<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 10, 1998
-------------------
(Date of earliest event reported)
BALL CORPORATION
-------------------
(Exact name of Registrant as specified in its charter)
Indiana 1-7349 35-0160610
-------------- --------------------- -------------------
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
10 Longs Peak Drive, Broomfield, CO 80021-2510
-------------------------------------------------
(Address of principal executive offices, including zip code)
(303) 469-5511
----------------
(Registrant's telephone number, including area code)
Not Applicable
----------------
(Former name or former address, if changed since last report)
Page 1 of 4
Exhibit Index is located at Page 4
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA
FINANCIAL INFORMATION AND EXHIBITS.
On August 10, 1998, Ball Corporation (the "Company") acquired (the
"Acquisition") the North American beverage can business of Reynolds Metals
Company (the "Acquired Business"). The Company reported the Acquisition on a
Form 8-K dated August 10, 1998 and filed August 25, 1998. At the time of
filing, the Company determined that the inclusion of the required interim
financial statements, including pro forma information, was impracticable.
Under the requirements of Form 8-K, Item 7(a)(4) and Item 7(b)(2), the
Company has 60 days from the filing date of the Form 8-K to file amended
interim financial information, including pro forma information. This
amendment provides the financial information and pro forma financial
information required by Regulation S-X.
The following financial statements are filed as part of this amendment
to the Form 8-K:
(a) FINANCIAL STATEMENTS OF THE ACQUIRED BUSINESS.
Attached as Exhibit 99.2 to this Current Report on Form 8-K/A are
the unaudited combined balance sheets of the Acquired Business as of June 30,
1998 and December 31, 1997 and the related combined statements of income and
cash flows for the six-month periods ended June 30, 1998 and 1997 and
accompanying notes.
(b) PRO FORMA FINANCIAL INFORMATION.
Attached as Exhibit 99.3 to this Current Report on Form 8-K/A
are the unaudited pro forma condensed consolidated statements of income for
the year ended December 31, 1997 and the six-month period ended June 28, 1998
and the unaudited pro forma condensed combined balance sheet as of June 28,
1998 and accompanying notes.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By: /s/ R. David Hoover
-----------------------------
Name: R. David Hoover
Title: Vice Chairman and
Chief Financial Officer
Dated: October 23, 1998
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Description Exhibit
- ----------- -------
<S> <C>
Unaudited combined balance sheets of the Acquired Business as EX 99.2
of June 30, 1998 and December 31, 1997 and the related
combined statements of income and cash flows for the six-month
periods ended June 30, 1998 and 1997 and accompanying notes.
Unaudited pro forma condensed consolidated statements of EX 99.3
income for the year ended December 31, 1997 and the six-month
period ended June 28, 1998 and the unaudited pro forma
condensed combined balance sheet as of June 28, 1998 and
accompanying notes.
</TABLE>
4
<PAGE>
NORTH AMERICAN CAN OPERATIONS
(A COMPONENT OF REYNOLDS METALS COMPANY)
COMBINED BALANCE SHEET
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- -------------
(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
Current assets:
Customer receivables, less allowances of $0.2 (1997 - $0.2)....................... $ 84.5 $ 54.5
Receivables from Reynolds' Latin American affiliate............................... 4.7 6.2
Inventories....................................................................... 98.2 115.8
Deferred taxes.................................................................... 4.1 4.6
Other............................................................................. 2.4 3.3
----------- ------
Total current assets................................................................ 193.9 184.4
Property, plant and equipment....................................................... 739.5 741.1
Less allowances for depreciation and amortization................................... 423.8 404.5
----------- ------
315.7 336.6
Assets held for sale................................................................ 6.1 6.2
Other assets........................................................................ 37.7 38.9
----------- ------
Total assets.......................................................................... $ 553.4 $ 566.1
----------- ------
----------- ------
LIABILITIES AND OWNER'S EQUITY
Current liabilities:
Accounts payable.................................................................. $ 35.6 $ 26.9
Accounts payable - Reynolds plant locations (net)................................. 44.9 43.2
Accrued compensation and related amounts.......................................... 14.4 10.4
Restructuring liabilities......................................................... 3.0 4.6
Other liabilities................................................................. 4.3 4.6
----------- ------
Total current liabilities........................................................... 102.2 89.7
Long-term debt...................................................................... 54.3 54.4
Deferred taxes...................................................................... 39.1 38.5
Environmental liabilities........................................................... 8.4 8.5
Owner's equity...................................................................... 349.4 375.0
Contingent liabilities..............................................................
