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Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-04 · 109 added, 58 removed, 85 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, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Dispensing and Specialty Closures 39.0 % 40.5 % 40.2 % 40.8 %

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Net income 6.0 % 7.0 % 5.9 % 6.5 %

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

(dollars in millions)

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Metal Containers (2)

66.4 58.6 104.4 104.2

Custom Containers (3)

30.9 27.2 55.6 51.7

Corporate (4)

(30.6) (6.6) (37.3) (15.9)

Consolidated $ 158.0 $ 153.0 $ 301.4 $ 279.5

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

(2) Includes rationalization charges of $1.3 million and $5.0 million for the three months ended March 31, 2022 and 2021, respectively.

(3) Includes rationalization charges of $0.1 million for each of the three months ended March 31, 2022 and 2021.

Three Months Ended March 31, 2022 Compared with Three Months Ended March 31, 2021

Consolidated net sales were $1.44 billion in the first quarter of 2022, a 16.5 percent increase as compared to the first quarter of 2021 primarily due to higher average selling prices due to the pass through of higher raw material and other inflationary costs across all segments, higher unit volumes in the dispensing and specialty closures segment including from acquisitions, and a more favorable mix of products sold in the custom containers segment, partially offset by lower unit volumes and a higher percentage of smaller cans sold in the metal containers segment, lower volumes in the custom containers segment and the impact from unfavorable foreign currency translation.

Income before interest and income taxes for the first quarter of 2022 was $143.4 million, a $16.8 million increase as compared to the same period in 2021 primarily due to the

favorable impact in the current year period from the delayed pass through of lower resin costs as compared to the unfavorable impact in the prior year period from the delayed pass through of higher resin costs in both the dispensing and specialty closures and custom containers segments, strong manufacturing performance and operating efficiencies, higher unit volumes in the dispensing and specialty closures segment and lower rationalization charges, partially offset by inflation in manufacturing costs, lower volumes in the metal containers and custom containers segments, the mix impact of more smaller cans sold in the metal containers segment and the impact of unfavorable foreign currency translation.

Results for the first quarters of 2022 and 2021 included rationalization charges of $1.4 million and $10.3 million, respectively.

Results for the first quarters of 2022 and 2021 also included a loss on early extinguishment of debt of $1.5 million and $0.9 million, respectively.

Net income for the first quarter of 2022 was $84.9 million as compared to $73.3 million for the same period in 2021.

Net income per diluted share for the first quarter of 2022 was $0.76 as compared to $0.66 for the same period in 2021.

The $203.8 million increase in consolidated net sales in the first quarter of 2022 as compared to the first quarter of 2021 was the result of higher net sales across all the segments.

Net sales for the dispensing and specialty closures segment increased $88.6 million, or 17.4 percent, in the first quarter of 2022 as compared to the same period in 2021.

This increase was primarily the result of higher average selling prices due to the pass through of higher raw material and other inflationary costs and higher unit volumes of approximately eight percent, partially offset by the impact of unfavorable foreign currency translation of approximately $15 million.

The increase in unit volumes was principally the result of the inclusion of the recent acquisitions and higher volumes for beauty and fragrance products, partially offset by a decrease in volumes for hygiene and home cleaning products which continued to be impacted by an inventory correction throughout the supply chain, and for metal closures as a result of customer pre-buy activity in late 2021 in advance of significant metal inflation this year.

Net sales for the metal containers segment increased $96.6 million, or 17.4 percent, in the first quarter of 2022 as compared to the same period in 2021.

This increase was primarily the result of higher average selling prices due to the pass through of higher raw material and other manufacturing costs, partially offset by lower unit volumes of approximately fourteen percent, a higher percentage of smaller cans sold and the impact of unfavorable foreign currency translation of approximately $7 million.

The decrease in unit volumes was principally the result of higher customer purchases in late 2021 in advance of significant metal inflation this year and customers’ ongoing supply chain and labor challenges in the current year period.

