What changed in this filing

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Item 1. Financial Statements

2020-08-07 compared with 2020-05-08 · 200 added, 116 removed, 380 unchanged (45% of the section changed)

3 unchanged sentences

(Dollars in thousands)

March 31, 2020 March 31, 2019 Dec.

June 30, 2020 June 30, 2019 Dec.

(unaudited) (unaudited)

31 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three months ended March 31, 2020 and 2019

For the three and six months ended June 30, 2020 and 2019

(Dollars and shares in thousands, except per share amounts)

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Net sales $ 1,176,470 $ 1,093,163 $ 2,206,854 $ 2,120,294

22 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three months ended March 31, 2020 and 2019

For the three and six months ended June 30, 2020 and 2019

(Dollars in thousands)

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Net income $ 78,172 $ 30,955 $ 135,772 $ 77,696

3 unchanged sentences

Foreign currency translation ( 1,576 ) 6,045 ( 38,015 ) 803

Other comprehensive loss ( 37,955 ) ( 3,623 )

Other comprehensive income (loss) 337 7,058 ( 37,618 ) 3,435

Comprehensive income $ 78,509 $ 38,013 $ 98,154 $ 81,131

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2020 and 2019

For the six months ended June 30, 2020 and 2019

(Dollars in thousands)

7 unchanged sentences

Loss on early extinguishment of debt 1,481 —

Other changes that provided (used) cash, net of effects from acquisition:

Other changes that provided (used) cash, net of effects from acquisitions:

Trade accounts receivable, net ( 179,949 ) ( 155,198 )

5 unchanged sentences

Cash flows provided by (used in) investing activities:

Purchase of business, net of cash acquired ( 39,828 ) —

Purchase of businesses, net of cash acquired ( 941,102 ) —

Capital expenditures ( 106,436 ) ( 116,165 )

9 unchanged sentences

Debt issuance costs ( 10,265 ) —

Repurchase of common stock under stock plan ( 12,664 ) ( 15,046 )

Repurchase of common stock ( 13,155 ) ( 15,252 )

Net cash provided by financing activities 1,100,291 282,493

1 unchanged sentence

Cash and cash equivalents:

Net increase 411,022 68,581

Net (decrease) increase ( 12,742 ) 38,522

Balance at beginning of year 203,824 72,819

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the three months ended March 31, 2020 and 2019

For the three and six months ended June 30, 2020 and 2019

(Dollars and shares in thousands, except per share amounts)

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Common stock - shares outstanding

2 unchanged sentences

Net issuance of treasury stock for vested restricted stock units

52 48 365 746

Repurchases of common stock

— — ( 259 ) —

Balance at end of period

7 unchanged sentences

Stock compensation expense

4,573 4,335 9,056 8,244

Net issuance of treasury stock for vested restricted stock units

9 unchanged sentences

Adoption of accounting standards updates related to credit losses in 2020 and leases in 2019 — — ( 665 ) ( 593 )

( 665 ) ( 593 )

Balance at end of period

13 unchanged sentences

Repurchases of common stock

— — ( 6,934 ) —

Balance at end of period

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Significant Accounting Policies

15 unchanged sentences

The following tables present our revenues disaggregated by reportable business segment and geography as they best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Revenues by business segment for the three months ended March 31 were as follows:

Revenues by business segment were as follows:

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

(Dollars in thousands)

3 unchanged sentences

$ 1,176,470 $ 1,093,163 $ 2,206,854 $ 2,120,294

Revenues by geography for the three months ended March 31 were as follows:

Revenues by geography were as follows:

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

(Dollars in thousands)

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Our contracts generally include standard commercial payment terms generally acceptable in each region.

3 unchanged sentences

Contract assets are the result of the timing of revenue recognition, billings and cash collections.

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $ 68.9 million, $ 75.3 million, and $ 71.1 million as of March 31, 2020 and 2019 and December 31, 2019, respectively.

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $ 80.4 million, $ 77.2 million, and $ 71.1 million as of June 30, 2020 and 2019 and December 31, 2019, respectively.

Unbilled receivables are included in trade accounts receivable, net on our Condensed Consolidated Balance Sheet.

