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Crown Holdings Reports Fourth Quarter 2012 Results

              Crown Holdings Reports Fourth Quarter 2012 Results

PR Newswire

PHILADELPHIA, Jan. 30, 2013

PHILADELPHIA, Jan. 30, 2013 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK)
today announced its financial results for the fourth quarter and year ended
December 31, 2012.

2012 Highlights

Full Year

  oIncome per diluted share $3.75; Before Certain Items $2.81
  oFree Cash Flow $345 million
  o3.5 billion units of annualized beverage can capacity added in growth
    markets
  oGlobal beverage can unit volume grows 5%
  o7.0 million shares repurchased

Fourth Quarter

  oIncome per diluted share $0.20; Before Certain Items $0.51
  oAcquisition of Superior Multi-Packaging completed
  oAcquisition of Vietnamese beverage can and end plant completed

Net sales in the fourth quarter were $2,037 million compared to $2,058 million
in the fourth quarter of 2011, primarily due to the pass through of lower
material costs.

Fourth quarter gross profit was $281 million compared to $289 million in the
2011 fourth quarter and included an increase of $2 million from foreign
currency translation.

Fourth quarter selling and administrative expense was $94 million compared to
$97 million in the prior year quarter.

Segment income (a non-GAAP measure defined by the Company as gross profit less
selling and administrative expense) was $187 million in the fourth quarter
compared to $192 million in the fourth quarter of 2011 including an increase
of $2 million from foreign currency translation. Segment income was 9.2% of
net sales compared to 9.3% in the fourth quarter of 2011.

Commenting on the quarter, John W. Conway, Chairman and Chief Executive
Officer, stated, "While European economic conditions remain challenging, net
income per share before certain items and free cash flow performance met or
exceeded the prior year.

"We look confidently ahead to 2013 and expect higher free cash flow,
increasing productivity and contribution from our 2012 beverage can capacity
additions, and the realization of benefits from our recent restructuring
actions in Europe to continue to create increasing shareholder value," Mr.
Conway said.

Net interest cost (interest expense less interest income) in the fourth
quarter was $54 million compared to $55 million in the fourth quarter of 2011.

During the fourth quarter of 2012, the Company recorded charges of $38 million
($29 million, net of tax, or $0.20 per diluted share) for restructuring
actions primarily in the Company's European division operations. The actions
are expected to occur throughout 2013 with a portion of the anticipated
benefit accruing to the Company beginning in the second half of 2013.

The Company also recorded a charge of $35 million ($23 million, net of tax, or
$0.16 per diluted share) to increase its asbestos litigation reserve.
Asbestos related payments totaled $28 million in both 2012 and 2011, and the
Company expects 2013 payments to be similar to prior years' levels.

Net income attributable to Crown Holdings in the fourth quarter increased to
$29 million, or $0.20 per diluted share, compared to $8 million, or $0.05 per
diluted share, in the fourth quarter last year. Before certain items, net
income increased to $74 million over the $73 million in the 2011 fourth
quarter; and earnings per diluted share attributable to Crown Holdings
improved to $0.51 over the $0.48 in the same quarter last year.

A reconciliation from net income and income per diluted share to net income
before certain items and income per diluted share before certain items is
provided below.

Twelve Month Results
For the full year, net sales were $8,470 million compared to $8,644 million in
2011, reflecting $243 million of unfavorable foreign currency translation and
the pass through of lower material costs, partially offset by 5% growth in
global beverage can volumes.

Gross profit for 2012 was $1,277 million compared to $1,348 million in 2011
and includes inventory holding gains that did not recur in 2012 and $31
million of unfavorable foreign currency translation.

Selling and administrative expense for 2012 was $382 million compared to $395
million for 2011 reflecting a decrease of $10 million in foreign currency
translation.

Segment income in 2012 was $895 million compared to $953 million in 2011. The
decrease in 2012 was primarily due to 2011 inventory holding gains not
recurring in 2012, $21 million of unfavorable currency translation and reduced
profits in the Company's European three-piece steel packaging businesses.

