(in millions, except per share, average settlement cost per asbestos claim, employee, shareholder and statistical data)

The following discussion summarizes the significant factors affecting the results of operations and financial condition of Crown Holdings, Inc. (the "Company") as of and during the three-year period ended December 31, 2012. This discussion should be read in conjunction with the consolidated financial statements included in this Annual Report.

BUSINESS STRATEGY AND TRENDS

The Company's strategy is to grow its businesses in targeted international growth markets, while improving operations and results in more mature markets through disciplined pricing, manufacturing and productivity improvements, cost control and careful capital allocation.

In recent years, the Company has expanded its beverage can operations in Asia, Brazil and Eastern Europe in response to increased unit volume demand driven by increased per capita incomes and consumption, combined with a shift in packaging mix to two-piece aluminum beverage cans from other packages.

Since the beginning of 2011, the Company has commercialized ten new production lines including six new plant startups in Asia, Brazil and Europe. When fully operational, these facilities are expected to have combined annual production capacity of 8.6 billion beverage cans to meet expected demand. In 2013, the Company expects to commercialize another 3.6 billion in annual beverage can production capabilities to meet existing demand in still growing markets in Cambodia, China, Malaysia, Thailand and Vietnam. There can be no assurance, however, that the Company will be able to implement its expansion plans according to this schedule or at all. The Company continuously monitors these markets and, where necessary, may adjust capital deployment based on economic developments and market-by-market conditions.

Beverage can unit sales volumes in the Company's mature markets have been stable to slightly declining in North America and slightly increasing in Europe. Global food and aerosol can sales unit volumes have been stable to declining in recent years primarily due to lower consumer spending. While the opportunity for organic volume growth in the Company's mature markets is not comparable to that in targeted international growth markets, the Company continues to generate strong returns on invested capital and significant cash flow from these businesses. The Company monitors capacity across all of its businesses and, where necessary, may take action such as closing a plant or reducing headcount to better manage its costs. Any or all of these actions may result in additional restructuring charges in the future which may be material.

As part of the Company's efforts to manage increased cost, it attempts to pass-through increases in the cost of aluminum and steel to its customers. There can be no assurance that the Company will be able to recover from its customers the impact of any such increased costs. Aluminum and steel prices can be subject to significant volatility and there does not appear to be a consistent and predictable trend in pricing.

The Company seeks to increase shareholder value by maximizing operating cash flows which can be reinvested in the business, used for acquisitions, used to repay debt or returned to shareholders through share repurchases or possible future dividends. In assessing the Company's performance, the key performance measure used is segment income, a non-GAAP measure defined by the Company as gross profit less selling and administrative expenses.

The foreign currency translation impacts referred to in the discussion below were primarily due to changes in the euro and pound sterling in the Company's European segments, the Canadian dollar in the Company's Americas segments and the Chinese renminbi and Thai baht in the Company's Asia Pacific segment.

NET SALES AND SEGMENT INCOME
                                                      2012        2011        2010
Net sales                                           $ 8,470     $ 8,644     $ 7,941
Beverage cans and ends as a percentage of net sales      55 %        52 %        51 %
Food cans and ends as a percentage of net sales          29 %        30 %        31 %

Year ended December 31, 2012 compared to 2011

Net sales decreased primarily due to $243 from the impact of foreign currency translation and $65 from lower selling prices including the pass through of lower material costs partially offset by $133 from sales unit volumes primarily due to organic growth and increased customer demand for beverage cans.

Year ended December 31, 2011 compared to 2010

Net sales increased primarily due to $432 from the pass-through of higher raw material costs, $84 from higher net global sales unit volumes due to organic growth and increased customer demand and $197 from the impact of foreign currency translation.

Discussion and analysis of net sales and segment income by segment follows.

Americas Beverage

The Americas Beverage segment manufactures aluminum beverage cans and ends and steel crowns, commonly referred to as "bottle caps", and supplies a variety of customers from its operations in the U.S., Brazil, Canada, Colombia and Mexico. The North American beverage can market is a mature market which has experienced slightly declining volumes in recent years. In Brazil, the Company's sales unit volumes have increased in recent years primarily due to market growth. In 2011, the Company completed construction of a new plant in Ponta Grossa, Brazil and commenced commercial operations of a second production line in its plant in Estancia, Brazil.

