Free 7-day Trial
All Articles and Columns »

Crown Holdings Inc. Reports Operating Results (10-Q)

November 05, 2010 | About:

10qk

18 followers
Crown Holdings Inc. (CCK) filed Quarterly Report for the period ended 2010-09-30.

Crown Holdings Inc. has a market cap of $5.26 billion; its shares were traded at around $32.91 with a P/E ratio of 15.5 and P/S ratio of 0.6. Crown Holdings Inc. had an annual average earning growth of 3.9% over the past 5 years.CCK is in the portfolios of Jean-Marie Eveillard of First Eagle Investment Management, LLC, Mario Gabelli of GAMCO Investors, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Pioneer Investments, PRIMECAP Management.
This is the annual revenues and earnings per share of CCK over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of CCK.


Highlight of Business Operations:

During the nine months ended September 30, 2010, the Company recorded net tax charges of $143 on pre-tax income of $515 for an effective rate of 28%. The difference between pre-tax income at the statutory rate of 35% or $180, and the tax charge of $143 is primarily explained as follows: $42 of decrease from lower tax rates in non-U.S. jurisdictions, $10 of decrease due to valuation allowance adjustments and $7 of decrease for the nontaxable settlement benefit of a legal dispute unrelated to the Company’s ongoing operations, partially offset by $7 of increase to recognize the tax impact of the new U.S. health care legislation, $3 of increase due to foreign tax law changes, $7 of increase to the valuation allowance in Canada for the tax benefit of current year losses that are not expected to be realized and $5 of increase due to other net differences.

During the three months ended September 30, 2010, the Company recorded net tax charges of $47 on pre-tax income of $208 for an effective rate of 23%. The difference between pre-tax income at the U.S. statutory rate of 35% or $73, and the tax charge of $47 is primarily explained as follows: $18 of decrease from lower tax rates in non-U.S. jurisdictions and $10 of decrease due to valuation allowance adjustments partially offset by $2 of increase due to foreign tax law changes.

The third quarter of 2009 included net tax charges of $3 on pre-tax income of $144. The difference of $47 between pre-tax income at the U.S. statutory rate of 35% or $50, and the tax charge of $3, was primarily due to benefits of $21 from lower tax rates in certain non-U.S. jurisdictions and $37 for valuation allowance adjustments, partially offset by charges of $11 for withholding taxes, state taxes and other items. The valuation allowance adjustments of $37 included a credit of $40 for the release of the valuation allowances in France based on the Company’s estimate of future profits.

The first nine months of 2009 included net tax charges of $71 on pre-tax income of $418 for an effective rate of 17.0%. The difference of $75 between pre-tax income at the U.S. statutory rate of 35% or $146, and the tax charge of $71, was primarily due to benefits of $52 from lower tax rates in certain non-U.S. jurisdictions and $50 from valuation allowance adjustments, partially offset by charges of $27 for withholding taxes, state taxes and other items. The valuation allowance adjustments of $50 included a credit of $40 for the release of valuation allowances in France based on the Company’s estimate of future profits.

Lenders under the new senior secured revolving credit facilities include certain lenders under the existing senior secured revolving credit facilities who elected to convert their commitments under the existing senior secured revolving credit facilities into commitments under the new senior secured revolving credit facilities, as well as new lenders. To the extent that lenders under the existing senior secured revolving credit facilities did not participate as lenders under the new senior secured revolving credit facilities, the existing senior secured revolving credit facilities remain outstanding, subject to their maturity on May 15, 2011. The available capacity under the existing revolving facilities is now $194. Prior to maturity of the existing revolving facilities, borrowings under the existing revolving facilities and the new revolving facilities are limited to $1,200 in the aggregate. At September 30, 2010, the Company had borrowings of $323 under its revolving credit facilities, of which $25 related to the facility that matures on May 15, 2011 and was classified as short-term debt. At September 30, 2010, the Company’s available borrowing capacity under the facilities was $804, equal to the facilities’ aggregate capacity of $1,200 less $323 of borrowings and $73 of outstanding letters of credit.

The Company’s asbestos liability is calculated using a ten-year projection and the Company therefore expects to incur an annual charge to account for projected claims in the new tenth year. The inclusion of an additional year in the ten-year projection combined with the increased settlement costs per claim, which was partially offset by a projected decrease in the number of future claims led the Company to record a charge of $55 in 2009 compared to $25 in 2008 and $28 in 2007, in each case to increase the Company’s accrual for probable costs for claims through the following ten-year period. During 2009, 2008 and 2007, respectively, the Company made asbestos-related payments of $26, $25 and $26. If the recent trend of settling claims alleging serious disease (primarily mesothelioma and other malignancies) for higher amounts continues, average settlement costs per claim are likely to increase and, if not offset by a reduction in overall claims and settlements, the Company may record additional charges in the future. A 10% change in either the average cost per claim or the number of projected claims would increase or decrease the estimated liability at December 31, 2009 by $23 for the following ten-year period. A 10% increase or decrease in these two factors at the same time would increase or decrease the estimated liability at December 31, 2009 by $48 and $44, respectively, for the following ten-year period.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 1.4/5 (5 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Hide