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, 1995
( ) 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
- - --------------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- - --------------------------------- --------------------------------
Common Stock, without par value New York Stock Exchange, Inc.
Chicago Stock Exchange, Inc.
Pacific 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. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant was $887.6 million based upon the closing market price on March 1,
1996 (excluding Series B ESOP Convertible Preferred Stock of the registrant,
which series is not publicly traded and which has an aggregate liquidation
preference of $65.6 million).
Number of shares outstanding as of the latest practicable date.
Class Outstanding at March 1, 1996
- - ---------------------------------- ----------------------------
Common Stock, without par value 30,179,074
DOCUMENTS INCORPORATED BY REFERENCE
1. Annual Report to Shareholders for the year ended December 31, 1995, to the
extent indicated in Parts I, II, and IV. Except as to information
specifically incorporated, the 1995 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 18, 1996, 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 1995 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," "Dispositions," "Spin-Off",
"Acquisition," "Restructuring and Other Charges" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Recent Business Developments
The company took a number of actions during 1995 which have affected the core
business. The most significant of these actions are summarized briefly below.
Further information regarding these actions are found in the notes to the
financial statements "Dispositions," and "Restructuring and Other Charges" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the 1995 Annual Report to Shareholders.
Ball-Foster Glass Container Co., L.L.C.
As a result of consolidation within the highly competitive, mature domestic
glass packaging industry, and due to the capital requirements to aggressively
participate in higher growth packaging markets, the company in 1995 formed a
strategic alliance with Compagnie de Saint-Gobain (Saint-Gobain), to create a
new U.S. glass company, Ball-Foster Glass Container Co., L.L.C. (Ball-Foster).
Ball-Foster acquired the glass businesses of both the company and Foster-Forbes,
a unit of American National Can Company. Ball-Foster, as the second largest
domestic glass producer, has the potential to realize economies necessary to
compete effectively. The company acquired a 42-percent interest in Ball-Foster;
the remaining 58-percent interest was acquired by Saint-Gobain.
Plastic Packaging
In 1994 the company announced that it would enter the PET (polyethylene
terephthalate) plastic container market. By late in the fourth quarter of 1995,
construction of a pilot line and research and development center and a
multi-line manufacturing facility, with full production anticipated in the
second quarter of 1996, were completed. Two additional multi-line manufacturing
facilities were under construction.
FTB Packaging
Through a series of investments, the company increased its equity ownership in
FTB Packaging, Limited. (FTB Packaging), its Hong Kong-based metal packaging
subsidiary, to approximately 92 percent. FTB Packaging has been included on a
consolidated basis within the packaging segment effective January 1995. The
company's investments in the People's Republic of China (PRC) are held
principally through FTB Packaging.
Efratom
In 1994 the company concluded a study to explore strategic alternatives for the
aerospace and technologies business (formerly aerospace and communications). A
decision was made to retain the core business, but to sell the Efratom time and
frequency measurement business. Efratom was sold in March 1995 to Datum Inc.
(Datum) for cash of $15.0 million and approximately 1.3 million shares, or 32
percent, of Datum common stock.
EarthWatch
In 1994 the company and WorldView, Inc. formed EarthWatch, Inc. (EarthWatch) to
commercialize certain proprietary technologies by serving the market for
satellite-based remote sensing of the Earth. The company invested approximately
$21 million in EarthWatch in 1995, and, it is anticipated that by mid-1996, the
company's ownership will be established at less than 50 percent of this new
venture.
Capacity Reductions
During the fourth quarter of 1995, the company recorded a pretax charge of $10.9
million ($6.6 million after tax or 22 cents per share) as a result of a decision
to close a metal slitting and coating facility which supported the metal food
and specialty products business and write down underutilized metal beverage
container end manufacturing equipment to net realizable value.
Other Information Pertaining to the Business of the Company
The company's continuing businesses are comprised of two segments: packaging,
and aerospace and technologies.
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. 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. Profitability is sensitive to production volumes,
the cost of labor and certain significant raw materials, such as aluminum, steel
and plastic resin.
Raw materials used by the company's packaging businesses are generally available
from several sources. The company has secured what it considers to be adequate
supplies of raw materials and is not experiencing any shortage. The company's
manufacturing facilities are dependent, in varying degrees, upon the
availability of process energy, such as natural gas and electricity. While
certain of these energy sources may become increasingly in short supply, or
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, research and
development efforts are directed toward the development of new sizes and types
of containers such as the SlimCan and the patented Touch TopTM metal beverage
container easy-open end.
The operations and products within this segment are discussed below:
Metal Packaging
Metal packaging is comprised primarily of two product lines: two-piece beverage
containers and two and three-piece food containers. Dominance in both the food
and beverage markets and high recycling rates contribute to the metal
container's significant market share. However, plastic containers, primarily
PET, have made recent gains against metal beverage containers in the soft drink
market. Current industry forecasts indicate that this trend will continue such
that PET containers' market share of packaged soft drinks may exceed metal
beverage containers by the year 2000.
The company provides manufacturing technology and assistance to can
manufacturers in Europe, the Middle East, Latin America, Australia and Asia. The
company also has a minority equity position in a new joint venture, in which the
company constructed the first two-piece beverage can manufacturing plant in the
Philippines. In 1995, the company announced the formation of a new joint venture
with BBM Participacoes S.A. to produce two-piece aluminum cans and ends in
Brazil. The company and BBM Participacoes S.A. will each own 50 percent of this
venture. In early 1996, the company announced a joint venture with Standard Can
Company of Bangkok, Thailand, to build a two-piece can and end plant in
Thailand. Ball and Standard Can will each own 40 percent; the remaining interest
will be held by local investors.
Metal beverage containers
Metal beverage containers and ends represent the company's largest product line
accounting for approximately 48 percent of 1995 consolidated net sales.
Decorated two-piece aluminum beverage cans are produced by seven manufacturing
facilities in the U.S. and three facilities in Canada; ends are produced by two
of the U.S. facilities. Metal beverage cans are also produced in China by FTB
Packaging's majority-owned subsidiary in Xian and its equity affiliates in
Zhuhai and Sanshui; ends are produced at Zhuhai and Sanshui. Two new beverage
container facilities are under construction in the PRC in Beijing and Wuhan in
which FTB Packaging will be the majority owner. These facilities are expected to
begin production in 1996.
Metal beverage containers are sold primarily to brewers and fillers of
carbonated soft drinks 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 1995 sales.
Combined sales to all bottlers of Pepsi-Cola and Coca-Cola branded beverages
comprised approximately 25 percent of consolidated 1995 sales. Sales volume of
metal beverage cans and ends tends to be highest during the period between April
and September.
The company estimates that it has an approximate 16 percent market share, based
upon estimated 1995 total industry shipments of aluminum beverage cans and ends
to the combined U.S. and Canadian market. The company estimates that its four
larger competitors together represent approximately 84 percent of estimated 1995
total industry shipments for the U.S. and Canada.
The U.S. metal beverage container industry had experienced steady demand growth
at a compounded annual rate of approximately 3.3 percent over the last decade,
with much of that growth in the soft drink market segment. However, in 1995
aluminum suppliers changed the pricing formula for aluminum can sheet to a price
based on ingot plus conversion costs, in contrast to the prior practice of
annually negotiated prices. As a result, the cost of aluminum can sheet
increased significantly and was reflected in higher beverage can selling prices.
It is believed that the soft drink industry responded by reducing its promotions
of products packaged in aluminum containers in 1995, and, coupled with increased
customer purchases in the fourth quarter of 1994 in anticipation of the higher
can prices, resulted in lower can shipments for the industry by an estimated 5
percent. Shipments to the beer industry were also affected by the price
increase, the accelerated shipments in 1994, and the predominant use of glass
containers for introduction of new products.
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 and restrictive taxes within Canada.
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. While higher aluminum can sheet costs were largely passed
through to customers through higher container pricing, it appears that pricing
will continue to be a major competitive factor.
The company, through its subsidiary, FTB Packaging, is the largest beverage can
manufacturer in the PRC, with an estimated market share of 35 percent (including
equity affiliates). The company's joint venture Sanshui Jianlibao FTB Packaging
Ltd. is the largest can manufacturing facility in the PRC. Capacity within the
PRC has doubled in less than two years and is expected to outstrip demand by the
end of 1996. However, as per capita consumption in the PRC is significantly
lower than in more developed countries and per capita income in China is rising,
there is significant potential for strong demand growth. However, as in North
America, as capacity increases to meet demand, competitive pressure on pricing,
currently at a premium compared to North America, will increase. Sales of FTB
Packaging represented less than three percent of consolidated 1995 net sales.
Metal food containers
Two-piece and three-piece steel food containers are manufactured in Canada and
the U.S. and sold primarily to food processors in Canada and the Midwestern
United States. In 1995 metal food container sales comprised approximately 19
percent of consolidated net sales. Sales to one customer represented more than
10 percent of this operation's 1995 sales. Sales volume of metal food containers
tends to be highest from June through October as a result of seasonal vegetable
packs.
Recent consolidations within the commercial food container industry have reduced
the number of competitors. Currently, the company has one principal competitor
located in Canada and two primary competitors located in the U.S. food container
market. Based on estimated 1995 industry shipments, the company estimates that
it is the third largest metal food container manufacturer with an approximate 18
percent share of the North American commercial market for metal food containers.
In the food container industry, capacity in North America significantly exceeds
market demand, resulting in a highly price-competitive market. During 1993 the
company completed consolidation of certain facilities in Canada and, in
conjunction with the restructuring plans developed in 1993, the company closed
its Augusta, Wisconsin, plant and sold its Alsip, Illinois, plant during 1994.
Late in 1995, the company substantially completed the closure and
reconfiguration of certain Canadian facilities. Further, the company announced
the closure in 1996 of a facility in Pittsburgh, Pennsylvania, which provides
metal coating and slitting services to the metal food and specialty products
businesses.
As part of the company's initiative to expand its presence internationally, the
company announced the formation of a new joint venture company, Ningbo FTB Can
Company, Ltd., to manufacture three-piece food cans in the PRC. This venture, in
which FTB Packaging will have a majority interest, is expected to begin
operations in 1996. Other metal packaging
The company also manufactures containers for aerosol products and other
specialty goods.
Plastic Packaging
PET (polyethylene terephthalate) plastic containers is the company's newest
business. A full-scale pilot line, research and development center in Smyrna,
Georgia, was completed in 1995. In addition, a multi-line production facility in
Chino, California, was completed in 1995, and construction for two other
production facilities in New York and Pennsylvania was started. Full-scale
production is anticipated to begin in the second quarter of 1996 in the
California and New York facilities; the Pennsylvania facility is anticipated to
be in full production by the end of the third quarter of 1996.
Demand for containers made of (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. While PET plastic beverage
containers compete against both metal and glass, the historical increase in
PET's market share has come primarily at the expense of glass containers. In
1994 the domestic plastic container market reached $5.5 billion, surpassing the
size of the glass container market for the first time. Projections for the year
2000 (based on estimated pounds of resin used) range from an increase of almost
60 percent to 100 percent compared to 1995.
Competition in this industry includes two national suppliers and several
regional suppliers and self-manufacturers (primarily Coca-Cola). Price, service
and quality are deciding competitive factors. Increasingly, the ability to
produce customized differentiated plastic containers is an important competitive
factor.
The demand for PET resins in North America has exceeded supply in the last few
years. However, all North American PET resin producers have significant capacity
expansion either under way or planned in the U.S., Canada or Mexico, which will
result in design capacity exceeding demand within the near future. The company
has arranged for an adequate supply of resin to meet its near-term sales
commitments.
The company has secured long-term customer supply agreements, principally for
beverage containers. Other products such as juice, water, liquor and food
containers are key elements in expanding the business. The company expects sales
of PET containers to be approximately $100 million in 1996, and that the
business will operate at a loss for 1996 as the new plants become fully
operational.
Aerospace and Technologies Segment
The aerospace and technologies segment (formerly aerospace and communications)
provides systems, products and services to the aerospace, defense and commercial
markets. Sales in the aerospace and technologies segment accounted for
approximately 12 percent of consolidated net sales in 1995. Approximately 8
percent of the segment's sales in 1995 were made to the commercial
telecommunications industry and 6 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 86 percent of this segment's sales in 1995.
Overall, competition within the aerospace business 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.
Aerospace systems
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.
Space systems include satellites, ground systems and launch vehicle integration
to NASA, the DoD and to commercial and international customers. 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 1995 net sales.
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.
Telecommunication products
Commercial telecommunications equipment is supplied 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.
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 technologies segment was approximately $420 million
at December 31, 1995, and $322 million at December 31, 1994, and consists of the
aggregate contract value of firm orders excluding amounts previously recognized
as revenue. The 1995 backlog includes approximately $233 million which is
expected to be billed during 1996, 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 $268 million at
December 31, 1995. Year-to-year comparisons of backlog are not necessarily
indicative of future operations.
The company's aerospace and technologies segment has contracts with the U.S.
Government which have standard termination provisions. The Government retains
the right to terminate contracts at its convenience. However, if contracts are
terminated, 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.
Ball-Foster Glass Container Co., L.L.C.
The company has a 42-percent interest in Ball-Foster Glass Container Co., L.L.C.
(Ball-Foster), a manufacturer of a diversified line of glass containers for sale
primarily to processors, packers and distributors of food, soft drinks, beer,
juice, wine and liquor products. Ball-Foster currently operates twenty glass
container manufacturing facilities and a glass mold manufacturing facility. In
addition, Ball-Foster manages a glass plant owned by Madera Glass Company, a
51-percent owned subsidiary of Ball-Foster, and a second plant through a 50%
venture with Tropicana Products, Inc.
The company estimates that Ball-Foster is the second largest domestic producer
of commercial glass containers with a 30 percent market share, based upon 1995
units shipped, assuming the businesses had been combined for the full year. The
largest competitor is estimated to comprise approximately 40 percent of the
domestic market. Service, quality, performance and price are discriminating
competitive factors.
The majority of Ball-Foster's sales are made directly to major companies having
leading market positions in packaged beer, soft drinks, food and juice, and
still wines and champagnes. Sales to one customer represented more than 10
percent of Ball-Foster's 1995 sales for the period from its formation on
September 15, 1995.
Ball-Foster manufactures a wide range of glass containers for the food
(including juices), beer and soft drink industries, which comprise approximately
40 percent, 37 percent and 15 percent, respectively, of Ball-Foster's proforma
total annual unit shipments. The total market for all types of glass containers
decreased approximately 5.4 percent in 1995 and has been essentially flat over
the last decade. However, industry shipments of food containers have increased
approximately 2.1 percent per annum since 1985, and shipments to the beer
industry have increased approximately 2.8 percent per annum since 1985 and 4.6
percent since 1990, primarily due to the recent proliferation of new beers which
have been introduced predominantly in glass containers. These increases have
been offset by decreases in shipments to the soft drink, liquor and wine
industries as other packaging materials, such as metal, plastic and flexible
packaging, have captured a share of products previously packaged in glass, and
to a general decline in alcohol 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 121 plants in 1983 to nine companies with 63 plants in 1996. Since
1991, nine plants were closed in the industry: four within the company's former
glass container business and five by competitors of Ball-Foster. In March 1996,
Ball-Foster announced that two of its plants will be closed in 1996. Further
analysis is in process to determine if additional plant closures or
restructuring is necessary to achieve, in part, the benefits anticipated from
the combining of the glass businesses within Ball-Foster.
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 1995 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. While container legislation has been
adopted in a few jurisdictions, similar legislation has been defeated in public
referenda in several other states, in local elections and in many state and
local legislative sessions. The company anticipates that continuing efforts will
be made to consider and adopt such legislation in many jurisdictions in the
future. If such legislation was widely adopted, it could have a material adverse
effect on the business of the company, as well as on the container manufacturing
industry generally, in view of the company's substantial North American sales
and investment in metal and PET beverage container manufacture as well as its
investment in glass container packaging.