Net sales for the custom containers segment increased $18.6 million, or 10.6 percent, in the first quarter of 2022 as compared to the same period in 2021.

This increase was principally due to higher average selling prices related to the pass through of higher resin costs and a more favorable mix of products sold, partially offset by lower volumes of approximately eight percent.

The decline in volumes was primarily due to strong pandemic driven demand in the first quarter of 2021.

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

(2) Includes rationalization charges of $3.4 million and $0.2 million for the three months ended June 30, 2022 and 2021, respectively, and $4.7 million and $5.2 million for the six months ended June 30, 2022 and 2021, respectively.

(3) Includes rationalization charges of $0.1 million for the three months ended June 30, 2021 and $0.1 million and $0.2 million for the six months ended June 30, 2022 and 2021, respectively.

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

Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021

Consolidated net sales were $1.54 billion in the second quarter of 2022, a 14.5 percent increase as compared to the second quarter of 2021 primarily due to higher average selling prices due to the pass through of higher raw material and other inflationary costs across all segments, higher unit volumes in the dispensing and specialty closures segment and a more favorable mix of products sold in the custom containers segment, partially offset by lower unit volumes and a higher percentage of smaller cans sold in the metal containers segment, the impact from unfavorable foreign currency translation and lower volumes in the custom containers segment.

Income before interest and income taxes for the second quarter of 2022 was $158.0 million, a $5.0 million increase as compared to the same period in 2021 primarily as a result of higher average selling prices across all segments due to the pass through of higher raw material and other inflationary costs, strong operating performances in each of the segments, the benefit from inventory management programs in the dispensing and specialty closures and metal containers segments, cost recovery of certain customer project expenditures in the dispensing and specialty closures segment, the favorable impact in the current year period from the delayed pass through of lower resin costs as compared to the unfavorable impact in the prior year period from the delayed pass through of higher resin costs in the dispensing and specialty closures and custom containers segments and higher unit volumes in the dispensing and specialty closures segment.

These increases were partially offset by inflation in manufacturing costs, higher corporate expenses due to the charge for the settlement with the European Commission in the current year period, lower volumes in the metal containers and custom containers segments, the impact of unfavorable foreign currency translation, the mix impact of more smaller cans sold in the metal containers segment and higher rationalization charges.

Results for the second quarters of 2022 and 2021 included rationalization charges of $3.4 million and $0.4 million, respectively.

Net income for the second quarter of 2022 was $92.7 million as compared to $94.5 million for the same period in 2021.

Net income per diluted share for the second quarter of 2022 was $0.83 as compared to $0.85 for the same period in 2021.

The $195.1 million increase in consolidated net sales in the second quarter of 2022 as compared to the second quarter of 2021 was the result of higher net sales across all the segments.

Net sales for the dispensing and specialty closures segment increased $56.6 million, or 10.4 percent, in the second quarter of 2022 as compared to the same period in 2021.

This increase was primarily the result of higher average selling prices due to the pass through of higher raw material and other inflationary costs and higher unit volumes of approximately two percent, partially offset by the impact of unfavorable foreign currency translation of approximately $29 million.

The increase in unit volumes was principally the result of the inclusion of the recent acquisitions and higher volumes for beauty and fragrance products, partially offset by a decrease in trigger sprayers for garden, hygiene and home cleaning products, which were impacted by further inventory corrections throughout the supply chain, and in closures for certain food and beverage products, which were unfavorably impacted by other supply chain disruptions at certain customers.

Net sales for the metal containers segment increased $129.9 million, or 20.8 percent, in the second quarter of 2022 as compared to the same period in 2021.

This increase was primarily the result of higher average selling prices due to the pass through of higher raw material and other manufacturing costs, partially offset by lower unit volumes of approximately ten percent, the impact of unfavorable foreign currency translation of approximately $14 million and a higher percentage of smaller cans sold.

