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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
amcr-20210930_g1.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 September 30, 2021

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 November 2, 2021, the registrant had 1,533,168,898 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," "estimate," "potential," "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. None of Amcor or 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;
• the inability to expand our current business effectively through either organic growth, including by product innovation, or acquisitions;
• the failure to successfully integrate acquisitions in the expected time frame;
• challenges to or the loss of our intellectual property rights;
• adverse impacts from the ongoing 2019 Novel Coronavirus ("COVID-19") pandemic or other similar outbreaks on Amcor and its customers, suppliers, employees, and the geographic markets in which Amcor and its customers operate;
• challenging current and future global economic conditions;
• impact 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 downturn;
• a failure or disruption in our information technology systems;
• an inability to attract and retain key personnel;
• costs and liabilities related to current and future environmental and health and safety laws and regulations;
• labor disputes;
• the possibility that the phase out of the London Interbank Offered Rate ("LIBOR") causes our interest expense to increase;
• foreign exchange rate risk;
• an increase in interest rates;
• a significant increase in our indebtedness or a downgrade in our credit rating that could increase our borrowing costs and negatively affect our financial condition and results of operations;
• a failure to hedge effectively against adverse fluctuations in interest rates and foreign exchange rates;
• a significant write-down of goodwill and/or other intangible assets;
• our need 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;
• litigation, including product liability claims, or regulatory developments;
• increasing scrutiny and changing expectations with respect to our Environmental, Social, and Governance ("ESG") policies resulting in additional costs or exposure to additional risks;
• changing government regulations in environmental, health, and safety matters;
• changes in tax laws or changes in our geographic mix of earnings; and
• our ability to develop and successfully introduce new products and to develop, acquire, and retain intellectual property rights.

    These risks and uncertainties are supplemented by those identified from time to time in our filings with the Securities and Exchange Commission, 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, 2021. 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
4



become apparent, except as expressly required by law. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement.

5



Part I - Financial Information
Item 1. Financial Statements
Amcor plc and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended September 30,
($ in millions, except per share data)20212020
Net sales$3,420 $3,097 
Cost of sales(2,770)(2,443)
Gross profit650 654 
Operating expenses:
Selling, general, and administrative expenses(313)(329)
Research and development expenses(25)(26)
Restructuring and related expenses, net(8)(23)
Other expenses, net(8) 
Operating income296 276 
Interest income5 3 
Interest expense(40)(40)
Other non-operating income, net5 3 
Income before income taxes and equity in income of affiliated companies266 242 
Income tax expense(63)(61)
Equity in income of affiliated companies, net of tax 19 
Net income$203 $200 
Net income attributable to non-controlling interests(1)(2)
Net income attributable to Amcor plc$202 $198 
Basic earnings per share:$0.131 $0.127 
Diluted earnings per share:$0.131 $0.126 
See accompanying notes to condensed consolidated financial statements.
6




Amcor plc and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended September 30,
($ in millions)20212020
Net income$203 $200 
Other comprehensive income (loss):
Net gains (losses) on cash flow hedges, net of tax (a)(2)4 
Foreign currency translation adjustments, net of tax (b)
(95)24 
Pension, net of tax (c)
 2 
Other comprehensive income (loss)(97)30 
Total comprehensive income106 230 
Comprehensive income attributable to non-controlling interest (2)
Comprehensive income attributable to Amcor plc$106 $228 
(a) Tax expense related to cash flow hedges$ $(1)
(b) Tax benefit (expense) related to foreign currency translation adjustments$(2)$3 
(c) Tax benefit related to pension adjustments$ $1 
See accompanying notes to condensed consolidated financial statements.