Aluminum, PET and glass containers are recyclable, and significant amounts of
used containers are being recycled and diverted from the solid waste stream. In
1995 approximately 62 percent of aluminum beverage containers sold in the U.S.
were recycled. In 1994, the most recent data available, approximately 49 percent
of the PET beverage containers, and approximately 33 percent of all PET
containers, sold in the U.S. were recycled.
Employees
As of March 1996 Ball employed approximately 7,500 people.
Item 2. Properties
The company's properties are well maintained, considered adequate and being
utilized for their intended purposes.
The Corporate headquarters and certain research and engineering facilities are
located in Muncie, Indiana. The 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. The offices, pilot line and research and
development center for the new plastic container business are located in Smyrna,
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.
Approximate
Floor Space in
Plant Location Square Feet
Metal packaging manufacturing facilities:
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
Plastic packaging manufacturing facilities:
Chino, California 228,000
Syracuse, New York 240,000
Reading, Pennsylvania 52,000
Ball Aerospace & Technologies Corp. offices are located in Broomfield, Colorado.
The Colorado-based operations of this business operate from a variety of company
owned and leased facilities in Boulder, Broomfield and Westminster, Colorado,
which together aggregate approximately 922,000 square feet of office,
laboratory, research and development, engineering and test, and manufacturing
space. Other aerospace and technologies operations are based in Dayton, Ohio,
Warner Robins, Georgia, and San Diego, California.
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
Denver, Chemical Waste Management, Inc., and Waste Management of Colorado, Inc.
(collectively "Waste"), have dismissed their lawsuit against the company and
Waste will defend, indemnify, and hold harmless, to the extent agreed, 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 which may have been
disposed of by the company at the site, but which are identified after the
execution of the settlement agreement. At this time, there are no Lowry Landfill
actions in which the company is actively involved. 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, 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. The Magistrate has
declared the patents of Lemelson are unenforceable because of the long delays in
prosecution. 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 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 dollars 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 2 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. 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 for cleanup costs incurred in connection with the removal
action of aboveground site areas. By a letter dated September 29, 1995, the
company, along with the other above described PRPs, were notified by EPA that it
was negotiating with the large volume PRPs another consent order for performance
of a site environmental study as a prerequisite to possible long-term
remediation. EPA and the large-volume PRPs have stated that a second de minimis
buyout for settlement of liability for performance of all environmental studies
and site remediation is being formulated and an offer to participate therein has
been made to the company. 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 percent of the waste
contributed to the site on a volumetric basis. The company is attempting to
identify additional information regarding this matter. The company has responded
and is investigating the accuracy of the total volume alleged to be attributable
to the company. The company joined the PRP group during 1993. In May-June 1994,
the company contributed $2,445 as its share of the cost of a one-time critical
removal action. In December 1994, received a request to execute a trust
agreement for the company's metal food container and specialty products group.
In February 1995, the company executed a trust agreement whereby certain
contributions will be made to fund the administration of an ongoing work group.
Based on the information available to the company, at this time, the company now
believes that this matter will not have a material, adverse effect on the
company.
On or about June 14, 1990, the El Monte plant of Ball-InCon Glass Packaging
Corp. (renamed Ball Glass Container Corporation on June 6, 1994, the assets of
which were sold in September 1995 to a joint venture with Saint-Gobain, now
known as Ball-Foster Glass Container Co., L.L.C.), a then wholly-owned
subsidiary of the company, received a general notification letter and
information request from EPA, Region IX, notifying Ball Glass Container
Corporation ("Ball Glass")that it may have a potential liability as defined in
Section 107(a) of 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 responded. After a period of
inactivity, the federal and state governments proceeded to have performed the
remedial investigation study, which will lead to a proposed cleanup. In this
regard, the California Regional Water Quality Control Board requested El Monte
area industries to commence resampling groundwater monitoring wells. Ball Glass
received notice from the City of El Monte that, pursuant to a proposed city
economic redevelopment plan, the City proposed to commence groundwater cleanup
by a pump and treat remediation process. Ball Glass submitted comments to the
City that, while Ball Glass approved the expenditures of public monies for
groundwater remediation, as opposed to assessing civil liability against
individual industries, Ball Glass requested further scientific substantiation
that treatment at a city water well adjacent to the El Monte plant would not
increase concentration of groundwater contamination under the plant. A hearing
was held January 12, 1994, by the El Monte Community Redevelopment Agency to
discuss various methods of public financing available to fund the City's
proposed water treatment project. A potentially responsible party ("PRP") group
organized and drafted a PRP group agreement, which Ball Glass executed. The PRP
group retained an environmental engineering firm to critique the U.S. EPA
studies and any proposed remediation. The group continued to challenge the
City's proposed groundwater production well activation program until sufficient
hydrogeologic studies have been done. Concern is that extraction of water for a
"pump and treat" process may draw additional concentrations of groundwater
pollutants onto plant property and other surrounding properties. Ball Glass
retained a hydrogeologic expert, who has established to Ball Glass that it did
not contribute to the groundwater pollution; rather, such pollution flowed
underground onto Ball Glass' property. 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. In response, the group (i) organized more formally,
(ii) requested that EPA send additional "special notice" letters to former
landowners who are believed to be responsible for the pollution, and (iii) held
its initial allocation committee meetings to discuss allocation methods to
attribute cleanup costs to various PRPs. Ball Glass received its letter on
October 17, 1994. Ball Glass asserts that it is a de minimis party at the site.
At the second meeting of the allocation committee, the group approved an
allocation method based on an equal, pro rata sharing of all expenses to share
the costs to perform the remedial investigation/feasibility study and any EPA
administrative costs incurred as of the date of the special notice letters from
the EPA. Subsequently, the allocation committee reversed its allocation method
and has now recommended group approval on an allocation method based upon fault
or contribution to pollution levels. On January 12, 1995, the group approved
such allocation method. The group submitted to the U.S. EPA its "good faith"
response letter outlining how the group proposes to perform the remedial
investigation study requested by the U.S. EPA.
The PRP group completed negotiations with the EPA over the terms of the
administrative consent order, statement of work for the remedial investigation
phase of the cleanup, and the interim allocation arrangement between group
members to fund the remedial investigation. The interim allocation approach
favors the company in that, ultimately, a payment will be based upon
contribution to pollution. The administrative consent order was executed by the
group and EPA. The EPA also accepted the statement of work for the remedial
investigation phase of the cleanup. The group retained an environmental
engineering consulting firm to perform the remedial investigation, and executed
a license agreement under which the consultant will use City Well No. 5 located
on plant property to sample area groundwater. As required under the
administrative consent order, submitted to the EPA all copies of all
environmental studies conducted at the plant, the majority of which had already
been furnished to the State of California. The company's general liability
insurer agreed to provide cost of defense coverage in this matter. EPA approved
the work plan, project management plan, and the data management plan portions of
the PRP group's proposed remedial investigation/feasibility study. EPA believes
the sampling and analysis plan portion contains deficiencies and is requesting
that these be addressed. The PRP group prepared responses to EPA's position
letter at its November 28, 1995, meeting. The company's environmental consulting
firm is preparing a request for presentation to the group this spring when
allocations of pollution contribution are decided. Based on the information, or
lack thereof, available to the company at the present time, the company is
unable to express an opinion as to the actual exposure of the company for this
matter.
On July 27, 1994, Onex Corporation ("Onex") initiated arbitration before the
International Chamber of Commerce, alleging that the company was in breach of a
joint venture agreement dated September 15, 1988. Onex's demand represented a
claim against the company for approximately $30 million. The company denied the
allegations of Onex's complaint. On August 1, 1995, the Arbitral Tribunal
decided the case in favor of Ball Corporation. The parties had previously agreed
to be bound by the decision of the Tribunal.
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.
This matter has now been settled.
In March of 1992, William Hallahan, an employee of the company's metal container
plant in Saratoga Springs, New York, filed a workers' compensation claim
alleging that he suffers from a form of leukemia that was caused by his exposure
to certain chemicals used in the plant. The company denied the charge, and
hearings on the matter were held before the Workers' Compensation Board of the
State of New York. Cross-examination of Mr. Hallahan's witnesses continued
during 1995. Based on the information available to the company, at this time,
the company now believes that this matter will not have a material, adverse
effect on the company.
On November 30, 1995, the U.S. Justice Department filed a lawsuit in the U.S.
District Court for the Eastern District of Michigan on behalf of the United
States of America against Erie Coatings and Chemicals, Inc., and certain other
defendants including the company. The lawsuit alleges that some thirty
generators of hazardous waste, including the company's metal container group,
disposed of hazardous waste at the Erie Coatings and Chemicals, Inc., site
located in Erie, Michigan. The company is attempting to investigate this matter
and to determine the nature and amount of remedial costs the government is
seeking to recoup. Based on the information available to the company, at this
time, the company is unable to express an opinion as to the actual exposure of
the company for this matter.
On January 5, 1996, the company was served with a lawsuit filed by an individual
named Tangee E. Daniels, on behalf of herself and two minor children and four
other plaintiffs, alleging that the company's metal container group a/k/a Ball
Corporation and over fifty other defendants disposed of certain hazardous waste
at the hazardous waste disposal site operated by Gibraltar Chemical Resources,
Inc., located in Winona, Smith County, Texas. The lawsuit also alleges that
American Ecology Corp., America Ecology Management Corp., Mobley Environmental
Services, Inc., and the managers of the site for Gibraltar, failed to
appropriately manage the waste disposed of or treated at the Gibraltar site,
resulting in release of hazardous substances into the environment. The
plaintiffs allege that they have been denied the enjoyment of their property and
have sustained personal and bodily injury and damages due to the release of
hazardous waste and toxic substances into the environment caused by all the
defendants. The plaintiffs allege numerous causes of action under state law and
common law. Plaintiffs also seek to recover damages for past, present, and
future medical treatment; mental and emotional anguish and trauma; loss of wages
and earning capacity; and physical impairment, as well as punitive damages and
prejudgment interest in unspecified amounts. The company intends to defend
against this matter. Based on the limited information available to the company,
at this time, the company is unable to express an opinion as to the actual
exposure of the company for this matter.
On February 16, 1996, the company was served with a lawsuit filed by an
individual named Marti Williams, individually, and as next friend of Michael
Williams, and Linda Smiley, individually and as next friend of Courtney Smiley
et al., alleging that the company's metal container group a/k/a Ball Corporation
and over fifty other defendants disposed of certain hazardous waste at the
hazardous waste disposal site operated by Gibraltar Chemical Resources, Inc.,
located in Winona, Smith County, Texas. The lawsuit also alleges that American
Ecology Corp., America Ecology Management Corp., Mobley Environmental Services,
Inc., and the managers of the site for Gibraltar, failed to appropriately manage
the waste disposed of or treated at the Gibraltar site, resulting in release of
hazardous substances into the environmental. The plaintiffs allege that they
have been denied the enjoyment of their property and have sustained personal and
bodily injury and damages due to the release of hazardous waste and toxic
substances into the environment caused by all the defendants. The plaintiffs
allege numerous causes of action under state law and common law. Plaintiffs also
seek to recover damages for past, present, and future medical treatment; mental
and emotional anguish and trauma; loss of wages and earning capacity; and
physical impairment, as well as punitive damages and prejudgment interest in
unspecified amounts. The company intends to defend against this matter. Based on
the limited information available to the company, at this time, the company is
unable to express an opinion as to the actual exposure of the company for this
matter.
Item 4. Submission of Matters to Vote of Security Holders
There were no matters submitted to the security holders during the fourth
quarter of 1995.
<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 8,944 common shareholders of record on March
1, 1996.
Other information required by Item 5 appears under the caption, "Quarterly Stock
Prices and Dividends," in the 1995 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, 1995,
appearing in the section titled, "Five Year Review of Selected Financial Data,"
of the 1995 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 Financial Condition and Results of
Operations" of the 1995 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 1995 Annual
Report to Shareholders, together with the report thereon of Price Waterhouse
LLP, dated January 23, 1996, 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, 59, President and Chief Executive Officer, since April
1995; Acting President and Chief Executive Officer, 1994-1995; Senior Vice
President, Corporate Affairs; Corporate Secretary and General Counsel,
1993-1995; Senior Vice President, Corporate Secretary and General Counsel,
1987-1992; Vice President, Corporate Secretary and General Counsel,
1981-1987.
2. R. David Hoover, 50, Executive Vice President and Chief Financial Officer,
since July 1995; Senior Vice President and Chief Financial Officer,
1992-1995; Vice President and Treasurer, 1988-1992; Assistant Treasurer,
1987-1988; Vice President, Finance and Administration, Technical Products,
1985-1987; Vice President, Finance and Administration, Management Services
Division, 1983-1985.
3. Duane E. Emerson, 58, Senior Vice President and Chief Administrative
Officer, since July 1995; Senior Vice President, Administration,
1985-1995; Vice President, Administration, 1980-1985.
4. Donovan B. Hicks, 58, Group Vice President; President, Ball Aerospace &
Technologies Corp., since August 1995; Group Vice President; President,
Aerospace and Communications Group, 1988-1995; Group Vice President,
Technical Products, 1980-1988; President, Ball Brothers Research
Corporation/Division, 1978-1980.
5. David B. Sheldon, 54, Executive Vice President, Packaging Operations,
since October 1995; Executive Vice President, North American Packaging
Operations, 1995; Group Vice President; President, Metal Beverage
Container Group, 1993-1995; 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.
6. Richard E. Durbin, 54, Vice President, Information Services, since April
1985; Corporate Director, Information Services, 1983-1985; Corporate
Director, Data Processing, 1981-1983.
7. Albert R. Schlesinger, 54, Vice President and Controller, since January
1987; Assistant Controller, 1976-1986.
8. Raymond J. Seabrook, 45, Vice President and Treasurer, since August 1992;
Senior Vice President and Chief Financial Officer, Ball Packaging Products
Canada, Inc., 1988-1992.
9. Harold L. Sohn, 50, Vice President, Corporate Relations, since March 1993;
Director, Industry Affairs, Packaging Products, 1988-1993.
10. David A. Westerlund, 45, Vice President, Human Resources, since December
1994; Senior Director, Corporate Human Resources, July 1994-December 1994;
Vice President, Human Resources and Administration, Ball Glass Container
Corporation, 1988-1994; Vice President, Human Resources, Ball Glass
Container Corporation, 1987-1988.
Other information required by Item 10 appearing under the caption, "Director
Nominees and Continuing Directors," on pages 3 through 5 and under the caption,
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" on page
15 of the company's proxy statement filed pursuant to Regulation 14A dated March
18, 1996, 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 14 of the company's proxy statement filed
pursuant to Regulation 14A dated March 18, 1996, is incorporated herein by
reference.
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 18, 1996, 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 15 of the company's proxy statement filed pursuant to
Regulation 14A dated March 18, 1996, 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 1995 Annual Report to
Shareholders are incorporated by reference in Part II, Item 8:
Consolidated statement of (loss) income - Years ended December 31,
1995, 1994 and 1993
Consolidated balance sheet - December 31, 1995 and 1994
Consolidated statement of cash flows - Years ended December 31, 1995,
1994 and 1993
Consolidated statement of changes in shareholders' equity - Years
ended December 31, 1995, 1994 and 1993
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
Amendment No. 1 to the Current Report on Form 8-K dated September 15,
1995 to include the financial statements and proforma financial
information omitted from the original filing, November 29, 1995.
<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, President and
Chief Executive Officer
March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated below.
