Page 1 of 12
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended March 31, 1995 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) of the Securities
Exchange Act of 1934 for the Period ____________ to ____________.
Commission file number 33-28409
SILGAN HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1269834
(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 May 10, 1995, 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 417,500
Class B 667,500
Class C 50,000<PAGE>
Page 2 of 12
Part I. Financial Information
Item 1. Financial Statements
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, March 31, Dec. 31,
1995 1994 1994
(unaudited)(unaudited)(audited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,352 $ 2,687 $ 2,682
Accounts receivable, net 75,205 68,188 65,229
Inventories 148,501 124,009 122,429
Prepaid expenses and other current
assets 5,225 3,598 8,044
Total current assets 230,283 198,482 198,384
Property, plant and equipment, net 251,832 285,738 251,810
Goodwill, net 29,699 23,878 30,009
Other assets 22,675 25,007 24,618
$534,489 $533,105 $504,821
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 50,416 $ 48,665 $ 36,845
Accrued payroll and related costs 28,207 25,263 26,019
Accrued interest payable 5,713 6,250 1,713
Accrued expenses and other current
liabilities 25,136 21,391 22,505
Bank working capital loans 15,200 5,800 12,600
Current portion of long-term debt 19,514 20,000 21,968
Total current liabilities 144,186 127,369 121,650
Long-term debt 518,280 512,328 510,763
Deferred income taxes 7,060 7,319 6,836
Other long-term liabilities 24,381 33,300 23,570
Deficiency in stockholders' equity:
Common stock 12 12 12
Additional paid-in capital 33,606 33,606 33,606
Accumulated deficit (193,036) (180,829) (191,616)
Total deficiency in stockholders'
equity (159,418) (147,211) (157,998)
$534,489 $533,105 $504,821
See accompanying notes.<PAGE>
Page 3 of 12
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
March 31, March 31,
1995 1994
Net sales $203,264 $186,243
Cost of goods sold 174,265 163,520
Gross profit 28,999 22,723
Selling, general and administrative expenses 10,168 8,745
Income from operations 18,831 13,978
Interest expense and other related
financing costs 17,251 15,647
Income (loss) before income taxes 1,580 (1,669)
Income tax provision 3,000 575
Net loss $ (1,420) $ (2,244)
See accompanying notes.<PAGE>
Page 4 of 12
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
March 31, March 31,
1995 1994
Cash flows from operating activities:
Net loss $ (1,420) $ (2,244)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 8,333 9,376
Amortization 1,766 1,774
Other items 35 276
Accretion of discount on discount debentures 7,517 6,610
Changes in assets and liabilities:
(Increase) in accounts receivable (10,025) (23,878)
(Increase) in inventories (26,072) (15,356)
Increase in trade accounts payable 13,571 16,752
Increase in accrued interest payable 4,000 5,467
Other, net 5,960 6,507
Total adjustments 5,085 7,528
Net cash provided by operating activities 3,665 5,284
Cash flows from investing activities:
Capital expenditures (8,359) (4,896)
Proceeds from sale of assets 3,218 -
Net cash used in investing activities (5,141) (4,896)
Cash flows from financing activities:
Borrowings under working capital loans 89,710 33,750
Repayments under working capital loans (87,110) (30,150)
Repayment of term loans (2,454) -
Payments to former shareholders of Silgan - (1,525)
Net cash provided by financing activities 146 2,075
Net increase (decrease) in cash and cash equivalents (1,330) 2,463
Cash and cash equivalents at beginning of year 2,682 224
Cash and cash equivalents at end of period $ 1,352 $ 2,687
Supplementary data:
Interest paid $ 4,304 $ 1,786
Income taxes paid 2,648 138
See accompanying notes.<PAGE>
Page 5 of 12
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at March 31, 1995 and 1994 and for the
three months then ended is unaudited)
(Dollars in thousands)
1. Basis of Presentation
The accompanying condensed unaudited consolidated financial statements of
Silgan Holdings Inc. ("Holdings" 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 Holdings' financial
position as of March 31, 1995 and 1994 and December 31, 1994, the results
of operations for the three months ended March 31, 1995 and 1994, and the
statements of cash flows for the three months ended March 31, 1995 and
1994.
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 the financial statements and notes
included in Holdings' Annual Report on Form 10-K for the year ended
December 31, 1994.
Effective October 1, 1994, the Company extended the estimated useful lives
of certain fixed assets to more properly reflect the true economic lives
of such assets and to better align the Company's depreciable lives with
the predominate practice in its industry. The change had the effect of
decreasing depreciation expense for the first quarter of 1995 by $1.5
million and increasing net income by $1.3 million.
