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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 September 30, 2022
 
☐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 RoadYardleyPA19067
(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 classTrading SymbolsName of each exchange on which registered
Common Stock $5.00 Par ValueCCKNew York Stock Exchange
7 3/8% Debentures Due 2026CCK26New York Stock Exchange
7 1/2% Debentures Due 2096CCK96New 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 119,946,169 shares of Common Stock outstanding as of October 28, 2022.

Crown Holdings, Inc.




PART I – FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions except per share data)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Net sales$3,259 $2,920 $9,931 $8,340 
Cost of products sold, excluding depreciation and amortization2,726 2,322 8,134 6,548 
Depreciation and amortization115 113 346 336 
Selling and administrative expense122 148 419 438 
Restructuring and other, net(1)(11)(75)(42)
Income from operations297 348 1,107 1,060 
Loss from early extinguishments of debt11 — 11 — 
Other pension and postretirement(5)(1)(13)(4)
Interest expense76 66 194 203 
Interest income(3)(2)(9)(5)
Foreign exchange15 — 12 (1)
Income from continuing operations before taxes and equity in net earnings of affiliates203 285 912 867 
Provision for income taxes55 74 218 285 
Equity in net earnings of affiliates10 5 39 10 
Net income from continuing operations158 216 733 592 
Net loss from discontinued operations— (85)— (43)
Net income 158 131 733 549 
Net income from continuing operations attributable to noncontrolling interests31 29 95 107 
Net income from discontinued operations attributable to noncontrolling interests— — — 1 
Net income attributable to Crown Holdings$127 $102 $638 $441 
Net income from continuing operations attributable to Crown Holdings$127 $187 $638 $485 
Net loss from discontinued operations attributable to Crown Holdings— (85)— (44)
Net income attributable to Crown Holdings$127 $102 $638 $441 
Earnings per common share attributable to Crown Holdings:
Basic earnings per common share from continuing operations1.06 1.45 5.26 3.68 
Basic loss per common share from discontinued operations— (0.66)— (0.34)
Basic$1.06 $0.79 $5.26 $3.34 
Diluted earnings per common share from continuing operations1.06 1.44 5.23 3.65 
Diluted loss per common share from discontinued operations— (0.65)— (0.33)
Diluted$1.06 $0.79 $5.23 $3.32 
The accompanying notes are an integral part of these consolidated financial statements.
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Crown Holdings, Inc.




CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Net income$158 $131 $733 $549 
Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments(55)517 (84)526 
Pension and other postretirement benefits12 19 30 49 
Derivatives qualifying as hedges(18)(6)(62)26 
Total other comprehensive income / (loss)(61)530 (116)601 
Total comprehensive income 97 661 617 1,150 
Net income attributable to noncontrolling interests31 29 95 108 
Translation adjustments attributable to noncontrolling interests(2)(1)(6)(2)
Derivatives qualifying as hedges attributable to noncontrolling interests(1)— (4)2 
Comprehensive income attributable to Crown Holdings$69 $633 $532 $1,042 

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

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Crown Holdings, Inc.




CONSOLIDATED BALANCE SHEETS (Condensed)
(In millions)
(Unaudited)
September 30,
2022		December 31,
2021
Assets
Current assets
Cash and cash equivalents$368 $531 
Receivables, net2,124 1,889 
Inventories2,184 1,735 
Prepaid expenses and other current assets274 243 
Current assets held for sale17 97 
Total current assets4,967 4,495 
Goodwill 2,841 3,007 
Intangible assets, net1,345 1,525 
Property, plant and equipment, net4,265 4,036 
Operating lease right-of-use assets, net207 191 
Other non-current assets599 604 
Total assets$14,224 $13,858 
Liabilities and equity
Current liabilities
Short-term debt$83 $75 
Current maturities of long-term debt94 135 
Current portion of operating lease liabilities41 42 
Accounts payable2,888 2,901 
Accrued liabilities904 966 
Current liabilities held for sale— 14 
Total current liabilities4,010 4,133 
Long-term debt, excluding current maturities6,709 6,052 
Postretirement and pension liabilities444 497 
Non-current portion of operating lease liabilities172 150 
Other non-current liabilities754 696 
Commitments and contingent liabilities (Note J)
— — 
Noncontrolling interests469 418 
Crown Holdings shareholders’ equity 1,666 1,912 
Total equity2,135 2,330 
Total liabilities and equity$14,224 $13,858 

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

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Crown Holdings, Inc.




CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)
(In millions)
(Unaudited)
Nine Months Ended
September 30,
20222021
Cash flows from operating activities
Net income$733 $549 
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization346 352 
Loss on sale of discontinued businesses— 89 
Loss on debt extinguishment11 — 
Restructuring and other, net(75)(40)
Pension expense21 36 
Pension contributions55 (287)
Stock-based compensation23 27 
Working capital changes and other(980)(481)
Net cash provided by operating activities134 245 
Cash flows from investing activities
Capital expenditures(607)(512)
Net investment hedge26 25 
Proceeds from sale of businesses, net of cash received182 2,255 
Proceeds from sale of property, plant and equipment15 24 
Acquisition of businesses, net of cash acquired(31)— 
Other3 (1)
Net cash (used for) / provided by investing activities(412)1,791 
Cash flows from financing activities
Net change in revolving credit facility and short-term debt415 (35)
Proceeds from long-term debt2,954 80 
Payments of long-term debt(2,263)(64)
Debt issuance costs(25)— 
Premiums paid to retire debt(4)— 
Foreign exchange derivatives related to debt(8)(13)
Payments of finance leases(2)(2)
Dividends paid to noncontrolling interests(34)(56)
Dividends paid to shareholders(80)(79)
Common stock issued1 1 
Common stock repurchased(722)(745)
Net cash provided by / (used for) financing activities232 (913)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(95)(34)
Net change in cash, cash equivalents and restricted cash(141)1,089 
Cash, cash equivalents and restricted cash at January 1593 1,238 
Cash, cash equivalents and restricted cash at September 30$452 $2,327 

The accompanying notes are an integral part of these consolidated financial statements.
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Crown Holdings, Inc.




CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In millions)
(Unaudited)
Crown Holdings, Inc. Shareholders’ Equity  
Common StockPaid-in CapitalAccumulated EarningsAccumulated Other Comprehensive LossTreasury StockTotal Crown EquityNoncontrolling InterestsTotal Shareholders' Equity
Balance at January 1, 2022$929 $— $3,180 $(1,898)$(299)$1,912 $418 $2,330 
Net income216 216 30 246 
Other comprehensive income59 59 3 62 
Dividends declared(27)(27)(27)
Dividends paid to noncontrolling interests— (11)(11)
Restricted stock awarded(1)1 — — 
Stock-based compensation10 10 10 
Common stock repurchased(335)(15)(350)(350)
Balance at March 31, 2022$929 $— $3,043 $(1,839)$(313)$1,820 $440 $2,260 
Net income295 295 34 329 
Other comprehensive loss(107)(107)(10)(117)
Dividends declared(26)(26)(26)
Dividends paid to noncontrolling interests— (13)(13)
Restricted stock awarded(1)1 — — 
Stock-based compensation6 6 6 
Common stock issued1 1 1 
Common stock repurchased(239)(11)(250)(250)
Balance at June 30, 2022$929 $— $3,079 $(1,946)$(323)$1,739 $451 $2,190 
Net income127 127 31 158 
Other comprehensive loss(58)(58)(3)(61)
Dividends declared(27)(27)(27)
Dividends paid to noncontrolling interests— (10)(10)
Restricted stock awarded— — 
Stock-based compensation77 7 
Common stock issued— — 
Common stock repurchased(116)(6)(122)(122)
Balance at September 30, 2022$929 $— $3,070 $(2,004)$(329)$1,666 $469 $2,135 

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

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Crown Holdings, Inc.




CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In millions)
(unaudited)
Crown Holdings, Inc. Shareholders’ Equity
Common StockPaid-in CapitalAccumulated EarningsAccumulated Other Comprehensive LossTreasury StockTotal Crown EquityNoncontrolling InterestsTotal Shareholders' Equity
Balance at January 1, 2021$929 $179 $4,538 $(3,193)$(255)$2,198 $406 $2,604 
Net income211 211 34 245 
Other comprehensive loss(5)(5)— (5)
Dividends declared(27)(27)(27)
Dividends paid to noncontrolling interests— (9)(9)
Restricted stock awarded(1)1 — — 
Stock-based compensation11 11 11 
Common stock issued1 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 income128 128 45 173 
Other comprehensive income75 75 1 76 
Dividends declared(26)(26)(26)
Dividends paid to noncontrolling interests— (15)(15)
Restricted stock awarded(1)1 — — 
Stock-based compensation6 6 6 
Common stock repurchased(184)(100)(14)(298)(298)
Balance at June 30, 2021$929 $— $4,724 $(3,123)$(268)$2,262 $462 $2,724 
Net income102 102 29 131 
Other comprehensive income / (loss)$531 531 (1)530 
Dividends declared(26)(26)(26)
Dividends paid to noncontrolling interests— (32)(32)
Stock-based compensation10 10 10 
Common stock repurchased(414)(21)(435)(435)
Disposition of subsidiary with noncontrolling interests (1)
— (15)(15)
Balance at September 30, 2021$929 $— $4,396 $(2,592)$(289)$2,444 $443 $2,887 
(1) The amount disposed in 2021 relates to discontinued operations. See Note C for further details.
The accompanying notes are an integral part of these consolidated financial statements.
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Crown Holdings, Inc.




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share and statistical data)
(Unaudited)


A.Statement of Information Furnished

The condensed consolidated financial statements ("consolidated financial statements") include the accounts of Crown Holdings, Inc. and its consolidated subsidiaries (the “Company”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with Form 10-Q instructions. In the opinion of management, these consolidated financial statements contain all adjustments of a normal and recurring nature necessary for a fair statement of the financial position of the Company as of September 30, 2022 and the results of its operations for the three and nine months ended September 30, 2022 and 2021 and of its cash flows for the nine months ended September 30, 2022 and 2021. 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, 2021.


B.Accounting and Reporting Developments

In September 2022, the Financial Accounting Standards Board issued new guidance which requires enhanced disclosures of supplier finance programs. The guidance requires buyers in a supplier finance program to disclose sufficient information about the program’s nature, activity during the period, changes from period to period, and potential magnitude. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The amendments should be applied retrospectively to each period in which a balance sheet is presented, except for disclosure of rollforward information, which should be applied prospectively. The Company is currently evaluating the impact of adopting this guidance on its disclosures.


C.     Divestitures

On August 31, 2021, the Company completed the sale (the “Transaction”) of its European Tinplate business (the “Business”) to Kouti B.V., an affiliate of KPS Capital Partners LP. The Business comprised the Company’s European Food segment and its European Aerosol and Promotional Packaging reporting unit which was previously reported in Other. The Company received pre-tax proceeds of approximately €1.9 billion ($2.3 billion) from the Transaction and received a 20% minority interest in the Business. For the year ended December 31, 2021, the Company recorded a pre-tax loss of $101 and tax charges of $81 related to taxable gains on the sale of the Business.

Major components of net loss from discontinued operations for the three and nine months ended September 30, 2021 were as follows:
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Crown Holdings, Inc.




Three Months Ended September 30,Nine Months Ended September 30,
20212021
Net sales$466 $1,585 
Cost of products sold, excluding depreciation and amortization393 1,301 
Depreciation and amortization— 16 
Selling and administrative expense17 60 
Restructuring and other2 2 
Other pension and postretirement— 1 
Interest expense2 6 
Foreign exchange1 — 
Loss on sale of discontinued businesses19 89 
Transaction costs26 34 
Income from discontinued operations before tax6 76 
Provision for income taxes91 119 
Net loss from discontinued operations(85)(43)
Net income from discontinued operations attributable to noncontrolling interests— 1 
Net loss from discontinued operations attributable to Crown Holdings$(85)$(44)

The Business had capital expenditures of $29 for the nine months ended September 30, 2021.

The Company accounted for the minority interest received in the Business under the equity method. The Company's share of income of the Business was $9 and $32, respectively, for the three and nine months ended September 30, 2022 and is reported in Equity in net earnings of affiliates in the Consolidated Statement of Operations.

In April 2022, the Company completed the sale of the Transit Packaging segment's Kiwiplan business and received pre-tax proceeds of $180. The Company recorded a pre-tax gain of $113 ($102, net of tax) on the sale, which is reported in Restructuring and other, net in the Consolidated Statement of Operations. The transaction did not represent a strategic shift that had a major effect on the Company's operations and financial results, and therefore did not qualify for reporting as a discontinued operation.


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:

September 30, 2022December 31, 2021
Cash and cash equivalents$368 $531 
Restricted cash included in prepaid expenses and other current assets84 61 
Restricted cash included in other non-current assets— 1 
Total restricted cash84 62 
Total cash, cash equivalents and restricted cash$452 $593 

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




E.    Receivables

September 30, 2022December 31, 2021
Accounts receivable$1,332 $1,289 
Less: allowance for credit losses(21)(20)
Net trade receivables1,311 1,269 
Unbilled receivables414 325 
Miscellaneous receivables399 295 
Receivables, net$2,124 $1,889 

In December 2021, the Company's Bowling Green plant sustained tornado damage, resulting in curtailment of operations. The Company resumed operations in March 2022. However, it will continue to incur incremental costs, including freight and warehousing expenses, to meet customer demand as the plant returns to full operational capacity. The Company has property and business interruption insurance policies for weather related events that include these incremental expenses. The Company recognizes insurance recoveries for losses incurred as the recoveries become probable. Insurance recoveries for lost profits are not recognized until they are realizable.

During the nine months ended September 30, 2022, the Company received insurance proceeds of $60 for business interruption, including incremental expenses, and $17 for property damage. As of September 30, 2022, the Company has recorded an insurance receivable, within miscellaneous receivables, of $40 for incremental expenses incurred that the Company expects to be reimbursed under the terms of its insurance policy.


F.    Inventories

September 30, 2022December 31, 2021
Raw materials and supplies$1,388 $1,094 
Work in process172 120 
Finished goods624 521 
$2,184 $1,735 


G.    Intangible Assets

Gross carrying amounts and accumulated amortization of finite-lived intangible assets by major class were as follows:
    
 September 30, 2022December 31, 2021
 GrossAccumulated amortizationNetGrossAccumulated amortizationNet
Customer relationships$1,314 $(501)$813 $1,363 $(443)$920 
Trade names507 (96)411 544 (86)458 
Technology150 (99)51 158 (88)70 
Long term supply contracts139 (71)68 137 (63)74 
Patents10 (8)2 15 (12)3 
$2,120 $(775)$1,345 $2,217 $(692)$1,525 

Net income from continuing operations for the three and nine months ended September 30, 2022 and 2021 included amortization expense of $40 and $119 and $42 and $125.