(1) Principal Executive Officer:
President and
/s/ George A. Sissel Chief Executive Officer
-------------------------------------- March 29, 1996
George A. Sissel
(2) Principal Financial Accounting Officer:
Executive Vice President and
/s/ R. David Hoover Chief Financial Officer
-------------------------------------- March 29, 1996
R. David Hoover
(3) Controller:
/s/ Albert R. Schlesinger Vice President and Controller
-------------------------------------- March 29, 1996
Albert R. Schlesinger
(4) A Majority of the Board of Directors:
/s/ Frank A. Bracken * Director
-------------------------------------- March 29, 1996
Frank A. Bracken
/s/ Howard M. Dean * Director
-------------------------------------- March 29, 1996
Howard M. Dean
/s/ John T. Hackett * Director
-------------------------------------- March 29, 1996
John T. Hackett
/s/ John F. Lehman * Director
-------------------------------------- March 29, 1996
John F. Lehman
/s/ Jan Nicholson * Director
-------------------------------------- March 29, 1996
Jan Nicholson
/s/ Alvin Owsley * Chairman of the Board and
-------------------------------------- Director
Alvin Owsley March 29, 1996
/s/ George A. Sissel * President and Chief Executive
-------------------------------------- Officer and Director
George A. Sissel March 29, 1996
/s/ W. Thomas Stephens * Director
-------------------------------------- March 29, 1996
W. Thomas Stephens
/s/ William P. Stiritz * Director
-------------------------------------- March 29, 1996
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, 1996
<PAGE>
Ball Corporation and Subsidiaries
Annual Report on Form 10-K
For the year ended December 31, 1995
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.
Exhibit
Number Description of Exhibit
------- ---------------------------------------------------------------
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.
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 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.
10.12 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.
10.13 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.
10.14 Ball Corporation Economic Value Added Incentive Compensation
Plan dated January 1, 1994 (filed by incorporation by reference
to the Annual Report on Form 10-K for the year ended December
31, 1994) filed March 29, 1995.
Exhibit
Number Description of Exhibit
------- ---------------------------------------------------------------
10.15 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.
10.16 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.
10.17 1993 Stock Option Plan (filed by incorporation by reference to
the Form S-8 Registration Statement, No. 33-61986) filed April
30, 1993.
10.18 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.
10.19 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.
10.20 Retention Agreement dated June 22, 1994, between Donovan B.
Hicks and Ball Corporation (filed by incorporation by reference
to the Quarterly Report on Form 10-Q for the quarter ended July
3, 1994) filed August 17, 1994.
10.21 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.
10.22 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.
10.23 Ball Corporation Long-Term Cash Incentive Plan, dated October
25, 1994 (filed by incorporation by reference to the Annual
Report on Form 10-K for the year ended December 31, 1994) filed
March 29, 1995.
10.24 Asset Purchase Agreement dated June 26, 1995, among Foster
Ball, L.L.C. (since renamed Ball-Foster Glass Container Co.,
L.L.C.), Ball Glass Container Corporation and Ball Corporation
(filed by incorporation by reference to the Current Report on
Form 8-K dated September 15, 1995) filed September 29, 1995.
Exhibit
Number Description of Exhibit
------- ---------------------------------------------------------------
10.25 Foster Ball, L.L.C. (since renamed Ball-Foster Glass Container
Co., L.L.C.) Amended and Restated Limited Liability Company
Agreement dated June 26, 1995, among Saint-Gobain Holdings I
Corp., BG Holdings I, Inc. and BG Holdings II, Inc. (filed by
incorporation by reference to the Current Report on Form 8-K
dated September 15, 1995) filed September 29, 1995.
11.1 Statement re: Computation of Earnings Per Share. (Filed
herewith.)
13.1 Ball Corporation 1995 Annual Report to Shareholders (The Annual
Report to Shareholders, except for those portions thereof
incorporated by reference, is furnished for the information of
the Commission and is not to be deemed filed as part of this
Form 10-K.) (Filed herewith.)
18.1 Letter re: Change in Accounting Principles (filed by
incorporation by reference to the Quarterly Report on Form 10-Q
for the quarterly period ended July 2, 1995) filed August 15,
1995.
21.1 List of Subsidiaries of Ball Corporation. (Filed herewith.)
23.1 Consent of Independent Accountants. (Filed herewith.)
24.1 Limited Power of Attorney. (Filed herewith.)
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.
<TABLE>
Exhibit 11.1
------------
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,
---------------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
(Loss) earnings per Common Share - Assuming No Dilution
- - -------------------------------------------------------
Net (loss) income from:
Continuing operations $(18.6) $ 73.0 $(32.5)
Alltrista operations -- -- 2.1
------------- ------------- -------------
Net (loss) income before cumulative effect
of changes in accounting principles, net of tax (18.6) 73.0 (30.4)
Cumulative effect of changes in accounting -- -- (34.7)
principles, net of tax
------------- ------------- -------------
Net (loss) income (18.6) 73.0 (65.1)
Preferred dividends, net of tax (3.1) (3.2) (3.2)
------------- ------------- -------------
Net (loss) earnings attributable to common shareholders $(21.7) $ 69.8 $(68.3)
============= ============= =============
Weighted average number of common shares
outstanding (000s) 30,024 29,662 28,712
============= ============= =============
(Loss) earnings per share of common stock:
Continuing operations $(0.72) $ 2.35 $(1.24)
Alltrista operations -- -- 0.07
Cumulative effect of changes in accounting
principles, net of tax -- -- (1.21)
------------- ------------- -------------
$(0.72) $ 2.35 $(2.38)
============= ============= =============
(Loss) earnings per Share - Assuming Full Dilution
- - --------------------------------------------------
Net (loss) income $(18.6) $ 73.0 $(65.1)
Series B ESOP Preferred dividend, net of tax -- -- (3.2)
Adjustments for deemed ESOP cash contribution
in lieu of Series B ESOP Preferred dividend (a) (2.4) (a)
------------- ------------- -------------
Net (loss) earnings attributable to common shareholders $(18.6) $ 70.6 $(68.3)
============= ============= =============
Weighted average number of common shares
outstanding (000s) 30,024 29,662 28,712
Dilutive effect of stock options (a) 264 (a)
Common shares issuable upon conversion
of Series B ESOP Preferred stock (a) 2,136 (a)
------------- ------------- -------------
Weighted average number shares applicable
to fully diluted earnings per share 30,024 32,062 28,712
============= ============= =============
Fully diluted (loss) earnings per share:
Continuing operations $(0.72) $ 2.20 $(1.24)
Alltrista operations -- -- 0.07
Cumulative effect of changes in accounting
principles, net of tax -- -- (1.21)
------------- ------------- -------------
$(0.72) $ 2.20 $(2.38)
============= ============= =============
</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 1995 and 1994 were:
<TABLE>
<CAPTION>
- - ------------------ ---------- ----------- ---------- ----------- ---------- ----------- ---------- -----------
1995 1994
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 35 1/8 36 7/8 38 3/4 30 3/8 30 3/8 30 1/2 28 3/8 32 1/8
Low 29 1/2 31 29 1/2 25 3/4 24 3/8 24 3/4 24 3/8 27 1/4
Dividends .15 .15 .15 .15 .15 .15 .15 .15
- - ------------------ ---------- ----------- ---------- ----------- ---------- ----------- ---------- -----------
</TABLE>
<PAGE>
<TABLE>
Five-Year Review of Selected Financial Data
Ball Corporation and Subsidiaries
<CAPTION>
- - -------------------------------------------------------------- ------------ ------------ ------------ ------------ -----------
(dollars in millions except per share amounts) 1995 1994 1993 1992 1991
- - -------------------------------------------------------------- ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net sales $ 2,591.7 $ 2,593.4 $ 2,433.8 $ 2,169.3 $ 2,018.4
Net (loss) income from:
Continuing operations(1) (18.6) 73.0 (32.5) 60.9 60.6
Alltrista operations -- -- 2.1 6.2 3.6
Net (loss) income before cumulative
effect of accounting changes (18.6) 73.0 (30.4) 67.1 64.2
Cumulative effect of accounting changes,
net of tax benefit -- -- (34.7) -- --
Net (loss) income (18.6) 73.0 (65.1) 67.1 64.2
Preferred dividends, net of tax benefit (3.1) (3.2) (3.2) (3.4) (8.3)
Net (loss) earnings attributable to
common shareholders (21.7) 69.8 (68.3) 63.7 55.9
Return on average common
shareholders' equity (3.7)% 12.1% (11.6)% 11.1% 12.3%
- - -------------------------------------------------------------- ------------ ----------- ------------ ------------ -----------
Per share of common stock:
(Loss) earnings from:
Continuing operations(1,2) $ (0.72) $ 2.35 $ (1.24) 2.21 $ 2.26
Alltrista operations -- -- .07 .24 .16
(Loss) earnings before cumulative
effect of accounting changes (0.72) 2.35 (1.17) 2.45 2.42
Cumulative effect of accounting
changes, net of tax benefit -- -- (1.21) -- --
(Loss) earnings(1,2) (0.72) 2.35 (2.38) 2.45 2.42
Cash dividends 0.60 0.60 1.24 1.22 1.18
Book value(3) 18.84 20.25 18.63 22.55 21.39
Market value 27 3/4 31 1/2 30 1/4 35 3/8 38
Annual return to common shareholders(4) (10.2)% 6.4% 1.1% (3.6)% 46.9%
Common dividend payout N.M. 25.5% N.M. 49.8% 48.8%
Weighted average common
shares outstanding (000s) 30,024 29,662 28,712 26,039 23,125
- - -------------------------------------------------------------- ------------ ------------ ------------ ------------ -----------
Fully diluted (loss) earnings per share:(5) (Loss) earnings from:
Continuing operations $ (0.72) $ 2.20 $ (1.24) $ 2.09 $ 2.11
Alltrista operations -- -- .07 .22 .14
(Loss) earnings before cumulative
effect of accounting changes (0.72) 2.20 (1.17) 2.31 2.25
Cumulative effect of accounting
changes, net of tax benefit -- -- (1.21) -- --
(Loss) earnings (0.72) 2.20 (2.38) 2.31 2.25
Fully diluted weighted average common
shares outstanding (000s) 30,024 32,062 28,712 8,223 25,408
- - -------------------------------------------------------------- ------------ ------------ ------------ ------------ -----------
Property, plant and equipment additions $ 206.2 $ 94.5 $ 140.9 $ 110.2 $ 87.3
Depreciation 108.9 121.8 110.0 98.7 88.4
Working capital 95.2 198.4 240.9 260.1 136.6
Current ratio 1.19 1.40 1.53 1.72 1.33
Total assets $ 1,612.5 $ 1,759.8 $ 1,795.6 $ 1,563.9 $ 1,432.0
Total interest bearing debt and lease obligations(6) 475.4 493.7 637.2 616.5 492.8
Common shareholders' equity 567.5 604.8 548.6 596.0 551.2
Total capitalization 1,064.1 1,126.5 1,211.8 1,237.5 1,129.1
Debt-to-total capitalization(6) 44.7% 43.8% 52.6% 49.8% 43.6%
- - -------------------------------------------------------------- ------------ ------------ ------------ ------------ -----------
<FN>
N.M. Not meaningful.
(1) Includes the effect of a change in 1995 to the LIFO method of accounting
of $17.1 million ($10.4 million
after tax or 35 cents per share).
(2) Based on weighted average common shares outstanding.
(3) Based on common shares outstanding at end of year.
(4) 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.
(5) The fully diluted loss per share in 1995 and 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.
(6) Including, in years prior to 1993, debt allocated to Alltrista.
