What changed in this filing

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Item 1. Financial Statements

2021-05-05 compared with 2020-11-06 · 138 added, 271 removed, 332 unchanged (55% of the section changed)

3 unchanged sentences

(Dollars in thousands)

30, 2020 Sept.

30, 2019 Dec.

March 31, 2021 March 31, 2020 Dec.

(unaudited) (unaudited)

31 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three and nine months ended September 30, 2020 and 2019

For the three months ended March 31, 2021 and 2020

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

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

Net sales $ 1,238,110 $ 1,030,384

8 unchanged sentences

Loss on early extinguishment of debt

— 1,676 1,481 1,676

Interest and other debt expense 27,306 24,970

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and nine months ended September 30, 2020 and 2019

For the three months ended March 31, 2021 and 2020

(Dollars in thousands)

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

Net income $ 73,281 $ 57,600

3 unchanged sentences

Foreign currency translation ( 33,372 ) ( 36,439 )

Other comprehensive income (loss) 25,008 ( 22,550 ) ( 12,610 ) ( 19,115 )

Other comprehensive loss ( 30,853 ) ( 37,955 )

Comprehensive income $ 42,428 $ 19,645

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2020 and 2019

For the three months ended March 31, 2021 and 2020

(Dollars in thousands)

7 unchanged sentences

Loss on early extinguishment of debt 883 1,481

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

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

Trade accounts receivable, net ( 103,549 ) ( 103,975 )

3 unchanged sentences

Other, net ( 8,983 ) ( 6,364 )

Net cash provided by (used in) operating activities 118,466 ( 2,411 )

Net cash used in operating activities ( 172,148 ) ( 168,136 )

Cash flows provided by (used in) investing activities:

Purchase of businesses, net of cash acquired ( 940,875 ) —

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

Capital expenditures ( 68,764 ) ( 65,147 )

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the three and nine months ended September 30, 2020 and 2019

For the three months ended March 31, 2021 and 2020

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

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

Common stock - shares outstanding

3 unchanged sentences

Repurchases of common stock

— ( 408 ) ( 259 ) ( 408 )

Balance at end of period

7 unchanged sentences

Stock compensation expense

4,824 4,425 13,880 12,669

Net issuance of treasury stock for vested restricted stock units ( 1,738 ) ( 1,622 )

— — ( 1,839 ) ( 3,670 )

Balance at end of period

6 unchanged sentences

( 15,680 ) ( 13,546 )

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

Adoption of accounting standards update related to credit losses in 2020 — ( 665 )

Balance at end of period

3 unchanged sentences

( 260,953 ) ( 259,742 )

Other comprehensive income (loss) 25,008 ( 22,550 ) ( 12,610 ) ( 19,115 )

Other comprehensive loss ( 30,853 ) ( 37,955 )

Balance at end of period

4 unchanged sentences

Net issuance of treasury stock for vested restricted stock units ( 6,537 ) ( 4,108 )

— — ( 4,382 ) ( 11,582 )

Repurchases of common stock

— ( 12,112 ) ( 6,934 ) ( 12,112 )

Balance at end of period

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

Significant Accounting Policies

7 unchanged sentences

You should read the accompanying condensed consolidated financial statements in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Goodwill and Other Intangible Assets.

We review goodwill and other indefinite-lived intangible assets for impairment as of July 1 of each year and more frequently if circumstances indicate a possible impairment.

We determined that our goodwill and other indefinite-lived intangible assets were not impaired in our annual 2020 assessment performed during the third quarter.

Recently Adopted Accounting Pronouncements.

In June 2016, the Financial Accounting Standards Board, or FASB, issued an accounting standards update, or ASU, that amends the guidance on the accounting for credit losses on financial instruments .

This new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments.

The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables.

We adopted this new standard on January 1, 2020 using the transition method, which allowed us to recognize the effects of applying this standard as a cumulative effect to retained earnings as of January 1, 2020.

