CROWN HOLDINGS INC - Quarter Report: 2021 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2021


☐			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.)

770 Township Line Road	Yardley	PA	19067
(Address of principal executive offices)			(Zip Code)

215-698-5100

(registrant’s telephone number, including area code)

____________________

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock $5.00 Par Value	CCK	New York Stock Exchange
7 3/8% Debentures Due 2026	CCK26	New York Stock Exchange
7 1/2% Debentures Due 2096	CCK96	New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)


Large Accelerated Filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

There were 131,367,768 shares of Common Stock outstanding as of July 22, 2021.

Crown Holdings, Inc.

PART I – FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	2,856	$	2,137	$	5,420	$	4,443
Cost of products sold, excluding depreciation and amortization	2,244		1,704		4,226		3,536
Depreciation and amortization	111		102		223		210
Selling and administrative expense	147		120		290		262
Restructuring and other	(31)		3		(31)		9
Income from operations	385		208		712		426

Other pension and postretirement	(2)		12		(3)		43
Interest expense	68		73		137		151
Interest income	(1)		(1)		(3)		(5)
Foreign exchange	1		(4)		(1)		(17)
Income from continuing operations before taxes	319		128		582		254
Provision for income taxes	146		39		211		73
Equity earnings in affiliates	3		2		5		3
Net income from continuing operations	176		91		376		184
Net (loss) / income from discontinued operations	(3)		50		42		71
Net income	173		141		418		255
Net income from continuing operations attributable to noncontrolling interests	(45)		(15)		(78)		(41)
Net income from discontinued operations attributable to noncontrolling interests	—		—		(1)		—
Net income attributable to Crown Holdings	$	128	$	126	$	339	$	214

Net income from continuing operations attributable to Crown Holdings	$	131	$	76	$	298	$	143
Net (loss) / income from discontinued operations attributable to Crown Holdings	(3)		50		41		71
Net income attributable to Crown Holdings	$	128	$	126	$	339	$	214

Earnings per common share attributable to Crown Holdings:
Basic earnings per common share from continuing operations	0.98		0.57		2.23		1.07
Basic earnings per common share from discontinued operations	(0.02)		0.38		0.31		0.53
Basic	$	0.96	$	0.95	$	2.54	$	1.60

Diluted earnings per common share from continuing operations	0.97		0.57		2.22		1.06
Diluted earnings per common share from discontinued operations	(0.02)		0.37		0.30		0.53
Diluted	$	0.95	$	0.94	$	2.52	$	1.59

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

Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net income	$	173	$	141	$	418	$	255

Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments	44		22		9		(297)
Pension and other postretirement benefits	15		(20)		30		237
Derivatives qualifying as hedges	17		22		32		(12)
Total other comprehensive loss	76		24		71		(72)

Total comprehensive income	249		165		489		183
Net income attributable to noncontrolling interests	(45)		(15)		(79)		(41)
Translation adjustments attributable to noncontrolling interests	—		(2)		1		1
Derivatives qualifying as hedges attributable to noncontrolling interests	(1)		(1)		(2)		1
Comprehensive income attributable to Crown Holdings	$	203	$	147	$	409	$	144

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

Crown Holdings, Inc.

CONSOLIDATED BALANCE SHEETS (Condensed)

(In millions)

(Unaudited)


	June 30, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	566	$	1,173
Receivables, net	1,766		1,479
Inventories	1,492		1,263
Prepaid expenses and other current assets	295		202
Current assets held for sale	2,986		786
Total current assets	7,105		4,903

Goodwill	3,119		3,146
Intangible assets, net	1,651		1,755
Property, plant and equipment, net	3,783		3,652
Operating lease right-of-use assets, net	179		171
Other non-current assets	858		885
Non-current assets held for sale	—		2,179
Total	$	16,695	$	16,691

Liabilities and equity
Current liabilities
Short-term debt	$	76	$	104
Current maturities of long-term debt	94		67
Current portion of operating lease liabilities	42		43
Accounts payable	2,236		2,142
Accrued liabilities	946		903
Current liabilities held for sale	1,120		1,024
Total current liabilities	4,514		4,283

Long-term debt, excluding current maturities	7,879		8,023
Non-current portion of operating lease liabilities	141		132
Postretirement and pension liabilities	661		680
Other non-current liabilities	776		766
Non-current liabilities held for sale	—		203
Commitments and contingent liabilities (Note J)
Noncontrolling interests	462		406
Crown Holdings shareholders’ equity	2,262		2,198
Total equity	2,724		2,604
Total	$	16,695	$	16,691

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

Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)

(In millions)

(Unaudited)


	Six Months Ended
	June 30,
	2021		2020
Cash flows from operating activities
Net income	$	418	$	255
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	239		239
Loss on classification as held for sale	70		—

Restructuring and other	(23)		10
Pension expense	25		69
Pension contributions	(11)		(11)
Stock-based compensation	17		15
Working capital changes and other	(566)		(815)
Net cash provided by / (used for) operating activities	169		(238)
Cash flows from investing activities
Capital expenditures	(325)		(199)
Net investment hedge	13		15


Other	1		—
Net cash used for investing activities	(311)		(184)
Cash flows from financing activities
Net change in revolving credit facility and short-term debt	(40)		183
Proceeds from long-term debt	35		111
Payments of long-term debt	(36)		(41)
Foreign exchange derivatives related to debt	(8)		11
Payments of finance leases	(1)		(1)
Contributions from noncontrolling interests	—		2
Dividends paid to noncontrolling interests	(24)		(12)
Dividends paid to shareholders	(53)		—
Common stock issued	1		1
Common stock repurchased	(297)		(58)
Net cash (used for) / provided by financing activities	(423)		196
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(9)		(10)
Net change in cash, cash equivalents and restricted cash	(574)		(236)
Cash, cash equivalents and restricted cash at January 1	1,238		663
Cash, cash equivalents and restricted cash at June 30	$	664	$	427

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

Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In millions)

(Unaudited)


	Crown Holdings, Inc. Shareholders’ Equity
	Common Stock		Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Crown Equity		Noncontrolling Interests		Total Shareholders' Equity

Balance at January 1, 2021	$	929	$	179	$	4,538	$	(3,193)	$	(255)	$	2,198	$	406	$	2,604

Net income					211						211		34		245
Other comprehensive loss							(5)				(5)				(5)
Dividends paid to shareholders					(27)						(27)				(27)
Dividends paid to noncontrolling interests											—		(9)		(9)

Restricted stock awarded			(1)						1		—				—
Stock-based compensation			11								11				11
Common stock issued			1								1				1
Common stock repurchased			(11)						(1)		(12)				(12)


Balance at March 31, 2021	$	929	$	179	$	4,722	$	(3,198)	$	(255)	$	2,377	$	431	$	2,808

Net income					128						128		45		173
Other comprehensive income							75				75		1		76
Dividends paid to shareholders					(26)						(26)				(26)
Dividends paid to noncontrolling interests											—		(15)		(15)

Restricted stock awarded			(1)						1		—				—
Stock-based compensation			6								6				6
Common stock issued											—				—
Common stock repurchased			(284)						(14)		(298)				(298)


Balance at June 30, 2021	$	929	$	(100)	$	4,824	$	(3,123)	$	(268)	$	2,262	$	462	$	2,724

Crown Holdings, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)

(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 Shareholders' Equity
Balance at January 1, 2020	$	929	$	207	$	3,959	$	(3,131)	$	(251)	$	1,713	$	379	$	2,092

Net income					88						88		26		114
Other comprehensive loss							(91)				(91)		(5)		(96)
Dividends paid to noncontrolling interests											—		(11)		(11)

Restricted stock awarded			(1)						1		—				—
Stock-based compensation			10								10				10
Common stock issued			1								1				1
Common stock repurchased			(52)						(5)		(57)				(57)


