Please visit our website www.crowncork.com
to read more of our story and obtain additional information.
Corporate/ameriCas Division HeaDquarters
Crown Holdings, Inc.
One Crown Way
Philadelphia, PA 19154-4599 USA
Main Tel: +1 (215) 698-5100
asia paCifiC Division HeaDquarters
CROWN Asia Pacific Holdings Ltd.
10 Hoe Chiang Road #19-01/02
Keppel Towers
Singapore 089315
Main Tel: +65 6423 9798
european Division HeaDquarters
CROWN Packaging Europe GmbH
Baarermatte
CH-6340 Baar
Switzerland
Main Tel: +41 41 759 10 00
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A
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 25, 2013, 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, was mailed to each shareholder of common stock of
record as of the close of business on March 5, 2013, 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 anD Corporate offiCers
2012 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
Net iNcome attributable to crowN HoldiNGS
2012
$ 8,470
1,277
226
557
per averaGe commoN SHare:
earNiNGS attributable to crowN HoldiNGS - diluted $ 3.75
36.81
market price (cloSiNG) (1)
total aSSetS
commoN SHareS repurcHaSed
caSH flow from operatioNS
capital expeNditureS
Number of employeeS
SHareS outStaNdiNG at december 31
averaGe SHareS outStaNdiNG - diluted
$ 7,490
6,954,968
$ 621
324
21,856
143,136,473
148,407,801
(1) Source: New York Stock Exchange - Composite Transactions
Net Sales 2012
2011
$ 8,644
1,348
232
282
$ 1.83
33.58
$ 6,899
7,965,176
$ 379
401
20,655
148,449,293
154,273,649
% Change
(2.0)
(5.3)
(2.6)
97.5
104.9
9.6
8.6
(12.7)
63.9
(19.2)
5.8
(3.6)
(3.8)
by SeGmeNt
by GeoGrapHic area
by product
10%
12%
21%
27 %
10%
32%
33%
12%
33%
55%
20%
35%
Americas Beverage
North America Food
European Beverage
European Food
Asia Pacific
Non-reportable
North America
Western Europe
Developing Markets
Beverage Cans
Food Cans & Closures
Other
1
2012 Chairman’s Letter
Dear Fellow Shareholder,
Our results for 2012 once again demonstrate the essential nature of the metal packaging products we offer and the Company’s
ability to prosper in all environments. While our operating results for 2012 did not meet our initial expectations, primarily due
to the effects of unfavorable weather and continued economic weakness in Europe, we successfully adapted to these changing
circumstances and exceeded our cash flow target for the year. We returned over $250 million of that cash to shareholders with
the repurchase of 5% of the Company’s outstanding common shares, and in 2013 we look forward to even greater cash flow
as we see increased contributions from our recent investments in capacity expansions and restructuring actions.
Over the last four years, we have successfully implemented an ambitious capacity expansion program in our beverage can
businesses, primarily focused on growing markets in Asia Pacific, Brazil and Eastern Europe. Sales of beverage cans in
developing markets accounted for 47% of our total beverage can sales in 2012.
With a 5% increase in global sales unit volumes, driven by growth of 16% in Asia Pacific and 15% in Brazil, beverage cans
accounted for 55% of our total revenue in 2012. Our Asia Pacific beverage can business has grown to such an extent that we
began reporting the region’s results as a separate business segment in the fourth quarter of 2012. In 2013, we are expecting
increased volume and contribution from the projects we completed in 2012, including three new beverage can plants in
China, a new plant in Turkey, a production line in Cambodia, capacity expansion in Vietnam, and the integration of a beverage
can facility in Vietnam that we acquired in the fourth quarter of 2012. In the first half of 2013, we expect to commercialize
new beverage can plants in Cambodia, Thailand and Vietnam and add second beverage can production lines in two existing
plants in China and Malaysia.
These, as with all of our capacity additions, are being built to meet demand from global and regional beverage companies.
Their growth, in turn, is being driven by the growing and aspiring middle class in these markets. At the same time, we are
benefiting from our customers’ increasing use of the two-piece beverage can to package their products.
Food cans, which remain the safest and most economical way to deliver nutritious and convenient food to consumers, accounted
for 29% of our global revenue in 2012. Our North American Food can and closures business turned in another strong
performance and we believe remains best-in-class in terms of operating efficiency, margins and profitability. But we can do
better. In an effort to spur consumer demand for canned food products we are participating in an industry-sponsored, multi-
platform marketing campaign to educate and raise awareness of the benefits and advantages of canned foods over frozen,
glass, paper, plastic and flexible packaged food. Simply put, they are better for you, are already prepared and ready to eat
or add to a recipe, and need no added preservatives because the airtight can protects them from oxygen, germs and light.
This campaign is being coordinated with the fillers and grocery retailers who appreciate the fact that cans ship and warehouse
easily, need no refrigeration or freezer, have a longer shelf life, stack and display easily and do not break or shatter.
During 2012, Europe experienced continued macroeconomic challenges as well as one of the coldest, wettest summers on
record. Our food can business was not immune to these developments and, in response, our European Food can and closures
business took swift action to lower its manufacturing and inventory levels. We began executing a restructuring plan to better
align capacity, and as a result, we expect to begin realizing cost savings and productivity increases in the second half of 2013.
With more normalized weather patterns in 2013 we would expect a better harvest and filling levels and demand from food
canners to increase.
Our non-reportable segment, which now is comprised of our global aerosol, European specialty packaging and equipment
manufacturing businesses, posted lower net sales and volumes in 2012. The decrease reflects lower consumer spending for
discretionary consumer and household products as well as lower relative demand for paint. With an eye toward increased
profitability and operating efficiencies, we initiated restructuring efforts around these businesses in 2012 and expect to see the
benefits in the second half of 2013 with the full annualized cost savings coming in 2014.
2
We will continue to seek growth as opportunities arise through line additions at existing plants, new plants in developing markets
that we already know and understand, and potential opportunistic acquisitions in geographic areas and product lines in which
we already operate. However, I want to underscore that we always endeavor to be prudent stewards of the Company’s capital.
We require all of our growth plans to undergo rigorous and continuous analysis and significant risk return hurdles, all with the
idea of increasing long-term shareholder value. In 2012, we canceled or postponed four previously announced capital expansion
projects in response to changing circumstances.
Sustainability is another important focus for Crown from both an operational and product perspective. On the manufacturing
side, our relentless focus on safety, innovation and efficiency has the inherent benefit of increasing the overall sustainability
of the manufacturing process. Our efforts to drive down costs increase our energy efficiency, lower transportation expenses
and reduce waste. Our products are naturally sustainable from multiple standpoints and, when compared with other packaging
materials, steel and aluminum cans win hands down. I have already noted that metal cans are the ultimate container for
preventing food spoilage and do so without preservatives, refrigeration or freezing. Unlike many other materials, metal is
100% recyclable, and 75% of all primary aluminum produced in the last 150 years is still in use and available through recycling.
Interestingly, emerging and developing markets have the highest recycle rates for metal cans. Our sustainability efforts also
are reflected in our commitment to our employees and the diverse communities in which we operate. This enables the
Company to attract, protect, develop and maintain the highest quality local workforces around the world.
I have spoken many times over the years about Crown’s industry leadership in technology, and we have dedicated two pages to
it in this annual report. From our SuperEnd® beverage ends that reduce aluminum use by 10%, to shaped food, beverage and
aerosol cans, to easier to open Orbit™ and Ideal Closure® vacuum closures, to our distinctive and advanced finishes – just to
name a few – Crown has led the way over the years in breaking new ground to help our customers market their products with
better shelf appeal in easier to use packaging. Our dedicated Innovation Team with its forward looking development process
clearly demonstrates our commitment to providing Brand-Building Packaging™.
Looking ahead, we recognize the uncertainty surrounding global economic conditions but believe our Company’s prospects
are excellent. Crown is uniquely positioned with a global footprint that is increasingly weighted toward beverage cans in the
most promising developing markets while maintaining a diverse portfolio of high quality metal packaging. Crown has laid a
strong foundation for future unit volume and profit growth. These are busy and promising times for all of us at Crown, and we
are confidently looking to 2013.
Last May, Chris Homfray stepped down as President of our European Division, a position he held since 2006. He successfully
led CROWN Europe during a period of volatile currencies and commodity prices, macroeconomic challenges and significant
volume growth in our European Beverage can business. Chris joined Crown in 1995 and the size and scope of our European
business reflect his contributions to the organization. We thank Chris for his valuable contributions toward the seamless transition
of leadership to Jerry Gifford, who was formerly President of Beverage Packaging North America.
I want to especially thank our almost 22,000 employees in our 149 plants across 41 countries around the world. Their
dedication, drive and energy, day-in and day-out, were critical factors in the Company’s World-Class Operating Performance
and its successes in 2012.
Best regards,
JoHN w. coNway
Chairman of the Board and Chief Executive Officer
3
2
Brand-Building Packaging™…
it’s a way of life at Crown
SO WHAT ExACTLy DOES BRAND-BUILDING PACkAGING™ MEAN? IT MEANS
HELPING OUR CUSTOMERS STAND OUT ON THE RETAIL SHELF. BUILD
CONSUMER LOyALTy. AND DRIVE BUSINESS REGIONALLy AND GLOBALLy.
It also communicates the unique value that we bring to our customers:
Innovation leadership;
Commitment to sustainability, both in terms of what we make and how we make it;
Forming collaborative relationships with our customers and providing proactive guidance
to enhance their productivity and manufacturing performance; and
Helping our customers get a foothold in emerging economies.
top right Jim Presnell checks out a piece of our closure forming equipment.
5
Breaking New Ground
INNOVATION. IT’S WHERE WE STARTED IN 1892 WHEN OUR FOUNDER, WILLIAM PAINTER, INVENTED
THE CROWN CORk. AND IT’S STILL AT THE CORE OF WHAT WE DO EVERy DAy.
Whether improving existing products or pioneering a new
concept, our research and development efforts focus on delivering
innovation that responds directly to consumer needs and, in turn,
helps our customers build their brands. These include:
SHelf appeal
The majority of consumers make buying decisions at the point-
of-sale. Brands that use packaging to surprise and intrigue them
have a good chance of making it into shopping carts. We offer a
range of decorative finishes and printing techniques on our aerosol,
beverage, food and speciality packaging containers, as well as our
metal closures, to help brands win the battle.
coNveNieNce
It’s about making everyday life easier for consumers. For some,
that means products that are easy to open or reclose. For others,
it’s about portion control or being able to enjoy their favorite brand
on-the-go. Greater functionality is another form of convenience.
Uniquely shaped containers that improve ergonomics are just one
of the many ways we can help our customers accomplish this goal.
iNcreaSed eNGaGemeNt
Packaging is a great way to engage consumers. For example, the
skirt of a metal closure is an underused but powerful place for
brands to communicate key messages to consumers. Another
option is to print messages or Quick Response (QR) codes under
the cap to drive participation in promotions and contests.
oppoSitE Gregory Saunders runs a palletizer in one of our food can plants.
6
Our dedicated Innovation Team
executes a phased, forward-
looking development process
to drive new product development.
The end result is packaging that is
distinctive, efficient to produce and
minimizes the amount of time it
takes to get to market.
1. IDEAS
Identify market opportunities
and technology response
2. CONCEPTS
Evaluate and select a winning
technical/commercial concept
3. FEASIBILTY
Challenge the market opportunity and
analyze the technical feasibility and risks
4. PRE-PRODUCTION
Demonstrate commercial and
technical capability
5. IMPLEMENTATION
Demonstrate production capability
and commercial sign-off
6. LAUNCH
Produce in quantity and deliver
to customer. Audit and react.
CONCEPTS
Evaluate and select a winning
technical/commercial concept
FEASIBILTY
Challenge the market opportunity and
analyze the technical feasibility and risks
PRE-PRODUCTION
Demonstrate commercial and
technical capability
IMPLEMENTATION
Demonstrate production capability
and commercial sign-off
LAUNCH
Produce in quantity and deliver
to customer. Audit and react.
5
O N C E P T S FEA
S
A
S C
A
E
D
I
H
C
N
U
A
L
Innovation
Process
N
O
IMPLEMENTATI
N
B
I
L
I
T
Y
P
R
E
-
P
R
O
D
UCTIO
O N C E P T S FEA
S
A
S C
A
E
D
I
H
C
N
U
A
L
Innovation
Process
N
O
IMPLEMENTATI
N
B
I
L
I
T
Y
P
R
E
-
P
R
O
D
UCTIO
IDEAS
CONCEPTS
FEASIBILITY
PRE-PRODUCTION
IMPLEMENTATION
LAUNCH
30%
40%
SNapSHot of iNNovatioN
360 End™
The 360 End™ is the world’s first full aperture beverage
end. It uses a combiNatioN of food aNd beveraGe
caN tecHNoloGy so that the entire lid can be removed,
turning the can itself into a drinking cup and eliminating
the need for separate glassware.
Easylid™
European paint manufacturers seeking the latest in
convenience packaging can leverage our Easylid™
closure. Designed to make the opeNiNG aNd
recloSiNG of paiNt caNS SiGNificaNtly eaSier
by eliminating the need for extra tools, the technology
made its market debut in Finland and is now
available for adoption in other parts of Europe.
BICAN®
BICAN® aerosol technology incorporates a plastic
inner bag to keep product and propellant completely
separate. This separation ensures propellaNt iS
Not emitted duriNG diSpeNSiNG and prevents the
product from coming in contact with the package
itself. The possibility of product drying or hardening
is also eliminated, increasing its life span.
Ideal Closure®
Our Ideal Closure® combines the characteristics of metal
and plastic to offer superior barrier performance, easier
opening for seniors and children and exceptioNal
braNd differeNtiatioN oN tHe SHelf. Suitable for
both glass and plastic containers, the Ideal Closure®
also offers a great deal of branding flexibility on the
center disk.
Orbit™Closure
The Orbit™ Closure is a revolutionary step change
in convenience. A unique two-part design reduces
torque, makiNG tHe cloSure SiGNificaNtly eaSier
to opeN when compared to standard twist-off
closures. The closure is available in 63mm, 70mm
and 82mm diameters.
Shaped Cans
To stand out from the competition on the supermarket
shelf, Nestlé Greece has refreshed the image of its
NESCAFE® instant coffee using striking shaped cans.
The new format HelpS tHe braNd HiGHliGHt itS
diStiNctive offeriNG and maintain its position as
the preferred consumer choice.
7
Protecting the Environment every day
CANS ARE A TIME-TESTED, HIGHLy DEPENDABLE METHOD OF SAFELy AND
EFFICIENTLy DELIVERING FOOD AND BEVERAGES TO CONSUMERS DAILy.
CANS STACk EASILy ON STORE SHELVES, ARE SIMPLE TO STORE AND, FOR
THE BEVERAGE MARkET, CHILL QUICkLy AND STAy COLD LONGER.
But the can also possesses some unique environmental advantages that many consumers
are not aware of. Consider these facts:
Metal packaging is 100% recyclable.
Recycled in a true material-to-material loop (i.e. steel to steel), metals retain their
original properties regardless of how many times they are recycled. In other words,
steel and aluminum never need to be downgraded to less demanding uses after recycling.
That makes both materials a permanent resource – not just a recycling resource.
Metal packaging has a well-established recycling infrastructure due to the economic
value of the materials. Consumers are able to recycle cans through curbside collection
programs or can banks. Metal can also be easily extracted from waste streams.
Food and beverage cans are made from steel and aluminum produced on average with
more than 50% recycled material.
Metal serves as a barrier to light and oxygen helping extend shelf life, protect product
freshness and nutritional value and reduce waste – another hallmark of sustainability.
Cans require no refrigeration during shipping and storage, reducing energy costs.
oppoSitE Rod Hartman oversees a closure decorating line.
10
The bottom line is that metal
packaging doesn’t just hold its own
against other forms of packaging in
terms of sustainability–it excels.
At Crown, environmental commitment and pollution preven-
tion are a fundamental part of our business philosophy. We
are committed to policies and manufacturing practices that
improve productivity and safety and reduce energy use.
Environmental considerations are also a priority in all tech-
nological developments. As a global leader in our industry,
we have led the way in reducing the amount of metal used
in consumer packaging. This process, called lightweighting,
allows can makers to reduce the thickness of can walls
without sacrificing the critical barrier and strength properties
our customers need.
Finally, workplace safety is built into every process, procedure
and system of the company and the attitudes and values of
every employee. A formal Environmental Health & Safety
(EH&S) program serves as the backbone to achieve a “Total
Safety Culture.”
More details about our commitment to all three dimensions
of sustainability can be found in our 2011 Sustainability
Report. Visit www.crowncork.com/sustainability to
download it.
30%
liGHtweiGHtiNG by tHe NumberS
The weighT of aluminum cans
has been reduced by 30% over
The pasT 35 years.
40%
sTeel packaging weighs 40% less
Than 30 years ago.
9
Superior Sustainability
When Crown introduced the revolutionary SuperEnd® beverage end in the year 2000, it was the first major break-
through in beverage end technology in nearly 20 years. The end reduceS metal uSe by 10%, and its unique geometry
delivers several key benefits to both fillers and consumers. To date, more than 400 billioN SupereNd® beveraGe
eNdS Have beeN produced, SaviNG over 100,000 metric toNS of alumiNum, 1,700 metric toNS of coatiNGS
aNd Nearly 900,000 metric toNS of GreeNHouSe GaSeS.
ABoVE Maria Gallegoes keeps things moving in an aerosol plant.
BELoW Terrence D. Coleman is part of the team in one of our beverage end facilities.
10
11
Customer Service that
lives up to its Name
PARTNERING WITH A SUPPLIER THAT OFFERS A WELL-ROUNDED AND ExPERIENCED CUSTOMER
SERVICE PROGRAM IS ESSENTIAL AS BRAND OWNERS CONTINUE TO NAVIGATE THROUGH A
CHALLENGING ECONOMy.
Crown delivers such a program to its customers around the world by
providing support from product concept to launch. Our Customer
Technical Service (CTS) team is composed of specialist engineers
and food technologists that help customers enhance their production
capabilities and address a range of processing issues including
thermal processing, microbiology and food safety. They can also
assist in resolving any ongoing production problems, filling or trialing
issues as they relate to our products or answer questions about new
metal packaging requirements.
Other value-added services Crown offers include:
Our Seaming School provides comprehensive instruction and
training for customers that require an update on the very latest in
double seam technology. The school also provides training on
recommended can closing practices for engineers and those
connected with the process, such as quality personnel.
At Crown’s pilot facilities, extensive testing on new packaging
products can be conducted in an environment that replicates the
conditions in which packaging is filled, processed, used and
handled by our customers.
For closures customers, support includes developing, installing
and maintaining capping machinery as well as training to help
maximize the efficiency of sterilization, pasteurization and
capping processes.
Co-packing services help our specialty packaging customers add
depth and breadth to their product lines without having to invest in
specialized equipment. They also help customers keep moving
products to retail when their own manufacturing resources are
at capacity.
top Kenneth Williams, Ron Maloyed and Michelle Hawthorne co-pack products
for one of our specialty packaging customers.
middLE Bruce Coberly at the start of the beverage end manufacturing process.
Bottom Arturo Gonzales operates a coatings line in one of our decorating centers.
oppoSitE Betty Jones works in a beverage end quality lab.
14
Our global footprint is also an asset
when it comes to customer service.
With 149 plants in 41 countries, we’re
able to supply high quality products
with shorter lead times. This broad
geographic reach also means we
are able to function as a local supplier
for many of our customers, helping
them reduce shipping expenses and
environmental impact.
41
countries
in 2010
41
countries
135
plants
in 2010
20,000
people
in 2010
149
plants
21,856
people
13
Expanding Our Footprint
Several proJectS are uNderway in our beverage
can facilities. Here’s a summary:
Second productioN liNeS are being installed
in beverage can plants in Putian, China and
Bangi, Malaysia.
Construction on three New beveraGe caN plaNtS
is underway in Danang, Vietnam; Sihanoukville,
Cambodia; and Bangkok, Thailand.
emerging Markets
A BUDDING MIDDLE CLASS IS HELPING PRODUCERS OF A DIVERSE RANGE
OF PRODUCTS, INCLUDING FOOD, BEVERAGES AND INDUSTRIAL GOODS,
DISCOVER OPPORTUNITIES IN GROWING ECONOMIES IN ASIA, EASTERN
EUROPE, SOUTH AMERICA, THE MIDDLE EAST AND AFRICA.
Armed with more disposable income, consumers are demanding more choice, giving
packaging a vital role to play. It helps differentiate products on increasingly crowded
shelves and, for international brands, ensures a consistent image and protects hard-earned
brand equity.
Our team is committed to working closely with both regional and international brands
to help them capitalize on opportunities in promising emerging markets with innovative
metal packaging.
In some cases, that means investing in new facilities or expanding existing facilities to provide
local supply. In others, we supply high quality packaging to customers in mature markets, who
then export product to emerging geographies where they will reach consumers. At the end of
the day, our goal is to ensure we have capacity when and where our customers need it.
17
JeNNe k. britell, pH.d. (B)
Chairman of United Rentals
and Senior Managing Director
of Brock Capital Group
william G. little (a, c, d)
Former Chairman and
Chief Executive Officer of
West Pharmaceutical Services
JoSef m. müller (B)
President of Swiss Association
of Branded Consumer Goods
‘PROMARCA’
Jim l. turNer (c)
Principal of JLT Beverages
Board of Directors
JoHN w. coNway (a)
Chairman of the Board and
Chief Executive Officer of the
Company
HaNS J. löliGer (c, d)
Vice Chairman of Winter Group
tHomaS a. ralpH (a, B, d)
Retired Partner, Dechert
william S. urkiel (B)
Former Senior Vice President and
Chief Financial Officer of IkON
Office Solutions
arNold w. doNald (c)
Principal of AWDPLC
JameS H. miller
Former Chairman and
Chief Executive Officer of
PPL Corporation
HuGueS de rouret (B)
Honorary Chairman of Automobile
Club de France Management
Company; Chairman of the
European School of Management;
and Member of the Chamber of
Commerce and Industry of Paris
committeeS a – ExEcutivE B – audit c – compEnsation d – nominating and corporatE govErnancE
Corporate Officers
JoHN w. coNway
Chairman of the Board and
Chief Executive Officer
timotHy J. doNaHue
President and
Chief Operating Officer
william t. GallaGHer
Senior Vice President, Secretary
and General Counsel
tHomaS a. kelly
Senior Vice President and
Chief Financial Officer
micHael b. burNS
Vice President and Treasurer
torSteN J. kreider
Vice President –
Planning and Development
keviN c. clotHier
Vice President and
Corporate Controller
adam J. dickSteiN
Assistant Corporate Secretary and
Assistant General Counsel
micHael J. rowley
Assistant Corporate Secretary and
Assistant General Counsel
daNiel a. abramowicz
Executive Vice President –
Corporate Technology and
Regulatory Affairs
kareN e. beriGaN
Vice President –
Corporate Risk Management
micHael f. duNleavy
Vice President – Corporate Affairs
and Public Relations
roSemary m. HaSelrotH
Assistant Corporate Secretary
18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2012
[ ] 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
(I.R.S. Employer
Identification No.)
19154-4599
(Zip Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Registrant’s telephone number, including area code: 215-698-5100
____________________
Title of each class
Common Stock $5.00 Par Value
7 3/8% Debentures Due 2026
7 1/2% Debentures Due 2096
Name of each exchange on which registered
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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such
files). 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, a non-accelerated filer or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
[X]
[ ] (Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
[ ]
[ ]
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, 2012, 148,907,165 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 $5,135,808,121 based on the New York Stock Exchange closing price for such shares on that date.
As of February 21, 2013, 143,200,728 shares of the Registrant’s Common Stock were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for the Annual Meeting of Shareholders to be held April 25, 2013
Document
Parts Into Which Incorporated
Part III to the extent described therein
Crown Holdings, Inc.
2012 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Item 1
Business
Item 1A
Risk Factors
Item 1B
Unresolved Staff Comments
Item 2
Properties
Item 3
Legal Proceedings
Item 4
Reserved
PART II
Item 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6
Selected Financial Data
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
Item 8
Financial Statements and Supplementary Data
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A
Controls and Procedures
Item 9B
Other Information
Item 10
Directors, Executive Officers and Corporate Governance
Item 11
Executive Compensation
PART III
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13
Certain Relationships and Related Transactions, and Director Independence
Item 14
Principal Accounting Fees and Services
Item 15
Exhibits and Financial Statement Schedules
SIGNATURES
PART IV
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ITEM 1.
BUSINESS
Crown Holdings, Inc.
PART I
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) 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 vacuum
closures and caps. These products are manufactured in the Company’s plants both within and outside the U.S. 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, 2012, the Company operated 149 plants along with sales and service facilities throughout 41 countries
and had 21,900 employees. Consolidated net sales for the Company in 2012 were $8.5 billion with 73% of 2012 net sales derived
from operations outside the U.S.
DIVISIONS AND OPERATING SEGMENTS
The Company’s business is organized geographically within three divisions, Americas, Europe and Asia Pacific. Within each
Division, 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 European Beverage and European Food. Americas Beverage includes beverage can operations in the U.S., Brazil, Canada,
Colombia and Mexico. North America Food includes food can and metal vacuum closure operations in the U.S. and Canada.
European Beverage includes beverage can operations in Europe, the Middle East and North Africa. European Food includes food
can and metal vacuum closure operations in Europe and Africa.
The Company's Asia Pacific Division consists of beverage and non-beverage can operations, primarily food cans and specialty
packaging. In the fourth quarter of 2012, the Company changed the internal reporting of its Asia Pacific businesses and in connection
with the change, began separately reporting Asia Pacific as a reportable segment. Prior to 2012, the Company's Asia Pacific
businesses were included in non-reportable segments. The Company's non-reportable segments now include its European Specialty
Packaging business, its aerosol can businesses in North America and Europe and its tooling and equipment operations in the U.S.
and United Kingdom.
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” of this Annual Report and under Note
X to the consolidated financial statements.
AMERICAS DIVISION
The Americas Division includes operations in the U.S., Brazil, Canada, the Caribbean, Colombia and Mexico. These operations
manufacture beverage, food and aerosol cans and ends, specialty packaging and metal vacuum closures and caps. At December 31,
2012, the division operated 46 plants in 8 countries and had 5,600 employees. In 2012, the Americas Division had net sales of
$3.4 billion. In 2012, 67% of the division’s 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. North America
Aerosol and food can operations in the Caribbean are not included as reportable segments.
Americas Beverage
The Americas Beverage segment manufactures aluminum beverage cans and ends and steel crowns, commonly referred to as
“bottle caps.” Americas Beverage had net sales in 2012 of $2.3 billion (26.8% of consolidated net sales) and segment income (as
defined under Note X to the consolidated financial statements) of $311 million.
North America Food
The North America Food segment manufactures steel and aluminum food cans and ends and metal vacuum closures. North America
Food had net sales in 2012 of $876 million (10.3% of consolidated net sales) and segment income (as defined under Note X to
the consolidated financial statements) of $146 million.
EUROPEAN DIVISION
Crown Holdings, Inc.
The European Division includes operations in Eastern and Western Europe, the Middle East and North Africa. These operations
manufacture beverage, food and aerosol cans and ends, specialty packaging and metal vacuum closures and caps. At December 31,
2012, the division operated 71 plants in 27 countries and had 11,200 employees. Net sales in 2012 were $4.0 billion. Within the
European Division, net sales in the United Kingdom were $757 million and in France were $568 million in 2012 or 18.9% and
14.2% of division net sales, respectively.
Within the European Division, the Company has determined that European Beverage and European Food are reportable segments.
The Company's European Aerosol and European Specialty Packaging businesses are not included as reportable segments.
European Beverage
The European Beverage segment manufactures steel and aluminum beverage cans and ends. European Beverage had net sales in
2012 of $1.7 billion (19.5% of consolidated net sales) and segment income (as defined under Note X to the consolidated financial
statements) of $217 million.
European Food
The European Food segment manufactures steel and aluminum food cans and ends, and metal vacuum closures. European Food
had net sales in 2012 of $1.8 billion (21.2% of consolidated net sales) and segment income (as defined under Note X to the
consolidated financial statements) of $180 million.
ASIA PACIFIC DIVISION
The Company's Asia Pacific Division consists of beverage can operations in Cambodia, China, Malaysia, Singapore, Thailand
and Vietnam and non-beverage can operations, primarily including food cans and specialty packaging in China, Singapore, Thailand
and Vietnam. At December 31, 2012, the division operated 32 plants in 6 countries and had 4,300 employees. Net sales in 2012
were $979 million (11.6% of consolidated net sales) and beverage can and end sales were 83.6% of division sales. During the
fourth quarter of 2012, the Company acquired an aluminum beverage can and end production facility in Vietnam and also acquired
a controlling interest in Superior Multi-Packaging Ltd., a listed company on the Singapore Exchange, which primarily produces
specialty packaging products in China, Singapore and Vietnam.
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 InBev, Carlsberg, Coca-Cola, Cott Beverages, Dr Pepper Snapple Group, Heineken, National Beverage and
Pepsi-Cola, among others. The Company’s beverage can 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 working together with its customers
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. Innovations include the SuperEnd® beverage can end and shaped beverage
cans which provide size differentiation, such as, slim line cans for low calorie products or larger sizes for high volume consumption.
The Company expects to continue to add capacity in many of the growth markets around the world.
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 water and energy usage while improving 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, Cecab, ConAgra, Continentale, Mars, Simmons Foods, Nestlé, Princes
Group and Stockmeyer, among others. The Company offers a wide variety of metal vacuum closures and sealing equipment
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Crown Holdings, Inc.
solutions to leading marketers such as Abbot Laboratories, Danone, H. J. Heinz, Nestlé, Premier Foods, Princes Group and Unilever,
among others, from a network of metal vacuum closure plants around the world. The Company supplies total packaging solutions,
including metal and composite closures, capping systems and services while working closely with customers, retailers and glass
and plastic container manufacturers to develop innovative closure solutions and meet customer requirements.
Technologies used to produce food cans include three-piece welded, two-piece drawn and wall-ironed and two-piece drawn and
redrawn. The Company also offers its LIFTOFF™ series of food ends, including its Easylift™ full aperture steel food can ends,
and PeelSeam™, a flexible aluminum foil laminated end. The Company offers expertise in closure design and decoration, ranging
from quality printing of the closure in up to nine colors, to inside-the-cap printing, which offers customers new promotional
possibilities, to better product protection through Ideal Closures™, Orbit™ and Superplus™. The Company’s commitment to
innovation has led to developments in packaging materials, surface finishes, can shaping, lithography, filling, retorting, sealing
and opening techniques and environmental performance. The Company manufactures easy open, vacuum and conventional 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.
Aerosol Cans
The Company’s customers for aerosol cans and ends include manufacturers of personal care, food, household and industrial
products, including Colgate Palmolive, Procter & Gamble, SC Johnson and Unilever, among others. The aerosol can business is
highly competitive. The Company competes by offering its customers a broad range of products including multiple sizes, multiple
color schemes and shaped packaging.
Specialty Packaging
The Company’s specialty packaging business through 2012 was located primarily in Europe and serves many major European
and multinational companies. At the end of 2012 the Company, as discussed above, added operations in China, Singapore and
Vietnam with the acquisition of Superior Multi-Packaging, Ltd. The Company produces a wide variety of specialty containers
with numerous lid and closure variations. The Company’s specialty packaging customers include Abbott Laboratories, Akzo Nobel,
Britvic, Kraft, Mars, Nestlé, PPG, Teisseire and United Biscuits, among others.
SALES AND DISTRIBUTION
Global marketers qualify suppliers on the basis of their ability to provide global service, 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 staffs. In some
instances, contracts with customers are centrally negotiated, but products are ordered through and distributed directly by the
Company’s local facilities. The Company’s facilities are generally located in proximity to their respective major customers. The
Company works closely 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
use of working capital. 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 not significant.
SEASONALITY
The food packaging business is somewhat seasonal with the first quarter tending to be the slowest period as the autumn packing
period in the Northern Hemisphere has ended and new crops are not yet planted. The industry generally enters its busiest period
in the third quarter when the majority of fruits and vegetables are harvested. Due to this seasonality, inventory levels increase in
the first half of the year to meet peak demand in the second and third quarters. 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. 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 primarily include aerosol and specialty packaging and canmaking equipment, which tend not to
be as significantly affected by seasonal variations.
3
COMPETITION
Crown Holdings, Inc.
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, some of whom
manufacture containers for their own use and for sale to others. The Company’s competitors include, but are not limited to, Ardagh
Group, Ball Corporation, BWAY Corporation, Can-Pack S.A., Metal Container Corporation, Mivisa Envases S.A.U., Rexam PLC
and Silgan Holdings Inc.
CUSTOMERS
The Company’s largest customers consist of many of the leading manufacturers and marketers of packaged consumer products in
the world. Consolidation trends among beverage and food marketers have led to a concentrated customer base. The Company’s
top ten global customers represented in the aggregate 28% of its 2012 net sales. In each of the years in the period 2010 through
2012, 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 utilizes its centralized RD&E capabilities to advance and deliver technologies for the Company's worldwide
packaging activities that (1) promote development of value-added metal packaging systems for its customers, (2) design cost-
efficient manufacturing processes, systems and materials that further the sustainability of metal packaging, (3) provide continuous
quality and/or production efficiency improvements in its manufacturing facilities, (4) advance customer and vendor relationships,
and (5) provide value-added engineering services and technical support. These capabilities facilitate (1) the identification of new
and/or expanded market opportunities by working directly with customers to develop new products or enhance existing products
through the application of new technologies that better differentiate products in the retail environment (for example, the creation
of new packaging shapes or novel decoration methods) and/or the incorporation of consumer-valued features (for example,
improved openability and/or ease of use) and (2) the reduction of manufacturing costs by reducing the material content of the
Company's products (while retaining necessary performance characteristics), reducing spoilage, and/or increasing operating
efficiencies in our manufacturing facilities.
The Company maintains a substantial portfolio of patents and other intellectual property (IP) in the field of metal packaging
systems and is seeking strategic partnerships to extend its IP in existing and emerging markets. As a result, the Company has
licensed IP in geographic regions where the Company has a limited market presence today. Existing technologies such as
SuperEnd® beverage ends and can shaping have been licensed in Australia, Japan, and Africa to provide customers with more
global access to Crown's brand building innovations.
The Company spent $43 million in 2012, $43 million in 2011, and $42 million in 2010 in its centralized 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 developed within the Company's RD&E facilities to improve manufacturing efficiencies, reduce unit costs, and develop
new and/or improved value-added packaging systems. However, these expenditures do not include related product and process
developments occurring within the Company's decentralized business units.
MATERIALS AND SUPPLIERS
The Company uses various raw materials, primarily aluminum and steel, in its manufacturing operations. In general, these raw
materials are purchased in highly competitive, price-sensitive markets which have historically exhibited price and demand
cyclicality. These and other materials 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 less developed 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.
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Crown Holdings, Inc.
In 2012, consumption of steel and aluminum represented 26% and 38%, 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, changes in ownership,
government regulations, political unrest and increased demand for raw materials in the packaging and other industries, among
other risk factors, provide uncertainty as to the availability of and 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 can be subject to significant volatility. The Company’s
raw material supply contracts vary as to terms and duration, with steel contracts typically one year in duration with fixed prices
or set repricing dates, and aluminum contracts typically multi-year in duration with fluctuating prices based on aluminum ingot
costs. The Company generally attempts to mitigate its steel and aluminum price risk by matching its purchase obligations with
its sales agreements; however, there can be no assurance that the Company will be able to fully mitigate that risk.
The Company, in agreement with customers in many cases, also uses commodity and foreign currency forwards in an attempt to
manage its exposure to aluminum price volatility.
There can be no assurance that the Company will be able to fully recover from its customers the impact of aluminum and steel
price increases or that the use of derivative instruments will effectively manage the Company’s exposure to price volatility. In
addition, if the Company is unable to purchase steel and aluminum for a significant period of time, its operations would be disrupted
and if the Company was unable to fully recover the higher cost of steel and aluminum, its financial results may be adversely
affected. The Company continues to monitor this situation and the effect on its operations. As a result of continuing global supply
and demand pressures, other commodity-related costs affecting the Company’s business may increase as well, including natural
gas, electricity and freight-related costs. The Company intends to increase prices on its products accordingly in order to recover
these costs.
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 water and processed energy,
such as natural gas and electricity. Certain of these 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.
Aluminum and steel, by their very nature, can be recycled at high effectiveness and can be repeatedly reused to form new consumer
packaging with minimal or no degradation in performance, quality or safety.
By recycling these metals, large amounts of energy can be saved and significant water use and carbon dioxide emissions avoided.
