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In addition to our operating cash needs, we believe our cash requirements over the next few years (not taking into account the acquisition of White Cap) will consist primarily of: • annual capital expenditures of $90 to $120 million; • principal amortization payments of bank term loans under the Credit Agreement and other outstanding debt agreements of $0.8 million in 2006, $14.6 million in 2007 and $69.5 million in 2008; • cash payments for quarterly dividends on our common stock of approximately $4.5 million (assuming our Board of Directors continues to approve dividends at the same level); • annual payments to satisfy employee withholding tax requirements resulting from certain restricted stock units becoming vested, which payments are dependent upon the price of our common stock at the time of vesting and the number of restricted stock units that vest, none of which is estimable at this time (payments in 2005 were not significant); • our interest requirements, including interest on revolving loans (the principal amount of which will vary depending upon seasonal requirements) and bank term loans under the Credit Agreement, which bear fluctuating rates of interest, and the 6 3/4% Notes; and • payments of approximately $30 to $40 million for federal, state and foreign tax liabilities in 2006, which may increase annually thereafter. |
The following chart shows our acquisitions since our inception: Acquired Business Year Products ----------------- ---- -------- Nestle Food Company's metal container 1987 Metal food containers manufacturing division Monsanto Company's plastic container business 1987 Plastic containers Fort Madison Can Company of The Dial 1988 Metal food containers Corporation Seaboard Carton Division of Nestle Food Company 1988 Paperboard containers Aim Packaging, Inc. 1989 Plastic containers Fortune Plastics Inc. 1989 Plastic containers Express Plastic Containers Limited 1989 Plastic containers Amoco Container Company 1989 Plastic containers Del Monte Corporation's U.S. can manufacturing 1993 Metal food containers operations Food Metal and Specialty business of American 1995 Metal food containers, National Can Company steel closures and Omni plastic containers Finger Lakes Packaging Company, Inc., a 1996 Metal food containers subsidiary of Birds Eye Foods, Inc. Alcoa Inc.'s North American aluminum roll-on 1997 Aluminum roll-on closure business closures Rexam plc's North American plastic container 1997 Plastic containers and business closures Winn Packaging Co. 1998 Plastic containers Campbell Soup Company's steel container 1998 Metal food containers manufacturing business Clearplass Containers, Inc. 1998 Plastic containers RXI Holdings, Inc. 2000 Plastic containers and plastic closures, caps, sifters and fitments Thatcher Tubes LLC 2003 Plastic tubes Amcor White Cap, LLC (Silgan Closures LLC) 2003 Metal, composite and plastic vacuum closures Pacific Coast Producers' can manufacturing 2003 Metal food containers operations Our Strategy We intend to enhance our position as a leading supplier of consumer goods packaging products by continuing to aggressively pursue a strategy designed to achieve future growth and increase shareholder value by focusing on the following key elements: Supply "Best Value" Packaging Products With High Levels of Quality, Service and Technological Support Since our inception, we have been, and intend to continue to be, devoted to consistently supplying our products with the combination of quality, price and service that our customers consider to be "best value." |
Below is a list of our operating facilities, including attached warehouses, as of March 1, 2005 for our metal food container business: Approximate Building Area Location (square feet) -------- ------------------------- Tarrant, AL ................................ 89,100 Antioch, CA ................................ 144,500 (leased) Kingsburg, CA .............................. 35,600 (leased) Modesto, CA ................................ 37,800 (leased) Modesto, CA ................................ 128,000 (leased) Modesto, CA ................................ 150,000 (leased) Riverbank, CA .............................. 167,000 Sacramento, CA ............................. 284,900 (leased) Stockton, CA ............................... 243,500 Athens, GA ................................. 113,000 (leased) Champaign, IL .............................. 119,000 (leased) Hoopeston, IL .............................. 323,000 Rochelle, IL ............................... 175,000 Waukegan, IL ............................... 40,000 (leased) Evansville, IN ............................. 186,000 Hammond, IN ................................ 158,000 (leased) Laporte, IN ................................ 144,000 (leased) Richmond, IN ............................... 462,700 Ft. |
Vernon, MO ............................. 100,000 St. Joseph, MO ............................. 173,700 Maxton, NC ................................. 231,800 (leased) Edison, NJ ................................. 265,500 Lyons, NY .................................. 149,700 Napoleon, OH ............................... 339,600 (leased) West Hazleton, PA .......................... 151,500 (leased) Crystal City, TX ........................... 26,000 (leased) Paris, TX .................................. 266,300 (leased) Toppenish, WA .............................. 105,000 Menomonee Falls, WI ........................ 116,000 Menomonie, WI .............................. 129,400 (leased) Oconomowoc, WI ............................. 105,200 Plover, WI ................................. 91,400 (leased) Waupun, WI ................................. 212,000 Below is a list of our operating facilities, including attached warehouses, as of March 1, 2005 for our plastic container business: Approximate Building Area Location (square feet) -------- ------------------------- Valencia, CA................................ 122,500 (leased) Deep River, CT.............................. 140,000 Monroe, GA.................................. 139,600 Flora, IL................................... 56,400 Woodstock, IL............................... 186,700 (leased) Woodstock, IL............................... 129,800 (leased) Ligonier, IN................................ 469,000 (276,000 leased) Plainfield, IN.............................. 105,700 (leased) Seymour, IN................................. 400,600 Franklin, KY................................ 122,000 (leased) Cape Girardeau, MO.......................... 71,700 (leased) Penn Yan, NY................................ 100,000 Ottawa, OH.................................. 267,000 Port Clinton, OH............................ 401,400 (leased) Breinigsville, PA........................... 70,000 (leased) Langhorne, PA............................... 172,600 (leased) Houston, TX................................. 335,200 Richmond, VA................................ 70,000 (leased) Triadelphia, WV............................. 168,400 Mississauga, Ontario........................ 75,000 (leased) Mississauga, Ontario........................ 62,600 (leased) Scarborough, Ontario........................ 117,000 Lachine, Quebec............................. 113,300 (leased) Lachine, Quebec............................. 77,800 (leased) We lease our research facilities in Oconomowoc, Wisconsin, Downers Grove, Illinois and Norcross, Georgia. |
Year Ended December 31, ---------------------------- 2004 2003 2002 ---- ---- ---- Operating Data: Net sales: Metal food containers.......................... 76.1% 75.7% 74.8% Plastic containers............................. 23.9 24.3 25.2 ----- ----- ----- Consolidated................................ 100.0 100.0 100.0 Cost of goods sold............................... 87.2 87.6 88.0 ----- ----- ----- Gross profit..................................... 12.8 12.4 12.0 Selling, general and administrative expenses..... 4.5 4.7 3.8 Rationalization charges (credits)................ 0.1 0.4 (0.2) ----- ----- ----- Income from operations........................... 8.2 7.3 8.4 Interest and other debt expense.................. 2.3 4.3 3.8 ----- ----- ----- Income before income taxes and equity in losses of affiliate ........................... 5.9 3.0 4.6 Provision for income taxes....................... 2.4 1.2 1.8 ----- ----- ----- Income before equity in losses of affiliate...... 3.5 1.8 2.8 Equity in losses of affiliate, net of income taxes................................... -- -- (0.1) ----- ----- ----- Net income....................................... 3.5% 1.8% 2.7% ===== ===== ===== Summary results for our business segments for the years ended December 31, 2004, 2003 and 2002 are provided below. |
Important factors that could cause the actual results of our operations or our financial condition to differ from those expressed or implied in these forward-looking statements include, but are not necessarily limited to: o our ability to effect cost reduction initiatives and realize benefits from capital investments; o our ability to locate or acquire suitable acquisition candidates on acceptable terms; o our ability to integrate the operations of our acquired businesses into our existing operations; o our ability to generate sufficient cash flow to invest in our business and service our indebtedness; o limitations and restrictions contained in our instruments and agreements governing our indebtedness; o our ability to retain sales with our major customers or to satisfy our obligations under our contracts; o the size and quality of the vegetable and fruit harvests in the midwest and west regions of the United States or our ability to collect our seasonal receivables; o our ability to obtain sufficient quantities of raw materials or to maintain the ability to pass raw material price increases through to our customers; o compliance by our suppliers with the terms of our arrangements with them; o changes in consumer preferences for different packaging products; o competitive pressures, including new product developments or changes in competitors' pricing for products; o changes in governmental regulations or enforcement practices; o changes in general economic conditions, such as fluctuations in interest rates and changes in energy costs (such as natural gas and electricity); o changes in labor relations and costs; o the performance of the investments in our pension plans against the level expected; o changes in our evaluation of goodwill recorded on our consolidated balance sheets; o our ability to refinance the Credit Agreement prior to its maturity in 2008, which will depend on, among other things, our financial condition at the time, the restrictions in the instruments governing our then outstanding indebtedness and other factors including market conditions; and o other factors described elsewhere in this Annual Report or in our other filings with the Securities and Exchange Commission. |
Signature Title Date - --------- ----- ---- Co-Chairman of the Board and Co-Chief Executive Officer /s/ R. Philip Silver (Principal Executive Officer) March 7, 2005 - ----------------------- (R. Philip Silver) Co-Chairman of the Board and Co-Chief Executive Officer /s/ D. Greg Horrigan (Principal Executive Officer) March 7, 2005 - ----------------------- (D. Greg Horrigan) /s/ John W. Alden Director March 7, 2005 - ----------------------- (John W. Alden) /s/ Jeffrey C. Crowe Director March 7, 2005 - ----------------------- (Jeffrey C. Crowe) /s/ William C. Jennings Director March 7, 2005 - ----------------------- (William C. Jennings) /s/ Edward A. Lapekas Director March 7, 2005 - ----------------------- (Edward A. Lapekas) Executive Vice President and Chief Financial Officer (Principal Financial and /s/ Robert B. Lewis (Accounting Officer) March 7, 2005 - ----------------------- (Robert B. Lewis) Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting The Board of Directors and Stockholders of Silgan Holdings Inc. We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that Silgan Holdings Inc. maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). |
The following chart shows our acquisitions since our inception: Acquired Business Year Products ----------------- ---- -------- Nestle Food Company's metal container 1987 Metal food containers manufacturing division Monsanto Company's plastic container business 1987 Plastic containers Fort Madison Can Company of The Dial 1988 Metal food containers Corporation Seaboard Carton Division of Nestle Food Company 1988 Paperboard containers Aim Packaging, Inc. 1989 Plastic containers Fortune Plastics Inc. 1989 Plastic containers Express Plastic Containers Limited 1989 Plastic containers Amoco Container Company 1989 Plastic containers Del Monte Corporation's U.S. can manufacturing 1993 Metal food containers operations Food Metal and Specialty business of American 1995 Metal food containers, National Can Company steel closures and Omni plastic containers Finger Lakes Packaging Company, Inc., a 1996 Metal food containers subsidiary of Birds Eye Foods, Inc. Alcoa Inc.'s North American aluminum roll-on 1997 Aluminum roll-on closure business closures Rexam plc's North American plastic container 1997 Plastic containers and business closures Winn Packaging Co. 1998 Plastic containers Campbell Soup Company's steel container 1998 Metal food containers manufacturing business Clearplass Containers, Inc. 1998 Plastic containers RXI Holdings, Inc. 2000 Plastic containers and plastic closures, caps, sifters and fitments Thatcher Tubes LLC 2003 Plastic tubes Amcor White Cap, LLC 2003 Metal, composite and plastic closures Pacific Coast Producers' can manufacturing 2003 Metal food containers operations Our Strategy We intend to enhance our position as a leading supplier of consumer goods packaging products by continuing to aggressively pursue a strategy designed to achieve future growth and increase shareholder value by focusing on the following key elements: Supply "Best Value" Packaging Products With High Levels of Quality, Service and Technological Support Since our inception, we have been, and intend to continue to be, devoted to consistently supplying our products with the combination of quality, price and service that our customers consider to be "best value." |
Below is a list of our operating facilities, including attached warehouses, as of March 1, 2004 for our metal food container business: Approximate Building Area Location (square feet) -------- ------------------------- Tarrant, AL................................. 89,100 (leased) Antioch, CA................................. 144,500 (leased) Kingsburg, CA............................... 35,600 (leased) Lodi, CA.................................... 133,000 (leased) Modesto, CA................................. 37,800 (leased) Modesto, CA................................. 128,000 (leased) Modesto, CA................................. 150,000 (leased) Riverbank, CA............................... 167,000 Sacramento, CA.............................. 284,900 (leased) Stockton, CA................................ 243,500 Athens, GA.................................. 113,000 (leased) Champaign, IL............................... 119,000 (leased) Chicago, IL................................. 467,900 Hoopeston, IL............................... 323,000 Rochelle, IL................................ 175,000 Waukegan, IL................................ 40,000 (leased) Evansville, IN.............................. 186,000 Hammond, IN................................. 158,000 (leased) Laporte, IN................................. 144,000 (leased) Richmond, IN................................ 462,700 Fort Madison, IA............................ 121,000 (56,000 leased) Ft. |
