UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT
OF 1934 For the quarterly period ended
September 29, 1996
Commission file number 1-7349
BALL CORPORATION
State of Indiana 35-0160610
345 South High Street, P.O. Box 2407
Muncie, IN 47307-0407
317/747-6100
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at October 27, 1996
Common Stock,
without par value 30,515,573 shares
<PAGE>
<TABLE>
Ball Corporation and Subsidiaries
QUARTERLY REPORT ON FORM 10-Q
For the period ended September 29, 1996
INDEX
<CAPTION>
Page Number
---------------------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Unaudited Condensed Consolidated Statement of
Income (Loss) for the three and nine month periods ended
September 29, 1996 and October 1, 1995 3
Unaudited Condensed Consolidated Balance Sheet at September 29,
1996 and December 31, 1995 4
Unaudited Condensed Consolidated Statement of Cash Flows for
the nine month periods ended September 29, 1996 and
October 1, 1995 5
Notes to Unaudited Condensed Consolidated Financial Statements
6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II. OTHER INFORMATION 11
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Ball Corporation and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
(Millions of dollars except per share amounts)
<CAPTION>
Three months ended Nine months ended
--------------------------------- ---------------------------------
September 29, October 1, September 29, October 1,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
----------------- ------------ ----------------- ------------
Net sales $ 622.2 $ 760.7 $ 1,684.3 $ 2,121.5
----------------- ------------ ----------------- ------------
Costs and expenses
Cost of sales 566.7 690.9 1,539.1 1,911.2
General and administrative expenses 17.0 23.1 57.3 69.8
Selling and product development expenses 5.1 5.4 12.7 18.7
Net loss on dispositions of businesses -- 113.3 -- 109.5
Interest expense 10.5 10.2 30.3 30.5
----------------- ------------ ----------------- ------------
599.3 842.9 1,639.4 2,139.7
----------------- ------------ ----------------- ------------
Income (loss) before taxes on income, minority
interests and equity in earnings of affiliates 22.9 (82.2) 44.9 (18.2)
Provision for income tax (expense) benefit (3.7) 24.2 (11.8) 0.1
Minority interests (0.3) (1.6) (0.1) (4.2)
Equity in earnings of affiliates 1.2 2.3 4.4 3.2
----------------- ------------ ----------------- ------------
Net income (loss) 20.1 (57.3) 37.4 (19.1)
Preferred dividends, net of tax benefit (0.7) (0.7) (2.2) (2.3)
----------------- ------------ ----------------- ------------
Earnings (loss) attributable to common
shareholders $ 19.4 $ (58.0) $ 35.2 $ (21.4)
================= ============ ================= ============
Earnings (loss) per share of common stock $ 0.64 $ (1.93) $ 1.16 $ (0.71)
================= ============ ================= ============
Fully diluted earnings (loss) per share $ 0.60 $ (1.93) $ 1.11 $ (0.71)
================= ============ ================= ============
Cash dividends declared per common share $ 0.15 $ 0.15 $ 0.45 $ 0.45
================= ============ ================= ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
Ball Corporation and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(Millions of dollars)
<TABLE>
<CAPTION>
September 29, December 31,
1996 1995
---------------- ----------------
<S> <C> <C>
ASSETS
Current assets
Cash and temporary investments $ 10.8 $ 5.1
Accounts receivable, net 386.4 200.0
Inventories, net
Raw materials and supplies 91.2 82.8
Work in process and finished goods 196.7 235.7
Deferred income tax benefits and prepaid expenses 80.4 69.1
------------------ ------------------
Total current assets 765.5 592.7
------------------ ------------------
Property, plant and equipment, at cost 1,267.5 1,146.8
Accumulated depreciation (551.7) (518.2)
------------------ ------------------
715.8 628.6
------------------ ------------------
Investment in affiliates 269.1 262.8
Goodwill and other assets 153.5 128.4
------------------ ------------------
$ 1,903.9 $ 1,612.5
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt and current portion of long-term debt $ 292.8 $ 155.0
Accounts payable 250.9 195.3
Salaries, wages and other current liabilities 125.8 147.2
------------------ ------------------
Total current liabilities 669.5 497.5
------------------ ------------------
Noncurrent liabilities
Long-term debt 427.8 320.4
Employee benefit obligations, deferred income taxes and other 182.1 205.9
------------------ ------------------
Total noncurrent liabilities 609.9 526.3
------------------ ------------------
Contingencies
Minority interests 7.3 6.0
------------------ ------------------
Shareholders' equity
Series B ESOP Convertible Preferred Stock 62.4 65.6
Unearned compensation - ESOP (47.3) (50.4)
------------------ ------------------
Preferred shareholder's equity 15.1 15.2
------------------ ------------------
Common stock (issued 32,807,794 shares - 1996;
32,172,768 shares - 1995) 313.9 293.8
Retained earnings 357.8 336.4
Treasury stock, at cost (2,197,145 shares - 1996;
2,058,173 shares - 1995) (69.6) (62.7)
------------------ ------------------
Common shareholders' equity 602.1 567.5
------------------ ------------------
$ 1,903.9 $ 1,612.5
================== ==================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
Ball Corporation and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(Millions of dollars)
<TABLE>
<CAPTION>
Nine months ended
-------------------------------------
September 29, October 1,
1996 1995
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 37.4 $ (19.1)
Reconciliation of net income (loss) to net cash provided by operating
activities:
Net loss on dispositions, restructuring and other -- 109.5
Depreciation and amortization 63.7 92.3
Deferred taxes on income 14.4 (14.9)
Other, net (20.4) (28.6)
Changes in working capital components (91.8) (101.1)
---------------- ----------------
Net cash provided by operating activities 3.3 38.1
---------------- ----------------
Cash flows from financing activities
Net change in long-term debt 124.0 (54.9)
Net change in short-term debt 124.1 (17.5)
Common and preferred dividends (16.1) (16.0)
Net proceeds from issuance of common stock under various employee and
shareholder plans 20.0 25.7
Acquisitions of treasury stock (6.8) (19.0)
Other, net (30.3) (1.2)
---------------- ----------------
Net cash provided by (used in) financing activities 214.9 (82.9)
---------------- ----------------
Cash flows from investing activities
Additions to property, plant and equipment (144.5) (126.5)
Net cash related to the dispositions of businesses (14.6) 332.0
Investments in and advances to affiliates and foreign joint ventures (39.4) (218.1)
Net cash flows from company owned life insurance (8.5) 85.0
Other, net (5.5) 3.5
---------------- ----------------
Net cash (used in) provided by investing activities (212.5) 75.9
---------------- ----------------
Net increase in cash 5.7 31.1
Cash and temporary investments:
Beginning of period 5.1 10.4
================ ================
End of period $ 10.8 $ 41.5
================ ================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
Ball Corporation and Subsidiaries
September 29, 1996
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General.
