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<SEC-DOCUMENT>0000009389-01-500003.txt : 20010402
<SEC-HEADER>0000009389-01-500003.hdr.sgml : 20010402
ACCESSION NUMBER: 0000009389-01-500003
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 9
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010330
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BALL CORP
CENTRAL INDEX KEY: 0000009389
STANDARD INDUSTRIAL CLASSIFICATION: METAL CANS [3411]
IRS NUMBER: 350160610
STATE OF INCORPORATION: IN
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-07349
FILM NUMBER: 1586869
BUSINESS ADDRESS:
STREET 1: 10 LONGS PEAK DRIVE
CITY: BROOMFIELD
STATE: CO
ZIP: 80021-2510
BUSINESS PHONE: 3034695511
MAIL ADDRESS:
STREET 1: PO BOX 5000
CITY: BROOMFIELD
STATE: CO
ZIP: 80038-5000
FORMER COMPANY:
FORMER CONFORMED NAME: BALL BROTHERS CO
DATE OF NAME CHANGE: 19731115
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<PRE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<b>FORM 10-K</b>
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 1-7349
<b>Ball Corporation</b>
State of Indiana 35-0160610
10 Longs Peak Drive, P.O. Box 5000
Broomfield, Colorado 80021-2510
Registrant's telephone number, including area code: (303) 469-3131
- ------------------------------------------------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
--------------------------------- ---------------------------------
Common Stock, without par value New York Stock Exchange, Inc.
Chicago Stock Exchange, Inc.
Pacific Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the registrant was $1,142 million based upon
the closing market price on March 2, 2001 (excluding Series B ESOP Convertible Preferred Stock of the registrant,
which series is not publicly traded and which has an aggregate liquidation preference of $53.4 million).
Number of shares outstanding as of the latest practicable date.
Class Outstanding at March 4, 2001
--------------------------------- ---------------------------------
Common Stock, without par value 27,462,515
DOCUMENTS INCORPORATED BY REFERENCE
1. Annual Report to Shareholders for the year ended December 31, 2000, to the extent indicated in Parts I, II
and IV. Except as to information specifically incorporated, the 2000 Annual Report to Shareholders is not
to be deemed filed as part of this Form 10-K Annual Report.
2. Proxy statement filed with the Commission dated March 15, 2000, to the extent indicated in Part III.
<PAGE>
<b>PART I</b>
<b>Item 1. Business</b>
Ball Corporation was organized in 1880 and incorporated in Indiana in 1922. Its principal executive offices are
located at 10 Longs Peak Drive, Broomfield, Colorado 80021-2510. The terms "Ball," "the company," "we" or "our"
as used herein refer to Ball Corporation and its consolidated subsidiaries.
Ball is a manufacturer of metal and plastic packaging, primarily for beverages and foods, and a supplier of
aerospace and other technologies and services to commercial and governmental customers.
The following sections of the 2000 Annual Report to Shareholders contain financial and other information
concerning company business developments and operations, and are incorporated herein by reference: the notes to
the consolidated financial statements "Business Segment Information" (Note 2), "Business Consolidation Costs and
Other" (Note 3), "Acquisitions" (Note 4) and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<b>Business Developments in 2000 and Early 2001</b>
As result of improved operating efficiencies throughout our packaging business and in keeping with our strategy
to keep manufacturing costs low, we recorded an $83.4 million pretax charge ($55 million after tax, minority
interests and equity earnings impacts, or $1.77 per diluted share) in the second quarter for packaging business
consolidation and investment exit activities. The charge includes costs associated with the permanent closure of
a beverage can manufacturing facility in the U.S., the elimination of food and beverage can manufacturing
capacity at two locations in Canada, the consolidation of production capacity in the People's Republic of China
(PRC) and the write-down to net realizable value of an investment in a Russian beverage can manufacturing joint
venture. These actions are expected to be completed during 2001. Additional details about the business
consolidations charge are provided in Note 3 to the consolidated financial statements, which can be found in
Exhibit 13.1.
Although we have taken various actions in the PRC during the past several years, the industry and market
environment in which we operate in China are not improving at a satisfactory pace. As a result, we have begun an
extensive review of options available to us in connection with our investment. We expect to complete our review
late in the second quarter of 2001, which will, in all likelihood, require the closure, consolidation or sale of
certain facilities. At this time, we have not determined the final structural changes, the facilities to be
affected or the amount of any potential charge. As an initial step in this process, the board of directors of one
of our subsidiaries in China authorized local management at a plant in Tianjin to develop an exit strategy for
the general packaging business in northern China, the completion of which is expected in the second quarter.
<b>Information Pertaining to the Business of the Company</b>
The company's businesses are comprised of two segments: (1) packaging and (2) aerospace and technologies.
<b>Packaging Segment</b>
Ball's principal business is the manufacture and sale of rigid packaging products, primarily for beverages and
foods. Packaging products are sold in highly competitive markets, primarily based on quality, service and price.
A substantial part of our packaging sales are made directly to relatively few major companies in packaged
beverage and food businesses, including Miller Brewing Company and worldwide bottlers of Pepsi-Cola and Coca-Cola
branded beverages and their licensees utilizing consolidated purchasing groups. Additional details about our
sales to these customers are included in Note 2 to the consolidated financial statements, which can be found in
Exhibit 13.1.
The rigid packaging business is capital intensive, requiring significant investments in machinery and equipment.
Profitability is sensitive to production volumes, labor and the costs of certain raw materials, such as aluminum,
steel and plastic resin.
Raw materials used in our packaging business are generally available from several sources. We have secured what
we consider to be adequate supplies of raw materials and are not experiencing any shortages. Our manufacturing
facilities are dependent, in varying degrees, upon the availability of process energy, such as natural gas and
electricity. While certain of these energy sources may become increasingly in short supply or halted due to
external factors (as is currently the case in California), we cannot predict the effects, if any, of such
occurrences on future operations.
Research and development efforts in this business generally seek to improve manufacturing efficiencies and lower
unit costs, principally raw material costs, by reducing the material content of containers while improving or
maintaining other physical properties such as material strength. In addition, research and development efforts
are directed toward the development of new sizes and types of metal and plastic beverage and food containers, as
well as new uses for the current containers.
Decorated two-piece aluminum beverage cans are currently being produced at 18 manufacturing facilities in the
U.S., 1 facility in Canada and 1 in Puerto Rico; ends are produced within 5 U.S. facilities. Metal beverage
containers are sold primarily to fillers of carbonated soft drinks, beer and other beverages under annual or
long-term supply contracts. Sales volumes of metal beverage cans and ends in North America tend to be highest
during the period from April through September.
Metal beverage containers and ends represent Ball's largest product line, accounting for approximately 61 percent
of 2000 consolidated net sales. As a result of a beverage can manufacturing asset acquisition in 1998, we
expanded our metal beverage product line to include specialty cans and became the largest metal beverage can
producer in North America.
Based on publicly available industry information, we estimate that our North American metal beverage container
shipments were approximately 32 percent of total U.S. and Canadian shipments for metal beverage containers. We
also estimate that five producers represent substantially all of the remaining metal beverage container
shipments. Available industry information indicates the growth in industry-wide shipments was relatively flat
from 1998 to 2000, but increased approximately 2.2 percent from 1997 to 1998.
In Canada, metal beverage containers have captured significantly lower percentages of the packaged beverage
industry than in the U.S., particularly in the packaged beer industry, in which the market share of metal
containers has been hindered by trade barriers and restrictive taxes within Canada.
Beverage container industry production capacity in the U.S. and Canada exceeds demand. In order to balance more
closely capacity and demand within our business, we have consolidated our can and end manufacturing capacity into
fewer, more efficient facilities with the closure of four plants during 1999 and 2000, as reported in our Annual
Report to Shareholders.
The aluminum beverage can continues to compete aggressively with other packaging materials in the beer and soft
drink industries. The glass bottle has shown resilience in the packaged beer industry, while the soft drink
industry use of the PET bottle has grown. The beer industry has also begun the usage of plastic beer bottles.
Two-piece and three-piece steel food containers are manufactured in the U.S. and Canada and sold primarily to
food processors in the Midwestern United States and Canada. In 2000 metal food container sales comprised
approximately 16 percent of consolidated net sales. Sales volumes of metal food containers in North America tend
to be highest from June through October as a result of seasonal vegetable and salmon packs.
In the metal food container industry, manufacturing capacity in North America exceeds market demand.
Approximately 34 billion steel food cans were shipped in the U.S. and Canada in 2000, of which approximately
18 percent were shipped by Ball.
Polyethylene terephthalate (PET) packaging is Ball's newest product line, representing slightly more than
7 percent of consolidated net sales in 2000. Demand for containers made of PET has increased in the beverage
packaging industry and is expected to increase in the food packaging industry with improved technology and
adequate supplies of PET resin. While PET beverage containers compete primarily against metal and glass, the
historical increase in the sales of PET containers has come primarily at the expense of glass containers and
through new market introductions. The latest publicly available projections indicate that the growth in overall
PET demand over the next two years is expected to be between 7 and 8 percent. Based on research estimates from
various sources, we believe Ball's share of the total U.S. and Canadian shipments is between 8 and 12 percent.
Competition in the PET container industry includes four national suppliers and several regional suppliers and
self-manufacturers. Service, quality and price are deciding competitive factors. Increasingly, the ability to
produce customized, differentiated plastic containers is an important competitive factor.
Ball has secured long-term customer supply agreements, principally for carbonated beverage and water containers.
Plastic beer containers are being tested by several of our customers and we are developing plastic containers for
the single serve juice market.
We are the largest beverage can manufacturer in the PRC, supplying approximately 50 percent of the two-piece
aluminum beverage cans used in the PRC. Capacity has grown rapidly in the PRC, resulting in a supply/demand
imbalance. As discussed above, we have begun a review of our options there, which will likely require the
consolidation, closure or sale of certain facilities. To date we have closed, in the early part of 1999, two of
our plants located in the PRC and have reduced production capacity in other plants.
The Beijing manufacturing facility is one of the most technologically advanced plants in the PRC and the
company's 34 percent-owned affiliate, Sanshui Jianlibao FTB Packaging Limited, is the largest can manufacturing
facility in the PRC in terms of production capacity. For more information on operations in the PRC, see Item 2,
Properties, and Exhibit 21.1, Subsidiary List.
We are a 50 percent equity owner of a joint venture with BBM Participacoes S.A. producing two-piece aluminum cans
and ends in Brazil. Ball also participates in joint ventures in Thailand, Taiwan and the Philippines, in addition
to providing manufacturing technology and assistance to several can manufacturers around the world.
<b>Aerospace and Technologies Segment</b>
The aerospace and technologies segment includes civil space systems, defense systems, commercial space
operations, commercial products and technologies, systems engineering services and advanced antenna and video
systems. Sales in the aerospace and technologies segment accounted for approximately 10 percent of consolidated
net sales in 2000.
The majority of the aerospace and technologies segment business involves work under contracts of generally one to
five years in length for the National Aeronautics and Space Administration (NASA), the U.S. Department of Defense
(DoD) and foreign governments. Contracts funded by the various agencies of the federal government represented
approximately 85 percent of segment sales in 2000. Major industry trends have not changed significantly, with
Department of Defense and NASA budgets remaining relatively flat. However, there is a growing worldwide demand
for commercial space activities. Consolidation in the industry continues, and there is strong competition for
business.
Civil space and defense systems and commercial space operations include hardware, software and services to both
U.S. and international customers, with emphases on space science, environment and Earth sciences, defense and
intelligence, manned missions and exploration. Also included are the design, manufacture and testing of
satellites, ground systems and payloads (including launch vehicle integration), as well as satellite ground
station control hardware and software.
Other hardware activities include: electro-optics products for spacecraft guidance; control instruments, sensors
and defense subsystems for surveillance; warning, target identification and attitude control; cryogenic systems
for reactant storage; sensor cooling devices such as closed-cycle mechanical refrigerators and open-cycle solid
and liquid cryogens; star trackers, which are general-purpose stellar attitude sensors; and fast-steering mirrors.
Additionally, the aerospace and technologies segment provides diversified technical services and products to
federal and local government agencies, prime contractors and commercial organizations for a broad range of
information warfare, electronic warfare, avionics, intelligence, training and space systems needs.
During 2000 we formed several strategic alliances to expand our commercial operations in the areas of radar
operations, internet connectivity and broadband data services. The QuikSCAT commercial satellite successfully
launched in 1999 made the news during 2000 when it was announced that approximately 99 percent of all possible
wind data had been processed. In what scientists hailed as one of the most successful mapping missions, our
synthetic aperture radar antenna acquired topographic data of more than 47.6 million square miles of Earth to be
used by the National Image and Mapping Agency to create the most accurate and complete topographic map of Earth
ever assembled.
<i>Backlog</i>
Backlog of the aerospace and technologies segment was approximately $351 million and $346 million at December 31,
2000 and 1999, respectively, and consists of the aggregate contract value of firm orders, excluding amounts
previously recognized as revenue. The 2000 backlog includes approximately $218 million expected to be billed
during 2001, with the remainder expected to be billed thereafter. Unfunded amounts included in backlog for
certain firm government orders which are subject to annual funding were approximately $215 million at
December 31, 2000. Year-to-year comparisons of backlog are not necessarily indicative of the trend of future
operations.
The company's aerospace and technologies segment has contracts with the U.S. government which have standard
termination provisions. The government retains the right to terminate contracts at its convenience. However, if
contracts are terminated, Ball is entitled to be reimbursed for allowable costs and profits to the date of
termination relating to authorized work performed to such date. U.S. government contracts are also subject to
reduction or modification in the event of changes in government requirements or budgetary constraints.
<b>Patents</b>
In the opinion of the company, none of its active patents is essential to the successful operation of its
business as a whole.
<b>Research and Development</b>
The "Research and Development" note in the 2000 Annual Report to Shareholders contains information on company
research and development activity and is incorporated herein by reference.
<b>Environment</b>
Aluminum, steel and PET containers are recyclable, and significant amounts of used containers are being recycled
and diverted from the solid waste stream. Using the most recent data available, in 1999 approximately 63 percent
of aluminum containers, 58 percent of steel cans and 24 percent of the PET containers sold in the U.S. were
recycled.
Compliance with federal, state and local laws relating to protection of the environment has not had a material,
adverse effect upon capital expenditures, earnings or competitive position of the company. As more fully
described under Item 3, Legal Proceedings, the U. S. Environmental Protection Agency and various state
environmental agencies have designated the company as a potentially responsible party, along with numerous other
companies, for the cleanup of several hazardous waste sites. However, the company's information at this time does
not indicate that these matters will have a material, adverse effect upon the liquidity, results of operations or
financial condition of the company.
Legislation which would prohibit, tax or restrict the sale or use of certain types of containers, and would
require diversion of solid wastes such as packaging materials from disposal in landfills, has been or may be
introduced in the U.S. Congress and the Canadian Parliament, in state and Canadian provincial legislatures and
other legislative bodies. While container legislation has been adopted in a few jurisdictions, similar
legislation has been defeated in public referenda in several other states, in local elections and in many state
and local legislative sessions. The company anticipates that continuing efforts will be made to consider and
adopt such legislation in many jurisdictions in the future. If such legislation was widely adopted, it could have
a material adverse effect on the business of the company, as well as on the container manufacturing industry
generally, in view of the company's substantial North American sales and investment in metal and PET container
manufacture.
<b>Employees</b>
At the end of February 2001, the company employed approximately 11,200 people worldwide.
<b>Item 2. Properties</b>
The company's properties described below are well maintained, are considered adequate and are being utilized for
their intended purposes.
The Corporate headquarters is located in Broomfield, Colorado. The offices for metal packaging operations are in
Westminster, Colorado. Also located in Westminster is the Edmund F. Ball Technical Center, which serves as a
research and development facility, primarily for the metal packaging operations. The offices, pilot line and
research and development center for the plastic container business are located in Smyrna, Georgia.
Ball Aerospace & Technologies Corp. offices are located in Boulder, Colorado. The Colorado-based operations of
this business occupy a variety of company-owned and leased facilities in Boulder, Broomfield and Westminster,
which together aggregate approximately 1,300,000 square feet of office, laboratory, research and development,
engineering and test and manufacturing space. Other aerospace and technologies operations include facilities in
California, Georgia, New Mexico, Ohio, Texas and Virginia.
Information regarding the approximate size of the manufacturing locations for significant packaging operations
which are owned by the company, except where indicated otherwise, follows. Facilities in the process of being
shut down have been excluded from the list. Where certain locations include multiple facilities, the total
approximate size for the location is noted. In addition to the manufacturing facilities, the company leases
warehousing space.
<PAGE>
<b>Approximate
Floor Space in
Square Feet</b>
<b>Plant Location</b>
<i>Metal packaging manufacturing facilities:</i>
<u>North America</u>
Blytheville, Arkansas (leased) 29,000
Springdale, Arkansas 286,000
Richmond, British Columbia 194,000
Fairfield, California 340,000
Torrance, California 265,000
Golden, Colorado 500,000
Tampa, Florida 275,000
Moultrie, Georgia 152,000
Kapolei, Hawaii 132,000
Monticello, Indiana 356,000
Kansas City, Missouri 225,000
Saratoga Springs, New York 153,000
Wallkill, New York 314,000
Reidsville, North Carolina 287,000
Columbus, Ohio 167,000
Findlay, Ohio 733,000
Burlington, Ontario 308,000
Whitby, Ontario 200,000
Guayama, Puerto Rico 225,000
Baie d'Urfe, Quebec 211,000
Chestnut Hill, Tennessee 300,000
Conroe, Texas 180,000
Fort Worth, Texas 161,000
Bristol, Virginia 241,000
Williamsburg, Virginia 400,000
Seattle, Washington 166,000
Weirton, West Virginia (leased) 85,000
DeForest, Wisconsin 45,000
Milwaukee, Wisconsin 161,000
<u>Asia</u>
Beijing, PRC 272,000
E-zhou, Hubei (Wuhan), PRC 193,000
Hong Kong, PRC 235,000
Panyu, PRC 207,000
Shenzhen, PRC 271,000
Tianjin, PRC 57,000
Xi'an, PRC 251,000
Zhuhai, PRC 180,000
<PAGE>
<b>Approximate
Floor Space in
Square Feet</b>
<b>Plant Location</b>
<i>Plastic packaging manufacturing facilities:</i>
<u>North America</u>
Chino, California (leased) 240,000
Ames, Iowa (leased) 250,000
Delran, New Jersey (leased) 450,000
Baldwinsville, New York (leased) 240,000
<u>Asia</u>
Taicang, Jiangsu, PRC (leased) 112,000
Tianjin, PRC 2,000
In addition to the consolidated manufacturing facilities, the company has ownership interests of 50 percent or
less in packaging affiliates located in the PRC, Brazil, Thailand, Taiwan and the Philippines.
<b>Item 3. Legal Proceedings</b>
As previously reported, the U.S. Environmental Protection Agency (EPA) considers the company to be a Potentially
Responsible Party (PRP) with respect to the Lowry Landfill site located east of Denver, Colorado. On June 12,
1992, the company was served with a lawsuit filed by the City and County of Denver (Denver) and Waste Management
of Colorado, Inc., seeking contribution from the company and approximately 38 other companies. The company filed
its answer denying the allegations of the Complaint. On July 8, 1992, the company was served with a third-party
complaint filed by S.W. Shattuck Chemical Company, Inc., seeking contribution from the company and other
companies for the costs associated with cleaning up the Lowry Landfill. The company denied the allegations of the
complaint.
In July 1992 the company entered into a settlement and indemnification agreement with Denver, Chemical Waste
Management, Inc., and Waste Management of Colorado, Inc. (collectively Waste) pursuant to which Denver and Waste
dismissed their lawsuit against the company and Waste agreed to defend, indemnify and hold harmless the company
from claims and lawsuits brought by governmental agencies and other parties relating to actions seeking
contributions or remedial costs from the company for the cleanup of the site. Several other companies, which are
defendants in the above-referenced lawsuits, had already entered into the settlement and indemnification
agreement with Denver and Waste. Waste Management, Inc., has agreed to guarantee the obligations for Chemical
Waste Management, Inc., and Waste Management of Colorado, Inc. Denver and Waste may seek additional payments from
the company if the response costs related to the site exceed $319 million. The company might also be responsible
for payments (calculated in 1992 dollars) for any additional wastes which may have been disposed of by the
company at the site but which are identified after the execution of the settlement agreement.
At this time, there are no Lowry Landfill actions in which the company is actively involved. Based on the
information available to the company at this time, the company believes that this matter will not have a
material adverse effect upon the liquidity, results of operations or financial condition of the company.
As previously reported, on April 24, 1992, the company was notified by the Muncie Race Track Steering Committee
(Steering Committee) that the company, through its former Consumer Products Division and former Zinc Products
Division, may be a PRP with respect to waste disposal at the Muncie Race Track Site located in Delaware County,
Indiana. The Steering Committee alleges that the company was a contributor to the site. The Steering Committee
requested that the company pay 2 percent of the cleanup costs which are estimated at this time to be $10 million.
The company declined to participate in the PRP group because the company's records do not indicate the company
contributed hazardous waste to the site. The company continues to attempt to settle this claim. Based upon the
information available to the company at this time, the company does not believe that this matter will have a
material adverse effect upon the liquidity, results of operations or financial condition of the company.
As previously reported, on August 1, 1997, the EPA sent notice of potential liability letters to 19 owners,
operators and waste generators concerning past activities at one or more of the four Rocky Flats parcels at the
Rocky Flats Industrial Park site located in Jefferson County, Colorado. Based upon sampling at the site in 1996,
the EPA determined that additional site work would be required to determine the extent of contamination and the
possible cleanup of the site. The EPA requested the letter recipients conduct an engineering evaluation and cost
analysis (EE/CA) of the site. Fourteen companies, including the company, have undertaken the study. The EPA is
also seeking reimbursement for approximately $1.5 million which it has spent at the site. On December 19, 1997,
the EPA issued an Administrative Order to conduct the EE/CA to 18 owners, operators and generators associated
with the site. The EPA alleged that the company is the ninth largest generator of the thirteen generators issued
Administrative Orders. The PRP group has undertaken the EE/CA at a cost of about $850,000, of which the company
has paid approximately $70,000.
Site characterization work began in May 1998 and continued through June 1999. Wells were installed and soil and
groundwater samples were taken for analysis. Contamination does not exist in deep aquifers but is present in soil
and shallow aquifers both in and off the Aerr Co. property. The draft EE/CA was submitted to USEPA in
January 2000. The final EE/CA was sent to USEPA in June 2000. A final draft agreement for professional services
was prepared in December 2000 for the PRP consultant (EMSI) to begin the next phase of site work.
The PRPs are discussing allocation formulas for the post EE/CA work. Ball's future obligation to the group may be
between $285,000 and $385,000. More expensive options, such as insurance and a site buyout, are under
consideration by the PRP group.
On September 29, 2000, an Administrative Order on Consent (AOC) for Removal Action for the Rocky Flats Industrial
Park Site was delivered to the EPA by a PRP group representative. Twelve companies signed the AOC to conduct
work on the Aerr Co. and Thoro properties. The EPA agreed to forgo all past costs at the site and work with the
PRPs to gain site access to conduct air sparging and soil vapor extraction (AS/SVE) activities. The PRPs
negotiated a revised group agreement. Ball will pay 12 percent of Aerr Co. site costs and a percentage of Thoro
AS/SVE system operation costs. Any potential state natural resources damage claims are not a part of this
agreement. The Department of Interior has not yet waived federal natural resource damage claims so the
Department of Justice has not approved the RFIP Administrative Order on Consent. Once approved the order will
not be final until a 30-day public comment period ends.
Based upon the information available to the company at this time, the company does not believe that this matter
will have a material adverse effect upon the liquidity, results of operations or financial condition of the
company.
As previously reported, the company was notified on June 19, 1989, that the EPA has designated the company and
numerous other companies as PRPs responsible for the cleanup of certain hazardous wastes that were released at
the Spectron, Inc., site located in Elkton, Maryland. In December 1989 the company, along with other companies
whose alleged hazardous waste contributions to the Spectron, Inc., site were considered to be de minimis, entered
into a settlement agreement with the EPA for cleanup costs incurred in connection with the removal action of
aboveground site areas. By a letter dated September 29, 1995, the company, along with other above-described PRPs,
was notified by the EPA that it was negotiating with the large-volume PRPs another consent order for performance
of a site environmental study as a prerequisite to long-term remediation. The EPA and the large-volume PRPs have
stated that a second de minimis buyout for settlement of liability for performance of all environmental studies
and site remediation is being formulated and an offer to participate therein has been made to the company. The
company has joined with a group of de minimis PRPs to negotiate a reduction (i.e., a lower price per gallon
assessment) in the proposed de minimis settlement offer. EPA is expected to issue its de minimis settlement offer
in May 2001. Based upon the information available to the company at this time, the company does not believe that
this matter will have a material adverse effect upon the liquidity, results of operations or financial condition
of the company.
As previously reported, the company was named a PRP with respect to the Solvents Recovery Site located in
Southington, Connecticut. According to the information received by the company, it is alleged that the company
contributed approximately 0.08816 percent of the waste contributed to the site on a volumetric basis. The company
responded and has investigated the accuracy of the total volume alleged to be attributable to the company. The
company joined the PRP group during 1993. In February 1995 the company executed a trust agreement whereby certain
contributions will be made to fund the administration of an ongoing work group. The group members finalized an
Administrative Order on Consent for Removal Action and Remedial Investigation/Feasibility Study on February 6,
1997, pursuant to which the group members will perform a removal action and completion of a remedial
investigation and feasibility study in connection with the site. Based upon the information available to the
company at this time, the company does not believe that this matter will have a material adverse effect upon the
liquidity, results of operations or financial condition of the company.
As previously reported, on or about June 14, 1990, the El Monte plant of Ball-InCon Glass Packaging Corp., a then
wholly owned subsidiary of the company [renamed Ball Glass Container Corporation (Ball Glass)], the assets of
which were contributed in September 1995 into a joint venture with Compagnie de Saint-Gobain (Saint-Gobain), now
known as Ball-Foster Glass Container Co., L.L.C., and wholly owned by Saint Gobain, received a general
notification letter and information request from the EPA, Region IX, notifying Ball Glass that it may have a
potential liability as defined in Section 107(a) of the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA) with respect to the San Gabriel Valley areas 1-4 Superfund Sites located in Los Angeles
County, California. The EPA requested certain information from Ball Glass, and Ball Glass responded. The company
received notice from the City of El Monte that, pursuant to a proposed city economic redevelopment plan, the City
proposed to commence groundwater cleanup by a pump and treat remediation process. As of March 1, 2001, the City
has not commenced this remediation. A PRP group organized and drafted a PRP group agreement, which Ball Glass
executed. The PRP group retained an environmental engineering firm to critique the EPA studies and any proposed
remediation.
The PRP group completed negotiations with the EPA over the terms of the administrative consent order, statement
of work for the remedial investigation phase of the cleanup, and the interim allocation arrangement between PRP
group members to fund the remedial investigation. The interim allocation approach requires that any payment will
be based upon contribution to pollution. Ball's interim allocation is 5.79 percent. The administrative consent
order was executed by the PRP group and the EPA. The EPA also accepted the statement of work for the remedial
investigation phase of the cleanup. The PRP group retained an environmental engineering consulting firm to
perform the remedial investigation. As required under the administrative consent order, the group submitted to
the EPA copies of all environmental studies conducted at the plant, the majority of which had already been
furnished to the State of California. The EPA then approved the work plan, project management plan and the data
management plan portions of the PRP group's proposed remedial investigation/feasibility study (RI/FS). The group
funded the RI/FS. The environmental consulting firm retained by the PRP group submitted to the EPA its
Feasibility Study Technical Memorandum 1 concerning the site. Five potential remedial action plans were
identified in the study, ranging from no action to an extensive groundwater remediation project for both shallow
and deep aquifers. The costs of such remedies ranged from minimal costs for no action to between $10.5 to
$25 million for the three groundwater pump and treat options proposed. The PRP group negotiated with the EPA over
the remedy selections for the Record of Decision (ROD) and has formed an allocation committee for making final
allocation of remediation costs between group members. The EPA has finalized the ROD and selected the most
extensive and expensive remedy. The selected remedy is extraction and treatment of the solvent contaminated
groundwater in both the east El Monte and west El Monte plumes, both deep and shallow aquifers. The PRP group has
commenced the final allocation process. The Allocation Committee has been assigned such task and continues the
development of the method for final allocation of costs among PRP group members. Although final allocation has
not been made, the Allocation Committee will allocate costs so that PRP group members responsible for the
majority of the contamination will pay a higher percentage of the cleanup costs required by the ROD, once it is
finalized and issued. Since final costs will be allocated under such method, Ball Glass decided to perform soil
vapor analysis testing to compliment its soil and groundwater sampling analyses previously conducted. Soil vapor
analysis was conducted during the week of October 25, 1999. In a significant positive development, the results of
all 44 vapor probe locations were non-detect for concern constituents sampled (i.e., those pollutants present in
the area groundwater). On November 11, 1999, Ball Glass informed the PRP group of these results, which should
reduce Ball Glass' final cost allocation under such allocation method. On March 14, 2000, Ball Glass made a
formal presentation to the Allocation Committee and requested, based upon its analytical data described above,
that its final allocation be reduced from the 5.79 percent interim allocation percentage. The San Gabriel Basin
Water Quality Authority (WQA) has committed to fund $500,000 as an early response action program (ERAP); and as a
result, the PRP group is in the process of implementing a shallow aquifer groundwater treatment program under
ERAP (in order to obtain such matching public grant funds), using group funds to install three west plume shallow
aquifer groundwater remediation wells. The PRP group is implementing such action under the ERAP since the
availability of ERAP public grant funds ceases at the point EPA issues special notice letters requiring the PRP
group members to enter an administrative consent order implementing the final cleanup remedy required by the ROD.