Cobra Plastics Acquisition

On February 4, 2020 we acquired Cobra Plastics, Inc., or Cobra Plastics, a manufacturer and seller of injection molded plastic closures for a wide variety of consumer products, with a particular focus on the aerosol overcap market.

2 unchanged sentences

Cobra Plastics' results of operations were included in our closures business since the acquisition date and were not significant since such date.

Albéa Dispensing Business Acquisition

On June 1, 2020, we acquired the dispensing operations of the Albéa Group, or the Albéa Dispensing Business, a leading global supplier of highly engineered pumps, sprayers and foam dispensing solutions to major branded consumer goods product companies in the beauty and personal care markets.

It operates a global network of ten manufacturing facilities across North America, Europe, South America and Asia.

This acquisition is strategically important for us, as it expands our closures franchise and, in particular, our dispensing systems operations.

The Albéa Dispensing Business is included in our closures business as of the acquisition date.

We acquired the Albéa Dispensing Business for a purchase price in cash of $ 901.3 million, net of cash acquired.

The purchase price is subject to adjustment for working capital, other current assets and current liabilities and net indebtedness.

We incurred acquisition related costs for the Albéa Dispensing Business totaling $ 16.1 million and $ 18.3 million for the three and six months ended June 30, 2020, respectively, which are included in selling, general and administrative expenses in our Condensed Consolidated Statements of Income.

We funded the purchase price for this acquisition with term and revolving loan borrowings under the Credit Agreement, including a delayed draw term loan of $ 900 million.

See Note 8 for further information.

The initial purchase price has been allocated to assets acquired and liabilities assumed based on estimated fair values at the date of acquisition using valuation techniques including the income, cost and market approaches, primarily using Level 3 inputs (as defined in Note 9).

The purchase price allocation is preliminary and subject to change pending a final valuation of the assets and liabilities, including property, plant and equipment and intangible assets, and the related tax impact of any adjustments to such valuations.

In connection with this acquisition, we recorded a charge of $ 3.5 million related to the write-up of acquired inventory of the Albéa Dispensing Business as a result of purchase accounting.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

The allocated fair value of assets acquired and liabilities assumed are summarized as follows (in thousands)

Trade accounts receivable $ 48,177

Inventories 41,178

Property, plant and equipment 167,316

Other intangible assets 287,000

Other assets 42,593

Trade accounts payable and accrued liabilities ( 66,506 )

Deferred income tax liabilities ( 90,791 )

Debt and other liabilities ( 36,587 )

Total identifiable net assets 392,380

Goodwill 508,894

Cash paid at closing, net of cash acquired $ 901,274

Goodwill of $ 508.9 million consists largely of our increased capacity to serve our global customers and achieve operational synergies and has been assigned to our closures segment.

A majority of the goodwill is not expected to be deductible for income tax purposes.

Other intangible assets consist of customer relationships of $ 260.0 million with an estimated remaining life of 24 years and technology know-how of $ 27.0 million with an estimated remaining life of 8 years.

Acquired property, plant and equipment are being depreciated on a straight-line basis with estimated remaining lives of up to 35 years.

Our consolidated results of operations for the three and six months ended June 30, 2020 included the results for the Albéa Dispensing Business since the acquisition date.

Net sales from the Albéa Dispensing Business operations of $ 29.9 million were included in our Condensed Consolidated Statements of Income for the three and six months ended June 30, 2020.

Rationalization Charges

1 unchanged sentence

We use a disciplined approach to identify opportunities that generate attractive cash returns.

Rationalization charges by business segment for the three months ended March 31 were as follows:

Rationalization charges by business segment were as follows:

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

(Dollars in thousands)

3 unchanged sentences

$ 1,942 $ 39,317 $ 4,741 $ 45,400

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Activity in reserves for our rationalization plans were as follows:

6 unchanged sentences

Utilized and currency translation ( 3,887 ) ( 1,752 ) ( 520 ) ( 6,159 )

Balance at March 31, 2020 $ 42,055 $ 809 $ — $ 42,864

Rationalization reserves as of March 31, 2020 were recorded in our Condensed Consolidated Balance Sheets as accrued liabilities of $ 4.7 million and other liabilities of $ 38.2 million.

