CROWN HOLDINGS INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - CROWN HOLDINGS INC	d746312d8k.htm
EX-99.2 - EX-99.2 - CROWN HOLDINGS INC	d746312dex992.htm

Exhibit 99.1

For purposes of this Exhibit 99.1, unless the context otherwise requires: (i) “Crown” refers to Crown Holdings, Inc. and its subsidiaries on a consolidated basis; (ii) “Crown Cork” refers to Crown Cork & Seal Company, Inc. and not its subsidiaries; and (iii) “Crown European Holdings” refers to Crown European Holdings S.A. and not its subsidiaries. References to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Crown’s consolidated financial statements refer to the corresponding sections of Crown’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and Crown’s Annual Report on Form 10-K for the year ended December 31, 2013.

FORWARD-LOOKING STATEMENTS

Statements included herein, which are not historical facts (including any statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto), are “forward-looking statements” within the meaning of the U.S. federal securities laws. Forward-looking statements can be identified by words, such as “believes,” “estimates,” “anticipates,” “expects” and other words of similar meaning in connection with a discussion of future operating or financial performance. These may include, among others, statements relating to:

•

Crown’s senior notes offering and the use of proceeds described herein, and Crown’s ability to implement it on the terms described herein;

•

Crown’s plans or objectives for future operations, products or financial performance;

•

Crown’s indebtedness and other contractual obligations;

•

the impact of an economic downturn or growth in particular regions;

•

anticipated uses of cash;

•

cost reduction efforts and expected savings;

•

Crown’s policies with respect to executive compensation; and

•

the expected outcome of contingencies, including with respect to asbestos-related litigation and pension and postretirement liabilities.

These forward-looking statements are made based upon Crown’s expectations and beliefs concerning future events impacting it and, therefore, involve a number of risks and uncertainties. Crown cautions that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

Important factors that could cause the actual results of operations or financial condition of Crown to differ include, but are not necessarily limited to:

•

the ability of Crown to expand successfully in international and emerging markets;

•

whether the acquisition of Adularia Inversiones 2010, S.L.U., the parent company of Mivisa Envases, S.A.U., and its subsidiaries (collectively, “Mivisa”) will be accretive to Crown’s earnings;

•

whether the sales and profits of Mivisa will continue to grow;

•

whether the combination of Crown and Mivisa will provide benefits to customers and shareholders;

•

whether the operations of Mivisa can be successfully integrated into the Crown’s operations;

•

the ability of Crown to repay, refinance or restructure its short and long-term indebtedness on adequate terms and to comply with the terms of its agreements relating to debt;

•

the impact of the recent European Sovereign debt crisis;

•

Crown’s ability to generate significant cash to meet its obligations and invest in its business and to maintain appropriate debt levels;

•

restrictions on Crown’s use of available cash under its debt agreements;

•

changes or differences in U.S. or international economic or political conditions, such as inflation or fluctuations in interest or foreign exchange rates (and the effectiveness of any currency or interest rate hedges), tax rates and tax laws (including with respect to taxation of unrepatriated non-U.S. earnings or as a result of the depletion of net loss carryforwards or foreign tax credits);

•

the impact of healthcare reform in the United States;

•

the impact of foreign trade laws and practices;

•

the collectability of receivables;

•

war or acts of terrorism that may disrupt Crown’s production or the supply or pricing of raw materials, including in Crown’s Middle East operations, impact the financial condition of customers or adversely affect Crown’s ability to refinance or restructure its remaining indebtedness;

•

changes in the availability and pricing of raw materials (including aluminum can sheet, steel tinplate, energy, water, inks and coatings) and Crown’s ability to pass raw material, energy and freight price increases and surcharges through to its customers or to otherwise manage these commodity pricing risks;

•

Crown’s ability to obtain and maintain adequate pricing for its products, including the impact on Crown’s revenue, margins and market share and the ongoing impact of price increases;

•

energy and natural resource costs;

•

the cost and other effects of legal and administrative cases and proceedings, settlements and investigations;

•

the outcome of asbestos-related litigation (including the number and size of future claims and the terms of settlements, and the impact of bankruptcy filings by other companies with asbestos-related liabilities, any of which could increase the asbestos-related costs of Crown Cork & Seal Company, Inc., a subsidiary of Crown (“Crown Cork”) over time, the adequacy of reserves established for asbestos-related liabilities, Crown Cork’s ability to obtain resolution without payment of asbestos-related claims by persons alleging first exposure to asbestos after 1964, and the impact of state legislation dealing with asbestos liabilities and any litigation challenging that legislation and any future state or federal legislation dealing with asbestos liabilities);

•

Crown’s ability to realize deferred tax benefits;

•

changes in Crown’s critical or other accounting policies or the assumptions underlying those policies;

•

labor relations and workforce and social costs, including Crown’s pension and postretirement obligations and other employee or retiree costs;

•

investment performance of Crown’s pension plans;

•

costs and difficulties related to the acquisition of a business and integration of acquired businesses, including the integration of Mivisa;

•

the impact of any potential dispositions, acquisitions or other strategic realignments, which may impact Crown’s operations, financial profile, investments or levels of indebtedness;

•

Crown’s ability to realize efficient capacity utilization and inventory levels and to innovate new designs and technologies for its products in a cost-effective manner;

•

competitive pressures, including new product developments, industry overcapacity, or changes in competitors’ pricing for products;

•

Crown’s ability to achieve high capacity utilization rates for its equipment;

•

Crown’s ability to maintain, develop and capitalize on competitive technologies for the design and manufacture of products and to withstand competitive and legal challenges to the proprietary nature of such technology;

•

Crown’s ability to protect its information technology systems from attacks or catastrophic failure;

•

the strength of Crown’s cyber-security;

•

Crown’s ability to generate sufficient production capacity;

•

Crown’s ability to improve and expand its existing product and product lines;

•

the impact of overcapacity on the end-markets Crown serves;

•

loss of customers, including the loss of any significant customers;

•

changes in consumer preferences for different packaging products;

•

the financial condition of Crown’s vendors and customers;

•

weather conditions, including their effect on demand for beverages and on crop yields for fruits and vegetables stored in food containers;

•

the impact of natural disasters, including in emerging markets;

•

changes in governmental regulations or enforcement practices, including with respect to environmental, health and safety matters and restrictions as to foreign investment or operation;

•

the impact of increased governmental regulation on Crown and its products, including the regulation or restriction of the use of bisphenol-A;

•

the impact of Crown’s recent initiatives to generate additional cash, including the reduction of working capital levels and capital spending;

•

the ability of Crown to realize cost savings from its restructuring programs;

•

Crown’s ability to maintain adequate sources of capital and liquidity;

•

costs and payments to certain of Crown’s executive officers in connection with any termination of such executive officers or a change in control of Crown;

•

the impact of existing and future legislation regarding refundable mandatory deposit laws in Europe for non-refillable beverage containers and the implementation of an effective return system; and

•

changes in Crown’s strategic areas of focus, which may impact Crown’s operations, financial profile or levels of indebtedness.

Crown does not intend to review or revise any particular forward-looking statements in light of future events.

Summary of Crown’s Business

For the fiscal year ended December 31, 2013 and the three months ended March 31, 2014, Crown had net sales of approximately $8,656 million and $1,993 million, respectively, and Adjusted EBITDA (a non-GAAP measure that is defined in “—Summary Historical and Adjusted Consolidated Condensed Financial Data”) of $1,054 million and $235 million, respectively. Approximately 74% of such net sales were derived from operations outside the United States, of which 62% of these non-U.S. revenues were derived from operations in the European Division, in the fiscal year ended December 31, 2013. Approximately 75% of such net sales were derived from operations outside of the United States in the three months ended March 31, 2014. For the twelve months ended March 31, 2014, Crown had net sales of approximately $8,676 million and Adjusted EBITDA of approximately $1,060 million, without giving effect to the Mivisa acquisition.

The following chart demonstrates the breadth of Crown’s product portfolio and its geographic presence by division:

Americas

Europe

Asia-
Pacific

Food cans

Beverage cans

Aerosol cans

Specialty cans

Closures and caps

Can-making equipment

Divisions and Operating Segments

Crown’s business is organized geographically within three divisions, Americas, Europe and Asia Pacific. Within each division, Crown is generally organized along product lines. Crown’s reportable segments within the Americas Division are Americas Beverage and North America Food. Crown’s reportable segments within the European Division are European Beverage and European Food. Crown’s Asia Pacific Division is a reportable segment which primarily consists of beverage can operations and also includes Crown’s non-beverage can operations, primarily food cans and specialty packaging. Crown’s non-reportable segments include its European Specialty Packaging business, its aerosol can businesses in North America and Europe and its tooling and equipment operations in the United States and United Kingdom.

Business Strengths

Crown’s principal strength lies in its ability to meet the changing needs of its global customer base with products and processes from a broad range of well-established packaging businesses. Crown believes that it is well-positioned within the packaging industry because of its:

•

Global leadership positions. Crown is a leading producer of food, beverage and aerosol cans and of closures in North America, Europe and Asia. Crown maintains its leadership through an extensive geographic presence, with 147 plants located throughout the world as of March 31, 2014. Its large manufacturing base allows Crown to service its customers locally while achieving significant economies of scale.

•

Strong customer base. Crown provides packaging to many of the world’s leading consumer products companies. Major customers include Anheuser-Busch InBev, Coca-Cola, Cott Beverages, Heineken, Mars, Nestlé, Pepsi-Cola, Procter & Gamble, SC Johnson and Unilever, among others. These consumer products companies represent generally stable businesses that provide consumer staples such as soft drinks, alcoholic beverages, foods and household products. In addition, Crown has long-standing relationships with many of its largest customers.

•

Broad and diversified product base. Crown produces a wide array of products differentiated by type, purpose, size, shape and benefit to customers. Crown is not dependent on any specific product market since no product in any one geographical region represents a substantial share of total revenues.

•

Business and industry fundamentals. Fundamental changes in its business, including price increases, cost reduction initiatives and working capital reductions, have improved Crown’s business outlook.

•

Technological leadership resulting in superior new product and process development. Crown believes that it possesses the technology, processes and research, development and engineering capabilities to allow it to provide innovative and value-added packaging solutions to its customers, as well as to design cost-efficient manufacturing systems and materials.

•

Financially disciplined management team. Crown’s current executive leadership is focused on improving profit and increasing free cash flow.

•

All levels of Crown’s management are committed to minimizing capital employed in their respective businesses.

•

Crown is prudent about its capital spending, attempting to pursue projects that provide an adequate return. In place of high capital spending, Crown attempts to maximize the usefulness of all assets currently employed.

Business Strategy

Crown has several key business strategies:

•

Grow in targeted markets. Crown plans to capitalize on its leading food, beverage and aerosol can positions by targeting geographic areas with strong growth potential. Crown believes that it is well-positioned to take advantage of the growth potential in Southern and Eastern Europe with numerous food and beverage can plants already established in those markets. In addition, as a leading packaging supplier to the Middle Eastern, Southeast Asian and Latin American markets, Crown will work to benefit from the anticipated growth in the consumption of consumer goods in these regions. Crown is considering, and in the future may pursue, acquisitions to grow its business (within developed or developing markets).

•

Increase margins through ongoing cost reductions. Crown plans to continue to reduce manufacturing costs, enhance efficiencies and drive return on invested capital through investments in equipment and technology and through improvements in productivity and material usage and by maintaining a disciplined approach to managing supplier contracts.

•

Maximize cash flow generation. Crown has established performance-based incentives to increase its free cash flow and operating income. In recent years Crown has used free cash flow to complete acquisitions, invest in emerging markets and repurchase Crown common stock, and Crown may in the future use free cash flow to complete acquisitions, invest in emerging or developed markets, repurchase stock or to fund regular dividend payments on Crown common stock.

•

Crown uses the economic profit concept in connection with its executive compensation program, which requires each business unit to exceed prior year’s returns on the capital that it employs.

•

Crown will continue to attempt to focus its capital expenditures on projects that provide an adequate return.

•

Serve the changing needs of the world’s leading consumer products companies through technological innovation. Crown intends to capitalize on the demand of its customers for higher value-added packaging products. By continuing to improve the physical attributes of its products, such as strength of materials and graphics, Crown plans to further improve its existing customer relationships, as well as attract new customers.

Recent Developments

Mivisa Acquisition

In April 2014, Crown closed its acquisition of Mivisa, a leading Spanish manufacturer of two- and three-piece food cans and ends, for approximately €550 million ($760 million) including lockbox interest and €700 million ($966 million) of debt assumed plus transaction costs excluding the impact of any cash acquired. Mivisa is the largest food can producer in both the Iberian Peninsula and Morocco, primarily serving the vegetable, fruit, fish and meat markets. The Mivisa acquisition builds upon Crown’s existing position in the European food can segment.

In connection with the acquisition, in the second quarter of 2014, Crown divested certain of its and Mivisa’s operations as a required condition for regulatory approval. The divested assets collectively had sales of €143 million during the year ended December 31, 2013.

To fund the Mivisa acquisition, pay off certain of Mivisa’s existing debt and pay related transaction costs, Crown incurred borrowings on (i) a $580 million Delayed Draw Term Loan A Facility, (ii) a €590 million ($815 million) Delayed Draw Term Euro Facility and (iii) a $362 million Farm Credit Facility.

Tender Offer for 7.125% Senior Notes due 2018

On June 23, 2014, Crown commenced a tender offer for any and all of Crown European Holdings’ €500 million of outstanding senior unsecured notes due 2018. To the extent not tendered (or if a tender offer is not consummated), Crown European Holdings intends to redeem all of its senior unsecured notes due 2018 that may remain outstanding.

Organizational Structure

The following chart shows a summary of Crown’s current organizational structure, as well as the applicable obligors under the new senior notes, other outstanding notes, and Crown’s senior secured credit facilities as of the date hereof after giving effect to the offering of the new senior notes. Crown may modify this corporate structure in the future.

LOGO

*	Guarantor of outstanding debentures of Crown Cork.

**	Guarantors of outstanding senior notes and senior secured credit facilities of Crown European Holdings and its subsidiaries, and Guarantors of Crown European Holdings’ obligations under the new senior notes.

***	Guarantors of the outstanding senior notes of Crown Americas LLC, Crown Americas Capital Corp. III and Crown Americas Capital Corp. IV.

****	Crown Metal Packaging Canada LP serves as the Canadian borrower.

*****

Certain Mivisa-related subsidiaries are expected to guarantee the outstanding senior secured credit facilities of Crown European Holdings and its subsidiaries and, if such guarantees are provided, to guarantee the notes on an unsecured senior basis.

(1)

The net proceeds from the offering of the new senior notes, together with other available funds, will be used to retire all of Crown European Holdings’ outstanding €500 million senior unsecured notes due 2018 and to pay fees and expenses associated with the offering of the new senior notes. See “Description of Certain Indebtedness.”

Crown is a Pennsylvania corporation. Crown’s principal executive offices are located at One Crown Way, Philadelphia, Pennsylvania 19154, and its telephone number is (215) 698-5100. Crown European Holdings (formerly known as CarnaudMetalbox SA) is a société anonyme organized under the laws of France. Crown European Holdings is an indirect, wholly-owned subsidiary of Crown.

