Edgar Filing: CROWN HOLDINGS INC

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-Q

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 JUNE 30, 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

(registrant’s 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)

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ¨ No x

There were 151,136,014 shares of Common Stock outstanding as of August 5, 2011.

Crown Holdings, Inc.

PART I – FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions except share and per share data)

(Unaudited)


Three months ended June 30	2011			2010

Net sales	$	2,281		$	2,010


Cost of products sold, excluding depreciation and amortization		1,865			1,631
Depreciation and amortization		45			44


Gross profit		371			335


Selling and administrative expense		100			95
Provision for restructuring		0			2
Asset impairments and sales		0			(6	)
Loss from early extinguishment of debt		2			0
Interest expense		60			45
Interest income		(2	)		(2	)
Translation and foreign exchange		1			0


Income before income taxes and equity earnings		210			201
Provision for income taxes		54			57

Net income		156			144
Net income attributable to noncontrolling interests		(27	)		(32	)

Net income attributable to Crown Holdings	$	129		$	112


Earnings per common share attributable to Crown Holdings:
Basic	$	0.85		$	0.70

Diluted	$	0.83		$	0.69


Weighted average common shares outstanding:
Basic		152,344,400			160,961,879
Diluted		155,486,354			163,292,749

The accompanying notes are an integral part of these consolidated financial statements.

Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions except share and per share data)

(Unaudited)


Six months ended June 30	2011			2010

Net sales	$	4,163		$	3,787


Cost of products sold, excluding depreciation and amortization		3,415			3,114
Depreciation and amortization		85			88


Gross profit		663			585


Selling and administrative expense		202			174
Provision for restructuring		25			24
Asset impairments and sales		0			(7	)
Loss from early extinguishment of debt		32			0
Interest expense		116			92
Interest income		(6	)		(3	)
Translation and foreign exchange		1			(2	)


Income before income taxes and equity earnings		293			307
Provision for income taxes		95			96

Net income		198			211
Net income attributable to noncontrolling interests		(53	)		(58	)

Net income attributable to Crown Holdings	$	145		$	153


Earnings per share attributable to Crown Holdings common shareholders:
Basic	$	0.94		$	0.95

Diluted	$	0.93		$	0.94


Weighted average common shares outstanding:
Basic		153,470,969			160,839,086
Diluted		156,607,199			163,197,094

The accompanying notes are an integral part of these consolidated financial statements.

Crown Holdings, Inc.

CONSOLIDATED BALANCE SHEETS (Condensed)

(In millions)

(Unaudited)


	June 30, 2011			December 31, 2010

Assets
Current assets
Cash and cash equivalents	$	421		$	463
Restricted cash		125			0
Receivables, net		1,323			936
Inventories		1,537			1,060
Prepaid expenses and other current assets		193			190

Total current assets		3,599			2,649


Goodwill		2,069			1,984
Property, plant and equipment, net		1,746			1,610
Other non-current assets		645			656

Total	$	8,059		$	6,899


Liabilities and equity
Current liabilities
Short-term debt	$	272		$	241
Current maturities of long-term debt		180			158
Accounts payable and accrued liabilities		2,258			1,978

Total current liabilities		2,710			2,377


Long-term debt, excluding current maturities		3,424			2,649
Postretirement and pension liabilities		1,171			1,159
Other non-current liabilities		483			485
Commitments and contingent liabilities (Note I)

Noncontrolling interests		341			325
Crown Holdings shareholders’ deficit		(70	)		(96	)

Total equity		271			229


Total	$	8,059		$	6,899

The accompanying notes are an integral part of these consolidated financial statements.

Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)

(In millions)

(Unaudited)


Six months ended June 30	2011			2010

Cash flows from operating activities
Net income	$	198		$	211
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization		85			88
Provision for restructuring		25			24
Asset impairments and sales		0			(7	)
Pension expense		49			57
Pension contributions		(37	)		(28	)
Stock-based compensation		12			15
Changes in assets and liabilities:
Receivables		(347	)		(466	)
Inventories		(431	)		(188	)
Accounts payable and accrued liabilities		172			66
Other, net		27			34

Net cash used for operating activities		(247	)		(194	)


Cash flows from investing activities
Capital expenditures		(184	)		(104	)
Change in restricted cash		(125	)		0
Proceeds from sale of property, plant and equipment		2			16
Other		0			3

Net cash used for investing activities		(307	)		(85	)


Cash flows from financing activities
Proceeds from long-term debt		1,416			47
Payments of long-term debt		(922	)		(426	)
Net change in revolving credit facility and short-term debt		248			679
Debt issue costs		(16	)		(14	)
Common stock issued		9			4
Common stock repurchased		(212	)		(5	)
Purchase of noncontrolling interests		(9	)		0
Dividends paid to noncontrolling interests		(38	)		(49	)
Other		18			20

Net cash provided by financing activities		494			256


Effect of exchange rate changes on cash and cash equivalents		18			(24	)


Net change in cash and cash equivalents		(42	)		(47	)

Cash and cash equivalents at January 1		463			459


Cash and cash equivalents at June 30	$	421		$	412

The accompanying notes are an integral part of these consolidated financial statements.

