Crown Holdings, Inc. Reports Third Quarter 2019 Results

Published

YARDLEY, Pa., Oct. 16, 2019 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the third quarter ended September 30, 2019.

Third Quarter Results

  • Earnings per share $1.36 versus $1.23 in 2018
  • Adjusted earnings per share $1.56 versus $1.71 in 2018
  • Beverage can capacity projects on schedule

Net sales in the third quarter were $3,084 million compared to $3,174 million in the third quarter of 2018 reflecting $64 million of unfavorable currency translation.

Income from operations was $352 million in the quarter compared to $365 million in the third quarter of 2018. Segment income was $395 million in the third quarter compared to $415 million in the prior year third quarter.

Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "Our overall performance during the third quarter was in line with expectations. Strong operating results in the Americas Beverage segment offset a disappointing performance in the European Food business due to unfavorable weather conditions and a weaker than expected harvest. Beverage can volumes were particularly robust in Europe, Mexico and Southeast Asia, as consumers in both emerging and developed markets continue to increasingly prefer cans over other packaging options. Recently installed beverage can capacity additions, including a third line at the Company's existing plant in Phnom Penh, Cambodia, a new one line high-speed plant in Parma, Italy and a new two line high-speed plant in Valencia, Spain, have helped us meet the continuing expansion in demand. In November 2019, we plan to commence operations at a new beverage can facility in Rio Verde in central Brazil.

"To meet the surge in volume requirements in our North American beverage can business, we have begun the construction of a third high-speed line at our Nichols, New York facility which will begin production during the second quarter of 2020. Also to support demand growth and targeted for a first quarter 2020 start-up, we are installing a new aluminum beverage can line at our Weston, Ontario plant. Both the Nichols and Weston lines will be capable of producing multiple sizes. In addition, we have begun construction of a new one line beverage can plant in Nong Khae, Thailand which will commence operations during the third quarter of 2020 and supply the increasing requirements of customers in the region."

Interest expense was $95 million in the third quarter of 2019 compared to $105 million in 2018 primarily due to lower debt levels in the current year.

Net income attributable to Crown Holdings in the third quarter was $183 million compared to $164 million in the third quarter of 2018. Reported diluted earnings per share were $1.36 in the third quarter of 2019 compared to $1.23 in 2018. Adjusted diluted earnings per share were $1.56 compared to $1.71 in 2018.

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

Nine Month ResultsNet sales for the first nine months of 2019 increased to $8,874 million compared to $8,417 million in the first nine months of 2018 primarily due to the impact of the Signode acquisition, partially offset by $244 million of unfavorable currency translation.

Income from operations was $997 million in the first nine months of 2019 compared to $878 million in 2018. Segment income in the first nine months of 2019 increased to $1,096 million over the $1,049 million in the prior year period reflecting the impact of the Signode acquisition offset by $26 million of unfavorable currency translation.

Interest expense was $290 million for the first nine months of 2019 compared to $282 million in 2018 primarily due to higher average outstanding debt from borrowings incurred to finance the Signode acquisition.

Net income attributable to Crown Holdings in the first nine months of 2019 was $423 million compared to $386 million in the first nine months of 2018. Reported diluted earnings per share were $3.14 compared to $2.88 in 2018. Adjusted diluted earnings per share were $4.07 compared to $4.20 in 2018.

OutlookThe Company currently expects fourth quarter and full year 2019 adjusted diluted earnings to be in the ranges of $0.93 to $0.98 and $5.00 to $5.05 per share, respectively, compared to the previous full year estimate of $5.05 to $5.20 per share, primarily due to a poor harvest in Europe and the impact of slowing economic activity on the Transit Packaging business.

The adjusted effective income tax rate for the full year of 2019 is expected to be between 25% and 26%.

Adjusted free cash flow, as defined below, is currently expected to be approximately $725 million for 2019 with capital spending of approximately $450 million.

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

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

Conference CallThe Company will hold a conference call tomorrow, October 17, 2019 at 9:00 a.m. (EDT) to discuss this news release. Forward-looking and other material information may be discussed on the conference call. The dial-in numbers for the conference call are (630) 395-0194 or toll-free (888) 324-8108 and the access password is "packaging." A live webcast of the call will be made available to the public on the internet at the Company's website, www.crowncork.com. A replay of the conference call will be available for a one-week period ending at midnight on October 24. The telephone numbers for the replay are (203) 369-3918 or toll free (888) 568-0403.

Cautionary Note Regarding Forward-Looking StatementsExcept 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 future impact of currency translation; the continuation of performance and market trends in 2019, including consumer preference for beverage cans and increasing global beverage can demand and demand in Europe, Mexico and Southeast Asia; the Company's ability to successfully complete and begin production at capacity expansion projects within expected timelines and budgets in Brazil, the U.S., Canada and Thailand and the Company's ability to generate expected earnings and cash flow in 2019 that may cause actual results to be materially different from those expressed or implied in the forward-looking statements. Important factors that could cause the statements made in this press release or the actual results of operations or financial condition of the Company to differ are discussed under the caption "Forward Looking Statements" in the Company's Form 10-K Annual Report for the year ended December 31, 2018 and in subsequent filings made prior to or after the date hereof. The Company does not intend to review or revise any particular forward-looking statement in light of future events.

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

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

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 September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net sales $3,084 $3,174 $8,874 $8,417
Cost of products sold 2,455 2,530 7,082 6,804
Depreciation and amortization 121 127 366 305
Selling and administrative expense 156 153 470 402
Restructuring and other (1) (41) 28
Income from operations (1) 352 365 997 878
Pension settlements and curtailments 6 23
Other pension and postretirement (5) (13) (11) (47)
Foreign exchange 4 (14) 6 14
Earnings before interest and taxes 347 392 979 911
Interest expense 95 105 290 282
Interest income (5) (6) (12) (17)
Loss from early extinguishment of debt 6
Income before income taxes 257 293 695 646
Provision for income taxes 54 102 190 196
Equity earnings 1 2 4 3
Net income 204 193 509 453
Net income attributable to noncontrolling interests (21) (29) (86) (67)
Net income attributable to Crown Holdings $183 $164 $423 $386
Earnings per share attributable to Crown Holdings common shareholders:
Basic $1.37 $1.23 $3.16 $2.89
Diluted $1.36 $1.23 $3.14 $2.88
Weighted average common shares outstanding:
Basic 133,906,820 133,729,731 133,854,275 133,608,065
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167
(1) A reconciliation from income from operations to segment income follows.

 

 

Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data) Consolidated Supplemental Financial Data (Unaudited) (in millions)
Three Months Ended September 30, Nine Months Ended September 30, Reconciliation from Income from Operations to Segment Income
2019 2018 2019 2018 The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition.
Net sales $3,084 $3,174 $8,874 $8,417
Cost of products sold 2,455 2,530 7,082 6,804
Depreciation and amortization 121 127 366 305 Three Months Ended September 30, Nine Months Ended September 30,
Selling and administrative expense 156 153 470 402 2019 2018 2019 2018
Restructuring and other (1) (41) 28 Income from operations $ 352 $ 365 $ 997 $ 878
Income from operations (1) 352 365 997 878 Intangibles amortization 43 51 140 103
Pension settlements and curtailments 6 23 Fair value adjustment to inventory (1) 40
Other pension and postretirement (5) (13) (11) (47) Provision for restructuring and other (1) (41) 28
Foreign exchange 4 (14) 6 14 Segment income $ 395 $ 415 $ 1,096 $ 1,049
Earnings before interest and taxes 347 392 979 911
Interest expense 95 105 290 282 (1) Included in cost of products sold
Interest income (5) (6) (12) (17)
Loss from early extinguishment of debt 6
Income before income taxes 257 293 695 646
Provision for income taxes 54 102 190 196 Segment Information
Equity earnings 1 2 4 3
Net income 204 193 509 453 Net Sales Three Months Ended September 30, Nine Months Ended September 30,
Net income attributable to noncontrolling interests (21) (29) (86) (67) 2019 2018 2019 2018
Net income attributable to Crown Holdings $183 $164 $423 $386 Americas Beverage $ 835 $ 872 $ 2,513 $ 2,478
European Beverage 416 418 1,165 1,194
Earnings per share attributable to Crown Holdings common shareholders: European Food 581 623 1,487 1,565
Basic $1.37 $1.23 $3.16 $2.89 Asia Pacific 319 321 959 990
Diluted $1.36 $1.23 $3.14 $2.88 Transit Packaging 564 585 1,725 1,205
Total reportable segments 2,715 2,819 7,849 7,432
Non-reportable segments (2) 369 355 1,025 985
Weighted average common shares outstanding: Total net sales $ 3,084 $ 3,174 $ 8,874 $ 8,417
Basic 133,906,820 133,729,731 133,854,275 133,608,065
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167 Segment Income 
Americas Beverage $ 134 $ 125 $ 386 $ 336
European Beverage 64 66 163 180
(1) A reconciliation from income from operations to segment income follows. European Food 79 90 189 231
Asia Pacific 47 46 143 137
Transit Packaging 74 81 227 175
Total reportable segments 398 408 1,108 1,059
Non-reportable segments (2) 34 40 103 102
Corporate and other unallocated items (37) (33) (115) (112)
Total segment income $ 395 $ 415 $ 1,096 $ 1,049
(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.