Balance at March 31, 2020	$	929	$	165	$	4,047	$	(3,222)	$	(255)	$	1,664	$	389	$	2,053

Net income					126						126		15		141
Other comprehensive income							21				21		3		24
Dividends paid to noncontrolling interests											—		(1)		(1)

Restricted stock awarded			(1)						1		—				—
Stock-based compensation			5								5				5
Common stock issued											—				—
Common stock repurchased									(1)		(1)				(1)


Balance at June 30, 2020	$	929	$	169	$	4,173	$	(3,201)	$	(255)	$	1,815	$	406	$	2,221

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

Crown Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share and statistical data)

(Unaudited)

A.Statement of Information Furnished

The consolidated financial statements include the accounts of Crown Holdings, Inc. and its consolidated subsidiaries (the “Company”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with Form 10-Q instructions. In the opinion of management, these consolidated financial statements contain all adjustments of a normal and recurring nature necessary for a fair statement of the financial position of the Company as of June 30, 2021 and the results of its operations for the three and six months ended June 30, 2021 and 2020 and of its cash flows for the six months ended June 30, 2021 and 2020. 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”), the application of which requires management’s utilization of estimates, and actual results may differ materially from the estimates utilized.

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, 2020.

B.Accounting and Reporting Developments

On January 1, 2021, the Company adopted new guidance to simplify the accounting for income taxes by, among other things, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws. The guidance did not have a material impact on the Company's consolidated financial statements.

C. Discontinued Operations

On April 8, 2021, the Company entered into a Share and Asset Purchase Agreement which provides for the sale (the “Transaction”) of its European Tinplate business (the “Business”) to Kouti B.V., an affiliate of KPS Capital Partners LP. The Business comprises the Company’s European Food segment and its European Aerosol and Promotional Packaging reporting unit which is reported in the Company's other segments. The Company expects to receive pre-tax proceeds of approximately €1.9 billion ($2.2 billion at June 30, 2021) from the Transaction and retain a 20% minority interest in the Business.

The completion of the Transaction is subject to the fulfillment of various conditions, including, among others, receipt of approvals from antitrust regulators in certain jurisdictions. Completion of the Transaction is expected to occur during the third quarter of 2021. However, given the number of jurisdictions in which antitrust approval is required, there is no assurance that the Transaction can be completed on that timeframe.

Beginning with the quarterly period ended June 30, 2021, the assets and liabilities of the Business were presented as held for sale in the Company's Consolidated Balance Sheet and the results of operations were reported as discontinued operations in the Consolidated Statement of Operations. Upon reclassification of the assets and liabilities of the Business to held for sale, the Company recorded a loss of $70, primarily due to $600 of currency translation adjustments which will be reclassified from accumulated other comprehensive income upon completion of the sale. In connection with the closing of the Transaction, the Company expects to record additional charges including income tax expense related to taxable gains on the sale of the Business and pension settlement charges.

Crown Holdings, Inc.

Major components of net (loss) / income from discontinued operations were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	605	$	552	$	1,119	$	1,003
Cost of products sold, excluding depreciation and amortization	490		451		908		839
Depreciation and amortization	—		15		16		29
Selling and administrative expense	22		19		43		39
Restructuring and other	—		—		—		1
Other pension and postretirement	1		1		1		1
Interest expense	2		3		4		5

Foreign exchange	(1)		(1)		(1)		—
Loss on classification as held for sale	70		—		70		—

Transaction costs	6		—		8		—
Income from discontinued operations before tax	15		64		70		89
Provision for income taxes	18		14		28		18

Net (loss) / income from discontinued operations	$	(3)	$	50	$	42	$	71

Major classes of assets and liabilities of the Business classified as held for sale were as follows.


	June 30, 2021		December 31, 2020

Receivables, net	$	368	$	324
Inventories	505		410
Prepaid expenses and other current assets	39		29
Goodwill	1,409		1,448
Intangible assets, net	117		126
Property, plant and equipment, net	545		545
Operating lease right-of-use assets, net	38		43
Other non-current assets	3		17
Loss on classification as held for sale	(70)		$	—
Total assets held for sale	$	2,954	$	2,942

Short-term debt	$	1	$	17
Current portion of operating lease liabilities	11		12
Accounts payable	673		723
Accrued liabilities	253		272
Postretirement and pension liabilities	76		82
Non-current portion of operating lease liabilities	27		32
Other non-current liabilities	79		89
Total liabilities held for sale	$	1,120	$	1,227

The table above excludes assets held for sale unrelated to the Business that are not material for disclosure.

The capital expenditures of the Business were as follows:


	June 30, 2021		June 30, 2020

Capital expenditures	$	20	$	8

Crown Holdings, Inc.

D. Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash included in the Company's Consolidated Balance Sheets and Statement of Cash Flows were as follows:


	June 30, 2021		December 31, 2020
Cash and cash equivalents	$	566	$	1,173

Restricted cash included in prepaid expenses and other current assets	96		64
Restricted cash included in other non-current assets	2		1
Total restricted cash	98		65

Total cash, cash equivalents and restricted cash	$	664	$	1,238

Amounts included in restricted cash primarily represent amounts required to be segregated by certain of the Company's receivables securitization agreements.

E. Receivables


	June 30, 2021		December 31, 2020
Accounts receivable	$	1,310	$	1,084
Less: allowance for credit losses	(26)		(20)
Net trade receivables	1,284		1,064
Unbilled receivables	284		248
Miscellaneous receivables	198		167
Receivables, net	$	1,766	$	1,479

F. Inventories

Inventories are stated at the lower of cost or net realizable value, with cost principally determined under the first-in first-out ("FIFO") or average cost method.


	June 30, 2021		December 31, 2020
Raw materials and supplies	$	877	$	800
Work in process	108		89
Finished goods	507		374
	$	1,492	$	1,263

Crown Holdings, Inc.

G. Intangible Assets

Gross carrying amounts and accumulated amortization of finite-lived intangible assets by major class were as follows:


	June 30, 2021						December 31, 2020
	Gross		Accumulated amortization		Net		Gross		Accumulated amortization		Net
Customer relationships	$	1,397	$	(397)	$	1,000	$	1,412	$	(346)	$	1,066
Trade names	556		(76)		480		565		(65)		500
Technology	163		(78)		85		165		(67)		98
Long term supply contracts	142		(59)		83		142		(55)		87
Patents	14		(11)		3		13		(10)		3
	$	2,272	$	(621)	$	1,651	$	2,297	$	(543)	$	1,754

Net income from continuing operations for the three and six months ended June 30, 2021 and 2020 included amortization expense of $41 and $83 and $39 and $80.

H. Restructuring and Other

The Company recorded restructuring and other items as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Restructuring	$	6	$	3	$	14	$	6
Other (income) / costs	(36)		—		(44)		3

Asset impairments and sales	(1)		—		(1)		—
	$	(31)	$	3	$	(31)	$	9

For the three and six months ended June 30, 2021, other income includes gains of $30 arising from favorable court rulings in lawsuits brought by certain of the Company's Brazilian subsidiaries asserting they were overcharged by the local tax authorities for indirect taxes paid in prior years.

For the three and six months ended June 30, 2020, restructuring included charges related to internal reorganizations

within the Transit Packaging division, including headcount reductions.

At June 30, 2021, the Company had restructuring accruals of $9, primarily related to headcount reductions in its European and Transit Packaging divisions. The Company expects to pay these amounts over the next twelve months.

I. Asbestos-Related Liabilities

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

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

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

Crown Holdings, Inc.

