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, 2015

 

¨	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 000-50189

____________________________________________________

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 139,411,768 shares of Common Stock outstanding as of October 22, 2015.

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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
	2015				2014				2015				2014
Net sales	$	2,460			$	2,594			$	6,735			$	6,970
Cost of products sold, excluding depreciation and amortization	1,984				2,119				5,487				5,740
Depreciation and amortization	61				53				174				135
Gross profit	415				422				1,074				1,095
Selling and administrative expense	94				95				291				302
Restructuring and other	40				8				57				91
Loss from early extinguishments of debt	—				34				9				34
Interest expense	68				64				202				188
Interest income	(4		)		(2		)		(8		)		(5		)
Foreign exchange	9				(2		)		14				4
Income before income taxes	208				225				509				481
Provision for / (benefits from) income taxes	48				(41		)		134				42
Net income	160				266				375				439
Net income attributable to noncontrolling interests	(19		)		(22		)		(48		)		(65		)
Net income attributable to Crown Holdings	$	141			$	244			$	327			$	374
Earnings per common share attributable to Crown Holdings:
Basic	$	1.02			$	1.78			$	2.37			$	2.73
Diluted	$	1.01			$	1.76			$	2.35			$	2.70

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

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Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Net income	$	160			$	266			$	375			$	439
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(153		)		(154		)		(360		)		(162		)
Pension and other postretirement benefits	25				19				48				51
Derivatives qualifying as hedges	(7		)		11				(17		)		32
Total other comprehensive loss	(135		)		(124		)		(329		)		(79		)
Total comprehensive income (loss)	25				142				46				360
Net income attributable to noncontrolling interests	(19		)		(22		)		(48		)		(65		)
Translation adjustments attributable to noncontrolling interests	2				2				3				1
Derivatives qualifying as hedges attributable to noncontrolling interests	1				(1		)		2				(3		)
Comprehensive income attributable to Crown Holdings	$	9			$	121			$	3			$	293

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

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Crown Holdings, Inc.

CONSOLIDATED BALANCE SHEETS (Condensed)

(In millions)

(Unaudited)

	September 30, 2015				December 31, 2014
Assets
Current assets
Cash and cash equivalents	$	466			$	965
Receivables, net	1,183				1,031
Inventories	1,302				1,324
Prepaid expenses and other current assets	311				256
Assets held for sale	—				48
Total current assets	3,262				3,624
Goodwill and intangible assets, net	3,664				2,926
Property, plant and equipment, net	2,614				2,437
Other non-current assets	689				721
Total	$	10,229			$	9,708
Liabilities and equity
Current liabilities
Short-term debt	$	61			$	75
Current maturities of long-term debt	142				177
Accounts payable and accrued liabilities	2,527				2,651
Liabilities held for sale	—				23
Total current liabilities	2,730				2,926
Long-term debt, excluding current maturities	5,608				5,007
Postretirement and pension liabilities	786				871
Other non-current liabilities	672				517
Commitments and contingent liabilities (Note L)
Noncontrolling interests	293				268
Crown Holdings shareholders’ equity	140				119
Total equity	433				387
Total	$	10,229			$	9,708

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

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Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)

(In millions)

(Unaudited)

	Nine Months Ended
	September 30
	2015				2014
Cash flows from operating activities
Net income	$	375			$	439
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	174				135
Restructuring and other	57				91
Pension expense	35				41
Pension contributions	(54		)		(63		)
Stock-based compensation	22				18
Changes in assets and liabilities:
Receivables	(201		)		(360		)
Inventories	(10		)		(168		)
Accounts payable and accrued liabilities	(94		)		(34		)
Other, net	11				(90		)
Net cash provided by operating activities	315				9
Cash flows from investing activities
Capital expenditures	(176		)		(212		)
Purchase of business	(1,207		)		(733		)
Proceeds from sale of property, plant and equipment	3				9
Proceeds from sale of business	33				22
Net investment hedge settlements	(11		)		—
Other	(16		)		2
Net cash used for investing activities	(1,374		)		(912		)
Cash flows from financing activities
Proceeds from long-term debt	1,435				2,742
Payments of long-term debt	(780		)		(1,720		)
Net change in revolving credit facility and short-term debt	34				(232		)
Debt issue costs	(18		)		(41		)
Common stock issued	5				11
Common stock repurchased	(9		)		(2		)
Purchase of noncontrolling interests	—				(93		)
Contributions from noncontrolling interests	3				—
Dividends paid to noncontrolling interests	(21		)		(45		)
Foreign exchange derivatives related to debt	(38		)		(14		)
Net cash provided by financing activities	611				606
Effect of exchange rate changes on cash and cash equivalents	(51		)		(12		)
Net change in cash and cash equivalents	(499		)		(309		)
Cash and cash equivalents at January 1	965				689
Cash and cash equivalents at September 30	$	466			$	380

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

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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, 2014	$	929			$	431			$	1,395			$	(2,513	)		$	(238	)		$	4			$	285			$	289
Net income									374												374				65				439
Other comprehensive income													(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
Balance at January 1, 2015	$	929			$	407			$	1,782			$	(2,765	)		$	(234	)		$	119			$	268			$	387
Net income									327												327				48				375
Other comprehensive income													(324		)						(324		)		(5		)		(329		)
Dividends paid to noncontrolling interests																					—				(21		)		(21		)
Contribution from noncontrolling interests																									3				3
Restricted stock awarded					(2		)										2				—								—
Stock-based compensation					22																22								22
Common stock issued					4												1				5								5
Common stock repurchased					(8		)										(1		)		(9		)						(9		)
Balance at September 30, 2015	$	929			$	423			$	2,109			$	(3,089	)		$	(232	)		$	140			$	293			$	433

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

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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, 2015 and the results of its operations for the three and nine months ended September 30, 2015 and 2014 and of its cash flows for the nine months ended September 30, 2015 and 2014. 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, 2014.

B.	Accounting and Reporting Developments

Recently Adopted Accounting Standards

In the first quarter of 2015, the Company adopted changes to the definition of discontinued operations 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 change did not impact the Company's financial statements in 2015.

In September 2015, the FASB issued new guidance related to accounting for measurement-period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment, including the impact on prior periods, be recognized in the reporting period in which the adjustment is identified. Early adoption is permitted and the Company has elected to early adopted this standard during the third quarter of 2015. The change did not materially impact the Company's financial statements in 2015.

 

Recently Issued Accounting Standards

In May 2014, the FASB issued new guidance related to how an entity should recognize revenue. The guidance specifies that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In addition, the guidance expands the required disclosures related to revenue and cash flows from contracts with customers. The guidance is effective for the Company beginning in the first quarter of 2018 with early adoption permitted beginning in the first quarter of 2017. 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.

In April 2015, the FASB issued new guidance related to the classification of debt issuance costs. The guidance requires the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the liability instead of a deferred charge. The guidance is effective for the Company beginning in the first quarter of 2016. Early adoption is permitted and the Company is currently assessing whether to early adopt. The guidance is not expected to impact the Company's financial statements other than presentation on the balance sheet.

In July 2015, the FASB issued new guidance related to the subsequent measurement of inventory. Under existing guidance, inventory was measured at the lower of cost or market, where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin. The new guidance requires an entity to subsequently measure inventory at the lower of cost or net realizable value, which is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The guidance will be effective for the Company on January 1, 2017 and early adoption is permitted. The guidance is not expected to have a material effect on the Company’s consolidated financial statements.

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Crown Holdings, Inc.

C.	Acquisitions

Empaque

On February 18, 2015, the Company completed its acquisition of Empaque, a leading manufacturer of beverage packaging in Mexico, from Heineken N.V., in a cash transaction valued at $1.2 billion. The addition of Empaque significantly increases the Company's presence in the growing Mexican market and substantially enhances the Company's strategic position in beverage cans, both regionally and globally.

The following table summarizes the consideration transferred to acquire Empaque and the preliminary valuation of identifiable assets acquired and liabilities assumed at the acquisition date.

Fair value of consideration transferred
Cash	$	1,207
Total consideration	$	1,207
Recognized amounts of identifiable assets acquired and liabilities assumed
Receivables, net	106
Inventories	55
Prepaid expenses and other current assets	1
Intangible assets	460
Property, plant and equipment, net	294
Accounts payable and accrued liabilities	(89		)
Other non-current liabilities	(223		)
Total identifiable net assets	$	604
Goodwill	$	603

The acquired goodwill was assigned to the Company's Americas Beverage segment and is not expected to be deductible for tax purposes.