Regarding the anticipated implementation of the final remedy, negotiations continue with area water providers who
may pump and treat deep aquifer groundwater from the east and west plumes. If these negotiations are successful,
the PRP group members may only be responsible for remediation of shallow aquifers on the east and west sides of
the operable unit. The EPA is requiring the PRP group to pay $400,000 of the EPA's past site operation costs plus
interest. Such payment must be made within the next three years; however, the EPA has agreed to accept
installment payments. The PRP group anticipates making a $100,000 installment payment by May 31, 2001. In
addition, Commercial Union, the Corporation's general liability insurer, is defending this governmental action
and is paying the cost of defense including attorneys' fees. Based on the information available to the company
at this time, the company is unable to express an opinion as to the actual exposure of the company; however,
the company does not believe that this matter will have a material adverse effect upon the liquidity, results
of operations or financial condition of the company.
As previously reported, in March 1992, William Hallahan, an employee at the company's metal beverage container
plant in Saratoga Springs, New York, filed a workers' compensation claim alleging that he suffers from a form of
leukemia that was caused by his exposure to certain chemicals used in the plant. The company denied the charge,
and hearings on the matter were held before the Workers' Compensation Board of the State of New York. On
January 14, 1997, the Administrative Law Judge (ALJ) filed his Memorandum of Decision finding in favor of the
claimant. The decision was appealed, and the Workers' Compensation Board remanded the case back to the ALJ for
further findings. The ALJ entered a decision against the company on January 8, 1998, as corrected on February 2,
1998, and February 4, 1998. The company appealed all of the decisions to the Appeals Bureau of the Workers'
Compensation Board on February 6, 1998. In June 1999 a three-judge panel of the Workers' Compensation Board
reversed the decision of the ALJ and found that substantial evidence does not show a causal relationship between
the claimant's workplace and his disease in order to support a causal link and conclude that he developed an
occupational disease. The Board then closed the case. The claimant appealed the case to the full Workers'
Compensation Board and alternatively to the Appellate Division of the New York State judicial system. On May 30,
2000, the full Workers' Compensation Board refused to review the matter. Based on the information available to
the company at this time, the company does not believe that this matter will have a material adverse effect upon
the liquidity, results of operations or financial condition of the company.
As previously reported, on or about December 31, 1992, William Hallahan and his wife filed suit in the Supreme
Court of the State of New York, County of Saratoga, against certain manufacturers of solvents, coatings and
equipment, including Somerset Technologies Inc. and Belvac Production Machinery, seeking damages in the amount of
$15 million for allegedly causing leukemia by exposing him to harmful toxins. Somerset and Belvac filed
third-party complaints seeking contribution from the company for damages that they might be required to pay
William Hallahan. Based upon the information available to the company at this time, the company believes that
this matter will not have a material adverse effect upon the liquidity, results of operations or financial
condition of the company.
As previously reported, on September 21, 1998, Daiei, Inc. (Daiei), a Japanese corporation, with its principal
place of business in Tokyo, Japan, sued the company in U.S. District Court, Southern District of Indiana,
Evansville Division. Daiei alleges it is engaged in the retail sale of consumer goods and food products at stores
throughout Japan. Daiei alleges that it purchased defective beer cans filled with beer from Evansville Brewing
Company, Inc. (EBC) between April 5, 1995, and July 20, 1995. Daiei further alleges that the metal containers
were defectively assembled and sealed by EBC at its production facility in Evansville, Indiana, upon a machine
which was inspected by representatives of Ball. Daiei further alleges that Ball breached its warranty to provide
metal containers that performed in a commercially reasonable manner, and that Ball's representatives were
negligent in the repair of the sealing equipment owned by EBC. Daiei seeks damages for the lost containers and
product in the amount of approximately $7 million. The company has retained counsel and is defending this case.
The parties are engaged in the discovery process, and a Motion to Dismiss was filed by the company on several
legal grounds. The Court dismissed Daiei's claim based upon negligence. Discovery continues with respect to
Daiei's claims for breach of express and implied warranties and fitness for a particular purpose. Based upon the
information available to the company at this time, the company does not believe that this matter will have
a material adverse effect upon the liquidity, results of operations or financial condition of the company.
On March 3, 2000, Pechiney Plastic Packaging, Inc., and Pechiney Emballage Flexible Europe (Pechiney) filed a
lawsuit against Kortec, Inc.; Crown Cork & Seal Company, Inc.; Crown Cork & Seal Technologies Corporation and
Ball Plastic Container Corp. in the U.S. District Court for the District of Massachusetts. Pechiney alleges that
the defendants have infringed two of its patents with respect to methods and apparatus for injection molding and
injection blow molding multi-layer plastic containers. Pechiney seeks an injunction and damages. Kortec is a
supplier to Ball Plastic Container Corp. of equipment for use in manufacturing multi-layered plastic bottles.
Kortec has agreed to defend Ball Plastic Container Corp. against the claims for infringement of patents arising
out of the purchase and use of such equipment purchased from Kortec and has assumed the defense of the action.
The parties are discussing a resolution of the matter. Based upon the information available to the company at
this time, the company is unable to express an opinion as to the actual exposure of the company; however, the
company does not believe that this matter will have a material adverse affect upon the liquidity, results of
operations or financial condition of the company.
On January 27, 1999, Plastic Solutions of Texas, Inc. (PST) and Kurt H. Ruppman, Sr. (Ruppman) filed a Statement
of Claim with the American Arbitration Association alleging the company breached a contract between the company
and PST and Ruppman relating to the grant of a license under certain patents and technology owned by PST and
Ruppman relating to the use of cryogenics in the manufacture of hot fill PET bottles. The arbitrator issued an
award favorable to Ball including monetary damages and specific performance. This award has been confirmed by the
District Court of Dallas County, Texas, and a judgment in favor of Ball for $2.5 million has been entered. The
parties are discussing satisfaction of this judgment.
In 1998 various consumers filed toxic tort litigation in the Superior Court for Los Angeles County (Trial Court)
against various water companies operating in the San Gabriel Valley Basin. The water companies petitioned the
Trial Court to remove this action to the California Public Utilities Commission. The Trial Court agreed. The
plaintiffs appealed this decision to the California Court of Appeals, which reversed the Trial Court. One
non-regulated utility has appealed this decision to the California Supreme Court. Pending completion of the
appellate process, the Trial Court stayed further action in this litigation except that the plaintiffs were
permitted to add additional defendants. The Trial Court consolidated the six separate lawsuits in the Northeast
District (Pasadena) and designated the case of Adler, et al. v. Southern California Water Company, et al., as the
lead case. In late March 1999, Ball-Foster Glass Container Co., L.L.C., which the company no longer owns,
received a summons and amended complaint based on its ownership of the El Monte glass plant. Ball-Foster Glass
tendered the lawsuit to the company for defense and indemnity. The company has in turn tendered this lawsuit to
its liability carrier, Commercial Union, for defense and indemnity. Plaintiffs appear to be proceeding to join
all companies, which are alleged to be PRPs in the various operable units in the San Gabriel Valley Superfund
Site. The litigation, including the filing of answers by such joined parties, has been stayed pending the
decision of the California Supreme Court as to whether the California Public Utilities Commission has sole
jurisdiction over these cases since some of the defendants are regulated utilities. Based on the information, or
lack thereof, available to the company at the present time, the company is unable to express an opinion as to the
actual exposure of the company for this matter; however, based on the information available to the company at
this time, the company does not believe that this matter will have a material adverse affect upon the
liquidity, results of operations or financial condition of the company.
<b>Item 4. Submission of Matters to Vote of Security Holders</b>
There were no matters submitted to the security holders during the fourth quarter of 2000.
<PAGE>
<b>PART II</b>
<b>Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters</b>
Ball Corporation common stock (BLL) is traded on the New York, Chicago and Pacific Stock Exchanges. There were
6,178 common shareholders of record on March 2, 2001.
Other information required by Item 5 appears under the caption, "Quarterly Stock Prices and Dividends," in the
2000 Annual Report to Shareholders and is incorporated herein by reference.
<b>Item 6. Selected Financial Data</b>
The information required by Item 6 for the five years ended December 31, 2000, appearing in the section titled,
"Five-Year Review of Selected Financial Data," of the 2000 Annual Report to Shareholders, is incorporated herein
by reference.
<b>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations</b>
"Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2000 Annual Report
to Shareholders is incorporated herein by reference.
<b>Item 7A. Quantitative and Qualitative Disclosures About Market Risk</b>
The information required by Item 7A appears under the caption, "Financial Instruments and Risk Management,"
within the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the
2000 Annual Report to Shareholders, which is incorporated herein by reference.
<b>Item 8. Financial Statements and Supplementary Data</b>
The consolidated financial statements and notes thereto of the 2000 Annual Report to Shareholders, together with
the report thereon of PricewaterhouseCoopers LLP, dated January 24, 2001, included in the 2000 Annual Report to
Shareholders, are incorporated herein by reference.
<b>Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</b>
There were no matters required to be reported under this item.
<PAGE>
<b>PART III</b>
<b>Item 10. Directors and Executive Officers of the Registrant</b>
The executive officers of the company as of December 31, 2000, were as follows:
1. George A. Sissel, 64, Chairman of the Board effective January 24, 2001; Chairman and Chief Executive
Officer, January 1998 to January 24, 2001; Chairman, President and Chief Executive Officer, 1996-1998;
President and Chief Executive Officer, 1995-1996; Acting President and Chief Executive Officer, 1994-1995;
Senior Vice President, Corporate Affairs; Corporate Secretary and General Counsel, 1993-1995; Senior Vice
President, Corporate Secretary and General Counsel, 1987-1993; Vice President, Corporate Secretary and
General Counsel, 1981-1987.
2. R. David Hoover, 55, President and Chief Executive Officer effective January 24, 2001; Vice Chairman,
President and Chief Operating Officer, April 2000 to January 2001; Vice Chairman, President and Chief
Financial Officer, January 2000 to April 2000; Vice Chairman and Chief Financial Officer, 1998-1999;
Executive Vice President and Chief Financial Officer, 1997-1998; Executive Vice President, Chief Financial
Officer and Treasurer, 1996-1997; Executive Vice President and Chief Financial Officer, 1995-1996; Senior
Vice President and Chief Financial Officer, 1992-1995; Vice President and Treasurer, 1988-1992; Assistant
Treasurer, 1987-1988; Vice President, Finance and Administration, Technical Products, 1985-1987; Vice
President, Finance and Administration, Management Services Division, 1983-1985.
3. Raymond J. Seabrook, 49, Senior Vice President and Chief Financial Officer since April 2000; Senior Vice
President, Finance, April 1998 to April 2000; Vice President, Planning and Control, 1996-1998; Vice
President and Treasurer, 1992-1996; Senior Vice President and Chief Financial Officer, Ball Packaging
Products Canada, Inc., 1988-1992.
4. Leon Midgett, 58, Executive Vice President and Chief Operating Officer, Packaging, since April 2000; Chief
Operating Officer, Packaging, and President of North American Beer/Beverage, January 2000 to April 2000;
President of North American Beer/Beverage, November 1995 to January 2000.
5. Donald C. Lewis, 58, Vice President and General Counsel, since September 1998; Vice President, Assistant
Corporate Secretary and General Counsel, 1997-1998; General Counsel and Assistant Corporate Secretary,
1995-1997; Associate General Counsel and Assistant Corporate Secretary, 1990-1995; Associate General
Counsel, 1983-1990; Assistant General Counsel, 1980-1983; Senior Attorney, 1978-1980; General Attorney,
1974-1978.
6. Albert R. Schlesinger, 59, Vice President and Controller, since January 1987; Assistant Controller,
1976-1986.
7. Harold L. Sohn, 54, Vice President, Corporate Relations, since March 1993; Director, Industry Affairs,
Packaging Products, 1988-1993.
8. David A. Westerlund, 50, Senior Vice President, Administration, since April 1998; Vice President,
Administration, 1997-1998; Vice President, Human Resources, 1994-1997; Senior Director, Corporate Human
Resources, July 1994-December 1994; Vice President, Human Resources and Administration, Ball Glass Container
Corporation, 1988-1994; Vice President, Human Resources, Ball-InCon Glass Packaging Corp., 1987-1988.
9. Scott Morrison, 38, Treasurer since September 2000; Managing Director/Senior Banker of Corporate Banking,
Bank One, Indianapolis, Indiana, 1995 to August 2000.
10. John Hayes, 35, Vice President, Corporate Planning and Development, since April 2000; Senior Director,
Corporate Planning and Development, February 1999 to April 2000; Vice President, Mergers and
Acquisitions/Corporate Finance, Lehman Brothers, Chicago, Illinois, April 1993 to February 1999.
Other information required by Item 10 appearing under the caption, "Director Nominees and Continuing Directors,"
on pages 3 through 5 and under the caption, "Section 16(a) Beneficial Ownership Reporting Compliance," on page 15
of the company's proxy statement filed pursuant to Regulation 14A dated March 15, 2001, is incorporated herein by
reference.
<b>Item 11. Executive Compensation</b>
The information required by Item 11 appearing under the caption, "Executive Compensation," on pages 7 through 13
of the company's proxy statement filed pursuant to Regulation 14A dated March 15, 2001, is incorporated herein by
reference. Additionally, the Ball Corporation 2000 Deferred Compensation Company Stock Plan and the Ball
Corporation Deposit Share Program were created to encourage key executives and other participants to acquire a
larger equity ownership interest in the company and increase their interest in the company's stock performance.
Nonemployee directors also participate in the 2000 Deferred Compensation Company Stock Plan.
<b>Item 12. Security Ownership of Certain Beneficial Owners and Management</b>
The information required by Item 12 appearing under the caption, "Voting Securities and Principal Shareholders,"
on pages 1 and 2 of the company's proxy statement filed pursuant to Regulation 14A dated March 15, 2001, is
incorporated herein by reference.
<b>Item 13. Certain Relationships and Related Transactions</b>
The information required by Item 13 appearing under the caption, "Ratification of the Appointment of Independent
Accountants," on page 15 of the company's proxy statement filed pursuant to Regulation 14A dated March 15, 2001,
is incorporated herein by reference.
<PAGE>
<b>PART IV</b>
<b>Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K</b>
(a) (1) <b><i>Financial Statements:</i></b>
The following documents included in the 2000 Annual Report to Shareholders are incorporated by reference
in Part II, Item 8:
Consolidated statements of earnings - Years ended December 31, 2000, 1999 and 1998
Consolidated balance sheets - December 31, 2000 and 1999
Consolidated statements of cash flows - Years ended December 31, 2000, 1999 and 1998
Consolidated statements of shareholders' equity and comprehensive earnings - Years ended December 31,
2000, 1999 and 1998
Notes to consolidated financial statements
Report of independent accountants
(2) <b><i>Financial Statement Schedules:</i></b>
There were no financial statement schedules required under this item.
(3) <b><i>Exhibits:</i></b>
See the Index to Exhibits which appears at the end of this document and which is incorporated by
reference herein.
(b) <b><i>Reports on Form 8-K:</i></b>
The registrant did not file or amend reports on Form 8-K during the fourth quarter of 2000.
<b>FORWARD-LOOKING STATEMENTS</b>
The company has made or implied certain forward-looking statements in this report. These forward-looking
statements represent the company's goals and are based on certain assumptions and estimates regarding the
worldwide economy, specific industry technological innovations, industry competitive activity, interest rates,
capital expenditures, pricing, currency movements, product introductions and the development of certain domestic
and international markets. Some factors that could cause the company's actual results or outcomes to differ
materially from those discussed in the forward-looking statements include, but are not limited to, fluctuation in
customer growth and demand; insufficient production capacity; overcapacity in foreign and domestic metal and
plastic container industry production facilities and its impact on pricing and financial results; the weather;
power and natural resource costs; difficulty in obtaining supplies and energy, such as gas and electric power;
shortages in and pricing of raw materials; competition in pricing and the possible decrease in, or loss of sales
resulting therefrom; loss of profitability and plant closures; regulatory action; federal and state legislation;
interest rates; labor strikes; boycotts; litigation involving antitrust; intellectual property, consumer and
other issues; maintenance and capital expenditures; local economic conditions; the authorization, funding and
availability of government contracts and the nature and continuation of those contracts and related services
provided thereunder; the success or lack of success of the satellite launches and the businesses and governments
associated with the launches; international business and market risks such as the devaluation of international
currencies; the ability to obtain adequate credit resources for foreseeable financing requirements of the
company's businesses and to satisfy the resulting credit obligations and successful or unsuccessful
acquisitions, joint ventures or divestitures. If the company's assumptions and estimates are incorrect, or if it
is unable to achieve its goals, then the company's actual performance could vary materially from those goals
expressed or implied in the forward-looking statements.
<PAGE>
<b>SIGNATURES</b>
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BALL CORPORATION
(Registrant)
By: /s/R. David Hoover
--------------------
R. David Hoover, President and
Chief Executive Officer
March 30, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates indicated below.
(1) Principal Executive Officer:
President and Chief Executive
/s/R. David Hoover Officer
---------------------------------------------------- March 30, 2001
R. David Hoover
(2) Principal Financial Accounting Officer:
Senior Vice President and Chief
/s/Raymond J. Seabrook Financial Officer
---------------------------------------------------- March 30, 2001
Raymond J. Seabrook
(3) Controller:
/s/Albert R. Schlesinger Vice President and Controller
---------------------------------------------------- March 30, 2001
Albert R. Schlesinger
(4) A Majority of the Board of Directors:
/s/Frank A. Bracken * Director
---------------------------------------------------- March 30, 2001
Frank A. Bracken
/s/Howard M. Dean * Director
---------------------------------------------------- March 30, 2001
Howard M. Dean
/s/John T. Hackett * Director
---------------------------------------------------- March 30, 2001
John T. Hackett
/s/R. David Hoover * Director
---------------------------------------------------- March 30, 2001
R. David Hoover
/s/John F. Lehman * Director
---------------------------------------------------- March 30, 2001
John F. Lehman
/s/Ruel C. Mercure, Jr. * Director
---------------------------------------------------- March 30, 2001
Ruel C. Mercure, Jr.
/s/Jan Nicholson * Director
---------------------------------------------------- March 30, 2001
Jan Nicholson
<PAGE>
/s/George A. Sissel * Chairman and Director
---------------------------------------------------- March 30, 2001
George A. Sissel
/s/William P. Stiritz * Director
---------------------------------------------------- March 30, 2001
William P. Stiritz
/s/Stuart A. Taylor II * Director
---------------------------------------------------- March 30, 2001
Stuart A. Taylor II
*By George A. Sissel as Attorney-in-Fact pursuant to a Limited Power of Attorney executed by the directors listed
above, which Power of Attorney has been filed with the Securities and Exchange Commission.
By: /s/George A. Sissel
---------------------
George A. Sissel
As Attorney-in-Fact
March 30, 2001
<PAGE>
<b>Ball Corporation and Subsidiaries
Annual Report on Form 10-K
For the year ended December 31, 2000
Index to Exhibits</b>
<b> Exhibit
Number Description of Exhibit
--------------------------------------------------------------------------------------------</b>
3.i Amended Articles of Incorporation as of November 26, 1990 (filed by
incorporation by reference to the Current Report on Form 8-K dated
November 30, 1990) filed December 13, 1990.
3.ii Bylaws of Ball Corporation as amended September 23, 1998, filed March 29,
1999.
4.1(a) Senior Note Indenture, dated August 10, 1998, among Ball Corporation,
certain subsidiary guarantors of Ball Corporation and The Bank of New York,
as Senior Note Trustee (filed by incorporation by reference to the Current
Report on Form 8-K dated August 10, 1998) filed August 25, 1998.
4.1(b) Senior Registration Rights Agreement, dated August 10, 1998, among Ball
Corporation, Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, BancAmerica Robertson Stephens, First Chicago Capital Markets,
Inc., and certain subsidiary guarantors of Ball Corporation (filed by
incorporation by reference to the Current Report on Form 8-K dated
August 10, 1998) filed August 25, 1998.
4.2(a) Senior Subordinated Note Indenture, dated August 10, 1998, among Ball
Corporation, certain subsidiary guarantors of Ball Corporation and The Bank
of New York, as Senior Subordinated Note Trustee (filed by incorporation by
reference to the Current Report on Form 8-K dated August 10, 1998) filed
August 25, 1998.
4.2(b) Senior Subordinated Registration Rights Agreement, dated August 10, 1998,
among Ball Corporation, Lehman Brothers Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, BancAmerica Robertson Stephens, First Chicago
Capital Markets, Inc., and certain subsidiary guarantors of Ball Corporation
(filed by incorporation by reference to the Current Report on Form 8-K dated
August 10, 1998) filed August 25, 1998.
4.3 Dividend distribution payable to shareholders of record on August 4, 1996,
of one preferred stock purchase right for each outstanding share of common
stock under the Rights Agreement dated as of July 24, 1996, between the
company and The First Chicago Trust company of New York (filed by
incorporation by reference to the Form 8-A Registration Statement,
No. 1-7349, dated August 1, 1996, and filed August 2, 1996, and to the
company's Form 8-K Report dated February 13, 1996, and filed February 14,
1996).
<PAGE>
<b> Exhibit
Number Description of Exhibit
--------------------------------------------------------------------------------------------</b>
10.1 1980 Stock Option and Stock Appreciation Rights Plan, as amended, 1983 Stock
Option and Stock Appreciation Rights Plan (filed by incorporation by
reference to the Form S-8 Registration Statement, No. 2-82925) filed
April 27, 1983.
10.2 1988 Restricted Stock Plan and 1988 Stock Option and Stock Appreciation
Rights Plan (filed by incorporation by reference to the Form S-8
Registration Statement, No. 33-21506) filed April 27, 1988.
10.3 Ball Corporation Deferred Incentive Compensation Plan (filed by
incorporation by reference to the Annual Report on Form 10-K for the year
ended December 31, 1987) filed March 25, 1988.
10.4 Ball Corporation 1986 Deferred Compensation Plan, as amended July 1, 1994
(filed by incorporation by reference to the Quarterly Report on Form 10-Q
for the quarter ended July 3, 1994) filed August 17, 1994.
10.5 Ball Corporation 1988 Deferred Compensation Plan, as amended July 1, 1994
(filed by incorporation by reference to the Quarterly Report on Form 10-Q
for the quarter ended July 3, 1994) filed August 17, 1994.
10.6 Ball Corporation 1989 Deferred Compensation Plan, as amended July 1, 1994
(filed by incorporation by reference to the Quarterly Report on Form 10-Q
for the quarter ended July 3, 1994) filed August 17, 1994.
10.7 Amended and Restated Form of Severance Benefit Agreement which exists
between the company and its executive officers, effective as of August 1,
1994, and as amended on January 24, 1996 (filed by incorporation by
reference to the Quarterly Report on Form 10-Q for the quarter ended March
22, 1996) filed May 15, 1996.
10.8 Stock Purchase Agreement dated as of June 29, 1989, between Ball Corporation
and Mellon Bank, N.A. (filed by incorporation by reference to the Quarterly
Report on Form 10-Q for the quarter ended July 2, 1989) filed August 15,
1989.
10.9 Ball Corporation 1986 Deferred Compensation Plan for Directors, as amended
October 27, 1987 (filed by incorporation by reference to the Annual Report
on Form 10-K for the year ended December 31, 1990) filed April 1, 1991.
10.10 1991 Restricted Stock Plan for Nonemployee Directors of Ball Corporation
(filed by incorporation by reference to the Form S-8 Registration Statement,
No. 33-40199) filed April 26, 1991.
10.11 Ball Corporation Economic Value Added Incentive Compensation Plan dated
January 1, 1994 (filed by incorporation by reference to the Annual Report on
Form 10-K for the year ended December 31, 1994) filed March 29, 1995.
<PAGE>
<b> Exhibit
Number Description of Exhibit
--------------------------------------------------------------------------------------------</b>
10.12 Ball Corporation 1997 Stock Incentive Plan (filed by incorporation by
reference to the Form S-8 Registration Statement, No. 333-26361) filed
May 1, 1997.
10.13 Agreement and Plan of Merger among Ball Corporation, Ball Sub Corp. and
Heekin Can, Inc. dated as of December 1, 1992, and as amended as of
December 28, 1992 (filed by incorporation by reference to the Registration
Statement on Form S-4, No. 33-58516) filed February 19, 1993.
10.14 Distribution Agreement between Ball Corporation and Alltrista (filed by
incorporation by reference to the Alltrista Corporation Form 8, Amendment
No. 3 to Form 10, No. 0-21052, dated December 31, 1992) filed March 17, 1993.
10.15 1993 Stock Option Plan (filed by incorporation by reference to the Form S-8
Registration Statement, No. 33-61986) filed April 30, 1993.
10.16 Retirement Agreement dated June 17, 1994, between Delmont A. Davis and Ball
Corporation (filed by incorporation by reference to the Quarterly Report on
Form 10-Q for the quarter ended July 3, 1994) filed August 17, 1994.
10.17 Ball-InCon Glass Packaging Corp. Deferred Compensation Plan, as amended
July 1, 1994 (filed by incorporation by reference to the Quarterly Report on
Form 10-Q for the quarter ended July 3, 1994) filed August 17, 1994.
10.18 Retention Agreement dated June 22, 1994, between Donovan B. Hicks and Ball
Corporation (filed by incorporation by reference to the Quarterly Report on
Form 10-Q for the quarter ended July 3, 1994) filed August 17, 1994.
10.19 Ball Corporation Supplemental Executive Retirement Plan (filed by
incorporation by reference to the Quarterly Report on Form 10-Q for the
quarter ended October 2, 1994) filed November 15, 1994.
10.20 Ball Corporation Split Dollar Life Insurance Plan (filed by incorporation by
reference to the Quarterly Report on Form 10-Q for the quarter ended
October 2, 1994) filed November 15, 1994.
10.21 Ball Corporation Long-Term Cash Incentive Plan, dated October 25, 1994, as
amended October 23, 1996 (filed by incorporation by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 29, 1996)
filed November 13, 1996.
10.22a Ball Corporation Merger Related, Special Incentive Plan for Operating
Executives which provides for Stock Option grants in which the five named
executive officers participate and which grants are referred to in the
Executive Compensation section in the Ball Corporation Proxy Statement dated
March 15, 1999. (The form of the option grants was filed March 29, 1999.)
<PAGE>
<b> Exhibit
Number Description of Exhibit
--------------------------------------------------------------------------------------------</b>
10.22b Ball Corporation Merger Related, Special Incentive Plan for Operating
Executives which provides for Restricted Stock grant in which the five named
executive officers participate and which grants are referred to in the
Executive Compensation section of the Ball Corporation Proxy Statement dated
March 15, 1999. (The form of the restricted grants was filed March 29, 1999.)
10.22c Ball Corporation Merger Related, Special Incentive Plan for Operating
Executives which provides for certain cash incentive payments based upon the
attainment of certain performance criteria. (The form of the plan was filed
March 29, 1999.)
10.23 Asset Purchase Agreement dated June 26, 1995, among Foster Ball, L.L.C.
(since renamed Ball-Foster Glass Container Co., L.L.C.), Ball Glass
Container Corporation and Ball Corporation (filed by incorporation by
reference to the Current Report on Form 8-K dated September 15, 1995) filed
September 29, 1995.
10.24 Foster Ball, L.L.C. (since renamed Ball-Foster Glass Container Co., L.L.C.)
Amended and Restated Limited Liability Company Agreement dated June 26,
1995, among Saint-Gobain Holdings I Corp., BG Holdings I, Inc. and BG
Holdings II, Inc. (filed by incorporation by reference to the Current Report
on Form 8-K dated September 15, 1995) filed September 29, 1995.
10.25 Asset Purchase Agreement dated August 10, 1998, among Ball Corporation and
its Ball Metal Beverage Container Corp. and Reynolds Metals Company (filed
by incorporation by reference to the Current Report on Form 8-K dated August
10, 1998) filed August 25, 1998.
10.26 Part-Time Employment, Retirement and Consulting Services Agreement between
Duane E. Emerson and Ball Corporation dated January 14, 1997 (filed by
incorporation by reference to the Annual Report on Form 10-K for the year
ended December 31, 1997) filed March 31, 1998.
10.27 Agreement and General Release between David B. Sheldon and Ball Corporation
dated February 7, 1997 (filed by incorporation by reference to the Annual
Report on Form 10-K for the year ended December 31, 1997) filed March 31,
1998.
10.28 Consulting Agreement between The Cygnus Enterprise Development Corp. (for
which Donovan B. Hicks is managing partner) and Ball Corporation dated
January 1, 1997 (filed by incorporation by reference to the Annual Report on
Form 10-K for the year ended December 31, 1997) filed March 31, 1998.
