Annual Meeting
We cordially invite you to attend the Annual Meeting
of Shareholders of Common Stock to be held at 9:30 a.m. on
Thursday, April 27, 2006 at the Company’s Corporate
Headquarters, One Crown Way, Philadelphia,
Pennsylvania. A formal notice of this Meeting, together
with the Proxy Statement and Proxy Card, will be mailed to
each Shareholder of Common Stock of record as of the close
of business on March 14, 2006, and only holders of record
on said date will be entitled to vote. The Board of Directors
of the Company requests the Shareholders of Common
Stock to sign Proxies and return them in advance of the
Meeting or register your vote by telephone or through the
internet.
Table of Contents
Financial Highlights
Letter to Shareholders
Board of Directors & Corporate Officers
2005 Annual Report on Form 10-K
Division Officers
Investor Information
Financial Highlights
(in millions, except share, per share, employee, and statistical data)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income /(loss) from continuing operations. . (1) . . . . . . . . . . . . . . .
Per average common share:
Income / (loss) from continuing operations . . . . . . . . . . . . . . . . .
Book value. . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market price (closing). . (3) . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ equity/(deficit)
2005
$ 6,908
900)
361)
(000,351)
($ 2.12)
1.42)
(
19.53
$ 6,545
3,403
(000236)
2004
$ 6,531
805
361
16
$ 00.09
1.68
13.74
$ 8,125
3,872
277
Depreciation and amortization
$00,249
Free cash flow . .(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 000, 0(000,314)
. . . . . . . . . . . . . . . . . . . . . . . .
$00,263
266
Number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares outstanding at December 31 . . . . . . . . . . . . . . . . . . . . . .
Average shares outstanding - diluted . . . . . . . . . . . . . . . . . . . . .
24,055
166,712,081
171,893,739
27,645
165,559,558
168,809,775
% Change
5.8
11.8
0.0
000
0.0
0.0
42.1
(19.4)
(12.1)
( 0.0)
( 5.3)
( 00.0)
(13.0)
0.7
1.8
Note: Sales and gross profit have been recast for 2004 to exclude the results of the plastic closures business which was sold in October 2005.
(1) Includes after-tax (i) restructuring charges of $14 in 2005 and $5 in 2004; (ii) (provision)/gain for asset impairments and sale of assets of ($10) or ($0.06) per share in 2005 and
$41 or $0.25 per share in 2004; (iii) provision for asbestos of $10 or $0.06 per share in 2005 and $35 or $0.21 per share in 2004; (iv) loss from early extinguishments of debt of
$376 or $2.27 per share in 2005 and $34 or $0.20 per share in 2004 and (v) foreign exchange gains/(losses) on U.S. dollar-denominated debt in Europe of ($87) or ($0.52) per share
in 2005 and $67 or $0.40 per share in 2004.
(2) Book value is defined by the Company as total shareholders’ equity divided by shares outstanding at December 31.
(3) Source; New York Stock Exchange - Composite Transactions.
(4) Includes prepayment premium and fees of $278 from the repurchase of a portion of the Company’s senior secured notes and also includes advanced pension contributions
of $266.
Reconciliation of a Non-GAAP Financial Measure:
Free cash flow is not defined under U.S. generally accepted accounting principles (GAAP). Free cash flow should not be considered
in isolation or as a substitute for cash flow data prepared in accordance with GAAP and may not be comparable to calculations of a
similarly titled measure by other companies.
The Company utilizes free cash flow for planning and evaluating investment opportunities and as a measure of its ability to incur and
service debt. Free cash flow is derived from the Company’s cash flow statements and a reconciliation to free cash flow is provided
below.
Reconciliation to Free Cash Flow
Net cash (used for)/provided by operating activities
. . . . . . . . . . .
Less: Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . .
Free cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2005
2004
($0122)
(00192)
————
($0314)
————
————
$0404
(00138)
—————
$ 266
————
—————
CROWN
Dear Fellow Shareholders:
Once again I am pleased to report a year of substantial improvements and to advise you
that Crown finished 2005 a much stronger Company. Overall, we achieved our fourth consecutive
year of significant progress on the long term strategy for growth of the Company's core business
and increased economic profit that we initiated in 2001. Our business performed solidly despite
significantly higher steel, aluminum, energy and transportation costs.
By working closely with our customers, emphasizing our World Class Performance system
and being ever vigilant on controlling costs, we continued to generate free cash flow and this along
with proceeds from divestitures enabled us to further delever the Company and strengthen our
balance sheet. Net sales in 2005 grew to $6.9 billion, a 5.8% increase over the prior year. Through
increased operating efficiencies, productivity gains across the Company and lower pension
expenses, gross profit grew to $900 million, up 11.8% over 2004, and gross profit as a percentage of
net sales expanded 70 basis points to 13.0%.
Consistent with our vision and strategy to maintain focus on Crown's core rigid metal
packaging businesses around the world, we sold our non-core Global Plastic Closures business in
the fourth quarter and utilized the net proceeds to repay debt and for growth oriented capital
investments.
Following the sale, we completed a milestone $2.4 billion debt refinancing plan structured
to reduce our interest expense, improve cash flow and liquidity, and extend the maturity of our
debt. By doing so, we provided the Company with a stable capital structure with an appropriate
amount of pre-payable debt for added future flexibility.
Volumes in all three of our operating divisions, the Americas, Europe and Asia Pacific,
firmed up in 2005 which resulted in higher net sales across these business segments. In the
Americas division, 2005 revenues grew 5% and gross profit was up just over 18%. This was
primarily due to increased operating efficiencies and productivity gains. The European division's
net sales and gross profit increased 5% and 9.3%, respectively. In the Asia Pacific division,
continued volume and market growth were reflected in its revenues growing 17% over the year,
exceeding our expectations. Compared to prior year, gross profit was down 1% reflecting the
competitive Chinese market in this fast growing and still developing region.
We have been serving the Middle East and Asia Pacific markets for over 25 years, regions
which provide exciting opportunities as economic growth and consumer spending accelerates. To
capture more of this growth, we added beverage can capacity in Tunisia and announced plans to
expand our facilities in Jordan, Dubai, Saudi Arabia, and Vietnam, and to build a new facility in
Kazakhstan. More recently, we announced plans to build a new beverage can plant in Cambodia.
CROWN
These actions will ensure we can continue to meet the growing needs of our customers
across the Middle East and Asia for world-class cans, ends and technical support.
Technology and innovation are at the core of Crown's success. We believe they enable us to
provide added value to our customers, which in turn improves margins and profitability. By
innovating, we are able to enhance product mix, differentiate our products from our competition
and reduce the material that we use in our products.
For example, in the current environment of increased aluminum prices, our patented
SuperEnd® technology has become even more important. Late in the year, we entered into a
licensing agreement with Showa Aluminum Can Corporation to produce and sell SuperEnd®
beverage can ends in Japan, a new market for Crown's products. We believe SuperEnd® is
becoming the global standard for beverage can ends and to date more than 60 billion SuperEnd®
ends have been sold around the world by Crown and our licensees.
Crown has always taken pride in our technological leadership in the industry. Our
proprietary and award winning metal-shaping technology is unique to the industry and is finding
increasing favor with our customers. This brand building packaging technology is currently being
used for beverage cans, food cans and aerosol containers for both consumer and industrial products
as a way for our customers to distinguish their products on the shelf and as a deterrent to
counterfeiters in international markets. Equally important, this allows us to improve margins
through a higher value-added product.
One of Crown's technologically advanced aerosol packages was recently honored by The
Metal Packaging Manufacturers' Association with the industry's most prestigious award, the
Supreme Gold Award for uniquely shaped cans with a specially embossed finish. The can was
designed for launch of a reformulated version of SICO's KING tire repair and inflator.
Our new metal vacuum closure technology is also gaining market acceptance. We have had
a great deal of success with our IDEAL Closure, a composite of plastic and metal, which gives the
customer significant marketing and performance advantages. We are also excited about the new
family of baby food metal closures that are being introduced in Europe this year.
During the year, we strengthened our Board of Directors with the addition of Jim Turner,
the former Chairman, President and Chief Executive Officer of the Dr. Pepper/Seven Up Bottling
Group. With his first hand knowledge and proven track record in the beverage industry, Jim has
already provided us with important insight into future growth opportunities as well as in other
important areas.
CROWN
We take pride in our achievements during 2005 and recognize the necessity for further
improvements in operating efficiencies and productivity gains as we move into 2006. I am very
proud of our employees around the world. They once again demonstrated passion and
commitment and we are grateful for their hard work, and the strong results they produced
in 2005.
We are focused on operational excellence, world class manufacturing performance and
producing the highest quality products for our customers and are also committed to Crown's
heritage of innovative brand building packaging and technologically advanced solutions to our
customers' ever changing packaging needs.
Looking ahead, we are excited about our organic growth opportunities in the emerging
markets of the Middle East, Southeast Asia, China and Eastern Europe. At the same time, we
recognize the fast changing world marketplace we operate in and the demand customers,
suppliers and competitors put on us to change with it.
We are sure your company is equal to the task.
Thank you for your interest and support.
Best regards,
John W. Conway
Chairman of the Board, President
and Chief Executive Officer
March 20, 2006
Jenne K. Britell (b)
Chairman and Chief Executive
Officer of Structured Ventures; former
Executive Officer of several General
Electric financial services companies;
also a Director of Lincoln National
Corporation, Aames Investment
Corporation and U.S.-Russia Investment
Fund, Quest Diagnostics and West
Pharmaceutical Services
John W. Conway ( a )
Chairman of the Board, President and
Chief Executive Officer; also a Director
of PPL Corporation
Arnold W. Donald (c)
President and Chief Executive Officer
of The Juvenile Diabetes Research
Foundation International; former
Chairman and Chief Executive Officer
of Merisant Company; also a Director of
Oil-Dri Corporation of America,
Carnival Corporation, The Scotts
Company, The Laclede Group and
Russell Corporation
Board of Directors
Marie L. Garibaldi (d)
Former Associate Justice of the
Supreme Court of New Jersey
William G. Little (b, d)
Former Chairman and Chief Executive
Officer of West Pharmaceutical Services;
also a Director of Constar International
and Ligocyte Pharmaceuticals
Hans J. Löliger (c, d)
Vice Chairman of Winter Group;
former Chief Executive Officer of SICPA
Group; also a Director of Fritz Meyer
Holding, Cronat Holding and Bühler
Holding
Thomas A. Ralph
Partner – Dechert LLP
Hugues du Rouret (b)
Chairman of Beaulieu Patrimoine;
former Chairman and Chief Executive
Officer of Shell France; also a Director of
Gras Savoye and Banque Saint-Olive
Alan W. Rutherford (a)
Vice Chairman of the Board,
Executive Vice President and
Chief Financial Officer
Harold A. Sorgenti (a, c, d)
General Partner of Sorgenti
Investment Partners; former Chief
Executive Officer of Arco Chemical and
former Chairman of Freedom Chemical;
also a Director of Philadelphia Facilities
Management Corporation
Jim L. Turner (c)
Principal of JLT Beverages L.P.; former
Chairman, President and Chief
Executive Officer of Dr. Pepper/Seven
Up Bottling Group; also Treasurer of
American Beverage Association and a
Director of Baylor Health Care System,
Baylor University and Dean Foods
William S. Urkiel (b)
Former Senior Vice President and Chief
Financial Officer of IKON Office Solutions
a – Executive
b – Audit
c – Compensation
d – Nominating and Corporate Governance
Committees
Corporate Officers
John W. Conway
Chairman of the Board, President
and Chief Executive Officer
William T. Gallagher
Senior Vice President, Secretary
and General Counsel
Thomas A. Kelly
Vice President and
Corporate Controller
Alan W. Rutherford
Vice Chairman of the Board,
Executive Vice President and
Chief Financial Officer
Daniel A. Abramowicz
Executive Vice President –
Corporate Technology
and Regulatory Affairs
Timothy J. Donahue
Senior Vice President – Finance
Karen E. Berigan
Vice President – Corporate Risk
Management
Torsten J. Kreider
Vice President – Planning
and Development
Michael B. Burns
Vice President and Treasurer
Harry E. Mumma
Vice President – Internal Audit
Michael F. Dunleavy
Vice President – Corporate Affairs
and Public Relations
Rosemary M. Haselroth
Assistant Secretary
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
[ ] 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 0-50189
Crown Holdings, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of incorporation or organization)
One Crown Way, Philadelphia, PA
(Address of principal executive offices)
75-3099507
(Employer Identification No.)
19154
(Zip Code)
Registrant’s telephone number, including area code: 215-698-5100
_______________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class
Common Stock $5.00 Par Value
Common Stock Purchase Rights
7% Notes Due 2006
Guarantees of 7% Notes Due 2006
7 3/8% Debentures Due 2026
7 ½% Debentures Due 2096
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(Title of Class)
_______________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ X ] No [ ]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [ X ]
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 filings
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K. [ X ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition
of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ X ] Accelerated filer [ ] Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
As of June 30, 2005, 166,336,672 shares of the Registrant’s Common Stock, excluding shares held in Treasury, were issued and outstanding, and the
aggregate market value of such shares held by non-affiliates of the Registrant on such date was $2,366,970,843 based on the New York Stock Exchange
closing price for such shares on that date.
As of March 3, 2006, 167,534,780 shares of the Registrant’s Common Stock were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Parts Into Which Incorporated
Proxy Statement for the Annual Meeting of Shareholders to be held April 27, 2006 Part III to the extent described therein
Crown Holdings, Inc.
2005 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Item 1
Business ...........................................................................................................................................1
Item 1A
Risk Factors......................................................................................................................................8
Item 1B
Unresolved Staff Comments...........................................................................................................17
Item 2
Properties .......................................................................................................................................17
Item 3
Legal Proceedings..........................................................................................................................19
Item 4
Submission of Matters to a Vote of Security Holders .....................................................................20
PART II
Item 5
Market for Registrant’s Common Stock and Related Stockholder Matters ....................................20
Item 6
Selected Financial Data..................................................................................................................21
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations .........23
Item 7A
Quantitative and Qualitative Disclosures About Market Risk .........................................................36
Item 8
Financial Statements, Supplementary Data and Financial Statement Schedule...........................37
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ........97
Item 9A
Controls and Procedures................................................................................................................97
Item 9B
Other Information............................................................................................................................98
PART III
Item 10
Directors and Executive Officers of the Registrant.........................................................................98
Item 11
Executive Compensation................................................................................................................98
Item 12
Security Ownership of Certain Beneficial Owners and Management
and Related Shareholder Matters ............................................................................................98
Item 13
Certain Relationships and Related Transactions ...........................................................................98
Item 14
Principal Accountant Fees and Services........................................................................................98
Item 15
Exhibits and Financial Statement Schedules .................................................................................99
SIGNATURES ......................................................................................................................................................109
PART IV
Crown Holdings, Inc.
PART I
ITEM 1.
BUSINESS
In connection with its refinancing and reorganization in 2003, Crown Cork & Seal Company, Inc. formed a
new public holding company named Crown Holdings, Inc. (the “Company” or the “Registrant”) (where the
context requires, the “Company” shall include reference to the Company and its consolidated subsidiary
companies). Crown Cork & Seal Company, Inc. is now a wholly-owned subsidiary of the Company. The
consolidated financial statements include the accounts of the Company. The Company is a Pennsylvania
corporation.
The Company is a worldwide leader in the design, manufacture and sale of packaging products for
consumer goods. The Company’s primary products include steel and aluminum cans for food, beverage,
household and other consumer products and metal caps and closures. These products are manufactured
in the Company’s plants both within and outside the United States and are sold through the Company’s
sales organization to the soft drink, food, citrus, brewing, household products, personal care and various
other industries. At December 31, 2005, the Company operated 155 plants along with sales and service
facilities throughout 42 countries and had 24,055 employees. Consolidated net sales for the Company in
2005 were $6.9 billion with over 70% of 2005 net sales derived from operations outside the United States,
of which 75% of these non-U.S. revenues were derived from operations in the Company’s European
Division.
On October 11, 2005, the Company completed the sale of its plastic closures business which had 29
facilities located in 13 countries across Europe, North America and Asia, and had approximately 3,500
employees. The sales amounts presented herein have been recast to exclude the results from the
divested business. Further information about the results of operations of the plastic closures business is
contained under Note B to the consolidated financial statements.
DIVISIONS AND OPERATING SEGMENTS
The Company’s business is organized geographically within three divisions, Americas, European and
Asia-Pacific. Within the Americas and European Divisions the Company is generally organized along
product lines. The Company’s reportable segments within the Americas Division are Americas Beverage
and North America Food. The Company’s reportable segments within the European Division are Europe
Beverage, Europe Food and Europe Specialty Packaging. Americas Beverage includes beverage can
operations in the U.S., Canada, Mexico and South and Central America. North America Food includes
food can and metal closure operations in the U.S. and Canada. Europe Beverage includes beverage can
operations in Europe and the Middle East. Europe Food includes food can and metal closure operations
in Europe and Africa. Europe Specialty Packaging includes specialty packaging operations in Europe.
Prior period segment reporting in this annual report on Form 10-K has been conformed to the current
presentation. No operating segments within the Asia-Pacific Division are included as reportable
segments.
Financial information concerning the Company’s operating segments, and within selected geographic
areas, is set forth within Management’s Discussion and Analysis of Financial Condition and Results of
Operations and under Note Y to the consolidated financial statements.
AMERICAS DIVISION
The Americas Division includes operations in the United States, Canada, Mexico and South and Central
America. These operations manufacture beverage, food and aerosol cans and ends, specialty packaging,
metal closures and caps, and health and beauty care packaging. At December 31, 2005, the division
operated 59 plants in 9 countries and had approximately 7,500 employees. In 2005, the Americas
Division had net sales of $2.9 billion compared to $2.7 billion in 2004. Approximately 72% of division net
sales were derived from within the United States.
Within the Americas Division the Company has determined that there are two reportable segments:
Americas Beverage and North America Food. Other operating segments consist of North America
Aerosol, Health and Beauty Care, and plastic packaging and food can operations in Latin America.
-1-
Americas Beverage
Crown Holdings, Inc.
The Americas Beverage segment manufactures metal beverage cans and ends and crowns. For 2005,
Americas Beverage had net sales of approximately $1.7 billion (24.0% of consolidated net sales) and
segment income (as defined under Note Y to the consolidated financial statements) of $197 million.
North America Food
The North America Food segment manufactures aluminum and steel food cans and ends and metal
closures. For 2005, North America Food had net sales of $754 million (10.9% of consolidated net sales)
and segment income (as defined under Note Y to the consolidated financial statements) of $42 million.
EUROPEAN DIVISION
The European Division includes operations in Europe, the Middle East and Africa. These operations
manufacture beverage, food and aerosol cans and ends, specialty packaging, metal closures and caps,
high density polyethylene (“HDPE”) containers, health and beauty care packaging and canmaking
equipment. At December 31, 2005 the division operated 82 plants in 27 countries and had approximately
14,000 employees. Net sales in 2005 were $3.6 billion. Net sales in the United Kingdom of $799 million
and in France of $711 million represented 22.0% and 19.6% of division net sales in 2005.
Within the European Division the Company has determined that there are three reportable segments:
Europe Beverage, Europe Food and Europe Specialty Packaging. Other operating segments consist of
Europe Aerosol and Europe Specialty Plastics.
Europe Food
The Europe Food segment manufactures aluminum and steel food cans and ends, and metal closures.
Europe Food had net sales in 2005 of approximately $1.8 billion (26.7% of consolidated net sales) and
segment income (as defined under Note Y to the consolidated financial statements) of $198 million.
Europe Beverage
The Europe Beverage segment manufactures metal beverage cans and ends and closures. Europe
Beverage had net sales in 2005 of approximately $1.0 billion (13.9% of consolidated net sales) and
segment income (as defined under Note Y to the consolidated financial statements) of $140 million.
Europe Specialty Packaging
The Europe Specialty Packaging segment manufactures a wide variety of specialty containers, with
numerous lid and closure variations. Within the consumer market, the Company manufactures a wide
variety of tinplate containers for cookies and cakes, tea and coffee, confectionery, giftware, personal care,
tobacco, wine and spirits, as well as non-processed food products. In the industrial market, the Company
manufactures tinplate containers for paints and inks, do-it-yourself products, and chemical, automotive
and household products.
In 2005 Europe Specialty Packaging had net sales of $406 million (5.9% of consolidated net sales) and
segment income (as defined under Note Y to the consolidated financial statements) of $20 million.
ASIA-PACIFIC DIVISION
The Asia-Pacific Division manufactures aluminum beverage cans and ends, steel food and aerosol cans
and ends, and metal caps. At December 31, 2005, the division operated 14 plants in 6 countries and had
approximately 1,900 employees. Net sales in 2005 were $422 million (6.1% of consolidated net sales)
and beverage can and end sales were approximately 79% of division sales.
No operating segments within the division are included as reportable segments.
-2-
Crown Holdings, Inc.
PRODUCTS
Beverage Cans
The Company supplies beverage cans and ends and other packaging products to a variety of beverage
and beer companies, including Anheuser-Busch, Cadbury Schweppes, Coca-Cola, Cott Beverages,
Heineken, InBev, Kroger, Pepsi-Cola and Scottish Courage. The Company’s beverage business is built
around local, regional and global markets, which has served to develop the Company’s understanding of
global consumer expectations.
The beverage market is dynamic and highly competitive, with each packaging manufacturer striving to
satisfy consumers’ ever-changing needs. The Company competes by offering its customers broad market
knowledge, resources at all levels of its worldwide organization and extensive research and development
capabilities that have enabled the Company to provide its customers with innovative products. The
Company meets its customers’ beverage packaging needs with an array of two-piece beverage cans and
ends, and metal bottle caps. Recent innovations include the SuperEnd™ beverage can end and shaped
beverage cans.
Beverage can manufacturing is capital intensive, requiring significant investment in tools and machinery.
The Company seeks to effectively manage its invested capital and is continuing its efforts to reduce can
and end diameter, lighten its cans, reduce non-metal costs and restructure production processes.
Food Cans and Closures
The Company manufactures a variety of food cans and ends, including two-and three-piece cans in
numerous shapes and sizes, and sells food cans to food marketers such as Bonduelle, Campbell Soup,
ConAgra, Continentale, H.J. Heinz, Mars, Menu Foods, Nestlé and Premier Foods.
Technologies used to produce these cans include three-piece welded, two-piece drawn and wall-ironed,
and two-piece drawn and redrawn. The Company has also introduced its Lift Off™ series of food ends,
including its EOLE™ (easy-open low energy) full pull-out steel food can ends and Peel Seam,™ a flexible
aluminum foil laminated end. The Company’s commitment to innovation has led to developments in
packaging materials, surface finishes, can shaping, lithography, sealing and opening techniques and
environmental performance.
The Company manufactures conventional and easy-open ends for a variety of heat-processed and dry
food products including fruits and vegetables, meat and seafood, soups, ready-made meals, infant
formula, coffee and pet food. In addition, the Company supplies a range of coil shearing, specialty
coating, advanced printing and decoration services.
The Company offers a wide variety of metal closures and sealing equipment solutions to leading
marketers such as Abbott Laboratories, Altria Group (Kraft Foods), H. J. Heinz, Nestlé, Premier Foods
and Unilever from a network of metal closure plants around the world. The Company supplies total
packaging solutions, including closures, capping systems and services while working closely with
customers, retailers and glass manufacturers to develop innovative closure solutions and meet customer
requirements.
The Company strives to continuously improve its metal closure design and printing technology to better
support customers’ marketing programs and promotional activities. The Company offers expertise in
closure design and decoration, ranging from high quality printing of the closure in up to nine colors, to
inside-the-cap printing, which offers customers new promotional possibilities.
-3-
Aerosol Cans
Crown Holdings, Inc.
The Company’s customers for aerosol cans and ends include manufacturers of personal care, food,
household and industrial products, including CCL Industries, Gillette, S.C. Johnson and Unilever. The
aerosol can business, while highly competitive, is marked by its high value-added service to customers.
Such value-added services include, among others, the ability to manufacture multiple sizes and design
customer labels and multiple color schemes.
Specialty Packaging
The Company’s specialty packaging business is located primarily in Europe and serves many major
European and multinational companies. The Company produces a wide variety of specialty containers,
with numerous lid and closure variations. The Company’s specialty packaging customers include Altria
Group (Kraft Foods), Akzo Nobel, Bristol-Meyers Squibb, Cadbury Schweppes, Danone, Nestlé, Sigma,
Teisseire and United Biscuits.
In the consumer market, the Company manufactures a wide variety of tinplate containers for cookies and
cakes, tea and coffee, confectionery, giftware, personal care, tobacco, wines and spirits, as well as non-
processed food products. In the industrial market, the Company manufactures tinplate containers for
paints and inks, do-it-yourself products, and chemical, automotive and household products.
Health and Beauty Care
The Company produces fragrance closures and packaging for lipsticks and eyecare products for leading
cosmetics and beauty care companies. As a global, single-source packaging partner, the Company
strives to use innovative design and engineering coupled with advanced manufacturing and decorating
capabilities to meet the high quality standards and the demanding deadlines of its global customers. The
Company’s health and beauty customers include Avon, Esteé Lauder, L’Oreal and Procter & Gamble.
SALES AND DISTRIBUTION
Global marketers continue to demand the consolidation of their supplier base under long-term
arrangements and qualify those suppliers on the basis of their ability to provide global service to create
innovative designs and technologies in a cost-effective manner.
With its global reach, the Company markets and sells products to customers through its own sales and
marketing staff located within each operating segment. Regional sales personnel support the segments’
staffs. Contracts with global suppliers are centrally negotiated, although products are ordered through and
distributed directly by each plant. Facilities are generally located in proximity to their respective major
customers. The Company maintains contact with customers in order to develop new business and to
extend the terms of its existing contracts.
Many customers provide the Company with quarterly or annual estimates of product requirements along
with related quantities pursuant to which periodic commitments are given. Such estimates assist the
Company in managing production and controlling working capital levels. The Company schedules its
production to meet customer requirements. Because the production time for the Company’s products is
short, any backlog of customer orders in relation to overall sales is immaterial.
COMPETITION
Most of the Company’s products are sold in highly competitive markets, primarily based on price, quality,
service and performance. The Company competes with other packaging manufacturers as well as with
fillers, food processors and packers who manufacture containers for their own use and for sale to others.
The Company’s multinational competitors include, but are not limited to, Alcoa Inc., Amcor Limited,
AptarGroup Inc., Ball Corporation, BWAY Corporation, Impress Holdings B.V., Metal Container
Corporation, Owens-Illinois Inc., Rexam Plc and Silgan Holdings Inc.
-4-
CUSTOMERS
Crown Holdings, Inc.
The Company’s largest customers consist of many of the leading manufacturers and marketers of
packaged products in the world. Consolidation trends among beverage and food marketers has led to a
concentrated customer base. The Company’s top ten global customers represented in the aggregate
approximately 25% of its 2005 net sales.
In each of the years in the period 2003 through 2005, no one customer of the Company accounted for
more than ten percent of the Company’s net sales. Each operating segment of the Company has major
customers and the loss of one or more of these major customers could have a material adverse effect on
an individual segment or the Company as a whole. Major customers include those listed above under the
Products discussion. In addition to sales to Coca-Cola and Pepsi-Cola, the Company also supplies
independent licensees of Coca-Cola and Pepsi-Cola.
RESEARCH AND DEVELOPMENT
The Company’s principal Research, Development & Engineering (RD&E) centers are located in Alsip,
Illinois and Wantage, England. The Company uses its centralized RD&E capabilities to (i) promote
development of value-added packaging systems, (ii) design cost-efficient manufacturing systems and
materials that also provide continuous quality improvement, (iii) support technical needs in customer and
vendor relationships, and (iv) provide engineering services for the Company’s worldwide packaging
activities. These capabilities allow the Company to identify market opportunities by working directly with
customers to develop new products, such as the creation of new packaging shapes.
Recent innovations include:
• Value-added shaped beverage, food and aerosol cans, such as Heineken’s keg can, the Stockmeyer
cauldron soup can and S.C. Johnson shaped containers for Glade air fresheners. This technology
has the capability of reinforcing brand image, providing differentiation on the shelf, and reducing
counterfeiting.
• The SuperEnd™ for beverage cans, which requires less metal than existing ends without any
reduction in strength. The SuperEnd™ also offers improved pourability, drinkability, ease-of-opening
and appearance.
• Patented composite (metal and plastic) closures including the Company’s “Ideal™” product line.
These closures offer improved barrier performance and tamper resistance while requiring less
strength to open than standard metal vacuum closures. The Company supplies composite closures
to a growing list of customers including Abbott Laboratories (Ensure), PepsiCo (Tropicana), Tree Top,
Smuckers and Unilever (Ragu).
• Next generation “Easy-open low energy” (“EOLE™”) full pullout steel food can ends. The end design
allows the end to be removed by hand with less strength than competing easy open food ends.
• A family of Peel Seam™ flexible lidding for cans that provides exceptional ease of opening, high
quality graphics and can still be applied with traditional closing technology.
• New specialty metal containers such as for Altoids Sours and the Bosch IXO metal tin.
The Company intends to selectively license its proprietary technologies and has licensed SuperEnd,™
can shaping and BiCan™ technology to Amcor Limited in Australia and New Zealand and SuperEnd™ to
Nampak Ltd. in South Africa, Showa in Japan, and Metal Container in North America.
The Company spent $47 million in 2005, $47 million in 2004 and $44 million in 2003 on RD&E activities.
Certain of these activities are expected to improve and expand the Company’s product lines in the future.
These expenditures include methods to improve manufacturing efficiencies and reduce unit costs,
principally raw material costs, by reducing the material content of containers while improving or
maintaining other physical properties, such as material strength. The costs incurred were associated with
a number of products in varying stages of development, but do not include product and/or process
developments occurring in the Company’s decentralized business units.
-5-
MATERIALS AND SUPPLIERS
Crown Holdings, Inc.
The Company in its manufacturing operations uses various raw materials, primarily aluminum and steel
for metals packaging. In general, these raw materials are purchased in highly competitive, price-sensitive
markets which have historically exhibited price and demand cyclicality. These materials and others used
in the manufacturing process have historically been available in adequate supply from multiple sources.
Generally, the Company’s principal raw materials are obtained from the major suppliers in the countries in
which it operates plants. Some plants in developing countries, which do not have local mills, obtain raw
materials from nearby, more-developed countries. The Company has agreements for what it considers
adequate supplies of raw materials. However, sufficient quantities may not be available in the future due
to, among other things, shortages due to excessive demand, weather or other factors, including
disruptions in supply caused by raw material transportation or production delays. From time to time,
some of the raw materials have been in short supply, but to date, these shortages have not had a
significant impact on the Company’s operations.
In 2005, consumption of steel and aluminum represented approximately 30% and 28%, respectively, of
consolidated cost of products sold, excluding depreciation and amortization. Due to the significance of
these raw materials to overall cost of products sold, raw material efficiency is a critical cost component of
the products manufactured. Supplier consolidations, recent government regulations, political unrest and
global or local demand for raw materials in the packaging and other industries, among other risk factors,
provide uncertainty as to the level of prices at which the Company might be able to source such raw
materials in the future. Moreover, the prices of aluminum and steel have at times been subject to volatility
and there can be no assurance that the Company will be able to fully recover higher raw material costs
from its customers.
During 2005, the average market price for steel used in packaging increased approximately 20%.
Suppliers have indicated that a shortage of raw materials to produce steel and increased global demand,
primarily in China, have combined to create the need for steel price increases for their customers. Several
suppliers have also indicated that the current market environment has resulted in a tighter supply of steel
which could require allocation among their steel purchasing customers. As a result of the steel price
increases, the Company in 2005 implemented significant price increases in all of its steel product
categories. There can be no assurance that the Company will be able to fully recover from its customers
the impact of steel price increases. In addition, if the Company is unable to purchase steel for a significant
period of time, its steel-consuming operations would be disrupted and if the Company is unable to fully
recover the higher cost of steel, its financial results may be adversely affected. The Company continues
to monitor this situation and the effect on its operations.
The average price of aluminum ingot on the London Metal Exchange (“LME”) increased approximately
16% in 2005. In an effort to reduce the impact of volatile aluminum prices on its Americas Beverage
operations, the Company in the Americas has entered into contracts with its suppliers of aluminum can
and end sheet that, by formula, guarantee prices for a period of six months. The pricing structure is
directly tied to a rolling average of the prior six months market price of aluminum ingot on the LME.
Further, ceiling prices have been established under these contracts that set maximum prices that the
Company would pay for aluminum. The Company’s beverage can and end sales contracts in the
Americas contain similar provisions that adjust selling prices to the customers based on changes in the
market price of aluminum.
In Europe and Asia, commodity and foreign currency forwards are used in combination with commercial
supply contracts with customers to manage the exposure to price volatility. There can be no assurance
that such instruments and contracts will effectively manage the Company’s exposure to price volatility.
In response to the volatility of raw material prices, ongoing productivity and cost reduction efforts in recent
years have focused on improving raw material cost management.
The Company’s manufacturing facilities are dependent, in varying degrees, upon the availability of
processed energy, such as natural gas and electricity. Certain of these energy sources may become
difficult or impossible to obtain on acceptable terms due to external factors which could increase the
Company’s costs or interrupt its business.
-6-
SEASONALITY
Crown Holdings, Inc.
The food can business is somewhat seasonal with the first quarter tending to be the slowest period as the
autumn packing period in the Northern Hemisphere ends and new crops are not yet planted. The industry
enters its busiest period in the third quarter when the majority of fruits and vegetables are harvested.
Weather represents a substantial uncertainty in the yield of food products and is a major factor in
determining the demand for food cans in any given year.
The Company’s beverage packaging business is predominately located in the Northern Hemisphere.
Generally, beverage products are consumed in greater amounts during the warmer months of the year
and sales and earnings have generally been higher in the second and third quarters of the calendar year.
The Company’s other businesses include aerosol, specialty and health and beauty care packaging,
canmaking equipment and various other products which tend not to be significantly affected by seasonal
variations.
ENVIRONMENTAL MATTERS
The Company’s operations are subject to numerous laws and regulations governing the protection of the
environment, disposal of waste, discharges into water, emissions into the atmosphere and the protection
of employee health and safety. Future regulations may impose stricter environmental requirements on the
packaging industry and may require additional capital investment. Anticipated future restrictions in some
jurisdictions on the use of certain coatings may require the Company to employ additional control
equipment or process modifications. The Company has a Corporate Environmental Protection Policy, and
environmental considerations are among the criteria by which the Company evaluates projects, products,
processes and purchases. There can be no assurance that current or future environmental laws or
remediation liabilities will not have a material effect on the Company’s financial condition, liquidity or
results of operations. Discussion of the Company’s environmental matters is contained within
Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Report
under the caption Environmental Matters, and under Note N to the consolidated financial statements.
WORKING CAPITAL
The Company generally uses cash during the first nine months of the year to finance seasonal working
capital needs. The Company’s working capital requirements are funded by its receivables securitization
and factoring programs, its revolving credit facility and from operations.
In 2005, the Company completed a refinancing that it expects will lower the interest rates on a portion of
its debt obligations and which extended their maturities. Further information relating to the Company’s
liquidity and capital resources and the refinancing is set forth within Management’s Discussion and
Analysis of Financial Condition and Results of Operations, of this Report under the caption Debt
Refinancing and under Note S and Note T to the consolidated financial statements.
Collection and payment periods tend to be longer for the Company’s operations located outside the U.S.
due to local business practices.
EMPLOYEES
At December 31, 2005, the Company employed approximately 24,000 people. Collective bargaining
agreements with varying terms and expiration dates cover approximately 14,850 employees. The
Company does not expect that renegotiations of the agreements expiring in 2006 will have a material
adverse effect on its results of operations, financial position or cash flow.
-7-
AVAILABLE INFORMATION
Crown Holdings, Inc.
The Company’s Internet web site address is www.crowncork.com. The Company’s Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those
reports filed by the Company with the U.S. Securities and Exchange Commission pursuant to sections
13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are accessible free of charge
through the Company’s web site as soon as reasonably practicable after the documents are filed with, or
otherwise furnished to, the U. S. Securities and Exchange Commission.
The Company’s Code of Business Conduct and Ethics, its Corporate Governance Guidelines, and the
charters of its Audit, Compensation and Nominating and Corporate Governance committees are available
on the Company’s web site. These documents are also available in print to any shareholder who requests
them. The Company intends to disclose amendments to and waivers of the Code of Business Conduct
and Ethics on the Company’s web site.
ITEM 1A.
RISK FACTORS
In addition to factors discussed elsewhere in this report and in “Management’s Discussion and Analysis,”
the following are some of the important factors that could materially and adversely affect the Company’s
business, financial condition and results of operations.
The substantial indebtedness of the Company could prevent it from fulfilling its obligations.
The Company is highly leveraged. As a result of its substantial indebtedness, a significant portion of the
Company’s cash flow will be required to pay interest and principal on its outstanding indebtedness and
the Company may not generate sufficient cash flow from operations, or have future borrowings available
under its credit facilities, to enable it to pay its indebtedness or to fund other liquidity needs. As of
December 31, 2005, the Company had approximately $3.4 billion of total indebtedness and shareholders’
deficit of $236 million. The Company’s earnings did not cover fixed charges by $306 million for 2005 as
discussed in Exhibit 12 to this Annual Report. The Company’s $544 million of first priority senior secured
notes mature on September 1, 2011 and its $800 million senior secured revolving credit facilities mature
on May 15, 2011. The Company’s $165 million and €287 million senior secured term loan facilities mature
on November 15, 2012.
The substantial indebtedness of the Company could:
• make it more difficult for the Company to satisfy its obligations;
• increase the Company’s vulnerability to general adverse economic and industry conditions,
including rising interest rates;
• limit the Company’s ability to obtain additional financing;
• require the Company to dedicate a substantial portion of its cash flow from operations to service
its indebtedness, thereby reducing the availability of its cash flow to fund future working capital,
capital expenditures and other general corporate requirements;
• require the Company to sell assets used in its business;
• limit the Company’s flexibility in planning for, or reacting to, changes in its business and the
industry in which it operates; and
• place the Company at a competitive disadvantage compared to its competitors that have less
debt.
-8-
Crown Holdings, Inc.
