What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-03 compared with 2023-05-03 · 97 added, 49 removed, 164 unchanged (47% 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, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Dispensing and Specialty Closures 39.3 % 39.0 % 40.1 % 40.2 %

12 unchanged sentences

Net income 5.5 % 6.0 % 5.3 % 5.9 %

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, 2023 June 30, 2022 June 30, 2023 June 30, 2022

(dollars in millions)

9 unchanged sentences

Consolidated $ 144.0 $ 158.0 $ 275.2 $ 301.4

Three Months Ended March 31, 2023 Compared with Three Months Ended March 31, 2022

Consolidated net sales were $1.42 billion in the first quarter of 2023, a decrease of $23.6 million, or 1.6 percent, as compared to the first quarter of 2022 primarily due to lower volumes in the dispensing and specialty closures and custom containers segments, the impact from unfavorable foreign currency translation, non-recurring net sales associated with Russia in 2022, lower average selling prices due primarily to the pass through of lower resin costs in the custom containers segment and a less favorable mix of products sold in the metal container segment.

These decreases were partially offset by higher selling prices primarily related to inflation in other manufacturing costs in each of the segments, higher unit volumes in the metal containers segment and a more favorable mix of products sold in the dispensing and specialty closures segment.

In the second quarter of 2023, consolidated net sales were $1.43 billion, a decrease of $117.1 million, or 7.6 percent, as compared to the second quarter of 2022 primarily due to lower volumes across all segments, non-recurring net sales associated with Russia in the second quarter of 2022, a less favorable mix of products sold in the metal containers segment and lower average selling prices in the custom containers segment due primarily to the pass through of lower resin costs.

These decreases were partially offset by higher selling prices in the metal containers segment primarily related to the pass through of inflation in labor and other manufacturing costs and the impact from favorable foreign currency translation.

In the first six months of 2023, consolidated net sales were $2.85 billion, a decrease of $140.7 million, or 4.7 percent, as compared to the first six months of 2022 primarily due to lower volumes across all segments, non-recurring net sales associated with Russia in the first six months of 2022, the impact from unfavorable foreign currency translation, a less favorable mix of products sold in the metal containers segment and lower average selling prices in the custom containers segment due primarily to the pass through of lower resin costs.

These decreases were partially offset by price increases primarily related to inflation in other manufacturing costs and a more favorable mix of products sold in the dispensing and specialty closures segment.

Gross Profit .

Gross profit margin increased 0.6 percentage points to 16.8 percent in the first quarter of 2023 as compared to the same period in 2022 for the reasons discussed below in "Income before Interest and Income Taxes."

Gross profit margin decreased 0.2 percentage points to 17.5 percent in the second quarter of 2023 and increased 0.2 percentage points to 17.2 percent in the first six months of 2023 as compared to the same periods in 2022 primarily 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 7.1 percent in the first quarter of 2023 as compared to 7.0 percent in the same period in 2022.

Selling, general and administrative expenses increased $1.3 million to $101.3 million for the first quarter of 2023 as compared to $100.0 million for the same period in 2022.

In the second quarter of 2023, selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.1 percent as compared to 8.0 percent in the second quarter of 2022.

For the second quarter of 2023, selling, general and administrative expenses decreased $21.6 million to $102.2 million as compared to the second quarter in 2022.

In the first six months of 2023, selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.2 percent as compared to 7.5 percent in the first six months of 2022.

For the first six months of 2023, selling, general and administrative expenses decreased $20.3 million to $203.5 million as compared to the first six months in 2022.

The decrease in selling, general and administrative expenses for each of the second quarter and first six months of 2023 was primarily due to the charge of $25.2 million for the settlement with the European Commission in the second quarter of 2022, partially offset by the write-off of a tax indemnity from a historical acquisition and higher expense for corporate development activities.

Other pension and postretirement expense (income) .

Other pension and postretirement expense in the first quarter of 2023 was $1.3 million, while other pension and postretirement (income) in the first quarter of 2022 was $(11.3) million.

This period -over-period change in other pension and postretirement expense (income) was the result of a lower pension asset balance in 2023 due to a lower rate of return on assets in 2022, higher pension plan interest cost and a decrease in the expected long-term rate of return on U.S.