 

 

Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data) Consolidated Supplemental Financial Data (Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data)
Three Months Ended September 30, Nine Months Ended September 30, Reconciliation from Income from Operations to Segment Income Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share
2019 2018 2019 2018 The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition.
Net sales $3,084 $3,174 $8,874 $8,417 The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release.
Cost of products sold 2,455 2,530 7,082 6,804
Depreciation and amortization 121 127 366 305 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
Selling and administrative expense 156 153 470 402 2019 2018 2019 2018 2019 2018 2019 2018
Restructuring and other (1) (41) 28 Income from operations $ 352 $ 365 $ 997 $ 878 Net income/diluted earnings per share attributable to Crown Holdings, as reported $183 $1.36 $164 $1.23 $423 $3.14 $386 $2.88
Income from operations (1) 352 365 997 878 Intangibles amortization 43 51 140 103 Intangibles amortization (1) 43 0.32 51 0.38 140 1.04 103 0.77
Pension settlements and curtailments 6 23 Fair value adjustment to inventory (1) 40 Fair value adjustment to inventory (2) 40 0.30
Other pension and postretirement (5) (13) (11) (47) Provision for restructuring and other (1) (41) 28 Restructuring and other (3) (1) (0.01) (41) (0.30) 28 0.21
Foreign exchange 4 (14) 6 14 Segment income $ 395 $ 415 $ 1,096 $ 1,049 Pension settlements and curtailments (4) 6 0.04 23 0.17
Earnings before interest and taxes 347 392 979 911 Acquisition costs (5) 24 0.18
Interest expense 95 105 290 282 (1) Included in cost of products sold Loss from early extinguishment of debt (6) 6 0.04
Interest income (5) (6) (12) (17) Income taxes (7) (22) (0.16) 15 0.11 (20) (0.15) (18) (0.13)
Loss from early extinguishment of debt 6 Noncontrolling interests (8) 17 0.13 (1) (0.01)
Income before income taxes 257 293 695 646 Adjusted net income/diluted earnings per share $210 $1.56 $229 $1.71 $548 $4.07 $562 $4.20
Provision for income taxes 54 102 190 196 Segment Information
Equity earnings 1 2 4 3 Effective tax rate as reported 21.0% 34.8% 27.3% 30.3%
Net income 204 193 509 453 Net Sales Three Months Ended September 30, Nine Months Ended September 30, Adjusted effective tax rate (9) 24.8% 25.4% 25.5% 25.4%
Net income attributable to noncontrolling interests (21) (29) (86) (67) 2019 2018 2019 2018
Net income attributable to Crown Holdings $183 $164 $423 $386 Americas Beverage $ 835 $ 872 $ 2,513 $ 2,478
European Beverage 416 418 1,165 1,194
Earnings per share attributable to Crown Holdings common shareholders: European Food 581 623 1,487 1,565
Basic $1.37 $1.23 $3.16 $2.89 Asia Pacific 319 321 959 990
Diluted $1.36 $1.23 $3.14 $2.88 Transit Packaging 564 585 1,725 1,205
Total reportable segments 2,715 2,819 7,849 7,432
Non-reportable segments (2) 369 355 1,025 985
Weighted average common shares outstanding: Total net sales $ 3,084 $ 3,174 $ 8,874 $ 8,417
Basic 133,906,820 133,729,731 133,854,275 133,608,065
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167 Segment Income 
Americas Beverage $ 134 $ 125 $ 386 $ 336
European Beverage 64 66 163 180
(1) A reconciliation from income from operations to segment income follows. European Food 79 90 189 231
Asia Pacific 47 46 143 137
Transit Packaging 74 81 227 175
Total reportable segments 398 408 1,108 1,059
Non-reportable segments (2) 34 40 103 102
Corporate and other unallocated items (37) (33) (115) (112)
Total segment income $ 395 $ 415 $ 1,096 $ 1,049
(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.

Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data) Consolidated Supplemental Financial Data (Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data) Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per share and effective tax rates determined in accordance with U.S. generally accepted accounting principles. The Company believes these non-GAAP measures provide useful information to evaluate the performance of the Company's ongoing business.
Three Months Ended September 30, Nine Months Ended September 30, Reconciliation from Income from Operations to Segment Income Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share (1) In the third quarter and first nine months of 2019, the Company recorded charges of $42 million ($31 million net of tax) and $136 million ($101 million net of tax) for intangibles arising from acquisitions. Also in the third quarter and first nine months of 2019, the Company recorded charges of $1 million ($0 million net of tax) and $4 million ($3 million net of tax) for accelerated depreciation related to the planned shutdown of a steel beverage can operation in Spain. In the third quarter and first nine months of 2018, the Company recorded charges of $51 million ($38 million net of tax) and $103 million ($76 million net of tax) for intangibles amortization.
2019 2018 2019 2018 The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition.
Net sales $3,084 $3,174 $8,874 $8,417 The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release. (2) In the second quarter of 2018, the Company recorded a charge of $40 million ($29 million net of tax) in cost of products sold for fair value adjustment related to the sale of inventory acquired in its acquisition of Signode.
Cost of products sold 2,455 2,530 7,082 6,804
Depreciation and amortization 121 127 366 305 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, (3) In the first nine months of 2019, the Company recorded net restructuring and other gains of $41 million ($26 million net of tax). The nine months amount included gains of $50 million arising from favorable court rulings in lawsuits brought by the Company's Brazilian subsidiaries claiming they were overcharged by local tax authorities for indirect taxes paid in prior years, offset by other net charges of $9 million primarily related to restructuring actions. In the third quarter and first nine months of 2018, the Company recorded net restructuring and other gains of $1 million ($1 million net of tax) and charges of $28 million ($27 million net of tax) including $22 million of transaction costs for the nine months in connection with its acquisition of Signode.
Selling and administrative expense 156 153 470 402 2019 2018 2019 2018 2019 2018 2019 2018
Restructuring and other (1) (41) 28 Income from operations $ 352 $ 365 $ 997 $ 878 Net income/diluted earnings per share attributable to Crown Holdings, as reported $183 $1.36 $164 $1.23 $423 $3.14 $386 $2.88 (4) In the third quarter and first nine months of 2019, the Company recorded charges of $6 million ($5 million net of tax) and $37 million ($31 million net of tax) arising from pension plan settlements. In the first quarter of 2019, the Company recorded a curtailment gain of $14 million ($12 million net of tax) in connection with the closure of a defined benefit pension plan to future accrual for active members.
Income from operations (1) 352 365 997 878 Intangibles amortization 43 51 140 103 Intangibles amortization (1) 43 0.32 51 0.38 140 1.04 103 0.77
Pension settlements and curtailments 6 23 Fair value adjustment to inventory (1) 40 Fair value adjustment to inventory (2) 40 0.30 (5) In the first quarter of 2018, the Company recorded a charge of $15 million ($10 million net of tax) for net losses arising from its hedge of the U.S. dollar purchase price of its acquisition of Signode. Also in the first quarter, the Company incurred net charges of $9 million ($7 million net of tax) for pre-acquisition interest carrying costs on borrowings to finance the acquisition.
Other pension and postretirement (5) (13) (11) (47) Provision for restructuring and other (1) (41) 28 Restructuring and other (3) (1) (0.01) (41) (0.30) 28 0.21
Foreign exchange 4 (14) 6 14 Segment income $ 395 $ 415 $ 1,096 $ 1,049 Pension settlements and curtailments (4) 6 0.04 23 0.17 (6) In the first quarter of 2019, the Company recorded a charge of $6 million ($5 million net of tax) for the write off of deferred financing fees in connection with the repayment of a portion of its term loan.
Earnings before interest and taxes 347 392 979 911 Acquisition costs (5) 24 0.18
Interest expense 95 105 290 282 (1) Included in cost of products sold Loss from early extinguishment of debt (6) 6 0.04 (7) In the third quarter and first nine months of 2019, the Company recorded income tax benefits of $13 million and $26 million related to the items described above. Also in the third quarter of 2019, the Company recorded a tax benefit of $9 million arising from tax law changes in India. In the second quarter of 2019, the Company recorded a charge of $15 million to settle a tax contingency arising from a transaction that occurred prior to its acquisition of Signode. In the third quarter and first nine months of 2018, the Company recorded income tax benefits of $13 million and $46 million related to the items described above. Also in the third quarter of 2018, the Company recorded charges of $28 million related to taxes on the distribution of foreign earnings, including an adjustment for the impact of the "Tax Cut and Jobs Act."
Interest income (5) (6) (12) (17) Income taxes (7) (22) (0.16) 15 0.11 (20) (0.15) (18) (0.13)
Loss from early extinguishment of debt 6 Noncontrolling interests (8) 17 0.13 (1) (0.01) (8) In the first nine months of 2019, the Company recorded noncontrolling interest expense of $17 million related to the items described above. In the first nine months of 2018, the Company recorded a noncontrolling interest benefit of $1 million related to the items described above.
Income before income taxes 257 293 695 646 Adjusted net income/diluted earnings per share $210 $1.56 $229 $1.71 $548 $4.07 $562 $4.20
Provision for income taxes 54 102 190 196 Segment Information (9) Income tax effects on adjusted net income were calculated using the applicable tax rates of the underlying jurisdictions.
Equity earnings 1 2 4 3 Effective tax rate as reported 21.0% 34.8% 27.3% 30.3%
Net income 204 193 509 453 Net Sales Three Months Ended September 30, Nine Months Ended September 30, Adjusted effective tax rate (9) 24.8% 25.4% 25.5% 25.4%
Net income attributable to noncontrolling interests (21) (29) (86) (67) 2019 2018 2019 2018
Net income attributable to Crown Holdings $183 $164 $423 $386 Americas Beverage $ 835 $ 872 $ 2,513 $ 2,478
European Beverage 416 418 1,165 1,194
Earnings per share attributable to Crown Holdings common shareholders: European Food 581 623 1,487 1,565
Basic $1.37 $1.23 $3.16 $2.89 Asia Pacific 319 321 959 990
Diluted $1.36 $1.23 $3.14 $2.88 Transit Packaging 564 585 1,725 1,205
Total reportable segments 2,715 2,819 7,849 7,432
Non-reportable segments (2) 369 355 1,025 985
Weighted average common shares outstanding: Total net sales $ 3,084 $ 3,174 $ 8,874 $ 8,417
Basic 133,906,820 133,729,731 133,854,275 133,608,065
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167 Segment Income 
Americas Beverage $ 134 $ 125 $ 386 $ 336
European Beverage 64 66 163 180
(1) A reconciliation from income from operations to segment income follows. European Food 79 90 189 231
Asia Pacific 47 46 143 137
Transit Packaging 74 81 227 175
Total reportable segments 398 408 1,108 1,059
Non-reportable segments (2) 34 40 103 102
Corporate and other unallocated items (37) (33) (115) (112)
Total segment income $ 395 $ 415 $ 1,096 $ 1,049
(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.

