SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) September 15, 1995 -------------------- BALL CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Indiana ---------------------------------------------- (State or other jurisdiction of incorporation) 1-7349 35-0160610 ------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) 345 South High Street, Muncie, IN 47307-0407 ------------------------------------------------------------- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (317) 747-6100 ---------------- BALL CORPORATION FORM 8-K/A - AMENDMENT NO. 1 Dated November 29, 1995 To CURRENT REPORT on FORM 8-K Dated September 15, 1995 Registrant hereby amends its Current Report on Form 8-K dated September 15, 1995 to include the financial statements and pro forma financial information set forth below which was omitted from the original filing pursuant to Items 7(a)(4) and 7(b)(2). Item 7. Financial Statements and Exhibits. (a) Financial statements of businesses acquired. (1) Audited consolidated financial statements of Ball Glass Container Corporation and subsidiary for the years ended December 31, 1994 and 1993 Report of Independent Accountants Consolidated Balance Sheet at December 31, 1994 and 1993 Consolidated Statement of Income (Loss) for the years ended December 31, 1994 and 1993 Consolidated Statement of Cash Flows for the years ended December 31, 1994 and 1993 Consolidated Statement of Changes in Shareholder's Equity for the years ended December 31, 1994 and 1993 Notes to Consolidated Financial Statements (2) Unaudited condensed consolidated financial statements of Ball Glass Container Corporation and subsidiary for the year-to-date periods ended September 15, 1995 and October 2, 1994 Condensed Consolidated Balance Sheet at September 15, 1995 and October 2, 1994 Condensed Consolidated Statement of Income for the year-to-date periods ended September 15, 1995 and October 2, 1994 Condensed Consolidated Statement of Cash Flows for the year-to-date periods ended September 15, 1995 and October 2, 1994 Notes to Unaudited Condensed Consolidated Financial Statements (3) Audited financial statements of Foster-Forbes Glass Division of American National Can Company for the years ended December 31, 1994 and 1993 Report of Independent Accountants Balance Sheets at December 31, 1994 and 1993 Statements of Income - Year ended December 31, 1994 and 1993 Statements of Cash Flows - Year ended December 31, 1994 and 1993 Notes to Financial Statements BALL CORPORATION FORM 8-K/A - AMENDMENT NO. 1 Dated November 29, 1995 To CURRENT REPORT on FORM 8-K Dated September 15, 1995 Item 7. Financial Statements and Exhibits (continued). (a) Financial statements of businesses acquired (continued). (4) Unaudited financial statements of Foster-Forbes Glass Division of American National Can Company for the year-to-date periods ended September 15, 1995 and September 30, 1994 Balance Sheets at September 15, 1995 and September 30, 1994 Statements of Income - Year-to-date periods ended September 15, 1995 and September 30, 1994 Statements of Cash Flows - Year-to-date periods ended September 15, 1995 and September 30, 1994 Notes to Financial Statements (b) Unaudited pro forma financial information. Introduction Pro Forma Condensed Consolidated Statement of Income (Loss) for the year ended December 31, 1994 Pro Forma Condensed Consolidated Statement of Income (Loss) for the nine month period ended October 1, 1995 Notes to Pro Forma Condensed Consolidated Statements of Income (Loss) (c) Exhibits. 23.1 Consent of Price Waterhouse LLP, Indianapolis, Indiana (filed herewith). 23.2 Consent of Price Waterhouse LLP, Chicago, Illinois (filed herewith). Item 7 (a) Financial statements of businesses acquired. (1) Audited consolidated financial statements of Ball Glass Container Corporation and subsidiary for the years ended December 31, 1994 and 1993 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Ball Corporation: In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income (loss), of changes in shareholder's equity and of cash flows present fairly, in all material respects, the financial position of Ball Glass Container Corporation (a wholly owned subsidiary of Ball Corporation) and its subsidiary at December 31, 1994 and 1993, and the results of their operations and their cash flows for the years then ended 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 Note 1 to the consolidated financial statements, in 1993 the company adopted the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions," Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" and Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." Price Waterhouse LLP Indianapolis, Indiana November 28, 1995 Ball Glass Container Corporation Consolidated Balance Sheet December 31, 1994 and 1993 (In thousands) 1994 1993 ---------- ---------- Assets Current assets Cash and temporary investments $ 1,782 $ 1,645 Accounts receivable, net 55,158 50,983 Inventories, net Raw materials and supplies 29,603 29,712 Work in process and finished goods 131,901 125,477 Deferred income taxes 11,729 26,508 Prepaid expenses 17,164 2,030 ---------- ---------- Total current assets 247,337 236,355 ---------- ---------- Property, plant and equipment, at cost Land 10,564 10,564 Buildings 79,205 76,718 Machinery and equipment 381,035 370,676 ---------- ---------- 470,804 457,958 Accumulated depreciation (221,865) (214,402) ---------- ---------- 248,939 243,556 ---------- ---------- Goodwill and other intangible assets, net 29,169 31,179 ---------- ---------- Other assets 17,101 16,879 ---------- ---------- $ 542,546 $ 527,969 ========== ========== Liabilities and Shareholder's Equity Current liabilities Current portion of long term debt $ 20,000 $ 21,250 Accounts payable 42,630 41,968 Salaries, wages and accrued employee benefits 39,845 33,124 Other current liabilities 21,298 23,769 ---------- ---------- Total current liabilities 123,773 120,111 ---------- ---------- Noncurrent liabilities Long-term debt 40,000 60,000 Deferred income taxes 1,823 1,875 Employee benefit obligations 23,631 21,878 Other noncurrent liabilities 22,213 18,619 ---------- ---------- Total noncurrent liabilities 87,667 102,372 ---------- ---------- Contingencies -- -- ---------- ---------- Minority interest in consolidated subsidiary 15,823 15,165 ---------- ---------- Shareholder's equity Common stock 77,371 77,371 Additional paid in capital 69,886 69,886 Retained earnings 24,636 20,381 Investments by and advances from Ball Corporation 143,390 122,683 ---------- ---------- Common shareholder's equity 315,283 290,321 ---------- ---------- $ 542,546 $ 527,969 ========== ========== See accompanying notes to consolidated financial statements. Ball Glass Container Corporation Consolidated Statement of Income (Loss) For the Years Ended December 31, 1994 and 1993 (In thousands) 1994 1993 --------- --------- Net sales $ 750,583 $ 699,374 --------- --------- Costs and expenses Cost of sales 698,275 670,113 General and administrative expenses 16,892 12,693 Selling expenses 9,529 9,529 Restructuring and other -- 51,400 Interest expense 11,021 11,970 --------- --------- 735,717 755,705 --------- --------- Income (loss) before taxes on income and minority interest 14,866 (56,331) Provision for income tax (expense) benefit (6,045) 22,217 Minority interest (4,566) (3,562) Net income (loss) before cumulative effect of changes in accounting principles 4,255 (37,676) Cumulative effect of changes in accounting principles, net of tax benefit -- (11,321) --------- --------- Net income (loss) $ 4,255 ($ 48,997) ========= ========= See accompanying notes to consolidated financial statements. Ball Glass Container Corporation Consolidated Statement of Cash Flows For the Years Ended December 31, 1994 and 1993 (In thousands) 1994 1993 --------- --------- Cash Flows from Operating Activities Net income (loss) before cumulative effect of changes in accounting principles $ 4,255 ($ 37,676) Reconciliation of net income (loss) to net cash provided by operating activities Minority interest in earnings of consolidated subsidiary 4,566 3,562 Net (payment) provision for restructuring (9,843) 51,400 Depreciation and amortization 45,669 41,044 Deferred taxes on income 14,727 (20,891) Other 3,025 884 Changes in working capital components: Accounts receivable (4,175) 2,812 Inventories (6,315) (2,617) Prepaid employee benefits (15,000) 7,882 Accounts payable 662 (1,673) Salaries, wages and employee benefits 13,785 (5,743) Other 6,464 (7,972) --------- --------- Net cash provided by operating activities 57,820 31,012 --------- --------- Cash Flows from Financing Activities Principal payments of long-term debt (21,250) (40,375) Dividends paid to minority interest (3,908) (3,908) Net investments by and advances from Ball Corporation 20,707 62,883 --------- --------- Net cash (used in) provided by financing activities (4,451) 18,600 --------- --------- Cash Flows from Investment Activities Capital expenditures (53,232) (51,772) --------- --------- Net cash used in investment activities (53,232) (51,772) --------- --------- Net Increase (Decrease) in Cash 137 (2,160) Cash and temporary investments at beginning of year 1,645 3,805 --------- --------- Cash and Temporary Investments at End of Year $ 1,782 $ 1,645 ========= ========= See accompanying notes to consolidated financial statements. Ball Glass Container Corporation Consolidated Statement of Changes in Shareholder's Equity For the Years Ended December 31, 1994 and 1993 (In thousands) Common Stock (10,000 shares Investments by authorized, Additional and advances issued and Paid-in Retained from Ball outstanding) Capital Earnings Corporation Total ------------- ---------- --------- -------------- --------- Balance, December 31, 1992 $ 77,371 $ 69,886 $ 69,378 $ 50,870 $ 267,505 Net transfer of cash and other from Ball Corporation -- -- -- 71,813 71,813 Net Loss -- -- (48,997) -- (48,997) --------- --------- --------- --------- --------- Balance, December 31, 1993 $ 77,371 $ 69,886 $ 20,381 $ 122,683 $ 290,321 Net transfer of cash and other from Ball Corporation -- -- -- 20,707 20,707 Net Income -- -- 4,255 -- 4,255 --------- --------- --------- --------- --------- Balance, December 31, 1994 $ 77,371 $ 69,886 $ 24,636 $ 143,390 $ 315,283 ========= ========= ========= ========= ========= See accompanying notes to consolidated financial statements. BALL GLASS CONTAINER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 Note 1 - Significant Accounting Policies - ---------------------------------------- Basis of Presentation As of December 31, 1994, Ball Glass Container Corporation (the "Company") was a wholly owned subsidiary of Ball Corporation (Ball). These consolidated financial statements of the Company have been