1, 2020, the company implemented changes to its management and internal reporting structure for cost reduction and operational efficiency purposes. As a result of these changes, the company’s plants in Cairo, Egypt, and Manisa, Turkey, have been combined with the former beverage packaging, Europe, segment to create the beverage packaging, EMEA, operating segment. In addition, the company’s operations in India and Saudi Arabia are now combined with the former non-reportable beverage packaging, Asia Pacific, operating segment to create a new non-reportable operating segment (beverage packaging, other). Our segment results and disclosures for the three and nine months ended September 30, 2019, have been retrospectively adjusted to conform to the current year presentation.

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Beverage Packaging, North and Central America


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019			2021			2020			2021			2020

Net sales	$	1,327		$	1,230		$	3,775		$	3,647		$	1,519		$	1,327		$	4,339		$	3,775

Comparable operating earnings	$	209		$	157		$	544		$	416			186			209			519			544
Business consolidation and other activities (a)		—			(2)			(4)			(8)
Amortization of acquired Rexam intangibles		(7)			(7)			(20)			(22)
Total segment earnings	$	202		$	148		$	520		$	386
Comparable operating earnings as a % of segment net sales		16	%		13	%		14	%		11	%		12	%		16	%		12	%		14	%

(a)	Further details of these items are included in Note 6 to the ~~unaudited condensed~~ consolidated financial statements within Item 1 of this report.

Segment sales for the three and nine months ended September 30, ~~2020,~~2021, were ~~$97~~$192 million ~~higher~~ and ~~$128~~$564 million higher, respectively, compared to the same periods in ~~2019.~~2020. The increase for the three and nine months ended September 30, ~~2020,~~2021, was primarily due to higher volumes, the pass through of higher aluminum prices and improved ~~customer contractual terms, partially offset by lower aluminum prices.~~mix.

Comparable operating earnings for the three and nine months ended September 30, ~~2020,~~2021, were ~~$52~~$23 million and ~~$128~~$25 million ~~higher,~~lower, respectively, compared to the same periods in ~~2019.~~2020. The ~~increase~~decrease for the three ~~months ended September 30, 2020, was primarily due to higher sales volumes, benefits from improved customer contractual terms~~ and ~~improved operating performance. The increase for the~~ nine months ended September 30, ~~2020,~~2021, was primarily due to the impact of low finished goods inventory throughout the quarter, startup and labor costs associated with three new manufacturing plants and timing of contractual non-aluminum input cost recovery, partially offset by higher ~~sales~~specialty volumes ~~benefits from~~and improved customer contractual terms and improved operating performance, partially offset by increased capacity expansion costs in the company’s existing Rome, Georgia, and Fort Worth, Texas, facilities along with unfavorable currency exchange rates in the first quarter of 2020 related to the Mexican peso.terms.

Beverage Packaging, EMEA


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019			2021			2020			2021			2020

Net sales	$	809		$	763		$	2,177		$	2,215		$	937		$	809		$	2,639		$	2,177

Comparable operating earnings	$	117		$	105		$	248		$	277			125			117			349			248
Business consolidation and other activities (a)		(2)			(9)			(8)			(24)
Amortization of acquired Rexam intangibles		(16)			(16)			(47)			(51)
Total segment earnings	$	99		$	80		$	193		$	202
Comparable operating earnings as a % of segment net sales		14	%		14	%		11	%		13	%		13	%		14	%		13	%		11	%

(a)	Further details of these items are included in Note 6 to the ~~unaudited condensed~~ consolidated financial statements within Item 1 of this report.

Segment sales for the three and nine months ended September 30, ~~2020,~~2021, were ~~$46~~$128 million ~~higher~~ and ~~$38~~$462 million ~~lower,~~higher, respectively, compared to the same periods in ~~2019.~~2020. The increase in sales for the three months ended September 30, 2020, was primarily related to increased sales volumes and favorable currency exchange rates, partially offset by the pass through of lower aluminum prices. The decrease in sales for the nine months ended September 30, 2020, was primarily related to lower sales volumes and the pass through of lower aluminum prices.

~~Table of Contents~~

Comparable operating earnings for the three and nine months ended September 30, 2020, were $12 million higher and $29 million lower, respectively, compared to the same periods in 2019. The increase for the three months ended September 30, 2020, was primarily due to higher sales volumes and favorable currency exchange rates. The decrease for the nine months ended September 30, 2020, was primarily due to lower sales volumes, higher warehousing costs and intermittent production line downtime.

