Crown Holdings - 10-Q quarterly report FY2014 Q3

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 SEPTEMBER 30, 2014



¨	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 138,918,911 shares of Common Stock outstanding as of October 24, 2014.

Crown Holdings, Inc.

PART I – FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions except per share data)

(Unaudited)



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Net sales	$	2,594		$	2,389		$	6,970		$	6,585
Cost of products sold, excluding depreciation and amortization	2,119			1,961			5,740			5,419
Depreciation and amortization	53			34			135			98
Gross profit	422			394			1,095			1,068
Selling and administrative expense	95			113			302			319
Restructuring and other	8			31			91			39
Loss from early extinguishments of debt	34			—			34			38
Interest expense	64			58			188			179
Interest income	(2		)	(1		)	(5		)	(4		)
Foreign exchange	(2		)	(2		)	4			—
Income before income taxes and equity earnings	225			195			481			497
Provision for / (benefit from) income taxes	(41		)	67			42			146
Equity earnings (loss) in affiliates	—			(1		)	—			(2		)
Net income	266			127			439			349
Net income attributable to noncontrolling interests	(22		)	(26		)	(65		)	(74		)
Net income attributable to Crown Holdings	$	244		$	101		$	374		$	275

Earnings per common share attributable to Crown Holdings:
Basic	$	1.78		$	0.73		$	2.73		$	1.96
Diluted	$	1.76		$	0.73		$	2.70		$	1.94

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

Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Net income	$	266		$	127		$	439		$	349

Other comprehensive income, net of tax
Foreign currency translation adjustments	(154		)	25			(162		)	1
Pension and other postretirement benefits	19			14			51			62
Derivatives qualifying as hedges	11			15			32			(15		)
Total other comprehensive income (loss)	(124		)	54			(79		)	48

Total comprehensive income	142			181			360			397
Net income attributable to noncontrolling interests	(22		)	(26		)	(65		)	(74		)
Translation adjustments attributable to noncontrolling interests	2			(1		)	1			—
Derivatives qualifying as hedges attributable to noncontrolling interests	(1		)	(2		)	(3		)	1
Comprehensive income attributable to Crown Holdings	$	121		$	152		$	293		$	324

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

Crown Holdings, Inc.

CONSOLIDATED BALANCE SHEETS (Condensed)

(In millions)

(Unaudited)



	September 30, 2014		December 31, 2013
Assets
Current assets
Cash and cash equivalents	$	380	$	689
Receivables, net	1,385		1,064
Inventories	1,473		1,213
Prepaid expenses and other current assets	370		214
Total current assets	3,608		3,180

Goodwill and intangible assets	3,067		2,016
Property, plant and equipment, net	2,447		2,152
Other non-current assets	695		682
Total	$	9,817	$	8,030

Liabilities and equity
Current liabilities
Short-term debt	$	157	$	279
Current maturities of long-term debt	90		94
Accounts payable and accrued liabilities	2,519		2,547
Total current liabilities	2,766		2,920

Long-term debt, excluding current maturities	5,200		3,469
Postretirement and pension liabilities	767		891
Other non-current liabilities	536		461
Commitments and contingent liabilities (Note L)
Noncontrolling interests	278		285
Crown Holdings shareholders’ equity	270		4
Total equity	548		289
Total	$	9,817	$	8,030

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

Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)

(In millions)

(Unaudited)



	Nine Months Ended
	September 30
	2014			2013
Cash flows from operating activities
Net income	$	439		$	349
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization	135			98
Restructuring and other	91			39
Pension expense	41			58
Pension contributions	(63		)	(63		)
Stock-based compensation	18			17
Changes in assets and liabilities:
Receivables	(360		)	(430		)
Inventories	(168		)	(166		)
Accounts payable and accrued liabilities	(34		)	(70		)
Other, net	(90		)	44
Net cash provided by / (used for) operating activities	9			(124		)
Cash flows from investing activities
Capital expenditures	(212		)	(181		)
Purchase of business	(733		)	—
Insurance proceeds	—			8
Proceeds from sale of property, plant and equipment	9			6
Proceeds from sale of business	22			—
Other	2			(11		)
Net cash used for investing activities	(912		)	(178		)
Cash flows from financing activities
Proceeds from long-term debt	2,742			1,063
Payments of long-term debt	(1,720		)	(998		)
Net change in revolving credit facility and short-term debt	(232		)	484
Debt issue costs	(41		)	(15		)
Common stock issued	11			16
Common stock repurchased	(2		)	(300		)
Purchase of noncontrolling interests	(93		)	(13		)
Dividends paid to noncontrolling interests	(45		)	(65		)
Other	(14		)	15
Net cash provided by financing activities	606			187
Effect of exchange rate changes on cash and cash equivalents	(12		)	1
Net change in cash and cash equivalents	(309		)	(114		)
Cash and cash equivalents at January 1	689			350
Cash and cash equivalents at September 30	$	380		$	236

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

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		Accumulated Other Comprehensive Loss			Treasury Stock			Total Crown Equity			Noncontrolling Interests			Total
Balance at January 1, 2013	$	929	$	668		$	1,071	$	(2,614	)	$	(214	)	$	(160	)	$	289		$	129
Net income						275								275			74			349
Other comprehensive income / (loss)								49						49			(1		)	48
Dividends paid to noncontrolling interests																	(65		)	(65		)
Restricted stock awarded			(6		)						6
Stock-based compensation			17											17						17
Common stock issued			12								4			16						16
Common stock repurchased			(265		)						(35		)	(300		)				(300		)
Purchase of noncontrolling interests			(1		)									(1		)	(12		)	(13		)
Balance at September 30, 2013	$	929	$	425		$	1,346	$	(2,565	)	$	(239	)	$	(104	)	$	285		$	181

Balance at January 1, 2014	$	929	$	431		$	1,395	$	(2,513	)	$	(238	)	$	4		$	285		$	289
Net income						374								374			65			439
Other comprehensive income / (loss)								(81		)				(81		)	2			(79		)
Dividends paid to noncontrolling interests																	(30		)	(30		)
Stock-based compensation			18											18						18
Common stock issued			8								3			11						11
Common stock repurchased			(2		)						—			(2		)				(2		)
Purchase of noncontrolling interests			(54		)									(54		)	(44		)	(98		)
Balance at September 30, 2014	$	929	$	401		$	1,769	$	(2,594	)	$	(235	)	$	270		$	278		$	548

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

Crown Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share and statistical data)

(Unaudited)


A.	Statement of Information Furnished

The consolidated financial statements include the accounts of Crown Holdings, Inc. and its consolidated subsidiaries (the “Company”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with Form 10-Q instructions. In the opinion of management, these consolidated financial statements contain all adjustments of a normal and recurring nature necessary for a fair statement of the financial position of the Company as of September 30, 2014 and the results of its operations for the three and nine months ended September 30, 2014 and 2013 and of its cash flows for the nine months ended September 30, 2014 and 2013. 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, 2013.


B.	Accounting and Reporting Developments

Recently Adopted Accounting Standards

In the first quarter of 2014, the Company adopted changes to the guidance on a parent’s accounting for cumulative translation adjustments upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The changes primarily clarified existing guidance regarding when cumulative translation adjustments should be released into earnings upon the occurrence of various events. The change did not impact the Company's financial statements in the first quarter.

Recently Issued Accounting Standards

In April 2014, the FASB issued changes to the definition of a discontinued operation to include only disposals that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. The guidance, which will be effective for the Company on January 1, 2015, applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. Early adoption is permitted.

In May 2014, the FASB issued new guidance related to how an entity should recognize revenue. The guidance specifies that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In addition, the guidance expands the required disclosures related to revenue and cash flows from contracts with customers. The guidance is effective for the Company beginning in the first quarter of 2017. Early adoption is not permitted and retrospective application is permitted, but not required. The Company is currently evaluating the impact of adopting this guidance on its financial position and results of operations.


C.	Acquisitions

Mivisa

On April 23, 2014 , the Company completed its previously announced acquisition of the sole shareholder of Mivisa Envases, S.A.U. (“Mivisa”) for $733, net of $28 in cash acquired, plus $977 of debt assumed. Mivisa, based in Murcia, Spain, primarily serves the vegetable, fruit, fish and meat markets and is the largest food can producer in both the Iberian Peninsula and Morocco. The acquisition is expected to significantly build upon the Company's existing position in the strategically important European food can segment by substantially increasing the Company's presence in Spain, one of Europe's leading agricultural economies.

Crown Holdings, Inc.

The following table summarizes the consideration transferred to acquire Mivisa and the identifiable assets acquired and liabilities assumed at the acquisition date.



Fair value of consideration transferred
Cash	$	733
Total consideration	$	733

Recognized amounts of identifiable assets acquired and liabilities assumed:
Receivables, net	205
Inventories	199
Prepaid expenses and other current assets	11
Intangible assets	336
Property, plant and equipment, net	313
Net assets of acquired business to be divested	9
Accounts payable and accrued liabilities	(151		)
Debt	(977		)
Other non-current liabilities	(136		)
Total identifiable net assets	$	(191	)

Goodwill	$	924

Goodwill is primarily attributable to expected synergies arising from the acquisition as well as the assembled workforce of Mivisa. All of the goodwill was assigned to the Company's European Food segment and is not expected to be deductible for tax purposes.

The fair value of the assets acquired includes receivables of $205. The gross contractual amount due is $227 of which $22 is expected to be uncollectible.

The acquired property, plant and equipment will be depreciated on a straight-line basis over the estimated remaining useful lives of the equipment in accordance with the Company's existing policies and procedures.

Intangible assets include $15 of acquired trademarks that will be amortized over one year and $321 of customer relationships that will be amortized over fifteen years.

The Company has not finalized its valuation of the assets acquired and as a result has not yet finalized the determination of the fair value of assets acquired and liabilities assumed. The Company expects to finalize its purchase accounting within one year of the acquisition date.

Empaque

On August 31, 2014, the Company entered into an agreement to acquire Empaque, a leading Mexican manufacturer of aluminum cans and ends, bottle caps and glass bottles for the beverage industry, from Heineken N.V., in a cash transaction valued at $1,225, subject to adjustment. The acquisition is subject to customary closing conditions, including competition authority approval. Empaque, headquartered in Monterrey, Mexico, currently operates two beverage can plants, a plant that manufacturers beverage can ends, aluminum closures and bottle caps, a glass bottle plant, a glass service facility and a sand mine in Mexico. For the year ended December 31, 2013, Empaque had sales of approximately $660.

Crown Holdings, Inc.

D. Accumulated Other Comprehensive Income

The following table provides information about the changes in each component of accumulated other comprehensive income.