SUSTAINABILITY AND ENVIRONMENTAL, HEALTH AND SAFETY 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 Sustainability Policy and a Corporate Environmental
Protection Policy. Environmental awareness is a key component of sustainability. Environmental considerations are among the
criteria by which the Company evaluates projects, products, processes and purchases. The Company is committed to continuous
improvement in product design and manufacturing practices to provide the best outcome for the human and natural environment,
both now and in the future. By reducing the per-unit amount of raw materials used in manufacturing its products, the Company
can significantly reduce the amount of energy, water and other resources and associated emissions necessary to manufacture metal
containers. The Company aims to continue that process of improvement in its manufacturing process to assure that consumers
and the environment are best served through the use of metal packaging. The Company is also committed to providing a safe work
environment for its employees through programs that emphasize safety awareness and the elimination of injuries and incidents.
There can be no assurance that current or future environmental laws or 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 Annual Report under the caption
“Environmental Matters,” and under Note L to the consolidated financial statements.
5
WORKING CAPITAL
Crown Holdings, Inc.
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 cash on hand, its revolving credit facility, its receivables securitization and factoring
programs, and from operations.
Further information relating to the Company’s liquidity and capital resources is set forth within “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of this Annual Report under the captions “Liquidity” and “Debt
Refinancings” and under Note Q to the consolidated financial statements.
Collection and payment periods tend to be longer for some of the Company’s operations located outside the U.S. due to local
business practices.
EMPLOYEES
At December 31, 2012, the Company had 21,900 employees. Collective bargaining agreements with varying terms and expiration
dates cover 12,200 employees. The Company does not expect that renegotiations of the agreements expiring in 2013 will have a
material adverse effect on its consolidated results of operations, financial position or cash flow.
AVAILABLE INFORMATION
The Company’s internet website address is www.crowncork.com. Information on the Company’s website is not incorporated by
reference in this Annual Report on Form 10-K. 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 website 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 SEC filings are also available for reading and copying at the
SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference
room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site (http://www.sec.gov)
containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
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 website. These documents
are also available in print to any shareholder who requests them. Amendments to and waivers of the Code of Business Conduct
and Ethics requiring disclosure under applicable SEC rules will be disclosed on the Company's website.
ITEM 1A.
RISK FACTORS
In addition to factors discussed elsewhere in this Annual Report and in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” 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 Company’s international operations, which generated approximately 73% of its consolidated net sales in 2012, are subject
to various risks that may lead to decreases in its financial results.
The Company is an international company, and 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 73%, 73% and
72% of its consolidated net sales in 2012, 2011 and 2010, respectively. In addition, the Company’s business strategy includes
continued expansion of international activities, including within developing markets and areas, such as Asia, Eastern Europe, the
Middle East and South America, that may pose greater risk of political or economic instability. Approximately 32%, 30% and
28% of the Company’s consolidated net sales in 2012, 2011 and 2010, respectively, were generated outside of the developed
markets in Western Europe, the United States and Canada. Furthermore, if the current European sovereign debt crisis continues
or further deteriorates, there will likely be a negative effect on the Company’s European business, as well as the businesses of the
Company’s European customers and suppliers. If this crisis ultimately leads to a significant devaluation of the euro, the value of
the Company’s financial assets that are denominated in euros would be significantly reduced when translated to U.S. dollars for
financial reporting purposes. Any of these conditions could ultimately harm the Company’s overall business, prospects, operating
results, financial condition and cash flows and such harm may be more pronounced if the Company expands in Western Europe
through potential acquisitions or otherwise.
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Crown Holdings, Inc.
Emerging markets are a focus of the Company’s international growth strategy. The developing nature of these markets and the
nature of the Company’s international operations generally are subject to various risks, including:
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foreign governments' 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;
difficulties associated with expatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws;
difficulties in enforcement of contractual obligations and intellectual property rights and difficulties in protecting
intellectual property or sensitive commercial and operations data or information technology systems generally;
exchange controls;
national and regional labor strikes;
the geographic, language and cultural differences between personnel in different areas of the world;
high social benefit costs for labor, including costs associated with restructurings;
civil unrest or political, social, legal and economic instability, such as recent political turmoil in the Middle East;
product boycotts, including with respect to the products of the Company’s multi-national customers;
customer, supplier, and investor concerns regarding operations in areas such as the Middle East;
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 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;
• war, civil disturbance, global or regional catastrophic events, natural disasters, such as flooding in Southeast Asia,
widespread outbreaks of infectious diseases, including in emerging markets, and acts of terrorism;
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geographical concentration of the Company’s factories and operations and regional shifts in its customer base;
periodic health epidemic concerns; and
the complexity of managing global operations.
There can be no guarantee that a deterioration of economic conditions in countries in which the Company operates or may seek
to operate in the future would not have a material impact on the Company’s results of operations.
7
Crown Holdings, Inc.
As the Company seeks to expand its business globally, growth opportunities may be impacted by greater political, economic
and social uncertainty and the continuing and accelerating globalization of businesses could significantly change the dynamics
of the Company’s competition, customer base and product offerings.
The Company’s efforts to grow its businesses depend to a large extent upon access to, and its success in developing market share
and operating profitably in, additional geographic markets including but not limited to Asia, Eastern Europe, the Middle East and
South America. In some cases, countries in these regions have greater political and economic volatility, greater vulnerability to
infrastructure and labor disruptions and differing local customer product preferences and requirements than the Company’s other
markets. Operating and seeking to expand business in a number of different regions and countries exposes the Company to multiple
and potentially conflicting cultural practices, business practices and legal and regulatory requirements that are subject to change,
including those related to tariffs and trade barriers, investments, property ownership rights, taxation and repatriation of earnings
and advanced technologies. Such expansion efforts may also use capital and other resources of the Company that could be invested
in other areas. Expanding business operations globally also increases exposure to currency fluctuations which can materially
affect the Company’s financial results. As these emerging geographic markets become more important to the Company, its
competitors are also seeking to expand their production capacities and sales in these same markets, which may lead to industry
overcapacity that could adversely affect pricing, volumes and financial results in such markets. Although the Company is taking
measures to adapt to these changing circumstances, the Company’s reputation and/or business results could be negatively affected
should these efforts prove unsuccessful.
The Company may not be able to manage its anticipated growth, and it may experience constraints or inefficiencies caused by
unanticipated acceleration and deceleration of customer demand.
Unanticipated acceleration and deceleration of customer demand for the Company’s products may result in constraints or
inefficiencies related to the Company’s manufacturing, sales force, implementation resources and administrative infrastructure,
particularly in emerging markets where the Company is seeking to expand production. Such constraints or inefficiencies may
adversely affect the Company as a result of delays, lost potential product sales or loss of current or potential customers due to
their dissatisfaction. Similarly, over-expansion, including as a result of overcapacity due to expansion by the Company’s
competitors, or investments in anticipation of growth that does not materialize, or develops more slowly than the Company expects,
could harm the Company’s financial results and result in overcapacity.
To manage the Company’s anticipated future growth effectively, the Company must continue to enhance its manufacturing
capabilities and operations, information technology infrastructure, and financial and accounting systems and controls.
Organizational growth and scale-up of operations could strain its existing managerial, operational, financial and other resources.
The Company’s growth requires significant capital expenditures and may divert financial resources from other projects, such as
the development of new products or enhancements of existing products or reduction of the Company’s outstanding indebtedness.
If the Company’s management is unable to effectively manage the Company’s growth, its expenses may increase more than
expected, its revenue could grow more slowly than expected and it may not be able to achieve its research and development and
production goals. The Company’s failure to manage its anticipated growth effectively could have a material effect on its business,
operating results or financial condition.
The Company’s profits will decline if the price of raw materials or energy rises and it cannot increase the price of its products,
and the Company’s financial results could be adversely affected if the Company was not able to obtain sufficient quantities of
raw materials.
The Company uses various raw materials, such as steel, aluminum, tin, water, natural gas, electricity and other processed energy,
in its manufacturing operations. Sufficient quantities of these raw materials may not be available in the future or may be available
only at increased prices. The Company’s raw material supply contracts vary as to terms and duration, with steel contracts typically
one year in duration with fixed prices and aluminum contracts typically multi-year in duration with fluctuating prices based on
aluminum ingot costs. The availability of various raw materials and their prices depends on global and local supply and demand
forces, governmental regulations (including tariffs), level of production, resource availability, transportation, and other factors,
including natural disasters such as floods and earthquakes. In particular, in recent years the consolidation of steel suppliers,
shortage of raw materials affecting the production of steel and the increased global demand for steel, including in China and other
developing countries, have contributed to an overall tighter supply for steel, resulting in increased steel prices and, in some cases,
special surcharges and allocated cut backs of products by steel suppliers. In addition, future steel supply contracts may provide
for prices that fluctuate or adjust rather than provide a fixed price during a one-year period. As a result of continuing global supply
and demand pressures, other commodity-related costs affecting its business may increase as well, including natural gas, electricity
and freight-related costs.
8
Crown Holdings, Inc.
The prices of certain raw materials used by the Company, such as steel, aluminum and processed energy, have historically been
subject to volatility. In 2012, consumption of steel and aluminum represented 26% and 38%, respectively, of the Company’s
consolidated cost of products sold, excluding depreciation and amortization. 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 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. Significant increases in raw material costs may increase
the Company’s working capital requirements, which may increase the Company’s average outstanding indebtedness and interest
expense and may exceed the amounts available under the Company’s senior secured credit facilities and other sources of liquidity.
In addition, the Company hedges raw material costs on behalf of certain customers and may suffer losses if such customers are
unable to satisfy their purchase obligations.
If the Company is unable to purchase steel, aluminum or other raw materials for a significant period of time, the Company’s
operations would be disrupted and any such disruption may adversely affect the Company’s financial results. If customers believe
that the Company’s competitors have greater access to raw materials, perceived certainty of supply at the Company’s competitors
may put the Company at a competitive disadvantage regarding pricing and product volumes.
The substantial indebtedness of the Company could prevent it from fulfilling its obligations under its indebtedness.
The Company has substantial outstanding indebtedness. As a result of the Company’s 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 senior secured credit facilities,
to enable it to repay its indebtedness, or to fund other liquidity needs. As of December 31, 2012, the Company and its subsidiaries
had $3.7 billion of indebtedness. The Company’s ratio of earnings to fixed charges was 3.5 times for the fiscal year ended December
31, 2012, as discussed in Exhibit 12 to this Annual Report. Giving effect to the January 2013 debt issuance and repayments
described in Note Y to the consolidated financial statements included in this Annual Report, the Company’s current sources of
liquidity and borrowings expire or mature as follows: its $200 million North American securitization facility in December 2015;
its $144 million European securitization facility in July 2017; its $1,200 million revolving credit facilities in June 2015; its €500
million ($659 million) 7.125% senior notes in August 2018; its $700 million 6.25% senior notes in February 2021; its $1,000
million 4.50% senior notes in January 2023; its $350 million 7.375% senior notes in December 2026; its $64 million 7.5% senior
notes in December 2096; and $283 million of other indebtedness in various currencies at various dates through 2019. In addition
the Company’s term loan facilities mature as follows: $46 million in June 2013, $91 million in June 2014, $137 million in June
2015 and $138 million in June 2016.
The substantial indebtedness of the Company could:
•
•
•
•
•
•
•
increase the Company's vulnerability to general economic and industry conditions, including rising interest rates;
restrict the Company from making strategic acquisitions or exploiting business opportunities, including any planned
expansion in emerging markets;
limit the Company’s ability to make capital expenditures both domestically and internationally in order to grow the
Company’s business or maintain manufacturing plants in good working order and repair;
limit, along with the financial and other restrictive covenants under the Company’s indebtedness, the Company’s ability
to obtain additional financing, dispose of assets or pay cash dividends;
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, research and development
expenditures and other general corporate requirements;
require the Company to sell assets used in its business;
limit the Company’s ability to refinance its existing indebtedness, particularly during periods of adverse credit market
conditions when refinancing indebtedness may not be available under interest rates and other terms acceptable to the
Company or at all;
•
increase the Company’s cost of borrowing;
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Crown Holdings, Inc.
•
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.
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 which could further diminish
the Company’s ability to generate cash flows from operations sufficient to service its debt obligations. 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 the Company’s interest expense
increasing if interest rates rise.
As of December 31, 2012, $1.3 billion of the Company’s $3.7 billion of total indebtedness was subject to floating interest rates.
Giving effect to the January 2013 debt issuance and repayments described in Note Y to the consolidated financial statements
included in this Annual Report, $800 million of the Company's 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 $226 million, $232 million and $203
million for 2012, 2011 and 2010, respectively. Based on $800 million of variable rate debt outstanding, a 1% increase in variable
interest rates would increase interest expense by $8 million. Accordingly, the Company may experience economic losses and a
negative impact on earnings as a result of interest rate fluctuation. The actual effect of a 1% increase could be more than $8 million
as the Company’s average borrowings on its variable rate debt may be higher during the year than $800 million. In addition, the
cost of the Company’s securitization facilities would also increase with an increase in floating interest rates. 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, there can be no assurance that such agreements
will achieve the desired effect. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Liquidity and Capital Resources—Market Risk.”
Notwithstanding the Company's current indebtedness levels and restrictive covenants, the Company may still be able to incur
substantial additional debt or make certain restricted payments, which could exacerbate the risks described above.
The Company may be able to incur additional debt in the future, including in connection with acquisitions or joint ventures.
Although the Company's senior secured credit facilities and indentures governing its outstanding notes contain restrictions on the
Company's ability to incur indebtedness, those restrictions are subject to a number of exceptions, and, under certain circumstances,
indebtedness incurred in compliance with these restrictions could be substantial. The Company may also consider investments in
joint ventures or acquisitions or increased capital expenditures, which may increase the Company's indebtedness. Moreover,
although the Company's senior secured credit facilities and indentures governing its outstanding notes contain restrictions on the
Company's ability to make restricted payments, including the declaration and payment of dividends and the repurchase of the
Company's common stock, the Company is able to make such restricted payments under certain circumstances which may increase
indebtedness, and the Company may in the future establish a regular dividend on the Company's common stock. Adding new debt
to current debt levels or making otherwise restricted payments 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 indentures and agreements governing the Company's senior secured credit facilities and outstanding notes contain affirmative
and negative covenants that limit the ability of Crown and its subsidiaries to take certain actions. These restrictions may limit
Crown'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 Company's senior secured credit facilities require the Company to maintain specified
financial ratios and satisfy other financial conditions. The agreements or indentures governing the Company's senior secured credit
facilities and outstanding notes restrict, among other things, the ability of the Company and the ability of all or substantially all
of its subsidiaries to:
•
•
incur additional debt;
pay dividends or make other distributions, repurchase capital stock, repurchase subordinated debt and make certain
investments or loans;
10
Crown Holdings, Inc.
•
•
create liens and engage in sale and leaseback transactions;
create restrictions on the payment of dividends and other amounts to the Company from subsidiaries;
• make loans, investments and capital expenditures;
•
•
•
•
change accounting treatment and reporting practices;
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 subsidiaries;
sell or acquire assets, enter into leaseback transactions 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 notes limit, among other things, the ability of
the Company to enter into certain transactions, such as mergers, consolidations, joint ventures, asset sales, sale and leaseback
transactions and the pledging of assets. Furthermore, if the Company or certain of its subsidiaries experience specific kinds of
changes of control, the Company's senior secured credit facilities will be due and payable and the Company will be required to
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 the notes and other outstanding debt. The ability of the
Company to comply with these covenants or indentures governing other indebtedness it may incur in the future and its outstanding
notes can be affected by events beyond its control and, therefore, it may be unable to meet these ratios and conditions.
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, its costs, assets
and liabilities, are denominated in currencies other than the U.S. dollar. For the fiscal years ended December 31, 2012, 2011 and
2010, the Company derived approximately 73%, 73% and 72%, 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 increased reported income before tax by $1 million in 2012
and $4 million in 2010 and reduced reported income before tax by $2 million in 2011. See “Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Liquidity and Capital Resources—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, there can be no
assurance that such agreements will achieve the desired effect.
For the year-ended December 31, 2012, a 0.10 movement in the average Euro rate (e.g., from 1.29 USD = 1 Euro to 1.19 USD =
1 Euro) would have reduced net income by $11 million.
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, a wholly-owned subsidiary of the Company, 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 $35 million, $28 million and $46 million to increase its accrual for asbestos-related
liabilities in 2012, 2011 and 2010, respectively. As of December 31, 2012, Crown Cork’s accrual for pending and future asbestos-
related claims and related legal costs was $256 million, including $204 for unasserted claims. Crown Cork’s accrual includes
estimated probable costs for claims through the year 2022. Crown Cork’s accrual excludes potential costs for claims beyond 2022
11
Crown Holdings, Inc.
because the Company believes that the key assumptions underlying its accrual are subject to greater uncertainty as the projection
period lengthens. Assumptions underlying the accrual 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 state statutes described under
Note K to the Company’s audited consolidated financial statements, including Texas and Pennsylvania statutes, 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.
Crown Cork had approximately 51,000 asbestos-related claims outstanding at December 31, 2012. Of these claims, approximately
15,000 claims relate to claimants alleging first exposure to asbestos after 1964 and approximately 36,000 relate to claimants
alleging first exposure to asbestos before or during 1964, of which approximately 13,000 were filed in Texas, 2,000 were filed in
Pennsylvania, 6,000 were filed in other states that have enacted asbestos legislation and 15,000 were filed in other states. The
outstanding claims at December 31, 2012 exclude 3,100 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. The outstanding claims at December 31, 2012 also
exclude approximately 19,000 inactive claims. Due to the passage of time, the Company considers it unlikely that the plaintiffs
in these cases will pursue further action. The exclusion of these inactive claims had no effect on the calculation of the Company’s
accrual as the claims were filed in states where the Company’s liability is limited by statute. The Company devotes significant
time and expense to defend against these various claims, complaints and proceedings, and there can be no assurance that the
expenses or distractions from operating the Company’s businesses arising from these defenses will not increase materially.
On October 22, 2010, the Texas Supreme Court, in a 6-2 decision, reversed a lower court decision, Barbara Robinson v. Crown
Cork & Seal Company, Inc., No. 14-04-00658-CV, Fourteenth Court of Appeals, Texas, which had upheld the dismissal of an
asbestos-related case against Crown Cork. The Texas Supreme Court held that the Texas legislation was unconstitutional under
the Texas Constitution when applied to asbestos-related claims pending against Crown Cork when the legislation was enacted in
June of 2003. The Company believes that the decision of the Texas Supreme Court is limited to retroactive application of the
Texas legislation to asbestos-related cases that were pending against Crown Cork in Texas on June 11, 2003 and therefore continues
to assign no value to claims filed after June 11, 2003.
Crown Cork made cash payments of $28 million, $28 million and $27 million in 2012, 2011 and 2010, respectively, for asbestos-
related claims including settlement payments and legal fees. 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 payments including 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) 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 state statutes relating to asbestos liability are upheld and/or applied by the courts, 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. Accordingly, Crown Cork may be required to make payments for claims
substantially in excess of its accrual, 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 “
Critical Accounting Policies” and under Note K to the Company’s audited consolidated financial statements.
The Company has significant pension plan obligations worldwide and significant unfunded postretirement obligations, which
could reduce its cash flow and negatively impact its results of operations and its financial condition.
The Company sponsors various pension plans worldwide, with the largest funded plans in the U.K., U.S. and Canada. In 2012,
2011 and 2010, the Company contributed $102 million, $404 million and $79 million, respectively, to its pension plans and
currently anticipates its 2013 funding to be approximately $55 million. Pension expense was $97 million in 2012 and is expected
to be $78 million in 2013. A 0.25% change in the 2013 expected rate of return assumptions would change 2013 pension expense
by approximately $11 million. A 0.25% change in the discount rates assumptions as of December 31, 2012 would change 2013
pension expense by approximately $4 million. The Company may be required to accelerate the timing of its contributions under
its pension plans. The actual impact of any accelerated funding will depend upon the interest rates required for determining the
plan liabilities and the investment performance of plan assets. An acceleration in the timing of pension plan contributions could
decrease the Company’s cash available to pay its outstanding obligations and its net income and increase the Company’s outstanding
indebtedness.
12
Crown Holdings, Inc.
Based on current assumptions, the Company expects to make pension contributions of $85 million in 2013, $84 million in 2014,
$134 million in 2015, $120 million in 2016 and $145 million in 2017 including its supplemental executive retirement plan.
The difference between pension plan obligations and assets, or the funded status of the plans, significantly affects the net periodic
benefit costs of the Company’s pension plans and the ongoing funding requirements of those plans. Among other factors, significant
volatility in the equity markets and in the value of illiquid alternative investments, changes in discount rates, investment returns
and the market value of plan assets can substantially increase the Company’s future pension plan funding requirements and could
have a negative impact on the Company’s results of operations and profitability. See Note V to the Company’s audited consolidated
financial statements. While its U.S. funded pension plan continues in effect, the Company continues to incur additional pension
obligations. The Company’s pension plan assets consist primarily of common stocks and fixed income securities and also include
alternative investments such as interests in private equity and hedge funds. If the performance of plan assets does not meet the
Company’s assumptions or discount rates continue to decline, the underfunding of the pension plan may increase and the Company
may have to contribute additional funds to the pension plan, and its pension expense may increase. In addition, the Company’s
supplemental executive retirement plan and retiree medical plans are unfunded.
The Company’s U.S. funded 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, which under certain circumstances may
be senior to the notes. In addition, as of December 31, 2012 the unfunded accumulated postretirement benefit obligation, as
calculated in accordance with U.S. generally accepted accounting principles, for retiree medical benefits was $352 million, based
on assumptions set forth under Note V to the Company’s audited consolidated financial statements.
Acquisitions or investments that the Company is considering or may pursue could be unsuccessful, consume significant
resources and require the incurrence of additional indebtedness.
The Company is considering, and in the future may pursue, acquisitions and investments that complement its existing business.
These possible acquisitions and investments involve or may involve significant cash expenditures, debt incurrence (including the
incurrence of additional indebtedness under the Company’s senior secured revolving credit facilities or other secured or unsecured
debt), operating losses and expenses that could have a material effect on the Company’s financial condition and operating results.
In particular, if the Company incurs additional debt, the Company’s liquidity and financial stability could be impaired as a result
of using a significant portion of available cash or borrowing capacity to finance an acquisition. Moreover, the Company may face
an increase in interest expense or financial leverage if additional debt is incurred to finance an acquisition, which may, among
other things, adversely affect the Company’s various financial ratios and the Company’s compliance with the conditions of its
existing indebtedness. In addition, such additional indebtedness may be incurred under the Company’s senior secured credit
facilities or otherwise secured by liens on the Company’s assets.
Acquisitions involve numerous other risks, including:
•
•
•
•
•
•
•
•
diversion of management time and attention;
failures to identify material problems and liabilities of acquisition targets or to obtain sufficient indemnification rights
to fully offset possible liabilities related to the acquired businesses;
difficulties integrating the operations, technologies and personnel of the acquired businesses;
inefficiencies and complexities that may arise due to unfamiliarity with new assets, businesses or markets;
disruptions to the Company’s ongoing business;
inaccurate estimates of fair value made in the accounting for acquisitions and amortization of acquired intangible assets
which would reduce future reported earnings;
the inability to obtain required financing for the new acquisition or investment opportunities and the Company’s existing
business;
potential loss of key employees, contractual relationships, suppliers or customers of the acquired businesses or of the
Company; and
13
•
inability to obtain required regulatory approvals.
Crown Holdings, Inc.
To the extent the Company pursues an acquisition that causes it to incur unexpected costs or that fails to generate expected returns,
the Company’s financial position, results of operations and cash flows may be adversely affected, and the Company’s ability to
service its indebtedness may be negatively impacted.
The Company’s principal markets may be subject to overcapacity and intense competition, which could reduce the Company’s
net sales and net income.
Food and beverage cans are standardized products, allowing for relatively little differentiation among competitors. This could
lead to overcapacity and price competition among food and beverage can producers, if capacity growth outpaced the growth in
demand for food and beverage cans and overall manufacturing capacity exceeded demand. These market conditions could reduce
product prices and contribute to declining revenue and net income and increasing debt balances. 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 and Western Europe food and beverage can markets, in particular, are considered to be mature
markets, characterized by slow growth and a sophisticated distribution system.
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.
The Company is subject to competition from substitute products and decreases in demand for its 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, paper, flexible
materials and plastic. 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.
For example, increases in the price of aluminum and steel and decreases in the price of plastic resin, which is a petrochemical
product and may fluctuate with prices in the oil and gas market, may increase substitution of plastic food and beverage containers
for metal containers or increases in the price of steel may increase substitution of aluminum packaging for aerosol products.
Moreover, due to its high percentage of fixed costs, the Company may be unable to maintain its gross margin at past levels if it is
not able to achieve high capacity utilization rates for its production equipment. In periods of low world-wide demand for its
products, the Company experiences relatively low capacity utilization rates in its operations, which can lead to reduced margins
during that period and can have an adverse effect on the Company’s business.
The Company’s business results depend on its ability to understand its customers’ specific preferences and requirements, and
to develop, manufacture and market products that meet customer demand.
The Company’s ability to develop new product offerings for a diverse group of global customers with differing preferences, while
maintaining functionality and spurring innovation, is critical to its success. This requires a thorough understanding of the Company’s
existing and potential customers on a global basis, particularly in potential high growth emerging markets, including the Middle
East, South America, Eastern Europe and Asia. Failure to deliver quality products that meet customer needs ahead of competitors
could have a significant adverse effect on the Company’s 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
and household products to consumers. Although no one customer accounted for more than 10% of its net sales in 2012, 2011 or
2010, the loss of any of its major customers, a reduction in the purchasing levels of these customers or an adverse change in the
14
Crown Holdings, Inc.
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 certain restrictions that may limit its ability to make payments on its debt 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 the Company's 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 their cash flow to service its debt.
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, the
use of chemicals in the Company’s products and manufacturing process, 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 or employee safety requirements affecting the Company’s operations or may impose additional requirements
regarding consumer health and safety, such as potential restrictions on the use of bisphenol-A, a starting material used to produce
internal and external coatings for some food, beverage, and aerosol containers and metal closures. Although the U.S. FDA currently
permits the use of bisphenol-A in food packaging materials and confirmed in a January 2010 update that studies employing
standardized toxicity tests have supported the safety of current low levels of human exposure to bisphenol-A, the FDA in that
January 2010 update noted that more research was needed, and further suggested reasonable steps to reduce exposure to bisphenol-
A. The FDA subsequently entered into a consent decree under which it agreed to issue, by March 31, 2012, a final decision on a
citizen’s petition requesting the agency take further regulatory steps with regard to bisphenol-A. On March 30, 2012, the FDA
denied the request, responding, in part, that the appropriate course of action was to continue scientific study and review of all new
evidence regarding the safety of bisphenol-A. In March 2010, the EPA issued an action plan for bisphenol-A, which includes,
among other things, consideration of whether to add bisphenol-A to the chemical concern list on the basis of potential environmental
effects and use of the EPA’s Design for the Environment program to encourage reductions in bisphenol-A manufacturing and use.
Moreover, certain U.S. Congressional bodies, states and municipalities, as well as certain foreign nations and some member states
of the European Union, have considered, proposed or already passed, such as Denmark, Belgium and France, legislation banning
or suspending the use of bisphenol-A in certain products or requiring warnings regarding bisphenol-A. In July 2012, the FDA
banned the use of bisphenol-A in baby bottles and children’s drinking cups. In the fourth quarter of 2012, the French Parliament
passed a law suspending the use of bisphenol-A in food packaging beginning in 2013 for food intended for children under 3 and
in 2015 for all other foods. The law also includes certain product labeling requirements. Further, the U.S. or additional international,
federal, state or other regulatory authorities could restrict or prohibit the use of bisphenol-A in the future. For example, on February
13, 2013, the State of California announced its intent to declare bisphenol-A a reproductive system hazard, which, if finalized,
would trigger a requirement to include warning labels on consumer items containing bisphenol-A in excess of certain levels. In
addition, recent public reports, litigation and other allegations regarding the potential health hazards of bisphenol-A could contribute
to a perceived safety risk about the Company’s products and adversely impact sales or otherwise disrupt the Company’s business.
While the Company is exploring various alternatives to the use of bisphenol-A and conversion to alternatives is underway in some
applications, there can be no assurance the Company will be completely successful in its efforts or that the alternatives will not
be more costly to the Company.
15
Crown Holdings, Inc.
Also, for example, 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. In addition, a
number of governmental authorities in the U.S. and abroad have introduced or are contemplating enacting legal requirements,
including emissions limitations, cap and trade systems or mandated changes in energy consumption, in response to the potential
impacts of climate change. Given the wide range of potential future climate change regulations in the jurisdictions in which the
Company operates, the potential impact to the Company’s operations is uncertain. In addition, the potential impact of climate
change on the Company’s operations is highly uncertain. The impact of climate change may vary by geographic location and
other circumstances, including weather patterns and any impact to natural resources such as water.
A number of governmental authorities both in the U.S. and abroad also have enacted, or are considering, legal requirements relating
to product stewardship, including mandating 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—Liquidity and Capital Resources—Environmental
Matters.”
The Company has significant amount of goodwill and a write down of goodwill would result in lower reported net income and
a reduction of its net worth.
Impairment of the Company’s goodwill would reduce the Company’s net income in the period of any such write down. At December
31, 2012, the carrying value of the Company’s goodwill was $2.0 billion. The Company is required to evaluate goodwill reflected
on its balance sheet at least annually, or when circumstances indicate a potential impairment. If it determines that the goodwill is
impaired, the Company would be required to write off a portion or all of the goodwill.
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 might be difficult to find new personnel
with comparable experience. Because the Company’s business is highly specialized, the Company believes that it would also be
difficult to replace its 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. In addition, under the Company’s unfunded Senior Executive Retirement Plan certain members of
senior management are entitled to lump sum payments upon retirement or other termination of employment and a lump sum death
benefit of five times the annual retirement benefit.
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. Moreover, additional groups of currently non-
unionized employees may seek union representation in the future. If the Company is unable to negotiate acceptable collective
bargaining agreements, it may become subject to union-initiated work stoppages, including strikes. The National Labor Relations
Board (“NLRB”) has adopted new regulations concerning the procedures for conducting employee representation elections that,
if implemented, could make it significantly easier for labor organizations to prevail in elections. The regulations became effective
on April 30, 2012; however, in May 2012, a federal district court found that the regulations were not properly adopted by the
NLRB. The NLRB responded to the decision by suspending implementation of the regulations and has not announced if or when
the regulations will again go into effect. Additionally, the Employee Free Choice Act, which was passed in the U.S. House of
Representatives in 2007, was reintroduced in the U.S. Congress in 2009, but not passed. If reintroduced in the current Congress
and enacted in its most recent form, the Employee Free Choice Act could make it significantly easier for union organizing drives
to be successful. The Employee Free Choice Act could also give third-party arbitrators the ability to impose terms, which may
be harmful to the Company, of collective bargaining agreements upon the Company and a labor union if the Company and such
union are unable to agree to the terms of an initial collective bargaining agreement. In addition, the Employee Free Choice Act
could increase the penalties the Company may incur if it engages in labor practices in violation of the National Labor Relations
Act.
16
Crown Holdings, Inc.
Failure by the Company’s joint venture partners to observe their obligations could adversely affect the business and operations
of the joint ventures and, in turn, the business and operations of the Company.
A portion of the Company’s operations, including certain joint venture beverage can operations in Asia, the Middle East and South
America, is conducted through certain joint ventures. The Company participates in these ventures with third parties. In the event
that the Company’s joint venture partners do not observe their obligations or are unable to commit additional capital to the joint
ventures, it is possible that the affected joint venture would not be able to operate in accordance with its business plans or that the
Company would have to increase its level of commitment to the joint venture.
If the Company fails to maintain an effective system of internal control, 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.
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 under the risk factor titled “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.
The Company's Italian subsidiaries have received assessments for value added taxes and related income taxes from the Italian tax
authorities and expect to receive additional assessments for value added taxes resulting from certain third party suppliers' failures
to remit required value added tax payments due by those suppliers under Italian law with respect to purchases for resale to the
Company. The assessments cover tax periods 2004 through 2007 and additional assessments are expected to cover tax periods
2007 through 2009. The expected total assessments are approximately €25 ($33 at December 31, 2012) plus any applicable interest
and penalties which the Company estimates may be up to approximately €50 ($66 at December 31, 2012). In early 2012, the
Company received one favorable ruling and two unfavorable rulings from lower level Italian courts related to these assessments.
These rulings have been appealed. In the fourth quarter of 2012, the Company settled an assessment with respect to 2007 taxes
for approximately €2 ($3 at December 31, 2012). In February 2013, the Company entered into an additional settlement with
respect to a 2005 tax assessment for approximately €2 ($3 at December 31, 2012). As of December 31, 2012, the Company has
accrued $14 related to the assessments. While the Company believes it has meritorious defenses to the remaining Italian tax
claims, it is reasonably possible that the Company could incur a loss in excess of its accrual. The Company cannot reasonably
estimate the possible loss or range of losses because the application of penalties under Italian law is complex and the amount
assessed by the Italian authorities is discretionary. Settlement discussions with the Italian tax authorities are ongoing. The Company
intends to continue disputing the assessments with respect to the open matters in judicial proceedings barring any settlement with
the Italian tax authorities. There can be no assurance the Company will be successful in settling these matters or prevailing in
judicial proceedings, or that the final amount of any additional taxes and related interest and penalties payable to the Italian tax
authorities in such settlement or judicial proceedings will be under the Company's accrual.
17
Crown Holdings, Inc.
The recent global credit and financial crisis could have adverse effects on the Company.
The recent global credit and financial crisis could have significant adverse effects on the Company’s operations, including as a
result of any the following:
•
•
•
•
•
•
downturns in the business or financial condition of any of the Company’s key customers or suppliers, potentially resulting
in customers’ inability to pay the Company’s invoices as they become due or at all or suppliers’ failure to fulfill their
commitments;
potential losses associated with hedging activity by the Company for the benefit of the Company’s customers including
counterparty risk associated with such hedging activity, or cost impacts of changing suppliers;
a decline in the fair value of the Company’s pension assets or a decline in discount rates used to measure the Company’s
pension obligations, potentially requiring the Company to make significant additional contributions to its pension plans
to meet prescribed funding levels;
the deterioration of any of the lending parties under the Company’s senior secured revolving credit facilities or the
creditworthiness of the counterparties to the Company’s derivative transactions, which could result in such parties’ failure
to satisfy their obligations under their arrangements with the Company;
noncompliance with the covenants under the Company’s indebtedness as a result of a weakening of the Company’s
financial position or results of operations; and
the lack of currently available funding sources, which could have a negative impact upon the liquidity of the Company
as well as that of its customers and suppliers.
The Company could also be adversely affected by the negative impact on economic growth resulting from the combination of
federal income tax increases that recently came into effect and government spending restrictions that may come into effect during
calendar year 2013 in the U.S. (commonly referred to as the “fiscal cliff”).
The Company relies on its information technology and the failure or disruption of its information technology could disrupt its
operations and adversely affect its results of operations.
The Company’s business increasingly relies on the successful and uninterrupted functioning of its information technology systems
to process, transmit, and store electronic information. A significant portion of the communication between the Company’s personnel
around the world, customers, and suppliers depends on information technology. As with all large systems, the Company’s
information technology systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of
upgrading or replacing software, databases or components thereof, power outages, hardware failures, computer viruses, attacks
by computer hackers, telecommunication failures, user errors or catastrophic events. In addition, security breaches could result in
unauthorized disclosure of confidential information.
The concentration of processes in shared services centers means that any disruption could impact a large portion of the Company’s
business within the operating zones served by the affected service center. If the Company does not allocate, and effectively manage,
the resources necessary to build, sustain and protect the proper technology infrastructure, the Company could be subject to
transaction errors, processing inefficiencies, loss of customers, business disruptions, the loss of or damage to intellectual property
through security breach, as well as potential civil liability and fines under various states’ laws in which the Company does business.
The Company’s information technology system could also be penetrated by outside parties intent on extracting information,
corrupting information or disrupting business processes. In addition, if the Company’s information technology systems suffer
severe damage, disruption or shutdown and the Company’s business continuity plans do not effectively resolve the issues in a
timely manner, the Company may lose revenue and profits as a result of its inability to timely manufacture, distribute, invoice and
collect payments from its customers, and could experience delays in reporting its financial results, including with respect to the
Company’s operations in emerging markets. Furthermore, if the Company is unable to prevent security breaches, it may suffer
financial and reputational damage because of lost or misappropriated confidential information belonging to the Company or to its
customers or suppliers. Failure or disruption of these systems, or the back-up systems, for any reason could disrupt the Company’s
operations and negatively impact the Company’s cash flows or financial condition.
