UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011
[ ] | 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 |
75-3099507 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
One Crown Way, Philadelphia, PA | 19154-4599 | |
(Address of principal executive offices) | (Zip Code) |
215-698-5100
(registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes 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 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. (Check one)
Large accelerated filer X | Accelerated filer | |
Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).
Yes No X
There were 155,940,729 shares of Common Stock outstanding as of April 29, 2011.
Crown Holdings, Inc.
PART I FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions except share and per share data)
(Unaudited)
Three months ended March 31 | 2011 | 2010 | ||||||
Net sales |
$1,882 | $1,777 | ||||||
Cost of products sold, excluding depreciation and amortization |
1,550 | 1,483 | ||||||
Depreciation and amortization |
40 | 44 | ||||||
Gross profit |
292 | 250 | ||||||
Selling and administrative expense |
102 | 79 | ||||||
Provision for restructuring |
25 | 22 | ||||||
Asset impairments and sales |
0 | (1 | ) | |||||
Loss from early extinguishments of debt |
30 | 0 | ||||||
Interest expense |
56 | 47 | ||||||
Interest income |
(4 | ) | (1 | ) | ||||
Translation and foreign exchange |
0 | (2 | ) | |||||
Income before income taxes and equity earnings |
83 | 106 | ||||||
Provision for income taxes |
41 | 39 | ||||||
Net income |
42 | 67 | ||||||
Net income attributable to noncontrolling interests |
(26 | ) | (26 | ) | ||||
Net income attributable to Crown Holdings |
$16 | $41 | ||||||
Earnings per common share attributable to Crown Holdings: |
||||||||
Basic |
$0.10 | $0.26 | ||||||
Diluted |
$0.10 | $0.25 | ||||||
Weighted average common shares outstanding: |
||||||||
Basic |
154,610,056 | 160,714,929 | ||||||
Diluted |
157,928,690 | 163,100,074 |
The accompanying notes are an integral part of these consolidated financial statements.
2
Crown Holdings, Inc.
CONSOLIDATED BALANCE SHEETS (Condensed)
(In millions)
(Unaudited)
March 31, 2011 |
December 31, 2010 |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$409 | $463 | ||||||
Receivables, net |
1,104 | 936 | ||||||
Inventories |
1,353 | 1,060 | ||||||
Prepaid expenses and other current assets |
204 | 190 | ||||||
Total current assets |
3,070 | 2,649 | ||||||
Goodwill |
2,047 | 1,984 | ||||||
Property, plant and equipment, net |
1,702 | 1,610 | ||||||
Other non-current assets |
657 | 656 | ||||||
Total |
$7,476 | $6,899 | ||||||
Liabilities and equity |
||||||||
Current liabilities |
||||||||
Short-term debt |
$413 | $241 | ||||||
Current maturities of long-term debt |
176 | 158 | ||||||
Accounts payable and accrued liabilities |
1,994 | 1,978 | ||||||
Total current liabilities |
2,583 | 2,377 | ||||||
Long-term debt, excluding current maturities |
2,884 | 2,649 | ||||||
Postretirement and pension liabilities |
1,171 | 1,159 | ||||||
Other non-current liabilities |
499 | 485 | ||||||
Commitments and contingent liabilities (Note I) |
||||||||
Noncontrolling interests |
346 | 325 | ||||||
Crown Holdings shareholders deficit |
(7 | ) | (96 | ) | ||||
Total equity |
339 | 229 | ||||||
Total |
$7,476 | $6,899 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
Crown Holdings, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)
(In millions)
(Unaudited)
Three months ended March 31 | 2011 | 2010 | ||||||
Cash flows from operating activities |
||||||||
Net income |
$42 | $67 | ||||||
Adjustments to reconcile net income to net cash used for operating activities: |
||||||||
Depreciation and amortization |
40 | 44 | ||||||
Provision for restructuring |
25 | 22 | ||||||
Asset impairments and sales |
0 | (1 | ) | |||||
Pension expense |
24 | 29 | ||||||
Pension contributions |
(18 | ) | (15 | ) | ||||
Stock-based compensation |
10 | 7 | ||||||
Changes in assets and liabilities: |
||||||||
Receivables |
(163 | ) | (366 | ) | ||||
Inventories |
(260 | ) | (140 | ) | ||||
Accounts payable and accrued liabilities |
(22 | ) | (132 | ) | ||||
Other, net |
5 | 69 | ||||||
Net cash used for operating activities |
(317 | ) | (416 | ) | ||||
Cash flows from investing activities |
||||||||
Capital expenditures |
(103 | ) | (32 | ) | ||||
Other |
2 | 11 | ||||||
Net cash used for investing activities |
(101 | ) | (21 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds from long-term debt |
754 | 4 | ||||||
Payments of long-term debt |
(605 | ) | (17 | ) | ||||
Net change in revolving credit facility and short-term debt |
218 | 409 | ||||||
Debt issue costs |
(11 | ) | 0 | |||||
Common stock issued |
4 | 2 | ||||||
Common stock repurchased |
(6 | ) | (5 | ) | ||||
Dividends paid to noncontrolling interests |
(6 | ) | (15 | ) | ||||
Other |
5 | 8 | ||||||
Net cash provided by financing activities |
353 | 386 | ||||||
Effect of exchange rate changes on cash and cash equivalents |
11 | (9 | ) | |||||
Net change in cash and cash equivalents |
(54 | ) | (60 | ) | ||||
Cash and cash equivalents at January 1 |
463 | 459 | ||||||
Cash and cash equivalents at March 31 |
$409 | $399 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
Crown Holdings, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
(In millions) (Unaudited)
Crown Holdings, Inc. Shareholders Equity | ||||||||||||||||||||||||||||||||
Common Stock |
Paid-in Capital |
Accumulated Earnings/ (Deficit) |
Accumulated Other Comprehensive Loss |
Treasury Stock |
Total Crown Equity |
Noncontrolling Interests |
Total | |||||||||||||||||||||||||
Balance at January 1, 2010 |
$929 | $1,536 | ($94 | ) | ($2,255 | ) | ($122 | ) | ($6 | ) | $389 | $383 | ||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||
Net income |
41 | 41 | 26 | 67 | ||||||||||||||||||||||||||||
Translation adjustments |
(31 | ) | (31 | ) | (5 | ) | (36 | ) | ||||||||||||||||||||||||
Amortization of net loss and prior service cost included in pension and postretirement cost |
18 | 18 | 18 | |||||||||||||||||||||||||||||
Derivatives qualifying as hedges |
9 | 9 | 9 | |||||||||||||||||||||||||||||
Total comprehensive income |
37 | 21 | 58 | |||||||||||||||||||||||||||||
Dividends paid to noncontrolling interests |
(15 | ) | (15 | ) | ||||||||||||||||||||||||||||
Restricted stock awarded |
(2 | ) | 3 | 1 | 1 | |||||||||||||||||||||||||||
Stock-based compensation |
7 | 7 | 7 | |||||||||||||||||||||||||||||
Common stock issued |
1 | 1 | 2 | 2 | ||||||||||||||||||||||||||||
Common stock repurchased |
(4 | ) | (1 | ) | (5 | ) | (5 | ) | ||||||||||||||||||||||||
Balance at March 31, 2010 |
$929 | $1,538 | ($53 | ) | ($2,259 | ) | ($119 | ) | $36 | $395 | $431 | |||||||||||||||||||||
Balance at January 1, 2011 |
$929 | $1,231 | $230 | ($2,333 | ) | ($153 | ) | ($96 | ) | $325 | $229 | |||||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||||||||
Net income |
16 | 16 | 26 | 42 | ||||||||||||||||||||||||||||
Translation adjustments |
45 | 45 | 4 | 49 | ||||||||||||||||||||||||||||
Amortization of net loss and prior service cost included in pension and postretirement cost |
16 | 16 | 16 | |||||||||||||||||||||||||||||
Derivatives qualifying as hedges |
5 | 5 | 1 | 6 | ||||||||||||||||||||||||||||
Total comprehensive income |
82 | 31 | 113 | |||||||||||||||||||||||||||||
Dividends paid to noncontrolling interests |
(6 | ) | (6 | ) | ||||||||||||||||||||||||||||
Restricted stock awarded |
(2 | ) | 2 | |||||||||||||||||||||||||||||
Stock-based compensation |
10 | 10 | 10 | |||||||||||||||||||||||||||||
Common stock issued |
3 | 1 | 4 | 4 | ||||||||||||||||||||||||||||
Common stock repurchased |
(5 | ) | (1 | ) | (6 | ) | (6 | ) | ||||||||||||||||||||||||
Purchase of noncontrolling interests |
(1 | ) | (1 | ) | (4 | ) | (5 | ) | ||||||||||||||||||||||||
Balance at March 31, 2011 |
$929 | $1,236 | $246 | ($2,267 | ) | ($151 | ) | ($7 | ) | $346 | $339 |
The accompanying notes are an integral part of these consolidated financial statements.