----------- ------
Total liabilities and owner's equity.................................................. $ 553.4 $ 566.1
----------- ------
----------- ------
</TABLE>
Note: The combined balance sheet at December 31, 1997 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes.
<PAGE>
NORTH AMERICAN CAN OPERATIONS
(A COMPONENT OF REYNOLDS METALS COMPANY)
COMBINED STATEMENT OF INCOME
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
REVENUES
Net sales.................................................................................... $ 627.6 $ 619.3
Net sales to Reynolds' Latin American affiliate.............................................. 2.2 6.3
--------- ---------
629.8 625.6
COSTS AND EXPENSES
Cost of products sold........................................................................ 554.4 557.1
Selling, administrative and general.......................................................... 16.5 15.6
Depreciation and amortization................................................................ 28.7 27.9
Interest..................................................................................... 1.2 0.9
--------- ---------
600.8 601.5
--------- ---------
EARNINGS
Income before income taxes................................................................... 29.0 24.1
Taxes on income.............................................................................. 11.7 9.8
--------- ---------
NET INCOME..................................................................................... $ 17.3 $ 14.3
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
<PAGE>
NORTH AMERICAN CAN OPERATIONS
(A COMPONENT OF REYNOLDS METALS COMPANY)
COMBINED STATEMENT OF CASH FLOWS
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income..................................................................................... $ 17.3 $ 14.3
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization................................................................ 28.7 27.9
Operational restructuring payments........................................................... (1.6) (5.7)
Deferred taxes............................................................................... 1.1 5.3
Changes in operating assets and liabilities:
Increase in receivables.................................................................... (28.5) (33.5)
Increase in inventories.................................................................... 17.6 28.0
Increase in payables....................................................................... 14.1 4.4
Other...................................................................................... (0.2) (2.4)
--------- ---------
Net cash provided by (used in) operating activities.............................................. 48.5 38.3
INVESTING ACTIVITIES:
Expenditures for property, plant and equipment................................................. (7.2) (13.4)
Proceeds from sales of assets.................................................................. 1.7 0.3
--------- ---------
Net cash used in investing activities............................................................ (5.5) (13.1)
FINANCING ACTIVITIES:
Cash changes in owner's equity................................................................. (42.9) (25.1)
Debt payments.................................................................................. (0.1) (0.1)
--------- ---------
Net cash provided by (used in) financing activities.............................................. (43.0) (25.2)
--------- ---------
CASH AT BEGINNING AND END OF PERIOD.............................................................. $ -- $ --
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
<PAGE>
NORTH AMERICAN CAN OPERATIONS
(A COMPONENT OF REYNOLDS METALS COMPANY)
NOTES TO COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
North American Can Operations is a component of Reynolds Metals Company
("Reynolds") that primarily produces aluminum beverage cans and ends. The North
American Can Operations (the "Operation") consist of 15 can and end plants in
the U.S. and a can plant in Puerto Rico.
The accompanying unaudited special-purpose interim combined financial
statements are presented in accordance with generally accepted accounting
principles for interim financial statements and have been prepared on a basis
consistent with the annual statements. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management of
the Operation, the statements include all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation. Operating
results for the interim period of 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. For further
information, refer to the special-purpose combined financial statements and
footnotes thereto included in North American Can Operations' report for the year
ended December 31, 1997.
2. CONTINGENT LIABILITIES
ENVIRONMENTAL
The Operation is involved in various environmental improvement activities
resulting from past operations including where Reynolds has been designated as a
potentially responsible party ("PRP"), with others, at various Environmental
Protection Agency-designated Superfund sites.
Amounts have been recorded (on an undiscounted basis) which, in management's
best estimate, will be sufficient to satisfy anticipated costs of known
remediation requirements.
Estimated costs for future environmental compliance and remediation are
necessarily imprecise because of factors such as:
- continuing evolution of environmental laws and regulatory requirements
- availability and application of technology
- identification of presently unknown remediation requirements
- cost allocations among PRPs
Further, it is not possible to predict the amount or timing of future costs
of environmental remediation that may subsequently be determined. Based on
information presently available, such future costs are not expected to have a
material adverse effect on the Operation's competitive or financial position or
its expected ongoing results of operations.
