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Item 2. Management’s Discussion and Analysis

2021-08-04 compared with 2021-05-05 · 106 added, 59 removed, 86 unchanged (66% of the section changed)

13 unchanged sentences

RESULTS OF OPERATIONS

The following table sets forth certain unaudited income statement data expressed as a percentage of net sales for the three months ended March 31

The following table sets forth certain unaudited income statement data expressed as a percentage of net sales for the periods presented:

Three Months Ended Six Months Ended

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

Dispensing and Specialty Closures 40.5 % 34.9 % 40.8 % 34.8 %

12 unchanged sentences

Net income 7.0 % 6.7 % 6.5 % 6.2 %

Summary unaudited results of operations for the three months ended March 31 are provided below.

Summary unaudited results of operations for the periods presented are provided below.

Three Months Ended Six Months Ended

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

(dollars in millions)

7 unchanged sentences

Metal Containers (2)

58.6 71.8 104.2 119.3

Custom Containers (3)

27.2 23.0 51.7 45.0

Corporate (4)

(6.6) (22.2) (15.9) (34.7)

Consolidated $ 153.0 $ 131.2 $ 279.5 $ 233.4

(1) Includes rationalization charges of $5.2 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively.

(2) Includes rationalization charges of $5.0 million and $2.0 million for the three months ended March 31, 2021 and 2020, respectively.

(3) Includes rationalization charges of $0.1 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively.

(4) Includes costs attributed to announced acquisitions of $2.3 million in 2020.

Three Months Ended March 30, 2021 Compared with Three Months Ended March 30, 2020

Consolidated net sales were $1.24 billion in the first quarter of 2021, a 20.2 percent increase as compared to the first quarter of 2020 primarily due to higher volumes in the Dispensing and Specialty Closures and Metal Container segments, the pass through of higher raw material and other costs, the impact from favorable foreign currency translation and a more favorable mix of products sold in the Dispensing and Specialty Closures and Custom Container segments, partially offset by a higher percentage of smaller cans sold in the Metal Container segment.

Income before interest and income taxes for the first

quarter of 2021 was $126.6 million, a $24.5 million increase as compared to the same period in 2020 primarily due to higher unit volumes in the Dispensing and Specialty Closures and Metal Container segments, a more favorable mix of products sold and strong operating performance in the Dispensing and Specialty Closures and Custom Container segments and higher pension income, partially offset by the unfavorable impact in the current year period from the delayed pass through of significantly higher resin costs in the Dispensing and Specialty Closures and Custom Container segments, higher production costs in the Metal Container segment, higher rationalization charges and foreign currency transaction losses in the Dispensing and Specialty Closures segment.

Results for the first quarters of 2021 and 2020 included rationalization charges of $10.3 million and $2.8 million, respectively.

Results for the first quarters of 2021 and 2020 also included a loss on early extinguishment of debt of $0.9 million and $1.5 million, respectively.

Net income for the first quarter of 2021 was $73.3 million as compared to $57.6 million for the same period in 2020.

Net income per diluted share for the first quarter of 2021 was $0.66 as compared to $0.52 for the same period in 2020.

The $207.7 million increase in consolidated net sales in the first quarter of 2021 as compared to the first quarter of 2020 was the result of higher net sales across all the segments.

Net sales for the Dispensing and Specialty Closures segment increased $152.1 million, or 42.6 percent, in the first quarter of 2021 as compared to the same period in 2020.

This increase was primarily the result of higher unit volumes of approximately nine percent, the pass through of higher raw material costs, a more favorable mix of products sold and the impact of favorable foreign currency translation of approximately $11 million.

The increase in unit volumes was principally the result of volumes from the dispensing operations of the Albéa Group acquired in June 2020 and continued higher volume demand across the product offerings.

Net sales for the Metal Container segment increased $45.6 million, or 9.0 percent, in the first quarter of 2021 as compared to the same period in 2020.

This increase was primarily the result of higher unit volumes of approximately nine percent, the pass through of higher raw material and other costs and the impact of favorable foreign currency translation of approximately $5 million, partially offset by a higher percentage of smaller cans sold.

The increase in unit volumes was primarily due to the continued high consumer demand levels for food cans.

Net sales for the Custom Container segment increased $10.0 million, or 6.1 percent, in the first quarter of 2021 as compared to the same period in 2020.