Pursuant to an organization agreement, each of the holders of the Class A
Common Stock, upon death or permanent disablement, had the right to
require Holdings to acquire his shares at fair market value. Since this
option expired on June 30, 1994, the financial statements at March 31,
1994 have been retroactively adjusted to reflect the reclassification of
the put option liability to equity.<PAGE>
Page 6 of 12
SILGAN HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information at March 31, 1995 and 1994 and for the
three months then ended is unaudited)
(Dollars in thousands)
2. Inventories
Inventories consisted of the following:
March 31, March 31, Dec. 31,
1995 1994 1994
Raw materials and supplies $ 32,446 $ 27,274 $ 40,196
Work-in-process 24,890 20,481 19,045
Finished goods 96,462 74,444 63,409
153,798 122,199 122,650
Adjustment to value inventory
at cost on the LIFO Method (5,297) 1,810 (221)
$148,501 $124,009 $122,429<PAGE>
Page 7 of 12
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31, 1995 Compared with
Three Months Ended March 31, 1994
Summary results for the Company's two business segments, metal and plastic
containers, for the three months ended March 31, 1995 and 1994 are
provided below.
March 31
1995 1994
(In millions)
Net sales:
Metal containers & other $144.7 $136.3
Plastic containers 58.6 50.0
Consolidated $203.3 $186.3
Operating profit:
Metal containers & other $ 15.9 $ 12.2
Plastic containers 4.3 2.0
Corporate expense (1.4) (0.2)
Consolidated $ 18.8 $ 14.0
For interim reporting purposes, the accounting period for the metal
container business ends on the last Friday of the month. As a result, the
1995 operating results for the metal container business include activity
for six more days than in 1994, which had the effect of increasing both
sales and income for this segment. The accounting period for the plastic
container business ends on the last day of each month, and, accordingly,
it reported activity for the same period in both 1995 and 1994.
Consolidated net sales increased $17.0 million, or 9.1%, to $203.3 million
for the three months ended March 31, 1995, as compared to $186.3 million
for the same period in 1994. This increase resulted from the generation
of greater sales by the plastic container business, along with the
additional sales realized by the metal container business because of its
longer reporting period.<PAGE>
Page 8 of 12
RESULTS OF OPERATIONS (continued)
Net sales for the metal container business (including paper containers)
were $144.7 million for the three months ended March 31,1995, an increase
of $8.4 million (6.2%) over net sales of $136.3 million for the same
period in 1994. As compared to the first three months of the prior year,
net sales of metal cans increased $9.3 million (6.5%) for the first three
months of 1995 due to greater unit volume. Sales to the Nestle Food
Company ("Nestle") increased $8.5 million (16.8%) due to an increase in
unit sales for most product lines of Nestle's business, while sales to Del
Monte Corporation ("Del Monte") were $4.7 million (13.2%) higher than 1994
because first quarter 1994 sales were reduced to adjust for excess
finished goods inventory acquired upon the purchase in December 1993 of
Del Monte's container manufacturing business in the United States ("DM
Can"). Sales to other customers decreased $3.9 million (8.2%) principally
due to the earlier shipment of containers to certain vegetable pack
customers in 1994. Sales of paper containers included in the metal
container segment declined $0.9 million to $2.1 million during 1995.
Net sales for the plastic container business of $58.6 million during the
three months ended March 31, 1995 increased $8.6 million, or 17.2%, over
net sales of plastic containers of $50.0 million for the same period in
1994. This increase was attributable to both higher average sales prices
due to the pass through of higher resin costs and increased unit sales to
new and existing customers.
Cost of goods sold was 85.7% of consolidated net sales ($174.3 million)
for the three months ended March 31, 1995, a decrease of 2.1 percentage
points, as compared to 87.8% of consolidated net sales ($163.5 million)
for the same period in 1994. The decrease in cost of goods sold as a
percentage of consolidated net sales principally resulted from lower per
unit manufacturing costs realized on higher sales and production volumes,
improved manufacturing efficiencies resulting from capital investment and
the incurrance of lower depreciation expense.
Selling, general and administrative expenses as a percentage of
consolidated net sales were 5.0% ($10.2 million) for the three months
ended March 31, 1995, an increase of 0.3 percentage points, compared with
4.7% ($8.7 million) for the same period in 1994. This increase
principally resulted from increased administrative requirements associated
with DM Can, for which the Company did not fully staff until after the
first quarter of 1994, and increased corporate legal and administrative
costs.<PAGE>
Page 9 of 12
RESULTS OF OPERATIONS (continued)
Income from operations as a percentage of consolidated net sales increased
1.8 percentage points to 9.3% ($18.8 million) for the three months ended
March 31, 1995, compared with 7.5% ($14.0 million) for the same period in
1994. The increase in income from operations as a percentage of sales was
principally attributable to the aforementioned improvement in gross
margin.