The accompanying condensed consolidated financial statements have been prepared
by the company without audit. Certain information and footnote disclosures,
including significant accounting policies, normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. However, the company believes that the financial
statements reflect all adjustments which are necessary for a fair statement of
the results for the interim period. Results of operations for the periods shown
are not necessarily indicative of results for the year, particularly in view of
some seasonality in packaging operations. It is suggested that these unaudited
condensed consolidated financial statements and accompanying notes should be
read in conjunction with the consolidated financial statements and the notes
thereto included in the company's latest annual report.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
reported amounts of revenues and expenses during the reporting period. Future
events could affect these estimates.
2. Reclassifications.
Certain prior year amounts have been reclassified to conform with the 1996
presentation.
3. Ball-Foster.
Effective October 1, 1996, the company sold its remaining 42 percent indirect
interest in Ball-Foster Glass Container Co., L.L.C. (Ball-Foster), a
manufacturer of glass containers, to a wholly owned subsidiary of Saint-Gobain
Corporation for approximately $190 million in cash. The company expects to
report a fourth quarter gain from the sale of this investment. The unaudited
financial results of the company's then significant equity affiliate,
Ball-Foster follow:
<TABLE>
<CAPTION>
Three months ended Nine months ended
(dollars in millions) September 29, 1996 September 29, 1996
-------------------- --------------------
<S> <C> <C>
Net sales $ 365.6 $ 1,082.7
Cost of sales 296.4 981.4
Net income (loss) reported by Ball-Foster 9.5 (16.5)
Net income (loss) attributable to Ball Corporation $ 4.0 $ (6.9)
=========== ==============
Net income (loss) after taxes included in equity earnings of
affiliates $ 2.0 $ (4.3)
After-tax impact of reserves released -- 7.0
----------- --------------
Net income after taxes attributable to Ball's investment in
Ball-Foster included in equity earnings of affiliates $ 2.0 $ 2.7
=========== ==============
</TABLE>
The year-to-date net loss reported by Ball-Foster includes a provision for costs
associated with the closure of two glass manufacturing facilities that were
previously owned by Ball and amortization of moulds previously capitalized by
the Foster-Forbes glass business. Ball's share of Ball-Foster's net loss was
more than offset by the after-tax benefits from the release of certain reserves
during the second quarter, provided by Ball in connection with the sale of the
glass business to Ball-Foster in 1995, and that Ball has since determined are no
longer required.
<PAGE>
4. Subsequent Event.
On November 8,1996, the company announced that it has signed an agreement with
Lam Soon (Hong Kong) Limited to acquire Lam Soon's controlling interest in M.C.
Packaging (Hong Kong) Limited for approximately $73 million. The acquisition,
which will be made through the company's Hong Kong-based subsidiary, FTB
Packaging Limited, is expected to close by early in 1997, subject to receiving
certain approvals.
M.C. Packaging produces two-piece aluminum beverage cans as well as three-piece
steel beverage and general purpose cans and plastic packaging products. M.C.
Packaging has 14 manufacturing sites, one in Hong Kong and 13 through affiliates
in the People's Republic of China, with a 19 percent market share of beverage
cans in the PRC and a 50 percent beverage can market share in Hong Kong. Sales
in 1995 were $195 million. FTB currently operates seven plants in China,
primarily producing beverage cans and ends, with a 30 percent market share.
Along with the acquisition of the controlling interest in M.C. Packaging, a
general offer will be made to acquire outstanding public shares of M.C.
Packaging. If all public shares are tendered, Ball would ultimately expect to
own, directly and indirectly, approximately 74 percent of M.C. Packaging.
5. Shareholders' Equity.
Issued and outstanding shares of the Series B ESOP Convertible Preferred Stock
were 1,699,900 shares at September 29, 1996, and 1,786,852 shares at December
31, 1995.
6. Contingencies.
In the ordinary course of business, the company is subject to various risks and
uncertainties due, in part, to the highly competitive nature of the industries
in which the company participates, its operations in developing markets outside
the U.S., volatile costs of commodity materials used in the manufacture of its
products, and changing capital markets. Where possible and practicable, the
company attempts to minimize these risks and uncertainties.
From time to time, the company is subject to routine litigation incidental to
its business. Additionally, 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.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated net sales and operating earnings for the third quarter of 1996 were
$622.2 million and $36.1 million, respectively, compared to $760.7 million and a
loss of $70.5 million for the third quarter of 1995, respectively. The 1995
third quarter loss includes a $113.3 million charge related to the sale of the
glass business to Ball-Foster, as more fully described below. Excluding the 1995
glass operating results and the impact of the sale of the glass business,
comparable 1996 third quarter operating earnings were marginally higher than
1995. For the first nine months of 1996, consolidated net sales and operating
earnings were $1.7 billion and $81.0 million, respectively, compared to $2.1
billion and $17.8 million, respectively, for the 1995 nine month period.
Excluding the 1995 operating results and net loss from businesses disposed,
comparable consolidated operating earnings for the year-to-date period of 1996
declined 19.1 percent from the same period of 1995. This decline in 1996
operating earnings was primarily attributable to lower earnings in the metal
beverage container business and continued startup losses within the company's
new PET plastic container business.