5
Crown Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share and statistical data)
(Unaudited)
A. | Statement of Information Furnished |
The consolidated financial statements include the accounts of Crown Holdings, Inc. and its consolidated subsidiaries (the Company). The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with Form 10-Q instructions. In the opinion of management, these consolidated financial statements contain all adjustments of a normal and recurring nature necessary for a fair statement of the financial position of Crown Holdings, Inc. as of March 31, 2011 and the results of its operations for the three month periods ended March 31, 2011 and 2010 and of its cash flows for the three months ended March 31, 2011 and 2010. The results reported in these consolidated financial statements are not necessarily indicative of the results that may be expected for the entire year. These results have been determined on the basis of accounting principles generally accepted in the United States of America (GAAP).
Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been condensed or omitted. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2010. Certain reclassifications of prior years data have been made to conform to the current year presentation.
B. | Stock-Based Compensation |
During the first three months of 2011, the Company awarded 318,607 shares of restricted stock to certain senior executives, including 121,940 shares of restricted stock with time-vesting requirements and 196,667 shares of performance-based stock with a market feature. The time-vesting awards vest ratably over three years and had a grant-date fair value of $33.70 per share. The performance-based shares cliff vest at the end of three years based on the results of the market criterion. The number of performance-based shares that will ultimately vest is based on the level of market performance achieved, ranging between 0% and 200% of the shares awarded, and will be settled in stock. The estimated grant-date fair value of each performance share was calculated as $41.69 using a Monte Carlo valuation model. During the first three months of 2011, 235,313 shares of previously issued time-vested awards and 145,278 shares of previously issued performance-based shares vested. Also during the first three months of 2011, 145,278 performance-based shares were issued because the Company exceeded the target level of performance shares established on the original date of the related awards by 100%. These shares were issued without restriction. The aggregate market value of the shares released and issued on the vesting dates was approximately $18. At March 31, 2011, unrecognized compensation cost related to unvested restricted stock was approximately $10. The weighted average period over which the expense is expected to be recognized is 1.8 years.
C. | Inventories |
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. Non-U.S. inventories are principally determined under the average cost method.
March 31, 2011 |
December 31, 2010 |
|||||||
Finished goods |
$577 | $365 | ||||||
Work in process |
169 | 128 | ||||||
Raw materials and supplies |
607 | 567 | ||||||
$1,353 | $1,060 | |||||||
6
Crown Holdings, Inc.
D. | Fair Value Measurements |
Under 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 report 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 following table sets forth the fair value hierarchy of the Companys financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2011 and December 31, 2010, respectively.
Fair value at reporting date using |
||||||||||||||||||||||||
Level 1 | Level 2 | |||||||||||||||||||||||
Mar. 31, 2011 |
Dec. 31, 2010 |
Mar. 31, 2011 |
Dec. 31, 2010 |
Mar. 31, 2011 |
Dec. 31, 2010 |
|||||||||||||||||||
Assets |
||||||||||||||||||||||||
Derivative instruments: |
||||||||||||||||||||||||
Foreign exchange |
$25 | $26 | $25 | $26 | ||||||||||||||||||||
Commodities |
63 | 53 | $63 | $53 | ||||||||||||||||||||
Total |
$88 | $79 | $63 | $53 | $25 | $26 | ||||||||||||||||||
Liabilities |
||||||||||||||||||||||||
Derivative instruments: |
||||||||||||||||||||||||
Foreign exchange |
$15 | $15 | $15 | $15 | ||||||||||||||||||||
Commodities |
1 | 1 | $1 | $1 | ||||||||||||||||||||
Total |
$16 | $16 | $1 | $1 | $15 | $15 | ||||||||||||||||||
The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The Companys 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.
Refer to Note E for further discussion of the Companys use of derivative instruments and their fair values.
E. | Derivative Financial Instruments |
In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange, 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 Companys 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.
7
Crown Holdings, Inc.
For derivative financial instruments accounted for as hedging instruments, 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 derivative financial instruments used in hedging transactions 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 March 31, 2011 mature between one and twenty-three 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.
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 aggregate U.S. dollar-equivalent notional value of commodity contracts designated as cash flow hedges at March 31, 2011 and December 31, 2010 was $304 and $326.
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 aggregate U.S. dollar-equivalent notional value of foreign exchange contracts designated as cash flow hedges at March 31, 2011 and December 31, 2010 was $636 and $751.
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 accounted for as cash flow hedges.
Amount of gain/(loss) recognized in AOCI (effective portion) |
Amount of
gain/(loss) reclassified from AOCI into earnings |
|||||||||||||||
Derivatives in cash flow hedges |
Quarter ended Mar. 31, 2011 |
Quarter ended Mar. 31, 2010 |
Quarter ended Mar. 31, 2011 |
Quarter ended Mar. 31, 2010 |
||||||||||||
Cross-currency swap |
$0 | $17 | $0 | $17 | (1) | |||||||||||
Foreign exchange contracts |
(3 | ) | 2 | (1 | ) | 1 | (2) | |||||||||
Commodity contracts |
13 | 10 | 6 | 2 | (3) | |||||||||||
Total |
$10 | $29 | $5 | $20 | ||||||||||||
(1) | Within the Statement of Operations for the three months ended March 31, 2010, $17 was credited to translation and foreign exchange. |
(2) | Within the Statement of Operations for the three months ended March 31, 2011, $1 was charged to cost of products sold. During the three months ended March 31, 2010, $2 was credited to net sales and $1 was charged to cost of products sold. |
(3) | Within the Statement of Operations for the three months ended March 31, 2011, $8 was credited to cost of products sold and $2 was charged to income tax expense. For the three months ended March 31, 2010, $2 was credited to cost of products sold. |
8
Crown Holdings, Inc.
During the twelve months ending March 31, 2012, a net gain of $51 ($39, net of tax) is expected to be reclassified to earnings. No amounts were reclassified during the three months ended March 31, 2011 and 2010 in connection with anticipated transactions that were no longer considered probable and the ineffective portion recorded in earnings was less than $1.
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 three months ended March 31, 2011. The U.S. dollar-equivalent notional value of foreign exchange contracts designated as fair value hedges at March 31, 2011 and December 31, 2010 was $273 and $256.
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 remeasurement of the related hedged items. The Companys 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 aggregate U.S dollar-equivalent notional value of these contracts at March 31, 2011 and December 31, 2010 was $659 and $827.
The impact on earnings of foreign exchange contracts designated as fair value hedges was less than $1 for the three months ended March 31, 2011 and 2010, respectively. The impact on earnings of foreign exchange contracts not designated as hedges were gains of $12 and $17 for the three months ended March 31, 2011 and 2010, respectively. These items were reported as translation and foreign exchange and were offset by changes in the fair value of the related hedged items.