18
Crown Holdings, Inc.
Potential U.S. tax law changes could increase the Company’s U.S. tax expense on its overseas earnings which could have a
negative impact on its after-tax income and cash flow.
President Obama’s Budget of the United States Government for 2013 indicates that legislative proposals may be made to reform
the deferral of U.S. taxes on non-U.S. earnings, potentially significantly changing the timing and extent of taxation on the Company’s
unrepatriated non-U.S earnings. These reforms include, among other items, a proposal to further limit foreign tax credits and a
proposal to defer interest expense deductions allocable to non-U.S earnings until earnings are repatriated. The proposal to defer
interest expense deductions and other deductions for expenses could result in the Company not being able to currently deduct a
significant portion of its interest expense. The proposal to defer tax deductions allocable to unrepatriated non-U.S. earnings has
been set out in various draft Congressional legislative proposals in recent years which were not enacted, and at this juncture it is
unclear whether these proposed tax revisions will be enacted, or, if enacted, what the precise scope of the revisions will be.
However, depending on their content, such proposals could have a material adverse effect on the Company’s after-tax income and
cash flow.
Changes in accounting standards, taxation requirements and other law could negatively affect the Company’s financial results.
New accounting standards or pronouncements that may become applicable to the Company from time to time, or changes in the
interpretation of existing standards and pronouncements, could have a significant effect on the Company’s reported results for the
affected periods. The Company is also subject to income tax in the numerous jurisdictions in which the Company operates.
Increases in income tax rates or other changes to tax laws could reduce the Company’s after-tax income from affected jurisdictions
or otherwise affect the Company’s tax liability. In addition, the Company’s products are subject to import and excise duties and/
or sales or value-added taxes in many jurisdictions in which it operates. Increases in indirect taxes could affect the Company’s
products’ affordability and therefore reduce demand for its products.
The Company may experience significant negative effects to its business as a result of new federal, state or local taxes, increases
to current taxes or other governmental regulations specifically targeted to decrease the consumption of certain types of
beverages.
Public health officials and government officials have become increasingly concerned about the public health consequences
associated with over-consumption of certain types of beverages, such as sugar beverages and including those sold by certain of
the Company’s significant customers. Possible new federal, state or local taxes, increases to current taxes or other governmental
regulations specifically targeted to decrease the consumption of these beverages may significantly reduce demand for the beverages
of the Company’s customers, which could in turn affect demand of the Company’s customers for the Company’s products. For
example, members of the U.S. Congress recently raised the possibility of a federal tax on the sale of certain beverages, including
non-diet soft drinks, fruit drinks, teas and flavored waters. Some state governments are also considering similar taxes. If enacted,
such taxes could materially adversely affect the Company’s business and financial results.
The Company's senior secured credit facilities provide that certain change of control events constitute an event of default. In
the event of a change of control, the Company may not be able to satisfy all of its obligations under the senior secured credit
facilities or other indebtedness.
The Company may not have sufficient assets or be able to obtain sufficient third party financing on favorable terms to satisfy all
of its obligations under the Company's senior secured credit facilities or other indebtedness in the event of a change of control.
The Company's senior secured credit facilities provide that certain change of control events constitute an event of default under
the senior secured credit facilities. Such an event of default entitles the lenders thereunder to, among other things, cause all
outstanding debt obligations under the senior secured credit facilities to become due and payable and to proceed against the
collateral securing the senior secured credit facilities. Any event of default or acceleration of the senior secured credit facilities
will likely also cause a default under the terms of other indebtedness of the Company.
The loss of the Company’s intellectual property rights may negatively impact its ability to compete.
If the Company is unable to maintain the proprietary nature of its technologies, its competitors may use its technologies to compete
with it. The Company has a number of patents covering various aspects of its products, including its SuperEnd® beverage can
end, whose primary patent expires in 2016, Easylift™ full aperture steel food can ends, PeelSeam™ flexible lidding and Ideal™
product line. The Company’s patents may not withstand challenge in litigation, and patents do not ensure that competitors will
not develop competing products or infringe upon the Company’s patents. Moreover, the costs of litigation to defend the Company’s
patents could be substantial and may outweigh the benefits of enforcing its rights under its patents. The Company markets its
products internationally and the patent laws of foreign countries may offer less protection than the patent laws of the United States.
Not all of the Company’s domestic patents have been registered in other countries. The Company also relies on trade secrets,
19
Crown Holdings, Inc.
know-how and other unpatented proprietary technology, and others may independently develop the same or similar technology
or otherwise obtain access to the Company’s unpatented technology. In addition, the Company has from time to time received
letters from third parties suggesting that it may be infringing on their intellectual property rights, and third parties may bring
infringement suits against the Company, which could result in the Company needing to seek licenses from these third parties or
refraining altogether from use of the claimed technology.
Demand for the Company’s products could be affected by changes in laws and regulations applicable to food and beverages
and changes in consumer preferences.
The Company manufactures and sells packaging primarily for the food and beverage can market. As a result, many of the
Company’s products come into direct contact with food and beverages. Accordingly, the Company's products must comply with
various laws and regulations for food and beverages applicable to its customers. Changes in such laws and regulations could
negatively impact customers’ demand for the Company's products as they comply with such changes and/or require the Company
to make changes to its products. Such changes to the Company's products could include modifications to the coatings and compounds
that the Company uses, possibly resulting in the incurrence of additional costs. Additionally, because many of the Company's
products are used to package consumer goods, the Company is subject to a variety of risks that could influence consumer behavior
and negatively impact demand for the Company's products, including changes in consumer preferences driven by various health-
related concerns and perceptions.
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 the Company’s
fiscal year relating to its periodic or current reports under the Securities Exchange Act of 1934.
ITEM 2.
PROPERTIES
As of December 31, 2012, the Company operated 149 manufacturing facilities of which 32 were leased. The Company has three
divisions, defined geographically, within which it manufactures and markets its products. The Americas Division has 46 operating
facilities of which 11 are leased. Within the Americas Division, 32 facilities operate in the U.S. of which 8 are leased. The European
Division has 71 operating facilities of which 14 are leased and the Asia Pacific Division has 32 operating facilities of which 7 are
leased. Certain leases provide renewal or purchase options. The principal manufacturing facilities at December 31, 2012 are listed
below and are grouped by product and by division.
In 2012 the Company established a joint venture to acquire shares of Superior Multi-Packaging, Ltd., ("Superior"), a listed company
on the Singapore Exchange with operations in China, Singapore and Vietnam. With the acquisition, the Company acquired 9
facilities in China, 1 facility in Singapore and 1 facility in Vietnam. The operations manufacture specialty packaging products.
The Company’s Americas and Corporate headquarters are in Philadelphia, Pennsylvania, its European headquarters is in Baar,
Switzerland 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 secured credit facility.
Excluded from the list below 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
below under the product with the largest contribution to sales.
20
Crown Holdings, Inc.
Beverage
and
Closures
Americas
Europe
Asia Pacific
Lawrence, MA
La Crosse, WI
Custines, France
Agoncillo, Spain
Phnom Penh, Cambodia
Kankakee, IL
Worland, WY
Korinthos, Greece
Sevilla, Spain
Sihanoukville, Cambodia
Crawfordsville, IN Cabreuva, Brazil
Patras, Greece
Mankato, MN
Estancia, Brazil
Amman, Jordan
El Agba, Tunisia
Izmit, Turkey
Beijing, China
Foshan, China
Batesville, MS
Manaus, Brazil
Dammam, Saudi Arabia
Osmaniye, Turkey
Huizhou, China
Dayton, OH
Cheraw, SC
Conroe, TX
Ponta Grossa, Brazil
Jeddah, Saudi Arabia
Dubai, UAE
Calgary, Canada
Kosice, Slovakia
Weston, Canada
Botcherby, UK
Braunstone, UK
Fort Bend, TX
Santafe de Bogota,
Winchester, VA
Colombia
Olympia, WA
Guadalajara, Mexico
Carolina, Puerto Rico
Hangzhou, China
Heshan City, China
Putian, China
Shanghai, China
Ziyang, China
Bangi, Malaysia
Singapore
Nong Khae, Thailand *
Danang, Vietnam
Dong Nai, Vietnam
Hanoi, Vietnam
Ho Chi Minh City, Vietnam
Food
and
Closures
Winter Garden, FL Hanover, PA
Carpentras, France
Abidjan, Ivory Coast
Bangpoo, Thailand
Pulaski Park, MD
Suffolk, VA
Concarneau, France
Toamasina, Madagascar
Haadyai, Thailand
Owatonna, MN
Seattle, WA
Omaha, NE
Oshkosh, WI
Laon, France
Nantes, France
Lancaster, OH
Chatham, Canada
Outreau, France
Massillon, OH
Kingston, Jamaica
Perigueux, France
Agadir, Morocco
Samrong, Thailand
Casablanca, Morocco
Songkhla, Thailand
Goleniow, Poland
Pruszcz, Poland
Mill Park, OH
La Villa, Mexico
Lubeck, Germany
Alcochete, Portugal
Connellsville, PA
Barbados, West Indies
Mühldorf, Germany
Timashevsk, Russia
Trinidad, West Indies
Seesen, Germany (2)
Dakar, Senegal
Tema, Ghana
Bellville, South Africa
Thessaloniki, Greece
Agoncillo, Spain
Nagykoros, Hungary
Molina de Segura, Spain
Athy, Ireland
Aprilia, Italy (2)
Battipaglia, Italy
Sevilla, Spain
Vigo, Spain
Neath, UK
Calerno S. Ilario d’Enza,
Poole, UK
Italy
Wisbech, UK
Nocera Superiore, Italy
Worchester, UK
Parma, Italy
Aerosol
Alsip, IL
Decatur, IL
Faribault, MN
Spartanburg, SC
Spilamberto, Italy
Mijdrecht, Netherlands
Sutton, UK
Specialty
Packaging
Belcamp, MD
St. Laurent, Canada
Hoboken, Belgium
Miravalles, Spain
Chengdu, China
Helsinki, Finland
Montmelo, Spain
Guangzhou, China
Chatillon-sur-Seine, France
Aesch, Switzerland
Huizhou, China
Rouen, France
Vourles, France
Chignolo Po, Italy
Hoorn, Netherlands
Aintree, UK
Carlisle, UK
Mansfield, UK
Newcastle, UK
Kunshau, China
Langfaug, China
Shanghai, China
Tianjin, China
Tongxiang, China
Zhengzhou, China
Singapore
Dinh Duong, Vietnam
Canmaking Norwalk, CT
and Spares
Shipley, UK
*
Plant replaces the Bangkadi, Thailand plant which was shut down in 2011 due to damage caused by severe flooding.
21
Crown Holdings, Inc.
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 space is 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 the captions “Provision
for Restructuring,” and “Asset Impairments and Sales,” and under Note M and Note N to the consolidated financial statements.
Utilization of any particular facility varies based upon product demand. While 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.
ITEM 3.
LEGAL PROCEEDINGS
Crown Cork & Seal Company, Inc., a wholly-owned subsidiary of the Company (“Crown Cork”), is one of many defendants in
a substantial number of lawsuits filed throughout the U.S. 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, 2011, the accrual for pending and future asbestos claims that are probable and estimable was $256 million.
The Company's Italian subsidiaries have received assessments for value added taxes and related income taxes from the Italian tax
authorities and expect to receive additional assessments for value added taxes resulting from certain third party suppliers' failures
to remit required value added tax payments due by those suppliers under Italian law with respect to purchases for resale to the
Company. The assessments cover tax periods 2004 through 2007 and additional assessments are expected to cover tax periods
2007 through 2009. The expected total assessments are approximately €25 ($33 at December 31, 2012) plus any applicable interest
and penalties which the Company estimates may be up to approximately €50 ($66 at December 31, 2012). In early 2012, the
Company received one favorable ruling and two unfavorable rulings from lower level Italian courts related to these assessments.
These rulings have been appealed. In the fourth quarter of 2012, the Company settled an assessment with respect to 2007 taxes
for approximately €2 ($3 at December 31, 2012). In February 2013, the Company entered into an additional settlement with
respect to a 2005 tax assessment for approximately €2 ($3 at December 31, 2012). As of December 31, 2012, the Company has
accrued $14 related to the assessments. While the Company believes it has meritorious defenses to the remaining Italian tax
claims, it is reasonably possible that the Company could incur a loss in excess of its accrual. The Company cannot reasonably
estimate the possible loss or range of losses because the application of penalties under Italian law is complex and the amount
assessed by the Italian authorities is discretionary. Settlement discussions with the Italian tax authorities are ongoing. The Company
intends to continue disputing the assessments with respect to the open matters in judicial proceedings barring any settlement with
the Italian tax authorities. There can be no assurance the Company will be successful in settling these matters or prevailing in
judicial proceedings, or that the final amount of any additional taxes and related interest and penalties payable to the Italian tax
authorities in such settlement or judicial proceedings will be under the Company's accrual.
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.
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 captions “Provision for Asbestos” and “Environmental Matters” and
under Note K and Note L to the consolidated financial statements.
ITEM 4.
Reserved.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the principal executive officers of the Company, including their ages and positions, is set forth in “Directors,
Executive Officers and Corporate Governance” of this Annual Report.
22
Crown Holdings, Inc.
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Registrant’s common stock is listed on the New York Stock Exchange. On February 21, 2013, there were 4,488 registered
shareholders of the Registrant’s common stock, including 1,351 participants in the Company’s Employee Stock Purchase Plan.
The market price of the Registrant’s common stock at December 31, 2012 is set forth in Part II of this Annual 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 the caption “Common Stock and Other Equity” and under Note O to the consolidated financial statements
included in this Annual Report. Information with respect to shares of common stock that may be issued under the Company’s
equity compensation plans is set forth in “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters,” of this Annual Report.
Issuer Purchases of Equity Securities
The following table provides information about the Company’s purchase of its equity securities as part of publicly announced
programs during the year ended December 31, 2012.
2012
July
December
Total
Total Number of
Shares Purchased
5,416,707
1,341,412
6,758,119
Average Price
Per Share
$
$
36.92
37.27
36.99
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Programs
5,416,707
1,341,412
6,758,119
Approximate Dollar
Value of Shares
that may yet be
Purchased under the
Programs as of the end
of the Period (millions)
94
$
800
$
800
$
The table above excludes 192,196 shares repurchased by the Company in connection with the surrender of shares to cover taxes
on the vesting of restricted stock and 4,653 shares received in April, 2012 in settlement of the Company's December, 2011
accelerated share repurchase program.
In July 2012, the Company entered into an agreement to purchase shares of its common stock under an accelerated repurchase
program. Pursuant to the agreement, the Company initially purchased 5,016,190 shares for $200 million. In November 2012, the
Company received an additional 400,517 shares based on its volume-weighted average stock price during the term of the transaction.
In December 2012, the Company entered into an agreement to repurchase shares of its common stock. Pursuant to the agreement,
the Company purchased 1,341,412 shares for $50 million.
The share repurchases were made pursuant to authorizations from the Company's Board of Directors. In December 2012, the
Company's Board of Directors authorized the repurchase of an aggregate amount of $800 million of the Company's common stock
through the end of 2014. This authorization supersedes the previous authorization. Share repurchases under the Company's programs
may be made in the open market or through privately negotiated transactions, and at times and in such amounts as management
deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price,
corporate and regulatory requirements and other market conditions. As of December 31, 2012, $800 million of the Company’s
outstanding common stock may be repurchased under the program.
The Company is not obligated to acquire any shares of its common stock and the share repurchase program may be suspended or
terminated at any time at the Company’s discretion. Share repurchases are subject to the terms of the Company’s debt agreements,
market conditions and other factors. The repurchased shares, if any, are expected to be used for the Company’s stock-based benefit
plans, as required, and to offset dilution resulting from the issuance of shares thereunder, and for other general corporate purposes.
See Note O to the consolidated financial statements for additional information regarding the Company’s share repurchases.
23
Crown Holdings, Inc.
COMPARATIVE STOCK PERFORMANCE (1)
Comparison of Five-Year Cumulative Total Return (a)
Crown Holdings, S&P 500 Index, Dow Jones “U.S. Containers & Packaging” Index (b)
COMPARATIVE STOCK PERFORMANCE (1)
Comparison of Five-Year Cumulative Total Return (a)
Crown Holdings, S&P 500 Index, Dow Jones “U.S. Containers & Packaging” Index (b)
130
128
103
119
92
131
140
103
94
144
118
109
105
$200
$200
$150
$100
$100
$50
99
75
63
63
$0
$0
2007
2005
2008
Crow n Holdings
Crow n Holdings
100
122
88
111
80
2006
2009
Fiscal Year Ended December 31
Fiscal Year Ended December 31
S&P 500 Index
2007
2010
2008
2011
2009
2012
S&P 500 Index
Dow Jones "U.S. Containers & Packaging" Index
(a) Assumes that the value of the investment in Crown Holdings common stock and each index was $100
(b)
on December 31, 2007 and that all dividends were reinvested.
(a) Assumes that the value of the investment in Crown Holdings common stock and each index was $100 on December 31,
2007 and that all dividends were reinvested.
Industry index is weighted by market capitalization and is comprised of Crown Holdings, AptarGroup,
Ball, Bemis, Greif, MeadWestvaco, Owens-Illinois, Packaging Corp. of America, RockTenn, Sealed Air,
(b) Industry index is weighted by market capitalization and is comprised of Crown Holdings, AptarGroup, Ball, Bemis, Greif,
Silgan and Sonoco.
MeadWestvaco, Owens-Illinois, Packaging Corp. of America, RockTenn, Sealed Air, Silgan and Sonoco.
(1) The preceding Comparative Stock Performance Graph is not deemed filed with the SEC and shall not
be incorporated by reference in any of the Company's filings under the Security Act of 1933 or the
(1) The preceding Comparative Stock Performance Graph is not deemed filed with the SEC and shall not be incorporated by
Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any
reference in any of the Company's filings under the Security Act of 1933 or the Securities Exchange Act of 1934, whether
general incorporation language in any such filing.
made before or after the date hereof and irrespective of any general incorporation language in any such filing.
24
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
Asset impairments and sales
Loss from early extinguishments of debt
Interest expense, net of interest income
Translation and exchange adjustments
Income before income taxes and equity earnings
Provision for/(benefit from) income taxes
Equity earnings/(loss)
Net income
Net income attributable to noncontrolling interests
Net income attributable to Crown Holdings
Financial Position at December 31
Working capital
Total assets
Total cash and cash equivalents
Total debt
Total debt, less cash and cash equivalents, to total
capitalization (1)
Total equity/(deficit)
Common Share Data (dollars per share)
Earnings:
Basic
Diluted
2012
2011
2010
2009
2008
$ 8,470
$ 8,644
$ 7,941
$ 7,938
$ 8,305
7,013
180
382
35
48
(42)
—
219
(1)
636
(17)
5
658
(101)
557
232
7,490
350
3,665
$
$
7,120
176
395
28
77
6
32
221
2
587
194
3
396
(114)
282
318
6,868
342
3,532
$
$
6,519
172
360
46
42
(18)
16
194
(4)
614
165
3
452
(128)
324
272
6,899
463
3,048
$
$
6,551
194
381
55
43
(6)
26
241
(6)
459
7
(2)
450
(116)
334
317
6,532
459
2,798
$
$
6,885
216
396
25
21
6
2
291
21
442
112
330
(104)
226
385
6,774
596
3,337
$
$
96.4%
108.1%
123
(239)
91.9%
229
85.9%
383
98.7%
36
$
3.81
3.75
$
1.86
1.83
$
2.03
2.00
$
2.10
2.06
$
1.42
1.39
Market price on December 31
Book value attributable to Crown Holdings based on
year-end outstanding shares
36.81
33.58
33.38
25.58
19.20
(1.13)
(3.19)
(0.62)
(0.04)
(1.99)
Number of shares outstanding at year-end
Average shares outstanding
Basic
Diluted
Other
Capital expenditures
143.1
148.4
155.3
161.5
159.2
146.1
148.4
151.7
154.3
159.4
162.4
159.1
161.9
159.6
162.9
$
324
$
401
$
320
$
180
$
174
Notes: (1) Total capitalization consists of total debt and total equity/(deficit), less cash and cash equivalents.
25
Crown Holdings, Inc.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(in millions, except per share, average settlement cost per asbestos claim, employee, shareholder and statistical data)
INTRODUCTION
The following 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, 2012. This discussion should be read
in conjunction with the consolidated financial statements included in this Annual Report.
BUSINESS STRATEGY AND TRENDS
The Company's strategy is to grow its businesses in targeted international growth markets, while improving operations and results
in more mature markets through disciplined pricing, manufacturing and productivity improvements, cost control and careful capital
allocation.
In recent years, the Company has expanded its beverage can operations in Asia, Brazil and Eastern Europe in response to increased
unit volume demand driven by increased per capita incomes and consumption, combined with a shift in packaging mix to two-
piece aluminum beverage cans from other packages.
Since the beginning of 2011, the Company has commercialized ten new production lines including six new plant startups in Asia,
Brazil and Europe. When fully operational, these facilities are expected to have combined annual production capacity of 8.6 billion
beverage cans to meet expected demand. In 2013, the Company expects to commercialize another 3.6 billion in annual beverage
can production capabilities to meet existing demand in still growing markets in Cambodia, China, Malaysia, Thailand and Vietnam.
There can be no assurance, however, that the Company will be able to implement its expansion plans according to this schedule
or at all. The Company continuously monitors these markets and, where necessary, may adjust capital deployment based on
economic developments and market-by-market conditions.
Beverage can unit sales volumes in the Company's mature markets have been stable to slightly declining in North America and
slightly increasing in Europe. Global food and aerosol can sales unit volumes have been stable to declining in recent years primarily
due to lower consumer spending. While the opportunity for organic volume growth in the Company's mature markets is not
comparable to that in targeted international growth markets, the Company continues to generate strong returns on invested capital
and significant cash flow from these businesses. The Company monitors capacity across all of its businesses and, where necessary,
may take action such as closing a plant or reducing headcount to better manage its costs. Any or all of these actions may result
in additional restructuring charges in the future which may be material.
As part of the Company's efforts to manage increased cost, it attempts to pass-through increases in the cost of aluminum and steel
to its customers. There can be no assurance that the Company will be able to recover from its customers the impact of any such
increased costs. Aluminum and steel prices can be subject to significant volatility and there does not appear to be a consistent and
predictable trend in pricing.
The Company seeks to increase shareholder value by maximizing operating cash flows which can be reinvested in the business,
used for acquisitions, used to repay debt or returned to shareholders through share repurchases or possible future dividends. In
assessing the Company's performance, the key performance measure used is segment income, a non-GAAP measure defined by
the Company as gross profit less selling and administrative expenses.
RESULTS OF OPERATIONS
The foreign currency translation impacts referred to in the discussion below were primarily due to changes in the euro and pound
sterling in the Company's European segments, the Canadian dollar in the Company's Americas segments and the Chinese renminbi
and Thai baht in the Company's Asia Pacific segment.
NET SALES AND SEGMENT INCOME
Net sales
Beverage cans and ends as a percentage of net sales
Food cans and ends as a percentage of net sales
2012
$ 8,470
2011
$ 8,644
2010
$ 7,941
55%
29%
52%
30%
51%
31%
26
Year ended December 31, 2012 compared to 2011
Crown Holdings, Inc.
Net sales decreased primarily due to $243 from the impact of foreign currency translation and $65 from lower selling prices
including the pass through of lower material costs partially offset by $133 from sales unit volumes primarily due to organic growth
and increased customer demand for beverage cans.
Year ended December 31, 2011 compared to 2010
Net sales increased primarily due to $432 from the pass-through of higher raw material costs, $84 from higher net global sales
unit volumes due to organic growth and increased customer demand and $197 from the impact of foreign currency translation.
Discussion and analysis of net sales and segment income by segment follows.
Americas Beverage
The Americas Beverage segment manufactures aluminum beverage cans and ends and steel crowns, commonly referred to as
“bottle caps”, and supplies a variety of customers from its operations in the U.S., Brazil, Canada, Colombia and Mexico. The
North American beverage can market is a mature market which has experienced slightly declining volumes in recent years. In
Brazil, the Company's sales unit volumes have increased in recent years primarily due to market growth. In 2011, the Company
completed construction of a new plant in Ponta Grossa, Brazil and commenced commercial operations of a second production line
in its plant in Estancia, Brazil.
Net sales and segment income in the Americas Beverage segment are as follows:
Net sales
Segment income
Year ended December 31, 2012 compared to 2011
2012
$ 2,274
311
2011
$ 2,273
302
2010
$ 2,097
275
Net sales did not change significantly as $51 from increased sales unit volumes was offset by $42 from the pass-through of lower
aluminum costs and $8 from the impact of foreign currency translation. Sales unit volume increases in Brazil offset volume
declines in North America. The increase in Brazil is primarily the result of recent capacity additions in Ponta Grossa and Estancia.
Sales unit volumes in Brazil are higher due to various factors, including its growing middle class and increasing disposable income
and shift in packaging mix to two-piece aluminum beverage cans from other packages.
Segment income increased primarily due to $19 from higher sales unit volumes in Brazil as described above and lower operating
costs, including $12 from reduced post-employment benefits in the U.S. partly due to post-retirement plan amendments, partially
offset by lower selling prices primarily due to competitive pricing pressure.
Year ended December 31, 2011 compared to 2010
Net sales increased primarily due to $113 from the pass-through of higher raw material costs, primarily aluminum, $48 from
increased sales unit volumes due to market growth in Brazil which offset lower sales unit volumes in the U.S. and $15 from the
impact of foreign currency translation. The increase in sales unit volumes is primarily due to the start of commercial operations
at the Company’s plant in Ponta Grossa, Brazil in the first quarter of 2011 and the start of commercial operations on the second
can line at the Company’s plant in Estancia, Brazil in the second quarter of 2011.
Segment income increased primarily due to $19 from increased sales unit volumes and favorable product mix and $7 from lower
operating costs including reduced post-employment benefits in the U.S. partly due to post-retirement plan amendments in 2011.
North America Food
The North America Food segment manufactures steel and aluminum food cans and ends and metal vacuum closures and supplies
a variety of customers from its operations in the U.S. and Canada. The North American food can and closures market is a mature
market which has experienced stable to slightly declining volumes in recent years.
27
Net sales and segment income in the North America Food segment are as follows:
Crown Holdings, Inc.
Net sales
Segment income
Year ended December 31, 2012 compared to 2011
2012
2011
2010
$
876
146
$
889
146
$
897
120
Net sales decreased primarily due to $25 from lower sales unit volumes partially offset by $13 from the pass-through of higher
costs.
Segment income did not change as $9 from the impact of lower sales unit volumes and $5 from inventory holding gains in 2011
that did not recur in 2012 were offset by $8 from improved cost performance and $6 from reduced post-employment benefits in
the U.S. partly due to post-retirement plan amendments in 2011.
Year ended December 31, 2011 compared to 2010
Net sales decreased primarily due to $54 from lower sales unit volumes as decreased market demand in the U.S. for food cans
offset higher sales unit volumes in metal vacuum closures. The decrease was partially offset by $39 from the pass-through of
higher raw material costs, primarily tinplate, and $7 from the impact of foreign currency translation.
Segment income increased primarily due to $19 from lower operating costs including the benefits from prior plant closures in
Canada and lower postretirement benefits in the U.S. resulting from plan amendments in 2010 and 2011 and $5 from inventory
holding gains from the sale of inventory on hand at the end of 2010.
European Beverage
The Company's European Beverage segment manufactures steel and aluminum beverage cans and ends and supplies a variety of
customers from its operations throughout Eastern and Western Europe, the Middle East and North Africa. In recent years, the
European beverage can market has been growing. In the second quarter of 2012, the Company commenced commercial operations
of a new plant in Osmaniye, Turkey which is expected to add annualized capacity of approximately 700 million cans when fully
operational.
Net sales and segment income in the European Beverage segment are as follows:
Net sales
Segment income
Year ended December 31, 2012 compared to 2011
2012
$ 1,653
217
2011
$ 1,669
210
2010
$ 1,524
244
Net sales decreased primarily due to $70 from the impact of foreign currency translation partially offset by $38 from increased
sales unit volumes primarily in Greece, Saudi Arabia, Slovakia and Turkey which offset lower volumes in France and Spain and
$16 from increased selling prices. The increase in Turkey is primarily the result of recent capacity additions.
Segment income increased primarily due to the higher sales unit volumes described above partially offset by $6 from the impact
of foreign currency translation.
Year ended December 31, 2011 compared to 2010
Net sales increased primarily due to $58 from increased sales unit volumes primarily in Slovakia, $56 from the pass-through of
higher raw material costs and $31 from the impact of foreign currency translation.
Segment income decreased primarily due to increased costs, including lower productivity, which were not fully offset by increases
in selling prices and increased volume activity.
28
European Food
Crown Holdings, Inc.
The European Food segment manufactures steel and aluminum food cans and ends, and metal vacuum closures and supplies a
variety of customers from its operations throughout Europe and Africa. The European food can market is a mature market which
has experienced stable to slightly declining volumes in recent years. In 2011 and 2012, the Company initiated restructuring
actions in its European Food segment to reduce manufacturing capacity and headcount. The Company expects these actions to
result in annual cost savings of approximately $16 when fully implemented in 2014. However, there can be no assurance that any
such pre-tax savings will be realized.
Net sales and segment income in the European Food segment are as follows:
Net sales
Segment income
Year ended December 31, 2012 compared to 2011
2012
$ 1,793
180
2011
$ 1,999
239
2010
$ 1,841
224
Net sales decreased primarily due to lower sales unit volumes due in part to ongoing economic uncertainty in Europe and adverse
weather conditions and $130 from the impact of foreign currency translation.
Segment income decreased primarily due to $41 split between unfavorable sale unit volume mix and the impact of competitive
price compression, $5 from inventory holding gains in 2011 that did not recur in 2012 and $13 from the impact of foreign currency
translation.
Year ended December 31, 2011 compared to 2010
Net sales increased primarily due to $142 from the pass-through of higher raw material costs, primarily tinplate, and $86 from the
impact of foreign currency translation partially offset by $70 from lower sales unit volumes.
Segment income increased primarily due to $24 from lower operating costs, $5 from inventory holding gains from the sale of
inventory on hand at the end of 2010 and $11 from the impact of foreign currency translation partially offset by $25 from lower
sales unit volumes including the fourth quarter 2010 effects of customers’ buying ahead of 2011 tinplate price increases.
Asia Pacific
The Company's Asia Pacific segment consists of beverage and non-beverage can operations, primarily food cans and specialty
packaging. In recent years, the Company's beverage can businesses in Asia have experienced significant growth.
In the first quarter of 2012, the Company commenced commercial operations at its new beverage can plant in Putian, China. In
the second quarter of 2012, the Company commenced commercial operations at its new beverage can plant in Ziyang, China,
completed capacity expansion at its plant in Ho Chi Minh City, Vietnam and began commercial production of beverage can ends
at its new plant in Heshan, China. In the third quarter of 2012, the Company began commercial production of beverage cans in
Heshan, China.
In the fourth quarter of 2012, the Company acquired an aluminum beverage can and end production facility in Vietnam and also
acquired a controlling interest in Superior Multi-Packaging Ltd. (“Superior”), a listed company on the Singapore Exchange.
Superior primarily produces specialty packaging containers for consumer products companies at its facilities in China, Singapore
and Vietnam. The acquisition of the controlling interest in Superior was made by an indirect 55% owned subsidiary of the Company.
In 2013, the Company has announced plans to complete new beverage can plants in Sihanoukville, Cambodia, Nong Khae, Thailand
and Danang, Vietnam and to expand capacity at its existing plants in Malaysia and Putian, China. The additional capacity in
Thailand and Malaysia is replacing capacity lost as a result of the 2011 flooding in Thailand. Once the projects are complete, the
Company expects to have added 3.6 billion units of annualized capacity.
Net sales
Segment income
2012
2011
2010
$
979
137
$
861
125
$
704
112
29
Year ended December 31, 2012 compared to 2011
Crown Holdings, Inc.
Net sales increased primarily due to $129 from increased beverage can sales unit volumes in Cambodia, China, Singapore and
Vietnam and food can volumes in Thailand partially offset by $21 from the pass-through of lower aluminum costs and a competitive
pricing environment in China. The increase in sales unit volumes is primarily due to increased regional demand driven by
macroeconomic factors such as GDP growth and increased consumer spending.
Segment income increased primarily due to $29 from increased sales unit volumes partially offset by competitive pricing pressure
in China and $8 of incremental start-up costs from recent capacity additions. During 2012, the Company recognized income of
$18 from insurance proceeds covering incremental costs and lost profits associated with the 2011 flooding in Thailand.
Year ended December 31, 2011 compared to 2010
Net sales increased primarily due to $93 from increased beverage can sales unit volumes in Cambodia, China and Vietnam, $40
from the pass-through of higher raw material costs and $25 from the impact of foreign currency translation.
Segment income increased primarily due to $7 from increased beverage can sales unit volumes and $4 from the impact of foreign
currency translation.
Non-reportable Segments
The Company's non-reportable segments include its aerosol can businesses in North America and Europe, its specialty packaging
business in Europe and its tooling and equipment operations in the U.S. and United Kingdom. In recent years, the Company's
specialty packaging business has experienced stable to slightly declining volumes and its aerosol can businesses have experienced
slightly declining volumes. In 2011 and 2012, the Company initiated restructuring actions in its European Aerosol and European
Specialty Packaging operations to reduce manufacturing capacity and headcount. The Company expects these actions to result
in annual cost savings of approximately $30 when fully implemented in 2014. However, there can be no assurance that any such
pre-tax savings will be realized.
Net sales and segment income in non-reportable segments are as follows:
Net sales
Segment income
Year ended December 31, 2012 compared to 2011
2012
2011
2010
$
895
98
$
953
139
$
878
116
Net sales decreased primarily due to $33 from lower sales unit volumes in the Company's European Specialty Packaging business
reflecting ongoing economic uncertainty in Europe, $22 from lower sales in the Company's North American and European aerosol
businesses primarily due to lower consumer spending partly due to ongoing economic uncertainty in Europe and $36 from the
impact of foreign currency translation, partially offset by $35 from increased beverage equipment sales to can manufacturers.
Segment income decreased primarily due to $17 from lower sales unit volumes in the Company's European Specialty Packaging
business, $20 from lower sales in the Company's North American and European aerosol businesses and $7 from inventory holding
gains in 2011 that did not recur in 2012
Year ended December 31, 2011 compared to 2010
Net sales increased primarily due to $41 from the pass-through of higher raw material costs in the Company's European specialty
packaging business and its North American and European aerosol businesses, $30 from increased beverage equipment sales to
can manufacturers and $33 from the impact of foreign currency translation, partially offset by $13 from lower sales unit volumes
in the Company's North American and European aerosol businesses, $8 from lower sales unit volumes in the Company's European
specialty packaging business and $10 from the April 2010 sale of the Company’s plastic closures business in Brazil.
Segment income increased primarily due to $8 from increased beverage equipment sales, $7 from inventory holding gains, $4
from lower operating costs in the Company's European specialty packaging business and $3 from the impact of foreign currency
translation.
30
Crown Holdings, Inc.
Corporate and Unallocated Expense
Corporate and unallocated expense
2012
2011
2010
$
194
$
208
$
201
Corporate and unallocated costs decreased in 2012 compared to 2011 primarily due to lower professional fees, lower pension costs
and lower insurance costs primarily due to a fire at a Company warehouse in 2011 partially offset by $6 from legal matters.
Corporate and unallocated costs increased in 2011 compared to 2010 primarily due to a benefit of $20 in 2010 from the settlement
of a legal dispute unrelated to the Company’s ongoing operations that did not recur in 2011 and increased insurance costs primarily
due to a fire at a Company warehouse in 2011 partially offset by $15 of lower pension costs.
COST OF PRODUCTS SOLD (EXCLUDING DEPRECIATION AND AMORTIZATION)
Cost of products sold (excluding depreciation and amortization) decreased from $7,120 in 2011 to $7,013 in 2012 primarily due
to $207 from the impact of foreign currency translation partially offset by the impact of increased global beverage can sales unit
volumes.
Cost of products sold, excluding depreciation and amortization, increased from $6,519 in 2010 to $7,120 in 2011, primarily due
to increased global sales unit volumes, increased raw material costs and $166 from the impact of foreign currency translation.
DEPRECIATION AND AMORTIZATION
For the year ended December 31, 2012 compared to 2011, depreciation and amortization increased from $176 to $180 primarily
due to the impact of recent capacity expansion which offset the impact of foreign currency translation. Depreciation and amortization
increased from $172 in 2010 to $176 in 2011 primarily due to $4 from the impact of foreign currency translation.