Net sales and segment income in the Americas Beverage segment are as follows:

                 2012       2011       2010
Net sales      $ 2,274    $ 2,273    $ 2,097
Segment income     311        302        275

Year ended December 31, 2012 compared to 2011

Net sales did not change significantly as $51 from increased sales unit volumes was offset by $42 from the pass-through of lower aluminum costs and $8 from the impact of foreign currency translation. Sales unit volume increases in Brazil offset volume declines in North America. The increase in Brazil is primarily the result of recent capacity additions in Ponta Grossa and Estancia. Sales unit volumes in Brazil are higher due to various factors, including its growing middle class and increasing disposable income and shift in packaging mix to two-piece aluminum beverage cans from other packages.

Segment income increased primarily due to $19 from higher sales unit volumes in Brazil as described above and lower operating costs, including $12 from reduced post-employment benefits in the U.S. partly due to post-retirement plan amendments, partially offset by lower selling prices primarily due to competitive pricing pressure.

Year ended December 31, 2011 compared to 2010

Net sales increased primarily due to $113 from the pass-through of higher raw material costs, primarily aluminum, $48 from increased sales unit volumes due to market growth in Brazil which offset lower sales unit volumes in the U.S. and $15 from the impact of foreign currency translation. The increase in sales unit volumes is primarily due to the start of commercial operations at the Company's plant in Ponta Grossa, Brazil in the first quarter of 2011 and the start of commercial operations on the second can line at the Company's plant in Estancia, Brazil in the second quarter of 2011.

Segment income increased primarily due to $19 from increased sales unit volumes and favorable product mix and $7 from lower operating costs including reduced post-employment benefits in the U.S. partly due to post-retirement plan amendments in 2011.

North America Food

The North America Food segment manufactures steel and aluminum food cans and ends and metal vacuum closures and supplies a variety of customers from its operations in the U.S. and Canada. The North American food can and closures market is a mature market which has experienced stable to slightly declining volumes in recent years.

                              Crown Holdings, Inc.


Net sales and segment income in the North America Food segment are as follows:
                2012     2011     2010
Net sales      $ 876    $ 889    $ 897
Segment income   146      146      120

Year ended December 31, 2012 compared to 2011

Net sales decreased primarily due to $25 from lower sales unit volumes partially offset by $13 from the pass-through of higher costs.

Segment income did not change as $9 from the impact of lower sales unit volumes and $5 from inventory holding gains in 2011 that did not recur in 2012 were offset by $8 from improved cost performance and $6 from reduced post-employment benefits in the U.S. partly due to post-retirement plan amendments in 2011.

Year ended December 31, 2011 compared to 2010

Net sales decreased primarily due to $54 from lower sales unit volumes as decreased market demand in the U.S. for food cans offset higher sales unit volumes in metal vacuum closures. The decrease was partially offset by $39 from the pass-through of higher raw material costs, primarily tinplate, and $7 from the impact of foreign currency translation.

Segment income increased primarily due to $19 from lower operating costs including the benefits from prior plant closures in Canada and lower postretirement benefits in the U.S. resulting from plan amendments in 2010 and 2011 and $5 from inventory holding gains from the sale of inventory on hand at the end of 2010.

European Beverage

The Company's European Beverage segment manufactures steel and aluminum beverage cans and ends and supplies a variety of customers from its operations throughout Eastern and Western Europe, the Middle East and North Africa. In recent years, the European beverage can market has been growing. In the second quarter of 2012, the Company commenced commercial operations of a new plant in Osmaniye, Turkey which is expected to add annualized capacity of approximately 700 million cans when fully operational.

Net sales and segment income in the European Beverage segment are as follows:

                 2012       2011       2010
Net sales      $ 1,653    $ 1,669    $ 1,524
Segment income     217        210        244

Year ended December 31, 2012 compared to 2011

Net sales decreased primarily due to $70 from the impact of foreign currency translation partially offset by $38 from increased sales unit volumes primarily in Greece, Saudi Arabia, Slovakia and Turkey which offset lower volumes in France and Spain and $16 from increased selling prices. The increase in Turkey is primarily the result of recent capacity additions.

Segment income increased primarily due to the higher sales unit volumes described above partially offset by $6 from the impact of foreign currency translation.