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							153									153			58			211
Translation adjustments										(74	)					(74	)		(14	)		(88	)
Amortization of net loss and prior service cost included in pension and postretirement cost										36						36						36
Derivatives qualifying as hedges										(18	)					(18	)		(2	)		(20	)

Total comprehensive income																97			42			139


Dividends paid to noncontrolling interests																			(49	)		(49	)
Restricted stock awarded				(3	)								3
Stock-based compensation				15												15						15
Common stock issued				2									2			4						4
Common stock repurchased				(4	)								(1	)		(5	)					(5	)
Sale of business																			(9	)		(9	)

Balance at June 30, 2010	$	929	$	1,546		$	59		$	(2,311	)	$	(118	)	$	105		$	373		$	478


Balance at January 1, 2011	$	929	$	1,231		$	230		$	(2,333	)	$	(153	)	$	(96	)	$	325		$	229

Comprehensive income:
Net income							145									145			53			198
Translation adjustments										61						61			6			67
Amortization of net loss and prior service cost included in pension and postretirement cost										32						32						32
Derivatives qualifying as hedges										(18	)					(18	)		(1	)		(19	)

Total comprehensive income																220			58			278


Dividends paid to noncontrolling interests																			(38	)		(38	)
Contribution from noncontrolling interests																			2			2
Restricted stock awarded				(2	)								2
Stock-based compensation				12												12						12
Common stock issued				6									3			9						9
Common stock repurchased				(186	)								(26	)		(212	)					(212	)
Purchase of noncontrolling interests				(3	)											(3	)		(6	)		(9	)

Balance at June 30, 2011	$	929	$	1,058		$	375		$	(2,258	)	$	(174	)	$	(70	)	$	341		$	271

The accompanying notes are an integral part of these consolidated financial statements.

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 June 30, 2011 and the results of its operations for the three and six month periods ended June 30, 2011 and 2010 and of its cash flows for the six months ended June 30, 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 Company’s 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

A summary of restricted stock transactions during the six months ended June 30, 2011 follows:


	Number of shares
Nonvested shares outstanding at January 1, 2011		1,059,481
Awarded:
Time-vesting (grant date fair value of $33.70)		121,940
Performance-based (grant date fair value of $41.69)		196,667
Performance-based– achieved 200% level (grant date fair value of $33.87)		145,278
Released:
Time-vesting shares awarded in 2008 through 2010		(235,313	)
Performance-based shares awarded in 2008		(145,278	)
Performance-based awards – achieved 200% level		(145,278	)

Nonvested shares outstanding at June 30, 2011		997,497

The time-vesting awards vest ratably over three years. 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-based share was calculated using a Monte Carlo valuation model. At June 30, 2011, unrecognized compensation cost related to unvested restricted stock was $8. The weighted average period over which the expense is expected to be recognized is 1.6 years.

The aggregate market value of the shares released and issued on the vesting dates was $18.

Crown Holdings, Inc.

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.


	June 30,		December 31,
	2011		2010
Finished goods	$	599	$	365
Work in process		208		128
Raw materials and supplies		730		567

	$	1,537	$	1,060

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 Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2011 and December 31, 2010, respectively.


					Fair value at reporting date using
					Level 1				Level 2
	June 30, 2011		Dec. 31, 2010		June 30, 2011		Dec. 31, 2010		June 30, 2011		Dec. 31, 2010
Assets
Derivative instruments:
Foreign exchange	$	27	$	26					$	27	$	26
Commodities		36		53	$	36	$	53

Total	$	63	$	79	$	36	$	53	$	27	$	26

Liabilities
Derivative instruments:
Foreign exchange	$	16	$	15					$	16	$	15
Commodities		5		1	$	5	$	1

Total	$	21	$	16	$	5	$	1	$	16	$	15

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.

Refer to Note E for further discussion of the Company’s use of derivative instruments and their fair values.

Crown Holdings, Inc.

E.	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 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 June 30, 2011 mature between one and thirty-one 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 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 accounted for as cash flow hedges.


	Amount of gain/(loss)						Amount of gain/(loss)
	recognized in AOCI						reclassified from AOCI
	(effective portion)						into earnings
	Quarter			Six months			Quarter			Six months
	ended			ended			ended			ended
Derivatives in cash flow hedges	June 30, 2011			June 30, 2011			June 30, 2011			June 30, 2011

Foreign exchange contracts	$	(1	)	$	(4	)	$	(1	)	$	(2	)⁽¹⁾
Commodity contracts		(13	)		0			10			16	⁽²⁾

Total	$	(14	)	$	(4	)	$	9		$	14

Crown Holdings, Inc.