Consolidated interest expense was $10.5 million in the third quarter of 1996
compared to $10.2 million in the 1995 third quarter. Higher interest expense in
the 1996 third quarter reflects higher average debt levels partially offset by
lower rates on interest-sensitive borrowings. For the year-to-date periods,
interest expense was $30.3 million and $30.5 million for 1996 and 1995,
respectively. For the nine month periods, interest expense was lower in 1996, a
result of lower first quarter 1996 borrowings and lower rates on
interest-sensitive borrowings.
The U.S. Internal Revenue Service (IRS) concurred with the company's position on
certain tax matters in connection with a routine examination of its federal
income tax return. As a result, the company recognized in net income, through a
reduction of the provision for taxes on income, a refund from the IRS. Further,
as a result of recently enacted changes in the tax law related to company owned
life insurance, the company is required to exclude from deductible expenses a
portion of interest incurred in connection with this program, retroactive to
January 1, 1996. As a result, the provision for taxes on income was increased
during the third quarter. The net effect of these tax adjustments was an
increase in 1996 third quarter net income of $4.3 million, or 14 cents per
share.
Equity in earnings of affiliates was $1.2 million and $2.3 million for the third
quarters of 1996 and 1995, respectively. For the nine month periods, equity in
earnings of affiliates was $4.4 million and $3.2 million for 1996 and 1995,
respectively. Included in the 1996 third quarter and nine month results was the
effect of the company's 42 percent share of Ball-Foster's operating earnings of
$2.0 million and $2.7 million, after taxes, respectively. The nine month period
of 1996 reflects a second quarter operating loss reported by Ball-Foster
essentially offset by after-tax benefits from the release of certain reserves,
provided by Ball in connection with the sale of the glass business to
Ball-Foster in 1995, and that Ball has since determined are no longer required.
In addition, the company recorded its share of losses reported by EarthWatch
Inc., a development stage company. The impact of EarthWatch on the quarter and
year-to-date periods of 1996 was a loss of $0.6 million and a loss of $2.2
million, respectively. The losses in the comparable 1995 periods were not
significant. Internationally, consolidated third quarter operating earnings of
FTB Packaging Limited, the company's Hong Kong-based subsidiary, were marginally
ahead of the comparable 1995 period. Lower results from international equity
affiliates in the 1996 third quarter largely reflect pre-operating costs in
connection with expansion into Brazil and Thailand. For the nine months of 1996,
results from those affiliates exceeded that period in 1995, despite the
unfavorable impact from expansion activity. The company's new plants in Brazil
and Thailand are scheduled for startup in early 1997.
Net income and earnings per common share for the third quarter of 1996 were
$20.1 million and 64 cents per share, compared to a loss of $57.3 million and
$1.93 per share in the third quarter of 1995. For the nine months of 1996 and
1995, net income was $37.4 million, or $1.16 per share, and a net loss of $19.1
million, or 71 cents per share, respectively. Excluding the impact of the 1995
dispositions of businesses, comparable 1996 year-to-date net income declined
33.5 percent due primarily to lower operating results as discussed above.
Business Segments
Packaging
Packaging net sales for the third quarter and year-to-date periods of 1996 were
22.6 percent and 25.2 percent lower, respectively, than prior year's net sales.
Excluding the operating results of the glass container business in 1995,
comparable packaging net sales for the third quarter and nine month periods of
1996 exceeded 1995 amounts by 2.0 percent and 5.3 percent, respectively,
reflecting increased sales in the metal food container business and first year
sales from the company's new PET plastic container business, which were
partially offset by lower metal beverage container sales. Operating results for
the packaging segment, excluding the consolidated 1995 glass container results
recorded prior to the 1995 disposition and the impact of the sale of the glass
business, were 1.1 percent and 30.1 percent lower for the third quarter and
year-to-date period of 1996, respectively. The marginal decline in the 1996
third quarter reflects lower metal beverage container earnings and startup
losses of the PET plastic container business largely offset by improved 1996
metal food container operating earnings . The nine month period of 1996 reflects
lower results in the metal beverage container business, as well as the impact of
startup losses in the PET plastic container business and a $2.7 million pretax
charge for a reduction in packaging administrative staff, all of which was
partially offset by higher metal food container earnings .
Within the packaging segment, North American metal beverage container shipments
of cans and ends have increased by 4 percent and 7 percent for the third quarter
and nine month periods of 1996, respectively, compared to prior year. The impact
of increased shipping volume on net sales has been substantially offset by lower
selling prices, due to the effect of lower market prices for aluminum sheet and
competitive pricing. Lower operating earnings in the North American metal
beverage container business were a result of lower metal pricing and
manufacturing inefficiencies caused by the conversion of production capabilities
to smaller diameter ends and lower gauge aluminum. Sales of metal beverage
containers in China by the company's Hong Kong-based subsidiary increased for
the 1996 third quarter and year-to-date periods versus 1995, though year-to-date
operating earnings were lower due to metal cost increases and competitive
pricing.
Sales in the North American metal food container business increased in excess of
6 percent for the third quarter and nine month periods of 1996 compared to 1995,
with third quarter operating earnings that more than doubled those of the prior
year period. Operating earnings for the year-to-date period were approximately
80 percent higher compared to the prior year period. A 9 percent increase in
food container shipments for the year and improved manufacturing efficiencies
contributed to the improved results. Subsequent to the 1996 third quarter, the
company sold its aerosol can manufacturing business.
The effect of this disposition has not yet been quantified.
The company's PET plastic container facilities in Chino, California and
Baldwinsville, New York began shipping containers in the first quarter of 1996,
and a third plant in Reading, Pennsylvania became operational in June. A fourth
manufacturing plant in Ames, Iowa was announced in late May, with production
scheduled to begin in early 1997. On November 4, 1996, the company entered into
a definitive agreement to acquire certain assets of Brunswick Container, a
company which manufactures PET plastic bottles, for approximately $30 million.
