21. Quarterly Results of Operations (Unaudited)

The company’s quarters in both 2016 and 2015 ended on March 31, June 30, September 30 and December 31.


($ in millions, except per share amounts)	First Quarter		Second Quarter (c)		Third Quarter (c)		Fourth Quarter		Total

2016
Net sales	$	1,756	$	2,030	$	2,752	$	2,523	$	9,061
Gross profit (a)		275		367		372		406		1,420
Earnings before taxes	$	(209)	$	192	$	50	$	92	$	125
Net earnings (loss) attributable to Ball Corporation	$	(127)	$	307	$	31	$	52	$	263

Basic earnings (loss) per share (b):	$	(0.90)	$	2.16	$	0.18	$	0.30	$	1.66

Diluted earnings (loss) per share (b):	$	(0.90)	$	2.11	$	0.17	$	0.29	$	1.63

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2015
Net sales	$	1,923	$	2,172	$	2,097	$	1,805	$	7,997
Gross profit (a)		305		336		346		308		1,295
Earnings before taxes	$	28	$	238	$	17	$	63	$	346
Net earnings attributable to Ball Corporation	$	21	$	160	$	45	$	55	$	281

Basic earnings per share (b):	$	0.15	$	1.16	$	0.32	$	0.40	$	2.05

Diluted earnings per share (b):	$	0.15	$	1.13	$	0.32	$	0.39	$	1.99

(a)

Gross profit is shown after depreciation and amortization related to cost of sales of $345 million and $242 million for the years ended December 31, 2016 and 2015, respectively.

(b)

Earnings per share calculations for each quarter are based on the weighted average shares outstanding for that period. As a result, the sum of the quarterly amounts may not equal the annual earnings per share amount.

(c)

Amounts have been revised as disclosed below.

The unaudited quarterly results of operations included business consolidation and other activities that affected the company’s operating performance. Further details are included in Note 5.

Revision of the Second and Third Quarter 2016 Unaudited Condensed Consolidated Financial Statements

As described in Note 1, the company has elected to revise its previously issued second and third quarter unaudited condensed consolidated financial statements to facilitate comparisons among periods. The following are selected line items from our financial statements illustrating the effect of the error corrections thereon.


($ in millions, except per share amounts)	Quarter to date June 30, 2016

2016	As Previously Reported		Adjustments (a)		As revised
Business consolidation and other activities	$	27	$	1	$	28
Earnings before interest and taxes		278		1		279
Earnings before taxes		191		1		192
Tax (provision) benefit		146		(32)		114
Net earnings		338		(31)		307
Net earnings attributable to Ball Corporation		338		(31)		307

Basic earnings per share		2.38		(0.22)		2.16
Diluted earnings per share		2.33		(0.22)		2.11


($ in millions, except per share amounts)	Quarter to date September 30, 2016

2016	As Previously Reported		Adjustments (b)		As revised
Net sales	$	2,815	$	(63)	$	2,752
Cost of sales (excluding depreciation and amortization)		(2,338)		63		(2,275)
Business consolidation and other activities		(79)		16		(63)
Earnings before interest and taxes		116		16		132
Earnings before taxes		34		16		50
Tax (provision) benefit		(38)		15		(23)
Net earnings		3		31		34
Net earnings attributable to Ball Corporation		-		31		31

Basic earnings per share		-		0.18		0.18
Diluted earnings per share		-		0.17		0.17

(a)

The company revised the amounts originally reported for the second quarter of 2016 for the following items:

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

Recorded $14 million of additional net gain on the sale of the Divestment Business in business consolidation and other activities for assets received by the buyer that should have been included in the amount owed to the company and liabilities that should have been derecognized by the company at the date of sale, as well as other insignificant items.

Recorded $30 million of tax expense associated with using an incorrect tax basis for the gain on the sale of the Divestment Business and an additional $2 million of tax expense associated with the tax effects of the adjustments above.

(b)

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

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

Reversed the $13 million charge in business consolidation and other activities for payroll tax payments for compensation arrangements previously recorded as an out of period amount as discussed in (a) above.

Reversed the $3 million charge recorded to the gain on the sale of the Divestment Business in business consolidation and other activities that was originally recorded in the third quarter of 2016 that should have been recorded in the second quarter of 2016, as discussed in (a) above. The charge was to write-off an asset that was sold in the Divestment Business.

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