Net interest cost (interest expense less interest income) in 2012 was $219
million compared to $221 million in 2011, and includes a $4 million decrease
from foreign currency translation.

Net income attributable to Crown Holdings for 2012 was $557 million, or $3.75
per diluted share, compared to $282 million, or $1.83 per diluted share, in
2011. Before certain items, net income was $417 million compared to $433
million in 2011 and earnings per diluted share before certain items was $2.81
in both 2012 and 2011.

During 2012, the Company repurchased 7.0 million shares of Company common
stock including 1.3 million shares repurchased in the open market during the
fourth quarter.

Net debt at December 31, 2012 was $3,315 million compared to $3,190 million at
December 31, 2011. The increase in net indebtedness includes $106 million
related to acquisitions completed during 2012, including $28 million of
acquired debt, and $31 million from foreign currency translation.

During the fourth quarter of 2012, the Company acquired an aluminum beverage
can and end production facility in Dong Nai Province, Vietnam and also
acquired a controlling interest in Superior Multi-Packaging Ltd. (SMP), a
listed company on the Singapore Exchange. The acquired Dong Nai facility,
which has one beverage can and two beverage end lines, is located northeast of
Ho Chi Minh City and will be combined with Crown's existing Dong Nai facility,
which is adjacent to the acquired site. SMP, with annual sales of
approximately $130 million, primarily produces metal and plastic containers
for the paint, chemical, petrochemical, marine and edible oil industries at
its facilities in Singapore, China and Vietnam. The acquisition of the
controlling interest in SMP was made by an indirect 55% owned subsidiary of
the Company.

As previously announced in January 2013, the Company issued $1 billion of 4.5%
senior unsecured notes due 2023 and initially used the proceeds to repay $500
million of indebtedness under the Company's senior secured term loan
facilities and to pay related fees and expenses. On February 2, 2013 the
Company expects to complete the previously announced redemption of its
outstanding $400 million 7.625% senior secured notes due 2017 and pay
associated redemption premiums on those notes. The Company expects to incur a
pre-tax charge of approximately $32 million in connection with the redemption
premiums and write-off of deferred financing fees.

Non-GAAP Measures
Segment income and free cash flow are not defined terms under U.S. generally
accepted accounting principles (non-GAAP measures). In addition, the
information presented regarding net income before certain items and income
before certain items per diluted share does not conform to U.S. GAAP and
includes non-GAAP measures. Non-GAAP measures should not be considered in
isolation or as a substitute for net income, income per diluted share or cash
flow data prepared in accordance with U.S. GAAP and may not be comparable to
calculations of similarly titled measures by other companies.

The Company views segment income and free cash flow as the principal measures
of performance of its operations and for the allocation of resources. Free
cash flow has certain limitations, however, including that it does not
represent the residual cash flow available for discretionary expenditures
since other non-discretionary expenditures, such as mandatory debt service
requirements, are not deducted from the measure. The amount of mandatory
versus discretionary expenditures can vary significantly between periods. The
Company believes that net income before certain items and income before
certain items per diluted share can be used to evaluate the Company's
operations. Segment income, free cash flow, net income before certain items
and income before certain items per diluted share are derived from the
Company's Consolidated Statements of Operations and Cash Flows and
Consolidated Balance Sheets, as applicable, and reconciliations to segment
income, free cash flow, net income before certain items and income before
certain items per diluted share can be found within this release.

Conference Call
The Company will hold a conference call tomorrow, January 31, 2013 at 9:00
a.m. (EST) to discuss this news release. Forward-looking and other material
information may be discussed on the conference call. The dial-in numbers for
the conference call are (415) 228-5025 or toll-free (800) 475-0233 and the
access password is "packaging." A live webcast of the call will be made
available to the public on the internet at the Company's web site,
www.crowncork.com. A replay of the conference call will be available for a
one-week period ending at midnight on February 7. The telephone numbers for
the replay are (203) 369-0572 or toll free (866) 403-7100.

Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all other information in this press release
consists of forward-looking statements. These forward-looking statements
involve a number of risks, uncertainties and other factors, including the
Company's ability to improve its free cash flow, increase productivity and
realize benefits from its recent beverage can capacity additions, generate
cost savings and other benefits from restructuring actions, the magnitude of
future payments for asbestos litigation and the successful redemption of its
outstanding $400 million senior secured notes that may cause actual results to
be materially different from those expressed or implied in the forward-looking
statements. Important factors that could cause the statements made in this
press release or the actual results of operations or financial condition of
the Company to differ are discussed under the caption "Forward-Looking
Statements" in the Company's Form 10-K Annual Report for the year ended
December 31, 2011 and in subsequent filings made prior to or after the date
hereof. The Company does not intend to review or revise any particular
forward-looking statement in light of future events.

Crown Holdings, Inc., through its subsidiaries, is a leading supplier of
packaging products to consumer marketing companies around the world. World
headquarters are located in Philadelphia, Pennsylvania.

For more information, contact:
Thomas A. Kelly, Senior Vice President – Finance, (215) 698-5341, or
Edward Bisno, Bisno Communications, (212) 717-7578.

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





Consolidated Statements of Operations (Unaudited)

(in millions, except share and per share data)
                            Three Months Ended        Twelve Months Ended

                            December 31,              December 31,
                            2012         2011         2012         2011
Net sales                   $2,037       $2,058       $8,470       $8,644
Cost of products sold       1,709        1,725        7,013        7,120
Depreciation and            47           44           180          176
amortization
Gross profit ^(1)           281          289          1,277        1,348
Selling and administrative  94           97           382          395
expense
Provision for asbestos      35           28           35           28
Provision for restructuring 38           50           48           77
Asset impairments and sales (18)         8            (42)         6
Loss from early                                                    32
extinguishment of debt
Interest expense            56           58           226          232
Interest income             (2)          (3)          (7)          (11)
Translation and foreign     3            2            (1)          2
exchange adjustments
Income before income taxes  75           49           636          587
Provision for income taxes  11           12           (17)         194
Equity earnings             3            2            5            3
Net income                  67           39           658          396
Net income attributable to  (38)         (31)         (101)        (114)
noncontrolling interests
Net income attributable to  $29          $8           $557         $282
Crown Holdings
Earnings per share
attributable to Crown
Holdings

 common shareholders:
 Basic              $0.20        $0.05        $3.81        $1.86
 Diluted                $0.20        $0.05        $3.75        $1.83
Weighted average common
shares outstanding:
 Basic                 143,035,092  149,799,805  146,066,394  151,705,706
 Diluted               145,322,962  152,123,484  148,407,801  154,273,649
Actual common shares        143,136,473  148,449,293  143,136,473  148,449,293
outstanding
(1) A reconciliation from gross profit to segment income is found on the
following page.





Consolidated Supplemental Financial Data (Unaudited)
(in millions)

Reconciliation from Gross Profit to Segment Income
The Company views segment income, as defined below, as a principal measure of
performance of its operations and for the allocation of resources. Segment
income is defined by the Company as gross profit less selling and
administrative expense. A reconciliation from gross profit to segment income
for the three and twelve months ended December 31, 2012 and 2011 follows:



                                                Three Months  Twelve Months
                                                Ended         Ended

                                                December 31,  December 31,
                                                2012   2011   2012     2011
Gross                                           $ 281  $ 289  $ 1,277  $ 1,348
profit
Selling and administrative expense                94     97     382      395
Segment income                                  $ 187  $ 192  $ 895    $ 953



                          Segment Information
                          Three Months Ended December 31,  Twelve Months Ended
                                                           December 31,
Net Sales                 2012              2011           2012       2011
Americas Beverage         $    573          $    576       $  2,274   $ 2,273
North America Food             204               213          876       889
European Beverage              368               378          1,653     1,669
European Food                  410               445          1,793     1,999
Asia Pacific                   259               235          979       861
 Total reportable        1,814             1,847        7,575     7,691
segments
Non-reportable segments        223               211          895       953
 Total net sales    $    2,037        $    2,058     $  8,470   $ 8,644
Segment Income
Americas Beverage         $    82           $    85        $  311     $ 302
North America Food             29                31           146       146
European Beverage              43                34           217       210
European Food                  29                37           180       239
Asia Pacific                   35                35           137       125
 Total reportable        218               222          991       1,022
segments
Non-reportable segments        14                25           98        139
Corporate and other            (45)              (55)         (194)     (208)
unallocated items
 Total segment      $    187          $    192       $  895     $ 953
income

