UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 000-22117
SILGAN HOLDINGS INC.
(Exact name of Registrant as specified in its charter)
Delaware 06-1269834
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4 Landmark Square
Stamford, Connecticut 06901
(Address of principal executive offices) (Zip Code)
(203)975-7110
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the Registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the Registrant was required
to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer[X] Accelerated filer[ ]
Non-accelerated filer[ ] Smaller reporting company[ ]
(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of July 31, 2009, the number of shares outstanding of the Registrant's common
stock, $0.01 par value, was 38,191,697.
SILGAN HOLDINGS INC.
TABLE OF CONTENTS
Page No.
--------
Part I. Financial Information 3
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets at 3
June 30, 2009 and 2008 and December 31, 2008
Condensed Consolidated Statements of Income for the 4
three months ended June 30, 2009 and 2008
Condensed Consolidated Statements of Income for the 5
six months ended June 30, 2009 and 2008
Condensed Consolidated Statements of Cash Flows for 6
the six months ended June 30, 2009 and 2008
Condensed Consolidated Statements of Stockholders' 7
Equity for the six months ended June 30, 2009 and 2008
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial 22
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market 31
Risk
Item 4. Controls and Procedures 31
Part II. Other Information 31
Item 1. Legal Proceedings 31
Item 4. Submission of Matters to a Vote of Security Holders 32
Item 6. Exhibits 33
Signatures 34
Exhibit Index 35
-2-
Part I. Financial Information
Item 1. Financial Statements
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, June 30, Dec. 31,
2009 2008 2008
---- ---- ----
(unaudited) (unaudited)
Assets
Current assets
Cash and cash equivalents $ 79,638 $ 86,079 $ 163,006
Trade accounts receivable, net 289,309 346,156 266,880
Inventories 555,704 576,129 392,335
Prepaid expenses and other current assets 28,531 30,233 31,093
---------- ---------- ----------
Total current assets 953,182 1,038,597 853,314
Property, plant and equipment, net 877,004 940,280 902,230
Goodwill 300,315 311,172 300,448
Other intangible assets, net 56,242 61,972 57,112
Other assets, net 52,400 76,212 50,475
---------- ---------- ----------
$2,239,143 $2,428,233 $2,163,579
========== ========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Revolving loans and current
portion of long-term debt $ 127,938 $ 318,765 $ 158,877
Trade accounts payable 218,626 258,907 298,611
Accrued payroll and related costs 72,157 82,483 72,337
Accrued liabilities 60,353 43,962 41,046
---------- ---------- ----------
Total current liabilities 479,074 704,117 570,871
Long-term debt 856,669 895,849 726,036
Other liabilities 326,754 271,259 342,094
Stockholders' equity
Common stock 434 432 433
Paid-in capital 166,878 157,417 162,568
Retained earnings 544,451 433,597 497,732
Accumulated other comprehensive (loss) income (74,740) 25,725 (75,861)
Treasury stock (60,377) (60,163) (60,294)
---------- ---------- ----------
Total stockholders' equity 576,646 557,008 524,578
---------- ---------- ----------
$2,239,143 $2,428,233 $2,163,579
========== ========== ==========
See accompanying notes.
-3-
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months ended June 30, 2009 and 2008
(Dollars and shares in thousands, except per share amounts)
(Unaudited)
2009 2008
---- ----
Net sales $689,542 $735,283
Cost of goods sold 584,516 627,256
-------- --------
Gross profit 105,026 108,027
Selling, general and administrative expenses 40,087 40,363
Rationalization (credit) charges (77) 2,718
-------- --------
Income from operations 65,016 64,946
Interest and other debt expense before loss on
early extinguishment of debt 12,208 14,802
Loss on early extinguishment of debt 661 --
-------- --------
Interest and other debt expense 12,869 14,802
Income before income taxes 52,147 50,144
Provision for income taxes 18,461 16,834
-------- --------
Net income $ 33,686 $ 33,310
======== ========
Earnings per share:
Basic net income per share $0.88 $0.88
===== =====
Diluted net income per share $0.88 $0.87
===== =====
Dividends per share $0.19 $0.17
===== =====
Weighted average number of shares:
Basic 38,146 37,851
Effect of dilutive securities 298 418
------ ------
Diluted 38,444 38,269
====== ======
See accompanying notes.
-4-
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the six months ended June 30, 2009 and 2008
(Dollars and shares in thousands, except per share amounts)
(Unaudited)
2009 2008
---- ----
Net sales $1,344,938 $1,415,115
Cost of goods sold 1,143,598 1,217,022
---------- ----------
Gross profit 201,340 198,093
Selling, general and administrative expenses 81,339 75,915
Rationalization charges 1,378 7,393
---------- ----------
Income from operations 118,623 114,785
Interest and other debt expense before loss on
early extinguishment of debt 22,665 31,115
Loss on early extinguishment of debt 661 --
---------- ----------
Interest and other debt expense 23,326 31,115
Income before income taxes 95,297 83,670
Provision for income taxes 33,936 29,204
---------- ----------
Net income $ 61,361 $ 54,466
========== ==========
Earnings per share:
Basic net income per share $1.61 $1.44
===== =====
Diluted net income per share $1.60 $1.42
===== =====
Dividends per share $0.38 $0.34
===== =====
Weighted average number of shares:
Basic 38,117 37,812
Effect of dilutive securities 314 427
------ ------
Diluted 38,431 38,239
====== ======
See accompanying notes.
-5-
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2009 and 2008
(Dollars in thousands)
(Unaudited)
2009 2008
---- ----
Cash flows provided by (used in) operating activities
Net income $ 61,361 $ 54,466
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 73,186 71,459
Rationalization charges 1,378 7,393
Loss on early extinguishment of debt 661 --
Excess tax benefit from stock-based compensation (1,173) (2,067)
Other changes that provided (used) cash,
net of effects from acquisitions:
Trade accounts receivable, net (23,197) (119,098)
Inventories (163,579) (131,389)
Trade accounts payable (28,937) 65,982
Accrued liabilities 12,617 6,511
Other, net (3,880) 2,725
--------- ---------
Net cash used in operating activities (71,563) (44,018)
--------- ---------
Cash flows provided by (used in) investing activities
Purchase of businesses, net of cash acquired -- (14,542)
Capital expenditures (48,776) (55,386)
Proceeds from asset sales 2,456 918
--------- ---------
Net cash used in investing activities (46,320) (69,010)
--------- ---------
Cash flows provided by (used in) financing activities
Borrowings under revolving loans 190,620 422,620
Repayments under revolving loans (93,039) (226,269)
Proceeds from issuance of long-term debt 243,200 7,984
Repayments of long-term debt (237,924) (3,000)
Debt issuance costs (5,325) --
Changes in outstanding checks - principally vendors (49,996) (88,063)
Dividends paid on common stock (14,642) (12,977)
Proceeds from stock option exercises 1,102 1,201
Excess tax benefit from stock-based compensation 1,173 2,067
Repurchase of treasury shares (654) (397)
--------- ---------
Net cash provided by financing activities 34,515 103,166
--------- ---------
Cash and cash equivalents
Net decrease (83,368) (9,862)
Balance at beginning of year 163,006 95,941
--------- ---------
Balance at end of period $ 79,638 $ 86,079
========= =========
Interest paid, net $ 19,905 $ 30,666
Income taxes paid, net 27,444 23,193
See accompanying notes.
