NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share and statistical data)
(Unaudited)
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|
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A.
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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 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 the Company as of
March 31, 2016
and the results of its operations for the
three months ended March 31, 2016
and
2015
and of its cash flows for the
three months ended March 31, 2016
and
2015
. 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, 2015
.
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B.
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Accounting and Reporting Developments
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Recently Issued Accounting Standards
In May 2014, the FASB issued new guidance related to how an entity should recognize revenue. The guidance specifies that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In addition, the guidance expands the required disclosures related to revenue and cash flows from contracts with customers. The guidance is effective for the Company beginning in the first quarter of 2018 with early adoption permitted beginning in the first quarter of 2017. The Company will adopt this standard on a modified retrospective basis and is currently evaluating the impact of adopting this guidance on its financial position and results of operations.
In July 2015, the FASB issued new guidance related to the subsequent measurement of inventory. Under existing guidance, inventory was measured at the lower of cost or market, where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin. The new guidance requires an entity to subsequently measure inventory at the lower of cost or net realizable value, which is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The guidance will be effective for the Company on January 1, 2017 and early adoption is permitted. The guidance is not expected to have a material effect on the Company’s consolidated financial statements.
In February 2016, the FASB issued new guidance on lease accounting. Under the new guidance lease classification criteria and income statement recognition is similar to current guidance; however, all leases with a lease term longer than one year will be recorded on the balance sheet through a right-of-use asset and a corresponding lease liability. The guidance will be effective for the Company on January 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its financial position and results of operations.
In March 2016, the FASB issued new guidance on share-based payments. The new guidance includes provisions to simplify various aspects of how share-based payments are accounted for and presented in the financial statements, including how tax benefits related to share-based payments are recorded. Under the current guidance upon settlement tax benefits in excess of compensation costs are recorded in equity ("windfalls") and tax deficiencies are recorded in equity to the extent of previous windfalls. Under the new guidance all of the tax effects related to share-based payments at settlement will be recorded through the income statement. The guidance will be effective for the Company on January 1, 2017 and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on the Company's consolidated financial statements.
On
February 18, 2015
, the Company completed its acquisition of Empaque, a leading manufacturer of beverage packaging in Mexico, from Heineken N.V., in a cash transaction valued at
$1.2 billion
. The addition of Empaque significantly increases the Company's presence in the growing Mexican market and substantially enhances the Company's strategic position in beverage cans, both regionally and globally.
The Company finalized its purchase accounting for the Empaque acquisition in the first quarter of 2016. There were no adjustments to the preliminary valuation of identifiable assets acquired and liabilities assumed as compared to the amounts disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.
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D.
|
Accumulated Other Comprehensive Income
|
The following table provides information about the changes in each component of accumulated other comprehensive income.
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Defined benefit plans
|
|
Foreign currency translation
|
|
Gains and losses on cash flow hedges
|
|
Total
|
|
Balance at December 31, 2014
|
|
$
|
(1,781
|
)
|
|
$
|
(980
|
)
|
|
$
|
(4
|
)
|
|
$
|
(2,765
|
)
|
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(209
|
)
|
|
(2
|
)
|
|
(211
|
)
|
|
Amounts reclassified from accumulated other comprehensive income
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
Other comprehensive income (loss)
|
|
11
|
|
|
(209
|
)
|
|
(2
|
)
|
|
(200
|
)
|
|
Balance at March 31, 2015
|
|
$
|
(1,770
|
)
|
|
$
|
(1,189
|
)
|
|
$
|
(6
|
)
|
|
$
|
(2,965
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
$
|
(1,690
|
)
|
|
$
|
(1,446
|
)
|
|
$
|
(18
|
)
|
|
$
|
(3,154
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
9
|
|
|
(2
|
)
|
|
7
|
|
|
Amounts reclassified from accumulated other comprehensive income
|
13
|
|
|
—
|
|
|
3
|
|
|
16
|
|
|
Other comprehensive income
|
|
13
|
|
|
9
|
|
|
1
|
|
|
23
|
|
|
Balance at March 31, 2016
|
|
$
|
(1,677
|
)
|
|
$
|
(1,437
|
)
|
|
$
|
(17
|
)
|
|
$
|
(3,131
|
)
|
The following table provides information about amounts reclassified from accumulated other comprehensive income.
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Three Months Ended
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|
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Details about accumulated other
|
|
March 31
|
|
Affected line item in the
|
|
comprehensive income components
|
|
2016
|
|
2015
|
|
statement of operations
|
|
(Gains) losses on cash flow hedges
|
|
|
|
|
|
|
|
Commodities
|
|
$
|
7
|
|
|
$
|
(1
|
)
|
|
Cost of products sold
|
|
|
|
7
|
|
|
(1
|
)
|
|
Income before taxes
|
|
|
|
(2
|
)
|
|
—
|
|
|
Provision for income taxes
|
|
|
|
$
|
5
|
|
|
$
|
(1
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)
|
|
Net income
|
|
|
|
|
|
|
|
|
|
Foreign exchange
|
|
$
|
2
|
|
|
$
|
—
|
|
|
Net sales
|
|
|
|
(4
|
)
|
|
1
|
|
|
Cost of products sold
|
|
|
|
(2
|
)
|
|
1
|
|
|
Income before taxes
|
|
|
|
—
|
|
|
—
|
|
|
Provision for income taxes
|
|
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
Total (gains) losses on cash flow hedges
|
|
$
|
3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
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Amortization of defined benefit plan items
|
|
|
|
|
|
|
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Actuarial losses
|
|
$
|
29
|
|
|
$
|
27
|
|
|
(a)
|
|
Prior service credit
|
|
(13
|
)
|
|
(12
|
)
|
|
(a)
|
|
|
|
16
|
|
|
15
|
|
|
Income before taxes
|
|
|
|
(3
|
)
|
|
(4
|
)
|
|
Provision for income taxes
|
|
|
|
$
|
13
|
|
|
$
|
11
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period
|
|
$
|
16
|
|
|
$
|
11
|
|
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|
(a) These accumulated other comprehensive income components are included in the computation of net periodic pension and postretirement cost. See
Note N
for further details.
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E.
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Stock-Based Compensation
|
A summary of restricted stock transactions during the
three
months ended
March 31, 2016
follows:
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|
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Number of shares
|
|
Non-vested stock awards outstanding at January 1, 2016
|
1,778,275
|
|
|
Awarded:
|
|
|
Time-vesting shares
|
70,396
|
|
|
Performance-based shares
|
133,676
|
|
|
Released:
|
|
|
Time-vesting shares
|
(131,462
|
)
|
|
Performance-based shares
|
(90,003
|
)
|
|
Forfeitures:
|
|
|
Time-vesting shares
|
(4,800
|
)
|
|
Performance-based shares
|
(153,248
|
)
|
|
Non-vested stock awards outstanding at March 31, 2016
|
1,602,834
|
|
In January 2016, the Company awarded shares of restricted stock to certain senior executives consisting of
70,396
time-vesting shares which vest
ratably over three years
and
133,676
performance-based shares which
cliff vest at the end of three years
. 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 originally awarded, and will be settled in stock. The market performance criteria is the Company's Total Shareholder Return ("TSR"), which includes share price appreciation and dividends paid, during the three-year term of the award measured against the TSR of a peer group of companies.
The weighted average grant-date fair value of the 2016 time-vesting stock awards was
$48.47
and the performance-based stock awards was
$51.05
.
The fair value of the performance-based shares awarded in
2016
was calculated using a
Monte Carlo
valuation model, including a weighted average stock price volatility of
19.8%
, an expected term of
three
years, and a weighted average risk-free interest rate of
1.22%
.
At
March 31, 2016
, unrecognized compensation cost related to outstanding non-vested stock awards was
$44
. The weighted average period over which the expense is expected to be recognized is
2.3
years. The aggregate market value of the shares released on the vesting dates was
$11
.
|
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|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|
Accounts receivable
|
$
|
867
|
|
|
$
|
827
|
|
|
Less: allowance for doubtful accounts
|
(86
|
)
|
|
(83
|
)
|
|
Net trade receivables
|
781
|
|
|
744
|
|
|
Miscellaneous receivables
|
199
|
|
|
168
|
|
|
Receivables, net
|
$
|
980
|
|
|
$
|
912
|
|
The Company uses receivable securitization facilities in the normal course of business as part of managing its cash flows. In connection with certain of the Company's receivable securitization facilities, the Company recognized a deferred purchase price of
$138
which was included in prepaid expenses and other current assets in the Company’s Consolidated Balance Sheet at March 31, 2016. The net change in deferred purchase price receivable was reflected in the receivables line item in the Company's Consolidated Statement of Cash Flows.