The Company, with the assistance of a third party appraiser, recently completed an evaluation of the estimated useful lives of its
two-piece and three-piece can-making equipment. As a result of the evaluation, effective January 1, 2013, the company increased
the estimated useful lives of its can-making equipment to 18 years. The Company believes that the revised useful lives better
reflect the actual useful lives of its can-making equipment. The Company currently expects 2013 depreciation and amortization
to be approximately $150.
SELLING AND ADMINISTRATIVE EXPENSE
Selling and administrative expense decreased from $395 in 2011 to $382 in 2012 primarily due $11 from the impact of foreign
currency translation.
Selling and administrative expense increased from $360 in 2010 to $395 in 2011 primarily due to $20 of benefit from the
settlement of a legal dispute unrelated to the Company’s ongoing operations in 2010 that did not recur in 2011 and $10 from the
impact of foreign currency translation.
PROVISION FOR ASBESTOS
Crown Cork & Seal Company, Inc. is one of many defendants in a substantial number of lawsuits filed throughout the U.S. by
persons alleging bodily injury as a result of exposure to asbestos. During 2012, 2011 and 2010 the Company recorded charges of
$35, $28 and $46, respectively, to increase its accrual for asbestos-related costs and made asbestos-related payments of $28, $28
and $27, respectively. The Company expects 2013 payments to be generally consistent with prior years’ levels. See Note K to the
consolidated financial statements for additional information regarding the provision for asbestos-related costs. Also see the Critical
Accounting Policies section of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
for a discussion of the Company’s policies with respect to asbestos liabilities.
31
Crown Holdings, Inc.
PROVISION FOR RESTRUCTURING
The Company recorded restructuring charges as follows.
2012
2011
2010
North America Food
European Food
Asia Pacific
Other European operations
European Division Headquarters
Corporate
$
3
15
4
18
3
5
48
$
3
9
—
45
20
—
77
$
28
—
—
—
14
—
42
See Note M to the consolidated financial statements for additional information on these charges. See also the discussion of net
sales and segment income above for information about the expected savings that may result from the recent restructuring actions
in the Company's European Food and other European operations.
LOSS FROM EARLY EXTINGUISHMENTS OF DEBT
During 2011, the Company recorded a charge of $32 in connection with the repayment of its $600 outstanding 7.75% senior
secured notes due 2015 and its €83 ($121) 6.25% first priority senior secured notes due 2011.
During 2010, the Company recorded a charge of $16 in connection with the repayment of €76 ($101) of its 6.25% first priority
senior secured notes due 2011 and its $200 outstanding 7.625% senior notes due 2013.
In January 2013, the Company issued $1,000 of 4.5% senior unsecured notes due 2023 and used the proceeds to repay $500 of
indebtedness under its senior secured term loan facilities, to redeem all of its outstanding $400 7.625% senior secured notes due
2017, to pay related fees, premiums and expenses, and for general corporate purposes. In connection with the transactions, the
Company expects to incur a charge of approximately $32 in the first quarter of 2013 for the related redemption premiums and
write-off of deferred financing costs.
INTEREST EXPENSE
Interest expense decreased from $232 in 2011 to $226 primarily due to $4 from the impact of foreign currency translation.
Interest expense increased from $203 in 2010 to $232 in 2011 primarily due to $23 from higher average debt outstanding and $4
from the impact of foreign currency translation.
TAXES ON INCOME
The Company's effective income tax rate was as follows:
Income before income taxes
Provision for / (benefit from) income taxes
Effective income tax rate
$
636
(17)
(2.7)%
$
587
194
33.0%
$
614
165
26.9%
2012
2011
2010
The effective income tax rate in 2012 includes a benefit of $175, net of valuation allowance, related to the recognition of previously
unrecognized U.S. foreign tax credits as discussed further in Note W to the consolidated financial statements. In addition, the
effective tax rate includes a benefit of $10 from the receipt of non-taxable insurance proceeds related to the 2011 flooding in
Thailand and the benefit of certain income tax incentives in Brazil as discussed further in Note W.
The effective income tax rate in 2011 was higher than in 2010 primarily due to a net tax charge of $25 in 2011 in connection with
the relocation of the Company’s European headquarters and management to Switzerland and a tax benefit of $7 in 2010, that did
not recur in 2011, from the nontaxable settlement of a legal dispute unrelated to the Company’s operations.
See Note W to the consolidated financial statements for additional information regarding income taxes. Also see the Critical
Accounting Policies section of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
for a discussion of the Company’s policies with respect to valuation allowances.
32
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Crown Holdings, Inc.
Net income attributable to noncontrolling interests decreased from $114 in 2011 to $101 in 2012 primarily due to the acquisition
of additional ownership interests in certain operations in China, Dubai, Greece, Jordan, Tunisia and Vietnam in the second half of
2011.
Net income attributable to noncontrolling interests decreased from $128 in 2010 to $114 in 2011 primarily due to the acquisition
of additional ownership interests in certain operations in Beijing, Dubai, Greece, Jordan, Shanghai, Tunisia and Vietnam which
offset increased earnings in Brazil.
OPERATING ACTIVITIES
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities increased from $379 in 2011 to $621 in 2012 primarily due to $301 of lower pension
contributions in 2012 partially offset by higher net working capital.
Receivables increased from $948 in 2011 to $1,057 in 2012 and used cash of $113 in 2012 compared to $36 in 2011. The increase
is primarily due to higher raw material costs, expansion in Asia and Brazil and mix of receivables. Days sales outstanding for
trade receivables increased from 35 in 2011 to 39 in 2012. The increase is primarily due to mix of receivables and not an increase
in overdues.
Inventories increased from $1,148 in 2011 to $1,166 in 2012 and used cash of $119 in 2011 compared to provided cash of $21 in
2012. In 2011, inventories used cash primarily due to higher raw material costs and increased inventory levels primarily due to
capacity expansion in Asia and Brazil. In 2012, inventories provided cash primarily due to the Company's efforts to manage lower
levels of inventory. Raw material costs did not have a significant impact on inventories at the end of 2012 compared to 2011.
Cash provided by operating activities decreased from $590 in 2010 to $379 in 2011 primarily due to $325 from increased pension
contributions and $40 from increased interest payments in 2011, offset by $208 in 2010 from a change in accounting guidance
requiring the Company’s securitization facilities and a portion of its factoring facilities to be accounted for as secured borrowings.
INVESTING ACTIVITIES
Cash used for investing activities decreased from $372 in 2011 to $362 in 2012. Capital expenditures, net of insurance proceeds
related to flooding at the Company's beverage can plant in Thailand, decreased by $125. The decrease was partially offset by $78
in cash payments for business acquisitions, net of cash acquired, $23 in lower proceeds from sales of property, plant and equipment
in 2012 and $8 from an increase in restricted cash. Currently, the Company expects capital expenditures of approximately $230
in 2013 which are to be funded primarily from cash flows from operations.
At December 31, 2012, the Company had $67 of capital commitments primarily related to capacity expansion in Cambodia, China
and Vietnam and the rebuilding of its beverage can plant in Thailand which was damaged by severe flooding in 2011. The Company
expects to fund these commitments primarily through cash flows generated from operations and to fund any excess needs over
available cash through external borrowings.
Cash used for investing activities increased from $281 in 2010 to $372 in 2011 primarily due to an increase in capital expenditures
related to the Company’s beverage can capacity expansion projects in Brazil, China, Eastern Europe and Vietnam.
FINANCING ACTIVITIES
Cash used for financing activities was $254, $129 and $299 in 2012, 2011 and 2010, respectively.
In 2012, cash used for financing activities was primarily to repurchase shares of the Company’s common stock as described in
Note O to the consolidated financial statements and to pay dividends to noncontrolling interests in the Company’s non-wholly
owned subsidiaries in Asia, the Middle East and South America.
In 2011 and 2010, cash used for financing activities was primarily to repurchase shares of the Company’s common stock as
described in Note O to the consolidated financial statements, purchase additional ownership interests in certain operations from
noncontrolling interests as described in Note T to the consolidated financial statements, pay dividends to noncontrolling interests
33
Crown Holdings, Inc.
in the Company’s non-wholly owned subsidiaries in Asia, the Middle East and South America and additional borrowings made
in 2011 to prefund $328 of pension obligations in the U.S. and Canada.
In 2010, cash flows from financing activities included an increase of $208 from a change in accounting guidance requiring the
Company’s securitization facilities and a portion of its factoring facilities to be accounted for as secured borrowings.
Other financing activities, in each year, is primarily cash settlements of foreign currency derivatives used to hedge intercompany
debt obligations.
LIQUIDITY
As of December 31, 2012, $319 of the Company's $350 cash and cash equivalents was located outside the U.S. The Company is
not currently aware of any legal restrictions under foreign law that materially impact its access to cash held outside the U.S.
The Company funds its cash needs in the U.S. through a combination of cash flows from operations in the U.S., dividends from
certain foreign subsidiaries, borrowings under its revolving credit facility and the acceleration of cash receipts under its receivable
securitization facilities. The Company records current and/or deferred U.S. taxes for the earnings of these foreign subsidiaries.
For certain other foreign subsidiaries, the Company considers earnings indefinitely reinvested and has not recorded any U.S. taxes.
Of the cash and cash equivalents located outside the U.S., $118 was held by subsidiaries for which earnings are considered
indefinitely reinvested. While based on current operating plans the Company does not foresee a need to repatriate these funds,
if such earnings were repatriated the Company may be required to record incremental U.S. taxes on the repatriated funds.
The Company funds its worldwide cash needs through a combination of cash flows from operations, borrowings under its revolving
credit facilities and the acceleration of cash receipts under its receivables securitization and factoring facilities. As of December 31,
2012, the Company has available capacity of $100 under its North American securitization facility, $41 under its European
securitization facility and $1,104 under its revolving credit facilities. The Company has current maturities of long-term debt of
$115 due in 2013 and is not required to refinance or renegotiate any of its current sources of liquidity in 2013. As described in
Note Y to the consolidated financial statements, in January 2013, the Company issued $1,000 of 4.5% senior unsecured notes due
2023 and used the proceeds to redeem all of its outstanding $400 senior notes due 2017, to repay $500 of indebtedness under its
senior secured term loan facilities, to pay related redemption premiums, fees and expenses and for general corporate purposes.
The Company has substantial debt outstanding. The ratio of total debt, less cash and cash equivalents, to total capitalization was
96.4% and 108.1%, at December 31, 2012 and 2011, respectively. Total capitalization is defined by the Company as total debt
plus total equity, less cash and cash equivalents. Total debt increased in 2012 primarily due to the acquisitions completed during
the year as described in Note S to the consolidated financial statements and $34 from the impact of foreign currency translation.
However, the ratio improved because total capitalization increased as the Company's total equity improved from a deficit in 2011
as described further below under Common Stock and Other Equity.
The Company's debt agreements 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, make certain other restricted payments, create liens and engage
in sale and leaseback transactions. These restrictions are subject to a number of exceptions, however, which allow the Company
to incur additional debt, create liens or make otherwise restricted payments. The amount of restricted payments permitted to be
made, including dividends and repurchases of the Company's common stock, is generally limited to the cumulative excess of $200
plus 50% of adjusted net income plus proceeds from the exercise of employee stock options over the aggregate of restricted
payments made since July 2004. Adjustments to net income may include, but are not limited to, items such as asset impairments,
gains and losses from asset sales and early extinguishments of debt.
The Company’s revolving credit facility and term loans also contain various financial covenants. The interest coverage ratio is
calculated as Adjusted EBITDA divided by interest expense. Adjusted EBITDA is calculated as the sum of net income attributable
to Crown Holdings, net income attributable to noncontrolling interests, income taxes, interest expense, depreciation and
amortization, and certain non-cash charges. The Company’s interest coverage ratio of 4.5 to 1.0 at December 31, 2012 was in
compliance with the covenant requiring a ratio of at least 2.85 to 1.0. The total net leverage ratio is calculated as total net debt
divided by Adjusted EBITDA, as defined above. Total net debt is defined in the credit agreement as total debt less cash and cash
equivalents. The Company’s total net leverage ratio of 2.9 to 1.0 at December 31, 2012 was in compliance with the covenant
requiring a ratio no greater than 4.0 to 1.0. The ratios are calculated at the end of each quarter using debt and cash balances as of
the end of the quarter and Adjusted EBITDA and interest expense for the most recent twelve months. Failure to meet the financial
covenants could result in the acceleration of any outstanding amounts due under the revolving credit facilities, term loan agreements
and senior notes due 2018 and 2021. In addition, the interest rate on the revolving credit facilities can vary from EURIBOR or
34
Crown Holdings, Inc.
LIBOR plus a margin of 1.75% up to 2.25% based on the total net leverage ratio. The term loans bear interest of LIBOR or
EURIBOR plus 1.75%.
Following the January 2013 debt issuance and repayments described in Note Y to the consolidated financial statements, the
Company’s current sources of liquidity and borrowings expire or mature as follows: its $200 North American securitization facility
in December 2015; its €110 ($144) European securitization facility in July 2017; its $1,200 revolving credit facilities in June 2015;
its €500 ($659) 7.125% senior notes in August 2018; its $700 6.25% senior notes in February 2021; its $1,000 4.50% senior notes
in January 2023; its $350 7.375% senior notes in December 2026; its $64 7.5% senior notes in December 2096; and $283 of other
indebtedness in various currencies at various dates through 2019. In addition the Company’s term loan facilities mature as follows:
$46 in June 2013, $91 in June 2014, $137 in June 2015 and $138 in June 2016.
CONTRACTUAL OBLIGATIONS
Contractual obligations as of December 31, 2012 are summarized in the table below.
2013
2014
2015
2016
2017
2018 &
after
Payments Due by Period
Long-term debt
Interest on long-term debt
Operating leases
Projected pension contributions
Postretirement obligations
Purchase obligations
Total contractual cash obligations
$
$
115
189
53
85
27
2,747
3,216
$
$
183
184
38
84
23
1,215
1,727
$
$
195
178
28
134
23
650
1,208
$
$
720
172
20
120
23
$
416
153
16
145
22
$
1,784
122
62
105
$
1,055
$
752
$
2,073
$
Total
3,413
998
217
568
223
4,612
10,031
All amounts due in foreign currencies are translated at exchange rates as of December 31, 2012.
Interest on long-term debt is presented through 2018 only and represents the interest that will accrue by year based on interest
rates in effect as of December 31, 2012. Interest on the Company’s revolving credit facility is calculated based on $45 of outstanding
borrowings as of December 31, 2012.
Projected pension contributions represent the Company's expected funding contributions for the next five years. Postretirement
obligations represent expected payments to retirees for medical and life insurance coverage for the next ten years. These 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 and have therefore been provided for only five years for pension and
ten years for postretirement.
Purchase obligations include commitments for raw materials and utilities at December 31, 2012. 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.
The table above excludes $35 of liabilities for unrecognized tax benefits because the Company is unable to estimate when these
amounts may be paid, if at all. See Note W to the consolidated financial statements for additional information on the Company’s
unrecognized tax benefits.
In order to reduce leverage and future interest payments, the Company may from time to time repurchase outstanding notes and
debentures with cash, exchange shares of its common stock for the Company’s outstanding notes and debentures, or seek to
refinance its existing credit facilities and other indebtedness. 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 subject to risk from adverse fluctuations in foreign exchange rates, interest rates
and commodity prices. The Company manages these risks through a program that includes the use of derivative financial
instruments, primarily swaps and forwards. Counterparties to these contracts are major financial institutions. These instruments
are not used for trading or speculative purposes. The extent to which the Company uses such instruments is dependent upon its
35
Crown Holdings, Inc.
access to them in the financial markets and its use of other methods, such as netting exposures for foreign exchange risk and
establishing sales arrangements that permit the pass-through to customers of changes in commodity prices and foreign exchange
rates, to effectively achieve its goal of risk reduction. The Company’s objective in managing its exposure to market risk is to limit
the impact on earnings and cash flow.
The Company manages foreign currency exposures at the operating unit level. Exposures that cannot be naturally offset within
an operating unit may be hedged with derivative financial instruments where possible and cost effective in the Company’s judgment.
Foreign exchange contracts generally mature within twelve months.
The table below provides information in U.S. dollars as of December 31, 2012 about the Company’s forward currency exchange
contracts. The contracts primarily hedge anticipated transactions, unrecognized firm commitments and intercompany debt. The
contracts with no amounts in the fair value column have a fair value of less than $1.
Buy/Sell
U.S. dollars/Euro
Sterling/Euro
Euro/Sterling
Euro/U.S. dollars
U.S. dollars/Sterling
Sterling/U.S. dollars
U.S. dollars/Thai Baht
Euro/Polish Zloty
Euro/Moroccan Dirham
Singapore dollars/U.S. dollars
Euro/Singapore dollars
Malaysia Ringgit/ U.S. dollars
Polish Zloty/Euro
Contract
amount
Contract
fair value
gain/(loss)
Average
contractual
exchange rate
$
$
52
128
457
508
11
27
47
19
17
62
65
13
13
1,419
$
$
$
(1)
(1)
2
4
—
—
(1)
—
—
—
2
—
—
5
1.30
0.80
0.81
1.31
1.60
1.59
31.16
4.09
11.21
1.22
1.58
3.05
4.08
At December 31, 2012, the Company had additional contracts with an aggregate notional value of $81 to purchase or sell other
currencies, primarily Asian currencies, including the Hong Kong dollar, European currencies, including the Hungarian forint and
Turkish Lira and African currencies, including the Tunisian dinar. The aggregate fair value of these contracts was a gain of $1.
The Company, from time to time, may manage its interest rate risk associated with fluctuations in variable interest rates through
interest rate swaps. The use of interest rate swaps and other methods of mitigating interest rate risk may increase overall interest
expense.
The table below presents principal cash flows and related interest rates by year of maturity for the Company’s debt obligations as
of December 31, 2012. Variable interest rates disclosed represent the weighted average rates at December 31, 2012.
Debt
Fixed rate
Average interest rate
Variable rate
Average interest rate
2013
2014
Year of Maturity
2016
2015
$
$
$
$
54
5.0%
322
2.1%
$
$
53
5.5%
130
2.8%
$
$
30
5.6%
165
2.6%
$
$
12
6.2%
708
2.5%
2017
408
7.6%
8
2.7%
Thereafter
1,784
$
6.8%
—
3.6%
Total future payments at December 31, 2012 include $2,436 of U.S. dollar-denominated debt, $1,089 of euro-denominated debt
and $149 of debt denominated in other currencies.
The Company uses various raw materials, such as steel and aluminum in its manufacturing operations, which expose it to risk
from adverse fluctuations in commodity prices. In 2012, consumption of steel and aluminum represented 26% and 38%, respectively,
of the Company’s consolidated cost of products sold, excluding depreciation and amortization. The Company primarily manages
its risk to adverse commodity price fluctuations and surcharges through contracts that pass through raw material costs to customers.
36
Crown Holdings, Inc.
The Company may, however, be unable to increase its prices to offset increases in raw material costs without suffering reductions
in unit volume, revenue and operating income, and any price increases may take effect after related cost increases, reducing
operating income in the near term.
In addition, the Company's manufacturing facilities are dependent, in varying degrees, upon the availability of water and processed
energy, such as natural gas and electricity.
Aluminum, a basic raw material used by the Company, is subject to the risk of significant price fluctuations which may be hedged
by the Company through forward commodity contracts. Current contracts involve aluminum forwards with a notional value of
$434 and a fair value loss of $14. 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.
See Note R to the consolidated financial statements for further information on the Company’s derivative financial instruments.
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 under Note L to the consolidated financial statements. The
Company also utilizes receivables securitization and factoring facilities and derivative financial instruments as further discussed
under Note C and Note R, respectively, 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.
The potential impact on the Company’s operations of climate change and potential future climate change regulation in the
jurisdictions in which the Company operates is highly uncertain. See the risk factor entitled “The Company is subject to costs and
liabilities related to stringent environmental and health and safety standards” in Part I, Item 1A of this Annual Report.
See Note L to the consolidated financial statements for additional information on environmental matters including the Company's
accrual for environmental remediation costs.
COMMON STOCK AND OTHER EQUITY
In 2012, total equity increased as follows:
Beginning balance
Net income
Other comprehensive loss
Dividends paid to noncontrolling interests
Contributions from noncontrolling interests
Acquisition of business
Stock-based compensation
Common stock issued
Common stock repurchased
Ending balance
37
$
$
(239)
658
(19)
(79)
17
7
18
17
(257)
123
Crown Holdings, Inc.
During 2012, 2011 and 2010, the Company repurchased 6,954,968, 7,965,176 and 7,959,707 shares of its common stock,
respectively.
The share repurchases were made pursuant to authorizations from the Company's Board of Directors. In December of 2012, the
Company's Board of Directors authorized the repurchase of an aggregate amount of $800 of the Company's common stock through
the end of 2014. This authorization supersedes the previous authorization. Share repurchases under the Company's programs may
be made in the open market or through privately negotiated transactions, and at times and in such amounts as management deems
appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate
and regulatory requirements and other market conditions.
Total common shares outstanding were 143,136,473 at December 31, 2012 and 148,449,293 at December 31, 2011.
INFLATION
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 of America 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 under 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.
Asbestos Liabilities
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 nature of future claims
(including the seriousness of alleged disease, whether claimants allege first exposure to asbestos before or during 1964 and the
alleged link to Crown Cork), the terms of settlements of other defendants with asbestos-related liabilities, bankruptcy filings of
other defendants (which may result in additional claims and higher settlement demands for non-bankrupt defendants), potential
liabilities for claims filed after the Company’s ten-year projection period and the effect of state 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). See Note K to the consolidated financial statements for additional information regarding the
provision for asbestos-related costs.
At the end of each quarter, the Company considers whether there have been any material developments that would cause it to
update its asbestos accrual calculations. Absent any significant developments in the asbestos litigation environment in general or
with respect to the Company specifically, the Company updates its accrual calculations in the fourth quarter of each year. The
Company’s asbestos accrual is an estimate of the amounts expected to be paid over the next ten years including outstanding claims,
projected future claims and legal costs. Outstanding claims used in the accrual calculation are adjusted for factors such as claims
filed in those states where the Company’s liability is limited by statute and claims alleging first exposure to asbestos after 1964
which are assumed to have no value and claims that have been outstanding for a significant length of time which are assumed to
have a nominal value. Projected future claims are calculated based on actual data for the most recent five years. Outstanding and
projected claims are multiplied by the average settlement cost of those claims for the most recent five years.
The five year average settlement cost per claim was $10,600, $8,200 and $7,500 for 2012, 2011 and 2010, respectively. The increase
in average settlement cost per claim is primarily explained as follows. Crown Cork's settlement pool continues to include a higher
percentage of claims alleging serious disease (primarily mesothelioma and other malignancies) which are settled for higher amounts.
In addition, claims alleging serious disease have made up a higher percentage of claims filed and therefore a higher percentage of
claims projected into the future. For example, of the projected claims related to claimants alleging first exposure to asbestos before
or during 1964 and filed in states that have not enacted asbestos legislation, 54%, 45% and 42% in 2012, 2011 and 2010 respectively,
relate to claims alleging serious diseases.
38
Crown Holdings, Inc.
Because the Company’s asbestos liability is an estimate of the amounts expected to be paid over the next ten years, the Company
expects to record a charge each year to account for projected claims in the new tenth year. As claims are not submitted or settled
evenly throughout the year, it is difficult to predict at any time during the year whether the number of claims or average settlement
cost over the five year period ending December 31 of such year will increase compared to the prior five year period.
In 2012, the Company recorded a charge of $35 primarily due to the impact of including an additional year of settlement and legal
costs in its projection period and the impact of valuing outstanding and projected claims, which include a higher percentage of
claims alleging serious disease, at higher average settlement amounts.
During 2012, 2011 and 2010, the Company made asbestos-related payments of $28, $28 and $27, respectively. If the recent trend
of settling a higher percentage of claims alleging serious disease (primarily mesothelioma and other malignancies) which are
settled for higher amounts continues, average settlement costs per claim are likely to increase and, if not offset by a reduction in
overall claims and settlements, the Company may record additional charges in the future. A 10% change in either the average cost
per claim or the number of projected claims would increase or decrease the estimated liability at December 31, 2012 by $25 for
the following ten-year period. A 10% increase or decrease in these two factors at the same time would increase or decrease the
estimated liability at December 31, 2012 by $52 and $47, respectively, for the following ten-year period.
Goodwill Impairment
The Company performs a goodwill impairment review in the fourth quarter of each year or when facts and circumstances indicate
goodwill may be impaired. In accordance with the accounting guidance, the Company may first perform a qualitative assessment
on none, some, or all of its reporting units to determine whether further quantitative impairment testing is necessary. Factors that
the Company may consider in its qualitative assessment include, but are not limited to, general economic conditions, changes in
the markets in which the Company operates, changes in input costs that may affect earnings and cash flows, trends over multiple
periods and the difference between the reporting unit's fair value and carrying amount as determined in the most recent fair value
calculation.
The quantitative impairment test involves a number of assumptions and judgments, including the calculation of fair value for the
Company’s identified reporting units. The Company determines the estimated fair value for each reporting unit based on the
average of the estimated fair values calculated using market values for comparable businesses and discounted cash flow projections.
The Company uses an average of the two methods in estimating fair value because it believes they provide an equal probability
of yielding an appropriate fair value for the reporting unit. The Company’s estimates of future cash flows include assumptions
concerning future operating performance and economic conditions and may differ from actual future cash flows. Under the first
method of calculating estimated fair value, the Company obtains publicly available trading multiples based on the enterprise value
of companies in the packaging industry whose shares are publicly traded. The Company also reviews available information
regarding the multiples used in recent transactions, if any, involving transfers of controlling interests in the packaging industry.
The appropriate multiple is applied to the forecasted Adjusted EBITDA (a non-GAAP item defined by the Company as net customer
sales, less cost of products sold excluding depreciation and amortization, less selling and administrative expenses) of the reporting
unit to obtain an estimated fair value. Under the second method, fair value is calculated as the sum of the projected discounted
cash flows of the reporting unit over the next five years and the terminal value at the end of those five years. The projected cash
flows generally include no growth assumption unless there has recently been a material change in the business or a material change
is forecasted. The discount rate used is based on the average weighted-average cost of capital of companies in the packaging
industry, which information is available through various sources.
The terminal value at the end of the five years is the product of the forecasted Adjusted EBITDA at the end of the five year period
and the trading multiple. The Company used an EBITDA multiple of 7.5 times and a discount rate of 6.5% in its 2012 review. The
assumed EBITDA multiple increased from the 7.0 times used in 2011 due to increased multiples of recent transactions in the
industry. The discount rate decreased from the 7.4% used in 2011 due to a decrease in the weighted average cost of capital of
companies in the packaging industry.
The Company completed its annual review for 2012 and determined that no adjustments to the carrying value of goodwill were
necessary. Although no goodwill impairment was recorded, there can be no assurances that future goodwill impairments will not
occur. Based upon the Company’s qualitative and quantitative assessment including consideration of the sensitivity of the
assumptions made and methods used to determine fair value, industry trends and other relevant factors, the Company did not have
any reporting unit at the end of 2012 whose fair value did not materially exceed its carrying value except for its European Aerosols
reporting unit.
39
Crown Holdings, Inc.
As of December 31, 2012, the estimated fair value of the European Aerosols reporting unit, using the methods and assumptions
described above, was 22% higher than its carrying value, and the reporting unit had $151 of goodwill. The maximum potential
effect of weighting the two valuation methods other than equally would have been to increase or decrease the estimated fair value
by $9. Assuming all other factors remain the same, a $1 change in forecasted annual Adjusted EBITDA changes the excess of
estimated fair value over carrying value by $8; a change of 0.5 in the assumed EBITDA multiple changes the excess of estimated
fair value over carrying value by $12; and an increase in the discount rate from 6.5% to 7.5% changes the excess of estimated fair
value over carrying value by $4. The projections used in the Company's analysis did not assume a significant recovery in sales
unit volumes in 2013 but, did assume that the Company will be able to realize the anticipated savings from its headcount and
capacity reductions initiated in the fourth quarter of 2011. If future operating results were to decline causing the estimated fair
value to fall below its carrying value, it is possible that an impairment charge of up to $151 could be recorded.
Long-lived Assets Impairment
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.
Tax Valuation Allowance
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. These estimates are projected through the life of the related deferred tax assets based on
assumptions that management believes are reasonable. 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 W to the consolidated financial statements for additional information on the Company’s valuation allowances.
Unrecognized Tax Positions
The Company recognizes the impact of a tax position if, in the Company’s opinion, it is more likely than not that the position will
be sustained on audit, based on the technical merits of that position. The tax position is measured at the largest amount of benefit
that is greater than 50% likely of being realized upon ultimate settlement. The determination of whether the impact should be
recognized, and the measurement of the impact, can require significant judgment and the Company’s estimate may differ from
actual settlement amounts. See Note W to the consolidated financial statements for additional information on the Company’s tax
positions.
Pension and Postretirement Benefits
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 Company recorded pension expense of $97 in 2012 and currently
projects its 2013 pension expense to be $78 using foreign currency exchange rates in effect at December 31, 2012.
The rate of return assumptions are reviewed at each measurement date based on the pension plans’ investment policies, current
asset allocations and an analysis of the historical returns of the capital markets.
The U.S. plan’s assumed rate of return was 8.0 % in 2012 and is 8.0% in 2013. The U.K. plan’s assumed rate of return was 6.25%
in 2012 and is 5.75% in 2013. The assumed rate of return for 2013 was calculated on a similar basis to 2012 as described in Note
V to the consolidated financial statements.
A 0.25% change in the expected rates of return would change 2013 pension expense by approximately $11.
40
Crown Holdings, Inc.
Discount rates were selected using a method that matches projected payouts from the plans with zero-coupon AA bond yield curves
in the respective currencies. The yield curves were constructed from the underlying bond price and yield data collected as of the
plans’ measurement date and are 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 AA 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 with sufficient capacity 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. A 0.25% change in
the discount rates from those used at December 31, 2012 would change 2013 pension expense by approximately $4 and
postretirement expense by approximately $1. A 0.25% change in the discount rates from those used at December 31, 2012 would
have changed the pension benefit obligation by approximately $159 and the postretirement benefit obligation by $9 as of
December 31, 2012. See Note V to the consolidated financial statements for additional information on pension and postretirement
benefit obligations and assumptions.
As of December 31, 2012, the Company had pre-tax unrecognized net losses in other comprehensive income of $2,517 related to
its pension plans and a net gain of $112 related to its other postretirement benefit plans. Unrecognized gains and losses arise each
year primarily due to changes in discount rates, differences in actual plan asset returns compared to expected returns, and changes
in actuarial assumptions such as mortality. For example, the unrecognized net loss in the Company’s pension plans included a
current year gain of $116 due to actual asset returns greater than expected returns and a loss of $411 primarily due to lower discount
rates at the end of 2012 compared to 2011. Unrecognized gains and losses are accumulated in other comprehensive income and
the portion in each plan that exceeds 10% of the greater of that plan’s assets or projected benefit obligation is amortized to income
over future periods. The Company’s pension expense for the year ended December 31, 2012 included charges of $117 for the
amortization of unrecognized net losses, and the Company estimates charges of $127 in 2013. The unrecognized net losses in the
pension plans as of December 31, 2012 include $1,248 in the U.K. defined benefit plan, $1,025 in the U.S defined benefit plans
and $237 in the Canadian defined benefit plans. Amortizable losses in the U.K. plan are being recognized over 22 years, representing
the average expected life of inactive employees as over 90% of the plan participants are inactive and the fund is closed to new
participants. Amortizable losses in the U.S. plans are being recognized over the average remaining service life of active participants
of 15 years. Amortizable losses in the Canadian plans are being recognized over the average remaining service life of active
participants of 9 years. An increase of 10% in the number of years used to amortize unrecognized losses in each plan would decrease
estimated charges for 2013 by $11. A decrease of 10% in the number of years would increase the estimated charge for 2013 by
$14.
Unrecognized net loss of $157 in the Company’s other postretirement benefit plans as of December 31, 2012, primarily include
$131 in the U.S. plans, with the amortizable portion being recognized over the average remaining service life of active participants
of 8 years. The Company’s other postretirement benefits expense for the year ended December 31, 2012 included a loss of $14
for the amortization of unrecognized net losses, and the Company estimates losses of $16 in 2013. An increase of 10% in the
number of years used to amortize the unrecognized losses in each plan would decrease the estimated charge for 2013 by $1. A
decrease of 10% in the number of years would increase the estimated charge for 2013 by $2.
RECENT ACCOUNTING GUIDANCE
In December 2011, the FASB issued changes to the disclosure of offsetting assets and liabilities. These changes require an entity
to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement
of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The enhanced
disclosures are intended to enable users of an entity’s financial statements to understand and evaluate the effect or potential effect
of master netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated
with certain financial instruments and derivative instruments. These changes will be applied retrospectively for interim and annual
periods beginning on or after January 1, 2013. Accordingly, these changes will first impact the Company's disclosures for the
period ended March 31, 2013.
In February 2013, the FASB issued changes to the disclosure of amounts reclassified out of accumulated other comprehensive
income. The changes require an entity to present in a single note or parenthetically on the face of the financial statements, the
effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source
and the income statement line items affected by the reclassification. If a component is not required to be reclassified to net income
in its entirety, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. These
changes will be applied prospectively for interim and annual periods beginning on or after December 15, 2012. Accordingly, these
changes will first impact the Company's disclosures for the period ended March 31, 2013.
See Note A to the consolidated financial statements for information on recently adopted accounting guidance.
41
FORWARD LOOKING STATEMENTS
Crown Holdings, Inc.
Statements in this Annual Report, including those in “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” in the discussions of the provision for asbestos under Note K and other contingencies under Note L to the consolidated
financial statements included in this Annual Report and in discussions incorporated by reference into this Annual Report (including,
but not limited to, those in “Compensation Discussion and Analysis” in the Company’s Proxy Statement), 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, (vi) the Company’s policies with respect to
executive compensation and (vii) 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 expand successfully in international and emerging markets; 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; the impact of the ongoing European Sovereign debt crisis; the Company’s ability to
generate significant cash to meet its obligations and invest in its business and to maintain appropriate debt levels; restrictions on
the Company’s use of available cash under its debt agreements; 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), tax rates and tax laws (including with respect to taxation of unrepatriated non-U.S. earnings or as a result of the
depletion of net loss carryforwards); the impact of health care reform in the U.S.; the impact of foreign trade laws and practices;
the collectability of receivables; war or acts of terrorism that may disrupt the Company’s production or the supply or pricing of
raw materials, including in the Company’s Middle East operations, impact the financial condition of customers or adversely affect
the Company’s ability to refinance or restructure its remaining indebtedness; changes in the availability and pricing of raw materials
(including aluminum can sheet, steel tinplate, energy, water, inks and coatings) and the Company’s ability to pass raw material,
energy and freight price increases and surcharges through to its customers or to otherwise manage these commodity pricing risks;
the Company’s ability to obtain and maintain adequate pricing for its products, including the impact on the Company’s revenue,
margins and market share and the ongoing impact of price increases; 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 state legislation dealing with asbestos liabilities
and any litigation challenging that legislation and any future state or federal legislation dealing with asbestos liabilities); the
Company’s ability to realize deferred tax benefits; changes in the Company’s critical or other accounting policies or the assumptions
underlying those policies; 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 acquisition of a business and integration of acquired businesses; the impact of any potential dispositions, acquisitions
or other strategic realignments, which may impact the Company’s operations, financial profile, investments or levels of
indebtedness; 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; competitive pressures, including new product developments, industry
overcapacity, or changes in competitors’ pricing for products; the Company’s ability to achieve high capacity utilization rates for
its equipment; the Company’s ability to maintain, develop and capitalize on 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 protect its information technology systems from attacks or catastrophic failure; the strength of the Company’s cyber-security;
the Company’s ability to generate sufficient production capacity; the Company’s ability to improve and expand its existing product
and product lines; the impact of overcapacity on the end-markets the Company serves; loss of customers, including the loss of
any significant customers; changes in consumer preferences for different packaging products; the financial condition of the
Company’s vendors and customers; weather conditions, including their effect on demand for beverages and on crop yields for
42
Crown Holdings, Inc.
fruits and vegetables stored in food containers; the impact of natural disasters, including in emerging markets; changes in
governmental regulations or enforcement practices, including with respect to environmental, health and safety matters and
restrictions as to foreign investment or operation; the impact of increased governmental regulation on the Company and its products,
including the regulation or restriction of the use of bisphenol-A; the impact of the Company’s initiative to generate additional
cash, including the reduction of working capital levels and capital spending; the ability of the Company to realize cost savings
from its restructuring programs; the Company’s ability to maintain adequate sources of capital and liquidity; costs and payments
to certain of the Company’s executive officers in connection with any termination of such executive officers or a change in control
of the Company; 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; and changes in the Company’s strategic areas
of focus, 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under
the caption “Market Risk” in this Annual Report is incorporated herein by reference.