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

In June 2003, the state of Texas enacted legislation that limits the asbestos-related liabilities in Texas courts of companies such as Crown Cork that allegedly incurred these liabilities because they are successors by corporate merger to companies that had been involved with asbestos. The Texas legislation, which applies to future claims and pending claims, caps asbestos-related liabilities at the total gross value of the predecessor’s assets adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the total adjusted value of its predecessor’s assets.

In October 2010, the Texas Supreme Court held that the Texas legislation was unconstitutional under the Texas Constitution when applied to asbestos-related claims pending against Crown Cork when the legislation was enacted in June 2003. The Company believes that the decision of the Texas Supreme Court is limited to retroactive application of the Texas legislation to asbestos-related cases that were pending against Crown Cork in Texas on June 11, 2003 and therefore, in its accrual, continues to assign no value to claims filed after June 11, 2003.

In recent years, the states of Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Michigan, Mississippi, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, West Virginia, Wisconsin and Wyoming enacted legislation that limits asbestos-related liabilities under state law of companies such as Crown Cork that allegedly incurred these liabilities because they are successors by corporate merger to companies that had been involved with asbestos. The legislation, which applies to future and, with the exception of Arkansas, Georgia, South Carolina, South Dakota, West Virginia and Wyoming, pending claims, caps asbestos-related liabilities at the fair market value of the predecessor's total gross assets adjusted for inflation. Crown Cork has paid significantly more for asbestos-related claims than the total value of its predecessor's assets adjusted for inflation. Crown Cork has integrated the legislation into its claims defense strategy.

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

During the six months ended June 30, 2021, the Company paid $5 to settle asbestos claims and pay related legal and defense costs and had claims activity as follows:


Beginning claims			56,000
New claims			800
Settlements or dismissals			(200)
Ending claims			56,600

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, 2020, the Company's outstanding claims were:


Claimants alleging first exposure after 1964			16,500
Claimants alleging first exposure before or during 1964 filed in:
Texas			13,000
Pennsylvania			1,500
Other states that have enacted asbestos legislation			6,000
Other states			19,000
Total claims outstanding			56,000

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

Crown Holdings, Inc.

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:


	2020		2019
Total claims	23	%	22	%
Pre-1964 claims in states without asbestos legislation	41	%	41	%

Crown Cork has entered into arrangements with plaintiffs’ counsel in certain jurisdictions with respect to claims which are not yet filed, or asserted, against it. However, Crown Cork expects claims under these arrangements to be filed or asserted against Crown Cork in the future. The projected value of these claims is included in the Company’s estimated liability as of June 30, 2021.

As of June 30, 2021, the Company’s accrual for pending and future asbestos-related claims and related legal costs was $245, including $199 for unasserted claims. The Company determines its accrual without limitation to a specific time period.

It is reasonably possible that the actual loss could be in excess of the Company’s accrual. However, the Company is unable to estimate the reasonably possible loss in excess of its accrual due to uncertainty in the following assumptions that underlie the Company’s accrual and the possibility of losses in excess of such accrual: the amount of damages sought by the claimant (which was not specified for approximately 81% of the claims outstanding at the end of 2020), the Company and claimant’s willingness to negotiate a settlement, the terms of settlements of other defendants with asbestos-related liabilities, the bankruptcy filings of other defendants (which may result in additional claims and higher settlements for non-bankrupt defendants), the nature of pending and future claims (including the seriousness of alleged disease, whether claimants allege first exposure to asbestos before or during 1964 and the claimant’s ability to demonstrate the alleged link to Crown Cork), the volatility of the litigation environment, the defense strategies available to the Company, the level of future claims, the rate of receipt of claims, the jurisdiction in which claims are filed, and the effect of state asbestos legislation (including the validity and applicability of the Pennsylvania legislation to non-Pennsylvania jurisdictions, where the substantial majority of the Company’s asbestos cases are filed).

J. Commitments and Contingent Liabilities

The Company, along with others in most cases, has been identified by the U.S. Environmental Protection Agency or a comparable state environmental agency as a Potentially Responsible Party (“PRP”) at a number of sites and has recorded aggregate accruals of $10 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.

Crown Holdings, Inc.

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 German market for the supply of metal packaging products. The Company conducted an internal investigation into the matter and discovered instances of inappropriate conduct by certain employees of German subsidiaries of the Company. The Company cooperated with the FCO and submitted a leniency application with the FCO which disclosed the findings of its internal investigation to date. In April 2018, the FCO discontinued its national investigation and referred the matter to the European Commission (the “Commission”). Following the referral, Commission officials conducted unannounced inspections of the premises of several metal packaging manufacturers, including Company subsidiaries in Germany, France and the United Kingdom.

The Commission's investigation is ongoing and, to date, the Commission has not officially charged the Company or any of its subsidiaries with violations of competition law. The Company is cooperating with the Commission and submitted a leniency application with the Commission with respect to the findings of the investigation in Germany referenced above. This application may lead to the reduction of possible future penalties. At this stage of the investigation the Company believes that a loss is probable but is unable to predict the ultimate outcome of the Commission’s investigation and is unable to estimate the loss or possible range of losses that could be incurred, and has therefore not recorded a charge in connection with the actions by the Commission. If the Commission finds that the Company or any of its subsidiaries violated competition law, fines levied by the Commission could be material to the Company's operating results and cash flows for the periods in which they are resolved or become reasonably estimable.

In March 2017, U.S. Customs and Border Protection (“CBP”) at the Port of Milwaukee issued a penalty notification alleging that certain of the Company’s subsidiaries intentionally misclassified the importation of certain goods into the U.S. during the period 2004-2009. CBP initially assessed a penalty of $18 and subsequently mitigated to $6. The Company has acknowledged to CBP that the goods were misclassified and has paid all related duties. The Company has asserted that the misclassification was unintentional and disputes the penalty assessment. At the present time, based on the information available, the Company does not believe that a loss for the alleged intentional misclassification is probable. There can be no assurance the Company will be successful in contesting the assessed penalty.

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 that the Company will be able to fully recover any increases or fluctuations in raw material costs from its customers. The Company also has commitments for standby letters of credit and for purchases of capital assets.

At June 30, 2021, the Company was party to certain indemnification agreements covering environmental remediation, lease payments and other potential costs associated with properties sold or businesses divested. 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.

K. Derivative and Other Financial Instruments

Fair Value Measurements

Under GAAP a framework exists for measuring fair value, providing a three-tier hierarchy of pricing inputs used to report assets and liabilities that are adjusted to fair value. Level 1 includes inputs such as quoted prices which are available in active markets for identical assets or liabilities as of the report date. Level 2 includes inputs other than those available in active markets included in Level 1, which are either directly or indirectly observable as of the

Crown Holdings, Inc.

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

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

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

Fair value disclosures for financial assets and liabilities that were accounted for at fair value on a recurring basis are provided later in this note. In addition, see Note L 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 and interest rate 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, using sales agreements that permit the pass-through of commodity price and foreign exchange rate risk to customers and borrowing both fixed and floating debt instruments to manage interest rate risk.

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 are recorded in accumulated 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 accumulated comprehensive income is the same as that of the underlying exposure. Contracts outstanding at June 30, 2021 mature between one and twenty-three 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 the fair value accumulated in other comprehensive income are recognized immediately in earnings.

The Company uses commodity 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.

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. Foreign currency risk is generally hedged with the related commodity price risk.

The Company also uses interest rate swaps to convert interest on floating rate debt to a fixed-rate.

The following tables set forth financial information about the impact on other comprehensive income ("OCI"), accumulated other comprehensive income ("AOCI") and earnings from changes in the fair value of derivative instruments.


