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, 2012
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM  ____  TO ____            
COMMISSION FILE NUMBER 0-50189
____________________________________________________
CROWN HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
____________________________________________________
Pennsylvania
 
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)

Large accelerated filer
x
Accelerated filer
¨
 
 
 
 
Non-accelerated filer
o   (Do not check if a smaller reporting company)
Smaller reporting company
¨

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes   ¨     No   x
There were 148,970,645 shares of Common Stock outstanding as of August 3, 2012 .


Crown Holdings, Inc.


PART I – FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions except per share data)
(Unaudited)

Three Months Ended June 30
2012
 
2011
Net sales
$
2,184

 
$
2,281

Cost of products sold, excluding depreciation and amortization
1,799

 
1,865

Depreciation and amortization
45

 
45

Gross profit
340

 
371

Selling and administrative expense
90

 
100

Provision for restructuring
3

 
—

Asset impairments and sales
(10
)
 
—

Loss from early extinguishments of debt
—

 
2

Interest expense
55

 
60

Interest income
(1
)
 
(2
)
Translation and foreign exchange
(5
)
 
1

Income before income taxes and equity earnings
208

 
210

Provision for income taxes
51

 
54

Net income
157

 
156

Net income attributable to noncontrolling interests
(23
)
 
(27
)
Net income attributable to Crown Holdings
$
134

 
$
129

 
 
 
 
       Earnings per common share attributable to Crown Holdings:
 
 
 
          Basic
$
0.91

 
$
0.85

          Diluted
$
0.89

 
$
0.83


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


2
Crown Holdings, Inc.


CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions except per share data)
(Unaudited)

Six Months Ended June 30
2012
 
2011
Net sales
$
4,131

 
$
4,163

Cost of products sold, excluding depreciation and amortization
3,417

 
3,415

Depreciation and amortization
87

 
85

Gross profit
627

 
663

Selling and administrative expense
196

 
202

Provision for restructuring
3

 
25

Asset impairments and sales
(10
)
 
—

Loss from early extinguishments of debt
—

 
32

Interest expense
113

 
116

Interest income
(3
)
 
(6
)
Translation and foreign exchange
(2
)
 
1

Income before income taxes and equity earnings
330

 
293

Provision for income taxes
83

 
95

Net income
247

 
198

Net income attributable to noncontrolling interests
(44
)
 
(53
)
Net income attributable to Crown Holdings
$
203

 
$
145

 
 
 
 
       Earnings per common share attributable to Crown Holdings:
 
 
 
          Basic
$
1.37

 
$
0.94

          Diluted
$
1.35

 
$
0.93


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


3

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months Ended June 30
2012
 
2011
Net income
$
157

 
$
156

 
 
 
 
Other comprehensive income, net of tax
 
 
 
Foreign currency translation adjustments
(39
)
 
18

Pension and other postretirement benefits
17

 
16

Derivatives qualifying as hedges
(24
)
 
(25
)
Total other comprehensive income
(46
)
 
9

 
 
 
 
Total comprehensive income
111

 
165

Net income attributable to noncontrolling interests
(23
)
 
(27
)
Translation adjustments attributable to noncontrolling interests
1

 
(2
)
Derivatives qualifying as hedges attributable to noncontrolling interests
4

 
2

Comprehensive income attributable to Crown Holdings
$
93

 
138


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


4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Six Months Ended June 30
2012
 
2011
Net income
$
247

 
$
198

 
 
 
 
Other comprehensive income, net of tax
 
 
 
Foreign currency translation adjustments
—

 
67

Pension and other postretirement benefits
33

 
32

Derivatives qualifying as hedges
(1
)
 
(19
)
Total other comprehensive income
32

 
80

 
 
 
 
Total comprehensive income
279

 
278

Net income attributable to noncontrolling interests
(44
)
 
(53
)
Translation adjustments attributable to noncontrolling interests
1

 
(6
)
Derivatives qualifying as hedges attributable to noncontrolling interests
1

 
1

Comprehensive income attributable to Crown Holdings
$
237

 
$
220


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





















5
Crown Holdings, Inc.




CONSOLIDATED BALANCE SHEETS (Condensed)
(In millions)
(Unaudited)

 
June 30,
2012
 
December 31,
2011
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
230

 
$
342

Receivables, net
1,194

 
948

Inventories
1,272

 
1,148

Prepaid expenses and other current assets
213

 
165

Total current assets
2,909

 
2,603

 
 
 
 
Goodwill
1,944

 
1,952

Property, plant and equipment, net
1,800

 
1,751

Other non-current assets
571

 
562

Total
$
7,224

 
$
6,868

 
 
 
 
Liabilities and equity
 
 
 
Current liabilities
 
 
 
Short-term debt
$
185

 
$
128

Current maturities of long-term debt
113

 
67

Accounts payable and accrued liabilities
1,979

 
2,090

Total current liabilities
2,277

 
2,285

 
 
 
 
Long-term debt, excluding current maturities
3,493

 
3,337

Postretirement and pension liabilities
946

 
996

Other non-current liabilities
497

 
489

Commitments and contingent liabilities ( Note J )

 

Noncontrolling interests
238

 
234

Crown Holdings shareholders’ deficit
(227
)
 
(473
)
Total equity/(deficit)
11

 
(239
)
Total
$
7,224

 
$
6,868


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


6
Crown Holdings, Inc.


CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)
(In millions)
(Unaudited)

Six Months Ended June 30
2012
 
2011
Cash flows from operating activities
 
 
 
Net income
$
247

 
$
198

Adjustments to reconcile net income to net cash used for operating activities:
 
 
 
Depreciation and amortization
87

 
85

Provision for restructuring
3

 
25

Asset impairments and sales
(10
)
 
—

Pension expense
49

 
49

Pension contributions
(51
)
 
(37
)
Stock-based compensation
12

 
12

Changes in assets and liabilities:
 
 
 
Receivables
(296
)
 
(347
)
Inventories
(135
)
 
(431
)
Accounts payable and accrued liabilities
(121
)
 
172

Other, net
(1
)
 
27

Net cash used for operating activities
(216
)
 
(247
)
Cash flows from investing activities
 
 
 
Capital expenditures
(139
)
 
(184
)
Insurance proceeds
23

 
—

Change in restricted cash
—

 
(125
)
Proceeds from sale of property, plant and equipment
2

 
2

Other
(14
)
 
—

Net cash used for investing activities
(128
)
 
(307
)
Cash flows from financing activities
 
 
 
Proceeds from long-term debt
42

 
1,416

Payments of long-term debt
(32
)
 
(922
)
Net change in revolving credit facility and short-term debt
274

 
248

Debt issue costs
—

 
(16
)
Common stock issued
4

 
9

Common stock repurchased
(7
)
 
(212
)
Purchase of noncontrolling interests
—

 
(9
)
Dividends paid to noncontrolling interests
(38
)
 
(38
)
Other
(5
)
 
18

Net cash provided by financing activities
238

 
494

Effect of exchange rate changes on cash and cash equivalents
(6
)
 
18

Net change in cash and cash equivalents
(112
)
 
(42
)
Cash and cash equivalents at January 1
342

 
463

Cash and cash equivalents at June 30
$
230

 
$
421


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


7
Crown Holdings, Inc.


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(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, 2011
$
929

 
$
1,231

 
$
230

 
$
(2,333
)
 
$
(153
)
 
$
(96
)
 
$
325

 
$
229

Net income
 
 
 
 
145

 
 
 
 
 
145

 
53

 
198

Other comprehensive income
 
 
 
 
 
 
75

 
 
 
75

 
5

 
80

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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2012
$
929

 
$
863

 
$
512

 
$
(2,590
)
 
$
(187
)
 
$
(473
)
 
$
234

 
$
(239
)
Net income
 
 
 
 
203

 
 
 
 
 
203

 
44

 
247

Other comprehensive income
 
 
 
 
 
 
34

 
 
 
34

 
(2
)
 
32

Dividends paid to noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 
(38
)
 
(38
)
Restricted stock awarded
 
 
(2
)
 
 
 
 
 
2

 
 
 
 
 
 
Stock-based compensation
 
 
12

 
 
 
 
 
 
 
12

 
 
 
12

Common stock issued
 
 
3

 
 
 
 
 
1

 
4

 
 
 
4

Common stock repurchased
 
 
(6
)
 
 
 
 
 
(1
)
 
(7
)
 
 
 
(7
)
Balance at June 30, 2012
$
929

 
$
870

 
$
715

 
$
(2,556
)
 
$
(185
)
 
$
(227
)
 
$
238

 
$
11


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

8
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, 2012 and the results of its operations for the three and six months ended June 30, 2012 and 2011 and of its cash flows for the six months ended June 30, 2012 and 2011 . 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, 2011 .

B.
Recent Accounting and Reporting Pronouncements

In January 2012, the Company adopted changes issued by the FASB to the presentation of comprehensive income. These changes give companies the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The changes eliminated the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income were not changed. Additionally, no changes were made to the calculation and presentation of earnings per share. Other than presentation, these changes had no impact on the Company's consolidated financial statements.

In January 2012, the Company adopted changes issued by the FASB to conform existing guidance regarding fair value measurement and disclosure between GAAP and International Financial Reporting Standards. The FASB's changes clarify many of the existing concepts for measuring fair value and do not result in a change in the Company's application of the FASB's fair value measurement guidance. These changes include enhanced disclosures about recurring Level 3 fair value measurements which did not impact the Company's financial statements. These changes also require additional disclosures for items that are not measured at fair value in the balance sheet but for which the fair value is required to be disclosed.

C.
Stock-Based Compensation
A summary of restricted stock transactions during the six months ended June 30, 2012 follows:
 
Number of shares
Non-vested shares outstanding at January 1, 2012
997,497

Awarded:

Time-vesting (average grant-date fair value of $33.75)
126,582

Performance-based (average grant-date fair value of $39.52)
216,188

Performance-based – achieved 149% level (grant-date fair value of $33.98)
125,552

Released:

Time-vesting shares awarded in 2009 through 2011
(185,848
)
Performance-based shares awarded in 2009
(256,229
)
Performance-based awards – achieved 149% level
(125,552
)
Non-vested shares outstanding at June 30, 2012
898,190


9
Crown Holdings, Inc.


Annually the Company awards shares of restricted stock to certain senior executives. The awards consist of time-vesting awards which vest ratably over three years and 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 fair value of the performance-based shares awarded was calculated using a Monte Carlo valuation model. The estimated weighted average grant-date fair value of the 216,188 performance-based shares awarded during the first six months of 2012 was $39.52 using a weighted average stock price volatility of 27.8% , an expected term of three years, and a weighed average risk-free interest rate of 0.36% .

During the first six months of 2012 , 125,552 additional performance-based shares were issued under the Company's 2009 award because the Company exceeded the target level ( 100% ) of performance-based shares, established on the original date of the related award, by 49% . These shares were issued without restriction.

At June 30, 2012 , unrecognized compensation cost related to outstanding restricted stock was $9 . The weighted average period over which the expense is expected to be recognized is 1.7 years. The aggregate market value of the shares released and issued on the vesting dates was $19 .

D.
Receivables
 
June 30, 2012
 
December 31, 2011
Accounts and notes receivable
$
1,064

 
$
834

Less: allowance for doubtful accounts
(37
)
 
(37
)
Net trade receivables
1,027

 
797

Miscellaneous receivables
167

 
151

Receivables, net
$
1,194

 
$
948


E.
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, 2012
 
December 31, 2011
Raw materials and supplies
$
582

 
$
602

Work in process
158

 
136

Finished goods
532

 
410

 
$
1,272

 
$
1,148


F.
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 quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 includes unobservable pricing inputs that are not corroborated by market data or other objective sources. The Company has no items valued using Level 3 inputs other than certain pension plan assets.

The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities measured at fair value and their placement within the fair value hierarchy.

The Company applies a market approach to value its commodity price hedge contracts. Prices from observable markets are used to develop the fair value of these financial instruments and they are reported under Level 1. The Company uses an income approach to value its foreign exchange forward contracts. These contracts are valued using a discounted cash flow model that calculates the present value of future cash flows under the terms of the contracts using market information

10
Crown Holdings, Inc.


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 H 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. Counter-parties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counter-parties. The Company does not use derivative instruments for trading or speculative purposes.

The Company’s objective in managing exposure to market risk is to limit the impact on earnings and cash flow. The extent to which the Company uses such instruments is dependent upon its access to these contracts in the financial markets and its success using other methods, such as netting exposures in the same currencies to mitigate foreign exchange risk and using sales agreements that permit the pass-through of commodity price and foreign exchange rate risk to customers.

For derivative financial instruments accounted for in hedging relationships, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the manner in which effectiveness will be assessed. The Company formally assesses, both at inception and at least quarterly thereafter, whether the hedging relationships are effective in offsetting changes in fair value or cash flows of the related underlying exposures. Any ineffective portion of the change in fair value of the instruments is recognized immediately in earnings.

Cash Flow Hedges

The Company designates certain derivative financial instruments as cash flow hedges. No components of the hedging instruments are excluded from the assessment of hedge effectiveness. Changes in fair value of outstanding derivatives accounted for as cash flow hedges, except any ineffective portion, are recorded in other comprehensive income until earnings are impacted by the hedged transaction. Classification of the gain or loss in the Consolidated Statements of Operations upon release from comprehensive income is the same as that of the underlying exposure. Contracts outstanding at June 30, 2012 mature between one and thirty-five 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.
 
 
 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, 2012
 
June 30, 2012
 
June 30, 2012
 
June 30, 2012
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange
 
$
—

 
$
2

 
$
—

 
$
(1
)
(1)  
Commodities
 
(31
)
 
(21
)
 
(11
)
 
(18
)
(2)  
Total
 
$
(31
)
 
$
(19
)
 
$
(11
)
 
$
(19
)
 

11
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, 2011
 
June 30, 2011
 
June 30, 2011
 
June 30, 2011
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange
 
$
(1
)
 
$
(4
)
 
$
(1
)
 
$
(2
)
(3)  
Commodities
 
(13
)
 
—

 
10

 
16

(4)  
Total
 
$
(14
)
 
$
(4
)
 
$
9

 
$
14

 

(1) Within the Statement of Operations for the three months ended June, 30, 2012 , a gain of $3 was recognized in cost of products sold and a loss of $3 was recognized in net sales. During the six months ended June 30, 2012 , a gain of $6 was recognized in cost of products sold and a loss of $7 recognized in net sales.

(2) Within the Statement of Operations for the three months ended June, 30, 2012 , a loss of $14 was recognized in cost of products sold and a tax benefit of $3 was recognized in income tax expense. During the six months ended June 30, 2012 , a loss of $23 was recognized in cost of products sold and a tax benefit of $5 was recognized in income tax expense.

(3) Within the Statement of Operations for the three months ended June 30, 2011 , a loss of $1 was recognized in cost of products sold. During the six months ended June 30, 2011 , a gain of $1 was recognized in net sales and a loss of $3 was recognized in cost of products sold.

(4) Within the Statement of Operations for the three months ended June 30, 2011 , a gain of $14 was recognized in cost of products sold and $4 was recognized as additional income tax expense. During the six months ended June 30, 2011 , a gain of $22 was recognized in cost of products sold and $6 was recognized as additional income tax expense.

For the twelve month period ending June 30, 2013 , a net loss of $56 ( $43 , net of tax) is expected to be reclassified to earnings. No amounts were reclassified during the six months ended June 30, 2012 and 2011 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, 2012 .

Certain derivative financial instruments, including foreign exchange contracts related to intercompany debt, were not designated or did not qualify for hedge accounting; however, they are effective economic hedges as the changes in their fair value, except for time value, are offset by changes in re-measurement of the related hedged items. The Company’s primary use of these derivative instruments is to offset the earnings impact that fluctuations in foreign exchange rates have on certain monetary assets and liabilities denominated in nonfunctional currencies. Changes in fair value of these derivative instruments are immediately recognized in earnings as foreign exchange adjustments.

The impact on earnings from foreign exchange contracts designated as fair value hedges was a loss of less than $1 and a gain of $1 for the three and six months ended June 30, 2012 and gains of $3 and $4 for the three and six months ended June 30, 2011 . The impact on earnings from foreign exchange contracts not designated as hedges were losses of $4 and $3 for the three and six months ended June 30, 2012 and gains of $7 and $19 for the same periods in 2011. These adjustments were reported within translation and foreign exchange in the Consolidated Statements of Operations and were offset by changes in the fair values of the related hedged item.

12
Crown Holdings, Inc.


Net Investment Hedges

During the first half of 2012, the Company designated certain derivative and non-derivative financial instruments (debt) as hedges of its net investment in a euro-based subsidiary to offset €277 ( $350 as of June 30, 2012) of foreign currency exposure related to the investment. The change in value of the hedging instruments is reported in accumulated other comprehensive income within shareholders' equity. The net assets of the Company's euro-based subsidiary are re-measured using the foreign currency exchange rate in effect at the balance sheet date with any adjustment reported in cumulative translation adjustments within accumulated other comprehensive income. As of June 30, 2012, the unrealized foreign currency transaction gain from the re-measurement of the non-derivative financial instruments was a gain of $14 ( $9 , net of tax) and the aggregate fair value of the derivative financial instruments was a loss of $1 with both amounts reported in accumulated other comprehensive income.

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 June 30, 2012 and December 31, 2011 , respectively.
Derivative Assets
Balance Sheet Classification
Fair Value Hierarchy
June 30, 2012
 
December 31, 2011
Derivatives designated as hedges:
 
 
 
 
 
Foreign exchange
Other current assets
2
$
19

 
$9
Commodities
Other current assets
1
6

 
4

Commodities
Other non-current assets
1
—

 
—

Derivatives not designated as hedges:
 
 
 
 

Foreign exchange
Other current assets
2
2

 
6

 
Total
 
$
27

 
$
19

 
 
 
 
 
 
Derivative Liabilities
Balance Sheet Classification
 
 
 
 
Derivatives designated as hedges:
 
 
 
 
 
Foreign exchange
Accounts payable and accrued liabilities
2
$
18

 
$10
Commodities
Accounts payable and accrued liabilities
1
57

 
56

Commodities
Other non-current liabilities
1
12

 
6

Derivatives not designated as hedges:
 
 
 
 

Foreign exchange
Accounts payable and accrued liabilities
2
1

 
10

 
Total
 
$
88

 
$82

The aggregate U.S. dollar-equivalent notional values of outstanding derivative instruments in the Consolidated Balance Sheets at June 30, 2012 and December 31, 2011 were:
 
June 30, 2012
 
December 31, 2011
Derivatives in cash flow hedges:
 
 
 
Foreign exchange
$
650

 
$
480

Commodities
528

 
528

Derivatives in fair value hedges:

 

Foreign exchange
117

 
123

Derivatives in net investment hedges:
 
 
 
Foreign exchange
38

 
 
Derivatives not designated as hedges:

 

Foreign exchange
371

 
965



13
Crown Holdings, Inc.


G.
Restructuring

The Company recorded restructuring charges as follows:
 
Three Months Ended
 
Six Months Ended
 
June 30
 
June 30
 
2012
 
2011
 
2012
 
2011
European Division Headquarters
$
—

 
$
—

 
$
—

 
$
19

North America Food
1

 
—

 
1

 
2

European Food
1

 
—

 
1

 
—

Other European operations
1

 
—

 
1

 
4

 
3

 
—

 
3

 
25


Restructuring charges by type are as follows:
 
Three Months Ended
 
Six Months Ended
 
June 30
 
June 30
 
2012
 
2011
 
2012
 
2011
Termination benefits
$
1

 
$
—

 
$
1

 
$
4

Other exit costs
2

 
—

 
2

 
21

 
$
3

 
$
—

 
$
3

 
$
25


European Division Headquarters

As of June 30, 2012 , the Company incurred costs of $34 which are expected to be the total costs related to the relocation of its European Division headquarters and management to Switzerland in order to benefit from a more centralized management location.