 

 

Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data) Consolidated Supplemental Financial Data (Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data) Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per share and effective tax rates determined in accordance with U.S. generally accepted accounting principles. The Company believes these non-GAAP measures provide useful information to evaluate the performance of the Company's ongoing business. Consolidated Balance Sheets (Condensed & Unaudited) (in millions)
Three Months Ended September 30, Nine Months Ended September 30, Reconciliation from Income from Operations to Segment Income Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share (1) In the third quarter and first nine months of 2019, the Company recorded charges of $42 million ($31 million net of tax) and $136 million ($101 million net of tax) for intangibles arising from acquisitions. Also in the third quarter and first nine months of 2019, the Company recorded charges of $1 million ($0 million net of tax) and $4 million ($3 million net of tax) for accelerated depreciation related to the planned shutdown of a steel beverage can operation in Spain. In the third quarter and first nine months of 2018, the Company recorded charges of $51 million ($38 million net of tax) and $103 million ($76 million net of tax) for intangibles amortization. September 30, 2019 (1) 2018
2019 2018 2019 2018 The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition. Assets
Net sales $3,084 $3,174 $8,874 $8,417 The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release. (2) In the second quarter of 2018, the Company recorded a charge of $40 million ($29 million net of tax) in cost of products sold for fair value adjustment related to the sale of inventory acquired in its acquisition of Signode. Current assets
Cost of products sold 2,455 2,530 7,082 6,804 Cash and cash equivalents $ 339 $ 298
Depreciation and amortization 121 127 366 305 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, (3) In the first nine months of 2019, the Company recorded net restructuring and other gains of $41 million ($26 million net of tax). The nine months amount included gains of $50 million arising from favorable court rulings in lawsuits brought by the Company's Brazilian subsidiaries claiming they were overcharged by local tax authorities for indirect taxes paid in prior years, offset by other net charges of $9 million primarily related to restructuring actions. In the third quarter and first nine months of 2018, the Company recorded net restructuring and other gains of $1 million ($1 million net of tax) and charges of $28 million ($27 million net of tax) including $22 million of transaction costs for the nine months in connection with its acquisition of Signode. Receivables, net 1,795 1,968
Selling and administrative expense 156 153 470 402 2019 2018 2019 2018 2019 2018 2019 2018 Inventories 1,740 1,639
Restructuring and other (1) (41) 28 Income from operations $ 352 $ 365 $ 997 $ 878 Net income/diluted earnings per share attributable to Crown Holdings, as reported $183 $1.36 $164 $1.23 $423 $3.14 $386 $2.88 (4) In the third quarter and first nine months of 2019, the Company recorded charges of $6 million ($5 million net of tax) and $37 million ($31 million net of tax) arising from pension plan settlements. In the first quarter of 2019, the Company recorded a curtailment gain of $14 million ($12 million net of tax) in connection with the closure of a defined benefit pension plan to future accrual for active members. Prepaid expenses and other current assets 208 193
Income from operations (1) 352 365 997 878 Intangibles amortization 43 51 140 103 Intangibles amortization (1) 43 0.32 51 0.38 140 1.04 103 0.77 Total current assets 4,082 4,098
Pension settlements and curtailments 6 23 Fair value adjustment to inventory (1) 40 Fair value adjustment to inventory (2) 40 0.30 (5) In the first quarter of 2018, the Company recorded a charge of $15 million ($10 million net of tax) for net losses arising from its hedge of the U.S. dollar purchase price of its acquisition of Signode. Also in the first quarter, the Company incurred net charges of $9 million ($7 million net of tax) for pre-acquisition interest carrying costs on borrowings to finance the acquisition.
Other pension and postretirement (5) (13) (11) (47) Provision for restructuring and other (1) (41) 28 Restructuring and other (3) (1) (0.01) (41) (0.30) 28 0.21 Goodwill and intangible assets, net 6,367 6,753
Foreign exchange 4 (14) 6 14 Segment income $ 395 $ 415 $ 1,096 $ 1,049 Pension settlements and curtailments (4) 6 0.04 23 0.17 (6) In the first quarter of 2019, the Company recorded a charge of $6 million ($5 million net of tax) for the write off of deferred financing fees in connection with the repayment of a portion of its term loan. Property, plant and equipment, net 3,739 3,722
Earnings before interest and taxes 347 392 979 911 Acquisition costs (5) 24 0.18 Other non-current assets 1,149 762
Interest expense 95 105 290 282 (1) Included in cost of products sold Loss from early extinguishment of debt (6) 6 0.04 (7) In the third quarter and first nine months of 2019, the Company recorded income tax benefits of $13 million and $26 million related to the items described above. Also in the third quarter of 2019, the Company recorded a tax benefit of $9 million arising from tax law changes in India. In the second quarter of 2019, the Company recorded a charge of $15 million to settle a tax contingency arising from a transaction that occurred prior to its acquisition of Signode. In the third quarter and first nine months of 2018, the Company recorded income tax benefits of $13 million and $46 million related to the items described above. Also in the third quarter of 2018, the Company recorded charges of $28 million related to taxes on the distribution of foreign earnings, including an adjustment for the impact of the "Tax Cut and Jobs Act." Total $ 15,337 $ 15,335
Interest income (5) (6) (12) (17) Income taxes (7) (22) (0.16) 15 0.11 (20) (0.15) (18) (0.13)
Loss from early extinguishment of debt 6 Noncontrolling interests (8) 17 0.13 (1) (0.01) (8) In the first nine months of 2019, the Company recorded noncontrolling interest expense of $17 million related to the items described above. In the first nine months of 2018, the Company recorded a noncontrolling interest benefit of $1 million related to the items described above.
Income before income taxes 257 293 695 646 Adjusted net income/diluted earnings per share $210 $1.56 $229 $1.71 $548 $4.07 $562 $4.20 Liabilities and equity
Provision for income taxes 54 102 190 196 Segment Information (9) Income tax effects on adjusted net income were calculated using the applicable tax rates of the underlying jurisdictions. Current liabilities
Equity earnings 1 2 4 3 Effective tax rate as reported 21.0% 34.8% 27.3% 30.3% Short-term debt $ 134 $ 53
Net income 204 193 509 453 Net Sales Three Months Ended September 30, Nine Months Ended September 30, Adjusted effective tax rate (9) 24.8% 25.4% 25.5% 25.4% Current maturities of long-term debt 87 89
Net income attributable to noncontrolling interests (21) (29) (86) (67) 2019 2018 2019 2018 Accounts payable and accrued liabilities 3,411 3,459
Net income attributable to Crown Holdings $183 $164 $423 $386 Americas Beverage $ 835 $ 872 $ 2,513 $ 2,478 Total current liabilities 3,632 3,601
European Beverage 416 418 1,165 1,194
Earnings per share attributable to Crown Holdings common shareholders: European Food 581 623 1,487 1,565 Long-term debt, excluding current maturities 8,042 8,928
Basic $1.37 $1.23 $3.16 $2.89 Asia Pacific 319 321 959 990 Other non-current liabilities 1,642 1,496
Diluted $1.36 $1.23 $3.14 $2.88 Transit Packaging 564 585 1,725 1,205
Total reportable segments 2,715 2,819 7,849 7,432 Noncontrolling interests 402 369
Non-reportable segments (2) 369 355 1,025 985 Crown Holdings shareholders' equity 1,619 941
Weighted average common shares outstanding: Total net sales $ 3,084 $ 3,174 $ 8,874 $ 8,417 Total equity 2,021 1,310
Basic 133,906,820 133,729,731 133,854,275 133,608,065 Total $ 15,337 $ 15,335
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167 Segment Income 
Americas Beverage $ 134 $ 125 $ 386 $ 336 (1) On January 1, 2019, the Company adopted new lease accounting guidance resulting in increases in other non-current assets and other non-current liabilities of $220. Prior period amounts have not been recast and continue to be reported in accordance with accounting guidance in effect for those periods.
European Beverage 64 66 163 180
(1) A reconciliation from income from operations to segment income follows. European Food 79 90 189 231
Asia Pacific 47 46 143 137
Transit Packaging 74 81 227 175
Total reportable segments 398 408 1,108 1,059
Non-reportable segments (2) 34 40 103 102
Corporate and other unallocated items (37) (33) (115) (112)
Total segment income $ 395 $ 415 $ 1,096 $ 1,049
(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.