<PAGE>
<b> Exhibit
Number Description of Exhibit
--------------------------------------------------------------------------------------------</b>
10.29 Form of Severance Agreement (Change of Control Agreement) which exists
between the company and its executive officers (filed by incorporation by
reference to the Annual Report on Form 10-K for the year ended December 31,
1988) filed March 25, 1989.
10.30 Consulting Agreement between George A. Matsik and Ball Corporation dated
October 18, 1999 (filed by incorporation by reference to the Annual Report
on Form 10-K for the year ended December 31, 1999) filed March 30, 2000.
10.31 Ball Corporation 2000 Deferred Compensation Company Stock Plan. This plan
is referred to in Item 11, the Executive Compensation section of this
Form 10-K. (Filed herewith.)
10.32 Ball Corporation Deposit Share Program. This plan is referred to in Item 11,
the Executive Compensation section of this Form 10-K. (Filed herewith.)
11.1 Statement re: Computation of Earnings Per Share (filed by incorporation by
reference to the notes to the consolidated financial statements, "Earnings
Per Share," in the 2000 Annual Report to Shareholders). (Filed herewith.)
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges. (Filed
herewith.)
13.1 Ball Corporation 2000 Annual Report to Shareholders. (The Annual Report to
Shareholders, except for those portions thereof incorporated by reference,
is furnished for the information of the Commission and is not to be deemed
filed as part of this Form 10-K.) (Filed herewith.)
18.1 Letter re: Change in Accounting Principles. (Filed by incorporation by
reference to the Quarterly Report on Form 10-Q for the quarterly period
ended July 2, 1995) filed August 15, 1995.
21.1 List of Subsidiaries of Ball Corporation. (Filed herewith.)
23.1 Consent of Independent Accountants. (Filed herewith.)
24.1 Limited Power of Attorney. (Filed herewith.)
99.1 Specimen Certificate of Common Stock (filed by incorporation by reference to
the Annual Report on Form 10-K for the year ended December 31, 1979) filed
March 24, 1980.
99.2 Cautionary statement for purposes of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, as amended. (Filed
herewith.)
</PRE>
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<FILENAME>ex10-31_f10k2000.htm
<DESCRIPTION>2000 DEFERRED COMPENSATION COMPANY STOCK PLAN
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<TITLE>Ball Corporation 2000 10-K, Exhibit 10.31
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<PRE>
<u>Exhibit 10.31</u>
<b>BALL CORPORATION
2000 DEFERRED COMPENSATION COMPANY STOCK PLAN</b>
1. Statement of Purpose
The purposes of the 2000 Deferred Compensation Company Stock Plan (the "Plan") are (1) to aid Ball
Corporation (the "Company") and its subsidiaries in attracting and retaining key employees by providing
a non-qualified deferred compensation vehicle that also increases the interest of such key employees in
the Company Stock performance, and (2) to establish an alternative method of compensating those
Directors of the Company who do not receive compensation as employees of the Company in a way that
increases the interest of such Directors in the Company Stock performance.
2. Definitions
2.1. <u>Beneficiary</u> - "Beneficiary" means the person or persons designated as such in accordance with
Section 8.
2.2. <u>Class Year</u> - "Class Year" means the year in respect of which Compensation is deferred under the
Plan.
2.3. <u>Company</u> - "Company" means Ball Corporation and any of its fifty percent (50%) or more owned
subsidiaries.
2.4. <u>Company Matching Contribution</u> - "Company Matching Contribution" means an additional amount to
be credited to a Participant's Deferred Compensation Account, which shall equal twenty percent
(20%) of the sum of: (1) Deferral Amounts credited to a Participant's Deferred Compensation
Account during a calendar year; and (2) amounts transferred from other deferred compensation
plans maintained by the Company and credited to a Participant's Deferred Compensation Account
during a calendar year. The maximum Company Matching Contribution credited to a Participant's
Deferred Compensation Account in a calendar year shall be $20,000. A Company Matching
Contribution shall be added to and treated as a part of the deferred amount or transferred
amount to which it relates, and shall be credited to the Participant's Deferred Compensation
Account at the same time as the deferred amount or transferred amount is credited to such
account. If more than one amount is deferred to or transferred to a Participant's Deferred
Compensation Account in a calendar year, the Company Matching Contribution shall be applied to
the earliest such amounts credited to such account until the maximum Company Matching
Contribution has been credited to the Participant; and, if more than one deferred or
transferred amount is credited to a Participant's Deferred Compensation Account on the same
day, the Company Matching Contribution shall be allocated among such amounts on a prorata basis.
2.5. <u>Company Stock</u> - "Company Stock" means the common stock of Ball Corporation.
2.6. <u>Compensation</u> - "Compensation" means, with respect to a Participant who is an Eligible Employee,
annual incentive compensation for the Class Year or other compensation as designated by the
Committee, or with respect to a Participant who is a Director, the cash portion of the annual
incentive retainer which is calculated in accordance with the Ball Corporation Economic Value
Added Incentive Compensation Plan (or any successor plan).
2.7. <u>Declining Balance Installments</u> - "Declining Balance Installments" means a series of annual
payments such that each payment is determined by taking that portion of the Participant's
Deferred Compensation Account as of the December 31 Valuation Date immediately preceding the
Distribution Date and dividing by the number of years of distributions remaining.
2.8. <u>Deferral Amount</u> - "Deferral Amount" means the amount of Elective Deferred Compensation deferred
by the Participant for each Class Year.
2.9. <u>Deferred Compensation Account</u> - "Deferred Compensation Account" means the account for each
Class Year maintained by the Company for each Participant pursuant to Section 6.
2.10. <u>Director</u> - "Director" means a Director of the Company who is not an employee of the Company or
an affiliate.
2.11. <u>Disability</u> - "Disability" or "Disabled" means that a Participant who is an Eligible Employee is
disabled for the purpose of any long-term disability program maintained by the Company.
2.12. <u>Distribution Date</u> - "Distribution Date" means the date on which the Company makes distributions
from the Participant's Deferred Compensation Account.
2.13. <u>Dividends</u> - "Dividends" means an amount equal to the number of Units in a Participant's
Deferred Compensation Account (as determined pursuant to Section 6.2.) multiplied by the amount
of quarterly dividend payable to Company Stock shareholders for each share of Company Stock.
The amount of Dividends for a payment date for a quarterly dividend shall be determined based
on the number of Units in the Participant's Deferred Compensation Account as of the preceding
Valuation Date.
2.14. <u>Effective Date</u> - "Effective Date" means November 1, 2000, the date on which the Plan commences.
2.15. <u>Election Form</u> - "Election Form" means the form or forms attached to this Plan and filed with
the Human Resources Committee by the Participant in order to participate in the Plan. The terms
and conditions specified in the Election Form(s) are incorporated by reference herein and form
a part of the Plan.
2.16. <u>Elective Deferred Compensation</u> - "Elective Deferred Compensation" means the amount elected to
be deferred by an Eligible Employee or Director in his Election Form.
2.17. <u>Eligible Employee</u> - "Eligible Employee" means an employee of the Company who has been selected
by the Human Resources Committee.
2.18. <u>Human Resources Committee</u> - "Human Resources Committee" (also referred to as the "Committee")
means the Human Resources Committee of the Board of Directors of the Company, who will
administer the Plan.
2.19. <u>Participant</u> - "Participant" means an Eligible Employee or Director participating in the Plan in
accordance with the provisions of Section 4.
2.20. <u>Termination of Employment</u> - "Termination of Employment" means, with respect to a Participant
who is an employee of the Company, the termination of said Participant's employment with the
Company for any reason other than Disability.
2.21. <u>Termination of Service</u> - "Termination of Service" means, with respect to a Participant who is a
Director, the termination of said Director's active service as a member of the Company's Board
of Directors.
2.22. <u>Transfer Form</u> - "Transfer Form" means the form or forms attached to this Plan and filed with
the Human Resources Committee by the Participant in order to transfer an amount from another
Company deferred compensation plan to this Plan pursuant to Section 4.2. The terms and
conditions specified in the Transfer Form(s) are incorporated by reference herein and form a
part of the Plan.
2.23. <u>Unit</u> - "Unit" means the Units credited to a Participant's Deferred Compensation Account
pursuant to Section 6. For valuation and distribution purposes, each unit shall be equivalent
to one share of Company Stock.
2.24. <u>Valuation Date</u> - "Valuation Date" means the date on which the number of units in a
Participant's Deferred Compensation Account is determined for each month as provided in
Section 6. hereof. Unless and until changed by the Committee, or except as otherwise provided
herein, the Valuation Date shall be the last day of each month. If a Participant (or
Beneficiary) requests a Liquidating Distribution under Section 7.8., then, for the purpose of
determining the number of shares of Company Stock to be distributed, the Valuation Date shall
be the last day of the month in which the Participant submits the request. If a Participant (or
Beneficiary) requests a Hardship Benefit pursuant to Section 7.3., the Valuation Date for the
purpose of determining the number of shares of Company Stock to be distributed shall be the
last day of the month in which the Committee determines that the Participant (or Beneficiary)
is eligible for such a distribution.
3. Administration of the Plan
The Human Resources Committee, by appointment of the Board of Directors of the Company, shall be the
sole administrator of the Plan. The Committee shall have full power to formulate additional details and
regulations for carrying out this Plan. The Committee shall also be empowered to make any and all of the
determinations not herein specifically authorized which may be necessary or desirable for the effective
administration of the Plan. Any decision or interpretation of any provision of this Plan adopted by the
Committee shall be final and conclusive.
4. Participation
4.1. <u>Election to Participate</u>. Participation in the Plan shall be limited to Eligible Employees and
Directors who elect to participate in the Plan by filing an Election Form prior to the beginning
of the Class Year in which the Participant's Compensation is earned. Notwithstanding the
foregoing, an employee or Director who first becomes an Eligible Employee or Director prior to
July 1 in any Class Year, may elect to participate in the Plan for such Class Year by filing an
Election Form within thirty (30) days after becoming an Eligible Employee or Director. The
minimum annual deferral shall be $1,000 and the maximum deferral shall be one hundred percent
(100%) of the Participant's Compensation (as defined in Section 2.6.) for the Class Year.
4.2. <u>Transfer from Other Plans</u>. An Eligible Employee or Director who has elected to defer amounts to
another deferred compensation plan implemented by Ball Corporation prior to December 31, 1999,
may elect to transfer deferred amounts from such other plan to this Plan by filing a Transfer
Form between November 1 and December 31 immediately preceding the date the transferred amount
is credited pursuant to Section 6.1. in any year after the effective date of the Plan, provided
the Eligible Employee is actively employed by the Company or the Director is actively serving
as a Director of the Company on the date of the election. The minimum amount that may be
transferred for any Class Year is $1,000, and the maximum amount that may be transferred is one
hundred percent (100%) of prior deferred amounts. Any such transfer shall be subject to the
terms and conditions contained in the Transfer Form (including as to the other plans from which
transfers may be made), the terms of which are incorporated by referenced herein and form a
part of the Plan.
4.3. <u>Committee Discretion</u>. The Committee may, in its sole discretion, and subject to any conditions
it determines to be appropriate, provide for the deferral of other amounts of compensation into
the Plan for an Eligible Employee or Director, either on a voluntary or involuntary basis, or
allow for transfer of additional amounts to the Plan from other deferred compensation plans
maintained by the Company. Unless otherwise specified in writing at the time any such amounts
are credited to the Plan: (1) the Eligible Employee or Director shall elect the timing and
form of payment for any such amounts; and (2) all other provisions of the Plan shall apply to
any such deferred amounts. A separate Deferred Compensation Account shall be established and
maintained for any such amount.
5. Vesting of Deferred Compensation Account
A Participant's interest in his Deferred Compensation Account, the Company Matching Contribution and
Dividends credited thereto shall vest immediately.
6. Accounts and Valuations
6.1. <u>Deferred Compensation Accounts</u>. The Committee shall establish and maintain a separate Deferred
Compensation Account for each Participant for each Class Year. Deferral Amounts for 2000 and
subsequent Class Years and related Company Matching Contributions shall be deemed credited to
the Deferred Compensation Account as of January 1 of the year subsequent to the Class Year for
which Compensation was deferred. Any deferred amounts transferred to this Plan pursuant to
Section 4.2. and any related Company Matching Contribution shall be deemed credited to the
Deferred Compensation Account on January 1 of the year following the year in which the election
to transfer is made pursuant to Section 4.2. A separate Deferred Compensation Account shall be
established and maintained for amounts transferred to this Plan pursuant to Section 4.2. and
any Company Matching Contribution related thereto.
6.2. <u>Account Valuation</u>. The value of each Deferred Compensation Account shall be based upon the
value of Company Stock. All Deferral Amounts, amounts transferred from other plans pursuant to
Section 4.2., and related Company Matching Contributions shall be credited to a Participant's
Deferred Compensation Account in Units, or fractional Units, with each Unit having a value
equivalent to one share of Company Stock. With respect to any amount credited to a
Participant's Deferred Compensation Account as of January 1 in any year, the number of such
credited Units shall be determined by dividing the amount credited to the Participant's account
(including any related Company Matching Contributions) by the closing price of one share of
Company Stock on the New York Stock Exchange Composite Listing as of the close of business on
the last trading day of the immediately preceding year. Dividends shall be reflected in a
Participant's Deferred Compensation Account by the crediting of additional Units or fractional
Units equal to the value of the Dividends and based upon the closing price of one share of
Company Stock as of the close of business on the New York Stock Exchange Composite Listing on
the payment date for each quarterly dividend payable to Company Stock shareholders. The value
of each Deferred Compensation Account shall be determined by multiplying the number of Units by
the value of one share of Company Stock on the New York Stock Exchange Composite Listing on the
applicable Valuation Date. In the event the New York Stock Exchange Composite Listing is closed
on the payment date on which any dividends are paid on Company Stock, or on any applicable
Valuation Date, the Units and their related value shall be determined based upon the closing
price of Company Stock on the New York Stock Exchange Composite Listing on the last business
day immediately preceding such date.
6.3. <u>Changes in Capitalization</u>. If there is any change in the number or class of shares of Company
Stock through the declaration of a stock dividend or other extraordinary dividends, or
recapitalization resulting in stock splits, or combinations or exchanges of such shares or in
the event of similar corporate transactions, the Units in each Participant's Deferred
Compensation Account shall be equitably adjusted to reflect any such change in the number or
class of issued shares of Company Stock or to reflect such similar corporate transaction.
6.4. <u>Nature of Account Entries</u>. The establishment and maintenance of a Participant's Deferred
Compensation Accounts and the crediting of Units and fractional Units pursuant to this
Section 6. shall be merely bookkeeping entries and shall not be construed as giving any person
any interest in any specific assets of the Company or of any subsidiary of the Company or any
trust created by the Company, including any Company Stock owned by the Company or any such
subsidiary or trust. The hypothetical investment of the Participant's Deferred Compensation
Accounts in shares of Company Stock shall be for bookkeeping purposes only, and shall not
require the purchase of actual Company Stock by the Committee or the Company. Benefits accrued
under this Plan shall constitute an unsecured general obligation of the Company.
7. Distribution of Accounts
7.1. <u>Form and Timing of Payments</u>. All benefits payable to a Participant or Beneficiary under the
Plan shall be paid in Company Stock, with one share distributed for each Unit credited pursuant
to Section 6.2. All fractional shares shall be payable in cash. A Participant's Deferred
Compensation Account(s) shall be paid to the Participant following the Participant's
Termination of Employment or Termination of Service. Except as otherwise provided by the Plan,
payment shall be made in a lump sum or in up to fifteen (15) annual installments, as the
Participant elects in his Election Form.
7.2. <u>Normal Benefit</u>
a. A Participant's Deferred Compensation Account shall be paid to the Participant as
requested in his Election Form, subject to the terms and conditions set forth in the
Plan, including the Election Form. If a Participant elects to receive payment of his
Deferred Compensation Account in installments, payments shall be made in Declining
Balance Installments. Unless the Committee determines otherwise, and subject to the
provisions of Section 7.5. as to when payments shall commence, distribution payments,
whether lump sum or installment, shall be made on or before the fifteenth (15th) day
of February of each year. A Participant may elect different payment schedules for
different Deferred Compensation Accounts.
b. If a Participant dies before receiving his total Deferred Compensation Account
balance, whether or not distributions have earlier commenced, his Beneficiary shall be
entitled to the remaining account balance in accordance with the payment elections in
the Election Form, except that such payments, if not already commenced, shall commence
on or before February 15 next following the date of the Participant's death.
7.3. <u>Hardship Benefit</u>. In the event that the Committee, upon written request of a Participant or
Beneficiary of a deceased Participant, determines in its sole discretion, that such person has
suffered an unforeseeable financial emergency, the Company shall pay to such person, from the
Deferred Compensation Account designated by the Participant or Beneficiary, an amount necessary
to meet the emergency, not in excess of the amount of the Deferred Compensation Account
credited to the Participant. Any amount determined to be payable pursuant to this Section shall
be paid no later than thirty (30) days following the applicable Valuation Date (as determined
pursuant to Section 2.24.), and no Dividends shall be credited on the distributed amount under
Section 6.2. from the Valuation Date to the Distribution Date. The Deferred Compensation
Account of the Participant shall thereafter be reduced to reflect the payment as of the date
paid of a Hardship Benefit.
7.4. <u>Request to Committee for Delay in Payment</u>. A Participant shall have no right to modify in any
way the schedule for the distribution of amounts from his Deferred Compensation Account which
he has specified in his Election Form. However, upon a written request submitted by the
Participant to the Committee, the Committee may, in its sole discretion, for each Class Year
postpone one time the date on which the payment shall commence, not beyond the year in which he
will attain age seventy-one (71); and at the same time increase the number of installments to a
number not to exceed fifteen (15). Any such request(s) must be made prior to the Termination of
Employment with respect to a Participant who is an employee, and at least ninety (90) days
prior to the date a Participant who is a Director terminates service on the Board of Directors.
7.5. <u>Date of Payments</u>. Except as otherwise provided in this Plan, payments under this Plan shall be
made on or before the fifteenth (15th) day of February of the calendar year following receipt
of notice by the Committee of an event which entitles a Participant (or Beneficiary) to
payments under the Plan. Amounts that become payable to the Estate of a Beneficiary pursuant to
Section 8. shall be paid within 30 days after the Valuation Date that follows a determination
by the Committee that an amount is payable. Except as otherwise determined by the Committee,
the payment amount to be paid on a Distribution Date shall be based on and subtracted from the
Deferred Compensation Account as of the December 31 immediately preceding the Distribution Date
plus any amount credited as of the January 1 immediately preceding the Distribution Date. No
Dividends shall be credited under Section 6.2. on the distributed amount from the December 31
immediately preceding the Distribution Date to the Distribution Date.
7.6. <u>Termination of Employment Before Age 55</u>. In the event a Participant who is an employee has a
Termination of Employment prior to his attaining age fifty-five (55) (other than by death, for
which benefits and/or accounts will be paid in accordance with Section 7.2.b.), then, whether
or not distributions have earlier commenced, the Deferred Compensation Account of said
Participant will be paid to him in a lump sum on or before the fifteenth (15th) day of February
in the year following the year in which the Termination of Employment occurred, unless
otherwise determined by the Committee. Upon written request of said Participant made within
thirty (30) days following Termination of Employment, the Committee may, in its sole
discretion, determine that, in lieu of a lump sum, payments shall be made to said Participant
in not more than five (5) Declining Balance Installments, commencing on or before such next
fifteenth (15th) day of February following the date of Termination of Employment.
7.7. <u>Taxes: Withholding</u>. To the extent required by law, the Company shall withhold from payments
made hereunder any amount required to be withheld by the federal or any state or local
government.
7.8. <u>Liquidating Distribution</u>. Notwithstanding any provisions of the Plan or the Participant's
Election Form to the contrary, following the receipt of a written request from a Participant
(or Beneficiary) for a Liquidating Distribution, the Company shall pay to the Participant (or
Beneficiary) the Participant's (or Beneficiary's) Liquidating Distribution Account Balance in a
lump sum, reduced by applicable withholding taxes, as required. Any such Liquidating
Distribution shall be paid no later than thirty (30) days following the applicable Valuation
Date (as determined pursuant to Section 2.24.), and no Dividends shall be credited under
Section 6.2. on the distributed amount from the Valuation Date to the Distribution Date.
"Liquidating Distribution" shall mean a distribution requested by the Participant (or
Beneficiary following the death of the Participant) in writing directed to the Committee and
specifically referencing this section. If the Participant requesting the Liquidating
Distribution is, at the time of the request, an active employee of the Company or is actively
serving as a Director of the Company, "Liquidating Distribution Account Balance" shall mean all
of the Deferred Compensation Accounts under the Plan in which the Participant has an
undistributed balance, decreased by a forfeiture penalty equal to six percent (6%) of the Units
credited to the Participant's Deferred Compensation Account(s) pursuant to Section 6.2. as of
the Valuation Date. If the Participant requesting the Liquidating Distribution is, at the time
of the request, no longer an active employee of the Company or actively serving as a Director
of the Company, or in the case of a request made by a Participant's Beneficiary, "Liquidating
Distribution Account Balance" shall mean all of the Deferred Compensation Accounts under the
Plan in which the Participant has an undistributed balance, decreased by a forfeiture penalty
equal to six percent (6%) of the Units credited to the Participant's Deferred Compensation
Account(s) pursuant to Section 6.2. as of the Valuation Date; and, the Liquidating Distribution
Account Balance in all of the Deferred Compensation Accounts under any Comparable Plans (as
said term is defined in the Comparable Plan, including the 6% forfeiture penalty, if any) in
which the Participant has an undistributed balance. "Comparable Plans" shall mean the Ball
Corporation 1986 Deferred Compensation Plan, the Ball Corporation 1988 Deferred Compensation
Plan, the Ball Corporation 1989 Deferred Compensation Plan, the Ball-InCon Glass Packaging
Corp. Deferred Compensation Plan, and any comparable deferred compensation plans or successor
plans so designated by the Committee.
Notwithstanding any provisions of the Plan or the Participant's Election Form to the contrary,
if the Participant requesting the Liquidating Distribution is, at the time of the request, an
active employee of the Company or active Director of the Company, then the Participant shall,
for a period of one (1) Class Year beginning with the Class Year during which the request for
the Liquidating Distribution is made, be ineligible to participate in the Plan or any
Comparable Plans with respect to any Compensation not yet deferred.
7.9. <u>Replacement of a Committee Member</u>. In the event that a Director requesting a Hardship Benefit
under Section 7.3. or a delay in payment under Section 7.4. is a member of the Human Resources
Committee, he shall not participate in the Committee's decision and, for purposes of
considering his request only, the Secretary of the Company will replace the Director as a
member of the Human Resources Committee.
8. Beneficiary Designation
A Participant shall have the right at any time, and from time to time, to designate and/or change or
cancel any person, persons, or entity as his Beneficiary or Beneficiaries (both principal and
contingent) to whom payment under this Plan shall be paid in the event of his death prior to complete
distribution to Participant of the benefits due him under the Plan. Each beneficiary change or
cancellation shall become effective only when filed in writing with the Committee during the
Participant's lifetime on a form provided by the Committee.
The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously
filed. Any finalized divorce of a Participant subsequent to the date of filing of a Beneficiary
designation form shall revoke such designation. The spouse of a married Participant domiciled in a
community property jurisdiction shall be required to join in any designation of Beneficiary or
Beneficiaries other than the spouse in order for the Beneficiary designation to be effective.
If a Participant fails to designate a Beneficiary as provided above, or, if his beneficiary designation
is revoked by divorce, or otherwise, without execution of a new designation, or if all designated
Beneficiaries predecease the Participant, then the distribution of such benefits shall be made in a lump
sum to the Participant's estate.
If any installment distribution has commenced to a Beneficiary and the Beneficiary dies before receiving
all installments, any remaining installments shall be paid in a lump sum to the estate of the
Beneficiary.
9. Amendment and Termination of Plan
9.1. <u>Amendment</u>. The Board of Directors may at any time amend the Plan in whole or in part, provided,
however, that no amendment shall be effective to reduce the value of any Participant's Deferred
Compensation Account or to affect the Participant's vested right therein, and, except as
provided in 9.2. or 9.3., no amendment shall be effective to decrease the future benefits under
the Plan payable to any Participant or Beneficiary with respect to any amount credited to a
Participant's Deferred Compensation Account prior to the date of the amendment. Written notice
of any amendments shall be given promptly to each Participant; provided, no notice shall be
required with respect to amendments that are non-material or administrative in nature.
9.2. <u>Termination of Plan</u>
a. <u>Company's Right to Terminate</u>. The Board of Directors may at any time, and in its sole
discretion, terminate the Plan. No such termination of the Plan shall reduce the
balance in a Participant's Deferred Compensation Account or affect the Participant's
vested right therein.
b. <u>Payments Upon Termination of Plan</u>. Upon any termination of the Plan under this
Section 9.2., Compensation for additional Class Years shall not be deferred under the
Plan. With respect to then-existing Deferred Compensation Accounts, the Company will,
depending upon the Participant's election at that time: (i) pay to the Participant, in
a lump sum, the value of each of his Deferred Compensation Accounts as of the
preceding Valuation Date; or (ii) make such other arrangement as the Committee
determines appropriate.
9.3. <u>Successors and Mergers, Consolidations or Change in Control</u>. The terms and conditions of this
Plan and Election Form shall enure to the benefit of and bind the Company, the Participants,
their successors, assignees, and personal representatives. If substantially all of the stock or
assets of the Company is acquired by another corporation or entity or if the Company is merged
into, or consolidated with, another corporation or entity, then the obligations created
hereunder shall be obligations of the acquiror or successor corporation or entity.
10. Miscellaneous
10.1. <u>Unsecured General Creditor</u>. Participants and their beneficiaries, heirs, successors and assigns
shall have no legal or equitable rights, interests, or other claims in any property or assets
of the Company, nor shall they be beneficiaries of, or have any rights, claims, or interests in
any life insurance policies, disability insurance policies, annuity contracts, or the policies
therefrom owned or which may be acquired by the Company ("Policies"). Such Policies or other
assets shall not be held under any trust solely for the benefit of Participants, their
beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the
fulfilling of the obligations of the Company under this Plan, except to the extent the corpus,
income and expenses are treated as assets, income and expenses of the Company pursuant to
Sections 671 through 679 of the Internal Revenue Code of 1986, as amended, and remain subject
to the claims of the general creditors of the Company. Any and all of such assets and Policies
shall be and remain general, unpledged, unrestricted assets of the Company. The Company's
obligation under the Plan shall be that of an unfunded and unsecured promise to pay money in
the future.
10.2. <u>Obligations to the Company</u>. If a Participant becomes entitled to a distribution of benefits
under the Plan, and if at such time the Participant has outstanding any debt, obligation, or
other liability representing an amount owed to the Company, then the Company may offset such
amounts owing it or an affiliate against the amount of benefits otherwise distributable. Such
determination shall be made by the Committee.
10.3. <u>Non-Assignability</u>. Neither a Participant nor any other person shall have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or
any part thereof, which are, and all rights to which are, expressly declared to be unassignable
and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject
to seizure or sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by operation of law
in the event of a Participant's or any other person's bankruptcy or insolvency.
10.4. <u>Employment or Future Eligibility to Participate Not Guaranteed</u>. Nothing contained in this Plan
nor any action taken hereunder shall be construed as a contract of employment or as giving any
Eligible Employee any right to be retained in the employ of the Company. Designation as an
Eligible Employee may be revoked at any time by the Committee with respect to any Compensation
not yet deferred.
10.5. <u>Election to Board of Directors Not Guaranteed</u>. Participation in this Plan shall not confer on
any Participant who is a Director any right to be nominated for re-election to the Board of
Directors, or to be re-elected to the Board of Directors.
10.6. <u>Gender, Singular and Plural</u>. All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine, or neuter, as the identity of the person or persons may require. As
the context may require, the singular may be read as the plural and the plural as the singular.
10.7. <u>Captions</u>. The captions to the articles, sections, and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of any of its
provisions.
10.8. <u>Applicable Law</u>. This Plan shall be governed and construed in accordance with the laws of the
State of Indiana.
10.9. <u>Validity</u>. In the event any provision of this Plan is held invalid, void, or unenforceable, the
same shall not affect, in any respect whatsoever, the validity of any other provision of this
Plan.
10.10. <u>Notice</u>. Any notice or filing required or permitted to be given to the Committee shall be
sufficient if in writing and hand delivered, or sent by registered or certified mail, to the
principal office of the Company, directed to the attention of the Chief Executive Officer of
the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for registration or
certification.