Income from operations as a percentage of net sales for the metal
container business increased 2.1 percentage points to 11.0% ($15.9
million) during the first three months of 1995, as compared to the same
period in the prior year, principally due to lower per unit manufacturing
costs realized on greater unit volume and improved manufacturing
efficiency as a result of capital investment. Income from operations as a
percentage of net sales attributable to the plastic container business for
the three months ended March 31, 1995 was 7.3% ($4.3 million), as compared
to 4.1% ($2.0 million) for the same period in 1994. The improved
operating performance of the plastic container business resulted from
improved manufacturing efficiency and from increased unit volume.
Interest expense increased by approximately $1.6 million to $10.2 million
for the three months ended March 31, 1995. The increase resulted from
higher average borrowing rates and greater accretion of interest on the
discount debentures offset, in part, by lower average outstanding bank
borrowings.
The provisions for income taxes for the three months ended March 31, 1995
and 1994 were comprised of federal, state and foreign income taxes
currently payable. The provision for income taxes for the first quarter
of 1995 increased because the Company fully utilized its alternative
minimum tax net operating loss carryovers in 1994 and, therefore, is
subject to tax at the rate of 20% on its alternative minimum taxable
income.
As a result of the items discussed above, the net loss for the three
months ended March 31, 1995 was $1.4 million, $0.8 million less than the
net loss for the three months ended March 31, 1994 of $2.2 million.<PAGE>
Page 10 of 12
CAPITAL RESOURCES AND LIQUIDITY
The Company's liquidity requirements arise primarily from its obligations
under the indebtedness incurred in connection with its acquisitions and
the refinancing of such indebtedness, capital investment in new and
existing equipment and the funding of the Company's seasonal working
capital needs. Historically, the Company has met these liquidity
requirements through cash flow generated from operating activities and
working capital borrowings.
For the first three months of 1995, capital expenditures of $8.3 million
and the repayment of $2.5 million of term loans were funded through the
borrowing of $2.6 million of working capital loans, cash provided from
operations of $3.7 million, proceeds of $3.2 million realized from the
sale of assets, and the use of $1.3 million of outstanding cash balances.
The Company's earnings before depreciation, interest, taxes and
amortization for the three months ended March 31, 1995 increased by $4.1
million over the same period in the prior year to $28.0 million. However,
cash provided by operations during the first three months of 1995 declined
slightly from the same period in 1994 because there was a greater increase
in working capital needs in 1995. During the first three months of 1995,
working capital needs increased due to increased accounts receivable as a
result of greater sales and increased inventories as a result of the
planned 1995 acceleration of finished goods production.
Because the Company sells metal containers used in vegetable and fruit
processing, its sales are seasonal. As is common in the packaging
industry, the Company must access working capital to build inventory and
then carry accounts receivable for some customers beyond the end of the
summer and fall packing season. Seasonal accounts are generally settled
by year end. Due to the Company's seasonal requirements, the Company
incurs short term indebtedness to finance its working capital
requirements, and it is expected that approximately $40.0 million of the
Company's working capital revolver, including letters of credit, will be
utilized at its peak in July 1995.
As of March 31, 1995, the outstanding principal amount of working capital
loans was $15.2 million and, subject to a borrowing base limitation and
taking into account outstanding letters of credit, the unused portion of
working capital commitments at such date was $49.1 million.<PAGE>
Page 11 of 12
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description
27 Financial Data Schedule.
(b) Reports on Form 8-K
None.<PAGE>
Page 12 of 12
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: May 12, 1995 /s/Harley Rankin, Jr.
Harley Rankin, Jr.
Executive Vice President, Chief
Financial Officer and Treasurer
(Principal Financial Officer)
Dated: May 12, 1995 /s/Harold J. Rodriguez, Jr.
Harold J. Rodriguez, Jr.
Vice President and Controller
(Chief Accounting Officer)<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Silgan
Holdings' Form 10-Q for the quarter ended March 31, 1995 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,352
<SECURITIES> 0
<RECEIVABLES> 75,205
<ALLOWANCES> 0
<INVENTORY> 148,501
<CURRENT-ASSETS> 230,283
<PP&E> 427,445
<DEPRECIATION> 175,613
<TOTAL-ASSETS> 534,489
<CURRENT-LIABILITIES> 144,186
<BONDS> 518,280
<COMMON> 12
0
0
<OTHER-SE> (159,430)
<TOTAL-LIABILITY-AND-EQUITY> 534,489
<SALES> 203,264
<TOTAL-REVENUES> 203,264
<CGS> 174,265
<TOTAL-COSTS> 174,265
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,251
<INCOME-PRETAX> 1,580
<INCOME-TAX> 3,000
<INCOME-CONTINUING> (1,420)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,420)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