7



Amcor plc and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
($ in millions except share and per share data)September 30, 2021June 30, 2021
Assets
Current assets:
Cash and cash equivalents$633 $850 
Trade receivables, net of allowance for doubtful accounts of $26 and $28, respectively
1,938 1,864 
Inventories, net2,113 1,991 
Prepaid expenses and other current assets595 561 
Total current assets5,279 5,266 
Non-current assets:
Property, plant, and equipment, net3,701 3,761 
Operating lease assets520 532 
Deferred tax assets136 139 
Other intangible assets, net1,792 1,835 
Goodwill5,385 5,419 
Employee benefit assets51 52 
Other non-current assets180 184 
Total non-current assets11,765 11,922 
Total assets$17,044 $17,188 
Liabilities
Current liabilities:
Current portion of long-term debt$5 $5 
Short-term debt63 98 
Trade payables2,412 2,574 
Accrued employee costs411 523 
Other current liabilities1,126 1,145 
Total current liabilities4,017 4,345 
Non-current liabilities:
Long-term debt, less current portion6,524 6,186 
Operating lease liabilities451 462 
Deferred tax liabilities688 696 
Employee benefit obligations294 307 
Other non-current liabilities365 371 
Total non-current liabilities8,322 8,022 
Total liabilities12,339 12,367 
Commitments and contingencies (See Note 13)
Shareholders' Equity
Amcor plc shareholders’ equity:
Ordinary shares ($0.01 par value)
Authorized (9,000 million shares)
Issued (1,533 and 1,538 million shares, respectively)
$15 $15 
Additional paid-in capital5,074 5,092 
Retained earnings473 452 
Accumulated other comprehensive loss(862)(766)
Treasury shares (4 and 3 million shares, respectively)
(50)(29)
Total Amcor plc shareholders' equity4,650 4,764 
Non-controlling interest55 57 
Total shareholders' equity4,705 4,821 
Total liabilities and shareholders' equity$17,044 $17,188 
See accompanying notes to condensed consolidated financial statements.
8



Amcor plc and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended September 30,
($ in millions)20212020
Cash flows from operating activities:  
Net income$203 $200 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, amortization, and impairment177 145 
Net periodic benefit cost1 3 
Amortization of debt discount and deferred financing costs1 2 
Net gain on disposal of property, plant, and equipment (1)
Net loss on disposal of businesses 6 
Equity in income of affiliated companies (19)
Net foreign exchange (gain) loss(11)1 
Share-based compensation15 14 
Other, net73 (28)
Loss from hyperinflationary accounting for Argentine subsidiaries2 6 
Deferred income taxes, net(11)(3)
Dividends received from affiliated companies 3 
Changes in operating assets and liabilities, excluding effect of acquisitions, divestitures, and currency(562)(439)
Net cash used in operating activities(112)(110)
Cash flows from investing activities:
Purchase of property, plant, and equipment, and other intangible assets(145)(114)
Proceeds from divestitures 138 
Proceeds from sales of property, plant, and equipment, and other intangible assets 3 
Net cash (used in) provided by investing activities(145)27 
Cash flows from financing activities:
Proceeds from issuance of shares82 5 
Purchase of treasury shares(131) 
Proceeds from non-controlling interest 1 
Proceeds from issuance of long-term debt8 1 
Repayment of long-term debt(401)(122)
Net borrowing of commercial paper795 350 
Net borrowing (repayment) of short-term debt(38)30 
Repayment of lease liabilities(1)(1)
Share buyback/cancellations(64) 
Dividends paid(183)(188)
Net cash provided by financing activities67 76 
Effect of exchange rates on cash and cash equivalents(27)21 
Net increase (decrease) in cash and cash equivalents(217)14 
Cash and cash equivalents balance at beginning of year850 743 
Cash and cash equivalents balance at end of period$633 $757 
Supplemental cash flow information:
Interest paid, net of amounts capitalized$16 $22 
Income taxes paid$55 $107 
Supplemental non-cash disclosures relating to investing and financing activities:
Purchase of property and equipment, accrued but unpaid$52 $58 
See accompanying notes to condensed consolidated financial statements.
9



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 InterestTotal
Balance as of June 30, 2020$16 $5,480 $246 $(1,049)$(67)$61 $4,687 
Net income198 2 200 
Other comprehensive income30 — 30 
Dividends declared ($0.115 per share)
(181)(7)(188)
Options exercised and shares vested(13)18 5 
Share-based compensation expense14 14 
Change in non-controlling interest1 1 
Cumulative adjustment related to the adoption of ASC 326
(5)(5)
Balance as of September 30, 2020$16 $5,481 $258 $(1,019)$(49)$57 $4,744 
Balance as of June 30, 2021$15 $5,092 $452 $(766)$(29)$57 $4,821 
Net income202 1 203 
Other comprehensive loss(96)(1)(97)
Share buyback/cancellations— (64)(64)
Dividends declared ($0.1175 per share)
(181)(2)(183)
Options exercised and shares vested(28)110 82 
Settlement of forward contracts to purchase equity to meet share-based incentive plans, net of tax59 59 
Purchase of treasury shares(131)(131)
Share-based compensation expense15 15 
Change in non-controlling interest— —  
Balance as of September 30, 2021$15 $5,074 473 $(862)$(50)$55 $4,705 
See accompanying notes to condensed consolidated financial statements.

