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)	​	2022			2021			2022			2021
​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales	​	$	3,951	​	$	3,553	​	$	11,801	​	$	10,137
​	​	​	​	​	​	​	​	​	​	​	​	​
Costs and expenses	​	​	​	​	​	​	​	​	​	​	​	​
Cost of sales (excluding depreciation and amortization)	​	​	(3,275)	​	​	(2,851)	​	​	(9,736)	​	​	(8,104)
Depreciation and amortization	​	​	(157)	​	​	(175)	​	​	(510)	​	​	(515)
Selling, general and administrative	​	​	(159)	​	​	(148)	​	​	(506)	​	​	(471)
Business consolidation and other activities	​	​	163	​	​	(141)	​	​	(23)	​	​	(136)
​	​	​	(3,428)	​	​	(3,315)	​	​	(10,775)	​	​	(9,226)
​	​	​	​	​	​	​	​	​	​	​	​	​
Earnings before interest and taxes	​	​	523	​	​	238	​	​	1,026	​	​	911
​	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​	​	(79)	​	​	(68)	​	​	(216)	​	​	(201)
Debt refinancing and other costs	​	​	—	​	​	(1)	​	​	(2)	​	​	(1)
Total interest expense	​	​	(79)	​	​	(69)	​	​	(218)	​	​	(202)
​	​	​	​	​	​	​	​	​	​	​	​	​
Earnings before taxes	​	​	444	​	​	169	​	​	808	​	​	709
Tax (provision) benefit	​	​	(38)	​	​	2	​	​	(139)	​	​	(146)
Equity in results of affiliates, net of tax	​	​	(12)	​	​	8	​	​	7	​	​	18
Net earnings	​	​	394	​	​	179	​	​	676	​	​	581
Net earnings attributable to noncontrolling interests	​	​	2	​	​	—	​	​	12	​	​	—
Net earnings attributable to Ball Corporation	​	$	392	​	$	179	​	$	664	​	$	581
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
Earnings per share:	​	​	​	​	​	​	​	​	​	​	​	​
Basic	​	$	1.25	​	$	0.55	​	$	2.09	​	$	1.78
Diluted	​	$	1.24	​	$	0.54	​	$	2.07	​	$	1.75
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
Weighted average shares outstanding: (000s)	​	​	​	​	​	​	​	​	​	​	​	​
Basic	​	​	314,054	​	​	325,876	​	​	317,296	​	​	327,097
Diluted	​	​	317,061	​	​	331,595	​	​	321,222	​	​	332,938
​	​	​	​	​	​	​	​	​	​	​	​	​

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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)		2022			2021			2022			2021
​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings	​	$	394	​	$	179	​	$	676	​	$	581
​	​	​	​	​	​	​	​	​	​	​	​	​
Other comprehensive earnings (loss):	​	​	​	​	​	​	​	​	​	​	​	​
Currency translation adjustment	​	​	(203)	​	​	(17)	​	​	51	​	​	19
Pension and other postretirement benefits	​	​	(1)	​	​	193	​	​	1	​	​	242
Derivatives designated as hedges	​	​	(129)	​	​	16	​	​	(148)	​	​	122
Total other comprehensive earnings (loss)	​	​	(333)	​	​	192	​	​	(96)	​	​	383
Income tax (provision) benefit	​	​	31	​	​	(48)	​	​	30	​	​	(82)
Total other comprehensive earnings (loss), net of tax	​	​	(302)	​	​	144	​	​	(66)	​	​	301
​	​	​	​	​	​	​	​	​	​	​	​	​
Total comprehensive earnings	​	​	92	​	​	323	​	​	610	​	​	882
Comprehensive earnings attributable to noncontrolling interests	​	​	2	​	​	—	​	​	12	​	​	—
Comprehensive earnings attributable to Ball Corporation	​	$	90	​	$	323	​	$	598	​	$	882

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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)		2022			2021
​	​	​	​	​	​	​
Assets	​	​	​	​	​	​
Current assets	​	​	​	​	​	​
Cash and cash equivalents	​	$	473	​	$	563
Receivables, net	​	​	2,877	​	​	2,560
Inventories, net	​	​	2,201	​	​	1,795
Other current assets	​	​	261	​	​	305
Total current assets	​	​	5,812	​	​	5,223
Noncurrent assets	​	​	​	​	​	​
Property, plant and equipment, net	​	​	6,738	​	​	6,502
Goodwill	​	​	4,119	​	​	4,378
Intangible assets, net	​	​	1,410	​	​	1,688
Other assets	​	​	1,974	​	​	1,923
Total assets	​	$	20,053	​	$	19,714
​	​	​	​	​	​	​
Liabilities and Equity	​	​	​	​	​	​
Current liabilities	​	​	​	​	​	​
Short-term debt and current portion of long-term debt	​	$	470	​	$	15
Accounts payable	​	​	4,527	​	​	4,759
Accrued employee costs	​	​	294	​	​	349
Other current liabilities	​	​	898	​	​	830
Total current liabilities	​	​	6,189	​	​	5,953
Noncurrent liabilities	​	​	​	​	​	​
Long-term debt	​	​	8,363	​	​	7,722
Employee benefit obligations	​	​	904	​	​	1,205
Deferred taxes	​	​	569	​	​	665
Other liabilities	​	​	479	​	​	484
Total liabilities	​	​	16,504	​	​	16,029
​	​	​	​	​	​	​
Equity	​	​	​	​	​	​
Common stock (682,024,158 shares issued - 2022; 680,944,867 shares issued - 2021)	​	​	1,247	​	​	1,220
Retained earnings	​	​	7,316	​	​	6,843
Accumulated other comprehensive earnings (loss)	​	​	(648)	​	​	(582)
Treasury stock, at cost (368,167,819 shares - 2022; 360,101,024 shares - 2021)	​	​	(4,436)	​	​	(3,854)
Total Ball Corporation shareholders' equity	​	​	3,479	​	​	3,627
Noncontrolling interests	​	​	70	​	​	58
Total equity	​	​	3,549	​	​	3,685
Total liabilities and equity	​	$	20,053	​	$	19,714