~~Beverage Packaging, South America~~

Three Months Ended September 30,

Nine Months Ended September 30,

($ in millions)

2020

2019

2020

2019


Net sales

$
432

$
392

$
1,166

$
1,210

Comparable operating earnings

$
64

$
60

$
173

$
193

Business consolidation and other activities (a)

3

(14)

(1)

22

Amortization of acquired Rexam intangibles

(14)

(14)

(42)

(42)

Total segment earnings

$
53

$
32

$
130

$
173

Comparable operating earnings as a % of segment net sales

15
%

15
%

15
%

16
%

~~(a)~~

~~Further details of these items are included in Note 6 to the unaudited condensed consolidated financial statements within Item 1 of this report.~~

~~Segment~~ sales for the three and nine months ended September 30, ~~2020, were $40 million higher and $44 million lower, respectively, compared to the same periods in 2019. The increase for the three months ended September 30, 2020,~~2021, was primarily related to increased sales volumes, ~~partially offset by regional pricing~~favorable currency exchange effects and the pass through of ~~lower~~higher aluminum prices. The decrease for the nine months ended September 30, 2020, was primarily due to regional pricing, the pass through of lower aluminum prices and unfavorable currency exchange rates, partially offset by increased volumes.

Comparable operating earnings for the three and nine months ended September 30, ~~2020,~~2021, were $4$8 million ~~higher~~ and ~~$20~~$101 million ~~lower,~~higher, respectively, compared to the same periods in ~~2019.~~2020. The increase in comparable operating earnings for the three and nine months ended September 30, 2021, was primarily due to higher sales volumes.

Beverage Packaging, South America


	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2021			2020			2021			2020

Net sales	$	462		$	432		$	1,401		$	1,166
Comparable operating earnings		74			64			245			173
Comparable operating earnings as a % of segment net sales		16	%		15	%		17	%		15	%

(a)	Further details of these items are included in Note 6 to the consolidated financial statements within Item 1 of this report.

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Segment sales for the three and nine months ended September 30, 2021, were $30 million and $235 million higher compared to the same periods in 2020. The increase in sales for the three months ended September 30, ~~2020,~~2021, was primarily ~~due~~related to ~~increased~~the pass through of higher aluminum prices and improved mix, partially offset by decreased sales ~~volumes.~~volumes following unfavorable weather conditions in July and August across South America. The ~~decrease~~increase in sales for the nine months ended September 30, ~~2020,~~2021, was primarily due to ~~adverse cost absorption~~higher sales volumes and the pass through of higher aluminum prices.

Comparable operating earnings for the three and nine months ended September 30, 2021, were $10 million and $72 million higher, respectively, compared to the same periods in 2020. The increase in comparable operating earnings for the three months ended September 30, 2021, was primarily due to ~~intermittent production line downtime in the second quarter of 2020, startup costs and regional pricing,~~improved mix, partially offset by lower volumes. The increase in comparable operating earnings for the nine months ended September 30, 2021, was primarily due to increased sales ~~volumes.~~volumes and favorable mix.

Aerospace


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019			2021			2020			2021			2020

Net sales	$	451		$	374		$	1,321		$	1,081		$	498		$	451		$	1,381		$	1,321
Comparable operating earnings		44			35			114			103			46			44		��	115			114
Comparable operating earnings as a % of segment net sales		10	%		9	%		9	%		10	%		9	%		10	%		8	%		9	%

Segment sales for the three and nine months ended September 30, ~~2020,~~2021, were ~~$77~~$47 million and ~~$240~~$60 million higher, respectively, compared to the same periods in ~~2019,~~2020, and comparable operating earnings for the three and nine months ended September 30, ~~2020,~~2021, were $9$2 million and ~~$11~~$1 million higher, respectively, compared to the same periods in ~~2019.~~2020. The higher sales and ~~comparable operating~~ earnings for the three ~~and nine~~ months ended September 30, ~~2020,~~2021, were primarily due to the ~~result of an increase in sales from significant U.S. national defense contracts.~~company’s new program wins and backlog growth.