Year ended December 31, 2011 compared to 2010

Net sales increased primarily due to $58 from increased sales unit volumes primarily in Slovakia, $56 from the pass-through of higher raw material costs and $31 from the impact of foreign currency translation.

Segment income decreased primarily due to increased costs, including lower productivity, which were not fully offset by increases in selling prices and increased volume activity.

European Food

The European Food segment manufactures steel and aluminum food cans and ends, and metal vacuum closures and supplies a variety of customers from its operations throughout Europe and Africa. The European food can market is a mature market which has experienced stable to slightly declining volumes in recent years. In 2011 and 2012, the Company initiated restructuring actions in its European Food segment to reduce manufacturing capacity and headcount. The Company expects these actions to result in annual cost savings of approximately $16 when fully implemented in 2014. However, there can be no assurance that any such pre-tax savings will be realized.

Net sales and segment income in the European Food segment are as follows:

                 2012       2011       2010
Net sales      $ 1,793    $ 1,999    $ 1,841
Segment income     180        239        224

Year ended December 31, 2012 compared to 2011

Net sales decreased primarily due to lower sales unit volumes due in part to ongoing economic uncertainty in Europe and adverse weather conditions and $130 from the impact of foreign currency translation.

Segment income decreased primarily due to $41 split between unfavorable sale unit volume mix and the impact of competitive price compression, $5 from inventory holding gains in 2011 that did not recur in 2012 and $13 from the impact of foreign currency translation.

Year ended December 31, 2011 compared to 2010

Net sales increased primarily due to $142 from the pass-through of higher raw material costs, primarily tinplate, and $86 from the impact of foreign currency translation partially offset by $70 from lower sales unit volumes.

Segment income increased primarily due to $24 from lower operating costs, $5 from inventory holding gains from the sale of inventory on hand at the end of 2010 and $11 from the impact of foreign currency translation partially offset by $25 from lower sales unit volumes including the fourth quarter 2010 effects of customers' buying ahead of 2011 tinplate price increases.

Asia Pacific

The Company's Asia Pacific segment consists of beverage and non-beverage can operations, primarily food cans and specialty packaging. In recent years, the Company's beverage can businesses in Asia have experienced significant growth.

In the first quarter of 2012, the Company commenced commercial operations at its new beverage can plant in Putian, China. In the second quarter of 2012, the Company commenced commercial operations at its new beverage can plant in Ziyang, China, completed capacity expansion at its plant in Ho Chi Minh City, Vietnam and began commercial production of beverage can ends at its new plant in Heshan, China. In the third quarter of 2012, the Company began commercial production of beverage cans in Heshan, China.

In the fourth quarter of 2012, the Company acquired an aluminum beverage can and end production facility in Vietnam and also acquired a controlling interest in Superior Multi-Packaging Ltd. ("Superior"), a listed company on the Singapore Exchange. Superior primarily produces specialty packaging containers for consumer products companies at its facilities in China, Singapore and Vietnam. The acquisition of the controlling interest in Superior was made by an indirect 55% owned subsidiary of the Company.

In 2013, the Company has announced plans to complete new beverage can plants in Sihanoukville, Cambodia, Nong Khae, Thailand and Danang, Vietnam and to expand capacity at its existing plants in Malaysia and Putian, China. The additional capacity in Thailand and Malaysia is replacing capacity lost as a result of the 2011 flooding in Thailand. Once the projects are complete, the Company expects to have added 3.6 billion units of annualized capacity.

                2012     2011     2010
Net sales      $ 979    $ 861    $ 704
Segment income   137      125      112

Year ended December 31, 2012 compared to 2011

Net sales increased primarily due to $129 from increased beverage can sales unit volumes in Cambodia, China, Singapore and Vietnam and food can volumes in Thailand partially offset by $21 from the pass-through of lower aluminum costs and a competitive pricing environment in China. The increase in sales unit volumes is primarily due to increased regional demand driven by macroeconomic factors such as GDP growth and increased consumer spending.

Segment income increased primarily due to $29 from increased sales unit volumes partially offset by competitive pricing pressure in China and $8 of incremental start-up costs from recent capacity additions. During 2012, the Company recognized income of $18 from insurance proceeds covering incremental costs and lost profits associated with the 2011 flooding in Thailand.