Aerospace and Technologies
Net sales for the aerospace and technologies segment for the third quarter and
nine month periods of 1996 were 21.0 percent and 15.8 percent higher than the
prior year. Segment operating earnings for the third quarter of 1996 were 54.5
percent higher than the same quarter of 1995, and the 1996 nine month results
were marginally higher than those of the prior year, which included an $11.8
million gain on the sale of the Efratom business in March 1995 and a charge of
$8.0 million for additional costs related to the discontinuance of the imaging
products business. Excluding the effects of the Efratom and imaging products
businesses from 1995 results, sales and operating earnings for the nine month
period of 1996 were 20.6 percent and 21.7 percent higher, respectively, than the
nine month period of 1995. The increased sales and earnings are primarily
attributable to a significant, classified multi-year contract into which the
company entered in late 1995. Contract backlog was $373 million at September 29,
1996, compared to $420 million and $369 million at December 31, 1995 and October
1, 1995, respectively.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $3.3 million for the nine months
of 1996 compared to $38.1 million for the same period of 1995. The decrease in
cash provided by operations is primarily due to lower operating earnings from
packaging operations. Capital spending for the first nine months of 1996 of
$144.5 million was primarily for construction of the PET plastic container
facilities, the completion of lightweighting projects in North American beverage
packaging facilities, and construction of international metal packaging
facilities. Total capital spending for 1996 is anticipated to be under $200
million. In addition, the company provided $39.4 million for investments in and
advances to equity affiliates in the first nine months of 1996 largely in Brazil
and Thailand. The company's investment in Ball-Foster largely comprised the
$218.1 million reported as the change in cash attributable to investments in and
advances to equity affiliates in 1995.
Working capital (excluding cash and current debt) was $378.0 million at
September 29, 1996 compared to $245.1 million at December 31, 1995. The increase
of $132.9 million largely related to higher accounts receivable resulting from
the effect of normal seasonal working capital requirements primarily in the food
business. The working capital ratio (total current assets divided by total
current liabilities) was 1.14 at the 1996 third quarter end versus 1.19 at year
end 1995.
Total debt at September 29, 1996 was $720.6 million compared to $475.4 million
at December 31, 1995. The increase of $245.2 million was used to fund operations
including seasonal working capital requirements, capital spending and
investments in affiliates. Debt-to-total capitalization at the end of the 1996
third quarter increased to 53.6 percent from 44.7 percent at year end 1995,
reflecting the higher level of debt.
In January 1996, the company completed a private placement of long-term senior
notes totaling $150 million. At September 29, 1996, the company had committed
revolving credit facilities of $280 million with various banks consisting of a
$150 million, five-year facility and 364-day facilities amounting to $130
million. The company also had $356 million in uncommitted credit facilities from
various banks, of which $105 million was outstanding, and a Canadian dollar
commercial paper facility of approximately $88 million, of which $66 million was
outstanding. The company's Hong Kong-based metal packaging subsidiary had
uncommitted credit facilities of approximately $79 million of which $45 million
was outstanding. Under the company's receivable sale agreement, a net amount of
$66.5 million of domestic packaging trade receivables have been sold without
recourse at September 29, 1996, which are reflected as a reduction in accounts
receivable. Fees in connection with this program, included in general and
administrative expenses, were $2.7 million and $3.3 million for the nine month
periods of 1996 and 1995, respectively.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings
There were no events required to be reported under Item 1 for the quarter ending
September 29, 1996.
Item 2. Changes in securities
There were no events required to be reported under Item 2 for the quarter ending
September 29, 1996.
Item 3. Defaults upon senior securities
There were no events required to be reported under Item 3 for the quarter ending
September 29, 1996.
Item 4. Submission of matters to a vote of security holders
There were no events required to be reported under Item 4 for the quarter ending
September 29, 1996.
Item 5. Other information
On November 8,1996, the company announced that it has signed an agreement with
Lam Soon (Hong Kong) Limited to acquire Lam Soon's controlling interest in M.C.
Packaging (Hong Kong) Limited for approximately $73 million. The acquisition,
which will be made through the company's Hong Kong-based subsidiary, FTB
Packaging Limited, is expected to close by early in 1997, subject to receiving
certain approvals.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
10.1 Ball Corporation Long-Term Cash Incentive Plan dated October 25,
1994, as amended October 23, 1996.
11.1 Statement Re: Computation of Earnings per Share
27.1 Financial Data Schedule for the Nine Months Ending September 29,
1996
99.1 Cautionary statement for purposes of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995
99.2 Press release announcing an agreement dated November 8, 1996,
between Ball Corporation and Lam Soon (Hong Kong) Limited to
acquire Lam Soon's controlling interest in M.C. Packaging (Hong
Kong)Limited.
(b) Reports on Form 8-K
A Current Report on Form 8-K, dated July 16, 1996, identifying important
factors that could cause the company's actual results to differ materially
from those projected in forward-looking statements of the company made by,
or on behalf of the company, in connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, filed
July 16, 1996.
A Current Report on Form 8-K, dated October 16, 1996, announcing the
disposition of the company's 42 percent indirect interest in Ball-Foster
Glass Container Co., L.L.C. effective October 1, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Ball Corporation
(Registrant)
By: /s/ R. David Hoover
R. David Hoover
Executive Vice President,
Chief Financial Officer
and Treasurer
Date: November 13, 1996
<PAGE>
Ball Corporation and Subsidiaries
QUARTERLY REPORT ON FORM 10-Q
September 29, 1996
EXHIBIT INDEX
<TABLE>
<CAPTION>
Description Exhibit
--------------
<S> <C>
Ball Corporation Long-Term Cash Incentive Plan, dated October 25, 1994, as
amended October 23, 1996. EX-10.1
Statement Re: Computation of Earnings (Loss) per Share EX-11.1
Financial Data Schedule for the Nine Months Ending September 29, 1996 EX-27.1
Cautionary statement for purposes of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. EX-99.1
Press release announcing an agreement dated November 8,1996, between Ball
Corporation and Lam Soon (Hong Kong) Limited to acquire Lam Soon's
controlling interest in M.C. Packaging (Hong Kong) Limited EX-99.2
</TABLE>
Exhibit 10.1
Ball Corporation Long-Term Cash Incentive Plan, dated
October 25, 1994, as amended October 23, 1996
BALL CORPORATION
LONG-TERM CASH INCENTIVE PLAN
(As Amended October 23, 1996)
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 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.