	Defined Benefit Plans			Foreign Currency Translation			Gains and Losses on Cash Flow Hedges			Total
Balance at December 31, 2012	$	(1,954	)	$	(648	)	$	(12	)	$	(2,614	)
Other comprehensive income (loss) before reclassifications	14			3			(39		)	(22		)
Amounts reclassified from accumulated other comprehensive income	48			(2		)	25			71
Other comprehensive income (loss)	62			1			(14		)	49
Balance at September 30, 2013	$	(1,892	)	$	(647	)	$	(26	)	$	(2,565	)

Balance at December 31, 2013	$	(1,828	)	$	(658	)	$	(27	)	$	(2,513	)
Other comprehensive income (loss) before reclassifications	—			(161		)	8			(153		)
Amounts reclassified from accumulated other comprehensive income	51			—			21			72
Other comprehensive income (loss)	51			(161		)	29			(81		)
Balance at September 30, 2014	$	(1,777	)	$	(819	)	$	2		$	(2,594	)

Crown Holdings, Inc.

The following table provides information about amounts reclassified out of accumulated other comprehensive income.



	Amount Reclassified from Accumulated Other Comprehensive Income
	Three Months Ended						Nine Months Ended
Details about Accumulated Other	September 30,						September 30,						Affected Line Item in the
Comprehensive Income Components	2014			2013			2014			2013			Statement of Operations
Gains and losses on cash flow hedges
Commodities	$	(2	)	$	16		$	24		$	34		Cost of products sold
	(2		)	16			24			34			Total before tax
	1			(4		)	(6		)	(9		)	Provision for income taxes
	$	(1	)	$	12		$	18		$	25		Net of tax

Foreign exchange	$	(2	)	$	5		$	(2	)	$	6		Net sales
	3			(4		)	5			(6		)	Cost of products sold
	1			1			3			—			Total before tax
	—			—			—			—			Provision for income taxes
	$	1		$	1		$	3		$	—		Net of tax

Total gains and losses on cash flow hedges	$	—		$	13		$	21		$	25

Foreign currency translation
Currency translation on disposed investment	$	—		$	(2	)	$	—		$	(2	)	Asset impairments and sales
	—			(2		)	—			(2		)	Total before tax
	—			—			—			—			Provision for income taxes
	$	—		$	(2	)	$	—		$	(2	)	Net of tax

Amortization of defined benefit plan items
Actuarial losses	$	33		$	37		$	97		$	106		(a)
Prior service credit	(12		)	(19		)	(36		)	(45		)	(a)
	21			18			61			61			Total before tax
	(2		)	(4		)	(10		)	(13		)	Provision for income taxes
	$	19		$	14		$	51		$	48		Net of tax

Total reclassifications for the period	$	19		$	25		$	72		$	71		Net of tax

(a) These accumulated other comprehensive income components are included in the computation of net period pension and postretirement cost. See Note N for further details.

Crown Holdings, Inc.


E.	Stock-Based Compensation

A summary of restricted and deferred stock transactions during the nine months ended September 30, 2014 follows:



	Number of shares
Non-vested stock awards outstanding at January 1, 2014	2,042,272
Awarded:
Time-vesting	178,794
Performance-based	174,481
Released:
Time-vesting shares awarded in 2011 through 2013	(109,784	)
Forfeitures:
Time-vesting	(59,375	)
Performance-based-shares awarded in 2011	(196,667	)
Non-vested stock awards outstanding at September 30, 2014	2,029,721

In January 2014, the Company awarded shares of restricted stock to certain senior executives consisting 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 market performance criteria is the Company's Total Shareholder Return ("TSR"), which includes share price appreciation and dividends paid, during the three-year term of the award measured against the TSR of a peer group of companies.

In addition, the Company awarded 83,700 shares of time-vesting restricted stock and deferred stock to U.S. and non-U.S. employees as part of its continuing general awards. The shares vest annually between three and four years.

In January 2014, the performance-based shares awarded in 2011 were forfeited as the required market condition was not met.

The weighted average grant-date fair values of the 2014 and 2013 time-vesting stock awards were $46.66 and $43.42 and the performance-based stock awards were $48.31 and $36.75, respectively.

The fair value of the performance-based shares awarded in 2014 was calculated using a Monte Carlo valuation model. The estimated weighted average grant-date fair value of the 174,481 performance-based shares awarded in 2014 was $48.31 using a weighted average stock price volatility of 21.5%, an expected term of three years, and a weighted average risk-free interest rate of 0.80%. The variables used to value the 2013 performance-based award included a weighted average stock price volatility of 22.40%, an expected term of three years, and a weighted average risk-free rate of 0.34%.

At September 30, 2014, unrecognized compensation cost related to outstanding nonvested stock awards was $48. The weighted average period over which the expense is expected to be recognized is 3.0 years. The aggregate market value of the shares released and issued on the vesting dates was $5. The Company has assumed an annual forfeiture rate of 3% on the general awards.


F.	Receivables



	September 30, 2014			December 31, 2013
Accounts receivable	$	1,285		$	962
Less: allowance for doubtful accounts	(98		)	(78		)
Net trade receivables	1,187			884
Miscellaneous receivables	198			180
Receivables, net	$	1,385		$	1,064

In 2014, the Company amended its North American securitization facility to provide for the sale of certain customer receivables without recourse on a revolving basis. As of September 30, 2014, the Company derecognized receivables sold of $293 and recognized a deferred purchase price of $153 which was included in prepaid expenses and other current assets in the Company’s Consolidated Balance Sheet. The deferred purchase price receivable is reduced as collections

Crown Holdings, Inc.

of the underlying receivables occur; however, as this is a revolving program, the sale of new receivables will result in an increase in the deferred purchase price receivable. The net change in the deferred purchase price receivable was reflected in the receivables line item on the Company’s Consolidated Statement of Cash Flows. This activity is reflected as an operating cash flow because the related customer receivables are the result of an operating activity with an insignificant, short-term interest rate risk.


G.	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 FIFO or average cost method.



	September 30, 2014		December 31, 2013
Raw materials and supplies	$	706	$	645
Work in process	165		128
Finished goods	602		440
	$	1,473	$	1,213

H. Derivative and Other Financial Instruments

Fair Value Measurements

Under GAAP a framework exists for measuring fair value, providing a three-tier hierarchy of pricing inputs used to report assets and liabilities that are adjusted to fair value. Level 1 includes inputs such as quoted prices which are available in active markets for identical assets or liabilities as of the report date. Level 2 includes inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 includes unobservable pricing inputs that are not corroborated by market data or other objective sources. The Company has no items valued using Level 3 inputs other than certain pension plan assets.

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

The Company applies a market approach to value its commodity price hedge contracts. Prices from observable markets are used to develop the fair value of these financial instruments and they are reported under Level 1. The Company uses an income approach to value its foreign exchange forward contracts. These contracts are valued using a discounted cash flow model that calculates the present value of future cash flows under the terms of the contracts using market information as of the reporting date, such as foreign exchange spot and forward rates, and are reported under Level 2 of the fair value hierarchy.

Fair value disclosures for financial assets and liabilities that were accounted for at fair value on a recurring basis are provided later in this note. In addition, see Note J for fair value disclosures related to debt.

Derivative Financial Instruments

In the normal course of business the Company is subject to risk from adverse fluctuations in currency exchange rates, interest rates and commodity prices. The Company manages these risks through a program that includes the use of derivative financial instruments, primarily swaps and forwards. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes.

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

Crown Holdings, Inc.

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 reclassification from comprehensive income is the same as that of the underlying exposure. Contracts outstanding at September 30, 2014 mature between one and 25 months.

When the Company discontinues hedge accounting because it is no longer probable that an anticipated transaction will occur in the originally specified period, changes to fair value accumulated in other comprehensive income are recognized immediately in earnings.

The Company uses forward contracts to hedge anticipated purchases of various commodities, including aluminum, fuel oil and natural gas and these exposures are hedged by a central treasury unit.

The Company also designates certain foreign exchange contracts as cash flow hedges of anticipated foreign currency denominated sales or purchases. The Company manages these risks at the operating unit level. Often 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 the fair value of derivative instruments.



	Amount of gain/(loss)					Amount of gain/(loss)
	recognized in AOCI					reclassified from AOCI
	(effective portion)					into earnings
	Three Months Ended			Nine Months Ended		Three Months Ended			Nine Months Ended
Derivatives in cash flow hedges	September 30, 2014			September 30, 2014		September 30, 2014			September 30, 2014

Foreign exchange	$	(2	)	$	—	$	(2	)	$	(3	)
Commodities	9			8		(1		)	(18		)
Total	$	7		$	8	$	(3	)	$	(21	)



	Amount of gain/(loss) recognized in AOCI (effective portion)						Amount of gain/(loss) reclassified from AOCI into earnings
	Three Months Ended			Nine Months Ended			Three Months Ended			Nine Months Ended
Derivatives in cash flow hedges	September 30, 2013			September 30, 2013			September 30, 2013			September 30, 2013
Foreign exchange contracts	$	(2	)	$	(1	)	$	(1	)	$	—
Commodity contracts	(24		)	(38		)	(12		)	(25		)
Total	$	(26	)	$	(39	)	$	(13	)	$	(25	)

For the three and nine months ended September 30, 2014, the Company recognized a gain of $2 and a loss of $1, respectively, related to hedge ineffectiveness caused primarily by volatility in the metal premium component of aluminum prices. In the event that recent volatility in metal premiums continues, it is possible that the Company could record losses in the future that could be material.

Crown Holdings, Inc.

During the twelve month period ending September 30, 2015, a net gain of $1 ($1, net of tax) is expected to be reclassified to earnings. No amounts were reclassified during the nine months ended September 30, 2014 and 2013 in connection with anticipated transactions that were no longer considered probable.

Fair Value Hedges and Contracts Not Designated as Hedges

The Company designates certain derivative financial instruments as fair value hedges of recognized foreign-denominated assets and liabilities, generally trade accounts receivable and payable and unrecognized firm commitments. The notional values and maturity dates of the derivative instruments coincide with those of the hedged items. Changes in fair value of the derivative financial instruments, excluding time value, are offset by changes in fair value of the related hedged items.

Other than for firm commitments, amounts related to time value are excluded from the assessment and measurement of hedge effectiveness and are reported in earnings. Less than $1 was reported in earnings for the nine months ended September 30, 2014.

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

assets and liabilities denominated in 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 loss of $3 and a loss of $2 for the three and nine months ended September 30, 2014 and a gain of $3 and loss of $1 for the three and nine months ended September 30, 2013. The impact on earnings from foreign exchange contracts not designated as hedges was a loss of $25 and a loss of $38 for the three and nine months ended September 30, 2014 and a gain of $3 and a loss of $1 for the same periods in 2013. These adjustments were reported within foreign exchange in the Consolidated Statements of Operations and were offset by changes in the fair values of the related hedged item.

Fair Values of Derivative Financial Instruments and Valuation Hierarchy

The following table sets forth the fair value hierarchy for the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2014 and December 31, 2013, respectively.



