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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A-1
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) of the Securities Exchange
Act of 1934 for the Quarter Ended September 30, 1996 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period ____________ to ____________.
Commission file number 1-11200
SILGAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 06-1207662
(State of Incorporation) (I.R.S. Employer Identification Number)
4 Landmark Square
Stamford, Connecticut 06901
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 975-7110
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
As of November 4, 1996, the number of shares outstanding of each of the issuer's
classes of common stock is as follows:
Classes of shares of Number of
common stock outstanding, $0.01 par value shares outstanding
----------------------------------------- ------------------
Class A 1
Class B 1
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The purpose of this filing is to amend Item 1 to the Quarterly Report for the
period ended September 30, 1996 (the "Report") of Silgan Corporation (the
"Company") for typographical errors. In connection therewith, adjustments have
been made to the financial statements included in Item 1 of the Report to
properly state the amount of total assets and total liabilities and
stockholder's equity recorded on the condensed consolidated balance sheet of the
Company for the period ended December 31, 1995. The condensed consolidated
financial statements of the Company and the notes thereto included herewith are
identical in all other respects to the condensed consolidated financial
statements of the Company and the notes thereto included with the original
Report.
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Part I. Financial Information
Item 1. Financial Statements
SILGAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, Sept. 30, Dec. 31,
1996 1995 1995
(unaudited) (unaudited) (audited)
----------- ----------- ---------
(Restated)
ASSETS
Current assets:
Cash and cash equivalents ........... $ 3,071 $ 3,847 $ 2,092
Accounts receivable, net ............ 218,883 262,819 109,929
Inventories ......................... 190,690 196,584 210,471
Prepaid expenses and other
current assets ................... 9,801 21,111 5,731
-------- ---------- --------
Total current assets ............ 422,445 484,361 328,223
Property, plant and equipment, net ....... 479,505 496,392 487,301
Goodwill, net ............................ 52,801 43,966 43,562
Other assets ............................. 38,783 41,007 29,637
-------- ---------- --------
$993,534 $1,065,726 $888,723
======== ========== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Trade accounts payable .............. $ 86,609 $ 96,159 $138,195
Accrued payroll and related costs ... 40,811 35,400 32,805
Accrued interest payable ............ 14,330 10,449 4,358
Other accrued expenses .............. 32,584 38,351 43,062
Bank working capital loans .......... 126,000 184,000 7,100
Current portion of long-term debt ... 28,454 7,250 28,140
-------- ---------- --------
Total current liabilities ....... 328,788 371,609 253,660
Long-term debt ........................... 673,348 577,750 549,610
Deferred income taxes .................... -- 13,017 3,017
Other long-term liabilities .............. 74,943 78,659 69,576
Common stockholder's equity:
Additional paid-in capital .......... 90,135 74,635 73,635
Accumulated deficit ................. (173,680) (49,944) (60,775)
-------- ---------- --------
Total common stockholder's equity (83,545) 24,691 12,860
-------- ---------- --------
$993,534 $1,065,726 $888,723
======== ========== ========
See accompanying notes.
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SILGAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
------------------
Sept. 30, Sept. 30,
1996 1995
---- ----
Net sales .............................................. $473,563 $406,515
Cost of goods sold ..................................... 414,589 364,832
-------- --------
Gross profit ...................................... 58,974 41,683
Selling, general and administrative expenses ........... 15,129 13,144
-------- --------
Income from operations ............................ 43,845 28,539
Interest expense and other related financing costs ..... 20,081 15,977
-------- --------
Income before income taxes ........................ 23,764 12,562
Income tax provision ................................... 8,350 5,100
-------- --------
Income before extraordinary charge ................ 15,414 7,462
Extraordinary charge relating to early
extinguishment of debt, net of taxes ................ -- 2,967
-------- --------
Net income ........................................ $ 15,414 $ 4,495
======== ========
See accompanying notes.
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SILGAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Nine Months Ended
-----------------
Sept. 30, Sept. 30,
1996 1995
---- ----
Net sales ............................................ $1,080,486 $811,505
Cost of goods sold ................................... 935,813 710,975
---------- --------
Gross profit .................................... 144,673 100,530
Selling, general and administrative expenses ......... 41,970 30,459
---------- --------
Income from operations .......................... 102,703 70,071
Interest expense and other related financing costs ... 52,474 35,068
---------- --------
Income before income taxes ...................... 50,229 35,003
Income tax provision ................................. 19,500 14,400
---------- --------
Income before extraordinary charge .............. 30,729 20,603
Extraordinary charge related to early
extinguishment of debt, net of taxes .............. -- 2,967
---------- --------
Net income ...................................... $ 30,729 $ 17,636
========== ========
See accompanying notes.