If its financial condition, operating results and liquidity deteriorate, the Company’s creditors may restrict its
ability to obtain future financing and its suppliers could require prepayment or cash on delivery rather than
extend credit to it. If the Company’s creditors restrict advances, the Company’s ability to generate cash
flows from operations sufficient to service its short and long-term debt obligations will be further
diminished. In addition, the Company’s ability to make payments on and refinance its debt and to fund its
operations will depend on the Company’s ability to generate cash in the future.
Some of the Company’s indebtedness is subject to floating interest rates, which would result in
its interest expense increasing if interest rates rise.
As of December 31, 2005, approximately $0.9 billion of the Company’s $3.4 billion of total indebtedness
was subject to floating interest rates. Changes in economic conditions could result in higher interest rates,
thereby increasing the Company’s interest expense and reducing funds available for operations or other
purposes. The Company’s annual interest expense was $361 million, $361 million and $379 million for
2005, 2004 and 2003, respectively. Based on the amount of variable rate debt outstanding as of
December 31, 2005, a 1% increase in variable interest rates would increase its annual interest expense
by $9 million. Accordingly, the Company may experience economic losses and a negative impact on
earnings as a result of interest rate fluctuations. Although the Company may use interest rate protection
agreements from time to time to reduce its exposure to interest rate fluctuations in some cases, it may not
elect or have the ability to implement hedges or, if it does implement them, they may not achieve the
desired effect. See “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Financial Position—Market Risk” in this report.
Notwithstanding the Company’s current indebtedness levels and restrictive covenants, the
Company may still be able to incur substantial additional debt, which could exacerbate the risks
described above.
The Company may be able to incur additional debt in the future. Although the Company’s credit facilities
and the indentures governing its outstanding notes contain restrictions on the Company’s ability to incur
indebtedness, those restrictions are subject to a number of exceptions. In addition, the Company may
consider investments in joint ventures or acquisitions, which may increase the Company’s indebtedness.
Adding new debt to current levels could intensify the related risks that the Company and its subsidiaries
now face.
Restrictive covenants in its debt agreements could restrict the Company’s operating flexibility.
The Company’s credit facilities and the indentures governing its secured and unsecured notes contain
affirmative and negative covenants that limit the ability of the Company and its subsidiaries to take certain
actions. These restrictions may limit the Company’s ability to operate its businesses and may prohibit or
limit its ability to enhance its operations or take advantage of potential business opportunities as they
arise. The credit facilities require the Company to maintain specified financial ratios and satisfy other
financial conditions. The credit facilities and the agreements or indentures governing the Company’s
secured and unsecured notes restrict, among other things and subject to certain exceptions, the ability of
the Company to:
• incur additional debt;
• pay dividends or make other distributions, repurchase capital stock, repurchase subordinated debt
and make certain investments or loans;
• create liens and engage in sale and leaseback transactions;
• create restrictions on the payment of dividends and other amounts to the Company from
subsidiaries;
• change accounting treatment and reporting practices;
-9-
Crown Holdings, Inc.
• enter into agreements restricting the ability of a subsidiary to pay dividends to, make or repay
loans to, transfer property to, or guarantee indebtedness of, the Company or any of its other
subsidiaries;
• sell or acquire assets and merge or consolidate with or into other companies; and
• engage in transactions with affiliates.
In addition, the indentures and agreements governing the Company’s outstanding unsecured notes limit,
among other things, the ability of the Company to enter into certain transactions, such as mergers,
consolidations, asset sales, sale and leaseback transactions and the pledging of assets. In addition, if
the Company or certain of its subsidiaries experience specific kinds of changes of control, the Company’s
credit facilities are due and payable and the Company must offer to repurchase outstanding notes.
The breach of any of these covenants by the Company or the failure by the Company to meet any of
these ratios or conditions could result in a default under any or all of such indebtedness. If a default
occurs under any such indebtedness, all of the outstanding obligations thereunder could become
immediately due and payable, which could result in a default under the Company’s other outstanding debt
and could lead to an acceleration of obligations related to other outstanding debt. The ability of the
Company to comply with the provisions of the credit facilities, the agreements or indentures governing
other indebtedness it may incur in the future and its outstanding secured and unsecured notes can be
affected by events beyond its control and, therefore, it may be unable to meet those ratios and conditions.
The Company is subject to certain restrictions that may limit its ability to make payments out of
the cash reserves shown in its consolidated financial statements.
The ability of the Company’s subsidiaries and joint ventures to pay dividends, make distributions, provide
loans or make other payments to the Company may be restricted by applicable state and foreign laws,
potentially adverse tax consequences and their agreements, including agreements governing their debt.
In addition, the equity interests of the Company’s joint venture partners or other shareholders in its non-
wholly owned subsidiaries in any dividend or other distribution made by these entities would need to be
satisfied on a proportionate basis with the Company. As a result, the Company may not be able to access
its cash flow to service its debt, and the amount of cash and cash flow reflected on its financial
statements may not be fully available to the Company.
Pending and future asbestos litigation and payments to settle asbestos-related claims could
reduce the Company’s cash flow and negatively impact its financial condition.
Crown Cork & Seal Company, Inc. (“Crown Cork”) is one of many defendants in a substantial number of
lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to
asbestos. In 1963, Crown Cork acquired a subsidiary that had two operating businesses, one of which is
alleged to have manufactured asbestos-containing insulation products. Crown Cork believes that the
business ceased manufacturing such products in 1963.
The Company recorded pre-tax charges of $10 million, $35 million, $44 million, $30 million and $51
million to increase its accrual for asbestos-related liabilities in 2005, 2004, 2003, 2002 and 2001,
respectively. As of December 31, 2005, Crown Cork’s accrual for pending and future asbestos-related
claims was $214 million and Crown Cork estimates that its range of potential liability for pending and
future asbestos claims that are probable and estimable is between $214 million and $272 million. Crown
Cork’s accrual includes estimates for probable costs for claims through the year 2015. The upper end of
Crown Cork’s estimated range of possible asbestos costs of $272 million includes claims beyond that
date. Assumptions underlying the accrual and the range of potential liability include that claims for
exposure to asbestos that occurred after the sale of the subsidiary’s insulation business in 1964 would
not be entitled to settlement payouts and that the Texas, Florida, Pennsylvania, Mississippi and Ohio
asbestos legislation described under Note M to the consolidated financial statements, are expected to
have a highly favorable impact on Crown Cork’s ability to settle or defend against asbestos-related claims
in those states, and other states where Pennsylvania law may apply.
-10-
Crown Holdings, Inc.
Crown Cork made cash payments of $29 million, $41 million, $68 million, $114 million and $118 million in
2005, 2004, 2003, 2002 and 2001, respectively, for asbestos-related claims. These payments have
reduced and any such future payments will reduce the cash flow available to Crown Cork for its business
operations and debt payments.
Asbestos-related pay-outs and defense costs may be significantly higher than those estimated by Crown
Cork because the outcome of this type of litigation (and, therefore, Crown Cork’s reserve and range of
potential liabilities) is subject to a number of assumptions and uncertainties, such as the number or size
of asbestos-related claims or settlements, the number of financially viable responsible parties, the extent
to which Texas, Florida, Ohio and Mississippi statutes relating to asbestos liability are upheld and/or
applied by Texas, Florida, Ohio and Mississippi courts, respectively, the extent to which a Pennsylvania
statute relating to asbestos liability is upheld and/or applied by courts in states other than Pennsylvania,
Crown Cork’s ability to obtain resolution without payment of asbestos-related claims by persons alleging
first exposure to asbestos after 1964, and the potential impact of any pending or future asbestos-related
legislation, including potential U.S. federal legislation described in the Company’s consolidated financial
statements. Accordingly, Crown Cork may be required to make payments for claims substantially in
excess of its accrual and range of potential liability, which could reduce the Company’s cash flow and
impair its ability to satisfy its obligations. As a result of the uncertainties regarding its asbestos-related
liabilities and its reduced cash flow, the ability of the Company to raise new money in the capital markets
is more difficult and more costly, and the Company may not be able to access the capital markets in the
future. Further information regarding Crown Cork’s asbestos-related liabilities is presented within
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the
headings, “Provision for Asbestos” and “Liquidity and Capital Resources” and under Note M to the
consolidated financial statements.
The Company has significant pension plan obligations worldwide and significant underfunded
U.S. post-retirement obligations, which could reduce its cash flow and negatively impact its
financial condition.
The Company sponsors various pension plans worldwide, with the largest funded plans in the U.K., U.S.
and Canada. In 2005, 2004, 2003, 2002 and 2001, the Company contributed $401 million, $171 million,
$122 million, $144 million and $118 million, respectively, to these plans and currently anticipates its 2006
funding to be at least $23 million. The Company may be required to make an additional contribution of
approximately £30 million to its U.K. plan in 2006 as a result of new legislation enacted in 2005. The
potential contribution arose from the 2005 sale of the Company’s plastic closures business. Pension
expense in 2006 is expected to decrease to approximately $43 million from $85 million in 2005, primarily
due to higher plan assets. A 0.25% change in the expected rate of return would change 2006 pension
expense by approximately $10 million. A 0.25% change in the discount rates would change 2006 pension
expense by approximately $7 million.
The Company has significant current funding obligations for pension benefits. The Company contributed
$323 million to its U.S. pension plan in 2005. Based on current assumptions, the Company has no
minimum U.S. pension funding requirement in calendar year 2006.
The Company’s U.S. pension plan is significantly underfunded, and its U.S. retiree medical plans are
unfunded. As of December 31, 2005, the Company’s U.S. pension plan was underfunded on a
termination basis by approximately $352 million. The Company’s pension plan assets consist primarily of
common stocks and fixed income securities. If the performance of investments in the plan does not meet
the Company’s assumptions, the underfunding of the pension plan may increase and the Company may
have to contribute additional funds to the pension plan. In addition, federal legislative proposals have
been made that could, if enacted, require the Company to significantly increase its funding obligations to
the plan and recently enacted legislation is expected to increase the premiums paid by the Company to
the Pension Benefit Guaranty Corporation. The actual impact of this legislation would depend upon the
requirements of the legislation, if enacted, contributions to and distributions from the pension plan and the
investment performance of the assets contributed to the pension plans. An increase in pension
contributions and expenses could decrease the Company’s cash available to pay its outstanding
obligations and its net income. While its U.S. pension plan continues in effect, the Company continues to
incur additional pension obligations.
-11-
Crown Holdings, Inc.
The Company’s U.S. pension plan is subject to the Employee Retirement Income Security Act of 1974, or
ERISA. Under ERISA, the Pension Benefit Guaranty Corporation, or PBGC, has the authority to terminate
an underfunded plan under certain circumstances. In the event its U.S. pension plan is terminated for any
reason while the plan is underfunded, the Company will incur a liability to the PBGC that may be equal to
the entire amount of the underfunding. In addition, as of December 31, 2005, the unfunded “accumulated
postretirement benefit obligation,” calculated in accordance with generally accepted accounting principles,
for retiree medical benefits was approximately $639 million, based on assumptions set forth under Note
W to the consolidated financial statements.
The Company could be liable for Constar’s pension obligations, which could decrease cash
available to satisfy its obligations and fund operations.
Under certain circumstances, the Company may be liable for the pension obligations of Constar
International Inc., the Company’s former subsidiary that engaged in an initial public offering in 2002,
which could decrease the Company’s cash available to pay its outstanding obligations. At the time of the
Constar initial public offering, Constar assumed sponsorship of the Company’s pension plan which
covered all active and former hourly employees and certain former salaried employees of Constar. Such
plan was underfunded by approximately $24 million when it was assumed by Constar. The Constar
pension plan is subject to ERISA. Under ERISA, the PBGC has the authority to terminate an underfunded
plan under certain circumstances. If the Constar pension plan is terminated within five years of the
completion of the Constar initial public offering, the PBGC may bring a claim under ERISA to hold the
Company liable for the Constar pension plan underfunding if it is determined that a principal purpose of
the Constar initial public offering was to evade pension liability. The Company does not believe that is the
case. The actual amount for which the Company may become liable in the future depends on the future
funding status of the Constar pension plan. In any case, if this claim is brought against the Company in
the future, it may be costly to defend and the claim may reduce the Company’s liquidity.
The Company has had net operating losses in the past and may not generate profits in the future.
Operating losses could limit the Company’s ability to service its debt and fund its operations. For the fiscal
years ended December 31, 2005, 2003, 2002 and 2001, the Company had consolidated losses from
continuing operations before cumulative effect of a change in accounting of approximately $351 million,
$74 million, $231 million and $1.0 billion, respectively. The Company had income from continuing
operations of $16 million for the fiscal year ended December 31, 2004. However, the Company may not
generate net income in the future.
The Company’s principal markets are subject to overcapacity and intense competition, which
could reduce the Company’s net sales and net income.
The worldwide food and beverage can markets have experienced limited growth in demand in recent
years. Food and beverage cans are standardized products, allowing for relatively little differentiation
among competitors. This has led to overcapacity and price competition among food and beverage
producers, as capacity growth outpaced the growth in demand for food and beverage cans and overall
manufacturing capacity exceeded demand. These market conditions reduced product prices, which
contributed to declining revenue and net income and increasing debt balances that the Company
experienced in the past. As a result of industry overcapacity and price competition, the Company may not
be able to increase prices sufficiently to offset higher costs or to generate sufficient cash flow. The North
American food and beverage can market, in particular, is considered to be a mature market,
characterized by slow growth and a sophisticated distribution system. Price-driven competition has
increased as producers seek to capture more sales volumes in order to keep their plants operating at
optimal levels and reduce unit costs.
Competitive pricing pressures, overcapacity, the failure to develop new product designs and technologies
for products, as well as other factors could cause the Company to lose existing business or opportunities
to generate new business and could result in decreased cash flow and net income.
-12-
Crown Holdings, Inc.
The Company is subject to competition from substitute products, which could result in lower
profits and reduced cash flows.
The Company is subject to substantial competition from producers of alternative packaging made from
glass, cardboard, and plastic, particularly from producers of plastic food and beverage containers, whose
market has grown substantially over the past several years. The Company’s sales depend heavily on the
volumes of sales by the Company’s customers in the food and beverage markets. Changes in
preferences for products and packaging by consumers of prepackaged food and beverage cans
significantly influence the Company’s sales. Changes in packaging by the Company’s customers may
require the Company to re-tool manufacturing operations, which could require material expenditures. In
addition, a decrease in the costs of, or a further increase in consumer demand for, alternative packaging
could result in lower profits and reduced cash flows for the Company.
The Company is subject to the effects of fluctuations in foreign exchange rates, which may reduce
its net sales and cash flow.
The Company is exposed to fluctuations in foreign currencies as a significant portion of its consolidated
net sales, and some of its costs, assets and liabilities, are denominated in currencies other than the U.S.
dollar. For the fiscal years ended December 31, 2005, 2004 and 2003, the Company derived
approximately 70%, 69% and 68%, respectively, of its consolidated net sales from sales in foreign
currencies. In its consolidated financial statements, the Company translates local currency financial
results into U.S. dollars based on average exchange rates prevailing during a reporting period. During
times of a strengthening U.S. dollar, its reported international revenue and earnings will be reduced
because the local currency will translate into fewer U.S. dollars. Conversely, a weakening U.S. dollar will
effectively increase the dollar-equivalent of the Company’s expenses and liabilities denominated in
foreign currencies. The Company’s translation and exchange adjustments reduced reported income
before tax by $94 million in 2005 and by $26 million in 2002, and increased reported income before tax by
$98 million in 2004 and by $207 million in 2003. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Financial Position—Market Risk.” Although the Company may use
financial instruments such as foreign currency forwards from time to time to reduce its exposure to
currency exchange rate fluctuations in some cases, it may not elect or have the ability to implement
hedges or, if it does implement them, they may not achieve the desired effect.
The Company’s international operations are subject to various risks that may lead to decreases in
its financial results.
The risks associated with operating in foreign countries may have a negative impact on the Company’s
liquidity and net income. The Company’s international operations generated approximately 70%, 69% and
68% of its consolidated net sales in 2005, 2004 and 2003, respectively. The business strategy of the
Company includes continued expansion of international activities. However, the Company’s international
operations are subject to various risks associated with operating in foreign countries, including:
• restrictive trade policies;
• inconsistent product regulation or policy changes by foreign agencies or governments;
• duties, taxes or government royalties, including the imposition or increase of withholding and other
taxes on remittances and other payments by non-U.S. subsidiaries;
• customs, import/export and other trade compliance regulations;
• foreign exchange rate risks;
• difficulty in collecting international accounts receivable and potentially longer payment cycles;
• increased costs in maintaining international manufacturing and marketing efforts;
• non-tariff barriers and higher duty rates;
-13-
Crown Holdings, Inc.
• difficulties in enforcement of contractual obligations and intellectual property rights;
• exchange controls, such as those found in Thailand;
• national and regional labor strikes;
• language and cultural barriers;
• high social benefit costs for labor, including costs associated with restructurings;
• political, social, legal and economic instability;
• taking of property by nationalization or expropriation without fair compensation;
• imposition of limitations on conversions of foreign currencies into dollars or payment of dividends
and other payments by non-U.S. subsidiaries;
• hyperinflation and currency devaluation in certain foreign countries, including the countries of
Eastern Europe and Turkey, where such currency devaluation could affect the amount of cash
generated by operations in those countries and thereby affect the Company’s ability to satisfy its
obligations; and
• war, civil disturbance and acts of terrorism.
There can be no guarantee that a deterioration of economic conditions in countries in which the Company
operates would not have a material impact.
The Company’s profits will decline if the price of raw materials or energy rises and it cannot
increase the price of its products.
The Company uses various raw materials, such as aluminum and steel for metals packaging, in its
manufacturing operations. Sufficient quantities of these raw materials may not be available in the future.
Moreover, the prices of certain of these raw materials, such as aluminum and steel, have historically been
subject to volatility. In 2005, consumption of steel and aluminum represented approximately 30% and
28%, respectively, of the Company’s consolidated cost of products sold, excluding depreciation and
amortization. The average market price for steel used in packaging increased approximately 20% and the
average price of aluminum ingot on the London Metal Exchange increased approximately 16% during
2005. Supplier consolidations and recent government regulations provide additional uncertainty as to the
level of prices at which the Company might be able to source raw materials in the future.
As a result of price increases, in 2005 the Company implemented significant price increases in all of its
steel and aluminum product categories. There can be no assurance that the Company will be able to fully
recover from its customers the impact of steel surcharges or steel and aluminum price increases. In
addition, if the Company is unable to purchase steel or aluminum for a significant period of time, the
Company’s steel or aluminum-consuming operations would be disrupted. The Company is continuing to
monitor this steel and aluminum prices situation and the effect on its operations.
The Company may be subject to adverse price fluctuations and surcharges, including recent steel price
increases discussed above, when purchasing raw materials. While certain, but not all, of the Company’s
contracts pass through raw material costs to customers, the Company may be unable to increase its
prices to offset unexpected increases in raw material costs without suffering reductions in unit volume,
revenue and operating income. In addition, any price increases may take effect after related cost
increases, reducing operating income in the near term. If any of the Company’s principal suppliers were
to increase their prices significantly, impose substantial surcharges or were unable to meet its
requirements for raw materials, either or both of its revenues or profits would decline.
-14-
Crown Holdings, Inc.
In addition, the manufacturing facilities of the Company are dependent, in varying degrees, upon the
availability of processed energy, such as natural gas and electricity. Certain of these energy sources may
become difficult or impossible to obtain on acceptable terms due to external factors or may only be
available at substantially increased costs, which could increase the Company’s costs or interrupt its
business.
The loss of a major customer and/or customer consolidation could reduce the Company’s net
sales and profitability.
Many of the Company’s largest customers have acquired companies with similar or complementary
product lines. This consolidation has increased the concentration of the Company’s business with its
largest customers. In many cases, such consolidation has been accompanied by pressure from
customers for lower prices, reflecting the increase in the total volume of product purchased or the
elimination of a price differential between the acquiring customer and the company acquired. Increased
pricing pressures from the Company’s customers may reduce the Company’s net sales and net income.
The majority of the Company’s sales are to companies that have leading market positions in the sale of
packaged food, beverages, aerosol and health and beauty products to consumers. Although no one
customer accounted for more than 10% of its net sales in 2005, 2004, or 2003, the loss of any of its major
customers, a reduction in the purchasing levels of these customers or an adverse change in the terms of
supply agreements with these customers could reduce the Company’s net sales and net income. A
continued consolidation of the Company’s customers could exacerbate any such loss.
The Company’s business is seasonal and weather conditions could reduce the Company’s net
sales.
The Company manufactures packaging primarily for the food and beverage can market. Its sales can be
affected by weather conditions. Due principally to the seasonal nature of the soft drink, brewing, iced tea
and other beverage industries, in which demand is stronger during the summer months, sales of the
Company’s products have varied and are expected to vary by quarter. Shipments in the U.S. and Europe
are typically greater in the second and third quarters of the year. Unseasonably cool weather can reduce
consumer demand for certain beverages packaged in its containers. In addition, poor weather conditions
that reduce crop yields of packaged foods can decrease customer demand for its food containers.
The Company is subject to costs and liabilities related to stringent environmental and health and
safety standards.
Laws and regulations relating to environmental protection and health and safety may increase the
Company’s costs of operating and reduce its profitability. The Company’s operations are subject to
numerous U.S. federal and state and non-U.S. laws and regulations governing the protection of the
environment, including those relating to treatment, storage and disposal of waste, discharges into water,
emissions into the atmosphere, remediation of soil and groundwater contamination and protection of
employee health and safety. Future regulations may impose stricter environmental requirements affecting
the Company’s operations. For example, anticipated future restrictions in some jurisdictions on air
emissions of volatile organic compounds and the use of certain paint and lacquering ingredients may
require the Company to employ additional control equipment or process modifications. The Company’s
operations and properties, both in the U.S. and abroad, must comply with these laws and regulations.
A number of governmental authorities both in the U.S. and abroad have enacted, or are considering, legal
requirements that would mandate certain rates of recycling, the use of recycled materials and/or
limitations on certain kinds of packaging materials such as plastics. In addition, some companies with
packaging needs have responded to such developments, and/or to perceived environmental concerns of
consumers, by using containers made in whole or in part of recycled materials. Such developments may
reduce the demand for some of the Company’s products, and/or increase its costs. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Financial Position—
Environmental Matters.”
-15-
Crown Holdings, Inc.
The Company has written down a significant amount of goodwill, and a further writedown of
goodwill would result in lower reported net income and a reduction of its net worth.
Further impairment of the Company’s goodwill would require additional write-offs of goodwill, which would
reduce the Company’s net income in the period of any such write-off. At December 31, 2005, the carrying
value of the Company’s goodwill was approximately $2.0 billion. In July 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 142, “Goodwill and Other
Intangible Assets.” Under the standard, the Company is no longer required to or permitted to amortize
goodwill reflected on its balance sheet. It is, however, required to evaluate goodwill reflected on its
balance sheet when circumstances indicate a potential impairment and at least annually, under the new
impairment testing guidelines outlined in the standard. If it determines that the goodwill is impaired, the
Company would be required to write-off a portion or all of the goodwill. The Company adopted this
standard on January 1, 2002 and recorded a noncash, non-tax deductible impairment charge of $1.0
billion, reported as the cumulative effect of a change in accounting.
If the Company fails to retain key management and personnel the Company may be unable to
implement its business plan.
Members of the Company’s senior management have extensive industry experience, and it would be
difficult to find new personnel with comparable experience. Because the Company’s business is highly
specialized, we believe that it would also be difficult to replace the Company’s key technical personnel.
The Company believes that its future success depends, in large part, on its experienced senior
management team. Losing the services of key members of its management team could limit the
Company’s ability to implement its business plan.
A significant portion of the Company’s workforce is unionized and labor disruptions could
increase the Company’s costs and prevent the Company from supplying its customers.
A significant portion of the Company’s workforce is unionized and a prolonged work stoppage or strike at
any facility with unionized employees could increase its costs and prevent the Company from supplying
its customers. In addition, upon the expiration of existing collective bargaining agreements, the Company
may not reach new agreements without union action and any such new agreements may not be on terms
satisfactory to the Company.
If the Company fails to maintain an effective system of internal controls, the Company may not be
able to accurately report financial results or prevent fraud.
Effective internal controls are necessary to provide reliable financial reports and to assist in the effective
prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm the
Company’s business. The Company must annually evaluate its internal procedures to satisfy the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires management and
auditors to assess the effectiveness of internal controls. If the Company fails to remedy or maintain the
adequacy of its internal controls, as such standards are modified, supplemented or amended from time to
time, the Company could be subject to regulatory scrutiny, civil or criminal penalties or shareholder
litigation.
In addition, failure to maintain adequate internal controls could result in financial statements that do not
accurately reflect the Company’s financial condition. There can be no assurance that the Company will be
able to complete the work necessary to fully comply with the requirements of the Sarbanes-Oxley Act or
that the Company’s management and external auditors will continue to conclude that the Company’s
internal controls are effective.
-16-
Crown Holdings, Inc.
The Company is subject to litigation risks which could negatively impact its operations and net
income.
The Company is subject to various lawsuits and claims with respect to matters such as governmental,
environmental and employee benefits laws and regulations, securities, labor, and actions arising out of
the normal course of business, in addition to asbestos-related litigation described in “Pending and future
asbestos litigation and payments to settle asbestos-related claims could reduce the Company’s cash flow
and negatively impact its financial condition.” The Company is currently unable to determine the total
expense or possible loss, if any, that may ultimately be incurred in the resolution of such legal
proceedings. Regardless of the ultimate outcome of such legal proceedings, they could result in
significant diversion of time by the Company’s management. The results of the Company’s pending legal
proceedings, including any potential settlements, are uncertain and the outcome of these disputes may
decrease its cash available for operations and investment, restrict its operations or otherwise negatively
impact its business, operating results, financial condition and cash flow.
ITEM 1B
UNRESOLVED STAFF COMMENTS
There are no unresolved written comments that were received from the SEC staff 180 days or more
before the end of our fiscal year relating to our periodic or current reports under the Securities Exchange
Act of 1934.
ITEM 2. PROPERTIES
As of December 31, 2005, the Company operated 155 manufacturing facilities of which 29 were leased.
The Company has three divisions, defined geographically, within which it manufactures and markets its
products. The Americas Division has 59 operating facilities of which 12 are leased. Within the Americas
Division, 36 facilities operate in the United States of which 8 are leased. The European Division has 82
operating facilities of which 14 are leased and Asia-Pacific has 14 operating facilities of which 3 are
leased. Some leases provide renewal options as well as various purchase options. The principal
manufacturing facilities at December 31, 2005 are listed below and are grouped by product and by
division.
-17-
Crown Holdings, Inc.
Americas
La Crosse, WI
Worland, WY
Aracaju, Brazil
Cabreuva, Brazil
Calgary, Canada
Montreal, Canada
Weston, Canada
Santafe de Bogota, Colombia
Guadalajara, Mexico
Carolina, Puerto Rico
Custines, France
Korinthos, Greece
Patras, Greece
Dammam, Jordan
Amman, Saudi Arabia
Jeddah, Saudi Arabia
Agoncillo, Spain
Europe
Sevilla, Spain
El Agba, Tunisia
Izmit, Turkey
Dubai, UAE
Botcherby, UK
Braunstone, UK
Asia-Pacific
Beijing, China
Foshan, China
Huizhou, China
Shanghai, China
Jakarta, Indonesia
Johor Bahru, Malaysia
Selangor, Malaysia
Singapore
Bangkadi, Thailand
Bangpoo, Thailand
Hanoi, Vietnam
Saigon, Vietnam
Lawrence, MA
Kankakee, IL
Metal
Packaging
Beverage Crawfordsville, IN
and
Closures
Mankato, MN
Batesville, MS
Dayton, OH
Cheraw, SC
Conroe, TX
Fort Bend, TX
Winchester, VA
Olympia, WA
Food
and
Closures Owatonna, MN
Winter Garden, FL Seattle, WA
Oshkosh, WI
Pulaski Park, MD
Bolton, Canada
Chatham, Canada
Concord, Canada
Dorval, Canada
Winnipeg, Canada
Kingston, Jamaica
La Villa, Mexico
Omaha, NE
Lancaster, OH
Massillon, OH
Mill Park, OH
Portland, OR
Connellsville, PA
Hanover, PA
Suffolk, VA
Barbados, West Indies
Trinidad, West Indies
Brive, France
Carpentras, France
Concarneau, France (3)
Laon, France
Nantes, France
Outreau, France
Perigueux, France
Gerwisch, Germany
Luebeck, Germany
Muehldorf, Germany
Seesen, Germany (2)
Tema, Ghana
Thessaloniki, Greece
Nagykoros, Hungary
Athy, Ireland
Aprilia, Italy (2)
Battipaglia, Italy
Abidjan, Ivory Coast
Samrong, Thailand
Toamasina, Madagascar Haadyai, Thailand
Casablanca, Morocco
Goleniow, Poland
Pruczcz, Poland
Alochete, Portugal
Timashevsk, Russia
Dakar, Senegal
Dunajska, Slovakia
Bellville, South Africa
Logrono, Spain
Molina de Segura, Spain
Sevilla, Spain
Valencia, Spain
Vigo, Spain
Neath, UK
Poole, UK
Calerno S. Ilario d’Enza, Italy Wisbech, UK
Nocera Superiore, Italy
Worcester, UK
Spartanburg, SC
Toronto, Canada
Parma, Italy
Deurne, Belgium
Spilamberto, Italy
Mijdrecht, Netherlands
Sutton, UK
Aerosol
Alsip, IL
Decatur, IL
Faribault, MN
Specialty
Packaging
Belcamp, MD
St. Laurent, Canada
Hoboken, Belgium
Helsinki, Finland
Chatillon-Sur-Seine, France
Rouen, France
Vourles, France
Hilden, Germany
Mechernich, Germany
Chignolo Po, Italy
Hoorn, Netherlands
Miravalles, Spain
Montmelo, Spain
Aesch, Switzerland
Aintree, UK
Carlisle, UK
Mansfield, UK
Newcastle, UK
Langeais, France
Hautot sur Mer, France
Plastic
Packaging
Pilar, Argentina
Venancio Aires, Brazil
Manaus, Brazil
Health &
Beauty Care Laconia, NH
Watertown, CT
Barrie, Canada
Reynosa, Mexico
Lailly-en-Val, France
Mozzate, Italy
Marolles, France
Middletown, NY
Norwalk, CT
Canmaking
& Spares
Shipley, UK
-18-
Crown Holdings, Inc.
Excluded from the list above are operating facilities in unconsolidated subsidiaries as well as service or
support facilities. The service or support facilities include machine shop operations, plant operations
dedicated to printing for cans and closures, coil shearing, coil coating and RD&E operations. Some
operating facilities produce more than one product but have been presented above under the product with
the largest contribution to sales.
The Company’s manufacturing and support facilities are designed according to the requirements of the
products to be manufactured. Therefore, the type of construction varies from plant to plant. Warehouse
and delivery facilities are generally provided at each of the manufacturing locations, although the
Company does lease outside warehouses.
Ongoing productivity improvements and cost reduction efforts in recent years have focused on upgrading
and modernizing facilities to reduce costs, improve efficiency and productivity and phase out
uncompetitive facilities. The Company has also opened new facilities to meet increases in market
demand for its products. These actions reflect the Company’s continued commitment to realign
manufacturing facilities to maintain its competitive position in its markets. The Company continually
reviews its operations and evaluates strategic opportunities. Further discussion of the Company’s recent
restructuring actions and divestitures is contained within Management’s Discussion and Analysis of
Financial Condition and Results of Operations under Provision for Restructuring, and under Provision for
Asset Impairments and Loss/Gain on Sale of Assets, and under Note B, Note O and under Note P to the
consolidated financial statements.
Utilization of any particular facility varies based upon demand for the product. While it is not possible to
measure with any degree of certainty or uniformity the productive capacity of these facilities, management
believes that, if necessary, production can be increased at several existing facilities through the addition
of personnel, capital equipment and, in some facilities, square footage available for production. In
addition, the Company may from time to time acquire additional facilities and/or dispose of existing
facilities.
The Company’s Americas and Corporate headquarters are in Philadelphia, Pennsylvania, its European
headquarters is in Paris, France and its Asia-Pacific headquarters is in Singapore. The Company
maintains research facilities in Alsip, Illinois and in Wantage, England.
The Company’s North American and European facilities, with certain exceptions, are subject to liens in
favor of the lenders under its senior credit facility and under the Company’s first priority senior secured
notes.
ITEM 3. LEGAL PROCEEDINGS
Crown Cork & Seal Company, Inc. (“Crown Cork”) is one of many defendants in a substantial number of
lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to
asbestos. These claims arose from the insulation operations of a U.S. company, the majority of whose
stock Crown Cork purchased in 1963. Approximately ninety days after the stock purchase, this U.S.
company sold its insulation assets and was later merged into Crown Cork. At December 31, 2005, the
accrual for pending and future asbestos claims that are probable and estimable was $214 million.
In 2003 Crown Cork amended the retiree medical benefits that it had been providing to approximately
10,000 retirees pursuant to a series of collective bargaining agreements between Crown Cork and certain
unions. The Amendments increased maximum coverage, required additional retiree contributions for
medical and prescription drug costs and reduced other coverage benefits. Crown Cork is a party to
litigation initiated in June 2003 in which the USWA and IAM unions and retirees claim that the retiree
medical benefits were vested and that the amendments breached the applicable collective bargaining
agreements in violation of ERISA and the Labor Management Relations Act.
The Company has been identified by the Environmental Protection Agency as a potentially responsible
party (along with others, in most cases) at a number of sites.
-19-
Crown Holdings, Inc.
Further information on these matters and other legal proceedings is presented within Management’s
Discussion and Analysis of Financial Condition and Results of Operations under the headings Provision
for Asbestos and Environmental Matters and under Note M and Note N to the consolidated financial
statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the principal executive officers of the Company, including their ages and
positions, is set forth in Part III, Item 10, “Directors and Executive Officers of the Registrant” of this
Report.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Registrant’s common stock is listed on the New York Stock Exchange. On March 3, 2006, there were
6,552 registered shareholders of the Registrant’s common stock, including 1,882 participants in the
Company’s Employee Stock Purchase Plan. The market price of the Registrant’s common stock at
December 31, 2005 is set forth in Part II of this Report under Quarterly Data (unaudited). The foregoing
information regarding the number of registered shareholders of common stock does not include persons
holding stock through clearinghouse systems. Details regarding the Company’s policy as to payment of
cash dividends and repurchase of shares are set forth within Management’s Discussion and Analysis of
Financial Condition and Results of Operations under Common Stock and Other Shareholders’
Equity/(Deficit) and under Note Q to the consolidated financial statements entitled Capital Stock.
Information with respect to shares of common stock that may be issued under the Company’s equity
compensation plans is set forth in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters,” of this Report.
Issuer Purchases of Equity Securities
(in thousands,
except per share)
Total Number
of Shares Purchased
Average Price
Paid Per Share
Total Number of
Shares Purchased as
Part of a Publicly
Announced Program
Approximate Dollar Value
of Shares that may yet
be Purchased under the
Programs as of the
end of the Month
2005
March
April
December
Total
500
350
1,250
2,100
$16.99
15.63
19.48
$18.24
500
350
1,250
2,100
$041,506
36,036
161,690
$161,690
In December 2005, the Company announced that its Board of Directors has authorized the repurchase of
up to $150 million of the Company’s common stock through the end of 2007. The new authorization is in
addition to the Company’s prior stock repurchase program of up to $50 million of the Company’s common
stock through the end of 2006, approved by the Board of Directors in February 2005. The actual amount
to be repurchased is subject to the Company’s debt agreements, market conditions, and other factors.
-20-
Crown Holdings, Inc.
ITEM 6. SELECTED FINANCIAL DATA
(in millions, except per share, ratios
and other statistics)
Summary of Operations
Net sales .................................................................
Cost of products sold (excluding depreciation
and amortization..................................................
Depreciation and amortization ................................
Selling and administrative expense ........................
Provision for asbestos.............................................
Provision for restructuring .......................................
Provision for asset impairments and loss/gain
on sale of assets ................................................
Loss/(gain) from early extinguishments of debt ......
Interest expense, net of interest income .................
Translation and exchange adjustments ..................
Income/(loss) from continuing operations before
income taxes, minority interests, equity earnings
and cumulative effect of a change
in accounting ......................................................
Provision/(benefit) for income taxes........................
Minority interests and equity earnings ....................
Income/(loss) from continuing operations before
cumulative effect of a change in accounting (1) .
Financial Position at December 31
2005
2004
2003
2002
2001
$06,908
$06,531
$06,007
$06,246
$06,669
5,759
249
349
10
16
5,463
263
318
35
7
5,073
281
292
44
15
5,220
332
277
30
18
10
383
352
94
47
39
353
(000,098 )
76
12
368
(000,207 )
247
(000,028 )
331
26
5,681
448
275
51
47
215
437
10
(000,314
)
(000,002 )
(000,039 )
104
61
(000,027 )
53
71
(000,207
)
9
(000,056 ) (000,015 )
(000,495
)
507
(000,004 )
($00,351
)
$0,0016
($00,074
)
($00,231
)
($01,006
)
Working capital/(deficit)...........................................
Total assets .............................................................
Total cash and cash equivalents.............................
Total debt ................................................................
($00,098 )
6,545
294
3,403
$00,263
8,125
471
3,872
$00,086
7,773
401
3,939
($00,246 )
7,505
363
4,054
($00,084 )
9,620
456
5,320
%
91.3
197
140
%
97.1
196
(000,087 )
%
82.9
201
804
Total debt, less cash and cash equivalents,
to total capitalization (2) .....................................
Minority interests .....................................................
Shareholders’ equity/(deficit)...................................
%
99.7
246
(000,236 )
%
87.7
201
277
-21-
Crown Holdings, Inc.
SELECTED FINANCIAL DATA (Continued)
(in millions, except per share, ratios
and other statistics)
Common Share Data (dollars per share)
Earnings/(loss) from continuing operations before
cumulative effect of a change in accounting:
2005
2004
2003
2002
2001
Basic ......................................................................
Diluted....................................................................
($002.12)
(0002.12)
$000.10
000.09
($000.45) ($0 1.61 )
(0000.45) (00 1.61 )
($0 8.01 )
(00 8.01 )
Market price on December 31...................................
Book value based on year-end outstanding shares..
Number of shares outstanding at year-end...............
Average shares outstanding
Basic ......................................................................