The following table summarizes the restructuring accrual balances and utilization by cost type for the relocation:
 
 
Termination
benefits
 
Other exit
costs
 
Total
Balance at January 1, 2012
$
—

 
$
19

 
$
19

Foreign currency translation
—

 
(1
)
 
(1
)
Balance at June 30, 2012
$
—

 
$
18

 
$
18


Other exit costs represent the estimated employee compensation costs resulting from an intercompany payment related to the relocation. The Company expects to pay these costs over the next 3 years.

North America Food

As of June 30, 2012 , the Company incurred total costs of $56 related to the closure of certain Canadian plants as part of restructuring actions to reduce costs through consolidation of certain U.S. and Canadian operations. These actions are expected to be completed in 2012.

The following table summarizes the restructuring accrual balances and utilization by cost type for these actions:
 
Termination
benefits
 
Other exit
costs
 
Total
Balance at January 1, 2012
$
2

 
$
—

 
$
2

Provisions
—

 
1

 
1

Payments
(1
)
 
(1
)
 
(2
)
Balance at June 30, 2012
$
1

 
$
—

 
$
1





14
Crown Holdings, Inc.


European Food

In the fourth quarter of 2011, the Company reviewed its existing supply and demand profile and long-term plans in Europe.  The Company identified additional restructuring actions to improve profitability, including in its European Food business, by consolidating operations through reducing capacity and headcount.  In December 2011, the Company approved these actions and recorded a charge of $9 . The action is expected to reduce headcount by approximately 121 . The Company expects to incur future additional charges of $2 related to the action which it expects to complete in 2012 at an estimated aggregate cost of $11 . The table below summarizes the restructuring accrual balances and utilization by cost type for this action.
 
Termination
benefits
 
Other exit
costs
 
Total
Balance at January 1, 2012
$
10

 
$
—

 
$
10

Provisions
—

 
1

 
1

Payments
(4
)
 
(1
)
 
(5
)
Balance at June 30, 2012
$
6

 
$
—

 
$
6


Other European operations

In the first quarter of 2011, the Company recorded a charge of $4 to reduce headcount in its European Specialty Packaging segment.  In the fourth quarter of 2011, the Company reviewed its existing supply and demand profile and long-term plans in Europe.  The Company identified additional restructuring actions to improve profitability, primarily in its European Aerosols and Specialty Packaging businesses, by consolidating operations through reducing capacity and headcount.  In December 2011, the Company approved these actions and recorded an additional charge of $41 .  These actions are expected to reduce headcount by approximately 360 and to eliminate approximately 14% of the businesses' capacity. The Company currently expects to incur future additional charges of $8 related to the actions and to complete the actions in 2013 at an estimated aggregate cost of $53 .

The table below summarizes the restructuring accrual balances and utilization by cost type for this action.
 
Termination
benefits
 
Other exit
costs
 
Total
Balance at January 1, 2012
$
46

 
$
—

 
$
46

Provision
1

 
—

 
1

Payments
(5
)
 
—

 
(5
)
Foreign currency translation
(1
)
 
—

 
(1
)
Balance at June 30, 2012
$
41

 
$
—

 
$
41


15
Crown Holdings, Inc.


H.
Debt
The Company’s outstanding debt at June 30, 2012 and December 31, 2011 was as follows.
 
June 30,
2012
 
December 31,
2011
Short-term debt
$
185

 
$
128

Long-term debt

 

Senior secured borrowings:

 

Revolving credit facilities
$
335

 
$
119

Term loan facilities

 

U.S. dollar at LIBOR plus 1.75% due 2016
550

 
550

Euro (€274 at June 30, 2012) at EURIBOR plus 1.75% due 2016
347

 
355

Senior notes and debentures:

 

U.S. dollar 7.625% due 2017
400

 
400

Euro (€500 at June 30, 2012) 7.125% due 2018
633

 
647

U.S. dollar 6.25% due 2021
700

 
700

U.S. dollar 7.375% due 2026
350

 
350

U.S. dollar 7.50% due 2096
64

 
64

Other indebtedness in various currencies
237

 
230

Unamortized discounts
(10
)
 
(11
)
Total long-term debt
3,606

 
3,404

Less: current maturities
(113
)
 
(67
)
Total long-term debt, less current maturities
$
3,493

 
$
3,337


The estimated fair value of the Company’s long-term borrowings, using a market approach incorporating level 2 inputs such as quoted market prices for the same or similar issues, was $3,969 at June 30, 2012 .

I.
Asbestos-Related Liabilities

Crown Cork & Seal Company, Inc. (“Crown Cork”) is one of many defendants in a substantial number of lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to asbestos. These claims arose from the insulation operations of a U.S. company, the majority of whose stock Crown Cork purchased in 1963. Approximately ninety days after the stock purchase, this U.S. company sold its insulation assets and was later merged into Crown Cork.
Prior to 1998, amounts paid to asbestos claimants were covered by a fund made available to Crown Cork under a 1985 settlement with carriers insuring Crown Cork through 1976, when Crown Cork became self-insured. The fund was depleted in 1998 and the Company has no remaining coverage for asbestos-related costs.
In recent years, the states of Alabama, Arizona, Florida, Georgia, Idaho, Indiana, Michigan, Mississippi, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Utah, Wisconsin and Wyoming enacted legislation that limits asbestos-related liabilities under state law of companies such as Crown Cork that allegedly incurred these liabilities because they are successors by corporate merger to companies that had been involved with asbestos. The legislation, which applies to future and, with the exception of Georgia, South Carolina, South Dakota and Wyoming, pending claims, caps asbestos-related liabilities at the fair 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.

16
Crown Holdings, Inc.



On October 22, 2010, the Texas Supreme Court, in a 6-2 decision, reversed a lower court decision, Barbara Robinson v. Crown Cork & Seal Company, Inc., No. 14-04-00658-CV, Fourteenth Court of Appeals, Texas, which had upheld the dismissal of an asbestos-related case against Crown Cork. The Texas Supreme Court held that the Texas legislation was unconstitutional under the Texas Constitution when applied to asbestos-related claims pending against Crown Cork when the legislation was enacted in June of 2003. The Company believes that the decision of the Texas Supreme Court is limited to retroactive application of the Texas legislation to asbestos-related cases that were pending against Crown Cork in Texas on June 11, 2003 and therefore, in its accrual, continues to assign no value to claims filed after June 11, 2003.

In December 2001, the Commonwealth of Pennsylvania enacted legislation that limits the asbestos-related liabilities of Pennsylvania corporations that are successors by corporate merger to companies involved with asbestos. The legislation limits the successor’s liability for asbestos to the acquired company’s asset value adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the acquired company’s adjusted asset value. In November 2004, the legislation was amended to address a Pennsylvania Supreme Court decision (Ieropoli v. AC&S Corporation, et. al., No. 117 EM 2002) which held that the statute violated the Pennsylvania Constitution due to retroactive application. The Company cautions that the limitations of the statute, as amended, are subject to litigation and may not be upheld. 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 , 2012 , the Company paid $10 to settle outstanding claims and had claims activity as follows:
Beginning claims
50,000

New claims
1,500

Settlements or dismissals
(1,000
)
Ending claims
50,500


As of December 31, the Company’s outstanding claims by year of exposure and state filed were:
 
2011
 
2010
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


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- 2011 ), 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.

17
Crown Holdings, Inc.



As of December 31, the percentage of outstanding claims related to claimants alleging serious diseases (primarily
mesothelioma and other malignancies) were as follows:
 
2011
 
2010
 
2009
Total claims
18
%
 
18
%
 
16
%
Pre-1964 claims in states without asbestos legislation
33
%
 
31
%
 
29
%

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 June 30, 2012 .

As of June 30, 2012 , the Company’s accrual for pending and future asbestos-related claims and related legal costs was $ 239 , including $ 186 for unasserted claims. The Company’s accrual includes estimated probable costs for claims through the year 2021 . The Company’s accrual excludes potential costs for claims beyond 2021 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 88% of the claims outstanding at the end of 2011 ), 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).

J.
Commitments and Contingent Liabilities

The Company, along with others in most cases, has been identified by the EPA or a comparable state environmental agency as a Potentially Responsible Party (“PRP”) at a number of sites and has recorded aggregate accruals of $6 for its share of estimated future remediation costs at these sites. The Company has been identified as having either directly or indirectly disposed of commercial or industrial waste at the sites subject to the accrual, and where appropriate and supported by available information, generally has agreed to be responsible for a percentage of future remediation costs based on an estimated volume of materials disposed in proportion to the total materials disposed at each site. The Company has not had monetary sanctions imposed nor has the Company been notified of any potential monetary sanctions at any of the sites.

The Company has also recorded aggregate accruals of $8 for remediation activities at various worldwide locations that are owned by the Company and for which the Company is not a member of a PRP group. Although the Company believes its accruals are adequate to cover its portion of future remediation costs, there can be no assurance that the ultimate payments will not exceed the amount of the Company’s accruals and will not have a material effect on its results of operations, financial position and cash flow. Any possible loss or range of potential loss that may be incurred in excess of the recorded accruals cannot be estimated.

The Company's Italian subsidiaries have received and expect to receive additional 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, 2005 and 2006 and additional assessments are expected to cover periods 2007 through 2009. The expected total assessments resulting from these third party suppliers failing to remit the tax payments are approximately €40 ( $51 at June 30, 2012 ) plus any applicable interest and penalties which the Company estimates may be up to approximately €55 ( $70 at June 30, 2012 ) . In early 2012, the Company received one favorable ruling and two unfavorable rulings from lower level Italian courts related to these assessments. The Company expects these rulings

18
Crown Holdings, Inc.


to be appealed. The Company continues to believe that, if necessary, it should be able to successfully dispute the assessments and demonstrate in the appropriate Italian courts that it has no additional liability for the asserted taxes and related interest and penalties. 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 any additional taxes and related interest and penalties 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 earnings, financial position or cash flow.

The Company has various commitments to purchase materials, supplies and utilities as part of the ordinary conduct of business. The Company’s basic raw materials for its products are steel and aluminum, both of which are purchased from multiple sources. The Company is subject to fluctuations in the cost of these raw materials and has periodically adjusted its selling prices to reflect these movements. There can be no assurance, however, that the Company will be able to fully recover any increases or fluctuations in raw material costs from its customers. The Company also has commitments for standby letters of credit and for purchases of capital assets.

At June 30, 2012 , the Company was party to certain indemnification agreements covering environmental remediation, lease payments and other potential costs associated with properties sold or businesses divested. For agreements with defined liability limits the maximum potential amount of future liability was $11 . 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, 2012 , the Company also had guarantees of $29 related to the residual values of leased assets.

K.
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, 2012 and 2011 , respectively:
 
Three Months Ended
 
Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Net income attributable to Crown Holdings
$
134

 
$
129

 
$
203

 
$
145

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
148.0

 
152.3

 
147.9

 
153.5

Add: dilutive stock options and restricted stock
2.5

 
3.2

 
2.4

 
3.1

Diluted
150.5

 
155.5

 
150.3

 
156.6

Basic earnings per share
$
0.91

 
$
0.85

 
$
1.37

 
$
0.94

Diluted earnings per share
$
0.89

 
$
0.83

 
$
1.35

 
$
0.93


For the three months ended June 30 , 2012 and 2011 , 0.1 million   and 0.0 million contingently issuable common shares were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive. For the six months ended June 30 , 2012 and 2011 , 0.2 million and 0.0 million contingently issuable common shares were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive.


L.
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:

19
Crown Holdings, Inc.


 
Three Months Ended
 
Six Months Ended
 
  June 30
 
  June 30
Pension Benefits – U.S. Plans
2012
 
2011
 
2012
 
2011
Service cost
$
3

 
$
3

 
$
6

 
$
6

Interest cost
17

 
18

 
34

 
36

Expected return on plan assets
(23
)
 
(20
)
 
(46
)
 
(40
)
Recognized prior service cost
—

 
—

 
—

 
1

Recognized net loss
14

 
13

 
28

 
24

Net periodic cost
$
11

 
$
14

 
$
22

 
$
27

 
 
Three Months Ended
 
Six Months Ended
 
  June 30
 
  June 30
Pension Benefits – Non-U.S. Plans
2012
 
2011
 
2012
 
2011
Service cost
$
7

 
$
6

 
$
14

 
$
12

Interest cost
38

 
40

 
76

 
79

Expected return on plan assets
(46
)
 
(49
)
 
(92
)
 
(97
)
Recognized prior service cost
1

 
—

 
1

 
1

Recognized net loss
14

 
14

 
28

 
27

Net periodic cost
$
14

 
$
11

 
$
27

 
$
22


 
Three Months Ended
 
Six Months Ended
 
  June 30
 
  June 30
Other Postretirement Benefits
2012
 
2011
 
2012
 
2011
Service cost
$
1

 
$
3

 
$
2

 
$
5

Interest cost
4

 
5

 
8

 
11

Recognized prior service credit
(11
)
 
(9
)
 
(22
)
 
(17
)
Recognized net loss
4

 
4

 
8

 
7

Net periodic cost
$
(2
)
 
$
3

 
$
(4
)
 
$
6



M.
Accelerated Share Repurchase

In December 2011, the Company entered into an agreement to repurchase shares of its common stock under an accelerated share repurchase program. Pursuant to the agreement, the Company initially purchased 2,771,004 shares for $100 . In April 2012, the Company received an additional 4,653 shares based on its volume-weighted average stock price during the term of the transaction.
In July 2012, the Company entered into an agreement to purchase an aggregate of $200 shares of its common stock under an accelerated repurchase program. The actual number of shares repurchased will be determined at the completion of the term of the agreement subject to provisions that establish a minimum number of shares to be repurchased based on the volume-weighted average share price of the Company's common stock over an initial hedge period and a maximum share purchase price.



20
Crown Holdings, Inc.


N.
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
 
2012
 
2011
 
2012
 
2011
U.S. statutory rate at 35%
$
73

 
$
74

 
$
116

 
$
103

Tax on foreign income
(22
)
 
(23
)
 
(33
)
 
(36
)
Valuation allowance
1

 
2

 
3

 
12

Tax law changes
—

 
—

 
—

 
(3
)
Other items, net
(1
)
 
1

 
(3
)
 
19

Income tax provision
$
51

 
$
54

 
$
83

 
$
95


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.

O.
Asset Impairments and Sales

For the three and six months ended June 30, 2012, the Company recognized a gain of $10 related to insurance proceeds received for property damage incurred in the 2011 flooding of the Company's beverage can plant in Thailand.

P.
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, 2012 and 2011 :
 
External Sales
 
External Sales
 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Americas Beverage
$
593

 
$
591

 
$
1,127

 
$
1,103

North America Food
213

 
217

 
413

 
405

European Beverage
472

 
500

 
834

 
840

European Food
434

 
509

 
836

 
931

European Specialty Packaging
97

 
119

 
187

 
219

Total reportable segments
1,809

 
1,936

 
3,397

 
3,498

Non-reportable segments
375

 
345

 
734

 
665

Total
$
2,184

 
$
2,281

 
$
4,131

 
$
4,163


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, the Company's food can and closures business in Thailand and the Company's tooling and equipment operations in the U.S. and United Kingdom.

21
Crown Holdings, Inc.


 
Intersegment Sales
 
Intersegment Sales
 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Americas Beverage
$
25

 
$
26

 
$
47

 
$
43

North America Food
2

 
3

 
5

 
6

European Beverage
6

 
—

 
12

 
—

European Food
29

 
34

 
55

 
62

European Specialty Packaging
11

 
19

 
22

 
37

Total reportable segments
73

 
82

 
141

 
148

Non-reportable segments
12

 
17

 
27

 
38

Total
$
85

 
$
99

 
$
168

 
$
186


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
 
Segment Income
 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Americas Beverage
$
78

 
$
77

 
$
147

 
$
140

North America Food
41

 
38

 
73

 
66

European Beverage
64

 
70

 
106

 
115

European Food
47

 
63

 
87

 
115

European Specialty Packaging
10

 
12

 
11

 
19

Total reportable segments
$
240

 
$
260

 
$
424

 
$
455


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, 2012 and 2011 follows:
 
Segment Income
 
Segment Income
 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012

2011
 
2012

2011
Segment income of reportable segments
$
240

 
$
260

 
$
424

 
$
455

Segment income of non-reportable segments
54

 
55

 
107

 
112

Corporate and unallocated items
(44
)
 
(44
)
 
(100
)
 
(106
)
Provision for restructuring
(3
)
 
—

 
(3
)
 
(25
)
Asset impairments and sales
10

 
—

 
10

 
—

Loss from early extinguishments of debt
—

 
(2
)
 
—

 
(32
)
Interest expense
(55
)
 
(60
)
 
(113
)
 
(116
)
Interest income
1

 
2

 
3

 
6

Translation and foreign exchange
5

 
(1
)
 
2

 
(1
)
Income before income taxes and equity earnings
$
208


$
210

 
$
330

 
$
293


For the six months ended June 30, 2012, intercompany profit of $1 was eliminated within segment income of non-reportable segments. For the three and six months ended June 30, 2011 , intercompany profit of $1 and $2 was eliminated.

“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.

22
Crown Holdings, Inc.




Q.
Condensed Combining Financial Information
Crown European Holdings SA (Issuer), a wholly owned subsidiary of the Company, has €500 ( $633 at June 30, 2012 ) principal amount of 7.125% senior notes due 2018 outstanding that are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent) and certain subsidiaries. The guarantors are wholly owned by the Company and the guarantees are made on a joint and several basis. The guarantor column includes financial information for all subsidiaries in the United States (except for an insurance subsidiary and a receivable securitization subsidiary), substantially all subsidiaries in Belgium, Canada, France, Germany, Mexico, Switzerland and the United Kingdom, and a subsidiary in the Netherlands. The following condensed combining financial statements:
• statements of comprehensive income for the three and six months ended June 30, 2012 and 2011 ,
• balance sheets as of June 30, 2012 and December 31, 2011 , and
• statements of cash flows for the six months ended June 30, 2012 and 2011
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.
During the second quarter of 2012, the Company revised its presentation of the condensed combining balance sheet at December 31, 2011 to reclassify a consolidation entry to net certain value added tax receivables and payables from non-guarantor subsidiaries to guarantor subsidiaries. The impact was a $226 decrease to both receivables and accounts payable and accrued liabilities of guarantor subsidiaries with a corresponding increase to non-guarantor subsidiaries. The Company deemed the revision to be immaterial for the previously issued financial statements and therefore, revised the condensed combining balance sheet included in this filing.







CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the three months ended June 30, 2012
(in millions)
 

23
Crown Holdings, Inc.


 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net sales

 

 
$
1,188

 
$
996

 

 
$
2,184

Cost of products sold, excluding depreciation and amortization

 

 
972

 
827

 

 
1,799

Depreciation and amortization

 

 
20

 
25

 

 
45

Gross profit
 
 
 
 
196

 
144

 
 
 
340

Selling and administrative expense

 
$
(1
)
 
67

 
24

 

 
90

Provision for restructuring

 

 
2

 
1

 

 
3

Asset impairments and sales

 

 
(1
)
 
(9
)
 

 
(10
)
Net interest expense

 
13

 
32

 
9

 

 
54

Technology royalty

 

 
(12
)
 
12

 

 
—

Translation and foreign exchange

 

 
(2
)
 
(3
)
 

 
(5
)
Income/(loss) before income taxes
 
 
(12
)
 
110

 
110

 
 
 
208

Provision for income taxes

 

 
36

 
15

 

 
51

Equity earnings in affiliates
$
134

 
65

 
60

 

 
$
(259
)
 
—

Net income
134

 
53

 
134

 
95

 
(259
)
 
157

Net income attributable to noncontrolling interests

 

 

 
(23
)
 

 
(23
)
Net income attributable to Crown Holdings
$
134

 
$
53

 
$
134

 
$
72

 
$
(259
)
 
$
134

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
93

 
$
6

 
$
93

 
$
16

 
$
(97
)
 
$
111

Comprehensive income attributable to noncontrolling interests


 


 


 
(18
)
 


 
(18
)
Comprehensive income attributable to Crown Holdings
$
93

 
$
6

 
$
93

 
$
(2
)
 
$
(97
)
 
$
93



24
Crown Holdings, Inc.


CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
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

 
—

 
851

 
1,014

 

 
1,865

Depreciation and amortization

 

 
21

 
24

 

 
45

Gross profit
 
 
—

 
211

 
160

 
 
 
371

Selling and administrative expense

 
—

 
78

 
22

 

 
100

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/(loss) 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

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
138

 
$
80

 
$
138

 
$
114

 
$
(305
)
 
$
165

Comprehensive income attributable to noncontrolling interests
—

 
—

 
—

 
(27
)
 
—

 
(27
)
Comprehensive income attributable to Crown Holdings
$
138

 
$
80

 
$
138

 
$
87

 
$
(305
)
 
$
138



25
Crown Holdings, Inc.



CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the six months ended June 30, 2012
(in millions)
 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net sales

 

 
$
2,277

 
$
1,854

 

 
$
4,131

Cost of products sold, excluding depreciation and amortization

 
 
 
1,883

 
1,534

 

 
3,417

Depreciation and amortization

 

 
38

 
49

 

 
87

Gross profit
 
 
 
 
356

 
271

 
 
 
627

Selling and administrative expense

 
$
(1
)
 
150

 
47

 

 
196

Provision for restructuring

 

 
2

 
1

 

 
3

Asset impairments and sales

 

 
(1
)
 
(9
)
 

 
(10
)
Net interest expense

 
28

 
63

 
19

 

 
110

Technology royalty

 

 
(19
)
 
19

 

 
—

Translation and foreign exchange

 

 
—

 
(2
)
 

 
(2
)
Income/(loss) before income taxes
 
 
(27
)
 
161

 
196

 
 
 
330

Provision for income taxes

 
—

 
54

 
29

 

 
83

Equity earnings in affiliates
$
203

 
114

 
96

 

 
$
(413
)
 
—

Net income
203

 
87

 
203

 
167

 
(413
)
 
247

Net income attributable to noncontrolling interests

 

 

 
(44
)
 

 
(44
)
Net income attributable to Crown Holdings
$
203

 
$
87

 
$
203

 
$
123

 
$
(413
)
 
$
203

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
237

 
$
104

 
$
237

 
$
159

 
$
(458
)
 
$
279

Comprehensive income attributable to noncontrolling interests


 


 


 
(42
)
 


 
(42
)
Comprehensive income attributable to Crown Holdings
$
237

 
$
104

 
$
237

 
$
117

 
$
(458
)
 
$
237



26
Crown Holdings, Inc.





CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
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

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
220

 
$
157

 
$
220

 
$
262

 
$
(581
)
 
$
278

Comprehensive income attributable to noncontrolling interests


 


 


 
(58
)
 


 
(58
)
Comprehensive income attributable to Crown Holdings
$
220

 
$
157

 
$
220

 
$
204

 
$
(581
)
 
$
220



27
Crown Holdings, Inc.



CONDENSED COMBINING BALANCE SHEET

As of June 30, 2012
(in millions)

 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents

 

 
$
35

 
$
195

 

 
$
230

Receivables, net

 


 
326

 
868

 

 
1,194

Intercompany receivables

 
$
1

 
78

 
31

 
$
(110
)
 
 
Inventories

 

 
657

 
615

 

 
1,272

Prepaid expenses and other current assets
$
2

 
5

 
149

 
57

 

 
213

Total current assets
2

 
6

 
1,245

 
1,766

 
(110
)
 
2,909

 
 
 
 
 
 
 
 
 
 
 
 
Intercompany debt receivables

 
1,678

 
3,711

 
377

 
(5,766
)
 
 
Investments
453

 
3,084

 
(440
)
 

 
(3,097
)
 
 
Goodwill

 

 
1,396

 
548

 

 
1,944

Property, plant and equipment, net

 

 
595

 
1,205

 

 
1,800

Other non-current assets

 
25

 
466

 
80

 

 
571

Total
$
455

 
$
4,793

 
$
6,973

 
$
3,976

 
$
(8,973
)
 
$
7,224

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
Short-term debt

 
$
10

 
$
8

 
$
167

 

 
$
185

Current maturities of long-term debt

 
17

 
28

 
68

 

 
113

Accounts payable and accrued liabilities
$
12

 
21

 
1,087

 
859

 

 
1,979

Intercompany payables

 
—

 
31

 
79

 
$
(110
)
 
 
Total current liabilities
12

 
48

 
1,154

 
1,173

 
(110
)
 
2,277

 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, excluding current maturities

 
962

 
2,362

 
169

 

 
3,493

Long-term intercompany debt
670

 
2,549

 
1,754

 
793

 
(5,766
)
 
 
Postretirement and pension liabilities

 

 
928

 
18

 

 
946

Other non-current liabilities

 

 
322

 
175

 

 
497

Commitments and contingent liabilities

 

 

 

 

 
 
Noncontrolling interests

 

 
—

 
238

 

 
238

Crown Holdings shareholders’ equity/(deficit)
(227
)
 
1,234

 
453

 
1,410

 
(3,097
)
 
(227
)
Total equity/(deficit)
(227
)
 
1,234

 
453

 
1,648

 
(3,097
)
 
11

Total
$
455

 
$
4,793

 
$
6,973

 
$
3,976

 
$
(8,973
)
 
$
7,224



28
Crown Holdings, Inc.


CONDENSED COMBINING BALANCE SHEET
As of December 31, 2011
(in millions)

 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents

 

 
$
54

 
$
288

 

 
$
342

Receivables, net

 


 
230

 
718

 

 
948

Intercompany receivables

 
$
2

 
60

 
23

 
$
(85
)
 
 
Inventories

 

 
615

 
533

 

 
1,148

Prepaid expenses and other current assets


 
7

 
129

 
29

 

 
165

Total current assets
—

 
9

 
1,088

 
1,591

 
(85
)
 
2,603

 
 
 
 
 
 
 
 
 
 
 
 
Intercompany debt receivables

 
1,590

 
3,514

 
327

 
(5,431
)
 
 
Investments
$
215

 
3,007

 
(577
)
 

 
(2,645
)
 
 
Goodwill

 

 
1,396

 
556

 

 
1,952

Property, plant and equipment, net

 

 
604

 
1,147

 

 
1,751

Other non-current assets

 
13

 
491

 
58

 

 
562

Total
$
215

 
$
4,619

 
$
6,516

 
$
3,679

 
$
(8,161
)
 
$
6,868

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
Short-term debt

 
$
6

 
$
14

 
$
108

 

 
$
128

Current maturities of long-term debt

 


 
1

 
66

 

 
67

Accounts payable and accrued liabilities
$
20

 
20

 
1,124

 
926

 

 
2,090

Intercompany payables

 
1

 
22

 
62

 
$
(85
)
 
 
Total current liabilities
20

 
27

 
1,161

 
1,162

 
(85
)
 
2,285

 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, excluding current maturities

 
1,002

 
2,173

 
162

 

 
3,337

Long-term intercompany debt
668

 
2,481

 
1,664

 
618

 
(5,431
)
 
 
Postretirement and pension liabilities

 

 
986

 
10

 

 
996

Other non-current liabilities

 

 
321

 
168

 

 
489

Commitments and contingent liabilities

 

 

 

 

 
 
Noncontrolling interests

 

 
(4
)
 
238

 

 
234

Crown Holdings shareholders’ equity/(deficit)
(473
)
 
1,109

 
215

 
1,321

 
(2,645
)
 
(473
)
Total equity/(deficit)
(473
)
 
1,109

 
211

 
1,559

 
(2,645
)
 
(239
)
Total
$
215

 
$
4,619

 
$
6,516

 
$
3,679

 
$
(8,161
)
 
$
6,868



29
Crown Holdings, Inc.


CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2012
(in millions)
 
 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net cash provided by/(used for) operating activities
$
1

 
$
(26
)
 
$
(95
)
 
$
(96
)
 

 
$
(216
)
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures

 

 
(29
)
 
(110
)
 

 
(139
)
Intercompany investing activities

 
34

 
55

 


 
$
(89
)
 
—

Insurance proceeds

 

 


 
23

 

 
23

Proceeds from sale of property, plant and equipment

 

 
2

 

 

 
2

Other, net

 

 


 
(14
)
 

 
(14
)
Net cash provided by/(used for) investing activities
—

 
34

 
28

 
(101
)
 
(89
)
 
(128
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
 
Proceeds from long-term debt

 


 


 
42

 

 
42

Payments of long-term debt

 


 


 
(32
)
 

 
(32
)
Net change in revolving credit facility and short-term debt

 
4

 
210

 
60

 

 
274

Net change in long-term intercompany balances
2

 
(20
)
 
(115
)
 
133

 

 
—

Common stock issued
4

 

 

 

 

 
4

Common stock repurchased
(7
)
 

 

 

 

 
(7
)
Dividends paid

 

 
(34
)
 
(55
)
 
89

 
 
Dividends paid to noncontrolling interests

 

 

 
(38
)
 

 
(38
)
Other

 
8

 
(13
)
 
—

 

 
(5
)
Net cash provided by/(used for) financing activities
(1
)
 
(8
)
 
48

 
110

 
89

 
238

Effect of exchange rate changes on cash and cash equivalents

 

 
 
 
(6
)
 
 
 
(6
)
Net change in cash and cash equivalents
—

 
—

 
(19
)
 
(93
)
 
—

 
(112
)
Cash and cash equivalents at January 1

 

 
54

 
288

 

 
342

Cash and cash equivalents at June 30
$
—

 
$
—

 
$
35

 
$
195

 
$
—

 
$
230



30
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 cash provided by/(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
)
 
 
Other

 

 
2

 


 

 
2

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

Net change in long-term intercompany balances
206

 
(63
)
 
(488
)
 
345

 

 
 
Debt issue costs


 

 
(16
)
 

 

 
(16
)
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
$
—

 
$
—

 
$
62

 
$
359

 
$
—

 
$
421



31
Crown Holdings, Inc.


Crown Cork & Seal Company, Inc. (Issuer), a wholly owned subsidiary, has $350 principal amount of 7.375% senior notes due 2026 and $64 principal amount of 7.5% senior notes due 2096 outstanding that are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent). No other subsidiary guarantees the debt. The following condensed combining financial statements:
• statements of comprehensive income for the three and six months ended June 30, 2012 and 2011 ,
• balance sheets as of June 30, 2012 and December 31, 2011 , and
• statements of cash flows for the six months ended June 30, 2012 and 2011
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.


CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the three months ended June 30, 2012
(in millions)

 
Parent
 
Issuer
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net sales

 

 
$
2,184

 

 
$
2,184

Cost of products sold, excluding depreciation and amortization

 

 
1,799

 

 
1,799

Depreciation and amortization

 

 
45

 

 
45

Gross profit
 
 
 
 
340

 
 
 
340

Selling and administrative expense

 
$
2

 
88

 

 
90

 Provision for restructuring
 
 
 
 
3

 
 
 
3

 Asset impairments and sales
 
 
 
 
(10
)
 
 
 
(10
)
Net interest expense

 
22

 
32

 

 
54

Translation and foreign exchange

 

 
(5
)
 

 
(5
)
Income/(loss) before income taxes
 
 
(24
)
 
232

 
 
 
208

Provision for/(benefit from) income taxes

 
(3
)
 
54

 

 
51

Equity earnings in affiliates
$
134

 
155

 


 
$
(289
)
 
—

Net income
134

 
134

 
178

 
(289
)
 
157

Net income attributable to noncontrolling interests

 

 
(23
)
 

 
(23
)
Net income attributable to Crown Holdings
$
134

 
$
134

 
$
155

 
$
(289
)
 
$
134

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
93

 
$
93

 
$
133

 
$
(208
)
 
$
111

Comprehensive income attributable to noncontrolling interests


 


 
(18
)
 


 
(18
)
Comprehensive income attributable to Crown Holdings
$
93

 
$
93

 
$
115

 
$
(208
)
 
$
93



32
Crown Holdings, Inc.


CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
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

Gross profit
 
 
 
 
371

 
 
 
371

Selling and administrative expense

 
$
3

 
97

 

 
100

Loss from early extinguishment of debt

 

 
2

 

 
2

Net interest expense

 
21

 
37

 

 
58

Translation and foreign exchange

 

 
1

 

 
1

Income/(loss) before income taxes
 
 
(24
)
 
234

 
 
 
210

Provision for/(benefit from) income taxes

 
2

 
52

 

 
54

Equity earnings in affiliates
$
129

 
155

 

 
$
(284
)
 
—

Net income
129

 
129

 
182

 
(284
)
 
156

Net income attributable to noncontrolling interests

 

 
(27
)
 

 
(27
)
Net income attributable to Crown Holdings
$
129

 
$
129

 
$
155

 
$
(284
)
 
$
129

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
138

 
$
138

 
$
190

 
$
(301
)
 
$
165

Comprehensive income attributable to noncontrolling interests


 


 
(27
)
 


 
(27
)
Comprehensive income attributable to Crown Holdings
$
138

 
$
138

 
$
163

 
$
(301
)
 
$
138



33
Crown Holdings, Inc.



CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the six months ended June 30, 2012
(in millions)

 
Parent
 
Issuer
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net sales

 

 
$
4,131

 

 
$
4,131

Cost of products sold, excluding depreciation and amortization

 

 
3,417

 

 
3,417

Depreciation and amortization

 

 
87

 

 
87

Gross profit
—

 
—

 
627

 
—

 
627

Selling and administrative expense

 
$
5

 
191

 

 
196

Provision for restructuring

 

 
3

 

 
3

Asset impairments and sales

 

 
(10
)
 

 
(10
)
Net interest expense

 
45

 
65

 

 
110

Translation and foreign exchange

 

 
(2
)
 

 
(2
)
Income/(loss) before income taxes
 
 
(50
)
 
380

 
 
 
330

Provision for/(benefit from) income taxes

 
(7
)
 
90

 

 
83

Equity earnings in affiliates
$
203

 
246

 


 
$
(449
)
 
—

Net income
203

 
203

 
290

 
(449
)
 
247

Net income attributable to noncontrolling interests

 

 
(44
)
 

 
(44
)
Net income attributable to Crown Holdings
$
203

 
$
203

 
$
246

 
$
(449
)
 
$
203

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
237

 
$
237

 
$
323

 
$
(518
)
 
$
279

Comprehensive income attributable to noncontrolling interests


 


 
(42
)
 


 
(42
)
Comprehensive income attributable to Crown Holdings
$
237

 
$
237

 
$
281

 
$
(518
)
 
$
237


34
Crown Holdings, Inc.



CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the six months ended June 30, 2011
(in millions)

 
Parent
 
Issuer
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net Sales

 

 
$
4,163

 

 
$
4,163

Cost of products sold, excluding depreciation and amortization

 

 
3,415

 

 
3,415

Depreciation and amortization

 

 
85

 

 
85

Gross profit
 
 
 
 
663

 
 
 
663

Selling and administrative expense

 
$
5

 
197

 

 
202

Provision for restructuring

 

 
25

 

 
25

Loss from early extinguishment of debt

 

 
32

 

 
32

Net interest expense

 
42

 
68

 

 
110

Translation and foreign exchange

 

 
1

 

 
1

Income/(loss) before income taxes
 
 
(47
)
 
340

 
 
 
293

Provision for/(benefit from) income taxes

 
(5
)
 
100

 

 
95

Equity earnings in affiliates
$
145

 
187

 

 
$
(332
)
 
—

Net income
145

 
145

 
240

 
(332
)
 
198

Net income attributable to noncontrolling interests

 

 
(53
)
 

 
(53
)
Net income attributable to Crown Holdings
$
145

 
$
145

 
$
187

 
$
(332
)
 
$
145

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
220

 
$
220

 
$
319

 
$
(481
)
 
$
278

Comprehensive income attributable to noncontrolling interests


 


 
(58
)
 


 
(58
)
Comprehensive income attributable to Crown Holdings
$
220

 
$
220

 
$
261

 
$
(481
)
 
$
220




35
Crown Holdings, Inc.



CONDENSED COMBINING BALANCE SHEET
As of June 30, 2012
(in millions)
 
Parent
 
Issuer
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Assets
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents

 

 
$
230

 

 
$
230

Receivables, net

 

 
1,194

 

 
1,194

Inventories

 

 
1,272

 

 
1,272

Prepaid expenses and other current assets
$
2

 
$
76

 
135

 

 
213

Total current assets
2

 
76

 
2,831

 
 
 
2,909

 
 
 
 
 
 
 
 
 
 
Intercompany debt receivables

 

 
1,400

 
$
(1,400
)
 
 
Investments
453

 
1,445

 

 
(1,898
)
 
 
Goodwill

 

 
1,944

 

 
1,944

Property, plant and equipment, net

 

 
1,800

 

 
1,800

Other non-current assets

 
366

 
205

 

 
571

Total
$
455

 
$
1,887

 
$
8,180

 
$
(3,298
)
 
$
7,224

 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
Short-term debt

 

 
$
185

 

 
$
185

Current maturities of long-term debt

 

 
113

 

 
113

Accounts payable and accrued liabilities
$
12

 
$
28

 
1,939

 

 
1,979

Total current liabilities
12

 
28

 
2,237

 
 
 
2,277

 
 
 
 
 
 
 
 
 
 
Long-term debt, excluding current maturities

 
411

 
3,082

 

 
3,493

Long-term intercompany debt
670

 
730

 

 
$
(1,400
)
 

Postretirement and pension liabilities

 

 
946

 

 
946

Other non-current liabilities

 
265

 
232

 

 
497

Commitments and contingent liabilities

 

 

 

 

Noncontrolling interests

 

 
238

 

 
238

Crown Holdings shareholders’ equity/(deficit)
(227
)
 
453

 
1,445

 
(1,898
)
 
(227
)
Total equity/(deficit)
(227
)
 
453

 
1,683

 
(1,898
)
 
11

Total
$
455

 
$
1,887

 
$
8,180

 
$
(3,298
)
 
$
7,224



36
Crown Holdings, Inc.


CONDENSED COMBINING BALANCE SHEET
As of December 31, 2011
(in millions)

 
Parent
 
Issuer
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Assets
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents

 

 
$
342

 

 
$
342

Receivables, net

 

 
948

 

 
948

Inventories

 

 
1,148

 

 
1,148

Prepaid expenses and other current assets


 
$
76

 
89

 

 
165

Total current assets
—

 
76

 
2,527

 
 
 
2,603

 
 
 
 
 
 
 
 
 
 
Intercompany debt receivables

 

 
1,391

 
$
(1,391
)
 
 
Investments
$
215

 
1,208

 

 
(1,423
)
 
 
Goodwill

 

 
1,952

 

 
1,952

Property, plant and equipment, net

 

 
1,751

 

 
1,751

Other non-current assets

 
376

 
186

 

 
562

Total
$
215

 
$
1,660

 
$
7,807

 
$
(2,814
)
 
$
6,868

 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
Short-term debt

 

 
$
128

 

 
$
128

Current maturities of long-term debt

 

 
67

 

 
67

Accounts payable and accrued liabilities
$
20

 
$
40

 
2,030

 

 
2,090

Total current liabilities
20

 
40

 
2,225

 
 
 
2,285

 
 
 
 
 
 
 
 
 
 