	Amount of gain/(loss) recognized in OCI				Amount of gain/(loss) recognized in OCI
	Three Months Ended June 30,				Six Months Ended June 30,
Derivatives in cash flow hedges	2021		2020		2021		2020
Foreign exchange	$	—	$	2	$	(1)	$	3
Interest Rate	1		—		2		(1)
Commodities	30		2		55		(37)
	$	31	$	4	$	56	$	(35)

	Amount of gain/(loss) reclassified from AOCI into income				Amount of gain/(loss) reclassified from AOCI into income
	Three Months Ended June 30,				Six Months Ended June 30,
Derivatives in cash flow hedges	2021		2020		2021		2020		Affected line items in the Statement of Operations
Foreign exchange	$	—	$	(1)	$	1	$	(2)	Net sales
Commodities	16		7		20		10		Net sales
Foreign exchange	—		1		—		—		Cost of products sold
Commodities	(36)		(29)		(55)		(40)		Cost of products sold
	(20)		(22)		(34)		(32)		Income from continuing operations before taxes
	5		7		9		9		Provision for income taxes
	(15)		(15)		(25)		(23)		Net income from continuing operations
Foreign exchange	1		(1)		—		(1)		Net (loss) / income from discontinued operations
Commodities	(1)		(1)		(1)		—		Net (loss) / income from discontinued operations
Total reclassified	$	(15)	$	(17)	$	(26)	$	(24)	Net income

For the twelve-month period ending June 30, 2022, a net gain of $63 ($51, net of tax) is expected to be reclassified to earnings for commodity and foreign exchange contracts. No material amounts were reclassified during the six months ended June 30, 2021 and 2020 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.

Crown Holdings, Inc.

For the three and six months ended June 30, 2021, the Company recorded losses of $13 and $6 from foreign exchange contracts designated as fair value hedges. For both the three and six months ended June 30, 2020, the Company recorded a loss of $2 related to these contracts. These adjustments were reported within foreign exchange in the Consolidated Statements of Operations.

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

The following table sets forth the impact on earnings from derivatives not designated as hedges.


	Pre-tax amounts of gain/(loss) recognized in income on derivative				Pre-tax amounts of gain/(loss) recognized in income on derivative
	Three Months Ended June 30,				Six Months Ended June 30,
Derivatives not designated as hedges	2021		2020		2021		2020		Affected line item in the Statement of Operations





Foreign exchange	$	—	$	1	$	(1)	$	—	Net sales
Foreign exchange	(1)		—		—		—		Cost of products sold

Foreign exchange	2		—		(11)		6		Foreign exchange
Foreign exchange	—		—		—		1		Net (loss) / income from discontinued operations
	$	1	$	1	$	(12)	$	7

Net Investment Hedges

The Company designates certain debt and derivative instruments as net investment hedges to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies and reduce the variability in the functional currency equivalent cash flows.

During the three and six months ended June 30, 2021, the Company recorded a loss of $13 ($13, net of tax) and a gain of $41 ($41, net of tax) in other comprehensive income for certain debt instruments that are designated as hedges of its net investment in a euro-based subsidiary. During the three and six months ended June 30, 2020, the Company recorded a loss of $26 ($26, net of tax) and a loss of less than $1 ($1, net of tax) in other comprehensive income for these net investment hedges. As of June 30, 2021 and December 31, 2020, cumulative gains of $8 ($31, net of tax) and losses of $33 ($10, net of tax) were recognized in accumulated other comprehensive income related to these net investment hedges and the carrying amount of the hedged net investment was €1,138 ($1,348) at June 30, 2021.

The following tables set forth the impact on AOCI from changes in the fair value of derivative instruments designated as net investment hedges.


	Amount of gain / (loss) recognized in AOCI				Amount of gain / (loss) recognized in AOCI
	Three months ended June 30,				Six months ended June 30,
Derivatives designated as net investment hedges	2021		2020		2021		2020
Foreign exchange	$	4	$	(22)	$	26	$	39

Gains and losses representing components excluded from the assessment of effectiveness on derivatives designated as net investment hedges are recognized in accumulated other comprehensive income.

Gains or losses on net investment hedges remain in accumulated other comprehensive income until disposal of the underlying assets.

Crown Holdings, Inc.

Fair Values of Derivative Financial Instruments and Valuation Hierarchy

The following table sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2021 and December 31, 2020, respectively. The fair values of these financial instruments were reported under Level 2 of the fair value hierarchy.


	Balance Sheet classification	June 30, 2021		December 31, 2020		Balance Sheet classification	June 30, 2021		December 31, 2020
Derivatives designated as hedging instruments
Foreign exchange contracts cash flow	Other current assets	$	9	$	5	Accrued liabilities	$	9	$	5
	Current assets held for sale	3		4		Current liabilities held for sale	2		3
	Other non-current assets	—		—		Other non-current liabilities	1		1
Foreign exchange contracts fair value	Other current assets	1		2		Accrued liabilities	8		6

Commodities contracts cash flow	Other current assets	78		43		Accrued liabilities	23		11
	Current assets held for sale	7		2		Current liabilities held for sale	—		—
	Other non-current assets	8		4		Other non-current liabilities	—		—
Interest rate contracts cash flow	Other non-current assets	—		—		Other non-current liabilities	—		2
Net investment hedge	Other non-current assets	33		7		Other non-current liabilities	13		20
		$	139	$	67		$	56	$	48
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other current assets	$	5	$	9	Accrued liabilities	$	8	$	4





		$	5	$	9		$	8	$	4

Total derivatives		$	144	$	76		$	64	$	52

Fair Value Hedge Carrying Amounts




	Carrying amount of the hedged assets / liabilities
	June 30, 2021		December 31, 2020
Line item in the Balance Sheet in which the hedged item is included
Cash and cash equivalents	$	24	$	22
Receivables, net	13		11
Accounts payable	132		100

As of June 30, 2021 and December 31, 2020, the cumulative amount of fair value hedging adjustments included in the carrying amount of the hedge assets and liabilities were net gains of $7 and $4.

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 June 30, 2021
Derivative assets	$144	$25	$119
Derivative liabilities	64	25	39

Balance at December 31, 2020
Derivative assets	76	11	65
Derivative liabilities	52	11	41

Notional Values of Outstanding Derivative Instruments

The aggregate U.S. dollar-equivalent notional values of outstanding derivative instruments in the Consolidated Balance Sheets at June 30, 2021 and December 31, 2020 were:


	June 30, 2021		December 31, 2020
Derivatives designated as cash flow hedges:
Foreign exchange	$	850	$	1,127
Commodities	204		248
Interest rate	—		200
Derivatives designated as fair value hedges:
Foreign exchange	253		183
Derivatives designated as net investment hedges:
Foreign exchange	1,775		1,075
Derivatives not designated as hedges:
Foreign exchange	1,028		722

Crown Holdings, Inc.

L. Debt

The Company's outstanding debt was as follows:


	June 30, 2021				December 31, 2020
	Principal		Carrying		Principal		Carrying
	outstanding		amount		outstanding		amount
Short-term debt	$	76	$	76	$	104	$	104

Long-term debt
Senior secured borrowings:
Revolving credit facilities	4		4		—		—
Term loan facilities
U.S. dollar at LIBOR + 1.2% due 2024	1,016		1,011		1,029		1,023

Euro at EURIBOR + 1.2% due 20241	368		368		387		387

Senior notes and debentures:
€650 at 4.0% due 2022	770		768		794		791
U. S. dollar at 4.50% due 2023	1,000		998		1,000		997
€335at 2.25% due 2023	397		395		409		407
€550 at 0.75% due 2023	652		649		671		666
€600 at 2.625% due 2024	711		707		733		729
€600 at 3.375% due 2025	711		707		733		728
U.S. dollar at 4.25% due 2026	400		396		400		396
U.S. dollar at 4.75% due 2026	875		866		875		865
U.S. dollar at 7.375% due 2026	350		348		350		348
€500 at 2.875% due 2026	593		587		610		603
U.S. dollar at 7.50% due 2096	40		40		40		40
Other indebtedness in various currencies	129		129		110		110

Total long-term debt	8,016		7,973		8,141		8,090
Less current maturities	(94)		(94)		(67)		(67)
Total long-term debt, less current maturities	$	7,922	$	7,879	$	8,074	$	8,023

(1) €311 and €317 at June 30, 2021 and December 31, 2020

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 $8,417 at June 30, 2021 and $8,617 at December 31, 2020.