3. SUBSEQUENT EVENT
On August 10, 1998, the Operation was sold to Ball Corporation.
<PAGE>
EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The unaudited pro forma condensed combined financial data is based on the
consolidated financial statements of Ball Corporation ("Ball") and the
combined financial statements at December 31, 1997, of the North American
beverage can business of Reynolds Metals Company ("Reynolds"), previously
filed with Form 8-K on August 25, 1998, and the interim combined financials
at June 30, 1998, of Reynolds included herein. The unaudited pro forma
financial data give effect to: (i) the acquisition by Ball of certain assets
and the assumption by Ball of certain liabilities of Reynolds; (ii) the
Senior Credit Facility; and (iii) the Offerings (collectively, the "Pro Forma
Transactions") as if these transactions had occurred on January 1, 1997.
The unaudited pro forma condensed combined balance sheet at June 28, 1998 is
based on the consolidated financial statements of Ball adjusted to give
effect to the Pro Forma Transactions as if such transactions had occurred on
June 28, 1998. The unaudited pro forma condensed combined statements of
income for the year ended December 31, 1997, and the six month period ended
June 28, 1998 are based on the consolidated financial statements of Ball and
adjusted to give effect to the Pro Forma Transactions as if such transactions
had occurred on January 1, 1997. During the periods presented neither the
Ball nor Reynolds statements of income included any amounts related to
discontinued operations. The Pro Forma Transaction adjustments are based upon
historical financial information of Ball and Reynolds and certain assumptions
that management of Ball believes are reasonable. The Reynolds acquisition is
accounted for under the purchase method of accounting. Under this method of
accounting, the purchase price has been allocated to the assets and
liabilities acquired based on preliminary estimates of fair value. The
allocation of the purchase price once the actual fair value of the assets and
liabilities are finally determined will be adjusted and may vary from the
preliminary estimates. The pro forma financial data does not necessarily
reflect the results of operations or the financial position of Ball that
actually would have resulted had the Pro Forma Transactions occurred at the
date indicated, or project the results of operations or financial position of
Ball for any future date or period.
The unaudited pro forma condensed combined financial data should be read in
conjunction with the consolidated financial statements of Ball and the
combined financial statements of Reynolds and the notes thereto previously
filed with Form 8-K on August 25, 1998.
<PAGE>
BALL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
BALL REYNOLDS PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS TOTAL
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $2,388.5 $1,192.7 $ - $3,581.2
-------- -------- -------- --------
Costs and expenses:
Cost of sales 2,121.2 1,109.9 (17.9) (1)
(1.6) (2) 3,211.6
Selling, product development, general and
administrative expense 136.9 32.1 9.8 (3)
1.6 (7) 180.4
Disposition, relocation and other expense (9.0) - - (9.0)
Interest expense 53.5 2.1 104.3 (4)
(31.6) (4)
(2.1) (4)
1.6 (4)
4.1 (4) 131.9
-------- -------- -------- --------
2,302.6 1,144.1 68.2 3,514.9
-------- -------- -------- --------
Earnings (loss) before taxes on income 85.9 48.6 (68.2) 66.3
Provision for income tax (expense) benefit (32.0) (19.9) 26.9 (5) (25.0)
Minority interests 5.1 - - 5.1
Equity in losses of affiliates (0.7) - - (0.7)
-------- -------- -------- --------
Net income (loss) 58.3 28.7 (41.3) 45.7
Preferred dividends, net of tax benefit (2.8) - - (2.8)
-------- -------- -------- --------
Net earnings (loss) attributable to common
shareholders $ 55.5 $ 28.7 $ (41.3) $ 42.9
-------- -------- -------- --------
-------- -------- -------- --------
Earnings per common share (6)
Basic $ 1.84 $ 1.42
-------- --------
-------- --------
Diluted $ 1.74 $ 1.35
-------- --------
-------- --------
Weighted average common shares outstanding
(in thousands) (6)
Basic 30,234 30,234
-------- --------
-------- --------
Diluted 32,311 32,311
-------- --------
-------- --------
</TABLE>
<PAGE>
BALL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS)
1) Represents the adjustment to depreciation expense to reflect the
estimated depreciation on plant and equipment, based on their estimated
respective fair values and estimated remaining useful lives, versus
Reynolds' historic depreciation. The assets are generally being amortized
over periods from ten to twenty years.
