Ball Reports Second Quarter Results

Condensed Financial Statements (Second Quarter 2013)

Unaudited Condensed Consolidated Statements of Earnings

Three Months Ended

Six Months Ended

June 30,

July 1,

June 30,

July 1,

($ in millions, except per share amounts)

2013

2012

2013

2012

Net sales

$ 2,202.4

$ 2,296.3

$ 4,193.4

$ 4,339.0

Costs and expenses

Cost of sales (excluding depreciation and amortization)

(1,798.9)

(1,890.8)

(3,442.4)

(3,578.5)

Depreciation and amortization

(74.5)

(66.5)

(147.0)

(135.5)

Selling, general and administrative

(102.9)

(98.6)

(212.2)

(198.2)

Business consolidation and other activities

(22.6)

(2.8)

(45.3)

(7.2)

(1,998.9)

(2,058.7)

(3,846.9)

(3,919.4)

203.5

237.6

346.5

419.6

Interest expense

(47.7)

(44.7)

(92.5)

(90.0)

Debt refinancing costs

(26.7)

-

(26.7)

(15.1)

Total interest expense

(74.4)

(44.7)

(119.2)

(105.1)

Earnings before taxes

129.1

192.9

227.3

314.5

Tax provision

(30.8)

(50.0)

(48.9)

(78.0)

Equity in results of affiliates, net of tax

0.8

-

-

(0.2)

Net earnings from continuing operations

99.1

142.9

178.4

236.3

Discontinued operations, net of tax

-

(0.4)

0.1

(0.7)

Net earnings

99.1

142.5

178.5

235.6

Less net earnings attributable to noncontrolling interests

(4.0)

(3.0)

(11.4)

(7.8)

Net earnings attributable to Ball Corporation

$      95.1

$    139.5

$    167.1

$    227.8

Earnings per share:

Basic - continuing operations

$      0.65

$      0.90

$      1.13

$      1.46

Basic - discontinued operations

-

-

-

-

Total basic earnings per share

$      0.65

$      0.90

$      1.13

$      1.46

Diluted - continuing operations

$      0.63

$      0.88

$      1.10

$      1.43

Diluted - discontinued operations

-

-

-

(0.01)

Total diluted earnings per share

$      0.63

$      0.88

$      1.10

$      1.42

Weighted average shares outstanding (000s):

Basic

147,088

155,526

148,027

156,534

Diluted

150,305

158,981

151,262

159,943

Condensed Financial Statements (Second Quarter 2013)

Six Months Ended

June 30,

July 1,

($ in millions)

2013

2012

Cash Flows from Operating Activities:

Net earnings

$ 178.5

$ 235.6

Discontinued operations, net of tax

(0.1)

0.7

Depreciation and amortization

147.0

135.5

Business consolidation and other activities

45.3

7.2

Deferred tax provision

7.9

12.7

Other, net

(39.4)

(49.3)

Changes in working capital

(394.6)

(267.3)

  Cash provided by (used in) continuing operating activities

(55.4)

75.1

  Cash provided by (used in) discontinued operating activities

(2.1)

(0.4)

    Total cash provided by (used in) operating activities

(57.5)

74.7

Cash Flows from Investing Activities:

Capital expenditures

(201.1)

(138.5)

Business acquisitions, net of cash acquired

(12.6)

-

Other, net

(4.5)

(16.2)

  Cash provided by (used in) investing activities

(218.2)

(154.7)

Cash Flows from Financing Activities:

Changes in borrowings, net

533.3

324.1

Purchases of common stock, net of issuances

(202.3)

(248.7)

Dividends

(38.0)

(31.2)

Other, net

(16.5)

(9.7)

  Cash provided by (used in) financing activities

276.5

34.5

Effect of currency exchange rate changes on cash

(5.4)

3.2

Change in cash

(4.6)

(42.3)

Cash - beginning of period

174.1

165.8

Cash - end of period

$ 169.5

$ 123.5

Condensed Financial Statements (Second Quarter 2013)

Unaudited Condensed Consolidated Balance Sheets

June 30,

July 1,

($ in millions)

