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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
amcorlogo.jpg
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________

Commission File Number 001-38932

AMCOR PLC
(Exact name of Registrant as specified in its charter)
Jersey
 
98-1455367
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

83 Tower Road North
Warmley, Bristol BS30 8XP
United Kingdom
(Address of principal executive offices)

Registrant’s telephone number, including area code: +44 117 9753200

    Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Ordinary Shares, Par Value $0.01 Per Share AMCRNew York Stock Exchange
1.125% Guaranteed Senior Notes Due 2027AUKF/27New York Stock Exchange

    Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No
1




    Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated FilerEmerging Growth Company
Non-Accelerated FilerSmaller Reporting Company
Accelerated Filer

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
    As of February 5, 2024, the registrant had 1,445,343,212 ordinary shares, $0.01 par value, outstanding.

2



Amcor plc
Quarterly Report on Form 10-Q
Table of Contents
  
 
 
 
3




Cautionary Statement Regarding Forward-Looking Statements

    Unless otherwise indicated, references to "Amcor," the "Company," "we," "our," and "us" in this Quarterly Report on Form 10-Q refer to Amcor plc and its consolidated subsidiaries.

    This Quarterly Report on Form 10-Q contains certain statements that are "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified with words like "believe," "expect," "target," "project," "may," "could," "would," "approximately," "possible," "will," "should," "intend," "plan," "anticipate," "commit," "estimate," "potential," "ambitions," "outlook," or "continue," the negative of these words, other terms of similar meaning, or the use of future dates. Such statements are based on the current expectations of the management of Amcor and are qualified by the inherent risks and uncertainties surrounding future expectations generally. Actual results could differ materially from those currently anticipated due to a number of risks and uncertainties. Neither Amcor nor any of its respective directors, executive officers, or advisors, provide any representation, assurance, or guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually occur. Risks and uncertainties that could cause actual results to differ from expectations include, but are not limited to:

Changes in consumer demand patterns and customer requirements in numerous industries;
the loss of key customers, a reduction in their production requirements, or consolidation among key customers;
significant competition in the industries and regions in which we operate;
an inability to expand our current business effectively through either organic growth, including product innovation, investments, or acquisitions;
challenging current and future global economic conditions, including the Russia-Ukraine conflict and inflation;
impacts of operating internationally;
price fluctuations or shortages in the availability of raw materials, energy and other inputs, which could adversely affect our business;
production, supply, and other commercial risks, including counterparty credit risks, which may be exacerbated in times of economic volatility;
pandemics, epidemics, or other disease outbreaks;
an inability to attract and retain our global executive management team and our skilled workforce;
costs and liabilities related to environment, health, and safety ("EHS") laws and regulations, as well as changes in the global climate;
labor disputes and an inability to renew collective bargaining agreements at acceptable terms;
risks related to climate change;
cybersecurity risks, which could disrupt our operations or risk of loss of our sensitive business information;
failures or disruptions in our information technology systems which could disrupt our operations, compromise customer, employee, supplier, and other data;
rising interest rates that increase our borrowing costs on our variable rate indebtedness and could have other negative impacts;
a significant increase in our indebtedness or a downgrade in our credit rating could reduce our operating flexibility and increase our borrowing costs and negatively affect our financial condition and results of operations;
foreign exchange rate risk;
a significant write-down of goodwill and/or other intangible assets;
a failure to maintain an effective system of internal control over financial reporting;
an inability of our insurance policies, including our use of a captive insurance company, to provide adequate protection against all of the risks we face;
an inability to defend our intellectual property rights or intellectual property infringement claims against us;
litigation, including product liability claims, or regulatory developments;
increasing scrutiny and changing expectations from investors, customers, and governments with respect to our Environmental, Social, and Governance ("ESG") practices and commitments resulting in additional costs or exposure to additional risks;
changing government regulations in environmental, health, and safety matters, including climate change; and
changes in tax laws or changes in our geographic mix of earnings.

    These risks and uncertainties are supplemented by those identified from time to time in our filings with the Securities and Exchange Commission (the "SEC"), including without limitation, those described under Part I, "Item 1A - Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, and as updated by our quarterly reports on Form 10-Q. You can obtain copies of Amcor’s filings with the SEC for free at the SEC’s website (www.sec.gov). Forward-looking statements included herein are made only as of the date hereof and Amcor does not undertake any obligation to update any forward-looking statements, or any other information in this communication, as a result of new information, future developments or otherwise, or to correct any inaccuracies or omissions in them which become apparent, except as expressly required by law. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement.
4