The decrease in unit volumes was principally the result of expected lower volumes of vegetable cans as compared to restocking activity in the prior year period and the impact from customers’ ongoing supply chain, labor and energy challenges in the current year period.

Net sales for the custom containers segment increased $8.6 million, or 4.8 percent, in the second quarter of 2022 as compared to the same period in 2021.

This increase was principally due to higher average selling prices which include the pass through of higher resin and other inflationary costs and a more favorable mix of products sold, partially offset by lower volumes of approximately seven percent and the impact of unfavorable foreign currency translation of approximately $1 million.

The decline in volumes was primarily for garden, hygiene and home cleaning products principally due to further inventory corrections throughout the supply chain.

Gross Profit .

Gross profit margin decreased 1.7 percentage points to 16.2 percent in the first quarter of 2022 as compared to the same period in 2021 for the reasons discussed below in "Income before Interest and Income Taxes."

Gross profit margin increased 0.3 percentage points to 17.7 percent in the second quarter of 2022 as compared to the same period in 2021 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 7.0 percent in the first quarter of 2022 as compared to 7.9 percent in the same period in 2021.

Selling, general and administrative expenses increased $2.6 million to $100.0 million for the first quarter of 2022 as compared to $97.4 million for the same period in 2021.

Selling, general and administrative expenses as a percentage of consolidated net sales increased to 8.0 percent in the second quarter of 2022 as compared to 7.0 percent in the same period in 2021.

Selling, general and administrative expenses increased $29.4 million to $123.8 million for the second quarter of 2022 as compared to $94.4 million for the same period in 2021.

The increase in selling, general and administrative expenses was principally the result of a charge of $25.2 million for the settlement with the European Commission and the inclusion of selling, general and administrative expenses from the operations acquired in the third and fourth quarters of 2021.

Income before Interest and Income Taxes .

Income before interest and income taxes for the first quarter of 2022 increased by $16.8 million as compared to the first quarter of 2021, while margins decreased to 9.9 percent from 10.2 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 containers segments, partially offset by lower income in the metal containers segment.

Rationalization charges were $1.4 million and $10.3 million in the first quarters of 2022 and 2021, respectively.

Segment income of the dispensing and specialty closures segment for the first quarter of 2022 increased $21.6 million as compared to the same period in 2021, and segment income margin increased to 14.6 percent from 12.9 percent over the same periods.

The increase in segment income was primarily due to the favorable impact in the current year period from the delayed pass through of lower resin costs as compared to the unfavorable impact in the prior year period from the delayed pass through of higher resin costs, higher unit volumes including from recent acquisitions, improved operating efficiencies and lower rationalization charges, partially offset by inflation in manufacturing costs and the impact of unfavorable foreign currency translation.

Rationalization charges were $5.2 million in the first quarter of 2021.

Segment income of the metal containers segment for the first quarter of 2022 decreased $7.6 million as compared to the same period in 2021, and segment income margin decreased to 5.8 percent from 8.2 percent over the same periods.

The decrease in segment income was due primarily to lower unit volumes, the mix impact of more smaller cans sold and inflation in manufacturing costs, partially offset by strong manufacturing performance.

The decrease in segment income margin was primarily due to to the mathematical consequence of the pass through of inflation in raw material and other manufacturing costs in the first quarter of 2022.

Rationalization charges were $1.3 million and $5.0 million in the first quarters of 2022 and 2021, respectively.

Segment income of the custom containers segment for the first quarter of 2022 increased $0.2 million as compared to the same period in 2021, while segment income margin decreased to 12.8 percent from 14.0 percent over the same periods.

The increase in segment income was primarily attributable to the favorable impact in the current year period from the delayed pass through of lower resin costs as compared to the unfavorable impact in the prior year period from the delayed pass through of higher resin costs and strong operational performance, partially offset by lower volumes.

The decrease in segment income margin was primarily due to the mathematical consequence of the pass through of higher raw material costs in the first quarter of 2022.