2013

2012

Assets

Current assets

Cash and cash equivalents

$    169.5

$    123.5

Receivables, net

1,123.9

1,143.1

Inventories, net

1,100.4

1,035.6

Deferred taxes and other current assets

225.7

209.5

    Total current assets

2,619.5

2,511.7

Property, plant and equipment, net

2,306.1

2,203.7

Goodwill

2,334.9

2,222.3

Other assets, net

555.1

501.8

Total assets

$ 7,815.6

$ 7,439.5

Liabilities and Shareholders' Equity

Current liabilities

Short-term debt and current portion of long-term debt

$    358.5

$    499.2

Payables and other accrued liabilities

1,408.9

1,389.3

    Total current liabilities

1,767.4

1,888.5

Long-term debt

3,472.6

2,963.5

Other long-term liabilities

1,368.2

1,246.1

Shareholders' equity

1,207.4

1,341.4

Total liabilities and shareholders' equity

$ 7,815.6

$ 7,439.5

Notes to the Condensed Financial Statements (Second Quarter 2013)

1. Business Segment Information

On January 1, 2013, the company implemented changes to its management and internal reporting structure. As a result, the European extruded aluminum business is now included in the metal food and household products packaging segment. This business was previously included in the metal beverage packaging, Europe, segment. The segment results for the three and six months ended July 1, 2012, have been retrospectively adjusted to conform to the current year presentation.

Three Months Ended

Six Months Ended

June 30,

July 1,

June 30,

July 1,

($ in millions)

2013

2012

2013

2012

Net sales -

Metal beverage packaging, Americas & Asia

$ 1,086.3

$ 1,207.6

$ 2,081.5

$ 2,257.3

Metal beverage packaging, Europe

508.7

511.7

911.6

926.2

Metal food & household products packaging

382.6

372.0

749.8

750.9

Aerospace & technologies

226.1

210.3

457.5

411.9

Corporate and intercompany eliminations

(1.3)

(5.3)

(7.0)

(7.3)

  Net sales

$ 2,202.4

$ 2,296.3

$ 4,193.4

$ 4,339.0

Earnings before interest and taxes -

Metal beverage packaging, Americas & Asia

$    125.7

$    136.8

$    229.7

$    242.3

Business consolidation and other activities

(11.0)

0.3

(12.5)

(1.4)

  Total metal beverage packaging, Americas & Asia

114.7

137.1

217.2

240.9

Metal beverage packaging, Europe

51.8

56.0

82.7

98.5

Business consolidation and other activities

(1.2)

(0.9)

(2.9)

(2.7)

  Total metal beverage packaging, Europe

50.6

55.1

79.8

95.8

Metal food & household products packaging

47.5

41.6

82.2

80.8

Business consolidation and other activities

(9.7)

-

(28.5)

-

  Total metal food & household products packaging

37.8

41.6

53.7

80.8

Aerospace & technologies

19.1

20.2

37.0

39.9

Business consolidation and other activities

(0.2)

-

(0.2)

-

  Total aerospace & technologies

18.9

20.2

36.8

39.9

    Segment earnings before interest and taxes

222.0

254.0

387.5

457.4

Undistributed and corporate expenses and intercompany eliminations, net

(18.0)

(14.2)

(39.8)

(34.7)

Business consolidation and other activities

(0.5)

(2.2)

(1.2)

(3.1)

  Total undistributed and corporate expenses, net

(18.5)

(16.4)

(41.0)

(37.8)

     Earnings before interest and taxes 

$    203.5

$    237.6

$    346.5

$    419.6

Notes to the Condensed Financial Statements (Second Quarter 2013)

2. Significant Business Consolidation Activities and Other Noncomparable Items

2013

The second quarter included charges of $7.1 million ($4.3 million after tax) to balance regional supply and demand in Ball's metal beverage packaging, Americas, operations by eliminating 12-ounce beverage can production from the company's Milwaukee, Wisconsin, facility. The second quarter also included a charge of $5.9 million ($3.6 million after tax) to migrate certain employees from a multi-employer defined benefit pension plan to a Ball-sponsored defined benefit pension plan.

