- -
<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
COMMISSION FILE NUMBER 1-2227
CROWN CORK & SEAL COMPANY, INC.
(Exact name of registrant as specific in its charter)
Pennsylvania 23-15264444
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
9300 Ashton Road, Philadelphia, PA 19136
(Address of principal executive offices) (Zip Code)
215-698-5100
(Registrant's Telephone Number, Including Area Code)
Indicated by check mark whether the registrant (1) has filed all reported to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subjected to such filing
requirements for the past 90 days. Yes X No
There were 90,610,547 shares of Common Stock outstanding as of October 31,
1995.
</PAGE>
<PAGE>2
Crown Cork & Seal Company, Inc.
PART 1 - FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions except share data)
(Unaudited)
Three months ended September 30, 1995 1994
Net sales $ 1,427.1 $ 1,283.3
Costs, expenses & other income
Cost of products sold, excluding
depreciation and amortization 1,249.7 1,074.4
Depreciation and amortization 67.3 53.1
Selling and administrative expense 36.0 34.7
Provision for restructuring 82.5 114.6
Interest expense 38.1 26.9
Interest income ( 3.3) ( 2.1)
Translation and exchange adjustments ( 1.8) ( .3)
1,468.5 1,301.3
Loss before income taxes ( 41.4) ( 18.0)
Provision for income taxes ( 23.9) ( 8.4)
Equity earnings, net of minority interests ( 2.4) 2.1
Net Loss ($ 19.9) ($ 7.5)
Loss per average common share ($ .22) ($ .08)
Average common shares outstanding 90,469,197 89,115,758
The accompanying notes are an integral part of these financial statements.
</PAGE>
<PAGE>3
Crown Cork & Seal Company, Inc.
PART 1 - FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions except share data)
(Unaudited)
Nine months ended September 30, 1995 1994
Net sales $ 3,939.6 $ 3,360.8
Costs, expenses & other income
Cost of products sold, excluding
depreciation and amortization 3,335.5 2,787.0
Depreciation and amortization 196.5 160.3
Selling and administrative expense 107.8 101.0
Provision for restructuring 102.7 114.6
Interest expense 111.6 70.6
Interest income ( 8.8) ( 5.1)
Translation and exchange adjustments ( 1.3) 5.8
3,844.0 3,234.2
Income before income taxes 95.6 126.6
Provision for income taxes 17.4 42.1
Equity earnings, net of minority interests ( 9.4) 6.4
Net income $ 68.8 $ 90.9
Earnings per average common share $ .76 $ 1.02
Average common shares outstanding 90,105,240 89,028,346
The accompanying notes are an integral part of these financial statements.
</PAGE>
<PAGE>4
Crown Cork & Seal Company, Inc.
CONSOLIDATED BALANCE SHEETS
(In millions except share data)
(Unaudited)
September 30, December 31,
1995 1994
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 58.0 $ 43.5
Receivables 975.6 738.0
Inventories 844.4 767.5
Prepaid expenses and other
current assets 76.0 56.6
Total Current Assets 1,954.0 1,605.6
Long-term notes and receivables 66.9 70.4
Investments 54.2 47.7
Goodwill, net of amortization 1,107.5 1,122.4
Property, plant and equipment 1,938.3 1,816.5
Other non-current assets 114.3 118.7
TOTAL $5,235.2 $4,781.3
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 997.7 $ 604.5
Current portion of long-term debt 66.1 131.3
Accounts payable and accrued liabilities 683.1 737.1
United States and foreign income taxes 7.2 10.1
Total Current Liabilities 1,754.1 1,483.0
Long-term debt, excluding
current maturities 1,162.6 1,089.5
Postretirement and pension liabilities 634.2 639.4
Other non-current liabilities 120.7 128.8
Minority interests 105.5 75.4
Shareholders' equity 1,458.1 1,365.2
TOTAL $5,235.2 $4,781.3
BOOK VALUE PER COMMON SHARE $16.10 $15.28
The accompanying notes are an integral part of these financial statements.