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

Intangible assets include $162 of customer relationships that will be amortized over 18 years and $298 for a long-term supply contract with Heineken affiliates that will be amortized over 15 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.

During the three and nine months ended September 30, 2015, Empaque contributed sales of approximately $153 and $401, respectively.

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.

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Crown Holdings, Inc.

The following table summarizes the final fair value of identifiable assets and liabilities assumed at the date of the acquisition.

Fair value of consideration transferred
Cash	$	733
Total consideration	$	733
Recognized amounts of identifiable assets acquired and liabilities assumed
Receivables, net	201
Inventories	195
Prepaid expenses and other current assets	11
Intangible assets	295
Property, plant and equipment, net	318
Net assets of business to be divested	9
Accounts payable and accrued liabilities	(159		)
Debt	(977		)
Other non-current liabilities	(98		)
Total identifiable net assets	$	(205	)
Goodwill	$	938

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, 2013		$	(1,828	)		$	(658	)		$	(27	)		$	(2,513	)
Other comprehensive 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	)
Balance at December 31, 2014		$	(1,781	)		$	(980	)		$	(4	)		$	(2,765	)
Other comprehensive income (loss) before reclassifications		16				(357		)		(28		)		(369		)
Amounts reclassified from accumulated other comprehensive income		32				—				13				45
Other comprehensive income (loss)		48				(357		)		(15		)		(324		)
Balance at September 30, 2015		$	(1,733	)		$	(1,337	)		$	(19	)		$	(3,089	)

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Crown Holdings, Inc.

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

		Amounts 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		2015				2014				2015				2014				statement of operations
(Gains) losses on cash flow hedges
Commodities		$	12			$	(2	)		$	16			$	24			Cost of products sold
		12				(2		)		16				24				Total before tax
		(3		)		1				(4		)		(6		)		Provision for income taxes
		$	9			$	(1	)		$	12			$	18			Net of tax
Foreign exchange		$	—			$	(2	)		$	(1	)		$	(2	)		Net sales
		—				3				2				5				Cost of products sold
		—				1				1				3				Total before tax
		—				—				—				—				Provision for income taxes
		$	—			$	1			$	1			$	3			Net of tax
Total (gains) losses on cash flow hedges		$	9			$	—			$	13			$	21
Amortization of defined benefit plan items
Actuarial losses		$	26			$	33			$	81			$	97			(a)
Prior service credit		(14		)		(12		)		(38		)		(36		)		(a)
		12				21				43				61				Total before tax
		(3		)		(2		)		(11		)		(10		)		Provision for income taxes
		$	9			$	19			$	32			$	51			Net of tax
Total reclassifications for the period		$	18			$	19			$	45			$	72

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

E.	Stock-Based Compensation

A summary of restricted stock transactions during the nine months ended September 30, 2015 follows:

	Number of shares
Non-vested stock awards outstanding at January 1, 2015	1,960,357
Awarded:
Time-vesting shares	268,680
Performance-based shares	201,092
Released:
Time-vesting shares	(373,741	)
Performance-based shares	(155,180	)
Forfeitures:
Time-vesting shares	(54,800	)
Performance-based shares	(61,008	)
Non-vested stock awards outstanding at September 30, 2015	1,785,400

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Crown Holdings, Inc.

In January 2015, the Company awarded shares of restricted stock to certain senior executives consisting of 93,480 time-vesting shares which vest ratably over three years and 201,092 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 June 2015, the Company granted a general award of 175,200 shares of time-vesting restricted and deferred stock. The shares vest ratably over four years commencing in 2017.

The weighted average grant-date fair value of the 2015 time-vesting stock awards was $53.56 and the performance-based stock awards was $49.50.

The fair value of the performance-based shares awarded in 2015 was calculated using a Monte Carlo valuation model, including a weighted average stock price volatility of 17.4%, an expected term of three years, and a weighted average risk-free interest rate of 1.06%.

At September 30, 2015, unrecognized compensation cost related to outstanding non-vested stock awards was $44. The weighted average period over which the expense is expected to be recognized is 2.5 years. The aggregate market value of the shares released and issued on the vesting dates was $28.

F.	Receivables

	September 30, 2015				December 31, 2014
Accounts receivable	$	1,064			$	940
Less: allowance for doubtful accounts	(84		)		(88		)
Net trade receivables	980				852
Miscellaneous receivables	203				179
Receivables, net	$	1,183			$	1,031

The Company uses receivable securitization facilities in the normal course of business as part of managing its cash flows. In connection with the Company's North American receivable securitization facility, the Company recognized a deferred purchase price of $109 which was included in prepaid expenses and other current assets in the Company’s Consolidated Balance Sheet at September 30, 2015. The net change in deferred purchase price receivable was reflected in the receivables line item in the Company's Consolidated Statement of Cash Flows.

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, 2015				December 31, 2014
Raw materials and supplies	$	623			$	684
Work in process	157				134
Finished goods	522				506
	$	1,302			$	1,324

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

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in active markets for identical assets or liabilities as of the report date. Level 2 includes inputs other than those available in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3

includes unobservable pricing inputs that are not corroborated by market data or other objective sources. The Company has no recurring items valued using Level 3 inputs other than certain pension plan assets.

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

The Company applies a market approach to value its commodity price hedge contracts. Prices from observable markets are used to develop the fair value of these financial instruments and they are reported under Level 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.

For derivative financial instruments accounted for in hedging relationships, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the manner in which effectiveness will be assessed. The Company formally assesses, both at inception and at least quarterly thereafter, whether the hedging relationships are effective in offsetting changes in fair value or cash flows of the related underlying exposures. When a hedge no longer qualifies for hedge accounting the change in fair value from the date of the last effectiveness test is recognized in earnings. Any gain or loss which has accumulated in other comprehensive income at the date of the last effectiveness test is reclassified into earnings at the same time of the underlying exposure.

Cash Flow Hedges

The Company designates certain derivative financial instruments as cash flow hedges. No components of the hedging instruments are excluded from the assessment of hedge effectiveness. Changes in fair value of outstanding derivatives accounted for as cash flow hedges, except for ineffectiveness, are recorded in other comprehensive income until earnings are impacted by the hedged transaction. Classification of the gain or loss in the Consolidated Statements of Operations upon reclassification from comprehensive income is the same as that of the underlying exposure. Contracts outstanding at September 30, 2015 mature between one and thirty-seven 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.

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Crown Holdings, Inc.

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, 2015				September 30, 2015				September 30, 2015				September 30, 2015
Foreign exchange		$	1			$	(2	)		$	—			$	(1	)
Commodities		(15		)		(26		)		(9		)		(12		)
Total		$	(14	)		$	(28	)		$	(9	)		$	(13	)

		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	)

For the nine months ended September 30, 2015, the Company recognized a gain of $2 ($1 net of tax), related to hedge ineffectiveness caused primarily by volatility in the metal premium component of aluminum prices.

For the three and nine months ended September 30, 2014, the Company recognized a gain of $2 and a loss of $1 (net of tax), respectively, related to hedge ineffectiveness caused primarily by volatility in the metal premium component of aluminum prices.

During the twelve month period ending September 30, 2016, a net loss of $18 ($14, net of tax) is expected to be reclassified to earnings. No amounts were reclassified during the nine months ended September 30, 2015 and 2014 in connection with anticipated transactions that were no longer considered probable.

Fair Value Hedges and Contracts Not Designated as Hedges

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

Other than for firm commitments, amounts related to time value are excluded from the assessment and measurement of hedge effectiveness and are reported in earnings. Less than $1 was reported in earnings for the three and nine months ended September 30, 2015.

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

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Crown Holdings, Inc.

for time value, are offset by changes in re-measurement of the related hedged items. The Company’s primary use of these derivative instruments is to offset the earnings impact that fluctuations in foreign exchange rates have on certain monetary

assets and liabilities denominated in currencies other than the entity's functional currency. Changes in fair value of these derivative instruments are immediately recognized in earnings as foreign exchange adjustments.

The impact on earnings from foreign exchange contracts designated as fair value hedges was a loss of less than $1 and a gain of less than $1 for the three and nine months ended September 30, 2015, respectively, and loss of $3 and a loss of $2 for the three and nine months ended September 30, 2014, respectively . The impact on earnings from foreign exchange contracts not designated as hedges was a gain of $24 and a loss of $19 for the three and nine months ended September 30, 2015, respectively, and a loss of $25 and a loss of $38 for the same periods in 2014. These adjustments were reported within foreign exchange in the Consolidated Statements of Operations and were offset by changes in the fair values of the related underlying hedged items.