Part I - Financial Information
Item 1. Financial Statements (unaudited)
Amcor plc and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended December 31, Six Months Ended December 31,
($ in millions, except per share data)2023202220232022
Net sales$3,251 $3,642 $6,694 $7,354 
Cost of sales(2,630)(2,980)(5,428)(6,024)
Gross profit621 662 1,266 1,330 
Selling, general, and administrative expenses(299)(298)(601)(600)
Research and development expenses(28)(24)(55)(49)
Restructuring and other related activities, net(24)213 (52)212 
Other income/(expenses), net(28)6 (46)8 
Operating income242 559 512 901 
Interest income11 11 21 20 
Interest expense(89)(79)(174)(138)
Other non-operating income, net1 3  3 
Income before income taxes and equity in loss of affiliated companies165 494 359 786 
Income tax expense(28)(33)(67)(91)
Equity in loss of affiliated companies, net of tax(1) (2) 
Net income$136 $461 $290 $695 
Net income attributable to non-controlling interests(2)(2)(4)(4)
Net income attributable to Amcor plc$134 $459 $286 $691 
Basic earnings per share:$0.093 $0.309 $0.198 $0.465 
Diluted earnings per share:$0.092 $0.307 $0.198 $0.461 
Note: Per share amounts may not add due to rounding. See accompanying notes to condensed consolidated financial statements.
5




Amcor plc and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended December 31, Six Months Ended December 31,
($ in millions)2023202220232022
Net income$136 $461 $290 $695 
Other comprehensive income/(loss):
Net gains/(losses) on cash flow hedges, net of tax (a)2 4 3 (3)
Foreign currency translation adjustments, net of tax (b)
99 144 31 (17)
Pension, net of tax (c)
 (1)1 (1)
Other comprehensive income/(loss)101 147 35 (21)
Total comprehensive income237 608 325 674 
Comprehensive income attributable to non-controlling interests(2)(2)(4)(4)
Comprehensive income attributable to Amcor plc$235 $606 $321 $670 
(a) Tax benefit/(expense) related to cash flow hedges$(1)$ $(1)$1 
(b) Tax benefit/(expense) related to foreign currency translation adjustments$3 $2 $2 $(1)
(c) Tax benefit related to pension adjustments$ $ $ $ 
See accompanying notes to condensed consolidated financial statements.

6



Amcor plc and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

($ in millions, except share and per share data)December 31, 2023June 30, 2023
Assets
Current assets:
Cash and cash equivalents$430 $689 
Trade receivables, net of allowance for credit losses of $23 and $21, respectively
1,820 1,875 
Inventories, net:
Raw materials and supplies941 992 
Work in process and finished goods1,209 1,221 
Prepaid expenses and other current assets559 531 
Total current assets4,959 5,308 
Non-current assets:
Property, plant, and equipment, net3,810 3,762 
Operating lease assets567 533 
Deferred tax assets130 134 
Other intangible assets, net1,474 1,524 
Goodwill5,388 5,366 
Employee benefit assets68 67 
Other non-current assets331 309 
Total non-current assets11,768 11,695 
Total assets$16,727 $17,003 
Liabilities
Current liabilities:
Current portion of long-term debt$12 $13 
Short-term debt46 80 
Trade payables2,338 2,690 
Accrued employee costs319 396 
Other current liabilities1,255 1,297 
Total current liabilities3,970 4,476 
Non-current liabilities:
Long-term debt, less current portion7,011 6,653 
Operating lease liabilities495 463 
Deferred tax liabilities609 616 
Employee benefit obligations207 224 
Other non-current liabilities408 481 
Total non-current liabilities8,730 8,437 
Total liabilities$12,700 $12,913 
Commitments and contingencies (See Note 14)
Shareholders' Equity
Amcor plc shareholders’ equity:
Ordinary shares ($0.01 par value)
Authorized (9,000 million shares)
Issued (1,445 and 1,448 million shares, respectively)
$14 $14 
Additional paid-in capital3,993 4,021 
Retained earnings795 865 
Accumulated other comprehensive loss(827)(862)
Treasury shares (1 and 1 million shares, respectively)
(11)(12)
Total Amcor plc shareholders' equity3,964 4,026 
Non-controlling interests63 64 
Total shareholders' equity4,027 4,090 
Total liabilities and shareholders' equity$16,727 $17,003 
See accompanying notes to condensed consolidated financial statements.
7



