SEC Comment Letter for CROWN HOLDINGS, INC. (CCK) (CIK 0001219601) (CCK) — Apr 24, 2012
CROWN HOLDINGS, INC. (CCK) (CIK 0001219601)
Date: April 24, 2012 · CIK: 0001219601 · Accession: 0000000000-12-021006
AI Filing Summary & Sentiment
Reasoning
Letter
April 24, 2012 Via E-mail Mr. Timothy J. Donahue Chief Financial Officer Crown Holdings, Inc. One Crown Way Philadelphia, PA 19154 Re: Crown Holdings, Inc. Form 10-K Filed February 29, 2012 File No. 0-50189
Dear Mr. Donahue: We have reviewed your response dated Apr il 13, 2012 and have the following comments. In some of our comments, we may ask you to pr ovide us with information so we may better understand your disclosure. Please respond to this letter within te n business days by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circum stances, please tell us w hy in your response. After reviewing the information you provide in response to these comments, we may have additional comments.
Form 10-K for the year ended December 31, 2011
Provision for Restructuring, page 36
1. We have read your response to comment 3. Pl ease confirm you will revise future filings to address the fourth quarter timing of the restructuring charges recognized during 2011. Also, we note that the September 30, 2011 Fo rm 10-Q, filed November 7, 2011, provides no informative disclosures about other possibl e, material charges that may be warranted for the remainder of the year within your Other European oper ations. In fact, we note the following disclosures therein: Page 13 states that “[d]uring the fi rst nine months of 2011”, the Company initiated restructuring for “headcount reduction of approximately 32 and is expected to be completed in 2011,” which costs of $4 million “are expected to be the total costs relate d to the restructuring.” Based on the foregoing, a reader could reasonably infer that you have affirmed that over the last ten months, you have
Mr. Timothy J. Donahue Crown Holdings, Inc. April 24, 2012 Page 2
undertaken a restructuring action that will result in only $4 million for the entire year. Page 50 states that both net sales and segment income for European Specialty Packaging, the affected segment, increased for the nine months ended September 30, 2011. Based on the foregoing, a reader co uld reasonably infer that since there is no discussion about mate rial adverse operating re sults to the impacted operations, restructuring activity aimed to reduce headcount and manufacturing capacity would be unexpected. Page 52 states only that the expectation for such restructuring provisions to the affected segment is annual tax savings of $3 million.
Therefore, tell us and identify in future filings the adverse operating results of the impacted businesses that would sufficiently explain why the restructuring plans were undertaken and quantify the extent to which manufacturing capacity is being reduced and the number of personnel you expect to terminate. Lastly, please tell us the timeline of your annual budget process in the fourth quart er of 2011, including th e exact dates when: i) the process informally and formally bega n; ii) you informally and formally approved the plan to undertake additional restructur ing activities to reduce manufacturing capacity throughout Western Europe; iii) you informa lly and formally approved the plan to undertake additional restructuring activitie s to reduce headcount throughout Western Europe, if different than that related to th e reduction of manufact uring capacity; and iv) you were able to reasonably quantify the cost a ssociated with such plans. Given the $41 million charge accounts for 105% of fourth qua rter net income and 10% of annual net income, it is important that a reader is pr ovided with transparent and timely information, in some cases even before material charge s are recorded. Item 303 of Regulation S-K requires MD&A disclosure of material uncer tainties unless management has concluded that the uncertainty is not reas onably likely to materially impa ct future operating results. Section 216 of the Financial Reporting Codifi cation states that “r egistrants have an obligation to forewarn public investors of the deteriorating co nditions which, unless reversed, may result in a subsequent write-o ff. This includes an obligation to provide information regarding the magnitude of exposure to loss.” You may contact Jenn Do at (202) 551-3743, or me at (202) 551-3355 if you have questions regarding comments on the financia l statements and related matters.
Sincerely,
/s/ Terence O’Brien
Terence O’Brien Branch Chief
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April 24, 2012 Via E-mail Mr. Timothy J. Donahue Chief Financial Officer Crown Holdings, Inc. One Crown Way Philadelphia, PA 19154 Re: Crown Holdings, Inc. Form 10-K Filed February 29, 2012 File No. 0-50189 Dear Mr. Donahue: We have reviewed your response dated Apr il 13, 2012 and have the following comments. In some of our comments, we may ask you to pr ovide us with information so we may better understand your disclosure. Please respond to this letter within te n business days by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circum stances, please tell us w hy in your response. After reviewing the information you provide in response to these comments, we may have additional comments. Form 10-K for the year ended December 31, 2011 Provision for Restructuring, page 36 1. We have read your response to comment 3. Pl ease confirm you will revise future filings to address the fourth quarter timing of the restructuring charges recognized during 2011. Also, we note that the September 30, 2011 Fo rm 10-Q, filed November 7, 2011, provides no informative disclosures about other possibl e, material charges that may be warranted for the remainder of the year within your Other European oper ations. In fact, we note the following disclosures therein: Page 13 states that “[d]uring the fi rst nine months of 2011”, the Company initiated restructuring for “headcount reduction of approximately 32 and is expected to be completed in 2011,” which costs of $4 million “are expected to be the total costs relate d to the restructuring.” Based on the foregoing, a reader could reasonably infer that you have affirmed that over the last ten months, you have Mr. Timothy J. Donahue Crown Holdings, Inc. April 24, 2012 Page 2 undertaken a restructuring action that will result in only $4 million for the entire year. Page 50 states that both net sales and segment income for European Specialty Packaging, the affected segment, increased for the nine months ended September 30, 2011. Based on the foregoing, a reader co uld reasonably infer that since there is no discussion about mate rial adverse operating re sults to the impacted operations, restructuring activity aimed to reduce headcount and manufacturing capacity would be unexpected. Page 52 states only that the expectation for such restructuring provisions to the affected segment is annual tax savings of $3 million. Therefore, tell us and identify in future filings the adverse operating results of the impacted businesses that would sufficiently explain why the restructuring plans were undertaken and quantify the extent to which manufacturing capacity is being reduced and the number of personnel you expect to terminate. Lastly, please tell us the timeline of your annual budget process in the fourth quart er of 2011, including th e exact dates when: i) the process informally and formally bega n; ii) you informally and formally approved the plan to undertake additional restructur ing activities to reduce manufacturing capacity throughout Western Europe; iii) you informa lly and formally approved the plan to undertake additional restructuring activitie s to reduce headcount throughout Western Europe, if different than that related to th e reduction of manufact uring capacity; and iv) you were able to reasonably quantify the cost a ssociated with such plans. Given the $41 million charge accounts for 105% of fourth qua rter net income and 10% of annual net income, it is important that a reader is pr ovided with transparent and timely information, in some cases even before material charge s are recorded. Item 303 of Regulation S-K requires MD&A disclosure of material uncer tainties unless management has concluded that the uncertainty is not reas onably likely to materially impa ct future operating results. Section 216 of the Financial Reporting Codifi cation states that “r egistrants have an obligation to forewarn public investors of the deteriorating co nditions which, unless reversed, may result in a subsequent write-o ff. This includes an obligation to provide information regarding the magnitude of exposure to loss.” You may contact Jenn Do at (202) 551-3743, or me at (202) 551-3355 if you have questions regarding comments on the financia l statements and related matters. Sincerely, /s/ Terence O’Brien Terence O’Brien Branch Chief