	Amount of gain/(loss)						Amount of gain/(loss)
	recognized in AOCI						reclassified from AOCI
	(effective portion)						into earnings
	Quarter			Six months			Quarter		Six months
	ended			ended			ended		ended
Derivatives in cash flow hedges	June 30, 2010			June 30, 2010			June 30, 2010		June 30, 2010

Cross-currency swap	$	22		$	39		$	24	$	41	⁽³⁾
Foreign exchange contracts		3			5			2		3	⁽⁴⁾
Commodity contracts		(22	)		(12	)		4		6	⁽⁵⁾

Total	$	3		$	32		$	30	$	50

(1)	Within the Statement of Operations for the three months ended June 30, 2011, $1 was charged to cost of products sold. During the six months ended June 30, 2011, $1 was credited to net sales and $3 was charged to cost of products sold.

(2)	Within the Statement of Operations for the three months ended June 30, 2011, $14 was credited to cost of products sold and $4 was charged to income tax expense. During the six months ended June 30, 2011, $22 was credited to cost of products sold and $6 was charged to income tax expense.

(3)	Within the Statement of Operations for the three months ended June 30, 2010, $24 was credited to translation and foreign exchange. During the six months ended June 30, 2010, $41 was credited to translation and foreign exchange.

(4)	Within the Statement of Operations for the three months ended June 30, 2010, $2 was credited to cost of goods sold. During the six months ended June 30, 2010, $2 was credited to net sales and $1 was credited to cost of goods sold.

(5)	Within the Statement of Operations for the three months ended June 30, 2010, $4 was credited to cost of goods sold. During the six months ended June 30, 2010, $6 was credited to cost of goods sold.

During the twelve months ending June 30, 2012, a net gain of $26 ($19, net of tax) is expected to be reclassified to earnings. No amounts were reclassified during the three and six months ended June 30, 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 six months ended June 30, 2011.

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 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.

Crown Holdings, Inc.

The impact on earnings from foreign exchange contracts designated as fair value hedges were gains of $3 and $4 for the three and six months ended June 30, 2011 and losses of $6 and $8 for the same periods in 2010. The impact on earnings from foreign exchange contracts not designated as hedges were gains of $7 and $19 for the three and six months ended June 30, 2011 and gains of $8 and $25 for the same periods in 2010. These items were reported as translation and foreign exchange and were offset by changes in the fair values of the hedged items.

The fair values of outstanding derivative instruments in the Consolidated Balance Sheets at June 30, 2011 and December 31, 2010 were:


	June 30, 2011			December 31, 2010
Assets
Derivatives designated as hedges:
Foreign exchange	$	15	⁽⁶⁾	$	12	⁽⁶⁾
Commodities		36	⁽⁷⁾		53	⁽⁷⁾

Derivatives not designated as hedges:
Foreign exchange		12	⁽⁶⁾		14	⁽⁶⁾

Total	$	63		$	79


Liabilities
Derivatives designated as hedges:
Foreign exchange	$	13	⁽⁸⁾	$	12	⁽⁸⁾
Commodities		5	⁽⁹⁾		1	⁽⁸⁾

Derivatives not designated as hedges:
Foreign exchange		3	⁽⁸⁾		3	⁽⁸⁾

Total	$	21		$	16

⁽⁶⁾	Reported in other current assets.

⁽⁷⁾	$31 and $40 reported in other current assets at June 30, 2011 and December 31, 2010 and $5 and $13 reported in other non-current assets at June 30, 2011 and December 31, 2010.

⁽⁸⁾	Reported in accounts payable and accrued liabilities.

⁽⁹⁾	$3 reported in accounts payable and accrued liabilities and $2 reported in other non-current liabilities at June 30, 2011.

The aggregate U.S. dollar-equivalent notional values of outstanding derivative instruments in the Consolidated Balance Sheets at June 30, 2011 and December 31, 2010 were:


	June 30,		December 31,
	2011		2010
Derivatives in cash flow hedges:
Foreign exchange	$	538	$	751
Commodities		370		326

Derivatives in fair value hedges:
Foreign exchange		277		256

Derivatives not designated as hedges:
Foreign exchange		670		827

F.	Restructuring

During the first six months of 2011, the Company recorded a pre-tax charge of $25 for restructuring costs, including $19 related to the relocation of the Company’s European Division headquarters and management to Switzerland, $4 related to severance costs in the Company’s European Specialty Packaging segment and $2 related to prior restructuring actions in the Company’s North America Food segment.

During the first six months of 2010, the Company recorded a pre-tax charge of $24 for restructuring costs related to plant closures in the Company’s North America Food segment.

Crown Holdings, Inc.

European Division Headquarters

In the third quarter of 2010, the Company determined that it would relocate its European Division headquarters and management to Switzerland effective January 1, 2011 in order to benefit from a more centralized management location and increased efficiencies. The relocation is expected to be completed in 2011.