Other pension and postretirement expense in the second quarter of 2023 was $1.3 million, while other pension and postretirement (income) in the second quarter of 2022 was $(11.3) million.

Other pension and postretirement expense in the first six months of 2023 was $2.6 million, while other pension and postretirement (income) in the first six months of 2022 was $(22.7) million.

These period-over-period changes in other pension and postretirement expense (income) were the result of a lower pension asset balance in 2023 due to a lower rate of return on assets in 2022, higher pension plan interest cost and a decrease in the expected long-term rate of return on U.S.

pension plan assets in 2023 from 2022.

2 unchanged sentences

Income before Interest and Income Taxes .

Income before interest and income taxes for the first quarter of 2023 decreased by $12.2 million to $131.2 million as compared to $143.4 million in the first quarter of 2022, and margins decreased to 9.3 percent from 9.9 percent over the same periods.

The decrease in income before interest and income taxes was primarily the result of other pension and postretirement expense in the current year period as compared to other pension and postretirement income in the prior year period, the unfavorable impact in the current year period from the delayed pass through of higher resin costs as compared to the favorable impact in the prior year period from the delayed pass through of lower resin costs in the dispensing and specialty closures segment, the favorable impact in the prior year period from an inventory management program in the dispensing and specialty closures segment, lower volumes in the custom containers and dispensing and specialty closures segments, a less favorable mix of products sold in the metal containers segment, higher rationalization charges and the impact of unfavorable foreign currency translation.

These decreases were partially offset by the favorable impact in the current year period from the lagged contractual pass through of inflation in other manufacturing costs in the metal containers segment, a more favorable mix of products sold in the dispensing and specialty closures segment, higher unit volumes in the metal containers segment, and cost savings and higher prices primarily related to inflation in other manufacturing costs in the custom containers business.

Rationalization charges were $4.1 million and $1.4 million in the first quarters of 2023 and 2022, respectively.

In the second quarter of 2023, income before interest and income taxes decreased by $14.0 million to $144.0 million as compared to $158.0 million in the second quarter of 2022, and margins decreased to 10.1 percent from 10.2 percent over the same periods.

The decrease in income before interest and income taxes was primarily the result of lower volumes across all segments, other pension and postretirement expense in the second quarter of 2023 as compared to other pension and postretirement income in the second quarter of 2022, the favorable impact in the second quarter of 2022 from an inventory management program and cost recovery of certain customer project expenditures in the dispensing and specialty closures segment, the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility, the write-off of a tax indemnity from a historical acquisition and higher expense for corporate development activities.

These decreases were partially offset by the charge of $25.2 million associated with the settlement with the European Commission in the second quarter of 2022, the favorable impact in the second quarter of 2023 from price increases primarily related to inflation in other manufacturing costs, a more favorable mix of products sold in the dispensing and specialty closures segment and lower rationalization charges.

Rationalization charges were $2.7 million and $3.4 million in the second quarters of 2023 and 2022, respectively.

In the first six months of 2023, income before interest and income taxes decreased by $26.2 million to $275.2 million as compared to $301.4 million in the first six months of 2022, and margins decreased to 9.7 percent from 10.1 percent over the same periods.

The decrease in income before interest and income taxes was primarily the result of lower volumes across all segments, other pension and postretirement expense in the first six months of 2023 as compared to other pension and postretirement income in the first six months of 2022, the favorable impact in the first six months of 2022 from an inventory management program and cost recovery of certain customer project expenditures in the dispensing and specialty closures segment, the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility, higher corporate expense related to the write-off of a tax indemnity from a historical acquisition and corporate development activities, and higher rationalization charges.

These decreases were partially offset by the $25.2 million charge for the settlement with the European Commission in the first six months of 2022, the favorable impact in the first six months of 2023 from price increases primarily related to inflation in other manufacturing costs and a more favorable mix of products sold

in the dispensing and specialty closures segment.

Rationalization charges were $6.8 million and $4.8 million in the first six months of 2023 and 2022, respectively.

Interest and Other Debt Expense .

Interest and other debt expense for the first quarter of 2023 increased $6.0 million to $36.8 million as compared to $30.8 million in the same period in 2022.