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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)		2022			2021
​	​	​	​	​	​	​
Cash Flows from Operating Activities	​	​	​	​	​	​
Net earnings	​	$	676	​	$	581
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:	​	​	​	​	​	​
Depreciation and amortization	​	​	510	​	​	515
Business consolidation and other activities	​	​	23	​	​	136
Deferred tax provision (benefit)	​	​	(23)	​	​	34
Other, net	​	​	(278)	​	​	(142)
Changes in working capital components, net of dispositions	​	​	(1,132)	​	​	(248)
Cash provided by (used in) operating activities	​	​	(224)	​	​	876
​	​	​	​	​	​	​
Cash Flows from Investing Activities	​	​	​	​	​	​
Capital expenditures	​	​	(1,262)	​	​	(1,204)
Business dispositions, net of cash sold	​	​	748	​	​	111
Other, net	​	​	62	​	​	(11)
Cash provided by (used in) investing activities	​	​	(452)	​	​	(1,104)
​	​	​	​	​	​	​
Cash Flows from Financing Activities	​	​	​	​	​	​
Long-term borrowings	​	​	3,401	​	​	850
Repayments of long-term borrowings	​	​	(2,446)	​	​	(14)
Net change in short-term borrowings	​	​	463	​	​	10
Acquisitions of treasury stock, net of proceeds from issuances of common stock and shares used for taxes	​	​	(592)	​	​	(325)
Common stock dividends	​	​	(191)	​	​	(164)
Other, net	​	​	(12)	​	​	(30)
Cash provided by (used in) financing activities	​	​	623	​	​	327
​	​	​	​	​	​	​
Effect of exchange rate changes on cash	​	​	(30)	​	​	(22)
​	​	​	​	​	​	​
Change in cash, cash equivalents and restricted cash	​	​	(83)	​	​	77
Cash, cash equivalents and restricted cash - beginning of period	​	​	579	​	​	1,381
Cash, cash equivalents and restricted cash - end of period	​	$	496	​	$	1,458

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See accompanying 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 2021 Annual Report on Form 10-K filed on February 16, 2022, pursuant to the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2021 (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

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Russia

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The current global business environment is being impacted directly and indirectly by the effects of the Russian invasion of Ukraine. Ball has sold its aluminum beverage packaging business located in Russia and has suspended future investments in Russia. See Note 4 for additional discussion.

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Ball is monitoring the geopolitical situation following Russia’s invasion of Ukraine and may experience increased costs for inputs such as energy and transportation due in part to the negative impact of the Russia-Ukraine war on the global economy. The ongoing conflict continues to have the potential to increase Ball’s vulnerabilities in its global business to near-term and severe impacts and it is not possible to accurately predict all future impacts of the invasion. As such, Russia’s invasion of Ukraine and the resulting effects have the potential to impact significant estimates used by Ball in the preparation of its consolidated financial statements, which could result in impairments.

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Novel Coronavirus (COVID-19)

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The current global business environment continues to be impacted directly and indirectly by the effects of the novel coronavirus (COVID-19), and it is not possible to accurately estimate the impacts of COVID-19. However, Ball management has reviewed the estimates used in preparing the company’s consolidated financial statements and the following have a reasonably possible likelihood of being affected, to a material extent, by the direct and indirect impacts of COVID-19 in the near term.

	●	Estimates regarding the future financial performance of the business used in the 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; and

	●	Estimates regarding the likelihood of forecasted transactions associated with hedge accounting positions at September 30, 2022, 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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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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New Accounting Guidance and Disclosure Requirements

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Government Assistance Disclosure

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In 2021, new guidance was issued by the Financial Accounting Standards Board (FASB) related to the disclosure of government assistance received. The company is currently assessing the impact that the adoption of this new guidance will have on its consolidated financial statements.

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Reference Rate Reform

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In 2020, new guidance was issued by the FASB related to global reference rates reform. The company is currently evaluating the impact that the transition from its London Inter-Bank Offered Rate (LIBOR) based interest rate agreements to Secured Overnight Financing Rate (SOFR) based interest rate agreements will have on its consolidated financial statements. Based on our current understanding, the LIBOR to SOFR transition is not expected to have a material impact on our financial condition, results of operations or cash flows.

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Supply Chain Finance Obligations

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In 2022, new guidance was issued by the FASB with the goal of enhancing transparency around supply chain finance arrangements for which a supplier may receive early payments on their invoices. The company is currently assessing the impact that the adoption of this new guidance will have on its 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.

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Beverage packaging, EMEA_:_ Consists of operations in numerous countries throughout Europe, as well as Egypt and Turkey, that manufacture and sell aluminum beverage containers throughout those countries. Ball sold its former operations located in Russia during the third quarter of 2022. See Note 4 for further details. Ball’s operations and results of its former Russian aluminum packaging business is included in the results of the beverage packaging, EMEA, business through the date of the disposal in the third quarter of 2022.

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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 recloseable aluminum bottles across multiple consumer categories as well as 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; and 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 2021, Ball sold its minority-owned investment in South Korea. In the first quarter of 2022, Ball sold its remaining equity method investment in Ball Metalpack. Refer to Note 4 for additional details on both transactions.

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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)		2022			2021			2022			2021
​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales	​	​	​	​	​	​	​	​	​	​	​	​
Beverage packaging, North and Central America	​	$	1,800	​	$	1,519	​	$	5,184	​	$	4,339
Beverage packaging, EMEA	​	​	1,031	​	​	937	​	​	3,106	​	​	2,639
Beverage packaging, South America	​	​	466	​	​	462	​	​	1,494	​	​	1,401
Aerospace	​	​	477	​	​	498	​	​	1,471	​	​	1,381
Reportable segment sales	​	​	3,774	​	​	3,416	​	​	11,255	​	​	9,760
Other	​	​	177	​	​	137	​	​	546	​	​	377
Net sales	​	$	3,951	​	$	3,553	​	$	11,801	​	$	10,137
​	​	​	​	​	​	​	​	​	​	​	​	​
Comparable operating earnings	​	​	​	​	​	​	​	​	​	​	​	​
Beverage packaging, North and Central America	​	$	205	​	$	186	​	$	543	​	$	519
Beverage packaging, EMEA	​	​	82	​	​	125	​	​	311	​	​	349
Beverage packaging, South America	​	​	67	​	​	74	​	​	197	​	​	245
Aerospace	​	​	47	​	​	46	​	​	126	​	​	115
Reportable segment comparable operating earnings	​	​	401	​	​	431	​	​	1,177	​	​	1,228
Reconciling items	​	​	​	​	​	​	​	​	​	​	​	​
Other (a)	​	​	(8)	​	​	(14)	​	​	(26)	​	​	(67)
Business consolidation and other activities	​	​	163	​	​	(141)	​	​	(23)	​	​	(136)
Amortization of acquired intangibles	​	​	(33)	​	​	(38)	​	​	(102)	​	​	(114)
Earnings before interest and taxes	​	​	523	​	​	238	​	​	1,026	​	​	911
Interest expense	​	​	(79)	​	​	(68)	​	​	(216)	​	​	(201)
Debt refinancing and other costs	​	​	—	​	​	(1)	​	​	(2)	​	​	(1)
Total interest expense	​	​	(79)	​	​	(69)	​	​	(218)	​	​	(202)
Earnings before taxes	​	$	444	​	$	169	​	$	808	​	$	709

(a)	Includes undistributed corporate expenses, net, of $25 million and $17 million for the three months ended September 30, 2022 and 2021, respectively_, and_ $73 million and $71 million for the nine months ended September 30, 2022 and 2021, 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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4. Acquisitions and Dispositions

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Russia

​

In the first quarter of 2022, the company announced that it is pursuing the sale of its aluminum beverage packaging business located in Russia. In the second quarter of 2022, Ball experienced deteriorating conditions and determined this constituted a triggering event for its Russian long-lived asset group. As a result, Ball performed a Level 3 expected cash flow recoverability analysis, using an income valuation approach with various scenarios, including a near-term sale of the business, to estimate the fair value of the long-lived assets, and recorded an impairment loss of $435 million during the second quarter of 2022. This non-cash charge has been presented in business consolidation and other activities.