Summary Historical and Adjusted Consolidated Condensed Financial Data

The following table sets forth summary historical and adjusted consolidated condensed financial data for Crown and certain combined financial data as of and for the periods presented. The summary of operations data and other financial data for each of the years in the three-year period ended December 31, 2013 and the balance sheet data as of December 31, 2012 and 2013 have been derived from Crown’s audited consolidated financial statements and the notes thereto. The summary of operations data and other financial data for the three-month period ended March 31, 2014 and the three-month period ended March 31, 2013, and the balance sheet data as of March 31, 2014 have been derived from Crown’s unaudited interim consolidated financial statements, which, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the result for the unaudited periods. The summary of operations data and other financial data for the twelve-month period ended March 31, 2014 have been derived by adding Crown’s financial data for the year ended December 31, 2013 to financial data for the three-month period ended March 31, 2014 and subtracting financial data for the three-month period ended March 31, 2013. The December 31, 2011 balance sheet data has been derived from Crown’s audited consolidated financial statements. The adjusted financial data gives effect to the issuance of the new senior notes and the expected application of the net proceeds therefrom described herein.

The combined financial data give effect to the acquisition of Mivisa as if it had occurred on April 1, 2013. The combined financial data combine certain financial data of Crown for the twelve-month period ended March 31, 2014 with certain financial data of Mivisa for the twelve-month period ended March 31, 2014. The combined financial information has not been adjusted to account for the divestiture of Crown’s metal food can business in Spain and a Mivisa plant in the Netherlands, which closed in the second quarter of 2014. Mivisa’s financial information was prepared in accordance with IFRS. For information regarding the reconciliation of IFRS to U.S. generally accepted accounting principles, see “—Summary Historical Financial Data for Mivisa.” The combined financial information is for informational purposes only and should not be considered indicative of actual results that would have been achieved had the Mivisa acquisition actually been consummated on the date indicated and does not purport to indicate our consolidated financial position or results of operations for any future period.

You should read the following financial information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Crown’s audited consolidated financial statements and the related notes thereto.


	(dollars in millions)
	Year Ended December 31,									Three Months Ended March 31,						Twelve Months Ended March 31,
	2011			2012			2013			2013			2014			2014
Summary of Operations Data:
Net sales	$	8,644		$	8,470		$	8,656		$	1,973		$	1,993		$	8,676
Cost of products sold, excluding depreciation and amortization		7,120			7,013			7,180			1,640			1,661			7,201
Depreciation and amortization		176			180			134			34			35			135

Gross profit		1,348			1,277			1,342			299			297			1,340
Selling and administrative expense		395			382			425			104			104			425
Provision for asbestos		28			35			32			—			—			32
Restructuring and other		83			—			34			4			52			82
Loss from early extinguishments of debt		32			—			41			38			—			3
Interest expense		232			226			236			60			58			234
Interest income		(11	)		(7	)		(5	)		(2	)		(2	)		(5	)
Translation and exchange adjustments		2			(1	)		3			2			6			7

Income before income taxes and equity earnings		587			642			576			93			79			562
Provision for/(benefit from) income taxes		194			(17	)		148			24			33			157
Equity earnings/(loss) in affiliates		3			5			—			(2	)		—			2

Net Income		396			664			428			67			46			407

Net income attributable to noncontrolling interests		(114	)		(105	)		(104	)		(26	)		(22	)		(100	)

Net income attributable to Crown Holdings	$	282		$	559		$	324		$	41		$	24		$	307


	(dollars in millions)
	Year Ended December 31,									Three Months Ended March 31,						Twelve Months Ended March 31,
	2011			2012			2013			2013			2014			2014
Other Financial Data:
Net cash flows provided by/(used for):
Operating activities	$	379		$	621		$	885		$	(432	)	$	(495	)	$	822
Investing activities		(372	)		(362	)		(246	)		(52	)		(73	)		(267	)
Financing activities		(129	)		(254	)		(306	)		439			147			(598	)
EBITDA(1)		984			1,041			941			185			170			926
Adjusted EBITDA(2)		1,129			1,075			1,054			229			235			1,060
Combined Adjusted EBITDA(3)																	1,220
Capital expenditures		401			324			275			63			84			296
Ratio of earnings to fixed charges(4)		3.4x			3.5x			3.2x			2.2x			2.1x			3.2x

Adjusted Financial Data:
Combined total secured debt(5)																$	2,678
Combined total debt(6)																	5,861
Combined interest expense(7)																	247
Ratio of combined total secured debt to combined Adjusted EBITDA																	2.2
Ratio of combined total debt to combined Adjusted EBITDA																	4.8
Ratio of combined Adjusted EBITDA to combined interest expense																	4.9

Balance Sheet Data (at end of period):
Cash and cash equivalents	$	342		$	350		$	689		$	304		$	267		$	267
Working capital(8)		318			228			260			694			518			518
Total assets		6,868			7,500			8,030			7,711			7,885			7,885
Total debt		3,532			3,665			3,842			4,104			4,104			4,104
Total equity/(deficit)		(239	)		129			289			170			258			258

(1)	EBITDA is a non-GAAP measurement that consists of net income before income taxes and equity earnings plus the sum of interest expense (net of interest income) and depreciation and amortization. The reconciliation from income from continuing operations to EBITDA is as follows:


	(dollars in millions)
	Year Ended December 31,									Three Months Ended March 31,						Twelve Months Ended March 31,
	2011			2012			2013			2013			2014			2014
Net Income	$	396		$	664		$	428		$	67		$	46		$	407
Add/(deduct):
Equity loss/(earnings) in affiliates		(3	)		(5	)		—			2			—			(2	)
Provision for/(benefit from) income taxes		194			(17	)		148			24			33			157
Interest income		(11	)		(7	)		(5	)		(2	)		(2	)		(5	)
Interest expense		232			226			236			60			58			234
Depreciation and amortization		176			180			134			34			35			135

EBITDA	$	984		$	1,041		$	941		$	185		$	170		$	926

(2)	Adjusted EBITDA is a non-GAAP measurement that consists of EBITDA plus the sum of provision for asbestos, restructuring and other, loss from early extinguishments of debt, timing impact of hedge ineffectiveness and foreign exchange. The reconciliation from EBITDA to Adjusted EBITDA is as follows:


	(dollars in millions)
	Year Ended December 31,							Three Months Ended March 31,				Twelve Months Ended March 31,
	2011		2012			2013		2013		2014		2014
EBITDA	$	984	$	1,041		$	941	$	185	$	170	$	926
Add/(deduct):
Provision for asbestos*		28		35			32		—		—		32
Restructuring and other**		83		—			37		4		52		85
Loss from early extinguishments of debt		32		—			41		38		—		3
Impact of hedge ineffectiveness		—		—			—		—		7		7
Foreign exchange		2		(1	)		3		2		6		7

Adjusted EBITDA	$	1,129	$	1,075		$	1,054	$	229	$	235	$	1,060

*	Crown made asbestos-related payments of $28 million, $28 million, $28 million, $10 million and $7 million during 2013, 2012 and 2011 and the three months ended March 31, 2014 and 2013, respectively.

For the year ended December 31, 2013, restructuring and other includes $3 million of transaction costs incurred in connection with Crown’s acquisition of Mivisa that were reported in selling and administrative expense in Crown’s Consolidated Statement of Operations. For the three months ended March 31, 2014, restructuring and other includes $2 million of transaction costs incurred in connection with the Company’s acquisition of Mivisa that were reported in restructuring and other in the Company’s Consolidated Statement of Operations.

EBITDA and Adjusted EBITDA are provided for illustrative and informational purposes only and do not purport to represent, and should not be viewed as indicative of, Crown’s actual or future financial condition or results of operations. EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to net income, operating income, net cash provided by operating activities or any other measure of operating performance or liquidity that is calculated in accordance with U.S. generally accepted accounting principles. EBITDA and Adjusted EBITDA information is unaudited and has been included in this exhibit because Crown believes that certain analysts, rating agencies and investors may use it as supplemental information to evaluate a company’s ability to service its indebtedness and overall operating performance over time. However, EBITDA and Adjusted EBITDA have material limitations as analytical tools and should not be considered in isolation, or as substitutes for analysis of Crown’s results as reported under U.S. generally accepted accounting principles. A limitation associated with EBITDA and Adjusted EBITDA is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in Crown’s business. Any measure that eliminates components of Crown’s capital structure and costs associated with carrying significant amounts of assets on its balance sheet has material limitations as a performance measure. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. In addition, in evaluating EBITDA and Adjusted EBITDA, you should be aware that the adjustments may vary from period to period and in the future Crown will incur expenses such as those used in calculating these measures. Furthermore, EBITDA and Adjusted EBITDA, as calculated by Crown, may not be comparable to calculations of similarly titled measures by other companies. In light of the foregoing limitations, Crown does not rely solely on EBITDA and Adjusted EBITDA as performance measures and also considers its results as calculated in accordance with U.S. generally accepted accounting principles. For purposes of the covenants in the indenture governing the new senior notes, EBITDA is defined differently, and for purposes of our credit facility and for calculating goodwill impairment, Adjusted EBITDA is defined differently.

(3)	Combined EBITDA and combined Adjusted EBITDA are non-GAAP measurements that give effect to the acquisition of Mivisa as if it had occurred on April 1, 2013. The reconciliation from combined income from operations to combined EBITDA and from combined EBITDA to combined Adjusted EBITDA is as follows:


	(dollars in millions)
	Twelve Months Ended March 31, 2014 (Unaudited)
	Crown			Mivisa			Combined
Net Income	$	407		$	36		$	443
Add/(deduct):
Equity loss/(earnings) in affiliates		(2	)		—			(2	)
Provision for/(benefit from) income taxes		157			—			157
Interest income		(5	)		(1	)		(6	)
Interest expense		234			62			296
Depreciation and amortization		135			51			186

EBITDA	$	926		$	148		$	1,074
Add/(deduct):
Provision for asbestos		32			—			32
Restructuring and other		85			—			85
Loss from early extinguishments of debt		3			4			7
Impact of hedge ineffectiveness		7			—			7
Foreign exchange		7			8			15

Adjusted EBITDA	$	1,060		$	160		$	1,220

This table excludes any pro forma adjustments related to the combined results of Crown and Mivisa. Crown is in the early stages of completing its purchase price allocation and therefore does not have the necessary information to estimate the impact. Such pro forma adjustments would typically include the amortization of fair value adjustments recorded as part of acquisition accounting, incremental interest expense associated with borrowings to fund the acquisition and any related income tax effects. The exclusion of these items from net income does not impact combined EBITDA or combined Adjusted EBITDA. For example, if the purchase price allocation results in $50 million of incremental depreciation and amortization, net income would decrease by $50 million but combined EBITDA and combined Adjusted EBITDA would not change. If the purchase price allocation resulted in $100 million of incremental depreciation and amortization, net income would decrease by $100 million but combined EBITDA and combined Adjusted EBITDA would not change. In addition, the combined financial information has not been adjusted to account for the divestiture of Crown’s metal food can business in Spain and a Mivisa plant in the Netherlands, which closed in the second quarter of 2014. The divested assets collectively had sales of €143 million during the year ended December 31, 2013.

The combined financial information is unaudited and for informational purposes only and should not be considered indicative of actual results that would have been achieved had the Mivisa acquisition actually been consummated on the date indicated and does not purport to indicate our consolidated financial position or results of operations for any future period.

(4)

For purposes of computing the ratio of earnings to fixed charges, earnings consist of income before income taxes and equity earnings plus fixed charges (exclusive of interest capitalized during the period), amortization of interest previously capitalized and distributed income from less-than-50%-owned companies. Fixed charges include interest incurred, expensed and capitalized, amortization of debt issue costs and the portion of rental expense that is deemed representative of an interest factor. For purposes of the covenants in the indenture governing Crown’s outstanding notes, the ratio of earnings to fixed charges is defined differently.

(5)

Combined total secured debt as of March 31, 2014 is presented after giving effect to the Mivisa acquisition and the issuance of the new senior notes and the expected application of the net proceeds therefrom and consists of borrowings under Crown’s senior secured term loan facilities ($1,766 million), borrowings under the senior secured revolving credit facilities ($350 million), borrowings under the Farm Credit facility ($362 million), receivable securitization facilities ($184 million) and capitalized leases and other secured debt ($16 million).

(6)

Combined total debt as of March 31, 2014 is presented after giving effect to the Mivisa acquisition and the issuance of the new senior notes and the expected application of the net proceeds therefrom. Combined total debt consists of $4,104 million of debt as of March 31, 2014 and $1,757 million of additional borrowings to fund the acquisition of Mivisa.

(7)

Combined interest expense reflects use of the proceeds of the senior notes offering to retire all €500 million of Crown European Holdings’ outstanding senior unsecured notes due 2018 and incremental borrowings of (i) $580 million under the Delayed Draw Term Loan A Facility, (ii) €590 million ($815 million) under the Delayed Draw Term Euro Facility and (iii) $362 million under the farm credit facility to fund the acquisition of Mivisa. The assumed interest rate on the €500 million of the new senior notes was 4.0%. The interest rate on the Delayed Draw Term Loan A Facility and Delayed Draw Term Euro Facility is LIBOR or EURIBOR plus 1.75%. The interest rate on the Farm Credit Facility is LIBOR or EURIBOR plus 2.0%. The LIBOR or EURIBOR rates used to calculate adjusted net interest expense for the above facilities was 0.15.

(8)	Working capital consists of current assets less current liabilities.

Summary Historical Financial Data for Mivisa

The following table sets forth selected unaudited historical consolidated condensed financial data for Mivisa. The unaudited income statement data for the twelve months ended March 31, 2014 have been derived from Mivisa’s audited consolidated financial statements for the year ended June 30, 2013, unaudited selected consolidated financial information for the nine-month period ended March 31, 2014, and unaudited selected consolidated financial information for the three-month period ended June 30, 2013, which do not appear herein. The unaudited balance sheet data as of March 31, 2014 have been derived from Mivisa’s unaudited selected consolidated financial information as of and for the nine-month period ended March 31, 2014. Mivisa’s income statements and balance sheet for the periods referenced were originally prepared in Euros and in accordance with IFRS as adopted by the European Union, which differs in certain material respects from U.S. generally accepted accounting principles. Adjustments made to align Mivisa’s financial information prepared under IFRS as adopted by the European Union with Crown’s accounting policies and presentation under U.S. generally accepted accounting principles are described in the footnote below. Historical results are not indicative of the results to be expected in the future.


	(in millions)
	Twelve Months Ended March 31, 2014 (unaudited)
	Historical IFRS in Euros			Adjustments to Conform to Crown Presentation and U.S. GAAP in Euros (1)			Historical Adjusted to Crown Presentation and U.S. GAAP in Euros (2)			Foreign Exchange (3)		Historical Adjusted to Crown Presentation and U.S. GAAP in USD
Income Statement Data:
Net sales	€	526		€	(10	)	€	516			1.35	$	697
Cost of products sold, excluding depreciation and amortization					(387	)		(387	)		1.35		(522	)
Total operating expenses		(409	)		409			—			1.35		—
Depreciation and amortization		(38	)		—			(38	)		1.35		(51	)

Gross profit	€	79		€	12		€	91			1.35	$	124

Other operating income		2			(2	)		—			1.35		—
Depreciation of raw and used materials		(1	)		1			—			1.35		—
Selling and administrative expense		—			(11	)		(11	)		1.35		(15	)
Loss from early extinguishments of debt		—			(3	)		(3	)		1.35		(4	)
Interest income		1			—			1			1.35		1
Interest expense		(55	)		9			(46	)		1.35		(62	)
Foreign exchange		—			(6	)		(6	)		1.35		(8	)

Income before income taxes	€	26		€	—		€	26			1.35	$	36

Income tax expense		—			—			—			1.35		—

Net income	€	26		€	—		€	26			1.35	$	36

(1)

Under IFRS, companies may present expenses based on either their nature or function within the entity, whereas U.S. generally accepted accounting principles requires expenses to be classified by their function. Accordingly, the majority of reclassifications presented above are to conform the presentation to a classification based on function. In addition, certain scrap sales and commissions that are presented as revenue and other operating expenses within Mivisa’s historical financial information have been reclassified as reductions of net sales and cost of products sold to conform to Crown’s presentation.