During the first six months of 2011, the Company recorded a pre-tax charge of $19 related to the relocation which represents the estimated employee compensation costs resulting from an intercompany payment related to the relocation. The Company expects to pay these costs over the next one to three years. As of June 30, 2011, the Company incurred costs of $33 which are expected to be the total costs related to the relocation.

The following table summarizes the restructuring accrual balances and utilization by cost type for the relocation:


	Termination			Other exit			Asset
	benefits			costs			writedowns		Total

Balance at January 1, 2011	$	8		$	2		$	0	$	10
Provisions					19					19
Payments made		(1	)		(2	)				(3	)
Foreign currency translation		1								1

Balance at June 30, 2011	$	8		$	19		$	0	$	27

North America Food

In 2010 and 2009, the Company closed certain Canadian food plants in an effort to reduce costs through consolidation of its U.S. and Canadian operations. The actions resulted in headcount reductions of approximately 400 and are expected to be completed in 2011.

During the first six months of 2011, the Company recorded a pre-tax charge of $2 for strip and clean costs related to the closures. As of June 30, 2011, the Company incurred total costs of $54 and expects to incur future additional charges of approximately $1 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 related to the pension settlements to be approximately $15.

The following table summarizes the restructuring accrual balances and utilization by cost type for these actions:


	Termination			Other exit			Asset
	benefits			costs			writedowns			Total

Balance at January 1, 2010	$	6		$	0		$	0		$	6
Provisions		10			4			10			24
Payments made		(3	)		(4	)					(7	)
Reclassified to other accounts		(5	)					(10	)		(15	)

Balance at June 30, 2010	$	8		$	0		$	0		$	8


Balance at January 1, 2011	$	3		$	0		$	0		$	3
Provisions					2						2
Payments made		(1	)		(2	)					(3	)

Balance at June 30, 2011	$	2		$	0		$	0		$	2

European Food

In 2009, the Company initiated a restructuring as part of ongoing cost reduction efforts in its European Food segment. The restructuring resulted in a headcount reduction of approximately 160 and is expected to be completed in 2011. The Company incurred total costs of $14 which are expected to be the total costs related to the restructuring.

Crown Holdings, Inc.

The following table summarizes the restructuring accrual balances and utilization by cost type for this action:


	Termination			Other exit		Asset
	benefits			costs		writedowns		Total

Balance at January 1, 2010	$	14		$	0	$	0	$	14
Payments made		(6	)						(6	)
Foreign currency translation		(1	)						(1	)

Balance at June 30, 2010	$	7		$	0	$	0	$	7


Balance at January 1, 2011	$	8		$	0	$	0	$	8
Payments made		(3	)						(3	)
Foreign currency translation		1							1

Balance at June 30, 2011	$	6		$	0	$	0	$	6

Other

In 2009, the Company initiated a restructuring as part of ongoing cost reduction efforts primarily in its European Specialty Packaging segment. The restructuring resulted in a headcount reduction of approximately 90 and is expected to be completed in 2011. The Company incurred costs of $5 which are expected to be the total costs related to the restructuring.

During the first six months of 2011, the Company initiated a restructuring as part of ongoing cost reduction efforts in its European Specialty Packaging segment. The restructuring resulted in a headcount reduction of approximately 32 and is expected to be completed in 2011. The Company incurred costs of $4 which are expected to be the total costs related to the restructuring.

The following table summarizes the restructuring accrual balances and utilization by cost type for these actions:


	Termination			Other exit		Asset
	benefits			costs		writedowns		Total

Balance at January 1, 2010	$	5		$	0	$	0	$	5
Payments made		(2	)						(2	)

Balance at June 30, 2010	$	3		$	0	$	0	$	3


Balance at January 1, 2011	$	2		$	0	$	0	$	2
Provisions		4							4

Balance at June 30, 2011	$	6		$	0	$	0	$	6

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.

Crown Holdings, Inc.

In June 2011, the Company amended its existing senior secured credit facilities to add a $200 term loan facility and a €274 ($397 at June 30, 2011) term loan facility, each of which will mature in June 2016 and bear interest at LIBOR or EURIBOR plus 1.75%. The Company paid $5 in bond issue costs that will be amortized over the term of the facilities The Company borrowed under the facilities to repay its existing $147 and €108 ($159) term loans, which were scheduled to mature in November 2012. In addition, the Company borrowed $125 under the facilities and irrevocably deposited the funds into an irrevocable trust to be used to redeem all €83 ($121) of the outstanding 6.25% first priority senior secured notes due September 2011 and to pay accrued interest and related fees. The funds were released from the trust in July 2011 to redeem the 2011 notes. As of June 30, 2011, the $125 deposited into the irrevocable trust was reported as restricted cash in the Company’s balance sheet. The Company recorded a loss from early extinguishment of debt of $2.

