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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
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)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share SLGN Nasdaq Global Select Market

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 ☒   No ☐

Indicate by check mark whether the Registrant has submitted electronically 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, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
           Accelerated filer ☐
Non-accelerated filer ☐
           Smaller reporting company ☐
           Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐   No ☒

As of July 31, 2021, the number of shares outstanding of the Registrant’s common stock was 110,408,113.
-1-

SILGAN HOLDINGS INC.
 
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-2-


Part I. Financial Information
Item 1. Financial Statements

SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, 2021 June 30, 2020 Dec. 31, 2020
  (unaudited) (unaudited)  
Assets      
Current assets:      
Cash and cash equivalents $ 164,821  $ 191,082  $ 409,481 
Trade accounts receivable, net 891,812  729,275  619,535 
Inventories 907,805  821,448  677,534 
Prepaid expenses and other current assets 88,818  85,918  92,643 
Total current assets 2,053,256  1,827,723  1,799,193 
Property, plant and equipment, net 1,832,885  1,729,481  1,840,758 
Goodwill 1,719,815  1,668,614  1,741,496 
Other intangible assets, net 609,882  635,156  637,208 
Other assets, net 508,481  512,082  492,931 
  $ 6,724,319  $ 6,373,056  $ 6,511,586 
Liabilities and Stockholders’ Equity      
Current liabilities:      
Revolving loans and current portion of long-term debt $ 240,859  $ 391,418  $ 28,036 
Trade accounts payable 727,523  601,740  802,541 
Accrued payroll and related costs 112,270  103,458  130,088 
Accrued liabilities 234,503  266,512  230,955 
Total current liabilities 1,315,155  1,363,128  1,191,620 
Long-term debt 3,176,393  3,106,425  3,223,217 
Deferred income taxes 360,027  357,131  355,995 
Other liabilities 484,164  456,678  487,881 
Stockholders’ equity:      
Common stock 1,751  1,751  1,751 
Paid-in capital 314,873  296,639  306,363 
Retained earnings 2,531,783  2,249,391  2,395,395 
Accumulated other comprehensive loss (263,433) (297,360) (260,953)
Treasury stock (1,196,394) (1,160,727) (1,189,683)
Total stockholders’ equity 1,388,580  1,089,694  1,252,873 
  $ 6,724,319  $ 6,373,056  $ 6,511,586 

See accompanying notes.
-3-

SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ended June 30, 2021 and 2020
(Dollars and shares in thousands, except per share amounts)
(Unaudited)

Three Months Ended Six Months Ended
  June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
   
Net sales $ 1,348,661  $ 1,176,470  $ 2,586,771  $ 2,206,854 
Cost of goods sold 1,113,777  952,375  2,130,421  1,797,661 
Gross profit 234,884  224,095  456,350  409,193 
Selling, general and administrative expenses 94,394  100,624  191,773  190,487 
Rationalization charges 354  1,942  10,711  4,741 
Other pension and postretirement income (12,818) (9,705) (25,637) (19,410)
Income before interest and income taxes 152,954  131,234  279,503  233,375 
Interest and other debt expense before loss on
    early extinguishment of debt 		26,406  25,837  52,829  49,326 
Loss on early extinguishment of debt
—  —  883  1,481 
Interest and other debt expense 26,406  25,837  53,712  50,807 
Income before income taxes 126,548  105,397  225,791  182,568 
Provision for income taxes 32,072  27,225  58,034  46,796 
Net income $ 94,476  $ 78,172  $ 167,757  $ 135,772 
Earnings per share:
Basic net income per share $ 0.86  $ 0.70  $ 1.52  $ 1.22 
Diluted net income per share $ 0.85  $ 0.70  $ 1.51  $ 1.22 
Weighted average number of shares:
Basic 110,442  110,901  110,323  110,879 
Effect of dilutive securities 661  433  743  501 
Diluted 111,103  111,334  111,066  111,380 
See accompanying notes.

-4-

 SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three and six months ended June 30, 2021 and 2020
(Dollars in thousands)
(Unaudited)

Three Months Ended Six Months Ended
  June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Net income $ 94,476  $ 78,172  $ 167,757  $ 135,772 
  Other comprehensive income (loss), net of tax:
  Changes in net prior service credit and actuarial losses 1,876  1,809  3,754  2,748 
  Change in fair value of derivatives 828  104  1,469  (2,351)
  Foreign currency translation 25,669  (1,576) (7,703) (38,015)
Other comprehensive income (loss) 28,373  337  (2,480) (37,618)
Comprehensive income $ 122,849  $ 78,509  $ 165,277  $ 98,154 
 
See accompanying notes.
-5-

 SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2021 and 2020
(Dollars in thousands)
(Unaudited)


  2021 2020
Cash flows provided by (used in) operating activities:    
Net income $ 167,757  $ 135,772 
Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: 		   
Depreciation and amortization 122,386  104,197 
Rationalization charges 10,711  4,741 
Stock compensation expense 10,337  9,056 
Loss on early extinguishment of debt 883  1,481 
Other changes that provided (used) cash, net of effects from acquisitions:    
Trade accounts receivable, net (277,768) (179,949)
Inventories (233,815) (148,141)
Trade accounts payable 31,825  (68,026)
Accrued liabilities (24,316) 67,936 
Other, net (17,313) 9,129 
Net cash used in operating activities (209,313) (63,804)
Cash flows provided by (used in) investing activities:    
Purchase of businesses, net of cash acquired 2,305  (941,102)
Capital expenditures (123,604) (106,436)
Other, net 4,914  983 
Net cash used in investing activities (116,385) (1,046,555)
Cash flows provided by (used in) financing activities:    
Borrowings under revolving loans 318,141  927,302 
Repayments under revolving loans (105,856) (570,955)
Proceeds from issuance of long-term debt 499,725  1,639,661 
Repayments of long-term debt (500,000) (766,170)
Changes in outstanding checks - principally vendors (84,216) (79,006)
Dividends paid on common stock (31,564) (27,121)
Debt issuance costs (4,905) (10,265)
Repurchase of common stock (8,538) (13,155)
Net cash provided by financing activities 82,787  1,100,291 
Effect of exchange rate changes on cash and cash equivalents (1,749) (2,674)
Cash and cash equivalents:    
Net decrease (244,660) (12,742)
Balance at beginning of year 409,481  203,824 
Balance at end of period $ 164,821  $ 191,082 
Interest paid, net $ 48,026  $ 38,058 
Income taxes paid, net 47,297  28,974 

See accompanying notes.
-6-

SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the three and six months ended June 30, 2021 and 2020
(Dollars and shares in thousands, except per share amounts)
(Unaudited)
 

Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Common stock - shares outstanding
Balance at beginning of period
110,386  110,834  110,057  110,780 
Net issuance of treasury stock for vested restricted stock units 22  52  351  365 
Repurchases of common stock
—  —  —  (259)
Balance at end of period
110,408  110,886  110,408  110,886 
Common stock - par value
Balance at beginning and end of period
$ 1,751  $ 1,751  $ 1,751  $ 1,751 
Paid-in capital
Balance at beginning of period
309,635  292,283  306,363  289,422 
Stock compensation expense
5,327  4,573  10,337  9,056 
Net issuance of treasury stock for vested restricted stock units (89) (217) (1,827) (1,839)
Balance at end of period
314,873  296,639  314,873  296,639 
Retained earnings
Balance at beginning of period
2,452,996  2,184,691  2,395,395  2,141,302 
Net income
94,476  78,172  167,757  135,772 
Dividends declared on common stock
(15,689) (13,472) (31,369) (27,018)
Adoption of accounting standards update related to credit losses in 2020 —  —  —  (665)
Balance at end of period
2,531,783  2,249,391  2,531,783  2,249,391 
Accumulated other comprehensive loss
Balance at beginning of period
(291,806) (297,697) (260,953) (259,742)
Other comprehensive income (loss) 28,373  337  (2,480) (37,618)
Balance at end of period
(263,433) (297,360) (263,433) (297,360)
Treasury stock
Balance at beginning of period
(1,196,221) (1,160,453) (1,189,683) (1,149,411)
Net issuance of treasury stock for vested restricted stock units (173) (274) (6,711) (4,382)
Repurchases of common stock
—  —  —  (6,934)
Balance at end of period
(1,196,394) (1,160,727) (1,196,394) (1,160,727)
Total stockholders' equity $ 1,388,580  $ 1,089,694  $ 1,388,580  $ 1,089,694 
Dividends declared on common stock per share $ 0.14  $ 0.12  $ 0.28  $ 0.24 

See accompanying notes.
-7-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 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.