Income before interest and income taxes for the second quarter of 2022 increased by $5.0 million as compared to the second quarter of 2021, while margins decreased to 10.2 percent from 11.3 percent over the same periods.

The increase in income before interest and income taxes was primarily the result of higher income in all of the segments, partially offset by higher corporate expenses due to the $25.2 million settlement with the European Commission and higher rationalization charges.

Rationalization charges were $3.4 million and $0.4 million in the second quarters of 2022 and 2021, respectively.

Segment income of the dispensing and specialty closures segment for the second quarter of 2022 increased $17.5 million as compared to the same period in 2021, and segment income margin increased to 15.2 percent from 13.5 percent over the same periods.

The increase in segment income was primarily due to higher average selling prices due to the pass through of inflationary costs, strong operating performance including the benefit of an inventory management program to significantly reduce working capital, cost recovery for certain customer project expenditures, the favorable impact in the current year period from the delayed pass through of lower resin costs as compared to the unfavorable impact in the prior year period from the delayed pass through of higher resin costs and higher unit volumes, partially offset by inflation in manufacturing costs and the impact of unfavorable foreign currency translation.

Segment income of the metal containers segment for the second quarter of 2022 increased $7.8 million as compared to the same period in 2021, while segment income margin decreased to 8.8 percent from 9.4 percent over the same periods.

The increase in segment income was due primarily to higher average selling prices as a result of the pass through of inflationary costs and strong operating performance including the benefit from inventory management, partially offset by inflation in manufacturing costs, lower unit volumes, the mix impact of more smaller cans sold, higher rationalization charges and the impact of unfavorable foreign currency translation.

The decrease in segment income margin was primarily due to the mathematical consequence of the pass through of inflation in raw material and other manufacturing costs in the second quarter of 2022.

Rationalization charges were $3.4 million and $0.2 million in the second quarters of 2022 and 2021, respectively.

Segment income of the custom containers segment for the second quarter of 2022 increased $3.7 million as compared to the same period in 2021, and segment income margin increased to 16.5 percent from 15.2 percent over the same periods.

The increase in segment income was primarily attributable to higher average selling prices due to the pass through of inflationary costs, strong operating performance and the favorable impact in the current year period from the delayed pass through of lower resin costs as compared to the unfavorable impact in the prior year period from the delayed pass through of higher resin costs, partially offset by inflation in manufacturing costs and lower volumes.

Interest and Other Debt Expense.

Interest and other debt expense before loss on early extinguishment of debt for the first quarter of 2022 increased $2.9 million to $29.3 million as compared to $26.4 million in the same period in 2021.

This increase was primarily due to higher weighted average outstanding borrowings during the quarter as a result of the acquisitions in the third and fourth quarters of 2021.

Interest and other debt expense before loss on early extinguishment of debt for the second quarter of 2022 increased $2.3 million to $28.7 million as compared to $26.4 million in the same period in 2021.

This increase was primarily due to higher weighted average outstanding borrowings during the quarter as a result of the acquisitions completed in the third and fourth quarters of 2021, partially offset by lower weighted average interest rates as a result of the redemption of the 4¾% Notes with proceeds from revolving loan borrowings under the Credit Agreement and cash on hand.

Provision for Income Taxes.

The effective tax rates were 28.4 percent and 25.3 percent for the second quarters of 2022 and 2021, respectively.

The effective tax rate in the second quarter of 2022 was unfavorably impacted by the non-deductible settlement with the European Commission.

Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021

Consolidated net sales were $2.99 billion in the first six months of 2022, a 15.4 percent increase as compared to the first six months of 2021 primarily as a result of higher average selling prices across all segments principally related to the pass through of higher raw material and other inflationary costs, higher unit volumes in the dispensing and specialty closures segment and a more favorable mix of products sold in the custom containers segment, partially offset by lower volumes in the metal containers and custom containers segments, the impact of unfavorable foreign currency translation and a higher percentage of smaller cans sold in the metal containers segment.