Amcor plc and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended December 31,
($ in millions)20232022
Cash flows from operating activities:  
Net income$290 $695 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and impairment295 284 
Net periodic benefit cost7 4 
Amortization of debt discount and deferred financing costs5 1 
Net gain on disposal of property, plant, and equipment(1)(5)
Net gain on disposal of businesses (219)
Equity in loss of affiliated companies2  
Net foreign exchange loss35 25 
Share-based compensation6 29 
Other, net(47)11 
Loss from highly inflationary accounting for Argentine subsidiaries86 28 
Deferred income taxes, net(5)(12)
Changes in operating assets and liabilities, excluding effect of acquisitions, divestitures, and currency(445)(696)
Net cash provided by operating activities228 145 
Cash flows from investing activities:
Issuance of loans to affiliated companies and other (1)
Investments in affiliated companies and other(3)(49)
Business acquisitions(19)(54)
Purchase of property, plant, and equipment, and other intangible assets(245)(250)
Proceeds from divestitures 370 
Proceeds from sales of property, plant, and equipment, and other intangible assets11 8 
Net cash (used in)/provided by investing activities(256)24 
Cash flows from financing activities:
Proceeds from issuance of shares 132 
Purchase of treasury shares and tax withholdings for share-based incentive plans(51)(221)
Repayment of long-term debt(21)(11)
Net borrowing of commercial paper322 500 
Net repayment of short-term debt(44)(83)
Repayment of lease liabilities(6)(2)
Share buybacks/cancellations(30)(40)
Dividends paid(361)(365)
Net cash used in financing activities(191)(90)
Effect of exchange rates on cash and cash equivalents(40)(92)
Net decrease in cash and cash equivalents(259)(13)
Cash and cash equivalents balance at beginning of year689 850 
Cash and cash equivalents balance at end of period$430 $837 
Supplemental cash flow information:
Interest paid, net of amounts capitalized$162 $127 
Income taxes paid$124 $91 
Supplemental non-cash disclosures relating to investing and financing activities:
Purchase of property, plant, and equipment, accrued but unpaid$59 $83 
Contingent purchase considerations related to acquired businesses, accrued but not paid$27 $12 
See accompanying notes to condensed consolidated financial statements. Cash and cash equivalents at the beginning of fiscal year 2023 include cash and cash equivalents classified as held for sale.
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Amcor plc and Subsidiaries
Condensed Consolidated Statements of Equity
(Unaudited)
($ in millions, except per share data)Ordinary SharesAdditional Paid-In CapitalRetained
Earnings
Accumulated Other Comprehensive LossTreasury SharesNon-controlling InterestsTotal
Balance as of September 30, 2022$15 $4,412 $588 $(1,048)$(49)$58 $3,976 
Net income459 2 461 
Other comprehensive income147  147 
Share buyback/cancellations (40)(40)
Dividends declared ($0.1225 per share)
(181)(3)(184)
Options exercised and shares vested(14)50 36 
Net settlement of forward contracts to purchase own equity for share-based incentive plans, net of tax20 20 
Purchase of treasury shares(19)(19)
Share-based compensation expense13 13 
Change in non-controlling interests 1 1 
Balance as of December 31, 2022$15 $4,391 $866 $(901)$(18)$58 $4,411 
Balance as of June 30, 2022$15 $4,431 $534 $(880)$(18)$59 $4,141 
Net income691 4 695 
Other comprehensive loss(21) (21)
Share buyback/cancellations (40)(40)
Dividends declared ($0.2425 per share)
(359)(6)(365)
Options exercised and shares vested(89)221 132 
Net settlement of forward contracts to purchase own equity for share-based incentive plans, net of tax60 60 
Purchase of treasury shares(221)(221)
Share-based compensation expense29 29 
Change in non-controlling interests 1 1 
Balance as of December 31, 2022$15 $4,391 $866 $(901)$(18)$58 $4,411 
Balance as of September 30, 2023$14 $3,983 $841 $(928)$(12)$66 $3,964 
Net income134 2 136 
Other comprehensive income101  101 
Dividends declared ($0.125 per share)
(180)(5)(185)
Shares vested(4)4  
Net settlement of forward contracts to purchase own equity for share-based incentive plans, net of tax3 3 
Purchase of treasury shares(3)(3)
Share-based compensation expense11 11 
Balance as of December 31, 2023$14 $3,993 $795 $(827)$(11)$63 $4,027 
Balance as of June 30, 2023$14 $4,021 $865 $(862)$(12)$64 $4,090 
Net income286 4 290 
Other comprehensive income35  35 
Share buyback/cancellations (30)(30)
Dividends declared ($0.2475 per share)
(356)(5)(361)
Shares vested and related tax withholdings(52)49 (3)
Net settlement of forward contracts to purchase own equity for share-based incentive plans, net of tax48 48 
Purchase of treasury shares(48)(48)
Share-based compensation expense6 6 
Balance as of December 31, 2023$14 $3,993 $795 $(827)$(11)$63 $4,027 
See accompanying notes to condensed consolidated financial statements.

9



Amcor plc and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1 - Nature of Operations and Basis of Presentation

    Amcor plc ("Amcor" or the "Company") is a public limited company incorporated under the Laws of the Bailiwick of Jersey. The Company's history dates back more than 150 years, with origins in both Australia and the United States of America. Today, Amcor is a global leader in developing and producing responsible packaging for food, beverage, pharmaceutical, medical, home and personal-care, and other consumer goods end markets. The Company's innovation excellence and global packaging expertise enable the Company to solve packaging challenges around the world every day, producing packaging that is more functional, appealing, and cost effective for its customers and their consumers and importantly, more sustainable for the environment.

    The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by U.S. GAAP for complete financial statements. Further, the year-end condensed consolidated balance sheet data as of June 30, 2023 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. It is management's opinion, however, that all material and recurring adjustments have been made that are necessary for a fair statement of the Company's interim financial position, results of operations, and cash flows. For further information, this Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

    There have been no material changes to the accounting policies followed by the Company during the current fiscal year. Certain amounts in the Company's notes to unaudited condensed consolidated financial statements may not add or recalculate due to rounding.