-6-
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
For the six months ended June 30, 2009 and 2008
(Dollars and shares in thousands)
(Unaudited)
Common Stock Accumulated
------------ Other Total
Shares Par Paid-in Retained Comprehensive Treasury Stockholders'
Outstanding Value Capital Earnings (Loss) Income Stock Equity
----------- ----- ------- -------- ------------- ----- ------
Balance at December 31, 2007 37,740 $430 $152,629 $392,108 $ 15,064 $(60,148) $500,083
Comprehensive income:
Net income -- -- -- 54,466 -- -- 54,466
Changes in net prior service
credit and actuarial losses,
net of tax provision of $115 -- -- -- -- 161 -- 161
Change in fair value of derivatives,
net of tax provision of $1,972 -- -- -- -- 2,786 -- 2,786
Foreign currency translation,
net of tax benefit of $8,705 -- -- -- -- 7,714 -- 7,714
--------
Comprehensive income 65,127
--------
Dividends declared on common stock -- -- -- (12,977) -- -- (12,977)
Stock compensation expense -- -- 1,768 -- -- -- 1,768
Stock option exercises, including
tax benefit of $2,131 130 2 3,330 -- -- -- 3,332
Net issuance of treasury stock for
vested restricted stock units,
including tax benefit of $72 20 -- (310) -- -- (15) (325)
------ ---- -------- -------- -------- -------- --------
Balance at June 30, 2008 37,890 $432 $157,417 $433,597 $ 25,725 $(60,163) $557,008
====== ==== ======== ======== ======== ======== ========
Balance at December 31, 2008 38,026 $433 $162,568 $497,732 $(75,861) $(60,294) $524,578
Comprehensive income:
Net income -- -- -- 61,361 -- -- 61,361
Changes in net prior service
credit and actuarial losses,
net of tax provision of $1,884 -- -- -- -- 2,873 -- 2,873
Change in fair value of derivatives,
net of tax benefit of $1,237 -- -- -- -- (1,600) -- (1,600)
Foreign currency translation,
net of tax provision of $2,838 -- -- -- -- (152) -- (152)
--------
Comprehensive income 62,482
--------
Dividends declared on common stock -- -- -- (14,642) -- -- (14,642)
Stock compensation expense -- -- 2,312 -- -- -- 2,312
Stock option exercises, including
tax benefit of $1,389 86 1 2,490 -- -- -- 2,491
Net issuance of treasury stock for
vested restricted stock units,
including tax benefit of $79 30 -- (492) -- -- (83) (575)
------ ---- -------- -------- -------- -------- --------
Balance at June 30, 2009 38,142 $434 $166,878 $544,451 $(74,740) $(60,377) $576,646
====== ==== ======== ======== ======== ======== ========
See accompanying notes.
-7-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 1. Significant Accounting Policies
Basis of Presentation. The accompanying unaudited condensed consolidated
financial statements of Silgan Holdings Inc., or Silgan, have been prepared in
accordance with U.S. generally accepted accounting principles, or GAAP, for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by GAAP for complete financial statements. In the opinion
of management, the accompanying financial statements include all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation. The results of operations for any interim period are not
necessarily indicative of the results of operations for the full year.
We have evaluated events subsequent to June 30, 2009 for recognition under
Statement of Financial Accounting Standards, or SFAS, No. 165, "Subsequent
Events," through August 10, 2009, the issuance date of the accompanying
condensed consolidated financial statements.
The Condensed Consolidated Balance Sheet at December 31, 2008 has been derived
from our audited consolidated financial statements at that date, but does not
include all of the information and footnotes required by GAAP for complete
financial statements.
You should read the accompanying condensed consolidated financial statements in
conjunction with our consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended December 31, 2008.
Recently Adopted Accounting Pronouncements. In September 2006, the Financial
Accounting Standards Board, or FASB, issued SFAS No. 157, "Fair Value
Measurements." SFAS No. 157 establishes a single authoritative definition for
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. As of January 1, 2009, we
completed the adoption of SFAS No. 157. The adoption of SFAS No. 157 did not
have a significant effect on our financial position, results of operations or
cash flows. See Note 6 for further information.
In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations." SFAS
No. 141(R) retains the fundamental requirements in SFAS No. 141 that the
purchase method of accounting be used for all business combinations and an
acquirer be identified for each business combination. SFAS No. 141(R)
establishes principles and requirements for the reporting entity in a business
combination, including recognition and measurement in the financial statements
of the identifiable assets acquired, the liabilities assumed and any
non-controlling interest at their fair values at the acquisition date. SFAS No.
141(R) also requires that acquisition-related costs be recognized separately
from the acquisition. SFAS No. 141(R) applies prospectively to business
combinations for which the acquisition date is on or after January 1, 2009. In
addition, SFAS No. 141(R) requires that any changes in an acquired deferred tax
account or related valuation allowance that occur after January 1, 2009 will be
recognized as adjustments to income tax expense. The initial adoption of SFAS
No. 141(R) did not have an effect on our financial position, results of
operations or cash flows. However, our unrecognized tax benefit positions will
impact our effective tax rate if recognition of such positions is required in
future periods.
-8-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 1. Significant Accounting Policies (continued)
Recently Adopted Accounting Pronouncements. (continued)
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." SFAS No. 161 requires companies with
derivative instruments to disclose information that should enable readers of
financial statements to understand how and why a company uses derivative
instruments, how derivative instruments and related hedged items are accounted
for under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," and how derivative instruments and related hedged items affect a
company's financial position, financial performance and cash flows. SFAS No. 161
was effective for us on January 1, 2009. The adoption of SFAS No. 161 did not
have an effect on our financial position, results of operations or cash flows.
See Note 6 for additional disclosures required under SFAS No. 161.
In April 2009, the FASB issued FASB Staff Position, or FSP, No. FAS 107-1 and
APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments," which
requires disclosures about the fair value of financial instruments for interim
reporting periods. This FSP was effective for us beginning with our quarter
ending June 30, 2009. The adoption of this FSP did not have an effect on our
financial position, results of operations or cash flows. See Note 6 for
additional disclosures required under this FSP.
Recently Issued Accounting Pronouncements. In December 2008, the FASB issued FSP
No. FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan
Assets," which requires enhanced disclosures about plan assets in an employer's
defined benefit pension or other postretirement plans. These disclosures are
intended to provide users of financial statements with a greater understanding
of how investment allocation decisions are made, the major categories of plan
assets, the inputs and valuation techniques used to measure the fair value of
plan assets and significant concentrations of risk within plan assets. FSP No.
FAS 132(R)-1 will apply to our plan asset disclosures for the fiscal year ending
December 31, 2009. We are currently evaluating the disclosure implications of
this FSP, however the adoption of it will not have an effect on our financial
position, results of operations or cash flows.
In June 2009, the FASB confirmed that the FASB Accounting Standards
Codification, or the Codification, will become the single official source of
authoritative GAAP, other than guidance issued by the Securities and Exchange
Commission. The Codification, which changes the referencing of financial
accounting standards, supersedes current authoritative guidance and is effective
for interim and annual financial periods ending after September 15, 2009. The
Codification is not intended to change existing GAAP. We will conform our
financial statements and related notes to the Codification beginning with the
quarter ending September 30, 2009.
-9-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 2. Rationalization Charges
As part of our plans to rationalize certain facilities, we have established
reserves for employee severance and benefits and plant exit costs. Activity in
our rationalization reserves since December 31, 2008 is summarized as follows:
Employee Plant
Severance Exit
and Benefits Costs Total
------------ ----- -----
(Dollars in thousands)
Balance at December 31, 2008
----------------------------
2001 Fairfield Rationalization Plan $ -- $ 168 $ 168
2006 Rationalization Plans 3,661 -- 3,661
2008 Rationalization Plans 949 875 1,824
------ ------ -------
Balance at December 31, 2008 4,610 1,043 5,653
Activity for the Six Months Ended June 30, 2009
-----------------------------------------------
2001 Fairfield Rationalization Plan Reserves Utilized -- (62) (62)
2006 Rationalization Plan Reserves Utilized (54) -- (54)
2008 Rationalization Plan Reserves Established 42 94 136
2008 Rationalization Plan Reserves Utilized (692) (384) (1,076)
2009 Rationalization Plan Reserves Established 1,242 -- 1,242
2009 Rationalization Plan Reserves Utilized (80) -- (80)
------ ------ -------
Total Activity 458 (352) 106
Balance at June 30, 2009
------------------------
2001 Fairfield Rationalization Plan -- 106 106
2006 Rationalization Plans 3,607 -- 3,607
2008 Rationalization Plans 299 585 884
2009 Rationalization Plan 1,162 -- 1,162
------ ------ -------
Balance at June 30, 2009 $5,068 $ 691 $ 5,759
====== ====== =======
2009 Rationalization Plan
-------------------------
In March 2009, we approved a plan to reduce costs at our Hannover, Germany
closures manufacturing facility, which plan included the termination of 14
employees. Total estimated charges related to this plan of $1.3 million for
employee severance and benefit costs were recognized through June 2009. Cash
payments of $0.1 million were paid as of June 30, 2009. Cash payments of $1.2
million are expected to be paid during the remainder of 2009.
-10-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 2. Rationalization Charges (continued)
2008 Rationalization Plans
--------------------------
In 2008, as part of our ongoing effort to streamline operations and reduce
costs, we approved plans to close our metal food container manufacturing
facility in Tarrant, Alabama, our plastic container manufacturing facility in
Richmond, Virginia and our closures manufacturing facility in Turkey and to
consolidate various administrative positions within our European closures
operations. Through December 31, 2008, we recognized an aggregate $10.7 million
of rationalization costs under these plans and terminated 200 employees. As of
December 31, 2008, these plans were substantially completed. During the six
months ended June 30, 2009, we recognized $0.1 million of rationalization costs
and made cash payments of $1.1 million related to these plans. We have ceased
operations at these three facilities and expect to sell the owned facilities for
proceeds at or in excess of their respective net book values. We expect to
recognize additional charges under these plans of $0.2 million during 2009.