	Balance Sheet Classification	Fair Value Hierarchy	September 30, 2014		December 31, 2013
Derivative Assets
Derivatives designated as hedges:

Foreign exchange	Other current assets	2	$	21	$	29
Commodities	Other current assets	1	6		—
Commodities	Other non-current assets	1	—		—
Derivatives not designated as hedges:
Foreign exchange	Other current assets	2	1		8
	Total		$	28	$	37

Derivative Liabilities
Derivatives designated as hedges:
Foreign exchange	Accounts payable and accrued liabilities	2	$	23	$	30
Commodities	Accounts payable and accrued liabilities	1	4		27
Commodities	Other non-current liabilities	1	—		2
Derivatives not designated as hedges:
Foreign exchange	Accounts payable and accrued liabilities	2	19		1
	Total		$	46	$	60

Crown Holdings, Inc.

Offsetting of Derivative Assets and Liabilities

Certain derivative financial instruments are subject to agreements with counterparties similar to master netting arrangements and are eligible for offset. The Company has made an accounting policy election not to offset the fair values of these instruments within the statement of financial position. In the table below, the aggregate fair values of the Company's derivative assets and liabilities are presented on both a gross and net basis, where appropriate.



	Gross Amounts Recognized in the Balance Sheet	Gross Amounts Not Offset in the Balance Sheet	Net Amount
Balance at September 30, 2014
Derivative Assets	28	5	23
Derivative Liabilities	46	5	41

Balance at December 31, 2013
Derivative Assets	37	2	35
Derivative Liabilities	60	2	58

Notional Values of Outstanding Derivative Instruments

The aggregate U.S. dollar-equivalent notional values of outstanding derivative instruments in the Consolidated Balance Sheets at September 30, 2014 and December 31, 2013 were:



	September 30, 2014		December 31, 2013
Derivatives in cash flow hedges:
Foreign exchange	$	478	$	724
Commodities	187		379
Derivatives in fair value hedges:
Foreign exchange	114		128
Derivatives not designated as hedges:
Foreign exchange	666		675


I.	Restructuring and Other

The Company recorded restructuring and other charges as follows:



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014	2013
Asset impairments and sales	$	(2	)	$	(2	)	40	(2	)
Restructuring	6			33			19	41
Transaction costs	—			—			14	—
Other costs	4			—			18	—
	8			31			91	39

For the three months ended September 30, 2014, restructuring included $5 of pension settlement charges related to a prior restructuring action in the Company's North American Food segment. Other costs primarily related to incremental costs associated with the temporary relocation of production due to an ongoing labor dispute in the Company's Americas Beverage segment.

For the nine months ended September 30, 2014, asset impairments and sales related to the divestment of certain operations in connection with the Company's acquisition of Mivisa. Transaction costs were also associated with the acquisition. Restructuring charges included $8 of termination benefits in the Company's European Food segment and $7 of pension settlement charges related to a prior restructuring action in the Company's North American Food segment. Other costs primarily related to incremental costs associated with the temporary relocation of production due to an ongoing labor dispute in the Company's Americas Beverage segment.

Crown Holdings, Inc.

For the three and nine months ended September 30, 2013, restructuring charges included $31 of termination benefits related to a cost reduction initiative in the Company's European Division as further described below and $2 and $10 of other exit costs related to prior restructuring actions.

The tables below summarize the outstanding accrual balances associated with prior restructuring actions.

2011 European Division Headquarters Relocation

Through September 30, 2014, the Company incurred costs of $40 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, 2014	$	—	$	18		$	18
Payments	—		(8		)	(8		)
Foreign currency translation	—		(1		)	(1		)
Balance at September 30, 2014	$	—	$	9		$	9

Other exit costs represent the estimated employee compensation costs resulting from an intercompany payment related to the relocation. The Company expects to pay the remaining costs in 2015.

2011 and 2012 European Division Actions

Through September 30, 2014, the Company incurred costs of $70 in connection with actions taken in 2011 and 2012 to reduce manufacturing capacity and headcount in its European Aerosol and Specialty Packaging businesses. Due to the similar nature of these actions, they have been combined in the rollforward presented below. The Company currently expects to incur future additional costs of $2 related to the actions which are expected to be completed in 2014 at an estimated aggregate cost of $72. The Company expects to pay the liability through 2024 as certain employees have elected to receive payout as a fixed monthly sum over a period of time. The Company continues to review its supply and demand profile and long-term plans in Europe and it is possible that the Company may record additional restructuring charges in the future.

The table below summarizes the restructuring accrual balances and utilization by cost type for this action.



	Termination benefits			Other exit costs			Total
Balance at January 1, 2014	$	16		$	—		$	16
Provision	2			1			3
Payments	(5		)	(1		)	(6		)
Foreign currency translation	(1		)	—			(1		)
Balance at September 30, 2014	$	12		$	—		$	12

2013 European Division Actions

Through September 30, 2014, the Company incurred costs of $31 related to a cost-reduction initiative to better align costs with ongoing market conditions in its European operations, including $15 in the Company's European Food segment, $2 in its European Beverage segment, $8 in non-reportable segments primarily in the Company's aerosol and specialty packaging businesses and $6 in Corporate. The action is expected to result in the reduction of approximately 235 employees when completed in 2014. The Company does not expect to incur any additional charges related to this action.

Crown Holdings, Inc.

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, 2014	$	27		$	—	$	27
Payments	(9		)	—		(9		)
Foreign currency translation	(1		)	—		(1		)
Balance at September 30, 2014	$	17		$	—	$	17

2014 European Division Actions

For the nine months ended September 30, 2014, the Company recorded a charge of $8 related to severance costs in its European Food segment. The Company does not expect to incur any additional charges related to this action.

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, 2014	$	—	$	—	$	—
Provision	8		—		8
Payments	—		—		—
Balance at September 30, 2014	$	8	$	—	$	8


J.	Debt

The Company’s outstanding debt was as follows.



	September 30, 2014			December 31, 2013
Short-term debt	$	157		$	279
Long-term debt
Senior secured borrowings:
Revolving credit facilities	$	—		$	103
Term loan facilities
U.S. dollar at LIBOR plus 1.75% due 2018	800			220
Euro (€700 at September 30, 2014) at EURIBOR plus 1.75% due 2018	884			151
Farm credit facility at LIBOR plus 2.00% due 2019	362			—
Senior notes and debentures:
Euro 7.125% due 2018	—			688
U.S. dollar 6.25% due 2021	700			700
Euro (€650 at September 30, 2014) 4.0% due 2022	821			—
U.S. dollar 4.50% due 2023	1,000			1,000
U.S. dollar 7.375% due 2026	350			350
U.S. dollar 7.50% due 2096	64			64
Other indebtedness in various currencies	311			289
Unamortized discounts	(2		)	(2		)
Total long-term debt	5,290			3,563
Less: current maturities	(90		)	(94		)
Total long-term debt, less current maturities	$	5,200		$	3,469

The estimated fair value of the Company’s long-term borrowings, using a market approach incorporating level 2 inputs such as quoted market prices for the same or similar issues, was $5,504 at September 30, 2014 and $3,645 at December 31, 2013.

Crown Holdings, Inc.

In April 2014, to fund the acquisition of Mivisa as described in Note C, payoff certain of Mivisa's existing debt and pay transaction costs, the Company borrowed $580 under its U.S. dollar term loan facility, €590 ($743 at September 30, 2014) under its euro term loan facility and $362 under a farm credit facility.

In July 2014, the Company issued €650 ($821 at September 30, 2014) principal amount of 4% senior unsecured notes due 2022. The notes were issued at par by Crown European Holdings S.A., a subsidiary of the Company, and are unconditionally guaranteed by the Company and certain of its subsidiaries. The Company used a portion of the proceeds to purchase through a tender offer and to redeem all of its outstanding senior notes due 2018. In connection with the repurchase and redemption of the 2018 notes, the Company recorded a loss from early extinguishment of debt of approximately $34 in the third quarter of 2014 including $28 for premiums paid and $6 for the write off of deferred financing fees.

In October 2014, the Company entered into amendments to its credit agreement which provide for a $75 Additional Term Loan A facility and a $675 Term Loan B facility. The Additional Term Loan A facility and Term Loan B facility are subject to consummation of the Empaque acquisition discussed in Note C. The maturity date for the Additional Term Loan A facility is December 19, 2018. The maturity date for the Term Loan B facility will be the seventh anniversary of the closing of the Empaque acquisition.


K.	Asbestos-Related Liabilities

Crown Cork & Seal Company, Inc. (“Crown Cork”) is one of many defendants in a substantial number of lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to asbestos. These claims arose from the insulation operations of a U.S. company, the majority of whose stock Crown Cork purchased in 1963. Approximately ninety days after the stock purchase, this U.S. company sold its insulation assets and was later merged into Crown Cork.

Prior to 1998, amounts paid to asbestos claimants were covered by a fund made available to Crown Cork under a 1985 settlement with carriers insuring Crown Cork through 1976, when Crown Cork became self-insured. The fund was depleted in 1998 and the Company has no remaining coverage for asbestos-related costs.

In recent years, the states of Alabama, Arizona, Florida, Georgia, Idaho, Indiana, Kansas, Michigan, Mississippi, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, 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.

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 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.

Crown Holdings, Inc.

In December 2001, the Commonwealth of Pennsylvania enacted legislation that limits the asbestos-related liabilities of Pennsylvania corporations that are successors by corporate merger to companies involved with asbestos. The legislation limits the successor’s liability for asbestos to the acquired company’s asset value adjusted for inflation. Crown Cork has

paid significantly more for asbestos-related claims than the acquired company’s adjusted asset value. In November 2004, the legislation was amended to address a Pennsylvania Supreme Court decision (Ieropoli v. AC&S Corporation, et. al., No. 117 EM 2002) which held that the statute violated the Pennsylvania Constitution due to retroactive application. The Company cautions that the limitations of the statute, as amended, are subject to litigation and may not be upheld.

The Company further cautions that an adverse ruling in any litigation relating to the constitutionality or applicability to Crown Cork of one or more statutes that limits the asbestos-related liability of alleged defendants like Crown Cork could have a material impact on the Company.

During the nine months ended September 30, 2014, the Company paid $15 to settle outstanding claims and had claims activity as follows:



Beginning claims	53,000
New claims	2,000
Settlements or dismissals	(1,000	)
Ending claims	54,000

In the fourth quarter of each year, the Company performs an analysis of outstanding claims and categorizes by year of exposure and state filed. As of December 31, 2013, the Company's outstanding claims were:



Claimants alleging first exposure after 1964	16,000
Claimants alleging first exposure before or during 1964 filed in:
Texas	13,000
Pennsylvania	2,000
Other states that have enacted asbestos legislation	6,000
Other states	16,000
Total claims outstanding	53,000

The outstanding claims in each period exclude approximately 19,000 inactive claims. Due to the passage of time, the Company considers it unlikely that the plaintiffs in these cases will pursue further action against the Company. The exclusion of these inactive claims had no effect on the calculation of the Company’s accrual as the claims were filed in states, as described above, where the Company’s liability is limited by statute.