The fair values of outstanding derivative instruments in the Consolidated Balance Sheet at March 31, 2011 and December 31, 2010 were:
Assets | March 31, 2011 |
December 31, 2010 |
||||||||
Derivatives designated as hedges: |
||||||||||
Foreign exchange |
$14 | (4) | $12 | (4) | ||||||
Commodities |
63 | (5) | 53 | (5) | ||||||
Derivatives not designated as hedges: |
||||||||||
Foreign exchange |
11 | (4) | 14 | (4) | ||||||
Total |
$88 | $79 | ||||||||
Liabilities |
||||||||||
Derivatives designated as hedges: |
||||||||||
Foreign exchange |
$13 | (6) | $12 | (6) | ||||||
Commodities |
1 | (6) | 1 | (6) | ||||||
Derivatives not designated as hedges: |
||||||||||
Foreign exchange |
2 | (6) | 3 | (6) | ||||||
Total |
$16 | $16 | ||||||||
(4) | Reported in other current assets. |
(5) | $52 and $40 reported in other current assets at March 31, 2011 and December 31, 2010 and $11 and $13 reported in other non-current assets at March 31, 2011 and December 31, 2010. |
(6) | Reported in accounts payable and accrued liabilities. |
9
Crown Holdings, Inc.
F. | Restructuring |
The components of the outstanding restructuring reserve and movements within these components during the three months ended March 31, 2011 and 2010, respectively, were as follows:
Termination benefits |
Other exit costs |
Asset writedowns |
Total | |||||||||||||
Balance at January 1, 2010 |
$25 | $0 | $0 | $25 | ||||||||||||
Provision |
10 | 2 | 10 | 22 | ||||||||||||
Payments |
(8 | ) | (2 | ) | (10 | ) | ||||||||||
Reclassified to other accounts |
(5 | ) | (10 | ) | (15 | ) | ||||||||||
Balance at March 31, 2010 |
$22 | $0 | $0 | $22 | ||||||||||||
Balance at January 1, 2011 |
$21 | $2 | $0 | $23 | ||||||||||||
Provision |
4 | 21 | 25 | |||||||||||||
Payments |
(3 | ) | (4 | ) | (7 | ) | ||||||||||
Balance at March 31, 2011 |
$22 | $19 | $0 | $41 | ||||||||||||
In the first three months of 2011, the Company recorded a pre-tax charge of $25 for restructuring costs, including $19 related to the relocation of the Companys European Division headquarters and management to Switzerland, $4 related to severance costs in the Companys European Specialty Packaging segment and $2 related to prior restructuring actions in the Companys North America Food segment. The charge of $19 represents the estimated employee compensation costs resulting from an intercompany payment related to the action. The Company expects to pay these costs over the next one to three years.
In the first three months of 2010, the Company recorded a pre-tax charge of $22 for restructuring costs, including $20 related to the closure of a Canadian plant in the Companys Americas Food segment and $2 for plant maintenance and strip and clean costs from a prior restructuring action. The charge of $20 included $5 for pension and postretirement plan curtailment charges, $5 for severance costs and $10 for asset writedowns.
In connection with the prior restructuring actions in Canada, the Company expects to incur future additional charges of approximately $5 for strip and clean costs and may incur future additional charges for pension settlements of approximately $40 when the Company receives regulatory approval and settles the obligations. The Company expects the total cash cost of these prior restructuring actions to be $27 including $15 for the pension settlement.
G. | Debt |
In January, 2011, the Company sold $700 principal amount of 6.25% senior unsecured 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 bond issue costs that will be amortized over the term of the debt.
In addition, concurrently with the offering of the notes, the Company commenced a tender offer for any and all of the $600 outstanding 7.75% senior secured notes due 2015 (the 2015 notes). At the expiration of the tender offer approximately 90% of the 2015 notes had been repurchased. All 2015 notes that remained outstanding after the expiration of the tender offer were redeemed by the Company in February, 2011. The Company recorded a loss from early extinguishment of debt of $30 including $25 for premiums paid and $5 for the write off of deferred financing fees.
10
Crown Holdings, Inc.
The Companys outstanding debt at March 31, 2011 and December 31, 2010 was as follows.
Mar. 31 2011 |
Dec. 31 2010 |
|||||||
Short-term debt |
$413 | $241 | ||||||
Long-term debt |
||||||||
Senior secured revolving credit facilities borrowings |
$235 | $184 | ||||||
Senior secured notes: |
||||||||
Euro (84 at March 31, 2011) 6.25% first priority due 2011 |
118 | 112 | ||||||
First priority term loans: |
||||||||
U.S. dollar at LIBOR plus 1.75% due 2012 |
147 | 147 | ||||||
Euro (108 at March 31, 2011) at EURIBOR plus 1.75% due 2012 |
153 | 145 | ||||||
Senior notes and debentures: |
||||||||
U.S. dollar 7.75% due 2015 |
0 | 600 | ||||||
U.S. dollar 7.625% due 2017 |
400 | 400 | ||||||
Euro (500 at March 31, 2011) 7.125% due 2018 |
708 | 669 | ||||||
U.S. dollar 6.25% due 2021 |
700 | 0 | ||||||
U.S. dollar 7.375% due 2026 |
350 | 350 | ||||||
U.S. dollar 7.50% due 2096 |
64 | 64 | ||||||
Other indebtedness in various currencies |
197 | 148 | ||||||
Unamortized discounts |
(12 | ) | (12 | ) | ||||
Total long-term debt |
3,060 | 2,807 | ||||||
Less: current maturities |
(176 | ) | (158 | ) | ||||
Total long-term debt, less current maturities |
$2,884 | $2,649 | ||||||
H. | 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.
During 2010 and 2011, the states of Nebraska, South Dakota 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.
Similar legislation was enacted in Florida, Georgia, Indiana, Mississippi, North Dakota, Ohio, Oklahoma, South Carolina and Wisconsin in recent years. The legislation, which applies to future and, with the exception of Georgia, South Carolina and South Dakota, pending claims, caps asbestos-related liabilities at the fair market value of the predecessors total gross assets adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the total value of its predecessors 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 predecessors assets adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the total adjusted value of its predecessors assets.
11
Crown Holdings, Inc.
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. In 2010, the Company recorded a pre-tax charge of $15 including estimated legal fees to increase its accrual for asbestos related costs for claims pending in Texas on June 11, 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.
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 successors liability for asbestos to the acquired companys asset value adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the acquired companys 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. Adverse rulings in cases challenging the constitutionality of the Pennsylvania statute could have a material impact on the Company.
At December 31, 2010, the Company had 50,000 claims outstanding. Of these claims, approximately 15,000 relate to claimants alleging first exposure to asbestos after 1964 and 35,000 relate to claimants alleging first exposure to asbestos before or during 1964, of which approximately 12,000 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. Historically (1977-2010), Crown Cork estimates that approximately one-quarter of all asbestos-related claims made against it have been asserted by claimants who claim first exposure to asbestos after 1964.
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 Companys 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 our settlement experience with post-1964 claims, we do 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 adverse impact on the Company with respect to such claims.
Of the approximately 50,000 claims outstanding at the end of 2010, 2009 and 2008 approximately 18%, 16% and 15%, respectively, relate to claims alleging serious diseases (primarily mesothelioma and other malignancies). Of the approximately 15,000 claims related to claimants alleging first exposure to asbestos before or during 1964 that were filed in states that have not enacted asbestos legislation and were outstanding at the end of 2010, 2009 and 2008 approximately 31%, 29% and 25%, respectively, relate to claims alleging serious disease.
During the three months ended March 31, 2011, Crown Cork received approximately 600 new claims, settled or dismissed approximately 500 claims for a total of $4, and had approximately 50,000 claims outstanding at the end of the period. Settlement amounts include amounts committed to be paid in future periods. The outstanding claims at March 31, 2011 exclude 33,000 pending claims involving plaintiffs who allege that they are, or were, maritime workers subject to exposure to asbestos, but whose claims the Company believes will not have a material effect on the Companys consolidated results of operations, financial position or cash flow. The outstanding claims at March 31, 2011 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 Companys accrual as the claims were filed in states, as described above, where the Companys liability is limited by statute.
12
Crown Holdings, Inc.
As of March 31, 2011, the Companys accrual for pending and future asbestos-related claims and related legal costs was $243, including $192 for unasserted claims. The Companys accrual includes estimates for probable costs for claims through the year 2020. Potential estimated additional claims costs of $30 beyond 2020 have not been included in the Companys accrual, as the Company believes cost projections beyond ten years are inherently unreliable due to potential changes in the litigation environment and other factors whose impact cannot be known or reasonably estimated.