As a result of the adoption of this standard, we reduced retained earnings by $ 0.7 million.

The adoption of this standard did not have a material impact on our financial position, results of operations or cash flows.

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 were as follows:

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

Effective with the first quarter of 2021, we renamed our Closures segment as our Dispensing and Specialty Closures segment and our Plastic Containers segment as our Custom Containers segment, in each case to better capture the evolving nature of their products and our ongoing strategic focus.

Each of these segments continues to consist of the same operations as prior to it being renamed.

The following tables present our revenues disaggregated by reportable 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 segment for the three months ended March 31 were as follows:

(Dollars in thousands)

Dispensing and Specialty Closures $ 509,352 $ 357,151

Metal Containers 554,081 508,519

Closures 475,105 353,436 1,242,725 1,072,979

Plastic containers 156,734 145,644 490,258 463,715

Custom Containers 174,677 164,714

$ 1,238,110 $ 1,030,384

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

Revenues by geography were as follows:

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

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

(Dollars in thousands)

5 unchanged sentences

We have no significant obligations for refunds, warranties or similar obligations.

Trade accounts receivable, net are shown separately on our Condensed Consolidated Balance Sheet.

Trade accounts receivable, net are shown separately on our Condensed Consolidated Balance Sheets.

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 $ 80.2 million, $ 73.4 million, and $ 71.1 million as of September 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.

The purchase price for this acquisition of $ 39.8 million, net of cash acquired, was primarily funded with revolving loan borrowings under our amended and restated senior secured credit facility, or the Credit Agreement.

For this acquisition, we applied the acquisition method of accounting and recognized assets acquired and liabilities assumed at fair value as of the acquisition date, and we recognized goodwill of $ 18.4 million and a customer relationship intangible asset of $ 11.5 million.

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 $ 901.0 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 $ 0.7 million and $ 19.0 million for the three and nine months ended September 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

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $ 86.4 million, $ 68.9 million, and $ 83.0 million as of March 31, 2021 and 2020 and December 31, 2020, respectively.

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

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

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.

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

Trade accounts receivable $ 42,742

Inventories 41,102

Property, plant and equipment 192,723

Other intangible assets 285,000

Other assets 33,478

Trade accounts payable and accrued liabilities ( 62,930 )

Deferred income tax liabilities ( 101,795 )

Debt and other liabilities ( 31,843 )

Total identifiable net assets 398,477

Goodwill 502,570

Cash paid at closing, net of cash acquired $ 901,047

Goodwill of $ 502.6 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 $ 257.0 million with an estimated remaining life of 24 years and technology know-how of $ 28.0 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 nine months ended September 30, 2020 included the results for the Albéa Dispensing Business since the acquisition date.

Net sales from the Albéa Dispensing Business operations of $ 81.3 million and $ 111.2 million were included in our Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2020, respectively.

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

Rationalization Charges

We continually evaluate cost reduction opportunities across each of our businesses, including rationalizations of our existing facilities through plant closings and downsizings.

We continually evaluate cost reduction opportunities across each of our segments, including rationalizations of our existing facilities through plant closings and downsizings.

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

Rationalization charges by business segment were as follows:

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

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

(Dollars in thousands)

Dispensing and Specialty Closures $ 5,231 $ 742

Metal Containers 5,021 1,963

Closures 787 72 2,229 5,979

Plastic containers 79 88 263 335

Custom Containers 105 94

$ 10,357 $ 2,799

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

Activity in reserves for our rationalization plans were as follows:

6 unchanged sentences

Utilized and currency translation ( 1,535 ) ( 455 ) ( 4,332 ) ( 6,322 )

Balance at September 30, 2020 $ 41,543 $ 652 $ — $ 42,195

Rationalization reserves as of September 30, 2020 were recorded in our Condensed Consolidated Balance Sheets as accrued liabilities of $ 4.8 million and other liabilities of $ 37.4 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 $ 2.1 million and $ 3.9 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.

