Item 1. FINANCIAL STATEMENTS

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,					​	Nine Months Ended September 30,
($ in millions, except per share amounts)	​	2021			2020			2021			2020
​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales	​	$	3,553	​	$	3,093	​	$	10,137	​	$	8,679
​	​	​	​	​	​	​	​	​	​	​	​	​
Costs and expenses	​	​	​	​	​	​	​	​	​	​	​	​
Cost of sales (excluding depreciation and amortization)	​	​	(2,851)	​	​	(2,430)	​	​	(8,104)	​	​	(6,875)
Depreciation and amortization	​	​	(175)	​	​	(160)	​	​	(515)	​	​	(499)
Selling, general and administrative	​	​	(148)	​	​	(121)	​	​	(471)	​	​	(363)
Business consolidation and other activities	​	​	(141)	​	​	(8)	​	​	(136)	​	​	(235)
​	​	​	(3,315)	​	​	(2,719)	​	​	(9,226)	​	​	(7,972)
​	​	​	​	​	​	​	​	​	​	​	​	​
Earnings before interest and taxes	​	​	238	​	​	374	​	​	911	​	​	707
​	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​	​	(68)	​	​	(68)	​	​	(201)	​	​	(206)
Debt refinancing and other costs	​	​	(1)	​	​	(1)	​	​	(1)	​	​	(41)
Total interest expense	​	​	(69)	​	​	(69)	​	​	(202)	​	​	(247)
​	​	​	​	​	​	​	​	​	​	​	​	​
Earnings before taxes	​	​	169	​	​	305	​	​	709	​	​	460
Tax (provision) benefit	​	​	2	​	​	(73)	​	​	(146)	​	​	(92)
Equity in results of affiliates, net of tax	​	​	8	​	​	8	​	​	18	​	​	(13)
Net earnings	​	​	179	​	​	240	​	​	581	​	​	355
Net (earnings) loss attributable to noncontrolling interests	​	​	—	​	​	1	​	​	—	​	​	3
Net earnings attributable to Ball Corporation	​	$	179	​	$	241	​	$	581	​	$	358
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
Earnings per share:	​	​	​	​	​	​	​	​	​	​	​	​
Basic	​	$	0.55	​	$	0.74	​	$	1.78	​	$	1.10
Diluted	​	$	0.54	​	$	0.72	​	$	1.75	​	$	1.08
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
Weighted average shares outstanding: (000s)	​	​	​	​	​	​	​	​	​	​	​	​
Basic	​	​	325,876	​	​	326,549	​	​	327,097	​	​	325,965
Diluted	​	​	331,595	​	​	332,654	​	​	332,938	​	​	332,152
​	​	​	​	​	​	​	​	​	​	​	​	​

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See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

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​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,					​	Nine Months Ended September 30,					​
($ in millions)		2021			2020			2021			2020		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings	​	$	179	​	$	240	​	$	581	​	$	355	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other comprehensive earnings (loss):	​	​	​	​	​	​	​	​	​	​	​	​	​
Currency translation adjustment	​	​	(17)	​	​	(130)	​	​	19	​	​	(292)	​
Pension and other postretirement benefits	​	​	193	​	​	9	​	​	242	​	​	(2)	​
Derivatives designated as hedges	​	​	16	​	​	44	​	​	122	​	​	63	​
Total other comprehensive earnings (loss)	​	​	192	​	​	(77)	​	​	383	​	​	(231)	​
Income tax (provision) benefit	​	​	(48)	​	​	(10)	​	​	(82)	​	​	(14)	​
Total other comprehensive earnings (loss), net of tax	​	​	144	​	​	(87)	​	​	301	​	​	(245)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total comprehensive earnings (loss)	​	​	323	​	​	153	​	​	882	​	​	110	​
Comprehensive (earnings) loss attributable to noncontrolling interests	​	​	—	​	​	1	​	​	—	​	​	3	​
Comprehensive earnings (loss) attributable to Ball Corporation	​	$	323	​	$	154	​	$	882	​	$	113	​