During the nine months ended September 30, 2015, certain commodity hedges did not meet the criteria for hedge accounting and therefore the change in their fair value during the quarter was recognized in earnings. For the three and nine months ended September 30, 2015, respectively, the Company recognized losses of $7 ($4, net of tax) and $5 ($3, net of tax) related to these ineffective hedges.

Net Investment Hedges

During the nine months ended September 30, 2015, the Company designated certain derivative and non-derivative financial instruments (debt) as hedges of its net investment in a euro-based subsidiary and recorded a loss of $11 ($7, net of tax) in accumulated other comprehensive income.

Fair Values of Derivative Financial Instruments and Valuation Hierarchy

The following table sets forth the fair value hierarchy for the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2015 and December 31, 2014, respectively.

		Balance Sheet classification		Fair Value hierarchy		September 30, 2015				December 31, 2014
Derivative assets
Derivatives designated as hedges:
Foreign exchange		Other current assets		2		$	19			$	20
Commodities		Other current assets		2		4				2
Commodities		Other non-current assets		2		1				—
		Total				$	24			$	22
Derivative liabilities
Derivatives designated as hedges:
Foreign exchange		Accounts payable and accrued liabilities		2		$	15			$	20
Commodities		Accounts payable and accrued liabilities		2		23				10
Commodities		Other non-current liabilities		2		3				—
Derivatives not designated as hedges:
Foreign exchange		Accounts payable and accrued liabilities		2		2				15
Commodities		Accounts payable and accrued liabilities		2		5				—
Commodities		Other non-current liabilities		2		1				—
		Total				$	49			$	45

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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, 2015
Derivative assets	$24	$6	$18
Derivative liabilities	49	6	43
Balance at December 31, 2014
Derivative assets	22	4	18
Derivative liabilities	45	4	41

    

Notional Values of Outstanding Derivative Instruments

The aggregate U.S. dollar-equivalent notational values of outstanding derivative instruments in the Consolidated Balance Sheets at September 30, 2015 and December 31, 2014 were:

	September 30, 2015				December 31, 2014
Derivatives in cash flow hedges:
Foreign exchange	$	223			$	678
Commodities	284				213
Derivatives in fair value hedges:
Foreign exchange	88				85
Derivatives not designated as hedges:
Foreign exchange	595				603
Commodities	61				—

I.	Restructuring and Other

The Company recorded restructuring and other charges as follows:

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Asset impairments and sales	$	14			$	(2	)		$	15			$	40
Restructuring	20				6				21				19
Transaction costs	—				—				15				14
Other costs	6				4				6				18
	40				8				$	57			91

Asset impairment and sales and restructuring in 2015 related primarily to projects in the Company's North America and European Food segments. Asset impairment and sales in 2014 related to the divestment of certain operations in connection with the acquisition of Mivisa. Restructuring costs in 2014 primarily related to severance costs in the Company's European Food segment. Transaction costs related to the acquisitions of Empaque in 2015 and Mivisa in 2014. Other costs in 2014 primarily related to the temporary relocation of production due to a labor dispute in the Company's Americas Beverage segment.

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Crown Holdings, Inc.

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

2015 European Division Actions

During the three and nine months ended September 30, 2015, the Company recorded a charge of $13 to write-down the carrying value of fixed assets and $17 for termination benefits related to the announced closure of two facilities in the Company's European Food segment upon completion of consultation processes with employee representatives. The Company also recorded a charge of $5 related to the write-off of certain non-productive inventory which is included in cost of products sold. The closures are expected to reduce cost by eliminating excess capacity and consolidating manufacturing processes.

The facility closures are expected to result in the reduction of approximately 280 employees when completed in 2016. The Company expects to incur $12 of future charges related to 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, 2015	$	—			$	—			$	—
Provision	17				—				$	17
Balance at September 30, 2015	$	17			$	—			$	17

2013 European Division Actions

Through September 30, 2015, the Company incurred costs of $31 related to an initiative to better align costs with ongoing market conditions in its European operations, primarily in its food can, aerosol can and specialty packaging business. The action resulted in the reduction of approximately 200 employees. The Company expects to pay the remaining liability in 2015 and 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, 2015	$	14			$	—			$	14
Payments	(8		)		—				(8		)
Foreign currency translation	(1		)		—				(1		)
Balance at September 30, 2015	$	5			$	—			$	5

Other Actions

At September 30, 2015, the Company also had a restructuring accrual of $16 primarily related to actions taken in 2011 and 2012 to reduce manufacturing capacity and headcount in its European Aerosol and Specialty Packaging businesses. The Company expects to pay the liability through 2024 as certain employees have elected to receive payment as a fixed monthly sum over future years. The Company continues to review its supply and demand profile and long-term plans in Europe and it is possible that the Company may record additional restructuring charges in the future.

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Crown Holdings, Inc.

J.	Debt

The Company’s outstanding debt was as follows:

	September 30, 2015				December 31, 2014
Short-term debt	$	61			$	75
Long-term debt
Senior secured borrowings:
Revolving credit facilities	$	45			$	—
Term loan facilities
U.S. dollar at LIBOR plus 1.75% due 2018	875				800
Euro (€700 at September 30, 2015) at EURIBOR plus 1.75% due 2018	782				847
Farm credit facility at LIBOR plus 2.00% due 2019	358				358
Senior notes and debentures:
U.S. dollar 6.25% due 2021	700				700
Euro (€650 at September 30, 2015) 4.0% due 2022	726				786
U.S. dollar 4.50% due 2023	1,000				1,000
Euro (€600 at September 30, 2015) 3.375% due 2025	671				—
U.S. dollar 7.375% due 2026	350				350
U.S. dollar 7.50% due 2096	64				64
Other indebtedness in various currencies	181				281
Unamortized discounts	(2		)		(2		)
Total long-term debt	5,750				5,184
Less: current maturities	(142		)		(177		)
Total long-term debt, less current maturities	$	5,608			$	5,007

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 $5,856 at September 30, 2015 and $5,346 at December 31, 2014.

In February 2015, to fund the acquisition of Empaque as described in Note C, the Company borrowed an additional $75 under its U.S. dollar term loan facility due in December 2018 and $675 under its U.S. dollar term loan facility due in February 2022.

In May 2015, the Company issued €600 ($671 at September 30, 2015) principal amount of 3.375% senior unsecured notes due 2025. 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 these proceeds to repay its U.S. dollar term loan facility due in February 2022. In connection with the repayment of the term loan facility, the Company recorded a loss from early extinguishment of debt of $9 for the write off of deferred financing costs.

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.

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Crown Holdings, Inc.

In recent years, the states of Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Kansas, Michigan, Mississippi, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Wisconsin and Wyoming enacted legislation that limits asbestos-related liabilities under state law of companies such as Crown Cork that allegedly incurred these liabilities because they are successors by corporate merger to companies that had been involved with asbestos. The legislation, which applies to future and, with the exception of Arkansas, Georgia, South Carolina, South Dakota 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.

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, 2015, the Company paid $12 to settle outstanding claims and had claims activity as follows:

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

In the fourth quarter of each year, the Company performs an analysis of outstanding claims and categorizes these claims by year of exposure and state filed. As of December 31, 2014, the Company's outstanding claims were:

Claimants alleging first exposure after 1964	16,000
Claimants alleging first exposure before or during 1964 filed in:
Texas	13,000
Pennsylvania	2,000
Other states that have enacted asbestos legislation	6,000
Other states	17,000
Total claims outstanding	54,000

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Crown Holdings, Inc.

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

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

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

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

	2014			2013			2012
Total claims	22	%		21	%		19	%
Pre-1964 claims in states without asbestos legislation	41	%		39	%		36	%

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, 2015.

As of September 30, 2015, the Company’s accrual for pending and future asbestos-related claims and related legal costs was $257, including $202 for unasserted claims. The Company’s accrual includes estimated probable costs for claims through the year 2024. The Company’s accrual excludes potential costs for claims beyond 2024 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 88% of the claims outstanding at the end of 2014), 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).

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Crown Holdings, Inc.