Crown Cork has entered into arrangements with plaintiffs counsel in certain jurisdictions with respect to claims which are not yet filed, or asserted, against us. 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 Companys estimated liability as of March 31, 2011.
While it is not possible to predict the ultimate outcome of asbestos-related claims and settlements, the Company believes that resolution of these matters is not expected to have a material adverse effect on the Companys financial position. The Company cautions, however, that estimates for asbestos cases and settlements are difficult to predict and may be influenced by many factors. In addition, there can be no assurance regarding the validity or correctness of the Companys assumptions or beliefs underlying its accrual. Unfavorable court decisions or other adverse developments may require the Company to substantially increase its accrual or change its estimate. Accordingly, these matters, if resolved in a manner different from the estimate, could have a material adverse effect on the Companys results of operations, financial position or cash flow.
I. | Commitments and Contingent Liabilities |
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 $8 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 Companys 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 is subject to antitrust investigations in Europe. In August 2010, the Spanish National Antitrust Commission issued a Proposal for Resolution (Propuesta de Resolución) alleging that Crown European Holdings SA, a wholly-owned subsidiary of the Company, and one of its subsidiaries violated Spanish and European competition law by coordinating certain commercial terms and exchanging information with competitors in Spain. The Proposal for Resolution does not constitute a decision on the merits and was replied to by the Company. The investigation phase of the proceeding has now ended and the proceeding has entered the resolution phase before the Board of the Spanish National Antitrust Commission. If the Antitrust Commission finds that the Companys subsidiaries violated competition law, the Antitrust Commission has the authority to levy fines. The Company believes that the allegations in Spain are without merit and intends to defend its position vigorously. The Company estimates the possible range of loss to be 8 to 12. However, the Company is unable to predict the ultimate outcome of the investigation or its impact on the Company. The Company expects that a final decision from the Board of Spanish National Antitrust Commission will be issued in 2011. This decision would be subject to appeal to the Spanish courts.
In July 2010, a subsidiary of the Company became aware of an investigation by the Netherlands Competition Authority in relation to competition law matters. In April 2011, the Netherlands Competition Authority terminated its investigation having found no evidence to support any charges against the Companys subsidiary. There can be no assurance that the Netherlands Competition Authority will not re-open its investigation against the Companys subsidiary in the event new facts or other circumstances justify a new investigation.
13
Crown Holdings, Inc.
The Companys Italian subsidiaries have received or expect to receive assessments for value added taxes and related income taxes from the Italian tax authorities 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 and 2005 and additional assessments are expected to cover periods 2006 through 2009. The expected total assessments resulting from these third party suppliers failing to remit the tax payments are approximately 40 plus any applicable interest and penalties. The Company intends to dispute these assessments and believes that, if necessary, it should be able to successfully demonstrate in the Italian courts that it has no additional liability for the asserted taxes. While the Company intends to dispute the assessments, there can be no assurance that it will be successful in such disputes or regarding the final amount of additional taxes, if any, payable to the Italian tax authorities.
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 Companys 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 Companys consolidated results of operations, 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 Companys 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.
In January 2010, the Company received a net one time payment of $20 as part of an overall resolution of a long-time dispute unrelated to the Companys ongoing operations and recorded a gain of $20 in the first quarter of 2010 within selling and administrative expense.
At March 31, 2011, 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 $14. 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 March 31, 2011, the Company also had guarantees of $16 related to the residual values of leased assets.
J. | Earnings Per Share |
The following table summarizes the computations of basic and diluted earnings per share attributable to Crown Holdings for the periods ended March 31, 2011 and 2010, respectively:
2011 | 2010 | |||||||
Net income attributable to Crown Holdings |
$16 | $41 | ||||||
Weighted average shares outstanding: |
||||||||
Basic |
154.6 | 160.7 | ||||||
Add: dilutive stock options and restricted stock |
3.3 | 2.4 | ||||||
Diluted |
157.9 | 163.1 | ||||||
Basic earnings per share |
$0.10 | $0.26 | ||||||
Diluted earnings per share |
$0.10 | $0.25 | ||||||
Excluded from the computation of diluted earnings per share were common shares contingently issuable, amounting to 0.1 million shares for the three months ended March 31, 2011 and 3.3 million shares for the same period in 2010 because the effect would have been antidilutive.
14
Crown Holdings, Inc.
K. | Pension and Other Postretirement Benefits |
The components of net periodic pension and other postretirement benefits costs for the three months ended March 31 were as follows:
Pension Benefits |
U.S. Plans | Non-U.S. Plans | ||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Service cost |
$ | 3 | $ | 2 | $ | 6 | $ | 7 | ||||||||
Interest cost |
18 | 18 | 39 | 39 | ||||||||||||
Expected return on plan assets |
(20 | ) | (20 | ) | (48 | ) | (45 | ) | ||||||||
Recognized prior service cost |
1 | 1 | 1 | (1 | ) | |||||||||||
Recognized net loss |
11 | 17 | 13 | 11 | ||||||||||||
Net periodic cost |
$ | 13 | $ | 18 | $ | 11 | $ | 11 | ||||||||
Other Postretirement Benefits |
||||||||||||||||
2011 | 2010 | |||||||||||||||
Service cost |
$ | 2 | $ | 2 | ||||||||||||
Interest cost |
6 | 7 | ||||||||||||||
Recognized prior service credit |
(8 | ) | (5 | ) | ||||||||||||
Recognized net loss |
3 | 2 | ||||||||||||||
Net periodic cost |
$ | 3 | $ | 6 | ||||||||||||
L. | Accelerated Share Repurchase |
In December 2010, the Company entered into an agreement with Citigroup to purchase shares of its common stock under an accelerated share repurchase program. Pursuant to the agreement, the Company initially purchased 4,354,838 shares for $150. The purchase price of these shares was subject to an adjustment based on the Companys volume-weighted average stock price during the term of the transaction. The purchase price adjustment was settled in April, 2011 and resulted in an additional cash payment of $6.
In May 2011, the Company entered into an agreement with Goldman, Sachs & Co. to purchase shares of its common stock under an accelerated share repurchase program. Pursuant to the agreement, the Company may purchase up to an aggregate of $200 of its common stock, subject to a maximum per share purchase price. Repurchases pursuant to the agreement are expected to conclude during the third quarter of 2011. Repurchases under the agreement are subject to provisions that will establish a minimum number of shares to be repurchased based on the volume-weighted average share price of the Companys common stock over an initial hedge period and a maximum share purchase price. The actual number of shares repurchased will be determined at the completion of the term of the agreement.
M. | Income Taxes |
During the three months ended March 31, 2011, the Company recorded net tax charges of $41 on pre-tax income of $83 for an effective rate of 49.4%. The difference between pre-tax income at the U.S. statutory rate of 35%, or $29, and the tax charge of $41 is primarily explained as follows: $17 of increase due to tax charges in connection with the relocation of the Companys European headquarters and management to Switzerland, $10 of increase to valuation allowances, $14 of decrease from lower tax rates in non-U.S. jurisdictions and $1 of decrease from other net differences.
During the three months ended March 31, 2010, the Company recorded net tax charges of $39 on pre-tax income of $106 for an effective rate of 36.8%. The difference of $2 between pre-tax income at the U.S. statutory rate of 35% or $37, and the tax charge of $39, is primarily explained as follows: $7 of increase to recognize the tax impact of the new U.S. health care legislation, $9 of increase to the valuation allowance in Canada for the tax benefit of current year losses that are not expected to be realized and $1 of increase from other net differences, partially offset by $7 of decrease for the nontaxable settlement benefit of a legal dispute unrelated to the Companys ongoing operations and $8 of decrease from lower tax rates in non-U.S. jurisdictions.
15
Crown Holdings, Inc.
N. | Segment Information |
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. Transactions between operating segments are not material.
