SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
( ) 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
BALL CORPORATION
State of Indiana 35-0160610
345 South High Street, P.O. Box 2407
Muncie, Indiana 47307-0407
Registrant's telephone number, including area code: (317) 747-6100
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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.
Midwest Stock Exchange, Inc.
Pacific Stock 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. [X]
The aggregate market value of voting stock held by non-affiliates of the
registrant was $981.1 million based upon the closing market price on March 1,
1995 (excluding Series B ESOP Convertible Preferred Stock of the registrant,
which series is not publicly traded and which has an aggregate liquidation
preference of $67.2 million).
Number of shares outstanding as of the latest practicable date.
Class Outstanding at March 1, 1995
------------------------------- ----------------------------
Common Stock, without par value 30,131,676
DOCUMENTS INCORPORATED BY REFERENCE
1. Annual Report to Shareholders for the year ended December 31, 1994, to the
extent indicated in Parts I, II, and IV. Except as to information
specifically incorporated, the 1994 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 20, 1995, to the
extent indicated in Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
Ball Corporation is an Indiana corporation organized in 1880 and incorporated in
1922. Its principal executive offices are located at 345 South High Street,
Muncie, Indiana 47305-2326. The terms "Ball" and the "company" as used herein
refer to Ball Corporation and its consolidated subsidiaries.
Ball Corporation is a manufacturer of packaging products for use primarily in
the packaging of food and beverage products. The company also provides aerospace
and communications products and professional services to the federal sector and
commercial customers.
The following sections of the 1994 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 financial
statements "Business Segment Information," "Restructuring and Other Charges,"
"Disposition," "Spin-Off," "Acquisitions" and "Management's Discussion and
Analysis of Operations".
Recent Business Developments
Restructuring and Other Charges
-------------------------------
In the company's major packaging markets, excess manufacturing capacity and
severe pricing pressures have presented significant competitive challenges in
recent years. Moreover, reductions in federal defense expenditures and other
attempts to curb the federal budget deficit have resulted in excess capacity in
the aerospace and defense industry, a declining number of new contract bidding
opportunities and curtailments and delays in existing programs.
In late 1993 the company developed plans to restructure its businesses in order
to adapt the company's manufacturing capabilities and administrative
organizations to meet foreseeable requirements of the packaging and aerospace
markets. These plans involved plant closures to consolidate manufacturing
activities into fewer, more efficient facilities, principally in the glass and
metal food container businesses, and administrative consolidations in the glass,
metal packaging and aerospace and communications businesses. In addition to the
restructuring plans, decisions were made during 1993 to discontinue two
aerospace and communications segment product lines.
The financial impact of these plans was recognized through restructuring and
other charges recorded in the third and fourth quarters of 1993 in the aggregate
amount of $108.7 million ($66.3 million after tax or $2.31 per share). Further
information regarding the company's restructuring plans is included in the
financial statement note "Restructuring and Other Charges" and "Management's
Discussion and Analysis of Operations," which are incorporated herein by
reference.
Disposition
-----------
In March 1995 the company sold the Efratom division to Datum Inc. (Datum) for
approximately $29 million which was paid in a combination of cash and Datum
common stock. Efratom produces time and frequency devices used in navigation and
communication. Total assets of the Efratom division at December 31, 1994 and
1993, were approximately $18.2 million and $16.0 million, respectively.
Operating income for the Efratom division was $3.1 million, $2.7 million and
$2.5 million in 1994, 1993 and 1992, respectively.
Spin-Off
--------
On April 2, 1993, the company completed the spin-off of seven diversified
businesses by means of a distribution of 100 percent of the common stock
of Alltrista Corporation (Alltrista), a then wholly owned subsidiary, to
holders of company common stock. The distributed net assets of Alltrista
included the following businesses: the consumer products division; the zinc
products division; the metal decorating and service division; the industrial
systems division; and the plastic products businesses, consisting of Unimark
plastics, industrial plastics and plastic packaging. Following the distribution,
Alltrista operated as an independent, publicly owned corporation. Additional
information regarding this transaction can be found in the financial statement
note "Spin-Off," which is incorporated herein by reference.
Heekin Can, Inc.
----------------
On March 19, 1993, the company acquired Heekin Can, Inc. (Heekin), a
manufacturer of metal containers primarily for the food, pet food and aerosol
markets, with 1992 sales of $355 million. The acquisition, which has been
accounted for as a purchase business combination, was effected by issuance of
approximately 2.5 million shares of Ball Corporation common stock valued at
approximately $88.3 million, in exchange for 100 percent of Heekin's issued and
outstanding common stock. Further information regarding this transaction is
included in the financial statement note "Acquisitions" and "Management's
Discussion and Analysis of Operations," which are incorporated herein by
reference.
Other Information Pertaining to the Business of the Company
The company's continuing businesses are comprised of two segments: packaging,
and aerospace and communications.
Packaging Segment
-----------------
The company's principal business segment develops, manufactures and sells rigid
packaging products, containers and materials primarily for use in packaging food
and beverage products. Most of the company's packaging segment products are sold
in highly competitive markets, primarily based on price, service, quality and
performance. The majority of the company's packaging sales are made directly to
major companies having leading market positions in packaged food and beverage
businesses. While a substantial portion of the company's sales of packaging
products is made to relatively few customers, the company believes that its
competitors exhibit similar customer concentrations.
The packaging business is capital intensive, requiring significant investments
in machinery and equipment, and profitability is sensitive to production volumes
and the cost of labor and significant raw materials. Generally, profitability is
enhanced where greater unit volumes can be produced from a given investment in
productive equipment and where material and labor costs per unit of product can
be reduced.
Raw materials used by the company's packaging businesses consist principally of
metals (aluminum and steel), sand and soda ash and are generally available from
several sources. Currently, the company is not experiencing any shortage of raw
materials. The company's manufacturing facilities are dependent, in varying
degrees, upon the availability of process energy, such as propane, natural gas,
fuel oil and electricity. While certain of these energy sources may become
increasingly in short supply, or subject to government allocation or excise
taxes, the company cannot predict the effects, if any, of such occurrences on
its future operations.
Research and development efforts in these businesses 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, the company
intends to produce and market new sizes and types of cans and market new
products like the SlimCan and the patented Touch Top(TM) end.
The operations and products within this segment are discussed below:
Metal Packaging
Metal packaging is manufactured by the company's domestic metal beverage
container operation as well as its wholly owned subsidiaries, Ball Packaging
Products Canada, Inc. and Heekin Can, Inc., and is comprised primarily of two
product lines: two-piece beverage containers and two and three-piece food
containers. The market share of metal cans has remained relatively unchanged
over the past 10 years. Dominance in both the food and beverage markets and high
recycling rates contribute to the metal container's significant market share.
The company's international metal container division has established business
relationships with can manufacturers in Europe, the Middle East, Latin America
and the Pacific Rim. In addition, the company began licensing programs in 1994
to provide manufacturing technology and assistance to the largest can maker in
Australia and New Zealand and to a joint venture project, in which we have a
minority equity position, to build the first two-piece beverage can
manufacturing plant in the Philippines. The company and its joint venture
partners are the largest producers of beverage cans in the People's Republic of
China.
Metal beverage containers
Metal beverage containers and ends represent the company's largest product line
accounting for approximately 41 percent of 1994 consolidated net sales.
Decorated two-piece aluminum beverage cans are produced by seven domestic
manufacturing facilities; ends are produced by two of these facilities. Three
manufacturing facilities operated by Ball Canada produce aluminum beverage cans;
ends are produced at one of these facilities as well as at one other facility.
The company believes it is the fourth largest commercial supplier of aluminum
beverage cans and ends to the combined U.S. and Canadian market in 1994 with an
approximate 17 percent market share, based upon estimated 1994 total industry
shipments. The company estimates that its three larger competitors together
represent approximately 67 percent of estimated 1994 total industry shipments
for the U.S. and Canada. One competitor increased its market share in 1994 by
purchasing the beverage can manufacturing operations of a self-manufacturer.
The U.S. and Canadian metal beverage container industry has experienced steady
demand growth at a compounded annual rate of approximately 3.5 percent over the
last decade, with much of that growth in the soft drink market segment. In
Canada, metal beverage containers have captured significantly lower percentages
of the packaged beverage market than in the U.S., particularly in the packaged
beer market, in which the market share of metal containers has been hindered by
trade barriers within Canada. As a result of General Agreement on Tariffs and
Trade (GATT) rulings, there has been pressure to remove these trade barriers.
However, in May 1992, the Ontario government enacted an "environmental" tax levy
of 10 cents (Canadian) per can of beer sold in Ontario. This tax discriminates
against cans in favor of refillable glass bottles. Shipments of cans to the
Ontario beer industry declined sharply after this tax was enacted.
Beverage container industry production capacity in the U.S. and Canada has
exceeded demand in the last several years, which has created a competitive
pricing environment. In 1994, aluminum suppliers announced a change in the
pricing formula for aluminum can sheet to a price based on ingot plus conversion
costs in contrast to the current practice of annually negotiated prices. As a
result, the cost of aluminum can sheet increased. In 1995 this increase will be
reflected in higher beverage can selling prices.
Metal beverage containers are sold primarily to brewers and fillers of
carbonated soft drinks, beer and other beverages, under long-term supply or
annual contracts. Sales to the company's largest customer, Anheuser-Busch
Companies, Inc., accounted for approximately 11 percent of consolidated 1994
sales. Sales to all bottlers of Pepsi-Cola and Coca-Cola branded beverages
comprised approximately 21 percent of consolidated 1994 sales. Sales volume of
metal beverage cans and ends tends to be highest during the period between April
and September.
Metal food containers
Two-piece and three-piece steel food containers are manufactured by Ball Canada
and Heekin, and sold primarily to food processors in Canada and the Midwestern
United States. In 1994 metal food container sales comprised approximately 19
percent of consolidated sales. Sales to one customer represented more than 10
percent of this operation's 1994 sales. Sales volume of metal food containers
tends to be highest from June through October.
The company has one principal competitor located in Canada and numerous
competitors located in the U.S. food container market. With the acquisition of
Heekin, the company estimates that it was the fourth largest metal food
container manufacturer with an approximate 14 percent share of the North
American market for metal food containers, based on estimated 1994 industry
shipments. A competitor's recent acquisition of a major food processor's
self-manufacturing operations resulted in that competitor becoming the third
largest food can manufacturer in the North American market with an approximate
20 percent market share. This market has shown an accelerated trend toward the
consolidation of manufacturing capacity during 1993 and 1994, including the
company's acquisition of Heekin in 1993.
In the food container industry, capacity significantly exceeds market demand
resulting in a highly price competitive market. During 1993 the company
completed consolidation of certain facilities in Canada. In conjunction with the
restructuring plans described above, the company closed its Augusta, Wisconsin,
plant and sold its Alsip, Illinois, plant during 1994.
Other metal packaging
The company also manufactures containers for aerosol products and other
specialty goods, and sells flat sheet products, primarily to customers which
manufacture cans for their own use.
Glass Packaging
Ball Glass Container Corporation (Ball Glass), a wholly owned subsidiary,
manufactures a diversified line of glass containers for sale primarily to
processors, packers and distributors of food, juice, wine and liquor products.
Ball Glass currently operates twelve glass container manufacturing facilities
and a glass mold manufacturing facility. One glass plant is owned by Madera
Glass Company, a 51 percent owned subsidiary of Ball Glass. Sales of glass
containers accounted for approximately 29 percent of consolidated sales in 1994.
The company estimates that Ball Glass is the third largest domestic producer of
commercial glass containers with an estimated 15 percent market share, based
upon 1994 sales dollars. Its two larger competitors together are estimated to
comprise in excess of 60 percent of the domestic market. Ball Glass has focused
upon the food and juice, still wines and champagnes, and distilled spirits
market segments, in which service, quality and performance are discriminating
competitive factors. Ball Glass' share positions in these markets are estimated
to be 24.2 percent, 23.9 percent and 11.5 percent, respectively.
One of the primary market segments served by Ball Glass, food and juice,
represents the largest segment of U.S. glass container shipments accounting for
39.2 percent of the market. The total market for all types of glass containers
decreased approximately 3.5 percent in 1994, and has declined by an average of
0.4 percent per annum since 1983 as other packaging materials, such as metal,
plastic and flexible packaging, have captured a share of products previously
packaged in glass, e.g., beer, carbonated soft drinks and specialty items, and
due to a decline in alcoholic beverage consumption. Declining long-term demand
for glass packaging has resulted in manufacturers reducing their production
capacity in order to maintain a balance between market demand and supply. The
glass container industry continues to face a challenging environment as plastic
container demand rises.
The number of glass container manufacturers has consolidated from 21 companies
operating 109 plants in 1983 to 11 companies with 67 plants in 1995. In 1992,
three plants were closed in the industry: two by the company and one by a
competitor. Although several furnaces were idled in 1993, no plants were closed
in the industry. In 1994, the company closed its Asheville, North Carolina, and
Okmulgee, Oklahoma, glass container manufacturing plants. One competitor closed
a plant in 1994 and announced the pending closing of two plants.
The majority of Ball Glass sales are made directly to major companies having
leading market positions in packaged food and juice, and still wines and
champagnes. Sales to no one customer represented more than 10 percent of Ball
Glass' 1994 sales.
Plastic Packaging
Demand for containers made of polyethylene terephthalate (PET) has increased in
the beverage packaging market and is expected to increase in the food packaging
market with improved technology and adequate supplies of PET resin. The company
announced plans in 1994 to enter the plastic container market which reached $5.5
billion in 1994, surpassing the size of the glass container market for the first
time.
Aerospace and Communications Segment
------------------------------------
The aerospace and communications segment provides systems, products and services
to the aerospace and defense, and commercial telecommunications markets. Sales
in the aerospace and communications segment accounted for approximately 10
percent of consolidated sales in 1994. Approximately 11 percent of the segment's
sales in 1994 were made to the commercial telecommunications industry and 7
percent of sales were made to international customers.
The majority of the company's aerospace business involves work under relatively
short-term contracts (generally one to five years) 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 78 percent of this segment's sales in 1994.
Overall, competition within the aerospace businesses is expected to intensify.
Declining defense spending generally has resulted in greater competition for DoD
contracts as the military market decreases, as well as greater competition for
NASA and other civilian aerospace contracts historically serviced by Ball, as
major defense contractors seek to enter those markets.
The segment also supplies commercial telecommunications equipment to customers
in satellite and ground communications markets. Products are supplied on a fixed
price basis to original equipment manufacturers both domestically and
internationally. These markets are generally characterized as having relatively
high growth rates (10 percent annually) and the products supplied typically have
life cycles of 3 to 5 years.
The operations which comprise the aerospace and communications segment presently
are organized as two divisions: the aerospace systems division and the
telecommunications products division. Included in the aerospace systems division
are space systems, systems engineering services, and electro-optics and
cryogenics products. The telecommunications products division is comprised of
commercial and video products and advanced antenna systems. In late 1994 a new
subsidiary, Earthwatch, Inc., was formed to serve the market for satellite-based
remote sensing of the earth. A description of the principal products and
services of the aerospace and communications segment follows:
Space systems and systems engineering services
These businesses provide complete space systems including satellites, ground
systems and launch vehicle integration to NASA, the DoD and to commercial and
international customers. The products and services include mission definition
and design; satellite design, manufacture and testing; payload and launch
vehicle definition and integration; and satellite ground station control
hardware and software.
Ball also provides a range of professional technical services to government
customers including systems engineering support; simulation studies, analysis
and prototype hardware; and hardware and software research and development tasks
for test and evaluation of government programs. Revenues derived from services
represented less than two percent of consolidated 1994 sales.
Electro-optics and cryogenics products
Primary products of the electro-optics business include: spacecraft guidance,
control instruments and sensors; defense subsystems for surveillance, warning,
target identification and attitude control in military and civilian space
applications; and scientific instruments used in various space and earth science
applications.
Primary products in the cryogenics business include: open cycle cryogenic
storage and cooling devices; mechanical refrigerators that provide cryogenic
cooling; and thermal electric coolers and radiative coolers, all of which are
used for the cooling of detectors and associated equipment for space science and
earth remote sensing applications. Open cycle cryogenic systems are also
provided to NASA for life support on space shuttles.
Telecommunication products
Ball provides advanced radio frequency transmission and reception antennae for a
variety of aerospace and defense platforms, including aircraft, missile,
spacecraft, ground mobile equipment and ships. Antenna products are also
provided for commercial aircraft for satellite communication and collision
avoidance applications.
Backlog
Backlog of the aerospace and communications segment was approximately $322
million at December 31, 1994, and $305 million at December 31, 1993, and
consists of the aggregate contract value of firm orders excluding amounts
previously recognized as revenue. The 1994 backlog includes approximately $223
million which is expected to be billed during 1995 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 $181
million at December 31, 1994. Year-to-year comparisons of backlog are not
necessarily indicative of future operations.
The company's aerospace and communications 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, the company 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.
Patents
In the opinion of the company, none of its active patents is essential to the
successful operation of its business as a whole.
Research and Development
The note, "Research and Development," of the 1994 Annual Report to Shareholders
contains information on company research and development activity and is
incorporated herein by reference.
Environment
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 (EPA) 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 financial condition, results of operations, capital expenditures or
competitive position 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
U.S. Congress and the Canadian Parliament, in state and Canadian provincial
legislatures and other legislative bodies. For instance, trade barriers were
placed on metal containers in Canada. In addition, the Ontario government
enacted an "environmental" tax levy of 10 cents (Canadian) per can of beer sold
in Ontario which caused a decline in shipments of cans to the Ontario beer
industry. 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
beverage container manufacture as well as its investments in glass container
packaging.
Glass and aluminum containers are recyclable, and significant amounts of used
containers are being recycled and diverted from the solid waste stream. In 1994
approximately 65 percent of aluminum beverage containers sold in the U.S. were
recycled.
Employees
As of March 1995 Ball employed 12,873 people.
<PAGE>
ITEM 2. PROPERTIES
The company's properties are well maintained, considered adequate and being
utilized for their intended purposes.
The Corporate headquarters, glass packaging group offices and certain research
and engineering facilities are located in Muncie, Indiana. The group offices for
metal packaging operations are based in Westminster, Colorado. Also located at
Westminster is the Edmund F. Ball Technical Center, which serves as a research
and development facility primarily for the metal packaging operations. Group
offices for the aerospace and communications group are located in Broomfield,
Colorado. The group offices and research and development center for the new
plastic container division are located in Atlanta, Georgia.
Information regarding the approximate size of the manufacturing facilities for
significant packaging operations, which are owned by the company, except where
indicated otherwise, is provided below.
The Colorado-based operations of the aerospace and communications segment
operate from a variety of company owned and leased facilities in Boulder,
Broomfield and Westminster, Colorado, which together aggregate approximately
1,074,000 square feet of office, laboratory, research and development,
engineering and test, and manufacturing space. Other aerospace and
communications operations are based in San Diego, California.
Approximate
Floor Space in
Plant Location Square Feet
--------------
Metal packaging manufacturing facilities:
----------------------------------------
Red Deer, Alberta (leased) 52,000
Blytheville, Arkansas (leased) 8,000
Springdale, Arkansas 290,000
Richmond, British Columbia 204,000
Fairfield, California 148,000
Golden, Colorado 330,000
Tampa, Florida 139,000
Columbus, Indiana 222,000
Saratoga Springs, New York 283,000
Cincinnati, Ohio 478,000
Columbus, Ohio 50,000
Findlay, Ohio 450,000
Burlington, Ontario 309,000
Hamilton, Ontario 347,000
Whitby, Ontario 195,000
Pittsburgh, Pennsylvania (leased) 81,000
Baie d'Urfe, Quebec 117,000
Chestnut Hill, Tennessee 70,000
Conroe, Texas 284,000
Williamsburg, Virginia 260,000
Weirton, West Virginia (leased) 117,000
DeForest, Wisconsin 45,000
Approximate
Floor Space in
Plant Location Square Feet
--------------
Glass packaging manufacturing facilities:
----------------------------------------
El Monte, California 456,000
Madera, California
(Madera Glass Company) 771,000
Dolton, Illinois 490,000
Lincoln, Illinois 327,000
Plainfield, Illinois 419,000
Dunkirk, Indiana (leased) 715,000
Ruston, Louisiana 430,000
Carteret, New Jersey 338,000
Henderson, North Carolina 757,000
Port Allegany, Pennsylvania 451,000
Laurens, South Carolina 623,000
Seattle, Washington 640,000
Additional warehousing facilities are leased. The leased mould making facility
operated by Ball Glass is located in Washington, Pennsylvania, and has
approximately 56,000 square feet of manufacturing and office space.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
As previously reported, the United States 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 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.