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 FIFO or average cost method.
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|
Raw materials and supplies
|
$
|
640
|
|
|
$
|
599
|
|
|
Work in process
|
152
|
|
|
129
|
|
|
Finished goods
|
621
|
|
|
485
|
|
|
|
$
|
1,413
|
|
|
$
|
1,213
|
|
|
|
|
|
H.
|
Derivative and Other Financial Instruments
|
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 those available in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3
includes unobservable pricing inputs that are not corroborated by market data or other objective sources. The Company has no recurring items valued using Level 3 inputs other than certain pension plan assets.
The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities measured at fair value and their placement within the fair value hierarchy.
The Company applies a
market approach
to value its commodity price hedge contracts. Prices from observable markets are used to develop the fair value of these financial instruments and they are reported under Level 2. The Company uses an
income approach
to value its foreign exchange forward contracts. These contracts are valued using a discounted cash flow model that calculates the present value of future cash flows under the terms of the contracts using market information as of the reporting date, such as foreign exchange spot and forward rates, and are reported under Level 2 of the fair value hierarchy.
Fair value disclosures for financial assets and liabilities that were accounted for at fair value on a recurring basis are provided later in this note. In addition, see
Note J
for fair value disclosures related to debt.
Derivative Financial Instruments
In the normal course of business the Company is subject to risk from adverse fluctuations in currency exchange rates, interest rates and commodity prices. The Company manages these risks through a program that includes the use of derivative financial instruments, primarily swaps and forwards. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes.
The Company’s objective in managing exposure to market risk is to limit the impact on earnings and cash flow.
The extent to which the Company uses such instruments is dependent upon its access to these contracts in the financial markets and its success using other methods, such as netting exposures in the same currencies to mitigate foreign exchange risk and using sales agreements that permit the pass-through of commodity price and foreign exchange rate risk to customers.
For derivative financial instruments accounted for in hedging relationships, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the manner in which effectiveness will be assessed. The Company formally assesses, both at inception and at least quarterly thereafter, whether the hedging relationships are effective in offsetting changes in fair value or cash flows of the related underlying exposures. When a hedge no longer qualifies for hedge accounting the change in fair value from the date of the last effectiveness test is recognized in earnings. Any gain or loss which has accumulated in other comprehensive income at the date of the last effectiveness test is reclassified into earnings at the same time of the underlying exposure.
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 for ineffectiveness, 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 reclassification from comprehensive income is the same as that of the underlying exposure. Contracts outstanding at
March 31, 2016
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 forward contracts 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, foreign currency risk is hedged together with the related commodity price risk.
The following table sets forth financial information about the impact on accumulated other comprehensive income (“AOCI”) and earnings from changes in the fair value of derivative instruments.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of gain/(loss)
|
|
Amount of gain/(loss)
|
|
|
|
recognized in AOCI
|
|
reclassified from AOCI
|
|
|
|
(effective portion)
|
|
into earnings
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Derivatives in cash flow hedges
|
|
March 31,
2016
|
|
March 31, 2015
|
|
March 31,
2016
|
|
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
Commodities
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
1
|
|
|
Total
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
For the
three months ended March 31, 2016
, the Company recognized less than
$1
in earnings related to hedge ineffectiveness caused by volatility in the metal premium component of aluminum prices.
For the
three months ended March 31, 2015
, the Company recognized a
gain
of
$2
(
$2
net of tax) related to hedge ineffectiveness caused primarily by volatility in the metal premium component of aluminum prices.
During the twelve month period ending March 31, 2017, a net
loss
of
$17
(
$14
, net of tax) is expected to be reclassified to earnings.
No
amounts were reclassified during the
three
months ended
March 31, 2016
and
2015
in connection with anticipated transactions that were no longer considered probable.
Fair Value Hedges and Contracts Not Designated as Hedges
The Company designates certain derivative financial instruments as fair value hedges of recognized foreign-denominated assets and liabilities, generally trade accounts receivable and payable and unrecognized firm commitments. The notional values and maturity dates of the derivative instruments coincide with those of the hedged items. Changes in fair value of the derivative financial instruments, excluding time value, are offset by changes in fair value of the related hedged items.
Other than for firm commitments, amounts related to time value are excluded from the assessment and measurement of hedge effectiveness and are reported in earnings. Less than
$1
was reported in earnings for the three months ended
March 31, 2016
.
Certain derivative financial instruments, including foreign exchange contracts related to intercompany debt, were not designated in hedge relationships; however, they are effective economic hedges as the changes in their fair value, except for time value, are offset by changes in re-measurement of the related hedged items. The Company’s primary use of these derivative instruments is to offset the earnings impact that fluctuations in foreign exchange rates have on certain monetary assets and liabilities denominated in currencies other than the entity's functional currency. Changes in fair value of these derivative instruments are immediately recognized in earnings as foreign exchange adjustments.
The impact on earnings from foreign exchange contracts designated as fair value hedges was a
loss
of
$1
for the
three months ended March 31, 2016
and
loss
of
$2
for the
three months ended March 31, 2015
. The impact on earnings from foreign exchange contracts not designated as hedges was a
gain
of
$21
for the
three months ended March 31, 2016
and a
loss
of
$48
for the same period in
2015
. These adjustments were reported within foreign exchange in the Consolidated Statements of Operations and were offset by changes in the fair values of the related underlying hedged items.
During the three months ended March 31, 2016, certain commodity hedges did not meet the criteria for hedge accounting and therefore the change in their fair value during the quarter was recognized in earnings. For the
three months ended March 31, 2016
, the Company recognized less than $
1
in earnings related to these ineffective hedges.
Net Investment Hedges
During the three months ended March 31, 2016, the Company designated certain derivative and non-derivative financial instruments (debt) as hedges of its net investment in a euro-based subsidiary and recorded a
loss
of
$45
(
$34
, net of tax) in accumulated other comprehensive income.
Fair Values of Derivative Financial Instruments and Valuation Hierarchy
The following table sets forth the fair value hierarchy for the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of
March 31, 2016
and
December 31, 2015
, respectively.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet classification
|
|
Fair Value hierarchy
|
|
March 31,
2016
|
|
December 31,
2015
|
|
Derivative assets
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
Foreign exchange
|
|
Other current assets
|
|
2
|
|
$
|
46
|
|
|
$
|
32
|
|
|
Commodities
|
|
Other current assets
|
|
2
|
|
4
|
|
|
5
|
|
|
Commodities
|
|
Other non-current assets
|
|
2
|
|
1
|
|
|
2
|
|
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
Commodities
|
|
Other current assets
|
|
2
|
|
2
|
|
|
3
|
|
|
|
|
Total
|
|
|
|
$
|
53
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
Foreign exchange
|
|
Accounts payable and accrued liabilities
|
|
2
|
|
$
|
35
|
|
|
$
|
14
|
|
|
Commodities
|
|
Accounts payable and accrued liabilities
|
|
2
|
|
21
|
|
|
26
|
|
|
Commodities
|
|
Other non-current liabilities
|
|
2
|
|
4
|
|
|
5
|
|
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
Foreign exchange
|
|
Accounts payable and accrued liabilities
|
|
2
|
|
3
|
|
|
2
|
|
|
Commodities
|
|
Accounts payable and accrued liabilities
|
|
2
|
|
4
|
|
|
5
|
|
|
|
|
Total
|
|
|
|
$
|
67
|
|
|
$
|
52
|
|
Offsetting of Derivative Assets and Liabilities
Certain derivative financial instruments are subject to agreements with counterparties similar to master netting arrangements and are eligible for offset. The Company has made an accounting policy election not to offset the fair
values of these instruments within the statement of financial position. In the table below, the aggregate fair values of the Company's derivative assets and liabilities are presented on both a gross and net basis, where appropriate.
|
|
|
|
|
|
|
|
|
Gross amounts recognized in the Balance Sheet
|
Gross amounts not offset in the Balance Sheet
|
Net amount
|
|
Balance at March 31, 2016
|
|
|
|
|
Derivative assets
|
$53
|
$9
|
$44
|
|
Derivative liabilities
|
67
|
9
|
58
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
|
|
|
Derivative assets
|
$42
|
$9
|
$33
|
|
Derivative liabilities
|
52
|
9
|
43
|
Notional Values of Outstanding Derivative Instruments
The aggregate U.S. dollar-equivalent notational values of outstanding derivative instruments in the Consolidated Balance Sheets at March 31, 2016 and December 31, 2015 were:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|
Derivatives in cash flow hedges:
|
|
|
|
|
Foreign exchange
|
$
|
963
|
|
|
$
|
922
|
|
|
Commodities
|
287
|
|
|
324
|
|
|
Derivatives in fair value hedges:
|
|
|
|
|
Foreign exchange
|
97
|
|
|
125
|
|
|
Derivatives not designated as hedges:
|
|
|
|
|
Foreign exchange
|
601
|
|
|
674
|
|
|
Commodities
|
56
|
|
|
57
|
|
|
|
|
|
I.
|
Restructuring and Other
|
The Company recorded restructuring and other charges as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
|
2015
|
|
Asset impairments and sales
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
Transaction costs
|
—
|
|
|
14
|
|
|
Other costs
|
4
|
|
|
—
|
|
|
|
2
|
|
|
20
|
|
The tables below summarize the outstanding accrual balances associated with current and prior restructuring actions.