The tables below present information about operating segments for the three months ended March 31, 2011 and 2010:
2011 |
External sales |
Segment Income |
||||||
Americas Beverage |
$ | 512 | $ | 63 | ||||
North America Food |
188 | 28 | ||||||
European Beverage |
340 | 45 | ||||||
European Food |
422 | 52 | ||||||
European Specialty Packaging |
100 | 7 | ||||||
Total reportable segments |
1,562 | 195 | ||||||
Non-reportable segments |
320 | 57 | ||||||
Corporate and unallocated items |
(62 | ) | ||||||
Total |
$ | 1,882 | $ | 190 | ||||
2010 |
External sales |
Segment Income |
||||||
Americas Beverage |
$ | 480 | $ | 57 | ||||
North America Food |
197 | 16 | ||||||
European Beverage |
314 | 52 | ||||||
European Food |
404 | 40 | ||||||
European Specialty Packaging |
91 | 3 | ||||||
Total reportable segments |
1,486 | 168 | ||||||
Non-reportable segments |
291 | 45 | ||||||
Corporate and unallocated items |
(42 | ) | ||||||
Total |
$ | 1,777 | $ | 171 | ||||
A reconciliation of segment income of reportable segments to income before income taxes and equity earnings for the three months ended March 31, 2011 and 2010 follows:
2011 | 2010 | |||||||
Segment income of reportable segments |
$ | 195 | $ | 168 | ||||
Segment income of non-reportable segments |
57 | 45 | ||||||
Corporate and unallocated items |
(62 | ) | (42 | ) | ||||
Provision for restructuring |
(25 | ) | (22 | ) | ||||
Asset impairments and sales |
1 | |||||||
Loss from early extinguishment of debt |
(30 | ) | ||||||
Interest expense |
(56 | ) | (47 | ) | ||||
Interest income |
4 | 1 | ||||||
Translation and foreign exchange |
0 | 2 | ||||||
Income before income taxes and equity earnings |
$ | 83 | $ | 106 | ||||
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.
16
Crown Holdings, Inc.
O. | Condensed Combining Financial Information |
Crown European Holdings SA (Issuer), a 100% owned subsidiary of the Company, has outstanding first priority senior secured notes and senior unsecured notes that are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent) and certain subsidiaries. The guarantors are 100% 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 operations for the three months ended March 31, 2011 and 2010, |
| balance sheets as of March 31, 2011 and December 31, 2010, and |
| statements of cash flows for the three months ended March 31, 2011 and 2010 |
are presented on the following pages to comply with the Companys requirements under Rule 3-10 of Regulation S-X.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the three months ended March 31, 2011
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Net sales |
$1,266 | $616 | $1,882 | |||||||||||||||||||||
Cost of products sold, excluding depreciation and amortization |
$(1) | 1,090 | 461 | 1,550 | ||||||||||||||||||||
Depreciation and amortization |
19 | 21 | 40 | |||||||||||||||||||||
Gross profit |
1 | 157 | 134 | 292 | ||||||||||||||||||||
Selling and administrative expense |
(1 | ) | 79 | 24 | 102 | |||||||||||||||||||
Provision for restructuring |
25 | 25 | ||||||||||||||||||||||
Asset impairments and sales |
(182 | ) | $182 | |||||||||||||||||||||
Loss from early extinguishment of debt |
30 | 30 | ||||||||||||||||||||||
Net interest expense |
19 | 30 | 3 | 52 | ||||||||||||||||||||
Technology royalty |
(6 | ) | 6 | |||||||||||||||||||||
Income/(loss) before income taxes |
(17 | ) | 181 | 101 | (182 | ) | 83 | |||||||||||||||||
Provision for income taxes |
1 | 1 | 39 | 41 | ||||||||||||||||||||
Equity earnings/(loss) in affiliates |
$16 | 48 | (164 | ) | 100 | |||||||||||||||||||
Net income |
16 | 30 | 16 | 62 | (82 | ) | 42 | |||||||||||||||||
Net income attributable to noncontrolling interests |
(26 | ) | (26 | ) | ||||||||||||||||||||
Net income attributable to Crown Holdings |
$16 | $30 | $16 | $36 | $(82 | ) | $16 | |||||||||||||||||
17
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the three months ended March 31, 2010
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Net sales |
$1,047 | $730 | $1,777 | |||||||||||||||||||||
Cost of products sold, excluding depreciation and amortization |
$(2 | ) | 895 | 590 | 1,483 | |||||||||||||||||||
Depreciation and amortization |
22 | 22 | 44 | |||||||||||||||||||||
Gross profit |
2 | 130 | 118 | 250 | ||||||||||||||||||||
Selling and administrative expense |
52 | 27 | 79 | |||||||||||||||||||||
Provision for restructuring |
22 | 22 | ||||||||||||||||||||||
Asset impairments and sales |
(1 | ) | (1 | ) | ||||||||||||||||||||
Net interest expense |
(2 | ) | 43 | 5 | 46 | |||||||||||||||||||
Technology royalty |
(7 | ) | 7 | |||||||||||||||||||||
Translation and foreign exchange |
(2 | ) | (2 | ) | ||||||||||||||||||||
Income before income taxes |
4 | 23 | 79 | 106 | ||||||||||||||||||||
Provision for income taxes |
24 | 15 | 39 | |||||||||||||||||||||
Equity earnings in affiliates |
$41 | 32 | 42 | $(115 | ) | |||||||||||||||||||
Net income |
41 | 36 | 41 | 64 | (115 | ) | 67 | |||||||||||||||||
Net income attributable to noncontrolling interests |
(26 | ) | (26 | ) | ||||||||||||||||||||
Net income attributable to Crown Holdings |
$41 | $36 | $41 | $38 | $(115 | ) | $41 | |||||||||||||||||
18
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of March 31, 2011
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Assets |
||||||||||||||||||||||||
Current assets |
||||||||||||||||||||||||
Cash and cash equivalents |
$49 | $360 | $409 | |||||||||||||||||||||
Receivables, net |
$56 | 213 | 835 | 1,104 | ||||||||||||||||||||
Intercompany receivables |
2 | 104 | 70 | $(176 | ) | |||||||||||||||||||
Inventories |
710 | 643 | 1,353 | |||||||||||||||||||||
Prepaid expenses and other current assets |
$1 | 6 | 163 | 34 | 204 | |||||||||||||||||||
Total current assets |
1 | 64 | 1,239 | 1,942 | (176 | ) | 3,070 | |||||||||||||||||
Intercompany debt receivables |
1,232 | 3,168 | 615 | (5,015 | ) | |||||||||||||||||||
Investments |
388 | 3,249 | (559 | ) | (3,078 | ) | ||||||||||||||||||
Goodwill |
1,446 | 601 | 2,047 | |||||||||||||||||||||
Property, plant and equipment, net |
633 | 1,069 | 1,702 | |||||||||||||||||||||
Other non-current assets |
16 | 590 | 51 | 657 | ||||||||||||||||||||
Total |
$389 | $4,561 | $6,517 | $4,278 | $(8,269 | ) | $7,476 | |||||||||||||||||
Liabilities and equity |
||||||||||||||||||||||||
Current liabilities |
||||||||||||||||||||||||
Short-term debt |
$58 | $158 | $197 | $413 | ||||||||||||||||||||
Current maturities of long-term debt |
122 | 5 | 49 | 176 | ||||||||||||||||||||
Accounts payable and accrued liabilities |
$10 | 11 | 1,115 | 858 | 1,994 | |||||||||||||||||||
Intercompany payables |
70 | 106 | $(176 | ) | ||||||||||||||||||||
Total current liabilities |