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Note 2 - New Accounting Guidance

Recently Adopted Accounting Standards

    In September 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-04 that adds certain disclosure requirements for entities that use supplier finance programs in connection with the purchase of goods and services. The Company adopted the disclosure requirements in ASU 2022-04 on July 1, 2023, except for the amendment on roll forward information, which is effective in fiscal year 2025.

    The Company facilitates several regional voluntary supply chain financing ("SCF") programs with financial institutions, all of which have similar characteristics. The Company establishes these SCF programs to provide its suppliers with a potential source of liquidity and to enable a more efficient payment process. Under these SCF programs, qualifying suppliers may elect, but are not obligated, to sell their receivables due from Amcor to these financial institutions in advance of the agreed payment due date. The Company is not involved in negotiations between the suppliers and the financial institutions, and its rights and obligations to its suppliers are not impacted by its suppliers’ decisions to sell amounts to the financial institutions. Under these SCF programs, the Company agrees to pay the financial institution the stated invoice amounts from its participating suppliers on the original maturity dates of the invoices. The range of payment terms negotiated with suppliers under these arrangements are consistent with industry norms and short-term in nature, regardless of whether a supplier participates in the program. The Company's SCF programs do not include any guarantees to the financial institutions, or any assets pledged as securities.

    All outstanding amounts related to suppliers participating in the SCF programs are reflected in trade payables in the Company’s unaudited condensed consolidated balance sheets, and associated payments are included in operating activities within the Company’s unaudited condensed consolidated statements of cash flows. As of December 31, 2023 and June 30, 2023, the amounts due to suppliers participating in the Company’s SCF programs amounted to $1.0 billion and $1.1 billion, respectively.

Accounting Standards Not Yet Adopted

    In November 2023, the FASB issued ASU 2023-07 that adds new reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The new standard's amendments are effective for the Company for annual periods beginning July 1, 2024, and interim periods beginning July 1, 2025, with early adoption permitted, and will be applied retrospectively to all periods in the financial statements. The Company will adopt this guidance in fiscal year 2025. The Company is currently evaluating the impact that this new guidance will have on its disclosures.

    In December 2023, the FASB issued ASU 2023-09 that adds new income tax disclosure requirements, primarily related to existing income tax rate reconciliation and income taxes paid information. The new standard's amendments are effective for the Company for annual periods beginning July 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact that this new guidance will have on its disclosures.

    The Company considers the applicability and impact of all ASUs issued by the FASB. The Company determined at this time that all other ASUs not yet adopted are either not applicable or are not expected to have a material impact on its results of operations, financial position, and disclosures.
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Note 3 - Restructuring and Other Related Activities, Net

    Restructuring and other related activities, net, as reported on the unaudited condensed consolidated statements of income are summarized as follows:
Three Months Ended December 31, Six Months Ended December 31,
($ in millions)2023202220232022
Gain on disposal of Russian business, net$ $215 $ $215 
Restructuring and related expenses, net(24)(2)(52)(3)
Restructuring and other related activities, net$(24)$213 $(52)$212 

    A pre-tax net gain on disposal of the Company's three manufacturing facilities in Russia ("Russian business") of $215 million was recognized in the three and six months ended December 31, 2022. The carrying value of the Russian business had previously been impaired by $90 million in the quarter ended June 30, 2022. For further information refer to Note 4, "Acquisitions and Disposals".

    Refer to Note 5, "Restructuring" for information on restructuring and related expenses, net.

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Note 4 - Acquisitions and Disposals

Fiscal Year 2024 - Acquisition

    On September 27, 2023, the Company completed the acquisition of a small manufacturer of flexible packaging for food, home care, and personal care applications in India for a purchase consideration of $14 million plus the assumption of debt of $10 million. The acquisition is part of the Company's Flexibles reportable segment and the Company aims to complete the purchase price allocation as soon as practicable but no later than one year from the date of the acquisition.

Fiscal Year 2023 - Acquisitions

    On May 31, 2023, the Company completed the acquisition of a New Zealand based leading manufacturer of state-of-the-art, automated protein packaging machines. The purchase consideration of $45 million is subject to customary post-closing adjustments. The consideration includes contingent consideration of $13 million, to be earned and paid in cash over the two years following the acquisition date, subject to meeting certain performance targets. The acquisition is part of the Company's Flexibles reportable segment and resulted in the recognition of acquired identifiable net assets of $21 million and goodwill of $24 million. Goodwill is deductible for tax purposes. The fair values of the contingent consideration, identifiable net assets acquired, and goodwill are based on the Company's best estimate as of December 31, 2023 using information available as of the acquisition date, and are considered preliminary. The Company aims to complete the purchase price allocation as soon as practicable but no later than one year from the date of the acquisition.

    On March 17, 2023, the Company completed the acquisition of a 100% equity interest in a medical device packaging manufacturing site in Shanghai, China. The purchase consideration of $61 million includes contingent consideration of $20 million, to be earned and paid in cash over the three years following the acquisition date, subject to meeting certain performance targets. The acquisition is part of the Company's Flexibles reportable segment and resulted in the recognition of acquired identifiable net assets of $21 million and goodwill of $40 million. Goodwill is not deductible for tax purposes. The fair values of the contingent consideration, identifiable net assets acquired, and goodwill are based on the Company's best estimate as of December 31, 2023 using information available as of the acquisition date, and are considered preliminary. The Company aims to complete the purchase price allocation as soon as practicable but no later than one year from the date of the acquisition.