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SILGAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
-----------------
Sept. 30, Sept. 30,
1996 1995
---- ----
Cash flows from operating activities:
Net income ............................................. $ 30,729 $ 17,636
Adjustments to reconcile net income to net
cash (used) provided by operating activities:
Depreciation ......................................... 40,009 27,233
Amortization ......................................... 5,884 4,848
Contribution by Parent for federal income
tax provision ..................................... 16,500 6,700
Extraordinary charge relating to early
extinguishment of debt, net of taxes .............. -- 2,967
Changes in assets and liabilities:
(Increase) in accounts receivable ............... (106,461) (55,512)
Decrease in inventories ......................... 21,238 14,472
(Decrease) increase in trade accounts payable ... (51,586) 2,508
Net working capital used by AN Can from
8/1/95 to 9/30/95 ............................ -- (11,195)
Other, net ...................................... (2,872) 10,905
-------- --------
Total adjustments ......................... (77,288) 2,926
-------- --------
Net cash (used) provided by operating activities ... (46,559) 20,562
-------- --------
Cash flows from investing activities:
Acquisition of ANC's Food Metal & Specialty business . (13,121) (347,052)
Capital expenditures ................................. (38,624) (30,414)
Proceeds from sale of assets ......................... 1,521 3,398
-------- --------
Net cash used in investing activities .............. (50,224) (374,068)
-------- --------
Cash flows from financing activities:
Borrowings under working capital loans ............... 710,550 490,410
Repayments under working capital loans ............... (591,650) (333,672)
Proceeds from issuance of long-term debt ............. 125,000 450,000
Repayment of long-term debt .......................... (948) (169,660)
Dividend to Parent ................................... (143,634) (57,596)
Debt issuance costs .................................. (1,556) (21,000)
Payments to former shareholders ...................... -- (3,794)
-------- --------
Net cash provided by financing activities .......... 97,762 354,688
-------- --------
Net increase in cash and cash equivalents ................ 979 1,182
Cash and cash equivalents at beginning of year ........... 2,092 2,665
-------- --------
Cash and cash equivalents at end of period ............... $ 3,071 $ 3,847
======== ========
Supplementary data:
Interest paid ...................................... $ 39,879 $ 23,017
Income taxes paid .................................. 568 8,592
See accompanying notes.
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SILGAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 30, 1996 and 1995 and for the
three months and nine months then ended is unaudited)
1. Basis of Presentation
The accompanying condensed unaudited consolidated financial statements of Silgan
Corporation ("Silgan" or the "Company") have been prepared in accordance with
Rule 10-01 of Regulation S-X and, therefore, do not include all information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. All adjustments of a normal recurring nature have been made,
including appropriate estimates for reserves and provisions which are normally
determined or settled at year end. In the opinion of the Company, however, the
accompanying financial statements contain all adjustments (consisting solely of
a normal recurring nature) necessary to present fairly Silgan's financial
position as of September 30, 1996 and 1995 and December 31, 1995, and the
results of operations for the three and nine months ended September 30, 1996 and
1995, and the statements of cash flows for the nine months ended September 30,
1996 and 1995.
While the Company believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these financial statements
be read in conjunction with Silgan's financial statements and notes included in
its Annual Report on Form 10-K for the year ended December 31, 1995.
Certain reclassifications have been made to prior year's financial statements to
conform with current year presentation. See also Note 5.
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" in the first quarter of 1996. Under SFAS No. 121,
impairment losses will be recognized when events or changes in circumstances
indicate that the undiscounted cash flows generated by the assets are less than
the carrying value of such assets. Impairment losses are then measured by
comparing the fair value of assets to their carrying amount. There were no
impairment losses recognized during the first nine months of 1996 as a result of
the adoption of SFAS No. 121.
In October 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123, "Accounting for Stock-Based Compensation", effective for the 1996
fiscal year. Under SFAS No. 123, compensation expense for all stock-based
compensation plans would be recognized based on the fair value of the options at
the date of grant using an option pricing model. As permitted under SFAS No.