This increase was principally due to a more favorable mix of products sold, the pass through of higher raw material costs and the impact of favorable foreign currency translation of approximately $2 million.

Aggregate volumes in 2021 were comparable to prior year record volumes as consumer goods and pet food products continued to experience strong demand, offset by lower volumes in hygiene products which had a significant surge in the prior year period.

(1) Includes rationalization charges of $0.1 million and $0.7 million for the three months ended June 30, 2021 and 2020, respectively, and $5.3 million and $1.4 million for the six months ended June 30, 2021 and 2020, respectively.

Includes a charge of $3.5 million for the write-up of inventory for purchase accounting for each of the three and six months ended June 30, 2020 as a result of the acquisition of the dispensing operations of the Albéa Group in June 2020.

(2) Includes rationalization charges of $0.2 million and $1.2 million for the three months ended June 30, 2021 and 2020, respectively and $5.2 million and $3.1 million for the six months ended June 30, 2021 and 2020, respectively.

(3) Includes rationalization charges of $0.1 million for each of the three months ended June 30, 2021 and 2020 and $0.2 million for each of the six months ended June 30, 2021 and 2020.

(4) Includes costs attributed to announced acquisitions of $16.1 million and $18.3 million for the three and six months ended June 30, 2020, respectively.

Three Months Ended June 30, 2021 Compared with Three Months Ended June 30, 2020

Consolidated net sales were $1.35 billion in the second quarter of 2021, a 14.6 percent increase as compared to the second quarter of 2020 primarily due to the pass through of higher raw material costs, higher unit volumes in the Dispensing and Specialty Closures segment, the impact from favorable foreign currency translation and a more favorable mix of products sold in the Metal Container and Custom Container segments, partially offset by lower volumes in the Metal Container and Custom Container segments.

Income before interest and income taxes for the second quarter of 2021 was $153.0 million, a $21.8 million increase as compared to the same period in 2020, primarily due to higher unit volumes and strong operating performance in the Dispensing and Specialty Closures segment, a more favorable mix of products sold and strong operating performance in the Custom Container segment, lower corporate expenses and rationalization charges, higher pension income and the inclusion in the prior year period of a charge for the purchase accounting write-up of inventory of the dispensing operations of the Albéa Group, or the Albéa Dispensing Business, which was acquired in June 2020 and a charge in the Custom Container segment in the prior year period for a non-commercial legal dispute relating to prior periods, partially offset by lower volumes in the Metal Container and Custom Container segments, higher production costs, less efficient manufacturing processes and lower production in the Metal Container segment, the unfavorable impact in the current year period from the delayed pass through of significantly higher resin costs in the Dispensing and Specialty Closures and Custom Container segments and foreign currency transaction losses.

Results for the second quarters of 2021 and 2020 included rationalization charges of $0.4 million and $2.0 million, respectively.

Results for the second quarter of 2020 also included costs attributed to announced acquisitions of $16.1 million.

Net income for the second quarter of 2021 was $94.5 million as compared to $78.2 million for the same period in 2020.

Net income per diluted share for the second quarter of 2021 was $0.85 as compared to $0.70 for the same period in 2020.

The $172.2 million increase in consolidated net sales in the second quarter of 2021 as compared to the second quarter of 2020 was the result of higher net sales across all the segments.

Net sales for the Dispensing and Specialty Closures segment increased $135.3 million, or 33.0 percent, in the second quarter of 2021 as compared to the same period in 2020.

This increase was primarily the result of higher unit volumes of approximately ten percent, the pass through of higher raw material costs and the impact of favorable foreign currency translation of approximately $17 million.

The increase in unit volumes was principally the result of volumes from the Albéa Dispensing Business acquired in June 2020 and a strong recovery in the beverage, beauty and fragrance markets, partially offset by a decrease in volume for hygiene and home cleaning products as compared to the initial pantry filling in response to the emerging COVID-19 pandemic in the second quarter of 2020.

Net sales for the Metal Container segment increased $27.3 million, or 4.6 percent, in the second quarter of 2021 as compared to the same period in 2020.

This increase was primarily the result of the pass through of higher raw material and other manufacturing costs, the impact of favorable foreign currency translation of approximately $7 million and a more favorable mix of products sold, partially offset by lower unit volumes of approximately two percent.

The decrease in unit volumes was primarily due to production shortfalls caused by raw material and labor supply challenges across the supply chain.