<PAGE>
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.
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, and as amended effective
October 22, 1996.
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 were two phase-in awards which provided the opportunity
for payments at the end of 1995 and 1996, as follows:
1994 | 1995 | 1996 | 1997 | 1998 | 1999 |
8/1/94 --------------> } Phase-In
} Cycles
8/1/94 --------------------------> }
1/1/95-------------------------->
1/1/96--------------------------->
1/1/97----------------------------->
1/1/98------------------->
1/1/99------->
Participation -- Participants in the Plan and individual participation
opportunities shall be determined by the Committee. Actual awards will be
dependent on performance levels as explained below. 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.
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, and ending December 31, 1995 and 1996, the performance requirements,
defined in terms of average annual compound rate of growth in total shareholder
return, are as follows:
Minimum -- 8% annual growth
Target -- 12% annual growth
Maximum -- 20% annual growth
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.
For cycles ending December 31, 1997, 1998 and 1999, the performance
requirements, in terms of annual average compound rate of growth in total
shareholder return, comparing average daily Ball closing stock prices and
dividends in the third year of the cycle with the average daily closing stock
prices and dividends in the year 1996, as compared with those for the S&P 400
stock index, are as follows:
*Minimum -- the 37.5th percentile of the S&P 400 stock index
Target -- the 50th percentile of the S&P 400 stock index
Maximum -- the 75th percentile of the S&P 400 stock index
*For the cycles ending December 31, 1997 and 1998, total shareholder
return must be positive to result in a payout.
For cycles ending December 31, 2000, and later, the performance requirements
will remain as above, except that in determining the annual average compound
rate of growth in total shareholder return, the average daily closing stock
prices in the third year of the cycle will be compared with the average daily
closing stock prices in the year prior to the start of the cycle.
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. However, for those executives
whose Ball Corporation stock holdings are below the established guidelines, up
to one-half of the award will be made in restricted stock.
<PAGE>
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 transferable 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 (LOSS) PER SHARE
(Millions of dollars except per share amounts)
<CAPTION>
Three months ended Nine months ended
---------------------------------- ---------------------------------
September 29, October 1, September 29, October 1,
1996 1995 1996 1995
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Earnings per Common Share - Assuming No Dilution
Net income $ 20.1 $ (57.3) $ 37.4 $ (19.1)
Preferred dividends, net of tax benefit (0.7) (0.7) (2.2) (2.3)
---------------- -------------- ---------------- --------------
Net earnings attributable to common shareholders $ 19.4 $ (58.0) $ 35.2 $ (21.4)
================ ============== ================ ==============
Weighted average number of common shares
outstanding (000s) 30,471 30,099 30,253 30,010
================ ============== ================ ==============
Net earnings per share of common stock $ 0.64 $ (1.93) $ 1.16 $ (0.71)
================ ============== ================ ==============
Earnings per Share - Assuming Full Dilution
Net income $ 20.1 $ (57.3) $ 37.4 $ (19.1)
Adjustments for deemed ESOP cash contribution in
lieu of Series B ESOP Preferred dividend (0.5) (0.7) (1.6) (2.3)
---------------- -------------- ---------------- --------------
Net earnings attributable to common shareholders $ 19.6 $ (58.0) $ 35.8 $ (21.4)
================ ============== ================ ==============
Weighted average number of common shares
outstanding (000s) 30,471 30,099 30,253 30,010
Dilutive effect of stock options 8 * 67 *
Common shares issuable upon conversion of Series B
ESOP Preferred stock 1,964 * 1,998 *
---------------- -------------- ---------------- --------------
Weighted average number shares applicable to fully
diluted earnings per share 32,443 30,099 32,318 30,010
================ ============== ================ ==============
Fully diluted earnings per share $ 0.60 $ (1.93) $ 1.11 $ (0.71)
================ ============== ================ ==============
* No conversion is assumed as the effect is antidilutive.
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1
BALL CORPORATION
FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED
SEPTEMBER 29, 1996 AND THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF
SEPTEMBER 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-29-1996
<CASH> 10,800
<SECURITIES> 0
<RECEIVABLES> 386,400
<ALLOWANCES> 0
<INVENTORY> 287,900
<CURRENT-ASSETS> 765,500
<PP&E> 1,267,500
<DEPRECIATION> 551,700
<TOTAL-ASSETS> 1,903,900
<CURRENT-LIABILITIES> 669,500
<BONDS> 427,800
0
15,100
<COMMON> 244,300
<OTHER-SE> 357,800
<TOTAL-LIABILITY-AND-EQUITY> 1,903,900
<SALES> 1,684,300
<TOTAL-REVENUES> 1,684,300
<CGS> 1,539,100
<TOTAL-COSTS> 1,539,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,300
<INCOME-PRETAX> 44,900
<INCOME-TAX> 11,800
<INCOME-CONTINUING> 37,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,400
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.11
</TABLE>
Exhibit 99.1
Cautionary statement for purposes of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. The Company's Form 10-K, the Company's Annual
Report to Shareholders, this or any other Form 10-Q or any Form 8-K of the
Company may include forward-looking statements which reflect the Company's
current views with respect to future events and financial performance.
The company wishes to caution readers that in addition to the important factors
described elsewhere within its reports, the following important factors, among
others, may cause the actual segment and consolidated results during 1996, and
beyond, to differ materially from those expressed in any forward looking
statements made by, or on behalf of the company.
- - Underutilization of the company's plants and factories, or of any plant
expansions or new plants, including, but not limited to, those in the
packaging products segment, resulting in production inefficiencies and
higher costs; start-up expenses and inefficiencies and delays and
increased costs in connection with the start of production in new
plants and expansions, including, but not limited to, those in the
plastic container operations.
- - Financial results are based upon assumptions, estimates and judgments
of management and, as a result, actual performance may differ from
forward-looking estimates based upon changes in facts, circumstances,
improved information or changes in accounting.