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See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)		2021			2020
​	​	​	​	​	​	​
Assets	​	​	​	​	​	​
Current assets	​	​	​	​	​	​
Cash and cash equivalents	​	$	1,446	​	$	1,366
Receivables, net	​	​	2,489	​	​	1,738
Inventories, net	​	​	1,638	​	​	1,353
Other current assets	​	​	344	​	​	218
Total current assets	​	​	5,917	​	​	4,675
Noncurrent assets	​	​	​	​	​	​
Property, plant and equipment, net	​	​	6,170	​	​	5,351
Goodwill	​	​	4,407	​	​	4,484
Intangible assets, net	​	​	1,732	​	​	1,883
Other assets	​	​	1,906	​	​	1,859
Total assets	​	$	20,132	​	$	18,252
​	​	​	​	​	​	​
Liabilities and Equity	​	​	​	​	​	​
Current liabilities	​	​	​	​	​	​
Short-term debt and current portion of long-term debt	​	$	762	​	$	17
Accounts payable	​	​	4,210	​	​	3,430
Accrued employee costs	​	​	364	​	​	347
Other current liabilities	​	​	795	​	​	650
Total current liabilities	​	​	6,131	​	​	4,444
Noncurrent liabilities	​	​	​	​	​	​
Long-term debt	​	​	7,755	​	​	7,783
Employee benefit obligations	​	​	1,322	​	​	1,613
Deferred taxes	​	​	673	​	​	634
Other liabilities	​	​	486	​	​	441
Total liabilities	​	​	16,367	​	​	14,915
​	​	​	​	​	​	​
Equity	​	​	​	​	​	​
Common stock (680,667,421 shares issued - 2021; 679,524,325 shares issued - 2020)	​	​	1,209	​	​	1,167
Retained earnings	​	​	6,611	​	​	6,192
Accumulated other comprehensive earnings (loss)	​	​	(653)	​	​	(954)
Treasury stock, at cost (355,842,472 shares - 2021; 351,938,709 shares - 2020)	​	​	(3,463)	​	​	(3,130)
Total Ball Corporation shareholders' equity	​	​	3,704	​	​	3,275
Noncontrolling interests	​	​	61	​	​	62
Total equity	​	​	3,765	​	​	3,337
Total liabilities and equity	​	$	20,132	​	$	18,252

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See accompanying notes to the unaudited condensed consolidated financial statements.

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BALL CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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​	​	​	​	​	​	​
​	​	Nine Months Ended September 30,
($ in millions)		2021			2020
​	​	​	​	​	​	​
Cash Flows from Operating Activities	​	​	​	​	​	​
Net earnings	​	$	581	​	$	355
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:	​	​	​	​	​	​
Depreciation and amortization	​	​	515	​	​	499
Business consolidation and other activities	​	​	136	​	​	235
Deferred tax provision (benefit)	​	​	34	​	​	(23)
Other, net	​	​	(142)	​	​	7
Changes in working capital components, net of dispositions	​	​	(248)	​	​	(728)
Cash provided by (used in) operating activities	​	​	876	​	​	345
Cash Flows from Investing Activities	​	​	​	​	​	​
Capital expenditures	​	​	(1,204)	​	​	(683)
Business acquisitions, net of cash acquired	​	​	—	​	​	(69)
Business dispositions, net of cash sold	​	​	111	​	​	(17)
Other, net	​	​	(11)	​	​	18
Cash provided by (used in) investing activities	​	​	(1,104)	​	​	(751)
Cash Flows from Financing Activities	​	​	​	​	​	​
Long-term borrowings	​	​	850	​	​	2,552
Repayments of long-term borrowings	​	​	(14)	​	​	(2,792)
Net change in short-term borrowings	​	​	10	​	​	(3)
Proceeds (payments) from issuances of common stock, net of shares used for taxes	​	​	31	​	​	(12)
Acquisitions of treasury stock	​	​	(356)	​	​	(57)
Common stock dividends	​	​	(164)	​	​	(149)
Other, net	​	​	(30)	​	​	(60)
Cash provided by (used in) financing activities	​	​	327	​	​	(521)
​	​	​	​	​	​	​
Effect of exchange rate changes on cash	​	​	(22)	​	​	(96)
​	​	​	​	​	​	​
Change in cash, cash equivalents and restricted cash	​	​	77	​	​	(1,023)
Cash, cash equivalents and restricted cash - beginning of period	​	​	1,381	​	​	1,806
Cash, cash equivalents and restricted cash - end of period	​	$	1,458	​	$	783

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See accompanying notes to the unaudited condensed consolidated financial statements.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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1**. Basis of Presentation**

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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.