With respect to claimants alleging first exposure to asbestos before or during 1964, the Company does not include in its accrual any amounts for settlements in states where the Company’s liability is limited by statute except for certain pending claims in Texas as described earlier.

With respect to post-1964 claims, regardless of the existence of asbestos legislation, the Company does not include in its accrual any amounts for settlement of these claims because of increased difficulty of establishing identification of relevant insulation products as the cause of injury. Given our settlement experience with post-1964 claims, we do not believe that an adverse ruling in the Texas or Pennsylvania asbestos litigation cases, or in any other state that has enacted asbestos legislation, would have a material impact on the Company with respect to such claims.

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



	2013		2012		2011
Total claims	21	%	19	%	18	%
Pre-1964 claims in states without asbestos legislation	39	%	36	%	33	%

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 September 30, 2014.

Crown Holdings, Inc.

As of September 30, 2014, the Company’s accrual for pending and future asbestos-related claims and related legal costs was $239, including $195 for unasserted claims. The Company’s accrual includes estimated probable costs for claims through the year 2023. The Company’s accrual excludes potential costs for claims beyond 2023 because the Company believes that the key assumptions underlying its accrual are subject to greater uncertainty as the projection period lengthens.

It is reasonably possible that the actual loss could be in excess of the Company’s accrual. The Company is unable to estimate the reasonably possible loss in excess of its accrual due to uncertainty in the following assumptions that underlie the Company’s accrual and the possibility of losses in excess of such accrual: the amount of damages sought by the claimant (which was not specified for approximately 87% of the claims outstanding at the end of 2013), the Company and claimant’s willingness to negotiate a settlement, the terms of settlements of other defendants with asbestos-related liabilities, the bankruptcy filings of other defendants (which may result in additional claims and higher settlements for non-bankrupt defendants), the nature of pending and future claims (including the seriousness of alleged disease, whether claimants allege first exposure to asbestos before or during 1964 and the claimant’s ability to demonstrate the alleged link to Crown Cork), the volatility of the litigation environment, the defense strategies available to the Company, the level of future claims, the rate of receipt of claims, the jurisdiction in which claims are filed, and the effect of state asbestos legislation (including the validity and applicability of the Pennsylvania legislation to non-Pennsylvania jurisdictions, where the substantial majority of the Company’s asbestos cases are filed).


L.	Commitments and Contingent Liabilities

The Company, along with others in most cases, has been identified by the EPA or a comparable state environmental agency as a Potentially Responsible Party (“PRP”) at a number of sites and has recorded aggregate accruals of $7 for its share of estimated future remediation costs at these sites. The Company has been identified as having either directly or indirectly disposed of commercial or industrial waste at the sites subject to the accrual, and where appropriate and supported by available information, generally has agreed to be responsible for a percentage of future remediation costs based on an estimated volume of materials disposed in proportion to the total materials disposed at each site. The Company has not had monetary sanctions imposed nor has the Company been notified of any potential monetary sanctions at any of the sites.

The Company has also recorded aggregate accruals of $6 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. The Company has a receivable of $4 for the recovery of certain of these costs from a third party. 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 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 course of business. The Company’s basic raw materials for its products are steel and aluminum, both of which are purchased from multiple sources. The Company is subject to fluctuations in the cost of these raw materials and has periodically adjusted its selling prices to reflect these movements. There can be no assurance, however, that the Company will be able to fully recover any increases or fluctuations in raw material costs from its customers. The Company also has commitments for standby letters of credit and for purchases of capital assets.

At September 30, 2014, 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 $5. 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 September 30, 2014, the Company also had guarantees of $33 related to the residual values of leased assets.

Crown Holdings, Inc.


M.	Earnings Per Share

The following table summarizes the computations of basic and diluted earnings per share attributable to the Company:



	Three Months Ended				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Net income attributable to Crown Holdings	$	244	$	101	$	374	$	275
Weighted average shares outstanding:
Basic	137.4		137.8		137.2		140.5
Add: dilutive stock options and restricted stock	1.3		1.4		1.2		1.4
Diluted	138.7		139.2		138.4		141.9
Basic earnings per share	$	1.78	$	0.73	$	2.73	$	1.96
Diluted earnings per share	$	1.76	$	0.73	$	2.70	$	1.94

For the three months ended September 30, 2014, there were no contingently issuable common shares excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive. For the three months ended September 30, 2013, 0.4 million contingently issuable common shares were excluded from the computation.

For the nine months ended September 30, 2014 and 2013, 0.1 million and 0.8 million contingently issuable commons shares were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive.


N.	Pension and Other Postretirement Benefits

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



	Three Months Ended						Nine Months Ended
	September 30						September 30
Pension Benefits – U.S. Plans	2014			2013			2014			2013
Service cost	$	3		$	4		$	11		$	11
Interest cost	15			15			48			46
Expected return on plan assets	(26		)	(25		)	(78		)	(74		)
Recognized net loss	11			14			32			42
Net periodic cost	$	3		$	8		$	13		$	25



	Three Months Ended						Nine Months Ended
	September 30						September 30
Pension Benefits – Non-U.S. Plans	2014			2013			2014			2013
Service cost	$	3		$	6		$	16		$	19
Interest cost	35			36			116			103
Expected return on plan assets	(43		)	(44		)	(145		)	(130		)
Recognized prior service credit	(3		)	(5		)	(11		)	(11		)
Recognized net loss	15			18			52			52
Net periodic cost	$	7		$	11		$	28		$	33

Crown Holdings, Inc.



	Three Months Ended						Nine Months Ended
	September 30						September 30
Other Postretirement Benefits	2014			2013			2014			2013
Service cost	$	1		$	1		$	2		$	3
Interest cost	1			3			7			10
Recognized prior service credit	(8		)	(14		)	(25		)	(34		)
Recognized net loss	2			4			6			12
Net periodic cost	$	(4	)	$	(6	)	$	(10	)	$	(9	)


O.	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						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
U.S. statutory rate at 35%	$	78		$	68		$	168		$	174
Tax on foreign income	(30		)	(21		)	(74		)	(52		)
Valuation allowance	(91		)	(1		)	(81		)	—
Tax law changes	—			18			—			18
Non-deductible impairment charge	—			—			15			—
Other items, net	2			3			14			6
Income tax provision / (benefit)	$	(41	)	$	67		$	42		$	146

For the three and nine months ended September 30, 2014, the Company recognized an income tax benefit of $90 to fully release the valuation allowance against its net deferred tax assets in France. In recent years, the Company's operating profits in France were offset by interest expense. In the third quarter of 2014, the Company refinanced its European bonds resulting in significant interest savings. The impact of the refinancing and current low interest rate environment has significantly lowered the Company's interest expense in France. As the Company is currently generating income in France and is projecting income in the future, the Company has fully released its valuation allowance. Due to the Company's high level of debt in France, a significant increase in interest rates could cause the Company to incur losses which may result in recording additional valuation allowance in the future. The Company's loss carryforwards in France do not expire.

For the nine months ended September 30, 2014, the income tax benefit resulting from the France valuation allowance release was partially offset by non-deductible transaction costs and impairment charges related to the divestment of certain operations in connection with the Company's acquisition of Mivisa.


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 excluding the impact of fair value adjustments related to the sale of inventory acquired in an acquisition and the timing impact of hedge ineffectiveness, 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.

Crown Holdings, Inc.

The tables below present information about the Company's operating segments:



	External Sales				External Sales
	Three Months Ended				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Americas Beverage	$	570	$	583	$	1,713	$	1,717
North America Food	236		249		628		652
European Beverage	474		481		1,358		1,344
European Food	787		543		1,715		1,349
Asia Pacific	310		300		924		877
Total reportable segments	2,377		2,156		6,338		5,939
Non-reportable segments	217		233		632		646
Total	$	2,594	$	2,389	$	6,970	$	6,585

The primary sources of revenue included in non-reportable segments are the Company's aerosol can businesses in North America and Europe, the Company's specialty packaging business in Europe and the Company's tooling and equipment operations in the U.S. and United Kingdom.



	Intersegment Sales				Intersegment Sales
	Three Months Ended				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Americas Beverage	$	19	$	18	$	70	$	56
North America Food	1		2		5		8
European Beverage	—		4		1		5
European Food	22		20		69		61
Asia Pacific	—		—		—		—
Total reportable segments	42		44		145		130
Non-reportable segments	29		27		87		84
Total	$	71	$	71	$	232	$	214

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				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Americas Beverage	$	77	$	83	$	241	$	244
North America Food	40		26		107		98
European Beverage	81		82		223		211
European Food	107		63		196		134
Asia Pacific	38		32		108		100
Total reportable segments	$	343	$	286	$	875	$	787

Crown Holdings, Inc.

A reconciliation of segment income of reportable segments to income before income taxes and equity earnings is as follows:



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Segment income of reportable segments	$	343		$	286		$	875		$	787
Segment income of non-reportable segments	26			31			72			84
Corporate and unallocated items	(42		)	(36		)	(154		)	(122		)
Restructuring and other	(8		)	(31		)	(91		)	(39		)
Loss from early extinguishments of debt	(34		)	—			(34		)	(38		)
Interest expense	(64		)	(58		)	(188		)	(179		)
Interest income	2			1			5			4
Foreign exchange	2			2			(4		)	—
Income before income taxes and equity earnings	$	225		$	195		$	481		$	497

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. For the three months ended September 30, 2014, corporate and unallocated items also included a charge of $4 related to fair value adjustments for the sale of inventory acquired in the Mivisa acquisition and a benefit of $3 related to hedge ineffectiveness. For the nine months ended September 30, 2014, corporate and unallocated items also included a charge of $19 related to fair value adjustments for the sale of inventory acquired in the Mivisa acquisition and a charge of $1 related to hedge ineffectiveness.

For the three months ended September 30, 2014, intercompany profit of $1 was eliminated within segment income of non-reportable segments. For the nine months ended September 30, 2014 and 2013, intercompany profit of $2 and $2 was eliminated within segment income of non-reportable segments.

Crown Holdings, Inc.