Net sales for the Custom Container segment increased $9.6 million, or 5.7 percent, in the second quarter of 2021 as compared to the same period in 2020.

This increase was principally due to the pass through of higher raw material costs, a more favorable mix of products sold and the impact of favorable foreign currency translation of approximately $3 million, partially offset by lower volumes of approximately eleven percent.

The decline in volumes was due primarily to unprecedented demand in the prior year quarter for cleaning and sanitizing products as a result of the initial pantry filling in response to the emerging COVID-19 pandemic in the second quarter of 2020.

Gross Profit .

Gross profit margin decreased 0.1 percentage points to 17.9 percent in the first quarter of 2021 as compared to the same period in 2020.

Gross profit margin decreased 1.7 percentage points to 17.4 percent in the second quarter of 2021 as compared to the same period in 2020 for the reasons discussed below in "Income before Interest and Income Taxes."

Selling, General and Administrative Expenses .

Selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.9 percent in the first quarter of 2021 as compared to 8.7 percent in the same period in 2020.

Selling, general and administrative expenses increased $7.5 million to $97.4 million for the first quarter of 2021 as compared to $89.9 million for the same period in 2020.

The increase in selling, general and administrative expenses was principally the result of the inclusion of selling, general and administrative expenses from the dispensing operations of the Albéa Group acquired in June 2020, partially offset by lower corporate expenses primarily related to prior year costs for one-time plant employee incentive payments and announced acquisitions.

Selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.0 percent in the second quarter of 2021 as compared to 8.5 percent in the same period in 2020.

Selling, general and administrative expenses decreased $6.2 million to $94.4 million for the second quarter of 2021 as compared to $100.6 million for the same period in 2020.

The decrease in selling, general and administrative expenses was principally due to lower corporate expenses, primarily as a result of costs attributed to announced acquisitions of $16.1 million incurred in the prior year period, and the inclusion in the prior year period of a charge of $2.8 million in the Custom Container segment for a non-commercial legal dispute relating to prior periods, partially offset by the inclusion of selling, general and administrative expenses from the Albéa Dispensing Business which was acquired in June 2020.

Income before Interest and Income Taxes .

Income before interest and income taxes for the first quarter of 2021 increased by $24.5 million as compared to the first quarter of 2020, and margins increased to 10.2 percent from 9.9 percent over the same periods.

The increase in income before interest and income taxes was primarily the result of higher income in the Dispensing and Specialty Closures and Custom Containers segments and lower corporate expenses, partially offset by higher rationalization charges.

Rationalization charges were $10.3 million and $2.8 million in the first quarters of 2021 and 2020, respectively.

Segment income of the Dispensing and Specialty Closures segment for the first quarter of 2021 increased $20.5 million as compared to the same period in 2020, and segment income margin increased to 12.9 percent from 12.7 percent over the same periods.

The increase in segment income was primarily due to higher unit volumes, a more favorable mix of products sold and strong operating performance, partially offset by the unfavorable impact in the current year period from the delayed pass through of significantly higher resin costs, higher rationalization charges and foreign currency transaction losses in the current year period.

Rationalization charges were $5.2 million and $0.7 million in the first quarters of 2021 and 2020, respectively.

Segment income of the Metal Container segment for the first quarter of 2021 decreased $1.9 million as compared to the same period in 2020, and segment income margin decreased to 8.2 percent from 9.3 percent over the same periods.

The decrease in segment income was due primarily to higher production costs principally due to challenges associated with severe winter weather conditions and one-time investments in hiring and training new employees to support increased demand levels, a higher percentage of smaller cans sold and higher rationalization charges, partially offset by higher unit volumes and higher pension income.

Rationalization charges were $5.0 million and $2.0 million in the first quarters of 2021 and 2020, respectively.

Segment income of the Custom Container segment for the first quarter of 2021 increased $2.5 million as compared to the same period in 2020, and segment income margin increased to 14.0 percent from 13.4 percent over the same periods.

The increase in segment income was primarily attributable to a more favorable mix of products sold and strong operating performance, partially offset by the unfavorable impact in the current year period from the delayed pass through of significantly higher resin costs.

Income before interest and income taxes for the second quarter of 2021 increased by $21.8 million as compared to the second quarter of 2020, and margins increased to 11.3 percent from 11.2 percent over the same periods.

The increase in income before interest and income taxes was primarily the result of higher income in the Dispensing and Specialty Closures and Custom Container segments, lower corporate expenses primarily as a result of prior year costs for announced acquisitions and lower rationalization charges, partially offset by lower income in the Metal Container segment.