(2)	This table excludes any pro forma adjustments related to the combined results of Crown and Mivisa.

(3)	The financial information presented under the column “Historical Adjusted to Crown Presentation and U.S. GAAP in USD” would differ if it had been calculated using the exchange rate as of March 31, 2014 or a weighted average exchange rate for the period presented.


	(in millions)
	Twelve Months Ended March 31, 2014 (unaudited)
	Historical IFRS in Euros		Adjustments to Conform to Crown Presentation and U.S. GAAP in Euros (1)			Historical Adjusted to Crown Presentation and U.S. GAAP in Euros (2)		Foreign Exchange (3)		Historical Adjusted to Crown Presentation and U.S. GAAP in USD
Balance Sheet Data (at end of period):
Current assets
Cash and cash equivalents	€	37	€	—		€	37		1.35	$	50
Receivables		124		(14	)		110		1.35		149
Inventories		145		—			145		1.35		196
Other current assets		6		—			6		1.35		8

Total current assets	€	312	€	(14	)	€	298		1.35	$	403

Goodwill		364		—			364		1.35		491
Intangible assets		130		—			130		1.35		176
Property, plant and equipment		208		—			208		1.35		281
Other non-current assets		17		—			17		1.35		23

Total non-current assets	€	719	€	—		€	719		1.35	$	971

Total assets	€	1,031	€	(14	)	€	1,017		1.35	$	1,374

Liabilities and equity:
Current liabilities
Short-term debt		26		—			26		1.35		35
Current maturities of long term debt		16		—			16		1.35		22
Accounts payable and accrued liabilities		99		(14	)		85		1.35		115

Total current liabilities	€	141	€	(14	)	€	127		1.35	$	172

Long-term debt		643		—			643		1.35		868
Other non-current liabilities		76		—			76		1.35		103

Total non-current liabilities	€	719	€	—		€	719		1.35	$	971

Total equity		171		—			171		1.35		231

Total liabilities and equity	€	1,031	€	(14	)	€	1,017		1.35	$	1,374

(1)	U.S. generally accepted accounting principles adjustment primarily relates to the netting of certain VAT assets and liabilities where right of offset exists.

(2)	This table excludes any pro forma adjustments related to the combined results of Crown and Mivisa.

(3)	The financial information presented under the column “Historical Adjusted to Crown Presentation and U.S. GAAP in USD” would differ if it had been calculated using the exchange rate as of March 31, 2014 or a weighted average exchange rate for the period presented.

RISK FACTORS

Risks Related to Crown’s Business

The substantial indebtedness of Crown could prevent it from fulfilling its obligations under the new senior notes and the note guarantees.

Crown has substantial outstanding indebtedness. As a result of Crown’s substantial indebtedness, a significant portion of Crown’s cash flow will be required to pay interest and principal on its outstanding indebtedness, and Crown may not generate sufficient cash flow from operations, or have future borrowings available under its senior secured credit facilities, to enable it to repay its indebtedness, including the new senior notes, or to fund other liquidity needs. As of March 31, 2014, giving adjusted effect to the offering of the new senior notes and the anticipated use of proceeds therefrom and effect to the Mivisa acquisition and related borrowings, Crown and its subsidiaries had approximately $5,861 million of indebtedness, including approximately $2,678 million of secured indebtedness and $378 million of additional indebtedness of non-guarantor subsidiaries and the ability to borrow $810 million under Crown’s senior secured revolving credit facilities. Crown’s ratio of earnings to fixed charges, without giving effect to the Mivisa acquisition, related divestitures or the offering of the new notes, was 3.2 times for the fiscal year ended December 31, 2013, and 2.1 times for the three months ended March 31, 2014. The net proceeds from the offering of the new senior notes, together with other available funds, will be used to retire all of Crown European Holdings’ outstanding €500 million senior unsecured notes due 2018 and to pay fees and expenses associated with the offering of the new senior notes.

As of March 31, 2014, without giving effect to the Mivisa acquisition or the offering of the new senior notes, Crown’s current sources of liquidity and borrowings expire or mature as follows: its $200 million North American securitization facility in December 2015; its €110 million ($152 million at March 31, 2014) European securitization facility in July 2017; its €500 million ($689 million at March 31, 2014) 7.125% senior notes in August 2018; its $1,200 million revolving credit facilities in December 2018; its $700 million 6.25% senior notes in February 2021; its $1,000 million 4.50% senior notes in January 2023; its $350 million 7.375% senior notes in December 2026; its $64 million 7.5% senior notes in December 2096; and $330 million of other indebtedness in various currencies at various dates through 2020. In addition, as of March 31, 2014, without giving effect to the Mivisa acquisition or related divestitures, Crown’s term loan facilities mature as follows: $11 million and €6 million ($8 million at March 31, 2014) in December 2015, $22 million and €11 million ($15 million at March 31, 2014) in December 2016, $33 million and €17 million ($23 million at March 31, 2014) in December 2017, $154 million and €77 million ($106 million at March 31, 2014) in December 2018. To fund the Mivisa acquisition, pay off certain of Mivisa’s existing debt and pay related transaction costs, Crown incurred borrowings on (i) a $580 million Delayed Draw Term Loan A Facility, (ii) a €590 million ($815 million) Delayed Draw Term Euro Facility and (iii) a $362 million Farm Credit Facility. The maturity date for the facilities, other than the Farm Credit Facility, is December 19, 2018. The maturity date for the Farm Credit Facility is December 19, 2019. See “Capitalization” and “Description of Certain Indebtedness.”

The substantial indebtedness of Crown could:

•

make it more difficult for Crown and its subsidiaries to satisfy their obligations with respect to the new senior notes, such as the issuer’s obligation to purchase notes tendered as a result of a change in control of Crown;

•

increase Crown’s vulnerability to general adverse economic and industry conditions, including rising interest rates;

•

restrict Crown from making strategic acquisitions or exploiting business opportunities, including any planned expansion in emerging markets;

•

limit Crown’s ability to make capital expenditures both domestically and internationally in order to grow Crown’s business or maintain manufacturing plants in good working order and repair;

•

limit, along with the financial and other restrictive covenants under Crown’s indebtedness, Crown’s ability to obtain additional financing, dispose of assets or pay cash dividends;

•

require Crown to dedicate a substantial portion of its cash flow from operations to service its indebtedness, thereby reducing the availability of its cash flow to fund future working capital, capital expenditures, research and development expenditures and other general corporate requirements;

•

require Crown to sell assets used in its business;

•

limit Crown’s ability to refinance its existing indebtedness, particularly during periods of adverse credit market conditions when refinancing indebtedness may not be available under interest rates and other terms acceptable to Crown or at all;

•

increase Crown’s cost of borrowing;

•

limit Crown’s flexibility in planning for, or reacting to, changes in its business and the industry in which it operates; and

•

place Crown at a competitive disadvantage compared to its competitors that have less debt.

If its financial condition, operating results and liquidity deteriorate, Crown’s creditors may restrict its ability to obtain future financing and its suppliers could require prepayment or cash on delivery rather than extend credit which could further diminish Crown’s ability to generate cash flows from operations sufficient to service its debt obligations. In addition, Crown’s ability to make payments on and refinance its debt and to fund its operations will depend on Crown’s ability to generate cash in the future.

Some of Crown’s indebtedness is subject to floating interest rates, which would result in Crown’s interest expense increasing if interest rates rise.

As of March 31, 2014, approximately $2,856 million of Crown’s $5,861 million of total indebtedness (giving adjusted effect to the offering of the new senior notes and the anticipated application of the proceeds therefrom and effect to the Mivisa acquisition and related borrowings) and other outstanding obligations were subject to floating interest rates. Changes in economic conditions could result in higher interest rates, thereby increasing Crown’s interest expense and reducing funds available for operations or other purposes. Crown’s annual interest expense was $236 million, $226 million and $232 million for 2013, 2012 and 2011, respectively. Based on the amount of variable rate debt outstanding at December 31, 2013, a 1% increase in variable interest rates would have increased its 2013 annual adjusted interest expense by $8.5 million. Accordingly, Crown may experience economic losses and a negative impact on earnings as a result of interest rate fluctuation. The actual effect of a 1% increase could be more than $8.5 million as Crown’s average borrowings on its variable rate debt may be higher during the year than the amount at December 31, 2013. In addition, the cost of Crown’s securitization facilities would also increase with an increase in floating interest rates. Although Crown may use interest rate protection agreements from time to time to reduce its exposure to interest rate fluctuations in some cases, it may not elect or have the ability to implement hedges or, if it does implement them, there can be no assurance that such agreements will achieve the desired effect. See “Capitalization,” “Description of Certain Indebtedness” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Market Risk.”

Crown’s international operations, which generated approximately 74% of its consolidated net sales in 2013, are subject to various risks that may lead to decreases in its financial results.

Crown is an international company, and the risks associated with operating in foreign countries may have a negative impact on Crown’s liquidity and net income. Crown’s international operations generated approximately 74%, 73%, 73% and 75% of its consolidated net sales in 2013, 2012, 2011 and the three months ended March 31, 2014, respectively, without giving effect to the Mivisa acquisition. In addition, the recent acquisition of Mivisa will increase sales generated by Crown’s international operations and Crown’s business strategy includes continued expansion of international activities, including within developing markets and areas, such as the Middle East, South America, Eastern Europe and Asia, that may pose greater risk of political or economic instability. Approximately 34%, 32%, 30%, and 34% of Crown’s consolidated net sales in 2013, 2012 and 2011 and three-month period ended March 31, 2014, respectively, were generated outside of the developed markets in Western Europe, the United States and Canada, without giving effect to the Mivisa acquisition or related divestitures. Furthermore, if the recent European sovereign debt crisis continues or further deteriorates, there will likely be a negative effect on Crown’s European business, as well as the businesses of Crown’s European customers and suppliers. If this crisis ultimately leads to a significant devaluation of the Euro, the value of Crown’s and Crown European Holdings’ financial assets that are denominated in Euros would be significantly reduced when translated to U.S. dollars for financial reporting purposes. Any of these conditions could ultimately harm Crown’s overall business, prospects, operating results, financial condition and cash flows and such harm may be more pronounced if Crown expands in Western Europe through potential acquisitions or otherwise.

Emerging markets are a focus of Crown’s international growth strategy. The developing nature of these markets and the nature of Crown’s international operations generally are subject to various risks, including:

•

foreign government’s restrictive trade policies;

•

inconsistent product regulation or policy changes by foreign agencies or governments;

•

duties, taxes or government royalties, including the imposition or increase of withholding and other taxes on remittances and other payments by non-U.S. subsidiaries;

•

customs, import/export and other trade compliance regulations;

•

foreign exchange rate risks;

•

difficulty in collecting international accounts receivable and potentially longer payment cycles;

•

increased costs in maintaining international manufacturing and marketing efforts;

•

non-tariff barriers and higher duty rates;

•

difficulties associated with expatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws;

•

difficulties in enforcement of contractual obligations and intellectual property rights and difficulties in protecting intellectual property or sensitive commercial and operations data or information technology systems generally;

•

exchange controls;

•

national and regional labor strikes;

•

the geographic, language and cultural differences between personnel in different areas of the world;

•

high social benefit costs for labor, including costs associated with restructurings;

•

civil unrest or political, social, legal and economic instability, such as recent political turmoil in the Middle East;

•

product boycotts, including with respect to the products of Crown’s multi-national customers;

•

customer, supplier, and investor concerns regarding operations in areas such as the Middle East;

•

taking of property by nationalization or expropriation without fair compensation;

•

imposition of limitations on conversions of foreign currencies into dollars or payment of dividends and other payments by non-U.S. subsidiaries;

•

hyperinflation and currency devaluation in certain foreign countries where such currency devaluation could affect the amount of cash generated by operations in those countries and thereby affect Crown’s ability to satisfy its obligations;

•

war, civil disturbance, global or regional catastrophic events, natural disasters, such as flooding in Southeast Asia, widespread outbreaks of infectious diseases, including in emerging markets, and acts of terrorism;

•

geographical concentration of Crown’s factories and operations and regional shifts in its customer base;

•

periodic health epidemic concerns;

•

the complexity of managing global operations; and

•

compliance with applicable anti-corruption or anti-bribery laws.

There can be no guarantee that a deterioration of economic conditions in countries in which Crown operates or may seek to operate in the future would not have a material impact on Crown’s results of operations.

As Crown seeks to expand its business globally, growth opportunities may be impacted by greater political, economic and social uncertainty and the continuing and accelerating globalization of businesses could significantly change the dynamics of Crown’s competition, customer base and product offerings.

Crown’s efforts to grow its businesses depend to a large extent upon access to, and its success in developing market share and operating profitably in, additional geographic markets including but not limited to the Middle East, South America, Eastern Europe and Asia. In some cases, countries in these regions have greater political and economic volatility, greater vulnerability to infrastructure and labor disruptions and differing local customer product preferences and requirements than Crown’s other markets. Operating and seeking to expand business in a number of different regions and countries exposes Crown to multiple and potentially conflicting cultural practices, business practices and legal and regulatory requirements that are subject to change, including those related to tariffs and trade barriers, investments, property ownership rights, taxation and repatriation of earnings and advanced technologies. Such expansion efforts may also use capital and other resources of Crown that could be invested in other areas. Expanding business operations globally also increases exposure to currency fluctuations which can materially affect Crown’s financial results. As these emerging geographic markets become more important to Crown, its competitors are also seeking to expand their production capacities and sales in these same markets, which may lead to industry overcapacity that could adversely affect pricing, volumes and financial results in such markets. Although Crown is taking measures to adapt to these changing circumstances, Crown’s reputation and/or business results could be negatively affected should these efforts prove unsuccessful.

Crown may not be able to manage its anticipated growth, and it may experience constraints or inefficiencies caused by unanticipated acceleration and deceleration of customer demand.

Unanticipated acceleration and deceleration of customer demand for Crown’s products may result in constraints or inefficiencies related to Crown’s manufacturing, sales force, implementation resources and administrative infrastructure, particularly in emerging markets where Crown is seeking to expand production. Such constraints or inefficiencies may adversely affect Crown as a result of delays, lost potential product sales or loss of current or potential customers due to their dissatisfaction. Similarly, over-expansion, including as a result of overcapacity due to expansion by Crown’s competitors, or investments in anticipation of growth that does not materialize, or develops more slowly than Crown expects, could harm Crown’s financial results and result in overcapacity.

To manage Crown’s anticipated future growth effectively, Crown must continue to enhance its manufacturing capabilities and operations, information technology infrastructure, and financial and accounting systems and controls. Organizational growth and scale-up of operations could strain its existing managerial, operational, financial and other resources. Crown’s growth requires significant capital expenditures and may divert financial resources from other projects, such as the development of new products or enhancements of existing products or reduction of Crown’s outstanding indebtedness. If Crown’s management is unable to effectively manage Crown’s growth, its expenses may increase more than expected, its revenue could grow more slowly than expected and it may not be able to achieve its research and development and production goals. Crown’s failure to manage its anticipated growth effectively could have a material effect on its business, operating results or financial condition.