On July 31, 1992, the company entered into a settlement and indemnification
agreement with the City and County of Denver ("Denver"), Chemical Waste
Management, Inc., and Waste Management of Colorado, Inc., pursuant to which
Chemical Waste Management, Inc., and Waste Management of Colorado, Inc.
(collectively "Waste"), have dismissed their lawsuit against the company and
will 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
have already entered into the settlement and indemnification agreement with
Denver and Waste. Waste Management, Inc., has guaranteed the obligations of
Chemical Waste Management, Inc., and Waste Management of Colorado, Inc. Waste
and Denver 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 disposed of
by the company at the site, which are identified after the execution of the
settlement agreement. The company's information at this time does not indicate
that this matter will have a material, adverse effect upon its financial
condition.
As previously reported, the EPA issued in August 1988, an administrative order
to 12 companies, including the company, pursuant to Section 106A of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (CERCLA), ordering them to remove certain abandoned drums and surface
waste at the AERR CO site located in Jefferson County, Colorado. AERR CO, which
used the site to recycle wastes, filed a petition with the United States
Bankruptcy Court in Denver, Colorado, seeking protection from its creditors.
Several of the companies, including the company, are subject to the EPA's order,
and have cleaned up the site. The companies negotiated with the EPA with regard
to its demand for the payment of oversight costs. The companies and the EPA
entered into a settlement agreement on or about January 24, 1994, pursuant to
which this matter was settled by payment of $488,867.41 by the companies. The
company's portion of this payment was $28,594.82. The company's information at
this time does not indicate that this matter will have a material, adverse
effect upon its financial condition.
As previously reported, in September 1989 the company received a federal grand
jury subpoena to produce documents relating to financial transactions and
results of operations of the Ball Aerospace Systems Group Colorado operations
since 1985. A supplemental subpoena was served in January 1990 requesting
additional documents. The company has complied fully with the subpoenas. The
Assistant United States Attorney has refused to disclose the specific nature of
the investigation, but has indicated informally that the company is not a target
of the investigation. The company does not believe that this matter will have a
material, adverse effect upon its financial condition.
As previously reported, in April 1990 the company received from the EPA, Region
V, Chicago, Illinois, a general notice letter and information request regarding
the NL Industries/Taracorp Superfund site located at Granite City, Illinois. The
EPA alleges that the company, through its Zinc Products Division (formerly known
as Ball Metal and Chemical Division) located in Greeneville, Tennessee, may be a
PRP with respect to the NL Industries/Taracorp site. The EPA requested that the
company provide the EPA with any and all information with respect to any
business conducted with Taracorp or NL Industries between 1977 and 1983. The
company has responded to the EPA's request for information. The company is
currently part of a group of companies which are organized to negotiate a de
minimis settlement with the EPA. The company's information at this time does not
indicate that this matter will have a material, adverse effect upon its
financial condition.
As previously reported, in April 1987 the EPA notified the company and its
wholly owned subsidiary, Heekin Can, Inc., that they may be PRPs in connection
with the alleged disposal of waste at the American Chemical Services, Inc. (ACS)
site located in Griffith, Indiana. In the fall of 1987, the company, as part of
a group of companies, filed a lawsuit in the United States District Court for
the Northern District of Indiana against the operators of the facility, ACS, and
the Town of Griffith, Indiana, seeking a declaration of landowner's liability
under CERCLA and seeking contribution from the landowners for the costs incurred
by the companies of performing a remedial investigation and feasibility study.
In September of 1990, ACS filed a counterclaim against the companies, including
the company. ACS sought a declaratory judgment that the companies are
responsible for a proportionate share of the liability for costs associated with
the cleanup. The company has denied the allegations of the counterclaim. This
lawsuit has now been settled. The company and its wholly owned subsidiary,
Heekin Can, Inc., have entered into an Administrative Order On Consent and on
January 20, 1995, paid the EPA $68,912.63 to resolve this matter. 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 its financial
condition.
As previously reported, on or about August 28, 1990, the company received a
notice from the Department of Environmental Resources, State of Pennsylvania
(DER), that the company may have been responsible for disposing of waste at the
Industrial Solvents and Chemical Company site located in York County,
Pennsylvania. The company is cooperating with several hundred other companies
and the DER to resolve this matter. In December 1993 the company entered into a
De Minimis Settlement Agreement with certain other companies who have agreed to
indemnify the company with respect to claims arising out of the alleged disposal
of hazardous waste at the site in consideration of the company paying an amount
not to exceed $11,031.70 to the indemnifying companies. The company has paid the
indemnifying companies in accordance with their agreement.
As previously reported, the company has been notified by Chrysler Corporation
(Chrysler) that Chrysler, Ford Motor Company, and General Motors Corporation
have been named in a lawsuit filed in the U.S. District Court in Reno, Nevada,
by Jerome Lemelson, alleging infringement of three of his vision inspection
system patents used by defendants. One or more of the vision inspection systems
used by the defendants may have been supplied by the company's former Industrial
Systems Division or its predecessors. The suit seeks injunctive relief and
unspecified damages. Chrysler has notified the Industrial Systems Division that
the Division may have indemnification responsibilities to Chrysler. The company
has responded to Chrysler that it appears at this time that the systems sold to
Chrysler by the company either were not covered by the identified patents or
were sold to Chrysler before the patents were issued. Based on that information,
it is not expected that any obligation to Chrysler because of the patents
referred to will have a material, adverse effect on the financial condition of
the company.
As previously reported, in July 1992 DeSoto, Inc., and other plaintiffs sued the
company and other defendants claiming contribution from the defendants,
including the company, through its former Plastics Division, for response costs
incurred in connection with the Industrial Waste Control Landfill Site located
in Fort Smith, Arkansas. The plaintiffs allege that the defendants are jointly
and severally liable for response costs in excess of $9 million. The company had
denied the allegations contained in the complaint, on the basis, primarily, that
the Division did not dispose of hazardous waste at the site. In March 1993 the
plaintiffs agreed to dismiss their complaint against the company. This matter
now appears to be concluded with no material, adverse effect on the company's
financial condition.
As previously reported, in September 1992 the company, as a fourth-party
defendant, was served with a lawsuit filed by Allied Signal and certain other
fourth-party plaintiffs seeking the recovery of certain response costs and
contribution under CERCLA with respect to the alleged disposal by its Metal
Decorating & Service Division of hazardous waste at the Cross Brothers Site in
Kankakee, Illinois, during the years 1961 to 1980. Also in September 1992, the
company was sued by another defendant, Krueger Ringier, Inc. In October 1992 the
Illinois Environmental Protection Agency filed an action to join the company as
a Defendant seeking to recover the State's costs in removing waste from the
Cross Brothers Site. The company has denied the allegations of the complaints
and will defend these matters, but is unable at this time to predict the outcome
of the litigation. The company and certain other companies have entered into a
Consent Decree with the EPA pursuant to which the EPA received approximately
$2.9 million and provided the companies with contribution protection and
a covenant not to sue. Ball's share of the settlement amount was $858,493.60.
The company has been indemnified for the settlement payment by Alltrista
Corporation which owns the Metal Decorating & Service Division. The Court
approved the Consent Decree on April 28, 1994. The company and certain other
companies are negotiating with the State of Illinois to settle the State's
alleged claim to recover costs expended in the cleanup of the Cross Brothers
Site. Based upon the information available to the company at this time, this
matter is not likely to have a material, adverse effect upon its financial
condition.
As previously reported, on October 12, 1992, the company received notice that it
may be a PRP for the cleanup of the Aqua-Tech Environmental site located in
Greer, South Carolina. The company is investigating this matter. Based upon the
limited information that the company has at this time, the company does not
believe this matter will have a material, adverse effect upon its financial
condition.
As previously reported, on April 24, 1992, the company was notified by the
Muncie Race Track Steering Committee that the company, through its former
Consumer Products Division and former Zinc Products Division, may be a PRP with
respect to waste disposed at the Muncie Race Track Site located in Delaware
County, Indiana. The company is currently attempting to identify additional
information regarding this matter. The Steering Committee has requested that the
company pay two percent of the cleanup costs which are estimated at this time to
be $10 million. The company has 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 also declined to participate in funding an allocation
study to be conducted by a consulting company. 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 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 have been 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. Certain other PRPs have agreed with the EPA to perform a
groundwater study of the site. The company's information at this time does not
indicate that this matter will have a material, adverse effect upon its
financial condition.
As previously reported, the company has received information that it has been
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 .08816% of the waste contributed to
the site on a volumetric basis. The company is attempting to identify additional
information regarding this matter. The company's information at this time does
not indicate that this matter will have a material, adverse effect upon its
financial condition.
On or about June 14, 1990, the El Monte plant of Ball-InCon Glass Packaging
Corp. (now Ball Glass Container Corporation (Ball Glass), through a name
change), a wholly owned subsidiary of the company, received a general
notification letter and information request from EPA, Region IX, notifying Ball
Glass that it may have potential liability as defined in Section 107(a) of the
CERCLA incurred 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 has responded. After a period of inactivity, the
federal and state governments are proceeding to complete the remedial
investigation study which will lead to a proposed cleanup. On October 7, 1994,
the U.S. EPA issued "special notice" letters requiring (i) the 17 recipients,
including Ball Glass, to form an official PRP group to deal with the EPA, (ii)
the group to undertake and pay for a remedial investigation/feasibility study,
and (iii) the recipients to pay EPA's administrative costs. The group submitted
to the EPA its "good faith" response letter outlining how the group proposes to
perform the remedial investigation study requested by the EPA. The company and
certain other companies continue to negotiate with the EPA. Based on the
information, or lack thereof, available at the present time, the company is
unable to express an opinion as to the actual exposure of the company for this
matter.
Prior to the acquisition on April 19, 1991, of the lenders' position in the term
debt and 100 percent ownership of Ball Canada, the company had owned indirectly
50 percent of Ball Canada through a joint venture holding company owned equally
with Onex Corporation (Onex). The 1988 Joint Venture Agreement had included a
provision under which Onex, beginning in late 1993, could "put" to the company
all of its equity in the holding company at a price based upon the holding
company's fair value. Onex has since claimed that its "put" option entitled it
to a minimum value founded on Onex's original investment of approximately $22.0
million. On December 9, 1993, Onex served notice on the company that Onex was
exercising its alleged right under the Joint Venture Agreement to require the
company to purchase all of the holding company shares owned or controlled by
Onex, directly or indirectly, for an amount including "approximately $40
million" in respect of the Class A-2 Preference Shares owned by Onex in the
holding company. Such "$40 million" is expressed in Canadian dollars and would
represent approximately $30 million at the year-end exchange rate. The company's
position is that it has no obligation to purchase any shares from Onex or to pay
Onex any amount for such shares, since, among other things, the Joint Venture
Agreement, which included the "put" option, is terminated. Onex is now pursuing
its claim on arbitration before the International Chamber of Commerce. A hearing
has been set to begin on May 30, 1995. The company believes that it has
meritorious defenses against Onex's claims, although, because of the
uncertainties inherent in the arbitration process, it is unable to predict the
outcome of this arbitration.
On March 8, 1994, the company and its wholly owned subsidiary, Heekin Can, Inc.,
were served with a lawsuit by Harlan Yoder, an employee of Heekin Can, Inc., and
his spouse seeking $6,500,000 jointly and severally as the result of an alleged
injury to Mr. Yoder on or about April 26, 1993. Mr. Yoder sustained a crushing
injury to his left hand while operating machinery at the Heekin Can, Inc., metal
container manufacturing plant located at Columbus, Ohio. The company and Heekin
Can, Inc., deny the material allegations of the complaint filed by the Yoders.
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 its
financial condition.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
There were no matters submitted to the security holders during the fourth
quarter of 1994.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Ball Corporation common stock (BLL) is traded on the New York, Midwest and
Pacific Stock Exchanges. There were 9,105 common shareholders of record on March
1, 1995.
Other information required by Item 5 appears under the caption, "Quarterly Stock
Prices and Dividends," in the section titled, "Items of Interest to
Shareholders," of the 1994 Annual Report to Shareholders and is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 for the five years ended December 31, 1994,
appearing in the section titled, "Eight Year Review of Selected Financial Data,"
of the 1994 Annual Report to Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Operations" of the 1994 Annual Report
to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and notes thereto of the 1994 Annual
Report to Shareholders, together with the report thereon of Price Waterhouse,
dated January 23, 1995, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no matters required to be reported under this item.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the company are as follows:
1. George A. Sissel, 58, Acting President and Chief Executive Officer, since
May 1994; Senior Vice President, Corporate Affairs; Corporate Secretary
and General Counsel, since January 1993; Senior Vice President, Corporate
Secretary and General Counsel, 1987-1992; Vice President, Corporate
Secretary and General Counsel, 1981-1987.
2. William A. Lincoln, 53, Executive Vice President, Metal Container
Operations, since March 1993; Executive Vice President, Metal Packaging
Operations, 1992-1993; Group Vice President, 1991-1992; President and
Chief Executive Officer, Ball Packaging Products Canada, Inc., since 1988;
Vice President and Group Executive, Research, Development and Engineering,
Packaging Products, 1988; Vice President, Engineering and Development,
Metal Container Division, 1978-1988.
3. Duane E. Emerson, 57, Senior Vice President, Administration, since April
1985; Vice President, Administration, 1980-1985.
4. R. David Hoover, 49, Senior Vice President and Chief Financial Officer,
since August 1992; 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.
5. John A. Haas, 58, Group Vice President; President and Chief Executive
Officer, Ball Glass Container Corporation, since June 1994; President,
Metal Food Container and Specialty Products Group, 1993-1994; President
and Chief Executive Officer, Heekin Can, Inc. 1988-1994.
6. Donovan B. Hicks, 57, Group Vice President; President, Aerospace and
Communications Group, since January 1988; Group Vice President, Technical
Products, 1980-1988; President, Ball Brothers Research
Corporation/Division, 1978-1980.
7. David B. Sheldon, 53, Group Vice President; President, Metal Beverage
Container Group; Group Vice President, Packaging Products, 1992-1993; Vice
President and Group Executive, Sales and Marketing, Packaging Products
Group, 1988-1992; Vice President and Group Executive, Sales and Marketing,
Metal Container Group, 1985-1988.
8. Richard E. Durbin, 53, Vice President, Information Services, since April
1985; Corporate Director, Information Services, 1983-1985; Corporate
Director, Data Processing, 1981-1983.
9. Albert R. Schlesinger, 53, Vice President and Controller, since January
1987; Assistant Controller, 1976-1986.
10. Raymond J. Seabrook, 44, Vice President and Treasurer, since August 1992;
Senior Vice President and Chief Financial Officer, Ball Packaging Products
Canada, Inc., 1988-1992.
11. Harold L. Sohn, 49, Vice President, Corporate Relations, since March 1993;
Director, Industry Affairs, Packaging Products, 1988-1993.
12. David A. Westerlund, 44, Vice President, Human Resources, since December
1994; Senior Director, Corporate Human Resources, July 1994-December 1994;
Vice President, Human Resources and Administration, Ball Glass, 1988-1994;
Vice President, Human Resources, Ball Glass, 1987-1988.
13. Elizabeth A. Overmyer, 55, Assistant Corporate Secretary, since April
1981; Administrator, Office of the Corporate Secretary, 1979-1981.
14. Donald C. Lewis, 52, Assistant Corporate Secretary and Associate General
Counsel, since May 1990; Associate General Counsel 1983-1990; Assistant
General Counsel, 1980-1983.
Other information required by Item 10 appearing under the caption, "Director
Nominees and Continuing Directors," on pages 3 through 5 of the company's proxy
statement filed pursuant to Regulation 14A dated March 20, 1995, is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 appearing under the caption, "Executive
Compensation," on pages 7 through 15 of the company's proxy statement filed
pursuant to Regulation 14A dated March 20, 1995, is incorporated herein by
reference.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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 20, 1995, is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 appearing under the caption, "Relationship
with Independent Public Accountants and Certain Other Relationships and Related
Transactions," on page 17 of the company's proxy statement filed pursuant to
Regulation 14A dated March 20, 1995, is incorporated herein by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements:
The following documents included in the 1994 Annual Report to
Shareholders are incorporated by reference in Part II, Item 8:
Consolidated statement of income (loss) - Years ended December 31, 1994,
1993 and 1992
Consolidated balance sheet - December 31, 1994 and 1993
Consolidated statement of cash flows - Years ended December 31, 1994,
1993 and 1992
Consolidated statement of changes in shareholders' equity - Years ended
December 31, 1994, 1993 and 1992
Notes to consolidated financial statements
Report of independent accountants
(2) Financial Statement Schedules:
There were no financial statement schedules required under this item.
(3) Exhibits:
See the Index to Exhibits which appears at the end of this document and
which is incorporated by reference herein.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of 1994.
<PAGE>
SIGNATURES
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/ George A. Sissel
--------------------------------------
George A. Sissel, Acting President and
Chief Executive Officer
March 29, 1995
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:
Acting President and
/s/ George A. Sissel Chief Executive Officer
--------------------------------------- March 29, 1995
George A. Sissel
(2) Principal Financial Accounting Officer:
Senior Vice President and
/s/ R. David Hoover Chief Financial Officer
--------------------------------------- March 29, 1995
R. David Hoover
(3) Controller:
/s/ Albert R. Schlesinger Vice President and
--------------------------------------- Controller
Albert R. Schlesinger March 29, 1995
(4) A Majority of the Board of Directors:
/s/ Howard M. Dean * Director
--------------------------------------- March 29, 1995
Howard M. Dean
/s/ John T. Hackett * Director
--------------------------------------- March 29, 1995
John T. Hackett
/s/ John F. Lehman * Director
--------------------------------------- March 29, 1995
John F. Lehman
/s/ Jan Nicholson * Director
--------------------------------------- March 29, 1995
Jan Nicholson
/s/ Alvin Owsley * Chairman of the Board and
--------------------------------------- Director
Alvin Owsley March 29, 1995
/s/ George A. Sissel * Acting President and Chief
--------------------------------------- Executive Officer and
George A. Sissel Director
March 29, 1995
/s/ Delbert C. Staley * Director
--------------------------------------- March 29, 1995
Delbert C. Staley
/s/ W. Thomas Stephens * Director
--------------------------------------- March 29, 1995
W. Thomas Stephens
/s/ William P. Stiritz * Director
--------------------------------------- March 29, 1995
William P. Stiritz
*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 29, 1995
<PAGE>
BALL CORPORATION AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1994
Index to Exhibits
Exhibit
Number Description of Exhibit
------- ---------------------------------------------------------------
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 January 25, 1994 (filed
by incorporation by reference to the Annual Report on Form 10-K
for the year ended December 31, 1993) filed March 29, 1994.
4.1 Ball Corporation and its subsidiaries have no long-term debt
instruments in which the total amount of securities authorized
under any instrument exceeds 10% of the total assets of the
registrant and its subsidiaries on a consolidated basis. Ball
Corporation hereby agrees to furnish a copy of any long-term
debt instruments upon the request of the Commission.