This increase was primarily due to higher weighted average interest rates.

In the second quarter of 2023, interest and other debt expense increased $18.1 million to $46.8 million as compared to $28.7 million in the second quarter of 2022.

In the first six months of 2023, interest and other debt expense increased $24.1 million to $83.6 million as compared to $59.5 million in the first six months of 2022.

These increases were primarily due to higher weighted average interest rates and the write-off of $3.5 million of accrued interest income associated with a historical acquisition tax indemnity.

The first six months of 2022 also included a loss on early extinguishment of debt of $1.5 million.

Provision for Income Taxes .

The effective tax rates were 23.8 percent and 24.6 percent for the first quarters of 2023 and 2022, respectively.

The effective tax rate for the first quarter of 2023 was favorably impacted by higher income generated in more favorable tax jurisdictions.

For the second quarters of 2023 and 2022, the effective tax rates were 18.8 percent and 28.4 percent, respectively.

For the first six months of 2023 and 2022, the effective tax rates were 21.3 percent and 26.6 percent, respectively.

The effective tax rates for the second quarter and first six months of 2023 were favorably impacted by the reversal of tax reserves associated with a historical acquisition indemnity which unfavorably impacted corporate and interest expense in both periods.

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

Non-GAAP Measures

19 unchanged sentences

Costs attributed to announced acquisitions consist of third party fees and expenses that are viewed by management as part of the acquisition and not indicative of the on-going cost structure of the Company.

A reconciliation of such non-GAAP financial measures is provided below for the three months ended March 31:

A reconciliation of such non-GAAP financial measures for the periods presented is provided below:

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

(Dollars in millions)

21 unchanged sentences

Loss before interest and income taxes (EBIT) $ (10.3) $ (30.6) $ (16.3) $ (37.3)

European Commission settlement — 25.2 — 25.2

Adjusted EBIT $ (10.3) $ (5.4) $ (16.3) $ (12.1)

1 unchanged sentence

Dispensing and Specialty Closures Segment

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 13.7 % 16.7 % 14.0 % 16.4 %

Net sales for the dispensing and specialty closures segment decreased $18.0 million, or 3.0 percent, in the first quarter of 2023 as compared to the same period in 2022.

This decrease was primarily the result of lower unit volumes of approximately six percent, the impact of unfavorable foreign currency translation of approximately $12 million and non-recurring net sales associated with Russia in 2022 of $4.0 million, partially offset by a more favorable mix of products sold and higher selling prices primarily related to inflation in other manufacturing costs.

The decrease in unit volumes was principally the result of lower volumes for closures for food and beverage markets due to the timing of customer purchases, partially offset by volume growth in higher margin dispensing products.

Adjusted EBIT of the dispensing and specialty closures segment for the first quarter of 2023 decreased $13.6 million as compared to the same period in 2022, and adjusted EBIT margin decreased to 14.3 percent from 16.1 percent over the same periods.

The decrease in adjusted EBIT was primarily due to the unfavorable impact in the current year period from the delayed pass through of higher resin costs as compared to the favorable impact in the prior year period from the delayed pass through of lower resin costs, the favorable impact in the prior year period from an inventory management program, lower unit volumes and the impact of unfavorable foreign currency translation, partially offset by a more favorable mix of products sold.

In the second quarter of 2023, net sales for the dispensing and specialty closures segment decreased $42.3 million, or 7.0 percent, as compared to the second quarter of 2022.

This decrease was primarily the result of lower unit volumes of approximately eight percent, including non-recurring net sales associated with Russia in the second quarter of 2022 of $5.4 million, partially offset by the impact of favorable foreign currency translation of approximately $3 million.

The decrease in unit volumes was principally the result of lower volumes for closures for food and beverage markets and non-recurring volumes associated with Russia, partially offset by volume growth in higher margin dispensing products.

In the first six months of 2023, net sales for the dispensing and specialty closures segment decreased $60.4 million, or 5.0 percent, as compared to the first six months of 2022.

This decrease was primarily the result of lower unit volumes of approximately seven percent, including non-recurring net sales associated with Russia in the first six months of 2022 of $9.4 million, and the impact of unfavorable foreign currency translation of approximately $9 million, partially offset by a more favorable mix of products sold and higher selling prices primarily related to inflation in other manufacturing costs.