Vernon, MO.............................. 100,000 St. Joseph, MO.............................. 173,700 Maxton, NC.................................. 231,800 (leased) Edison, NJ.................................. 265,500 Lyons, NY................................... 149,700 Napoleon, OH................................ 339,600 (leased) West Hazleton, PA........................... 151,500 (leased) Crystal City, TX............................ 26,000 (leased) Paris, TX................................... 266,300 (leased) Toppenish, WA............................... 105,000 Menomonee Falls, WI......................... 116,000 Menomonie, WI............................... 129,400 (leased) Oconomowoc, WI.............................. 105,200 Plover, WI.................................. 91,400 (leased) Waupun, WI.................................. 212,000 Below is a list of our operating facilities, including attached warehouses, as of March 1, 2004 for our plastic container business: Approximate Building Area Location (square feet) -------- ------------------------- Valencia, CA................................ 122,500 (leased) Deep River, CT.............................. 140,000 Monroe, GA.................................. 139,600 Flora, IL................................... 56,400 Woodstock, IL............................... 186,700 (leased) Woodstock, IL............................... 129,800 (leased) Ligonier, IN................................ 469,000 (276,000 leased) Plainfield, IN.............................. 105,700 (leased) Seymour, IN................................. 400,600 Franklin, KY................................ 122,000 (leased) Cape Girardeau, MO.......................... 71,700 (leased) Penn Yan, NY................................ 100,000 Ottawa, OH.................................. 267,000 Port Clinton, OH............................ 298,900 (leased) Langhorne, PA............................... 156,000 (leased) Houston, TX................................. 335,200 Richmond, VA................................ 70,000 (leased) Triadelphia, WV............................. 168,400 Mississauga, Ontario........................ 75,000 (leased) Mississauga, Ontario........................ 62,600 (leased) Scarborough, Ontario........................ 117,000 Lachine, Quebec............................. 113,300 (leased) Lachine, Quebec............................. 77,800 (leased) We lease our research facilities in Oconomowoc, Wisconsin, Downers Grove, Illinois and Norcross, Georgia. |
Year Ended December 31, --------------------------- 2003 2002 2001 ---- ---- ---- Operating Data: Net sales: Metal food containers.......................... 75.7% 74.8% 74.6% Plastic containers............................. 24.3 25.2 25.4 ----- ----- ----- Consolidated................................ 100.0 100.0 100.0 Cost of goods sold............................... 87.6 88.0 87.6 ----- ----- ----- Gross profit..................................... 12.4 12.0 12.4 Selling, general and administrative expenses..... 4.7 3.8 4.0 Rationalization charges (credits)................ 0.4 (0.2) 0.5 ----- ----- ----- Income from operations........................... 7.3 8.4 7.9 Gain on assets contributed to affiliate.......... -- -- 0.3 Interest and other debt expense.................. 4.3 3.8 4.2 ----- ----- ----- Income before income taxes and equity in losses of affiliates .......................... 3.0 4.6 4.0 Provision for income taxes....................... 1.2 1.8 1.6 ----- ----- ----- Income before equity in losses of affiliates..... 1.8 2.8 2.4 Equity in losses of affiliates, net of income taxes................................... -- (0.1) (0.2) ----- ----- ----- Net income....................................... 1.8% 2.7% 2.2% ===== ===== ===== Summary results for our business segments for the years ended December 31, 2003, 2002 and 2001 are provided below. |
Important factors that could cause the actual results of our operations or our financial condition to differ from those expressed or implied in these forward-looking statements include, but are not necessarily limited to: o our ability to effect cost reduction initiatives and realize benefits from capital investments; o our ability to locate or acquire suitable acquisition candidates on acceptable terms; o our ability to assimilate the operations of our acquired businesses into our existing operations; o our ability to generate sufficient cash flow to invest in our business and service our indebtedness; o limitations and restrictions contained in our instruments and agreements governing our indebtedness; o our ability to retain sales with our major customers or to satisfy our obligations under our contracts; o the size and quality of the vegetable and fruit harvests in the midwest and west regions of the United States or our ability to collect our seasonal receivables; o our ability to obtain sufficient quantities of raw materials or to maintain the ability to pass raw material price increases through to our customers; o compliance by our suppliers with the terms of our arrangements with them; o changes in consumer preferences for different packaging products; o competitive pressures, including new product developments or changes in competitors' pricing for products; o changes in governmental regulations or enforcement practices; o changes in general economic conditions, such as fluctuations in interest rates and changes in energy costs (such as natural gas and electricity); o changes in labor relations and costs; o the performance of the investments in our pension plans against the level expected; o changes in our evaluation of goodwill recorded on our consolidated balance sheets; o our ability to refinance the Credit Agreement prior to its maturity in 2008, which will depend on, among other things, our financial condition at the time, the restrictions in the instruments governing our then outstanding indebtedness and other factors including market conditions; and o other factors described elsewhere in this Annual Report or in our other filings with the Securities and Exchange Commission. |
Signature Title Date - --------- ----- ---- Chairman of the Board and Co-Chief Executive Officer /s/ R. Philip Silver (Principal Executive Officer) March 15, 2004 - ----------------------- (R. Philip Silver) President, Co-Chief Executive Officer and Director /s/ D. Greg Horrigan (Principal Executive Officer) March 15, 2004 - ----------------------- (D. Greg Horrigan) /s/ John W. Alden Director March 15, 2004 - ----------------------- (John W. Alden) /s/ Jeffrey C. Crowe Director March 15, 2004 - ----------------------- (Jeffrey C. Crowe) /s/ William C. Jennings Director March 15, 2004 - ----------------------- (William C. Jennings) /s/ Edward A. Lapekas Director March 15, 2004 - ----------------------- (Edward A. Lapekas) Executive Vice President and Chief Financial Officer /s/ Anthony J. Allott (Principal Financial Officer) March 15, 2004 - ----------------------- (Anthony J. Allott) Vice President and Controller /s/ Nancy Merola (Principal Accounting Officer) March 15, 2004 - ----------------------- (Nancy Merola) REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Silgan Holdings Inc. We have audited the accompanying consolidated financial statements and schedules of Silgan Holdings Inc. as listed in the accompanying index to the financial statements (Item 15(a)). |
/s/ Ernst & Young LLP Stamford, Connecticut January 28, 2004 SILGAN HOLDINGS INC. CONSOLIDATED BALANCE SHEETS December 31, 2003 and 2002 (Dollars in thousands, except per share data) 2003 2002 ---- ---- Assets Current assets: Cash and cash equivalents .................... $ 12,100 $ 58,318 Trade accounts receivable, less allowances of $3,086 and $2,864, respectively ........ 159,273 124,657 Inventories .................................. 320,194 272,836 Prepaid expenses and other current assets .... 53,731 43,521 ---------- ---------- Total current assets ..................... 545,298 499,332 Property, plant and equipment, net ................ 817,850 705,746 Goodwill, net ..................................... 202,421 141,481 Other assets ...................................... 55,515 57,399 ---------- ---------- $1,621,084 $1,403,958 ========== ========== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt ............ $ 48,670 $ 20,170 Trade accounts payable ....................... 211,639 172,703 Accrued payroll and related costs ............ 65,940 56,238 Accrued liabilities .......................... 24,518 15,825 ---------- ---------- Total current liabilities ................ 350,767 264,936 Long-term debt .................................... 953,910 936,655 Other liabilities ................................. 195,602 139,275 Commitments and contingencies Stockholders' equity: Common stock ($0.01 par value per share; 100,000,000 shares authorized, 20,958,517 and 20,916,317 shares issued and 18,273,042 and 18,230,842 shares outstanding, respectively) ................. 210 209 Paid-in capital .............................. 125,758 124,872 Retained earnings ............................ 60,905 18,871 Accumulated other comprehensive loss ......... (5,675) (20,467) Treasury stock at cost (2,685,475 shares) .... (60,393) (60,393) ---------- ---------- Total stockholders' equity ............... 120,805 63,092 ---------- ---------- $1,621,084 $1,403,958 ========== ========== See notes to consolidated financial statements. |
Long-Term Debt Long-term debt at December 31 is as follows: 2003 2002 ---- ---- (Dollars in thousands) Bank debt: Bank revolving loans ................. $ 25,000 $ -- Bank A term loans .................... 83,330 100,000 Bank B term loans .................... 691,250 348,250 ---------- -------- Total bank debt .................... 799,580 448,250 Subordinated debt: 6 3/4% Senior Subordinated Notes ..... 200,000 -- 9% Senior Subordinated Debentures .... -- 505,575 Other ................................ 3,000 3,000 ---------- -------- Total subordinated debt ............ 203,000 508,575 ---------- -------- Total debt .............................. 1,002,580 956,825 Less current portion ................. 48,670 20,170 ---------- -------- $ 953,910 $936,655 ========== ======== The aggregate annual maturities of our debt are as follows (dollars in thousands): 2004 ............ $ 48,670 2005 ............ 23,670 2006 ............ 23,670 2007 ............ 23,670 2008 ............ 682,900 Thereafter ...... 200,000 ---------- $1,002,580 ========== Bank Credit Agreement - --------------------- On June 28, 2002, we completed the refinancing of our previous U.S. senior secured credit facility, or the Previous U.S. Credit Agreement, by entering into a new $850 million senior secured credit facility, or the Credit Agreement. |
Stock Option Plans (continued) The following is a summary of stock option activity for years ended December 31, 2003, 2002 and 2001: Weighted Average Options Exercise Price ------- ---------------- Options outstanding at December 31, 2000 ..... 1,188,465 $12.71 ========= Granted ................................. 100,000 $20.76 Exercised ............................... (150,773) 6.82 Canceled ................................ -- -- --------- Options outstanding at December 31, 2001 ..... 1,137,692 14.20 ========= Granted ................................. 151,440 $37.89 Exercised ............................... (377,172) 11.41 Canceled ................................ (144,600) 15.57 --------- Options outstanding at December 31, 2002 ..... 767,360 19.99 ========= Granted ................................. 231,500 $29.18 Exercised ............................... (42,200) 15.33 Canceled ................................ (29,800) 17.97 --------- Options outstanding at December 31, 2003 ..... 926,860 22.56 ========= At December 31, 2003, 2002 and 2001, the remaining contractual life of options outstanding was 6.7 years, 7.4 years and 7.0 years, respectively, and there were 346,048, 220,280 and 402,372 options exercisable with weighted average exercise prices of $18.71, $17.88 and $12.26, respectively. |
SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003, 2002 and 2001 Note 18. Business Segment Information (continued) Total segment income from operations is reconciled to income before income taxes and equity in losses of affiliates as follows: 2003 2002 2001 ---- ---- ---- (Dollars in thousands) Total segment income from operations ...... $168,092 $167,940 $152,411 Interest and other debt expense ........... 98,034 74,772 81,192 Gain on assets contributed to affiliate ... -- -- 4,908 -------- -------- -------- Income before income taxes and equity in losses of affiliates ... $ 70,058 $ 93,168 $ 76,127 ======== ======== ======== Total segment assets at December 31 are reconciled to total assets as follows: 2003 2002 ---- ---- (Dollars in thousands) Total segment assets ......... $1,581,311 $1,374,177 Other assets ................. 39,773 29,781 ---------- ---------- Total assets ............ $1,621,084 $1,403,958 ========== ========== Financial information relating to our operations by geographic area is as follows: SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003, 2002 and 2001 Note 18. Business Segment Information (continued) Net sales are attributed to the country from which the product was manufactured and shipped. |
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT SILGAN HOLDINGS INC. (Parent Company) CONDENSED BALANCE SHEETS December 31, 2003 and 2002 (Dollars in thousands) 2003 2002 ---- ---- Assets Current assets: Cash and cash equivalents ................... $ 62 $ 62 Notes receivable - subsidiaries ............. 23,670 20,170 Interest receivable - subsidiaries .......... 2,445 3,792 Other current assets ........................ 8,517 4,297 ---------- ---------- Total current assets ...................... 34,694 28,321 Notes receivable - subsidiaries ................ 950,910 933,655 Investment in and amounts due from subsidiaries ................................ 111,321 49,838 Other assets ................................... 23,853 31,636 ---------- ---------- $1,120,778 $1,043,450 ========== ========== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt ........... $ 23,670 $ 20,170 Accrued interest payable .................... 2,445 3,792 Accounts payable and accrued liabilities .... 4,169 736 ---------- ---------- Total current liabilities ................. 30,284 24,698 Long-term debt ................................. 950,910 933,655 Other liabilities .............................. 18,779 22,005 Stockholders' equity: Common stock ................................ 210 209 Paid-in capital ............................. 125,758 124,872 Retained earnings ........................... 60,905 18,871 Accumulated other comprehensive loss ........ (5,675) (20,467) Treasury stock at cost (2,685,475 shares) ... (60,393) (60,393) ---------- ---------- Total stockholders' equity ................ 120,805 63,092 ---------- ---------- $1,120,778 $1,043,450 ========== ========== See notes to condensed financial statements. |
The following chart shows our acquisitions since our inception: Acquired Business Year Products ----------------- ---- -------- Nestle Food Company's metal container 1987 Metal food containers manufacturing division Monsanto Company's plastic container business 1987 Plastic containers Fort Madison Can Company of The Dial 1988 Metal food containers Corporation Seaboard Carton Division of Nestle Food 1988 Paperboard containers Company Aim Packaging, Inc. 1989 Plastic containers Fortune Plastics Inc. 1989 Plastic containers Express Plastic Containers Limited 1989 Plastic containers Amoco Container Company 1989 Plastic containers Del Monte Corporation's U.S. can 1993 Metal food containers manufacturing operations Food Metal and Specialty business of 1995 Metal food containers, American National Can Company steel closures and Omni plastic containers Finger Lakes Packaging Company, Inc., a 1996 Metal food containers subsidiary of Birds Eye Foods, Inc. Alcoa Inc.'s North American aluminum roll-on 1997 Aluminum roll-on closure business closures Rexam plc's North American plastic container 1997 Plastic containers and business closures Winn Packaging Co. 1998 Plastic containers Campbell Soup Company's steel container 1998 Metal food containers manufacturing business Clearplass Containers, Inc. 1998 Plastic containers RXI Holdings, Inc. 2000 Plastic containers and plastic closures, caps, sifters and fitments Thatcher Tubes LLC 2003 Plastic tubes Amcor White Cap, LLC 2003 Metal, composite and plastic closures Our Strategy We intend to enhance our position as a leading supplier of consumer goods packaging products by continuing to aggressively pursue a strategy designed to achieve future growth and increase shareholder value by focusing on the following key elements: Expand Through Acquisitions That Generate Attractive Cash Returns and Through Internal Growth We intend to continue to increase our market share in our current business lines through acquisitions and internal growth. |