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Crown Holdings, Inc.




H.    Restructuring and Other

The Company recorded restructuring and other items as follows:
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Asset sales and impairments$— $(13)$(115)$(14)
Restructuring(4)7 34 21 
Other costs / (income)3 (5)6 (49)
$(1)$(11)$(75)$(42)

For the nine months ended September 30, 2022, asset sales and impairments primarily relates to the $113 gain on sale of the Kiwiplan business. See Note C for more information on the sale. For the three and nine months ended September 30, 2021, asset sales and impairments includes gains on various asset sales.

For the nine months ended September 30, 2022, restructuring included $29 of charges related to an overhead cost reduction program initiated by the Company's Transit Packaging segment. The Company expects to reduce headcount by approximately 600 employees.

For the three and nine months ended September 30, 2021, restructuring primarily included charges related to internal reorganizations within the Transit Packaging division and headcount reductions across segments.

For the nine months ended September 30, 2021, other income included 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.

At September 30, 2022, the Company had a restructuring accrual of $24, primarily related to the headcount reductions and other internal reorganizations within the Transit Packaging segment. 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 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
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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.

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 have 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 nine months ended September 30, 2022, the Company paid $16 to settle asbestos claims and pay related legal and defense costs and had claims activity as follows:

Beginning claims57,000 
New claims1,000
Settlements or dismissals(1,000)
Ending claims57,000 

In the fourth quarter of each year, the Company performs an analysis of outstanding claims and categorizes these claims by year of exposure and state filed. As of December 31, 2021, the Company's outstanding claims were:

Claimants alleging first exposure after 196417,000 
Claimants alleging first exposure before or during 1964 filed in:
Texas13,000 
Pennsylvania1,500 
Other states that have enacted asbestos legislation6,000 
Other states19,500 
Total claims outstanding57,000 

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

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

With respect to post-1964 claims, regardless of the existence of asbestos legislation, the Company does not include in its accrual any amounts for settlement of these claims because of increased difficulty of establishing identification of relevant insulation products as the cause of injury. Given 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.

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

20212020
Total claims24 %23 %
Pre-1965 claims in states without asbestos legislation42 %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 September 30, 2022.

As of September 30, 2022, the Company’s accrual for pending and future asbestos-related claims and related legal costs was $221, including $180 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 82% of the claims outstanding at the end of 2021), the Company and claimant’s willingness to negotiate a settlement, the terms of settlements of other defendants with asbestos-related liabilities, the bankruptcy filings of other defendants (which may result in additional claims and higher settlements for non-bankrupt defendants), the nature of pending and future claims (including the seriousness of alleged disease, whether claimants allege first exposure to asbestos before or during 1964 and the claimant’s ability to demonstrate the alleged link to Crown Cork), the volatility of the litigation environment, the defense strategies available to the Company, the level of future claims, the rate of receipt of claims, the jurisdiction in which claims are filed, and the effect of state asbestos legislation (including the validity and applicability of the Pennsylvania legislation to non-Pennsylvania jurisdictions, where the substantial majority of the Company’s asbestos cases are filed).


J.    Commitments and Contingent Liabilities

The Company, along with others in most cases, has been identified by the EPA or a comparable state environmental agency as a Potentially Responsible Party (“PRP”) at a number of sites and has recorded aggregate accruals of $12 for its share of estimated future remediation costs at these sites. The Company has been identified as having either directly or indirectly disposed of commercial or industrial waste at the sites subject to the accrual, and where appropriate and supported by available information, generally has agreed to be responsible for a percentage of future remediation costs based on an estimated volume of materials disposed in proportion to the total materials disposed at each site. The Company has not had monetary sanctions imposed nor has the Company been notified of any potential monetary sanctions at any of the sites.

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

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
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in Germany, France and the U.K. The Company cooperated with the Commission and submitted a leniency application with the Commission with respect to the findings of its internal investigation in Germany.

In July 2022, the Company reached a settlement with the Commission relating to the Commission’s investigation, pursuant to which the Company agreed to pay a fine in the amount of $8. Fining decisions based on settlements can be appealed under EU law. The Company is seeking annulment of the Commissions's fining decision on the basis that the referral of the case from the FCO to the Commission was unjustified. There can be no assurance regarding the outcome of such appeal.

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. The Company has acknowledged to CBP that the goods were misclassified and has paid all related duties, which CBP does not dispute. The Company has asserted that the misclassification was unintentional and disputes the penalty assessment by CBP. CBP has brought suit in the U.S. Court of International Trade seeking enforcement of the initial penalty against the Company. At the present time, based on the information available, the Company does not believe that a loss for the alleged intentional misclassification is probable. However, there can be no assurance that the Company will be successful in contesting the assessed penalty.

On October 7, 2021, the French Autorité de la concurrence (the French Competition Authority or “FCA”) issued a statement of objections to 14 trade associations, one public entity and 101 legal entities from 28 corporate groups, including the Company, certain of its subsidiaries, other leading metal can manufacturers, certain can fillers and certain retailers in France. The FCA alleged violations of Articles 101 of the Treaty on the Functioning of the European Union and L.420-1 of the French Commercial Code. The statement of objections alleges, among other things, anti-competitive behavior in connection with the removal of bisphenol-A from metal packaging in France. The removal of bisphenol-A was mandated by French legislation that went into effect in 2015. If the FCA finds that the Company or its subsidiaries violated competition law, the FCA may levy fines. Proceedings with respect to this matter are ongoing and the Company is unable to predict the ultimate outcome including the amount of fines, if any, that may be levied by the FCA. The Company intends to vigorously defend against the allegations in the statement of objections.

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

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

At September 30, 2022, 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.

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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 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 forecasted transaction is reasonably possible, but not probable of occurring, the hedge no longer qualifies for hedge accounting and 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 or when the forecasted transaction becomes probable of not occurring.

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 September 30, 2022 mature between one and twenty-seven months.

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Crown Holdings, Inc.




The Company uses commodity forward contracts to hedge anticipated purchases of various commodities, primarily aluminum, and these exposures are hedged by a central treasury unit.

The Company also designates certain foreign exchange contracts as cash flow hedges of anticipated foreign currency denominated sales or purchases. The Company manages these risks at the operating unit level. Often, foreign currency risk is generally hedged together with the related commodity price risk.

The Company may also use 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 OCIAmount of gain/(loss) recognized in OCI
Three Months Ended September 30,Nine Months Ended
September 30,
Derivatives in cash flow hedges2022202120222021
Foreign exchange$1 $2 $(4)$1 
Interest Rate— — — 2 
Commodities(24)21 (40)76 
$(23)$23 $(44)$79 
Amount of gain/(loss) reclassified from AOCI into incomeAmount of gain/(loss) reclassified from AOCI into income
Three Months Ended September 30,Nine Months Ended
September 30,
Derivatives in cash flow hedges2022202120222021Affected line items in the Statement of Operations
Foreign exchange$(1)$2 $(7)$1 Net sales
Commodities6 $(15)(8)(35)Net sales
Foreign exchange2 — 1 — Cost of products sold, excluding depreciation and amortization
Commodities(9)45 39 100 Cost of products sold, excluding depreciation and amortization
(2)32 25 66 Income from continuing operations before taxes and equity in net earnings of affiliates
1 (7)(6)(16)Provision for income taxes
(1)25 19 50 Net income from continuing operations
Commodities— 4 — 5 Net loss from discontinued operations
Total reclassified$(1)$29 $19 $55 Net income

For the twelve-month period ending September 30, 2023, a net loss of $33 ($27, net of tax) is expected to be reclassified to earnings for commodity and foreign exchange contracts. No material amounts were reclassified during the nine months ended September 30, 2022 and 2021 in connection with anticipated transactions that were considered probable of not occurring.

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.

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For the three and nine months ended September 30, 2022, the Company recorded losses of $4 and $19 from foreign exchange contracts designated as fair value hedges. For the three and nine months ended September 30, 2021, the Company recorded gains of $7 and $1 from foreign exchange contracts designated as fair value hedges. 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 derivativePre-tax amounts of gain/(loss) recognized in income on derivative
Three Months Ended September 30,Nine Months Ended September 30,
Derivatives not designated as hedges2022202120222021Affected line item in the Statement of Operations
Foreign exchange$— $— $(3)$(1)Net sales
Foreign exchange5 — 9 — Cost of products sold
Foreign exchange(12)(7)(26)(18)Foreign exchange
$(7)$(7)$(20)$(19)

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 nine months ended September 30, 2022, the Company recorded gains of $30 ($20, net of tax) and $80 ($56, 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 nine months ended September 30, 2021, the Company recorded gains of $40 ($40, net of tax) and $81 ($81, net of tax) in other comprehensive income for these net investment hedges. As of September 30, 2022 and December 31, 2021, cumulative gains of $149 ($148, net of tax) and gains of $69 ($92, 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 €535 ($524) at September 30, 2022.

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 AOCIAmount of gain / (loss) recognized in AOCI
Three Months ended September 30,Nine months ended September 30,
Derivatives designated as net investment hedges2022202120222021
Foreign exchange$36 $16 $75 $42 

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.


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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 September 30, 2022 and December 31, 2021, respectively. The fair values of these financial instruments were reported under Level 2 of the fair value hierarchy.

Balance Sheet classificationSeptember 30, 2022December 31, 2021Balance Sheet classificationSeptember 30, 2022December 31, 2021
Derivatives designated as hedging instruments
Foreign exchange contracts cash flowPrepaid expenses and other current assets$8 $3 Accrued liabilities$3 $10 
Foreign exchange contracts fair valuePrepaid expenses and other current assets6 1 Accrued liabilities4 2 
Commodities contracts cash flowPrepaid expenses and other current assets16 53 Accrued liabilities54 17 
Other non-current assets2 2 Other non-current liabilities5 1 
Net investment hedgeOther non-current assets147 49 Other non-current liabilities— — 
$179 $108 $66 $30 
Derivatives not designated as hedging instruments
Foreign exchange contractsPrepaid expenses and other current assets$17 $3 Accrued liabilities$22 $3 
$17 $3 $22 $3 
Total derivatives$196 $111 $88 $33 

Carrying amount of the hedged assets / liabilities
September 30,
2022		December 31,
2021
Line item in the Balance Sheet in which the hedged item is included
Cash and cash equivalents$26 $38 
Receivables, net15 21 
Accounts payable122 116 

As of September 30, 2022 and December 31, 2021, the cumulative amounts of fair value hedging adjustments included in the carrying amount of the hedged assets and liabilities were a net loss of $2 and a net gain of $1.

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.
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Gross amounts recognized in the Balance SheetGross amounts not offset in the Balance SheetNet amount
Balance at September 30, 2022
Derivative assets$196$18$178
Derivative liabilities881870
Balance at December 31, 2021
Derivative assets1111992
Derivative liabilities331914

Notional Values of Outstanding Derivative Instruments

The aggregate U.S. dollar-equivalent notional values of outstanding derivative instruments in the Consolidated Balance Sheets at September 30, 2022 and December 31, 2021 were:

September 30, 2022December 31, 2021
Derivatives designated as cash flow hedges:
Foreign exchange$219 $241 
Commodities311 261 
Derivatives designated as fair value hedges:
Foreign exchange222 229 
Derivatives designated as net investment hedges:
Foreign exchange875 875 
Derivatives not designated as hedges:
Foreign exchange567 617 
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Crown Holdings, Inc.




L.    Debt

    The Company's outstanding debt was as follows:
September 30, 2022December 31, 2021
PrincipalCarryingPrincipalCarrying
outstandingamountoutstandingamount
Short-term debt$83 $83 $75 $75 
Long-term debt
Senior secured borrowings:
Revolving credit facilities421 421 50 50 
Term loan facilities
U.S. dollar due 20271,8001,791——
U.S. dollar due 2024— — 1,002 997 
Euro due 20271
529529——
Euro due 20241
— — 344 344 
Senior notes and debentures:
€335 at 2.25% due 2023
— — 381 380 
€550 at 0.75% due 2023
— — 626 624 
€600 at 2.625% due 2024
588 586 683 680 
€600 at 3.375% due 2025
588 586 683 679 
U.S. dollar at 4.25% due 2026
400 397 400 396 
U.S. dollar at 4.75% due 2026
875 869 875 867 
U.S. dollar at 7.375% due 2026
350 348 350 348 
€500 at 2.875% due 2026
491 487 570 565 
U.S. dollar at 5.25% due 2030
500493— — 
U.S. dollar at 7.50% due 2096
40 40 40 40 
Other indebtedness in various currencies256256217 217 
Total long-term debt6,838 6,803 6,221 6,187 
Less current maturities(94)(94)(136)(135)
Total long-term debt, less current maturities6,744 6,709 6,085 6,052 
(1) €540 and €303 at September 30, 2022 and December 31, 2021.
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 $6,691 at September 30, 2022 and $6,548 at December 31, 2021.

In March 2022, the Company issued $500 principal amount of 5.250% senior unsecured notes due 2030. The notes were issued at par by Crown Americas LLC, a subsidiary of the Company, and are unconditionally guaranteed by the Company and substantially all of its U.S. subsidiaries. The Company paid $7 in issuance costs that will be amortized over the term of the notes.

In August 2022, the Company amended the credit agreement governing its senior secured credit facilities. The Amendment extends the agreement’s maturity to August 2027 and increases the commitments under several of the Company’s existing facilities. The Company’s commitments under its credit agreement include $800 million in U.S. dollar denominated revolving commitments, $800 million in multicurrency revolving commitments, $50 million in Canadian dollar-denominated revolving commitments, $1.8 billion in Term Loan A commitments, and €540 million in Term Euro commitments. At September 30, 2022, the U.S. dollar term loan interest rate was SOFR plus 1.35% and the Euro term loan interest rate was EURIBOR plus 1.25%. At December 31, 2021, the U.S. dollar term loan interest rate was LIBOR plus 1.20% and the Euro term loan interest rate was EURIBOR plus 1.20%.

In September 2022, the Company redeemed all of its €335 2.25% senior notes due 2023 and its €550 0.75% senior notes due 2023. In connection with the amended credit agreement and early redemption of senior notes, the Company
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recorded a loss from early extinguishment of debt of $11 in the third quarter of 2022 for premium payments and the write-off of deferred financing fees.


M.    Pension and Other Postretirement Benefits

The components of net periodic pension and other postretirement benefits costs for the three and nine months ended September 30, 2022 and 2021 were as follows:
Three Months EndedNine Months Ended
 September 30,September 30,
Pension benefits – U.S. plans2022202120222021
Service cost$5 $5 $15 $16 
Interest cost7 6 22 18 
Expected return on plan assets(19)(16)(56)(47)
Recognized prior service cost— 1 — 1 
Recognized net loss11 15 35 45 
Curtailment loss1 — 1 — 
Net periodic cost$5 $11 $17 $33 
Three Months EndedNine Months Ended
 September 30,September 30,
Pension benefits – Non-U.S. plans2022202120222021
Service cost$4 $3 $8 $10 
Interest cost3 9 9 27 
Expected return on plan assets(5)(20)(16)(61)
Recognized net loss1 8 3 27 
Net periodic cost$3 $— $4 $3 

Three Months EndedNine Months Ended
 September 30,September 30,
Other postretirement benefits2022202120222021
Service cost$— $1 $— $1 
Interest cost1 1 3 2 
Recognized prior service credit(5)(6)(15)(19)
Recognized net loss— 1 2 3 
Net periodic benefit$(4)$(3)$(10)$(13)

In October 2021, the trustees of the Company's U.K. defined benefit pension plan (the "Plan") entered into a transaction to fully insure all of its U.K. pension liabilities. In 2021, the Company made a cash contribution to enable the Plan to purchase a bulk annuity insurance contract for the benefit of the Plan participants. The Company recorded a settlement charge of $1,511 in the fourth quarter of 2021, upon irrevocable transfer of the Plan's obligations. The Company expects £127 ($141 as of September 30, 2022) of the cash contribution to be repaid as the Plan sells its remaining illiquid assets, of which £93 ($104) has been received to date.

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.

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Crown Holdings, Inc.




Three Months EndedNine Months Ended
September 30,September 30,
Details about accumulated other comprehensive income components2022202120222021Affected line items in the statement of operations
Actuarial losses$13 $24 $40 $75 Other pension and postretirement
Prior service credit (5)(5)(15)(18)Other pension and postretirement
Settlement loss1 — 1 — Other pension and postretirement
9 19 26 57 Income from continuing operations before taxes and equity in net earnings of affiliates
(2)(5)(6)(13)Provision for income taxes
7 14 20 44 Net income from continuing operations
Actuarial losses— 9 — 9 Net loss from discontinued operations
Total reclassified$7 $23 $20 $53 Net income from continuing operations attributable to Crown Holdings

Amortization of prior service credits of $15 for the nine months ended September 30, 2022, primarily relates to prior service credits which arose from postretirement plan amendments in prior years. These prior service credits are expected to be fully amortized to income in 2022.


N.    Capital Stock

On December 9, 2021, the Company's Board of Directors authorized the repurchase of an aggregate amount of $3,000 of Company common stock through the end of 2024. 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. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. The Company repurchased $722 of its shares during the nine months ended September 30, 2022 and $950 of its shares during the twelve months ended December 31, 2021.

For the three and nine months ended September 30, 2022, the Company declared and paid cash dividends of $0.22 per share and $0.66 per share. Additionally, on October 27, 2022, the Company's Board of Directors declared a dividend of $0.22 per share payable on November 25, 2022 to shareholders of record as of November 10, 2022.


O.    Accumulated Other Comprehensive Income

The following table provides information about the changes in each component of accumulated other comprehensive income.
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Defined benefit plansForeign currency translationGains and losses on cash flow hedgesTotal
Balance at January 1, 2021$(1,464)$(1,759)$30 $(3,193)
Other comprehensive income / (loss) before reclassifications(4)(25)79 50 
Amounts reclassified from accumulated other comprehensive income53 553 (55)551 
Other comprehensive income 49 528 24 601 
Balance at September 30, 2021$(1,415)$(1,231)$54 $(2,592)
Balance at January 1, 2022$(768)$(1,158)$28 $(1,898)
Other comprehensive income / (loss) before reclassifications10 (78)(44)(112)
Amounts reclassified from accumulated other comprehensive income20 — (14)6 
Other comprehensive income / (loss) 30 (78)(58)(106)
Balance at September 30, 2022$(738)$(1,236)$(30)$(2,004)
See Note K and Note M for further details of amounts related to cash flow hedges and defined benefit plans.


P.     Revenue

The Company recognized revenue as follows:
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Revenue recognized over time$1,733 $1,527 $5,333 $4,448 
Revenue recognized at a point in time1,526 1,393 4,598 3,892 
Total revenue$3,259 $2,920 $9,931 $8,340 

See Note S 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 are typically recognized for work in process related to the Company's three-piece printed products and equipment business. Contract assets and liabilities are reported in a net position on a contract-by-contract basis. The Company had net contract assets of $25 and $23 as of September 30, 2022 and December 31, 2021 included in prepaid and other current assets. During the three and nine months ended September 30, 2022, the Company satisfied performance obligations related to contract assets at December 31, 2021 and also recorded new contract assets primarily related to work in process for the equipment business.


Q.     Income Tax

As of September 30, 2022, the Company recorded a deferred tax asset of $18 for goodwill amortization and net operating loss carryforwards in Switzerland. The Company believes that it is more likely than not that these deferred tax assets will not be utilized prior to their expiration and has recorded a full valuation allowance.

For the three and nine months ended September 30, 2021, the Company recorded income tax charges of $11 and $42 in continuing operations for reorganizations and other transactions required to prepare the European Tinplate business for sale. Additionally, for the nine months ended September 30, 2021, the Company also recorded income tax benefits of $8 related to tax law changes in India and the U.K. 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
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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 regarding the sale of the European Tinplate business.

In August 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law in the U.S.. The Company does not expect the IRA to have a material impact on the Company's consolidated financial statements, including its annual estimated effective tax rate.



R.    Earnings Per Share

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

Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net income from continuing operations attributable to Crown Holdings$127 $187 $638 $485 
Net loss from discontinued operations attributable to Crown Holdings— (85)— (44)
Net income attributable to Crown Holdings$127 $102 $638 $441 
Weighted average shares outstanding:
Basic119.7 128.7 121.4 131.9 
Dilutive stock options and restricted stock0.5 1.0 0.7 1.0 
Diluted120.2 129.7 122.1 132.9 
Earnings per common share attributable to Crown Holdings:
Basic earnings per common share from continuing operations$1.06 $1.45 $5.26 $3.68 
Basic loss per common share from discontinued operations— (0.66)— (0.34)
Basic earnings per share$1.06 $0.79 $5.26 $3.34 
Diluted earnings per common share from continuing operations$1.06 $1.44 $5.23 $3.65 
Diluted loss per common share from discontinued operations— (0.65)— (0.33)
Diluted earnings per share$1.06 $0.79 $5.23 $3.32 

For the three and nine months ended September 30, 2022, 0.1 million and 0.4 million contingently issuable common shares were excluded from the computation of diluted earnings per share because the effect would be anti-dilutive.

For the nine months ended September 30, 2021, 0.1 million contingently issuable common shares were excluded from the computation of diluted earnings per share because the effect would be anti-dilutive.


S.    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 and provisions for restructuring and other. 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.     

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

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Crown Holdings, Inc.




 External SalesExternal Sales
Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Americas Beverage$1,312 $1,151 $3,916 $3,240 
European Beverage552 513 1,661 1,381 
Asia Pacific375 280 1,220 941 
Transit Packaging 609 644 1,957 1,838 
Other411 332 1,177 940 
Total$3,259 $2,920 $9,931 $8,340 

The primary sources of revenue included in Other 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 SalesIntersegment Sales
Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Americas Beverage$— $— $7 $— 
European Beverage28 36 88 108 
Transit Packaging9 7 23 20 
Other12 38 61 98 
Total$49 $81 $179 $226 

Intersegment sales primarily include sales of cans, ends and parts and equipment used in the manufacturing process.

 Segment IncomeSegment Income
Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Americas Beverage$185 $190 $565 $575 
European Beverage20 76 129 216 
Asia Pacific35 32 143 131 
Transit Packaging75 83 210 235 
Total reportable segments$315 $381 $1,047 $1,157 

A reconciliation of segment income of reportable segments to income before income taxes is as follows:
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Crown Holdings, Inc.




Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Segment income of reportable segments$315 $381 $1,047 $1,157 
Segment income of other50 39 206 111 
Corporate and unallocated items(29)(41)(102)(125)
Restructuring and other, net1 11 75 42 
Amortization of intangibles(40)(42)(119)(125)
Loss from early extinguishments of debt(11)— (11)— 
Other pension and postretirement5 1 13 4 
Interest expense(76)(66)(194)(203)
Interest income3 2 9 5 
Foreign exchange(15)— (12)1 
Income from continuing operations before taxes and equity in net earnings of affiliates$203 $285 $912 $867 

For the three and nine months ended September 30, 2022, intercompany profits of $2 and $11 were eliminated within segment income of other.

For the three and nine months ended September 30, 2021, intercompany profits of $4 and $8 were eliminated within segment income of other.

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




PART I - FINANCIAL INFORMATION

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

    Introduction

The following discussion presents management's analysis of the results of operations for the three and nine months ended September 30, 2022 compared to 2021 and changes in financial condition and liquidity from December 31, 2021. 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, 2021, 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 deploy capital into its global beverage can operations to expand production capacity to support growing customer demand in alcoholic and non-alcoholic drink categories. 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.

The Company's capital allocation strategy also focuses on maintaining a strong balance sheet with a leverage ratio between 3.0x and 3.5x and returning capital to shareholders in the form of dividends and the repurchase of Company shares. In December 2021, the Board of Directors authorized the repurchase of $3.0 billion in Company common stock through the end of 2024.

The Company continues to actively elevate its commitment to sustainability, which is a core value of the Company. In 2020, the Company debuted Twentyby30, a robust program that outlines twenty measurable, science based, environmental, social and governance goals to be completed by 2030 or sooner. In September 2021, the Company joined The Climate Pledge, a commitment to be net-zero carbon across business operations by 2040.

To date the war between Russia and Ukraine has not had a direct material impact on the Company's business, financial condition, or results of operations.

The Company continues to actively manage the challenges of supply chain disruptions, foreign exchange fluctuations and inflationary pressures, including increasing costs for raw materials, energy and transportation. The Company generally attempts to mitigate aluminum and steel price risk by matching its purchase obligations with its sales agreements. Additionally, the Company attempts to mitigate inflationary pressures on energy and raw material costs with contractual pass-through provisions that include annual selling price adjustments based on price indexes. The Company also uses commodity forward contracts to manage its exposure to raw material costs. The ability to mitigate inflationary risks through these measures varies by region and the impact on the results of the Company’s segments is discussed, as applicable, in the Results of Operations.

Results of Operations

The key measure used by the Company in assessing performance is segment income, a non-GAAP measure defined by the Company as income from operations adjusted to exclude intangibles amortization charges, 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 Beverage segment and the Thai baht in the Company's Asia Pacific segment. The Company's Transit Packaging segment is a global business. The foreign currency translation impacts

27
Crown Holdings, Inc.




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

referred to in the discussion below for Transit Packaging are primarily related to the euro and various other currencies. The Company calculates the impact of foreign currency translation by dividing current year U.S. dollar results by the
current year average foreign exchange rates and then multiplying those amounts by the applicable prior year average exchange rates.

Net Sales and Segment Income    
Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net sales$3,259 $2,920 $9,931 $8,340 

Three months ended September 30, 2022 compared to 2021

Net sales increased primarily due to the pass-through of higher material costs and 6% higher sales unit volumes in the Company's global beverage can businesses driven by volumes in Brazil, Mexico and Vietnam, partially offset by $127 from the impact of unfavorable foreign currency translation.

Nine months ended September 30, 2022 compared to 2021

Net sales increased primarily due to the pass-through of higher material costs and 4% higher sales unit volumes in the Company's global beverage can businesses, partially offset by $280 from the impact of unfavorable 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 at a new two-line plant in Bowling Green, Kentucky in the second quarter of 2021 and on a third line at its Olympia, Washington plant in the third quarter of 2021. The Company also announced construction of a new two-line plant in Martinsville, Virginia which is expected to commence operations in November 2022 and a new two-line plant in Mesquite, Nevada which is expected to commence operations in 2023.

In December 2021, the Bowling Green plant sustained tornado damage, resulting in curtailment of operations at the plant. The Company resumed operations in March 2022. However, it will continue to incur incremental costs, including freight and warehousing expenses, to meet customer demand as the plant returns to full operational capacity and during a temporary shut-down period expected to begin in late 2022 to complete final repairs to the plant. The Company has property and business interruption insurance policies for weather related events that include these incremental expenses. The Company recognizes insurance recoveries for incremental costs incurred as the recoveries become probable. The plant is expected to be fully operational by the end of 2022.

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. To meet volume requirements in these markets, the Company began commercial production on second lines at its Rio Verde, Brazil facility in 2021 and its Monterrey, Mexico facility in April 2022. Additionally, the Company began commercial production on the first of two lines at a new facility in Uberaba, Brazil in May 2022 and the second line began commercial production in October 2022.

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






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Crown Holdings, Inc.




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

Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net sales$1,312 $1,151 $3,916 $3,240 
Segment income185 190 565 575 

Three months ended September 30, 2022 compared to 2021

Net sales increased primarily due to the pass-through of higher aluminum costs, 8% higher sales unit volumes in both Mexico and Brazil, partially offset by 6% lower sales unit volumes in North America.

Segment income decreased primarily due lower sales unit volumes in North America and $2 of increased depreciation associated with recent capacity additions, partially offset by contractual pass-through mechanisms put in place to recover inflation and higher sales unit volumes in Mexico and Brazil.

Nine months ended September 30, 2022 compared to 2021

Net sales increased primarily due to the pass-through of higher aluminum costs and 5% higher sales unit volumes in Mexico, partially offset by lower sales unit volumes in Brazil and North America.

Segment income decreased primarily due to lower sales unit volumes in Brazil and North America and $13 of increased depreciation associated with recent capacity additions, partially offset by contractual pass-through mechanisms put in place to recover inflation and higher sales unit volumes in Mexico.

European Beverage

The Company's European Beverage segment manufactures aluminum beverage cans and ends and supplies a variety of customers from its operations throughout Europe, the Middle East and North Africa. In recent years, the European beverage can market has been growing. The Company has begun construction of a new plant in Peterborough, U.K. and new can lines in the Agoncillo, Spain and Parma, Italy plants which are expected to commence operations in 2023.

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

Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net sales$552 $513 $1,661 $1,381 
Segment income20 76 129 216 

Three and nine months ended September 30, 2022 compared to 2021

Net sales increased primarily due to the pass-through of higher aluminum costs and 3% and 5% higher sales unit volumes partially offset by $65 and $136 from the impact of unfavorable foreign currency translation for the three and nine months ended September 30, 2022.

Segment income decreased primarily due to energy costs in excess of contractual pass-through provisions, a mismatch in contractual aluminum pass-through provisions whereby higher cost inventory was sold at lower prices and $2 and $8 from the impact of unfavorable foreign currency translation for the three and nine months ended September 30, 2022 partially offset by higher sales unit volumes. The aluminum pass-through provisions are impacted by higher than normal inventory levels due to supply chain concerns and lower than expected volumes, and price volatility in the aluminum market.




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Crown Holdings, Inc.




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

Asia Pacific
The Company's Asia Pacific segment consists of beverage, food and specialty packaging can operations in Cambodia, China, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam. In recent years, the beverage can market in Southeast Asia has been growing. In 2021, the Company began commercial production at a new beverage can plant in Vung Tau, Vietnam and on a second line in the Hanoi, Vietnam beverage can plant. Additionally, the Company expects to commercialize production on a third line in its Phnom Penh, Cambodia beverage can plant during 2022.
    
In June 2022, the Company's Yangon, Myanmar beverage can plant was temporarily idled due to currency restrictions. For the nine months ended September 30, 2022, the plant had net sales of $17 and segment income of less than $1. Property, plant and equipment as of September 30, 2022 was $57, including $26 of land and buildings and $31 of machinery and equipment. The Company will continue to monitor the economic conditions and the impact to its business in Myanmar, including any alternative uses for its machinery and equipment.

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

Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net sales$375 $280 $1,220 $941 
Segment income35 32 143 131 

Three and nine months ended September 30 ,2022 compared to 2021

Net sales increased due to the pass-through of higher raw material costs and 14% and 26% higher sales unit volumes for the three and nine months ended September 30, 2022, primarily in Vietnam as 2021 was negatively impacted by coronavirus lockdowns. The unfavorable impact of foreign currency translation was $12 and $29 for the three and nine months ended September 30, 2022.

Segment income increased primarily due to higher sales unit volumes partially offset by a mismatch in contractual aluminum pass-through provisions whereby higher cost inventory was sold at lower prices. The aluminum pass-through provisions are impacted by higher than normal inventory levels due to supply chain concerns and lower than expected volumes, and price volatility in the aluminum market.

Transit Packaging

The Transit Packaging segment includes the Company's global industrial and protective solutions and equipment and tools businesses. Industrial and protective solutions includes steel strap, plastic strap and industrial film and other related products that are used in a wide range of industries, and transit protection products used 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 EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net sales$609 $644 $1,957 $1,838 
Segment income75 83 210 235 

Three months ended September 30, 2022 compared to 2021

Net sales decreased primarily due to $44 from the impact of unfavorable foreign currency translation and lower sales unit volumes, partially offset by the pass through of higher raw material costs.


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Crown Holdings, Inc.




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

Segment income decreased primarily due to lower sales unit volumes and $6 from the impact of unfavorable foreign currency translation, partially offset by inflationary price increases in the protective packaging business and costs savings from headcount reductions across the business.

Nine months ended September 30, 2022 compared to 2021

Net sales increased primarily due to the pass through of higher raw material costs, partially offset by $104 from the impact of unfavorable foreign currency translation and lower sales unit volumes.

Segment income decreased primarily due to lower sales unit volumes, the unfavorable impact of higher cost inventory from the prior year in the steel strap business and $14 from the impact of unfavorable foreign currency translation, partially offset by inflationary price increases in the protective packaging business and costs savings from headcount reductions across the business.

Other

Other includes 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. In 2021, the Company commenced operations at a new food can plant in Dubuque, Iowa and on a new food can line in its Hanover, Pennsylvania plant. Additionally, the Company will add a third two-piece food can line to its Owatonna, Minnesota plant before the end of 2022.

Net sales and segment income in Other were as follows:

Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net sales$411 $332 $1,177 $940 
Segment income50 39 206 111 

Three months ended September 30, 2022 compared to 2021

Net sales increased primarily due to the pass-through of higher tinplate costs in the Company's North America food can, aerosol can and closures businesses in North America, partially offset by 20% lower aerosol sales unit volumes and $6 from the impact of unfavorable foreign currency translation.

Segment income increased primarily due to increased profitability in the Company's North America food can, aerosol can and closures businesses due to higher self-made two-piece food can sales unit volumes, inflationary price increases and the benefit of lower cost inventory from prior year-end, partially offset by lower aerosol sales unit volumes.

Nine months ended September 30, 2022 compared to 2021

Net sales increased primarily due to the pass-through of higher tinplate costs in the Company's North America food can, aerosol can and closures businesses in North America, partially offset by 15% lower aerosol sales unit volumes and $12 from the impact of unfavorable foreign currency translation.

Segment income increased primarily due to increased profitability in the Company's North America food can, aerosol can and closures businesses due to higher self-made two-piece food can sales unit volumes, inflationary price increases and the benefit of lower cost inventory from prior year-end partially offset by $4 from the impact of unfavorable foreign currency translation. The benefit arising from lower cost inventory from prior year-end was $35 for the nine months ended September 30, 2022.






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Crown Holdings, Inc.




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

Corporate and unallocated

Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Corporate and unallocated expense$(29)$(41)$(102)$(125)

Corporate and unallocated expenses decreased for the three and nine months ended September 30, 2022 due to higher incentive compensation costs in 2021.

For the nine months ended September 30, 2021, corporate and unallocated expenses included certain corporate costs, including research and development, that were not directly attributable to the Company's European Tinplate business which was sold in August 2021 and as such, could not be allocated to discontinued operations. Subsequent to the sale, the Company's corporate cost structure reflects its ongoing operations.

Restructuring and other, net

For the nine months ended September 30, 2022 the benefit from restructuring and other was primarily due to the $113 gain from the sale of the Transit Packaging segment's Kiwiplan business, partially offset by $29 of charges related to an overhead cost reduction program initiated by the Transit Packaging segment in the second quarter of 2022. The Company expects to reduce headcount by approximately 600 employees and this action to result in annual savings of approximately $60. However, there can be no assurance that any such pre-tax savings will be realized.

Loss on debt extinguishment

For the three and nine months ended September 30, 2022 the $11 loss on debt extinguishment included premium payments and the write-off of deferred financing fees related to the refinancing of the Company's revolving credit and term loan facilities and the redemption of the Company's €335 2.25% senior notes due 2023 and its €550 0.75% senior notes due 2023. See Note L for more information on the Company's refinancing actions.

Interest expense

For the three months ended September 30, 2022 compared to 2021, interest expense increased from $66 to $76 due to higher interest rates. For the nine months ended September 30, 2022 compared to 2021, interest expense decreased from $203 to $194 due to lower outstanding debt balances partially offset by higher interest rates.

Provision for income taxes

The effective rate for the nine months ended September 30, 2022, decreased as compared to 2021, primarily due to prior year income tax charges of $42 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. See Note C for more information related to the sale of the European Tinplate business.

Equity in net earnings of affiliates

For the three and nine months ended September 30, 2022 compared to 2021, equity in net earnings of affiliates increased from $5 to $10 and $10 to $39 due to the 20% ownership interest received after the sale of Company's European Tinplate business in August 2021.

Net income attributable to noncontrolling interest

For the nine months ended September 30, 2022 compared to 2021, net income from noncontrolling interests decreased from $107 to $95 primarily due to lower earnings in the Company's beverage can operations in Brazil. The nine months ended September 30, 2021 included a benefit of $30 related to a favorable court ruling in a lawsuit brought by

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Crown Holdings, Inc.




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

certain of the Company's Brazilian subsidiaries asserting they were overcharged by the local tax authorities for indirect taxes paid in prior years.

Liquidity and Capital Resources

Cash from Operations

Cash provided by operating activities decreased from $245 for the nine months ended September 30, 2021 to $134 for the nine months ended September 30, 2022. The decrease in cash provided by operating activities was primarily due to increases in working capital, partially offset by higher earnings and $69 received for partial reimbursement of the contribution made in 2021 to fully settle the U.K. pension plan obligation, which is included in Pension contributions in the Consolidated Statements of Cash Flows. See Note L for more information regarding the settlement of the U.K. pension plan obligations.

Days sales outstanding for trade receivables, excluding the impact of unbilled receivables, decreased from 37 days as of December 31, 2021 to 36 days as of September 30, 2022.

Inventory turnover increased from 59 days at December 31, 2021 to 64 days at September 30, 2022. Inventory has increased from $1,735 at December 31, 2021 to $2,184 due to inventory builds in certain segments.

Days outstanding for trade payables decreased from 112 days at December 31, 2021 to 93 days at September 30, 2022 as prior year included the payables impact of inventory built in anticipation of market growth.

Investing Activities

Cash flow from investing activities decreased from an inflow of $1,791 for the nine months ended September 30, 2021 to an outflow of $412 for the nine months ended September 30, 2022 primarily due to the proceeds received from the sale of the European Tinplate business in 2021 and higher capital expenditures in 2022.

The Company currently expects capital expenditures in 2022 to be approximately $850.

Financing Activities

Financing activities used cash of $913 for the nine months ended September 30, 2021 and provided cash of $232 for the nine months ended September 30, 2022.

The Company had higher net borrowings in 2022 primarily related to the refinancing of the Company's revolving credit and term loan facilities and the redemption of the Company's €335 2.25% senior notes due 2023 and its €550 0.75% senior notes due 2023. See Note L for more information.

Liquidity

As of September 30, 2022, $307 of the Company's $368 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 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., $249 was held by subsidiaries for which earnings are considered indefinitely reinvested.

As of September 30, 2022, the Company had $1,159 of borrowing capacity available under its revolving credit facility, equal to the total facility of $1,650 less outstanding standby letters of credit of $70 and $421 of credit facility borrowings. The Company could have borrowed this amount at September 30, 2022 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 3.2 to 1.0 at September 30, 2022 was in compliance with the covenant requiring a ratio of no greater than 5.0 to 1.0. The maximum net total leverage ratio under the agreement reduces to 4.5 to 1.0 at December 31, 2023.

In March 2022, the Company amended its securitization facility to increase the program limit from $500 to $700. This securitization facility expires in July 2023.
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Crown Holdings, Inc.




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

Capital Resources

As of September 30, 2022, the Company had approximately $270 of capital commitments primarily related to its global beverage can businesses. The Company expects to fund these commitments primarily through cash flows from operations.

Contractual Obligations

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, 2021, which information is incorporated herein by reference.

Supplemental Guarantor Financial Information

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
Nine Months Ended
 September 30, 2022
Net sales$— 
Gross Profit— 
Income from operations(3)
Net income from continuing operations1
(45)
Net income attributable to Crown Holdings1
(45)
(1) Includes $30 of expense related to intercompany interest with non-guarantor subsidiaries




 September 30, 2022December 31, 2021
Current assets$16 $7 
Non-current assets21 27 
Current liabilities57 72 
Non-current liabilities1
6,078 5,286 
(1) Includes payables of $5,231 and $4,560 due to non-guarantor subsidiaries as of September 30, 2022 and December 31, 2021






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Crown Holdings, Inc.




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

Crown Americas Obligor Group

Nine Months Ended
 September 30, 2022
Net sales1
$4,060 
Gross profit2
665 
Income from operations2
338 
Net income attributable to continuing operations3
285 
Net income attributable to Crown Holdings3
285 
(1) Includes $404 of sales to non-guarantor subsidiaries
(2) Includes $40 of gross profit related to sales to non-guarantor subsidiaries
(3) Includes $23 of income related to intercompany interest and technology royalties with non-guarantor subsidiaries


 September 30, 2022December 31, 2021
Current assets1
$1,186 $1,078 
Non-current assets2
3,825 3,495 
Current liabilities3
1,339 1,330 
Non-current liabilities4
6,183 4,761 
(1) Includes receivables of $54 and $48 due from non-guarantor subsidiaries as of September 30, 2022 and December 31, 2021
(2) Includes receivables of $283 and $180 due from non-guarantor subsidiaries as of September 30, 2022 and December 31, 2021
(3) Includes payables of $34 and $35 due to non-guarantor subsidiaries as of September 30, 2022 and December 31, 2021
(4) Includes payables of $1281 and $1,397 due to non-guarantor subsidiaries as of September 30, 2022 and December 31, 2021

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, 2021 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, as applicable, are included in the notes to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

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, 2021, which are not historical facts (including any statements concerning the direct or indirect impact of the COVID-19 pandemic and the Russia-Ukraine war, objectives of management for capacity additions, share repurchases, dividends, future operations or economic performance, or assumptions related thereto, including the potential for higher interest rates and energy prices), are “forward-looking statements” within the
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Crown Holdings, Inc.




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 U.S. 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, 2021 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 September 30, 2022, see Note K to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

As of September 30, 2022, the Company had $2.9 billion principal floating interest rate debt. A change of 0.25% in these floating interest rates would change annual interest expense by approximately $7 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.


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Crown Holdings, Inc.

PART II – OTHER INFORMATION

Item 1.    Legal Proceedings

For information regarding the Company's potential asbestos-related liabilities and other litigation, see Note 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, 2021. 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 September 30, 2022. The table excludes 66,104 shares surrendered to cover taxes on the vesting of restricted stock during the three months ended September 30, 2022.
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)
July— $— — $2,415 
August1,193,700 $96.79 1,193,700 $2,299 
September— $— — $2,299 
1,193,700 1,193,700 

(1) In December 2021, the Company's Board of Directors authorized the repurchase of an aggregate amount of $3.0 billion of Company common stock through the end of 2024. 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.

Item 3. Defaults Upon Senior Securities

There were no events required to be reported under Item 3 for the nine months ended September 30, 2022.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.









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Crown Holdings, Inc.

Item 6.    Exhibits    

10.p
22
31.1
31.2
32
101The following financial information from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 formatted in inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021, (ii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021, (iii) Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021, (v) Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2022 and 2021 and (vi) Notes to Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

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/ Christy L. Kalaus
 Christy L. Kalaus
 Vice President and Corporate Controller
Date: November 1, 2022

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