prepared on a separate company basis. See Note 6, "Related Party Transactions." Consolidation The accompanying consolidated financial statements include the accounts of the Company and its 51% owned subsidiary, Madera Glass Company. All significant intercompany amounts between the Company and Madera are eliminated in consolidation. Temporary Investments Temporary investments are considered cash equivalents if original maturities are three months or less. Revenue Recognition and Accounts Receivable Revenue from the sales of finished goods is recognized at the time of shipment. Accounts receivable at December 31, 1994 and 1993 are net of reserves for uncollectible amounts of $2.28 million and $1.11 million, respectively. In September 1993, Ball entered into an agreement to sell, on a revolving basis without recourse, an undivided percentage ownership interest in a designated pool of up to $75.00 million of packaging trade accounts receivable. The current agreement expires in December 1995. At December 31, 1994 and 1993, a net amount of approximately $16.6 million and $18.0 million of accounts receivable sold under this program was allocated to Ball Glass Container Corporation based accounts receivable. This reduction has not been reflected in the Company's accounts receivable balance for the years included in these statements. Inventories Finished goods inventories are stated at the lower of cost or net realizable value, cost being determined on the first-in, first-out method. All other inventories are stated at average cost. Depreciation and Amortization Depreciation is provided on the straight-line method in amounts sufficient to amortize the cost of properties over their estimated useful lives (land improvements and buildings -- 15 to 50 years; machinery and equipment -- 2 to 20 years). Depreciation expense for the years ended December 31, 1994 and 1993 was $43.65 million and $38.94 million, respectively. Goodwill is amortized over the periods benefited, generally 40 years. For the years ended December 31, 1994 and 1993, amortization expense totaled $2.01 million and $2.10 million, respectively. At December 31, 1994 and 1993, accumulated amortization was $9.89 million and $7.88 million, respectively. Company Owned Life Insurance The Company has purchased insurance on the lives of certain employees. Premiums were approximately $2.63 million and $2.66 million for the years ended December 31, 1994 and 1993, respectively. The Company borrowed $10.24 million and $7.68 million at December 31, 1994 and 1993, respectively, from the accumulated cash value of the policies. The policies are issued by The Hartford Life Insurance Company. Taxes on Income The Company is party to a tax-sharing agreement with Ball and is included in Ball's consolidated federal tax return. Madera files a separate federal tax return. For purposes of these consolidated financial statements, the Company records income taxes on a separate-company basis, following the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". SFAS No. 109 was adopted by Ball effective January 1, 1993, and this separate-company presentation of the Company likewise reflects the adoption effective January 1, 1993. Prior to the adoption of SFAS No. 109, Ball and the Company accounted for income taxes under the provisions of SFAS No. 96, a predecessor standard to SFAS No. 109. In the Company's circumstances the accounting under SFAS No. 96 and SFAS No. 109 was similar, and as such, adoption of SFAS No. 109 had no effect upon the 1993 provision for income tax benefit or on the cumulative effect of changes in accounting principles. Under SFAS No. 109, deferred income taxes reflect the future tax consequence of differences between the tax bases of assets and liabilities and their financial reporting amounts at each balance sheet date based upon enacted 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 or receivable because certain items of income and expense included in the consolidated financial statements are recognized in different time periods by taxing authorities. Pension Costs The Company's employees participate in a defined benefit pension plan sponsored by Ball. The Company accounts for this plan as participation in a multi-employer plan and recognizes pension expense based on amounts allocated by Ball for continued participation in the plan. This expense allocation is based on an actuarial estimate of the annual service and interest cost for the Company's covered employees prepared in accordance with SFAS No. 87, "Employers' Accounting for Pensions" and an allocation of the amortization of prior service cost, gains or losses and the return on plan assets. Other Postretirement and Postemployment Benefits Effective January 1, 1993, the Company adopted the provisions of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 112, "Employers' Accounting for Postemployment Benefits." Postretirement benefit costs subsequent to the change in accounting principles are accrued on an actuarial basis over the period from the date of hire to the date of full eligibility for employees and covered dependents who are expected to qualify for such benefits. Postemployment benefits are accrued when it is determined that a liability has been incurred. Previously, postretirement and postemployment benefit costs were recognized as claims were paid or incurred. Financial Instruments and Concentration of Credit Risk The fair value of accounts receivable, accounts payable and other current liabilities approximates their carrying value due to the short-term maturities of these instruments. The fair value of long term debt was approximately $62.80 million and $91.12 million at December 31, 1994 and 1993 (carrying values of $60.00 million and $81.25 million), respectively, and was estimated using rates currently available to the Company for loans with similar terms and maturities. Concentrations of credit risk with respect to accounts receivable are limited due to the relatively large number of customers comprising the Company's customer base. For the years ended December 31, 1994 and 1993, no customer accounted for more than 10% of net sales. The Company enters into derivative financial instruments with terms ranging from three months to one year in order to hedge the commodity price risk of natural gas and does not hold or issue financial instruments for trading purposes. The impact of using these derivatives was not material. Investment By and Advances from Ball Corporation Ball maintains a centralized cash management system and substantially all cash receipts and disbursements are recorded at the corporate level. The Company is charged or credited for the net of cash receipts, cash disbursements, and other corporate charges each month. Interest is charged on a portion of this balance, and interest expense for the years ended December 31, 1994 and 1993 includes $3.66 million and $2.09 million, respectively, of interest charged the Company by Ball on a portion of the outstanding balances. Note 2 - Debt and Interest Costs - -------------------------------- Long-term debt consisted of the following at December 31, 1994 and 1993 (in thousands): 1994 1993 ------- ------- Serial senior notes: 9.22%, due April 30, 1995 $ --- $20,000 9.35%, due April 30, 1996 20,000 20,000 9.52%, due April 30, 1997 20,000 20,000 9.66%, due April 30, 1998 20,000 20,000 ------- ------- 60,000 80,000 Madera variable rate loan due January 15, 1999 (6.0% at December 31, 1993) --- 1,250 ------- ------- 60,000 81,250 Less current portion 20,000 21,250 ------- ------- $40,000 $60,000 ======= ======= In 1993 the Company prepaid $20.00 million of 9.05% serial senior notes originally due April 30, 1994. Serial senior notes in the amount of $20.00 million continue to be classified as current based upon the Company's intention to repay that amount in each succeeding year. Additionally, in 1994 the Company prepaid $1.25 million of the Madera variable rate term loan originally due January 15, 1999. For the years ended December 31, 1994 and 1993, the Company paid $6.71 million and $9.45 million, respectively, of interest to unrelated third parties. The serial senior notes agreement contains certain guarantees and financial covenants, the more significant of which include current ratio, net worth and interest coverage requirements, and limitations on other borrowings and liens, acquisitions and the sale of assets. Note 3 - Income Taxes - --------------------- The provision for income tax expense (benefit) was comprised as follows (in thousands): 1994 1993 -------- -------- Current Federal $ (8,169) $ (997) State (513) (329) -------- -------- Total current (8,682) (1,326) -------- -------- Deferred Federal 12,792 (17,511) State 1,935 (3,380) -------- -------- Total deferred 14,727 (20,891) -------- -------- Total provision for income tax expense (benefit) $ 6,045 $(22,217) ======== ======== The reconciliation of the statutory U.S. income tax rate to the effective income tax rate is as follows: 1994 1993 ----- ------ Statutory U.S. federal income tax rate 35.0% (35.0)% Increase (decrease) in rate due to: State income taxes, net of federal benefit 6.2 (4.3) Tax effects of company owned life insurance (3.3) (.9) Goodwill amortization 2.1 .6 Other .7 .2 ----- ------ Effective income tax rate 40.7% (39.4)% ===== ====== Significant components of deferred tax (assets) liabilities follow (in thousands): 1994 1993 -------- -------- Gross deferred tax assets: Accrued employee benefits $(21,461) $(20,558) Restructuring reserve (3,439) (8,141) Inventory reserves (6,128) (5,102) Tax credits --- (4,422) Other (3,410) (2,846) -------- -------- Total gross deferred tax assets (34,438) (41,069) -------- -------- Gross deferred tax liabilities: Depreciation 18,501 16,100 Prepaid group insurance 4,800 --- Other 1,231 336 -------- -------- Total gross deferred tax liabilities 24,532 16,436 -------- -------- Net deferred tax assets $ (9,906) $(24,633) ======== ======== All current income tax assets and liabilities are owed by/to Ball and are included as a component of investments by and advances from Ball Corporation. Note 4 - Other Postretirement and Postemployment Benefits - --------------------------------------------------------- Pension Benefits The Company's employees participate in a defined benefit pension plan sponsored by Ball. The Company's contributions to Ball for continued participation in this plan were $8.97 million and $7.19 million for the years ended December 31, 1994 and 1993, respectively. Other Postretirement and Postemployment Benefits The Company provides retirement health care and life insurance benefits to certain groups of employees. In addition, employees may become eligible, upon termination of active employment prior to retirement, for long-term disability, medical and life insurance continuation and other postemployment benefits. These benefit obligations are unfunded and, with the exception of life insurance benefits, are self-insured. Effective January 1, 1993, the Company adopted two new accounting standards for these benefit costs, SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 112, "Employers' Accounting for Postemployment Benefits." SFAS No. 106 requires that the Company's estimated postretirement benefit obligations be accrued by the dates at which participants attain eligibility for benefits. Similarly, SFAS No. 112 mandates accrual accounting for postemployment benefits. Postretirement Medical and Life Insurance Benefits Postretirement health care benefits are provided to substantially all of the Company's salaried employees and hourly employees who are members of the AFGW&U union. Most domestic salaried employees who retired prior to 1993 are covered by contributory medical plans with capped lifetime benefits. Employees retiring after January 1, 1993 are provided a fixed subsidy by the Company toward each retiree's future purchase of medical insurance. Life insurance benefits are noncontributory. Hourly employees belonging to the AFGW&U union are covered by noncontributory plans with capped lifetime benefits. Hourly employees belonging to the GMP union are covered by the collective bargaining agreement, under which the Company contributes to a multi-employer health and welfare plan. The Company has no commitments to increase monetary benefits provided by any of the postretirement benefit programs. 