The Condensed Consolidated Balance Sheet at December 31, 2020 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, 2020.

Effective with the first quarter of 2021, we renamed our Closures segment as our Dispensing and Specialty Closures segment and our Plastic Containers segment as our Custom Containers segment, in each case to better capture the evolving nature of their products and our ongoing strategic focus. Each of these segments continues to consist of the same operations as prior to it being renamed.


Note 2.               Revenue

The following tables present our revenues disaggregated by reportable segment and geography as they best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenues by segment were as follows:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
(Dollars in thousands)
Dispensing and Specialty Closures $ 545,768  $ 410,468  $ 1,055,120  $ 767,619 
Metal Containers 624,534  597,191  1,178,615  1,105,709 
Custom Containers 178,359  168,811  353,036  333,526 
$ 1,348,661  $ 1,176,470  $ 2,586,771  $ 2,206,854 

Revenues by geography were as follows:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
(Dollars in thousands)
North America $ 968,497  $ 897,327  $ 1,866,899  $ 1,715,000 
Europe and other 380,164  279,143  719,872  491,854 
$ 1,348,661  $ 1,176,470  $ 2,586,771  $ 2,206,854 

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $92.6 million, $80.4 million, and $83.0 million as of June 30, 2021 and 2020 and December 31, 2020, respectively. Unbilled receivables are included in trade accounts receivable, net on our Condensed Consolidated Balance Sheets.


-8-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
Note 3.               Rationalization Charges

We continually evaluate cost reduction opportunities across each of our segments, including rationalizations of our existing facilities through plant closings and downsizings. We use a disciplined approach to identify opportunities that generate attractive cash returns. Rationalization charges by segment were as follows:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
  (Dollars in thousands)
Dispensing and Specialty Closures $ 67  $ 700  $ 5,298  $ 1,442 
Metal Containers 225  1,153  5,246  3,116 
Custom Containers 62  89  167  183 
  $ 354  $ 1,942  $ 10,711  $ 4,741 

Activity in reserves for our rationalization plans were as follows:
Employee
Severance
and Benefits 		Plant
Exit
Costs 		Non-Cash
Asset
Write-Down 		Total
  (Dollars in thousands)
Balance at December 31, 2020 $ 41,005  $ 555  $ —  $ 41,560 
Charged to expense 6,172  (5) 4,544  10,711 
Utilized and currency translation (3,258) (263) (4,544) (8,065)
Balance at June 30, 2021 $ 43,919  $ 287  $ —  $ 44,206 

Non-cash asset write-downs were the result of comparing the carrying value of certain production related assets to their fair value using estimated future discounted cash flows, a Level 3 fair value measurement (see Note 7 for information regarding a Level 3 fair value measurement).

Rationalization reserves as of June 30, 2021 were recorded in our Condensed Consolidated Balance Sheet as accrued liabilities of $7.9 million and other liabilities of $36.3 million. Exclusive of the footprint optimization plan for our Metal Container segment and our resulting withdrawal from the Central States, Southeast and Southwest Areas Pension Plan, or the Central States Pension Plan, announced in 2019, remaining expenses and cash expenditures for our rationalization plans are expected to be $2.2 million and $7.0 million, respectively. Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $1.1 million per year and be recognized annually through 2040, and remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $3.1 million annually through 2040.



-9-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
Note 4.               Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is reported in our Condensed Consolidated Statements of Stockholders’ Equity.  Amounts included in accumulated other comprehensive loss, net of tax, were as follows:
 
Unrecognized Net
Defined Benefit
Plan Costs 		Change in Fair
Value of
Derivatives 		Foreign
Currency
Translation 		Total
  (Dollars in thousands)
Balance at December 31, 2020 $ (168,604) $ (4,656) $ (87,693) $ (260,953)
Other comprehensive loss before reclassifications
—  484  (7,703) (7,219)
Amounts reclassified from accumulated other
    comprehensive loss
3,754  985  —  4,739 
 Other comprehensive loss 3,754  1,469  (7,703) (2,480)
Balance at June 30, 2021 $ (164,850) $ (3,187) $ (95,396) $ (263,433)
 
The amounts reclassified to earnings from the unrecognized net defined benefit plan costs component of accumulated other comprehensive loss for the three and six months ended June 30, 2021 were net (losses) of $(2.6) million and $(5.2) million, respectively, excluding income tax benefits of $0.7 million and $1.4 million, respectively. For the three and six months ended June 30, 2021, these net (losses) consisted of amortization of net actuarial (losses) of $(3.0) million and $(6.0) million and amortization of net prior service credit of $0.4 million and $0.8 million, respectively. Amortization of net actuarial losses and net prior service credit was recorded in other pension and postretirement income in our Condensed Consolidated Statements of Income. See Note 9 for further information.

The amounts reclassified to earnings from the change in fair value of derivatives component of accumulated other comprehensive loss for the three and six months ended June 30, 2021 were not significant.

Other comprehensive loss before reclassifications related to foreign currency translation for the three and six months ended June 30, 2021 consisted of (i) foreign currency gains (losses) related to translation of quarter end financial statements of foreign subsidiaries utilizing a functional currency other than the U.S. dollar of $29.1 million and $(22.6) million, respectively, (ii) foreign currency gains related to intra-entity foreign currency transactions that are of a long-term investment nature of $0.5 million and $0.9 million, respectively, and (iii) foreign currency (losses) gains related to our net investment hedges of $(5.2) million and $18.3 million, respectively, excluding an income tax benefit (provision) of $1.3 million and $(4.3) million, respectively. See Note 7 for further discussion.


Note 5.               Inventories

Inventories consisted of the following: 
June 30, 2021 June 30, 2020 Dec. 31, 2020
  (Dollars in thousands)
Raw materials $ 302,719  $ 298,550  $ 270,066 
Work-in-process 164,655  165,505  167,100 
Finished goods 534,522  499,799  335,346 
Other 15,497  14,089  14,610 
  1,017,393  977,943  787,122 
Adjustment to value inventory at cost on the LIFO method (109,588) (156,495) (109,588)
  $ 907,805  $ 821,448  $ 677,534 

-10-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
Note 6.               Long-Term Debt

Long-term debt consisted of the following: 
June 30, 2021 June 30, 2020 Dec. 31, 2020
  (Dollars in thousands)
Bank debt      
Bank revolving loans $ 195,859  $ 354,000  $ — 
U.S. term loans 400,000  900,000  900,000 
Other foreign bank revolving and term loans 47,132  42,534  30,407 
Total bank debt 642,991  1,296,534  930,407 
4¾% Senior Notes
300,000  300,000  300,000 
3¼% Senior Notes
770,835  728,520  795,307 
4⅛% Senior Notes 600,000  600,000  600,000 
2¼% Senior Notes 592,950  560,400  611,775 
1.4% Senior Secured Notes 500,000  —  — 
Finance leases 33,460  35,102  34,480 
Total debt - principal 3,440,236  3,520,556  3,271,969 
Less unamortized debt issuance costs and debt discount 22,984  22,713  20,716 
Total debt 3,417,252  3,497,843  3,251,253 
Less current portion 240,859  391,418  28,036 
  $ 3,176,393  $ 3,106,425  $ 3,223,217 

At June 30, 2021, the current portion of long-term debt consisted of $195.9 million of bank revolving loans under our amended and restated senior secured credit facility, or the Credit Agreement, $43.1 million of other foreign bank revolving and term loans and $1.9 million of finance leases.