2015 European Division Actions
Through March 31, 2016, the Company incurred costs of
$17
re
lated to the closure of
two
facilities in its
European Food segment upon completion of consultation processes with employee representatives. The closures are expected to reduce cost by eliminating excess capacity and consolidating manufacturing processes.
The facility closures are expected to result in the reduction of approximately
280
employees when completed in 2016. The Company expects to incur
$12
of future charges related to these actions.
The table below summarizes the restructuring accrual balances and utilization by cost type for these actions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
benefits
|
|
Other exit
costs
|
|
Total
|
|
Balance at January 1, 2016
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
Provision
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Balance at March 31, 2016
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Other Actions
At March 31, 2016, the Company also had a restructuring accrual of
$12
primarily related to actions taken in 2011 and 2012 to reduce manufacturing capacity and headcount in its European Aerosol and Specialty Packaging businesses. The Company expects to pay the liability through 2024 as certain employees have elected to receive payment as a fixed monthly sum over future years. The Company continues to review its supply and demand profile and long-term plans in Europe, and it is possible that the Company may record additional restructuring charges in the future.
J.
Debt
The Company's outstanding debt was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|
|
Principal
|
|
Carrying
|
|
Principal
|
|
Carrying
|
|
|
outstanding
|
|
amount
|
|
outstanding
|
|
amount
|
|
Short-term debt
|
$
|
67
|
|
|
$
|
67
|
|
|
$
|
54
|
|
|
$
|
54
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
|
|
Senior secured borrowings:
|
|
|
|
|
|
|
|
|
Revolving credit facilities
|
$
|
369
|
|
|
$
|
369
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Term loan facilities
|
|
|
|
|
|
|
|
|
U.S. dollar at LIBOR + 1.75% due 2018
|
1,131
|
|
|
1,120
|
|
|
831
|
|
|
821
|
|
|
€665 Euro at EURIBOR + 1.75% due 2018
|
757
|
|
|
749
|
|
|
723
|
|
|
714
|
|
|
Farm credit facility at LIBOR + 2.00% due 2019
|
355
|
|
|
350
|
|
|
355
|
|
|
350
|
|
|
Senior notes and debentures:
|
|
|
|
|
|
|
|
|
U.S. dollar at 6.25% due 2021
|
—
|
|
|
—
|
|
|
700
|
|
|
694
|
|
|
€650 at 4.0% due 2022
|
740
|
|
|
731
|
|
|
706
|
|
|
697
|
|
|
U. S. dollar at 4.50% due 2023
|
1,000
|
|
|
990
|
|
|
1,000
|
|
|
989
|
|
|
€600 at 3.375% due 2025
|
683
|
|
|
673
|
|
|
652
|
|
|
642
|
|
|
U.S. dollar at 7.375% due 2026
|
350
|
|
|
346
|
|
|
350
|
|
|
346
|
|
|
U.S. dollar at 7.50% due 2096
|
45
|
|
|
45
|
|
|
45
|
|
|
45
|
|
|
Other indebtedness in various currencies
|
159
|
|
|
159
|
|
|
166
|
|
|
166
|
|
|
Total long-term debt
|
5,589
|
|
|
5,532
|
|
|
5,528
|
|
|
5,464
|
|
|
Less current maturities
|
(241
|
)
|
|
(239
|
)
|
|
(211
|
)
|
|
(209
|
)
|
|
Total long-term debt, less current maturities
|
$
|
5,348
|
|
|
$
|
5,293
|
|
|
$
|
5,317
|
|
|
$
|
5,255
|
|
The estimated fair value of the Company’s long-term borrowings, using a market approach incorporating Level 2 inputs such as quoted market prices for the same or similar issues, was
$5,711
at
March 31, 2016
and
$5,540
at
December 31, 2015
.
In February 2016, the Company amended its credit agreement to provide for an additional
$300
of term loan borrowings, the proceeds of which, along with borrowings under the revolving credit facilities and cash on hand were used to redeem the Company's
$700
6.25%
senior notes due 2021. In connection with the redemption of the 2021 notes, the Company recorded a loss from early extinguishment of debt of
$27
.
|
|
|
|
K.
|
Asbestos-Related Liabilities
|
Crown Cork & Seal Company, Inc. (“Crown Cork”) is one of many defendants in a substantial number of lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to asbestos. These claims arose from the insulation operations of a U.S. company, the majority of whose stock Crown Cork purchased in 1963. Approximately
ninety
days after the stock purchase, this U.S. company sold its insulation assets and was later merged into Crown Cork.
Prior to 1998, amounts paid to asbestos claimants were covered by a fund made available to Crown Cork under a 1985 settlement with carriers insuring Crown Cork through 1976, when Crown Cork became self-insured. The fund was depleted in 1998 and the Company has no remaining coverage for asbestos-related costs.
In 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.
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.
In October 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 2003. The Company believes that the decision of the Texas Supreme Court is limited to retroactive application of the Texas legislation to asbestos-related cases that were pending against Crown Cork in Texas on June 11, 2003 and therefore, in its accrual, continues to assign no value to claims filed after June 11, 2003.
In recent years, the states of Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Kansas, Michigan, Mississippi, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, West Virginia, Wisconsin and Wyoming enacted legislation that limits asbestos-related liabilities under state law of companies such as Crown Cork that allegedly incurred these liabilities because they are successors by corporate merger to companies that had been involved with asbestos. The legislation, which applies to future and, with the exception of Arkansas, Georgia, South Carolina, South Dakota, West Virginia and Wyoming, 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 further cautions that an adverse ruling in any litigation relating to the constitutionality or applicability to Crown Cork of one or more statutes that limits the asbestos-related liability of alleged defendants like Crown Cork could have a material impact on the Company.
During the
three months ended March 31, 2016
, the Company paid
$3
to settle outstanding claims and had claims activity as follows:
|
|
|
|
|
|
|
Beginning claims
|
54,500
|
|
|
New claims
|
1,000
|
|
|
Settlements or dismissals
|
(500
|
)
|
|
Ending claims
|
55,000
|
|
In the fourth quarter of each year, the Company performs an analysis of outstanding claims and categorizes these claims by year of exposure and state filed. As of
December 31, 2015
, the Company's outstanding claims were:
|
|
|
|
|
|
|
Claimants alleging first exposure after 1964
|
16,000
|
|
|
Claimants alleging first exposure before or during 1964 filed in:
|
|
|
Texas
|
13,000
|
|
|
Pennsylvania
|
2,000
|
|
|
Other states that have enacted asbestos legislation
|
6,000
|
|
|
Other states
|
17,500
|
|
|
Total claims outstanding
|
54,500
|
|
The outstanding claims in each period exclude approximately
19,000
inactive claims. Due to the passage of time, the Company considers it unlikely that the plaintiffs in these cases will pursue further action against the Company. The exclusion of these inactive claims had no effect on the calculation of the Company’s accrual as the claims were filed in states, as described above, where the Company’s liability is limited by statute.
With respect to claimants alleging first exposure to asbestos before or during 1964, the Company does not include in its accrual any amounts for settlements in states where the Company’s liability is limited by statute except for certain pending claims in Texas as described earlier.
With respect to post-1964 claims, regardless of the existence of asbestos legislation, the Company does not include in its accrual any amounts for settlement of these claims because of increased difficulty of establishing identification of relevant insulation products as the cause of injury. Given the Company's settlement experience with post-1964 claims, it does not believe that an adverse ruling in the Texas or Pennsylvania asbestos litigation cases, or in any other state that has enacted asbestos legislation, would have a material impact on the Company with respect to such claims.
As of December 31, the percentage of outstanding claims related to claimants alleging serious diseases (primarily mesothelioma and other malignancies) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
Total claims
|
22
|
%
|
|
22
|
%
|
|
21
|
%
|
|
Pre-1964 claims in states without asbestos legislation
|
41
|
%
|
|
41
|
%
|
|
39
|
%
|
Crown Cork has entered into arrangements with plaintiffs’ counsel in certain jurisdictions with respect to claims which are not yet filed, or asserted, against it. However, Crown Cork expects claims under these arrangements to be filed or asserted against Crown Cork in the future. The projected value of these claims is included in the Company’s estimated liability as of
March 31, 2016
.