    The fair value estimates for all three acquisitions in fiscal years 2024 and 2023 were based on income, market, and cost valuation methods. Pro forma information related to these acquisitions has not been presented, as the effect of the acquisitions on the Company's consolidated financial statements was not material.

Fiscal Year 2023 - Disposal

    On December 23, 2022, the Company completed the sale of the Russian business after receiving all necessary regulatory approvals and cash proceeds, including receipt of closing cash balances. The sale followed the Company’s previously announced plan to pursue the orderly sale of its Russian business. The total net cash consideration received, excluding disposed cash and items settled net, was $365 million and resulted in a net pre-tax net gain of $215 million. The carrying value of the Russian business had previously been impaired by $90 million in the quarter ended June 30, 2022. The impairment charge was based on the Company's best estimate of the fair value of its Russian business, which considered the wide range of indicative bids received and uncertain regulatory environment. The net pre-tax gain on disposal of the Russian business was recorded as restructuring and other related activities, net within the condensed consolidated statements of income. The Russian business had a net carrying value of $252 million, including allocated goodwill of $46 million and accumulated other comprehensive losses of $73 million, primarily attributed to foreign currency translation adjustments.
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Note 5 - Restructuring

    Restructuring and related expenses, net, were $24 million and $2 million during the three months ended December 31, 2023 and 2022, respectively, and $52 million and $3 million during the six months ended December 31, 2023 and 2022, respectively. The Company's restructuring activities for the three and six months ended December 31, 2023 were primarily comprised of restructuring activities related to the 2023 Restructuring Plan (as defined below). The Company's restructuring activities in the three and six months ended December 31, 2022 related to Other Restructuring Plans (as defined below).

    Restructuring related expenses are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. The Company believes the disclosure of restructuring related costs provides more information on its restructuring activities.

2023 Restructuring Plan

    On February 7, 2023, the Company announced that it will allocate approximately $110 million to $130 million of the sale proceeds from the Russian business to various cost saving initiatives to partly offset divested earnings from the Russian business (the "2023 Restructuring Plan" or the "Plan"). The Company expects the total Plan cash and non-cash net expenses to total approximately $230 million. As of December 31, 2023, the Company has initiated projects with an expected net cost of approximately $210 million, of which $87 million relates to employee related expenses, $45 million to fixed asset related expenses (net of expected gains on asset disposals), $55 million to other restructuring expenses, and $23 million to restructuring related expenses. The projects initiated as of December 31, 2023 are expected to result in approximately $110 million of net cash expenditures. The Plan includes both the Flexibles and Rigid Packaging reportable segments and is expected to be largely completed by the end of calendar year 2024.

    From the initiation of the Plan through December 31, 2023, the Company has incurred $77 million in employee related expenses, $25 million in fixed asset related expenses, $27 million in other restructuring, and $13 million in restructuring related expenses, with $126 million incurred in the Flexibles reportable segment and $16 million incurred in the Rigid Packaging reportable segment. The Plan has resulted in cumulative net cash outflows of $49 million. Additional cash payments of approximately $40 million to $45 million, net of estimated proceeds from disposals, are expected for the remainder of the fiscal year 2024, the majority of which relates to the Flexibles reportable segment.

    The restructuring related costs relate primarily to the closure of facilities and include startup and training costs after relocation of equipment, and other costs incidental to the Plan.

Other Restructuring Plans

    The Company has entered into other individually immaterial restructuring plans ("Other Restructuring Plans"). Expenses incurred on such programs are primarily costs to move equipment and other costs.

Consolidated Restructuring Plans

    The total costs incurred from the beginning of the Company's 2023 Restructuring Plan and Other Restructuring Plans are as follows:
($ in millions)2023 Restructuring Plan (1)Other Restructuring Plans (2)Total Restructuring and Related Expenses
Fiscal year 2023$94 $17 $111 
Fiscal year 2024, first quarter26 2 28 
Fiscal year 2024, second quarter22 2 24 
Net expenses incurred$142 $21 $163 
(1)Includes restructuring related expenses from the 2023 Restructuring Plan of $6 million, $3 million, and $4 million for fiscal year 2023, first quarter of fiscal year 2024, and second quarter of fiscal year 2024, respectively. In the three and six months ended December 31, 2023, $16 million and $39 million of restructuring and related expenses, net, were incurred in the Flexibles reportable segment and $6 million and $9 million in the Rigid Packaging reportable segment.
(2)Includes restructuring related costs of $4 million, nil, and $1 million for fiscal year 2023, first quarter of fiscal year 2024, and second quarter of fiscal year 2024, respectively.
    