The Company’s outstanding debt at June 30, 2011 and December 31, 2010 was as follows.


	Jun. 30 2011			Dec. 31 2010

Short-term debt	$	272		$	241

Long-term debt
Senior secured borrowings:
Revolving credit facilities	$	410		$	184
Term loan facilities
U.S. dollar at LIBOR plus 1.75% due 2012		0			147
Euro at EURIBOR plus 1.75% due 2012		0			145
U.S. dollar at LIBOR plus 1.75% due 2016		200			0
Euro (€274 at June 30, 2011) at EURIBOR plus 1.75% due 2016		397			0
Euro (€83 at June 30, 2011) 6.25% first priority notes due 2011		121			112

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 June 30, 2011) 7.125% due 2018		725			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		248			148
Unamortized discounts		(11	)		(12	)

Total long-term debt		3,604			2,807
Less: current maturities		(180	)		(158	)

Total long-term debt, less current maturities	$	3,424		$	2,649

The estimated fair value of the Company’s long-term borrowings, based on quoted market prices for the same or similar issues, was $3,654 at June 30, 2011.

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 Alabama, 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.

Crown Holdings, Inc.

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 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. 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 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. Adverse rulings in cases challenging the constitutionality of the Pennsylvania statute could have a material impact on the Company.

During the six months ended June 30, 2011, the Company paid $10 to settle outstanding claims and had claims activity as follows:


Beginning claims	50,000
New claims	1,000
Settlements or dismissals	(1,000	)

Ending claims	50,000

As of December 31, 2010, the Company’s outstanding claims by year of exposure and state filed were:


	2010		2009
Claimants alleging first exposure after 1964		15,000		15,000
Claimants alleging first exposure before or during 1964 filed in:
Texas		12,000		12,000
Pennsylvania		2,000		2,000
Other states that have enacted asbestos legislation		6,000		6,000
Other states		15,000		15,000

Total claims outstanding		50,000		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.

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 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 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 impact on the Company with respect to such claims.

As of December 31, 2010, the percentage of outstanding claims related to claimants alleging serious diseases (primarily mesothelioma and other malignancies) were as follows:


	2010			2009			2008
Total claims		18	%		16	%		15	%
Pre-1964 claims in states without asbestos legislation		31	%		29	%		25	%

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 Company’s estimated liability as of June 30, 2011.

As of June 30, 2011, the Company’s accrual for pending and future asbestos-related claims and related legal costs was $239, including $189 for unasserted claims. The Company’s accrual includes estimated probable costs for claims through the year 2020. The Company’s accrual excludes potential costs for claims beyond 2020 because the Company believes that the key assumptions underlying its accrual are subject to greater uncertainty as the projection period lengthens.

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 (which was not specified for approximately 96% of the claims outstanding at the end of 2010), 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).

Crown Holdings, Inc.

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 $9 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 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. In May 2011, the Antitrust Commission concluded that there was no violation and closed the investigation. There can be no assurance that the Antitrust Commission will not re-open its investigation against the Company’s subsidiary in the event new facts or other circumstances justify a new investigation.

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 Company’s subsidiary. There can be no assurance that the Netherlands Competition Authority will not re-open its investigation against the Company’s subsidiary in the event new facts or other circumstances justify a new investigation.

The Company’s 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 ($58 at June 30, 2011) 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 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 results of operations, financial position or cash flow.

Crown Holdings, Inc.

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.

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 Company’s ongoing operations and recorded as a gain in the first quarter of 2010 within selling and administrative expense.

At June 30, 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 June 30, 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 June 30, 2011 and 2010, respectively:


	Three Months Ended				Six Months Ended
	June 30				June 30
	2011		2010		2011		2010

Net income attributable to Crown Holdings	$	129	$	112	$	145	$	153

Weighted average shares outstanding:
Basic		152.3		161.0		153.5		160.8
Add: dilutive stock options and restricted stock		3.2		2.3		3.1		2.4

Diluted		155.5		163.3		156.6		163.2


Basic earnings per share	$	0.85	$	0.70	$	0.94	$	0.95

Diluted earnings per share	$	0.83	$	0.69	$	0.93	$	0.94

For the three and six months ended June 30, 2010, 3.2 million and 3.3 million of contingently issuable common shares were excluded from the computation of diluted earnings per share because the effect would have been antidilutive.

K.	Pension and Other Postretirement Benefits

The components of net periodic pension and other postretirement benefits costs for the three and six months ended June 30 were as follows:


	Three Months Ended						Six Months Ended
	June 30						June 30
Pension Benefits – U.S. Plans	2011			2010			2011			2010

Service cost	$	3		$	2		$	6		$	4
Interest cost		18			18			36			36
Expected return on plan assets		(20	)		(20	)		(40	)		(40	)
Recognized prior service cost								1			1
Recognized net loss		13			17			24			34

Net periodic cost	$	14		$	17		$	27		$	35

Crown Holdings, Inc.


	Three Months Ended						Six Months Ended
	June 30						June 30
Pension Benefits – Non-U.S. Plans	2011			2010			2011			2010

Service cost	$	6		$	6		$	12		$	13
Interest cost		40			37			79			76
Expected return on plan assets		(49	)		(43	)		(97	)		(88	)
Recognized prior service (credit)/cost					(1	)		1			(2	)
Recognized net loss		14			12			27			23

Net periodic cost	$	11		$	11		$	22		$	22


	Three Months Ended						Six Months Ended
	June 30						June 30
Other Postretirement Benefits	2011			2010			2011			2010

Service cost	$	3		$	2		$	5		$	4
Interest cost		5			8			11			15
Recognized prior service credit		(9	)		(6	)		(17	)		(11	)
Recognized net loss		4			3			7			5

Net periodic cost	$	3		$	7		$	6		$	13

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 Company’s 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 purchased 5,018,701 shares for $200.

M.	Income Taxes

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:


	Three Months Ended						Six Months Ended
	June 30						June 30
	2011			2010			2011			2010

U.S. statutory rate at 35%	$	74		$	70		$	103		$	107
Tax on foreign income		(23	)		(16	)		(36	)		(24	)
Valuation allowance		2			2			12			11
Nontaxable settlement of legal dispute		0			0			0			(7	)
Tax law changes		0			0			(3	)		7
Other items, net		1			1			19			2

Income tax provision	$	54		$	57		$	95		$	96

The other items caption for the six months ended June 30, 2011 includes $20 of increase due to tax charges in connection with the relocation of the Company’s European headquarters and management to Switzerland.

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 and six months ended June 30, 2011 and 2010:


	External Sales				External Sales
	Three Months Ended				Six Months Ended
	June 30				June 30
	2011		2010		2011		2010

Americas Beverage	$	591	$	549	$	1,103	$	1,029
North America Food		217		214		405		411
European Beverage		500		439		840		753
European Food		509		421		931		825
European Specialty Packaging		119		97		219		188

Total reportable segments		1,936		1,720		3,498		3,206

Non-reportable segments		345		290		665		581

Total	$	2,281	$	2,010	$	4,163	$	3,787

The primary sources of revenue included in non-reportable segments are the Company’s aerosol can businesses in North America, Europe and Thailand, the Company’s beverage can businesses in Cambodia, China, Malaysia, Singapore, Thailand and Vietnam and the Company’s food can and closures business in Thailand.


	Intersegment Sales				Intersegment Sales
	Three Months Ended				Six Months Ended
	June 30				June 30
	2011		2010		2011		2010

Americas Beverage	$	26	$	22	$	43	$	37
North America Food		3		2		6		3
European Beverage		0		0		0		0
European Food		34		19		62		37
European Specialty Packaging		19		14		37		26

Total reportable segments		82		57		148		103

Non-reportable segments		17		14		38		24

Total	$	99	$	71	$	186	$	127

Intersegment sales primarily include sales of components used to manufacture cans such as ends and printed and coated metal as well as parts and equipment used in the manufacturing process.

Crown Holdings, Inc.


	Segment Income				Segment Income
	Three Months Ended				Six Months Ended
	June 30				June 30
	2011		2010		2011		2010
Americas Beverage	$	77	$	73	$	140	$	130
North America Food		38		33		66		49
European Beverage		70		75		115		127
European Food		63		59		115		99
European Specialty Packaging		12		8		19		11

Total reportable segments	$	260	$	248	$	455	$	416

A reconciliation of segment income of reportable segments to income before income taxes and equity earnings for the three and six months ended June 30, 2011 and 2010 follows:


	Segment Income						Segment Income
	Three Months Ended June 30						Six Months Ended June 30
	2011			2010			2011			2010
Segment income of reportable segments	$	260		$	248		$	455		$	416
Segment income of non-reportable segments		55			47			112			92
Corporate and unallocated items		(44	)		(55	)		(106	)		(97	)
Provision for restructuring		0			(2	)		(25	)		(24	)
Asset impairments and sales		0			6			0			7
Loss from early extinguishment of debt		(2	)		0			(32	)		0
Interest expense		(60	)		(45	)		(116	)		(92	)
Interest income		2			2			6			3
Translation and foreign exchange		(1	)		0			(1	)		2

Income before income taxes and equity earnings	$	210		$	201		$	293		$	307

For the three and six months ended June 30, 2011, intercompany profit of $1 and $2 related to non-reportable segments was eliminated within the segment income of non-reportable segments line. For the three and six months ended June 30, 2010, the intercompany profit elimination was less than $1.

“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.

Crown Holdings, Inc.