</PRE>
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<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-32_f10k2000.htm
<DESCRIPTION>DEPOSIT SHARE PROGRAM
<TEXT>
<HTML>
<head>
<TITLE>Ball Corporation 2000 10-K, Exhibit 10.32
</TITLE>
</head>
<BODY>
<PRE>
<u>Exhibit 10.32</u>
<b>Ball Corporation
Deposit Share Program</b>
<u><b>Table of Contents</b></u>
1. Purpose.........................................................................................1
2. Definitions.....................................................................................1
2.1 Cliff Lapse..........................................................................1
2.2 Committee............................................................................1
2.3 Deferral.............................................................................1
2.4 Disability...........................................................................1
2.5 Effective Date.......................................................................1
2.6 Grant Date...........................................................................1
2.7 Holding Period.......................................................................1
2.8 Newly Acquired Shares................................................................1
2.9 Participant..........................................................................1
2.10 Program..............................................................................1
2.11 Restricted Shares....................................................................2
2.12 Restricted Units.....................................................................2
2.13 Retirement...........................................................................2
2.14 Shareholder of Record................................................................2
3. Restricted Stock Grant..........................................................................2
3.1 Minimum Number of Newly Acquired Shares..............................................2
3.2 Granting of Restricted Shares........................................................2
4. Holding Period for the Newly Acquired Shares....................................................2
5. Lapse of Restrictions...........................................................................3
5.1 Cliff Lapse..........................................................................3
5.2 Accelerated Lapse Rate...............................................................3
6 Additional Cash Payment.........................................................................3
7. Retirement, Disability or Death.................................................................3
7.1 Proration Calculation................................................................3
7.2 Proration's Effect on Lapse Schedule as a Result of Retirement
or Disability.......................................................................3
7.3 Proration's Effect on Lapse Schedule as a Result of Death............................3
7.4 Fractional Shares....................................................................3
8. Forfeiture......................................................................................4
9. Deferral of Award...............................................................................4
9.1 Exchange of Restricted Shares........................................................4
9.2 Election to Defer....................................................................4
9.3 Exchange of Restricted Shares from Restricted Units..................................4
9.4 Date of Deferral.....................................................................4
10. Miscellaneous...................................................................................4
10.1 Administration of the Program........................................................4
10.2 Amendment and Termination of Program.................................................4
10.3 Successors and Mergers, Consolidations, or Change in Control.........................5
10.4 Employment or Future Eligibility to Participate Not Guaranteed.......................5
10.5 Gender, Singular or Plural...........................................................5
10.6 Captions.............................................................................5
10.7 Applicable Law.......................................................................5
10.8 Validity.............................................................................5
<PAGE>
<b><u>Deposit Share Program</u> ("Program")</b>
1. <u>Purpose</u>
To encourage key executives to acquire a larger equity ownership interest in the Corporation to further
align the personal interests of the Participants with the interests of the shareholders of the
Corporation, in order to promote share price growth and enhancement of shareholder value.
2. <u>Definitions</u>
2.1 <u>Cliff Lapse</u> means restrictions lapse at one time on the fourth anniversary following the date
of grant of Restricted Shares under this Program.
2.2 <u>Committee</u> means the Human Resources Committee of the Board of Directors of Ball Corporation.
2.3 <u>Deferral</u> means the amount of elective Restricted Units deferred by a Participant into the Ball
Corporation 2000 Deferred Compensation Company Stock Plan.
2.4 <u>Disability</u> means a bodily injury or disease as determined by the Committee that totally and
continuously prevents the Participant, for at least six consecutive months, from engaging in
the Participant's regular occupation.
2.5 <u>Effective Date</u> means March 7, 2001, which is the effective date of the Deposit Share Program.
2.6 <u>Grant Date</u> means the actual date of issuance of the Restricted Shares pursuant to this Program.
2.7 <u>Holding Period</u> means the time period during which a Participant may not sell Newly Acquired
Shares in order to have the restrictions lapse on a Restricted Stock grant.
2.8 <u>Newly Acquired Shares</u> means Ball Corporation Common Stock acquired within two years after the
Effective Date of the Deposit Share Program. It does not include Ball Corporation Common Stock
attained by a Participant through the Corporation's other benefit plans, which include but are
not limited to the 401(k) plan, the Employee Stock Purchase Plan and the Employee Stock
Ownership Plan.
2.9 <u>Participant</u> means an employee who has been selected for participation in the Program by
management and approved by the Committee.
2.10 <u>Program</u> means the Deposit Share Program as set forth in this document as amended from time to
time.
2.11 <u>Restricted Shares</u> means shares of stock that are issued or transferred to a Participant under
this Program pursuant to the Ball Corporation 1997 Stock Incentive Plan.
2.12 <u>Restricted Units</u> means the Performance Unit Award based on the dollar value of Ball Corporation
Common Stock as provided for in the Ball Corporation 1997 Stock Incentive Plan.
2.13 <u>Retirement</u> means termination of employment by a Participant for whatever reason other than
death or disability after attainment of age 55.
2.14 <u>Shareholder of Record</u> means the person who holds Ball Corporation Common Stock that is held in
an account by the transfer agent and for which dividends are paid by the transfer agent.
3. <u>Restricted Stock Grant</u>
The grant under this Program shall be a Restricted Stock Grant ("Restricted Share") pursuant to the Ball
Corporation 1997 Stock Incentive Plan. If, at any time or from time to time, within two years of the
effective date of the Program, the Participant provides evidence to the Corporate Secretary's Department
of the Corporation, reasonably satisfactory to the Corporation, of Participant's acquisition of Newly
Acquired Shares during the two-year period commencing March 7, 2001, together with a written promise by
the Participant to hold the shares for the prescribed period, then the Corporation will grant the
Participant a Restricted Share for each Newly Acquired Share so acquired, up to the maximum number of
Restricted Shares specified in the Participant's Award Letter.
3.1 <u>Minimum Number of Newly Acquired Shares</u> - The minimum number of Newly Acquired Shares that will
be matched by Restricted Shares at one time is 200 shares. The Participant may accumulate
purchases of fewer than 200 shares, and when the total number of accumulated shares is equal to
or exceeds 200 shares, the Participant may then request that matching Restricted Shares be
issued.
3.2 <u>Granting of Restricted Shares</u> - The Restricted Shares will be granted on the 15th of each month
provided the documentation required in Section 3.1 is received on or before the 5th of that
month, otherwise it will granted the following month. If the 15th occurs on a holiday or
weekend, the Restricted Shares will be issued on the workday immediately prior to that holiday
or weekend.
4. <u>Holding Period for the Newly Acquired Shares</u>
The Participant must agree that the Newly Acquired Shares will not be sold or transferred prior to the
lapse of restrictions on the matching Restricted Shares. A pledge of Newly Acquired Shares as collateral
for any loan during the holding period is not considered to be a sale or transfer of the shares for
purposes of this Program; however, in the event of default on the loan, the Newly Acquired Shares will
be considered to be sold and the matching Restricted Shares will be forfeited.
5. <u>Lapse of Restrictions</u>
5.1 <u>Cliff Lapse</u> - Except as provided herein, restrictions on all Restricted Shares will cliff lapse
on the fourth anniversary following the date of grant of the Restricted Shares.
5.2 <u>Accelerated Lapse Rate</u> - The restrictions may lapse at an accelerated rate if the Participant
meets stock ownership guidelines, which are measured at the end of the month prior to the
accelerated lapse date. The accelerated lapse schedule is as follows:
Anniversary Following
Percentage Date of Grant
-------------------- -------------------------------
30% Second
30% Third
40% Fourth
6. <u>Additional Cash Payment</u>
The Participant also will receive a dividend equivalent, if any, payable with respect to the Restricted
Shares from the date of grant until restrictions lapse.
7. <u>Retirement, Disability or Death</u>
Participants who retire before restrictions have lapsed on Restricted Shares granted under this Program
will receive a prorated portion of their Restricted Shares.
7.1 <u>Proration Calculation</u>
Number of restricted Number of
shares still outstanding X <u>Number of days from grant to retirement,disability or death</u> = Restricted Shares
on date of retirement, Number of days from grant to scheduled cliff lapsing outstanding after
disability or death proration
7.2 <u>Proration's Effect on Lapse Schedule as a Result of Retirement or Disability</u> - Restricted
Shares outstanding after proration will have restrictions lapse according to Section 5 above.
7.3 <u>Proration's Effect on Lapse Schedule as a Result of Death</u> - Restricted Shares outstanding after
proration will lapse and the unrestricted shares will be issued to the participant or his
beneficiary.
7.4 <u>Fractional Shares</u> - All fractional shares will be rounded up at proration.
8. <u>Forfeiture</u>
All rights in and to any and all Restricted Shares granted pursuant to this Program which have not had
restrictions lapse as described above in this Program, shall be forfeited upon the Participant's
termination from the Corporation, except for prorated Restricted Shares as provided for in Section 7. In
addition, any Restricted Shares granted pursuant to this Program shall be forfeited if the Newly
Acquired Shares to which the Restricted Shares relate are sold or transferred by the Participant prior
to the lapse of restrictions on such Restricted Shares. For each Restricted Share for which the
restrictions have lapsed, the holding period requirement for an equal number of Newly Acquired Shares
shall also end.
9. <u>Deferral of Award</u>
9.1 <u>Exchange of Restricted Shares</u> - Participants in the Program will have an opportunity to
exchange Restricted Shares granted under this Program for Restricted Units issued under the
Ball Corporation 2000 Deferred Compensation Company Stock Plan (the "Deferred Stock Plan").
9.2 <u>Election to Defer</u> - In order to exchange shares and utilize the Deferred Stock Plan, the
Participant must elect to exchange any Restricted Shares granted under this Program at least
one year prior to the lapse of restrictions on such Restricted Shares. The Restricted Units
will be eligible for a Corporation Matching Contribution under the Deferred Stock Plan.
9.3 <u>Exchange of Restricted Shares for Restricted Units</u> - In the event a Participant elects to
undertake such an exchange, the Restricted Shares granted under this Program will be cancelled
and an equivalent number of Restricted Units will be issued to the Participant. Restrictions
and the Participant's rights with respect to such Restricted Units will be determined under the
terms of the Program.
9.4 <u>Date of Deferral</u> - The actual deferral of the Restricted Units will not occur until
restrictions lapse on the Restricted Units.
10. <u>Miscellaneous</u>
10.1 <u>Administration of the Program</u> - The Human Resources Committee of the Board of Directors shall
be the sole administrator of the Program. The Committee shall have full power to formulate
additional details and regulations for carrying out this Program. The Committee shall also be
empowered to make any and all of the determinations not herein specifically authorized which
may be necessary or desirable for the effective administration of the Program. Any decision or
interpretation of any provision of this Program adopted by the Committee shall be final and
conclusive.
10.2 <u>Amendment and Termination of Program</u> - The Committee may at any time amend the Program in whole
or in part; provided, however, that no amendment shall be effective to affect the Participant's
vested right therein, and, except as provided below, no amendment shall be effective to
decrease the future benefits under the Program payable to any Participant or beneficiary with
respect to any amount granted or vested prior to the date of the amendment. Written notice of
any amendments shall be given promptly to each Participant. No notice shall be required with
respect to amendments that are non-material or administrative in nature.
10.3 <u>Successors and Mergers, Consolidations, or Change in Control</u> - The terms and conditions of this
Program and Election Form shall enure to the benefit of and bind the Corporation, the
Participants, their successors, assignees, and personal representatives. If substantially all
of the stock or assets of the Corporation are merged into, or consolidated with, another
corporation or entity, then the obligations created hereunder shall be obligations of the
acquirer or successor corporation or entity.
10.4 <u>Employment or Future Eligibility to Participate Not Guaranteed</u> - Nothing contained in this
Program nor any action taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to be retained in the employ of the Corporation. Designation
as a Participant may be revoked at any time by the Committee with respect to any Restricted
Shares not yet granted.
10.5 <u>Gender, Singular and Plural</u> - All pronouns and any variations thereof shall be deemed to refer
to the masculine and feminine gender as the identity of the person or persons may require. As
the context may require, the singular may be read as the plural and the plural as the singular.
10.6 <u>Captions</u> - The captions to the articles, sections, and paragraphs of this Program are for
convenience only and shall not control or affect the meaning or construction of any of its
provisions.
10.7 <u>Applicable Law</u> - This Program shall be governed and construed in accordance with the laws of
the State of Indiana.
10.8 <u>Validity</u> - In the event any provision of this Program is held invalid, void, or unenforceable,
the same shall not affect, in any respect whatsoever, the validity of any other provision of
this Program.
</PRE>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>4
<FILENAME>ex12-1_f10k2000.htm
<DESCRIPTION>EARNINGS TO FIXED CHARGES
<TEXT>
<HTML>
<head>
<TITLE>Ball Corporation 2000 10-K, Exhibit 12.1
</TITLE>
</head>
<BODY>
<PRE>
<u>Exhibit 12.1</u>
<b>Ball Corporation and Subsidiaries
Ratio of Earnings to Fixed Charges</b>
- ------------------------------------------- ----------- ----------- ----------- ----------- -----------
($ in millions) 2000 1999 1998 1997 1996
- ------------------------------------------- ----------- ----------- ----------- ----------- -----------
Income from continuing operations before
taxes on income $ 113.9 $ 171.2 $ 27.3 $ 85.9 $ 29.6
Plus:
Interest expensed and capitalized 98.5 109.6 80.9 57.9 45.4
Interest expense within rent 25.4 18.0 15.4 12.7 9.1
Amortization of capitalized interest 2.0 1.9 2.1 2.6 2.1
Distributed income of equity
investees - 1.5 2.5 6.9 -
Less:
Interest capitalized (3.3) (2.0) (2.3) (4.4) (6.6)
----------- ----------- ----------- ----------- -----------
Adjusted earnings 236.5 300.2 125.9 161.6 79.6
Fixed charges(1) 123.9 127.6 96.3 70.6 54.5
Ratio of earnings to fixed charges 1.9x 2.4x 1.3x 2.3x 1.5x
- ------------------------------------------- ----------- ----------- ----------- ----------- -----------
(1) Fixed charges include interest expensed and capitalized as well as interest expense within rent.
</PRE>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>5
<FILENAME>ex13-1_f10k2000.htm
<DESCRIPTION>2000 ANNUAL REPORT TO SHAREHOLDERS
<TEXT>
<HTML>
<head>
<TITLE>Ball Corporation 2000 10-K, Exhibit 13.1
</TITLE>
</head>
<BODY>
<PRE>
<u>Exhibit 13.1</u>
<b>Management's Discussion and Analysis of Financial Condition and Results of Operations</b>
Ball Corporation and Subsidiaries
<i>Management's discussion and analysis should be read in conjunction with the consolidated financial statements and the accompanying
notes. Ball Corporation and subsidiaries are referred to collectively as "Ball" or "the company" or "we" and "our" in the following
discussion and analysis.</i>
<b>Consolidated Sales and Earnings</b>
Ball's operations are organized along its product lines and include two segments - the packaging segment and the aerospace and
technologies segment.
<i>Packaging Segment</i>
The packaging segment includes metal and PET (polyethylene terephthalate) plastic containers, primarily used in beverage and food
packaging. Our packaging operations are located in and serve North America (the U.S. and Canada) and Asia, primarily the People's
Republic of China (PRC). Packaging segment sales were flat compared to 1999. Operating margins, excluding the business consolidation
charge in 2000, were slightly improved compared to 1999 with improved production efficiencies and cost reductions being partially
offset by price/cost compression. Packaging segment sales were up significantly in 1999 compared to 1998, largely the result of the
incremental business from an acquisition of beverage can manufacturing assets in the second half of 1998.
North American metal beverage container sales, which represented approximately 68 percent of segment sales in 2000, decreased
3 percent in comparison to 1999. The decrease in 2000 compared to 1999 was due to lower shipments, partially offset by higher aluminum
prices passed through to customers. At the end of the second quarter, we ceased production at one of our beverage can manufacturing
facilities due to industry overcapacity and unattractive pricing. In addition, a manufacturing line in British Columbia ceased
production near the end of 2000, for which a provision was made as part of the second quarter business consolidation charge. During
the first quarter of 2000, we closed an acquired aluminum beverage can plant in Tampa and began operation of a new, high-speed
production line in our other Tampa plant. The sales increase in 1999 compared to 1998 was due to the additional sales volume from the
plants acquired in a 1998 beverage can manufacturing acquisition. Based on publicly available industry information, we estimate that
shipments in 2000 for our metal beverage container product line were approximately 32 percent of total U.S. and Canadian shipments.
North American metal food container sales, which comprised approximately 17 percent of segment sales in 2000, increased 10 percent
over 1999 and 14 percent over 1998. The increase in 2000 was the result of volume gains, including sales to our joint venture
partner, ConAgra Grocery Products Company. The 1999 increase was due to stronger sales in seasonal and nonseasonal lines, with the
Pacific salmon catch and the harvest in the Midwest both higher year over year. In 1999 shipments from the metal food container
product line exceeded five billion units for the first time. We estimate our 2000 shipments of 5.3 billion units to be approximately
18 percent of total U.S. and Canadian metal food container shipments, based on publicly available industry information.
During the second quarter of 2000, Ball and ConAgra Grocery Products Company formed a joint venture food can manufacturing company,
Ball Western Can Company. Ball receives management fees and accounts for the results of its 50 percent-owned investment under the
equity method.
Sales in the plastic container product line, which comprised approximately 8 percent of segment sales in 2000, have increased
steadily over the last three years. Plastic container sales in 2000 exceeded 1999 by approximately 4 percent, which exceeded 1998 by
approximately 9 percent. The 2000 increase was due to the pass-through of higher resin prices, while the 1999 increase was due to
higher sales volumes. The sales mix continues to be weighted heavily toward carbonated soft drink and water containers. Plastic beer
containers are being tested by several of our customers and we are developing plastic containers for the single serve juice market.
International packaging sales are comprised of the sales within the PRC as well as revenues from technical services provided to Ball
licensees. International packaging sales decreased approximately 2 percent in the PRC in 2000 compared to 1999, which was lower than
1998 by 5 percent. The closure of two plants in the PRC during the first quarter of 1999 contributed to the lower sales in that year.
Sales and operating margins within the PRC continue to be affected negatively by a soft metal beverage container market combined with
industry overcapacity.
<PAGE>
<i>Aerospace and Technologies Segment</i>
The aerospace and technologies segment had lower sales in 2000 compared to 1999 as a result of the completion of some programs and
delays in the start-up and funding of new programs. Despite the decrease in sales, earnings in 2000 were higher as a result of the
favorable settlement regarding costs associated with the company's ESOP as well as better than anticipated margins at the completion
of certain contracts. Sales increased in 1999 in comparison to 1998 as a result of increased program activity. Earnings in 1999 were
lower due in part to costs to develop antennas for wireless personal communications systems that employ Ball technology.
Sales to the U.S. government, either as a prime contractor or as a subcontractor, represented approximately 85 percent, 86 percent
and 90 percent of segment sales in 2000, 1999 and 1998, respectively. Major industry trends have not changed significantly, with
Department of Defense and NASA budgets remaining relatively flat. However, there is a growing worldwide market for commercial space
activities. Consolidation in the industry continues, and there is strong competition for business. Backlog for the aerospace and
technologies segment at December 31, 2000 and 1999, was approximately $351 million and $346 million, respectively. Year-to-year
comparisons of backlog are not necessarily indicative of the trend of future operations.
For additional information regarding the company's segments, see the summary of business segment information in Note 2 accompanying
the consolidated financial statements.
<b>Selling and Administrative Expenses</b>
Selling and administrative expenses were $141.9 million, $140.9 million and $119.4 million for 2000, 1999 and 1998, respectively.
Higher consolidated selling and administrative expenses in 1999 compared to 1998 were due partially to the additional costs
associated with the plants acquired in August 1998, including salaries and interim administrative support. Also contributing to the
increase were higher performance-based incentive compensation costs and, in 1999, a nonrecurring $4.7 million charge in the second
quarter associated with an executive stock option grant which vested in April when the company's closing stock price reached
specified levels. Excluding the $4.7 million stock option compensation charge in 1999, higher selling and administrative expenses in
2000 included increases in compensation and related costs.
<b>Interest and Taxes</b>
Consolidated interest expense was $95.2 million in 2000 compared to $107.6 million in 1999 and $78.6 million in 1998. The 2000
decrease is attributable to a lower level of average borrowings during the year, as well as increased capitalization of interest,
largely in connection with our Tampa plant expansion, offset by higher short-term interest rates. We maintained a higher percentage
of long-term debt at lower fixed rates in 2000 as a result of fixing certain previously floating rate debt through the use of
derivative instruments. The increase in 1999 interest costs over 1998 was attributable to a full year of the higher debt levels
associated with the August 1998 beverage can acquisition.
Ball's consolidated effective income tax rate was 37.6 percent in 2000 compared to 37.9 percent in 1999 and 32.2 percent in 1998. The
slightly lower effective income tax rate in 2000 is primarily the result of the favorable resolution during the year of certain prior
years' federal and state tax matters, partially offset by nondeductible goodwill included in the second quarter charge for business
consolidation costs.
The higher tax rate for 1999 compared to 1998 is related to the phase-in effects of the previously reported 1996 legislated changes
in the tax treatment of the costs of company-owned life insurance, the impact of a full year of goodwill amortization related to the
book and tax basis differences of acquired assets and liabilities and the favorable settlement in 1998 of various issues with taxing
authorities, all of which were partially offset by the effects of foreign operations.
<b>Minority Interests and Results of Equity Affiliates</b>
Minority interests' share of losses was $1 million for 2000, compared to their share of income of $1.9 million in 1999 and their
share of losses of $7.9 million in 1998. The losses in 2000 and 1998 reflect the minority share of the charges for plant closures in
the PRC recorded in those years.
Equity in the earnings of affiliates is attributable to investments in the PRC, Thailand and Brazil. Results were losses of
$3.9 million in 2000 and $0.2 million in 1999 and income of $5.6 million in 1998. Brazil's losses in 2000 were the result of
unfavorable currency hedging transactions, while losses in the PRC reflect the continued effects of excess capacity in the industry,
coupled with higher metal costs relative to the previous year and the impact of business consolidation costs. Thailand incurred a
small loss in both 2000 and 1999.
<PAGE>
<b>Other Items</b>
The company recorded an $83.4 million pretax charge ($55 million after tax, minority interests and equity earnings impacts, or $1.77
per diluted share) in the second quarter for packaging business consolidation and investment exit activities. The charge includes
costs associated with the permanent closure of a beverage can manufacturing facility in the U.S., the elimination of food and
beverage can manufacturing capacity at two locations in Canada, the consolidation of production capacity in the PRC and the
write-down to net realizable value of an investment in a Russian beverage can manufacturing joint venture. These actions, which are
expected to be completed during 2001, are largely the result of improved operating efficiencies throughout our packaging business and
are consistent with our strategy to keep manufacturing costs low. Additional details about the business consolidation and investment
exit activities are provided in Note 3 to the consolidated financial statements.
Also during the second quarter, we favorably resolved certain state and federal tax matters related to prior years that reduced the
overall tax provision by $2.3 million (7 cents per diluted share).
On April 3, 2000, the Armed Services Board of Contract Appeals sustained our claim to recoverability of costs associated with our
Employee Stock Ownership Plan for fiscal years beginning in 1989, and the time frame for the U.S. government to file an appeal
expired in August. As a result, in the third quarter we recognized earnings of approximately $7 million ($4.3 million after tax or
14 cents per diluted share) related to this matter.
In connection with a beverage can manufacturing acquisition in 1998, the company provided $51.3 million in the opening balance sheet
for the costs of integrating the acquired business, which included the closure of a headquarters facility and three plants. The
employees have been terminated, and the former headquarters facility and two of the three plants have been sold. The third plant and
certain equipment remain for sale. Additional details about the acquisition are provided in Note 4 to the consolidated financial
statements.
Also in connection with the acquisition, we refinanced $521.9 million of our existing debt and, as a result, recorded a pretax charge
for early extinguishment of the debt of $19.9 million ($12.1 million after tax or 37 cents per diluted share).
During the fourth quarter of 1998, the company announced the closure of two of its plants located in the PRC and removed from service
manufacturing equipment at a third plant. The actions resulted in a $56.2 million, largely noncash, charge in 1998, primarily for the
write-down to net realizable value of fixed assets, goodwill and other assets. Also in 1998 we relocated our corporate headquarters
to an existing company-owned building in Broomfield, Colorado. In connection with the relocation, which has been completed, the
company recorded a pretax charge in 1998 of $17.7 million, primarily for employee-related costs.
In 1998 the company also adopted SOP No. 98-5, "Reporting on the Costs of Start-Up Activities," in advance of its required 1999
implementation date. SOP No. 98-5 requires that costs of start-up activities and organizational costs, as defined, be expensed as
incurred. In accordance with this statement, we recorded an after-tax charge to earnings of $3.3 million (11 cents per share),
retroactive to January 1, 1998, representing the cumulative effect of this change in accounting on prior years.
<b>Financial Condition, Liquidity and Capital Resources</b>
Cash flows from operating activities were $176.5 million in 2000 compared to $306 million in 1999 and $387.1 million in 1998. The
decrease in 2000 from 1999 was the result of higher accounts receivable and inventory balances, partially offset by higher earnings,
excluding the business consolidation charge. The decrease in 1999 from 1998 was due to improved operating results and higher
collections on receivables offset by higher inventories, primarily due to purchases of aluminum late in 1999 in anticipation of a
price increase. Additionally, free cash flow has increased accordingly.
<PAGE>
Free cash flow is the cash remaining from operations before working capital changes, reduced by capital spending and dividends, and
is used to pay down debt, repurchase shares and finance working capital. We focus on increasing free cash flow to achieve our primary
objective of maximizing shareholder value over time. The consolidated statements of our cash flows are summarized as follows:
<i>($ in millions)</i> 2000 1999 1998
------------- ------------ ------------
Operating cash flows $ 176.5 $ 306.0 $ 387.1
Working capital changes 130.1 1.5 (159.5)
Capital spending (98.7) (107.0) (84.2)
Dividends (21.6) (22.5) (22.7)
------------- ------------ ------------
Free cash flow 186.3 178.0 120.7
Business acquisitions - - (838.4)
Debt borrowings (repayments) (48.0) (151.1) 619.3
Share repurchases, net of issuances (60.9) (35.5) (3.4)
Working capital changes (130.1) (1.5) 159.5
Other 42.5 11.9 (49.2)
------------- ------------ ------------
Net change in cash and temporary investments $ (10.2) $ 1.8 $ 8.5
============= ============ ============
Capital expenditures, excluding effects of business acquisitions and dispositions, were $98.7 million, $107 million and $84.2 million
in 2000, 1999 and 1998, respectively. Higher spending in 1999 compared to 1998 was largely related to the additional plants acquired
in 1998. Capital spending is expected to be approximately $100 million in 2001.
Debt at December 31, 2000, decreased $59.4 million to $1,137.3 million from $1,196.7 million at year end 1999, while cash and
temporary investments were reduced slightly. Consolidated debt-to-total capitalization improved to 62 percent at December 31, 2000,
from 62.7 percent at year end 1999.
Debt includes $300 million of 7.75% Senior Notes due in 2006, $250 million of 8.25% Senior Subordinated Notes due in 2008 and
borrowings under a Senior Credit Facility, which bear interest at variable rates. At December 31, 2000, $559 million was available
under the revolving credit facility portion of the Senior Credit Facility.
Ball Asia Pacific Holdings Limited and its consolidated subsidiaries had short-term uncommitted credit facilities of approximately
$110 million at the end of the year, of which $58.5 million was outstanding at December 31, 2000.
A receivables sales agreement provides for the ongoing, revolving sale of a designated pool of trade accounts receivable of Ball's
U.S. packaging operations, up to $125 million. Net funds received from the sale of the accounts receivable totaled $122.5 million at
December 31, 2000 and 1999.
The company was not in default of any loan agreement at December 31, 2000, and has met all payment obligations. The U.S. note
agreements, bank credit agreement, ESOP debt guarantee and industrial development revenue bond agreements contain certain
restrictions relating to dividends, investments, guarantees and the incurrence of additional indebtedness.
Additional details about the company's receivables sales agreement and debt are available in Notes 5 and 9, respectively,
accompanying the consolidated financial statements.
Cash dividends paid on common stock in 2000, 1999 and 1998 were 60 cents per share each year.
<b>Financial Instruments and Risk Management</b>
In the ordinary course of business, we employ established risk management policies and procedures to reduce our exposure to commodity
price changes, changes in interest rates, fluctuations in foreign currencies and the company's common share repurchase program.
We have estimated our market risk exposure using sensitivity analysis. Market risk exposure has been defined as the changes in fair
value of a derivative instrument assuming a hypothetical 10 percent adverse change in market prices or rates. The results of the
sensitivity analysis are summarized below. Actual changes in market prices or rates may differ from hypothetical changes.
<PAGE>
<i>Commodity Price Risk</i>
We primarily manage our commodity price risk in connection with market price fluctuations of aluminum by entering into customer sales
contracts for cans and ends, which include aluminum-based pricing terms that consider price fluctuations under our commercial supply
contracts for aluminum purchases. The terms include "band" pricing where there is an upper and lower limit, a fixed price or only an
upper limit to the aluminum component pricing. This matched pricing affects substantially all of our North American metal beverage
packaging net sales. We also, at times, use certain derivative instruments such as option and forward contracts to hedge commodity
price risk.
Considering the effects of derivative instruments, the market's ability to accept price increases and the company's North American
and international commodity price exposures to aluminum, a hypothetical 10 percent adverse change in the company's North American and
international aluminum prices could have an estimated $1.9 million impact on earnings over a one-year period. Considering the same
factors, a hypothetical 10 percent adverse change in the prices of steel and resin could have an estimated $4.7 million impact on
earnings over the same period. Actual results may vary based on actual changes in market prices and rates.