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 $16.52 million ($9.99 million after tax). The accumulated postretirement benefit obligation ("APBO") represents, at the date of adoption, the full liability for postretirement benefits expected to be paid with respect to retirees and a pro rata portion of the benefits expected to be paid with respect to active employees. Net periodic postretirement benefit cost for medical and life insurance benefits for the years ended December 31, 1994 and 1993 included the following components (in thousands): 1994 1993 ------ ------ Service cost - benefits attributed to service during the period $ 402 $ 426 Interest cost on accumulated postretirement benefit obligation 1,204 1,430 Net amortization and deferral 17 -- ------ ------ Net periodic postretirement benefit cost $1,623 $1,856 ====== ====== The incremental expense in 1993 resulting from the adoption of SFAS No. 106 was approximately $1.13 million, excluding the effect of the transition obligation which was recognized as the cumulative effect on prior years of the change in accounting. Contributions to multi-employer plans were $3.99 million and $3.47 million for the years ended December 31, 1994 and 1993, respectively. The status of the Company's unfunded postretirement benefit obligation at December 31, 1994 and 1993 follows (in thousands): 1994 1993 --------- --------- Accumulated postretirement benefit obligation (APBO): Retirees $ 8,903 $ 10,963 Fully eligible active plan participants 2,892 3,713 Other active plan participants 3,454 5,064 --------- --------- 15,249 19,740 Prior service cost not yet recognized in net periodic postretirement benefit cost (167) (154) Unrecognized net gain (loss) from experience and assumption changes 5,115 (385) --------- --------- Accrued postretirement benefit obligation $ 20,197 $ 19,201 ========= ========= The assumed discount rate used to measure the APBO was changed from 7.50% as of December 31, 1993 to 8.75% as of December 31, 1994, resulting in the decrease in the APBO. The health care cost trend rate used to value the APBO is assumed to decline to 6% after the year 2001. A one percentage point increase in the health care cost trend rate would increase the APBO as of December 31, 1994 and the sum of the service and interest costs for the year ended December 31, 1994 by $820,000 and $100,000, respectively. Other Postemployment Benefits The Company elected early adoption of SFAS No. 112 and, effective January 1, 1993, recorded a noncash, pretax charge of $2.20 million ($1.33 million after tax) to recognize the cumulative effect on prior years. Excluding the cumulative effect on prior years, the annual cost for SFAS No. 112 was $1.63 million and $970,000 for the years ended December 31, 1994 and 1993, respectively. The incremental expense in 1993 resulting from the adoption of SFAS No. 112 was approximately $394,000, excluding the effect of the transition obligation which was recognized as the cumulative effect on prior years of the change in accounting. Other Benefit Plans Substantially all domestic salaried employees who participate in a Ball-sponsored 401(k) salary conversion plan and meet certain eligibility requirements automatically participate in a Ball-sponsored employee stock ownership plan ("ESOP"). Compensation expense charged by Ball to the Company for the Company's proportionate share of the ESOP's cost was $228,000 and $209,000 for the years ended December 31, 1994 and 1993, respectively. Interest expense related to the ESOP was $299,000 and $304,000 for the same respective years. Note 5 - Restructuring - ---------------------- In late 1993 plans were developed to undertake a number of restructuring actions, which included the elimination of excess manufacturing capacity through plant closures and consolidations and certain administrative consolidations. In connection therewith, pretax restructuring and other charges of $51.40 million were recorded in the fourth quarter of 1993. A summary of these charges follows (in thousands): Asset write-off and write-downs to net realizable values $22,483 Employment costs and termination benefits 23,296 Other 5,621 ------- $51,400 ======= Employment costs and termination benefits include the effects of work force reductions and pension curtailment losses of $6.20 million. Other includes incremental costs associated with the planned phaseout of the facilities to be closed. At December 31, 1994 and 1993, restructuring reserves included in the consolidated balance sheet and the changes in those reserves were as follows (in thousands): Current Noncurrent Assets Liabilities Liabilities Total ------ ----------- ----------- ----- Restructuring charge to operations in 1993 $ 22,483 $ 22,094 $ 6,823 $ 51,400 Noncash items (2,706) (6,224) -- (8,930) -------- -------- -------- -------- Reserve at December 31, 1993 19,777 15,870 6,823 42,470 Noncash items (1,481) -- -- (1,481) Cash payments -- (9,843) -- (9,843) -------- -------- -------- -------- Reserve at December 31, 1994 $ 18,296 $ 6,027 $ 6,823 $ 31,146 ======== ======== ======== ======== Included in assets are write-offs of and write-downs of property, plant and equipment to net realizable value and the write-off of other deferred costs. The net book values of the property, plant and equipment related to the facilities expected to be closed was approximately $22 million (before write-down) at December 31, 1993, and did not change significantly at December 31, 1994. This amount is included in the property, plant and equipment caption of the consolidated balance sheet. Employment costs and termination benefits due to work force reductions that are expected to be paid out within one year are reflected in current liabilities. Liabilities resulting from pension curtailment losses are likewise included in current liabilities and are reflected as a noncash item in 1993 as these amounts represent an intercompany liability to Ball, which as sponsor of the affected multi-employer plan has recorded the additional non-current liability related to the curtailment. Non-current liability includes the employment related costs associated with the closure of one facility that are not expected to be paid within the next year. Payments made in 1994 were made by Ball and reflected as increases in Ball's investment in and advances to the Company. Of the total restructuring reserves outstanding at December 31, 1994, $19.5 million will not impact future cash flows, apart from related tax benefits, of either the Company or Ball. Note 6 - Related Party Transactions - ----------------------------------- The Company has extensive transactions and relationships with Ball. Generally, direct transactions and allocations between the Company and Ball are recorded at cost. During the normal course of business, Ball makes disbursements on behalf of the Company which directly relate to the operations of the Company. The Company also participates in Ball-sponsored programs for which it receives a direct charge from Ball representing its proportional share of the costs incurred. For the periods presented, operating expenses include charges for an allocation of certain corporate expenses from Ball representing general management and other administrative services. Management believes the foregoing allocations were made on a reasonable basis. However, the aforementioned transactions may not reflect the costs and revenues which would be derived from transactions between unrelated entities. The following is a summary of the nature and amount of expenses incurred by Ball which were charged to the Company for the years ended December 31, 1994 and 1993 (in thousands): Nature of Expense 1994 1993 - ----------------- ------- ------- Management and administrative services $ 6,436 $ 7,504 Employee benefits 11,475 9,887 Information services 928 1,561 Facilities 1,170 785 ------- ------- $20,009 $19,737 ======= ======= The Company supplied bottles to Heublein, the Madera minority shareholder, in accordance with a renewable supply contract with an initial expiration date of December 1, 1996. For the years ended December 31, 1994 and 1993, the Company's sales to Heublein and its affiliates aggregated $36.83 million and $41.75 million, respectively. At December 31, 1994 and 1993, Heublein owed the Company $2.59 million and $1.51 million, respectively. Note 7 - Commitments and Contingencies - -------------------------------------- Leases Noncancellable operating leases of the Company in effect at December 31, 1994 require rental payments over the next five years approximating (in thousands): 1995 $5,600 1996 $2,400 1997 $2,100 1998 $1,700 1999 $1,400 Thereafter $3,100 The 1995 aggregate minimum lease payments have not been reduced by minimum sublease income of $160,000. Certain of the leases contain renegotiation clauses which provide for periodic adjustments to the payments. In 1994 Ball Glass entered into a 10 year non-cancelable warehouse lease with monthly rental payments of approximately $130,000, the start date of which is dependent upon the completion of the third party warehouse, which is expected to occur in the fourth quarter of 1995. Net