Income before interest and income taxes for the first six months of 2022 increased by $21.9 million as compared to the same period in 2021 primarily due to higher average selling prices across all segments principally due to the pass through of higher raw material and other inflationary costs, strong operating performances in each of the segments, the benefits from inventory management programs in the dispensing and specialty closures and metal containers segments, the favorable impact from the delayed pass through of lower resin costs in the current year period as compared to the unfavorable impact in the prior year period from the delayed pass through of higher resin costs in the dispensing and specialty closures and custom containers segments, higher unit volumes in the dispensing and specialty closures segment, cost recovery for certain customer project expenditures in the dispensing and specialty closures

segment and lower rationalization charges.

These increases were partially offset by inflation in manufacturing costs, lower volumes in the metal containers and custom containers segments, higher corporate expenses due to the charge for the settlement with the European Commission in the current year period, the mix impact of more smaller cans sold in the metal containers segment and the impact of unfavorable foreign currency translation.

Results for the first six months of 2022 and 2021 included rationalization charges of $4.8 million and $10.7 million, respectively, and a loss on early extinguishment of debt of $1.5 million and $0.9 million, respectively.

Net income for the first six months of 2022 was $177.6 million as compared to $167.8 million for the same period in 2021.

Net income per diluted share for the first six months of 2022 was $1.59 as compared to $1.51 for the same period in 2021.

The $398.9 million increase in consolidated net sales in the first six months of 2022 as compared to the first six months of 2021 was the result of higher net sales across all the segments.

Net sales for the dispensing and specialty closures segment increased $145.3 million, or 13.8 percent, in the first six months of 2022 as compared to the same period in 2021.

This increase was primarily the result of higher average selling prices related to the pass through of higher raw material and other inflationary costs and higher unit volumes of approximately four percent, partially offset by the impact of unfavorable foreign currency translation of approximately $44 million.

The increase in unit volumes was principally the result of the inclusion of volumes from the recent acquisitions and higher volumes for beauty and fragrance products, partially offset by a decrease in volumes for garden, hygiene and home cleaning products, which were impacted by further inventory corrections throughout the supply chain, and for closures as a result of customer pre-buy activity in late 2021 in advance of significant metal inflation this year and other supply chain disruptions at certain customers.

Net sales for the metal containers segment increased $226.5 million, or 19.2 percent, in the first six months of 2022 as compared to the same period in 2021.

This increase was primarily the result of higher average selling prices related to the pass through of higher raw material and other manufacturing costs, partially offset by lower unit volumes of approximately twelve percent, the impact of unfavorable foreign currency translation of approximately $21 million and a higher percentage of smaller cans sold.

The decrease in unit volumes was primarily due to the impact of the customer pre-buy activity in late 2021 in advance of significant price increases due to unprecedented metal inflation this year, lower volumes of vegetable cans as compared to restocking activity in the prior year period and customers' ongoing supply chain, labor and energy challenges in the current year period.

Net sales for the custom containers segment increased $27.1 million, or 7.7 percent, in the first six months of 2022 as compared to the same period in 2021.

This increase was primarily due to higher average selling prices which include the pass through of higher resin and other inflationary costs and a more favorable mix of products sold, partially offset by lower volumes of approximately eight percent and the impact of unfavorable foreign currency translation of approximately $1 million.

The decrease in volumes was primarily due to higher volumes in the prior year period as a result of strong pandemic driven demand and subsequent inventory corrections throughout the supply chain in the current year period.

Gross Profit .

Gross profit margin decreased 0.6 percentage points to 17.0 percent in the first six months of 2022 as compared to the same period in 2021 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 increased to 7.5 percent for the first six months of 2022 as compared to 7.4 percent in the same period in 2021.

Selling, general and administrative expenses increased $32.0 million to $223.8 million for the first six months of 2022 as compared to $191.8 million for the same period in 2021.