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

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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.

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

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Risks and Uncertainties – Novel Coronavirus (COVID-19)

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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 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 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.

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	●	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, 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

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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.

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2. Accounting Pronouncements

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Recently Adopted Accounting Standards

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Income Tax Simplification

​

In December 2019, new guidance was issued to simplify the accounting for income taxes. Ball adopted this guidance and all related amendments on January 1, 2021, applying either the retrospective basis, the modified retrospective method, or the prospective method where appropriate. The adoption of this guidance had no impact on the company’s consolidated financial statements.

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3. Business Segment Information

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

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

​

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

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

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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.

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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.

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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

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Summary of Business by Segment

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​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,					​	Nine Months Ended September 30,					​
($ in millions)		2021			2020			2021			2020
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales	​	​	​	​	​	​	​	​	​	​	​	​	​
Beverage packaging, North and Central America	​	$	1,519	​	$	1,327	​	$	4,339	​	$	3,775	​
Beverage packaging, EMEA	​	​	937	​	​	809	​	​	2,639	​	​	2,177	​
Beverage packaging, South America	​	​	462	​	​	432	​	​	1,401	​	​	1,166	​
Aerospace	​	​	498	​	​	451	​	​	1,381	​	​	1,321	​
Reportable segment sales	​	​	3,416	​	​	3,019	​	​	9,760	​	​	8,439	​
Other	​	​	137	​	​	74	​	​	377	​	​	240	​
Net sales	​	$	3,553	​	$	3,093	​	$	10,137	​	$	8,679	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Comparable operating earnings	​	​	​	​	​	​	​	​	​	​	​	​	​
Beverage packaging, North and Central America	​	$	186	​	$	209	​	$	519	​	$	544	​
Beverage packaging, EMEA	​	​	125	​	​	117	​	​	349	​	​	248	​
Beverage packaging, South America	​	​	74	​	​	64	​	​	245	​	​	173	​
Aerospace	​	​	46	​	​	44	​	​	115	​	​	114	​
Reportable segment comparable operating earnings	​	​	431	​	​	434	​	​	1,228	​	​	1,079	​
Reconciling items	​	​	​	​	​	​	​	​	​	​	​	​	​
Other (a)	​	​	(14)	​	​	(15)	​	​	(67)	​	​	(26)	​
Business consolidation and other activities	​	​	(141)	​	​	(8)	​	​	(136)	​	​	(235)	​
Amortization of acquired intangibles	​	​	(38)	​	​	(37)	​	​	(114)	​	​	(111)	​
Earnings before interest and taxes	​	​	238	​	​	374	​	​	911	​	​	707	​
Interest expense	​	​	(68)	​	​	(68)	​	​	(201)	​	​	(206)	​
Debt refinancing and other costs	​	​	(1)	​	​	(1)	​	​	(1)	​	​	(41)	​
Total interest expense	​	​	(69)	​	​	(69)	​	​	(202)	​	​	(247)	​
Earnings before taxes	​	$	169	​	$	305	​	$	709	​	$	460	​

(a)	_Includes undistributed corporate expenses, net, of $_17 _million and $_13 million for the three months ended September 30, 2021 and 2020, respectively, and $71 million and $33 million for the nine months ended September 30, 2021 and 2020, respectively.

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

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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4. Acquisitions and Dispositions

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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.

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Brazil Aluminum Aerosol Packaging Business

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In 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. 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.

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5. Revenue from Contracts with Customers

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Disaggregation of Sales

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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.

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

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,								​	Nine Months Ended September 30,
($ in millions)	​	Point in Time		​	Over Time		​	Total			Point in Time		​	Over Time		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
2021	​	$	603	​	$	2,950	​	$	3,553	​	$	1,837	​	$	8,300	​	$	10,137
2020	​	​	604	​	​	2,489	​	​	3,093	​	​	1,638	​	​	7,041	​	​	8,679

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Contract Balances

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The company did not have any contract assets at either September 30, 2021, or December 31, 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.