- - The company's actions in connection with continued and increasing
competition in many product and service areas, including, but not
limited to, metal beverage packaging, food container packaging, plastic
container packaging and aerospace products and services, including
price competition, fluctuating demand for certain products in certain
seasons, such as food containers which are subject to seasonal changes
in the weather; competition in the Aerospace industry, particularly in
the commercial telecommunications and space markets, which could result
in fluctuating results from quarter to quarter.
- - Difficulties in obtaining raw materials, supplies, power and natural
resources, and any other items needed for the production of metal,
glass, and plastic containers as well as telecommunications and
aerospace products which could affect the company's or its affiliates'
ability to ship containers and telecommunications and aerospace
products.
- - Pricing of raw materials, supplies, power and natural resources needed
for the production of metal, glass, and plastic containers as well as
telecommunications and aerospace products. Pricing and ability to sell
scrap associated with the production of metal containers. The effect of
changes in the cost of warehousing the company's products.
- - Difficulties, delays or failures in the development, production,
testing and marketing of metal, glass, plastic and aerospace products,
including, but not limited to, a failure to ship new products and
technologies when anticipated, including, can and end technologies; the
failure of customers to accept these products or technologies when
planned.
<PAGE>
- - The failure of EarthWatch, Incorporated, to launch successfully
satellites planned for 1996 and subsequent years; technological or
market acceptance issues, performance failures in related contracts or
subcontracts, including any failure of EarthWatch to receive additional
financing needed for EarthWatch to continue to make payments, or any
events which would require the company to provide additional financial
support for EarthWatch, Incorporated.
- - The inability of the company or its subsidiaries to realize investments
in the glass container business and other joint venture companies due
to changed economic conditions, customer preferences, relationships,
bankruptcy, currency risk, or political risk.
- - The inability of the company, its subsidiaries and joint ventures to
successfully establish metal container plants in certain designated
international markets as well as the failure of customers to accept
these products; the inability of the packaging subsidiaries and joint
ventures to perform contracts or subcontracts, including the inability
of these subsidiaries and joint ventures to receive additional
financing needed for these subsidiaries to continue to make payments,
or any events which would require the company to provide additional
financial support for such subsidiaries and joint ventures.
- - The inability to sell products and services due to the customers'
changing markets or relationships and the inability to collect or
extreme delays in collecting accounts receivables.
- - The effects of, and changes in, laws and regulations, other activities
of governments (including political situations and inflationary
economies), agencies and similar organizations, including, but not
limited to, those affecting frequency, use and availability of metal,
glass and plastic containers, the authorization and control over the
availability of government contracts and the nature and continuation of
those contracts and the related services provided thereunder, the use
of remote sensing data and changes in domestic and international tax
laws.
- - The cancellation or termination of government contracts by the U.S.
government, other customers, or other government contractors.
- - The costs and other effects of legal and administrative cases and
proceedings (whether civil, or criminal), settlements and
investigations, claims, and changes in those items, and developments or
assertions by or against the company relating to products and services,
environmental, intellectual property rights and intellectual property
licenses, and compliance with the law.
- - The effect on revenue, profits, assets and liabilities as the result of
decisions by the Internal Revenue Service, or other taxing authorities,
courts of law, arbitral tribunals, legislative bodies or administrative
agencies.
- - The effects of changes in the company's organization or in the
compensation and/or benefit plans; any changes in agreements regarding
investments or joint ventures in which the company has an investment;
the amount, type or cost of the company's financing and changes to that
financing.
- - Risks involved in purchasing and selling products and services and
receiving payments in currencies other than the U.S. dollar.
EXHIBIT 99.2
Press Release announcing an agreement dated
November 8, 1996, between Ball Corporation
and Lam Soon (Hong Kong) Limited to acquire
Lam Soon's controlling interest in
M.C. Packaging (Hong Kong) Limited
FTB PACKAGING LIMITED
(incorporated in Hong Kong with limited liability)
M.C. PACKAGING (HONG KONG) LIMITED
(incorporated in Hong Kong with limited liability)
LAM SOON (HONG KONG) LIMITED
(incorporated in Hong Kong with limited liability)
JOINT ANNOUNCEMENT
CONDITIONAL ACQUISITION BY FTB PACKAGING LIMITED (the "Offeror")
OF A CONTROLLING INTEREST
IN M.C. PACKAGING (HONG KONG) LIMITED (the "Company")
and
POSSIBLE CASH OFFER BY
LEHMAN BROTHERS ASIA LIMITED
ON BEHALF OF THE OFFEROR
FOR ALL OF THE ISSUED SHARES IN THE COMPANY (OTHER THAN THOSE ALREADY
AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT)
<PAGE>
The respective boards of directors of the Offeror, the Company, and Lam Soon
(Hong Kong) Limited (the "Vendor") announce that on November 7, 1996, a
conditional sale and purchase agreement (the "Share Sale Agreement") was entered
into by the Offeror and the Vendor pursuant to which the Vendor agreed to sell
and the Offeror agreed to purchase (i) 5,805 shares of HK$1 each in the capital
of Fung Shun Investment Company Limited ("Fung Shun"), representing
approximately 58.05% of the issued share capital of Fung Shun (the "Fung Shun
Shares"), and (ii) 6,503,766 shares of HK$0.20 each in the capital of the
Company, representing approximately 0.97% of the issued share capital of the
Company (the "M.C.P. Shares"). Fung Shun owns 336,000,000 shares of HK$0.20 each
in the capital of the Company (representing approximately 50.23% of the issued
share capital of the Company). Such 336,000,000 shares in the Company are the
sole assets of Fung Shun. Fung Shun's outstanding liability is under HK$100,000.
As at the date hereof, the shareholding structure of the Company is as follows:
- --------------------------------------------------------------
(narrative description of chart included in the press release)
The Vendor (listed company) owns 58.05% of Fung Shun and 0.97% of The Company
(listed company)
Ng Fung Hong (Holdings) Ltd. owns 41.95% of Fung Shun and 4.42% of
The Company (listed company)
Fung Shun owns 50.23% of The Company (listed company)
Others including the public own 44.38% of The Company (listed company)
- --------------------------------------------------------------
After completion of the Share Sale Agreement ("Completion") in accordance with
its terms, the Offeror will control, directly and indirectly through Fung Shun,
approximately 51.20% of the voting rights of the Company, as detailed below.
