-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LzI2YfAHQ2V/1t07jwvYNnuoLxp3X8tJOVJexw2X8tRmddpYQkKqBblsjPuRVi7y 4UngPcJPG1mBY6XnSEVjAQ== 0000009389-00-000016.txt : 20000518 0000009389-00-000016.hdr.sgml : 20000518 ACCESSION NUMBER: 0000009389-00-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000402 FILED AS OF DATE: 20000517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BALL CORP CENTRAL INDEX KEY: 0000009389 STANDARD INDUSTRIAL CLASSIFICATION: METAL CANS [3411] IRS NUMBER: 350160610 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07349 FILM NUMBER: 638877 BUSINESS ADDRESS: STREET 1: 10 LONGS PEAK DRIVE CITY: BROOMFIELD STATE: CO ZIP: 80021-2510 BUSINESS PHONE: 3034695511 MAIL ADDRESS: STREET 1: PO BOX 5000 CITY: BROOMFIELD STATE: CO ZIP: 80038-5000 FORMER COMPANY: FORMER CONFORMED NAME: BALL BROTHERS CO DATE OF NAME CHANGE: 19731115 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 2, 2000 ---------------------- Commission file number 1-7349 BALL CORPORATION State of Indiana 35-0160610 10 Longs Peak Drive, P.O. Box 5000 Broomfield, CO 80021-2510 303/469-3131 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 [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 30, 2000 ------------------- --------------------------------- Common Stock, 29,718,632 shares without par value Ball Corporation and Subsidiaries QUARTERLY REPORT ON FORM 10-Q For the period ended April 2, 2000 INDEX Page Number ----------- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Unaudited Condensed Consolidated Statements of Earnings for the Three-Month Periods Ended April 2, 2000, and April 4, 1999 3 Unaudited Condensed Consolidated Balance Sheets at April 2, 2000, and December 31, 1999 4 Unaudited Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended April 2, 2000, and April 4, 1999 5 Notes to Unaudited Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 PART II. OTHER INFORMATION 17 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Ball Corporation and Subsidiaries UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS ($ in millions, except per share amounts)
Three Months Ended --------------------------------------- April 2, 2000 April 4, 1999 ----------------- ----------------- - ---------------------------------------------------------------------------------------------------------------------- Net sales $ 817.6 $ 820.3 - ---------------------------------------------------------------------------------------------------------------------- Costs and expenses Cost of sales (excluding depreciation and amortization) 680.9 691.9 Depreciation and amortization (Notes 6 and 7) 40.4 41.5 Selling and administrative 33.5 30.5 Receivable securitization fees and product development (Note 8) 3.7 3.6 ----------------- ----------------- 758.5 767.5 - ---------------------------------------------------------------------------------------------------------------------- Earnings before interest and taxes 59.1 52.8 - ---------------------------------------------------------------------------------------------------------------------- Interest expense 23.4 28.2 ----------------- ----------------- Earnings before taxes 35.7 24.6 Provision for taxes (13.8) (9.7) Minority interests (0.2) 0.5 Equity in earnings of affiliates (1.7) 0.3 ----------------- ----------------- Net earnings 20.0 15.7 Preferred dividends, net of tax (0.6) (0.7) - ---------------------------------------------------------------------------------------------------------------------- Earnings attributable to common shareholders $ 19.4 $ 15.0 - ---------------------------------------------------------------------------------------------------------------------- Earnings per common share (Note 10) $ 0.65 $ 0.50 ================= ================= Diluted earnings per share (Note 10) $ 0.62 $ 0.47 ================= ================= Cash dividends declared per common share $ 0.15 $ 0.15 ================= =================
See accompanying notes to unaudited condensed consolidated financial statements. Ball Corporation and Subsidiaries UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions)
April 2, 2000 December 31, 1999 ----------------- ----------------- ASSETS Current assets Cash and temporary investments $ 42.5 $ 35.8 Accounts receivable, net 278.3 220.2 Inventories, net (Note 5) 639.9 565.9 Deferred taxes and prepaid expenses 77.1 73.9 ----------------- ----------------- Total current assets 1,037.8 895.8 Property, plant and equipment, net (Note 6) 1,093.3 1,121.2 Goodwill and other assets (Note 7) 695.0 715.1 ----------------- ----------------- Total Assets $ 2,826.1 $ 2,732.1 ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term debt and current portion of long-term debt (Note 8) $ 150.9 $ 104.0 Accounts payable 336.0 345.5 Salaries, wages and accrued employee benefits 78.6 114.7 Other current liabilities 95.6 105.9 ----------------- ----------------- Total current liabilities 661.1 670.1 Long-term debt (Note 8) 1,176.3 1,092.7 Employee benefit obligations, deferred income taxes and other noncurrent liabilities 266.1 258.7 ----------------- ----------------- Total liabilities 2,103.5 2,021.5 ----------------- ----------------- Contingencies (Note 11) Minority interests 19.1 19.7 ----------------- ----------------- Shareholders' equity (Note 9) Series B ESOP Convertible Preferred Stock 55.3 56.2 Unearned compensation - ESOP (20.5) (20.5) ----------------- ----------------- Preferred shareholder's equity 34.8 35.7 ----------------- ----------------- Common stock (36,309,782 shares issued - 2000; 35,849,778 shares issued - 1999) 428.5 413.0 Retained earnings 496.1 481.2 Accumulated other comprehensive loss (28.0) (26.7) Treasury stock, at cost (6,528,930 shares - 2000; 6,032,651 shares - 1999) (227.9) (212.3) ----------------- ----------------- Common shareholders' equity 668.7 655.2 ----------------- ----------------- Total shareholders' equity 703.5 690.9 ----------------- ----------------- Total Liabilities and Shareholders' Equity $ 2,826.1 $ 2,732.1 ================= =================
See accompanying notes to unaudited condensed consolidated financial statements. Ball Corporation and Subsidiaries UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in millions)
Three Months Ended --------------------------------------- April 2, 2000 April 4, 1999 ----------------- ----------------- Cash Flows from Operating Activities Net earnings $ 20.0 $ 15.7 Noncash charges to net earnings: Depreciation and amortization 40.4 41.5 Other, net (2.0) 15.0 Changes in working capital components (186.4) (181.5) ----------------- ----------------- Net cash used in operating activities (128.0) (109.3) ----------------- ----------------- Cash Flows from Investing Activities Additions to property, plant and equipment (23.5) (21.5) Incentive loan receipts and other, net 34.4 3.2 ----------------- ----------------- Net cash provided by (used in) investing activities 10.9 (18.3) ----------------- ----------------- Cash Flows from Financing Activities Long-term borrowings 110.5 84.0 Repayments of long-term borrowings (23.1) (17.5) Change in short-term borrowings 43.3 76.0 Common and preferred dividends (4.5) (4.5) Proceeds from issuance of common stock under various employee and shareholder plans 15.2 7.0 Acquisitions of treasury stock (15.6) (8.8) Other, net (2.0) (0.5) ----------------- ----------------- Net cash provided by financing activities 123.8 135.7 ----------------- ----------------- Net Change in Cash and Temporary Investments 6.7 8.1 Cash and temporary investments - beginning of period 35.8 34.0 ----------------- ----------------- Cash and Temporary Investments - End of Period $ 42.5 $ 42.1 ================= =================
See accompanying notes to unaudited condensed consolidated financial statements. Ball Corporation and Subsidiaries April 2, 2000 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. General The accompanying condensed consolidated financial statements include the accounts of Ball Corporation and its controlled affiliates in which it holds a majority equity position (collectively, Ball or the Company) and have been prepared by the Company without audit. Certain information and footnote disclosures, including significant accounting policies, normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Future events could affect these estimates. However, the Company believes that the financial statements reflect all adjustments which are of a normal recurring nature and are necessary for a fair statement of the results for the interim period. 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 segment. It is suggested that these unaudited condensed consolidated financial statements and accompanying notes be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest annual report. Certain prior-year amounts have been reclassified in order to conform with the current-year presentation. 2. New Accounting Pronouncements SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," essentially requires all derivatives to be recorded on the balance sheet at fair value and establishes new accounting practices for hedge instruments. In June 1999 SFAS No. 137 was issued to defer the effective date of SFAS No. 133 by one year. As a result, SFAS No. 133 will not be effective for Ball until 2001. The effect, if any, of adopting this standard has not yet been determined. FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation--an Interpretation of Accounting Principles Board Opinion No. 25," clarifies certain issues related to the accounting for stock compensation and is effective for Ball as of July 1, 2000. The effect, if any, of adopting this standard has not yet been determined. 3. Business Segment Information Ball's operations are organized along its product lines in two segments - the packaging segment and the aerospace and technologies segment. The accounting policies of the segments are the same as those in the condensed consolidated financial statements. The packaging segment includes the lines of businesses that manufacture metal and PET (polyethylene terephthalate) containers, primarily for use in beverage and food packaging. The Company's consolidated packaging operations are located in and serve North America (the U.S. and Canada) and Asia, primarily the People's Republic of China (PRC). Ball also has investments, which are accounted for under the equity method, in packaging companies largely in the PRC, Brazil and Thailand. The aerospace and technologies segment includes civil space systems, defense systems, commercial space operations, commercial products and technologies, systems engineering services, advanced antenna and video systems and products and technology.