10 | 191 | 1,348 | 1,210 | (176 | ) | 2,583 | |||||||||||||||||
Long-term debt, excluding current maturities |
857 | 1,882 | 145 | 2,884 | ||||||||||||||||||||
Long-term intercompany debt |
386 | 2,281 | 1,401 | 947 | (5,015 | ) | ||||||||||||||||||
Postretirement and pension liabilities |
1,152 | 19 | 1,171 | |||||||||||||||||||||
Other non-current liabilities |
344 | 155 | 499 | |||||||||||||||||||||
Commitments and contingent liabilities |
||||||||||||||||||||||||
Noncontrolling interests |
2 | 344 | 346 | |||||||||||||||||||||
Crown Holdings shareholders equity/(deficit) |
(7 | ) | 1,232 | 388 | 1,458 | (3,078 | ) | (7 | ) | |||||||||||||||
Total equity/(deficit) |
(7 | ) | 1,232 | 390 | 1,802 | (3,078 | ) | 339 | ||||||||||||||||
Total |
$389 | $4,561 | $6,517 | $4,278 | $(8,269 | ) | $7,476 | |||||||||||||||||
19
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2010
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Assets |
||||||||||||||||||||||||
Current assets |
||||||||||||||||||||||||
Cash and cash equivalents |
$65 | $398 | $463 | |||||||||||||||||||||
Receivables, net |
$66 | 111 | 759 | 936 | ||||||||||||||||||||
Intercompany receivables |
1 | 101 | 64 | $(166 | ) | |||||||||||||||||||
Inventories |
575 | 485 | 1,060 | |||||||||||||||||||||
Prepaid expenses and other current assets |
$1 | 12 | 148 | 29 | 190 | |||||||||||||||||||
Total current assets |
1 | 79 | 1,000 | 1,735 | (166 | ) | 2,649 | |||||||||||||||||
Intercompany debt receivables |
1,374 | 2,956 | 373 | (4,703 | ) | |||||||||||||||||||
Investments |
308 | 3,039 | (350 | ) | (2,997 | ) | ||||||||||||||||||
Goodwill |
1,411 | 573 | 1,984 | |||||||||||||||||||||
Property, plant and equipment, net |
626 | 984 | 1,610 | |||||||||||||||||||||
Other non-current assets |
16 | 590 | 50 | 656 | ||||||||||||||||||||
Total |
$309 | $4,508 | $6,233 | $3,715 | $(7,866 | ) | $6,899 | |||||||||||||||||
Liabilities and equity |
||||||||||||||||||||||||
Current liabilities |
||||||||||||||||||||||||
Short-term debt |
$48 | $5 | $188 | $241 | ||||||||||||||||||||
Current maturities of long-term debt |
116 | 5 | 37 | 158 | ||||||||||||||||||||
Accounts payable and accrued liabilities |
$28 | 26 | 1,085 | 839 | 1,978 | |||||||||||||||||||
Intercompany payables |
2 | 62 | 102 | $(166 | ) | |||||||||||||||||||
Total current liabilities |
28 | 192 | 1,157 | 1,166 | (166 | ) | 2,377 | |||||||||||||||||
Long-term debt, excluding current maturities |
810 | 1,731 | 108 | 2,649 | ||||||||||||||||||||
Long-term intercompany debt |
377 | 2,362 | 1,556 | 408 | (4,703 | ) | ||||||||||||||||||
Postretirement and pension liabilities |
1,149 | 10 | 1,159 | |||||||||||||||||||||
Other non-current liabilities |
331 | 154 | 485 | |||||||||||||||||||||
Commitments and contingent liabilities |
||||||||||||||||||||||||
Noncontrolling interests |
1 | 324 | 325 | |||||||||||||||||||||
Crown Holdings shareholders equity/(deficit) |
(96 | ) | 1,144 | 308 | 1,545 | (2,997 | ) | (96 | ) | |||||||||||||||
Total equity/(deficit) |
(96 | ) | 1,144 | 309 | 1,869 | (2,997 | ) | 229 | ||||||||||||||||
Total |
$309 | $4,508 | $6,233 | $3,715 | $(7,866 | ) | $6,899 | |||||||||||||||||
20
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2011
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Net used for operating activities |
$(7 | ) | $(23 | ) | $(205 | ) | $(82 | ) | $(317 | ) | ||||||||||||||
Cash flows from investing activities |
||||||||||||||||||||||||
Capital expenditures |
(21 | ) | (82 | ) | (103 | ) | ||||||||||||||||||
Intercompany investing activities |
6 | 188 | (180 | ) | $(14 | ) | ||||||||||||||||||
Other |
2 | 2 | ||||||||||||||||||||||
Net cash provided by/(used for) investing activities |
6 | 169 | (262 | ) | (14 | ) | (101 | ) | ||||||||||||||||
Cash flows from financing activities |
||||||||||||||||||||||||
Proceeds from long-term debt |
700 | 54 | 754 | |||||||||||||||||||||
Payments of long-term debt |
(600 | ) | (5 | ) | (605 | ) | ||||||||||||||||||
Net change in revolving credit facility and short-term debt |
12 | 204 | 2 | 218 | ||||||||||||||||||||
Debt issue costs |
(11 | ) | (11 | ) | ||||||||||||||||||||
Net change in long-term intercompany balances |
9 | (5 | ) | (273 | ) | 269 | ||||||||||||||||||
Common stock issued |
4 | 4 | ||||||||||||||||||||||
Common stock repurchased |
(6 | ) | (6 | ) | ||||||||||||||||||||
Dividends paid |
(14 | ) | 14 | |||||||||||||||||||||
Dividends paid to noncontrolling interests |
(6 | ) | (6 | ) | ||||||||||||||||||||
Other |
10 | (5 | ) | 5 | ||||||||||||||||||||
Net cash provided by financing activities |
7 | 17 | 20 | 295 | 14 | 353 | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
11 | 11 | ||||||||||||||||||||||
Net change in cash and cash equivalents |
(16 | ) | (38 | ) | (54 | ) | ||||||||||||||||||
Cash and cash equivalents at January 1 |
0 | 65 | 398 | 463 | ||||||||||||||||||||
Cash and cash equivalents at March 31 |
$0 | $0 | $49 | $360 | $0 | $409 | ||||||||||||||||||
21
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2010
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Net cash provided by/(used for) operating activities |
$(7 | ) | $20 | $(141 | ) | $(288 | ) | $(416 | ) | |||||||||||||||
Cash flows from investing activities |
||||||||||||||||||||||||
Capital expenditures |
(11 | ) | (21 | ) | (32 | ) | ||||||||||||||||||
Intercompany investing activities |
7 | 3 | $(10 | ) | ||||||||||||||||||||
Other |
11 | 11 | ||||||||||||||||||||||
Net cash used for investing activities |
(4 | ) | (7 | ) | (10 | ) | (21 | ) | ||||||||||||||||
Cash flows from financing activities |
||||||||||||||||||||||||
Proceeds from long-term debt |
4 | 4 | ||||||||||||||||||||||
Payments of long-term debt |
(14 | ) | (3 | ) | (17 | ) | ||||||||||||||||||
Net change in revolving credit facility and short-term debt |
164 | 126 | 119 | 409 | ||||||||||||||||||||
Net change in long-term intercompany balances |
10 | (170 | ) | (12 | ) | 172 | ||||||||||||||||||
Common stock issued |
2 | 2 | ||||||||||||||||||||||
Common stock repurchased |
(5 | ) | (5 | ) | ||||||||||||||||||||
Dividends paid |
(10 | ) | 10 | |||||||||||||||||||||
Dividends paid to noncontrolling interests |
(15 | ) | (15 | ) | ||||||||||||||||||||
Other |
(5 | ) | 13 | 8 | ||||||||||||||||||||
Net cash provided by/(used for) financing activities |
7 | (25 | ) | 127 | 267 | 10 | 386 | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
(9 | ) | (9 | ) | ||||||||||||||||||||
Net change in cash and cash equivalents |
(5 | ) | (18 | ) | (37 | ) | (60 | ) | ||||||||||||||||
Cash and cash equivalents at January 1 |
5 | 49 | 405 | 459 | ||||||||||||||||||||
Cash and cash equivalents at March 31 |
$0 | $0 | $31 | $368 | $0 | $399 | ||||||||||||||||||
22
Crown Holdings, Inc.