Crown’s profits will decline if the price of raw materials or energy rises and it cannot increase the price of its products, and Crown’s financial results could be adversely affected if Crown was not able to obtain sufficient quantities of raw materials.

Crown uses various raw materials, such as steel, aluminum, tin, water, natural gas, electricity and other processed energy, in its manufacturing operations. Sufficient quantities of these raw materials may not be available in the future or may be available only at increased prices. Crown’s raw material supply contracts vary as to terms and duration, with steel contracts typically one year in duration with fixed prices and aluminum contracts typically multi-year in duration with fluctuating prices based on aluminum ingot costs. The availability of various raw materials and their prices depends on global and local supply and demand forces, governmental regulations (including tariffs), level of production, resource availability, transportation, and other factors, including natural disasters such as floods and earthquakes. In particular, in recent years the consolidation of steel suppliers, shortage of raw materials affecting the production of steel and the increased global demand for steel, including in China and other developing countries, have contributed to an overall tighter supply for steel, resulting in increased steel prices and, in some cases, special surcharges and allocated cut backs of products by steel suppliers. In addition, future steel supply contracts may provide for prices that fluctuate or adjust rather than provide a fixed price during a one-year period. As a result of continuing global supply and demand pressures, other commodity-related costs affecting its business may increase as well, including natural gas, electricity and freight-related costs.

The prices of certain raw materials used by Crown, such as steel, aluminum and processed energy, have historically been subject to volatility. In 2013, consumption of steel and aluminum represented 25% and 39%, respectively, of Crown’s consolidated cost of products sold, excluding depreciation and amortization. While certain, but not all, of Crown’s contracts pass through raw material costs to customers, Crown may be unable to increase its prices to offset increases in raw material costs without suffering reductions in unit volume, revenue and operating income. In addition, any price increases may take effect after related cost increases, reducing operating income in the near term. Significant increases in raw material costs may increase Crown’s working capital requirements, which may increase Crown’s average outstanding indebtedness and interest expense and may exceed the amounts available under Crown’s senior secured credit facilities and other sources of liquidity. In addition, Crown hedges raw material costs on behalf of certain customers and may suffer losses if such customers are unable to satisfy their purchase obligations.

If Crown is unable to purchase steel, aluminum or other raw materials for a significant period of time, Crown’s operations would be disrupted and any such disruption may adversely affect Crown’s financial results. If customers believe that Crown’s competitors have greater access to raw materials, perceived certainty of supply at Crown’s competitors may put Crown at a competitive disadvantage regarding pricing and product volumes.

Crown is subject to the effects of fluctuations in foreign exchange rates, which may reduce its net sales and cash flow.

Crown is exposed to fluctuations in foreign currencies as a significant portion of its consolidated net sales, its costs, assets and liabilities, are denominated in currencies other than the U.S. dollar. For the fiscal years ended December 31, 2013, 2012 and 2011 and the three months ended March 31, 2014, Crown derived approximately 74%, 73%, 73%, and 75%, respectively, of its consolidated net sales from its international operations, without giving effect to the Mivisa acquisition. The recent acquisition of Mivisa will increase Crown’s sales in foreign currencies. In its consolidated financial statements, Crown translates local currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period. During times of a strengthening U.S. dollar, its reported international revenue and earnings will be reduced because the local currency will translate into fewer U.S. dollars. Conversely, a weakening U.S. dollar will effectively increase the dollar-equivalent of Crown’s expenses and liabilities denominated in foreign currencies. Crown’s translation and exchange adjustments decreased reported income before tax by $3 million in 2013 and $2 million in 2011 and increased reported income before tax by $1 million in 2012. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Market Risk.” Although Crown may use financial instruments such as foreign currency forwards from time to time to reduce its exposure to currency exchange rate fluctuations in some cases, it may not elect or have the ability to implement hedges or, if it does implement them, there can be no assurance that such agreements will achieve the desired effect.

For the year-ended December 31, 2013, a 0.10 movement in the average Euro rate (e.g., from 1.33 USD = 1 Euro to 1.23 USD = 1 Euro) would have reduced net income by $7 million.

Pending and future asbestos litigation and payments to settle asbestos-related claims could reduce Crown’s cash flow and negatively impact its financial condition.

Crown Cork, a wholly-owned subsidiary of Crown, is one of many defendants in a substantial number of lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to asbestos. In 1963, Crown Cork acquired a subsidiary that had two operating businesses, one of which is alleged to have manufactured asbestos-containing insulation products. Crown Cork believes that the business ceased manufacturing such products in 1963.

Crown recorded pre-tax charges of $32 million, $35 million and $28 million to increase its accrual for asbestos-related liabilities in 2013, 2012, and 2011, respectively. As of March 31, 2014, Crown Cork’s accrual for pending and future asbestos-related claims and related legal costs was $250 million, including $211 million for unasserted claims. Crown Cork’s accrual includes estimated probable costs for claims through the year 2023. Crown Cork’s accrual excludes potential costs for claims beyond 2023 because Crown believes that the key assumptions underlying its accrual are subject to greater uncertainty as the projection period lengthens. Assumptions underlying the accrual include that claims for exposure to asbestos that occurred after the sale of the subsidiary’s insulation business in 1964 would not be entitled to settlement payouts and that state statutes described under Note K to Crown’s audited consolidated financial statements, including Texas and Pennsylvania statutes, are expected to have a highly favorable impact on Crown Cork’s ability to settle or defend against asbestos-related claims in those states and other states where Pennsylvania law may apply.

Crown Cork had approximately 53,000 asbestos-related claims outstanding at December 31, 2013. Of these claims, approximately 16,000 claims relate to claimants alleging first exposure to asbestos after 1964 and approximately 37,000 relate to claimants alleging first exposure to asbestos before or during 1964, of which approximately 13,000 were filed in Texas, 2,000 were filed in Pennsylvania, 6,000 were filed in other states that have enacted asbestos legislation and 16,000 were filed in other states. The outstanding claims at December 31, 2013 exclude approximately 19,000 inactive claims. Due to the passage of time, Crown considers it unlikely that the plaintiffs in these cases will pursue further action. The exclusion of these inactive claims had no effect on the calculation of Crown’s accrual as the claims were filed in states where Crown’s liability is limited by statute. Crown devotes significant time and expense to defend against these various claims, complaints and proceedings, and there can be no assurance that the expenses or distractions from operating Crown’s businesses arising from these defenses will not increase materially.

During the three months ended March 31, 2014, Crown Cork received approximately 1,000 new claims and settled or dismissed approximately 1,000 claims. Approximately 53,000 claims were outstanding at the end of the period.

On October 22, 2010, the Texas Supreme Court, in a 6-2 decision, reversed a lower court decision, Barbara Robinson v. Crown Cork & Seal Company, Inc., No. 14-04-00658-CV, Fourteenth Court of Appeals, Texas, which had upheld the dismissal of an asbestos-related case against Crown Cork. The Texas Supreme Court held that the Texas legislation was unconstitutional under the Texas Constitution when applied to asbestos-related claims pending against Crown Cork when the legislation was enacted in June of 2003. Crown believes that the decision of the Texas Supreme Court is limited to retroactive application of the Texas legislation to asbestos-related cases that were pending against Crown Cork in Texas on June 11, 2003 and therefore continues to assign no value to claims filed after June 11, 2003.

Crown Cork made cash payments of $28 million in each of the years 2013, 2012 and 2011 and $10 million for the three months ended March 31, 2014 for asbestos-related claims, including settlement payments and legal fees. These payments have reduced and any such future payments will reduce the cash flow available to Crown Cork for its business operations and debt payments.

Asbestos-related payments, including defense costs, may be significantly higher than those estimated by Crown Cork because the outcome of this type of litigation (and, therefore, Crown Cork’s reserve) is subject to a number of assumptions and uncertainties, such as the number or size of asbestos-related claims or settlements, the number of financially viable responsible parties, the extent to which state statutes relating to asbestos liability are upheld and/or applied by the courts, Crown Cork’s ability to obtain resolution without payment of asbestos-related claims by persons alleging first exposure to asbestos after 1964, and the potential impact of any pending or future asbestos-related legislation. Accordingly, Crown Cork may be required to make payments for claims substantially in excess of its accrual, which could reduce Crown’s cash flow and impair its ability to satisfy its obligations. As a result of the uncertainties regarding its asbestos-related liabilities and its reduced cash flow, the ability of Crown to raise new money in the capital markets is more difficult and more costly, and Crown may not be able to access the capital markets in the future. Further information regarding Crown Cork’s asbestos-related liabilities is presented within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings, “Provision for Asbestos” and “Critical Accounting Policies” and under Note K to Crown’s audited consolidated financial statements.

Crown has significant pension plan obligations worldwide and significant unfunded postretirement obligations, which could reduce its cash flow and negatively impact its results of operations and its financial condition.

Crown sponsors various pension plans worldwide, with the largest funded plans in the United Kingdom, United States and Canada. In 2013, 2012, and 2011, Crown contributed $84 million, $102 million and $404 million, respectively,

to its pension plans. Pension expense was $75 million in 2013 and is expected to be $63 million in 2014. A 0.25% change in the 2014 expected rate of return assumptions would change 2014 pension expense by approximately $11 million. A 0.25% change in the discount rates assumptions as of December 31, 2013 would change 2014 pension expense by approximately $5 million. Crown may be required to accelerate the timing of its contributions under its pension plans. The actual impact of any accelerated funding will depend upon the interest rates required for determining the plan liabilities and the investment performance of plan assets. An acceleration in the timing of pension plan contributions could decrease Crown’s cash available to pay its outstanding obligations and its net income and increase Crown’s outstanding indebtedness.

Based on current assumptions, Crown expects to make pension contributions of $80 million in 2014, $120 million in 2015, $91 million in 2016, $94 million in 2017 and $94 million in 2018 including its supplemental executive retirement plan.

The difference between pension plan obligations and assets, or the funded status of the plans, significantly affects the net periodic benefit costs of Crown’s pension plans and the ongoing funding requirements of those plans. Among other factors, significant volatility in the equity markets and in the value of illiquid alternative investments, changes in discount rates, investment returns and the market value of plan assets can substantially increase Crown’s future pension plan funding requirements and could have a negative impact on Crown’s results of operations and profitability. See Note V to Crown’s audited consolidated financial statements. While its U.S. funded pension plan continues in effect, Crown continues to incur additional pension obligations. Crown’s pension plan assets consist primarily of common stocks and fixed income securities and also include alternative investments such as interests in private equity and hedge funds. If the performance of plan assets does not meet Crown’s assumptions or discount rates continue to decline, the underfunding of the pension plan may increase and Crown may have to contribute additional funds to the pension plan, and its pension expense may increase. In addition, Crown’s supplemental executive retirement plan and retiree medical plans are unfunded.

Crown’s U.S. funded pension plan is subject to the Employee Retirement Income Security Act of 1974, or ERISA. Under ERISA, the Pension Benefit Guaranty Corporation, or PBGC, has the authority to terminate an underfunded plan under certain circumstances. In the event its U.S. pension plan is terminated for any reason while the plan is underfunded, Crown will incur a liability to the PBGC that may be equal to the entire amount of the underfunding, which under certain circumstances may be senior to the notes. In addition, as of December 31, 2013 the unfunded accumulated postretirement benefit obligation, as calculated in accordance with U.S. generally accepted accounting principles, for retiree medical benefits was approximately $274 million, based on assumptions set forth under Note V to Crown’s audited consolidated financial statements.

Acquisitions or investments that Crown is considering or may pursue could be unsuccessful, consume significant resources and require the incurrence of additional indebtedness.

Crown is considering, and in the future may pursue acquisitions and investments that complement its existing business. These possible acquisitions and investments, including an acquisition currently under consideration by Crown, may involve significant cash expenditures, debt incurrence (including the incurrence of additional indebtedness under Crown’s senior secured revolving credit facilities or other secured or unsecured debt), operating losses and expenses that could have a material effect on Crown’s financial condition and operating results.

In particular, if Crown incurs additional debt, Crown’s liquidity and financial stability could be impaired as a result of using a significant portion of available cash or borrowing capacity to finance an acquisition. Moreover, Crown may face an increase in interest expense or financial leverage if additional debt is incurred to finance an acquisition, which may, among other things, adversely affect Crown’s various financial ratios and Crown’s compliance with the conditions of its existing indebtedness. In addition, such additional indebtedness may be incurred under Crown’s senior secured credit facilities or otherwise secured by liens on Crown’s assets, in which case the new senior notes and the note guarantees would be effectively subordinated to the additional debt. See “Description of Certain Indebtedness.”

Acquisitions involve numerous other risks, including:

•

diversion of management time and attention;

•

failures to identify material problems and liabilities of acquisition targets or to obtain sufficient indemnification rights to fully offset possible liabilities related to the acquired businesses;

•

difficulties integrating the operations, technologies and personnel of the acquired businesses;

•

inefficiencies and complexities that may arise due to unfamiliarity with new assets, businesses or markets;

•

disruptions to Crown’s ongoing business;

•

inaccurate estimates of fair value made in the accounting for acquisitions and amortization of acquired intangible assets which would reduce future reported earnings;

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the inability to obtain required financing for the new acquisition or investment opportunities and Crown’s existing business;

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potential loss of key employees, contractual relationships, suppliers or customers of the acquired businesses or of Crown; and

•

inability to obtain required regulatory approvals.

To the extent Crown pursues an acquisition that causes it to incur unexpected costs or that fails to generate expected returns, Crown’s financial position, results of operations and cash flows may be adversely affected, and Crown’s ability to service its indebtedness, including the new senior notes, may be negatively impacted.

Crown’s principal markets may be subject to overcapacity and intense competition, which could reduce Crown’s net sales and net income.

Food and beverage cans are standardized products, allowing for relatively little differentiation among competitors. This could lead to overcapacity and price competition among food and beverage can producers, if capacity growth outpaced the growth in demand for food and beverage cans and overall manufacturing capacity exceeded demand. These market conditions could reduce product prices and contribute to declining revenue and net income and increasing debt balances. As a result of industry overcapacity and price competition, Crown may not be able to increase prices sufficiently to offset higher costs or to generate sufficient cash flow. The North American and Western Europe food and beverage can markets, in particular, are considered to be mature markets, characterized by slow growth and a sophisticated distribution system.

Competitive pricing pressures, overcapacity, the failure to develop new product designs and technologies for products, as well as other factors could cause Crown to lose existing business or opportunities to generate new business and could result in decreased cash flow and net income.

Crown is subject to competition from substitute products and decreases in demand for its products, which could result in lower profits and reduced cash flows.

Crown is subject to substantial competition from producers of alternative packaging made from glass, paper, flexible materials and plastic. Crown’s sales depend heavily on the volumes of sales by Crown’s customers in the food and beverage markets. Changes in preferences for products and packaging by consumers of prepackaged food and beverage cans significantly influence Crown’s sales. Changes in packaging by Crown’s customers may require Crown to re-tool manufacturing operations, which could require material expenditures. In addition, a decrease in the costs of, or a further increase in consumer demand for, alternative packaging could result in lower profits and reduced cash flows for Crown. For example, increases in the price of aluminum and steel and decreases in the price of plastic resin, which is a petrochemical product and may fluctuate with prices in the oil and gas market, may increase substitution of plastic food and beverage containers for metal containers or increases in the price of steel may increase substitution of aluminum packaging for aerosol products. Moreover, due to its high percentage of fixed costs, Crown may be unable to maintain its gross margin at past levels if it is not able to achieve high capacity utilization rates for its production equipment. In periods of low world-wide demand for its products, Crown experiences relatively low capacity utilization rates in its operations, which can lead to reduced margins during that period and can have an adverse effect on Crown’s business.