Summary of Business by Segment Three Months Ended --------------------------------------- April 2, 2000 April 4, 1999 ($ in millions) ----------------- ----------------- Net Sales Packaging $ 730.1 $ 724.8 Aerospace and technologies 87.5 95.5 ----------------- ----------------- Consolidated net sales $ 817.6 $ 820.3 ================= ================= Operating Earnings Packaging $ 59.2 $ 50.8 Aerospace and technologies 5.4 6.2 ----------------- ----------------- Segment earnings before interest and taxes 64.6 57.0 Corporate undistributed expenses, net (5.5) (4.2) ----------------- ----------------- Earnings before interest and taxes 59.1 52.8 Interest expense (23.4) (28.2) Provision for taxes on income (13.8) (9.7) Minority interests (0.2) 0.5 Equity in earnings of affiliates (1.7) 0.3 ----------------- ----------------- Consolidated net earnings $ 20.0 $ 15.7 ================= ================= April 2, 2000 December 31, 1999 ----------------- ----------------- Net Investment Packaging $ 1,339.7 $ 1,319.7 Aerospace and technologies 165.5 161.6 ----------------- ----------------- Segment net investment 1,505.2 1,481.3 Consolidating eliminations and other (801.7) (790.4) ----------------- ----------------- Consolidated net investment $ 703.5 $ 690.9 ================= =================
4. Acquisitions and Plant Closures On August 10, 1998, Ball acquired substantially all the assets and assumed certain liabilities of the North American beverage can manufacturing business of Reynolds Metals Company (Acquisition). In connection with the Acquisition, the Company provided $51.3 million in the opening balance sheet for the costs of integrating the acquired business, which included the closure of a headquarters facility and three plants. The $51.3 million included $22.8 million which was transferred to pension and other postretirement benefit liability accounts. The plants and certain equipment are for sale. Employees of the closed facilities, primarily comprised of manufacturing and support personnel, have been terminated. The carrying value of the fixed assets held for sale was approximately $21.5 million at April 2, 2000. Subsequent increases in actual costs, if any, will be included in current-period earnings, and decreases, if any, will result in a further reduction of goodwill. The following table summarizes the first quarter activity related to the remaining integration costs associated with the Acquisition:
($ in millions) Employee Other Exit Severance Costs Total ------------- ------------- ------------- Balance at December 31, 1999 $ 12.8 $ 2.2 $ 15.0 Payments made (1.8) (0.3) (2.1) Reclassification of prior-period payments - 1.6 1.6 ------------- ------------- ------------- Balance at April 2, 2000 $ 11.0 $ 3.5 $ 14.5 ============= ============= =============
During the last quarter of 1998, the Company announced the closure of two of its plants located in the PRC and removed from service manufacturing equipment at a third plant. The actions resulted in a $56.2 million, largely noncash, charge in 1998, primarily for the write-down to net realizable value of fixed assets, goodwill and other assets. The carrying value of the remaining fixed assets held for sale was $10 million at April 2, 2000. 5. Inventories ($ in millions) April 2, 2000 December 31, 1999 ----------------- ----------------- Raw materials and supplies $ 218.6 $ 238.0 Work in process and finished goods 421.3 327.9 ----------------- ----------------- $ 639.9 $ 565.9 ================= ================= 6. Property, Plant and Equipment ($ in millions) April 2, 2000 December 31, 1999 ----------------- ----------------- Land $ 62.1 $ 61.6 Buildings 432.5 433.6 Machinery and equipment 1,444.6 1,439.4 ----------------- ----------------- 1,939.2 1,934.6 Accumulated depreciation (845.9) (813.4) ----------------- ----------------- $ 1,093.3 $ 1,121.2 ================= ================= Depreciation expense amounted to $36.1 million and $35.5 million for the three-month periods ended April 2, 2000, and April 4, 1999, respectively. 7. Goodwill and Other Assets ($ in millions) April 2, 2000 December 31, 1999 ----------------- ----------------- Goodwill $ 464.3 $ 482.9 Investments in affiliates 78.6 81.3 Other 152.1 150.9 ----------------- ----------------- $ 695.0 $ 715.1 ================= ================= Goodwill is net of accumulated amortization of $46.1 million at April 2, 2000 (including the reclassification of prior-year amortization), and $41.9 million at December 31, 1999. Total amortization expense amounted to $4.3 million and $6 million for the three-month periods ended April 2, 2000, and April 4, 1999, respectively, of which $3.2 million and $3.5 million related to the amortization of goodwill. 8. Debt and Guarantees of Subsidiaries Debt includes $300 million of 7.75% Senior Notes due in 2006, $250 million of 8.25% Senior Subordinated Notes due in 2008 and borrowings under a Senior Credit Facility, which bears interest at variable rates. At April 2, 2000, approximately $452 million was available under the revolving credit facility portion of the Senior Credit Facility. The Senior Notes, Senior Subordinated Notes and Senior Credit Facility agreements are guaranteed on a full, unconditional, and joint and several basis by certain of the Company's domestic wholly owned subsidiaries and contain certain covenants and restrictions including, among other things, limits on the incurrence of additional indebtedness and increases in dividends. Exhibit 20.1 contains condensed, consolidating financial information for the Company, segregating the guarantor subsidiaries and non-guarantor subsidiaries. Separate financial statements for the guarantor subsidiaries and the non-guarantor subsidiaries are not presented because management has determined that such financial statements would not be material to investors. A receivables sales agreement provides for the ongoing, revolving sale of a designated pool of trade accounts receivable of Ball's U.S. packaging operations, up to $125 million. Net funds received from the sale of the accounts receivable totaled $122.5 million and $119.5 million at April 2, 2000, and April 4, 1999, respectively. Fees incurred in connection with the sale of accounts receivable, which are included in other expenses, totaled $2 million and $1.7 million for the first three months of 2000 and 1999, respectively. The Company was not in default of any loan agreement at April 2, 2000, and has met all payment obligations. Latapack-Ball Embalagens Ltda. (Latapack-Ball), the Company's 50 percent-owned equity affiliate in Brazil, was in noncompliance with certain financial provisions, including current and debt-to-equity ratios, under a fixed-term loan agreement of which $44 million was outstanding at the quarter end. Latapack-Ball has received waivers from the lender in respect of the noncompliance covering the periods prior to January 1, 2000, and has requested a further waiver in respect of the noncompliance during the first quarter. 9. Shareholders' Equity The composition of the accumulated other comprehensive loss at April 2, 2000, and December 31, 1999, is primarily the cumulative effect of foreign currency translation and additional minimum pension liability. Total comprehensive income was $18.7 million for the quarter ended April 2, 2000, and $17.7 million for the quarter ended April 4, 1999. The difference between net income and comprehensive income for each period represents the effects of foreign currency translation. Issued and outstanding shares of the Series B ESOP Convertible Preferred Stock were 1,503,177 shares at April 2, 2000, and 1,530,411 shares at December 31, 1999. 10. Earnings Per Share The following table provides additional information on the computation of earnings per share amounts:
($ in millions, except per share amounts) Three Months Ended --------------------------------------- April 2, 2000 April 4, 1999 ----------------- ----------------- Earnings per Common Share Net earnings $ 20.0 $ 15.7 Preferred dividends, net of tax (0.6) (0.7) ----------------- ----------------- Earnings attributable to common shareholders $ 19.4 $ 15.0 ================= ================= Weighted average common shares (000s) 29,707 30,240 ================= ================= Earnings per common share $ 0.65 $ 0.50 ================= ================= Diluted Earnings per Share Net earnings 20.0 15.7 Adjustment for deemed ESOP cash contribution in lieu of the ESOP Preferred dividend (0.5) (0.5) ----------------- ----------------- Earnings attributable to common shareholders $ 19.5 $ 15.2 ================= ================= Weighted average common shares (000s) 29,707 30,240 Effect of dilutive stock options 251 438 Common shares issuable upon conversion of the ESOP Preferred stock 1,762 1,833 ----------------- ----------------- Weighted average shares applicable to diluted earnings per share 31,720 32,511 ================= ================= Diluted earnings per share $ 0.62 $ 0.47 ================= =================