<i>Interest Rate Risk</i>
Our objective in managing exposure to interest rate changes is to limit the impact of interest rate changes on earnings and cash
flows and to lower our overall borrowing costs. To achieve these objectives, we use a variety of interest rate swaps, collars and
options to manage our mix of floating and fixed-rate debt. Interest rate instruments held by the company at December 31, 2000 and
1999, included pay-floating and pay-fixed interest rate swaps, interest rate caps and swaption contracts. Pay-fixed swaps effectively
convert floating rate obligations to fixed rate instruments. Pay-floating swaps effectively convert fixed-rate obligations to
variable rate instruments. Swap agreements expire at various times up to five years.
The related notional amounts of interest rate swaps and options serve as the basis for computing the cash flow under these agreements
but do not represent our exposure through the use of these instruments. Although these instruments involve varying degrees of credit
and interest risk, the counter parties to the agreements involve financial institutions, which are expected to perform fully under
the terms of the agreements.
Based on our interest rate exposure at December 31, 2000, assumed floating rate debt levels throughout 2001 and the effects of
derivative instruments, a 10 percent change in interest rates could have an estimated $2.3 million impact on earnings over a one-year
period. Actual results may vary based on actual changes in market prices and rates.
<i>Exchange Rate Risk</i>
Our objective in managing exposure to foreign currency fluctuations is to protect foreign cash flow and reduce earnings volatility
associated with foreign exchange rate changes. Our primary foreign currency risk exposures result from the strengthening of the U.S.
dollar against the Hong Kong dollar, Canadian dollar, Chinese renminbi, Thai baht and Brazilian real. We face currency exposures that
arise from translating the results of our global operations and maintaining U.S. dollar debt and payables in foreign countries. We
primarily use forward contracts to manage our foreign currency exposures and, as a result, gains and losses on these derivative
positions offset, in part, the impact of currency fluctuations on the existing assets and liabilities.
Considering the company's derivative financial instruments outstanding at December 31, 2000, and the currency exposures, a
hypothetical 10 percent unfavorable change in the exchange rates compared to the U.S. dollar could have an estimated $7.4 million
impact on earnings over a one-year period. Actual changes in market prices or rates may differ from hypothetical changes.
<i>Equity</i>
In connection with the company's ongoing share repurchase program, the company sells put options which give the purchaser of those
options the right to sell shares of the company's common stock to the company on specified dates at specified prices upon the
exercise of those options. The put option contracts allow us to determine the method of settlement, either in cash or shares. As
such, the contracts are considered equity instruments and changes in the fair value are not recognized in the company's financial
statements. Our objective in selling put options is to lower the average purchase price of acquired shares in connection with the
share repurchase program.
In 2000 the company entered into a forward share repurchase agreement to purchase shares of the company's common stock. During the
year we purchased 580,300 shares under the agreement at an average price of $34.50, and in January 2001 we purchased the 510,500
shares remaining under the agreement at an average price of $35.16.
<i>New Accounting Pronouncement</i>
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and SFAS No. 138, an amendment of SFAS 133, essentially
require all derivatives to be recorded on the balance sheet at fair value and establish new accounting practices for hedge
instruments. In connection with the adoption of these statements, which became effective for Ball on January 1, 2001, we expect the
cumulative earnings effect of this change in accounting to be insignificant.
For information regarding other recent accounting pronouncements, see Note 1 to the consolidated financial statements.
<b>Contingencies</b>
The company is subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive nature
of the industries in which we participate, our operations in developing markets outside the U.S., changing commodity prices for the
materials used in the manufacture of our products and changing capital markets. Where practicable, we attempt to reduce these risks
and uncertainties through the establishment of risk management policies and procedures, including, at times, the use of derivative
financial instruments as explained above.
From time to time, the company is subject to routine litigation incident to its business. Additionally, the U.S. Environmental
Protection Agency has designated Ball as a potentially responsible party, along with numerous other companies, for the cleanup of
several hazardous waste sites. Our information at this time does not indicate that these matters will have a material adverse effect
upon the liquidity, results of operations or financial condition of the company.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Future events could affect
these estimates.
The U.S. economy and the company have experienced minor general inflation during the past several years. Management believes that
evaluation of Ball's performance during the periods covered by these consolidated financial statements should be based upon
historical financial statements.
<b>Forward-Looking Statements</b>
We have made certain forward-looking statements in this annual report. These forward-looking statements represent goals and are based
on certain assumptions and estimates regarding the worldwide economy, specific industry technological innovations, industry capacity
and competitive activity, interest rates, capital expenditures, pricing, currency movements, product introductions, and the
development of certain domestic and international markets. Some factors that could cause our actual results or outcomes to differ
materially from those discussed in the forward-looking statements include, but are not limited to, fluctuation in customer growth and
demand; the weather; vegetable and fish yields; fuel and energy costs and availability; regulatory action; federal and state
legislation; interest rates; labor strikes; boycotts; litigation involving antitrust, intellectual property, consumer and other
issues; maintenance and capital expenditures; local economic conditions; the authorization and control over the availability of
government contracts and the nature and continuation of those contracts and related services provided thereunder; the success or lack
of success of satellite launches and the businesses and governments associated with the launches; the fluctuation of international
currencies; the ability to obtain adequate credit resources for foreseeable financing requirements of our businesses; and the ability
of the company to acquire or divest of other businesses. If our assumptions and estimates are incorrect, or if we are unable to
achieve our goals, then actual performance could vary materially from goals expressed or implied in forward-looking statements.
<PAGE>
<b>Report of Management on Financial Statements</b>
The consolidated financial statements contained in this annual report to shareholders are the responsibility of management. These
financial statements have been prepared in conformity with generally accepted accounting principles and, necessarily, include certain
amounts based on management's informed judgments and estimates. Future events could affect these judgments and estimates.
In fulfilling its responsibility for the integrity of financial information, management maintains and relies upon a system of
internal control which is designated to provide reasonable assurance that assets are safeguarded from unauthorized use or
disposition, that transactions are executed in accordance with management's authorization and that transactions are properly recorded
to permit the preparation of reliable financial statements in all material respects. To assure the continuing effectiveness of the
system of internal controls and to maintain a climate in which such controls can be effective, management establishes and
communicates appropriate written policies and procedures; carefully selects, trains and develops qualified personnel; maintains an
organizational structure that provides clearly defined lines of responsibility, appropriate delegation of authority and segregation
of duties; and maintains a continuous program of internal audits with appropriate management follow-up. Company policies concerning
use of corporate assets and conflicts of interest, which require employees to maintain the highest ethical and legal standards in
their conduct of the company's business, are important elements of the internal control system.
The board of directors oversees management's administration of company reporting practices, internal controls and the preparation of
the consolidated financial statements with the assistance of its audit committee, which is subject to regulation by the Securities
and Exchange Commission and the New York Stock Exchange (the Exchange). The board of directors has adopted an audit committee charter
that governs the work of the audit committee and meets the requirements of the Exchange.
<i>R. David Hoover Raymond J. Seabrook
President and Chief Executive Officer Senior Vice President and Chief Financial Officer</i>
<b>Report of Independent Accountants</b>
To the Board of Directors and Shareholders
Ball Corporation
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, of cash flows and of
shareholders' equity and comprehensive earnings present fairly, in all material respects, the financial position of Ball Corporation and
its subsidiaries at December 31, 2000, and 1999, and the results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the company's management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in
the United States of America which require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Denver, Colorado
January 24, 2001
<PAGE>
<b>Consolidated Statements of Earnings</b>
Ball Corporation and Subsidiaries
Years ended December 31,
-----------------------------------------------
<i>($ in millions, except per share amounts)</i> 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------
<b>Net sales $3,664.7 $3,707.2 $2,995.7</b>
- ----------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of sales (excluding depreciation and amortization) 3,064.1 3,111.0 2,537.7
Depreciation and amortization (Notes 7 and 8) 159.1 162.9 145.0
Business consolidation costs and other (Note 3) 76.4 - 73.9
Selling and administrative 141.9 140.9 119.4
Receivable securitization fees and product development
(Note 5) 14.1 13.6 13.8
------------- ------------- -------------
3,455.6 3,428.4 2,889.8
- ----------------------------------------------------------------------------------------------------------
<b>Earnings before interest and taxes 209.1 278.8 105.9</b>
- ----------------------------------------------------------------------------------------------------------
Interest expense (Note 9) 95.2 107.6 78.6
------------- ------------- ------------
Earnings before taxes 113.9 171.2 27.3
Provision for taxes (Note 11) (42.8) (64.9) (8.8)
Minority interests 1.0 (1.9) 7.9
Equity in net results of affiliates (3.9) (0.2) 5.6
------------- ------------- -------------
Earnings before extraordinary item and accounting change 68.2 104.2 32.0
Early debt extinguishment costs, net of tax - - (12.1)
Cumulative effect of accounting change for start-up
costs, net of tax - - (3.3)
------------- ------------- -------------
<b>Net earnings 68.2 104.2 16.6</b>
Preferred dividends, net of tax (2.6) (2.7) (2.8)
- ----------------------------------------------------------------------------------------------------------
<b>Earnings attributable to common shareholders $ 65.6 $ 101.5 $ 13.8</b>
- ----------------------------------------------------------------------------------------------------------
Basic earnings per share before extraordinary item and
accounting change (Note 14) $ 2.26 $ 3.36 $ 0.96
Early debt extinguishment costs, net of tax - - (0.40)
Cumulative effect of accounting change for start-up
costs, net of tax - - (0.11)
------------- ------------- -------------
<b>Basic earnings per share $ 2.26 $ 3.36 $ 0.45</b>
============= ============= =============
Diluted earnings per share before extraordinary item and
accounting change (Note 14) $ 2.14 $ 3.15 $ 0.91
Early debt extinguishment costs, net of tax - - (0.37)
Cumulative effect of accounting change for start-up costs,
net of tax - - (0.10)
------------- ------------- -------------
<b>Diluted earnings per share $ 2.14 $ 3.15 $ 0.44</b>
============= ============= =============
<i>The accompanying notes are an integral part of the consolidated financial statements.</i>
<PAGE>
<b>Consolidated Balance Sheets</b>
Ball Corporation and Subsidiaries
December 31,
--------------------------
<i>($ in millions)</i> 2000 1999
------------ ------------
<b>Assets</b>
Current assets
Cash and temporary investments $ 25.6 $ 35.8
Receivables, net (Note 5) 230.2 220.2
Inventories, net (Note 6) 627.5 565.9
Deferred taxes and prepaid expenses (Note 11) 86.0 73.9
------------ ------------
Total current assets 969.3 895.8
Property, plant and equipment, net (Note 7) 1,003.7 1,121.2
Goodwill and other assets (Notes 4 and 8) 676.8 715.1
------------ ------------
<b>Total Assets</b> $ 2,649.8 $ 2,732.1
============ ============
<b>Liabilities and Shareholders' Equity</b>
Current liabilities
Short-term debt and current portion of long-term debt (Note 9) $ 125.7 $ 104.0
Accounts payable 332.1 345.5
Accrued employee costs and other current liabilities 201.3 220.6
------------ ------------
Total current liabilities 659.1 670.1
Long-term debt (Note 9) 1,011.6 1,092.7
Employee benefit obligations, deferred taxes and other liabilities
(Notes 11 and 12) 281.8 258.7
------------ ------------
Total liabilities 1,952.5 2,021.5
------------ ------------
Contingencies (Note 17)
Minority interests 14.9 19.7
------------ ------------
Shareholders' Equity (Note 13)
Series B ESOP Convertible Preferred Stock 53.4 56.2
Unearned compensation - ESOP (10.6) (20.5)
------------ ------------
Preferred shareholder's equity 42.8 35.7
------------ ------------
Common stock (36,773,381 shares issued - 2000;
35,849,778 shares issued - 1999 443.9 413.0
Retained earnings 529.3 481.2
Accumulated other comprehensive loss (29.7) (26.7)
Treasury stock, at cost (8,724,380 shares - 2000;
6,032,651 shares - 1999) (303.9) (212.3)
------------ ------------
Common shareholders' equity 639.6 655.2
------------ ------------
Total shareholders' equity 682.4 690.9
------------ ------------
<b>Total Liabilities and Shareholders' Equity</b> $ 2,649.8 $ 2,732.1
============ ============
<i>The accompanying notes are an integral part of the consolidated financial statements.</i>
<PAGE>
<b>Consolidated Statements of Cash Flows</b>
Ball Corporation and Subsidiaries
Years ended December 31,
-----------------------------------------------
<i>($ in millions)</i> 2000 1999 1998
------------ ------------ ------------
<b>Cash Flows from Operating Activities</b>
Net earnings $ 68.2 $ 104.2 $ 16.6
Noncash charges to net earnings:
Depreciation and amortization 159.1 162.9 145.0
Deferred taxes 9.8 34.3 (7.6)
Business consolidation costs net of related equity and
minority interest effects 81.3 - 60.9
Early debt extinguishment costs - - 19.9
Other, net (11.8) 6.1 (7.2)
Working capital changes, excluding effects of
acquisitions and dispositions:
Receivables (9.8) 53.5 93.9
Inventories (73.8) (49.1) 27.7
Accounts payable (12.5) (5.1) 54.7
Other, net (34.0) (0.8) (16.8)
------------ ------------ ------------
Net cash provided by operating activities 176.5 306.0 387.1
------------ ------------ ------------
<b>Cash Flows from Investing Activities</b>
Additions to property, plant and equipment (98.7) (107.0) (84.2)
Acquisitions, net of cash acquired - - (838.4)
Incentive loan receipts 17.4 7.6 -
Other, net 28.8 6.7 7.5
------------ ------------ ------------
Net cash used in investing activities (52.5) (92.7) (915.1)
------------ ------------ ------------
<b>Cash Flows from Financing Activities</b>
Long-term borrowings - 23.1 1,180.4
Repayments of long-term borrowings (50.9) (161.0) (357.8)
Change in short-term borrowings 2.9 (13.2) (203.3)
Debt issuance costs - - (28.9)
Debt prepayment costs - - (17.5)
Common and preferred dividends (21.6) (22.5) (22.7)
Proceeds from issuance of common stock under
various employee and shareholder plans 30.7 36.8 31.5
Acquisitions of treasury stock (91.6) (72.3) (34.9)
Other, net (3.7) (2.4) (10.3)
------------ ------------ ------------
Net cash provided by (used in) financing activities (134.2) (211.5) 536.5
------------ ------------ ------------
<b>Net Change in Cash and Temporary Investments</b> (10.2) 1.8 8.5
Cash and Temporary Investments - Beginning of Year 35.8 34.0 25.5
------------ ------------ ------------
<b>Cash and Temporary Investments - End of Year</b> $ 25.6 $ 35.8 $ 34.0
============ ============ ============
<i>The accompanying notes are an integral part of the consolidated financial statements.</i>
<PAGE>
<b>Consolidated Statements of Shareholders' Equity and Comprehensive Earnings</b>
Ball Corporation and Subsidiaries
<i>Number of Shares Years ended December 31,
(in thousands) ($ in millions)</i>
2000 1999 1998 2000 1999 1998
----------- ---------- ---------- ---------- ---------- ----------
<b>Series B ESOP Convertible Preferred Stock</b>
Balance, beginning of year 1,530 1,587 1,635 $ 56.2 $ 57.2 $ 59.9
Shares retired (76) (57) (48) (2.8) (1.0) (2.7)
----------- ---------- ---------- ---------- ---------- ----------
Balance, end of year 1,454 1,530 1,587 $ 53.4 $ 56.2 $ 57.2
=========== ========== ========== ========== ========== ==========
<b>Unearned Compensation - ESOP</b>
Balance, beginning of year $ (20.5) $ (29.5) $ (37.0)
Amortization 9.9 9.0 7.5
---------- ---------- ----------
Balance, end of year $ (10.6) $ (20.5) $ (29.5)
========== ========== ==========
<b>Common Stock</b>
Balance, beginning of year 35,850 34,860 33,759 $ 413.0 $ 368.4 $ 336.9
Shares issued for stock options and
other employee and shareholder stock
plans less shares exchanged 923 990 1,101 30.9 44.6 31.5
----------- ---------- ---------- ---------- ---------- ----------
Balance, end of year 36,773 35,850 34,860 $ 443.9 $ 413.0 $ 368.4
=========== ========== ========== ========== ========== ==========
<b>Retained Earnings</b>
Balance, beginning of year $ 481.2 $ 397.9 $ 402.3
Net earnings 68.2 104.2 16.6
Common dividends (17.5) (18.2) (18.2)
Preferred dividends, net of tax (2.6) (2.7) (2.8)
---------- ---------- ----------
Balance, end of year $ 529.3 $ 481.2 $ 397.9
========== ========== ==========
<b>Treasury Stock</b>
Balance, beginning of year (6,033) (4,405) (3,540) $(212.3) $(140.0) $(105.1)
Shares reacquired (2,691) (1,628) (865) (91.6) (72.3) (34.9)
----------- ---------- ---------- ---------- ---------- ----------
Balance, end of year (8,724) (6,033) (4,405) $(303.9) $(212.3) $(140.0)
=========== ========== ========== ========== ========== ==========
<i>Years ended December 31,
-----------------------------------------------------------------------------------
($ in millions) 2000 1999 1998
--------------------------- --------------------------- ---------------------------</i>
Accumulated Accumulated Accumulated
Other Other Other
Comprehensive Comprehensive Comprehensive Comprehensive Comprehensive Comprehensive
Earnings Loss Earnings Loss Earnings Loss
------------- ------------- ------------- ------------- ------------- -------------
<b>Comprehensive Earnings (Loss)</b>
Balance, beginning of year $ (26.7) $ (31.7) $ (22.8)
Net earnings $ 68.2 $ 104.2 $ 16.6
------------- ------------- -------------
Foreign currency translation adjustment (3.2) 4.0 (7.7)
Minimum pension liability adjustment,
net of tax 0.2 1.0 (1.2)
------------- -------------
-------------
Other comprehensive earnings (loss) (3.0) (3.0) 5.0 5.0 (8.9) (8.9)
------------- ------------- -------------
Comprehensive earnings $ 65.2 $ 109.2 $ 7.7
============= ============= =============
------------- ------------- -------------
Balance, end of year $ (29.7) $ (26.7) $ (31.7)
============= ============= =============
<i>The accompanying notes are an integral part of the consolidated financial statements.</i>
<PAGE>
<b>Notes to Consolidated Financial Statements</b>
Ball Corporation and Subsidiaries
<b>1. Significant Accounting Policies</b>
<i>Principles of Consolidation and Basis of Presentation</i>
The consolidated financial statements include the accounts of Ball Corporation and its controlled affiliates (collectively, Ball,
the company, we or our). Investments in 20 percent through 50 percent-owned affiliates are accounted for by the equity method where
Ball does not control, but exercises significant influence over, operating and financial affairs. Otherwise, investments are included
at cost. Differences between the carrying amounts of equity investments and the company's interest in underlying net assets are
amortized over periods benefited. Significant intercompany transactions are eliminated. The results of subsidiaries and equity
affiliates in Asia and South America are reflected in the consolidated financial statements on a one-month lag.
<i>Reclassifications</i>
Certain prior year amounts have been reclassified in order to conform with the current year presentation.
<i>Use of Estimates</i>
Generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingencies and reported amounts of revenues and expenses. Actual results could differ from
these estimates.
<i>Foreign Currency Translation</i>
Assets and liabilities of foreign operations, where the local currency is the functional currency, are translated using period-end
exchange rates, and revenues and expenses are translated using average exchange rates during each period. Translation gains and
losses are reported in accumulated other comprehensive loss as a component of common shareholders' equity.
<i>Revenue Recognition</i>
Sales of products in the packaging segment are recognized upon the shipment of products. In the case of long-term contracts within
the aerospace and technologies segment, sales are recognized under the cost-to-cost, percentage-of-completion method. Certain U.S.
government contracts contain profit incentives based upon technical and cost performance relative to predetermined targets. Profit
incentives are recorded when there is sufficient information to assess anticipated contract performance. Provision for estimated
contract losses, if any, is made in the period that such losses are determined.
<i>Temporary Investments</i>
Temporary investments are considered cash equivalents if original maturities are three months or less.
<i>Derivative Financial Instruments</i>
The company uses derivative financial instruments for the purpose of hedging exposures to fluctuations in interest rates, foreign
currency exchange rates, raw materials purchasing and the common share repurchase program. Accrual accounting is applied for
financial instruments classified as hedges. Costs of hedging instruments are deferred as a cost adjustment, or deferred and amortized
as a yield adjustment, over the term of the hedging agreement. Gains and losses on early terminations of derivative financial
instruments related to debt are deferred and amortized as yield adjustments. Deferred gains and losses related to exchange rate
forwards are recognized as cost adjustments of the related purchase or sale transaction. If a financial instrument no longer
qualifies as an effective hedge, the instrument is recorded at fair market value.
<i>Inventories</i>
Inventories are stated at the lower of cost or market. The cost for certain U.S. metal beverage container inventories and
substantially all inventories within the U.S. metal food container business is determined using the last-in, first-out (LIFO) method
of accounting. The cost for remaining inventories is determined using the first-in, first-out (FIFO) method.
<PAGE>
<i>Depreciation and Amortization</i>
Depreciation is provided using the straight-line method in amounts sufficient to amortize the cost of the properties over their
estimated useful lives (buildings and improvements - 15 to 40 years; machinery and equipment - 5 to 15 years). Goodwill is amortized
using the straight-line method over 40 years. The company evaluates long-lived assets, including goodwill and other intangibles, when
significant economic events suggest that they may be impaired or may not be fully recoverable or the depreciation or amortization
period should be reconsidered. In estimating the useful lives, consideration is given to the factors in Accounting Principles Board
(APB) Opinion No. 17. As part of the valuation process, the company considers the fair value and cash flow measurement techniques
described in Statement of Financial Accounting Standards (SFAS) No. 121. Undiscounted cash flows serve as a basis for determination
of realizability or impairment.
<i>Taxes on Income</i>
Deferred income taxes reflect the future tax consequences of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each balance sheet date, based upon enacted income tax laws and tax rates. Income tax expense or
benefit is provided based on earnings reported in the financial statements. The provision for income tax expense or benefit differs
from the amounts of income taxes currently payable because certain items of income and expense included in the consolidated financial
statements are recognized in different time periods by taxing authorities. Deferred tax assets and operating loss and tax credit
carryforwards are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that any portion of
these tax attributes will not be realized.
<i>Employee Stock Ownership Plan</i>
Ball records the cost of its Employee Stock Ownership Plan (ESOP) using the shares allocated transitional method under which the
annual pretax cost of the ESOP, including preferred dividends, approximates program funding. Compensation and interest components of
ESOP cost are included in net earnings. Preferred dividends, net of related tax benefits, are shown as a reduction from net
earnings. Unearned compensation recorded within the accompanying balance sheet and related to the ESOP is reduced as the principal of
the guaranteed ESOP notes is amortized.
<i>Earnings Per Share</i>
Basic earnings per share are computed by dividing the net earnings attributable to common shareholders by the weighted average number
of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if the
Series B ESOP Convertible Preferred Stock (ESOP Preferred) was converted into additional outstanding common shares and outstanding
dilutive stock options were exercised. In the diluted computation, net earnings attributable to common shareholders are adjusted for
additional ESOP contributions which would be required if the ESOP Preferred was converted to common shares. This computation
excludes the tax benefit of deductible common dividends upon the assumed conversion of the ESOP Preferred.
<i>New Accounting Pronouncements</i>
During the fourth quarter of 1998, Ball adopted Statement of Position (SOP) No. 98-5, "Reporting on the Costs of Start-Up
Activities," in advance of its required 1999 implementation date. SOP No. 98-5 requires that costs of start-up activities and
organizational costs, as defined, be expensed as incurred. In accordance with this statement, we recorded an after-tax charge to
earnings of approximately $3.3 million (11 cents per share), retroactive to January 1, 1998, representing the cumulative effect of
this change in accounting on prior years.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and SFAS No. 138, an amendment of SFAS 133, essentially
require all derivatives to be recorded on the balance sheet at fair value and establish new accounting practices for hedge
instruments. In connection with the adoption of these statements, which became effective for Ball on January 1, 2001, we expect the
cumulative earnings effect of this change in accounting to be insignificant.
Financial Accounting Standards Board Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of Accounting Principles Board Opinion No. 25," clarifies certain issues related to the accounting for stock
compensation and was effective for Ball as of the beginning of the third quarter of 2000. This interpretation did not have an effect
on our reported results in 2000.
Staff Accounting Bulletin (SAB) No. 101, which was issued by the U.S. Securities and Exchange Commission, provides guidance on the
recognition, presentation and disclosure of revenue in the financial statements and became effective for Ball in the fourth quarter
of 2000. The adoption of this guidance had no effect on our results in 2000.
<PAGE>
The Emerging Issues Task Force (EITF) reached a consensus in September on a portion of Issue No. 00-10, "Accounting for Shipping and
Handling Fees and Costs," which requires companies to report shipping and handling fees and costs as a component of cost of sales.
The effect of this guidance resulted only in offsetting increases in net sales and cost of sales in the consolidated statement of
earnings and accompanying notes. The reclassifications of $126.9 million, $123 million and $99.3 million for 2000, 1999 and 1998,
respectively, were reflected in all periods shown for comparative purposes.
<b>2. Business Segment Information</b>
Ball's operations are organized along its product lines and include two segments - the packaging segment and the aerospace and
technologies segment. The accounting policies of the segments are the same as those described in the summary of significant
accounting policies. See Notes 3 and 4 for information regarding transactions affecting segment results.
<i>Packaging</i>
The packaging segment includes the manufacture and sale of metal and PET (polyethylene terephthalate) plastic containers, primarily
for use in beverage and food packaging. Our consolidated packaging operations are located in and serve North America (the U.S. and
Canada) and Asia, primarily the People's Republic of China (PRC). We also have investments in packaging companies in the PRC, Brazil
and Thailand, which are accounted for under the equity method, and, accordingly, those results are not included in segment earnings
or assets.
<i>Aerospace and Technologies</i>
The aerospace and technologies segment includes civil space systems, defense systems, commercial space operations, commercial
products and technologies, systems engineering services and advanced antenna and video systems.
<i>Major Customers</i>
Packaging segment sales to Miller Brewing Company, a customer since an August 1998 acquisition, represented approximately 15 percent
of net sales in both 2000 and 1999 and less than 10 percent in 1998. Sales to PepsiCo, Inc., and affiliates represented approximately
14 percent of consolidated net sales in 2000, 13 percent of consolidated net sales in 1999 and 15 percent of consolidated net sales
in 1998. Sales to the Coca-Cola Company and affiliates represented 11 percent of consolidated net sales in 2000 and 1999 and
10 percent of consolidated net sales in 1998. Sales to all bottlers of Pepsi-Cola and Coca-Cola branded beverages comprised
approximately 35 percent of consolidated net sales in 2000 and 1999 and 40 percent of consolidated net sales in 1998. Sales to
various U.S. government agencies by the aerospace and technologies segment, either as a prime contractor or as a subcontractor,
represented approximately 9 percent of consolidated net sales in 2000 and 1999 and 11 percent of consolidated net sales in 1998.
Financial data segmented by geographic area is provided below.
<b>Summary of Net Sales by Geographic Area</b>
<i>($ in millions)</i> U.S. Other<i>(1)</i> Consolidated
--------------- --------------- ---------------
<b>2000 $ 3,195.9 $ 468.8 $ 3,664.7</b>
1999 3,237.1 470.1 3,707.2
1998 2,537.5 458.2 2,995.7
<i>(1) Includes the company's net sales in the PRC and Canada, neither of which are significant, intercompany eliminations and other.</i>
<b>Summary of Long-Lived Assets<i>(1)</i> by Geographic Area</b>
<i>($ in millions)</i> U.S. PRC Other<i>(2)</i> Consolidated
--------------- --------------- --------------- ---------------
<b>2000 $ 1,565.5 $ 301.8 $ (186.8) $ 1,680.5</b>
1999 1,701.6 352.0 (217.3) 1,836.3
1998 1,763.2 369.3 (163.3) 1,969.2
<i>(1) Long-lived assets primarily consist of property, plant and equipment, goodwill and other intangible assets.