Diluted....................................................................
19.53
(0001.42)
166.7
165.9
165.9
13.74
1.68
165.6
165.3
168.8
9.06
0.85
165.0
7.95
(00 0.55)
159.4
164.7
164.7
143.8
143.8
2.54
6.40
125.7
125.6
125.6
Other
Capital expenditures .................................................
Number of employees ..............................................
$000192
24,055
$0 0138
27,645
$0 0120 $0 0115
28,319
27,444
$0 0168
33,046
Notes:
The summary of operations data above has been recast to exclude the plastic closures business
that was divested in 2005 as discussed under Note B to the consolidated financial statements.
During 2002 and 2001, the Company divested its U.S. fragrance pump business, its European
pharmaceutical packaging business, its operations in Central and East Africa, and sold 89.5% of
its interest in Constar International, Inc. in an initial public offering. These divested operations
accounted for approximately $674 and $904 of net sales in 2002 and 2001, respectively.
(1) Amounts for 2005, 2004, 2003, 2002 and 2001 included after-tax adjustments for restructuring
actions of $14, $5, $14, $15 and $46, respectively. Also included in reported net income/(loss)
were (i) after-tax charges for provision for asset impairments and loss/gain on sale of assets of
$10 or $0.06 per share in 2005, $41 or $0.25 per share in 2004; $68 or $0.41 per share in 2003;
$258 or $1.79 per share in 2002 and $208 or $1.66 per share in 2001, (ii) after-tax charges for
asbestos of $10 or $0.06 per share in 2005, $35 or $0.21 per share in 2004; $44 or $0.27 per
share in 2003; $30 or $0.21 per share in 2002 and $51 or $0.41 per share in 2001, (iii) after-tax
gains/(losses) of ($376) or ($2.27) per share in 2005, ($34) or ($0.20) per share in 2004; ($16) or
($0.10) per share in 2003 and $28 or $0.19 per share in 2002 from early extinguishments of debt,
(iv) after-tax foreign exchange gains/(losses) on debt in Europe in 2005 of ($87) or ($0.52) per
share, in 2004 of $67 or $0.40 per share, and in 2003 of $143 or $0.86 per share, (v) a charge
of $22 or $0.13 per share in 2003 for the Company’s share of a goodwill impairment charge
recorded by Constar, (vi) a tax charge to establish a valuation allowance for U.S. deferred tax
assets in 2001 of $452 or $3.60 per share, and (vii) a transition charge of $1,014 or $7.05 per
share in 2002 and a transition credit of $4 or $0.03 per share in 2001 related to the adoption of
new accounting standards.
(2) Total capitalization consists of total debt, minority interests and shareholders’ equity/(deficit), less
cash and cash equivalents.
-22-
Crown Holdings, Inc.
ITEM 7. MANAGEMENT’S DISCUSSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(in millions, except per share, employee, shareholder and statistical data; per share earnings
are quoted as diluted)
INTRODUCTION
This discussion summarizes the significant factors affecting the results of operations and financial
condition of Crown Holdings, Inc. (the “Company”) as of and during the three-year period ended
December 31, 2005. This discussion should be read in conjunction with the consolidated financial
statements included in this annual report.
EXECUTIVE OVERVIEW
The Company’s principal areas of focus include improving segment income, reducing debt, and reducing
asbestos-related costs. Segment income is defined by the Company as net sales less cost of products
sold, depreciation and amortization, and selling and administrative expenses.
Improving segment income is primarily dependent on the Company’s ability to increase revenues and
manage costs. Key strategies for expanding sales include targeting geographic markets with strong
growth potential, such as the Middle East, Asia, Latin America and southern and central Europe,
improving selling prices in certain product lines and developing innovative packaging products using
proprietary technology. The Company’s cost control efforts focus on improving operating efficiencies and
managing material and labor costs, including pension and other benefit costs.
The reduction of debt remains a principal strategic goal of the Company and is primarily dependent upon
the Company’s ability to generate cash flow from operations. In addition, the Company may consider
divestitures from time to time, the proceeds of which may be used to reduce debt. The Company reduced
its total debt by $469, to $3,403 at December 31, 2005 from $3,872 at December 31, 2004. Cash
balances decreased by $177, to $294 from $471 from December 31, 2004 to December 31, 2005.
The Company seeks to reduce its asbestos-related costs through prudent case management. Asbestos-
related payments were $29 in 2005, $41 in 2004 and $68 in 2003, and the Company expects to pay
approximately $30 in 2006. While the level of payments has declined recently, the Company’s asbestos-
related liabilities remain significant and the amount of future payments and liabilities is inherently
unpredictable.
The cost of aluminum and steel, the primary raw materials used to manufacture the Company’s products,
has increased significantly since the end of 2004. The Company is attempting to pass-through these
increased costs to its customers through existing provisions that adjust the selling prices to certain
customers based on changes in the market price of the applicable raw material, or through surcharges
where no such provision exists. However, there can be no assurance that the Company will be able to
fully recover from its customers the impact of the increased aluminum and steel costs.
RESULTS OF OPERATIONS
The foreign currency translation impacts referred to below are primarily due to changes in the euro and
pound sterling in the European Division operating segments and the Canadian dollar in the Americas
Division operating segments.
NET SALES
Net sales during 2005 were $6,908, an increase of $377 or 5.8% versus 2004 net sales of $6,531. The
increase in net sales during 2005 was primarily due to $66 from the favorable impact of foreign currency
translation, $67 from the consolidation of certain Middle East operations as discussed in Note C to the
consolidated financial statements, and the pass-through of raw material cost increases to customers.
-23-
Crown Holdings, Inc.
Net sales during 2004 were $6,531, an increase of $524 or 8.7% versus 2003 net sales of $6,007. The
increase in net sales during 2004 was primarily due to the favorable impact of foreign currency translation
of $343 and the pass-through of raw material cost increases to customers.
Net sales from U.S. operations accounted for 29.9% of consolidated net sales in 2005, 30.6% in 2004
and 31.6% in 2003. Sales of beverage cans and ends accounted for 42.3% of net sales in 2005
compared to 40.3% of net sales in 2004 and 40.5% in 2003. Sales of food cans and ends accounted for
34.1% of net sales in 2005, 35.6% in 2004 and 35.1% in 2003.
Net sales in the Americas Beverage segment increased 7.9% from $1,538 in 2004 to $1,659 in 2005. Net
sales during 2004 increased 6.2% from $1,448 in 2003. The increases in 2005 and 2004 were primarily
due to higher selling prices from the pass-through of increased aluminum costs to customers.
Net sales in the North America Food segment increased 1.9% from $740 in 2004 to $754 in 2005, and
net sales during 2004 increased 5.1% from $704 in 2003, primarily due to higher selling prices from the
pass-through of higher steel costs to customers.
Net sales in the Europe Beverage segment increased 13.2% from $851 in 2004 to $963 in 2005. The
increase in net sales in 2005 was primarily due to $67 from the consolidation of certain Middle East
operations, as discussed in Note C to the consolidated financial statements, and higher selling prices
from the pass-through of raw material cost increases to customers. Net sales in 2004 increased 12.0%
from $760 in 2004 primarily due to the positive effect of foreign currency translation.
Net sales in the Europe Food segment increased 1.9% from $1,807 in 2004 to $1,842 in 2005. The
increase in net sales in 2005 was primarily due to higher selling prices from the pass-through of higher
steel costs to customers. Net sales in 2004 increased 12.2% from $1,610 in 2003 primarily due to $166
from the positive effect of foreign currency translation, and the pass-through of higher steel costs to
customers.
Net sales in the Europe Specialty Packaging segment increased 5.5% from $385 in 2004 to $406 in 2005
primarily due to improved pricing, including the pass-through of higher material costs to customers. Net
sales in 2004 increased 10.0% from $350 in 2003 primarily due to the positive effect of foreign currency
translation.
COST OF PRODUCTS SOLD (EXCLUDING DEPRECIATION AND AMORTIZATION)
Cost of products sold, excluding depreciation and amortization, was $5,759 in 2005, an increase of 5.4%
from $5,463 in 2004. The increase in 2005 was primarily due to the impact of currency translation of $53
and higher material costs, primarily aluminum and steel.
Cost of products sold, excluding depreciation and amortization, was $5,463 in 2004, an increase of 7.7%
from $5,073 in 2003. The increase in 2004 was primarily due to the impact of foreign currency translation
of $283 and higher material costs, primarily aluminum and steel. As a percentage of net sales, cost of
products sold, excluding depreciation and amortization, was 83.4% in 2005 as compared to 83.6% in
2004 and 84.4% in 2003.
Steel suppliers have indicated that a shortage of raw materials to produce steel and increased global
demand, primarily in China, have combined to create the need for steel price increases for their
customers and have resulted in a tighter supply of steel which could require allocation among their steel
purchasing customers.
As a result of the steel price increases, the Company in 2004 implemented significant price increases in
all of its steel product categories. There can be no assurance that the Company will be able to fully
recover from its customers the impact of steel surcharges or price increases. In addition, if the Company
is unable to purchase steel for a significant period of time, its steel-consuming operations would be
disrupted, and if the Company is unable to fully recover the higher cost of steel, its financial results may
be adversely affected. The Company is continuing to monitor this situation and the effect on its
operations.
-24-
DEPRECIATION AND AMORTIZATION
Crown Holdings, Inc.
Depreciation and amortization during 2005 was $249, a decrease of $14 or 5.3% from $263 in 2004. The
decrease in 2005 from 2004 was primarily due to decreased capital spending in recent years.
Depreciation and amortization during 2004 was $263, a decrease of $18 or 6.4% from $281 in 2003. The
decrease in 2004 was primarily due to reduced capital spending in recent years, partially offset by an
increase of $14 due to the impact of foreign currency translation.
SELLING AND ADMINISTRATIVE EXPENSE
Selling and administrative expense for 2005 was $349, an increase of 9.7% from the 2004 expense of
$318, following an increase of 8.9% from $292 in 2003. The increase in 2005 was primarily due to
increased compensation costs. The increase in 2004 was primarily due to the impact of foreign currency
translation in Europe.
SEGMENT INCOME
Segment income in the Americas Beverage segment increased $22 from $175 in 2004 to $197 in 2005,
and increased $27 in 2004 from $148 in 2003. The increases in 2005 and 2004 were primarily due to
improved operating efficiencies, including process improvements and reduced manning.
Segment income in the North America Food segment in 2005 decreased to $42 from $44 in 2004.
Segment income during 2004 increased $11 or 33.3% versus 2003 primarily due to improved selling
prices.
Segment income in the Europe Beverage segment decreased $5 or 3.4% from $145 in 2004 to $140 in
2005 primarily due to higher material costs. Segment income in 2004 increased $22 or 17.9% from $123
in 2003 primarily due to the positive effect of currency translation of $10, $7 of decreased depreciation
due to lower capital spending in recent years, and increased operating efficiencies.
Segment income in the Europe Food segment increased $33 from $165 in 2004 to $198 in 2005 primarily
due to increased operating efficiencies of $15, a reduction in depreciation expense of $6 and increased
selling prices. Segment income in 2004 increased $26 or 18.7% from $139 in 2003 primarily due to the
positive effect of currency translation of $14 and increased operating efficiencies.
Segment income in the Europe Specialty Packaging segment increased $14 from $6 in 2004 to $20 in
2005 primarily due to improved pricing. Segment income in 2004 increased $2 from 2003 segment
income of $4 due to increased operating efficiencies.
PROVISION FOR ASBESTOS
Crown Cork & Seal Company, Inc. is one of many defendants in a substantial number of lawsuits filed
throughout the United States by persons alleging bodily injury as a result of exposure to asbestos. During
2005, 2004 and 2003 the Company recorded charges of $10, $35 and $44, respectively, to increase its
accrual for asbestos-related costs. See Note M to the consolidated financial statements for additional
information regarding the provision for asbestos-related costs.
PROVISION FOR RESTRUCTURING
During 2005, the Company provided a pre-tax charge of $16 for restructuring costs, including (i) $3 in the
Americas for severance costs to reduce headcount at a beverage can plant; (ii) $3 in an Americas health
and beauty care operation for severance costs to close a plant; (iii) $5 for severance costs to reduce
headcount in a European aerosol can plant; (iv) $2 for severance costs to reduce headcount in the U.S.
research and development group; and (v) $3 for other severance and exit costs. The actions are
expected to save $18 pre-tax on an annual basis when fully implemented.
During 2004, the Company provided a pre-tax charge of $7 for restructuring costs. The charge primarily
included $5 in a European specialty plastics operation for severance costs for reductions in force.
-25-
Crown Holdings, Inc.
During 2003, the Company provided a net pre-tax charge of $15 for restructuring costs. The charge
included $10 for various operations in Europe and $5 in the Americas, including $2 in the health and
beauty care operations, primarily for severance costs for reductions in force. The charge in Europe was
net of a reversal of $4 for costs provided in previous years.
Balances remaining in the reserves included provisions for current year actions as well as for contracts or
agreements for which payments from prior restructuring actions are extended over time. The balance of
the restructuring reserves was included in the Consolidated Balance Sheets within accounts payable and
accrued liabilities. See Note O to the consolidated financial statements for additional information on
these charges.
PROVISION FOR ASSET IMPAIRMENTS AND LOSS/GAIN ON SALE OF ASSETS
The Company provided net pre-tax charges of $10, $47 and $76 for asset impairments and asset sales
during 2005, 2004 and 2003, respectively. See Note P to the consolidated financial statements for
additional information on these charges.
LOSS FROM EARLY EXTINGUISHMENTS OF DEBT
In November 2005, the Company repaid its prior revolving credit facility and all but $34 of its second and
third priority senior secured notes and recognized a loss of $379 in connection with the transactions,
consisting of $278 of premiums and fees and the write-off of $101 of unamortized fees and unamortized
interest rate swap termination costs related to the refinanced facilities and notes. During 2005, the
Company also recognized an additional loss of $4 from early extinguishments of debt for premiums paid
to purchase certain unsecured notes prior to their maturity.
During 2004, the Company repurchased certain of its senior notes prior to maturity at premiums above
their principal amount and recognized losses of $6 for the premiums paid. The Company also refinanced
its credit facility and recorded a charge of $33 to write-off unamortized fees from its previous credit facility.
During 2003, the Company repurchased $1,013 of unsecured notes, including $819 prior to maturity. The
Company also exchanged 5,386,809 shares of its common stock for debt with a face value of $43 in
privately negotiated debt-for-equity exchanges. In connection with the repurchases and exchanges and
the write-off of unamortized fees from its previous credit facility, the Company recognized a loss of $12
from the early extinguishments of debt.
See Note T to the consolidated financial statements for additional information on the early
extinguishments of debt.
INTEREST EXPENSE
Interest expense of $361 in 2005 was unchanged from 2004, as an increase in the average borrowing
rates offset lower average debt outstanding.
Interest expense was $361 in 2004, a decrease of $18 or 4.7% compared to 2003 interest expense of
$379. The decrease in 2004 interest expense was primarily due to lower average debt outstanding and
was partially offset by increased borrowing rates from the 2003 refinancing and higher average variable
borrowing rates.
Information about the Company’s 2004 and 2005 refinancing activities is summarized in the Liquidity and
Capital Resources section of this discussion and in Notes S and T to the consolidated financial
statements.
TRANSLATION AND EXCHANGE ADJUSTMENTS
Unfavorable foreign exchange adjustments of $94 and favorable foreign exchange adjustments of $98
and $207 were recorded in 2005, 2004 and 2003, respectively, primarily due to the currency exposure
created in Europe by the sale in February 2003 of U.S. dollar senior secured notes described under Debt
Refinancing.
-26-
TAXES ON INCOME
Crown Holdings, Inc.
Taxes on income for 2005, 2004 and 2003 were a benefit of $2 and provisions of $61 and $71,
respectively, against a pre-tax loss of $314 in 2005 and pre-tax income of $104 in 2004 and $53 in 2003.
The primary items causing the 2005 effective rate of 0.6% to differ from the 35.0% U.S. statutory rate
were an increase of $115 due to valuation allowance adjustments and a decrease of $20 due to tax on
foreign income at lower rates.
The primary items causing the 2004 effective tax rate of 58.7% to differ from the 35.0% U.S. statutory rate
were increases of $18 due to tax contingencies and $10 due to the non-deductible write-off of cumulative
translation adjustments.
The primary items causing the 2003 effective tax rate of 134.0% to differ from the 35.0% U.S. statutory
rate were (i) an increase of $40 due to the U.S. tax charge on a gain from an intercompany sale of a
subsidiary by the U.S. tax group, (ii) an increase of $24, primarily due to losses in the U.S. and Argentina
for which the Company recorded no tax benefit, and (iii) a decrease of $22 for tax on foreign income at
lower tax rates.
See Note X to the consolidated financial statements for additional information regarding income taxes.
MINORITY INTERESTS AND EQUITY EARNINGS
Minority interests’ share of net income was $51, $41 and $39 in 2005, 2004 and 2003, respectively. The
increase in 2005 was primarily due to the consolidation of certain Middle East operations beginning in
September 2005 as discussed in Note C to the consolidated financial statements.
Equity in earnings/(loss) was $12, $14 and ($17) in 2005, 2004 and 2003, respectively. The decrease in
2005 was primarily due to the consolidation of certain Middle East operations beginning in September
2005 as discussed in Note C to the consolidated financial statements. The improvement in 2004 was
primarily because 2003 included $25 for the Company’s share of losses recorded by Constar, and
because of increased 2004 profits in the beverage can operations in the Middle East.
DISCONTINUED OPERATIONS
On October 11, 2005, the Company completed the sale of its plastic closures business for total proceeds
of $690 and recognized a loss of $44 related to the transaction. The loss on sale and results of
operations of the divested business were reported in discontinued operations for all periods presented.
See Note B to the consolidated financial statements for further information.
LIQUIDITY AND CAPITAL RESOURCES
FINANCIAL POSITION
Cash and cash equivalents were $294 at December 31, 2005 compared to $471 and $401 at December
31, 2004 and 2003, respectively. Cash used for operating activities was $122 compared to cash provided
by operating activities of $404 in 2004 and $434 in 2003. The significant changes from 2004 to 2005
included payments of $278 in 2005 for premiums and fees to repurchase a portion of the Company’s
senior secured notes as discussed in Note T to the consolidated financial statements; an increase in
pension contributions from $171 in 2004 to $401 in 2005, including $266 of advanced funding in 2005 in
the U.S. and Canada; an increase in cash from working capital from $48 in 2004 to $165 in 2005,
primarily due to $91 of increased receivables securitization in 2005 due to the new European facility
discussed in Note F to the consolidated financial statements; an increase in net interest payments from
$330 in 2004 to $389 in 2005 due to early payouts on the repurchase of the senior secured notes
discussed above in Loss from Early Extinguishments of Debt; payments of $30 in 2005 to terminate
interest rate swaps; and the loss of the fourth quarter cash flow in 2005 from the divested plastic closures
business. Cash from working capital reductions decreased from $113 in 2003 to $48 in 2004; net interest
-27-
Crown Holdings, Inc.
payments increased from $294 in 2003 to $330 in 2004 due to the timing of payments on the senior
secured notes issued in 2003; pension plan contributions increased from $122 in 2003 to $171 in 2004
primarily due to increased U.S. contributions; and income tax payments increased from $50 in 2003 to
$74 in 2004 due to improved income before taxes. These cash flow decreases in 2004 compared to 2003
were partially offset by improvements in gross profit.
Payments for asbestos were $29 in 2005, $41 in 2004 and $68 in 2003 and the Company expects to pay
approximately $30 in 2006. The Company contributed $401 to its pension plans in 2005 and expects to
contribute approximately $23 in 2006, excluding a potential additional contribution in the U.K. plan as
discussed under Contractual Obligations.
Cash flow from investing activities in 2005 included $627 of net proceeds from the sale of the plastic
closures business as discussed in Note B to the consolidated financial statements. Capital expenditures
of $192 in 2005 were higher than recent years due to expansion of the Middle East operations and
additional spending in the plastic closures business prior to its divestiture.
Cash flow used for financing activities increased significantly to $497 in 2005 compared to the prior two
years primarily due to the use of excess cash to repay debt in 2005.
Cash flow from financing activities included dividends paid to minority interests of $45, $41 and $24 in
2005, 2004 and 2003, respectively. These dividends were paid to the Company’s joint venture partners
or other shareholders primarily in the Company’s consolidated non-wholly owned subsidiaries in South
America, the Middle East and Asia.
The Company is highly leveraged. The ratio of total debt, less cash and cash equivalents, to total
capitalization was 99.7%, 87.7% and 91.3% at December 31, 2005, 2004 and 2003, respectively. Total
capitalization is defined by the Company as total debt, minority interests and shareholders’ equity/(deficit),
less cash and cash equivalents.
The Company funds its operations, debt services and other obligations primarily with cash flow from
operations (including the accelerated receipt of cash under its receivables securitization facilities) and
borrowings under its revolving credit facility. The Company may also consider divestitures from time to
time, the proceeds of which may be used to reduce debt. The Company had $251 of outstanding
borrowings under its $800 revolving credit facility at December 31, 2005 and had $234 of securitized
receivables. The Company also had $72 of outstanding letters of credit under its revolving credit facility
as of December 31, 2005, which, along with the borrowings of $251, reduce the amount of borrowings
otherwise available under the credit facility to $477.
The Company’s debt agreements contain covenants that provide limits on the ability of the Company and
its subsidiaries to, among other things, incur additional debt, pay dividends or repurchase capital stock,
create liens, and engage in sale and leaseback transactions.
DEBT REFINANCING
In November 2005, the Company sold $500 of 7.625% senior notes due 2013 and $600 of 7.75% senior
notes due 2015, and entered into an $800 first priority revolving credit facility due 2011, and a first priority
term loan facility due 2012 comprised of $165 and €287 term loans. The proceeds from the refinancing
were used to repay the Company’s 2004 revolving credit facility and all but $34 of its second and third
priority senior secured notes, and to pay premiums, fees and expenses associated with the refinancing.
In September and October 2004, the Company sold an aggregate of €460 of 6.25% first priority senior
secured notes due 2011 and entered into a new senior secured credit facility. The senior secured credit
facility was refinanced in November 2005 as described above.
In February 2003, the Company completed a refinancing consisting of the sale of $1,085 of 9.5% second
priority senior secured notes due 2011, €285 of 10.25% second priority senior secured notes due 2011,
$725 of 10.875% third priority senior secured notes due 2013, a first priority term loan facility due 2008
and a new $550 first priority revolving credit facility due 2006. The term loan facility and revolving credit
facility were refinanced in 2004.
-28-
Crown Holdings, Inc.
See Notes F, S and T to the consolidated financial statements for further information relating to the
Company’s refinancings and liquidity and capital resources.
CONTRACTUAL OBLIGATIONS
Contractual obligations as of December 31, 2005 are summarized in the table below.
Long-term debt
Interest on long-term debt
Operating leases
Projected pension contributions
Postretirement obligations
Purchase obligations
Total contractual cash
Obligations
Payments Due by Period
2006
2007
2008
2009
2010
2011 &
after
Total
$0,139
215
48
23
47
1,464
$0,045
208
39
49
662
$017
208
25
49
495
$013
207
15
50
6
$010
210
19
$3,112
212
35
50
238
$3,336
1,260
181
23
483
2,627
$1,936
$1,003
$794
$291
$289
$3,597
$7,910
Interest on long-term debt is presented through 2011 only, represents the interest that will accrue by year,
and is calculated based on interest rates in effect as of December 31, 2005. Interest on the credit facility
borrowings is based on the outstanding balances as of December 31, 2005. The interest is net of the
payments to be received on the $700 of cross-currency swaps, as discussed in Note U to the
consolidated financial statements, of $11, $9, $7, $7 and $3 in 2006 through 2010, respectively
The projected pension contributions caption includes the minimum required contributions the Company
expects to make in 2006 to fund its plans. Excluded from the pension obligations caption is an additional
contribution of £30 the Company may be required to make in 2006 to its U.K. plan as a result of new
legislation enacted in 2005. The potential contribution arose from the 2005 sale of the Company’s plastic
closures business. The Company is reviewing the legislation and its potential impact. The postretirement
obligations caption includes the expected payments through 2015 to retirees for medical and life
insurance coverage. The pension and postretirement projections require the use of numerous estimates
and assumptions such as discount rates, rates of return on plan assets, compensation increases, health
care cost increases, mortality and employee turnover. Accordingly, these amounts have been provided
for one year only in the case of pensions and through 2015 in the case of postretirement costs.
Purchase obligations include commitments for raw materials and utilities at December 31, 2005. These
commitments specify significant terms, including fixed or minimum quantities to be purchased; fixed,
minimum or variable pricing provisions; and the approximate timing of transactions.
In order to further reduce leverage and future cash interest payments, the Company may from time to
time repurchase outstanding notes and debentures with cash or exchange shares of its common stock for
the Company’s outstanding notes and debentures. The Company will evaluate any such transactions in
light of then existing market conditions and may determine not to pursue such transactions.
MARKET RISK
In the normal course of business, the Company is exposed to fluctuations in currency values, interest
rates, commodity prices and other market risks. The Company manages these risks through a program
that includes the use of derivative financial instruments, primarily swaps and forwards, which are not used
for trading or speculative purposes. The Company’s objective in managing its exposure to market risk is
to limit the impact on earnings and cash flow.
International operations, principally European, constitute a significant portion of the Company’s
consolidated revenues and identifiable assets. These operations result in a large volume of foreign
currency commitments and transactions and significant foreign currency net asset and liability exposures.
-29-
Crown Holdings, Inc.
The Company manages foreign currency exposures at the operating unit level. Exposures that cannot be
naturally offset within an operating unit are hedged with derivative financial instruments, where possible
and cost effective in the Company’s judgment. Foreign exchange contracts which hedge defined
exposures generally mature within twelve months. The Company does not generally hedge its exposure
to translation gains or losses on its non-U.S. net assets. The Company, from time to time, enters into
cross-currency swaps to hedge foreign currency exchange risk for subsidiary debt which is denominated
in currencies other than the functional currency of the subsidiary.
The table below provides information in U.S. dollars as of December 31, 2005 about the Company’s
forward currency exchange contracts. The majority of the contracts expire in 2006 and primarily hedge
anticipated transactions, unrecognized firm commitments and intercompany debt and are recorded at fair
value.
Buy/Sell
Sterling/Euro
Sterling/U.S. dollars
Euro/Sterling
Euro/U.S. dollars
Euro/Polish Zloty
Euro/Swiss Francs
U.S. dollars/Euro
U.S. dollars/Sterling
U.S. dollars/Thai Baht
U.S. dollars/Singapore dollars
Polish Zloty/Euro
Singapore dollars/U.S. dollars
Contract
Amount
$152
13
214
1
34
13
53
18
13
3
4
31
$549
Contract
Fair value
-
-
$2
-
(01)
-
-
-
-
-
-
-
$1
Average Contractual
Exchange Rate
0.69
.56
1.46
.83
3.86
.65
1.19
1.73
41.26
.60
3.88
1.67
The Company has an additional $2 in a number of smaller contracts to purchase or sell various other
currencies, principally Asian, as of December 31, 2005.
The U.S. dollar debt exposure in Crown European Holdings (“CEH”), created as part of the 2003
refinancing, changed significantly from December 31, 2004 due to the Company’s 2005 refinancing and
related hedging activity, as discussed in Note T to the consolidated financial statements. As of December
31, 2005, CEH, a euro-functional subsidiary, has U.S. dollar exposure on intercompany debt of $700
owed to the U.S. As discussed in Note U to the consolidated financial statements, CEH entered into
$700 notional value cross-currency swaps as a hedge against this exposure. As of December 31, 2005,
CEH has unhedged foreign currency exposure on a $0.5 billion intercompany receivable denominated in
Canadian dollars, and a $0.2 billion intercompany receivable denominated in pound sterling. In addition,
a U.K. subsidiary had foreign currency exposures on $107 of U.S. dollar debt due December 2006 and
CEH had foreign currency exposure on $34 of U.S. dollar debt due 2011 and 2013. Based on these net
exposures at December 31, 2005, a one percent change in the functional currency exchange rates
against the currency creating the exposure would create an exchange rate gain or loss of approximately
$6 before tax.
The Company, from time to time, may manage its interest rate risk, primarily from fluctuations in variable
interest rates, through interest rate swaps in order to balance its exposure between fixed and variable
rates while attempting to minimize its interest costs. Interest rate swaps and other methods of mitigating
interest rate risk may increase overall interest expense. At December 31, 2004, four interest rate swaps
were outstanding with a combined notional value of $900. The swaps effectively converted 9.5% fixed
rate debt into variable rate debt at LIBOR plus 5.46%. The underlying hedged debt was the second
priority U.S. dollar notes due 2011. During 2005, the Company terminated these interest rate swaps and
paid their then fair value of $30.
The table below presents principal cash flows and related interest rates by year of maturity for the
Company’s debt obligations. Variable interest rates disclosed represent the weighted average rates at
December 31, 2005.
-30-
Crown Holdings, Inc.
Debt
Fixed rate ..............................
Average interest rate.............
2006
$108
7.0%
2007
$01
3.9%
2008
$01
2.5%
$01
2.5%
Year of Maturity
2009
2010
Thereafter
$2,377
7.4%
Variable rate..........................
Average interest rate.............
$103
4.8%
$44
5.0%
$16
5.8%
$12
5.9%
$10
6.0%
$0,735
5.1%
The total future payments of $3,408 at December 31, 2005 include $2,311 of U.S. dollar-denominated
debt, $980 of euro-denominated debt and $117 of debt denominated in other currencies.
Aluminum, a basic raw material of the Company, is subject to significant price fluctuations which may be
hedged by the Company through forward commodity contracts. Current contracts involve aluminum
forwards with a notional value of $35. Any gains or losses realized from the use of these contracts are
included in inventory to the extent that they are designated and effective as hedges of the anticipated
purchases. The maturities of the commodity contracts closely correlate to the anticipated purchases of
those commodities. These contracts are used in combination with commercial supply contracts with
customers to manage exposure to price volatility.
CAPITAL EXPENDITURES
Consolidated capital expenditures were $192 in 2005 compared to $138 in 2004.
Expenditures in the Americas Division were $53 in 2005 and included spending of $25 in the Americas
Beverage and $13 in the North America Food segments. Spending was primarily for cost reduction,
equipment modernization and plant relocation.
Expenditures in the European Division were $131 and included spending of $81 in Europe Beverage, $20
in Europe Food and $5 in Europe Specialty Packaging. Spending was primarily for increased beverage
can and end capacity in the Middle East, cost reduction and equipment modernization and equipment for
new products.
At December 31, 2005, the Company had approximately $37 of capital commitments.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has certain guarantees and indemnification agreements that could require the payment of
cash upon the occurrence of certain events. The guarantees and agreements are further discussed in
Note N to the consolidated financial statements.
The Company also utilizes receivables securitization facilities as further discussed in Note F to the
consolidated financial statements.
ENVIRONMENTAL MATTERS
Compliance with the Company’s Environmental Protection Policy is mandatory and the responsibility of
each employee of the Company. The Company is committed to the protection of human health and the
environment and is operating within the increasingly complex laws and regulations of national, state, and
local environmental agencies or is taking action to achieve compliance with such laws and regulations.
Environmental considerations are among the criteria by which the Company evaluates projects, products,
processes and purchases.
The Company is dedicated to a long-term environmental protection program and has initiated and
implemented many pollution prevention programs with an emphasis on source reduction. The Company
continues to reduce the amount of metal used in the manufacture of steel and aluminum containers
through “lightweighting” programs. The Company recycles nearly 100% of scrap aluminum, steel and
copper used in its manufacturing processes. Many of the Company’s programs for pollution prevention
reduce operating costs and improve operating efficiencies.
-31-
Crown Holdings, Inc.
The Company has been identified by the EPA as a potentially responsible party (along with others, in
most cases) at a number of sites. Actual expenditures for remediation were $1, $1 and $2 in 2005, 2004
and 2003, respectively. The Company’s balance sheet reflects estimated discounted remediation
liabilities of $27 at December 31, 2005, including $1 as a current liability. The Company records an
environmental liability when it is probable that a liability has been incurred and the amount of the liability
is reasonably estimable. The reserve at December 31, 2005 is primarily for asserted claims and is based
on internal and external environmental studies. The Company expects that the liability will be paid out
over the period of remediation for the applicable sites, which in some cases may exceed ten years.
Although the Company believes its reserves are adequate, there can be no assurance that the ultimate
payments will not exceed the amount of the Company’s reserve and will not have a material effect on the
Company’s consolidated results, financial position and cash flow. Any possible loss or range of potential
loss that may be incurred in excess of the recorded reserves cannot be estimated.
COMMON STOCK AND OTHER SHAREHOLDERS’ EQUITY/(DEFICIT)
In connection with its refinancing and reorganization in 2003, Crown Cork & Seal Company, Inc. formed a
new public holding company named Crown Holdings, Inc. Details of the corporate reorganization and
activities in its common stock for the past three years are provided in Note Q to the consolidated financial
statements.
Shareholders’ equity/(deficit) was ($236) at December 31, 2005 compared to $277 and $140 at
December 31, 2004 and 2003, respectively. The decrease in 2005 was primarily due to a net loss of
$362 and unfavorable foreign currency translation adjustments resulting primarily from the strengthening
of the U.S. dollar against the euro and pound sterling, offset by an increase in the minimum pension
liability adjustments. The increase in 2004 was primarily due to favorable foreign currency translation
adjustments resulting primarily from the strengthening of the euro and pound sterling against the U.S.
dollar. In 2004, improved earnings were offset by the adjustment to the minimum pension liability.
The Company’s first priority revolving credit and term loan facilities and its first priority senior secured
notes contain provisions that limit the repurchase of common stock and the payment of dividends subject
to certain permitted payments or repurchases and exceptions. The Company acquired 2,101,809 shares,
11,221 shares and 16,411 shares of common stock in 2005, 2004 and 2003, respectively.
Total common shares outstanding were 166,712,081 at December 31, 2005 and 165,559,558 at
December 31, 2004.
The Board of Directors has authorized the repurchase of up to $200 million of the Company’s outstanding
common stock from time to time through December 31, 2007 ($50 million of which is authorized to be
repurchased through December 31, 2006), in the open market or through privately negotiated
transactions, subject to the terms of the Company’s debt agreements, market conditions and other
factors. As of February 28, 2006, 2,583,500 shares of common stock had been repurchased by the
Company under this authorization for $47. The Company is not obligated to acquire any shares of
common stock and the share repurchase plan may be suspended or terminated at any time at the
Company’s discretion.
The repurchased shares, if any, are expected to be used for the Company’s stock-based benefit plans,
and to offset dilution resulting from the issuance of shares thereunder, and for other general corporate
purposes.
The Board of Directors adopted a Shareholders’ Rights Plan in 1995 and declared a dividend of one right
for each outstanding share of common stock. In connection with the formation of Crown Holdings, Inc.,
the existing Shareholders’ Rights Plan was terminated and a new Rights Agreement was entered into
with terms substantially identical to the terminated plan, as amended in 2004. See Note Q to the
consolidated financial statements for a description of the Shareholders’ Rights Plan.
-32-
INFLATION
Crown Holdings, Inc.
Inflation has not had a significant impact on the Company over the past three years and the Company
does not expect it to have a significant impact on the results of operations or financial condition in the
foreseeable future.
CRITICAL ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States which require that management make numerous
estimates and assumptions. Actual results could differ from those estimates and assumptions, impacting
the reported results of operations and financial position of the Company. The Company’s significant
accounting policies are more fully described in Note A to the consolidated financial statements. Certain
accounting policies, however, are considered to be critical in that (i) they are most important to the
depiction of the Company’s financial condition and results of operations and (ii) their application requires
management’s most subjective judgment in making estimates about the effect of matters that are
inherently uncertain.
The Company’s potential liability for asbestos cases is highly uncertain due to the difficulty of forecasting
many factors, including the level of future claims, the rate of receipt of claims, the jurisdiction in which
claims are filed, the terms of settlements of other defendants with asbestos-related liabilities, the
bankruptcy filings of other defendants (which may result in additional claims and higher settlement
demands for non-bankrupt defendants), the effect of the Texas, Mississippi, Ohio and Florida asbestos
legislation, and the effect of the Pennsylvania asbestos legislation (including the validity and applicability
of the Pennsylvania legislation to non-Pennsylvania jurisdictions, where the substantial majority of the
Company’s asbestos cases are filed). The Company reviews the adequacy of its accrual in the fourth
quarter of each year, unless new information or circumstances indicate the review should be done prior to
that time. See Note M to the consolidated financial statements for additional information on the
Company’s asbestos-related liabilities and assumptions.
The Company performs a goodwill impairment review in the fourth quarter of each year or when facts and
circumstances indicate goodwill may be impaired. The impairment review involves a number of
assumptions and judgments, including the calculation of fair value of the Company’s identified reporting
units. The Company uses a combination of market values for comparable businesses and discounted
cash flow projections to calculate fair value. The Company’s estimates of future cash flows include
assumptions concerning future operating performance, economic conditions, and technological changes
and may differ from actual future cash flows.
The Company performs an impairment review of its long-lived assets, primarily property, plant and
equipment, when facts and circumstances indicate the carrying value may not be recoverable from its
undiscounted cash flows. Any impairment loss is measured by comparing the carrying amount of the
asset to its fair value. The Company’s estimates of future cash flows involve assumptions concerning
future operating performance, economic conditions, and technological changes that may affect the future
useful lives of the assets. These estimates may differ from actual cash flows or useful lives.
The Company records a valuation allowance to reduce its deferred tax assets when it is more likely than
not that a portion of the tax assets will not be realized. The estimate of the amount that will not be
realized requires the use of assumptions concerning the Company’s future taxable income. The Company
considers all sources of taxable income in estimating its valuation allowances, including taxable income in
any available carry back period; the reversal of taxable temporary differences; tax-planning strategies;
and taxable income expected to be generated in the future other than reversing temporary differences.
Should the Company change its estimate of the amount of its deferred tax assets that it would be able to
realize, an adjustment to the valuation allowance would result in an increase or decrease in tax expense
in the period such a change in estimate was made. See Note X to the consolidated financial statements
for additional information on the Company’s assumptions and valuation allowances.
-33-
Crown Holdings, Inc.