Below is a list of our operating facilities, including attached warehouses, as of March 1, 2003 for our metal food container business: Approximate Building Area Location (square feet) -------- ------------------------- Tarrant, AL........................ 89,100 (leased) Antioch, CA........................ 144,500 (leased) Kingsburg, CA...................... 35,600 (leased) Modesto, CA........................ 37,800 (leased) Modesto, CA........................ 128,000 (leased) Modesto, CA........................ 150,000 (leased) Riverbank, CA...................... 167,000 Sacramento, CA..................... 284,900 (leased) Stockton, CA....................... 243,500 Athens, GA......................... 113,000 (leased) Broadview, IL...................... 85,000 Champaign, IL...................... 119,000 (leased) Chicago, IL........................ 542,000 Hoopeston, IL...................... 323,000 Rochelle, IL....................... 175,000 Waukegan, IL....................... 40,000 (leased) Evansville, IN..................... 186,000 Hammond, IN........................ 158,000 (leased) Laporte, IN........................ 144,000 (leased) Richmond, IN....................... 462,000 Fort Madison, IA................... 121,000 (56,000 leased) Ft. |
Vernon, MO..................... 100,000 St. Joseph, MO..................... 173,700 Maxton, NC......................... 231,800 (leased) Edison, NJ......................... 265,500 Lyons, NY.......................... 149,700 Napoleon, OH....................... 339,600 (leased) West Hazleton, PA.................. 151,600 (leased) Crystal City, TX................... 26,000 (leased) Paris, TX.......................... 266,300 (leased) Toppenish, WA...................... 105,000 Menomonee Falls, WI................ 116,000 Menomonie, WI...................... 129,400 (leased) Oconomowoc, WI..................... 105,200 Plover, WI......................... 91,400 (leased) Waupun, WI......................... 212,000 Queretaro, Mexico.................. 170,000 Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 2003 for our plastic container business: Approximate Building Area Location (square feet) -------- ------------------------- Anaheim, CA........................ 127,000 (leased) Valencia, CA....................... 122,500 (leased) Deep River, CT..................... 140,000 Norwalk, CT........................ 14,400 (leased) Monroe, GA......................... 139,600 Norcross, GA....................... 59,000 (leased) Flora, IL.......................... 56,400 Woodstock, IL...................... 186,700 (leased) Woodstock, IL...................... 129,800 (leased) Ligonier, IN....................... 469,000 (276,000 leased) Plainfield, IN..................... 105,700 (leased) Seymour, IN........................ 400,600 Franklin, KY....................... 122,000 (leased) Cape Girardeau, MO................. 71,700 (leased) Penn Yan, NY....................... 100,000 Ottawa, OH......................... 267,000 Port Clinton, OH................... 298,900 (leased) Langhorne, PA...................... 156,000 (leased) Houston, TX........................ 335,200 Richmond, VA....................... 70,000 (leased) Triadelphia, WV.................... 168,400 Mississauga, Ontario............... 75,000 (leased) Mississauga, Ontario............... 62,600 (leased) Scarborough, Ontario............... 117,000 Lachine, Quebec.................... 113,300 (leased) Lachine, Quebec.................... 77,800 (leased) Culiacan, Mexico................... 10,800 (leased) We own and lease other warehouse facilities that are detached from our manufacturing facilities. |
Year Ended December 31, --------------------------- 2002 2001 2000 ---- ---- ---- Operating Data: Net sales: Metal food containers.......................... 74.8% 72.2% 73.9% Plastic containers............................. 25.2 25.4 21.3 Metal closures................................. -- 2.4 4.8 ----- ----- ----- Total....................................... 100.0 100.0 100.0 Cost of goods sold............................... 88.0 87.6 87.8 ----- ----- ----- Gross profit..................................... 12.0 12.4 12.2 Selling, general and administrative expenses..... 3.8 4.0 3.8 Rationalization (credits) charges ............... (0.2) 0.5 -- ----- ----- ----- Income from operations........................... 8.4 7.9 8.4 Gain on assets contributed to affiliate.......... -- 0.3 -- Interest and other debt expense.................. 3.7 4.2 4.9 ----- ----- ----- Income before income taxes, equity in losses of affiliates and extraordinary item ............. 4.7 4.0 3.5 Provision for income taxes....................... 1.9 1.6 1.4 ----- ----- ----- Income before equity in losses of affiliates and extraordinary item......................... 2.8 2.4 2.1 Equity in losses of affiliates................... (0.1) (0.2) (0.2) ----- ----- ----- Income before extraordinary item................. 2.7 2.2 1.9 Extraordinary item - loss on early extinguishment of debt, net of income taxes................... -- -- (0.2) ----- ----- ----- Net income....................................... 2.7% 2.2% 1.7% ===== ===== ===== Summary results for our business segments for the years ended December 31, 2002, 2001, and 2000 are provided below. |
Important factors that could cause the actual results of our operations or our financial condition to differ from those expressed or implied in these forward-looking statements include, but are not necessarily limited to: o our ability to effect cost reduction initiatives and realize benefits from capital investments; o our ability to locate or acquire suitable acquisition candidates that generate attractive cash returns and on acceptable terms; o our ability to assimilate the operations of our acquired businesses into our existing operations; o our ability to generate free cash flow to invest in our business and service our indebtedness; o limitations and restrictions contained in our instruments and agreements governing our indebtedness; o our ability to retain sales with our major customers; o the size and quality of the vegetable and fruit harvests in the midwest and west regions of the United States; o changes in the pricing and availability to us of raw materials or our ability generally to pass raw material price increases through to our customers; o changes in consumer preferences for different packaging products; o competitive pressures, including new product developments or changes in competitors' pricing for products; o changes in governmental regulations or enforcement practices; o changes in general economic conditions, such as fluctuations in interest rates and changes in energy costs (such as natural gas and electricity); o changes in labor relations and costs; and o other factors described elsewhere in this Annual Report or in our other filings with the Securities and Exchange Commission. |
Signature Title Date - --------- ----- ---- Chairman of the Board and Co-Chief Executive Officer /s/ R. Philip Silver (Principal Executive Officer) March 31, 2003 - ---------------------- (R. Philip Silver) President, Co-Chief Executive Officer and Director /s/ D. Greg Horrigan (Principal Executive Officer) March 31, 2003 - ---------------------- (D. Greg Horrigan) /s/ Leigh J. Abramson Director March 31, 2003 - ---------------------- (Leigh J. Abramson) /s/ John W. Alden Director March 31, 2003 - ---------------------- (John W. Alden) /s/ Jeffrey C. Crowe Director March 31, 2003 - ---------------------- (Jeffrey C. Crowe) /s/ Edward A. Lapekas Director March 31, 2003 - ---------------------- (Edward A. Lapekas) Executive Vice President and Chief Financial Officer /s/ Anthony J. Allott (Principal Financial Officer) March 31, 2003 - ---------------------- (Anthony J. Allott) Vice President and Controller /s/ Nancy Merola (Principal Accounting Officer) March 31, 2003 - ---------------------- (Nancy Merola) CERTIFICATIONS I, R. Philip Silver, certify that: 1. |
SILGAN HOLDINGS INC. CONSOLIDATED BALANCE SHEETS December 31, 2002 and 2001 (Dollars in thousands, except per share data) 2002 2001 ---- ---- Assets Current assets: Cash and cash equivalents .................... $ 58,318 $ 18,009 Trade accounts receivable, less allowances of $2,864 and $3,449, respectively ........ 124,657 144,903 Inventories .................................. 272,836 262,627 Prepaid expenses and other current assets .... 13,988 12,053 ---------- ---------- Total current assets ..................... 469,799 437,592 Property, plant and equipment, net ................ 705,746 677,542 Goodwill, net ..................................... 141,481 141,465 Other assets ...................................... 57,399 55,221 ---------- ---------- $1,374,425 $1,311,820 ========== ========== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt ............ $ 20,170 $ 57,999 Trade accounts payable ....................... 172,703 173,851 Accrued payroll and related costs ............ 56,238 59,215 Accrued liabilities .......................... 15,825 26,653 ---------- ---------- Total current liabilities ................ 264,936 317,718 Long-term debt .................................... 936,655 886,770 Other liabilities ................................. 109,742 92,184 Commitments and contingencies Stockholders' equity: Common stock ($0.01 par value per share; 100,000,000 shares authorized, 20,916,317 and 20,539,145 shares issued and 18,230,842 and 17,853,670 shares outstanding, respectively).................. 209 205 Paid-in capital .............................. 124,872 118,319 Retained earnings (accumulated deficit) ...... 18,871 (34,937) Accumulated other comprehensive loss ......... (20,467) (8,046) Treasury stock at cost (2,685,475 shares) .... (60,393) (60,393) ---------- ---------- Total stockholders' equity ............... 63,092 15,148 ---------- ---------- $1,374,425 $1,311,820 ========== ========== See notes to consolidated financial statements. |
Long-Term Debt Long-term debt at December 31 is as follows: 2002 2001 ---- ---- (Dollars in thousands) Bank debt: Bank revolving loans ................... $ -- $333,025 Bank A term loans ...................... 100,000 119,413 Bank B term loans ...................... 348,250 186,588 Canadian Bank Facility ................. -- 2,639 -------- -------- Total bank debt ...................... 448,250 641,665 Subordinated debt: 9% Senior Subordinated Debentures ...... 505,575 300,000 Other .................................. 3,000 3,104 -------- -------- Total subordinated debt .............. 508,575 303,104 -------- -------- Total debt ................................ 956,825 944,769 Less current portion ................... 20,170 57,999 -------- -------- $936,655 $886,770 ======== ======== The aggregate annual maturities of long-term debt at December 31, 2002 are as follows (dollars in thousands): 2003 ............ $ 20,170 2004 ............ 20,170 2005 ............ 20,170 2006 ............ 20,170 2007 ............ 20,170 Thereafter ...... 850,400 -------- $951,250 ======== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002, 2001 and 2000 Note 9. |
Stock Option Plans (continued) The following is a summary of stock option activity for years ended December 31, 2002, 2001 and 2000: Weighted Average Options Exercise Price ------- ---------------- Options outstanding at December 31, 1999 ..... 857,268 $11.17 ========= Granted ................................... 823,900 $13.62 Exercised ................................. (256,203) 2.00 Canceled .................................. (236,500) 21.88 --------- Options outstanding at December 31, 2000 ..... 1,188,465 12.71 ========= Granted ................................... 100,000 $20.76 Exercised ................................. (150,773) 6.82 Canceled .................................. -- -- --------- Options outstanding at December 31, 2001 ..... 1,137,692 14.20 ========= Granted ................................... 151,440 $37.89 Exercised ................................. (377,172) 11.41 Canceled .................................. (144,600) 15.57 --------- Options outstanding at December 31, 2002 ..... 767,360 19.99 ========= At December 31, 2002, 2001 and 2000, the remaining contractual life of options outstanding was 7.4 years, 7.0 years and 7.5 years, respectively, and there were 220,280, 402,372 and 360,065 options exercisable with weighted average exercise prices of $17.88, $12.26 and $8.12, respectively. |
SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002, 2001 and 2000 Note 18. Business Segment Information (continued) Information for each of the past three years for our business segments is as follows: SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002, 2001 and 2000 Note 18. Business Segment Information (continued) Total segment income from operations is reconciled to income before income taxes, equity in losses of affiliates and extraordinary item as follows: Total segment assets are reconciled to total assets as follows: 2002 2001 ---- ---- (Dollars in thousands) Total segment assets ....... $1,374,177 $1,310,440 Other assets ............... 248 1,380 ---------- ---------- Total assets .......... $1,374,425 $1,311,820 ========== ========== Financial information relating to our operations by geographic area is as follows: 2002 2001 2000 ---- ---- ---- (Dollars in thousands) Net sales: United States ............... $1,928,058 $1,882,114 $1,823,349 Canada ...................... 60,226 58,880 54,148 ---------- ---------- ---------- Total net sales ........... $1,988,284 $1,940,994 $1,877,497 ========== ========== ========== Long-lived assets: United States ............... $ 824,571 $ 796,632 Canada ...................... 22,656 22,375 ---------- ---------- Total long-lived assets ... $ 847,227 $ 819,007 ========== ========== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002, 2001 and 2000 Note 18. Business Segment Information (continued) Net sales are attributed to the country from which the product was manufactured and shipped. |
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT SILGAN HOLDINGS INC. (Parent Company) CONDENSED BALANCE SHEETS December 31, 2002 and 2001 (Dollars in thousands) 2002 2001 ---- ---- Assets Current assets: Cash and cash equivalents ................... $ 62 $ 189 Notes receivable - subsidiaries ............. 20,170 56,685 Interest receivable - subsidiaries .......... 3,792 3,054 Other current assets ........................ 4,297 5,239 ---------- -------- Total current assets ...................... 28,321 65,167 Notes receivable - subsidiaries ................ 933,655 549,316 Investment in and amounts due from subsidiaries ................................. 49,838 -- Other assets ................................... 31,636 38,780 ---------- -------- $1,043,450 $653,263 ========== ======== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt ........... $ 20,170 $ 56,685 Accrued interest payable .................... 3,792 3,054 Accounts payable and accrued liabilities .... 736 1,495 ---------- -------- Total current liabilities ................. 24,698 61,234 Excess of distributions over investment in subsidiaries .............................. -- 9,373 Long-term debt ................................. 933,655 549,316 Other liabilities .............................. 22,005 18,192 Stockholders' equity: Common stock ................................ 209 205 Paid-in capital ............................. 124,872 118,319 Retained earnings (accumulated deficit) ..... 18,871 (34,937) Accumulated other comprehensive loss ........ (20,467) (8,046) Treasury stock at cost (2,685,475 shares) ... (60,393) (60,393) ---------- -------- Total stockholders' equity ................ 63,092 15,148 ---------- -------- $1,043,450 $653,263 ========== ======== See notes to condensed financial statements. |