</FN>
</TABLE>
<TABLE>
Consolidated Statement of (Loss) Income
Ball Corporation and Subsidiaries
<CAPTION>
Year ended December 31,
------------------------------------------------
(dollars in millions except per share amounts) 1995 1994 1993
- - ---------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Net sales $2,591.7 $2,593.4 $2,433.8
------------- ------------- -------------
Costs and expenses
Cost of sales 2,339.4 2,311.3 2,209.6
General and administrative expenses 89.0 86.1 96.5
Selling and product development expenses 23.1 28.4 24.5
Loss on dispositions (net), restructuring and other 118.2 6.8 108.7
Interest expense 37.8 41.0 45.9
------------- ------------- -------------
2,607.5 2,473.6 2,485.2
------------- ------------- -------------
(Loss) income from continuing operations
before taxes on income (15.8) 119.8 (51.4)
Provision for income tax benefit (expense) 0.1 (44.7) 21.2
Minority interests (4.6) (4.6) (3.6)
Equity in earnings of affiliates 1.7 2.5 1.3
------------- ------------- -------------
Net (loss) income from:
Continuing operations (18.6) 73.0 (32.5)
Alltrista operations - - 2.1
------------- ------------- -------------
Net (loss) income before cumulative effect of
changes in accounting principles (18.6) 73.0 (30.4)
Cumulative effect of changes in accounting principles,
net of tax benefit - - (34.7)
------------- ------------- -------------
Net (loss) income (18.6) 73.0 (65.1)
Preferred dividends, net of tax benefit (3.1) (3.2) (3.2)
------------- ------------- -------------
Net (loss) earnings attributable to common shareholders $ (21.7) $ 69.8 $ (68.3)
------------------------------------------------------------- ============= ============= =============
Net (loss) earnings per share of common stock:
Continuing operations $ (0.72) $ 2.35 $ (1.24)
Alltrista operations - - .07
Cumulative effect of changes in accounting principles,
net of tax benefit - - (1.21)
------------- ------------- -------------
$ (0.72) $ 2.35 $ (2.38)
------------------------------------------------------------- ============= ============= =============
Fully diluted (loss) earnings per share:
Continuing operations $ (0.72) $ 2.20 $ (1.24)
Alltrista operations - - .07
Cumulative effect of changes in accounting principles,
net of tax benefit - - (1.21)
------------- ------------- -------------
$ (0.72) $ 2.20 $ (2.38)
------------------------------------------------------------- ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
Consolidated Balance Sheet
Ball Corporation and Subsidiaries
<CAPTION>
December 31,
-------------------------------
(dollars in millions) 1995 1994
- - ---------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Assets
Current assets
Cash and temporary investments $ 5.1 $ 10.4
Accounts receivable, net 200.0 204.5
Inventories, net 318.5 414.0
Deferred income tax benefits 30.3 36.7
Prepaid expenses 38.8 32.5
------------- -------------
Total current assets 592.7 698.1
------------- -------------
Property, plant and equipment, at cost
Land 24.0 34.3
Buildings 231.8 303.4
Machinery and equipment 891.0 1,148.3
------------- -------------
1,146.8 1,486.0
Accumulated depreciation (518.2) (706.1)
------------- -------------
628.6 779.9
------------- -------------
Investments in affiliates 262.8 30.8
Goodwill and other intangibles, net 66.1 93.8
Net cash surrender value of company-owned life insurance 16.8 94.7
Other assets 45.5 62.5
------------- -------------
$1,612.5 $1,759.8
============= =============
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt and current portion of long-term debt $ 155.0 $ 116.7
Accounts payable 195.3 209.2
Salaries, wages and accrued employee benefits 73.0 110.5
Other current liabilities 74.2 63.3
------------- -------------
Total current liabilities 497.5 499.7
------------- -------------
Noncurrent liabilities
Long-term debt 320.4 377.0
Deferred income taxes 28.0 56.6
Employee benefit obligations, restructuring and other 177.9 193.7
------------- -------------
Total noncurrent liabilities 526.3 627.3
------------- -------------
Contingencies
Minority interests 6.0 16.1
------------- -------------
Shareholders' equity
Series B ESOP Convertible Preferred Stock 65.6 67.2
Unearned compensation - ESOP (50.4) (55.3)
------------- -------------
Preferred shareholder's equity 15.2 11.9
------------- -------------
Common stock (32,172,768 shares issued - 1995;
31,034,338 shares issued - 1994) 293.8 261.3
Retained earnings 336.4 378.6
Treasury stock, at cost (2,058,173 shares - 1995; 1,166,878 shares - 1994) (62.7) (35.1)
------------- -------------
Common shareholders' equity 567.5 604.8
------------- -------------
$1,612.5 $1,759.8
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
Consolidated Statement of Cash Flows
Ball Corporation and Subsidiaries
<CAPTION>
Year ended December 31,
------------------------------------------------
(dollars in millions) 1995 1994 1993
------------- -------------- -------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net (loss) income from continuing operations before
cumulative effect of changes in accounting principles $(18.6) $ 73.0 $(32.5)
Reconciliation of net (loss) income to net cash
provided by operating activities:
Loss on dispositions (net), restructuring and other 118.2 6.8 108.7
Depreciation and amortization 113.6 127.0 116.3
Net payments for restructuring and other charges (14.5) (17.2) (6.1)
Deferred taxes on income (14.3) 7.7 (41.8)
Other (14.2) (5.8) (6.0)
Working capital changes, excluding
effects of dispositions and acquisitions:
Accounts receivable, including $66.5 million in proceeds
from the sale of trade accounts receivable in 1993 (48.0) (11.7) 70.2
Inventories (85.6) (13.0) 32.4
Other current assets (10.9) (1.0) 6.8
Accounts payable 27.5 53.8 (19.1)
Other current liabilities (5.3) 21.1 (42.2)
------------- -------------- -------------
Net cash provided by operating activities 47.9 240.7 186.7
------------- -------------- -------------
Cash Flows from Financing Activities
Principal payments of long-term debt, including refinancing
of $108.8 million of Heekin indebtedness in 1993 (79.9) (45.2) (181.9)
Changes in long-term borrowings 22.2 (74.3) 136.2
Net change in short-term borrowings 40.0 (15.0) 26.5
Common and preferred dividends (23.0) (22.9) (40.8)
Proceeds from issuance of common stock under
various employee and shareholder plans 32.5 19.8 20.0
Acquisitions of treasury stock (27.5) (9.9) (8.6)
Other (5.8) (1.7) 1.2
------------- -------------- -------------
Net cash used in financing activities (41.5) (149.2) (47.4)
------------- -------------- -------------
Cash Flows from Investment Activities
Additions to property, plant and equipment (206.2) (94.5) (140.9)
Investments in affiliates (235.8) (5.6) (13.7)
Net proceeds from business dispositions 332.0 - -
Company-owned life insurance, net 88.4 (1.4) 15.5
Net cash to Alltrista - - (8.0)
Other 9.9 12.2 1.5
------------- -------------- -------------
Net cash used in investment activities (11.7) (89.3) (145.6)
------------- -------------- -------------
Net (Decrease) Increase in Cash (5.3) 2.2 (6.3)
Cash and temporary investments at beginning of year 10.4 8.2 14.5
------------- -------------- -------------
Cash and Temporary Investments at End of Year $ 5.1 $ 10.4 $ 8.2
============= ============== =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<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)
1995 1994 1993 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Series B ESOP Convertible
Preferred Stock
Balance, beginning of year 1,828 1,870 1,893 $ 67.2 $ 68.7 $ 69.6
Shares issued - - 11 - - 0.4
Shares retired (41) (42) (34) (1.6) (1.5) (1.3)
---------- ---------- ---------- ---------- ---------- ----------
Balance, end of year 1,787 1,828 1,870 $ 65.6 $ 67.2 $ 68.7
========== ========== ========== ========== ========== ==========
Unearned Compensation - ESOP
Balance, beginning of year $(55.3) $(58.6) $(61.6)
Amortization 4.9 3.3 3.0
---------- ---------- ----------
Balance, end of year $(50.4) $(55.3) $(58.6)
========== ========== ==========
Common Stock
Balance, beginning of year 31,034 30,258 26,968 $261.3 $241.5 $130.4
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 1,139 776 775 32.5 19.8 22.8
---------- ---------- ---------- ---------- ---------- ----------
Balance, end of year 32,173 31,034 30,258 $293.8 $261.3 $241.5
========== ========== ========== ========== ========== ==========
Retained Earnings
Balance, beginning of year $378.6 $332.2 $482.4
Net (loss) income for the year (18.6) 73.0 (65.1)
Common dividends (18.0) (17.8) (35.5)
Dividend of Alltrista shares - - (34.5)
Preferred dividends,
net of tax benefit (3.1) (3.2) (3.2)
Foreign currency translation adjustment
(1.4) (6.7) (4.1)
Additional minimum pension
liability, net of tax (1.1) 1.1 (7.8)
---------- ---------- ----------
Balance, end of year $336.4 $378.6 $332.2
========== ========== ==========
Treasury Stock
Balance, beginning of year (1,167) (812) (539) $(35.1) $(25.1) $(16.8)
Shares reacquired (889) (350) (281) (27.5) (9.9) (8.6)
Shares issued for stock options and
other employee and shareholder stock
plans less shares exchanged (2) (5) 8 (0.1) (0.1) 0.3
---------- ---------- ---------- ---------- ---------- ----------
Balance, end of year (2,058) (1,167) (812) $(62.7) $(35.1) $(25.1)
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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, and majority-owned affiliates where control is
temporary, 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 for prior years have been reclassified from amounts
originally reported to conform to the 1995 presentation.
The 1993 results of operations of the businesses contributed to Alltrista
Corporation, formerly a wholly-owned subsidiary, have been segregated from
continuing operations and are captioned as "Alltrista operations." See the note,
"Spin-Off," for more information regarding this 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. Provision for estimated contract losses, if any,
are made in the period that such losses are determined.
Inventories
Inventories are stated at the lower of cost or market. The cost for
substantially all inventories within the U.S. metal food container business is
determined using the last-in, first-out (LIFO) method of accounting. Effective
January 1, 1995, the company adopted the LIFO method for determining the cost of
certain U.S. metal beverage container inventories. The cost for remaining
inventories is determined using the first-in, first-out (FIFO) 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
- - - 15 to 40 years; machinery and equipment - 5 to 10 years). Goodwill is
amortized over the periods benefited, generally 40 years.
Taxes on Income
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.
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
related 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 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 (loss) earnings 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 (loss) earnings 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 1995 and 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.
Use of Estimates
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.
New Accounting Pronouncements
The Financial Accounting Standards Board issued Statements of Financial
Accounting Standards (SFAS) No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," and SFAS No. 123,
"Accounting for Stock-Based Compensation," which are effective for the company
beginning in 1996. SFAS No. 121 requires a review for impairment of long-lived
assets and certain identifiable intangibles used in the business whenever events
or changes in circumstances indicate that the carrying amounts may not be
recoverable. The statement also requires that long-lived assets and certain
identifiable intangibles which are held for disposition should be reported at
the lower of carrying amount or fair value less cost to sell. The company has
not yet determined the impact, if any, of adopting this statement.
SFAS No. 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. SFAS No. 123 also defines a fair
value-based method of accounting for employee stock options and encourages,
though does not require, companies to adopt that method of accounting for all
employee stock compensation plans. The company will continue to account for its
stock-based employee compensation programs as prescribed by existing generally
accepted accounting principles.
Business Segment Information
The company has two business segments: packaging, and aerospace and
technologies.
Within the packaging segment, the company sold the commercial glass
packaging business in September 1995 to Ball-Foster Glass Container Co., L.L.C.
(Ball-Foster) in which the company owns a 42-percent interest. The loss recorded
in connection with the sale is included as part of operating earnings, as are
the results of that business through the date of sale. The company accounts for
its interest in Ball-Foster under the equity method of accounting. Accordingly,
results of the glass business are not consolidated subsequent to the transaction
date. Effective January 1, 1995, the company consolidated the results of FTB
Packaging, Ltd. (FTB Packaging), the company's Hong Kong-based metal packaging
subsidiary. Also in 1995, the company entered the PET (polyethylene
terephthalate) plastic container business. Costs incurred in connection with the
start-up of that business are included in packaging segment results. In March
1993 the company acquired Heekin Can, Inc. (Heekin), a metal food container and
specialty products business, which is included in the consolidated results from
its acquisition date. Further information regarding the sale of the glass
business and acquisition of Heekin is provided in the notes, "Dispositions" and
"Acquisitions." The packaging segment includes the data for 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.
Plastic - manufacture of PET plastic containers, primarily for use in
beverage and food packaging.
With regard to the aerospace and technologies segment (formerly aerospace
and communications), the company sold its Efratom time and frequency measurement
business in March 1995. The gain recorded in connection with the sale is
included as part of the aerospace and technologies segment operating earnings,
as are the results of that business through the date of sale. The aerospace and
technologies segment includes the following operations: the aerospace systems
division, comprised of electro-optics and cryogenics, space systems and systems
engineering; and the telecommunication products division.
Packaging segment sales to Anheuser-Busch Companies, Inc. represented
approximately 11 percent of consolidated net sales in each of 1995, 1994 and
1993. Sales to each of the Pepsi-Cola Company and The Coca-Cola Company and
their affiliates represented approximately 10 percent of consolidated net sales
in 1993. Sales to all bottlers of Pepsi-Cola and Coca-Cola branded beverages
comprised approximately 25 percent, 21 percent and 22 percent of consolidated
net sales in 1995, 1994 and 1993, respectively. Sales to various U.S. government
agencies by the aerospace and technologies segment represented approximately 10
percent of consolidated net sales in 1995 and approximately 8 percent of
consolidated net sales in each of 1994 and 1993.
<TABLE>
<CAPTION>
Summary of Business by Segment
(dollars in millions) 1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Net Sales
Packaging
Metal $1,730.0 $1,574.8 $1,466.8
Glass 545.9 750.6 698.7
------------- ------------- -------------
Total packaging 2,275.9 2,325.4 2,165.5
Aerospace and technologies 315.8 268.0 268.3
------------- ------------- -------------
Consolidated net sales 2,591.7 2,593.4 2,433.8
============= ============= =============
(Loss) Income
Packaging 122.1 152.0 105.6
Dispositions, restructuring and other charges (1) (122.0) - (76.7)
------------- ------------- -------------
Total packaging 0.1 152.0 28.9
------------- ------------- -------------
Aerospace and technologies 27.3 23.1 3.3
Dispositions, restructuring and other charges (1) 3.8 (4.0) (29.1)
------------- ------------- -------------
Total aerospace and technologies 31.1 19.1 (25.8)
------------- ------------- -------------
Consolidated operating earnings 31.2 171.1 3.1
Corporate expenses, net (9.2) (7.5) (5.7)
Corporate restructuring and other charges (1) - (2.8) (2.9)
Interest expense (37.8) (41.0) (45.9)
------------- ------------- -------------
Consolidated (loss) income from continuing operations
before taxes on income (15.8) 119.8 (51.4)
============= ============= =============
Assets Employed in Operations (2)
Packaging 1,069.5 1,383.9 1,371.8
Aerospace and technologies 124.2 124.2 145.9
------------- ------------- -------------
Assets employed in operations 1,193.7 1,508.1 1,517.7
Investments in affiliates (3) 262.8 30.8 29.2
Corporate (4) 156.0 220.9 248.7
------------- ------------- -------------
Total assets 1,612.5 1,759.8 1,795.6
============= ============= =============
Property, Plant and Equipment Additions
Packaging 190.6 87.9 128.3
Aerospace and technologies 13.9 5.3 10.8
Corporate 1.7 1.3 1.8
------------- ------------- -------------
Total additions 206.2 94.5 140.9
============= ============= =============
Depreciation and Amortization
Packaging 100.2 112.8 98.9
Aerospace and technologies 10.9 11.5 13.1
Corporate 2.5 2.7 4.3
------------- ------------- -------------
Total depreciation and amortization $ 113.6 $ 127.0 $ 116.3
============= ============= =============
<FN>
(1) Refer to the notes, "Dispositions" and "Restructuring and Other Charges."
(2) Includes reserves described in the note, "Restructuring and Other Charges."
(3) Investments in affiliates at December 31, 1995, include $178.3 million for
Ball-Foster; $49.1 million for affiliates in Asia, principally held through
FTB Packaging; $18.8 million for EarthWatch; and, $16.6 million for Datum
and others. Amounts for 1994 and 1993 were comprised principally of Asian
affiliates, including FTB Packaging.
(4) 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>
<TABLE>
Financial data segmented by geographic area is provided below.
Summary of Business by Geographic Area
<CAPTION>
United Canada
(dollars in millions) States and Other Asia Eliminations Consolidated
------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
1995
Net sales
Sales to unaffiliated customers $2,231.6 $304.0 $56.1 $ - $2,591.7
Inter-area sales to affiliates - 0.3 - (0.3) -
------------- ------------- ------------- --------------- ---------------
2,231.6 304.3 56.1 (0.3) 2,591.7
============= ============= ============= =============== ===============
Consolidated operating earnings (1) 7.5 19.1 4.7 (0.1) 31.2
============= ============= ============= =============== ===============
Assets employed in operations $ 938.8 $198.2 $60.4 $(3.7) $1,193.7
============= ============= ============= =============== ===============
1994
Net sales
Sales to unaffiliated customers $2,313.6 $279.8 $ - $2,593.4
Inter-area sales to affiliates 0.6 1.0 (1.6) -
------------- ------------- --------------- ---------------
2,314.2 280.8 (1.6) 2,593.4
============= ============= =============== ===============
Consolidated operating earnings (1) 151.4 19.7 - 171.1
============= ============= =============== ===============
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
============= ============= =============== ===============
<FN>
(1) Refer to the notes, "Dispositions" and "Restructuring and Other Charges."
</FN>
</TABLE>
Dispositions
Ball Glass
On September 15, 1995, the company sold substantially all of the assets Ball
Glass Container Corporation (Ball Glass), a wholly-owned subsidiary of the
company, to Ball-Foster Glass Container Co., L.L.C. (Ball-Foster) for
approximately $323 million in cash. The company acquired a 42-percent interest
in Ball-Foster for $180.6 million, which is included in investments in
affiliates in the Consolidated Balance Sheet. The remaining 58-percent interest
was acquired for $249.4 million by Compagnie de Saint-Gobain (Saint-Gobain).
Ball-Foster also acquired substantially all of the assets of Foster-Forbes, a
unit of American National Can Company, for approximately $680 million in cash.
Ball-Foster's acquisition financing was secured and guaranteed by Saint-Gobain.
The agreement between the company and Saint-Gobain includes provisions
allowing the company to sell its interest in Ball-Foster to Saint-Gobain
initially during a three-year period beginning in 1998 at a price based upon
prior year's earnings, and, similarly, for Saint-Gobain to purchase the
company's interests during certain periods in 2001 or 2002.
The company recorded a charge of $111.1 million ($76.7 million after tax or
$2.55 per share) in 1995 in connection with the sale of the assets of Ball
Glass. The final determination of the loss realized may vary from the amount
recorded in 1995 depending on the resolution of certain post-closing adjustments
as provided in the agreement of sale. In addition, in order to achieve, in part,
the benefits anticipated from combining the glass businesses within Ball-Foster,
it may become necessary to rationalize plants or equipment, or to eliminate
redundant systems or processes, resulting in charges against earnings. The
components, timing and amounts of the charges, if any, are uncertain at this
time.
The following table illustrates the company's unaudited pro forma
consolidated results as though the sale of the glass business and investment in
Ball-Foster had occurred at January 1, 1995. These unaudited pro forma
consolidated results include the company's 42-percent interest in pro forma
earnings of Ball-Foster; adjust interest expense to reflect the reduction of
indebtedness from the assumed application of the proceeds from the sale, net of
the company's investment in Ball-Foster; adjust general and administrative
expenses to expected recurring levels; and, recognize related tax effects of the
foregoing adjustments. The after tax loss of $76.7 million recorded in 1995 upon
disposition is also excluded from the unaudited pro forma results. The unaudited
pro forma data 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 transactions been effected on January 1, 1995.