Exclusive of the footprint optimization plan for our metal container business and our resulting withdrawal from the Central States, Southeast and Southwest Areas Pension Plan, or the Central States Pension Plan, announced in 2019, remaining expenses for our rationalization plans of $ 1.9 million are expected primarily through 2020 and remaining cash expenditures for our rationalization plans of $ 3.6 million are expected through 2023.

Balance at June 30, 2020 $ 41,643 $ 652 $ — $ 42,295

Rationalization reserves as of June 30, 2020 were recorded in our Condensed Consolidated Balance Sheets as accrued liabilities of $ 4.5 million and other liabilities of $ 37.8 million.

Exclusive of the footprint optimization plan for our metal container business and our resulting withdrawal from the Central States, Southeast and Southwest Areas Pension Plan, or the Central States Pension Plan, announced in 2019, remaining expenses and cash expenditures for our rationalization plans are expected to be $ 1.9 million and $ 3.4 million, respectively.

Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $ 1.1 million per year and be recognized annually for the next twenty years, and remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $ 3.1 million annually for the next twenty years, beginning in 2020.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

Accumulated Other Comprehensive Loss

14 unchanged sentences

Other comprehensive loss 2,748 ( 2,351 ) ( 38,015 ) ( 37,618 )

Balance at March 31, 2020 $ ( 138,163 ) $ ( 5,637 ) $ ( 153,897 ) $ ( 297,697 )

The amounts reclassified to earnings from the unrecognized net defined benefit plan costs component of accumulated other comprehensive loss for the three months ended March 31, 2020, were net (losses) of $( 2.4 ) million, excluding an income tax benefit of $ 0.6 million.

These net (losses) consisted of amortization of net actuarial (losses) of $( 2.8 ) million and amortization of net prior service credit of $ 0.4 million, respectively.

Balance at June 30, 2020 $ ( 136,354 ) $ ( 5,533 ) $ ( 155,473 ) $ ( 297,360 )

The amounts reclassified to earnings from the unrecognized net defined benefit plan costs component of accumulated other comprehensive loss for the three and six months ended June 30, 2020, were net (losses) of $( 2.5 ) million and $( 4.9 ) million, respectively, excluding income tax benefits of $ 0.7 million and $ 1.3 million, respectively.

For the three and six months ended June 30, 2020 these net (losses) consisted of amortization of net actuarial (losses) of $( 2.9 ) million and $( 5.7 ) million and amortization of net prior service credit of $ 0.4 million and $ 0.8 million, respectively.

Amortization of net actuarial losses and net prior service credit was recorded in other pension and postretirement income in our Condensed Consolidated Statements of Income.

See Note 11 for further information.

The amounts reclassified to earnings from the change in fair value of derivatives component of accumulated other comprehensive loss for the three months ended March 31, 2020 were not significant.

Other comprehensive loss before reclassifications related to foreign currency translation for the three months ended March 31, 2020, consisted of (i) foreign currency (losses) related to translation of quarter end financial statements of foreign subsidiaries utilizing a functional currency other than the U.S.

dollar of $( 32.9 ) million, (ii) foreign currency (losses) related to intra-entity foreign currency transactions that are of a long-term investment nature of $( 3.0 ) million, and (iii) foreign currency (losses) related to our net investment hedges of $( 0.7 ) million, excluding an income tax benefit of $ 0.2 million.

See Note 8 for further discussion.

The amounts reclassified to earnings from the change in fair value of derivatives component of accumulated other comprehensive loss for the three and six months ended June 30, 2020 were not significant.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Other comprehensive loss before reclassifications related to foreign currency translation for the three and six months ended June 30, 2020, consisted of (i) foreign currency gains (losses) related to translation of quarter end financial statements of foreign subsidiaries utilizing a functional currency other than the U.S.

dollar of $ 10.2 million and $( 22.7 ) million, respectively, (ii) foreign currency gains (losses) related to intra-entity foreign currency transactions that are of a long-term investment nature of $ 0.1 million and $( 2.9 ) million, respectively, and (iii) foreign currency (losses) related to our net investment hedges of $( 15.6 ) million and $( 16.2 ) million, respectively, excluding income tax benefits of $ 3.6 million and $ 3.8 million, respectively.