2) To eliminate the historical amortization of goodwill of Reynolds.
3) Represents (i) the amortization of the excess purchase price over the
fair value of the acquired assets and liabilities of $314.8 million
over a period of 40 years and (ii) the amortization of other intangible
assets of $15.0 million over a period of 10 years.
4) Interest expense was adjusted to reflect (i) $104.3 million resulting
from the following borrowings:
<TABLE>
<CAPTION>
Average Interest Interest
Debt instrument Principle Rate Expense
--------------- --------- -------- --------
<S> <C> <C> <C>
Senior Notes $300.0 7.75% $ 23.3
Senior Subordinated Notes 250.0 8.25% 20.6
Senior Credit Facility 818.7 7.38% 60.4
------
Total $104.3
------
------
</TABLE>
(ii) the elimination of $31.6 million of interest on the existing Ball debt
that will be repaid with proceeds of the Senior Credit Facility and Notes;
(iii) the elimination of $2.1 million of interest related to the Reynolds
debt that will not be assumed by Ball; (iv) $1.6 million of commitment fees
on the average unused portion of the Senior Credit Facility and (v) the
amortization of financing costs of $4.1 million over the life of the
indebtedness. Borrowing under the Senior Credit Facility represents
floating rate debt. A 1/8 of 1 percent change in the interest rate on that
debt would result in a change in interest expense of approximately $1.0
million.
5) Income tax expense was adjusted to reflect an effective tax rate of 39.2%,
which is the estimated statutory effective tax rate of Ball.
6) Basic earnings per common share was calculated by dividing Ball
historical or pro forma net earnings available to common shareholders by
the weighted average common shares outstanding. Diluted earnings per
common share was calculated by dividing Ball historical or pro forma net
income attributable to common shareholders, as adjusted for the effect of
an assumed conversion of the Ball ESOP preferred shares into common
shares, by the weighted average common shares outstanding, adjusted for
the assumed exercise of dilutive stock options and the conversion of the
ESOP preferred shares into common shares.
7) Represents incremental rent expense on certain of the Company's leases as a
result of the transaction.
<PAGE>
BALL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 28, 1998
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
BALL REYNOLDS PRO FORMA PRO FORMA
HISTORICAL HISTORICAL (8) ADJUSTMENTS TOTAL
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $1,195.3 $629.8 $ - $1,825.1
-------- ------ ------- --------
Costs and expenses:
Cost of sales 1,060.0 583.1 (9.3) (1)
(0.8) (2) 1,633.0
Selling, product development, general and
administrative expense 63.8 16.5 4.9 (3)
0.8 (7) 86.0
Disposition, relocation and other expense 10.3 - - 10.3
Interest expense 26.1 1.2 52.4 (4)
(16.1) (4)
(1.2) (4)
0.7 (4)
2.0 (4) 65.1
-------- ------ ------- --------
1,160.2 600.8 33.4 1,794.4
-------- ------ ------- --------
Earnings (loss) before taxes on income 35.1 29.0 (33.4) 30.7
Provision for income tax (expense) benefit (15.3) (11.7) 13.2 (5) (13.8)
Minority interests 4.0 - - 4.0
Equity in earnings of affiliates 0.5 - - 0.5
-------- ------ ------- --------
Net income (loss) 24.3 17.3 (20.2) 21.4
Preferred dividends, net of tax benefit (1.4) - - (1.4)
-------- ------ ------- --------
Net earnings (loss) attributable to common
shareholders $ 22.9 $ 17.3 $(20.2) $ 20.0
-------- ------ ------- --------
-------- ------ ------- --------
Earnings per common share (6)
Basic $ 0.76 $ 0.66
-------- --------
-------- --------
Diluted $ 0.72 $ 0.63
-------- --------
-------- --------
Weighted average common shares outstanding
(in thousands) (6)
Basic 30,264 30,264
-------- --------
-------- --------
Diluted 32,367 32,367
-------- --------
-------- --------
</TABLE>
<PAGE>
BALL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 28, 1998
(IN MILLIONS)
1) Represents the adjustment to depreciation expense to reflect the
estimated depreciation on plant and equipment, based on their estimated
respective fair values and estimated remaining useful lives, versus
Reynolds' historic depreciation. The assets are generally being amortized
over periods from ten to twenty years.
2) To eliminate the historical amortization of goodwill of Reynolds.
