-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sF+1iQD/B3sAFri9/jQzRRqvNytQnG52WEelKX8uXz6m4rnHp0iSOX4prMT0YVn8 JukB4Pu/lblyl//Nqm/feA== 0000849869-94-000017.txt : 19941111 0000849869-94-000017.hdr.sgml : 19941111 ACCESSION NUMBER: 0000849869-94-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SILGAN HOLDINGS INC CENTRAL INDEX KEY: 0000849869 STANDARD INDUSTRIAL CLASSIFICATION: 3440 IRS NUMBER: 061269834 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-28409 FILM NUMBER: 94558816 BUSINESS ADDRESS: STREET 1: 4 LANDMARK SQ CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2039757110 10-Q 1 Page 1 of 15 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 September 30, 1994 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 November 9, 1994, 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 2 of 15 Part I. Financial Information Item 1. Financial Statements SILGAN HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) Sept. 30, Sept. 30, Dec. 31, 1994 1993 1993 ASSETS (unaudited)(unaudited)(audited) Current assets: Cash and cash equivalents $ 2,472 $ 435 $ 224 Accounts receivable, net 108,612 77,864 44,409 Inventories 100,993 88,107 108,653 Prepaid expenses and other current assets 4,191 3,709 3,676 Total current assets 216,268 170,115 156,962 Property, plant and equipment, net 279,523 233,612 290,395 Other assets 50,226 35,662 50,276 $546,017 $439,389 $497,633 LIABILITIES & DEFICIENCY IN STOCKHOLDERS' EQUITY Current liabilities: Working capital loans $ 850 $ 72,850 $ 2,200 Current portion of term loans 20,000 20,899 20,000 Trade accounts payable 50,536 31,969 31,913 Accrued payroll and related costs 25,382 19,047 20,523 Accrued interest payable 5,325 5,186 783 Accrued expenses and other current liabilities 19,203 22,005 21,385 Total current liabilities 121,296 171,956 96,804 Term loans 115,000 20,553 120,000 Senior secured notes 50,000 50,000 50,000 11 3/4% Senior subordinated notes 135,000 135,000 135,000 13 1/4% Senior discount debentures 221,064 194,446 200,718 Deferred income taxes 7,362 7,011 6,836 Other long-term liabilities 33,053 15,501 33,242 Deficiency in stockholders' equity: Class A, B & C common stock 12 9 12 Additional paid-in capital 58,652 33,218 58,652 Accumulated deficit (195,422) (188,305) (203,631) Total deficiency in stockholders' equity (136,758) (155,078) (144,967) $546,017 $439,389 $497,633 See accompanying notes. Page 3 of 15 SILGAN HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands) Three Months Ended Sept. 30, Sept. 30, 1994 1993 Net sales $286,037 $181,092 Cost of goods sold 249,198 161,768 Gross profit 36,839 19,324 Selling, general and administrative expenses 9,605 7,395 Income from operations 27,234 11,929 Interest expense and other related financing costs 16,763 13,875 Other expense 38 1,047 Income (loss) before income taxes 10,433 (2,993) Income tax provision 1,475 500 Net income (loss) $ 8,958 $ (3,493) See accompanying notes. Page 4 of 15 SILGAN HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands) Nine Months Ended Sept. 30, Sept. 30, 1994 1993 Net sales $673,240 $478,342 Cost of goods sold 584,693 421,497 Gross profit 88,547 56,845 Selling, general and administrative expenses 28,266 24,278 Income from operations 60,281 32,567 Interest expense and other related financing costs 48,693 40,192 Other expense 454 1,693 Income (loss) before income taxes 11,134 (9,318) Income tax provision 2,925 1,500 Income (loss) before cumulative effect of changes in accounting principles 8,209 (10,818) Cumulative effect of changes in accounting principles - (6,276) Net income (loss) $ 8,209 $(17,094) See accompanying notes. Page 5 of 15 SILGAN HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended Sept. 30, Sept. 30, 1994 1993 Cash flows from operating activities: Net income (loss) $ 8,209 $(17,094) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 27,027 21,418 Amortization 5,043 4,112 Loss on equipment disposal 442 1,612 Other items 629 (164) Accretion of discount on discount debentures 20,346 17,895 Provision for postretirement health care benefits 419 261 Cumulative effect of changes in accounting principles - 6,276 Changes in assets and liabilities: (Increase) in accounts receivable (64,766) (32,937) (Increase) decrease in inventories 7,660 (11,470) Increase in trade accounts payable 18,623 4,013 Other, net 1,981 6,811 Total adjustments 17,404 17,827 Net cash provided by operating activities 25,613 733 Cash flows from investing activities: Capital expenditures (17,015) (34,738) Proceeds from sale of assets - 231 Net cash used in investing activities (17,015) (34,507) Cash flows from