Q.	Condensed Combining Financial Information

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 nine months ended September 30, 2014 and 2013,

•balance sheets as of September 30, 2014 and December 31, 2013, and

•statements of cash flows for the nine months ended September 30, 2014 and 2013

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 September 30, 2014

(in millions)



	Parent		Issuer			Non- Guarantors			Eliminations			Total Company
Net sales						$	2,594					$	2,594
Cost of products sold, excluding depreciation and amortization						2,119						2,119
Depreciation and amortization						53						53
Gross profit			—			422						422
Selling and administrative expense			$	2		93						95
Restructuring and other						8						8
Loss on early extinguishments of debt						34						34
Net interest expense			23			39						62
Foreign exchange						(2		)				(2		)
Income/(loss) before income taxes			(25		)	250			—			225
Provision for / (benefit from) income taxes			(7		)	(34		)				(41		)
Equity earnings / (loss) in affiliates	$	244	245						$	(489	)	—
Net income	244		227			284			(489		)	266
Net income attributable to noncontrolling interests						(22		)				(22		)
Net income attributable to Crown Holdings	$	244	$	227		$	262		$	(489	)	$	244

Comprehensive income	$	121	$	104		$	160		$	(243	)	$	142
Comprehensive income attributable to noncontrolling interests						(21		)				(21		)
Comprehensive income attributable to Crown Holdings	$	121	$	104		$	139		$	(243	)	$	121

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the three months ended September 30, 2013

(in millions)



	Parent		Issuer			Non- Guarantors			Eliminations			Total Company
Net sales						$	2,389					$	2,389
Cost of products sold, excluding depreciation and amortization						1,961						1,961
Depreciation and amortization						34						34
Gross profit			—			394						394
Selling and administrative expense			$	2		111						113
Restructuring and other			(2		)	33						31
Net interest expense			26			31						57
Foreign exchange						(2		)				(2		)
Income/(loss) before income taxes			(26		)	221						195
Provision for / (benefit from) income taxes			1			66						67
Equity earnings / (loss) in affiliates	$	101	128						$	(230	)	(1		)
Net income	101		101			155			(230		)	127
Net income attributable to noncontrolling interests						(26		)				(26		)
Net income attributable to Crown Holdings	$	101	$	101		$	129		$	(230	)	$	101

Comprehensive income	$	152	$	152		$	209		$	(332	)	$	181
Comprehensive income attributable to noncontrolling interests						(29		)				(29		)
Comprehensive income attributable to Crown Holdings	$	152	$	152		$	180		$	(332	)	$	152

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended September 30, 2014

(in millions)



	Parent		Issuer			Non- Guarantors			Eliminations			Total Company
Net sales						$	6,970					$	6,970
Cost of products sold, excluding depreciation and amortization						5,740						5,740
Depreciation and amortization						135						135
Gross profit			—			1,095						1,095
Selling and administrative expense			$	7		295						302
Restructuring and other			14			77						91
Loss from early extinguishment of debt						34						34
Net interest expense			70			113						183
Foreign exchange						4						4
Income/(loss) before income taxes			(91		)	572						481
Provision for / (benefit from) income taxes			(16		)	58						42
Equity earnings / (loss) in affiliates	$	374	436						$	(810	)	—
Net income	374		361			514			(810		)	439
Net income attributable to noncontrolling interests						(65		)				(65		)
Net income attributable to Crown Holdings	$	374	$	361		$	449		$	(810	)	$	374

Comprehensive income	$	293	$	280		$	435		$	(648	)	$	360
Comprehensive income attributable to noncontrolling interests						(67		)				(67		)
Comprehensive income attributable to Crown Holdings	$	293	$	280		$	368		$	(648	)	$	293

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended September 30, 2013

(in millions)



	Parent		Issuer			Non- Guarantors			Eliminations			Total Company
Net sales						$	6,585					$	6,585
Cost of products sold, excluding depreciation and amortization			$	(16	)	5,435						5,419
Depreciation and amortization						98						98
Gross profit			16			1,052						1,068
Selling and administrative expense			3			316						319
Restructuring and other			(2		)	41						39
Loss from early extinguishment of debt						38						38
Net interest expense			77			98						175
Income/(loss) before income taxes			(62		)	559						497
Provision for / (benefit from) income taxes						146						146
Equity earnings / (loss) in affiliates	$	275	337						$	(614	)	(2		)
Net income	275		275			413			(614		)	349
Net income attributable to noncontrolling interests						(74		)				(74		)
Net income attributable to Crown Holdings	$	275	$	275		$	339		$	(614	)	$	275

Comprehensive Income	$	324	$	324		$	461		$	(712	)	$	397
Comprehensive income attributable to noncontrolling interests						(73		)				(73		)
Comprehensive income attributable to Crown Holdings	$	324	$	324		$	388		$	(712	)	$	324

Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of September 30, 2014

(in millions)



	Parent		Issuer		Non- Guarantors		Eliminations			Total Company
Assets
Current assets
Cash and cash equivalents					$	380				$	380
Receivables, net					1,385					1,385
Inventories					1,473					1,473
Prepaid expenses and other current assets	$	2	$	102	266					370
Total current assets	2		102		3,504					3,608

Intercompany debt receivables					2,847		$	(2,847	)	—
Investments	2,356		2,462				(4,818		)	—
Goodwill and intangible assets					3,067					3,067
Property, plant and equipment, net					2,447					2,447
Other non-current assets			335		360					695
Total	$	2,358	$	2,899	$	12,225	$	(7,665	)	$	9,817

Liabilities and equity
Current liabilities
Short-term debt					$	157				$	157
Current maturities of long-term debt					90					90
Accounts payable and accrued liabilities	$	13	$	40	2,466					2,519
Total current liabilities	13		40		2,713					2,766

Long-term debt, excluding current maturities			412		4,788					5,200
Long-term intercompany debt	2,075		772				$	(2,847	)	—
Postretirement and pension liabilities					767					767
Other non-current liabilities			273		263					536
Commitments and contingent liabilities
Noncontrolling interests					278					278
Crown Holdings shareholders’ equity/(deficit)	270		1,402		3,416		(4,818		)	270
Total equity/(deficit)	270		1,402		3,694		(4,818		)	548
Total	$	2,358	$	2,899	$	12,225	$	(7,665	)	$	9,817

Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of December 31, 2013

(in millions)



	Parent		Issuer		Non- Guarantors		Eliminations			Total Company
Assets
Current assets
Cash and cash equivalents					$	689				$	689
Receivables, net					1,064					1,064
Inventories					1,213					1,213
Prepaid expenses and other current assets	$	1	$	103	110					214
Total current assets	1		103		3,076					3,180

Intercompany debt receivables					1,908		$	(1,908	)	—
Investments	1,176		2,212				(3,388		)	—
Goodwill and intangible assets					2,016					2,016
Property, plant and equipment, net					2,152					2,152
Other non-current assets			349		333					682
Total	$	1,177	$	2,664	$	9,485	$	(5,296	)	$	8,030

Liabilities and equity
Current liabilities
Short-term debt					$	279				$	279
Current maturities of long-term debt					94					94
Accounts payable and accrued liabilities	$	16	$	36	2,495					2,547
Total current liabilities	16		36		2,868					2,920

Long-term debt, excluding current maturities			412		3,057					3,469
Long-term intercompany debt	1,157		751				$	(1,908	)	—
Postretirement and pension liabilities					891					891
Other non-current liabilities			289		172					461
Commitments and contingent liabilities
Noncontrolling interests					285					285
Crown Holdings shareholders’ equity/(deficit)	4		1,176		2,212		(3,388		)	4
Total equity/(deficit)	4		1,176		2,497		(3,388		)	289
Total	$	1,177	$	2,664	$	9,485	$	(5,296	)	$	8,030

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2014

(in millions)



	Parent			Issuer			Non- Guarantors			Eliminations			Total Company
Net cash provided by/(used for) operating activities	$	14		$	(72	)	$	67					$	9
Cash flows from investing activities
Capital expenditures							(212		)				(212		)
Purchase of business							(733		)				(733		)
Proceeds from sale of property, plant and equipment							9						9
Proceeds from sale of business							22						22
Intercompany investing activities	(941		)	51			941			$	(51	)	—
Other							2						2
Net cash provided by/(used for) investing activities	(941		)	51			29			(51		)	(912		)
Cash flows from financing activities
Proceeds from long-term debt							2,742						2,742
Payments of long-term debt							(1,720		)				(1,720		)
Net change in revolving credit facility and short-term debt							(232		)				(232		)
Net change in long-term intercompany balances	918			21			(939		)				—
Debt issue costs							(41		)				(41		)
Common stock issued	11												11
Common stock repurchased	(2		)										(2		)
Dividends paid							(51		)	51			—
Purchase of noncontrollling interests							(93		)				(93		)
Dividend paid to noncontrolling interests							(45		)				(45		)
Other							(14		)				(14		)
Net cash provided by/(used for) financing activities	927			21			(393		)	51			606
Effect of exchange rate changes on cash and cash equivalents							(12		)				(12		)
Net change in cash and cash equivalents	—			—			(309		)	—			(309		)
Cash and cash equivalents at January 1							689						689
Cash and cash equivalents at September 30	$	—		$	—		$	380		$	—		$	380

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2013

(in millions)



	Parent			Issuer			Non- Guarantors			Eliminations			Total Company
Net cash provided by/(used for) operating activities	$	13		$	(86	)	$	(51	)				$	(124	)
Cash flows from investing activities
Capital expenditures							(181		)				(181		)
Insurance proceeds							8						8
Proceeds from sale of property, plant and equipment							6						6
Intercompany investing activities				56						$	(56	)	—
Other				10			(21		)				(11		)
Net cash provided by/(used for) investing activities				66			(188		)	(56		)	(178		)
Cash flows from financing activities
Proceeds from long-term debt							1,063						1,063
Payments of long-term debt							(998		)				(998		)
Net change in revolving credit facility and short-term debt							484						484
Net change in long-term intercompany balances	271			20			(291		)				—
Debt issue costs							(15		)				(15		)
Common stock issued	16												16
Common stock repurchased	(300		)										(300		)
Dividends paid							(56		)	56			—
Purchase of noncontrolling interests							(13		)				(13		)
Dividend paid to noncontrolling interests							(65		)				(65		)
Other							15						15
Net cash provided by/(used for) financing activities	(13		)	20			124			56			187
Effect of exchange rate changes on cash and cash equivalents							1						1
Net change in cash and cash equivalents	—			—			(114		)	—			(114		)
Cash and cash equivalents at January 1							350						350
Cash and cash equivalents at September 30	$	—		$	—		$	236		$	—		$	236

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 $700 principal amount of 6.25% senior notes due 2021 and $1,000 principal amount of 4.5% senior notes due 2023, which are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent) and substantially all subsidiaries in the United States. The guarantors are wholly owned by the Company and the guarantees are made on a joint and several basis.