The following chart shows our acquisitions since our inception: Acquired Business Year Products ----------------- ---- -------- Nestle Food Company's metal container 1987 Metal food containers manufacturing division Monsanto Company's plastic container business 1987 Plastic containers Fort Madison Can Company of The Dial 1988 Metal food containers Corporation Seaboard Carton Division of Nestle Food 1988 Paperboard containers Company Aim Packaging, Inc. 1989 Plastic containers Fortune Plastics Inc. 1989 Plastic containers Express Plastic Containers Limited 1989 Plastic containers Amoco Container Company 1989 Plastic containers Del Monte Corporation's U.S. can 1993 Metal food containers manufacturing operations Food Metal and Specialty business of 1995 Metal food containers, American National Can Company steel closures and Omni plastic containers Finger Lakes Packaging Company, Inc., a 1996 Metal food containers subsidiary of Agrilink Foods, Inc. Alcoa Inc.'s North American aluminum roll-on 1997 Aluminum roll-on closure business closures Rexam plc's North American plastic container 1997 Plastic containers and business closures Winn Packaging Co. 1998 Plastic containers Campbell Soup Company's steel container 1998 Metal food containers manufacturing business Clearplass Containers, Inc. 1998 Plastic containers RXI Holdings, Inc. 2000 Plastic containers and plastic closures, caps, sifters and fitments Our Strategy We intend to enhance our position as a leading supplier of consumer goods packaging products by continuing to aggressively pursue a strategy designed to achieve future growth and increase shareholder value by focusing on the following key elements: Expand Through Acquisitions at Attractive Cash Flow Multiples and Through Internal Growth We intend to continue to increase our market share in our current business lines through acquisitions and internal growth. |
Vernon, MO..................... 100,000 Northtown, MO...................... 111,700 (leased) St. Joseph, MO..................... 173,700 Maxton, NC......................... 231,800 (leased) Edison, NJ......................... 265,500 Lyons, NY.......................... 149,700 Napoleon, OH....................... 339,600 (leased) Crystal City, TX................... 26,000 (leased) Paris, TX.......................... 266,300 (leased) Toppenish, WA...................... 105,000 Menomonee Falls, WI................ 116,000 Menomonie, WI...................... 129,400 (leased) Oconomowoc, WI..................... 105,200 Plover, WI......................... 91,400 (leased) Waupun, WI......................... 212,000 Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 2002 for our plastic container business: Approximate Building Area Location (square feet) -------- ------------------------- Anaheim, CA........................ 127,000 (leased) Valencia, CA....................... 122,500 (leased) Deep River, CT..................... 140,000 Norwalk, CT........................ 14,400 (leased) Monroe, GA......................... 139,600 Norcross, GA....................... 59,000 (leased) Flora, IL.......................... 56,400 Woodstock, IL...................... 186,700 (leased) Ligonier, IN....................... 469,000 (276,000 leased) Plainfield, IN..................... 105,700 (leased) Seymour, IN........................ 450,000 Franklin, KY....................... 122,000 (leased) Cape Girardeau, MO................. 71,700 (leased) Penn Yan, NY....................... 100,000 Ottawa, OH......................... 267,000 Port Clinton, OH................... 257,400 (leased) Langhorne, PA...................... 156,000 (leased) Houston, TX........................ 335,200 Richmond, VA....................... 70,000 (leased) Triadelphia, WV.................... 168,400 Mississauga, Ontario............... 75,000 (leased) Mississauga, Ontario............... 62,600 (leased) Scarborough, Ontario............... 117,000 Lachine, Quebec.................... 113,300 (leased) Lachine, Quebec.................... 77,800 (leased) We own and lease other warehouse facilities that are detached from our manufacturing facilities. |
Year Ended December 31, ----------------------- 2001 2000 1999 ---- ---- ---- Operating Data: Net sales:(1) Metal food containers.......................... 72.2% 73.9% 76.1% Plastic containers............................. 25.4 21.3 18.5 Metal closures................................. 2.4 4.8 5.4 ----- ----- ----- Total....................................... 100.0 100.0 100.0 Cost of goods sold............................... 87.6 87.8 87.6 ----- ----- ----- Gross profit..................................... 12.4 12.2 12.4 Selling, general and administrative expenses..... 4.0 3.8 3.9 Rationalization charges, net(2).................. 0.5 -- 1.9 ----- ----- ----- Income from operations........................... 7.9 8.4 6.6 Gain on assets contributed to affiliate.......... 0.3 -- -- Interest and other debt expense.................. 4.2 4.9 4.6 ----- ----- ----- Income before income taxes and equity in losses of affiliates .......................... 4.0 3.5 2.0 Provision for income taxes....................... 1.6 1.4 0.7 ----- ----- ----- Income before equity in losses of affiliates and extraordinary item......................... 2.4 2.1 1.3 Equity in losses of affiliates................... 0.2 0.2 -- ----- ----- ----- Income before extraordinary item................. 2.2 1.9 1.3 Extraordinary item - loss on early extinguishment of debt, net of income taxes................... -- 0.2 -- ----- ----- ----- Net income....................................... 2.2% 1.7% 1.3% ===== ===== ===== Summary results for our business segments, metal food containers, plastic containers and metal closures, for the years ended December 31, 2001, 2000, and 1999 are provided below. |
Year Ended December 31, ----------------------- 2001 2000 1999 ---- ---- ---- (Dollars in millions) Net sales:(1) Metal food containers.............. $1,401.1 $1,387.7 $1,440.0 Plastic containers................. 493.6 399.0 350.5 Metal closures..................... 46.3 90.8 101.6 -------- -------- -------- Consolidated.................... $1,941.0 $1,877.5 $1,892.1 ======== ======== ======== Income from operations:(1) Metal food containers.............. $ 114.2 $ 120.2 $ 120.6 Plastic containers................. 49.5 36.9 40.0 Metal closures..................... 3.3 3.7 3.7 Rationalization charges, net(2).... (9.3) -- (36.1) Corporate.......................... (5.3) (3.7) (3.9) -------- -------- -------- Consolidated.................... $ 152.4 $ 157.1 $ 124.3 ======== ======== ======== - ------------ (1) As a result of the White Cap joint venture, we no longer report the results of our remaining specialty packaging business, which had net sales of $34.3 million, $33.1 million and $36.5 million in 2001, 2000 and 1999, respectively, as a separate business segment. |
In addition to our operating cash needs, we believe our cash requirements over the next few years (without taking into account the effect of future acquisitions) will consist primarily of: o annual capital expenditures of $80 to $110 million; o annual principal amortization payments of bank term loans under our current senior secured credit facilities in 2002 through 2005 of approximately $58.0 million, $68.1 million, $2.0 million and $180.7 million and the repayment of outstanding revolving loans under our current senior secured credit facilities ($333.0 million outstanding at December 31, 2001) no later than December 31, 2003; o our interest requirements, including interest on revolving loans (the principal amount of which will vary depending upon seasonal requirements) and bank term loans under our senior secured credit facilities, which bear fluctuating rates of interest, and the 9% Debentures; and o payments of approximately $20 million for federal, state and foreign tax liabilities in 2002, which will increase annually thereafter. |
Important factors that could cause the actual results of our operations or our financial condition to differ from those expressed or implied in these forward-looking statements include, but are not necessarily limited to: o our ability to effect cost reduction initiatives and realize benefits from capital investments; o our ability to locate or acquire suitable acquisition candidates at attractive cash flow multiples and on acceptable terms; o our ability to assimilate the operations of our acquired businesses into our existing operations; o our ability to generate free cash flow to invest in our business and service our indebtedness; o limitations and restrictions contained in our instruments and agreements governing our indebtedness; o our ability to retain sales with our major customers; o the size and quality of the vegetable and fruit harvests in the midwest and west regions of the United States; o changes in the pricing and availability to us of raw materials or our ability generally to pass raw material price increases through to our customers; o changes in consumer preferences for different packaging products; o competitive pressures, including new product developments or changes in competitors' pricing for products; o changes in governmental regulations or enforcement practices; o changes in general economic conditions, such as fluctuations in interest rates and changes in energy costs (such as natural gas and electricity); o changes in labor relations and costs; o our ability to refinance our current U.S. senior secured credit facility and, if we are able to effect this refinancing, the terms of this refinancing, all of which will be dependant upon a variety of factors, including our future prospects, the state of the economy and the financial markets, prevailing interest rates, the timing of the refinancing, the amount of debt to be refinanced and other factors beyond our control; and o other factors described elsewhere in this Annual Report or in our other filings with the Securities and Exchange Commission. |
Signature Title Date - --------- ----- ---- Chairman of the Board and /s/ R. Philip Silver Co-Chief Executive Officer - ---------------------- (Principal Executive Officer) March 29, 2002 (R. Philip Silver) /s/ D. Greg Horrigan President, Co-Chief Executive - ---------------------- Officer and Director March 29, 2002 (D. Greg Horrigan) /s/ Leigh J. Abramson - ---------------------- Director March 29, 2002 (Leigh J. Abramson) /s/ John W. Alden - ---------------------- Director March 29, 2002 (John W. Alden) /s/ Jeffrey C. Crowe - ---------------------- Director March 29, 2002 (Jeffrey C. Crowe) /s/ Edward A. Lapekas - ---------------------- Director March 29, 2002 (Edward A. Lapekas) Executive Vice President and /s/ Harley Rankin, Jr. Chief Financial Officer - ---------------------- (Principal Financial Officer) March 29, 2002 (Harley Rankin, Jr.) /s/ Nancy Merola Vice President and Controller - ---------------------- (Principal Accounting Officer) March 29, 2002 (Nancy Merola) REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Silgan Holdings Inc. We have audited the accompanying consolidated financial statements and schedules of Silgan Holdings Inc. as listed in the accompanying index to the financial statements (Item 14(a)). |
Long-Term Debt Long-term debt at December 31 is as follows: 2001 2000 ---- ---- (Dollars in thousands) Bank Debt: Bank Revolving Loans ..................... $333,025 $ 367,400 Bank A Term Loans ........................ 119,413 159,218 Bank B Term Loans ........................ 186,588 188,542 Canadian Bank Facility ................... 2,639 12,850 -------- ---------- Total bank debt ........................ 641,665 728,010 Subordinated Debt: 9% Senior Subordinated Debentures ........ 300,000 300,000 Other .................................... 3,104 3,465 -------- ---------- Total subordinated debt ................ 303,104 303,465 -------- ---------- Total Debt .................................. 944,769 1,031,475 Less current portion ..................... 57,999 44,948 -------- ---------- $886,770 $ 986,527 ======== ========== The aggregate annual maturities of long-term debt at December 31, 2001 are as follows (dollars in thousands): 2002 ............ $ 57,999 2003 ............ 401,090 2004 ............ 1,954 2005 ............ 180,726 2006 ............ -- Thereafter ...... 303,000 -------- $944,769 ======== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2001 2000 and 1999 Note 9. |
Income Taxes The components of the provision for income taxes are as follows: 2001 2000 1999 ---- ---- ---- (Dollars in thousands) Current: Federal .............. $11,618 $ 7,859 $ 5,879 State ................ 1,372 816 1,143 Foreign .............. 3,380 2,656 2,654 ------- ------- ------- 16,370 11,331 9,676 Deferred: Federal .............. 12,378 10,372 5,952 State ................ 2,182 953 (1,490) Foreign .............. (708) 424 167 ------- ------- ------- 13,852 11,749 4,629 ------- ------- ------- $30,222 $23,080 $14,305 ======= ======= ======= The provision for income taxes is included in our Consolidated Statements of Income as follows: 2001 2000 1999 ---- ---- ---- (Dollars in thousands) Income before equity in losses of affiliates and extraordinary item ..... $30,222 $25,790 $14,305 Extraordinary item ....................... -- (2,710) -- ------- ------- ------- $30,222 $23,080 $14,305 ======= ======= ======= SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2001, 2000 and 1999 Note 13. |
Significant components of our deferred tax assets and liabilities at December 31 are as follows: 2001 2000 ---- ---- (Dollars in thousands) Deferred tax assets: Pension and postretirement liabilities ........ $ 24,694 $ 20,026 Rationalization and other accrued liabilities ................................. 24,971 22,732 Net operating loss carryforwards .............. 39,128 55,356 AMT and other credit carryforwards ............ 25,405 14,635 Other ......................................... 5,729 3,986 --------- --------- Total deferred tax assets .................. 119,927 116,735 Deferred tax liabilities: Property, plant and equipment ................. (115,060) (107,995) Other ......................................... (10,843) (9,106) --------- --------- Total deferred tax liabilities ............. (125,903) (117,101) --------- --------- Net deferred tax liability ...................... $ (5,976) $ (366) ========= ========= SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2001, 2000 and 1999 Note 13. |
Stock Option Plan (continued) The following is a summary of stock option activity for years ended December 31, 2001, 2000 and 1999: Weighted Average Options Exercise Price ------- ---------------- Options outstanding at December 31, 1998 ..... 934,523 $ 8.64 ========= Granted ................................... 115,000 $17.61 Exercised ................................. (192,255) 2.67 --------- Options outstanding at December 31, 1999 ..... 857,268 11.17 ========= Granted ................................... 823,900 $13.62 Exercised ................................. (256,203) 2.00 Canceled .................................. (236,500) 21.88 --------- Options outstanding at December 31, 2000 ..... 1,188,465 12.71 ========= Granted ................................... 100,000 $20.76 Exercised ................................. (150,773) 6.82 --------- Options outstanding at December 31, 2001 ..... 1,137,692 14.20 ========= At December 31, 2001, 2000 and 1999, the remaining contractual life of options outstanding was 7.0 years, 7.5 years and 4.8 years, respectively, and there were 402,372, 360,065 and 581,488 options exercisable with weighted average exercise prices of $12.26, $8.12 and $5.16, respectively. |