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

Reconciliation from Net Income and Income Per Diluted Common Share to Net
Income before Certain Items and Income Per Diluted Common Share before Certain
Items

The following table reconciles reported net income and diluted earnings per
share attributable to the Company to net income before certain items and
income per diluted common share before certain items, as used elsewhere in
this release:

                                      Three Months Ended  Twelve Months Ended

                                      December 31,        December 31,
                                      2012       2011     2012         2011
Net income attributable to Crown      $   29     $ 8      $   557      $ 282
Holdings, as reported
Items, net of tax:
 Provision for asbestos               23       18         23         18
 Provision for restructuring [        29       36         36         62
]^(1)
 Asset impairments and sales ^(2)     (11)     6          (34)       4
 Loss from early extinguishment                                      20
of debt ^(3)
 Income taxes ^(4)                    4        5          (165)      47
Net income before the above items     $   74     $ 73     $   417      $ 433
Income per diluted common share as    $   0.20   $ 0.05   $   3.75     $ 1.83
reported
Income per diluted common share       $   0.51   $ 0.48   $   2.81     $ 2.81
before the above items
Effective tax rate as reported            14.7%    24.5%      (2.7%)     33.0%
Effective tax rate before the above       21.5%    24.4%      25.0%      25.5%
items

Net income before certain items, income per diluted common share before
certain items and the effective tax rate before certain items are non-GAAP
measures and are not meant to be considered in isolation or as a substitute
for net income, income per diluted common share and effective tax rates
determined in accordance with U.S. generally accepted accounting principles
("U.S. GAAP"). The Company believes these non-GAAP measures provide useful
information to evaluate the performance of the Company's ongoing business.
    In the fourth quarter and full year of 2012, the Company recorded
    restructuring charges of $38 million ($29 million, net of tax, or $0.20
    per diluted share) and $48 million ($36 million, net of tax and
    noncontrolling interest, or $0.24 per diluted share) for various
(1) restructuring actions. In the fourth quarter and full year of 2011, the
    Company recorded restructuring charges of $50 million ($36 million, net
    of tax, or $0.24 per diluted share) and $77 million ($62 million, net of
    tax, or $0.40 per diluted share), primarily related to a restructuring of
    its European division operations and the relocation of its European
    Division headquarters from France to Switzerland.
    In the fourth quarter and full year of 2012, the Company recorded gains
    on asset sales of $18 million ($11 million, net of tax and noncontrolling
    interest, or $0.07 per diluted share) and $42 million ($34 million, net
    of tax and noncontrolling interest, or $0.23 per diluted share) primarily
(2) related to insurance proceeds received for property damage incurred in
    the 2011 flooding in Thailand and a gain on the acquisition of Superior
    Multi-Packaging. In the fourth quarter and full year of 2011, the
    Company recorded net charges of $8 million ($6 million, net of tax, or
    $0.04 per diluted share) and $6 million ($4 million, net of tax, or $0.03
    per diluted share) for asset impairments and sales.
    In the first quarter of 2011, the Company recorded a loss of $30 million
    ($19 million, net of tax, or $0.12 per diluted share) in connection with
(3) the early extinguishment of its $600 million notes due 2015. In the
    second quarter of 2011, the Company recorded a loss of $2 million ($1
    million, net of tax, or $0.01 per diluted share) primarily in connection
    with the redemption of its notes due September 2011.
    In the third quarter of 2012, the Company recorded net income tax
    benefits of $169 million ($1.14 per diluted share) primarily related to
    the recognition of U.S. foreign tax credits. In the fourth quarter of
    2012, the Company recorded a tax charge of $4 million ($0.03 per diluted
    share) related to French tax law changes. In the first and fourth
(4) quarters of 2011, the Company recorded aggregate tax charges of $17
    million ($0.11 per diluted share) and $5 million ($0.03 per diluted
    share) in connection with the relocation of its European Division
    headquarters. In the third quarter of 2011, the Company recorded a tax
    charge of $25 million ($0.17 per diluted share) in connection with a tax
    law change in France that limits the amount of tax loss carryforwards a
    company can use in any year.