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

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​	​	​	​	​	​	​
​	​	Contract		​	Contract
​	​	Liabilities		​	Liabilities
($ in millions)		(Current)		​	(Noncurrent)
​	​	​	​	​	​	​
Balance at December 31, 2020	​	$	108	​	$	29
Increase (decrease)	​	​	118	​	​	6
Balance at September 30, 2021	​	$	226	​	$	35
​	​	​	​	​	​	​

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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During the nine months ended September 30, 2021, total contract liabilities increased by $124 million, which is net of cash received of $503 million and amounts recognized as sales of $379 million, the majority of which related to current contract liabilities. The amount of sales recognized in the nine months ended September 30, 2021, which were included in the opening contract liabilities balances, was $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.

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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 nine months ended September 30, 2021 and 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.

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Transaction Price Allocated to Remaining Performance Obligations

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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.

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​	​	​	​	​	​	​	​	​	​
($ in millions)		Next Twelve Months		​	Thereafter		​	Total
​	​	​	​	​	​	​	​	​	​
Sales expected to be recognized on multi-year contracts in place as of September 30, 2021	​	$	1,398	​	$	1,290	​	$	2,688

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6. Business Consolidation and Other Activities

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

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,					​	Nine Months Ended September 30,
($ in millions)		2021			2020			2021			2020
​	​	​	​	​	​	​	​	​	​	​	​	​
Beverage packaging, North and Central America	​	$	—	​	$	—	​	$	(1)	​	$	(4)
Beverage packaging, EMEA	​	​	(2)	​	​	(2)	​	​	(5)	​	​	(8)
Beverage packaging, South America	​	​	(9)	​	​	3	​	​	11	​	​	(1)
Other	​	​	(130)	​	​	(9)	​	​	(141)	​	​	(222)
​	​	$	(141)	​	$	(8)	​	$	(136)	​	$	(235)

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2021

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Beverage Packaging, North and Central America

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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.

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Beverage Packaging, EMEA

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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

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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 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.

	●	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.

​

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.

​

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.

​

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 beverage packaging, other, operating segment. See Note 11 for further details.

	●	A non-cash charge of $23 million resulting from the 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.

	●	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 2019 in the 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.

​

​

7.	Supplemental Cash Flow Statement Disclosures

​

​	​	​	​	​	​	​
​	​	September 30,
($ in millions)	​	2021			2020
​	​	​	​		​	​
Beginning of period:	​	​	​		​	​
Cash and cash equivalents	​	$	1,366		$	1,798
Current restricted cash (included in other current assets)	​	​	15		​	8
Total cash, cash equivalents and restricted cash	​	$	1,381		$	1,806
​	​	​	​		​	​
End of period:	​	​	​		​	​
Cash and cash equivalents	​	$	1,446		$	771
Current restricted cash (included in other current assets)	​	​	12		​	12
Total cash, cash equivalents and restricted cash	​	$	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 been made. These noncash capital expenditures are excluded from the statement of cash flows. The PP&E acquired but not yet paid for amounted to approximately $550 million at September 30, 2021, and $409 million at December 31, 2020.

​

​

​

8. Receivables, Net

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)	​	2021			2020
​	​	​	​	​	​	​
Trade accounts receivable	​	$	1,282	​	$	825
Unbilled receivables	​	​	702	​	​	528
Less: Allowance for doubtful accounts	​	​	(8)	​	​	(9)
Net trade accounts receivable	​	​	1,976	​	​	1,344
Other receivables	​	​	513	​	​	394
​	​	$	2,489	​	$	1,738

​

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 $1.7 billion at September 30, 2021, and $1.6 billion at December 31, 2020. A total of $430 million and $232 million were available for sale under these programs as of September 30, 2021, and December 31, 2020, respectively.

​

Other receivables include income and sales tax receivables and other miscellaneous receivables.

​

9. Inventories, Net

​

​	​	​	​	​	​
​	September 30,		​	December 31,
($ in millions)	2021			2020
​	​	​	​	​	​
Raw materials and supplies	$	1,012	​	$	889
Work-in-process and finished goods	​	716	​	​	557
Less: Inventory reserves	​	(90)	​	​	(93)
​	$	1,638	​	$	1,353

​

​

10. Property, Plant and Equipment, Net

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)		2021			2020
​	​	​	​	​	​	​
Land	​	$	165	​	$	163
Buildings	​	​	1,944	​	​	1,653
Machinery and equipment	​	​	6,736	​	​	6,214
Construction-in-progress	​	​	1,130	​	​	883
​	​	​	9,975	​	​	8,913
Accumulated depreciation	​	​	(3,805)	​	​	(3,562)
​	​	$	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 nine months ended September 30, 2021 and 2020, respectively.

​

11. Goodwill

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
($ in millions)		**​ **Beverage Packaging, North & Central America			**​ **Beverage Packaging, EMEA			**​ **Beverage Packaging, South America			**​ **Aerospace			Other			Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at December 31, 2020	​	$	1,275	​	$	1,573	​	$	1,298	​	$	40	​	$	298	​	$	4,484
Effects of currency exchange	​	​	—	​	​	(64)	​	​	—	​	​	—	​	​	(13)	​	​	(77)
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, 2021 and December 31, 2020.

​

In the first quarter of 2020, Ball recorded a non-cash impairment charge of $62 million related to the goodwill associated with the 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 which was made in connection with a January 1, 2020 change in segment management and internal reporting structure.

​

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

​

12. Intangible Assets, Net

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)		2021			2020
​	​	​	​	​	​	​
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
​	​	$	1,732	​	$	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 nine months ended September 30, 2021 and 2020, respectively.

​

13. Other Assets

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)		2021			2020
​	​	​	​	​	​	​
Long-term pension assets	​	$	569	​	$	562
Investments in affiliates	​	​	182	​	​	321
Right-of-use operating lease assets	​	​	406	​	​	302
Long-term deferred tax assets	​	​	154	​	​	227
Other	​	​	595	​	​	447
​	​	$	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.

​

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

​

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

​

​	​	​	​	​	​	​	​
​	​	​	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,
($ in millions)		2021			2020
​	​	​	​	​	​	​
Senior Notes	​	​	​	​	​	​
5.00% due March 2022	​	$	736	​	$	748
4.00% due November 2023	​	​	1,000	​	​	1,000
4.375%, euro denominated, due December 2023	​	​	811	​	​	855
0.875%, euro denominated, due March 2024	​	​	869	​	​	916
5.25% due July 2025	​	​	1,000	​	​	1,000
4.875% due March 2026	​	​	750	​	​	750
1.50%, euro denominated, due March 2027	​	​	637	​	​	672
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	​	​	593
Finance lease obligations	​	​	10	​	​	12
Other (including debt issuance costs)	​	​	(63)	​	​	(60)
​	​	​	8,493	​	​	7,786
Less: Current portion	​	​	(738)	​	​	(3)
​	​	$	7,755	​	$	7,783

​

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

​

In the third quarter of 2021, Ball issued $850 million of 3.125% senior notes due 2031. In the fourth quarter of 2021, Ball redeemed the outstanding 5.00% senior notes due in March 2022 in the amount of $736 million.

​

The fair value of long-term debt was estimated to be $8.9 billion at September 30, 2021, and $8.3 billion at December 31, 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.

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. The company’s most restrictive debt covenant requires the company to maintain a leverage ratio (as defined) of no greater than 5.0 times as of September 30, 2021, which 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, 2021, and December 31, 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 non-U.S. rate differences and 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 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,
($ in millions)	​	2021			2020
​	​	​	​	​	​	​
Underfunded defined benefit pension liabilities	​	$	718	​	$	955
Less: Current portion	​	​	(22)	​	​	(24)
Long-term defined benefit pension liabilities	​	​	696	​	​	931
Long-term retiree medical liabilities	​	​	148	​	​	156
Deferred compensation plans	​	​	417	​	​	439
Other	​	​	61	​	​	87
​	​	$	1,322	​	$	1,613