SHAREHOLDING STRUCTURE OF THE COMPANY
IMMEDIATELY FOLLOWING COMPLETION
- --------------------------------------------------------------
(narrative description of chart included in the press release)
The Offeror owns 58.05% of Fung Shun and 0.97% of
The Company (listed company)
Ng Fung Hong (Holdings) Ltd. owns 41.95% of Fung Shun and 4.42% of
The Company (listed company)
Fung Shun owns 50.23% of The Company (listed company)
Others including the public own 44.38% of The Company (listed company)
- --------------------------------------------------------------
<PAGE>
CONDITIONS OF THE SHARE SALE AGREEMENT
Completion of the Share Sale Agreement is conditional on the satisfaction of the
following conditions:
(A) If The Stock Exchange of Hong Kong Limited (the "Stock Exchange") so
requires, the shareholders of the Vendor (other than persons precluded
from voting in accordance with The Rules Governing the Listing of
Securities on the Stock Exchange (the "Listing Rules") or otherwise by
the Stock Exchange) having approved the transaction contemplated by the
Share Sale Agreement at an extraordinary general meeting to be convened,
as soon as reasonably practicable and in any event no later than
December 22, 1996 (details of which will be set out in a separate
announcement issued by the board of the Vendor today); and
(B) a waiver or rejection having been received by the Vendor from Ng Fung
Hong (Holdings) Limited ("NFH"), in terms reasonably satisfactory to the
Offeror in relation to NFH's right of first refusal to purchase the Fung
Shun Shares pursuant to the articles of association of Fung Shun, or the
period of 60 days having elapsed since receipt by NFH of a written offer
to sell the Fung Shun Shares pursuant to the articles of association of
Fung Shun, which written offer was sent to NFH today forthwith after the
execution of the Share Sale Agreement, without NFH having accepted such
offer.
If the conditions set out above are not satisfied on or before January 31, 1997,
either the Vendor or the Offeror shall have the right upon five business days
written notice to all other parties to the Share Sale Agreement to terminate it.
The Fung Shun Shares and the M.C.P. Shares (collectively, the "Sale Shares") are
to be acquired free from all liens, charges, encumbrances, equities and third
party rights, together with all rights attaching thereto, provided that the
Company may pay the interim dividend already declared by the Company which will
be paid in November 1996, and Fung Shun may then declare and pay pro-rata
dividends.
The total consideration for the Sale Shares is HK$564,344,944.80 representing an
offer price of HK$2.80 per M.C.P. Share in respect of 6,503,766 M.C.P. Shares
directly held by the Vendor and HK$94,080.00 per Fung Shun Share in respect of
5,805 Fung Shun Shares held by the Vendor.
Pursuant to the Share Sale Agreement, an amount equivalent to 10 percent of the
consideration for the Sale Shares (the "Retained Consideration") is to be
retained by the Offeror and will be subject to deductions in the event that the
Company or any of its subsidiaries is found to have any obsolete or unsaleable
stock as at Completion or in the event that certain accounts receivable existing
as at the date of Completion cannot be collected during the period of six to
nine months following Completion. The balance (if any) of the Retained
Consideration will be paid to the Vendor not later than one year after
Completion.
POSSIBLE CASH OFFER
In accordance with the requirements under the Hong Kong Code on Takeovers and
Mergers (the "Takeovers Code"), a possible cash offer (the "Offer"), subject to
Completion of the Share Sale Agreement, will be made by Lehman Brothers Asia
Limited on behalf of the Offeror, for all the shares in the Company (the
"Shares") (other than those agreed to be acquired, directly or indirectly, by
the Offeror and parties acting in concert with the Offeror during the Offer
period) ("Offer Shares"), on the following basis:--
For each Offer Share HK$2.80 in cash
The Offer values the whole of the issued share capital of the Company of
668,860,000 Shares at approximately HK$1,872,808,000. The Offer price of HK$2.80
per Offer Share is the result of arm's length negotiations between the Offeror
and the Vendor. Such price represents a premium of approximately 8.7% to the
closing market price of the Shares, HK$2.575, quoted on the Stock Exchange on
November 6, 1996. The Company does not have any outstanding warrants or
convertible securities. The Offer will not be extended to the options under the
Company's share option scheme as such options are not transferable.
All the Offer Shares will be acquired free from all claims, liens, charges,
equities and encumbrances and third party rights of any kind and together with
all rights attaching thereto after Completion.
Apart from (i) Mr. Lo Foo Cheung ("Mr. Lo"), managing director of the Offeror
who owns 500 Shares and (ii) Mr. Mak Yue Kay ("Mr. Mak"), a director of the
Offeror who owns 20,000 Shares, neither the Offeror nor any person acting in
concert with the Offeror presently owns any Shares or has dealt therein in the
six months preceding the date of this announcement. Mr. Lo acquired his 500
Shares in 1992 pursuant to a share exchange at the time of listing of the
Company on the Stock Exchange. Mr. Mak acquired his 20,0000 Shares in 1992 as
part of such listing of the Company at a price of HK$1.614 per Share.
The obligations of the Offeror to make the Offer will not arise unless and until
completion occurs, which is conditional upon the satisfaction of the conditions
described above, namely the shareholders of the Vendor having approved the
transaction contemplated by the Share Sale Agreement no later than December 22,
1996, and a waiver or rejection having been received by the Vendor from NFH in
relation to NFH's right of first refusal to purchase the Fung Shun Shares. The
Offeror also has the right to rescind the Share Sale Agreement in the event of a
material breach of the warranties contained in the Share Sale Agreement
("Warranties") prior to Completion. In the event of it being found prior to
Completion that any of the Warranties are untrue, misleading or incorrect in any
material respect or in the event of any matter or thing arising or becoming
known or being notified to the Offeror which is inconsistent in any material
respect with any of the Warranties or any other provision of the Share Sale
Agreement the Offeror shall not be bound to complete the purchase of the Sale
Shares and the Offeror may by notice to the Vendor rescind the Share Sale
Agreement. Under the Share Sale Agreement, "material" shall be interpreted to
mean any fact or occurrence of such significance or importance as would, if
known to a reasonable purchaser in the position of the Offeror and in the
circumstances of the transaction contemplated under the Share Sale Agreement,
deter him from proceeding to Completion in accordance with its terms.