Year ended December 31, 2011 compared to 2010

Net sales increased primarily due to $93 from increased beverage can sales unit volumes in Cambodia, China and Vietnam, $40 from the pass-through of higher raw material costs and $25 from the impact of foreign currency translation.

Segment income increased primarily due to $7 from increased beverage can sales unit volumes and $4 from the impact of foreign currency translation.

Non-reportable Segments

The Company's non-reportable segments include its aerosol can businesses in North America and Europe, its specialty packaging business in Europe and its tooling and equipment operations in the U.S. and United Kingdom. In recent years, the Company's specialty packaging business has experienced stable to slightly declining volumes and its aerosol can businesses have experienced slightly declining volumes. In 2011 and 2012, the Company initiated restructuring actions in its European Aerosol and European Specialty Packaging operations to reduce manufacturing capacity and headcount. The Company expects these actions to result in annual cost savings of approximately $30 when fully implemented in 2014. However, there can be no assurance that any such pre-tax savings will be realized.

Net sales and segment income in non-reportable segments are as follows:

                2012     2011     2010
Net sales      $ 895    $ 953    $ 878
Segment income    98      139      116

Year ended December 31, 2012 compared to 2011

Net sales decreased primarily due to $33 from lower sales unit volumes in the Company's European Specialty Packaging business reflecting ongoing economic uncertainty in Europe, $22 from lower sales in the Company's North American and European aerosol businesses primarily due to lower consumer spending partly due to ongoing economic uncertainty in Europe and $36 from the impact of foreign currency translation, partially offset by $35 from increased beverage equipment sales to can manufacturers.

Segment income decreased primarily due to $17 from lower sales unit volumes in the Company's European Specialty Packaging business, $20 from lower sales in the Company's North American and European aerosol businesses and $7 from inventory holding gains in 2011 that did not recur in 2012

Year ended December 31, 2011 compared to 2010

Net sales increased primarily due to $41 from the pass-through of higher raw material costs in the Company's European specialty packaging business and its North American and European aerosol businesses, $30 from increased beverage equipment sales to can manufacturers and $33 from the impact of foreign currency translation, partially offset by $13 from lower sales unit volumes in the Company's North American and European aerosol businesses, $8 from lower sales unit volumes in the Company's European specialty packaging business and $10 from the April 2010 sale of the Company's plastic closures business in Brazil.

Segment income increased primarily due to $8 from increased beverage equipment sales, $7 from inventory holding gains, $4 from lower operating costs in the Company's European specialty packaging business and $3 from the impact of foreign currency translation.

                              Crown Holdings, Inc.


Corporate and Unallocated Expense
                                   2012     2011     2010
Corporate and unallocated expense $ 194    $ 208    $ 201

Corporate and unallocated costs decreased in 2012 compared to 2011 primarily due to lower professional fees, lower pension costs and lower insurance costs primarily due to a fire at a Company warehouse in 2011 partially offset by $6 from legal matters.

Corporate and unallocated costs increased in 2011 compared to 2010 primarily due to a benefit of $20 in 2010 from the settlement of a legal dispute unrelated to the Company's ongoing operations that did not recur in 2011 and increased insurance costs primarily due to a fire at a Company warehouse in 2011 partially offset by $15 of lower pension costs.

COST OF PRODUCTS SOLD (EXCLUDING DEPRECIATION AND AMORTIZATION)

Cost of products sold (excluding depreciation and amortization) decreased from $7,120 in 2011 to $7,013 in 2012 primarily due to $207 from the impact of foreign currency translation partially offset by the impact of increased global beverage can sales unit volumes.

Cost of products sold, excluding depreciation and amortization, increased from $6,519 in 2010 to $7,120 in 2011, primarily due to increased global sales unit volumes, increased raw material costs and $166 from the impact of foreign currency translation.

DEPRECIATION AND AMORTIZATION

For the year ended December 31, 2012 compared to 2011, depreciation and amortization increased from $176 to $180 primarily due to the impact of recent capacity expansion which offset the impact of foreign currency translation. Depreciation and amortization increased from $172 in 2010 to $176 in 2011 primarily due to $4 from the impact of foreign currency translation.