lease expense for the Company was $21.74 million and $19.62 million in 1994 and 1993, respectively. Environmental The U.S. Environmental Protection Agency has designated the Company as a potentially responsible party, along with numerous other companies, for the cleanup of certain hazardous waste sites. Information at this time does not indicate that the disposition of these or any legal matters the Company may be involved in will have a material, adverse effect upon financial condition, results of operations, cash flows or competitive position of the Company. Note 8 - Subsequent Event - ------------------------- On September 15, 1995, Ball sold substantially all of the assets of the Company to Ball-Foster Glass Container Corporation (Ball-Foster), a newly formed Delaware limited liability company, for an aggregate purchase price of approximately $323.00 million in cash, subject to adjustment in certain circumstances. In connection with the disposition, a pretax loss of approximately $113.33 million was recorded in 1995. In conjunction with this sale, Ball acquired for cash a 42 percent interest in Ball-Foster, which also acquired the glass business of Foster- Forbes Glass Division of American National Can. Item 7 (a) Financial statements of businesses acquired (continued). (2) Unaudited condensed consolidated financial statements of Ball Glass Container Corporation and subsidiary for the year-to- date periods ended September 15, 1995 and October 2, 1994 Ball Glass Container Corporation and Subsidiary UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET (Millions of dollars) September 15, October 2, 1995 1994 ------------ --------- ASSETS Current assets Cash and temporary investments $ 9.1 $ 1.0 Accounts receivable, net 76.6 77.4 Inventories, net Raw materials and supplies 31.4 28.5 Work in process and finished goods 146.0 131.0 Deferred income taxes 11.7 26.5 Prepaid expenses 2.9 1.3 ------- ------- Total current assets 277.7 265.7 ------- ------- Property, plant and equipment, at cost 488.5 481.9 Accumulated depreciation (247.6) (237.0) ------- ------- 240.9 244.9 ------- ------- Goodwill and other intangibles, net 26.9 29.1 Other assets 19.1 17.2 ------- ------- $ 564.6 $ 556.9 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 20.0 $ 20.0 Accounts payable 47.1 56.3 Salaries, wages and accrued employee benefits 31.9 39.5 Other current liabilities 22.3 24.9 ------- ------- Total current liabilities 121.3 140.7 ------- ------- Noncurrent liabilities Long-term debt 20.0 40.0 Deferred income taxes 1.8 1.8 Employee benefit obligations, and other noncurrent liabilities 44.4 40.8 ------- ------- Total noncurrent liabilities 66.2 82.6 ------- ------- Contingencies Minority interest in consolidated subsidiary 18.8 14.5 ------- ------- Shareholder's equity 358.3 319.1 ------- ------- $ 564.6 $ 556.9 ======= ======= See accompanying notes to unaudited condensed consolidated financial statements. Ball Glass Container Corporation UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME (Millions of dollars) Year-to-date Period Ended ------------------------- September 15, October 2, 1995 1994 ------------ --------- Net sales $545.9 $574.2 ------ ------ Costs and expenses Cost of sales 502.8 533.9 Selling, general and administrative expenses 16.2 18.6 Interest expense 6.2 8.4 ------ ------ 525.2 560.9 ------ ------ Income before taxes on income and minority interest 20.7 13.3 Provision for income tax expense (8.4) (5.4) Minority interest (3.0) (3.2) ------ ------ Net income $ 9.3 $ 4.7 ====== ====== See accompanying notes to unaudited condensed consolidated financial statements. Ball Glass Container Corporation and Subsidiary UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Millions of dollars) Year-to-date Period Ended ------------------------- September 15, October 2, 1995 1994 ------------ --------- Cash Flows from Operating Activities Net income $ 9.3 $ 4.7 Reconciliation of net income to net cash provided by operating activities Minority interest in earnings of consolidated subsidiary 3.0 3.2 Net payment for restructuring and other charges (7.2) (4.1) Depreciation and amortization 34.7 36.5 Other, net 1.5 -- Changes in working capital components (17.8) (4.4) ----- ----- Net cash provided by operating activities 23.5 35.9 ----- ----- Cash Flows from Financing Activities Principal payments of long-term debt (20.0) (21.3) Net investments by and advances from Ball Corporation 31.1 25.2 Dividends paid to minority interest -- (3.9) ----- ----- Net cash provided by financing activities 11.1 -- ----- ----- Cash Flows from Investment Activities Capital expenditures (27.3) (36.5) ----- ----- Net cash used in investment activities (27.3) (36.5) ----- ----- Net Increase (Decrease) in Cash 7.3 (.6) Cash and temporary investments: Beginning of period 1.8 1.6 ----- ----- End of period $ 9.1 $ 1.0 ===== ===== See accompanying notes to unaudited condensed consolidated financial statements. Ball Glass Container Corporation and Subsidiary September 15, 1995 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Millions of dollars unless otherwise noted) 1. General. The accompanying unaudited condensed consolidated financial statements have been prepared without audit. Certain information and footnote disclosures, including significant accounting policies, normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. However, management of the Company believes that the financial statements reflect all adjustments which are necessary for a fair statement of the results for the interim periods. Results of operations for the periods shown are not necessarily indicative of results for the year. The accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the audited consolidated financial statements for the years ended December 31, 1994 and 1993. Accordingly, these financial statements exclude the effects of the sale of substantially all of the assets of the glass container manufacturing business of Ball Glass Container Corporation to Ball-Foster Glass Container Corporation. Such excluded effects are comprised of the writedown of assets to the net realized value, losses realized and costs incurred in connection with the disposition. It is suggested that these unaudited condensed consolidated financial statements and accompanying notes be read in conjunction with the audited consolidated financial statements and the notes thereto for the years ended December 31, 1994 and 1993. Item 7 (a) Financial statements of businesses acquired (continued). (3) Audited financial statements of Foster-Forbes Glass Division of American National Can Company for the years ended December 31, 1994 and 1993 REPORT OF INDEPENDENT ACCOUNTANTS - --------------------------------- October 27, 1995 To the Board of Directors of American National Can Company In our opinion, the accompanying balance sheets and the related statements of income and of cash flows present fairly, in all material respects, the financial position of the Foster-Forbes Glass Division (the "Division"), a division of American National Can Company, at December 31, 1994 and 1993, and the results of its operations and its cash flows for the years then ended 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 Note 2 to the financial statements, the Division changed its method of accounting for postemployment benefits in 1994 and for postretirement benefits in 1993. Also, as discussed in Note 2 to the financial statements, the Division changed its method of evaluating the recoverability of goodwill in 1994. Price Waterhouse LLP Chicago, Illinois FOSTER-FORBES GLASS DIVISION ---------------------------- BALANCE SHEETS -------------- (Dollars in thousands) December 31, ---------------------- 1994 1993 --------- --------- ASSETS ------ CURRENT ASSETS: Cash $ 27 $ 21 Accounts receivable, less allowances of $83 in 1994 and $350 in 1993 (Note 3) 27,944 15,892 Inventories (Notes 2 and 6) 75,446 53,433 Deferred income taxes (Notes 2 and 9) 7,091 5,579 Other 2,461 1,530 --------- --------- TOTAL CURRENT ASSETS 112,969 76,455 --------- --------- INVESTMENTS IN UNCONSOLIDATED AFFILIATES (Notes 2 and 4) 14,373 7,422 PROPERTY, PLANT AND EQUIPMENT, net (Notes 2, 4 and 7) 315,948 241,097 GOODWILL, less accumulated amortization of $78,974 in 1994 and $34,692 in 1993 (Notes 1, 2 and 5) 276,437 242,841 OTHER ASSETS (Notes 4, 11 and 15) 17,898 16,828 --------- --------- TOTAL ASSETS $ 737,625 $ 584,643 ========= ========= LIABILITIES AND EQUITY ---------------------- CURRENT LIABILITIES: Accounts payable $ 35,226 $ 44,167 Accrued liabilities (Note 10) 41,465 28,579 --------- --------- TOTAL CURRENT LIABILITIES 76,691 72,746 --------- --------- LONG-TERM LIABILITIES: Pension liabilities (Note 11) 10,450 -- Postretirement benefit obligations (Notes 2 and 12) 4,260 3,966 Deferred income taxes (Notes 2 and 9) 42,987 39,320 Other (Note 13) 24,942 22,953 --------- --------- TOTAL LONG-TERM LIABILITIES 82,639 66,239 --------- --------- COMMITMENTS AND CONTINGENCIES (Note 15) -- -- --------- --------- EQUITY: Equity adjustment for minimum pension liability (Note 11) (4,991) (371) Investments by and advances from ANC (Note 3) 583,286 446,029 --------- --------- TOTAL EQUITY 578,295 445,658 --------- --------- TOTAL LIABILITIES AND EQUITY $ 737,625 $ 584,643 ========= ========= See accompanying notes to financial statements. FOSTER-FORBES GLASS DIVISION ---------------------------- STATEMENTS OF INCOME -------------------- (Dollars in thousands) Year Ended December 31, ---------------------- 1994 1993 --------- --------- NET SALES (Note 16) $ 591,896 $ 528,772 OPERATING COSTS AND EXPENSES: Cost of sales (excluding depreciation and amortization) (Note 4) 444,152 411,980 Depreciation and amortization of property, plant and equipment (Notes 2 and 7) 35,930 31,437 Selling, general and administrative expenses (Note 3) 20,744 18,760 Net postretirement benefit expense (Note 12) 3,647 3,175 Amortization of goodwill (Notes 2 and 5) 44,282 6,938 Interest expense (Note 3) 8,072 756 Other, net (Note 14) 2,352 (2) --------- --------- 559,179 473,044 --------- --------- INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 32,717 55,728 PROVISION FOR INCOME TAXES (Notes 2 and 9): Current 23,814 21,525 Deferred 5,633 2,891 --------- --------- 29,447 24,416 --------- --------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 3,270 31,312 CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES, net of tax (Note 2) (843) (5,167) --------- --------- NET INCOME $ 2,427 $ 26,145 ========= ========= See accompanying notes to financial statements. FOSTER-FORBES GLASS DIVISION ---------------------------- STATEMENTS OF CASH FLOWS ------------------------ (Dollars in thousands) Year Ended December 31, ------------------------ 1994 1993 