(dollars in millions except per share amounts)
Net sales $2,045.8
Cost of sales 1,836.6
Net income 54.7
Net earnings attributable to common shareholders $ 51.6
- - ------------------------------------------------------------ ---------------
Earnings per share of common stock $ 1.72
Fully diluted earnings per share $ 1.62
Preliminary unaudited summary financial information of Ball-Foster, for the
period from September 15, 1995, including a preliminary allocation of the
purchase price, based on estimated fair values of assets acquired and
liabilities assumed, follows:
(dollars in millions)
Period ended December 31, 1995
Net sales $ 354.9
Cost of sales 328.9
Net loss reported by Ball-Foster (5.4)
Net loss attributable to Ball Corporation (2.3)
Net loss after taxes included in equity in earnings of affiliates $ (1.3)
At December 31, 1995
Current assets $ 431.4
Noncurrent assets 827.6
---------------
Total assets 1,259.0
---------------
Current liabilities 196.5
Noncurrent liabilities 621.1
Minority interest 16.8
---------------
Total liabilities and minority interest 834.4
---------------
Net assets 424.6
---------------
Ball's net investment at December 31, 1995 $ 178.3
---------------
Efratom
In March 1995 the company sold its Efratom time and frequency measurement
business to Datum Inc. (Datum) for cash of $15.0 million and approximately 1.3
million shares of Datum common stock with a market value of $14.0 million at the
date of the sale. In conjunction with the sale of Efratom, the company recorded
a gain of $11.8 million ($7.7 million after tax or 25 cents per share). The
company records its 32-percent share of Datum's earnings under the equity
method; the investment is included in investments in affiliates in the
Consolidated Balance Sheet.
Spin-Off
In March 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 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.
Alltrista's 1993 net sales and net income were $67.4 million and $2.1
million, respectively, through the date of distribution. Alltrista's 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.
Acquisition
In March 1993 the company acquired Heekin Can, Inc., a manufacturer of metal
food, pet food and aerosol containers, through a tax-free exchange of shares
accounted for as a purchase. 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, the company 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.
Accounts Receivable
Sale of Trade Accounts Receivable
In September 1993, as an alternative source of competitively priced financing,
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 1996 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, 1995 and 1994, the $66.5 million of trade receivables sold
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 1995, 1994 and 1993 amounted to $4.3 million, $3.0
million and $.6 million, respectively.
Accounts Receivable in Connection with Long-Term Contracts
Net accounts receivable under long-term contracts, due primarily from agencies
of the U.S. government, were $59.9 million and $47.6 million at December 31,
1995 and 1994, respectively, and include gross unbilled amounts representing
revenue earned but not yet billable of $24.9 million and $12.4 million,
respectively. Approximately $6.7 million of gross unbilled receivables at
December 31, 1995, is expected to be collected after one year.
Inventories
Inventories at December 31 consisted of the following:
(dollars in millions) 1995 1994
------------- -------------
Raw materials and supplies $ 82.8 $132.3
Work in process and finished goods 235.7 281.7
============= =============
$318.5 $414.0
============= =============
Effective January 1, 1995, the company adopted the LIFO method of
accounting for determining the cost of certain U.S. metal beverage container
inventories as a preferable method for matching the cost of the products sold
with the revenues generated. The impact of this change in accounting was an
increase in cost of sales and corresponding decrease in operating earnings of
$17.1 million ($10.4 million after tax or 35 cents per share). The company is
unable to determine the cumulative impact of this change on prior periods.
With the adoption of LIFO accounting for U.S. metal beverage container
inventories, approximately 75 percent of total U.S. product inventories at
December 31, 1995, were valued using this method. Inventories, at December 31,
1995, would have been $17.1 million higher than the reported amounts if the FIFO
method, which approximates replacement cost, had been used for all inventories.
Company-Owned Life Insurance
The company has purchased insurance on the lives of certain groups of employees.
Premiums have been approximately $20 million annually. Amounts in the
Consolidated Statement of Cash Flows represent net cash flows from this program
including policy loans of $113.2 million, $23.4 million and $37.2 million in
1995, 1994 and 1993, respectively. Loans outstanding of $233.0 million and
$120.7 million at December 31, 1995 and 1994, respectively, are reflected as a
reduction in the net cash value in the Consolidated Balance Sheet. The policies
are issued by Great-West Life Assurance Company and The Hartford Life Insurance
Company. Federal budget proposals currently under consideration by Congress
include legislation which may limit, to varying degrees, the amount of interest
on policy loans which could be deducted for federal income tax purposes. The
company is monitoring the proposed legislation closely and reviewing options
available should the legislation be enacted.
Restructuring and Other Charges
Capacity Reductions
In late 1995, as part of the company's ongoing assessment of industry trends and
conditions upon its packaging business, a decision was made to curtail certain
manufacturing capacity and write down certain unproductive manufacturing
equipment to net realizable value resulting in a charge of $10.9 million ($6.6
million after tax or 22 cents per share) in the fourth quarter of 1995. The
charge included $7.5 million for asset write-downs to net realizable value and
$3.4 million for employment termination costs, benefits and other costs. The
estimated net future pretax cash outflows related to this charge is $.7 million.
The curtailments are expected to be completed during 1996.
1993 Restructuring Plan
In 1993 plans were developed to undertake a number of actions which included
elimination of excess manufacturing capacity through plant closures and
consolidations, administrative consolidations and the discontinuance of two
aerospace and technologies segment product lines. In connection with these
plans, pretax restructuring and other charges were recorded of $108.7 million
($66.3 million after tax or $2.31 per share) in the third and fourth quarters of
1993. A summary of these charges by business segment follows:
<TABLE>
<CAPTION>
Aerospace and
(dollars in millions) Packaging Technologies 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 termination costs and 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 termination costs and 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 phaseout and disposal of
facilities and discontinued product lines.
Additional charges were recorded in 1995 and 1994 for costs associated with
the 1993 decision to exit the visual image generating systems (VIGS) business.
Total charges included in restructuring and other for the VIGS business were
$8.0 million, $4.0 million and $10.2 million in 1995, 1994 and 1993,
respectively.
Amounts related to the 1993 restructuring plan included in the Consolidated
Balance Sheet at December 31 and the changes in those reserves follow:
<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
Pension curtailments (1) (2.4) - (11.8) (14.2)
Noncash items (11.5) (2.0) - (13.5)
Cash payments (2.7) (3.4) - (6.1)
------------ ------------- ------------ ------------
Reserve at December 31, 1993 32.9 31.3 10.7 74.9
Additional provision in 1994 - 4.0 - 4.0
Noncash items (6.1) (5.7) (0.5) (12.3)
Cash payments (1.4) (15.7) (0.1) (17.2)
------------ ------------- ------------ ------------
Reserve at December 31, 1994 25.4 13.9 10.1 49.4
Additional provision in 1995 - 8.0 - 8.0
Related to sale of glass business (7.2) (0.8) (6.8) (14.8)
Noncash items (10.3) 7.5 (3.3) (6.1)
Cash payments - (14.5) - (14.5)
------------ ------------- ------------ ------------
Reserve at December 31, 1995 $ 7.9 $14.1 $ -- $22.0
============ ============= ============ ============
<FN>
(1) The balance sheet effects of pension curtailment costs are included in
accrued pension costs and deferred pension expense. Pension funding will
occur over an extended period of time.
</FN>
</TABLE>
Property, plant and equipment and inventory are classified in the
respective asset categories at net realizable value within the Consolidated
Balance Sheet. Employment costs and termination benefits due to work force
reductions are reflected in current liabilities. Of the total restructuring and
other reserves outstanding at December 31, 1995, $10.8 million will not impact
future cash flows apart from related tax benefits. The balance of the reserves,
$11.2 million, represents future pretax cash outflows, which are expected to be
expended in 1996.
Debt and Interest Costs
Short-Term Debt
The following table summarizes short-term financing facilities and the related
amounts outstanding at December 31:
<TABLE>
<CAPTION>
1995 1994
---------------------------------------------- -------------------------------
Weighted Weighted
Total Average Average
(dollars in millions) Available Outstanding Rate Outstanding Rate
----------- --------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Uncommitted U.S. bank facilities $381.0 $ 21.7 6.2% $17.0 6.0%
Canadian dollar commercial paper 87.9 43.3 6.1% 39.6 6.8%
Asian bank facilities (1) 80.0 38.5 7.7% -- --
----------- --------------- ---------------
$548.9 $103.5 $56.6
=========== =============== ===============
<FN>
(1) Provide for borrowings by FTB Packaging in U.S. and Asian currencies.
Borrowings are without recourse to Ball Corporation.
</FN>
</TABLE>
Long-Term Debt
Long-term debt at December 31 consisted of the following:
<TABLE>
<CAPTION>
(dollars in millions) 1995 1994
------------- -------------
<S> <C> <C>
Notes Payable
Private placements:
8.09% to 8.75% serial installment notes (8.48% weighted average)
due through 2012 $110.0 $110.0
8.20% to 8.57% serial notes (8.35% weighted average)
due 1999 through 2000 60.0 60.0
9.82% to 10.00% serial notes (9.97% weighted average)
due through 1998 45.0 55.0
9.52% to 9.66% serial notes (9.63% weighted average)
due through 1998 40.0 60.0
9.18% Canadian note due 1998 - 21.4
6.64% notes due 1995 - 20.0
8.875% installment notes due through 1998 6.0 8.0
6.62% note due January 1996 (1) 20.0 -
Industrial Development Revenue Bonds
Floating rates (5.10%-6.63% at December 31, 1995) due through 2011 33.1 34.1
7.00% to 7.75% due through 2009 - 2.0
Capital Lease Obligations and Other 7.4 10.7
ESOP Debt Guarantee
8.38% installment notes due through 1999 25.3 30.8
8.75% installment note due 1999 through 2001 25.1 25.1
------------- -------------
371.9 437.1
Less:
Current portion of long-term debt (51.5) (60.1)
------------- -------------
$320.4 $377.0
============= =============
<FN>
(1) This note was refinanced in January 1996 with long-term, fixed-rate date due
2004 at 6.62 percent.
</FN>
</TABLE>
In January 1996 the company issued long-term senior unsecured notes to
several insurance companies for $150 million with a weighted average interest
rate of 6.7 percent, and maturities from 1997 through 2008. The maturities
related to these notes for the years ending December 31, 1997 through 2000, are
$2.9 million each year. Maturities of fixed long-term debt obligations
outstanding at December 31, 1995, are $57.0 million, $46.0 million, $51.0
million and $50.6 million for the years ending December 31, 1997 through 2000,
respectively.
The company had revolving credit agreements at December 31, 1995, totaling
$300 million consisting of a five-year facility for $150 million and 364-day
facilities of $150 million in the aggregate. The revolving credit agreements
provide for various borrowing rates including borrowing rates based on 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.
Under the most restrictive covenant in any agreement, approximately $94 million
was available for payment of dividends and purchases of treasury stock at
December 31, 1995.
ESOP debt represents borrowings by the trust for the company-sponsored ESOP
which have been irrevocably guaranteed by the company. Letters of credit are
issued in the ordinary course of business by Ball Corporation of which $31.8
million were outstanding at December 31, 1995, primarily in connection with
insurance arrangements. In addition, FTB Packaging issues letters of credit in
the ordinary course of business in connection with supplier arrangements and
provides guarantees to secure bank financing for its affiliates in the People's
Republic of China. At year end, FTB Packaging had outstanding letters of credit
and guarantees of approximately $16.0 million and $31.0 million, respectively.
A summary of total interest cost paid and accrued follows:
(dollars in millions) 1995 1994 1993
------------- ------------- -------------
Interest costs $41.3 $43.2 $47.6
Amounts capitalized (3.5) (2.2) (1.7)
------------- ------------- -------------
Interest expense 37.8 41.0 45.9
============= ============= =============
Gross amount paid during year $42.6 $37.6 $47.1
============= ============= =============
Financial and Derivative Instruments and Risk Management
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.
The company uses various techniques to minimize its exposure to significant
changes in the cost of commodity materials, primarily aluminum, through
arrangements with suppliers and, at times, through the use of certain derivative
instruments, designated as hedges. Financial derivatives, including interest
rate swaps and options and forward exchange contracts, are used when
circumstances warrant to manage the company's interest rate and foreign exchange
exposure. Interest rate derivatives are used principally to manage the company's
mix of floating- and fixed-rate debt within parameters that are consistent with
its long-term financial strategy. Derivative instruments generally are not held
for trading purposes.
Under interest rate swap agreements, the company agrees to exchange with
the counter parties the difference between the fixed-rate and floating-rate
interest amounts calculated on the notional amounts. Interest rate swap
agreements outstanding at December 31, 1995, had notional amounts of $117
million at a fixed rate and $25 million at a floating rate, or a net fixed-rate
position of $92 million. Fixed-rate agreements with notional amounts of $50
million included an interest rate floor. These swap agreements effectively
change the rate upon which interest expense is determined from a floating rate
to a fixed rate of interest. Interest rate swap agreements had notional amounts
of $75 million at a fixed rate and $109 million at a floating rate, or a net
floating-rate position of $34 million at December 31, 1994.
The related notional amounts of interest rate swaps and options serve as
the basis for computing the cash flow due under these agreements but do not
represent the company's exposure through its use of these instruments. Although
these instruments involve varying degrees of credit and interest risk, the
counter parties to the agreements involve financial institutions which are
expected to perform fully under the terms of the agreements.
The fair value of all nonderivative financial instruments approximates
their carrying amounts with the exception of long-term debt. Rates currently
available to the company for loans with similar terms and maturities are used to
estimate the fair value of long-term debt based on discounted cash flows. The
fair value of derivatives generally reflects the estimated amounts that the
company would pay or receive upon termination of the contracts at December 31,
taking into account any unrealized gains or losses of open contracts.
<TABLE>
<CAPTION>
1995 1994
--------------------------- ----------------------------
Carrying Fair Carrying Fair
(dollars in millions) Amount Value Amount Value
------------ ------------ ----------- --------------
<S> <C> <C> <C> <C>
Long-term debt $371.9 $405.1 $437.1 $448.5
Unrealized net loss on derivative
contracts relating to debt - 4.9 - 2.3
Unrealized loss on derivative contracts
relating to aluminum can and end sheet - 2.4 - -
</TABLE>
Leases
Noncancellable operating leases in effect at December 31, 1995, require rental
payments of $16.0 million, $12.6 million, $7.9 million, $6.0 million and $4.2
million for the years 1996 through 2000, respectively, and $18.2 million for
years thereafter. Lease expense for all operating leases was $33.4 million,
$36.2 million and $33.2 million in 1995, 1994 and 1993, respectively.
Taxes on Income
The amounts of (loss) income from continuing operations before income taxes by
national jurisdiction follow:
(dollars in millions) 1995 1994 1993
------------- ------------- -------------
Domestic $(32.1) $104.6 $(44.1)
Foreign 16.3 15.2 (7.3)
------------- ------------- -------------
$(15.8) $119.8 $(51.4)
============= ============= =============
The provision for income tax (benefit) expense for continuing operations
was comprised as follows:
(dollars in millions) 1995 1994 1993
------------- ------------- -------------
Current
U.S. $ 8.2 $29.2 $19.2
State and local 3.8 6.9 0.8
Foreign 2.2 0.9 0.6
------------- ------------- -------------
Total current 14.2 37.0 20.6
------------- ------------- -------------
Deferred
U.S. (13.6) 2.4 (33.8)
State and local (4.5) (0.5) (5.2)
Foreign 3.8 5.8 (2.8)
------------- ------------- -------------
Total deferred (14.3) 7.7 (41.8)
------------- ------------- -------------
Total provision for income taxes $ (0.1) $44.7 $(21.2)
============= ============= =============
Provision is not made for additional U.S. or foreign taxes on undistributed
earnings of controlled foreign corporations where such earnings will continue to
be reinvested. It is not practicable to estimate the additional taxes, including
applicable foreign withholding taxes, that might become payable upon the
eventual remittance of the foreign earnings for which no provision has been
made.