(2) Includes the company's long-lived assets in Canada, which are not significant, intercompany eliminations and other.</i>
<PAGE>
<b>Summary of Business by Segment</b>
<i>($ in millions)</i> 2000 1999 1998
------------- ------------- -------------
<b>Net Sales</b>
North American metal beverage $ 2,245.5 $ 2,326.4 $ 1,660.9
North American metal food 576.4 524.1 505.2
North American plastic containers 265.7 255.4 235.2
International 214.1 218.3 231.8
------------- ------------- -------------
Total packaging 3,301.7 3,324.2 2,633.1
Aerospace and technologies 363.0 383.0 362.6
------------- ------------- -------------
Consolidated net sales $ 3,664.7 $ 3,707.2 $ 2,995.7
============= ============= =============
<b>Consolidated Earnings</b>
Packaging $ 278.4 $ 276.7 $ 164.7
Business consolidation costs and other (Note 3) (83.4) - (56.2)
------------- ------------- -------------
Total packaging 195.0 276.7 108.5
------------- ------------- -------------
Aerospace and technologies 29.0 24.9 30.4
ESOP settlement (Note 3) 7.0 - -
------------- ------------- -------------
Total aerospace and technologies 36.0 24.9 30.4
------------- ------------- -------------
Segment earnings before interest and taxes 231.0 301.6 138.9
Headquarters relocation costs (Note 3) - - (17.7)
Corporate undistributed expenses (21.9) (22.8) (15.3)
------------- ------------- -------------
Earnings before interest and taxes 209.1 278.8 105.9
Interest expense (95.2) (107.6) (78.6)
Provision for taxes (42.8) (64.9) (8.8)
Minority interests 1.0 (1.9) 7.9
Equity in net results of affiliates (3.9) (0.2) 5.6
------------- ------------- -------------
Consolidated earnings before extraordinary item and
accounting change $ 68.2 $ 104.2 $ 32.0
============= ============= =============
<b>Depreciation and Amortization</b>
Packaging $ 143.9 $ 146.4 $ 125.8
Aerospace and technologies 13.0 13.5 15.0
------------- ------------- -------------
Segment depreciation and amortization 156.9 159.9 140.8
Corporate 2.2 3.0 4.2
------------- ------------- -------------
Consolidated depreciation and amortization $ 159.1 $ 162.9 $ 145.0
============= ============= =============
<b>Net Investment</b>
Packaging $ 1,410.9 $ 1,319.7 $ 1,164.3
Aerospace and technologies 181.8 161.6 143.5
------------- ------------- -------------
Segment net investment 1,592.7 1,481.3 1,307.8
Corporate net investment and eliminations (910.3) (790.4) (685.5)
------------- ------------- -------------
Consolidated net investment $ 682.4 $ 690.9 $ 622.3
============= ============= =============
<b>Investments in Equity Affiliates</b>
Packaging $ 65.6 $ 79.0 $ 80.9
Aerospace and technologies 15.6 2.3 -
------------- ------------- -------------
Consolidated investments in equity affiliates $ 81.2 $ 81.3 $ 80.9
============= ============= =============
<b>Property, Plant and Equipment Additions</b>
Packaging $ 85.9 $ 95.8 $ 63.7
Aerospace and technologies 12.0 10.1 17.2
------------- ------------- -------------
Segment property, plant and equipment additions 97.9 105.9 80.9
Corporate 0.8 1.1 3.3
------------- ------------- -------------
Consolidated property, plant and equipment additions $ 98.7 $ 107.0 $ 84.2
============= ============= =============
<PAGE>
<b>3. Business Consolidation Costs and Other</b>
<i>2000</i>
The company recorded an $83.4 million pretax charge ($55 million after tax, minority interests and equity earnings impacts, or $1.77
per diluted share) in the second quarter for packaging business consolidation and investment exit activities expected to be completed
during 2001. The charge includes costs associated with the permanent closure of a beverage can manufacturing facility in the U.S.,
the elimination of food and beverage can manufacturing capacity at two locations in Canada, the consolidation of production capacity
in the PRC and the write-down to net realizable value of certain equity investments, primarily related to a beverage can
manufacturing joint venture in Russia.
The $83.4 million charge included (1) $43.9 million for the write-down of fixed assets held for sale and related machinery spare
parts inventory to estimated net realizable value, including estimated costs to sell; (2) $9 million for severance, supplemental
unemployment and other related benefits, substantially all of which are related to the termination of 321 manufacturing and
administrative employees in the U.S. and Canada; (3) $14.3 million for contractual pension and retirement obligations which have been
included in the appropriate liability accounts; (4) $5.4 million for the write-down of goodwill associated with the closed PRC plant;
(5) $8.2 million for the write-down of equity investments; and (6) $2.6 million for other assets and consolidation costs.
Approximately $21 million of the charge will require cash payments, offset by $26 million of tax benefits. Of the $43.9 million fixed
asset write-down, $34.3 million relates to Canada and the PRC. The carrying value of the remaining fixed assets held for sale at
December 31, 2000, was $2.1 million. Subsequent changes to the estimated costs of business consolidations, if any, will be included
in current-period earnings.
The following table summarizes the activity related to the plant closing costs recorded during 2000:
Pension and
<i>($ in millions)</i> Fixed Other Other
Assets/ Employee Post-retirement Equity Assets/
Spare Parts Costs Obligations Investments Costs Total
------------- ------------ --------------- ------------ ------------ ------------
Charge to earnings in second
quarter 2000 $ 43.9 $ 9.0 $ 14.3 $ 8.2 $ 8.0 $ 83.4
Payments - (4.1) - - (0.9) (5.0)
Transfers and adjustments to
liabilities - - (14.3) - - (14.3)
Transfers and adjustments to
assets to reflect
estimated realizable values (43.9) - - (8.2) (6.8) (58.9)
------------- ------------ --------------- ------------ ------------ ------------
Balance at December 31, 2000 $ - $ 4.9 $ - $ - $ 0.3 $ 5.2
============= ============ =============== ============ ============ ============
On April 3, 2000, the Armed Services Board of Contract Appeals sustained the company's claim to recoverability of costs associated
with Ball's ESOP for fiscal years beginning in 1989, and the time frame for the U.S. government to file an appeal expired in August
2000. As a result, in the third quarter we recognized earnings of approximately $7 million ($4.3 million after tax or 14 cents per
diluted share) related to this matter.
Also during the second quarter, the company resolved favorably state and federal tax matters related to prior years that reduced the
overall tax provision by $2.3 million (7 cents per diluted share).
<i>1998</i>
In 1998 we relocated our corporate headquarters to an existing company-owned building in Broomfield, Colorado. In connection with the
relocation, which has been completed, the company recorded a pretax charge of $17.7 million, primarily for employee-related costs.
During the last quarter of 1998, we announced the closure of two of our plants located in the PRC and removed from service
manufacturing equipment at a third plant. The actions resulted in a $56.2 million, largely noncash, charge in 1998, primarily for
the write down to net realizable value of fixed assets, goodwill and other assets. The carrying value of the remaining fixed assets
held for sale at December 31, 2000, was $3.5 million.
<PAGE>
<b>4. Acquisition</b>
<i>Metal Beverage</i>
On August 10, 1998, Ball acquired substantially all the assets and assumed certain liabilities of the North American beverage can
manufacturing business of Reynolds Metals Company for approximately $745.4 million, before a refundable incentive loan of
$39 million, a working capital adjustment of an additional $40.1 million and transaction costs. The assets acquired consisted largely
of 16 plants in 12 states and Puerto Rico. The acquisition has been accounted for as a purchase, with its results included in our
consolidated financial statements effective with the acquisition.
In connection with the acquisition, the company provided $51.3 million in the opening balance sheet for the costs of integrating the
acquired business, which included the closure of a headquarters facility and three plants. Included within the $51.3 million was
$22.8 million in pension and other postretirement benefits liabilities, $23.3 million for severance, supplemental unemployment,
medical, relocation and other related termination benefits and $5.2 million for other plant closure costs. The former headquarters
facility and two of the three plants have been sold. The third plant and certain equipment remain for sale. Employees of the closed
facilities, primarily comprised of manufacturing and support personnel, have been terminated with certain benefits continuing in
accordance with contractual provisions. The carrying value of the fixed assets remaining for sale at December 31, 2000, was
approximately $10.4 million. Subsequent increases in actual costs, if any, will be included in current period earnings, and
decreases, if any, will result in a reduction of goodwill.
The following table summarizes the year-to-date activity related to the remaining integration costs associated with the acquisition:
<i>($ in millions)</i> Employee Other Exit
Severance Costs Total
------------ ------------ ------------
Balance at December 31, 1999 $ 12.8 $ 2.2 $ 15.0
Reclassification of prior-period payments - 1.6 1.6
Payments made (4.7) (2.9) (7.6)
------------ ------------ ------------
Balance at December 31, 2000 $ 8.1 $ 0.9 $ 9.0
============ ============ ============
<b>5. Accounts Receivable</b>
Accounts receivable are net of an allowance for doubtful accounts of $15.1 million and $8.8 million at December 31, 2000 and 1999,
respectively.
<i>Trade Accounts Receivable Securitization Agreement</i>
A securitization agreement provides for the ongoing, revolving sale of a designated pool of U.S. packaging trade accounts receivable,
up to $125 million. Net funds received from the sale of the accounts receivable totaled $122.5 million at both December 31, 2000 and
1999. Fees incurred in connection with the sale of accounts receivable totaled $8.4 million in 2000, $7 million in 1999 and
$4 million in 1998.
<i>Accounts Receivable in Connection with Long-Term Contracts</i>
Net accounts receivable under long-term contracts, due primarily from agencies of the U.S. government, were $100.1 million and
$83.8 million at December 31, 2000 and 1999, respectively, and include unbilled amounts representing revenue earned but contractually
not yet billable of $47.2 million and $40.5 million, respectively. The average length of the long-term contracts is approximately
three years and the average length remaining on those contracts at December 31, 2000, was approximately 13 months. Approximately
$7.4 million of unbilled receivables at December 31, 2000, is expected to be collected after one year and is related to fees and cost
withholds that will be paid largely upon completion of milestones or other contract terms, as well as final overhead rate
settlements.
<b>6. Inventories</b>
December 31,
-------------------------------
<i>($ in millions)</i> 2000 1999
------------- -------------
Raw materials and supplies $ 214.9 $ 238.0
Work in process and finished goods 412.6 327.9
------------- -------------
$ 627.5 $ 565.9
============= =============
Approximately 41 percent and 42 percent of total inventories at December 31, 2000 and 1999, respectively, were valued using the LIFO
method of accounting. Inventories at December 31, 2000 and 1999 would have been $5.7 million higher and $4.1 million lower,
respectively, than the reported amounts if the FIFO method of accounting, which approximates replacement cost, had been used for
those inventories.
<b>7. Property, Plant and Equipment</b>
December 31,
-------------------------------------
<i>($ in millions)</i> 2000 1999
---------------- ----------------
Land $ 52.1 $ 61.6
Buildings 438.9 433.6
Machinery and equipment 1,410.2 1,439.4
---------------- ----------------
1,901.2 1,934.6
Accumulated depreciation (897.5) (813.4)
---------------- ----------------
$ 1,003.7 $ 1,121.2
================ ================
Depreciation expense amounted to $142.2 million, $143.8 million and $130.8 million for the years ended December 31, 2000, 1999 and
1998, respectively.
<b>8. Goodwill and Other Assets</b>
December 31,
-------------------------------------
<i>($ in millions)</i> 2000 1999
---------------- ----------------
Goodwill (net of accumulated amortization of $54.5 and $41.9 at $ 436.8 $ 482.9
December 31, 2000 and 1999, respectively)
Investments in affiliates 81.2 81.3
Prepaid pension 67.1 60.5
Other 91.7 90.4
---------------- ----------------
$ 676.8 $ 715.1
================ ================
Total amortization expense, including goodwill amortization, amounted to $16.9 million, $19.1 million and $14.2 million for the years
ended December 31, 2000, 1999 and 1998, respectively, of which $12.6 million, $13.4 million and $7.4 million related to the
amortization of goodwill.
<b>9. Debt and Interest Costs</b>
Short-term debt consisted of non-recourse Asian bank facilities of which $58.5 million and $57.2 million were outstanding under these
facilities at December 31, 2000 and 1999, respectively. The weighted average rate of the outstanding facilities was 6.5 percent at
December 31, 2000, and 6.8 percent at December 31, 1999.
Long-term debt at December 31 consisted of the following:
<PAGE>
<i>($ in millions)</i> 2000 1999
------------ ------------
<b>Notes Payable</b>
7.75% Senior Notes due August 2006 $ 300.0 $ 300.0
8.25% Senior Subordinated Notes due August 2008 250.0 250.0
Senior Credit Facility:
Term Loan A due August 2004 (2000 - 7.5%; 1999 - 7%) 295.0 330.0
Term Loan B due March 2006 (2000 - 8.5%; 1999 - 8%) 196.0 198.0
<b>Industrial Development Revenue Bonds</b>
Floating rates due through 2011 (2000 - 5%; 1999 - 5.35%) 27.1 27.1
<b>ESOP Debt Guarantee</b>
9.60% installment note due through December 2001 10.7 20.5
<b>Other</b> - 13.9
------------ ------------
1,078.8 1,139.5
Less: Current portion of long-term debt 67.2 46.8
------------ ------------
$ 1,011.6 $ 1,092.7
============ ============
In connection with an acquisition in 1998, the company refinanced $521.9 million of its existing debt and, as a result, recorded an
after-tax extraordinary charge for the early extinguishment of debt of $12.1 million (37 cents per diluted share).
The acquisition and related costs were financed with a placement of $300 million in 7.75% Senior Notes due in 2006, $250 million in
8.25% Senior Subordinated Notes due in 2008 and $808.2 million from a Senior Credit Facility. The Senior Credit Facility bears
interest at variable rates and is comprised of the following: (1) Term Loan A due in installments through August 2004, (2) Term
Loan B due in installments through March 2006; (3) a revolving credit facility which provides us with up to $585 million, comprised
of a $135 million, 364-day annually renewable facility and a $450 million long-term committed facility expiring in August 2004; and
(4) a $50 million long-term committed Canadian facility expiring in November 2002. At December 31, 2000, $559 million was available
under the revolving credit facilities.
The Senior Notes, Senior Subordinated Notes and Senior Credit Facility agreements are guaranteed on a full, unconditional and joint
and several basis by certain of the company's domestic wholly owned subsidiaries. All amounts outstanding under the Senior Credit
Facility are secured by (1) a pledge of 100 percent of the stock owned by the company in its direct and indirect majority-owned
domestic subsidiaries and (2) a pledge of the company's stock, owned directly or indirectly, of certain foreign subsidiaries, which
equals 65 percent of the stock of each such foreign subsidiary. Separate financial statements for the guarantor subsidiaries and the
non-guarantor subsidiaries are not presented because management has determined that such financial statements would not be material
to investors. Condensed, consolidating financial information for the company, segregating the guarantor subsidiaries and
non-guarantor subsidiaries, will be provided in an exhibit to our Form 10-K for the year ended December 31, 2000.
Ball's Asian subsidiary and its consolidated affiliates had short-term uncommitted credit facilities of approximately $110 million,
of which $58.5 million was outstanding at December 31, 2000.
Maturities of all fixed long-term debt obligations outstanding at December 31, 2000, are $67.2 million, $67 million, $87 million,
$100.1 million and $10 million for the years ending December 31, 2001 through 2005, respectively, and $747.5 million thereafter.
Ball issues letters of credit in the ordinary course of business to secure liabilities recorded in connection with the company's
deferred compensation program, industrial development revenue bonds and insurance arrangements, of which $75.8 million were
outstanding at December 31, 2000. Ball also has provided a completion guarantee representing 50 percent of the $37.3 million of debt
issued by our Brazilian joint venture to fund the construction of facilities. ESOP debt represents borrowings by the trust for the
Ball-sponsored ESOP which have been irrevocably guaranteed by the company.
The company was not in default of any loan agreement at December 31, 2000, and has met all payment obligations. The U.S. note
agreements, bank credit agreement, ESOP debt guarantee and industrial development revenue bond agreements contain certain
restrictions relating to dividends, share repurchases, investments, guarantees and the incurrence of additional indebtedness.
A summary of total interest cost paid and accrued follows:
<i>($ in millions)</i> 2000 1999 1998
------------ ------------- ------------
Interest costs $ 98.5 $ 109.6 $ 80.9
Amounts capitalized (3.3) (2.0) (2.3)
------------ ------------- ------------
Interest expense $ 95.2 $ 107.6 $ 78.6
============ ============= ============
Interest paid during the year $ 96.8 $ 111.2 $ 63.3
============ ============= ============
<b>Subsidiary Guarantees of Debt</b>
The Company's Senior Notes, Senior Subordinated Notes and Senior Credit Facility agreements are guaranteed on a full, unconditional,
and joint and several basis by certain of the Company's wholly owned domestic subsidiaries. The following is condensed, consolidating
financial information for the Company, segregating the guarantor subsidiaries and non-guarantor subsidiaries, as of December 31, 2000
and 1999, and for the years ended December 31, 2000, 1999 and 1998 (in millions of dollars). Certain prior-year amounts have been
reclassified in order to conform with the current year presentation. Separate financial statements for the guarantor subsidiaries and
the non-guarantor subsidiaries are not presented because management has determined that such financial statements would not be
material to investors.
<PAGE>
CONSOLIDATED BALANCE SHEET
------------------------------------------------------------------------------
December 31, 2000
------------------------------------------------------------------------------
Ball Guarantor Non-Guarantor Eliminating Consolidated
Corporation Subsidiaries Subsidiaries Adjustments Total
-------------- -------------- -------------- -------------- --------------
ASSETS
Current assets
Cash and temporary investments $ 12.3 $ 0.2 $ 13.1 $ - $ 25.6
Accounts receivable, net 3.0 171.4 55.8 - 230.2
Inventories, net - 498.8 128.7 - 627.5
Deferred income tax benefits and
prepaid expenses 197.5 114.7 6.2 (232.4) 86.0
-------------- -------------- -------------- -------------- --------------
Total current assets 212.8 785.1 203.8 (232.4) 969.3
-------------- -------------- -------------- -------------- --------------
Property, plant and equipment, at cost 25.8 1,534.8 340.6 - 1,901.2
Accumulated depreciation (15.2) (768.2) (114.1) - (897.5)
-------------- -------------- -------------- -------------- --------------
10.6 766.6 226.5 - 1,003.7
-------------- -------------- -------------- -------------- --------------
Investment in subsidiaries 1,476.5 340.0 9.8 (1,826.3) -
Investment in affiliates 7.8 15.7 57.7 - 81.2
Goodwill, net - 338.8 98.0 - 436.8
Other assets 81.0 43.9 33.9 - 158.8
-------------- -------------- -------------- -------------- --------------
$ 1,788.7 $ 2,290.1 $ 629.7 $ (2,058.7) $ 2,649.8
============== ============== ============== ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt and current portion
of long-term debt $ 67.2 $ - $ 58.5 $ - $ 125.7
Accounts payable 7.4 262.8 61.9 - 332.1
Salaries and wages 10.6 100.6 7.4 - 118.6
Other current liabilities 34.9 248.9 31.3 (232.4) 82.7
-------------- -------------- -------------- -------------- --------------
Total current liabilities 120.1 612.3 159.1 (232.4) 659.1
Long-term debt 1,001.5 10.1 - - 1,011.6
Intercompany borrowings (142.1) 59.8 82.3 - -
Employee benefit obligations, deferred
income taxes and other 126.8 98.5 56.5 - 281.8
-------------- -------------- -------------- -------------- --------------
Total liabilities 1,106.3 780.7 297.9 (232.4) 1,952.5
-------------- -------------- -------------- -------------- --------------
Contingencies
Minority interests - - 14.9 - 14.9
-------------- -------------- -------------- -------------- --------------
Shareholders' equity
Series B ESOP Convertible Preferred
Stock 53.4 - - - 53.4
Convertible preferred stock - - 179.6 (179.6) -
Unearned compensation - ESOP (10.6) - - - (10.6)
-------------- -------------- -------------- -------------- --------------
Preferred shareholders' equity 42.8 - 179.6 (179.6) 42.8
-------------- -------------- -------------- -------------- --------------
Common stock 443.9 1,155.7 239.7 (1,395.4) 443.9
Retained earnings 529.3 355.7 (78.6) (277.1) 529.3
Accumulated other comprehensive loss (29.7) (2.0) (23.8) 25.8 (29.7)
Treasury stock, at cost (303.9) - - - (303.9)
-------------- -------------- -------------- -------------- --------------
Common shareholders' equity 639.6 1,509.4 137.3 (1,646.7) 639.6
-------------- -------------- -------------- -------------- --------------
Total shareholders' equity 682.4 1,509.4 316.9 (1,826.3) 682.4
-------------- -------------- -------------- -------------- --------------
$ 1,788.7 $ 2,290.1 $ 629.7 $ (2,058.7) $ 2,649.8
============== ============== ============== ============== ==============
<PAGE>
CONSOLIDATED BALANCE SHEET
------------------------------------------------------------------------------
December 31, 1999
------------------------------------------------------------------------------
Ball Guarantor Non-Guarantor Eliminating Consolidated
Corporation Subsidiaries Subsidiaries Adjustments Total
-------------- -------------- -------------- -------------- --------------
ASSETS
Current assets
Cash and temporary investments $ 13.6 $ 0.2 $ 22.0 $ - $ 35.8
Accounts receivable, net 4.1 151.7 64.4 - 220.2
Inventories, net - 452.1 113.8 - 565.9
Deferred income tax benefits and
prepaid expenses 129.2 94.8 13.0 (163.1) 73.9
-------------- -------------- -------------- -------------- --------------
Total current assets 146.9 698.8 213.2 (163.1) 895.8
-------------- -------------- -------------- -------------- --------------
Property, plant and equipment, at cost 25.4 1,525.5 383.7 - 1,934.6
Accumulated depreciation (13.5) (697.5) (102.4) - (813.4)
-------------- -------------- -------------- -------------- --------------
11.9 828.0 281.3 - 1,121.2
-------------- -------------- -------------- -------------- --------------
Investment in subsidiaries 1,412.4 337.7 10.3 (1,760.4) -
Investment in affiliates 9.0 2.3 70.0 - 81.3
Goodwill, net - 365.2 117.7 - 482.9
Other assets 88.9 37.5 24.5 - 150.9
-------------- -------------- -------------- -------------- --------------
$ 1,669.1 $ 2,269.5 $ 717.0 $ (1,923.5) $ 2,732.1
============== ============== ============== ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt and current portion
of long-term debt $ 46.8 $ - $ 57.2 $ - $ 104.0
Accounts payable 4.5 285.3 55.7 - 345.5
Salaries and wages 7.3 99.1 8.3 - 114.7
Other current liabilities 35.0 193.3 40.7 (163.1) 105.9
-------------- -------------- -------------- -------------- --------------
Total current liabilities 93.6 577.7 161.9 (163.1) 670.1
Long-term debt 1,068.7 24.0 - - 1,092.7
Intercompany borrowings (302.6) 199.1 103.5 - -
Employee benefit obligations, deferred
income taxes and other 118.5 83.1 57.1 - 258.7
-------------- -------------- -------------- -------------- --------------
Total liabilities 978.2 883.9 322.5 (163.1) 2,021.5
-------------- -------------- -------------- -------------- --------------
Contingencies
Minority interests - - 19.7 - 19.7
-------------- -------------- -------------- -------------- --------------
Shareholders' equity
Series B ESOP Convertible Preferred
Stock 56.2 - - - 56.2
Convertible preferred stock - - 179.6 (179.6) -
Unearned compensation - ESOP (20.5) - - - (20.5)
-------------- -------------- -------------- -------------- --------------
Preferred shareholders' equity 35.7 - 179.6 (179.6) 35.7
-------------- -------------- -------------- -------------- --------------
Common stock 413.0 1,155.7 240.9 (1,396.6) 413.0
Retained earnings 481.2 231.2 (23.7) (207.5) 481.2
Accumulated other comprehensive loss (26.7) (1.3) (22.0) 23.3 (26.7)
Treasury stock, at cost (212.3) - - - (212.3)
-------------- -------------- -------------- -------------- --------------
Common shareholders' equity 655.2 1,385.6 195.2 (1,580.8) 655.2
-------------- -------------- -------------- -------------- --------------
Total shareholders' equity 690.9 1,385.6 374.8 (1,760.4) 690.9
-------------- -------------- -------------- -------------- --------------
$ 1,669.1 $ 2,269.5 $ 717.0 $ (1,923.5) $ 2,732.1
============== ============== ============== ============== ==============
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
------------------------------------------------------------------------------
For the Year Ended December 31, 2000
------------------------------------------------------------------------------
Ball Guarantor Non-Guarantor Eliminating Consolidated
Corporation Subsidiaries Subsidiaries Adjustments Total
-------------- -------------- -------------- -------------- --------------
Net sales $ - $ 3,460.4 $ 454.2 $ (249.9) $ 3,664.7
Costs and expenses
Cost of sales (excluding depreciation
and amortization) - 2,933.5 380.5 (249.9) 3,064.1
Depreciation and amortization 2.2 128.1 28.8 - 159.1
Business consolidation costs and other 2.3 15.1 59.0 - 76.4
Selling and administrative 30.4 100.9 10.6 - 141.9
Receivable securitization fees and
product development - 13.9 0.2 - 14.1
Interest expense 82.1 7.8 5.3 - 95.2
Equity in earnings of subsidiaries (90.8) - - 90.8 -
Corporate allocations (60.2) 60.2 - - -
-------------- -------------- -------------- -------------- --------------
(34.0) 3,259.5 484.4 (159.1) 3,550.8
-------------- -------------- -------------- -------------- --------------
Earnings (loss) before taxes 34.0 200.9 (30.2) (90.8) 113.9
Provision for taxes 34.5 (75.1) (2.2) - (42.8)
Minority interests - - 1.0 - 1.0
Equity in earnings (losses) of
affiliates (0.3) (1.3) (2.3) - (3.9)
-------------- -------------- -------------- -------------- --------------
Net earnings (loss) 68.2 124.5 (33.7) (90.8) 68.2
Preferred dividends, net of tax (2.6) - - - (2.6)
-------------- -------------- -------------- -------------- --------------
Earnings (loss) attributable to common
shareholders $ 65.6 $ 124.5 $ (33.7) $ (90.8) $ 65.6
============== ============== ============== ============== ==============
CONSOLIDATED STATEMENT OF EARNINGS
------------------------------------------------------------------------------
For the Year Ended December 31, 1999
------------------------------------------------------------------------------
Ball Guarantor Non-Guarantor Eliminating Consolidated
Corporation Subsidiaries Subsidiaries Adjustments Total
-------------- -------------- -------------- -------------- --------------
Net sales $ - $ 3,498.6 $ 456.9 $ (248.3) $ 3,707.2
Costs and expenses
Cost of sales (excluding depreciation
and amortization) - 2,980.6 378.7 (248.3) 3,111.0
Depreciation and amortization 3.0 130.1 29.8 - 162.9
Selling and administrative 15.3 97.5 28.1 - 140.9
Receivable securitization fees and
product development - 13.5 0.1 - 13.6
Interest expense 60.8 37.3 9.5 - 107.6
Equity in earnings of subsidiaries (119.4) - - 119.4 -
Corporate allocations (49.7) 49.7 - - -
-------------- -------------- -------------- -------------- --------------
(90.0) 3,308.7 446.2 (128.9) 3,536.0
-------------- -------------- -------------- -------------- --------------
Earnings (loss) before taxes 90.0 189.9 10.7 (119.4) 171.2
Provision for taxes 13.9 (72.7) (6.1) - (64.9)
Minority interests - - (1.9) - (1.9)
Equity in earnings (losses) of
affiliates 0.3 (0.2) (0.3) - (0.2)
-------------- -------------- -------------- -------------- --------------
Net earnings (loss) 104.2 117.0 2.4 (119.4) 104.2
Preferred dividends, net of tax (2.7) - - - (2.7)
-------------- -------------- -------------- -------------- --------------
Earnings (loss) attributable to common
shareholders $ 101.5 $ 117.0 $ 2.4 $ (119.4) $ 101.5
============== ============== ============== ============== ==============
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
------------------------------------------------------------------------------
For the Year Ended December 31, 1998
------------------------------------------------------------------------------
Ball Guarantor Non-Guarantor Eliminating Consolidated
Corporation Subsidiaries Subsidiaries Adjustments Total
-------------- -------------- -------------- -------------- --------------
Net sales $ - $ 2,780.5 $ 455.5 $ (240.3) $ 2,995.7
Costs and expenses
Cost of sales (excluding depreciation
and amortization) - 2,395.2 382.8 (240.3) 2,537.7
Depreciation and amortization 4.2 108.6 32.2 - 145.0
Selling and administrative 14.3 75.9 29.2 - 119.4
Receivable securitization fees and
product development - 13.7 0.1 - 13.8
Headquarters relocation, plant
closures, dispositions and other
costs 17.7 - 56.2 - 73.9
Interest expense 52.7 8.3 17.6 - 78.6
Equity in earnings of subsidiaries (15.1) - - 15.1 -
Corporate allocations (45.3) 45.3 - - -
-------------- -------------- -------------- -------------- --------------
28.5 2,647.0 518.1 (225.2) 2,968.4
-------------- -------------- -------------- -------------- --------------
Earnings (loss) before taxes (28.5) 133.5 (62.6) (15.1) 27.3
Provision for taxes 47.0 (47.9) (7.9) - (8.8)
Minority interests - - 7.9 - 7.9
Equity in (losses) earnings of
affiliates (0.7) - 6.3 - 5.6
-------------- -------------- -------------- -------------- --------------
Earnings (loss) before extraordinary
