What changed in this filing

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Item 1. Financial Statements

2022-05-04 compared with 2021-11-04 · 84 added, 236 removed, 335 unchanged (49% of the section changed)

3 unchanged sentences

(Dollars in thousands)

30, 2021 Sept.

30, 2020 Dec.

March 31, 2022 March 31, 2021 Dec.

(unaudited) (unaudited)

31 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three and nine months ended September 30, 2021 and 2020

For the three months ended March 31, 2022 and 2021

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

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 Sept.

Net sales $ 1,441,886 $ 1,238,110

8 unchanged sentences

Loss on early extinguishment of debt

— — 883 1,481

Interest and other debt expense 30,830 27,306

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and nine months ended September 30, 2021 and 2020

For the three months ended March 31, 2022 and 2021

(Dollars in thousands)

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 Sept.

Net income $ 84,875 $ 73,281

3 unchanged sentences

Foreign currency translation 12,350 ( 33,372 )

Other comprehensive (loss) income ( 27,725 ) 25,008 ( 30,205 ) ( 12,610 )

Other comprehensive income (loss) 15,186 ( 30,853 )

Comprehensive income $ 100,061 $ 42,428

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2021 and 2020

For the three months ended March 31, 2022 and 2021

(Dollars in thousands)

13 unchanged sentences

Other, net ( 12,660 ) ( 8,983 )

Net cash (used in) provided by operating activities ( 5,778 ) 118,466

Net cash used in operating activities ( 267,401 ) ( 172,148 )

Cash flows provided by (used in) investing activities:

12 unchanged sentences

Repurchase of common stock ( 11,474 ) ( 8,275 )

Net cash provided by financing activities 761,886 975,500

Net cash (used in) provided by financing activities ( 35,843 ) 25,693

Effect of exchange rate changes on cash and cash equivalents 1,396 ( 4,533 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the three and nine months ended September 30, 2021 and 2020

For the three months ended March 31, 2022 and 2021

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

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 Sept.

Common stock - shares outstanding

2 unchanged sentences

Net issuance of treasury stock for vested restricted stock units 390 329

Repurchases of common stock

— — — ( 259 )

Balance at end of period

7 unchanged sentences

Stock compensation expense

5,268 4,824 15,605 13,880

Net issuance of treasury stock for vested restricted stock units ( 2,126 ) ( 1,738 )

7 unchanged sentences

( 17,923 ) ( 15,680 )

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

Balance at end of period

3 unchanged sentences

( 259,828 ) ( 260,953 )

Other comprehensive (loss) income ( 27,725 ) 25,008 ( 30,205 ) ( 12,610 )

Other comprehensive income (loss) 15,186 ( 30,853 )

Balance at end of period

4 unchanged sentences

Net issuance of treasury stock for vested restricted stock units ( 9,348 ) ( 6,537 )

Repurchases of common stock

— — — ( 6,934 )

Balance at end of period

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

(Information at March 31, 2022 and 2021 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, 2021.

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.

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 2021 assessment performed during the third quarter.

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 were as follows:

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 Sept.

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

(Dollars in thousands)

3 unchanged sentences

$ 1,441,886 $ 1,238,110

Revenues by geography were as follows:

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 Sept.

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

(Dollars in thousands)

2 unchanged sentences

$ 1,441,886 $ 1,238,110

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $ 94.6 million, $ 80.2 million, and $ 83.0 million as of September 30, 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 $ 99.1 million, $ 86.4 million, and $ 78.2 million as of March 31, 2022 and 2021 and December 31, 2021, respectively.

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

Gateway Plastics Acquisition

On September 20, 2021, we acquired Gateway Plastics LLC, or Silgan Specialty Packaging, a manufacturer and seller of dispensing closures and integrated dispensing packaging solutions, such as a combined container and closure or 100% recyclable dispensing beverage pods, to consumer goods product companies primarily for the food and beverage markets.

The purchase price for this acquisition of $ 483.8 million, net of cash acquired, was funded with revolving loan borrowings under our amended and restated senior secured credit facility, as amended, or the Credit Agreement.

The purchase price is subject to adjustments for working capital, net indebtedness and seller's transaction expenses.

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).

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 $ 200.7 million which is expected to be deductible for income tax purposes, a customer relationship intangible asset of $ 166.0 million with an estimated remaining life of 22 years and technology know-how of $ 3.4 million with an estimated remaining life of 5 years.

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.

Silgan Specialty Packaging's results of operations were included in our Dispensing and Specialty Closures segment since the acquisition date and were not significant since such date.