Accounting for pensions and postretirement benefit plans requires the use of estimates and assumptions
regarding numerous factors, including discount rates, rates of return on plan assets, compensation
increases, health care cost increases, mortality and employee turnover. Actual results may differ from the
Company’s actuarial assumptions, which may have an impact on the amount of reported expense or
liability for pensions or postretirement benefits. The rate of return assumption is reviewed at each
measurement date based on the pension plan’s investment policies and an analysis of the historical
returns of the capital markets, adjusted for current interest rates as appropriate. The U.S. plan’s current
asset allocation targets are to have 70% U.S. and international equities, 12% debt securities, 15%
alternate investments and 3% real estate. The U.K. plan, which is the primary non-U.S. plan, has a
current asset allocation policy of 25% U.K. and non-U.K. equities, 52% liability-matching debt securities,
5% other debt securities, 10% alternate investments and 8% real estate. The discount rate for the U.S.
plan was selected using a method that matches projected payouts from the plan with a zero-coupon
double A bond yield curve. This yield curve was constructed from the underlying bond price and yield
data collected as of the plan’s measurement date and is represented by a series of annualized, individual
discount rates with durations ranging from six months to thirty years. Each discount rate in the curve was
derived from an equal weighting of the double A or higher bond universe, apportioned into distinct
maturity groups. These individual discount rates were then converted into a single equivalent discount
rate. To assure that the resulting rates can be achieved by the plan, only bonds that satisfy certain
criteria and are expected to remain available through the period of maturity of the plan benefits were used
to develop the discount rate. The discount rate for the U.K. plan was determined based on the yields
available on high quality sterling-denominated bonds whose proceeds are expected to match the
projected pension benefit payments. The U.K. plan benefit payments are largely linked to future price
inflation, and to select the discount rate the Company considers the yields available on index-linked gilts
together with allowance for double A credit risk spreads and expectations for future inflation consistent
with the benefit payment projections. A .25% change in the expected rates of return would change 2006
pension expense by approximately $10. A .25% change in the discount rates from those used at
December 31, 2005 would change 2006 pension expense by approximately $7. See Note W to the
consolidated financial statements for additional information on pension and postretirement benefit
obligations and assumptions.
The Company currently accounts for stock-based compensation expense using the intrinsic value
method. The effect on net income and earnings per share if the Company had applied the fair value
provisions of FAS 123 is disclosed in Note A to the consolidated financial statements.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standards (“SFAS”) No. 123 (revised 2004) (“FAS 123(R)”), “Share-Based Payment.” FAS
123(R) replaces SFAS No. 123 (“FAS 123”), “Accounting for Stock Issued to Employees.” FAS 123(R)
requires that the cost of share-based payments to employees, including grants of employee stock
options, be recognized in the financial statements based on their grant-date fair values. The proforma
disclosures previously permitted under FAS 123 will no longer be an alternative to financial statement
recognition. Upon adoption of FAS 123(R), the Company must select an appropriate valuation model to
calculate the fair value of its share-based payments for awards made subsequent to adoption of the
standard, and a transition method for recognizing compensation expense. Valuations of awards granted
prior to adoption of the standard have been calculated using the Black-Scholes option pricing model.
Upon adoption of the standard, these prior valuations will not be reassessed. The transition methods
provided in the standard include modified prospective and retrospective options. The Company will
use the modified prospective method in which compensation expense for all unvested stock awards,
measured by the grant-date fair value of the award, will be charged to earnings prospectively over the
remaining vesting period based on the estimated number of awards that are expected to vest. The
Company will adopt the new standard on January 1, 2006. The Company estimates the impact on 2006
results from adopting the standard to be approximately $4 or approximately $.02 per share based on the
options outstanding at December 31, 2005. However, the total expense to be recognized in 2006 and in
future periods will depend on several variables, including the number of new awards issued, the number
of share-based awards that vest and the fair value of those awards.
-34-
Crown Holdings, Inc.
In November 2004, the FASB issued SFAS No. 151 (“FAS 151”), “Inventory Costs – An Amendment of
ARB No. 43, Chapter 4.” FAS 151 amends the guidance in ARB No. 43 to clarify that abnormal amounts
of idle facility expense, freight, handling costs and material spoilage should be expensed as incurred and
not included in overhead. Additionally, FAS 151 requires that the allocation of fixed production overheads
to the costs of conversion should be based on normal capacity of the production facilities. FAS 151 is
effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company will
prospectively adopt the standard in 2006. The standard is not expected to have a material impact on the
Company’s results of operations and financial position.
In December 2004, the FASB issued SFAS No. 153 (“FAS 153”), “Exchanges of Nonmonetary Assets –
An Amendment of APB Opinion No. 29.” FAS 153 eliminates the exception from fair value measurement
for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB 29 and replaces it
with an exception for exchanges that do not have commercial substance. FAS 153 specifies that a
nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. The provisions of FAS 153 are effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company
will prospectively adopt the new standard in 2006. The standard is not expected to have a material
impact on the Company’s results of operations and financial position.
In May 2005, the FASB issued SFAS No. 154 (“FAS 154”), “Accounting Changes and Error Corrections, a
Replacement of APB No. 20 and FASB Statement No, 3.” FAS 154 requires retrospective application,
with minor exceptions, to prior periods’ financial statements of changes in accounting principle. The
Statement applies primarily to voluntary changes in accounting principle. The Statement also requires
that a change in depreciation, amortization or depletion method for long-lived non-financial assets be
accounted for as a change in accounting estimate affected by a change in accounting principle. FAS 154
is effective for accounting changes and correction of errors made in fiscal years beginning after
December 15, 2005. The Company will prospectively adopt the new standard in 2006. The standard is
not expected to have a material impact on the Company’s results of operations and financial position.
FORWARD LOOKING STATEMENTS
Statements in this Annual Report, including those in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and in the discussions of the provision for asbestos in Note M and
other contingencies in Note N to the consolidated financial statements included in this Annual Report,
which are not historical facts (including any statements concerning plans and objectives of management
for future operations or economic performance, or assumptions related thereto), are “forward-looking
statements,” within the meaning of the federal securities laws. In addition, the Company and its
representatives may from time to time make other oral or written statements which are also “forward-
looking statements.” Forward-looking statements can be identified by words, such as “believes,”
“estimates,” “anticipates,” “expects” and other words of similar meaning in connection with a discussion of
future operating or financial performance. These may include, among others, statements relating to (i) the
Company’s plans or objectives for future operations, products or financial performance, (ii) the Company’s
indebtedness and other contractual obligations, (iii) the impact of an economic downturn or growth in
particular regions, (iv) anticipated uses of cash, (v) cost reduction efforts and expected savings and (vi)
the expected outcome of contingencies, including with respect to asbestos-related litigation and pension
and postretirement liabilities.
These forward-looking statements are made based upon management’s expectations and beliefs
concerning future events impacting the Company and, therefore, involve a number of risks and
uncertainties. Management cautions that forward-looking statements are not guarantees and that actual
results could differ materially from those expressed or implied in the forward-looking statements.
Important factors that could cause the actual results of operations or financial condition of the Company
to differ include, but are not necessarily limited to, the ability of the Company to repay, refinance or
restructure its short and long-term indebtedness on adequate terms and to comply with the terms of its
agreements relating to debt; loss of customers, including the loss of any significant customers; the
Company’s ability to obtain and maintain adequate pricing for its products, including the impact on the
-35-
Crown Holdings, Inc.
Company’s revenue, margins and market share and the ongoing impact of recent price increases; the
impact of the Company’s initiative to generate additional cash, including the reduction of working capital
levels and capital spending; restrictions on the Company’s use of available cash under its debt
agreements; the ability of the Company to realize cost savings from its restructuring programs; changes in
the availability and pricing of raw materials (including aluminum can sheet, steel tinplate, plastic resin,
energy, inks and coatings) and the Company’s ability to pass raw material and energy price increases
and surcharges through to its customers or to otherwise manage these commodity pricing risks; the
financial condition of the Company’s vendors and customers; the Company’s ability to generate
significant cash to meet its obligations and invest in its business and to maintain appropriate debt
levels; the Company’s ability to maintain adequate sources of capital and liquidity; the Company’s ability
to realize efficient capacity utilization and inventory levels and to innovate new designs and technologies
for its products in a cost-effective manner; changes in consumer preferences for different packaging
products; competitive pressures, including new product developments, industry overcapacity; or changes
in competitors’ pricing for products; the Company’s ability to maintain and develop competitive
technologies for the design and manufacture of products and to withstand competitive and legal
challenges to the proprietary nature of such technology; the Company’s ability to generate sufficient
production capacity; the collectibility of receivables; changes in governmental regulations or enforcement
practices, including with respect to environmental, health and safety matters and restrictions as to foreign
investment or operation; weather conditions, including their effect on demand for beverages and on crop
yields for fruits and vegetables stored in food containers; changes or differences in U.S. or international
economic or political conditions, such as inflation or fluctuations in interest or foreign exchange rates (and
the effectiveness of any currency or interest rate hedges) and tax rates; war or acts of terrorism that may
disrupt the Company’s production or the supply or pricing of raw materials, impact the financial condition
of customers or adversely affect the Company’s ability to refinance or restructure its remaining
indebtedness; the impact of existing and future legislation regarding refundable mandatory deposit laws in
Europe for non-refillable beverage containers and the implementation of an effective return system;
energy and natural resource costs; the cost and other effects of legal and administrative cases and
proceedings, settlements and investigations; the outcome of asbestos-related litigation (including the
number and size of future claims and the terms of settlements, and the impact of bankruptcy filings by
other companies with asbestos-related liabilities, any of which could increase Crown Cork’s asbestos-
related costs over time, the adequacy of reserves established for asbestos-related liabilities, Crown
Cork’s ability to obtain resolution without payment of asbestos-related claims by persons alleging first
exposure to asbestos after 1964, and the impact of Texas, Pennsylvania, Mississippi, Ohio and Florida
legislation dealing with asbestos liabilities and any litigation challenging that legislation and any future
state or federal legislation dealing with asbestos liabilities), labor relations and workforce and social costs,
including the Company’s pension and postretirement obligations and other employee or retiree costs;
investment performance of the Company’s pension plans; costs and difficulties related to the integration
of acquired businesses; changes in the Company’s critical or other accounting policies or the
assumptions underlying those policies; changes in the Company’s strategic areas of focus; and the
impact of any potential dispositions, acquisitions or other strategic realignments, including the recent sale
of the Company’s plastic closures business and the net proceeds therefrom which may impact the
Company’s operations, financial profile or levels of indebtedness.
Some of the factors noted above are discussed elsewhere in this Annual Report and prior Company
filings with the Securities and Exchange Commission (“SEC”), including within Part I, Item 1A, “Risk
Factors” in this Annual Report. In addition, other factors have been or may be discussed from time to
time in the Company’s SEC filings.
While the Company periodically reassesses material trends and uncertainties affecting the Company’s
results of operations and financial condition in connection with the preparation of Management’s
Discussion and Analysis of Financial Condition and Results of Operations and certain other sections
contained in the Company’s quarterly, annual or other reports filed with the SEC, the Company does not
intend to review or revise any particular forward-looking statement in light of future events.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth within Item 7, Management’s Discussion and Analysis of Financial Condition and
Results of Operations under “Market Risk” is incorporated herein by reference.
-36-
Crown Holdings, Inc.
ITEM 8. FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND FINANCIAL STATEMENT
SCHEDULE
INDEX TO FINANCIAL STATEMENTS
Financial Statements
Management’s Report on Internal Control Over Financial Reporting................................
38
Report of Independent Registered Public Accounting Firm ..............................................
39
Consolidated Statements of Operations for the years ended
December 31, 2005, 2004 and 2003...........................................................................
41
Consolidated Balance Sheets as of December 31, 2005 and 2004..................................
42
Consolidated Statements of Cash Flows for the years ended
December 31, 2005, 2004 and 2003...........................................................................
43
Consolidated Statements of Shareholders’ Equity/(Deficit) for the years ended
December 31, 2005, 2004 and 2003...........................................................................
44
Notes to Consolidated Financial Statements.....................................................................
45
Supplementary Information................................................................................................
96
Financial Statement Schedule
Schedule II – Valuation and Qualifying Accounts and Reserves ................................................
97
-37-
Crown Holdings, Inc.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). The
Company’s system of internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles.
Because of the inherent limitations, a system of internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2005. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-
Integrated Framework. Based on its assessment, management has concluded that, as of December 31,
2005, the Company’s internal control over financial reporting was effective based on those criteria.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting
as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered
public accounting firm, as stated in their report which appears herein.
-38-
Crown Holdings, Inc.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
of Crown Holdings, Inc.:
We have completed integrated audits of Crown Holdings, Inc.’s 2005 and 2004 consolidated financial
statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its
2003 consolidated financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.
Consolidated financial statements and financial statement schedule
In our opinion, the consolidated financial statements listed in the accompanying index appearing under
Item 15(a)(1) present fairly, in all material respects, the financial position of Crown Holdings Inc. and its
subsidiaries at December 31, 2005 and December 31, 2004, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2005 in conformity with
accounting principles generally accepted in the United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index appearing under Item 15(a)(2) presents
fairly, in all material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and financial statement schedule are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit of financial
statements 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 our opinion.
Internal control over financial reporting
Also, in our opinion, management’s assessment, included in the accompanying “Management’s Report
on Internal Control Over Financial Reporting”, that the Company maintained effective internal control
over financial reporting as of December 31, 2005 based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in
our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated
Framework issued by the COSO. The Company’s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting. Our responsibility is to express opinions on management’s assessment and on the
effectiveness of the Company’s internal control over financial reporting based on our audit. We
conducted our audit of internal control over financial reporting in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. An audit of internal control over financial reporting
includes obtaining an understanding of internal control over financial reporting, evaluating management’s
assessment, testing and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we consider necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinions.
-39-
Crown Holdings, Inc.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 15, 2006
-40-
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
Crown Holdings, Inc.
For the years ended December 31
2005
2004
2003
Net sales..............................................................................................
$ 6,908
$ 6,531
$6,007
Cost of products sold, excluding depreciation and amortization ...
Depreciation and amortization.......................................................
5,759
249
5,463
263
5,073
281
Gross profit.........................................................................................
Selling and administrative expense ...............................................
Provision for asbestos…Note M ....................................................
Provision for restructuring…Note O...............................................
Provision for asset impairments and loss/gain on sale
of assets…Note P ...................................................................
Loss from early extinguishments of debt…Note T ........................
Interest expense ............................................................................
Interest income ..............................................................................
Translation and exchange adjustments…Note S ..........................
Income/(loss) from continuing operations before income taxes,
minority interests and equity earnings......................................
Provision/(benefit) for income taxes…Note X ...............................
Minority interests............................................................................
Equity earnings/(loss) ....................................................................
Income/(loss) from continuing operations ......................................
900
349
10
16
10
383
361
9)
94
314
)
2)
51)
12
351)
(
(
(
(
(
(
(
(
Discontinued operations…Note B ....................................................
Income before income taxes .........................................................
Provision for income taxes ............................................................
Income/(loss) from discontinued operations ..................................
Net income/(loss)
23
34
(
11)
( $ 362)
$
805
318
35
7
47
39
361
8)
98)
104
61
41)
14
16
56
21
35
51
653
292
44
15
76
12
379
11 )
207 )
53
71
39 )
17 )
74 )
66
24
42
32 )
(
(
(
(
(
( $
Per common share data: Note V
Earnings/(loss)
Basic – Continuing operations.....................................................
Discontinued operations .................................................
Diluted – Continuing operations ....................................................
Discontinued operations ................................................
( $ 2.12)
( 0.06)
( $ 2.18)
$ 0.10
0.21
$ 0.31
( $ 0.45 )
0.26
( $ 0.19 )
( $ 2.12)
(
0.06)
( $ 2.18)
$ 0.09
0.21
$ 0.30
( $ 0.45 )
0.26
( $ 0.19 )
The accompanying notes are an integral part of these consolidated financial statements.
-41-
Crown Holdings, Inc.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
December 31
Assets
Current assets
2005
2004
Cash and cash equivalents ...........................................................
Receivables, net…Note F..............................................................
Inventories…Note G ......................................................................
Prepaid expenses and other current assets..................................
Total current assets...........................................................
$
294
686
810
55
1,845
Goodwill…Note D.................................................................................
Property, plant and equipment, net…Note H .......................................
Other non-current assets…Note I ........................................................
Total ....................................................................................
2,013
1,607
1,080
$ 6,545
Liabilities and shareholders’ equity / (deficit)
Current liabilities
Short-term debt…Note S ...............................................................
Current maturities of long-term debt…Note S ...............................
Accounts payable and accrued liabilities…Note J.........................
Income taxes payable....................................................................
Total current liabilities ......................................................
$
$
471
900
894
78
2,343
2,592
2,002
1,188
$ 8,125
$
51
25
1,943
61
2,080
3,796
1,019
752
201
72
139
1,674
58
1,943
3,192
745
655
246
Long-term debt, excluding current maturities…Note S........................
Postretirement and pension liabilities…Note W...................................
Other non-current liabilities…Note K ...................................................
Minority interests ..................................................................................
Commitments and contingent liabilities…Notes L and N.....................
Shareholders’ equity / (deficit)
Preferred stock, authorized: 30,000,000; none issued…Note Q .........
Common stock, par value: $5.00; authorized: 500,000,000…Note Q .
2005 – issued 185,744,072; 2004 – issued 185,751,452 .............
Additional paid-in capital ......................................................................
Accumulated deficit ..............................................................................
Accumulated other comprehensive loss…Note E ...............................
Unearned compensation ......................................................................
Treasury stock at par value (2005 – 19,031,991 shares;
929
1,679
1,526 )
1,219 )
5 )
(
(
(
929
1,699
1,164 )
1,087 )
(
(
2004 – 20,191,894 shares)............................................................
Total shareholders’ equity/(deficit)............................................
Total ....................................................................................
(
94 )
(
236 )
$ 6,545
(
100 )
277
$ 8,125
The accompanying notes are an integral part of these consolidated financial statements.
-42-
Crown Holdings, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
For the years ended December 31
2005
2004
2003
Cash flows from operating activities
Net income/(loss) .................................................................................. ( $ 362)
Adjustments to reconcile net income/(loss) to net cash
provided by/(used for) operating activities:
Depreciation and amortization........................................................
Loss/(gain) from translation and foreign exchange........................
Provision for asset impairments and loss/gain on sale of assets...
Write-off of deferred financing fees…Note T..................................
Pension expense............................................................................
Pension contributions ..................................................................... (
Deferred income taxes ................................................................... (
Minority interests and equity earnings............................................
Changes in assets and liabilities, net of effect of divested businesses:
Receivables ....................................................................................
Inventories ...................................................................................... (
Accounts payable and accrued liabilities .......................................
Asbestos liabilities .......................................................................... (
Other............................................................................................... (
Net cash provided by/(used for) operating activities......... (
282
94
10
101
85
401)
35)
39
72
28)
121
19)
81)
122)
Cash flows from investing activities
Capital expenditures.......................................................................... (
Funding of restricted cash accounts…Note T ...................................
Withdrawals from restricted cash accounts…Note T ........................
Proceeds from sale of business, net of cash sold…Note B ..............
Proceeds from sale of property, plant and equipment.......................
Other.................................................................................................. (
Net cash provided by/(used for) investing activities .........
627
40
11)
464
192)
(
138)
Cash flows from financing activities
Proceeds from long-term debt ...........................................................
1,616
Payments of long-term debt .............................................................. ( 2,268)
248
Net change in short-term debt ...........................................................
Debt issue costs ................................................................................ (
26)
Net payment from termination of cross-currency swaps ...................
Common stock issued .......................................................................
Common stock repurchased.............................................................. (
Dividends paid to minority interests................................................... (
Net cash used for financing activities ................................. (
16
38)
45)
497)
Effect of exchange rate changes on cash and cash equivalents............. (
22)
Net change in cash and cash equivalents ............................................... (
177)
$
51
( $
32 )
326
207 )
73
12
97
(122 )
6
56
85
37
9 )
24 )
136
434
120 )
344 )
344
35
15 )
100 )
(
(
(
(
(
(
(
2,625
( 1,109 )
( 1,673 )
141 )
(
8 )
(
2
(
(
(
(
(
308
98)
47
33
100
171)
12
28
43)
37)
128
6)
52
404
39
8)
107)
720
873)
24)
31)
3
(
(
(
(
(
(
(
41)
246)
(
(
24 )
328 )
19
70
32
38
Cash and cash equivalents at January 1 .................................................
471
401
363
Cash and cash equivalents at December 31 ....................................... $ 294
$ 471
$ 401
The accompanying notes are an integral part of these consolidated financial statements.
-43-
Crown Holdings, Inc.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY / (DEFICIT) AND COMPREHENSIVE INCOME/(LOSS)
(in millions, except share data)
Balance January 1, 2003 ........................................
$902
Comprehensive
Income/(Loss)
Common
Stock
Unearned
Compensation
Paid-in
Capital
$1,684
Retained
Earnings/
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
($1,183 )
($1,386 )
($104 ) ($0,087 )
Net loss .....................................................................
Derivatives qualifying as hedges ..............................
Translation adjustments............................................
Minimum pension liability adjustments, net of tax.....
Available for sale securities ......................................
Comprehensive income ............................................
($0,032 )
1
203
10
2
$0,184
Stock issued in debt-for-equity exchanges:
5,386,809 common shares...............................
27
Stock issued – benefit plans:
223,680 common shares..................................
Stock repurchased: 16,411 common shares ............
14
1
(00,032 )
1
203
10
2
(00,032 )
1
203
10
2
41
2
1
Balance December 31, 2003...................................
929
1,699
(01,215 )
(01,170 )
(0103 )
140
Net income................................................................
Derivatives qualifying as hedges ..............................
Translation adjustments............................................
Translation adjustments – disposition of
foreign investments ..........................................
Minimum pension liability adjustments, net of tax.....
Available for sale securities ......................................
Comprehensive income ............................................
$0,051
7
107
29
(00,063 )
3
$0,134
Stock issued – benefit plans:
546,626 common shares..................................
Stock repurchased: 11,221 common shares ............
51
7
107
29
(00,063 )
3
51
7
107
29
(00,063 )
3
3
3
Balance December 31, 2004...................................
929
1,699
(01,164 )
($1,087 )
($100 )
277
Net loss .....................................................................
Derivatives qualifying as hedges ..............................
Translation adjustments............................................
Translation adjustments – disposition of
foreign investments ..........................................
Minimum pension liability adjustments, net of tax.....
Available for sale securities ......................................
Comprehensive loss .................................................
($0362 )
(00010 )
(00187 )
(00005 )
76
(00006 )
($0494 )
Restricted stock issued – 604,196 shares
Earned compensation on restricted stock
Stock issued – benefit plans:
2,650,136 common shares...............................
Stock repurchased: 2,101,809 common shares .......
5
($8 )
3
3
(00,028 )
(00,362 )
(00,010 )
(0,0187 )
(00,005 )
76
(00,006 )
(0362 )
(0010 )
(0187 )
(0005 )
76
(0006 )
3
3
13
(0010 )
16
(0038 )
Balance December 31, 2005...................................
$929
$1,679
($5 )
($1,526 )
($1,219 )
($094 )
($236 )
The accompanying notes are an integral part of these consolidated financial statements.
-44-
Crown Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share, per share, employee and statistical data)
A. Summary of Significant Accounting Policies
Business and Principles of Consolidation. In connection with its refinancing and reorganization in
2003, as discussed in Note Q and Note T, Crown Cork & Seal Company, Inc. formed a new public
holding company named Crown Holdings, Inc. Crown Cork & Seal Company, Inc. is now a wholly-owned
subsidiary of Crown Holdings, Inc. The consolidated financial statements include the accounts of Crown
Holdings, Inc. (the “Company”) and its consolidated subsidiary companies (where the context requires,
the “Company” shall include reference to the Company and its consolidated subsidiary companies). The
reorganization had no effect on the results of operations, financial position or cash flow of the Company.
The Company manufactures and sells metal containers, metal closures, packaging for health and beauty
care products and canmaking equipment. These products are manufactured in the Company’s plants
both within and outside the United States and are sold through the Company’s sales organization to the
soft drink, food, citrus, brewing, household products, personal care and various other industries. The
financial statements were prepared in conformity with U.S. generally accepted accounting principles and
reflect management’s estimates and assumptions. Actual results could differ from those estimates,
impacting reported results of operations and financial position. All intercompany accounts and
transactions are eliminated in consolidation. In deciding which entities should be reported on a
consolidated basis, the Company first determines whether the entity is a variable interest entity (“VIE”) as
defined in FASB Interpretation No. 46 (“FIN 46”). If an entity meets the criteria for VIE status, the
Company consolidates that entity if the Company has the obligation to absorb more than 50% of the
entity’s expected losses or receive more than 50% of the entity’s expected residual returns. If an entity
does not meet the criteria for VIE status, the Company consolidates those in which it has effective control,
which includes certain subsidiaries that are not majority-owned. Certain of the Company’s joint venture
agreements, including those discussed in Note C, contain provisions in which the Company would
surrender certain decision-making rights upon a change in control of the Company. AccordingIy,
consolidation of these operations may no longer be appropriate subsequent to a change in control of the
Company, as defined in the joint venture agreements. Investments in companies in which the Company
does not have effective control, but has the ability to exercise significant influence over operating and
financial policies, are accounted for by the equity method. Investments in securities where the Company
does not have the ability to exercise significant influence over operating and financial policies, and whose
fair value is readily determinable such as those listed on a securities exchange, are referred to as
“available for sale securities” and reported at their fair value with unrealized gains and losses reported in
accumulated other comprehensive income in shareholders’ equity. Other investments are carried at cost.
Foreign Currency Translation. For non-U.S. subsidiaries which operate in a local currency environment,
assets and liabilities are translated into U.S. dollars at year-end exchange rates. Income and expense
items are translated at average exchange rates prevailing during the year. Translation adjustments for
these subsidiaries are accumulated as a separate component of accumulated other comprehensive
income in shareholders’ equity. For non-U.S. subsidiaries that use a U.S. dollar functional currency, local
currency inventories and property, plant and equipment are translated into U.S. dollars at approximate
rates prevailing when acquired; all other assets and liabilities are translated at year-end exchange rates.
Inventories charged to cost of sales and depreciation are remeasured at historical rates; all other income
and expense items are translated at average exchange rates prevailing during the year. Gains and losses
which result from remeasurement are included in earnings.
Revenue Recognition. The Company recognizes revenue from product sales when the goods are
shipped and the title and risk of loss pass to the customer. Provisions for discounts and rebates to
customers, returns, and other adjustments are provided in the period that the related sales are recorded.
Stock-Based Compensation. The Company has stock-based employee compensation plans that are
currently comprised of fixed stock options and restricted stock awards. Compensation cost for stock
options and restricted stock is measured as the excess, if any, of the quoted market price of the
Company’s stock at the date of grant above the amount an employee must pay to acquire the
stock awarded.
-45-
Crown Holdings, Inc.
The following table illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123 (“FAS 123”), “Accounting for Stock-Based
Compensation,” to stock options.
Net income/(loss), as reported
Add: Stock-based compensation expense for restricted stock
2005
2004
2003
($362 )
$051
($032 )
already included in net income/(loss) as reported, net of tax
3
Deduct: Proforma stock-based compensation expense for stock
options and restricted stock, net of tax
Proforma net income/(loss)
(0013 )
($372 )
(0009 )
$042
(0011 )
($043 )
Earnings/(loss) per share:
Basic – as reported
Diluted – as reported
Basic – proforma
Diluted – proforma
($2.18 )
($2.18 )
($2.24 )
($2.24 )
$0.31
$0.30
$0.25
$0.25
($0.19 )
($0.19 )
($0.26 )
($0.26 )
In December 2004, the FASB issued SFAS No. 123 (revised 2004) (“FAS 123(R)”), “Share-Based
Payment,” which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (“FAS 123”) and
supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” FAS 123(R) requires that
the cost of share-based payments to employees, including grants of employee stock options, be
recognized in the financial statements based on their grant-date fair values. The pro forma disclosures
previously permitted under FAS 123 will no longer be an alternative to financial statement recognition.
Under FAS 123(R) the Company must select an appropriate valuation model to calculate the fair value
of its share-based payments for awards made subsequent to adoption of the standard, and a transition
method for recognizing compensation expense. Valuations of awards granted prior to adoption of the
standard have been calculated using the Black-Scholes Option Pricing Model. Upon adoption of the
standard, these prior valuations will not be reassessed. The transition methods provided in the standard
include modified prospective and retrospective options. The Company will use the modified prospective
method in which compensation expense for all unvested stock awards, measured by the grant-date fair
value of the award, will be charged to earnings prospectively over the remaining vesting period based on
the estimated number of awards that are expected to vest. The Company will prospectively adopt the new
standard in 2006.
Cash and Cash Equivalents. Cash equivalents represent investments with maturities of three months or
less from the time of purchase and are carried at cost which approximates fair value because of the short
maturity of those instruments. Outstanding checks in excess of funds on deposit are included in accounts
payable. Restricted cash of $17 and $20 at December 31, 2005 and 2004, respectively, is included within
other non-current assets in the Consolidated Balance Sheets.
Accounts Receivable and Allowance for Doubtful Accounts. Trade accounts receivable are recorded
at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the best estimate
of the amount of probable credit losses in the existing accounts receivable. The allowance is determined
based on a review of individual accounts for collectibility, generally focusing on those accounts that are
past due. The current year expense to adjust the allowance for doubtful accounts is recorded within cost
of products sold in the consolidated statements of operations. Account balances are charged against the
allowance when it is probable the receivable will not be recovered.
Inventory Valuation. Inventories are stated at the lower of cost or market, with cost for U.S. inventories
principally determined under the last-in, first-out (“LIFO”) method. Non-U.S. inventories are principally
determined under the average cost method.
-46-
Crown Holdings, Inc.
Property, Plant and Equipment. Property, plant and equipment (“PP&E”) is carried at cost less
accumulated depreciation and includes expenditures for new facilities and equipment and those costs
which substantially increase the useful lives or capacity of existing PP&E. Cost of constructed assets
includes capitalized interest incurred during the construction and development period. Maintenance,
repairs and minor renewals are expensed as incurred. When PP&E is retired or otherwise disposed, the
net carrying amount is eliminated with any gain or loss on disposition recognized in earnings at that time.
Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the
assets. The range of estimated economic lives in years assigned to each significant fixed asset category
is as follows: Land Improvements-25; Buildings and Building Improvements-25 to 40; Machinery and
Equipment-3 to 14.
Intangibles. Goodwill, representing the excess of the cost over the net tangible and identifiable intangible
assets of acquired businesses, and other intangible assets are stated at cost.
Potential impairment is identified by comparing the fair value of a reporting unit, using a combination of
market values for comparable businesses and discounted cash flow projections, to its carrying value
including goodwill. If the carrying value of the reporting unit exceeds its fair value, any impairment loss is
measured by comparing the carrying value of the reporting unit’s goodwill to its implied fair value.
Goodwill is tested for impairment in the fourth quarter of each year or when facts and circumstances
indicate goodwill may be impaired.
Impairment or Disposal of Long-Lived Assets. In the event that facts and circumstances indicate that
the carrying value of long-lived assets, primarily PP&E and certain identifiable intangible assets with finite
lives, may be impaired, the Company performs a recoverability evaluation. If the evaluation indicates that
the carrying value of an asset is not recoverable from its undiscounted cash flows, then an impairment
loss is measured by comparing the carrying value of the asset to its fair value, based on discounted cash
flows. Long-lived assets classified as held for sale are presented in the balance sheet at the lower of their
carrying value or fair value less cost to sell.
Derivatives and Hedging. The Company recognizes all outstanding derivative financial instruments in
the balance sheet at their fair values. The impact on earnings from recognizing the fair values of these
instruments depends on their intended use, their hedge designation and their effectiveness in offsetting
changes in the fair values of the exposures they are hedging. Changes in the fair values of instruments
designated to reduce or eliminate adverse fluctuations in the fair values of recognized assets and
liabilities and unrecognized firm commitments are reported currently in earnings along with changes in the
fair values of the hedged items. Changes in the effective portions of the fair values of instruments used to
reduce or eliminate adverse fluctuations in cash flows of anticipated or forecasted transactions are
reported in shareholders’ equity as a component of accumulated other comprehensive income. Amounts
in accumulated other comprehensive income are reclassified to earnings when the related hedged items
impact earnings or the anticipated transactions are no longer probable. Changes in the fair values of
derivative instruments that are not designated as hedges or do not qualify for hedge accounting treatment
are reported currently in earnings.
The effectiveness of derivative instruments in reducing risks associated with the hedged exposures is
assessed at inception and on an ongoing basis. Any amounts excluded from the assessment of hedge
effectiveness, and any ineffective portion of designated hedges, are reported currently in earnings. Time
value, a component of an instrument’s fair value, is excluded in assessing effectiveness for fair value
hedges, except hedges of firm commitments, and included for cash flow hedges.
The Company discontinues hedge accounting prospectively when (i) it determines that the derivative
instrument is no longer effective in offsetting changes in fair value or cash flows of the underlying hedged
item, (ii) the derivative instrument expires, is sold, terminated or exercised, or (iii) the Company
determines that designating the derivative instrument as a hedge is no longer appropriate.
The Company formally documents all relationships between its hedging instruments and hedged items,
as well as its risk management objective and strategy for establishing various hedge relationships. Cash
flows from hedging instruments are classified in the Consolidated Statements of Cash Flows consistent
with the items being hedged.
-47-
Crown Holdings, Inc.
Treasury Stock. Treasury stock is reported at par value. The excess of fair value over par value is first
charged to paid-in capital, if any, and then to retained earnings.
Research and Development. Net research, development and engineering costs of $47, $47 and $44 in
2005, 2004 and 2003, respectively, were expensed as incurred and reported in selling and administrative
expense in the Consolidated Statements of Operations. Substantially all engineering and development
costs are related to developing new products or designing significant improvements to existing products
or processes. Costs primarily include employee salaries and benefits and facility costs.
Reclassifications. Certain reclassifications of prior years’ data have been made to conform to the current
year presentation. See Note Y for reclassification of prior years’ segment data.
Recently Adopted Accounting and Reporting Standards. During 2005 the Company adopted the
following accounting and reporting standards:
• FASB Interpretation No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement
Obligations (an interpretation of SFAS No. 143).”
• Emerging Issues Task Force (“EITF”) Issue No. 03-13 (“EITF 03-13”), “Applying the
Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether to Report
Discontinued Operations.”
In March 2005, the FASB issued FIN 47 which provides clarification with respect to the timing of liability
recognition for legal obligations associated with retirement of tangible long-lived assets when the timing
and/or method of settlement of the obligation is conditional on a future event. FIN 47 requires that the fair
value of a liability for a conditional asset retirement obligation be recognized in the period in which it
occurred if a reasonable estimate of fair value can be made. The adoption of FIN 47 at December 31,
2005 had no impact on the Company’s statements of operations and cash flows or its balance sheet.
In February 2005, the FASB issued EITF 03-13 which provides guidance on evaluating whether
operations and cash flows of a disposed component have been or will be eliminated from ongoing
operations and the types of continuing involvement that constitute significant continuing involvement in
the operations of the disposed component. The Company has applied the provisions of EITF 03-13 in
determining its discontinued operations presentation.
B. Discontinued Operations
On October 11, 2005, the Company completed the sale of its plastic closures business for total proceeds
of $690, and recognized a loss of $44 related to the transaction. The assets sold included $50 of cash
and the Company paid $13 in fees related to the sale, resulting in net proceeds of $627. The gross
proceeds of $690 and the related loss exclude up to $20 of contingent consideration that, if earned based
on the divested business achieving certain targets, will be payable in 2006 and 2008. The loss also
excludes any other final purchase price adjustments related to working capital that may be made in the
future and are currently under review. The divested business makes plastic closures for beverage, food
and other consumer products.
The results of operations for the plastic closures business were reported within discontinued operations in
the accompanying statements of operations, and prior period statements of operations have been recast.
The segment results in Note Y and the Condensed Combining Statements of Operations in Note Z also
reflect the reclassification of the plastic closures business to discontinued operations. The 2005
Consolidated Statement of Cash Flows does not separately report the cash flows of the discontinued
operations and the Balance Sheets and Statements of Cash Flows for prior periods have not been recast.
Interest expense was not allocated to the plastic closures business and, therefore, all of the Company’s
interest expense is included within continuing operations.
The plastic closures business was a separate operating segment of the Company.
-48-
Crown Holdings, Inc.
The components of the income/(loss) from discontinued operations are presented below.
Income before tax
Income tax on operations
Loss on disposal
Income tax on disposal
Income/(loss) from discontinued operations
For the Years Ended December 31
2005
$050
(0017)
(0027)
(0017)
($011)
2004
$056
(0021)
2003
$066
(0024)
$035
$042
C. Change in Consolidation
In connection with the Company’s plans to expand its beverage can operations in the Middle East, the
Company obtained effective control of certain of these operations as of September 1, 2005 through
amendments to existing shareholders’ agreements. The Company owns from 40% to 50% of these
operations and its ownership percentages did not change as a result of the amendments. With the
amendments, the Company now has the unilateral right to establish the operating, capital and financing
activities of these operations and, accordingly, has changed its method of accounting to the consolidation
method from the equity method.
The change in accounting will have no effect on the Company’s net income or earnings per share. The
Company’s proforma net sales are presented below as if the operations were consolidated as of the
beginning of the year for each year presented.
Net sales
As reported
Proforma
2005
2004
2003
$6,908
7,025
$6,531
6,657
$6,007
6,095
D. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by reportable segment for the years ended December 31,
2005 and 2004 were as follows:
Americas North America Europe
Food
Beverage
Beverage
Europe Non-reportable
Food
segments
Total
Balance at January 1, 2004
Foreign currency translation
Balance at December 31, 2004
Goodwill of divested business
Change in consolidation
Foreign currency translation
Balance at December 31, 2005
$422
4
426
1
$427
$137
4
141
3
$144
$681
48
729
16
( 72)
$673
$660
56
716
( 87)
$629
$542
38
580
(0387)
( 53)
$140
$2,442
150
2,592
(387)
16
( 208)
$2,013
The goodwill of divested business caption includes the goodwill of the divested plastic closures business
as discussed in Note B. The change in consolidation caption includes the effect of consolidating certain
entities that were previously not consolidated as discussed in Note C.