item and accounting change 17.8 85.6 (56.3) (15.1) 32.0
Extraordinary loss from early debt
extinguishment, net of tax (1.2) (10.9) - - (12.1)
Cumulative effect of accounting change,
net of tax - (1.8) (1.5) - (3.3)
-------------- -------------- -------------- -------------- --------------
Net earnings (loss) 16.6 72.9 (57.8) (15.1) 16.6
Preferred dividends, net of tax (2.8) - - - (2.8)
-------------- -------------- -------------- -------------- --------------
Earnings (loss) attributable to common
shareholders $ 13.8 $ 72.9 $ (57.8) $ (15.1) $ 13.8
============== ============== ============== ============== ==============
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------------------------------------------------
For the Year Ended December 31, 2000
------------------------------------------------------------------------------
Ball Guarantor Non-Guarantor Eliminating Consolidated
Corporation Subsidiaries Subsidiaries Adjustments Total
-------------- -------------- -------------- -------------- --------------
Cash flows from operating activities
Net earnings (loss) $ 68.2 $ 124.5 $ (33.7) $ (90.8) $ 68.2
Noncash charges to net earnings:
Depreciation and amortization 2.2 128.1 28.8 - 159.1
Business consolidation costs, net
of related equity and minority
interest effects 2.3 22.1 56.9 - 81.3
Deferred income taxes (28.2) 42.1 (4.1) - 9.8
Equity earnings of subsidiaries (90.8) - - 90.8 -
Other, net 10.4 (21.0) (1.2) - (11.8)
Changes in working capital
components (13.8) (91.6) (24.7) - (130.1)
-------------- -------------- -------------- -------------- --------------
Net cash (used in) provided
by operating activities (49.7) 204.2 22.0 - 176.5
-------------- -------------- -------------- -------------- --------------
Cash flows from investing activities
Additions to property, plant and
equipment (0.8) (85.4) (12.5) - (98.7)
Investments in and advances to
affiliates 153.6 (141.4) (12.2) - -
Other, net 17.9 36.5 (8.2) - 46.2
-------------- -------------- -------------- -------------- --------------
Net cash provided by (used in)
investing activities 170.7 (190.3) (32.9) - (52.5)
-------------- -------------- -------------- -------------- --------------
Cash flows from financing activities
Repayments of long-term borrowings (37.0) (13.9) - - (50.9)
Change in short-term borrowings - - 2.9 - 2.9
Common and preferred dividends (21.6) - - - (21.6)
Proceeds from issuance of common
stock under various employee and
shareholder plans 30.7 - - - 30.7
Acquisitions of treasury stock (91.6) - - - (91.6)
Other, net (2.8) - (0.9) - (3.7)
-------------- -------------- -------------- -------------- --------------
Net cash (used in) provided by
financing activities (122.3) (13.9) 2.0 - (134.2)
-------------- -------------- -------------- -------------- --------------
Net change in cash and temporary
investments (1.3) - (8.9) - (10.2)
Cash and temporary investments -
beginning of year 13.6 0.2 22.0 - 35.8
-------------- -------------- -------------- -------------- --------------
Cash and temporary investments -
end of year $ 12.3 $ 0.2 $ 13.1 $ - $ 25.6
============== ============== ============== ============== ==============
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------------------------------------------------
For the Year Ended December 31, 1999
------------------------------------------------------------------------------
Ball Guarantor Non-Guarantor Eliminating Consolidated
Corporation Subsidiaries Subsidiaries Adjustments Total
-------------- -------------- -------------- -------------- --------------
Cash flows from operating activities
Net earnings (loss) $ 104.2 $ 117.0 $ 2.4 $ (119.4) $ 104.2
Noncash charges to net earnings:
Depreciation and amortization 3.0 130.1 29.8 - 162.9
Deferred income taxes 8.0 24.6 1.7 - 34.3
Equity earnings of subsidiaries (119.4) - - 119.4 -
Other, net 21.4 (15.3) - - 6.1
Changes in working capital
components (94.7) 94.8 (1.6) - (1.5)
-------------- -------------- -------------- -------------- --------------
Net cash (used in) provided
by operating activities (77.5) 351.2 32.3 - 306.0
-------------- -------------- -------------- -------------- --------------
Cash flows from investing activities
Additions to property, plant and
equipment (1.1) (95.1) (10.8) - (107.0)
Investments in and advances to
affiliates 238.5 (275.0) 36.5 - -
Other, net 4.6 5.4 4.3 - 14.3
-------------- -------------- -------------- -------------- --------------
Net cash provided by (used in)
investing activities 242.0 (364.7) 30.0 - (92.7)
-------------- -------------- -------------- -------------- --------------
Cash flows from financing activities
Long-term borrowings - 13.9 9.2 - 23.1
Repayments of long-term borrowings (102.0) (0.4) (58.6) - (161.0)
Change in short-term borrowings - - (13.2) - (13.2)
Common and preferred dividends (22.5) - - - (22.5)
Proceeds from issuance of common
stock under various employee and
shareholder plans 36.8 - - - 36.8
Acquisitions of treasury stock (72.3) - - - (72.3)
Other, net (2.5) (0.3) 0.4 - (2.4)
-------------- -------------- -------------- -------------- --------------
Net cash (used in) provided by
financing activities (162.5) 13.2 (62.2) - (211.5)
-------------- -------------- -------------- -------------- --------------
Net change in cash and temporary
investments 2.0 (0.3) 0.1 - 1.8
Cash and temporary investments -
beginning of year 11.6 0.5 21.9 - 34.0
-------------- -------------- -------------- -------------- --------------
Cash and temporary investments -
end of year $ 13.6 $ 0.2 $ 22.0 $ - $ 35.8
============== ============== ============== ============== ==============
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------------------------------------------------
For the Year Ended December 31, 1998
------------------------------------------------------------------------------
Ball Guarantor Non-Guarantor Eliminating Consolidated
Corporation Subsidiaries Subsidiaries Adjustments Total
-------------- -------------- -------------- -------------- --------------
Cash flows from operating activities
Net earnings (loss) $ 16.6 $ 72.9 $ (57.8) $ (15.1) $ 16.6
Noncash charges to net earnings:
Depreciation and amortization 4.2 108.6 32.2 - 145.0
Headquarters relocation, plant
closures, dispositions and
other costs 4.7 - 56.2 - 60.9
Extraordinary loss from early
debt extinguishment 2.0 17.9 - - 19.9
Equity earnings of subsidiaries (15.1) - - 15.1 -
Other, net (18.6) 16.6 (12.8) - (14.8)
Changes in working capital
components, excluding effect
of acquisitions 25.0 119.6 14.9 - 159.5
-------------- -------------- -------------- -------------- --------------
Net cash provided by operating
activities 18.8 335.6 32.7 - 387.1
-------------- -------------- -------------- -------------- --------------
Cash flows from investing activities
Additions to property, plant and
equipment (3.3) (68.7) (12.2) - (84.2)
Acquisitions, net of cash acquired (15.5) (822.9) - - (838.4)
Investments in and advances to
affiliates, net (948.2) 895.3 50.7 - (2.2)
Intercompany capital contributions
and transactions (75.5) - 75.5 - -
Other, net (5.0) 2.7 12.0 - 9.7
-------------- -------------- -------------- -------------- --------------
Net cash (used in) provided by
investing activities (1,047.5) 6.4 126.0 - (915.1)
-------------- -------------- -------------- -------------- --------------
Cash flows from financing activities
Long-term borrowings 1,310.0 0.4 - 1,310.4
Repayments of long-term borrowings (130.3) (323.2) (34.3) - (487.8)
Debt issuance costs (28.9) - - (28.9)
Debt prepayment costs - (17.5) - (17.5)
Change in short-term borrowings (85.5) - (117.8) - (203.3)
Common and preferred dividends (22.7) - - - (22.7)
Proceeds from issuance of common
stock under various employee and
shareholder plans 31.5 - - - 31.5
Acquisitions of treasury stock (34.9) - - - (34.9)
Other, net (3.1) (1.7) (5.5) - (10.3)
-------------- -------------- -------------- -------------- --------------
Net cash provided by (used in)
financing activities 1,036.1 (342.0) (157.6) - 536.5
-------------- -------------- -------------- -------------- --------------
Net change in cash and temporary
investments 7.4 - 1.1 - 8.5
Cash and temporary investments -
beginning of period 4.2 0.5 20.8 - 25.5
-------------- -------------- -------------- -------------- --------------
Cash and temporary investments -
end of period $ 11.6 $ 0.5 $ 21.9 $ - $ 34.0
============== ============== ============== ============== ==============
<PAGE>
<b>10. Leases</b>
The company leases warehousing and manufacturing space and certain manufacturing equipment, primarily within the packaging segment,
and office space, primarily within the aerospace and technologies segment. Under certain of these lease arrangements, we have the
option to purchase the leased facilities and equipment for a total purchase price at the end of the lease term of approximately
$96.3 million. If we elect not to purchase the facilities and equipment and do not enter into a new lease arrangement, Ball has
guaranteed the lessors a minimum residual value of approximately $77.2 million and may incur other incremental costs to discontinue
or relocate the business activities associated with these leased assets. These agreements contain certain restrictions relating to
dividends, investments and borrowings. Total noncancellable operating leases in effect at December 31, 2000, require rental payments
of $46.6 million, $43.9 million, $38.7 million, $35.4 million and $33.2 million for the years 2001 through 2005, respectively, and
$32.8 million combined for all years thereafter. Lease expense for all operating leases was $63.4 million, $44.8 million and
$38.5 million in 2000, 1999 and 1998, respectively.
<b>11. Taxes on Income</b>
The amounts of earnings (losses) before income taxes by national jurisdiction follow:
<i>($ in millions)</i> 2000 1999 1998
------------- ------------- -------------
U.S. $ 144.0 $ 161.5 $ 89.6
Foreign (30.1) 9.7 (62.3)
------------- ------------- -------------
$ 113.9 $ 171.2 $ 27.3
============= ============= =============
The provision for income tax expense (benefit) was as follows:
<i>($ in millions</i>) 2000 1999 1998
------------- ------------- -------------
Current
U.S. $ 28.5 $ 23.5 $ 7.6
State and local 0.9 2.2 2.8
Foreign 3.6 4.9 6.0
------------- ------------- -------------
Total current 33.0 30.6 16.4
------------- ------------- -------------
Deferred
U.S. 12.8 28.7 (8.1)
State and local 2.5 4.6 (1.6)
Foreign (5.5) 1.0 2.1
------------- ------------- -------------
Total deferred 9.8 34.3 (7.6)
------------- ------------- -------------
Provision for income taxes $ 42.8 $ 64.9 $ 8.8
============= ============= =============
The provision for income taxes recorded within the consolidated statement of earnings differs from the amount of income tax expense
determined by applying the U.S. statutory federal income tax rate to pretax earnings as a result of the following:
<i>($ in millions)</i> 2000 1999 1998
------------- ------------- -------------
Statutory U.S. federal income tax $ 39.8 $ 59.9 $ 9.6
Increase (decrease) due to:
Company-owned life insurance (3.1) (2.1) (5.2)
Research and development tax credits (3.1) (3.0) (2.9)
Foreign operations and royalty income 4.5 2.9 9.4
State and local taxes, net 1.9 4.4 0.8
Other, net 2.8 2.8 (2.9)
------------- ------------- -------------
Provision for taxes $ 42.8 $ 64.9 $ 8.8
============= ============= =============
Effective tax rate expressed as a percentage of
pretax earnings 37.6% 37.9% 32.2%
============= ============= =============
At December 31, 2000, the company had capital loss carryforwards, expiring in 2004, of $67.5 million with a related tax benefit of
$26.4 million. That benefit has been fully offset by a valuation allowance. Additionally, alternative minimum tax credits of
$22.1 million, which may be carried forward indefinitely, are available.
Provision has not been made for additional U.S. or foreign taxes on undistributed earnings of controlled foreign corporations where
such earnings will continue to be reinvested. It is not practicable to estimate the additional taxes, including applicable foreign
withholding taxes, that might become payable upon the eventual remittance of the foreign earnings for which no provision has been
made.
Net income tax payments were $28.8 million, $29.6 million and $20.5 million for 2000, 1999 and 1998, respectively.
The significant components of deferred tax assets and liabilities at December 31 were:
<i>($ in millions)</i> 2000 1999
------------- -------------
Deferred tax assets:
Deferred compensation $ (35.2) $ (28.3)
Accrued employee benefits (63.3) (62.2)
Plant closure costs (38.4) (31.6)
Other (43.6) (48.0)
------------- -------------
Total deferred tax assets (180.5) (170.1)
------------- -------------
Deferred tax liabilities:
Depreciation 139.5 121.6
Other 36.6 36.2
------------- -------------
Total deferred tax liabilities 176.1 157.8
------------- -------------
Net deferred tax asset $ (4.4) $ (12.3)
============= =============
<b>12. Pension and Other Postretirement and Postemployment Benefits</b>
The company's noncontributory pension plans cover substantially all U.S. and Canadian employees meeting certain eligibility
requirements. The defined benefit plans for salaried employees provide pension benefits based on employee compensation and years of
service. In addition, the plan covering salaried employees in Canada includes a defined contribution feature. Plans for hourly
employees provide benefits based on fixed rates for each year of service. Our policy is to fund the plans on a current basis to the
extent deductible under existing tax laws and regulations and in amounts sufficient to satisfy statutory funding requirements. Plan
assets consist primarily of common stocks and fixed income securities.
The company sponsors defined benefit and defined contribution postretirement health care and life insurance plans for substantially
all U.S. and Canadian employees. Employees may also qualify for long-term disability, medical and life insurance continuation and
other postemployment benefits upon termination of active employment prior to retirement. All of the Ball-sponsored plans are unfunded
and, with the exception of life insurance benefits, are self-insured.
In Canada, the company provides supplemental medical and other benefits in conjunction with Canadian provincial health care plans.
Most U.S. salaried employees who retired prior to 1993 are covered by noncontributory defined benefit medical plans with capped
lifetime benefits. Ball provides a fixed subsidy toward each retiree's future purchase of medical insurance for U.S. salaried and
substantially all nonunion hourly employees retiring after January 1, 1993. Life insurance benefits are noncontributory. Ball has no
commitments to increase benefits provided by any of the postretirement benefit plans.
<PAGE>
An analysis of the change in benefit accruals for 2000 and 1999 follows:
Other Postretirement
Pension Benefits Benefits
----------------------------- -----------------------------
<i>($ in millions)</i> 2000 1999 2000 1999
------------ ------------ ------------ ------------
<b>Change in benefit obligation:</b>
Benefit obligation at beginning of year $ 418.3 $ 422.1 $ 97.3 $ 91.7
Service cost 12.4 14.2 1.9 1.7
Interest cost 32.0 29.1 7.6 6.5
Benefits paid (18.7) (13.1) (3.9) (4.1)
Net actuarial gain (1.8) (46.0) (6.1) (5.6)
Special termination 11.4 - 1.7 -
Business acquisition - 2.6 - 2.4
Other, net 2.1 9.4 (0.4) 4.7
------------ ------------ ------------ ------------
Benefit obligation at end of year 455.7 418.3 98.1 97.3
------------ ------------ ------------ ------------
<b>Change in plan assets:</b>
Fair value of assets at beginning of year 435.4 419.2 - -
Actual return on plan assets 30.8 12.9 - -
Employer contributions 21.9 25.1 3.8 4.0
Benefits paid (18.7) (25.7) (3.9) (4.1)
Other, net (2.1) 3.8 0.1 0.1
------------ ------------ ------------ ------------
Fair value of assets at end of year 467.3 435.3 - -
------------ ------------ ------------ ------------
<b>Funded status</b> 11.6 17.0 (98.1) (97.3)
Unrecognized net actuarial loss (gain) 16.5 8.1 (11.9) (7.8)
Unrecognized prior service cost 14.9 12.7 4.0 4.3
Unrecognized transition asset (0.6) (3.7) - -
------------ ------------ ------------ ------------
Prepaid (accrued) benefit cost $ 42.4 $ 34.1 $ (106.0) $ (100.8)
============ ============ ============ ============
Amounts recognized in the balance sheet consist of:
Other Postretirement
Pension Benefits Benefits
----------------------------- -----------------------------
<i>($ in millions)</i> 2000 1999 2000 1999
------------ ------------ ------------ ------------
Prepaid benefit cost $ 56.2 $ 55.2 $ - $ -
Accrued benefit liability (30.0) (33.7) (106.0) (100.8)
Intangible asset 12.9 9.3 - -
Accumulated other comprehensive earnings 3.3 3.3 - -
------------ ------------ ------------ ------------
Net amount recognized $ 42.4 $ 34.1 $ (106.0) $ (100.8)
============ ============ ============ ============
Components of net periodic benefit cost were:
Pension Benefits Other Postretirement Benefits
---------------------------------- ----------------------------------
<i>($ in millions)</i> 2000 1999 1998 2000 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
Service cost $ 12.4 $ 14.2 $ 10.5 $ 1.9 $ 1.7 $ 1.0
Interest cost 32.0 29.1 26.1 7.6 6.5 4.9
Expected return on plan assets (42.3) (37.6) (35.5) - - -
Amortization of prior service cost 1.4 1.1 1.1 0.3 - -
Amortization of transition asset (3.1) (3.2) (3.2) - - -
Curtailment loss 7.9 0.5 - - - -
Recognized net actuarial loss (gain) 0.7 1.7 1.3 (0.7) (0.3) (0.3)
---------- ---------- ---------- ---------- ---------- ----------
Net periodic benefit cost 9.0 5.8 0.3 9.1 7.9 5.6
Expense of defined contribution plans 0.7 0.7 0.6 - - -
---------- ---------- ---------- ---------- ---------- ----------
Net periodic benefit cost $ 9.7 $ 6.5 $ 0.9 $ 9.1 $ 7.9 $ 5.6
========== ========== ========== ========== ========== ==========
Weighted average assumptions at the measurement date were:
Pension Benefits Other Postretirement Benefits
---------------------------------- ----------------------------------
<i>($ in millions)</i> 2000 1999 1998 2000 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
Discount rate 7.84% 7.84% 7.00% 7.85% 7.82% 7.00%
Rate of compensation increase 3.30% 3.33% 3.33% N/A N/A N/A
Expected long-term rates of return on 9.81% 9.82% 10.79% N/A N/A N/A
assets
The expected long-term rates of return on assets are calculated by applying the expected rate of return to a market related value of
plan assets at the beginning of the year, adjusted for the weighted average expected contributions and benefit payments. The market
related value of plan assets used to calculate expected return was $433.9 million at September 30, 2000, $382.8 million at
December 31, 1999, and $329.5 million at December 31, 1998. The measurement date for determining the market related value of plan
assets was changed during 2000 from December 31 to September 30 in order to utilize more timely and accurate data. This change had an
insignificant impact on the 2000 financial statements.
For pension plans, accumulated gains and losses in excess of a 10 percent corridor, the prior service cost and the transition asset
are being amortized on a straight-line basis from the date recognized over the average remaining service period of active
participants. For other postretirement benefits, the 10 percent corridor is not used for accumulated actuarial gains and losses, and
they are amortized over 10 years.
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets were $143 million, $141.9 million and $112.4 million, respectively, as of December 31,
2000.
For the U.S. plans at December 31, 2000, a 5.5 percent health care cost trend rate was used for pre-65 and post-65 benefits, and
trend rates were assumed to remain level for 2001 and subsequent years. For the Canadian plans, a 7 percent health care cost trend
rate was used, which was assumed to decrease to 4.5 percent by 2006 and remain at that level in subsequent years.
Health care cost trend rates can have an effect on the amounts reported for the health care plan. A one-percentage point change in
assumed health care cost trend rates would increase or decrease the total of service and interest cost by approximately $0.3 million
and the postretirement benefit obligation by approximately $3.2 million.
The additional minimum pension liability, less related intangible asset, was recognized net of tax benefits as a component of
shareholders' equity within accumulated other comprehensive loss.
<i>Other Benefit Plans</i>
Substantially all employees within the company's aerospace and technologies segment who participate in Ball's 401(k) salary
conversion plan receive a performance-based matching cash contribution of up to 4 percent of base salary. The company recorded
$1.9 million, zero and $1.6 million in 2000, 1999 and 1998, respectively, as compensation related to this match. In addition,
substantially all U.S. salaried employees and certain U.S. nonunion hourly employees who participate in Ball's 401(k) salary
conversion plan automatically participate in the company's ESOP through an employer matching contribution. Cash contributions to the
ESOP trust, including preferred dividends, are used to service the ESOP debt and were $11.5 million in 2000, $11.6 million in 1999
and $10.7 million in 1998. Interest paid by the ESOP trust for its borrowings was $1.7 million, $2.6 million and $3.3 million for
2000, 1999 and 1998, respectively.
<b>13. Shareholders' Equity</b>
At December 31, 2000, the company had 120 million shares of common stock and 15 million shares of preferred stock authorized, both
without par value. Preferred stock includes 600,000 authorized but unissued shares designated as Series A Junior Participating
Preferred Stock and 2,100,000 authorized shares designated as Series B ESOP Convertible Preferred Stock.
The ESOP Preferred has a stated value and liquidation preference of $36.75 per share and cumulative annual dividends of $2.76 per
share. The ESOP Preferred shares are entitled to 1.3 votes per share and are voted with common shares as a single class upon matters
submitted to a vote of Ball's shareholders. Each ESOP Preferred share has a guaranteed value of $36.75 and is convertible into
1.1552 shares of Ball Corporation common stock.
Under the company's successor Shareholder Rights Plan, one Preferred Stock Purchase Right (Right) is attached to each outstanding
share of Ball Corporation common stock. Subject to adjustment, each Right entitles the registered holder to purchase from the company
one one-thousandth of a share of Series A Junior Participating Preferred Stock of the company at an exercise price of $130 per Right.
If a person or group acquires 15 percent or more of the company's outstanding common stock (or upon occurrence of certain other
events), the Rights (other than those held by the acquiring person) become exercisable and generally entitle the holder to purchase
shares of Ball Corporation common stock at a 50 percent discount. The Rights, which expire in 2006, are redeemable by the company at
a redemption price of one cent per Right and trade with the common stock. Exercise of such Rights would cause substantial dilution to
a person or group attempting to acquire control of the company without the approval of Ball's board of directors. The Rights would
not interfere with any merger or other business combinations approved by the board of directors.
Common shares were reserved at December 31, 2000, for future issuance under the employee stock purchase, stock option, dividend
reinvestment and restricted stock plans, as well as to meet conversion requirements of the ESOP Preferred.
In connection with the employee stock purchase plan, the company contributes 20 percent of up to $500 of each participating
employee's monthly payroll deduction toward the purchase of Ball Corporation common stock. Company contributions for this plan were
approximately $1.9 million in 2000, $1.8 million in 1999 and $1.6 million in 1998.
<i>Accumulated Other Comprehensive Loss</i>
The activity related to accumulated other comprehensive loss was as follows:
Minimum Accumulated
Foreign Pension Other
<i>($ in millions)</i> Currency Liability Comprehensive
Translation (net of tax) Loss
----------------- ----------------- -----------------
December 31, 1997 $ (20.9) $ (1.9) $ (22.8)
1998 change (7.7) (1.2) (8.9)
----------------- ----------------- -----------------
December 31, 1998 (28.6) (3.1) (31.7)
1999 change 4.0 1.0 5.0
----------------- ----------------- -----------------
December 31, 1999 (24.6) (2.1) (26.7)
2000 change (3.2) 0.2 (3.0)
----------------- ----------------- -----------------
December 31, 2000 $ (27.8) $ (1.9) $ (29.7)
================= ================= =================
The minimum pension liability component of other comprehensive earnings (loss) is presented net of related tax expense (benefit) of
$1.4 million, $0.7 million and $(0.4) million for the years ended December 31, 2000, 1999 and 1998, respectively. No tax benefit has
been provided on the foreign currency translation loss component for any period, as the undistributed earnings of the company's
foreign investments will continue to be reinvested.
<i>Stock Options and Restricted Shares</i>
The company has several stock option plans under which options to purchase shares of common stock have been granted to officers and
key employees at the market value of the stock at the date of grant. Payment must be made at the time of exercise in cash or with
shares of stock owned by the option holder, which are valued at fair market value on the date exercised. Options terminate 10 years
from date of grant. Tier A options are exercisable in four equal installments commencing one year from date of grant, with the
exception of certain Tier A options granted in 1998, which become exercisable after the company's common stock price reaches
specified prices for 10 consecutive days, or at the end of five years, whichever comes first. Tier B options vested at the date of
grant, and were exercisable after the company's common stock price closed at or above a target price of $50 per share for
10 consecutive days, which occurred in April 1999. Approximately $4.7 million was recorded as compensation expense in the second
quarter of 1999 in connection with the Tier B options becoming exercisable, and common stock was increased accordingly. The target
stock price was adjusted based on a compounded annual growth rate of 7.5 percent for individuals retiring prior to the options
becoming exercisable.
The company also granted 130,000 shares of restricted stock to certain management employees during 1998 at a price of $35 per share.
Restrictions on these shares lapse in tranches based on the company achieving certain standards of performance or at the end of seven
years, whichever comes first.
<PAGE>
A summary of stock option activity for the years ended December 31 follows:
2000 1999 1998
-------------------------- -------------------------- --------------------------
Weighted Weighted Weighted
Average Average Average
Number of Exercise Number of Exercise Number of Exercise
Shares Price Shares Price Shares Price
------------ ------------ ------------ ------------ ------------ ------------
Outstanding at beginning of year 1,926,795 $ 34.657 2,163,396 $ 30.884 1,754,298 $ 27.223
Tier A options exercised (92,292) 26.705 (394,283) 29.626 (332,594) 26.981
Tier B options exercised - - (55,500) 24.375 (38,000) 24.375
Tier A options granted 380,375 33.063 301,100 53.861 822,300 36.738
Tier A options canceled (60,623) 39.012 (87,918) 36.633 (42,608) 29.378
------------ ------------ ------------
Outstanding at end of year 2,154,255 34.594 1,926,795 34.657 2,163,396 30.884
------------ ------------ ------------
Exercisable at end of year 1,258,490 31.727 1,087,045 29.955 743,671 28.555
------------ ------------ ------------
Reserved for future grants 1,783,489 2,128,130 2,360,056
------------ ------------ ------------
Additional information regarding options outstanding at December 31, 2000, follows:
Exercise Price Range
-------------------------------------------------------------------
$24.375 - $26.625 $28.250 - $35.000 $35.625 - $55.125 Total
------------------- ------------------- ------------------- ---------
Number of options outstanding 641,388 726,433 786,434 2,154,255
Weighted average exercise price $25.368 $33.400 $43.221 $34.594
Weighted average remaining 6.4 years 8.7 years 8.2 years 7.9 years
contractual life
Number of shares exercisable 584,763 278,783 394,944 1,258,490
Weighted average exercise price $25.250 $33.439 $40.106 $31.727
These options cannot be traded in any equity market. However, based on the Black-Scholes option pricing model, adapted for use in
valuing compensatory stock options in accordance with SFAS No. 123, Tier A options granted in 2000, 1999 and 1998 have estimated
weighted average fair values at the date of grant of $12.16 per share, $17.32 per share and $10.73 per share, respectively. Under the
same methodology, Tier B options granted during 1997 have an estimated weighted average fair value at the date of grant of $8.54 per
share. The actual value an employee may realize will depend on the excess of the stock price over the exercise price on the date the
option is exercised. Consequently, there is no assurance that the value realized by an employee will be at or near the value
estimated. The fair values were estimated using the following weighted average assumptions:
2000 Grants 1999 Grants 1998 Grants
--------------- --------------- ---------------
Expected dividend yield 1.30% 1.52% 1.31%
Expected stock price volatility 32.43% 29.80% 25.34%
Risk-free interest rate 6.36% 5.34% 5.21%
Expected life of options 5.5 years 5.5 years 5.3 years
<PAGE>
Ball accounts for its stock-based employee compensation programs using the intrinsic value method prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." If we had elected to recognize compensation based upon the calculated fair value of the
options granted after 1994, pro forma net earnings and earnings per share would have been:
Years ended December 31,
----------------------------------------
<i>($ in millions, except per share amounts)</i> 2000 1999 1998
------------ ------------ ------------
As reported:
Net earnings $ 68.2 $ 104.2 $ 16.6
Basic earnings per share 2.26 3.36 0.45
Diluted earnings per share 2.14 3.15 0.44
Pro forma results:
Net earnings $ 65.6 $ 100.6 $ 14.3
Basic earnings per share 2.17 3.24 0.38
Diluted earnings per share 2.06 3.04 0.37
<PAGE>
<b>14. Earnings per Share</b>
The following table provides additional information on the computation of earnings per share amounts.