43
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Crown Holdings, Inc.
INDEX TO FINANCIAL STATEMENTS
Financial Statements
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, 2012, 2011 and 2010
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011
and 2010
Consolidated Balance Sheets as of December 31, 2012 and 2011
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2012,
2011 and 2010
Notes to Consolidated Financial Statements
Supplementary Information
Financial Statement Schedule
Schedule II – Valuation and Qualifying Accounts and Reserves
45
46
47
48
49
50
51
52
110
111
44
Management’s Report on Internal Control Over Financial Reporting
Crown Holdings, Inc.
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, 2012. 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, 2012, the Company’s internal control over financial reporting was effective based on those criteria.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2012 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
45
Crown Holdings, Inc.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Crown Holdings, Inc:
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the
financial position of Crown Holdings, Inc. and its subsidiaries at December 31, 2012 and December 31, 2011, and the results of
their operations and their cash flows for each of the three years in the period ended December 31, 2012 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 presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express
opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial
reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
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, PA
March 1, 2013
46
Crown Holdings, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions except per share data)
For the Years Ended December 31
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
Asset impairments and sales
Loss from early extinguishments of debt
Interest expense
Interest income
Translation and foreign exchange
Income before income taxes and equity earnings
Provision for / (benefit from) income taxes
Equity earnings in affiliates
Net income
Net income attributable to noncontrolling interests
Net income attributable to Crown Holdings
Earnings per common share attributable to Crown Holdings:
Basic
Diluted
2012
2011
2010
$
8,470
7,013
180
1,277
382
35
48
(42)
—
226
(7)
(1)
636
(17)
5
658
(101)
557
3.81
3.75
$
$
$
$
$
$
$
8,644
7,120
176
1,348
395
28
77
6
32
232
(11)
2
587
194
3
396
(114)
282
1.86
1.83
$
7,941
6,519
172
1,250
360
46
42
(18)
16
203
(9)
(4)
614
165
3
452
(128)
324
2.03
2.00
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
47
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
For the Years Ended December 31
Net income
2012
2011
2010
$
658
$
396
$
452
Other comprehensive income / (loss), net of tax
Foreign currency translation adjustments
Pension and other postretirement benefits
Derivatives qualifying as hedges
Total other comprehensive loss
Total comprehensive income
76
(135)
40
(19)
(54)
(120)
(93)
(267)
(31)
(74)
11
(94)
639
129
358
Net income attributable to noncontrolling interests
Translation adjustments attributable to noncontrolling interests
Derivatives qualifying as hedges attributable to noncontrolling interests
Comprehensive income attributable to Crown Holdings
(101)
(1)
(4)
533
(114)
(2)
6
19
(128)
6
1
237
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
48
Crown Holdings, Inc.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
December 31
Assets
Current assets
Cash and cash equivalents
Receivables, net
Inventories
Prepaid expenses and other current assets
Total current assets
Goodwill
Property, plant and equipment, net
Other non-current assets
Total
Liabilities and equity
Current liabilities
Short-term debt
Current maturities of long-term debt
Accounts payable and accrued liabilities
Total current liabilities
Long-term debt, excluding current maturities
Postretirement and pension liabilities
Other non-current liabilities
Commitments and contingent liabilities (Note L)
Equity/(deficit)
Noncontrolling interests
Preferred stock, authorized: 30,000,000; none issued (Note O)
Common stock, par value: $5.00; authorized: 500,000,000 shares; issued:
185,744,072 shares (Note O)
Additional paid-in capital
Accumulated earnings
Accumulated other comprehensive loss
Treasury stock at par value (2012 - 42,607,599 shares; 2011 - 37,294,779
shares)
Crown Holdings shareholders’ deficit
Total equity/(deficit)
2012
2011
$
$
$
$
$
$
350
1,057
1,166
177
2,750
1,998
1,995
747
7,490
261
115
2,142
2,518
3,289
1,098
462
285
—
929
668
1,069
(2,614)
(214)
(162)
123
342
948
1,148
165
2,603
1,952
1,751
562
6,868
128
67
2,090
2,285
3,337
996
489
234
—
929
863
512
(2,590)
(187)
(473)
(239)
6,868
Total
$
7,490
$
The accompanying notes are an integral part of these consolidated financial statements.
49
Crown Holdings, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
For the Years Ended December 31
Cash flows from operating activities
Net income
2012
2011
2010
$
658
$
396
$
452
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Provision for restructuring
Asset impairments and sales
Pension expense
Pension contributions
Stock-based compensation
Deferred income taxes
Changes in assets and liabilities:
Receivables
Inventories
Accounts payable and accrued liabilities
Asbestos liabilities
Other, net
Net cash provided by operating activities
Cash flows from investing activities
Capital expenditures
Insurance proceeds
Acquisition of businesses, net of cash acquired
Proceeds from sale of businesses, net of cash sold
Proceeds from sale of property, plant and equipment
Other
Net cash used for investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility and short-term debt
Debt issue costs
Common stock issued
Common stock repurchased
Purchase of noncontrolling interests
Dividends paid to noncontrolling interests
Other
Net cash used for financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
$
The accompanying notes are an integral part of these consolidated financial statements.
50
180
48
(42)
97
(102)
18
(101)
(113)
21
(6)
7
(44)
621
(324)
48
(78)
—
3
(11)
(362)
110
(66)
28
—
15
(257)
(4)
(79)
(1)
(254)
3
8
342
350
176
77
6
97
(404)
18
83
(36)
(119)
100
—
(15)
379
(401)
—
—
4
26
(1)
(372)
1,770
(1,069)
(192)
(22)
11
(312)
(202)
(104)
(9)
(129)
1
(121)
463
$
342
$
172
42
(18)
112
(79)
20
52
(255)
(119)
159
19
33
590
(320)
—
—
7
32
—
(281)
745
(734)
278
(31)
13
(255)
(169)
(112)
(34)
(299)
(6)
4
459
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T
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. 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 Company manufactures and sells metal containers, metal closures, and canmaking equipment. These products are manufactured
in the Company’s plants both within and outside the U.S. 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 accounting principles generally accepted in the United States of America 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”). If an entity is a VIE, the
Company determines whether it is the primary beneficiary based on whether it (1) has the power to direct the activities of the VIE
that most significantly impact the entity’s economic performance and (2) has the obligation to absorb losses of the entity or the
right to receive benefits from the entity that could potentially be significant to the VIE. If an entity is not a VIE, the Company
consolidates those entities in which it has control, including certain subsidiaries that are not majority-owned. Certain of the
Company’s agreements with noncontrolling interests contain provisions in which the Company would surrender certain decision-
making rights upon a change in control of the Company. Accordingly, consolidation of these operations may no longer be appropriate
subsequent to a change in control of the Company, as defined in the agreements. Investments in companies in which the Company
does not have 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 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, expense and cash flow 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 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. Revenue is recognized 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 estimated and provided for
in the period that the related sales are recorded. Taxes collected from customers and remitted to governmental authorities are
excluded from net sales. Shipping and handling fees and costs are reported as cost of products sold.
Stock-Based Compensation. The Company has stock-based employee compensation plans that are currently comprised of fixed
stock option grants and restricted stock awards. Compensation expense is recognized over the vesting period on a straight-line
basis using the grant date fair value of the award and the estimated number of awards that are expected to vest. The Company’s
plans provide for stock awards which include accelerated vesting upon retirement, disability, or death of eligible employees. The
Company considers a stock-based award to be vested when the service period is no longer contingent on the employee providing
future service. Accordingly, the related compensation cost is recognized immediately for awards granted to retirement-eligible
individuals or over the period from the grant date to the date that retirement eligibility is achieved, if less that the stated vesting
period.
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.
52
Crown Holdings, Inc.
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 collectability, 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 first-in, first-out (“FIFO”) method and for non-U.S. inventories under the FIFO or average cost method.
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 and repairs, including labor and material costs for planned major maintenance such as annual production line
overhauls, 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 described below
(in years). The Company periodically reviews the estimated useful lives of its PP&E and, where appropriate, changes are made
prospectively.
Land improvements
Buildings and Building Improvements
Machinery and Equipment
25
25 – 40
3 – 14
Goodwill. 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 of goodwill 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. Goodwill was allocated to the reporting units at the time of the acquisition based on the relative
fair values of the reporting units. If the carrying value of a 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, 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.
Taxes on Income. The provision for income taxes is determined using the asset and liability approach. Deferred taxes represent
the future expected tax consequences of differences between the financial reporting and tax bases of assets and liabilities based
upon enacted tax rates and laws. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not
that a tax benefit will not be realized.
The with-and-without approach is used to account for utilization of windfall tax benefits arising from the Company’s stock-based
compensation plans and only the direct impact of awards is considered when calculating the amount of windfalls or shortfalls.
Income tax-related interest is reported as interest expense and penalties are reported as income tax expense.
Derivatives and Hedging. All outstanding derivative financial instruments are recognized 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 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
53
Crown Holdings, Inc.
as hedges or do not qualify for hedge accounting treatment are reported currently in earnings. Amounts reported in earnings are
classified consistent with the item being hedged.
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.
Hedge accounting is discontinued prospectively when (i) the instrument is no longer effective in offsetting changes in fair value
or cash flows of the underlying hedged item, (ii) the instrument expires, is sold, terminated or exercised, or (iii) designating the
instrument as a hedge is no longer appropriate.
The Company formally documents all relationships between its hedging instruments and hedged items at inception, including 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.
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 $43, $43 and $42 in 2012, 2011 and 2010,
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.
Recent Accounting and Reporting Pronouncements. In January 2012, the Company adopted changes issued by the FASB to
the presentation of comprehensive income. These changes give companies the option to present the total of comprehensive income,
the components of net income, and the components of other comprehensive income either in a single continuous statement of
comprehensive income or in two separate but consecutive statements. The changes eliminated the option to present the components
of other comprehensive income as part of the statement of changes in shareholders’ equity. The items that must be reported in
other comprehensive income or when an item of other comprehensive income must be reclassified to net income were not changed.
Additionally, no changes were made to the calculation and presentation of earnings per share. Other than changes to presentation,
these changes had no impact on the Company's consolidated financial statements.
In January 2012, the Company adopted changes issued by the FASB to conform existing guidance regarding fair value measurement
and disclosure between GAAP and International Financial Reporting Standards. The FASB's changes clarify many of the existing
concepts for measuring fair value and do not result in a change in the Company's application of the FASB's fair value measurement
guidance. These changes include enhanced disclosures about recurring Level 3 fair value measurements which did not impact
the Company's financial statements. These changes also require additional disclosures for items that are not measured at fair value
in the balance sheet but for which the fair value is required to be disclosed.
In September 2011, the FASB issued changes to the testing of goodwill for impairment. These changes give companies the option
to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is
more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative
assessment and determines that an impairment is more likely than not, the entity is then required to perform the existing two-step
quantitative impairment test. An entity also may elect not to perform the qualitative assessment and, instead, go directly to the
two-step quantitative impairment test. The Company early adopted the changes for its review of goodwill in the fourth quarter of
2011. As the changes do not affect the outcome of the impairment analysis of a reporting unit, there was no impact on the Company’s
Consolidated Financial Statements.
B. Accumulated Other Comprehensive Loss Attributable to Crown Holdings
Pension and postretirement adjustments
Cumulative translation adjustments
Derivatives qualifying as hedges
2012
2011
$
$
(1,954)
(648)
(12)
(2,614)
$
$
(1,819)
(723)
(48)
(2,590)
54
Crown Holdings, Inc.
C. Receivables
Accounts receivable
Less: allowance for doubtful accounts
Net trade receivables
Miscellaneous receivables
2012
2011
$
$
922
(37)
885
172
1,057
$
$
834
(37)
797
151
948
At December 31, 2012, the Company had a receivable of $43 with a customer in its European Food business who has experienced
financial difficulty. The customer entered into a reorganization plan which included receiving additional capital from new investors
and merging with a competitor. As part of the plan, the customer is in the process of raising additional capital which it expects to
complete in 2013. The Company has agreed to settlement terms with the customer and expects the receivable to be fully paid.
The Company uses receivables securitization facilities in the normal course of business as part of managing its cash flows. In
North America, the Company has a $200 securitization facility that matures in December, 2015. In Europe, the Company has a
€110 ($144 at December 31, 2012) securitization facility that matures in July, 2017. The Company has determined that transactions
under these facilities do not qualify for sale accounting and has therefore accounted for the transactions as secured borrowings
with the receivables and associated liabilities recognized in the Company’s Consolidated Balance Sheets.
In addition, the Company uses receivables factoring arrangements in the normal course of business as part of managing its cash
flows. Under these arrangements, the Company sells its entire interest in specified receivables to various third parties. Where the
Company has surrendered control over factored receivables, the Company has accounted for the transfers as sales.
The Company’s continuing involvement in factored receivables accounted for as sales is limited to servicing the receivables. The
Company receives adequate compensation for servicing the receivables and no servicing asset or liability is recorded.
At December 31, the amounts securitized or factored were as follows:
Accounted for as secured borrowings
Accounted for as sales
2012
2011
$
$
216
312
$
$
113
297
In 2012, 2011and 2010, the Company recorded expenses related to securitization and factoring facilities of $8, $10 and $10 as
interest expense.
Collections from customers on securitized or factored receivables and related fees and costs are included in operating activities
in the Consolidated Statements of Cash Flows. Proceeds and repayments related to securitization or factoring transactions that do
not qualify for sale accounting are included in financing activities in the Consolidated Statements of Cash Flows.
D. Inventories
Raw materials and supplies
Work in process
Finished goods
2012
2011
$
$
602
128
436
1,166
$
$
602
136
410
1,148
55
E. Goodwill
Crown Holdings, Inc.
Changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2012 and 2011 were as
follows:
Americas
Beverage
North
America
Food
European
Beverage
European
Food
Non-
reportable
Segments
Total
Balance at January 1, 2011:
Goodwill
$
457 $
162 $
Accumulated impairment losses
Net
Foreign currency translation
Balance at December 31, 2011:
Goodwill
Accumulated impairment losses
Net
Foreign currency translation
Balance at December 31, 2012:
Goodwill
Accumulated impairment losses
(29)
428
(2)
455
(29)
426
2
457
(29)
162
162
162
2
164
Net
$
428 $
164 $
743 $
(73)
670
(11)
1,300 $
(724)
576
(16)
298 $
(150)
148
(3)
2,960
(976)
1,984
(32)
732
(73)
659
19
1,284
(724)
560
14
295
(150)
145
9
2,928
(976)
1,952
46
751
(73)
678 $
1,298
(724)
574 $
304
(150)
154 $
2,974
(976)
1,998
F. Property, Plant and Equipment
Buildings and improvements
Machinery and equipment
Land and improvements
Construction in progress
Less: accumulated depreciation and amortization
G. Other Non-Current Assets
Deferred taxes
Debt issue costs
Investments
Fair value of derivatives
Other
2012
2011
$
$
$
$
923
4,576
140
185
5,824
(3,829)
1,995
2012
577
40
30
1
99
747
$
$
$
$
806
4,195
136
211
5,348
(3,597)
1,751
2011
452
49
25
—
36
562
The investments caption includes the Company’s investments accounted for by the equity method and the cost method.
56
H. Accounts Payable and Accrued Liabilities
Crown Holdings, Inc.
Trade accounts payable
Salaries, wages and other employee benefits, including pension and postretirement
Accrued taxes, other than on income
Fair value of derivatives
Accrued interest
Asbestos liabilities
Income taxes payable
Deferred taxes
Restructuring
Other
I. Other Non-Current Liabilities
Asbestos liabilities
Deferred taxes
Postemployment benefits
Income taxes payable
Environmental
Fair value of derivatives
Other
2012
2011
$
$
$
$
1,469
168
117
27
47
25
12
12
70
195
2,142
2012
231
23
37
29
12
3
127
462
$
$
$
$
1,393
164
105
76
45
25
13
10
58
201
2,090
2011
224
27
44
32
12
6
144
489
Income taxes payable includes uncertain tax positions as discussed in Note W.
J. Lease Commitments
The Company leases manufacturing, warehouse and office facilities and certain equipment. Certain of the leases contain renewal
or purchase options, but the leases do not contain significant contingent rental payments, escalation clauses, rent holidays, rent
concessions or leasehold improvement incentives. Under long-term operating leases, minimum annual rentals are $53 in 2013,
$38 in 2014, $28 in 2015, $20 in 2016, $16 in 2017 and $62 thereafter. Such rental commitments have been reduced by minimum
sublease rentals of $5 due under non-cancelable subleases. Rental expense (net of sublease rental income) was $63, $62 and $60
in 2012, 2011 and 2010, respectively. The Company did not have any significant capital leases at December 31, 2012.
K. Asbestos-Related Liabilities
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, 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 recent years, the states of Alabama, Arizona, Florida, Georgia, Idaho, Indiana, Michigan, Mississippi, Nebraska, North Dakota,
Ohio, Oklahoma, South Carolina, South Dakota, Utah, Wisconsin and Wyoming enacted legislation that limits 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 legislation, which applies to future and, with the
exception of Georgia, South Carolina, South Dakota and Wyoming, pending claims, caps asbestos-related liabilities at the fair
57
Crown Holdings, Inc.
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 value of its predecessor's assets adjusted for inflation. 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 22, 2010, the Texas Supreme Court, in a 6-2 decision, reversed a lower court decision, Barbara Robinson v. Crown
Cork & Seal Company, Inc., No. 14-04-00658-CV, Fourteenth Court of Appeals, Texas, which had upheld the dismissal of an
asbestos-related case against Crown Cork. The Texas Supreme Court held that the Texas legislation was unconstitutional under
the Texas Constitution when applied to asbestos-related claims pending against Crown Cork when the legislation was enacted in
June of 2003. The Company believes that the decision of the Texas Supreme Court is limited to retroactive application of the Texas
legislation to asbestos-related cases that were pending against Crown Cork in Texas on June 11, 2003 and therefore, in its accrual,
continues to assign no value to claims filed after June 11, 2003.
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 paid significantly
more for asbestos-related claims than the acquired company’s adjusted asset value. In November 2004, the legislation was amended
to address a Pennsylvania Supreme Court decision (Ieropoli v. AC&S Corporation, et. al., No. 117 EM 2002) which held that the
statute violated the Pennsylvania Constitution due to retroactive application. The Company cautions that the limitations of the
statute, as amended, are subject to litigation and may not be upheld.
The Company further cautions that an adverse ruling in any litigation relating to the constitutionality or applicability to Crown
Cork of one or more statutes that limits the asbestos-related liability of alleged defendants like Crown Cork could have a
material impact on the Company.
The Company's approximate claims activity for the years ended 2012, 2011 and 2010 was as follows:
Beginning claims
New claims
Settlements or dismissals
Ending claims
2012
2011
2010
50,000
3,000
(2,000)
51,000
50,000
2,000
(2,000)
50,000
50,000
2,000
(2,000)
50,000
The Company's cash payments during the years ended 2012, 2011, and 2010 were as follows:
Asbestos-related payments
Settled claims payments (included in asbestos-related payments above)
$
$
28
20
$
28
20
27
17
2012
2011
2010
In the fourth quarter of each year, the Company performs an analysis of outstanding claims and categorizes by year of exposure
and state filed. As of December 31, 2012 and December 31, 2011, the Company's outstanding claims were:
Claimants alleging first exposure after 1964
Claimants alleging first exposure before or during 1964 filed in:
Texas
Pennsylvania
Other states that have enacted asbestos legislation
Other states
Total claims outstanding
58
2012
2011
15,000
13,000
2,000
6,000
15,000
51,000
15,000
13,000
2,000
5,000
15,000
50,000
Crown Holdings, Inc.
The outstanding claims in each period exclude 3,100 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. The outstanding claims also exclude approximately 19,000
inactive claims. Due to the passage of time, the Company considers it unlikely that the plaintiffs in these cases will pursue further
action against the Company. The exclusion of these inactive claims had no effect on the calculation of the Company’s accrual as
the claims were filed in states, as described above, where the Company’s liability is limited by statute.
With respect to claimants alleging first exposure to asbestos before or during 1964, the Company does not include in its accrual
any amounts for settlements in states where the Company’s liability is limited by statute except for certain pending claims in Texas
as described earlier.
With respect to post-1964 claims, regardless of the existence of asbestos legislation, the Company does not include in its accrual
any amounts for settlement of these claims because of increased difficulty of establishing identification of relevant insulation
products as the cause of injury. Given its settlement experience with post-1964 claims, the Company does not believe that an
adverse ruling in the Texas or Pennsylvania asbestos litigation cases, or in any other state that has enacted asbestos legislation,
would have a material impact on the Company with respect to such claims.
As of December 31, the percentage of outstanding claims related to claimants alleging serious diseases (primarily mesothelioma
and other malignancies) were as follows:
Total claims
Pre-1964 claims in states without asbestos legislation
2012
2011
2010
19%
36%
18%
33%
18%
31%
Crown Cork has entered into arrangements with plaintiffs’ counsel in certain jurisdictions with respect to claims which are not
yet filed, or asserted, against it. However, Crown Cork expects claims under these arrangements to be filed or asserted against
Crown Cork in the future. The projected value of these claims is included in the Company’s estimated liability as of December 31,
2012.
As of December 31, 2012, the Company’s accrual for pending and future asbestos-related claims and related legal costs was $256,
including $204 for unasserted claims. The Company’s accrual includes estimated probable costs for claims through the year 2022.
The Company’s accrual excludes potential costs for claims beyond 2022 because the Company believes that the key assumptions
underlying its accrual are subject to greater uncertainty as the projection period lengthens.
Approximately 88% of the claims outstanding at the end of 2012 were filed by plaintiffs who do not claim a specific amount of
damages or claim a minimum amount as established by court rules relating to jurisdiction; approximately 11% were filed by
plaintiffs who claim damages of less than $5; approximately 1% were filed by plaintiffs who claim damages from $5 to less than
$100 (90% of whom claim damages less than $25) and 3 were filed by plaintiffs who claim damages in excess of $100.
It is reasonably possible that the actual loss could be in excess of the Company’s accrual. However, the Company is unable to
estimate the reasonably possible loss in excess of its accrual due to uncertainty in the following assumptions that underlie the
Company’s accrual and the possibility of losses in excess of such accrual: the amount of damages sought by the claimant, the
Company and claimant’s willingness to negotiate a settlement, 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 settlements for non-bankrupt
defendants), the nature of pending and future claims (including the seriousness of alleged disease, whether claimants allege first
exposure to asbestos before or during 1964 and the claimant’s ability to demonstrate the alleged link to Crown Cork), the volatility
of the litigation environment, the defense strategies available to the Company, the level of future claims, the rate of receipt of
claims, the jurisdiction in which claims are filed, and the effect of state 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).
59
L. Commitments and Contingent Liabilities
Crown Holdings, Inc.
The Company, along with others in most cases, has been identified by the EPA or a comparable state environmental agency as a
Potentially Responsible Party (“PRP”) at a number of sites and has recorded aggregate accruals of $6 for its share of estimated
future remediation costs at these sites. The Company has been identified as having either directly or indirectly disposed of
commercial or industrial waste at the sites subject to the accrual, and where appropriate and supported by available information,
generally has agreed to be responsible for a percentage of future remediation costs based on an estimated volume of materials
disposed in proportion to the total materials disposed at each site. The Company has not had monetary sanctions imposed nor has
the Company been notified of any potential monetary sanctions at any of the sites.
The Company has also recorded aggregate accruals of $7 for remediation activities at various worldwide locations that are owned
by the Company and for which the Company is not a member of a PRP group. Although the Company believes its accruals are
adequate to cover its portion of future remediation costs, there can be no assurance that the ultimate payments will not exceed the
amount of the Company’s accruals and will not have a material effect on its results of operations, financial position and cash
flow. Any possible loss or range of potential loss that may be incurred in excess of the recorded accruals cannot be estimated.
The Company's Italian subsidiaries have received assessments for value added taxes and related income taxes from the Italian tax
authorities and expect to receive additional assessments for value added taxes resulting from certain third party suppliers' failures
to remit required value added tax payments due by those suppliers under Italian law with respect to purchases for resale to the
Company. The assessments cover tax periods 2004 through 2007 and additional assessments are expected to cover tax periods
2007 through 2009. The expected total assessments are approximately €25 ($33 at December 31, 2012) plus any applicable interest
and penalties which the Company estimates may be up to approximately €50 ($66 at December 31, 2012). In early 2012, the
Company received one favorable ruling and two unfavorable rulings from lower level Italian courts related to these assessments.
These rulings have been appealed. In the fourth quarter of 2012, the Company settled an assessment with respect to 2007 taxes
for approximately €2 ($3 at December 31, 2012). In February 2013, the Company entered into an additional settlement with
respect to a 2005 tax assessment for approximately €2 ($3 at December 31, 2012). As of December 31, 2012, the Company has
accrued $14 related to the assessments. While the Company believes it has meritorious defenses to the remaining Italian tax
claims, it is reasonably possible that the Company could incur a loss in excess of its accrual. The Company cannot reasonably
estimate the possible loss or range of losses because the application of penalties under Italian law is complex and the amount
assessed by the Italian authorities is discretionary. Settlement discussions with the Italian tax authorities are ongoing. The Company
intends to continue disputing the assessments with respect to the open matters in judicial proceedings barring any settlement with
the Italian tax authorities. There can be no assurance the Company will be successful in settling these matters or prevailing in
judicial proceedings, or that the final amount of any additional taxes and related interest and penalties payable to the Italian tax
authorities in such settlement or judicial proceedings will be under the Company's accrual.
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 Company’s 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 earnings, financial position
or cash flow.
The Company has various commitments to purchase materials, supplies and utilities 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 standby letters of credit and for purchases of
capital assets.
At December 31, 2012, the Company was party to 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 $10. The Company accrues for costs related to these items when it is
probable that a liability has been incurred and the amount can be reasonably estimated. At December 31, 2012, the Company also
had guarantees of $40 related to the residual values of leased assets.
60
Crown Holdings, Inc.
M. Restructuring
The Company recorded restructuring charges as follows:
North America Food
European Food
Asia Pacific
Other European operations
European Division Headquarters
Corporate
Restructuring charges by type are as follows:
Termination benefits
Other exit costs
Asset write-downs
European Division Headquarters
2012
2011
2010
$
3
15
4
18
3
5
48
$
2012
2011
35
13
—
48
$
$
3
9
—
45
20
—
77
56
21
—
77
$
$
$
$
28
—
—
—
14
—
42
20
12
10
42
2010
$
$
$
$
As of December 31, 2012, the Company incurred costs of $37 which are expected to be the total costs related to the relocation of
its European Division headquarters and management to Switzerland in order to benefit from a more centralized management
location.
The following table summarizes the restructuring accrual balances and utilization by cost type for the relocation:
Balance at December 31, 2010
Provisions
Payments made
Foreign currency translation
Balance at December 31, 2011
Provisions
Payments
Foreign currency translation
Balance at December 31, 2012
Termination
benefits
Other exit
costs
$
$
$
8
1
(8)
(1)
—
—
—
—
— $
2
19
(2)
—
19
3
—
—
22
$
Asset
writedowns
$
— $
—
—
— $
—
—
—
—
— $
Total
10
20
(10)
(1)
19
3
—
—
22
Other exit costs represent the estimated employee compensation costs resulting from an intercompany payment related to the
relocation. The Company expects to pay these costs over the next 3 years.
European Food
In 2011, the Company recorded a charge of $9 to reduce manufacturing capacity and headcount in its European Food segment.
In 2012, the Company continued to monitor capacity and identified additional restructuring actions to improve profitability. As
a result, the Company recorded additional restructuring charges of $15 to further reduce capacity and headcount. These actions
combined are expected to reduce headcount by approximately 285 and to eliminate approximately 7% of the business' capacity.
Due to the similar nature of these actions, the Company has combined in the rollforward presented below. The Company expects
to incur future additional charges of $5 related to the actions which are expected to be completed in 2014 at an estimated aggregate
cost of $29. The Company continues to review its supply and demand profile and long-term plans in Europe and it is possible
that the Company may record additional restructuring charges in the future.
61
Crown Holdings, Inc.
Termination
benefits
Other exit
costs
Asset
writedowns
Total
$
$
7
9
(4)
(2)
10
14
(7)
1
18
$
$
— $
—
—
—
—
1
(1)
—
— $
— $
—
—
—
—
—
—
—
— $
7
9
(4)
(2)
10
15
(8)
1
18
Balance at December 31, 2010
Provisions
Payments made
Foreign currency translation
Balance at December 31, 2011
Provisions
Payments
Foreign currency translation
Balance at December 31, 2012
Other European operations
In 2011, the Company recorded a charge of $45 to reduce manufacturing capacity and headcount in other European operations
primarily its European Aerosol and Specialty Packaging businesses. In 2012, the Company continued to monitor capacity and
identified additional restructuring actions to improve profitability. As a result, the Company recorded additional restructuring
charges of $18 to further reduce capacity and headcount. These actions combined are expected to reduce headcount by approximately
474 and to eliminate approximately 20% of the businesses' capacity. Due to the similar nature of these actions, the Company has
combined in the rollforward presented below. The Company expects to incur future additional charges of $5 related to the actions
which are expected to be completed in 2014 at an estimated aggregate cost of $68. The Company continues to review its supply
and demand profile and long-term plans in Europe and it is possible that the Company may record additional restructuring charges
in the future.
The table below summarizes the restructuring accrual balances and utilization by cost type for this action.
Balance at December 31, 2010
Provisions
Payments made
Foreign currency translation
Balance at December 31, 2011
Provisions
Payments made
Foreign currency translation
Balance at December 31, 2012
Other
Termination
benefits
Other exit
costs
Asset
writedowns
Total
$
$
2
45
(1)
(1)
45
15
(23)
—
37
$
$
— $
—
—
—
—
3
(3)
—
— $
— $
—
—
—
—
—
—
—
— $
2
45
(1)
(1)
45
18
(26)
—
37
As of December 31, 2012, the accrual balance related to restructuring actions in North America Food was $1, Asia Pacific was
$2 and Corporate was $5. These amounts relate to termination benefits for actions taken in 2012 and are expected to be paid in
2013.
N. Asset Impairments and Sales
During 2012, the Company recognized a net gain of $42 for asset impairments and sales including $31 related to insurance proceeds
received for property damage incurred in the 2011 flooding of its beverage can plant in Thailand and a gain of $14 related to its
acquisition of Superior Multi-Packaging, Ltd., as described further in Note S.
During 2011, the Company recorded a net charge of $6 for asset impairments and sales including a loss of $4 for the insurance
deductible related to its beverage can plant in Thailand that was shut down in October due to damage caused by severe flooding.
As a result of the flooding, the company wrote-off $23 of property, plant and equipment which was fully offset by anticipated
insurance proceeds which the Company recognized because realization of such proceeds was considered probable.
62
Crown Holdings, Inc.
During 2010, the Company recorded a net gain of $18 for asset impairments and sales including a gain of $14 from sales of
Canadian real estate as a result of previously announced plant closings and $4 from the sale of the Company’s plastic closures
business in Brazil.
O. Capital Stock
A summary of common share activity for the year ended December 31 is as follows (in shares):
Common shares outstanding at January 1
Shares repurchased
Shares issued upon exercise of employee stock options
Restricted stock issued to employees
Shares issued to non-employee directors
2012
148,449,293
(6,954,968)
1,143,755
468,323
30,070
2011
2010
155,256,791
(7,965,176)
666,183
463,885
27,610
161,483,074
(7,959,707)
1,219,680
481,326
32,418
Common shares outstanding at December 31
143,136,473
148,449,293
155,256,791
During 2012, the Company repurchased shares of its common stock as follows:
•
•
•
In December 2011, the Company entered into an agreement to repurchase shares of its common stock under an accelerated
share repurchase program. Pursuant to the agreement, the Company initially purchased 2,771,004 shares for $100. In
April 2012, the Company received an additional 4,653 shares based on its volume-weighted average stock price during
the term of the transaction.
In July 2012, the Company entered into an agreement to repurchase shares of its common stock under an accelerated
repurchase program. Pursuant to the agreement, the Company initially purchased 5,016,190 shares for $200. In November
2012, the Company received an additional 400,517 shares based on its volume-weighted average stock price during the
term of the transaction.
In December 2012, the Company entered into an agreement to repurchase shares of its common stock. Pursuant to the
agreement, the Company purchased 1,341,412 shares for $50.
• The Company also repurchased 192,196 shares of its common stock in connection with the surrender of shares to cover
taxes on the vesting of restricted stock.
The share repurchases were made pursuant to authorizations from the Company's Board of Directors. In December 2012, the
Company's Board of Directors authorized the repurchase of an aggregate amount of $800 of the Company's common stock through
the end of 2014. This authorization supersedes the previous authorization. Share repurchases under the Company's programs may
be made in the open market or through privately negotiated transactions, and at times and in such amounts as management deems
appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate
and regulatory requirements and other market conditions.
The Company is not obligated to acquire any shares of its common stock and the share repurchase program may be suspended or
terminated at any time at the Company’s discretion. Share repurchases are subject to the terms of the Company’s debt agreements,
market conditions and other factors. The repurchased shares, if any, are expected to be used for the Company’s stock-based benefit
plans, as required, and to offset dilution resulting from the issuance of shares thereunder, and for other general corporate purposes.
The Board of Directors has the authority to issue, at any time or from time to time, up to 30 million shares of preferred stock in
one or more classes or series of classes. Such shares of 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 2012, the Company amended its Shareholders’ Rights Plan to accelerate the final expiration date. As a result of the amendment,
the Shareholders’ Rights Plan and underlying common stock purchase rights expired and terminated as of the close of business
on December 14, 2012.
The Company’s ability to pay dividends and repurchase its common stock is limited by certain restrictions in its debt agreements.
These restrictions are subject to a number of exceptions, however, allowing the Company to make otherwise restricted payments.
63
Crown Holdings, Inc.
The amount of restricted payments permitted to be made, including dividends and repurchases of the Company’s common stock,
is generally limited to the cumulative excess of $200 plus 50% of adjusted net income plus proceeds from the exercise of employee
stock options over the aggregate of restricted payments made since July 2004. Adjustments to net income may include, but are
not limited to, items such as asset impairments, gains and losses from asset sales and early extinguishments of debt.
P. Stock-Based Compensation
The Company’s shareholder-approved stock-based incentive compensation plans provide for the granting of awards in the form
of stock options, deferred stock, restricted stock or stock appreciation rights (“SARs”). The awards may be subject to the
achievement of certain performance goals, generally based on market conditions, as determined by the Plan Committee designated
by the Company’s Board of Directors. Shares awarded under the plans are issued from the Company’s treasury shares. As of
December 31, 2012, 1.6 million shares are available for future awards under the Company’s 2006 stock-based incentive
compensation plan. There have been no awards of SARs or deferred stock.
Stock-based compensation expense was as follows:
Stock options
Restricted stock
Stock Options
A summary of stock option activity follows:
Options outstanding at January 1
Granted
Exercised
Forfeited
Expired
Options outstanding at December 31
Options fully vested or expected to vest at December 31
$
2012
5
12
$
2011
5
12
$
2010
5
14
2012
Weighted average
exercise price
$
$
19.12
—
13.59
25.15
21.89
21.38
21.31
Shares
3,786,419
—
(1,140,255)
(82,900)
(7,150)
2,556,114
2,543,874
The following table summarizes outstanding and exercisable options at December 31, 2012:
Options Outstanding
Options Exercisable
Range of
exercise
prices
$8.60 to $8.75
$13.20 to $23.19
$23.45
$23.88 to $40.01
Number
outstanding
453,568
26,500
1,936,046
140,000
2,556,114
Weighted
average
remaining
contractual
life in years
Weighted
average
exercise
price
$
1.3
3.5
4.0
7.3
3.7
8.61
18.18
23.45
34.73
21.38
Number
exercisable
$
453,568
22,500
1,441,846
34,000
1,951,914
Weighted
average
exercise
price
8.61
17.29
23.45
25.17
19.96
Outstanding stock options have a contractual term of ten years, are fixed-price and non-qualified. Options granted in 2007 or later
vest over six years at 20% per year with initial vesting on the second anniversary of the grant.
Options outstanding at December 31, 2012 had an aggregate intrinsic value (which is the amount by which the stock price exceeded
the exercise price of the options as of December 31, 2012) of $40. The aggregate intrinsic value of options exercised during the
years ended December 31, 2012, 2011 and 2010 was $27, $15 and $24, respectively. Cash received from exercise of stock options
during 2012 was $15.
64
Crown Holdings, Inc.