See Note 9 for further discussion.

Inventories consisted of the following:

March 31, 2020 March 31, 2019 Dec.

June 30, 2020 June 30, 2019 Dec.

(Dollars in thousands)

7 unchanged sentences

$ 821,448 $ 822,584 $ 633,005

Goodwill and Other Intangibles

Changes in the carrying amount of goodwill were as follows:

Containers Closures Plastic

Containers Total

(Dollars in thousands)

Balance at December 31, 2019 $ 113,463 $ 801,776 $ 226,984 $ 1,142,223

Acquisitions — 527,270 — 527,270

Currency translation ( 84 ) 35 ( 830 ) ( 879 )

Balance at June 30, 2020 $ 113,379 $ 1,329,081 $ 226,154 $ 1,668,614

In connection with our acquisitions of Cobra Plastics and the Albéa Dispensing Business as discussed in Note 3, we recognized goodwill of $ 527.3 million.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

The components of other intangible assets, net were as follows:

June 30, 2020 December 31, 2019

Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization

(Dollars in thousands)

Definite-lived intangibles:

Customer relationships $ 688,391 $ ( 126,737 ) $ 422,042 $ ( 116,575 )

Other 68,075 ( 26,713 ) 39,447 ( 22,439 )

756,466 ( 153,450 ) 461,489 ( 139,014 )

Indefinite-lived intangibles:

Trade names 32,140 — 32,140 —

$ 788,606 $ ( 153,450 ) $ 493,629 $ ( 139,014 )

In connection with our acquisitions of Cobra Plastics and the Albéa Dispensing Business as discussed in Note 3, we recognized intangible assets for customer relationships of $ 271.5 million and technology know-how of $ 27.0 million.

Amortization expense was $ 8.1 million and $ 14.9 million for the three and six months ended June 30, 2020, respectively, and $ 6.8 million and $ 13.6 million for the three and six months ended June 30, 2019, respectively.

Amortization expense is expected to be $ 35.8 million, $ 40.4 million, $ 39.3 million, $ 39.2 million and $ 38.3 million for the years ended December 31, 2020 through 2024, respectively.

Long-Term Debt

Long-term debt consisted of the following:

March 31, 2020 March 31, 2019 Dec.

June 30, 2020 June 30, 2019 Dec.

(Dollars in thousands)

17 unchanged sentences

$ 3,106,425 $ 1,824,533 $ 2,214,608

At March 31, 2020, the current portion of long-term debt consisted of $ 827.0 million of bank revolving loans under the Credit Agreement, $ 26.0 million of other foreign bank revolving and term loans and $ 1.7 million of finance leases.

On February 26, 2020, we issued (i) an additional $ 200 million aggregate principal amount of our 4⅛% Senior Notes due 2028, or the 4⅛% Notes, at 99.5 percent of their principal amount, plus accrued and unpaid interest from November 12, 2019, and € 500 million aggregate principal amount of our 2¼% Senior Notes due 2028, or the 2¼% Notes, at 100 percent of their principal amount.

We used the net proceeds from these issuances and revolving loan borrowings under the Credit Agreement to

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

prepay all of our outstanding U.S.

A term loans under the Credit Agreement.

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

At June 30, 2020, the current portion of long-term debt consisted of $ 354.0 million of bank revolving loans under the Credit Agreement, $ 35.6 million of other foreign bank revolving and term loans and $ 1.8 million of finance leases.

We used the net proceeds from these issuances and revolving loan borrowings under the Credit Agreement to prepay all of our outstanding U.S.

term loans under the Credit Agreement at that time.

As a result of this prepayment, we recorded a pre-tax charge for the loss on early extinguishment of debt of $ 1.5 million during the first quarter of 2020 for the write-off of unamortized debt issuance costs.

10 unchanged sentences

We will be required to make an offer to repurchase the 2¼% Notes at a repurchase price equal to 101 percent of their principal amount, plus accrued and unpaid interest to the date of repurchase, upon the occurrence of a change of control repurchase event as provided in the indenture for the 2¼% Notes.

Incremental U.S.