On February 1, 2021, we and certain of our subsidiaries entered into a Second Amendment to Amended and Restated Credit Agreement, or the Second Amendment, with certain lenders party thereto and Wells Fargo Bank, National Association, as administrative agent under the Credit Agreement. The Second Amendment amends the Credit Agreement to provide us with additional flexibility to issue new senior secured notes with related guarantees from our U.S. subsidiaries, which new senior secured notes and related guarantees may be secured on a pari passu basis with the U.S. Obligations by the U.S. Collateral (each as defined in the Second Amendment). The Second Amendment also makes minor technical changes and allows for certain additional internal corporate reorganizations.

1.4% SENIOR SECURED NOTES

On February 10, 2021, we issued $500.0 million aggregate principal amount of our 1.4% Senior Secured Notes due 2026, or the 1.4% Notes, at 99.945 percent of their principal amount, in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended. The proceeds from the sale of the 1.4% Notes were $499.7 million. We used the proceeds from the sale of the 1.4% Notes to prepay $500.0 million of our outstanding term loans under the Credit Agreement. We paid the initial purchasers’ discount and offering expenses related to the sale of the 1.4% Notes with cash on hand. As a result of this prepayment, we recorded a pre-tax charge for the loss on early extinguishment of debt of $0.9 million during the first quarter of 2021 for the write-off of unamortized debt issuance costs.

The 1.4% Notes are guaranteed on a senior secured basis by our U.S. subsidiaries that guarantee the Credit Agreement. The 1.4% Notes are not guaranteed by any of our subsidiaries that do not guarantee the Credit Agreement, any of our foreign subsidiaries or any of our non-wholly owned subsidiaries. The 1.4% Notes and related guarantees are secured by pledges of equity interests, or the Collateral, that are owned by us and by each subsidiary guarantor, which equity interests are the same equity interests pledged to secure the obligations of U.S. borrowers under the Credit Agreement. The 1.4% Notes will share equally in the Collateral with the Credit Agreement. The guarantee of each such subsidiary guarantor will be released to the
-11-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
extent such subsidiary no longer guarantees the Credit Agreement and in certain other circumstances, and the Collateral pledged by such subsidiary guarantor will also be released upon the release of such subsidiary guarantor’s guarantee.
The 1.4% Notes and related guarantees are senior secured obligations of us and the subsidiary guarantors. The 1.4% Notes and related guarantees rank equally in right of payment with all of our and the subsidiary guarantors’ existing and future senior indebtedness, including under the Credit Agreement and our 4¾% Senior Notes due 2025, or the 4¾% Notes, our 3¼% Senior Notes due 2025, or the 3¼% Notes, our 4⅛% Senior Notes due 2028, or the 4⅛% Notes, and our 2¼% Senior Notes due 2028, or the 2¼% Notes; are senior in right of payment to all of our and the subsidiary guarantors’ future indebtedness that is by its terms expressly subordinated in right of payment to the 1.4% Notes; rank equally in right of payment to all of our and the subsidiary guarantors’ existing and future senior secured indebtedness (including indebtedness under the Credit Agreement) that is secured by the Collateral on a first-priority basis, to the extent of the value of the Collateral; rank effectively senior to all of our and the subsidiary guarantors’ existing and future unsecured indebtedness and indebtedness secured on a junior basis, in each case to the extent of the value of the Collateral; rank effectively junior to all existing and future indebtedness that is secured by liens on assets that do not constitute a part of the Collateral, to the extent of the value of such assets; and are structurally subordinated to all existing and future indebtedness and other liabilities of each of our existing and future subsidiaries that do not guarantee the 1.4% Notes.

As a result of the guarantees by the subsidiary guarantors of the 1.4% Notes, such subsidiaries were also required to guarantee, and have now guaranteed, on a senior unsecured basis the 4¾% Notes, the 3¼% Notes, the 4⅛% Notes and the 2¼% Notes pursuant to supplemental indentures to the indenture for the 4¾% Notes and the 3¼% Notes, the indenture for the 4⅛% Notes and the indenture for the 2¼% Notes.
The 1.4% Notes are not, and are not required to be, registered under the Securities Act of 1933, as amended.
    
The 1.4% Notes mature on April 1, 2026. Interest on the 1.4% Notes will be payable semi-annually in cash on April 1 and October 1 of each year, beginning on October 1, 2021. The 1.4% Notes were issued pursuant to an indenture by and among Silgan, certain of our U.S. subsidiaries and Wells Fargo Bank, National Association, as trustee and collateral agent, which indenture contains covenants that are generally less restrictive than those in the Credit Agreement and substantially similar to the covenants in the indenture for the 4¾% Notes and the 3¼% Notes, the indenture for the 4⅛% Notes and the indenture for the 2¼% Notes.
Prior to March 1, 2026 (one month prior to the maturity date of the 1.4% Notes, or the Par Call Date) the 1.4% Notes will be redeemable at a redemption price equal to the greater of (i) 100 percent of the principal amount of the 1.4% Notes to be redeemed and (ii) the principal amount of the 1.4% Notes plus a “make-whole” amount, plus, in each case, accrued and unpaid interest thereon to the redemption date. On or after the Par Call Date, the 1.4% Notes will be redeemable at a redemption price equal to 100 percent of the aggregate principal amount of any 1.4% Notes being redeemed, plus accrued and unpaid interest thereon to the redemption date.
We will be required to make an offer to repurchase the 1.4% Notes at a repurchase price equal to 101 percent of their principal amount, plus accrued and unpaid interest to the date of repurchase, upon the occurrence of a change of control repurchase event as provided in the indenture for the 1.4% Notes.



-12-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
Note 7.               Financial Instruments

The financial instruments recorded in our Condensed Consolidated Balance Sheets include cash and cash equivalents, trade accounts receivable, trade accounts payable, debt obligations and swap agreements. Due to their short-term maturity, the carrying amounts of trade accounts receivable and trade accounts payable approximate their fair market values. The following table summarizes the carrying amounts and estimated fair values of our other financial instruments at June 30, 2021:
Carrying
Amount 		Fair
Value
  (Dollars in thousands)
Assets:    
Cash and cash equivalents $ 164,821  $ 164,821 
Liabilities:    
Bank debt $ 642,991  $ 642,991 
4¾% Notes 300,000  304,890 
3¼% Notes 770,835  777,850 
4⅛% Notes 600,000  622,500 
2¼% Notes 592,950  597,397 
1.4% Notes 500,000  495,000 

Fair Value Measurements

GAAP 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). GAAP 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.

Financial Instruments Measured at Fair Value

The financial assets and liabilities that were measured on a recurring basis at June 30, 2021 consisted of our cash and cash equivalents and derivative instruments. We measured the fair value of cash and cash equivalents using Level 1 inputs. We measured the fair value of our derivative instruments using the income approach. The fair value of our derivative instruments reflects the estimated amounts that we would pay or receive based on the present value of the expected cash flows derived from market interest rates and prices. As such, these derivative instruments were classified within Level 2.

Financial Instruments Not Measured at Fair Value

Our bank debt, 4¾% Notes, 3¼% Notes, 4⅛% Notes, 2¼% Notes and 1.4% Notes were recorded at historical amounts in our Condensed Consolidated Balance Sheets, as we have not elected to measure them at fair value. We measured the fair value of our variable rate bank debt using the market approach based on Level 2 inputs. Fair values of the 4¾% Notes, 3¼% Notes, 4⅛% Notes, 2¼% Notes and 1.4% Notes were estimated based on quoted market prices, a Level 1 input.

Derivative Instruments and Hedging Activities

Our derivative financial instruments were 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.

-13-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
We utilize certain derivative financial instruments to manage a portion of our interest rate, foreign currency exchange rate and natural gas cost exposures. We generally limit our use of derivative financial instruments to interest rate, foreign currency exchange rate and natural gas swap agreements. We do not engage in trading or other speculative uses of these financial instruments. For a financial instrument to qualify as a hedge, we must be exposed to interest rate, foreign currency exchange rate or price risk, and the financial instrument must reduce the exposure and be designated as a hedge. Financial instruments qualifying for hedge accounting must maintain a high correlation between the hedging instrument and the item being hedged, both at inception and throughout the hedged period. The notional principal amounts outstanding under foreign currency exchange rate agreements and natural gas swap agreements were not significant as of June 30, 2021.

In addition, we also utilize certain internal hedging strategies to minimize our foreign currency exchange rate risk. Net investment hedges that qualify for hedge accounting result in the recognition of foreign currency gains or losses, net of tax, in accumulated other comprehensive loss. 

Interest Rate Swap Agreements

We have entered into two U.S. dollar interest rate swap agreements, each for $50.0 million notional principal amount, to manage a portion of our exposure to interest rate fluctuations. These agreements have a fixed rate of 2.878 percent and mature on March 24, 2023. The difference between amounts to be paid or received on our interest rate swap agreements is recorded in interest and other debt expense in our Condensed Consolidated Statements of Income and was not significant for the three and six months ended June 30, 2021. These agreements are with a financial institution which is expected to fully perform under the terms thereof. The total fair value of our interest rate swap agreements in effect at June 30, 2021 was not significant.

Foreign Currency Exchange Rate Risk

In an effort to minimize our foreign currency exchange rate risk, in addition to limited foreign currency exchange rate derivative financial instruments, we have financed acquisitions of foreign operations primarily with borrowings denominated in Euros and Canadian dollars. In addition, where available, we have borrowed funds in local currency or implemented certain internal hedging strategies to minimize our foreign currency exchange rate risk related to foreign operations, including net investment hedges related to the 3¼% Notes which are Euro denominated. Foreign currency (losses) gains related to our net investment hedges included in accumulated other comprehensive loss for the three and six months ended June 30, 2021 were $(5.2) million and $18.3 million, respectively.



-14-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
Note 8.               Commitments and Contingencies

A competition authority in Germany commenced an antitrust investigation in 2015 involving the industry association for metal packaging in Germany and its members, including our metal closures and metal container subsidiaries in Germany. At the end of April 2018, the European Commission commenced an antitrust investigation involving the metal packaging industry in Europe including our metal closures and metal container subsidiaries, which should effectively close out the investigation in Germany. Given the current stage of the investigation, we cannot reasonably assess what actions may result from these investigations or estimate what costs we may incur as a result thereof.

We are a party to other legal proceedings, contract disputes and claims arising in the ordinary course of our business. We are not a party to, and none of our properties are subject to, any pending legal proceedings which could have a material adverse effect on our business or financial condition.


Note 9.               Retirement Benefits

The components of the net periodic pension benefit credit were as follows:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
  (Dollars in thousands)
Service cost $ 3,789  $ 3,489  $ 7,577  $ 6,975 
Interest cost 4,355  5,710  8,709  11,420 
Expected return on plan assets (19,850) (17,993) (39,698) (35,987)
Amortization of prior service cost 58  56  116  111 
Amortization of actuarial losses 3,028  2,934  6,054  5,869 
Net periodic benefit credit $ (8,620) $ (5,804) $ (17,242) $ (11,612)
 
The components of the net periodic other postretirement benefit credit were as follows:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
(Dollars in thousands)
Service cost $ 28  $ 25  $ 56  $ 48 
Interest cost 95  141  190  283 
Amortization of prior service credit (457) (484) (913) (967)
Amortization of actuarial gains (47) (69) (95) (139)
Net periodic benefit credit $ (381) $ (387) $ (762) $ (775)


Note 10.               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 completed its review of the 2019 tax year with no change to our filed federal income tax return. We have been accepted into the Compliance Assurance Program for the 2020 and 2021 tax years which provides for the review by the IRS of tax matters relating to our tax return prior to filing.





-15-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
Note 11.               Treasury Stock

On October 17, 2016, our Board of Directors authorized the repurchase by us of up to an aggregate of $300.0 million of our common stock by various means from time to time through and including December 31, 2021. We did not repurchase any shares of our common stock pursuant to this authorization during the six months ended June 30, 2021. At June 30, 2021, we had approximately $76.6 million remaining under this authorization for the repurchase of our common stock.

During the first six months of 2021, we issued 573,232 treasury shares which had an average cost of $3.19 per share for restricted stock units that vested during the period. In accordance with the Silgan Holdings Inc. Amended and Restated 2004 Stock Incentive Plan, we repurchased 222,146 shares of our common stock at an average cost of $38.44 to satisfy minimum employee withholding tax requirements resulting from the vesting of such restricted stock units.

We account for treasury shares using the first-in, first-out (FIFO) cost method. As of June 30, 2021, 64,704,383 shares of our common stock were held in treasury.


Note 12.             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 2021, 359,469 restricted stock units were granted to certain of our officers, other key employees and outside directors. The fair value of these restricted stock units at the grant date was $13.9 million, which is being amortized ratably over the respective vesting period from the grant date.



-16-

SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
Note 13.             Segment Information

Reportable segment information was as follows:
Dispensing and Specialty Closures Metal
Containers 		Custom
Containers 		Corporate Total
  (Dollars in thousands)
Three Months Ended June 30, 2021          
Net sales $ 545,768  $ 624,534  $ 178,359  $ —  $ 1,348,661 
Depreciation and amortization(1)
29,101  21,329  9,632  42  60,104 
Rationalization charges 67  225  62  —  354 
Segment income 73,836  58,635  27,244  (6,761) 152,954 
Three Months Ended June 30, 2020          
Net sales $ 410,468  $ 597,191  $ 168,811  $ —  $ 1,176,470 
Depreciation and amortization(1)
22,026  20,545  9,352  42  51,965 
Rationalization charges 700  1,153  89  —  1,942 
Segment income 58,581  71,782  22,987  (22,116) 131,234 
Six Months Ended June 30, 2021          
Net sales $ 1,055,120  $ 1,178,615  $ 353,036  $ —  $ 2,586,771 
Depreciation and amortization(1)
57,991  42,578  19,005  81  119,655 
Rationalization charges 5,298  5,246  167  —  10,711 
Segment income 139,481  104,249  51,730  (15,957) 279,503 
Six Months Ended June 30, 2020          
Net sales $ 767,619  $ 1,105,709  $ 333,526  $ —  $ 2,206,854 
Depreciation and amortization(1)
42,150  41,026  18,840  79  102,095 
Rationalization charges 1,442  3,116  183  —  4,741 
Segment income 103,810  119,261  45,032  (34,728) 233,375 
_____________

(1)Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $1.4 million and $1.1 million for the three months ended June 30, 2021 and 2020, respectively and $2.7 million and $2.1 million for the six months ended June 30, 2021 and 2020, respectively.

Total segment income is reconciled to income before income taxes as follows:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
  (Dollars in thousands)
Total segment income $ 152,954  $ 131,234  $ 279,503  $ 233,375 
Interest and other debt expense 26,406  25,837  53,712  50,807 
Income before income taxes $ 126,548  $ 105,397  $ 225,791  $ 182,568 

Sales and segment income of part of our Dispensing and Specialty Closures segment and our Metal Container segment are dependent, in part, upon fruit and vegetable harvests. 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
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SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at June 30, 2021 and 2020 and for the
three and six months then ended is unaudited)
experienced higher unit sales volume in the third quarter of our fiscal year and generated a disproportionate amount of our annual segment income during that quarter.

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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 that 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, as amended.  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, 2020 and in 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 sustainable rigid packaging solutions for consumer goods products.  We currently produce dispensing and specialty closures for food, beverage, health care, garden, home, personal care and beauty products; steel and aluminum containers for human and pet food and general line products; and custom designed containers for personal care, food, health care, pharmaceutical, household and industrial chemical, pet food and care, agricultural, automotive and marine chemical products. We are a leading worldwide manufacturer of dispensing and specialty closures, a leading manufacturer of metal containers in North America and Europe, and a leading manufacturer of custom plastic containers in North America for a variety of markets, including the personal care, food, health care and household and industrial chemical 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 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.








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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, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Net sales
Dispensing and Specialty Closures 40.5  % 34.9  % 40.8  % 34.8  %
Metal Containers 46.3  50.8  45.6  50.1 
Custom Containers 13.2  14.3  13.6  15.1 
Consolidated 100.0  100.0  100.0  100.0 
Cost of goods sold 82.6  80.9  82.4  81.5 
Gross profit 17.4  19.1  17.6  18.5 
Selling, general and administrative expenses 7.0  8.5  7.4  8.6 
Rationalization charges —  0.2  0.4  0.2 
Other pension and postretirement income (0.9) (0.8) (1.0) (0.9)
Income before interest and income taxes 11.3  11.2  10.8  10.6 
Interest and other debt expense 1.9  2.2  2.1  2.3 
Income before income taxes 9.4  9.0  8.7  8.3 
Provision for income taxes 2.4  2.3  2.2  2.1 
Net income 7.0  % 6.7  % 6.5  % 6.2  %

Summary unaudited results of operations for the periods presented are provided below.
Three Months Ended Six Months Ended
  June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
(dollars in millions)
Net sales    
Dispensing and Specialty Closures $ 545.8  $ 410.5  $ 1,055.1  $ 767.6 
Metal Containers 624.5  597.2  1,178.6  1,105.7 
Custom Containers 178.4  168.8  353.1  333.5 
Consolidated $ 1,348.7  $ 1,176.5  $ 2,586.8  $ 2,206.8 
Segment income
Dispensing and Specialty Closures (1)
$ 73.8  $ 58.6  $ 139.5  $ 103.8 
Metal Containers (2)
58.6  71.8  104.2  119.3 
Custom Containers (3)
27.2  23.0  51.7  45.0 
Corporate (4)
(6.6) (22.2) (15.9) (34.7)
Consolidated $ 153.0  $ 131.2  $ 279.5  $ 233.4 
 
(1) Includes rationalization charges of $0.1 million and $0.7 million for the three months ended June 30, 2021 and 2020, respectively, and $5.3 million and $1.4 million for the six months ended June 30, 2021 and 2020, respectively. Includes a charge of $3.5 million for the write-up of inventory for purchase accounting for each of the three and six months ended June 30, 2020 as a result of the acquisition of the dispensing operations of the Albéa Group in June 2020.
(2) Includes rationalization charges of $0.2 million and $1.2 million for the three months ended June 30, 2021 and 2020, respectively and $5.2 million and $3.1 million for the six months ended June 30, 2021 and 2020, respectively.
(3) Includes rationalization charges of $0.1 million for each of the three months ended June 30, 2021 and 2020 and $0.2 million for each of the six months ended June 30, 2021 and 2020.
(4) Includes costs attributed to announced acquisitions of $16.1 million and $18.3 million for the three and six months ended June 30, 2020, respectively.
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Three Months Ended June 30, 2021 Compared with Three Months Ended June 30, 2020

Overview.  Consolidated net sales were $1.35 billion in the second quarter of 2021, a 14.6 percent increase as compared to the second quarter of 2020 primarily due to the pass through of higher raw material costs, higher unit volumes in the Dispensing and Specialty Closures segment, the impact from favorable foreign currency translation and a more favorable mix of products sold in the Metal Container and Custom Container segments, partially offset by lower volumes in the Metal Container and Custom Container segments. Income before interest and income taxes for the second quarter of 2021 was $153.0 million, a $21.8 million increase as compared to the same period in 2020, primarily due to higher unit volumes and strong operating performance in the Dispensing and Specialty Closures segment, a more favorable mix of products sold and strong operating performance in the Custom Container segment, lower corporate expenses and rationalization charges, higher pension income and the inclusion in the prior year period of a charge for the purchase accounting write-up of inventory of the dispensing operations of the Albéa Group, or the Albéa Dispensing Business, which was acquired in June 2020 and a charge in the Custom Container segment in the prior year period for a non-commercial legal dispute relating to prior periods, partially offset by lower volumes in the Metal Container and Custom Container segments, higher production costs, less efficient manufacturing processes and lower production in the Metal Container segment, the unfavorable impact in the current year period from the delayed pass through of significantly higher resin costs in the Dispensing and Specialty Closures and Custom Container segments and foreign currency transaction losses. Results for the second quarters of 2021 and 2020 included rationalization charges of $0.4 million and $2.0 million, respectively. Results for the second quarter of 2020 also included costs attributed to announced acquisitions of $16.1 million. Net income for the second quarter of 2021 was $94.5 million as compared to $78.2 million for the same period in 2020. Net income per diluted share for the second quarter of 2021 was $0.85 as compared to $0.70 for the same period in 2020.

Net Sales.  The $172.2 million increase in consolidated net sales in the second quarter of 2021 as compared to the second quarter of 2020 was the result of higher net sales across all the segments.

Net sales for the Dispensing and Specialty Closures segment increased $135.3 million, or 33.0 percent, in the second quarter of 2021 as compared to the same period in 2020. This increase was primarily the result of higher unit volumes of approximately ten percent, the pass through of higher raw material costs and the impact of favorable foreign currency translation of approximately $17 million. The increase in unit volumes was principally the result of volumes from the Albéa Dispensing Business acquired in June 2020 and a strong recovery in the beverage, beauty and fragrance markets, partially offset by a decrease in volume for hygiene and home cleaning products as compared to the initial pantry filling in response to the emerging COVID-19 pandemic in the second quarter of 2020.

Net sales for the Metal Container segment increased $27.3 million, or 4.6 percent, in the second quarter of 2021 as compared to the same period in 2020. This increase was primarily the result of the pass through of higher raw material and other manufacturing costs, the impact of favorable foreign currency translation of approximately $7 million and a more favorable mix of products sold, partially offset by lower unit volumes of approximately two percent. The decrease in unit volumes was primarily due to production shortfalls caused by raw material and labor supply challenges across the supply chain.

Net sales for the Custom Container segment increased $9.6 million, or 5.7 percent, in the second quarter of 2021 as compared to the same period in 2020. This increase was principally due to the pass through of higher raw material costs, a more favorable mix of products sold and the impact of favorable foreign currency translation of approximately $3 million, partially offset by lower volumes of approximately eleven percent. The decline in volumes was due primarily to unprecedented demand in the prior year quarter for cleaning and sanitizing products as a result of the initial pantry filling in response to the emerging COVID-19 pandemic in the second quarter of 2020.

Gross Profit.  Gross profit margin decreased 1.7 percentage points to 17.4 percent in the second quarter of 2021 as compared to the same period in 2020 for the reasons discussed below in "Income before Interest and Income Taxes."

Selling, General and Administrative Expenses.  Selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.0 percent in the second quarter of 2021 as compared to 8.5 percent in the same period in 2020. Selling, general and administrative expenses decreased $6.2 million to $94.4 million for the second quarter of 2021 as compared to $100.6 million for the same period in 2020. The decrease in selling, general and administrative expenses was principally due to lower corporate expenses, primarily as a result of costs attributed to announced acquisitions of $16.1 million incurred in the prior year period, and the inclusion in the prior year period of a charge of $2.8 million in the Custom Container segment for a non-commercial legal dispute relating to prior periods, partially offset by the inclusion of selling, general and administrative expenses from the Albéa Dispensing Business which was acquired in June 2020.

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Income before Interest and Income Taxes.  Income before interest and income taxes for the second quarter of 2021 increased by $21.8 million as compared to the second quarter of 2020, and margins increased to 11.3 percent from 11.2 percent over the same periods. The increase in income before interest and income taxes was primarily the result of higher income in the Dispensing and Specialty Closures and Custom Container segments, lower corporate expenses primarily as a result of prior year costs for announced acquisitions and lower rationalization charges, partially offset by lower income in the Metal Container segment. Rationalization charges were $0.4 million and $2.0 million in the second quarters of 2021 and 2020, respectively. The second quarter of 2020 also included the negative impact of a $3.5 million charge related to the purchase accounting write-up of inventory for the Albéa Dispensing Business acquired in June 2020.

Segment income of the Dispensing and Specialty Closures segment for the second quarter of 2021 increased $15.2 million as compared to the same period in 2020, while segment income margin decreased to 13.5 percent from 14.3 percent over the same periods due primarily to the pass through of significantly higher raw material costs. The increase in segment income was primarily due to higher unit volumes, strong operating performance and the inclusion in the prior year period of a $3.5 million charge for the purchase accounting write-up of inventory of the Albéa Dispensing Business, partially offset by the unfavorable impact in the current year period from the delayed pass through of significantly higher resin costs and foreign currency transaction losses.

Segment income of the Metal Container segment for the second quarter of 2021 decreased $13.2 million as compared to the same period in 2020, and segment income margin decreased to 9.4 percent from 12.0 percent over the same periods. The decrease in segment income was due primarily to higher production costs, less efficient manufacturing processes and lower production and volume levels, all due in large part to significant raw material supply issues and labor challenges, partially offset by higher pension income and lower rationalization charges. Rationalization charges were $0.2 million and $1.2 million in the second quarters of 2021 and 2020, respectively.

Segment income of the Custom Container segment for the second quarter of 2021 increased $4.2 million as compared to the same period in 2020, and segment income margin increased to 15.2 percent from 13.6 percent over the same periods. The increase in segment income was primarily attributable to a more favorable mix of products sold, strong operating performance and the inclusion in the prior year period of a $2.8 million charge for a non-commercial legal dispute relating to prior periods, partially offset by lower volumes and the unfavorable impact in the current year period from the delayed pass through of higher resin costs.

Interest and Other Debt Expense. Interest and other debt expense for the second quarter of 2021 increased $0.6 million to $26.4 million as compared to $25.8 million in the same period in 2020. This increase was primarily due to higher weighted average outstanding borrowings during the quarter as a result of the acquisition of the Albéa Dispensing Business in June 2020, partially offset by lower weighted average interest rates during the quarter due to lower variable market rates.

Provision for Income Taxes. The effective tax rates were 25.3 percent and 25.8 percent for the second quarters of 2021 and 2020, respectively.
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Six Months Ended June 30, 2021 Compared with Six Months Ended June, 2020

Overview.  Consolidated net sales were $2.59 billion in the first six months of 2021, a 17.2 percent increase as compared to the first six months of 2020 primarily as a result of higher unit volumes in the Dispensing and Specialty Closures and Metal Container segments, the pass through of higher raw material costs, the impact of favorable foreign currency translation and a more favorable mix of products sold in the Dispensing and Specialty Closures and Custom Container segments, partially offset by lower volumes in the Custom Container segment and a higher percentage of smaller cans sold in the Metal Container segment. Income before interest and income taxes for the first six months of 2021 increased by $46.1 million as compared to the same period in 2020 primarily due to higher unit volumes in the Dispensing and Specialty Closures and Metal Container segments, a more favorable mix of products sold and strong operating performance in the Dispensing and Specialty Closures and Custom Container segments, lower corporate expenses, higher pension income, the negative impact in the prior year period of a charge for the purchase accounting write-up of acquired inventory of the Albéa Dispensing Business and the inclusion in the prior year period of a charge in the Custom Container segment for a non-commercial legal dispute relating to prior periods. These increases were partially offset by the unfavorable impact in the current year period from the delayed pass through of higher resin costs in the Dispensing and Specialty Closures and Custom Container segments, higher production costs, less efficient manufacturing processes and lower production levels in the Metal Container segment, lower volumes in the Custom Container segment, higher rationalization charges, a higher percentage of smaller cans sold in the Metal Container segment and foreign currency transaction losses. Results for the first six months of 2021 and 2020 included rationalization charges of $10.7 million and $4.7 million and a loss on early extinguishment of debt of $0.9 million and $1.5 million, respectively. Results for the first six months of 2020 also included costs attributed to acquisitions of $18.3 million. Net income for the first six months of 2021 was $167.8 million as compared to $135.8 million for the same period in 2020. Net income per diluted share for the first six months of 2021 was $1.51 as compared to $1.22 for the same period in 2020.

Net Sales.  The $380.0 million increase in consolidated net sales in the first six months of 2021 as compared to the first six months of 2020 was the result of higher net sales across all the segments.

Net sales for the Dispensing and Specialty Closures segment increased $287.5 million, or 37.5 percent, in the first six months of 2021 as compared to the same period in 2020. This increase was primarily the result of higher unit volumes of approximately nine percent, the pass through of higher raw material costs, the impact of favorable foreign currency translation of approximately $27 million and a more favorable mix of products sold. The increase in unit volumes was principally the result of the inclusion of volumes from the Albéa Dispensing Business which was acquired in June 2020 and strong volumes for beverage, beauty and fragrance products.

Net sales for the Metal Container segment increased $72.9 million, or 6.6 percent, in the first six months of 2021 as compared to the same period in 2020. This increase was primarily the result of the pass through of higher raw material and other manufacturing costs, higher unit volumes of approximately four percent and the impact of favorable foreign currency translation of approximately $12 million, partially offset by a higher percentage of smaller cans sold. The increase in unit volumes was primarily due to the continued high consumer demand levels for food cans, partially offset by the negative impact on volume of production shortfalls caused by raw material and labor supply challenges across the supply chain.

Net sales for the Custom Container segment increased $19.6 million, or 5.9 percent, in the first six months of 2021 as compared to the same period in 2020. This increase was primarily due to a more favorable mix of products sold, the pass through of higher raw material costs and the impact of favorable foreign currency translation of approximately $5 million, partially offset by lower volumes of approximately six percent. The decrease in volumes was due primarily to unprecedented demand in the prior year period for cleaning and sanitizing products as a result of the initial pantry filling in response to the emerging COVID-19 pandemic.

Gross Profit.  Gross profit margin decreased 0.9 percentage points to 17.6 percent in the first six months of 2021 as compared to the same period in 2020 for the reasons discussed below in "Income before Interest and Income Taxes".

Selling, General and Administrative Expenses.  Selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.4 percent for the first six months of 2021 as compared to 8.6 percent in the same period in 2020. Selling, general and administrative expenses increased $1.3 million to $191.8 million for the first six months of 2021 as compared to $190.5 million for the same period in 2020. The increase in selling, general and administrative expenses was principally the result of the inclusion of selling, general and administrative expenses from the Albéa Dispensing Business which was acquired in June 2020, partially offset by the inclusion in the prior year period of costs attributed to announced acquisitions of $18.3 million, one-time plant employee incentive payments and a charge of $2.8 million in the Custom Container segment for a non-commercial legal dispute relating to prior periods.

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Income before Interest and Income Taxes.  Income before interest and income taxes for the first six months of 2021 increased by $46.1 million as compared to the first six months of 2020, and margins increased to 10.8 percent from 10.6 percent over the same periods. The increase in income before interest and income taxes was primarily due to higher income in the Dispensing and Specialty Closures and Custom Container segments and lower corporate expenses primarily as a result of prior year costs for announced acquisitions, partially offset by lower income in the Metal Container segment and higher rationalization charges. Rationalization charges were $10.7 million and $4.7 million for the first six months of 2021 and 2020, respectively.

Segment income of the Dispensing and Specialty Closures segment for the first six months of 2021 increased $35.7 million, as compared to the same period in 2020, while segment income margin decreased to 13.2 percent from 13.5 percent over the same periods due primarily to the pass through of higher raw material costs. The increase in segment income was primarily due to higher unit volumes, strong operating performance, a more favorable mix of products sold and the inclusion in the prior year period of a $3.5 million charge for the purchase accounting write-up of inventory of the Albéa Dispensing Business, partially offset by the unfavorable impact in the current year period from the delayed pass through of higher resin costs, higher rationalization charges and foreign currency transaction losses. Rationalization charges were $5.3 million and $1.4 million in the first six months of 2021 and 2020, respectively.

Segment income of the Metal Container segment for the first six months of 2021 decreased $15.1 million as compared to the same period in 2020, and segment income margin decreased to 8.8 percent from 10.8 percent over the same periods. The decrease in segment income was primarily attributable to higher production costs, less efficient manufacturing processes and lower production levels, a higher percentage of smaller cans sold and higher rationalization charges, partially offset by higher unit volumes. Rationalization charges were $5.2 million and $3.1 million in the first six months of 2021 and 2020, respectively.

Segment income of the Custom Container segment for the first six months of 2021 increased $6.7 million as compared to the same period in 2020, and segment income margin increased to 14.6 percent from 13.5 percent over the same periods. The increase in segment income was primarily attributable to a more favorable mix of products sold, strong operating performance and the inclusion in the prior year period of a $2.8 million charge for a non-commercial legal dispute relating to prior periods, partially offset by lower volumes and the delayed pass through of higher resin costs.

Interest and Other Debt Expense. Interest and other debt expense before loss on early extinguishment of debt for the first six months of 2021 increased $3.5 million to $52.8 million as compared to $49.3 million in the same period in 2020 principally due to higher weighted average outstanding borrowings primarily related to the acquisition of the Albéa Dispensing Business in June 2020, partially offset by lower weighted average interest rates due to lower variable market rates. In February 2021, we issued the 1.4% Notes and utilized the proceeds therefrom to prepay outstanding term loans under the Credit Agreement. In conjunction with this prepayment, we recognized a loss on early extinguishment of debt of $0.9 million in the first quarter of 2021. In the first six months of 2020, we recognized a loss on early extinguishment of debt of $1.5 million in conjunction with the prepayment of term loans under the Credit Agreement.

Provision for Income Taxes. The effective tax rates were 25.7 percent and 25.6 percent for the first six months of 2021 and 2020, respectively.


CAPITAL RESOURCES AND LIQUIDITY

Our principal sources of liquidity have been net cash from operating activities and borrowings under our debt instruments, including our senior secured credit facility. 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.

On February 10, 2021, we issued $500.0 million aggregate principal amount of the 1.4% Notes at 99.945 percent of their principal amount. The proceeds from the sale of the 1.4% Notes were $499.7 million. We used the proceeds from the sale of the 1.4% Notes to prepay $500.0 million of our outstanding term loans under the Credit Agreement. We paid the initial purchasers' discount and offering expenses related to the sale of the 1.4% Notes with cash on hand. As a result of this prepayment, we recorded a pre-tax charge for the loss on early extinguishment of debt of $0.9 million during the first quarter of 2021 for the write-off of unamortized debt issuance costs.

You should also read Note 6 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2021 included elsewhere in this Quarterly Report.

-24-


For the six months ended June 30, 2021, we used proceeds from the issuance of the 1.4% Notes of $499.7 million, net borrowings of revolving loans of $212.2 million and cash and cash equivalents of $244.7 million to fund repayments of long-term debt of $500.0 million, cash used in operations of $209.3 million, net capital expenditures and other investing activities of $116.4 million, decreases in outstanding checks of $84.2 million, dividends paid on our common stock of $31.6 million, repurchases of our common stock of $8.5 million under our stock-based compensation plan, debt issuance costs of $4.9 million and the negative effect of exchange rate changes on cash and cash equivalents of $1.7 million.

For the six months ended June 30, 2020, we used net proceeds of $1,639.7 million from the issuance of the 2¼% Notes and the additional 4⅛% Notes and from the incremental term loans borrowed under our Credit Agreement, net borrowings of revolving loans of $356.4 million and cash and cash equivalents of $10.0 million to fund the purchases of the Albéa Dispensing Business and Cobra Plastics for $941.1 million, repayments of long-term debt of $766.2 million, net capital expenditures and other investing activities of $105.5 million, decreases in outstanding checks of $79.0 million, cash used in operations of $63.8 million, dividends paid on our common stock of $27.1 million, repurchases of our common stock of $13.1 million, debt issuance costs of $10.3 million and the negative effect of exchange rate changes on cash and cash equivalents of $2.7 million.

At June 30, 2021, we had $195.9 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, 2021 was $976.0 million and Cdn $15.0 million.

Because we sell metal containers and closures 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, which generally peak sometime in the summer or early fall, we may incur short-term indebtedness to finance our working capital requirements.  Our peak seasonal working capital requirements have historically averaged approximately $350 million. We fund seasonal working capital requirements through revolving loans under the Credit Agreement, other foreign bank loans and cash on hand. 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.

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.

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 2021 with all of these covenants.






















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Guaranteed Securities

Each of the 4¾% Notes, the 3¼% Notes, the 4⅛% Notes, the 2¼% Notes and the 1.4% Notes were issued by Silgan and are guaranteed by certain wholly owned subsidiaries of Silgan, collectively the Obligor Group.

The following summarized financial information relates to the Obligor Group as of June 30, 2021 and December 31, 2020 and for the six months ended June 30, 2021. 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 $1.47 billion and $1.46 billion as of June 30, 2021 and December 31, 2020, respectively, are not included in noncurrent assets in the table below.
  June 30, 2021 Dec. 31, 2020
(Dollars in millions)
   
Current assets $1,270.2 $1,104.1
Noncurrent assets 3,312.4 3,324.0
Current liabilities 952.0 891.1
Noncurrent liabilities 3,709.1 3,744.6

At June 30, 2021 and December 31, 2020, the Obligor Group held current receivables due from other subsidiary companies of $38.0 million and $54.8 million, respectively; long-term notes receivable due from other subsidiary companies of $795.1 million and $818.9 million, respectively; and current payables due to other subsidiary companies of $6.1 million and $13.4 million, respectively.
  Six months ended
June 30, 2021
(Dollars in millions)
 
Net sales $1,859.4
Gross profit 285.4 
Net income 127.6 

For the six months ended June 30, 2021, net income in the table above excludes income from equity method investments of other subsidiary companies of $40.2 million. For the six months ended June 30, 2021, the Obligor Group recorded the following transactions with other subsidiary companies: sales to such other subsidiary companies of $21.3 million; net credits from such other subsidiary companies of $15.7 million; and net interest income from such other subsidiary companies of $9.4 million. For the six months ended June 30, 2021, the Obligor Group received dividends from other subsidiary companies of $16.1 million.

Rationalization Charges

We continually evaluate cost reduction opportunities across each of our segments, including rationalizations of our existing facilities through plant closings and downsizings. We use a disciplined approach to identify opportunities that generate attractive cash returns. Under our rationalization plans, we made cash payments of $3.5 million and $3.6 million for the six months ended June 30, 2021 and 2020, respectively. Exclusive of the footprint optimization plan for our Metal Container segment and our resulting withdrawal from the Central States Pension Plan announced in 2019, remaining expenses and cash expenditures for our rationalization plans are expected to be $2.2 million and $7.0 million, respectively. Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $1.1 million per year and be recognized annually through 2040, and remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $3.1 million annually through 2040.
You should also read Note 3 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2021 included elsewhere in this Quarterly Report.
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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 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, 2020.  Since such filing, other than the changes discussed in Notes 6 and 7 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2021 included elsewhere in this Quarterly Report, 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.

 

Item 4.  CONTROLS AND PROCEDURES
 
As required by Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, 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.  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 were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
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.

On June 1, 2020, we acquired the Albéa Dispensing Business. We are currently in the process of integrating the internal controls and procedures of the Albéa Dispensing Business into our internal controls over financial reporting. As provided under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the Securities and Exchange Commission, we will include the internal controls and procedures of the Albéa Dispensing Business in our annual assessment of the effectiveness of our internal control over financial reporting for our 2021 fiscal year. 

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Part II.  Other Information

Item 6.  Exhibits

Exhibit Number Description
   
*3.1
*+10.1
22
*31.1
   
*31.2
   
*32.1
 
*32.2
   
101.INS  XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
   
101.SCH Inline XBRL Taxonomy Extension Schema Document.
   
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
   
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
   
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
 
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
___________________ 
*Filed herewith.
+ Management contract or compensatory plan or arrangement.
-28-


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 4, 2021  /s/ Robert B. Lewis                   
  Robert B. Lewis
  Executive Vice President and
  Chief Financial Officer
  (Principal Financial and
  Accounting Officer)

-29-
Exhibit 3.1
CERTIFICATE OF AMENDMENT TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SILGAN HOLDINGS INC.
PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE

Silgan Holdings Inc., a corporation organized and existing under and by virtue of the laws of the State of Delaware, hereby certifies that:

1. The name of the corporation is Silgan Holdings Inc. (the “Corporation”).

2. Paragraph A of Article FOURTH of the Corporation’s Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on June 7, 2006, as amended by Certificates of Amendment filed with the Secretary of State of the State of Delaware on June 7, 2010, June 7, 2010 and June 11, 2018 (as so amended, the “Certificate of Incorporation”), is hereby amended by deleting the last four sentences of such paragraph and adding the following to the end of such paragraph:

Notwithstanding anything to the contrary in this Paragraph A, at any time and from time to time during the period beginning on June 1, 2021 and ending on December 31, 2023, the Board of Directors of the Corporation may increase the number of directors of the Corporation constituting the entire Board of Directors to a maximum of nine. Any vacancies in the Board of Directors created by any such increase may be filled only by the Board of Directors (and not by the stockholders), acting by a majority of the directors then in office, and any director so chosen shall (i) be designated as a member of such class of directors as shall be determined by the Board of Directors who shall, in making such determination, take into consideration that all classes of directors should be comprised of as nearly equal a number of directors as possible and (ii) hold office until the annual meeting of stockholders at which the term of office of such class of directors expires and until such director’s successor shall be elected and shall qualify. The number of directors constituting the class to which such director is designated shall correspondingly be increased by one. To the extent the size of the Board of Directors is so increased, upon the death, resignation, removal from office or expiration of term of service without standing for reelection of any independent director (as defined in the applicable listing standards of the Nasdaq Stock Market and the applicable rules of the Securities and Exchange Commission) at any time following such increase and only if the number of directors constituting the entire Board of Directors immediately prior to such death, resignation, removal from office or expiration of term of service without standing for reelection was greater than seven, then, subject to the ability of the Board of Directors of the Corporation to again increase the size of the Board of Directors to up to a maximum of nine members at any time and from time to time through December 31, 2023, (x) such directorship shall be eliminated, (y) the number of directors of the Corporation constituting the entire Board of Directors shall be reduced by one and the number of directors constituting the class of which such director was a member shall correspondingly be reduced by one, but in no event shall the number of directors of the Corporation constituting the entire Board of Directors be less than seven, and (z) such death, resignation, removal from office or expiration of term of service without standing for reelection shall not result in a vacancy in the Board of Directors.

3. This Certificate of Amendment was duly approved and adopted by the Board of Directors of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

4. Thereafter, an annual meeting of the stockholders of the Corporation was duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting this Certificate of Amendment was authorized and approved by the stockholders of the Corporation in accordance with Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, SILGAN HOLDINGS INC. has caused this Certificate of Amendment to be executed in its corporate name by its duly authorized officer on the 1st day of June, 2021.
SILGAN HOLDINGS INC.
By:
/s/ Frank W. Hogan, III
Name:
Frank W. Hogan, III
Title:
Senior Vice President, General
Counsel and Secretary

Exhibit 10.1
SECOND AMENDMENT
TO THE
SILGAN HOLDINGS INC.
AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

WHEREAS, Silgan Holdings Inc., a Delaware corporation (the “Corporation”), maintains the Silgan Holdings Inc. Amended and Restated 2004 Stock Incentive Plan, as amended (the “Plan”); and

WHEREAS, the Corporation considers it in the best interests of the Corporation to further amend the Plan as set forth below.

NOW, THEREFORE, pursuant to Section 27(b) of the Plan, the Plan is hereby amended, effective as of April 1, 2021, as follows:

1. By substituting the following Section for Section 15 of the Plan:

SECTION 15. DIRECTOR AWARDS.

(a) Annual Grant. On the first business day following the day of each annual meeting of the stockholders of the Company, each Outside Director shall be granted an Award of Restricted Shares or Restricted Stock Units, in the discretion of the Board of Directors, which Award shall have an aggregate Fair Market Value of $125,000 as of the date of grant, provided that no fractional Share or fractional Stock Unit shall be issued. In addition, for an Outside Director who is elected to the Board of Directors subsequent to an annual meeting of stockholders of the Company in a particular year, such Outside Director shall also be granted, on the first business day after the next annual meeting of stockholders of the Company, a prorated amount of the Award of Restricted Shares or Restricted Stock Units, as the case may be, that were granted to Outside Directors following the annual meeting of stockholders of the Company in such particular year (based on the number of days that such Outside Director served as a Director of the Company during the period from the last annual meeting of stockholders of the Company to and including the next annual meeting of stockholders of the Company). If an Outside Director would otherwise acquire the right to receive fractional Shares or fractional Stock Units pursuant to the preceding sentence, such right shall be disregarded and the Award shall be rounded down to the nearest number of whole Shares or whole Stock Units, as applicable. Notwithstanding anything to the contrary herein, the Board of Directors shall determine the terms of any Award to an Outside Director, which terms shall be set forth in an Award Agreement between the recipient and the Company. The terms of any Award of Restricted Shares shall conform to the provisions of Section 6, and the terms of any Award of Restricted Stock Units shall conform to the provisions of Section 11, in each case except to the extent specifically modified by this Section 15.

(b) Vesting. Each Award of Restricted Shares or Restricted Stock Units to an Outside Director shall become fully vested, in the sole discretion of the Board of Directors, over a period no shorter than the approximately twelve (12) month period beginning on the first business day following each annual meeting of stockholders of the Company and ending on the date of the next annual meeting of stockholders of the Company, as specified in the Award Agreement; provided that, a prorated Award (granted as provided in Section 15(a) above) to an Outside Director who is elected to the Board of Directors subsequent

Exhibit 10.1
to an annual meeting of stockholders of the Company shall become fully vested on the date of the next annual meeting of stockholders of the Company. Vesting shall occur, at once or in installments, upon satisfaction of the conditions set forth in the Award Agreement. If the conditions on vesting have not been satisfied as of the termination of the Outside Director’s Service, the unvested Awards shall be forfeited.”

Except as amended hereby, the Plan shall remain in full force and effect.


Effective April 1, 2021


Exhibit 31.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Anthony J. Allott, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2021 of Silgan Holdings Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 Date:  August 4, 2021 /s/ Anthony J. Allott
  Anthony J. Allott
  Chairman of the Board and
  Chief Executive Officer



Exhibit 31.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Robert B. Lewis, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2021 of Silgan Holdings Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:  August 4, 2021 /s/ Robert B. Lewis
  Robert B. Lewis
  Executive Vice President and
  Chief Financial Officer



Exhibit 32.1


CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT


In connection with the Quarterly Report of Silgan Holdings Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Anthony J. Allott, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
  (1) The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  (2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Anthony J. Allott
Anthony J. Allott
Chairman of the Board and
Chief Executive Officer

August 4, 2021


A signed original of this written statement required by Section 906 has been provided to Silgan Holdings Inc. and will be retained by Silgan Holdings Inc. and furnished to the Securities and Exchange Commission or its staff upon request.



Exhibit 32.2


CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT


In connection with the Quarterly Report of Silgan Holdings Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Robert B. Lewis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
  (1) The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  (2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert B. Lewis
Robert B. Lewis
Executive Vice President and
Chief Financial Officer

August 4, 2021


A signed original of this written statement required by Section 906 has been provided to Silgan Holdings Inc. and will be retained by Silgan Holdings Inc. and furnished to the Securities and Exchange Commission or its staff upon request.