The provision for income tax (benefit) recorded within the Consolidated
Statement of (Loss) Income differs from the amount of income tax (benefit)
determined by applying the U.S. statutory federal income tax rate to pretax
(loss) income from continuing operations as a result of the following:
<TABLE>
<CAPTION>
(dollars in millions) 1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Statutory U.S. federal income tax (benefit) $ (5.6) $ 41.9 $(18.0)
Increase (decrease) due to:
Company-owned life insurance (5.4) (4.1) (3.7)
State and local income taxes, net (0.7) 3.9 (3.1)
Bases differences of Ball Glass assets sold 7.7 - -
Amortization of goodwill and other intangibles 0.8 0.7 0.7
Foreign tax rate differentials 0.4 1.4 1.2
U.S. taxes provided on earnings of foreign affiliates 2.3 0.1 0.5
Other, net 0.4 0.8 1.2
------------- ------------- -------------
Income tax (benefit) provision $ (0.1) $ 44.7 $(21.2)
============= ============= =============
Effective income tax rate expressed
as a percentage of pretax (loss) income (0.6)% 37.3% (41.2)%
============= ============= =============
</TABLE>
The significant components of deferred tax (assets) liabilities at December 31
were:
(dollars in millions) 1995 1994
------------- -------------
Deferred tax assets:
Deferred compensation $(18.9) $(17.7)
Accrued employee benefits (39.2) (43.3)
Restructuring and other reserves (18.5) (25.3)
Other (36.0) (31.2)
------------- -------------
Total deferred tax assets (112.6) (117.5)
------------- -------------
Deferred tax liabilities:
Depreciation 97.7 120.5
Other 12.6 16.9
------------- -------------
Total deferred tax liabilities 110.3 137.4
------------- -------------
Net deferred tax (assets) liabilities $ (2.3) $ 19.9
============= =============
Total income tax payments, including amounts accrued in prior years, were
$26.5 million, $18.5 million and $34.7 million for 1995, 1994 and 1993,
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 cost of pension benefits, including prior service cost, is recognized
over the estimated service periods of employees based upon respective pension
plan benefit provisions. The composition of pension expense for salaried and
hourly employee pension plans, excluding curtailments and settlements, follows:
<TABLE>
<CAPTION>
(dollars in millions) 1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 9.5 $ 12.5 $ 11.6
Interest cost on projected benefit obligation 31.5 28.8 26.8
Investment return on plan assets (77.6) 9.6 (49.0)
Net amortization and deferral 42.3 (39.3) 19.7
------------- ------------- -------------
Net periodic pension expense 5.7 11.6 9.1
Alltrista net periodic pension credit included above - - 0.1
------------- ------------- -------------
Net periodic pension expense of continuing operations 5.7 11.6 9.2
Expense of defined contribution plans 0.8 0.9 0.9
------------- ------------- -------------
Total pension expense $ 6.5 $ 12.5 $ 10.1
============= ============= =============
</TABLE>
A net curtailment loss of $18.6 million was recognized in conjunction with
the sale of the glass business in 1995 and was included as part of the
transaction loss. A net curtailment and settlement loss of $12.3 million was
recognized in 1993 in conjunction with the decision to close certain packaging
operations and in connection with the Alltrista spin-off.
The funded status of the plans at December 31 follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------------- --------------------------------
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 $187.6 $193.0 $148.2 $147.9
Nonvested benefit obligation 4.1 9.1 5.3 24.5
-------------- ------------- -------------- --------------
Accumulated benefit obligation 191.7 202.1 153.5 172.4
Effect of projected future compensation 20.6 0.7 21.5 0.3
-------------- ------------- -------------- --------------
Projected benefit obligation 212.3 202.8 175.0 172.7
-------------- ------------- -------------- --------------
Plan assets at fair value 222.7 160.2 188.3 118.5
-------------- ------------- -------------- --------------
Plan assets in excess of (less than)
projected benefit obligation 10.4 (42.6) 13.3 (54.2)
Unrecognized transitional asset at
January 1, 1987, net of amortization (15.7) (1.0) (18.7) (1.8)
Prior service cost not yet recognized in
net periodic pension cost 1.1 5.2 2.9 28.4
Unrecognized net loss since initial
application of SFAS No. 87 29.5 14.2 19.3 12.5
Additional minimum pension liability - (17.7) - (39.1)
-------------- ------------- -------------- --------------
Prepaid (accrued) pension cost $ 25.3 $(41.9) $ 16.8 $(54.2)
============== ============= ============== ==============
Actuarial assumptions used for plan calculations were:
Discount rate 7.50-8.75% 7.50-8.75% 8.75-9.75% 8.75-9.75%
Assumed rate of increase in future compensation 4.0% - 4.0% -
Expected long-term rates of return on assets 10.2-10.5% 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.
The additional minimum liability for plans having unfunded accumulated
benefit obligations was $17.7 million and $39.1 million at December 31, 1995 and
1994, respectively. The 1995 and 1994 additional minimum liabilities were
partially offset by intangible assets of $5.0 million and $28.4 million,
respectively. The remainder, $7.8 million in 1995 and $6.7 million in 1994, net
of tax benefits, was recognized as a component of shareholders' equity.
Other Postretirement and Postemployment Benefits
The company sponsors 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
qualify for long-term disability, medical and life insurance continuation and
other postemployment benefits upon termination of active employment prior to
retirement. All of the company-sponsored plans are unfunded and, with the
exception of life insurance benefits, are self-insured.
Effective January 1, 1993, the company adopted two 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." Under SFAS No. 106, postretirement benefits 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. Similarly, SFAS No. 112 requires accrual accounting
so that other postemployment benefits are accrued when it is determined that a
liability has been incurred.
Postretirement Medical and Life Insurance Benefits
Postretirement health care benefits are provided to substantially all of the
company's U.S. and Canadian employees. In Canada, the company provides
supplemental medical and other benefits in conjunction with the Canadian
national health care plan. Most U.S. salaried employees who retired prior to
1993 are covered by noncontributory defined benefit medical plans with capped
lifetime benefits. The company provides a fixed subsidy toward each retiree's
future purchase of medical insurance for U.S. salaried and substantially all
nonunion hourly employees retiring after January 1, 1993. Hourly employees
within the U.S. metal food container business are covered by noncontributory
defined benefit medical plans with caps on the annual cost per capita to the
company. Life insurance benefits are noncontributory. The company has no
commitments to increase monetary benefits provided by any of the postretirement
benefit plans.
Contributions to multi-employer health and welfare plans, which are not
included in periodic postretirement benefit cost, were $3.0 million in 1995 for
the period through September 15, $4.0 million in 1994 and $3.8 million in 1993,
and were related to union employees within the glass business.
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 fully
eligible active employees, and a pro rata portion of the benefits expected to be
paid with respect to active employees not yet fully eligible.
The company recorded curtailment and settlement gains in 1995 in connection
with the sale of the glass business of $8.4 million which is included in the net
loss on the disposition. Net periodic postretirement benefit cost, excluding
curtailments and settlements, included the following components:
<TABLE>
<CAPTION>
U.S. Foreign
(dollars in millions) Plans Plans Total
---------- ------------ ----------
<S> <C> <C> <C>
1995
Service cost - benefits attributed to service during the period $1.0 $0.1 $1.1
Interest cost on accumulated postretirement benefit obligation 4.1 1.3 5.4
Net amortization and deferral (0.3) - (0.3)
---------- ------------ ----------
Net periodic postretirement benefit cost $4.8 $1.4 $6.2
========== ============ ==========
1994
Service cost - benefits attributed to service during the period $1.4 $0.1 $1.5
Interest cost on accumulated postretirement benefit obligation 4.1 1.2 5.3
Net amortization and deferral 0.6 0.1 0.7
---------- ------------ ----------
Net periodic postretirement benefit cost $6.1 $1.4 $7.5
========== ============ ==========
1993
Service cost - benefits attributed to service during the period $1.3 $0.1 $1.4
Interest cost on accumulated postretirement benefit obligation 4.3 1.1 5.4
Net amortization and deferral 0.1 (0.1) -
---------- ------------ ----------
Net periodic postretirement benefit cost $5.7 $1.1 $6.8
========== ============ ==========
</TABLE>
The health care cost trend rates used to value the APBO are assumed to
decline to 5.0 percent after the year 2002. A one percentage point increase in
these rates would increase the APBO by $5.1 million at December 31, 1995, and
would have increased the service and interest components of net periodic
postretirement benefit cost by $.5 million in 1995.
The status of the company's unfunded postretirement benefit obligation at
December 31 follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------------ -------------------------------------
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 $33.4 $13.2 $46.6 $28.7 $11.2 $39.9
Fully eligible active plan participants 8.3 0.9 9.2 7.3 0.8 8.1
Other active plan participants 16.7 1.4 18.1 15.0 1.1 16.1
--------- ---------- --------- ---------- --------- ----------
58.4 15.5 73.9 51.0 13.1 64.1
Prior service cost not yet recognized in net
periodic postretirement benefit cost (1.5) 0.8 (0.7) (1.9) 0.9 (1.0)
Unrecognized net (loss) gain from experience
and assumption changes (1.1) (4.6) (5.7) 13.8 (2.9) 10.9
--------- ---------- --------- ---------- --------- ----------
Accrued postretirement benefit obligation $55.8 $11.7 $67.5 $62.9 $11.1 $74.0
========= ========== ========= ========== ========= ==========
Assumptions used to measure the APBO were:
Discount rate 7.50% 8.75% 8.75% 9.75%
Health care cost trend rates:
Canadian - 12.00% - 12.00%
U.S. Pre-Medicare 10.00% - 11.00% -
U.S. Post-Medicare 7.80% - 8.10% -
</TABLE>
Other Postemployment Benefits
Effective January 1, 1993, the company adopted SFAS No. 112 and recorded a
pretax charge of $10.0 million ($6.2 million after tax) to recognize the
cumulative effect on prior years. The annual charge in connection with related
benefits was $2.6 million, $2.2 million and $2.1 million in 1995, 1994 and 1993,
respectively.
Other Benefit Plans
Substantially all U.S. salaried employees and certain U.S. nonunion hourly
employees who participate in the company's 401(k) salary conversion plan and
meet 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 $10.2 million, $9.5 million and $8.8 million for
1995, 1994 and 1993, respectively. Total interest paid by the ESOP trust for its
borrowings was $4.7 million, $5.1 million and $5.4 million for 1995, 1994 and
1993, respectively.
Shareholders' Equity
At December 31, 1995, 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 1,786,852 shares of Series B ESOP Preferred outstanding at December 31,
1995.
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. 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
company's shareholders. Effective April 2, 1993, in accordance with the
antidilution provisions, the conversion price of the Series B ESOP Preferred was
adjusted to $31.813 per share from $36.75 per share and the conversion ratio was
adjusted to 1.1552 shares of company common stock for each share of Series B
ESOP Preferred. These adjustments had no impact on the stated value and
liquidation preference of $36.75 per share.
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, which expire in August 1996, are
redeemable by the company at a redemption price of five cents 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. In January 1996 the board of directors adopted a new shareholder
rights plan effective upon termination of the current plan in August 1996. The
new plan is similar to the existing plan, with the exception that under the new
plan, the percentage of the company's outstanding common stock acquired by a
person or group which cause the rights to become exercisable is reduced to 15
percent, and the redemption price is reduced to one cent per right. The new plan
expires in the year 2006.
Common shares were reserved at December 31, 1995, 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 in each
of 1995 and 1994, and $2.0 million in 1993.
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.
A summary of stock option activity for the years ended December 31 follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------------------- -------------------------------------------
Shares Price Range Shares Price Range
--------------- --------------------------- --------------- ---------------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 1,779,448 $21.150 - $38.500 1,674,970 $12.960 - $38.500
Exercised (495,405) $21.150 - $35.970 (122,283) $12.960 - $28.950
Granted 295,700 $35.625 299,500 $26.375 - $28.250
Canceled (175,921) $21.150 - $38.500 (72,739) $21.360 - $38.500
--------------- ---------------
Outstanding at end of year 1,403,822 $21.360 - $38.500 1,779,448 $21.150 - $38.500
=============== ===============
Exercisable at end of year 875,813 $21.360 - $38.500 1,170,574 $21.150 - $38.500
=============== ===============
Reserved for future grants 1,003,057 1,132,011
=============== ===============
</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 $13.4 million, $12.5
million and $15.7 million for the years 1995, 1994 and 1993, respectively.
Contingencies
On July 27, 1994, Onex Corporation (Onex) initiated arbitration before the
International Chamber of Commerce, alleging that the company was in breach of a
joint venture agreement dated September 15, 1988. Onex's demand represented a
claim against the company for approximately $30 million. The company denied the
allegations of Onex's complaint. On August 1, 1995, the Arbitral Tribunal
decided the case in favor of Ball Corporation. The parties had previously agreed
to be bound by the decision of the Tribunal.
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.
<TABLE>
Quarterly Results of Operations (Unaudited)
<CAPTION>
(dollars in millions except per share amounts) First Second Third Fourth
Quarter Quarter Quarter Quarter Total
----------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
1995
Net sales $605.6 $755.2 $760.7 $470.2 $2,591.7
----------- ---------- ---------- ---------- -------------
Gross profit 64.7 75.8 69.8 42.0 252.3
----------- ---------- ---------- ---------- -------------
Net (loss) income (1) 16.3 21.9 (57.3) 0.5 (18.6)
Preferred dividends, net of tax benefit (0.8) (0.8) (0.7) (0.8) (3.1)
----------- ---------- ---------- ---------- -------------
Net (loss) earnings attributable to
common shareholders $ 15.5 $ 21.1 $(58.0) $ (0.3) $ (21.7)
=========== ========== ========== ========== =============
(Loss) earnings per share of common stock $ 0.52 $ 0.70 $(1.93) $(0.01) $ (0.72)
=========== ========== ========== ========== =============
Fully diluted (loss) earnings per share (2) $ 0.49 $ 0.66 $(1.93) $(0.01) $ (0.72)
=========== ========== ========== ========== =============
1994
Net sales $587.1 $676.5 $717.1 $612.7 $2,593.4
----------- ---------- ---------- ---------- -------------
Gross profit 56.0 71.4 80.9 73.8 282.1
----------- ---------- ---------- ---------- -------------
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
=========== ========== ========== ========== =============
<FN>
(1) Includes a net gain of $3.8 million ($2.8 million after tax or 9 cents per
share) in the first quarter for the gain on sale of Efratom, net of a
charge related to exit the VIGS business. The third and fourth quarters
include charges of $113.3 million ($78.1 million after tax or $2.59 per
share) and $8.7 million ($5.2 million after tax or 18 cents per share),
respectively, for the loss on the sale of the glass business, and
restructuring and other charges. See the notes, "Dispositions" and
"Restructuring and Other Charges."
First quarter 1995 results have been restated from amounts originally
reported due to the second quarter adoption of LIFO accounting, retroactive
to January 1, 1995. The impact of the change on the first quarter was an
increase in cost of sales and corresponding decrease in gross profit of
$5.4 million ($3.3 million after tax or 11 cents per share). The per share
impact of this accounting change was 11 cents, 6 cents and 7 cents for the
second, third and fourth quarters of 1995, respectively.