M. Pension and Other Postretirement Benefits

The components of net periodic pension and other postretirement benefits costs for the three and six months ended June 30, 2021 and 2020 were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
Pension benefits – U.S. plans	2021		2020		2021		2020
Service cost	$	6	$	5	$	11	$	10
Interest cost	6		9		12		19
Expected return on plan assets	(16)		(19)		(31)		(37)

Recognized net loss	15		14		30		28
Net periodic cost	$	11	$	9	$	22	$	20

Crown Holdings, Inc.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
Pension benefits – Non-U.S. plans	2021		2020		2021		2020
Service cost	$	4	$	3	$	7	$	6
Interest cost	9		12		18		26
Expected return on plan assets	(21)		(22)		(41)		(53)

Settlement loss	—		19		—		56

Recognized net loss	10		4		19		13

Net periodic cost	$	2	$	16	$	3	$	48


	Three Months Ended				Six Months Ended
	June 30,				June 30,
Other postretirement benefits	2021		2020		2021		2020

Interest cost	$	—	$	1	$	1	$	2
Recognized prior service credit	(6)		(7)		(13)		(13)
Recognized net loss	1		1		2		2
Net periodic benefit	$	(5)	$	(5)	$	(10)	$	(9)

In the three and six months ended June 30, 2020, the Company recorded settlement charges related to the payment of

lump sum buy-outs to settle certain non-U.S. pension obligations using plan assets.

The Company is currently in negotiations to transfer the outstanding benefit obligations related to one of its non-U.S. pension plans to an insurance company. If an agreement is reached, the Company will record a material settlement charge. As of December 31, 2020, the plan had a funded status of $510 and net actuarial losses in accumulated other comprehensive income of $750.

The components of net periodic cost / (benefit) other than the service cost component are included in other pension and postretirement in the Consolidated Statement of Operations.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
Details about accumulated other comprehensive income components	2021		2020		2021		2020		Affected line items in the statement of operations
Actuarial losses	$	26	$	19	$	51	$	43	Other pension and postretirement
Settlements	—		19		—		56		Other pension and postretirement
Prior service credit	(6)		(7)		(13)		(13)		Other pension and postretirement

	20		31		38		86		Income from continuing operations before taxes
	(5)		(3)		(8)		(7)		Provision for income taxes
Total reclassified	$	15	$	28	$	30	$	79	Net income from continuing operations attributable to Crown Holdings

Crown Holdings, Inc.

N. 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 January 1, 2020	$	(1,449)	$	(1,668)	$	(14)	$	(3,131)

Other comprehensive income / (loss) before reclassifications	158		(296)		(35)		(173)
Amounts reclassified from accumulated other comprehensive income	79		—		24		103
Other comprehensive income / (loss)	237		(296)		(11)		(70)
Balance at June 30, 2020	$	(1,212)	$	(1,964)	$	(25)	$	(3,201)

Balance at January 1, 2021	$	(1,464)	$	(1,759)	$	30	$	(3,193)

Other comprehensive income before reclassifications	—		10		56		66
Amounts reclassified from accumulated other comprehensive income	30		—		(26)		4
Other comprehensive income	30		10		30		70
Balance at June 30, 2021	$	(1,434)	$	(1,749)	$	60	$	(3,123)

See Note K and Note M for further details of amounts related to cash flow hedges and defined benefit plans.

O. Revenue

For the three and six months ended June 30, 2021 and 2020, the Company recognized revenue as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenue recognized over time	$	1,531	$	1,192	$	2,921	$	2,457
Revenue recognized at a point in time	1,325		945		2,499		1,986
Total revenue	$	2,856	$	2,137	$	5,420	$	4,443

See Note R for further disaggregation of the Company's revenue.

The Company has applied the practical expedient to exclude disclosure of remaining performance obligations as its binding orders typically have a term of one year or less.

Contract Assets

The Company recorded contract assets of $23 and $20 in prepaid and other current assets as of June 30, 2021 and December 31, 2020. For the three and six months, the Company satisfied performance obligations related to contract assets at December 31, 2020 related to customized work-in-process inventory for the Company's equipment business and also recorded new contract assets related to this business.

P. Income Tax

For the three and six months ended June 30, 2021, the Company recorded income tax charges of $31 in continuing operations for reorganizations and other transactions required to prepare the European Tinplate business for sale. The Company also recorded an income tax charge of $40 to establish a valuation allowance for deferred tax assets related to tax loss carryforwards in France. The Company believes that it is more likely than not that these tax loss

Crown Holdings, Inc.

carryforwards will not be utilized after the sale of the European Tinplate business. See Note C for more information regarding the sale of the European Tinplate business.

During the three and six months ended June 30, 2021, the Company also recorded an income tax benefit of $5 related to a tax law change in the U.K.

Q. Earnings Per Share

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net income from continuing operations attributable to Crown Holdings	$	131	$	76	$	298	$	143
Net (loss) / income from discontinued operations attributable to Crown Holdings	(3)		50		41		71
Net income attributable to Crown Holdings	$	128	$	126	$	339	$	214

Weighted average shares outstanding:
Basic	133.1		133.3		133.4		133.7
Dilutive restricted stock	1.1		0.7		1.0		0.8
Diluted	134.2		134.0		134.4		134.5

Earnings per common share attributable to Crown Holdings:
Basic earnings per common share from continuing operations	$	0.98	$	0.57	$	2.23	$	1.07
Basic earnings per common share from discontinued operations	(0.02)		0.38		0.31		0.53
Basic earnings per share	$	0.96	$	0.95	$	2.54	$	1.60

Diluted earnings per common share from continuing operations	$	0.97	$	0.57	$	2.22	$	1.06
Diluted earnings per common share from discontinued operations	(0.02)		0.37		0.30		0.53
Diluted earnings per share	$	0.95	$	0.94	$	2.52	$	1.59

For the three and six months ended June 31, 2020, 0.3 million and 0.7 million contingently issuable common shares were excluded from the computation of diluted earnings per share because the effect would be anti-dilutive.

For the three and six months ended June 30, 2021, the Company declared and paid cash dividends of $.20 per share and $.40 per share. Additionally, on July 22, 2021, the Company's Board of Directors declared a dividend of $.20 per share payable on August 19, 2021 to shareholders of record on August 5, 2021.

R. Segment Information

The Company evaluates performance and allocates resources based on segment income, which is not a defined term under GAAP. The Company defines segment income as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition.

Segment income should not be considered in isolation or as a substitute for net income prepared in accordance with GAAP and may not be comparable to calculations of similarly titled measures by other companies.

Crown Holdings, Inc.

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


	External Sales				External Sales
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Americas Beverage	$	1,096	$	777	$	2,089	$	1,648
European Beverage	479		330		868		676

Asia Pacific	330		270		661		571
Transit Packaging	637		462		1,194		984
Total reportable segments	2,542		1,839		4,812		3,879
Other segments	314		298		608		564
Total	$	2,856	$	2,137	$	5,420	$	4,443

The primary sources of revenue included in other segments are the Company's food can, aerosol can, and closures businesses in North America, and beverage tooling and equipment operations in the U.S. and U.K.