Long-term debt, excluding current maturities

 
411

 
2,926

 

 
3,337

Long-term intercompany debt
668

 
723

 

 
$
(1,391
)
 
 
Postretirement and pension liabilities

 

 
996

 

 
996

Other non-current liabilities

 
271

 
218

 

 
489

Commitments and contingent liabilities

 

 

 

 
 
Noncontrolling interests

 

 
234

 

 
234

Crown Holdings shareholders’ equity/(deficit)
(473
)
 
215

 
1,208

 
(1,423
)
 
(473
)
Total equity/(deficit)
(473
)
 
215

 
1,442

 
(1,423
)
 
(239
)
Total
$
215

 
$
1,660

 
$
7,807

 
$
(2,814
)
 
$
6,868



37
Crown Holdings, Inc.


CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2012
(in millions)

 
Parent
 
Issuer
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net cash provide by/(used for) operating activities
$
1

 
$
(51
)
 
$
(166
)
 

 
$
(216
)
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Capital expenditures

 

 
(139
)
 

 
(139
)
Intercompany investing activities

 
43

 


 
$
(43
)
 
—

Insurance proceeds

 

 
23

 

 
23

Proceeds from sale of property, plant and equipment
 
 
 
 
2

 
 
 
2

Other

 

 
(14
)
 

 
(14
)
Net cash provided by/(used for) investing activities
—

 
43

 
(128
)
 
(43
)
 
(128
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Proceeds from long-term debt

 

 
42

 

 
42

Payments of long-term debt

 

 
(32
)
 

 
(32
)
Net change in revolving credit facility and short-term debt

 

 
274

 

 
274

Net change in long-term intercompany balances
2

 
8

 
(10
)
 

 
—

Common stock issued
4

 

 

 

 
4

Common stock repurchased
(7
)
 

 

 

 
(7
)
Dividends paid

 

 
(43
)
 
43

 
 
Dividend paid to noncontrolling interests

 

 
(38
)
 

 
(38
)
Other

 

 
(5
)
 

 
(5
)
Net cash provided by/(used for) financing activities
(1
)
 
8

 
188

 
43

 
238

Effect of exchange rate changes on cash and cash equivalents

 

 
(6
)
 

 
(6
)
Net change in cash and cash equivalents
—

 
—

 
(112
)
 
—

 
(112
)
Cash and cash equivalents at January 1

 

 
342

 

 
342

Cash and cash equivalents at June 30
$
—

 
$
—

 
$
230

 
$
—

 
$
230



38
Crown Holdings, Inc.


CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2011
(in millions)

 
Parent
 
Issuer
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net cash provided by/(used for) operating activities
$
(3
)
 
$
(43
)
 
$
(201
)
 

 
$
(247
)
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Capital expenditures

 

 
(184
)
 

 
(184
)
Change in restricted cash
 
 
 
 
(125
)
 
 
 
(125
)
Intercompany investing activities

 
31

 


 
$
(31
)
 
 
Proceeds from sale of property, plant and equipment

 

 
2

 

 
2

Net cash provided by/(used for) investing activities
 
 
31

 
(307
)
 
(31
)
 
(307
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Proceeds from long-term debt

 

 
1,416

 

 
1,416

Payments of long-term debt

 

 
(922
)
 

 
(922
)
Net change in revolving credit facility and short-term debt

 

 
248

 

 
248

Net change in long-term intercompany balances
206

 
12

 
(218
)
 

 
 
Debt issue costs

 

 
(16
)
 

 
(16
)
Common stock issued
9

 

 

 

 
9

Common stock repurchased
(212
)
 

 

 

 
(212
)
Dividends paid

 

 
(31
)
 
31

 
 
Purchase of noncontrolling interests

 

 
(9
)
 

 
(9
)
Dividend paid to noncontrolling interests

 

 
(38
)
 

 
(38
)
Other

 

 
18

 

 
18

Net cash provided by/(used for) financing activities
3

 
12

 
448

 
31

 
494

Effect of exchange rate changes on cash and cash equivalents

 

 
18

 

 
18

Net change in cash and cash equivalents
—

 
—

 
(42
)
 
—

 
(42
)
Cash and cash equivalents at January 1

 

 
463

 

 
463

Cash and cash equivalents at June 30
$
—

 
$
—

 
$
421

 
$
—

 
$
421



39
Crown Holdings, Inc.


Crown Americas, LLC, Crown Americas Capital Corp. II and Crown Americas Capital Corp. III (collectively, the Issuers), wholly owned subsidiaries of the Company, have outstanding $400 principal amount of 7.625% senior notes due 2017 and $700 principal amount of 6.25% senior notes due 2021 , all of which are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent) and substantially all subsidiaries in the United States. The guarantors are wholly owned by the Company and the guarantees are made on a joint and several basis. The following condensed combining financial statements:
•
statements of comprehensive income for the three and six months ended June 30, 2012 and 2011 ,
•
balance sheets as of June 30, 2012 and December 31, 2011 , and
•
statements of cash flows for the six months ended June 30, 2012 and 2011
are presented on the following pages to comply with the Company’s requirements under Rule 3-10 of Regulation S-X.


CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the three months ended June 30, 2012
(in millions)

 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net sales

 

 
$
600

 
$
1,584

 

 
$
2,184

Cost of products sold, excluding depreciation and amortization

 

 
473

 
1,326

 

 
1,799

Depreciation and amortization

 

 
10

 
35

 

 
45

Gross profit
 
 
 
 
117

 
223

 
 
 
340

Selling and administrative expense

 
$
1

 
32

 
57

 

 
90

Provision for restructuring

 

 
1

 
2

 

 
3

Asset impairments and sales

 

 
(1
)
 
(9
)
 

 
(10
)
Net interest expense

 
13

 
23

 
18

 

 
54

Technology royalty

 

 
(10
)
 
10

 

 
 
Translation and foreign exchange

 

 

 
(5
)
 

 
(5
)
Income/(loss) before income taxes
 
 
(14
)
 
72

 
150

 
 
 
208

Provision for/(benefit from) income taxes

 
(5
)
 
34

 
22

 

 
51

Equity earnings in affiliates
$
134

 
61

 
96

 

 
$
(291
)
 
—

Net income
134

 
52

 
134

 
128

 
(291
)
 
157

Net income attributable to noncontrolling interests

 

 

 
(23
)
 

 
(23
)
Net income attributable to Crown Holdings
$
134

 
$
52

 
$
134

 
$
105

 
$
(291
)
 
$
134

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
93

 
$
59

 
$
93

 
$
75

 
$
(209
)
 
$
111

Comprehensive income attributable to noncontrolling interests


 


 


 
(18
)
 


 
(18
)
Comprehensive income attributable to Crown Holdings
$
93

 
$
59

 
$
93

 
$
57

 
$
(209
)
 
$
93



40
Crown Holdings, Inc.


CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the three months ended June 30, 2011
(in millions)

 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net sales

 

 
$
513

 
$
1,768

 

 
$
2,281

Cost of products sold, excluding depreciation and amortization

 

 
398

 
1,467

 

 
1,865

Depreciation and amortization

 

 
9

 
36

 

 
45

Gross profit
 
 
 
 
106

 
265

 
 
 
371

Selling and administrative expense

 
$
1

 
34

 
65

 

 
100

Loss from early extinguishment of debt

 
—

 
2

 


 

 
2

Net interest expense

 
14

 
18

 
26

 

 
58

Technology royalty

 

 
(13
)
 
13

 

 
 
Translation and foreign exchange

 

 

 
1

 

 
1

Income/(loss) before income taxes
 
 
(15
)
 
65

 
160

 
 
 
210

Provision for/(benefit from) income taxes

 
(5
)
 
(17
)
 
76

 

 
54

Equity earnings in affiliates
$
129

 
90

 
47

 

 
$
(266
)
 
 
Net income
129

 
80

 
129

 
84

 
(266
)
 
156

Net income attributable to noncontrolling interests

 

 

 
(27
)
 

 
(27
)
Net income attributable to Crown Holdings
$
129

 
$
80

 
$
129

 
$
57

 
$
(266
)
 
$
129

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
138

 
$
85

 
$
138

 
$
59

 
$
(255
)
 
$
165

Comprehensive income attributable to noncontrolling interests
—

 
—

 
—

 
(27
)
 
—

 
(27
)
Comprehensive income attributable to Crown Holdings
$
138

 
$
85

 
$
138

 
$
32

 
$
(255
)
 
$
138



41
Crown Holdings, Inc.



CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the six months ended June 30, 2012
(in millions)

 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net sales

 

 
$
1,140

 
$
2,991

 

 
$
4,131

Cost of products sold, excluding depreciation and amortization

 

 
913

 
2,504

 

 
3,417

Depreciation and amortization

 

 
20

 
67

 

 
87

Gross profit
 
 
 
 
207

 
420

 
 
 
627

Selling and administrative expense
 
 
$
3

 
71

 
122

 
 
 
196

Provision for restructuring
 
 
 
 
1

 
2

 
 
 
3

Asset impairments and sales
 
 
 
 
(1
)
 
(9
)
 
 
 
(10
)
Net interest expense
 
 
26

 
45

 
39

 
 
 
110

Technology royalty
 
 
 
 
(20
)
 
20

 
 
 
 
Translation and foreign exchange
 
 
 
 
 
 
(2
)
 
 
 
(2
)
Income/(loss) before income taxes
 
 
(29
)
 
111

 
248

 
 
 
330

Provision for/(benefit from) income taxes
 
 
(11
)
 
55

 
39

 
 
 
83

Equity earnings in affiliates
$
203

 
116

 
147

 
 
 
$
(466
)
 
—

Net income
203

 
98

 
203

 
209

 
(466
)
 
247

Net income attributable to noncontrolling interests

 

 

 
(44
)
 

 
(44
)
Net income attributable to Crown Holdings
$
203

 
$
98

 
$
203

 
$
165

 
$
(466
)
 
$
203

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
237

 
$
105

 
$
237

 
$
234

 
$
(534
)
 
$
279

Comprehensive income attributable to noncontrolling interests


 


 


 
(42
)
 


 
(42
)
Comprehensive income attributable to Crown Holdings
$
237

 
$
105

 
$
237

 
$
192

 
$
(534
)
 
$
237




42
Crown Holdings, Inc.


CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME
For the six months ended June 30, 2011
(in millions)


 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net sales

 

 
$
1,136

 
$
3,027

 

 
$
4,163

Cost of products sold, excluding depreciation and amortization

 

 
926

 
2,489

 

 
3,415

Depreciation and amortization

 

 
19

 
66

 

 
85

Gross profit
 
 
 
 
191

 
472

 
 
 
663

Selling and administrative expense

 
$
3

 
70

 
129

 

 
202

Provision for restructuring

 

 


 
25

 

 
25

Loss from early extinguishment of debt

 
30

 
2

 
—

 

 
32

Net interest expense

 
26

 
40

 
44

 

 
110

Technology royalty

 

 
(23
)
 
23

 

 
 
Translation and foreign exchange

 

 

 
1

 

 
1

Income/(loss) before income taxes
 
 
(59
)
 
102

 
250

 
 
 
293

Provision for/(benefit from) income taxes

 
(22
)
 
—

 
117

 

 
95

Equity earnings in affiliates
$
145

 
116

 
43

 

 
$
(304
)
 
—

Net income
145

 
79

 
145

 
133

 
(304
)
 
198

Net income attributable to noncontrolling interests

 

 

 
(53
)
 
 
 
(53
)
Net income attributable to Crown Holdings
$
145

 
$
79

 
$
145

 
$
80

 
$
(304
)
 
$
145

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
220

 
$
89

 
$
220

 
$
196

 
$
(447
)
 
$
278

Comprehensive income attributable to noncontrolling interests


 


 


 
(58
)
 


 
(58
)
Comprehensive income attributable to Crown Holdings
$
220

 
$
89

 
$
220

 
$
138

 
$
(447
)
 
$
220
























43
Crown Holdings, Inc.


CONDENSED COMBINING BALANCE SHEET
As of June 30, 2012
(in millions)

 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents

 
$
25

 
$
1

 
$
204

 

 
$
230

Receivables, net

 
1

 
13

 
1,180

 

 
1,194

Intercompany receivables

 

 
43

 
15

 
$
(58
)
 
 
Inventories

 

 
294

 
978

 

 
1,272

Prepaid expenses and other current assets
$
2

 
2

 
88

 
121

 

 
213

Total current assets
2

 
28

 
439

 
2,498

 
(58
)
 
2,909

 
 
 
 
 
 
 
 
 
 
 
 
Intercompany debt receivables

 
2,258

 
1,916

 
340

 
(4,514
)
 
 
Investments
453

 
1,492

 
775

 

 
(2,720
)
 
 
Goodwill

 

 
453

 
1,491

 

 
1,944

Property, plant and equipment, net

 
1

 
300

 
1,499

 

 
1,800

Other non-current assets

 
28

 
344

 
199

 

 
571

Total
$
455

 
$
3,807

 
$
4,227

 
$
6,027

 
$
(7,292
)
 
$
7,224

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
Short-term debt

 

 

 
$
185

 

 
$
185

Current maturities of long-term debt

 
$
28

 
—

 
85

 

 
113

Accounts payable and accrued liabilities
$
12

 
34

 
$
314

 
1,619

 

 
1,979

Intercompany payables

 

 
15

 
43

 
$
(58
)
 
 
Total current liabilities
12

 
62

 
329

 
1,932

 
(58
)
 
2,277

 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, excluding current maturities

 
1,895

 
412

 
1,186

 

 
3,493

Long-term intercompany debt
670

 
1,193

 
2,211

 
440

 
(4,514
)
 
 
Postretirement and pension liabilities

 

 
528

 
418

 

 
946

Other non-current liabilities

 

 
294

 
203

 

 
497

Commitments and contingent liabilities

 

 

 

 

 
 
Noncontrolling interests

 

 

 
238

 

 
238

Crown Holdings shareholders’ equity/(deficit)
(227
)
 
657

 
453

 
1,610

 
(2,720
)
 
(227
)
Total equity/(deficit)
(227
)
 
657

 
453

 
1,848

 
(2,720
)
 
11

Total
$
455

 
$
3,807

 
$
4,227

 
$
6,027

 
$
(7,292
)
 
$
7,224



44
Crown Holdings, Inc.


CONDENSED COMBINING BALANCE SHEET
As of December 31, 2011
(in millions)

 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents

 
$
21

 
$
1

 
$
320

 

 
$
342

Receivables, net

 
1

 
37

 
910

 

 
948

Intercompany receivables

 

 
40

 
17

 
$
(57
)
 

Inventories

 

 
285

 
863

 

 
1,148

Prepaid expenses and other current assets


 
2

 
58

 
105

 

 
165

Total current assets
—

 
24

 
421

 
2,215

 
(57
)
 
2,603

 
 
 
 
 
 
 
 
 
 
 
 
Intercompany debt receivables

 
1,833

 
1,354

 
525

 
(3,712
)
 

Investments
$
215

 
1,386

 
632

 

 
(2,233
)
 

Goodwill

 

 
453

 
1,499

 

 
1,952

Property, plant and equipment, net

 
1

 
298

 
1,452

 

 
1,751

Other non-current assets

 
30

 
382

 
150

 

 
562

Total
$
215

 
$
3,274

 
$
3,540

 
$
5,841

 
$
(6,002
)
 
$
6,868

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
Short-term debt

 

 

 
$
128

 

 
$
128

Current maturities of long-term debt

 


 
$
1

 
66

 

 
67

Accounts payable and accrued liabilities
$
20

 
$
34

 
323

 
1,713

 

 
2,090

Intercompany payables

 

 
17

 
40

 
$
(57
)
 

Total current liabilities
20

 
34

 
341

 
1,947

 
(57
)
 
2,285

 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, excluding current maturities

 
1,732

 
412

 
1,193

 

 
3,337

Long-term intercompany debt
668

 
956

 
1,726

 
362

 
(3,712
)
 

Postretirement and pension liabilities

 

 
550

 
446

 

 
996

Other non-current liabilities

 

 
296

 
193

 

 
489

Commitments and contingent liabilities

 

 

 

 

 

Noncontrolling interests

 

 

 
234

 

 
234

Crown Holdings shareholders’ equity/(deficit)
(473
)
 
552

 
215

 
1,466

 
(2,233
)
 
(473
)
Total equity/(deficit)
(473
)
 
552

 
215

 
1,700

 
(2,233
)
 
(239
)
Total
$
215

 
$
3,274

 
$
3,540

 
$
5,841

 
$
(6,002
)
 
$
6,868



45
Crown Holdings, Inc.


CONDENSED COMBINING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2012
(in millions)

 
Parent
 
Issuer
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Company
Net provided by/(used for) operating activities
$
1

 
$
(15
)
 
$
69

 
$
(271
)
 

 
$
(216
)
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures

 

 
(13
)
 
(126
)
 

 
(139
)
Intercompany investing activities

 
7

 
43

 


 
$
(50
)
 
 
Insurance proceeds

 

 

 
23

 

 
23

Proceeds from sale of property, plant and equipment

 

 
1

 
1

 

 
2

Other

 

 


 
(14
)
 

 
(14
)
Net cash provided by/(used for) investing activities
 
 
7

 
31

 
(116
)
 
(50
)
 
(128
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
 
Proceeds from long-term debt

 


 

 
42

 

 
42

Payments of long-term debt

 


 


 
(32
)
 

 
(32
)
Net change in revolving credit facility and short-term debt

 
191

 

 
83

 

 
274

Net change in long-term intercompany balances
2

 
(179
)
 
(100
)
 
277

 

 
 
Common stock issued
4

 

 

 

 

 
4

Common stock repurchased
(7
)
 

 

 

 

 
(7
)
Dividends paid

 

 

 
(50
)
 
50

 
 
Dividends paid to noncontrolling interests

 

 

 
(38
)
 

 
(38
)
Other

 

 

 
(5
)
 

 
(5
)
Net cash provided by/(used for) financing activities
(1
)
 
12

 
(100
)
 
277

 
50

 
238

Effect of exchange rate changes on cash and cash equivalents

 

 

 
(6
)
 

 
(6
)
Net change in cash and cash equivalents
—

 
4

 
—

 
(116
)
 
—

 
(112
)
Cash and cash equivalents at January 1

 
21

 
1

 
320

 

 
342

Cash and cash equivalents at June 30
$
—

 
$
25

 
$
1

 
$
204

 
$
—

 
$
230



46
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 provided by/(used for) operating activities
$
(3
)
 
$
(16
)
 
$
48

 
$
(276
)
 

 
$
(247
)
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures

 

 
(9
)
 
(175
)
 

 
(184
)
Change in restricted cash

 

 


 
(125
)
 

 
(125
)
Proceeds from sale of property, plant and equipment

 

 
—

 
2

 

 
2

Intercompany investing activities

 


 
32

 
—

 
$
(32
)
 
 
Other

 

 


 
—

 

 
—

Net cash provided by/(used for) investing activities
—

 
—

 
23

 
(298
)
 
(32
)
 
(307
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
 
Proceeds from long-term debt

 
900

 

 
516

 

 
1,416

Payments of long-term debt

 
(746
)
 
(1
)
 
(175
)
 

 
(922
)
Net change in revolving credit facility and short-term debt

 
225

 

 
23

 

 
248

Net change in long-term intercompany balances
206

 
(350
)
 
(70
)
 
214

 

 

Debt issue costs


 
(16
)
 

 

 

 
(16
)
Common stock issued
9

 

 

 

 

 
9

Common stock repurchased
(212
)
 

 

 

 

 
(212
)
Dividends paid

 

 

 
(32
)
 
32

 
 
Purchase of noncontrolling interests
—

 

 

 
(9
)
 

 
(9
)
Dividends paid to noncontrolling interests

 

 

 
(38
)
 

 
(38
)
Other

 


 

 
18

 

 
18

Net cash provided by/(used for) financing activities
3

 
13

 
(71
)
 
517

 
32

 
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

 
38

 
1

 
424

 

 
463

Cash and cash equivalents at June 30
$
—

 
$
35

 
$
1

 
$
385

 
$
—

 
$
421



47
Crown Holdings, Inc.


PART I – FINANCIAL INFORMATION


Item 2.      Management's Discussion and Analysis of Financial Condition and Results of Operations
(dollars in millions)

Introduction

The following discussion presents management's analysis of the results of operations for the three and six months ended June 30, 2012 compared to the corresponding period in 2011 and the changes in financial condition and liquidity from December 31, 2011. This discussion 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, 2011, along with the consolidated financial statements and related notes included in and referred to within this report.