(2) The fully diluted loss per share in 1995 is the same as the net 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 shares outstanding for that period. As a result, the sum of the
quarterly amounts may not equal the annual earnings per share amount.
Report of Management on Financial Statements
The consolidated financial statements contained in this annual report to
shareholders are the responsibility of management. These financial statements
have been prepared in conformity with generally accepted accounting principles
and, necessarily, include certain amounts based on management's best judgments
and estimates. Financial information appearing elsewhere in this annual report
is consistent with the financial statements.
In fulfilling its responsibility for the integrity of financial
information, management maintains and relies upon a 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 procedures; carefully selects,
trains and develops qualified personnel; maintains an organizational structure
that provides clearly defined lines of responsibility, appropriate delegation of
authority and segregation of duties; and maintains a continuous program of
internal audits with appropriate management follow-up. Company policies
concerning use of corporate assets and conflicts of interest, which require
employees to maintain the highest ethical and legal standards in their conduct
of the company's business, are important elements of the internal control
system.
The board of directors oversees management's administration of company
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 with
representatives of management, internal audit and Price Waterhouse LLP to review
the scope and results of audit work, the adequacy of internal controls and the
quality of financial reporting. Price Waterhouse LLP and internal auditors have
direct access to the audit committee, and the opportunity to meet the 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
President and Chief Executive Officer Executive Vice President
and Chief 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 (loss) income, 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, 1995 and 1994,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, 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 Inventories note to consolidated financial statements,
the company changed its method of determining the cost of certain inventories
from first-in, first-out to the last-in, first-out method effective January 1,
1995. In addition, as discussed in the Other Postretirement and Postemployment
Benefits note to consolidated financial statements, the company adopted
Statements of Financial Accounting Standards 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, 1996
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.
Overview
The company took a number of actions during the three-year reporting period
toward achieving its strategic objectives. In summary, those objectives are: to
maintain the company's leadership as a low-cost, high-quality North American
beverage can manufacturer; position the mature North American rigid packaging
businesses to yield significant earnings and positive cash flow; establish the
company in the PET plastic container market; expand the company's international
packaging presence; and capitalize on the world-class capabilities of the
company's aerospace and technologies subsidiary. These actions have changed the
core business and, in certain respects, have affected comparability of financial
information.
As a result of consolidation within the highly competitive, mature domestic
glass packaging industry, coupled with capital requirements to aggressively
participate in higher growth packaging markets, the company in 1995 formed a
strategic alliance with Compagnie de Saint-Gobain (Saint-Gobain), to create a
new U.S. glass company, Ball-Foster Glass Container Co., L.L.C. (Ball-Foster).
Ball-Foster acquired the glass businesses of both the company and Foster-Forbes,
a unit of American National Can Company. Ball-Foster, as the second largest
domestic glass producer, has the potential to realize economies necessary to
compete effectively. The company acquired a 42-percent interest in Ball-Foster
for $180.6 million. The remaining 58-percent interest was acquired by
Saint-Gobain for $249.4 million. Ball-Foster's acquisition financing was secured
and guaranteed by Saint-Gobain. The sale of the company's glass manufacturing
operations to Ball-Foster, for approximately $323 million, resulted in a pretax
charge to earnings of $111.1 million ($76.7 million after tax or $2.55 per
share) which is included in the results of the packaging segment. The final
determination of the loss realized may vary from the amount recorded in 1995
depending on the resolution of certain post-closing adjustments as provided in
the agreement of sale. The company accounts for its 42-percent interest in
Ball-Foster under the equity method. For the initial period of operation from
September 15, 1995 through December 31, 1995, Ball-Foster reported sales of
$354.9 million and a loss in which the company's equity interest was $1.3
million after tax.
In 1994 the company announced that it would enter the PET (polyethylene
terephthalate) plastic container market. By late in the fourth quarter of 1995,
construction of a pilot line and research and development center and a
multi-line manufacturing facility, with full production anticipated by the
second quarter of 1996, were completed. Two additional multi-line manufacturing
facilities were under construction. Pretax costs of $7.8 million relating to the
start-up of this business are included in the operating earnings of the
packaging segment.
During 1994 and 1995, the company increased its equity ownership in FTB
Packaging, Ltd. (FTB Packaging), its Hong Kong-based metal packaging subsidiary,
to approximately 92 percent. FTB Packaging has been included on a consolidated
basis within the packaging segment effective January 1995. The company's
investments in the People's Republic of China (PRC) are held principally by FTB
Packaging.
In 1994 the company concluded a study to explore strategic alternatives for
the aerospace and technologies business (formerly aerospace and communications).
A decision was made to retain the core aerospace and technologies business, but
to sell the Efratom time and frequency measurement business. Efratom was sold in
March 1995 at a gain of $11.8 million ($7.7 million after tax or 25 cents per
share) to Datum Inc. (Datum) for cash of $15.0 million and approximately 1.3
million shares, or 32 percent, of Datum common stock. Efratom was included in
consolidated results and in the aerospace and technologies segment through the
date of sale. The gain was partially offset by a pretax charge of $8.0 million
for costs in connection with the wind-down of the visual image generating
systems (VIGS) business.
In 1994 the company and WorldView, Inc. formed EarthWatch, Inc.
(EarthWatch) to commercialize certain proprietary technologies by serving the
market for satellite-based remote sensing of the Earth. The company accounts for
its interest in EarthWatch under the equity method.
With the significant industry-wide increase in aluminum can sheet prices in
1995, the company elected to change its method of accounting for certain U.S.
metal beverage container inventories effective January 1 from first-in,
first-out (FIFO) to last-in, first-out (LIFO). This accounting change increased
cost of sales, and correspondingly decreased 1995 operating earnings, by $17.1
million ($10.4 million after tax or 35 cents per share).
During the fourth quarter of 1995, the company recorded a pretax charge of
$10.9 million ($6.6 million after tax or 22 cents per share) as a result of a
decision to reduce excess capacity within the metal packaging segment, including
the closure of a metal slitting and coating facility which supported the metal
food and specialty products business and the write-down of underutilized metal
beverage container end manufacturing equipment to net realizable value.
In March 1993 the company acquired Heekin Can, Inc. (Heekin), a
manufacturer of metal food, pet food and aerosol containers, for approximately
$91.3 million, consisting of approximately 2.5 million newly issued shares of
Ball Corporation common stock plus transaction costs. The company also assumed
$121.9 million of Heekin indebtedness, of which $108.8 million was refinanced
following the acquisition. In April 1993 the spin-off of seven diversified
businesses was effected through a distribution of 100 percent of the common
stock of Alltrista Corporation (Alltrista). The results of Heekin are
consolidated within the packaging segment from its acquisition date. The results
of Alltrista operations are presented as discontinued operations through the
date of spin-off.
Further, the company recorded a charge of $108.7 million in 1993 ($66.3
million after tax or $2.31 per share) as a result of a plan to align
manufacturing capacity and administrative organizations to compete effectively
in the company's industries and markets, of which $76.7 million pertained to the
packaging segment, $29.1 million pertained to the aerospace and technologies
segment and $2.9 million related to certain administrative decisions.
Consolidated Results
Consolidated net sales of $2.6 billion for 1995 were essentially at 1994 levels,
which reflects a reduction in net sales due to the dispositions of the company's
glass packaging operations and the Efratom time and frequency measurement
business, the effects of which were substantially offset by increased sales in
the North American metal beverage container and the aerospace and technologies
businesses, as well as the consolidation of FTB Packaging. Consolidated net
sales in 1994 increased to $2.6 billion from $2.4 billion in 1993 due primarily
to the full-year effects of Heekin in 1994 and improved sales in the commercial
glass container and North American metal beverage container businesses.
Consolidated 1995 operating earnings of $31.2 million declined from $171.1
million in 1994. The 1995 earnings include a net pretax charge of $118.2 million
($80.5 million after tax or $2.68 per share) in connection with business
dispositions and capacity reductions. Before consideration of dispositions,
restructuring and other charges in both years, consolidated operating earnings
were 14.7 percent lower than comparable 1994 results, primarily due to the
effects of the change to the LIFO method of accounting and costs associated with
the start-up of the PET plastic container business.
Consolidated 1994 operating earnings of $171.1 million increased from $3.1
million in 1993, which included restructuring and other charges of $105.8
million. The 1994 earnings also reflect improved operating performance in both
the packaging and the aerospace and technologies segments. The 1994 results
include a charge of $4.0 million related to the September 1994 foreclosure of
certain assets of the VIGS business, which had been sold in May.
Interest expense decreased in 1995 to $37.8 million compared to $41.0
million in 1994 and $45.9 million in 1993. The beneficial effects of generally
lower interest-sensitive borrowings, prepayment of higher fixed-rate term debt,
and higher interest capitalization in connection with increased capital spending
were partially offset by higher interest rates on interest-sensitive U.S. and
Canadian borrowings and the interest on FTB Packaging borrowings in 1995.
Comparing 1994 to 1993, the decrease in interest expense was due to lower
borrowings, offset partially by higher rates on interest-sensitive borrowings.
Interest capitalized amounted to $3.5 million, $2.2 million and $1.7 million in
1995, 1994 and 1993, respectively.
The company's consolidated effective income tax rate was 0.6 percent in
1995, compared to 37.3 percent and 41.2 percent in 1994 and 1993, respectively.
The changes in the effective income tax rates are due to the taxable
characteristics of the charges for dispositions, restructuring and other
included in pretax (loss) income. Excluding the effects of these items from
pretax income and taxes provided on income, the effective income tax rate would
have been approximately 37 percent in each of the last three years.
Equity in earnings of affiliates for 1995 of $1.7 million is comprised
primarily of the earnings of FTB Packaging's PRC equity affiliates, partially
offset by the company's share of the development stage loss of EarthWatch and
the operating loss of Ball-Foster for the period subsequent to September 15,
1995. Equity in earnings of affiliates of $2.5 million and $1.3 million in 1994
and 1993, respectively, represent the company's share of earnings of Pacific Rim
joint ventures including FTB Packaging prior to its consolidation in 1995.
The net loss attributable to common shareholders was $21.7 million in 1995,
compared to net earnings of $69.8 million in 1994 and a net loss of $68.3
million in 1993. The lower results in 1995 were primarily a result of the lower
consolidated operating earnings, which included the net loss on dispositions,
restructuring and other charges, and the effect of adopting LIFO accounting. The
increase in 1994 compared to 1993 was the result of improved performance in 1994
and, in 1993, the combined effects of the restructuring and other charges,
unsatisfactory operating performance and the cumulative effect of changes in
accounting for postretirement and postemployment benefits.
The loss per share of common stock for 1995 was 72 cents, compared to net
earnings of $2.35 per share in 1994 and a net loss of $2.38 per share in 1993.
The 1993 per share amount reflects a loss of $1.24 from continuing operations
and a charge of $1.21 in connection with the cumulative effects of the changes
in accounting principles. Fully diluted earnings per share from continuing
operations was $2.20 in 1994. In 1995 and 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 reduced
the loss per share.
Business Segments
Packaging
Packaging segment net sales were $2.3 billion in each of 1995 and 1994, and $2.2
billion in 1993. Packaging sales in 1995 compared to 1994 reflect a decrease due
to the sale of the commercial glass business substantially offset by increased
North American metal beverage container sales, as well as the consolidation of
FTB Packaging's sales. Comparing 1994 to 1993, the increase in 1994 was due
primarily to the inclusion of Heekin sales for the full period in 1994 and
increased sales of commercial glass and metal beverage containers. Segment
operating earnings for 1995 were $.1 million after reduction for a $122.0
million charge related to the sale of the glass business and capacity reductions
in metal packaging. In 1994 and 1993, segment operating earnings were $152.0
million and $28.9 million, respectively. Before consideration of the effects of
dispositions, restructuring and other charges, and the effects of adopting the
LIFO method of accounting, segment earnings were $139.2 million, $152.0 million
and $105.6 million for 1995, 1994 and 1993, respectively.
Metal Packaging
- - ---------------
Net sales for metal packaging increased 9.9 percent in 1995 to $1.7 billion from
$1.6 billion in 1994. The increase was due primarily to a 10.6 percent increase
in North American metal beverage container sales as higher selling prices for
metal beverage containers, the result of an unprecedented industry-wide increase
in aluminum can sheet cost, more than offset the impact of lower sales volumes.
North American metal beverage can industry shipments in 1995 declined an
estimated 5 percent. The company's North American metal beverage container
shipments declined approximately 8 percent compared to 1994 as soft drink
industry promotions of products packaged in aluminum cans declined following the
aluminum can sheet price increase. Significant can shipments in the fourth
quarter of 1994 to customers anticipating the 1995 price increase and the
effects of a protracted strike, since settled, at a customer facility, also
contributed to lower 1995 can shipments. Sales of metal food and specialty
products declined approximately 4 percent in 1995 compared to 1994 as unit
volumes declined approximately 8 percent, due in part to a poor vegetable
harvest, lower shipments to the pet food industry and continued competitive
pricing pressures.
Metal packaging operating earnings for 1995 declined 22.9 percent compared
to 1994. The decrease was due primarily to the adoption of LIFO accounting for
certain U.S. beverage can inventories and the charge for capacity reductions.
Within metal packaging, however, on a basis comparable to 1994, operating
earnings in the North American metal beverage container business in 1995
increased approximately 5 percent due to the favorable FIFO cost/price
relationship of 1994 inventories sold in 1995, coupled with productivity gains.
The North American metal food container and specialty products business had
significantly lower earnings, due, in large part, to reduced sales volumes and
competitive industry pricing. Metal packaging operating earnings in 1995 also
included FTB Packaging operating earnings of $4.7 million.
Comparing 1994 and 1993, metal packaging sales increased 7.4 percent to
$1.6 billion from $1.5 billion, primarily due to the full-year consolidation of
Heekin sales and improved sales volumes of both beverage and food containers.
Shortages of glass and plastic beverage containers contributed to increased
volumes in the metal segment of the industry, though selling prices of both
beverage and food containers declined in 1994, reflecting the competitive
environment in which the company operates.
Operating earnings in 1994 increased compared to 1993, primarily due to
higher sales in the North American beverage container business which also
achieved unit cost reductions as a result of higher volumes, productivity gain
programs, reduced freight and warehousing expenses and significantly higher
prices for the sale of aluminum process scrap. Within the metal food container
business, 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. The company completed the sale of its metal decorating and coating
facility in Alsip, Illinois, and closed its Augusta, Wisconsin, metal food
container plant in 1994. These actions did not impact significantly the
company's financial position or results of operations.
Glass Packaging
- - ---------------
Before the sale of the glass business to Ball-Foster on September 15, 1995,
glass sales included in 1995 consolidated results were $545.9 million compared
to $750.6 million included for the full year of 1994. Excluding the $111.1
million charge ($76.7 million after tax or $2.55 per share) recorded in
connection with the sale of the glass business, operating earnings declined
year-over-year; though for comparable nine-month periods, the glass business
reported increased 1995 operating earnings due to the benefits realized from the
reconfiguration of its plants during 1994, including the closure of two glass
manufacturing facilities.
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 the competitive nature of the industry. 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. 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.
Aerospace and Technologies
Aerospace and technologies segment 1995 net sales and operating earnings
increased 17.8 percent and 62.8 percent, respectively, compared to 1994,
including the gain from the sale of Efratom partially offset by a charge for
additional costs to wind down the VIGS business in 1995. Excluding the results
of Efratom and the effects of dispositions, restructuring and other charges in
both years, 1995 net sales and operating earnings increased 32.4 percent and
33.7 percent, respectively. Both the aerospace systems division and the
telecommunication products division (excluding Efratom's results in both years)
reported improvement. The improvements were due primarily to a significant new
multi-year contract awarded late in 1994, the completion of two contracts for
second generation instruments for the Hubble Space Telescope and cost benefits
associated with the company's 1993 restructuring plan.