4.2 Dividend distribution payable to shareholders of record on
August 4, 1986, of one preferred stock purchase right for each
outstanding share of common stock under the Rights Agreement
dated as of July 22, 1986, and as amended by the Amended and
Restated Rights Agreement dated as of January 24, 1990 and the
First Amendment, dated as of July 27, 1990, between the
corporation and The First National Bank of Chicago (filed by
incorporation by reference to the Form 8-A Registration
Statement, No. 1-7349, dated July 25, 1986, as amended by
Form 8, Amendment No. 1, dated January 24, 1990 and by Form 8,
Amendment No. 2, dated July 27, 1990) filed August 2, 1990.
10.1 1975 Stock Option Plan as amended, 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 Restricted Stock Plan (filed by incorporation by reference to
the Form S-8 Registration Statement, No. 2-61252) filed May 2,
1978.
10.3 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.
10.4 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.
10.5 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.
10.6 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.
10.7 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.
10.8 Form of Severance Agreement which exists between the company
and its executive officers (filed by incorporation by reference
to the Quarterly Report on Form 10-Q for the quarter ended
October 2, 1994) filed November 15, 1994.
10.9 An agreement dated September 15, 1988 between Ball Corporation
and Onex Corporation to form a joint venture company known as
Ball-Onex Packaging Corp., since renamed Ball Packaging
Products Canada, Inc. (filed by incorporation by reference to
the Current Report on Form 8-K dated December 8, 1988) filed
December 23, 1988.
<PAGE>
Exhibit
Number Description of Exhibit
------- ---------------------------------------------------------------
10.10 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.
10.11 Stock Purchase Agreement dated July 30, 1990 between Ball
Corporation and NV Hollandsch-Amerikaansche
Beleggingsmaatschappij (Holland-American Investment
Corporation) (filed by incorporation by reference to the
Current Report on Form 8-K dated November 30, 1990) filed
December 13, 1990, as amended under cover of Form 8 filed on
February 12, 1991.
10.12 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.
10.13 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.
10.14 Agreement of Purchase and Sale, dated April 11, 1991, between
Ball Corporation and the term lenders of Ball Packaging
Products Canada, Inc., Citibank Canada, as Agent (filed by
incorporation by reference to the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1991) filed May 15, 1991.
10.15 Ball Corporation Economic Value Added Incentive Compensation
Plan dated January 1, 1994. (Filed herewith.)
10.16 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.
10.17 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.
10.18 1993 Stock Option Plan (filed by incorporation by reference
to the Form S-8 Registration Statement, No. 33-61986) filed
April 30, 1993.
10.19 Letter agreement, dated March 22, 1993, confirming offer and
terms of employment to Mr. John A. Haas as Group Vice
President; President, Metal Food Container and Specialty
Products Group (filed by incorporation by reference to the
Annual Report on Form 10-K for the year ended December 31,
1993) filed March 29, 1994.
10.20 Employment agreement, dated December 1, 1992, among Heekin Can,
Inc. and John A. Haas (filed by incorportion by reference to
the Annual Report on Form 10-K for the year ended December 31,
1993) filed March 29, 1994.
10.21 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.
10.22 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.
10.23 Retirement Agreement dated July 29, 1994, between H. Ray Looney
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.
10.24 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.
<PAGE>
Exhibit
Number Description of Exhibit
------- ---------------------------------------------------------------
10.25 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.
10.26 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.
10.27 Ball Corporation Long-Term Cash Incentive Plan, dated
October 25, 1994. (Filed herewith.)
11.1 Statement re: Computation of Earnings Per Share. (Filed here-
with.)
13.1 Ball Corporation 1994 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.)
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.)
27.1 Financial Data Schedule. (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.
Exhibit 10.15
-------------
BALL CORPORATION
ECONOMIC VALUE ADDED
INCENTIVE COMPENSATION PLAN
1. Statement of Purpose
The purpose of the Ball Corporation (the "Company") Economic Value Added
Incentive Compensation Plan (the "Plan") is to produce sustained
shareholder value improvement by establishing a direct link between
Economic Value Added ("EVA") and incentive compensation payments.
2. Administration of the Plan
The Human Resource Committee of the Board of Directors (the "Committee")
shall be the sole administrator of the Plan. The Committee shall have
full power to formulate additional regulations and make interpretations
for carrying out the 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.
3. Eligibility
Eligibility to participate is limited to those key regular exempt
salaried employees selected by the business unit and approved by the
Committee.
4. Targets
4.1. Establishment of Target Incentive Percent - At the time a
Participant commences participation in the Plan, there
shall be established for each Participant a Target Incentive
Percent. The Target Incentive Percent for such Participant for any
future Year(s) may be increased, decreased or left unchanged from
the prior Year. Following the end of each Year, the Target
Incentive Percent for that Year will be multiplied by the Base
Salary of such Participant for that Year to arrive at the Target
Incentive Amount for such Participant. The Target Incentive Amount
will then be multiplied by the Performance Factor for that Year
to arrive at the amount of the Award, if any, and the amount
of adjustment to the Participant's Bank balance, if any.
4.2. Establishment of Target EVA - For any one Year, Target EVA shall
equal the sum of (i) the prior year's Target EVA and (ii) one-half
(1/2) the amount of the prior year's Incremental EVA.
Adjustments to the Target EVA (as computed above) may be
made, with the approval of the Committee due to changes in
the composition of the Participating Units, or for other
reasons at the discretion of the Committee.
5. Calculation of Performance Factors, Awards, Banks, and Distributions
5.1. Calculation of the Performance Factor
a. If Incremental EVA (i.e., Actual EVA less Target EVA)
is positive, the Performance Factor is determined as
follows:
Performance Factor = 1+ Incremental EVA
------------------------
Positive Leverage Factor
b. If Incremental EVA is zero (0), the Performance Factor
is 1.00.
c. If Incremental EVA is negative, the Performance Factor
is determined as follows:
Performance Factor = 1- Incremental EVA
------------------------
Negative Leverage Factor
5.2. Calculation of Participant's Award - The Performance Factor will
be multiplied by the Participant's Target Incentive Amount to
arrive at each Participant's Award for the Year.
If a Participant has multiple Participation Bases, the Performance
Factor for each Participation Basis will be determined separately
and accumulated to compute the Participant's total Award.
Except with the prior approval of the Committee, the total Award
for a Participating Unit may not exceed one-third (1/3) of
Positive Incremental EVA generated by that Unit, computed before
consideration of such Awards. The Leverage Factor of the
Participating Unit will be amended if the total Award of the Unit
exceeds one-third (1/3).
5.3. Determination of Distributions and Bank Balances - To encourage
sustained improvements to EVA, there are cases when earned
incentive will be deferred and credited to a Participant's bank
balance. Correspondingly, to ensure accountability for performance
in down periods, there are cases when a negative bank balance will
be created for a Participant. Appendix A sets out the Plan
distribution rules.
The distribution date shall be once each year and no later than
March 15 of the year following the year for which an Award was
calculated.
The formulas and examples of Determination of Distributions and
Bank Balances are contained in Appendix A and B and are
incorporated by reference herein and form a part of the Plan.
5.4. De Minimis Bank Balances - If after determination of the
Distribution for the Year, the Bank balance is positive but less
than Three Thousand Dollars ($3,000.00), then such balance will be
added to the Distribution for the Year, and the Bank balance will
thereby be brought to zero.
5.5. Calculation of Award Distributions When a Participant has Multiple
Participation Bases - In the event a Participant has multiple
Participation Bases for a Year, then Awards, Banks, Performance
Factors and Target Incentive Amounts shall be calculated
separately and independently for each Participation Basis.
Bank balances shall be maintained separately for each
Participation Basis. A Bank Balance from one Participation Basis
may not be offset against a Bank balance of another Participation
Basis.
5.6. Changes in Participation Basis - In the event a Participant
experiences a change in Participation Basis during a Year, then
Awards, Banks, Performance Factors and Target Incentive Amounts
shall be calculated separately and independently for each
Participation Basis of such Participant using those portions of
the Participant's Base Salary actually paid for service while
included in each separate Participation Basis.
Bank balances shall be maintained separately for each
Participation Basis.
5.7. Changes in Target Incentive Percent - In the event a Participant
experiences a change in Target Incentive Percent without
experiencing a change in Participation Basis during a Year, then
Award calculations and Bank adjustments will be made separately
using those portions of the Participant's Base Salary actually
paid for service while participating at each separate Target
Incentive Percent.
Separate Bank accounts shall not be maintained because of changes
in a Participant's Target Incentive Percent.
5.8. Qualification of Distributions for Other Plans - Distributions
from the Plan to active Participants shall qualify as incentive
payments for the purpose of any deferred compensation plan(s)
maintained by the Company, and as such, may be deferred by
Participants eligible to defer under the terms and conditions of
such plan(s). Such eligibility for deferral is not automatic and
shall only be as authorized for eligible employees under the
rules of such plan(s). Notwithstanding anything to the contrary
in such plan(s), no portion of any Award or any Bank, prior to
actual Distribution, shall qualify for the purposes of deferral
under the terms and conditions of such plan(s).
6. Leverage Factors
6.1. Establishment of Positive Leverage Factor - The Positive Leverage
Factor is determined by management, with the approval of the
Committee. The determination of the Positive Leverage Factor
considers a number of judgemental factors including, but not
limited to, the volatility of earnings and the capital invested in
each Participating Unit and the Total Incentive Amount for all
Participants in each Participating Unit.
It is anticipated that changes to the Positive Leverage Factor
will not be made often. Circumstances which may warrant a change
in the Positive Leverage factor include significant changes which
affect the Participating Unit, including a change in the
composition of the Participating Unit, permanent changes in market
conditions, and acquisitions and/or divestitures.
6.2. Establishment of Negative Leverage Factor - The Negative Leverage
Factor is equal to the Positive Leverage Factor multiplied by a
factor of two (2.0).
7. Distributions Following Termination
7.1. Eligibility - A Participant who terminates prior to December 31 of
a Year shall not be eligible for any Distribution for such Year or
any future Distributions, unless such termination is by reason of
Retirement, Death or Disability.
7.2. Distributions for the Year of Retirement, Death or Disability -
Distributions for a Participant for the Year of such Participant's
Retirement, Death or Disability shall be on the same basis as for
all other Participants.
Complete Distribution of Bank(s) of Participants who have
experienced a termination by reason of Retirement, Death or
Disability shall be accomplished no later than the Distribution
Date for the Year following the Year of Retirement, Death or
Disability.
7.3. Obligation for Negative Bank Balances - If, after the Distribution
made for the Year of Retirement, Death or Disability, the
Participant's Bank balance is negative, then such Bank balance
will be eliminated without further obligation of the Participant
to the Company. Participants who terminate for reasons other than
Retirement, Death or Disability and at the time of termination
have a negative Bank balance will have no obligation to the
Company related to the negative Bank balance.
8. Beneficiary Designation
The 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 to
his Beneficiary (both principal and contingent) to whom Distribution
under this Plan shall be made in the event of such Participant's death
prior to a Distribution. Any 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 or otherwise acceptable
to the Company.
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 any prior designation of the divorced
spouse as a Beneficiary. The spouse of a Participant domiciled in a
community property jurisdiction shall be required to join in any
designation of Beneficiary 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 such 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 shall be
made to the Participant's estate.
9. Miscellaneous
9.1. Unsecured General Creditor - Participants and their beneficiaries,
heirs, successors and assigns shall have no legal or equitable
rights, interests, or other claim in any property or assets of the
Employer. Any and all assets shall remain general, unpledged,
unrestricted assets of the Employer. The Company's obligation
under the Plan shall be that of an unfunded and unsecured promise
to pay money in the future, and there shall be no obligation to
establish any fund, any security or any otherwise restricted
asset, in order to provide for the payment of amounts under the
Plan.
9.2. Obligations To The Employer - If a Participant becomes entitled to
a Distribution under the Plan, and, if, at the time of the
Distribution, such Participant has outstanding any debt,
obligation or other liability representing an amount owed to
the Employer, then the Employer may offset such amounts owing
to it or any affiliate against the amount of any Distribution.
Such determination shall be made by the Committee. Any
election by the Committee not to reduce any Distribution
shall not constitute a waiver of any claim for any outstanding
debt, obligation, or other liability representing an amount
owed to the Employer.
9.3. Nonassignability - 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 an Award and/or Bank, prior to actual
Distribution, shall be subject to seizure or sequestration for the
payment of any debts, judgements, alimony or separate maintenance
owed by a Participant or any other person, nor shall it be
transferable by operation of law in the event of the Participant's
or any other person's bankruptcy or insolvency.
9.4. Taxes; Withholding - To the extent required by law, the Company
shall withhold from all cash Distributions made, any amount
required to be withheld by the federal and any state, provincial
or local government.
9.5. Employment or Future Eligibility to Participate - Not Guaranteed -
Nothing contained in this Plan nor any action taken hereunder
shall be construed as a contract of employment or as giving any
Eligible Employee or any Participant or any former Participant any
right to be retained in the employ of the Employer. Designation as
an Eligible Employee or as a Participant is on a year-by-year
basis and may or may not be renewed for any employment years not
yet commenced.
9.6. Applicable Law - This Plan shall be governed and construed in
accordance with the laws of the State of Indiana.
9.7. Validity - In the event any provision of the Plan is held invalid,
void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of the Plan.
9.8. Notice - 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
President and CEO 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.
10. Amendment and Termination of the Plan
10.1. Amendment - The Committee may at any time amend the Plan in whole
or in part provided, however, that no amendment shall be effective
to affect the Participant's right to designate a beneficiary.
10.2. Termination of the Plan
a. Employer's Right to Terminate. The Committee may at any time
terminate the Plan as to prospective earning of Awards, if it
determines in good faith that the continuation of the Plan is
not in the best interest of the Company and its shareholders.
No such termination of the Plan shall reduce any Distribution
already made.
b. Payments Upon Termination of the Plan. Upon any termination
of the Plan under this Section, Awards for future years shall
not be made. With respect to the Year in which such
termination takes place, the employer will pay to each
Participant the Participant's Award for such Year or partial
Year, no later than March 15 in the calendar year following
the year of termination of the Plan. Bank Distributions shall
be made in their entirety to the Participants no later than
March 15 in the calendar year following the year of
termination of the Plan.
11. Definitions
11.1. Award - "Award" means the dollar amount (positive or negative)
which results from the multiplication of the Participant's
Target Incentive Amount for the Year, by the Performance Factor
for the same Year.
11.2. Bank - "Bank" means a dollar amount account that maintains the
balance of unpaid positive and negative Awards earned in
accordance with the terms and conditions of the Plan. Bank
balances are maintained by Participant, and the Company does
not transfer cash into such Bank accounts. The Bank accounts
exist only as bookkeeping records to evidence the Company's
obligation to pay these amounts in accordance with Plan
requirements. (See Appendix A for bank rules.)
No interest is charged or credited on amounts in the Bank.
Participants are never vested in amounts in the Bank, and such
amounts are not earned until the respective Distribution Date.
11.3. Base Salary - "Base Salary" means the Participant's actual base
salary paid during the Year, excluding incentive payments,
salary continuation, and other payments which are not, in the
sole determination of the Committee, actual base salary.
11.4. Beneficiary - "Beneficiary" means the person or persons
designated as such in accordance with Section 8.
11.5. Committee - "Committee" means the Human Resources Committee of
the Board of Directors of Ball Corporation or their
designee(s).
11.6. Disability - "Disability" means a bodily injury or disease, as
determined by the Committee, that totally and continuously
prevents the Participant, for at least six (6) consecutive
months, from engaging in an "occupation" for pay or profit.
During the first twenty-four (24) months of total disability,
"occupation" means the Participant's regular occupation. After
that period, "occupation" means any occupation for which the
Participant is reasonably fitted, based upon the Participant's
education, training or experience as determined by the
Committee.
11.7. Distribution - "Distribution" means the payment of incentive
compensation in cash or bank balance adjustment(s).
11.8. Distribution Date - "Distribution Date" means the date on which
the Employer makes Distributions. The Distribution Date shall
be once each Year and no later than March 15 of the Year
following the Year for which an Award was calculated.
11.9. Economic Value Added - "Economic Value Added" ("EVA") is a
measure of corporate performance. EVA is computed by
subtracting a charge for the use of invested capital from Net
Operating Profit After Tax.
EVA = Net Operating Profit After Tax less (Invested Capital X
Required Rate of Return on Capital)
11.10. Effective Date - "Effective Date" means the date on which the
Plan commences.
11.11. Eligible Employee - "Eligible Employee" means a regular,
exempt, salaried employee of the Company who may be selected by
management and recommended to the Committee for participation.
11.12. Employer - "Employer" (also referred to as the "Company") means
Ball Corporation and its wholly owned subsidiaries.
11.13. Incremental EVA - "Incremental EVA" is the difference (positive
or negative) between the year's Target EVA and actual EVA.
11.14. Invested Capital - "Invested Capital" means total assets less
non-interest bearing current liabilities. Average Invested
Capital for the year represents the average of twelve month-end
amounts.
11.15 Negative Leverage Factor - "Negative Leverage Factor" means
that amount of negative Incremental EVA required to obtain a
Performance Factor of zero (0).
11.16. Net Operating Profit After Tax - "Net Operating Profit After
Tax" (also referred to as "NOPAT") means operating income
before financing costs and income taxes reduced by income taxes
which are computed by applying a statistical tax rate
appropriate to the jurisdiction(s) in which the Company or
Participating Unit operates.
11.17. Participant - "Participant" means an Eligible Employee who has
been recommended for participation in the Plan by management
and approved by the Committee. Designation as a Participant
must be renewed annually.
11.18. Participating Unit - "Participating Unit" means an organization
within the Company or a wholly owned subsidiary for which EVA
Targets are established.
11.19. Participation Basis - "Participation Basis" means the Company
or Participating Unit or combination of Participating Units
and/or Company upon whose performance the Performance Factor
for the Year is calculated for a Participant.
11.20. Performance Factor - "Performance Factor" means that number
described in Section 5.1 and which is multiplied by a
Participant's Target Incentive Amount to arrive at such
Participant's Award.
11.21. Plan - "Plan" means this Economic Value Added Incentive
Compensation Plan.
11.22. Positive Leverage Factor - "Positive Leverage Factor" means
that amount of positive Incremental EVA required to obtain a
Performance Factor of two (2.0).
11.23. Retirement - "Retirement" means termination of employment by a
Participant for whatever reason other than Death or Disability
after attainment of age fifty-five (55), or, if prior to having
attained age fifty-five (55), only after having obtained prior
permission of the Committee. A Participant who has experienced
a Retirement as defined herein shall be termed a "Retiree."
11.24. Target EVA - "Target EVA" means that amount of EVA (positive or
negative) which, if attained, produces a Performance Factor of
one (1.000).
11.25. Target Incentive Amount - "Target Incentive Amount" means that
dollar amount determined by multiplying the Participant's Base
Salary by such Participant's Target Incentive Percent.
11.26. Target Incentive Percent - "Target Incentive Percent" means
that percent of Base Salary which is established by management,
consistent with the guidelines approved by the Committee, as
being the percent of Base Salary to be paid to the Participant
if Target EVA is achieved.
11.27. Year - "Year" means the calendar year in respect of which
performance is measured under the Plan.
Exhibit 10.27
-------------
BALL CORPORATION
LONG-TERM CASH INCENTIVE PLAN
Section I
Terms and Conditions
The purpose of the Ball Corporation Long-Term Cash Incentive Plan (the "Plan")
is to advance the interests of Ball Corporation (the "Company") and its
subsidiaries by providing a long-term financial incentive to selected key
executives who contribute and are expected to continue to contribute materially
to the success of the Company and its subsidiaries through their leadership
skills, vision and dedication.
Section II
Plan Concept
The Plan, offered in conjunction with the various Ball Stock Option Plans,
provides cash awards on the basis of Ball's total return (stock price
appreciation plus dividends) performance over three-year performance cycles
which begin at the start of each calendar year.