 

 

Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data) Consolidated Supplemental Financial Data (Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data) Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per share and effective tax rates determined in accordance with U.S. generally accepted accounting principles. The Company believes these non-GAAP measures provide useful information to evaluate the performance of the Company's ongoing business. Consolidated Balance Sheets (Condensed & Unaudited) (in millions) Consolidated Statements of Cash Flows (Condensed & Unaudited) (in millions)
Nine months ended September 30, 2019 2018
Three Months Ended September 30, Nine Months Ended September 30, Reconciliation from Income from Operations to Segment Income Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share (1) In the third quarter and first nine months of 2019, the Company recorded charges of $42 million ($31 million net of tax) and $136 million ($101 million net of tax) for intangibles arising from acquisitions. Also in the third quarter and first nine months of 2019, the Company recorded charges of $1 million ($0 million net of tax) and $4 million ($3 million net of tax) for accelerated depreciation related to the planned shutdown of a steel beverage can operation in Spain. In the third quarter and first nine months of 2018, the Company recorded charges of $51 million ($38 million net of tax) and $103 million ($76 million net of tax) for intangibles amortization. September 30, 2019 (1) 2018
2019 2018 2019 2018 The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition. Assets Cash flows from operating activities
Net sales $3,084 $3,174 $8,874 $8,417 The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release. (2) In the second quarter of 2018, the Company recorded a charge of $40 million ($29 million net of tax) in cost of products sold for fair value adjustment related to the sale of inventory acquired in its acquisition of Signode. Current assets Net income $ 509 $ 453
Cost of products sold 2,455 2,530 7,082 6,804 Cash and cash equivalents $ 339 $ 298 Depreciation and amortization 366 305
Depreciation and amortization 121 127 366 305 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, (3) In the first nine months of 2019, the Company recorded net restructuring and other gains of $41 million ($26 million net of tax). The nine months amount included gains of $50 million arising from favorable court rulings in lawsuits brought by the Company's Brazilian subsidiaries claiming they were overcharged by local tax authorities for indirect taxes paid in prior years, offset by other net charges of $9 million primarily related to restructuring actions. In the third quarter and first nine months of 2018, the Company recorded net restructuring and other gains of $1 million ($1 million net of tax) and charges of $28 million ($27 million net of tax) including $22 million of transaction costs for the nine months in connection with its acquisition of Signode. Receivables, net 1,795 1,968 Restructuring and other (41) 28
Selling and administrative expense 156 153 470 402 2019 2018 2019 2018 2019 2018 2019 2018 Inventories 1,740 1,639 Pension expense 52 8
Restructuring and other (1) (41) 28 Income from operations $ 352 $ 365 $ 997 $ 878 Net income/diluted earnings per share attributable to Crown Holdings, as reported $183 $1.36 $164 $1.23 $423 $3.14 $386 $2.88 (4) In the third quarter and first nine months of 2019, the Company recorded charges of $6 million ($5 million net of tax) and $37 million ($31 million net of tax) arising from pension plan settlements. In the first quarter of 2019, the Company recorded a curtailment gain of $14 million ($12 million net of tax) in connection with the closure of a defined benefit pension plan to future accrual for active members. Prepaid expenses and other current assets 208 193 Pension contributions (14) (14)
Income from operations (1) 352 365 997 878 Intangibles amortization 43 51 140 103 Intangibles amortization (1) 43 0.32 51 0.38 140 1.04 103 0.77 Total current assets 4,082 4,098 Stock-based compensation 23 17
Pension settlements and curtailments 6 23 Fair value adjustment to inventory (1) 40 Fair value adjustment to inventory (2) 40 0.30 (5) In the first quarter of 2018, the Company recorded a charge of $15 million ($10 million net of tax) for net losses arising from its hedge of the U.S. dollar purchase price of its acquisition of Signode. Also in the first quarter, the Company incurred net charges of $9 million ($7 million net of tax) for pre-acquisition interest carrying costs on borrowings to finance the acquisition. Working capital changes and other (694) (1,029)
Other pension and postretirement (5) (13) (11) (47) Provision for restructuring and other (1) (41) 28 Restructuring and other (3) (1) (0.01) (41) (0.30) 28 0.21 Goodwill and intangible assets, net 6,367 6,753
Foreign exchange 4 (14) 6 14 Segment income $ 395 $ 415 $ 1,096 $ 1,049 Pension settlements and curtailments (4) 6 0.04 23 0.17 (6) In the first quarter of 2019, the Company recorded a charge of $6 million ($5 million net of tax) for the write off of deferred financing fees in connection with the repayment of a portion of its term loan. Property, plant and equipment, net 3,739 3,722 Net cash provided by/(used for) operating activities (1) 201 (232)
Earnings before interest and taxes 347 392 979 911 Acquisition costs (5) 24 0.18 Other non-current assets 1,149 762
Interest expense 95 105 290 282 (1) Included in cost of products sold Loss from early extinguishment of debt (6) 6 0.04 (7) In the third quarter and first nine months of 2019, the Company recorded income tax benefits of $13 million and $26 million related to the items described above. Also in the third quarter of 2019, the Company recorded a tax benefit of $9 million arising from tax law changes in India. In the second quarter of 2019, the Company recorded a charge of $15 million to settle a tax contingency arising from a transaction that occurred prior to its acquisition of Signode. In the third quarter and first nine months of 2018, the Company recorded income tax benefits of $13 million and $46 million related to the items described above. Also in the third quarter of 2018, the Company recorded charges of $28 million related to taxes on the distribution of foreign earnings, including an adjustment for the impact of the "Tax Cut and Jobs Act." Total $ 15,337 $ 15,335 Cash flows from investing activities
Interest income (5) (6) (12) (17) Income taxes (7) (22) (0.16) 15 0.11 (20) (0.15) (18) (0.13) Capital expenditures (242) (305)
Loss from early extinguishment of debt 6 Noncontrolling interests (8) 17 0.13 (1) (0.01) (8) In the first nine months of 2019, the Company recorded noncontrolling interest expense of $17 million related to the items described above. In the first nine months of 2018, the Company recorded a noncontrolling interest benefit of $1 million related to the items described above. Beneficial interest in transferred receivables 490
Income before income taxes 257 293 695 646 Adjusted net income/diluted earnings per share $210 $1.56 $229 $1.71 $548 $4.07 $562 $4.20 Liabilities and equity Acquisition of business, net of cash acquired (11) (3,912)
Provision for income taxes 54 102 190 196 Segment Information (9) Income tax effects on adjusted net income were calculated using the applicable tax rates of the underlying jurisdictions. Current liabilities Proceeds from sale of assets 17 27
Equity earnings 1 2 4 3 Effective tax rate as reported 21.0% 34.8% 27.3% 30.3% Short-term debt $ 134 $ 53 Other 20 (19)
Net income 204 193 509 453 Net Sales Three Months Ended September 30, Nine Months Ended September 30, Adjusted effective tax rate (9) 24.8% 25.4% 25.5% 25.4% Current maturities of long-term debt 87 89
Net income attributable to noncontrolling interests (21) (29) (86) (67) 2019 2018 2019 2018 Accounts payable and accrued liabilities 3,411 3,459 Net cash used for investing activities (216) (3,719)
Net income attributable to Crown Holdings $183 $164 $423 $386 Americas Beverage $ 835 $ 872 $ 2,513 $ 2,478 Total current liabilities 3,632 3,601
European Beverage 416 418 1,165 1,194 Cash flows from financing activities
Earnings per share attributable to Crown Holdings common shareholders: European Food 581 623 1,487 1,565 Long-term debt, excluding current maturities 8,042 8,928 Net change in debt (192) 3,999
Basic $1.37 $1.23 $3.16 $2.89 Asia Pacific 319 321 959 990 Other non-current liabilities 1,642 1,496 Dividends paid to noncontrolling interests (36) (18)
Diluted $1.36 $1.23 $3.14 $2.88 Transit Packaging 564 585 1,725 1,205 Common stock repurchased (2) (4)
Total reportable segments 2,715 2,819 7,849 7,432 Noncontrolling interests 402 369 Debt issue costs (70)
Non-reportable segments (2) 369 355 1,025 985 Crown Holdings shareholders' equity 1,619 941 Other, net (15) (5)
Weighted average common shares outstanding: Total net sales $ 3,084 $ 3,174 $ 8,874 $ 8,417 Total equity 2,021 1,310
Basic 133,906,820 133,729,731 133,854,275 133,608,065 Total $ 15,337 $ 15,335 Net cash provided by/(used for) financing activities (245) 3,902
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167 Segment Income  Effect of exchange rate changes on cash and cash equivalents (1) (32)
Americas Beverage $ 134 $ 125 $ 386 $ 336 (1) On January 1, 2019, the Company adopted new lease accounting guidance resulting in increases in other non-current assets and other non-current liabilities of $220. Prior period amounts have not been recast and continue to be reported in accordance with accounting guidance in effect for those periods. Net change in cash and cash equivalents (261) (81)
European Beverage 64 66 163 180 Cash and cash equivalents at January 1 659 435
(1) A reconciliation from income from operations to segment income follows. European Food 79 90 189 231
Asia Pacific 47 46 143 137 Cash and cash equivalents at September 30 (2) $ 398 $ 354
Transit Packaging 74 81 227 175
Total reportable segments 398 408 1,108 1,059
Non-reportable segments (2) 34 40 103 102 (1) Adjusted free cash flow is defined by the Company as net cash used for operating activities plus beneficial interest in transferred receivables less capital expenditures and certain other items. A reconciliation from net cash used for operating activities to adjusted free cash flow for the three and nine months ended September 30, 2019 and 2018 follows.
Corporate and other unallocated items (37) (33) (115) (112)
Total segment income $ 395 $ 415 $ 1,096 $ 1,049 (2) Cash and cash equivalents includes $59 and $56 of restricted cash at September 30, 2019 and 2018.
(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net cash from operating activities $428 $260 $201 $(232)
Beneficial interest in transferred receivables (3) 155 490
Acquisition costs 22
Adjusted cash from operating activities 428 415 201 280
Interest included in investing activities (4) 15 21
Capital expenditures (88) (105) (242) (305)
Adjusted free cash flow $355 $310 $(20) $(25)
(3) Subsequent to amendments to the Company's receivables securitization program during the third quarter of 2018, certain activity that was previously reported as investing activity is now reported as operating activity.
(4) Interest benefit of cross currency swaps included in investing activities.

 

 

Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data) Consolidated Supplemental Financial Data (Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data) Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per share and effective tax rates determined in accordance with U.S. generally accepted accounting principles. The Company believes these non-GAAP measures provide useful information to evaluate the performance of the Company's ongoing business. Consolidated Balance Sheets (Condensed & Unaudited) (in millions) Consolidated Statements of Cash Flows (Condensed & Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data)
Nine months ended September 30, 2019 2018
Three Months Ended September 30, Nine Months Ended September 30, Reconciliation from Income from Operations to Segment Income Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share (1) In the third quarter and first nine months of 2019, the Company recorded charges of $42 million ($31 million net of tax) and $136 million ($101 million net of tax) for intangibles arising from acquisitions. Also in the third quarter and first nine months of 2019, the Company recorded charges of $1 million ($0 million net of tax) and $4 million ($3 million net of tax) for accelerated depreciation related to the planned shutdown of a steel beverage can operation in Spain. In the third quarter and first nine months of 2018, the Company recorded charges of $51 million ($38 million net of tax) and $103 million ($76 million net of tax) for intangibles amortization. September 30, 2019 (1) 2018 Impact of Foreign Currency Translation by Segment (1) – Favorable/(Unfavorable)
2019 2018 2019 2018 The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition. Assets Cash flows from operating activities
Net sales $3,084 $3,174 $8,874 $8,417 The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release. (2) In the second quarter of 2018, the Company recorded a charge of $40 million ($29 million net of tax) in cost of products sold for fair value adjustment related to the sale of inventory acquired in its acquisition of Signode. Current assets Net income $ 509 $ 453 Three Months Nine Months
Cost of products sold 2,455 2,530 7,082 6,804 Cash and cash equivalents $ 339 $ 298 Depreciation and amortization 366 305 Ended September 30, 2019 Ended September 30, 2019
Depreciation and amortization 121 127 366 305 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, (3) In the first nine months of 2019, the Company recorded net restructuring and other gains of $41 million ($26 million net of tax). The nine months amount included gains of $50 million arising from favorable court rulings in lawsuits brought by the Company's Brazilian subsidiaries claiming they were overcharged by local tax authorities for indirect taxes paid in prior years, offset by other net charges of $9 million primarily related to restructuring actions. In the third quarter and first nine months of 2018, the Company recorded net restructuring and other gains of $1 million ($1 million net of tax) and charges of $28 million ($27 million net of tax) including $22 million of transaction costs for the nine months in connection with its acquisition of Signode. Receivables, net 1,795 1,968 Restructuring and other (41) 28
Selling and administrative expense 156 153 470 402 2019 2018 2019 2018 2019 2018 2019 2018 Inventories 1,740 1,639 Pension expense 52 8 Net Sales Segment Income Net Sales Segment Income
Restructuring and other (1) (41) 28 Income from operations $ 352 $ 365 $ 997 $ 878 Net income/diluted earnings per share attributable to Crown Holdings, as reported $183 $1.36 $164 $1.23 $423 $3.14 $386 $2.88 (4) In the third quarter and first nine months of 2019, the Company recorded charges of $6 million ($5 million net of tax) and $37 million ($31 million net of tax) arising from pension plan settlements. In the first quarter of 2019, the Company recorded a curtailment gain of $14 million ($12 million net of tax) in connection with the closure of a defined benefit pension plan to future accrual for active members. Prepaid expenses and other current assets 208 193 Pension contributions (14) (14)
Income from operations (1) 352 365 997 878 Intangibles amortization 43 51 140 103 Intangibles amortization (1) 43 0.32 51 0.38 140 1.04 103 0.77 Total current assets 4,082 4,098 Stock-based compensation 23 17 Americas Beverage $(7) $(1) $(25) $(3)
Pension settlements and curtailments 6 23 Fair value adjustment to inventory (1) 40 Fair value adjustment to inventory (2) 40 0.30 (5) In the first quarter of 2018, the Company recorded a charge of $15 million ($10 million net of tax) for net losses arising from its hedge of the U.S. dollar purchase price of its acquisition of Signode. Also in the first quarter, the Company incurred net charges of $9 million ($7 million net of tax) for pre-acquisition interest carrying costs on borrowings to finance the acquisition. Working capital changes and other (694) (1,029) European Beverage (15) (1) (53) (5)
Other pension and postretirement (5) (13) (11) (47) Provision for restructuring and other (1) (41) 28 Restructuring and other (3) (1) (0.01) (41) (0.30) 28 0.21 Goodwill and intangible assets, net 6,367 6,753 European Food (30) (5) (93) (12)
Foreign exchange 4 (14) 6 14 Segment income $ 395 $ 415 $ 1,096 $ 1,049 Pension settlements and curtailments (4) 6 0.04 23 0.17 (6) In the first quarter of 2019, the Company recorded a charge of $6 million ($5 million net of tax) for the write off of deferred financing fees in connection with the repayment of a portion of its term loan. Property, plant and equipment, net 3,739 3,722 Net cash provided by/(used for) operating activities (1) 201 (232) Asia Pacific 2 (5) (1)
Earnings before interest and taxes 347 392 979 911 Acquisition costs (5) 24 0.18 Other non-current assets 1,149 762 Transit Packaging (9) (52) (6)
Interest expense 95 105 290 282 (1) Included in cost of products sold Loss from early extinguishment of debt (6) 6 0.04 (7) In the third quarter and first nine months of 2019, the Company recorded income tax benefits of $13 million and $26 million related to the items described above. Also in the third quarter of 2019, the Company recorded a tax benefit of $9 million arising from tax law changes in India. In the second quarter of 2019, the Company recorded a charge of $15 million to settle a tax contingency arising from a transaction that occurred prior to its acquisition of Signode. In the third quarter and first nine months of 2018, the Company recorded income tax benefits of $13 million and $46 million related to the items described above. Also in the third quarter of 2018, the Company recorded charges of $28 million related to taxes on the distribution of foreign earnings, including an adjustment for the impact of the "Tax Cut and Jobs Act." Total $ 15,337 $ 15,335 Cash flows from investing activities Corporate and Non-Reportable (5) (16) 1
Interest income (5) (6) (12) (17) Income taxes (7) (22) (0.16) 15 0.11 (20) (0.15) (18) (0.13) Capital expenditures (242) (305) $(64) $(7) $(244) $(26)
Loss from early extinguishment of debt 6 Noncontrolling interests (8) 17 0.13 (1) (0.01) (8) In the first nine months of 2019, the Company recorded noncontrolling interest expense of $17 million related to the items described above. In the first nine months of 2018, the Company recorded a noncontrolling interest benefit of $1 million related to the items described above. Beneficial interest in transferred receivables 490
Income before income taxes 257 293 695 646 Adjusted net income/diluted earnings per share $210 $1.56 $229 $1.71 $548 $4.07 $562 $4.20 Liabilities and equity Acquisition of business, net of cash acquired (11) (3,912) (1) The impact of foreign currency translation represents the difference between actual current year U.S. dollar results and pro forma amounts assuming constant foreign currency exchange rates for translation in both periods. In order to compute the difference, the Company compares actual U.S. dollar results to an amount calculated by multiplying or dividing, as appropriate, the current U.S. dollar results by current year average foreign exchange rates and then multiplying or dividing, as appropriate, those amounts by the applicable prior year average foreign exchange rates.
Provision for income taxes 54 102 190 196 Segment Information (9) Income tax effects on adjusted net income were calculated using the applicable tax rates of the underlying jurisdictions. Current liabilities Proceeds from sale of assets 17 27
Equity earnings 1 2 4 3 Effective tax rate as reported 21.0% 34.8% 27.3% 30.3% Short-term debt $ 134 $ 53 Other 20 (19)
Net income 204 193 509 453 Net Sales Three Months Ended September 30, Nine Months Ended September 30, Adjusted effective tax rate (9) 24.8% 25.4% 25.5% 25.4% Current maturities of long-term debt 87 89
Net income attributable to noncontrolling interests (21) (29) (86) (67) 2019 2018 2019 2018 Accounts payable and accrued liabilities 3,411 3,459 Net cash used for investing activities (216) (3,719)
Net income attributable to Crown Holdings $183 $164 $423 $386 Americas Beverage $ 835 $ 872 $ 2,513 $ 2,478 Total current liabilities 3,632 3,601
European Beverage 416 418 1,165 1,194 Cash flows from financing activities
Earnings per share attributable to Crown Holdings common shareholders: European Food 581 623 1,487 1,565 Long-term debt, excluding current maturities 8,042 8,928 Net change in debt (192) 3,999
Basic $1.37 $1.23 $3.16 $2.89 Asia Pacific 319 321 959 990 Other non-current liabilities 1,642 1,496 Dividends paid to noncontrolling interests (36) (18)
Diluted $1.36 $1.23 $3.14 $2.88 Transit Packaging 564 585 1,725 1,205 Common stock repurchased (2) (4)
Total reportable segments 2,715 2,819 7,849 7,432 Noncontrolling interests 402 369 Debt issue costs (70)
Non-reportable segments (2) 369 355 1,025 985 Crown Holdings shareholders' equity 1,619 941 Other, net (15) (5)
Weighted average common shares outstanding: Total net sales $ 3,084 $ 3,174 $ 8,874 $ 8,417 Total equity 2,021 1,310
Basic 133,906,820 133,729,731 133,854,275 133,608,065 Total $ 15,337 $ 15,335 Net cash provided by/(used for) financing activities (245) 3,902
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167 Segment Income  Effect of exchange rate changes on cash and cash equivalents (1) (32)
Americas Beverage $ 134 $ 125 $ 386 $ 336 (1) On January 1, 2019, the Company adopted new lease accounting guidance resulting in increases in other non-current assets and other non-current liabilities of $220. Prior period amounts have not been recast and continue to be reported in accordance with accounting guidance in effect for those periods. Net change in cash and cash equivalents (261) (81)
European Beverage 64 66 163 180 Cash and cash equivalents at January 1 659 435
(1) A reconciliation from income from operations to segment income follows. European Food 79 90 189 231
Asia Pacific 47 46 143 137 Cash and cash equivalents at September 30 (2) $ 398 $ 354
Transit Packaging 74 81 227 175
Total reportable segments 398 408 1,108 1,059
Non-reportable segments (2) 34 40 103 102 (1) Adjusted free cash flow is defined by the Company as net cash used for operating activities plus beneficial interest in transferred receivables less capital expenditures and certain other items. A reconciliation from net cash used for operating activities to adjusted free cash flow for the three and nine months ended September 30, 2019 and 2018 follows.
Corporate and other unallocated items (37) (33) (115) (112)
Total segment income $ 395 $ 415 $ 1,096 $ 1,049 (2) Cash and cash equivalents includes $59 and $56 of restricted cash at September 30, 2019 and 2018.
(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net cash from operating activities $428 $260 $201 $(232)
Beneficial interest in transferred receivables (3) 155 490
Acquisition costs 22
Adjusted cash from operating activities 428 415 201 280
Interest included in investing activities (4) 15 21
Capital expenditures (88) (105) (242) (305)
Adjusted free cash flow $355 $310 $(20) $(25)
(3) Subsequent to amendments to the Company's receivables securitization program during the third quarter of 2018, certain activity that was previously reported as investing activity is now reported as operating activity.
(4) Interest benefit of cross currency swaps included in investing activities.

 

 

Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data) Consolidated Supplemental Financial Data (Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data) Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per share and effective tax rates determined in accordance with U.S. generally accepted accounting principles. The Company believes these non-GAAP measures provide useful information to evaluate the performance of the Company's ongoing business. Consolidated Balance Sheets (Condensed & Unaudited) (in millions) Consolidated Statements of Cash Flows (Condensed & Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data) Comparative Results for Transit Packaging
Nine months ended September 30, 2019 2018
Three Months Ended September 30, Nine Months Ended September 30, Reconciliation from Income from Operations to Segment Income Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share (1) In the third quarter and first nine months of 2019, the Company recorded charges of $42 million ($31 million net of tax) and $136 million ($101 million net of tax) for intangibles arising from acquisitions. Also in the third quarter and first nine months of 2019, the Company recorded charges of $1 million ($0 million net of tax) and $4 million ($3 million net of tax) for accelerated depreciation related to the planned shutdown of a steel beverage can operation in Spain. In the third quarter and first nine months of 2018, the Company recorded charges of $51 million ($38 million net of tax) and $103 million ($76 million net of tax) for intangibles amortization. September 30, 2019 (1) 2018 Impact of Foreign Currency Translation by Segment (1) – Favorable/(Unfavorable) Revenue Segment Income Depreciation (2)
2019 2018 2019 2018 The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition. Assets Cash flows from operating activities 2019 2018 2017 2019 2018 2017 2019 2018 2017
Net sales $3,084 $3,174 $8,874 $8,417 The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release. (2) In the second quarter of 2018, the Company recorded a charge of $40 million ($29 million net of tax) in cost of products sold for fair value adjustment related to the sale of inventory acquired in its acquisition of Signode. Current assets Net income $ 509 $ 453 Three Months Nine Months Q1 $569 $588 $526 $73 $79 $76 $15 $13 $12
Cost of products sold 2,455 2,530 7,082 6,804 Cash and cash equivalents $ 339 $ 298 Depreciation and amortization 366 305 Ended September 30, 2019 Ended September 30, 2019 Q2 592 620 575 80 94 80 14 14 13
Depreciation and amortization 121 127 366 305 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, (3) In the first nine months of 2019, the Company recorded net restructuring and other gains of $41 million ($26 million net of tax). The nine months amount included gains of $50 million arising from favorable court rulings in lawsuits brought by the Company's Brazilian subsidiaries claiming they were overcharged by local tax authorities for indirect taxes paid in prior years, offset by other net charges of $9 million primarily related to restructuring actions. In the third quarter and first nine months of 2018, the Company recorded net restructuring and other gains of $1 million ($1 million net of tax) and charges of $28 million ($27 million net of tax) including $22 million of transaction costs for the nine months in connection with its acquisition of Signode. Receivables, net 1,795 1,968 Restructuring and other (41) 28 Q3 564 585 565 74 81 82 13 15 12
Selling and administrative expense 156 153 470 402 2019 2018 2019 2018 2019 2018 2019 2018 Inventories 1,740 1,639 Pension expense 52 8 Net Sales Segment Income Net Sales Segment Income Q4 595 566 80 82 14 13
Restructuring and other (1) (41) 28 Income from operations $ 352 $ 365 $ 997 $ 878 Net income/diluted earnings per share attributable to Crown Holdings, as reported $183 $1.36 $164 $1.23 $423 $3.14 $386 $2.88 (4) In the third quarter and first nine months of 2019, the Company recorded charges of $6 million ($5 million net of tax) and $37 million ($31 million net of tax) arising from pension plan settlements. In the first quarter of 2019, the Company recorded a curtailment gain of $14 million ($12 million net of tax) in connection with the closure of a defined benefit pension plan to future accrual for active members. Prepaid expenses and other current assets 208 193 Pension contributions (14) (14) $2,388 $2,232 $334 $320 $56 $50
Income from operations (1) 352 365 997 878 Intangibles amortization 43 51 140 103 Intangibles amortization (1) 43 0.32 51 0.38 140 1.04 103 0.77 Total current assets 4,082 4,098 Stock-based compensation 23 17 Americas Beverage $(7) $(1) $(25) $(3)
Pension settlements and curtailments 6 23 Fair value adjustment to inventory (1) 40 Fair value adjustment to inventory (2) 40 0.30 (5) In the first quarter of 2018, the Company recorded a charge of $15 million ($10 million net of tax) for net losses arising from its hedge of the U.S. dollar purchase price of its acquisition of Signode. Also in the first quarter, the Company incurred net charges of $9 million ($7 million net of tax) for pre-acquisition interest carrying costs on borrowings to finance the acquisition. Working capital changes and other (694) (1,029) European Beverage (15) (1) (53) (5)
Other pension and postretirement (5) (13) (11) (47) Provision for restructuring and other (1) (41) 28 Restructuring and other (3) (1) (0.01) (41) (0.30) 28 0.21 Goodwill and intangible assets, net 6,367 6,753 European Food (30) (5) (93) (12) (2) Amount of depreciation expense included in segment income.
Foreign exchange 4 (14) 6 14 Segment income $ 395 $ 415 $ 1,096 $ 1,049 Pension settlements and curtailments (4) 6 0.04 23 0.17 (6) In the first quarter of 2019, the Company recorded a charge of $6 million ($5 million net of tax) for the write off of deferred financing fees in connection with the repayment of a portion of its term loan. Property, plant and equipment, net 3,739 3,722 Net cash provided by/(used for) operating activities (1) 201 (232) Asia Pacific 2 (5) (1)
Earnings before interest and taxes 347 392 979 911 Acquisition costs (5) 24 0.18 Other non-current assets 1,149 762 Transit Packaging (9) (52) (6)
Interest expense 95 105 290 282 (1) Included in cost of products sold Loss from early extinguishment of debt (6) 6 0.04 (7) In the third quarter and first nine months of 2019, the Company recorded income tax benefits of $13 million and $26 million related to the items described above. Also in the third quarter of 2019, the Company recorded a tax benefit of $9 million arising from tax law changes in India. In the second quarter of 2019, the Company recorded a charge of $15 million to settle a tax contingency arising from a transaction that occurred prior to its acquisition of Signode. In the third quarter and first nine months of 2018, the Company recorded income tax benefits of $13 million and $46 million related to the items described above. Also in the third quarter of 2018, the Company recorded charges of $28 million related to taxes on the distribution of foreign earnings, including an adjustment for the impact of the "Tax Cut and Jobs Act." Total $ 15,337 $ 15,335 Cash flows from investing activities Corporate and Non-Reportable (5) (16) 1
Interest income (5) (6) (12) (17) Income taxes (7) (22) (0.16) 15 0.11 (20) (0.15) (18) (0.13) Capital expenditures (242) (305) $(64) $(7) $(244) $(26)
Loss from early extinguishment of debt 6 Noncontrolling interests (8) 17 0.13 (1) (0.01) (8) In the first nine months of 2019, the Company recorded noncontrolling interest expense of $17 million related to the items described above. In the first nine months of 2018, the Company recorded a noncontrolling interest benefit of $1 million related to the items described above. Beneficial interest in transferred receivables 490
Income before income taxes 257 293 695 646 Adjusted net income/diluted earnings per share $210 $1.56 $229 $1.71 $548 $4.07 $562 $4.20 Liabilities and equity Acquisition of business, net of cash acquired (11) (3,912) (1) The impact of foreign currency translation represents the difference between actual current year U.S. dollar results and pro forma amounts assuming constant foreign currency exchange rates for translation in both periods. In order to compute the difference, the Company compares actual U.S. dollar results to an amount calculated by multiplying or dividing, as appropriate, the current U.S. dollar results by current year average foreign exchange rates and then multiplying or dividing, as appropriate, those amounts by the applicable prior year average foreign exchange rates.
Provision for income taxes 54 102 190 196 Segment Information (9) Income tax effects on adjusted net income were calculated using the applicable tax rates of the underlying jurisdictions. Current liabilities Proceeds from sale of assets 17 27
Equity earnings 1 2 4 3 Effective tax rate as reported 21.0% 34.8% 27.3% 30.3% Short-term debt $ 134 $ 53 Other 20 (19)
Net income 204 193 509 453 Net Sales Three Months Ended September 30, Nine Months Ended September 30, Adjusted effective tax rate (9) 24.8% 25.4% 25.5% 25.4% Current maturities of long-term debt 87 89
Net income attributable to noncontrolling interests (21) (29) (86) (67) 2019 2018 2019 2018 Accounts payable and accrued liabilities 3,411 3,459 Net cash used for investing activities (216) (3,719)
Net income attributable to Crown Holdings $183 $164 $423 $386 Americas Beverage $ 835 $ 872 $ 2,513 $ 2,478 Total current liabilities 3,632 3,601
European Beverage 416 418 1,165 1,194 Cash flows from financing activities
Earnings per share attributable to Crown Holdings common shareholders: European Food 581 623 1,487 1,565 Long-term debt, excluding current maturities 8,042 8,928 Net change in debt (192) 3,999
Basic $1.37 $1.23 $3.16 $2.89 Asia Pacific 319 321 959 990 Other non-current liabilities 1,642 1,496 Dividends paid to noncontrolling interests (36) (18)
Diluted $1.36 $1.23 $3.14 $2.88 Transit Packaging 564 585 1,725 1,205 Common stock repurchased (2) (4)
Total reportable segments 2,715 2,819 7,849 7,432 Noncontrolling interests 402 369 Debt issue costs (70)
Non-reportable segments (2) 369 355 1,025 985 Crown Holdings shareholders' equity 1,619 941 Other, net (15) (5)
Weighted average common shares outstanding: Total net sales $ 3,084 $ 3,174 $ 8,874 $ 8,417 Total equity 2,021 1,310
Basic 133,906,820 133,729,731 133,854,275 133,608,065 Total $ 15,337 $ 15,335 Net cash provided by/(used for) financing activities (245) 3,902
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167 Segment Income  Effect of exchange rate changes on cash and cash equivalents (1) (32)
Americas Beverage $ 134 $ 125 $ 386 $ 336 (1) On January 1, 2019, the Company adopted new lease accounting guidance resulting in increases in other non-current assets and other non-current liabilities of $220. Prior period amounts have not been recast and continue to be reported in accordance with accounting guidance in effect for those periods. Net change in cash and cash equivalents (261) (81)
European Beverage 64 66 163 180 Cash and cash equivalents at January 1 659 435
(1) A reconciliation from income from operations to segment income follows. European Food 79 90 189 231
Asia Pacific 47 46 143 137 Cash and cash equivalents at September 30 (2) $ 398 $ 354
Transit Packaging 74 81 227 175
Total reportable segments 398 408 1,108 1,059
Non-reportable segments (2) 34 40 103 102 (1) Adjusted free cash flow is defined by the Company as net cash used for operating activities plus beneficial interest in transferred receivables less capital expenditures and certain other items. A reconciliation from net cash used for operating activities to adjusted free cash flow for the three and nine months ended September 30, 2019 and 2018 follows.
Corporate and other unallocated items (37) (33) (115) (112)
Total segment income $ 395 $ 415 $ 1,096 $ 1,049 (2) Cash and cash equivalents includes $59 and $56 of restricted cash at September 30, 2019 and 2018.
(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net cash from operating activities $428 $260 $201 $(232)
Beneficial interest in transferred receivables (3) 155 490
Acquisition costs 22
Adjusted cash from operating activities 428 415 201 280
Interest included in investing activities (4) 15 21
Capital expenditures (88) (105) (242) (305)
Adjusted free cash flow $355 $310 $(20) $(25)
(3) Subsequent to amendments to the Company's receivables securitization program during the third quarter of 2018, certain activity that was previously reported as investing activity is now reported as operating activity.
(4) Interest benefit of cross currency swaps included in investing activities.