Net sales in the aerospace and technologies business segment of $268.0
million in 1994 decreased less than one percent from 1993, which 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 Efratom 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 margins resulting from
cost reduction actions, 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. The $4.0 million
pretax charge recorded in 1994 for estimated costs related to this foreclosure
is included in operating earnings for the aerospace and technologies segment.
Contracts with the federal government represented approximately 86 percent
and 78 percent of segment sales in 1995 and 1994, respectively. Backlog for the
aerospace and technologies segment at December 31, 1995 and 1994, was
approximately $420 million and $322 million, respectively.
Financial Position, Liquidity and Capital Resources
Cash flow from operations in 1995 of $47.9 million decreased from $240.7 million
in 1994. Cash used for working capital included that ordinarily required in the
operation of the glass business through September 15, when that business was
sold, compared to 1994, which included the reduction in working capital, and
corresponding cash inflows, normal for that business in the fourth quarter. In
addition, metal packaging inventories increased in 1995 from unusually low
levels at year end 1994. In 1994 cash flow from operations was more than double
the $120.2 million in 1993, excluding the effects of the sale of $66.5 million
of trade accounts receivable. The increased cash flow from operations in 1994
reflected higher annual operating earnings and significantly improved fourth
quarter performance.
Working capital at December 31, 1995, excluding short-term debt and the
current portion of long-term debt, was $250.2 million, a decrease of $64.9
million from the 1994 year end. The decrease was due largely to the sale of the
glass business, partially offset by increased inventories within the metal
packaging business and the impact of consolidating FTB Packaging. The current
ratio was 1.19 and 1.40 at December 31, 1995 and 1994, respectively.
Capital expenditures of $206.2 million in 1995 included approximately $70
million for the company's new PET plastic container business. Spending also
included amounts for the conversion of metal beverage plant equipment to meet
new industry container specifications for smaller diameter ends and the new
8-ounce container. The conversion program is expected to be substantially
completed in 1996. Other investing activities included $180.6 million for the
company's 42-percent interest in Ball-Foster, $20.9 million in connection with
the formation of EarthWatch and approximately $31 million, primarily for new
metal beverage container plants in Beijing and Wuhan, PRC, and a metal food
container plant in Ningbo, PRC. The company will hold a majority interest in
these PRC ventures through its subsidiary, FTB Packaging. The new facilities are
expected to be operational in 1996.
Capital expenditures of $94.5 million in 1994 were primarily for the
conversions of metal beverage plant equipment to smaller diameter ends,
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. Capital
expenditures amounted to $140.9 million in 1993 and were primarily for the
conversion to smaller diameter ends, upgrading 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.
In 1996 total capital spending and investments are anticipated to be within
a range from $230 million to $280 million, including additional spending within
the PET plastic container business; completion of the metal beverage and food
container facilities within the new PRC ventures; the company's Brazil and
Thailand joint ventures; and the conversion of a metal beverage container line
to produce two-piece drawn and ironed (D&I) metal food cans.
Premiums on company-owned life insurance were approximately $20 million
annually. Amounts in the Consolidated Statement of Cash Flows represent net cash
flows from this program including policy loans of $113.2 million, $23.4 million
and $37.2 million in 1995, 1994 and 1993, respectively. Loans outstanding of
$233.0 million and $120.7 million at December 31, 1995 and 1994, respectively,
are reflected as a reduction in the net cash value in the Consolidated Balance
Sheet. Federal budget proposals currently being considered by Congress include
legislation which may limit, to varying degrees, the amount of interest on
policy loans which could be deducted for federal income tax purposes. The
company is monitoring the proposed legislation closely and reviewing options
available should the new legislation be enacted.
Indebtedness at December 31, 1995, decreased $18.3 million to $475.4
million from $493.7 million at the end of 1994. Proceeds received from the sale
of the glass and Efratom businesses, the net cash received from the
company-owned life insurance program and net positive operating cash flows were
primarily used to reduce debt and finance capital spending and other investment.
Consolidated debt-to-total capitalization increased to 44.7 percent at year end
1995 from 43.8 percent at year end 1994. The increase in the ratio, despite the
lower debt, reflects reduced equity, attributable to the net loss for the year.
The company has revolving credit facilities of $300 million consisting of a
five-year facility for $150 million and 364-day facilities for an additional
$150 million. In January 1996 the company issued long-term senior unsecured
notes to several insurance companies for an aggregate amount of $150 million
with a weighted average interest rate of 6.7 percent to secure lower cost,
fixed-rate financing. This debt matures from 1997 through 2008.
Cash dividends paid on common stock in 1995 and 1994 were 60 cents per
share. The common dividend was reduced in 1994 from $1.24 paid in 1993 to
facilitate financing for growth opportunities and to improve financial
flexibility. Management believes that existing credit resources will be adequate
to meet foreseeable financing requirements of the company's businesses.
Restructuring and Other Charges
Capacity Reductions
- - -------------------
In late 1995, the company decided that in 1996 it would close the Pittsburgh,
Pennsylvania, facility which supplied metal slitting and coating services to the
company's metal food and specialty container business, and to write-down
underutilized metal beverage container end manufacturing equipment at two
Canadian facilities. Included as a reduction in the packaging segments operating
earnings was a charge of $10.9 million ($6.6 million after tax or 22 cents per
share) in the fourth quarter of 1995 for these actions. The charge included $7.5
million of asset write-downs to net realizable value and $3.4 million for
employment termination costs, benefits and other costs.
1993 Restructuring Plan
- - -----------------------
In late 1993, plans were developed to adapt the company's manufacturing
capabilities and administrative organizations to meet foreseeable requirements
of its packaging and aerospace markets. These plans included plant closures to
consolidate manufacturing activities into fewer, more efficient facilities,
principally in the glass and metal packaging businesses, and administrative
consolidations in the glass, metal packaging, and aerospace and technologies
businesses. In addition to the restructuring plans, decisions were made during
1993 to discontinue two aerospace and technologies segment product lines.
Restructuring and other charges recorded in 1993 totaled $108.7 million
($66.3 million after tax or $2.31 per share). Of this total, $76.7 million
pertained to the packaging segment, $29.1 million pertained to the aerospace and
technologies 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.
Within the packaging segment, $66.3 million represented the estimated cost
of consolidating manufacturing facilities, including recognition of estimated
net realizable values 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 this plan. The company began to benefit from
operating fewer manufacturing facilities in 1994 as fixed costs declined and the
annual plant utilization rate for the glass container business increased from 86
percent in 1993 to 92 percent in 1994. In conjunction with the sale of the glass
business in 1995, $14.8 million provided in 1993 and identified for the closure
of an additional glass container facility was released as a part of the net loss
on the disposition of the glass business. The remaining $16.8 million at
December 31, 1995, is adequate to complete the disposition of the retained glass
assets and the consolidation of certain metal packaging operations.
Other charges in 1993 within the packaging segment of $10.4 million were
largely for the write-off of machinery and equipment as a result of
industry-wide changes in beverage container specifications. These reserves were
fully utilized at December 31, 1995.
Costs of $19.4 million associated with the disposition of the VIGS and
all-light-level television (ALLTV) product lines were included in the aerospace
and technologies segment in 1993. 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 of $8.0 million and $4.0 million were recorded in
1995 and 1994, respectively, for costs associated with the foreclosure and
wind-down of the VIGS business. The remaining $5.2 million at December 31, 1995,
is adequate to complete unresolved matters. Costs of $9.7 million for segment
administrative consolidations were part of the reserve in 1993, all of which has
been utilized at December 31, 1995.
At December 31, 1995, restructuring and other reserves related to the 1993
restructuring plan included in the Consolidated Balance Sheet totaled $22.0
million of which $10.8 million will not impact future cash flows apart from
related tax benefits. The remaining $11.2 million represents future pretax cash
outflows, the majority of which is expected to be incurred in 1996. The exact
timing of those cash outflows is dependent upon the pace of facility
consolidation.
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. In addition, in order to achieve, in part, the
benefits anticipated from combining the glass businesses within Ball-Foster, it
may become necessary to rationalize plants or equipment, or to eliminate
redundant systems or processes, resulting in charges against earnings. The
components, timing and amounts of the charges, if any, are uncertain at this
time.
Other
Cumulative Effect of Changes in Accounting
- - ------------------------------------------
Effective January 1, 1993, the company adopted the provisions of Statements 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 requires 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 pretax charge to earnings as of January 1, 1993, in the amount of
$46.0 million ($28.5 million after tax or 99 cents per share), which represents
the cumulative effect on prior years of the change in accounting. The company's
early adoption of SFAS No. 112 for postemployment benefits resulted in a pretax
charge of $10.0 million ($6.2 million after tax or 22 cents per share) to
recognize the cumulative effect on prior years.
New Accounting Pronouncements
- - -----------------------------
The Financial Accounting Standards Board issued SFAS No. 121, "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
and SFAS No. 123, "Accounting for Stock-Based Compensation," which are effective
for the company beginning in 1996. SFAS No. 121 requires a review for impairment
of long-lived assets and certain identifiable intangibles used in the business
whenever events or changes in circumstances indicate that the carrying amounts
may not be recoverable. The statement also requires that long-lived assets and
certain identifiable intangibles which are held for disposition should be
reported at the lower of carrying amount or fair value less cost to sell. The
company has not yet determined the impact, if any, of adopting this statement.
SFAS No. 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. SFAS No. 123 also defines a fair
value-based method of accounting for employee stock options and encourages,
though does not require, companies to adopt that method of accounting for all
employee stock compensation plans. The company will continue to account for its
stock-based employee compensation programs as prescribed by existing generally
accepted accounting principles.
Inflation, Risks, Uncertainties and the Use of Estimates
- - --------------------------------------------------------
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.
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.
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.
Litigation
- - ----------
On July 27, 1994, Onex Corporation (Onex) initiated arbitration before the
International Chamber of Commerce, alleging that the company was in breach of a
joint venture agreement dated September 15, 1988. Onex's demand represented a
claim against the company for approximately $30 million. The company denied the
allegations of Onex's complaint. On August 1, 1995, the Arbitral Tribunal
decided the case in favor of Ball Corporation. The parties had previously agreed
to be bound by the decision of the Tribunal.
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.
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 of a consolidated
basis.
State or Country
of Incorporation Percentage
Name or Organization Ownership (2)
Ball Packaging Corp. Colorado 100%
Ball Asia Pacific Limited Colorado 100%
Ball Plastic Container Corp. Colorado 100%
Ball Metal Food Container Corp.
(formerly Heekin Can, Inc.) Delaware 100%
Ball Metal Beverage Container Corp. Colorado 100%
Ball Metal Packaging Sales Corp. Colorado 100%
Ball Glass Container Corporation Delaware 100%
BG Holdings I, Inc. Delaware 100%
BG Holdings II, Inc. Delaware 100%
Ball Technologies Holdings Corp. Colorado 100%
Ball Aerospace & Technologies Corp. Delaware 100%
Ball Systems Technology Limited United Kingdom 100%
Ball Technology Services Corporation California 100%
Efratom Holding, Inc. Colorado 100%
Ball Cayman Limited Cayman Islands 100%
Ball Foreign Sales Corporation Barbados 100%
Ball International Sales Corporation Delaware 100%
Ball Packaging Products Canada, Inc. Canada 100%
Ball Technology Licensing Corporation Indiana 100%
GPT Global Packaging Technology AB Sweden 100%
FTB Packaging Limited Hong Kong 92%
Beijing FTB Packaging Ltd. PRC 78%
FTB Tooling and Engineering Limited Hong Kong 92%
Fully Tech Ltd. Hong Kong 92%
Greater China Trading Ltd. Cayman Islands 92%
Hubei FTB Packaging Ltd. PRC 74%
Ningbo FTB Can Company Ltd. PRC 69%
Richford Properties Limited Hong Kong 92%
Xian Kun Lun FTB Packaging Ltd. PRC 55%
<PAGE>
<TABLE>
SUBSIDIARY LIST (1)
Ball Corporation and Subsidiaries
The following is a list of affiliates of Ball Corporation included in the
financial statements on the basis of equity accounting:
<CAPTION>
State or Country
of Incorporation Percentage
Name or Organization Ownership (2)
<S> <C> <C>
Ball-Foster Glass Container Co. L.L.C.
(through BG Holdings I, Inc. and BG Holdings II, Inc.) Delaware 42%
Datum Inc. (through Efratom Holding, Inc.) Delaware 32%
EarthWatch, Inc. Colorado 50%
Phoenix Packaging Corporation
(through Ball Packaging Corp.) Ohio 25%
San Miguel Yamamura Ball Corporation Philippines 6%
Lam Soon-Ball Yamamura Taiwan 8%
Peak Expediters Limited Cayman Islands 50%
MCP-Ball International Limited Hong Kong 40%
GMCP Ball International Hong Kong 10%
Guangzhou M.C. Packaging, Ltd. PRC 10%
Latapack-Ball Embalagens Ltda.
(through Ball Cayman Limited) Brazil 50%
The following are owned indirectly through
FTB Packaging Limited
Jianlibao FTB Bev & Can Manufacture (Shanghai) Ltd. PRC 37%
Sanshui Jianlibao FTB Packaging Ltd. PRC 32%
Zhongshan Yedao Drinks Ltd. PRC 9%
Zhuhai FTB Packaging Ltd. PRC 32%
<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) Represents the Registrant's direct and/or indirect ownership in each of the
subsidiaries' voting capital share.
</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,
33-40196 and 33-58741) and in each Form S-8 Registration Statement or
Post-Effective Amendment (Registration Nos. 33-21506, 33-40199, 33-37548,
33-28064, 33-15639, 33-61986 and 33-51121) of Ball Corporation of our report
dated January 23, 1996 in the 1995 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, 1996
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, 1996
-------------------------
/s/ R. David Hoover /s/ Frank A. Bracken
- - --------------------------------- ----------------------------------------
R. David Hoover Officer Frank A. Bracken Director
/s/ Albert R. Schlesinger /s/ Howard M. Dean
- - --------------------------------- ----------------------------------------
Albert R. Schlesinger Officer Howard M. Dean Director
/s/ George A. Sissel /s/ John T. Hackett
- - --------------------------------- ----------------------------------------
George A. Sissel Officer John T. Hackett Director
/s/ John F. Lehman
----------------------------------------
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/ W. Thomas Stephens
` ----------------------------------------
W. Thomas Stephens Director
/s/ William P. Stiritz
----------------------------------------
William P. Stiritz Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1
------------
BALL CORPORATION
FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1995 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-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 5,100
<SECURITIES> 0
<RECEIVABLES> 200,000
<ALLOWANCES> 0
<INVENTORY> 318,500
<CURRENT-ASSETS> 592,700
<PP&E> 1,146,800
<DEPRECIATION> 518,200
<TOTAL-ASSETS> 1,612,500
<CURRENT-LIABILITIES> 497,500
<BONDS> 320,400
0
15,200
<COMMON> 231,100
<OTHER-SE> 336,400
<TOTAL-LIABILITY-AND-EQUITY> 1,612,500
<SALES> 2,591,700
<TOTAL-REVENUES> 2,591,700
<CGS> 2,339,400
<TOTAL-COSTS> 2,339,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,800
<INCOME-PRETAX> (15,800)
<INCOME-TAX> (100)
<INCOME-CONTINUING> (18,600)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,600)
<EPS-PRIMARY> (0.72)
<EPS-DILUTED> (0.72)
</TABLE>