The following condensed combining financial statements:


•	statements of comprehensive income for the three and nine months ended September 30, 2014 and 2013,


•	balance sheets as of September 30, 2014 and December 31, 2013, and


•	statements of cash flows for the nine months ended September 30, 2014 and 2013

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 September 30, 2014

(in millions)



	Parent		Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company
Net sales						$	571		$	2,023					$	2,594
Cost of products sold, excluding depreciation and amortization						445			1,674						2,119
Depreciation and amortization						8			45						53
Gross profit			—			118			304						422
Selling and administrative expense			$	3		32			60						95
Restructuring and other						1			7						8
Loss from early extinguishments of debt									34						34
Net interest expense			16			23			23						62
Technology royalty						(16		)	16						—
Foreign exchange									(2		)				(2		)
Income/(loss) before income taxes			(19		)	78			166						225
Provision for / (benefit from) income taxes			(7		)	33			(67		)				(41		)
Equity earnings / (loss) in affiliates	$	244	71			182						$	(497	)	—
Net income	244		59			227			233			(497		)	266
Net income attributable to noncontrolling interests									(22		)				(22		)
Net income attributable to Crown Holdings	$	244	$	59		$	227		$	211		$	(497	)	$	244

Comprehensive income	$	121	$	62		$	104		$	106		$	(251	)	$	142
Comprehensive income attributable to noncontrolling interests									(21		)				(21		)
Comprehensive income attributable to Crown Holdings	$	121	$	62		$	104		$	85		$	(251	)	$	121

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the three months ended September 30, 2013

(in millions)



	Parent		Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company
Net sales						$	595		$	1,794					$	2,389
Cost of products sold, excluding depreciation and amortization			$	(1	)	468			1,494						1,961
Depreciation and amortization						9			25						34
Gross profit			1			118			275						394
Selling and administrative expense			3			51			59						113
Restructuring and other						(2		)	33						31
Net interest expense			11			22			24						57
Technology royalty						(16		)	16						—
Foreign exchange									(2		)				(2		)
Income/(loss) before income taxes			(13		)	63			145						195
Provision for / (benefit from) income taxes			(5		)	32			40						67
Equity earnings / (loss) in affiliates	$	101	65			70						$	(237	)	(1		)
Net income	101		57			101			105			(237		)	127
Net income attributable to noncontrolling interests									(26		)				(26		)
Net income attributable to Crown Holdings	$	101	$	57		$	101		$	79		$	(237	)	$	101

Comprehensive income	$	152	$	61		$	152		$	157		$	(341	)	$	181
Comprehensive income attributable to noncontrolling interests									(29		)				(29		)
Comprehensive income attributable to Crown Holdings	$	152	$	61		$	152		$	128		$	(341	)	$	152

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended September 30, 2014

(in millions)



	Parent		Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company
Net sales						$	1,642		$	5,328					$	6,970
Cost of products sold, excluding depreciation and amortization						1,305			4,435						5,740
Depreciation and amortization						23			112						135
Gross profit						314			781						1,095
Selling and administrative expense			$	7		105			190						302
Restructuring and other			1			44			46						91
Loss from early extinguishment of debt									34						34
Net interest expense			43			66			74						183
Technology royalty						(40		)	40						—
Foreign exchange									4						4
Income/(loss) before income taxes			(51		)	139			393						481
Provision for / (benefit from) income taxes			(19		)	74			(13		)				42
Equity earnings / (loss) in affiliates	$	374	170			296						$	(840	)	—
Net income	374		138			361			406			(840		)	439
Net income attributable to noncontrolling interests									(65		)				(65		)
Net income attributable to Crown Holdings	$	374	$	138		$	361		$	341		$	(840	)	$	374

Comprehensive Income	$	293	$	151		$	280		$	314		$	(678	)	$	360
Comprehensive income attributable to noncontrolling interests									(67		)				(67		)
Comprehensive income attributable to Crown Holdings	$	293	$	151		$	280		$	247		$	(678	)	$	293

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended September 30, 2013

(in millions)



	Parent		Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company
Net sales						$	1,709		$	4,876					$	6,585
Cost of products sold, excluding depreciation and amortization			$	(1	)	1,331			4,089						5,419
Depreciation and amortization						22			76						98
Gross profit			1			356			711						1,068
Selling and administrative expense			7			122			190						319
Restructuring and other						2			37						39
Loss from early extinguishment of debt			37						1						38
Net interest expense			35			68			72						175
Technology royalty						(38		)	38						—
Income/(loss) before income taxes			(78		)	202			373						497
Provision for / (benefit from) income taxes			(30		)	99			77						146
Equity earnings / (loss) in affiliates	$	275	189			172						$	(638	)	(2		)
Net income	275		141			275			296			(638		)	349
Net income attributable to noncontrolling interests									(74		)				(74		)
Net income attributable to Crown Holdings	$	275	$	141		$	275		$	222		$	(638	)	$	275

Comprehensive income	$	324	$	152		$	324		$	335		$	(738	)	$	397
Comprehensive income attributable to noncontrolling interests									(73		)				(73		)
Comprehensive income attirbutable to Crown Holdings	$	324	$	152		$	324		$	262		$	(738	)	$	324

Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of September 30, 2014

(in millions)



	Parent		Issuer		Guarantors		Non- Guarantors		Eliminations			Total Company
Assets
Current assets
Cash and cash equivalents			$	37	$	1	$	342				$	380
Receivables, net					13		1,372					1,385
Intercompany receivables					25		16		$	(41	)	—
Inventories					299		1,174					1,473
Prepaid expenses and other current assets	$	2	2		101		265					370
Total current assets	2		39		439		3,169		(41		)	3,608

Intercompany debt receivables			2,465		2,829		7		(5,301		)	—
Investments	2,356		2,095		863				(5,314		)	—
Goodwill and intangible assets					453		2,614					3,067
Property, plant and equipment, net			1		319		2,127					2,447
Other non-current assets			52		322		321					695
Total	$	2,358	$	4,652	$	5,225	$	8,238	$	(10,656	)	$	9,817

Liabilities and equity
Current liabilities
Short-term debt							$	157				$	157
Current maturities of long-term debt							90					90
Accounts payable and accrued liabilities	$	13	$	25	$	499	1,982					2,519
Intercompany payables					16		25		$	(41	)	—
Total current liabilities	13		25		515		2,254		(41		)	2,766

Long-term debt, excluding current maturities			2,862		412		1,926					5,200
Long-term intercompany debt	2,075		568		2,356		302		(5,301		)	—
Postretirement and pension liabilities					267		500					767
Other non-current liabilities					273		263					536
Commitments and contingent liabilities
Noncontrolling interests							278					278
Crown Holdings shareholders’ equity/(deficit)	270		1,197		1,402		2,715		(5,314		)	270
Total equity/(deficit)	270		1,197		1,402		2,993		(5,314		)	548
Total	$	2,358	$	4,652	$	5,225	$	8,238	$	(10,656	)	$	9,817

Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of December 31, 2013

(in millions)



	Parent		Issuer		Guarantors		Non- Guarantors		Eliminations			Total Company
Assets
Current assets
Cash and cash equivalents			$	177	$	2	$	510				$	689
Receivables, net					26		1,038					1,064
Intercompany receivables					30		81		$	(111	)	—
Inventories					266		947					1,213
Prepaid expenses and other current assets	$	1	2		109		102					214
Total current assets	1		179		433		2,678		(111		)	3,180

Intercompany debt receivables			1,476		1,808		19		(3,303		)	—
Investments	1,176		1,917		685				(3,778		)	—
Goodwill and intangible assets					453		1,563					2,016
Property, plant and equipment, net			1		314		1,837					2,152
Other non-current assets			36		388		258					682
Total	$	1,177	$	3,609	$	4,081	$	6,355	$	(7,192	)	$	8,030

Liabilities and equity
Current liabilities
Short-term debt							$	279				$	279
Current maturities of long-term debt							94					94
Accounts payable and accrued liabilities	$	16	$	49	$	466	2,016					2,547
Intercompany payables					81		30		$	(111	)	—
Total current liabilities	16		49		547		2,419		(111		)	2,920

Long-term debt, excluding current maturities			1,920		412		1,137					3,469
Long-term intercompany debt	1,157		594		1,353		199		(3,303		)	—
Postretirement and pension liabilities					299		592					891
Other non-current liabilities					294		167					461
Commitments and contingent liabilities
Noncontrolling interests							285					285
Crown Holdings shareholders’ equity/(deficit)	4		1,046		1,176		1,556		(3,778		)	4
Total equity/(deficit)	4		1,046		1,176		1,841		(3,778		)	289
Total	$	1,177	$	3,609	$	4,081	$	6,355	$	(7,192	)	$	8,030

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2014

(in millions)



	Parent			Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company
Net provided by/(used for) operating activities	$	14		$	(48	)	$	65		$	(22	)				$	9
Cash flows from investing activities
Capital expenditures							(27		)	(185		)				(212		)
Purchase of business										(733		)				(733		)
Proceeds from sale of property, plant and equipment							4			5						9
Proceeds from sale of business										22						22
Intercompany investing activities	(941		)	5			51			941			$	(56	)	—
Other										2						2
Net cash provided by/(used for) investing activities	(941		)	5			28			52			(56		)	(912		)
Cash flows from financing activities
Proceeds from long-term debt				942						1,800						2,742
Payments of long-term debt										(1,720		)				(1,720		)
Net change in revolving credit facility and short-term debt										(232		)				(232		)
Net change in long-term intercompany balances	918			(1,015		)	(18		)	115						—
Debt issue costs				(24		)				(17		)				(41		)
Common stock issued	11															11
Common stock repurchased	(2		)													(2		)
Dividends paid										(56		)	56			—
Purchase of noncontrolling interests							(76		)	(17		)				(93		)
Dividends paid to noncontrolling interests										(45		)				(45		)
Other										(14		)				(14		)
Net cash provided by/(used for) financing activities	927			(97		)	(94		)	(186		)	56			606
Effect of exchange rate changes on cash and cash equivalents										(12		)				(12		)
Net change in cash and cash equivalents	—			(140		)	(1		)	(168		)	—			(309		)
Cash and cash equivalents at January 1				177			2			510						689
Cash and cash equivalents at September 30	$	—		$	37		$	1		$	342		$	—		$	380

Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2013

(in millions)



	Parent			Issuer			Guarantors			Non- Guarantors			Eliminations			Total Company
Net provided by/(used for) operating activities	$	13		$	(35	)	$	140		$	(242	)				$	(124	)
Cash flows from investing activities
Capital expenditures							(23		)	(158		)				(181		)
Insurance Proceeds										8						8
Proceeds from sale of property, plant and equipment							4			2						6
Intercompany investing activities				20			61						$	(81	)	—
Other							10			(21		)				(11		)
Net cash provided by/(used for) investing activities	—			20			52			(169		)	(81		)	(178		)
Cash flows from financing activities
Proceeds from long-term debt				1,000						63						1,063
Payments of long-term debt				(729		)				(269		)				(998		)
Net change in revolving credit facility and short-term debt				85						399						484
Net change in long-term intercompany balances	271			(332		)	(193		)	254						—
Debt issue costs				(15		)										(15		)
Common stock issued	16															16
Common stock repurchased	(300		)													(300		)
Dividends paid										(81		)	81			—
Purchase of noncontrolling interests										(13		)				(13		)
Dividends paid to noncontrolling interests										(65		)				(65		)
Other										15						15
Net cash provided by/(used for) financing activities	(13		)	9			(193		)	303			81			187
Effect of exchange rate changes on cash and cash equivalents										1						1
Net change in cash and cash equivalents	—			(6		)	(1		)	(107		)	—			(114		)
Cash and cash equivalents at January 1				27			1			322						350
Cash and cash equivalents at September 30	$	—		$	21		$	—		$	215		$	—		$	236

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 nine months ended September 30, 2014 compared to 2013 and changes in financial condition and liquidity from December 31, 2013. 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, 2013, 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.