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,427 $ 26,145 Adjustments to reconcile net income to net cash provided from operating activities: Cumulative effect of changes in accounting principles 843 5,167 Depreciation and amortization 80,212 38,375 Provision for deferred income taxes 5,633 2,891 Other adjustments to net income 2,011 (126) Changes in assets and liabilities, net of effects of acquisition of business: Increase in accounts receivable (6,314) (834) (Increase) decrease in inventories (11,564) 1,799 (Increase) decrease in other current assets (765) 3,201 Increase in other assets (6,477) (2,447) Increase (decrease) in accounts payable (12,573) 8,245 Increase in other liabilities 4,604 4,215 ---------- ---------- NET CASH PROVIDED FROM OPERATING ACTIVITIES 58,037 86,631 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (54,795) (41,900) Proceeds from sale of property, plant and equipment 269 4 Acquisition of business (Note 5) (138,321) -- ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (192,847) (41,896) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments of obligations under capital leases (14) (12) Increase (decrease) in advances from ANC (Note 3) 134,830 (44,765) ---------- ---------- NET CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES 134,816 (44,777) ---------- ---------- NET INCREASE (DECREASE) IN CASH 6 (42) CASH, beginning of year 21 63 ---------- ---------- CASH, end of year $ 27 $ 21 ========== ========== See accompanying notes to financial statements. FOSTER-FORBES GLASS DIVISION NOTES TO FINANCIAL STATEMENTS (Dollars in thousands) Note 1 - Organization and Basis of Presentation - ----------------------------------------------- Foster-Forbes Glass Division (the "Division") is a division of American National Can Company ("ANC") which is an indirect majority-owned subsidiary of Pechiney Corporation, a Delaware corporation. Pechiney Corporation is a wholly owned subsidiary of Pechiney International S.A., which is a majority-owned subsidiary of Pechiney S.A., a French corporation. ANC, including the operations of the Division, was acquired by Pechiney Corporation on December 31, 1988. As a result of the acquisition, the tangible assets and liabilities of the Division were adjusted to their fair values as of the date of acquisition and an allocated portion of the purchase price and related expenses incurred by Pechiney Corporation to acquire ANC, together with the resultant goodwill related to the Division and amortization thereof, have been pushed down to the Division's financial statements. The accompanying financial statements reflect the "carve-out" financial position, results of operations and cash flows of the Division for the periods presented. The financial information included herein does not necessarily reflect what the financial position and results of operations of the Division would have been had it operated as a stand alone entity during the period covered, and may not be indicative of future operations or financial position. Note 2 - Summary of Significant Accounting Policies - --------------------------------------------------- Revenue Recognition - ------------------- Revenues are recognized when goods are shipped. Financial Instruments - --------------------- The carrying value of the Division's financial instruments, primarily receivables and payables, generally approximates fair value. Inventories - ----------- Inventories are stated at the lower of cost or market. The cost of 76% and 74% of inventories at December 31, 1994 and 1993, respectively, was determined by the last-in, first-out (LIFO) method. The cost of all other inventories was determined by the first-in, first-out (FIFO) method. Investments in Unconsolidated Affiliates - ---------------------------------------- Investments in unconsolidated affiliates are accounted for using the equity method. These investments comprise a 50% interest in Tropicana Industrial Glass Company (the "Tropicana Joint Venture"), a joint venture with Tropicana Products, Inc., a 50% interest in Heye America, L.P. ("Heye"), a joint venture with Hermann Heye KG of Germany, and a 23% interest in Trona Company ("Trona"), a joint venture with General Chemical Corporation. Property, Plant and Equipment - ----------------------------- Property, plant and equipment is stated at cost (as adjusted in connection with the acquisition of ANC by Pechiney Corporation) including interest incurred on funds borrowed during the period that major items are prepared for their intended use. Capitalized leases are stated at the lesser of the present value of future minimum lease payments or the fair value of the leased property. Depreciation and amortization are computed using the straight-line method. During 1994, the Division performed a study of the economic lives of its fixed assets and determined that the useful lives of certain asset categories were generally longer than the lives used for depreciation purposes. Therefore, the Division extended the estimated depreciable lives of certain categories of property, plant and equipment (mainly machinery and equipment used in the production process), by a maximum of two years, effective January 1, 1994. The effect of this change in estimate reduced 1994 depreciation expense by $3,162 and increased 1994 net income by $1,932. Goodwill - -------- Goodwill consists of an allocated portion of the Pechiney Corporation acquisition costs in excess of the fair value of the net assets of the Division (see Note 1), and the acquisition costs in excess of the fair value of the net assets acquired from the Liberty Glass Company ("Liberty") in 1994 (see Note 5). Goodwill is amortized on a straight-line basis over forty years. In addition to the normal charge for the year, Pechiney Corporation and ANC, in 1994, revised their method of evaluating goodwill resulting in a writedown of $35,944 relating to the Division. A review of the carrying value of goodwill in light of recent profitability trends of certain assets and current market values resulted in this additional charge. Other Postretirement and Postemployment Benefits - ------------------------------------------------ Effective January 1, 1993, the Division adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" which requires that the projected cost of all health care and other non-pension benefits provided by the Division to its retired employees and their dependents be accrued during an employees' period of service rather than expensed as paid. The cumulative effect of this change in accounting for postretirement benefits resulted in a non-cash, after-tax charge in 1993 of $5,167 (net of $3,289 of income tax benefits). This cumulative effect represents the actuarial present value of all future medical and life insurance benefits to be paid to active employees and employees who retired subsequent to the date of the acquisition by Pechiney Corporation (see Note 1) based on services rendered to date. The amount of the cumulative effect recorded by the Division at January 1, 1993 was determined (a) for active employees on the basis of an actuarial valuation and (b) for retired employees based on a pro rata allocation of Division retirees to the total number of retirees of ANC covered by the plans, after reduction for the remaining portion of the liability established at the date of acquisition by Pechiney Corporation for employees who had already retired as of that date. Effective January 1, 1994, the Division adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS 112"). This standard requires that the projected costs of all benefits the Division provides to former or inactive employees (and their covered dependents) before their retirement be accrued at the time they are terminated or become inactive. The cumulative effect of this change in accounting for postemployment benefits resulted in a non-cash, after-tax charge of $843 (net of $537 of income tax benefits). There was no impact on pretax earnings in 1994 as a result of complying with SFAS 112. Income Taxes - ------------ The Division is included as part of ANC in the consolidated U.S. federal income tax return of Pechiney Corporation. The provision for income taxes is computed on the taxable income of the Division on a stand-alone basis. The Division accounts for income taxes based on the asset and liability approach in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and the tax bases of assets and liabilities. The liability for the current portion of the tax provision is transferred to the Investments by and advances from ANC account at the end of each year. The net asset or liability for deferred income taxes has been included in the accompanying balance sheets. Note 3 - Related Party Transactions - ----------------------------------- ANC provides the Division certain data processing, human resources, purchasing, credit, accounting and tax services. An allocation of the estimated costs of these services is charged directly to the Division each month by ANC using varying allocation bases (primarily number of transactions processed). The allocation process is consistent with the methodology used by ANC to allocate costs of similar services provided to its other business units. The costs for these services are negotiated and agreed to by both the Division and ANC each year, and in the opinion of management are reasonable. The allocated costs of these services, which aggregated $2,787 and $2,993 in 1994 and 1993, respectively, were reflected in selling, general and administrative expenses in the accompanying statements of income. ANC maintains a centralized cash management system and substantially all cash receipts and disbursements are recorded at the corporate level. The Division is charged or credited for the net of cash receipts and disbursements each month. The Division incurs a monthly charge for interest expense from ANC based on a formula which takes into consideration its percentage of certain assets and liabilities in relation to the total for ANC of these assets and liabilities. The Division incurred a charge for interest expense from ANC of $8,072 in 1994 and $756 in 1993. The following table sets forth the activity in the Investments by and advances from ANC account for the years ended December 31, 1994 and 1993: 1994 1993 -------- -------- Balance, beginning of year $446,029 $464,649 Net income 2,427 26,145 Charges (advances) from ANC, net 134,830 ( 44,765) -------- -------- Balance, end of year $583,286 $446,029 ======== ======== ANC maintains agreements with certain banks to sell trade accounts receivable, with limited recourse, on a revolving basis. The agreements specify certain eligibility criteria for receivables that are sold, including credit quality and maturity. At