</PAGE>
<PAGE>5
Crown Cork & Seal Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed)
(In millions)
(Unaudited)
Nine months ended September 30, 1995 1994
Cash flows from operating activities
Net income $ 68.8 $ 90.9
Depreciation and amortization 196.5 160.3
Provision for restructuring 67.0 73.2
Equity in earnings of joint ventures,
net of dividends received .5 ( 10.7)
Minority interest in earnings of subsidiaries 13.2 9.3
Change in assets and liabilities,
other than debt ( 433.4) ( 422.9)
Net cash used in operating activities ( 87.4) ( 99.9)
Cash flows from investing activities
Capital expenditures ( 295.4) ( 323.0)
Acquisition of business, net of cash acquired ( 14.2) ( 66.2)
Proceeds from sales of property,
plant and equipment 12.8 9.5
Other, net ( 3.8)
Net cash used in investing activities ( 300.6) ( 379.7)
Cash flows from financing activities
Proceeds from long-term debt 329.4 148.5
Payments of long-term debt ( 205.9) ( 181.8)
Net change in short-term debt 258.8 504.4
Common stock:
Repurchased for treasury ( .3) ( 12.6)
Issued under various employee benefit plans 18.8 12.4
Minority contributions, net of dividends paid 9.6 7.3
Net cash provided by financing activities 410.4 478.2
Effect of exchange rate changes
on cash and cash equivalents ( 7.9) 9.5
Net change in cash and cash equivalents 14.5 8.1
Cash and cash equivalents at beginning of period 43.5 54.2
Cash and cash equivalents at end of period $ 58.0 $ 62.3
Schedule of non-cash Investing Activities 1995 1994
Acquisition of business:
Fair value of assets acquired $14.2 $89.1
Liabilities assumed ( 25.1)
Cash paid $14.2 $64.0
Certain prior year balances have been reclassified to improve comparability.
The accompanying notes are an integral part of these financial statements.
</PAGE>
<PAGE>6
<TABLE>
Crown Cork & Seal Company, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In millions)
(Unaudited)
<CAPTION>
Minimum Cumulative
Common Paid-In Retained Pension Translation Treasury
Stock Capital Earnings Liability Adjustment Shares Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $592.5 $168.4 $ 974.1 ($48.1) ($175.9) ($145.8) $1,365.2
Net income 68.8 68.8
Treasury stock purchased ( .3) ( .3)
Stock issued under employee
benefit plans 12.6 6.2 18.8
Translation adjustments 5.6 5.6
Balance at September 30, 1995 $592.5 $180.7 $1,042.9 ($48.1) ($170.3) ($139.6) $1,458.1
Minimum Cumulative
Common Paid-In Retained Pension Translation Treasury
Stock Capital Earnings Liability Adjustment Shares Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $592.5 $167.4 $843.1 ($46.3) ($156.5) ($148.4) $1,251.8
Net income 90.9 90.9
Treasury stock purchased ( 10.9) ( 1.7) ( 12.6)
Stock issued under employee
benefit plans 8.9 3.5 12.4
Translation adjustments 20.8 20.8
Balance at September 30, 1994 $592.5 $165.4 $934.0 ($46.3) ($135.7) ($146.6) $1,363.3
<FN>
<F1> The accompanying notes are an integral part of these financial
statements.
</TABLE>
</PAGE>
<PAGE>7
Crown Cork & Seal Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share and employee data)
(Unaudited)
A. Statement of Information Furnished
The accompanying unaudited interim consolidated and condensed financial
statements have been prepared by the Company in accordance with Form 10-Q
instructions. In the opinion of management, these consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of Crown
Cork & Seal Company, Inc. as of September 30, 1995 and the results of
operations and cash flows for the periods ended September 30, 1995 and
1994, respectively. These results have been determined on the basis of
generally accepted accounting principles and practices applied
consistently.