On April 17, 2020, we and certain of our subsidiaries entered into an Incremental Term Loan Commitment Agreement, or the Incremental Term Loan Commitment Agreement, with the lenders thereunder and Wells Fargo Bank, National Association, as Administrative Agent and a lender.

The Incremental Term Loan Commitment Agreement was entered into pursuant to the Credit Agreement and provided for the lenders thereunder to lend to us, on a delayed draw basis, $900 million of Incremental U.S.

Term Loans, or the Incremental U.S.

Term Loans, to fund the purchase price for the acquisition of the Albéa Dispensing Business.

On June 1, 2020, we borrowed $ 900 million of Incremental U.S.

Term Loans under the Incremental Term Loan Commitment Agreement to fund the purchase price for the acquisition of the Albéa Dispensing Business.

The Incremental U.S.

Term Loans mature on May 30, 2024 and are repayable in installments of $ 90 million on each of December 31, 2021, 2022 and 2023, with the remaining outstanding principal balance to be repaid on May 30, 2024.

The Incremental U.S.

Term Loans initially have an Applicable Margin (as defined in the Credit Agreement) of 1.75 percent per annum in the case of Eurodollar Rate Loans (as defined in the Credit Agreement) and 0.75 percent per annum in the case of Base Rate Loans (as defined in the Credit Agreement), in both cases until the delivery of our financial statements for the fiscal quarter ending June 30, 2020.

The Applicable Margin will vary between 1.25 percent to 1.75 percent per annum for Eurodollar

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Rate Loans and between 0.25 percent to 0.75 percent per annum for Base Rate Loans, in both cases based on our Total Net Leverage Ratio (as defined in the Credit Agreement).

The Incremental U.S.

Term Loans are guaranteed by the US Guarantors (as defined in the Credit Agreement) and secured on a pari passu basis by the same collateral that secures our outstanding loans under the Credit Agreement.

Financial Instruments

1 unchanged sentence

Due to their short-term maturity, the carrying amounts of trade accounts receivable and trade accounts payable approximate their fair market values.

The following table summarizes the carrying amounts and estimated fair values of our other financial instruments at March 31, 2020:

The following table summarizes the carrying amounts and estimated fair values of our other financial instruments at June 30, 2020:

(Dollars in thousands)

1 unchanged sentence

Bank debt $ 1,296,534 $ 1,296,534

4¾% Notes 300,000 289,500

3¼% Notes 713,490 699,263

4⅛% Notes 599,009 553,500

2¼% Notes 548,839 489,015

4¾% Senior Notes 300,000 303,813

3¼% Senior Notes 728,520 734,592

4⅛% Senior Notes 599,035 594,750

2¼% Senior Notes 560,400 540,450

Derivative instruments (accrued and other liabilities) 7,259 7,259

7 unchanged sentences

Financial Instruments Measured at Fair Value

The financial assets and liabilities that were measured on a recurring basis at March 31, 2020 consisted of our cash and cash equivalents and derivative instruments.

The financial assets and liabilities that were measured on a recurring basis at June 30, 2020 consisted of our cash and cash equivalents and derivative instruments.

We measured the fair value of cash and cash equivalents using Level 1 inputs.

3 unchanged sentences

Financial Instruments Not Measured at Fair Value

Our bank debt, 4¾% Notes, 3¼% Notes, 4⅛% Notes and 2¼% Notes were recorded at historical amounts in our Condensed Consolidated Balance Sheets, as we have not elected to measure them at fair value.

Our bank debt, 4¾% Senior Notes, 3¼% Senior Notes, 4⅛% Senior Notes and 2¼% Senior Notes were recorded at historical amounts in our Condensed Consolidated Balance Sheets, as we have not elected to measure them at fair value.

We measured the fair value of our variable rate bank debt using the market approach based on Level 2 inputs.

Fair values of the 4¾% Notes, 3¼% Notes, 4⅛% Notes and 2¼% Notes were estimated based on quoted market prices, a Level 1 input.

Fair values of the 4¾% Senior

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Notes, 3¼% Senior Notes, 4⅛% Senior Notes and 2¼% Senior Notes were estimated based on quoted market prices, a Level 1 input.

Derivative Instruments and Hedging Activities

1 unchanged sentence

Changes in fair values of derivatives are recorded in each period in earnings or comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

We utilize certain derivative financial instruments to manage a portion of our interest rate and natural gas cost exposures.