Balance at March 31, 2021 $ 45,140 $ 455 $ — $ 45,595

Non-cash asset write-downs were the result of comparing the carrying value of certain production related assets to their fair value using estimated future discounted cash flows, a Level 3 fair value measurement (see Note 7 for information regarding a Level 3 fair value measurement).

Rationalization reserves as of March 31, 2021 were recorded in our Condensed Consolidated Balance Sheets as accrued liabilities of $ 8.9 million and other liabilities of $ 36.7 million.

Exclusive of the footprint optimization plan for our Metal Container segment 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 $ 2.5 million and $ 8.3 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 through 2040, and remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $ 3.1 million annually through 2040.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

Accumulated Other Comprehensive Loss

14 unchanged sentences

Other comprehensive loss 1,878 641 ( 33,372 ) ( 30,853 )

Balance at September 30, 2020 $ ( 134,547 ) $ ( 4,852 ) $ ( 132,953 ) $ ( 272,352 )

The amounts reclassified to earnings from the unrecognized net defined benefit plan costs component of accumulated other comprehensive loss for the three and nine months ended September 30, 2020, were net (losses) of $( 2.4 ) million and $( 7.3 ) million, respectively, excluding income tax benefits of $ 0.6 million and $ 1.9 million, respectively.

For the three and nine months ended September 30, 2020 these net (losses) consisted of amortization of net actuarial (losses) of $( 2.9 ) million and $( 8.6 ) million and amortization of net prior service credit of $ 0.4 million and $ 1.3 million, respectively.

Balance at March 31, 2021 $ ( 166,726 ) $ ( 4,015 ) $ ( 121,065 ) $ ( 291,806 )

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, 2021, were net (losses) of $( 2.6 ) million, excluding an income tax benefit of $ 0.7 million.

These net (losses) consisted of amortization of net actuarial (losses) of $( 3.0 ) million and amortization of net prior service credit of $ 0.4 million.

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 9 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 and nine months ended September 30, 2020 were not significant.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

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

dollar of $ 42.4 million and $ 19.4 million, respectively, (ii) foreign currency (losses) related to intra-entity foreign currency transactions that are of a long-term investment nature of $( 0.4 ) million and $( 3.3 ) million, respectively, and (iii) foreign currency (losses) related to our net investment hedges of $( 25.2 ) million and $( 41.4 ) million, respectively, excluding income tax benefits of $ 6.0 million and $ 9.8 million, respectively.

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, 2021 were not significant.

Other comprehensive loss before reclassifications related to foreign currency translation for the three months ended March 31, 2021, 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 $( 51.7 ) million, (ii) foreign currency gains related to intra-entity foreign currency transactions that are of a long-term investment nature of $ 0.4 million, and (iii) foreign currency gains related to our net investment hedges of $ 23.5 million, excluding an income tax (provision) of $( 5.6 ) million.

See Note 7 for further discussion.

Inventories consisted of the following:

30, 2020 Sept.

30, 2019 Dec.

March 31, 2021 March 31, 2020 Dec.

(Dollars in thousands)

4 unchanged sentences

898,225 854,303 787,122

Adjustment to value inventory

at cost on the LIFO method ( 156,495 ) ( 125,883 ) ( 156,495 )

Adjustment to value inventory at cost on the LIFO method ( 109,588 ) ( 156,495 ) ( 109,588 )

$ 788,637 $ 697,808 $ 677,534

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 — 520,946 — 520,946

Currency translation 2,217 37,511 ( 434 ) 39,294

Balance at September 30, 2020 $ 115,680 $ 1,360,233 $ 226,550 $ 1,702,463

In connection with our acquisitions of Cobra Plastics and the Albéa Dispensing Business as discussed in Note 3, we recognized goodwill of $ 521.0 million.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

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

30, 2020 Dec.

Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization

(Dollars in thousands)

Definite-lived intangibles:

Customer relationships $ 696,003 $ ( 136,583 ) $ 422,042 $ ( 116,575 )

Other 70,766 ( 29,070 ) 39,447 ( 22,439 )

766,769 ( 165,653 ) 461,489 ( 139,014 )

Indefinite-lived intangibles:

Trade names 32,140 — 32,140 —

$ 798,909 $ ( 165,653 ) $ 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 $ 268.5 million and technology know-how of $ 28.0 million.

Amortization expense was $ 10.4 million and $ 25.4 million for the three and nine months ended September 30, 2020, respectively, and $ 6.7 million and $ 20.4 million for the three and nine months ended September 30, 2019, respectively.

Amortization expense is expected to be $ 35.9 million, $ 40.7 million, $ 39.9 million, $ 39.9 million and $ 38.3 million for the years ended December 31, 2020 through 2024, respectively.

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

Long-Term Debt

Long-term debt consisted of the following:

30, 2020 Sept.

30, 2019 Dec.

March 31, 2021 March 31, 2020 Dec.

(Dollars in thousands)

1 unchanged sentence

term loans 400,000 — 900,000

Canadian term loans — 15,943 4,703

Other foreign bank revolving and term loans 60,030 29,239 30,407

6 unchanged sentences

2¼% Senior Notes 587,650 548,839 611,775

1.4% Senior Secured Notes 500,000 — —

Finance leases 33,936 32,582 34,480

4 unchanged sentences

$ 3,163,292 $ 2,174,571 $ 3,223,217

At March 31, 2021, the current portion of long-term debt consisted of $ 137.0 million of bank revolving loans under our amended and restated senior secured credit facility, or the Credit Agreement, $ 56.2 million of other foreign bank revolving and term loans and $ 1.9 million of finance leases.

On February 1, 2021, we and certain of our subsidiaries entered into a Second Amendment to Amended and Restated Credit Agreement, or the Second Amendment, with certain lenders party thereto and Wells Fargo Bank, National Association, as administrative agent under the Credit Agreement.

The Second Amendment amends the Credit Agreement to provide us with additional flexibility to issue new senior secured notes with related guarantees from our U.S.

subsidiaries, which new senior secured notes and related guarantees may be secured on a pari passu basis with the U.S.

Obligations by the U.S.

Collateral (each as defined in the Second Amendment).

The Second Amendment also makes minor technical changes and allows for certain additional internal corporate reorganizations.

1.4% SENIOR SECURED NOTES

On February 10, 2021, we issued $ 500.0 million aggregate principal amount of our 1.4 % Senior Secured Notes due 2026, or the 1.4% Notes, at 99.945 percent of their principal amount, in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended.

The proceeds from the sale of the 1.4% Notes were $ 499.7 million.

We used the proceeds from the sale of the 1.4% Notes to prepay $ 500.0 million of our outstanding term loans under the Credit Agreement.

We paid the initial purchasers’ discount and offering expenses related to the sale of the 1.4% Notes with cash on hand.

As a result of this prepayment, we recorded a pre-tax charge for the loss on early extinguishment of debt of $ 0.9 million during the first quarter of 2021 for the write-off of unamortized debt issuance costs.

The 1.4% Notes are guaranteed on a senior secured basis by our U.S.

subsidiaries that guarantee the Credit Agreement.

The 1.4% Notes are not guaranteed by any of our subsidiaries that do not guarantee the Credit Agreement, any of our foreign subsidiaries or any of our non-wholly owned subsidiaries.

The 1.4% Notes and related guarantees are secured by pledges of equity interests, or the Collateral, that are owned by us and by each subsidiary guarantor, which equity interests are the same equity interests pledged to secure the obligations of U.S.

borrowers under the Credit Agreement.

The 1.4% Notes will share equally in the Collateral with the Credit Agreement.