 

 

Consolidated Statements of Operations (Unaudited) (in millions, except share and per share data) Consolidated Supplemental Financial Data (Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data) Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per share and effective tax rates determined in accordance with U.S. generally accepted accounting principles. The Company believes these non-GAAP measures provide useful information to evaluate the performance of the Company's ongoing business. Consolidated Balance Sheets (Condensed & Unaudited) (in millions) Consolidated Statements of Cash Flows (Condensed & Unaudited) (in millions) Consolidated Supplemental Data (Unaudited) (in millions, except per share data) Comparative Results for Transit Packaging Reconciliation of Adjusted EBITDA
Nine months ended September 30, 2019 2018
Three Months Ended September 30, Nine Months Ended September 30, Reconciliation from Income from Operations to Segment Income Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share (1) In the third quarter and first nine months of 2019, the Company recorded charges of $42 million ($31 million net of tax) and $136 million ($101 million net of tax) for intangibles arising from acquisitions. Also in the third quarter and first nine months of 2019, the Company recorded charges of $1 million ($0 million net of tax) and $4 million ($3 million net of tax) for accelerated depreciation related to the planned shutdown of a steel beverage can operation in Spain. In the third quarter and first nine months of 2018, the Company recorded charges of $51 million ($38 million net of tax) and $103 million ($76 million net of tax) for intangibles amortization. September 30, 2019 (1) 2018 Impact of Foreign Currency Translation by Segment (1) – Favorable/(Unfavorable) Revenue Segment Income Depreciation (2) September YTD 2019 September YTD 2018 Full Year 2018 Twelve Months Ended September 30, 2019
2019 2018 2019 2018 The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as income from operations adjusted to exclude intangibles amortization charges, provisions for asbestos and restructuring and other, and the impact of fair value adjustments to inventory acquired in an acquisition. Assets Cash flows from operating activities 2019 2018 2017 2019 2018 2017 2019 2018 2017 Income from operations $997 $878 $1,096 $1,215
Net sales $3,084 $3,174 $8,874 $8,417 The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release. (2) In the second quarter of 2018, the Company recorded a charge of $40 million ($29 million net of tax) in cost of products sold for fair value adjustment related to the sale of inventory acquired in its acquisition of Signode. Current assets Net income $ 509 $ 453 Three Months Nine Months Q1 $569 $588 $526 $73 $79 $76 $15 $13 $12 Add: 185
Cost of products sold 2,455 2,530 7,082 6,804 Cash and cash equivalents $ 339 $ 298 Depreciation and amortization 366 305 Ended September 30, 2019 Ended September 30, 2019 Q2 592 620 575 80 94 80 14 14 13 Intangibles amortization 140 103 148
Depreciation and amortization 121 127 366 305 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, (3) In the first nine months of 2019, the Company recorded net restructuring and other gains of $41 million ($26 million net of tax). The nine months amount included gains of $50 million arising from favorable court rulings in lawsuits brought by the Company's Brazilian subsidiaries claiming they were overcharged by local tax authorities for indirect taxes paid in prior years, offset by other net charges of $9 million primarily related to restructuring actions. In the third quarter and first nine months of 2018, the Company recorded net restructuring and other gains of $1 million ($1 million net of tax) and charges of $28 million ($27 million net of tax) including $22 million of transaction costs for the nine months in connection with its acquisition of Signode. Receivables, net 1,795 1,968 Restructuring and other (41) 28 Q3 564 585 565 74 81 82 13 15 12 Fair value adjustment to inventory 40 40
Selling and administrative expense 156 153 470 402 2019 2018 2019 2018 2019 2018 2019 2018 Inventories 1,740 1,639 Pension expense 52 8 Net Sales Segment Income Net Sales Segment Income Q4 595 566 80 82 14 13 Provision for restructuring and other (41) 28 44 (25)
Restructuring and other (1) (41) 28 Income from operations $ 352 $ 365 $ 997 $ 878 Net income/diluted earnings per share attributable to Crown Holdings, as reported $183 $1.36 $164 $1.23 $423 $3.14 $386 $2.88 (4) In the third quarter and first nine months of 2019, the Company recorded charges of $6 million ($5 million net of tax) and $37 million ($31 million net of tax) arising from pension plan settlements. In the first quarter of 2019, the Company recorded a curtailment gain of $14 million ($12 million net of tax) in connection with the closure of a defined benefit pension plan to future accrual for active members. Prepaid expenses and other current assets 208 193 Pension contributions (14) (14) $2,388 $2,232 $334 $320 $56 $50 Segment income 1,096 1,049 1,328 1,375
Income from operations (1) 352 365 997 878 Intangibles amortization 43 51 140 103 Intangibles amortization (1) 43 0.32 51 0.38 140 1.04 103 0.77 Total current assets 4,082 4,098 Stock-based compensation 23 17 Americas Beverage $(7) $(1) $(25) $(3) Other pension and postretirement 11 47 67 31
Pension settlements and curtailments 6 23 Fair value adjustment to inventory (1) 40 Fair value adjustment to inventory (2) 40 0.30 (5) In the first quarter of 2018, the Company recorded a charge of $15 million ($10 million net of tax) for net losses arising from its hedge of the U.S. dollar purchase price of its acquisition of Signode. Also in the first quarter, the Company incurred net charges of $9 million ($7 million net of tax) for pre-acquisition interest carrying costs on borrowings to finance the acquisition. Working capital changes and other (694) (1,029) European Beverage (15) (1) (53) (5) Depreciation 226 202 277 301
Other pension and postretirement (5) (13) (11) (47) Provision for restructuring and other (1) (41) 28 Restructuring and other (3) (1) (0.01) (41) (0.30) 28 0.21 Goodwill and intangible assets, net 6,367 6,753 European Food (30) (5) (93) (12) (2) Amount of depreciation expense included in segment income. Adjusted EBITDA $1,333 $1,298 $1,672 $1,707
Foreign exchange 4 (14) 6 14 Segment income $ 395 $ 415 $ 1,096 $ 1,049 Pension settlements and curtailments (4) 6 0.04 23 0.17 (6) In the first quarter of 2019, the Company recorded a charge of $6 million ($5 million net of tax) for the write off of deferred financing fees in connection with the repayment of a portion of its term loan. Property, plant and equipment, net 3,739 3,722 Net cash provided by/(used for) operating activities (1) 201 (232) Asia Pacific 2 (5) (1)
Earnings before interest and taxes 347 392 979 911 Acquisition costs (5) 24 0.18 Other non-current assets 1,149 762 Transit Packaging (9) (52) (6)