December 31, 1994 and 1993, a portion of the Division's receivables was included in the eligible pool of receivables sold by ANC. The accompanying balance sheets reflect all Division receivables, including those in the eligible pool. Note 4 - Investments in Unconsolidated Affiliates - ------------------------------------------------- Tropicana Joint Venture - ----------------------- The Tropicana Joint Venture was formed effective January 25, 1993 for the purpose of manufacturing glass containers. The Division's investment in the Tropicana Joint Venture was $8,581 at December 31, 1994 and $3,276 at December 31, 1993. The Division's share of equity earnings for the years ended December 31, 1994 and 1993 of $5,305 and $3,276, respectively, was recorded as a reduction of cost of sales in the accompanying statements of income. During 1994 and 1993, the Division purchased machinery and equipment with a cost of $13,024 and $12,471, respectively, for use by the Tropicana Joint Venture. Heye - ---- At December 31, 1994 and 1993, the Division's investment in Heye, a manufacturer of glass making machinery and equipment, was $5,792 and $4,146, respectively. The Division also holds a $3,133 non-interest bearing note receivable from Heye, due no sooner than December 1, 2001, which is included in other assets on the accompanying balance sheets at December 31, 1994 and 1993. During 1994 and 1993, the Division purchased approximately $28,300 and $21,400, respectively, of machinery and equipment, including spare parts, from Heye. The Division's share of equity earnings of Heye for the years ended December 31, 1994 and 1993 totaled $1,882 and $1,375, respectively, of which $1,009 and $739, respectively, was recorded as a reduction of the cost of machinery and equipment purchased by the Division from Heye and $873 and $636, respectively, was reflected as a reduction of cost of sales in the accompanying statements of income. Trona - ----- Trona was formed for the purpose of mining and distributing soda ash, a raw material used in the glass production process. All of Trona's sales are to the Division. The Division's share of the equity earnings of Trona for the years ended December 31, 1994 and 1993 of $2,025 and $1,326, respectively, was reflected as a reduction of cost of sales in the accompanying statements of income. The Division purchased approximately $14,300 during 1994 and $13,700 during 1993 of soda ash from Trona. Summarized financial information for all of the unconsolidated affiliates for 1994 and 1993 is as follows: 1994 1993 -------- -------- Condensed Statements of Income: Net sales $106,300 $ 84,100 Income before taxes 23,300 15,100 Net income 23,300 15,100 Condensed Balance Sheets: Current assets $ 40,800 $ 31,100 Noncurrent assets 4,700 5,000 -------- -------- $ 45,500 $ 36,100 ======== ======== Current liabilities $ 10,600 $ 14,600 Noncurrent liabilities 6,000 6,700 Equity 28,900 14,800 -------- -------- $ 45,500 $ 36,100 ======== ======== Note 5 - Acquisition - -------------------- On April 25, 1994, the Division through ANC acquired the net assets of Liberty, a glass manufacturer with a facility in Sapulpa, Oklahoma for cash of $138,321. This acquisition is being accounted for in accordance with the purchase method of accounting, and accordingly the results of operations of Liberty were included in the accompanying statements of income from the acquisition date. The net assets of Liberty were included in the accompanying balance sheets at values representing the allocation of the purchase cost to such net assets. The excess of purchase cost over the valuation of the net tangible assets of $77,878 was recorded as goodwill and is being amortized on a straight-line basis over 40 years. The following summary presents unaudited pro forma financial information as if the Liberty acquisition had occurred at the beginning of each year, rather than from the date of acquisition. The pro forma financial summary is for information purposes only, based on historical information, and does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations of the combined businesses: 1994 1993 -------- -------- Net sales $614,600 $610,900 ======== ======== Income before taxes and cumulative effect of changes in accounting principles $ 33,600 $ 57,100 ========= ======== Net income $ 3,000 $ 27,000 ========= ========= Note 6 - Inventories - -------------------- Inventories at December 31, 1994 and 1993 consist of the following: 1994 1993 -------- -------- Raw materials $11,840 $ 9,794 Finished goods 51,002 34,136 Machine spare parts 12,604 9,503 ------- -------- $75,446 $ 53,433 ======= ======== At December 31, 1994 and 1993, the FIFO basis of inventories (which approximates replacement cost) exceeded the LIFO inventory carrying value by approximately $1,477 and $2,365, respectively. Note 7 - Property, Plant and Equipment - -------------------------------------- Property, plant and equipment at December 31, 1994 and 1993 consists of the following: Estimated 1994 1993 Useful Life -------- -------- ------------ Land $ 7,941 $ 7,171 - Buildings & improvements 66,386 55,498 40 years Machinery and equipment 388,553 295,786 3 to 20 years Less: Accumulated depreciation (146,932) (117,358) -------- -------- $315,948 $241,097 ======== ======== Note 8 - Operating Leases - ------------------------- The Division leases manufacturing, warehouse and office facilities and certain equipment. Future minimum lease payments required under operating leases having initial or remaining noncancelable lease terms in excess of one year are set forth below: 1995 $ 766 1996 422 1997 274 1998 172 1999 12 Thereafter - ------ Total minimum rentals $1,646 ====== Rental expense under operating leases amounted to $7,908 and $7,132 for the years ended December 31, 1994 and 1993, respectively, which included $4,898 and $4,428, respectively, for warehouse leases with terms of less than one year. Note 9 - Income Taxes - --------------------- The provision for income taxes for the years ended December 31, 1994 and 1993 was as follows: 1994 1993 -------- ------- Current income taxes: Federal $20,141 $18,205 State 3,673 3,320 ------- ------- 23,814 21,525 Deferred income taxes 5,633 2,891 ------- ------- $29,447 $24,416 ======= ======= The provision for income taxes differed from the U.S. statutory rate for the years ended December 31, 1994 and 1993 for the following reasons: 1994 1993 -------- -------- Statutory tax rate 35.0% 35.0% State and local taxes, net of federal benefit 9.1 4.4 Goodwill amortization 45.9 4.4 ---- ---- 90.0% 43.8% ==== ==== Deferred tax assets (liabilities) were comprised of the following at December 31, 1994 and 1993: 1994 1993 -------- -------- Deductible temporary differences: Employee benefits $ 9,686 $ 8,347 Environmental reserve 3,415 3,647 Minimum pension liability adjustment 3,177 236 Workers' compensation 3,138 2,953 Inventories 608 - Other 203 220 -------- -------- Total 20,227 15,403 -------- -------- Taxable temporary differences: Fixed assets (54,516) (48,598) Goodwill (1,607) - Inventories - (546) Total (56,123) (49,144) Net deferred tax liability ($35,896) ($33,741) ======== ======== Note 10 - Accrued Liabilities - ----------------------------- The components of accrued liabilities at December 31, 1994 and 1993 were as follows: 1994 1993 -------- -------- Accrued payroll and employee benefits $15,851 $13,478 Workers' compensation liability 9,867 7,842 Payable to fixed asset vendors 6,354 3,654 Reorganization reserves 5,138 216 Pension liabilities (Note 11) 2,536 2,088 Environmental reserve (Note 15) 462 217 Other 1,257 1,084 ------- ------- $41,465 $28,579 ======= ======= Note 11 - Pension Liabilities - ----------------------------- The Division sponsors defined benefit retirement plans covering substantially all hourly employees of the Division. The Division's salaried employees are included in ANC-sponsored defined benefit and defined contribution plans which cover substantially all of the salaried employees of ANC. These plans provide benefits that are based on employees' years of service and compensation during employment with the Division. The Division through ANC makes contributions to the defined benefit plans at least equal to the minimum funding requirements under the Employee Retirement Income Security Act of 1974 (ERISA). Net periodic pension cost for the Division's hourly plans for 1994 and 1993 included the following components: 1994 1993 -------- -------- Service cost - benefits earned during the period $2,435 $2,376 Interest cost on projected benefit obligation 4,234 3,937 Actual return on assets - (gain)loss 1,333 (7,290) Net amortization and deferral (4,539) 4,803 ------ ------ Net periodic pension cost $3,463 $3,826 ====== ====== The aggregate expense included in the accompanying statements of income for the salaried defined benefit and defined contribution plans amounted to $2,717 in 1994 and $2,178 in 1993. Pension expense for salaried employees of the Division participating in the ANC-sponsored plans was allocated based on an actuarial valuation. Pension expense for salaried retirees of the Division participating in the ANC-sponsored plans was determined based on a pro-rata allocation of Division retirees to total ANC retirees. For 1993 and 1994, the discount rate used to determine the actuarial present value of the projected benefit obligation was 8.0%, the expected rate of return on plan assets was 10.0%, and the discount rate used to determine the interest cost on the projected benefit obligation was 8.0%. The expected increase in future salaries for those plans using future compensation assumptions ranged from 4.0% to 6.9% for 1994 and 6.0% to 8.9% for 1993. All amortization is based upon the average remaining service period of covered employees except for unrecognized prior service costs for benefit improvements negotiated during the current period which are amortized over ten years (twice the contract period). The following table sets forth the funded status and amounts recognized for the Division's hourly plans in the accompanying balance sheets at December 31, 1994 and 1993: 1994 1993 -------- -------- Actuarial present value of benefit obligations: Vested benefits $ 56,604 $ 52,675 Nonvested benefits 2,114 2,134 -------- -------- Accumulated benefit obligation 58,718 54,809 Excess of projected benefit obligation over accumulated benefit obligation -- -- -------- -------- Projected benefit obligation 58,718 54,809 Plan assets at fair value 45,732 47,703 -------- -------- Funded status (12,986) (7,106) Unrecognized prior service cost 8,471 9,763 Unrecognized net loss 8,168 2,815 Additional minimum liability (16,639) (5,202) -------- -------- Pension asset (liability) recognized in the balance sheets ($12,986) $ 