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. Although the Company believes

its accruals are adequate to cover its portion of future remediation costs, there can be no assurance that the ultimate payments will not exceed the amount of the Company’s accruals and will not have a material effect on its results of operations, financial position and cash flow. Any possible loss or range of potential loss that may be incurred in excess of the recorded accruals cannot be estimated.

In March 2015, the Bundeskartellamt, or German Federal Cartel Office (“FCO”), conducted unannounced inspections of the premises of several metal packaging manufacturers, including a German subsidiary of the Company. The local court order authorizing the inspection cited FCO suspicions of anti-competitive agreements in the market for the supply of metal packaging products. The FCO’s investigation is ongoing. To date, the FCO has not officially charged the Company or any of its subsidiaries with any violations of competition law. The Company has commenced an internal investigation into the matter and has discovered instances of inappropriate conduct by certain employees of German subsidiaries of the Company. The Company is cooperating with the FCO and submitted a leniency application which disclosed the findings of its internal investigation to date and which may lead to the reduction of penalties that the FCO may impose. If the FCO finds that the Company or any of its subsidiaries violated competition law, the FCO has wide discretion to levy fines. At this stage of the investigation the Company believes that a loss is probable. The Company is unable to predict the ultimate outcome of the FCO’s investigation and any additional losses that could be incurred, which could be material to the Company’s operating results and cash flows for the periods in which they are resolved or become reasonably estimable.

The Company and its subsidiaries are also subject to various other lawsuits and claims with respect to governmental, labor, environmental, securities, vendor and other matters arising out of the Company’s normal course of business. While the impact on future financial results is not subject to reasonable estimation because considerable uncertainty exists, management believes that the ultimate liabilities resulting from such lawsuits and claims will not materially affect the Company’s consolidated earnings, financial position or cash flow.

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

At September 30, 2015, 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 $9. 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, 2015, the Company also had guarantees of $27 related to the residual values of leased assets.

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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
	2015				2014				2015				2014
Net income attributable to Crown Holdings	$	141			$	244			$	327			$	374
Weighted average shares outstanding:
Basic	138.1				137.4				137.9				137.2
Dilutive stock options and restricted stock	1.0				1.3				1.1				1.2
Diluted	139.1				138.7				139.0				138.4
Basic earnings per share	$	1.02			$	1.78			$	2.37			$	2.73
Diluted earnings per share	$	1.01			$	1.76			$	2.35			$	2.70

For the three and nine months ended September 30, 2014, 0.1 million contingently issuable common shares were excluded from the computation of diluted earnings per share because the effect would be anti-dilutive.

N.	Pension and Other Postretirement Benefits

The components of net periodic pension and other postretirement benefits costs for the three and nine months ended September 30, 2015 and 2014 were as follows:

	Three Months Ended								Nine Months Ended
	September 30								September 30
Pension benefits – U.S. plans	2015				2014				2015				2014
Service cost	$	2			$	3			$	11			$	11
Interest cost	16				15				47				48
Expected return on plan assets	(25		)		(26		)		(75		)		(78		)
Recognized net loss	13				11				38				32
Net periodic cost	$	6			$	3			$	21			$	13

	Three Months Ended								Nine Months Ended
	September 30								September 30
Pension benefits – Non-U.S. plans	2015				2014				2015				2014
Service cost	$	6			$	4			$	19			$	17
Interest cost	31				34				94				115
Expected return on plan assets	(43		)		(43		)		(129		)		(145		)
Recognized prior service credit	(3		)		(3		)		(10		)		(11		)
Recognized net loss	13				15				40				52
Net periodic cost	$	4			$	7			$	14			$	28

	Three Months Ended								Nine Months Ended
	September 30								September 30
Other postretirement benefits	2015				2014				2015				2014
Service cost	$	1			$	1			$	1			$	2
Interest cost	2				1				6				7
Recognized prior service credit	(10		)		(8		)		(27		)		(25		)
Recognized net loss	—				2				3				6
Net periodic benefit	$	(7	)		$	(4	)		$	(17	)		$	(10	)

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Crown Holdings, Inc.

During the third quarter of 2015, the Company amended its U.S. retiree medical and life insurance plan to eliminate retiree medical benefits and to reduce life insurance benefits for certain active and retired employees. As a result of these changes, the Company was required to re-measure the associated plans as of September 1, 2015. The re-measurement and amendment resulted in a net decrease of $54 to the Company's postretirement benefit obligation which will be amortized over the average remaining service life of active participants.

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
	2015				2014				2015				2014
U.S. statutory rate at 35%	$	73			$	78			$	178			$	168
Tax on foreign income	(27		)		(30		)		(66		)		(74		)
Tax contingencies	—				—				8				—
Valuation allowance	2				(91		)		7				(81		)
Non-deductible impairment charge	—				—				1				15
Other items, net	—				2				6				14
Income tax provision	$	48			$	(41	)		$	134			$	42

During the nine months ended September 30, 2015, the increase in tax contingencies is primarily due to an unfavorable Spanish tax court ruling in a case not directly involving the Company.

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.

The nine months ended September 30, 2014, also included non-deductible 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.

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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
	2015				2014				2015				2014
Americas Beverage	$	722			$	570			$	2,080			$	1,713
North America Food	200				236				530				628
European Beverage	427				474				1,173				1,358
European Food	641				787				1,564				1,715
Asia Pacific	300				310				920				924
Total reportable segments	2,290				2,377				6,267				6,338
Non-reportable segments	170				217				468				632
Total	$	2,460			$	2,594			$	6,735			$	6,970

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
	2015				2014				2015				2014
Americas Beverage	$	16			$	19			$	61			$	70
North America Food	1				1				3				5
European Beverage	1				—				1				1
European Food	26				22				77				69
Asia Pacific	2				—				2				—
Total reportable segments	46				42				144				145
Non-reportable segments	19				29				73				87
Total	$	65			$	71			$	217			$	232

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
	2015				2014				2015				2014
Americas Beverage	$	116			$	77			$	300			$	241
North America Food	25				40				72				107
European Beverage	74				81				178				223
European Food	98				107				208				196
Asia Pacific	37				38				111				108
Total reportable segments	$	350			$	343			$	869			$	875

    

23

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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
	2015				2014				2015				2014
Segment income of reportable segments	$	350			$	343			$	869			$	875
Segment income of non-reportable segments	25				26				62				72
Corporate and unallocated items	(54		)		(42		)		(148		)		(154		)
Restructuring and other	(40		)		(8		)		(57		)		(91		)
Loss from early extinguishments of debt	—				(34		)		(9		)		(34		)
Interest expense	(68		)		(64		)		(202		)		(188		)
Interest income	4				2				8				5
Foreign exchange	(9		)		2				(14		)		(4		)
Income before income taxes	$	208			$	225			$	509			$	481

Corporate and unallocated items includes corporate and division administrative costs, technology costs, and unallocated items such as the U.S. and U.K. pension plan costs, fair value adjustments for the sale of inventory acquired in an acquisition and the timing impact of hedge ineffectiveness.

24

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Crown Holdings, Inc.

Q.	Condensed Combining Financial Information

Crown Cork & Seal Company, Inc. (Issuer), a 100% owned subsidiary, has $350 principal amount of 7.375% senior notes due 2026 and $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, 2015 and 2014,

•balance sheets as of September 30, 2015 and December 31, 2014, and

•statements of cash flows for the nine months ended September 30, 2015 and 2014

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, 2015

(in millions)

	Parent				Issuer				Non- Guarantors				Eliminations				Total Company
Net sales									$	2,460							$	2,460
Cost of products sold, excluding depreciation and amortization									1,984								1,984
Depreciation and amortization									61								61
Gross profit									415								415
Selling and administrative expense					$	3			91								94
Restructuring and other									40								40
Net interest expense					25				39								64
Foreign exchange									9								9
Income/(loss) before income taxes					(28		)		236								208
Provision for / (benefit from) income taxes					(15		)		63								48
Equity earnings / (loss) in affiliates	$	141			110								$	(251	)		—
Net income	141				97				173				(251		)		160
Net income attributable to noncontrolling interests									(19		)						(19		)
Net income attributable to Crown Holdings	$	141			$	97			$	154			$	(251	)		$	141
Comprehensive income	$	9			$	35			$	38			$	(57	)		$	25
Comprehensive income attributable to noncontrolling interests									(16		)						(16		)
Comprehensive income attributable to Crown Holdings	$	9			$	35			$	22			$	(57	)		$	9

25

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Crown Holdings, Inc.