The guarantee of each such subsidiary guarantor will be released to the

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

At September 30, 2020, the current portion of long-term debt consisted of $ 246.0 million of bank revolving loans under the Credit Agreement, $ 36.6 million of other foreign bank revolving and term loans and $ 1.9 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 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.

2¼% S ENIOR N OTES

The 2¼% Notes are general unsecured obligations of Silgan, ranking equal in right of payment with our existing and future unsecured unsubordinated indebtedness, including our 4¾% Senior Notes due 2025, or the 4¾% Notes, our 3¼% Senior Notes due 2025, or the 3¼% Notes, and the 4⅛% Notes, and ahead of our existing and future subordinated debt, if any.

The 2¼% Notes are effectively subordinated to Silgan’s secured debt to the extent of the assets securing such debt and structurally subordinated to all obligations of subsidiaries of Silgan.

The 2¼% Notes will mature on June 1, 2028.

Interest on the 2¼% Notes will be payable semi-annually in cash on January 15 and July 15 of each year, beginning on July 15, 2020.

The 2¼% Notes were issued pursuant to an indenture by and among Silgan, U.S.

Bank National Association, as trustee, Elavon Financial Services DAC, UK Branch, as paying agent, and Elavon Financial Services DAC, as registrar and transfer agent, which indenture contains covenants that are generally less restrictive than those in the Credit Agreement and substantially similar to the covenants in the indenture for the 4¾% Notes and the 3¼% Notes and the indenture for the 4⅛% Notes.

The 2¼% Notes are redeemable, at our option, in whole or in part, at any time after March 1, 2023, initially at 101.125 percent of their principal amount, plus accrued and unpaid interest to the redemption date, declining ratably to 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date, on or after March 1, 2025.

In addition, prior to March 1, 2023, we may redeem up to 35 percent of the aggregate principal amount of the 2¼% Notes with the proceeds of certain equity offerings at a redemption price of 102.25 percent of their principal amount, plus accrued and unpaid interest to the date of redemption.

We may also redeem the 2¼% Notes, in whole or in part, prior to March 1, 2023 at a redemption price equal to 100 percent of their principal amount plus a make-whole premium as provided in the indenture for the 2¼% Notes, together with accrued and unpaid interest to the date of redemption.

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

extent such subsidiary no longer guarantees the Credit Agreement and in certain other circumstances, and the Collateral pledged by such subsidiary guarantor will also be released upon the release of such subsidiary guarantor’s guarantee.

The 1.4% Notes and related guarantees are senior secured obligations of us and the subsidiary guarantors.

The 1.4% Notes and related guarantees rank equally in right of payment with all of our and the subsidiary guarantors’ existing and future senior indebtedness, including under the Credit Agreement and our 4¾% Senior Notes due 2025, or the 4¾% Notes, our 3¼% Senior Notes due 2025, or the 3¼% Notes, our 4⅛% Senior Notes due 2028, or the 4⅛% Notes, and our 2¼% Senior Notes due 2028, or the 2¼% Notes;

are senior in right of payment to all of our and the subsidiary guarantors’ future indebtedness that is by its terms expressly subordinated in right of payment to the 1.4% Notes;

rank equally in right of payment to all of our and the subsidiary guarantors’ existing and future senior secured indebtedness (including indebtedness under the Credit Agreement) that is secured by the Collateral on a first-priority basis, to the extent of the value of the Collateral;

rank effectively senior to all of our and the subsidiary guarantors’ existing and future unsecured indebtedness and indebtedness secured on a junior basis, in each case to the extent of the value of the Collateral;

rank effectively junior to all existing and future indebtedness that is secured by liens on assets that do not constitute a part of the Collateral, to the extent of the value of such assets;

and are structurally subordinated to all existing and future indebtedness and other liabilities of each of our existing and future subsidiaries that do not guarantee the 1.4% Notes.