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In the third quarter of 2022, the company completed the sale of its Russian aluminum beverage packaging business for total cash consideration of $530 million and recorded a gain on disposal of $222 million in business consolidation and other activities. The gain on sale includes cumulative currency translation gains that were recorded in accumulated other comprehensive earnings (loss) and were released upon the complete liquidation of our investment in Russia that resulted upon the sale. The net gain also includes goodwill associated with our beverage packaging, EMEA, reporting unit that was allocated to the Russian disposal group at the date of sale. When considering the impairment loss recorded during the second quarter 2022 of $435 million, the impairment loss net of gain on the sale of the Russian business was $213 million for the nine months ended September 30, 2022. The impairment loss in the second quarter and the gain on sale in the third quarter were significantly impacted by movements in the U.S. dollar to Russian ruble exchange rates. Cash proceeds from the sale, net of the cash on the disposed business, of $455 million were received in the third quarter of 2022 and are presented in business dispositions, net of cash sold, in the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2022.

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In connection with this sale, Ball entered into a call option agreement that is contingently exercisable between 2025 and 2032, and if it becomes exercisable, will provide Ball the right to repurchase the business subject to the status of sanctions and certain other contingencies outside of Ball’s control. The option price, if exercised, would provide a compounded annual rate of return to the purchaser based on defined cash flows associated with the purchase and operation of the business from the purchase date through the exercise date of the option. Because the option strike price could limit the residual returns generated by the purchaser, if exercised, the option represents a variable interest retained by Ball in the Russian business. Based on the terms of the option relative to current market conditions in Russia, we have determined that the option has an immaterial value. Neither the option nor any other terms in the sales agreement result in Ball being the primary beneficiary of the business and, therefore, it has been deconsolidated.

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Ball Metalpack Investment

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During the first quarter of 2022, Ball sold its remaining 49 percent owned equity method investment in Ball Metalpack to Sonoco, a global provider of consumer, industrial, healthcare and protective packaging, for total consideration of approximately $298 million, all of which was received in cash in the first quarter of 2022. Ball’s carrying value of the investment before the sale was zero; therefore, a gain from the sale of $298 million is reported in business consolidation and other activities in the unaudited condensed consolidated statements of earnings. Cash proceeds of $298 million related to the sale are presented in business dispositions, net of cash sold, in the unaudited condensed consolidated statement of cash flows.

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Ball also received proceeds from Ball Metalpack for the repayment of an outstanding promissory note and accrued interest of approximately $16 million, which was recorded as a gain in business consolidation and other activities in the unaudited condensed consolidated statements of earnings.

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South Korea Investment

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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 receivables, net 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 was presented in business consolidation and other activities in the unaudited condensed consolidated statement of earnings.

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5. Revenue from Contracts with Customers

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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,
Periods Ended September 30,	​	Point in Time		​	Over Time		​	Total			Point in Time		​	Over Time		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
2022	​	$	725	​	$	3,226	​	$	3,951	​	$	2,031	​	$	9,770	​	$	11,801
2021	​	​	603	​	​	2,950	​	​	3,553	​	​	1,837	​	​	8,300	​	​	10,137

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Contract Balances

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The company did not have any contract assets at either September 30, 2022, or December 31, 2021. 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, 2021	​	$	272	​	$	38
Increase (decrease)	​	​	(59)	​	​	(24)
Balance at September 30, 2022	​	$	213	​	$	14
​	​	​	​	​	​	​

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During the nine months ended September 30, 2022, total contract liabilities decreased by $83 million, which is net of cash received of $527 million and amounts recorded as sales of $444 million, the majority of which related to current contract liabilities. The amount of sales recorded in the nine months ended September 30, 2022, which were included in the opening contract liabilities balances, was $272 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 recorded a reduction in net sales of $5 million in the three months ended September 30, 2022, and net sales of $7 million and $18 million in the three and nine months ended September 30, 2021, respectively, from performance obligations satisfied (or partially satisfied) in prior periods. These sales amounts are the result of changes in the transaction price of the company’s contracts with customers.

​

Transaction Price Allocated to Remaining Performance Obligations

​

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

​

​	​	​	​	​	​	​	​	​	​
($ in millions)		Next Twelve Months		​	Thereafter		​	Total
​	​	​	​	​	​	​	​	​	​
Sales expected to be recognized on multi-year contracts in place as of September 30, 2022	​	$	1,433	​	$	1,507	​	$	2,940

​

​

6. Business Consolidation and Other Activities

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,					​	Nine Months Ended September 30,
($ in millions)		2022			2021			2022			2021
​	​	​	​	​	​	​	​	​	​	​	​	​
Beverage packaging, North and Central America	​	$	(36)	​	$	—	​	$	(37)	​	$	(1)
Beverage packaging, EMEA	​	​	214	​	​	(2)	​	​	(225)	​	​	(5)
Beverage packaging, South America	​	​	(9)	​	​	(9)	​	​	(31)	​	​	11
Other	​	​	(6)	​	​	(130)	​	​	270	​	​	(141)
​	​	$	163	​	$	(141)	​	$	(23)	​	$	(136)

​

2022

​

Beverage Packaging, North and Central America

​

During the three and nine months ended September 30, 2022, the company recorded charges of $34 million primarily related to employee severance and benefits, accelerated depreciation and other shutdown costs resulting from the planned closure of its Phoenix, Arizona, and St. Paul, Minnesota, facilities in the fourth quarter of 2022, and the first quarter of 2023, respectively. The company also recorded charges of $2 million for the three and nine months ended September 30, 2022, for employee severance and benefit charges related to cost-out activities. Additional charges of $1 million in the nine months ended September 30, 2022, were for individually insignificant activities.

​

Beverage Packaging, EMEA

​

During the third quarter of 2022, Ball sold its Russian aluminum beverage packaging business for $530 million of cash and recorded a gain of $222 million. During the second quarter of 2022, Ball recorded a non-cash impairment of $435 million for its Russian long-lived asset group as a result of the Russian invasion of Ukraine. Ball recorded net charges associated with its inability to hedge Russian ruble currency exposures of $3 million for the three and nine months ended September 30, 2022. See Note 4 for further details.