Section III
Administration of the Plan
The plan shall be administered by the Human Resources Committee of the Board of
Directors (the "Committee"). The Committee shall have full and final authority
to interpret the Plan and the awards granted thereunder, to prescribe, amend and
rescind rules and regulations, if any, relating to the Plan and to make all
determinations necessary or advisable for the administration of the Plan. No
member of the Committee shall be liable for anything done or omitted to be done
by him or by any other member of the Committee in connection with the Plan,
except for his own willful misconduct or gross negligence.
<PAGE>
Section IV
Effective Date
The effective date of the Plan is August 1,1994, as adopted by the Board of
Directors of Ball ( the "Board") on October 25,1994.
Section V
Operation of the Plan
Performance Cycles -- The normal operation of the Plan provides for performance
cycles beginning each January 1, which last for three calendar years. However,
as a transition, there will be two phase-in awards which provide the opportunity
for payments at the end of 1995 and 1996, as follows:
<TABLE>
<CAPTION>
1994 | 1995 | 1996 | 1997 | 1998 | 1999 |
<S> <C> <C> <C> <C> <C>
8/1/94 ------------------------> } Phase-In
} Cycles
8/1/94 ------------------------------------------> }
1/1/95 ------------------------------------------>
1/1/96 ------------------------------------------>
1/1/97 ------------------------------------------>
1/1/98 ------------------------
1/1/99 -------
</TABLE>
Participation -- Participants in the Plan shall be selected by the Committee.
Initially, participation shall be limited to members of the Ball Management
Committee.
<PAGE>
Award Opportunity -- The initial award opportunity is as follows for each
participant:
17% of Total Compensation* at minimum performance,
35% of Total Compensation* at target performance, and
70% of Total Compensation* at maximum performance.
The amount of the award will be prorated for performance greater than minimum
but less than target and for performance greater than target but less than
maximum. These percentages will be subject to review and possible modification
by the Committee for performance cycles beginning after August 1, 1994.
*Total Compensation is defined as average base salary plus incentive
compensation at target over the performance period.
Performance Requirements -- Awards are dependent upon Ball's total shareholder
return over the performance period (defined as stock price appreciation plus
dividends assumed to be reinvested). For the transition cycles beginning August
1, 1994, the performance requirements, defined in terms of average annual
compounded rate of growth in total shareholder return, are as follows:
Minimum performance -- 8% annual growth
Target -- 12% annual growth
Maximum -- 20% annual growth
The Committee shall determine if such performance requirements will remain the
same or be changed for performance cycles beginning after August 1, 1994. In
calculating the stock price under the Plan, the average of the five trading days
ending at the beginning and at the end of the performance period will be used.
Form and Timing of Payment -- The awards will be made in cash as soon as
practical after the close of the Performance Period, but no later than March 15
of the year following the close of such period.
SECTION VI
Terms and Conditions
Termination of Employment Due to Death, Disability or Retirement -- If death,
disability or early or normal retirement, as defined in the Ball Pension Plan
for Salaried Employees, occurs prior to the end of one or more cycles in which
an executive was a participant, the participant's performance award for each
such cycle will be paid as provided in Section V hereof, except the award under
this paragraph shall be calculated as follows for each cycle in which the
terminated executive was a participant:
Award Opportunity achieved under the plan for each full performance
cycle times a fraction, the numerator of which is the number of
calendar days of continuous employment completed by the participant
during each cycle and the denominator of which is the total number of
calendar days in the cycle.
Beneficiary Designation for Termination by Death -- A participant may designate
a beneficiary or beneficiaries who, upon the participant's death, are to receive
the amounts that otherwise would have been paid to the participant. All
designations shall be in writing and signed by the participant. The designation
shall be effective only if and when delivered to Ball during the lifetime of the
participant. The participant may change his/her beneficiary or beneficiaries
with a signed, written instrument delivered to Ball. Payouts shall be in
accordance with the last unrevoked written designation of beneficiary that has
been signed and delivered to Ball's senior vice president of administration.
Termination of Employment for Reasons Other Than Death, Disability or Retirement
-- If a participant's employment is terminated by Ball other than for cause,
prior to the end of one or more performance cycles, payout shall be in
accordance with the same terms as for termination due to death, disability or
retirement as described above. If termination is for cause, the participant
shall not be entitled to any payout with respect to any incomplete performance
cycle.
Merger, Consolidation or Acquisition -- In the event of a merger, consolidation,
or acquisition such that Ball is not the surviving corporation, performance
awards will become immediately payable based on the performance achieved as of
the end of the most recently completed calendar year for each cycle as to which
the grant of award opportunities has occurred at least six months previously.
Recapitalization -- In the event of any increase or decrease in the total number
of shares of Ball Corporation common stock resulting from a subdivision or
consolidation of shares or other capital adjustment or the payment of a stock
dividend or other increase or decrease in such shares effected without receipt
of consideration by Ball, Ball's total shareholder return calculation shall be
adjusted for each incomplete performance cycle at the effective date of such
recapitalization, as if such recapitalization had been effected at the beginning
of each such performance cycle.
Nonalienation of Benefits -- Neither the participant nor any designated
beneficiary under the Plan shall have the power to transfer, assign, anticipate,
hypothecate, or otherwise encumber in advance any of the benefits payable
hereunder, nor shall said benefits be subject to seizure for the payment of any
debts or judgments or be transferrable by operation of law in the event of
bankruptcy, insolvency or otherwise.
No Right to Continued Employment -- Ball may continue to employ a participant in
such capacity or position as it may from time to time determine, but Ball
retains the right to terminate the participant's employment with or without
cause. Ball also retains the right to terminate the Plan, but only with respect
to performance cycles not yet begun, and all the participant's rights hereunder,
whether or not the participant's employment is terminated.
Exhibit 11.1
------------
<TABLE>
Ball Corporation and Subsidiaries
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Millions of dollars except per share amounts)
<CAPTION>
For the Year Ended December 31,
-------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Earnings per Common Share - Assuming No Dilution
------------------------------------------------
Net income (loss) from:
Continuing operations $ 73.0 $ (32.5) $ 60.9
Alltrista operations -- 2.1 6.2
-------- -------- --------
Net income (loss) before cumulative effect of changes in accounting
principles, net of tax 73.0 (30.4) 67.1
Cumulative effect of changes in accounting principles, net of tax -- (34.7) --
-------- -------- --------
Net income (loss) 73.0 (65.1) 67.1
Preferred dividends, net of tax (3.2) (3.2) (3.4)
-------- -------- --------
Net earnings (loss) attributable to common shareholders $ 69.8 $ (68.3) $ 63.7
======== ======== ========
Weighted average number of common shares outstanding (000s) 29,662 28,712 26,039
======== ======== ========
Earnings (loss) per share of common stock:
Continuing operations $ 2.35 $ (1.24) $ 2.21
Alltrista operations -- 0.07 0.24
Cumulative effect of changes in accounting principles, net of tax -- (1.21) --
-------- -------- --------
$ 2.35 $ (2.38) $ 2.45
======== ======== ========
Earnings per Share - Assuming Full Dilution
-------------------------------------------
Net income (loss) $ 73.0 $ (65.1) $ 67.1
Series C Preferred dividend -- -- (0.1)
Series B ESOP Preferred dividend, net of tax -- (3.2) --
Adjustments for deemed ESOP cash contribution in lieu of Series B
ESOP Preferred dividend (2.4) (a) (1.8)
-------- -------- --------
Net earnings (loss) attributable to common shareholders $ 70.6 $ (68.3) $ 65.2
======== ======== ========
Weighted average number of common shares outstanding (000s) 29,662 28,712 26,039
Dilutive effect of stock options 264 (a) 287
Common shares issuable upon conversion of Series B ESOP Preferred
stock 2,136 (a) 1,897
-------- -------- --------
Weighted average number shares applicable to fully diluted earnings
per share 32,062 28,712 28,223
======== ======== ========
Fully diluted earnings (loss) per share:
Continuing operations $ 2.20 $ (1.24) $ 2.09
Alltrista operations -- 0.07 0.22
Cumulative effect of changes in accounting principles, net of tax
-- (1.21) --
-------- -------- --------
$ 2.20 $ (2.38) $ 2.31
======== ======== ========
</TABLE>
(a) No conversion of the Series B ESOP Convertible Preferred Stock is assumed as
the effect is antidilutive.
Exhibit 13.1
------------
ITEMS OF INTEREST TO SHAREHOLDERS
QUARTERLY STOCK PRICES AND DIVIDENDS
Quarterly sales prices for the company's common stock, as reported on the
composite tape, and quarterly dividends in 1994 and 1993 were:
<TABLE>
<CAPTION>
1994 1993
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High 30 3/8 30 1/2 28 3/8 32 1/8 37 1/4 35 1/2 32 1/4 31 1/4
Low 24 3/8 24 3/4 24 3/8 27 1/4 33 3/4 27 7/8 27 3/8 25 1/8
Dividends .15 .15 .15 .15 .31 .31 .31 .31
</TABLE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
BALL CORPORATION AND SUBSIDIARIES
<CAPTION>
(dollars in millions except per
share amounts) 1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C>
Net sales $ 2,594.7 $ 2,433.8 $ 2,169.3 $ 2,018.4 $ 1,120.9
Net income (loss) from:
Continuing operations 73.0 (32.5) 60.9 60.6 40.6
Alltrista operations -- 2.1 6.2 3.6 7.6
Net income (loss) before cumulative effect
of accounting changes 73.0 (30.4) 67.1 64.2 48.2
Cumulative effect of accounting changes,
net of tax benefit -- (34.7) -- -- --
Net income (loss) 73.0 (65.1) 67.1 64.2 48.2
Preferred dividends, net of tax benefit (3.2) (3.2) (3.4) (8.3) (3.8)
Net earnings (loss) attributable to common
shareholders 69.8 (68.3) 63.7 55.9 44.4
Return on average common
shareholders' equity 12.1% (11.6)% 11.1% 12.3% 11.3%
--------- ---------- --------- --------- ---------
Per share of common stock
Continuing operations $ 2.35 $ (1.24) $ 2.21 $ 2.26 $ 1.69
Alltrista operations -- .07 .24 .16 .34
Earnings (loss) before cumulative
effect of accounting changes 2.35 (1.17) 2.45 2.42 2.03
Cumulative effect of accounting changes,
net of tax benefit -- (1.21) -- -- --
Earnings (loss) (1) 2.35 (2.38) 2.45 2.42 2.03
Cash dividends 0.60 1.24 1.22 1.18 1.14
Book value(2) 20.25 18.63 22.55 21.39 18.28
Market value 31 1/2 30 1/4 35 3/8 38 26 7/8
Annual return to common
shareholders(3) 6.4% 1.1% (3.6)% 46.9% (16.9)%
Common dividend payout 25.5% N.M. 49.8% 48.8% 56.2%
Weighted average common shares
outstanding (000s) 29,662 28,712 26,039 23,125 21,886
--------- ---------- --------- --------- ----------
Fully diluted earnings (loss) per share(4)
Continuing operations $ 2.20 $ (1.24) $ 2.09 $ 2.11 $ 1.59
Alltrista operations -- .07 .22 .14 .32
Earnings (loss) before cumulative
effect of accounting changes 2.20 (1.17) 2.31 2.25 1.91
Cumulative effect of accounting changes,
net of tax benefit -- (1.21) -- -- --
Earnings (loss) 2.20 (2.38) 2.31 2.25 1.91
Fully diluted weighted average shares
outstanding (000s) 32,062 28,712 28,223 25,408 23,975
--------- ---------- --------- --------- ---------
Property, plant and equipment additions $ 94.5 $ 140.9 $ 110.2 $ 87.3 $ 20.7
Depreciation 121.8 110.0 98.7 88.4 43.3
Working capital 198.4 240.9 260.1 136.6 178.7
Current ratio 1.40 1.53 1.72 1.33 1.61
Total assets $ 1,759.8 $ 1,795.6 $ 1,563.9 $ 1,432.0 $ 1,194.3
Total interest bearing debt and lease
obligations(5) 493.7 637.2 616.5 492.8 488.1
Common shareholders' equity 604.8 548.6 596.0 551.2 403.9
Total capitalization 1,126.5 1,211.8 1,237.5 1,129.1 958.8
Debt-to-total capitalization(5) 43.8% 52.6% 49.8% 43.6% 50.9%
--------- ---------- --------- --------- ---------
<FN>
N.M. Not meaningful.
(1) Based upon weighted average common shares outstanding.
(2) Based upon common shares outstanding at end of year.
(3) Change in stock price plus dividend yield assuming reinvestment of
dividends. In 1993 the Alltrista distribution is included
based upon a value of $4.25 per share of company common stock.
(4) Fully diluted earnings per share in 1993 is the same as earnings per common
share because the assumed exercise of stock options and conversion of
preferred stock would have been antidilutive. The dilutive effect of stock
options prior to 1988 was insignificant.
(5) Including, in years prior to 1993, debt allocated to Alltrista.
</FN>
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BALL CORPORATION AND SUBSIDIARIES
Management's discussion and analysis should be read in conjunction with the
consolidated financial statements and the accompanying notes.
CONSOLIDATED RESULTS
Consolidated net sales in 1994 increased to $2.6 billion from $2.4 billion in
1993 and $2.2 billion in 1992 due primarily to the inclusion of net sales of
Heekin Can, Inc. (Heekin) for a full period in 1994 and improved sales in the
commercial glass container and metal beverage container businesses. In 1993 the
inclusion of Heekin sales from March 19, 1993, the date of acquisition,
contributed to the increase in net sales compared to 1992.
Consolidated 1994 operating earnings of $172.4 million increased from the
1993 level of $3.1 million. Improved operating performance in both the
packaging and the aerospace and communications businesses, coupled with the
effect of the 1993 charge for restructuring and other, accounted for the
improvement. Before consideration of the restructuring and other charges,
business segment operating earnings were 62 percent higher in 1994. Included
in 1994 operating results is a net charge of $6.8 million related to the
September 1994 foreclosure of certain assets of the visual image generation
systems (VIGS) business, which had been sold in May, and a one-time charge
associated with the early retirement of two former employees, partially offset
by a gain on the sale of a portion of the Taiwan joint venture interest.
Consolidated 1993 operating earnings of $3.1 million declined from the 1992
level of $142.9 million largely as a result of restructuring and other
charges. Business segment operating earnings in 1993, excluding the
restructuring and other charges, were approximately 24 percent less than
comparable 1992 business segment operating earnings.
Interest expense decreased to $42.3 million in 1994 from $45.9 million in 1993.
The 1994 decrease was due to a reduction in the average level of borrowings,
offset partially by higher rates on interest-sensitive borrowings. The increase
in 1993 interest expense compared to $37.2 million in 1992 was due to a higher
volume of borrowings, a result primarily of the assumed Heekin indebtedness and
the full-year effect of higher fixed-rate long-term debt borrowed late in 1992.
These effects were offset partially by lower rates on interest-sensitive
borrowings. Interest capitalized amounted to $2.2 million, $1.7 million, and
$1.0 million in 1994, 1993 and 1992, respectively.
The company's consolidated effective income tax rates were 37.3 percent, 41.2
percent, and 37.3 percent in 1994, 1993 and 1992, respectively. The greatest
factor contributing to the year-to-year changes in the effective income tax
rates has been the varying levels of earnings and losses given that the amounts
of nontaxable income and nondeductible expense have remained relatively constant
over the three-year period.
Equity in earnings of packaging affiliates of $2.5 million, $1.3 million and
$0.6 million in 1994, 1993 and 1992, respectively, represents the company's
share of earnings of Pacific Rim joint ventures including the company's majority
owned Chinese metal packaging business, FTB Packaging Ltd.
Net income from Alltrista operations was $2.1 million and $6.2 million in 1993
and 1992, respectively. Alltrista 1993 net income represents the earnings of
that business through the date of the spin-off to shareholders.
Net earnings attributable to common shareholders increased to $69.8 million in
1994, compared to a net loss of $68.3 million in 1993. This increase was the
result of improved net income in 1994 and, in 1993, the combined effects of the
aforementioned restructuring and other charges, lower segment operating
earnings, and a net charge of $34.7 million for the cumulative effect of changes
in accounting for postretirement and postemployment benefits.
Net earnings per share of common stock of $2.35 improved in 1994, compared to
the 1993 net loss of $2.38 per share. The 1993 per share amount reflects the
effects of a loss of $1.24 from continuing operations and a charge of $1.21 in
connection with the changes in accounting principles. Per share results for 1993
also were affected by the additional common shares issued to acquire Heekin.
Fully diluted earnings per share from continuing operations were $2.20 in 1994
and $2.09 in 1992. In 1993 the loss per share on a fully diluted basis was the
same as the net loss per common share because the assumed exercise of stock
options and conversion of preferred stock would have been antidilutive.
BUSINESS SEGMENTS
Packaging
---------
Packaging segment net sales represented 89.7 percent of 1994 consolidated net
sales and increased to $2.3 billion compared to $2.2 billion and $1.9 billion in
1993 and 1992, respectively. The 1994 increase was due primarily to the
inclusion of Heekin sales for the full period in 1994 and increases in
commercial glass container and metal beverage container sales. Heekin's results
in 1993 were included in consolidated results of operations from the March 1993
acquisition date. Segment operating earnings were $153.3 million, $28.9 million,
and $121.2 million for 1994, 1993 and 1992, respectively. Before consideration
of restructuring and other charges, 1993 operating results were $105.6 million.
Metal packaging sales in 1994 increased 7.5 percent to $1.6 billion primarily
due to the full-year consolidation of Heekin sales and improved sales volumes of
both beverage and food containers. Selling prices declined in 1994 due to
industry competition. Operating earnings increased in 1994 primarily due to
higher sales in the beverage container business which also achieved unit cost
reductions as a result of higher volumes and significantly higher prices for the
sale of aluminum process scrap.
In 1993 metal packaging sales increased 27.1 percent to $1.5 billion as a result
of the Heekin sales and higher domestic sales of beverage containers. Metal
packaging 1993 operating earnings declined due primarily to restructuring and
other charges of $25.3 million. Before such charges, earnings increased due to
the positive contribution of Heekin and improved Ball Packaging Products Canada,
Inc. (Ball Canada) earnings, offset partially by domestic beverage container
results which declined despite higher sales.
Sales of domestic and Canadian beverage cans and ends improved in 1994 compared
to 1993 reflecting higher beverage can shipments despite pricing erosion.
Shortages of glass and plastic beverage containers contributed to increased
volumes in the metal segment of the industry. Operating results of the metal
beverage container business improved in 1994 due to higher unit sales volumes,
productivity gain programs, aggressive cost containment programs implemented
late in 1993, reduced freight and warehousing expenses, and recoveries from the
sale of aluminum scrap.
Domestic and Canadian metal beverage can and end sales in 1993 increased
modestly as a result of higher unit volumes, the effects of which more than
offset reduced selling prices. In Canada, beverage container sales and unit
volumes increased reflecting improved demand for soft drink containers and
relatively stable volumes of beer containers. Despite increases in domestic
sales, operating results of the metal beverage container business declined as
the beneficial effects of higher volumes and lower raw material prices were more
than offset by reduced selling prices and higher spending. Outside warehousing
expenses increased due to the higher levels of inventory carried until the
fourth quarter and high warehousing cost in several market areas.
Metal food and specialty products sales increased during 1994 reflecting the
inclusion of Heekin sales for the full period in 1994 and increased shipments of
domestic and Canadian food cans, despite depressed industry pricing. Operating
earnings decreased slightly despite higher shipments and work force reductions,
reflecting some volume disruption and overtime due to restructuring of
manufacturing facilities. In addition, a fire in a major steel supplier's mill
resulted in inefficiencies, high spoilage, and dislocation of business. In 1994
the company completed the sale of its metal decorating and coating facility in
Alsip, Illinois, and closed its Augusta, Wisconsin, plant. These actions did not
impact significantly the company's financial position or results of operations.
Total manufacturing capacity was maintained, however, through a combination of
relocating equipment to other facilities and establishing continuous 24-hour
operations in several facilities.