Income before Interest and Income Taxes .

Income before interest and income taxes for the first six months of 2022 increased by $21.9 million as compared to the first six months of 2021, while margins decreased to 10.1 percent from 10.8 percent over the same periods.

The increase in income before interest and income taxes was primarily due to higher income across all the segments and lower rationalization charges, partially offset by higher corporate expenses due to the $25.2 million settlement with the European Commission.

Rationalization charges were $4.8 million and $10.7 million for the first six months of 2022 and 2021, respectively.

Segment income of the dispensing and specialty closures segment for the first six months of 2022 increased $39.2 million as compared to the same period in 2021, and segment income margin increased to 14.9 percent from 13.2 percent over the same period.

The increase in segment income was due primarily to higher average selling prices principally as a result of the pass through of higher raw material and other inflationary costs, strong operating performance including the benefit from an inventory management program, the favorable impact from the delayed pass through of lower resin costs in the current year

period as compared to the unfavorable impact in the prior year period from the delayed pass through of higher resin costs, higher unit volumes, cost recovery for certain customer project expenditures and lower rationalization charges, partially offset by inflation in manufacturing costs and the impact of unfavorable foreign currency translation.

Rationalization charges were $5.3 million in the first six months of 2021.

Segment income of the metal containers segment for the first six months of 2022 increased $0.2 million as compared to the same period in 2021, while segment income margin decreased to 7.4 percent from 8.8 percent over the same periods.

The increase in segment income was primarily attributable to higher average selling prices due to the pass through of higher raw material and other inflationary costs, strong operating performance including the benefit from an inventory management program and lower rationalization charges, partially offset by inflation in manufacturing costs, lower unit volumes, the mix impact of more smaller cans sold and the impact of unfavorable foreign currency translation.

The decrease in segment income margin was primarily due to the mathematical consequence of the pass through of inflation in raw material and other manufacturing costs.

Rationalization charges were $4.7 million and $5.2 million in the first six months of 2022 and 2021, respectively.

Segment income of the custom containers segment for the first six months of 2022 increased $3.9 million as compared to the same period in 2021, and segment income margin remained unchanged at 14.6 percent over the same periods.

The increase in segment income was primarily attributable higher average selling prices principally due to the pass through of higher raw material and other inflationary costs, strong operating performance and the favorable impact from the delayed pass through of lower resin costs in the current year period as compared to the unfavorable impact of the delayed pass through of higher resin costs in the prior year period, partially offset by inflation in manufacturing costs and lower volumes.

Interest and Other Debt Expense.

Interest and other debt expense before loss on early extinguishment of debt for the first six months of 2022 increased $5.2 million to $58.0 million as compared to $52.8 million in the same period in 2021 principally due to higher weighted average outstanding borrowings as a result of the acquisitions completed in 2021, partially offset by lower weighted average interest rates as a result of the redemption of the 4¾% Notes with proceeds from revolving loan borrowings under the Credit Agreement and cash on hand.

In March 2022, we redeemed all $300.0 million aggregate principal amount of the outstanding 4¾% Notes.

In conjunction with this redemption, we recognized a loss on early extinguishment of debt of $1.5 million in the first quarter of 2022.

In February 2021, we issued the 1.4% Senior Secured 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.

Provision for Income Taxes.

The effective tax rates were 24.6 percent and 26.2 percent for the first quarters of 2022 and 2021, 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 26.6 percent and 25.7 percent for the first six months of 2022 and 2021, respectively.

The effective tax rate in 2022 was unfavorably impacted by the non-deductible settlement with the European Commission in the second quarter of 2022.

CAPITAL RESOURCES AND LIQUIDITY

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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.

You should also read Note 6 to our Condensed Consolidated Financial Statements for the three months ended March 31, 2022 included elsewhere in this Quarterly Report.