10 unchanged sentences

These agreements have a fixed rate of 2.878 percent and mature on March 24, 2023.

The difference between amounts to be paid or received on our interest rate swap agreements is recorded in interest and other debt expense in our Condensed Consolidated Statements of Income and was not significant for the three months ended March 31, 2020.

These agreements are with a financial institution which is expected to fully perform under the terms thereof.

The total fair value of our interest rate swap agreements in effect at March 31, 2020 was not significant.

The total fair value of our interest rate swap agreements in effect at June 30, 2020 was not significant.

Natural Gas Swap Agreements

We have entered into natural gas swap agreements to manage a portion of our exposure to fluctuations in natural gas prices.

The difference between amounts to be paid or received on our natural gas swap agreements is recorded in cost of goods sold in our Condensed Consolidated Statements of Income and was not significant for the three months ended March 31, 2020.

These agreements are with a financial institution which is expected to fully perform under the terms thereof.

The total fair value of our natural gas swap agreements in effect at March 31, 2020 was not significant.

The total fair value of our natural gas swap agreements in effect at June 30, 2020 was not significant.

Foreign Currency Exchange Rate Risk

1 unchanged sentence

In addition, where available, we have borrowed funds in local currency or implemented certain internal hedging strategies to minimize our foreign currency exchange rate risk related to foreign operations.

We have designated the 3¼% Notes and the 2¼% Notes, which are Euro denominated, as net investment hedges.

Foreign currency losses related to our net investment hedges included in accumulated other comprehensive loss for the three months ended March 31, 2020 were $( 0.7 ) million.

We have designated the 3¼% Senior Notes and the 2¼% Senior Notes, which are Euro denominated, as net investment hedges.

Foreign currency losses related to our net investment hedges included in accumulated other comprehensive loss for the three and six months ended June 30, 2020 were $( 15.6 ) million and $( 16.2 ) million, respectively.

Commitments and Contingencies

1 unchanged sentence

At the end of April 2018, the European Commission commenced an antitrust investigation involving the metal packaging industry in Europe including our metal container and closures subsidiaries, which should effectively close out the investigation in Germany.

Given the current stage of the investigation, we cannot reasonably assess what actions may result from these investigations or estimate what costs we may incur as a result thereof.

We are a party to other legal proceedings, contract disputes and claims arising in the ordinary course of our business.

We are not a party to, and none of our properties are subject to, any pending legal proceedings which could have a material adverse effect on our business or financial condition.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

the current stage of the investigation, we cannot reasonably assess what actions may result from these investigations or estimate what costs we may incur as a result thereof.

We are a party to other legal proceedings, contract disputes and claims arising in the ordinary course of our business.

We are not a party to, and none of our properties are subject to, any pending legal proceedings which could have a material adverse effect on our business or financial condition.

Retirement Benefits

The components of the net periodic pension benefit credit for the three months ended March 31 were as follows:

The components of the net periodic pension benefit credit were as follows:

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

(Dollars in thousands)

5 unchanged sentences

Net periodic benefit credit $ ( 5,804 ) $ ( 673 ) $ ( 11,612 ) $ ( 1,341 )

The components of the net periodic other postretirement benefit credit for the three months ended March 31 were as follows:

The components of the net periodic other postretirement benefit credit were as follows:

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

(Dollars in thousands)

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Silgan and its subsidiaries file U.S.

4 unchanged sentences

On October 17, 2016, our Board of Directors authorized the repurchase by us of up to an aggregate of $ 300.0 million of our common stock by various means from time to time through and including December 31, 2021.

During the three months ended March 31, 2020, we repurchased an aggregate of 259,461 shares of our common stock at an average price per share of $ 26.71 , for a total purchase price of $ 6.9 million.

At March 31, 2020, we had approximately $ 105.6 million remaining under this authorization for the repurchase of our common stock.

During the first three months of 2020, we issued 514,053 treasury shares which had an average cost of $ 3.16 per share for restricted stock units that vested during the period.

During the six months ended June 30, 2020, we repurchased an aggregate of 259,461 shares of our common stock at an average price per share of $ 26.71 , for a total purchase price of $ 6.9 million.

