What changed in this filing

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Item 1. Financial Statements

2021-08-04 compared with 2021-05-05 · 109 added, 80 removed, 390 unchanged (33% of the section changed)

3 unchanged sentences

(Dollars in thousands)

March 31, 2021 March 31, 2020 Dec.

June 30, 2021 June 30, 2020 Dec.

(unaudited) (unaudited)

31 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three months ended March 31, 2021 and 2020

For the three and six months ended June 30, 2021 and 2020

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

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Net sales $ 1,348,661 $ 1,176,470 $ 2,586,771 $ 2,206,854

8 unchanged sentences

Loss on early extinguishment of debt

— — 883 1,481

Interest and other debt expense 26,406 25,837 53,712 50,807

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three months ended March 31, 2021 and 2020

For the three and six months ended June 30, 2021 and 2020

(Dollars in thousands)

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Net income $ 94,476 $ 78,172 $ 167,757 $ 135,772

3 unchanged sentences

Foreign currency translation 25,669 ( 1,576 ) ( 7,703 ) ( 38,015 )

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

Other comprehensive income (loss) 28,373 337 ( 2,480 ) ( 37,618 )

Comprehensive income $ 122,849 $ 78,509 $ 165,277 $ 98,154

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2021 and 2020

For the six months ended June 30, 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 acquisition:

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

Trade accounts receivable, net ( 277,768 ) ( 179,949 )

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 2,305 ( 941,102 )

Capital expenditures ( 123,604 ) ( 106,436 )

13 unchanged sentences

Cash and cash equivalents:

Net (decrease) increase ( 219,350 ) 411,022

Net decrease ( 244,660 ) ( 12,742 )

Balance at beginning of year 409,481 203,824

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the three months ended March 31, 2021 and 2020

For the three and six months ended June 30, 2021 and 2020

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

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Common stock - shares outstanding

3 unchanged sentences

Repurchases of common stock

— — — ( 259 )

Balance at end of period

7 unchanged sentences

Stock compensation expense

5,327 4,573 10,337 9,056

Net issuance of treasury stock for vested restricted stock units ( 89 ) ( 217 ) ( 1,827 ) ( 1,839 )

13 unchanged sentences

( 291,806 ) ( 297,697 ) ( 260,953 ) ( 259,742 )

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

Other comprehensive income (loss) 28,373 337 ( 2,480 ) ( 37,618 )

Balance at end of period

5 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, 2021 and 2020 and for the

three months then ended is unaudited)

(Information at June 30, 2021 and 2020 and for the

three and six months then ended is unaudited)

Significant Accounting Policies

10 unchanged sentences

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:

Revenues by segment were as follows:

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(Dollars in thousands)

3 unchanged sentences

$ 1,348,661 $ 1,176,470 $ 2,586,771 $ 2,206,854

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, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(Dollars in thousands)

2 unchanged sentences

$ 1,348,661 $ 1,176,470 $ 2,586,771 $ 2,206,854

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

We do not provide financing with extended payment terms beyond generally standard commercial payment terms for the applicable industry.

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

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 $ 86.4 million, $ 68.9 million, and $ 83.0 million as of March 31, 2021 and 2020 and December 31, 2020, respectively.

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $ 92.6 million, $ 80.4 million, and $ 83.0 million as of June 30, 2021 and 2020 and December 31, 2020, respectively.

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

(Information at June 30, 2021 and 2020 and for the

three and six months then ended is unaudited)

Rationalization Charges

1 unchanged sentence

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

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

Rationalization charges by segment were as follows:

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(Dollars in thousands)

11 unchanged sentences

Utilized and currency translation ( 3,258 ) ( 263 ) ( 4,544 ) ( 8,065 )

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

Balance at June 30, 2021 $ 43,919 $ 287 $ — $ 44,206

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.

Rationalization reserves as of June 30, 2021 were recorded in our Condensed Consolidated Balance Sheet as accrued liabilities of $ 7.9 million and other liabilities of $ 36.3 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 $ 2.2 million and $ 7.0 million, respectively.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

(Information at June 30, 2021 and 2020 and for the

three and six months then ended is unaudited)

Accumulated Other Comprehensive Loss

14 unchanged sentences

Other comprehensive loss 3,754 1,469 ( 7,703 ) ( 2,480 )

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.

Balance at June 30, 2021 $ ( 164,850 ) $ ( 3,187 ) $ ( 95,396 ) $ ( 263,433 )

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, 2021 were net (losses) of $( 2.6 ) million and $( 5.2 ) million, respectively, excluding income tax benefits of $ 0.7 million and $ 1.4 million, respectively.

For the three and six months ended June 30, 2021, these net (losses) consisted of amortization of net actuarial (losses) of $( 3.0 ) million and $( 6.0 ) 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 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 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.

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, 2021 were not significant.

Other comprehensive loss before reclassifications related to foreign currency translation for the three and six months ended June 30, 2021 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 $ 29.1 million and $( 22.6 ) million, respectively, (ii) foreign currency gains related to intra-entity foreign currency transactions that are of a long-term investment nature of $ 0.5 million and $ 0.9 million, respectively, and (iii) foreign currency (losses) gains related to our net investment hedges of $( 5.2 ) million and $ 18.3 million, respectively, excluding an income tax benefit (provision) of $ 1.3 million and $( 4.3 ) million, respectively.

See Note 7 for further discussion.