270 ======== ======== Classified in the balance sheets as: Other assets -- $ 2,358 Accrued liabilities (2,536) (2,088) Long-term liabilities (10,450) -- -------- -------- ($12,986) $ 270 ======== ======== The plans' assets are held by a master trust created for collective investment of plans' funds. At December 31, 1994 and 1993, assets held by the master trust consisted primarily of common and preferred stocks, corporate bonds, U.S. government obligations, pooled funds, real estate and short-term investments. At December 31, 1994 and 1993, equity adjustments of $4,991 and $371, respectively, (net of taxes of $3,177 and $236, respectively), had been recorded, which represent the excess of the additional minimum pension liability over the related unrecognized prior service cost for the Division-sponsored plans. Intangible assets of $8,471 and $4,596 have been recorded at December 31, 1994 and 1993, respectively, to the extent of unrecognized prior service cost and were included in other assets in the accompanying balance sheets. The projected benefit obligation for the Division's salaried employees and retirees included in the ANC-sponsored plans was approximately $27,700 and $26,600 at December 31, 1994 and 1993, respectively, calculated on the same bases as the related pension expense. Such obligations are not included in the accompanying balance sheets. Note 12 - Postretirement Benefits Other than Pensions - ---------------------------------------------------- The Division participates in a number of multi-employer plans which provide postretirement health care benefits to substantially all hourly employees not covered by Division-sponsored plans. The Division also sponsors health care and life insurance benefit plans for certain hourly employees and their dependents. Certain of the plans require retiree contributions. The Division's salaried employees are included in an ANC-sponsored plan which covers substantially all salaried employees of ANC. The net postretirement benefit expense for 1994 and 1993 included the following: 1994 1993 -------- -------- Division contributions to hourly multi-employer union plans $2,325 $1,936 Division-sponsored plans for hourly employees: Service cost - benefits earned during the year 63 63 Interest cost on accumulated postretirement benefit 318 296 ------ ------ 381 359 ------ ------ Allocated portion of service and interest cost for the Division's salaried employees participating in the ANC-sponsored plan 941 880 ------ ------ Net postretirement benefit expense $3,647 $3,175 ====== ====== These benefits are funded from current Division cash flows as claims are paid. The accumulated postretirement benefit obligation for the Division-sponsored plans for hourly participants included in the accompanying balance sheets at December 31, 1994 and 1993 were as follows: 1994 1993 ------ ------ Retirees $2,391 $2,294 Active participants 1,869 1,672 ------ ------ $4,260 $3,966 ====== ====== Additionally, the postretirement benefit obligation for salaried employees and salaried retirees of the Division included in the ANC-sponsored plan of $8,431 at December 31, 1994 and $7,546 at December 31, 1993, as determined by actuarial valuation, are reflected in other long-term liabilities on the accompanying balance sheets. A discount rate of 8% was used for determining obligations and interest costs. The following table shows the other assumptions used to develop the accumulated postretirement benefit obligation and the net post-retirement benefit expense. Managed Under Age Care Under Over Age 65 Age 65 65 --------- ---------- -------- Current year health care trend rate 10% 8% 8% Ultimate trend rate 6% 6% 5% Year ultimate trend rate is achieved 2001 2001 2001 A one percentage point increase in the assumed health care cost trend rates would increase the accumulated postretirement benefit obligation, excluding the ANC-sponsored and multi-employer plans, as of December 31, 1994 by approximately $500, and would increase the total of the service and interest cost components by approximately $50 for the year ended December 31, 1994. Note 13 - Other Long-Term Liabilities - ------------------------------------- The components of other long-term liabilities at December 31, 1994 and 1993 were as follows: 1994 1993 ------- ------- Environmental reserve (Note 15) $11,997 $13,262 Postretirement benefit obligation for ANC-sponsored plans (Note 12) 8,431 7,546 Accrued employee benefits 3,691 2,140 Other 823 5 ------- ------- $24,942 $22,953 ======= ======= Note 14 - Asset Writedowns - -------------------------- In 1994, the Division recorded a writedown of various assets aggregating $2,381 due to the technological obsolescence of machinery and equipment used in the production process. The writedown has been included in Other, net on the accompanying statements of income. Note 15 - Contingencies - ----------------------- The Division is involved in litigation and in administrative proceedings and investigations in various jurisdictions. A number of such matters involve the Division, ANC and other parties related to environmental remediation costs. It is the Division's policy to accrue environmental cleanup costs when it is probable that a liability has been incurred and an amount is reasonably estimable. As assessments and cleanups proceed, these liabilities are reviewed periodically and adjusted as additional information becomes available. The liabilities can change substantially due to such factors as additional information on the nature or extent of contamination, methods of remediation required, and other actions by governmental agencies or private parties. The aggregate environmental-related accruals were $12,459 at December 31, 1994 and $13,479 at December 31, 1993. A right of recovery exists from a third party for certain future incurred costs at one site. This expected future recovery of $3,681 at December 31, 1994 and $4,105 at December 31, 1993 has been recorded in other assets in the accompanying balance sheets. While the Division's liability, if any, with respect to all pending suits and claims cannot be determined at this time, it is the opinion of management that the outcome of any such matters, and all of them combined, will not have a material adverse effect on the Division's financial position or results of operations. Note 16 - Major Customers - ------------------------- The Division had net sales to one customer in 1994 and 1993 amounting to approximately $252,000 and $229,000, respectively. Note 17 - Subsequent Event - -------------------------- On September 15, 1995, Foster Ball, LLC acquired from ANC substantially all of the net operating assets of the Division, including ANC's interest in the Tropicana Joint Venture, Heye and Trona, for cash of approximately $680,000. Upon completion of this transaction, ANC will no longer sell products in the glass manufacturing markets. Item 7(a) Financial statements of businesses acquired (continued). (4) Unaudited financial statements of Foster-Forbes Glass Division of American National Can Company for the year-to-date periods ended September 15, 1995 and September 30, 1994 FOSTER-FORBES GLASS DIVISION ---------------------------- BALANCE SHEETS -------------- (Unaudited) (Dollars in thousands) September 15, September 30, 1995 1994 ------------- ------------- ASSETS ------ CURRENT ASSETS: Cash $ 110 $ 53 Accounts receivable, less allowances of $403 in 1995 and 42,005 27,937 $262 in 1994 Inventories 74,703 64,512 Deferred income taxes 7,445 7,427 Other 3,201 4,601 --------- --------- TOTAL CURRENT ASSETS 127,464 104,530 INVESTMENTS IN UNCONSOLIDATED AFFILIATES 17,133 13,599 PROPERTY, PLANT AND EQUIPMENT, net 313,032 313,188 GOODWILL, less accumulated amortization of $84,764 in 1995 and 270,647 307,994 $40,945 in 1994 OTHER ASSETS 17,835 15,418 --------- --------- TOTAL ASSETS $ 746,111 $ 754,729 ========= ========= LIABILITIES AND EQUITY ---------------------- CURRENT LIABILITIES: Accounts payable $ 29,523 $ 39,692 Accrued liabilities 25,415 30,342 --------- --------- TOTAL CURRENT LIABILITIES 54,938 70,034 --------- --------- LONG-TERM LIABILITIES: Pension liabilities 7,225 7,248 Postretirement benefit obligations 3,114 4,186 Deferred income taxes 50,798 45,066 Other 24,363 24,236 --------- --------- TOTAL LONG-TERM LIABILITIES 85,500 80,736 --------- --------- COMMITMENTS AND CONTINGENCIES -- -- --------- --------- EQUITY: Equity adjustment for minimum pension liability (3,181) (3,836) Investments by and advances from ANC 608,854 607,795 --------- --------- TOTAL EQUITY 605,673 603,959 --------- --------- TOTAL LIABILITIES AND EQUITY $ 746,111 $ 754,729 ========= ========= See accompanying notes to financial statements. FOSTER-FORBES GLASS DIVISION ---------------------------- STATEMENTS OF INCOME -------------------- (Unaudited) (Dollars in thousands) Year-to-Date Period Ended ---------------------------- September 15, September 30, 1995 1994 ------------- ------------- NET SALES $ 459,721 $ 445,535 OPERATING COSTS AND EXPENSES: Cost of goods sold (excluding depreciation and amortization) 367,434 337,493 Depreciation and amortization of property, plant and equipment 28,932 26,098 Selling, general and administrative expenses 17,084 15,435 Net postretirement benefit expense 2,536 2,735 Amortization of goodwill 5,790 6,078 Interest expense 12,367 4,922 Other, net (16) 2,371 --------- --------- 434,127 395,132 --------- --------- INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 25,594 50,403 PROVISION FOR INCOME TAXES: Current 5,348 14,999 Deferred 6,334 6,641 --------- --------- 11,682 21,640 --------- --------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 13,912 28,763 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX -- (843) --------- --------- NET INCOME $ 13,912 $ 27,920 ========= ========= See accompanying notes to financial statements. FOSTER-FORBES GLASS DIVISION ---------------------------- STATEMENTS OF CASH FLOWS ----------------------- (Unaudited) (Dollars in thousands) Year-to-Date Period Ended ----------------------------- September 15, September 30, 1995 1994 -------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 13,912 $ 27,920 Adjustments to reconcile net income to net cash provided from operating activities: Cumulative effect of change in accounting principle -- 843 Depreciation and amortization 34,722 32,176 Provision for deferred income taxes 6,334 6,641 Other adjustments to net income 200 2,205 Changes in assets and liabilities, net of effects of acquisition of business: Increase in accounts receivable (14,261) (6,541) Decrease (increase) in inventories 743 (630) Increase in other current assets (36) (4,424) Increase in other assets (3,841) (6,080) Decrease in accounts payable (4,504) (8,107) (Decrease) increase