Crown’s business results depend on its ability to understand its customers’ specific preferences and requirements, and to develop, manufacture and market products that meet customer demand.

Crown’s ability to develop new product offerings for a diverse group of global customers with differing preferences, while maintaining functionality and spurring innovation, is critical to its success. This requires a thorough understanding of Crown’s existing and potential customers on a global basis, particularly in potential high growth emerging markets, including the Middle East, South America, Eastern Europe and Asia. Failure to deliver quality products that meet customer needs ahead of competitors could have a significant adverse effect on Crown’s business.

The loss of a major customer and/or customer consolidation could reduce Crown’s net sales and profitability.

Many of Crown’s largest customers have acquired companies with similar or complementary product lines. This consolidation has increased the concentration of Crown’s business with its largest customers. In many cases, such consolidation has been accompanied by pressure from customers for lower prices, reflecting the increase in the total volume of product purchased or the elimination of a price differential between the acquiring customer and the company acquired. Increased pricing pressures from Crown’s customers may reduce Crown’s net sales and net income.

The majority of Crown’s sales are to companies that have leading market positions in the sale of packaged food, beverages and household products to consumers. Although no one customer accounted for more than 10% of its net sales in the years ended 2013, 2012 or 2011, the loss of any of its major customers, a reduction in the purchasing levels of these customers or an adverse change in the terms of supply agreements with these customers could reduce Crown’s net sales and net income. A continued consolidation of Crown’s customers could exacerbate any such loss.

Crown’s business is seasonal and weather conditions could reduce Crown’s net sales.

Crown manufactures packaging primarily for the food and beverage can market. Its sales can be affected by weather conditions. Due principally to the seasonal nature of the soft drink, brewing, iced tea and other beverage

industries, in which demand is stronger during the summer months, sales of Crown’s products have varied and are expected to vary by quarter. Shipments in the United States and Europe are typically greater in the second and third quarters of the year. Unseasonably cool weather can reduce consumer demand for certain beverages packaged in its containers. In addition, poor weather conditions that reduce crop yields of packaged foods can decrease customer demand for its food containers.

Crown is subject to costs and liabilities related to stringent environmental and health and safety standards.

Laws and regulations relating to environmental protection and health and safety may increase Crown’s costs of operating and reduce its profitability. Crown’s operations are subject to numerous U.S. federal and state and non-U.S. laws and regulations governing the protection of the environment, including those relating to treatment, storage and disposal of waste, the use of chemicals in Crown’s products and manufacturing process, discharges into water, emissions into the atmosphere, remediation of soil and groundwater contamination and protection of employee health and safety. Future regulations may impose stricter environmental or employee safety requirements affecting Crown’s operations or may impose additional requirements regarding consumer health and safety, such as potential restrictions on the use of bisphenol-A, a starting material used to produce internal and external coatings for some food, beverage, and aerosol containers and metal closures. Although the U.S. FDA currently permits the use of bisphenol-A in food packaging materials and confirmed in a January 2010 update that studies employing standardized toxicity tests have supported the safety of current low levels of human exposure to bisphenol-A, the FDA in that January 2010 update noted that more research was needed, and further suggested reasonable steps to reduce exposure to bisphenol-A. The FDA subsequently entered into a consent decree under which it agreed to issue, by March 31, 2012, a final decision on a citizen’s petition requesting the agency take further regulatory steps with regard to bisphenol-A. On March 30, 2012, the FDA denied the request, responding, in part, that the appropriate course of action was to continue scientific study and review of all new evidence regarding the safety of bisphenol-A. In March 2010, the EPA issued an action plan for bisphenol-A, which includes, among other things, consideration of whether to add bisphenol-A to the chemical concern list on the basis of potential environmental effects and use of the EPA’s Design for the Environment program to encourage reductions in bisphenol-A manufacturing and use. Moreover, certain U.S. Congressional bodies, states and municipalities, as well as certain foreign nations and some member states of the European Union, such as Denmark, Belgium and France, have considered, proposed or already passed legislation banning or suspending the use of bisphenol-A in certain products or requiring warnings regarding bisphenol-A. In July 2012, the FDA banned the use of bisphenol-A in baby bottles and children’s drinking cups, and in July 2013, the FDA banned the use of bisphenol-A in epoxy resins that coat infant formula cans. In the fourth quarter of 2012, the French Parliament passed a law suspending the use of bisphenol-A in food packaging beginning in 2013 for food intended for children under 3 and in 2015 for all other foods. The law also includes certain product labeling requirements. In the first quarter of 2014, the European Food Safety Authority recommended that the tolerable daily intake of bisphenol-A be lowered. Further, the U.S. or additional international, federal, state or other regulatory authorities could restrict or prohibit the use of bisphenol-A in the future. For example, on April 11, 2013, the State of California declared bisphenol-A a reproductive system hazard. However, this declaration was enjoined on April 19, 2013 pending the resolution of a suit challenging the classification. If the injunction is lifted, it would trigger a requirement to include warning labels on consumer items containing bisphenol-A in excess of certain levels. In addition, recent public reports, litigation and other allegations regarding the potential health hazards of bisphenol-A could contribute to a perceived safety risk about Crown’s products and adversely impact sales or otherwise disrupt Crown’s business. While Crown is exploring various alternatives to the use of bisphenol-A and conversion to alternatives is underway in some applications, there can be no assurance that Crown will be completely successful in its efforts or that the alternatives will not be more costly to Crown.

Also, for example, future restrictions in some jurisdictions on air emissions of volatile organic compounds and the use of certain paint and lacquering ingredients may require Crown to employ additional control equipment or process modifications. Crown’s operations and properties, both in the United States and abroad, must comply with these laws and regulations. In addition, a number of governmental authorities in the United States and abroad have introduced or are contemplating enacting legal requirements, including emissions limitations, cap and trade systems or mandated changes in energy consumption, in response to the potential impacts of climate change. Given the wide range of potential future climate change regulations in the jurisdictions in which Crown operates, the potential impact to Crown’s operations is uncertain. In addition, the potential impact of climate change on Crown’s operations is highly uncertain. The impact of climate change may vary by geographic location and other circumstances, including weather patterns and any impact to natural resources such as water.

A number of governmental authorities both in the United States and abroad also have enacted, or are considering, legal requirements relating to product stewardship, including mandating recycling, the use of recycled materials and/or limitations on certain kinds of packaging materials such as plastics. In addition, some companies with packaging needs have responded to such developments, and/or to perceived environmental concerns of consumers, by using containers made in whole or in part of recycled materials. Such developments may reduce the demand for some of Crown’s products, and/or increase its costs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Environmental Matters.”

Crown has a significant amount of goodwill that, if impaired in the future, would result in lower reported net income and a reduction of its net worth.

Impairment of Crown’s goodwill would require a write down of goodwill, which would reduce Crown’s net income in the period of any such write down. At March 31, 2014, the carrying value of Crown’s goodwill was approximately $2 billion. Crown is required to evaluate goodwill reflected on its balance sheet at least annually, or when circumstances indicate a potential impairment. If it determines that the goodwill is impaired, Crown would be required to write off a portion or all of the goodwill.

If Crown fails to retain key management and personnel, Crown may be unable to implement its business plan.

Members of Crown’s senior management have extensive industry experience, and it might be difficult to find new personnel with comparable experience. Because Crown’s business is highly specialized, Crown believes that it would also be difficult to replace its key technical personnel. Crown believes that its future success depends, in large part, on its experienced senior management team. Losing the services of key members of its management team could limit Crown’s ability to implement its business plan. In addition, under Crown’s unfunded Senior Executive Retirement Plan certain members of senior management are entitled to lump sum payments upon retirement or other termination of employment and a lump sum death benefit of five times the annual retirement benefit.

A significant portion of Crown’s workforce is unionized and labor disruptions could increase Crown’s costs and prevent Crown from supplying its customers.

A significant portion of Crown’s workforce is unionized and a prolonged work stoppage or strike at any facility with unionized employees could increase its costs and prevent Crown from supplying its customers. In addition, upon the expiration of existing collective bargaining agreements, Crown may not reach new agreements without union action and any such new agreements may not be on terms satisfactory to Crown. Moreover, additional groups of currently non-unionized employees may seek union representation in the future. If Crown is unable to negotiate acceptable collective bargaining agreements, it may become subject to union-initiated work stoppages, including strikes. In recent months Crown has temporarily relocated production due to a labor dispute and related work stoppage at a facility in the Americas Beverage segment. The National Labor Relations Board (“NLRB”) has adopted new regulations concerning the procedures for conducting employee representation elections that, if implemented, could make it significantly easier for labor organizations to prevail in elections. The regulations became effective on April 30, 2012; however, in May 2012, a federal district court found that the regulations were not properly adopted by the NLRB. The NLRB responded to the decision by issuing proposed amendments to its rules and regulations governing representation-case procedures, inviting public comments and holding public hearings. The comment period has closed and the NLRB is expected to issue amendments reflecting the public comments and hearings.

Failure by Crown’s joint venture partners to observe their obligations could adversely affect the business and operations of the joint ventures and, in turn, the business and operations of Crown.

A portion of Crown’s operations, including certain joint venture beverage can operations in Asia, the Middle East and South America, is conducted through certain joint ventures. Crown participates in these ventures with third parties. In the event that Crown’s joint venture partners do not observe their obligations or are unable to commit additional capital to the joint ventures, it is possible that the affected joint venture would not be able to operate in accordance with its business plans or that Crown would have to increase its level of commitment to the joint venture.

If Crown fails to maintain an effective system of internal control, Crown may not be able to accurately report financial results or prevent fraud.

Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm Crown’s business. Crown must annually evaluate its internal procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires management and auditors to assess the effectiveness of internal controls. If Crown fails to remedy or maintain the adequacy of its internal controls, as such standards are modified, supplemented or amended from time to time, Crown could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation.

In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect Crown’s financial condition. There can be no assurance that Crown will be able to complete the work necessary to fully comply with the requirements of the Sarbanes-Oxley Act or that Crown’s management and external auditors will continue to conclude that Crown’s internal controls are effective.

Crown is subject to litigation risks which could negatively impact its operations and net income.

Crown is subject to various lawsuits and claims with respect to matters such as governmental, environmental and employee benefits laws and regulations, securities, labor, and actions arising out of the normal course of business, in addition to asbestos-related litigation described under the risk factor titled “Pending and future asbestos litigation and

payments to settle asbestos-related claims could reduce Crown’s cash flow and negatively impact its financial condition.” Crown is currently unable to determine the total expense or possible loss, if any, that may ultimately be incurred in the resolution of such legal proceedings. Regardless of the ultimate outcome of such legal proceedings, they could result in significant diversion of time by Crown’s management. The results of Crown’s pending legal proceedings, including any potential settlements, are uncertain and the outcome of these disputes may decrease its cash available for operations and investment, restrict its operations or otherwise negatively impact its business, operating results, financial condition and cash flow.

The downturn in certain global economies could have adverse effects on Crown.

The downturn in certain global economies could have significant adverse effects on Crown’s operations, including as a result of any the following:

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downturns in the business or financial condition of any of Crown’s key customers or suppliers, potentially resulting in customers’ inability to pay Crown’s invoices as they become due or at all or suppliers’ failure to fulfill their commitments;

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potential losses associated with hedging activity by Crown for the benefit of Crown’s customers including counterparty risk associated with such hedging activity, or cost impacts of changing suppliers;

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a decline in the fair value of Crown’s pension assets or a decline in discount rates used to measure Crown’s pension obligations, potentially requiring Crown to make significant additional contributions to its pension plans to meet prescribed funding levels;

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the deterioration of any of the lending parties under Crown’s senior secured revolving credit facilities or the creditworthiness of the counterparties to Crown’s derivative transactions, which could result in such parties’ failure to satisfy their obligations under their arrangements with Crown;

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noncompliance with the covenants under Crown’s indebtedness as a result of a weakening of Crown’s financial position or results of operations; and

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the lack of currently available funding sources, which could have a negative impact upon the liquidity of Crown as well as that of its customers and suppliers.

Crown could also be adversely affected by the negative impact on economic growth resulting from the combination of federal individual income tax increases and government spending restrictions that recently came into effect in the United States.

Crown relies on its information technology and the failure or disruption of its information technology could disrupt its operations and adversely affect its results of operations.

Crown’s business increasingly relies on the successful and uninterrupted functioning of its information technology systems to process, transmit, and store electronic information. A significant portion of the communication between Crown’s personnel around the world, customers, and suppliers depends on information technology. As with all large systems, Crown’s information technology systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors or catastrophic events. In addition, security breaches could result in unauthorized disclosure of confidential information.

The concentration of processes in shared services centers means that any disruption could impact a large portion of Crown’s business within the operating zones served by the affected service center. If Crown does not allocate, and effectively manage, the resources necessary to build, sustain and protect the proper technology infrastructure, Crown could be subject to transaction errors, processing inefficiencies, loss of customers, business disruptions, the loss of or damage to intellectual property through security breach, as well as potential civil liability and fines under various states’ laws in which Crown does business. Crown’s information technology system could also be penetrated by outside parties intent on extracting information, corrupting information or disrupting business processes. In addition, if Crown’s information technology systems suffer severe damage, disruption or shutdown and Crown’s business continuity plans do not effectively resolve the issues in a timely manner, Crown may lose revenue and profits as a result of its inability to timely manufacture, distribute, invoice and collect payments from its customers, and could experience delays in reporting its financial results, including with respect to Crown’s operations in emerging markets. Furthermore, if Crown is unable to prevent security breaches, it may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to Crown or to its customers or suppliers. Failure or disruption of these systems, or the back-up systems, for any reason could disrupt Crown’s operations and negatively impact Crown’s cash flows or financial condition.

Potential U.S. tax law changes could increase Crown’s U.S. tax expense on its overseas earnings which could have a negative impact on its after-tax income and cash flow.

Legislative proposals have been made to reform the deferral of U.S. taxes on non-U.S. earnings (including as part of President Obama’s Budget of the United States Government for 2015), which could significantly change the timing and extent of taxation on Crown’s unrepatriated non-U.S earnings. These reforms include, among other items, a proposal to further limit foreign tax credits and a proposal to defer interest expense deductions allocable to non-U.S earnings until earnings are repatriated. The proposal to defer interest expense deductions and other deductions for expenses could

result in Crown not being able to currently deduct a significant portion of its interest expense. The proposal to defer tax deductions allocable to unrepatriated non-U.S. earnings has been set out in various draft Congressional legislative proposals in recent years which were not enacted, and at this juncture it is unclear whether this proposed tax revision (or any of the reforms described above) will be enacted or, if enacted, what the precise scope of the revisions will be. However, depending on their content, such proposals could have a material adverse effect on Crown’s after-tax income and cash flow.

Changes in accounting standards, taxation requirements and other law could negatively affect Crown’s financial results.

New accounting standards or pronouncements that may become applicable to Crown from time to time, or changes in the interpretation of existing standards and pronouncements, could have a significant effect on Crown’s reported results for the affected periods. Crown is also subject to income tax in the numerous jurisdictions in which Crown operates. Increases in income tax rates or other changes to tax laws could reduce Crown’s after-tax income from affected jurisdictions or otherwise affect Crown’s tax liability. In addition, Crown’s products are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions in which it operates. Increases in indirect taxes could affect Crown’s products’ affordability and therefore reduce demand for its products.