Sales of the metal food and specialty products business more than doubled in
1993 with the addition of the Heekin business. Operating earnings also increased
due to improved Canadian results, as well as the Heekin contribution. Canadian
results reflect the benefit of past productivity investments, prior
restructuring activities, including the midyear completion of the Quebec food
container manufacturing consolidation, and an improved salmon catch in British
Columbia after a very poor 1992 catch. While Heekin made a positive contribution
in 1993, poor weather and flooding throughout the Midwest and erosion of selling
prices reduced its results as compared with its performance prior to
acquisition.
Glass sales in 1994 increased 7.4 percent to $750.6 million, reflecting higher
unit volumes in food and wine products. Overall pricing increased only slightly,
reflecting competitive industry pricing. Net earnings improved substantially
over 1993, excluding the effect of the 1993 restructuring charge. The strong
performance in 1994 was attributable to increased sales, higher plant
utilization rates, increased productivity and labor efficiency. The Ruston,
Louisiana, manufacturing facility operated at an improved level of capacity
utilization in 1994 compared to 1993. Total plant utilization for all glass
facilities increased from 86 percent in 1993 to 92 percent in 1994 as a result
of increased demand and consolidating capacity. The company continued to rebuild
furnaces in 1994. In conjunction with the company's restructuring plan, glass
container manufacturing facilities were closed during 1994 in Asheville, North
Carolina, and Okmulgee, Oklahoma. These plant closures did not have a
significant impact on the company's financial position or results of operations
in 1994 as a result of provisions recorded for that purpose in 1993.
Glass packaging sales decreased 2.4 percent in 1993 to $698.7 million compared
to $715.8 million in 1992, and the glass container business recorded a loss,
after restructuring and other charges. Before consideration of the restructuring
charge, the business was profitable. However, operating earnings declined
compared to 1992. Contributing factors to the 1993 performance included the
difficult start-up of expanded manufacturing facilities in Ruston, Louisiana,
increased maintenance spending, and freight and warehousing costs. Reduced unit
volumes and lower capacity utilization also were significant negative factors
which resulted from lower demand by certain customers in the core food packaging
segment and extended shutdowns at the end of 1993 to reduce inventories.
Aerospace and Communications
----------------------------
Net sales in the aerospace and communications business segment of $268.0 million
in 1994 decreased less than one percent from 1993. Prior year sales included
$6.2 million from the VIGS unit. Sales improved in both the Telecommunication
Products Division and the Aerospace Systems Division, reflecting increased sales
by the Efratom time and frequency device unit and new contracts awarded in 1994.
Operating earnings in 1994, excluding the effect of the restructuring and other
charges and losses in the VIGS unit in 1993, improved in both divisions over
1993 as a result of increased sales and improved recovery of indirect overhead
costs, primarily in the Telecommunication Products Division. In September 1994
the company foreclosed on its security interest with regard to certain assets of
the VIGS unit which had been sold in May. As a result of the foreclosure, the
related assets were returned to the company. A $4.0 million pretax charge was
recorded in 1994 for estimated costs related to this foreclosure and is included
in operating earnings for the aerospace and communications segment.
Aerospace and communications segment sales for 1993 declined 10.4 percent to
$268.3 million from $299.5 million in 1992. Including restructuring and other
charges of $29.1 million, the segment recorded a loss from operations in 1993.
Excluding the effect of the restructuring and other charges, operating earnings
declined 85 percent to $3.3 million. The impact of reduced federal defense
spending was reflected in lower sales of both the Telecommunication Products
Division, excluding Efratom, and the Aerospace Systems Division. Lower operating
earnings in 1993 reflected reduced sales as well as losses incurred by the VIGS
unit.
Contracts with the federal government represented approximately 78 percent and
77 percent of segment sales in 1994 and 1993, respectively. Backlog of the
aerospace and communications businesses was approximately $322 million at the
end of 1994 versus $305 million at December 31, 1993. The backlog at December
31, 1994, is comprised primarily of orders for cryogenics, space and earth
sciences instruments and equipment.
The company has signed a definitive agreement with Datum Inc. for the sale of
the Efratom unit for approximately $26.5 million to be paid in a combination of
cash and Datum common stock. The sale is expected to take place late in the
first quarter of 1995. In addition, a new subsidiary, EarthWatch, Inc., was
formed in the aerospace and communications segment in late 1994 to serve the
market for satellite-based remote sensing of the earth. During 1994 the company
undertook a study to explore various strategic options for the remaining
aerospace and communications segment. The study was concluded with a decision to
retain the core aerospace and communications business.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations of $240.7 million in 1994 increased from $120.2
million in 1993. The 1993 amount excludes the effects of the sale of $66.5
million of trade accounts receivable. The increased cash flow from operations in
1994 reflects higher annual operating earnings and significantly improved fourth
quarter performance. Operating cash flow in 1993, excluding the effect of the
receivable sale, was essentially unchanged from 1992, as the additional Heekin
operating cash flow was offset by reduced operating performance, principally in
the glass container and aerospace and communications operations.
Working capital at December 31, 1994, excluding short-term debt and the current
portion of long-term debt, was $315.1 million, a decrease of $49.7 million from
the 1993 year end, reflecting increased accounts payable and accrued
liabilities. The current ratio was 1.40 and 1.53 at December 31, 1994 and 1993,
respectively.
Capital expenditures of $94.5 million in 1994 were primarily for conversions of
metal beverage plant equipment to new industry container specifications,
expansion of warehouse space for metal beverage containers, furnace rebuilds and
capacity optimization at certain glass container plants, and productivity
improvement programs in several of the metal food container plants. Property,
plant and equipment expenditures amounted to $140.9 million in 1993 and were
primarily for conversions of metal beverage plant equipment to new industry
specifications, expansion of the Fairfield, California, plant to accommodate
additional business, completion of the Ruston, Louisiana, glass container plant
expansion and the Quebec food container manufacturing consolidation, and a
number of furnace rebuilds in glass container plants. Property, plant and
equipment expenditures amounted to $110.2 million in 1992 and included
completion of a fourth aluminum beverage can line in Saratoga Springs, New York,
consolidation of Quebec food container operations, and expansion of the Ruston,
Louisiana, glass manufacturing facility, as well as normal expenditures for
upgrades of glass forming equipment and furnace rebuilds.
In 1995 total capital spending of approximately $280.0 million is anticipated.
This includes significant amounts for emerging business opportunities, such as
domestic plastics (PET) and metal packaging in China, and spending in existing
businesses, in part to complete the conversion of metal beverage equipment to
the new industry specifications.
Premiums on company owned life insurance were approximately $20.0 million each
year. Amounts in the Consolidated Statement of Cash Flows represent net cash
flows from this program including related tax benefits. The company borrowed
$23.4 million and $37.2 million in 1994 and 1993, respectively, from the
accumulated net cash value.
At December 31, 1994, indebtedness decreased by $143.5 million from the year
earlier to $493.7 million. The reduction in debt was achieved as a result of
positive cash flow from operations. The consolidated debt-to-total
capitalization ratio at December 31, 1994, improved to 43.8 percent compared
with 52.6 percent at December 31, 1993. The improved ratio was primarily the
result of higher earnings, reduced common dividends and the reduction in debt.
The company has revolving facilities of $300.0 million consisting of a $150.0
million, three-year facility and 364-day facilities which amount to $150.0
million.
During 1993 the company took advantage of low prevailing interest rates by
prepaying $20.0 million of serial notes, and by refinancing $108.8 million of
Heekin indebtedness and $17.0 million of industrial development revenue bonds.
The company redeemed the Series C Preferred Stock on January 7, 1992, for $50.3
million. In the last half of 1992, the company borrowed approximately $214.0
million of fixed-rate, long-term debt, the proceeds of which were used to repay
floating-rate, short-term debt. Short-term debt had increased primarily due to
financing the acquisition of the Kerr assets, the redemption of the Series C
Preferred Stock, and the increase in working capital.
Cash dividends paid on common stock in 1994 were $0.60 per share. The reduction
in the common dividend in 1994 from $1.24 paid in 1993 provided improved
financial flexibility and access to capital. Management believes that, absent a
major business dislocation, existing credit resources will be adequate to meet
foreseeable financing requirements of the company's businesses.
RESTRUCTURING AND OTHER CHARGES
In the company's major packaging markets, excess manufacturing capacity and
severe pricing pressures presented significant competitive challenges in recent
years. Although domestic metal beverage container operations have operated at or
near capacity, such has not been the case in the metal food and glass container
businesses, including the Heekin business acquired in 1993. More recently,
reductions in federal defense expenditures and other attempts to curb the
federal budget deficit have created similar market dynamics in the aerospace and
defense industry as the number of new contract bidding opportunities has
declined and existing programs have been curtailed or delayed.
In late 1993 the company developed plans to restructure the company's businesses
in order to adapt the company's manufacturing capabilities and administrative
organizations to meet foreseeable requirements of its packaging and aerospace
markets. These plans involved plant closures to consolidate manufacturing
activities into fewer, more efficient facilities, principally in the glass and
metal food container businesses, and administrative consolidations in the glass,
metal packaging, and aerospace and communications businesses. In addition to the
restructuring plans, decisions were made during 1993 to discontinue two
aerospace and communications segment product lines.
The financial impact of these plans was recognized through restructuring and
other charges recorded in the third and fourth quarters of 1993 in the aggregate
amount of $108.7 million ($66.3 million after tax or $2.31 per share), of which
$76.7 million pertained to the packaging segment, $29.1 million pertained to the
aerospace and communications segment and $2.9 million related to certain
corporate actions, including a $1.6 million charge for transaction costs in
connection with a pending foreign joint venture which management had determined
not to pursue at the time.
Within the packaging segment, $66.3 million represents the estimated cost of
consolidating manufacturing facilities, including recognition of estimated net
realizable values that are less than book amounts of property, plant and
equipment, employment costs such as severance benefits and pension curtailment
losses, and incremental costs associated with the phaseout of facilities to be
closed. During 1994 the company's glass container plants in Asheville, North
Carolina, and Okmulgee, Oklahoma, were closed as part of the restructuring plan,
which reduced the reserve by approximately $14.0 million. The company began to
benefit from operating fewer manufacturing facilities in 1994. The annual plant
utilization rate for the glass container business was 92 percent in 1994
compared to 86 percent in 1993 and 90 percent in 1992. In addition, fixed costs
declined in 1994.
As a result of industry-wide changes in beverage container specifications, a
$9.0 million reserve was established in 1993 primarily for the write-off of
machinery and equipment, the replacement of which began in 1994. This
replacement resulted in a $4.9 million reduction of the reserve.
The Heekin acquisition afforded a number of opportunities to achieve greater
cost economies through consolidation of the headquarters of Heekin, Ball Canada
and domestic metal beverage container operations into a combined metal packaging
management group based in Westminster, Colorado. This group began implementation
in 1993 of common financial and manufacturing management systems throughout the
U.S. and Canadian metal packaging operations, and the consolidation of metal
food container manufacturing capabilities. The Heekin purchase price accounting
included provision for the consolidation of facilities and other costs of
integration, including the closing of the Augusta, Wisconsin, plant which
occurred in August 1994.
In the aerospace and communications segment, costs of $19.4 million associated
with the disposition of the VIGS and all-light-level television (ALLTV) product
lines were reflected in the 1993 reserve and included write-downs of inventory
and fixed assets to net realizable values and incremental costs of phasing out
the VIGS product line within the aerospace and communications segment. The
reserve has been reduced by $14.7 million related to the disposition of these
product lines, including $4.9 million in VIGS operating losses in 1994. VIGS
operating losses amounted to $5.7 million and $6.3 million in 1993 and 1992,
respectively, and were reflected in operating earnings. In May 1994 the company
sold certain assets of the VIGS unit, but foreclosed on its security interest in
the assets in September 1994. As a result of the foreclosure, the assets were
returned to the company. Additional charges to earnings of $4.0 million were
made in 1994 for estimated costs related to the foreclosure.
Costs of administrative consolidations of the Colorado operations and group
headquarters of $9.7 million were charged to the reserve in 1993. A reserve of
$1.9 million remains at December 31, 1994.
At December 31, 1994 and 1993, restructuring and other reserves included in the
Consolidated Balance Sheet totalled $62.8 million and $89.1 million,
respectively. See the note, "Restructuring and Other Charges," in the
accompanying Notes to Consolidated Financial Statements for further information.
Of the total restructuring reserve outstanding at December 31, 1994, $29.0
million will not impact future cash flows apart from related tax benefits. The
remaining $33.8 million represents future pretax cash outflows, the majority of
which is expected to be incurred in 1995. The exact timing of those cash
outflows is dependent upon the pace of facility consolidation. Funding of
certain costs, such as pensions of terminated employees, will occur over an
extended period of time. Management believes that cash flow from operations,
supplemented, if necessary, from existing credit resources, will be sufficient
to fund the net cash outflows associated with the restructuring and other
actions outlined above.
While management has no further plans for restructuring of operations beyond
those described, the company's businesses and competitive posture are evaluated
continually for the purpose of improving financial performance. Accordingly,
there can be no assurance that all of the anticipated benefits of restructuring
will be fully realized or that further restructuring or other measures will not
become necessary in future years.
SPIN-OFF
On April 2, 1993, the company completed the spin-off of seven diversified
businesses by means of a distribution of 100 percent of the common stock of
Alltrista, a then wholly owned subsidiary, to holders of company common stock.
The distributed net assets of Alltrista included the following businesses: the
consumer products division; the zinc products division; the metal decorating and
service division; the industrial systems division; and the plastic products
businesses, consisting of Unimark plastics, industrial plastics and plastic
packaging. Following the distribution, Alltrista operated as an independent,
publicly owned corporation. Accordingly, the results of operations of the
Alltrista businesses have been classified separately from continuing operations
in the accompanying consolidated financial statements. Additional information
regarding the spin-off can be found in the accompanying Notes to Consolidated
Financial Statements.
CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1993, the company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 106,"Employers' Accounting for
Postretirement Benefits Other Than Pensions," and SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 106 requires that the
company's estimated postretirement benefit obligations be accrued by the dates
at which participants attain eligibility for the benefits. Similarly, SFAS No.
112 mandates accrual accounting for postemployment benefits.
In connection with the adoption of SFAS No. 106, the company elected immediate
recognition of the previously unrecognized transition obligation through a
noncash, pretax charge to earnings as of January 1, 1993, in the amount of $46.0
million ($28.5 million after tax or $0.99 per share), which represents the
cumulative effect on prior years of the change in accounting. The incremental
postretirement benefit expense included in 1993 results of continuing operations
was approximately $3.7 million, excluding the cumulative effect of adoption.
The company's early adoption of SFAS No. 112 for postemployment benefits
resulted in a noncash, pretax charge of $10.0 million ($6.2 million after tax or
$0.22 per share) to recognize the cumulative effect on prior years. Excluding
the cumulative effect of adoption, neither the annual cost nor incremental
impact on after tax earnings was significant.
The company adopted prospectively, from January 1, 1993, SFAS No. 109,
"Accounting for Income Taxes." Previously, income tax accounting followed the
provisions of SFAS No. 96, a predecessor income tax accounting standard adopted
in 1988. Because the effects of the two standards are similar in the company's
circumstances, adoption of SFAS No. 109 had no effect upon the 1993 provision
for income tax benefit or net loss before the cumulative effect of changes in
accounting principles.
OTHER
The U. S. Environmental Protection Agency has 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 financial condition, results of operations, capital expenditures or
competitive position of the company.
The company's former joint venture partner, Onex Corporation (Onex), has
demanded that the company purchase the shares held by Onex in a joint venture
holding company through which the partners held their investment in Ball Canada
prior to the company's acquisition of 100 percent ownership. Management believes
that Onex's demand represents approximately $30 million. The company's position
is that it has no obligation to purchase any shares from Onex or to pay Onex any
amount for such shares. The company believes that it has meritorious defenses
against Onex's claim. The dispute is in the process of arbitration, and, because
of the uncertainties inherent in that process, the company is unable to predict
its outcome. See the note, "Contingencies," in the accompanying Notes to
Consolidated Financial Statements for further information with respect to this
matter.
The U.S. economy and the company have experienced minor general inflation during
the past several years. Management believes that evaluation of the company's
performance during the periods covered by these consolidated financial
statements should be based upon historical financial statements. Continuing
emphasis on productivity improvement programs, the ongoing profit improvement
programs, and controlled capital spending for facilities and equipment are
management actions that are designed to maximize cash flow and have offset, in
large part, any adverse effects of inflation.
<PAGE>
REPORT OF MANAGEMENT ON FINANCIAL STATEMENTS
Management of Ball Corporation is responsible for the preparation and fair
presentation of the consolidated financial statements included in this annual
report to shareholders. The 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.
Financial information appearing elsewhere in this annual report is consistent
with the financial statements.
Management is responsible for maintaining an adequate system of internal control
which is designed 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. To assure
the continuing effectiveness of the system of internal control and to maintain a
climate in which such controls can be effective, management establishes and
communicates appropriate written policies and procedu res; 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 managem ent 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 financial
reporting practices, internal controls and the preparation of the consolidated
financial statements through its audit committee which is composed entirely of
outside directors. The audit committee meets periodically wi th representatives
of management, internal audit and Price Waterhouse to review the scope and
results of audit work, the adequacy of internal controls and the quality of
financial reporting. Price Waterhouse and internal audit have direct access to
the audit committee, and the opportunity to meet t he committee without
management present, to assure a free discussion of the results of their work and
audit findings.
/s/ GEORGE A. SISSEL /s/ R. DAVID HOOVER
George A. Sissel R. David Hoover
Acting President and Chief Senior Vice President and Chief
Executive Officer Financial Officer
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
BALL CORPORATION
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income (loss), of cash flows and of changes in
shareholders' equity present fairly, in all material respects, the financial
position of Ball Corporation and its subsidiaries at December 31, 1994 and 1993,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. 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 generally accepted auditing
standards which require that we plan and perform the audit 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 the opinion expressed above.
As discussed in the Taxes on Income and Other Postretirement and Postemployment
Benefits notes to consolidated financial statements, the company adopted
Statements of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," No. 106, "Employers'Accounting for Postretirement Benefits Other Than
Pensions," and No. 112, "Employers' Accounting for Postemployment Benefits,"
effective January 1, 1993.