In February 2013, Ball announced that it will close its Elgin, Illinois, metal food and household products packaging facility in December 2013. The first quarter and second quarter included charges of $20.8 million ($12.6 million after tax) and $5.3 million ($3.3 million after tax), respectively, in connection with the closure.

The first quarter and second quarter also included charges of $1.1 million ($0.6 million after tax) and $2.0 million ($1.2 million after tax), respectively, related to the previously announced closure of Ball's Columbus, Ohio, and Gainesville, Florida, metal beverage packaging, Americas, facilities and related voluntary separation programs.

Other items in the first quarter and second quarter included charges of $2.1 million ($1.6 million after tax) and $1.7 million ($1.3 million after tax) for the relocation of the company's European headquarters from Germany to Switzerland, as well as additional tax expense of $1.9 million and $2.0 million, respectively, related to this relocation. Additionally, the first and second quarters included income of $2.0 million ($1.2 million after tax) and $1.5 million ($0.9 million after tax), respectively, related to the reimbursement of funds paid in 2012 for the settlement of certain Canadian defined benefit pension liabilities of previously closed facilities.

During the second quarter, Ball issued $1 billion of 4.00 percent senior notes due in November 2023 and tendered for the redemption of $375 million of 7.125 percent senior notes originally due in September 2016. The redemption of the bonds, as well as the renegotiation of Ball's bank credit facilities in June, resulted in a charge of $26.7 million ($16.3 million after tax) for the call premium and the write off of unamortized financing costs and discounts.

2012

The first quarter and second quarter included charges of $2.5 million ($1.9 million after tax) and $2.9 million ($1.9 million after tax), respectively, incurred in connection with the relocation of the company's European headquarters from Germany to Switzerland.

The first six months of 2012 also included net charges of $1.8 million ($1.0 million after tax) for ongoing costs related to previously closed facilities.

During the first quarter, Ball issued $750 million of 5.00 percent senior notes and tendered for the redemption of $450 million of 6.625 percent senior notes originally due in March 2018. The redemption of the bonds resulted in a charge of $15.1 million ($9.2 million after tax) for the call premium and the write off of unamortized financing costs and premiums.

A summary of the effects of the above transactions on after-tax earnings is as follows:

Three Months Ended

Six Months Ended

June 30,

July 1,

June 30,

July 1,

($ in millions, except per share amounts)

2013

2012

2013

2012

Net earnings attributable to Ball Corporation, as reported

$    95.1

$ 139.5

$  167.1

$ 227.8

Discontinued operations, net of tax

-

0.4

(0.1)

0.7

Business consolidation and other activities, net of tax

16.3

1.8

32.3

4.8

Debt refinancing costs, net of tax

16.3

-

16.3

9.2

  Net earnings attributable to Ball Corporation before above transactions (Comparable Earnings)

$  127.7

$ 141.7

$  215.6

$ 242.5

  Per diluted share before above transactions

$   0.85

$   0.89

$   1.43

$   1.52

Notes to the Condensed Financial Statements (Second Quarter 2013) 

2. Significant Business Consolidation Activities and Other Noncomparable Items (continued)

A summary of the effects of the above transactions on earnings before interest and taxes is as follows:

Three Months Ended

Six Months Ended

June 30,

July 1,

June 30,

July 1,

($ in millions)

2013

2012

2013

2012

 Earnings before interest and taxes, as reported 

$  203.5

$ 237.6

$  346.5

$ 419.6

 Business consolidation and other activities 

22.6

2.8

45.3

7.2

   EBIT before above transactions (Comparable EBIT)

$  226.1

$ 240.4

$  391.8

$ 426.8

Non-U.S. GAAP Measures- Non-U.S. GAAP measures should not be considered in isolation. They should not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S. GAAP and may not be comparable to similarly titled measures of other companies. Presentations of earnings and cash flows presented in accordance with U.S. GAAP are available in this earnings release and quarterly and annual regulatory filings.