​

The company also recorded charges of $6 million for the three and nine months ended September 30, 2022, for employee severance and benefit charges related to cost-out activities. Additionally, the company recorded $1 million of credits and $3 million of charges, in the three and nine months ended September 30, 2022, respectively, for individually insignificant activities.

​

Beverage Packaging, South America

​

The company recorded charges in the three and nine months ended September 30, 2022, of $8 million primarily related to employee severance and benefits and facility shutdown costs resulting from the closure of its Santa Cruz, Brazil, facility, and $1 million for individually insignificant activities. During the nine months ended September 30, 2022, Ball recorded charges of $22 million related to an increased risk of not being able to fully collect amounts due from a regional customer in Brazil. See Note 21 for further details.

​

Other

​

During the three months ended September 30, 2022, the company recorded charges of $6 million for employee severance and benefit charges related to cost-out activities.

​

During the nine months ended September 30, 2022, the company recorded the following amounts:

	●	A gain of $298 million related to the sale of Ball’s remaining equity method investment in Ball Metalpack. See Note 4 for further details.

	●	A charge related to a donation of $30 million to The Ball Foundation, a non-profit philanthropic organization with efforts to build a better world.

	●	A gain of $16 million from Ball Metalpack’s repayment of a loan which was formerly fully reserved.

	●	Net charges of $5 million associated with Ball’s inability to hedge Russian ruble currency exposures.

	●	Charges of $6 million for employee severance and benefit charges related to cost-out activities.

	●	Charges of $3 million for individually insignificant activities.

​

2021

​

Beverage Packaging, North and Central America

​

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

​

Beverage Packaging, EMEA

​

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

​

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. 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.

	●	Charges of $6 million for individually insignificant activities.

​

​

7.	Supplemental Cash Flow Statement Disclosures

​

​	​	​	​	​	​	​
​	​	September 30,
($ in millions)	​	2022			2021
​	​	​	​		​	​
Beginning of period:	​	​	​		​	​
Cash and cash equivalents	​	$	563		$	1,366
Current restricted cash (included in other current assets)	​	​	16		​	15
Total cash, cash equivalents and restricted cash	​	$	579		$	1,381
​	​	​	​		​	​
End of period:	​	​	​		​	​
Cash and cash equivalents	​	$	473		$	1,446
Current restricted cash (included in other current assets)	​	​	23		​	12
Total cash, cash equivalents and restricted cash	​	$	496		$	1,458

​

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.

​

Non-cash investing activities include the acquisition of property, plant and equipment (PP&E) for which payment has not been made. These non-cash capital expenditures are excluded from the statement of cash flows. A summary of the PP&E acquired but not yet paid for is as follows:

​

​	​	​	​	​	​	​
​	​	September 30,
($ in millions)	​	2022			2021
​	​	​	​		​	​
Beginning of period:	​	​	​		​	​
PP&E acquired but not yet paid	​	$	540		$	409
​	​	​	​	​	​	​
End of period:	​	​	​		​	​
PP&E acquired but not yet paid	​	$	461		$	550

​

​

​

​

8. Receivables, Net

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)	​	2022			2021
​	​	​	​	​	​	​
Trade accounts receivable	​	$	1,632	​	$	1,304
Unbilled receivables	​	​	705	​	​	727
Less: Allowance for doubtful accounts	​	​	(15)	​	​	(9)
Net trade accounts receivable	​	​	2,322	​	​	2,022
Other receivables	​	​	555	​	​	538
​	​	$	2,877	​	$	2,560

​

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 $2 billion and $1.7 billion at September 30, 2022, and December 31, 2021. A total of $638 million and $308 million were available for sale under these programs as of September 30, 2022, and December 31, 2021, respectively.

​

Other receivables include income and sales tax receivables, aluminum scrap sale receivables and other miscellaneous receivables, including the remaining amount that relates to the sale of Ball’s minority-owned investment in South Korea as detailed in Note 4.

​

9. Inventories, Net

​

​	​	​	​	​	​
​	September 30,		​	December 31,
($ in millions)	2022			2021
​	​	​	​	​	​
Raw materials and supplies	$	1,395	​	$	1,064
Work-in-process and finished goods	​	897	​	​	821
Less: Inventory reserves	​	(91)	​	​	(90)
​	$	2,201	​	$	1,795

​

​

​

10. Property, Plant and Equipment, Net

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)		2022			2021
​	​	​	​	​	​	​
Land	​	$	178	​	$	167
Buildings	​	​	2,083	​	​	2,081
Machinery and equipment	​	​	6,929	​	​	6,876
Construction-in-progress	​	​	1,430	​	​	1,179
​	​	​	10,620	​	​	10,303
Accumulated depreciation	​	​	(3,882)	​	​	(3,801)
​	​	$	6,738	​	$	6,502

​

Depreciation expense amounted to $117 million and $130 million for the three months ended September 30, 2022 and 2021, respectively, and $386 million and $380 million for the nine months ended September 30, 2022 and 2021, respectively.

​

During the third quarter of 2022, the company completed an evaluation of the estimated useful lives of its manufacturing equipment, buildings and certain assembly and test equipment. The company utilized a third-party appraiser to assist in the evaluation, which was performed as a result of the company’s experience with the duration over which its equipment can be utilized. Effective July 1, 2022, Ball revised the estimated useful lives of all of its equipment and buildings included in the analysis, which resulted in a net reduction in depreciation expense of approximately $24 million ($18 million after tax, or $0.06 per diluted share) for the three and nine months ended September 30, 2022, as compared to the amount of depreciation expense that would have been recognized by utilizing the prior depreciable lives. This change in useful lives is expected to reduce depreciation expense by approximately $48 million ($36 million after tax, or $0.11 per diluted share) for the year ending December 31, 2022.

​

As discussed in Note 4, in the second quarter of 2022, Ball recorded a non-cash impairment charge related to its Russian long-lived asset group, of which $296 million related to property, plant and equipment associated with the company’s Russian aluminum beverage packaging business, which resulted in fully impairing the assets which were subsequently disposed through the sale of the Russia aluminum beverage packaging business. See Note 4 for further details.

​

11. Goodwill

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
($ in millions)		​ BeveragePackaging,North & CentralAmerica			**​ BeveragePackaging,**EMEA			**​ BeveragePackaging,**South America			**​ **Aerospace			Other			Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at December 31, 2021	​	$	1,275	​	$	1,483	​	$	1,298	​	$	40	​	$	282	​	$	4,378
Business dispositions	​	​	—	​	​	(101)	​	​	—	​	​	—	​	​	—	​	​	(101)
Effects of currency exchange	​	​	—	​	​	(141)	​	​	—	​	​	—	​	​	(17)	​	​	(158)
Balance at September 30, 2022	​	$	1,275	​	$	1,241	​	$	1,298	​	$	40	​	$	265	​	$	4,119

​

Goodwill in the above table is presented net of accumulated impairment losses of $60 million and $62 million as of September 30, 2022 and December 31, 2021, respectively.