In the second quarter of 2023, adjusted EBIT of the dispensing and specialty closures segment decreased $23.4 million as compared to the second quarter of 2022, and adjusted EBIT margin decreased to 13.7 percent from 16.7 percent over the same periods.

The decrease in adjusted EBIT was primarily due to the favorable impact in the second quarter of 2022 from an inventory management program and cost recovery for certain customer project expenditures, lower unit volumes and the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility, partially offset by higher selling prices primarily related to inflation in other manufacturing costs and a more favorable mix of products sold.

In the first six months of 2023, adjusted EBIT of the dispensing and specialty closures segment decreased $37.0 million as compared to the first six months of 2022, and adjusted EBIT margin decreased to 14.0 percent from 16.4 percent over the same periods.

The decrease in adjusted EBIT was primarily due to the favorable impact in the first six months of 2022 from an inventory management program and cost recovery for certain customer project expenditures, lower unit volumes, the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility and the impact of unfavorable foreign currency translation, partially offset by higher selling prices primarily related to inflation in other manufacturing costs and a more favorable mix of products sold.

Metal Containers Segment

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 10.6 % 8.4 % 9.3 % 6.9 %

Net sales for the metal containers segment increased $19.4 million, or 3.0 percent, in the first quarter of 2023 as compared to the same period in 2022.

This increase was primarily the result of higher unit volumes of approximately three percent and higher average selling prices due to the lagged contractual pass through of inflation in other manufacturing costs, partially offset by a less favorable mix of products sold, non-recurring net sales associated with Russia in 2022 of $5.5 million and the impact of unfavorable foreign currency translation of approximately $4 million.

The increase in unit volumes was principally the result of higher volumes primarily for pet food.

Adjusted EBIT of the metal containers segment for the first quarter of 2023 increased $19.5 million as compared to the same period in 2022, and adjusted EBIT margin increased to 7.8 percent from 5.1 percent for the same periods.

The increase in adjusted EBIT was primarily due to higher average selling prices due to the lagged contractual pass through of inflation in other manufacturing costs and higher unit volumes, partially offset by a less favorable mix of products sold and the impact of unfavorable foreign currency translation.

In the second quarter of 2023, net sales for the metal containers segment decreased $43.6 million, or 5.8 percent, as compared to the second quarter of 2022.

This decrease was primarily the result of lower unit volumes of approximately seven percent, including non-recurring net sales associated with Russia in the second quarter of 2022 of $20.1 million, and a less favorable mix of products sold, partially offset by higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs and the impact of favorable foreign currency translation of approximately $2 million.

The decrease in unit volumes was principally the result of non-recurring volumes associated with Russia and lower soup volumes due to a return to a more seasonal buying pattern.

In the first six months of 2023, net sales for the metal containers segment decreased $24.1 million, or 1.7 percent, as compared to the first six months of 2022.

This decrease was primarily the result of lower unit volumes of approximately three percent, including non-recurring net sales associated with Russia in the first six months of 2022 of $25.6 million, a less favorable mix of products sold and the impact of unfavorable foreign currency translation of approximately $2 million, partially offset by higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs.

The decrease in unit volumes was principally the result of non-recurring volumes associated with Russia and lower volumes for soup, partially offset by higher volumes for pet food.

In the second quarter of 2023, adjusted EBIT of the metal containers segment increased $12.2 million as compared to the second quarter of 2022, and adjusted EBIT margin increased to 10.6 from 8.4 percent for the same periods.

The increase in adjusted EBIT was primarily due to higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs, partially offset by lower unit volumes and a less favorable mix of products sold.

In the first six months of 2023, adjusted EBIT of the metal containers segment increased $31.7 million as compared to the first six months of 2022, and adjusted EBIT margin increased to 9.3 percent from 6.9 percent for the same periods.

The increase in adjusted EBIT was primarily due to higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs, partially offset by a less favorable mix of products sold and lower unit volumes.

Custom Containers Segment

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 11.9 % 15.8 % 11.9 % 13.9 %

Net sales for the custom containers segment decreased $25.0 million, or 12.9 percent, in the first quarter of 2023 as compared to the same period in 2022.