​

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,
​	​	2021								​	2020
($ in millions)		U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Ball-sponsored plans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Service cost	​	$	20	​	$	4	​	$	24	​	$	16	​	$	4	​	$	20
Interest cost	​	​	12	​	​	9	​	​	21	​	​	18	​	​	14	​	​	32
Expected return on plan assets	​	​	(29)	​	​	(17)	​	​	(46)	​	​	(29)	​	​	(22)	​	​	(51)
Amortization of prior service cost	​	​	—	​	​	1	​	​	1	​	​	—	​	​	1	​	​	1
Recognized net actuarial loss	​	​	12	​	​	1	​	​	13	​	​	10	​	​	1	​	​	11
Settlement losses (a)	​	​	130	​	​	—	​	​	130	​	​	5	​	​	—	​	​	5
Total net periodic benefit cost	​	$	145	​	$	(2)	​	$	143	​	$	20	​	$	(2)	​	$	18

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended September 30,
​	​	2021								​	2020
($ in millions)		U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Ball-sponsored plans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Service cost	​	$	62	​	$	10	​	$	72	​	$	48	​	$	12	​	$	60
Interest cost	​	​	38	​	​	27	​	​	65	​	​	56	​	​	43	​	​	99
Expected return on plan assets	​	​	(91)	​	​	(49)	​	​	(140)	​	​	(91)	​	​	(64)	​	​	(155)
Amortization of prior service cost	​	​	1	​	​	2	​	​	3	​	​	1	​	​	2	​	​	3
Recognized net actuarial loss	​	​	36	​	​	4	​	​	40	​	​	30	​	​	4	​	​	34
Settlement losses (a)	​	​	130	​	​	—	​	​	130	​	​	102	​	​	—	​	​	102
Total net periodic benefit cost	​	$	176	​	$	(6)	​	$	170	​	$	146	​	$	(3)	​	$	143

(a)	Includes settlement losses related to the purchase of non-participating annuities and lump-sum payments which 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 nine months ended September 30, 2021 and 2020, respectively, is included in selling, general, and administrative (SG&A) 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, and such contributions are expected to be approximately $215 million for the full year of 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 certain of its U.S. pension benefit obligations that were transferred to an insurance company in the third quarter of 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 earnings.

​

​

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		​	​	​	​	​	​
​	​	Number of	​	​		​	Number of	​	​		​	Retained		​	Comprehensive		​	Noncontrolling		​	Total
($ in millions; share amounts in thousands)		Shares		Amount			Shares		Amount			Earnings			Earnings (Loss)			Interest			Equity
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at June 30, 2021	​	680,246	​	$	1,195	​	(353,475)	​	$	(3,255)	​	$	6,496	​	$	(797)	​	$	62	​	$	3,701
Net earnings	​	—	​	​	—	​	—	​	​	—	​	​	179	​	​	—	​	​	—	​	​	179
Other comprehensive earnings (loss), net of tax	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	144	​	​	—	​	​	144
Common dividends	​	—	​	​	—	​	—	​	​	—	​	​	(66)	​	​	—	​	​	—	​	​	(66)
Treasury stock purchases	​	—	​	​	—	​	(2,429)	​	​	(219)	​	​	—	​	​	—	​	​	—	​	​	(219)
Treasury shares reissued	​	—	​	​	—	​	62	​	​	9	​	​	—	​	​	—	​	​	—	​	​	9
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	​	421	​	​	14	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	14
Other activity	​	—	​	​	—	​	—	​	​	2	​	​	2	​	​	—	​	​	(1)	​	​	3
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 June 30, 2020	​	678,484	​	$	1,153	​	(352,102)	​	$	(3,145)	​	$	5,822	​	$	(1,068)	​	$	68	​	$	2,830
Net earnings	​	—	​	​	—	​	—	​	​	—	​	​	241	​	​	—	​	​	(1)	​	​	240
Other comprehensive earnings (loss), net of tax	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	(87)	​	​	—	​	​	(87)
Common dividends	​	—	​	​	—	​	—	​	​	—	​	​	(49)	​	​	—	​	​	—	​	​	(49)
Treasury shares reissued	​	—	​	​	—	​	80	​	​	7	​	​	—	​	​	—	​	​	—	​	​	7
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	​	517	​	​	11	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	11
Other activity	​	—	​	​	—	​	—	​	​	1	​	​	—	​	​	—	​	​	—	​	​	1
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		​	​	​	​	​	​
​	​	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, 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	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	301	​	​	—	​	​	301
Common dividends	​	—	​	​	—	​	—	​	​	—	​	​	(164)	​	​	—	​	​	—	​	​	(164)
Treasury stock purchases	​	—	​	​	—	​	(4,201)	​	​	(368)	​	​	—	​	​	—	​	​	—	​	​	(368)
Treasury shares reissued	​	—	​	​	—	​	298	​	​	25	​	​	—	​	​	—	​	​	—	​	​	25
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	​	1,143	​	​	42	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	42
Other activity	​	—	​	​	—	​	—	​	​	10	​	​	2	​	​	—	​	​	(1)	​	​	11
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