Since its origin in 1987, the Company has completed the following acquisitions: Acquired Business Year Products ----------------- ---- -------- Nestle's metal container manufacturing division 1987 Metal food containers Monsanto Company's plastic container business 1987 Plastic containers Fort Madison Can Company of Dial 1988 Metal food containers Seaboard Carton Division of Nestle 1988 Paperboard containers Aim Packaging, Inc. 1989 Plastic containers Fortune Plastics Inc. 1989 Plastic containers Express Plastic Containers Limited 1989 Plastic containers Amoco Container Company 1989 Plastic containers Del Monte's U.S. can manufacturing operations 1993 Metal food containers Food Metal and Specialty business of ANC 1995 Metal food containers, steel closures and Omni plastic containers Finger Lakes Packaging Company, Inc., a 1996 Metal food containers subsidiary of Agrilink Alcoa Inc.'s North American aluminum roll-on 1997 Aluminum roll-on closures closure business ("Roll-on Closures") Rexam plc's North American plastic container 1997 Plastic containers and business closures Winn Packaging Co. ("Winn") 1998 Plastic containers Campbell's steel container manufacturing business 1998 Metal food containers Clearplass Containers, Inc. ("Clearplass") 1998 Plastic containers RXI Plastics, Inc. 2000 Plastic containers and plastic closures, caps, sifters and fitments Item 2. |
Vernon, MO........................... 100,000 Northtown, MO............................ 111,700 (leased) St. Joseph, MO........................... 173,700 Maxton, NC............................... 231,800 (leased) Edison, NJ............................... 260,000 Lyons, NY................................ 149,700 Napoleon, OH............................. 339,600 (leased) Crystal City, TX......................... 26,000 (leased) Paris, TX................................ 266,300 (leased) Toppenish, WA............................ 105,000 Menomonee Falls, WI...................... 116,000 Menomonie, WI............................ 129,400 (leased) Oconomowoc, WI........................... 105,200 Plover, WI............................... 91,400 (leased) Waupun, WI............................... 212,000 Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 2001 for its plastic container business: Approximate Building Area Location (square feet) -------- ------------------------- Anaheim, CA.............................. 127,000 (leased) Valencia, CA............................. 93,000 (leased) Deep River, CT........................... 140,000 Monroe, GA............................... 139,600 Norcross, GA............................. 59,000 (leased) Flora, IL................................ 56,400 Ligonier, IN............................. 469,000 (276,000 leased) Plainfield, IN........................... 106,000 (leased) Seymour, IN.............................. 431,000 Franklin, KY............................. 122,000 (leased) Cape Girardeau, MO....................... 70,000 (leased) Penn Yan, NY............................. 100,000 Fairfield, OH............................ 185,000 (leased) Ottawa, OH............................... 267,000 Port Clinton, OH......................... 257,400 (leased) Langhorne, PA............................ 156,000 (leased) Houston, TX.............................. 335,000 Richmond, VA............................. 70,000 (leased) Triadelphia, WV.......................... 177,000 Mississauga, Ontario..................... 75,000 (leased) Mississauga, Ontario..................... 62,600 (leased) Scarborough, Ontario..................... 117,000 Lachine, Quebec.......................... 113,300 (leased) Lachine, Quebec.......................... 77,800 (leased) Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 2001 for its specialty packaging business: Approximate Building Area Location (square feet) -------- ------------------------- Norwalk, CT.............................. 14,400 (leased) Broadview, IL............................ 85,000 Woodstock, IL............................ 186,700 (leased) Evansville, IN........................... 188,000 Richmond, IN............................. 462,000 The Company owns and leases certain other warehouse facilities that are detached from its manufacturing facilities. |
Results of Operations The following table sets forth certain income statement data for the Company, expressed as a percentage of net sales, for each of the periods presented, and should be read in conjunction with the consolidated financial statements of the Company and related notes included elsewhere in this Annual Report on Form 10-K. Year Ended December 31, ----------------------- 2000 1999 1998 ---- ---- ---- Operating Data: Net sales: Metal food containers ........................... 73.5% 75.6% 74.8% Plastic containers .............................. 19.9 17.1 17.7 Specialty packaging ............................ 6.6 7.3 7.5 ----- ----- ----- Total ........................................ 100.0 100.0 100.0 Cost of goods sold ................................ 87.8 87.6 87.4 ----- ----- ----- Gross Profit ...................................... 12.2 12.4 12.6 Selling, general and administrative expenses ...... 3.8 3.9 3.9 Rationalization charges ........................... -- 1.9 -- ----- ----- ----- Income from operations ............................ 8.4 6.6 8.7 Interest and other debt expense ................... 4.9 4.6 4.6 ----- ----- ----- Income before income taxes and equity in losses of affiliate ............................. 3.5 2.0 4.1 Provision for income taxes ........................ 1.4 0.7 1.5 ----- ----- ----- Income before equity in losses of affiliate and extraordinary item .......................... 2.1 1.3 2.6 Equity in losses of affiliate ..................... 0.2 -- -- ----- ----- ----- Income before extraordinary item .................. 1.9 1.3 2.6 Extraordinary item - loss on early extinguishment of debt, net of income taxes .................... 0.2 -- -- ----- ----- ----- Net income ........................................ 1.7% 1.3% 2.6% ===== ===== ===== Summary historical results for the Company's three business segments, metal food containers, plastic containers and specialty packaging, for the years ended December 31, 2000, 1999, and 1998 are provided below. |
In addition to its operating cash needs, the Company believes its cash requirements over the next few years (without taking into account the effect of future acquisitions) will consist primarily of (i) annual capital expenditures of $85 to $90 million, (ii) annual principal amortization payments of bank term loans under its senior secured credit facilities beginning in 2001 of approximately $44.6 million, $60.6 million and $71.2 million, (iii) expected total expenditures of approximately $11.0 million over the next few years associated with plant rationalizations, employee severance and workforce reductions and other plant exit costs, (iv) the Company's interest requirements, including interest on revolving loans (the principal amount of which will vary depending upon seasonal requirements and acquisitions) and bank term loans under its senior secured credit facilities, most of which bear fluctuating rates of interest, and the 9% Debentures, and (v) payments of approximately $20.0 million for federal and state tax liabilities in 2001, which will increase annually thereafter. |
Important factors that could cause the actual results of operations or financial condition of the Company to differ from those expressed or implied in these forward-looking statements include, but are not necessarily limited to, the ability of the Company to effect cost reduction initiatives and realize benefits from capital investments; the ability of the Company to locate or acquire suitable acquisition candidates at reasonable cash flow multiples and on acceptable terms; the Company's ability to assimilate the operations of its acquired businesses into its existing operations; the Company's ability to generate free cash flow to invest in its business and service its indebtedness; limitations and restrictions contained in the Company's instruments and agreements governing its indebtedness; the ability of the Company to retain sales with its major customers; the size and quality of the vegetable, tomato and fruit harvests in the midwest and west regions of the United States; changes in the pricing and availability to the Company of raw materials or the Company's ability generally to pass raw material price increases through to its customers; changes in consumer preferences for different packaging products; competitive pressures, including new product developments or changes in competitors' pricing for products; changes in governmental regulations or enforcement practices; changes in general economic conditions, such as fluctuations in interest rates and changes in energy costs (such as natural gas and electricity); changes in labor relations and costs; and other factors described elsewhere in this Annual Report on Form 10-K or in the Company's other filings with the Securities and Exchange Commission. |
Signature Title Date - --------- ----- ---- Chairman of the Board and /s/ R. Philip Silver Co-Chief Executive Officer - -------------------- (Principal Executive Officer) March 29, 2001 (R. Philip Silver) /s/ D. Greg Horrigan President, Co-Chief Executive - -------------------- Officer and Director March 29, 2001 (D. Greg Horrigan) /s/ Leigh J. Abramson March 29, 2001 - -------------------- Director (Leigh J. Abramson) /s/ Thomas M. Begel March 29, 2001 - -------------------- Director (Thomas M. Begel) /s/ Jeffrey C. Crowe March 29, 2001 - -------------------- Director (Jeffrey C. Crowe) /s/ James S. Hoch March 29, 2001 - --------------------- Director (James S. Hoch) Executive Vice President, Chief /s/ Harley Rankin, Jr. Financial Officer and Treasurer - --------------------- (Principal Financial Officer) March 29, 2001 (Harley Rankin, Jr.) /s/ Nancy Merola Vice President and Controller - ---------------------- (Principal Accounting Officer) March 29, 2001 (Nancy Merola) REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Silgan Holdings Inc. We have audited the accompanying consolidated financial statements and schedules of Silgan Holdings Inc. as listed in the accompanying index to the financial statements (Item 14(a)). |
Long-Term Debt Long-term debt at December 31 is as follows: 2000 1999 ---- ---- (Dollars in thousands) Bank Debt Bank Revolving Loans ................. $ 367,400 $125,200 Bank A Term Loans .................... 159,218 194,047 Bank B Term Loans .................... 188,542 190,495 Canadian Bank Facility ............... 12,850 14,312 ---------- -------- Total bank debt .................... 728,010 524,054 Subordinated Debt 9% Senior Subordinated Debentures .... 300,000 300,000 13 1/4% Subordinated Debentures ...... -- 56,206 Other ................................ 3,465 3,000 ---------- -------- Total subordinated debt ............ 303,465 359,206 ---------- -------- Total Debt .............................. 1,031,475 883,260 Less current portion ................. 44,948 39,351 ---------- -------- $ 986,527 $843,909 ========== ======== The aggregate annual maturities of long-term debt at December 31, 2000 are as follows (dollars in thousands): 2001........... $ 44,948 2002........... 60,679 2003........... 440,168 2004........... 1,954 2005........... 180,726 Thereafter..... 303,000 ---------- $1,031,475 ========== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Note 9. |
Significant components of the Company's deferred tax assets and liabilities at December 31 are as follows: 2000 1999 ---- ---- (Dollars in thousands) Deferred tax assets: Book reserves not yet deductible for tax purposes ..................................... $ 54,886 $ 66,675 Net operating loss carryforwards ................ 55,356 53,534 AMT and other credit carryforwards .............. 14,635 9,016 Other ........................................... 2,609 3,527 -------- -------- Total deferred tax assets .................... 127,486 132,752 Deferred tax liabilities: Tax over book depreciation ...................... 106,224 97,174 Book over tax basis of assets acquired .......... 18,785 18,349 Other ........................................... 2,843 2,636 -------- -------- Total deferred tax liabilities ............... 127,852 118,159 -------- -------- Net deferred tax (liability) asset ................ $ (366) $ 14,593 ======== ======== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Note 13. |
Stock Option Plan (continued) The following is a summary of stock option activity for years ended December 31, 2000, 1999 and 1998: Weighted Average Options Exercise Price ------- ---------------- Options outstanding at December 31, 1997 ..... 1,940,103 $ 3.71 ========= Granted ................................... 95,000 $33.92 Exercised ................................. (1,100,580) 2.13 --------- Options outstanding at December 31, 1998 ..... 934,523 8.64 ========= Granted ................................... 115,000 $17.61 Exercised ................................. (192,255) 2.67 --------- Options outstanding at December 31, 1999 ..... 857,268 11.17 ========= Granted ................................... 823,900 $13.62 Exercised ................................. (256,203) 2.00 Canceled .................................. (236,500) 21.88 --------- Options outstanding at December 31, 2000 ..... 1,188,465 12.71 ========= At December 31, 2000, 1999 and 1998, the remaining contractual life of options outstanding was 7.5 years, 4.8 years and 4.8 years, respectively, and there were 360,065, 581,488 and 645,455 options exercisable with weighted average exercise prices of $8.12, $5.16 and $3.12, respectively. |
SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Note 18. Business Segment Information (continued) Reportable business segment information for each of the past three years for the Company's three business segments are as follows: SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Note 18. Business Segment Information (continued) Total segment profit is reconciled to income before income taxes as follows: 2000 1999 1998 ---- ---- ---- (Dollars in thousands) Total segment profit ................. $157,102 $160,441 $154,264 Interest and other debt expense ...... 91,178 86,057 81,456 Rationalization charges .............. -- 36,149 -- -------- -------- -------- Income before income taxes ........ $ 65,924 $ 38,235 $ 72,808 ======== ======== ======== Total segment assets are reconciled to total assets as follows: 2000 1999 1998 ---- ---- ---- (Dollars in thousands) Total segment assets .............. $1,381,375 $1,170,303 $1,207,691 Deferred tax asset ................ -- 14,593 15,902 Other assets ...................... 2,449 389 452 ---------- ---------- ---------- Total assets ................... $1,383,824 $1,185,285 $1,224,045 ========== ========== ========== Financial information relating to the Company's operations by geographic area is as follows: 2000 1999 1998 ---- ---- ---- (Dollars in thousands) Net Sales: United States .................. $1,823,349 $1,845,180 $1,725,902 Canada ......................... 54,148 46,898 42,843 ---------- ---------- ---------- Total net sales ............. $1,877,497 $1,892,078 $1,768,745 ========== ========== ========== Long-Lived Assets: United States .................. $ 838,180 $ 729,628 $ 762,596 Canada ......................... 24,371 23,438 18,052 ---------- ---------- ---------- Total long-lived assets ..... $ 862,551 $ 753,066 $ 780,648 ========== ========== ========== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000, 1999 and 1998 Note 18. Business Segment Information (continued) Net sales are attributed to the country from which the product was manufactured and shipped. |