​

During the third quarter of 2022, the company sold its Russian aluminum beverage packaging business, which resulted in a $101 million decrease in goodwill in the beverage packaging, EMEA, segment. See Note 4 for additional details.

​

12. Intangible Assets, Net

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)		2022			2021
​	​	​	​	​	​	​
Acquired customer relationships and other intangibles (net of accumulated amortization and impairment losses of $857 million at September 30, 2022, and $862 million at December 31, 2021)	​	$	1,317	​	$	1,593
Capitalized software (net of accumulated amortization of $197 million at September 30, 2022, and $187 million at December 31, 2021)	​	​	75	​	​	74
Other intangibles (net of accumulated amortization of $97 million at September 30, 2022, and $97 million at December 31, 2021)	​	​	18	​	​	21
​	​	$	1,410	​	$	1,688

​

Total amortization expense of intangible assets amounted to $40 million and $45 million for the three months ended September 30, 2022 and 2021, respectively, and $124 million and $135 million for the nine months ended September 30, 2022 and 2021, respectively.

​

As discussed in Note 4, in the second quarter of 2022, Ball recorded a non-cash impairment charge related to its Russian long-lived asset group, of which $131 million related to acquired customer relationships and other intangibles associated with the company’s Russian aluminum beverage packaging business, which resulted in fully impairing the assets which were subsequently disposed through the sale of the Russia aluminum beverage packaging business. See Note 4 for further details.

​

13. Other Assets

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)		2022			2021
​	​	​	​	​	​	​
Long-term pension assets	​	$	487	​	$	579
Right-of-use operating lease assets	​	​	443	​	​	420
Investments in affiliates	​	​	193	​	​	184
Long-term deferred tax assets	​	​	112	​	​	126
Other	​	​	739	​	​	614
​	​	$	1,974	​	$	1,923

​

​

​

Investments in affiliates primarily includes the company’s 50 percent ownership interest in an entity in Guatemala, a 50 percent ownership interest in an entity in Panama, a 50 percent ownership interest in an entity in Vietnam and an ownership interest of 50 percent in an entity in the U.S.

​

In 2021, Ball sold its minority-owned investment in South Korea and in the first quarter of 2022, Ball sold its remaining equity method investment in Ball Metalpack. See Note 4 for further details of both transactions.

​

​

​

​

​

​

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.

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

​

​	​	​	​	​	​	​	​
​	​	​	September 30,		​	December 31,
($ in millions)	Balance Sheet Location	​	2022		​	2021
​	​	​	​	​	​	​	​
Operating leases:	​	​	​	​	​	​	​
Operating lease ROU asset	Other assets	​	$	443	​	$	420
Current operating lease liabilities	Other current liabilities	​	​	89	​	​	80
Noncurrent operating lease liabilities	Other liabilities	​	​	361	​	​	340
Finance leases:	​	​	​	​	​	​	​
Finance lease ROU assets, net	Property, plant and equipment, net	​	​	11	​	​	14
Current finance lease liabilities	Short-term debt and current portion of long-term debt	​	​	2	​	​	2
Noncurrent finance lease liabilities	Long-term debt	​	​	10	​	​	12

​

​

​

​

​

​

​

15. Debt

​

Long-term debt consisted of the following:

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)		2022			2021
​	​	​	​	​	​	​
Senior Notes	​	​	​	​	​	​
4.00% due November 2023	​	$	1,000	​	$	1,000
4.375%, euro denominated, due December 2023	​	​	686	​	​	796
0.875%, euro denominated, due March 2024	​	​	735	​	​	853
5.25% due July 2025	​	​	1,000	​	​	1,000
4.875% due March 2026	​	​	750	​	​	750
1.50%, euro denominated, due March 2027	​	​	539	​	​	625
2.875% due August 2030	​	​	1,300	​	​	1,300
3.125% due September 2031	​	​	850	​	​	850
Senior Credit Facility (at variable rates)	​	​	​	​	​	​
Term A loan due March 2024 (1.35% - 2021)	​	​	—	​	​	593
U.S. dollar revolver due June 2027 (4.10% - 2022)	​	​	200	​	​	—
Term A loan due June 2027 (3.81% - 2022)	​	​	1,350	​	​	—
Finance lease obligations	​	​	12	​	​	14
Other (including debt issuance costs)	​	​	(56)	​	​	(56)
​	​	​	8,366	​	​	7,725
Less: Current portion	​	​	(3)	​	​	(3)
​	​	$	8,363	​	$	7,722

​

In the second quarter of 2022, the company completed the closing of its new revolving and term loan senior secured credit facilities that refinance its existing senior secured credit facilities entered into in 2019. The company’s senior credit facilities include long-term multi-currency revolving facilities that mature in June 2027, which provide the company with up to the U.S. dollar equivalent of $1.75 billion. At September 30, 2022, taking into account outstanding letters of credit, $1.5 billion was available under the company’s long-term, revolving credit facilities. In addition to these facilities, the company had approximately $1.2 billion of short-term uncommitted credit facilities available at September 30, 2022, of which $467 million was outstanding and due on demand. At December 31, 2021, the company had $12 million outstanding under short-term uncommitted credit facilities.

​

The fair value of long-term debt was estimated to be $7.6 billion and $8 billion at September 30, 2022 and December 31, 2021. 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.

​

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, 2022, which will change to 4.5 times as of September 30, 2025. The company was in compliance with all loan agreements and debt covenants at both September 30, 2022, and December 31, 2021, and it has met all debt payment obligations.

​

16. Taxes on Income

​

The company’s effective tax rate was 8.6 percent and 17.2 percent for the three and nine months ended September 30, 2022, respectively. As compared to the statutory U.S. tax rate, the effective tax rate for the three and nine months ended September 30, 2022, was reduced by 10.8 and 5.9 percentage points for the sale of the Russian aluminum beverage packaging business, respectively, reduced by 5.1 and 2.8 percentage points, respectively, for non-U.S. rate differences net of withholding taxes and reduced by 2.2 and 2.6 percentage points, respectively, for federal tax credits. The effective rate for the three and nine months ended September 30, 2022, increased by 3.8 and 3.0 percentage points, respectively, for U.S. permanent differences.

​

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.