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 from early extinguishment 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

26

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Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended September 30, 2015

(in millions)

	Parent				Issuer				Non- Guarantors				Eliminations				Total Company
Net sales									$	6,735							$	6,735
Cost of products sold, excluding depreciation and amortization									5,487								5,487
Depreciation and amortization									174								174
Gross profit									1,074								1,074
Selling and administrative expense					$	8			283								291
Restructuring and other									57								57
Loss from early extinguishment of debt									9								9
Net interest expense					76				118								194
Foreign exchange									14								14
Income/(loss) before income taxes					(84		)		593								509
Provision for / (benefit from) income taxes					(24		)		158								134
Equity earnings / (loss) in affiliates	$	327			298								$	(625	)		—
Net income	327				238				435				(625		)		375
Net income attributable to noncontrolling interests									(48		)						(48		)
Net income attributable to Crown Holdings	$	327			$	238			$	387			$	(625	)		$	327
Comprehensive income	$	3			$	73			$	106			$	(136	)		$	46
Comprehensive income attributable to noncontrolling interests									(43		)						(43		)
Comprehensive income attributable to Crown Holdings	$	3			$	73			$	63			$	(136	)		$	3

27

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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

28

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Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of September 30, 2015

(in millions)

	Parent				Issuer				Non- Guarantors				Eliminations				Total Company
Assets
Current assets
Cash and cash equivalents									$	466							$	466
Receivables, net									1,183								1,183
Inventories									1,302								1,302
Prepaid expenses and other current assets	$	1			$	67			243								311
Total current assets	1				67				3,194								3,262
Intercompany debt receivables									3,786				$	(3,786	)		—
Investments	3,064				2,474								(5,538		)		—
Goodwill and intangible assets									3,664								3,664
Property, plant and equipment, net									2,614								2,614
Other non-current assets					397				292								689
Total	$	3,065			$	2,938			$	13,550			$	(9,324	)		$	10,229
Liabilities and equity
Current liabilities
Short-term debt									$	61							$	61
Current maturities of long-term debt									142								142
Accounts payable and accrued liabilities	$	19			$	41			2,467								2,527
Total current liabilities	19				41				2,670								2,730
Long-term debt, excluding current maturities					412				5,196								5,608
Long-term intercompany debt	2,906				880								$	(3,786	)		—
Postretirement and pension liabilities									786								786
Other non-current liabilities					297				375								672
Commitments and contingent liabilities
Noncontrolling interests									293								293
Crown Holdings shareholders’ equity/(deficit)	140				1,308				4,230				(5,538		)		140
Total equity/(deficit)	140				1,308				4,523				(5,538		)		433
Total	$	3,065			$	2,938			$	13,550			$	(9,324	)		$	10,229

29

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Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of December 31, 2014

(in millions)

	Parent				Issuer				Non- Guarantors				Eliminations				Total Company
Assets
Current assets
Cash and cash equivalents									$	965							$	965
Receivables, net									1,031								1,031
Inventories									1,324								1,324
Prepaid expenses and other current assets	$	1			$	69			186								256
Assets held for sale									48								48
Total current assets	1				69				3,554								3,624
Intercompany debt receivables									2,885				$	(2,885	)		—
Investments	2,199				2,350								(4,549		)		—
Goodwill and intangible assets									2,926								2,926
Property, plant and equipment, net									2,437								2,437
Other non-current assets					397				324								721
Total	$	2,200			$	2,816			$	12,126			$	(7,434	)		$	9,708
Liabilities and equity
Current liabilities
Short-term debt									$	75							$	75
Current maturities of long-term debt									177								177
Accounts payable and accrued liabilities	$	20			$	35			2,596								2,651
Liabilities related to assets held for sale									23								23
Total current liabilities	20				35				2,871								2,926
Long-term debt, excluding current maturities					412				4,595								5,007
Long-term intercompany debt	2,061				824								$	(2,885	)		—
Postretirement and pension liabilities									871								871
Other non-current liabilities					310				207								517
Commitments and contingent liabilities
Noncontrolling interests									268								268
Crown Holdings shareholders’ equity/(deficit)	119				1,235				3,314				(4,549		)		119
Total equity/(deficit)	119				1,235				3,582				(4,549		)		387
Total	$	2,200			$	2,816			$	12,126			$	(7,434	)		$	9,708

30

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Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2015

(in millions)

	Parent				Issuer				Non- Guarantors				Eliminations				Total Company
Net cash provided by/(used for) operating activities	$	24			$	(65	)		$	356							$	315
Cash flows from investing activities
Capital expenditures									(176		)						(176		)
Purchase of business									(1,207		)						(1,207		)
Proceeds from sale of property, plant and equipment									3								3
Proceeds from sale of business									33								33
Intercompany investing activities	(865		)		9				865				$	(9	)		—
Net investment hedge settlements									(11		)						(11		)
Other									(16		)						(16		)
Net cash provided by/(used for) investing activities	(865		)		9				(509		)		(9		)		(1,374		)
Cash flows from financing activities
Proceeds from long-term debt									1,435								1,435
Payments of long-term debt									(780		)						(780		)
Net change in revolving credit facility and short-term debt									34								34
Net change in long-term intercompany balances	845				56				(901		)						—
Debt issue costs									(18		)						(18		)
Common stock issued	5																5
Common stock repurchased	(9		)														(9		)
Dividends paid									(9		)		9				—
Contributions from noncontrolling interests									3								3
Dividend paid to noncontrolling interests									(21		)						(21		)
Foreign exchange derivatives related to debt									(38		)						(38		)
Net cash provided by/(used for) financing activities	841				56				(295		)		9				611
Effect of exchange rate changes on cash and cash equivalents									(51		)						(51		)
Net change in cash and cash equivalents	—				—				(499		)		—				(499		)
Cash and cash equivalents at January 1									965								965
Cash and cash equivalents at September 30	$	—			$	—			$	466			$	—			$	466

31

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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 noncontrolling interests									(93		)						(93		)
Dividend paid to noncontrolling interests									(45		)						(45		)
Foreign exchange derivatives related to debt									(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

32

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Crown Holdings, Inc.

Crown Americas, LLC, Crown Americas Capital Corp. II and Crown Americas Capital Corp. III (collectively, the Issuers), 100% 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, 2015 and 2014,

•	balance sheets as of September 30, 2015 and December 31, 2014, and

•	statements of cash flows for the nine months ended September 30, 2015 and 2014

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, 2015

(in millions)

	Parent				Issuer				Guarantors				Non- Guarantors				Eliminations				Total Company
Net sales									$	527			$	1,933							$	2,460
Cost of products sold, excluding depreciation and amortization									415				1,569								1,984
Depreciation and amortization									8				53								61
Gross profit									104				311								415
Selling and administrative expense					$	2			37				55								94
Restructuring and other									3				37								40
Net interest expense					23				23				18								64
Technology royalty									(13		)		13								—
Foreign exchange					3								9				$	(3	)		9
Income/(loss) before income taxes					(28		)		54				179				3				208
Provision for / (benefit from) income taxes					(11		)		15				43				1				48
Equity earnings / (loss) in affiliates	$	141			70				58								(269		)		—
Net income	141				53				97				136				(267		)		160
Net income attributable to noncontrolling interests													(19		)						(19		)
Net income attributable to Crown Holdings	$	141			$	53			$	97			$	117			$	(267	)		$	141
Comprehensive income	$	9			$	48			$	35			$	(25	)		$	(42	)		$	25
Comprehensive income attributable to noncontrolling interests													(16		)						(16		)
Comprehensive income attributable to Crown Holdings	$	9			$	48			$	35			$	(41	)		$	(42	)		$	9

33

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Crown Holdings, Inc.