financing activities: Borrowings under working capital loans 281,100 232,400 Repayments under working capital loans (282,450) (199,950) Repayments of term loans (5,000) (1,128) Net cash provided (used) by financing activities (6,350) 31,322 Net increase (decrease) in cash and cash equivalents 2,248 (2,452) Cash and cash equivalents at beginning of year 224 2,887 Cash and cash equivalents at end of period $ 2,472 $ 435 Supplementary data: Interest paid $ 18,938 14,702 Income taxes paid, net of refunds 2,283 50 See accompanying notes. Page 6 of 15 SILGAN HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Information at September 30, 1994 and 1993 and for the three months and nine 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 September 30, 1994 and 1993 and December 31, 1993, the results of operations for the three months and nine months ended September 30, 1994 and 1993, and the statements of cash flows for the nine months ended September 30, 1994 and 1993. Certain reclassifications have been made to conform prior years' data to the current presentation. 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, 1993. In the first quarter of 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 106 "Employers' Accounting for Postretirement Benefits Other than Pensions" and SFAS No. 109 "Accounting for Income Taxes". In the fourth quarter of 1993, the Company adopted SFAS No. 112 "Employers' Accounting for Postemployment Benefits" effective as of January 1, 1993. The cumulative effect of these changes in accounting methods aggregated $6,276. The financial statements for the period ended September 30, 1993 have been restated to reflect the adoption of SFAS No. 112. Page 7 of 15 SILGAN HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Information at September 30, 1994 and 1993 and for the three months and nine months then ended is unaudited) (Dollars in thousands) 2. Inventories Inventories consisted of the following: Sept. 30, Sept. 30, Dec. 31, 1994 1993 1993 Raw materials and supplies $ 27,973 $ 21,265 26,458 Work-in-process 15,907 10,204 17,105 Finished goods 56,133 57,748 65,072 100,013 89,217 108,635 Adjustment to value inventory at cost on the LIFO Method 980 (1,110) 18 $100,993 $ 88,107 $108,653 3. Stockholders' Equity At June 30, 1994, the put option for the Class A common stock had expired and the fair market value that had been assigned to the put option liability has been reclassified to stockholders' equity for each of the periods presented. Page 8 of 15 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended September 30, 1994 Compared with Three Months Ended September 30, 1993 Net sales of metal containers were $231.2 million for the three months ended September 30, 1994 (including net sales of $65.7 million and $81.4 million to Nestle Food Company ("Nestle") and Del Monte Corporation ("Del Monte"), respectively, during such period), an increase of $98.8 million, or 74.6%, over net sales of metal containers of $132.4 million for the same period in 1993 (including net sales of $57.6 million and $3.1 million to Nestle and Del Monte, respectively, during the same period in 1993.) The increase in net sales for the three months ended September 30, 1994 as compared to the three months ended September 30, 1993 was primarily attributable to increased unit sales due to the acquisition of all of the assets of Del Monte's container manufacturing business in the United States ("DM Can") in December 1993, increased unit sales of containers to Nestle and existing vegetable pack customers, offset, in part, by modestly lower average sales prices. Net sales of plastic containers increased $7.0 million, or 15.3%, to $52.8 million for the three months ended September 30, 1994, as compared to $45.8 million for the same period in 1993. The increase in net sales was principally attributable to increased unit sales to new and existing customers. Sales of other containers totaled $2.0 million for the three months ended September 30, 1994, compared to $2.9 million for the same period in 1993. Cost of goods sold was 87.1% of net sales ($249.2 million) for the three months ended September 30, 1994, a decrease of 2.2 percentage points as compared to 89.3% of net sales ($161.8 million) for the same period in 1993. The decrease in cost of goods sold as a percentage of net sales principally resulted from lower per unit manufacturing costs due to higher production volumes, improved manufacturing efficiencies resulting from greater capital investment in 1993 and synergistic benefits resulting from the acquisition of DM Can. Page 9 of 15 RESULTS OF OPERATIONS (Continued) Selling, general and administrative expenses as a percentage of net sales declined 0.7 percentage points to 3.4% of net sales ($9.6 million) for the three months ended September 30, 1994, as compared to 4.1% ($7.4 million) for the same period in 1993. The decrease as a percentage of net sales resulted from the Company's ability to absorb the increase in selling, general and administrative functions associated with the acquisition of DM Can with a modest increase in expenses. Income from operations as a percentage of net sales increased 2.9 percentage points to 9.5% ($27.2 million) for the three months ended September 30, 1994, compared with 6.6% ($11.9 million) for the same period in 1993. The increase in income from operations of $15.3 million was principally attributable to the aforementioned increase in gross profit. Interest expense increased by approximately $2.9 million to $16.8 million for the three months ended September 30, 1994. The increase resulted from the incurrance of additional bank borrowings to finance the acquisition of DM Can, higher average bank borrowing rates and higher accretion of interest on the Company's discount debentures. The provision for income taxes for the three months ended September 30, 1994 and September 30, 1993 were comprised of state and foreign components and recognize the benefit of certain deductions for federal income tax purposes which are available to Holdings. As a result of the items discussed above, net income for the three months ended September 30, 1994 was $9.0 million, $12.5 million greater than the net loss for the three months ended September 30, 1993 of $3.5 million. Page 10 of 15 RESULTS OF OPERATIONS (Continued) Nine Months Ended September 30, 1994 Compared with Nine Months Ended September 30, 1993 Net sales of metal containers were $514.9 million for the nine months ended September 30, 1994 (including net sales of $167.6 million and $158.0 million to Nestle and Del Monte, respectively, during such period), an increase of $187.2 million, or 57.1%, over net sales of metal containers of $327.7 million for the same period in 1993 (including net sales of $163.9 million and $7.6 million to Nestle and Del Monte, respectively, during the same period in 1993.) The increase in net sales for the nine months ended September 30, 1994 as compared to the nine months ended September 30, 1993 was primarily attributable to increased unit sales due to the acquisition of DM Can in December 1993 and increased unit sales of containers to existing customers, including vegetable pack customers, offset, in part, by modestly lower average sales prices. Net sales of plastic containers increased $10.2 million, or 7.2%, to $150.9 million for the nine months ended September 30, 1994, as compared to $140.7 million for the same period in 1993. The increase in net sales was attributable to increased unit sales to new and existing customers and, to a lesser extent, higher average sales prices due to the pass through of higher resin costs. Sales of other containers totaled $7.4 million for the nine months ended September 30, 1994, compared to $9.9 million for the same period in 1993. Cost of goods sold was 86.8% of net sales ($584.7 million) for the nine months ended September 30, 1994, a decrease of 1.3 percentage points as compared to 88.1% of net sales ($421.5 million) for the same period in 1993. The decrease in cost of goods sold as a percentage of net sales principally resulted from lower per unit manufacturing costs due to higher production volumes, improved manufacturing efficiencies resulting from greater capital investment in 1993 and synergistic benefits resulting from the acquisition of DM Can. Also, the purchase of an additional manufacturing facility in May 1993 increased production capacity and offset the first half 1993 outsourcing requirement for which there was no margin contribution. Page 11 of 15 RESULTS OF OPERATIONS (Continued) Selling, general and administrative expenses as a percentage of net sales declined 0.9 percentage points to 4.2% of net sales ($28.3 million) for the nine months ended September 30, 1994, as compared to 5.1% ($24.3 million) for the same period in 1993. The decrease as a percentage of net sales resulted from the Company's ability to absorb the increase in selling, general and administrative functions associated with the acquisition of DM Can with a modest increase in expenses. Income from operations as a percentage of net sales increased 2.2 percentage points to 9.0% ($60.3 million) for the nine months ended September 30, 1994, compared with 6.8% ($32.6 million) for the same period in 