​

17. Employee Benefit Obligations

​

​	​	​	​	​	​	​
​	​	September 30,		​	December 31,
($ in millions)	​	2022			2021
​	​	​	​	​	​	​
Underfunded defined benefit pension liabilities	​	$	487	​	$	582
Less: Current portion	​	​	(19)	​	​	(21)
Long-term defined benefit pension liabilities	​	​	468	​	​	561
Long-term retiree medical liabilities	​	​	128	​	​	135
Deferred compensation plans	​	​	272	​	​	441
Other	​	​	36	​	​	68
​	​	$	904	​	$	1,205

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,
​	​	2022								​	2021
($ in millions)		U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Ball-sponsored plans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Service cost	​	$	22	​	$	3	​	$	25	​	$	20	​	$	4	​	$	24
Interest cost	​	​	13	​	​	12	​	​	25	​	​	12	​	​	9	​	​	21
Expected return on plan assets	​	​	(27)	​	​	(15)	​	​	(42)	​	​	(29)	​	​	(17)	​	​	(46)
Amortization of prior service cost	​	​	—	​	​	1	​	​	1	​	​	—	​	​	1	​	​	1
Recognized net actuarial loss	​	​	7	​	​	1	​	​	8	​	​	12	​	​	1	​	​	13
Settlement losses and other one-time charges (a)	​	​	3	​	​	—	​	​	3	​	​	130	​	​	—	​	​	130
Total net periodic benefit cost	​	$	18	​	$	2	​	$	20	​	$	145	​	$	(2)	​	$	143

(a)	The charges in 2021 include settlement losses related to the purchase of non-participating annuities, plant shutdown benefits and other settlements that occur in the normal course of business. The charges in 2022 include one-time plant-related charges. These amounts have been recorded in business consolidation and other activities.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended September 30,
​	​	2022								​	2021
($ in millions)		U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Ball-sponsored plans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Service cost	​	$	66	​	$	8	​	$	74	​	$	62	​	$	10	​	$	72
Interest cost	​	​	40	​	​	36	​	​	76	​	​	38	​	​	27	​	​	65
Expected return on plan assets	​	​	(81)	​	​	(47)	​	​	(128)	​	​	(91)	​	​	(49)	​	​	(140)
Amortization of prior service cost	​	​	1	​	​	2	​	​	3	​	​	1	​	​	2	​	​	3
Recognized net actuarial loss	​	​	21	​	​	3	​	​	24	​	​	36	​	​	4	​	​	40
Settlement losses and other one-time charges (a)	​	​	3	​	​	—	​	​	3	​	​	130	​	​	—	​	​	130
Total net periodic benefit cost	​	$	50	​	$	2	​	$	52	​	$	176	​	$	(6)	​	$	170

(a)	The charges in 2021 include settlement losses related to the purchase of non-participating annuities, plant shutdown benefits and other settlements that occur in the normal course of business. The charges in 2022 include one-time plant-related charges. These amounts have been recorded in business consolidation and other activities.

​

Non-service pension income of $8 million and $11 million for the three months ended September 30, 2022 and 2021, respectively, and income of $25 million and $32 million for the nine months ended September 30, 2022 and 2021, 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 $113 million for the first nine months of 2022 compared to $203 million for the first nine months of 2021, and such contributions are expected to be approximately $127 million for the full year of 2022. This estimate may change based on changes to the U.S. Pension Protection Act and the actual returns achieved on plan assets, among other factors.

​

18. Equity and Accumulated Other Comprehensive Earnings (Loss)

​

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, 2022	​	681,866	​	$	1,232	​	(367,399)	​	$	(4,408)	​	$	6,987	​	$	(346)	​	$	68	​	$	3,533
Net earnings	​	—	​	​	—	​	—	​	​	—	​	​	392	​	​	—	​	​	2	​	​	394
Other comprehensive earnings (loss), net of tax	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	(392)	​	​	—	​	​	(392)
Currency translation recognized in earnings from the sale of the Russian aluminum beverage packaging business	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	90	​	​	—	​	​	90
Common dividends, net of tax benefits	​	—	​	​	—	​	—	​	​	—	​	​	(63)	​	​	—	​	​	—	​	​	(63)
Treasury stock purchases	​	—	​	​	—	​	(921)	​	​	(39)	​	​	—	​	​	—	​	​	—	​	​	(39)
Treasury shares reissued	​	—	​	​	—	​	152	​	​	8	​	​	—	​	​	—	​	​	—	​	​	8
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	​	158	​	​	15	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	15
Other activity	​	—	​	​	—	​	—	​	​	3	​	​	—	​	​	—	​	​	—	​	​	3
Balance at September 30, 2022	​	682,024	​	$	1,247	​	(368,168)	​	$	(4,436)	​	$	7,316	​	$	(648)	​	$	70	​	$	3,549

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	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, net of tax benefits	​	—	​	​	—	​	—	​	​	—	​	​	(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 December 31, 2021	​	680,945	​	$	1,220	​	(360,101)	​	$	(3,854)	​	$	6,843	​	$	(582)	​	$	58	​	$	3,685
Net earnings	​	—	​	​	—	​	—	​	​	—	​	​	664	​	​	—	​	​	12	​	​	676
Other comprehensive earnings (loss), net of tax	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	(156)	​	​	—	​	​	(156)
Currency translation recognized in earnings from the sale of the Russian aluminum beverage packaging business	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	90	​	​	—	​	​	90
Common dividends	​	—	​	​	—	​	—	​	​	—	​	​	(191)	​	​	—	​	​	—	​	​	(191)
Treasury stock purchases	​	—	​	​	—	​	(8,384)	​	​	(617)	​	​	—	​	​	—	​	​	—	​	​	(617)
Treasury shares reissued	​	—	​	​	—	​	317	​	​	25	​	​	—	​	​	—	​	​	—	​	​	25
Shares issued and stock compensation for stock options and other stock plans, net of shares exchanged	​	1,079	​	​	27	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	27
Other activity	​	—	​	​	—	​	—	​	​	10	​	​	—	​	​	—	​	​	—	​	​	10
Balance at September 30, 2022	​	682,024	​	$	1,247	​	(368,168)	​	$	(4,436)	​	$	7,316	​	$	(648)	​	$	70	​	$	3,549

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	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

​

In the second quarter of 2022, in a privately negotiated transaction, Ball entered into an accelerated share repurchase agreement to buy $300 million of its common shares using cash on hand and available borrowings. In the third quarter of 2022, Ball settled the agreement and received a total of 4.34 million shares with the average price per share paid of $69.06.