As a result of the guarantees by the subsidiary guarantors of the 1.4% Notes, such subsidiaries were also required to guarantee, and have now guaranteed, on a senior unsecured basis the 4¾% Notes, the 3¼% Notes, the 4⅛% Notes and the 2¼% Notes pursuant to supplemental indentures to the indenture for the 4¾% Notes and the 3¼% Notes, the indenture for the 4⅛% Notes and the indenture for the 2¼% Notes.

The 1.4% Notes are not, and are not required to be, registered under the Securities Act of 1933, as amended.

The 1.4% Notes mature on April 1, 2026.

Interest on the 1.4% Notes will be payable semi-annually in cash on April 1 and October 1 of each year, beginning on October 1, 2021.

The 1.4% Notes were issued pursuant to an indenture by and among Silgan, certain of our U.S.

subsidiaries and Wells Fargo Bank, National Association, as trustee and collateral agent, which indenture contains covenants that are generally less restrictive than those in the Credit Agreement and substantially similar to the covenants in the indenture for the 4¾% Notes and the 3¼% Notes, the indenture for the 4⅛% Notes and the indenture for the 2¼% Notes.

Prior to March 1, 2026 (one month prior to the maturity date of the 1.4% Notes, or the Par Call Date) the 1.4% Notes will be redeemable at a redemption price equal to the greater of (i) 100 percent of the principal amount of the 1.4% Notes to be redeemed and (ii) the principal amount of the 1.4% Notes plus a “make-whole” amount, plus, in each case, accrued and unpaid interest thereon to the redemption date.

On or after the Par Call Date, the 1.4% Notes will be redeemable at a redemption price equal to 100 percent of the aggregate principal amount of any 1.4% Notes being redeemed, plus accrued and unpaid interest thereon to the redemption date.

We will be required to make an offer to repurchase the 1.4% 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 1.4% 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 September 30, 2020 and 2019 and for the

three and nine 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.

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

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 September 30, 2020:

The following table summarizes the carrying amounts and estimated fair values of our other financial instruments at March 31, 2021:

(Dollars in thousands)

1 unchanged sentence

Bank debt $ 597,030 $ 597,030

4¾% Senior Notes 300,000 305,250

3¼% Senior Notes 762,223 772,589

4⅛% Senior Notes 599,062 613,500

2¼% Senior Notes 586,325 573,133

Derivative instruments (accrued and other liabilities) 6,588 6,588

4¾% Notes 300,000 304,950

3¼% Notes 763,945 770,515

4⅛% Notes 600,000 616,380

2¼% Notes 587,650 590,412

1.4% Notes 500,000 489,400

Fair Value Measurements

6 unchanged sentences

Financial Instruments Measured at Fair Value

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

The financial assets and liabilities that were measured on a recurring basis at March 31, 2021 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% 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.

Our bank debt, 4¾% Notes, 3¼% Notes, 4⅛% Notes, 2¼% Notes and 1.4% 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% Senior

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine 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.

Fair values of the 4¾% Notes, 3¼% Notes, 4⅛% Notes, 2¼% Notes and 1.4% 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, 2021 and 2020 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 and nine month periods ended September 30, 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 September 30, 2020 was not significant.

The total fair value of our interest rate swap agreements in effect at March 31, 2021 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 and nine month periods ended September 30, 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 September 30, 2020 was not significant.

The total fair value of our natural gas swap agreements in effect at March 31, 2021 was not significant.

Foreign Currency Exchange Rate Risk

In an effort to minimize foreign currency exchange rate risk, we have financed acquisitions of foreign operations primarily with borrowings denominated in Euros and Canadian dollars.

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% 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 nine months ended September 30, 2020 were $( 25.2 ) million and $( 41.4 ) million, respectively.

Commitments and Contingencies

A competition authority in Germany commenced an antitrust investigation in 2015 involving the industry association for metal packaging in Germany and its members, including our metal container and closures subsidiaries in Germany.

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.

Foreign currency gains related to our net investment hedges included in accumulated other comprehensive loss for the three months ended March 31, 2021 were $ 23.5 million.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine 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.