At June 30, 2020, we had approximately $ 105.6 million remaining under this authorization for the repurchase of our common stock.

During the first six months of 2020, we issued 582,151 treasury shares which had an average cost of $ 3.16 per share for restricted stock units that vested during the period.

In accordance with the Silgan Holdings Inc.

1 unchanged sentence

We account for treasury shares using the first-in, first-out (FIFO) cost method.

As of March 31, 2020, 64,278,312 shares of our common stock were held in treasury.

As of June 30, 2020, 64,226,667 shares of our common stock were held in treasury.

Stock-Based Compensation

We currently have one stock-based compensation plan in effect under which we have issued options and restricted stock units to our officers, other key employees and outside directors.

During the first three months of 2020, 334,800 restricted stock units were granted to certain of our officers and other key employees.

During the first six months of 2020, 423,622 restricted stock units were granted to certain of our officers, other key employees and outside directors.

The fair value of these restricted stock units at the grant date was $ 12.5 million, which is being amortized ratably over the respective vesting period from the grant date.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Business Segment Information

Reportable business segment information for the three months ended March 31was as follows:

Reportable business segment information was as follows:

Containers Closures Plastic

1 unchanged sentence

(Dollars in thousands)

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Net sales $ 597,191 $ 410,468 $ 168,811 $ — $ 1,176,470

3 unchanged sentences

Segment income 71,782 58,581 22,987 ( 22,116 ) 131,234

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

Net sales $ 575,618 $ 363,344 $ 154,201 $ — $ 1,093,163

3 unchanged sentences

Segment income 14,029 46,857 13,410 ( 5,697 ) 68,599

Six Months Ended June 30, 2020

Net sales $ 1,105,709 $ 767,619 $ 333,526 $ — $ 2,206,854

Depreciation and amortization (1)

41,026 42,150 18,840 79 102,095

(1) Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $ 1.0 million for the three months ended March 31, 2020 and debt issuance costs of $ 0.9 million for the three months ended March 31, 2019, respectively.

Rationalization charges 3,116 1,442 183 — 4,741

Segment income 119,261 103,810 45,032 ( 34,728 ) 233,375

Six Months Ended June 30, 2019

Net sales $ 1,082,680 $ 719,543 $ 318,071 $ 2,120,294

Depreciation and amortization (1)

42,543 41,498 18,153 80 102,274

Rationalization charges 39,245 5,908 247 45,400

Segment income 52,926 87,113 25,476 ( 10,174 ) 155,341

_____________

(1) Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $ 1.1 million and $ 2.1 million for the three and six months ended June 30, 2020, respectively, and debt issuance costs of $ 0.9 million and $ 1.8 million for the three and six months ended June 30, 2019, respectively.

Total segment income is reconciled to income before income taxes as follows:

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

(Dollars in thousands)

2 unchanged sentences

Income before income taxes $ 105,397 $ 40,198 $ 182,568 $ 99,836

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Sales and segment income of our metal container business and part of our closures business are dependent, in part, upon fruit and vegetable harvests.

1 unchanged sentence

Because of the seasonality of the harvests, we have historically experienced higher unit sales volume in the third quarter of our fiscal year and generated a disproportionate amount of our annual segment income during that quarter.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

Subsequent Events

Securities and Assets Sale Agreement for the Acquisition of Albéa’s Dispensing Business

As previously disclosed, on January 27, 2020, we, on behalf of ourself and certain of our subsidiaries, made a binding offer, or the Offer, to Twist Beauty Packaging S.A.S., or Albéa, on behalf of itself and certain of its subsidiaries, or the Sellers, to purchase all the outstanding securities of certain subsidiaries of the Sellers engaged in the dispensing business and certain assets related to the Sellers’ dispensing business in China, or collectively the Albéa Dispensing Business, for an aggregate cash purchase price of $ 900 million, subject to certain adjustments including for working capital, other current assets and current liabilities and net indebtedness, or the Acquisition.

The Albéa Dispensing Business is a leading global supplier of highly engineered pumps, sprayers and foam dispensing solutions to major branded consumer goods product companies in the beauty and personal care markets.