Crown may experience significant negative effects to its business as a result of new federal, state or local taxes, increases to current taxes or other governmental regulations specifically targeted to decrease the consumption of certain types of beverages.

Public health officials and government officials have become increasingly concerned about the public health consequences associated with over-consumption of certain types of beverages, such as sugar beverages and including those sold by certain of Crown’s significant customers. Possible new federal, state or local taxes, increases to current taxes or other governmental regulations specifically targeted to decrease the consumption of these beverages may significantly reduce demand for the beverages of Crown’s customers, which could in turn affect demand of Crown’s customers for Crown’s products. For example, members of the U.S. Congress recently raised the possibility of a federal tax on the sale of certain beverages, including non-diet soft drinks, fruit drinks, teas and flavored waters. Some state governments are also considering similar taxes. If enacted, such taxes could materially adversely affect Crown’s business and financial results.

The loss of Crown’s intellectual property rights may negatively impact its ability to compete.

If Crown is unable to maintain the proprietary nature of its technologies, its competitors may use its technologies to compete with it. Crown has a number of patents covering various aspects of its products, including its SuperEnd^® beverage can end, whose primary patent expires in 2016, Easylift™ full aperture steel food can ends, PeelSeam™ flexible lidding and Ideal™ product line. Crown’s patents may not withstand challenge in litigation, and patents do not ensure that competitors will not develop competing products or infringe upon Crown’s patents. Moreover, the costs of litigation to defend Crown’s patents could be substantial and may outweigh the benefits of enforcing its rights under its patents. Crown markets its products internationally and the patent laws of foreign countries may offer less protection than the patent laws of the United States. Not all of Crown’s domestic patents have been registered in other countries. Crown also relies on trade secrets, know-how and other unpatented proprietary technology, and others may independently develop the same or similar technology or otherwise obtain access to Crown’s unpatented technology. In addition, Crown has from time to time received letters from third parties suggesting that it may be infringing on their intellectual property rights, and third parties may bring infringement suits against Crown, which could result in Crown needing to seek licenses from these third parties or refraining altogether from use of the claimed technology.

Demand for Crown’s products could be affected by changes in laws and regulations applicable to food and beverages and changes in consumer preferences.

Crown manufactures and sells packaging primarily for the food and beverage can market. As a result, many of Crown’s products come into direct contact with food and beverages. Accordingly, our products must comply with various laws and regulations for food and beverages applicable to our customers. Changes in such laws and regulations could negatively impact our customers’ demand for our products as they comply with such changes and/or require us to make changes to our products. Such changes to our products could include modifications to the coatings and compounds that Crown uses, possibly resulting in the incurrence by us of additional costs. Additionally, because many of our products are used to package consumer goods, we are subject to a variety of risks that could influence consumer behavior and negatively impact demand for our products, including changes in consumer preferences driven by various health-related concerns and perceptions.

We may not be able to use all of our foreign tax credit carryforwards in the event we undergo an ownership change as defined by the U.S. Internal Revenue Code of 1986.

We have substantial foreign tax carryforwards that can, subject to complex limitations, reduce U.S. taxes owed on foreign income. In the event we undergo an ownership change as determined, our use of those foreign tax credit carryovers may be severely curtailed under section 383 of the U.S. Internal Revenue Code of 1986. An ownership change may occur if the percentage of our stock owned by one or more 5% shareholders increases by more than 50 percentage points over the lowest percentage of our stock owned by those shareholders, measured over a three year period.

CAPITALIZATION

The following table sets forth the consolidated cash and cash equivalents and capitalization of Crown as of March 31, 2014, on an actual basis and the consolidated cash and cash equivalents and capitalization of Crown as of March 31, 2014 as adjusted to give adjusted effect to the offering of the new senior notes and the application of the net proceeds therefrom, and without giving effect to the Mivisa acquisition or related divestitures. You should read this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness” and Crown’s audited consolidated financial statements and the related notes thereto.


	(dollars in millions)
	March 31, 2014
	Actual		As Adjusted
Cash and cash equivalents(1)	$	267	$	229

Debt:
Senior secured facilities:
Revolving credit facilities due 2018		350		350
Receivables securitization facilities		184		184
Term loan facilities(2)
U.S. dollar at LIBOR plus 1.75% due 2018		220		220
Euro (€110 at March 31, 2014) at EURIBOR plus 1.75% due 2018		151		151
Euro (€500 at March 31, 2014) 7_¹⁄₈% Senior notes due 2018(3)		689		—
U.S. dollar 6_¹⁄₄% Senior notes due 2021		700		700
U.S. dollar 4^¹⁄₂% Senior notes due 2023		1,000		1,000
Euro % Senior notes due 2022(4)		—		689
U.S. dollar 7^³⁄₈% Senior notes due 2026		350		350
U.S. dollar 7_¹⁄₂% Senior notes due 2096		64		64
Capital lease obligations and other secured debt		16		16
Other unsecured indebtedness		380		380

Total debt		4,104		4,104
Noncontrolling interests		255		255
Crown Holdings shareholders’ equity/(deficit)(5)		3		(32	)

Total capitalization	$	4,362	$	4,327

(1)

As adjusted cash and cash equivalents decrease by $38 million, reflecting an increase of $689 million from the issuance of the new senior notes, offset by $38 million of fees and expenses paid in connection therewith and approximately $689 million used to retire Crown European Holdings’ outstanding senior unsecured notes due 2018. See “Description of Certain Indebtedness.”

(2)

Actual and as adjusted amounts do not give effect to the acquisition of Mivisa during the second quarter of 2014 for approximately €550 million ($760 million) including lockbox interest and €700 million ($966 million) of debt assumed plus transaction costs excluding the impact of any cash acquired or the completion of relative divestitures. To fund the acquisition, pay off certain of Mivisa’s existing debt and pay related transaction costs, Crown incurred borrowings on (i) a $580 million Delayed Draw Term Loan A Facility, (ii) a €590 million ($815 million) Delayed Draw Term Euro Facility and (iii) a $362 million Farm Credit Facility. The maturity date for the facilities, other than the Farm Credit Facility, is December 19, 2018. The maturity date for the Farm Credit Facility is December 19, 2019.

(3)

The net proceeds from the offering of the new senior notes, together with other available funds, will be used to retire all of Crown European Holdings’ outstanding €500 million senior unsecured notes due 2018 and to pay fees and expenses associated with the offering of the notes. See “Description of Certain Indebtedness.”

(4)	Consists of €500 million aggregate principal amount of new senior notes and does not give effect to original issue discount, if any.

(5)	As adjusted shareholders’ equity has decreased by $35 million to reflect $29 million in premiums and remaining interest paid to retire the €500 million of outstanding senior unsecured notes due 2018 and $6 million to write off unamortized debt issuance costs.

CROWN’S BUSINESS

General

Crown is a worldwide leader in the design, manufacture and sale of packaging products for consumer goods. Crown’s primary products include steel and aluminum cans for food, beverage, household and other consumer products and metal vacuum closures and caps. These products are manufactured in Crown’s plants both within and outside the United States and are sold through Crown’s sales organization to the soft drink, food, citrus, brewing, household products, personal care and various other industries. At March 31, 2014, Crown operated 147 plants along with sales and service facilities throughout 40 countries and had approximately 21,900 employees. Consolidated net sales for Crown in 2013 and the three months ended March 31, 2014 were $8,656 million and $1,993 million, respectively, with 74% of 2013 net sales and 75% of net sales for the three months ended March 31, 2014 derived from operations outside the United States, of which 62% and 60%, respectively, derived from operations in Crown’s European Division, in each case without giving effect to the Mivisa acquisition.

Business Strengths

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Financially disciplined management team. Crown’s current executive leadership is focused on improving profit and increasing free cash flow.

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All levels of Crown’s management are committed to minimizing capital employed in their respective businesses.

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Business Strategy

Crown has several key business strategies:

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Grow in targeted markets. Crown plans to capitalize on its leading food, beverage and aerosol can positions by targeting geographic areas with strong growth potential. Crown believes that it is well-positioned to take advantage of the growth potential in Southern and Eastern Europe with numerous food and beverage can plants already established in those markets. In addition, as a leading packaging supplier to the Middle Eastern, Southeast Asian and Latin American markets, Crown will work to benefit from the anticipated growth in the consumption of consumer goods in these regions. Crown is considering, and in the future may pursue, possible acquisitions to grow its business (within developed or developing markets).

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Increase margins through ongoing cost reductions. Crown plans to continue to reduce manufacturing costs; enhance efficiencies and drive return on invested capital through investments in equipment and technology and through improvements in productivity and material usage and by maintaining a disciplined approach to managing supplier contacts.

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Maximize cash flow generation. Crown has established performance-based incentives to increase its free cash flow and operating income. In recent years Crown has used free cash flow to complete acquisitions, invest in emerging markets and repurchase Crown common stock and Crown may in the future use free cash flow to complete acquisitions, invest in emerging or developed markets, repurchase stock or to fund regular dividend payments on Crown common stock.

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Crown uses the economic profit concept in connection with its executive compensation program, which requires each business unit to exceed prior year’s returns on the capital that it employs.

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Crown will continue to attempt to focus its capital expenditures on projects that provide an adequate return.

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Divisions and Operating Segments

Crown’s business is organized geographically within three divisions, Americas, European and Asia Pacific. Within each Division, Crown is generally organized along product lines. Crown’s reportable segments within the Americas Division are Americas Beverage and North America Food. Crown’s reportable segments within the European Division are European Beverage and European Food. Crown’s Asia Pacific Division is a reportable segment which primarily consists of beverage can operations and also includes non-beverage can operations, primarily food cans and specialty packaging. Crown’s non-reportable segments include its European Specialty Packaging business, its aerosol can businesses in North America and Europe and its tooling and equipment operations in the United States and United Kingdom.

Financial information concerning Crown’s operating segments, and within selected geographic areas, is set forth within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and under Note X to Crown’s audited consolidated financial statements.

Americas Division

The Americas Division includes operations in the United States, Brazil, Canada, the Caribbean, Colombia and Mexico. These operations manufacture beverage, food and aerosol cans and ends, specialty packaging and metal vacuum closures and caps. At December 31, 2013, the division operated 45 plants in eight countries and had approximately 5,400 employees. In 2013, the Americas Division had net sales of approximately $3,400 million. For the three month period ended March 31, 2014, the Americas Division has net sales of $784 million. Approximately 64% of the net sales were derived from within the United States for the three month period ended March 31, 2014. Within the Americas Division, Crown has determined that there are two reportable segments: Americas Beverage and North America Food. North America Aerosol and food can operations in the Caribbean are not included as reportable segments.

Americas Beverage. The Americas Beverage segment manufactures aluminum beverage cans and ends and steel crowns, commonly referred to as “bottle caps,” in the United States, Brazil, Canada, Columbia and Mexico. Americas Beverage had net sales in 2013 of $2,289 million and segment income (as defined under Note X to Crown’s audited consolidated financial statements) of $327 million. Americas Beverage had net sales in the first three months of 2014 of $549 million and segment income (as defined under Note X to Crown’s audited consolidated financial statements) of $79 million.

North America Food. The North America Food segment manufactures steel and aluminum food cans and ends and metal vacuum closures in the United States and Canada. North America Food had net sales in 2013 of $845 million and segment income (as defined under Note X to Crown’s audited consolidated financial statements) of $119 million. North America Food had net sales in the first three months of 2014 of $179 million and segment income (as defined under Note X to Crown’s audited consolidated financial statements) of $29 million.

European Division

The European Division includes operations in Eastern and Western Europe, the Middle East and North Africa. These operations manufacture beverage, food and aerosol cans and ends, specialty packaging and metal vacuum closures and caps. At December 31, 2013, the division operated 70 plants in 26 countries and had approximately 10,900 employees. Net sales in 2013 were $4,000 million. Within the European Division, net sales in the United Kingdom were $759 million and in France were $547 million in 2013. Net sales in the first three months of 2014 were $895 million. Net sales in the United Kingdom of $176 million and in France of $136 million each represented 20% and 15%, respectively, of division net sales in the first three months of 2014 (in each case without giving effect to the Mivisa acquisition).

Within the European Division, Crown has determined that European Beverage and European Food are reportable segments. Crown’s European Specialty Packaging, European Aerosol and canmaking equipment operations are not included as a reportable segment.

European Beverage. The European Beverage segment manufactures steel and aluminum beverage cans and ends in Europe, the Middle East and North Africa. European Beverage had net sales in 2013 of $1,731 million and segment income (as defined under Note X to Crown’s audited consolidated financial statements) of $257 million. European Beverage had net sales in the first three months of 2014 of $388 million and segment income (as defined under Note X to Crown’s audited consolidated financial statements) of $59 million.

European Food. The European Food segment manufactures steel and aluminum food cans and ends, and metal vacuum closures, in Europe and Africa. European Food had net sales in 2013 of $1,751 million (and segment income (as defined under Note X to Crown’s audited consolidated financial statements) of $144 million. European Food had net sales in the first three months of 2014 of $373 million and segment income (as defined under Note X to Crown’s audited consolidated financial statements of $26 million.

Asia-Pacific Division

The Asia-Pacific Division is a reportable segment which primarily consists of beverage can operations in Cambodia, China, Malaysia, Singapore, Thailand and Vietnam and also includes Crown’s non-beverage can operations, primarily food cans and specialty packaging in China, Singapore, Thailand and Vietnam. At December 31, 2013, the division operated 30 plants in 6 countries and had approximately 4,400 employees. Net sales in 2013 were $1,200 million. Net sales in the first three months of 2014 were $298 million and segment income (as defined under Note X to Crown’s audited consolidated financial statements) was $34 million.

Products

Beverage Cans

Crown supplies beverage cans and ends and other packaging products to a variety of beverage and beer companies, including Anheuser-Busch InBev, Carlsberg, Coca-Cola, Cott Beverages, Dr Pepper Snapple Group, Heineken, National Beverage and Pepsi-Cola, among others. Crown’s beverage can business is built around local, regional and global markets, which has served to develop Crown’s understanding of global consumer expectations.

The beverage market is dynamic and highly competitive, with each packaging manufacturer working together with its customers to satisfy consumers’ ever-changing needs. Crown competes by offering its customers broad market knowledge, resources at all levels of its worldwide organization and extensive research and development capabilities that have enabled Crown to provide its customers with innovative products. Crown meets its customers’ beverage packaging needs with an array of two-piece beverage cans and ends and metal bottle caps. Innovations include the SuperEnd^® beverage can end, shaped beverage cans which include size differentiation, such as slim line cans for low calorie products or larger sizes for high volume consumption. Crown expects to continue to add capacity in many of the growth markets around the world.

Beverage can manufacturing is capital intensive, requiring significant investment in tools and machinery. Crown seeks to effectively manage its invested capital and is continuing its efforts to reduce can and end diameter, lighten the metal content of its cans, reduce non-metal costs and water and energy usage while improving production processes.

Food Cans and Closures

Crown manufactures a variety of food cans and ends, including two-and three-piece cans in numerous shapes and sizes, and sells food cans to food marketers such as Bonduelle, Cecab, Mars, Simmons Foods, Nestlé, Princes Group and Stockmeyer, among others. Crown offers a wide variety of metal vacuum closures and sealing equipment solutions to leading marketers such as Abbot Laboratories, Danone, H. J. Heinz, Kraft, Nestlé, Premier Foods and Unilever, among others, from a network of metal vacuum closure plants around the world. Crown supplies total packaging solutions, including metal and composite closures, capping systems and services while working closely with customers, retailers and glass and plastic container manufacturers to develop innovative closure solutions and meet customer requirements.