Unicep Packaging Acquisition

On September 30, 2021, we acquired Unicep Packaging LLC, or Unicep, a Specialty Contract Manufacturer and Developer, or SCMD, solutions provider that develops, formulates, manufactures and sells precision dosing dispensing packaging solutions, such as diagnostic test components, oral care applications and skin care products, primarily for the health care, diagnostics, animal health, oral care and personal care markets.

The purchase price for this acquisition of $ 236.9 million, net of cash acquired, was funded with revolving loan borrowings under the Credit Agreement.

The purchase price is subject to adjustments for working capital, net indebtedness and seller's transaction expenses.

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 $ 142.8 million which is expected to be deductible for income tax purposes, a customer relationship intangible asset of $ 72.0 million with an estimated remaining life of 18 years, technology know-how of $ 4.0 million with an estimated remaining life of 10 years and a trade name of $ 3.7 million with an estimated remaining life of 10 years.

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.

Unicep's results of operations were included in our Dispensing and Specialty Closures segment since the acquisition date and were not significant since such date.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

(Information at March 31, 2022 and 2021 and for the

three 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 were as follows:

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 Sept.

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

(Dollars in thousands)

9 unchanged sentences

Balance at December 31, 2021

$ 41,090 $ 157 $ — $ 41,247

Charged to expense 621 733 25 1,379

Utilized and currency translation ( 1,839 ) ( 702 ) ( 25 ) ( 2,566 )

Balance at September 30, 2021 $ 43,014 $ 127 $ — $ 43,141

Balance at March 31, 2022

$ 39,872 $ 188 $ — $ 40,060

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 September 30, 2021 were recorded in our Condensed Consolidated Balance Sheet as accrued liabilities of $ 7.1 million and other liabilities of $ 36.0 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 $ 1.2 million and $ 5.9 million, respectively.

Rationalization reserves as of March 31, 2022 were recorded in our Condensed Consolidated Balance Sheet as accrued liabilities of $ 4.8 million and other liabilities of $ 35.3 million.

Excluding the impact of our withdrawal from the Central States, Southeast and Southwest Areas Pension Plan, or the Central States Pension Plan, in 2019, remaining expenses and cash expenditures for our rationalization plans are expected to be $ 0.6 million and $ 2.2 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 $ 1.0 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.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

(Information at March 31, 2022 and 2021 and for the

three months then ended is unaudited)

Accumulated Other Comprehensive Loss

8 unchanged sentences

Balance at December 31, 2021

Other comprehensive loss before reclassifications

$ ( 119,474 ) $ ( 2,327 ) $ ( 138,027 ) $ ( 259,828 )

Other comprehensive income before reclassifications — 2,018 12,350 14,368

Amounts reclassified from accumulated other

1 unchanged sentence

499 319 — 818

Other comprehensive loss 5,910 2,540 ( 38,655 ) ( 30,205 )

Balance at September 30, 2021 $ ( 162,694 ) $ ( 2,116 ) $ ( 126,348 ) $ ( 291,158 )

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, 2021 were net (losses) of $( 2.9 ) million and $( 8.1 ) million, respectively, excluding income tax benefits of $ 0.8 million and $ 2.2 million, respectively.

For the three and nine months ended September 30, 2021, these net (losses) consisted of amortization of net actuarial (losses) of $( 3.3 ) million and $( 9.3 ) million and amortization of net prior service credit of $ 0.4 million and $ 1.2 million, respectively.

Other comprehensive income 499 2,337 12,350 15,186

Balance at March 31, 2022

$ ( 118,975 ) $ 10 $ ( 125,677 ) $ ( 244,642 )

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, 2022 were net (losses) of $( 0.7 ) million, excluding an income tax benefit of $ 0.2 million.

These net (losses) consisted of amortization of net actuarial (losses) of $( 1.1 ) 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, 2021 were not significant.

Other comprehensive loss before reclassifications related to foreign currency translation for the three and nine months ended September 30, 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 $( 40.5 ) million and $( 63.1 ) million, respectively, (ii) foreign currency (losses) gains related to intra-entity foreign currency transactions that are of a long-term investment nature of $( 0.1 ) million and $ 0.8 million, respectively, and (iii) foreign currency gains related to our net investment hedges of $ 12.6 million and $ 30.9 million, respectively, excluding an income tax (provision) of $( 3.0 ) million and $( 7.3 ) 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, 2022 were not significant.

Other comprehensive loss before reclassifications related to foreign currency translation for the three months ended March 31, 2022 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 $ 3.0 million, (ii) foreign currency gains related to intra-entity foreign currency transactions that are of a long-term investment nature of $ 0.8 million, and (iii) foreign currency gains related to our net investment hedges of $ 11.3 million, excluding an income tax (provision) of $( 2.7 ) million.

See Note 7 for further discussion.

Inventories consisted of the following:

30, 2021 Sept.

30, 2020 Dec.

March 31, 2022 March 31, 2021 Dec.

(Dollars in thousands)

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

Goodwill and Other Intangibles

Changes in the carrying amount of goodwill were as follows:

Dispensing and Specialty Closures Metal Containers Custom

Containers Total

(Dollars in thousands)

Balance at December 31, 2020 $ 1,396,191 $ 117,938 $ 227,367 $ 1,741,496

Acquisitions 346,916 — — 346,916

Currency translation ( 46,610 ) ( 2,869 ) 100 ( 49,379 )

Balance at September 30, 2021 $ 1,696,497 $ 115,069 $ 227,467 $ 2,039,033

In connection with our acquisitions of Silgan Specialty Packaging and Unicep as discussed in Note 3, we recognized goodwill of $ 343.5 million.

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

30, 2021 Dec.

Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization

(Dollars in thousands)

Definite-lived intangibles:

Customer relationships $ 926,566 $ ( 163,998 ) $ 711,065 $ ( 147,014 )

Other 81,339 ( 36,715 ) 72,689 ( 31,672 )

1,007,905 ( 200,713 ) 783,754 ( 178,686 )

Indefinite-lived intangibles:

Trade names 32,140 — 32,140 —

$ 1,040,045 $ ( 200,713 ) $ 815,894 $ ( 178,686 )

In connection with our acquisitions of Silgan Specialty Packaging and Unicep as discussed in Note 3, we recognized intangible assets for customer relationships of $ 238.0 million, technology know-how of $ 7.4 million and a trade name of $ 3.7 million.

Amortization expense was $ 10.5 million and $ 31.1 million for the three and nine months ended September 30, 2021, respectively, and $ 10.4 million and $ 25.4 million for the three and nine months ended September 30, 2020, respectively.

Amortization expense is expected to be $ 45.1 million, $ 52.8 million, $ 52.7 million, $ 52.7 million and $ 48.7 million for the years ended December 31, 2021 through 2025, respectively.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

(Information at March 31, 2022 and 2021 and for the

three months then ended is unaudited)

Long-Term Debt

Long-term debt consisted of the following:

30, 2021 Sept.

30, 2020 Dec.

March 31, 2022 March 31, 2021 Dec.

(Dollars in thousands)

16 unchanged sentences

$ 3,445,633 $ 3,163,292 $ 3,772,926

At September 30, 2021, the current portion of long-term debt consisted of $ 910.0 million of bank revolving loans under the Credit Agreement, $ 21.6 million of other foreign bank revolving and term loans and $ 2.6 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, 2021 and 2020 and for the

three and nine 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.

At March 31, 2022, the current portion of long-term debt consisted of $ 508.0 million of bank revolving loans under our amended and restated senior secured credit facility, as amended, or the Credit Agreement, $ 28.4 million of other foreign bank revolving and term loans and $ 2.7 million of finance leases.

On March 28, 2022, we redeemed all $ 300.0 million aggregate principal amount of our outstanding 4¾% Senior Notes due 2025, or the 4¾% Notes, at a redemption price of 100 percent of their principal amount plus accrued and unpaid interest to the redemption date.

We funded this redemption with revolving loan borrowings under the Credit Agreement and cash on hand.

As a result of this redemption, we recorded a pre-tax charge for the loss on early extinguishment of debt of $ 1.5 million during the first quarter of 2022 for the write-off of unamortized debt issuance costs.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

(Information at March 31, 2022 and 2021 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, 2021:

The following table summarizes the carrying amounts and estimated fair values of our other financial instruments at March 31, 2022:

(Dollars in thousands)

1 unchanged sentence

Bank debt $ 1,558,014 $ 1,558,014

4¾% Notes 300,000 304,140

3¼% Notes 753,285 760,291

4⅛% Notes 599,172 616,500

2¼% Notes 579,450 584,607

1.4% Notes 499,758 492,000

3¼% Senior Notes 723,190 721,671

4⅛% Senior Notes 599,229 575,280

2¼% Senior Notes 556,300 507,624

1.4% Senior Secured Notes 499,784 456,550

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, 2021 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, 2022 consisted of our cash and cash equivalents and derivative instruments.

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

3 unchanged sentences

Financial Instruments Not Measured at Fair Value

Our bank debt, 4¾% Notes, 3¼% Notes, 4⅛% Notes, 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.