Consolidated Balance Sheets (Condensed & Unaudited)

(in millions)


December 31,                                  2012      2011
Assets
Current assets
 Cash and cash equivalents                  $ 350     $ 342
 Receivables, net                             1,057     948
 Inventories                                  1,166     1,148
 Prepaid expenses and other current assets    177       165
 Total current assets                 2,750     2,603
Goodwill                                         1,998     1,952
Property, plant and equipment, net               1,995     1,751
Other non-current assets                         747       562
 Total                              $ 7,490   $ 6,868
Liabilities and equity
Current liabilities
 Short-term debt                            $ 261     $ 128
 Current maturities of long-term debt         115       67
 Accounts payable and accrued liabilities     2,142     2,090
 Total current liabilities            2,518     2,285
Long-term debt, excluding current maturities     3,289     3,337
Other non-current liabilities                    1,560     1,485
Noncontrolling interests                         285       234
Crown Holdings shareholders' deficit             (162)     (473)
Total (deficit)/equity                           123       (239)
 Total                              $ 7,490   $ 6,868





Consolidated Statements of Cash Flows (Condensed & Unaudited)

(in millions)


Twelve months ended December 31,                          2012      2011
Cash flows from operating activities
 Net income                                           $ 658     $ 396
 Depreciation and amortization                          180       176
^ Provision for restructuring                         48        77
 Asset impairments and sales                            (42)      6
^ Pension expense                                     98        97
^ Pension contributions                               (103)     (404)
 Stock-based compensation                               18        18
 Working capital changes                                (98)      (55)
 Deferred taxes and other                               (138)     68
 Net cash provided by operating activities (A)    621       379
Cash flows from investing activities
 Capital expenditures                                   (324)     (401)
 Acquisition of businesses, net of cash acquired        (78)
 Insurance proceeds                                     48
 Proceeds from sale of assets                           3         26
 Other                                                  (11)      3
 Net cash used for investing activities             (362)     (372)
Cash flows from financing activities
 Net change in debt                                     72        509
 Purchase of noncontrolling interests                   (4)       (202)
 Common stock repurchased                               (257)     (312)
 Dividends paid to noncontrolling interests             (79)      (102)
 Other, net                                             14        (22)
 Net cash used for financing activities           (254)     (129)
Effect of exchange rate changes on cash and cash            3         1
equivalents
Net change in cash and cash equivalents                     8         (121)
Cash and cash equivalents at January 1                      342       463
Cash and cash equivalents at December 31                  $ 350     $ 342

    Free cash flow is defined by the Company as adjusted net cash provided
    by/used for operating activities less capital expenditures. A
(A) reconciliation from net cash provided by operating activities to free cash
    flow for the three and twelve months ended December 31, 2012 and 2011
    follows:



                                       Three Months Ended  Twelve Months Ended

                                       December 31,        December 31,
                                       2012      2011      2012        2011
Net cash provided by operating         $738      $513      $621        $379
activities
Pension plan prefunding ^(1)                     328                   328
Premiums paid to retire debt early                                     27
Adjusted net cash provided by          738       841       621         734
operating activities
Capital expenditures                   (110)     ( 128)   (324)       (401)
Insurance proceeds from Thailand       15                  48
flooding
Free cash flow                         $643      $713      $345        $333

(1) The Company made contributions of $328 million to prefund its North
    American defined benefit pension plans in the fourth quarter of 2011.



SOURCE Crown Holdings, Inc.

Website: http://www.crowncork.com
 
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