The Company identifies and evaluates growth opportunities through line additions in existing plants, new plants in developing markets that it already knows and understands, and potential strategic acquisitions in geographic areas and product lines in which it already operates. The Company rigorously evaluates each opportunity against a variety of metrics including economic profit, return on invested capital and cash flow generation. Every approved project is undertaken with an eye toward creating long-term shareholder value. Cash flows generated from the Company's operations may be reinvested in the business, used for acquisitions, used to repay debt or returned to shareholders through share repurchases or possible future dividends. The Company does not presently anticipate any share repurchases or dividends in 2014 or 2015.

In April 2014, the Company closed its acquisition of Mivisa, a leading Spanish manufacturer of two- and three-piece food cans and ends. Mivisa is the largest food can producer in both the Iberian Peninsula and Morocco; primarily serving vegetable, fruit, fish and meat markets. In connection with the acquisition, the Company divested certain Crown and Mivisa operations as a required condition for regulatory approval. The acquisition is expected to significantly build upon the Company's existing position in the strategically important European food can segment and is expected to be earnings accretive.

On August 31, 2014, the Company entered into an agreement to acquire Empaque, a leading Mexican manufacturer of aluminum cans and ends, bottle caps and glass bottles for the beverage industry, from Heineken N.V., in a cash transaction valued at $1,225, subject to adjustment. The acquisition is subject to customary closing conditions, including competition authority approval. The acquisition is expected to significantly enhance the Company’s strategic position in beverage cans, both regionally and globally, and is expected to be earnings accretive. There can be no assurances regarding the Company’s ability to close the transaction and whether the transaction will be accretive to the Company’s earnings.

Over the past five years, the Company has continued to develop its beverage can platform in emerging markets with particular focus on Asia, Brazil and Eastern Europe. In 2013, the Company added capacity in Cambodia, China, Malaysia and Vietnam. In April 2014, the Company commenced production at its new facility in Teresina, Brazil and in October commenced commercial shipments from a third beverage can line in Cabreuva, Brazil. Beverage can volume growth in these markets has been driven by increased per capita incomes and consumption, combined with an increased preference for cans in the package mix.

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. Any or all of these actions may result in additional restructuring charges in the future which may be material.

Crown Holdings, Inc.

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

As part of the Company's efforts to manage cost, it attempts to pass-through increases in the cost of aluminum and steel to its customers. There can be no assurance that the Company will be able to recover from its customers the impact of any such increased costs. Aluminum and steel prices can be subject to significant volatility and there has not been a consistent and predictable trend in pricing.

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 excluding the impact of fair value adjustments related to the sale of inventory acquired in an acquisition and the timing impact of hedge ineffectiveness, 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 businesses, the Canadian dollar in the Company's Americas segments and the Chinese renminbi and Thai baht in the Company's Asia Pacific segment.

Net Sales and Segment Income



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Net sales	$	2,594		$	2,389		$	6,970		$	6,585
Beverage cans and ends as a percentage of net sales	48		%	53		%	53		%	55		%
Food cans and ends as a percentage of net sales	36		%	30		%	31		%	28		%

Three months ended September 30, 2014 compared to 2013

Net sales increased primarily due to higher European food can volumes including contributions from the Mivisa acquisition that closed in April of this year.

Nine months ended September 30, 2014 compared to 2013

Net sales increased primarily due to the impact of the Mivisa acquisition and increased global beverage can volumes.

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 and supplies a variety of customers from its operations in the U.S., Brazil, Canada, Colombia and Mexico. The U.S. and Canadian beverage can markets are mature markets which have 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 April, 2014, the Company commenced production at its new facility in Teresina, Brazil.

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



	Three Months Ended				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Net sales	$	570	$	583	$	1,713	$	1,717
Segment income	77		83		241		244

Crown Holdings, Inc.

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

Three months ended September 30, 2014 compared to 2013

Net sales decreased primarily due to $6 of lower sales from the closure of a manufacturing facility in Puerto Rico and $5 from the impact of foreign currency translation. In the quarter, sales unit volumes were down 4% primarily due to lower sales in the U.S., partially offset by increased volume in Brazil and Canada.

Segment income decreased primarily due to lower sales unit volumes and inefficiencies in plant operations.

Nine months ended September 30, 2014 compared to 2013

Net sales decreased primarily due to $22 of lower sales from the closure of a manufacturing facility in Puerto Rico and $21 from the impact of foreign currency translation, partially offset by the impact of higher sales unit volumes. For the year, sales unit volumes were down slightly as increases in Brazil were offset by lower sales in the U.S.

Segment income decreased as the impact of higher sales unit volumes in Brazil was offset by inefficiencies in plant operations.

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				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Net sales	$	236	$	249	$	628	$	652
Segment income	40		26		107		98

Three months ended September 30, 2014 compared to 2013

Net sales decreased primarily due to a 3% decline in sales unit volumes and $2 from the impact of foreign currency translation.

Segment income increased primarily due to a charge of $18 in 2013 to record a reserve against a portion of an outstanding customer receivable balance that did not recur in 2014, partially offset by the impact of competitive price compression.

Nine months ended September 30, 2014 compared to 2013

Net sales decreased primarily due to a 1% decline in sales unit volumes, lower customer pricing and $7 from the impact of foreign currency translation.

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 first quarter of 2014, the Company increased its ownership interests in subsidiaries in Jordan and Tunisia to 100% by purchasing the remaining noncontrolling interests.

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				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Net sales	$	474	$	481	$	1,358	$	1,344
Segment income	81		82		223		211

Three months ended September 30, 2014 compared to 2013

Net sales decreased primarily due to a 2% decline in sales unit volumes. During the quarter, sales unit volumes were down in the Company's Middle Eastern businesses due to the ongoing conflicts in the region. The decreases in the Middle East were partially offset by increases in Spain, Turkey and the U.K.

Segment income decreased primarily due to the impact of lower sales unit volumes and higher aluminum premiums, partially offset by strong manufacturing performance.

Nine months ended September 30, 2014 compared to 2013

Net sales increased primarily due to $9 from the impact of foreign currency translation.

Segment income increased primarily due to improved manufacturing performance which more than offset the impact of higher aluminum premiums.

European Food

The European Food segment manufactures steel and aluminum food cans, ends and metal vacuum closures, and supplies a variety of customers from its operations throughout Europe and Africa. The European food can market is a mature market which has experienced stable to slightly declining volumes in recent years. In April 2014, the Company closed its acquisition of Mivisa and in June divested certain Crown and Mivisa operations as required for regulatory approval. Mivisa is being integrated with the Company's existing European Food business.

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



	Three Months Ended				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Net sales	$	787	$	543	$	1,715	$	1,349
Segment income	107		63		196		134

Three months ended September 30, 2014 compared to 2013

Net sales and segment income increased primarily due to higher sales unit volumes including contributions from the Mivisa acquisition that closed in April of this year as well as strong unit volumes across many countries including France, Germany, Greece, Italy and the U.K.

Nine months ended September 30, 2014 compared to 2013

Net sales increased primarily due to higher sales unit volumes including contributions from the Mivisa acquisition that closed in April of this year and $50 from the impact of foreign currency translation.

Segment income increased primarily due to contributions from the Mivisa acquisition and a charge of $11 in 2013 to record a reserve against a portion of an outstanding customer receivable balance that did not recur in 2014.

Crown Holdings, Inc.

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

Asia Pacific

The Company's Asia Pacific segment primarily consists of beverage can operations in Cambodia, China, Malaysia, Singapore, Thailand and Vietnam and also includes the Company's non-beverage can operations, primarily food cans and specialty packaging in China, Singapore, Thailand and Vietnam. In recent years, the Company's beverage can businesses in Asia have experienced significant growth.

In the first quarter of 2013, the Company commercialized second beverage can lines at its facilities in Putian, China and Bangi, Malaysia. In the second quarter of 2013, the Company commercialized new beverage can plants in Danang, Vietnam and Bangkok, Thailand; and in the third quarter of 2013, the Company began production at its new plant in Sihanoukville, Cambodia.

Net sales and segment income in the Asia Pacific segment are as follows:



	Three Months Ended				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Net sales	$	310	$	300	$	924	$	877
Segment income	38		32		108		100

Three months ended September 30, 2014 compared to 2013

Net sales increased primarily due to $26 from increased sales unit volumes due to recent capacity expansion partially offset by $14 from lower selling prices primarily due to the pass-through of lower raw material costs and the impact of competitive price compression.

Segment income increased primarily due to the impact of increased sales unit volumes and improved manufacturing performance from recent capacity additions.

Nine months ended September 30, 2014 compared to 2013

Net sales increased primarily due to $108 from increased sales unit volumes due to recent capacity expansion partially offset by $44 from lower selling prices primarily due to the pass-through of lower raw material costs and the impact of competitive price compression and $13 from the impact of foreign currency translation.

Segment income increased primarily due to $16 from increased sales unit volumes partially offset by $10 from the impact of competitive price compression.

Non-reportable Segments

The Company's non-reportable segments include its aerosol can businesses in North America and Europe, its specialty packaging business in Europe and its tooling and equipment operations in the U.S. and U.K. In recent years, the Company's specialty packaging and aerosol can businesses have experienced slightly declining volumes.

Net sales and segment income in non-reportable segments are as follows:



	Three Months Ended				Nine Months Ended
	September 30				September 30
	2014		2013		2014		2013
Net sales	$	217	$	233	$	632	$	646
Segment income	26		31		72		84

Crown Holdings, Inc.

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

Three months ended September 30, 2014 compared to 2013

Net sales and segment income decreased primarily due to lower sales in the Company's aerosol and specialty packaging businesses.

Nine months ended September 30, 2014 compared to 2013

Net sales decreased primarily due to $27 of lower sales in the Company's aerosol and specialty packaging businesses and $6 of lower equipment sales, partially offset by $19 from the impact of foreign currency translation.