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    An analysis of the restructuring charges by type incurred is as follows:

Three Months Ended December 31, Six Months Ended December 31,
($ in millions)2023202220232022
Employee related expenses$(3)$1 $13 $2 
Fixed asset related expenses6  12  
Other expenses16  19  
Total restructuring expenses, net$19 $1 $44 $2 

    An analysis of the Company's restructuring plan liability is as follows:
($ in millions)Employee CostsFixed Asset Related CostsOther CostsTotal Restructuring Costs
Liability balance as of June 30, 2023$126 $3 $21 $150 
Net charges to earnings13 12 19 44 
Cash paid(40) (18)(58)
Non-cash and other (12)(2)(14)
Foreign currency translation1   1 
Liability balance as of December 31, 2023$100 $3 $20 $123 

    The table above includes liabilities arising from the 2023 Restructuring Plan and Other Restructuring Plans. The accruals related to restructuring activities have been recorded on the unaudited condensed consolidated balance sheets under other current liabilities.
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Note 6 - Goodwill and Other Intangible Assets, Net

Goodwill

    Changes in the carrying amount of goodwill attributable to each reportable segment were as follows:

($ in millions)Flexibles Segment Rigid Packaging SegmentTotal
Balance as of June 30, 2023$4,391 $975 $5,366 
Acquisitions (1)1  1 
Foreign currency translation20 1 21 
Balance as of December 31, 2023$4,412 $976 $5,388 
(1)Acquisitions are attributed to goodwill recognized in connection with the business combinations detailed in Note 4, "Acquisitions and Disposals".

    Goodwill is not amortized but is tested for impairment annually in the fourth quarter of the fiscal year, or during interim periods if events or circumstances arise which indicate that goodwill may be impaired.

Other Intangible Assets, Net

    Other intangible assets, net were comprised of the following:

 December 31, 2023
($ in millions)Gross Carrying AmountAccumulated Amortization and Impairment (1)Net Carrying Amount
Customer relationships$2,006 $(729)$1,277 
Computer software272 (187)85 
Other (2)339 (227)112 
Total other intangible assets$2,617 $(1,143)$1,474 

 June 30, 2023
($ in millions)Gross Carrying AmountAccumulated Amortization and Impairment (1)Net Carrying Amount
Customer relationships$1,987 $(660)$1,327 
Computer software261 (185)76 
Other (2)327 (206)121 
Total other intangible assets$2,575 $(1,051)$1,524 
(1)Accumulated amortization and impairment as of December 31, 2023 and June 30, 2023 included $37 million and $34 million, respectively, of accumulated impairment in the Other category.
(2)As of December 31, 2023 and June 30, 2023, Other included $18 million and $17 million, respectively, of acquired intellectual property assets not yet being amortized as the related R&D projects have not yet been completed.

    Amortization expenses for intangible assets were $47 million and $43 million during the three months ended December 31, 2023 and 2022, respectively, and $91 million and $87 million during the six months ended December 31, 2023 and 2022, respectively.
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Note 7 - Fair Value Measurements

    The fair values of the Company's financial assets and financial liabilities listed below reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price).

    The Company's non-derivative financial instruments primarily include cash and cash equivalents, trade receivables, trade payables, short-term debt, and long-term debt. As of December 31, 2023 and June 30, 2023, the carrying value of these financial instruments, excluding long-term debt, approximated fair value because of the short-term nature of these instruments.

    The carrying value of long-term debt with variable interest rates approximates its fair value. The fair value of the Company's long-term debt with fixed interest rates is based on market prices, if available, or expected future cash flows discounted at the current interest rate for financial liabilities with similar risk profiles.

    The carrying values and estimated fair values of long-term debt with fixed interest rates (excluding the fair value of designated receive-fixed/pay-variable interest rate swaps) were as follows:

 December 31, 2023June 30, 2023
 Carrying ValueFair ValueCarrying ValueFair Value
($ in millions)(Level 2)(Level 2)
Total long-term debt with fixed interest rates (excluding commercial paper (1) and finance leases)
$4,149 $3,990 $4,123 $3,844 
(1) As of December 31, 2023, and June 30, 2023, the Company held interest rate swap contracts for a total notional amount of commercial paper equal to $1.2 billion. These contracts are considered to be economic hedges and the related $1.2 billion notional amount of commercial paper is also excluded from the total long-term debt with fixed interest rates.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

    Additionally, the Company measures and records certain assets and liabilities, including derivative instruments and contingent purchase consideration liabilities, at fair value. The following table summarizes the fair value of these instruments, which are measured at fair value on a recurring basis, by level, within the fair value hierarchy:

 December 31, 2023
($ in millions)Level 1Level 2Level 3Total
Assets
Commodity contracts$ $1 $ $1 
Forward exchange contracts 4  4 
Interest rate swaps 7  7 
Total assets measured at fair value$ $12 $ $12 
Liabilities
Contingent purchase consideration$ $ $38 $38 
Commodity contracts 1  1 
Forward exchange contracts 4  4 
Interest rate swaps 82  82 
Total liabilities measured at fair value$ $87 $38 $125 