At December 31, 2012, shares that were fully vested or expected to vest had an aggregate intrinsic value of $40 and a weighted
average remaining contractual term of 3.7 years, and shares exercisable had an aggregate intrinsic value of $33 and a weighted
average remaining contractual term of 3.4 years. Also at December 31, 2012, there was $2 of unrecognized compensation expense
related to outstanding nonvested stock options with a weighted average recognition period of 0.8 years.
Stock options are valued at their grant date fair value using the Black-Scholes option pricing model. Valuations incorporate several
variables, including expected term, expected volatility, and a risk-free interest rate. The expected term (which is the timeframe
over which an award is exercised after grant) is derived from historical data about participant exercise and post-vesting employment
termination patterns. Volatility is the expected fluctuation of the Company’s stock price in the market and is derived from a
combination of historical data about the Company’s stock price and implied volatilities based on market data. The risk-free interest
rate is the U.S. Treasury yield curve rate in effect at the date of the grant which has a contractual life similar to the option’s expected
term.
There were no stock option grants in 2012. The fair values of stock option grants during 2011 and 2010 were estimated using the
following weighted average assumptions:
Risk-free interest rate
Expected life of option (years)
Expected stock price volatility
Expected dividend yield
2011
2.4%
6.8
31.7%
—%
2010
2.6%
6.0
33.2%
—%
The weighted average grant-date fair values for options granted during 2011 and 2010 were $14.98 and $10.14, respectively. The
Company has assumed an annual forfeiture rate of between three and five percent in each year based on historical data of the
forfeiture of nonvested share-based awards through the termination of service by plan participants.
Restricted Stock
Each year the Company awards shares to certain senior executives in the form of time-vested restricted stock and performance-
based shares. The restricted stock vests ratably over three years on the anniversary date of the award. The performance-based
shares cliff vest at the end of three years on the anniversary date of the award. The number of performance-based shares that will
ultimately vest is based on the level of performance achieved, ranging between 0% and 200% of the shares originally awarded
and will be settled in shares of common stock. The market performance criteria is the Company’s Total Shareholder Return (“TSR”),
which includes share price appreciation and dividends paid, during the three-year term of the award measured against the TSR of
a peer group of companies. Participants who terminate employment because of retirement, disability or death receive accelerated
vesting of their time-vested awards to the date of termination. However, performance-based awards, for such participants, will
not be issued until the original vesting date.
A summary of restricted stock activity follows:
Non-vested shares outstanding at January 1, 2012
Awarded:
Time-vesting
Performance-based
Performance-based – achieved 149% level (grant-date fair value of $33.98)
Released:
Time-vesting shares awarded in 2009 through 2011
Performance-based shares awarded in 2009
Performance-based awards – achieved 149% level
Non-vested shares outstanding at December 31, 2012
Number of shares
997,497
126,582
216,188
125,552
(185,848)
(256,229)
(125,552)
898,190
The average grant-date fair value of restricted stock awarded in 2012, 2011 and 2010 follows:
Time-vested restricted stock
Performance-based shares
2012
2011
2010
$
$
33.75
39.52
$
$
33.70
41.69
$
$
26.80
36.25
65
Crown Holdings, Inc.
The fair values of the performance-based shares awarded were calculated using a Monte Carlo valuation model and the following
weighted average assumptions:
Risk-free interest rate
Expected term (years)
Expected stock price volatility
2012
2011
2010
0.4%
3
27.8%
1.0%
3
37.9%
1.4%
3
38.8%
During 2012, the Company issued 125,552 additional performance-based shares under its 2009 award because it exceeded the
target level (100%) of performance-based shares, established on the original date of the related award, by 49%. These shares were
issued without restriction.
At December 31, 2012, unrecognized compensation cost related to outstanding restricted stock was $6. The weighted average
period over which the expense is expected to be recognized is 1.2 years. The aggregate market value of the shares released and
issued on the vesting dates was $19.
The Company maintains a Stock-Based Compensation Plan for Non-Employee Directors. Under the plan a portion of the non-
employee directors' quarterly compensation is provided in the form of restricted stock. During 2012, $1 of stock-based compensation
was recognized under this plan.
Q.
Debt
Short-term debt
Securitization
Bank loans/overdrafts/factoring
Total short-term debt
Long-term debt
Senior secured borrowings:
Revolving credit facilities
Term loan facilities
U.S. dollar at LIBOR plus 1.75% due 2016
Euro (€274 at December 31, 2012) at EURIBOR plus 1.75% due 2016
Senior notes and debentures:
U.S. dollar 7.625% due 2017
Euro (€500 at December 31, 2012) 7.125% due 2018
U.S. dollar 6.25% due 2021
U.S. dollar 7.375% due 2026
U.S. dollar 7.50% due 2096
Other indebtedness in various currencies
Fixed rate with rates in 2012 from 1.0% to 8.5% due through 2019
Variable rate with average rates in 2012 from 2.6% to 6.6% through 2018
Unamortized discounts
Total long-term debt
Less: current maturities
.
Total long-term debt, less current maturities
2012
2011
$
$
$
$
203
58
261
45
550
362
400
659
700
350
64
157
126
(9)
3,404
(115)
3,289
$
$
$
$
100
28
128
119
550
355
400
647
700
350
64
178
52
(11)
3,404
(67)
3,337
The estimated fair value of the Company’s long-term borrowings, using a market approach incorporating level 2 inputs such as
quoted market prices for the same or similar issues, was $3,603 at December 31, 2012.
The weighted average interest rates were as follows:
Short-term debt
Revolving credit facilities
2012
2011
2010
1.9%
3.5%
2.5%
3.6%
2.7%
2.6%
66
Crown Holdings, Inc.
Aggregate maturities of long-term debt for the five years subsequent to 2012, excluding unamortized discounts, are $115, $183,
$195, $720 and $416, respectively. Cash payments for interest during 2012, 2011 and 2010 were $205, $203 and $163, respectively.
The Company’s senior secured revolving credit facilities, which mature in June 2015, include provisions for letters of credit up
to $210 that reduce the amount of borrowing capacity otherwise available. At December 31, 2012, the Company’s available
borrowing capacity under the facilities was $1,104, equal to the facilities’ aggregate capacity of $1,200 less $45 of borrowings
and $51 of outstanding letters of credit. The interest rate on the facilities can vary from LIBOR or EURIBOR plus a margin of
1.750% up to 2.25% plus a 0.25% facing fee on letters of credit. The senior secured revolving credit facilities and term loans
contain financial covenants including an interest coverage ratio and a total net leverage ratio.
See Note Y for subsequent event discussion of the Company's issuance of senior notes due 2023, redemption of senior notes due
2017 and partial repayment of senior secured term loan facilities.
2011 Activity
In January 2011, the Company sold $700 principal amount of 6.25% senior notes due 2021. The notes were issued at par by Crown
Americas LLC and Crown Americas Capital Corp. III, each a subsidiary of the Company, and are unconditionally guaranteed by
the Company and substantially all of its U.S. subsidiaries. The Company paid $11 in issue costs that will be amortized over the
term of the debt.
In June 2011, the Company amended its existing senior secured credit facilities to add a $200 term loan facility and a €274 ($355)
term loan facility, each of which matures in June 2016 and bear interest at LIBOR or EURIBOR plus 1.75%. The Company paid
$6 in issue costs that will be amortized over the term of the facilities.
In November 2011, the Company amended its existing senior secured credit facilities to add an additional $350 term loan facility
which matures in June 2016 and bears interest at LIBOR plus 1.75%. The Company maintained the ability to enter into up to
$1,000 of additional term loans under its existing facilities, subject to agreement from any participating lenders. The Company
paid $5 in issue costs that will be amortized over the term of the facilities.
The Company recorded a loss from early extinguishments of debt of $32 including $27 for premiums paid and $5 for the write
off of deferred financing fees in connection with the following transactions.
• The Company retired all of its $600 outstanding 7.75% senior notes due 2015 and paid a redemption premium of $25.
• The Company repaid its existing $147 and €108 ($159) term loans, which were scheduled to mature in November 2012.
• The Company redeemed all €83 ($121) of the outstanding 6.25% first priority senior secured notes due September 2011.
2010 Activity
In June 2010, the Company repaid $200 of its U.S. dollar term loan facility and the equivalent of $200 of its euro term loan facility.
In July 2010, the Company sold €500 ($650) principal amount of 7.125% senior notes due 2018. The notes were issued at par by
Crown European Holdings SA, a wholly owned subsidiary of the Company. The notes are senior obligations of Crown European
Holdings SA and are unconditionally guaranteed on a senior basis by the Company and each of the Company’s present and future
U.S. subsidiaries that guarantees obligations under the Company’s credit facilities and, subject to applicable law, each of Crown
European Holdings SA’s subsidiaries that guarantee obligations under the Company’s credit facilities.
In connection with these transactions, the Company paid $31 in bond issue costs that will be amortized over the related contractual
term.
The Company recorded a loss from early extinguishments of debt of $16, including $12 for premiums paid and $4 for the write
off of deferred financing fees, in connection with the following transactions:
• The Company retired €76 ($101) principal amount of Crown European Holdings SA’s 6.25% first priority senior secured
notes due 2011 and paid a redemption premium of $4.
67
Crown Holdings, Inc.
• The Company redeemed all of the outstanding $200 principal amount of 7.625% senior notes due 2013 of Crown Americas
LLC and Crown Americas Capital Corp., each a wholly-owned subsidiary of the Company, and paid a redemption premium
of $8.
R. Derivative and Other Financial Instruments
Fair Value Measurements
Under US GAAP a framework exists for measuring fair value, providing a three-tier hierarchy of pricing inputs used to report
assets and liabilities that are adjusted to fair value. Level 1 includes inputs such as quoted prices which are available in active
markets for identical assets or liabilities as of the report date. Level 2 includes inputs other than quoted prices in active markets
included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 includes unobservable
pricing inputs that are not corroborated by market data or other objective sources. The Company has no items valued using Level
3 inputs other than certain pension plan assets.
The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The Company’s
assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation
of assets and liabilities measured at fair value and their placement within the fair value hierarchy.
The Company applies a market approach to value its commodity price hedge contracts. Prices from observable markets are used
to develop the fair value of these financial instruments and they are reported under Level 1. The Company uses an income approach
to value its foreign exchange forward contracts. These contracts are valued using a discounted cash flow model that calculates the
present value of future cash flows under the terms of the contracts using market information as of the reporting date, such as
foreign exchange spot and forward rates, and are reported under Level 2 of the fair value hierarchy.
Fair value disclosures for financial assets and liabilities that were accounted for at fair value on a recurring basis are provided later
in this note. In addition, see Note Q for fair value disclosures related to debt.
Derivative Financial Instruments
In the normal course of business the Company is subject to risk from adverse fluctuations in currency exchange rates, interest
rates and commodity prices. The Company manages these risks through a program that includes the use of derivative financial
instruments, primarily swaps and forwards. Counterparties to these contracts are major financial institutions. The Company is
exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments
for trading or speculative purposes.
The Company’s objective in managing exposure to market risk is to limit the impact on earnings and cash flow. The extent to
which the Company uses such instruments is dependent upon its access to these contracts in the financial markets and its success
using other methods, such as netting exposures in the same currencies to mitigate foreign exchange risk and using sales agreements
that permit the pass-through of commodity price and foreign exchange rate risk to customers.
For derivative financial instruments accounted for in hedging relationships, the Company formally designates and documents, at
inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the manner
in which effectiveness will be assessed. The Company formally assesses, both at inception and at least quarterly thereafter, whether
the hedging relationships are effective in offsetting changes in fair value or cash flows of the related underlying exposures. Any
ineffective portion of the change in fair value of the instruments is recognized immediately in earnings.
Cash Flow Hedges
The Company designates certain derivative financial instruments as cash flow hedges. No components of the hedging instruments
are excluded from the assessment of hedge effectiveness. Changes in fair value of outstanding derivatives accounted for as cash
flow hedges, except any ineffective portion, are recorded in other comprehensive income until earnings are impacted by the hedged
transaction. Classification of the gain or loss in the Consolidated Statements of Operations upon release from comprehensive
income is the same as that of the underlying exposure. Contracts outstanding at December 31, 2012 mature between one and thirty-
four months.
When the Company discontinues hedge accounting because it is no longer probable that an anticipated transaction will occur in
the originally specified period, changes to fair value accumulated in other comprehensive income are recognized immediately in
earnings.
68
Crown Holdings, Inc.
The Company uses commodity forwards to hedge anticipated purchases of various commodities, including aluminum, fuel oil
and natural gas and these exposures are hedged by a central treasury unit.
The Company also designates certain foreign exchange contracts as cash flow hedges of anticipated foreign currency denominated
sales or purchases. The Company manages these risks at the operating unit level. Often the hedging of foreign currency risk is
performed in concert with related commodity price hedges.
The following table sets forth financial information about the impact on Accumulated Other Comprehensive Income (“AOCI”)
and earnings from changes in fair value related to derivative instruments.
Derivatives in cash flow hedges
Foreign exchange
Commodities
Total
Amount of gain/(loss)
recognized in AOCI
(effective portion)
2012
2011
Amount of gain/(loss)
reclassified from AOCI
into earnings
2012
2011
$
$
— $
(82)
(82)
$
(8)
(66)
(74)
$
$
— $
(46)
(46)
$
(1)
(2)
(5)
18
13
(1) Within the Statement of Operations for the twelve months ended December 31, 2012, a gain of $14 was recognized in cost
of products sold and a loss of $14 was recognized in net sales. During the twelve months ended December 31, 2011, a gain of
$1 was recognized in cost of products sold and a loss of $6 recognized in net sales.
(2) Within the Statement of Operations for the twelve months ended December 31, 2012, a loss of $60, including $3 of
ineffectiveness, was recognized in cost of products sold and a tax benefit of $14 was recognized in income tax expense. During
the twelve months ended December 31, 2011, a gain of $25 was recognized in cost of products sold and a tax charge of $7 was
recognized in income tax expense.
For the year-ended December 31, 2012, a gain of $40 related to the effective portion of derivatives qualifying as hedges was
recognized in other comprehensive income net of tax of $7. At December 31, 2012, the effective portion of derivatives
qualifying as hedges recognized in accumulated other comprehensive was a loss of $12 net of an income tax benefit of $4.
For the twelve month period ending December 31, 2013, a net loss of $15 ($11, net of tax) is expected to be reclassified to earnings.
No amounts were reclassified during the twelve months ended December 31, 2012 and 2011 in connection with anticipated
transactions that were no longer considered probable.
Fair Value Hedges and Contracts Not Designated as Hedges
The Company designates certain derivative financial instruments as fair value hedges of recognized foreign-denominated assets
and liabilities, generally trade accounts receivable and payable and unrecognized firm commitments. The notional values and
maturity dates of the derivative instruments coincide with those of the hedged items. Changes in fair value of the derivative
financial instruments, excluding time value, are offset by changes in fair value of the related hedged items.
Other than for firm commitments, amounts related to time value are excluded from the assessment and measurement of hedge
effectiveness and are reported in earnings. Less than $1 was reported in earnings for the twelve months ended December 31, 2012.
Certain derivative financial instruments, including foreign exchange contracts related to intercompany debt, were not designated
or did not qualify for hedge accounting; however, they are effective economic hedges as the changes in their fair value, except for
time value, are offset by changes in re-measurement of the related hedged items. The Company’s primary use of these derivative
instruments is to offset the earnings impact that fluctuations in foreign exchange rates have on certain monetary assets and liabilities
denominated in nonfunctional currencies. Changes in fair value of these derivative instruments are immediately recognized in
earnings as foreign exchange adjustments.
The impact on earnings from foreign exchange contracts designated as fair value hedges was a gain of $4 for the twelve months
ended December 31, 2012 and less than $1 for the twelve months ended December 31, 2011. The impact on earnings from foreign
exchange contracts not designated as hedges was a gain of $2 for the twelve months ended December 31, 2012 and a loss of $33
69
Crown Holdings, Inc.
for the same period in 2011. These adjustments were reported within translation and foreign exchange in the Consolidated
Statements of Operations and were offset by changes in the fair values of the related hedged item.
Net Investment Hedges
During the year ended December 31, 2012, the Company designated certain derivative and non-derivative financial instruments
(debt) as hedges of its net investment in a euro-based subsidiary and recorded a loss of $10 ($6, net of tax) in accumulated other
comprehensive income. The Company did not have any net investment hedges outstanding at December 31, 2012.
The following table sets forth the fair value hierarchy for the Company's financial assets and liabilities that were accounted for
at fair value on a recurring basis as of December 31, 2012 and December 31, 2011, respectively.
Derivative Assets
Derivatives designated as hedges:
Balance Sheet Classification
Foreign exchange
Commodities
Commodities
Other current assets
Other current assets
Other non-current assets
Derivatives not designated as hedges:
Foreign exchange
Other current assets
Total
Derivative Liabilities
Derivatives designated as hedges:
Balance Sheet Classification
Foreign exchange
Commodities
Commodities
Accounts payable and accrued
liabilities
Accounts payable and accrued
liabilities
Other non-current liabilities
Derivatives not designated as hedges:
Foreign exchange
Accounts payable and accrued
liabilities
Total
Fair Value
Hierarchy
December 31,
2012
December 31,
2011
2
1
1
2
2
1
1
2
$
$
$
$
5
5
1
11
22
6
17
3
4
30
$
$
$
$
9
4
—
6
19
10
56
6
10
82
The aggregate U.S. dollar-equivalent notional values of outstanding derivative instruments in the Consolidated Balance Sheets at
December 31, 2012 and December 31, 2011 were:
Derivatives in cash flow hedges:
Foreign exchange
Commodities
Derivatives in fair value hedges:
Foreign exchange
Derivatives not designated as hedges:
Foreign exchange
S. Acquisitions
December 31,
2012
December 31,
2011
$
$
471
434
105
924
480
528
123
965
In the fourth quarter of 2012, the Company completed the following acquisitions.
The Company established a joint venture to acquire shares of Superior Multi-Packaging, Ltd., (“Superior”) a listed company on
the Singapore exchange with operations in China, Singapore and Vietnam through a tender offer. The Company's partner in the
joint venture contributed its existing shares in Superior to the joint venture and the Company paid $20 to acquire additional shares.
70
Crown Holdings, Inc.
Upon completion of the tender offer, the joint venture owned approximately 85% of the shares of Superior. The Company has
consolidated both the joint venture and Superior in its financial statements. Superior had net sales in 2012 of $126 of which $8
was generated post-acquisition and is included in the Company's net sales for 2012.
The preliminary purchase price allocation included $9 to cash, $39 to receivables, $22 to inventory, $39 to fixed assets, $28 to
debt, $23 to accounts payable and accrued liabilities and $7 to non-controlling interests. The fair value of the non-controlling
interest that remains publicly traded was determined based on the acquisition date share price.
Although the price paid to acquire the public shares of Superior was at a premium to its then trading price, the fair value of the
assets acquired and liabilities assumed exceeded the fair value of the consideration transferred. As a result, the Company recognized
a bargain purchase gain of $14 included in asset impairments and sales in the consolidated statements of operations. Net income
attributable to noncontrolling interests includes $7 of bargain purchase gain allocated to the Company's joint venture partner. The
Company believes that the acquisition resulted in a gain because Superior has underperformed in recent years. Consequently, the
Company reassessed the recognition and measurement of the assets acquired and liabilities assumed and concluded that its
preliminary purchase price allocation was appropriate. The Company is in the process of finalizing its valuation of the assets
acquired and as a result has not yet finalized its purchase price allocation.
The Company paid $38 to acquire a beverage can and end production business in Vietnam. The purchase price was allocated
entirely to fixed assets. The Company is in the process of finalizing its valuation of the assets acquired and as a result has not yet
finalized its purchase price allocation.
The Company paid $29 to acquire a food can production business in the U.S. The purchase price was allocated $25 to customer
contracts, $3 to fixed assets and $1 to inventory. The customer contracts will be amortized on a straight-line basis over the ten
year life of the customer contracts.
T. Noncontrolling interests
In 2011, the Company paid an aggregate of $202 to purchase the remaining public ownership interests in Hellas Can, a listed
company in Greece and to increase its ownership interests in its subsidiaries in Dubai, Beijing and Shanghai to 100% and in Jordan
and Tunisia to 60%.
In 2010, the Company paid an aggregate of $169 to acquire the remaining ownership interests in the holding companies for its
four joint ventures in China and its joint venture in Hanoi, Vietnam, and to increase its ownership interests in Hellas Can, a listed
company in Greece, to 85%, and it subsidiaries in Dong Nai, Vietnam to 96% and Senegal to 100%.
The accounting guidance requires changes in noncontrolling interests that do not result in a change of control and where there is
a difference between fair value and carrying value to be accounted for as equity transactions. The effect on net income attributable
to the Company had the purchases of noncontrolling interests been recorded through net income is as follows:
Net income attributable to Crown Holdings
Transfers to noncontrolling interests – Decrease in paid-in-capital for
purchase of noncontrolling interests
Net income attributable to Crown Holdings after transfers to
noncontrolling interests
$
$
2012
2011
2010
557
$
282
$
324
—
(119)
(114)
557
$
163
$
210
71
U. Earnings Per Share
Crown Holdings, Inc.
The following table summarizes the basic and diluted earnings per share (EPS) attributable to Crown Holdings. Basic EPS excludes
all potentially dilutive securities and is computed by dividing net income attributable to Crown Holdings by the weighted average
number of common shares outstanding during the period. Diluted EPS includes the effect of stock options and restricted stock as
calculated under the treasury stock method.
Net income attributable to Crown Holdings
Weighted average shares outstanding:
Basic
Add: dilutive stock options and restricted stock
Diluted
Basic EPS
Diluted EPS
2012
2011
2010
557
$
282
$
324
146.1
2.3
148.4
3.81
3.75
$
$
151.7
2.6
154.3
1.86
1.83
$
$
159.4
3.0
162.4
2.03
2.00
$
$
$
Contingently issuable shares excluded from the computation of diluted
earnings per share because the effect would have been anti-dilutive.
0.1
0.1
0.3
For purposes of calculating assumed proceeds under the treasury stock method when determining the diluted weighted average
shares outstanding, the Company excludes the impact of windfall tax benefits until the deduction reduces taxes payable.
V. Pension and Other Postretirement 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.
A measurement date of December 31 was used for all plans presented below.
The components of pension expense were as follows:
U.S. Plans
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost
Net periodic cost
Non-U.S. Plans
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost/(credit)
Net periodic cost
2012
2011
2010
$
$
$
$
12
69
(94)
56
—
43
2012
26
153
(186)
61
—
54
$
$
$
$
11
72
(80)
47
3
53
2011
27
161
(196)
50
2
44
$
$
$
$
9
72
(80)
66
2
69
2010
26
155
(179)
47
(6)
43
The non-U.S. pension expense excludes $10 of cost attributable to plan curtailments and settlements that was recorded in
restructuring expense in 2010.
Additional pension expense of $5, $5 and $4 was recognized in 2012, 2011 and 2010 for multi-employer plans.
72
Crown Holdings, Inc.
The projected benefit obligations, accumulated benefit obligations, plan assets and funded status of the Company's U.S. and Non-
U.S. plans is as follows:
Projected Benefit Obligations
Benefit obligations at January 1
Service cost
Interest cost
Plan participants’ contributions
Amendments
Actuarial loss
Benefits paid
Foreign currency translation
Benefit obligations at December 31
Plan Assets
Fair value of plan assets at January 1
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Benefits paid
Foreign currency translation
Fair value of plan assets at December 31
Funded Status
Accumulated benefit obligations at December 31
U.S. Plans
2012
2011
Non-U.S. Plans
2012
2011
$
$
$
$
$
$
1,502
12
69
1
2
131
(108)
—
1,609
1,172
195
32
1
(108)
—
1,292
(317)
1,575
$
$
$
$
$
$
1,477
11
72
1
(4)
54
(109)
—
1,502
978
(9)
311
1
(109)
—
1,172
(330)
1,474
$
$
$
$
$
$
3,256
26
153
5
(108)
279
(181)
142
3,572
2,894
201
70
5
(181)
127
3,116
(456)
3,427
$
$
$
$
$
$
2,982
27
161
5
3
290
(177)
(35)
3,256
2,729
271
93
5
(177)
(27)
2,894
(362)
3,106
During 2012, the Company eliminated discretionary enhanced early retirement benefits for certain active employees
participating in its U.K. plan.
Information for pension plans with accumulated benefit obligations in excess of plan assets is as follows:
U.S.
Projected benefit obligations
Accumulated benefit obligations
Fair value of plan assets
Non-U.S.
Projected benefit obligations
Accumulated benefit obligations
Fair value of plan assets
2012
2011
$
$
1,609
1,575
1,292
2012
3,559
3,427
3,104
$
$
1,502
1,474
1,172
2011
3,247
3,106
2,884
The Company’s investment strategy in its U.S. plan is designed to generate returns that are consistent with providing benefits to
plan participants within the risk tolerance of the plan. Asset allocation is the primary determinant of return levels and investment
risk exposure. The assets of the plan are broadly diversified in terms of securities and security types in order to limit the potential
of large losses from any one security.
73
The strategic ranges for asset allocation in the U.S. plan are as follows:
Crown Holdings, Inc.
U.S. equities
International equities
Fixed income
Balanced funds
Real estate
Private equity
Hedge funds
30% to
10% to
13% to
15% to
3% to
3% to
2% to
40%
15%
23%
25%
7%
7%
7%
The Company’s investment strategy in its U.K. plan, the largest non-U.S. plan, is designed to achieve a funding level of 100%
within the next 15 years by targeting an expected return (net of fees) of 2.0% annually in excess of the expected growth in the
liabilities. The company seeks to achieve this return with a risk level commensurate with a 5% chance of the funding level falling
between 5% and 9% in any one year. The strategic ranges for asset allocation in the U.K. plan are as follows:
Investment grade credit
Equities
Hedge funds
Real estate
Private equity
Emerging market wealth
Alternative credit
Other
40% to
0% to
0% to
0% to
0% to
0% to
0% to
0% to
80%
30%
10%
5%
15%
15%
15%
5%
Pension assets are classified into three levels. Level 1 asset values are derived from quoted prices which are available in active
markets as of the report date. Level 2 asset values are derived from other than quoted prices in active markets included in Level
1, which are either directly or indirectly observable as of the report date. Level 3 asset values are derived from unobservable
pricing inputs that are not corroborated by market data or other objective sources.
Equity securities are valued at the latest quoted prices taken from the primary exchange on which the security trades. Mutual funds
are valued at the net asset value (NAV) of shares held at year-end. Fixed income securities, including government issued debt,
corporate debt, asset-backed and structured debt securities are valued using market inputs such as benchmark yields, reported
trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and other reference data including
market research publications. Derivatives, which consist mainly of interest rate swaps, are valued using a discounted cash flow
pricing model based on observable market data. Investment funds, hedge funds and private equity funds are valued at the NAV at
year-end. The values assigned to private equity funds are based upon assessments of each underlying investment, incorporating
valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based
information, including comparable transactions, and performance multiples among other factors. Real estate investments are based
on third party appraisals as of year-end.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective
of future fair value. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments
could result in different fair value measurements at the reporting date.
The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may
affect the valuation of the fair value of assets and their placement within the fair value hierarchy.
74
The levels assigned to the defined benefit plan assets as of December 31, 2012 and 2011 are summarized in the tables below:
Crown Holdings, Inc.
Level 1
Cash and cash equivalents
Global large cap equity
U.S. large cap equity
U.S. mid/small cap equity
Mutual funds – global equity
Mutual funds – U.S. equity
Mutual funds – fixed income
Level 2
Government issued debt securities
Corporate debt securities
Asset backed securities
Structured debt
Insurance contracts
Derivatives
Investment funds – fixed income
Investment funds – global equity
Investment funds – emerging markets
Level 3
Investment funds – real estate
Hedge funds
Private equity
Real estate – direct
Total
U.S. plan
assets
2012
Non-U.S. plan
assets
Total
$
$
$
92
—
146
246
183
88
138
893
59
95
3
7
—
—
14
—
43
221
42
70
48
16
176
1,290
$
158
62
37
14
—
—
—
271
542
162
4
628
13
98
404
257
174
2,282
88
144
321
5
558
3,111
$
$
250
62
183
260
183
88
138
1,164
601
257
7
635
13
98
418
257
217
2,503
130
214
369
21
734
4,401
75
Crown Holdings, Inc.
U.S. plan
assets
2011
Non-U.S. plan
assets
Total
$
$
$
152
—
163
174
98
84
62
733
56
87
1
11
—
—
6
44
39
244
—
121
53
19
193
1,170
$
86
56
36
12
—
—
—
190
374
343
14
547
11
96
335
231
162
2,113
84
163
332
5
584
2,887
$
$
238
56
199
186
98
84
62
923
430
430
15
558
11
96
341
275
201
2,357
84
284
385
24
777
4,057
Level 1
Cash and cash equivalents
Global large cap equity
U.S. large cap equity
U.S. mid/small cap equity
Mutual funds – global equity
Mutual funds – U.S. equity
Mutual funds – fixed income
Level 2
Government issued debt securities
Corporate debt securities
Asset backed securities
Structured debt
Insurance contracts
Derivatives
Investment funds – fixed income
Investment funds – global equity
Investment funds – emerging markets
Level 3
Investment funds – real estate
Hedge funds
Private equity
Real estate – direct
Total
Accrued income excluded from the table above is as follows:
U.S. plan assets
Non-U.S. plan assets
2012
2011
2
5
2
7
Plan assets include $124 and $113 of the Company’s common stock at December 31, 2012 and 2011, respectively.
76
Crown Holdings, Inc.
The following tables reconcile the beginning and ending balances of plan assets measured using significant unobservable inputs
(Level 3).
Hedge
funds
Private
equity
Real
Estate
Total
Balance at January 1, 2011
Foreign currency translation
Asset returns – assets held at reporting date
Asset returns – assets sold during the period
Purchases, sales and settlements, net
Balance at December 31, 2011
Foreign currency translation
Asset returns – assets held at reporting date
Asset returns – assets sold during the period
Purchases, sales and settlements, net
Balance at December 31, 2012
$
$
315
(1)
(10)
9
(29)
284
7
6
18
(101)
214
$
$
387
(2)
(6)
38
(32)
385
14
(39)
49
(40)
369
$
$
110
—
—
—
(2)
108
4
14
4
21
151
$
$
Pension assets/(liabilities) included in the Consolidated Balance Sheets were:
Non-current assets
Current liabilities
Non-current liabilities
2012
2011
$
— $
(9)
(764)
812
(3)
(16)
47
(63)
777
25
(19)
71
(120)
734
1
(8)
(685)
The Company’s current liability at December 31, 2012, represents the expected required payments to be made for unfunded
plans over the next twelve months. Total estimated 2013 employer contributions are $85 for the Company’s pension plans.
Changes in the net loss and prior service cost/(credit) for the Company’s pension plans were:
2012
2011
2010
Net loss
Prior
service
Net
loss
Prior
service
Net
loss
Prior
service
Balance at January 1
Reclassification to net periodic benefit cost
Current year loss
Amendments
Foreign currency translation
Balance at December 31
$
$
2,382
(117)
295
—
59
2,619
$
$
$
4
—
—
(106)
—
(102) $
2,135
(97)
358
—
(14)
2,382
$
$
9
(5)
—
(1)
1
4
$
$
1,991
(118)
281
—
(19)
2,135
$
$
3
4
—
3
(1)
9
The estimated portions of the net losses and net prior service that are expected to be recognized as components of net periodic
benefit cost in 2013 are $127 and $(14).
Expected future benefit payments as of December 31, 2012 were:
2013
2014
2015
2016
2017
2018 - 2022
$
Non-U.S.
plans
184
189
194
199
203
1,045
U.S.
plans
$
112
110
143
107
111
515
77
The weighted average actuarial assumptions used to calculate the benefit obligations at December 31 were:
Crown Holdings, Inc.
U.S.
Discount rate
Compensation increase
Non-U.S.
Discount rate
Compensation increase
2012
2011
2010
4.0%
3.0%
4.8%
3.0%
2012
2011
2010
4.1%
2.8%
4.7%
3.3%
5.1%
3.0%
5.4%
3.3%
The weighted average actuarial assumptions used to calculate pension expense for each year were:
U.S.
Discount rate
Compensation increase
Long-term rate of return
Non-U.S.
Discount rate
Compensation increase
Long-term rate of return
2012
2011
2010
4.8%
3.0%
8.00%
5.1%
3.0%
8.75%
5.7%
3.0%
8.75%
2012
2011
2010
4.7%
3.3%
6.4%
5.4%
3.3%
7.0%
5.9%
3.3%
7.2%
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.
The U.S. plan’s 2012 assumed asset rate of return was based on a calculation using underlying assumed rates of return of 9.9%
for equity securities and alternative investments, and 5.1% for debt securities and real estate. The rate of return used for equity
securities and alternative investments was based on the total return of the S&P 500 for the 25 year period ended December 31,
2011. The Company believes that the equity securities included in the S&P 500 are representative of the equity securities and
alternative investments held by its U.S. plan, and that this period provides a sufficient time horizon as a basis for estimating future
returns. The rate of return used for debt securities is consistent with the U.S. plan discount rate and the return on AA corporate
bonds with duration equal to the plan’s liabilities. The underlying debt securities in the plan are primarily invested in various
corporate and government agency securities and are benchmarked against returns on AA corporate bonds.
The U.K. plan’s 2012 assumed asset rate of return was based on a calculation using underlying assumed rates of return of 10.4%
for equity securities and alternative investments, and 5.5% for debt securities and real estate. Equity securities in the U.K. plan as
of December 31, 2011 were allocated approximately 43% to U.S. securities, 29% to securities in developed European countries,
and 28% to securities in emerging markets. The assumed rate of return for equity securities and alternative investments represents
the weighted average 25 year return of equity securities in these markets. The Company believes that the equity securities included
in the related market indexes are representative of the equity securities and alternative investments held by its U.K. plan, and that
this period provides a sufficient time horizon as a basis for estimating future returns.
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 net postretirement benefits cost were as follows:
Other Postretirement Benefits
Service cost
Interest cost
Amortization of prior service credit
Amortization of actuarial loss
Net periodic (benefit) / cost
2012
2011
2010
$
$
3
16
(44)
14
(11)
$
$
8
20
(36)
13
5
$
$
9
26
(25)
9
19
78
Crown Holdings, Inc.
Changes in the benefit obligations were:
Benefit obligations at January 1
Service cost
Interest cost
Amendments
Actuarial loss
Benefits paid
Foreign currency translation
Benefit obligations at December 31
2012
2011
337
3
16
—
16
(22)
2
352
$
$
445
8
20
(107)
(3)
(24)
(2)
337
$
$
Changes in the net loss and prior service credit for the Company’s postretirement benefit plans were:
2012
2011
2010
Net
loss
Prior
service
Net
loss
Prior
service
Net
loss
Prior
service
Balance at January 1
Reclassification to net periodic benefit cost
Current year (gain)/loss
Amendments
Foreign currency translation
Balance at December 31
$
$
157
(14)
16
—
(2)
157
$
$
(313) $
44
—
—
—
(269) $
174
(13)
(3)
—
(1)
157
$
$
(242) $
36
—
(107)
—
(313) $
147
(9)
34
—
2
174
$
$
(159)
25
—
(108)
—
(242)
The estimated portions of the net losses and prior service credits that are expected to be recognized as components of net periodic
benefit cost/(credit) in 2013 are $16 and $(39).
In 2011, the U.S. plans were amended to, among other things, eliminate health coverage for retirees who are not yet eligible for
Medicare. In 2010, the U.S. plans were amended to, among other things, require additional retiree contributions for medical and
prescription drug costs.
Expected future benefit payments, as of December 31, 2012, net of expected Medicare Part D subsidies of $5 in the aggregate
were:
2013
2014
2015
2016
2017
2018 - 2022
Benefit
Payments
$
27
23
23
23
22
105
The assumed health care cost trend rates at December 31, 2012 are as follows:
Health care cost trend rate assumed for next year
Rate that the cost trend rate gradually declines to
Year that the rate reaches the rate it is assumed to remain
5.9%
4.4%
2018
A one-percentage-point change in assumed health care cost trend rates would have the following effects:
Effect on total service and interest cost
Effect on postretirement benefit obligation
79
One percentage point
Increase
Decrease
$
$
1
30
$
$
1
25
Crown Holdings, Inc.
Weighted average discount rates used to calculate the benefit obligations at the end of each year and the cost for each year are
presented below.
Benefit obligations
Cost
2012
2011
2010
4.1%
4.9%
4.9%
5.1%
5.1%
5.8%
Other Comprehensive Income. Amounts recorded in other comprehensive income were net of tax as follows:
Amortization of net loss and prior service cost
Net loss and prior service cost adjustments arising in the current year
2012
2011
2010
$
$
19
60
$
18
52
25
45
Employee Savings Plan. The Company sponsors the Savings Investment Plan which covers substantially all domestic salaried
employees who are at least 21 years of age. The Company matches up to 50% of 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 2012 and 2011 were
31,598 and 30,600, respectively, and the Company’s contributions were less than $1 in both years.