As of
March 31, 2016
, the Company’s accrual for pending and future asbestos-related claims and related legal costs was $
266
, including $
221
for unasserted claims. The Company’s accrual includes estimated probable costs for claims through the year
2025
. The Company’s accrual excludes potential costs for claims beyond
2025
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. 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
82%
of the claims outstanding at the end of
2015
), 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).
|
|
|
|
L.
|
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
$7
for its share of estimated future remediation costs at these sites. The Company has been identified as having either directly or indirectly disposed of commercial or industrial waste at the sites subject to the accrual, and where appropriate and supported by available information, generally has agreed to be responsible for a percentage of future remediation costs based on an estimated volume of materials disposed in proportion to the total materials disposed at each site. The Company has not had monetary sanctions imposed nor has the Company been notified of any potential monetary sanctions at any of the sites.
The Company has also recorded aggregate accruals of
$7
for remediation activities at various worldwide locations that are owned by the Company and for which the Company is not a member of a PRP group. Although the Company believes
its accruals are adequate to cover its portion of future remediation costs, there can be no assurance that the ultimate payments will not exceed the amount of the Company’s accruals and will not have a material effect on its results of operations, financial position and cash flow. Any possible loss or range of potential loss that may be incurred in excess of the recorded accruals cannot be estimated.
In March 2015, the Bundeskartellamt, or German Federal Cartel Office (“FCO”), conducted unannounced inspections of the premises of several metal packaging manufacturers, including a German subsidiary of the Company. The local court order authorizing the inspection cited FCO suspicions of anti-competitive agreements in the market for the supply of metal packaging products. The FCO’s investigation is ongoing. To date, the FCO has not officially charged the Company or any of its subsidiaries with any violations of competition law. The Company has commenced an internal investigation into the matter and has discovered instances of inappropriate conduct by certain employees of German subsidiaries of the Company. The Company is cooperating with the FCO and submitted a leniency application which disclosed the findings of its internal investigation to date and which may lead to the reduction of penalties that the FCO may impose. If the FCO finds that the Company or any of its subsidiaries violated competition law, the FCO has wide discretion to levy fines. At this stage of the investigation the Company believes that a loss is probable. The Company is unable to predict the ultimate outcome of the FCO’s investigation and any additional losses that could be incurred, which could be material to the Company’s operating results and cash flows for the periods in which they are resolved or become reasonably estimable.
The Company and its subsidiaries are also subject to various other lawsuits and claims with respect to governmental, labor, environmental, securities, vendor and other matters arising out of the Company’s normal course of business. While the impact on future financial results is not subject to reasonable estimation because considerable uncertainty exists, management believes that the ultimate liabilities resulting from such lawsuits and claims will not materially affect the Company’s consolidated earnings, financial position or cash flow.
The Company has various commitments to purchase materials, supplies and utilities as part of the ordinary course of business. The Company’s basic raw materials for its products are steel and aluminum, both of which are purchased from multiple sources. The Company is subject to fluctuations in the cost of these raw materials and has periodically adjusted its selling prices to reflect these movements. There can be no assurance, however, that the Company will be able to fully recover any increases or fluctuations in raw material costs from its customers. The Company also has commitments for standby letters of credit and for purchases of capital assets.
At
March 31, 2016
, 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
$7
. 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, 2016
, the Company also had guarantees of
$23
related to the residual values of leased assets.
The following table summarizes the computations of basic and diluted earnings per share attributable to the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
|
2015
|
|
Net income attributable to Crown Holdings
|
$
|
79
|
|
|
$
|
44
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
Basic
|
138.1
|
|
|
137.7
|
|
|
Dilutive stock options and restricted stock
|
0.9
|
|
|
1.3
|
|
|
Diluted
|
139.0
|
|
|
139.0
|
|
|
Basic earnings per share
|
$
|
0.57
|
|
|
$
|
0.32
|
|
|
Diluted earnings per share
|
$
|
0.57
|
|
|
$
|
0.32
|
|
For the
three months ended March 31, 2016
and 2015,
0.4 million
and
0.1 million
contingently issuable common shares were excluded from the computation of diluted earnings per share because the effect would be anti-dilutive.
|
|
|
|
N.
|
Pension and Other Postretirement Benefits
|
The components of net periodic pension and other postretirement benefits costs for the
three months ended March 31, 2016
and
2015
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
Pension benefits – U.S. plans
|
2016
|
|
2015
|
|
Service cost
|
$
|
4
|
|
|
$
|
5
|
|
|
Interest cost
|
13
|
|
|
16
|
|
|
Expected return on plan assets
|
(23
|
)
|
|
(25
|
)
|
|
Recognized net loss
|
12
|
|
|
12
|
|
|
Net periodic cost
|
$
|
6
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
Pension benefits – Non-U.S. plans
|
2016
|
|
2015
|
|
Service cost
|
$
|
6
|
|
|
$
|
5
|
|
|
Interest cost
|
26
|
|
|
30
|
|
|
Expected return on plan assets
|
(41
|
)
|
|
(42
|
)
|
|
Recognized prior service credit
|
(3
|
)
|
|
(3
|
)
|
|
Recognized net loss
|
13
|
|
|
13
|
|
|
Net periodic cost
|
$
|
1
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
Other postretirement benefits
|
2016
|
|
2015
|
|
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest cost
|
1
|
|
|
2
|
|
|
Recognized prior service credit
|
(10
|
)
|
|
(8
|
)
|
|
Recognized net loss
|
1
|
|
|
1
|
|
|
Net periodic benefit
|
$
|
(8
|
)
|
|
$
|
(5
|
)
|
For the three months ended March 31, 2016, the Company also recorded a pension settlement charge of
$3
which is included in restructuring and other in the Consolidated Statement of Operations.
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
|
|
|
March 31
|
|
|
2016
|
|
2015
|
|
U.S. statutory rate at 35%
|
$
|
48
|
|
|
$
|
35
|
|
|
Tax on foreign income
|
(14
|
)
|
|
(12
|
)
|
|
Tax contingencies
|
—
|
|
|
7
|
|
|
Valuation allowance
|
2
|
|
|
3
|
|
|
Non-deductible impairment charge
|
—
|
|
|
1
|
|
|
Other items, net
|
2
|
|
|
3
|
|
|
Income tax provision
|
$
|
38
|
|
|
$
|
37
|
|
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 income from operations adjusted to add back provisions for asbestos and restructuring and other, the impact of fair value adjustments related to the sale of inventory acquired in an acquisition and the timing impact of hedge ineffectiveness. 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.
The tables below present information about the Company's operating segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
External Sales
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
|
2015
|
|
Americas Beverage
|
$
|
643
|
|
|
$
|
617
|
|
|
North America Food
|
146
|
|
|
160
|
|
|
European Beverage
|
315
|
|
|
324
|
|
|
European Food
|
398
|
|
|
431
|
|
|
Asia Pacific
|
277
|
|
|
310
|
|
|
Total reportable segments
|
1,779
|
|
|
1,842
|
|
|
Non-reportable segments
|
114
|
|
|
155
|
|
|
Total
|
$
|
1,893
|
|
|
$
|
1,997
|
|
The primary sources of revenue included in non-reportable segments are the Company's aerosol can businesses in North America and Europe, the Company's specialty packaging business in Europe and the Company's tooling and equipment operations in the U.S. and United Kingdom.
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment Sales
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
|
2015
|
|
Americas Beverage
|
$
|
15
|
|
|
$
|
21
|
|
|
North America Food
|
6
|
|
|
1
|
|
|
European Beverage
|
1
|
|
|
—
|
|
|
European Food
|
16
|
|
|
27
|
|
|
Asia Pacific
|
—
|
|
|
—
|
|
|
Total reportable segments
|
38
|
|
|
49
|
|
|
Non-reportable segments
|
18
|
|
|
27
|
|
|
Total
|
$
|
56
|
|
|
$
|
76
|
|
Intersegment sales primarily include sales of ends and components used to manufacture cans, such as printed and coated metal, as well as parts and equipment used in the manufacturing process.
