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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission file number 1-2227
Crown Cork & Seal Company, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1526444
(State or other jurisdiction (Employer
of incorporation or organization) Identification No.)
9300 Ashton Road, Philadelphia, PA 19136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 215-698-5100
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
Common Stock $5.00 Par Value New York Stock Exchange & Paris Bourse
4.5% Convertible Preferred Stock
$41.8875 Par Value
Common Stock Purchase Rights
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filings
requirements for the past 90 days.
Yes __X__ No____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 15, 1996, 128,133,465 shares of the Registrant's Common Stock,
excluding shares held in Treasury, and 12,432,622 shares of the Registrant's
4.5% Convertible Preferred Stock were issued and outstanding, and the aggregate
market value of such shares held by non-affiliates of the Registrant on such
date was $6,830,839,653.
DOCUMENTS INCORPORATED BY REFERENCE
Notice of Annual Meeting and Proxy Statement dated March 22, 1996 is
incorporated by reference into Part III hereof. Only those specific portions so
incorporated are to be deemed filed as part of this Form 10-K Annual Report.
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<PAGE>
Crown Cork & Seal Company, Inc.
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Item 1 Business............................................................1
Item 2 Properties..........................................................7
Item 3 Legal Proceedings...................................................9
Item 4 Submission of Matters to a Vote of Security Holders................10
PART II
Item 5 Market for Registrant's Common Stock and
Related Stockholder Matters...................................10
Item 6 Selected Financial Data............................................11
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................12
Item 8 Financial Statements and Supplementary Data........................24
Item 9 Disagreements on Accounting and Financial Disclosure...............52
PART III
Item 10 Directors and Executive Officers of the Registrant.................52
Item 11 Executive Compensation.............................................53
Item 12 Security Ownership of Certain Beneficial Owners and Management.....53
Item 13 Certain Relationships and Related Transactions.....................53
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports
on Form 8-K...................................................54
SIGNATURES...................................................................58
<PAGE>
Crown Cork & Seal Company, Inc.
PART I
ITEM 1. BUSINESS
GENERAL
Crown Cork & Seal Company, Inc. (the "Company" and the "Registrant") is a
multinational manufacturer of metal and plastic packaging, including cans,
bottles, crowns and closures (metal and plastic) and machinery for filling,
packaging and handling. The Company is an international packaging producer and,
as such, benefits from, but is also exposed to, the fluctuations of world trade.
The Company recognizes that it must constantly review operations worldwide to
ensure that it maintains its competitive position. To achieve better
productivity, the Company closed or reorganized 44 facilities across nine
countries between 1991 and 1995 and is scheduled to close three plants during
1996. The Company continues to review all operations so that it can determine
the appropriate number, size and location of plants, emphasizing service to
customers and rate of return to investors.
Financial information about the Company's operations in its two principal
industry segments, Metal Packaging and Plastic Packaging, and within geographic
areas is set forth in Part II of this Report on pages 48 and 49 under Note V of
the Notes to Consolidated Financial Statements entitled "Segment Information by
Industry Segment and Geographic Area."
For several years, the Company has developed its historical core Metal Packaging
businesses and has expanded into new product lines, such as, plastic containers,
primarily through selected strategic acquisitions. As part of the Company's
focus on global packaging opportunities, Management recognized the need to
expand the scope of its non-U.S. operations, especially within Europe. The
Company identified CarnaudMetalbox ("CMB") as an attractive potential partner
for a combination, particularly in light of the complementary fit between the
Company's strong presence in North America and CMB's strong presence in Europe.
In May 1995 an exchange offer agreement was signed between the Company and
Compagnie Generale d' Industrie et de Participations ("CGIP"), a French societe
anonyme and the principal shareholder of CMB, pursuant to which the Company
agreed to make an exchange offer for all of the outstanding shares of CMB. The
acquisition of CMB was completed in February 1996.
The CMB acquisition further diversifies the Company's business on a geographic
and product basis. The Company will continue to operate within two principal
industry segments, Metal Packaging and Plastic Packaging. Geographically, the
Company's European operations will expand considerably. Management believes that
the acquisition of CMB complements the Company's existing market presence,
enhancing the Company's ability to compete outside North America on a global
basis. In that regard, CMB has historically derived approximately 90% of its
revenues outside the North American market. Accordingly, the combined Company's
financial position and future results of operations will be subject to increased
risks from exchange rate fluctuations.
Information about the Company's acquisitions over the most recent three years
appears in Part II hereof on pages 32 and 33 under Note C of the Notes to
Consolidated Financial Statements. Information about the Company's acquisition
of CMB appears in Part II hereof, on pages 18 and 19 under "Acquisition of
CarnaudMetalbox" within Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and on pages 45 and 46 under Note
T of the Notes to Consolidated Financial Statements.
DISTRIBUTION
As of December 31, 1995, the Company's products were manufactured in 70 plants
within the United States and 68 plants outside the U.S., spanning over 40
countries. Products are sold through the Company's sales organization to the
soft drink, food, citrus, brewing, household products, personal care and various
other industries.
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Crown Cork & Seal Company, Inc.
With the February 1996 acquisition of CMB, the Company has acquired a
multinational manufacturer of metal and plastic packaging materials and
equipment with more than three quarters of its revenues derived from operations
within the European Union. At December 31, 1995, CMB had 175 plants and
facilities located within 38 countries worldwide.
In the period 1993 through 1995, no one customer of the Company accounted for
more than 10 percent of the Company's net sales.
RESEARCH AND DEVELOPMENT
With the acquisition of CMB and its research and development facilities in the
United Kingdom and Singapore, the Company significantly increased its
engineering activities currently based at the Company's Alsip Technical Center
near Chicago. The Alsip Technical Center has historically enabled the Company to
provide technical and engineering services worldwide both within the Company and
to third parties. The size of the combined organization may provide an
opportunity to create new product concepts and the flexibility to spread the
costs of future research and development activities and technological
investments over a larger revenue base. Cost control and innovation continue in
importance as the Company attempts to enhance its ability to compete in its
relatively mature markets.
The Company expended $22.3 million, $21.1 million and $23.3 million in 1995,
1994 and 1993, respectively, on research and development activities. These
activities are expected to make a greater contribution to improve and expand the
Company's product lines in the future.
MATERIALS
The Company continues to pursue strategies which enable it to source its raw
materials with increasing effectiveness, and may consider vertical integration
into the production of certain raw materials, such as PET resin, used in plastic
bottle production, if it is advantageous to do so. The raw materials used in the
manufacture of the Company's products are primarily aluminum and tinplate for
the Metal Packaging segment, and various types of resins, which are
petrochemical derivatives, for the Plastic Packaging segment. The Company may be
subject to adverse price fluctuations on the purchase of such raw materials. See
"Metal Packaging" below.
SEASONALITY
The Company's metal and plastic beverage container businesses are predominantly
located in the Northern Hemisphere. Generally, beverage products are consumed in
greater amounts during warmer months of the year. Consequently, product sales
and earnings have generally been higher in the second and third quarters of the
calendar year. Demand for food packaging materials for particular products
generally is higher during the harvest and processing season. Consequently,
sales and earnings for food cans have generally been higher in the third quarter
of the year due to the agricultural harvest. Substantial food can business,
primarily within Europe, was obtained with the acquisition of CMB which may
result in increased seasonal effect on the Company's sales and earnings. The
Company's other businesses tend not to be affected by significant seasonal
variations.
ENVIRONMENTAL MATTERS
The Company's operations, like those of others in the industry, generally are
subject to numerous laws and regulations governing the protection of the
environment, disposal of waste, discharges into water and emissions into the
atmosphere. The Company has a Corporate Environmental Protection Policy, and
environmental considerations are among the criteria by which the Company
evaluates projects, products, processes and purchases. Further discussion of the
Company's environmental matters is contained in Part
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Crown Cork & Seal Company, Inc.
II, Item 7 "Management's Discussion and Analysis of Financial Condition and
Results of Operations" of this Report on pages 21 and 22 under the caption
"Environmental Matters".
WORKING CAPITAL
Information relating to the Company's liquidity and capital resources is set
forth in Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," of this Report on pages 17 and 18 under
the caption "Liquidity and Capital Resources".
EMPLOYEES
At December 31, 1995, the Company employed 20,409 people throughout the world.
With the acquisition of CMB in February 1996 approximately 28,500 more employees
have been added. The majority of the Company's employees are included in the
Metal Packaging industry segment. A significant number of the Company's
employees are covered by collective bargaining agreements of varying terms and
expiration dates.
APPOINTMENT OF CORPORATE OFFICERS
As the Company reorganizes its operations to assimilate its acquisition of CMB,
the Board of Directors of the Company has appointed Mr. Michael J. McKenna to
the position of President and Chief Operating Officer (COO) of the Company. Mr.
McKenna has been with the Company over 39 years and has held many management and
executive positions, most recently as President of the Company's North American
Division. Mr. John W. Conway has been appointed President of the newly created
Americas Division with responsibility for the Company's Metal Packaging
operations in North, Central and South America. Mr. Conway, who is an Executive
Vice President of the Company, was previously President of the Company's
International Division. Mr. Mark Hartman, formerly Executive Vice President -
Corporate Technologies, was appointed to head the CMB merger transition team as
Executive Vice President - Office of the Chairman. In this newly created
position Mr. Hartman will be responsible for the successful integration of CMB
into the Company's worldwide organization. Mr. Ian B. Carmichael, who in his 41
years with Metalbox and CMB has held a number of senior level positions in
manufacturing and division management, was appointed Executive Vice President -
Corporate Technologies as a replacement for Mr. Hartman. Mr. Carmichael will be
responsible for the successful merger of research, development and engineering
functions of CMB into the Company's current organization. William H. Voss has
been appointed Executive Vice President and President of the newly created
Asia-Pacific Division. Mr. Voss was formerly Managing Director for the Company's
operations in China, Vietnam and Hong Kong. Mr. Tommy H. Karlsson has been
appointed Executive Vice President and President of the newly created European
Division.
METAL PACKAGING
The Metal Packaging segment which in 1995 included the North American,
International and Machinery Divisions of the Company accounted for approximately
75 percent of net sales and 69 percent of operating income. This segment
manufactures and markets steel and aluminum cans as well as composite cans,
crowns (also known as bottle caps) and metal closures. Within the Machinery
Division, the Company manufactures filling, packaging and handling machinery.
All products are sold through the Company's sales organization to the soft
drink, food, citrus, brewing, household products, personal care and various
other industries.
With global beverage and food marketers increasing the consolidation of their
supplier base under long-term arrangements as well as qualifying suppliers on
the basis of their ability to provide service globally and to create innovative
designs and technologies in a cost-effective manner, the Company sought a
strategic acquisition which would channel it into such a position with its
customers. In February 1996 the Company acquired CMB, creating a geographically
diversified and innovative packaging company. The
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Crown Cork & Seal Company, Inc.
Company plans to organize its Metal Packaging segment into three divisions in
the future: Americas, European and Asia-Pacific. The Americas Division will
include North, Central and South America. The European and Asia-Pacific regions
along with South America were previously included in the International Division.
CMB's metal packaging segment, which represented approximately 74% of CMB's 1995
net sales, principally in Europe and Asia, includes the manufacture of food
cans, food closures, specialty packaging, aerosol and beverage cans.
In connection with the approval of the acquisition of CMB, the European
Commission required that the Company divest certain aerosol operations located
in five European countries. The Company believes that divesting these operations
will not have a material effect on its combined financial position or results of
operations.
The Company believes that price, quality and customer service are the principal
competitive factors affecting its business. Based upon sales, the Company
believes that it is a leader in the markets for metal packaging in which it
competes; however, the Company encounters competition from a number of companies
offering similar products.
The Company's basic raw materials for its Metal Packaging segment's products are
tinplate and aluminum. These metals are supplied by the major mills in the
countries within which the Company operates plants. Some plants in
less-developed countries, which do not have local mills, obtain their metal from
nearby more-developed countries. In 1995, the Company obtained more than 90
percent of its tinplate requirements from ten suppliers with one supplier
accounting for more than 25 percent and obtained its aluminum requirements from
ten suppliers of which two suppliers accounted for 65 percent. Approximately 75
percent of CMB's raw material purchases are for tinplate. Tinplate has been
sourced from a limited number of European suppliers of which the four largest
maintained by CMB account for over 60 percent of its tinplate purchased.
Aluminum has been purchased from a limited number of global suppliers of which
the six largest supplying CMB accounted for approximately 70 percent of its
purchases. Although sufficient quantities of metal raw materials have been
available in the past, there can be no assurances that sufficient quantities
will be available in the future.
Prior to 1995, the Company entered into annual agreements with its tinplate and
aluminum suppliers, pursuant to which the Company obtained price commitments for
its tinplate and aluminum requirements for the next calendar year. The Company
continues to contract for its tinplate requirements on this basis.
During 1994, the Company's suppliers of aluminum can and end sheet announced and
implemented a new pricing formula for 1995. Pursuant to the new formula,
aluminum can and end sheet prices are tied directly to the price of aluminum
ingot on the London Metal Exchange (LME). The formula price is generally the LME
spot price of aluminum ingot plus a charge for the cost of converting and
transporting aluminum. The Company believes that this new pricing formula is
primarily responsible for the significant increase in the cost of aluminum in
1995 as compared to 1994, and that the effect of this new pricing structure has
been to transfer the volatility in the commodity markets to the Company.
Historically, the Company has adjusted the prices for its products in response
to changes in the cost of tinplate and aluminum. In response to the new aluminum
pricing structure, the Company had announced price increases to its customers
based upon the price of aluminum ingot on the LME. Due to overcapacity in the
aluminum beverage can market and the customers' willingness to shift a portion
of their packaging requirements away from aluminum, the Company was not able to
fully recover increases in the cost of aluminum from its customers.
Additionally, in the future, there can be no assurance that the Company will be
able to recover fully any increases or fluctuations in metal prices from its
customers. Consolidated aluminum consumption, primarily for beverage cans and
ends, accounted for 33% and 36% of the Company's consolidated cost of sales for
1995 and 1994, respectively.
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Crown Cork & Seal Company, Inc.
The Company, based on net sales, is one of two leading producers of aluminum
beverage cans within the United States. In 1995, with the higher aluminum cost
exerting pressure on margins, the Company increased selling prices for its
beverage cans. With the increased prices, sales dollars were higher in 1995 but
volumes were lower as customers shifted first quarter 1995 requirements into the
fourth quarter of 1994 in advance of the anticipated increase in selling prices.
The Company is continuing its ongoing efforts to reduce can and end diameter,
lightweight its cans, reduce non-metal costs and restructure production
processes. Beverage can capacity in North America continues to be redeployed to
emerging markets, and to a lesser extent, retrofitted to produce two-piece food
cans.
During 1995, the Company continued to review the number of manufacturing lines
used in North America to produce beverage cans. The Company reduced its beverage
can capacity in 1995 in line with market demand. Additional restructuring also
has been directed towards non-beverage metal operations in North America.
Information relating to the Company's 1995 restructuring activities is set forth
in Part II, Item 7, "Management's Discussion and Analysis", of this Report on
pages 19 and 20 under the caption "Provision for Restructuring" and in Part II,
Item 8, on pages 34 and 35 under Note H to the Notes to Consolidated Financial
Statements. The Company also expects to incur significant transition and
restructuring costs and expenses in connection with the acquisition of CMB, both
in Europe and worldwide. The ultimate effect of such charges on the combined
Company and future results cannot be determined at this time, however, those
costs and the prospective savings could be material.
In April 1993, the Company acquired the Van Dorn Company. Van Dorn provides the
Company with two-piece (drawn) aluminum cans for processed foods and adds
additional manufacturing capacity for metal, plastic and composite cans for the
paint, chemical, automotive, food, pharmaceutical and household product
industries.
With the CMB acquisition a significant European food operation has been
obtained. This acquisition along with the 1994 acquisition of the container
division of Tri-Valley Growers significantly enhances the Company's position
with global food marketers and also reduces the percentage of aluminum beverage
can sales to overall consolidated net sales.
Outside North America, the Company's Metal Packaging products consist of metal
crowns and closures as well as metal cans for food, beverage and aerosol
customers. Europe is the most significant beverage crown and closure market for
the Company with returnable bottles continuing to be a dominant form of beverage
packaging in the region. In 1995, the Company commenced production of two-piece
beverage cans and beverage ends in Shanghai and beverage ends in Foshan, China.
Full production for two-piece beverage cans and beverage ends was achieved at
the Company's plants in Argentina and the United Arab Emirates in early 1995. In
the second quarter of 1995 a joint-venture was established in Brazil with
Petropar, S.A. of Porto Alegre, Brazil for the production of beverage cans and
ends, PET plastic bottles and plastic closures. The Company's non-U.S. beverage
can capacity is concentrated in Hong Kong, China, Argentina, the United Arab
Emirates, Korea, Saudi Arabia and Venezuela. The Company's operations in the
United Arab Emirates, Hong Kong, China, Korea, Saudi Arabia and Venezuela are
joint-venture operations,consistent with the Company's current philosophy that
the use of business partners in many overseas locations represents another
cost-effective means of entering these new markets.
The Machinery Division, representing approximately 1 percent of consolidated net
sales, reported increased sales in 1995 due to increased demand for fillers and
spare parts.
PLASTIC PACKAGING
The Plastic Packaging segment manufactures plastic containers and plastic
closures. With the Company's 1992 acquisition of CONSTAR International and the
1993 acquisition of the remaining 56 percent of Wellstar, the Company currently
offers a wider product range to its worldwide customers. The Plastic Packaging
segment also includes plastic closure operations within the United States in
Virginia and within
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Crown Cork & Seal Company, Inc.
Europe in Reinach, Switzerland and the manufacture of plastic closures in Metal
Packaging plants in Belgium, Germany, Italy, Spain, Argentina, Thailand and the
United Arab Emirates. The Plastic Packaging segment represented approximately 25
percent of the Company's net sales in 1995 as compared to approximately 2
percent in 1991.
To continue the Company's goal of becoming the global leader for the products
which it sells, the Company, with the acquisition of CMB, has significantly
expanded its Plastic Packaging segment. This acquisition is expected to add
product and geographic diversity to the current business and to provide
opportunities to differentiate the products and expand margins within this
segment.
CMB's Plastic Packaging segment, which represented approximately 22% of their
1995 net sales, included the manufacture of rigid plastic packaging for food,
household and health and beauty items and flexible packaging for food products.
The addition of CMB's European plastic operations, while complementing the
Company's existing activities, may result in certain restructuring or
consolidation efforts in the future. The ultimate effect of such changes on the
combined Company and on future results cannot be determined at this time,
however, these costs could be material.
The Company believes that price, quality and customer service are the principal
competitive factors affecting its business. Based upon sales, the Company
believes that it is a leader in the markets for plastic packaging in which it
competes; however, the Company encounters competition from a number of companies
offering similar products.
The Plastic Packaging segment manufactures plastic packaging for the beverage,
food, household products, personal care, chemical, health and beauty and other
industries. With the acquisition of CMB's Plastic Division and its combination
with CONSTAR International operations in Europe, the Company, based on net
sales, believes it has become the leading European producer of plastic
packaging. The combination further strengthens the Company's plastics marketing
base within Europe. CONSTAR, based on net sales, is one of the two leading
producers of plastic containers produced from PET (polyethylene terephthalate)
and HDPE (high-density polyethylene) within the United States. Plastic
containers continued to increase their share of the packaging market during
1995.
The principal raw materials used in the manufacture of plastic containers and
closures are various types of resins which are purchased from several commercial
sources. Resins, which are petrochemical derivatives, are presently available in
quantities adequate for the Company's needs. The Company has experienced
fluctuations in the cost of resins in the past and has periodically adjusted its
selling prices for plastic containers and closures to reflect these movements in
resin costs. There can be no assurance, however, that the Company will be able
to recover fully any increases or fluctuations in resin prices from its
customers.
Typically, the Company identifies market opportunities by working cooperatively
with customers and implementing commercially successful programs. The Company
believes it will capitalize on both the conversions to plastic from other forms
of packaging and the new markets through its technical expertise, quality
reputation and customer service. The Company also believes that its plastic
container plant sites are strategically located and sized to meet market
requirements.
Capital expenditures for the Plastic Packaging segment were approximately 34
percent of total capital expenditures for the Company in 1995 as compared to
approximately 5 percent in 1991. The Company is committed to servicing its
global customers with plastic containers. Information relating to the Company's
capital expenditures is set forth in Part II, Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations", of this report
on pages 20 and 21 under the caption "Capital Expenditures".
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Crown Cork & Seal Company, Inc.
ITEM 2. PROPERTIES
The Company's manufacturing and support facilities are designed according to the
requirements of the products to be manufactured, and the type of construction
varies from plant to plant. In the design of each facility, particular emphasis
is placed on quality assurance in the finished products, safety in the
operations, and avoidance or abatement of pollution. The Company maintains its
own engineering staff, which aids in achieving close integration of research,
design, construction and manufacturing functions and facilitates the
construction of plants which will be best suited to their special purposes.
Warehouse and delivery facilities are provided at each of the manufacturing
locations, however, the Company does lease outside warehouses at some locations.
The plants of the Company and its subsidiaries are owned, with the exception of
those that have the word "leased", in brackets, after the location name.
Joint-Ventures are indicated by the initials JV, in brackets, after the location
name. The list of locations as of December 31, 1995 follows:
<TABLE>
<CAPTION>
METAL PACKAGING LOCATIONS IN THE UNITED STATES
<S> <C> <C>
Abilene, TX Kankakee, IL Portage, IN (Leased)
Alsip, IL La Crosse, WI Portland, OR (Leased)
Arden, NC Lakeville, MN Pulaski Park, MD (Leased)
Arlington, TX La Mirada, CA Salisbury, MD
Atlanta, GA Lawrence, MA Seattle, WA (Leased)
Batesville, MS Mankato, MN Solon, OH
Cheraw, SC Massillon, OH (2) Spartanburg, SC
Conroe, TX Merced, CA Suffolk, VA (Leased)
Covington, GA Modesto, CA Union City, CA
Crawfordsville, IN Olympia, WA (Leased) Walla Walla, WA
Dayton, OH Omaha, NE Winchester, VA
Decatur, IL Oshkosh, WI Winter Garden, FL
Faribault, MN Owatonna, MN Worland, WY
Fort Bend, TX Perrysburg, OH York, PA
Fremont, CA Plymouth, FL
Hanover, PA Pocatella, ID (Leased)
</TABLE>
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Crown Cork & Seal Company, Inc.
<TABLE>
<CAPTION>
METAL PACKAGING LOCATIONS OUTSIDE THE UNITED STATES
<S> <C> <C> <C>
* Buenos Aires (2) Argentina Hong Kong Hong Kong (JV)
Schwanenstadt Austria Cork Ireland
* Antwerp Belgium * ** Voghera Italy
Vinhedo Brazil Amman Jordan (JV)
Aracaju Brazil Nairobi Kenya (JV)
Montreal (3) Canada Seoul (2) Korea (JV)
Chatham Canada Jahore Bahru Malaysia
Calgary Canada Guadalajara Mexico
Bolton Canada Mexico City (2) Mexico
Toronto (3) Canada Casablanca Morocco
Winnipeg Canada Lagos (2) Nigeria
Santiago Chile Lima Peru
Beijing China (JV) Lisbon Portugal
Shanghai China (JV) Mayaguez Puerto Rico (Leased)
Huizhou China (JV) San Juan Puerto Rico
Foshan China (JV) Dammam Saudi Arabia (JV)
Medellin Colombia Jeddah Saudi Arabia (JV)
Barranguilla Colombia Jurong Singapore
San Jose Costa Rica Johannesburg (2) South Africa (JV)
Copenhagen Denmark Cape Town South Africa (JV)
Guayaquil Ecuador * Madrid Spain
** London England Arima Trinidad & Tobago
** Tredegar, Wales England * Bangkok Thailand
* Frankenthal Germany * Jebel Ali United Arab Emirates (JV)
Bedburg Germany Caracus Venezuela (JV)
Guatemala City Guatemala Hanoi Vietnam
Jakarta Indonesia Ndola Zambia (JV)
Mijdrecht Holland Harare Zimbabwe (JV)
<FN>
* Plastic Packaging manufactured within Metal Packaging locations
** Includes aerosol operations which the Company has agrred to divest in
connection with the acquisition of CMB.
</FN>
Some metal manufacturing locations are supported by facilities that provide
art work for cans and crowns, coil shearing, coil coating, research,
product development and engineering. The support locations within the
United States are located in Alsip, IL, Aurora, IL (Leased), Fairless
Hills, PA (Leased), Massillon, OH, Philadelphia, PA, Plymouth, FL, Toledo,
OH, Youngstown OH; and outside the United States in Rotterdam, Holland and
Bilbao, Spain.
</TABLE>
<TABLE>
<CAPTION>
PLASTIC PACKAGING LOCATIONS IN THE UNITED STATES
<S> <C> <C>
Atlanta, GA Dallas, TX (Leased) Newark, OH (Leased)
Baltimore, MD Greenville, SC (Leased) Orlando, FL (Leased)
Baltimore, MD (Leased) Houston, TX (Leased) Phoenix, AZ (Leased)
Birmingham, AL (Leased) Jackson, MS (Leased) Reserve, LA (Leased)
Charlotte, NC Kansas City, KS (Leased) Salt Lake City, UT
City of Industry, CA (Leased) Leominster, MA (Leased) Sandston, VA
Collierville, TN (Leased) New Stanton, PA West Chicago, IL
</TABLE>
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Crown Cork & Seal Company, Inc.
PLASTIC PACKAGING LOCATIONS OUTSIDE THE UNITED STATES
<TABLE>
<S> <C> <C> <C> <C> <C>
Horizonte Brazil (JV) Didam Holland Reinach Switzerland
Sherburn England Budapest Hungary (JV) Izmir Turkey (JV)
* Evry France (Leased) Iztapalapa Mexico (JV)
<FN>
* Metal Packaging manufactured within Plastic Packaging location
</FN>
</TABLE>
The Company manufactures bottle and can filling machinery and parts at locations
within the United States in Baltimore, MD and Titusville, FL; outside the United
States in Londerzeel, Belgium and San Luis Potosi, Mexico. The Company also
operates two machinery overhaul locations within the United States in Bartow, FL
and Philadelphia, PA.
The Company has four machine shop locations which manufacture tool and die parts
used within its own manufacturing locations and also sells to customers in the
packaging industry. The locations are within the United States, with two in
Philadelphia, PA., and one in Wissota, WI and one in Wilkes Barre, PA.
The Company is directly involved in post-consumer plastic container recycling
and aluminum and steel can recycling through its subsidiary, Nationwide
Recyclers, Inc., located in Polkton, NC and Ocala, FL.
With the acquisition of CMB, the Company obtained an additional 175 plants and
facilities within 38 countries. These CMB locations are owned or held under
long-term leases by its operating subsidiaries.
ITEM 3. LEGAL PROCEEDINGS
In management's opinion, there are no pending claims or litigations, the adverse
determination of which would have a material adverse effect on the consolidated
financial position or results of operations of the Company. The Company has been
identified by the Environmental Protection Agency as a potentially responsible
party (along with others, in most cases) at a number of sites. Information on
this is presented in Part I, Item 1, entitled "Business" under the caption
"Environmental Matters" appearing on pages 2 and 3 of this Report and in Part II
Item 7, entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" under "Environmental Matters" appearing on pages 21
and 22 of this Report.
-9-
<PAGE>
Crown Cork & Seal Company, Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a special meeting of the Shareholders of the Company held on December 19,
1995, in Philadelphia Pennsylvania, the following matters (more fully described
in the Proxy Statement dated November 14, 1995 relating to such meeting) were
voted upon and approved with the votes relating to each such matter as
indicated:
<TABLE>
<CAPTION>
- - - - - - V O T E S - - - - - -
For Against Abstain
<S> <C> <C> <C>
(1) Proposal for approval of the transactions
contemplated by the Exchange Offer
Agreement between Crown and CGIP 69,318,099 1,424,361 217,487
(2) Proposal for the approval of the issuance
of shares of the Company's Common Stock and
shares of a new series of Company Preferred
Stock in connection with the CMB acquisition 69,314,413 1,425,570 219,964
(3) Proposal for the approval of the Amendment
to the Company's Articles of Incorporation
in connection with the CMB acquisition 68,331,249 2,392,898 235,800
(4) Proposal for approval of the Modernization
of the Company's Articles of Incorporation 66,450,829 3,965,060 544,058
(5) Proposal for approval of the amendment to
the Company's Articles of Incorporation to
authorize the Additional Preferred Stock 57,394,724 13,270,971 294,252
</TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Registrant's Common Stock is listed on the New York Stock Exchange and the
Paris Bourse. On March 15, 1996, there were 5,881 registered shareholders of the
Registrant's Common Stock. The market price with respect to the Registrant's
Common Stock is set forth on page 47 in Note U of the Notes to Consolidated
Financial Statements entitled "Quarterly Data (unaudited)". With the acquisition
of CMB in February 1996, the Registrant issued 4.5% Convertible Preferred Stock
(Preferred Stock). The Registrant's Preferred Stock is listed on the New York
Stock Exchange and the Paris Bourse. On March 15, 1996, there were 5 registered
shareholders of the Registrant's Preferred Stock. The foregoing information
regarding the number of registered shareholders of Common Stock and Preferred
Stock does not include persons holding stock through clearinghouse systems in
the United States and France. The Company's policy as to payment of cash
dividends is set forth in Part II, Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations" under "Dividends/Issuance of
Stock in Connection with CMB Acquisition" appearing on page 22 of this Report.
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<PAGE>
Crown Cork & Seal Company, Inc.
ITEM 6. SELECTED FINANCIAL DATA
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(in millions, except per share, ratios and
other statistics) 1995 1994 1993 1992 1991
Summary of Operations
<S> <C> <C> <C> <C> <C>
Earnings per average common share
before cumulative effect of
accounting changes..........................(1) $ .83 $ 1.47 $ 2.08 $ 1.79 $ 1.48
Earnings per average common share..........(1)(2) .83 1.47 1.14 1.79 1.48
Net income before cumulative effect of
accounting changes............................. 74.9 131.0 180.9 155.4 128.1
% to net sales............................... 1.5% 2.9% 4.3% 4.1% 3.4%
Net income....................................(2) 74.9 131.0 99.1 155.4 128.1
% to net sales............................... 1.5% 2.9% 2.4% 4.1% 3.4%
Net sales ....................................... 5,053.8 4,452.2 4,162.6 3,780.7 3,807.4
Depreciation and amortization.................... 256.3 218.3 191.7 142.4 128.4
Selling and administrative....................... 139.3 135.4 126.6 112.1 105.4
% to net sales .............................. 2.8% 3.0% 3.0% 3.0% 2.8%
Interest expense................................. 148.6 98.8 89.8 77.4 76.6
Interest income.................................. 12.5 7.2 10.1 13.5 10.0
Taxes on income.................................. 24.9 55.6 97.4 101.0 83.8
Return on average shareholders' equity........(2) 5.3% 10.0% 8.3% 13.9% 12.6%
Financial Position at December 31
Total assets..................................... $ 5,051.7 $ 4,781.3 $ 4,236.3 $ 3,825.1 $ 2,963.5
Working capital ratio............................ 1.3:1 1.1:1 1.0:1 1.1:1 1.4:1
Short-term debt plus current maturities.......... 608.1 735.8 474.8 379.4 184.4
Long-term debt................................... 1,490.1 1,089.5 891.5 939.9 585.0
Total debt to total capitalization.........(2)(3) 56.2% 55.3% 50.1% 52.1% 40.5%
Shareholders' equity............................. 1,461.2 1,365.2 1,251.8 1,143.6 1,084.4
Book value per common share................(1)(2) 16.12 15.28 14.09 13.24 12.45
Other Statistics
Capital expenditures ............................ $ 433.5 $ 439.8 $ 271.3 $ 150.6 $ 92.2
Employees........................................ 20,409 22,373 21,254 20,378 17,763
Number of shareholders........................... 5,976 6,011 6,168 4,193 3,722
Number of shares - at year-end...........(1) 90,650,814 89,360,040 88,814,533 86,348,180 87,088,179
- average...............(1) 90,233,518 89,086,999 87,086,553 86,895,574 86,780,517
<FN>
(1) All data relating to common shares prior to 1992 have been restated for
comparative purposes to reflect the 3 for 1 common stock split in 1992.
(2) Figures for 1995 and 1994 include after-tax adjustments for
restructuring, $67.0 or $.74 per share and $73.2 or $.82 per share,
respectively; and for 1993 the cumulative effect of accounting changes of
$81.8 or $.94 per share. Without these adjustments, the return on average
shareholders' equity in 1995, 1994 and 1993 would have been 9.6%, 14.7%
and 14.6%, respectively.
(3) Total capitalization includes total debt (net of cash and cash
equivalents), minority interests and shareholders' equity.
</FN>
</TABLE>
Certain reclassifications of prior years' data have been made to improve
comparability.
-11-
<PAGE>
Crown Cork & Seal Company, Inc.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(in millions, except per share, employee, shareholder and statistical data)
INTRODUCTION
This discussion summarizes the significant factors affecting the results of
operations and financial position of Crown Cork & Seal Company, Inc. (the
Company) during the three-year period ended December 31, 1995. This discussion
should be read in conjunction with the Consolidated Financial Statements
included in this annual report.
Financial results (operating income, pretax income, net income and earnings per
share) for 1995, 1994 and 1993 were impacted by restructuring charges or
accounting changes. These items are summarized below:
RESTRUCTURING PLAN
The financial results for 1995 and 1994 were impacted by a two-phase
restructuring plan outlined by the Company in March 1994. Pretax income was
charged for $102.7 ($67.0 after taxes or $.74 per share) and $114.6 ($73.2
after taxes or $.82 per share), in 1995 and 1994, respectively.
Further information concerning the details of the restructuring plan,
including a reconciliation of the restructuring accrual, is included in Note
H to the Consolidated Financial Statements and under Restructuring as
provided later in this discussion.
ACCOUNTING CHANGES
The Company adopted SFAS 106 and SFAS 109 on January 1, 1993. Additionally,
during the fourth quarter of 1993, the Company adopted SFAS 112 retroactive
to January 1, 1993. The after-tax effect of these accounting changes was a
one-time charge to 1993 earnings of $81.8 or $.94 per share, with an
incremental charge to 1993 earnings of $2.5 or $.03 per share. These
accounting changes are more fully described in Note B to the Consolidated
Financial Statements.
Adoption of the above three statements did not and will not have any cash
flow impact on the Company.
RESULTS OF OPERATIONS
NET SALES
Net sales during 1995 were $5,053.8, an increase of $601.6 or 13.5% versus 1994
net sales of $4,452.2. Net sales during 1993 were $4,162.6. Sales from domestic
operations increased 13.7% in 1995 compared with a 4.5% increase in 1994.
Foreign sales increased 13.2% in 1995 following a 12.3% increase in 1994.
Domestic sales accounted for 66.8% of consolidated sales in 1995 and 66.7% in
1994.
<TABLE>
<CAPTION>
% Increase/
Net Sales (Decrease)
DIVISION 1995 1994 1993 1995/1994 1994/1993
<S> <C> <C> <C> <C> <C>
North American.............................. $2,869.8 $2,654.6 $2,598.2 8.1 2.2
International............................... 949.5 828.8 724.5 14.6 14.4
Plastics.................................... 1,150.7 880.9 736.7 30.6 19.6
Other....................................... 83.8 87.9 103.2 (4.7) (14.8)
-------- -------- --------
$5,053.8 $4,452.2 $4,162.6 13.5 7.0
======== ======== ========
</TABLE>
Included in the International Division are net sales of $92.0, $77.0 and $58.9
for the years ended December 31, 1995, 1994 and 1993, respectively, related to
plastic packaging products manufactured and sold by the International Division.
-12-
<PAGE>
Crown Cork & Seal Company, Inc.
The increase in 1995 North American Division net sales is a result of (i)
increased raw material prices which forced increases in selling prices,
primarily in aluminum beverage cans and ends, (ii) sales unit volume increases
in food cans, and (iii) a full year's sales from the Company's food can plants
acquired from Tri-Valley Growers in June 1994; partially offset by (i) sales
unit volume decreases in aluminum beverage cans and ends and aerosol cans, and
(ii) the weakening of the Mexican peso against the U.S. dollar during 1995. The
increase in 1994 division net sales was primarily the result of a full year's
sales from Van Dorn acquired in April 1993, and sales unit volume increases in
beverage and food cans; offset by (i) lower raw material costs which were passed
on to customers in the form of reduced selling prices, (ii) continued
competitive pricing in the North American beverage can market, and (iii) the
strengthening of the U.S. dollar against the Canadian dollar and Mexican peso.
U.S. sales accounted for approximately 85% of division net sales in 1995, and
83% in both 1994 and 1993.
The increase in 1995 International Division net sales is primarily a result of
(i) increased aluminum costs passed on to customers in the form of increased
selling prices, (ii) continued expansion of operations at the Company's beverage
can and plastic cap operations in Buenos Aires, Argentina and the United Arab
Emirates, (iii) increased sales volumes at the Company's dedicated aerosol plant
in Mijdrecht, The Netherlands, (iv) plastic closure expansion in Italy and
Thailand, (v) the start-up of beverage can operations in Shanghai, China, and
(vi) the strengthening of many European currencies against the U.S. dollar which
increased division sales by $47. The increase in 1994 International Division net
sales was primarily a result of (i) the first full year of operations at the
Company's operations in Buenos Aires, Argentina and the United Arab Emirates
(ii) continued expansion into China through the Company's Hong Kong affiliate
and (iii) increased unit volumes in Europe across most product lines.
The increase in 1995 Plastics Division net sales is directly a result of the
Company's U.S. and European capacity expansion programs initiated in 1993 and
continuing through 1995. As customers have increasingly converted to plastic for
packaging their products, the Company has aggressively invested to increase unit
capacity to meet demand. In the U.S., beverage container unit sales increased
31% in 1995 following a 25% increase in 1994. Beverage container unit production
in the U.S. increased 17% in 1995 following a 37% increase in 1994. Increased
raw material prices, particularly in PET resin, passed on to customers in the
form of increased selling prices, also contributed to the sales increase. The
increase in 1994 Plastics Division net sales was a result of sales unit volume
increases across most product lines in both the U.S. and Europe and increased
raw material prices passed on to customers.
COST OF PRODUCTS SOLD
Cost of products sold, excluding depreciation and amortization for 1995 was
$4,311.0, a 16.5% increase from the $3,699.5 in 1994. This increase follows
increases of 6.5% and 8.7% in 1994 and 1993, respectively. The increase in 1995
cost of products sold is directly attributable to increased raw material prices,
particularly in aluminum and PET resin, and increased unit sales in certain
International Division locations and plastic beverage containers as noted above.
The increase in 1994 and 1993 cost of products sold primarily reflects increased
sales levels as noted above offset by lower raw material costs and company-wide
cost containment programs.
As a percentage of net sales, cost of products sold was 85.3% in 1995 as
compared to 83.1% in 1994 and 83.5% in 1993.
SELLING AND ADMINISTRATIVE
Selling and administrative expenses for 1995 were $139.3, an increase of 2.9%
over 1994. This increase compares to increases of 7.0% for 1994 and 12.9% for
1993. Selling and administrative expenses have increased in recent years as a
result of businesses acquired and to a lesser extent, general inflation. As a
percentage of net sales, selling and administrative expenses were 2.8% in 1995
and 3.0% in both 1994 and 1993.
-13-
<PAGE>
Crown Cork & Seal Company, Inc.
OPERATING INCOME
The Company views operating income as the principal measure of performance
before interest costs and other non-operating expenses. Operating income, after
restructuring charges, was $244.5 and $284.4 in 1995 and 1994, respectively.
Operating income of $347.2 in 1995, before the restructuring charge of $102.7,
was $51.8 or 13.0% less than in 1994. Operating income of $399.0 in 1994, before
the restructuring charge of $114.6, was $28.7 or 7.8% greater than 1993
operating income of $370.3. Operating income, before restructuring, as a
percentage of net sales was 6.9% in 1995 as compared to 9.0% in 1994 and 8.9% in
1993.
An analysis of operating income, before restructuring, by operating division
follows:
<TABLE>
<CAPTION>
% Increase/
Operating Income (Decrease)
DIVISION 1995 1994 1993 1995/1994 1994/1993
<S> <C> <C> <C> <C> <C>
North American.............................. $181.4 $240.2 $232.1 (24.5) 3.5
International .............................. 84.9 85.1 70.0 (.2) 21.6
Plastics ................................... 70.9 67.0 53.9 5.8 24.3
Other....................................... 10.0 6.7 14.3 49.3 (53.1)
-------- -------- --------
$347.2 $399.0 $370.3 (13.0) 7.8
====== ====== ======
</TABLE>
Included in the International Division is operating income of $12.3, $9.9 and
$7.7 for the years ended December 31, 1995, 1994 and 1993, respectively, related
to plastic packaging products manufactured and sold by the International
Division.
Operating income in the North American Division was 6.3% of net sales in 1995
versus 9.0% and 8.9% in 1994 and 1993, respectively. The decrease in 1995
operating margins reflects increases in raw material costs, principally steel
and aluminum, which were not fully passed through to customers, and sales unit
volume declines in aerosol cans and aluminum beverage cans and ends. This was
partially offset by sales unit volume increases in food cans, as the division
benefitted from a full year of operations of the Tri-Valley container plants
acquired in June 1994 and the benefits associated with the Company's three-piece
steel food and aerosol plant restructuring program initiated in 1994. The
Company's suppliers of aluminum can and end sheet implemented a new pricing
structure for 1995 which, by formula, is directly tied to the price of ingot on
the London Metal Exchange (LME). The formula takes the LME spot price of
aluminum ingot and adds other costs to convert and transport aluminum, thereby
effectively transferring the volatility in the commodity markets to the Company.
While the Company had announced price increases to its customers based on LME
quotes, the Company was not able to fully recover raw material price increases
as overcapacity in the aluminum beverage can market and the customers'
willingness to shift a portion of their packaging requirements away from
aluminum continued to put pressure on beverage can prices. Operating income in
1994 increased over 1993 due to sales unit volume increases in most product
lines and prior years efforts to consolidate acquired plants into existing
plants. The decreased operating income reflects the difficult operating
conditions that the industry faced during 1995. The Company expects some of
these difficult operating conditions to be short-term or self-correcting in
nature, however, there can be no assurance that operating income in 1996 will
not be negatively affected by some of these same conditions.
International Division operating income was 8.9% as a percentage of net sales in
1995 compared to 10.3% in 1994, and 9.7% in 1993. The decrease in operating
income in 1995 reflects lower inflationary levels in Brazil as compared to prior
years. The decrease in inflation has resulted in lower local currency price
increases to customers to cover such inflation. In prior years, as the Company
increased pricing, operating profit gains were recognized locally only to be
lost in translation to the U.S. Dollar. Additionally, our European companies
benefitted in 1995 from the strengthening of their currencies against the U.S.
Dollar. However, the benefit of strengthening currencies is sometimes offset by
price softening and/or the loss of volume as companies that operate in weaker
currencies can be more price competitive to customers. The Company expects
operating margins to improve as new operations in Brazil, China and Vietnam
begin production and mature through the learning curve. The increased operating
income in 1994 primarily
-14-
<PAGE>
Crown Cork & Seal Company, Inc.
reflects the Company's efforts to restructure certain European affiliates in
1993 and 1992 and the start-up of new operations in Argentina and the United
Arab Emirates.
Increased sales unit volume is the primary reason for operating income increases
in the Plastics Division. As a percentage of net sales, operating income was
6.2% in 1995 compared to 7.6% in 1994 and 7.3% in 1993. The capital investment
program, which has seen more than $430 invested in the division over the last
three years, has resulted in production inefficiencies. The Company expects
margins to improve as installations are completed. Product mix and increased raw
material costs have also contributed to lower operating margins as selling
prices, particularly in PET beverage bottles, have not fully recovered PET resin
cost increases.
Management believes that the acquisition of CMB referred to below complements
the Company's existing market presence, enhancing the Company's ability to
compete outside North America on a global basis. In that regard, CMB currently
derives approximately 90% of its revenues outside the North American market.
Accordingly, the combined Company's financial position and future results of
operations will be subject to increased risks from exchange rate fluctuations.
NET INTEREST EXPENSE/INCOME
Net interest expense was $136.1 in 1995, an increase of $44.5 when compared to
1994 net interest of $91.6. Net interest expense was $79.7 in 1993. The increase
in 1995 and 1994 net interest expense was due primarily to (i) higher interest
rates, (ii) acquisition financing for recent companies acquired and (iii) the
substantial capital investment program that the Company had entered into over
the last three years. Specific information regarding acquisitions is found in
Note C to the Consolidated Financial Statements, while information specific to
Company financing is presented in the Liquidity and Capital Resources section of
this discussion and Notes I and J to the Consolidated Financial Statements.
TAXES ON INCOME
The effective tax rates on income were 22.7%, 30.4% and 34.8% in 1995, 1994, and
1993, respectively. The lower effective rates for 1995 and 1994 were primarily a
result of lower effective tax rates in non-U.S. operations, higher non-U.S.
income as a percentage of consolidated income as well as the continuing
re-evaluation of reserve and valuation allowance requirements. The effective
rate in 1993 approximated the U.S. statutory rate of 35% as lower effective tax
rates in non-U.S. operations were offset by non-deductible amortization of
goodwill and other intangibles. A reconciliation of the Company's effective tax
rate from the U.S. statutory rate is presented in Note P to the Consolidated
Financial Statements.
EQUITY IN EARNINGS OF AFFILIATES, NET OF MINORITY INTERESTS
Equity in earnings of affiliates was $3.9, $16.3 and $5.0 for 1995, 1994, and
1993, respectively. The decrease in equity earnings in 1995 is due to both
rising aluminum costs and decreased volumes in the Company's non-consolidated
affiliates in Saudi Arabia and Korea. The late 1995 devaluation of the bolivar,
which substantially eliminated all profits in the Company's Venezuelan
joint-venture, and a slow start-up in the Company's new ventures in Jordan and
Brazil also contributed to the decrease in equity earnings. The increase in
equity earnings in 1994 was due to improved performance by the Company's
affiliates in Saudi Arabia, Korea and Venezuela.
Minority interests were $13.6, $12.4 and $6.5 in 1995, 1994, 1993, respectively.
The increase in minority interests relates to increased sales volumes and
earnings in Hong Kong and the United Arab Emirates.
The Company continues to invest in emerging market projects which offer
substantial rewards as well as exposure to sometimes volatile economies. These
markets provide excellent future growth potential for the Company's products and
services. The Company believes that the use of business partners in many
overseas locations presents another cost-effective means of entering new
markets.
-15-
<PAGE>
Crown Cork & Seal Company, Inc.
The Company has presented earnings from equity affiliates, net of minority
interests (the components of which can be found in Notes F and Q to the
Consolidated Financial Statements), as a separate component of net income.
Management believes that presenting such earnings as a component of pre-tax
income would distort the Company's effective tax rate, and as such, has
presented equity earnings after the provision for income taxes.
NET INCOME AND EARNINGS PER SHARE BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES
Net income for 1995 was $74.9, compared with $131.0 in 1994 and $180.9 in 1993.
Earnings per share for 1995 was $.83, compared with $1.47 and $2.08 in 1994 and
1993, respectively. Excluding the provision for restructuring, net income
decreased 30.5% to $141.9 and earnings per share decreased 31.4% to $1.57.
Excluding the provision for restructuring, net income for 1994 and 1993
represent increases of 12.9% and 16.4%, respectively over the preceding year.
Earnings per share for 1994 and 1993 represent increases of 10.1% and 16.2%,
respectively over the preceding year. The sum of per share earnings by quarter
does not equal earnings per share for the years ended December 31, 1995, 1994
and 1993 due to the effect of shares issued during 1995, 1994 and 1993.
INDUSTRY SEGMENT PERFORMANCE
This section presents individual segment results for the last three years. The
after-tax charge of $67.0 or $.74 per share related to the 1995 restructuring
charge is included as an after-tax charge in the Metal Packaging segment
(Metals) of $60.1 or $.67 per share and an after-tax charge of $6.9 or $.07 per
share in the Plastics Packaging segment (Plastics) and is excluded in making
comparisons to 1995 results. The after-tax charge of $73.2 or $.82 per share
related to the 1994 restructuring charge is included as an after-tax charge in
Metals and is excluded in making comparisons to 1994 results. The after-tax
charge of $81.8 or $.94 per share related to adoption of SFAS 106, SFAS 109 and
SFAS 112 in 1993 is included as an after-tax charge in Metals of $83.7 or $.96
per share and an after-tax credit in Plastics of $1.9 or $.02 per share, and is
excluded in making comparisons to 1993 results.
Net sales for Metals in 1995 were $3,811.1, an increase of 9.1% compared to 1994
net sales of $3,494.3. Net sales in 1993 were $3,367.0. Metals sales in 1995
increased over 1994 as a result of (i) increased raw material prices,
particularly aluminum, which were partially passed on to customers in the form
of higher selling prices, (ii) increased sales unit volumes in food cans in the
U.S., (iii) increased sales unit volumes in Argentina, China, The Netherlands
and the United Arab Emirates and (iv) the positive effect of the strengthening
of many European currencies against the U.S. dollar; partially offset by lower
sales unit volumes in the U.S. in aerosol cans and aluminum beverage cans and
ends. Metals sales in 1994 increased over 1993 as a result of increased sales in
operations in Argentina, the United Arab Emirates, Hong Kong and most European
operations.
Metals operating income in 1995 was $264.0, before restructuring charges of
$94.4, or 6.9% of net sales compared to 1994 operating income of $322.1 or 9.2%
of net sales, before restructuring charges of $114.6. Operating income in 1993
was $308.7 or 9.2% of net sales. The decrease in Metals operating income in 1995
is directly attributable to increased aluminum costs which were not fully passed
through to customers. Despite competitive price pressures, the Company continues
its efforts to rationalize and improve manufacturing efficiencies, thereby
achieving cost reductions and increasing operating profits.
Net sales for Plastics increased $284.8 or 29.7% to $1,242.7 in 1995 from $957.9
in 1994. Net sales for 1994 increased $162.3 or 20.4% against 1993 net sales of
$795.6. The increases in 1995 and 1994 are primarily a result of the increased
unit capacity in the Company's CONSTAR plants. The increased capacity has been
generated through significant capital investments in the three years ending
December 31, 1995.
Plastics operating income in 1995 was $83.2, before restructuring charges of
$8.3, or 6.7% of net sales as compared to 1994 operating income of $76.9, or
8.0% of net sales. Operating income in 1993 was $61.6 or 7.7% of net sales.
Increased PET resin costs not fully recovered due to continued price pressure in
PET
-16-
<PAGE>
Crown Cork & Seal Company, Inc.
beverage bottles and production inefficiencies caused by continuing capital
expansion in most plants have resulted in decreasing operating margins.
FINANCIAL POSITION
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position remains strong. Cash and cash equivalents
totaled $68.1 at December 31, 1995 compared to $43.5 and $54.2 at December 31,
1994 and 1993, respectively. The Company had working capital of $429.9 and
$122.6 at December 31, 1995 and 1994, respectively. The Company's primary
sources of cash in 1995 consisted of (i) funds provided from operations $164.6;
(ii) proceeds from short-term borrowings $99.8; and, (iii) proceeds from
long-term borrowings $365.4. The Company's primary uses of cash in 1995
consisted of (i) payments on long-term debt $209.0; and, (ii) capital
expenditures of $433.5. Funds provided from operations of $164.6 in 1995,
benefitting from the collection of December 31, 1994 accounts receivable in the
first quarter of 1995, increased $157.8 as compared to 1994. This increase is
primarily due to strong customer demand in the fourth quarter of 1994 which
reflected fourth quarter sales of 1994 being $156.2 greater than the fourth
quarter of 1993. Customer buyaheads in the fourth quarter of 1994 were reflected
in the Company's accounts receivable, using cash of $185.5 during 1994. Accounts
receivable in 1995 only used cash of $24.7 as fourth quarter 1995 sales did not
reflect such a large surge in customer demand.
The Company funds its working capital requirements on a short-term basis
primarily through issuances of commercial paper. The commercial paper program is
supported by a $1,000 multi-currency credit facility which was formalized in
February 1995 and which replaced a revolving bank credit agreement. This
facility bears interest at market rates and matures in February 2000. The
Company's use of the facility is not restricted and at December 31, 1995, there
were no funds drawn against this facility. Based on the Company's intention and
ability to maintain its credit facility beyond 1996 and 1995, respectively, $300
and $235 of commercial paper borrowings were classified as long-term at December
31, 1995 and 1994, respectively. There was $761.2 and $660.6 in commercial paper
outstanding at December 31, 1995 and 1994, respectively.
On December 20, 1994, the Company filed with the Securities and Exchange
Commission a shelf registration statement for the possible offering and sale of
up to $500 aggregate principal amount of debt securities of the Company. On
January 15, 1995, the Company sold $300 of public debt securities. This first
tranche of the shelf registration includes $300 of 8.38% notes due 2005, priced
at 99.79% to yield 8.4%. Net proceeds from the issue were used to reduce
short-term indebtedness.
In January 1993, the Company filed with the Securities and Exchange Commission a
shelf registration statement for the possible offering and sale of up to $600
aggregate principal amount of debt securities of the Company. On June 9, 1994,
the Company sold $100 of 7% notes due 1999, priced at 99.71% to yield 7.02%. Net
proceeds from the issue were used to refinance outstanding indebtedness. This
transaction represented the final tranche of the shelf registration. The
Company's long-term debt securities are rated Baa1 by Moody's Investors Service
and BBB+ by Standard & Poor's Corporation.
The Company has, when considered appropriate, hedged its currency exposures on
its foreign denominated debt through various agreements with lending
institutions. The Company also utilizes a corporate "netting" system which
enables resources and liabilities to be pooled and then netted, thereby
mitigating the exposure. The Company enters into limited interest rate and
currency swaps and forward exchange contracts in its management of interest rate
and foreign currency exposure. The Company has entered into an interest rate
swap agreement to convert 1,000.0 Belgian Francs ($33.9 and $31.4 at December
31, 1995 and 1994, respectively) to a 6.53% fixed rate obligation. The contract
amount represents 39.0% and 66.7% of the total underlying debt at December 31,
1995 and 1994, respectively, bears interest at variable market rates and has a
maturity which coincides with that of the debt. These financial instruments are
more fully described in Notes I and J to the Consolidated Financial Statements.
-17-
<PAGE>
Crown Cork & Seal Company, Inc.
The Company's ratio of total debt (net of cash and cash equivalents) to total
capitalization was 56.2%, 55.3% and 50.1% at December 31, 1995, 1994 and 1993,
respectively. Total capitalization is defined by the Company as total debt,
minority interests and shareholders' equity. The increase in the Company's total
debt in recent years is due to the significant capital expenditure program which
the Company has committed to in the last three years and businesses acquired
since December 29,1989. As of December 31, 1995, $70.2 of long-term debt matures
within one year.
On December 1, 1995, the Company entered into a Revolving Credit and Term Loan
Agreement (Credit Agreement) with a syndicate of financial institutions.
Pursuant to the Credit Agreement, the lenders have made available to the Company
French Francs (FRF) 13,700 in a multi-currency revolving credit facility to fund
the cash portion of the consideration to be paid in connection with the
Company's proposed Offer (see Acquisition of CarnaudMetalbox below for
description of the Offer) to purchase all of the outstanding shares of
CarnaudMetalbox ("CMB"), to fund the costs and expenses of the Offer, to
repurchase shares of capital stock of the Company, or, following the Offer, to
be used for general corporate purposes. Prior to November 30, 1996, amounts
borrowed and repaid may be reborrowed. At November 30, 1996, the Credit
Agreement will terminate and any loans outstanding may be converted to term
loans at the Company's option. Any term loans will mature on November 30, 1997.
Borrowings under the facility will be permitted in FRF, U.S. Dollars and British
Pound Sterling. Borrowings bear interest at variable market rates. There were no
borrowings under this facility at December 31, 1995. A total of FRF 9,100
(approximately $1,800) was drawn on February 22, 1996 to fund the purchase of
shares from those CMB shareholders electing cash (approximately 40.1 million CMB
shares at FRF 225 per share). It is anticipated that the borrowings under this
facility will be repaid from funds generated from the Company's operations,
through additional borrowings and net proceeds of dispositions.
Management believes that, in addition to current financial resources (cash and
cash equivalents and the Company's commercial paper program), adequate capital
resources are available to satisfy the Company's ongoing investment programs.
Such sources of capital would include, but not be limited to, bank borrowings.
Management believes that the Company's cash flow is sufficient to maintain its
current operations.
ACQUISITION OF CARNAUDMETALBOX
On February 26, 1996, the Company completed settlement of its previously
announced Exchange Offer (the "Offer") to acquire all of the outstanding shares
of common stock, par value FRF 10 per share, of CMB, a French societe anonyme.
Under the terms of the Offer, the Company offered to exchange or purchase each
CMB share validly tendered in the Offer for, at the election of the holder,
either (1) 1.086 Units, each Unit consisting of .75 shares of Crown common
stock, par value $5.00 per share and .25 shares of Crown 4.5% Convertible
Preferred Stock, par value $41.8875 per share (acquisition preferred) or (2) FRF
225 in cash. The Offer was made pursuant to the terms of the Exchange Offer
Agreement dated May 22, 1995, as amended, between the Company and Compagnie
Generale d'Industrie et de Participations (CGIP), a French societe anonyme and
the principal shareholder of CMB. A description of the Exchange Offer Agreement
was previously reported in the Company's Current Report on Form 8-K dated May
22, 1995 and the Company's Proxy Statement/Prospectus, dated November 14, 1995
forming a part of the Company's Amendment No. 1 to its Registration Statement on
Form S-4 filed with the Securities and Exchange Commission on November 14, 1995.
This acquisition is more fully described in Note T to the Consolidated Financial
Statements.
85,932,200 CMB shares, representing approximately 98.7% of the outstanding CMB
shares, were validly tendered into the Offer. Of the CMB shares tendered,
40,125,325 were tendered for cash (aggregating approximately FRF 9,000 or
approximately $1,800) and 45,797,825 were exchanged for Units (resulting in the
Company issuing 37,300,818 shares of common stock and 12,432,622 shares of
acquisition preferred). Pursuant to the terms of the Exchange Offer Agreement,
CGIP exchanged its CMB shares for Units and received 21,330,903 shares of common
stock and 7,110,300 shares of acquisition preferred.
-18-
<PAGE>
Crown Cork & Seal Company, Inc.
CGIP's shares of common stock and acquisition preferred are held pursuant to the
Shareholders Agreement more fully described below.
The financing for the cash portion of the consideration paid in the Offer was
obtained pursuant to the Credit Agreement as more fully described earlier in
this discussion.
In accordance with the terms of the Exchange Offer Agreement, the Company has
adopted Amended and Restated Articles of Incorporation and the terms of
preferred stock and has amended and restated its Bylaws.
Pursuant to the Exchange Offer Agreement, the Company and CGIP entered into a
Shareholders Agreement dated as of February 22, 1996. Subject to the terms of
the Shareholders Agreement, CGIP has agreed to certain standstill provisions
which prohibit CGIP from acquiring beneficial ownership of voting securities
representing more than 19.95% of the outstanding total voting power of the
Company, making a takeover proposal of the Company or its subsidiaries and
taking certain other actions.
The Shareholders Agreement provides that CGIP is entitled to designate up to
three persons to be nominated for election as directors of the Company at each
annual meeting of Company shareholders, depending on the amount of Company
voting securities beneficially owned by CGIP. On February 22, 1996, the
Company's Board of Directors elected Ernest-Antoine Seilliere, Guy de Wouters
and Felix G. Rohatyn to the Company's Board in accordance with this provision.
CGIP has also agreed to vote any Company voting securities beneficially owned by
CGIP during the standstill period (as defined in the Shareholders Agreement), in
the manner recommended by the Company's Board of Directors in connection with
the election of directors of the Company and any question relating to a takeover
proposal. The standstill period began on February 22, 1996 and terminates under
certain circumstances upon the earliest to occur of (i) the later of February
22, 1999 and the date on which CGIP beneficially owns voting securities of the
Company representing less than 3.5% of the outstanding total voting power of the
Company, (ii) the date the Company breaches certain provisions relating to
CGIP's board representation or the Company's dividend policy or debt rating,
(iii) the date the Company agrees to recommend (or ceases to oppose) the
consummation of a specified event (as defined in the Shareholders Agreement) or
enters into, or takes material steps to solicit, an agreement with respect to
certain fundamental corporate transactions involving the Company or its
subsidiaries, (iv) the date a person other than CGIP acquires 25% of the total
voting power of the Company, or (v) the date any CGIP Designee fails to be
elected to the Company's Board of Directors.
The Shareholders Agreement also contains provisions relating to the Company's
dividend policy and debt rating, certain restrictions on CGIP's sale or transfer
of Company stock and CGIP's registration rights with respect to its shares of
Company stock.
PROVISION FOR RESTRUCTURING
During 1995 and 1994, the Company recorded pre-tax restructuring charges of
$102.7 ($67.0 after-tax or $.74 per share) and $114.6 ($73.2 after-tax or $.82
per share), respectively, as part of a two-phase restructuring plan outlined in
March 1994. Affected by these restructurings are plants which produce two-piece
aluminum beverage cans and ends, three-piece steel food and aerosol containers
and plastic blow mold containers. The restructurings are expected to enable the
Company to remain competitive in its core packaging businesses and improve
profitability. The program commenced in the fourth quarter of 1994 with seven
plants being closed as of December 31, 1994. An additional nine plants were
closed in 1995 with four other plants being reorganized to improve cost
effectiveness. Three more plants will be closed prior to September 1996. The
Company estimates of the total restructuring charges for 1995 and 1994 that
$71.0 and $71.7, respectively, will be non-cash charges primarily to reflect the
writedown of assets. Cash charges related to the restructurings total $31.7 and
$42.9, respectively, and are net of cash to be generated from the sale of
properties and equipment. Approximately $35.7 and $10.0 of cash had been
expended at December 31, 1995 and 1994, respectively. Cash charges not paid by
December 31, 1995
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<PAGE>
Crown Cork & Seal Company, Inc.
primarily relate to future pension plan contributions and retiree medical
benefits to be paid for terminated employees.
The cost of providing severance pay and benefits for the reduction of
approximately 1,870 employees (approximately 1,500 positions eliminated by the
end of 1995) was approximately $25.8 in 1995 and $58.4 in 1994 and is primarily
a cash expense. Actual expenditures for severance pay and benefits through
December 31, 1995 and 1994 amounted to approximately $19.6 and $4.4,
respectively, with costs attributable to pension and other post-retirement
benefits not paid being reclassified to their respective liability accounts. See
Note O to the Consolidated Financial Statements. Employees terminated include
most, if not all, employees at each plant to be closed or reorganized including
salaried employees and employees of the respective unions represented at each
plant site. The cost associated with the writedown of assets (property,
equipment, inventory, etc.) was approximately $53.1 and $50.4 and has been
reflected as a reduction in the carrying value of the Company's assets at
December 31, 1995 and 1994, respectively. Non-cash charges of $72.2 and $68.2
offset by cash to be generated of $19.1 and $17.8 from the sale of properties
and equipment are the components of the asset writedown. Costs incurred in
maintaining properties from the date of closure of the facilities to the
estimated sale date or lease termination date of the facilities approximated
$14.6 and $6.1 of the charge and is primarily a cash expense of which $7.0 and
$.2 had been expended as of December 31, 1995 and 1994, respectively. Details of
the charge are also presented in Note H to the Consolidated Financial
Statements. As of December 31, 1995, estimates related to the charges have
remained unchanged.
The Company estimates that the 1995 restructurings, when complete, will generate
cost savings of approximately $26 after tax on a full year basis. While the
restructuring is being completed during 1996, the Company expects to realize an
after-tax cost savings of approximately $18 in 1996. The Company expects that
the restructuring program will have positive effects on its liquidity and
sources and uses of capital resources.
During 1995, the Company acquired businesses for approximately $14, following
acquisitions in 1994 and 1993 of $64 and $222, respectively. The details of such
acquisitions are discussed in Note C to the Consolidated Financial Statements.
The Company has established reserves to restructure acquired companies. These
reserves relate primarily to costs associated with Company plans to combine
acquired operations with pre-existing operations and include severance costs,
plant consolidations and lease terminations. Cash expenditures for acquired
company restructuring efforts were $5, $35 and $81 for the years ended December
31, 1995, 1994 and 1993, respectively.
Management also expects to incur significant transition and restructuring costs
and expenses in connection with the acquisition of CMB. The ultimate effect of
such charges on the combined Company and on future results cannot be determined
at this time, however, management expects those costs to be material.
CAPITAL EXPENDITURES
Consolidated capital expenditures totaled $433.5 in 1995 as compared with $439.8
in 1994. Minority partner contributions to consolidated capital expenditures
were approximately $51 and $27 in 1995 and 1994, respectively. During the past
five years, capital expenditures totaled $1,387.4.
Expenditures in the North American Division totaled $160 including ongoing
projects to convert domestic beverage can and end lines to the 202 diameter from
the 206 diameter, the purchase of two 2,000 cans per minute lines and the
modernization of the Company's drawn and ironed beer and beverage can plant in
Sugarland, Texas.
Investments of $132 were made in the International Division. The Company began
construction of a beverage can plant in Hanoi, Vietnam, continued construction
of a beverage can plant in Beijing, China and began installation of beverage end
line equipment in Shanghai, China. The Company continued its expansion of
existing plastic cap production in Europe and also began installation of a PET
preform line in the United Arab Emirates.
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<PAGE>
Crown Cork & Seal Company, Inc.
Spending in the Plastics Division for 1995 totaled $133 as the Company continued
its commitment to service global customers with plastic containers. Major
spending included the continued expansion of existing products, specifically
single-serve PET preform and bottle lines in the United States, Holland and
England.
The Company expects its capital expenditures, including needs for acquired CMB
plants, in 1996 to approximate $600 including joint-venture partner
contributions estimated at approximately $90. The Company plans to continue
capital expenditure programs designed to take advantage of technological
developments which enhance productivity and contain costs, as well as those that
provide growth opportunities. Capital expenditures including CMB and exclusive
of potential acquisitions, during the five-year period 1996 through 2000 are
expected to approximate $2,500, with an additional $500 being contributed from
joint-venture partners. Cash flow from operating activities will provide support
for these expenditures; however, depending upon the Company's evaluation of
growth opportunities and other existing market conditions, external financing
may be required from time to time.
ENVIRONMENTAL MATTERS
The Company has adopted a Corporate Environmental Protection Policy. The
implementation of this Policy is a primary management objective and the
responsibility of each employee of the Company. The Company is committed to the
protection of human health and the environment, and is operating within the
increasingly complex laws and regulations of federal, state, and local
environmental agencies or is taking action aimed at assuring compliance with
such laws and regulations. Environmental considerations are among the criteria
by which the Company evaluates projects, products, processes and purchases, and,
accordingly, does not expect compliance with these laws and regulations to have
a material effect on the Company's competitive position, financial condition,
results of operations or capital expenditures.
The Company is dedicated to a long-term environmental protection program and has
initiated and implemented many pollution preventing programs with the emphasis
on source reduction. The Company continues to reduce the amount of metal and
plastic used in the manufacture of steel, aluminum and plastic containers
through "lightweighting" programs. The Company not only recycles nearly 100
percent of scrap aluminum, steel, plastic and copper used in its manufacturing
processes, but through its Nationwide Recyclers subsidiary, is directly involved
in post-consumer aluminum, steel and plastics recycling. Additionally, the
Company has exceeded the Environmental Protection Agency's (EPA) 1995 goals for
its 33/50 program which called for companies, voluntarily, to reduce toxic air
emissions by 33% by the end of 1992 and by 50% by the end of 1995, compared to
the base year of 1988. The cost to accomplish this reduction did not materially
affect operating results. Many of the Company's programs for pollution
prevention lower operating costs and improve operating efficiencies.
The Company has been identified by the EPA as a potentially responsible party
(along with others, in most cases) at a number of sites. Estimated remedial
expenses for active projects are recognized in accordance with generally
accepted accounting principles governing probability and the ability to
reasonably estimate future costs. Actual expenditures for remediation were $3.3
during 1995 and $2.7 in 1994. The Company's balance sheet reflects estimated
gross remediation liabilities of $20.7 and $25.6 at December 31, 1995 and 1994,
respectively, and estimated recoveries related to indemnification from the
sellers of acquired companies and the Company's insurance carriers of $15.5 and
$16.4 at December 31, 1995 and 1994, respectively.
Environmental exposures are difficult to assess for numerous reasons, including
the identification of new sites, advances in technology, changes in
environmental laws and regulations and their application, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement of and the financial capability of other potentially responsible
parties and the time periods (sometimes lengthy) over which site remediation
occurs. It is possible that some of these matters (the outcome of which are
subject to various uncertainties) may be decided unfavorably against the
Company. It is however, the opinion of
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<PAGE>
Crown Cork & Seal Company, Inc.
Company management, after consulting with counsel, that any unfavorable decision
will not have a material adverse effect on the Company's financial position.
COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY
Shareholders' equity was $1,461.2 at December 31, 1995, as compared with
$1,365.2 at December 31, 1994. The increase in 1995 equity represents the
retention of $74.9 earnings in the business, a $16.0 minimum pension liability
adjustment as more fully described in Note O to the Consolidated Financial
Statements and the issuance of 1,298,175 common shares for various stock
purchase and savings plans offset by the effect of 7,401 common shares
repurchased and equity adjustments for currency translation in non-U.S.
subsidiaries of $15.8. The book value of each share of common stock at December
31, 1995 was $16.12 as compared to $ 15.28 at December 31, 1994.
In 1995, the return on average shareholders' equity before restructuring was
9.6% as compared to 14.7% in 1994. Including the restructuring charges, the
return on average shareholders' equity was 5.3% in 1995 compared to 10.0% in
1994.
The Board of Directors has approved resolutions authorizing the Company to
repurchase shares of its common stock to meet the requirements for the Company's
various stock purchase and savings plans. The Company acquired 7,401 shares,
347,360 shares and 2,580,982 shares of common stock in 1995, 1994 and 1993 for
$.3, $12.7 and $86.5, respectively.
DIVIDENDS/ISSUANCE OF STOCK IN CONNECTION WITH CMB ACQUISITION
On February 22, 1996, the Company declared a quarterly cash dividend of $.25 per
common share payable on March 29, 1996 to shareholders of record on March 15,
1996. It is the present intention of the Company to continue paying dividends on
its common stock on a quarterly basis. The Company last paid a cash dividend in
August 1956. Since that time, the Company generally has used a portion of its
free cash flow to repurchase common shares in the open market, strengthen market
positions through acquisitions, and modernize operations through capital
expenditures.
The Company, pursuant to a shareholder rights plan, authorized the distribution
of one right per common share held, to be exercisable in certain events
involving the acquisition of 15 per cent or more of the Company's outstanding
common stock. Contingent upon the completion of the CMB acquisition, the
Company's shareholders authorized the Company to issue up to an additional 380
million shares of its common stock, up to 30 million shares of additional
preferred stock (additional preferred) and up to 50 million shares of 4.5%
cumulative convertible preferred stock (acquisition preferred). The acquisition
preferred ranks senior to the Company's common stock as to dividends and
liquidation rights. The acquisition preferred has a par value of $41.8875 per
share and bears a quarterly cash dividend of $.4712 per share. In connection
with the completion of the CMB acquisition, the Company, on February 26, 1996,
issued approximately 37.3 million shares of its common stock and 12.4 million
shares of its acquisition preferred. Dividends will accrue on the acquisition
preferred from the issuance date of February 26, 1996 and are payable on a
quarterly basis, commencing May 20, 1996, until not later than the mandatory
conversion date of February 26, 2000. The acquisition preferred, additional
preferred, and shareholder rights plan are more fully described in Note N to the
Consolidated Financial Statements.
At December 31, 1995, common shareholders of record numbered 5,976 compared with
6,011 at the end of 1994. Total shares outstanding were 90,650,814 at December
31, 1995 compared to 89,360,040 at December 31, 1994. Immediately following the
completion of the CMB acquisition there were approximately 128.1 million common
shares outstanding and approximately 12.4 million acquisition preferred shares
outstanding.
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<PAGE>
Crown Cork & Seal Company, Inc.
INFLATION
General inflation has not had a significant impact on the Company over the past
three years due to strong cash flow from operations. The Company continues to
maximize cash flow through programs designed for cost containment, productivity
improvements, and capital spending. Management does not expect inflation to have
a significant impact on the results of operations or financial condition in the
foreseeable future.
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<PAGE>
Crown Cork & Seal Company, Inc.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Financial Statements
Report of Independent Accountants.......................................25
Consolidated Statements of Income.......................................26
Consolidated Balance Sheets.............................................27
Consolidated Statements of Cash Flows...................................28
Consolidated Statements of Shareholders' Equity.........................29
Notes to Consolidated Financial Statements..............................30
Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
and Reserves..........................................................50
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<PAGE>
Crown Cork & Seal Company, Inc.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Crown Cork & Seal Company, Inc.
In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Crown
Cork & Seal Company, Inc. and its subsidiaries at December 31, 1995 and 1994,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe our audits
provide a reasonable basis for the opinion expressed above.
As discussed in Note B, the Company changed its methods of accounting for income
taxes, postretirement benefits and postemployment benefits in 1993.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, PA 19103
March 5, 1996
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<PAGE>
Crown Cork & Seal Company, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net sales................................................. $ 5,053.8 $ 4,452.2 $ 4,162.6
------------ ------------- -------------
Costs, expenses and other income
Cost of products sold (excluding
depreciation and amortization).................... 4,311.0 3,699.5 3,474.0
Depreciation and amortization......................... 256.3 218.3 191.7
Selling and administrative expense.................... 139.3 135.4 126.6
Provision for restructuring . . Note H................ 102.7 114.6
Interest expense...................................... 148.6 98.8 89.8
Interest income....................................... (12.5) (7.2) (10.1)
Translation and exchange adjustments ................. (1.1) 10.1 10.8
------------ ------------- -------------
4,944.3 4,269.5 3,882.8
------------ ------------- -------------
Income before income taxes and cumulative
effect of accounting changes.......................... 109.5 182.7 279.8
Provision for income taxes . . Note P............. 24.9 55.6 97.4
------------ ------------- -------------
Income from operations ................................... 84.6 127.1 182.4
------------ ------------- -------------
Equity in earnings of affiliates, net of
minority interests . . Notes F and Q.............. (9.7) 3.9 (1.5)
------------ ------------- -------------
Net income before cumulative effect of
accounting changes.................................... 74.9 131.0 180.9
------------ ------------- -------------
Cumulative effect of accounting
changes . . Note B.................................... (81.8)
------------ ------------- -------------
Net income................................................ $ 74.9 $ 131.0 $ 99.1
============= ============= =============
Average common share data:
Earnings before cumulative effect of
accounting changes ................................... $ .83 $ 1.47 $ 2.08
Cumulative effect of accounting
changes . . Note B.................................... (.94)
------------ ------------- -------------
Earnings per average common share......................... $ .83 $ 1.47 $ 1.14
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
Crown Cork & Seal Company, Inc.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
<TABLE>
<CAPTION>
December 31 1995 1994
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents..................................... $ 68.1 $ 43.5
Receivables . . Note D........................................ 744.3 738.0
Inventories . . Note E........................................ 811.9 767.5
Prepaid expenses and other current assets..................... 84.6 56.6
------------- -------------
Total current assets ................................. 1,708.9 1,605.6
------------- -------------
Long-term notes and receivables................................... 63.5 70.4
Investments . . Note F............................................ 57.5 47.7
Goodwill, net of amortization..................................... 1,095.7 1,122.4
Property, plant and equipment . . Note G.......................... 2,005.9 1,816.5
Other non-current assets.......................................... 120.2 118.7
------------- -------------
Total ................................................ $ 5,051.7 $ 4,781.3
============= =============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt . . Note I.................................... $ 537.9 $ 604.5
Current portion of long-term debt . . Note I.................. 70.2 131.3
Accounts payable and accrued liabilities . . Note K........... 668.2 737.1
United States and foreign income taxes........................ 2.7 10.1
------------- -------------
Total current liabilities ............................ 1,279.0 1,483.0
------------- -------------
Long-term debt, excluding current maturities . . Note I........... 1,490.1 1,089.5
Other non-current liabilities . . Note L.......................... 112.2 128.8
Postretirement and pension liabilities . . Note O................. 590.6 639.4
Minority interests . . Note Q..................................... 118.6 75.4
Shareholders' equity
Common stock with $5.00 par value;
120,000,000 shares authorized;
118,490,814 shares issued................................. 592.5 592.5
Additional paid-in capital.................................... 182.7 168.4
Retained earnings............................................. 1,049.0 974.1
Minimum pension liability adjustment . . Note O............... (32.1) (48.1)
Cumulative translation adjustment............................. (191.7) (175.9)
Treasury stock (1995 - 27,840,000 shares;
1994 - 29,130,774 shares)................................. (139.2) (145.8)
------------- -------------
Total shareholders' equity............................ 1,461.2 1,365.2
------------- -------------
Total................................................. $ 5,051.7 $ 4,781.3
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Certain reclassifications of prior years' data have been made to improve
comparability.
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<PAGE>
Crown Cork & Seal Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities
Net income ........................................... $ 74.9 $ 131.0 $ 99.1
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization..................... 256.3 218.3 191.7
Provision for restructuring....................... 67.0 73.2
Cumulative effect of accounting changes .......... 81.8
Deferred income taxes ............................ (3.2) (14.0) 79.6
Minority interest in earnings of subsidiaries..... 13.6 12.4 6.5
Equity in earnings of joint ventures,
net of dividends ............................. 1.5 (9.0) 2.1
Other, net........................................ (9.7) (.3) 6.1
Changes in assets and liabilities,
net of businesses acquired:
Receivables....................................... (24.7) (185.5) 69.2
Inventories....................................... (55.1) (37.8) 5.2
Accounts payable, accrued and other liabilities... (172.5) (162.8) (174.3)
Other............................................. 16.5 (18.7) (15.8)
------------- ------------- -------------
Net cash provided by
operating activities.......................... 164.6 6.8 351.2
------------- ------------- -------------
Cash flows from investing activities
Capital expenditures ................................. (433.5) (439.8) (271.3)
Acquisition of businesses, net of cash acquired....... (14.2) (65.7) (66.2)
Proceeds from sale of property, plant
and equipment..................................... 26.8 7.7 11.9
Proceeds from sale of businesses...................... 83.6
Other, net............................................ (17.1) (1.5) (.3)
------------- ------------- -------------
Net cash used for investing activities........ (438.0) (499.3) (242.3)
------------- ------------- -------------
Cash flows from financing activities
Proceeds from long-term debt.......................... 365.4 154.8 548.3
Payments of long-term debt............................ (209.0) (186.5) (715.0)
Net change in short-term debt......................... 99.8 495.6 136.5
Common stock:
Repurchase for treasury........................... (.3) (12.7) (86.5)
Issued under various employee benefit plans....... 21.2 16.3 30.0
Minority contributions, net of dividends paid......... 21.5 9.0 7.0
------------- ------------- -------------
Net cash (used for)/provided by
financing activities......................... 298.6 476.5 (79.7)
------------- ------------- -------------
Effect of exchange rate changes on cash
and cash equivalents.................................. (.6) 5.3 (1.9)
------------- ------------- -------------
Net change in cash and cash equivalents................... 24.6 (10.7) 27.3
Cash and cash equivalents at January 1.................... 43.5 54.2 26.9
------------- ------------- -------------
Cash and cash equivalents at December 31.................. $ 68.1 $ 43.5 $ 54.2
============ ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Certain reclassifications of prior years' data have been made to improve
comparability.
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<PAGE>
Crown Cork & Seal Company, Inc.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in millions, except share data)
<TABLE>
<CAPTION>
Minimum Cumulative
Common Paid-In Retained Pension Translation Treasury
Stock Capital Earnings Liability Adjustment Stock Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1992................. $ 592.5 $ 95.0 $ 744.0 ($ 127.2) ($ 160.7) $ 1,143.6
Net income - 1993......................... 99.1 99.1
Stock repurchased:
2,580,982 shares ..................... (73.6) (12.9) (86.5)
Stock issued under stock option and
employee savings plans:
1,415,711 shares...................... 23.6 7.0 30.6
Stock issued in business combination:
3,631,624 shares...................... 122.4 18.2 140.6
Minimum pension liability adjustment...... ($46.3) (46.3)
Translation adjustments................... (29.3) (29.3)
-------- -------- --------- --------- --------- --------- ---------
Balance December 31, 1993................. 592.5 167.4 843.1 (46.3) (156.5) (148.4) 1,251.8
Net income - 1994......................... 131.0 131.0
Stock repurchased:
347,360 shares ....................... (10.9) (1.8) (12.7)
Stock issued under stock option and
employee savings plans:
892,867 shares........................ 11.9 4.4 16.3
Minimum pension liability adjustment...... (1.8) (1.8)
Translation adjustments................... (19.4) (19.4)
-------- -------- --------- --------- --------- --------- ---------
Balance December 31, 1994................. 592.5 168.4 974.1 (48.1) (175.9) (145.8) 1,365.2
Net income - 1995......................... 74.9 74.9
Stock repurchased:
7,401 shares.......................... (.3) (.3)
Stock issued under stock option and
employee savings plans:
1,298,175 shares...................... 14.6 6.6 21.2
Minimum pension liability adjustment...... 16.0 16.0
Translation adjustments................... (15.8) (15.8)
-------- -------- --------- --------- --------- --------- ---------
Balance December 31, 1995................. $ 592.5 $ 182.7 $ 1,049.0 ($ 32.1) ($ 191.7) ($ 139.2) $ 1,461.2
======== ======== ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Certain reclassifications of prior years' data have been made to improve
comparability.