/s/ PRICE WATERHOUSE LLP
Indianapolis, Indiana
January 23, 1995
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF INCOME (LOSS)
BALL CORPORATION AND SUBSIDIARIES
<CAPTION>
Year ended December 31,
--------------------------------
(dollars in millions except per share amounts) 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net sales $2,594.7 $2,433.8 $2,169.3
Costs and expenses
Cost of sales 2,311.3 2,209.6 1,919.5
General and administrative expenses 86.1 96.5 87.6
Selling and product development expenses 28.4 24.5 22.7
Restructuring and other 6.8 108.7 --
Interest expense 42.3 45.9 37.2
--------- --------- ---------
2,474.9 2,485.2 2,067.0
--------- --------- ---------
Income (loss) from continuing operations before taxes on
income 119.8 (51.4) 102.3
Provision for income tax (expense) benefit (44.7) 21.2 (38.2)
Minority interest (4.6) (3.6) (3.8)
Equity in earnings of affiliates 2.5 1.3 0.6
--------- --------- ---------
Net income (loss) from:
Continuing operations 73.0 (32.5) 60.9
Alltrista operations -- 2.1 6.2
--------- --------- ---------
Net income (loss) before cumulative effect of changes in
accounting principles 73.0 (30.4) 67.1
Cumulative effect of changes in accounting principles,
net of tax benefit -- (34.7) --
--------- --------- ---------
Net income (loss) 73.0 (65.1) 67.1
Preferred dividends, net of tax benefit (3.2) (3.2) (3.4)
--------- --------- ---------
Net earnings (loss) attributable to common shareholders (69.8) $ (68.3) $ 63.7
========= ========= =========
Net earnings (loss) per share of common stock:
Continuing operations $ 2.35 $ (1.24) $ 2.21
Alltrista operations -- .07 .24
Cumulative effect of changes in accounting principles,
net of tax benefit -- (1.21) --
--------- --------- ---------
$ 2.35 $ (2.38) $ 2.45
========= ========= =========
Fully diluted earnings (loss) per share:
Continuing operations $ 2.20 $ (1.24) $ 2.09
Alltrista operations -- .07 .22
Cumulative effect of changes in accounting principles,
net of tax benefit -- (1.21) --
--------- --------- ---------
$ 2.20 $ (2.38) $ 2.31
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
BALL CORPORATION AND SUBSIDIARIES
<CAPTION>
December 31,
---------------------
(dollars in millions) 1994 1993
--------- ---------
<S> <C> <C>
ASSETS
Current assets
Cash and temporary investments $ 10.4 $ 8.2
Accounts receivable, net 204.5 191.3
Inventories, net
Raw materials and supplies 132.3 99.8
Work in process and finished goods 281.7 309.5
Deferred income tax benefits 36.7 53.1
Prepaid expenses 32.5 30.2
--------- ---------
Total current assets 698.1 692.1
--------- ---------
Property, plant and equipment, at cost
Land 34.3 33.3
Buildings 303.4 301.3
Machinery and equipment 1,148.3 1,114.7
--------- ---------
1,486.0 1,449.3
Accumulated depreciation (706.1) (626.6)
--------- ---------
779.9 822.7
--------- ---------
Goodwill and other intangibles, net 93.8 101.5
Net cash surrender value of company owned life insurance 94.7 86.4
Other assets 93.3 92.9
--------- ---------
$1,759.8 $1,795.6
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt and current portion of long-term debt $ 116.7 $ 123.9
Accounts payable 209.2 157.3
Salaries, wages and accrued employee benefits 110.5 85.8
Other current liabilities 63.3 84.2
--------- ---------
Total current liabilities 499.7 451.2
--------- ---------
Noncurrent liabilities
Long-term debt 377.0 513.3
Deferred income taxes 56.6 65.1
Employee benefit obligations, restructuring and other 193.7 191.4
--------- ---------
Total noncurrent liabilities 627.3 769.8
--------- ---------
Contingencies
Minority interest 16.1 15.9
--------- ---------
Shareholders' equity
Series B ESOP Convertible Preferred Stock 67.2 68.7
Unearned compensation - ESOP (55.3) (58.6)
--------- ---------
Preferred shareholder's equity 11.9 10.1
--------- ---------
Common stock (31,034,338 shares issued - 1994;
30,258,169 shares issued - 1993) 261.3 241.5
Retained earnings 378.6 332.2
Treasury stock, at cost (1,166,878 shares - 1994; 811,545 shares - 1993) (35.1) (25.1)
--------- ---------
Common shareholders' equity 604.8 548.6
--------- ---------
$1,759.8 $1,795.6
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
BALL CORPORATION AND SUBSIDIARIES
<CAPTION>
Year ended December 31,
-----------------------------
(dollars in millions) 1994 1993 1992
------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) from continuing operations before
cumulative effect of changes in accounting principles $ 73.0 $ (32.5) $ 60.9
Reconciliation of net income (loss) to net cash provided by
operating activities
Net provision (payment) for restructuring and other charges (13.2) 102.6 --
Depreciation and amortization 127.0 116.3 105.5
Deferred taxes on income 7.7 (41.8) (1.6)
Other (3.0) (6.0) 0.7
Changes in working capital components excluding effects of
acquisitions and Alltrista operations
Accounts receivable, including $66.5 million proceeds
from sale of trade accounts receivable in 1993 (11.7) 70.2 12.0
Inventories (13.0) 32.4 (65.5)
Other current assets (1.0) 6.8 2.2
Accounts payable 53.8 (19.1) 6.6
Other current liabilities 21.1 (42.2) 1.6
------- -------- --------
Net cash provided by operating activities 240.7 186.7 122.4
------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments of long-term debt, including
refinancing of $108.8 million of Heekin indebtedness in 1993 (45.2) (181.9) (35.1)
Changes in long-term borrowings (74.3) 136.2 239.0
Net change in short-term borrowings (15.0) 26.5 (71.1)
Common and preferred dividends (22.9) (40.8) (37.6)
Proceeds from issuance of common stock under various
employee and shareholder plans 19.8 20.0 21.5
Acquisitions of treasury stock (9.9) (8.6) (0.2)
Redemption of Series C Preferred Stock -- -- (50.3)
Other (1.7) 1.2 (1.1)
------- -------- --------
Net cash (used in) provided by financing activities
(149.2) (47.4) 65.1
------- -------- --------
CASH FLOWS FROM INVESTMENT ACTIVITIES
Additions to property, plant and equipment (94.5) (140.9) (110.2)
Company owned life insurance, net (1.4) 15.5 (23.7)
Investments in packaging affiliates (5.6) (13.7) (6.1)
Net cash (to) from Alltrista operations -- (8.0) 20.9
Purchase of Kerr commercial glass assets -- -- (68.4)
Proceeds from sale of investment 7.0 -- --
Other 5.2 1.5 3.5
------- -------- --------
Net cash used in investment activities (89.3) (145.6) (184.0)
------- -------- --------
Net Increase (Decrease) in Cash 2.2 (6.3) 3.5
Cash and temporary investments at beginning of year 8.2 14.5 11.0
------- -------- --------
Cash and Temporary Investments at End of Year $ 10.4 $ 8.2 $ 14.5
======= ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
BALL CORPORATION AND SUBSIDIARIES
<CAPTION>
Number of Shares Year ended December 31,
(in thousands) (dollars in millions)
1994 1993 1992 1994 1993 1992
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SERIES B ESOP CONVERTIBLE PREFERRED STOCK
Balance, beginning of year 1,870 1,893 1,899 $ 68.7 $ 69.6 $ 69.8
Shares issued -- 11 4 -- 0.4 0.2
Shares retired (42) (34) (10) (1.5) (1.3) (0.4)
------- ------- ------- -------- ------- -------
Balance, end of year 1,828 1,870 1,893 $ 67.2 $ 68.7 $ 69.6
======= ======= ======= ======== ======= =======
UNEARNED COMPENSATION - ESOP
Balance, beginning of year $ (58.6) $(61.6) $(64.3)
Amortization 3.3 3.0 2.7
-------- ------- -------
Balance, end of year $ (55.3) $(58.6) $(61.6)
------- ------- ------- ======== ======= =======
COMMON STOCK
Balance, beginning of year 30,258 26,968 26,968 $ 241.5 $130.4 $128.9
Shares issued to acquire Heekin Can, Inc. -- 2,515 -- -- 88.3 --
Shares issued for stock options and
other employee and shareholder stock
plans less shares exchanged 776 775 -- 19.8 22.8 1.5
------- ------- -------- -------- ------- -------
Balance, end of year 31,034 30,258 26,968 $ 261.3 $241.5 $130.4
======= ======= ======== ======== ======= =======
RETAINED EARNINGS
Balance, beginning of year $ 332.2 $482.4 $458.9
Net income (loss) for the year 73.0 (65.1) 67.1
Common dividends (17.8) (35.5) (31.8)
Dividend of Alltrista shares -- (34.5) --
Preferred dividends, net of tax benefit (3.2) (3.2) (3.4)
Foreign currency translation adjustment (6.7) (4.1) (8.4)
Additional minimum pension liability,
net of tax 1.1 (7.8) --
--------- -------- --------
Balance, end of year $ 378.6 $ 332.2 $ 482.4
------- ------- -------- ========= ======== ========
TREASURY STOCK
Balance, beginning of year (812) (539) (1,200) $ (25.1) $ (16.8) $ (36.6)
Shares reacquired (350) (281) (5) (9.9) (8.6) (0.2)
Shares issued for stock options and
other employee and shareholder stock
plans less shares exchanged (5) 8 666 (0.1) 0.3 20.0
------- ------- -------- --------- -------- --------
Balance, end of year (1,167) (812) (539) $ (35.1) $ (25.1) $ (16.8)
======= ======= ======== ========= ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BALL CORPORATION AND SUBSIDIARIES
SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of Ball Corporation
and majority owned subsidiaries. Investments in 20 percent through 50 percent
owned affiliated companies are included under the equity method where the
company 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. All significant intercompany
transactions are eliminated. Certain amounts shown for 1993 and 1992 have been
reclassified to conform to the 1994 presentation.
The results of operations and net assets of the businesses contributed to
Alltrista Corporation, formerly a wholly owned subsidiary, have been segregated
from continuing operations in 1993 and 1992 and are captioned as "Alltrista
operations." See the note, "Spin-Off," for more information regarding this 1993
transaction. All amounts included in the Notes to Consolidated Financial
Statements pertain to continuing operations except where otherwise noted.
Foreign Currency Translation
----------------------------
Foreign currency financial statements of foreign operations where the local
currency is the functional currency are translated using period end exchange
rates for assets and liabilities and average exchange rates during each period
for results of operations and cash flows.
Temporary Investments
---------------------
Temporary investments are considered cash equivalents if original maturities are
three months or less.
Revenue Recognition
-------------------
Sales and earnings are recognized primarily upon shipment of products, except in
the case of long-term government contracts for which revenue is recognized under
the percentage of completion method. Certain of these contracts provide for
fixed and incentive fees which are recorded as they are earned or when incentive
amounts become determinable. Provisions for estimated contract losses are made
in the period that such losses are determined.
Inventories
-----------
Inventories are stated at the lower of cost or market, cost being determined
primarily on the first-in, first-out method.
Depreciation and Amortization
-----------------------------
Depreciation is provided on the straight-line method in amounts sufficient to
amortize the cost of the properties over their estimated useful lives (buildings
- 30 to 50 years; machinery and equipment - 5 to 10 years). Goodwill is
amortized over the periods benefited, generally 40 years.
Taxes on Income
---------------
The company adopted prospectively, from January 1, 1993, Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under SFAS
No. 109, 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.
Pension Costs
-------------
Pension expense is determined under the provisions of SFAS No. 87, "Employers'
Accounting for Pensions." The cost of pension benefits, including prior service
cost, is recognized over the estimated service periods of employees based upon
respective pension plan benefit provisions.
<PAGE>
Other Postretirement and Postemployment Benefits
------------------------------------------------
Effective January 1, 1993, the company adopted the provisions of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," and
SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
Postretirement benefit costs subsequent to the change in accounting principles
are accrued on an actuarial basis over the period from the date of hire to the
date of full eligibility for employees and covered dependents who are expected
to qualify for such benefits. Postemployment benefits are accrued when it is
determined that a liability has been incurred. Previously, postretirement and
postemployment benefit costs were recognized as claims were paid or incurred.
Financial Instruments
---------------------
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
purchase or sale transaction.
Employee Stock Ownership Plan
-----------------------------
The company records the cost of its Employee Stock Ownership Plan (ESOP) using
the shares allocated transitional method prescribed by the Financial Accounting
Standards Board's Emerging Issues Task Force, 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 income;
preferred dividends, net of related tax benefits, are shown as a reduction from
net income. Unearned compensation-ESOP will be reduced as the principal of the
guaranteed ESOP notes is amortized.
Earnings Per Share of Common Stock
----------------------------------
Earnings per share computations are based upon net earnings (loss) attributable
to common shareholders and the weighted average number of common shares
outstanding each year. Fully diluted earnings per share computations assume that
the Series B ESOP Convertible Preferred Stock was converted into additional
outstanding common shares and that outstanding dilutive stock options were
exercised. In the fully diluted computation, net earnings (loss) attributable to
common shareholders is adjusted for additional ESOP contributions which would be
required if the Series B ESOP Convertible Preferred Stock was converted to
common shares and excludes the tax benefit of deductible common dividends upon
the assumed conversion of the Series B ESOP Preferred Stock. The fully diluted
loss per share in 1993 is the same as the net loss per common share because the
assumed exercise of stock options and conversion of preferred stock would have
been antidilutive.
BUSINESS SEGMENT INFORMATION
The company has two business segments: packaging, and aerospace and
communications. Packaging, the principal segment, was expanded during the
three-year reporting period with the acquisitions of Heekin Can, Inc. (Heekin)
and the commercial glass assets of Kerr Group, Inc. (Kerr), described in the
note, "Acquisitions." The results of these acquired businesses are included in
the packaging segment information below from their respective acquisition dates.
The packaging segment is comprised of the following operations:
Metal - manufacture of metal beverage and food containers, container ends and
specialty products.
Glass - manufacture of glass containers, primarily for use in the commercial
packaging of food, juice, wine and liquor.
The aerospace and communications segment is comprised principally of the
following businesses: electro-optics and cryogenics; space systems;
communication systems; time and frequency devices; and systems engineering.
Packaging segment sales to Anheuser-Busch Companies, Inc. represented
approximately 11 percent of consolidated sales in 1994 and 1993, and 14 percent
of consolidated sales in 1992. Sales to each of the Pepsi-Cola Company and The
Coca-Cola Company and their affiliates were less than 10 percent of consolidated
net sales in 1994 and represented 10 percent of consolidated net sales in 1993
and 1992. Sales to all bottlers of Pepsi-Cola and Coca-Cola branded beverages
comprised approximately 21 percent, 22 percent and 20 percent of consolidated
sales in 1994, 1993 and 1992, respectively. Sales to various U.S. government
agencies by the aerospace and communications segment represented approximately 8
percent of consolidated sales in 1994 and 1993 and 11 percent in 1992.
<PAGE>
<TABLE>
SUMMARY OF BUSINESS BY SEGMENT
<CAPTION>
(dollars in millions) 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
NET SALES
Packaging
Metal $1,576.1 $1,466.8 $1,154.0
Glass 750.6 698.7 715.8
--------- --------- ---------
Total packaging 2,326.7 2,165.5 1,869.8
Aerospace and communications 268.0 268.3 299.5
--------- --------- ---------
Consolidated net sales 2,594.7 2,433.8 2,169.3
========= ========= =========
INCOME (LOSS)
Packaging 153.3 105.6 121.2
Restructuring and other charges (1) -- (76.7) --
--------- --------- ---------
Total packaging 153.3 28.9 121.2
--------- --------- ---------
Aerospace and communications 23.1 3.3 21.7
Restructuring and other charges (1) (4.0) (29.1) --
--------- --------- ---------
Total aerospace and communications 19.1 (25.8) 21.7
--------- --------- ---------
CONSOLIDATED OPERATING EARNINGS 172.4 3.1 142.9
Corporate expenses, net (7.5) (5.7) (3.4)
Corporate restructuring and other charges (1) (2.8) (2.9) --
Interest expense (42.3) (45.9) (37.2)
--------- --------- ---------
Consolidated income (loss) from continuing operations
before taxes on income 119.8 (51.4) 102.3
========= ========= =========
ASSETS EMPLOYED IN OPERATIONS (2)
Packaging 1,383.9 1,371.8 1,168.5
Aerospace and communications 124.2 145.9 174.7
--------- --------- ---------
Assets employed in operations 1,508.1 1,517.7 1,343.2
Corporate (3) 220.9 248.7 184.0
Investments in packaging affiliates 30.8 29.2 14.6
Net assets of Alltrista operations -- -- 22.1
--------- --------- ---------
Total assets 1,759.8 1,795.6 1,563.9
========= ========= =========
PROPERTY, PLANT AND EQUIPMENT ADDITIONS
Packaging 87.9 128.3 98.2
Aerospace and communications 5.3 10.8 9.5
Corporate 1.3 1.8 2.5
--------- --------- ---------
Total additions 94.5 140.9 110.2
========= ========= =========
DEPRECIATION AND AMORTIZATION
Packaging 112.8 98.9 88.4
Aerospace and communications 11.5 13.1 13.0
Corporate 2.7 4.3 4.1
--------- --------- ---------
Total depreciation and amortization $ 127.0 $ 116.3 $ 105.5
========= ========= =========
<FN>
(1) Refer to the note, "Restructuring and Other Charges."
(2) Includes impairment reserves described in the note, "Restructuring and
Other Charges."
(3) Corporate assets include cash and temporary investments, current deferred
and prepaid income taxes, amounts related to employee benefit plans and
corporate facilities and equipment.
</FN>
</TABLE>
The company's major customers and principal facilities are located within the
U.S. and Canada. Financial information by geographic area is provided below.
Inter-area sales from the U.S. were primarily to Canada and generally were
priced with reference to prevailing market prices.
<PAGE>
<TABLE>
SUMMARY OF BUSINESS BY GEOGRAPHIC AREA
<CAPTION>
United Canada
(dollars in millions) States and Other Eliminations Consolidated
---------- --------- ------------ ------------
<S> <C> <C> <C> <C>
1994
----
Net sales
Sales to unaffiliated customers $ 2,314.9 $ 279.8 $ -- $ 2,594.7
Inter-area sales to affiliates 0.6 1.0 (1.6) --
----------- --------- ------- ---------- -
2,315.5 280.8 (1.6) 2,594.7
=========== ========= ======= ==========
Consolidated operating earnings (1) 152.7 19.7 -- 172.4
=========== ========= ======= ==========
Assets employed in operations $ 1,320.0 $ 193.3 $ (5.2) $ 1,508.1
=========== ========= ======= ==========
1993
----
Net sales
Sales to unaffiliated customers $ 2,165.1 $ 268.7 $ -- $ 2,433.8
Inter-area sales to affiliates 9.3 9.9 (19.2) --
----------- --------- ------- ----------
2,174.4 278.6 (19.2) 2,433.8
=========== ========= ======= ==========
Consolidated operating earnings (1) 3.8 (0.7) -- 3.1
=========== ========= ======= ==========
Assets employed in operations $ 1,287.4 $ 232.8 $ (2.5) $ 1,517.7
=========== ========= ======= ==========
1992
----
Net sales
Sales to unaffiliated customers $ 1,889.6 $ 279.7 $ -- $ 2,169.3
Inter-area sales to affiliates 6.1 2.9 (9.0) --
----------- --------- ------- ----------
1,895.7 282.6 (9.0) 2,169.3
=========== ========= ======= ==========
Consolidated operating earnings 133.3 9.6 -- 142.9
=========== ========= ======= ==========
Assets employed in operations $ 1,111.3 $ 232.8 $ (0.9) $ 1,343.2
=========== ========= ======= ==========
<FN>
(1) Refer to the note, "Restructuring and Other Charges."
</FN>
</TABLE>
<PAGE>
RESTRUCTURING AND OTHER CHARGES
In late 1993 plans were developed to undertake a number of restructuring actions
which included elimination of excess manufacturing capacity through plant
closures and consolidations, administrative consolidations, and the
discontinuance of two aerospace and communications segment product lines. In
connection therewith, pretax restructuring and other charges were recorded in
the third and fourth quarters of $14.0 million and $94.7 million, respectively,
for an aggregate charge to annual results of operations in 1993 of $108.7
million ($66.3 million after tax or $2.31 per share). A summary of these charges
by business segment and nature of the amounts provided appears below:
<TABLE>
<CAPTION>
Aerospace and
(dollars in millions) Packaging Communications Corporate Total
--------- -------------- --------- ------
<S> <C> <C> <C> <C>
Asset write-offs and write-downs to net
realizable values $36.7 $14.2 $1.6 $ 52.5
Employment costs and termination benefits 34.7 1.2 -- 35.9
Other 5.3 13.7 1.3 20.3
----- ----- ---- ------
$76.7 $29.1 $2.9 $108.7
===== ===== ==== ======
</TABLE>
Employment costs and termination benefits include the effects of work force
reductions and packaging segment pension curtailment losses of $14.2 million.
Other includes incremental costs associated with the planned phaseout of
facilities to be closed and estimated losses to be incurred prior to the
disposal of closed facilities and discontinued product lines.