Technologies used to produce food cans include three-piece welded, two-piece drawn and wall-ironed and two-piece drawn and redrawn. Crown also offers its LIFTOFF™ series of food ends, including its Easylift™ full aperture steel

food can ends, and PeelSeam™, a flexible aluminum foil laminated end. Crown offers expertise in closure design and decoration, ranging from quality printing of the closure in up to nine colors, to inside-the-cap printing, which offers customers new promotional possibilities, to better product protection through Ideal Closures™, Orbit™ and Superplus™. Crown’s commitment to innovation has led to developments in packaging materials, surface finishes, can shaping, lithography, filling, retorting, sealing and opening techniques and environmental performance.

Crown manufactures easy open, vacuum and conventional ends for a variety of heat-processed and dry food products including fruits and vegetables, meat and seafood, soups, ready-made meals, infant formula, coffee and pet food.

Aerosol Cans

Crown’s customers for aerosol cans and ends include manufacturers of personal care, food, household and industrial products, including Colgate Palmolive, KIK Custom, Procter & Gamble, SC Johnson and Unilever, among others. The aerosol can business is highly competitive. Crown competes by offering its customers a broad range of products including multiple sizes, multiple color schemes and shaped packaging.

Specialty Packaging

Crown’s specialty packaging business is primarily located in Europe and Asia. Crown produces a wide variety of specialty containers with numerous lid and closure variations. Crown’s specialty packaging customers include Abbott Laboratories, Akzo Nobel, Britvic, Kraft, Mars, Nestlé, Nippon Paints, PPG, Tikkurlia Oy and United Biscuits, among others.

Sales and Distribution

Global marketers qualify suppliers on the basis of their ability to provide global service, innovative designs and technologies in a cost-effective manner.

With its global reach, Crown markets and sells products to customers through its own sales and marketing staffs. In some instances, contracts with customers are centrally negotiated, but products are ordered through and distributed directly by Crown’s local facilities. Crown’s facilities are generally located in proximity to their respective major customers. Crown works closely with customers in order to develop new business and to extend the terms of its existing contracts.

Many customers provide Crown with quarterly or annual estimates of product requirements along with related quantities pursuant to which periodic commitments are given. Such estimates assist Crown in managing production and controlling use of working capital. Crown schedules its production to meet customer requirements. Because the production time for Crown’s products is short, any backlog of customer orders in relation to overall sales is not significant.

Seasonality

The food packaging business is somewhat seasonal with the first quarter tending to be the slowest period as the autumn packing period in the Northern Hemisphere has ended and new crops are not yet planted. The industry generally enters its busiest period in the third quarter when the majority of fruits and vegetables are harvested. Due to this seasonality, inventory levels increase in the first half of the year to meet peak demand in the second and third quarters. Weather represents a substantial uncertainty in the yield of food products and is a major factor in determining the demand for food cans in any given year. Generally, beverage products are consumed in greater amounts during the warmer months of the year in the Northern Hemisphere and sales and earnings have generally been higher in the second and third quarters of the calendar year.

Crown’s other businesses primarily include aerosol and specialty packaging and canmaking equipment, which tend not to be as significantly affected by seasonal variations.

Competition

Most of Crown’s products are sold in highly competitive markets, primarily based on price, quality, service and performance. Crown competes with other packaging manufacturers as well as with fillers, food processors and packers, some of whom manufacture containers for their own use and for sale to others. Crown’s competitors include, but are not limited to, Ardagh Group, Ball Corporation, BWAY Corporation, Can-Pack S.A., Metal Container Corporation, Rexam PLC and Silgan Holdings Inc.

Customers

Crown’s largest customers consist of many of the leading manufacturers and marketers of packaged consumer products in the world. Consolidation trends among beverage and food marketers have led to a concentrated customer base. Crown’s top ten global customers represented in the aggregate approximately 29% of its 2013 net sales. In each of the years in the period 2011 through 2013, no one customer of Crown accounted for more than ten percent of Crown’s net sales. Each operating segment of Crown has major customers and the loss of one or more of these major customers could have a material adverse effect on an individual segment or Crown as a whole. Major customers include those listed above under the Products discussion. In addition to sales to Coca-Cola and Pepsi-Cola, Crown also supplies independent licensees of Coca-Cola and Pepsi-Cola.

Research and Development

Crown’s principal Research, Development & Engineering (RD&E) Centers are located in Alsip, Illinois and Wantage, England. Crown utilizes its centralized RD&E capabilities to advance and deliver technologies for Crown’s worldwide packaging activities that (1) promote development of value-added metal packaging systems for its customers, (2) design cost-efficient manufacturing processes, systems and materials that further the sustainability of metal packaging, (3) provide continuous quality and/or production efficiency improvements in its manufacturing facilities, (4) advance customer and vendor relationships, and (5) provide value-added engineering services and technical support. These capabilities facilitate (1) the identification of new and/or expanded market opportunities by working directly with customers to develop new packaging products or enhance existing packaging products through the application of new technologies that better differentiate our customers’ products in the retail environment (for example, the creation of new packaging shapes or novel decoration methods) and/or the incorporation of consumer-valued features (for example, improved openability and ease of use) and (2) the reduction of manufacturing costs by reducing the material content of Crown’s products (while retaining necessary performance characteristics), reducing spoilage, and increasing operating efficiencies in our manufacturing facilities.

Crown maintains a substantial portfolio of patents and other intellectual property (IP) in the field of metal packaging systems and seeks strategic partnerships to extend its IP into existing and emerging markets. As a result, Crown has licensed IP in geographic regions where it has a limited market presence today. Existing technologies such as SuperEnd^® beverage ends, the 360 End™ beverage end and can shaping have been licensed in Australia, Japan and Africa to provide customers with more global access to Crown’s brand building innovations.

Crown spent $36 million in 2013, $43 million in 2012, and $43 million in 2011 in its centralized RD&E activities. Certain of these activities are expected to improve and expand Crown’s product lines in the future. These expenditures include methods developed within Crown’s RD&E facilities to improve manufacturing efficiencies, reduce unit costs, and develop new and improved value-added packaging systems. These expenditures do not include related product and process developments occurring within Crown’s decentralized business units.

Materials and Suppliers

Crown uses various raw materials, primarily aluminum and steel, in its manufacturing operations. In general, these raw materials are purchased in highly competitive, price-sensitive markets which have historically exhibited price and demand cyclicality. These and other materials used in the manufacturing process have historically been available in adequate supply from multiple sources.

Generally, Crown’s principal raw materials are obtained from the major suppliers in the countries in which it operates plants. Some plants in less developed countries, which do not have local mills, obtain raw materials from nearby, more developed countries. Crown has agreements for what it considers adequate supplies of raw materials. However, sufficient quantities may not be available in the future due to, among other things, shortages due to excessive demand, weather or other factors, including disruptions in supply caused by raw material transportation or production delays. From time to time, some of the raw materials have been in short supply, but, to date, these shortages have not had a significant impact on Crown’s operations.

In 2013, consumption of steel and aluminum represented approximately 25% and 39%, respectively, of consolidated cost of products sold, excluding depreciation and amortization. Due to the significance of these raw materials to overall cost of products sold, raw material efficiency is a critical cost component of the products manufactured. Supplier consolidations, changes in ownership, government regulations, political unrest and increased demand for raw materials in the packaging and other industries, among other risk factors, provide uncertainty as to the availability of and the level of prices at which Crown might be able to source such raw materials in the future. Moreover, the prices of aluminum and steel can be subject to significant volatility. Crown’s raw material supply contracts vary as to terms and duration, with steel contracts typically one year in duration with fixed prices or set repricing dates, and aluminum contracts typically multi-year in duration with fluctuating prices based on aluminum ingot costs. Crown generally attempts to mitigate its steel and aluminum price risk by matching its purchase obligations with its sales agreements; however, there can be no assurance that Crown will be able to fully mitigate that risk.

Crown, in agreement with customers in many cases, also uses commodity and foreign currency forwards in an attempt to manage its exposure to aluminum price volatility.

There can be no assurance that Crown will be able to fully recover from its customers the impact of aluminum and steel price increases or that the use of derivative instruments will effectively manage Crown’s exposure to price volatility. In addition, if Crown is unable to purchase steel and aluminum for a significant period of time, its operations would be disrupted and if Crown were unable to fully recover the higher cost of steel and aluminum, its financial results may be adversely affected. Crown continues to monitor this situation and the effect on its operations. As a result of continuing

global supply and demand pressures, other commodity-related costs affecting Crown’s business may increase as well, including natural gas, electricity and freight-related costs. Crown will attempt to increase prices on its products accordingly in order to recover these costs.

In response to the volatility of raw material prices, ongoing productivity and cost reduction efforts in recent years have focused on improving raw material cost management.

Crown’s manufacturing facilities are dependent, in varying degrees, upon the availability of water and processed energy, such as natural gas and electricity. Certain of these sources may become difficult or impossible to obtain on acceptable terms due to external factors which could increase Crown’s costs or interrupt its business.

Aluminum and steel, by their very nature, can be recycled at high effectiveness and can be repeatedly reused to form new consumer packaging with minimal or no degradation in performance, quality or safety. By recycling these metals, large amounts of energy can be saved and significant water use and carbon dioxide emissions avoided.

Sustainability and Environmental, Health and Safety Matters

Crown’s operations are subject to numerous laws and regulations governing the protection of the environment, disposal of waste, discharges into water, emissions into the atmosphere and the protection of employee health and safety. Future regulations may impose stricter environmental requirements on the packaging industry and may require additional capital investment. Anticipated future restrictions in some jurisdictions on the use of certain coatings may require Crown to employ additional control equipment or process modifications. Crown has a Corporate Sustainability Policy and a Corporate Environmental Protection Policy. Environmental awareness is a key component of sustainability. Environmental considerations are among the criteria by which Crown evaluates projects, products, processes and purchases. Crown is committed to continuous improvement in product design and manufacturing practices to provide the best outcome for the human and natural environment, both now and in the future. By reducing the per-unit amount of raw materials used in manufacturing its products, Crown can significantly reduce the amount of energy, water and other resources and associated emissions necessary to manufacture metal containers. Crown aims to continue that process of improvement in its manufacturing process to assure that consumers and the environment are best served through the use of metal packaging. Crown is also committed to providing a safe work environment for its employees through programs that emphasize safety awareness and the elimination of injuries and incidents. There can be no assurance that current or future environmental laws or liabilities will not have a material effect on Crown’s financial condition, liquidity or results of operations. Discussion of Crown’s environmental matters is contained within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Environmental Matters,” and under Note L to Crown’s audited consolidated financial statements.

Working Capital

Crown generally uses cash during the first nine months of the year to finance seasonal working capital needs. Crown’s working capital requirements are funded by cash flow from operations, revolving credit facility facilities and receivables securitization and factoring programs.

Further information relating to Crown’s liquidity and capital resources is set forth within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Liquidity” and under Note Q to Crown’s audited consolidated financial statements.

Collection and payment periods tend to be longer for some of Crown’s operations located outside the United States due to local business practices.

Employees

At March 31, 2014, Crown had approximately 21,900 employees. At December 31, 2013, collective bargaining agreements with varying terms and expiration dates cover approximately 13,500 employees. Crown does not expect that renegotiation of the agreements expiring in 2014 will have a material adverse effect on its consolidated results of operations, financial position or cash flow.

Properties

As of March 31, 2014, Crown operated 147 manufacturing facilities of which 31 were leased. Crown has three divisions, defined geographically, within which it manufactures and markets its products. At March 31, 2014, the Americas Division had 45 operating facilities of which 10 were leased. Within the Americas Division, 30 facilities were operated in the United States of which 7 were leased. At March 31, 2014, the European Division had 70 operating facilities of which 15 were leased, and the Asia-Pacific Division had 30 operating facilities of which 5 were leased. Crown also has canmaking and spare part operations in the United States and the United Kingdom, which included on lease facility. Certain leases provide renewal or purchase options.

Legal Proceedings

Crown Cork is one of many defendants in a substantial number of lawsuits filed throughout the United States by persons alleging bodily injury as a result of exposure to asbestos. These claims arose from the insulation operations of a U.S. company, the majority of whose stock Crown Cork purchased in 1963. Approximately ninety days after the stock purchase, this U.S. company sold its insulation assets and was later merged into Crown Cork. At December 31, 2013, the accrual for pending and future asbestos claims and related legal costs that are probable and estimable was $260 million.

Crown’s Italian subsidiaries received assessments for value added taxes and related income taxes from the Italian tax authorities resulting from certain third party suppliers’ failures to remit required value added tax payments due by those suppliers under Italian law with respect to purchases for resale to Crown. In 2013, Crown entered into a formal agreement with Italian tax authorities to settle these matters and as a result recorded a pre-tax charge of $20 million.

Crown has been identified by the Environmental Protection Agency as a potentially responsible party (along with others, in most cases) at a number of sites.

Further information on these matters and other legal proceedings is presented within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the captions “Provision for Asbestos” and “Environmental Matters” and under Note K and Note L to Crown’s audited consolidated financial statements and Note J and Note K to Crown’s unaudited consolidated financial statements.

DESCRIPTION OF CERTAIN INDEBTEDNESS

Credit Facilities

Set forth below is a summary of the terms of Crown’s senior secured credit facilities. You should refer to Crown’s senior secured credit facilities for all of the terms thereof, which are available upon request from Crown.

Borrowers

The borrowers under Crown’s senior secured credit facilities are Crown Americas, Crown European Holdings, CROWN Metal Packaging Canada LP and certain subsidiaries of Crown European Holdings approved by the administrative agent.

The Facilities

Crown’s senior secured credit facilities include the following: (i) a $450 million Dollar Revolving Facility, (ii) a $700 million Multicurrency Revolving Facility, a (iii) $50 million Canadian Revolving Facility, (iv) a $220 million Term Loan A Facility, (v) a $580 million Delayed Draw Term Loan A Facility, (vi) a €110 million Term Euro Facility, a (vii) €590 million Delayed Draw Term Euro Facility and (viii) a $362 million Farm Credit Facility (together, the “Facilities”).

The maturity date for the Facilities, other than the Farm Credit Facility, is December 19, 2018. The maturity date for the Farm Credit Facility is December 19, 2019.

The applicable interest margins and commitment fee in respect of the Facilities are subject to a grid.

Guarantees

The U.S. Credit Parties (as defined below) and, with certain limited exceptions, each of Crown’s subsidiaries in Canada, Mexico and the United Kingdom and Crown European Holdings’ subsidiaries organized in France, Germany, the Netherlands and Switzerland guarantee borrowings under the Facilities by non-U.S. borrowers. Certain subsidiaries of Mivisa are expected to guarantee the outstanding senior secured credit facilities of Crown European Holdings and its subsidiaries.

Security

Borrowings by Crown Americas under the Facilities are, with certain limited exceptions, secured by substantially all of the assets of Crown Holdings and each of its direct and indirect U.S. subsidiaries and are guaranteed by Crown Holdings and, with certain limited exceptions, each of its direct and indirect U.S. subsidiaries (existing or thereafter acquired or created) (collectively, the “U.S. Credit Parties”); provided that the pledge of capital stock of any first-tier non-U.S. subsidiaries is limited to 65% of such capital stock.