​

Accumulated Other Comprehensive Earnings (Loss)

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​
($ in millions)		​ CurrencyTranslation**(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, 2021	​	​	(536)	​	​	(169)	​	​	123	​	​	(582)
Other comprehensive earnings (loss) before reclassifications	​	​	141	​	​	(24)	​	​	118	​	​	235
Reclassification of net deferred gains (losses) into earnings	​	​	(90)	​	​	23	​	​	(234)	​	​	(301)
Balance at September 30, 2022	​	$	(485)	​	$	(170)	​	$	7	​	$	(648)

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,					​	Nine Months Ended September 30,
($ in millions)		2022			2021			2022			2021
​	​	​	​	​	​	​	​	​	​	​	​	​
Gains (losses) on cash flow hedges:	​	​	​	​	​	​	​	​	​	​	​	​
Commodity contracts recorded in net sales	​	$	105	​	$	(28)	​	$	23	​	$	(89)
Commodity contracts recorded in cost of sales	​	​	(5)	​	​	53	​	​	141	​	​	95
Currency exchange contracts recorded in selling, general and administrative	​	​	59	​	​	27	​	​	136	​	​	66
Interest rate contracts recorded in interest expense	​	​	2	​	​	—	​	​	2	​	​	—
Total before tax effect	​	​	161	​	​	52	​	​	302	​	​	72
Tax benefit (expense) on amounts reclassified into earnings	​	​	(35)	​	​	(9)	​	​	(68)	​	​	(11)
Recognized gain (loss), net of tax	​	$	126	​	$	43	​	$	234	​	$	61
​	​	​	​	​	​	​	​	​	​	​	​	​
Amortization of pension and other postretirement benefits: (a)	​	​	​	​	​	​	​	​	​	​	​	​
Actuarial gains (losses)	​	$	(8)	​	$	(12)	​	$	(24)	​	$	(39)
Prior service income (expense)	​	​	(1)	​	​	(1)	​	​	(3)	​	​	(3)
Effect of settlement losses and other one-time charges	​	​	(3)	​	​	(130)	​	​	(3)	​	​	(130)
Total before tax effect	​	​	(12)	​	​	(143)	​	​	(30)	​	​	(172)
Tax benefit (expense) on amounts reclassified into earnings	​	​	2	​	​	35	​	​	7	​	​	43
Recognized gain (loss), net of tax	​	$	(10)	​	$	(108)	​	$	(23)	​	$	(129)
​	​	​	​	​	​	​	​	​	​	​	​	​
Currency translation recorded in business consolidation and other activities from the sale of the Russian aluminum beverage packaging business	​	$	90	​	$	—	​	$	90	​	$	—

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

​

​

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)		2022			2021			2022			2021
​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings attributable to Ball Corporation	​	$	392	​	$	179	​	$	664	​	$	581
​	​	​	​	​	​	​	​	​	​	​	​	​
Basic weighted average common shares	​	​	314,054	​	​	325,876	​	​	317,296	​	​	327,097
Effect of dilutive securities	​	​	3,007	​	​	5,719	​	​	3,926	​	​	5,841
Weighted average shares applicable to diluted earnings per share	​	​	317,061	​	​	331,595	​	​	321,222	​	​	332,938
​	​	​	​	​	​	​	​	​	​	​	​	​
Per basic share	​	$	1.25	​	$	0.55	​	$	2.09	​	$	1.78
Per diluted share	​	$	1.24	​	$	0.54	​	$	2.07	​	$	1.75

​

Certain outstanding options and SSAR’s were excluded from the diluted earnings per share calculation because they were anti-dilutive (i.e., the sum of the proceeds, including the unrecognized compensation, exceeded the average closing stock price for the period). Ball excluded anti-dilutive options and SSAR’s of four million and one million for the three months ended September 30, 2022 and 2021, respectively, and three million and one million for the nine months ended September 30, 2022 and 2021, respectively.

​

The company declared and paid dividends of $0.20 per share for the three months ended September 30, 2022 and 2021, and $0.60 per share and $0.50 per share for the nine months ended September 30, 2022 and 2021, 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.

​

The following table provides additional information related to the commercial risk management instruments described above:

​

​	​	​	​	​	​	​	​	​	​
($ in millions)	​	September 30, 2022
Commercial risk area	​	Commodity			Currency			Interest Rate
​	​	​	​	​	​	​	​	​	​
Notional amount of contracts	​	$	1,758	​	$	2,710	​	$	788
Net gain (loss) included in AOCI, after-tax	​	​	—	​	​	7	​	​	—
Net gain (loss) included in AOCI, after-tax, expected to be recognized in net earnings within the next 12 months	​	​	—	​	​	22	​	​	—
​	​	​	​	​	​	​	​	​	​
Longest duration of forecasted cash flow hedge transactions in years	​	​	2	​	​	2	​	​	1

​

Common Stock Price Risk

​

The company’s deferred compensation stock program is subject to variable plan accounting and, accordingly, is marked to fair value using the company’s closing stock price at the end of the related reporting period. The company entered into total return swaps to reduce the company’s earnings exposure to these fair value fluctuations that will be outstanding through May 2023 and have a combined notional value of 2.5 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, 2022, and December 31, 2021, the aggregate fair value of all derivative instruments with credit-risk-related contingent features was a net liability position of $44 million and $3 million, respectively, and no collateral was required to be posted.

​

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, 2022, and December 31, 2021, 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, 2022
($ in millions)	Balance Sheet Location		DerivativesDesignatedas Hedging****Instruments			Derivatives notDesignated asHedging****Instruments			Total
​	​	​	​	​	​	​	​	​	​	​
Assets:	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	75	​	$	1	​	$	76
Currency contracts	​	​	​	—	​	​	38	​	​	38
Total current derivative contracts	Other current assets	​	$	75	​	$	39	​	$	114
​	​	​	​	​	​	​	​	​	​	​
Currency contracts	​	​	$	172	​	$	2	​	$	174
Total noncurrent derivative contracts	Other noncurrent assets	​	$	172	​	$	2	​	$	174
	​	​	​	​	​	​	​	​	​	​
Liabilities:	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	69	​	$	1	​	$	70
Currency contracts	​	​	​	2	​	​	18	​	​	20
Other contracts	​	​	​	—	​	​	19	​	​	19
Total current derivative contracts	Other current liabilities	​	$	71	​	$	38	​	$	109
​	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	1	​	$	—	​	$	1
Currency contracts	​	​	​	—	​	​	1	​	​	1
Total noncurrent derivative contracts	Other noncurrent liabilities	​	$	1	​	$	1	​	$	2

​

​	​	​	​	​	​	​	​	​	​	​
​	​	​	December 31, 2021
($ in millions)	Balance Sheet Location	​	DerivativesDesignatedas Hedging****Instruments			Derivatives notDesignated asHedging****Instruments			Total
​	​	​	​	​	​	​	​	​	​	​
Assets:	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	142	​	$	—	​	$	142
Currency contracts	​	​	​	2	​	​	19	​	​	21
Other contracts	​	​	​	1	​	​	6	​	​	7
Total current derivative contracts	Other current assets	​	$	145	​	$	25	​	$	170
​	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	3	​	$	—	​	$	3
Currency contracts	​	​	​	59	​	​	1	​	​	60
Total noncurrent derivative contracts	Other noncurrent assets	​	$	62	​	$	1	​	$	63
	​	​	​	​	​	​	​	​	​	​
Liabilities:	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	$	20	​	$	—	​	$	20
Currency contracts	​	​	​	—	​	​	8	​	​	8
Other contracts	​	​	​	—	​	​	1	​	​	1
Total current derivative contracts	Other current liabilities	​	$	20	​	$	9	​	$	29
​	​	​	​	​	​	​	​	​	​	​
Currency contracts	​	​	$	—	​	$	3	​	$	3
Total noncurrent derivative contracts	Other noncurrent liabilities	​	$	—	​	$	3	​	$	3

​

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 SOFR rate, 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, 2022, has not identified any circumstances requiring the reported values of the company’s financial instruments be adjusted.