At December 31, 1994 and 1993, restructuring and other reserves included in the
consolidated balance sheet and the changes in those reserves were as follows:
<TABLE>
<CAPTION>
Balance Sheet Caption
-----------------------------------------------
Current Noncurrent
(dollars in millions) Assets liabilities liabilities Total
------- ----------- ----------- -------
<S> <C> <C> <C> <C>
Restructuring and other charges to
operations in 1993 $ 49.5 $36.7 $22.5 $108.7
Noncash items (11.5) (2.0) -- (13.5)
Cash payments (2.7) (3.4) -- (6.1)
------- ------ ------ -------
Reserve at December 31, 1993 35.3 31.3 22.5 89.1
Additional provision in 1994 -- 4.0 -- 4.0
Noncash items (6.1) (5.7) (1.3) (13.1)
Cash payments (1.4) (15.7) (0.1) (17.2)
------- ------ ------ -------
Reserve at December 31, 1994 $ 27.8 $13.9 $21.1 $ 62.8
======= ====== ====== =======
</TABLE>
Included in assets are write-offs and write-downs of property, plant and
equipment and inventory to net realizable value. Employment costs and
termination benefits due to work force reductions are reflected in current
liabilities. Liabilities resulting from pension curtailment losses are included
in noncurrent liabilities. Of the total restructuring and other reserves
outstanding at December 31, 1994, $29.0 million will not impact future cash
flows apart from related tax benefits. The balance of the reserves, $33.8
million, represents future pretax cash outflows, which in large part are
expected to be expended in 1995. Pension funding will occur over an extended
period of time.
In 1994 additional nonrecurring charges were recorded which include $4.0 million
related to the VIGS unit.
DISPOSITION
In October 1994 the company signed a definitive agreement with Datum Inc. for
the sale of the Efratom division for approximately $26.5 million to be paid in a
combination of cash and Datum common stock. Efratom produces time and frequency
devices used in navigation and communication. The sale is expected to take place
in the first quarter of 1995. Total assets of the Efratom division at December
31, 1994 and 1993, were approximately $18.2 million and $16.0 million,
respectively. Operating income for the Efratom division was $3.1 million, $2.7
million and $2.5 million in 1994, 1993 and 1992, respectively.
SPIN-OFF
On March 23, 1993, the company's board of directors declared a dividend and
approved the distribution of 100 percent of the stock of Alltrista Corporation
(Alltrista), then a wholly owned subsidiary of the company, to the holders of
company common stock of record on April 2, 1993. Shareholders received one share
of Alltrista Corporation common stock for each four shares of Ball common stock
held on that date. The dividend distribution of $34.5 million represented the
net assets of $32.2 million, which included bank indebtedness of $75.0 million,
along with transaction costs of $2.3 million. Following the distribution,
Alltrista operated as an independent, publicly owned corporation.
Net sales of Alltrista were $67.4 million in 1993 through the date of
distribution and $268.6 million in 1992, while net income was $2.1 million
through the date of distribution in 1993 and $6.2 million in 1992. Alltrista net
income included interest expense allocated based on assumed indebtedness of
$75.0 million at Ball Corporation's weighted average interest rate for general
borrowings and allocated general and administrative expenses of $1.2 million and
$4.7 million for 1993 and 1992, respectively.
ACQUISITIONS
Heekin Can, Inc.
----------------
On March 19, 1993, the company acquired Heekin through a tax-free exchange of
shares accounted for as a purchase. Heekin is a manufacturer of metal food, pet
food and aerosol containers with 1992 sales of $355.0 million. Each outstanding
share of common stock of Heekin was exchanged for 0.769 shares of common stock
of the company. The consideration amounted to approximately $91.3 million,
consisting of 2,514,630 newly issued shares of the company's common stock which
were exchanged for 3,270,000 issued and outstanding shares of Heekin common
stock valued at $27.00 per share, and transaction costs of approximately $3.0
million. In connection with the acquisition, Ball also assumed $121.9 million of
Heekin indebtedness, of which $108.8 million was refinanced following the
acquisition. The purchase price has been assigned, based upon estimated fair
values, to acquired assets of $326.8 million, including goodwill of $47.0
million, and assumed liabilities of $235.5 million.
The following table illustrates the effects of the acquisition on a pro forma
basis as though it had occurred at January 1, 1993. The unaudited pro forma
combined financial information presented below is provided for informational
purposes only and does not purport to be indicative of the future results or
what the results of operations would have been had the acquisition been effected
on January 1, 1993.
<TABLE>
<CAPTION>
(dollars in millions except per share amounts) 1993
---------
<S> <C>
Net sales $2,506.7
=========
Loss from continuing operations before taxes on income (53.1)
=========
Net loss from continuing operations (33.6)
=========
Loss per share from continuing operations (1.26)
=========
Fully diluted loss per share from continuing operations $ (1.26)
=========
</TABLE>
Pro forma adjustments include incremental depreciation and amortization relating
to the allocation of the purchase price to property, plant and equipment and
goodwill, adjustment to employee benefit plan costs, principally to reflect
accounting practices and assumptions used by the company to record pension and
postretirement benefit expense, reduction in interest expense to reflect the
effect of refinancing Heekin indebtedness at lower rates available to the
company, and related tax effects.
Kerr Group, Inc. Commercial Glass Assets
----------------------------------------
On February 28, 1992, the company acquired certain assets of the commercial
glass manufacturing operations of Kerr Group, Inc. for $68.4 million. Assets
acquired included inventory, machinery and equipment and certain manufacturing
facilities. The excess of the purchase price over the net book value of the
assets acquired and liabilities assumed has been assigned to long-term assets,
including goodwill of $9.7 million, and will be amortized to expense over
periods corresponding to the useful lives of property, plant and equipment and,
in the case of goodwill, over 40 years.
ACCOUNTS RECEIVABLE
Sale of Trade Accounts Receivable
---------------------------------
In September 1993 the company entered into an agreement to sell, on a revolving
basis without recourse, an undivided percentage ownership interest in a
designated pool of up to $75.0 million of packaging trade accounts receivable.
The current agreement expires in December 1995 and includes an optional one year
extension. The company's retained credit exposure on receivables sold is limited
to $8.5 million.
At December 31, 1994 and 1993, a net amount of $66.5 million of trade
receivables had been sold under the accounts receivable sales program and was
reflected as a reduction of accounts receivable in the accompanying Consolidated
Balance Sheet. Costs of the program are based on certain variable interest
indices and are included in the caption, "General and administrative expenses."
Costs recorded in 1994 and 1993 amounted to $3.0 million and $0.6 million,
respectively.
Receivables in Connection with Long-Term Contracts
--------------------------------------------------
Accounts receivable under long-term contracts, net of reserves, were $47.6
million and $63.5 million at December 31, 1994 and 1993, respectively, and
include gross unbilled amounts representing revenue earned but not yet billable
of $12.4 million and $29.0 million, respectively. Approximately $2.6 million of
gross unbilled receivables at December 31, 1994, is expected to be collected
after one year.
OTHER ASSETS
The composition of other assets at December 31, 1994 and 1993, was as follows:
<TABLE>
<CAPTION>
(dollars in millions) 1994 1993
------ ------
<S> <C> <C>
Pension intangibles and deferred expense $45.2 $46.4
Investments in packaging affiliates 30.8 29.2
Other 17.3 17.3
------ ------
Total other assets $93.3 $92.9
====== ======
</TABLE>
Company Owned Life Insurance
----------------------------
The company has purchased insurance on the lives of certain groups of employees.
Premiums were approximately $20.0 million each year. Amounts in the Consolidated
Statement of Cash Flows represent net cash flows from this program including
related tax benefits. The company borrowed $23.4 million and $37.2 million in
1994 and 1993, respectively, from the accumulated net cash value. The policies
have been issued by Great-West Life Assurance Company and The Hartford Life
Insurance Company.
DEBT AND INTEREST COSTS
Short-Term Debt
---------------
At December 31, 1994, the company had uncommitted short-term facilities
available of approximately $450.0 million from various banks to provide funding
sources at competitive interest rates. The company's wholly owned Canadian
subsidiary had a Canadian commercial paper facility which provides additional
short-term funds of up to approximately $85.0 million. At December 31, 1994,
short-term debt outstanding consisted of $39.6 million in commercial paper and
$17.0 million under uncommitted short-term facilities with weighted average
interest rates of 6.0 percent and 6.8 percent, respectively. Short-term debt
outstanding at December 31, 1993, was comprised of $38.9 million in commercial
paper and $35.7 million under uncommitted short-term facilities with weighted
average interest rates of 4.2 percent and 3.5 percent, respectively.
<PAGE>
Long-Term Debt
--------------
Long-term debt at December 31, 1994 and 1993, consisted of the following:
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Notes Payable
Private placements:
8.09% to 8.75% serial installment notes (8.50% weighted
average) due 1996 through 2012 $110.0 $110.0
9.35% to 9.66% serial notes (9.56% weighted average) due
through 1998 60.0 80.0
9.65% to 10.00% serial notes (9.95% weighted average) due
through 1998 55.0 65.0
8.20% to 8.57% serial notes (8.35% weighted average) due 1999
through 2000 60.0 60.0
9.18% Canadian note due 1998 21.4 22.7
6.64% notes due 1995 20.0 20.0
8.875% installment notes due through 1998 8.0 10.0
Floating rate bank revolving credit -- 75.0
Industrial Development Revenue Bonds
Floating rates (5.50%-6.54% at December 31, 1994) due through 2011 34.1 34.9
7.00% to 7.75% due through 2009 2.0 11.0
Capital Lease Obligations and Other 10.7 13.7
ESOP Debt Guarantee
8.38% installment notes due through 1999 30.8 35.2
8.75% installment note due 1999 through 2001 25.1 25.1
------- -------
437.1 562.6
Less:
Current portion of long-term debt (60.1) (49.3)
------- -------
$377.0 $513.3
======= =======
</TABLE>
During the third quarter of 1994 the company entered into revolving credit
agreements totalling $300.0 million which consist of a $150.0 million three-year
facility and 364-day facilities of $150.0 million in the aggregate. The new
revolving credit agreements provide for various borrowing rate options including
borrowing rates based on a fixed spread over the London Interbank Offered Rate
(LIBOR). The company pays a facility fee on the committed facilities.
The note, bank credit and industrial development revenue bond agreements, and
guaranteed ESOP notes contain similar restrictions relating to dividends,
investments, working capital requirements, guarantees and other borrowings. If
financed with borrowings, the company had approximately $147.0 million available
for payment of dividends and certain investments under these agreements at
December 31, 1994.
ESOP debt represents borrowings by the trust for the company-sponsored ESOP
which have been irrevocably guaranteed by the company.
Maturities of fixed long-term debt obligations excluding the bank credit
agreements are $50.4 million, $56.7 million, $67.4 million and $51.2 million for
the years ending December 31, 1996 through 1999, respectively.
A summary of total interest cost paid and accrued follows:
<TABLE>
<CAPTION>
(dollars in millions) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Interest costs $44.5 $47.6 $38.2
Amounts capitalized (2.2) (1.7) (1.0)
------ ------ ------
Interest expense 42.3 45.9 37.2
====== ====== ======
Gross amount paid during year $38.9 $47.1 $33.4
====== ====== ======
</TABLE>
At December 31, 1994, letters of credit amounting to $25.4 million were
outstanding, primarily to provide security under insurance arrangements.
FINANCIAL AND DERIVATIVE INSTRUMENTS
The following table presents the carrying amounts and fair values of the
company's financial instruments at December 31, 1994 and 1993, as defined in
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments." Accounts
receivable and accounts payable are not included below because carrying amounts
approximate fair value. Deferred balances related to derivative financial
instruments which hedge interest risks on long-term debt are included in other
noncurrent liabilities.
Rates currently available to the company for loans with similar terms and
maturities are used to estimate the fair value of long-term debt. The fair value
of derivatives generally reflects the estimated amounts that the company would
pay or receive upon termination of the contracts at December 31, 1994 and 1993,
taking into account any unrealized gains or losses of open contracts.
<TABLE>
<CAPTION>
1994 1993
---------------------- ----------------------
Carrying Fair Carrying Fair
(dollars in millions) Amount Value Amount Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Nonderivatives
Long-term debt $437.1 $448.5 $562.6 $614.6
Derivatives relating to debt
Noncurrent liabilities -- (2.3) -- 0.6
</TABLE>
The company enters into derivative financial instruments to manage the costs of
borrowing, foreign exchange rate exposures and commodity price risks and
generally does not hold or issue financial instruments for trading purposes. The
following table summarizes the company's derivative financial instruments at
December 31, 1994 and 1993:
<TABLE>
<CAPTION>
Notional Amount
(dollars in millions) 1994 1993
------------ ------------
<S> <C> <C>
Interest rate swaps and swaptions:
Floating rate swaps $109.0 $30.0
Fixed rate offsetting swaps 75.0 --
Exchange rate forwards and futures 3.0 --
</TABLE>
The notional amounts of derivatives do not represent amounts exchanged and are
not a measure of the exposure to credit risk. The amounts exchanged are
calculated on the basis of the notional amounts. Although these instruments
involve varying degrees of credit, foreign currency exchange, and interest rate
risk, the counter parties to the agreements are major financial institutions
which are expected to perform fully under the terms of the agreements.
LEASES
Noncancellable operating leases in effect at December 31, 1994, require rental
payments of $18.1 million, $13.3 million, $9.7 million, $6.5 million and $4.9
million for the years 1995 through 1999, respectively, and $25.3 million for
years thereafter. Lease expense for all operating leases was $36.2 million,
$33.2 million and $26.3 million in 1994, 1993 and 1992, respectively.
TAXES ON INCOME
The amounts of income (loss) from continuing operations before income taxes by
national jurisdiction follow:
<TABLE>
<CAPTION>
(dollars in millions) 1994 1993 1992
------- ------- ------
<S> <C> <C> <C>
Domestic $104.6 $(44.1) $100.6
Foreign 15.2 (7.3) 1.7
------- ------- ------
$119.8 $(51.4) $102.3
======= ======= ======
</TABLE>
<PAGE>
The provision for income tax expense (benefit) for continuing operations was
comprised as follows:
<TABLE>
<CAPTION>
(dollars in millions) 1994 1993 1992
------ ------- ------
<S> <C> <C> <C>
Current
U.S. $29.2 $ 19.2 $32.7
State and local 6.9 0.8 6.5
Foreign 0.9 0.6 0.6
------ ------- ------
Total current 37.0 20.6 39.8
------ ------- ------
Deferred
U.S. 2.4 (33.8) (1.9)
State and local (0.5) (5.2) (0.5)
Foreign 5.8 (2.8) 0.8
------ ------- ------
Total deferred 7.7 (41.8) (1.6)
------ ------- ------
Total provision for income taxes $44.7 $(21.2) $38.2
====== ======= ======
</TABLE>
The reconciliation of the statutory U.S. income tax rate to the effective
income tax rate is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----- ------- ------
<S> <C> <C> <C>
Statutory U.S. federal income tax rate 35.0% (35.0)% 34.0%
Increase (decrease) in rates due to:
Tax effects of company owned life insurance (3.5) (7.1) (3.2)
State and local income taxes, net 3.2 (6.0) 3.8
Other 2.6 6.9 2.7
----- ------ ------
Effective income tax rate 37.3% (41.2)% 37.3%
===== ====== ======
</TABLE>
Provision is not made for additional U.S. or foreign taxes on undistributed
earnings of certain international operations 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 foreign earnings for which no provision has been
made.
Significant components of deferred tax (assets) liabilities follow:
<TABLE>
<CAPTION>
(dollars in millions) 1994 1993
-------- ---------
<S> <C> <C>
Gross deferred tax assets
Deferred compensation $ (17.7) $ (13.8)
Accrued employee benefits (43.3) (48.2)
Restructuring and other reserves (25.3) (38.8)
Other (31.2) (35.9)
-------- ---------
Total gross deferred tax assets (117.5) (136.7)
-------- ---------
Gross deferred tax liabilities:
Depreciation 120.5 132.9
Other 16.9 15.8
-------- ---------
Total gross deferred tax liabilities 137.4 148.7
-------- ---------
Net deferred tax liabilities $ 19.9 $ 12.0
======== =========
</TABLE>
Total income tax payments, including amounts accrued in prior years, were $18.5
million, $34.7 million and $53.5 million for 1994, 1993 and 1992, respectively.
PENSION BENEFITS
----------------
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. Plans for hourly employees provide benefits
based on fixed rates for each year of service. The company's 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 fixed income securities and
common stocks.
The composition of pension expense for salaried and hourly employee pension
plans follows:
<TABLE>
<CAPTION>
(dollars in millions) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Service cost - benefits earned during the period $12.5 $11.6 $ 9.1
Interest cost on projected benefit obligation 28.8 26.8 21.2
Investment return on plan assets 9.6 (49.0) (20.4)
Net amortization and deferral (39.3) 19.7 (7.2)
------ ------ ------
Net periodic pension expense 11.6 9.1 2.7
Alltrista net periodic pension credit included above - 0.1 0.5
------ ------ ------
Net periodic pension expense of continuing operations 11.6 9.2 3.2
Expense of defined contribution plans 0.9 0.9 1.0
------ ------ ------
Total pension expense $12.5 $10.1 $ 4.2
====== ====== ======
</TABLE>
Net curtailment losses of $12.3 million in 1993 were recognized in conjunction
with the decision to rationalize certain packaging operations and in connection
with the Alltrista spin-off.
The funded status of the plans at December 31, 1994 and 1993, was as follows:
<TABLE>
<CAPTION>
1994 1993
-------------------------- --------------------------
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
(dollars in millions) Benefits Assets Benefits Assets
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Vested benefit obligation $148.2 $147.9 $155.5 $159.6
Nonvested benefit obligation 5.3 24.5 7.2 26.9
----------- ----------- ----------- -----------
Accumulated benefit obligation 153.5 172.4 162.7 186.5
Effect of projected future compensation 21.5 0.3 27.0 --
----------- ----------- ----------- -----------
Projected benefit obligation 175.0 172.7 189.7 186.5
----------- ----------- ----------- -----------
Plan assets at fair value 188.3 118.5 202.0 123.7
----------- ----------- ----------- -----------
Plan assets in excess of (less than) projected
benefit obligation 13.3 (54.2) 12.3 (62.8)
Unrecognized transitional asset at January 1, 1987,
net of amortization (18.7) (1.8) (22.0) (2.1)
Prior service cost not yet recognized in net periodic
pension cost 2.9 28.4 3.6 29.6
Unrecognized net loss since initial application of
SFAS No. 87 19.3 12.5 22.9 14.8
Minimum pension liability (unfunded accumulated
benefit obligation) -- (39.1) -- (42.3)
----------- ----------- ----------- -----------
Prepaid (accrued) pension cost $ 16.8 $(54.2) $ 16.8 $(62.8)
=========== =========== =========== ===========
Actuarial assumptions used for plan calculations were:
Discount rate 8.75-9.75% 8.75-9.75% 7.5-8.0% 7.5-8.0%
Assumed rate of increase in future compensation 4.0% -- 4.0% --
Expected long-term rates of return on assets 10.5% 10.0-10.5% 10.5% 10.0-10.5%
</TABLE>
Where two discount rates are provided in the table above, the higher rate in
each case pertains to the company's Canadian pension plans. A portion of the
Canadian benefit obligation has been funded with a dedicated securities
portfolio having a market value of $16.4 million. The discount rate and expected
long-term rate of return used for this obligation and related asset portfolio
was 9.25 percent in 1994 and 8.75 percent in 1993.
In accordance with the provisions of SFAS No. 87, an additional minimum
liability of $39.1 million and $42.3 million is reflected at December 31, 1994
and 1993, respectively, for plans having unfunded accumulated benefit
obligations. The 1994 and 1993 additional minimum liabilities were offset
partially by intangible assets of $28.4 million and $29.6 million, respectively.
The remainder, $6.7 million in 1994 and $7.8 million in 1993, net of tax, was
recognized as a change in shareholders' equity. The 1994 reduction in the
additional minimum liability and the adjustment to equity were due primarily to
higher discount rates, partially offset by increased actuarial losses.
OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The company and its subsidiaries sponsor various defined benefit and defined
contribution postretirement benefit plans which provide retirement health care
and life insurance benefits to substantially all employees. In addition,
employees may become eligible, upon termination of active employment prior to
retirement, for long-term disability, medical and life insurance continuation
and other postemployment benefits. All of the company sponsored plans are
unfunded and, with the exception of life insurance benefits, are self-insured.
Effective January 1, 1993, the company adopted two new accounting standards for
these benefit costs, SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," and SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." SFAS No. 106 requires that the company's estimated
postretirement benefit obligations be accrued by the dates at which participants
attain eligibility for the benefits. Similarly, SFAS No. 112 mandates accrual
accounting for postemployment benefits.
Postretirement Medical and Life Insurance Benefits
--------------------------------------------------
Postretirement health care benefits are provided to substantially all of the
company's domestic nonunion, certain salaried and Canadian union employees. In
Canada, the company provides supplemental medical and other benefits in
conjunction with the Canadian national health care plan. Most domestic salaried
employees who retired prior to 1990 are covered by noncontributory defined
benefit medical plans with capped lifetime benefits. Employees who retired
during 1991 and 1992 are covered by similar contributory plans. U.S. employees
retiring after January 1, 1993, are provided a fixed subsidy by the company
toward each retiree's future purchase of medical insurance. Life insurance
benefits are noncontributory. Most employees not covered by company plans are
covered by collective bargaining agreements under which the company contributes
to multiemployer health and welfare plans. The company has no commitments to
increase monetary benefits provided by any of the postretirement benefit plans.
In connection with the adoption of SFAS No. 106, the company elected immediate
recognition of the previously unrecognized transition obligation through a
pretax, noncash charge to earnings as of January 1, 1993, in the amount of $46.0
million ($28.5 million after tax). Since Heekin had adopted SFAS No. 106 prior
to being acquired, its obligation for postretirement benefits was assumed by the
company and was not included in the cumulative effect of adopting the new
accounting standard. The accumulated postretirement benefit obligation (APBO)
represents, at the date of adoption, the full liability for postretirement
benefits expected to be paid with respect to retirees and a pro rata portion of
the benefits expected to be paid with respect to active employees.
Net periodic postretirement benefit cost for continuing operations in 1994 and
1993 included the following components:
<TABLE>
<CAPTION>
1994 1993
----------------------- -----------------------
U.S. Foreign U.S. Foreign
(dollars in millions) Plans Plans Total Plans Plans Total
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits attributed to
service during the period $1.4 $0.1 $1.5 $1.3 $ 0.1 $1.4
Interest cost on accumulated
postretirement benefit obligation 4.1 1.2 5.3 4.3 1.1 5.4
Net amortization and deferral 0.6 0.1 0.7 0.1 (0.1) --
----- ---- ---- ---- ------ ----
Net periodic postretirement benefit cost
$6.1 $1.4 $7.5 $5.7 $ 1.1 $6.8
===== ==== ==== ==== ====== ====
</TABLE>
Postretirement benefit expense was $7.5 million, $6.8 million and $2.3 million
in 1994, 1993 and 1992, respectively. The incremental expense for continuing
operations in 1993 resulting from adoption of SFAS No. 106 was approximately
$3.7 million, excluding the effect of the transition obligation which was
recognized as the cumulative effect on prior years of the change in accounting.
Contributions to multiemployer plans were $4.0 million, $3.8 million and $2.8
million in 1994, 1993 and 1992, respectively.
The health care cost trend rate used to value the APBO is assumed to decline to
6.0 percent for the U.S. plans and 6.75 percent for the Canadian plans after the
year 2003. A one percentage point increase in the health care cost trend rate
would increase the APBO as of December 31, 1994, by $3.8 million. The impact of
a one percentage point increase in the health care trend rate on the sum of the
service and interest costs in 1994 would have been an increase of $0.4 million.
<PAGE>
The status of the company's unfunded postretirement benefit obligation at
December 31, 1994 and 1993, follows:
<TABLE>
<CAPTION>
1994 1993
-------------------------------- --------------------------------
U.S. Foreign U.S. Foreign
(dollars in millions) Plans Plans Total Plans Plans Total
------- ------- ----- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees $ 28.7 $ 11.2 $39.9 $ 36.4 $ 13.1 $49.5
Fully eligible active plan participants 7.3 0.8 8.1 9.5 0.7 10.2
Other active plan participants 15.0 1.1 16.1 18.1 1.4 19.5
------- ------- ------ ------- ------- ------
51.0 13.1 64.1 64.0 15.2 79.2
Prior service cost not yet recognized in
net periodic postretirement benefit
cost (1.9) 0.9 (1.0) (2.0) 1.1 (0.9)
Unrecognized net gain (loss) from
experience and assumption changes 13.8 (2.9) 10.9 (2.9) (4.9) (7.8)
------- ------- ------ ------- ------- ------
Accrued postretirement benefit obligation $ 62.9 $ 11.1 $74.0 $ 59.1 $ 11.4 $70.5
======= ======= ====== ======= ======= ======
Assumptions used to measure the APBO were as follows:
Discount rate: 8.75% 9.75% -- 7.50% 8.00% --
Health care cost trend rates:
Canadian -- 12.00% -- -- 12.00% --
U.S. Pre-Medicare 11.00% -- -- 12.00% -- --
U.S. Post-Medicare 8.10% -- -- 8.40% -- --
</TABLE>
Other Postemployment Benefits
-----------------------------
The company elected early adoption of SFAS No. 112 and, effective January 1,
1993, recorded a noncash, pretax charge of $10.0 million ($6.2 million after
tax) to recognize the cumulative effect on prior years. Excluding the cumulative
effect on prior years, the annual cost for SFAS No. 112 was $2.2 million and
$2.1 million in 1994 and 1993, respectively, and approximates cash expenditures
in both years.
Other Benefit Plans
-------------------
Substantially all domestic salaried employees and certain domestic nonunion
hourly employees who participate in the company's 401(k) salary conversion plan
and meet certain eligibility requirements automatically participate in the
company's ESOP. Cash contributions to the ESOP trust, including preferred
dividends, are used to service the ESOP debt and were $9.5 million, $8.8 million
and $8.3 million for 1994, 1993 and 1992, respectively. Total interest paid by
the ESOP trust for its borrowings was $5.1 million, $5.4 million and $5.7
million for 1994, 1993 and 1992, respectively.
SHAREHOLDERS' EQUITY
At December 31, 1994, 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 (Series B ESOP Preferred). There
were 1,827,973 shares of Series B ESOP Preferred outstanding at December 31,
1994.
The Series B ESOP Preferred has a stated value and liquidation preference of
$36.75 per share and cumulative annual dividends of $2.76 per share. Each share
is convertible into not less than one share of common stock. The Series B 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 the corporation's
shareholders. Effective April 2, 1993, the conversion price and conversion ratio
of the Series B ESOP Preferred were adjusted in accordance with the antidilution
provisions of the security to give effect to, among other things, the dividend
of Alltrista common stock to holders of company common stock. The conversion
price was adjusted to $31.813 per share, from $36.75 per share, and the
conversion ratio was adjusted to 1.1552 shares of Ball Corporation Common Stock
for each share of Series B ESOP Preferred. The adjustments to the conversion
price and conversion ratio had no impact on the stated value and liquidation
preference of $36.75 per share.
On January 7, 1992, the company redeemed for $50.3 million all 503 shares of the
Series C Preferred Stock issued on November 30, 1990, in connection with the
purchase of the remaining 50 percent interest in the glass business.
Under the company's Shareholder Rights Plan, adopted in 1986, one Preferred
Stock Purchase Right is attached to each outstanding share of common stock of
the company. If a person or group acquires 20 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 common stock of the company
at a 50 percent discount. The rights expire in 1996, are redeemable by the
company at a redemption price of $.05 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 the
company'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, 1994, 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 Series B 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. Company contributions for this plan were $1.8 million, $2.0 million
and $1.7 million in 1994, 1993 and 1992, respectively.
The company has several stock option plans under which options to purchase
shares of common stock have been granted to officers and key employees of the
company and its subsidiaries at not less than the market value of the stock at
the date of grant. Payment must be 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 exercise date. Options terminate ten years from date of grant and are
exercisable in four equal installments commencing one year from date of grant.
Several option plans provide for, among other things, the discretionary grant of
stock appreciation rights in tandem with options and certain antidilution
provisions. Effective April 2, 1993, in conjunction with the dividend of
Alltrista common stock to holders of the company's common stock, the company
adjusted the number and exercise price of options outstanding as of that date in
accordance with the relevant antidilution provisions of the plans.
A summary of stock option activity for the years ended December 31, 1994 and
1993, follows:
<TABLE>
<CAPTION>
1994 1993
------------------------------------------ ----------------------------------------
Shares Price Range Shares Price Range
---------- ------------------------ ---------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 1,674,970 $12.960 - $38.500 1,695,753 $15.125 - $39.625
Exercised (122,283) $12.960 - $28.950 (178,536) $15.125 - $31.500
Granted 299,500 $26.375 - $28.250 273,365 $24.930 - $44.940
Canceled (72,739) $21.360 - $38.500 (380,105) $28.000 - $34.250
Effect of antidilution adjustment -- -- -- 264,493 $12.960 - $38.500
---------- ----------
Outstanding at end of year 1,779,448 $21.150 - $38.500 1,674,970 $12.960 - $38.500
========== ==========
Exercisable at end of year 1,170,574 $21.150 - $38.500 1,032,840 $12.960 - $38.500
========== ==========
Reserved for future grants 1,132,011 1,374,309
========== ==========
</TABLE>
RESEARCH AND DEVELOPMENT
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 amounted to $12.5 million, $15.7
million and $14.6 million for the years 1994, 1993 and 1992, respectively.
CONTINGENCIES
Environmental
-------------
The U. S. Environmental Protection Agency has 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 financial condition, results of operations, capital expenditures or
competitive position of the company.
Litigation
----------
Prior to the acquisition on April 19, 1991, of the lenders' position in the term
debt and 100 percent ownership of Ball Canada, the company had owned indirectly
50 percent of Ball Canada through a joint venture holding company owned equally
with Onex Corporation (Onex). The 1988 Joint Venture Agreement had included a
provision under which Onex, beginning in late 1993, could "put" to the company
all of its equity in the holding company at a price based upon the holding
company's fair value. Onex has since claimed that its "put" option entitled it
to a minimum value founded on Onex's original investment of approximately $22.0
million. On December 9, 1993, Onex served notice on the company that Onex was
exercising its alleged right under the Joint Venture Agreement to require the
company to purchase all of the holding company shares owned or controlled by
Onex, directly or indirectly, for an amount including approximately $30 million
in respect of the Class A-2 Preference Shares owned by Onex in the holding
company.
The company's position is that it has no obligation to purchase any shares from
Onex or to pay Onex any amount for such shares, since, among other things, the
Joint Venture Agreement, which included the "put" option, is terminated. On
January 24, 1994, the Ontario Court (General Division Commercial List) ordered
that Onex's August 1993 Application for Rectification to reform the Joint
Venture Agreement document be stayed, and the Court referred the parties to
arbitration on the matter. Onex is now pursuing its claim in arbitration before
the International Chamber of Commerce. The company filed its answer and
counterclaim on September 12, 1994. A hearing has been set to begin on May 30,
1995. The parties are currently engaged in discovery. The company believes that
it has meritorious defenses against Onex's claims, although, because of the
uncertainties inherent in the arbitration process, it is unable to predict the
outcome of this arbitration.
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(dollars in millions except per share amounts) First Second Third Fourth
1994 Quarter Quarter Quarter Quarter Total
---- -------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $ 587.3 $676.6 $717.5 $613.3 $2,594.7
-------- ------- ------- ------- ---------
Gross profit 55.4 71.3 81.5 75.2 283.4
-------- ------- ------- ------- ---------
Net income 10.5 17.2 23.3 22.0 73.0
Preferred dividends, net of tax benefit (0.8) (0.8) (0.8) (0.8) (3.2)
-------- ------- ------- ------- ---------
Net earnings attributable to common shareholders $ 9.7 $ 16.4 $ 22.5 $ 21.2 $ 69.8
======== ======= ======= ======= =========
Earnings per share of common stock $ 0.33 $ 0.55 $ 0.76 $ 0.71 $ 2.35
======== ======= ======= ======= =========
Fully diluted earnings per share $ 0.31 $ 0.52 $ 0.71 $ 0.66 $ 2.20
======== ======= ======= ======= =========
1993
----
Net sales $ 532.9 $663.0 $680.2 $557.7 $2,433.8
-------- ------- ------- ------- ---------
Gross profit 52.3 67.7 68.1 36.1 224.2
-------- ------- ------- ------- ---------
Net income (loss) from:
Continuing operations(1) 9.1 13.3 3.8 (58.7) (32.5)
Alltrista operations 2.1 -- -- -- 2.1
-------- ------- ------- ------- ---------
Net income (loss) before cumulative effect of
changes in accounting principles 11.2 13.3 3.8 (58.7) (30.4)
Cumulative effect of changes in accounting
principles, net of tax benefit (34.7) -- -- -- (34.7)
-------- ------ ------- ------- ---------
Net income (loss) (23.5) 13.3 3.8 (58.7) (65.1)
Preferred dividends, net of tax benefit (0.8) (0.8) (0.8) (0.8) (3.2)
-------- ------ ------- ------- ---------
Net earnings (loss) attributable to common
shareholders $ (24.3) $ 12.5 $ 3.0 $(59.5) $ (68.3)
======== ======= ======= ======= =========
Net earnings (loss) per share of common stock:
Continuing operations(1) $ 0.31 $ 0.43 $ 0.10 $(2.02) $ (1.24)
Alltrista operations 0.08 -- -- -- 0.07
Cumulative effect of changes in accounting
principles, net of tax benefit (1.29) -- -- -- (1.21)
-------- ------- ------- ------- ---------
$ (0.90) $ 0.43 $ 0.10 $(2.02) $ (2.38)
======== ======= ======= ======= =========
Fully diluted earnings (loss) per share:(2)
Continuing operations(1) $ 0.30 $ 0.41 $ 0.10 $(2.02) $ (1.24)
Alltrista operations 0.08 -- -- -- 0.07
Cumulative effect of changes in accounting
principles, net of tax benefit (1.28) -- -- -- (1.21)
-------- ------- ------- ------- ---------
$ (0.90) $ 0.41 $ 0.10 $(2.02) $ (2.38)
======== ======= ======= ======= =========
<FN>
(1) Includes $14.0 million ($8.5 million after tax) in the third quarter and
$94.7 million ($57.8 million after tax) in the fourth quarter of
restructuring and other charges. See the note, "Restructuring and Other
Charges."
(2) Fully diluted earnings (loss) per share in 1993 is the same as net earnings
(loss) per common share because the assumed exercise of stock options and
conversion of the preferred stock would have been antidilutive.
</FN>
</TABLE>
Earnings per share calculations for each quarter are based on the weighted
average number of shares outstanding for each period, and the sum of the
quarterly amounts may not equal the annual earnings per share amount.
Exhibit 21.1
------------
SUBSIDIARY LIST (1)
Ball Corporation and Subsidiaries
The following is a list of subsidiaries of Ball Corporation (an Indiana
Corporation) which are included in the financial statements on a consolidated
basis:(2)
<TABLE>
<CAPTION>
State or Country of
Name Incorporation or Organization
-------------------------------------------- -----------------------------
<S> <C>
Ball Brothers AG Switzerland
Ball-Canada Holdings Inc. Ontario, Canada
Ball Efratom Elektronik GmbH (3) Federal Republic of Germany
Efratom Holding, Inc. Colorado
Efratom Time and Frequency Products, Inc. (3) Colorado
Ball Foreign Sales Corporation Barbados
Ball Glass Container Corporation Delaware
Ball Metal Container Corporation Indiana
Ball Packaging Products Canada, Inc. Canada
Ball Systems Technology Limited United Kingdom
Ball Technology Licensing Corporation Indiana
Ball Technology Services Corporation California
CCD, Inc. Delaware
Earthwatch, Incorporated Colorado
Heekin Can, Inc. Delaware
Madera Glass Company California
Muncie & Western Railroad Company Indiana
</TABLE>
The following is a list of affiliates of Ball Corporation included in the
financial statements on the equity basis of accounting:
<TABLE>
<CAPTION>
Percentage State or Country
Name Ownership(4) of Incorporation
-------------------------------------- ------------ --------------------------
<S> <C> <C>
Ball Packaging Products Holdings, Inc. 50 Ontario, Canada
FTB Packaging Limited 72 Hong Kong
Guangzhou M.C. Packaging, Ltd. 10 Peoples Republic of China
MCP-Ball International Limited 40 Hong Kong
Phoenix Packaging, Inc. 25 Ohio
FTB Tooling and Engineering Limited 72 Hong Kong
Richford Properties Limited 72 Hong Kong
Xian Kunlun FTB Packaging Limited 72 Hong Kong
Zhuhal FTB Packaging Limited 24 Hong Kong
Sanshui Jianlibao FTB Company Limited 25 Hong Kong
Jianlibao FTB Beverage and Can Manufacturer
(Shanghai) Limited 29 Hong Kong
<FN>
(1) In accordance with Regulation S-K, Item 601(b)(22)(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(v).
(2) Each of the consolidated subsidiaries listed is directly or indirectly
wholly-owned by the Registrant, except Madera Glass Company, in which the
Registrant indirectly owns 51 percent of the voting share capital.
(3) These companies were sold on March 17, 1995.
(4) Represents the Registrant's direct and/or indirect ownership in each of
the subsidiaries' voting share capital.
</FN>
</TABLE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
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 and
33-40196) 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 and 33-51121) of Ball Corporation of our report dated January 23, 1995
appearing on page 17 of the 1994 Annual Report to Shareholders which is
incorporated by reference in this Annual Report on Form 10-K.
/s/ PRICE WATERHOUSE LLP
Indianapolis, Indiana
March 29, 1995
Exhibit 24.1
------------
FORM 10-K
LIMITED POWER OF ATTORNEY
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, Albert R. Schlesinger, and George A. Sissel, 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.
Dated: March 29, 1995
------------------------
/s/ R. David Hoover /s/ Howard M. Dean
-------------------------------- -----------------------------------------
R. David Hoover Officer Howard M. Dean Director
/s/ Albert R. Schlesinger /s/ John T. Hackett
--------------------------------- ------------------------------------------
Albert R. Schlesinger Officer John T. Hackett Director
/s/ George A. Sissel /s/ John F. Lehman
--------------------------------- ------------------------------------------
George A. Sissel Officer John F. Lehman Director
/s/ Jan Nicholson
------------------------------------------
Jan Nicholson Director
/s/ Alvin Owsley
` ------------------------------------------
Alvin Owsley Director
/s/ George A. Sissel
------------------------------------------
George A. Sissel Director
/s/ Delbert C. Staley
------------------------------------------
Delbert C. Staley Director
/s/ W. Thomas Stephens
------------------------------------------
W. Thomas Stephens Director
/s/ William P. Stiritz
------------------------------------------
William P. Stiritz Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1994 AND THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1994 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 10,400
<SECURITIES> 0
<RECEIVABLES> 204,500
<ALLOWANCES> 0
<INVENTORY> 414,000
<CURRENT-ASSETS> 698,100
<PP&E> 1,486,000
<DEPRECIATION> 706,100
<TOTAL-ASSETS> 1,759,800
<CURRENT-LIABILITIES> 499,700
<BONDS> 377,000
<COMMON> 226,200
0
11,900
<OTHER-SE> 378,600
<TOTAL-LIABILITY-AND-EQUITY> 1,759,800
<SALES> 2,594,700
<TOTAL-REVENUES> 2,594,700
<CGS> 2,311,300
<TOTAL-COSTS> 2,311,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,300
<INCOME-PRETAX> 119,800
<INCOME-TAX> 44,700
<INCOME-CONTINUING> 73,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,000
<EPS-PRIMARY> 2.35
<EPS-DILUTED> 2.20
</TABLE>