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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 global packaging company that employs approximately 46,000 people across approximately 225 significant manufacturing and support facilities in more than 40 countries. The Company develops and produces a broad range of packaging products including flexible packaging, rigid packaging containers, specialty cartons, and closures.

    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. It is management's opinion, however, that all material and recurring adjustments have been made that are necessary for a fair statement of its 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, 2021. There have been no material changes in 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 December 2019, the FASB issued updated guidance to simplify the accounting for income taxes by removing certain exceptions and improving the consistent application of U.S. GAAP in other tax accounting areas. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2020 with early adoption permitted. The guidance became effective for the Company on July 1, 2021 and the adoption did not have a material impact on the Company's unaudited condensed consolidated financial statements.    

Accounting Standards Not Yet Adopted

The Company considers the applicability and impact of all ASUs issued by the FASB. The Company determined that all other ASUs not yet adopted are either not applicable or are expected to have minimal impact on the Company's unaudited condensed consolidated financial statements at this time.

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Note 3 - Restructuring

2019 Bemis Integration Plan

    In connection with the acquisition of Bemis Company, Inc. ("Bemis"), the Company initiated restructuring activities in the fourth quarter of fiscal year 2019 aimed at integrating and optimizing the combined organization. As previously announced, the Company continues to target realizing at least $180 million of pre-tax synergies driven by procurement, supply chain, and general and administrative savings by the end of fiscal year 2022.

    The Company's total 2019 Bemis Integration Plan pre-tax integration costs are expected to be approximately $230 million to $240 million. The total 2019 Bemis Integration Plan costs include approximately $190 million to $200 million of restructuring and related expenses, net, and $40 million of general integration expenses. The Company estimates that net cash expenditures including disposal proceeds will be approximately $160 million to $170 million, of which $40 million relates to general integration expenses. As of September 30, 2021, the Company has incurred $137 million in employee related expenses, $39 million in fixed asset related expenses, $29 million in other restructuring and $29 million in restructuring related expenses, partially offset by a gain on disposal of a business of $51 million. The three months ended September 30, 2021 resulted in net outflows of $14 million, of which $12 million were payments related to restructuring and related expenditures. Cash payments of approximately $65 million to $70 million are expected for the balance of the fiscal year for restructuring and related expenses. The 2019 Bemis Integration Plan relates to the Flexibles segment and Corporate and is expected to be substantially completed by the end of fiscal year 2022.

    Restructuring related costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. General integration costs are not linked to restructuring. The Company believes the disclosure of restructuring related costs provides more information on the total cost of the 2019 Bemis Integration Plan. The restructuring related costs relate primarily to the closure of facilities and include costs to replace graphics, train new employees on relocated equipment, and anticipated losses on sale of closed facilities.
    
Other Restructuring Plans

    The Company has entered into other individually immaterial restructuring plans ("Other Restructuring Plans"). The Company's restructuring charges related to these plans were $1 million and $9 million for the three months ended September 30, 2021 and 2020, respectively. The Company's total incurred restructuring charges for Other Restructuring Plans primarily relate to the Flexibles reporting segment.

Consolidated Amcor Restructuring Plans

    The total costs incurred from the beginning of the Company's active material and other restructuring plans are as follows:
($ in millions)2019 Bemis Integration Plan (1)Other Restructuring PlansTotal Restructuring and Related Expenses (1)
Fiscal year 2019 net charges to earnings$48 $19 $67 
Fiscal year 2020 net charges to earnings60 18 78 
Fiscal year 2021 net charges to earnings68 6 74 
Fiscal year 2022 first quarter net charges to earnings7 1 8 
Expense incurred to date$183 $44 $227 
(1)Total restructuring and related expenses include restructuring related costs from the 2019 Bemis Integration Plan of $2 million, $15 million, $13 million, and $3 million for fiscal year 2019, fiscal year 2020, fiscal year 2021, and first quarter of fiscal year 2022, respectively.