It operates a global network of 10 plants across North America, Europe, South America and Asia.

For the year ended December 31, 2019, the Albéa Dispensing Business reported net sales of approximately $ 395 million.

In accordance with the terms of the Offer, following the conclusion of c onsultation and notification processes with applicable works’ councils and trade unions , on April 14, 2020, Albéa exercised the option contained in the Offer, and on April 21, 2020 we and certain of our subsidiaries and the Sellers executed the securities and assets sale agreement, or the SPA, substantially in the form attached to the Offer.

We expect to fund the purchase price for the Acquisition using borrowings under an Incremental Term Loan Commitment Agreement entered into pursuant to the Credit Agreement, as further described below, together with cash on hand and borrowings of revolving loans under the Credit Agreement.

The Acquisition is expected to close in the first half of 2020, subject to the satisfaction or waiver of certain closing conditions , including remaining antitrust clearances.

The SPA provides that either we or the Sellers have the right to terminate the SPA in the event that the applicable antitrust clearances have not been obtained by October 27, 2020, or the Outside Date;

provided, however, that we and the Sellers have the right to unilaterally postpone the Outside Date by up to three months after the Outside Date, or the Postponed Outside Date, in the event that applicable antitrust clearances have not yet been obtained by the Outside Date.

The SPA further provides that if the applicable antitrust clearances have not been obtained by the Outside Date or the Postponed Outside Date, as the case may be, then we are required to pay a break fee of $ 25 million to the Sellers.

In connection with the SPA, we and certain of our subsidiaries and the Sellers have also entered into an ancillary representations and warranties agreement containing customary representations and warranties made by the Sellers in respect of the Acquisition and will enter into other agreements at closing for the Acquisition, including a transition services agreement.

Incremental Term Loan Commitment Agreement

On April 17, 2020, we and certain of our subsidiaries entered into an Incremental Term Loan Commitment Agreement, or the Incremental Term Loan Commitment Agreement, with the Incremental Term A-1 Loan Lenders thereunder and Wells Fargo Bank, National Association, as Administrative Agent and an Incremental Term A-1 Loan Lender.

The Incremental Term Loan Commitment Agreement was entered into pursuant to the Credit Agreement and provides for the Incremental Term A-1 Loan Lenders to lend to us, on a delayed draw basis and pursuant to the terms of the Incremental Term Loan Commitment Agreement and the Credit Agreement, $ 900 million of Incremental Term A-1 Loans to fund the purchase price for the Acquisition and related fees, costs and expenses.

The Incremental Term A-1 Loans mature on May 30, 2024, the same maturity date for term loans under the Credit Agreement.

The Incremental Term Loan Commitment Agreement provides that the Incremental Term A-1 Loans are repayable in installments of $ 90 million on each of December 31, 2021, 2022 and 2023, with the remaining outstanding principal balance to be repaid on May 30, 2024.

The Incremental Term A-1 Loans will initially have an Applicable Margin (as defined in the Credit Agreement) of 1.75 percent per annum in the case of Eurodollar Rate Loans (as defined in the Credit Agreement) and 0.75 percent per annum in the case of Base Rate Loans (as defined in the Credit Agreement), in both cases until the delivery of our financial statements for the fiscal

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2020 and 2019 and for the

three months then ended is unaudited)

quarter ending June 30, 2020.

The Applicable Margin will vary between 1.25 percent to 1.75 percent per annum for Eurodollar Rate Loans and between 0.25 percent to 0.75 percent per annum for Base Rate Loans, in both cases based on our Total Net Leverage Ratio (as defined in the Credit Agreement).

The Incremental Term A-1 Loans will be guaranteed by the US Guarantors (as defined in the Credit Agreement) and secured on a pari passu basis by the same collateral that secures our outstanding loans under the Credit Agreement.

Commencing on May 27, 2020, we will pay a ticking fee to the Administrative Agent, for the account of each Incremental Term A-1 Loan Lender, at a rate of 0.30 percent per annum on the unfunded Incremental Term A-1 Loans.

The ticking fee will be payable in arrears and will end on the earlier to occur of the date at which (i) the Incremental Term A-1 Loans are drawn or (ii) the SPA expires or is terminated in accordance with its terms, as applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements