EX-99 2 ex99dec2018.htm FOURTH QUARTER 2018 EARNINGS NEWS RELEASE Exhibit

News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif

 
CROWN HOLDINGS, INC. REPORTS FOURTH QUARTER 2018 RESULTS
 

Yardley, PA - February 6, 2019. Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the fourth quarter and year ended December 31, 2018.

Highlights

Earnings per share $0.40 for the quarter versus a loss of $0.67 in 2017
Adjusted earnings per share $1.00 for the quarter versus $0.84 in 2017; $5.20 full year versus $4.24 in 2017, an improvement of 23%
Full year free cash flow of $636 million, or $4.75 per diluted share
Deleveraging plans on target
Transit Packaging performance on plan
Global beverage can volumes grew 5% in the quarter and 4% for the year
Reaffirm 2019 free cash flow target of $775 million

Net sales in the fourth quarter were $2,734 million compared to $2,168 million in the fourth quarter of 2017 reflecting the impact of the Signode acquisition, increased beverage can volumes and the pass through of higher material costs to customers partially offset by $53 million of unfavorable currency translation.
 
Income from operations was $218 million in the quarter compared to $212 million in the fourth quarter of 2017. Segment income increased to $279 million in the fourth quarter compared to $244 million in the prior year fourth quarter primarily due to the Signode acquisition.

Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, “The Company’s earnings performance was on plan for both the fourth quarter and full year, adjusted free cash flow exceeded our expectations, and we are reaffirming our cash flow guidance for 2019. Strong global beverage can volume growth of 5% during the quarter, led by robust shipments in Asia Pacific and the United States, combined with firm results in Transit Packaging, offset challenges in other operations. As expected, European Beverage results in the quarter had a difficult comparison to the prior year due to pre-production and start-up costs associated with new beverage can plants in Valencia, Spain and Parma, Italy, and volume softness in the Middle East consistent with previous quarters. European Food results in the quarter, compared to the prior year, were affected by currency translation and under-absorption of fixed costs due to lower production following poor harvest yields and higher inventory levels at the end of the third quarter.

“Beverage cans, the world’s most sustainable and recycled beverage packaging, are increasingly recognized as the most responsible form of beverage packaging, and as such are gaining preference among brand owners and consumers alike.  To meet this expanding demand, in July we commenced production at a new one-line beverage can plant in Yangon, Myanmar.  The first line of the Valencia plant began operations in October and the second line will start-up in February 2019.  In December, we commenced operations in Parma, initially a one-line beverage can plant, and in January 2019 we commenced operations on the third line at the Company’s existing plant in Phnom Penh, Cambodia.  During the fourth quarter of 2019, we will begin operations at a new one-line beverage can plant in Rio Verde, central Brazil.”

Interest expense was $102 million in the fourth quarter of 2018 compared to $65 million in 2017 primarily due to higher outstanding debt from borrowings incurred to finance the Signode acquisition.

Net income attributable to Crown Holdings in the fourth quarter was $53 million compared to a loss of $89 million in the fourth quarter of 2017. Reported diluted earnings per share were $0.40 in the fourth quarter of 2018 compared to a loss of $0.67 in 2017. Adjusted diluted earnings per share increased to $1.00 over the $0.84 in 2017.

A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share is provided below.

Page 1 of 11


News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif


Full Year Results
Net sales for the full year of 2018 increased to $11,151 million compared to $8,698 million in 2017 primarily due to the impact of the Signode acquisition, increased beverage can volumes, the pass through of higher material costs to customers and $134 million of favorable currency translation.

Income from operations was $1,096 million in 2018 compared to $1,024 million in the prior year. Segment income increased to $1,328 million over the $1,117 million in 2017, reflecting the Signode acquisition.

Interest expense was $384 million in 2018 compared to $252 million in 2017 primarily due to higher outstanding debt from borrowings incurred to finance the Signode acquisition.                     

Net income attributable to Crown Holdings for 2018 was $439 million compared to $323 million in 2017.  Reported diluted earnings per share were $3.28 compared to $2.38 in 2017.  Adjusted diluted earnings per share increased to $5.20 over the $4.24 in 2017. 

Outlook
The Company currently expects 2019 adjusted diluted earnings per share to be in the range of $5.20 to $5.40, which includes a non-cash headwind of approximately $53 million ($0.32 per share after tax) in pension expense primarily due to a decline in the market value of pension assets and an increase in discount rates in 2018, and an unfavorable currency translation impact of approximately $0.09 per share based on current exchange rate levels. Adjusted diluted earnings per share for the 2019 first quarter are expected to be in the range of $1.00 to $1.10.

The adjusted effective income tax rate for 2019 is expected to be in the range of approximately 25%-26% compared to 24.7% in 2018.

Adjusted free cash flow, as defined below, is currently expected to be approximately $775 million in 2019 compared to $636 million in 2018. A reconciliation from net cash provided by operating activities to adjusted free cash flow for 2018 is provided below.

Non-GAAP Measures
Segment income, adjusted free cash flow, net leverage ratio, adjusted net income, the adjusted effective tax rate and adjusted diluted earnings per share are not defined terms under U.S. generally accepted accounting principles (non-GAAP measures). Non-GAAP measures should not be considered in isolation or as a substitute for income from operations, net income, diluted earnings per share, effective tax rates, cash flow or leverage ratio data prepared in accordance with U.S. GAAP and may not be comparable to calculations of similarly titled measures by other companies.

The Company views segment income as the principal measure of the performance of its operations and adjusted free cash flow and net leverage ratio as the principal measure of its liquidity. The Company considers all of these measures in the allocation of resources. Adjusted free cash flow has certain limitations, however, including that it does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods. The Company believes that adjusted net income, the adjusted effective tax rate and adjusted diluted earnings per share are useful in evaluating the Company’s operations as these measures are adjusted for items that affect comparability between periods. Reconciliations of estimated adjusted diluted earnings per share for the first quarter and full year of 2019 to estimated diluted earnings per share on a GAAP basis are not provided in this release due to the unavailability of estimates of the following, the timing and magnitude of which the Company is unable to reliably forecast without unreasonable efforts, which are excluded from estimated adjusted diluted earnings per share and could have a significant impact on earnings per share on a GAAP basis: gains or losses on the sale of businesses or other assets, restructuring costs, asset impairment charges, acquisition related costs including fair value adjustments to inventory, asbestos-related charges, losses from early extinguishment of debt, pension settlement and curtailment charges, the tax impact of the items above, and the impact of tax law changes or other tax matters. The Company believes that adjusted free cash flow and net leverage ratio provide meaningful measures of liquidity and a useful basis for assessing the Company’s ability to fund its activities, including the financing of acquisitions, debt repayments, share repurchases or possible future dividends. Segment income, adjusted free cash flow, net leverage ratio, the adjusted effective tax rate, adjusted net income

Page 2 of 11


News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif

and adjusted diluted earnings per share are derived from the Company’s Consolidated Statements of Operations and Cash Flows and Consolidated Balance Sheets, as applicable, and reconciliations to segment income, adjusted free cash flow, net leverage ratio, the adjusted effective tax rate, adjusted net income and adjusted diluted earnings per share can be found within this release.

Conference Call
The Company will hold a conference call tomorrow, February 7, 2019 at 9:00 a.m. (EST) to discuss this news release. Forward-looking and other material information may be discussed on the conference call. The dial-in numbers for the conference call are (630) 395-0194 or toll-free (888) 324-8108 and the access password is “packaging.” A live webcast of the call will be made available to the public on the internet at the Company’s website, www.crowncork.com. A replay of the conference call will be available for a one-week period ending at midnight on February 14. The telephone numbers for the replay are (203) 369-1865 or toll free (866) 503-3216.

Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all other information in this press release consists of forward-looking statements. These forward-looking statements involve a number of risks, uncertainties and other factors, including the continuation of performance and market trends in 2019, including customer and consumer preference for beverage cans and increasing global beverage can demand; the Company’s ability to successfully complete and manage capacity expansion and other projects, including in Myanmar, Spain, Italy, Cambodia and Brazil; and the Company’s ability to generate expected earnings and cash flow in 2019 that may cause actual results to be materially different from those expressed or implied in the forward-looking statements. Important factors that could cause the statements made in this press release or the actual results of operations or financial condition of the Company to differ are discussed under the caption "Forward Looking Statements" in the Company's Form 10-K Annual Report for the year ended December 31, 2017 and in subsequent filings made prior to or after the date hereof. The Company does not intend to review or revise any particular forward-looking statement in light of future events.

Crown Holdings, Inc., through its subsidiaries, is a leading global supplier of rigid packaging products to consumer marketing companies, as well as transit and protective packaging products, equipment and services to a broad range of end markets. World headquarters are located in Yardley, Pennsylvania.

For more information, contact:
Thomas A. Kelly, Senior Vice President and Chief Financial Officer, (215) 698-5341
Thomas T. Fischer, Vice President, Investor Relations and Corporate Affairs, (215) 552-3720
Edward Bisno, Bisno Communications, (212) 717-7578



Unaudited Consolidated Statements of Operations, Balance Sheets, Statements of Cash Flows, Segment Information and Supplemental Data follow.




Page 3 of 11


News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif


Consolidated Statements of Operations (Unaudited)
(in millions, except share and per share data)

 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2018
 
2017 (1)
 
2018
 
2017 (1)
Net sales
$
2,734

 
$
2,168

 
$
11,151

 
$
8,698

 
 
 
 
 
 
 
 
Cost of products sold
2,224

 
1,771

 
9,028

 
7,006

Depreciation and amortization
120

 
64

 
425

 
247

Selling and administrative expense
156

 
97

 
558

 
367

Provision for asbestos


 
3

 


 
3

Restructuring and other
16

 
21

 
44

 
51

Income from operations (2) 
218

 
212

 
1,096

 
1,024

 
 
 
 
 
 
 
 
Other pension and postretirement
22

 
(10
)
 
(25
)
 
(53
)
Foreign exchange
4

 


 
18

 
4

Earnings before interest and taxes
192

 
222

 
1,103

 
1,073

Interest expense
102

 
65

 
384

 
252

Interest income
(4
)
 
(5
)
 
(21
)
 
(15
)
Loss from early extinguishment of debt

 


 


 
7

Income before income taxes
94

 
162

 
740

 
829

Provision for income taxes
20

 
223

 
216

 
401

Equity earnings
1

 


 
4

 


Net income/(loss)
75

 
(61
)
 
528

 
428

Net income attributable to noncontrolling interests
(22
)
 
(28
)
 
(89
)
 
(105
)
Net income/(loss) attributable to Crown Holdings
$
53

 
$
(89
)
 
$
439

 
$
323

 
 
 
 
 
 
 
 
Earnings per share attributable to Crown
  Holdings common shareholders:
 
 
 
 


 


     Basic
$
0.40

 
$
(0.67
)
 
$
3.28

 
$
2.39

     Diluted
$
0.40

 
$
(0.67
)
 
$
3.28

 
$
2.38

 

 
 
 


 


Weighted average common shares outstanding:
 
 
 
 
 
 
 
     Basic
133,738,344

 
133,445,697

 
133,640,902

 
135,286,296

     Diluted
134,095,905

 
133,804,236

 
133,878,064

 
135,608,800

Actual common shares outstanding
135,173,948

 
134,275,609

 
135,173,948

 
134,275,609




(1) Prior year results have been restated to reflect new accounting guidance on the presentation of pension and postretirement expense in the statement of operations.

(2) A reconciliation from income from operations to segment income follows.

Page 4 of 11


News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif

Consolidated Supplemental Financial Data (Unaudited)
(in millions)
Reconciliation from Income from Operations to Segment Income
The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, the impact of fair value adjustments to inventory acquired in an acquisition, and the timing impact of hedge ineffectiveness.
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Income from operations
$
218

 
$
212

 
$
1,096

 
$
1,024

Intangibles amortization
45

 
10

 
148

 
39

Fair value adjustment to inventory (1) 


 
 
 
40

 
 
Provision for asbestos


 
3

 


 
3

Provision for restructuring and other
16

 
21

 
44

 
51

Impact of hedge ineffectiveness (1)


 
(2
)
 

 

Segment income
$
279

 
$
244

 
1,328

 
1,117


(1) Included in cost of products sold

Segment Information
 
Three Months Ended
 
Year Ended
Net Sales
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Americas Beverage
$
804

 
$
762

 
$
3,282

 
$
2,928

European Beverage
295

 
324

 
1,489

 
1,457

European Food
417

 
458

 
1,982

 
1,935

Asia Pacific
326

 
312

 
1,316

 
1,177

Transit Packaging
595

 


 
1,800

 


     Total reportable segments
2,437

 
1,856

 
9,869

 
7,497

Non-reportable segments (2)
297

 
312

 
1,282

 
1,201

     Total net sales
$
2,734

 
$
2,168

 
$
11,151

 
$
8,698

Segment Income (3)
 
 
 
 
 
 
 
Americas Beverage
$
118

 
$
128

 
$
454

 
$
470

European Beverage
13

 
37

 
193

 
235

European Food
26

 
42

 
257

 
264

Asia Pacific
49

 
44

 
186

 
168

Transit Packaging
80

 


 
255

 


     Total reportable segments
286

 
251

 
1,345

 
1,137

Non-reportable segments (2)
20

 
22

 
122

 
123

Corporate and other unallocated items
(27
)
 
(29
)
 
(139
)
 
(143
)
     Total segment income
$
279

 
$
244

 
$
1,328

 
$
1,117


(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.

(3) Prior year segment income has been restated to reflect new accounting guidance on the presentation of pension and postretirement expense and the Company’s revised policy to exclude intangibles amortization charges from segment income. A reconciliation from 2017 segment income to amounts previously reported is provided below.


Page 5 of 11


News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif

Consolidated Supplemental Data (Unaudited)
(in millions, except per share data)

Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share

The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release.
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Net income/diluted earnings per share
   attributable to Crown Holdings, as reported
$
53

 
$
0.40

 
$
(89
)
 
$
(0.67
)
 
$
439

 
$
3.28

 
$
323

 
$
2.38

Intangibles amortization (1)
45

 
0.34

 
10

 
0.07

 
148

 
1.11

 
39

 
0.29

     Fair value adjustment to inventory (2)

 

 
 
 
 
 
40

 
0.30

 
 
 
 
Provision for asbestos (3)

 

 
3

 
0.02

 

 

 
3

 
0.02

     Provision for restructuring and other (4)
16

 
0.12

 
21

 
0.16

 
44

 
0.33

 
51

 
0.38

     Impact of hedge ineffectiveness (5) 
 
 
 
 
(2
)
 
(0.01
)
 
 
 
 
 

 

Acquisition costs (6)
 
 
 
 
 
 
 
 
24

 
0.18

 
 
 
 
Pension and postretirement charges (7)
42

 
0.31

 
1

 
0.01

 
42

 
0.31

 
(3
)
 
(0.02
)
     Loss from early extinguishment of debt (8)
 
 
 
 


 

 
 
 
 
 
7

 
0.05

     Income taxes and noncontrolling interests (9)
(22
)
 
(0.17
)
 
169

 
1.26

 
(41
)
 
(0.31
)
 
155

 
1.14

Adjusted net income/diluted earnings per share
$
134

 
$
1.00

 
$
113

 
$
0.84

 
$
696

 
$
5.20

 
$
575

 
$
4.24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate as reported
21.3
%
 
 
 
137.7
%
 
 
 
29.2
%
 
 
 
48.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted effective tax rate (10)
21.3
%
 
 
 
27.7
%
 
 
 
24.7
%
 
 
 
26.6
%
 
 

Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per share and effective tax rates determined in accordance with U.S. generally accepted accounting principles. The Company believes these non-GAAP measures provide useful information to evaluate the performance of the Company’s ongoing business.

(1)
In the fourth quarter and full year of 2018, the Company recorded charges of $45 million ($35 million net of tax) and $148 million ($111 million net of tax) for intangibles amortization arising from acquisitions, including its acquisition of Signode in the second quarter of 2018. In the fourth quarter and full year of 2017, the Company recorded charges of $10 million ($7 million net of tax) and $39 million ($28 million net of tax) for intangibles amortization.

(2)
In the second quarter of 2018, the Company recorded a charge of $40 million ($29 million net of tax) in cost of products sold for fair value adjustment related to the sale of inventory acquired in its acquisition of Signode.

(3)
In the fourth quarter of 2017, the Company recorded a charge of $3 million ($2 million net of tax) to increase its reserve for asbestos related liabilities.

(4)
In the fourth quarter and full year of 2018, the Company recorded net restructuring and other charges of $15 million ($10 million net of tax) and $49 million ($38 million net of tax) including $22 million of transaction costs for the year in connection with its acquisition of Signode. In the fourth quarter of 2017, the Company recorded restructuring and other charges of $12 million ($10 million net of tax) primarily due to costs related to the closures of a U.S. beverage can facility and a promotional packaging facility in Europe. For the full year of 2017, the Company recorded charges of $39 million ($31 million net of tax) that additionally included costs to settle a litigation matter related to Mivisa that arose prior to its acquisition by Crown.

In the fourth quarter and full year of 2018, the Company recorded net losses of $1 million ($2 million net of tax) and gains of $5 million ($3 million net of tax) for asset sales and impairments.  In the fourth quarter and full year of 2017, the Company recorded charges of $9 million ($7 million net of tax) and $12 million ($11 million net of tax) for asset sales and impairments primarily due to the closures of a beverage can plant in China, a beverage can plant in the U.S. and a promotional packaging facility in Europe.


Page 6 of 11


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Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
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(5)
In the fourth quarter of 2017, the Company recorded a benefit of $2 million ($2 million net of tax) in cost of products sold related to the timing impact of hedge ineffectiveness caused primarily by volatility in the metal premium component of aluminum prices. There was no impact for the full year of 2017.

(6)
In the first quarter of 2018, the Company recorded a charge of $15 million ($10 million net of tax) for net losses arising from its hedge of the U.S. dollar purchase price of its acquisition of Signode.  Also in the first quarter, the Company incurred net charges of $9 million ($7 million net of tax) for pre-acquisition interest carrying costs on borrowings to finance the acquisition.

(7)
In the fourth quarter of 2018, the Company recorded pension and postretirement charges of $42 million ($35 million net of tax) primarily arising from payment of lump sum buy-outs to settle certain pension obligations using plan assets. In the fourth quarter and full year of 2017, the Company recorded pension charges of $1 million ($1 million net of tax) and benefits of $3 million ($2 million net of tax) for plan settlements and curtailments.

(8)
In the second quarter of 2017, the Company recorded a charge of $7 million ($5 million net of tax) for the write off of deferred financing fees in connection with the refinancing of its term loan and revolving credit facilities.

(9)
In the fourth quarter and full year of 2018, the Company recorded income tax and noncontrolling interest benefits of $21 million and $72 million related to the items described above. Also in the fourth quarter and full year of 2018, the Company recorded benefits of $1 million and charges of $31 million including taxes on the distribution of foreign earnings and adjustments for the impact of the “Tax Cut and Jobs Act”. In the fourth quarter and full year of 2017, the Company recorded income tax benefits of $8 million and $22 million related to the items described above. Also in the fourth quarter of 2017, the Company recorded a charge of $177 million to recognize the impact of the “Tax Cut and Jobs Act”.

(10)
Income tax effects on adjusted net income were calculated using the applicable tax rates of the underlying jurisdictions.


Page 7 of 11


News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif



Consolidated Balance Sheets (Condensed & Unaudited)
(in millions)
 
 
 
 
December 31,
2018
 
2017
Assets
 
 
 
Current assets
 
 
 
   Cash and cash equivalents
$
607

 
$
424

   Receivables, net
1,602

 
1,041

   Inventories
1,690

 
1,385

   Prepaid expenses and other current assets
180

 
224

        Total current assets
4,079

 
3,074

 

 

Goodwill and intangible assets, net
6,635

 
3,518

Property, plant and equipment, net
3,745

 
3,239

Other non-current assets
803

 
832

        Total
$
15,262

 
$
10,663

 

 

 

 

Liabilities and equity

 

Current liabilities

 

   Short-term debt
$
89

 
$
62

   Current maturities of long-term debt
86

 
64

   Accounts payable and accrued liabilities
3,738

 
3,124

        Total current liabilities
3,913

 
3,250

 

 

Long-term debt, excluding current maturities
8,517

 
5,217

Other non-current liabilities
1,546

 
1,273

 

 

Noncontrolling interests
349

 
322

Crown Holdings shareholders' equity
937

 
601

Total equity
1,286

 
923

        Total
$
15,262

 
$
10,663











Page 8 of 11


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Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif

Consolidated Statements of Cash Flows (Condensed & Unaudited)
(in millions)
Year ended December 31,
2018
 
2017
 
 
 
 
Cash flows from operating activities
 
 
 
   Net income
$
528

 
$
428

   Depreciation and amortization
425

 
247

   Restructuring and other
44

 
51

   Pension expense
45

 
13

   Pension contributions
(20
)
 
(294
)
   Stock-based compensation
27

 
23

   Income taxes
35

 
247

   Working capital changes and other
(513
)
 
(965
)
          Net cash provided by/(used for) operating activities (1)
571

 
(250
)
 
 
 
 
Cash flows from investing activities
 
 
 
   Capital expenditures
(462
)
 
(498
)
   Beneficial interest in transferred receivables
490

 
1,010

   Acquisition of business, net of cash acquired
(3,912
)
 

   Proceeds from sale of assets
36

 
8

   Other
5

 
(25
)
          Net cash provided by/(used for) investing activities
(3,843
)
 
495

 
 
 
 
Cash flows from financing activities
 
 
 
   Net change in debt
3,680

 
12

   Dividends paid to noncontrolling interests
(60
)
 
(93
)
   Common stock repurchased
(4
)
 
(339
)
   Debt issue costs
(70
)
 
(16
)
   Other, net
(13
)
 
36

          Net cash provided by/(used for) financing activities
3,533

 
(400
)
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(37
)
 
14

 

 

Net change in cash and cash equivalents
224

 
(141
)
Cash and cash equivalents at January 1
435

 
576

 

 

Cash and cash equivalents at December 31 (2)
$
659

 
$
435


(1)
Adjusted free cash flow is defined by the Company as net cash from operating activities plus beneficial interest in transferred receivables less capital expenditures and certain other items. A reconciliation from net cash used for operating activities to adjusted free cash flow for the three months and full year ended December 31, 2018 and 2017 follows.
(2)
Cash and cash equivalents includes $52 and $11 of restricted cash at December 31, 2018 and 2017.
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Net cash from operating activities
$
803

 
$
20

 
$
571

 
$
(250
)
Beneficial interest in transferred receivables (3)

 
252

 
490

 
1,010

Pension prefunding (4)


 
241

 


 
241

Acquisition costs

 

 
22

 

Adjusted cash from operating activities
803

 
513

 
1,083

 
1,001

Interest included in investing activities (5)
15

 


 
15

 


Capital expenditures
(157
)
 
(216
)
 
(462
)
 
(498
)
Adjusted free cash flow
$
661

 
$
297

 
$
636

 
$
503


(3)
Prior year cash flow has been restated to reflect new accounting guidance related to the classification of certain cash receipts associated with the Company’s receivable securitization programs. Certain receipts previously reported in cash from operations are now reported in cash from investing activities as “Beneficial interest in transferred receivables”.
(4)
Net cash from operating activities for the three and twelve months ended December 31, 2017 includes the impact of a voluntary prefunding contribution to the Company’s U.K. defined benefit pension plan that will reduce future contributions that would otherwise be made.
(5)
Interest benefit of cross-currency swap included in investing activities.

Page 9 of 11


News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif


Consolidated Supplemental Data (Unaudited)
(in millions, except per share data)



Reconciliation of 2017 Segment Income to Amounts Previously Reported
 
 
 
 
 
 
 
 
 
Fourth Quarter 2017 Segment Income (1)
 
 
 
 
 
 
 
 
 
 
As
 
 
 
 
 
As
 
 
Previously
 
Pension and
 
Intangibles
 
Currently
Segment
 
Reported
 
Postretirement
 
Amortization
 
Reported
Americas Beverage
 
$
129

 
$
(6
)
 
$
5

 
$
128

European Beverage
 
38

 
(1
)
 


 
37

European Food
 
37

 

 
5

 
42

Asia Pacific
 
44

 

 


 
44

Non-reportable
 
26

 
(4
)
 


 
22

Corporate and unallocated
 
(29
)
 

 


 
(29
)
Total segment income
 
$
245

 
$
(11
)
 
$
10

 
$
244

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full Year 2017 Segment Income (1)
 
 
 
 
 
 
 
 
 
 
As
 
 
 
 
 
As
 
 
Previously
 
Pension and
 
Intangibles
 
Currently
Segment
 
Reported
 
Postretirement
 
Amortization
 
Reported
Americas Beverage
 
$
474

 
$
(24
)
 
$
20

 
$
470

European Beverage
 
239

 
(4
)
 


 
235

European Food
 
247

 

 
17

 
264

Asia Pacific
 
168

 

 


 
168

Non-reportable
 
139

 
(18
)
 
2

 
123

Corporate and unallocated
 
(139
)
 
(4
)
 


 
(143
)
Total segment income
 
$
1,128

 
$
(50
)
 
$
39

 
$
1,117


(1)
Prior year segment income has been restated to reflect new accounting guidance on the presentation of pension and postretirement expense and the Company’s revised policy to exclude intangibles amortization charges from segment income.


Page 10 of 11


News Release

Corporate Headquarters
770 Township Line Road
Yardley, PA 19067-4219
 
crownblacklogoa10.gif


Consolidated Supplemental Data (Unaudited)
(in millions, except per share data)



Comparative Results for Transit Packaging


 
Revenue
 
Segment Income
 
Depreciation (1)
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Q1
$
588

 
$
526

 
$
79

 
$
76

 
$
13

 
$
12

Q2
620

 
575

 
94

 
80

 
14

 
13

Q3
585

 
565

 
81

 
82

 
15

 
12

Q4
595

 
566

 
80

 
82

 
14

 
13

 
$
2,388

 
$
2,232

 
$
334

 
$
320

 
$
56

 
$
50



(1)
Amount of depreciation expense included in segment income, including acquisition step-up depreciation in 2018.


Reconciliation of Adjusted EBITDA and Net Leverage Ratio

 
December 31,

2018
 
2017
Income from operations
$
1,096

 
$
1,024

Add:
 
 
 
Intangibles amortization
148

 
39

Fair value adjustment to inventory
40

 
 
Provision for asbestos
 
 
3

Provision for restructuring and other
44

 
51

Segment income
1,328

 
1,117

Other pension and postretirement (1)
67

 
50

Depreciation
277

 
208

Proforma Q1 Signode (2)
92

 
 
Proforma Adjusted EBITDA
$
1,764

 
$
1,375



 
 
 
Total debt
$
8,692

 
$
5,343

Cash and cash equivalents
(607
)
 
(424
)
Net debt
$
8,085

 
$
4,919

 
 
 
 
Net leverage ratio
4.6x

 
3.6x



(1)
Excludes settlement and curtailment charges of $42 million in 2018 and benefits of $3 million in 2017.
(2)
Signode acquisition closed April 3, 2018.

Page 11 of 11