3) Represents (i) the amortization of the excess purchase price over the
fair value of the acquired assets and liabilities of $314.8 million
over a period of 40 years and (ii) the amortization of other intangible
assets of $15.0 million over a period of 10 years.
4) Interest expense was adjusted to reflect (i) $52.4 million resulting
from the following borrowings:
<TABLE>
<CAPTION>
Average Interest Interest
Debt instrument Principle Rate Expense
--------------- --------- -------- --------
<S> <C> <C> <C>
Senior Notes $300.0 7.75% $ 11.6
Senior Subordinated Notes 250.0 8.25% 10.3
Senior Credit Facility 824.5 7.40% 30.5
------
Total $ 52.4
------
------
</TABLE>
(ii) the elimination of $16.1 million of interest on the existing Ball debt
that will be repaid with proceeds of the Senior Credit Facility and Notes;
(iii) the elimination of $1.2 million of interest related to the Reynolds
debt that will not be assumed by Ball; (iv) $.7 million of commitment fees
on the average unused portion of the Senior Credit Facility and (v) the
amortization of financing costs of $2.0 million over the life of the
indebtedness. A 1/8 of 1 percent change in the interest rate on that debt
would result in a change in interest expense of approximately $0.5 million.
5) Income tax expense was adjusted to reflect an effective tax rate of 39.2%,
which is the estimated statutory effective tax rate of Ball.
6) Basic earnings per common share was calculated by dividing Ball
historical or pro forma net earnings available to common shareholders by
the weighted average common shares outstanding. Diluted earnings per
common share was calculated by dividing Ball historical or pro forma net
income attributable to common shareholders, as adjusted for the effect
of an assumed conversion of the Ball ESOP preferred shares into common
shares, by the weighted average common shares outstanding, adjusted for
the assumed exercise of dilutive stock options and the conversion of the
ESOP preferred shares into common shares.
7) Represents incremental rent expense on certain of the Company's leases as a
result of the transaction.
8) Six-month period ended June 30, 1998.
<PAGE>
BALL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 28, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
BALL REYNOLDS PRO FORMA PRO FORMA
HISTORICAL HISTORICAL(10) ADJUSTMENTS TOTAL
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and temporary investments $ 68.4 $ - $ - $ 68.4
Accounts receivable, net 339.2 89.2 - 428.4
Inventory, net
Raw materials and supplies 145.6 2.8 - 148.4
Work in process and finished goods 245.0 95.4 2.4 (2) 342.8
Deferred income tax benefits and prepaid
expenses 56.6 6.5 (4.1) (1) 59.0
-------- ------- -------- --------
Total current assets 854.8 193.9 (1.7) 1,047.0
-------- ------- -------- --------
Property, plant and equipment, at cost 1,546.0 745.6 (5.4) (1)
117.4 (2)
(423.8) (2) 1,979.8
Accumulated depreciation (680.2) (423.8) 423.8 (2) (680.2)
-------- ------- -------- --------
865.8 321.8 96.0 1,299.6
-------- ------- -------- --------
Investment in affiliates 75.6 - - 75.6
Goodwill, net 212.8 12.6 (12.6) (3)
314.8 (3) 527.6
Other assets 104.5 25.1 30.1 (4)
15.0 (4) 174.7
-------- ------- -------- --------
$2,113.5 $ 553.4 $ 457.6 $3,124.5
-------- ------- -------- --------
-------- ------- -------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt and current portion of long
term debt $ 430.4 $ - $ (341.7) (6) $ 88.7
Accounts payable 270.7 80.5 - 351.2
Salaries and wages 61.5 14.4 (0.8) (1) 75.1
Other current liabilities 94.0 4.3 (0.4) (1)
17.0 (7)
(7.8) (9) 107.1
Restructuring liability - 3.0 (3.0) (1)
- -
-------- ------- -------- --------
Total current liabilities 856.6 102.2 (336.7) 622.1
-------- ------- -------- --------
Noncurrent liabilities
Long-term debt 354.6 54.3 (54.3) (1)
857.7 (6)
341.7 (6) 1,554.0
Deferred income taxes 62.2 39.1 (39.1) (1)
(33.7) (5/7)
(14.7) (7) 13.8
Restructuring liability 52.0 (5) 52.0
Employee benefit obligations and other 143.4 8.4 (8.4) (1)
17.0 (7)
37.6 (7) 198.0
-------- ------- -------- --------
560.2 101.8 1,155.8 1,817.8
-------- ------- -------- --------
Contingencies - - - -
Minority interests 41.3 - - 41.3
-------- ------- -------- --------
Shareholders' equity -
Series B ESOP Convertible Preferred Stock 59.4 - - 59.4