O.	Condensed Combining Financial Information

Crown European Holdings SA (Issuer), a 100% owned subsidiary of the Company, has €83 ($121 at June 30, 2011) principal amount of 6.25% first priority notes due 2011 outstanding and €500 ($725 at June 30, 2011) 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 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 and six months ended June 30, 2011 and 2010,

•

balance sheets as of June 30, 2011 and December 31, 2010, and

•

statements of cash flows for the six months ended June 30, 2011 and 2010

are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.

CONDENSED COMBINING STATEMENT OF OPERATIONS

For the three months ended June 30, 2011

(in millions)


	Parent		Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company

Net sales						$	1,083		$	1,198					$	2,281
Cost of products sold, excluding depreciation and amortization			$	0			851			1,014						1,865
Depreciation and amortization							21			24						45


Gross profit				0			211			160						371


Selling and administrative expense				0			78			22						100
Provision for restructuring							0			0						0
Asset impairments and sales							0			0						0
Loss from early extinguishment of debt				2												2
Net interest expense				20			25			13						58
Technology royalty							(9	)		9
Translation and foreign exchange										1						1


Income/(loss) before income taxes				(22	)		117			115						210
Provision for income taxes							38			16						54
Equity earnings in affiliates	$	129		91			50					$	(270	)


Net income		129		69			129			99			(270	)		156
Net income attributable to noncontrolling interests										(27	)					(27	)

Net income attributable to Crown Holdings	$	129	$	69		$	129		$	72		$	(270	)	$	129

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF OPERATIONS

For the three months ended June 30, 2010

(in millions)


	Parent		Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company

Net sales						$	1,161		$	849					$	2,010
Cost of products sold, excluding depreciation and amortization			$	(4	)		956			679						1,631
Depreciation and amortization							23			21						44


Gross profit				4			182			149						335


Selling and administrative expense				(1	)		69			27						95
Provision for restructuring							2									2
Asset impairments and sales				1			(1	)		(6	)					(6	)
Net interest expense				6			35			2						43
Technology royalty							(9	)		9


Income/(loss) before income taxes				(2	)		86			117						201
Provision for income taxes							35			22						57
Equity earnings in affiliates	$	112		75			61					$	(248	)


Net income		112		73			112			95			(248	)		144
Net income attributable to noncontrolling interests										(32	)					(32	)

Net income attributable to Crown Holdings	$	112	$	73		$	112		$	63		$	(248	)	$	112

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF OPERATIONS

For the six months ended June 30, 2011

(in millions)


	Parent		Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company

Net sales						$	2,349		$	1,814					$	4,163
Cost of products sold, excluding depreciation and amortization			$	(1	)		1,941			1,475						3,415
Depreciation and amortization							40			45						85


Gross profit				1			368			294						663


Selling and administrative expense				(1	)		157			46						202
Provision for restructuring							25									25
Asset impairments and sales							(182	)				$	182
Loss from early extinguishment of debt				2			30									32
Net interest expense				39			55			16						110
Technology royalty							(15	)		15
Translation and foreign exchange										1						1


Income/(loss) before income taxes				(39	)		298			216			(182	)		293
Provision for income taxes				1			39			55						95
Equity earnings/(loss) in affiliates	$	145		139			(114	)					(170	)


Net income		145		99			145			161			(352	)		198
Net income attributable to noncontrolling interests										(53	)					(53	)

Net income attributable to Crown Holdings	$	145	$	99		$	145		$	108		$	(352	)	$	145

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF OPERATIONS

For the six months ended June 30, 2010

(in millions)


	Parent		Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company

Net sales						$	2,208		$	1,579					$	3,787
Cost of products sold, excluding depreciation and amortization			$	(6	)		1,851			1,269						3,114
Depreciation and amortization							45			43						88


Gross profit				6			312			267						585


Selling and administrative expense				(1	)		121			54						174
Provision for restructuring							24									24
Asset impairments and sales				1			(2	)		(6	)					(7	)
Net interest expense				4			78			7						89
Technology royalty							(16	)		16
Translation and foreign exchange							(2	)								(2	)


Income before income taxes				2			109			196						307
Provision for income taxes							59			37						96
Equity earnings in affiliates	$	153		107			103					$	(363	)


Net income		153		109			153			159			(363	)		211
Net income attributable to noncontrolling interests										(58	)					(58	)

Net income attributable to Crown Holdings	$	153	$	109		$	153		$	101		$	(363	)	$	153

Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of June 30, 2011

(in millions)


	Parent			Issuer		Guarantors			Non- Guarantors		Eliminations			Total Company
Assets
Current assets
Cash and cash equivalents						$	62		$	359				$	421
Restricted cash				$	125										125
Receivables, net					74		311			938					1,323
Intercompany receivables					1		68			23	$	(92	)
Inventories							767			770					1,537
Prepaid expenses and other current assets	$	1			6		150			36					193

Total current assets		1			206		1,358			2,126		(92	)		3,599


Intercompany debt receivables					1,316		3,443			265		(5,024	)
Investments		525			3,381		(656	)				(3,250	)
Goodwill							1,455			614					2,069
Property, plant and equipment, net							635			1,111					1,746
Other non-current assets					15		581			49					645

Total	$	526		$	4,918	$	6,816		$	4,165	$	(8,366	)	$	8,059


Liabilities and equity
Current liabilities
Short-term debt				$	16	$	30		,$	226				$	272
Current maturities of long-term debt					121		1			58					180
Accounts payable and accrued liabilities	$	13			28		1,283			934					2,258
Intercompany payables							23			69	$	(92	)

Total current liabilities		13			165		1,337			1,287		(92	)		2,710


Long-term debt, excluding current maturities					1,123		2,114			187					3,424
Long-term intercompany debt		583			2,337		1,358			746		(5,024	)
Postretirement and pension liabilities							1,152			19					1,171
Other non-current liabilities							329			154					483
Commitments and contingent liabilities

Noncontrolling interests							1			340					341
Crown Holdings shareholders’ equity/(deficit)		(70	)		1,293		525			1,432		(3,250	)		(70	)

Total equity/(deficit)		(70	)		1,293		526			1,772		(3,250	)		271


Total	$	526		$	4,918	$	6,816		$	4,165	$	(8,366	)	$	8,059

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

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the six months ended June 30, 2011

(in millions)


	Parent			Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company

Net used for operating activities	$	(3	)	$	(43	)	$	(103	)	$	(98	)				$	(247	)


Cash flows from investing activities
Capital expenditures								(31	)		(153	)					(184	)
Change in restricted cash					(125	)											(125	)
Intercompany investing activities					6			230			(180	)	$	(56	)
Proceeds from sale of property, plant and equipment								2									2
Other																	0


Net cash provided by/(used for) investing activities					(119	)		201			(333	)		(56	)		(307	)


Cash flows from financing activities
Proceeds from long-term debt					400			900			116						1,416
Payments of long-term debt					(159	)		(747	)		(16	)					(922	)
Net change in revolving credit facility and short-term debt					(29	)		250			27						248
Debt issue costs								(16	)								(16	)
Net change in long-term intercompany balances		206			(63	)		(488	)		345
Common stock issued		9															9
Common stock repurchased		(212	)														(212	)
Dividends paid											(56	)		56
Purchase of noncontrolling interests											(9	)					(9	)
Dividends paid to noncontrolling interests											(38	)					(38	)
Other					13						5						18


Net cash provided by/(used for) financing activities		3			162			(101	)		374			56			494


Effect of exchange rate changes on cash and cash equivalents											18						18


Net change in cash and cash equivalents								(3	)		(39	)					(42	)

Cash and cash equivalents at January 1								65			398						463


Cash and cash equivalents at June 30	$	0		$	0		$	62		$	359		$	0		$	421

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the six months ended June 30, 2010

(in millions)


	Parent			Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company

Net cash provided by/(used for) operating activities	$	4					$	12		$	(210	)				$	(194	)


Cash flows from investing activities
Capital expenditures								(31	)		(73	)					(104	)
Intercompany investing activities				$	(193	)		231			3		$	(41	)
Proceeds from sale of property, plant and equipment								5			11						16
Other								1			2						3


Net cash provided by/(used for) investing activities					(193	)		206			(57	)		(41	)		(85	)


Cash flows from financing activities
Proceeds from long-term debt											47						47
Payments of long-term debt					(215	)		(201	)		(10	)					(426	)
Net change in revolving credit facility and short-term debt					255			257			167						679
Net change in long-term intercompany balances		(3	)		134			(274	)		143
Common stock issued		4															4
Common stock repurchased		(5	)														(5	)
Dividends paid											(41	)		41
Dividends paid to noncontrolling interests											(49	)					(49	)
Other					14			(8	)								6


Net cash provided by/(used for) financing activities		(4	)		188			(226	)		257			41			256


Effect of exchange rate changes on cash and cash equivalents								(2	)		(22	)					(24	)


Net change in cash and cash equivalents					(5	)		(10	)		(32	)					(47	)

Cash and cash equivalents at January 1					5			49			405						459


Cash and cash equivalents at June 30	$	0		$	0		$	39		$	373		$	0		$	412

Crown Holdings, Inc.

Crown Cork & Seal Company, Inc. (Issuer), a 100% 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 operations for the three and six months ended June 30, 2011 and 2010,

•

balance sheets as of June 30, 2011 and December 31, 2010, and

•

statements of cash flows for the six months ended June 30, 2011 and 2010

are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.

CONDENSED COMBINING STATEMENT OF OPERATIONS

For the three months ended June 30, 2011

(in millions)


	Parent	Issuer	Non- Guarantors		Eliminations	Total Company

Net sales			$	2,281		$	2,281
Cost of products sold, excluding depreciation and amortization				1,865			1,865
Depreciation and amortization				45			45