Our bank debt, 3¼% Senior Notes, 4⅛% Senior Notes, 2¼% Senior Notes and 1.4% Senior Secured Notes were recorded at historical amounts in our Condensed Consolidated Balance Sheets, as we have not elected to measure them at fair value.

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

Fair values of the 4¾% Notes, 3¼% Notes, 4⅛% Notes, 2¼% Notes and 1.4% Notes were estimated based on quoted market prices, a Level 1 input.

Fair values of the 3¼% Senior Notes, 4⅛% Senior Notes, 2¼% Senior Notes and 1.4% Senior Secured Notes were estimated based on quoted market prices, a Level 1 input.

Derivative Instruments and Hedging Activities

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine 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.

(Information at March 31, 2022 and 2021 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.

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, foreign currency exchange 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 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.

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

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

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.

3 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 months ended September 30, 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 September 30, 2021 was not significant.

The total fair value of our interest rate swap agreements in effect at March 31, 2022 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, 2022.

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, 2022 was not significant.

Foreign Currency Exchange Rate Risk

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 and nine months ended September 30, 2021 were $ 12.6 million and $ 30.9 million, respectively.

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

Foreign currency gains related to our net investment hedges included in accumulated other comprehensive loss for the three months ended March 31, 2022 were $ 11.3 million.

Commitments and Contingencies

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

(Information at March 31, 2022 and 2021 and for the

three months then ended is unaudited)

Retirement Benefits

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

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 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 $ ( 7,645 ) $ ( 8,622 )

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

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 Sept.

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

(Dollars in thousands)

9 unchanged sentences

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 nine months ended September 30, 2021.

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

During the first nine months of 2021, we issued 576,232 treasury shares which had an average cost of $ 3.19 per share for restricted stock units that vested during the period.

On March 4, 2022, 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, 2026.

We did not repurchase any shares of our common stock pursuant to this authorization during the three months ended March 31, 2022.

During the first three months of 2022, we issued 667,004 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, 2021, 64,702,267 shares of our common stock were held in treasury.

As of March 31, 2022, 64,312,089 shares of our common stock were held in treasury.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

(Information at March 31, 2022 and 2021 and for the

three months then ended is unaudited)

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 2021, 364,769 restricted stock units were granted to certain of our officers, other key employees and outside directors.

During the first three months of 2022, 409,900 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 $ 17.0 million, which is being amortized ratably over the respective vesting period from the grant date.

Segment Information

Reportable segment information was as follows:

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

Dispensing and Specialty Closures Metal

2 unchanged sentences

(Dollars in thousands)

Three Months Ended September 30, 2021

Net sales $ 533,329 $ 942,125 $ 175,616 $ — $ 1,651,070

Depreciation and amortization (1)

30,830 21,231 10,072 38 62,171

Rationalization charges 406 1,822 87 — 2,315

Segment income 60,090 94,271 22,704 ( 9,148 ) 167,917

Three Months Ended September 30, 2020

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

Depreciation and amortization (1)

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

Rationalization charges 787 1,639 79 — 2,505

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

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Net sales $ 597,927 $ 650,726 $ 193,233 $ — $ 1,441,886

3 unchanged sentences

Segment income 87,313 38,009 24,694 ( 6,624 ) 143,392

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

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

4 unchanged sentences

_____________

(1) Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $ 1.4 million and $ 1.2 million for the three months ended September 30, 2021 and 2020, respectively and $ 4.1 million and $ 3.3 million for the nine months ended September 30, 2021 and 2020, respectively.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine months then ended is unaudited)

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

Three Months Ended Nine Months Ended

30, 2021 Sept.

30, 2020 Sept.

30, 2021 Sept.

(1) Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $ 1.5 million and $ 1.3 million for the three months ended March 31, 2022 and 2021, respectively.

Total segment income is reconciled to income before income taxes for the three months ended March 31 as follows:

(Dollars in thousands)

2 unchanged sentences

Income before income taxes $ 112,562 $ 99,243

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.

Sales and segment income of our metal containers segment and of part of our dispensing and specialty closures segment are dependent, in part, upon the vegetable and fruit harvests in the United States and, to a lesser extent, in a variety of national growing regions in Europe.

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.

Subsequent Event

Easytech Closures Acquisition

On October 1, 2021, we acquired Easytech Closures S.p.A., or Easytech, a manufacturer and seller of easy-open and sanitary metal ends used with metal containers primarily for food applications in Europe.

The purchase price for this acquisition of $ 28.5 million, net of cash acquired, was funded with revolving loan borrowings under the Credit Agreement.

Easytech's results of operations will be included in our Metal Container segment.

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