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT SILGAN HOLDINGS INC. (Parent Company) CONDENSED BALANCE SHEETS December 31, 2000 and 1999 (Dollars in thousands) 2000 1999 ---- ---- Assets Current assets: Cash and cash equivalents ....................... $ 32 $ 49 Notes receivable - subsidiaries ................. 41,758 36,783 Interest receivable - subsidiaries .............. 6,665 10,088 Other current assets ............................ 20 27 -------- --------- Total current assets .......................... 48,475 46,947 Notes receivable-subsidiaries ...................... 606,002 703,965 Deferred tax asset ................................. 81,296 80,201 Other assets ....................................... 2,398 312 -------- --------- $738,171 $ 831,425 ======== ========= Liabilities and Deficiency in Stockholders' Equity Current liabilities: Current portion of long-term debt ............... $ 41,758 $ 36,783 Accrued interest payable ........................ 6,665 10,088 Accounts payable and accrued expenses ........... 881 1,267 -------- --------- Total current liabilities ..................... 49,304 48,138 Excess of distributions over investment in subsidiaries ................................. 75,425 114,703 Long-term debt ..................................... 606,002 703,965 Other liabilities .................................. 27,820 13,353 Deficiency in stockholders' equity: Common stock .................................... 204 201 Paid-in capital ................................. 118,099 118,666 Retained earnings (accumulated deficit) ......... (76,702) (108,010) Accumulated other comprehensive income (loss) ... (1,588) (273) Treasury stock at cost (2,685,475 and 2,585,475 shares, respectively) .............. (60,393) (59,318) -------- --------- Total deficiency in stockholders' equity ...... (20,380) (48,734) -------- --------- $738,171 $ 831,425 ======== ========= See notes to condensed financial statements. |
Since its origin in 1987, the Company has completed the following acquisitions: Acquired Business Year Products ----------------- ---- -------- Nestle's metal container manufacturing 1987 Metal food containers division Monsanto Company's plastic container business 1987 Plastic containers Fort Madison Can Company of Dial 1988 Metal food containers Seaboard Carton Division of Nestle 1988 Paperboard containers Aim Packaging, Inc. 1989 Plastic containers Fortune Plastics Inc. 1989 Plastic containers Express Plastic Containers Limited 1989 Plastic containers Amoco Container Company 1989 Plastic containers Del Monte's U.S. can manufacturing operations 1993 Metal food containers Food Metal and Specialty business of ANC 1995 Metal food containers, metal caps and closures and Omni plastic containers Finger Lakes Packaging Company, Inc., a 1996 Metal food containers subsidiary of Agrilink Alcoa's North American aluminum roll-on 1997 Aluminum roll-on closures closure business ("Roll-on Closures") Rexam plc's North American plastic container 1997 Plastic containers and business closures Winn Packaging Co. ("Winn") 1998 Plastic containers Campbell's steel container manufacturing 1998 Metal food containers business Clearplass Containers, Inc. ("Clearplass") 1998 Plastic containers Item 2. |
Vernon, MO...................... 100,000 Northtown, MO....................... 111,700 (leased) St. Joseph, MO...................... 173,700 Maxton, NC.......................... 231,800 (leased) Edison, NJ.......................... 260,000 Lyons, NY........................... 149,700 Napoleon, OH........................ 339,600 (leased) Crystal City, TX.................... 26,000 (leased) Paris, TX........................... 266,300 (leased) Toppenish, WA....................... 105,000 Menomonee Falls, WI................. 116,000 Menomonie, WI....................... 129,400 (leased) Oconomowoc, WI...................... 105,200 Plover, WI.......................... 91,400 (leased) Waupun, WI.......................... 212,000 Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 2000 for its plastic container business: Approximate Building Area Location (square feet) -------- ------------- Sheffield, AL....................... 20,200 (leased) Anaheim, CA......................... 127,000 (leased) Deep River, CT...................... 140,000 Monroe, GA.......................... 139,600 Norcross, GA........................ 59,000 (leased) Flora, IL........................... 56,400 Ligonier, IN........................ 469,000 (276,000 leased) Seymour, IN......................... 431,000 Albia, IA........................... 53,000 (leased) Franklin, KY........................ 122,000 (leased) Penn Yan, NY........................ 100,000 Fairfield, OH....................... 185,000 (leased) Port Clinton, OH.................... 257,400 (leased) Langhorne, PA....................... 156,000 (leased) Mississauga, Ontario................ 75,000 (leased) Mississauga, Ontario................ 62,600 (leased) Scarborough, Ontario................ 117,000 Lachine, Quebec..................... 113,300 (leased) Lachine, Quebec..................... 77,800 (leased) Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 2000 for its specialty packaging business: Approximate Building Area Location (square feet) -------- ------------- Norwalk, CT......................... 14,400 (leased) Broadview, IL....................... 85,000 Woodstock, IL....................... 186,700 (leased) Evansville, IN...................... 188,000 Richmond, IN........................ 462,000 The Company owns and leases certain other warehouse facilities that are detached from its manufacturing facilities. |
Year Ended December 31, ----------------------- 1999 1998 1997 ---- ---- ---- (Dollars in millions) Net sales: Metal food container business ...... $1,401.1 $1,299.0 $1,134.5 Plastic container business ......... 321.2 310.9 263.3 Specialty packaging business ....... 134.5 128.8 113.6 -------- -------- -------- Consolidated .................... $1,856.8 $1,738.7 $1,511.4 ======== ======== ======== Income from operations: Metal food container business ...... $ 120.7 $ 116.1 $ 118.5 Plastic container business ......... 38.6 38.0 28.5 Specialty packaging business ....... 5.0 3.3 1.9 Rationalization charges(1) ......... (36.1) -- -- Non-cash stock option charge(2) .... -- -- (22.5) Corporate expense .................. (3.9) (3.1) (1.8) -------- -------- -------- Consolidated .................... $ 124.3 $ 154.3 $ 124.6 ======== ======== ======== - ------------ (1) Included in income from operations of the Company in 1999 are an aggregate of $36.1 million of rationalization charges, consisting of a charge of $11.9 million relating to the Company's decision to close two manufacturing facilities of the metal food container business (which includes $7.3 million for the non-cash write-down in carrying value of assets determined to be impaired) and a non-cash charge of $24.2 million for the excess of carrying value over estimated realizable value of machinery and equipment of the metal food container business which had become obsolete or surplus. |
In addition to its operating cash needs, the Company believes its cash requirements over the next several years (without taking into account the effect of future acquisitions or the possible redemption of the 13-1/4% Exchange Debentures) will consist primarily of (i) annual capital expenditures of $80 to $85 million, (ii) annual principal amortization payments of bank term loans under its senior secured credit facilities beginning in 2000 of approximately $39.4 million, $44.7 million, $60.7 million and $196.6 million, (iii) expected total expenditures of approximately $22.1 million over the next few years associated with plant rationalizations, employee severance and workforce reductions and other plant exit costs, (iv) the Company's interest requirements, including interest on revolving loans (the principal amount of which will vary depending upon seasonal requirements and acquisitions) and bank term loans under its senior secured credit facilities, most of which bear fluctuating rates of interest, the 9% Debentures and the 13-1/4% Exchange Debentures (for which the Company intends to make future interest payments in cash), and (v) payments of approximately $14 million for federal and state tax liabilities in 2000, which will increase annually thereafter. |
Important factors that could cause the actual results of operations or financial condition of the Company to differ from those expressed or implied in these forward-looking statements include, but are not necessarily limited to, the ability of the Company to effect cost reduction initiatives and realize benefits from capital investments; the ability of the Company to locate or acquire suitable acquisition candidates at reasonable cash flow multiples and on acceptable terms; the Company's ability to assimilate the operations of its acquired businesses into its existing operations; the Company's ability to generate free cash flow to invest in its business and service its indebtedness; limitations and restrictions contained in the Company's instruments and agreements governing its indebtedness; the ability of the Company to retain sales with its major customers; the size and quality of the vegetable, tomato and fruit harvests in the midwest and west regions of the United States; changes in the pricing and availability to the Company of raw materials or the Company's ability generally to pass raw material price increases through to its customers; changes in consumer preferences for different packaging products; competitive pressures, including new product developments or changes in competitors' pricing for products; changes in governmental regulations or enforcement practices; changes in general economic conditions, such as fluctuations in interest rates; changes in labor relations and costs; and other factors described elsewhere in this Annual Report on Form 10-K or in the Company's other filings with the Securities and Exchange Commission. |
Signature Title Date - --------- ----- ---- Chairman of the Board and /s/ R. Philip Silver Co-Chief Executive Officer - -------------------- (Principal Executive Officer) March 14, 2000 (R. Philip Silver) /s/ D. Greg Horrigan President, Co-Chief Executive - -------------------- Officer and Director March 14, 2000 (D. Greg Horrigan) /s/ Leigh J. Abramson March 14, 2000 - -------------------- Director (Leigh J. Abramson) /s/ Thomas M. Begel March 14, 2000 - -------------------- Director (Thomas M. Begel) /s/ Jeffrey C. Crowe March 14, 2000 - -------------------- Director (Jeffrey C. Crowe) /s/ Michael M. Janson March 14, 2000 - --------------------- Director (Michael M. Janson) Executive Vice President, Chief /s/ Harley Rankin, Jr. Financial Officer and Treasurer - --------------------- (Principal Financial Officer) March 14, 2000 (Harley Rankin, Jr.) /s/ Stephen J. Sweeney Vice President and Controller - ---------------------- (Principal Accounting Officer) March 14, 2000 (Stephen J. Sweeney) REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Silgan Holdings Inc. We have audited the accompanying consolidated financial statements and schedules of Silgan Holdings Inc. as listed in the accompanying index to the financial statements (Item 14(a)). |
Stock Option Plan (continued) The following is a summary of stock option activity for each of the three years in the period ended December 31, 1999: Number of Weighted Average Shares Exercise Price --------- ---------------- Options outstanding December 31, 1996 ........... 1,820,103 $ 2.18 Granted .................................... 120,000 26.91 Exercised .................................. -- -- Canceled ................................... -- -- --------- Options outstanding December 31, 1997 ........... 1,940,103 3.71 Granted .................................... 95,000 33.92 Exercised .................................. (1,100,580) 2.13 Canceled ................................... -- -- --------- Options outstanding December 31, 1998 ........... 934,523 8.64 Granted .................................... 115,000 17.61 Exercised .................................. (192,255) 2.67 Canceled ................................... -- -- --------- Options outstanding December 31, 1999 ........... 857,268 $11.17 ========= The number of options exercisable was 581,488, 645,455, and 1,578,952; the weighted average exercise price was $5.16, $3.12, and $2.08; and the remaining contractual life of options outstanding was 4.8 years, 4.8 years, and 3.7 years at December 31, 1999, 1998 and 1997, respectively. |
Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (dollars and shares in thousands, except per share amounts): 1999 1998 1997 ---- ---- ---- Numerator: Income before extraordinary charges ....... $23,930 $45,924 $ 50,566 Extraordinary charges ..................... -- -- (16,382) Preferred stock dividend requirement ...... -- -- (3,224) ------- ------- -------- Numerator for basic and dilutive earnings per share - income available to common stockholders ........ $23,930 $45,924 $ 30,960 ======= ======= ======== Denominator: Denominator for basic earnings per share - weighted average shares ......... 17,706 19,003 18,397 Effect of dilutive securities: Employee stock options .................. 492 948 1,326 ------- -------- -------- Denominator for diluted earnings per share - adjusted weighted average shares .......................... 18,198 19,951 19,723 ======= ======= ======== Basic earnings per common share: Income before extraordinary charges ........ $1.35 $2.41 $ 2.75 Extraordinary charges ...................... -- -- (0.89) Preferred stock dividend requirement ....... -- -- (0.18) ----- ----- ------ Net income per basic common share .......... $1.35 $2.41 $ 1.68 ===== ===== ====== Diluted earnings per common share: Income before extraordinary charges ........ $1.32 $2.30 $ 2.56 Extraordinary charges ...................... -- -- (0.83) Preferred stock dividend requirement ....... -- -- (0.16) ----- ----- ------ Net income per diluted common share ........ $1.32 $2.30 $ 1.57 ===== ===== ====== Options to purchase 215,000 to 330,000 shares of Common Stock at prices ranging from $17.00 to $36.75 per share for 1999 and 140,000 shares of Common Stock at prices ranging from $28.875 to $36.75 per share for 1998, respectively, were outstanding but were not included in the computation of diluted earnings per share because the exercise prices for such options were greater than the average market price of the Common Stock and, therefore, the effect would be anti-dilutive. |
SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1999, 1998 and 1997 16. Business Segment Information (continued) Total segment profit is reconciled to income before income taxes as follows: 1999 1998 1997 ---- ---- ---- (Dollars in millions) Total segment profit ................. $160.4 $154.3 $147.1 Interest expense and other related financing costs ........... 86.1 81.5 80.7 Rationalization charges .............. 36.1 -- -- Non-cash stock option charge ......... -- -- 22.5 ------ ------ ------ Income before income taxes ........ $ 38.2 $ 72.8 $ 43.9 ====== ====== ====== Total segment assets are reconciled to total assets as follows: 1999 1998 1997 ---- ---- ---- (Dollars in millions) Total segment assets ................. $1,170.3 $1,207.7 $1,018.0 Deferred tax asset ................... 14.6 15.9 32.0 Other assets ......................... 0.4 0.4 0.6 -------- -------- -------- Total assets ...................... $1,185.3 $1,224.0 $1,050.6 ======== ======== ======== Financial information relating to the Company's operations by geographic area is as follows: Net Sales -------------------------- 1999 1998 1997 ---- ---- ---- (Dollars in millions) United States ........................ $1,810.5 $1,696.4 $1,476.5 Canada ............................... 46.3 42.3 34.9 -------- -------- -------- Consolidated ...................... $1,856.8 $1,738.7 $1,511.4 ======== ======== ======== Long-Lived Assets ------------------------- 1999 1998 1997 ---- ---- ---- (Dollars in millions) United States ........................ $729.7 $762.5 $579.2 Canada ............................... 23.4 18.1 19.4 ------ ------ ------ Consolidated ...................... $753.1 $780.6 $598.6 ====== ====== ====== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1999, 1998 and 1997 16. Business Segment Information (continued) Net sales are attributed to the country from which the product was manufactured and shipped. |
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT SILGAN HOLDINGS INC. (Parent Company) CONDENSED BALANCE SHEETS (Dollars in thousands) December 31, 1999 1998 ---- ---- ASSETS - ------ Current assets: Cash and cash equivalents ....................... $ 49 $ 22 Notes receivable - subsidiaries ................. 36,783 33,987 Interest receivable - subsidiaries .............. 10,088 9,816 Other current assets ............................ 27 25 --------- --------- Total current assets .......................... 46,947 43,850 Notes receivable-subsidiaries ...................... 703,965 738,568 Deferred tax asset ................................. 80,201 77,966 Other non-current assets ........................... 312 403 --------- --------- $ 831,425 $ 860,787 ========= ========= Current liabilities: Current portion of term debt .................... $ 36,783 $ 33,987 Accrued interest payable ........................ 10,088 9,816 Accounts payable and accrued expenses ........... 1,267 858 --------- --------- Total current liabilities ..................... 48,138 44,661 Excess of distributions over investment in subsidiaries ................................... 114,703 121,810 Long-term debt ..................................... 703,965 738,568 Other long-term liabilities ........................ 13,353 13,056 Deficiency in stockholders' equity: Common stock .................................... 201 199 Additional paid-in capital ...................... 118,666 117,911 Accumulated deficit ............................. (108,010) (131,940) Accumulated other comprehensive loss ............ (273) (723) Treasury stock at cost, 2,585,475 and 1,683,503 shares in 1999 and 1998, respectively .................................. (59,318) (42,755) --------- --------- Total deficiency in stockholders' equity ...... (48,734) (57,308) --------- --------- $ 831,425 $ 860,787 ========= ========= See notes to condensed financial statements. |
Since its origin in 1987, the Company has completed the following acquisitions: Acquired Business Year Products ----------------- ---- -------- Nestle's metal container manufacturing 1987 Metal food containers division Monsanto Company's plastic container 1987 Plastic containers business Fort Madison Can Company of Dial 1988 Metal food containers Seaboard Carton Division of Nestle 1988 Paper containers Aim Packaging, Inc. 1989 Plastic containers Fortune Plastics Inc. 1989 Plastic containers Express Plastic Containers Limited 1989 Plastic containers Amoco Container Company 1989 Plastic containers Del Monte's U.S. can manufacturing operations 1993 Metal food containers Food Metal and Specialty business of ANC 1995 Metal food containers, metal caps and closures and Omni plastic containers Finger Lakes Packaging Company, Inc. 1996 Metal food containers ("Finger Lakes"), a subsidiary of Agrilink Alcoa's North American aluminum roll-on 1997 Aluminum roll-on closures closure business Rexam's North American plastic container 1997 Plastic containers and business("Rexam Plastics") closures Winn Packaging Co. 1998 Plastic containers Campbell's steel container manufacturing 1998 Metal food containers business Clearplass Containers, Inc. 1998 Plastic containers Recent Developments On August 1, 1998, the Company acquired Clearplass, a manufacturer of rigid PET plastic containers primarily serving the personal care and pharmaceutical industries with sales of approximately $23 million in its fiscal year ending June 30, 1998. |
Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 1999 for its metal food container business: Approximate Building Area Location (square feet) -------- ------------- Tarrant, AL............................ 89,100 (leased) City of Industry, CA................... 70,000 (leased) Kingsburg, CA.......................... 35,600 (leased) Modesto, CA............................ 37,800 (leased) Modesto, CA............................ 128,000 (leased) Modesto, CA............................ 150,000 (leased) Riverbank, CA.......................... 167,000 Sacramento, CA......................... 284,900 (leased) San Leandro, CA........................ 73,000 (leased) Stockton, CA........................... 243,500 Hoopeston, IL.......................... 323,000 Rochelle, IL........................... 175,000 Waukegan, IL........................... 40,000 (leased) Hammond, IN............................ 158,000 (leased) Laporte, IN............................ 144,000 (leased) Fort Madison, IA....................... 65,000 Ft. |
Vernon, MO......................... 100,000 Northtown, MO.......................... 111,700 (leased) St. Joseph, MO......................... 173,700 Maxton, NC............................. 231,800 (leased) Edison, NJ............................. 260,000 Lyons, NY.............................. 149,700 Napoleon, OH........................... 339,600 (leased) Crystal City, TX....................... 26,000 (leased) Paris, TX.............................. 266,300 (leased) Toppenish, WA.......................... 105,000 Vancouver, WA.......................... 127,000 (leased) Menomonee Falls, WI.................... 116,000 Menomonie, WI.......................... 187,500 (leased) Oconomowoc, WI......................... 105,200 Plover, WI............................. 91,400 (leased) Waupun, WI............................. 212,000 Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 1999 for its plastic container business: Approximate Building Area Location (square feet) -------- ------------- Sheffield, AL.......................... 20,200 (leased) Anaheim, CA............................ 127,000 (leased) Deep River, CT......................... 140,000 Monroe, GA............................. 139,600 Norcross, GA........................... 59,000 (leased) Flora, IL.............................. 56,400 Ligonier, IN........................... 469,000 (276,000 leased) Seymour, IN............................ 406,000 Albia, IA.............................. 53,000 (leased) Franklin, KY........................... 122,000 (leased) Penn Yan, NY........................... 100,000 Fairfield, OH.......................... 185,000 (leased) Port Clinton, OH....................... 257,400 (leased) Langhorne, PA.......................... 156,000 (leased) Mississauga, Ontario................... 75,000 (leased) Mississauga, Ontario................... 62,600 (leased) Scarborough, Ontario................... 117,000 Lachine, Quebec........................ 113,300 (leased) Lachine, Quebec........................ 77,820 (leased) Below is a list of the Company's operating facilities, including attached warehouses, as of March 1, 1999 for its specialty packaging business: Approximate Building Area Location (square feet) -------- ------------- Norwalk, CT............................ 14,400 (leased) Broadview, IL.......................... 85,000 Woodstock, IL.......................... 186,650 (leased) Evansville, IN......................... 188,000 Richmond, IN........................... 462,000 The Company owns and leases certain other warehouse facilities that are detached from its manufacturing facilities. |
Year Ended December 31, ----------------------- 1998 1997 1996 ---- ---- ---- (Dollars in millions) Net sales: Metal food container business ............ $1,299.0 $1,134.5 $1,098.6 Plastic container business ............... 310.9 263.3 216.4 Specialty packaging business ............. 128.8 113.6 90.7 -------- -------- -------- Consolidated .......................... $1,738.7 $1,511.4 $1,405.7 ======== ======== ======== Income from operations: Metal food container business ............ $ 116.1 $ 118.5 $ 95.6 Plastic container business ............... 38.0 28.5 18.4 Specialty packaging business ............. 3.3 1.9 10.5 Non-cash stock option charge(1) .......... -- (22.5) -- Corporate expense ........................ (3.1) (1.8) (1.2) -------- -------- -------- Consolidated .......................... $ 154.3 $ 124.6 $ 123.3 ======== ======== ======== - ------------ (1) In connection with the IPO, the Company recognized a non-cash charge of $22.5 million for the excess of the fair market value over the grant price of stock options converted from stock option plans of Holdings' subsidiaries to Holdings' stock option plan at the time of the IPO. |
During 1996, cash generated from operations of $125.2 million, borrowings of $125.0 million of term loans under the previous credit agreement, net proceeds of $47.8 million from the sale by Holdings of its preferred stock (which has subsequently been exchanged for the Exchange Debentures), net borrowings of revolving loans under the previous credit agreement of $20.7 million, proceeds of $1.6 million from the sale of assets, and $1.1 million of cash balances were used to fund capital expenditures of $56.9 million, the purchase of Finger Lakes for $29.9 million and the purchase of AN Can's St. Louis facility for $13.1 million, the redemption of $154.4 million of Discount Debentures, the repayment of $29.5 million of term loans under the previous credit agreement, the payment of $1.8 million of financing costs associated with the borrowing of additional term loans under the previous credit agreement, and the purchase for $35.8 million of Holdings' Class B common stock held by Mellon Bank N.A., as trustee for First Plaza Group Trust. |
In addition to its operating cash needs, the Company believes its cash requirements over the next several years (without taking into account the effect of future acquisitions) will consist primarily of (i) annual capital expenditures of $80 to $85 million, (ii) annual principal amortization payments of bank term loans under its senior secured credit facilities beginning in 1999 of approximately $36.1 million, $39.2 million, $44.5 million, $60.5 million and $207.0 million, (iii) expected total expenditures of approximately $24.7 million over the next few years associated with plant rationalizations, employee severance and workforce reductions and other plant exit costs, (iv) the Company's interest requirements, including interest on revolving loans (the principal amount of which will vary depending upon seasonal requirements and acquisitions) and bank term loans under its senior secured credit facilities, most of which bear fluctuating rates of interest, the 9% Debentures and the Exchange Debentures (for which the Company intends to make future interest payments in cash), and (v) payments of approximately $18.0 million for federal and state tax liabilities in 1999, which will increase annually thereafter. |
Important factors that could cause the actual results of operations or financial condition of the Company to differ from those expressed or implied in these forward-looking statements include, but are not necessarily limited to, the ability of the Company to effect cost reduction initiatives and realize benefits from capital investments; the ability of the Company to locate or acquire suitable acquisition candidates on acceptable terms; the Company's ability to assimilate the operations of its acquired businesses into its existing operations; the Company's ability to generate free cash flow to invest in its business and service its indebtedness; limitations and restrictions contained in the Company's instruments and agreements governing its indebtedness; the ability of the Company to retain sales with its major customers; the size and quality of the vegetable, tomato and fruit harvests in the midwest and west regions of the United States; changes in the pricing and availability to the Company of raw materials or the Company's ability generally to pass raw material price increases through to its customers; changes in consumer preferences for different packaging products; competitive pressures, including new product developments or changes in competitors' pricing for products; changes in governmental regulations or enforcement practices; changes in general economic conditions, such as fluctuations in interest rates; changes in labor relations and costs; and other factors described elsewhere in this Annual Report on Form 10-K or in the Company's other filings with the Securities and Exchange Commission. |
Signature Title Date - --------- ----- ---- Chairman of the Board and Co-Chief Executive Officer /s/ R. Philip Silver (Principal Executive Officer) March 24, 1999 - -------------------- (R. Philip Silver) President, Co-Chief Executive /s/ D. Greg Horrigan Officer and Director March 24, 1999 - -------------------- (D. Greg Horrigan) /s/ Leigh J. Abramson Director March 24, 1999 - -------------------- (Leigh J. Abramson) /s/ Thomas M. Begel Director March 24, 1999 - -------------------- (Thomas M. Begel) /s/ Jeffrey C. Crowe Director March 24, 1999 - -------------------- (Jeffrey C. Crowe) /s/ Michael M. Janson Director March 24, 1999 - --------------------- (Michael M. Janson) Executive Vice President, Chief Financial Officer and Treasurer /s/ Harley Rankin, Jr. (Principal Financial Officer) March 24, 1999 - --------------------- (Harley Rankin, Jr.) Vice President, Controller and Assistant Treasurer /s/ Harold J. Rodriguez, Jr. (Principal Accounting Officer) March 24, 1999 - ------------------------- (Harold J. Rodriguez, Jr.) REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Silgan Holdings Inc. We have audited the accompanying consolidated financial statements and schedules of Silgan Holdings Inc. as listed in the accompanying index to the financial statements (Item 14(a)). |
Stock Option Plans (continued) The following is a summary of stock option activity for each of the three years in the period ended December 31, 1998: Number of Weighted Average Shares Exercise Price Options outstanding December 31, 1995 .. 1,820,103 $ 2.18 Granted ................................ -- -- Exercised .............................. -- -- Canceled ............................... -- -- --------- Options outstanding December 31, 1996 .. 1,820,103 2.18 Granted ................................ 120,000 26.91 Exercised .............................. -- -- Canceled ............................... -- -- --------- Options outstanding December 31, 1997 .. 1,940,103 3.71 Granted ................................ 95,000 33.92 Exercised .............................. (1,100,580) 2.13 Canceled ............................... -- -- --------- Options outstanding December 31, 1998 .. 934,523 $ 8.64 ========= The number of options exercisable was 645,455, 1,578,952, and 1,465,098; the weighted average exercise price was $3.12, $2.08, and $2.03; and the remaining contractual life of options outstanding was 4.8 years, 3.7 years, and 4.3 years at December 31, 1998, 1997, and 1996, respectively. |
SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1998, 1997 and 1996 17. Business Segment Information (continued) Total segment profit is reconciled to income before income taxes as follows: 1998 1997 1996 ---- ---- ---- (Dollars in millions) Total segment profit ................... $154.3 $147.1 $124.1 Interest expense and other related financing costs ...................... 81.5 80.7 89.4 Non-cash stock option charge ........... -- 22.5 0.8 ------ ------ ------ Income before income taxes .......... $ 72.8 $ 43.9 $ 33.9 ====== ====== ====== Total segment assets are reconciled to total assets as follows: 1998 1997 1996 ---- ---- ---- (Dollars in millions) Total segment assets ................... $1,207.7 $1,018.0 $909.2 Deferred tax asset ..................... 15.9 32.0 -- Other assets ........................... 0.4 0.6 4.3 -------- -------- ------ Total assets ........................ $1,224.0 $1,050.6 $913.5 ======== ======== ====== Financial information relating to the Company's operations by geographic area is as follows: Net Sales ----------------------------- 1998 1997 1996 ---- ---- ---- (Dollars in millions) United States .......................... $1,696.4 $1,476.5 $1,392.3 Canada ................................. 42.3 34.9 13.4 -------- -------- -------- Consolidated ........................ $1,738.7 $1,511.4 $1,405.7 ======== ======== ======== Long Lived Assets ------------------------------ 1998 1997 1996 ---- ---- ---- (Dollars in millions) United States .......................... $ 759.0 $ 579.2 $ 571.3 Canada ................................. 18.1 19.4 5.6 -------- -------- -------- Consolidated ........................ $ 777.1 $ 598.6 $ 576.9 ======== ======== ======== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1998, 1997 and 1996 17. Business Segment Information (continued) Net sales are attributed to the country from which the product was manufactured and shipped. |