Crown Cork & Seal Company, Inc. (Issuer), a 100% owned subsidiary, has outstanding registered debt that is fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent). No other subsidiary guarantees the debt. The following condensed combining financial statements:
| statements of operations for the three months ended March 31, 2011 and 2010, |
| balance sheets as of March 31, 2011 and December 31, 2010, and |
| statements of cash flows for the three months ended March 31, 2011 and 2010 |
are presented on the following pages to comply with the Companys requirements under Rule 3-10 of Regulation S-X.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the three months ended March 31, 2011
(in millions)
Parent | Issuer | Non- Guarantors |
Eliminations | Total Company |
||||||||||||||||
Net sales |
$1,882 | $1,882 | ||||||||||||||||||
Cost of products sold, excluding depreciation and amortization |
1,550 | 1,550 | ||||||||||||||||||
Depreciation and amortization |
40 | 40 | ||||||||||||||||||
Gross profit |
292 | 292 | ||||||||||||||||||
Selling and administrative expense |
$2 | 100 | 102 | |||||||||||||||||
Provision for restructuring |
25 | 25 | ||||||||||||||||||
Loss from early extinguishment of debt |
30 | 30 | ||||||||||||||||||
Net interest expense |
21 | 31 | 52 | |||||||||||||||||
Income/(loss) before income taxes |
(23 | ) | 106 | 83 | ||||||||||||||||
Provision for/(benefit from) income taxes |
(7 | ) | 48 | 41 | ||||||||||||||||
Equity earnings in affiliates |
$16 | 32 | $(48 | ) | ||||||||||||||||
Net income |
16 | 16 | 58 | (48 | ) | 42 | ||||||||||||||
Net income attributable to noncontrolling interests |
(26 | ) | (26 | ) | ||||||||||||||||
Net income attributable to Crown Holdings |
$16 | $16 | $32 | $(48 | ) | $16 | ||||||||||||||
23
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the three months ended March 31, 2010
(in millions)
Parent | Issuer | Non- Guarantors |
Eliminations | Total Company |
||||||||||||||||
Net sales |
$1,777 | $1,777 | ||||||||||||||||||
Cost of products sold, excluding depreciation and amortization |
1,483 | 1,483 | ||||||||||||||||||
Depreciation and amortization |
44 | 44 | ||||||||||||||||||
Gross profit |
250 | 250 | ||||||||||||||||||
Selling and administrative expense |
$(18 | ) | 97 | 79 | ||||||||||||||||
Provision for restructuring |
22 | 22 | ||||||||||||||||||
Asset impairments and sales |
(1 | ) | (1 | ) | ||||||||||||||||
Net interest expense |
22 | 24 | 46 | |||||||||||||||||
Translation and foreign exchange |
(2 | ) | (2 | ) | ||||||||||||||||
Income/(loss) before income taxes |
(4 | ) | 110 | 106 | ||||||||||||||||
Provision for income taxes |
2 | 37 | 39 | |||||||||||||||||
Equity earnings in affiliates |
$41 | 47 | $(88 | ) | ||||||||||||||||
Net income |
41 | 41 | 73 | (88 | ) | 67 | ||||||||||||||
Net income attributable to noncontrolling interests |
(26 | ) | (26 | ) | ||||||||||||||||
Net income attributable to Crown Holdings |
$41 | $41 | $47 | $(88 | ) | $41 | ||||||||||||||
24
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of March 31, 2011
(in millions)
Parent | Issuer | Non- Guarantors |
Eliminations | Total Company |
||||||||||||||||
Assets |
||||||||||||||||||||
Current assets |
||||||||||||||||||||
Cash and cash equivalents |
$409 | $409 | ||||||||||||||||||
Receivables, net |
1,104 | 1,104 | ||||||||||||||||||
Inventories |
1,353 | 1,353 | ||||||||||||||||||
Prepaid expenses and other current assets |
$1 | 203 | 204 | |||||||||||||||||
Total current assets |
1 | 3,069 | 3,070 | |||||||||||||||||
Intercompany debt receivables |
1,037 | $(1,037 | ) | |||||||||||||||||
Investments |
388 | $1,226 | (1,614 | ) | ||||||||||||||||
Goodwill |
2,047 | 2,047 | ||||||||||||||||||
Property, plant and equipment, net |
1,702 | 1,702 | ||||||||||||||||||
Other non-current assets |
527 | 130 | 657 | |||||||||||||||||
Total |
$389 | $1,753 | $7,985 | $(2,651 | ) | $7,476 | ||||||||||||||
Liabilities and equity |
||||||||||||||||||||
Current liabilities |
||||||||||||||||||||
Short-term debt |
$413 | $413 | ||||||||||||||||||
Current maturities of long-term debt |
176 | 176 | ||||||||||||||||||
Accounts payable and accrued liabilities |
$10 | $44 | 1,940 | 1,994 | ||||||||||||||||
Total current liabilities |
10 | 44 | 2,529 | 2,583 | ||||||||||||||||
Long-term debt, excluding current maturities |
411 | 2,473 | 2,884 | |||||||||||||||||
Long-term intercompany debt |
386 | 651 | $(1,037 | ) | ||||||||||||||||
Postretirement and pension liabilities |
1,171 | 1,171 | ||||||||||||||||||
Other non-current liabilities |
259 | 240 | 499 | |||||||||||||||||
Commitments and contingent liabilities |
||||||||||||||||||||
Noncontrolling interests |
346 | 346 | ||||||||||||||||||
Crown Holdings shareholders equity/(deficit) |
(7 | ) | 388 | 1,226 | (1,614 | ) | (7 | ) | ||||||||||||
Total equity/(deficit) |
(7 | ) | 388 | 1,572 | (1,614 | ) | 339 | |||||||||||||
Total |
$389 | $1,753 | $7,985 | $(2,651 | ) | $7,476 | ||||||||||||||
25
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2010
(in millions)
Parent | Issuer | Non- Guarantors |
Eliminations | Total Company |
||||||||||||||||
Assets |
||||||||||||||||||||
Current assets |
||||||||||||||||||||
Cash and cash equivalents |
$463 | $463 | ||||||||||||||||||
Receivables, net |
936 | 936 | ||||||||||||||||||
Inventories |
1,060 | 1,060 | ||||||||||||||||||
Prepaid expenses and other current assets |
$1 | 189 | 190 | |||||||||||||||||
Total current assets |
1 | 2,648 | 2,649 | |||||||||||||||||
Intercompany debt receivables |
1,014 | $(1,014 | ) | |||||||||||||||||
Investments |
308 | $1,133 | (1,441 | ) | ||||||||||||||||
Goodwill |
1,984 | 1,984 | ||||||||||||||||||
Property, plant and equipment, net |
1,610 | 1,610 | ||||||||||||||||||
Other non-current assets |
528 | 128 | 656 | |||||||||||||||||
Total |
$309 | $1,661 | $7,384 | $(2,455 | ) | $6,899 | ||||||||||||||
Liabilities and equity |
||||||||||||||||||||
Current liabilities |
||||||||||||||||||||
Short-term debt |
$241 | $241 | ||||||||||||||||||
Current maturities of long-term debt |
158 | 158 | ||||||||||||||||||
Accounts payable and accrued liabilities |
$28 | $42 | 1,908 | 1,978 | ||||||||||||||||
Total current liabilities |
28 | 42 | 2,307 | 2,377 | ||||||||||||||||
Long-term debt, excluding current maturities |
411 | 2,238 | 2,649 | |||||||||||||||||
Long-term intercompany debt |
377 | 637 | $(1,014 | ) | ||||||||||||||||
Postretirement and pension liabilities |
1,159 | 1,159 | ||||||||||||||||||
Other non-current liabilities |
263 | 222 | 485 | |||||||||||||||||
Commitments and contingent liabilities |
||||||||||||||||||||
Noncontrolling interests |
325 | 325 | ||||||||||||||||||
Crown Holdings shareholders equity/(deficit) |
(96 | ) | 308 | 1,133 | (1,441 | ) | (96 | ) | ||||||||||||
Total equity/(deficit) |
(96 | ) | 308 | 1,458 | (1,441 | ) | 229 | |||||||||||||
Total |
$309 | $1,661 | $7,384 | $(2,455 | ) | $6,899 | ||||||||||||||
26
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2011
(in millions)
Parent | Issuer | Non- Guarantors |
Eliminations | Total Company |
||||||||||||||||
Net cash used for operating activities |
$(7 | ) | $(17 | ) | $(293 | ) | $(317 | ) | ||||||||||||
Cash flows from investing activities |