Certain information and footnote disclosures, normally included in
financial statements presented in accordance with generally accepted
accounting principles, have been condensed or omitted. The accompanying
Consolidated Financial Statements should be read in conjunction with the
statements and notes thereto incorporated by reference in the Company's
1994 Form 10-K Annual Report as well as its first and second quarter
1995 Form 10-Q's.
B. Summary of Significant Accounting Policies
Goodwill
On an annual basis the Company reviews the recoverability of goodwill
based primarily upon an analysis of undiscounted cash flows from the
acquired business.
Property, Plant and Equipment
The range of estimated economic lives assigned to each significant fixed
asset category are as follows:
Land Improvements 25
Building and Improvements 25 to 40
Other depreciable assets 3 to 14
C. Restructuring
In March 1994 the Company outlined a two-phase implementation plan to
effectively restructure its North American operations. Phase one of this
plan, principally affecting the food and aerosol container sectors, was
initiated in the third quarter of 1994 and was completed in September
1995. This phase contained a pre-tax restructuring charge of $114.6 million
($73.2 million after-tax) and commenced in the fourth quarter of 1994 with
the closure of seven plants.
</PAGE>
<PAGE>8
Crown Cork & Seal Company, Inc.
In the third quarter of 1995, the Company announced that it was
implementing the second phase of the restructuring plan affecting its
North American operations which the Company initially outlined in
March 1994. In this second phase, two aluminum beverage can plants and
one beverage end plant will be closed in order to match manufacturing
capacity with demand. An additional beverage can plant will be off-line
during 1996 to upgrade its production equipment. The Company also
intends to close two food can plants in the U.S. and combine two
non-U.S. food operations into one location. In the Plastics Division,
one facility will be closed and two others will be reorganized to
improve cost effectiveness.
In connection with this second phase, the Company incurred a
restructuring charge of $82.5 million ($54.2 million or $0.60 per
share on an after-tax basis) in the third quarter ended September 30,
1995. The Company has estimated that the pre-tax annual savings
resulting from these actions will be approximately $36 million after
the second phase is completed in September 1996.
The restructuring charge of $82.5 million ($54.2 million after taxes)
includes cash charges of $28.6 million, $19.4 million of which is for
employee separation costs from the elimination of approximately 950
positions. Employees terminated include most, if not all, employees at
each plant to be closed including salaried and hourly employees and
employees of the respective union represented at that plant site.
Non-cash charges include writedowns of assets (spare parts, property and
equipment, etc.) totaling $53.9 million.
With the addition of the third quarter restructuring charge, 1995 pre-tax
earnings have been reduced due to restructuring by $102.7 million
($67.0 million after tax). The balance and components of these
reserves at September 30, 1995 are as follows:
Partial
Reversal of
December 31, 9/30/94 Add'l 1995 1995
1994 Provision Provision Activity Balance
Employee costs $16.6 ($3.0) $ 28.8 ($19.5) $22.9
Writedown of assets ( 5.3) 58.4 ( 53.1)
Lease termination
and property holding
costs 5.9 ( .8) 15.4 ( 1.1) 19.4
Anticipated gain
from sale of
properties ( 11.1) 10.9 ( .2)
Incremental
operating losses 5.4 ( 1.7) ( 3.7)
$16.8 $ .1 $102.6 ($77.4) $42.1
The adjustment for writedown of assets has actually been recorded
against the related assets but is presented herein as a reconciliation
between announced provisions or reversals and the reserve balances.
Where applicable, the Company has also established reserves to
restructure acquired companies. These purchase accounting adjustments
related primarily to employee separation costs to be incurred upon
plant closures, such as severance and additional pension and retiree
medical liabilities. As of September 30, 1995 the balance for such
expenses, classified as restructuring in the balance sheet, was $14.2
million.
</PAGE>
<PAGE>9
Crown Cork & Seal Company, Inc.
D. Inventories
September 30, December 31,
1995 1994
Finished Goods $347.0 $284.7
Work in Process 124.7 106.6
Raw Materials 300.1 309.2
Supplies and Repair Parts 72.6 67.0
Total $844.4 $767.5
E. Supplemental Cash Flow Information
Cash payments for interest, net of amounts capitalized ($5.6 million
and $4.7 million for 1995 and 1994 respectively), were $87.5 million
and $54.0 million during the nine months ended September 30, 1995 and
1994, respectively. Cash payments for income taxes amounted to $18.5
million and $63.1 million during the nine months ended September 30,
1995 and 1994, respectively. The 1995 tax payments are below 1994
payments due, in part, to a second quarter domestic refund of $15.0
million, lower domestic earnings and the impact on tax depreciation
from the recent capital programs.
</PAGE>
<PAGE>10
Crown Cork & Seal Company, Inc.
PART 1 - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Restructuring
In the third quarter of 1995, the Company announced that it was implementing
the second phase of the restructuring plan affecting its North American
operations. The plan was initially outlined in March 1994. In connection
with this second phase, the Company has incurred a restructuring charge of
$82.5 million ($54.2 million or $0.60 per share on an after-tax basis) in
the third quarter ended September 30, 1995. Further detail of the
restructuring is presented in Note C to the Consolidated Financial
Statements.
Net Income and Earnings Per Share
Net income in the third quarter, before the restructuring charge, was $34.2
million or $.38 per share, a decrease of 47.9% and 48.6%, when compared to
respective prior year amounts of $65.7 million or $.74 per share. The
charge taken for the restructuring in the quarter was $82.5 million ($54.2
million after taxes) or $.60 per share. Following the restructuring charge,
the Company reported a net loss of $19.9 million and a per share loss of
$.22 compared to a loss of $7.5 million or $.08 per share in 1994. After
the total 1995 net charge to income for restructuring of $67.0 million, net
income for the nine months ended September 30, 1995 was $68.8 million or
$.76 per share as compared to $90.9 million or $1.02 per share in 1994.
Total 1994 net restructuring charges were $73.2 million or $.82 per share.
The primary factors for the decline in net income were: (1) competitive
pressures limiting the recovery of higher raw material costs through
adequate net selling prices and (2) weaker than expected demand.
On September 19, 1995, the Company announced that it expected earnings per
share for 1995 to be less than the $2.29 per share which it reported in
1994, as measured before restructuring charges. Management stated that it
expected second half 1995 net earnings before any restructuring charges
would be unlikely to exceed $55 million and could be lower. Management
considers the results in the third quarter to be consistent with the
earnings outlook for the second half of 1995 that was announced on September
19, 1995. Continuing exposure to volatile raw material costs in the aluminum
and plastic resin sectors substantially reduced profitability in the quarter.
The foregoing discussion of restructuring charges and related cost savings,
and of anticipated second half results, represents the Company's best
estimate, but it necessarily makes numerous assumptions with respect to
industry performance, general business and economic conditions, raw
materials and product pricing levels, restructuring costs and other
matters, many of which are outside the Company's control. The Company's
estimate and related assumptions are not necessarily indicative of future
performance, which may be significantly more or less favorable than as set
forth above. Shareholders are cautioned not to place undue reliance on the
estimate and the assumptions and should appreciate that such information may
not be necessarily updated to reflect circumstances existing after the date
hereof or to reflect the occurence of unanticipated events.
</PAGE>
<PAGE>11
Crown Cork & Seal Company, Inc.
Item 2. Management's Discussion and Analysis (Continued)
Net Sales
Net sales for the quarter increased 11.2% from $1,283.3 million in 1994 to
$1,427.1 million in 1995. Sales from domestic operations increased 9.4% and
those in foreign markets increased 15.6%. Domestic sales accounted for
67.7% of consolidated net sales in 1995 as compared to 68.9% in 1994. Net
sales for the nine months ended September 30, 1995 of $3,939.6 million
represent an increase of 17.2 % from the prior year level of $3,360.8
million. An analysis of net sales by operating division follows:
Net Sales Percentage
Third Quarter Nine Months Ended Change
Third Nine
1995 1994 1995 1994 Quarter Months
North American $ 840.4 $ 789.2 $2,242.8 $2,019.4 6.5 11.1
International 253.8 233.1 732.1 621.0 8.9 17.9
Plastics 315.6 240.3 901.3 657.2 31.3 37.1
Other 17.3 20.7 63.4 63.2 (16.4) .3
$1,427.1 $1,283.3 $3,939.6 $3,360.8 11.2 17.2
North American Division net sales increased in the quarter and for the nine
months ended September 30, 1995 over the respective period in 1994 due
primarily to the pass-through of substantially higher raw material costs.
This pass-through did not fully recover the costs increases experienced for
aluminum can sheet. It has been difficult to increase selling prices to
recover such raw material cost increases. The pass-through of higher costs
was offset by unit sales volume declines across most product lines. In the
quarter, domestic beverage can volumes were down approximately 2.5% from a
year earlier and combined food and aerosol can volumes were down
approximately 9.7%. Canadian and Mexican volumes were also down in the
quarter and year-to-date.
Increased sales in the International Division were due primarily to
increased unit sales in China, the Middle East and Latin America along with
the effects of a weakening U.S. dollar against most European currencies.
In the third quarter, some U.S. dollar recovery aided in reducing the
impact of translation on European net sales. Within China, unit sales
growth resulted from the commencement of production of two-piece beverage
cans and beverage ends in Shanghai and beverage ends in Foshan. Sales
growth in Latin America and the Middle East resulted from the attainment in
1995 of full production for two-piece beverage cans and beverage ends at the
Company's plants in Argentina and Dubai.
As customers continue to convert to plastic for packaging their products,
the Company with its recent unit capacity expansion program has been
responsive to this continuing demand by providing PET packaging for
beverage, processed food and household products. The increase in 1995
Plastic Division net sales has resulted from higher unit sales volumes
across most product lines both in the U.S. and in Europe as well as from
higher selling prices representing the pass-through of substantially higher
resin costs to customers.
</PAGE>
<PAGE>12
Crown Cork & Seal Company, Inc.
Item 2. Management's Discussion and Analysis (Continued)
Cost of Products Sold
Cost of products sold, excluding depreciation and amortization, for the
third quarter was $1,249.7 million, a 16.3% increase from $1,074.4 million
in 1994. For nine months ended September 30, 1995, cost of products sold
increased 19.7% to $3,335.5 million from $2,787.0 million in 1994. These
increases are due primarily to higher net raw material costs, both for
aluminum can and end sheet, plastic resins and unit sales gains in plastics.
The higher raw material costs, primarily in the domestic markets, have not
been fully passed through to customers and, as such, have been a factor in
the increased nine month ratio between cost of products sold and net sales
from 82.9% in 1994 to 84.7% in 1995, and the resultant erosion of margin.
The Company expects continued difficulty in recovering higher raw material
costs and is concerned about eroding manufacturing efficiencies due to
weaker than expected customer demand in virtually all products and across
all geographic areas.
Depreciation and amortization as a percentage of net sales for the nine
months have increased from 4.8% in 1994 to 5.0% in 1995. This increase
primarily reflects the Company's efforts to improve productivity and
efficiencies and to meet customer demands for new products through its
annual capital investment programs.
The Company expects resin pricing to stabilize following steady increases
since October 1994 due, in part, to additional capacity becoming available
next year. As for aluminum can and end sheet prices, recent discussions
with the Company's suppliers has indicated that they are at least aware of
the effects of their pricing practices on market demand for aluminum
beverage cans. In the interim, the Company, to maintain its competitive
position, plans to complete its 202 diameter aluminum end conversion program
by the end of 1995 and accelerate line speeds at various plants.
Selling and Administrative
Selling and administrative expenses for the third quarter were $36.0
million, 2.5% of net sales. Expenses increased by 3.7% over 1994 but
improved as a percentage of net sales from 2.7% a year earlier. For nine
months ended September 30, 1995, selling and administrative expenses
increased 6.7% from a year earlier but improved as a percentage of net sales
from 3.0% in 1994 to 2.7% in 1995.
</PAGE>
<PAGE>13
Crown Cork & Seal Company, Inc.
Item 2. Management's Discussion and Analysis (Continued)
Operating Income
Operating income, before restructuring charges, was $74.1 million or 5.2%
of net sales for the quarter ended September 30, 1995 and $299.8 million or
7.6% of net sales year-to-date. These results represent a decline of 38.8%
from the quarter ended September 30, 1994 and 4.1% from the nine months
ended September 30, 1994. An analysis of operating income, before
restructuring charges, by operating division follows:
Operating Income Percentage
Third Quarter Nine Months Ended Change
Third Nine
1995 1994 1995 1994 Quarter Months
North American $29.1 $ 60.5 $158.2 $172.3 (51.9) ( 8.2)
International 28.8 28.5 76.6 74.4 1.0 3.0
Plastics 15.8 29.7 58.1 60.3 (46.8) ( 3.6)
Other .4 2.4 6.9 5.5 (83.3) 25.5
$74.1 $121.1 $299.8 $312.5 (38.8) ( 4.1)
Operating income in the North American Division as a percentage of net sales
was 3.5% in the quarter and 7.1% year-to-date as compared to 7.7% and 8.5%,
respectively, for 1994. The decrease in 1995 margins from 1994 was
primarily due to escalating raw material costs, the most significant being
those related to aluminum can and end sheet used in beverage canmaking.
Competitive pressures and industry overcapacity have been factors in
preventing the Company from fully passing these substantial cost increases
through to its customers. In addition to higher raw material costs, lower
1995 volumes impacted existing capacity utilization. Lower capacity
utilization has resulted in plant inefficiencies which have eroded product
margins and resulted in implementation of phase two of the Company's
restructuring plan as discussed above. The Company intends to redeploy
temporarily excess capacity into markets which will provide sufficient
return on its capital. The benefits of phase one of the restructuring
plan, completed in September 1995, have largely been offset by reduced
volumes in three-piece food and aerosol cans. The Company believes that it
has improved operating leverage in the event that volumes rebound in 1996
as any rebound will flow through its remaining productive plants.
International Division operating margins were 11.3% for the quarter and
10.5% year-to-date as compared to 12.2% and 12.0%, respectively, for 1994.
The lower margins are primarily due to competitive pressures on selling
prices and changes in product mix.
</PAGE>
<PAGE>14
Crown Cork & Seal Company, Inc.
Item 2. Management's Discussion and Analysis (Continued)
Operating income as a percentage of net sales for the Plastics Division has
declined from 12.4% in 1994 to 5.0% in 1995 for the quarter and for the
nine months ended September 30 from 9.2% in 1994 to 6.4% in 1995. The
margin erosion in the quarter and year-to-date was due primarily to
difficulties experienced in recovering the steady increases,
since October 1994, in PET resin prices and, to a lesser
extent, inefficiencies caused by the impact of continued capacity
enhancement programs at various plants. With excess capacity in the U.S.
PET bottle market and eroding margins due to the difficult PET price
structure, the Company has responded by restricting capital spending,
closing one plant and reorganizing two plants. Although the Company
believes that these actions will increase profitability in the future
through improved utilization of remaining capacity, the Company expects that
margins may erode further in the fourth quarter.
Net Interest Expense/Income
Net interest expense was $34.8 million in the quarter and $102.8 million
year-to-date and represents increases over 1994 of 40.3% and 56.9%
respectively. The increase in net interest expense is due primarily to (a)
generally higher interest rates, (b) increased working capital requirements
resulting from the impact on inventories of higher raw material costs and
(c) capital spending programs to expand production worldwide and to improve
production efficiencies.
Taxes on Income
The effective tax rate before restructuring charges was 11.1% in the quarter
and 26.8% year-to-date as compared to 34.1% in the quarter and 34.6%
year-to-date in 1994. The lower effective tax rate is primarily due to
increased pre-tax income, especially in the third quarter, from non-U.S.
operations with lower statutory rates, such as those in China, the United
Arab Emirates and Switzerland.
Liquidity and Capital Resources
Cash and cash equivalents at September 30, 1995, were $58.0 million as
compared to $43.5 million at December 31, 1994 and $62.3 million at
September 30, 1994. Working capital at September 30, 1995 was $199.9
million, an improvement of $77.3 million from December 31, 1994 and $240.2
million from September 30, 1994. Net book value of property, plant and
equipment representing 37.0% of total assets increased by $121.8 million
from December 31, 1994. The change in net book value resulted from: (1)
capital expenditures of $295.4 million, (2) reserve for writedown of assets
under the restructuring plans of $53.1 million, (3) retirement and/or sale
of assets, (4) depreciation on assets of $174.5 million and (5) the impact
of translation on non-U.S. assets. Total debt at September 30, 1995 was
$2,226.4 million and represented an increase of 22.0% over the December 31,
1994 debt level of $1,825.3 million. Total debt, net of cash and cash
equivalents, as a percentage of total capitalization was 58.1% at September
30, 1995 as compared to 55.3% at December 31.
</PAGE>
<PAGE>15
Crown Cork & Seal Company, Inc.
Item 2. Management's Discussion and Analysis (Continued)
The primary sources of cash through the nine months ended September 30, 1995
have been: (1) proceeds from short-term debt, primarily commercial paper,
of $258.8 million and (2) proceeds from long-term borrowings of $329.4
million. Short-term debt, through issuances of commercial paper, has
historically funded the Company's working capital requirements on an interim
basis. The current commercial paper program is supported by a $1,000.0
million multi-currency credit facility which bears interest at variable
market rates and which matures in February 2000. There are no restrictions
attached to this facility. At September 30, 1995 outstanding commercial
paper was $937.4 million as compared to $425.6 million at December 31, 1994
and $774.5 million at September 30, 1994. Proceeds from long-term debt were
generated through the issuance of $300 million of 8.38% notes due 2005.
These notes were part of a $500.0 million shelf registration filed with the
Securities and Exchange Commission on December 20, 1994. Funds from the
notes were used to paydown short-term indebtedness.
The primary uses of cash for the nine months were: (1) capital expenditures,
(2) working capital requirements and (3) repayment of long-term debt.
Capital expenditures of $295.4 million represent a decrease of 8.5% from the
year earlier level of $323.0 million. The reduction in overall spending
from a year earlier represents the Company's continuing effort to reduce
interest costs by lowering or restricting debt levels. Spending for the
North American Division was $126.9 million. Included in spending for this
division were: (1) continuing conversion of aluminum beverage can and end
lines to 202 diameter at various plants, (2) modernization of a plant in
Texas to meet customer needs and (3) downpayments on two new high-speed
beverage can lines. Spending in the Plastic Division has declined by 30.3%
from a year earlier as the Company continues to evaluate its capacity
utilization within this segment; and, as such, has restricted current
spending. Primary spending has been in response to customer requirements,
specifically single-serve PET preform and bottle lines. Spending in the
International Division totaled $47.0 million as compared to 1994 spending
of $43.5 million. The major projects in this division have been
concentrated in the Company's joint ventures as well as further expansion
of existing European plastic cap production. Aside from capital
expenditures, working capital required significant cash commitment due
primarily to the impact of substantially higher raw material cost in 1995.
