Crown Holdings, Inc. TAXES ON INCOME The Company's effective income tax rates were as follows: Income before income taxes Provision for income taxes Effective income tax rate
$
2019 786 166 21.1%
$
2018 740 216 29.2%
$
2017 829 401 48.4%
The lower effective tax rate in 2019 was primarily due to a tax benefit of $36 from the release of a valuation allowance against the Company's net deferred tax assets in Luxembourg and a tax benefit of $9 arising from tax law changes in India, partially offset by a charge of $15 to settle a tax contingency arising from a transaction that occurred prior to the acquisition of Signode. The effective rate in 2018 included $24 related to taxes on the distributions of foreign earnings, which were previously asserted to be indefinitely reinvested. The higher effective tax rate in 2017 was primarily due to a net charge of $177 to recognize the impact of U.S. federal tax reform which reduced the U.S. corporate tax rate from 35% to 21%, imposed a limitation on the tax deduction for interest expense, net of interest income, to 30% of a U.S. corporation's adjusted taxable income and also changed certain provisions related to the taxation of non-U.S. subsidiary earnings. For additional information regarding income taxes, see Note S to the consolidated financial statements and 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 valuation allowances. NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS Net income attributable to noncontrolling interest increased from $89 in 2018 to $115 in 2019 primarily due to higher earnings in the Company's beverage can operations in Brazil, including the impact of a favorable court ruling related to the recovery of indirect taxes paid in prior years. Net income attributable to noncontrolling interest decreased from $105 in 2017 to $89 in 2018 primarily due to lower earnings in the Company's beverage can operations in Brazil and the Middle East. LIQUIDITY AND CAPITAL RESOURCES OPERATING ACTIVITIES Cash provided by operating activities increased from $571 in 2018 to $1,163 in 2019 primarily due to higher income from operations and changes in working capital partially offset by cash used for interest payments in 2019 related to outstanding borrowings incurred to finance the Signode acquisition. Receivables decreased from $1,602 at December 31, 2018 to $1,528 at December 31, 2019 primarily due to increased securitization and factoring and lower aluminum costs, partially offset by higher sales unit volumes. Days sales outstanding for trade receivables, excluding the impact of unbilled receivables, decreased from 41 at December 31, 2018 to 36 at December 31, 2019, primarily related to increased securitization and factoring. Inventories decreased from $1,690 at December 31, 2018 to $1,626 at December 31, 2019 primarily due to lower inventory levels in the Transit Packaging segment. Inventory turnover was 64 days at December 31, 2018 compared to 63 days at December 31, 2019. The food can business is seasonal with the first quarter tending to be the slowest period as the autumn packaging period in the Northern Hemisphere has ended and new crops are not yet planted. The industry enters its busiest period in the third quarter when the majority of fruits and vegetables in the Northern Hemisphere are harvested. Due to this seasonality, inventory levels increase in the first half of the year to meet peak demand in the second and third quarters. The beverage can business is also seasonal with inventory levels generally increasing in the first half of the year to meet peak demand in the summer months in the Northern Hemisphere.
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