Prepayments; Covenants; Events of Default

The Facilities contain affirmative and negative covenants, financial covenants requiring Crown Holdings to maintain a maximum leverage ratio and a minimum interest coverage ratio, representations and warranties and events of default customary for facilities of this type. In addition, the term loan facility contains mandatory prepayment provisions customary for facilities of this type. The Facilities also permit the borrowers to incur additional secured and unsecured debt (including additional first lien debt), subject to covenant compliance and other terms and conditions.

Outstanding Senior Notes due 2018

On July 28, 2010, Crown European Holdings issued senior unsecured notes under an indenture among Crown European Holdings, the guarantors named therein and The Bank of New York Mellon, as trustee. Crown intends to use the net proceeds of the offering of the new senior notes and other available funds to retire all of Crown European Holdings’ €500 million of outstanding senior unsecured notes due 2018. On June 23, 2014, Crown commenced a tender offer for any and all of Crown European Holdings’ €500 million of outstanding senior unsecured notes due 2018. To the extent not tendered (or if a tender offer is not consummated), Crown European Holdings intends to redeem all of its senior unsecured notes due 2018 that may remain outstanding.

Set forth below is a summary of the terms of the outstanding senior notes due 2018. You should refer to the indenture for all of the terms thereof, which is filed with the SEC as Exhibit 4.1 to Crown’s Current Report on Form 8-K filed on July 28, 2010.

Principal, Maturity and Interest

The senior notes issued by Crown European Holdings in July 2010 will mature on August 15, 2018 and accrue interest at the rate of 7.125% per year. The aggregate principal amount of the senior notes due 2018 is €500 million. Interest on each series of senior notes is payable semi-annually in arrears on each February 15 and August 15.

Ranking and Guarantees

The senior notes due 2018 are senior obligations of Crown European Holdings, ranking senior in right of payment to all subordinated indebtedness of Crown European Holdings.

The senior notes due 2018 are guaranteed on a senior basis by (i) Crown and each of Crown’s U.S., Canadian and U.K. restricted subsidiaries that from time to time are obligors under or guarantee Crown’s senior secured credit facilities or that guarantee or otherwise become liable with respect to any other indebtedness of Crown, Crown European Holdings or another guarantor of the notes and (ii) each of Crown European Holdings’ restricted subsidiaries that guarantee or otherwise become liable with respect to any indebtedness of Crown, Crown European Holdings or another guarantor or are otherwise obligors under Crown’s senior secured credit facilities, unless the incurrence of such guarantee is prohibited by the laws of the jurisdiction of incorporation or formation of such restricted subsidiary.

The senior notes due 2018 and note guarantees are senior unsecured obligations of Crown European Holdings and the guarantors,

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ranking effectively junior in right of payment to all existing and future secured indebtedness of the issuer and the guarantors to the extent of the value of the assets securing such indebtedness, including any borrowings under Crown’s senior secured credit facilities;

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structurally subordinated to all indebtedness of Crown’s non-guarantor subsidiaries;

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ranking equal in right of payment to any existing or future senior unsecured indebtedness of Crown European Holdings and the guarantors; and

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ranking senior in right of payment to all existing and future subordinated indebtedness of Crown European Holdings and the guarantors.

Upon the release of any note guarantor from each of its guarantee and other obligations which resulted in the requirement to guarantee the senior notes due 2018, unless there is existing a default or event of default under the indenture governing the senior notes due 2018, the guarantee of the senior notes due 2018 by such note guarantor will also be released.

Optional Redemption

Crown European Holdings may redeem some or all of the senior notes due 2018 at any time prior to August 15, 2014 by paying a “make-whole” premium, plus accrued and unpaid interest, if any, to the redemption date. Thereafter, Crown European Holdings may redeem some or all of the senior notes due 2018 at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to the redemption date.

Change of Control

If Crown or Crown European Holdings experiences a change of control, Crown European Holdings may be required to offer to purchase the senior notes due 2018 at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the repurchase date.

Certain Covenants

The indenture governing the senior notes due 2018 contains covenants that limit the ability of Crown and the ability of its restricted subsidiaries (including Crown European Holdings) to, among other things: incur additional debt; pay dividends or make other distributions, repurchase capital stock, repurchase subordinated debt and make certain investments; create liens and engage in sale and leaseback transactions; create restrictions on the payment of dividends and other amounts to Crown or the issuer from restricted subsidiaries; sell assets or merge or consolidate with or into other companies; and engage in transactions with affiliates.

If at any time the senior notes due 2018 are rated investment grade by both Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services and no default or event of default has occurred and is continuing under the indenture governing such notes, Crown and its subsidiaries will no longer be subject to certain of these restrictions.

Such covenants are subject to certain other exceptions and limitations.

Outstanding Senior Notes due 2021

On January 31, 2011, Crown Americas and Crown Americas Capital Corp. III (“Crown Americas Capital III”) issued senior unsecured notes under an indenture among Crown Americas and Crown Americas Capital III, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee. Set forth below is a summary of the terms of the outstanding senior notes due 2021. You should refer to the indenture for all of the terms thereof, which is filed with the SEC as Exhibit 4.2 to Crown’s Current Report on Form 8-K filed on February 2, 2011.

Principal, Maturity and Interest

The senior notes issued by Crown Americas and Crown Americas Capital III in 2011 will mature on February 1, 2021 and accrue interest at the rate of 6.25% per year. The aggregate principal amount of the senior notes due 2021 is $700 million. Interest on each series of senior notes is payable semi-annually in arrears on each February 1 and August 1.

Ranking and Guarantees

The senior notes due 2021 are senior obligations of Crown Americas and Crown Americas Capital III, ranking senior in right of payment to all subordinated indebtedness of Crown Americas and Crown Americas Capital III.

The senior notes due 2021 are guaranteed on a senior basis by Crown and each of Crown’s present and future U.S. subsidiaries (other than Crown Americas, Crown Americas Capital Corp., Crown Americas Capital II, Crown Americas Capital III and Crown Americas Capital IV) that from time to time are obligors under or guarantee Crown’s senior secured credit facilities.

The senior notes due 2021 and note guarantees are senior unsecured obligations of Crown Americas and Crown Americas Capital III and the guarantors,

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effectively ranking junior in right of payment to all existing and future secured indebtedness of Crown Americas and Crown Americas Capital III and the guarantors to the extent of the value of the assets securing such indebtedness, including any borrowings under Crown’s senior secured credit facilities;

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structurally subordinated to all indebtedness of Crown’s non-guarantor subsidiaries which include all of Crown’s foreign subsidiaries and any U.S. subsidiaries that are neither obligors nor guarantors of Crown’s senior secured credit facilities;

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ranking equal in right of payment to any existing or future senior unsecured indebtedness of Crown Americas and Crown Americas Capital III and the guarantors; and

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ranking senior in right of payment to all existing and future subordinated indebtedness of Crown Americas and Crown Americas Capital III and the guarantors.

Upon the release of any note guarantor from its obligations under Crown’s senior secured credit facilities, unless there is existing a default or event of default under the indenture governing the senior notes due 2021, the guarantee of such notes by such note guarantor will also be released.

Optional Redemption

Crown Americas and Crown Americas Capital III may redeem some or all of the senior notes due 2021 at any time prior to February 1, 2016 by paying a “make-whole” premium, plus accrued and unpaid interest, if any, to the redemption date. Thereafter, Crown Americas and Crown Americas Capital III may redeem some or all of the senior notes due 2021 at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to the redemption date.

Change of Control

Upon a change of control of Crown, as defined under the indenture for senior notes due 2021, the holders of such notes will have the right to require Crown Americas and Crown Americas Capital III to repurchase all or part of such notes at a repurchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.

Certain Covenants

The indenture governing the senior notes due 2021 limits, among other things, Crown’s ability and the ability of its restricted subsidiaries (including Crown Americas and Crown Americas Capital III) to: incur additional debt and issue preferred stock; pay dividends or make other distributions, repurchase capital stock, repurchase subordinated debt and make certain investments; create liens and engage in sale and leaseback transactions; create restrictions on the payment of dividends and other amounts to Crown, Crown Americas or Crown Americas Capital III from restricted subsidiaries; sell assets or merge or consolidate with or into other companies; and engage in transactions with affiliates.

If at any time the senior notes due 2021 are rated investment grade by both Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services and no default or event of default has occurred and is continuing under the indenture governing such notes, Crown and its subsidiaries will no longer be subject to certain of these restrictions.

Such covenants are subject to certain other exceptions and limitations.

Outstanding Senior Notes due 2023

On January 9, 2013 and January 15, 2013, Crown Americas and Crown Americas Capital Corp. IV (“Crown Americas Capital IV”) issued senior unsecured notes under an indenture among Crown Americas and Crown Americas Capital IV, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee. Set forth below is a summary of the terms of the outstanding senior notes due 2023. You should refer to the indenture for all of the terms thereof, which is filed with the SEC as Exhibit 4.2 to Crown’s Current Report on Form 8-K filed on January 11, 2013.

Principal, Maturity and Interest

The senior notes issued by Crown Americas and Crown Americas Capital IV in 2013 will mature on January 15, 2023 and accrue interest at the rate of 4.50% per year. The aggregate principal amount of the senior notes due 2023 is $1,000 million. Interest on each series of senior notes is payable semi-annually in arrears on each January 15 and July 15.

Ranking and Guarantees

The senior notes due 2023 are senior obligations of Crown Americas and Crown Americas Capital IV, ranking senior in right of payment to all subordinated indebtedness of Crown Americas and Crown Americas Capital IV.

The senior notes due 2023 are guaranteed on a senior basis by Crown and each of Crown’s present and future U.S. subsidiaries (other than Crown Americas, Crown Americas Capital Corp., Crown Americas Capital Corp. II, Crown Americas Capital III and Crown Americas Capital IV) that from time to time are obligors under or guarantee Crown’s senior secured credit facilities.

The senior notes due 2023 and note guarantees are senior unsecured obligations of Crown Americas and Crown Americas Capital IV and the guarantors,

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effectively ranking junior in right of payment to all existing and future secured indebtedness of Crown Americas and Crown Americas Capital IV and the guarantors to the extent of the value of the assets securing such indebtedness, including any borrowings under Crown’s senior secured credit facilities;

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ranking equal in right of payment to any existing or future senior unsecured indebtedness of Crown Americas and Crown Americas Capital IV and the guarantors; and

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ranking senior in right of payment to all existing and future subordinated indebtedness of Crown Americas and Crown Americas Capital IV and the guarantors.

Upon the release of any note guarantor from its obligations under Crown’s senior secured credit facilities, unless there is existing a default or event of default under the indenture governing the senior notes due 2023, the guarantee of such notes by such note guarantor will also be released.

Optional Redemption

Crown Americas and Crown Americas Capital IV may redeem some or all of the senior notes due 2023 at any time at the redemption prices equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus a “make-whole” premium.

Change of Control

Upon a change of control of Crown, as defined under the indenture for senior notes due 2023, the holders of such notes will have the right to require Crown Americas and Crown Americas Capital IV to repurchase all or part of such notes at a repurchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.

Certain Covenants

The indenture governing the senior notes due 2023 limits, among other things, Crown’s ability and the ability of its restricted subsidiaries (including Crown Americas and Crown Americas Capital IV) to incur secured indebtedness and engage in certain sale and leaseback transactions.

Such covenants are subject to certain other exceptions and limitations.

Outstanding Debentures

Crown Cork currently has two series of debentures outstanding. The outstanding debentures were issued under the indenture among Crown Cork, Crown Cork & Seal Finance PLC, Crown Cork & Seal Finance S.A. and The Bank of New York, as trustee, dated as of December 17, 1996.

The outstanding debentures issued by Crown Cork have been guaranteed by Crown. The following table is a summary of the two series of notes outstanding as of the date hereof.


Outstanding Principal Amount (in millions)		Interest Rate			Maturity	Redemption by Issuer
$	350		7.375	%	December 2026	Redeemable at a price equal to the greater of (i) 100% of the principal amount and (ii) the sum of the present values of the remaining scheduled payments thereon, plus accrued interest

$	64		7.50	%	December 2096	Redeemable at a price equal to the greater of (i) 100% of the principal amount and (ii) the sum of the present values of the remaining scheduled payments thereon, plus accrued interest

The indenture under which the outstanding debentures were issued provides certain protections for the holders of such debentures. These protections restrict the ability of Crown to enter into certain transactions, such as mergers, consolidations, asset sales, sale and leaseback transactions and pledging of assets.

Consolidation, Merger, Conveyance, Transfer or Lease

Subject to certain exceptions, the indenture and agreements contain a restriction on the ability of Crown to undergo a consolidation or merger, or to transfer or lease substantially all of its properties and assets.

Limitation on Sale and Leaseback

Subject to certain exceptions, the indenture and agreements contain a covenant prohibiting Crown and certain “restricted subsidiaries” from selling any “principal property” to a person or entity and then subsequently entering into an arrangement with such person or entity that provides for the leasing by Crown or any of its restricted subsidiaries, as lessee, of such principal property. “Principal property” is defined in the indenture and agreements as any single manufacturing or processing plant or warehouse (excluding any equipment or personalty located therein) located in the United States, other than any such plant or warehouse or portion thereof that Crown’s board of directors reasonably determines is not of material importance to the business conducted by Crown and its subsidiaries as an entirety. In the indenture and agreements the definition of “principal property” includes property located outside the United States. The indenture and agreements define “restricted subsidiary” to mean any subsidiary that owns, operates or leases one or more principal properties.

Limitations on Liens

Subject to certain exceptions, the indenture and agreements contain a covenant restricting Crown and its restricted subsidiaries under such indentures or agreements from creating or assuming any mortgage, security interest, pledge or lien upon any principal property (as defined above) or any shares of capital stock or evidences of indebtedness for borrowed money issued by any such restricted subsidiary and owned by Crown or any such restricted subsidiary without concurrently providing that the outstanding debentures shall be secured equally and ratably. The foregoing covenant shall not apply to the extent that the amount of indebtedness secured by liens on Crown’s principal properties and Crown’s restricted subsidiaries does not exceed 10% of its consolidated net tangible assets.

Receivable Securitization Facilities

On March 9, 2010, Crown Cork & Seal Receivables (DE) Corporation and CROWN Cork & Seal USA, Inc. entered into a North American receivables securitization facility with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as administrative agent for the purchasers and the owners thereto. Under its committed $200 million North American facility, certain of Crown’s subsidiaries sell receivables, on a revolving basis, to a wholly-owned, bankruptcy-remote subsidiary. The bankruptcy-remote subsidiary was formed for the sole purpose of buying and selling receivables generated by Crown and, in turn, sells the purchased receivables to the administrative agent for the benefit of a syndicate of financial institutions. Crown continues to service these receivables for a fee but does not retain any interest in the pool of receivables sold. At December 31, 2013, Crown had available capacity of $100 million under its North American facility. The North American facility matures in December 2015, and the interest rate applicable to yield for purchases under the facility is (1) LIBOR plus 0.80% per annum; (2) the alternative base rate plus 0.80% per annum or (iii) the commercial paper rate plus 0.80% per annum. The North American facility contains customary covenants, including the requirement to perform under the contracts underlying the receivables, comply with the credit and collection policies and reporting requirements. In Europe, Crown has a €110 million ($152 million at March 31, 2014) receivables securitization facility that matures in July 2017. At December 31, 2013, Crown had available capacity of $46 million under its European facility.

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