in other liabilities (15,911) 2,458 ---------- ---------- NET CASH PROVIDED FROM OPERATING ACTIVITIES 17,358 46,461 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (23,221) (40,547) Proceeds from sale of property, plant and equipment 6 91 Acquisition of business -- (138,267) ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (23,215) (178,723) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments of obligations under capital leases -- (7) Increase in advances from ANC 5,940 132,301 ---------- ---------- NET CASH PROVIDED FROM FINANCING ACTIVITIES 5,940 132,294 ---------- ---------- NET INCREASE IN CASH 83 32 CASH, beginning of period 27 21 ---------- ---------- CASH, end of period $ 110 $ 53 ========== ========== See accompanying notes to financial statements. FOSTER-FORBES GLASS DIVISION ---------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- (Unaudited) (Dollars in thousands) A. Financial Statements -------------------- Results of operations for any interim period are not necessarily indicative of results of any other periods or for the year. The financial statements as of September 15, 1995 and September 30, 1994 and for the periods from January 1, 1995 to September 15, 1995 and January 1, 1994 to September 30, 1994 are unaudited, but in the opinion of management include all adjustments necessary for a fair presentation of results for such periods. These financial statements should be read in conjunction with the audited financial statements and related notes for the two years ended December 31, 1994. B. Inventories ----------- Inventories consist of the following: September 15, 1995 September 30, 1994 ------------------ ------------------ Raw materials $13,407 $10,984 Finished goods 49,075 41,239 Machine spare parts 12,221 12,289 ------- ------- $74,703 $64,512 ======= ======= The FIFO basis of inventories (which approximates replacement cost) exceeded the LIFO inventory carrying value by $4,192 at September 15, 1995 and $2,587 at September 30, 1994. Item 7 (b) Unaudited pro forma financial information. Introduction The following unaudited pro forma consolidated statements of income (loss) of Ball Corporation for the year ended December 31, 1994 and for the nine months ended October 1, 1995 give effect to the September 15, 1995 sale of Registrant's glass food and beverage container manufacturing business, operated through its wholly owned subsidiary, Ball Glass Container Corporation ("Ball Glass"), to Ball-Foster Glass Container Corporation ("Ball-Foster"), a joint venture limited liability company. On September 15, 1995, Ball-Foster also acquired substantially all of the assets and liabilities of the Foster-Forbes Glass Division ("Foster-Forbes") of American National Can Company, a subsidiary of Pechiney S.A. A pro forma balance sheet presentation at October 1, 1995 is not presented since the sale of substantially all of the assets and liabilities of Ball Glass was reflected in Registrant's most recent balance sheet for the quarter ended October 1, 1995 which was filed November 15, 1995 with Registrant's Quarterly Report on Form 10-Q. Compagnie de Saint-Gobain, a French corporation, indirectly holds 58% of the ownership interests of Ball-Foster while the Registrant indirectly holds a 42% ownership interest which is accounted for under the equity method. The pro forma statements are prepared as if the aforementioned transactions had occurred on January 1, 1994 and give effect to the deconsolidation of the Ball Glass business and to the Registrant's 42% equity in the pro forma after tax earnings of Ball-Foster. The pro forma presentation does not include the net loss on Ball Glass disposition of $113.3 million pretax ($77.8 million after tax or $2.58 per share). Notwithstanding the potential for the combined Ball-Foster business to achieve meaningful synergies through enhanced economies of scale and consolidation of operations, the pro forma equity in earnings of Ball-Foster does not include any anticipated synergies nor any nonrecurring charges which may be required in connection with actions taken to achieve such synergies. The unaudited pro forma consolidated statements of income (loss) are not necessarily indicative of the results which would have been obtained had the transactions occurred at January 1, 1994, nor are they necessarily indicative of future results. The pro forma financial information should be read in conjunction with: the accompanying notes to unaudited pro forma consolidated statements of income (loss); the audited annual and unaudited interim financial statements of Ball Glass and Foster-Forbes included elsewhere in this Form 8-K/A; the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and Registrant's Quarterly Reports on Forms 10-Q for the three quarters ended October 1, 1995. Ball Corporation Pro Forma Condensed Consolidated Statement of Income (Loss) For the year ended December 31, 1994 (Unaudited) Ball (dollars in thousands except Corporation Less: Pro Forma Pro Forma per share amounts) Historical Ball Glass Adjustments As Adjusted ------------ ---------- ------------ ------------ Net sales $ 2,594,676 $ 750,583 $ 1,844,093 Costs and Expenses: Cost of sales 2,311,288 698,275 1,613,013 Selling, general and administrative expenses 114,544 26,421 6,999 (c) 95,122 Restructuring and other expenses 6,772 -- 6,772 Interest expense 42,298 -- (b) (6,500)(d) 35,798 ------------ ---------- ------------ ------------ Income before taxes on income, minority interest and equity in earnings of affiliates 119,774 25,887 (499) 93,388 Provision for income tax expense (44,706) (9,578)(e) 184 (e) (34,944) Minority interest (4,566) (4,566) Equity earnings in affiliates 2,454 15,668 (f) 18,122 ------------ ---------- ------------ ------------ Net income 72,956 11,743 15,353 76,566 Preferred dividends, net of tax benefit (3,133) (3,133) ------------ ---------- ------------ ------------ Net earnings attributable to common shareholders $ 69,823 $ 11,743 $ 15,353 $ 73,433 ============ ========== ============ ============ Net earnings per share of common stock $2.35 $ 2.48 ============ ============ Fully diluted earnings per share $2.20 $ 2.33 ============ ============ Weighted average common shares outstanding 29,662 29,618 ============ ============= Weighted average shares outstanding - fully diluted 32,061 31,902 ============ ============= See accompanying notes to pro forma condensed consolidated statements of income (loss). Ball Corporation Pro Forma Condensed Consolidated Statement of Income (Loss) For the nine month period ended October 1, 1995 (Unaudited) Ball (dollars in thousands except Corporation Less: Pro Forma Pro Forma per share amounts) Historical Ball Glass Adjustments As Adjusted ------------ ------------ ----------- ------------ Net sales $ 2,121,567 $ 545,891 $ 1,575,676 Costs and Expenses: Cost of sales 1,911,208 502,799 1,408,409 Selling, general and administrative expenses 88,494 16,196 5,357 (c) 77,655 Net loss (gain) on dispositions of businesses 109,556 113,325 (a) (3,769) Interest expense 30,497 - (b) (6,484)(d) 24,013 ------------ ------------ ----------- ------------ (Loss) income before taxes on income, minority interests and equity in earnings of affiliates (18,188) (86,429) 1,127 69,368 Provision for income tax benefit (expense) 92 25,573 (e) (417)(e) (25,898) Minority interests (4,189) (2,964) (1,225) Equity earnings in affiliates 3,175 0 10,085 (f) 13,260 ------------ ------------ ----------- ------------- Net (loss) income (19,110) (63,820) 10,795 55,505 Preferred dividends, net of tax benefit (2,320) (2,320) ------------ ------------ ----------- ------------ Net (loss) earnings attributable to common shareholders $ (21,430) $ (63,820) $ 10,795 $ 53,185 ============ ============ =========== ============ Net (loss) earnings per share of common stock ($0.71) $1.77 ============ ============ Fully diluted (loss) earnings per share ($0.71) $1.66 ============ ============ Weighted average common shares outstanding 30,010 30,010 ============ ============ Weighted average shares outstanding - fully diluted 32,409 32,409 ============ ============ See accompanying notes to pro forma condensed consolidated statements of income (loss). Ball Corporation NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (a) To exclude the nonrecurring loss recognized upon disposition of Ball Glass. (b) Interest expense is not adjusted because interest-bearing indebtedness related to Ball Glass has been retained by the Registrant. (c) To reflect certain allocated corporate overhead costs which will not be eliminated as a consequence of the sale of Ball Glass. (d) Reflects the application of the $141.9 million net cash proceeds from the sale of Ball Glass to reduce short term indebtedness and related interest expense at weighted average actual interest rates of 4.58% and 6.45% in 1994 and 1995, respectively. (e) To reflect the income tax effects of the pro forma adjustments at statutory rates. (f) Ball-Foster's acquisition of the Foster-Forbes business has been treated as a purchase business combination with the purchase consideration allocated to estimated fair values of assets acquired and liabilities assumed. Such estimated values are preliminary and are subject to adjustment due to: final purchase price negotiations, results of appraisals and refinements to other estimates. As a consequence of Registrant's continuing interest in the net assets of its former glass container manufacturing business, the related depreciation and amortization have been included in pro forma equity in earnings of Ball-Foster at the company's basis which includes the effect of recognizing the net value realized upon disposition. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BALL CORPORATION (Registrant) By: /s/ R. David Hoover -------------------------------- R. David Hoover Executive Vice President and Chief Financial Officer Date: November 29, 1995 ----------------- BALL CORPORATION FORM 8-K/A - AMENDMENT NO. 1 Dated November 29, 1995 To CURRENT REPORT on FORM 8-K Dated September 15, 1995 EXHIBIT INDEX Exhibit Description EX-2.1* Asset Purchase Agreement dated June 26, 1995 among Foster Ball, L.L.C., Ball Glass Container Corporation and Ball Corporation. Registrant agrees to furnish supplementally a copy of any omitted schedule to the Commission upon request. EX-2.2* Foster Ball, 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. Registrant agrees to furnish supplementally a copy of any omitted schedule to the Commission upon request. EX-23.1 Consent of Price Waterhouse LLP, Indianapolis, Indiana (filed herewith). EX-23.2 Consent of Price Waterhouse LLP, Chicago, Illinois (filed herewith). EX-99.1* Press Release dated September 18, 1995 issued by Ball Corporation. *Previously filed.