The Company, with the assistance of a third party appraiser, recently completed an evaluation of the estimated useful lives of its two-piece and three-piece can-making equipment. As a result of the evaluation, effective January 1, 2013, the company increased the estimated useful lives of its can-making equipment to 18 years. The Company believes that the revised useful lives better reflect the actual useful lives of its can-making equipment. The Company currently expects 2013 depreciation and amortization to be approximately $150.

SELLING AND ADMINISTRATIVE EXPENSE

Selling and administrative expense decreased from $395 in 2011 to $382 in 2012 primarily due $11 from the impact of foreign currency translation. Selling and administrative expense increased from $360 in 2010 to $395 in 2011 primarily due to $20 of benefit from the settlement of a legal dispute unrelated to the Company's ongoing operations in 2010 that did not recur in 2011 and $10 from the impact of foreign currency translation.

PROVISION FOR ASBESTOS

Crown Cork & Seal Company, Inc. is one of many defendants in a substantial number of lawsuits filed throughout the U.S. by persons alleging bodily injury as a result of exposure to asbestos. During 2012, 2011 and 2010 the Company recorded charges of $35, $28 and $46, respectively, to increase its accrual for asbestos-related costs and made asbestos-related payments of $28, $28 and $27, respectively. The Company expects 2013 payments to be generally consistent with prior years' levels. See Note K to the consolidated financial statements for additional information regarding the provision for asbestos-related costs. Also see the Critical Accounting Policies section of this "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of the Company's policies with respect to asbestos liabilities.

                              Crown Holdings, Inc.


PROVISION FOR RESTRUCTURING

The Company recorded restructuring charges as follows.
                                2012     2011     2010
North America Food                 3        3       28
European Food                     15        9        -
Asia Pacific                       4        -        -
Other European operations         18       45        -
European Division Headquarters     3       20       14
Corporate                          5        -        -
                               $  48    $  77    $  42

See Note M to the consolidated financial statements for additional information on these charges. See also the discussion of net sales and segment income above for information about the expected savings that may result from the recent restructuring actions in the Company's European Food and other European operations.
LOSS FROM EARLY EXTINGUISHMENTS OF DEBT
During 2011, the Company recorded a charge of $32 in connection with the repayment of its $600 outstanding 7.75% senior secured notes due 2015 and its €83 ($121) 6.25% first priority senior secured notes due 2011. During 2010, the Company recorded a charge of $16 in connection with the repayment of €76 ($101) of its 6.25% first priority senior secured notes due 2011 and its $200 outstanding 7.625% senior notes due 2013.
In January 2013, the Company issued $1,000 of 4.5% senior unsecured notes due 2023 and used the proceeds to repay $500 of indebtedness under its senior secured term loan facilities, to redeem all of its outstanding $400 7.625% senior secured notes due 2017, to pay related fees, premiums and expenses, and for general corporate purposes. In connection with the transactions, the Company expects to incur a charge of approximately $32 in the first quarter of 2013 for the related redemption premiums and write-off of deferred financing costs.
INTEREST EXPENSE
Interest expense decreased from $232 in 2011 to $226 primarily due to $4 from the impact of foreign currency translation.
Interest expense increased from $203 in 2010 to $232 in 2011 primarily due to $23 from higher average debt outstanding and $4 from the impact of foreign currency translation.

TAXES ON INCOME

The Company's effective income tax rate was as follows:
                                              2012      2011      2010
Income before income taxes                  $ 636      $ 587     $ 614
Provision for / (benefit from) income taxes   (17 )      194       165
Effective income tax rate                    (2.7 )%    33.0 %    26.9 %

The effective income tax rate in 2012 includes a benefit of $175, net of valuation allowance, related to the recognition of previously unrecognized U.S. foreign tax credits as discussed further in Note W to the consolidated financial statements. In addition, the effective tax rate includes a benefit of $10 from the receipt of non-taxable insurance proceeds related to the 2011 flooding in Thailand and the benefit of certain income tax incentives in Brazil as discussed further in Note W .

The effective income tax rate in 2011 was higher than in 2010 primarily due to a net tax charge of $25 in 2011 in connection with the relocation of the Company's European headquarters and management to Switzerland and a tax benefit of $7 in 2010, that did not recur in 2011, from the nontaxable settlement of a legal dispute unrelated to the Company's operations.

See Note W to the consolidated financial statements for additional information regarding income taxes. Also see the Critical Accounting Policies section of this "Management's Discussion and Analysis of Financial Condition and . . .