This decrease was principally due to lower volumes of approximately ten percent, the unfavorable impact in the current year period from the pass through of lower resin costs and the impact of unfavorable foreign currency translation of approximately $2 million, partially offset by price increases primarily related to inflation in other manufacturing costs.

In the second quarter of 2023, net sales for the custom containers segment decreased $31.2 million, or 16.7 percent, as compared to the second quarter of 2022.

This decrease was principally due to lower volumes of approximately fourteen percent, the unfavorable impact from the pass through of lower resin costs and the impact of unfavorable foreign currency translation of approximately $2 million.

The decline in volumes was primarily due to the exiting of lower margin business that did not meet reinvestment criteria and lower demand for the personal care and food markets.

In the first six months of 2023, net sales for the custom containers segment decreased $56.2 million, or 14.8 percent, as compared to the first six months of 2022.

This decrease was principally due to lower volumes of approximately twelve percent, the unfavorable impact from the pass through of lower resin costs and the impact of unfavorable foreign currency translation of approximately $4 million, partially offset by price increases primarily related to inflation in other manufacturing costs.

The decline in volumes was primarily due to the exiting of lower margin business that did not meet reinvestment criteria.

Adjusted EBIT of the custom containers segment for the first quarter of 2023 decreased $3.3 million as compared to the same period in 2022, and adjusted EBIT margin decreased to 11.9 percent from 12.1 percent over the same periods.

In the second quarter of 2023, adjusted EBIT of the custom containers segment decreased $11.0 million as compared to the second quarter of 2022, and adjusted EBIT margin decreased to 11.9 percent from 15.8 percent over the same periods.

The decrease in adjusted EBIT was primarily attributable to lower volumes, partially offset by cost savings and higher prices primarily related to inflation in other manufacturing costs.

In the first six months of 2023, adjusted EBIT of the custom containers segment decreased $14.4 million as compared to the first six months of 2022, and adjusted EBIT margin decreased to 11.9 percent from 13.9 percent over the same periods.

The decrease in adjusted EBIT was primarily attributable to lower volumes, partially offset by cost savings and higher prices primarily related to inflation in other manufacturing costs.

CAPITAL RESOURCES AND LIQUIDITY

1 unchanged sentence

Our liquidity requirements arise from our obligations under the indebtedness incurred in connection with our acquisitions and the refinancing of that indebtedness, capital investment in new and existing equipment, the funding of our seasonal working capital needs and other general corporate uses.

For the three months ended March 31, 2023, we used net borrowings of revolving loans and proceeds from other foreign long-term debt of an aggregate of $756.5 million and cash and cash equivalents of $84.6 million (including the positive effect of exchange rate changes of $3.8 million) to fund cash used in operations of $631.8 million, net capital expenditures and other investing activities of $67.0 million, decreases in outstanding checks of $61.4 million, the repayment of long-term debt of $50.7 million, dividends paid on our common stock of $20.6 million and repurchases of our common stock of $13.4 million.

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 our 4¾% Senior 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.

At March 31, 2023, we had $755.0 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, 2023 was $724.6 million.

On June 22, 2023, we and certain of our subsidiaries entered into the Fourth Amendment with the lenders party to the Credit Agreement and Wells Fargo Bank, National Association, as administrative agent under the Credit Agreement.

The Fourth Amendment amended the Credit Agreement to provide for the transition from LIBOR based interest rates to SOFR (Secured Overnight Financing Rates) and SONIA (Sterling Overnight Index Average) based interest rates and to provide for standard interest rate benchmark replacement language.

The Fourth Amendment also reduced the spread adjustments for Term SOFR borrowings.

For the six months ended June 30, 2023, we used net borrowings of revolving loans and proceeds from other foreign long-term debt of an aggregate of $758.7 million and cash and cash equivalents of $349.0 million (including the positive effect of exchange rate changes of $5.7 million) to fund cash used in operations of $811.7 million, net capital expenditures and other investing activities of $117.0 million, decreases in outstanding checks of $61.4 million, the repayment of long-term debt of $51.9 million, dividends paid on our common stock of $40.4 million and repurchases of our common stock of $31.0 million.

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 our 4¾% Senior 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.

At June 30, 2023, we had $738.0 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, 2023 was $741.5 million.

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

4 unchanged sentences

We may use the available portion of revolving loans under the Credit Agreement, after taking into account our seasonal needs and outstanding letters of credit, for other general corporate purposes including acquisitions, capital expenditures, dividends, stock repurchases and to refinance or repurchase other debt.

obligations, pension benefit plan contributions, share repurchases and common stock dividends for the foreseeable future.

We believe that cash generated from operations and funds from borrowings available under the Credit Agreement and other foreign bank loans will be sufficient to meet our expected operating needs, planned capital expenditures, debt service, tax obligations, pension benefit plan contributions, share repurchases and common stock dividends for the foreseeable future.

We continue to evaluate acquisition opportunities in the consumer goods packaging market and may incur additional indebtedness, including indebtedness under the Credit Agreement, to finance any such acquisition.

13 unchanged sentences

Separate from this SCF program, we and suppliers who participate in this SCF program generally maintain the contractual right to require the other party to negotiate in good faith the existing payment terms as a result of changes in market conditions, including changes in interest rates and general market liquidity, or in some cases for any reason.

Outstanding trade accounts payables subject to this SCF program were approximately $318.4 million, $372.2 million and $346.8 million at March 31, 2023 and 2022 and December 31, 2022, respectively.

Outstanding trade accounts payables subject to this SCF program were approximately $321.9 million, $369.5 million and $346.8 million at June 30, 2023 and 2022 and December 31, 2022, respectively.

Guaranteed Securities

1 unchanged sentence

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, 2023 and December 31, 2022 and for the three months ended March 31, 2023.

The following summarized financial information relates to the Obligor Group as of June 30, 2023 and December 31, 2022 and for the six months ended June 30, 2023.

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, 2023 and December 31, 2022 are not included in noncurrent assets in the table below.

March 31, 2023 Dec.

Investments in subsidiaries of Silgan that are not part of the Obligor Group of $1.5 billion and $1.4 billion as of June 30, 2023 and December 31, 2022 are not included in noncurrent assets in the table below.

June 30, 2023 Dec.

(Dollars in millions)

3 unchanged sentences

Noncurrent liabilities 3,896.3 3,911.4

At March 31, 2023 and December 31, 2022, the Obligor Group held current receivables due from other subsidiary companies of $39.2 million and $72.4 million, respectively;

At June 30, 2023 and December 31, 2022, the Obligor Group held current receivables due from other subsidiary companies of $49.3 million and $72.4 million, respectively;

long-term notes receivable due from other subsidiary companies of $757.6 million and $730.0 million, respectively;

and current payables due to other subsidiary companies of $4.1 million and $7.9 million, respectively.

Three months ended March 31, 2023

Six Months Ended June 30, 2023

(Dollars in millions)

2 unchanged sentences

Net income 99.4

For the three months ended March 31, 2023, net income in the table above excludes income from equity method investments of other subsidiary companies of $27.1 million.

For the three months ended March 31, 2023, the Obligor Group recorded the following transactions with other subsidiary companies:

For the six months ended June 30, 2023, net income in the table above excludes income from equity method investments of other subsidiary companies of $51.5 million.

For the six months ended June 30, 2023, the Obligor Group recorded the following transactions with other subsidiary companies:

sales to such other subsidiary companies of $25.8 million;

1 unchanged sentence

and net interest income from such other subsidiary companies of $17.7 million.

For the three months ended March 31, 2023, the Obligor Group received dividends from other subsidiary companies of $2.4 million.

For the six months ended June 30, 2023, the Obligor Group received dividends from other subsidiary companies of $15.8 million.

Rationalization Charges

1 unchanged sentence

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

Under our rationalization plans, we made cash payments of $5.1 million and $2.5 million for the three months ended March 31, 2023 and 2022, respectively.

Under our rationalization plans, we made cash payments of $8.9 million and $4.3 million for the six months ended June 30, 2023 and 2022, 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 $1.0 million and $3.3 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 $0.8 million in 2023 and $2.6 million annually thereafter through 2040.

You should also read Note 3 to our Condensed Consolidated Financial Statements for the three months ended March 31, 2023 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, 2023 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