Inventories consisted of the following:

March 31, 2021 March 31, 2020 Dec.

June 30, 2021 June 30, 2020 Dec.

(Dollars in thousands)

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

(Information at June 30, 2021 and 2020 and for the

three and six months then ended is unaudited)

Long-Term Debt

Long-term debt consisted of the following:

March 31, 2021 March 31, 2020 Dec.

June 30, 2021 June 30, 2020 Dec.

(Dollars in thousands)

16 unchanged sentences

$ 3,176,393 $ 3,106,425 $ 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.

At June 30, 2021, the current portion of long-term debt consisted of $ 195.9 million of bank revolving loans under our amended and restated senior secured credit facility, or the Credit Agreement, $ 43.1 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.

19 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

(Information at June 30, 2021 and 2020 and for the

three and six 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.

17 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

(Information at June 30, 2021 and 2020 and for the

three and six 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 March 31, 2021:

The following table summarizes the carrying amounts and estimated fair values of our other financial instruments at June 30, 2021:

(Dollars in thousands)

14 unchanged sentences

Financial Instruments Measured at Fair Value

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.

The financial assets and liabilities that were measured on a recurring basis at June 30, 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.

11 unchanged sentences

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.

We generally limit our use of derivative financial instruments to interest rate and natural gas swap agreements.

(Information at June 30, 2021 and 2020 and for the

three and six months then ended is unaudited)

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

We generally limit our use of derivative financial instruments to interest rate, foreign currency exchange rate and natural gas swap agreements.

We do not engage in trading or other speculative uses of these financial instruments.

For a financial instrument to qualify as a hedge, we must be exposed to interest rate or price risk, and the financial instrument must reduce the exposure and be designated as a hedge.

For a financial instrument to qualify as a hedge, we must be exposed to interest rate, foreign currency exchange rate or price risk, and the financial instrument must reduce the exposure and be designated as a hedge.

Financial instruments qualifying for hedge accounting must maintain a high correlation between the hedging instrument and the item being hedged, both at inception and throughout the hedged period.

We utilize certain internal hedging strategies to minimize our foreign currency exchange rate risk.

The notional principal amounts outstanding under foreign currency exchange rate agreements and natural gas swap agreements were not significant as of June 30, 2021.

In addition, we also utilize certain internal hedging strategies to minimize our foreign currency exchange rate risk.

Net investment hedges that qualify for hedge accounting result in the recognition of foreign currency gains or losses, net of tax, in accumulated other comprehensive loss.

We generally do not utilize external derivative financial instruments to manage our foreign currency exchange rate risk.

Interest Rate Swap Agreements

2 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, 2021.

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, 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 months ended March 31, 2021.

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, 2021 was not significant.

The total fair value of our interest rate swap agreements in effect at June 30, 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 an effort to minimize our foreign currency exchange rate risk, in addition to limited foreign currency exchange rate derivative financial instruments, 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, including net investment hedges related to the 3¼% Notes which are Euro denominated.

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.

Foreign currency (losses) gains related to our net investment hedges included in accumulated other comprehensive loss for the three and six months ended June 30, 2021 were $( 5.2 ) million and $ 18.3 million, 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)

(Information at June 30, 2021 and 2020 and for the

three and six months then ended is unaudited)

Commitments and Contingencies

5 unchanged sentences

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, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(Dollars in thousands)

5 unchanged sentences

Net periodic benefit credit $ ( 8,620 ) $ ( 5,804 ) $ ( 17,242 ) $ ( 11,612 )

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, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(Dollars in thousands)

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

(Information at June 30, 2021 and 2020 and for the

three and six 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.

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.

We did not repurchase any shares of our common stock pursuant to this authorization during the six months ended June 30, 2021.

At June 30, 2021, we had approximately $ 76.6 million remaining under this authorization for the repurchase of our common stock.

During the first six months of 2021, we issued 573,232 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 March 31, 2021, 64,726,235 shares of our common stock were held in treasury.

As of June 30, 2021, 64,704,383 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 2021, 338,700 restricted stock units were granted to certain of our officers and other key employees.

During the first six months of 2021, 359,469 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 $ 13.9 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 June 30, 2021 and 2020 and for the

three and six months then ended is unaudited)

Segment Information

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

Reportable segment information was as follows:

Dispensing and Specialty Closures Metal

2 unchanged sentences

(Dollars in thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Net sales $ 545,768 $ 624,534 $ 178,359 $ — $ 1,348,661

3 unchanged sentences

Segment income 73,836 58,635 27,244 ( 6,761 ) 152,954

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

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

3 unchanged sentences

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

Six Months Ended June 30, 2021

Net sales $ 1,055,120 $ 1,178,615 $ 353,036 $ — $ 2,586,771

Depreciation and amortization (1)

57,991 42,578 19,005 81 119,655

(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)

Rationalization charges 5,298 5,246 167 — 10,711

Segment income 139,481 104,249 51,730 ( 15,957 ) 279,503

Six Months Ended June 30, 2020

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

Depreciation and amortization (1)

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

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

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

_____________

(1) Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $ 1.4 million and $ 1.1 million for the three months ended June 30, 2021 and 2020, respectively and $ 2.7 million and $ 2.1 million for the six months ended June 30, 2021 and 2020, respectively.

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

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(Dollars in thousands)

4 unchanged sentences

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

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.

Because of the seasonality of the harvests, we have historically

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2021 and 2020 and for the

three and six months then ended is unaudited)

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.

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