	Intersegment Sales				Intersegment Sales
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

European Beverage	$	36	$	1	$	72	$	1


Transit Packaging	6		3		13		7
Total reportable segments	42		4		85		8
Other segments	30		36		60		54
Total	$	72	$	40	$	145	$	62

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


	Segment Income				Segment Income
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Americas Beverage	$	197	$	129	$	385	$	263
European Beverage	78		37		140		76

Asia Pacific	47		39		99		84
Transit Packaging	82		51		152		117
Total reportable segments	$	404	$	256	$	776	$	540

Crown Holdings, Inc.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Segment income of reportable segments	$	404	$	256	$	776	$	540
Segment income of other segments	36		29		72		49
Corporate and unallocated items	(45)		(35)		(84)		(74)
Restructuring and other	31		(3)		31		(9)
Amortization of intangibles	(41)		(39)		(83)		(80)

Other pension and postretirement	2		(12)		3		(43)
Interest expense	(68)		(73)		(137)		(151)
Interest income	1		1		3		5
Foreign exchange	(1)		4		1		17
Income from continuing operations before taxes	$	319	$	128	$	582	$	254

For the three and six months ended June 30, 2021, intercompany profits of $2 and $4 were eliminated within segment income of other segments.

For the three and six months ended June 30, 2020, intercompany profits of $5 were eliminated within segment income of other segments.

Corporate and unallocated items includes corporate and division administrative costs, technology costs, and unallocated items such as stock-based compensation.

Crown Holdings, Inc.

PART I - FINANCIAL INFORMATION

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

(dollars in millions)

Introduction

The following discussion presents management's analysis of the results of operations for the three and six months ended June 30, 2021 compared to 2020 and changes in financial condition and liquidity from December 31, 2020. 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, 2020, 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 growth markets, while improving operations and results in more mature markets through disciplined pricing, cost control and careful capital allocation.

The Company's global beverage can business continues to be a major strategic focus for organic growth. Beverage cans are the world’s most sustainable and recycled beverage packaging and continue to gain market share in new beverage product launches. The Company continues to drive brand differentiation by increasing its ability to offer multiple product sizes.

For several years, global industry demand for beverage cans has been growing. In North America, beverage can growth has accelerated in recent years mainly due to the outsized portion of new beverage products being introduced in cans versus other packaging formats. In addition, markets such as Brazil, Europe, Mexico and Southeast Asia have also experienced higher volumes and market expansion, although volumes in certain of those markets were negatively affected by the impact of the coronavirus pandemic in 2020. The Company continues to invest in capacity expansion to meet the accelerating demand.

The Company's primary capital allocation focus has been to reduce leverage, as was successfully accomplished following previous acquisitions, and to begin to return capital to its shareholders. In April 2021, the Company announced an agreement to sell its European Tinplate business (the "Business"). The Business comprises the Company’s European Food segment and its European Aerosol and Promotional Packaging reporting unit which is reported in the Company's other segments. The Company expects to receive pre-tax proceeds of approximately €1.9 billion ($2.2 billion at June 30, 2021) from the transaction and retain a 20% ownership stake in the business. The Company expects to use the net proceeds, after closing working capital adjustments, taxes and other transaction related costs, to further reduce debt, fund capital projects and repurchase shares over time under the $1.5 billion share repurchase program approved by its Board in February 2021.

In response to the ongoing coronavirus pandemic, the Company continues to take actions to ensure the safety of its employees. The Company has increased safety measures in its manufacturing facilities to protect the safety of its employees and the products they produce.

The Company’s products are a vital part of the support system to its customers and consumers. In addition to manufacturing containers that provide protection for food and beverages, the Company also produces closures for baby food, aerosol containers for cleaning and sanitizing products and numerous other products that provide for the safe and secure transportation of goods in transit.

The Company is working to keep its manufacturing facilities around the world operational and equipped with the resources required to meet continually evolving customer demand by delivering high quality products in a safe and timely manner. The Company is actively monitoring and managing supply chain challenges, including coordinating with its suppliers to identify and mitigate potential areas of risk and manage inventories.

The Company continues to actively elevate its industry-leading commitment to sustainability, which is a core value of the Company. In 2020, the Company debuted Twentyby30, a robust program that outlines twenty measurable environmental, social and governance goals to be completed by 2030 or sooner.

Crown Holdings, Inc.

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

Results of Operations

In assessing performance, the key performance measure used by the Company is segment income, a non-GAAP measure generally defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition.

The foreign currency translation impacts referred to in the discussion below were primarily due to changes in the euro and pound sterling in the Company's European and Transit Packaging segments and the Canadian dollar and Mexican peso in the Company's Americas Beverage segment. The Company calculates the impact of foreign currency translation by multiplying or dividing, as appropriate, current year U.S. dollar results by the current year average foreign exchange rates and then multiplying or dividing, as appropriate, those amounts by the applicable prior year average exchange rates.

Net Sales and Segment Income


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	2,856	$	2,137	$	5,420	$	4,443

Three months ended June 30, 2021 compared to 2020

Net sales increased primarily due to higher sales unit volumes in the Company's beverage can and transit packaging businesses, the pass through of higher material costs and $125 from the impact of foreign currency translation.

Six months ended June 30, 2021 compared to 2020

Net sales increased primarily due to higher sales unit volumes, the pass through of higher material costs and $177 from the impact of foreign currency translation.

Americas Beverage

The Americas Beverage segment manufactures aluminum beverage cans and 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 have experienced recent growth due to the introduction of new beverage products in cans versus other packaging formats. To meet volume requirements in these markets, the Company began commercial production on a new beverage can line at its Toronto, Ontario plant in January 2020 and on the third line at its Nichols, NY facility in June 2020. During the second quarter of 2021, the first line in the new Bowling Green, Kentucky facility began commercial shipments and a second line is scheduled for a late third quarter 2021 start-up. To meet the expanding requirements of specialty cans in the Pacific Northwest, the Company will construct a third line in its Olympia, Washington plant which is scheduled to begin production during the fourth quarter of 2021. The Company also announced construction of a new facility in Martinsville, Virginia which is expected to commence operations during the second quarter of 2022 and a new facility in the South West which is expected to commence commercial shipments in late second quarter of 2023.

In Brazil and Mexico, 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. A second line at the Company's Rio Verde, Brazil facility is expected to commence operations during the fourth quarter of 2021. The Company has also begun construction of a two-line facility in Uberaba, Brazil, with the first line expected to begin production during the second quarter of 2022 and the second line scheduled to start up during the fourth quarter of 2022.

Crown Holdings, Inc.

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

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	1,096	$	777	$	2,089	$	1,648
Segment income	197		129		385		263

Three months ended June 30, 2021 compared to 2020

Net sales increased primarily due to 21% higher sales unit volumes, the pass-through of higher aluminum costs and $47 from the impact of foreign currency translation. Sales unit volumes for the three months ended June 30, 2020 were unfavorably impacted by the coronavirus pandemic in Brazil and Mexico.

Segment income increased primarily due to higher sales unit volumes and $8 from the impact of foreign currency translation.

Six months ended June 30, 2021 compared to 2020

Net sales increased primarily due to 14% higher sales unit volumes, the pass-through of higher aluminum costs and $51 from the impact of foreign currency translation.

Segment income increased primarily due to higher sales unit volumes and improved pricing.

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 Western European beverage can markets have been growing. In the second quarter of 2020, two beverage can lines in the Seville, Spain plant began commercial production of aluminum cans.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	479	$	330	$	868	$	676
Segment income	78		37		140		76

Three months ended June 30, 2021 compared to 2020

Net sales increased primarily due to 25% higher sales unit volumes, $33 from the impact of foreign currency translation and the pass-through of higher aluminum costs.

Segment income increased primarily due to higher sales unit volumes and $5 from the impact of foreign currency translation.

Six months ended June 30, 2021 compared to 2020

Net sales increased primarily due to 16% higher sales unit volumes, $54 from the impact of foreign currency translation and the pass-through of higher aluminum costs.