Rationalization charges were $0.4 million and $2.0 million in the second quarters of 2021 and 2020, respectively.

The second quarter of 2020 also included the negative impact of a $3.5 million charge related to the purchase accounting write-up of inventory for the Albéa Dispensing Business acquired in June 2020.

Segment income of the Dispensing and Specialty Closures segment for the second quarter of 2021 increased $15.2 million as compared to the same period in 2020, while segment income margin decreased to 13.5 percent from 14.3 percent over the same periods due primarily to the pass through of significantly higher raw material costs.

The increase in segment income was primarily due to higher unit volumes, strong operating performance and the inclusion in the prior year period of a $3.5 million charge for the purchase accounting write-up of inventory of the Albéa Dispensing Business, partially offset by the unfavorable impact in the current year period from the delayed pass through of significantly higher resin costs and foreign currency transaction losses.

Segment income of the Metal Container segment for the second quarter of 2021 decreased $13.2 million as compared to the same period in 2020, and segment income margin decreased to 9.4 percent from 12.0 percent over the same periods.

The decrease in segment income was due primarily to higher production costs, less efficient manufacturing processes and lower production and volume levels, all due in large part to significant raw material supply issues and labor challenges, partially offset by higher pension income and lower rationalization charges.

Rationalization charges were $0.2 million and $1.2 million in the second quarters of 2021 and 2020, respectively.

Segment income of the Custom Container segment for the second quarter of 2021 increased $4.2 million as compared to the same period in 2020, and segment income margin increased to 15.2 percent from 13.6 percent over the same periods.

The increase in segment income was primarily attributable to a more favorable mix of products sold, strong operating performance and the inclusion in the prior year period of a $2.8 million charge for a non-commercial legal dispute relating to prior periods, partially offset by lower volumes and the unfavorable impact in the current year period from the delayed pass through of higher resin costs.

Interest and Other Debt Expense.

Interest and other debt expense before loss on early extinguishment of debt for the first quarter of 2021 increased $3.0 million to $26.4 million as compared to $23.4 million in the same period in 2020.

This increase was primarily due to higher weighted average outstanding borrowings during the quarter as a result of the acquisition of the dispensing operations of the Albéa Group in June 2020, partially offset by lower weighted average interest rates during the current quarter due to lower variable market rates.

Interest and other debt expense for the second quarter of 2021 increased $0.6 million to $26.4 million as compared to $25.8 million in the same period in 2020.

This increase was primarily due to higher weighted average outstanding borrowings during the quarter as a result of the acquisition of the Albéa Dispensing Business in June 2020, partially offset by lower weighted average interest rates during the quarter due to lower variable market rates.

Provision for Income Taxes.

The effective tax rates were 25.3 percent and 25.8 percent for the second quarters of 2021 and 2020, respectively.

Six Months Ended June 30, 2021 Compared with Six Months Ended June, 2020

Consolidated net sales were $2.59 billion in the first six months of 2021, a 17.2 percent increase as compared to the first six months of 2020 primarily as a result of higher unit volumes in the Dispensing and Specialty Closures and Metal Container segments, the pass through of higher raw material costs, the impact of favorable foreign currency translation and a more favorable mix of products sold in the Dispensing and Specialty Closures and Custom Container segments, partially offset by lower volumes in the Custom Container segment and a higher percentage of smaller cans sold in the Metal Container segment.

Income before interest and income taxes for the first six months of 2021 increased by $46.1 million as compared to the same period in 2020 primarily due to higher unit volumes in the Dispensing and Specialty Closures and Metal Container segments, a more favorable mix of products sold and strong operating performance in the Dispensing and Specialty Closures and Custom Container segments, lower corporate expenses, higher pension income, the negative impact in the prior year period of a charge for the purchase accounting write-up of acquired inventory of the Albéa Dispensing Business and the inclusion in the prior year period of a charge in the Custom Container segment for a non-commercial legal dispute relating to prior periods.

These increases were partially offset by the unfavorable impact in the current year period from the delayed pass through of higher resin costs in the Dispensing and Specialty Closures and Custom Container segments, higher production costs, less efficient manufacturing processes and lower production levels in the Metal Container segment, lower volumes in the Custom Container segment, higher rationalization charges, a higher percentage of smaller cans sold in the Metal Container segment and foreign currency transaction losses.

Results for the first six months of 2021 and 2020 included rationalization charges of $10.7 million and $4.7 million and a loss on early extinguishment of debt of $0.9 million and $1.5 million, respectively.

Results for the first six months of 2020 also included costs attributed to acquisitions of $18.3 million.

Net income for the first six months of 2021 was $167.8 million as compared to $135.8 million for the same period in 2020.

Net income per diluted share for the first six months of 2021 was $1.51 as compared to $1.22 for the same period in 2020.

The $380.0 million increase in consolidated net sales in the first six months of 2021 as compared to the first six months of 2020 was the result of higher net sales across all the segments.

Net sales for the Dispensing and Specialty Closures segment increased $287.5 million, or 37.5 percent, in the first six months of 2021 as compared to the same period in 2020.

This increase was primarily the result of higher unit volumes of approximately nine percent, the pass through of higher raw material costs, the impact of favorable foreign currency translation of approximately $27 million and a more favorable mix of products sold.

The increase in unit volumes was principally the result of the inclusion of volumes from the Albéa Dispensing Business which was acquired in June 2020 and strong volumes for beverage, beauty and fragrance products.

Net sales for the Metal Container segment increased $72.9 million, or 6.6 percent, in the first six months of 2021 as compared to the same period in 2020.

This increase was primarily the result of the pass through of higher raw material and other manufacturing costs, higher unit volumes of approximately four percent and the impact of favorable foreign currency translation of approximately $12 million, partially offset by a higher percentage of smaller cans sold.

The increase in unit volumes was primarily due to the continued high consumer demand levels for food cans, partially offset by the negative impact on volume of production shortfalls caused by raw material and labor supply challenges across the supply chain.

Net sales for the Custom Container segment increased $19.6 million, or 5.9 percent, in the first six months of 2021 as compared to the same period in 2020.

This increase was primarily due to a more favorable mix of products sold, the pass through of higher raw material costs and the impact of favorable foreign currency translation of approximately $5 million, partially offset by lower volumes of approximately six percent.

The decrease in volumes was due primarily to unprecedented demand in the prior year period for cleaning and sanitizing products as a result of the initial pantry filling in response to the emerging COVID-19 pandemic.

Gross Profit .

Gross profit margin decreased 0.9 percentage points to 17.6 percent in the first six months of 2021 as compared to the same period in 2020 for the reasons discussed below in "Income before Interest and Income Taxes".

Selling, General and Administrative Expenses .

Selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.4 percent for the first six months of 2021 as compared to 8.6 percent in the same period in 2020.

Selling, general and administrative expenses increased $1.3 million to $191.8 million for the first six months of 2021 as compared to $190.5 million for the same period in 2020.

The increase in selling, general and administrative expenses was principally the result of the inclusion of selling, general and administrative expenses from the Albéa Dispensing Business which was acquired in June 2020, partially offset by the inclusion in the prior year period of costs attributed to announced acquisitions of $18.3 million, one-time plant employee incentive payments and a charge of $2.8 million in the Custom Container segment for a non-commercial legal dispute relating to prior periods.

Income before Interest and Income Taxes .

Income before interest and income taxes for the first six months of 2021 increased by $46.1 million as compared to the first six months of 2020, and margins increased to 10.8 percent from 10.6 percent over the same periods.

The increase in income before interest and income taxes was primarily due to higher income in the Dispensing and Specialty Closures and Custom Container segments and lower corporate expenses primarily as a result of prior year costs for announced acquisitions, partially offset by lower income in the Metal Container segment and higher rationalization charges.

Rationalization charges were $10.7 million and $4.7 million for the first six months of 2021 and 2020, respectively.

Segment income of the Dispensing and Specialty Closures segment for the first six months of 2021 increased $35.7 million, as compared to the same period in 2020, while segment income margin decreased to 13.2 percent from 13.5 percent over the same periods due primarily to the pass through of higher raw material costs.

The increase in segment income was primarily due to higher unit volumes, strong operating performance, a more favorable mix of products sold and the inclusion in the prior year period of a $3.5 million charge for the purchase accounting write-up of inventory of the Albéa Dispensing Business, partially offset by the unfavorable impact in the current year period from the delayed pass through of higher resin costs, higher rationalization charges and foreign currency transaction losses.

Rationalization charges were $5.3 million and $1.4 million in the first six months of 2021 and 2020, respectively.

Segment income of the Metal Container segment for the first six months of 2021 decreased $15.1 million as compared to the same period in 2020, and segment income margin decreased to 8.8 percent from 10.8 percent over the same periods.

The decrease in segment income was primarily attributable to higher production costs, less efficient manufacturing processes and lower production levels, a higher percentage of smaller cans sold and higher rationalization charges, partially offset by higher unit volumes.

Rationalization charges were $5.2 million and $3.1 million in the first six months of 2021 and 2020, respectively.

Segment income of the Custom Container segment for the first six months of 2021 increased $6.7 million as compared to the same period in 2020, and segment income margin increased to 14.6 percent from 13.5 percent over the same periods.

Interest and Other Debt Expense.

Interest and other debt expense before loss on early extinguishment of debt for the first six months of 2021 increased $3.5 million to $52.8 million as compared to $49.3 million in the same period in 2020 principally due to higher weighted average outstanding borrowings primarily related to the acquisition of the Albéa Dispensing Business in June 2020, partially offset by lower weighted average interest rates due to lower variable market rates.

In February 2021, we issued the 1.4% Notes and utilized the proceeds therefrom to prepay outstanding term loans under the Credit Agreement.

In conjunction with this prepayment, we recognized a loss on early extinguishment of debt of $0.9 million in the first quarter of 2021.

In the first six months of 2020, we recognized a loss on early extinguishment of debt of $1.5 million in conjunction with the prepayment of term loans under the Credit Agreement.

Provision for Income Taxes.

The effective tax rates were 26.2 percent and 25.4 percent for the first quarters of 2021 and 2020, respectively.

The effective tax rate for the first quarter of 2021 was unfavorably impacted by higher income in less favorable tax jurisdictions.

The effective tax rates were 25.7 percent and 25.6 percent for the first six months of 2021 and 2020, respectively.

CAPITAL RESOURCES AND LIQUIDITY

6 unchanged sentences

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.

You should also read Note 6 to our Condensed Consolidated Financial Statements for the three months ended March 31, 2021 included elsewhere in this Quarterly Report.

For the three months ended March 31, 2021, we used proceeds from the issuance of the 1.4% Notes of $499.7 million, net borrowings of revolving loans of $139.2 million and cash and cash equivalents of $219.4 million to fund repayments of long-term debt of $500.0 million, cash used in operations of $172.2 million, decreases in outstanding checks of $84.2 million, net capital expenditures and other investing activities of $68.4 million, dividends paid on our common stock of $16.1 million, repurchases of our common stock of $8.3 million under our stock-based compensation plan, debt issuance costs of $4.6 million and the negative effect of exchange rate changes of $4.5 million.

For the three months ended March 31, 2020, we used net borrowings of revolving loans of $828.1 million and net proceeds from the issuance of the 2¼% Notes and the additional 4⅛% Notes of $739.7 million to fund repayments of long-term debt of $766.2 million, cash used in operations of $168.1 million, decreases in outstanding checks of $79.0 million, net capital expenditures and other investing activities of $64.6 million, the purchase of Cobra Plastics for $39.8 million, dividends paid on our common stock of $13.8 million, repurchases of our common stock of $12.7 million, debt issuance costs of $7.5 million and the negative effect of exchange rate changes of $5.1 million and to increase cash and cash equivalents by $411.0 million.

At March 31, 2021, we had $137.0 million of revolving loans outstanding under the Credit Agreement.

After taking into account outstanding letters of credit, the available portion of revolving loans under the Credit Agreement at March 31, 2021 was $1.04 billion and Cdn $15.0 million.

You should also read Note 6 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2021 included elsewhere in this Quarterly Report.

For the six months ended June 30, 2021, we used proceeds from the issuance of the 1.4% Notes of $499.7 million, net borrowings of revolving loans of $212.2 million and cash and cash equivalents of $244.7 million to fund repayments of long-term debt of $500.0 million, cash used in operations of $209.3 million, net capital expenditures and other investing activities of $116.4 million, decreases in outstanding checks of $84.2 million, dividends paid on our common stock of $31.6 million, repurchases of our common stock of $8.5 million under our stock-based compensation plan, debt issuance costs of $4.9 million and the negative effect of exchange rate changes on cash and cash equivalents of $1.7 million.

For the six months ended June 30, 2020, we used net proceeds of $1,639.7 million from the issuance of the 2¼% Notes and the additional 4⅛% Notes and from the incremental term loans borrowed under our Credit Agreement, net borrowings of revolving loans of $356.4 million and cash and cash equivalents of $10.0 million to fund the purchases of the Albéa Dispensing Business and Cobra Plastics for $941.1 million, repayments of long-term debt of $766.2 million, net capital expenditures and other investing activities of $105.5 million, decreases in outstanding checks of $79.0 million, cash used in operations of $63.8 million, dividends paid on our common stock of $27.1 million, repurchases of our common stock of $13.1 million, debt issuance costs of $10.3 million and the negative effect of exchange rate changes on cash and cash equivalents of $2.7 million.

At June 30, 2021, we had $195.9 million of revolving loans outstanding under the Credit Agreement.

After taking into account outstanding letters of credit, the available portion of revolving loans under the Credit Agreement at June 30, 2021 was $976.0 million and Cdn $15.0 million.

Because we sell metal containers and closures used in fruit and vegetable pack processing, we have seasonal sales.

9 unchanged sentences

Each of the 4¾% Notes, the 3¼% Notes, the 4⅛% Notes, the 2¼% Notes and the 1.4% Notes were issued by Silgan and are guaranteed by certain wholly owned subsidiaries of Silgan, collectively the Obligor Group.

The following summarized financial information relates to the Obligor Group as of March 31, 2021 and December 31, 2020 and for the three months ended March 31, 2021.

The following summarized financial information relates to the Obligor Group as of June 30, 2021 and December 31, 2020 and for the six months ended June 30, 2021.

Intercompany transactions, equity investments and other intercompany activity within the Obligor Group have been eliminated from the summarized financial information.

Investments in subsidiaries of Silgan that are not part of the Obligor Group of $1.41 billion and $1.46 billion as of March 31, 2021 and December 31, 2020, respectively, are not included in noncurrent assets in the table below.

March 31, 2021 December 31, 2020

Investments in subsidiaries of Silgan that are not part of the Obligor Group of $1.47 billion and $1.46 billion as of June 30, 2021 and December 31, 2020, respectively, are not included in noncurrent assets in the table below.

June 30, 2021 Dec.

(Dollars in millions)

3 unchanged sentences

Noncurrent liabilities 3,709.1 3,744.6

At March 31, 2021 and December 31, 2020, the Obligor Group held current receivables due from other subsidiary companies of $35.1 million and $54.8 million, respectively;

At June 30, 2021 and December 31, 2020, the Obligor Group held current receivables due from other subsidiary companies of $38.0 million and $54.8 million, respectively;

long-term notes receivable due from other subsidiary companies of $795.1 million and $818.9 million, respectively;

and current payables due to other subsidiary companies of $6.1 million and $13.4 million, respectively.

Three months ended

March 31, 2021

Six months ended

June 30, 2021

(Dollars in millions)

2 unchanged sentences

Net income 127.6

For the three months ended March 31, 2021, net income in the table above excludes income from equity method investments of other subsidiary companies of $14.5 million.

For the three months ended March 31, 2021, the Obligor Group recorded the following transactions with other subsidiary companies:

For the six months ended June 30, 2021, net income in the table above excludes income from equity method investments of other subsidiary companies of $40.2 million.

For the six months ended June 30, 2021, the Obligor Group recorded the following transactions with other subsidiary companies:

sales to such other subsidiary companies of $21.3 million;

1 unchanged sentence

and net interest income from such other subsidiary companies of $9.4 million.

For the three months ended March 31, 2021, the Obligor Group received dividends from other subsidiary companies of $16.0 million.

For the six months ended June 30, 2021, the Obligor Group received dividends from other subsidiary companies of $16.1 million.

Rationalization Charges

1 unchanged sentence

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

Under our rationalization plans, we made cash payments of $2.0 million and $3.6 million for the three months ended March 31, 2021 and 2020, respectively.

Under our rationalization plans, we made cash payments of $3.5 million and $3.6 million for the six months ended June 30, 2021 and 2020, respectively.

Exclusive of the footprint optimization plan for our Metal Container segment and our resulting withdrawal from 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.

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.

You should also read Note 3 to our Condensed Consolidated Financial Statements for the three months ended March 31, 2021 included elsewhere in this Quarterly Report.

You should also read Note 3 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2021 included elsewhere in this Quarterly Report.

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 2. Management’s Discussion and Analysis