Segment income decreased primarily due to $11 from lower sales in the Company's aerosol and specialty packaging businesses and $4 from lower equipment sales, partially offset by $2 from the impact of foreign currency translation.

Corporate and Unallocated Expense



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Corporate and unallocated expense	$	(42	)	$	(36	)	$	(154	)	$	(122	)

For the three months ended September 30, 2014 compared to 2013, corporate and unallocated expense increased primarily due to a charge of $4 related to the impact of fair value adjustments for the sale of inventory acquired in the acquisition of Mivisa and higher incentive compensation costs, partially offset by a credit of $3 related to hedge ineffectiveness caused primarily by volatility in the metal premium component of aluminum prices.

For the nine months ended September 30, 2014 compared to 2013, corporate and unallocated expense increased primarily due to a charge of $19 related to the impact of fair value adjustments for the sale of inventory acquired in the acquisition of Mivisa, higher general corporate costs and $3 from higher hedge ineffectiveness.

Cost of Products Sold (Excluding Depreciation and Amortization)

For the three months ended September 30, 2014 compared to 2013, cost of products sold (excluding depreciation and amortization) increased from $1,961 to $2,119 primarily due to the acquisition of Mivisa. For the nine months ended September 30, 2014 compared to 2013, cost of products sold (excluding depreciation and amortization) increased from $5,419 to $5,740 primarily due to increased global beverage can volumes and the acquisition of Mivisa.

Depreciation and Amortization

For the three and nine months ended September 30, 2014 compared to 2013, depreciation and amortization expense increased primarily due to the acquisition of Mivisa including the impact of amortizing fair value adjustments recorded in connection with the Company's preliminary purchase price allocation.

Selling and Administrative Expense

For the three months ended September 30, 2014 compared to 2013, selling and administrative expense decreased from $113 to $95 primarily due to a charge of $18 in 2013 to record a reserve against a portion of an outstanding customer receivable balance that did not recur in 2014.

For the nine months ended September 30, 2014 compared to 2013, selling and administrative expense decreased from $319 to $302 primarily due to charges of $29 in 2013 to record reserves against customer receivable balances that did not recur in 2014 partially offset by the impact of the acquisition of Mivisa, higher corporate costs and $6 from the impact of foreign currency translation.

Crown Holdings, Inc.

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

Interest Expense

For the three months ended September 30, 2014 compared to 2013, interest expense increased from $58 to $64 primarily due to higher average debt outstanding primarily due to the acquisition of Mivisa.

For the nine months ended September 30, 2014 compared to 2013, interest expense increased from $179 to $188 primarily due to higher average debt outstanding primarily due to the acquisition of Mivisa, partially offset by $5 of expense in 2013 related to Italian value added tax assessments that did not recur in 2014.

Taxes on Income

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



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Income before income taxes	$	225		$	195		$	481		$	497
Provision for income taxes	(41		)	67			42			146
Effective income tax rate	(18		)%	34		%	9		%	29		%

For the three and nine months ended September 30, 2014 compared to 2013, the Company's effective income tax rate was lower primarily due to the release of the Company's valuation allowance in France as described in Note O to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

Net Income Attributable to Noncontrolling Interests

For the three and nine months ended September 30, 2014 compared to 2013, net income attributable to noncontrolling interests decreased from $26 to $22 and from $74 to $65 primarily due to the acquisition of additional ownership interests in subsidiaries in Jordan and Tunisia and lower earnings in certain beverage can operations in the Middle East, partially offset by higher earnings in the Company's beverage can operations in Brazil.

Liquidity and Capital Resources

Cash from Operations

Cash flows from operating activities improved from a use of $124 for the nine months ended September 30, 2013 to providing $9 in 2014 primarily due to $140 from a change in the Company's North American receivables securitization facility which resulted in receivables transactions being accounted for as sales in 2014 compared to secured borrowings in 2013.

For the nine months ended September 30, 2014, other operating activities included a non-cash increase in deferred tax assets of $90 related to the reversal of the Company's valuation allowance in France as described in Note O.

Investing Activities

Cash used for investing activities increased from $178 for the nine months ended September 30, 2013 to $912 in 2014 primarily due to $733 paid to acquire Mivisa and higher capital expenditures, partially offset by $22 of proceeds from divesting certain Crown and Mivisa operations as required for regulatory approval of the acquisition.

Crown Holdings, Inc.

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

Financing Activities

Cash provided by financing activities increased from $187 for the nine months ended September 30, 2013 to $606 in 2014 primarily due to higher net borrowings in 2014 to fund the acquisition of Mivisa and repay certain of Mivisa's existing debt.

In July 2014, the Company issued €650 ($821 at September 30, 2014) principal amount of 4% senior unsecured notes due 2022. The Company used a portion of the proceeds to purchase through a tender offer and to redeem all of its €500 7.125% senior unsecured notes due 2018.

Other financing activities, in each year, represent cash settlements of foreign currency derivatives used to hedge intercompany debt obligations.

Liquidity

As of September 30, 2014, $330 of the Company's $380 of 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., distributions 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., $199 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 September 30, 2014, the Company had $1,160 of borrowing capacity available under its revolving credit facility, equal to the total facility of $1,200 less $40 of outstanding standby letters of credit. As of September 30, 2014, there were no outstanding borrowings under the facility.

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.

Capital Resources

As of September 30, 2014, the Company has approximately $79 of capital commitments primarily related to its operations in Europe. 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.

Crown Holdings, Inc.

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

Contractual Obligations

During the first nine months of 2014 there were no material changes to the Company's contractual obligations provided within 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, 2013, which information is incorporated herein by reference, except for the debt issuances and repayments described in Note J to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

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 L, 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, 2013 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 nine months of 2014. The discussion below supplements the discussion from the Company's Annual Report on Form 10-K for the year ended December 31, 2013 with respect to goodwill.

Goodwill Impairment

As disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, the estimated fair value of the Company's European Aerosols and Specialty Packaging reporting unit was 50% higher than its carrying value. The Company continues to believe that the estimated fair value of the reporting unit exceeds its carrying value. If future operating results were to decline causing the estimated fair value to fall below its carrying value, it is possible that an impairment charge of up to $148 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 K and commitments and contingencies in Note L 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, 2013, which are not historical facts (including any statements concerning plans and objectives of management for capacity additions, share repurchases, dividends, 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.

Crown Holdings, Inc.

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

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.

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, 2013 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 September 30, 2014, see Note H to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

As of September 30, 2014, the Company had $2.3 billion principal floating interest rate debt. A change of 0.25% in these floating interest rates would change annual interest expense by approximately $5.8 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.

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 K entitled “Asbestos-Related Liabilities” and Note L 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, 2013, 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 as part of publicly announced programs during the first nine months of 2014.

In December 2012, the Company's Board of Directors authorized the repurchase of an aggregate amount of $800 million of the Company's common stock through the end of 2014. This authorization supersedes the previous authorization. Share repurchases under the Company's programs may be made in the open market or through privately negotiated transactions, and at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. As of September 30, 2014 $507 million of the Company’s outstanding common stock may be repurchased under the program.

Item 4. Mine Safety Disclosures

Not applicable.


Item 5.	Other Information

On October 24, 2014, the Company entered into Incremental Amendment No. 2 (the “Amendment”), among Crown Americas LLC, a wholly-owned indirect subsidiary of the Company, as U.S. Borrower, Deutsche Bank AG New York Branch, as administrative agent for certain Term Lenders (as defined in the Credit Agreement (as defined below)), and the Term Loan B Lenders party thereto, amending the Company’s Credit Agreement dated as of December 19, 2013, as amended (the “Credit Agreement”). The Amendment, among other changes, establishes a new Term Loan B facility to allow for Term B Loans (as defined in the Credit Agreement) in the amount of $675 million to be used in connection with, among other purposes, the previously announced acquisition of Empaque from affiliates of Heineken N.V. The Term Loan B facility is subject to consummation of the previously announced Empaque acquisition. The maturity date for the Term Loan B facility will be the seventh anniversary of the closing of the Empaque acquisition. The interest rate on the Term Loan B facility is, at Crown Americas LLC’s option, either (i) the Eurocurrency Rate (as defined in the Credit Agreement) plus 3.25% (subject to a 0.75% floor) or (ii) the Base Rate (as defined in the Credit Agreement) plus 2.25%. All other material terms and conditions applicable to the Company’s term loans under the Credit Agreement are applicable to the Term B Loans created under the new Term Loan B facility.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment.

Crown Holdings, Inc.


Item 6.	Exhibits



2	Stock Purchase Agreement, dated as of August 31, 2014, by and among Heineken International B.V., Heineken Mexico Holding, S.A. de C.V., Cuauhtémoc Moctezuma Holding, S.A. de C.V., Crown Holdings, Inc., Crown Packaging Lux III S.à r.l., Fábricas Monterrey, S.A. de C.V., Cierres Herméticos, S.A. de C.V., Terrestratégicos, S.A. de C.V., Prolatamex, S.A. de C.V., Sílices de Veracruz, S.A. de C.V., Glass & Silice, S.A. de C.V. and Sílice del Istmo, S.A. de C.V.

4.1	First Amendment to Credit Agreement, among Crown Americas LLC, as U.S. Borrower, Crown European Holdings SA, as European Borrower, CROWN Metal Packaging Canada LP, as Canadian Borrower, the Subsidiary Borrowers named therein, Crown Holdings, Inc., Crown International Holdings, Inc. and Crown Cork & Seal Company, Inc., as Parent Guarantors, Deutsche Bank AG New York Branch, as Administrative Agent, Deutsche Bank AG London Branch, a U.K. Administrative Agent, Deutsche Bank AG Canada Branch, as Canadian Administrative Agent, and various Lending Institutions referred to therein.

4.2	Indenture, dated as of July 8, 2014, by and among Crown European Holdings S.A., as Issuer, the Guarantors named therein, U.S. Bank National Association, as Trustee, and the other parties thereto, relating to the €650 million 4% Senior Notes due 2022 (incorporated by reference to Exhibit 4.1 of the Registrant's Current Report on Form 8-K dated July 11, 2014 (File No. 000-50189)).

10.1	Purchase Agreement, dated as of June 26, 2014, by and among Crown Holdings, Inc., Crown European Holdings S.A., BNP Paribas and the Royal Bank of Scotland plc as Representatives, the Initial Purchasers (as defined therein) and the Guarantors (as defined therein) (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K dated July 2, 2014 (File No. 000-50189)).

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 Thomas A. Kelly, Senior 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 September 30, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013, (ii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2014 and 2013, (iii) Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013, (v) Consolidated Statements of Changes in Equity for the nine months ended September 30, 2014 and 2013 and (vi) Notes to Consolidated Financial Statements.

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
		(Chief Accounting Officer)

Date: October 28, 2014

Crown Holdings - 10-Q quarterly report FY2014 Q3

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