​

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

​

Accumulated Other Comprehensive Earnings (Loss)

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​
($ in millions)		**​ **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, 2020	​	​	(555)	​	​	(466)	​	​	67	​	​	(954)
Other comprehensive earnings (loss) before reclassifications	​	​	19	​	​	55	​	​	159	​	​	233
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.

​

​

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

​

19. Earnings and Dividends Per Share

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,					​	Nine Months Ended September 30,
($ in millions, except per share amounts; shares in thousands)		2021			2020			2021			2020
​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings attributable to Ball Corporation	​	$	179	​	$	241	​	$	581	​	$	358
​	​	​	​	​	​	​	​	​	​	​	​	​
Basic weighted average common shares	​	​	325,876	​	​	326,549	​	​	327,097	​	​	325,965
Effect of dilutive securities	​	​	5,719	​	​	6,105	​	​	5,841	​	​	6,187
Weighted average shares applicable to diluted earnings per share	​	​	331,595	​	​	332,654	​	​	332,938	​	​	332,152
​	​	​	​	​	​	​	​	​	​	​	​	​
Per basic share	​	$	0.55	​	$	0.74	​	$	1.78	​	$	1.10
Per diluted share	​	$	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 one million for the three and nine months ended September 30, 2021 and 2020.

​

The company declared and paid dividends of $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.

​

​

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 - The company manages commodity price risk in connection with market price fluctuations of aluminum through two different methods. First, the company enters into container sales contracts that include 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 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.

​

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.

​

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.

​

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

​

The following table provides additional information related to the 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 March 2022 and have a combined notional value of 2.6 million shares. Based on the current number of shares in the program, each $1 change in the company’s stock price 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 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, 2021, and December 31, 2020, the aggregate fair value of all derivative instruments with credit-risk-related contingent features was a net liability position of $7 million and $52 million, respectively, and no collateral was required to be posted.

​

Ball Corporation

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, 2021, and December 31, 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, 2021
($ in millions)	Balance Sheet Location		Derivatives Designated as Hedging Instruments			Derivatives not Designated as Hedging Instruments			Total
​	​	​	​	​	​	​	​	​	​	​
Assets:	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	188	​	$	—	​	$	188
Currency contracts	​	​	​	4	​	​	19	​	​	23
Other contracts	​	​	​	—	​	​	2	​	​	2
Total current derivative contracts	Other current assets	​	$	192	​	$	21	​	$	213
​	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	11	​	$	—	​	$	11
Currency contracts	​	​	​	47	​	​	—	​	​	47
Total noncurrent derivative contracts	Other noncurrent assets	​	$	58	​	$	—	​	$	58
	​	​	​	​	​	​	​	​	​	​
Liabilities:	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	45	​	$	—	​	$	45
Currency contracts	​	​	​	—	​	​	5	​	​	5
Other contracts	​	​	​	—	​	​	9	​	​	9
Total current derivative contracts	Other current liabilities	​	$	45	​	$	14	​	$	59
​	​	​	​	​	​	​	​	​	​	​
Currency contracts	​	​	$	—	​	$	3	​	$	3
Total noncurrent derivative contracts	Other noncurrent liabilities	​	$	—	​	$	3	​	$	3