-29-
<PAGE>
Crown Cork & Seal Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share, employee, shareholder and statistical data)
(share data for years prior to 1992 have been restated for the 3 for 1 common
stock split declared in 1992.)
A. Summary of Significant Accounting Policies
Business and Principles of Consolidation
The consolidated financial statements include the accounts of Crown Cork & Seal
Company, Inc. (the "Company") and its wholly-owned and majority-owned subsidiary
companies. The Company manufactures and sells metal and plastic containers,
aluminum and plastic closures and crowns as well as manufactures filling,
packaging and handling machinery. These products are manufactured in the
Company's plants both within and outside the United States and are sold through
the Company's sales organization to the soft drink, food, citrus, brewing,
household products, personal care and various other industries. The financial
statements have been prepared in conformity with generally accepted accounting
principles and reflect management estimates and assumptions. Actual results
could differ from those estimates, impacting reported results of operations and
financial position. All significant intercompany accounts and transactions are
eliminated in consolidation. Investments in joint ventures and other companies
in which the Company does not have control, but has the ability to exercise
significant influence over operating and financial policies (generally greater
than 20% ownership) are accounted for by the equity method. Other investments
are carried at cost.
Foreign Currency Translation
For non-U.S. subsidiaries which operate in a local currency environment, assets
and liabilities are translated into U.S. dollars at year-end exchange rates.
Income and expense items are translated at average rates prevailing during the
year. Translation adjustments for these subsidiaries are accumulated in a
separate component of Shareholders' Equity. For non-U.S. subsidiaries which
operate in U.S. dollars (functional currency) or whose economic environment is
highly inflationary, local currency inventories and plant and other property are
translated into U.S. dollars at approximate rates prevailing when acquired; all
other assets and liabilities are translated at year-end exchange rates.
Inventories charged to cost of sales and depreciation are remeasured at
historical rates; all other income and expense items are translated at average
exchange rates prevailing during the year. Gains and losses which result from
remeasurement are included in earnings.
Cash and Cash Equivalents
Cash equivalents represent investments with maturities of three months or less
from the time of purchase, and are carried at cost which approximates fair value
because of the short maturity of those instruments.
Inventory Valuation
Inventories are carried at the lower of cost or market, with cost for all
domestic metal, plastic container, crown and closure inventories determined
under the last-in, first-out (LIFO) method. Machinery Division and non-U.S.
inventories are principally determined under the average cost method.
Goodwill
Goodwill, representing the excess of the cost over the net tangible and
identifiable intangible assets of acquired businesses, is stated on the basis of
cost and is amortized, principally on a straight-line basis, over the estimated
future periods to be benefited (primarily 40 years). On an annual basis the
Company reviews the recoverability of goodwill based primarily upon an analysis
of undiscounted cash flows from the acquired businesses. Accumulated
amortization amounted to $117.8 and $86.9 at December 31, 1995 and 1994,
respectively.
-30-
<PAGE>
Crown Cork & Seal Company, Inc.
Property, Plant and Equipment
Property, plant and equipment (PP&E) is carried at cost and includes
expenditures for new facilities and those costs which substantially increase the
useful lives of existing PP&E. Cost of significant assets includes capitalized
interest incurred during the construction and development period. Maintenance,
repairs and minor renewals are expensed as incurred. When properties are retired
or otherwise disposed, the related costs and accumulated depreciation are
eliminated from the respective accounts and any profit or loss on disposition is
reflected in income. Costs assigned to PP&E of acquired businesses are based on
estimated fair value at the date of acquisition.
Depreciation and amortization are provided on a straight-line basis for
financial reporting purposes and an accelerated basis for tax purposes over the
estimated useful lives of the assets. The range of estimated economic lives
assigned to each significant fixed asset category are as follows: Land
Improvements--25; Buildings and Building Improvements--25 to 40; Other
Depreciable Assets--3 to 14.
Impairment of Long-Lived Assets
In the event that facts and circumstances indicate that the cost of long-lived
assets may be impaired, an evaluation of recoverability would be performed. If
an evaluation is required, the estimated future undiscounted cash flows
associated with the asset would be compared to the asset's carrying amount to
determine whether a write-down to market value is required.
Treasury Stock
Treasury stock is reported at par value and constructively retired. The excess
of fair value over par value is first charged to paid-in capital, if any, and
then to retained earnings.
Research and Development
Research, development and engineering expenditures which amounted to $22.3,
$21.1 and $23.3 in 1995, 1994 and 1993, respectively, are expensed as incurred.
Substantially all engineering and development costs are related to developing
new products or designing significant improvements to existing products.
Earnings Per Share
Earnings per share are computed based on the weighted average number of shares
actually outstanding during the period plus the shares that would be outstanding
assuming the exercise of dilutive stock options, which are considered to be
common stock equivalents. The number of equivalent shares that would be issued
from the exercise of stock options is computed using the treasury stock method.
Reclassifications
Certain reclassifications of prior years' data have been made to improve
comparability.
- --------------------------------------------------------------------------------
B. Accounting Changes
Effective January 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 109,
"Accounting for Income Taxes." In the fourth quarter of 1993, effective January
1, 1993, the Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." The incremental after-tax effect of these accounting
changes was a non-cash charge to 1993 earnings of $2.5 or $.03 per share.
SFAS No. 106 requires employers to recognize the costs and obligations for
postretirement benefits other than pensions over the employees' service lives.
Previously, such costs were generally recognized as an expense when paid. The
cumulative effect of implementing SFAS No. 106 as of January 1, 1993 resulted in
a non-cash charge to net income, net of $46.0 tax benefit, of $89.2 or $1.03 per
share.
SFAS No. 109 establishes new accounting and reporting standards for income taxes
and requires adopting the liability method, which replaces the deferred method
required by Accounting Principles Board Opinion
-31-
<PAGE>
Crown Cork & Seal Company, Inc.
(APB) No. 11. The cumulative effect of implementing SFAS No. 109 as of January
1, 1993 resulted in a non-cash increase to net income of $23.5 or $.27 per
share.
SFAS No. 112 requires employers to accrue the costs and obligations of
postemployment benefits (severance, disability, and related life insurance and
health care benefits) to be paid to inactive or former employees. Prior to
adoption, the Company had recognized expense for the cost of these benefits
either on an accrual or on an "as paid" basis, depending on the plan. The
cumulative effect of implementing SFAS No. 112 resulted in a non-cash charge to
net income, net of $8.5 tax benefit, of $16.1 or $.18 per share as of January 1,
1993.
- --------------------------------------------------------------------------------
C. Acquisitions
In February 1996, the Company completed settlement of its previously announced
exchange offer to acquire the outstanding shares of common stock of
CarnaudMetalbox (CMB). See Note T to the Consolidated Financial Statements and
Management's Discussion and Analysis for further discussion of this transaction.
During 1995, the Company acquired, in separate transactions, the assets of a
plastics recycling company in Florida for approximately $3 in cash and the
assets of a beverage can manufacturer in Huizhou, China for approximately $11 in
cash. Both transactions were financed principally through cash from operations.
On June 27, 1994, the Company acquired the can manufacturing facilities of
Tri-Valley Growers for approximately $61 in cash, which was financed principally
through cash from operations. The Company also acquired the stock of a tooling
company in Pennsylvania for approximately $3 in cash.
On April 16, 1993, the Company's acquisition of the Van Dorn Company was
completed through the issuance of 3,631,624 shares of the Company's common stock
valued at approximately $140, and the payment in cash of approximately $37. The
cash portion was financed through cash from operations. Van Dorn's Plastic
Machinery Division was then sold on April 20, 1993 for approximately $81 in cash
to an affiliate of Mannesmann Demag, AG. During 1993, the Company through its
affiliate, CONSTAR International, also acquired, in separate transactions,
Wellman, Inc.'s 50% interest in Wellstar Acquisition, B.V., for consideration of
approximately $33 in cash, and the minority interest in Wellstar Acquisition's
affiliate, Wellstar Holding, B.V. The Company now owns 100% of Wellstar Holding.
For financial reporting purposes, all of the acquisitions through December 31,
1995 above were treated as purchases. An excess purchase price of approximately
$142 has been determined, based upon the fair values of assets acquired and
liabilities assumed in connection with the above acquisitions. The operating
results of each acquisition are included in consolidated net income from the
date of acquisition.
The following represents the non-cash impact of the acquisitions noted above:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Fair value of assets acquired................................. $ 14.2 $ 89.1 $ 421.4
Liabilities assumed........................................... (25.1) (201.9)
Issuance of common stock (3,631,624 shares)................... (140.6)
-------- --------- --------
Cash paid..................................................... $ 14.2 $ 64.0 $ 78.9
======== ========= ========
</TABLE>
-32-
<PAGE>
Crown Cork & Seal Company, Inc.
The following represents the unaudited pro forma results of operations as if the
above noted business combinations had occurred at the beginning of the
respective year in which the companies were acquired as well as at the beginning
of the immediately preceding year:
<TABLE>
<CAPTION>
(unaudited) 1995 1994
<S> <C> <C>
Net sales ............................................................ $ 5,069.1 $ 4,522.7
Income before income taxes (1)......................................... 99.5 184.8
Net income............................................................. 74.7 129.9
Earnings per average common share...................................... $ .83 $ 1.46
<FN>
(1) Includes equity in earnings of affiliates, net of minority interests.
</FN>
</TABLE>
The pro forma operating results include each company's results of operations for
the indicated years with increased depreciation and amortization on property,
plant and equipment along with other relevant adjustments to reflect fair market
value. Interest expense on the acquisition borrowings has also been included.
The pro forma information given above does not purport to be indicative of the
results that actually would have been obtained if the operations were combined
during the periods presented, and is not intended to be a projection of future
results or trends.
- --------------------------------------------------------------------------------
D. Receivables
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accounts and notes receivable.......................................... $ 660.9 $ 657.6
Less: Allowance for possible losses ................................... (10.0) (10.6)
----------- -----------
Net trade receivables................................................ 650.9 647.0
Miscellaneous receivables.............................................. 93.4 91.0
----------- -----------
$ 744.3 $ 738.0
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
E. Inventories
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Finished goods......................................................... $ 305.3 $ 284.7
Work in process ....................................................... 94.3 106.6
Raw materials.......................................................... 331.3 309.2
Supplies and repair parts ............................................. 81.0 67.0
----------- -----------
$ 811.9 $ 767.5
=========== ===========
</TABLE>
Approximately 45% and 55% of worldwide inventories at December 31, 1995 and
1994, respectively, were stated on the last-in, first-out (LIFO) method of
inventory valuation. Had average cost (which approximates replacement cost) been
applied to such inventories at December 31, 1995 and 1994, total inventories
would have been $45.4 and $22.4 higher, respectively.
- --------------------------------------------------------------------------------
-33-
<PAGE>
Crown Cork & Seal Company, Inc.
F. Investments
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
January 1.............................................................. $ 47.7 $ 42.6
Change in reporting entity............................................. (1.0) (6.5)
Dividends received from equity affiliates.............................. (5.4) (7.3)
Equity in earnings of joint ventures................................... 3.9 16.3
Change in cumulative translation on net assets of
equity affiliates.................................................. (1.0) 0.1
Acquisition of equity and investments in joint ventures ............... 13.3 2.5
----------- -----------
December 31............................................................ $ 57.5 $ 47.7
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
G. Property, Plant and Equipment
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Buildings and improvements............................................. $ 511.6 $ 470.0
Machinery and equipment................................................ 2,434.8 2,080.1
2,946.4 2,550.1
Less: Accumulated depreciation and amortization....................... (1,239.8) (1,049.1)
1,706.6 1,501.0
Land and improvements ................................................. 84.2 93.4
Construction in progress .............................................. 215.1 222.1
----------- -----------
$ 2,005.9 $ 1,816.5
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
H. Restructuring
During 1995 and 1994, the Company recorded pre-tax restructuring charges of
$102.7 ($67.0 after taxes or $.74 per share) and $114.6 ($73.2 after taxes or
$.82 per share), respectively, as part of a two-phase restructuring plan
outlined in March 1994. The combined plan was implemented to streamline the
Company's North American operations to improve productivity and enhance
competitiveness. The Company records restructuring charges against operations
and provides a reserve based on the best information available at the time the
decision is made to restructure. The balance of these reserves, (excluding the
writedown of assets which are reflected as a reduction of the related asset
account), is included within accounts payable and accrued liabilities and other
non-current liabilities. The components of restructuring are as follows:
<TABLE>
<CAPTION>
Balance at Partial Reversal Other Balance at
December 31, of 1994 1995 1995 December 31,
1994 Provision Provision Activity 1995
<S> <C> <C> <C> <C> <C>
Employee costs ..................... $ 16.6 ($ 3.0) $ 28.8 ($ 30.9) $ 11.5
Writedown of assets ................ (5.3) 58.4 (53.1)
Lease termination and
property holding costs.......... 5.9 (.8) 15.4 (6.8) 13.7
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 ($ 94.3) $ 25.2
======== ======== ======== ======== =======
</TABLE>
-34-
<PAGE>
Crown Cork & Seal Company, Inc.
In the second quarter of 1995, the Company reevaluated its 1994 restructuring
plan and made a decision to maintain operations in two aerosol facilities and to
continue an art and plate operation which had been scheduled for closure. The
impact of this decision was a net pre-tax charge to income of $.1. Combined with
the reevaluation of the 1994 plan was a decision to close a three-piece food can
facility and not to reopen the earthquake-damaged Van Nuys can facility. The
cost associated with the closure of these two facilities was a pre-tax charge of
$20.1. The combined pre-tax charge in the second quarter of 1995 for these
decisions was $20.2 ($12.8 after tax or $.14 per share).
In the third quarter of 1995, the Company recorded a pre-tax restructuring
charge of $82.5 ($54.2 after taxes or $.60 per share). Two aluminum beverage can
plants and one beverage end plant were closed in order to match manufacturing
capacity with demand. The Company also intends to close two food can plants in
the United States and combine two non-U.S. food can operations into one
location. In the Plastics Division, one facility was closed and two others were
reorganized to improve cost effectiveness.
Employee costs primarily include severance costs to be paid to terminated
employees and amounts necessary to reflect pension and retiree medical benefits,
as determined by the Company's actuary. Benefits provided to employees to be
terminated include only those predetermined benefits fully described in existing
union contracts or as described in the Company's salaried employees benefits
handbook. The plan of restructuring only provides for the costs of employees
terminated involuntarily. Costs attributable to pension and other
post-retirement benefits not paid by December 31, 1995 have been reclassified to
their respective liability accounts at year-end. See Note O to the Consolidated
Financial Statements.
The consolidation of the Company's container businesses into a reduced number of
facilities has resulted in certain equipment becoming excess. The Company has
written down these excess assets to their estimated realizable values. The
restructuring charge also includes the estimated losses on the disposal of the
related properties.
Costs provided for lease termination include remaining lease payments and other
costs to be incurred in maintaining the property between the closure date of the
facility and the lease termination date. Costs provided for property held for
sale include costs incurred in maintaining the property from the date of closure
of the facility to the estimated sale date of the facility.
- --------------------------------------------------------------------------------
-35-
<PAGE>
Crown Cork & Seal Company, Inc.
I. Short-Term Borrowings and Long-Term Debt
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Short-term Borrowings (1)
Commercial paper (6.0%, 6.1%, and 3.5%
weighted average interest rates at December 31,
1995, 1994 and 1993, respectively)................................. $ 761.2 $ 660.6
Notes payable to banks/overdrafts (8.5%, 6.5%, and 8.5%
weighted average interest rates at December 31,
1995, 1994 and 1993, respectively)................................. 76.7 178.9
Commercial paper reclassified to long-term (2)......................... (300.0) (235.0)
----------- -----------
Total short-term borrowings............................................ $ 537.9 $ 604.5
=========== ===========
Long-Term Debt
Commercial paper (2)................................................... $ 300.0 $ 235.0
8.49% private placement due 1996....................................... 50.0 100.0
Bank term loan (3)..................................................... 100.0
5.88% notes due 1998................................................... 100.0 100.0
7.00% notes due 1999................................................... 100.0 100.0
6.75% notes due 2003................................................... 200.0 200.0
8.38% notes due 2005 (4)............................................... 300.0
8.00% notes due 2023................................................... 200.0 200.0
Belgian Franc borrowings (5)........................................... 86.9 47.1
German Mark borrowings (5)............................................. 104.0
Other loans in various currencies,
rates in 1995 ranging from 6.8%
to 10.98%, due 1996-2002 (6)....................................... 119.4 138.7
----------- -----------
1,560.3 1,220.8
Less current maturities of long-term debt issuances ................... (70.2) (131.3)
----------- -----------
Total long-term debt................................................... $ 1,490.1 $ 1,089.5
=========== ===========
<FN>
(1) Domestic and Canadian operations' working capital requirements are funded
on a short-term basis through the issuance of commercial paper. Short-term
funds for certain international operations are obtained through bank
overdrafts and short-term notes payable. The weighted average interest
rates for commercial paper outstanding during 1995, 1994 and 1993, were
6.1%, 4.8% and 3.6%, respectively. The weighted average interest rates for
notes and overdrafts outstanding during 1995, 1994 and 1993, were 8.6%,
6.9% and 9.2%, respectively. The weighted average amount of short-term debt
outstanding during the years 1995, 1994 and 1993, was $893.3, $736.5 and
$529.5, respectively. Short-term borrowings did not exceed $1,114.1, $915.5
and $651.1, during 1995, 1994 and 1993, respectively. At December 31, 1993,
commercial paper was $324.0 and notes and overdrafts totaled $48.9.
(2) At December 31, 1995, $300 of commercial paper was reclassified as long
term, reflecting the Company's intent and ability to refinance these
borrowings on a long-term basis through a $1,000 committed multi-currency
credit facility which has a maturity date of February 2000. This facility
is unrestricted and bears interest at variable market rates. At December
31, 1995, there were no funds drawn against this facility. At December 31,
1994, $235 of commercial paper was classified as long-term, reflecting the
Company's intent and ability to refinance these borrowings on a long-term
basis through a $275 committed credit facility. At December 31, 1994, the
Company had drawn $40 related to this facility at a weighted average
interest cost of 6.3%.
(3) On January 27, 1995, this outstanding term loan due beyond 1995 was
extinguished, without penalty.
-36-
<PAGE>
Crown Cork & Seal Company, Inc.
(4) On December 20, 1994, the Company filed an S-3 Registration Statement to
issue up to $500 of debt securities. On January 15, 1995, $300, 8.38% notes
due 2005 were issued with the proceeds used to pay down short-term
indebtedness.
(5) At December 31, 1995, the Belgian Franc and German Mark borrowings, both
LIBOR-based facilities, were classified as long-term, reflecting the
Company's intent and ability to refinance these borrowings on a long-term
basis through the $1,000 committed multi-currency credit facility described
in (2) above. Associated with the Belgian Franc borrowings, the Company had
entered into an interest rate swap agreement to convert 1,000 Belgian
Francs ($33.9 and $31.4 at December 31, 1995 and 1994, respectively) to a
6.53% fixed rate obligation. The contract amount represents 39.0% of the
total underlying debt as compared to 66.7% in 1994. At December 31, 1994,
the outstanding Belgian Franc loan was a three year revolving credit
agreement with the previously noted interest rate swap arrangement
attached. The borrowings along with the swap had a maturity of December
1996 and, as such, the debt was classified as long-term. In 1995 the
Belgian Franc loan agreement was renegotiated in light of the new
multi-currency facility and is now callable at any time. At December 31,
1994, the German Mark borrowings were classified as short-term as this
facility was not covered by any long-term credit facility.
(6) Approximately $41.3 and $24.6 is non-recourse to the Company at December
31, 1995 and 1994, respectively.
</FN>
</TABLE>
Aggregate maturities of total long-term debt for the five years subsequent to
December 31, 1995 are $70.2; $25.9; $127.7; $116.8 and $13.0, respectively. Cash
payments for interest were $113.4 in 1995, $107.1 in 1994 and $82.2 in 1993
(including amounts capitalized of $5.8 and $5.5 in 1995 and 1994, respectively).
The Company closed on a French Franc (FRF) 13,700, 365 day multi-currency
revolving credit facility on December 1, 1995 to finance the cash consideration
of the CMB acquisition and other corporate purposes. A total of FRF 9,100,
approximately $1,800, was drawn on February 22, 1996 to close the CMB
transaction. This facility bears interest at variable market rates.
The carrying value of total debt as of December 31, 1995 and 1994 does not
differ materially from its estimated market value.