~~Table of Contents~~

The aerospace sales contract mix for the nine months ended September 30, ~~2020,~~2021, consisted of 5048 percent cost-type contracts, which are billed at our costs plus an agreed upon and/or earned profit component, and 4749 percent fixed-price contracts. The remaining sales were for time and materials contracts. Contracted backlog was ~~$2.4~~$2.8 billion and ~~$2.5~~$2.4 billion at September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively. The backlog at September 30, ~~2020,~~2021, consisted of 4640 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, timing variances in program funding and the uncertain timing of future contract awards.

Management Performance Measures

Management internally uses various financial 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); 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, including business consolidation costs and gains or losses on acquisitions and dispositions.

Nonfinancial measures used 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).

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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 included 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.

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019		2021		2020		2021		2020

Net earnings attributable to Ball Corporation	$	241	$	92	$	358	$	406	$	179	$	241	$	581	$	358
Add: Net loss attributable to noncontrolling interests		(1)		—		(3)		—
Net earnings (loss) attributable to noncontrolling interests, net of tax										—		(1)		—		(3)
Net earnings		240		92		355		406		179		240		581		355
Less: Equity in results of affiliates, net of tax		(8)		(5)		13		6
Add: Tax provision (benefit)		73		32		92		73
Earnings before taxes, as reported		305		119		460		485
Add: Total interest expense		69		79		247		241
Equity in results of affiliates, net of tax										(8)		(8)		(18)		13
Tax provision (benefit)										(2)		73		146		92
Earnings before taxes										169		305		709		460
Total interest expense										69		69		202		247
Earnings before interest and taxes		374		198		707		726		238		374		911		707
Add: Business consolidation and other activities		8		133		235		147
Add: Amortization of acquired Rexam intangibles		37		38		111		118
Business consolidation and other activities										141		8		136		235
Amortization of acquired intangibles										38		37		114		111
Comparable operating earnings	$	419	$	369	$	1,053	$	991	$	417	$	419	$	1,161	$	1,053

Our calculation of comparable net earnings and the related earnings per share are summarized below:


	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions, except per share amounts)	2021		2020		2021		2020

Net earnings attributable to Ball Corporation	$	179	$	241	$	581	$	358
Business consolidation and other activities		141		8		136		235
Amortization of acquired intangibles		38		37		114		111
Share of equity method affiliate non-comparable costs, net of tax		(3)		1		3		31
Debt refinancing and other costs		1		1		1		41
Noncontrolling interest share of non-comparable costs, net of tax		—		—		—		1
Non-comparable taxes		(43)		9		5		(62)
Comparable net earnings	$	313	$	297	$	840	$	715

Diluted earnings per share	$	0.54	$	0.72	$	1.75	$	1.08
Comparable diluted earnings per share	$	0.94	$	0.89	$	2.52	$	2.15

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~~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)

2020

2019

2020

2019

Net earnings attributable to Ball Corporation

$
241

$
92

$
358

$
406
Add: Business consolidation and other activities

8

133

235

147
Add: Amortization of acquired Rexam intangibles

37

38

111

118
Add: Share of equity method affiliate non-comparable costs

1

—

31

16
Add: Debt refinancing and other costs

1

—

41

4
Less: Non-controlling interest share of non-comparable costs

—

—

1

—
Less: Noncomparable taxes

9

(26)

(62)

(68)
Comparable net earnings

$
297

$
237

$
715

$
623

Diluted earnings per share, as reported

$
0.72

$
0.27

$
1.08

$
1.19
Comparable diluted earnings per share

$
0.89

$
0.70

$
2.15

$
1.82

NEW ACCOUNTING PRONOUNCEMENTS

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

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flows and Capital Expenditures

The following summarizes our cash flows:


	Nine Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2021		2020

Cash flows provided by (used in) operating activities	$	345	$	656	$	876	$	345
Cash flows provided by (used in) investing activities		(751)		(449)		(1,104)		(751)
Cash flows provided by (used in) financing activities		(521)		(418)		327		(521)

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, 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. We have no debt maturities until 2022, our senior credit facilities are in place until 2024 and we are focused in the near term on maintaining liquidity and flexibility in the current economic environment.

Cash flows provided by ~~operations~~operating activities were ~~$311~~$876 million ~~lower~~ in ~~2020 compared to 2019,~~2021, primarily ~~due to higher~~driven by net earnings before depreciation and amortization of $1.1 billion, being partially offset by pension contributions of $203 million and working capital outflows of ~~$728~~$248 million, ~~in 2020 compared to $423 million in 2019. The higher working capital outflows in 2020 were primarily due to seasonal working capital build~~ which ~~was more sizeable than typical due largely to the timing of metal payments in the first quarter. In comparison to the same period of 2019, our working capital movements reflect~~reflected an increase in days sales outstanding from ~~38 days in 2019 to 44~~42 days in 2020 to 54 days in 2021 and ~~a decrease~~an increase in days payable outstanding from ~~118~~128 days in ~~2019~~2020 to ~~107~~136 days in ~~2020.~~2021.

Cash ~~outflows from~~flows used in investing activities ~~increased~~were $1.1 billion in 2021 primarily driven by ~~$302 million from $449 million in 2019 to $751 million in 2020. This predominantly reflected a $258 million increase in~~$1.2 billion of capital expenditures for large growth projects, ~~and $69~~partially offset by $110 million received in 2021 for the ~~acquisition~~sale of ~~the Brazil aluminum aerosol packaging business, as discussed~~our minority-owned investment in ~~Note 4 of the unaudited condensed consolidated financial statements included within Item 1 of this report.~~South Korea.

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Cash ~~outflows from~~flows provided by financing activities ~~increased by $103 million from $418~~were $327 million in ~~2019 to $521~~2021 driven primarily by the issuance of $850 million ~~in 2020. The primary reasons for the increase were the redemption in January 2020~~ of ~~euro-denominated 3.50%~~3.125% senior notes, ~~of €400 million and 4.375% senior notes of $1 billion combined with revolver repayments,~~ partially offset by ~~the August 2020 issuance of $1.3 billion in 2.875% senior notes and decreased~~ net share ~~repurchases~~purchases of ~~$529~~$325 million and common stock dividends of $164 million.

We have entered into several regional committed and uncommitted accounts receivable factoring programs with various financial institutions for certain of our receivables. The programs are accounted for as true sales of the receivables, without recourse to Ball, and had combined limits of approximately ~~$1.5 billion and $1.4~~$1.7 billion at September 30, ~~2020,~~2021, and $1.6 billion at December 31, ~~2019, respectively.~~2020. A total of ~~$184~~$430 million and ~~$230~~$232 million were available for sale under such programs as of September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively.

Contributions to the company’s defined benefit pension plans were $203 million in the first nine months of 2021 compared to $92 million in the first nine months of 2020, ~~compared to $154 million in the first nine months of 2019,~~ and such contributions are expected to be approximately ~~$100~~$215 million for the full year of ~~2020.~~2021. This estimate may change based on changes to the U.S. Pension Protection Act, the effects of the CARES Act and ARPA Act and the actual returns achieved on plan assets, among other factors.

~~We expect that 2020~~The company has approximately $1.7 billion of capital expenditures for property, plant and equipment ~~will likely exceed $900 million, and approximately $1 billion was~~ contractually committed as of September 30, ~~2020.~~2021.

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As of September 30, ~~2020,~~2021, approximately ~~$510~~$427 million of our cash was held outside of the U.S. In the event we need to utilize any of the cash held outside 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. Management believes ~~its~~the company’s U.S. operating cash flows and cash on hand, together with its availability under long-term, revolving credit facilities, uncommitted short-term credit facilities and committed and uncommitted accounts receivable factoring programs, will be sufficient to meet the cash requirements of the U.S. portion of our ongoing operations, scheduled principal and interest payments on U.S. debt, dividend payments, capital expenditures and other U.S. cash requirements. If ~~foreign~~non-U.S. funds are needed for our U.S. cash requirements and we are unable to provide the funds through intercompany financing arrangements, we would be required to repatriate funds from ~~foreign~~non-U.S. locations where the company has previously asserted indefinite reinvestment of funds outside the U.S.

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 additional taxes that may become payable if these earnings were remitted to the U.S.

Share Repurchases

The company’s share repurchases, net of issuances, totaled ~~$69~~$325 million during the nine months ended September 30, ~~2020,~~2021, compared to ~~$598~~$69 million of repurchases, net of issuances, during the same period of ~~2019.~~2020. The company’s share repurchases ~~were~~are completed using cash on hand, cash provided by operating activities and available borrowings.

Debt Facilities and Refinancing

Given our cash flow projections and unused credit facilities that are available until March 2024, our liquidity is strong and is expected to meet our ongoing cash and debt service requirements. Total interest-bearing debt of ~~$7.7~~$8.5 billion and $7.8 billion was outstanding at September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively.

In the third quarter of 2020, Ball issued $1.3 billion of 2.875% senior notes due in 2030. In the first quarter of 2020, Ball redeemed the outstanding euro-denominated 3.50% senior notes due in 2020 in the amount of €400 million and the outstanding 4.375% senior notes due in 2020 in the amount of $1 billion. We recorded debt extinguishment costs of $41 million for the nine months ended September 30, 2020.

At September 30, ~~2020,~~2021, taking into account our outstanding letters of credit, approximately $1.7 billion was available under existing long-term, multi-currency committed revolving credit facilities, which are available until March 2024. In addition to these facilities, the company had approximately ~~$990 million~~$1 billion of short-term uncommitted credit facilities available as of September 30, ~~2020,~~2021, of which ~~$30~~$24 million was outstanding and due on demand.

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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, ~~2020,~~2021, 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. ~~In August 2020, we amended certain of our credit agreements, which among other things, modified the~~The most restrictive of our debt ~~covenants. This covenant~~covenants requires us to maintain a leverage ratio (as defined) of no greater than 5.0 times, which ~~changes~~will change to 4.5 times as of December 31, 2022. As of September 30, ~~2020,~~2021, the company could borrow up to its limits available under the company’s long-term multi-currency committed revolving facilities and short-term uncommitted credit facilities without violating our existing debt covenants. Additional details regarding our debt are available in Note 15 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~~Note 21 and Note 22 accompanying the ~~unaudited condensed~~ consolidated financial statements included within Item 1 of this report. The company is routinely subject to litigation ~~incident~~incidental 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 former Rexam subsidiaries. The company believes the matters identified will not have a material adverse effect upon its liquidity, results of operations or financial condition.

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Guaranteed Securities

The company’s senior notes are guaranteed on a full and unconditional, joint and several ~~basis~~bases by the issuer of the company’s senior notes and the subsidiaries that guarantee the notes (the obligor group). The entities that comprise the obligor group are 100 percent owned by the company. As described in the supplemental indentures governing the company’s existing senior notes, the senior notes are guaranteed by any of the company’s domestic subsidiaries that guarantee any other indebtedness of the company.

The following summarized financial information relates to the obligor group as of September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, and for the nine months ended September 30, ~~2020~~2021, and the year ended December 31, ~~2019.~~2020. Intercompany transactions, equity investments and other intercompany activity between obligor group subsidiaries have been eliminated from the summarized financial information. Investments in subsidiaries not forming part of the obligor group have also been eliminated.


	Nine Months Ended		Year Ended		Nine Months Ended		Year Ended
($ in millions)	September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020

Net sales	$	5,342	$	6,540	$	5,885	$	7,115
Gross profit (a)		695		789		673		935
Net earnings (loss)		359		211		266		528
Net earnings (loss) attributable to Ball		359		211
Net earnings (loss) attributable to Ball Corporation						266		528

(a)	Gross profit is shown after depreciation and amortization related to cost of sales of ~~$124~~$148 million for the nine months ended September 30, ~~2020,~~2021, and ~~$160~~$167 million for the year ended December 31, ~~2019.~~2020.

September 30,

December 31,
($ in millions)

2020

2019

Current assets

$
1,842

$
2,310
Noncurrent assets

13,366

13,073
Current liabilities

3,415

5,073
Noncurrent liabilities

10,675

9,953


	September 30,		December 31,
($ in millions)	2021		2020

Current assets	$	3,218	$	2,211
Noncurrent assets		14,396		13,701
Current liabilities		5,181		3,704
Noncurrent liabilities		11,075		10,854

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Included in the amounts disclosed in the tables above, at September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, the obligor group held receivables due from other subsidiary companies of ~~$340~~$435 million and ~~$299~~$221 million, respectively, long-term notes receivable due from other subsidiary companies of $9.1 billion and ~~$9.3~~$9.2 billion, respectively, payables due to other subsidiary companies of ~~$1.7~~$1.8 billion and ~~$1.9~~$1.7 billion, respectively, and long-term notes payable due to other subsidiary companies of ~~$1.5~~$1.9 billion and ~~$2.2~~$1.5 billion, respectively.

For the nine months ended September 30, ~~2020,~~2021, and the year ended December 31, ~~2019,~~2020, the obligor group recorded the following transactions with other subsidiary companies: sales to them of ~~$619~~$583 million and ~~$792~~$804 million, respectively, net credits from them of ~~$19~~$25 million and ~~net charges to them of $21~~$24 million, respectively, and net interest income from them of ~~$309~~$253 million and ~~$127~~$393 million, respectively. During ~~the nine months ended September 30, 2020, and for~~ the year ended December 31, ~~2019,~~2020, the obligor group received dividends from other subsidiary companies of $56 ~~million and $775 million, respectively.~~million.

A description of the terms and conditions of the company’s debt guarantees is located in Note 22 of Item 1 of this report.

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 ~~2019~~2020 Annual Report on Form 10-K filed on February ~~19, 2020,~~17, 2021, and in Note 20 accompanying the ~~unaudited condensed~~ consolidated financial statements included within Item 1 of this report.

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Item 4. CONTROLS AND PROCEDURES

Our chief executive officer and chief financial officer participated in management’s evaluation of our disclosure controls and procedures, as defined by the Securities and Exchange Commission (SEC), as of the end of the period covered by this report and concluded that our controls and procedures were effective. There were no changes to internal controls during the company’s third quarter of ~~2020~~2021 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" statements concerning future events and financial performance. Words such as "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. ~~The readers of this report~~You should therefore not place undue reliance upon any forward-looking statements and any such statements should be read in conjunction with, and qualified in their entirety by, the cautionary statements referenced below. The ~~company~~Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or 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. Additional factors that might affect: a) our packaging segments include product capacity, supply, and demand constraints and fluctuations ~~including due to virus~~ and ~~disease outbreaks and responses thereto;~~changes in consumption patterns; availability/cost of raw materials, equipment, and logistics; competitive packaging, pricing and substitution; changes in climate and weather; footprint adjustments and other manufacturing changes, including the startup of new facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; unfavorable mandatory deposit or ~~other restrictive~~ packaging laws; customer and supplier consolidation; power and supply chain 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; changes in ~~foreign~~currency exchange or tax rates; and tariffs, trade actions, or other governmental actions, including business restrictions and shelter-in-place orders in any country or jurisdiction affecting goods produced by us or in our supply chain, including imported raw ~~materials, such as those related to COVID-19 and those pursuant to Section 232 of the U.S. Trade Expansion Act of 1962 or Section 301 of Trade Act of 1974;~~materials; b) our aerospace segment include funding, authorization, availability and returns of government and commercial contracts; and delays, extensions and technical uncertainties affecting segment contracts; c) the ~~company~~Company as a whole include those listed above plus: the extent to which sustainability-related opportunities arise and can be capitalized upon; changes in senior management, succession, and the ability to attract and retain skilled labor; regulatory ~~action~~actions or issues including those related to tax, ESG reporting, competition, 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; the ability to manage cyber ~~threats and the success of information technology initiatives;~~threats; litigation; strikes; disease; pandemic; labor cost changes; rates of return on assets of the ~~company's~~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 policies, orders, and actions related to ~~COVID-19, the U.S. government elections, stimulus package(s), budget, sequestration and debt limit;~~COVID-19; reduced cash flow; interest rates affecting our debt; and successful or unsuccessful joint ventures, acquisitions and divestitures, and their effects on our operating results and business generally.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There were no events required to be reported under Item 1 for the three months ended September 30, ~~2020,~~2021, except as discussed in Note 21 to the ~~unaudited condensed~~ consolidated financial statements included within Part I, Item 1 of this report.

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~~Item 1A. Risk Factors~~

Risk factors affecting the company can be found within Item 1A of the company’s 2019 Annual Report on Form 10-K filed on February 19, 2020, for the year ended December 31, 2019. In 2020, we have included a new risk factor described below. There are no other material changes in our risk factors from those previously discussed in our Annual Report on Form 10-K filed on February 19, 2020.

~~We face risks related to health epidemics, pandemics and other outbreaks, including the current novel coronavirus (COVID-19), which could adversely affect our business.~~

The circumstances of the current COVID-19 outbreak are changing rapidly, and at this time we are unable to reasonably estimate the full impact of the COVID-19 outbreak on our financial results. The products produced and services provided by Ball are essential and, as a result, relevant governments around the world have allowed our operations to continue through this crisis. However, COVID-19 could give rise to circumstances that cause one or more of the following risk factors discussed in the company’s 2019 Annual Report on Form 10-K filed on February 19, 2020, to occur:

●

~~We could lose key customers, customers could become insolvent or have a reduction in demand for our products and services;~~

●

~~We could face increased competition within the beverage packaging and aerospace industries, or from alternate products and services;~~

●

~~We could be subject to changes in laws and governmental regulations that adversely affect our business and operations;~~

●

~~We could be subject to adverse fluctuations in currency exchange rates;~~

●

~~We might lose key management and operating personnel;~~

●

~~Our ability to develop or apply new technology may be reduced;~~

●

~~We may be subject to disruptions in the supply or price of our raw materials;~~

●

~~We may face prolonged work stoppages at our facilities;~~

●

~~We may be impacted by government budget constraints or government shutdowns;~~

●

~~Our goodwill and other long-lived assets could become impaired;~~

●

Our pension plan investments may not perform as expected, and we may be required to make additional contributions to our pension plans which would otherwise be available for other general corporate purposes;

●

Our access to capital markets may be restricted, which could adversely affect our short-term liquidity and prevent us from fulfilling our obligations under the notes issued pursuant to our bond indentures;

●

~~We may be impacted by deterioration in the global credit, financial and economic environment, which could have a negative impact on our results of operations, financial position or cash flows;~~

●

~~We may be subject to increased information technology (IT) security threats and reduced network access availability;~~

●

~~Our operations and of our principal customers and suppliers could be designated as non-essential across our key markets; and~~

●

~~A material weakness in our internal control over financial reporting or a material misstatement in our financial statements.~~

Because the nature of a global outbreak of COVID-19 is far-reaching and its impacts cannot be completely anticipated, additional risks may arise that could materially impact the company’s financial results and liquidity.

~~Table of Contents~~

The company has or may implement actions to minimize the risks and associated negative effects from COVID-19, which do not guarantee the prevention or mitigation of material impacts on our business. Some of these actions may include, and are not limited to:

●

~~Implementing alternative work arrangements including work from home;~~

●

~~Limiting or eliminating work-related travel;~~

●

~~Effecting a full or partial shut-down of operations;~~

●

~~Enhancing the cleaning and disinfecting of our physical locations;~~

●

~~Implementing health screening for employees and third parties who enter our facilities;~~

●

~~Adjusting inventory levels to mitigate potential supply disruptions;~~

●

~~Delaying growth capital spending;~~

●

~~Modifying payment terms with customers;~~

●

~~Providing additional health-related services to our employees;~~

●

~~Reducing or suspending our quarterly dividends;~~

●

~~Reducing compensation for our employees;~~

●

~~Reducing our workforce levels;~~

●

~~Modifying our debt arrangements; and~~

●

~~Adjusting contributions to defined benefit pension plans or income tax payments.~~

Item 2. Changes in Securities

The following table summarizes the company’s repurchases of its common stock during the third quarter of ~~2020.~~2021.


Purchases of Securities	Purchases of Securities						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)		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, 2020		—	$	—	—	36,549,524
August 1 to August 31, 2020		1,618		69.49	1,618	36,547,906
September 1 to September 30, 2020		—		—	—	36,547,906
July 1 to July 31, 2021								257,897	$	82.24	257,897	34,518,266
August 1 to August 31, 2021								1,392,218		90.41	1,392,218	33,126,048
September 1 to September 30, 2021								779,311		92.71	779,311	32,346,737
Total		1,618		—	1,618			2,429,426		90.28	2,429,426

(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.

(b)

The company has an ongoing repurchase program for which 50 million shares ~~are~~were authorized ~~from time to time~~for repurchase by Ball’s Board of Directors. ~~On January 23, 2019, the 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 three months ended September 30, ~~2020.~~2021.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

There were no events required to be reported under Item 5 for the three months ended September 30, ~~2020.~~2021.

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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).~~
12		Obligor group subsidiaries of Ball Corporation

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~~Executive 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~~Executive 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.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 cover page of the company’s quarterly report on Form 10-Q for the quarter ended September 30, ~~2020,~~2021, formatted in Inline XBRL (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.

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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~~Executive Vice President and Chief Financial Officer


Date:	November ~~6, 2020~~5, 2021

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