Interest expense 95 105 290 282 (1) Included in cost of products sold Loss from early extinguishment of debt (6) 6 0.04 (7) In the third quarter and first nine months of 2019, the Company recorded income tax benefits of $13 million and $26 million related to the items described above. Also in the third quarter of 2019, the Company recorded a tax benefit of $9 million arising from tax law changes in India. In the second quarter of 2019, the Company recorded a charge of $15 million to settle a tax contingency arising from a transaction that occurred prior to its acquisition of Signode. In the third quarter and first nine months of 2018, the Company recorded income tax benefits of $13 million and $46 million related to the items described above. Also in the third quarter of 2018, the Company recorded charges of $28 million related to taxes on the distribution of foreign earnings, including an adjustment for the impact of the "Tax Cut and Jobs Act." Total $ 15,337 $ 15,335 Cash flows from investing activities Corporate and Non-Reportable (5) (16) 1
Interest income (5) (6) (12) (17) Income taxes (7) (22) (0.16) 15 0.11 (20) (0.15) (18) (0.13) Capital expenditures (242) (305) $(64) $(7) $(244) $(26)
Loss from early extinguishment of debt 6 Noncontrolling interests (8) 17 0.13 (1) (0.01) (8) In the first nine months of 2019, the Company recorded noncontrolling interest expense of $17 million related to the items described above. In the first nine months of 2018, the Company recorded a noncontrolling interest benefit of $1 million related to the items described above. Beneficial interest in transferred receivables 490
Income before income taxes 257 293 695 646 Adjusted net income/diluted earnings per share $210 $1.56 $229 $1.71 $548 $4.07 $562 $4.20 Liabilities and equity Acquisition of business, net of cash acquired (11) (3,912) (1) The impact of foreign currency translation represents the difference between actual current year U.S. dollar results and pro forma amounts assuming constant foreign currency exchange rates for translation in both periods. In order to compute the difference, the Company compares actual U.S. dollar results to an amount calculated by multiplying or dividing, as appropriate, the current U.S. dollar results by current year average foreign exchange rates and then multiplying or dividing, as appropriate, those amounts by the applicable prior year average foreign exchange rates.
Provision for income taxes 54 102 190 196 Segment Information (9) Income tax effects on adjusted net income were calculated using the applicable tax rates of the underlying jurisdictions. Current liabilities Proceeds from sale of assets 17 27
Equity earnings 1 2 4 3 Effective tax rate as reported 21.0% 34.8% 27.3% 30.3% Short-term debt $ 134 $ 53 Other 20 (19)
Net income 204 193 509 453 Net Sales Three Months Ended September 30, Nine Months Ended September 30, Adjusted effective tax rate (9) 24.8% 25.4% 25.5% 25.4% Current maturities of long-term debt 87 89
Net income attributable to noncontrolling interests (21) (29) (86) (67) 2019 2018 2019 2018 Accounts payable and accrued liabilities 3,411 3,459 Net cash used for investing activities (216) (3,719)
Net income attributable to Crown Holdings $183 $164 $423 $386 Americas Beverage $ 835 $ 872 $ 2,513 $ 2,478 Total current liabilities 3,632 3,601
European Beverage 416 418 1,165 1,194 Cash flows from financing activities
Earnings per share attributable to Crown Holdings common shareholders: European Food 581 623 1,487 1,565 Long-term debt, excluding current maturities 8,042 8,928 Net change in debt (192) 3,999
Basic $1.37 $1.23 $3.16 $2.89 Asia Pacific 319 321 959 990 Other non-current liabilities 1,642 1,496 Dividends paid to noncontrolling interests (36) (18)
Diluted $1.36 $1.23 $3.14 $2.88 Transit Packaging 564 585 1,725 1,205 Common stock repurchased (2) (4)
Total reportable segments 2,715 2,819 7,849 7,432 Noncontrolling interests 402 369 Debt issue costs (70)
Non-reportable segments (2) 369 355 1,025 985 Crown Holdings shareholders' equity 1,619 941 Other, net (15) (5)
Weighted average common shares outstanding: Total net sales $ 3,084 $ 3,174 $ 8,874 $ 8,417 Total equity 2,021 1,310
Basic 133,906,820 133,729,731 133,854,275 133,608,065 Total $ 15,337 $ 15,335 Net cash provided by/(used for) financing activities (245) 3,902
Diluted 134,981,636 133,849,368 134,768,003 133,816,005
Actual common shares outstanding 135,526,922 135,190,167 135,526,922 135,190,167 Segment Income  Effect of exchange rate changes on cash and cash equivalents (1) (32)
Americas Beverage $ 134 $ 125 $ 386 $ 336 (1) On January 1, 2019, the Company adopted new lease accounting guidance resulting in increases in other non-current assets and other non-current liabilities of $220. Prior period amounts have not been recast and continue to be reported in accordance with accounting guidance in effect for those periods. Net change in cash and cash equivalents (261) (81)
European Beverage 64 66 163 180 Cash and cash equivalents at January 1 659 435
(1) A reconciliation from income from operations to segment income follows. European Food 79 90 189 231
Asia Pacific 47 46 143 137 Cash and cash equivalents at September 30 (2) $ 398 $ 354
Transit Packaging 74 81 227 175
Total reportable segments 398 408 1,108 1,059
Non-reportable segments (2) 34 40 103 102 (1) Adjusted free cash flow is defined by the Company as net cash used for operating activities plus beneficial interest in transferred receivables less capital expenditures and certain other items. A reconciliation from net cash used for operating activities to adjusted free cash flow for the three and nine months ended September 30, 2019 and 2018 follows.
Corporate and other unallocated items (37) (33) (115) (112)
Total segment income $ 395 $ 415 $ 1,096 $ 1,049 (2) Cash and cash equivalents includes $59 and $56 of restricted cash at September 30, 2019 and 2018.
(2) Includes the Company's food can and closures businesses in North America, aerosol can businesses in North America and Europe, promotional packaging business in Europe, and tooling and equipment operations in the U.S. and United Kingdom.
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net cash from operating activities $428 $260 $201 $(232)
Beneficial interest in transferred receivables (3) 155 490
Acquisition costs 22
Adjusted cash from operating activities 428 415 201 280
Interest included in investing activities (4) 15 21
Capital expenditures (88) (105) (242) (305)
Adjusted free cash flow $355 $310 $(20) $(25)
(3) Subsequent to amendments to the Company's receivables securitization program during the third quarter of 2018, certain activity that was previously reported as investing activity is now reported as operating activity.
(4) Interest benefit of cross currency swaps included in investing activities.

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SOURCE Crown Holdings, Inc.

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