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 June 30, 2023
($ in millions)Level 1Level 2Level 3Total
Assets
Forward exchange contracts$ $3 $ $3 
Interest rate swaps 16  16 
Total assets measured at fair value$ $19 $ $19 
Liabilities
Contingent purchase consideration$ $ $46 $46 
Commodity contracts 2  2 
Forward exchange contracts 5  5 
Interest rate swaps 96  96 
Total liabilities measured at fair value$ $103 $46 $149 

    The fair value of the commodity contracts was determined using a discounted cash flow analysis based on the terms of the contracts and observed market forward prices discounted at a currency specific rate. Forward exchange contract fair values were determined based on quoted prices for similar assets and liabilities in active markets using inputs such as currency rates and forward points. The fair value of the interest rate swaps was determined using a discounted cash flow method based on market based swap yield curves, taking into account current interest rates.

    Contingent purchase consideration liabilities arise from business acquisitions and other investments. As of December 31, 2023, the Company had contingent purchase consideration liabilities of $38 million, consisting of $27 million of contingent purchase consideration predominantly relating to fiscal year 2023 acquisitions (refer to Note 4, "Acquisitions and Disposals") and a $11 million liability that is contingent on future royalty income generated by Discma AG, a subsidiary acquired in March 2017. The fair values of the contingent purchase consideration liabilities were determined for each arrangement individually. The fair values were determined using an income approach with significant inputs that are not observable in the market. Key assumptions include the selection of discount rates consistent with the level of risk of achievement and probability adjusted financial projections. The expected outcomes are recorded at net present value, which require adjustment over the life for changes in risks and probabilities. Changes arising from modifications in forecasts related to contingent consideration are not expected to be material. During the three and six months ended December 31, 2023, income of $9 million was recorded in other income/(expenses), net from remeasuring the fair value of the Company's contingent purchase consideration liability.

    The fair value of contingent purchase consideration liabilities is included in other current liabilities and other non-current liabilities in the unaudited condensed consolidated balance sheets.

Assets and Liabilities Measured and Recorded at Fair Value on a Nonrecurring Basis

    In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets at fair value on a nonrecurring basis, generally when events or changes in circumstances indicate the carrying value may not be recoverable, or when they are deemed to be other than temporarily impaired. These assets include goodwill and other intangible assets, equity method and other investments, long-lived assets and disposal groups held for sale, and other long-lived assets. The fair values of these assets are determined, when applicable, based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. These nonrecurring fair value measurements are considered to be Level 3 in the fair value hierarchy.

    During the three months ended December 31, 2023 and 2022, there were no impairment charges recorded on indefinite-lived intangibles, including goodwill. For information on long-lived asset impairments, refer to Note 5, "Restructuring".
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Note 8 - Derivative Instruments

    The Company periodically uses derivatives and other financial instruments to hedge exposures to interest rates, commodity prices, and currency risks. The Company does not hold or issue derivative instruments for speculative or trading purposes. For hedges that meet hedge accounting criteria, the Company, at inception, formally designates and documents the instruments as a fair value hedge or a cash flow hedge of a specific underlying exposure. On an ongoing basis, the Company assesses and documents that its designated hedges have been and are expected to continue to be highly effective.

Interest Rate Risk

    The Company's policy is to manage exposure to interest rate risk by maintaining a mixture of fixed-rate and variable-rate debt, monitoring global interest rates, and, where appropriate, hedging floating interest rate exposure or debt at fixed interest rates through various interest rate derivative instruments including, but not limited to, interest rate swaps, cross-currency interest rate swaps, and interest rate locks. For interest rate swaps that are accounted for as fair value hedges, the gains and losses related to the changes in the fair value of the interest rate swaps are included in interest expense and offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. Changes in the fair value of interest rate swaps that have not been designated as hedging instruments are reported in the accompanying unaudited condensed consolidated statements of income in other income/(expenses), net.

    In March 2023, the Company entered into interest rate swap contracts for a total notional amount of $1.2 billion. Under the terms of the contracts, the Company pays a weighted-average fixed interest rate of 3.88% and receives a variable rate of interest, based on 1-month Term Secured Overnight Financing Rate ("SOFR"), from July 2023 through June 2024, settled monthly. As of December 31, 2023 and June 30, 2023, the Company had no other receive-variable/pay-fixed interest rate swaps. Although the Company is not applying hedge accounting, the Company believes that these economic hedging instruments are effective in protecting the Company against the risks of changes in the variable interest rate on a portion of its forecasted commercial paper issuances.

    As of December 31, 2023, and June 30, 2023, the total notional amount of the Company’s receive-fixed/pay-variable interest rate swaps was $650 million.

Foreign Currency Risk

    The Company manufactures and sells its products and finances operations in a number of countries throughout the world and, as a result, is exposed to movements in foreign currency exchange rates. The purpose of the Company's foreign currency hedging program is to manage the volatility associated with the changes in exchange rates.