Identifiable intangible assets other than goodwill are recorded within other non-current assets in the
Consolidated Balance Sheets and, excluding minimum pension assets, are not material.
-49-
E. Accumulated Other Comprehensive Loss
Crown Holdings, Inc.
As of December 31, accumulated other comprehensive loss consisted of the following:
Minimum pension liability adjustments...........................................
Cumulative translation adjustments ...............................................
Derivatives qualifying as hedges ...................................................
Available for sale securities............................................................
F. Receivables
Accounts and notes receivable ......................................................
Less: allowance for doubtful accounts ...........................................
Net trade receivables .....................................................................
Miscellaneous receivables .............................................................
2005
($0,652)
(00,566)
(00,001)
($1,219)
2005
$0,596
(00,033)
563
123
$0,686
2004
($0,728)
(00,374)
10
5
($1,087)
2004
$0,832
(0,0042)
790
110
$0,900
Following are the changes in the allowance for doubtful accounts for the years ended December 31,
2005, 2004 and 2003. Charges or credits to the allowance that affect the consolidated statements of
operations are reported within cost of products sold, excluding depreciation and amortization.
2003
2004
2005
Balance at
beginning of year
$54
56
42
Expense /
(income)
$1
(03)
Write-offs
Balance at
Translation End of year
($13)
(005)
$1
2
(04)
$56
42
33
The Company utilizes receivable securitization facilities in the normal course of business as part of its
management of cash flow activities. Under its $225 North American facility, the Company sells receivables,
on a revolving basis, to a wholly-owned, bankruptcy-remote subsidiary. The subsidiary was formed for the
sole purpose of buying and selling receivables generated by the Company and, in turn, sells undivided
percentage ownership interests in the pool of purchased receivables to a syndicate of financial institutions.
The Company continues to service these receivables for a fee but does not retain any interest in the
receivables sold. The Company has relinquished control of the receivables and the sales are reflected as a
reduction in receivables within the Consolidated Balance Sheets. At both December 31, 2005 and 2004,
$120 of receivables were securitized under the North American facility.
In 2005, the Company entered into a new €120 European securitization facility. Under this facility, certain
subsidiaries in the U.K. and France sell receivables to an entity formed in France for the sole purpose of
buying receivables from the selling subsidiaries. The buying entity finances the purchase of receivables
through the issuance of senior units to a company in which the Company does not retain any interest. The
selling subsidiaries continue to service the receivables for a fee, but do not retain any interest in the
receivables sold and the sales are reflected as a reduction in receivables within the Consolidated Balance
Sheet. At December 31, 2005, $114 of receivables were securitized under this program.
During 2005, 2004 and 2003, the Company recorded expenses related to the securitization facilities of
$9, $5 and $11, respectively, as interest expense.
-50-
G. Inventories
Crown Holdings, Inc.
Finished goods...............................................................................
Work in process .............................................................................
Raw materials and supplies ...........................................................
2005
$0,281
101
428
$0,810
2004
$0,307
111
476
$0,894
Approximately 20% of worldwide productive inventories at December 31, 2005 and 2004 were stated on
the LIFO method of inventory valuation. Had average cost (which approximates replacement cost) been
applied to such inventories at December 31, 2005 and 2004, total inventories would have been $51 and
$43 higher, respectively.
H. Property, Plant and Equipment
Buildings and improvements ..........................................................
Machinery and equipment..............................................................
Less: accumulated depreciation and amortization.........................
Land and improvements.................................................................
Construction in progress ................................................................
2005
$0,749
3,549
4,298
(02,936)
1,362
140
105
$1,607
2004
$0,861
4,231
5,092
( 03,314)
1,778
166
58
$2,002
I. Other Non-Current Assets
Pension assets...............................................................................
Debt issue costs.............................................................................
Pension intangibles ........................................................................
Deferred taxes................................................................................
Investments ....................................................................................
Long-term notes and receivables...................................................
Other ..............................................................................................
J. Accounts Payable and Accrued Liabilities
Trade accounts payable.................................................................
Salaries, wages and other employee benefits,
including pension and postretirement .........................................
Accrued taxes, other than on income ............................................
Accrued interest .............................................................................
Asbestos liabilities..........................................................................
Restructuring..................................................................................
Deferred taxes................................................................................
Other ..............................................................................................
2005
$0,871
48
17
59
40
6
39
$1,080
2005
$1,103
224
99
30
30
13
39
136
$1,674
2004
$0,853
126
24
30
85
17
53
$1,188
2004
$1,186
338
115
93
40
15
28
128
$1,943
-51-
Crown Holdings, Inc.
K. Other Non-Current Liabilities
Deferred taxes................................................................................
Asbestos liabilities..........................................................................
Postemployment benefits...............................................................
Fair value of derivatives .................................................................
Environmental ................................................................................
Other ..............................................................................................
2005
$0,298
184
44
12
26
91
$0,655
2004
$0,342
193
47
25
23
122
$0,752
L. Lease Commitments
The Company leases manufacturing, warehouse and office facilities and certain equipment. Certain non-
cancelable leases are classified as capital leases, and the leased assets are included in property, plant
and equipment. Other long-term non-cancelable leases are classified as operating leases and are not
capitalized. The amount of capital leases reported as capital assets, net of accumulated amortization,
was $2 and $8 at December 31, 2005 and 2004, respectively.
Under long-term operating leases, minimum annual rentals are $48 in 2006, $39 in 2007, $25 in 2008,
$15 in 2009, $10 in 2010 and $35 thereafter. Such rental commitments have been reduced by minimum
sublease rentals of $14 due under non-cancelable subleases. The present value of future minimum
payments on capital leases was less than $1 as of December 31, 2005. Rental expense (net of sublease
rental income of $8 in 2005) was $52 in 2005.
M. Provision for Asbestos
Crown Cork & Seal Company, Inc. (“Crown Cork”) is one of many defendants in a substantial number of
lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to
asbestos. These claims arose from the insulation operations of a U.S. company, the majority of whose
stock Crown Cork purchased in 1963. Approximately ninety days after the stock purchase, this U.S.
company sold its insulation assets and was later merged into Crown Cork.
Prior to 1998, the amounts paid to asbestos claimants were covered by a fund made available to Crown
Cork under a 1985 settlement with carriers insuring Crown Cork through 1976, when Crown Cork became
self-insured. The fund was depleted in 1998 and the Company has no remaining coverage for asbestos-
related costs.
In May 2005, January 2005 and April 2004, the States of Florida, Ohio and Mississippi, respectively,
enacted legislation that limits the asbestos-related liabilities under state law of companies such as Crown
Cork that allegedly incurred these liabilities because they are successors by corporate merger to
companies that had been involved with asbestos. The new legislation, which applies to future and
pending claims, caps asbestos-related liabilities at the fair market value of the predecessor’s total gross
assets adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the
total adjusted value of its predecessor’s assets. Crown Cork has integrated the legislation into its claims
defense strategy. The Company cautions, however, that the legislation may be challenged and there can
be no assurance regarding the ultimate effect of the legislation on Crown Cork.
In June 2003, the State of Texas enacted legislation that limits the asbestos-related liabilities in Texas
courts of companies such as Crown Cork that allegedly incurred these liabilities because they are
successors by corporate merger to companies that had been involved with asbestos. The Texas
legislation, which applies to future claims and pending claims, caps asbestos-related liabilities at the total
gross value of the predecessor’s assets adjusted for inflation. Crown Cork has paid significantly more for
asbestos-related claims than the total adjusted value of its predecessor’s assets. On October 31, 2003,
-52-
Crown Holdings, Inc.
Crown Cork received a favorable ruling on its motion for summary judgment in two asbestos-related
cases pending against it in the district court of Harris County, Texas (in Re Asbestos Litigation No. 90-
23333, District Court, Harris County, Texas); this ruling has been appealed. In addition, a favorable ruling
for summary judgment in an asbestos case pending against it in the district court of Travis County, Texas
(in Re Rosemarie Satterfield as Representative of the Estate of Jerrold Braley Deceased v. Crown Cork &
Seal Company, Inc. District Court Travis County, 98th Judicial District Cause No. GN-203572) has been
appealed. Although the Company believes that the rulings of the District Court are correct, there can be
no assurance that the legislation will be upheld by the Texas courts on appeal or in other cases that may
challenge the legislation.
In December 2001, the Commonwealth of Pennsylvania enacted legislation that limits the asbestos-
related liabilities of Pennsylvania corporations that are successors by corporate merger to companies
involved with asbestos. The legislation limits the successor’s liability for asbestos to the acquired
company’s asset value adjusted for inflation. Crown Cork has already paid significantly more for
asbestos-related claims than the acquired company’s adjusted asset value. On February 20, 2004, the
Supreme Court of Pennsylvania reversed the June 11, 2002 order of the Philadelphia Court of Common
Pleas, in which the Court of Common Pleas ruled favorably on a motion by Crown Cork for summary
judgment regarding 376 pending asbestos-related cases against Crown Cork in Philadelphia and
remanded the cases to the Philadelphia Court of Common Pleas (Ieropoli v. AC&S Corporation, et. al.,
No. 117 EM 2002). The Court ruled that the new statute, as applied, violated the Pennsylvania
Constitution because it retroactively extinguished the plaintiffs’ pre-existing and accrued causes of action.
The Company believes that the ruling by the court was limited only to cases which were pending at the
time the legislation was enacted. In November 2004, the Commonwealth of Pennsylvania enacted
legislation amending the 2001 successor liability statute providing that the 2001 statute applies only to
asbestos-related claims with respect to which the two-year statute of limitations for asbestos-related
claims began to run after the new statute was enacted on December 17, 2001. On July 28, 2005, the
Philadelphia Court of Common Pleas granted Crown Cork’s global motion for summary judgment to
dismiss all pending asbestos-related cases filed in the court after December 17, 2003 (In re: Asbestos-
Litigation October term 1986, No. 001). This decision remains subject to potential appeal by the plaintiffs.
The Company cautions that its position regarding the limitation of the Pennsylvania Supreme Court ruling
may not be upheld.
In recent years, certain other state and federal legislators have considered legislation to reform the
treatment of asbestos-related personal injury claims. The Fairness in Asbestos Injury Resolution Act of
2005 (the “FAIR Bill”) was introduced in the United States Senate in April 2005, and was defeated in a
procedural vote in the Senate in February 2006 and motion for reconsideration has been filed. The FAIR
Bill would create a national trust fund in lieu of state and federal litigation to compensate people with
asbestos-related diseases. The trust fund would require contributions from companies, such as Crown
Cork, that have made past payments for asbestos-related personal injury claims and would limit the
payments made by such companies relating to asbestos-related liabilities during the life of the fund.
There can be no assurance that federal asbestos legislation, such as the FAIR Bill, will be passed into
law or the form that any such legislation will take. Due to this uncertainty, the Company has not
considered possible federal legislation in evaluating the adequacy of the Company’s reserve for
asbestos-related claims.
During 2005, 2004 and 2003, respectively, Crown Cork (i) received 9,000, 13,000 and 36,000 new claims,
(ii) settled or dismissed 4,000, 14,000 and 20,000 claims, and (iii) had 79,000, 74,000 and 75,000 claims
outstanding at the end of the respective years. The outstanding claims at December 31, 2005 exclude
33,000 pending claims involving plaintiffs who allege that they are, or were, maritime workers subject to
exposure to asbestos, but whose claims the Company believes will not have a material effect on the
Company’s consolidated results of operations, financial position or cash flow.
During 2005, 2004 and 2003, respectively, the Company (i) recorded pre-tax charges of $10, $35 and
$44 to increase its accrual, (ii) made asbestos-related payments of $29, $41 and $68, (iii) settled claims
totaling $15, $30 and $37, including amounts committed to be paid in future periods and (iv) had
outstanding accruals of $214, $233 and $239 at the end of the year.
-53-
Crown Holdings, Inc.
The Company estimates that its probable and estimable asbestos liability for pending and future asbestos
claims and related legal costs will range between $214 and $272. The accrual balance of $214 at the
end of 2005 includes $132 for unasserted claims and $6 for committed settlements that will be paid in
2006.
Historically (1977-2005), Crown Cork estimates that approximately one-quarter of all asbestos-related
claims made against it have been asserted by claimants who claim first exposure to asbestos after 1964.
However, because of Crown Cork’s settlement experience to date and the increased difficulty of
establishing identification of the subsidiary’s insulation products as the cause of injury by persons alleging
first exposure to asbestos after 1964, the Company has not included in its accrual and range of potential
liability any amounts for settlements by persons alleging first exposure to asbestos after 1964.
Assumptions underlying the accrual and the range of potential liability include that claims for exposure to
asbestos that occurred after the sale of the U.S. company’s insulation business in 1964 would not be
entitled to settlement payouts and that the Texas, Florida, Mississippi, Ohio and Pennsylvania asbestos
legislation described above are expected to have a highly favorable impact on Crown Cork’s ability to
settle or defend against asbestos-related claims in those states, and other states where Pennsylvania law
may apply. The Company’s accrual includes estimates for probable costs for claims through the year
2015. The upper end of the Company’s estimated range of possible asbestos costs of $272 includes
claims beyond that date.
While it is not possible to predict the ultimate outcome of the asbestos-related claims and settlements, the
Company believes that resolution of these matters is not expected to have a material adverse effect on
the Company’s financial position. The Company cautions, however, that estimates for asbestos cases
and settlements are difficult to predict and may be influenced by many factors. In addition, there can be
no assurance regarding the validity or correctness of the Company’s assumptions or beliefs underlying its
accrual and the estimated range of potential liability. Unfavorable court decisions or other adverse
developments may require the Company to substantially increase its accrual or change its estimate.
Accordingly, these matters, if resolved in a manner different from the estimate, could have a material
effect on the Company’s results of operations, financial position or cash flow.
N. Commitments and Contingent Liabilities
The Company has been identified by the EPA as a potentially responsible party (along with others, in
most cases) at a number of sites. The Company also has environmental issues at certain of its plants in
the Americas and Europe. Actual expenditures for remediation were $1, $1 and $2 in 2005, 2004 and
2003, respectively. The Company’s balance sheet reflects estimated undiscounted remediation liabilities
of $27 and $25 at December 31, 2005 and 2004, respectively, including $1 and $2 as current liabilities,
respectively. The Company records an environmental liability when it is probable that a liability has been
incurred and the amount of the liability is reasonably estimable. The reserves at December 31, 2005 are
primarily for asserted claims and are based on internal and external environmental studies. The Company
expects that the liabilities will be paid out over the period of remediation for the applicable sites, which in
some cases may exceed ten years. Although the Company believes its reserves are adequate, there can
be no assurance that the ultimate payments will not exceed the amount of the Company’s reserves and
will not have a material effect on the Company’s consolidated results of operations, financial position or
cash flow. Any possible loss or range of potential loss that may be incurred in excess of the recorded
reserves cannot be estimated.
In 2003, Crown Cork amended the retiree medical benefits that it had been providing to approximately
10,000 retirees pursuant to a series of collective bargaining agreements between Crown Cork and certain
unions. The amendments increased maximum coverage, required additional retiree contributions for
medical and prescription drug costs and reduced other coverage benefits. Crown Cork is a party to
litigation initiated in June 2003 in which the USWA and IAM unions and retirees claim that the retiree
medical benefits were vested and that the amendments breached the applicable collective bargaining
agreements in violation of ERISA and the Labor Management Relations Act. Crown Cork and the USWA
-54-
Crown Holdings, Inc.
parties have submitted their dispute to binding arbitration in Pittsburgh, Pennsylvania and litigation
involving Crown Cork and the IAM parties is pending in federal district court in Nebraska. The Company
believes that it had the right to make such amendments and intends to contest the matter vigorously.
However, the ultimate outcome of these cases is uncertain and if they are decided adversely, the
Company could be required to restore all or a portion of the retiree medical benefits to their pre-
amendment levels. Restoration of the retiree medical benefits to their pre-amendment levels would
increase the accumulated postretirement benefit obligation by approximately $56, the annual charge to
income by approximately $9, and the annual payments to retirees by approximately $6 in the initial years
after restoration.
The Company and its subsidiaries are also subject to various other lawsuits and claims with respect to
labor, environmental, securities, vendor and other matters arising out of the normal course of business.
While the impact on future financial results is not subject to reasonable estimation because considerable
uncertainty exists, management believes that the ultimate liabilities resulting from such lawsuits and
claims will not materially affect the Company’s consolidated results of operations, financial position or
cash flow.
The Company has various commitments to purchase materials, supplies and utilities totaling
approximately $2.6 billion as of December 31, 2005 as part of the ordinary conduct of business. The
Company’s basic raw materials for its products are steel and aluminum, both of which are purchased from
multiple sources. The Company is subject to fluctuations in the cost of these raw materials and has
periodically adjusted its selling prices to reflect these movements. There can be no assurance, however,
that the Company will be able to fully recover any increases or fluctuations in raw material costs from its
customers. The Company also has commitments for purchases of capital assets of approximately $37.
At December 31, 2005 the Company had certain indemnification agreements covering environmental
remediation, lease payments, and other potential costs associated with properties sold or businesses
divested. For agreements with defined liability limits the maximum potential amount of future liability was
$38. Several agreements outstanding at December 31, 2005 did not provide liability limits. At December
31, 2005, the Company had recorded liabilities of $2 covering these indemnification agreements. The
Company also has guarantees of $36 related to the residual value of leased assets at December 31,
2005, and has recorded a liability of $8 related to these guarantees.
O. Restructuring
During 2005, the Company provided a pre-tax charge of $16 for restructuring costs, including (i) $3 in
North America for severance costs to reduce headcount at a beverage can plant; (ii) $3 in an Americas
health and beauty care operation for severance costs to close a plant; (iii) $5 for severance costs to
reduce headcount in a European aerosol can plant; (iv) $2 for severance costs to reduce headcount in
the U.S. research and development group; and (v) $3 for other severance and exit costs.
During 2004, the Company provided a pre-tax charge of $7 for restructuring costs. The charge primarily
included $5 in a European specialty plastics operation for severance costs for reductions in force.
During 2003, the Company provided a net pre-tax charge of $19 for restructuring costs, including $4 for
operations that were reported within discontinued operations. The charge included $14 in Europe for
various operations and $5 in the Americas, including $2 in the health and beauty care operations,
primarily for severance costs for reductions in force. The charge in Europe was net of a reversal of $4 for
costs provided in previous years.
Balances remaining in the reserves at December 31, 2005 included provisions of $12 for current year
actions and $1 for prior restructuring actions. The balance of the restructuring reserves was included in
the Consolidated Balance Sheets within accounts payable and accrued liabilities and the majority will be
paid in 2006.
-55-
The components of the restructuring reserve and movements within these components during 2005 and
2004 were as follows:
Crown Holdings, Inc.
Balance as of January 1, 2004
Provisions
Payments made
Foreign currency translation and other
Balance as of December 31, 2004
Provisions
Payments made
Foreign currency translation and other
Balance as of December 31, 2005
Termination
Benefits
$23
7
(017)
1
14
15
(015)
(002)
$12
Other
Exit
Costs
$02
(001)
1
1
(001)
$01
Total
$25
7
(018)
1
15
16
(016)
(002)
$13
P. Asset Impairments and Loss/Gain on Sale of Assets
During 2005, the Company recorded net pre-tax charges of $10 for asset impairments and asset sales,
including (i) charges of $21 and $9 to write-down assets in the Americas health and beauty care and
Europe specialty plastic operations, respectively, due to reduced profit projections, offset by (ii) a gain of
$7 for the reversal of a provision for an expected loss on divestiture in Asia, and (iii) other net gains of
$13 for asset sales. In Asia, the Company received a waiver of a local requirement to divest a portion of
one of its subsidiaries and, accordingly, reversed its provision for the expected loss on divestiture at a
price below fair value.
During 2004, the Company recorded net pre-tax charges of $47 for asset impairments and asset sales,
including charges of $29 to reclassify cumulative translation adjustments to earnings from the planned
sale of three businesses in South and Central America, and $14 to write-down the value of machinery
and equipment in the specialty plastics businesses in Europe due to reduced profit projections. The
remaining net charges of $4 were for the write-down of various assets, offset by gains on sales of surplus
property.
During 2003, the Company recorded net pre-tax charges of $76 for asset impairments and asset sales,
including charges of (i) $25 to write-down assets in Argentina due to the impact of the local economy on
the Company’s businesses, (ii) $11 for the impairment of goodwill in the Americas health and beauty care
operation due to reduced profit projections, (iii) $20 to write-down certain assets in the European specialty
packaging businesses due to reduced profit projections, (iv) $7 to write-down surplus beverage end
assets in the U.S. due to the expanded use of the Company’s SuperEnd™ technology, (v) $11 to write-off
redundant equipment in the U.S., primarily due to the consolidation of operations and (vi) $2 due to other
losses, primarily for the sale of assets.
Q. Capital Stock
In connection with its refinancing and reorganization in 2003, as discussed in Note A and Note T, Crown
Cork & Seal Company, Inc. formed a new public holding company named Crown Holdings, Inc. Crown
Cork & Seal Company, Inc. is now a wholly-owned subsidiary of Crown Holdings, Inc. Shareholders of
Crown Cork & Seal Company, Inc. became shareholders of Crown Holdings, Inc. and have the same
number of shares and percentage of ownership and the same rights, privileges and interests with respect
to Crown Holdings, Inc. that they held in Crown Cork & Seal Company, Inc. immediately prior to the
reorganization. The conversion of shares of Crown Cork & Seal Company, Inc. into shares of Crown
Holdings, Inc. occurred without the physical exchange of certificates, and certificates formerly
representing shares of Crown Cork & Seal Company, Inc. were deemed to represent shares of Crown
Holdings, Inc. The common stock of Crown Holdings, Inc. continues to be publicly traded under the
symbol “CCK” on the New York Stock Exchange.
-56-
Crown Holdings, Inc.
As of December 31, 2005 and 2004, there were 166,712,081 and 165,559,558 common shares
outstanding, respectively.
During 2003, the Company exchanged 5,386,809 shares of its common stock for debt and related
accrued interest in privately negotiated debt-for-equity exchanges with holders of its outstanding notes
and debentures.
Shares of common stock issued as compensation to non-employee directors were 35,308, 46,937 and
64,483 during 2005, 2004 and 2003, respectively.
The Company’s first priority revolving credit and term loan facilities and its first priority senior secured
notes limit the payment of dividends and the repurchase of common stock, subject to certain permitted
payments or repurchases and exceptions.
The Board of Directors has the authority to issue, at any time or from time to time, up to 30 million shares
of additional preferred stock in one or more classes or series of classes. Such shares of additional
preferred stock would not be entitled to more than one vote per share when voting as a class with holders
of the Company’s common stock. The voting rights and such designations, preferences, limitations and
special rights are subject to the terms of the Company’s Articles of Incorporation, determined by the
Board of Directors.
In February 2005, the Board of Directors authorized the repurchase of up to $50 of the Company’s
outstanding common stock from time to time through December 31, 2006. In December 2005, the Board
of Directors authorized the repurchase of up to $150 of additional common shares through December 31,
2007. The repurchases may be made in the open market or through privately negotiated transactions,
subject to the terms of the Company’s debt agreements, market conditions and other factors. The
Company is not obligated to acquire any shares of common stock and the share repurchase plans may
be suspended or terminated at any time at the Company’s discretion. The repurchased shares, if any, are
expected to be used for the Company’s stock-based benefit plans, and to offset dilution resulting from the
issuance of shares thereunder, and for other general corporate purposes. During 2005, the Company
repurchased 2,100,000 shares at a total cost of $38 to reduce the remaining authorized repurchase
amount to $162. The Company purchased 483,500 additional shares for $9 during January and February
of 2006 to further reduce the remaining authorized repurchases to $153.
In connection with the formation of Crown Holdings, Inc. as discussed in Note A, the Board of Directors
adopted a Shareholders’ Rights Plan, as amended, and declared a dividend of one right for each
outstanding share of common stock. Such rights only become exercisable, or transferable apart from the
common stock, after a person or group acquires beneficial ownership of, or commences a tender or
exchange offer for, 15% or more of the Company’s common stock. Each right then may be exercised to
acquire one share of common stock at an exercise price of $200, subject to adjustment. Alternatively,
under certain circumstances involving the acquisition by a person or group of 15% or more of the
Company’s common stock, each right will entitle its holder to purchase a number of shares of the
Company’s common stock having a market value of two times the exercise price of the right. In the event
the Company is acquired in a merger or other business combination transaction after a person or group
has acquired 15% or more of the Company’s common stock, each right will entitle its holder to purchase a
number of the acquiring company’s common shares having a market value of two times the exercise price
of the right. The rights may be redeemed by the Company at $.01 per right at any time until the tenth day
following public announcement that a 15% position has been acquired. The rights expire on August 10,
2015.
R. Stock-Based Compensation
As of December 31, 2005, the Company had five active stock-based incentive compensation plans - the
1990, 1994, 1997, 2001 and 2004 plans. The plans provide for the granting of awards in the form of
stock options, deferred stock, restricted stock or stock appreciation rights (“SARs”) and may be subject to
the achievement of certain performance goals as determined by the Plan Committee designated by the
-57-
Crown Holdings, Inc.
Company’s Board of Directors. There were no issuances of deferred stock or SARs under any of the
plans as of December 31, 2005. In January 2005, the Company issued 604,196 shares of restricted stock
to key executives under the 2004 plan at a fair value of $13.05 per share. The restricted stock vests
ratably over three years on the anniversary date of the grant. As of December 31, 2005, no further option
grants were available under the 1990, 1994 and 1997 plans. Additional grants under the 2001 plan are
available through February 2006 and under the 2004 plan through April 2009. Options outstanding at
December 31, 2005, included grants from all five plans discussed above.
Stock options granted during 2005 have a maximum term of ten years and vest over two years.
A summary of stock option activity is as follows:
2005
2004
2003
Weighted
Average
Exercise
Weighted
Average
Exercise
Price
Shares
Weighted
Average
Exercise
Shares
Price
Shares
Price
Options outstanding at January 1 ... 15,259,982 $13.93
Granted ...........................................
42,500 15.33
(2,622,208 ) 5.97
Exercised.........................................
(543,226 ) 27.49
Canceled .........................................
Options outstanding
at December 31............................ 12,137,048 $15.01
Options exercisable
at December 31............................ 10,486,048 $15.98
Options available for grant
at December 31............................ 1,189,679
10,858,137 $16.91 12,887,807 $19.30
45,000
7.09
4.58
(00,161,100 )
(01,913,570 ) 33.79
5,432,500 8.65
(500,899 ) 4.86
(529,756 ) 29.34
15,259,982 $13.93 10,858,137 $16.91
11,190,107 $15.82
9,182,793 $19.00
1,672,125
1,455,875
The following table summarizes outstanding and exercisable options at December 31, 2005:
Options Outstanding
Options Exercisable
Range of
Exercise
Prices
$04.25
$04.31 to $05.30
$05.49 to $08.38
$08.60
$08.75 to $29.25
$29.38 to $54.375
Number
Outstanding
1,530,483
1,565,540
973,500
3,379,075
2,633,800
2,054,650
12,137,048
Weighted
Average
Remaining
Contractual
Life
5.4
6.1
5.2
8.3
5.9
1.2
5.7
Weighted
Average
Exercise
Price
$4.25
5.30
7.47
8.60
15.93
43.36
15.01
Weighted
Average
Exercise
Price
$4.25
5.30
7.44
8.60
18.31
43.36
15.98
Number
Exercisable
1,530,483
1,565,540
941,750
2,448,325
1,945,300
2,054,650
10,486,048
The fair value of each stock option on the date of the grant was estimated using the Black-Scholes option
pricing model with the following weighted average assumptions:
Risk-free interest rate
Expected life of option (years)
Expected stock price volatility
Expected dividend yield
2005
4.2%
4.0
29.9%
0.0%
2004
3.2%
4.2
61.8%
0.0%
2003
3.0%
4.4
76.8%
0.0%
The weighted average grant-date fair values for options granted during 2005, 2004 and 2003 were $4.83,
$4.46 and $4.04, respectively.
-58-
Crown Holdings, Inc.
S. Debt
Short-term debt (1)
U.S. dollar bank loans/overdrafts...................................................
Other currency bank loans/overdrafts............................................
Total short-term debt.........................................................
Long-term debt
Credit facility borrowings: (2)
U.S. dollar ................................................................................
Other currencies ......................................................................
Senior secured notes:
Euro (€460) 6.25% first priority due 2011................................
First priority term loans:
U.S. dollar at LIBOR plus 1.50% due 2012 .............................
Euro (€287) at EURIBOR plus 1.50% due 2012 .....................
Senior notes and debentures:
U.S. dollar 7.00% due 2006 (3) ...............................................
U.S. dollar 9.50% due 2011.....................................................
Euro (€19 in 2005) 10.25% due 2011 .....................................
U.S. dollar 7.625% due 2013...................................................
U.S. dollar 10.875% due 2013.................................................
U.S. dollar 7.75% due 2015.....................................................
U.S. dollar 8.00% due 2023.....................................................
U.S. dollar 7.375% due 2026...................................................
U.S. dollar 7.50% due 2096.....................................................
Other indebtedness in various currencies:
Fixed rate with rates in 2005 from 1.0% to 5.0%
due 2009 through 2015..................................................
Variable rate with average rates in 2005 from 1.8%
to 22.0% due 2006 through 2011 ..................................
Capital lease obligations in various currencies ..............................
Unamortized discounts and fair value adjustments .......................
Total long-term debt .............................................
Less: current maturities..................................................................
Total long-term debt, less current maturities .......
2005
2004
$0,010
62
$0,072
$0,006
45
$0,051
$0,210
41
544
165
339
107
9
22
500
3
600
200
350
150
26
70
(00,005)
3,331
(00,139)
$3,192
$0,623
235
1,085
386
725
200
350
150
6
88
3
(00,030)
3,821
(00,025)
$3,796
(1) The weighted average interest rates for bank loans and overdrafts outstanding during 2005, 2004 and
2003 were 4.3%, 4.3% and 3.6%, respectively.
(2) The $800 revolving credit facility is due 2011 and bears interest at EURIBOR or LIBOR plus 1.50%.
There were no outstanding borrowings at December 31, 2004 under the previous facility. The
weighted average rates for the credit facilities were 5.0% in both 2005 and 2004.
(3) A wholly-owned finance subsidiary in the United Kingdom has outstanding revolving public debt
securities that are fully and unconditionally guaranteed by the Company on a joint and several basis.
Aggregate maturities of long-term debt for the five years subsequent to 2005, excluding unamortized
discounts and fair value adjustments, are $139, $45, $17, $13 and $10, respectively. Cash payments for
interest during 2005, 2004 and 2003 were $389, $330 and $294, respectively (including amounts
capitalized of $1 in 2005 and 2003).
The estimated fair value of the Company’s long-term borrowings, based on quoted market prices for the
same or similar issues, was $3,423 at December 31, 2005.
-59-
Crown Holdings, Inc.
During 2005, 2004 and 2003, the Company recorded pre-tax unrealized foreign exchange losses of $97
and gains of $98 and $201, respectively, related to currency exposure arising primarily from intercompany
loans and U.S. dollar debt issued by its European subsidiaries as described in Note T. The gains and
losses are included in translation and exchange adjustments in the Consolidated Statements of
Operations.
T. Debt Refinancings and Early Extinguishments
In November 2005, the Company sold $500 of 7.625% senior notes due 2013 and $600 of 7.75% senior
notes due 2015, and entered into an $800 first priority revolving credit facility due 2011 and a first priority
term loan facility due 2012 comprised of $165 and €287 term loans. The revolving credit and term loan
facilities are subject to a pricing grid and have initial pricing of 1.5% above LIBOR and EURIBOR,
respectively. The proceeds from the refinancing were used to repay the Company’s prior revolving credit
facility and all but $34 of its second and third priority senior secured notes, and to pay premiums, fees
and expenses associated with the refinancing. The Company recognized a loss of $379 in connection
with the refinancing, consisting of $278 of premiums and fees and the write-off of $101 of unamortized
fees and unamortized interest rate swap termination costs related to the refinanced facilities and notes.
During 2005, the Company also recognized an additional loss of $4 from early extinguishments of debt for
premiums paid to purchase certain unsecured notes.
The notes due 2013 and 2015 are senior obligations of Crown Americas, LLC and Crown Americas
Capital Corporation, indirect, wholly-owned subsidiaries of the Company, and are guaranteed by
substantially all U.S. subsidiaries. The revolving credit and term loan facilities contain financial covenants
including an interest coverage ratio, a total net leverage ratio and a senior secured net leverage ratio.
The $800 revolving credit facility includes provisions for letters of credit up to $150 and €50. Outstanding
letters of credit accrue interest at 1.50% and reduce the amount of borrowing capacity otherwise
available. As of December 31, 2005, there were $72 of outstanding letters of credit under the facility.
In December 2004, the Company purchased $33 aggregate principal of its 7.00% senior notes due
December 2006 at a premium of 5.0% to principal. Also in December 2004, the Company retired the $40
remaining aggregate principal amount of its outstanding 8.38% senior notes due January 2005. In March
2004, the Company purchased $21 aggregate principal of its 8.38% senior notes due January 2005 at a
premium of 4.5% to principal and €85 aggregate principal of its 6.00% notes due 2004 at a premium of
3.0% to principal. The Company recognized total charges of $6 in connection with these early
extinguishments of debt.
In September 2004, the Company sold €350 of 6.25% first priority senior secured notes due 2011 and
entered into a new $625 senior secured credit facility. The new facility included a $400 revolving credit
facility due 2010, a $100 standby letter of credit facility due 2010 and a $125 term loan facility due 2011.
In October 2004, the Company completed an add-on issuance of €110 of 6.25% first priority senior
secured notes due 2011, bringing the total of the issue to €460. The €350 of proceeds from the first
issuance combined with the new $625 senior secured credit facility were used to refinance the existing
credit and term loan facilities entered into in February, 2003, and to pay fees and expenses associated
with the refinancing. The €110 of proceeds from the second issuance were used to repay the $125 term
loan from September 2004 and to pay expenses associated with the issuance. In connection with the
September 2004 refinancing, the Company recorded a charge of $33, as a loss from early
extinguishments of debt, to write-off unamortized fees from its previous credit facility.
In February 2003, the Company completed a refinancing and formed Crown Holdings, Inc. as a new
public holding company. The formation of Crown Holdings, Inc. is more fully described in Note Q. The
proceeds from the refinancing consisted of the sale of $1,085 of 9.5% second priority senior secured
notes due 2011, €285 of 10.25% second priority senior secured notes due 2011, $725 of 10.875%
third priority senior secured notes due 2013, $504 of first priority term loans due 2008 and a $550 first
priority revolving credit facility due 2006. The proceeds of $2,620 from the senior secured notes and term
loans, and $198 of borrowings under the $550 credit facility, were used to repay the existing credit facility,
-60-
Crown Holdings, Inc.
to repurchase certain of the Company’s outstanding unsecured notes prior to maturity, and to pay fees
and expenses associated with the refinancing. The remaining proceeds of $344 were initially placed in
restricted cash accounts and were subsequently used to repay other existing unsecured notes, including
$149 prior to maturity. The Company also repurchased $86 of other unsecured notes prior to maturity. In
connection with the repurchases, exchanges of debt for equity as described in Note Q, and the write-off of
unamortized financing fees and expenses from its previous credit facility, the Company recognized a loss
of $12 from the early extinguishments of debt.
In connection with the November 2005 refinancing and repurchase of the significant majority of the
second and third priority senior secured notes discussed above, the $34 of remaining notes outstanding
as of December 31, 2005 no longer have any secured interest. CEH may redeem the 2011 notes at any
time prior to March 2007, and the 2013 notes at any time prior to March 2008, by paying a make-whole
premium. Thereafter, CEH may redeem some or all of the 2011 and 2013 notes at redemption prices
initially representing a premium to principal equal to one-half of the applicable interest rate on the notes,
declining annually thereafter.
The notes issued in 2003 and 2004 are senior obligations of Crown European Holdings (“CEH”), an
indirect wholly-owned subsidiary, and are guaranteed on a senior basis by Crown Holdings, Crown Cork
& Seal Company, Inc. (“Crown Cork”), substantially all other U.S. subsidiaries, and certain subsidiaries in
the U.K., Canada, France, Germany, Mexico, Switzerland and Belgium. The holders of the first priority
senior secured notes have first priority liens on assets of certain of the guarantor subsidiaries and the
stock of Crown Cork. CEH may redeem all or some of the first priority secured notes at any time by
paying a make-whole premium. At any time prior to September 2007 CEH may redeem up to 35% of the
first priority secured notes with the net cash proceeds of certain equity offerings of capital stock of Crown
Holdings that are used to capitalize CEH. CEH is also required to make an offer to purchase the first
priority secured notes upon the occurrence of certain change of control transactions or asset sales. The
first priority note indentures contain covenants that limit the ability of the Company and its subsidiaries to,
among other things, incur additional debt, pay dividends or repurchase capital stock, create liens, and
engage in sale and leaseback transactions.
U. Derivative Financial Instruments
In the normal course of business the Company is subject to risk from adverse fluctuations in foreign
exchange and interest rates and commodity prices. The Company manages these risks through a
program that includes the use of derivative financial instruments. These instruments are not used for
trading or speculative purposes. The extent to which the Company uses such instruments is dependent
upon its access to them in the financial markets and its ability to utilize other methods, such as netting
exposures for foreign exchange risk, to effectively achieve its goal of risk reduction. Counterparties to
these contracts are major financial institutions.
Cash Flow Hedges. The Company designates certain derivative instruments as cash flow hedges of
anticipated purchases or sales,
intercompany
transactions. The ineffective portion of these hedges was not material and no components of the hedge
instruments were excluded from the measurement of hedge effectiveness.
foreign currency denominated
including certain
In November 2005, the Company entered into four cross-currency swaps. These swaps effectively
convert fixed rate U.S. dollar intercompany debt into fixed rate euro intercompany debt. The aggregate
notional value of the swaps is $700 and they mature in 2006 through 2010. Since the terms of the swaps
and the related debt are the same, the Company expects the swaps to be highly effective in reducing the
related risk. At December 31, 2005, the aggregate fair value of these swaps was a loss of $13 and was
reported within other current liabilities and non-current liabilities in the Consolidated Balance Sheet.