- --------------------------------------------------------------------------------
J. Financial Instruments
It is the Company's policy to reduce its exposure to adverse fluctuations in
interest and foreign exchange rates.
The Company has a program to offset equivalent foreign currency assets and
liabilities, thereby minimizing net exposures. The Company uses only liquid
instruments from creditworthy financial institutions and does not enter into
leveraged, tiered or illiquid contracts. Further, the Company does not enter
into derivative financial instruments for trading purposes.
Complementary to this approach, the Company enters into forward exchange
contracts, primarily in European currencies, to hedge certain foreign currency
transactions for periods consistent with the terms of the underlying
transactions. As of December 31, 1995 and 1994, the Company had outstanding
foreign exchange contracts to buy or sell foreign currencies for an aggregate
notional amount of $236.9 and $126.1, respectively. Based on year-end exchange
rates and the maturity date of the various contracts, the aggregate contract
value of these items approximated fair value at December 31, 1995 and 1994,
respectively. Gains and losses resulting from contracts that are designated and
effective as hedges are recognized in the same period as the underlying hedged
transaction.
The Company also enters into interest rate swap and cap agreements to manage
interest rates on its underlying debt obligations. Costs associated with these
financial instruments are generally amortized over the lives of the instruments
and are not material to the Company's financial results. Differences in
interest,
-37-
<PAGE>
Crown Cork & Seal Company, Inc.
which are paid or received, are recognized as adjustments to interest expense of
the underlying debt obligation.
- --------------------------------------------------------------------------------
K. Accounts Payable and Accrued Liabilities
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Trade accounts payable................................................. $ 387.5 $ 440.1
Interest............................................................... 21.3 10.9
Employee benefits...................................................... 136.0 130.8
Salaries, wages and other compensation................................. 18.6 33.1
Environmental.......................................................... 4.2 2.7
Restructuring.......................................................... 14.9 30.4
Deferred taxes......................................................... 9.1 6.0
Other.................................................................. 76.6 83.1
----------- -----------
$ 668.2 $ 737.1
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
L. Other Non-Current Liabilities
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Postemployment benefits................................................ $ 14.8 $ 19.1
Restructuring.......................................................... 10.3 13.5
Deferred taxes......................................................... 40.4 35.9
Environmental.......................................................... 16.5 22.9
Other.................................................................. 30.2 37.4
----------- -----------
$ 112.2 $ 128.8
=========== ===========
</TABLE>
Other non-current assets includes $15.5 and $16.4 at December 31, 1995 and 1994,
respectively, for estimated recoveries related to environmental liabilities.
- --------------------------------------------------------------------------------
M. Stock Options
All amounts below have been adjusted to reflect the 3 for 1 stock split to
shareholders of record as of May 12, 1992.
In accordance with the Stock Option Plans adopted in 1983 and 1984, options to
purchase 9,180,000 common shares have been granted to officers and key
employees. Options were granted at market value on the date of grant and are
exercisable beginning one to two years from date of grant and terminate from
five to ten years from date of grant.
<TABLE>
<CAPTION>
Transactions for 1995, 1994 and 1993 are as follows: 1995 1994 1993
<S> <C> <C> <C>
Options outstanding at January 1.............................. 81,000 99,000 538,290
Granted.......................................................
Exercised..................................................... (18,000) (18,000) (422,790)
Canceled...................................................... (16,500)
------- ------- -------
Options outstanding at December 31............................ 63,000 81,000 99,000
====== ====== ======
Options price at December 31.................................. $10.44 $10.44 $10.44
Options exercisable at December 31............................ 9,000 9,000 9,000
Options available for grant at December 31....................
</TABLE>
-38-
<PAGE>
Crown Cork & Seal Company, Inc.
In accordance with the 1990 Stock-Based Incentive Compensation Plan, options to
purchase 6,000,000 common shares can be granted to officers and key employees.
Options are granted at market value on the date of grant and are exercisable
beginning one to two years from date of grant and terminate up to ten years from
date of grant. Certain options granted in 1993 to employees of acquired
companies, which are included in the table below, do not reduce the shares
available for grant under the 1990 plan.
<TABLE>
<CAPTION>
Transactions for 1995, 1994 and 1993 are as follows: 1995 1994 1993
<S> <C> <C> <C>
Options outstanding at January 1.............................. 2,889,225 3,523,315 4,005,300
Granted....................................................... 226,600 357,196 765,854
Exercised..................................................... (1,367,309) (818,286) (971,589)
Canceled...................................................... (75,064) (173,000) (276,250)
--------- --------- ---------
Options outstanding at December 31............................ 1,673,452 2,889,225 3,523,315
========= ========= =========
Options price range at December 31............................ $16.96 $16.96 $16.96
to to to
$49.00 $40.00 $40.00
Options exercisable at December 31............................ 582,351 810,790 572,436
Options available for grant at December 31.................... 709,189 860,725 919,721
</TABLE>
In accordance with the 1994 Stock-Based Incentive Compensation Plan, 4,000,000
common shares have been made available for award to officers and key employees.
Such awards can be made in the form of options, deferred stock, restricted stock
or stock appreciation rights (SAR's). Options are exercisable in accordance with
the terms of each grant but in no event may the term be less than six months or
greater than fifteen years. The award of deferred or restricted stock, or the
subsequent termination of the deferral or restriction period, may be subject to
the achievement of certain performance goals as determined by the Plan committee
as designated by the Board of Directors. SAR's payments, as determined by the
appreciation in the number of shares subject to the SAR, may be in the form of
cash, common stock, deferred stock or restricted stock.
During 1995, 100,000 options were granted at a market price of $37.50, leaving
3,900,000 shares available for award as of December 31, 1995.
During 1995, the Financial Accounting Standards Board (FASB) issued SFAS No. 123
"Accounting for Stock-Based Compensation". The effective date of this accounting
standard is for fiscal years beginning after December 15, 1995. This standard
has significant disclosure requirements concerning the impact of fair value
calculations related to stock-based compensation. Pro forma net income and
earnings per share must be disclosed. The standard is not expected to have a
material impact on the Company's reported results or financial position.
- --------------------------------------------------------------------------------
N. Capital Stock
In connection with and contingent upon the completion of the proposed
acquisition of CMB, the Company's shareholders, at a special meeting held on
December 19, 1995, authorized the Company to issue up to 50 million shares of
cumulative convertible preferred stock (acquisition preferred) solely to effect
the acquisition of CMB. On February 26, 1996, 12,432,622 shares of acquisition
preferred were issued pursuant to the acquisition, and the number of authorized
shares of acquisition preferred was reduced accordingly and no further shares of
acquisition preferred shall be issued. Generally each share of acquisition
preferred is entitled to the number of votes equal to the number of shares of
common stock into which such share of acquisition preferred is convertible as of
the applicable record date. Dividends on shares issued will accrue and be paid
quarterly on February 20, May 20, August 20 and November 20 each year. The
acquisition preferred ranks senior to the Company's common stock as to dividends
and liquidation rights. The acquisition preferred has a par value of $41.8875
per share and bears a quarterly cash dividend of $.4712 per share. Each share of
acquisition preferred is convertible into common stock
-39-
<PAGE>
Crown Cork & Seal Company, Inc.
at a rate equal to the $41.8875 par value of such acquisition preferred divided
by the applicable conversion price of $45.9715, subject to adjustment in certain
events. The Company will at all times reserve and keep available, out of its
authorized and unissued common stock, sufficient amounts of its common stock to
effect any future conversions. The acquisition preferred is mandatorily
convertible February 26, 2000. The acquisition preferred has a liquidation value
equivalent to its par value plus accrued and unpaid dividends.
Also contingent upon the completion of the CMB acquisition, the shareholders at
the special meeting in December approved the increase in the authorized capital
by an additional 380 million shares of common stock.
Further, the Company's shareholders authorized 30 million shares of additional
preferred stock. The Board of Directors will have the authority to issue, at any
time or from time to time, up to a maximum of 30 million shares of additional
preferred stock in one or more classes or series of a class. The additional
preferred stock will rank on a parity with or junior to the acquisition
preferred in respect of dividend and liquidation rights and such shares will not
be entitled to more than one vote per share when voting as a class with holders
of Company common stock. The voting rights and such designations preferences,
limitations and special rights are, subject to the terms of the Company's
Articles of Incorporation, determined by the Board of Directors.
At December 31, 1995, there were no issued shares of acquisition preferred or
other additional preferred stock.
The Board of Directors adopted a Shareholder Rights Plan in 1995 and declared a
dividend of one right for each outstanding share of common stock. Such rights
only become exercisable, or transferable apart from the common stock, after a
person or group acquires beneficial ownership of, or commences a tender or
exchange offer for, 15% or more of the Company's common stock; except that the
Rights Plan provides that CGIP's (major shareholder of CMB) acquisition of
shares of the Company pursuant to the Company's acquisition of CMB does not
cause the rights to become exercisable. Each right then may be exercised to
acquire one share of common stock at an exercise price of $200, subject to
adjustment. Alternatively, under certain circumstances involving the acquisition
by a person or group of 15% or more of the Company's common stock, each right
will entitle its holder to purchase a number of shares of the Company's common
stock having a market value of two times the exercise price of the right. In the
event the Company is acquired in a merger or other business combination
transaction after a person or group has acquired 15% or more of the Company's
common stock, each right will entitle its holder to purchase a number of the
acquiring company's common shares having a market value of two times the
exercise price of the right. The rights may be redeemed by the Company at $ .01
per right at any time until the tenth day following public announcement that a
15% position has been acquired. The rights will expire on August 10, 2005.
- --------------------------------------------------------------------------------
O. Pensions and Other Retirement Benefits
Pensions
The Company sponsors various pension plans, covering substantially all U.S.,
Canadian and some non-U.S. and non-Canadian employees and participates in
certain multi-employer pension plans. The company-sponsored plans are currently
funded. The benefits for these plans are based primarily on years of service and
the employees' remuneration near retirement. Contributions to multi-employer
plans in which the Company and its non-U.S. and non-Canadian subsidiaries
participate are determined in accordance with the provisions of negotiated labor
contracts or applicable local regulations.
Plan assets of company-sponsored plans of $1,213.6 consist principally of common
stocks and fixed income securities along with other investments, including
$239.6 of the Company's common stock.
Pension expense amounted to $6.0 (including expense of $8.6 for non-company
sponsored plans) in 1995, expense of $1.3 (including expense of $7.2 for
non-company sponsored plans) in 1994 and income of
-40-
<PAGE>
Crown Cork & Seal Company, Inc.
$18.6 (including expense of $5.7 for non-company sponsored plans) in 1993.
Pension cost for non-U.S. and non-Canadian plans in 1995, 1994 and 1993 was
determined under statutory accounting principles which are not considered
materially different from U.S. generally accepted accounting principles.
The 1995, 1994 and 1993 components of pension cost for company-sponsored plans
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost--benefits earned during the year.................. $ 11.3 $ 14.1 $ 11.4
Interest cost on projected benefit obligations................ 96.9 94.6 99.3
Return on assets:
-actual.................................................. (200.7) 31.0 (133.5)
-deferred gain/(loss).................................... 79.3 (163.5) 4.7
Amortization of net unrecognized loss/(gain)
at January 1, 1986....................................... .1 .1 (.7)
Amortization of net unrecognized loss/(gain).................. 2.2 .7 (5.5)
Cost attributable to plant closings........................... 8.3 17.1
-------- --------- --------
Total pension (income)........................................ ($ 2.6) ($ 5.9) ($ 24.3)
======== ========= ========
</TABLE>
Cost attributable to plant closings is included within the restructuring charge
as more fully described in Note H to the Consolidated Financial Statements.
The funded status of company-sponsored plans, including the assets and
liabilities assumed in connection with acquisitions, at December 31, 1995 and
1994 was as follows:
<TABLE>
<CAPTION>
Plans in which
Accumulated Assets Exceeded
Benefits Accumulated
Exceeded Assets Benefits
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation..................... ($ 870.6) ($ 925.8) ($ 386.6) ($ 236.7)
Non-vested benefits........................... (26.1) (18.0) (5.7) (2.2)
---------- ----------- ---------- ---------
Accumulated benefit obligation............ ($ 896.7) ($ 943.8) ($ 392.3) ($ 238.9)
========== =========== ========== =========
Actuarial present value of projected benefit
obligation.................................... ($ 905.6) ($ 961.4) ($ 420.5) ($ 258.5)
Plan assets at fair value.......................... 783.5 767.8 430.1 351.9
---------- ----------- ---------- ---------
Plan assets (less than) in excess of projected
benefit obligation............................ (122.1) (193.6) 9.6 93.4
Unrecognized loss (gain) at January 1, 1986........ 12.5 12.8 (5.0) (5.3)
Unrecognized net loss (gain) since 1986............ 70.6 98.9 31.0 (20.1)
Unrecognized prior service cost.................... 5.2 2.8 7.3 2.0
Minimum liability.................................. (79.4) (96.4)
---------- ----------- ---------- ---------
(Accrued)/Prepaid pension cost at
December 31................................... ($113.2) ($175.5) $42.9 $70.0
======= ======= ===== =====
</TABLE>
The Company recognizes a minimum pension liability for underfunded plans. The
minimum liability is equal to the excess of the accumulated benefit obligation
over plan assets. A corresponding amount is recognized as either an intangible
asset, to the extent of previously unrecognized prior service cost and
previously unrecognized transition obligation, or a reduction of shareholders'
equity. The Company had recorded
-41-
<PAGE>
Crown Cork & Seal Company, Inc.
additional liabilities of $79.4 and $96.4 as of December 31, 1995 and 1994,
respectively. An intangible asset of $17.7 and $10.6 and a shareholders' equity
reduction, net of income taxes, of $32.1 and $48.1 was recorded as of December
31, 1995 and 1994, respectively.
The weighted average actuarial assumptions for the Company's pension plans are
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Discount rate................................................. 7.5% 8.6% 7.1%
Compensation increase......................................... 5.0% 5.2% 5.2%
Long-term rate of return...................................... 11.0% 11.0% 11.0%
</TABLE>
Other Postretirement Benefit Plans
The Company and certain subsidiaries sponsor unfunded plans to provide health
care and life insurance benefits to pensioners and survivors. Generally, the
medical plans pay a stated percentage of medical expenses reduced by deductibles
and other coverages. Life insurance benefits are generally provided by insurance
contracts. The Company reserves the right, subject to existing agreements, to
change, modify or discontinue the plans.
<TABLE>
<CAPTION>
The net postretirement benefit cost was comprised
of the following: 1995 1994 1993
<S> <C> <C> <C>
Service cost for benefits earned during the year........... $ 4.0 $ 5.5 $ 3.6
Interest cost on accumulated postretirement
benefit obligation..................................... 36.5 39.1 45.0
Amortization of net unrecognized (gain).................... (5.0)
Cost attributable to plant closings........................ 4.2 10.8
-------- --------- --------
Net postretirement benefit cost................... $ 39.7 $ 55.4 $ 48.6
======== ========= ========
</TABLE>
Cost attributable to plant closings is included within the restructuring charge
as more fully described in Note H to the Consolidated Financial Statements.
Health care claims and life insurance benefits paid totaled $42.5 in 1995, $36.3
in 1994 and $41.6 in 1993.
The following provides a reconciliation of the accumulated postretirement
benefit obligation to the liabilities recognized in the Company's balance sheet
as of December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Retirees ......................................................... ($418.2) ($401.1)
Fully eligible active plan participants........................... (41.7) (38.9)
Other active plan participants.................................... (47.0) (46.1)
------- -------
Total accumulated obligation...................................... ($506.9) (486.1)
Unrecognized net (gain) loss...................................... (56.1) (79.1)
------- -------
Accrued postretirement benefit obligation......................... ($563.0) ($565.2)
======= =======
</TABLE>
The health care accumulated postretirement benefit obligation was determined at
December 31, 1995 and 1994 using health care trend rates of 9.9% and 10.1%,
respectively, decreasing to 4.9% over nine years and 5.1% over ten years,
respectively. The assumed long-term rate of compensation increase used for life
insurance was 5%. The discount rate was 7.4% and 8.5% at December 31, 1995 and
1994, respectively. Changing the assumed health care cost trend rate by one
percentage point in each year would change the accumulated postretirement
benefit obligation by $44.6 and the net postretirement benefit cost by $2.8.
-42-
<PAGE>
Crown Cork & Seal Company, Inc.
Employee Savings Plan
The Company sponsors a Savings Investment Plan which covers all domestic
salaried employees who are 21 years of age with one or more years of service.
The Company matches with equivalent value of Company stock, up to 1.5% of a
participant's compensation.
Employee Stock Purchase Plan
Since 1994, the Company has sponsored an Employee Stock Purchase Plan which
covers all domestic employees with one or more years of service who are
non-officers and non-highly compensated as defined by the Internal Revenue Code.
Eligible participants contribute 85% of the quarter ending market price towards
the purchase of each common share. The Company's contribution is equivalent to
15% of the quarter-ending market price. Total shares purchased under the plan in
1995 and 1994 were 84,309 and 65,437, respectively, and the Company's
contributions were approximately $.5 and $.4 respectively.
- --------------------------------------------------------------------------------
P. Income Taxes
Pretax income before cumulative effect of accounting changes for the years ended
December 31 was taxed under the following jurisdictions:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Domestic.................................................. $ 30.8 $ 88.5 $ 214.0
Foreign................................................... 78.7 94.2 65.8
--------- -------- ---------
$ 109.5 $ 182.7 $ 279.8
========= ======== =========
The provision for income taxes consists of the following:
Current tax provision:
U.S. Federal......................................... $ 16.2 $ 50.9
State and foreign.................................... 11.9 18.7 $ 17.8
--------- -------- ---------
28.1 69.6 17.8
--------- -------- ---------
Deferred tax provision:
U.S. Federal......................................... (3.1) (17.7) 74.5
State and foreign.................................... (.1) 3.7 5.1
--------- -------- ---------
(3.2) (14.0) 79.6
--------- -------- ---------
$ 24.9 $ 55.6 $ 97.4
========= ======== =========
</TABLE>
The provision for income taxes differs from the amount of income tax determined
by applying the applicable U.S. statutory federal income tax rate to pretax
income as a result of the following differences:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
U.S. Statutory rate....................................... 35.0% 35.0% 35.0%
Non-U.S. operations at different rates.................... (14.5%) (8.4%) (1.1%)
Amortization of acquisition adjustments................... 8.0% 4.7% 2.9%
Other items, net.......................................... (5.8%) (.9%) (2.0%)
---- --- ----
Effective income tax rate............................ 22.7% 30.4% 34.8%
==== ==== ====
</TABLE>
The Company paid federal, state, local and foreign (net) income taxes of $28.0
for 1995, $88.9 for 1994 and $11.7 for 1993.
-43-
<PAGE>
Crown Cork & Seal Company, Inc.
The components of deferred tax assets and liabilities at December 31, follow:
<TABLE>
<CAPTION>
1995 1994
Asset Liability Asset Liability
<S> <C> <C> <C> <C>
Depreciation.............................................. $227.1 $230.7
Postretirement and postemployment benefits................ $206.5 $206.7
Pensions.................................................. 19.7 16.9
Inventories............................................... 34.2 40.4
Tax loss carryforwards.................................... 31.1 38.6
Restructuring............................................. 16.6 23.1
Accruals and other........................................ 46.6 10.8 43.7 12.3
------ ------ ------ ------
320.5 272.1 329.0 283.4
Valuation allowance....................................... (22.8) (29.2)
------ ------ ------ ------
$297.7 $272.1 $299.8 $283.4
====== ====== ====== ======
</TABLE>
Prepaid expenses and other current assets includes $47.2 and $9.2 of deferred
tax assets at December 31, 1995 and 1994, respectively. Other non-current assets
includes $27.9 and $49.1 of deferred tax assets at December 31, 1995 and 1994,
respectively.
Approximately $31.1 of deferred tax assets relating to net operating losses and
tax basis differences were available in various foreign tax jurisdictions at
December 31, 1995. Deferred tax assets of $12.7 must be utilized within the next
six years and $18.4 can be utilized over an indefinite period. The Company
believes that it is more likely than not that $8.3 of these benefits are
expected to be realized by achieving future profitable operations based on
actions taken by the Company.
No net benefit has been recorded for the remaining items. Future recognition of
these carryforwards will be made either when the benefit is realized or when it
has been determined that it is more likely than not that the benefit will be
realized against future earnings. No other tax operating loss or credit
carryforwards exist for which the Company has recognized a net financial
benefit.
The cumulative amount of the Company's share of undistributed earnings of
non-U.S. subsidiaries for which no deferred taxes have been provided was $467.3,
$432.2 and $401.2 as of December 31, 1995, 1994 and 1993, respectively.
Management has no plans to distribute such earnings in the foreseeable future.
- --------------------------------------------------------------------------------
Q. Minority Interests
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
January 1.................................................................. $75.4 $53.7
Formation of new jointly-owned subsidiaries................................ 8.3 8.4
Minority interest in net income of consolidated subsidiaries............... 13.6 12.4
Change in cumulative translation adjustment................................ (.2) .3
Dividends paid to minority shareholders.................................... (2.0) (1.3)
Investment by minority shareholders........................................ 23.5 1.9
------ -----
December 31................................................................ $118.6 $75.4
====== =====
</TABLE>
- --------------------------------------------------------------------------------
-44-
<PAGE>
Crown Cork & Seal Company, Inc.
R. Leases
Minimum rental commitments under all noncancelable operating leases, primarily
real estate, in effect at December 31,1995 are:
<TABLE>
<CAPTION>
Years ending December 31
<S> <C>
1996.................................................................. $17.1
1997.................................................................. 13.2
1998.................................................................. 10.7
1999.................................................................. 6.9
2000.................................................................. 3.8
Thereafter ........................................................... 10.7
-----
Total minimum payments................................................ 62.4
Less: Total minimum sublease rentals ................................. (5.5)
-----
Net minimum rental commitments ....................................... $56.9
=====
</TABLE>
Operating lease rental expense (net of sublease rental income of $.8 in 1995,
$1.1 in 1994 and $1.0 in 1993) was $22.7 in 1995, $19.6 in 1994 and $21.9 in
1993.
- --------------------------------------------------------------------------------
S. Commitments and Contingent Liabilities
The Company has various commitments to purchase materials and supplies as part
of the ordinary conduct of business. In the aggregate, such commitments are not
at prices in excess of current market.
The Company is subject to various lawsuits and claims with respect to matters
such as governmental regulations and other actions arising out of the normal
course of business. While the impact on future financial results is not subject
to reasonable estimation because considerable uncertainty exists, management
believes, after consulting with counsel, that the ultimate liabilities resulting
from such lawsuits and claims will not materially affect the consolidated
results or financial position of the Company.
The Company's basic raw materials for the products in its Metals and Plastics
packaging segments are tinplate, aluminum and resins, all of which are purchased
from multiple sources. The Company is subject to material fluctuations in the
cost of these raw materials and has previously adjusted its selling prices to
reflect these movements. There can be no assurance, however, that the Company
will be able to recover fully any increases or fluctuations in raw material
costs from its customers.
- --------------------------------------------------------------------------------
T. Subsequent Events
In February 1996, the Company completed the acquisition of CMB pursuant to the
terms of its previously announced exchange offer. CMB is a leading multinational
manufacturer of metal and plastic packaging materials and equipment with
headquarters in Paris, France. At December 31, 1995, CMB had approximately
28,500 employees who are located in 175 plants and facilities within 38
countries worldwide.
CMB had unaudited net sales of approximately $4,900 and unaudited net income of
approximately $150 for the twelve months ending December 31, 1995.
Each share of CMB tendered into the offer was exchanged for cash or a
combination of the Company's common and acquisition preferred stock.
Approximately 37.3 million shares of Crown common stock and 12.4 million shares
of Crown acquisition preferred stock were issued to tendering CMB shareholders.
Crown common stock had a market value of approximately $42.00 at completion. The
total cost of the acquisition, excluding liabilities assumed, was approximately
$4,000, including $1,880 in cash, $1,600 in Crown
-45-
<PAGE>
Crown Cork & Seal Company, Inc.
common stock and $520 in Crown acquisition preferred stock. The cash portion of
the consideration was financed through a Revolving Credit and Term Loan facility
with a syndicate of financial institutions. This facility is further described
in Note I to the Consolidated Financial Statements.
The acquisition will be accounted for as a purchase in 1996. The purchase price
will be allocated to the assets acquired and liabilities assumed based upon
their estimated fair values. Results of operations for CMB will be included with
those of the Company for periods subsequent to the date of acquisition.
The excess of the purchase price over the net assets acquired, which is expected
to exceed $3,000, will be amortized over a period not exceeding 40 years. The
purchase price allocation will be determined during 1996 when appraisals, other
studies and additional information become available. Accordingly the final
allocation may have a material effect on the supplemental unaudited pro forma
information presented below.
The following unaudited pro forma summary presents the consolidated results of
operations as if the acquisition had been completed at the beginning of the
periods presented and does not purport to be indicative of what would have
occurred had the acquisition actually been made as of such date or of results
which may occur in the future.
<TABLE>
<CAPTION>
(unaudited) 1995 1994
<S> <C> <C>
Net sales........................................... $ 9,975.8 $ 8,968.6
Net income.......................................... 46.8 141.1
Earnings per average
common share...................................... $ .37 $ 1.12
</TABLE>
Adjustments made in arriving at the pro forma unaudited results of operations
include increased interest expense on acquisition debt, amortization of
goodwill, preferred stock dividends and related tax adjustments. No effect has
been given to the fair value of assets acquired, depreciable lives, transition
and restructuring costs or synergistic benefits which may be realized from the
acquisition.
- --------------------------------------------------------------------------------
-46-
<PAGE>
Crown Cork & Seal Company, Inc.
U. Quarterly Data (unaudited)
<TABLE>
<CAPTION>
1995 1994
First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.................. $1,126.7 $1,385.8 $1,427.1 $1,114.2 $943.0 $1,134.5 $1,283.3 $1,091.4
Gross Profit*.............. 130.5 146.8(1) 27.6(2) 78.9 110.6 147.1 41.2(3) 120.9
Net income................. 36.5 52.2(1) (19.9)(2) 6.1 33.6 64.8 (7.5)(3) 40.1
Average shares
outstanding
(in millions)........... 89.6 90.2 90.5 90.6 88.9 89.1 89.1 89.3
Earnings (loss) per
average common
share**................. .41 .58(1) (.22)(2) .07 .38 .73 (.08)(3) .45
Common Stock
Price Range***
High.................... 45 50 1/4 50 5/8 44 5/8 41 7/8 39 3/4 39 1/2 40 7/8
Low..................... 37 3/4 41 3/8 36 7/8 34 1/2 36 5/8 33 3/4 33 1/2 35 7/8
Close................... 43 7/8 50 1/8 38 3/4 41 3/4 39 1/8 37 1/4 38 1/2 37 3/4
<FN>
* Net sales less cost of products sold, depreciation and amortization and the
provision for restructuring.
** The sum of the quarters' earnings per share does not equal the year-to-date
earnings per share due to changes in average share calculations.
*** Source: New York Stock Exchange - Composite Transactions.
(1) Includes net pre-tax restructuring charges of $20.2, $12.8 after taxes or
$.14 per share. Excluding the effects of the restructuring charges, net
income was $65.0 or $.72 per share. See Note H for additional details.
(2) Includes pre-tax restructuring charges of $82.5, $54.2 after taxes or $.60
per share. Excluding the effects of the restructuring charges, net income
was $34.2 or $.38 per share. See Note H for additional details.
(3) Includes pre-tax restructuring charges of $114.6, $73.2 after taxes or $.82
per share. Excluding the effects of the restructuring charges, net income
was $65.7 or $.74 per share.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
-47-
<PAGE>
Crown Cork & Seal Company, Inc.
V. Segment Information by Industry Segment and Geographic Area
A. Industry Segment
<TABLE>
<CAPTION>
Net Operating % To Identifiable Depreciation Capital
1995 Sales Income Net Sales Assets & Amortization Expenditures
<S> <C> <C> <C> <C> <C> <C>
Metal Packaging & Other . . (2)......... $3,811.1 $169.6(3) 4.5 $3,688.9 $177.9 $287.7
Plastic Packaging....................... 1,242.7 74.9(3) 6.0 1,294.7 78.4 145.8
-------- ------ --- -------- ------ ------
Consolidated . . (6).................... $5,053.8 $244.5(5) 4.8 $4,983.6(6) $256.3 $433.5
======== ====== === ======== ====== ======
1994
Metal Packaging & Other . . (2)......... $3,494.3 $207.5(4) 5.9 $3,453.3 $157.0 $232.7
Plastic Packaging....................... 957.9 76.9 8.0 1,284.5 61.3 207.1
-------- ------ --- -------- ------ ------
Consolidated . . (6).................... $4,452.2 $284.4(5) 6.4 $4,737.8(6) $218.3 $439.8
======== ====== === ======== ====== ======
1993
Metal Packaging & Other . . (2)......... $3,367.0 $308.7 9.2 $3,158.7 $140.0 $152.3
Plastic Packaging....................... 795.6 61.6 7.7 1,023.4 51.7 119.0
-------- ------ --- -------- ------ ------
Consolidated . . (6).................... $4,162.6 $370.3(5) 8.9 $4,182.1(6) $191.7 $271.3
======== ====== === ======== ====== ======
B. Geographic Area
1995
United States........................... $3,376.2 $147.4(3) 4.4 $3,372.6 $175.4 $260.5
Europe.................................. 785.2 58.9 7.5 606.1 38.6 50.9
North and Central America............... 440.8 (5.0)(3) (1.1) 486.1 24.2 19.0
Other Non-U.S........................... 451.6 43.2 9.6 518.8 18.1 103.1
-------- ------ --- -------- ------ ------
Consolidated . . (6).................... $5,053.8(1) $244.5(5) 4.8 $4,983.6(6) $256.3 $433.5
======== ====== === ======== ====== ======
1994
United States........................... $2,969.6 $170.9(4) 5.8 $3,291.1 $150.1 $335.1
Europe.................................. 640.0 49.7 7.8 571.8 31.4 54.8
North and Central America............... 466.6 16.7(4) 3.6 517.7 24.3 10.6
Other Non-U.S........................... 376.0 47.1 12.5 357.2 12.5 39.3
-------- ------ --- -------- ------ ------
Consolidated . . (6).................... $4,452.2(1) $284.4(5) 6.4 $4,737.8(6) $218.3 $439.8
======== ====== === ======== ====== ======
1993
United States........................... $2,842.0 $281.0 9.9 $2,909.6 $133.2 $139.8
Europe.................................. 569.1 30.8 5.4 461.1 25.4 57.0
North and Central America............... 464.0 14.2 3.1 528.8 24.0 14.2
Other Non-U.S........................... 287.5 44.3 15.4 282.6 9.1 60.3
-------- ------ --- -------- ------ ------
Consolidated . . (6).................... $4,162.6(1) $370.3(5) 8.9 $4,182.1(6) $191.7 $271.3
======== ====== === ======== ====== ======
<FN>
(1) Transfers between Geographic Areas are not material.
(2) Within "Metal Packaging and Other" is the Company's machinery operation
which, along with other non-metal packaging domestic affiliates, is not
significant.
(3) Operating income for 1995 includes restructuring charges of $81.4 for U.S.
Metal Packaging, $3.9 for U.S. Plastics Packaging, $4.4 for Canadian
Plastics Packaging and $13.0 for North and Central American Metal
Packaging.
(4) Operating income for 1994 included restructuring charges of $102.3 for U.S.
Metal Packaging and $12.3 for Canadian Metal Packaging.
</FN>
</TABLE>
-48-
<PAGE>
Crown Cork & Seal Company, Inc.
(5) The following reconciles operating income to pre-tax income:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Operating income*......................................... $ 244.5 $ 284.4 $ 370.3
Interest and other corporate
expense**............................................... (135.0) (101.7) (90.5)
--------- -------- ---------
Pre-tax income............................................ $ 109.5 $ 182.7 $ 279.8
========= ======== =========
<FN>
* Has been restated for prior years to conform with the 1995 presentation of
operating income.
** Includes interest income and expense along with other corporate income and
expense items, such as exchange gains and losses.
</FN>
</TABLE>
(6) The following reconciles identifiable assets to total assets:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Identifiable assets ...................................... $ 4,983.6 $ 4,737.8* $ 4,182.1**
Corporate assets.......................................... 68.1 43.5 54.2
---------- ---------- ----------
Total assets.............................................. $ 5,051.7 $ 4,781.3 $ 4,236.3
========== ========== ==========
<FN>
* Included in identifiable assets for 1994 is $85.5 relating to the
acquisition of Tri-Valley Growers.
** Included in identifiable assets for 1993 is:
(a) "United States," $96 relating to the acquisition of the Van Dorn
Company.
(b) "Europe," $42 relating to the acquisition of the remaining interest in
CONSTAR International's affiliate, Wellstar Acquisition, B.V. and its
affiliate Wellstar Holdings, B.V.
</FN>
</TABLE>
For the years ended December 31, 1995, 1994 and 1993, respectively, no one
customer accounted for more than 10% of the Company's net sales.
Included in "Other Non-U.S." are affiliates in South America, Africa, Asia and
the Middle East. Figures for the United States are not comparable due to the
April 1993 acquisition of the Van Dorn Company. Figures for Europe are not
comparable due to the 1993 acquisitions of Wellman's interest in Wellstar
Acquisition, B.V. and the minority interest in Wellstar Acquisition's affiliate,
Wellstar Holding, B.V.
Total non-U.S. liabilities were $822.4, $777.7 and $637.0 at December 31, 1995,
1994 and 1993, respectively.
Certain reclassifications of prior years' data have been made to improve
comparability.
-49-
<PAGE>
Crown Cork & Seal Company, Inc.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
1 OF 2
<TABLE>
<CAPTION>
(In millions) For the year Ended December 31, 1995
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Additions Charged Balance at
Beginning to Costs and Deductions - End of
of Period Expenses Write - Offs Period
<S> <C> <C> <C> <C>
Reserves deducted from assets
to which they apply:
Allowance for losses
on accounts receivable $10.6 $4.9 $5.5 $10.0
===== ==== ==== =====
</TABLE>
<TABLE>
<CAPTION>
(In millions) For the year Ended December 31, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Additions Charged Balance at
Beginning to Costs and Deductions - End of
of Period Expenses Write - Offs Period
<S> <C> <C> <C> <C>
Reserves deducted from assets
to which they apply:
Allowance for losses
on accounts receivable $6.2 $4.6 $.2 $10.6
==== ==== === =====
</TABLE>
<TABLE>
<CAPTION>
(In millions) For the year Ended December 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Additions Charged Balance at
Beginning to Costs and Deductions - End of
of Period Expenses Write - Offs Period
<S> <C> <C> <C> <C>
Reserves deducted from assets
to which they apply:
Allowance for losses
on accounts receivable $6.7 $4.7 $5.2 $6.2
==== ==== ==== ====
</TABLE>
-50-
<PAGE>
Crown Cork & Seal Company, Inc.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
2 OF 2
<TABLE>
<CAPTION>
(In millions) For the year Ended December 31, 1995
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Additions Charged Balance at
Beginning to Costs and Deductions - End of
of Period Expenses Write - Offs Period
<S> <C> <C> <C> <C>
Reserves deducted from assets
to which they apply:
Accumulated Amortization
of Intangibles including
goodwill $100.8 $32.0 $132.8
====== ===== ====== ======
</TABLE>
<TABLE>
<CAPTION>
(In millions) For the year Ended December 31, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Additions Charged Balance at
Beginning to Costs and Deductions - End of
of Period Expenses Write - Offs Period
<S> <C> <C> <C> <C>
Reserves deducted from assets
to which they apply:
Accumulated Amortization
of Intangibles including
goodwill $68.5 $32.3 $100.8
====== ===== ====== ======
</TABLE>
<TABLE>
<CAPTION>
(In millions) For the year Ended December 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Additions Charged Balance at
Beginning to Costs and Deductions - End of
of Period Expenses Write - Offs Period
<S> <C> <C> <C> <C>
Reserves deducted from assets
to which they apply:
Accumulated Amortization
of Intangibles including
goodwill $37.8 $30.4 ($.3) $68.5
====== ===== ====== ======
</TABLE>
-51-
<PAGE>
Crown Cork & Seal Company, Inc.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by this Item is set forth on pages 4, 5 and 6 of the
Company's Proxy Statement dated March 22, 1996, in the section entitled
"Election of Directors" and on page 15 in the section entitled "Section 16
Requirements" and is incorporated herein by reference.
The following table sets forth certain information concerning the principal
executive officers of the Company, including their ages and positions.
<TABLE>
<CAPTION>
Name Age Present Title
<S> <C> <C>
William J. Avery 55 Chairman of the Board of Directors
and Chief Executive Officer
Michael J. McKenna 61 President,
Chief Operating Officer
John W. Conway 50 Executive Vice President,
President Americas Division
Ian B. Carmichael 59 Executive Vice President,
Corporate Technologies
Mark W. Hartman 58 Executive Vice President,
Office of the Chairman
Tommy H. Karlsson 49 Executive Vice President,
President European Division
Richard L. Krzyzanowski 63 Executive Vice President,
Secretary and General Counsel
Hans J. Loliger 52 Executive Vice President,
President Plastics Division
Alan W. Rutherford 52 Executive Vice President,
Chief Financial Officer
Ronald R. Thoma 61 Executive Vice President,
Procurement and Traffic
William H. Voss 50 Executive Vice President,
President Asia-Pacific Division
Craig R. L. Calle 36 Senior Vice President,
Finance and Treasurer
Timothy J. Donahue 33 Vice President and Controller
E. C. Norris Roberts 52 Vice President, Corporate Administration
Richard Donohue 61 Manufacturing Controller
</TABLE>
-52-
<PAGE>
Crown Cork & Seal Company, Inc.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth on pages 8 through 13 of the Company's Proxy Statement
dated March 22, 1996, in the section entitled "Executive Compensation" is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth on pages 2 through 6 of the
Company's Proxy Statement dated March 22, 1996, in the sections entitled "Proxy
Statement Meeting, April 25, 1996" and "Election of Directors" and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth on pages 4, 5 and 6 of the
Company's Proxy Statement dated March 22, 1996, in the section entitled
"Election of Directors" and is incorporated herein by reference
-53-
<PAGE>
Crown Cork & Seal Company, Inc.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a) The following documents are filed as part of this report:
(1) All Financial Statements:
Crown Cork & Seal Company, Inc. and Subsidiaries (see Part II pages 26
through 49 of this Report).
(2) Financial Statement Schedules:
Schedule Number
II.- Valuation and Qualifying Accounts and Reserves (see pages 50 and
51 of this Report).
All other schedules have been omitted because they are not applicable
or the required information is included in the Consolidated Financial
Statements.
(3) Exhibits
2.a Exchange Offer Agreement, dated as of May 22, 1995, as amended,
between Crown Cork & Seal Company, Inc. (the "Company") and
Compagnie Generale d'Industrie et de Participations (CGIP)
(incorporated by reference to Annex A of the Company's Proxy
Statement/Prospectus dated November 14, 1995 forming a part of
the Company's Amendment No.1 to its Registration Statement on
Form S-4 (No. 33-64167) filed with the Securities and Exchange
Commission on November 14, 1995 and to Exhibit 2.1 of the
Company's Current Report on Form 8-K dated December 28, 1995
(File No. 1-2227)).
2.b Shareholders Agreement dated February 22, 1996, between Crown
Cork & Seal Company, Inc. and Compagnie Generale d'Industrie et
de Participation (CGIP) (incorporated by reference to Exhibit 2.2
of the Company's Current Report on Form 8-K dated February 22,
1996 (File No. 1-2227)).
3.a Amended and Restated Articles of Incorporation of Crown Cork &
Seal Company, Inc. (incorporated by reference to Exhibit 3.1 of
the Company's Registration Statement on Form 8-A dated February
20, 1996 (File No. 1-2227)).
3.b By-laws of Crown Cork & Seal Company, Inc., as amended,
(incorporated by reference to Exhibit 3.3 of the Company's
Registration Statement on Form 8-A dated February 20, 1996 (File
No. 1-2227)).
3.c Resolution fixing the terms of the Registrant's 4.5% Convertible
Preferred Stock (incorporated by reference to Exhibit 3.2 of the
Company's Registration Statement on Form 8-A, dated February 20,
1996 (File No. 1-2227)).
4.a Specimen certificate of Registrant's Common Stock
4.b Specimen certificate of Registrant's 4.5% Convertible Preferred
Stock (incorporated by reference to Exhibit 4 of the Company's
Registration Statement on Form 8-A dated February 20, 1996 (File
No. 1- 2227)).
4.c Form of the Company's 5-7/8% Notes Due 1998 (incorporated by
reference to Exhibit 22 of Registrant's Current Report on Form
8-K dated April 12, 1993 (File No. 1-2227)).
-54-
<PAGE>
Crown Cork & Seal Company, Inc.
4.d Form of the Company's 6-3/4% Notes Due 2003 (incorporated by
reference to Exhibit 23 of Registrant's Current Report on Form
8-K dated April 12, 1993 (File No. 1-2227)).
4.e Form of the Company's 8% Debentures Due 2023 (incorporated by
reference to Exhibit 24 of Registrant's Current Report on Form
8-K dated April 12, 1993 (File No. 1-2227)).
4.f Officers' Certificate of the Company (incorporated by reference
to Exhibit 4.3 of the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1993 (File No. 1-2227)).
4.g Indenture dated as of April 1, 1993 between the Company and
Chemical Bank, as Trustee (incorporated by reference to Exhibit
26 of the Registrant's Current Report on Form 8-K dated April 12,
1993 (File No 1-2227)).
4.h Terms Agreement dated March 31, 1993 (incorporated by reference
to Exhibit 27 of the Registrant's Current Report on Form 8-K
dated April 12, 1993 (File No. 1-2227)).
4.i Form of the Company's 7% Notes Due 1999 (incorporated by
reference to Exhibit 99.1 of the Registrant's Current Report on
Form 8-K dated June 16, 1994 (File No. 1-2227)).
4.j Officers' Certificate of the Company dated June 16, 1994
(incorporated by reference to Exhibit 99.2 of the Registrant's
Current Report on Form 8-K dated June 16, 1994 (File No.
1-2227)).
4.k Terms Agreement dated June 9, 1994 (incorporated by reference to
Exhibit 99.3 of Registrant's Current Report on Form 8-K dated
June 16, 1994 (File No. 1-2227)).
4.l Indenture dated as of January 15, 1995 between the Company and
Chemical Bank, as Trustee (incorporated by reference to Exhibit 4
of the Registrant's Current Report on Form 8-K dated January 25,
1995 (File No. 1-2227)).
4.m Form of the Company's 8-3/8% Notes Due 2005 (incorporated by
reference to Exhibit 99a of the Registrant's Current Report on
Form 8-K dated January 25, 1995 (File No. 1-2227)).
4.n Officers' Certificate of the Company dated January 25, 1995
(incorporated by reference to Exhibit 99b of the Registrant's
Current Report on Form 8-K dated January 25, 1995 (File No.
1-2227)).
4.o Terms Agreement dated January 18, 1995 (incorporated by reference
to Exhibit 99c of the Registrant's Current Report on Form 8-K
dated January 25, 1995 (File No. 1-2227)).
4.p Revolving Credit and Competitive Advance Facility Agreement,
dated February 10, 1995 among Registrant, the Subsidiary
Borrowers referenced therein, the Lenders referenced therein and
Chemical Bank, as Administrative Agent (incorporated by reference
to Exhibit 4.o of Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994 (File No. 1-2227)).
4.q Rights Agreement, dated August 7, 1995, between Crown Cork & Seal
Company, Inc. and First Chicago Trust of New York (incorporated
by reference to Exhibits 1 and 2 to the Company's Registration
Statement on Form 8-A, dated August 10, 1995 (File No. 1-2227)).
-55-
<PAGE>
Crown Cork & Seal Company, Inc.
4.r Revolving Credit and Term Loan Agreement, dated as of December 1,
1995, among Crown Cork & Seal Company, Inc., each of the
Subsidiary Borrowers as defined therein, the financial
institutions which are signatories thereto (the "Lenders"),
Chemical Bank, as arranger and administrative agent for the
Lenders and Credit Suisse and Societe Generale as arrangers and
documentation agents (incorporated by reference to Exhibit 10.1
of the Company's Current Report on Form 8-K dated December 1,
1995 (File No. 1-2227)).
Other long-term agreements of the Registrant are not filed
pursuant to Item 601(b)(4)(iii)(A) of regulation S-K, and the
Registrant agrees to furnish copies of such agreements to the
Securities and Exchange Commission upon its request.
10.a Crown Cork & Seal Company, Inc. Executive Deferred Compensation
Plan (incorporated by reference to Exhibit 10 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991
(No. 1-2227)).
10.b 1990 Stock-Based Incentive Compensation Plan (incorporated by
reference to Exhibit 10.2 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992 (File No.
1-2227)).
10.c Crown Cork & Seal Company, Inc. Restricted Stock Plan for
Non-Employee Directors. (incorporated by the reference to Exhibit
10.3 of the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992 (File No. 1-2227)).
10.d Crown Cork & Seal Company, Inc. 1984 Non-Qualified Stock Option
Plan (incorporated by reference to Exhibit 28 of the Company's
Registration Statement on Form S-8 filed with the Securities and
Exchange on June 6, 1986 (Registration No. 33-06261)).
10.e Crown Cork & Seal Company, Inc. Retirement Thrift Plan
(incorporated by reference to Exhibit 4.3 of the Company's
Registration Statement on Form S-8 filed with the Securities and
Exchange on September 22, 1993 (File No. 33-50369)).
10.f Crown Cork & Seal Company, Inc. Stock Purchase Plan (incorporated
by reference to Exhibit 4.3 of the Company's Registration
Statement on Form S-8, filed with the Securities and Exchange
Commission on March 16, 1994 (Registration No. 33-52699)).
10.g Crown Cork & Seal Company, Inc. 1994 Stock-Based Incentive
Compensation Plan (incorporated by reference to Exhibit 10.g of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-2227)).
10.h Crown Cork & Seal Company, Inc. Deferred Compensation Plan for
Directors, dated as of October 27, 1994 (incorporated by
reference to Exhibit 10.b of Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995 (File No. 1-2227)).
10.i Crown Cork & Seal Company, Inc. Pension Plan for outside
Directors, dated as of October 27, 1994 (incorporated by
reference to Exhibit 10.c of the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995 (File No. 1-2227)).
Exhibits 10.a through 10.i, inclusive, are management contracts
or compensatory plans or arrangements required to be filed as
exhibits pursuant to Item 14(c) of this Report.
-56-
<PAGE>
Crown Cork & Seal Company, Inc.
11. Statement re Computation of Per Share Earnings
12. Computation of ratio of earnings to fixed charges
21. Subsidiaries of Registrant.
23. Consent of Independent Accountants.
27. Financial Data Schedule
b) Reports on Form 8-K
On December 15, 1995 the Registrant filed with the Securities and Exchange
Commission a Current Report on Form 8-K dated December 1, 1995 for the
following event:
The Company reported under Item 5 - Other Events that it had entered into a
Revolving Credit and Term Loan Agreement among the Company, a syndicate of
financial institutions, Chemical Bank as arranger and administrative agent,
and Credit Suisse and Societe Generale as arrangers and documentation
agents. Pursuant to the Credit Agreement, the lenders have made available
to Crown, subject to the terms and conditions of the Credit Agreement, FRF
13.7 billion (approximately $2.8 billion) in a multi-currency revolving
credit facility to pay the cash portion of the consideration to be paid in
connection with the Company's proposed offer to purchase all of the
outstanding shares of CMB, to fund the costs and expenses of the Offer, to
repurchase shares of the Company's capital stock, or following the Offer,
to be used for general corporate purposes.
-57-
<PAGE>
Crown Cork & Seal Company, Inc.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 March 29, 1996
- -------------------
By: /s/ Timothy J. Donahue
-----------------------------------------
Timothy J. Donahue
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
/s/ William J. Avery 3/29/96
- --------------------------------------------
William J. Avery Chairman of the Board
and Chief Executive Officer
/s/ Alan W. Rutherford 3/29/96
- --------------------------------------------
Alan W. Rutherford Director, Executive Vice President
and Chief Financial Officer
DIRECTORS
/s/ Henry E. Butwel 3/29/96 /s/ Felix G. Rohatyn 3/29/96
- -------------------------------------------- --------------------------------------------
Henry E. Butwel Felix G. Rohatyn
/s/ Charles F. Casey 3/29/96 /s/ Ernest-Antoine Seilliere 3/29/96
- -------------------------------------------- --------------------------------------------
Charles F. Casey Ernest-Antoine Seilliere
/s/ Francis X. Dalton 3/29/96 /s/ J. Douglass Scott 3/29/96
- -------------------------------------------- --------------------------------------------
Francis X. Dalton J. Douglass Scott
/s/ Chester C. Hilinski 3/29/96 /s/ Robert J. Siebert 3/29/96
- -------------------------------------------- --------------------------------------------
Chester C. Hilinski Robert J. Siebert
/s/ Richard L. Krzyzanowski 3/29/96 /s/ Harold A. Sorgenti 3/29/96
- -------------------------------------------- --------------------------------------------
Richard L. Krzyzanowski Harold A. Sorgenti
/s/ Josephine C. Mandeville 3/29/96 /s/ Guy de Wouters 3/29/96
- -------------------------------------------- --------------------------------------------
Josephine C. Mandeville Guy de Wouters
/s/ Michael J. McKenna 3/29/96
- --------------------------------------------
Michael J. McKenna
</TABLE>
-58-
Exhibit 4.a
Number [Form of Facing Page CROWN CORK & SEAL Shares
COMPANY, INC. Stock Certificate]
Common Stock CROWN CORK & SEAL COMPANY, Common Stock
(Par Value $5.00 Each) INC. (Par Value $5.00 Each)
CUSIP 228255 10 5
Incorporated Under the Laws of the Commonwealth of
Pennsylvania
See Reverse For Certain
Definitions
This is to Certify that is the owner of
FULL-PAID AND NON-ASSESSABLE SHARES, OF THE PAR VALUE OF $5.00 EACH,
OF COMMON STOCK
of Crown Cork & Seal Company, Inc. (hereinafter referred to as the
"Corporation") transferable on the books of the Corporation by the holder hereof
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed. The shares represented hereby are issued and shall be held
subject to all of the provisions of the Articles of Incorporation (pursuant to
which the Corporation is formed) as amended, (copies of which are on file with
the Transfer Agent), to all of which the holder by acceptance hereof assents.
This Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
Witness the seal of the Corporation and the signatures of its duly
authorized officers.
Dated:_______________
[FORM OF
_____________________________ CORPORATE ________________________________
Corporate Secretary SEAL] Chairman of the Board
COUNTERSIGNED AND REGISTERED
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
TRANSFER AGENT
BY AND REGISTRAR.
AUTHORIZED SIGNATURE
<PAGE>
CROWN CORK & SEAL COMPANY, INC.
The Corporation will furnish to any shareholder upon request and without
charge a full or summary statement of the designations, voting rights,
preferences, limitations and special rights of the shares of each class or
series authorized to be issued so far as they have been fixed and determined and
the authority of the board of directors to fix and determine the designations,
voting rights, preferences, limitations and special rights of the classes and
series of shares of the Corporation. Any such requests may be made to the
Corporation or the Transfer Agent.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM ___ as tenants in common UNIF GIFT MIN ACT--
TEN ENT ___ as tenants by the entireties ___________Custodian____________
JT TEN ___ as joint tenants with right (Cust) (Minor)
of survivorship and not
as tenants in common under Uniform Gifts
to Minors Act __________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
____________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint_______________________________________
________________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated,_______________________________________
SIGNATURE(S) GUARANTEED
By_________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION. (Banks,
Stockbrokers, Savings and Loan Associations
and Credit Unions) WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM PURSUANT TO S.E.C. RULE 17 Ad-15.
This certificate also evidences and entitles the holder hereof to certain Rights
as set forth in a Rights Agreement between Crown Cork & Seal Company, Inc. (the
"Company") and First Chicago Trust Company of New York as Rights Agent, dated as
of August 7, 1995 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
executive offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without charge
promptly following receipt of a written request therefor.
Under certain circumstances, Rights beneficially owned by Acquiring Persons or
Associates or Affiliates of Acquiring Persons (as such terms are defined in the
Rights Agreement) and any subsequent holder of such Rights may become null and
void.
Crown Cork & Seal Company, Inc.
Exhibit 11
Statement re Computation of Per Share Earnings
<TABLE>
<CAPTION>
Twelve Months Ended Three Months Ended
December 31, December 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
1 Net income (in millions) $74.9 $131.0 $6.1 $40.1
2 Weighted average number of shares
outstanding during period 90,233,518 89,086,999 90,614,169 89,261,0446
3 Earnings per share based upon
average outstanding shares (1/2) $0.83 $1.47 $0.07 $0.45
4 Net shares issuable upon exercise of
dilutive outstanding stock options
(treasury stock method) 438,721 815,974 269,295 713,169
5 Fully diluted shares (2+4) 90,672,239 89,902,973 90,883,464 89,974,215
6 Fully diluted earnings per share (1/5) $0.83 $1.46 $0.07 $0.45
</TABLE>
Crown Cork & Seal Company, Inc.
Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Computation of Earnings
<S> <C>
Pre-tax income $109.5
Adjustments to income:
Add: Distributed income from
less than 50% owned companies 5.4
Add: Interest incurred, net of amounts capitalized 148.6
Add: Amortization of interest previously
capitalized 1.9
Add: Amortization of debt issue costs
and discount or premium on indebtedness .8
------
Earnings $266.2
======
Computation of Fixed Charges
Interest incurred $154.4
Amortization of debt issue costs
and discount or premium on indebtedness .8
Portion of rental expenses
representative of interest expense -0-
------
Fixed Charges $155.2
======
* Ratio of Earnings to Fixed Charges 1.7x
<FN>
* During 1995, the Company continued the restructuring plan outlined in March
1994. The Company incurred a pre-tax charge of $102.7 million to reflect
the costs associated with the continued restructuring of its packaging
operations within the United States and Canada. If the charge had not
occurred, the ratio of earnings to fixed charges for the year ended
December 31, 1995 would have been 2.4x.
</FN>
</TABLE>
Crown Cork & Seal Company, Inc.
Exhibit 21 - Subsidiaries of Registrant
1 of 2
<TABLE>
<CAPTION>
PERCENT OF
VOTING
STATE OR COUNTRY OF SECURITIES
NAME INCORPORATION OR ORGANIZATION OWNED
<S> <C> <C>
Crown Cork & Seal Company, Inc. Pennsylvania Registrant
Crown Cork & Seal Company (PA) Inc. Pennsylvania 100%
CONSTAR International, Inc. Delaware 100%
Van Dorn Company Ohio 100%
Crown Financial Corporation Pennsylvania 100%
Nationwide Recyclers, Inc. Pennsylvania 100%
H-V Industries, Inc. Pennsylvania 100%
Volstro Manufacturing Company Pennsylvania 100%
Northern Engineering and Machine Corporation Pennsylvania 100%
Nationwide Coil Coating Company, Inc Ohio 100%
Midway Tool Engineering Company, Inc. Pennsylvania 100%
Wissota Enterprises, Inc. Wisconsin 100%
Foreign Manufacturers Finance Corporation Delaware 100%
Crown Cork & Seal Company, (Delaware) Inc. Delaware 100%
Crown Beverage Packaging, Inc. Delaware 100%
Automated Containers Corporation Florida 100%
Crown Precision Technologies, Inc. Florida 100%
Central States Can Company of Puerto Rico, Inc. Ohio 100%
Crown Swire Investment Company Limited Bermuda 51%
Crown Cork & Seal Foreign Sales Corporation Virgin Islands 100%
Aluplata S. A. Argentina 100%
Crown Cork de Argentina S.A. Argentina 100%
Crown Cork Company (Austria) GMBH Austria 100%
Crown Cork Company (Belgium) N.V. Belgium 99.82%
Crown Cork Coordination Ctr. N.V. Belgium 100%
Crown Brasil Holding Ltd. Brazil 100%
Crown Cork do Brasil S.A. (Rolhas Metalicas) Brazil 50%
Crown Cork & Seal Canada Inc. Canada 100%
Crown Cork de Chile, S.A.I. Chile 100%
Beijing Crown Can Co., Ltd. China 80%
Foshan Crown Can Company, Limited China 50%
Foshan Crown Easy-Opening Ends Co., Ltd. China 50%
Huizhou Crown Can Co., Ltd. China 99%
Shanghai Crown Packaging Co., Ltd. China 60%
Crown Litometal S.A. Colombia 100%
Crown Cork Centroamericana, S.A. Costa Rica 100%
Crown Cork de Puerto Rico, Inc. Delaware 100%
Crown Cork (Scandinavia) A/S Denmark 100%
Crown Cork del Ecuador, C.A. Ecuador 100%
Crown Cork Company (France) S.A. France 100%
CONSTAR International France, SARL France 100%
Crown Financial Corporation-France France 100%
Crown Bender (Germany) GMBH Germany 100%
Crown Cork Holding GMBH Germany 100%
Crown Cork de Guatemala, S.A. Guatemala 100%
Crown Can Hong Kong, Ltd Hong Kong 50.1%
</TABLE>
<PAGE>
Crown Cork & Seal Company, Inc.
Exhibit 21 - Subsidiaries of Registrant
2 of 2
<TABLE>
<CAPTION>
PERCENT OF
VOTING
STATE OR COUNTRY OF SECURITIES
NAME INCORPORATION OR ORGANIZATION OWNED
<S> <C> <C>
CONSTAR International Plastics KFT Hungary 66.5%
The Irish Crown Cork Ltd. Ireland 100%
Crown Cork Company (Italy) S.P.A. Italy 100%
The Crown Cork Company (East Africa) Ltd. Kenya 70%
Crown Cork de Mexico, S.A. Mexico 100%
Envases Generales Crown, S.A. DE C.V. Mexico 100%
Crown Cork Company (Morocco) S.A. Morocco 100%
Crown Cork Company (Holland) B.V. The Netherlands 100%
Crown Cork Mijdrecht B.V. The Netherlands 100%
Crown Cork Netherlands Holding B.V. The Netherlands 100%
CONSTAR International Holland B.V. The Netherlands 100%
Crown Cork del Peru, S.A. Peru 96.07%
Crown Cork & Seal (Portugal) S.A. Portugal 100%
Crown Investment Holdings (Pty) Limited South Africa 100%
Crown Cork Co., S. A. (Pty) Ltd. South Africa 50%
Crown Cork Company Iberica (Spain) S.A. Spain 100%
Crown Cork AG Switzerland 100%
Crown Obrist Switzerland 100%
COPAG Trading AG Switzerland 100%
Crown Cork & Seal (Thailand) Co., Ltd. Thailand 100%
CONSTAR Ambalaj Sanayi Ve Ticaret A.S. Turkey 55%
Emirates Can Company, Ltd. (Dubai, UAE) United Arab Emirates 50%
The Crown Cork Company Limited United Kingdom 100%
CONSTAR International U.K. Ltd. United Kingdom 100%
Copag Trading S.A. Uruguay 100%
Vietnam Crown Vinalimex Packaging Ltd. Vietnam 67%
Crown Cork & Seal (W.I.) Ltd. Trinidad & Tobago 100%
Crown Cork Company (Zambia) Limited Zambia 70%
Crown Cork Company (1958) (Pvt) Limited Zimbabwe 70%
<FN>
(1) The list includes only consolidated subsidiaries which are directly owned
or indirectly owned by the Registrant.
(2) In accordance with Regulation S-K, Item 601(b)(22)(ii), the names of
certain subsidiaries have been omitted from the foregoing list. The unnamed
subsidiaries, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary, as defined in Regulation S-X, Rule
1-02 (w).
</FN>
</TABLE>
Consent of Independent Accountants
Exhibit 23
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (No. 33-56965) and
Form S-4 (No. 33-64167) and in the Registration Statements on Form S-8 (Nos.
33-01893, 33-45900, 33-39529, 33-63732, 33-61240, 33-61238, 33-50369 and
33-52699) of Crown Cork & Seal Company, Inc. of our report dated March 5, 1996,
appearing on page 25 of this Form 10-K.
PRICE WATERHOUSE LLP
Philadelphia, PA
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ON PAGES 24 THROUGH 51
OF THE COMPANY'S 1995 ANNUAL REPORT TO STOCKHOLDERS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000025890
<NAME> CROWN CORK & SEAL COMPANY, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 68
<SECURITIES> 0
<RECEIVABLES> 661
<ALLOWANCES> 10
<INVENTORY> 812
<CURRENT-ASSETS> 1709
<PP&E> 3246
<DEPRECIATION> 1240
<TOTAL-ASSETS> 5052
<CURRENT-LIABILITIES> 1279
<BONDS> 1490
0
0
<COMMON> 592
<OTHER-SE> 869
<TOTAL-LIABILITY-AND-EQUITY> 5052
<SALES> 5054
<TOTAL-REVENUES> 5054
<CGS> 4311
<TOTAL-COSTS> 4670
<OTHER-EXPENSES> (1)
<LOSS-PROVISION> 5
<INTEREST-EXPENSE> 149
<INCOME-PRETAX> 109
<INCOME-TAX> 25
<INCOME-CONTINUING> 75
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75
<EPS-PRIMARY> .83
<EPS-DILUTED> .83
</TABLE>