||||||||||||||||||||
Capital expenditures |
(103 | ) | (103 | ) | ||||||||||||||||
Investment dividends |
3 | $(3 | ) | |||||||||||||||||
Other |
2 | 2 | ||||||||||||||||||
Net cash provided by/(used for) investing activities |
3 | (101 | ) | (3 | ) | (101 | ) | |||||||||||||
Cash flows from financing activities |
||||||||||||||||||||
Proceeds from long-term debt |
754 | 754 | ||||||||||||||||||
Payments of long-term debt |
(605 | ) | (605 | ) | ||||||||||||||||
Net change in revolving credit facility and short-term debt |
218 | 218 | ||||||||||||||||||
Debt issue costs |
(11 | ) | (11 | ) | ||||||||||||||||
Net change in long-term intercompany balances |
9 | 14 | (23 | ) | ||||||||||||||||
Common stock issued |
4 | 4 | ||||||||||||||||||
Common stock repurchased |
(6 | ) | (6 | ) | ||||||||||||||||
Dividends paid |
(3 | ) | 3 | |||||||||||||||||
Dividend paid to noncontrolling interests |
(6 | ) | (6 | ) | ||||||||||||||||
Other |
5 | 5 | ||||||||||||||||||
Net cash provided by financing activities |
7 | 14 | 329 | 3 | 353 | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
11 | 11 | ||||||||||||||||||
Net change in cash and cash equivalents |
(54 | ) | (54 | ) | ||||||||||||||||
Cash and cash equivalents at January 1 |
463 | 463 | ||||||||||||||||||
Cash and cash equivalents at March 31 |
$0 | $0 | $409 | $0 | $409 | |||||||||||||||
27
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2010
(in millions)
Parent | Issuer | Non- Guarantors |
Eliminations | Total Company |
||||||||||||||||
Net cash provided by/(used for) operating activities |
$(7 | ) | $10 | $(419 | ) | $(416 | ) | |||||||||||||
Cash flows from investing activities |
||||||||||||||||||||
Capital expenditures |
(32 | ) | (32 | ) | ||||||||||||||||
Investment dividends |
9 | $(9 | ) | |||||||||||||||||
Other |
11 | 11 | ||||||||||||||||||
Net cash provided by/(used for) investing activities |
9 | (21 | ) | (9 | ) | (21 | ) | |||||||||||||
Cash flows from financing activities |
||||||||||||||||||||
Proceeds from long-term debt |
4 | 4 | ||||||||||||||||||
Payments of long-term debt |
(17 | ) | (17 | ) | ||||||||||||||||
Net change in revolving credit facility and short-term debt |
409 | 409 | ||||||||||||||||||
Net change in long-term intercompany balances |
10 | (19 | ) | 9 | ||||||||||||||||
Common stock issued |
2 | 2 | ||||||||||||||||||
Common stock repurchased |
(5 | ) | (5 | ) | ||||||||||||||||
Dividends paid |
(9 | ) | 9 | |||||||||||||||||
Dividend paid to noncontrolling interests |
(15 | ) | (15 | ) | ||||||||||||||||
Other |
8 | 8 | ||||||||||||||||||
Net cash provided by/(used for) financing activities |
7 | (19 | ) | 389 | 9 | 386 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
(9 | ) | (9 | ) | ||||||||||||||||
Net change in cash and cash equivalents |
(60 | ) | (60 | ) | ||||||||||||||||
Cash and cash equivalents at January 1 |
459 | 459 | ||||||||||||||||||
Cash and cash equivalents at March 31 |
$0 | $0 | $399 | $0 | $399 | |||||||||||||||
28
Crown Holdings, Inc.
Crown Americas, LLC, Crown Americas Capital Corp. and Crown Americas Capital Corp. II (collectively, the Issuers), 100% owned subsidiaries of the Company, have outstanding senior unsecured notes that are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent) and substantially all subsidiaries in the United States. The guarantors are 100% owned by the Company and the guarantees are made on a joint and several basis. The following condensed combining financial statements:
| statements of operations for the three months ended March 31, 2011 and 2010, |
| balance sheets as of March 31, 2011 and December 31, 2010, and |
| statements of cash flows for the three months ended March 31, 2011 and 2010 |
are presented on the following pages to comply with the Companys requirements under Rule 3-10 of Regulation S-X.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the three months ended March 31, 2011
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Net sales |
$623 | $1,259 | $1,882 | |||||||||||||||||||||
Cost of products sold, excluding depreciation and amortization |
528 | 1,022 | 1,550 | |||||||||||||||||||||
Depreciation and amortization |
10 | 30 | 40 | |||||||||||||||||||||
Gross profit |
85 | 207 | 292 | |||||||||||||||||||||
Selling and administrative expense |
$2 | 36 | 64 | 102 | ||||||||||||||||||||
Provision for restructuring |
20 | 5 | 25 | |||||||||||||||||||||
Loss from early extinguishment of debt |
30 | 30 | ||||||||||||||||||||||
Net interest expense |
12 | 22 | 18 | 52 | ||||||||||||||||||||
Technology royalty |
(10 | ) | 10 | |||||||||||||||||||||
Income/(loss) before income taxes |
(44 | ) | 17 | 110 | 83 | |||||||||||||||||||
Provision/(benefit) for income taxes |
(17 | ) | 17 | 41 | 41 | |||||||||||||||||||
Equity earnings in affiliates |
$16 | 26 | 16 | $(58 | ) | |||||||||||||||||||
Net income/(loss) |
16 | (1 | ) | 16 | 69 | (58 | ) | 42 | ||||||||||||||||
Net income attributable to noncontrolling interests |
(26 | ) | (26 | ) | ||||||||||||||||||||
Net income/(loss) attributable to Crown Holdings |
$16 | $(1 | ) | $16 | $43 | $(58 | ) | $16 | ||||||||||||||||
29
Crown Holdings, Inc.
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the three months ended March 31, 2010
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Net sales |
$522 | $1,255 | $1,777 | |||||||||||||||||||||
Cost of products sold, excluding depreciation and amortization |
454 | 1,029 | 1,483 | |||||||||||||||||||||
Depreciation and amortization |
10 | 34 | 44 | |||||||||||||||||||||
Gross profit |
58 | 192 | 250 | |||||||||||||||||||||
Selling and administrative expense |
$2 | 15 | 62 | 79 | ||||||||||||||||||||
Provision for restructuring |
22 | 22 | ||||||||||||||||||||||
Asset impairments and sales |
(1 | ) | (1 | ) | ||||||||||||||||||||
Net interest expense |
21 | 13 | 12 | 46 | ||||||||||||||||||||
Technology royalty |
(7 | ) | 7 | |||||||||||||||||||||
Translation and foreign exchange |
(2 | ) | (2 | ) | ||||||||||||||||||||
Income/(loss) before income taxes |
(23 | ) | 37 | 92 | 106 | |||||||||||||||||||
Provision/(benefit) for income taxes |
(9 | ) | 24 | 24 | 39 | |||||||||||||||||||
Equity earnings in affiliates |
$41 | 28 | 28 | $(97 | ) | |||||||||||||||||||
Net income |
41 | 14 | 41 | 68 | (97 | ) | 67 | |||||||||||||||||
Net income attributable to noncontrolling interests |
(26 | ) | (26 | ) | ||||||||||||||||||||
Net income attributable to Crown Holdings |
$41 | $14 | $41 | $42 | $(97 | ) | $41 | |||||||||||||||||
30
Crown Holdings, Inc.
CONDENSED COMBINING BALANCE SHEET
As of March 31, 2011
(in millions)
Parent | Issuer | Guarantors | Non- Guarantors |
Eliminations | Total Company |
|||||||||||||||||||
Assets |
||||||||||||||||||||||||
Current assets |
||||||||||||||||||||||||
Cash and cash equivalents |
$33 | $376 | $409 | |||||||||||||||||||||
Receivables, net |
$(16 | ) | 1,120 | 1,104 | ||||||||||||||||||||
Intercompany receivables |
46 | 13 | $(59 | ) | ||||||||||||||||||||
Inventories |
331 | 1,022 | 1,353 | |||||||||||||||||||||
Prepaid expenses and other current assets |
$1 | 2 | 87 | 114 | 204 | |||||||||||||||||||
Total current assets |
1 | 35 | 448 | 2,645 | (59 | ) | 3,070 | |||||||||||||||||
< |