    To manage this exchange rate risk, the Company utilizes forward contracts. Contracts that qualify for hedge accounting are designated as cash flow hedges of certain forecasted transactions denominated in foreign currencies. The effective portion of the changes in fair value of these instruments is reported in accumulated other comprehensive loss ("AOCI") and reclassified into earnings in the same financial statement line item and in the same period or periods during which the related hedged transactions affect earnings. The ineffective portion is recognized in earnings over the life of the hedging relationship in the same consolidated statements of income line item as the underlying hedged item. Changes in the fair value of forward contracts that have not been designated as hedging instruments are reported in the accompanying unaudited condensed consolidated statements of income.

    As of December 31, 2023, and June 30, 2023, the notional amount of the outstanding forward contracts was $450 million and $462 million, respectively.
    
Commodity Risk

    Certain raw materials used in the Company's production processes are subject to price volatility caused by weather, supply conditions, political and economic variables, and other unpredictable factors. The Company's policy is to minimize exposure to price volatility by passing through the commodity price risk to customers, including through the use of fixed price swaps.

    In some cases, the Company purchases, on behalf of customers, fixed price commodity swaps to offset the exposure of price volatility on the underlying sales contracts. These instruments are cash closed out on maturity and the related cost or benefit is passed through to customers. Information about commodity price exposure is derived from supply forecasts submitted by customers and these exposures are hedged by central treasury units. Changes in the fair value of commodity hedges are recognized in AOCI. The cumulative amount of the hedge is recognized in the unaudited condensed consolidated statements of income when the forecasted transaction is realized.
19




    The Company had the following outstanding commodity contracts to hedge forecasted purchases:
 December 31, 2023June 30, 2023
CommodityVolumeVolume
Aluminum14,670 tons14,325 tons
PET resin16,600,000 lbs. lbs.

    The following table provides the location of derivative instruments in the unaudited condensed consolidated balance sheets:

($ in millions)Balance Sheet LocationDecember 31, 2023June 30, 2023
Assets
Derivatives in cash flow hedging relationships:
Commodity contractsOther current assets$1 $ 
Forward exchange contractsOther current assets3 2 
Derivatives not designated as hedging instruments:
Forward exchange contractsOther current assets1 1 
Interest rate swapsOther current assets7 16 
Total current derivative contracts12 19 
Total non-current derivative contracts  
Total derivative asset contracts$12 $19 
Liabilities
Derivatives in cash flow hedging relationships:
Commodity contractsOther current liabilities$1 $2 
Forward exchange contractsOther current liabilities2 3 
Derivatives not designated as hedging instruments:
Forward exchange contractsOther current liabilities1 1 
Total current derivative contracts4 6 
Derivatives in cash flow hedging relationships:
Forward exchange contractsOther non-current liabilities 1 
Derivatives in fair value hedging relationships:
Interest rate swapsOther non-current liabilities82 96 
Derivatives not designated as hedging instruments:
Forward exchange contractsOther non-current liabilities1  
Total non-current derivative contracts83 97 
Total derivative liability contracts$87 $103 

    Certain derivative financial instruments are subject to master netting arrangements and are eligible for offset. The Company has made an accounting policy election not to offset the fair values of these instruments within the unaudited condensed consolidated balance sheets.

    









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    The following tables provide the effects of derivative instruments on AOCI and in the unaudited condensed consolidated statements of income:

Location of Loss Reclassified from AOCI into IncomeLoss Reclassified from AOCI into Income (Effective Portion)
Three Months Ended December 31, Six Months Ended December 31,
($ in millions)2023202220232022
Derivatives in cash flow hedging relationships
Commodity contractsCost of sales$ $(4)$(1)$(2)
Forward exchange contractsNet sales(1)(1) (1)
Treasury locksInterest expense  (1)(1)
Total$(1)$(5)$(2)$(4)

Location of Gain / (Loss) Recognized in the Unaudited Condensed Consolidated Statements of IncomeGain / (Loss) Recognized in Income for Derivatives Not Designated as Hedging Instruments
Three Months Ended December 31, Six Months Ended December 31,
($ in millions)2023202220232022
Derivatives not designated as hedging instruments
Forward exchange contractsOther income/(expenses), net$6 $10 $8 $(5)
Interest rate swapsOther income/(expenses), net(6)1 (9)1 
Total$ $11 $(1)$(4)

Location of Gain/(Loss) Recognized in the Unaudited Condensed Consolidated Statements of IncomeGain/(Loss) Recognized in Income for Derivatives in Fair Value Hedging Relationships
Three Months Ended December 31, Six Months Ended December 31,
($ in millions)2023202220232022
Derivatives in fair value hedging relationships
Interest rate swapsInterest expense$25 $5 $14 $(28)
Total$25 $5 $14 $(28)


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Note 9 - Components of Net Periodic Benefit Cost

    Net periodic benefit cost for defined benefit plans included the following components:

Three Months Ended December 31, Six Months Ended December 31,
($ in millions)2023202220232022
Service cost$5 $5 $9 $9 
Interest cost12 12 25 24 
Expected return on plan assets(14)(14)(28)(28)
Amortization of actuarial loss1  2 1 
Amortization of prior service credit(1)(1)(2)(2)
Settlement costs   1  
Net periodic benefit cost$3 $2