During 2003, the Company terminated two cross-currency swaps with an aggregate notional value of
$500, received $27, and recognized a loss of $5 as a loss on sale of assets.
-61-
Crown Holdings, Inc.
The Company has designated foreign exchange swaps and forwards and commodity forwards as cash
flow hedges of anticipated foreign exchange and commodity transactions. Contracts outstanding at
December 31, 2005 mature between one and twelve months. At December 31, 2005 and 2004, the
aggregate fair value of the commodity contracts were gains of approximately $11 and $17, respectively,
and were reported in other current assets consistent with the classification of the hedged items. The
aggregate fair value of the foreign exchange contracts was not material and was also reported in other
current assets.
The changes in accumulated other comprehensive loss associated with cash flow hedging activities
during 2005 and 2004 were as follows:
Balance at January 1 ...............................................................
Current period changes in fair value, net of tax .......................
Reclassifications to earnings, net of tax...................................
Balance at December 31..........................................................
2005
$10
(014)
4
$00
2004
$03
3
4
$10
During the twelve months ending December 31, 2006, income of approximately $6 is expected to be
reclassified to earnings. The actual amount that will be reclassified to earnings over the next twelve
months may vary from this amount due to changing market conditions. No amounts were reclassified to
earnings during 2005 in connection with forecasted transactions that were no longer considered probable.
Fair Value Hedges. The Company designates certain derivative financial instruments as fair value
hedges of recognized assets, liabilities, and unrecognized firm commitments. Amounts excluded from the
assessment and measurement of hedge effectiveness were reported in earnings and amounted to less
than $1 before income taxes in each of the last three years.
During 2003 and 2004, the Company entered into four interest rate swaps with a combined notional value
of $900. The swaps were accounted for as fair value hedges of the second priority U.S. dollar notes due
2011. At December 31, 2004, the combined fair value of the swaps of $25 was reported within other non-
current liabilities. During 2005, the Company paid $30 to terminate the four swaps.
During 2003, the Company terminated a cross-currency swap and paid its then fair value of $35.
The Company designates certain foreign currency forward exchange contracts as fair value hedges of
recognized foreign-denominated assets and liabilities, generally trade accounts receivable and payable
and intercompany debt, and unrecognized foreign-denominated firm commitments. At December 31,
2005 and 2004, the fair values of these contracts were not material and were reported in current assets or
current liabilities consistent with the classification of the hedged items. There was no impact on earnings
in any of the last three years from a hedged firm commitment that no longer qualified as a fair value
hedge.
V. Earnings Per Share (“EPS”)
The following table summarizes the basic and diluted earnings per share computations for 2005, 2004
and 2003. Basic EPS excludes all potentially dilutive securities and is computed by dividing the net
income/loss from continuing operations by the weighted average number of common shares outstanding
during the period. Diluted EPS includes the assumed exercises of stock options unless they are
antidilutive.
-62-
Crown Holdings, Inc.
Income/(loss) from continuing operations
Weighted average shares outstanding:
Basic
Dilutive effect of stock options and restricted stock
Diluted
2005
2004
($351)
$016
2003
($074 )
165.9
165.9
165.3
3.5
168.8
164.7
164.7
Earnings/(loss) per share from continuing operations:
Basic
($2.12)
$0.10
($0.45 )
Diluted
($2.12)
$0.09
($0.45 )
Potentially dilutive common stock equivalents resulting from stock options and restricted stock of 6.0
million in 2005 and 1.3 million in 2003 were excluded from diluted shares outstanding because they would
have been anti-dilutive due to the net losses. In addition, common shares contingently issuable upon the
exercise of outstanding stock options of 3.6 million in 2005, 3.9 million in 2004 and 6.2 million in 2003,
had exercise prices above the average market price for the related periods and were also excluded.
W. Pensions and Other Retirement Benefits
Pensions. The Company sponsors various pension plans covering certain U.S. and non-U.S. employees,
and participates in certain multi-employer pension plans. The benefits under the Company plans are
based primarily on years of service and either the employees’ remuneration near retirement or a fixed
dollar multiple. Contributions to multi-employer plans in which the Company and its subsidiaries
participate are determined in accordance with the provisions of negotiated labor contracts or applicable
local regulations.
A measurement date of December 31 was used for all plans presented below.
The components of pension expense were as follows:
U.S.
2005
2004
2003
Service cost....................................................................................
Interest cost....................................................................................
Expected return on plan assets .....................................................
Recognized actuarial loss ..............................................................
Recognized prior service cost........................................................
Total pension expense ...................................................................
$009
78
(0089 )
62
2
$062
$008
81
(0073 )
61
2
$079
$008
77
(0064 )
51
2
$074
Non-U.S.
2005
2004
2003
Service cost....................................................................................
Interest cost....................................................................................
Expected return on plan assets .....................................................
Recognized actuarial loss ..............................................................
Recognized prior service cost........................................................
Cost attributable to settlements and curtailments..........................
Total pension expense ...................................................................
$034
163
(0216 )
46
(0007 )
3
$023
$031
163
(0217 )
47
(0006 )
3
$021
$026
139
(0179 )
40
(0006 )
3
$023
Additional pension expense of $4 was recognized in each of the last three years for multi-employer plans.
-63-
Crown Holdings, Inc.
The projected benefit obligations, accumulated benefit obligations and fair value of plan assets for U.S.
pension plans with accumulated benefit obligations in excess of plan assets were $1,434, $1,406 and
$1,291, respectively, as of December 31, 2005, and were $1,402, $1,369 and $952, respectively, as of
December 31, 2004.
The projected benefit obligations, accumulated benefit obligations and fair value of plan assets for non-
U.S. pension plans with accumulated benefit obligations in excess of plan assets were $207, $183 and
$78, respectively, as of December 31, 2005 and $366, $333 and $164, respectively, as of December 31,
2004.
Projected Benefit Obligations
U.S. Plans
2005
2004
Non-U.S. Plans
2005
2004
Benefit obligations at January 1...........................
Service cost..........................................................
Interest cost..........................................................
Plan participants’ contributions ............................
Amendments ........................................................
Curtailments .........................................................
Actuarial loss........................................................
Benefits paid ........................................................
Foreign currency exchange rate changes............
Benefit obligations at December 31 .....................
$1,402
9
78
1
$1,279
8
81
1
60
(00,116 )
151
(00,118 )
$1,434
$1,402
$2,808
34
163
8
5
(00,052 )
393
(00,149 )
(00,284 )
$2,926
$2,474
31
163
9
1
76
(00,141 )
195
$2,808
Accumulated benefit obligations at December 31
$1,406
$1,369
$2,762
$2,619
Plan Assets
U.S. Plans
2005
2004
Non-U.S. Plans
2005
2004
Fair value of plan assets at January 1 .................
Actual return on plan assets.................................
Employer contributions.........................................
Plan participants’ contributions ............................
Benefits paid ........................................................
Foreign currency exchange rate changes............
Fair value of plan assets at December 31 ...........
$0,952
131
323
1
(00,116 )
$0,830
114
125
1
(00,118 )
$1,291
$0,952
$2,885
340
78
8
(00,149 )
(00,281 )
$2,881
$2,521
252
46
9
(00,141 )
198
$2,885
Plan assets in excess of / (less than)
benefit obligation ...............................................
Unrecognized actuarial loss .................................
Unrecognized prior service cost...........................
Net amount recognized ........................................
($0,143 )
766
11
$0,634
($0,450 )
810
13
$0,373
($0,045 )
859
(00,026 )
$0,788
$0,077
717
(00,043 )
$0,751
Amounts recognized in the balance sheet consist of:
Prepaid benefit cost .............................................
Accrued benefit liability ........................................
Intangible asset ....................................................
Accumulated other comprehensive loss ..............
Net amount recognized ........................................
($0,116 )
11
739
$0,634
($0,419 )
13
779
$0,373
$0,871
(00,138 )
6
49
$0,788
$0,853
(00,219 )
11
106
$0,751
For U.S. plans, additional minimum pension liabilities of $750 and $792 were recognized at December 31,
2005 and 2004, respectively. For non-U.S. plans, additional minimum pension liabilities of $55 and $117
were recognized at December 31, 2005 and 2004, respectively.
-64-
The expected future benefit payments as of December 31, 2005 were:
Crown Holdings, Inc.
2006 .....................................................................
2007 .....................................................................
2008 .....................................................................
2009 .....................................................................
2010 .....................................................................
2011 – 2015 .........................................................
U.S.
Plans
$117
115
128
112
131
523
Non-U.S.
Plans
$141
144
151
156
162
880
Additional information concerning the plan assets is presented below.
Plan assets
Equity securities
Debt securities
Real estate
Other
U.S. Plan Assets
Weighted Average
2006
Target Allocation
70%
12%
3%
15%
100%
December 31,
2004
2005
69%
75%
10%
8%
2%
2%
15%
19%
100%
100%
Non-U.S. Plan Assets
Weighted Average
2006
Target Allocation
25%
57%
8%
10%
100%
December 31,
2004
2005
25%
27%
58%
56%
9%
8%
8%
9%
100%
100%
Plan assets included $119 and $84 of the Company’s common stock at December 31, 2005 and 2004,
respectively.
The non-U.S. plan asset percentages are those of the U.K. plan, which is the primary non-U.S. plan with
assets. The “other” caption of plan assets includes alternate investments such as private equities, hedge
funds and venture capital limited partnerships.
Estimated 2006 employer contributions are $1 for the U.S. plans and $22 for the non-U.S. plans.
The Company’s investment strategy in the U.S. plan is to provide the fund with an ability to earn attractive
long-term rates of return on its assets at an acceptable level of risk. The equity portions of the program
are diversified within the U.S. and international markets based on capitalization, valuations and other
factors. Debt securities include all sectors of the marketable bond markets.
The Company’s investment strategy in the U.K. plan is to invest 52% of its assets in investment grade
bonds that match the liability profile. The remaining assets are invested in U.K. and global equities, real
estate, high-yield bonds and alternate investments. The allocation of assets is determined after
considering the plan’s financial position, liability profile and funding requirements.
The weighted average actuarial assumptions used to calculate the benefit obligations at December 31
were:
U.S.
2005
2004
Discount rate ..................................................................................
Compensation increase .................................................................
5.7%
3.0%
5.8%
3.0%
Non-U.S.
Discount rate ..................................................................................
Compensation increase .................................................................
2005
5.0%
3.5%
2004
6.3%
4.3%
2003
6.3%
3.0%
2003
6.7%
4.3%
-65-
Crown Holdings, Inc.
The weighted average actuarial assumptions used to calculate pension expense for each year were:
U.S.
2005
2004
Discount rate ..................................................................................
Compensation increase .................................................................
Long-term rate of return .................................................................
5.8%
3.0%
9.0%
6.3%
3.0%
9.0%
Non-U.S.
2005
2004
Discount rate ..................................................................................
Compensation increase .................................................................
Long-term rate of return .................................................................
6.3%
4.3%
8.1%
6.7%
4.3%
8.5%
2003
6.8%
3.0%
9.0%
2003
6.9%
4.4%
8.5%
The expected long-term rates of return are determined at each measurement date based on a review of
the actual plan assets, the target allocation, and the historical returns of the capital markets, adjusted for
current interest rates as appropriate. The rate for the U.S. plan will decrease from 9.0% in 2005 to 8.75%
in 2006 and the rate for the U.K. plan will decrease from 8.0% in 2005 to 7.0% in 2006.
Other Postretirement Benefit Plans. The Company sponsors unfunded plans to provide health care and
life insurance benefits to pensioners and survivors. Generally, the medical plans pay a stated percentage
of medical expenses reduced by deductibles and other coverages. Life insurance benefits are generally
provided by insurance contracts. The Company reserves the right, subject to existing agreements, to
change, modify or discontinue the plans. A measurement date of December 31 was used for the plans
presented below.
The components of the net postretirement benefits cost were as follows:
Service cost....................................................................................
Interest cost....................................................................................
Recognized prior service cost........................................................
Recognized actuarial loss ..............................................................
Total postretirement benefits cost..................................................
$04
38
(013)
15
$44
$03
39
(012)
14
$44
2005
2004
2003
$03
45
(006)
10
$52
The following provides the components of the changes in the benefit obligations, and reconciles the
obligations to the amounts recognized:
Benefit obligations at January 1.....................................................
Service cost....................................................................................
Interest cost....................................................................................
Amendments ..................................................................................
Actuarial loss..................................................................................
Benefits paid ..................................................................................
Foreign currency exchange rate changes......................................
Benefit obligations at December 31 ...............................................
Unrecognized actuarial loss ...........................................................
Unrecognized prior service cost.....................................................
Net amount recognized ..................................................................
2005
$685
4
38
(0052)
11
(0047)
639
(0219)
136
$556
2004
$653
3
39
33
(0048)
5
685
(0224)
99
$560
The U.S. plans were amended in 2003 and 2005 to, among other things, require additional retiree
contributions for medical and prescription drug costs. As described in Note N, the validity of the 2003
amendments is being litigated. The Company believes that it had the right to make such amendments
and intends to contest the matter vigorously. However, the ultimate outcome of the litigation is uncertain
and if the litigation is decided adversely, the Company could be required to restore all or a portion of the
retiree medical benefits to their pre-amendment levels.
-66-
Crown Holdings, Inc.
The expected future benefit payments are $47 in 2006, $49 in 2007, $49 in 2008, $50 in 2009, $50 in
2010 and $238 in aggregate for 2011 through 2015. These payments are net of expected Medicare Part
D subsidies of $4 in each of the years 2006 to 2010 and $21 in aggregate for 2011 through 2015.
The health care accumulated postretirement benefit obligations were determined at December 31, 2005
and 2004 using health care trends of 9.0% decreasing to 5.0% over six years. Increasing the assumed
health care cost trend rate by one percentage point in each year would increase the accumulated
postretirement benefit obligations by $58 and the total of service and interest cost by $4. Decreasing the
assumed health care cost trend rate by one percentage point in each year would decrease the
accumulated postretirement benefit obligations by $49 and the total of service and interest cost by $3.
The weighted average actuarial assumptions used to calculate the benefit obligations and cost are the
same as those used for the pension plans as presented above.
Employee Savings Plan. The Company sponsors Savings Investment Plans which cover substantially all
domestic salaried employees who are at least 21 years of age. The Company matches up to 3% of a
participant’s compensation and the total Company contributions were $2 in each of the last three years.
Employee Stock Purchase Plan. The Company sponsors an Employee Stock Purchase Plan which
covers all domestic employees with one or more years of service who are non-officers and non-highly
compensated as defined by the Internal Revenue Code. Eligible participants contribute 85% of the
quarter-ending market price towards the purchase of each common share. The Company’s contribution
is equivalent to 15% of the quarter-ending market price. Total shares purchased under the plan in 2005
and 2004 were 69,652 and 87,960, respectively, and the Company’s contributions were less than $1 in
both years.
X.
Income Taxes
Pre-tax income/(loss) for the years ended December 31 was taxed under the following jurisdictions:
U.S. ................................................................................................
Foreign ...........................................................................................
2005
2004
($083)
(0231)
($314)
($109)
213
$104
2003
($245)
298
$053
The provision/(benefit) for income taxes consisted of the following:
Current tax:
U.S. federal ....................................................................................
State and foreign............................................................................
$004
50
54
($004)
57
53
$004
64
68
Deferred tax:
U.S. federal ....................................................................................
State and foreign............................................................................
Total ...............................................................................................
(0019)
(0037)
(0056)
($002)
(0006)
14
8
$061
(0007)
10
3
$071
-67-
Crown Holdings, Inc.
The provision for income taxes differed from the amount of income tax determined by applying the U.S.
statutory federal income tax rate to pre-tax income as a result of the following items:
U.S. statutory rate at 35% ..............................................................
Sale of subsidiary...........................................................................
Valuation allowance .......................................................................
Impairment losses ..........................................................................
Tax on foreign income....................................................................
Withholding taxes...........................................................................
Other items, net..............................................................................
Income tax provision/(benefit) ........................................................
2005
2004
($110)
$036
115
(0020)
9
4
($002)
(0004)
10
(0006)
8
17
$061
2003
$019
40
24
4
(0022)
5
1
$071
The valuation allowance caption for 2005 includes charges of $120 in the non-U.S. operations and a
credit of $5 in the U.S. The non-U.S. charges of $120 were primarily in France. The credit of $5 in the
U.S. was primarily due to the use of tax losses to recover taxes paid in prior years. Additional discussion
of the Company’s valuation allowances is provided below.
The other items caption for 2005 includes a benefit of $5 for the partial reversal of a U.K. tax contingency
of $16 that was provided during 2004, as discussed below. The reversal of $5 was based on a settlement
covering a portion of the period under examination.
The impairment losses caption for 2004 includes the tax effect of the non-deductible charge of $29 for the
write-off of cumulative translation adjustments as discussed in Note P. The other items caption for 2004
primarily includes charges of $18 for tax contingencies and a charge of $6 due to a 2004 change in the
French capital gains tax rules, partially offset by other net benefits of $7, including adjustments for
federal, state and foreign refunds and credits due. The primary item included in the $18 of tax
contingencies was $16 for an issue in the U.K. concerning the amount of commission payments paid by
the Company’s U.K. subsidiaries to its centralized European purchasing center.
The sale of subsidiary caption in 2003 includes the U.S. tax charge on a gain from an intercompany sale
of a subsidiary by the U.S. tax group. The offset to this item is included in the valuation allowance caption
as the U.S. tax loss carryforwards are covered by a full valuation allowance. The pre-tax effect of the sale
was eliminated in consolidation.
The valuation allowance caption for 2003 primarily includes losses in the U.S. and Argentina for which the
Company recorded no tax benefit. The loss in Argentina was primarily due to the asset impairment
charge described in Note P. The impairment loss caption in 2003 includes the effect of the non-deductible
goodwill impairment charge described in Note P.
The Company paid taxes, net of refunds, of $70, $74 and $50 in 2005, 2004 and 2003, respectively.
The components of deferred taxes at December 31 were:
2005
2004
Assets
Depreciation .......................................................
Tax loss and credit carryforwards ......................
Postretirement and postemployment benefits....
Pensions.............................................................
Asbestos.............................................................
Inventories..........................................................
Accruals and other .............................................
Valuation allowances .........................................
Total ...................................................................
$009
532
214
63
75
1
71
(0749)
$216
Liabilities
$172
260
16
34
$482
Assets
$009
364
211
159
82
55
(0679)
$201
Liabilities
$218
247
22
39
$526
Prepaid expenses and other current assets included $12 and $15 of deferred tax assets at December 31,
2005 and 2004, respectively.
-68-
Crown Holdings, Inc.
Tax loss and credit carryforwards expire as follows: 2006 - $26; 2007 - $2; 2008 - $2; 2009 - $11; 2010 -
$1; thereafter - $273; unlimited - $217. The majority of those expiring after 2010 relate to $243 of U.S. tax
loss carryforwards that expire through 2025. The unlimited carryforwards primarily include tax losses and
credits in Europe.
Realization of any portion of the Company’s deferred tax assets is dependent upon the availability of
taxable income in these jurisdictions. The Company considers all sources of taxable income, including (i)
taxable income in any available carry back period, (ii) the reversal of taxable temporary differences, (iii)
tax-planning strategies, and (iv) taxable income expected to be generated in the future other than from
reversing temporary differences. The Company also considers whether there have been cumulative
losses in recent years. The Company records a valuation allowance when it is more likely than not that
some portion or all of the deferred tax assets will not be realized.
The Company’s valuation allowances of $749 as of December 31, 2005 include $569 in the U.S., $132 in
France, and $48 in other non-U.S. operations.
The Company has a full valuation allowance against its U.S. net deferred tax assets of $569, consisting of
$628 of deferred tax assets and $59 of deferred tax liabilities. The U.S. deferred tax assets of $628
include, among other items, $290 of tax loss and tax credit carryforwards, $211 related to pension and
postretirement benefits, and $75 related to asbestos liabilities. The U.S. operations have had tax losses
in recent years due, in part, to significant interest expense, pension plan contributions, and asbestos-
related payments. The Company determined that a full valuation allowance was appropriate for its U.S.
net deferred tax assets as of both December 31, 2005 and 2004 due to these recent losses and
uncertainty regarding the amount and timing of future taxable income. Although the U.S. deferred tax
assets include $231 of benefits for tax loss carryforwards that will not expire within the next ten years, the
Company’s underlying assumption is that there is not sufficient positive evidence of future taxable
income, after considering all sources, that overcomes the negative evidence of losses in recent years.
Accordingly, the Company concluded that it was more likely than not that no portion of the deferred tax
assets will be realized. As of December 31, 2005, the Company also has a full valuation allowance
against its net deferred tax assets in France of $132, consisting of $169 of deferred tax assets and $37 of
deferred tax liabilities. The deferred tax assets of $169 include, among other items, $134 of tax loss
carryforwards. The Company’s operations in France have also had losses in recent years due to
significant interest expense, foreign exchange losses and, in 2005, the payment of premiums to repay a
portion of the Company’s senior secured notes as discussed in Note T. The Company determined that a
full valuation allowance was appropriate for its French net deferred tax assets as of December 31, 2005
due to the recent losses and uncertainty regarding the amount and timing of future taxable income.
Although the French deferred tax assets include $134 of benefits for tax loss carryforwards that do not
expire, the Company’s underlying assumption is that there is not sufficient positive evidence of future
taxable income, after considering all sources, that overcomes the negative evidence of losses in recent
years. Accordingly, the Company concluded that it was more likely than not that no portion of the
deferred tax assets will be realized. The valuation allowances of $48 in other non-U.S. operations
includes approximately $31 for tax loss carryforwards in inactive entities in Europe where there are no
current tax-planning strategies to utilize the losses, $7 in other European operations, $6 in the Americas
and $4 in Asia.
As of December 31, 2005, the Company had a recorded liability of $11 for estimated U.S. state tax
contingencies related to various issues and states for which the audits have not been completed. The
Company may adjust its estimates in the future as the contingencies are settled or more information
becomes available.
The cumulative amount of the Company’s share of undistributed earnings of non-U.S. subsidiaries for
which no deferred taxes have been provided was $152 as of December 31, 2005. Management has no
plans to distribute such earnings in the foreseeable future.
-69-
Y. Segment Information
Crown Holdings, Inc.
The Company’s business is organized geographically within three divisions, Americas, Europe and Asia-
Pacific. Within the Americas and Europe, the Company has determined that it has the following
reportable segments organized along a combination of product lines and geographic areas: Americas
Beverage and North America Food within the Americas, and Europe Beverage, Europe Food and Europe
Specialty Packaging within Europe. Prior periods shown below have been conformed to the current
presentation.
The Company evaluates performance and allocates resources based on segment income. Segment
income is defined by the Company as net sales less cost of products sold, depreciation and amortization,
and selling and administrative expenses.
The tables below present information about operating segments for the years ended December 31, 2005,
2004 and 2003:
2005
External
sales
Segment
assets
Depreciation
Capital
and amortization expenditures
Segment
income
Americas Beverage................................
North America Food ...............................
Europe Beverage ...................................
Europe Food ..........................................
Europe Specialty Packaging ..................
Total reportable segments .....................
Non-reportable segments.......................
Corporate and unallocated items ...........
Total .......................................................
$1,659
754
963
1,842
406
5,624
1,284
$6,908
$0,983
523
1,363
1,626
188
4,683
782
1,080
$6,545
$049
21
38
62
9
179
63
7
$249
$025
13
81
20
5
144
46
2
$192
$197
42
140
198
20
$597
2004
External
sales
Segment
assets
Depreciation
Capital
and amortization expenditures
Segment
income
Americas Beverage................................
North America Food ...............................
Europe Beverage ...................................
Europe Food ..........................................
Europe Specialty Packaging ..................
Total reportable segments .....................
Non-reportable segments.......................
Corporate and unallocated items ...........
Total .......................................................
$1,538
740
851
1,807
385
5,321
1,210
$6,531
$0,984
540
1,254
1,859
216
4,853
1,865
1,407
$8,125
$051
24
35
68
10
188
69
6
$263
$029
7
17
23
8
84
51
3
$138
$175
44
145
165
6
$535
2003
External
sales
Segment
assets
Depreciation
Capital
and amortization expenditures
Segment
income
Americas Beverage................................
North America Food ...............................
Europe Beverage ...................................
Europe Food ..........................................
Europe Specialty Packaging ..................
Total reportable segments .....................
Non-reportable segments.......................
Corporate and unallocated items ...........
Total .......................................................
$1,448
704
760
1,610
350
4,872
1,135
$6,007
$0,985
537
1,196
1,768
202
4,688
1,749
1,336
$7,773
$148
33
123
139
4
$447
$053
25
42
67
12
199
75
7
$281
$021
7
14
18
5
65
48
7
$120
-70-
Crown Holdings, Inc.
“Corporate and unallocated items” includes corporate and division administrative costs, technology
costs, and unallocated items such as the U.S. and U.K. pension plan costs.
A reconciliation of segment income to consolidated income/(loss) from continuing operations before
income taxes, minority interests and equity earnings for the years ended December 31, 2005, 2004 and
2003 follows:
2005
2004
2003
Segment income of reportable segments ........................................ $597
Segment income of non-reportable segments ................................. 108
Corporate and other non-allocated costs......................................... (0154)
Provision for asbestos...................................................................... (0010)
Provision for restructuring ................................................................ (0016)
Provision for asset impairments and loss/gain on sale of assets .... (0010)
Loss from early extinguishments of debt ......................................... (0383)
Interest expense............................................................................... (0361)
Interest income.................................................................................
9
Translation and exchange adjustments ........................................... (0094)
Income/(loss) from continuing operations before income taxes,
minority interest and equity earnings ............................................ ($314)
$535
117
(0165)
(0035)
(0007)
(0047)
(0039)
(0361)
8
98
$447
88
(0174)
(0044)
(0015)
(0076)
(0012)
(0379)
11
207
$104
$053
For the years ended December 31, 2005, 2004 and 2003, no one customer accounted for more than 10%
of the Company’s consolidated net sales.
Sales by major product were:
Metal beverage cans and ends ...................................................... $2,925
2,355
Metal food cans and ends ..............................................................
1,280
Other metal packaging ...................................................................
286
Plastics packaging .........................................................................
Other products ...............................................................................
62
Consolidated net sales................................................................... $6,908
$2,634
2,324
1,225
295
53
$6,531
$2,431
2,110
1,133
279
54
$6,007
2005
2004
2003
Sales and long-lived assets for the major countries in which the Company operates were:
United States......................
United Kingdom..................
France ................................
Other ..................................
Consolidated total ..............
2005
$2,063
799
711
3,335
$6,908
Net Sales
2004
$1,997
769
734
3,031
$6,531
2003
$1,897
712
686
2,712
$6,007
Long-lived Assets
2004
2005
2003
$0,422
222
126
837
$1,607
$0,529
311
187
975
$2,002
$0,574
322
213
1,003
$2,112
-71-
Z. Condensed Combining Financial Information
Crown Holdings, Inc.
In connection with the Company’s 2003 and 2004 refinancings as discussed in Note T, Crown European
Holdings (Issuer), a 100% owned subsidiary of the Company, issued senior secured notes that are fully
and unconditionally guaranteed by Crown and certain subsidiaries. The guarantor information includes
substantially all subsidiaries in the United States, the United Kingdom, France, Germany, Belgium,
Canada, Mexico and Switzerland. The guarantors are 100% owned by the Company and the guarantees
are made on a joint and several basis. The following condensed combining financial statements:
statements of operations and cash flows for the years ended December 31, 2005, 2004
•
and 2003, and
• balance sheets as of December 31, 2005 and 2004
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of
Regulation S-X.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2005
(in millions)
Net sales...........................................................
Cost of products sold, excluding
depreciation and amortization ...............
Depreciation and amortization....................
Parent
Issuer
Guarantors
$4,480
Non
Guarantors
$2,428
Eliminations
($019 )
3,793
164
1,985
85
Gross profit......................................................
19
Total
Company
$6,908
5,759
249
900
349
10
16
10
383
352
94
523
264
10
14
358
85
2
301
109
11
22
78
235
(00,030)
51
(00,012
)
4
8
30
32
(0402 )
($362)
155
(00,121)
(00,055)
(00,328)
209
53
(00,314 )
(00,002 )
$535
(0362
)
)
(0247
(00,394
)
156
535
(00,039)
(00,312
)
(00,039 )
Selling and administrative expense ............
Provision for asbestos ................................
Provision for restructuring...........................
Provision for asset impairments and
loss/gain on sale of assets ....................
Loss from early extinguishments of debt....
Net interest expense...................................
Technology royalty......................................
Translation and exchange adjustments......
Income/(loss) from continuing operations
before income taxes, minority interests
and equity earnings..................................
Provision/(benefit) for income taxes ...........
Equity earnings/(loss) .................................
Income/(loss) from continuing operations
before minority interests and equity
earnings .....................................................
Minority interests and equity earnings ........
Income/(loss) from continuing operations ...
(0362) (0247 )
(00,394)
117
535
(00,351 )
Discontinued operations
Income/(loss) before income taxes.............
Provision for income taxes .........................
Net income/(loss) ............................................
(0034 )
($362) ($281 )
64
32
($362)
(00,007)
2
$108
23
34
($0,362 )
$535
-72-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2004
(in millions)
Net sales...........................................................
Cost of products sold, excluding
depreciation and amortization ...............
Depreciation and amortization....................
Gross profit......................................................
Selling and administrative expense ............
Provision for asbestos ................................
Provision for restructuring...........................
Provision for asset impairments and
loss/gain on sale of assets ....................
Loss from early extinguishments of debt....
Net interest expense...................................
Technology royalty......................................
Translation and exchange adjustments......
Income/(loss) from continuing operations
before income taxes, minority interests
and equity earnings..................................
Provision for income taxes .........................
Equity earnings ...........................................
Income from continuing operations before
minority interests and equity earnings ..
Minority interests and equity earnings ........
Parent
Issuer
Guarantors
$4,382
Non
Guarantors
$2,149
Eliminations
($021 )
3,752
176
1,732
87
21
(0001 )
454
253
35
7
9
117
(0037 )
43
30
235
(00,029 )
(00,042 )
330
66
4
1
29
(00,019)
Total
Company
$6,531
5,463
263
805
318
35
7
47
39
353
(00,098 )
(0067 )
$51
239
(00,078 )
1
95
249
60
($385 )
104
61
51
172
16
189
(00,027)
(0385 )
43
(00,027 )
Income from continuing operations..............
51
172
16
162
(0385 )
16
Discontinued operations
Income before income taxes ......................
Provision for income taxes .........................
Net income .......................................................
$51
$172
56
21
$0,051
$0,162
($385 )
56
21
$51
-73-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2003
(in millions)
Net sales...........................................................
Cost of products sold, excluding
depreciation and amortization ...............
Depreciation and amortization....................
($015 )
3,560
189
Gross profit......................................................
15
Parent
Issuer
Guarantors
$4,114
Non
Guarantors
$1,893
Eliminations
365
240
44
13
1,528
92
273
52
2
30
(00,012)
25
(00,041)
)
($098
71
102
(0063 )
73
12
278
(00,025)
(00,103)
Total
Company
$6,007
5,073
281
653
292
44
15
76
12
368
(00,207 )
(0095 )
($32)
249
(00,167)
7
100
217
64
98
(0317 )
53
71
(032)
154
(00,074)
153
(00,056)
(0219 )
(00,018 )
(00,056 )
Selling and administrative expense ............
Provision for asbestos ................................
Provision for restructuring...........................
Provision for asset impairments and
loss/gain on sale of assets ....................
Loss from early extinguishments of debt....
Net interest expense...................................
Technology royalty......................................
Translation and exchange adjustments......
Income/(loss) from continuing operations
before income taxes, minority interests
and equity earnings..................................
Provision for income taxes .........................
Equity earnings/(loss) .................................
Income/(loss) from continuing operations
before minority interests
and equity earnings..................................
Minority interests and equity earnings ........
Income/(loss) from continuing operations ...
(032)
154
(00,074)
97
(0219 )
(00,074 )
Discontinued operations
Income before income taxes ......................
Provision for income taxes .........................
Net income/(loss) ............................................
($32) $154
64
22
($0,032)
2
2
$00,97
66
24
($0332 )
($219 )
-74-
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2005
(in millions)
Parent
Issuer
Guarantors
Non
Guarantors
Eliminations
Total
Company
Assets
Current assets
Cash and cash equivalents ................................
Receivables, net .................................................
Intercompany receivables...................................
Inventories ..........................................................
Prepaid expenses and other current assets.......
Total current assets ............................
$0,061
1
62
Intercompany debt receivables ................................. $003
1,562
Investments in subsidiaries....................................... (0222 ) 2,685
Goodwill ....................................................................
Property, plant and equipment, net...........................
Other non-current assets ..........................................
11
Total ...................................................... ($219 ) $4,320
Liabilities and shareholders’ equity/(deficit)
Current liabilities
Short-term debt...................................................
Current maturities of long-term debt...................
Accounts payable and accrued liabilities............
Intercompany payables ......................................
Income taxes payable.........................................
Total current liabilities ........................
Long-term debt, excluding current maturities ...........
Long-term intercompany debt ...................................
Postretirement and pension liabilities .......................
Other non-current liabilities .......................................
Minority interests .......................................................
Commitments and contingent liabilities ....................
$0,023
3
14
4
5
49
$17
17
912
2,212
13
$0,067
61
65
470
53
716
1,562
(00,122 )
1,430
951
991
$5,528
$0,002
110
1,037
49
9
1,207
2,214
1,066
730
533
$0,227
564
53
340
2
1,186
740
583
656
78
$3,243
$0,047
26
606
66
44
789
66
589
15
109
246
($0,119 )
(00,119 )
(03,867 )
(02,341 )
($6,327 )
($0,119 )
(00,119 )
(03,867 )
$0,294
686
810
55
1,845
2,013
1,607
1,080
$6,545
$0,072
139
1,674
58
1,943
3,192
745
655
246
Shareholders’ equity/(deficit) .................................... (0236 ) 1,134
Total .................................................... ($219 ) $4,320
(00,222 )
$5,528
1,429
$3,243
(00,236 )
(02,341 )
($6,327 ) $6,545
-75-
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2004
(in millions)
Parent
Issuer
Guarantors
Non
Guarantors
Eliminations
Total
Company
$0,168
362
53
556
59
1,198
1,378
75
17
1,931
1,329
978
$6,906
$0,010
2
1,237
37
37
1,323
935
2,786
1,003
587
$0,302
532
37
338
19
1,228
898
10
660
673
41
$3,510
$0,041
23
595
54
24
737
67
741
16
140
201
($0,091 )
(00,091 )
(4,946 )
(3,543 )
($8,580 )
($0,091 )
(00,091 )
(04,946 )
$0,471
900
894
78
2,343
85
2,592
2,002
1,103
$8,125
$0,051
25
1,943
61
2,080
3,796
1,019
752
201
272
$6,906
1,608
$3,510
(03,543 )
($8,580 )
277
$8,125
$0,001
6
1
8
2,648
3,254
1
Assets
Current assets
Cash and cash equivalents ................................
Receivables, net .................................................
Intercompany receivables...................................
Inventories ..........................................................
Prepaid expenses and other current assets.......
Total current assets ............................
Intercompany debt receivables ................................. $022
Investments...............................................................
Investments in subsidiaries.......................................
Goodwill ....................................................................
Property, plant and equipment, net...........................
Other non-current assets ..........................................
272
84
Total ...................................................... $294 $5,995
Liabilities and shareholders’ equity
Current liabilities
Short-term debt...................................................
Current maturities of long-term debt...................
Accounts payable and accrued liabilities............ $017 $0,094
Intercompany payables ......................................
Income taxes payable.........................................
Total current liabilities ........................
17
94
Long-term debt, excluding current maturities ...........
Long-term intercompany debt ...................................
Postretirement and pension liabilities .......................
Other non-current liabilities .......................................
Minority interests .......................................................
Commitments and contingent liabilities ....................
2,794
1,419
25
Shareholders’ equity .................................................
1,663
Total .................................................... $294 $5,995
277
-76-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2005
(in millions)
Net cash provided by/(used for) operating activities....
$03 ($0,406 )
Parent
Issuer
Guarantors
($0,001 )
Non
Guarantors
$282
Eliminations
Total
Company
($0,122 )
Cash flows from investing activities
Capital expenditures........................................................
Proceeds from sale of business ......................................
Proceeds from sale of property, plant and equipment ....
Intercompany investing activities ....................................
Other................................................................................
72
189
(00,100 )
483
31
34
(00,002 )
(0092 )
72
9
(0009 )
(00,192 )
627
40
(00,011 )
($223 )
Net cash provided by/(used for)
investing activities ........................................
261
446
(0020 )
(0223 )
464
Cash flows from financing activities
Proceeds from long-term debt.........................................
Payments of long-term debt ............................................
Net change in short-term debt.........................................
Net change in long-term intercompany balances............
Debt issue costs ..............................................................
Dividends paid .................................................................
Common stock issued .....................................................
Common stock repurchased ...........................................
Dividends paid to minority interests ................................
335
(02,109 )
13
1,905
19
1,265
(00,129 )
257
(01,886 )
(00,026 )
(00,023 )
16
(038 )
16
(0030 )
(0022 )
(0038 )
(0200 )
223
(0045 )
1,616
(02,268 )
248
(00,026 )
16
(00,038)
(00,045 )
Net cash provided by/(used for)
financing activities........................................
(003 )
144
(00,542 )
(0319 )
223
(00,497 )
Effect of exchange rate changes on cash and cash
equivalents ......................................................................
)
(00,004
(0018
)
Net change in cash and cash equivalents..........................
(00,001 )
(00,101 )
(0075 )
Cash and cash equivalents at January 1 ...........................
1
168
302
)
(00,022
(00,177 )
471
Cash and cash equivalents at December 31..................
$00 $0,000
$0,067
$227
$000
$0,294
-77-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2004
(in millions)
Net cash provided by/(used for) operating activities ...
Cash flows from investing activities
Capital expenditures .......................................................
Proceeds from sale of property, plant and equipment ....
Intercompany investing activities ....................................
Other ...............................................................................
Parent
$11
Issuer
($086 )
Guarantors
$171
Non
Guarantors
$308
Eliminations
Total
Company
$404
557
(0105 )
29
452
6
(0033 )
10
(0001 )
(0014 )
($1,008 )
(0138 )
39
(0008 )
Net cash provided by/(used for)
investing activities........................................