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Three Months Ended September 30,
​	​	​	​	2022					​	2021
($ in millions)		**Location of Gain (Loss)**Recognized in Earnings on Derivatives		Cash FlowHedge -ReclassifiedAmount fromAccumulatedOtherComprehensive****Earnings (Loss)			Gain (Loss) onDerivatives notDesignated asHedgeInstruments			Cash FlowHedge -ReclassifiedAmount fromAccumulatedOtherComprehensive****Earnings (Loss)			Gain (Loss) onDerivatives notDesignated asHedgeInstruments
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commodity contracts - manage exposure to customer pricing	​	Net sales	​	$	105	​	$	—	​	$	(28)	​	$	—
Commodity contracts - manage exposure to supplier pricing	​	Cost of sales	​	​	(5)	​	​	37	​	​	53	​	​	3
Interest rate contracts - manage exposure for outstanding debt	​	Interest expense	​	​	2	​	​	5	​	​	—	​	​	—
Currency contracts - manage currency exposure	​	Selling, general and administrative	​	​	59	​	​	28	​	​	27	​	​	12
Equity contracts	​	Selling, general and administrative	​	​	—	​	​	(51)	​	​	—	​	​	23
Total	​	​	​	$	161	​	$	19	​	$	52	​	$	38

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Nine Months Ended September 30,											​
​	​	​	​	2022					​	2021					​
($ in millions)		**Location of Gain (Loss)**Recognized in Earnings on Derivatives		Cash FlowHedge -ReclassifiedAmount fromAccumulatedOtherComprehensive****Earnings (Loss)			Gain (Loss) onDerivatives notDesignated asHedgeInstruments			Cash FlowHedge -ReclassifiedAmount fromAccumulatedOtherComprehensive****Earnings (Loss)			Gain (Loss) onDerivatives notDesignated asHedgeInstruments		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commodity contracts - manage exposure to customer pricing	​	Net sales	​	$	23	​	$	—	​	$	(89)	​	$	—	​
Commodity contracts - manage exposure to supplier pricing	​	Cost of sales	​	​	141	​	​	17	​	​	95	​	​	9	​
Interest rate contracts - manage exposure for outstanding debt	​	Interest expense	​	​	2	​	​	9	​	​	—	​	​	—	​
Currency contracts - manage currency exposure	​	Selling, general and administrative	​	​	136	​	​	88	​	​	66	​	​	32	​
Equity contracts	​	Selling, general and administrative	​	​	—	​	​	(120)	​	​	—	​	​	(11)	​
Total	​	​	​	$	302	​	$	(6)	​	$	72	​	$	30	​

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

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended September 30,					​	Nine Months Ended September 30,
($ in millions)		2022			2021			2022			2021
​	​	​	​	​	​	​	​	​	​	​	​	​
Amounts reclassified into earnings:	​	​	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	$	(100)	​	$	(25)	​	$	(164)	​	$	(6)
Interest rate contracts	​	​	(2)	​	​	—	​	​	(2)	​	​	—
Currency exchange contracts	​	​	(59)	​	​	(27)	​	​	(136)	​	​	(66)
Change in fair value of cash flow hedges:	​	​	​	​	​	​	​	​	​	​	​	​
Commodity contracts	​	​	(32)	​	​	44	​	​	30	​	​	137
Interest rate contracts	​	​	—	​	​	(1)	​	​	1	​	​	(1)
Currency exchange contracts	​	​	62	​	​	26	​	​	123	​	​	58
Currency and tax impacts	​	​	34	​	​	(1)	​	​	32	​	​	(24)
​	​	$	(97)	​	$	16	​	$	(116)	​	$	98

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21. Contingencies

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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 $25 million in the aggregate, and such amounts have been included in other current liabilities and other noncurrent liabilities at September 30, 2022.

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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 statements 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 statements of the other party in April 2021. The parties submitted their position statements to the District Court on April 21, 2021. On August 25, 2021, the Court issued its order regarding the further proceedings permitting each party to submit supplemental expert reports and depositions of the experts. On September 9, 2021, the parties submitted a Submission Regarding Scheduling in which most issues were agreed, but the Court was requested to resolve a disagreement regarding the process and timing for the submission of each expert’s report and the deposition of the experts. The Court issued its Order resolving the disagreement on August 12, 2022, and issued a further Scheduling Order on August 30, 2022, that outlines the litigation process and schedule for the proceedings on remand over the following twelve months. 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. Tenders for the proposed remediation work were issued in 2020 and a preferred supplier of the remedial works has been identified. These proposed works are the subject of discussions taking place with the French environmental authorities before adoption of the final plan for the site and conduct of the remediation activity. 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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During 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 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 2021, 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 $22 million of prior year collections in business consolidation and other activities within its unaudited condensed consolidated statement of earnings for the period ended December 31, 2021. As of September 30, 2022, the company has no additional claims outstanding that would result in material reimbursements.

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In the second quarter of 2022, Ball’s beverage packaging, South America, segment formally notified a regional customer in Brazil of its breach of a long-term committed supply agreement since the first quarter of 2022, inclusive of beverage can and end volume requirements and associated accounts payable with Ball. In the event that satisfactory rectifying action is not taken in response to the notification of breach, Ball intends to pursue legal action to recover all amounts due and seek damages for non-performance. In the second quarter of 2022, Ball recorded a charge of $22 million reflecting an increased risk of not being able to fully collect amounts due from the customer; see Note 6 for further details. After recording this charge, Ball has financial exposure on balances due from the customer of $37 million, which are presented in receivables, net, other current assets, and other assets, in its unaudited condensed consolidated balance sheets. Ball considers that losses in the event of an unfavorable outcome to the dispute and any related legal action (or gains in the event of a favorable outcome) would not have a material effect upon its liquidity, results of operations or financial condition.

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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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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 they 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 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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