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

Commitments and Contingencies

At the end of April 2018, the European Commission commenced an antitrust investigation involving the metal packaging industry in Europe including our metal closures and metal container 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.

1 unchanged sentence

Retirement Benefits

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

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

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

(Dollars in thousands)

5 unchanged sentences

Net periodic benefit credit $ ( 8,622 ) $ ( 5,808 )

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

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

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

(Dollars in thousands)

4 unchanged sentences

Net periodic benefit credit $ ( 381 ) $ ( 388 )

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

Silgan and its subsidiaries file U.S.

2 unchanged sentences

We have been accepted into the Compliance Assurance Program for the 2020 and 2021 tax years which provides for the review by the IRS of tax matters relating to our tax return prior to filing.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

Treasury Stock

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 nine months ended September 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 September 30, 2020, we had approximately $ 105.6 million remaining under this authorization for the repurchase of our common stock.

During the first nine 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.

We did not repurchase any shares of our common stock pursuant to this authorization during the three months ended March 31, 2021.

At March 31, 2021, we had approximately $ 76.6 million remaining under this authorization for the repurchase of our common stock.

During the first three months of 2021, we issued 545,168 treasury shares which had an average cost of $ 3.19 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 September 30, 2020, 64,226,667 shares of our common stock were held in treasury.

As of March 31, 2021, 64,726,235 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 nine months of 2020, 453,622 restricted stock units were granted to certain of our officers, other key employees and outside directors.

During the first three months of 2021, 338,700 restricted stock units were granted to certain of our officers and other key employees.

The fair value of these restricted stock units at the grant date was $ 13.0 million, which is being amortized ratably over the respective vesting period from the grant date.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

Business Segment Information

Reportable business segment information was as follows:

Containers Closures Plastic

Segment Information

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

Dispensing and Specialty Closures Metal

Containers Custom

Containers Corporate Total

(Dollars in thousands)

Three Months Ended September 30, 2020

Net sales $ 856,660 $ 475,105 $ 156,734 $ — $ 1,488,499

Depreciation and amortization (1)

21,008 27,777 9,207 39 58,031

Rationalization charges 1,639 787 79 — 2,505

Segment income 94,497 64,161 21,887 ( 6,512 ) 174,033

Three Months Ended September 30, 2019

Net sales $ 822,262 $ 353,436 $ 145,644 $ — $ 1,321,342

Depreciation and amortization (1)

21,477 20,847 9,512 39 51,875

Rationalization charges 3,035 72 88 — 3,195

Segment income 81,128 44,784 11,425 ( 4,642 ) 132,695

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Net sales $ 509,352 $ 554,081 $ 174,677 $ — $ 1,238,110

3 unchanged sentences

Segment income 65,645 45,614 24,486 ( 9,196 ) 126,549

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Net sales $ 357,151 $ 508,519 $ 164,714 $ — $ 1,030,384

4 unchanged sentences

_____________

(1) Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $ 1.2 million and $ 3.3 million for the three and nine months ended September 30, 2020, respectively, and amortization of debt issuance costs of $ 0.8 million and $ 2.6 million for the three and nine months ended September 30, 2019, respectively.

(1) Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $ 1.3 million and $ 1.0 million for the three months ended March 31, 2021 and 2020, respectively.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 2021 and 2020 and for the

three months then ended is unaudited)

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

Three Months Ended Nine Months Ended

30, 2020 Sept.

30, 2019 Sept.

30, 2020 Sept.

(Dollars in thousands)

2 unchanged sentences

Income before income taxes $ 99,243 $ 77,171

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine 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.

Sales and segment income of part of our Dispensing and Specialty Closures segment and our Metal Container segment are dependent, in part, upon fruit and vegetable harvests.

The size and quality of these harvests varies from year to year, depending in large part upon the weather conditions in applicable regions.

1 unchanged sentence

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