11. Contingencies The Company is subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive nature of the industries in which Ball participates, its operations in developing markets outside the U.S., changing commodity prices for the materials used in the manufacture of its products and changing capital markets. Where practicable, the Company attempts to reduce these risks and uncertainties through the establishment of risk management policies and procedures, including, at times, the use of certain derivative financial instruments. The U.S. government disputed the Company's claim to recoverability (by means of allocation to government contracts) of reimbursed costs associated with Ball's ESOP for fiscal years 1989 through 1995, as well as the corresponding prospective costs accrued after 1995. The government has not reimbursed the Company for certain disputed ESOP expenses incurred or accrued after 1995. A deferred payment agreement for the costs reimbursed through 1995 was entered into between the government and Ball. On October 10, 1995, the Company filed its complaint before the Armed Services Board of Contract Appeals (ASBCA) seeking final adjudication of this matter. Trial before the ASBCA was conducted in January 1997. Since that time, the Defense Contract Audit Agency (DCAA) has issued a Draft Audit Report disallowing a portion of the Company's ESOP costs for 1994 through 1997 on the asserted basis that the Company's dividend contributions to the ESOP do not constitute allowable deferred compensation. The Draft Audit Report takes the position that the disallowance is not covered by the pending decision by the ASBCA. However, more recently, the Corporate Administrative Contracting Officer assigned to Ball has resolved the DCAA's disallowance in Ball's favor and has incorporated this favorable resolution into a Memorandum of Agreement with Ball to close out cost claims for years 1994 through 1997. On April 3, 2000, the ASBCA, in a formal decision, sustained the Company's appeal. At this time, the U.S. government has not indicated whether or not it will appeal. The Company's information at this time does not indicate that this matter will have a material adverse effect upon the liquidity, results of operations or financial condition of the Company. From time to time, the Company is subject to routine litigation incident to its business. Additionally, the U.S. Environmental Protection Agency has designated Ball as a potentially responsible party, along with numerous other companies, for the cleanup of several hazardous waste sites. However, the Company's information at this time does not indicate that these matters will have a material adverse effect upon the liquidity, results of operations or financial condition of the Company. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes. Ball Corporation and subsidiaries are referred to collectively as "Ball" or the "Company" in the following discussion and analysis. RESULTS OF OPERATIONS Consolidated Sales and Earnings Ball's operations are organized along its product lines in two segments: (1) packaging and (2) aerospace and technologies. The following table summarizes the results of these two segments: ($ in millions) Three Months Ended --------------------------------------- April 2, 2000 April 4, 1999 ----------------- ----------------- Net Sales Packaging $ 730.1 $ 724.8 Aerospace and technologies 87.5 95.5 ----------------- ----------------- Consolidated net sales $ 817.6 $ 820.3 ================= ================= Earnings Before Interest and Taxes Packaging $ 59.2 $ 50.8 Aerospace and technologies 5.4 6.2 ----------------- ----------------- Consolidated segment earnings before interest and taxes $ 64.6 $ 57.0 ================= ================= Packaging Segment The packaging segment includes metal and PET (polyethylene terephthalate) container products, primarily used in beverage and food packaging. The Company's packaging operations are located in and serve North America (the U.S. and Canada) and Asia, primarily the People's Republic of China (PRC). While the Company closed three plants during the past year, largely eliminating the associated costs, packaging segment sales remained comparable to the first quarter of 1999. Segment operating margins for the first quarter increased to 8.1 percent from 7 percent, reflecting improved production efficiencies and cost reductions, including the effects of the consolidation actions taken in 1999 and 1998. North American metal beverage container sales, which represented approximately 70 percent of segment sales in the first quarter of 2000, decreased approximately 3 percent in comparison to the first quarter of 1999. The decrease was primarily due to lower soft drink container shipments. During the first quarter of 2000, Ball closed an acquired aluminum beverage can plant in Tampa and began operation of a new, high-speed production line in its other Tampa plant. North American metal food container sales, which comprised approximately 15 percent of segment sales in the first three months of 2000, increased approximately 14 percent over the same period in 1999. This increase was the result of volume gains with several customers. During the latter part of the first quarter of 2000, Ball and ConAgra Grocery Products Company (ConAgra), a unit of ConAgra, Inc., formed a joint venture company called Ball Western Can Company (Ball Western) to acquire and operate certain ConAgra can manufacturing assets in California. The transaction closed on April 10, 2000. Under a separate agreement, Ball will purchase certain ConAgra manufacturing equipment (for $4 million) which will be utilized at an existing Ball plant in Tennessee. Ball Western and Ball will supply metal food cans and ends under long-term agreements to ConAgra, whose requirements are currently about one billion cans and ends per year. Plastic container sales, which comprised approximately 8 percent of segment sales in the first quarter of 2000, increased approximately 6 percent compared to the same period in 1999. The increase was primarily due to the pass-through of increased resin prices, as unit volumes were comparable year over year. The sales mix continues to be weighted primarily toward carbonated soft drinks and water. Plastic beer containers, which utilize a multi-layer technology, are currently being tested by several of Ball's customers. Sales were up nearly 5 percent in China and Hong Kong. Operating earnings were considerably improved compared to 1999, due largely to prior-year plant consolidations which helped improve operating efficiencies. Aerospace and Technologies Segment The aerospace and technologies segment had lower sales and earnings in the first three months of 2000 as a result of a large program reaching completion, as well as delays in expected contract awards. Backlog at the end of the first quarter was approximately $337 million compared to $346 million at December 31, 1999, and $271 million at April 4, 1999. Year-to-year comparisons of backlog are not necessarily indicative of the trend of future operations. Selling and Administrative Expenses Higher consolidated selling and administrative expenses in 2000 compared to 1999 were due in large part to higher accruals for employee benefit costs. Interest and Taxes Consolidated interest expense for the first three months of 2000 was $23.4 million compared to $28.2 million for the same period in 1999. The decrease is primarily attributable to a lower level of average borrowings during the period, as well as increased capitalization of interest, largely in connection with the Tampa plant expansion, and a higher percentage of fixed, lower rate debt in 2000 compared to 1999, partially as a result of fixing the Company's floating debt using interest rate swaps. Ball's lower consolidated effective income tax rate for the first quarter of 2000, as compared to the same period in 1999, is primarily due to the favorable effects of an election late in the first quarter of 1999 to treat certain investments in Hong Kong and the PRC as partnerships for U.S. tax purposes. Results of Equity Affiliates and Minority Interests Equity earnings and losses in affiliates are largely attributable to those from investments in the PRC, Thailand and Brazil. Results were a loss of $1.7 million in the first quarter of 2000 compared to earnings of $0.3 million for the same period in 1999. Results in Brazil were hampered by the effects of a weakened Brazilian real and slower sales. Minority interests' share of income, which was $0.2 million for the first three months of 2000 compared to their share of losses of $0.5 million for the same period in 1999, reflected improved results. Other Items In connection with an acquisition in 1998, the Company provided $51.3 million in the opening balance sheet for the costs of integrating the acquired business, which included the closure of a headquarters facility and three plants. The employees have been terminated, and the plants and certain equipment are for sale. During the first quarter of 2000, the Company made payments of $2.1 million and reclassified prior-period payments totaling $1.6 million. The carrying value of the fixed assets held for sale was approximately $21.5 million at April 2, 2000. During the last quarter of 1998, the Company announced the closure of two of its plants located in the PRC and removed from service manufacturing equipment at a third plant. The actions resulted in a $56.2 million, largely noncash, charge in 1998, primarily for the write-down to net realizable value of fixed assets, goodwill and other assets. The carrying value of the remaining fixed assets held for sale was $10 million at April 2, 2000. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," essentially requires all derivatives to be recorded on the balance sheet at fair value and establishes new accounting practices for hedge instruments. In June 1999 SFAS No. 137 was issued to defer the effective date of SFAS No. 133 by one year. As a result, SFAS No. 133 will not be effective for Ball until 2001. The effect, if any, of adopting this standard has not yet been determined. FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an Interpretation of Accounting Principles Board Opinion No. 25," clarifies certain issues related to the accounting for stock compensation and is effective for Ball as of July 1, 2000. The effect, if any, of adopting this standard has not yet been determined. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The $128 million of cash used in operations for the first quarter reflected seasonally increased working capital partially offset by improved earnings. Capital spending of $23.5 million in the first quarter of 2000 was well below depreciation of $40.4 million. Capital spending is expected to be approximately $140 million for the year. Total debt increased to $1,327.2 million at April 2, 2000, compared to $1,196.7 million at December 31, 1999, primarily due to seasonal financing for the normal increase in accounts receivable and inventories. The debt-to-total capitalization ratio of 64.7 percent at April 2, 2000, rose from 62.7 percent at December 31, 1999. Debt includes $300 million of 7.75% Senior Notes due in 2006, $250 million of 8.25% Senior Subordinated Notes due in 2008 and borrowings under a Senior Credit Facility, which bear interest at variable rates. At April 2, 2000, approximately $452 million was available under the revolving credit facility portion of the Senior Credit Facility. The Senior Notes, Senior Subordinated Notes and Senior Credit Facility agreements are guaranteed on a full, unconditional, and joint and several basis by certain of the Company's domestic wholly owned subsidiaries and contain certain covenants and restrictions including, among other things, limits on the incurrence of additional indebtedness and increases in dividends. Exhibit 20.1 contains condensed, consolidating financial information for the Company, segregating the guarantor subsidiaries and non-guarantor subsidiaries. Separate financial statements for the guarantor subsidiaries and the non-guarantor subsidiaries are not presented because management has determined that such financial statements would not be material to investors. Ball Asia Pacific Holdings Limited and its consolidated subsidiaries had short-term uncommitted credit facilities of approximately $136 million at the end of the first quarter, of which $62 million was outstanding at April 2, 2000. A receivables sales agreement provides for the ongoing, revolving sale of a designated pool of trade accounts receivable of Ball's U.S. packaging operations, up to $125 million. Net funds received from the sale of the accounts receivable totaled $122.5 million and $119.5 million at April 2, 2000, and April 4, 1999, respectively. Fees incurred in connection with the sale of accounts receivable, which are included in other expenses, totaled $2 million and $1.7 million for the first three months of 2000 and 1999, respectively. The Company was not in default of any loan agreement at April 2, 2000, and has met all payment obligations. Latapack-Ball Embalagens Ltda. (Latapack-Ball), the Company's 50 percent-owned equity affiliate in Brazil, was in noncompliance with certain financial provisions, including current and debt-to-equity ratios, under a fixed-term loan agreement of which $44 million was outstanding at the quarter end. Latapack-Ball has received waivers from the lender in respect of the noncompliance covering the periods prior to January 1, 2000, and has requested a further waiver in respect of the noncompliance during the first quarter. CONTINGENCIES The Company is subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive nature of the industries in which Ball participates, its operations in developing markets outside the U.S., changing commodity prices for the materials used in the manufacture of its products and changing capital markets. Where practicable, the Company attempts to reduce these risks and uncertainties through the establishment of risk management policies and procedures, including, at times, the use of certain derivative financial instruments. The U.S. government disputed the Company's claim to recoverability (by means of allocation to government contracts) of reimbursed costs associated with Ball's ESOP for fiscal years 1989 through 1995, as well as the corresponding prospective costs accrued after 1995. The government has not reimbursed the Company for certain disputed ESOP expenses incurred or accrued after 1995. A deferred payment agreement for the costs reimbursed through 1995 was entered into between the government and Ball. On October 10, 1995, the Company filed its complaint before the Armed Services Board of Contract Appeals (ASBCA) seeking final adjudication of this matter. Trial before the ASBCA was conducted in January 1997. Since that time, the Defense Contract Audit Agency (DCAA) has issued a Draft Audit Report disallowing a portion of the Company's ESOP costs for 1994 through 1997 on the asserted basis that the Company's dividend contributions to the ESOP do not constitute allowable deferred compensation. The Draft Audit Report takes the position that the disallowance is not covered by the pending decision by the ASBCA. However, more recently, the Corporate Administrative Contracting Officer assigned to Ball has resolved the DCAA's disallowance in Ball's favor and has incorporated this favorable resolution into a Memorandum of Agreement with Ball to close out cost claims for years 1994 through 1997. On April 3, 2000, the ASBCA, in a formal decision, sustained the Company's appeal. At this time, the U.S. government has not indicated whether or not it will appeal. The Company's information at this time does not indicate that this matter will have a material adverse effect upon the liquidity, results of operations or financial condition of the Company. From time to time, the Company is subject to routine litigation incident to its business. Additionally, the U.S. Environmental Protection Agency has designated Ball as a potentially responsible party, along with numerous other companies, for the cleanup of several hazardous waste sites. However, the Company's information at this time does not indicate that these matters will have a material adverse effect upon the liquidity, results of operations or financial condition of the Company. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In the ordinary course of business, the Company employs established risk management policies and procedures to reduce its exposure to commodity price changes, changes in interest rates, fluctuations in foreign currencies and the Company's common share repurchase program. The Company's objective in managing its exposure to commodity price changes is to limit the impact of raw material price changes on earnings and cash flow through arrangements with customers and suppliers and, at times, through the use of certain derivative instruments, such as options and forward contracts, designated as hedges. The Company's objective in managing its exposure to interest rate changes is to limit the impact of interest rate changes on earnings and cash flow and to lower its overall borrowing costs. To achieve these objectives, the Company primarily uses interest rate swaps, collars and options to manage the Company's mix of floating and fixed-rate debt between a minimum and maximum percentage, which is set by policy. The Company's objective in managing its exposure to foreign currency fluctuations is to protect foreign cash flow and reduce earnings volatility associated with foreign exchange rate changes. The Company primarily manages the commodity price risk in connection with market price fluctuations of aluminum by entering into customer sales contracts for cans and ends which include aluminum-based pricing terms which consider price fluctuations under its commercial supply contracts for aluminum purchases. The terms include "band" pricing where there is an upper and lower limit, a fixed price or only an upper limit to the aluminum component pricing. This matched pricing affects substantially all of the Company's North American metal beverage packaging net sales. The Company also, at times, uses certain derivative instruments such as option and forward contracts to hedge commodity price risk. Unrealized losses on foreign exchange forward contracts are recorded in the balance sheet as other current liabilities. Realized gains/losses from hedges are classified in the income statement consistent with the accounting treatment of the item being hedged. The Company accrues the differential for interest rate swaps to be paid or received under these agreements as adjustments to interest expense over the lives of the swaps. Gains and losses upon the early termination of swap agreements are deferred in long-term liabilities and amortized as an adjustment to interest expense over the remaining term of the agreement. The Company has estimated its market risk exposure using sensitivity analysis. Market risk exposure has been defined as the changes in fair value of a derivative instrument assuming a hypothetical 10 percent adverse change in market prices or rates. The results of the sensitivity analyses as of April 2, 2000, did not differ materially from the amounts reported as of December 31, 1999. Actual changes in market prices or rates may differ from hypothetical changes. FORWARD-LOOKING STATEMENTS The Company has made or implied certain forward-looking statements in this report. These forward-looking statements represent the Company's goals and are based on certain assumptions and estimates regarding the worldwide economy, specific industry technological innovations, industry competitive activity, interest rates, capital expenditures, pricing, currency movements, product introductions and the development of certain domestic and international markets. Some factors that could cause the Company's actual results or outcomes to differ materially from those discussed in the forward-looking statements include, but are not limited to, fluctuation in customer growth and demand; insufficient production capacity; the weather; fuel costs and availability; shortages in and pricing of raw materials; competition in pricing and the possible decrease in, or loss of, sales resulting therefrom; loss of profitability and plant closures; regulatory action; federal and state legislation; interest rates; labor strikes; boycotts; litigation involving antitrust, intellectual property, consumer and other issues; maintenance and capital expenditures; local economic conditions; the authorization and control over the availability of government contracts and the nature and continuation of those contracts and related services provided thereunder; the success or lack of success of satellite launches and the businesses and governments associated with the launches; international business risks such as the devaluation of international currencies; the ability to obtain adequate credit resources for foreseeable financing requirements of the Company's businesses and to satisfy the resulting credit obligations; the inability of the Company's customers and vendors to achieve year 2000 readiness; and unsuccessful acquisitions, joint ventures or divestitures. If the Company's assumptions and estimates are incorrect, or if it is unable to achieve its goals, then the Company's actual performance could vary materially from those goals expressed or implied in the forward-looking statements. PART II. OTHER INFORMATION Item 1. Legal Proceedings On March 3, 2000, Pechiney Plastic Packaging, Inc., and Pechiney Emballage Flexible Europe (Pechiney) filed a lawsuit against Kortec, Inc.; Crown Cork & Seal Company, Inc.; Crown Cork & Seal Technologies Corporation and Ball Plastic Container Corp. in the U.S. District Court for the District of Massachusetts. Pechiney alleges that the defendants have infringed two of its patents with respect to methods and apparatus for injection molding and injection blow molding multi-layer plastic containers. Pechiney seeks an injunction and damages. Kortec is a supplier to Ball Plastic Container Corp. of equipment for use in manufacturing multi-layered plastic bottles. Kortec has agreed to defend Ball Plastic Container Corp. against the claims for infringement of patents arising out of the purchase and use of such equipment purchased from Kortec and has assumed the defense of the action. Based upon the information, or lack of information available at the present time, the Company is unable to express an opinion as to the actual exposure of the Company; however, the Company does not believe that this matter will have a material adverse affect upon the liquidity, results of operations or financial condition of the Company. Item 2. Changes in Securities There were no events required to be reported under Item 2 for the quarter ending April 2, 2000. Item 3. Defaults Upon Senior Securities There were no events required to be reported under Item 3 for the quarter ending April 2, 2000. Item 4. Submission of Matters to a Vote of Security Holders There were no events required to be reported under Item 5 for the quarter ending April 2, 2000. Item 5. Other Information There were no events required to be reported under Item 5 for the quarter ending April 2, 2000. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 20.1 Subsidiary Guarantees of Debt 27.1 Financial Data Schedule 99.1 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995, as amended. (b) Reports on Form 8-K The registrant filed or amended reports on Form 8-K as follows: A Current Report on Form 8-K was filed March 6, 2000, reporting under Item 5 of Regulation S-X an announcement by Ball Corporation and ConAgra Grocery Products Company (a unit of ConAgra, Inc.) to form a joint venture company called Ball Western Can Company. The new joint venture company and Ball Corporation will supply metal food cans and ends under long-term agreements to ConAgra Grocery Products. 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/ Raymond J. Seabrook ------------------------------ Raymond J. Seabrook Senior Vice President and Chief Financial Officer Date: May 17, 2000 Ball Corporation and Subsidiaries QUARTERLY REPORT ON FORM 10-Q April 2, 2000 EXHIBIT INDEX Description Exhibit - -------------------------------------------------- --------- Subsidiary Guarantees of Debt (Filed herewith.) EX-20.1 Financial Data Schedule (Filed herewith.) EX-27.1 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995, as amended. (Filed herewith.) EX-99.1 EX-20.1 2 EXHIBIT 20.1 EXHIBIT 20.1 Subsidiary Guarantees of Debt The Company's Senior Notes, Senior Subordinated Notes and Senior Credit Facility agreements are guaranteed on a full, unconditional, and joint and several basis by certain of the Company's wholly owned domestic subsidiaries. The following is condensed, consolidating financial information for the Company, segregating the guarantor subsidiaries and non-guarantor subsidiaries, as of April 2, 2000, and December 31, 1999, and for the three-month periods ended April 2, 2000, and April 4, 1999 (in millions of dollars). Certain prior-year amounts have been reclassified in order to conform with the current-year presentation. Separate financial statements for the guarantor subsidiaries and the non-guarantor subsidiaries are not presented because management has determined that such financial statements would not be material to investors.
CONSOLIDATED BALANCE SHEET --------------------------------------------------------------------------------------------- April 2, 2000 --------------------------------------------------------------------------------------------- ($ in millions) Ball Guarantor Non-Guarantor Eliminating Consolidated Corporation Subsidiaries Subsidiaries Adjustments Total ----------------- ----------------- ----------------- ----------------- ----------------- ASSETS Current assets Cash and temporary investments $ 14.8 $ 0.1 $ 27.6 $ - $ 42.5 Accounts receivable, net 1.2 211.0 66.1 - 278.3 Inventories, net - 509.6 130.3 - 639.9 Deferred income tax benefits and prepaid expenses 134.7 102.0 11.6 (171.2) 77.1 ----------------- ----------------- ----------------- ----------------- ----------------- Total current assets 150.7 822.7 235.6 (171.2) 1,037.8 ----------------- ----------------- ----------------- ----------------- ----------------- Property, plant and equipment, at cost 25.3 1,529.2 384.7 - 1,939.2 Accumulated depreciation (13.9) (723.6) (108.4) - (845.9) ----------------- ----------------- ----------------- ----------------- ----------------- 11.4 805.6 276.3 - 1,093.3 ----------------- ----------------- ----------------- ----------------- ----------------- Investment in subsidiaries 1,435.1 339.6 9.8 (1,784.5) - Investment in affiliates 9.0 2.2 67.4 - 78.6 Goodwill, net - 347.8 116.5 - 464.3 Other assets 89.1 38.2 24.8 - 152.1 ----------------- ----------------- ----------------- ----------------- ----------------- Total Assets $ 1,695.3 $ 2,356.1 $ 730.4 $ (1,955.7) $ 2,826.1 ================= ================= ================= ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term debt and current portion of long-term debt $ 75.5 $ - $ 75.4 $ - $ 150.9 Accounts payable 15.6 250.0 70.4 - 336.0 Salaries and wages 9.4 62.7 6.5 - 78.6 Other current liabilities 26.9 202.7 37.2 (171.2) 95.6 ----------------- ----------------- ----------------- ----------------- ----------------- Total current liabilities 127.4 515.4 189.5 (171.2) 661.1 Long-term debt 1,166.2 10.1 - - 1,176.3 Intercompany borrowings (410.5) 317.5 93.0 - - Employee benefit obligations, deferred income taxes and other 108.7 101.0 56.4 - 266.1 ----------------- ----------------- ----------------- ----------------- ----------------- Total liabilities 991.8 944.0 338.9 (171.2) 2,103.5 ----------------- ----------------- ----------------- ----------------- ----------------- Contingencies Minority interests - - 19.1 - 19.1 ----------------- ----------------- ----------------- ----------------- ----------------- Shareholders' Equity: Series B ESOP Convertible Preferred Stock 55.3 - - - 55.3 Convertible preferred stock - - 179.6 (179.6) - Unearned compensation - ESOP (20.5) - - - (20.5) ----------------- ----------------- ----------------- ----------------- ----------------- Preferred shareholders' equity 34.8 - 179.6 (179.6) 34.8 ----------------- ----------------- ----------------- ----------------- ----------------- Common stock 428.5 1,155.7 240.3 (1,396.0) 428.5 Retained earnings (deficit) 496.1 257.8 (24.0) (233.8) 496.1 Accumulated other comprehensive loss (28.0) (1.4) (23.5) 24.9 (28.0) Treasury stock, at cost (227.9) - - - (227.9) ----------------- ----------------- ----------------- ----------------- ----------------- Common shareholders' equity 668.7 1,412.1 192.8 (1,604.9) 668.7 ----------------- ----------------- ----------------- ----------------- ----------------- Total shareholders' equity 703.5 1,412.1 372.4 (1,784.5) 703.5 ----------------- ----------------- ----------------- ----------------- ----------------- Total Liabilities and Shareholders' Equity $ 1,695.3 $ 2,356.1 $ 730.4 $ (1,955.7) $ 2,826.1 ================= ================= ================= ================= =================
CONSOLIDATED BALANCE SHEET --------------------------------------------------------------------------------------------- December 31, 1999 --------------------------------------------------------------------------------------------- ($ in millions) Ball Guarantor Non-Guarantor Eliminating Consolidated Corporation Subsidiaries Subsidiaries Adjustments Total ----------------- ----------------- ----------------- ----------------- ----------------- ASSETS Current assets Cash and temporary investments $ 13.6 $ 0.2 $ 22.0 $ - $ 35.8 Accounts receivable, net 4.1 151.7 64.4 - 220.2 Inventories, net - 452.1 113.8 - 565.9 Deferred income tax benefits and prepaid expenses 129.2 94.8 13.0 (163.1) 73.9 ----------------- ----------------- ----------------- ----------------- ----------------- Total current assets 146.9 698.8 213.2 (163.1) 895.8 ----------------- ----------------- ----------------- ----------------- ----------------- Property, plant and equipment, at cost 25.4 1,525.5 383.7 - 1,934.6 Accumulated depreciation (13.5) (697.5) (102.4) - (813.4) ----------------- ----------------- ----------------- ----------------- ----------------- 11.9 828.0 281.3 - 1,121.2 ----------------- ----------------- ----------------- ----------------- ----------------- Investment in subsidiaries 1,412.4 337.7 10.3 (1,760.4) - Investment in affiliates 9.0 2.3 70.0 - 81.3 Goodwill, net - 365.2 117.7 - 482.9 Other assets 88.9 37.5 24.5 - 150.9 ----------------- ----------------- ----------------- ----------------- ----------------- Total Assets $ 1,669.1 $ 2,269.5 $ 717.0 $ (1,923.5) $ 2,732.1 ================= ================= ================= ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term debt and current portion of long-term debt $ 46.8 $ - $ 57.2 $ - $ 104.0 Accounts payable 4.5 285.3 55.7 - 345.5 Salaries and wages 7.3 99.1 8.3 - 114.7 Other current liabilities 35.0 193.3 40.7 (163.1) 105.9 ----------------- ----------------- ----------------- ----------------- ----------------- Total current liabilities 93.6 577.7 161.9 (163.1) 670.1 Long-term debt 1,068.7 24.0 - - 1,092.7 Intercompany borrowings (302.6) 199.1 103.5 - - Employee benefit obligations, deferred income taxes and other 118.5 83.1 57.1 - 258.7 ----------------- ----------------- ----------------- ----------------- ----------------- Total liabilities 978.2 883.9 322.5 - 2,021.5 ----------------- ----------------- ----------------- ----------------- ----------------- Contingencies Minority interests - - 19.7 - 19.7 ----------------- ----------------- ----------------- ----------------- ----------------- Shareholders' Equity: Series B ESOP Convertible Preferred Stock 56.2 - - - 56.2 Convertible preferred stock - - 179.6 (179.6) - Unearned compensation - ESOP (20.5) - - - (20.5) ----------------- ----------------- ----------------- ----------------- ----------------- Preferred shareholders' equity 35.7 - 179.6 (179.6) 35.7 ----------------- ----------------- ----------------- ----------------- ----------------- Common stock 413.0 1,155.7 240.9 (1,396.6) 413.0 Retained earnings (deficit) 481.2 231.2 (23.7) (207.5) 481.2 Accumulated other comprehensive loss (26.7) (1.3) (22.0) 23.3 (26.7) Treasury stock, at cost (212.3) - - - (212.3) ----------------- ----------------- ----------------- ----------------- ----------------- Common shareholders' equity 655.2 1,385.6 195.2 (1,580.8) 655.2 ----------------- ----------------- ----------------- ----------------- ----------------- Total shareholders' equity 690.9 1,385.6 374.8 (1,760.4) 690.9 ----------------- ----------------- ----------------- ----------------- ----------------- Total Liabilities and Shareholders' Equity $ 1,669.1 $ 2,269.5 $ 717.0 $ (1,923.5) $ 2,732.1 ================= ================= ================= ================= =================
CONSOLIDATED STATEMENT OF EARNINGS --------------------------------------------------------------------------------------------- For the Three Months Ended April 2, 2000 --------------------------------------------------------------------------------------------- ($ in millions) Ball Guarantor Non-Guarantor Eliminating Consolidated Corporation Subsidiaries Subsidiaries Adjustments Total ----------------- ----------------- ----------------- ----------------- ----------------- Net sales $ - $ 769.1 $ 99.6 $ (51.1) $ 817.6 Costs and expenses Cost of sales (excluding depreciation and amortization) - 651.0 81.0 (51.1) 680.9 Depreciation and amortization 0.5 32.3 7.6 - 40.4 Selling and administrative 3.1 23.1 7.3 - 33.5 Receivable securitization fees and product development - 3.7 - - 3.7 Interest expense 19.0 3.4 1.0 - 23.4 Equity in earnings of subsidiaries (26.3) - - 26.3 - Corporate allocations (12.4) 12.4 - - - ----------------- ----------------- ----------------- ----------------- ----------------- (16.1) 725.9 96.9 (24.8) 781.9 ----------------- ----------------- ----------------- ----------------- ----------------- Earnings (loss) before taxes 16.1 43.2 2.7 (26.3) 35.7 Provision for taxes 4.0 (16.5) (1.3) - (13.8) Minority interests - - (0.2) - (0.2) Equity in earnings of affiliates (0.1) (0.1) (1.5) - (1.7) ----------------- ----------------- ----------------- ----------------- ----------------- Net earnings (loss) 20.0 26.6 (0.3) (26.3) 20.0 Preferred dividends, net of tax (0.6) - - - (0.6) ----------------- ----------------- ----------------- ----------------- ----------------- Earnings (loss) attributable to common shareholders $ 19.4 $ 26.6 $ (0.3) $ (26.3) $ 19.4 ================= ================= ================= ================= =================
CONSOLIDATED STATEMENT OF EARNINGS --------------------------------------------------------------------------------------------- For the Three Months Ended April 4, 1999 --------------------------------------------------------------------------------------------- ($ in millions) Ball Guarantor Non-Guarantor Eliminating Consolidated Corporation Subsidiaries Subsidiaries Adjustments Total ----------------- ----------------- ----------------- ----------------- ----------------- Net sales $ - $ 774.2 $ 94.9 $ (48.8) $ 820.3 Costs and expenses Cost of sales (excluding depreciation and amortization) - 661.4 79.3 (48.8) 691.9 Depreciation and amortization 0.8 32.6 8.1 - 41.5 Selling and administrative 1.6 23.2 5.7 - 30.5 Receivable securitization fees and product development - 3.6 - - 3.6 Interest expense 15.5 9.9 2.8 - 28.2 Equity in earnings of subsidiaries (16.3) - - 16.3 - Corporate allocations (12.6) 12.6 - - - ----------------- ----------------- ----------------- ----------------- ----------------- (11.0) 743.3 95.9 (32.5) 795.7 ----------------- ----------------- ----------------- ----------------- ----------------- Earnings (loss) before taxes 11.0 30.9 (1.0) (16.3) 24.6 Provision for taxes 4.4 (12.3) (1.8) - (9.7) Minority interests - - 0.5 - 0.5 Equity in earnings (losses) of 0.3 - - - 0.3 affiliates ----------------- ----------------- ----------------- ----------------- ----------------- Net earnings (loss) 15.0 18.6 (2.3) (16.3) 15.7 Preferred dividends, net of tax (0.7) - - - (0.7) ----------------- ----------------- ----------------- ----------------- ----------------- Earnings (loss) attributable to common shareholders $ 15.0 $ 18.6 $ (2.3) $ (16.3) $ 15.0 ================= ================= ================= ================= =================
CONSOLIDATED STATEMENT OF CASH FLOWS --------------------------------------------------------------------------------------------- For the Three Months Ended April 2, 2000 --------------------------------------------------------------------------------------------- ($ in millions) Ball Guarantor Non-Guarantor Eliminating Consolidated Corporation Subsidiaries Subsidiaries Adjustments Total ----------------- ----------------- ----------------- ----------------- ----------------- Cash Flows from Operating Activities Net earnings (loss) $ 20.0 $ 26.6 $ (0.3) $ (26.3) $ 20.0 Noncash charges to net earnings: Depreciation and amortization 0.5 32.3 7.6 - 40.4 Equity in earnings of subsidiaries (26.3) - - 26.3 - Other, net (3.4) 0.4 1.0 - (2.0) Changes in working capital components (6.5) (172.3) (7.6) - (186.4) ----------------- ----------------- ----------------- ----------------- ----------------- Net cash (used in) provided by operating activities (15.7) (113.0) 0.7 - (128.0) ----------------- ----------------- ----------------- ----------------- ----------------- Cash Flows from Investing Activities Additions to property, plant and equipment (0.2) (20.4) (2.9) - (23.5) Investments in and advances to affiliates, net (105.8) 116.3 (10.5) - - Other, net 2.5 30.9 1.0 - 34.4 ----------------- ----------------- ----------------- ----------------- ----------------- Net cash (used in) provided by investing activities (103.5) 126.8 (12.4) - 10.9 ----------------- ----------------- ----------------- ----------------- ----------------- Cash Flows from Financing Activities Long-term borrowings 110.5 - - - 110.5 Repayments of long-term borrowings (9.2) (13.9) - - (23.1) Change in short-term borrowings 25.0 - 18.3 - 43.3 Common and preferred dividends (4.5) - - - (4.5) Proceeds from issuance of common stock under various employee and shareholder plans 15.2 - - - 15.2 Acquisitions of treasury stock (15.6) - - - (15.6) Other, net (1.0) - (1.0) - (2.0) ----------------- ----------------- ----------------- ----------------- ----------------- Net cash provided by (used in) financing activities 120.4 (13.9) 17.3 - 123.8 ----------------- ----------------- ----------------- ----------------- ----------------- Net Change in Cash and Temporary Investments 1.2 (0.1) 5.6 - 6.7 Cash and temporary investments - beginning of period 13.6 0.2 22.0 - 35.8 ----------------- ----------------- ----------------- ----------------- ----------------- Cash and Temporary Investments - End of Period $ 14.8 $ 0.1 $ 27.6 $ - $ 42.5 ================= ================= ================= ================= =================
CONSOLIDATED STATEMENT OF CASH FLOWS --------------------------------------------------------------------------------------------- For the Three Months Ended April 4, 1999 --------------------------------------------------------------------------------------------- ($ in millions) Ball Guarantor Non-Guarantor Eliminating Consolidated Corporation Subsidiaries Subsidiaries Adjustments Total ----------------- ----------------- ----------------- ----------------- ----------------- Cash Flows from Operating Activities Net earnings (loss) $ 15.7 $ 18.6 $ (2.3) $ (16.3) $ 15.7 Noncash charges to net earnings: Depreciation and amortization 0.8 32.6 8.1 - 41.5 Equity earnings of subsidiaries (16.3) - - 16.3 - Other, net 2.3 12.3 0.4 - 15.0 Changes in working capital components (22.8) (143.6) (15.1) - (181.5) ----------------- ----------------- ----------------- ----------------- ----------------- Net cash provided by operating activities (20.3) (80.1) (8.9) - (109.3) ----------------- ----------------- ----------------- ----------------- ----------------- Cash Flows from Investing Activities Additions to property, plant and equipment (0.3) (14.5) (6.7) - (21.5) Investments in and advances to affiliates, net (133.0) 93.6 39.4 - - Other, net 3.7 1.0 (1.5) - 3.2 ----------------- ----------------- ----------------- ----------------- ----------------- Net cash (used in) provided by investing activities (129.6) 80.1 31.2 - (18.3) ----------------- ----------------- ----------------- ----------------- ----------------- Cash Flows from Financing Activities Long-term borrowings 110.0 - - - 110.0 Repayments of long-term borrowings (5.5) - (12.0) (17.5) Change in short-term borrowings 47.7 - 2.3 - 50.0 Common and preferred dividends (4.5) - - - (4.5) Proceeds from issuance of common stock under various employee and shareholder plans 7.0 - - - 7.0 Acquisitions of treasury stock (8.8) - - - (8.8) Other, net (0.5) - - - (0.5) ----------------- ----------------- ----------------- ----------------- ----------------- Net cash provided by (used in) financing activities 145.4 - (9.7) - 135.7 ----------------- ----------------- ----------------- ----------------- ----------------- Net Change in Cash and Temporary Investments (4.5) - 12.6 - 8.1 Cash and temporary investments - beginning of period 11.6 0.5 21.9 - 34.0 ----------------- ----------------- ----------------- ----------------- ----------------- Cash and Temporary Investments - End of Period $ 7.1 $ 0.5 $ 34.5 $ - $ 42.1 ================= ================= ================= ================= =================
EX-27.1 3 EXHIBIT 27.1
5 EXHIBIT 27.1 BALL CORPORATION FINANCIAL DATA SCHEDULE THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED APRIL 2, 2000, AND THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF APRIL 2, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-2000 APR-02-2000 42,500 0 278,300 0 639,900 1,037,800 1,939,200 (845,900) 2,826,100 661,100 1,176,300 428,500 0 34,800 240,200 2,826,100 817,600 817,600 715,000 715,000 0 0 23,400 35,700 13,800 20,000 0 0 0 20,000 0.65 0.62
EX-99.1 4 EXHIBIT 99.1 EXHIBIT 99.1 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the Reform Act), Ball is hereby filing cautionary statements identifying important factors that could cause Ball's actual results to differ materially from those projected in forward-looking statements of Ball. Forward-looking statements may be made in several different contexts; for example, in the Company's Annual Report and in annual and periodic communications with investors. Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements, and many of these statements are contained in Part I, Item 2, "Business." The Reform Act defines forward-looking statements as statements that express or imply an expectation or belief and contain a projection, plan or assumption with regard to, among other things, future revenues, income, earnings per share or capital structure. Such statements of future events or performance involve estimates, assumptions and uncertainties, and are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause Ball's actual results to differ materially from those contained in forward-looking statements made by or on behalf of Ball. Some important factors that could cause Ball's actual results or outcomes to differ materially from those discussed in forward-looking statements include, but are not limited to: o Fluctuation in customer growth and demand, including loss of major customers; manufacturing overcapacity; lack of productivity improvement; weather; regulatory action; federal, state and local law; interest rates; labor strikes and work stoppages; boycotts; litigation involving antitrust, intellectual property, consumer and other issues; maintenance and capital expenditures; capital availability; economic conditions and acts of war or catastrophic events. o Competition in pricing and the possible decrease in, or loss of, sales resulting therefrom; loss of profitability and plant closures. o The timing and extent of regulation or deregulation, competition in each line of business, product development and introductions and technology changes. o Ball's ability to have available sufficient production capacity in a timely manner. o Difficulties in obtaining raw materials, supplies, power and natural resources needed for the production of metal and plastic containers as well as telecommunications and aerospace products. o The pricing of raw materials, supplies, power and natural resources needed for the production of metal and plastic containers as well as telecommunications and aerospace products, pricing and ability to sell scrap associated with the production of metal containers and the effect of changes in the cost of warehousing the Company's products. o The ability to pass on to customers changes in raw material cost, particularly resin, steel and aluminum. o International business risks, particularly in foreign developing countries such as China and Brazil, including political and economic instability in foreign markets, restrictive trade practices of foreign governments, sudden policy changes by foreign governments, the imposition of duties, taxes or other government charges, foreign exchange rate risk, exchange controls and national and regional labor strikes or work stoppages. o The ability to obtain adequate credit resources for foreseeable financing requirements of the Company's businesses. o Undertaking unsuccessful acquisitions, joint ventures and divestitures and the integration activities associated with acquisitions and joint ventures. o The failure to make cash payments and satisfy other debt obligations. o The inability to achieve technological and product advances in the Company's businesses. o The inability of the Company's customers and vendors to achieve year 2000 readiness. o The success or lack of success of satellite launches and the businesses and governments associated with the launches. o The authorization, funding and availability of government contracts and the nature and continuation of those contracts and related services, as well as the cancellation or termination of government contracts for the U.S. government, other customers or other government contractors. o Fluctuation in the fiscal and monetary policy established by the U.S. government. -----END PRIVACY-ENHANCED MESSAGE-----