Remaining aggregate cash payments of $1.1 million are expected during the
remainder of 2009.
2006 Rationalization Plans
--------------------------
In 2006, we announced plans to exit our St. Paul, Minnesota and Stockton,
California metal food container manufacturing facilities. These plans have been
fully implemented and substantially all costs have been recognized. We have
ceased operations at these facilities. We expect to sell both buildings for
estimated proceeds at or in excess of their net book value. Remaining cash
payments of $3.6 million are expected in 2009 and thereafter.
Rationalization reserves are included in the Condensed Consolidated Balance
Sheets as follows:
June 30, June 30, Dec. 31,
2009 2008 2008
---- ---- ----
(Dollars in thousands)
Accrued liabilities $2,777 $3,633 $2,671
Other liabilities 2,982 3,165 2,982
------ ------ ------
$5,759 $6,798 $5,653
====== ====== ======
-11-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 3. Accumulated Other Comprehensive (Loss) Income
Accumulated other comprehensive (loss) income is reported in the Condensed
Consolidated Statements of Stockholders' Equity. Amounts included in accumulated
other comprehensive (loss) income consisted of the following:
June 30, June 30, Dec. 31,
2009 2008 2008
---- ---- ----
(Dollars in thousands)
Foreign currency translation $ 12,044 $ 40,330 $ 12,196
Change in fair value of derivatives (8,760) 4,625 (7,160)
Unrecognized net periodic pension and
other postretirement benefit costs:
Net prior service credit 6,730 4,446 6,845
Net actuarial loss (84,754) (23,676) (87,742)
-------- -------- --------
Accumulated other comprehensive
(loss) income $(74,740) $ 25,725 $(75,861)
======== ======== ========
Note 4. Inventories
Inventories consisted of the following:
June 30, June 30, Dec. 31,
2009 2008 2008
---- ---- ----
(Dollars in thousands)
Raw materials $ 96,281 $ 94,564 $110,480
Work-in-process 78,303 81,247 72,078
Finished goods 409,431 420,233 237,080
Spare parts and other 30,387 32,760 30,841
-------- -------- --------
614,402 628,804 450,479
Adjustment to value domestic inventory
at cost on the LIFO method (58,698) (52,675) (58,144)
-------- -------- --------
$555,704 $576,129 $392,335
======== ======== ========
-12-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 5. Long-Term Debt
Long-term debt consisted of the following:
June 30, June 30, Dec. 31,
2009 2008 2008
---- ---- ----
(Dollars in thousands)
Bank debt
Bank revolving loans $ 99,000 $ 193,232 $ --
Bank A term loans 121,765 345,000 284,118
Bank B term loans 40,621 41,477 41,049
Canadian term loans 72,194 88,974 72,122
Euro term loans 178,801 315,480 256,860
Other foreign bank revolving and term loans 28,938 30,451 30,764
-------- ---------- ---------
Total bank debt 541,319 1,014,614 684,913
-------- ---------- ---------
7 1/4% Senior Notes, net of unamortized discount 243,288 -- --
6 3/4% Senior Subordinated Notes 200,000 200,000 200,000
-------- ---------- ---------
Total other debt 443,288 200,000 200,000
-------- ---------- ---------
Total debt 984,607 1,214,614 884,913
Less current portion 127,938 318,765 158,877
-------- ---------- ---------
$856,669 $ 895,849 $ 726,036
======== ========== =========
The aggregate annual principal maturities of our term loans under our senior
secured credit facility, or the Credit Agreement, 7 1/4% Senior Notes and 6 3/4%
Senior Subordinated Notes are as follows (dollars in thousands, non-U.S. dollar
debt has been translated into U.S. dollars at exchange rates in effect at the
balance sheet date):
2010 $ 13,979
2011 213,698
2012 185,704
2013 200,000
Thereafter 250,000
--------
$863,381
========
At June 30, 2009, amounts expected to be repaid within one year consisted of
$99.0 million of bank revolving loans related primarily to seasonal working
capital needs and $28.9 million of foreign bank revolving and term loans.
-13-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 5. Long-Term Debt (continued)
7 1/4% Senior Notes
-------------------
On May 12, 2009, we issued $250 million aggregate principal amount of 7 1/4%
Senior Notes, or the 7 1/4% Notes. The issue price for the 7 1/4% Notes was
97.28 percent of their principal amount. The 7 1/4% Notes are general unsecured
obligations of Silgan, ranking equal in right of payment with Silgan's unsecured
unsubordinated indebtedness and ahead of Silgan's subordinated debt. The 7 1/4%
Notes are effectively subordinated to Silgan's secured debt to the extent of the
assets securing such debt and effectively subordinated to all obligations of the
subsidiaries of Silgan. Interest on the 7 1/4% Notes is payable semi-annually in
cash on August 15 and February 15 of each year and the 7 1/4% Notes mature on
August 15, 2016. Net proceeds from the issuance of the 7 1/4% Notes of $237.9
million were used to prepay all of the 2009 term loan installment payments and
substantially all of the 2010 term loan installment payments due under the
Credit Agreement. As a result of these term loan prepayments, we incurred a $0.7
million loss on early extinguishment of debt for the write off of debt issuance
costs.
The 7 1/4% Notes are redeemable, at the option of Silgan, in whole or in part,
at any time after August 15, 2013 at the following redemption prices (expressed
in percentages of principal amount) plus accrued and unpaid interest thereon to
the redemption date if redeemed during the twelve month period commencing August
15, of the years set forth below:
Year Redemption Price
---- ----------------
2013 103.625%
2014 101.813%
2015 and thereafter 100.000%
In addition, prior to August 15, 2012, we may redeem up to 35 percent of the
aggregate principal amount of the 7 1/4% Notes from the proceeds of certain
equity offerings. We may also redeem the 7 1/4% Notes, in whole or in part, at a
redemption price equal to 100 percent of their principal amount plus a
make-whole premium as provided in the indenture for the 7 1/4% Notes.
Upon the occurrence of a change of control, as defined in the indenture for the
7 1/4% Notes, Silgan is required to make an offer to purchase the 7 1/4% Notes
at a purchase price equal to 101 percent of their principal amount, plus accrued
interest to the date of purchase.
The indenture for the 7 1/4% Notes contains covenants which are generally less
restrictive than those under the Credit Agreement.
-14-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 6. Financial Instruments
The financial instruments recorded in our Condensed Consolidated Balance Sheets
include cash and cash equivalents (primarily invested in U.S. Treasury
instruments), trade accounts receivable, trade accounts payable, debt
obligations and swap agreements. Due to their short-term maturity, the carrying
amounts of cash and cash equivalents, 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 June 30, 2009:
Carrying Fair
Amount Value
------ -----
(Dollars in thousands)
Bank debt $541,319 $541,319
7 1/4% Notes 243,288 240,625
6 3/4% Senior Subordinated Notes 200,000 190,500
Interest rate swap agreements 13,575 13,575
Natural gas swap agreements 1,204 1,204
Fair Value Measurements
-----------------------
Financial Instruments Measured at Fair Value
SFAS No. 157 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (exit price). SFAS No. 157 classifies the
inputs used to measure fair value into a hierarchy consisting of three levels.
Level 1 inputs represent unadjusted quoted prices in active markets for
identical assets or liabilities. Level 2 inputs represent unadjusted quoted
prices in active markets for similar assets or liabilities, or unadjusted quoted
prices for identical or similar assets or liabilities in markets that are not
active, or inputs other than quoted prices that are observable for the asset or
liability. Level 3 inputs represent unobservable inputs for the asset or
liability. Financial assets and liabilities are classified in their entirety
based on the lowest level of input that is significant to the fair value
measurement.
The financial assets and liabilities that are measured on a recurring basis at
June 30, 2009 consist of our interest rate and natural gas swap agreements. We
measured the fair value of these swap agreements using the income approach. The
fair value of these agreements reflects the estimated amounts that we would pay
based on the present value of the expected cash flows derived from market
interest rates and prices. As such, these derivative instruments are classified
within Level 2.
Financial Instruments Not Measured at Fair Value
Our bank debt, 7 1/4% Notes and 6 3/4% Senior Subordinated Notes are recorded at
historical amounts in our Condensed Consolidated Balance Sheets as we have not
elected to measure them at fair value. The carrying amounts of our variable rate
bank debt approximate their fair values. Fair values of our 7 1/4% Notes and
6 3/4% Senior Subordinated Notes are estimated based on quoted market prices.
-15-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 6. Financial Instruments (continued)
Derivative Instruments and Hedging Activities
---------------------------------------------
Effective January 1, 2009, we adopted SFAS No. 161 which expands the disclosure
requirements about our derivative instruments and hedging activities. We account
for derivative financial instruments under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended and interpreted,
which requires all derivatives to be recorded in the Condensed Consolidated
Balance Sheets at their fair values. 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.
We utilize certain derivative financial instruments to manage a portion of our
interest rate and natural gas cost exposures. We limit our use of derivative
financial instruments to interest rate and natural gas swap agreements. We do
not engage in trading or other speculative uses of these financial instruments.
For a financial instrument to qualify as a hedge, we must be exposed to interest
rate or price risk, and the financial instrument must reduce the exposure and be
designated as a hedge. Financial instruments qualifying for hedge accounting
must maintain a high correlation between the hedging instrument and the item
being hedged, both at inception and throughout the hedged period.
We utilize certain internal hedging strategies to minimize our foreign currency
exchange rate risk. Net investment hedges that qualify for hedge accounting
result in the recognition of foreign currency gains or losses, net of tax, in
accumulated other comprehensive (loss) income. We generally do not utilize
external derivative financial instruments to manage our foreign currency
exchange rate risk.
Our interest rate and natural gas swap agreements are accounted for as cash flow
hedges. During the first six months of 2009, our hedges were fully effective.
The fair value of the outstanding swap agreements in effect at June 30, 2009 was
recorded in our Condensed Consolidated Balance Sheet as a liability of $14.8
million, of which $9.0 million was included in accrued liabilities and $5.8
million was included in other liabilities.
The amount reclassified to earnings from the change in fair value of derivatives
component of accumulated other comprehensive (loss) income for the six months
ended June 30, 2009 was a loss of $2.3 million, net of income taxes. We estimate
that we will reclassify losses of $4.9 million, net of income taxes, of the
change in fair value of derivatives component of accumulated other comprehensive
(loss) income to earnings during the next twelve months. The actual amount that
will be reclassified to earnings will vary from this amount as a result of
changes in market conditions.
-16-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 6. Financial Instruments (continued)
Interest Rate Swap Agreements
-----------------------------
We have entered into U.S. dollar, Euro and Canadian dollar interest rate swap
agreements to manage a portion of our exposure to interest rate fluctuations. At
June 30, 2009, the aggregate notional principal amount of outstanding interest
rate swap agreements was $273 million (non-U.S. dollar agreements have been
translated into U.S. dollars at exchange rates in effect at the balance sheet
date). In connection with the prepayment of certain installments of Euro term
loans as discussed in Note 5, we settled EUR 10 million of notional principal
amount of outstanding Euribor interest rate swap agreements.
The difference between amounts to be paid or received on interest rate swap
agreements is recorded in interest and other debt expense in our Condensed
Consolidated Statements of Income. For the six months ended June 30, 2009, net
payments under these interest rate swap agreements were $3.0 million. These
agreements are with a financial institution which is expected to fully perform
under the terms thereof.
Natural Gas Swap Agreements
---------------------------
We have entered into natural gas swap agreements with a major financial
institution to manage a portion of our exposure to fluctuations in natural gas
prices. At June 30, 2009, the aggregate notional principal amount of our natural
gas swap agreements was 674,000 MMBtu of natural gas with fixed prices ranging
from $4.340 to $8.115 per MMBtu, which hedges approximately 26 percent of our
estimated twelve month exposure to fluctuations in natural gas prices. For the
six months ended June 30, 2009, net payments under our natural gas swap
agreements were $0.9 million. These agreements are with a financial institution
which is expected to fully perform under the terms thereof.
Foreign Currency Exchange Rate Risk
-----------------------------------
In an effort to minimize foreign currency exchange rate risk, we have financed
our 2006 acquisitions of the White Cap closures operations and Cousins-Currie
Limited with term loans borrowed under our Credit Agreement denominated in Euros
and Canadian dollars, respectively. 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. Foreign currency gains recognized as net investment hedges
included in accumulated other comprehensive (loss) income for the six months
ended June 30, 2009 were $6.8 million, net of a deferred tax provision of $2.8
million.
-17-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 7. Retirement Benefits
The components of the net periodic pension benefits costs are as follows:
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in thousands)
Service cost $ 3,276 $ 3,373 $ 6,686 $ 6,786
Interest cost 6,993 6,810 13,973 13,566
Expected return on plan assets (6,312) (7,573) (12,646) (15,176)
Amortization of prior service cost 551 561 1,107 1,121
Amortization of actuarial losses 2,380 80 4,763 160
------- ------- -------- --------
Net periodic benefit cost $ 6,888 $ 3,251 $ 13,883 $ 6,457
======= ======= ======== ========
The components of the net periodic other postretirement benefits costs are as
follows:
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in thousands)
Service cost $ 197 $ 236 $ 405 $ 461
Interest cost 766 804 1,532 1,649
Amortization of prior service credit (641) (600) (1,279) (1,149)
Amortization of actuarial losses 83 74 166 144
----- ----- ------- -------
Net periodic benefit cost $ 405 $ 514 $ 824 $ 1,105
===== ===== ======= =======
As previously disclosed in our consolidated financial statements and notes
thereto included in our Annual Report on Form 10-K for the year ended December
31, 2008, there are no material minimum required contributions to our pension
plans in 2009. However, this is subject to change based on a number of factors,
including further governmental interpretations of certain provisions of The
Pension Protection Act of 2006. Based on our current funded status, in February
2009 we made voluntary contributions of $23.1 million to our pension benefit
plans. To the extent they are tax deductible, we may make additional voluntary
contributions to our pension benefit plans during the remainder of 2009.
Note 8. Income Taxes
Silgan and its subsidiaries file U.S. Federal income tax returns, as well as
income tax returns in various states and foreign jurisdictions. The Internal
Revenue Service, or IRS, has commenced an examination of Silgan's income tax
return for the periods ended December 31, 2004 and December 31, 2005. It is
reasonably possible that this IRS audit and IRS audits for prior periods will be
concluded within the next twelve months, and that the conclusion of these audits
may result in a significant change to our reported unrecognized tax benefits.
Due to the ongoing nature of these audits, we are unable to estimate the amount
of this potential impact.
-18-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 9. Dividends
In each of March and June of 2009, we paid quarterly cash dividends on our
common stock of $0.19 per share, as approved by our Board of Directors. The cash
payments related to these dividends totaled $14.6 million.
On August 7, 2009, our Board of Directors declared a quarterly cash dividend
on our common stock of $0.19 per share, payable on September 15, 2009 to
holders of record of our common stock on September 1, 2009. The cash payment
related to this dividend is expected to be approximately $7.3 million.
Note 10. Treasury Stock
During the first six months of 2009, we issued 43,100 treasury shares which had
an average cost of $13.25 per share for restricted stock units that vested
during the period. In accordance with the Silgan Holdings Inc. 2004 Stock
Incentive Plan, we repurchased 13,476 shares of our common stock at an average
cost of $48.49 to satisfy employee withholding tax requirements resulting from
certain restricted stock units becoming vested. We account for the treasury
shares using the first-in, first-out (FIFO) cost method. As of June 30, 2009,
5,233,371 shares were held in treasury.
Note 11. 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 six months of 2009, we granted
121,700 restricted stock units to certain of our officers and key employees. The
fair value of these restricted stock units at the date of grant was $5.9
million, which is being amortized ratably over the five-year vesting period from
the date of grant.
In May 2009, we granted 6,702 restricted stock units to non-employee members of
our Board of Directors, which vest in full one year from the date of grant. The
fair value of these restricted stock units at the date of grant was $0.3
million.
At our annual meeting of stockholders held on May 26, 2009, our stockholders
approved the Second Amendment to the Silgan Holdings Inc. 2004 Stock Incentive
Plan, as amended, or the 2004 Stock Incentive Plan, which, among other things,
increased the number of shares of our Common Stock available for awards under
the 2004 Stock Incentive Plan by an additional 1,500,000 shares. The total
number of shares available for issuance under the 2004 Stock Incentive Plan as
of June 30, 2009 was 2,012,016.
-19-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 12. Business Segment Information
Reportable business segment information for the three and six months ended June
30 is as follows:
Metal Food Plastic
Containers Closures Containers Corporate Total
---------- -------- ---------- --------- -----
(Dollars in thousands)
Three Months Ended June 30, 2009
--------------------------------
Net sales $405,356 $154,591 $129,595 $ -- $ 689,542
Depreciation and amortization (1) 16,788 7,057 11,619 421 35,885
Rationalization (credit) charges -- (99) 22 -- (77)
Segment income from operations 41,815 22,208 4,258 (3,265) 65,016
Three Months Ended June 30, 2008
--------------------------------
Net sales $377,462 $190,928 $166,893 $ -- $ 735,283
Depreciation and amortization (1) 15,869 7,461 11,408 421 35,159
Rationalization charges 2,023 621 74 -- 2,718
Segment income from operations 33,085 21,754 13,598 (3,491) 64,946
Six Months Ended June 30, 2009
------------------------------
Net sales $776,972 $296,927 $271,039 $ -- $1,344,938
Depreciation and amortization (1) 34,656 13,961 22,920 841 72,378
Rationalization charges -- 1,326 52 -- 1,378
Segment income from operations 68,426 36,547 20,361 (6,711) 118,623
Six Months Ended June 30, 2008
------------------------------
Net sales $728,693 $347,372 $339,050 $ -- $1,415,115
Depreciation and amortization (1) 32,030 15,090 22,814 842 70,776
Rationalization charges 3,290 3,269 834 -- 7,393
Segment income from operations 58,171 36,278 26,179 (5,843) 114,785
-------------
(1) Depreciation and amortization excludes amortization of debt issuance
costs of $0.4 million and $0.3 million for the three months ended June
30, 2009 and 2008, respectively, and $0.7 million for each of the six
months ended June 30, 2009 and 2008.
-20-
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2009 and 2008 and for the
three and six months then ended is unaudited)
Note 12. Business Segment Information (continued)
Total segment income from operations is reconciled to income before income taxes
as follows:
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in thousands)
Total segment income from operations $65,016 $64,946 $118,623 $114,785
Interest and other debt expense 12,869 14,802 23,326 31,115
------- ------- -------- --------
Income before income taxes $52,147 $50,144 $ 95,297 $ 83,670
======= ======= ======== ========
Sales and income from operations of our metal food container business are
dependent, in part, upon the vegetable and fruit harvests in the midwest and
western regions of the United States. Our closures business is also dependent,
in part, upon vegetable and fruit harvests. The size and quality of these
harvests varies from year to year, depending in large part upon the weather
conditions in applicable regions. Because of the seasonality of the harvests, we
have historically experienced higher unit sales volume in the third quarter of
our fiscal year and generated a disproportionate amount of our annual income
from operations during that quarter.
-21-
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Statements included in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Quarterly Report on
Form 10-Q which are not historical facts are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and Securities Exchange Act of 1934. Such forward-looking
statements are made based upon management's expectations and beliefs concerning
future events impacting us and therefore involve a number of uncertainties and
risks, including, but not limited to, those described in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2008 and our other filings with
the Securities and Exchange Commission. As a result, the actual results of our
operations or our financial condition could differ materially from those
expressed or implied in these forward-looking statements.
General
We are a leading manufacturer of metal and plastic consumer goods packaging
products. We produce steel and aluminum containers for human and pet food;
metal, composite and plastic vacuum closures for food and beverage products; and
custom designed plastic containers, tubes and closures for personal care, health
care, pharmaceutical, household and industrial chemical, food, pet care,
agricultural chemical, automotive and marine chemical products. We are the
largest manufacturer of metal food containers in North America, a leading
worldwide manufacturer of metal, composite and plastic vacuum closures for food
and beverage products and a leading manufacturer of plastic containers in North
America for a variety of markets, including the personal care, health care,
household and industrial chemical and food markets.
Our objective is to increase shareholder value by efficiently deploying capital
and management resources to grow our business, reduce operating costs and build
sustainable competitive positions, or franchises, and to complete acquisitions
that generate attractive cash returns. We have grown our net sales and income
from operations over the years, largely through acquisitions but also through
internal growth, and we continue to evaluate acquisition opportunities in the
consumer goods packaging market. If acquisition opportunities are not identified
over a longer period of time, we may use our cash flow to repay debt, repurchase
shares of our common stock or increase dividends to our stockholders or for
other permitted purposes.
-22-
RESULTS OF OPERATIONS
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, June 30, June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net sales
Metal food containers 58.8% 51.3% 57.8% 51.5%
Closures 22.4 26.0 22.1 24.5
Plastic containers 18.8 22.7 20.1 24.0
----- ----- ----- -----
Consolidated 100.0 100.0 100.0 100.0
Cost of goods sold 84.8 85.3 85.0 86.0
----- ----- ----- -----
Gross profit 15.2 14.7 15.0 14.0
Selling, general and administrative expenses 5.8 5.5 6.1 5.4
Rationalization charges -- 0.4 0.1 0.5
----- ----- ----- -----
Income from operations 9.4 8.8 8.8 8.1
Interest and other debt expense 1.8 2.0 1.7 2.2
----- ----- ----- -----
Income before income taxes 7.6 6.8 7.1 5.9
Provision for income taxes 2.7 2.3 2.5 2.1
----- ----- ----- -----
Net income 4.9% 4.5% 4.6% 3.8%
===== ===== ===== =====
Summary unaudited results of operations for the three and six months ended June
30, 2009 and 2008 are provided below.
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in millions)
Net sales
Metal food containers $405.3 $377.5 $ 777.0 $ 728.7
Closures 154.6 190.9 296.9 347.4
Plastic containers 129.6 166.9 271.0 339.0
------ ------ -------- --------
Consolidated $689.5 $735.3 $1,344.9 $1,415.1
====== ====== ======== ========
Income from operations
Metal food containers (1) $ 41.8 $ 33.1 $ 68.4 $ 58.2
Closures (2) 22.2 21.8 36.5 36.3
Plastic containers (3) 4.3 13.6 20.4 26.2
Corporate (3.3) (3.6) (6.7) (5.9)
------ ------ -------- --------
Consolidated $ 65.0 $ 64.9 $ 118.6 $ 114.8
====== ====== ======== ========
-------------
(1) Includes rationalization charges of $2.0 million and $3.3 million for the
three and six months ended June 30, 2008, respectively.
(2) Includes a rationalization credit of $0.1 million and rationalization
charges of $0.6 million for the three months ended June 30, 2009 and 2008,
respectively, and rationalization charges of $1.3 million and $3.3 million
for the six months ended June 30, 2009 and 2008, respectively.
(3) Includes rationalization charges of $0.1 million for the three months ended
June 30, 2008 and $0.1 million and $0.8 million for the six months ended
June 30, 2009 and 2008, respectively.
-23-
Three Months Ended June 30, 2009 Compared with Three Months Ended June 30, 2008
Overview. Consolidated net sales were $689.5 million in the second quarter of
2009, representing a 6.2 percent decrease as compared to the second quarter of
2008 primarily as a result of lower average selling prices in the plastic
container business largely attributable to the pass through of resin price
declines, the impact of unfavorable foreign currency translation and lower
volumes in the plastic container and closures businesses, partially offset by
higher average selling prices in the metal food container business due to the
pass through of higher raw material and other manufacturing costs. Income from
operations for the second quarter of 2009 of $65.0 million increased by $0.1
million, or 0.2 percent, as compared to the same period in 2008 due to effective
cost control and manufacturing efficiencies and lower rationalization charges,
principally offset by the impact from lower unit volumes in the plastic
container and closures businesses, increased pension expense and higher
depreciation expense. Results for 2009 included a loss on early extinguishment
of debt of $0.7 million. Results for 2008 included rationalization charges of
$2.7 million. Net income for the second quarter of 2009 was $33.7 million, or
$0.88 per diluted share, as compared to $33.3 million, or $0.87 per diluted
share, for the same period in 2008.
Net Sales. The $45.8 million decrease in consolidated net sales in the second
quarter of 2009 as compared to the second quarter of 2008 was the result of
lower net sales in the plastic container and closures businesses, partially
offset by higher net sales in the metal food container business.
Net sales for the metal food container business increased $27.8 million, or 7.4
percent, in the second quarter of 2009 as compared to the same period in 2008.
This increase was primarily attributable to higher average selling prices as a
result of the pass through of higher net raw material and other manufacturing
costs.
Net sales for the closures business decreased $36.3 million, or 19.0 percent, in
the second quarter of 2009 as compared to the same period in 2008. This decrease
was primarily the result of unfavorable foreign currency translation of
approximately $10.5 million and moderately lower unit volumes largely
attributable to softer demand in the single-serve beverage markets as a result
of the current economic environment.
Net sales for the plastic container business in the second quarter of 2009
decreased $37.3 million, or 22.3 percent, as compared to the same period in
2008. This decrease was principally due to the impact of lower average selling
prices as a result of the lagged pass through of lower raw material costs, a
decline in unit volumes attributable to the ongoing weakness in demand which was
partly impacted by some consumers trading down to products with less value added
packaging and the impact of unfavorable foreign currency translation of
approximately $4.1 million.
Gross Profit. Gross profit margin increased 0.5 percentage points to 15.2
percent in the second quarter of 2009 as compared to the same period in 2008 for
the reasons discussed below in "Income from Operations."
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $0.3 million to $40.1 million for the second
quarter of 2009 as compared to $40.4 million for the same period in 2008.
Selling, general and administrative expenses as a percentage of consolidated net
sales increased 0.3 percentage points to 5.8 percent for the second quarter of
2009 as compared to 5.5 percent for the same period in 2008 due primarily to the
decrease in consolidated net sales.
-24-
Income from Operations. Income from operations for the second quarter of 2009
increased by $0.1 million as compared to the second quarter of 2008, and
operating margin increased to 9.4 percent from 8.8 percent over the same
periods.
Income from operations of the metal food container business for the second
quarter of 2009 increased $8.7 million, or 26.3 percent, as compared to the same
period in 2008, and operating margin increased to 10.3 percent from 8.8 percent
over the same periods. These increases were primarily the result of ongoing cost
controls, improved manufacturing efficiencies including benefits from rebuilding
inventory which was reduced late in the fourth quarter of 2008 and lower
rationalization charges, partially offset by higher pension expense and
depreciation expense. The second quarter of 2008 included rationalization
charges of $2.0 million primarily related to ongoing costs to exit the St. Paul,
Minnesota manufacturing facility as well as costs incurred for the shutdown of
the Tarrant, Alabama manufacturing facility.
Income from operations of the closures business for the second quarter of 2009
increased $0.4 million, or 1.8 percent, as compared to the same period in 2008,
and operating margin increased to 14.4 percent from 11.4 percent over the same
periods. These increases were primarily attributable to the benefits of ongoing
cost reduction initiatives, improved manufacturing efficiencies and lower
rationalization charges, principally offset by moderately lower unit volumes.
The second quarter of 2008 included rationalization charges of $0.6 million
related to the streamlining of certain operations and consolidation of various
administrative positions in Europe.
Income from operations of the plastic container business for the second quarter
of 2009 decreased $9.3 million, or 68.4 percent, as compared to the same period
in 2008, and operating margin decreased to 3.3 percent from 8.1 percent over the
same periods. These decreases were primarily attributable to modestly lower unit
volumes, a less favorable mix of products sold, the negative cost impact
attributable to a reduction in inventory, the unfavorable effect from the lagged
pass through of recent resin price increases and higher pension expense,
partially offset by improved manufacturing efficiencies and ongoing cost
controls. The second quarter of 2008 included rationalization charges of $0.1
million related to the shutdown of the Richmond, Virginia manufacturing
facility.
Interest and Other Debt Expense. Interest and other debt expense before loss on
early extinguishment of debt for the second quarter of 2009 decreased $2.6
million to $12.2 million as compared to the same period in 2008. This decrease
was primarily due to lower average debt balances outstanding in the second
quarter of 2009 as compared to the same period in 2008, partially offset by
slightly higher interest rates largely as a result of the issuance of the 7 1/4%
Notes in May 2009. The net proceeds from this issuance were utilized to prepay
all of the 2009 term loan installment payments and substantially all of the 2010
term loan installment payments due under the Credit Agreement. As a result of
these prepayments, we incurred a loss on early extinguishment of debt for the
write off of debt issuance costs of $0.7 million.
Provision for Income Taxes. The effective tax rate for the second quarter of
2009 was 35.4 percent as compared to 33.6 percent in the same period of 2008.
The effective tax rate for the second quarter of 2008 benefited from a $1.7
million tax credit related to certain non-recurring state tax incentives
associated with capital investments.
-25-
Six Months Ended June 30, 2009 Compared with Six Months Ended June 30, 2008
Overview. Consolidated net sales were $1.34 billion in the first six months of
2009, representing a 5.0 percent decrease as compared to the first six months of
2008 primarily due to lower unit volumes across all businesses, lower average
selling prices in the plastic container business largely attributable to the
pass through of resin prices declines and unfavorable foreign currency
translation, partially offset by higher average selling prices in the metal food
container business due to the pass through of higher raw material and other
manufacturing costs. Income from operations for the first six months of 2009
increased by $3.8 million, or 3.3 percent, as compared to the same period in
2008 as a result of lower rationalization charges incurred in 2009, improved
manufacturing efficiencies and ongoing cost controls across all businesses.
These increases were partially offset by lower unit volumes across all
businesses, higher pension and depreciation expense and inflation in
manufacturing and other costs as well as the impact of management fee income of
$2.2 million recognized in the first quarter of 2008 from the pre-acquisition
management of the Brazilian White Cap closures operations. The results for the
first six months of 2009 and 2008 included rationalization charges of $1.4
million and $7.4 million, respectively. Net income for the first six months of
2009 was $61.4 million, or $1.60 per diluted share, as compared to $54.5
million, or $1.42 per diluted share, for the same period in 2008.
Net Sales. The $70.2 million decrease in consolidated net sales in the first six
months of 2009 as compared to the first six months of 2008 was due to lower net
sales in the plastic container and closures businesses, partially offset by
higher net sales in the metal food container business.
Net sales for the metal food container business increased $48.3 million, or 6.6
percent, in the first six months of 2009 as compared to the same period in 2008.
This increase was primarily attributable to higher average selling prices due to
the pass through of inflation in raw material and other manufacturing costs,
partially offset by slightly lower unit volumes principally due to the customer
buy ahead in the fourth quarter of 2008.
Net sales for the closures business in the first six months of 2009 decreased
$50.5 million, or 14.5 percent, as compared to the same period in 2008. This
decrease was primarily the result of unfavorable foreign currency translation of
approximately $19.5 million and a moderate decrease in unit volumes largely
attributable to softer demand in the single-serve beverage markets as a result
of the current economic environment and the customer buy ahead of metal closures
in the fourth quarter of 2008.
Net sales for the plastic container business in the first six months of 2009
decreased $68.0 million, or 20.1 percent, as compared to the same period in
2008. This decrease was primarily the result of lower average selling prices as
a result of the lagged pass through of lower raw material costs, a modest
decline in unit volumes attributable to the ongoing weakness in demand and the
impact of unfavorable foreign currency translation of approximately $11.0
million.
Gross Profit. Gross Profit margin increased 1.0 percentage point to 15.0 percent
for the first six months of 2009 as compared to the same period in 2008 for the
reasons discussed below in "Income from Operations."
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $5.4 million to $81.3 million for the six
months ended June 30, 2009 as compared to $75.9 million for the same period in
2008. Selling, general and administrative expenses as a percentage of
consolidated net sales increased to 6.1 percent for the first six months of 2009
as compared to 5.4 percent for the same period in 2008. These increases were
primarily due to the recognition in the first quarter of 2008 of management fee
income of $2.2 million from the management of the White Cap Brazil closures
operations until it was acquired from Amcor Limited in April 2008 and higher
pension expense in 2009.
-26-
Income from Operations. Income from operations for the first six months of 2009
increased by $3.8 million, or 3.3 percent, as compared to the first six months
of 2008, and operating margin increased to 8.8 percent from 8.1 percent over the
same periods.
Income from operations of the metal food container business for the first six
months of 2009 increased $10.2 million, or 17.5 percent, as compared to the same
period in 2008, and operating margin increased to 8.8 percent from 8.0 percent
over the same periods. These increases were primarily the result of ongoing cost
controls, improved manufacturing efficiencies including benefits from rebuilding
inventory which was reduced late in the fourth quarter of 2008 and lower
rationalization charges. These increases were partially offset by the impact of
slightly lower unit volumes, higher pension expense and increased depreciation
expense. The first six months of 2008 included total rationalization charges of
$3.3 million related to ongoing costs to exit the St. Paul, Minnesota
manufacturing facility as well as costs incurred for the shutdown of the
Tarrant, Alabama manufacturing facility.
Income from operations of the closures business for the first six months of 2009
increased $0.2 million, or 0.6 percent, as compared to the same period in 2008,
and operating margin increased to 12.3 percent from 10.4 percent over the same
periods. These increases were primarily attributable to the benefits of ongoing
cost reduction initiatives, improved manufacturing efficiencies and lower
rationalization charges, principally offset by moderately lower unit volumes and
the year-over-year impact of the management fee income from the Brazilian White
Cap closures operation of $2.2 million recognized in the first quarter of 2008.
Rationalization charges of $1.3 million were recognized in the first six months
of 2009 for a reduction in workforce at the operating facility in Germany. The
first six months of 2008 included rationalization charges of $3.3 million
related to the streamlining of certain operations and consolidation of various
administrative positions in Europe.
Income from operations of the plastic container business for the first six
months of 2009 decreased $5.8 million, or 22.1 percent, as compared to the same
period in 2008, and operating margin decreased to 7.5 percent from 7.7 percent
over the same periods. These decreases were primarily attributable to modestly
lower unit volumes, a less favorable mix of products sold, the negative cost
impact attributable to a reduction in inventory and higher pension expense,
partially offset by the net positive effect in 2009 from the lagged pass through
of resin price decreases in the first quarter of 2009 in excess of the lagged
pass through of resin price increases in the second quarter of 2009, ongoing
focus on cost reductions, improved manufacturing efficiencies and lower
rationalization charges. The first quarter of 2008 included rationalization
charges of $0.8 million related to the shutdown of the Richmond, Virginia
manufacturing facility.
Interest and Other Debt Expense. Interest and other debt expense before loss on
early extinguishment of debt for the first six months of 2009 decreased $8.5
million to $22.7 million as compared to the same period in 2008. This decrease
resulted primarily from lower outstanding debt balances and higher interest
income attributable to the cash on hand during 2009, partially offset by the
impact of slightly higher interest rates largely due to the issuance of the 7
1/4% Notes in May 2009. The net proceeds from this issuance were utilized to
prepay all of the 2009 term loan installment payments and substantially all of
the 2010 term loan installment payments due under the Credit Agreement. As a
result of these prepayments, we incurred a loss on early extinguishment of debt
for the write off of debt issuance costs of $0.7 million.
Provision for Income Taxes. The effective tax rate for the first six months of
2009 was 35.6 percent as compared to 34.9 percent in the same period of 2008.
The effective tax rate for the first six months of 2008 benefited from a $1.7
million tax credit related to certain non-recurring state tax incentives
associated with capital investments.
-27-
CAPITAL RESOURCES AND LIQUIDITY
Our principal sources of liquidity have been net cash from operating activities
and borrowings under our debt instruments, including our Credit Agreement. Our
liquidity requirements arise primarily 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 and the
funding of our seasonal working capital needs.
On May 12, 2009, we issued $250 million aggregate principal amount of the 7 1/4%
Notes. The issue price for the 7 1/4% Notes was 97.28 percent of their principal
amount. Interest on the 7 1/4% Notes is payable semi-annually in cash on August
15 and February 15 of each year and the 7 1/4% Notes mature on August 15, 2016.
Net proceeds from the issuance of the 7 1/4% Notes of $237.9 million were used
to prepay all of the 2009 term loan installment payments and substantially all
of the 2010 term loan installment payments due under the Credit Agreement. As a
result of these term loan prepayments, we incurred a $0.7 million loss on early
extinguishment of debt for the write off of debt issuance costs.
As of June 30, 2009, our contractual obligations as they relate to long-term
debt obligations, interest on fixed rate debt and interest on variable rate debt
are as follows:
Payment for the years ending
----------------------------------------------------
2010 2012 2014
through through and
Total 2009 2011 2013 thereafter
----- ---- ---- ---- ----------
(Dollars in millions)
Long-term debt obligations (1) $863.4 $ -- $227.7 $385.7 $250.0
Interest on fixed rate debt (2) 197.4 18.2 63.3 61.6 54.3
Interest on variable rate debt(3) 60.0 19.2 26.2 14.6 --
(1) These amounts represent expected cash payments of our long-term debt and
exclude current debt of $99.0 million of bank revolving loans related
primarily to seasonal working capital needs and $28.9 million of foreign
bank revolving and term loans.
(2) These amounts represent cash payments of interest on our fixed rate
long-term debt on an actual basis for the first six months of 2009 and
thereafter on an expected basis.
(3) These amounts represent cash payments of interest on our variable rate
long-term debt, excluding bank revolving loans and foreign bank revolving
and term loans, after taking into consideration our interest rate swap
agreements, on an actual basis for the first six months of 2009 and
thereafter on an expected basis at prevailing interest rates at June 30,
2009.
You should also read Note 5 to our Condensed Consolidated Financial Statements
for the three and six months ended June 30, 2009 included elsewhere in this
Quarterly Report.
For the six months ended June 30, 2009, we used net borrowings of revolving
loans of $97.5 million, cash and cash equivalents of $83.4 million, proceeds
from the issuance of the 7 1/4% Notes of $243.2 million and net proceeds from
stock-based compensation issuances of $1.6 million to fund the repayment of term
loans of $237.9 million, cash used in operations of $71.6 million primarily for
our seasonal working capital needs, net capital expenditures of $46.3 million,
decreases in outstanding checks of $50.0 million, debt issuance costs of $5.3
million and dividends paid on our common stock of $14.6 million.
-28-
For the six months ended June 30, 2008, we used net borrowings of revolving
loans of $196.3 million, cash and cash equivalents of $9.9 million, other debt
borrowings of $8.0 million and net proceeds from stock-based compensation
issuances of $2.9 million to fund cash used in operations of $44.0 million
primarily for our seasonal working capital needs, net capital expenditures of
$54.5 million, our acquisitions of the metal vacuum closures operations of Grup
Vemsa 1857, S.L. and the White Cap Brazil operations for $14.5 million, net of
cash acquired, decreases in outstanding checks of $88.1 million, the repayment
of debt of $3.0 million and dividends paid on our common stock of $13.0 million.
Because we sell metal containers used in fruit and vegetable pack processing, we
have seasonal sales. As is common in the industry, we must utilize working
capital to build inventory and then carry accounts receivable for some customers
beyond the end of the packing season. Due to our seasonal requirements, we may
incur short-term indebtedness to finance our working capital requirements. For
the six months ended June 30, 2009, we utilized cash on hand to partially fund
our working capital requirements.
At June 30, 2009, we had $99.0 million of revolving loans outstanding under the
Credit Agreement. After taking into account outstanding letters of credit, the
available portion of our revolving loan facility under the Credit Agreement at
June 30, 2009 was $322.3 million. We may use the available portion of our
revolving loan facility, after taking into account our seasonal needs and
outstanding letters of credit, for acquisitions or other permitted purposes. We
may also borrow revolving loans to increase our cash and cash equivalents to
ensure access to liquidity. During 2009, we estimate that we will utilize
approximately $275 - $325 million of revolving loans under the Credit Agreement
for our peak seasonal working capital requirements, which amount could be lower
to the extent we utilize cash and cash equivalents on hand for our seasonal
working capital requirements.
During the first six months of 2009, we paid cash dividends on our common stock
totaling $14.6 million. On August 7, 2009, our Board of Directors declared a
quarterly cash dividend on our common stock of $0.19 per share, payable on
September 15, 2009 to holders of record of our common stock on September 1,
2009. The cash payment related to this dividend is expected to be approximately
$7.3 million.
We believe that cash generated from operations and funds from borrowings
available under the Credit Agreement will be sufficient to meet our expected
operating needs, planned capital expenditures, debt service, tax obligations,
pension benefit plan contributions, share repurchases required under our 2004
Stock Incentive Plan and common stock dividends for the foreseeable future. With
cash and cash equivalents on hand and cash generated from operations, we believe
that we will be able to repay all outstanding term loans under the Credit
Agreement as they become due and payable. However, there can be no assurance
that we will be able to generate enough cash from operations to repay all such
outstanding term loans, in which case we will need to refinance any remaining
outstanding term loans. Additionally, we also believe that we will be able to
replace our revolving loan facilities under the Credit Agreement before they
expire with other loan facilities for our seasonal working capital needs.
There can be no assurance that we will be able to effect any such refinancing,
and, if we are able to, we may not be able to do so on the same terms (including
interest rates) as under the Credit Agreement. Our ability to effect any such
transactions and the terms thereof (including interest rates) will depend on a
variety of factors, including the condition of the credit markets, which have
experienced substantial disruptions to liquidity and credit availability in
recent months; our future performance, which will be subject to prevailing
economic conditions and to financial, business and other factors (including the
state of the economy and other factors beyond our control) affecting our
business and operations; the timing of such transactions; and the amount of debt
to be refinanced.
-29-
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.
We are in compliance with all financial and operating covenants contained in our
financing agreements and believe that we will continue to be in compliance
during 2009 with all of these covenants.
Rationalization Charges
In March 2009, we approved a plan to reduce costs at our Hannover, Germany
closures manufacturing facility, which plan included the termination of 14
employees. Total estimated charges related to this plan of $1.3 million for
employee severance and benefit costs were recognized through June 2009.
In 2008, as part of our ongoing effort to streamline operations and reduce
costs, we approved plans to close our metal food container manufacturing
facility in Tarrant, Alabama, our plastic container manufacturing facility in
Richmond, Virginia and our closures manufacturing facility in Turkey and to
consolidate various administrative positions within our European closures
operations. Through December 31, 2008, we recognized an aggregate of $10.7
million of rationalization costs under these plans and terminated 200 employees.
As of December 31, 2008, these plans were substantially completed. During the
six months ended June 30, 2009, we recognized $0.1 million of rationalization
costs and made cash payments of $1.1 million related to these plans. We have
ceased operations at these three facilities and expect to sell the owned
facilities for proceeds at or in excess of their respective net book values. We
expect to recognize additional charges under these plans of $0.2 million during
2009.
Under our rationalization plans, we made cash payments of $1.3 million and $3.8
million for the six months ended June 30, 2009 and 2008, respectively. Total
future cash spending of $6.0 million is expected for our outstanding
rationalization plans.
You should also read Note 2 to our Condensed Consolidated Financial Statements
for the three and six months ended June 30, 2009 included elsewhere in this
Quarterly Report.
We continually evaluate cost reduction opportunities in our business, including
rationalizations of our existing facilities through plant closings and
downsizings. We use a disciplined approach to identify opportunities that
generate attractive cash returns.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENT
In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations." SFAS
No. 141(R) retains the fundamental requirements in SFAS No. 141 that the
purchase method of accounting be used for all business combinations and an
acquirer be identified for each business combination. SFAS No. 141(R)
establishes principles and requirements for the reporting entity in a business
combination, including recognition and measurement in the financial statements
of the identifiable assets acquired, the liabilities assumed and any
non-controlling interest at their fair values at the acquisition date. SFAS No.
141(R) also requires that acquisition-related costs be recognized separately
from the acquisition. SFAS No. 141(R) applies prospectively to business
combinations for which the acquisition date is on or after January 1, 2009. In
addition, SFAS No. 141(R) requires that any changes in an acquired deferred tax
account or related valuation allowance that occur after January 1, 2009 will be
recognized as adjustments to income tax expense. The initial adoption of SFAS
No. 141(R) did not have an effect on our financial position, results of
operations or cash flows. However, our unrecognized tax benefit positions will
impact our effective tax rate if recognition of such positions is required in
future periods.
-30-
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
Market risks relating to our operations result primarily from changes in
interest rates and, with respect to our international closures operations and
our Canadian plastic container operations, from foreign currency exchange rates.
In the normal course of business, we also have risk related to commodity price
changes for items such as natural gas. We employ established policies and
procedures to manage our exposure to these risks. Interest rate, foreign
currency and commodity pricing transactions are used only to the extent
considered necessary to meet our objectives. We do not utilize derivative
financial instruments for trading or other speculative purposes.
Information regarding our interest rate risk, foreign currency exchange rate
risk and commodity pricing risk has been disclosed in our Annual Report on Form
10-K for the fiscal year ended December 31, 2008. Since such filing, other than
the issuance of the 7 1/4% Notes and the prepayment of $237.9 million of
variable rate term loan installments under our Credit Agreement with the
proceeds from such issuance, there has not been a material change to our
interest rate risk, foreign currency exchange rate risk or commodity pricing
risk or to our policies and procedures to manage our exposure to these risks.
You should also read Notes 5 and 6 to our Condensed Consolidated Financial
Statements for the three and six months ended June 30, 2009 included elsewhere
in this Quarterly Report.
Item 4. CONTROLS AND PROCEDURES
-----------------------
We carried out an evaluation, under the supervision and with the participation
of management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Based upon
that evaluation, as of the end of the period covered by this Quarterly Report
our Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures are effective in ensuring that all material
information required to be disclosed in this Quarterly Report has been made
known to them in a timely fashion.
There were no changes in our internal controls over financial reporting during
the period covered by this Quarterly Report that have materially affected, or
are reasonably likely to materially affect, these internal controls.
Part II. Other Information
Item 1. Legal Proceedings
In August 2009, we reached an agreement in principle to enter into a Consent
Decree with the U.S. Environmental Protection Agency, or EPA, pursuant to which
we will pay a $365,000 fine and agree to certain plant and operational changes
in response to alleged past violations of the federal Clean Air Act at seventeen
of our metal food container manufacturing facilities in Alabama, Illinois,
Indiana, Michigan, Minnesota, New York, North Carolina, Washington, and
Wisconsin. Plant and operational changes to correct alleged past violations have
been substantially completed. This agreement completes a voluntary process that
we initiated in 1999 for all of our metal food container manufacturing
facilities pursuant to EPA's Audit Policy, "Incentives for Self Policing:
Discovery, Disclosure, Correction and Prevention of Violations." Most of these
alleged past violations stem from activities occurring during the facilities'
ownership by prior owners. The Consent Decree will be filed in the United States
District Court for the Eastern District of Wisconsin, and the fine will be
payable after entry of the Consent Decree.
In addition, refer to our Quarterly Report on Form 10-Q for the period ended
March 31, 2009.
-31-
Item 4. Submission of Matters to a Vote of Security Holders
Our annual meeting of stockholders, or the Annual Meeting, for which proxies
were solicited pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended, was held on May 26, 2009 for the purposes of (1) electing
three directors to serve for a three year term until our annual meeting of
stockholders in 2012 and until their successors are duly elected and qualified;
(2) approving an amendment to the Silgan Holdings Inc. 2004 Stock Incentive Plan
and the material terms of the performance goals under the Silgan Holdings Inc.
2004 Stock Incentive Plan and (3) ratifying the appointment of Ernst & Young LLP
as our independent registered public accounting firm for the fiscal year ending
December 31, 2009.
The nominees for director listed in our proxy statement, each of whom was
elected at the Annual Meeting, are named below, and each received the number of
votes for election as indicated below (with each share of our common stock being
entitled to one vote):
Number of Shares Number of Shares
Voted For Withheld
--------- --------
Anthony J. Allott 21,293,429 13,290,802
Jeffrey C. Crowe 31,974,188 2,610,043
Edward A. Lapekas 33,418,819 1,165,412
Our directors whose term of office continued after the Annual Meeting are R.
Philip Silver and William C. Jennings, each of whose term of office as a
director continues until our annual meeting of stockholders in 2010, and D. Greg
Horrigan and John W. Alden, each of whose term of office as a director continues
until our annual meeting of stockholders in 2011.
The amendment to the Silgan Holdings Inc. 2004 Stock Incentive Plan and the
material terms of the performance goals under the Silgan Holdings Inc. 2004
Stock Incentive Plan were approved at the Annual Meeting. There were 30,963,421
votes cast approving such amendment and material terms of the performance goals,
3,511,348 votes cast against such amendment and material terms of the
performance goals and 24,541 votes abstaining.
The ratification of the appointment of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending December 31, 2009
was approved at the Annual Meeting. There were 33,963,024 votes cast ratifying
such appointment, 617,988 votes cast against ratification of such appointment
and 3,219 votes abstaining.
-32-
Item 6. Exhibits
Exhibit Number Description
-------------- -----------
12 Ratio of Earnings to Fixed Charges for the three and six
months ended June 30, 2009 and 2008.
31.1 Certification by the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act.
31.2 Certification by the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act.
32.1 Certification by the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act.
32.2 Certification by the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act.
-33-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned thereunto duly authorized.
SILGAN HOLDINGS INC.
Dated: August 10, 2009 /s/ Robert B. Lewis
----------------------------
Robert B. Lewis
Executive Vice President and
Chief Financial Officer
-34-
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
----------- -------
12 Ratio of Earnings to Fixed Charges for the three and six
months ended June 30, 2009 and 2008.
31.1 Certification by the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act.
31.2 Certification by the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act.
32.1 Certification by the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act.
32.2 Certification by the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act.
-35-