Segment income increased primarily due to higher sales unit volumes and $7 from the impact of foreign currency translation.

Crown Holdings, Inc.

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

Asia Pacific

The Company's Asia Pacific segment consists of beverage can operations in Cambodia, China, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam and non-beverage can operations, primarily food cans and specialty packaging. In recent years, the beverage can market in Southeast Asia has been growing. In 2020, however, industry volumes decreased due to the impact of the coronavirus pandemic. The Company began commercial production at a one-line beverage can plant in Nong Khae, Thailand in July 2020. Additionally, the Company has begun construction of a one-line beverage can plant in Vung Tau, Vietnam, that is expected to begin commercial production in September 2021.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	330	$	270	$	661	$	571
Segment income	47		39		99		84

Three months ended June 30, 2021 compared to 2020

Net sales increased due to 17% higher sales unit volumes, the pass-through of higher aluminum costs and $7 from the impact of foreign currency translation. Sales unit volumes for the three months ended June 30, 2020 were unfavorably impacted by the impact of the coronavirus pandemic.

Segment income increased primarily due to higher sales unit volumes.

Six months ended June 30, 2021 compared to 2020

Net sales increased due to 14% higher sales unit volumes, $13 from the impact of foreign currency translation and the pass-through of higher aluminum costs.

Segment income increased primarily due to higher sales unit volumes.

Transit Packaging

The Transit Packaging segment includes the Company's global consumables and equipment and tools businesses. Consumables include steel strap, plastic strap and industrial film and other related products that are used in a wide range of industries, and transit protection products that help prevent movement during transport for a wide range of industrial and consumer products. Equipment and tools includes manual, semi-automatic and automatic equipment and tools used in end-of-line operations to apply industrial solutions consumables.

Net sales and segment income in the Transit Packaging segment were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	637	$	462	$	1,194	$	984
Segment income	82		51		152		117

Three months ended June 30, 2021 compared to 2020

Net sales increased primarily due to higher sales unit volumes, the pass-through of higher raw material prices and $29 from the impact of foreign currency translation. Sales unit volumes for the three months ended June 30, 2020 were unfavorably impacted by the coronavirus pandemic.

Crown Holdings, Inc.

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

Segment income increased primarily due to higher sales unit volumes and $4 from the impact of foreign currency translation.

Six months ended June 30, 2021 compared to 2020

Net sales increased primarily due to higher sales unit volumes, the pass-through of higher raw material prices and $46 from the impact of foreign currency translation.

Segment income increased primarily due to higher sales unit volumes and $7 from the impact of foreign currency translation.

Other Segments

The Company's other segments include its food can, aerosol can and closures businesses in North America, and beverage tooling and equipment operations in the U.S. and U.K.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	314	$	298	$	608	$	564
Segment income	36		29		72		49

Three months ended June 30, 2021 compared to 2020

Net sales increased primarily due to higher sales in the Company's beverage can equipment operations and $9 from the impact of foreign currency translation.

Segment income increased due to improved cost performance in the Company's North America food can business and higher sales in the Company's beverage can equipment operations.

Six months ended June 30, 2021 compared to 2020

Net sales increased primarily due to higher sales in the Company's beverage can equipment operations, the pass-through of higher tinplate costs and $13 from the impact of foreign currency translation.

Segment income increased due to lower tinplate carryover costs in the Company's North America food can business as compared to the six months ended June 30, 2020 and higher sales in the Company's beverage can equipment operations.

Corporate and Unallocated Expense


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Corporate and unallocated expense	$	(45)	$	(35)	$	(84)	$	(74)

Corporate and unallocated expenses included lower personnel, incentive compensation and other general costs resulting from the coronavirus pandemic for the three and six months ended June 30, 2020 compared to 2021.

Interest Expense

For the three months and six months ended June 30, 2021 compared to 2020, interest expense decreased from $73 to $68 and from $151 to $137 a due to lower outstanding debt balances.

Crown Holdings, Inc.

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

Taxes on Income

The effective rate for the three and six months ended June 30, 2021, increased as compared to 2020, primarily due to income tax charges of $31 for reorganizations and other transactions required to prepare the European Tinplate business for sale and an income tax charge of $40 to establish a valuation allowance for deferred tax assets related to tax loss carryforwards in France. The Company believes that it is more likely than not that these tax loss carryforwards will not be utilized after the sale of the European Tinplate business. See Note C for more information related to the sale of the European Tinplate business.

The effective tax rate for the three and six months ended June 30, 2021 also included a benefit of $5 arising from a tax law change in the U.K.

The effective tax rate for the six months ended June 30, 2020, included a benefit of $4 arising from a tax law change in

India.

Net Income Attributable to Noncontrolling Interests

For the three and six months ended June 30, 2021 compared to 2020, net income attributable to noncontrolling interests increased from $15 to $45 and $41 to $78 primarily due to higher earnings in the Company's beverage can operations in Brazil, including a favorable court ruling in a lawsuit brought by one of the Company's Brazilian subsidiaries asserting it was overcharged by the local tax authorities for indirect taxes paid in prior years.

Liquidity and Capital Resources

Cash from Operations

Operating activities used cash of $238 for the six months ended June 30, 2020 and provided cash of $169 for the six months ended June 30, 2021. The increase in cash provided by operating activities was primarily due to higher earnings and changes in working capital.

Days sales outstanding for trade receivables, excluding the impact of unbilled receivables, was 39 days as of June 30, 2020 as compared to 40 days as of June 30, 2021.

Inventory turnover was 62 days at June 30, 2020 compared to 57 days at June 30, 2021.

Days outstanding for trade payables was 81 days at June 30, 2020 compared to 90 days at June 30, 2021 due to higher raw material costs and sales unit volumes.

Investing Activities

Cash used for investing activities increased from $184 for the six months ended June 30, 2020 to $311 for the six months ended June 30, 2021 primarily due to increased capital expenditures related to capacity expansion projects in the Americas Beverage segment.

The Company currently expects capital expenditures in 2021 to be approximately $900.

Financing Activities

Financing activities provided cash of $196 for the six months ended June 30, 2020 and used cash of $423 for the six months ended June 30, 2021. The Company had higher net borrowings, repurchased $297 of capital stock and paid dividends to stockholders of $53 during the six months ended June 30, 2021.

Liquidity

As of June 30, 2021, $494 of the Company's $566 of cash and cash equivalents was located outside the U.S. The Company funds its cash needs in the U.S. through cash flows from operations in the U.S., distributions from certain

Crown Holdings, Inc.

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

foreign subsidiaries, borrowings under its revolving credit facility and the acceleration of cash receipts under its receivable securitization facilities. Of the cash and cash equivalents located outside the U.S., $404 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 taxes on the repatriated funds.

As of June 30, 2021, the Company had $1,583 of borrowing capacity available under its revolving credit facility, equal to the total facility of $1,650 less borrowings of $4 and outstanding standby letters of credit of $63. The Company could have borrowed this amount at June 30, 2021 and still have been in compliance with its leverage ratio covenants. The Company's net total leverage ratio, as defined by the credit agreement, of 3.4 to 1.0 at June 30, 2021 was in compliance with the covenant requiring a ratio of no greater than 5.0 to 1.0. The required net total leverage ratio under the agreement reduces to 4.5 to 1.0 at December 31, 2022.

Capital Resources

As of June 30, 2021, the Company had approximately $219 of capital commitments primarily related to its Americas Beverage segment. The Company expects to fund these commitments primarily through cash flows from operations and proceeds from the sale of its European Tinplate business.

Contractual Obligations

During the six months ended June 30, 2021 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, 2020, which information is incorporated herein by reference.