W.
Income Taxes
The components of income before income taxes and equity earnings were as follows:
U.S.
Foreign
The provision for income taxes consisted of the following:
Current tax:
U.S. federal
State and foreign
Deferred tax:
U.S. federal
State and foreign
Total
2012
2011
2010
$
$
$
$
$
$
127
509
636
—
84
84
(131)
30
(101)
(17)
2012
2012
$
$
$
$
$
$
2011
2011
66
521
587
—
111
111
69
14
83
194
$
$
$
$
$
$
2010
2010
44
570
614
—
113
113
50
2
52
165
80
Crown Holdings, Inc.
The provision for income taxes differs 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%
Tax on foreign income
Valuation allowance
Nontaxable settlement of legal dispute
Tax law changes
Other items, net
Income tax provision
2012
2011
2010
$
$
223
(70)
56
—
2
(228)
(17)
$
$
205
(50)
(19)
—
(4)
62
194
$
$
215
(52)
(6)
(7)
8
7
165
The other items caption in 2012 includes an income tax benefit of $213, before valuation allowance as described below, primarily
related to the recognition of previously unrecognized U.S. foreign tax credits.
In the third quarter of 2012, the Company committed to a formal repatriation plan, including certain steps that were completed in
September with the filing of its 2011 U.S. income tax return, which will allow it to claim foreign tax credits on its 2012 income
tax return. The Company's plan involved finalization of earnings and profits in certain foreign subsidiaries, evaluation of expiring
U.S. tax law provisions and anticipated utilization of existing net operating loss and foreign tax credit carryforwards. The Company
has been utilizing existing net operating losses which will be fully utilized this year and will begin to utilize existing foreign tax
credits in 2013. Once the Company claims these credits on its tax return, it has ten years to utilize the credits.
In connection with this action, the Company determined that it will amend its 2003 U.S. income tax return to claim foreign taxes
paid as a credit rather than as a tax deduction. The Company recorded a valuation allowance of $38 against certain of these credits
that expire in 2013 which, at this time, the Company does not believe are more likely than not to be realized prior to expiration.
The Company will continue to search for and evaluate tax planning strategies which may allow it to accelerate taxable income
into 2013 in order to use the credits. If the Company is able to identify a feasible tax planning strategy, it is possible that it will
release a portion of the valuation allowance in 2013.
Realization of the foreign tax credits is dependent upon the amount and timing of future taxable income. If actual results are
different than the Company's projections, it is possible that the Company may record additional valuation allowance in the future.
The other items caption in 2012 also includes a benefit of $10 from the receipt of non-taxable insurance proceeds related to the
2011 flooding in Thailand.
The other items caption in 2011 includes $55 of increase due to tax charges in connection with the relocation of the Company’s
European headquarters and management to Switzerland. The tax charges were partially offset by $30 of valuation allowance
release included in the valuation allowance caption.
The Company has certain income tax incentives in Brazil which allow it pay reduced income taxes. The tax incentives expire at
various dates beginning in 2016. In 2012, these incentives reduced net income attributable to the Company by $11.
The Company paid taxes of $92, $107 and $102 in 2012, 2011 and 2010, respectively.
The components of deferred taxes at December 31 are:
Tax loss and credit carryforwards
Postretirement and postemployment benefits
Pensions
Property, plant and equipment
Asbestos
Accruals and other
Valuation allowances
Total
2012
2011
Assets
Liabilities
Assets
Liabilities
$
$
744
130
246
7
97
86
(400)
910
$
$
81
— $
—
10
114
—
140
—
264
$
599
128
233
9
95
91
(359)
796
$
$
—
—
12
113
—
157
—
282
Crown Holdings, Inc.
At December 31, 2012 and 2011, $104 and $99 of deferred tax assets were included in prepaid expenses and other current assets.
Tax loss and credit carryforwards expire as follows:
2013
2014
2015
2016
2017
Thereafter
Unlimited
$
102
22
17
13
25
410
155
Tax loss and credit carryforwards expiring after 2017 include $193 of state tax loss carryforwards. The unlimited category includes
$138 of French tax loss carryforwards. The tax loss carryforwards presented above exclude $53 of U.S. windfall tax benefits that
will be recorded in additional paid-in capital when realized.
Realization of any portion of the Company’s deferred tax assets is dependent upon the availability of taxable income in the relevant
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 at December 31, 2012 include $202 in the U.S., $83 in France, $84 in Canada and $13 in
Belgium.
The Company’s valuation allowance in the U.S. includes $160 for state tax loss carryforwards and $38 for U.S. foreign tax credits
as described above. The Company does not believe that it is more likely than not that these deferred tax assets will be utilized
prior to their expiration. The Company’s ability to utilize state tax loss carryforwards is impacted by several factors including
expiration dates, limitations imposed by certain states on the amount of loss carryforwards that can be used in a given year to
offset taxable income and whether the state permits the Company to file a combined return.
The Company continues to maintain a full valuation allowance against its net deferred tax assets in France because the Company
does not believe at this time that it is more likely than not that it will realize any deferred tax benefits in France, primarily due to
significant interest costs which are in excess of operating profits.
The Company maintains a full valuation allowance against its net deferred tax assets in Canada because the Company does not
believe at this time that it is more likely than not that it will realize any deferred tax benefits in Canada. The Company’s Canadian
operations remain in a three year cumulative loss position and continue to project losses in the near-term.
The Company’s valuation allowance in Belgium is for tax loss carryforwards in a dormant entity that do not expire but the Company
does not believe at this time it will be able to utilize the loss carryforwards.
Management’s estimates of the appropriate valuation allowance in any jurisdiction involve a number of assumptions and judgments,
including the amount and timing of future taxable income. Should future results differ from management’s estimates, it is possible
there could be future adjustments to the valuation allowances that would result in an increase or decrease in tax expense in the
period such changes in estimates are made.
The Company has not provided deferred taxes on $580 of earnings in certain non-U.S. subsidiaries because such earnings are
indefinitely reinvested in its international operations. Upon distribution of such earnings in the form of dividends or otherwise,
the Company would be subject to incremental tax. It is not practicable to estimate the amount of tax that might be payable.
82
A reconciliation of unrecognized tax benefits for 2012, 2011 and 2010 follows.
Crown Holdings, Inc.
Balance at January 1
Additions for current year tax positions
Reductions to prior period tax positions
Lapse of statute of limitations
Settlements
Foreign currency translation
Balance at December 31
2012
2011
2010
$
$
37
—
—
(3)
—
1
35
$
$
37
8
(5)
(2)
—
(1)
37
$
$
38
4
—
(3)
—
(2)
37
The Company’s reserves as presented primarily include potential liabilities related to transfer pricing, foreign withholding taxes,
and non-deductibility of expenses and exclude $2 of penalties as of December 31, 2012. Interest and penalties are recorded in the
statement of operations as interest expense and provision for income taxes, respectively. The total interest and penalties recorded
in the statement of operations was $1 in each of the last three years.
The unrecognized tax benefits as of December 31, 2012 include $28 that, if recognized, would affect the effective tax rate. The
remaining balance would have no effect due to valuation allowances in certain jurisdictions. The Company’s unrecognized tax
benefits are expected to increase in the next twelve months as it continues its current transfer pricing policies, and are expected
to decrease as open tax years lapse or claims are settled. The Company is unable to estimate a range of reasonably possible changes
in its unrecognized tax benefits in the next twelve months as it is unable to predict when, or if, the tax authorities will commence
their audits, the time needed for the audits, and the audit findings that will require settlement with the applicable tax authorities,
if any.
The tax years that remained subject to examination by major tax jurisdiction as of December 31, 2012 were 2004 and subsequent
years for France; 2006 and subsequent years for Spain; 2008 and subsequent years for Italy; 2009 and subsequent years for the
U.S. and Canada; 2010 and subsequent years for the U.K. and Germany.
X. Segment Information
The Company’s business is organized geographically within three divisions, Americas, Europe and Asia Pacific. Within the
Americas and European divisions, 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 European
Beverage and European Food within Europe.
In recent years, the Company has significantly expanded its beverage can operations in the Asia Pacific region. As discussed in
Note S, in the fourth quarter of 2012, the Company completed the acquisition of Superior Multi-Packaging, Ltd. which expanded
the Company's non-beverage operations in the region. The Company expects its level of capital expenditures in the region to
begin to decrease in 2013. In connection with these developments, in the fourth quarter of 2012, the Company changed the internal
reporting of its Asia Pacific businesses to separately report Asia Beverage and Asia Non-Beverage operations to the Company's
Chief Operating Decision Maker. The Company has aggregated its Asia Beverage and Asia Non-Beverage operating segments
into an Asia Pacific reportable segment based on similar economic and qualitative characteristics. Prior to 2012, the Company's
Asia Pacific businesses were included in non-reportable segments. For each period presented, the Company has restated the
segment information below to present its Asia Pacific segment separate from non-reportable segments. In addition, the Company
has determined that it is no longer necessary to separately report its European Specialty Packaging segment and has included in
non-reportable segments for each period presented.
Non-reportable segments include the Company’s aerosol can businesses in North America and Europe, the Company’s specialty
packaging business in Europe and the Company’s tooling and equipment operations in the U.S. and United Kingdom.
The Company evaluates performance and allocates resources based on segment income. Segment income, which is not a defined
term under GAAP, is defined by the Company as gross profit less selling and administrative expenses. Segment income should
not be considered in isolation or as a substitute for net income data prepared in accordance with GAAP and may not be comparable
to calculations of similarly titled measures by other companies.
83
The tables below present information about operating segments for the three years ended December 31, 2012, 2011 and 2010:
Crown Holdings, Inc.
2012
Americas Beverage
North America Food
European Beverage
European Food
Asia Pacific
Total reportable segments
Non-reportable segments
Corporate and unallocated items
External
sales
$
2,274
$
876
1,653
1,793
979
7,575
895
—
Total
$
8,470
$
Inter-
segment
sales
68
9
13
96
—
186
128
—
314
Segment
assets
$
1,504
Depreciation
and
amortization
48
$
Capital
expenditures
52
$
500
1,593
1,464
1,137
6,198
611
681
13
42
29
27
159
15
6
$
7,490
$
180
$
7
25
26
181
291
24
9
324
2011
Americas Beverage
North America Food
European Beverage
European Food
Asia Pacific
Total reportable segments
Non-reportable segments
Corporate and unallocated items
External
sales
$
2,273
$
889
1,669
1,999
861
7,691
953
—
Total
$
8,644
$
Inter-
segment
sales
71
14
2
109
—
196
196
—
392
Segment
assets
$
1,445
Depreciation
and
amortization
44
$
Capital
expenditures
126
$
504
1,578
1,531
757
5,815
593
460
14
43
33
20
154
15
7
$
6,868
$
176
$
7
61
26
154
374
17
10
401
2010
Americas Beverage
North America Food
European Beverage
European Food
Asia Pacific
Total reportable segments
Non-reportable segments
Corporate and unallocated items
Total
$
$
External
sales
Inter-
segment
sales
Segment
assets
$
2,097
$
57
$
1,307
Depreciation
and
amortization
37
$
Capital
expenditures
151
$
897
1,524
1,841
704
7,063
878
—
7,941
$
9
1
77
—
144
143
—
287
514
1,537
1,457
577
5,392
551
956
15
40
36
17
145
17
10
$
6,899
$
172
$
7
60
21
60
299
$
16
5
320
Intersegment sales primarily include sales of ends and components used to manufacture cans, such as printed and coated metal,
as well as parts and equipment used in the manufacturing process.
84
Segment
income
$
$
311
146
217
180
137
991
Segment
income
$
302
146
210
239
125
$
1,022
Segment
income
$
275
120
244
224
112
975
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 of reportable segments to income before income taxes and equity earnings for the three years
ended December 31, 2012, 2011 and 2010 follows:
Segment income of reportable segments
Segment income of non-reportable segments
Corporate and unallocated items
Provision for asbestos
Provision for restructuring
Asset impairments and sales
Loss from early extinguishments of debt
Interest expense
Interest income
Translation and foreign exchange
Income before income taxes and equity earnings
2012
2011
2010
991
98
(194)
(35)
(48)
42
—
(226)
7
1
636
$
$
1,022
139
(208)
(28)
(77)
(6)
(32)
(232)
11
(2)
587
$
$
975
116
(201)
(46)
(42)
18
(16)
(203)
9
4
614
$
$
For the three years ended December 31, 2012, 2011 and 2010, intercompany profit of $5, $7 and less than $1 was eliminated
within segment income of non-reportable segments.
For the three years ended December 31, 2012, 2011 and 2010, 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
Metal food cans and ends
Other metal packaging
Other products
Consolidated net sales
2012
2011
2010
$
$
4,649
2,425
1,244
152
8,470
$
$
4,532
2,614
1,373
125
8,644
$
$
4,065
2,479
1,299
98
7,941
Sales and long-lived assets for the major countries in which the Company operates were:
2012
$ 2,275
852
568
4,775
$ 8,470
Net Sales
2011
$ 2,297
826
675
4,846
$ 8,644
2010
$ 2,248
740
624
4,329
$ 7,941
Long-Lived Assets
2011
2010
2012
$
309
138
65
1,483
$ 1,995
$
306
126
67
1,252
$ 1,751
$
297
117
76
1,120
$ 1,610
United States
United Kingdom
France
Other
Consolidated total
Y. Subsequent Events
In January 2013, the Company issued $1,000 principal amount of 4.5% senior unsecured notes due 2023. In connection with the
issuance, the Company redeemed all of its outstanding $400 senior notes due 2017 and repaid $500 of indebtedness under its
senior secured term loan facilities. In the first quarter of 2013, the Company will record a loss from early extinguishment of debt
of approximately $32 including $23 for premiums paid and $9 for the write off of deferred financing fees.
85
Crown Holdings, Inc.
Z.
Condensed Combining Financial Information
Crown European Holdings SA (Issuer), a wholly owned subsidiary of the Company, has €500 ($659 at December 31, 2012)
principal amount of 7.125% senior notes due 2018 outstanding that are fully and unconditionally guaranteed by Crown Holdings,
Inc. (Parent) and certain subsidiaries. The guarantors are wholly owned by the Company and the guarantees are made on a joint
and several basis. The guarantor column includes financial information for all subsidiaries in the United States (except for an
insurance subsidiary and a receivable securitization subsidiary), substantially all subsidiaries in Belgium, Canada, France,
Germany, Mexico, Switzerland and the United Kingdom, and a subsidiary in the Netherlands. The following condensed combining
financial statements:
•
•
statements of comprehensive income and cash flows for the years ended December 31, 2012, 2011, 2010, and
balance sheets as of December 31, 2012 and December 31, 2011
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.
During the second quarter of 2012, the Company revised its presentation of the condensed combining balance sheet at December
31, 2011 to reclassify a consolidation entry to net certain value added tax receivables and payables from non-guarantor subsidiaries
to guarantor subsidiaries. The impact was a $226 decrease to both receivables and accounts payable and accrued liabilities of
guarantor subsidiaries with a corresponding increase to non-guarantor subsidiaries. The Company deemed the revision to be
immaterial for the previously issued financial statements and therefore, revised the condensed combining balance sheet included
in this filing.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2012
(in millions)
Parent
Issuer
Guarantors
Guarantors Eliminations
Non-
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
Asset impairments and sales
Net interest expense
Technology royalty
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling
interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to
Crown Holdings
$
$
$
$
$
4,573
$
3,897
3,771
3,243
$
(1)
1
(2)
(977)
57
923
8
240
1,155
557
557
79
723
290
35
45
(1)
121
(31)
(1)
265
(81)
211
557
557
533
$
$
1,155
1,200
$
$
557
533
$
$
Total
Company
$
8,470
7,013
180
1,277
382
35
48
(42)
219
—
(1)
636
(17)
5
658
(101)
557
977
(977)
(1,004)
(1,981)
(1,981) $
(2,048) $
639
(106)
101
553
94
3
(41)
41
31
—
425
56
1
370
(101)
269
421
(106)
$
$
$
533
$
1,200
$
533
$
315
$
(2,048) $
533
86
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2011
(in millions)
Parent
Issuer
Guarantors
Guarantors Eliminations
Non-
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
Asset impairments and sales
Loss from early extinguishment of debt
Net interest expense
Technology royalty
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling
interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to
Crown Holdings
$
$
$
$
$
$
$
(1)
1
(2)
—
2
78
—
(77)
—
239
162
—
162
3
—
282
282
—
282
19
$
4,780
$
3,864
3,934
3,187
82
764
298
28
73
—
30
104
(46)
(3)
280
123
125
282
—
282
19
94
583
99
—
4
4
—
39
46
5
386
71
—
315
$
$
(114)
201
219
(110)
$
$
$
$
$
Total
Company
$
8,644
7,120
176
1,348
395
28
77
6
32
221
—
2
587
194
3
396
—
2
—
(2)
—
(643)
(645)
—
(645) $
(114)
282
(131) $
129
(110)
19
$
3
$
19
$
109
$
(131) $
19
87
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2010
(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
Asset impairments and sales
Loss from early extinguishment of debt
Net interest expense
Technology royalty
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling
interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to
Crown Holdings
$
$
$
$
Parent
Issuer
Guarantors
Guarantors Eliminations
Non-
Total
Company
$
4,734
$
3,207
$
7,941
$
(13)
3,993
2,539
13
—
—
5
35
—
(27)
3
249
219
—
219
198
$
$
88
653
258
46
42
(14)
11
144
(35)
(3)
204
86
206
324
—
324
237
84
584
102
—
(4)
—
15
35
(1)
437
76
— $
361
(128)
233
322
(121)
$
$
$
$
—
—
324
324
—
324
237
$
$
6,519
172
1,250
360
46
42
(18)
16
194
—
(4)
614
165
3
452
—
—
—
—
—
(776)
(776)
—
(776) $
(128)
324
(636) $
358
(121)
237
$
198
$
237
$
201
$
(636) $
237
88
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2012
(in millions)
Assets
Current assets
Cash and cash equivalents
Receivables, net
Intercompany receivables
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
Liabilities and equity
Current liabilities
Short-term debt
Current maturities of long-term debt
Accounts payable and accrued liabilities
$
Intercompany payables
Total current liabilities
Long-term debt, excluding current maturities
Long-term intercompany debt
Postretirement and pension liabilities
Other non-current liabilities
Commitments and contingent liabilities
Noncontrolling interests
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
$
1
1
749
$
2
14
16
1,578
3,839
24
134
274
41
582
123
1,154
3,141
(278)
1,429
610
658
$
216
783
$
32
$
(75)
584
39
1,654
492
569
1,385
65
(75)
(5,211)
(4,310)
350
1,057
1,166
177
2,750
1,998
1,995
747
$
750
$
5,457
$
6,714
$
4,165
$
(9,596) $
7,490
$
18
18
894
$
2
18
21
—
41
1,003
2,264
8
— $
28
1,097
32
1,157
2,073
1,340
1,079
316
—
749
749
$
259
69
1,006
43
$
1,377
(75)
(75)
213
713
19
138
285
1,420
1,705
(5,211)
(4,310)
(4,310)
(9,596) $
261
115
2,142
2,518
3,289
1,098
462
285
(162)
123
7,490
Crown Holdings shareholders’ equity/(deficit)
Total equity/(deficit)
(162)
(162)
2,141
2,141
Total
$
750
$
5,457
$
6,714
$
4,165
$
89
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2011
(in millions)
Assets
Current assets
Cash and cash equivalents
Receivables, net
Intercompany receivables
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
Liabilities and equity
Current liabilities
Short-term debt
Current maturities of long-term debt
Accounts payable and accrued liabilities
Intercompany payables
Total current liabilities
Long-term debt, excluding current maturities
Long-term intercompany debt
Postretirement and pension liabilities
Other non-current liabilities
Commitments and contingent liabilities
Noncontrolling interests
Crown Holdings shareholders’ equity/(deficit)
Total equity/(deficit)
Total
$
$
$
$
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
$
$
2
7
9
1,590
3,007
—
215
215
$
13
4,619
$
$
6
$
20
20
668
20
1
27
1,002
2,481
$
$
$
54
230
60
615
129
1,088
3,514
(577)
1,396
604
491
6,516
14
1
1,124
22
1,161
2,173
1,664
986
321
(473)
(473)
215
$
1,109
1,109
4,619
$
(4)
215
211
6,516
$
288
718
23
533
29
1,591
327
556
1,147
58
3,679
108
66
926
62
1,162
162
618
10
168
238
1,321
1,559
3,679
$
$
(85)
(85)
(5,431)
(2,645)
$
(8,161) $
$
$
(85)
(85)
(5,431)
(2,645)
(2,645)
(8,161) $
$
342
948
—
1,148
165
2,603
—
—
1,952
1,751
562
6,868
128
67
2,090
—
2,285
3,337
—
996
489
234
(473)
(239)
6,868
90
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2012
(in millions)
Net cash provided by/(used for) operating
activities
$
14
$
(66) $
301
$
372
$
621
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
Cash flows from investing activities
Capital expenditures
Acquisition of businesses, net of cash
acquired
Intercompany investing activities
Proceeds from sale of intercompany
investment
Insurance proceeds
Proceeds from sale of property, plant and
equipment
Other, net
Net cash provided by/(used for)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility
and short-term debt
Net change in long-term intercompany
balances
Capital contribution
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrolling interests
Dividends paid to noncontrolling
interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net change in cash and cash equivalents
—
—
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
(77)
(29)
293
(741)
1,205
(1,205)
3
(247)
(49)
48
(11)
$
448
(324)
(78)
—
—
48
3
(11)
—
464
(1,015)
(259)
448
(362)
226
(232)
17
(257)
(170)
8
(14)
(398)
(1)
(4)
(103)
77
1,205
(370)
(3)
(11)
794
80
54
109
(65)
136
(71)
8
(225)
(1)
(79)
—
(1,213)
765
109
(66)
29
—
—
17
(257)
(4)
(79)
(3)
(188)
(448)
(254)
3
(72)
288
—
3
8
342
350
$
— $
— $
134
$
216
$
— $
91
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2011
(in millions)
Net cash provided by/(used for) operating
activities
$
10
$
(12) $
(119) $
500
$
379
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
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)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility
and short-term debt
Net change in long-term intercompany
balances
Debt issue costs
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrolling interests
Dividends paid to noncontrolling
interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
(107)
(294)
(180) $
(118)
(474)
(118)
(372)
8
8
383
(276)
(48)
(38)
(3)
26
290
3
212
1,250
(748)
(54)
(438)
(19)
(98)
(14)
3
4
—
—
(104)
(11)
65
291
11
(312)
(10)
—
137
(45)
(90)
185
(118)
(104)
(104)
2
(137)
1
(110)
398
118
118
—
(401)
26
—
3
1,770
(1,069)
(192)
—
(22)
11
(312)
—
(202)
(104)
(9)
(129)
1
(121)
463
342
$
— $
— $
54
$
288
$
— $
92
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2010
(in millions)
Net cash provided by/(used for) operating
activities
$
26
$
2
$
357
$
205
$
590
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
Cash flows from investing activities
Capital expenditures
Proceeds from sale of businesses, net of
cash sold
Proceeds from sale of property, plant and
equipment
Intercompany investing activities
Net cash provided by/(used for)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility
and short-term debt
Net change in long-term intercompany
balances
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrolling interests
Dividends paid to noncontrolling
interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
(190)
(190)
650
(307)
42
56
(211)
(47)
183
(5)
5
216
13
(255)
(26)
—
$
— $
— $
(81)
(239)
(320)
3
20
459
401
—
(405)
73
(392)
—
(18)
(742)
16
49
65
4
12
38
$
(307)
7
32
—
(185)
(307)
(281)
95
(22)
163
120
(96)
(169)
(112)
—
(21)
(6)
(7)
405
307
307
—
$
398
$
— $
745
(734)
278
—
13
(255)
—
(169)
(112)
(65)
(299)
(6)
4
459
463
93
Crown Holdings, Inc.
Crown Cork & Seal Company, Inc. (Issuer), a wholly owned subsidiary, has $350 principal amount of 7.375% senior notes due
2026 and $64 principal amount of 7.5% senior notes due 2096 outstanding that are fully and unconditionally guaranteed by Crown
Holdings, Inc. (Parent). No other subsidiary guarantees the debt. The following condensed combining financial statements:
•
•
statements of comprehensive income and cash flows for the years ended December 31, 2012, 2011, 2010, and
balance sheets as of December 31, 2012 and December 31, 2011
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.
For the year ended December 31, 2012
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
(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
Asset impairments and sales
Net interest expense
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to noncontrolling
interests
$
$
$
557
557
557
533
Parent
Issuer
Non-
Guarantors
$
8,470
Eliminations
Total
Company
$
8,470
—
$
—
9
35
90
(134)
(36)
655
557
$
$
557
533
$
$
7,013
180
1,277
373
—
48
(42)
129
(1)
770
19
— $
$
$
751
(101)
650
732
(106)
626
7,013
180
1,277
382
35
48
(42)
219
(1)
636
(17)
5
658
(101)
557
—
(1,207)
(1,207)
(1,207) $
(1,159) $
639
$
(1,159) $
(106)
533
Comprehensive income attributable to Crown Holdings $
533
$
533
$
94
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2011
(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
Asset impairments and sales
Loss from early extinguishment of debt
Net interest expense
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to noncontrolling
interests
Parent
Issuer
Non-
Guarantors
$
8,644
Eliminations
Total
Company
$
8,644
$
$
$
10
28
—
83
—
(121)
(7)
396
282
—
282
19
$
$
—
282
282
—
282
19
$
$
$
7,120
176
1,348
385
—
77
6
32
138
2
708
201
3
$
510
(114)
396
243
(110)
133
$
$
$
7,120
176
1,348
395
28
77
6
32
221
2
587
194
3
396
(114)
282
—
(678)
(678)
—
(678) $
(152) $
129
(152) $
(110)
19
Comprehensive income attributable to Crown Holdings $
19
$
19
$
95
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2010
(in millions)
Parent
Issuer
Non-
Guarantors
$
7,941
Eliminations
Total
Company
$
7,941
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
Asset impairments and sales
Loss from early extinguishment of debt
Net interest expense
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to noncontrolling
interests
$
(12)
46
—
81
—
(115)
(17)
422
324
—
324
237
$
$
—
324
324
—
324
237
$
$
$
$
$
6,519
172
1,250
372
—
42
(18)
16
113
(4)
729
182
3
$
550
(128)
422
456
(121)
335
$
$
$
6,519
172
1,250
360
46
42
(18)
16
194
(4)
614
165
3
452
(128)
324
—
(746)
(746)
—
(746) $
(572) $
358
(572) $
(121)
237
Comprehensive income attributable to Crown Holdings $
237
$
237
$
96
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2012
(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
$
1
1
83
83
$
$
350
1,057
1,166
93
2,666
Intercompany debt receivables
Investments
Goodwill
Property, plant and equipment, net
Other non-current assets
Total
Liabilities and equity
Current liabilities
Short-term debt
749
1,768
1,769
$
(1,769)
(2,517)
1,998
1,995
243
504
$
750
$
2,355
$
8,671
$
(4,286) $
Current maturities of long-term debt
Accounts payable and accrued liabilities
$
Total current liabilities
$
18
18
Long-term debt, excluding current maturities
Long-term intercompany debt
Postretirement and pension liabilities
Other non-current liabilities
Commitments and contingent liabilities
Noncontrolling interests
Crown Holdings shareholders’ equity/(deficit)
Total equity/(deficit)
894
—
—
(162)
(162)
$
34
34
412
875
285
749
749
261
115
2,090
2,466
2,877
1,098
177
285
1,768
2,053
$
$
(1,769)
(2,517)
(2,517)
(4,286) $
Total
$
750
$
2,355
$
8,671
$
97
350
1,057
1,166
177
2,750
1,998
1,995
747
7,490
261
115
2,142
2,518
3,289
1,098
462
285
(162)
123
7,490
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2011
(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
$
—
76
76
$
$
342
948
1,148
89
2,527
Intercompany debt receivables
Investments
Goodwill
Property, plant and equipment, net
Other non-current assets
Total
Liabilities and equity
Current liabilities
Short-term debt
215
1,208
1,391
$
(1,391)
(1,423)
1,952
1,751
186
376
215
$
1,660
$
7,807
$
(2,814) $
$
$
Current maturities of long-term debt
Accounts payable and accrued liabilities
$
Total current liabilities
Long-term debt, excluding current maturities
Long-term intercompany debt
Postretirement and pension liabilities
Other non-current liabilities
Commitments and contingent liabilities
Noncontrolling interests
$
20
20
668
Crown Holdings shareholders’ equity/(deficit)
Total equity/(deficit)
(473)
(473)
$
40
40
411
723
271
215
215
128
67
2,030
2,225
2,926
996
218
234
1,208
1,442
$
$
(1,391)
(1,423)
(1,423)
(2,814) $
Total
$
215
$
1,660
$
7,807
$
98
342
948
1,148
165
2,603
1,952
1,751
562
6,868
128
67
2,090
2,285
3,337
996
489
234
(473)
(239)
6,868
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2012
(in millions)
Net cash provided by/(used for) operating
activities
$
14
$
(217) $
824
$
621
Parent
Issuer
Non-
Guarantors
Eliminations
Total
Company
Cash flows from investing activities
Capital expenditures
Acquisition of businesses, net of cash
acquired
Intercompany investing activities
Insurance proceeds
Proceeds from sale of property, plant and
equipment
Other
Net cash provided by/(used for)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility and
short-term debt
Net change in long-term intercompany
balances
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrollling interests
Dividend paid to noncontrolling interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
67
(324)
(78)
— $
48
3
(11)
(67)
(324)
(78)
—
48
3
(11)
—
67
(362)
(67)
(362)
109
(66)
29
(376)
—
—
(67)
(4)
(79)
(3)
(457)
3
8
342
350
67
67
—
—
$
— $
109
(66)
29
—
17
(257)
(4)
(79)
(3)
(254)
3
8
342
350
226
17
(257)
150
—
(14)
150
—
—
—
—
$
— $
— $
99
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2011
(in millions)
Net cash provided by/(used for) operating
activities
Cash flows from investing activities
Capital expenditures
Intercompany investing activities
Proceeds from sale of property, plant and
equipment
Other
Net cash provided by/(used for)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility and
short-term debt
Net change in long-term intercompany
balances
Debt issue costs
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrolling interests
Dividend paid to noncontrolling interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
Parent
Issuer
Non-
Guarantors
Eliminations
Total
Company
$
10
$
(39) $
408
$
379
(401)
49
$
(49)
26
3
(401)
—
26
3
49
(372)
(49)
(372)
291
11
(312)
86
—
—
(96)
(10)
(10)
1,770
(1,069)
(192)
(377)
(22)
—
(49)
(106)
(104)
(9)
(158)
1
(121)
463
49
49
—
1,770
(1,069)
(192)
—
(22)
11
(312)
—
(202)
(104)
(9)
(129)
1
(121)
463
342
Net change in cash and cash equivalents
—
—
$
— $
— $
342
$
— $
100
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2010
(in millions)
Parent
Issuer
Non-
Guarantors
Eliminations
Total
Company
$
26
$
(26) $
590
$
590
Net cash provided by/(used for) operating
activities
Cash flows from investing activities
Capital expenditures
Intercompany investing activities
Proceeds from sale of business, net of cash
sold
Proceeds from sale of property, plant and
equipment
Net cash provided by/(used for)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility and
short-term debt
Net change in long-term intercompany
balances
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrolling interests
Dividend paid to noncontrolling interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
55
55
(1)
(28)
—
—
—
216
13
(255)
(26)
(29)
(320)
7
32
(281)
745
(733)
278
(188)
—
(55)
(169)
(112)
(65)
(299)
(6)
4
$
(55)
(55)
55
55
—
(320)
—
7
32
(281)
745
(734)
278
—
13
(255)
—
(169)
(112)
(65)
(299)
(6)
4
459
463
Net change in cash and cash equivalents
—
—
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
$
— $
— $
459
463
$
— $
101
Crown Holdings, Inc.
