What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-04 · 124 added, 72 removed, 347 unchanged (36% of the section changed)

3 unchanged sentences

(Dollars in thousands)

March 31, 2022 March 31, 2021 Dec.

June 30, 2022 June 30, 2021 Dec.

(unaudited) (unaudited)

31 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three months ended March 31, 2022 and 2021

For the three and six months ended June 30, 2022 and 2021

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

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net sales $ 1,543,781 $ 1,348,661 $ 2,985,667 $ 2,586,771

8 unchanged sentences

Loss on early extinguishment of debt

— — 1,481 883

Interest and other debt expense 28,660 26,406 59,490 53,712

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three months ended March 31, 2022 and 2021

For the three and six months ended June 30, 2022 and 2021

(Dollars in thousands)

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net income $ 92,675 $ 94,476 $ 177,550 $ 167,757

3 unchanged sentences

Foreign currency translation ( 64,053 ) 25,669 ( 51,703 ) ( 7,703 )

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

Other comprehensive (loss) income ( 63,574 ) 28,373 ( 48,388 ) ( 2,480 )

Comprehensive income $ 29,101 $ 122,849 $ 129,162 $ 165,277

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2022 and 2021

For the six months ended June 30, 2022 and 2021

(Dollars in thousands)

28 unchanged sentences

Repurchase of common stock ( 39,402 ) ( 8,538 )

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

Net cash provided by financing activities 96,897 82,787

Effect of exchange rate changes on cash and cash equivalents ( 8,179 ) ( 1,749 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the three months ended March 31, 2022 and 2021

For the three and six months ended June 30, 2022 and 2021

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

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Common stock - shares outstanding

2 unchanged sentences

Net issuance of treasury stock for vested restricted stock units 65 22 455 351

Repurchases of common stock

( 650 ) — ( 650 ) —

Balance at end of period

7 unchanged sentences

Stock compensation expense

3,991 5,327 8,870 10,337

Net issuance of treasury stock for vested restricted stock units ( 315 ) ( 89 ) ( 2,441 ) ( 1,827 )

12 unchanged sentences

( 244,642 ) ( 291,806 ) ( 259,828 ) ( 260,953 )

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

Other comprehensive (loss) income ( 63,574 ) 28,373 ( 48,388 ) ( 2,480 )

Balance at end of period

4 unchanged sentences

Net issuance of treasury stock for vested restricted stock units ( 1,245 ) ( 173 ) ( 10,593 ) ( 6,711 )

Repurchases of common stock

( 26,367 ) — ( 26,367 ) —

Balance at end of period

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

(Information at June 30, 2022 and 2021 and for the

three and six months then ended is unaudited)

Significant Accounting Policies

8 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, 2022 June 30, 2021 June 30, 2022 June 30, 2021

(Dollars in thousands)

3 unchanged sentences

$ 1,543,781 $ 1,348,661 $ 2,985,667 $ 2,586,771

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, 2022 June 30, 2021 June 30, 2022 June 30, 2021

(Dollars in thousands)

2 unchanged sentences

$ 1,543,781 $ 1,348,661 $ 2,985,667 $ 2,586,771

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.

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $ 110.3 million, $ 92.6 million, and $ 78.2 million as of June 30, 2022 and 2021 and December 31, 2021, 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, 2022 and 2021 and for the

three months then ended is unaudited)

(Information at June 30, 2022 and 2021 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, 2022 June 30, 2021 June 30, 2022 June 30, 2021

(Dollars in thousands)

12 unchanged sentences

Utilized and currency translation ( 3,519 ) ( 737 ) ( 237 ) ( 4,493 )

Balance at March 31, 2022

Balance at June 30, 2022

$ 41,404 $ 157 $ — $ 41,561

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

Rationalization reserves as of June 30, 2022 were recorded in our Condensed Consolidated Balance Sheet as accrued liabilities of $ 5.0 million and other liabilities of $ 36.6 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 $ 3.8 million and $ 7.4 million, respectively.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

(Information at June 30, 2022 and 2021 and for the

three and six months then ended is unaudited)

Accumulated Other Comprehensive Loss

9 unchanged sentences

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

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

Other comprehensive loss before reclassifications — 2,257 ( 51,703 ) ( 49,446 )

Amounts reclassified from accumulated other

1 unchanged sentence

1,038 20 — 1,058

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

Balance at March 31, 2022

Other comprehensive loss 1,038 2,277 ( 51,703 ) ( 48,388 )

Balance at June 30, 2022

$ ( 118,436 ) $ ( 50 ) $ ( 189,730 ) $ ( 308,216 )

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.

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, 2022 were net (losses) of $( 0.7 ) million and $( 1.4 ) million, respectively, excluding income tax benefits of $ 0.2 million and $ 0.4 million, respectively.

For the three and six months ended June 30, 2022, these net (losses) consisted of amortization of net actuarial (losses) of $( 1.1 ) million and $( 2.2 ) 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, 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.

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, 2022 were not significant.

Other comprehensive loss before reclassifications related to foreign currency translation for the three and six months ended June 30, 2022 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 $( 88.7 ) million and $( 85.6 ) million, respectively, (ii) foreign currency gains related to intra-entity foreign currency transactions that are of a long-term investment nature of $ 1.1 million and $ 1.9 million, respectively, and (iii) foreign currency gains related to our net investment hedges of $ 30.8 million and $ 42.0 million, respectively, excluding income tax (provisions) of $( 7.3 ) million and $( 10.0 ) million, respectively.