Business Strategy and Trends

The Company's strategy is to grow its businesses in targeted international growth markets, while improving operations and results in more mature markets through disciplined pricing, cost control and careful capital allocation.

In recent years, the Company has expanded its beverage can businesses in Brazil, China and Southeast Asia in response to increased unit volume demand driven by increased per capita incomes and consumption, combined with a shift in packaging mix to two-piece aluminum beverage cans from other packages. The Company continues to focus its capital deployment in these markets. When currently announced expansion projects are completed, the Company expects to have added approximately 7.1 billion units of incremental beverage can capacity to its year-end 2011 levels. There can be no assurance, however, that the Company will be able to implement its expansion plans according to the Company's announced schedule or at all. The Company continuously monitors these markets and, where necessary, may adjust capital deployment based on economic developments and market-by-market conditions.

Beverage can sales unit volumes in the Company's mature markets have been stable to slightly declining in North America and slightly increasing in Europe. Global food and aerosol can sales unit volumes have been stable to declining in recent years primarily due to lower consumer spending. While the opportunity for organic volume growth in the Company's mature markets is not comparable to that in targeted international growth markets, the Company continues to generate strong returns on invested capital and significant cash flow from these businesses. The Company monitors capacity across all of its businesses and, where necessary, may take action such as closing a plant or reducing headcount to better manage its costs which may result in additional restructuring charges in the future which may be material.
 
In addition, as part of the Company's efforts to manage cost, it attempts to pass-through the cost of aluminum and steel to its customers. There can be no assurance that the Company will be able to recover from its customers the impact of any such increased costs. Aluminum and steel prices can be subject to significant volatility and there does not appear to be a consistent and predictable trend in pricing.

The Company seeks to increase shareholder value by maximizing operating cash flows which can be reinvested in the business, used for acquisitions, used to repay debt or returned to shareholders through share repurchases. In assessing the Company's performance, the key performance measure used is segment income, a non-GAAP measure defined by the Company as gross profit less selling and administrative expenses.

Results of Operations

The foreign currency translation impacts referred to below were primarily due to changes in the euro and pound sterling in the Company's European segments, the Canadian dollar in the Company's Americas segments and the Chinese renminbi and Thai baht in the Company's Asian businesses included in non-reportable segments.









48
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

Net Sales and Segment Income     

 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Net sales
$
2,184

 
$
2,281

 
$
4,131

 
$
4,163

Beverage cans and ends as a percentage of net sales
57
%
 
54
%
 
56
%
 
53
%
Food cans, ends and metal vacuum closures as a percentage of net sales
27
%
 
29
%
 
27
%
 
29
%

Three months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to $101 from the impact of foreign currency translation.

Six months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to $137 from the impact of foreign currency translation partially offset by $94 from increased global sales unit volumes. Overall, sales unit volumes in the Company's beverage can businesses were higher than in the prior year offsetting declines in the Company's food can and closures, aerosol can and specialty packaging businesses.

Discussion and analysis of net sales and segment income by segment follows.

Americas Beverage

The Americas Beverage segment manufactures aluminum beverage cans and ends and steel crowns, commonly referred to as “bottle caps”, and supplies a variety of customers from its operations in the U.S., Brazil, Canada, Colombia and Mexico. The North American beverage can market is a mature market which has experienced slightly declining volumes in recent years. In Brazil, the Company's sales unit volumes have increased in recent years primarily due to market growth. In 2011, the Company completed construction of a new plant in Ponta Grossa, Brazil with the first line commencing commercial operations in the first quarter of 2011 and a second line commencing commercial operations in the second quarter of 2011. Also in the second quarter of 2011, the Company commenced commercial operations of a second line in its plant in Estancia, Brazil. At full capacity and efficiency, these additions are expected to add annual capacity of more than 2.5 billion beverage cans, resulting in approximately 10% higher capacity than in the Americas Beverage segment in 2010.

Net sales and segment income in the Americas Beverage segment are as follows:

 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Net sales
$
593

 
$
591

 
$
1,127

 
$
1,103

Segment income
78

 
77

 
147

 
140


Three months ended June 30, 2012 compared to 2011

Net sales increased primarily due to $9 from increased sales with an increase in Brazil offsetting lower sales unit volumes in the U.S. partially offset by $7 from the impact of foreign currency translation. The increase in sales unit volumes in Brazil is primarily from recent capacity additions in Ponta Grossa and Estancia. Sales unit volumes in Brazil are higher due to various factors; including its growing middle class and increasing disposable income and shift in packaging mix to two-piece aluminum beverage cans from other packages.


49
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

Segment income increased primarily due to $12 from higher sales unit volumes in Brazil as described above partially offset by $10 from lower selling prices primarily due to competitive pricing pressure.

Six months ended June 30, 2012 compared to 2011

Net sales increased primarily due to $33 from increased sales with an increase in Brazil offsetting lower sales unit volumes in the U.S. partially offset by $9 from the impact of foreign currency translation. The increase in sales unit volumes in Brazil is primarily from recent capacity additions in Ponta Grossa and Estancia. Sales unit volumes in Brazil are higher due to various factors; including its growing middle class and increasing disposable income and shift in packaging mix to two-piece aluminum beverage cans from other packages.

Segment income increased primarily due to $17 from higher sales unit volumes in Brazil as described above partially offset by $9 from lower selling prices primarily due to competitive pricing pressure.

North America Food

The North America Food segment manufactures steel and aluminum food cans and ends and metal vacuum closures and supplies a variety of customers from its operations in the U.S. and Canada. The North American food can and closures market is a mature market which has experienced stable to slightly declining volumes in recent years.

Net sales and segment income in the North America Food segment are as follows:
 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Net sales
$
213

 
$
217

 
$
413

 
$
405

Segment income
41

 
38

 
73

 
66


Three months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to lower sales unit volumes including the impact of certain customers accelerating shipments into the first quarter of 2012 that in 2011 occurred in the second quarter and $2 from the impact of foreign currency translation.

Segment income increased primarily due to lower operating costs including improved manufacturing performance and reduced post-retirement benefits in the U.S. resulting from plan amendments in 2011.

Six months ended June 30, 2012 compared to 2011

Net sales increased primarily due to $9 from the pass-through of higher costs partially offset by $3 from the impact of foreign currency translation.

Segment income increased primarily due to $7 from lower operating costs including improved manufacturing performance and $3 from reduced post-retirement benefits in the U.S. resulting from plan amendments in 2011, partially offset by $5 from inventory holding gains in 2011 that did not recur in 2012.

European Beverage

The Company's European Beverage segment manufactures steel and aluminum beverage cans and ends and supplies a variety of customers from its operations throughout Eastern and Western Europe, the Middle East and North Africa. In recent years, the European beverage can market has been growing. In the second quarter of 2011, the Company commenced commercial operations of the second line at its plant in Kechnec, Slovakia which is expected to add full annualized capacity of approximately 750 million cans. In the second quarter of 2012, the Company commenced commercial operations of a new plant in Osmaniye, Turkey which is expected to add full annualized capacity of approximately 700 million cans.


50
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)
    
Net sales and segment income in the European Beverage segment are as follows:

 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Net sales
$
472

 
$
500

 
$
834

 
$
840

Segment income
64

 
70

 
106

 
115


Three months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to $30 from the impact of foreign currency translation. Sales unit volumes did not change significantly as increased volumes in the UK, Dubai and Saudi Arabia were offset by lower volumes in France and Spain resulting from ongoing economic uncertainty in Europe and adverse weather conditions.

Segment income decreased primarily due to lower levels of manufacturing activity which resulted in costs being absorbed across fewer units, $1 from start-up costs at the Company's plant in Osmaniye, Turkey and $2 from the impact of foreign currency translation.

Six months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to $41 from the impact of foreign currency translation partially offset by $27 from increased sales unit volumes in the UK, Dubai and Saudi Arabia and $8 from the pass-through of higher costs.

Segment income decreased primarily due to lower levels of manufacturing activity which resulted in costs being absorbed across fewer units, $2 from start-up costs at the Company's plant in Osmaniye, Turkey and $3 from the impact of foreign currency translation.

European Food

The European Food segment manufactures steel and aluminum food cans and ends, and metal vacuum closures and supplies a variety of customers from its operations throughout Europe and Africa. The European food can market is a mature market which has experienced stable to slightly declining volumes in recent years. The Company is currently evaluating certain plans which, if approved, may result in additional restructuring charges in its European Food which could be material.

Net sales and segment income in the European Food segment are as follows:

 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Net sales
$
434

 
$
509

 
$
836

 
$
931

Segment income
47

 
63

 
87

 
115


Three months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to $23 from lower sales unit volumes due to ongoing economic uncertainty in Europe and adverse weather conditions and $47 from the impact of foreign currency translation.

Segment income decreased primarily due to unfavorable sales unit volumes and product mix, lower levels of manufacturing activity which resulted in costs being absorbed across fewer units and $5 from the impact of foreign currency translation.

51
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

Six months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to $39 from lower sales unit volumes due to ongoing economic uncertainty in Europe and adverse weather conditions and $65 from the impact of foreign currency translation.

Segment income decreased primarily due to unfavorable sales unit volumes and product mix, lower levels of manufacturing activity which resulted in costs being absorbed across fewer units, $5 from inventory holding gains in 2011 that did not recur in 2012 and $6 from the impact of foreign currency translation.

As of March 31, 2012, the Company had a receivable of $27 with a customer in its European Food business that was experiencing financial difficulty. In the second quarter of 2012, the customer completed a reorganization which included receiving additional capital from new investors and merging with a competitor. In connection with the reorganization, the Company agreed to settlement terms with the customer and expects the receivable to be fully paid.

European Specialty Packaging

The European Specialty Packaging segment manufactures a wide variety of specialty containers, with numerous lid and closure variations and supplies a variety of customers throughout Europe.

Net sales and segment income in the European Specialty Packaging segment are as follows:

 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Net sales
$
97

 
$
119

 
$
187

 
$
219

Segment income
10

 
12

 
11

 
19


Three months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to $12 from lower sales unit volumes reflecting ongoing economic uncertainty in Europe and $10 from the impact of foreign currency translation.

Segment income decreased primarily due to lower sales unit volumes and $1 from the impact of foreign currency translation.

Six months ended June 30, 2012 compared to 2011

Net sales decreased primarily due to $21 from lower sales unit volumes reflecting ongoing economic uncertainty in Europe and $13 from the impact of foreign currency translation.

Segment income decreased primarily due to lower sales unit volumes, $2 from inventory holding gains in 2011 that did not recur in 2012 and $1 from the impact of foreign currency translation.

Non-reportable Segments

The Company's non-reportable segments include its aerosol can businesses in North America, Europe and Thailand, its beverage can businesses in Cambodia, China, Malaysia, Singapore, Thailand and Vietnam, its food can and closures business in Thailand and its tooling and equipment operations in the U.S. and United Kingdom. In recent years, the Company's businesses in Asia have experienced significant growth whereas its aerosol can businesses have experienced slightly declining volumes.






52
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

In the first quarter of 2012, the Company commenced commercial operations at its new beverage can plant in Putian, China. In the second quarter of 2012, the Company commenced commercial operations at its new beverage can plant in Ziyang, China, completed capacity expansion at its plant in Ho Chi Minh City, Vietnam and began commercial production of beverage can ends at its new plant in Heshan, China. In the third quarter of 2012, the Company expects to begin commercial production of beverage cans in Heshan, China. In 2013, the Company has announced plans to complete new beverage can plants in Sihanoukville, Cambodia, Nanning, China and Danang, Vietnam and to expand capacity in Malaysia and Putian. Once the projects are complete, the Company expects to have 18 beverage can plants in Asia with nine strategically located across China, four in Vietnam, two in Cambodia and one each in Malaysia, Singapore and Thailand.

Net sales and segment income in non-reportable segments are as follows:
 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Net sales
$
375

 
$
345

 
$
734

 
$
665

Segment income
54

 
55

 
107

 
112


Three months ended June 30, 2012 compared to 2011

Net sales increased primarily due to $41 from increased beverage can sales in Cambodia, China, Malaysia and Vietnam as a result of increased regional demand driven by macroeconomic factors such as GDP growth and increased consumer spending partially offset by $8 from lower sales in the Company's North American and European aerosol businesses primarily due to lower consumer spending partly due to ongoing economic uncertainty in Europe and $5 from the impact of foreign currency translation.

Segment income remained relatively unchanged as $5 of decrease from the Company's North American and European aerosol businesses was offset by $6 from increased beverage can sales in Cambodia, China, Malaysia, Thailand and Vietnam partially offset by $3 of start-up costs from recent capacity additions.

The Company recognized income of $6 from proceeds received from its insurer covering incremental costs and lost profits associated with flood damage at the Company's beverage can plant in Thailand that occurred in the fourth quarter of 2011.

Six months ended June 30, 2012 compared to 2011

Net sales increased primarily due to $70 from increased beverage can sales in Cambodia, China, Malaysia and Vietnam as a result of increased regional demand driven by macroeconomic factors such as GDP growth and increased consumer spending. In addition, net sales increased due to $22 from increased beverage equipment sales to can manufacturers partially offset by $16 of lower sales in the Company's North American and European aerosol businesses primarily due to lower consumer spending partly due to ongoing economic uncertainty in Europe and $6 from the impact of foreign currency translation.

Segment income decreased primarily due to $15 from the Company's North American and European aerosol businesses including $5 of inventory holding gains in 2011 that did not recur in 2012. The decrease was partially offset by $8 from the Company's operations in Asia which included $11 from increased beverage can sales in Cambodia, China, Malaysia, Thailand and Vietnam partially offset by $5 of start-up costs from recent capacity additions.

The Company recognized income of $7 from proceeds received from its insurer covering incremental costs and lost profits associated with flood damage at the Company's beverage can plant in Thailand that occurred in the fourth quarter of 2011.






53
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

Corporate and Unallocated Expense
 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Corporate and unallocated expense
$
(44
)
 
$
(44
)
 
$
(100
)
 
$
(106
)

For the six months ended June 30, 2012 compared to 2011, corporate and unallocated expense decreased primarily due to insurance costs related to a fire at a Company warehouse in 2011.

Cost of Products Sold (Excluding Depreciation and Amortization)

For the three months ended June 30, 2012 compared to 2011, cost of products sold (excluding depreciation and amortization) decreased from $1,865 to $1,799 primarily due to $86 from the impact of foreign currency translation partially offset by increased global beverage can sales unit volumes.

For the six months ended June 30, 2012 compared to 2011, cost of products sold (excluding depreciation and amortization) increased from $3,415 to $3,417 as the impact of increased global beverage can sales unit volumes and higher raw material costs was offset by foreign currency translation.

Depreciation and Amortization

For the three months ended June 30, 2012 compared to 2011, depreciation and amortization remained at $45 as the impact of recent capacity expansion offset foreign currency translation.

For the six months ended June 30, 2012 compared to 2011, depreciation and amortization increased from $85 to $87 primarily due to the impact of recent capacity expansion.     

Selling and Administrative Expense

For the three months ended June 30, 2012 compared to 2011, selling and administrative expense decreased from $100 to $90 primarily due to $4 from lower legal and professional fees and $4 from the impact of foreign currency translation.

For the six months ended June 30, 2012 compared to 2011, selling and administrative expense decreased from $202 to $196 primarily due to $6 from the impact of foreign currency translation.

Interest Expense

For the three months ended June 30, 2012 compared to 2011, interest expense decreased from $60 to $55 primarily due to lower borrowing rates and $2 from the impact of foreign currency translation.

For the six months ended June 30, 2012 compared to 2011, interest expense decreased from $116 to $113 primarily due to lower borrowing rates and $2 from the impact of foreign currency translation partially offset by higher average debt outstanding.













54
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

Taxes on Income
    
The Company's effective income tax rate was as follows:

 
Three Months Ended
 
    Six Months Ended
 
  June 30
 
  June 30
 
2012
 
2011
 
2012
 
2011
Income before income taxes
$
208

 
$
210

 
$
330

 
$
293

Provision for income taxes
51

 
54

 
83

 
95

Effective income tax rate
24.5
%
 
25.7
%
 
25.2
%
 
32.4
%

The effective income tax rate for the six months ended June 30, 2011 was higher than in 2012 primarily due to a net tax charge of $20 in 2011 in connection with the relocation of the Company's European headquarters and management to Switzerland.

Net Income Attributable to Noncontrolling Interests

For the three and six months ended June 30, 2012 compared to 2011 net income attributable to noncontrolling interests decreased from $27 to $23 and from $53 to $44, respectively, primarily due to the acquisition of additional ownership interests in certain operations in China, Dubai, Greece, Jordan, Tunisia and Vietnam in the second half of 2011.


Liquidity and Capital Resources

Cash from Operations

Cash used for operating activities decreased from $ 247 for the six months ended June 30, 2011 to $ 216 in 2012 primarily due to lower net working capital as days sales outstanding for working capital decreased from 44 for the three months ended June 30, 2011 to 42 in 2012 .

Receivables increased from $ 948 at December 31, 2011 to $ 1,194 at June 30, 2012 and used cash of $ 347 for the six months ended June 30, 2011 compared to $ 296 in 2012 . Sales in June 2012 were higher than in December 2011 as sales generally increase each month of the year until peaking in the third quarter. As a result, receivables generally increase through the third quarter of each year. Days sales outstanding for trade receivables decreased from 45 for three months ended June 30, 2011 to 42 in 2012 .

Inventories increased from $ 1,148 at December 31, 2011 to $ 1,272 at June 30, 2012 and used cash of $ 431 for the six months ended June 30, 2011 compared to $ 135 in 2012 . Inventory levels typically increase each month of the year until peaking in the third quarter due to seasonal build primarily in the Company's food can businesses. Inventory levels did not increase as significantly in 2012 as in 2011 due to the Company's efforts to manage lower levels of inventory and lower raw material costs partially offset by the impact of recent capacity expansion.

Investing Activities

Cash used for investing activities decreased from $ 307 for the six months ended June 30, 2011 to $128 in 2012 primarily due to $45 from lower capital expenditures, $23 from the receipt of insurance proceeds related to flooding at the Company's beverage can plant in Thailand and $125 from an increase in restricted cash in 2011 that did not recur in 2012. Currently, the Company expects capital expenditures of approximately $325 in 2012 excluding the cost to rebuild beverage can capacity lost to flooding which the Company expects will be reimbursed by insurance. Upon reaching an agreement with its insurance provider, the Company may record additional gains for insurance proceeds in excess of losses recorded in its financial statements.




55
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

Financing Activities

Cash provided by financing activities decreased from $494 for the six months ended June 30, 2011 to $238 in 2012 primarily due to higher borrowings in 2011 that were used for share repurchases and to repay $125 of debt in July 2011.
Other financing activities, in each year, represent cash settlements of foreign currency derivatives used to hedge intercompany debt obligations.

Liquidity

As of June 30, 2012 , $200 of the Company's $230 cash and cash equivalents was located outside the U.S. The Company is not currently aware of any legal restrictions under foreign law that materially impact its access to cash held outside the U.S.

The Company funds its cash needs in the U.S. through a combination of cash flows from operations in the U.S., dividends from certain foreign subsidiaries, borrowings under its revolving credit facility and the acceleration of cash receipts under its receivable securitization facilities. The Company records current and/or deferred U.S. taxes for the earnings of these foreign subsidiaries. For certain other foreign subsidiaries, the Company considers earnings indefinitely reinvested and has not recorded any U.S. taxes. Of the cash and cash equivalents located outside the U.S., $79 was held by subsidiaries for which earnings are considered indefinitely reinvested. While based on current operating plans the Company does not foresee a need to repatriate these funds, if such earnings were repatriated the Company would be required to record any incremental U.S. taxes on the repatriated funds.

As of June 30, 2012 , the Company had $806 of borrowing capacity available under its revolving credit facility, equal to the total facility of $1,200 less $335 of borrowings and $59 of outstanding standby letters of credit.

The Company's debt agreements contain covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional debt, pay dividends or repurchase capital stock, make certain other restricted payments, create liens and engage in sale and leaseback transactions. These restrictions are subject to a number of exceptions, however, which allow the Company to incur additional debt, create liens or make otherwise restricted payments. The amount of restricted payments permitted to be made, including dividends and repurchases of the Company's common stock, is generally limited to the cumulative excess of $200 plus 50% of adjusted net income plus proceeds from the exercise of employee stock options over the aggregate of restricted payments made since July 2004. Adjustments to net income may include, but are not limited to, items such as asset impairments, gains and losses from asset sales and early extinguishments of debt.

During the second quarter of 2012, Congress passed the Moving Ahead for Progress in the 21st Century Act which included pension funding provisions designed to stabilize the discount rate used to determine funding requirements from the effects of interest rate volatility. Currently, the Company does not expect these provisions to have a material impact on its 2012 pension contributions.

Capital Resources

As of June 30, 2012, the Company has approximately $94 of capital commitments primarily related to the Company's expansion in Cambodia, China, Malaysia and Vietnam and rebuilding of its beverage can plant in Thailand which was damaged by severe flooding in 2011. The Company expects to fund these commitments primarily through cash flows generated from operations and to fund any excess needs over available cash through external borrowings.

Contractual Obligations

During the first six months of 2012 there were no material changes to the Company's contractual obligations reported in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of the Company's Annual Report on Form 10-K for the year ended December 31, 2011.





56
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

Commitments and Contingent Liabilities

Information regarding the Company's commitments and contingent liabilities appears in Part I within Item 1 of this report under Note J, entitled “Commitments and Contingent Liabilities,” to the consolidated financial statements, which information is incorporated herein by reference.

Critical Accounting Policies

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States which require that management make numerous estimates and assumptions.

Actual results could differ from these estimates and assumptions, impacting the reported results of operations and financial condition of the Company. Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Note A to the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 describe the significant accounting estimates and policies used in the preparation of the consolidated financial statements. There have been no significant changes in the Company's critical accounting policies during the first six months of 2012. The discussion below supplements the discussion from the Company's Annual Report on Form 10-K for the year ended December 31, 2011 with respect to goodwill.

Goodwill Impairment

As disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, the estimated fair value of the Company's European Aerosols reporting unit was 35% higher than its carrying value and the reporting unit had $145 of goodwill. In the fourth quarter of 2011, the Company initiated a restructuring action to improve profitability in its European Aerosols reporting unit by consolidating operations through reducing headcount and capacity. During the first six months of 2012, results of operations in the European Aerosols reporting unit were impacted by the economic downturn in Europe. Based on current projections, the Company continues to believe that the estimated fair value of its European Aerosols reporting unit exceeds its carrying value. However, if future operating results continue to decline or if the Company is unable to realize its anticipated savings from the restructuring action, the Company will perform step one of the impairment analysis to assess whether goodwill is potentially impaired. If the Company determines that goodwill is impaired, it is possible that an impairment charge of up to $145 could be recorded.

Forward Looking Statements

Statements included herein in “Management's Discussion and Analysis of Financial Condition and Results of Operations,” including, but not limited to, in the discussions of asbestos in Note I and commitments and contingencies in Note J to the consolidated financial statements included in this Quarterly Report on Form 10-Q and also in Part I, Item 1: “Business” and Item 3: “Legal Proceedings” and in Part II, Item 7: “Management's Discussion and Analysis of Financial Condition and Results of Operations,” within the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which are not historical facts (including any statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto), are “forward-looking statements” within the meaning of the federal securities laws. In addition, the Company and its representatives may, from time to time, make oral or written statements which are also “forward-looking statements.”

These forward-looking statements are made based upon management's expectations and beliefs concerning future events impacting the Company and, therefore, involve a number of risks and uncertainties. Management cautions that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.    

While the Company periodically reassesses material trends and uncertainties affecting the Company's results of operations and financial condition in connection with the preparation of “Management's Discussion and Analysis of Financial Condition and Results of Operations” and certain other sections contained in the Company's quarterly, annual or other reports filed with the Securities and Exchange Commission (“SEC”), the Company does not intend to review or revise any particular forward-looking statement in light of future events.    



57
Crown Holdings, Inc.


Item 2. Management's Discussion and Analysis (Continued)

A discussion of important factors that could cause the actual results of operations or financial condition of the Company to differ from expectations has been set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 within Part II, Item 7: “Management's Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Forward Looking Statements” and is incorporated herein by reference. Some of the factors are also discussed elsewhere in this Form 10-Q and in prior Company filings with the SEC. In addition, other factors have been or may be discussed from time to time in the Company's SEC filings.

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange and interest rates and commodity prices. The Company manages these risks through a program that includes the use of derivative financial instruments, 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 the counterparties. These instruments are not used for trading or speculative purposes. The extent to which the Company uses such instruments is dependent upon its access to these contracts in the financial markets and its success in using other methods, such as netting exposures in the same currencies to mitigate foreign exchange risk and using sales arrangements that permit the pass-through of commodity prices and foreign exchange rate risks to customers. The Company's objective in managing its exposure to market risk is to limit the impact on earnings and cash flow. For further discussion of the Company's use of derivative instruments and their fair values at June 30, 2012, see Note F to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

As of June 30, 2012, the Company had $1,475 million principal floating interest rate debt. A change of 0.25% in these floating interest rates would change annual interest expense by approximately $4 million before tax.

Item 4.
Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, management, including the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures. Based upon that evaluation and as of the end of the quarter for which this report is made, the Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective. Disclosure controls and procedures ensure that information to be disclosed in reports that the Company files and submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and terms of the Securities and Exchange Commission, and ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There has been no change in internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.






58
Crown Holdings, Inc.


PART II – OTHER INFORMATION


Item 1.
Legal Proceedings

For information regarding the Company's potential asbestos-related liabilities and other litigation, see Note I entitled “Asbestos-Related Liabilities” and Note J entitled “Commitments and Contingent Liabilities,” respectively, to the consolidated financial statements within Item 1 of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.


Item 1A. Risk Factors

In addition to the other information set forth in this report, carefully consider the factors discussed in Item 1A to Part I in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, which could materially affect the Company's business, financial condition or future results. The risks described in the Company's Quarterly Report on Form 10-Q are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company's business, financial condition and/or operating results.


Item 2.
Unregistered Sale of Equity Securities and Use of Proceeds

The Company made no purchases of its equity securities during the first six months of 2012.

In December 2011, the Company entered into an agreement to repurchase shares of its common stock under an accelerated share repurchase program. Pursuant to the agreement, the Company initially purchased 2,771,004 shares for $100. In April 2012, the Company received an additional 4,653 shares based on its volume-weighted average stock price during the term of the transaction.

In July 2012, the Company entered into an agreement to purchase an aggregate of $200 shares of its common stock under an accelerated repurchase program. The actual number of shares repurchased will be determined at the completion of the term of the agreement subject to provisions that establish a minimum number of shares to be repurchased based on the volume-weighted average share price of the Company's common stock over an initial hedge period and a maximum share purchase price.

On December 9, 2010, the Company's Board of Directors authorized the repurchase of up to $600 million of the Company's common stock through the end of 2012. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. This repurchase authorization replaces all previous authorizations. As of July 31, 2012, $94 million of the Company's outstanding common stock may still be purchased under this program.


Item 4.
Mine Safety Disclosures

Not applicable.


Item 5.
Other Information

None.

59
Crown Holdings, Inc.




Item 6.      Exhibits
 
10.1
Executive Employment Agreement, effective June 1, 2012, between Crown Holdings, Inc. and Gerard Gifford.
 
 
 
 
10.2
Senior Executive Retirement Agreement, effective June 1, 2012, between Crown Holdings, Inc. and Gerard Gifford.
 
 
 
 
10.3
Crown Cork & Seal Company, Inc. Restoration Plan, dated July 28, 2010.
 
 
 
 
10.4
Amendment No. 1, effective July 1, 2011, to the Crown Cork & Seal Company, Inc. Restoration Plan.
 
 
 
 
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
32
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by John W. Conway, Chairman of the Board, President and Chief Executive Officer of Crown Holdings, Inc. and Timothy J. Donahue, Executive Vice President and Chief Financial Officer of Crown Holdings, Inc.
 
 
 
 
101
The following financial information from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and six months ended June 30, 2012 and 2011, (ii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2012 and 2011, (iii) Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011, (v) Consolidated Statements of Changes in Equity for the six months ended June 30, 2012 and 2011 and (vi) Notes to Consolidated Financial Statements.





60
Crown Holdings, Inc.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
 
Crown Holdings, Inc.
Registrant
 
 
By:
 
/s/    Kevin C. Clothier
 
 
Kevin C. Clothier
 
 
Vice President and Corporate Controller

Date: August 9, 2012


61



EXECUTIVE EMPLOYMENT AGREEMENT
THIS IS AN EMPLOYMENT AGREEMENT (“ Agreement ”), effective June 1, 2012, (“ Effective Date ”) between Crown Holdings, Inc., (“ Crown ” and, with its subsidiaries, the “ Company ”), and Gerard Gifford (the “ Executive ”).
Background
WHEREAS, the Executive is currently employed by the Company.
WHEREAS, the Company desires to assure itself of the continued employment of the Executive with the Company and to encourage his continued attention and dedication to the best interests of the Company, including but not limited to Crown Americas, Inc. (“Crown Americas”) and Crown Packaging Europe GMBH (“CPE”).
WHEREAS, the Executive desires to remain and continue in the employment of the Company in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and intending to be legally bound hereby, the parties agree as follows:
Terms
1.
Definitions . As used in this Agreement, the following terms shall have the meanings set forth below:

1.1.    “ Board ” shall mean the Board of Directors of Crown.

1.2.    “ Cause ” shall mean the termination of the Executive's employment with the Company as a result of:

(a) the Executive's willful failure to perform such services as may be reasonably delegated or assigned to the Executive by the Board, the Chairman of the Board, Crown's Chief Executive Officer or any other executive to whom the Executive reports;

(b) the continued failure by the Executive to devote his full-time best effort to the performance of his duties under the Agreement (other than any such failure resulting from the Executive's incapacity due to physical or mental illness);

(c) the breach by the Executive of any provision of Sections 6, 7 and 8 hereof;

(d) the willful engaging by the Executive in misconduct which is materially injurious to the Company, monetarily or otherwise; or

(e) the Executive's conviction of, or a plea of nolo contendere to, a felony or a crime involving moral turpitude.

1.3.    “ Change in Control ” shall mean any of the following events:

1



(a)    a “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of Crown in substantially the same proportions as their ownership of stock of Crown, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Crown representing 50% or more of the combined voting power of Crown's then outstanding securities; or

(b)    during any period of 2 consecutive years, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with Crown to effect a transaction described in Section 1.3(a), Section 1.3(c) or Section 1.3(d) hereof) whose election by the Board or nomination for election by Crown's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

(c)    Crown merges or consolidates with any other corporation, other than in a merger or consolidation that would result in the voting securities of Crown outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 75% of the combined voting power of the voting securities of Crown or such surviving entity outstanding immediately after such merger or consolidation; or

(d)    the complete liquidation of Crown or Crown sells or otherwise disposes of all or substantially all of Crown's assets.

1.4.    “ Code ” means the Internal Revenue Code of 1986, as amended from time to time.

1.5.    “ Good Reason ” shall mean:

(a)    the assignment to the Executive, without the Executive's express written approval, of duties or responsibilities, inconsistent, in a material respect, with the Executive's title and position on the date of a Change in Control or a material reduction in the Executive's duties, responsibilities or authority from those in effect on the date of a Change in Control;

(b)    a reduction by the Company in the Executive's Base Salary (as defined in Section 4.1 below) or in the other compensation and benefits, in the aggregate, payable to the Executive hereunder, or a material adverse change in the terms or conditions on which any such compensation or benefits are payable as in effect on the date of a Change in Control;

(c)    following a Change in Control, the Company's failure, without the express consent of the Executive, to pay the Executive any amounts otherwise vested and due hereunder or under any plan or policy of the Company;

(d)    a relocation of the Executive's primary place of employment, without the Executive's express written approval, to a location more than 20 miles from the location at which the Executive performed his duties on the date of a Change in Control; or

2



(e)    the failure or refusal of Crown's Successor (as defined in Section 13 below) to expressly assume this Agreement in writing, and all of the duties and obligations of the Company hereunder in accordance with Section 13.

1.6.    “ Short-Term Disability ” shall mean the temporary incapacity of the Executive that, as determined by the Board in a uniformly-applied manner, renders the Executive temporarily incapable of engaging in his usual executive function and as a result, the Executive is under the direct care and treatment of a physician who certifies to such incapacity.

1.7.    “ Total Disability ” shall mean that a qualified physician designated by the Company has determined that the Executive:

(a)    is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

(b)    is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

2. Position and Duties . The Company agrees to continue to employ the Executive and the Executive hereby agrees to continue to be employed by the Company, upon the terms, conditions and limitations set forth in this Agreement. The Executive shall serve as the Company's President-European Division (or in such other position as agreed to by the parties), with the customary duties, authorities and responsibility of such position of a publicly-traded corporation and such other duties, authorities and responsibility (a) as have been agreed upon by the Company and the Executive or (b) as may from time to time be delegated to the Executive by the Board, the Chairman of the Board, Crown's Chief Executive Officer or any other executive to whom the Executive reports as are consistent with such position. The Executive agrees to perform the duties and responsibilities called for hereunder to the best of his ability and to devote his full time, energies and skills to such duties, with the understanding that he may participate in charitable and similar activities and may have business interests in passive investments which may, from time to time, require portions of his time, but such activities shall be done in a manner consistent with his obligations hereunder.

3. Term . The Executive's employment under this Agreement shall commence on the Effective Date and unless sooner terminated as provided in Article 5 shall continue for a period of one year (the “ Initial Term ”). Except as otherwise provided herein, unless either party gives written notice to the other party at least 30 days before any anniversary of the Effective Date that the term hereunder shall not be extended beyond its then term (a “ Nonrenewal Notice ”), the term of the Agreement shall automatically be extended for an additional one year period from each anniversary, subject to the same terms, conditions and limitations as applicable to the Initial Term unless amended or terminated as provided herein (the “ Renewal Term ”). For purposes of this Agreement, the Initial Term and all subsequent Renewal Terms shall be collectively referred to as the “ Term ” of the Agreement.

3



4. Compensation and Benefits .

4.1.     Base Salary . The Company shall pay to the Executive for the performance of his duties under this Agreement an initial base salary of $440,000 U.S. dollars per year (the “ Base Salary ”), payable in accordance with the Company's normal payroll practices. Thereafter, the rate of the Executive's Base Salary will be reviewed and adjusted as appropriate in accordance with the Company's regular compensation review practices. Effective as of the date of any such increase, the Base Salary so increased shall be considered the new Base Salary for all purposes of this Agreement.

4.2.     Incentive Bonus . During the Term, in addition to Base Salary, for each calendar year ending during the Term, the Executive shall participate in, and shall have the opportunity to receive a bonus in an amount to be determined in accordance with, the Company's existing incentive bonus plan or any successor bonus plan, and any other bonus or incentive plan, program or arrangement established by the Company for the benefit of its executive officers (the “ Incentive Bonus Payment ”).

4.3.     Employee Benefits . During the Term, the Executive shall be eligible to participate in the applicable employee benefit plans, programs and policies of Crown Americas (or other applicable affiliate as agreed to by the parties) that are now or hereafter made available to its salaried personnel generally, as such plans, programs and policies may be in effect from time to time, in each case to the extent that the Executive is eligible under the terms of such plans, programs and policies and the Executive's participation therein is not duplicative of other benefits provided by the Company. The Executive shall also be eligible to participate in Crown's Senior Executive Retirement Plan (the “SERP”) and Crown's 2006 Stock-Based Incentive Compensation Plan, and any other equity-based incentive plans as maintained by Crown from time to time for the benefit of senior executives.

4.4.     Vacation . The Executive shall be entitled to vacation in accordance with the Company's vacation policy.

4.5.     Automobile . During the Term, the Company shall make an automobile available to the Executive in accordance with and subject to the conditions of its applicable automobile policy or practices as in effect from time to time.

4.6.     Reimbursement of Expenses . During the Term, the Company will reimburse the Executive in accordance with the Company's expense reimbursement policy as in effect from time to time for expenses reasonably and properly incurred by him in performing his duties, provided that such expenses are incurred and accounted for in accordance with the policies and procedures presently or hereinafter established by the Company.

4.7.     Short-Term Disability . In the event that the Executive incurs a Short-Term Disability, the Executive shall be entitled to six months of Base Salary and incentive payments, payable in accordance with the Company's normal payroll practices, provided that all payments under this provision shall be reduced dollar-for-dollar by any other short-term disability benefits the Executive is entitled to under any other Company-sponsored short-term disability plan or arrangement and shall cease as of the earliest of the Executive's cessation of Short-Term Disability, the occurrence of Total Disability, death or the first day of the month following the month in which the Executive attains age 65 (the “ Normal Retirement Date ”).

4



4.8.     Medical Examination Benefit . During the Term, the Executive shall be entitled to reimbursement for actual costs incurred, up to $2,500 per calendar year, for medical examinations.

5. Termination .

5.1.     Death . The Executive's employment under this Agreement shall terminate immediately upon the Executive's death, and the Company shall have no further obligations under this Agreement, except to pay to the Executive's estate (or his beneficiary, as may be appropriate) (a) any Base Salary earned through his date of death, to the extent theretofore unpaid, (b) a pro-rated Incentive Bonus Payment equal to the product of (i) the target Incentive Bonus Payment for the year of termination multiplied by (ii) a fraction, the numerator of which is the number of completed days in the year of termination during which the Executive was employed by the Company and the denominator of which is 365, and provided that such amount will be paid in the normal course and shall only be paid if the Executive would have become entitled to such amount if he had not terminated his employment, and (c) such retirement and other benefits earned and vested (if applicable) by the Executive as of the date of his death under any employee benefit plan of the Company in which the Executive participates, including without limitation all vested benefits due under the SERP and other retirement plans, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of such plans.

5.2.     Disability . If the Executive is unable to perform his duties under this Agreement because of a Total Disability, the Company may terminate the Executive's employment by giving written notice to the Executive. Such termination shall be effective as of the date of such notice and the Company shall have no further obligations under this Agreement, except to pay to the Executive (a) any Base Salary earned through the date of such termination, to the extent theretofore unpaid, (b) Total Disability benefits as described below, (c) a pro-rated Incentive Bonus Payment equal to the product of (i) the target Incentive Bonus Payment for the year of termination multiplied by (ii) a fraction, the numerator of which is the number of completed days in the year of termination during which the Executive was employed by the Company and the denominator of which is 365, and provided that such amount will be paid in the normal course and shall only be paid if the Executive would have become entitled to such amount if he had not terminated his employment, and (d) such retirement and other benefits earned and vested (if applicable) by the Executive as of the date of his termination under any employee benefit plan of the Company in which the Executive participates, including without limitation all vested benefits due under the SERP and other retirement plans, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of such plans. In the event that the Executive incurs a Total Disability, the Executive shall be entitled to an annual disability benefit equal to 75% of his Base Salary, payable in accordance with the Company's normal payroll practices, provided that all payments under this provision shall be reduced dollar-for-dollar by Social Security disability benefits and any other long-term disability benefits the Executive is entitled to under any other Company-sponsored long-term disability plan or arrangements and shall cease as of the earliest of the Executive's cessation of Total Disability, death or attainment of his Normal Retirement Date.

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5.3.     Retirement . The Executive's voluntary termination of employment at a time when he is eligible to begin receiving retirement benefits under the Crown Cork & Seal Company, Inc. Pension Plan shall be treated as a retirement termination under this Agreement. Unless Section 5.7 is applicable, upon such termination, the Company shall have no further obligations under this Agreement, except to pay to the Executive (a) any Base Salary earned through the date of the Executive's retirement, to the extent theretofore unpaid, (b) a pro-rated Incentive Bonus Payment equal to the product of (i) the target Incentive Bonus Payment for the year of termination multiplied by (ii) a fraction, the numerator of which is the number of completed days in the year of termination during which the Executive was employed by the Company and the denominator of which is 365, and provided that such amount will be paid in the normal course and shall only be paid if the Executive would have become entitled to such amount if he had not terminated his employment, and (c) such retirement, incentive and other benefits earned and vested (if applicable) by the Executive as of the date of his retirement under any employee benefit plan of the Company in which the Executive participates, including without limitation all vested benefits due under the SERP and other retirement plans, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of such plans.

5.4.     Voluntary Termination . At any time during the Term, upon 30 days' written notice to the Company, the Executive may voluntarily terminate his employment with the Company. Unless Section 5.7 is applicable, upon such termination the Company shall have no further obligations under this Agreement except to pay to the Executive (a) any Base Salary earned to the date of the Executive's termination of employment, to the extent theretofore unpaid, (b) a pro-rated Incentive Bonus Payment equal to the product of (i) the target Incentive Bonus Payment for the year of termination multiplied by (ii) a fraction, the numerator of which is the number of completed days in the year of termination during which the Executive was employed by the Company and the denominator of which is 365, and provided that such amount will be paid in the normal course and shall only be paid if the Executive would have become entitled to such amount if he had not terminated his employment, and (c) such retirement and other benefits earned by the Executive and vested (if applicable) as of the date of his termination under the terms of any employee benefit plan of the Company in which the Executive participates, including without limitation all vested benefits due under the SERP and other retirement plans, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of such plans.

5.5.     Termination For Cause . The Board may terminate the Executive's employment and the Company's obligations under this Agreement at any time for Cause by giving written notice to the Executive. The Company's required notice of termination shall specify the event or circumstances that constitute Cause. Executive's termination shall be effective as of the date of such notice. Upon termination of the Executive's employment for Cause, the obligations of the Company under this Agreement shall terminate, except for the obligation to pay to the Executive (a) any Base Salary earned through the date of such termination, to the extent theretofore unpaid, and (b) such retirement and other benefits earned and vested (if applicable) by the Executive as of such termination under any employee benefit plan of the Company in which the Executive participates, including all payments due under retirement plans, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of such plans.

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5.6.     Involuntary Termination by the Company without Cause Prior to a Change in Control . The Company may terminate the Executive's employment without Cause at any time during the Term, upon thirty (30) days' written notice; provided that during such notice period, the Company, in its absolute discretion, may relieve the Executive of all his duties, responsibilities and authority with respect to the Company and restrict the Executive's access to Company property. For purposes of this Section 5.6, the Company's delivery of a Nonrenewal Notice to the Executive shall be treated as termination without Cause on the last day of the then current Term. If the Company so terminates the Executive's employment without Cause at any time other than the 12-month period following a Change in Control, the Company's obligations under this Agreement shall terminate except for the Company's obligation to pay to the Executive the following: (a) any Base Salary earned through the date of the Executive's termination of employment, to the extent theretofore unpaid, (b) a pro-rated Incentive Bonus Payment equal to the product of (i) the target Incentive Bonus Payment for the year of termination multiplied by (ii) a fraction, the numerator of which is the number of completed days in the year of termination during which the Executive was employed by the Company and the denominator of which is 365, and provided that such amount will be paid in the normal course and shall only be paid if the Executive would have become entitled to such amount if he had not terminated his employment, (c) a lump-sum payment equal to the Executive's Base Salary, provided , however that if the Executive is a “Specified Employee,” as that term is defined in Section 409A of the Code, any payments under this clause, if so required, shall be made on the date that is six months and one day after the date of the Executive's termination hereunder and (d) such retirement and other benefits earned by the Executive and vested (if applicable) as of the date of his termination under the terms of any employee benefit plan of the Company in which the Executive participates, including without limitation all vested benefits due under the SERP and other retirement plans all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of such plans. In no event shall the payment in clause (c) be included for purposes of the SERP in Executive's “Compensation,” as that term is defined therein.

5.7.     Involuntary Termination by the Company or by the Executive for Good Reason Following a Change of Control . If the Company terminates the Executive's employment without Cause during the 12-month period following a Change in Control, or the Executive voluntarily terminates his employment for Good Reason during the 12 months following a Change in Control, the Company's obligations under this Agreement shall terminate except for the Company's obligation to pay to the Executive the following: (a) any Base Salary earned through the date of the Executive's termination of employment, to the extent theretofore unpaid, (b) a lump-sum payment equal to three times the sum of the Executive's Base Salary and average Incentive Bonus Payment paid or payable to the Executive for the three completed years prior to the year of such termination, (c) such retirement and other benefits earned by the Executive and vested (if applicable) as of the date of his termination under the terms of any employee benefit plan of the Company in which the Executive participates, including without limitation all vested benefits due under the SERP and other retirement plans, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of such plans, and (d) all outstanding stock options and restricted stock held by the Executive shall become immediately vested and such stock options shall become exercisable and shall remain exercisable for a period of 30 days or such longer period as provided under the terms of such option. Each of the payments described in (a) and (b) above shall be made within 30 days of the Executive's termination of employment; provided, however that if the Executive is a Specified Employee, such payments, if so required, shall be made on the date that is six months and one day after the date of the Executive's termination hereunder. In no event shall the payment in clause (b) be included for purposes of the SERP in Executive's “Compensation,” as that term is defined therein.

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5.8.     Mitigation . The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any profits, income or earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of Executive hereunder.

6. Confidential Information . Except as required in the performance of his duties to the Company under this Agreement, the Executive shall not, during or after the Term of this Agreement, use for himself or others, or disclose to others, any confidential information including without limitation, trade secrets, data, know-how, design, developmental or experimental work, Company relationships, computer programs, proprietary information bases and systems, data bases, customer lists, business plans, financial information of or about the Company or any of its affiliates, customers or clients, unless authorized in writing to do so by the Board or Crown's Chief Executive Officer, but excluding any information generally available to the public or information (except information related to the Company) which Executive possessed prior to his employment with the Company. The Executive understands that this undertaking applies to the information of either a technical or commercial or other nature and that any information not made available to the general public is to be considered confidential. The Executive acknowledges that such confidential information as is acquired and used by the Company or its affiliates is a special, valuable and unique asset. All records, files, materials and confidential information obtained by Executive in the course of his employment with the Company are confidential and proprietary and shall remain the exclusive property of the Company or its affiliates, as the case may be.

7. Return of Documents and Property . Upon the termination of Executive's employment from the Company, or at any time upon the request of the Company, Executive (or his heirs or personal representative) shall deliver to the Company (a) all documents and materials containing confidential information relating to the business or affairs of the Company or any of its affiliates, customers or clients and (b) all other documents, materials and other property belonging to the Company or its affiliates, customers or clients that are in the possession or under the control of Executive.

8. Noncompetition . By and in consideration of the salary and benefits to be provided by the Company hereunder, including the severance arrangements set forth herein, and further in consideration of the Executive's exposure to the proprietary information of the Company, the Executive agrees, unless the Executive requests in writing to the Board, and is thereafter authorized in writing to do so by the Board, that (a) during his employment under this Agreement, and (b)(i) for the one year period following the termination of employment prior to a Change in Control or (ii) the two year period following the termination of employment following a Change in Control, the Executive shall not directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be employed or otherwise connected in any manner with, including without limitation as a consultant, any business which at any relevant time during said period directly or indirectly competes with the Company or any of its affiliates in any country in which the Company does business. Notwithstanding the foregoing, the Executive shall not be prohibited during the non-competition period described above from being a passive investor where he owns not more than five percent of the issued and outstanding capital stock of any publicly-held company. The Executive further agrees that during said period, the Executive shall not, directly or indirectly, solicit or induce, or attempt to solicit or induce, any employee of the Company to terminate employment with the Company or hire any employee of the Company.

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9. Enforcement . The Executive acknowledges that (i) the Executive's work for the Company has given and will continue to give him access to the confidential affairs and proprietary information of the Company; (ii) the covenants and agreements of the Executive contained in Sections 6, 7 and 8 are essential to the business and goodwill of the Company; and (iii) Crown would not have entered into this Agreement but for the covenants and agreements set forth in Sections 6, 7 and 8. The Executive further acknowledges that in the event of his breach or threat of breach of Sections 6, 7 or 8 of this Agreement, the Company, in addition to any other legal remedies which may be available to it, shall be entitled to appropriate injunctive relief and/or specific performance in order to enforce or prevent any violations of such provisions, and the Executive and the Company hereby confer jurisdiction to enforce such provisions upon the courts of any jurisdiction within the geographical scope of such provisions.

10. Notices . All notices and other communications provided for herein that one party intends to give to the other party shall be in writing and shall be considered given when mailed or couriered, return receipt requested, or personally delivered, either to the party or at the addresses set forth below (or to such other address as a party shall designate by notice hereunder):

If to the Company:
Crown Holdings, Inc.
One Crown Way
Philadelphia, PA 19154
Attention: Chief Executive Officer

If to the Executive, notice shall be sent to the Executive's address on file with the Company.
11.
Amendments . This Agreement may be amended, modified or superseded only by a written instrument executed by both of the parties hereto.

12. Binding Effect . This Agreement shall inure to the benefit of and shall be binding upon the Company and the Executive and their respective heirs, executors, personal representatives, successors and permitted assigns.

13. Assignability . This Agreement shall not be assignable, in whole or in part, by either party, without the prior written consent of the other party, provided that (i) this Agreement shall be binding upon and shall be assigned by Crown to any person, firm or corporation with which Crown may be merged or consolidated or which may acquire all or substantially all of the assets of Crown, or its successor (“ Crown's Successor ”), (ii) Crown shall require Crown's Successor to expressly assume in writing all of Crown's obligations under this Agreement and (iii) Crown's Successor shall be deemed substituted for Crown for all purposes of this Agreement.

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14. Arbitration . Except as provided in Section 9 of this Agreement, any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in Philadelphia, Pennsylvania in accordance with the rules of the American Arbitration Association, and judgment upon any award so rendered may be entered in any court having jurisdiction thereof. The determination of the arbitrator(s) shall be conclusive and binding on the Company and the Executive, and judgment may be entered on the arbitrator(s)' award in any court having jurisdiction.

15. Governing Law . Except to the extent such laws are superseded by Federal laws, this Agreement shall be governed by the laws of the Commonwealth of Pennsylvania without reference to principles of conflict of laws.

16. Entire Agreement . This Agreement contains the entire Agreement between the parties relative to its subject matter, superseding all prior agreements or understandings of the parties relating thereto. In the event of any conflict between this Agreement and the terms of any benefit plan or any other agreement, the terms of this Agreement will control.

17. Waiver . Any term or provision of this Agreement may be waived in writing at any time by the party entitled to the benefit thereof. The failure of either party at any time to require performance of any provision of this Agreement shall not affect such party's right at a later time to enforce such provision. No consent or waiver by either party to any default or to any breach of a condition or term in this Agreement shall be deemed or construed to be a consent or waiver to any other breach or default.

18. Withholding of Taxes . All payments made by the Company to the Executive under this Agreement shall be subject to the withholding of such amounts, if any, relating to tax, and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.

19. Survival . Anything contained in this Agreement to the contrary notwithstanding, the provisions of Sections 6, 7, 8, 9, 13, 14 and 17, (and the other provisions of this Agreement to the extent necessary to effectuate the survival of Sections 6, 7, 8, 9, 13, 14 and 17), shall survive termination of this Agreement and any termination of the Executive's employment hereunder.

20. Invalidity of Portion of Agreement . If any provision of this Agreement or the application thereof to either party shall be invalid or unenforceable to any extent, the remainder of this Agreement shall not be affected thereby and shall be enforceable to the fullest extent of the law. If any clause or provision hereof is determined by any court of competent jurisdiction to be unenforceable because of its scope or duration, the parties expressly agree that such court shall have the power to reduce the duration and/or restrict the scope of such clause or provision to the extent necessary to permit enforcement of such clause or provision in reduced or restricted form.

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21. Compliance with Code Section 409A . Notwithstanding anything else to the contrary in this Agreement, all reimbursements, including, without limitation, for medical related expenses, business expenses, legal fees and/or taxes shall be paid to the Executive as soon as practicable after submission of proper documentation of claims, but no later than December 31 of the year following the year during which the expense or fee was incurred.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above.
Crown Holdings, Inc.
/s/ John W. Conway
John W. Conway
Chairman of the Board, President
and Chief Executive Officer


Executive
/s/ Gerard Gifford
Gerard Gifford


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SENIOR EXECUTIVE RETIREMENT AGREEMENT
Background
Crown Holdings, Inc. maintains the Crown Senior Executive Retirement Plan (the “Plan”) to provide retirement and death benefits to certain of its key management employees.              Gerard Gifford (the “Participant”), as an executive of the Company, has been selected to participate in the Plan effective June 1, 2012. Unless otherwise defined herein, all capitalized terms used in this Agreement shall have the definitions set forth in the Plan, which is incorporated herein and made a part hereof.
Therefore, the Company and the Participant, both intending to be legally bound, hereby agree as follows:
Agreement
1.      Participation Effective Date . The effective date of the Participant's participation in the Plan is June 1, 2012.
2.      Normal Retirement Benefit . The Participant has been designated as a Group C Participant and shall be entitled to a Retirement Benefit calculated in accordance with the applicable provision of Section 3.1 of the Plan. For purposes of calculating the Participant's Retirement Benefit under Section 3.1.2 of the Plan, item “F” shall include the “Supplemental Retirement Benefit” the Participant is entitled to under the Crown Restoration Plan. The reduction in the Participant's Retirement Benefit attributable to his Supplemental Retirement Benefit under the Crown Restoration Plan shall be determined in a manner consistent with the reduction attributable to the Participant's Crown Pension.
3.      Vesting . The Participant shall be 100% vested in his Retirement Benefit upon meeting the requirements of Article IV of the Plan.

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4.      Normal Retirement Date . The Participant's Normal Retirement Date is March 28, 2020.
5.      Early Retirement Benefit . In the event the Participant's Commencement Date precedes his Normal Retirement Date, his Retirement Benefit shall be the amount determined under Section 3.1 of the Plan, reduced by the standard early retirement reduction factors set forth in Rider No. 1 to the Crown Cork & Seal Company, Inc. Pension Plan (or any successor plan thereto) for the period by which his Commencement Date precedes his Normal Retirement Date.
6.      Disability Benefit . There shall be no short-term or long-term disability benefits payable under the Plan.
7.      Surviving Spouse Retirement Benefits . If the Participant dies after becoming entitled to a vested Retirement Benefit under the Plan and prior to his Commencement Date, his surviving spouse, if any, shall receive a lump sum survivor benefit equal to 50% of the present value of the Participant's Retirement Benefit determined at the time of the Participant's death and which shall be payable as soon as administratively feasible after what would have been the Participant's Commencement Date or upon a Change in Control, if earlier.
8.      Death Benefits . If the Participant dies after becoming entitled to a vested Retirement Benefit under the Plan, the Company shall pay to the Participant's designated beneficiary a lump sum death benefit equal to five times his annual normal Retirement Benefit, as determined under Article III of the Plan. In the event the Participant fails to properly designate a beneficiary or if the designated beneficiary does not survive the Participant, the death benefit shall be payable to the Participant's estate. This death benefit shall be determined at the applicable time as set forth in the relevant section of the Plan and shall be payable as soon as administratively feasible following the Participant's death.

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9.      Form of Benefit . The Participant's Retirement Benefit shall be paid in the form of a cash lump sum. This lump sum payment shall equal the Actuarial Equivalent present value of the Participant's Retirement Benefit. All amounts payable under this Agreement shall be determined and paid in United States dollars (no amount shall be adjusted for any fluctuations in exchange rates between such date of determination and the date any such payment is actually made).
10.      Distribution . The Participant's vested Retirement Benefit shall be paid on the earlier of (a) the Participant's Commencement Date or (b) the occurrence of a Change in Control. Notwithstanding the foregoing, if the Participant's Commencement Date is determined by reference to the Participant's termination of employment, then the payment of the Participant's Retirement Benefit shall be made on the date that is at least six months and one day after the date of the Participant's termination of employment; notwithstanding the foregoing, if the Participant dies within such six month period, the Participant's Retirement Benefits shall be paid to his surviving spouse or his estate, if there is no surviving spouse, as soon as administratively practicable following the Participant's death, as provided in Section 6.1 of the Plan.
11.      Terms of the Plan Control . The Participant agrees to be bound in all respects by all provisions of the Plan, as amended and restated effective January 1, 2008 and subsequently amended or restated from time to time, including without limitation, all decisions of the Committee resolving questions concerning the operation and interpretation of the Plan. In all cases in which the Participant has an election or option under the Plan, the Participant must comply with the policies and procedures specified in the Plan or established by the Committee to make such election.

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12.      Interpretation . The Participant shall be considered a Group C Participant for all purposes of the Plan and this Agreement shall be interpreted accordingly. References to Plan provisions shall mean those provisions of the Plan, as amended and restated effective January 1, 2008 and subsequently amended or restated from time to time. Nothing in the Plan or in this Agreement shall be interpreted to cause a duplication of benefits. Any change or amendment to such Plan provisions that would affect the Participant's rights accrued up to the date of such change or amendment shall be effective as to the Participant only with his written consent; provided that , the Company or the Committee may make non-material changes to administrative policies or procedures without the Participant's consent.
13.      General . This Agreement shall not constitute an employment contract between the Company and the Participant and shall not be construed as conferring on the Participant the right to continue in the employ of the Company. The Participant, his beneficiary and his surviving spouse shall have no right to assign, transfer, pledge, encumber or otherwise anticipate any payment or interest under the Plan or this Agreement. The Participant acknowledges that he, his surviving spouse and beneficiary shall have no title to, or secured interest in, any assets the Company sets aside, earmarks or otherwise segregates (including in any trust) for the satisfaction of its liabilities under the Plan or this Agreement.
14.      This Agreement shall be construed in accordance with, and governed by, the laws of the Commonwealth of Pennsylvania, except to the extent superseded by federal law.

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This Agreement is entered into effective as of June 1, 2012.
 
CROWN HOLDINGS, INC.
 
/s/ John W. Conway
 
By: John W. Conway
 
 
 
/s/ Gerard Gifford
 
GERARD GIFFORD



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CROWN RESTORATION PLAN



This is the Crown Restoration Plan (the “ Plan ”), effective July 28, 2010. Crown Cork & Seal Company, Inc. (“ Crown ”) and certain of its affiliates (collectively the “ Company ”) have adopted the Plan to provide supplemental retirement benefits to certain of their key management employees. The Plan is intended to be unfunded and maintained by the Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees in accordance with Sections 201, 301 and 401 of ERISA, and is further intended to conform with the requirements of Section 409A of the Code and shall be implemented and administered in a manner consistent therewith.
ARTICLE I. DEFINITIONS.

The following terms as used herein have the following meanings:
1.1    “ Accrued Benefit ” means the amount payable to the Participant under the basic pension formula of the Pension Plan and the Rider applicable to the Participant that is attributable to employer contributions made to the Pension Plan by the Company.

1.2    “ Actuarial Equivalent ” means the equivalent actuarial value of a Participant's Supplemental Retirement Benefit provided in Section 3.2.1, determined based upon (i) the annual rate of interest on 30-year Treasury securities as of any determination date, and (ii) the 1983 Group Annuity Mortality Table for males.

1.3    “ Board of Directors ” means the Board of Directors of Holdings.

1.4      “ Cause ” means:

1.4.1.    a Participant's willful failure to perform such services as may be delegated or assigned to the Participant by any executive of the Company to whom the Participant reports;

1.4.2.      the failure by the Participant to devote his full business time and best effort to the performance of his Company duties (other than any such failure resulting from the Participant's incapacity due to physical or mental illness);

1.4.3.      the breach by the Participant of any restrictive covenant (e.g., noncompetition or nonsolicitation) to which the Participant is subject;

1.4.4.      the willful engaging by the Participant in misconduct which is materially injurious to the Company, monetarily or otherwise; or

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1.4.5.      the Participant's conviction of, or a plea of guilty or nolo contendere to, a felony or a crime involving fraud or moral turpitude;

in any case, as approved by the Board of Directors upon the vote of not less than a majority of the members of the Board of Directors then in office, after reasonable notice to the Participant specifying in writing the basis for the proposed termination for Cause and after the Participant, together with counsel, has been provided an opportunity to be heard before a meeting of the Board of Directors held upon reasonable notice to all members of the Board of Directors and the Participant. For purposes of this Section 1.4, no act, or failure to act, on the Participant's part shall be considered “willful” unless done, or omitted to be done, by him in bad faith and without reasonable belief that his action or omission was in the best interests of the Company. Any act or omission to act by the Participant in good faith and in reliance upon an opinion of counsel to the Company shall not be deemed to be willful.

1.5.      “ Change in Control ” means if and when:

1.5.1.      a “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of Holdings in substantially the same proportions as their ownership of stock of Holdings, becomes the “beneficial owner” (as defined in Rule 13D-3 under the Exchange Act), directly or indirectly, of securities of Holdings representing more than 50% of the combined voting power of Holdings' then outstanding voting securities; or

1.5.2.      a “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of Holdings in substantially the same proportions as their ownership of stock of Holdings, acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition) beneficial ownership, directly or indirectly, of securities of Holdings representing 35% or more of the combined voting power of Holdings' then outstanding voting securities; or

1.5.3.      during any 12 month period, individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with Holdings to effect a transaction described in Section 1.5.1, Section 1.5.2, Section 1.5.4 or Section 1.5.5 hereof) whose election by the Board of Directors or nomination for election by Holdings' stockholders was approved by a vote of a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

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1.5.4.      a merger or consolidation of Holdings with any other corporation, other than a merger or consolidation that would result in the voting securities of Holdings outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 70% of the combined voting power of the voting securities of Holdings or such surviving entity outstanding immediately after such merger or consolidation; or

1.5.5.      a sale or disposition by Holdings of all or substantially all of Holdings' assets;

in any case, provided that such transaction satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(v), (vi) or (vii).

1.6.      “ Code ” means the Internal Revenue Code of 1986, as amended, and the regulations and rulings issued thereunder.

1.7.      “ Committee ” means the Compensation Committee of the Board of Directors.

1.8.      “ Eligible Employee ” means an employee of the Company whose position is at the Senior-Vice President level or above.

1.9.      “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and rulings issued thereunder.
    
1.10.    “ Holdings ” means Crown Holdings, Inc.

1.11.      “ Joint & Survivor Annuity ” means a benefit payable for the life of the Participant, with 50% of such benefit continuing after the death of the Participant for the remaining life of his surviving spouse.

1.12.      “ Modified Accrued Benefit ” means a Participant's Accrued Benefit, modified by (i) disregarding the limitations imposed under Sections 401(a)(17) and 415(b)(1)(A) of the Code and (ii) including the Participant's target bonus compensation in the calculation of the Participant's Compensation (as such term is defined in the Pension Plan and the Rider applicable to the Participant).

1.13.      “ Normal Retirement Date ” has the meaning set forth in the Pension Plan and the Rider applicable to the Participant.

1.14.      “ Pension Plan ” means the Crown Cork & Seal Company, Inc. Pension Plan or any successor plan.

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1.15.      “ Rider ” has the meaning set forth in the Pension Plan.

1.16.    “ Separation from Service ” means a Participant's “separation from service” (within the meaning of Section 409A of the Code) with the Company.

1.17.      “ Supplemental Retirement Benefit ” means the benefit a Participant is entitled to receive under the Plan, as determined under Section 3.1.

ARTICLE II. PARTICIPATION.

2.1.      Participation . The Committee shall, in its sole discretion, select those Eligible Employees who will be permitted to participate in the Plan (each, a “ Participant ”). Each such Participant shall be notified in writing and his or her name shall be set forth on Exhibit A attached hereto, which Exhibit A shall be updated by the Committee from time to time.

ARTICLE III. SUPPLEMENTAL RETIREMENT BENEFIT.

3.1.      Supplemental Retirement Benefit . A Participant's “Supplemental Retirement Benefit” means the difference between the Participant's Modified Accrued Benefit and the Participant's Accrued Benefit, expressed in terms of a single-life annuity effective as of the first day of the month next following the Participant's Normal Retirement Date.

3.2.      Payment of Supplemental Retirement Benefit .

3.2.1.      Normal Form of Payment . Unless otherwise elected by the Participant in accordance with Section 3.2.2, a Participant's Supplemental Retirement Benefit shall be paid to the Participant in the form of a monthly single-life annuity, beginning as of the first day of the month following the Participant's Separation from Service (but no earlier than the Participant's 55 th birthday) and ending in the month including the Participant's death.

3.2.2.      Joint and Survivor Annuity . At any time prior to the date of a Participant's Separation from Service, a Participant may elect, by delivering written notice to the Company, to have the Participant's Supplemental Retirement Benefit paid in the form of a Joint & Survivor Annuity, beginning as of the first day of the month following the Participant's Separation from Service (but no earlier than the Participant's 55 th birthday). Such election shall become irrevocable upon the Participant's Separation from Service. Such Joint & Survivor Annuity shall be the equivalent actuarial value of the normal form of Supplemental Retirement Benefit provided in Section 3.2.1, using the assumptions set forth in Appendix A to Rider No. 1 of the Pension Plan.

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3.2.3.     Distribution Upon Change in Control . Notwithstanding any provision of the Plan to the contrary, in the event of a Change in Control, a Participant's accrued Supplemental Retirement Benefit (including amounts in pay status) shall be paid to the Participant (or, in the event the Participant dies prior to the Change in Control and has elected to receive his Supplemental Retirement Benefit in the form of a Joint & Survivor Annuity, to the Participant's surviving spouse) in a cash lump sum as soon as administratively practicable but in no event more than 10 business days after the Change in Control. In the event that the person who is eligible to receive payment under this Section 3.2.3 dies after a Change in Control but prior to distribution of his Supplemental Retirement Benefit, the entire amount of such Supplemental Retirement Benefit, as determined under this Section 3.2.3 shall be paid to his surviving spouse or his estate, if there is no surviving spouse, as soon as administratively practicable following such person's death. This lump sum payment shall equal the Actuarial Equivalent present value of the Supplemental Retirement Benefit.

3.3.      Death Benefit . In the event that a married Participant dies while in the employment of the Company, for purposes of determining the amount of benefits payable under the Plan to the Participant's surviving spouse, if any, the Participant shall be deemed to have (i) elected to receive payment of his Supplemental Retirement Benefit in the form of a Joint & Survivor Annuity (determined in accordance with Section 3.2.2) and (ii) incurred a Separation from Service on the day immediately preceding the date of the Participant's death. If a deceased Participant has attained age 55 at the time of his death, the survivor benefit portion of his Supplemental Retirement Benefit shall begin to be paid as of the first day of the month following the Participant's death. In the event the Participant has not attained age 55, such benefit shall begin to be paid as of the first day of the month following the date the Participant would have attained age 55. In the event that a Participant dies while in the employ of the Company and does not have a surviving spouse, then, except as provided in Section 3.2.3, the Company shall have no further liability or obligation under the Plan to the Participant or any person or entity claiming rights through the Participant (including his estate).

3.4.      Adjustments for Early Retirement . In the event a Participant incurs a Separation from Service prior to the Participant's Normal Retirement Date, the Participant's Supplemental Retirement Benefit shall be adjusted in the same manner that the Participant's Accrued Benefit under the Pension Plan would be adjusted had such Participant elected to receive his Accrued Benefit under the Pension Plan (i) in the same form that the Participant elected to receive his Supplemental Retirement Benefit and (ii) commencing on the later of the first day of the month next following his (a) Separation from Service or (b) 55 th birthday.

3.5.      Certain Required Payment Delays . Notwithstanding any other provision of this Plan to the contrary, if a Participant is a "specified employee" within the meaning of Section 409A of the Code and a payment provided for in this Plan would be subject to additional tax under Section 409A of the Code if such payment is paid within six months after the Participant's Separation from Service, then such payment required under this Plan shall not be paid (or commence) during the six-month period immediately following the Participant's Separation from Service. In such an event, any payments that would otherwise have been made during such six-month period and which would have incurred such additional tax under Section 409A of the Code shall instead be paid to the Participant in a lump-sum cash payment, with interest calculated at the six month London Interbank Offered Rate (as in effect at the time of the Participant's Separation from Service), on the first day of the seventh month following the Participant's Separation from Service.

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ARTICLE IV. VESTING.

4.1.      Vesting of Supplemental Retirement Benefit . Subject to Section 4.2, a Participant's Supplemental Retirement Benefit shall become 100% vested: (i) if while employed by the Company, the Participant (a) dies or (b) attains age 55 and is credited with 15 Years of Service, (ii) if while employed by the Company, a Change in Control occurs or (iii) under such other circumstances as prescribed by the Committee. If a Participant incurs a Separation from Service prior to satisfying the criteria set forth in the preceding sentence, the Participant shall forfeit his entire Supplemental Retirement Benefit.

4.2.      Forfeiture of Supplemental Retirement Benefit . Notwithstanding any other provision of this Plan to the contrary, if a Participant incurs a Separation from Service for Cause, then such Participant shall forfeit his Supplemental Retirement Benefit and the Company shall have no obligations to the Participant (or any person or entity claiming rights under the Participant) hereunder.

ARTICLE V. CONTRIBUTIONS.

5.1.      Contributions . In order to meet its obligations hereunder, the Company may, in its sole discretion, contribute to a trust the funds necessary to provide the benefits hereunder. The assets of any such trust shall remain subject to the claims of the Company's general creditors. Notwithstanding the foregoing, the Company's obligations hereunder shall constitute general, unsecured obligations, payable solely out of its general assets, and no Participant or other person shall have any right to specific assets. Title to and beneficial ownership of any assets, whether cash or investments, that the Company may set aside or earmark to meet its obligations hereunder, shall at all times remain in the Company; provided that legal title to any assets placed in a trust shall be in the trustee.

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ARTICLE VI. ADMINISTRATION.

6.1.      Administration by the Committee . The Plan shall be administered by the Committee. The Committee shall have the authority, responsibility and discretion to (i) interpret and construe the Plan, (ii) select the Eligible Employees who will be offered participation in the Plan, (iii) determine a Participant's Accrued Benefit, Modified Accrued Benefit and Supplemental Retirement Benefit, (iv) decide all questions arising under the Plan, including, without limitation, questions of eligibility for participation, eligibility for benefits and the time of the distribution thereof and (v) make all other determinations it deems necessary for the administration of the Plan. The Committee shall have the authority to deviate from the literal terms of the Plan to the extent the Committee shall determine to be necessary or appropriate to operate the Plan in compliance with the provisions of applicable law. All determinations made under the Plan by the Committee in good faith shall be final, binding and conclusive on all Participants, the Company and all other persons.
 
ARTICLE VII. AMENDMENT AND TERMINATION.

7.1.     Amendment . The Company reserves the right to amend the Plan at any time and in any manner whatsoever; provided , however , that no such amendment shall operate to reduce the benefit accrued under the Plan as of the date of such amendment without the consent of the affected Participant.

7.2.      Termination . Continuance of the Plan is completely voluntary, and is not assumed as a contractual obligation of the Company. The Company shall have the right, at any time, prospectively to discontinue the Plan; provided , however , that such termination shall not operate to reduce the benefit accrued under the Plan as of such termination without the consent of the affected Participant.

ARTICLE VIII. CLAIMS PROCEDURE.

8.1.      General . Each Participant (and each person or entity claiming rights under the Plan through such Participant) shall claim any benefit to which he or she is entitled under the Plan by a written notification to the Committee. If a claim is denied, it must be denied within a reasonable period of time, but not in excess of 90 days following receipt of the claim by the Committee unless the Committee determines that special circumstances require an extension of time for processing the claim, in which case, the Committee shall provide the claimant with written notice of extension prior to the termination of the initial 90 day period and shall have an additional 90 days from the expiration of the initial 90 day period to decide such claim. Any such notice of extension shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render its decision. The Committee's decision with respect to such claim shall be provided to the claimant in writing in a manner calculated to be understood by the claimant, and if such claim is denied, shall include (i) the specific reason for the denial, (ii) reference to the specific Plan provisions on which the denial is based, (iii) a description of additional information necessary for the claimant to present his claim, if any, and an explanation of why such information is necessary, and (iv) an explanation of the Plan's claim review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under Section 502 of ERISA following an adverse determination on review.

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8.2.      Appeal Process . Following the denial of a claim, the claimant shall have 60 days to request, in writing, a review of the denial by the Committee, which will provide a full and fair review. The claimant may review pertinent documents, and may submit written comments, documents, records and other information relating to the claim. In addition, upon request and free of charge, the claimant shall be provided reasonable access to, and copies of, all documents, records and other information relevant to the claim. The Committee's decision on review must be given within 60 days after receipt of the request for review unless the Committee determines that special circumstances require an extension of time for processing the claim (such as a hearing), in which case, written notice of the extension shall be provided to the claimant prior to the expiration of the initial 60 day period and the Committee shall have an additional 60 days from the expiration of the initial 60 day period to decide such claim. Any such notice of extension shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render its decision. The Committee's review shall take into account all comments, documents, records and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Committee's decision shall be provided to the claimant in writing in a manner calculated to be understood by the claimant, and if such claim is denied, shall include (i) specific reasons for the adverse determination, (ii) reference to the specific Plan provisions on which the determination is based, (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim and (iv) a statement of the claimant's right to bring an action under Section 502 of ERISA.

8.3.      Court Review . In order for the Committee to operate and administer the claims procedures in a timely and efficient manner, any claimant whose appeal with respect to a claim for benefits has been denied and who desires to begin a legal action with respect to such claim, must begin such action in a court of competent jurisdiction within 90 days after receipt of notification of such denial, and shall not be permitted to introduce any new facts or legal theories that were not presented during the claim review process. Failure to file such action by the prescribed time shall result in the permanent denial of such claim.

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ARTICLE IX. MISCELLANEOUS.

9.1.      Non-alienation . The right of a Participant or any other person to the payment of any benefit hereunder shall not be assigned, transferred, pledged or encumbered.

9.2.      Tax Withholding . Participants shall be responsible to make appropriate provision for all taxes required to be withheld in connection with participation in the Plan and receipt of any benefits hereunder. Such responsibility shall extend to all applicable Federal, state, local or foreign withholding taxes. The Company may, in its sole discretion, satisfy any such tax withholding obligation by withholding any payroll or other amounts otherwise due a Participant.

9.3.      No Employment Contract . Nothing contained herein shall be construed as conferring upon a Participant the right to continue in the employ of the Company or any of its affiliates in any capacity.

9.4.      Succession . The Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participants and their heirs, executors, administrators and legal representatives. The Plan shall be assignable at the discretion of the Company, provided that any assignee assumes all of the obligations of the Company hereunder.

9.5.      Gender and Number . For purposes of the Plan, the singular shall include the plural and the masculine shall include the feminine, and vice versa.

9.6.      Governing Law . The Plan shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania (without regard to its choice of law provisions), except to the extent superseded by federal law.

9.7.      409A Compliance . The Plan is intended to comply with Code Section 409A and the Committee shall interpret, apply and administer the Plan in the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder by the Company.



*      *      *      *      *

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IN WITNESS WHEREOF, the Company has caused the Plan to be executed effective as of the date first above written.
CROWN CORK & SEAL COMPANY, INC.
By: /S/ Timothy J. Donahue
                            
Name: Timothy J. Donahue
                            
Title: Executive Vice President
& Chief Financial Officer



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AMENDMENT NO. 1

CROWN RESTORATION PLAN


WITNESSETH:
WHEREAS , Crown Cork & Seal Company, Inc. (the “Company”) adopted the Crown Restoration Plan (the “Plan”) to provide supplemental retirement benefits to certain of its senior management personnel as further described therein, and

WHEREAS , the Company desires to amend the Plan as set forth below (the “Amendment”).

NOW, THEREFORE, the Plan is hereby amended, effective July 1, 2011, as follows:

1.      Section 1.12 is hereby amended and restated in its entirety to read as follows:

“1.12      ' Modified Accrued Benefit ' means a Participant's Accrued Benefit, modified by (i) disregarding the limitations imposed under Sections 401(a)(17) and 415(b)(1)(A) of the Code, (ii) including the Participant's target bonus compensation in the calculation of the Participant's Compensation (as such term is defined in the Pension Plan and the Rider applicable to the Participant) and (iii) including all periods of service a Participant had with H-C Industries, Inc. prior to April 1, 1989, as if such periods of service had been a 'Year of Service' under the terms of Rider No. 1 of the Pension Plan.”
2.      Except as specifically provided in and modified by this Amendment, the Plan is in all other respects hereby ratified and confirmed and references to the Plan shall be deemed to refer to the Plan as modified by this Amendment.
To record the adoption of this Amendment No. 1 to the Plan, Crown Cork & Seal Company, Inc. has caused its authorized officer to affix its corporate name this 30th day of June, 2011.

CROWN CORK & SEAL COMPANY, INC.


By:      /s/ Timothy J. Donahue                          
Timothy J. Donahue
Executive Vice President & Chief Financial Officer





EXHIBIT 31.1
CERTIFICATION
I, John W. Conway, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Crown Holdings, Inc. (“the registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
August 9, 2012
 
/s/  John W. Conway        
 
 
 
John W. Conway
 
 
 
Chief Executive Officer



EXHIBIT 31.2
CERTIFICATION
I, Timothy J. Donahue, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Crown Holdings, Inc. (“the registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
August 9, 2012
 
/s/  Timothy J. Donahue
 
 
 
Timothy J. Donahue
 
 
 
Chief Financial Officer




EXHIBIT 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Crown Holdings, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2012 (the “Report”), each of the undersigned officers certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial position and results of operations of the Company.

Date:
August 9, 2012
 
/s/  John W. Conway        
 
 
 
John W. Conway
 
 
 
Chief Executive Officer
 
 
 
 
Date:
August 9, 2012
 
/s/  Timothy J. Donahue
 
 
 
Timothy J. Donahue
 
 
 
Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to this Quarterly Report on Form 10-Q and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.