557
382
(0038 )
(01,008 )
(0107 )
Cash flows from financing activities
Proceeds from long-term debt ........................................
Payments of long-term debt............................................
Net change in short-term debt ........................................
Net change in long-term intercompany balances ...........
Debt issue costs..............................................................
Dividends paid.................................................................
Common stock issued.....................................................
Dividends paid to minority interests ................................
563
(0058 )
(0552 )
(0014 )
(0415 )
125
(0650 )
(0034 )
139
(0017 )
(0074 )
(014)
3
32
(0165 )
10
427
(0519 )
1,008
(0041 )
720
(0873 )
(0024 )
(0031 )
3
(0041 )
Net cash used for financing activities...............
(011)
(0476 )
(0511 )
(0256 )
1,008
(0246 )
Effect of exchange rate changes on cash and cash
equivalents ......................................................................
1
Net change in cash and cash equivalents..........................
(0004 )
8
50
10
24
Cash and cash equivalents at January 1 ...........................
5
118
278
19
70
401
Cash and cash equivalents at December 31 .................
$00
$001
$168
$302
$0,000
$471
-78-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2003
(in millions)
Net cash provided by/(used for) operating activities .....
Cash flows from investing activities
Capital expenditures .........................................................
Funding of restricted cash accounts .................................
Withdrawals from restricted cash accounts ......................
Proceeds from sale of property, plant and equipment......
Intercompany investing activities ......................................
Other .................................................................................
Parent
Issuer
($0,010 )
Guarantors
$0,106
Non
Guarantors
$338
Eliminations
Total
Company
$0,434
(00,086 )
(00,228 )
228
30
1,196
3
(0034 )
(0116 )
116
5
34
(0009 )
(00,120 )
(00,344 )
344
35
(00,015 )
($112)
(01,118 )
(00,009 )
Net cash provided by/(used for)
investing activities..........................................
(01,127 )
1,143
(0004 )
(0112)
(00,100 )
Cash flows from financing activities
Proceeds from long-term debt ..........................................
Payments of long-term debt..............................................
Net change in short-term debt ..........................................
Net change in long-term intercompany balances .............
Debt issue costs................................................................
Net payment from termination of cross-currency swaps...
Dividends paid...................................................................
Common stock issued.......................................................
Dividends paid to minority interests ..................................
2,170
(00,003 )
($2) (00,940 )
(00,086 )
2
450
(00,651 )
(01,670 )
666
(00,055 )
27
(00,047 )
2
5
(0455 )
(0003 )
274
(0035 )
(0065 )
(0024 )
2,625
(01,109 )
(01,673 )
(00,141 )
(00,008 )
2
(00,024)
2
112
(0002)
Net cash provided by/(used for)
financing activities........................................
1,141
(01,278 )
(0303 )
112
(00,328 )
Effect of exchange rate changes on cash
and cash equivalents .....................................................
Net change in cash and cash equivalents ...........................
Cash and cash equivalents at January 1 .............................
8
(00,021 )
24
55
139
223
4
1
32
38
363
Cash and cash equivalents at December 31 ...................
$0 $0,005
$0,118
$278
$000
$0,401
-79-
Crown Holdings, Inc.
Crown Cork & Seal Company, Inc. (Issuer), a 100% owned subsidiary has outstanding registered
debt that is fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent). No other
subsidiary guarantees the debt. The following condensed combining financial statements:
•
statements of operations and cash flows for the years ended December 31, 2005, 2004 and
2003, and
• balance sheets as of December 31, 2005 and 2004
are presented on the following pages to comply with the Company’s requirements under Rule 3-
10 of Regulation S-X.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2005
(in millions)
Net sales ..............................................................................
Cost of products sold, excluding depreciation and
Amortization ..............................................................
Depreciation and amortization .......................................
Gross profit .........................................................................
Parent
Issuer
Eliminations
Non
Guarantors
$6,908
5,759
249
Selling and administrative expense ...............................
Provision for asbestos....................................................
Provision for restructuring ..............................................
Provision for asset impairments and loss/gain
on sale of assets......................................................
Loss from early extinguishments of debt .......................
Net interest expense ......................................................
Translation and exchange adjustments .........................
$0,006
10
(00,505 )
269
900
343
16
10
888
83
94
Total
Company
$6,908
5,759
249
900
349
10
16
10
383
352
94
Income/(loss) from continuing operations before
income taxes, minority interests
and equity earnings .....................................................
Provision/(benefit) for income taxes...............................
Equity loss......................................................................
220
(00,534 )
(00,002 )
(00,314 )
(00,002 )
($362 ) (00,593 )
$955
Loss from continuing operations before
minority interests and equity earnings......................
Minority interests and equity earnings ...........................
(0362 ) (00,373 )
11
(00,532 )
(00,050 )
955
(00,312 )
(00,039 )
Loss from continuing operations .....................................
(0362 ) (00,362 )
(00,582 )
955
(00,351 )
Discontinued operations
Income before income taxes..........................................
Provision for income taxes.............................................
Net loss................................................................................
($362 ) ($0,362 )
23
34
($0,593 )
23
34
($0,362 )
$955
-80-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2004
(in millions)
Net sales ..............................................................................
Cost of products sold, excluding depreciation and
amortization...............................................................
Depreciation and amortization .......................................
Gross profit .........................................................................
Selling and administrative expense ...............................
Provision for asbestos....................................................
Provision for restructuring ..............................................
Provision for asset impairments and loss/gain
on sale of assets......................................................
Loss from early extinguishments of debt .......................
Net interest expense ......................................................
Translation and exchange adjustments .........................
Income/(loss) from continuing operations before
income taxes, minority interests and.........................
equity earnings.............................................................
Provision/(benefit) for income taxes...............................
Equity earnings ..............................................................
Income from continuing operations before minority
interests and equity earnings .....................................
Minority interests and equity earnings ...........................
Income from continuing operations .................................
Discontinued operations
Income before income taxes..........................................
Provision for income taxes.............................................
Net income ..........................................................................
Parent
Issuer
Non
Guarantors
$6,531
Eliminations
Total
Company
$6,531
5,463
263
805
313
7
46
38
44
(00,098 )
$005
35
1
1
309
5,463
263
805
318
35
7
47
39
353
(00,098 )
(0351 )
(0094 )
294
455
155
($345 )
104
61
37
14
51
300
(00,041 )
(0345 )
43
(00,027 )
259
(0345 )
16
$51
51
51
$51
$051
56
21
$0,294
56
21
$00,051
($345 )
-81-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2003
(in millions)
Net sales .............................................................................
Cost of products sold, excluding depreciation and
amortization..............................................................
Depreciation and amortization ......................................
Gross profit ........................................................................
Selling and administrative expense...............................
Provision for asbestos ...................................................
Provision for restructuring .............................................
Provision for asset impairments and loss/gain
on sale of assets.....................................................
(Gain)/loss from early extinguishments of debt.............
Net interest expense .....................................................
Translation and exchange adjustments ........................
Income/(loss) from continuing operations before
income taxes, minority interests and........................
equity earnings............................................................
Provision/(benefit) for income taxes..............................
Equity earnings/(loss)....................................................
Parent
Issuer
Non
Guarantors
$6,007
Eliminations
Total
Company
$6,007
5,073
281
653
292
15
5,073
281
653
292
44
15
76
(00,009)
59
(00,207)
$156
76
12
368
(00,207 )
$044
(0156 )
21
309
(0218 )
(0047 )
159
($32 )
427
118
(0156 )
(0127 )
53
71
Income/(loss) from continuing operations before
minority interests and equity earnings .....................
Minority interests and equity earnings...........................
(032 )
(0012 )
(0020 )
309
(00,036)
(0283 )
(00,018 )
(00,056 )
Income/(loss) from continuing operations......................
(032 )
(0032 )
273
(0283 )
(00,074 )
Discontinued operations
Income before income taxes .........................................
Provision for income taxes ............................................
Net income/(loss)...............................................................
($32 )
($032 )
66
24
$0,315
66
24
($0,032 )
($283 )
-82-
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2005
(in millions)
Parent
Issuer
Non
Guarantors
Eliminations
Total
Company
Assets
Current assets
Cash and cash equivalents ................................
Receivables, net .................................................
Inventories ..........................................................
Prepaid expenses and other current assets.......
Total current assets ............................
Intercompany debt receivables .................................
Investments ...............................................................
Goodwill.....................................................................
Property, plant and equipment, net...........................
Other non-current assets ..........................................
Total ......................................................
$003
(0222 ) $807
27
($219 ) $834
Liabilities and shareholders’ equity/(deficit)
Current liabilities
Short-term debt...................................................
Current maturities of long-term debt...................
Accounts payable and accrued liabilities............
Income taxes payable.........................................
Total current liabilities ........................
$017
17
Long-term debt, excluding current maturities............
Long-term intercompany debt ...................................
Postretirement and pension liabilities .......................
Other non-current liabilities .......................................
Minority interests .......................................................
Commitments and contingent liabilities.....................
$001
35
36
698
120
202
$0,294
686
810
55
1,845
117
2,013
1,607
1,053
$6,635
$0,071
139
1,622
58
1,890
2,494
745
453
246
$0,294
686
810
55
1,845
2,013
1,607
1,080
$6,545
$0,072
139
1,674
58
1,943
3,192
745
655
246
($120 )
(0585 )
($705 )
($120 )
Shareholders’ equity/(deficit).....................................
Total ....................................................
(0236 ) (0222 )
($219 ) $834
807
$6,635
(0585 )
($705 )
(00,236 )
$6,545
-83-
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2004
(in millions)
Parent
Issuer
Non
Guarantors
Eliminations
Total
Company
Assets
Current assets
Cash and cash equivalents ................................
Receivables, net .................................................
Inventories ..........................................................
Prepaid expenses and other current assets.......
Total current assets ............................
Intercompany debt receivables .................................
Investments ...............................................................
Goodwill.....................................................................
Property, plant and equipment, net...........................
Other non-current assets ..........................................
Total ......................................................
$022
272 $4,389
64
$294 $4,453
Liabilities and shareholders’ equity
Current liabilities
Short-term debt...................................................
Current maturities of long-term debt...................
Accounts payable and accrued liabilities............
Income taxes payable.........................................
Total current liabilities ........................
$017
$0,001
49
17
50
Long-term debt, excluding current maturities............
Long-term intercompany debt ...................................
Postretirement and pension liabilities .......................
Other non-current liabilities .......................................
Minority interests .......................................................
Commitments and contingent liabilities.....................
698
3,226
207
$00,471
900
894
78
2,343
3,204
2,592
2,002
1,124
$11,265
$00,051
24
1,877
61
2,013
3,098
1,019
545
201
$0,471
900
894
78
2,343
2,592
2,002
1,188
$8,125
$0,051
25
1,943
61
2,080
3,796
1,019
752
201
($3,226 )
(04,661 )
($7,887 )
($3,226 )
Shareholders’ equity .................................................
Total ....................................................
277
272
$294 $4,453
4,389
$11,265
(04,661 )
($7,887 )
277
$8,125
-84-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2005
(in millions)
Net cash provided by/(used for) operating activities......
Cash flows from investing activities
Capital expenditures ..........................................................
Proceeds from sale of business ........................................
Proceeds from sale of property, plant and equipment.......
Intercompany investing activities.......................................
Other..................................................................................
Parent
$03
Issuer
($303 )
Non
Guarantors
$0,178
Eliminations
Total
Company
($0,122 )
(00,192 )
627
40
(00,011 )
(00,192 )
627
40
(00,011 )
($2,903 )
2,903
Net cash provided by investing activities ...........
2,903
464
(02,903 )
464
Cash flows from financing activities
Proceeds from long-term debt ...........................................
Payments of long-term debt ..............................................
Net change in short-term debt ...........................................
Debt issue costs ................................................................
Net change in long-term intercompany balances ..............
Dividends paid ...................................................................
Common stock issued .......................................................
Common stock repurchased..............................................
Dividends paid to minority interests...................................
1,616
(02,268 )
248
(00,026 )
2,581
(02,903 )
(00,045 )
1,616
(02,268 )
248
(00,026 )
16
(00,038 )
(00,045 )
2,903
$19
(02,600 )
16
(038 )
Net cash used for financing activities .................
(003 ) (02,600 )
(00,797 )
2,903
(00,497 )
Effect of exchange rate changes on cash
and cash equivalents .........................................................
Net change in cash and cash equivalents............................
Cash and cash equivalents at January 1 .............................
(00,022
)
(00,177 )
471
(00,022
)
(00,177 )
471
Cash and cash equivalents at December 31....................
$00
$000
$0,294
$0
$0,294
-85-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2004
(in millions)
Net cash provided by/(used for) operating activities......
Cash flows from investing activities
Capital expenditures ..........................................................
Proceeds from sale of property, plant and equipment.......
Intercompany investing activities.......................................
Other..................................................................................
Parent
$11
Issuer
($263)
Non
Guarantors
$656
Eliminations
Total
Company
$404
(0138 )
39
(0398 )
(0012 )
410
4
($12)
(0138 )
39
(0008 )
Net cash provided by/(used for)
investing activities ..........................................
414
(0509 )
(012)
(0107 )
Cash flows from financing activities
Proceeds from long-term debt ...........................................
Payments of long-term debt ..............................................
Net change in short-term debt ...........................................
Debt issue costs ................................................................
Net change in long-term intercompany balances ..............
Dividends paid ...................................................................
Common stock issued .......................................................
Dividends paid to minority interests...................................
(0062)
(014)
(0089)
3
720
(0811 )
(0024 )
(0031 )
103
(0012 )
(0041 )
720
(0873 )
(0024 )
(0031 )
3
(0041 )
12
Net cash used for financing activities..................
(011)
(0151)
(0096 )
12
(0246 )
Effect of exchange rate changes on cash
and cash equivalents .........................................................
Net change in cash and cash equivalents............................
Cash and cash equivalents at January 1 .............................
19
70
401
19
70
401
Cash and cash equivalents at December 31....................
$00
$000
$471
$00
$471
-86-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2003
(in millions)
Net cash provided by/(used for) operating activities....
Cash flows from investing activities
Capital expenditures ........................................................
Funding of restricted cash accounts ................................
Withdrawals from restricted cash accounts .....................
Proceeds from sale of property, plant and equipment.....
Intercompany investing activities .....................................
Other ................................................................................
Parent
Issuer
($0,323 )
Non
Guarantors
$0,757
Eliminations
Total
Company
$0,434
(00,120 )
(00,344 )
344
35
(00,877 )
(00,019 )
(00,120 )
(00,344 )
344
35
(00,015 )
$22
855
4
Net cash provided by/(used for)
investing activities ........................................
859
(00,981 )
22
(00,100 )
Cash flows from financing activities
Proceeds from long-term debt .........................................
Payments of long-term debt.............................................
Net change in short-term debt .........................................
Debt issue costs...............................................................
Net payment from termination of cross-currency swaps .
Net change in long-term intercompany balances ............
Dividends paid .................................................................
Common stock issued......................................................
Dividends paid to minority interests .................................
(00,329 )
(01,576 )
($2 ) 1,342
2
27
2,625
(00,780 )
(00,097 )
(00,141 )
(00,008 )
(01,340 )
(00,005 )
(00,024 )
2,625
(01,109 )
(01,673 )
(00,141 )
(00,008 )
2
(00,024 )
5
(027 )
Net cash provided by/(used for)
financing activities ......................................
(00,536 )
230
(022 )
(00,328 )
Effect of exchange rate changes on cash
and cash equivalents .......................................................
Net change in cash and cash equivalents ..........................
Cash and cash equivalents at January 1............................
32
38
363
32
38
363
Cash and cash equivalents at December 31..................
$0 $0,000
$0,401
$00
$0,401
-87-
Crown Holdings, Inc.
In connection with the Company’s 2005 refinancing as discussed in Note T, Crown Americas, LLC and
Crown Americas Capital Corp., 100% owned subsidiaries of the Company issued senior unsecured notes
that are fully and unconditionally guaranteed by substantially all subsidiaries in the United States. The
guarantors are 100% owned by the Company and the guarantees are made on a joint and several basis.
The following condensed combining financial statements:
•
statements of operations and cash flows for the years ended December 31, 2005, 2004
and 2003,
•
balance sheets as of December 31, 2005 and 2004
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of
Regulation S-X.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2005
(in millions)
Net sales...........................................................
Cost of products sold, excluding
depreciation and amortization ...............
Depreciation and amortization....................
Gross profit......................................................
Selling and administrative expense ............
Provision for asbestos ................................
Provision for restructuring...........................
Provision for asset impairments and
loss/gain on sale of assets ....................
Loss from early extinguishments of debt....
Net interest expense...................................
Technology royalty......................................
Translation and exchange adjustments......
Income/(loss) from continuing operations
before income taxes, minority interests
and equity earnings..................................
Provision/(benefit) for income taxes ...........
Equity earnings/(loss) .................................
Loss from continuing operations before
minority interests and equity earnings ..
Minority interests and equity earnings ........
Parent
Issuer
Guarantors
$1,989
Non
Guarantors
$4,919
Eliminations
1,714
77
4,045
172
$008
198
112
10
3
(0005
)
558
21
20
(505)
116
(00,044)
702
229
13
(00,005
)
330
215
44
94
Total
Company
$6,908
5,759
249
900
349
10
16
10
383
352
94
(0582 )
($362)
288
486
(00,016)
(00,860)
(00,218 )
14
(00,314)
(00,002 )
$934
(0362) (0294 )
1
(00,358)
1
(00,232)
(00,041)
934
(00,312 )
(00,039 )
Loss from continuing operations..................
(0362) (0293 )
(00,357)
(00,273)
934
(00,351 )
Discontinued operations
Income/(loss) before income taxes.............
Provision for income taxes .........................
Net loss ............................................................
94
($362) ($199 )
9
14
($0,362)
(00,080)
20
($0,373)
23
34
($0,362 )
$934
-88-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2004
(in millions)
Net sales...........................................................
Cost of products sold, excluding
depreciation and amortization ...............
Depreciation and amortization....................
Gross profit......................................................
Selling and administrative expense ............
Provision for asbestos ................................
Provision for restructuring...........................
Provision for asset impairments and
loss/gain on sale of assets ....................
Loss from early extinguishments of debt....
Net interest expense...................................
Technology royalty......................................
Translation and exchange adjustments......
Income/(loss) from continuing operations
before income taxes, minority interests
and equity earnings..................................
Provision/(benefit) for income taxes ...........
Equity earnings ...........................................
Parent
Issuer
Guarantors
$1,904
Non
Guarantors
$4,627
Eliminations
1,678
78
3,785
185
148
103
35
657
204
7
$011
29
24
26
(00,004
)
4
108
(00,044)
22
11
219
44
(00,098)
Total
Company
$6,531
5,463
263
805
318
35
7
47
39
353
(00,098 )
(0090 )
(0031 )
178
(00,054)
25
109
$51
248
67
($338 )
104
61
Income from continuing operations
before minority interests
and equity earnings..................................
Minority interests and equity earnings ........
51
119
2
Income from continuing operations..............
51
121
30
14
44
181
(00,043)
(0338 )
43
(00,027 )
138
(0338 )
16
Discontinued operations
Income before income taxes ......................
Provision for income taxes .........................
Net income .......................................................
$51
$121
11
4
$0,051
45
17
$0,166
56
21
($338 ) $0,051
-89-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 2003
(in millions)
Net sales...........................................................
Cost of products sold, excluding
depreciation and amortization ...............
Depreciation and amortization....................
Gross profit......................................................
Selling and administrative expense ............
Provision for asbestos ................................
Provision for restructuring...........................
Provision for asset impairments and
loss/gain on sale of assets ....................
(Gain)/loss from early extinguishments
of debt ....................................................
Net interest expense...................................
Technology royalty......................................
Translation and exchange adjustments......
Income/(loss) from continuing operations
before income taxes, minority interests
and equity earnings..................................
Provision/(benefit) for income taxes ...........
Equity earnings/(loss) .................................
Income/(loss) from continuing operations
before minority interests and equity
earnings.....................................................
Minority interests and equity earnings ........
Parent
Issuer
Guarantors
$1,787
Non
Guarantors
$4,220
Eliminations
1,602
83
3,471
198
$11
102
103
44
5
3
(00,132
)
37
23
141
(00,040)
551
178
10
49
(00,011
)
190
40
(00,207)
Total
Company
$6,007
5,073
281
653
292
44
15
$156
76
12
368
(00,207 )
(051 )
(018 )
92
(00,042)
22
5
($32)
302
67
(0156 )
(0065 )
53
71
(032)
59
2
(00,059)
20
235
(0078)
(0221 )
(00,018 )
(00,056 )
Income/(loss) from continuing operations ...
(032)
61
(00,039)
157
(0221 )
(00,074 )
Discontinued operations
Income before income taxes ......................
Provision for income taxes .........................
Net income/(loss) ............................................
($32)
$61
11
4
($0,032)
55
20
$0,192
66
24
($0,032 )
($221 )
-90-
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2005
(in millions)
Parent
Issuer
Guarantors
Non
Guarantors
Eliminations
Total
Company
$0,018
1
19
1,096
375
Assets
Current assets
Cash and cash equivalents ................................
Receivables, net .................................................
Intercompany receivables...................................
Inventories ..........................................................
Prepaid expenses and other current assets.......
Total current assets ............................
Intercompany debt receivables ................................. $003
Investments in subsidiaries....................................... (0222 )
Goodwill ....................................................................
Property, plant and equipment, net...........................
Other non-current assets ..........................................
3
42
Total ...................................................... ($219 ) $1,535
Liabilities and shareholders’ equity/(deficit)
Current liabilities
Short-term debt...................................................
Current maturities of long-term debt...................
Accounts payable and accrued liabilities............ $017 $0,012
Intercompany payables ......................................
Income taxes payable.........................................
Total current liabilities ........................
17
12
Long-term debt, excluding current maturities ...........
Long-term intercompany debt ...................................
Postretirement and pension liabilities .......................
Other non-current liabilities .......................................
Minority interests .......................................................
Commitments and contingent liabilities ....................
1,475
412
$0,001
10
54
156
1
222
458
454
444
419
47
$2,044
$0,002
343
9
354
697
403
574
238
$0,275
676
654
53
1,658
62
1,569
1,185
991
$5,465
$0,072
137
1,302
54
49
1,614
1,020
804
171
417
246
($0,054 )
(00,054 )
(01,619 )
(00,607 )
($2,280 )
($0,054 )
(00,054 )
(01,619 )
$0,294
686
810
55
1,845
2,013
1,607
1,080
$6,545
$0,072
139
1,674
58
1,943
3,192
745
655
246
Shareholders’ equity/(deficit) .................................... (0236 ) (00,364)
Total .................................................... ($219 ) $1,535
(00,222 )
$2,044
1,193
$5,465
(00,607 )
($2,280 )
(00,236 )
$6,545
-91-
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2004
(in millions)
Parent
Issuer
Guarantors
Non
Guarantors
Eliminations
Total
Company
$00,037
10
44
171
4
266
407
1,700
531
510
107
$3,521
$0,001
408
24
433
698
1,081
786
251
$0,425
890
723
72
2,110
850
2,061
1,489
1,047
$7,557
$0,051
24
1,516
44
37
1,672
3,098
98
233
501
201
($0,044 )
(00,044 )
(2,338 )
(4,726 )
($7,108 )
($0,044 )
(00,044 )
(02,338 )
$0,471
900
894
78
2,343
2,592
2,002
1,188
$8,125
$0,051
25
1,943
61
2,080
3,796
1,019
752
201
272
$3,521
1,754
$7,557
(04,726 )
($7,108 )
277
$8,125
$0,009
2
11
1,059
2,754
Assets
Current assets
Cash and cash equivalents ................................
Receivables, net .................................................
Intercompany receivables...................................
Inventories ..........................................................
Prepaid expenses and other current assets.......
Total current assets ............................
Intercompany debt receivables ................................. $022
272
Investments in subsidiaries.......................................
Goodwill ....................................................................
Property, plant and equipment, net...........................
Other non-current assets ..........................................
3
34
Total ...................................................... $294 $3,861
Liabilities and shareholders’ equity
Current liabilities
Short-term debt...................................................
Current maturities of long-term debt...................
. Accounts payable and accrued liabilities............ $017 $0,002
Intercompany payables ......................................
Income taxes payable.........................................
Total current liabilities ........................
Long-term debt, excluding current maturities ...........
Long-term intercompany debt ...................................
Postretirement and pension liabilities .......................
Other non-current liabilities .......................................
Minority interests .......................................................
Commitments and contingent liabilities ....................
17
2
1,159
Shareholders’ equity .................................................
2,700
Total .................................................... $294 $3,861
277
-92-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2005
(in millions)
Net cash provided by/(used for) operating activities....
$03 ($0,031 )
Parent
Issuer
Guarantors
($0,188 )
Non
Guarantors
$0,094
Eliminations
Total
Company
($0,122 )
Cash flows from investing activities
Capital expenditures........................................................
Proceeds from sale of business ......................................
Proceeds from sale of property, plant and equipment ....
Intercompany investing activities ....................................
Other................................................................................
156
4
18
(00,026 )
96
17
2,899
(00,005 )
(00,166 )
375
19
(00,006 )
(00,192 )
627
40
(00,011 )
($2,917)
Net cash provided by investing activities.........
178
2,981
222
(02,917)
464
Cash flows from financing activities
Proceeds from long-term debt.........................................
Payments of long-term debt ............................................
Net change in short-term debt.........................................
Net change in long-term intercompany balances............
Debt issue costs ..............................................................
Dividends paid .................................................................
Common stock issued .....................................................
Common stock repurchased ...........................................
Dividends paid to minority interests ................................
1,265
19
210
1,310
(00,026 )
(02,897 )
16
(038)
(00,001 )
(02,828 )
351
(02,267 )
38
1,499
(00,020 )
2,917
(00,045 )
1,616
(02,268 )
248
(00,026 )
16
(00,038 )
(00,045 )
Net cash used for financing activities............
(003) (00,138 )
(02,829 )
(00,444 )
2,917
(00,497 )
Effect of exchange rate changes on cash and cash
equivalents ......................................................................
Net change in cash and cash equivalents..........................
Cash and cash equivalents at January 1 ...........................
)
(00,022
9
9
(00,036 )
(00,150 )
37
425
)
(00,022
(00,177 )
471
Cash and cash equivalents at December 31..................
$00 $0,018
$0,001
$0,275
$0,000
$0,294
-93-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2004
(in millions)
Net cash provided by/(used for) operating activities ...
Cash flows from investing activities
Capital expenditures........................................................
Proceeds from sale of property, plant and equipment ....
Intercompany investing activities ....................................
Other................................................................................
Net cash provided by/(used for)
Parent
$11
Issuer
$010
Guarantors
($023 )
Non
Guarantors
$406
Eliminations
Total
Company
$404
(001 )
14
(0042 )
20
412
4
(0095 )
19
(0400 )
(0012 )
($26 )
(0138 )
39
(0008 )
investing activities........................................
13
394
(0488 )
(026 )
(0107 )
Cash flows from financing activities
Proceeds from long-term debt.........................................
Payments of long-term debt ............................................
Net change in short-term debt.........................................
Net change in long-term intercompany balances............
Debt issue costs ..............................................................
Dividends paid.................................................................
Common stock issued .....................................................
Dividends paid to minority interests.................................
(014)
3
125
(0553 )
423
(0019 )
(0061 )
(0325 )
595
(0259 )
(0024 )
(0084 )
(0012 )
(0026 )
(0041 )
720
(0873 )
(0024 )
(0031 )
3
(0041 )
26
Net cash provided by/(used for)
financing activities .......................................
(011)
(0024 )
(0386 )
149
26
(0246 )
Effect of exchange rate changes on cash and cash
equivalents ......................................................................
Net change in cash and cash equivalents..........................
(0001 )
(0015 )
19
86
Cash and cash equivalents at January 1 ...........................
10
52
339
19
70
401
Cash and cash equivalents at December 31..................
$00
$009
$037
$425
$00
$471
-94-
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2003
(in millions)
Net cash provided by/(used for) operating activities .....
Cash flows from investing activities
Capital expenditures .........................................................
Funding of restricted cash accounts .................................
Withdrawals from restricted cash accounts ......................
Proceeds from sale of property, plant and equipment ......
Intercompany investing activities ......................................
Other .................................................................................
Net cash provided by/(used for)
Parent
Issuer
($0,020 )
Guarantors
($0,048 )
Non
Guarantors
$0,502
Eliminations
Total
Company
$0,434
(00,039 )
8
15
800
(00,081 )
(00,344 )
344
20
(00,795 )
(00,015 )
(00,120 )
(00,344 )
344
35
(00,015 )
($13 )
investing activities..........................................
8
776
(00,871 )
(013 )
(00,100 )
Cash flows from financing activities
Proceeds from long-term debt...........................................
Payments of long-term debt ..............................................
Net change in short-term debt...........................................
Net change in long-term intercompany balances..............
Debt issue costs ................................................................
Net payment from termination of cross-currency swaps...
Dividends paid...................................................................
Common stock issued.......................................................
Dividends paid to minority interests ..................................
450
(00,023 )
($2) (00,347 )
(00,058 )
(00,401 )
(01,576 )
1,230
2
2,175
(00,685 )
(00,097 )
(00,881 )
(00,083 )
(00,008 )
(00,013 )
(00,024 )
2,625
(01,109 )
(01,673 )
(00,141 )
(00,008 )
2
(00,024)
13
Net cash provided by/(used for)
financing activities........................................
22
(00,747 )
384
13
(00,328 )
Effect of exchange rate changes on cash
and cash equivalents .....................................................
Net change in cash and cash equivalents............................
10
(00,019 )
32
47
Cash and cash equivalents at January 1 .............................
71
292
32
38
363
Cash and cash equivalents at December 31 ...................
$0 $0,010
$0,052
$0,339
$000
$0,401
-95-
Quarterly Data (unaudited)
Crown Holdings, Inc.
(in millions)
2005
2004
Net sales...............................
Gross profit*..........................
Income/(loss) –
continuing operations.........
Income/(loss) –
discontinued operations.....
Net income/(loss)..................
Earnings/(loss) per average
common share: †
Basic
- continuing operations ......
- discontinued operations...
Net earnings/(loss).............
Diluted
- continuing operations ......
- discontinued operations...
Net earnings/(loss).............
Average common shares
outstanding:
Basic..................................
Diluted ...............................
Common stock price range: **
High ...................................
Low ....................................
Close .................................
First
$1,529
182
Second
$1,822
256
Third
$1,928
272
Fourth
$1,629
190
First
$1,458
155
Second
$1,662
227
Third
$1,826
250
Fourth
$1,585
173
(00,018
) (1)
(2)
15
(3)
80
(00,428
) (4)
(00,026
) (5)
(6)
21
(7)
50
(00,029
) (8)
8
(00,010)
13
28
)
(00,002
78
)
(00,030
(00,458)
10
(00,016)
15
36
8
58
2
(00,027)
($00.11) (1)
$00.05
($00.06)
$00.09 (2)
$00.08
$00.17
$00.48 (3)
($00.01)
$00.47
($02.58) (4)
($00.18)
($02.76)
($00.16) (5)
$00.06
($00.10)
$00.13 (6)
$00.09
$00.22
$00.30 (7)
$00.05
$00.35
($00.17) (8)
$00.01
($00.16)
($00.11) (1)
$00.05
($00.06)
$00.09 (2)
$00.07
$00.16
$00.46 (3)
($00.01)
$00.45
($02.58) (4)
($00.18)
($02.76)
($00.16) (5)
$00.06
($00.10)
$00.13 (6)
$00.09
$00.22
$00.30 (7)
$00.05
$00.35
($00.17) (8)
$00.01
($00.16)
165.8
165.8
165.7
171.5
165.9
171.9
166.2
166.2
165.1
165.1
165.2
167.3
165.3
168.0
165.4
165.4
$17.24
12.28
15.56
$16.30
13.51
14.23
$17.37
14.12
15.94
$20.45
15.33
19.53
$09.96
8.10
9.32
$10.60
7.85
9.97
$10.67
9.21
10.31
$14.20
9.77
13.74
† Diluted earnings per share in the first and fourth quarters of 2005 and 2004 are the same as basic because common shares
contingently issuable upon the exercise of stock options were either not material or were anti-dilutive, or the grant prices of the
then outstanding options were above the average market price for the related periods.
The Company defines gross profit as net sales less cost of products sold and depreciation and amortization.
*
** Source: New York Stock Exchange – Composite Transactions
(1) Includes foreign exchange losses on foreign currency-denominated debt of $30 ($22 after taxes or $.13 per share), partially
offset by a gain on the sale of assets of $5 ($5 after taxes or $.03 per share).
(2) Includes foreign exchange losses on foreign currency-denominated debt of $65 ($58 after taxes or $.34 per share) and a loss
from the early extinguishments of debt of $2 ($1 after taxes), partially offset by gains from the sales of assets of $17 ($14 after
taxes or $.08 per share) and the reversal of tax valuation allowances of $9 ($.05 per share).
(3) Includes foreign exchange gains on foreign currency-denominated debt of $19 ($16 after taxes or $.09 per share), partially
offset by provisions for restructuring actions of $3.
(4) Includes foreign exchange losses on foreign currency-denominated debt of $18 ($23 after taxes or $.14 per share), provisions
for asset impairments of $32 ($29 after taxes or $.17 per share), losses from the early extinguishments of debt of $381 ($375
after taxes or $2.26 per share), a charge for asbestos of $10 ($10 after taxes or $.06 per share) and provisions for
restructuring actions of $13.
(5) Includes a loss from the early extinguishments of debt of $4 ($3 after taxes or $.02 per share) and foreign exchange losses on
foreign currency-denominated debt in Europe of $3 ($2 after taxes or $.01 per share).
(6) Includes foreign exchange losses on foreign currency-denominated debt in Europe of $22 ($15 after taxes or $.09 per share).
(7) Includes an after-tax restructuring charge of $1, a loss from the early extinguishments of debt of $33 ($29 after taxes or $.17
per share), and foreign exchange gains of $32 ($22 after taxes or $.13 per share) on foreign currency-denominated debt in
Europe.
(8) Includes an after-tax restructuring charge of $4, a charge for asbestos of $35 ($35 after taxes or $.21 per share), a charge for
asset impairments of $47 ($41 after taxes or $.25 per share), a loss from the early extinguishments of debt of $2 ($1 after
taxes or $.01 per share) and foreign exchange gains of $91 ($62 net of taxes or $.37 per share) on foreign currency-
denominated debt in Europe.
-96-
Crown Holdings, Inc.
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In millions)
COLUMN A
Description
COLUMN B
Balance at
beginning of
period
COLUMN C
Additions
COLUMN D
COLUMN E
Charged to costs
and expense
Charged to
other accounts
Deductions
– Write-offs
Balance at
end of period
For the Year Ended December 31, 2005
Allowances deducted from
assets to which they apply:
Trade accounts receivable
$042
Deferred tax assets
679
$62
$08
Allowances deducted from
assets to which they apply:
For the Year Ended December 31, 2004
Trade accounts receivable
56
Deferred tax assets
663
(003)
(004)
2
20
Allowances deducted from
assets to which they apply:
For the Year Ended December 31, 2003
Trade accounts receivable
54
Deferred tax assets
695
1
24
1
$09
$033
749
13
56
42
679
56
663
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
As of the end of the period covered by this Annual Report on Form 10-K, management, including the
Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design
and operation of its disclosure controls and procedures. Based upon that evaluation and as of the end of the
quarter for which this report is made, the Company’s Chief Executive Officer and Chief Financial Officer
concluded that the disclosure controls and procedures were effective to ensure that information to be disclosed
in reports that the Company files and submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the rules and terms of the Securities and Exchange
Commission, and to ensure that information required to be disclosed in the reports that the Company files or
submits under the Exchange Act is accumulated and communicated to the Company’s management, including
its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
The Company’s report on internal control over financial reporting is included in Item 8 of this Report on Form
10-K.
There has been no change in internal controls over financial reporting that occurred during the quarter ended
December 31, 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
-97-
ITEM 9B. OTHER INFORMATION
None.
Crown Holdings, Inc.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is set forth in the Company’s Proxy Statement within the sections entitled
“Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate
Governance” and is incorporated herein by reference.
The following table sets forth certain information concerning the principal executive officers of the Company,
including their ages and positions.
Name
Age
Present Title
Year Assumed
Present Title
John W. Conway
Alan W. Rutherford
William R. Apted
Frank J. Mechura
William H. Voss
Timothy J. Donahue
Thomas A. Kelly
60
62
58
63
60
43
46
Chairman of the Board, President
and Chief Executive Officer
Vice Chairman of the Board, Executive
Vice President and Chief Financial Officer
President – European Division
President – Americas Division
President – Asia-Pacific Division
Senior Vice President – Finance
Vice President and Corporate Controller
2001
2001
2000
2001
1996
2000
2000
All of the principal executive officers have been employed by the Company for the past five years.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Company’s Proxy Statement within the sections entitled
“Executive Compensation,” “Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values” and “Corporate Governance” and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information required by this Item is set forth in the Company’s Proxy Statement within the sections entitled
“Proxy Statement – Meeting, April 27, 2006,” “Equity –Compensation Plan Information” and “Common Stock
Ownership of Directors and Executive Officers” and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Company’s Proxy Statement within the sections entitled
“Election of Directors” and “Executive Compensation” and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is set forth in the Company’s Proxy Statement within the sections entitled
“Principal Accountant Fees and Services” and is incorporated herein by reference.
-98-
Crown Holdings, Inc.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a)
The following documents are filed as part of this report:
(1) All Financial Statements:
Crown Holdings, Inc. and Subsidiaries (see Part II, Item 8, pages 36 through 95 of this Report).
Management’s Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003
Consolidated Balance Sheets as of December 31, 2005 and 2004
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003
Consolidated Statements of Shareholders’ Equity/(Deficit) and Comprehensive Income/(Loss)
for the years ended December 31, 2005, 2004 and 2003
Notes to Consolidated Financial Statements
Supplementary Information
(2) Financial Statement Schedules:
Schedule Number II – Valuation and Qualifying Accounts and Reserves (see page 97 of this Report).
All other schedules have been omitted because they are not applicable or the required information is
included in the Consolidated Financial Statements.
(3) Exhibits
3.a Articles of Incorporation of Crown Holdings, Inc., as amended (incorporated by reference to
Exhibit 3.a of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2004
(File No. 0-50189)).