See Note 7 for further discussion.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2022 and 2021 and for the

three and six months then ended is unaudited)

Inventories consisted of the following:

March 31, 2022 March 31, 2021 Dec.

June 30, 2022 June 30, 2021 Dec.

(Dollars in thousands)

6 unchanged sentences

$ 1,253,894 $ 907,805 $ 798,837

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

During the three and six months ended June 30, 2022, we implemented an inventory management program which resulted in permanent reductions of inventories valued under the last-in, first-out basis.

This resulted in liquidations of inventory layers carried at costs prevailing in prior years and thereby decreased cost of goods sold by $ 7.3 million for both periods.

Long-Term Debt

Long-term debt consisted of the following:

March 31, 2022 March 31, 2021 Dec.

June 30, 2022 June 30, 2021 Dec.

(Dollars in thousands)

16 unchanged sentences

$ 3,367,469 $ 3,176,393 $ 3,772,926

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.

At June 30, 2022, the current portion of long-term debt consisted of $ 675.0 million of bank revolving loans under our amended and restated senior secured credit facility, as amended, or the Credit Agreement, $ 41.0 million of other foreign bank revolving and term loans and $ 2.7 million of finance leases.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2022 and 2021 and for the

three and six months then ended is unaudited)

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.

1 unchanged sentence

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 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 March 31, 2022:

The following table summarizes the carrying amounts and estimated fair values of our other financial instruments at June 30, 2022:

(Dollars in thousands)

13 unchanged sentences

Financial Instruments Measured at Fair Value

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.

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

6 unchanged sentences

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.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2022 and 2021 and for the

three and six months then ended is unaudited)

Derivative Instruments and Hedging Activities

1 unchanged sentence

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

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at March 31, 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.

9 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, 2022.

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, 2022 was not significant.

The total fair value of our interest rate swap agreements in effect at June 30, 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.

The total fair value of our natural gas swap agreements in effect at June 30, 2022 was not significant.

Foreign Currency Exchange Rate Risk

1 unchanged sentence

In addition, where available, we have borrowed funds in local currency or implemented certain internal hedging strategies to minimize our foreign currency exchange rate risk related to foreign operations, including net investment hedges related to the 3¼% Senior 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, 2022 were $ 11.3 million.

Foreign currency gains related to our net investment hedges included in accumulated other comprehensive loss for the three and six months ended June 30, 2022 were $ 30.8 million and $ 42.0 million, respectively.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2022 and 2021 and for the

three and six months then ended is unaudited)

Commitments and Contingencies

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

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

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

On July 12, 2022, we announced that we concluded a settlement with the European Commission to end a long-running investigation of our metal packaging operations in Europe.

This investigation was started in 2015 by the German antitrust authority and was transferred in 2018 to the European Commission.

As part of the settlement, we agreed to pay a fine of $ 25.2 million to put an end to the investigation, although we do not fully concur with the facts and legal qualifications put forth by the European Commission.

The fine will be payable in the fourth quarter of 2022.

The European Commission has agreed to close its investigation and not proceed any further with this matter.

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

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

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

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, 2022 June 30, 2021 June 30, 2022 June 30, 2021

(Dollars in thousands)

5 unchanged sentences

Net periodic benefit credit $ ( 7,695 ) $ ( 8,620 ) $ ( 15,340 ) $ ( 17,242 )

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, 2022 June 30, 2021 June 30, 2022 June 30, 2021

(Dollars in thousands)

8 unchanged sentences

We have been accepted into the Compliance Assurance Program for the 2021 and 2022 tax years which provides for the review by the IRS of tax matters relating to our tax return prior to filing.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2022 and 2021 and for the

three and six months then ended is unaudited)

Treasury Stock

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.

During the six months ended June 30, 2022, we repurchased an aggregate of 649,727 shares of our common stock at an average price per share of $ 40.56 , for a total purchase price of $ 26.4 million.

At June 30, 2022, we had approximately $ 273.6 million remaining under this authorization for the repurchase of our common stock.

During the first six months of 2022, we issued 765,917 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, 2022, 64,312,089 shares of our common stock were held in treasury.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three months then ended is unaudited)

As of June 30, 2022, 64,896,981 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 2022, 409,900 restricted stock units were granted to certain of our officers and other key employees.

During the first six months of 2022, 429,731 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 $ 17.9 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, 2022 and 2021 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, 2022

Three Months Ended June 30, 2022

Net sales $ 602,431 $ 754,396 $ 186,954 $ — $ 1,543,781

3 unchanged sentences

Segment income (2)

Three Months Ended March 31, 2021

91,349 66,358 30,890 ( 30,580 ) 158,017

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

Six Months Ended June 30, 2022

Net sales $ 1,200,358 $ 1,405,122 $ 380,187 $ — $ 2,985,667

Depreciation and amortization (1)

73,160 40,938 19,817 81 133,996

(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:

Rationalization charges — 4,702 105 — 4,807

Segment income (2)

178,662 104,367 55,584 ( 37,204 ) 301,409

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

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

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

_____________

(1) Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $ 1.3 million and $ 1.4 million for the three months ended June 30, 2022 and 2021, respectively, and $ 2.8 million and $ 2.7 million for the six months ended June 30, 2022 and 2021, respectively.

(2) Corporate includes a charge of $ 25.2 million for the settlement with the European Commission for each of the three and six months ended June 30, 2022.

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

Three Months Ended Six Months Ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

(Dollars in thousands)

2 unchanged sentences

Income before income taxes $ 129,357 $ 126,548 $ 241,919 $ 225,791

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2022 and 2021 and for the

three and six months then ended is unaudited)

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.

2 unchanged sentences

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