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An analysis of the restructuring charges by type incurred follows:

Three Months Ended September 30,
($ in millions)20212020
Employee costs$2 $12 
Fixed asset related costs 1 
Other costs3 9 
Total restructuring costs, net$5 $22 


    An analysis of the Company's restructuring plan liability follows:
($ in millions)Employee CostsFixed Asset Related CostsOther CostsTotal Restructuring Costs
Liability balance at June 30, 2021$78 $ $17 $95 
Net charges to earnings2  3 5 
Cash paid(8)1 (4)(11)
Other non-cash (1) (1)
Foreign currency translation(4) (1)(5)
Liability balance at September 30, 2021$68 $ $15 $83 

    The costs related to restructuring activities have been presented on the unaudited condensed consolidated statements of income as restructuring and related expenses, net. 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 4 - Inventories, Net

    Inventories, net are summarized as follows:

($ in millions)September 30, 2021June 30, 2021
Raw materials and supplies$994 $905 
Work in process and finished goods1,237 1,193 
Less: inventory reserves(118)(107)
Total inventories, net$2,113 $1,991 

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Note 5 - 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 SegmentRigid Packaging SegmentTotal
Balance as of June 30, 2021$4,437 $982 $5,419 
Foreign currency translation(31)(3)(34)
Balance as of September 30, 2021$4,406 $979 $5,385 

Other Intangible Assets, Net

    Other intangible assets, net comprised the following:
 September 30, 2021
($ in millions)Gross Carrying AmountAccumulated Amortization and Impairment (1)Net Carrying Amount
Customer relationships$1,983 $(438)$1,545 
Computer software236 (158)78 
Other (2)327 (158)169 
Total other intangible assets$2,546 $(754)$1,792 

 June 30, 2021
($ in millions)Gross Carrying AmountAccumulated Amortization and Impairment (1)Net Carrying Amount
Customer relationships$1,986 $(405)$1,581 
Computer software233 (156)77 
Other (2)321 (144)177 
Total other intangible assets$2,540 $(705)$1,835 
(1)Accumulated amortization and impairment included $33 million and $34 million for September 30, 2021 and June 30, 2021, respectively, of accumulated impairment in the Other category.
(2)Other included $16 million and $17 million for September 30, 2021 and June 30, 2021, 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 during the three months ended September 30, 2021 and 2020 were $45 million and $46 million, respectively.
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Note 6 - 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. At September 30, 2021 and June 30, 2021, the carrying value of these financial instruments, excluding long-term debt, approximated fair value because of the short-term nature of these instruments.

    The fair value of long-term debt with variable interest rates approximates its carrying 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 capital leases) were as follows:
 September 30, 2021June 30, 2021
 Carrying ValueFair ValueCarrying ValueFair Value
($ in millions)(Level 2)(Level 2)
Total long-term debt with fixed interest rates (excluding commercial paper and finance leases)$3,894 $4,126 $4,325 $4,558 

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:

 September 30, 2021
($ in millions)Level 1Level 2Level 3Total
Assets
Commodity contracts$ $14 $ $14 
Forward exchange contracts 6  6 
Interest rate swaps 1  1 
Total assets measured at fair value$ $21 $ $21 
Liabilities
Contingent purchase consideration liabilities$ $ $16 $16 
Forward exchange contracts 21  21 
Total liabilities measured at fair value$ $21 $16 $37 

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 June 30, 2021
($ in millions)Level 1Level 2Level 3Total
Assets
Commodity contracts$ $14 $ $14 
Forward exchange contracts 7  7 
Interest rate swaps 19  19 
Total assets measured at fair value$ $40 $ $40 
Liabilities
Contingent purchase consideration liabilities$ $ $18 $18 
Forward exchange contracts 4  4 
Total liabilities measured at fair value$ $4 $18 $22 

    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. The Company's contingent purchase consideration liabilities consist of a $10 million liability that is contingent on future royalty income generated by Discma AG, a subsidiary acquired in March 2017 and a $6 million balance relating to consideration for small business acquisitions where payments are contingent on the Company vacating a certain property or performance criteria. The fair value of the contingent purchase consideration liabilities was determined for each arrangement individually. The fair value was determined using the income approach with significant inputs that are not observable in the market. Key assumptions include the 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 requires adjustment over the life for changes in risks and probabilities. Changes arising from modifications in forecasts related to contingent consideration are expected to be immaterial.

    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 assets and liabilities at fair value on a nonrecurring basis. The Company measures certain assets, including technology intangible assets, equity method and other investments, and other long-lived and intangible assets at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. 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.

During the three months ended September 30, 2021, long-lived assets with a carrying value of $12 million were written down to a fair value of zero as the Company's Durban, South Africa, manufacturing facility was destroyed in a fire as the result of general civil unrest. In addition, other long-lived assets in South Africa, with a carrying amount of $8 million, were written down to their estimated fair value of $4 million using level 3 inputs.