Crown Americas, LLC, Crown Americas Capital Corp. II and Crown Americas Capital Corp. III (collectively, the Issuers), wholly
owned subsidiaries of the Company, have outstanding $400 principal amount of 7.625% senior notes due 2017 and $700 principal
amount of 6.25% senior notes due 2021, all of which are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent)
and substantially all subsidiaries in the United States. The guarantors are wholly owned by the Company and the guarantees are
made on a joint and several basis. The following condensed combining financial statements:
•
•
statements of comprehensive income and cash flows for the years ended December 31, 2012, 2011, 2010, and
balance sheets as of December 31, 2012 and December 31, 2011
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 COMPREHENSIVE INCOME
For the year ended December 31, 2012
(in millions)
Selling and administrative expense
$
7
Net sales
Cost of products sold, excluding
depreciation and amortization
Depreciation and amortization
Gross profit
Provision for asbestos
Provision for restructuring
Asset impairments and sales
Net interest expense
Technology royalty
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling
interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to
Crown Holdings
$
$
$
$
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
$
2,276
$
6,194
—
1,821
5,192
Total
Company
$
8,470
40
415
131
35
5
(1)
90
(41)
196
(97)
264
557
50
(57)
(22)
217
182
557
557
557
533
$
$
182
162
$
$
557
533
$
$
140
862
244
43
(41)
79
41
(1)
497
102
1
$
396
(101)
295
385
(106)
$
$
7,013
180
1,277
382
35
48
(42)
219
(1)
636
(17)
5
658
(101)
557
(1,034)
(1,034)
(1,034) $
(974) $
639
(106)
533
$
162
$
533
$
279
$
(974) $
533
102
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2011
(in millions)
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
$
2,297
$
6,347
1,865
5,255
Selling and administrative expense
$
6
Net sales
Cost of products sold, excluding
depreciation and amortization
Depreciation and amortization
Gross profit
Provision for asbestos
Provision for restructuring
Asset impairments and sales
Loss from early extinguishment of debt
Net interest expense
Technology royalty
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling
interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to
Crown Holdings
$
$
$
$
—
30
49
—
(85)
(32)
237
184
—
184
160
$
$
—
282
282
—
282
19
$
$
Total
Company
$
8,644
7,120
176
1,348
395
28
77
6
32
221
—
2
587
194
3
396
—
(719)
(719)
(719) $
(114)
282
(194) $
129
(110)
39
393
134
28
2
1
1
81
(47)
—
193
114
203
282
—
282
19
$
$
137
955
255
—
75
5
1
91
47
2
479
112
— $
367
$
$
(114)
253
125
(110)
19
$
160
$
19
$
15
$
(194) $
19
103
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2010
(in millions)
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
$
2,323
$
5,618
1,966
4,553
Selling and administrative expense
$
7
Net sales
Cost of products sold, excluding
depreciation and amortization
Depreciation and amortization
Gross profit
Provision for asbestos
Provision for restructuring
Asset impairments and sales
Loss from early extinguishment of debt
Net interest expense
Technology royalty
Translation and foreign exchange
Income/(loss) before income taxes
Provision for / (benefit from) income taxes
Equity earnings / (loss) in affiliates
Net income
Net income attributable to noncontrolling
interests
Net income attributable to Crown Holdings
Comprehensive income
Comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to
Crown Holdings
$
$
$
$
(2)
11
40
—
(56)
(21)
189
154
—
154
139
$
$
—
324
324
—
324
237
$
$
Total
Company
$
7,941
6,519
172
1,250
360
46
42
(18)
16
194
(4)
614
165
3
452
—
(789)
(789)
—
(789) $
(128)
324
(615) $
358
(121)
40
317
137
46
(14)
1
—
96
(41)
—
92
46
279
325
(1)
324
237
132
933
216
—
56
(17)
5
58
41
(4)
578
140
— $
438
$
$
(127)
311
360
(121)
$
$
237
$
139
$
237
$
239
$
(615) $
237
104
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2012
(in millions)
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
$
322
1,041
$
17
$
(24)
$
$
27
2
1
1
749
1
30
1,530
1,560
1
26
1
14
7
282
92
396
884
83
2,347
1,483
279
606
453
308
529
1,545
1,686
192
(24)
(3,292)
(2,915)
350
1,057
1,166
177
2,750
1,998
1,995
747
$
750
$
3,147
$
3,775
$
6,049
$
(6,231) $
7,490
Assets
Current assets
Cash and cash equivalents
Receivables, net
Intercompany receivables
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
Liabilities and equity
Current liabilities
Short-term debt
Current maturities of long-term debt
$
Accounts payable and accrued liabilities
$
Intercompany payables
Total current liabilities
Long-term debt, excluding current maturities
Long-term intercompany debt
Postretirement and pension liabilities
Other non-current liabilities
Commitments and contingent liabilities
Noncontrolling interests
18
18
894
$
28
33
61
1,616
756
—
317
17
334
412
1,447
545
288
Crown Holdings shareholders’ equity/(deficit)
Total equity/(deficit)
(162)
(162)
714
714
749
749
$
261
87
1,774
7
$
2,129
1,261
195
553
174
285
1,452
1,737
$
(24)
(24)
(3,292)
(2,915)
(2,915)
(6,231) $
261
115
2,142
2,518
3,289
1,098
462
285
(162)
123
7,490
Total
$
750
$
3,147
$
3,775
$
6,049
$
105
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2011
(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
—
Intercompany debt receivables
Investments
Goodwill
Property, plant and equipment, net
Other non-current assets
Total
Liabilities and equity
Current liabilities
Short-term debt
$
$
21
1
2
24
1,833
1,386
1
30
$
320
910
$
17
$
(57)
1
37
40
285
58
421
863
105
2,215
(57)
(3,712)
(2,233)
1,354
525
632
453
298
382
1,499
1,452
150
342
948
1,148
165
2,603
1,952
1,751
562
$
215
$
215
$
3,274
$
3,540
$
5,841
$
(6,002) $
6,868
Current maturities of long-term debt
Accounts payable and accrued liabilities
$
20
$
Intercompany payables
Total current liabilities
Long-term debt, excluding current maturities
Long-term intercompany debt
Postretirement and pension liabilities
Other non-current liabilities
Commitments and contingent liabilities
Noncontrolling interests
20
668
$
34
34
1,732
956
1
323
17
341
412
1,726
550
296
Crown Holdings shareholders’ equity/(deficit)
Total equity/(deficit)
(473)
(473)
552
552
215
215
$
128
66
1,713
40
$
1,947
1,193
362
446
193
234
1,466
1,700
$
(57)
(57)
(3,712)
(2,233)
(2,233)
(6,002) $
128
67
2,090
2,285
3,337
996
489
234
(473)
(239)
6,868
Total
$
215
$
3,274
$
3,540
$
5,841
$
106
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2012
(in millions)
Net provided by/(used for) operating
activities
Cash flows from investing activities
Capital expenditures
Acquisition of businesses, net of cash
acquired
Intercompany investing activities
Insurance proceeds
Proceeds from sale of property, plant and
equipment
Other
Net cash provided by/(used for)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility
and short-term debt
Net change in long-term intercompany
balances
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrolling interests
Dividends paid to noncontrolling
interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
$
14
$
(28) $
213
$
422
$
621
29
(41)
(29)
268
1
(283)
(49)
48
2
(11)
$
(297)
(324)
(78)
48
3
(11)
29
199
(293)
(297)
(362)
(1)
(104)
109
(408)
(3)
109
(65)
133
73
(297)
(1)
(79)
(3)
109
(66)
29
17
(257)
(4)
(79)
(3)
297
5
6
21
27
$
(412)
(130)
297
(254)
—
1
1
$
3
2
320
322
—
$
— $
3
8
342
350
226
17
(257)
(14)
—
$
— $
107
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2011
(in millions)
Net 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)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility
and short-term debt
Net change in long-term intercompany
balances
Debt issue costs
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrolling interests
Dividends paid to noncontrolling
interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
$
10
$
(29) $
(127) $
525
$
379
(55)
(346)
26
— $
(84)
—
(401)
26
—
3
(320)
(84)
(372)
520
(322)
(137)
(65)
(3)
—
(84)
(106)
(104)
(9)
(310)
1
(104)
424
—
84
—
84
—
—
—
$
320
$
— $
1,770
(1,069)
(192)
(22)
11
(312)
(202)
(104)
(9)
(129)
1
(121)
463
342
31
31
1,250
(746)
(55)
(449)
(19)
—
(19)
—
(17)
38
—
291
11
(312)
—
(10)
—
—
—
$
— $
21
$
53
3
1
(1)
223
—
(96)
—
126
—
—
1
1
108
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the year ended December 31, 2010
(in millions)
Net provided by/(used for) operating
activities
Cash flows from investing activities
Capital expenditures
Proceeds from sale of businesses, net of
cash sold
Proceeds from sale of property, plant and
equipment
Intercompany investing activities
Net cash provided by/(used for)
investing activities
Cash flows from financing activities
Proceeds from long-term debt
Payments of long-term debt
Net change in revolving credit facility
and short-term debt
Net change in long-term intercompany
balances
Common stock issued
Common stock repurchased
Dividends paid
Purchase of noncontrolling interests
Dividends paid to noncontrolling
interests
Other
Net cash provided by/(used for)
financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
Parent
Issuer
Guarantors
Non-
Guarantors
Eliminations
Total
Company
$
26
$
(20) $
190
$
394
$
590
(41)
(279)
(320)
3
20
23
—
(404)
65
359
—
1
22
4
31
38
$
(18)
(206)
(1)
745
(329)
213
(171)
(404)
—
—
—
(172)
—
—
1
1
(12)
8
—
11
27
38
$
—
(80)
(169)
(112)
(53)
(189)
(6)
(7)
431
—
(80)
(80)
—
80
—
80
—
—
—
$
424
$
— $
7
32
—
(281)
745
(734)
278
—
13
(255)
(169)
(112)
(65)
(299)
(6)
4
459
463
—
216
13
(255)
—
(26)
—
—
—
$
— $
109
Quarterly Data (unaudited)
Crown Holdings, Inc.
(in millions)
2012
2011
Net sales
Gross profit *
Net income attributable to Crown
Holdings
Earnings per average common
share:
Basic
Diluted
Average common shares
outstanding:
Basic
Diluted
Common stock price range: **
First
$ 1,947
287
(1)
Second
$ 2,184
340
(2)
Third
$ 2,302
369
(3)
Fourth
$ 2,037
281
(4)
First
$ 1,882
292
(5)
Second
$ 2,281
371
(6)
Third
$ 2,423
396
(7)
Fourth
$ 2,058
289
69
134
325
29
16
129
129
8
0.47
0.46
0.91
0.89
2.23
2.20
$
$
0.20
0.20
0.10
0.10
0.85
0.83
0.86
0.84
0.05
0.05
147.8
150.0
148.0
150.5
145.5
147.8
143.0
145.3
154.6
157.9
152.3
155.5
150.1
152.7
149.8
152.1
High
Low
Close
$ 38.13
33.57
36.83
$ 38.56
32.40
34.49
$ 37.66
33.13
36.75
$ 39.05
35.84
36.81
$ 39.95
32.69
38.58
$ 41.58
36.46
38.82
$ 39.63
29.74
30.61
$ 34.86
28.68
33.58
* The Company defines gross profit as net sales less cost of products sold and depreciation and amortization.
** Source: New York Stock Exchange - Composite Transactions
Notes:
(1) Includes pre-tax charge of $3 for restructuring and pre-tax gain of $10 for asset impairments and sales.
(2) Includes pre-tax charge of $7 for restructuring, pre-tax gain of $14 for asset impairments and sales and a net income tax
benefit of $169 primarily related to the recognition of U.S. foreign tax credits.
(3) Includes pre-tax charges of $35 for asbestos claims and $38 for restructuring actions, pre-tax gain of $18 for asset
impairments and sales and an income tax charge of $4 for tax law changes.
(4) Includes pre-tax charges of $25 for restructuring actions, $30 for losses on early extinguishments of debt and $17 for
tax charges in connection with relocation of the Company’s European Division headquarters..
(5) Includes pre-tax charge of $2 for loss on early extinguishment of debt.
(6) Includes pre-tax charges of $2 for restructuring actions, $25 for tax charges in connection with a tax law change in
France and pre-tax gains of $2 for asset impairments and sales.
(7) Includes pre-tax charges of $28 for asbestos claims,$50 for restructuring actions,$8 for asset impairments and sales and
$5 for tax charges in connection with the relocation of the Company’s European Division headquarters.
110
Crown Holdings, Inc.
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In millions)
COLUMN A
COLUMN B
COLUMN C
Additions
COLUMN D COLUMN E
Description
Balance at
beginning of
period
Charged to
costs and
expense
Charged to
other
accounts
Deductions
– Write-offs
Balance at
end of period
For the Year Ended December 31, 2012
Allowances deducted from assets to which
they apply:
Trade accounts receivable
$
37 $
— $
2 $
(2) $
Deferred tax assets
359
56
(15)
—
For the Year Ended December 31, 2011
Allowances deducted from assets to which
they apply:
Trade accounts receivable
Deferred tax assets
40
376
1
(19)
For the Year Ended December 31, 2010
Allowances deducted from assets to which
they apply:
Trade accounts receivable
Deferred tax assets
40
391
4
(6)
(1)
2
(1)
(9)
(3)
—
(3)
—
37
400
37
359
40
376
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
ITEM 9.
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 period 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.
111
Crown Holdings, Inc.
The Company’s report on internal control over financial reporting is included in Part II, Item 8 of this Annual Report on Form 10-
K.
There has been no change in internal control over financial reporting that occurred during the quarter ended December 31, 2012
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
None.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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.
Title
Year Assumed
Present Title
Name
John W. Conway
Timothy J. Donahue
Raymond L. McGowan, Jr.
Gerard H. Gifford
Jozef Salaerts
Thomas A. Kelly
Kevin C. Clothier
Age
67
50
61
57
58
53
Chairman of the Board, President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
President – Americas Division
President – European Division
President – Asia Pacific Division
Senior Vice President – Finance
44 Vice President and Corporate Controller
2001
2008
2008
2012
2007
2009
2009
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,” “Compensation Discussion and Analysis” and “Corporate Governance” and is incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Certain information required by this Item is set forth in the Company’s Proxy Statement within the sections entitled “Proxy
Statement – Meeting, April 25, 2013” , “Common Stock Ownership of Certain Beneficial Owners, Directors and Executive
Officers” and "Proposal 3: Approval of the 2013 Stock-Based Incentive Compensation Plan" and is incorporated herein by
reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is set forth in the Company’s Proxy Statement within the sections entitled “Election of
Directors,” “Corporate Governance” and “Executive Compensation” and is incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item is set forth in the Company’s Proxy Statement within the sections entitled “Principal
Accounting Fees and Services” and is incorporated herein by reference.
112
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 (see Part II, Item 8)
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, 2012, 2011 and 2010
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010
Consolidated Balance Sheets as of December 31, 2012 and 2011
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2012, 2011 and 2010
Notes to Consolidated Financial Statements
Supplementary Information
(2) Financial Statement Schedules:
Schedule II – Valuation and Qualifying Accounts and Reserves
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
3.b
4.a
4.b
4.c
4.d
4.e
4.f
4.g
4.h
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)).
Amended and Restated By-Laws of Crown Holdings, Inc. (incorporated by reference to Exhibit 3.ii of the
Registrant's Current Report on Form 8-K dated November 2, 2011 (File No. 0-50189)).
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)).
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)).
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)).
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)).
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)).
Officers' Certificate for 7-1/2% Debentures Due 2096 (incorporated by reference to Exhibit 99.7 of the Registrant's
Current Report on From 8-K dated December 17, 1996 (File No. 1-2227)).
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)).
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)).
113
Crown Holdings, Inc.
4.i
4.j
4.k
4.l
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)).
Amendment No. 1 to the Amended and Restated Rights Agreement, dated as of December 14, 2012, 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 13, 2012 (File No. 0.-50189)).
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 Exhibit 4.3 of the Registrant’s Current Report on Form 8-K dated February 26, 2003
(File No. 0-50189)).
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 Exhibit 4.5 of the Registrant’s Current Report on Form 8-K dated
February 26, 2003 (File No. 0-50189)).
4.m 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)).
4.n
4.o
4.p
4.q
4.r
4.s
4.t
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.i of the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2011 (File No. 0-50189)).
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)).
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)).
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)).
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)).
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)).
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)).
114
Crown Holdings, Inc.
4.u
4.v
4.w
4.x
4.y
4.z
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)).
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)).
First Amendment to Credit Agreement, dated as of August 4, 2006, by and among Crown Americas LLC, as U.S.
Borrower, the other undersigned Credit Parties, the undersigned financial institutions, including Deutsche Bank
AG New York Branch, as Lenders, and Deutsche Bank AG New York Branch, as Administrative Agent and as
Collateral Agent for Lenders, and with Deutsche Bank Securities, Inc. and Lehman Commercial Paper, Inc., as
Joint Lead Arrangers for the Additional Term B Loans and as Joint Book Managers, and Lehman Commercial
Paper, Inc., as Syndication Agent (incorporated by reference to Exhibit 4 of the Registrant’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006 (File No. 0-50189)).
Second Amendment to Credit Agreement, dated as of November 12, 2009, by and among Crown Americas LLC,
as U.S. Borrower, the other undersigned Credit Parties, the undersigned financial institutions, including Deutsche
Bank AG New York Branch, as Lenders, and Deutsche Bank AG new York Branch, as Administrative Agent and
as Collateral Agent for Lenders (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on
Form 8-K dated November 12, 2009 (File No. 0-50189)).
Third Amendment to Credit Agreement, dated as of May 14, 2010, by and among Crown Americas LLC, as U.S.
Borrower, the other undersigned Credit Parties, the undersigned financial institutions, including Deutsche Bank
AG New York Branch, as lenders thereunder, and Deutsche Bank AG New York Branch, as Administrative Agent
and as Collateral Agent for the Lenders. (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report
on Form 8-K dated May 14, 2010 (File No. 0-05189)).
Fourth Amendment to Credit Agreement and Waiver, dated as of June 15, 2010, by and among Crown Americas
LLC, as U.S. Borrower, Crown European Holdings SA, 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, the financial institutions party thereto, including
Deutsche Bank AG New York Branch, as lenders, The Bank of Nova Scotia, as Canadian Administrative Agent,
and Deutsche Bank AG New York Branch, as Administrative Agent and U.K. Administrative Agent, European
Swing Line Lender, U.S. Swing Line Lender, Facing Agent and Collateral Agent. (incorporated by reference to
Exhibit 4.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No.
0-05189)).
4.aa
Fifth Amendment to Credit Agreement, dated as of December 3, 2010, by and among Crown Americas LLC, as
U.S. Borrower, the other undersigned Credit Parties, the undersigned financial institutions, including Deutsche
Bank AG New York Branch, as lenders thereunder, and Deutsche Bank AG New York Branch, as Administrative
Agent and as Collateral Agent for the Lenders (incorporated by reference to Exhibit 4.1 of the Registrant’s Current
Report on Form 8-K dated December 9, 2010 (File No. 0-05189)).
4.bb
Sixth Amendment to Credit Agreement, dated as of June 9, 2011, by and 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, the financial institutions party thereto, including
115
Crown Holdings, Inc.
4.cc
4.dd
4.ee
4.ff
4.gg
4.hh
4.ii
4.jj
Deutsche Bank AG New York Branch, as lenders, The Bank of Nova Scotia, as Canadian Administrative Agent,
and Deutsche Bank AG New York Branch, as Administrative Agent and U.K. Administrative Agent and Collateral
Agent (incorporated by reference to Exhibit 4.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2011 (File No. 0-05189))
Seventh Amendment to Credit Agreement, dated as of November 30, 2011, by and 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, the financial institutions party thereto, including
Deutsche Bank AG New York Branch, as lenders, The Bank of Nova Scotia, as Canadian Administrative Agent,
and Deutsche Bank AG New York Branch, as Administrative Agent and U.K. Administrative Agent and Collateral
Agent (incorporated by reference to Exhibit 4.dd of the Registrant's Annual Report on Form 10-K for the year
ended December 31, 2011 (File No. 0.-50189)).
First Amendment to Euro Bank Pledge Agreement, dated as of June 15, 2010, by Crown Cork & Seal Company,
Inc., Crown Americas LLC, Crown International Holdings, Inc., the U.S. subsidiaries of the Company party thereto,
as Pledgors, and Deutsche Bank AG New York Branch, as Euro Collateral Agent. (incorporated by reference to
Exhibit 4.2 of the Registrant’s Current Report on Form 8-K dated June 15, 2010 (File No. 0-05189)).
First Amendment to Second Amended and Restated CEH Pledge Agreement, dated as of June 15, 2010, by Crown
European Holdings S.A., as Pledgor, and Deutsche Bank AG New York Branch, as Euro Collateral Agent.
(incorporated by reference to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K dated June 15, 2010
(File No. 0-05189)).
First Amendment to Second Amended and Restated Shared Pledge Agreement, dated as of June 15, 2010, by the
Company, Crown Cork & Seal Company, Inc., Crown Americas LLC, Crown International Holdings, Inc., the
U.S. subsidiaries of the Company party thereto, as Pledgors, and Deutsche Bank AG New York Branch, as Collateral
Agent. (incorporated by reference to Exhibit 4.4 of the Registrant’s Current Report on Form 8-K dated June 15,
2010 (File No. 0-05189)).
First Amendment to Bank Pledge Agreement, dated as of June 15, 2010, by the Company, Crown Cork & Seal
Company, Inc., Crown Americas LLC, Crown International Holdings, Inc., the U.S. subsidiaries of the Company
party thereto, as Pledgors, and Deutsche Bank AG New York Branch, as Collateral Agent. (incorporated by reference
to Exhibit 4.5 of the Registrant’s Current Report on Form 8-K dated June 15, 2010 (File No. 0-05189)).
First Amendment to Second Amended and Restated U.S. Security Agreement, dated as of June 15, 2010, by the
Company, Crown Cork & Seal Company, Inc., Crown Americas LLC, Crown International Holdings, Inc., the
U.S. subsidiaries of the Company party thereto, as Grantors, and Deutsche Bank AG New York Branch, as Collateral
Agent. (incorporated by reference to Exhibit 4.6 of the Registrant’s Current Report on Form 8-K dated June 15,
2010 (File No. 0-05189)).
First Amendment to U.S. Guarantee Agreement, dated as of June 15, 2010, among each of the subsidiaries listed
therein of Crown Americas LLC, as Guarantors, and Deutsche Bank AG New York Branch, as Administrative
Agent. (incorporated by reference to Exhibit 4.7 of the Registrant’s Current Report on Form 8-K dated June 15,
2010 (File No. 0-05189)).
First Amendment to Second Amended and Restated U.S. Intercreditor and Collateral Agency Agreement, dated
as of June 15, 2010, 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, Deutsche Bank
AG New York Branch, as U.S. Collateral Agent, the Company, Crown Americas LLC, Crown Cork & Seal
Company, Inc., Crown International Holdings, Inc. and each of the U.S. subsidiaries of the Company listed therein.
(incorporated by reference to Exhibit 4.8 of the Registrant’s Current Report on Form 8-K dated June 15, 2010
(File No. 0-05189)).
4.kk
First Amendment to Second Amended and Restated Euro Intercreditor and Collateral Agency Agreement, dated
as of June 15, 2010, among Deutsche Bank AG New York Branch, as U.K. Administrative Agent, The Bank of
Nova Scotia, as Canadian Administrative Agent, Deutsche Bank AG New York Branch, as Euro Collateral Agent,
Crown European Holdings SA, and each of the subsidiaries of Crown European Holdings identified therein.
116
Crown Holdings, Inc.
(incorporated by reference to Exhibit 4.9 of the Registrant’s Current Report on Form 8-K dated June 15, 2010
(File No. 0-05189)).
4.ll
Indenture, dated as of July 28, 2010, by and among Crown European Holdings SA, as Issuer, the Guarantors named
therein and The Bank of New York Mellon, as Trustee, relating to the 7 1/8% Senior Notes due 2018 (incorporated
by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K dated July 28, 2010 (File No. 0-05189)).
4.mm Form of 7 1/8% Senior Notes due 2018 (included in Exhibit 4.ll).
4.nn
Indenture, dated as of January 31, 2011, by and among Crown Americas LLC, Crown Americas Capital Corp. III,
as Issuers, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee,
relating to the 6 1/4% Senior Notes due 2021. (incorporated by reference to Exhibit 4.2 of the Registrant’s Current
Report on Form 8-K dated January 31, 2011 (File No. 0-05189)).
4.oo
Form of 6 1/4% Senior Notes due 2021 (included in Exhibit 4.nn).
4.pp Registration Rights Agreement, dated as of January 9, 2013, by and among the Company, Crown Americas LLC
and Crown Americas Capital Corp. IV, Deutsche Bank Securities Inc., as Representative of the several Initial
Purchasers named therein and the Guarantors (as defined therein), relating to the $800 million 4 1/2% Senior Notes
due 2023 (incorporated by reference to Exhibit 4.1 of the Registrant's Current Report on Form 8-K dated January
9, 2013 (File No. 0.-50189)).
4.qq
Indenture, dated as of January 9, 2013, by and among Crown Americas LLC and Crown Americas Capital Corp.
IV, as Issuers, the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee,
relating to the 4 1/2% Senior Notes due 2023 (incorporated by reference to Exhibit 4.2 of the Registrant's Current
Report on Form 8-K dated January 9, 2013 (File No. 0.-50189)).
4.rr
Form of 4 ½% Senior Notes due 2023 (included in Exhibit 4.qq).
4.ss
Registration Rights Agreement, dated as of January 15, 2013, by and among the Company, Crown Americas LLC
and Crown Americas Capital Corp. IV, Deutsche Bank Securities Inc., as the Initial Purchaser, and the Guarantors
(as defined therein), relating to the $200 million 4 1/2% Senior Notes due 2023 (incorporated by reference to
Exhibit 4.1 of the Registrant's Current Report on Form 8-K dated January 15, 2013 (File No. 0.-50189)).
10.a
10.b
10.c
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.
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)).
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)).
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
117
Crown Holdings, Inc.
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)).
10.f
10.g
10.h
10.i
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)).
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’s Current Report on Form 8-K dated November 18, 2005 (File No. 0-50189)).
Purchase Agreement, dated as of January 3, 2013, by and among the Company, Crown Americas LLC, Crown
Americas Capital Corp. IV, Deutsche Bank Securities Inc. as Representative, the Initial Purchasers (as defined
therein) and the Guarantors (as defined therein) (incorporated by reference to Exhibit 10.1 of the Registrant's
Current Report on Form 8-K dated January 3, 2013 (File No. 0.-50189)).
Purchase Agreement, dated as of January 9, 2013, by and among the Company, Crown Americas LLC, Crown
Americas Capital Corp. IV, Deutsche Bank Securities Inc., as the Initial Purchaser, and the Guarantors (as defined
therein) (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K dated January
9, 2013 (File No. 0.-50189)).
10.j
Employment Contracts:
(1) Employment contract between Crown Holdings, Inc. and John W. Conway, dated May 3, 2007 (incorporated
by reference to Exhibit 10.1(a) of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2007 (File No. 0-50189)).
(2) Second amendment to the employment contract, dated May 3, 2007, between Crown Holdings, Inc. and
Timothy J. Donahue, dated as of December 11, 2008 (incorporated by reference to Exhibit 10.2 of the
Registrant’s Current Report on Form 8-K dated December 11, 2008).
(3) Employment contract between Crown Holdings, Inc. and Timothy J. Donahue, dated May 3, 2007
(incorporated by reference to Exhibit 10.1(e) of the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007 (File No. 0-50189)).
(4) Employment contract between CROWN Packaging Europe GmbH and Christopher C. Homfray, dated
May 4, 2011 (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-
Q for the quarter ended March 31, 2011 (File No. 0-50189)).
(5) Employment contract between Crown Holdings, Inc. and Raymond L. McGowan, Jr., dated May 3, 2007
(incorporated by reference to Exhibit 10.h(7) of the Registrant’s Annual Report on Form 10-K for the year
ended December 31, 2007 (File No. 0-50189)).
118
Crown Holdings, Inc.
(6)
Executive Employment Agreement, effective June 1, 2012, between Crown Holdings, Inc. and Gerard
Gifford (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2012 (File No 0-50189)).
(7) Employment contract between Crown Holdings, Inc. and Jozef Salaerts, dated November 5, 2012
(incorporated by reference to Exhibit 10 of the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2012 (File No 0-50189)).
10.k Crown Holdings, Inc. Economic Profit Incentive Plan, effective as of January 1, 2007 (incorporated by reference
to Exhibit 10.i of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No.
0-50189)).
10.l
Crown Holdings, Inc. Senior Executive Retirement Plan, as amended and restated as of January 1, 2008
(incorporated by reference to Exhibit 10.l of the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2007 (File No. 0-50189)).
10.m Senior Executive Retirement Agreements:
(1) Senior Executive Retirement Agreement between Crown Holdings, Inc. and John W. Conway, dated May 3,
2007 (incorporated by reference to Exhibit 10.4(a) of the Registrant’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2007 (File No. 0-50189)).
(2) Senior Executive Retirement Agreement between Crown Holdings, Inc. and Timothy J. Donahue, dated
May 3, 2007 (incorporated by reference to Exhibit 10.4(e) of the Registrant’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2007 (File No. 0-50189)).
(3) Senior Executive Retirement Agreement between Crown Holdings, Inc. and Christopher C. Homfray,
effective January 1, 2008 (incorporated by reference to Exhibit 10.m(6) of the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2007 (File No. 0-50189)).
(4) Senior Executive Retirement Agreement between Crown Holdings, Inc. and Raymond L. McGowan, Jr.,
dated May 3, 2007 (incorporated by reference to Exhibit 10.m(7) of the Registrant’s Annual Report on Form
10-K for the year ended December 31, 2007 (File No. 0-50189)).
(5) Senior Executive Retirement Agreement between Crown Holdings, Inc. and Jozef Salaerts, effective
January 1, 2008 (incorporated by reference to Exhibit 10.m(8) of the Registrant’s Annual Report on Form
10-K for the year ended December 31, 2007 (File No. 0-50189)).
(6)
Senior Executive Retirement Agreement, effective June 1, 2012, between Crown Holdings, Inc. and Gerard
Gifford (incorporated by reference to Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2012(File No 0-50189)).
(7) Amendment No. 1 to the Senior Executive Retirement Agreement, effective June 1, 2012, between Crown
Holdings, Inc. and Gerard Gifford dated December 28, 2012.
10.n 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.o 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.p Amendment No. 2, effective December 14, 2006, to the Crown Holdings, Inc. 2001 Stock-Based Incentive
Compensation Plan (incorporated by reference to Exhibit 10.bb of the Registrant’s Annual Report on Form 10-K
for the year ended December 31, 2006 (File No. 0-50189)).
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)).
10.q
119
Crown Holdings, Inc.
10.r
Form of Agreement for Restricted Stock Awards under Crown Holdings, Inc. 2006 Stock-Based Incentive
Compensation Plan (incorporated by reference to Exhibit 10.dd of the Registrant’s Annual Report on Form 10-K
for the year ended December 31, 2006 (File No. 0-50189)).
10.s Crown Holdings, Inc. 2004 Stock-Based Incentive Compensation Plan, dated as of April 22, 2004 (incorporated
by reference to the Registrant’s Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange
Commission on March 19, 2004 (File No. 0-50189)).
10.t Amendment No. 1, effective December 14, 2006, to the Crown Holdings, Inc. 2004 Stock-Based Incentive
Compensation Plan (incorporated by reference to Exhibit 10.ff of the Registrant’s Annual Report on Form 10-K
for the year ended December 31, 2006 (File No. 0-50189)).
10.u
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’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004 (File No. 0-51089)).
10.v Crown Holdings, Inc. Deferred Compensation Plan for Directors, as Amended and Restated, effective January 1,
2008 (incorporated by reference to Exhibit 10.w of the Registrant’s Annual Report on Form 10-K for the year
ended December 31, 2008 (File No. 0-50189)).
10.w Crown Holdings, Inc. Stock Compensation Plan for Non-Employee Directors, dated as of April 22, 2004
(incorporated by reference to the Registrant’s Definitive Proxy Statement on Schedule 14A, filed with the Securities
and Exchange Commission on March 19, 2004 (File No. 0-50189)).
10.x 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’s Quarterly Report on Form 10-Q for the quarter ended June 30,
1995 (File No. 1-2227)).
10.y 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 Registrant’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2005 (File No. 0-50189)).
10.z 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 Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 (File No. 0-50189)).
10.aa 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 Registrant’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2005 (File No. 0-50189)).
10.bb Crown Holdings, Inc. 2006 Stock-Based Incentive Compensation Plan (incorporated by reference to the
Registrant’s Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission
on March 24, 2006 (File No. 0-50189)).
10.cc Amendment No. 1, effective December 14, 2006, to the Crown Holdings, Inc. 2006 Stock-Based Incentive
Compensation Plan (incorporated by reference to Exhibit 10.pp of the Registrant’s Annual Report on Form 10-K
for the year ended December 31, 2006 (File No. 0-50189)).
10.dd Amendment No. 2, effective July 28, 2010, to the Crown Holdings, Inc. 2006 Stock-Based Incentive Compensation
Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2010 (File No. 0-50189)).
120
Crown Holdings, Inc.
10.ee Form of Agreement for Non-Qualified Stock Option Awards under Crown Holdings, Inc. 2006 Stock-Based
Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2007 (File No. 0-50189)).
10.ff Crown Cork & Seal Company, Inc. Restoration Plan, dated July 28, 2010 (incorporated by reference to Exhibit
10.3 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012(File No 0-50189)).
10.gg Amendment No. 1, effective July 1, 2011, to the Crown Cork & Seal Company, Inc. Restoration Plan (incorporated
by reference to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
2012(File No 0-50189)).
10.hh Receivables Purchase Agreement, dated as of March 9, 2010, among Crown Cork & Seal Receivables (DE)
Corporation, as the seller, Crown Cork & Seal USA, Inc., as the servicer, Coöperatieve Centrale Raiffeisen-
Boerenleenbank B.A. "Rabobank Nederland", New York Branch, as administrative agent, and the conduit
purchasers, alternate purchasers, facility agents party thereto from time to time (incorporated by reference to
Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010(File No
0-50189)).
10.ii Parent Undertaking Agreement, dated as of March 9, 2010, made by Crown Holdings, Inc., Crown Cork & Seal
Company, Inc. and Crown International Holdings, Inc. in favor of the purchasers, the facility agents and
Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland", New York Branch, as
administrative agent (incorporated by reference to Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-
Q for the quarter ended March 31, 2010(File No 0-50189)).
10.jj Third Amended and Restated Receivables Sale Agreement, dated as of March 9, 2010, among Crown Cork and
Seal USA, Inc., as a seller and the servicer, CROWN Metal packaging Canada LP, as a seller, and Crown Cork &
Seal Receivables (DE) Corporation, as the buyer (incorporated by reference to Exhibit 10.3 of the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2010(File No 0-50189)).
Exhibits 10.j through 10.jj, with the exception of 10.z, 10.aa and 10.hh - 10.jj, are management contracts or compensatory
plans or arrangements required to be filed as exhibits pursuant to Item 14(c) of this Report.
12
21
23
Computation of ratio of earnings to fixed charges.
Subsidiaries of Registrant.
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
101
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 Timothy J. Donahue, Executive Vice President and Chief Financial Officer of Crown Holdings,
Inc.
The following financial information from the Registrant’s Annual Report on Form 10-K for the year ended
December 31, 2012 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements
of Operations for the twelve months ended December 31, 2012, 2011 and 2010, (ii) Consolidated Statements of
Comprehensive Income for the twelve months ended December 31, 2012, 2011 and 2010; (iii) Consolidated
Balance Sheets as of December 31, 2012 and December 31, 2011, (iv) Consolidated Statements of Cash Flows
for the twelve months ended December 31, 2012, 2011 and 2010, (v) Consolidated Statements of Changes in
Shareholders' Equity for the twelve months ended December 31, 2012, 2011 and 2010 and (vi) Notes to Consolidated
Financial Statements.
121
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.
Crown Holdings, Inc.
Registrant
By:
/s/ Kevin C. Clothier
Kevin C. Clothier
Vice President and Corporate Controller
Date: March 1, 2013
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John W. Conway, Timothy J. Donahue
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 2012 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
TITLE
/s/ John W. Conway
John W. Conway
/s/ Timothy J. Donahue
Timothy J. Donahue
/s/ Kevin C. Clothier
Kevin C. Clothier
SIGNATURE
/s/ Jenne K. Britell
Jenne K. Britell
/s/ Arnold W. Donald
Arnold W. Donald
/s/ William G. Little
William G. Little
/s/ Hans J. Löliger
Hans J. Löliger
/s/ James H. Miller
James H. Miller
Chairman of the Board, President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
Vice President and Corporate Controller
DIRECTORS
/s/ Josef M. Müller
Josef M. Müller
/s/ Thomas A. Ralph
Thomas A. Ralph
/s/ Hugues du Rouret
Hugues du Rouret
Jim L. Turner
/s/ William S. Urkiel
William S. Urkiel
122
Division Officers
Americas Division
raymoNd l. mcGowaN, Jr. | President
c. aNderSoN boltoN
President – CROWN Aerosol
Packaging North America
JoSepH r. pierce
President – CROWN Beverage
Packaging North America
JameS d. wilSoN
President – CROWN Food
Packaging North America and
CROWN Closures and Speciality
Packaging North America
ramiro barNey duSSaN
President – CROWN Latin America
and Caribbean
riNaldo lopeS
President – CROWN Beverage
Packaging South America
ricHard a. forti
Senior Vice President –
Business Support
edward c. veSey
Senior Vice President – Sourcing
timotHy p. auSt
Vice President and
Chief Financial Officer
alfred J. dermody
Vice President –
Human Resources, Americas
Asia Pacific Division
Jozef SalaertS | President
Hock Huat GoH
Senior Vice President – Finance and
Human Resources
robert bourque, Jr.
Vice President – CROWN Beverage
Packaging China and Hong kong
Gary fiSHlock
Vice President – Manufacturing
fraNk koH
Vice President – CROWN Beverage
Packaging South East Asia
patrick lee
General Manager – CROWN Food
and Aerosol Thailand
cHee meNG waN
General Manager – Superior Multi-
Packaging Limited
patrick NG
Director – Sourcing
European Division
Gerard H. Gifford | President
cHriStopHer Homfray
Executive Vice President
JoHN cliNtoN
Senior Vice President – Sourcing
peter lockley
Senior Vice President – CROWN
Bevcan Europe and Middle East
Howard lomax
Senior Vice President and Chief
Financial Officer
didier SouriSSeau
Senior Vice President – CROWN
Food and Closures Europe
david uNderwood
Senior Vice President –
Operations Support
tHomaS t. fiScHer
Vice President –
CROWN Aerosols Europe
pierre Sirbat
Vice President –
Environment, Quality and WCP
david HarriSoN
Vice President – CROWN Speciality
Packaging Europe
martiN reyNoldS
Vice President –
External and Regulatory Affairs
laureNt watteaux
Vice President and General Counsel
CROWN Packaging Technology
daNiel a. abramowicz | President
keviN ambroSe
Vice President – Metals Development
iaN bucklow
Vice President – Sustainability and
Materials Development
briaN roGerS
Vice President –
Project Management and Engineering
NiGel wakely
Vice President –
Engineering Development
Company Profile
Investor Information
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 vacuum closures and caps. As of December 31, 2012, the Company operated 149 plants located
in 41 countries, employing 21,856 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 Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-0854
General Telephone Number:
1-800-468-9716
Website: www.shareowneronline.com
Owners of shares 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.
form 10-k aNd otHer reportS
The Company will provide without charge a copy of its
2012 Annual Report on Form 10-k, excluding exhibits,
as filed with the U.S. Securities and Exchange Commis-
sion (“SEC”). To request a copy of the Company’s annual
report, call 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 the Company’s website at
www.crowncork.com in the “For Investors” section
under Annual Report and SEC filings.
iNterNet
Visit our website at www.crowncork.com for more
information about the Company, including news
releases and investor information.
certificatioNS
The Company included as Exhibit 31 to its 2012 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.
This report is printed on recycled paper using soy-based inks.
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 25, 2013, 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, was mailed to each shareholder of common stock of
record as of the close of business on March 5, 2013, 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 anD Corporate offiCers
2012 annual report on form 10-K
Division offiCers
investor information
Please visit our website www.crowncork.com
to read more of our story and obtain additional information.
Corporate/ameriCas Division HeaDquarters
Crown Holdings, Inc.
One Crown Way
Philadelphia, PA 19154-4599 USA
Main Tel: +1 (215) 698-5100
asia paCifiC Division HeaDquarters
CROWN Asia Pacific Holdings Ltd.
10 Hoe Chiang Road #19-01/02
Keppel Towers
Singapore 089315
Main Tel: +65 6423 9798
european Division HeaDquarters
CROWN Packaging Europe GmbH
Baarermatte
CH-6340 Baar
Switzerland
Main Tel: +41 41 759 10 00
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