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Income
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
|
2015
|
|
Americas Beverage
|
$
|
104
|
|
|
$
|
85
|
|
|
North America Food
|
12
|
|
|
24
|
|
|
European Beverage
|
46
|
|
|
38
|
|
|
European Food
|
49
|
|
|
42
|
|
|
Asia Pacific
|
35
|
|
|
35
|
|
|
Total reportable segments
|
$
|
246
|
|
|
$
|
224
|
|
A reconciliation of segment income of reportable segments to income before income taxes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2016
|
|
2015
|
|
Segment income of reportable segments
|
$
|
246
|
|
|
$
|
224
|
|
|
Segment income of non-reportable segments
|
13
|
|
|
17
|
|
|
Corporate and unallocated items
|
(38
|
)
|
|
(53
|
)
|
|
Restructuring and other
|
(2
|
)
|
|
(20
|
)
|
|
Loss from early extinguishments of debt
|
(27
|
)
|
|
—
|
|
|
Interest expense
|
(64
|
)
|
|
(65
|
)
|
|
Interest income
|
3
|
|
|
2
|
|
|
Foreign exchange
|
6
|
|
|
(6
|
)
|
|
Income before income taxes
|
$
|
137
|
|
|
$
|
99
|
|
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, fair value adjustments for the sale of inventory acquired in an acquisition and the timing impact of hedge ineffectiveness.
|
|
|
|
Q.
|
Condensed Combining Financial Information
|
Crown Cork & Seal Company, Inc. (Issuer), a
100%
owned subsidiary, has
$350
principal amount of
7.375%
senior notes due
2026
and
$45
principal amount of
7.5%
senior notes due
2096
outstanding that are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent). No other subsidiary guarantees the debt.
The following condensed combining financial statements:
•
statements of comprehensive income for the
three months ended March 31, 2016
and
2015
,
•
balance sheets as of
March 31, 2016
and
December 31, 2015
, and
•
statements of cash flows for the
three
months ended
March 31, 2016
and
2015
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the three months ended
March 31, 2016
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Net sales
|
|
|
|
|
$
|
1,893
|
|
|
|
|
$
|
1,893
|
|
|
Cost of products sold, excluding depreciation and amortization
|
|
|
|
|
1,521
|
|
|
|
|
1,521
|
|
|
Depreciation and amortization
|
|
|
|
|
60
|
|
|
|
|
60
|
|
|
Selling and administrative expense
|
|
|
$
|
2
|
|
|
89
|
|
|
|
|
91
|
|
|
Restructuring and other
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
Income from operations
|
|
|
(2
|
)
|
|
221
|
|
|
|
|
219
|
|
|
Loss on early extinguishments of debt
|
|
|
|
|
|
27
|
|
|
|
|
27
|
|
|
Net interest expense
|
|
|
27
|
|
|
34
|
|
|
|
|
61
|
|
|
Foreign exchange
|
|
|
|
|
(6
|
)
|
|
|
|
(6
|
)
|
|
Income/(loss) before income taxes
|
|
|
(29
|
)
|
|
166
|
|
|
|
|
137
|
|
|
Provision for / (benefit from) income taxes
|
|
|
(7
|
)
|
|
45
|
|
|
|
|
38
|
|
|
Equity earnings / (loss) in affiliates
|
$
|
79
|
|
|
77
|
|
|
|
|
$
|
(156
|
)
|
|
—
|
|
|
Net income
|
79
|
|
|
55
|
|
|
121
|
|
|
(156
|
)
|
|
99
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
(20
|
)
|
|
|
|
(20
|
)
|
|
Net income attributable to Crown Holdings
|
$
|
79
|
|
|
$
|
55
|
|
|
$
|
101
|
|
|
$
|
(156
|
)
|
|
$
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
$
|
102
|
|
|
$
|
145
|
|
|
$
|
145
|
|
|
$
|
(269
|
)
|
|
$
|
123
|
|
|
Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
(21
|
)
|
|
|
|
(21
|
)
|
|
Comprehensive income attributable to Crown Holdings
|
$
|
102
|
|
|
$
|
145
|
|
|
$
|
124
|
|
|
$
|
(269
|
)
|
|
$
|
102
|
|
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the three months ended
March 31, 2015
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Net sales
|
|
|
|
|
$
|
1,997
|
|
|
|
|
$
|
1,997
|
|
|
Cost of products sold, excluding depreciation and amortization
|
|
|
|
|
1,660
|
|
|
|
|
1,660
|
|
|
Depreciation and amortization
|
|
|
|
|
51
|
|
|
|
|
51
|
|
|
Selling and administrative expense
|
|
|
$
|
2
|
|
|
96
|
|
|
|
|
98
|
|
|
Restructuring and other
|
|
|
|
|
20
|
|
|
|
|
20
|
|
|
Income from operations
|
|
|
(2
|
)
|
|
170
|
|
|
|
|
168
|
|
|
Net interest expense
|
|
|
26
|
|
|
37
|
|
|
|
|
63
|
|
|
Foreign exchange
|
|
|
|
|
6
|
|
|
|
|
6
|
|
|
Income/(loss) before income taxes
|
|
|
(28
|
)
|
|
127
|
|
|
|
|
99
|
|
|
Provision for / (benefit from) income taxes
|
|
|
(1
|
)
|
|
38
|
|
|
|
|
37
|
|
|
Equity earnings / (loss) in affiliates
|
$
|
44
|
|
|
57
|
|
|
|
|
$
|
(101
|
)
|
|
—
|
|
|
Net income
|
44
|
|
|
30
|
|
|
89
|
|
|
(101
|
)
|
|
62
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
(18
|
)
|
|
|
|
(18
|
)
|
|
Net income attributable to Crown Holdings
|
$
|
44
|
|
|
$
|
30
|
|
|
$
|
71
|
|
|
$
|
(101
|
)
|
|
$
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
$
|
(156
|
)
|
|
$
|
(78
|
)
|
|
$
|
(113
|
)
|
|
$
|
207
|
|
|
$
|
(140
|
)
|
|
Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
(16
|
)
|
|
|
|
(16
|
)
|
|
Comprehensive income attributable to Crown Holdings
|
$
|
(156
|
)
|
|
$
|
(78
|
)
|
|
$
|
(129
|
)
|
|
$
|
207
|
|
|
$
|
(156
|
)
|
CONDENSED COMBINING BALANCE SHEET
As of
March 31, 2016
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
257
|
|
|
|
|
$
|
257
|
|
|
Receivables, net
|
|
|
|
|
980
|
|
|
|
|
980
|
|
|
Inventories
|
|
|
|
|
1,413
|
|
|
|
|
1,413
|
|
|
Prepaid expenses and other current assets
|
$
|
1
|
|
|
$
|
2
|
|
|
251
|
|
|
|
|
254
|
|
|
Total current assets
|
1
|
|
|
2
|
|
|
2,901
|
|
|
|
|
2,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany debt receivables
|
|
|
|
|
3,548
|
|
|
$
|
(3,548
|
)
|
|
—
|
|
|
Investments
|
2,890
|
|
|
2,653
|
|
|
|
|
(5,543
|
)
|
|
—
|
|
|
Goodwill and intangible assets
|
|
|
|
|
3,627
|
|
|
|
|
3,627
|
|
|
Property, plant and equipment, net
|
|
|
|
|
2,727
|
|
|
|
|
2,727
|
|
|
Other non-current assets
|
|
|
430
|
|
|
252
|
|
|
|
|
682
|
|
|
Total
|
$
|
2,891
|
|
|
$
|
3,085
|
|
|
$
|
13,055
|
|
|
$
|
(9,091
|
)
|
|
$
|
9,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
|
|
$
|
67
|
|
|
|
|
$
|
67
|
|
|
Current maturities of long-term debt
|
|
|
|
|
239
|
|
|
|
|
239
|
|
|
Accounts payable and accrued liabilities
|
$
|
10
|
|
|
$
|
41
|
|
|
2,361
|
|
|
|
|
2,412
|
|
|
Total current liabilities
|
10
|
|
|
41
|
|
|
2,667
|
|
|
|
|
2,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, excluding current maturities
|
|
|
391
|
|
|
4,902
|
|
|
|
|
5,293
|
|
|
Long-term intercompany debt
|
2,632
|
|
|
916
|
|
|
|
|
$
|
(3,548
|
)
|
|
—
|
|
|
Postretirement and pension liabilities
|
|
|
|
|
720
|
|
|
|
|
720
|
|
|
Other non-current liabilities
|
|
|
296
|
|
|
360
|
|
|
|
|
656