Ad valorem stamp duty arising in connection with acceptances of the Offer will
be payable by those shareholders of the Company who accept the Offer and will be
deducted from the consideration payable on acceptance of the Offer.
Lehman Brothers Asia Limited is satisfied that sufficient financial resources
are available to the Offeror to enable it to satisfy acceptance of the Offer in
full.
The Company intends to apply to the Securities and Futures Commission for its
consent for the offer document to be posted to shareholders of the Company
within seven days of fulfillment or waiver of the last of the conditions of the
Share Sale Agreement in accordance with Rule 8.2 of the Takeovers Code.
INFORMATION REGARDING THE OFFEROR
The Offeror is a company incorporated in Hong Kong and is owned approximately 96
percent by Ball Corporation, a company incorporated under the laws of the State
of Indiana, U.S.A. and listed on the New York Stock Exchange, the Pacific Stock
Exchange, and the Midwest Stock Exchange. The balance of the issued capital in
the Offeror is beneficially owned by the management of the Offeror. The
principal activities of the Offeror are mainly the manufacture of two-piece
metal beverage cans. The principal activities of Ball Corporation are the
manufacture of two-piece metal beverage cans and other rigid metal and plastic
packaging for foods and beverages, and the provision of aerospace and other
technology products and services to government and commercial customers. No one
shareholder or group of shareholders controls Ball Corporation.
The major executive directors of the Offeror are Mr. Lo, Chairman and Chief
Executive Officer, and Mr. Mak, Vice President Operations. The major executive
directors of Ball Corporation include Mr. George A. Sissel, Chairman of the
Board, President and Chief Executive Officer; Mr. R. David Hoover, Executive
Vice President, Treasurer and Chief Financial Officer; and Mr. David B. Sheldon,
Executive Vice President, Packaging Operations. Mr. Sissel and Mr. Hoover also
serve on the board of directors of Ball Corporation. Mr. Hoover and Mr. Sheldon
also serve on the board of directors of the Offeror.
The Offeror is a private Hong Kong company with paid-up capital of
HK$480,000,000 divided into 480,000,000 shares of HK$1 each. Ball Corporation
reported annual sales of US$2,591.7 million for 1995 and total assets of
US$1,612.5 million as of December 31, 1995.
Several synergies could result from the ownership by the Offeror of the Company
including technology and technical management infusion, economies of scale in
the purchasing of raw materials and administrative efficiencies. As far as Ball
Corporation and/or the Offeror are concerned, they can distinguish themselves in
terms of customers and market segments with respect to the products produced by
the Company. Ball Corporation and the Offeror recognize that there is a possible
conflict of interest in the business of the Company and that of the Offeror.
The Offeror will undertake to ensure that the business of the Company does not
compete with the business of the Offeror by rationalizing their respective
business operations and customer bases. The directors of the Offeror also
undertake to ensure that the issue on conflict of interest will be resolved.
INFORMATION REGARDING THE COMPANY
The principal activities of the Company are the manufacture and sale of
two-piece aluminum cans, three-piece tin containers, plastic bottles, and
closures. It is also engaged in the provision of metal plate printing and
coating services as well as the trading of packaging products and related
equipment. According to the Company's interim report for the six months ended
June 30, 1996, the consolidated turnover of the Company for such period was
HK$840,642,000 and profit attributable to shareholders was HK$30,275,000.
The Offeror shall be entitled upon Completion to appoint new directors to the
Company to replace the directors of the Company nominated by the Vendor.
It is the Offeror's present intention that the Company shall carry on its
existing business after Completion. There is currently no plan for any injection
or disposal of any assets.
LISTING OF THE COMPANY
It is the intention of the Offeror to maintain the listing of the shares of the
Company (the "Shares" on the Stock Exchange. Accordingly, in the event that
following the close of the Offer less than 25 percent of the Company's issued
share capital is held by the public, the Offeror will undertake to take
appropriate steps to ensure that not less than 25 percent of the Shares will be
so held.
The Stock Exchange has stated that, in the event that less than 25 percent of
the Shares is in public hands following the close of the Offer, it will closely
monitor the trading in the Shares. If the Stock Exchange believes that a false
market exists or may exist in the Shares, or that there are insufficient shares
in public hands to maintain an orderly market, then it will give consideration
to exercising its discretion to suspend dealings in the Shares.
The Stock Exchange has also stated that, if the Shares continue to be listed on
the Stock Exchange, any acquisitions or disposals by the Company will be subject
to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock
Exchange has the discretion to require the Company to issue a circular to the
shareholders where any acquisition or disposal by the Company is proposed,
irrespective of the size of each acquisition or disposal and in particular where
such acquisition or disposal represents a departure from the principal
activities of the Company. The Stock Exchange also has the power, pursuant to
the Listing Rules, to aggregate a series of acquisitions or disposals by the
Company and any such acquisitions or disposals may, in any event, result in the
Company being treated as a new applicant for listing and subject to the
requirements for new applicants as set out in the Listing Rules.
An independent financial adviser will be appointed to advise an independent
committee of the board of the Company and to advise the minority shareholders of
the Company in relation to the Offer in due course.
<PAGE>
Trading of the Shares was suspended at 10:00 a.m. on November 7, 1996, and will
be resumed at 10:00 a.m. on November 8, 1996.
Shareholders and other investors who are contemplating dealing in the securities
of the Company are advised to exercise extreme caution.
By order of the Board
FTB Packaging Limited
Lo Foo Cheung
Chairman and Chief Executive Officer
By order of the Board
M.C. Packaging (Hong Kong) Limited
Mo Hin Wai
Company Secretary
By order of the Board
Lam Soon (Hong Kong) Limited
Ho King Cheung
Company Secretary
Hong Kong, November 7, 1996