3.b By-Laws of Crown Holdings, Inc., as amended (incorporated by reference to Exhibit 3.b of the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 0-
50189)).
.
4.a Specimen certificate of Registrant’s Common Stock (incorporated by reference to Exhibit 4.a of
the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-
2227)).
4.b Form of the Registrant’s 8% Debentures Due 2023 (incorporated by reference to Exhibit 24 of the
Registrant’s Current Report on Form 8-K dated April 12, 1993 (File No. 1-2227)).
4.c Officers’ Certificate (incorporated by reference to Exhibit 4.3 of the Registrant’s Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993 (File No. 1-2227)).
4.d
Indenture dated as of April 1, 1993 between Crown Cork & Seal Company, Inc. and Chemical
Bank, as Trustee (incorporated by reference to Exhibit 26 of the Registrant’s Current Report on
Form 8-K dated April 12, 1993 (File No. 1-2227)).
-99-
Crown Holdings, Inc.
4.e Terms Agreement dated March 31, 1993 (incorporated by reference to Exhibit 27 of the
Registrant’s Current Report on Form 8-K dated April 12, 1993 (File No. 1-2227)).
4.f
Indenture, dated December 17, 1996, among Crown Cork & Seal Company, Inc., Crown Cork &
Seal Finance PLC, Crown Cork & Seal Finance S.A. and the Bank of New York, as trustee
(incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K dated
December 17, 1996 (File No. 1-2227)).
4.g Form of the Registrant’s 7-3/8% Debentures Due 2026 (incorporated by reference to Exhibit 99.1
of the Registrant’s Current Report on Form 8-K dated December 17, 1996 (File No. 1-2227)).
4.h Officers’ Certificate for 7-3/8% Debentures Due 2026 (incorporated by reference to Exhibit 99.6 of
the Registrant’s Current Report on Form 8-K dated December 17, 1996 (File No. 1-2227)).
4.i
Form of the Registrant’s 7-1/2% Debentures Due 2096 (incorporated by reference to Exhibit 99.2
of the Registrant’s Current Report on Form 8-K dated December 17, 1996 (File No. 1-2227)).
4.j Officers’ Certificate for 7-1/2% Debentures Due 2096 (incorporated by reference to Exhibit 99.7 of
the Registrant’s Current Report on Form 8-K dated December 17, 1996 (File No. 1-2227)).
4.k Form of U.K. 7% Debentures Due 2006 (incorporated by reference to Exhibit 99.4 of the
Registrant’s Current Report on Form 8-K dated December 17, 1996 (File No. 1-2227)).
4.l Officers’ Certificate for 7% Debentures Due 2006 (incorporated by reference to Exhibit 99.9 of the
Registrant’s Current Report on Form 8-K dated December 17, 1996 (File No. 1-2227)).
4.m Terms Agreement dated December 12, 1996 (incorporated by reference to Exhibit 1.1 of the
Registrant’s Current Report on Form 8-K dated December 17, 1996 (File No. 1-2227)).
4.n Form of Bearer Security Depositary Agreement (incorporated by reference to Exhibit 4.2 of the
Registrant’s Registration Statement on Form S-3, dated November 26, 1996, amended December
5 and 10, 1996 (File No. 333-16869)).
4.o Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 of the Registrant’s
Registration Statement on Form S-3, dated November 26, 1996, amended December 5 and 10,
1996 (File No. 333-16869)).
4.p Amended and Restated Rights Agreement, dated as of December 9, 2004, between Crown
Holdings, Inc. and Wells Fargo Bank, N.A., as Rights Agent (incorporated by reference to Exhibit
4.1 of the Registrant’s Current Report on Form 8-K dated December 9, 2004 (File No. 0-50189)).
4.q Supplemental Indenture to Indenture dated April 1, 1993, dated as of February 25, 2003, between
Crown Cork & Seal Company, Inc., as Issuer, Crown Holdings, Inc., as Guarantor and Bank One
Trust Company, N.A., as Trustee (incorporated by reference to the Registrant’s Current Report on
Form 8-K dated February 26, 2003 (File No. 0-50189)).
4.r Supplemental Indenture to Indenture dated December 17, 1996, dated as of February 25, 2003,
between Crown Cork & Seal Company, Inc., as Issuer and Guarantor, Crown Cork & Seal Finance
PLC, as Issuer, Crown Cork & Seal Finance S.A., as Issuer, Crown Holdings, Inc., as Additional
Guarantor and Bank One Trust Company, N.A., as Trustee (incorporated by reference to the
Registrant’s Current Report on Form 8-K dated February 26, 2003 (File No. 0-50189)).
4.s U.S. Guarantee Agreement, dated as of September 1, 2004, among the Domestic Subsidiaries
referred to therein and Citicorp North America Inc., as Administrative Agent (incorporated by
reference to Exhibit 4.g of the Registrant’s Current Report on Form 8-K dated September 1, 2004
(File No. 0-50189)).
-100-
Crown Holdings, Inc.
4.t Non-U.S. Guarantee Agreement, dated as of February 26, 2003 among the Guarantors referred to
therein and Citicorp International plc, as U.K. Administrative Agent (incorporated by reference to
Exhibit 4.kk of the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2002 (File No. 0-50189)).
4.u Registration Rights Agreement relating to the 9.5% Second Priority Senior Secured Notes due
2011 and the 10.25% Second Priority Senior Secured Notes due 2011, dated as of February 26,
2003 among Crown European Holdings, Crown Holdings, Inc. and the other Guarantors named
therein and the several purchasers named in Schedule I thereto (incorporated by reference to
Exhibit 4.mm of the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2002 (File No. 0-50189)).
4.v Registration Rights Agreement, dated as of September 1, 2004, by and among the Company,
Crown European Holdings S.A., Citigroup Global Markets Inc. and Lehman Brothers Inc., as
Representatives, the Initial Purchasers (as defined therein) and the Guarantors (as defined
therein) (incorporated by reference to Exhibit 4.i of the Registrant’s Current Report on Form 8-K
dated September 1, 2004 (File No. 0-50189)).
4.w
Indenture dated as of September 1, 2004, by and among the Company, as Issuer the Guarantors
named therein and Wells Fargo Bank, as Trustee, relating to the 6.25% First Priority Senior
Secured Notes due 2011 (incorporated by reference to Exhibit 4.j of the Registrant’s Current
Report on Form 8-K dated September 1, 2004 (File No. 0-50189)).
4.x Form of Crown European Holdings’ 9.5% Second Priority Senior Secured Notes due 2011
(incorporated by reference to Exhibit 4.jj of the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2003 (File No. 0-50189)).
4.y
Indenture dated as of February 26, 2003, by and among Crown European Holdings, the
guarantors named therein and Wells Fargo Bank Minnesota, N.A., as Trustee, governing Crown
European Holdings’ 9.5% Second Priority Senior Secured Notes due 2011 and 10.25% Second
Priority Senior Secured Notes due 2011 (incorporated by reference to Exhibit 4.oo of the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 0-
50189)).
4.z Form of Crown European Holdings’ 10.25% Second Priority Senior Secured Notes due 2011
(incorporated by reference to Exhibit 4.kk of the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2003 (File No. 0-50189)).
4.aa Indenture dated as of February 26, 2003, by and among Crown European Holdings, the
guarantors named therein and Wells Fargo Bank, N.A., as trustee, governing Crown European
Holdings’ 10.875% Third Priority Senior Secured Notes due 2013 (incorporated by reference to
Exhibit 4.rr of the Registrant’s Annual Report on Form 10-K for the year ended December 31,
2002 (File No. 0-50189)).
4.bb Form of Crown European Holdings’ 10.875% Third Priority Senior Secured Notes due 2013
(incorporated by reference to Exhibit 4.mm of the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2003 (File No. 0-50189)).
4.cc Form of Crown European Holdings’ 6.25% First Priority Senior Secured Notes due 2011
(incorporated by reference to Exhibit 4.a of the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004 (File No. 0-50189)).
4.dd Registration Rights Agreement relating to the 10.875% Third Priority Senior Secured Notes due
2013, dated as of February 26, 2003 among Crown European Holdings, Crown Holdings, Inc. and
the other Guarantors named therein and the several purchasers named in Schedule I thereto
(incorporated by reference to Exhibit 4.nn of the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2002 (File No. 0-50189)).
-101-
Crown Holdings, Inc.
4.ee Registration Rights Agreement relating to the 6.25% First Priority Senior Secured Notes due 2011,
dated as of October 6, 2004, by and among the Company, Crown European Holdings, S.A.,
Citigroup Global Markets Inc. and Lehman Brothers Inc., as Representatives, the Initial
Purchasers (as defined therein) and the Guarantors (as defined therein) (incorporated by
reference to Exhibit 4.a of the Registrant’s Current Report on Form 8-K dated October 6, 2004
(File No. 0-50189)).
4.ff Credit Agreement, dated as of November 18, 2005, among Crown Americas LLC, as U.S.
Borrower, Crown European Holdings, S.A., as European Borrower, CROWN Metal Packaging
Canada LP, as Canadian Borrower, the Subsidiary Borrowers named therein, the Company,
Crown International Holdings, Inc. and Crown Cork & Seal Company, Inc., as Parent Guarantors,
Deutsche Bank AG New York Branch, as Administrative Agent and U.K. Administrative Agent, The
Bank of Nova Scotia, as Canadian Administrative Agent, and various Lending Institutions
(incorporated by reference to Exhibit 4.a of the Registrant’s Current Report on Form 8-K dated
November 18, 2005 (File No. 0-50189)).
4.gg Euro Bank Pledge Agreement, dated as of November 18, 2005, by Crown Cork & Seal Company,
Inc., Crown Americas LLC, Crown International Holdings, Inc., the U.S. Subsidiaries party thereto,
as Pledgors and Deutsche Bank AG New York Branch, as Euro Collateral Agent (incorporated by
reference to Exhibit 4.b of the Registrant’s Current Report on Form 8-K dated November 18, 2005
(File No. 0-50189)).
4.hh Second Amended and Restated CEH Pledge Agreement, dated as of November 18, 2005, by
Crown European Holdings S.A., as Pledgor and Deutsche Bank AG New York Branch, as Euro
Collateral Agent (incorporated by reference to Exhibit 4.c of the Registrant’s Current Report on
Form 8-K dated November 18, 2005 (File No. 0-50189)).
4.ii Second Amended and Restated Shared Pledge Agreement, dated as of November 18, 2005, by
the Company, Crown Cork & Seal Company, Inc., Crown Americas LLC, Crown International
Holdings, Inc., the U.S. Subsidiaries party thereto, as Pledgors and Deutsche Bank AG New York
Branch, as Collateral Agent (incorporated by reference to Exhibit 4.d of the Registrant’s Current
Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
4.jj Bank Pledge Agreement, dated as of November 18, 2005, by the Company, Crown Cork & Seal
Company, Inc., Crown Americas LLC, Crown International Holdings, Inc., the U.S. Subsidiaries
party thereto, as Pledgors and Deutsche Bank AG New York Branch, as Collateral Agent
(incorporated by reference to Exhibit 4.e of the Registrant’s Current Report on Form 8-K dated
November 18, 2005 (File No. 0-50189)).
4.kk Second Amended and Restated U.S. Security Agreement, dated as of November 18, 2005, by the
Company, Crown Cork & Seal Company, Inc., Crown Americas LLC, Crown International
Holdings, Inc., the U.S. Subsidiaries party thereto, as Grantors and Deutsche Bank AG New York
Branch (incorporated by reference to Exhibit 4.f of the Registrant’s Current Report on Form 8-K
dated November 18, 2005 (File No. 0-50189)).
4.ll U.S. Guarantee Agreement, dated as of November 18, 2005, among each of the subsidiaries
listed therein of Crown Americas LLC and Deutsche Bank AG New York Branch, as Administrative
Agent (incorporated by reference to Exhibit 4.g of the Registrant’s Current Report on Form 8-K
dated November 18, 2005 (File No. 0-50189)).
4.mm Second Amended and Restated Global Participation and Proceeds Sharing Agreement, dated as
of November 18, 2005, among Deutsche Bank AG New York Branch, as Administrative Agent,
Deutsche Bank AG New York Branch, as U.K. Agent, The Bank of Nova Scotia, as Canadian
Administrative Agent, Wells Fargo Bank, N.A., as Second Priority Notes Trustee, Wells Fargo
Bank, N.A., as Third Priority Notes Trustee, Wells Fargo Bank, N.A., as First Priority Notes
Trustee, Deutsche Bank AG New York Branch, as U.S. Collateral Agent, Deutsche Bank AG New
York Branch, as Euro Collateral Agent, Deutsche Bank AG New York Branch, as Sharing Agent
(as defined therein) and the other persons who may become party to the Agreement from time to
-102-
Crown Holdings, Inc.
time pursuant to and in accordance with Section 9 of the Agreement (incorporated by reference to
Exhibit 4.h of the Registrant’s Current Report on Form 8-K dated November 18, 2005 (File No. 0-
50189)).
4.nn Registration Rights Agreement, dated as of November 18, 2005, by and among the Company,
Crown Americas LLC and Crown Americas Capital Corp., Citigroup Global Markets Inc., Lehman
Inc., Banc of Americas Securities LLC, as
Brothers
Representatives of the several Initial Purchasers named therein and the Guarantors (as defined
therein), relating to the $500 million 7 5/8% Senior Notes due 2013 (incorporated by reference to
Exhibit 4.i of the Registrant’s Current Report on Form 8-K dated November 18, 2005 (File No. 0-
50189)).
Inc., Deutsche Bank Securities
4.oo Registration Rights Agreement, dated as of November 18, 2005, by and among the Company,
Crown Americas LLC and Crown Americas Capital Corp., Citigroup Global Markets Inc., Lehman
Inc., Banc of Americas Securities LLC, as
Brothers
Representatives of the several Initial Purchasers named therein and the Guarantors (as defined
therein), relating to the $600 million 7 3/4% Senior Notes due 2015 (incorporated by reference to
Exhibit 4.j of the Registrant’s Current Report on Form 8-K dated November 18, 2005 (File No. 0-
50189)).
Inc., Deutsche Bank Securities
4.pp Indenture, dated as of November 18, 2005, by and among Crown Americas LLC and Crown
Americas Capital Corp., as Issuers, the Guarantors named therein and Citibank, N.A., as Trustee,
relating to the 7 5/8% Senior Notes due 2013 (incorporated by reference to Exhibit 4.k of the
Registrant’s Current Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
4.qq Indenture, dated as of November 18, 2005, by and among Crown Americas LLC and Crown
Americas Capital Corp., as Issuers, the Guarantors named therein and Citibank, N.A., as Trustee,
relating to the 7 3/4% Senior Notes due 2015 (incorporated by reference to Exhibit 4.l of the
Registrant’s Current Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
4.rr Form of 7 5/8% Senior Notes due 2013 (incorporated by reference to Exhibit 4.m of the
Registrant’s Current Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
4.ss Form of 7 3/4% Senior Notes due 2015 (incorporated by reference to Exhibit 4.n of the
Registrant’s Current Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
4.tt Second Amended and Restated U.S. Intercreditor and Collateral Agency Agreement, dated as of
November 18, 2005, among Deutsche Bank AG New York Branch, as Administrative Agent,
Deutsche Bank AG New York Branch, as U.K. Agent, The Bank of Nova Scotia, as Canadian
Administrative Agent, Wells Fargo Bank, N.A., as First Priority Notes Trustee, Deutsche Bank AG
New York Branch, as U.S. Collateral Agent (as defined within), the Company, Crown Americas
LLC, Crown Cork & Seal Company, Inc., Crown International Holdings, Inc., each of the U.S.
subsidiaries of the Company listed therein, and the other persons who may become parties to the
Agreement from time to time pursuant to and in accordance with Section 8 of the Agreement
(incorporated by reference to Exhibit 4.o of the Registrant’s Current Report on Form 8-K dated
November 18, 2005 (File No. 0-50189)).
4.uu Second Amended and Restated Euro Intercreditor and Collateral Agency Agreement, dated as of
November 18, 2005, among Deutsche Bank AG New York Branch, as U.K. Administrative Agent,
The Bank of Nova Scotia, as Canadian Administrative Agent, Wells Fargo Bank, N.A., as First
Priority Notes Trustee, Deutsche Bank AG New York Branch, as Euro Collateral Agent, Crown
European Holdings SA, the subsidiaries of Crown European Holdings identified thereto and the
other persons who may become parties to the Agreement from time to time pursuant to and in
accordance with Section 6 of the Agreement, and any other obligor under any Financing
Documents (as defined therein) (incorporated by reference to Exhibit 4.p of the Registrant’s
Current Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
-103-
Crown Holdings, Inc.
4.vv Supplemental Indenture, dated as of November 18, 2005, to Indenture, dated as of February 26,
2003, among Crown European Holdings SA, as Issuer, the Guarantors named therein and Wells
Fargo Bank, National Association, as Trustee, relating to the dollar denominated 9 1/2% Second
Priority Senior Secured Notes due 2011 and euro denominated 10 1/4% Second Priority Senior
Secured Notes due 2011 (incorporated by reference to Exhibit 4.q of the Registrant’s Current
Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
4.ww Supplemental Indenture, dated as of November 18, 2005, to Indenture, dated as of February 26,
2003, among Crown European Holdings SA, as Issuer, the Guarantors named therein and Wells
Fargo Bank, National Association, as Trustee, relating to the 10 7/8% Third Priority Senior
Secured Notes due 2013 (incorporated by reference to Exhibit 4.r of the Registrant’s Current
Report on Form 8-K dated November 18, 2005 (File No. 0-50189))
Other long-term agreements of the Registrant are not filed pursuant to Item 601(b)(4)(iii)(A) of
Regulation S-K, and the Registrant agrees to furnish copies of such agreements to the Securities
and Exchange Commission upon its request.
10.a Second Amended and Restated Receivables Purchase Agreement, dated as of December 5,
2003, among Crown Cork & Seal Receivables (DE) Corporation, as Seller, CROWN Cork & Seal
USA, Inc. (formerly known as Crown Cork & Seal Company (USA), Inc.), as Servicer, the banks
and other financial institutions party thereto as Purchasers, and Citibank, N.A., as Agent
(incorporated by reference to Exhibit 10.a of the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2003 (File No. 0-50189)).
10.b First Amendment, dated as of September 1, 2004, to Second Amended and Restated Receivables
Purchase Agreement among Crown Cork & Seal Receivables (DE) Corporation, as Seller,
CROWN Cork & Seal USA, Inc. (formerly known as Crown Cork & Seal Company (USA), Inc.), as
Servicer, the banks and other financial institutions party thereto, as Purchasers, and Citibank,
N.A., as Agent (incorporated by reference to Exhibit 10.a of the Registrant’s Current Report on
Form 8-K dated September 1, 2004 (File No. 0-50189)).
10.c First Amendment, dated as of September 1, 2004, to Second Amended and Restated Receivables
Contribution and Sale Agreement among CROWN Cork & Seal USA, Inc. (formerly known as
Crown Cork & Seal Company (USA), Inc.), CROWN Risdon USA, Inc. (formerly known as Risdon-
AMS (USA), Inc.), CROWN Zeller USA, Inc. (formerly known as Zeller Plastik, Inc.), CROWN
Metal Packaging Canada LP, and Crown Cork & Seal Receivables (DE) Corporation
(incorporated by reference to Exhibit 10.b of the Registrant’s Current Report on Form 8-K dated
September 1, 2004 (File No. 0-50189)).
10.d Second Amended and Restated Receivables Contribution and Sale Agreement, dated as of
December 5, 2003, among CROWN Cork & Seal USA, Inc. (formerly known as Crown Cork &
Seal Company (USA), Inc.), CROWN Risdon USA, Inc. (formerly known as Risdon-AMS (USA),
Inc.), CROWN Zeller USA, Inc. (formerly known as Zeller Plastik, Inc.), Crown Canadian Holdings
ULC, and CROWN Metal Packaging Canada LP, as Sellers, Crown Cork & Seal Receivables
(DE) Corporation, as Buyer, and CROWN Cork & Seal USA, Inc., as the Buyer’s Servicer
(incorporated by reference to Exhibit 10.b of the Registrant’s Annual Report on Form 10-K for the
year ended December 31, 2003 (File No. 0-50189)).
10.e Third Amended and Restated Parent Undertaking Agreement, dated as of September 1, 2004,
made by Crown Holdings, Inc., Crown Cork & Seal Company, Inc. and Crown International
Holdings, Inc, in favor of Citibank, N.A., as Agent and the Purchasers (incorporated by reference
to Exhibit 10.c of the Registrant’s Current Report on Form 8-K dated September 1, 2004 (File No.
0-50189)).
-104-
Crown Holdings, Inc.
10.f Second Amended and Restated Intercreditor Agreement dated as of September 1, 2004, among
Citibank, N.A., as Agent, Crown Holdings, Inc., Crown International Holdings, Inc., Crown Cork &
Seal Company, Inc., Crown Cork & Seal Receivables (DE) Corporation, CROWN Cork & Seal
USA, Inc. (formerly known as Crown Cork & Seal Company (USA), Inc.), CROWN Risdon USA,
Inc. (formerly known as Risdon-AMS (USA), Inc.), CROWN Zeller USA, Inc. (formerly known as
Zeller Plastik, Inc.), and Citicorp North America, Inc., as Administrative Agent and U.S. Collateral
Agent (incorporated by reference to Exhibit 10.d of the Registrant’s Current Report on Form 8-K
dated September 1, 2004 (File No. 0-50189)).
10.g Employment Contracts:
(1) Employment contract between Crown Cork & Seal Company, Inc. and John W. Conway
dated January 3, 2000 (incorporated by reference to Exhibit 10.a.2 of the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 1999 (File No. 1-2227)).
(2) Amendment No. 1 to Executive Employment Agreement, dated as of January 1, 2004,
between Crown Cork & Seal Company, Inc., Crown Holdings, Inc., and John W. Conway
(incorporated by reference to Exhibit 10.f.(2) of the Registrant’s Annual Report on Form 10-K
for the year ended December 31, 2003 (File No. 0-50189)).
(3) Employment contract between Crown Cork & Seal Company, Inc. and Alan W. Rutherford
dated January 3, 2000 (incorporated by reference to Exhibit 10.a.3 of the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 1999 (File No. 1-2227)).
(4) Amendment No. 1 to Executive Employment Agreement, dated as of January 1, 2004,
between Crown Cork & Seal Company, Inc., Crown Holdings, Inc., and Alan W. Rutherford
(incorporated by reference to Exhibit 10.f.(4) of the Registrant’s Annual Report on Form 10-K
for the year ended December 31, 2003 (File No. 0-50189)).
(5) Executive Employment Agreement, dated as of July 22, 2004, between Crown Holdings, Inc.
and William R. Apted (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 0-50189)).
(6) Executive Employment Agreement, dated as of July 22, 2004, between Crown Holdings, Inc.
and Frank J. Mechura (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 0-50189)).
(7) Executive Employment Agreement, dated as of July 22, 2004, between Crown Holdings, Inc.
and William H. Voss (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 0-50189)).
(8) Executive Employment Agreement, dated as of July 22, 2004, between Crown Holdings, Inc.
and Timothy J. Donahue (incorporated by reference to Exhibit 10.4 of the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 0-
50189)).
10.h Crown Cork & Seal Company, Inc. Executive Deferred Compensation Plan (incorporated by
reference to Exhibit 10 of the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 1-2227)).
10.i Crown Holdings, Inc. Economic Profit Incentive Plan, dated as of January 1, 2004 (incorporated by
reference to Exhibit 10.i of the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2004 (File No. 0-50189)).
10.j Crown Holdings, Inc. Economic Profit Incentive Plan, dated as of January 1, 2005 (incorporated by
reference to Exhibit 10.j of the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2004 (File No. 0-50189)).
-105-
Crown Holdings, Inc.
10.k Crown Cork & Seal Company, Inc. Senior Executive Retirement Plan, as amended and restated
as of January 1, 2000 (incorporated by reference to Exhibit 10.8 of the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 0-51089)).
10.l Amendment No. 1, effective July 22, 2004, to the Crown Cork & Seal Company, Inc. Senior
Executive Retirement Plan, as amended and restated January 1, 2000 (incorporated by reference
to Exhibit 10.9 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004 (File No. 0-51089)).
10.m Crown Holdings, Inc. 1990 Stock-Based Incentive Compensation Plan (incorporated by reference
to Exhibit 10.2 of the Registrant’s Annual Report on Form 10-K for the year ended December 31,
1992 (File No. 1-2227)).
10.n Amendment No. 1 to the Crown Holdings, Inc. 1990 Stock-Based Incentive Compensation Plan,
dated as of September 21, 1998 (incorporated by reference to Exhibit 10.a of the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (File No. 1-2227)).
10.o Amendment No. 2 to the Crown Holdings, Inc. 1990 Stock-Based Incentive Compensation Plan,
dated as of January 1, 2003 (incorporated by reference to Exhibit 10.k of the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 2002 (File No. 0-50189)).
10.p Crown Holdings, Inc. Stock Purchase Plan (incorporated by reference to Exhibit 4.3 of the
Registrant’s Registration Statement on Form S-8, filed with the Securities and Exchange
Commission on March 16, 1994 (Registration No. 33-52699)).
10.q Crown Holdings, Inc. 1994 Stock-Based Incentive Compensation Plan (incorporated by reference
to Exhibit 10.g of the Registrant’s Annual Report on Form 10-K for the year ended December 31,
1994 (File No. 1-2227)).
10.r Amendment No. 1 to the Crown Holdings, Inc. 1994 Stock-Based Incentive Compensation Plan,
dated as of September 21, 1998 (incorporated by reference to Exhibit 10.b of the Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (File No. 1-2227)).
10.s Amendment No. 2 to the Crown Holdings, Inc. 1994 Stock-Based Incentive Compensation Plan,
dated as of January 1, 2003 (incorporated by reference to Exhibit 10.o of the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 2002 (File No. 0-50189)).
10.t Crown Holdings, Inc. 1997 Stock-Based Incentive Compensation Plan, amended and restated
(incorporated by reference to the Registrant’s Definitive Additional Materials on Schedule 14A,
filed with the Securities and Exchange Commission on April 13, 2000 (File No. 1-2227)).
10.u Amendment No. 3 to the Crown Holdings, Inc. 1997 Stock-Based Incentive Compensation Plan,
dated as of January 1, 2003 (incorporated by reference to Exhibit 10.q of the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 2002 (File No. 0-50189)).
10.v Crown Holdings, Inc. 2001 Stock-Based Incentive Compensation Plan, dated as of February 22,
2001 (incorporated by reference to the Registrant’s Definitive Proxy Statement on Schedule 14A,
filed with the Securities and Exchange Commission on March 27, 2001 (File No. 1-2227)).
10.w Amendment No. 1 to the Crown Holdings, Inc. 2001 Stock-Based Incentive Compensation Plan,
dated as of January 1, 2003 (incorporated by reference to Exhibit 10.s of the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 2002 (File No. 0-50189)).
10.x Form of Agreement for Restricted Stock Awards under Crown Holdings, Inc. 2004 Stock-Based
Incentive Compensation Plan (incorporated by reference to Exhibit 10.x of the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 2004 (File No. 0-50189)).
-106-
Crown Holdings, Inc.
10.y Crown Holdings, Inc. 2004 Stock-Based Incentive Compensation Plan, dated as of April 22,
2004 (incorporated by reference to the Registrant(cid:1)s Definitive Proxy Statement on Schedule
14A, filed with the Securities and Exchange Commission on March 19, 2004 (File No. 0-
50189)).
10.z Form of Agreement for Non-Qualified Stock Option Awards under Crown Holdings, Inc. 2004
Stock-Based Incentive Compensation Plan (incorporated by reference to Exhibit 10.6 of the
Registrant(cid:1)s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (File No.
0-51089)).
10.aa Crown Cork & Seal Company, Inc. Deferred Compensation Plan for Directors, dated as of October
27, 1994 (incorporated by reference to Exhibit 10.b of the Registrant(cid:1)s Quarterly Report on Form
10-Q for the quarter ended June 30, 1995 (File No. 1-2227)).
10.bb Crown Holdings, Inc. Stock Compensation Plan for Non-Employee Directors, dated as of April
22, 2004 (incorporated by reference to the Registrant(cid:1)s Definitive Proxy Statement on Schedule
14A, filed with the Securities and Exchange Commission on March 19, 2004 (File No. 0-
50189)).
10.cc Crown Cork & Seal Company, Inc. Pension Plan for Outside Directors, dated as of October 27,
1994 (incorporated by reference to Exhibit 10.c of the Registrant(cid:1)s Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995 (File No. 1-2227)).
10.dd Amendment No. 1, effective April 1, 2005, to the Crown Holdings, Inc. Stock Compensation Plan
for Non-Employee Directors, dated as of April 22, 2004 (incorporated by reference to Exhibit 10 to
the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 (File No. 0-
50189)).
10.ee Master Definitions Agreement, dated June 21, 2005, between France Titrisation, as Management
Company, BNP Paribas, as Custodian Calculation Agent, FCC Account Bank, Liquidity Facility
Provider and Swap Counterparty, Eliopée Limited, as Eliopée, GE Factofrance, as Back-up
Servicer, Crown European Holdings, as Parent Company, the Entities listed in Schedule, as
Sellers or Servicers, CROWN Emballage France SAS, as French Administrative Agent and
CROWN Packaging UK PLC, as English Administrative Agent (incorporated by reference to
Exhibit 10.a to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30,
2005 (File No. 0-50189)).
10.ff. Master Receivables Transfer and Servicing Agreement, dated June 21, 2005, between France
Titrisation, as Management Company, BNP Paribas, as Custodian, the Entities listed in Schedule
1 of Appendix 1, as Sellers or Servicers, CROWN Emballage France SAS, as French
Administrative Agent and CROWN Packaging UK PLC, as English Administrative Agent
(incorporated by reference to Exhibit 10.b to the Registrants Quarterly Report on Form 10-Q for
the quarter ended June 30, 2005 (File No. 0-50189)).
10.gg Stock and Asset Purchase Agreement, dated as of August 18, 2005, between Crown Holdings,
Inc. and Financière Daunou 1 S.A. (incorporated by reference to Exhibit 99.2 to the Registrant(cid:1)s
Current Report on Form 8-K filed on October 17, 2005 (File No. 0-50189)).
10.hh Intercreditor Agreement dated as of November 18, 2005, among Citibank, N.A., as Program
Agent, the Company, Crown International Holdings, Inc., Crown Cork& Seal Company, Inc.,
Crown Cork & Seal Receivables (DE) Corporation, Crown Cork & Seal USA, Inc., Crown Risdon
USA, Inc., CROWN Metal Packaging Canada LP and Deutsche Bank AG New York Branch and
The Bank of Nova Scotia, as Bank Agent (incorporated by reference to Exhibit 10.a of the
Registrant(cid:1)s Current Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
-107-
Crown Holdings, Inc.
Exhibits 10.g through 10.dd inclusive, are management contracts or compensatory plans or
arrangements required to be filed as exhibits pursuant to Item 14(c) of this Report.
12. Computation of ratio of earnings to fixed charges.
21. Subsidiaries of Registrant.
23. Consent of Independent Registered Public Accounting Firm.
31.1. Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities
and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2. Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities
and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32. Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, executed by John W. Conway, Chairman of the Board, President
and Chief Executive Officer of Crown Holdings, Inc. and Alan W. Rutherford, Vice Chairman of the
Board, Executive Vice President and Chief Financial Officer of Crown Holdings, Inc.
99. Separate financial statements of affiliates whose securities are pledged as collateral.
c)
The consolidated statements and notes thereto and financial statement schedule for Crown Cork & Seal
Company, Inc., included in Exhibit 99 above, are incorporated herein by reference.
-108-
Crown Holdings, Inc.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 15, 2006
Crown Holdings, Inc.
Registrant
By: /s/ Thomas A. Kelly
Thomas A. Kelly
Vice President and Corporate Controller
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John
W. Conway, Alan W. Rutherford and William T. Gallagher, and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all
amendments to the Annual Report on Form 10-K for the Company’s 2005 fiscal year, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them, or
their or his substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the date indicated above.
SIGNATURE
/s/ John W. Conway
John W. Conway
/s/ Alan W. Rutherford
Alan W. Rutherford
/s/ Thomas A. Kelly
Thomas A. Kelly
SIGNATURE
/s/ Jenne K. Britell
Jenne K. Britell
/s/ Arnold W. Donald
Arnold W. Donald
/s/ Marie L. Garibaldi
Marie L. Garibaldi
/s/ William G. Little
William G. Little
/s/ Hans J. Löliger
Hans J. Löliger
TITLE
Chairman of the Board, President
and Chief Executive Officer
Vice Chairman of the Board, Executive Vice President
and Chief Financial Officer
Vice President and Corporate Controller
DIRECTORS
/s/ Thomas R. Ralph
Thomas R. Ralph
/s/ Hugues du Rouret
Hugues du Rouret
/s/ Harold A. Sorgenti
Harold A. Sorgenti
/s/ Jim L. Turner
Jim L. Turner
/s/ William S. Urkiel
William S. Urkiel
-109-
(THIS PAGE INTENTIONALLY LEFT BLANK)
Division Officers
Americas Division
Frank J. Mechura
President – Americas Division
Robert J. Truitt
President – CROWN
Beverage Packaging USA
Raymond L. McGowan, Jr.
President – CROWN Food
Packaging USA
Alfred J. Wareing
President – CROWN Metal
Packaging Canada
David R. Underwood
President – CROWN
Aerosol Packaging USA
Joseph R. Pierce
President – CROWN
Closures Division
William Filotas
President – Mexico, Caribbean
and Central America
Stephen T. Pearlman
President – CROWN
Risdon USA
Patrick D. Szmyt
Senior Vice President and
Chief Financial Officer
E.C. Norris Roberts
Executive Vice President –
Information Systems, Planning
and World-Class Performance
Edward C. Vesey
Senior Vice President –
Sourcing
John Foster
President – Argentina
Gary L. Burgess
Senior Vice President –
Human Resources
Asia-Pacific Division
William H. Voss
President – Asia-Pacific Division
Jozef Salaerts
Senior Vice President – South East Asia
Ng-Seng Yap
Vice President – Thailand
Hock-Huat Goh
Vice President – Finance & H.R. and
Chief Financial Officer
Gary Fishlock
Director – Manufacturing
Terry Cartwright
Senior Vice President –
China and Hong Kong
Patrick Ng
Director – Purchasing
European Division
William R. Apted
President – CROWN Europe
Peter Calder
Senior Vice President – Human
Resources and Communications
Nicolas Anthon
Vice President – CROWN
Aerosols Europe
Terry Dobb
Vice President and
Chief Information Officer
Ralph Lambert
Vice President – CROWN
Bevcan Middle East
John Clinton
Senior Vice President –
CROWN Bevcan Europe
and Middle East
Chris Homfray
Senior Vice President –
CROWN Food Europe
Howard Lomax
Senior Vice President and
Chief Financial Officer
Peter Nuttall
Senior Vice President –
Sourcing
Paul Browett
Vice President and Treasurer
Inigo d’Ornellas
Vice President and Controller
Peter Collier
Vice President – CROWN
Closures Europe
Roland Dachs
Vice President – Logistics
and Planning
John Davidson
Vice President – Legal
and General Counsel
David Francis
Vice President – Operations,
CROWN Bevcan Europe
and Middle East
Ashok Kapoor
Chairman and Managing Director
– CROWN Hellas Can
and Vice President – Business
Development, CROWN Bevcan
Europe and Middle East
Nick Mullen
Vice President – CROWN
Speciality Packaging Europe
Guglielmo Prati
Vice President – CROWN
Food Italy
Martin Reynolds
Vice President – External
and Regulatory Affairs
Pierre Sirbat
Vice President – EHS and Quality
CROWN Packaging Technology
Daniel A. Abramowicz
President – CROWN Technology
Michael J. A. Curtis
Vice President –
Engineering Development
Leonard Jenkins
Vice President –
Technology Development
Stanley J. Taylor
Director –
Materials Development
Nigel Wakely
Director, Finance
Investor Information
Company Profile
Crown Holdings, Inc. is a leading manufacturer of packaging products for consumer marketing companies
around the world. We make a wide range of metal packaging for food, beverage, household and personal care
and industrial products and metal caps and closures. As of December 31, 2005, the Company operated 155
plants located in 42 countries, employing 24,055 people.
STOCK TRADING INFORMATION
Stock Symbol: CCK (Common)
Stock Exchange Listing: New York Stock Exchange
Corporate Headquarters
One Crown Way
Philadelphia, PA 19154-4599
Main phone: (215) 698-5100
Shareholder Services
Registered shareholders needing information about stock
holdings, transfer requirements, registration changes, account
consolidations, lost certificates or address changes should
contact the Company’s stock transfer agent and registrar:
Mailing Address:
Wells Fargo Bank Minnesota, N.A.
Shareholder Services
161 North Concord Exchange
South St. Paul, MN 55075
General Telephone Number:
1-800-468-9716
Internet website:
http://www.wellsfargo.com/shareownerservices
Owners of shares held in street name (shares held by any bank
or broker in the name of the bank or brokerage house) should
direct communications or administrative matters to their bank
or stockbroker.
Forms 10-K and Other Reports
The Company will provide without charge to its shareholders
a copy of its 2005 Annual Report on Form 10-K, excluding
exhibits, as filed with the U.S. Securities and Exchange
Commission (“SEC”). To request a copy of the Company’s
annual report, call 804-327-3400 or toll free 888-400-7789.
Canadian callers should dial 888-757-5989. Copies in electronic
format of the Company’s annual report and filings with the
SEC are available at its website at http://www.crowncork.com
under Annual Report and SEC filings.
Internet
Visit our website on the Internet at http://www.crowncork.com
for more information about the Company, including news
releases and investor information.
Certifications
The Company included as Exhibit 31 to its 2005 Annual Report
on Form 10-K, as filed with the U.S. Securities and Exchange
Commission, certifications of the Chief Executive Officer and
Chief Financial Officer of the Company. The CEO and CFO
certify to, among other things, the information contained in the
Company’s Form 10-K. The Company has also submitted to
the New York Stock Exchange a certification from the CEO
certifying that he is not aware of any violation by the Company
of New York Stock Exchange corporate governance listing
standards.
INCORPORATED — COMMONWEALTH OF
PENNSYLVANIA
This report is printed on recycled paper.