For the three months ended March 31, 2022, we used net borrowings of revolving loans of $520.2 million and cash and cash equivalents of $371.9 million (including the positive effect of exchange rate changes of $1.4 million) to fund the redemption of the 4¾% Notes for $300.0 million, cash used in operations of $267.4 million, decreases in outstanding checks of $225.9 million, net capital expenditures and other investing activities of $70.0 million, dividends paid on our common stock of $18.7 million, and repurchases of our common stock of $11.5 million under our stock-based compensation plan.

For the three months ended March 31, 2021, we used proceeds from the issuance of the 1.4% Senior Secured 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.

At March 31, 2022, we had $508.0 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, 2022 was $972.2 million.

You should also read Note 6 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2022 included elsewhere in this Quarterly Report.

For the six months ended June 30, 2022, we used net borrowings of revolving loans of $698.9 million and cash and cash equivalents of $383.6 million to fund the redemption of the 4¾% Notes for $300.0 million, cash used in operations of $351.9 million, decreases in outstanding checks of $225.9 million, net capital expenditures and other investing activities of $120.4 million, repurchases of our common stock of $39.4 million, dividends paid on our common stock of $36.7 million and the negative effect of exchange rate changes on cash and cash equivalents of $8.2 million.

For the six months ended June 30, 2021, we used proceeds from the issuance of the 1.4% Senior Secured 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.

At June 30, 2022, we had $675.0 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 June 30, 2022 was $805.3 million.

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

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subsidiaries that also guarantee our obligations under the Credit Agreement, collectively the Obligor Group.

The following summarized financial information relates to the Obligor Group as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022.

The following summarized financial information relates to the Obligor Group as of June 30, 2022 and December 31, 2021 and for the six months ended June 30, 2022.

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 $1.5 billion and $1.4 billion as of March 31, 2022 and December 31, 2021, respectively, are not included in noncurrent assets in the table below.

March 31, 2022 Dec.

Investments in subsidiaries of Silgan that are not part of the Obligor Group of $1.4 billion as of each of June 30, 2022 and December 31, 2021 are not included in noncurrent assets in the table below.

June 30, 2022 Dec.

(Dollars in millions)

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Noncurrent liabilities 4,008.6 4,392.4

At March 31, 2022 and December 31, 2021, the Obligor Group held current receivables due from other subsidiary companies of $36.9 million and $70.5 million, respectively;

At June 30, 2022 and December 31, 2021, the Obligor Group held current receivables due from other subsidiary companies of $41.5 million and $70.5 million, respectively;

long-term notes receivable due from other subsidiary companies of $731.2 million and $782.4 million, respectively;

and current payables due to other subsidiary companies of $5.4 million and $7.3 million, respectively.

Three months ended March 31, 2022

Six Months Ended June 30, 2022

(Dollars in millions)

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Net income 127.2

For the three months ended March 31, 2022, net income in the table above excludes income from equity method investments of other subsidiary companies of $27.6 million.

For the three months ended March 31, 2022, the Obligor Group recorded the following transactions with other subsidiary companies:

For the six months ended June 30, 2022, net income in the table above excludes income from equity method investments of other subsidiary companies of $50.4 million.

For the six months ended June 30, 2022, the Obligor Group recorded the following transactions with other subsidiary companies:

sales to such other subsidiary companies of $21.2 million;

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and net interest income from such other subsidiary companies of $10.1 million.

For the three months ended March 31, 2022, the Obligor Group received dividends from other subsidiary companies of $0.2 million.

For the six months ended June 30, 2022, the Obligor Group received dividends from other subsidiary companies of $1.7 million.

Rationalization Charges

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

Under our rationalization plans, we made cash payments of $2.5 million and $2.0 million for the three months ended March 31, 2022 and 2021, respectively.

Under our rationalization plans, we made cash payments of $4.3 million and $3.5 million for the six months ended June 30, 2022 and 2021, respectively.

Excluding the impact of our withdrawal from 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.

Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $0.9 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, 2022 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, 2022 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