The Company continues to proceed with its proposed acquisition of
CarnaudMetalbox. The Company has received commitments from thirteen banks
as part of its 13.7 billion French Franc (approximately $2.8 billion)
Multi-Currency Revolving Credit/Term Loan facility. Funds from this
acquisition facility will be used to finance the cash portion of the proposed
exchange offer to acquire the shares of CarnaudMetalbox of France. The
Company expects that the indebtedness incurred under such a facility will
be repaid from (1) funds generated internally by the Company and its
subsidiaries, (2) additional borrowings, (3) proceeds from asset dispositions
and possibly (4) equity offerings. A combination of two or more sources
will more than likely generate these future cash resources.
</PAGE>
<PAGE>16
Crown Cork & Seal Company, Inc.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
2.a Exchange Offer Agreement, dated as of May 22, 1995, as
amended as of November 13, 1995 between Crown Cork & Seal
Company, Inc., and Compagnie Generale d' Industrie et de
Participations (incorporated by reference to Annex A of
the Proxy Statement/Prospectus forming a part of the
Registrant's Registration Statement on Form S-4 filed with
the Commission on November 13, 1995 (File No. 33-64167)).
3.a By-laws of the Registrant as amended by the Company's
Board of Directors on July 27, 1995 (incorporated by
reference to Exhibit 3 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995
(File No. 1-2227)).
4. Rights Agreement dated as of August 7, 1995 between Crown
Cork & Seal Company, Inc., and First Chicago Trust
Company of New York (incorporated by reference to Exhibit
1 of the Registrant's Form 8-A dated August 10, 1995
(File No. 1-2227)).
11. Statement re: Computation of per share earnings
23. Consent of Independent Accountants
27. Financial Data Schedule
b. Reports on Form 8-K
No reports on Form 8-K have been filed during the three
months ended September 30, 1995.
</PAGE>
<PAGE>17
Crown Cork & Seal Company, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Crown Cork & Seal Company, Inc,
Registrant
Date: Noveber 14, 1995 By: /S/Timothy J. Donahue
Timothy J. Donahue
Vice President and Controller
</PAGE>
<PAGE>18
Crown Cork & Seal Company, Inc.
Exhibit 11 - Statement re Computation of per share earnings
Nine Months Ended Three Months Ended
1995 1994 1995 1994
1. Net Income (in millions) $ 68.8 $ 90.9 ($ 19.9) ($ 7.4)
2. Weighted average number of
shares outstanding during
the period 90,105,240 89,028,346 90,469,197 89,115,758
3. Earnings per share based
upon average outstanding
shares (1/2) $ 0.76 $ 1.02 ($ 0.22) ($ 0.08)
4. Net shares issuable upon
exercise of dilutive
outstanding stock options
(treasury stock method) 516,409 865,453 372,073 798,528
5. Fully diluted shares(2+4) 90,621,649 89,893,799 90,841,270 89,914,286
6. Fully diluted earnings
per share (1/5) $ 0.76 $ 1.01 ($ 0.22) ($ 0.08)
</page>
<PAGE>19
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of our report
dated February 10, 1995, appearing on page 19 of Crown Cork & Seal Company,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994. We
also consent to the references to us under the heading "Experts" in such
Prospectus.
Price Waterhouse LLP
Philadelphia, PA
November 10, 1995
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 58
<SECURITIES> 0
<RECEIVABLES> 987
<ALLOWANCES> 11
<INVENTORY> 844
<CURRENT-ASSETS> 1954
<PP&E> 3151
<DEPRECIATION> 1213
<TOTAL-ASSETS> 5235
<CURRENT-LIABILITIES> 1754
<BONDS> 1163
<COMMON> 592
0
0
<OTHER-SE> 866
<TOTAL-LIABILITY-AND-EQUITY> 5235
<SALES> 3940
<TOTAL-REVENUES> 3940
<CGS> 3532
<TOTAL-COSTS> 3635
<OTHER-EXPENSES> 3
<LOSS-PROVISION> 2
<INTEREST-EXPENSE> 112
<INCOME-PRETAX> 96
<INCOME-TAX> 17
<INCOME-CONTINUING> 69
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69
<EPS-PRIMARY> .76
<EPS-DILUTED> .76
</TABLE>