​

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

​

​	​	​	​	​	​	​	​	​	​	​
​	​	​	December 31, 2020
​	​	​	Derivatives Designated as Hedging Instruments			Derivatives not Designated as Hedging Instruments			Total
​	​	​	​	​	​	​	​	​	​	​
Assets:	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	50	​	$	—	​	$	50
Currency contracts	​	​	​	3	​	​	27	​	​	30
Other contracts	​	​	​	—	​	​	2	​	​	2
Total current derivative contracts	Other current assets	​	$	53	​	$	29	​	$	82
​	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	8	​	$	—	​	$	8
Total noncurrent derivative contracts	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, 2021, has not identified any circumstances requiring the reported values of the company’s financial instruments be adjusted.

​

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Three Months Ended September 30,											​
​	​	​	​	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	​	$	(28)	​	$	—	​	$	(4)	​	$	—	​
Commodity contracts - manage exposure to supplier pricing	​	Cost of sales	​	​	53	​	​	3	​	​	(27)	​	​	(7)	​
Interest rate contracts - manage exposure for outstanding debt	​	Interest expense	​	​	—	​	​	—	​	​	(2)	​	​	—	​
Currency contracts - manage currency exposure	​	Selling, general and administrative	​	​	27	​	​	12	​	​	(30)	​	​	(51)	​
Equity contracts	​	Selling, general and administrative	​	​	—	​	​	23	​	​	—	​	​	37	​
Total	​	​	​	$	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	​

​

​

Ball Corporation

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,
($ in millions)		2021			2020			2021			2020
​	​	​	​	​	​	​	​	​	​	​	​	​
Amounts reclassified into earnings:	​	​	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	$	(25)	​	$	31	​	$	(6)	​	$	29
Cross-currency swap contracts	​	​	—	​	​	—	​	​	—	​	​	1
Interest rate contracts	​	​	—	​	​	2	​	​	—	​	​	5
Currency exchange contracts	​	​	(27)	​	​	30	​	​	(66)	​	​	23
Change in fair value of cash flow hedges:	​	​	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	44	​	​	21	​	​	137	​	​	(8)
Interest rate contracts	​	​	(1)	​	​	1	​	​	(1)	​	​	(3)
Cross-currency swap contracts	​	​	—	​	​	(1)	​	​	—	​	​	—
Currency exchange contracts	​	​	26	​	​	(39)	​	​	58	​	​	16
Currency and tax impacts	​	​	(1)	​	​	(9)	​	​	(24)	​	​	(12)
​	​	$	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 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 $26 million in the aggregate, and such amounts have been included in other current liabilities and other noncurrent liabilities at September 30, 2021.

​

Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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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. 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. On December 31, 2020, the Court of Appeals vacated the decision of the District Court and remanded the case for further proceedings. The District Court held a telephonic hearing with counsel for the parties in 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.

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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.

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The company’s operations in Brazil are involved in various governmental assessments, which have historically mainly related to claims for taxes on the internal transfer of inventory, gross revenue taxes, and indirect tax incentives and deductibility of goodwill. In addition, one 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 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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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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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).

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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 2020 and 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 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 its second quarter 2021 unaudited condensed consolidated statement of earnings. As of September 30, 2021, the Company has no additional claims outstanding that would result in material reimbursements.

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22. Indemnifications and Guarantees

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General Guarantees

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The company or its appropriate consolidated direct or indirect 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 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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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.

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Ball Corporation

Notes to the Unaudited Condensed Consolidated Financial Statements

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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.

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Debt Guarantees

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The company’s and its subsidiaries’ obligations under the senior notes and senior credit facilities (or, in the case of U.S. domiciled non-U.S. subsidiaries under the senior credit facilities, the obligations of 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 non-U.S. subsidiaries under the senior credit facilities, the obligations of 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 non-U.S. subsidiaries directly owned by the company or any of its wholly owned domestic subsidiaries. In addition, the obligations of certain non-U.S. borrowers and 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 non-U.S. subsidiaries and material wholly owned U.S. domiciled 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.

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