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 extinguishment 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

34

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Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended September 30, 2015

(in millions)

	Parent				Issuer				Guarantors				Non- Guarantors				Eliminations				Total Company
Net sales									$	1,555			$	5,180							$	6,735
Cost of products sold, excluding depreciation and amortization									1,235				4,252								5,487
Depreciation and amortization									24				150								174
Gross profit									296				778								1,074
Selling and administrative expense					$	7			115				169								291
Restructuring and other									5				52								57
Loss from early extinguishment of debt					9																9
Net interest expense					67				69				58								194
Technology royalty									(32		)		32								—
Foreign exchange					11								14				$	(11	)		14
Income/(loss) before income taxes					(94		)		139				453				11				509
Provision for / (benefit from) income taxes					(36		)		61				105				4				134
Equity earnings / (loss) in affiliates	$	327			158				160								(645		)		—
Net income	327				100				238				348				(638		)		375
Net income attributable to noncontrolling interests													(48		)						(48		)
Net income attributable to Crown Holdings	$	327			$	100			$	238			$	300			$	(638	)		$	327
Comprehensive Income	$	3			$	101			$	73			$	(5	)		$	(126	)		$	46
Comprehensive income attributable to noncontrolling interests													(43		)						(43		)
Comprehensive income attributable to Crown Holdings	$	3			$	101			$	73			$	(48	)		$	(126	)		$	3

35

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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 attirbutable to Crown Holdings	$	293			$	151			$	280			$	247			$	(678	)		$	293

36

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Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of September 30, 2015

(in millions)

	Parent				Issuer				Guarantors				Non- Guarantors				Eliminations				Total Company
Assets
Current assets
Cash and cash equivalents					$	32							$	434							$	466
Receivables, net									$	7			1,176								1,183
Intercompany receivables									41				9				$	(50	)		—
Inventories									281				1,021								1,302
Prepaid expenses and other current assets	$	1			1				76				233								311
Total current assets	1				33				405				2,873				(50		)		3,262
Intercompany debt receivables					3,201				3,665				693				(7,559		)		—
Investments	3,064				2,158				805								(6,027		)		—
Goodwill and intangible assets									472				3,192								3,664
Property, plant and equipment, net					1				330				2,283								2,614
Other non-current assets					45				394				250								689
Total	$	3,065			$	5,438			$	6,071			$	9,291			$	(13,636	)		$	10,229
Liabilities and equity
Current liabilities
Short-term debt													$	61							$	61
Current maturities of long-term debt					$	48							94								142
Accounts payable and accrued liabilities	$	19			24				$	485			1,999								2,527
Intercompany payables									9				41				$	(50	)		—
Total current liabilities	19				72				494				2,195				(50		)		2,730
Long-term debt, excluding current maturities					2,886				412				2,310								5,608
Long-term intercompany debt	2,906				1,266				3,178				209				(7,559		)		—
Postretirement and pension liabilities									384				402								786
Other non-current liabilities									295				377								672
Commitments and contingent liabilities
Noncontrolling interests													293								293
Crown Holdings shareholders’ equity/(deficit)	140				1,214				1,308				3,505				(6,027		)		140
Total equity/(deficit)	140				1,214				1,308				3,798				(6,027		)		433
Total	$	3,065			$	5,438			$	6,071			$	9,291			$	(13,636	)		$	10,229

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Crown Holdings, Inc.

CONDENSED COMBINING BALANCE SHEET

As of December 31, 2014

(in millions)

	Parent				Issuer				Guarantors				Non- Guarantors				Eliminations				Total Company
Assets
Current assets
Cash and cash equivalents					$	128							$	837							$	965
Receivables, net									$	18			1,013								1,031
Intercompany receivables									20				11				$	(31	)		—
Inventories									291				1,033								1,324
Prepaid expenses and other current assets	$	1			4				75				176								256
Assets held for sale													48								48
Total current assets	1				132				404				3,118				(31		)		3,624
Intercompany debt receivables					2,415				2,640				27				(5,082		)		—
Investments	2,199				2,005				850								(5,054		)		—
Goodwill and intangible assets									473				2,453								2,926
Property, plant and equipment, net					1				328				2,108								2,437
Other non-current assets					51				413				257								721
Total	$	2,200			$	4,604			$	5,108			$	7,963			$	(10,167	)		$	9,708
Liabilities and equity
Current liabilities
Short-term debt													$	75							$	75
Current maturities of long-term debt									$	44			133								177
Accounts payable and accrued liabilities	$	20			$	49			480				2,102								2,651
Intercompany payables									11				20				$	(31	)		—
Liabilities related to assets held for sale													23								23
Total current liabilities	20				49				535				2,353				(31		)		2,926
Long-term debt, excluding current maturities					2,858				368				1,781								5,007
Long-term intercompany debt	2,061				584				2,199				238				(5,082		)		—
Postretirement and pension liabilities									464				407								871
Other non-current liabilities									307				210								517
Commitments and contingent liabilities
Noncontrolling interests													268								268
Crown Holdings shareholders’ equity/(deficit)	119				1,113				1,235				2,706				(5,054		)		119
Total equity/(deficit)	119				1,113				1,235				2,974				(5,054		)		387
Total	$	2,200			$	4,604			$	5,108			$	7,963			$	(10,167	)		$	9,708

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Crown Holdings, Inc.

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2015

(in millions)

	Parent				Issuer				Guarantors				Non- Guarantors				Eliminations				Total Company
Net provided by/(used for) operating activities	$	24			$	(53	)		$	76			$	268							$	315
Cash flows from investing activities
Capital expenditures									(30		)		(146		)						(176		)
Purchase of business													(1,207		)						(1,207		)
Proceeds from sale of property, plant and equipment									1				2								3
Proceeds from sale of business													33								33
Intercompany investing activities	(865		)		7				9				865				$	(16	)		—
Net investment hedge settlements					(11		)														(11		)
Other									(10		)		(6		)						(16		)
Net cash provided by/(used for) investing activities	(865		)		(4		)		(30		)		(459		)		(16		)		(1,374		)
Cash flows from financing activities
Proceeds from long-term debt					750								685								1,435
Payments of long-term debt					(675		)						(105		)						(780		)
Net change in revolving credit facility and short-term debt													34								34
Net change in long-term intercompany balances	845				(104		)		(46		)		(695		)						—
Debt issue costs					(10		)						(8		)						(18		)
Common stock issued	5																				5
Common stock repurchased	(9		)																		(9		)
Dividends paid													(16		)		16				—
Contributions from noncontrolling interests													3								3
Dividends paid to noncontrolling interests													(21		)						(21		)
Foreign exchange derivatives related to debt													(38		)						(38		)
Net cash provided by/(used for) financing activities	841				(39		)		(46		)		(161		)		16				611
Effect of exchange rate changes on cash and cash equivalents													(51		)						(51		)
Net change in cash and cash equivalents	—				(96		)		—				(403		)		—				(499		)
Cash and cash equivalents at January 1					128								837								965
Cash and cash equivalents at September 30	$	—			$	32			$	—			$	434			$	—			$	466

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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		)
Foreign exchange derivatives related to debt													(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

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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, 2015 compared to 2014 and changes in financial condition and liquidity from December 31, 2014. 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, 2014, 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 capacity 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. In response to increasing global customer demand for beverage cans in non-standard sizes, commonly called "specialty cans", the Company will continue to make investments in converting existing capacity or adding new capacity for non-standard can sizes. The Company rigorously evaluates each investment opportunity against a variety of metrics and 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. Following the acquisition of Empaque as described below, the Company's primary focus in 2015 is to utilize cash flow to reduce leverage. The Company does not presently anticipate any share repurchases or dividends in 2015.

In recent years, the Company has developed its beverage can platform in emerging markets with particular focus on Asia, Brazil and Eastern Europe. Beverage can volume growth in these markets has been driven by increased per capita incomes and consumption, combined with an increased preference for cans over other forms of beverage packaging.

In April 2014, the Company completed its acquisition of Mivisa, the largest food can producer in both the Iberian Peninsula and Morocco; primarily serving the vegetable, fruit, fish and meat markets in a cash transaction valued at $1.7 billion. In February 2015, the Company completed its acquisition of Empaque, a leading manufacturer for the beverage industry in Mexico, from Heineken N.V., in a cash transaction valued at $1.2 billion. Accompanying the Empaque transaction are long-term supply agreements with Heineken affiliates which are expected to provide a stable cash flow base. In February 2015, the Company announced plans to construct a new beverage can plant in Monterrey, Mexico. The addition of Empaque and the Monterrey facility significantly increases the Company's presence in the growing Mexican market and substantially enhances the Company's strategic position in beverage cans, both regionally and globally.

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. 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.

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. In the Americas Beverage segment, the Company has generally been able to pass-through increases in aluminum premium costs to its customers. In the European Beverage segment, the Company has generally been unable to pass-through increases in aluminum premium costs 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.

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Crown Holdings, Inc.

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

In assessing the Company's performance, the key performance measure used is segment income, a non-GAAP measure generally 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.