123, the Company may either adopt the new pronouncement or follow the current
accounting methods as prescribed under APB No. 25. The Company continues to
recognize compensation expense in accordance with APB No. 25.
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SILGAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 30, 1996 and 1995 and for the
three months and nine months then ended is unaudited)
2. Inventories
Inventories consisted of the following (in thousands):
Sept. 30, Sept. 30, Dec. 31,
1996 1995 1995
---- ---- ----
Raw materials and supplies .......... $ 37,314 $ 39,675 $ 46,027
Work-in-process ..................... 32,792 22,588 24,869
Finished goods ...................... 111,229 132,804 135,590
Spare parts and other ............... 7,663 6,345 6,344
-------- -------- --------
188,998 201,412 212,830
Adjustment to value inventory
at cost on the LIFO Method ....... 1,692 (4,828) (2,359)
-------- -------- --------
$190,690 $196,584 $210,471
======== ======== ========
3. Acquisitions
Set forth below is the Company's summary unaudited pro forma results of
operations for the nine months ended September 30, 1995. The unaudited pro forma
results of operations of the Company for the nine months ended September 30,
1995 include the historical results of the Company and the Food Metal &
Specialty business of American National Can Company ("AN Can") for such period
and give effect to certain pro forma adjustments. The pro forma adjustments made
to the historical results of operations for September 30, 1995 reflect the
effect of purchase accounting adjustments based upon appraisals and valuations,
the financing of the acquisition of AN Can by the Company, the refinancing of
certain of the Company's debt obligations, and certain other adjustments as if
these events had occurred as of the beginning of 1995. The pro forma adjustments
are based upon available information and upon certain assumptions that the
Company believes are reasonable. The pro forma results of operations do not give
effect to adjustments for decreased costs from manufacturing synergies resulting
from the integration of AN Can with Containers' existing can manufacturing
operations and benefits the Company may realize as a result of its planned
rationalization of plant operations. Pro forma adjustments have not been made to
interest expense for the nine months ended September 30, 1995 for the
refinancings described in Note 4 or for the subsequent events discussed in Note
7. The following unaudited pro forma results of operations do not purport to
represent what the Company's results of operations would actually have been had
the transactions in fact occurred on January 1, 1995, or to project the
Company's results of operations for any future period (in thousands):
Pro forma
September 30, 1995
------------------
Net sales ................................ $1,113,982
Income from operations ................... 93,140
Income before income taxes ............... 42,826
Net income ............................... 25,267
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SILGAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 30, 1996 and 1995 and for the
three months and nine months then ended is unaudited)
3. Acquisitions (continued)
In connection with the acquisition of AN Can, the Company has finalized its
plant rationalization and integration plans. These plans consist primarily of
the closing or downsizing of certain manufacturing plants and the integration of
the selling, general, and administrative functions of the former AN Can
operations with the Company. The Company estimates that costs related to such
plans include approximately $6.6 million related to plant exit costs, $22.6
million related to employee severance and relocation costs, and $3.5 million
related to administrative workforce reductions. The timing of the plant
rationalizations, among other things, will be dependent on covenants in existing
labor agreements and accordingly these costs will be incurred during the period
from late 1996 through early 1998. Through September 30, 1996, costs of $3.3
million related to administrative workforce reductions and relocation were
incurred.
During 1996, the purchase price allocation for the AN Can acquisition was
adjusted for differences between the actual and preliminary valuations for the
asset appraisals and for projected employee benefit costs as well as for a
revision in estimated costs of plant rationalizations, administrative workforce
reductions and other various matters. The final purchase price allocation
resulted in an adjustment to increase goodwill by $10.7 million.
4. Long Term Debt
On May 31, 1996, the Company amended its Credit Agreement to, among other
things, provide for the borrowing by the Company of an additional $125.0 million
of B term loans. On July 3, 1996, Silgan borrowed the additional B term loans
and, as permitted under the Credit Agreement, used the proceeds therefrom to
fund the redemption by Silgan Holdings Inc. ("Holdings") of $125.0 million
principal amount of Holdings' 13 1/4% Senior Discount Debentures due 2002
("Holdings Discount Debentures").