1993. The increase in income from operations of $27.7 million was principally attributable to the aforementioned increase in gross profit. Interest expense increased by approximately $8.5 million to $48.7 million for the nine months ended September 30, 1994. The increase resulted primarily from the incurrance of additional bank borrowings to finance the acquisition of DM Can, higher average bank borrowing rates and higher accretion of interest on the Company's discount debentures. The provision for income taxes for the nine months ended September 30, 1994 and September 30, 1993 were comprised of state and foreign components and recognize the benefit of certain deductions for federal income tax purposes which are available to Holdings. As a result of the items discussed above, net income for the nine months ended September 30, 1994 was $8.2 million, $19.0 million greater than the loss before cumulative effect of changes in accounting principles for the nine months ended September 30, 1993 of $10.8 million. Effective January 1, 1993, the Company adopted SFAS No. 106, SFAS No. 109 and SFAS No. 112. The cumulative effect of these accounting changes, for years prior to 1993, was to decrease net income by $6.3 million. Page 12 of 15 RESULTS OF OPERATIONS (Continued) 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 borrowings of working capital loans. For the first nine months of 1994, cash generated from operations of $25.6 million was used to fund capital expenditures of $17.0 million, repay $5.0 million of term loan borrowings and $1.4 million of working capital borrowings and increase cash balances by $2.2 million. Cash provided from operations during the nine months ended September 30, 1994 was $24.9 million greater than cash provided from operations during the same period in the prior year. This increase was attributable to an increase in earnings before depreciation, interest, taxes and amortization ($88.8 million for the nine months ended September 30, 1994 versus $55.8 million for the same period in the prior year) principally due to higher earnings realized on increased sales volume. Net working capital at September 30, 1994, as compared to September 30, 1993, increased due to the acquisition of DM Can on December 21, 1993. 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 incurred short term indebtedness to finance its working capital requirements, and approximately $50.0 million of the working capital revolver, including letters of credit, were utilized at its peak in July 1994. As of September 30, 1994, the outstanding principal amount of working capital loans was $0.9 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 $63.9 million. On October 14, 1994, the Company voluntarily prepaid $15.0 million of term loan borrowings under its credit agreement in satisfaction of the mandatory payment due December 31, 1994. Page 13 of 15 RESULTS OF OPERATIONS (Continued) CAPITAL RESOURCES AND LIQUIDITY (Continued) In May 1994, Silgan Containers Corporation, an indirect wholly owned subsidiary of Holdings ("Containers"), extended the term of three of its supply agreements with Nestle (representing approximately 65% of the Company's unit sales to Nestle) through December 31, 2001. On December 21, 1993, Containers acquired DM Can from Del Monte. To finance the acquisition, Silgan Corporation, a wholly owned subsidiary of Holdings ("Silgan"), and its subsidiaries entered into a credit agreement, which credit agreement also refinanced in full Silgan's prior credit agreement. In conjunction therewith, the banks party to the credit agreement loaned Silgan an aggregate of $140.0 million of term loans and agreed to lend to Silgan's subsidiaries up to $70.0 million of working capital loans. In addition, in conjunction with the acquisition, Holdings sold 250,000 shares of its Class B Common Stock for $15.0 million. Page 14 of 15 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 15 of 15 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: November 10, 1994 /s/Harley Rankin, Jr. Harley Rankin, Jr. Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) Dated: November 10, 1994 /s/Harold J. Rodriguez, Jr. Harold J. Rodriguez, Jr. Vice President and Controller (Chief Accounting Officer) 10QH394 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SILGAN HOLDINGS' FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1994 SEP-30-1994 2,472 0 108,612 0 100,993 216,268 447,402 167,879 546,017 121,296 521,064 12 0 0 (136,770) 546,017 673,240 673,240 584,693 584,693 0 0 48,693 11,134 2,925 8,209 0 0 0 8,209 0 0
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