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
|
|
|
304
|
|
|
|
|
304
|
|
|
Crown Holdings shareholders’ equity/(deficit)
|
249
|
|
|
1,441
|
|
|
4,102
|
|
|
(5,543
|
)
|
|
249
|
|
|
Total equity/(deficit)
|
249
|
|
|
1,441
|
|
|
4,406
|
|
|
(5,543
|
)
|
|
553
|
|
|
Total
|
$
|
2,891
|
|
|
$
|
3,085
|
|
|
$
|
13,055
|
|
|
$
|
(9,091
|
)
|
|
$
|
9,940
|
|
CONDENSED COMBINING BALANCE SHEET
As of December 31, 2015
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
717
|
|
|
|
|
$
|
717
|
|
|
Receivables, net
|
|
|
|
|
912
|
|
|
|
|
912
|
|
|
Inventories
|
|
|
|
|
1,213
|
|
|
|
|
1,213
|
|
|
Prepaid expenses and other current assets
|
|
|
$
|
2
|
|
|
205
|
|
|
|
|
207
|
|
|
Total current assets
|
—
|
|
|
2
|
|
|
3,047
|
|
|
|
|
3,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany debt receivables
|
|
|
|
|
3,654
|
|
|
$
|
(3,654
|
)
|
|
—
|
|
|
Investments
|
$
|
2,937
|
|
|
2,490
|
|
|
|
|
(5,427
|
)
|
|
—
|
|
|
Goodwill and intangible assets
|
|
|
|
|
3,580
|
|
|
|
|
3,580
|
|
|
Property, plant and equipment, net
|
|
|
|
|
2,699
|
|
|
|
|
2,699
|
|
|
Other non-current assets
|
|
|
430
|
|
|
262
|
|
|
|
|
692
|
|
|
Total
|
$
|
2,937
|
|
|
$
|
2,922
|
|
|
$
|
13,242
|
|
|
$
|
(9,081
|
)
|
|
$
|
10,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
|
|
$
|
54
|
|
|
|
|
$
|
54
|
|
|
Current maturities of long-term debt
|
|
|
|
|
209
|
|
|
|
|
209
|
|
|
Accounts payable and accrued liabilities
|
$
|
24
|
|
|
$
|
41
|
|
|
2,580
|
|
|
|
|
2,645
|
|
|
Total current liabilities
|
24
|
|
|
41
|
|
|
2,843
|
|
|
|
|
2,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, excluding current maturities
|
|
|
391
|
|
|
4,864
|
|
|
|
|
5,255
|
|
|
Long-term intercompany debt
|
2,769
|
|
|
885
|
|
|
|
|
$
|
(3,654
|
)
|
|
—
|
|
|
Postretirement and pension liabilities
|
|
|
|
|
767
|
|
|
|
|
767
|
|
|
Other non-current liabilities
|
|
|
309
|
|
|
346
|
|
|
|
|
655
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
|
|
|
291
|
|
|
|
|
291
|
|
|
Crown Holdings shareholders’ equity/(deficit)
|
144
|
|
|
1,296
|
|
|
4,131
|
|
|
(5,427
|
)
|
|
144
|
|
|
Total equity/(deficit)
|
144
|
|
|
1,296
|
|
|
4,422
|
|
|
(5,427
|
)
|
|
435
|
|
|
Total
|
$
|
2,937
|
|
|
$
|
2,922
|
|
|
$
|
13,242
|
|
|
$
|
(9,081
|
)
|
|
$
|
10,020
|
|
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the
three months ended March 31, 2016
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Net cash provided by/(used for) operating activities
|
$
|
(10
|
)
|
|
$
|
(31
|
)
|
|
$
|
(364
|
)
|
|
(3
|
)
|
|
$
|
(408
|
)
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(51
|
)
|
|
|
|
(51
|
)
|
|
Intercompany investing activities
|
150
|
|
|
|
|
|
|
|
$
|
(150
|
)
|
|
—
|
|
|
Other
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
Net cash provided by/(used for) investing activities
|
150
|
|
|
—
|
|
|
(48
|
)
|
|
(150
|
)
|
|
(48
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
|
|
303
|
|
|
|
|
303
|
|
|
Payments of long-term debt
|
|
|
|
|
(709
|
)
|
|
|
|
(709
|
)
|
|
Net change in revolving credit facility and short-term debt
|
|
|
|
|
383
|
|
|
|
|
383
|
|
|
Net change in long-term intercompany balances
|
(137
|
)
|
|
31
|
|
|
106
|
|
|
|
|
—
|
|
|
Debt issue costs
|
|
|
|
|
(2
|
)
|
|
|
|
(2
|
)
|
|
Common stock issued
|
1
|
|
|
|
|
|
|
|
|
1
|
|
|
Common stock repurchased
|
(4
|
)
|
|
|
|
|
|
|
|
(4
|
)
|
|
Dividends paid
|
|
|
|
|
(153
|
)
|
|
153
|
|
|
—
|
|
|
Dividend paid to noncontrolling interests
|
|
|
|
|
(8
|
)
|
|
|
|
(8
|
)
|
|
Foreign exchange derivatives related to debt
|
|
|
|
|
32
|
|
|
|
|
32
|
|
|
Net cash provided by/(used for) financing activities
|
(140
|
)
|
|
31
|
|
|
(48
|
)
|
|
153
|
|
|
(4
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
—
|
|
|
Net change in cash and cash equivalents
|
—
|
|
|
—
|
|
|
(460
|
)
|
|
—
|
|
|
(460
|
)
|
|
Cash and cash equivalents at January 1
|
|
|
|
|
717
|
|
|
|
|
717
|
|
|
Cash and cash equivalents at March 31
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
257
|
|
|
$
|
—
|
|
|
$
|
257
|
|
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the
three months ended March 31, 2015
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Net cash provided by/(used for) operating activities
|
$
|
(2
|
)
|
|
$
|
(35
|
)
|
|
$
|
(250
|
)
|
|
|
|
$
|
(287
|
)
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(52
|
)
|
|
|
|
(52
|
)
|
|
Purchase of business
|
|
|
|
|
(1,206
|
)
|
|
|
|
(1,206
|
)
|
|
Proceeds from sale of business
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|
Intercompany investing activities
|
(1,006
|
)
|
|
4
|
|
|
1,006
|
|
|
$
|
(4
|
)
|
|
—
|
|
|
Other
|
|
|
|
|
(9
|
)
|
|
|
|
(9
|
)
|
|
Net cash provided by/(used for) investing activities
|
(1,006
|
)
|
|
4
|
|
|
(240
|
)
|
|
(4
|
)
|
|
(1,246
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
|
|
750
|
|
|
|
|
750
|
|
|
Payments of long-term debt
|
|
|
|
|
(41
|
)
|
|
|
|
(41
|
)
|
|
Net change in revolving credit facility and short-term debt
|
|
|
|
|
234
|
|
|
|
|
234
|
|
|
Net change in long-term intercompany balances
|
1,009
|
|
|
31
|
|
|
(1,040
|
)
|
|
|
|
—
|
|
|
Common stock issued
|
3
|
|
|
|
|
|
|
|
|
3
|
|
|
Common stock repurchased
|
(4
|
)
|
|
|
|
|
|
|
|
(4
|
)
|
|
Dividends paid
|
|
|
|
|
(4
|
)
|
|
4
|
|
|
—
|
|
|
Purchase of noncontrolling interests
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Dividend paid to noncontrolling interests
|
|
|
|
|
(9
|
)
|
|
|
|
(9
|
)
|
|
Foreign exchange derivatives related to debt
|
|
|
|
|
(47
|
)
|
|
|
|
(47
|
)
|
|
Net cash provided by/(used for) financing activities
|
1,008
|
|
|
31
|
|
|
(157
|
)
|
|
4
|
|
|
886
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
(38
|
)
|
|
|
|
(38
|
)
|
|
Net change in cash and cash equivalents
|
—
|
|
|
—
|
|
|
(685
|
)
|
|
—
|
|
|
(685
|
)
|
|
Cash and cash equivalents at January 1
|
|
|
|
|
965
|
|
|
|
|
965
|
|
|
Cash and cash equivalents at March 31
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
280
|
|
|
$
|
—
|
|
|
$
|
280
|
|
Crown Americas, LLC, Crown Americas Capital Corp. II and Crown Americas Capital Corp. III (collectively, the Issuer),
100%
owned subsidiaries of the Company, have outstanding
$1,000
principal amount of
4.5%
senior notes due
2023
, which are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent) and substantially all subsidiaries in the United States. The guarantors are wholly owned by the Company and the guarantees are made on a joint and several basis.
The following condensed combining financial statements:
|
|
|
|
•
|
statements of comprehensive income for the
three months ended March 31, 2016
and
2015
,
|
|
|
|
|
•
|
balance sheets as of
March 31, 2016
and
December 31, 2015
, and
|
|
|
|
|
•
|
statements of cash flows for the
three
months ended
March 31, 2016
and
2015
|
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the three months ended
March 31, 2016
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Net sales
|
|
|
|
|
$
|
447
|
|
|
$
|
1,446
|
|
|
|
|
$
|
1,893
|
|
|
Cost of products sold, excluding depreciation and amortization
|
|
|
|
|
363
|
|
|
1,158
|
|
|
|
|
1,521
|
|
|
Depreciation and amortization
|
|
|
|
|
8
|
|
|
52
|
|
|
|
|
60
|
|
|
Selling and administrative expense
|
|
|
$
|
3
|
|
|
35
|
|
|
53
|
|
|
|
|
91
|
|
|
Restructuring and other
|
|
|
|
|
4
|
|
|
(2
|
)
|
|
|
|
2
|
|
|
Income from operations
|
|
|
(3
|
)
|
|
37
|
|
|
185
|
|
|
|
|
219
|
|
|
Loss from early extinguishments of debt
|
|
|
27
|
|
|
|
|
|
|
|
|
27
|
|
|
Net interest expense
|
|
|
20
|
|
|
22
|
|
|
19
|
|
|
|
|
61
|
|
|
Technology royalty
|
|
|
|
|
(9
|
)
|
|
9
|
|
|
|
|
—
|
|
|
Foreign exchange
|
|
|
32
|
|
|
|
|
(6
|
)
|
|
$
|
(32
|
)
|
|
(6
|
)
|
|
Income/(loss) before income taxes
|
|
|
(82
|
)
|
|
24
|
|
|
163
|
|
|
32
|
|
|
137
|
|
|
Provision for / (benefit from) income taxes
|
|
|
(31
|
)
|
|
14
|
|
|
44
|
|
|
11
|
|
|
38
|
|
|
Equity earnings / (loss) in affiliates
|
$
|
79
|
|
|
64
|
|
|
45
|
|
|
|
|
(188
|
)
|
|
—
|
|
|
Net income
|
79
|
|
|
13
|
|
|
55
|
|
|
119
|
|
|
(167
|
)
|
|
99
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
(20
|
)
|
|
Net income attributable to Crown Holdings
|
$
|
79
|
|
|
$
|
13
|
|
|
$
|
55
|
|
|
$
|
99
|
|
|
$
|
(167
|
)
|
|
$
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
$
|
102
|
|
|
$
|
16
|
|
|
$
|
145
|
|
|
$
|
172
|
|
|
$
|
(312
|
)
|
|
$
|
123
|
|
|
Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
(21
|
)
|
|
Comprehensive income attributable to Crown Holdings
|
$
|
102
|
|
|
$
|
16
|
|
|
$
|
145
|
|
|
$
|
151
|
|
|
$
|
(312
|
)
|
|
$
|
102
|
|
CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the three months ended
March 31, 2015
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Net sales
|
|
|
|
|
$
|
486
|
|
|
$
|
1,511
|
|
|
|
|
$
|
1,997
|
|
|
Cost of products sold, excluding depreciation and amortization
|
|
|
|
|
387
|
|
|
1,273
|
|
|
|
|
1,660
|
|
|
Depreciation and amortization
|
|
|
|
|
8
|
|
|
43
|
|
|
|
|
51
|
|
|
Selling and administrative expense
|
|
|
$
|
2
|
|
|
42
|
|
|
54
|
|
|
|
|
98
|
|
|
Restructuring and other
|
|
|
|
|
|
|
20
|
|
|
|
|
20
|
|
|
Income from operations
|
|
|
(2
|
)
|
|
49
|
|
|
121
|
|
|
|
|
168
|
|
|
Net interest expense
|
|
|
20
|
|
|
23
|
|
|
20
|
|
|
|
|
63
|
|
|
Technology royalty
|
|
|
|
|
(9
|
)
|
|
9
|
|
|
|
|
—
|
|
|
Foreign exchange
|
|
|
|
|
|
|
6
|
|
|
|
|
6
|
|
|
Income/(loss) before income taxes
|
|
|
(22
|
)
|
|
35
|
|
|
86
|
|
|
|
|
99
|
|
|
Provision for / (benefit from) income taxes
|
|
|
(8
|
)
|
|
23
|
|
|
22
|
|
|
|
|
37
|
|
|
Equity earnings / (loss) in affiliates
|
$
|
44
|
|
|
50
|
|
|
18
|
|
|
|
|
$
|
(112
|
)
|
|
—
|
|
|
Net income
|
44
|
|
|
36
|
|
|
30
|
|
|
64
|
|
|
(112
|
)
|
|
62
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
(18
|
)
|
|
|
|
(18
|
)
|
|
Net income attributable to Crown Holdings
|
$
|
44
|
|
|
$
|
36
|
|
|
$
|
30
|
|
|
$
|
46
|
|
|
$
|
(112
|
)
|
|
$
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
$
|
(156
|
)
|
|
$
|
40
|
|
|
$
|
(78
|
)
|
|
$
|
(142
|
)
|
|
$
|
196
|
|
|
$
|
(140
|
)
|
|
Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
|
|
(16
|
)
|
|
|
|
(16
|
)
|
|
Comprehensive income attributable to Crown Holdings
|
$
|
(156
|
)
|
|
$
|
40
|
|
|
$
|
(78
|
)
|
|
$
|
(158
|
)
|
|
$
|
196
|
|
|
$
|
(156
|
)
|
CONDENSED COMBINING BALANCE SHEET
As of
March 31, 2016
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
46
|
|
|
|
|
$
|
211
|
|
|
|
|
$
|
257
|
|
|
Receivables, net
|
|
|
|
|
$
|
7
|
|
|
973
|
|
|
|
|
980
|
|
|
Intercompany receivables
|
|
|
|
|
33
|
|
|
10
|
|
|
$
|
(43
|
)
|
|
—
|
|
|
Inventories
|
|
|
|
|
343
|
|
|
1,070
|
|
|
|
|
1,413
|
|
|
Prepaid expenses and other current assets
|
$
|
1
|
|
|
2
|
|
|
10
|
|
|
241
|
|
|
|
|
254
|
|
|
Total current assets
|
1
|
|
|
48
|
|
|
393
|
|
|
2,505
|
|
|
(43
|
)
|
|
2,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany debt receivables
|
|
|
2,847
|
|
|
3,374
|
|
|
719
|
|
|
(6,940
|
)
|
|
—
|
|
|
Investments
|
2,890
|
|
|
2,261
|
|
|
794
|
|
|
|
|
(5,945
|
)
|
|
—
|
|
|
Goodwill and intangible assets
|
|
|
|
|
470
|
|
|
3,157
|
|
|
|
|
3,627
|
|
|
Property, plant and equipment, net
|
|
|
1
|
|
|
391
|
|
|
2,335
|
|
|
|
|
2,727
|
|
|
Other non-current assets
|
|
|
5
|
|
|
463
|
|
|
214
|
|
|
|
|
682
|
|
|
Total
|
$
|
2,891
|
|
|
$
|
5,162
|
|
|
$
|
5,885
|
|
|
$
|
8,930
|
|
|
$
|
(12,928
|
)
|
|
$
|
9,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
|
|
|
|
$
|
67
|
|
|
|
|
$
|
67
|
|
|
Current maturities of long-term debt
|
|
|
$
|
122
|
|
|
|
|
117
|
|
|
|
|
239
|
|
|
Accounts payable and accrued liabilities
|
$
|
10
|
|
|
18
|
|
|
$
|
566
|
|
|
1,818
|
|
|
|
|
2,412
|
|
|
Intercompany payables
|
|
|
|
|
10
|
|
|
33
|
|
|
$
|
(43
|
)
|
|
—
|
|
|
Total current liabilities
|
10
|
|
|
140
|
|
|
576
|
|
|
2,035
|
|
|
(43
|
)
|
|
2,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, excluding current maturities
|
|
|
2,408
|
|
|
391
|
|
|
2,494
|
|
|
|
|
5,293
|
|
|
Long-term intercompany debt
|
2,632
|
|
|
1,339
|
|
|
2,817
|
|
|
152
|
|
|
(6,940
|
)
|
|
—
|
|
|
Postretirement and pension liabilities
|
|
|
|
|
354
|
|
|
366
|
|
|
|
|
720
|
|
|
Other non-current liabilities
|
|
|
|
|
306
|
|
|
350
|
|
|
|
|
656
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
|
|
|
|
|
304
|
|
|
|
|
304
|
|
|
Crown Holdings shareholders’ equity/(deficit)
|
249
|
|
|
1,275
|
|
|
1,441
|
|
|
3,229
|
|
|
(5,945
|
)
|
|
249
|
|
|
Total equity/(deficit)
|
249
|
|
|
1,275
|
|
|
1,441
|
|
|
3,533
|
|
|
(5,945
|
)
|
|
553
|
|
|
Total
|
$
|
2,891
|
|
|
$
|
5,162
|
|
|
$
|
5,885
|
|
|
$
|
8,930
|
|
|
$
|
(12,928
|
)
|
|
$
|
9,940
|
|
CONDENSED COMBINING BALANCE SHEET
As of
December 31, 2015
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
104
|
|
|
|
|
$
|
613
|
|
|
|
|
$
|
717
|
|
|
Receivables, net
|
|
|
|
|
$
|
23
|
|
|
889
|
|
|
|
|
912
|
|
|
Intercompany receivables
|
|
|
|
|
30
|
|
|
2
|
|
|
$
|
(32
|
)
|
|
—
|
|
|
Inventories
|
|
|
|
|
291
|
|
|
922
|
|
|
|
|
1,213
|
|
|
Prepaid expenses and other current assets
|
|
|
2
|
|
|
7
|
|
|
198
|
|
|
|
|
207
|
|
|
Total current assets
|
|
|
|
106
|
|
|
351
|
|
|
2,624
|
|
|
(32
|
)
|
|
3,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany debt receivables
|
|
|
3,111
|
|
|
3,471
|
|
|
681
|
|
|
(7,263
|
)
|
|
—
|
|
|
Investments
|
$
|
2,937
|
|
|
2,199
|
|
|
804
|
|
|
|
|
(5,940
|
)
|
|
—
|
|
|
Goodwill and intangible assets
|
|
|
|
|
471
|
|
|
3,109
|
|
|
|
|
3,580
|
|
|
Property, plant and equipment, net
|
|
|
1
|
|
|
390
|
|
|
2,308
|
|
|
|
|
2,699
|
|
|
Other non-current assets
|
|
|
6
|
|
|
457
|
|
|
229
|
|
|
|
|
692
|
|
|
Total
|
$
|
2,937
|
|
|
$
|
5,423
|
|
|
$
|
5,944
|
|
|
$
|
8,951
|
|
|
$
|
(13,235
|
)
|
|
$
|
10,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
|
|
|
|
$
|
54
|
|
|
|
|
$
|
54
|
|
|
Current maturities of long-term debt
|
|
|
$
|
90
|
|
|
|
|
119
|
|
|
|
|
209
|
|
|
Accounts payable and accrued liabilities
|
$
|
24
|
|
|
47
|
|
|
$
|
526
|
|
|
2,048
|
|
|
|
|
2,645
|
|
|
Intercompany payables
|
|
|
|
|
2
|
|
|
30
|
|
|
$
|
(32
|
)
|
|
—
|
|
|
Total current liabilities
|
24
|
|
|
137
|
|
|
528
|
|
|
2,251
|
|
|
(32
|
)
|
|
2,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, excluding current maturities
|
|
|
2,759
|
|
|
391
|
|
|
2,105
|
|
|
|
|
5,255
|
|
|
Long-term intercompany debt
|
2,769
|
|
|
1,268
|
|
|
3,041
|
|
|
185
|
|
|
(7,263
|
)
|
|
—
|
|
|
Postretirement and pension liabilities
|
|
|
|
|
377
|
|
|
390
|
|
|
|
|
767
|
|
|
Other non-current liabilities
|
|
|
|
|
311
|
|
|
344
|
|
|
|
|
655
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
|
|
|
|
|
291
|
|
|
|
|
291
|
|
|
Crown Holdings shareholders’ equity/(deficit)
|
144
|
|
|
1,259
|
|
|
1,296
|
|
|
3,385
|
|
|
(5,940
|
)
|
|
144
|
|
|
Total equity/(deficit)
|
144
|
|
|
1,259
|
|
|
1,296
|
|
|
3,676
|
|
|
(5,940
|
)
|
|
435
|
|
|
Total
|
$
|
2,937
|
|
|
$
|
5,423
|
|
|
$
|
5,944
|
|
|
$
|
8,951
|
|
|
$
|
(13,235
|
)
|
|
$
|
10,020
|
|
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the
three months ended March 31, 2016
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Net provided by/(used for) operating activities
|
$
|
(10
|
)
|
|
$
|
(66
|
)
|
|
$
|
(2
|
)
|
|
$
|
(323
|
)
|
|
(7
|
)
|
|
$
|
(408
|
)
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(21
|
)
|
|
(30
|
)
|
|
|
|
(51
|
)
|
|
Intercompany investing activities
|
150
|
|
|
|
|
150
|
|
|
|
|
|
$
|
(300
|
)
|
|
—
|
|
|
Other
|
|
|
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
Net cash provided by/(used for) investing activities
|
150
|
|
|
—
|
|
|
129
|
|
|
(27
|
)
|
|
(300
|
)
|
|
(48
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
300
|
|
|
|
|
3
|
|
|
|
|
303
|
|
|
Payments of long-term debt
|
|
|
(700
|
)
|
|
|
|
(9
|
)
|
|
|
|
(709
|
)
|
|
Net change in revolving credit facility and short-term debt
|
|
|
75
|
|
|
|
|
308
|
|
|
|
|
383
|
|
|
Net change in long-term intercompany balances
|
(137
|
)
|
|
335
|
|
|
(127
|
)
|
|
(71
|
)
|
|
|
|
—
|
|
|
Debt issue costs
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
Common stock issued
|
1
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
Common stock repurchased
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
Dividends paid
|
|
|
|
|
|
|
(307
|
)
|
|
307
|
|
|
—
|
|
|
Dividends paid to noncontrolling interests
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
(8
|
)
|
|
Foreign exchange derivatives related to debt
|
|
|
|
|
|
|
32
|
|
|
|
|
32
|
|
|
Net cash provided by/(used for) financing activities
|
(140
|
)
|
|
8
|
|
|
(127
|
)
|
|
(52
|
)
|
|
307
|
|
|
(4
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Net change in cash and cash equivalents
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(402
|
)
|
|
—
|
|
|
(460
|
)
|
|
Cash and cash equivalents at January 1
|
|
|
104
|
|
|
|
|
613
|
|
|
|
|
717
|
|
|
Cash and cash equivalents at March 31
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
211
|
|
|
$
|
—
|
|
|
$
|
257
|
|
CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the
three months ended March 31, 2015
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
Company
|
|
Net provided by/(used for) operating activities
|
$
|
(2
|
)
|
|
$
|
(42
|
)
|
|
$
|
25
|
|
|
$
|
(268
|
)
|
|
|
|
$
|
(287
|
)
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(13
|
)
|
|
(39
|
)
|
|
|
|
(52
|
)
|
|
Purchase of business
|
|
|
|
|
|
|
(1,206
|
)
|
|
|
|
(1,206
|
)
|
|
Proceeds from sale of business
|
|
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|
Intercompany investing activities
|
(1,006
|
)
|
|
2
|
|
|
4
|
|
|
1,006
|
|
|
$
|
(6
|
)
|
|
—
|
|
|
Other
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
(9
|
)
|
|
Net cash provided by/(used for) investing activities
|
(1,006
|
)
|
|
2
|
|
|
(9
|
)
|
|
(227
|
)
|
|
(6
|
)
|
|
(1,246
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
750
|
|
|
|
|
|
|
|
|
750
|
|
|
Payments of long-term debt
|
|
|
(2
|
)
|
|
|
|
(39
|
)
|
|
|
|
(41
|
)
|
|
Net change in revolving credit facility and short-term debt
|
|
|
155
|
|
|
|
|
79
|
|
|
|
|
234
|
|
|
Net change in long-term intercompany balances
|
1,009
|
|
|
(953
|
)
|
|
(16
|
)
|
|
(40
|
)
|
|
|
|
—
|
|
|
Common stock issued
|
3
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
Common stock repurchased
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
Dividends paid
|
|
|
|
|
|
|
(6
|
)
|
|
6
|
|
|
—
|
|
|
Dividends paid to noncontrolling interests
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
(9
|
)
|
|
Foreign exchange derivatives related to debt
|
|
|
(8
|
)
|
|
|
|
(39
|
)
|
|
|
|
(47
|
)
|
|
Net cash provided by/(used for) financing activities
|
1,008
|
|
|
(58
|
)
|
|
(16
|
)
|
|
(54
|
)
|
|
6
|
|
|
886
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
|
|
(38
|
)
|
|
|
|
(38
|
)
|
|
Net change in cash and cash equivalents
|
—
|
|
|
(98
|
)
|
|
—
|
|
|
(587
|
)
|
|
—
|
|
|
(685
|
)
|
|
Cash and cash equivalents at January 1
|
|
|
128
|
|
|
|
|
837
|
|
|
|
|
965
|
|
|
Cash and cash equivalents at March 31
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
280
|
|
PART I - FINANCIAL INFORMATION