The Company sold its equity method investment in AMVIG Holdings Limited ("AMVIG") on September 30, 2020. Refer to Note 14, "Disposals."

    The Company tests indefinite-lived intangibles for impairment when facts and circumstances indicate the carrying value may not be recoverable from their undiscounted cash flows. During the three months ended September 30, 2021, and 2020, there were no triggering events and no indefinite-lived intangible impairment charges recorded.

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Note 7 - Derivative Instruments

    The Company periodically uses derivatives and other financial instruments to hedge exposures to interest rate, commodity price, and currency risks. The Company does not hold or issue financial instruments for speculative or trading purposes. For hedges that meet the hedge accounting criteria, the Company, at inception, formally designates and documents the instrument 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 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 under other non-operating income, net.

In July 2021, the Company terminated $400 million of its receive-fixed/pay-variable interest rate swaps that were designated as fair value hedges and received $2 million in net proceeds. This termination was in association with the full redemption of the $400 million 4.50% U.S. dollar notes due October 2021, completed on July 15, 2021. The Company also terminated an aggregate amount of €300 million (equivalent of $357 million) receive-fixed/pay-variable interest rate swaps and received €13 million (equivalent of $15 million) in net proceeds. These interest rate swaps, which were to mature in March 2023, were designated as fair value hedges against €300 million of principal on the 2.75% Euro bonds due March 2023. The gain on the termination of the aforementioned swaps is deferred and is being amortized to interest income over the remaining contractual term of the 2.75% Euro bonds due March 2023.

    As of September 30, 2021, and June 30, 2021, the total notional amount of the Company’s receive-fixed/pay-variable interest rate swaps accounted for as fair value hedges was $500 million and $1,257 million, respectively.

Foreign Currency Risk

    The Company manufactures and sells its products and finances its 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 unaudited condensed 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 September 30, 2021, and June 30, 2021, the notional amount of the outstanding forward contracts was $1.8 billion and $1.1 billion, 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. 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 a central treasury unit. Changes in the fair value of commodity hedges are recognized in
19



AOCI. The cumulative amount of the hedge is recognized in the unaudited condensed consolidated statements of income when the forecasted transaction is realized.

    The Company had the following outstanding commodity contracts to hedge forecasted purchases:
 September 30, 2021June 30, 2021
CommodityVolumeVolume
Aluminum18,033 tons22,629 tons
PET resin2,087,502 lbs.6,312,764 lbs.

    The following table provides the location of derivative instruments in the unaudited condensed consolidated balance sheets:
($ in millions)Balance Sheet LocationSeptember 30, 2021June 30, 2021
Assets
Derivatives in cash flow hedging relationships:
Commodity contractsOther current assets$14 $14 
Forward exchange contractsOther current assets2 3 
Derivatives in fair value hedging relationships:
Interest rate swapsOther current assets1 15 
Derivatives not designated as hedging instruments:
Forward exchange contractsOther current assets4 4 
Total current derivative contracts21 36 
Derivatives in fair value hedging relationships:
Interest rate swapsOther non-current assets 4 
Total non-current derivative contracts 4 
Total derivative asset contracts$21 $40 
Liabilities
Derivatives in cash flow hedging relationships:
Forward exchange contractsOther current liabilities3 2 
Derivatives not designated as hedging instruments:
Forward exchange contractsOther current liabilities18 2 
Total current derivative contracts21 4 
Total non-current derivative contracts  
Total derivative liability contracts$21 $4 

    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 Gain (Loss) Reclassified from AOCI into Income (Effective Portion)Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Three Months Ended September 30,
($ in millions)20212020
Derivatives in cash flow hedging relationships
Commodity contractsCost of sales$6 $(3)
Treasury locksInterest expense(1)(1)
Total$5 $(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 September 30,
($ in millions)20212020
Derivatives not designated as hedging instruments
Forward exchange contractsOther expenses, net$(13)$7 
Cross-currency interest rate swapsOther expenses, net (4)
Total$(13)$3 

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 September 30,
($ in millions)20212020
Derivatives in fair value hedging relationships
Interest rate swapsInterest expense$(4)$(1)
Total$(4)$(1)

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Note 8 - Components of Net Periodic Benefit Cost

    Net periodic benefit cost for benefit plans included the following components:
Three Months Ended September 30,
($ in millions)20212020
Service cost$6 $6 
Interest cost