As a result of the additional borrowing, the aggregate annual maturities of
long-term debt of the Company are as follows (in thousands):
1996...................... $ 28,454
1997...................... 38,433
1998...................... 53,401
1999...................... 53,401
2000...................... 126,130
2001 and thereafter....... 401,983
--------
$701,802
========
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SILGAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 30, 1996 and 1995 and for the
three months and nine months then ended is unaudited)
5. Dividend to Parent
During 1996, the Company dividended to Holdings $143.6 million with proceeds
from the additional B term loans and the borrowing of working capital loans,
which were used to fund the redemption by Holdings of $142.4 million principal
amount of Holdings Discount Debentures and pay accrued interest thereon.
As a result of the distributions made to Holdings in 1996, Silgan has
reclassified its advance of $57.6 million made to Holdings in 1995 as a
dividend.
6. Issuance of Preferred Stock by Parent
On July 22, 1996, Holdings issued 50,000 shares of 13 1/4% Exchangeable
Preferred Stock ("Holdings Preferred Stock"), mandatorily redeemable in 2006, at
$1,000 per share which represents the liquidation preference of Holdings
Preferred Stock. Net proceeds of $47.8 million from this issuance were used by
Holdings to purchase its Class B Common Stock held by Mellon Bank N.A., as
trustee for First Plaza Group Trust, for $35.8 million and to redeem $12.0
million principal amount of Holdings Discount Debentures.
The Holdings Preferred Stock holders are entitled to receive cumulative
dividends at 13 1/4% per annum, which are payable quarterly in cash or, on or
prior to July 15, 2000 at the sole option of Holdings, in additional shares of
Holdings Preferred Stock. After July 15, 2000, dividends may be paid only in
cash. The dividend payable on October 15, 1996 was paid in additional shares of
Holdings Preferred Stock.
The Holdings Preferred Stock is exchangeable into Holdings' Subordinated
Debentures due 2006 ("Holdings Exchange Debentures"), in whole but not in part,
at the option of Holdings, subject to certain conditions. The Holdings Exchange
Debentures will bear interest at the dividend rate in effect with respect to the
Holdings Preferred Stock. Interest on the Holdings Exchange Debentures will be
payable semi-annually and, on or prior to July 15, 2000, Holdings may pay such
interest by issuing additional Holdings Exchange Debentures. If by July 22, 1997
the Holdings Preferred Stock has not been exchanged for Holdings Exchange
Debentures, the dividend rate on the Holdings Preferred Stock will increase by
0.5% per annum to 13 3/4% per annum until such exchange occurs.
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SILGAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at September 30, 1996 and 1995 and for the
three months and nine months then ended is unaudited)
7. Subsequent Events
1996 Acquisition
- ----------------
On October 9, 1996, the Company acquired substantially all of the assets of
Finger Lakes Packaging Company, Inc. ("Finger Lakes"), a metal food container
manufacturer and a wholly-owned subsidiary of Curtice Burns Foods, Inc.
("Curtice Burns") for approximately $29.9 million. As part of the transaction,
the Company entered into a ten-year supply agreement with Curtice Burns to
supply all of the metal food container requirements of Curtice Burns' Comstock
Michigan Fruit and Brooks Foods divisions. For its fiscal year ended June 29,
1996, Finger Lakes had net sales of $48.8 million. The Company financed this
acquisition through working capital borrowings under its Credit Agreement.
1996 Public Offering by Holdings
- --------------------------------
In September 1996, Holdings filed a registration statement on Form S-2 for an
initial public offering ("IPO") of Holdings' common stock. In the event that the
proposed IPO occurs, Holdings expects to use the net proceeds received to redeem
the remaining outstanding amount of Holdings Discount Debentures (approximately
$59.0 million). Upon the closing of the IPO, the Company will recognize a
non-cash charge of approximately $16.1 million for the excess of fair market
value over the grant price of the variable stock options under the Containers
and Plastics option plans which convert to Holdings options.
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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 CORPORATION
Dated: November 21, 1996 /s/Harley Rankin, Jr.
- ------------------------- ---------------------
Harley Rankin, Jr.
Executive Vice President, Chief
Financial Officer and Treasurer
(Principal Financial Officer)
Dated: November 21, 1996 /s/Harold J. Rodriguez, Jr.
- ------------------------- ---------------------------
Harold J. Rodriguez, Jr.
Vice President and Controller
(Chief Accounting Officer)