Unearned compensation - ESOP (33.6) - - (33.6)
-------- ------- -------- --------
Preferred shareholder's equity 25.8 - - 25.8
-------- ------- -------- --------
Common stock 352.4 - - 352.4
Retained earnings 416.1 349.4 (349.4) (8)
(12.1) (9) 404.0
Accumulated comprehensive other (loss) (25.6) - - (25.6)
Treasury stock, at cost (113.3) - - (113.3)
-------- ------- -------- --------
Common shareholders' equity 629.6 349.4 (361.5) 617.5
-------- ------- -------- --------
Total shareholders' equity 655.4 349.4 (361.5) 643.3
-------- ------- -------- --------
$2,113.5 $553.4 $457.6 $3,124.5
-------- ------- -------- --------
-------- ------- -------- --------
</TABLE>
<PAGE>
BALL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 28, 1998
(IN MILLIONS)
1) These adjustments reflect the elimination from the Reynolds historical
financial statement balances of the assets and liabilities that will not
be purchased or assumed by Ball, as provided in the Purchase Agreement.
2) The Reynolds acquisition will be accounted for using the purchase method
of accounting. The purchase price allocation to assets acquired and
liabilities assumed at their estimated fair values was determined and
allocated as follows:
<TABLE>
<CAPTION>
<S> <C>
Purchase price for Reynolds business $ 745.4
Additional cash paid for working capital 13.8
Incentive loan to RMC 39.0
Acquisition costs (a) 9.6
-------
Total purchase price $ 807.8
-------
-------
Purchase price allocated to:
Tangible assets $ 651.1
Goodwill (b) 314.8
Other intangible assets 15.0
Liabilities (173.1)
-------
Total purchase price allocated $ 807.8
-------
-------
</TABLE>
(a) Represents fees and costs directly associated with the Reynolds
acquisition consisting of investment banking, legal and other
professional fees.
(b) Goodwill is the excess purchase price over the fair value of
the acquired assets and liabilities.
3) Goodwill was adjusted to reflect (i) the elimination of existing goodwill
of Reynolds and (ii) the excess of purchase cost over the estimated fair
value of the net assets acquired and liabilities assumed, which amount
will be amortized on a straight line basis over an estimated life of
40 years.
4) Other assets were adjusted to reflect (i) the capitalization of
$30.1 million of financing costs that will be amortized over the life of
the Notes and the Senior Credit Facility and (ii) the allocation of
$15.0 million of purchase price to other intangible assets (primarily
related to customer lists, agreements not to compete and technology
licensing agreements) that will be amortized over an estimated life
of ten years.
5) The Company has announced that it will close the former Reynolds metal
beverage container headquarters facility in Richmond, Virginia, and
consolidate headquarters operations at its offices near Denver, Colorado.
In addition, the Company is assessing possible further integration
opportunities and has initially recorded a $52.0 million liability,
before tax effects, as a part of the valuation process. Upon finalization
of the plan, adjustments to the liability will be reflected in the
allocation of the purchase price.
6) Long-term debt was adjusted to (i) reflect gross proceeds of
$550.0 million from the issuance of the Notes and additional borrowings
of $307.7 million under the Senior Credit Facility and (ii) the
reclassification of $341.7 million of short-term debt to long-term.
7) Represents an adjustment to reflect the estimated liability for certain
Reynolds employee benefit obligations and other liabilities assumed by
Ball. These obligations, primarily for pension and medical benefits,
were recorded on the books of RMC, the seller, and not pushed down to
Reynolds. All accrued costs related to these benefit plans were
recorded on the books of Reynolds. A corresponding deferred tax asset
related to these liabilities is included within this pro forma
balance sheet.
8) The adjustment reflects the elimination of the former owner's equity of
Reynolds.
9) The adjustment reflects an estimate of the non-recurring cost ($19.9
million, net of a $7.8 million tax benefit) in connection with
refinancing Ball's existing borrowings under the Senior Credit Facility
as a net reduction of shareholders' equity.
10) As of June 30, 1998.