Supplemental Guarantor Financial Information

As disclosed in Note L, the Company and certain of its 100% directly or indirectly owned subsidiaries provide guarantees of senior notes and debentures issued by other 100% directly or indirectly owned subsidiaries. These senior notes and debentures are fully and unconditionally guaranteed by the Company and substantially all of its subsidiaries in the United States, except in the case of the Company’s outstanding senior notes issued by Crown Cork & Seal Company, Inc., which are fully and unconditionally guaranteed by Crown Holdings, Inc. (Parent). No other subsidiary guarantees the debt and the guarantees are made on a joint and several basis.

The following tables present summarized financial information related to the senior notes issued by the Company’s subsidiary debt issuers and guarantors on a combined basis for each issuer and its guarantors (together, an “obligor group”) after elimination of (i) intercompany transactions and balances among the Parent and the guarantors and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor. Crown Cork Obligor group consists of Crown Cork & Seal Company, Inc. and the Parent. Crown Americas Obligor group consists of Crown Americas LLC, Crown Americas Capital Corp. IV, Crown Americas Capital Corp. V, Crown Americas Capital Corp. VI, the Parent, and substantially all of the Company’s subsidiaries in the United States.

Crown Cork Obligor Group


	Six Months Ended
	June 30, 2021
Net sales		$	—
Gross Profit		—
Income from operations		(2)
Net income from continuing operations1		(38)
Net income attributable to Crown Holdings2		(44)

(1) Includes $18 of expense related to intercompany interest with non-guarantor subsidiaries

(2) Includes $18 of expense related to intercompany interest with non-guarantor subsidiaries and $6 of expense for discontinued operations

Crown Holdings, Inc.

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


	June 30, 2021		December 31, 2020
Current assets	$	14	$	12
Non-current assets	91		118
Current liabilities	65		63
Non-current liabilities1	4,662		4,305

(1) Includes payables of $3,981 and $3,623 due to non-guarantor subsidiaries as of June 30, 2021 and December 31, 2020

Crown Americas Obligor Group


	Six Months Ended
	June 30, 2021
Net sales1		$	2,150
Gross profit2		354
Income from operations2		145
Net income from continuing operations3		45
Net income attributable to Crown Holdings4		36

(1) Includes $228 of sales to non-guarantor subsidiaries

(2) Includes $23 of gross profit related to sales to non-guarantor subsidiaries

(3) Includes $37 of income related to intercompany interest and technology royalties with non-guarantor subsidiaries

(4) Includes $37 of income related to intercompany interest and technology royalties with non-guarantor subsidiaries and $9 of expense for discontinued operations


	June 30, 2021		December 31, 2020
Current assets1	$	1,001	$	917
Non-current assets2	3,404		3,248
Current liabilities3	1,174		1,081
Non-current liabilities4	4,859		4,491

(1) Includes receivables of $50 and $45 due from non-guarantor subsidiaries as of June 30, 2021 and December 31, 2020

(2) Includes receivables of $188 and $142 due from non-guarantor subsidiaries as of June 30, 2021 and December 31, 2020

(3) Includes payables of $38 and $54 due to non-guarantor subsidiaries as of June 30, 2021 and December 31, 2020

(4) Includes payables of $439 and $31 due to non-guarantor subsidiaries as of June 30, 2021 and December 31, 2020

Commitments and Contingent Liabilities

Information regarding the Company's commitments and contingent liabilities appears in Part I within Item 1 of this report under Note J, entitled “Commitments and Contingent Liabilities,” to the consolidated financial statements, 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 U.S. which require that management make numerous estimates and assumptions.

Actual results could differ from these estimates and assumptions, impacting the reported results of operations and financial condition of the Company. Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Note A to the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 describe the significant accounting estimates and policies used in the preparation of the consolidated financial statements. Updates to the Company's accounting policies related to new accounting pronouncements are included in Note B to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

Crown Holdings, Inc.

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

Forward Looking Statements

Statements included herein, including, but not limited to, those in “Management's Discussion and Analysis of Financial Condition and Results of Operations” and in the discussions of asbestos in Note I and commitments and contingencies in Note J to the consolidated financial statements included in this Quarterly Report on Form 10-Q, and also in Part I, Item 1, “Business” and Item 3, “Legal Proceedings” and in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” within the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which are not historical facts (including any statements concerning the direct or indirect impact of the COVID-19 pandemic, plans, the sale of the Company's European Tinplate business (including whether the sale will ultimately be consummated within the expected timeframe or at all and whether the sale will ultimately prove to be beneficial to the Company) 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, 2020 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 (including under Item 1A of Part II below) and in prior Company filings with the SEC. In addition, other factors have been or may be discussed from time to time in the Company's SEC filings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange and interest rates and commodity prices. The Company manages these risks through a program that includes the use of derivative financial instruments, primarily swaps and forwards. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by the counterparties. These instruments are not used for trading or speculative purposes. The extent to which the Company uses such instruments is dependent upon its access to these contracts in the financial markets and its success in using other methods, such as netting exposures in the same currencies to mitigate foreign exchange risk and using sales arrangements that permit the pass-through of commodity prices and foreign exchange rate risks to customers. The Company's objective in managing its exposure to market risk is to limit the impact on earnings and cash flow. For further discussion of the Company's use of derivative instruments and their fair values at June 30, 2021, see Note K to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

As of June 30, 2021, the Company had $1.5 billion principal floating interest rate debt. A change of 0.25% in these floating interest rates would change annual interest expense by approximately $4 million before tax.

Item 4. Controls and Procedures

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

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

The information set forth in this report should be read in conjunction with the risk factors discussed in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Such risks 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 may also materially adversely affect the Company's business, financial condition and/or operating results.

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

The following table provides information about the Company's purchases of equity securities during the three months ended June 30, 2021. The table excludes 5,318 shares surrendered to cover taxes on the vesting of restricted stock during the three months ended June 30,2021.


	Total number of shares purchased	Average price per share		Total number of shares purchased as part of publicly announced programs(1)	Approximate dollar value of shares that may yet be purchased under the programs as of the end of the period (millions of dollars)
April	—	—		—	$	1,500
May	—	—		—	$	1,500
June	2,953,718	$	100.61	2,953,718	$	1,203
	2,953,718			2,953,718

(1) In February 2021, the Company's Board of Directors authorized the repurchase of an aggregate amount of $1.5 billion of Company common stock through the end of 2023. Share repurchases under the Company's program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as management deems appropriate.

Crown Holdings, Inc.

Item 3. Defaults Upon Senior Securities

There were no events required to be reported under Item 3 for the three months ended June 30, 2021.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On April 16, 2021, the Company entered into a Transaction Bonus Agreement with Didier Sourisseau which makes Mr. Sourisseau eligible for an exceptional bonus payment upon completion of the sale of the Company's European Tinplate business. Additionally, on May 27, 2021, the Company entered into a Consulting Agreement with Mr. Sourisseau which requires Mr. Sourisseau to perform various consulting services over a four year period. The Transaction Bonus and Consulting Agreement are attached as exhibits to this Form 10-Q and are incorporated by reference.

Item 6. Exhibits


10(d) (12)			Transaction Bonus Agreement, effective April 16, 2021, by, and between Crown Holdings, Inc. and Didier Sourisseau

10(d) (13)			Consulting Agreement, effective August 1, 2021, by, and between Crown Holdings, Inc. and Didier Sourisseau

22			List of Guarantor Subsidiaries

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 Timothy J. Donahue, 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 June 30, 2021 formatted in inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020, (ii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020, (iii) Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020, (iv) Consolidated Statements of Cash Flows for the three months ended June 30, 2021 and 2020, (v) Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2021 and 2020 and (vi) Notes to Consolidated Financial Statements.

104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

Crown Holdings, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



						Crown Holdings, Inc. Registrant

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

Date: July 23, 2021