Years ended December 31,
--------------------------------------------------
<i>($ in millions, except per share amounts)</i> 2000 1999 1998
-------------- -------------- --------------
<b>Basic earnings per Share</b>
Earnings before extraordinary item and accounting change $ 68.2 $ 104.2 $ 32.0
Early debt extinguishment costs, net of tax - - (12.1)
Cumulative effect of accounting change for start-up costs,
net of tax - - (3.3)
-------------- -------------- --------------
Net earnings 68.2 104.2 16.6
Preferred dividends, net of tax (2.6) (2.7) (2.8)
-------------- -------------- --------------
Earnings attributable to common shareholders $ 65.6 $ 101.5 $ 13.8
============== ============== ==============
Weighted average common shares <i>(000s)</i> 29,040 30,170 30,388
============== ============== ==============
Basic earnings per share:
Earnings before extraordinary item and accounting change $ 2.26 $ 3.36 $ 0.96
Early debt extinguishment costs, net of tax - - (0.40)
Cumulative effect of accounting change, net of tax - - (0.11)
-------------- -------------- --------------
Basic earnings per share $ 2.26 $ 3.36 $ 0.45
============== ============== ==============
<b>Diluted Earnings per Share</b>
Earnings before extraordinary item and accounting change $ 68.2 $ 104.2 $ 32.0
Early debt extinguishment costs, net of tax - - (12.1)
Cumulative effect of accounting change for start-up costs,
net of tax - - (3.3)
-------------- -------------- --------------
Net earnings 68.2 104.2 16.6
Adjustments for deemed ESOP cash contribution
in lieu of the ESOP Preferred dividend (2.0) (2.0) (2.1)
-------------- -------------- --------------
Adjusted earnings attributable to common shareholders $ 66.2 $ 102.2 $ 14.5
============== ============== ==============
Weighted average common shares <i>(000s)</i> 29,040 30,170 30,388
Effect of dilutive securities:
Dilutive effect of stock options 256 476 338
Common shares issuable upon conversion of the
ESOP Preferred stock 1,721 1,804 1,866
-------------- -------------- --------------
Weighted average shares applicable to diluted earnings per share 31,017 32,450 32,592
============== ============== ==============
Diluted earnings per share:
Earnings before extraordinary item and accounting change $ 2.14 $ 3.15 $ 0.91
Early debt extinguishment costs, net of tax - - (0.37)
Cumulative effect of accounting change, net of tax - - (0.10)
-------------- -------------- --------------
Diluted earnings per share $ 2.14 $ 3.15 $ 0.44
============== ============== ==============
<PAGE>
The following options have been excluded for the respective years from the computation of the diluted earnings per share calculation
since they were anti-dilutive (i.e., the exercise price exceeded the average common stock price for the year):
Exercise Price Expiration 2000 1999 1998
------------------ --------------- -------------- -------------- --------------
$ 35.000 2008 245,000 - -
35.625 2005 128,850 - -
35.938 2008 280,550 - -
44.313 2008 98,750 - 120,000
55.125 2009 242,338 259,650 -
Various Various 35,946 - 4,000
-------------- -------------- --------------
Total 1,031,434 259,650 124,000
============== ============== ==============
<b>15. Financial Instruments and Risk Management</b>
The company is subject to various risks and uncertainties due to our operations and business activities, changing commodity prices
and changing capital markets.
<i>Policies and Procedures</i>
In the ordinary course of business, the company employs established risk management policies and procedures to reduce exposure to
commodity price changes, changes in interest rates, fluctuations in foreign currencies and the company's common share repurchase
program. Our objective in managing our exposure to commodity price changes is to limit the impact of raw material price changes on
earnings and cash flow through arrangements with customers and suppliers, and, at times, through the use of certain derivative
instruments such as options and forward contracts designated as hedges. Our objective in managing our exposure to interest rate
changes is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To
achieve these objectives, we primarily use interest rate swaps, collars and options to manage our mix of floating and fixed-rate
debt. Our objective in managing our exposure to foreign currency fluctuations is to protect foreign cash flow and reduce earnings
volatility associated with foreign exchange rate changes.
Unrealized losses on foreign exchange forward contracts are recorded in the balance sheet as other current liabilities. Realized
gains/losses from hedges are classified in the income statement consistent with accounting treatment of the item being hedged. The
company accrues the differential for interest rate swaps to be paid or received under these agreements as adjustments to interest
expense over the lives of the swaps. Gains and losses upon the early termination of swap agreements are deferred in long-term
liabilities and amortized as an adjustment to interest expense over the remaining term of the agreement.
<i>Commodity Price Risk</i>
The company primarily manages the commodity price risk in connection with market price fluctuations of aluminum by entering into
customer sales contracts for cans and ends, which include aluminum-based pricing terms which consider price fluctuations under our
commercial supply contracts for aluminum purchases. The terms include "band" pricing where there is an upper and lower limit, a
fixed price or only an upper limit to the aluminum component pricing. This matched pricing affects substantially all of our North
American metal beverage packaging net sales. The company also, at times, uses certain derivative instruments such as option and
forward contracts to hedge commodity price risk. At December 31, 2000, the company had aluminum forward contracts with notional
amounts of $124 million hedging its aluminum purchase contracts. These forward contract agreements expire in less than one year.
The fair value of these contracts at December 31, 2000, was $(2.4) million. The company's equity joint ventures also had aluminum
forward contracts with notional amounts of $20 million hedging aluminum purchase contracts. These forward contract agreements expire
at various times up to two years. The fair value of these contracts at December 31, 2000, was $0.2 million. At December 31, 1999,
the company had aluminum forward contracts with notional amounts of $163 million hedging the aluminum in the fixed price sales
contracts. The fair value of these contracts at December 31, 1999, was $2.1 million.
<i>Interest Rate Risk</i>
Interest rate instruments held by the company at December 31, 2000 and 1999, included pay-floating and pay-fixed interest rate swaps,
interest rate caps and swaption contracts. Pay-fixed swaps effectively convert floating rate obligations to fixed rate instruments.
Pay-floating swaps effectively convert fixed-rate obligations to variable rate instruments. Swap agreements expire at various times
up to five years.
Interest rate swap agreements outstanding at December 31, 2000, had notional amounts of $10 million at a floating rate and
$154 million at a fixed rate, or a net fixed position of $144 million. The company also entered into an interest rate cap agreement
in 2000 with a notional amount of $10 million. At December 31, 1999, the agreements had notional amounts of $10 million at a floating
rate and $475 million at a fixed rate, or a net fixed position of $465 million.
The related notional amounts of interest rate swaps and options serve as the basis for computing the cash flow under these agreements
but do not represent the company's exposure through its use of these instruments. Although these instruments involve varying degrees
of credit and interest risk, the counter parties to the agreements involve financial institutions, which are expected to perform
fully under the terms of the agreements.
The fair value of all non-derivative financial instruments approximates their carrying amounts with the exception of long-term debt.
Rates currently available to the company for loans with similar terms and maturities are used to estimate the fair value of long-term
debt based on discounted cash flows. The fair value of derivatives generally reflects the estimated amounts that we would pay or
receive upon termination of the contracts at December 31, 2000 and 1999, taking into account any unrealized gains and losses on open
contracts.
2000 1999
-------------------------------- -----------------------------
Carrying Fair Carrying Fair
<i>($ in millions)</i> Amount Value Amount Value
-------------- -------------- -------------- --------------
Long-term debt $ 1,078.8 $ 1,059.4 $ 1,139.5 $ 1,124.6
Unrealized net gain on derivative
contracts relating to debt - 1.3 - 8.0
<i>Exchange Rate Risk</i>
The company's foreign currency risk exposure results from fluctuating currency exchange rates, primarily the strengthening of the
U.S. dollar against the Hong Kong dollar, Canadian dollar, Chinese renminbi, Thai baht and Brazilian real. The company faces currency
exposure that arises from translating the results of its global operations and maintaining U.S. dollar debt and payables in foreign
countries. The company primarily uses forward contracts to manage its foreign currency exposures and, as a result, gains and losses
on these derivative positions offset, in part, the impact of currency fluctuations on the existing assets and liabilities. At
December 31, 2000, the notional amounts of the company's foreign exchange risk management contracts, net of notional amounts of
contracts with counterparties against which the company has the legal right of offset, were $7.7 million for the Brazilian Real,
$1.3 million for the Euro and $0.5 million for the Thai baht. The fair value of these contracts as of December 31, 2000 was
$0.2 million.
<i>Equity</i>
In connection with the company's ongoing share repurchase program, we sell put options which give the purchaser of those options the
right to sell shares of the company's common stock to the company on specified dates at specified prices upon the exercise of those
options. The put option contracts allow the company to determine the method of settlement, either in cash or shares. As such, the
contracts are considered equity instruments and changes in the fair value are not recognized in our financial statements. The
company's objective in selling put options is to lower the average purchase price of acquired shares in connection with the share
repurchase program. During 1999 we received $1.3 million in premiums for option contracts and in 2000 we paid $1.2 million to settle
in cash those contracts that either matured with no value or were not purchased. As of December 31, 2000, there was one put option
contract outstanding for 50,000 shares with a strike price of $45.06. The premiums received are shown as a reduction in treasury
stock.
Also in connection with the ongoing share repurchase program, the company entered into a forward share repurchase agreement in 2000
to purchase shares of the company's common stock. During 2000 we purchased 580,300 shares under the agreement at an average price of
$34.50. In January 2001 we purchased the 510,500 shares remaining under the agreement at an average price of $35.16.
<i>New Accounting Pronouncement</i>
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and SFAS No. 138, an amendment of SFAS 133, essentially
require all derivatives to be recorded on the balance sheet at fair value and establish new accounting practices for hedge
instruments. In connection with the adoption of these statements, which became effective for Ball on January 1, 2001, we expect the
cumulative earnings effect of this change in accounting to be insignificant.
<PAGE>
<b>16. Research and Development</b>
Research and development costs are expensed as incurred in connection with the company's internal programs for the development of
products and processes. Costs incurred in connection with these programs, a portion of which is included in cost of sales, amounted
to $14.4 million, $14 million and $23.7 million for the years 2000, 1999 and 1998, respectively.
<b>17. Contingencies</b>
The company is subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive nature
of the industries in which we participate, our operations in developing markets outside the U.S., changing commodity prices for the
materials used in the manufacture of our products and changing capital markets. Where practicable, we attempt to reduce these risks
and uncertainties through the establishment of risk management policies and procedures, including, at times, the use of certain
derivative financial instruments.
From time to time, the company is subject to routine litigation incident to its business. Additionally, the U.S. Environmental
Protection Agency has designated Ball as a potentially responsible party, along with numerous other companies, for the cleanup of
several hazardous waste sites. Our information at this time does not indicate that these matters will have a material adverse effect
upon the liquidity, results of operations or financial condition of the company.
<PAGE>
<b>18. Quarterly Results of Operations (Unaudited)</b>
The company's fiscal quarters end on the Sunday nearest the calendar quarter end. The fiscal years end on December 31.
<i>2000 Quarterly Information</i>
The company recorded an $83.4 million pretax charge ($55 million after tax, minority interests and equity earnings impacts) in the
second quarter for packaging business consolidation and investment exit activities. Additional details about the charge and related
activities are provided in Note 3.
<i>1999 Quarterly Information</i>
Fluctuations in sales and earnings for the quarters in 1999 reflected the normal seasonality of the business as well as the number of
days in each fiscal quarter.
<PAGE>
<i>($ in millions except per share amounts)</i> First Second Third Fourth
Quarter Quarter Quarter Quarter Total
----------- ----------- ----------- ----------- -----------
<b>2000</b>
Net sales<i>(1)</i> $ 846.0 $ 995.0 $ 996.0 $ 827.7 $3,664.7
----------- ----------- ----------- ----------- -----------
Gross profit<i>(2)</i> 102.6 127.0 134.1 103.1 466.8
----------- ----------- ----------- ----------- -----------
Net earnings 20.0 (15.4) 44.5 19.1 68.2
Preferred dividends, net of tax (0.6) (0.7) (0.6) (0.7) (2.6)
----------- ----------- ----------- ----------- -----------
Earnings (loss) attributable to common
shareholders $ 19.4 $ (16.1) $ 43.9 $ 18.4 $ 65.6
=========== =========== =========== =========== ===========
Basic earnings (loss) per share $ 0.65 $ (0.55) $ 1.52 $ 0.65 $ 2.26
=========== =========== =========== =========== ===========
Diluted earnings (loss) per share $ 0.62 $ (0.55) $ 1.43 $ 0.62 $ 2.14
=========== =========== =========== =========== ===========
<b>1999</b>
Net sales<i>(1)</i> $ 848.7 $1,011.3 $1,026.5 $ 820.7 $3,707.2
----------- ----------- ----------- ----------- -----------
Gross profit<i>(2)</i> 94.2 126.7 133.0 104.9 458.8
----------- ----------- ----------- ----------- -----------
Net earnings 15.7 32.0 37.0 19.5 104.2
Preferred dividends, net of tax (0.7) (0.7) (0.6) (0.7) (2.7)
----------- ----------- ----------- ----------- -----------
Earnings attributable to common shareholders $ 15.0 $ 31.3 $ 36.4 $ 18.8 $ 101.5
=========== =========== =========== =========== ===========
Basic earnings per share $ 0.50 $ 1.03 $ 1.21 $ 0.63 $ 3.36
=========== =========== =========== =========== ===========
Diluted earnings per share $ 0.47 $ 0.96 $ 1.13 $ 0.59 $ 3.15
=========== =========== =========== =========== ===========
<i>(1) EITF No. 00-10, which requires that shipping and handling fees be reported as a component of cost of sales, was adopted in the
fourth quarter of 2000. The effect of this guidance resulted in offsetting increases in sales and cost of sales for both years.
See Note 1 for more details.
(2) Gross profit is shown after depreciation and amortization of $133.8 million and $137.4 million for the years ended
December 31, 2000 and 1999, respectively.</i>
Earnings per share calculations for each quarter are based on the weighted average shares outstanding for that period. As a result,
the sum of the quarterly amounts may not equal the annual earnings per share amount. The diluted loss per share in the second quarter
of 2000 is the same as the net loss per basic share because the assumed exercise of stock options and conversion of the ESOP
Preferred stock would have been antidilutive.
<PAGE>
<b>Five-Year Review of Selected Financial Data</b>
Ball Corporation and Subsidiaries
----------------------------------------- ------------ ------------ ------------ ------------ ------------
($ in millions, except per share amounts) 2000 1999 1998 1997 1996
----------------------------------------- ------------ ------------ ------------ ------------ ------------
Net sales $ 3,664.7 $ 3,707.2 $ 2,995.7 $ 2,464.5 $ 2,252.7
Earnings from:
Continuing operations 68.2 104.2 32.0 58.3 13.1
Discontinued operations - - - - 11.1
Earnings before cumulative effect of
accounting change 68.2 104.2 32.0 58.3 24.2
Early debt extinguishment costs,
net of tax - - (12.1) - -
Cumulative effect of accounting
change, net of tax<i>(1)</i> - - (3.3) - -
Net earnings 68.2 104.2 16.6 58.3 24.2
Preferred dividends, net of tax (2.6) (2.7) (2.8) (2.8) (2.9)
Earnings (loss) attributable to
common shareholders $ 65.6 $ 101.5 $ 13.8 $ 55.5 $ 21.3
Return on average common
shareholders' equity 10.1% 16.2% 2.3% 9.3% 3.7%
----------------------------------------- ------------ ------------ ------------ ------------ ------------
Earnings per common share:
Earnings from:
Continuing operations $ 2.26 $ 3.36 $ 0.96 $ 1.84 $ 0.34
Discontinued operations - - - - 0.36
Earnings before extraordinary
item and cumulative effect of
accounting change 2.26 3.36 0.96 1.84 0.70
Early debt extinguishment costs,
net of tax - - (0.40) - -
Cumulative effect of accounting
change, net of tax<i>(1)</i> - - (0.11) - -
Earnings per common share $ 2.26 $ 3.36 $ 0.45 $ 1.84 $ 0.70
Weighted average common shares
outstanding (000s) 29,040 30,170 30,388 30,234 30,314
----------------------------------------- ------------ ------------ ------------ ------------ ------------
Diluted earnings per share:
Earnings from:
Continuing operations $ 2.14 $ 3.15 $ 0.91 $ 1.74 $ 0.34
Discontinued operations - - - - 0.34
Earnings before extraordinary
item and cumulative effect of
accounting change 2.14 3.15 0.91 1.74 0.68
Early debt extinguishment costs,
net of tax - - (0.37) - -
Cumulative effect of accounting
change, net of tax<i>(1)</i> - - (0.10) - -
Diluted earnings per share $ 2.14 $ 3.15 $ 0.44 $ 1.74 $ 0.68
Diluted weighted average common
shares outstanding (000s) 31,017 32,450 32,592 32,311 32,335
----------------------------------------- ------------ ------------ ------------ ------------ ------------
Property, plant and equipment
additions $ 98.7 $ 107.0 $ 84.2 $ 97.7 $ 196.1
Depreciation and amortization $ 159.1 $ 162.9 $ 145.0 $ 117.5 $ 93.5
Total assets $ 2,649.8 $ 2,732.1 $ 2,854.8 $ 2,090.1 $ 1,700.8
Total interest bearing debt and
capital lease obligations<i>(3)</i> $ 1,137.3 $ 1,196.7 $ 1,356.6 $ 773.1 $ 582.9
Common shareholders' equity $ 639.6 $ 655.2 $ 594.6 $ 611.3 $ 586.7
Total capitalization<i>(3)</i> $ 1,834.6 $ 1,907.3 $ 2,003.2 $ 1,459.0 $ 1,194.3
Debt-to-total capitalization<i>(3)</i> 62.0% 62.7% 67.7% 53.0% 48.8%
Cash dividends $ 0.60 $ 0.60 $ 0.60 $ 0.60 $ 0.60
Book value $ 22.80 $ 21.97 $ 19.52 $ 20.23 $ 19.22
Market value $ 46.06 $ 39.38 $ 45.75 $ 35.38 $ 26.25
Annual return to common shareholders<i>(2)</i> 19.2% (12.7)% 31.4% 37.4% (3.2)%
----------------------------------------- ------------ ------------ ------------ ------------ ------------
<i> (1) See the notes to the consolidated financial statements.
(2) Change in stock price plus dividend yield assuming reinvestment of dividends.
(3) Includes amounts attributed to discontinued operations.</i>
<PAGE>
Quarterly Stock Prices and Dividends
Quarterly prices for the company's common stock, as reported on the composite tape, were:
2000 1999
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
--------- --------- --------- --------- --------- --------- --------- ---------
High $ 43.25 $ 37.63 $ 36.38 $ 47.94 $ 46.94 $ 59.13 $ 52.44 $ 44.25
Low 26.00 29.25 31.13 28.56 39.25 42.25 42.56 35.38
A common stock dividend of $0.15 per share was paid in each of the 2000 and 1999 quarters.
</PRE>
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<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>6
<FILENAME>ex21-1_f10k2000.htm
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>
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<TITLE>Ball Corporation 2000 10-K, Exhibit 21.1
</TITLE>
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<PRE>
<u>Exhibit 21.1</u>
<b>SUBSIDIARY LIST</b><i>(1)</i>
Ball Corporation and Subsidiaries
The following is a list of subsidiaries of Ball Corporation (an Indiana Corporation).
State or
Country of
Incorporation Percentage
Name or Organization Ownership(2)
- ---- --------------- -------------
Ball Capital Corp. Colorado 100%
Ball Packaging Corp. Colorado 100%
Ball Asia Services Limited Delaware 100%
Ball Plastic Container Corp. Colorado 100%
Ball Metal Food Container Corp. Delaware 100%
Ball Metal Beverage Container Corp. Colorado 100%
Latas de Aluminio Ball, Inc. Delaware 100%
Ball Metal Packaging Sales Corp. Colorado 100%
Ball Aerospace & Technologies Corp. Delaware 100%
Sirba Solutions, Inc. Delaware 100%
Ball Aerospace - (Australia), Pty Ltd. Australia 100%
Ball Advanced Imaging & Management
Solutions PTY LTD Australia 100%
Ball AIMS (Malaysia) SDN BHD Malaysia 100%
Ball Systems Technology Limited United Kingdom 100%
Ball Technology Services Corporation California 100%
Ball North America, Inc. Canada 100%
Ball Packaging Products Canada Corp. Canada 100%
Ball Asia Pacific Holdings Limited
(formerly FTB Packaging Limited) Hong Kong 97%
Beijing FTB Packaging Limited PRC 92%
FTB Tooling & Engineering Ltd. Hong Kong 97%
Fully Tech Industrial Ltd. Hong Kong 98%
Greater China Trading Ltd. Cayman Islands 97%
FTB Zhuhai Ends Manufacturing Co. Ltd. PRC 97%
Hubei FTB Packaging Limited PRC 89%
Ningbo FTB Can Company Limited PRC 73%
Zhuhai FTB Packaging Limited PRC 73%
Xi'an Kunlun FTB Packaging Limited PRC 58%
Ball Asia Pacific Limited (formerly
M.C. Packaging (Hong Kong) Limited) Hong Kong 97%
MCP Beverage Packaging Limited Hong Kong 97%
MCP Industries Limited Hong Kong 97%
Plasco Limited Hong Kong 68%
Hainan M.C. Packaging Limited PRC 87%
Panyu MCP Industries Limited PRC 87%
Shenzhen M.C. Packaging Limited PRC 58%
Tianjin M.C. Packaging Limited PRC 100%
Hemei Containers (Tianjin) Co. Ltd. PRC 66%
Tianjin MCP Cap Manufacture Company Limited PRC 100%
Tianjin MCP Industries Limited PRC 100%
Zhongfu (Taicang) Plastics Products Co. Ltd. PRC 68%
GPT Global Packaging Technology AB Sweden 100%
<PAGE>
The following is a list of affiliates of Ball Corporation included in the financial statements under the equity
or cost accounting methods:
State or
Country of
Incorporation Percentage
Name or Organization Ownership(2)
- ---- --------------- -------------
Ball Western Can Company, LLC Delaware 50%
Space Operations International LLC Maryland 55%
Vexcel Corporation Colorado 50%
EarthWatch Incorporated Delaware 7%
Lam Soon-Ball Yamamura Taiwan 8%
Latapack-Ball Embalagens Ltda. Brazil 50%
Centrotampa Embalagens Ltda. Brazil 50%
Thai Beverage Can Ltd. Thailand 40%
The following are owned indirectly through Ball Asia
Pacific Holdings Limited and Ball Asia Pacific Limited:
Suzhou M.C. Beverage Packaging Co. Ltd. PRC 50%
Sanshui Jianlibao FTB Packaging Limited PRC 34%
Guangzhou M.C. Packaging Limited PRC 29%
Qingdao M.C. Packaging Limited PRC 39%
Richmond Systempak Limited Hong Kong 32%
Hangzhou Cofco-M.C. Packaging Company Limited PRC 24%
<i>(1) In accordance with Regulation S-K, Item 601(b)(21)(ii), the names of certain subsidiaries have been omitted
from the foregoing lists. The unnamed subsidiaries, considered in the aggregate as a single subsidiary,
would not constitute a significant subsidiary, as defined in Regulation S-X, Rule 1-02(w).
(2) Represents the Registrant's direct and/or indirect ownership in each of the subsidiaries' voting capital
share.</i>
</PRE>
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<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>7
<FILENAME>ex23-1_f10k2000.htm
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>
<HTML>
<head>
<TITLE>Ball Corporation 2000 10-K, Exhibit 23.1
</TITLE>
</head>
<BODY>
<PRE>
<u>Exhibit 23.1</u>
<b>Consent of Independent Accountants</b>
We hereby consent to the incorporation by reference in each Prospectus constituting part of each Post-Effective
Amendment No. 1 on Form S-3 to Form S-16 Registration Statement (Registration Nos. 2-62247 and 2-65638) and in
each Prospectus constituting part of each Form S-3 Registration Statement or Post-Effective Amendment
(Registration Nos. 33-3027, 33-16674, 33-19035, 33-40196 and 33-58741) and in each Form S-8 Registration
Statement or Post-Effective Amendment (Registration Nos. 33-21506, 33-40199, 33-37548, 33-28064, 33-15639,
33-61986, 33-51121, 333-26361, 333-32393, 333-84561 and 333-52862) of Ball Corporation of our report dated
January 24, 2001 relating to the financial statements, which appear in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
March 30, 2001
</PRE>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>8
<FILENAME>ex24-1_f10k2000.htm
<DESCRIPTION>LIMITED POWER OF ATTORNEY
<TEXT>
<HTML>
<head>
<TITLE>Ball Corporation 2000 10-K, Exhibit 24.1
</TITLE>
</head>
<BODY>
<PRE>
<u>Exhibit 24.1</u>
<b>Form 10-K
Limited Power of Attorney</b>
KNOW ALL MEN BY THESE PRESENTS that the undersigned directors and officers of Ball Corporation, an
Indiana corporation, hereby constitute and appoint R. David Hoover, Raymond J. Seabrook and Albert R.
Schlesinger, and any one or all of them, the true and lawful agents and attorneys-in-fact of the undersigned with
full power and authority in said agents and attorneys-in-fact, and in any one or more of them, to sign for the
undersigned and in their respective names as directors and officers of the Corporation the Form 10-K of the
Corporation to be filed with the Securities and Exchange Commission, Washington, D.C., under the Securities
Exchange Act of 1934, as amended, and to sign any amendment to such Form 10-K, hereby ratifying and confirming
all acts taken by such agents and attorneys-in-fact or any one of them, as herein authorized.
Date: March 30, 2001
----------------------
/s/R. David Hoover /s/Frank A. Bracken
- ------------------------------------- -----------------------------------------
R. David Hoover Officer Frank A. Bracken Director
/s/Raymond J. Seabrook /s/Howard M. Dean
- ------------------------------------- -----------------------------------------
Raymond J. Seabrook Officer Howard M. Dean Director
/s/Albert R. Schlesinger /s/John T. Hackett
- ------------------------------------- -----------------------------------------
Albert R. Schlesinger Officer John T. Hackett Director
/s/R. David Hoover
-----------------------------------------
R. David Hoover Director
/s/John F. Lehman
-----------------------------------------
John F. Lehman Director
/s/Ruel C. Mercure, Jr.
-----------------------------------------
Ruel C. Mercure, Jr. Director
/s/Jan Nicholson
-----------------------------------------
Jan Nicholson Director
/s/George A. Sissel
-----------------------------------------
George A. Sissel Director
/s/William P. Stiritz
-----------------------------------------
William P. Stiritz Director
/s/Stuart A. Taylor II
-----------------------------------------
Stuart A. Taylor II Director
</PRE>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>9
<FILENAME>ex99-2_f10k2000.htm
<DESCRIPTION>CAUTIONARY STATEMENT
<TEXT>
<HTML>
<head>
<TITLE>Ball Corporation 2000 10-K, Exhibit 99.2
</TITLE>
</head>
<BODY>
<PRE>
<u>Exhibit 99.2</u>
<b>Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995</b>
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the Reform
Act), Ball is hereby filing cautionary statements identifying important factors that could cause Ball's actual
results to differ materially from those projected in forward-looking statements of Ball. Forward-looking
statements may be made in several different contexts; for example, in the company's Annual Report and in annual
and periodic communications with investors. Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements, and many of these statements are contained in Part I,
Item 2, "Business." The Reform Act defines forward-looking statements as statements that express or imply an
expectation or belief and contain a projection, plan or assumption with regard to, among other things, future
revenues, income, earnings per share or capital structure. Such statements of future events or performance
involve estimates, assumptions and uncertainties, and are qualified in their entirety by reference to, and are
accompanied by, the following important factors that could cause Ball's actual results to differ materially from
those contained in forward-looking statements made by or on behalf of Ball.
Some important factors that could cause Ball's actual results or outcomes to differ materially from those
discussed in forward-looking statements include, but are not limited to:
o Fluctuation in customer growth and demand, including loss of major customers; manufacturing
overcapacity; lack of productivity improvement; weather; regulatory action; federal, state and local law;
interest rates; labor strikes and work stoppages; boycotts; litigation involving antitrust, intellectual
property, consumer and other issues; maintenance and capital expenditures; capital availability; economic
conditions and acts of war or catastrophic events.
o Competition in pricing and the possible decrease in, or loss of, sales resulting therefrom; loss of
profitability and plant closures, as well as the impact of price increases on financial results.
o The timing and extent of regulation or deregulation, competition in each line of business, product
development and introductions and technology changes.
o Ball's ability or inability to have available sufficient production capacity in a timely manner.
o Overcapacity in foreign and domestic metal and plastic container industry production facilities and its
impact on pricing and financial results.
o Difficulties in obtaining raw materials, supplies, energy such as gas and electric power, and natural
resources needed for the production of metal and plastic containers as well as telecommunications and
aerospace products.
o The pricing of raw materials, supplies, power and natural resources needed for the production of metal
and plastic containers as well as telecommunications and aerospace products, pricing and ability or
inability to sell scrap associated with the production of metal containers and the effect of changes in the
cost of warehousing the company's products.
o The ability or inability to pass on to customers changes in raw material cost, particularly resin, steel
and aluminum.
<PAGE>
o International business and market risks, particularly in foreign developing countries such as China and
Brazil, including political and economic instability in foreign markets, restrictive trade practices of
foreign governments, sudden policy changes by foreign governments, the imposition of duties, taxes or other
government charges, foreign exchange rate risk, exchange controls and national and regional labor strikes or
work stoppages.
o The ability or inability to obtain adequate credit resources for foreseeable financing requirements of
the company's businesses.
o Undertaking successful and unsuccessful acquisitions, joint ventures and divestitures and the integration
activities associated with acquisitions and joint ventures.
o The failure to make cash payments and satisfy other debt obligations.
o The ability or inability to achieve technological and product advances in the company's businesses.
o The success or lack of success of satellite launches and the businesses and governments associated with
the launches.
o The authorization, funding and availability of government contracts and the nature and continuation of
those contracts and related services, as well as the cancellation or termination of government contracts for
the U.S. government, other customers or other government contractors.
o Actual vs. estimated business consolidation and investment exit costs and the estimated net realizable
values of assets associated with such activities.
o Fluctuation in the fiscal and monetary policy established by the U.S. government.
</PRE>
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