On July 23, 2015, John W. Conway, informed the Board of his decision to retire from his role as Chief Executive Officer of the Company effective January 1, 2016. Mr. Conway will continue to serve on the Company’s Board as non-executive Chairman. The Board has elected Timothy J. Donahue, the Company’s current President and Chief Operating Officer, to assume the position of President and Chief Executive Officer effective January 1, 2016.  Upon his retirement, Mr. Conway will be entitled to a lump-sum payment of $32 under the Company’s unfunded Senior Executive Retirement Plan (“SERP”) and accelerated vesting of restricted stock awards. The Company anticipates recording a pre-tax charge of approximately $7 in connection with Mr. Conway’s retirement benefits during 2016 and the $32 payable under the SERP in 2016 will reduce the Company’s cash flows during the periods in which it is paid.

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 Brazilian real, Canadian dollar and Mexican peso 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
	2015				2014				2015				2014
Net sales	$	2,460			$	2,594			$	6,735			$	6,970
Beverage cans and ends as a percentage of net sales	52		%		48		%		56		%		53		%
Food cans and ends as a percentage of net sales	31		%		36		%		28		%		31		%

Three months ended September 30, 2015 compared to 2014

Net sales decreased primarily due to the impact of foreign currency translation, partially offset by the acquisition of Empaque. Net sales would have been $281 higher using exchange rates in effect during 2014.

Nine months ended September 30, 2015 compared to 2014

Net sales decreased primarily due to the impact of foreign currency translation, partially offset by the acquisition of Empaque and an additional four months of Mivisa. Net sales would have been $694 higher using exchange rates in effect during 2014.

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

Americas Beverage

The Americas Beverage segment manufactures aluminum beverage cans, ends, steel crowns, glass bottles and aluminum closures 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 driven by increased per capita incomes and consumption, combined with an increased preference for cans over other forms of beverage packaging.

In February 2015, the Company completed its acquisition of Empaque, a leading manufacturer of beverage packaging in Mexico. Empaque has been integrated with the Company's existing Americas Beverage business.

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Crown Holdings, Inc.

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

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

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Net sales	$	722			$	570			$	2,080			$	1,713
Segment income	116				77				300				241

Three months ended September 30, 2015 compared to 2014

Net sales increased $153 due to the acquisition of Empaque and $46 from increased sales unit volumes primarily in the U.S. and Mexico, partially offset by the impact of foreign currency translation.

Segment income increased $28 due to the acquisition of Empaque, $12 from increased sales unit volumes and improved plant operations.

Nine months ended September 30, 2015 compared to 2014

Net sales increased $401 due to the acquisition of Empaque and $48 from increased sales unit volumes, partially offset by the impact of foreign currency translation. Sales unit volumes were higher in the U.S., Canada and Mexico, partially offset by lower unit volume in Brazil.

Segment income increased $71 due to the acquisition of Empaque, partially offset by the impact of foreign currency translation.

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. In the third quarter of 2015, the Company announced the closure of two North America food can plants to more appropriately align capacity with customer demand and reduce costs.

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

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Net sales	$	200			$	236			$	530			$	628
Segment income	25				40				72				107

Three months ended September 30, 2015 compared to 2014

Net sales decreased primarily due to a 16% decline in sales unit volumes primarily attributable to the loss of a large customer and $7 from the impact of foreign currency translation.

Segment income decreased primarily due to lower sales unit volumes and higher costs.

Nine months ended September 30, 2015 compared to 2014

Net sales decreased primarily due to an 18% decline in sales unit volumes primarily attributable to the loss of certain customers and $12 from the impact of foreign currency translation.

Segment income decreased primarily due to lower sales unit volumes and higher costs.

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Crown Holdings, Inc.

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

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 Europe, the Middle East and North Africa. In recent years, the European beverage can market has been growing.

In September 2015, the Company announced plans to invest in a second line at its Osmaniye, Turkey plant in response to growing demand. The new line is expected to be operational in the first quarter of 2017 and have initial annual production capacity of approximately 900 million two-piece aluminum beverage cans in multiple sizes.

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

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Net sales	$	427			$	474			$	1,173			$	1,358
Segment income	74				81				178				223

    

Three months ended September 30, 2015 compared to 2014

Net sales and segment income decreased primarily due to the impact of foreign currency translation, partially offset by a 1% increase in sales unit volumes. Increased sales unit volumes in France, Greece, Eastern Europe, Italy and Spain offset continued weakness in the Middle East due to ongoing conflicts in the region.

Nine months ended September 30, 2015 compared to 2014

Net sales and segment income decreased primarily due to the impact of foreign currency translation and a 4% decline in sales unit volumes, primarily in the Middle East due to ongoing conflicts in the region. Net sales and segment income would have been $155 and $20 higher, respectively, using exchange rates in effect during 2014.

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 completed its acquisition of Mivisa and in June 2014 divested certain Crown and Mivisa operations as required for regulatory approval. In the third quarter of 2015, the Company announced the closure of two European Food facilities in an effort to reduce cost by eliminating excess capacity and consolidating manufacturing processes.

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

	Three Months Ended								Six Months Ended
	September 30								September 30
	2015				2014				2015				2014
Net sales	$	641			$	787			$	1,564			$	1,715
Segment income	98				107				208				196

Three months ended September 30, 2015 compared to 2014

Net sales decreased primarily due to the impact of foreign currency translation and a 1% decline in sales unit volumes. Net sales would have been $120 higher using exchange rates in effect during 2014.

Segment income decreased primarily due to the impact of foreign currency translation, partially offset by improved cost performance.

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Crown Holdings, Inc.

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

Nine months ended September 30, 2015 compared to 2014

Net sales decreased primarily due to the impact of foreign currency translation, partially offset by increased sales unit volumes and $145 for an additional four months of Mivisa. Net sales would have been $313 higher using exchange rates in effect during 2014.

Segment income decreased primarily due to the impact of foreign currency translation, partially offset by an additional four months of Mivisa and improved cost performance. Segment income would have been $42 higher using exchange rates in effect during 2014.

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 beverage can market in Asia has been growing. In the third quarter of 2015, the Company announced that it began construction of a third beverage can plant in Cambodia. The Company currently expects the plant to begin commercial production in late 2016.

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

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Net sales	$	300			$	310			$	920			$	924
Segment income	37				38				111				108

Three months ended September 30, 2015 compared to 2014

Net sales decreased $13 from the impact of foreign currency translation, partially offset by increased beverage can sales unit volumes.

Segment income decreased primarily due to the impact of competitive price compression in China, partially offset by increased beverage can sales unit volumes.

Nine months ended September 30, 2015 compared to 2014

Net sales decreased $23 from the impact of foreign currency translation, partially offset by increased beverage can sales unit volumes.

Segment income increased primarily due to increased beverage can sales unit volumes, partially offset by the impact of competitive price compression in China.

Non-reportable Segments

The Company's non-reportable segments include its European aerosol can and specialty packaging business, its North American aerosol can business and its tooling and equipment operations in the U.S. and U.K. In recent years, the Company's aerosol can and specialty packaging businesses have experienced slightly declining volumes. In the first quarter of 2015, the Company completed the sale of four of its European industrial specialty packaging plants.

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

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Net sales	$	170			$	217			$	468			$	632
Segment income	25				26				62				72

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Crown Holdings, Inc.

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

Three months ended September 30, 2015 compared to 2014

Net sales decreased primarily due to $44 from the sale of four industrial specialty packaging plants and the transfer of production from a European specialty packaging plant to the European food business and $14 from the impact of foreign currency translation, partially offset by $10 from higher equipment sales.

Segment income decreased primarily due to the impact of foreign currency translation, partially offset by higher equipment sales.

Nine months ended September 30, 2015 compared to 2014

Net sales decreased primarily due to $121 from the sale of four industrial specialty packaging plants and the transfer of production from a European specialty packaging plant to the European food business and $44 from the impact of foreign currency translation.

Segment income decreased primarily due to $10 from the sale of four industrial specialty packaging plants and the transfer of production from a European specialty packaging plant to the European food business and $3 from the impact of foreign currency translation.

Corporate and Unallocated Expense

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Corporate and unallocated expense	$	(54	)		$	(42	)		$	(148	)		$	(154	)

For the three months ended September 30, 2015, corporate and unallocated expense included charges of $7 for the timing of hedge ineffectiveness and $5 for the write-off of non-productive inventory related to plant closures. For the three months ended September 30, 2014, corporate and unallocated expense included charges of $4 related to the impact of fair value adjustments for the sale of inventory acquired in the acquisition of Mivisa and a benefit of $3 related to the timing of hedge ineffectiveness.

For the nine months ended September 30, 2015, corporate and unallocated expense included charges of $6 for fair value adjustments for the sale of inventory acquired in the acquisition of Empaque, $5 for the write-off of non-productive inventory related to plant closures and $3 for the timing of hedge ineffectiveness. For the nine months ended September 30, 2014, corporate and unallocated expense included a charge of $19 related to the impact of fair value adjustments for the sale of inventory acquired in the acquisition of Mivisa and a charge of $1 for the timing of hedge ineffectiveness.

Cost of Products Sold (Excluding Depreciation and Amortization)

For the three and nine months ended September 30, 2015 compared to 2014, cost of products sold (excluding depreciation and amortization) decreased from $2,119 to $1,984 and from $5,740 to $5,487 primarily due to the impact of foreign currency translation, partially offset by the impact of the acquisitions of Mivisa and Empaque. Cost of products sold would have been $226 and $566 higher for the three and nine months ended September 30, 2015 using exchange rates in effect during 2014.

Depreciation and Amortization

For the three and nine months ended September 30, 2015 compared to 2014, depreciation and amortization expense increased from $53 to $61 and from $135 to $174 primarily due to depreciation and amortization of fixed assets and intangible assets recorded in connection with the Company's acquisitions of Mivisa and Empaque.

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Crown Holdings, Inc.

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

Selling and Administrative Expense

For the three and nine months ended September 30, 2015 compared to 2014, selling and administrative expense decreased from $95 to $94 and $302 to $291 due to the impact of foreign currency translation, partially offset by higher corporate costs.

Interest Expense

For the three and nine months ended September 30, 2015 compared to 2014, interest expense increased from $64 to $68 and from $188 to $202 primarily due to higher average debt outstanding due to the acquisitions of Mivisa and Empaque, partially offset by lower borrowing rates and the impact of foreign currency translation.

Taxes on Income

    

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

	Three Months Ended								Nine Months Ended
	September 30								September 30
	2015				2014				2015				2014
Income before income taxes	$	208			$	225			$	509			$	481
Provision for income taxes	48				(41		)		134				42
Effective income tax rate	23		%		(18		)%		26		%		9		%

Refer to Note O to the consolidated financial statements for a reconciliation of the Company's provision for income taxes to the amount determined by applying the U.S. statutory federal income tax rate to pre-tax income.

Net Income Attributable to Noncontrolling Interests

For the three and nine months ended September 30, 2015 compared to 2014, net income attributable to noncontrolling interests decreased from $22 to $19 and from $65 to $48 primarily due to lower earnings in the Company's beverage can operations in Brazil and the Middle East.

Liquidity and Capital Resources

Cash from Operations

Cash flows provided by operating activities increased from $9 for the nine months ended September 30, 2014 compared to $315 in 2015 primarily due to improvements in working capital. Day sales outstanding for trade receivables improved from 41 days in 2014 to 36 days in 2015 due to a decrease of 5 days related to the derecognition of receivables under the Company's securitization and factoring programs.

Inventories used cash of $168 for the nine months ended September 30, 2014 compared to $10 in 2015. Cash used in 2014 was higher than in 2015 primarily due to growth in the Company's European Food business and higher material costs.

Investing Activities

Cash used for investing activities increased from $912 for the nine months ended September 30, 2014 to $1,374 in 2015 primarily due to funds paid for the acquisition of Empaque, partially offset by lower capital expenditures. The Company currently expects capital expenditures for 2015 to be approximately $350.

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Crown Holdings, Inc.

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

Financing Activities

Cash provided by financing activities increased from $606 for the nine months ended September 30, 2014 to $611 in 2015 primarily due to higher net borrowings in 2015 to fund the acquisition of Empaque as described in Note J and from payments in 2014 to increase the Company's ownership interest in subsidiaries in Jordan and Tunisia.

Liquidity

As of September 30, 2015, $425 of the Company's $466 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 certain 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., $226 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, 2015, the Company had $1,114 of borrowing capacity available under its revolving credit facility, equal to the total facility of $1,200 less borrowings of $45 and $41 of outstanding standby letters of credit.

Capital Resources

As of September 30, 2015, the Company has approximately $88 of capital commitments. The Company expects to fund these commitments primarily through cash flows generated from operations and to fund any excess needs through external borrowings.

Contractual Obligations

During the first nine months of 2015 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, 2014, 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, and in Part II within Item 1A of this report 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.

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

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, 2014 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 nine months of 2015. The discussion below supplements the discussion from the Company's Annual Report on Form 10-K for the year ended December 31, 2014 with respect to goodwill.

Goodwill Impairment

In recent years, the Company’s European Aerosols and Specialty Packaging reporting unit has experienced declining operating results. Based on current projections, 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 $105 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, 2014, 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.    

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, 2014 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.

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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, 2015, see Note H to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

As of September 30, 2015, the Company had $2.2 billion principal floating interest rate debt. A change of 0.25% in these floating interest rates would change annual interest expense by approximately $6 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.

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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” 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 information set forth below and 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, 2014 and in Item 1A to Part II in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, 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 and the Company’s Annual Report on Form 10-K 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.

The Company is subject to litigation risks which could negatively impact its operations and net income.

The Company is subject to various lawsuits and claims with respect to matters such as governmental, environmental and employee benefits laws and regulations, securities, labor, and actions arising out of the normal course of business, in addition to asbestos-related litigation described under the risk factor titled “Pending and future asbestos litigation and payments to settle asbestos-related claims could reduce the Company's cash flow and negatively impact its financial condition.” The Company is currently unable to determine the total expense or possible loss, if any, that may ultimately be incurred in the resolution of such legal proceedings. Regardless of the ultimate outcome of such legal proceedings, they could result in significant diversion of time by the Company's management. The results of the Company's pending legal proceedings, including any potential settlements, are uncertain and the outcome of these disputes may decrease its cash available for operations and investment, restrict its operations or otherwise negatively impact its business, operating results, financial condition and cash flow.

In March 2015, the Bundeskartellamt, or German Federal Cartel Office (“FCO”), conducted unannounced inspections of the premises of several metal packaging manufacturers, including one of the Company’s German subsidiaries. The local court order authorizing the inspection cited FCO suspicions of anti-competitive agreements in the market for the supply of metal packaging products. The FCO’s investigation is ongoing. To date, the FCO has not officially charged the Company or any of its subsidiaries with any violations of competition law. The Company has commenced an internal investigation into the matter and has discovered instances of inappropriate conduct by certain employees of German subsidiaries of the Company. The Company is cooperating with the FCO and submitted a leniency application which disclosed the findings of its internal investigation to date and which may lead to the reduction of penalties that the FCO may impose. If the FCO finds that the Company or any of its subsidiaries violated competition law, the FCO has wide discretion to levy fines. At this stage of the investigation the Company believes that a loss is probable. The Company is unable to predict the ultimate outcome of the FCO’s investigation and any additional losses that could be incurred, which could be material to the Company’s operating results and cash flows for the periods in which they are resolved or become reasonably estimable.

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 2015.

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Item 3. Defaults Upon Senior Securities

There were no events required to be reported under Item 3 for the quarter ended September 30, 2015.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

On October 19, 2015, the Company announced that it recorded $40 of restructuring and other charges in the third quarter of 2015 which included a charge of $13 to write-down the carrying value of fixed assets and $17 for termination benefits related to the announced closure of two facilities in the Company's European Food segment upon completion of consultation processes with employee representatives. The Company also recorded a charge of $5 related to the write-off of certain non-productive inventory which is included in cost of products sold. The closures are expected to reduce cost by eliminating excess capacity and consolidating manufacturing processes. The facility closures are expected to result in the reduction of approximately 280 employees when completed in 2016. The Company expects to incur $12 of future charges related to this action.

Item 6.    Exhibits    

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, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and nine months ended September 30, 2015, (ii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015, (iii) Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014, (v) Consolidated Statements of Changes in Equity for the nine months ended September 30, 2015 and 2014 and (vi) Notes to Consolidated Financial Statements.

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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/ David A. Beaver
		David A. Beaver
		Vice President and Corporate Controller
		(Chief Accounting Officer)

Date: October 23, 2015

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