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT SILGAN HOLDINGS INC. (Parent Company) CONDENSED BALANCE SHEETS (Dollars in thousands) December 31, 1998 1997 ---- ---- ASSETS - ------ Current assets: Cash and cash equivalents ......................... $ 22 $ (7) Notes receivable - subsidiaries ................... 33,987 18,365 Interest receivable - subsidiaries ................ 9,816 10,941 Other current assets .............................. 25 20 -------- -------- Total current assets ............................ 43,850 29,319 Notes receivable-subsidiaries ..................... 738,568 772,555 Deferred tax asset ................................ 77,966 74,353 Other assets ...................................... 403 493 -------- -------- $860,787 $876,720 ======== ======== LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY - -------------------------------------------------- Current liabilities: Current portion of term loans ..................... $ 33,987 $ 18,365 Accrued interest payable .......................... 9,816 10,941 Accounts payable and accrued expenses ............. 858 1,458 -------- -------- Total current liabilities ....................... 44,661 30,764 Excess of distributions over investment in subsidiaries .................................. 121,810 125,285 Long-term debt ...................................... 738,568 772,555 Other long-term liabilities ......................... 13,056 15,364 Deficiency in stockholders' equity: Common stock ...................................... 199 189 Additional paid-in capital ........................ 117,911 110,935 Accumulated deficit ............................... (131,940) (177,864) Accumulated other comprehensive loss .............. (723) (508) Treasury stock at cost, 1,683,503 shares in 1998 .. (42,755) -- -------- -------- Total deficiency in stockholders' equity ........ (57,308) (67,248) -------- -------- $860,787 $876,720 ======== ======== See Notes to Condensed Financial Statements. |
Long-Term Debt Debt obligations of the Parent Company at December 31, 1998 and 1997 consist of the following: 1998 1997 ---- ---- (Dollars in thousands) Bank Debt: Bank A Term Loans .................. $223,900 $235,714 Bank B Term Loans .................. 192,449 199,000 -------- -------- Total bank debt ................. 416,349 434,714 Subordinated Debt: 9% Senior Subordinated Debentures .. 300,000 300,000 13 1/4% Subordinated Debentures .... 56,206 56,206 -------- -------- Total subordinated debt ......... 356,206 356,206 -------- -------- Total Debt .............................. 772,555 790,920 Less: Amounts due within one year.. 33,987 18,365 -------- -------- $738,568 $772,555 ======== ======== SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - Continued SILGAN HOLDINGS INC. (Parent Company) NOTES TO CONDENSED FINANCIAL STATEMENTS For the years ended December 31, 1998, 1997 and 1996 (Dollars in thousands) The aggregate annual maturities of outstanding debt obligations at December 31, 1998 are as follows (dollars in thousands): 1999........................... $ 33,987 2000........................... 36,760 2001........................... 41,736 2002........................... 56,662 2003........................... 66,614 2004 and thereafter............ 536,796 -------- $772,555 ======== As of December 31, 1998 and 1997, the obligations of Holdings had been pushed down to its subsidiaries. |
Since its inception in 1987, the Company has completed the following acquisitions: Acquired Business Year Products ----------------- ---- -------- Metal Container Manufacturing division of Nestle 1987 Metal food containers Monsanto Company's plastic container business 1987 Plastic containers Fort Madison Can Company of Dial 1988 Metal food containers Seaboard Carton Division of Nestle 1988 Paper containers Aim Packaging, Inc. 1989 Plastic containers Fortune Plastics Inc. 1989 Plastic containers Express Plastic Containers Limited 1989 Plastic containers Amoco Container Company 1989 Plastic containers Del Monte's U.S. can manufacturing operations 1993 Metal food containers Food Metal and Specialty business of ANC 1995 Metal food containers, metal caps and closures and Omni plastic containers Finger Lakes, a subsidiary of Curtice Burns 1996 Metal food containers Alcoa's North American aluminum roll-on closure 1997 Aluminum roll-on business closures Rexam's North American plastic container business 1997 Plastic containers and closures Winn Packaging Co. 1998 Plastic containers Recent Developments On February 18, 1998, the Company announced that it had reached an agreement in principle with Campbell for the purchase of Campbell's can manufacturing assets located in Campbell's facilities in Maxton, North Carolina; Napoleon, Ohio; Paris, Texas; and Sacramento, California. |
Below is a list of the Company's operating facilities, including attached warehouses, as of February 28, 1998 for its metal container business: Approximate Building Area Location (square feet) - -------- ------------- Tarrant, AL ....................................... 89,000 (leased) City of Industry, CA .............................. 50,000 (leased) Kingsburg, CA ..................................... 37,783 (leased) Modesto, CA ....................................... 35,585 (leased) Modesto, CA ....................................... 128,000 (leased) Modesto, CA ....................................... 150,000 (leased) Riverbank, CA ..................................... 167,000 San Leandro, CA ................................... 200,000 (leased) Stockton, CA ...................................... 243,500 Norwalk, CT ....................................... 14,359 (leased) Broadview, IL ..................................... 85,000 Hoopeston, IL ..................................... 323,000 Rochelle, IL ...................................... 175,000 Waukegan, IL ...................................... 40,000 (leased) Woodstock, IL ..................................... 160,000 (leased) Evansville, IN .................................... 188,000 Hammond, IN ....................................... 160,000 (leased) Laporte, IN ....................................... 144,000 (leased) Richmond, IN ...................................... 462,000 Fort Madison, IA .................................. 66,000 Ft. |
Vernon, MO .................................... 100,000 Northtown, MO ..................................... 112,000 (leased) St. Joseph, MO .................................... 173,725 St. Louis, MO ..................................... 174,000 (leased) Edison, NJ ........................................ 260,000 Lyons, NY ......................................... 149,687 Crystal City, TX .................................. 26,045 (leased) Toppenish, WA ..................................... 105,000 Vancouver, WA ..................................... 127,000 (leased) Menomonee Falls, WI ............................... 116,000 Menomonie, WI ..................................... 60,000 (leased) Oconomowoc, WI .................................... 105,200 Plover, WI ........................................ 88,000 (leased) Waupun, WI ........................................ 212,000 Below is a list of the Company's operating facilities, including attached warehouses, as of February 28, 1998 for its plastic container business: Approximate Building Area Location (square feet) - -------- ------------- Anaheim, CA ....................................... 127,000 (leased) Deep River, CT .................................... 140,000 Monroe, GA ........................................ 139,600 Norcross, GA ...................................... 59,000 (leased) Flora, IL ......................................... 56,400 Ligonier, IN ...................................... 469,000 (276,000 leased) Seymour, IN ....................................... 406,000 Franklin, KY ...................................... 122,000 (leased) Fairfield, OH ..................................... 185,350 (leased) Port Clinton, OH .................................. 257,400 (leased) Langhorne, PA ..................................... 156,000 (leased) Mississauga, Ontario .............................. 75,000 (leased) Mississauga, Ontario .............................. 62,630 (leased) Scarborough, Ontario .............................. 117,000 Lachine, Quebec ................................... 113,313 (leased) Lachine, Quebec ................................... 77,820 (leased) The Company owns and leases certain other warehouse facilities that are detached from its manufacturing facilities. |
(i) "Adjusted EBITDA" means consolidated net income before extraordinary charges, cumulative effect of changes in accounting principles and preferred stock dividends plus, to the extent reflected in the income statement for the applicable period, without duplication, consolidated interest expense, income tax expense and depreciation and amortization expense, as adjusted to add back expenses relating to postretirement health care costs (which amounted to $3.4 million, $2.6 million, $1.7 million, $0.7 million and $0.5 million for the years ended December 31, 1997, 1996, 1995, 1994 and 1993, respectively), the reduction in carrying value of assets (which were $14.7 million and $16.7 million for the years ended December 31, 1995 and 1994, respectively) and certain other non-cash charges (which included a charge of $22.5 million incurred in 1997 in connection with the IPO as referred to in footnote (c) above and charges relating to the vesting of benefits under Stock Appreciation Rights ("SARs") of $0.8 million for each of the years ended December 31, 1996 and 1995 and $1.5 million for the year ended December 31, 1994). |
Year Ended December 31, ---------------------------- 1997 1996 1995 ---- ---- ---- (Dollars in millions) Net sales: Metal container & specialty business ..... $ 1,248.1 $ 1,189.3 $ 882.3 Plastic container business ............... 263.3 216.4 219.6 -------- -------- -------- Consolidated .......................... $ 1,511.4 $ 1,405.7 $ 1,101.9 ======== ======== ======== Income from operations: Metal container & specialty business ..... $ 120.4 $ 106.1 $ 72.9 Plastic container business ............... 28.5 18.4 13.2 Non-cash stock option charge(1) .......... (22.5) -- -- Reduction in asset value(2) .............. -- -- (14.7) Corporate expense ........................ (1.8) (1.2) (1.6) ------- ------- ------- Consolidated .......................... $ 124.6 $ 123.3 $ 69.8 ======= ======= ======= (1) In connection with the IPO, the Company recognized a non-cash charge of $22.5 million for the excess of the fair market value over the grant price of stock options converted from stock option plans of Holdings' subsidiaries to the Holdings' Stock Option Plan at the time of the IPO. |
In addition to its operating cash needs, the Company believes its cash requirements over the next several years (without taking into account the effect of future acquisitions) will consist primarily of (i) annual capital expenditures of $60 to $70 million, (ii) annual principal amortization payments of bank term loans under its senior secured credit facilities beginning in 1998 of approximately $20.2 million (which includes $4.2 million that was repaid in January 1998 and $14.2 million that will be repaid no later than April 30, 1998), $33.5 million, $38.7 million, $44.0 million and $59.7 million, (iii) expected expenditures of $30 to $35 million over the next few years associated with plant rationalizations, employee severance and administrative workforce reductions, other plant exit costs and employee relocation costs relating to AN Can, (iv) the Company's interest requirements, including interest on revolving loans under its senior secured credit facilities (the principal amount of which will vary depending upon seasonal requirements and acquisitions) and bank term loans under the senior secured credit facilities, most of which bear fluctuating rates of interest, the 9% Debentures and the Exchange Debentures (for which the Company intends to make future interest payments in cash), and (v) payments of approximately $17.0 million for federal and state tax liabilities in 1998, which will increase annually thereafter. |
Important factors that could cause the actual results of operations or financial condition of the Company to differ from those expressed or implied in these forward-looking statements include, but are not necessarily limited to, the ability of the Company to locate or acquire suitable acquisition candidates on acceptable terms; the Company's ability to assimilate the operations of its acquired businesses into its existing operations; the Company's ability to generate free cash flow to invest in its business and service its indebtedness; limitations and restrictions contained in the Company's instruments and agreements governing its indebtedness; the ability of the Company to retain sales with its major customers; the size and quality of the vegetable, tomato and fruit harvests in the midwest and west regions of the United States; changes in the pricing and availability to the Company of raw materials or the Company's ability generally to pass raw material price increases through to its customers; changes in consumer preferences for different packaging products; competitive pressures, including new product developments or changes in competitors' pricing for products; changes in governmental regulations or enforcement practices; changes in general economic conditions, such as fluctuations in interest rates; changes in labor relations and costs; and other factors described elsewhere in this Annual Report on Form 10-K or in the Company's other filings with the Securities and Exchange Commission. |
Signature Title Date - --------- ----- ---- Chairman of the Board and Co-Chief Executive Officer /s/ R. Philip Silver (Principal Executive Officer) March 26, 1998 - -------------------- (R. Philip Silver) President, Co-Chief Executive /s/ D. Greg Horrigan Officer and Director March 26, 1998 - -------------------- (D. Greg Horrigan) /s/ Robert H. Niehaus Director March 26, 1998 - -------------------- (Robert H. Niehaus) /s/ Leigh J. Abramson Director March 26, 1998 - -------------------- (Leigh J. Abramson) /s/ Thomas M. Begel Director March 26, 1998 - -------------------- (Thomas M. Begel) /s/ Jeffrey C. Crowe Director March 26, 1998 - -------------------- (Jeffrey C. Crowe) Executive Vice President, Chief Financial Officer and Treasurer /s/ Harley Rankin, Jr. (Principal Financial Officer) March 26, 1998 - --------------------- (Harley Rankin, Jr.) Vice President, Controller and Assistant Treasurer /s/ Harold J. Rodriguez, Jr. (Principal Accounting Officer) March 26, 1998 - ------------------------- (Harold J. Rodriguez, Jr.) REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Silgan Holdings Inc. We have audited the accompanying consolidated financial statements and schedule of Silgan Holdings Inc. as listed in the accompanying index to the financial statements (Item 14(a)). |
/s/ Ernst & Young LLP Stamford, Connecticut January 26, 1998 SILGAN HOLDINGS INC. CONSOLIDATED BALANCE SHEETS December 31, 1997 and 1996 (Dollars in thousands) 1997 1996 ---- ---- Assets - ------ Current assets: Cash and cash equivalents ..................... $ 53,718 $ 1,017 Accounts receivable, less allowances for doubtful accounts of $3,415 and $4,045, respectively ................................ 125,837 101,436 Inventories ................................... 209,963 195,981 Prepaid expenses and other current assets ..... 9,997 7,403 ----------- ----------- Total current assets ...................... 399,515 305,837 Property, plant and equipment, net ................. 531,765 499,781 Goodwill, net ...................................... 66,895 77,176 Deferred tax asset ................................. 32,024 -- Other non-current assets ........................... 20,368 30,752 ----------- ----------- $ 1,050,567 $ 913,546 =========== =========== Liabilities and Deficiency in Stockholders' Equity - -------------------------------------------------- Current liabilities: Trade accounts payable ........................ $ 142,281 $ 122,623 Accrued payroll and related costs ............. 40,621 41,799 Accrued interest payable ...................... 10,939 9,522 Accrued expenses and other current liabilities 20,871 35,456 Current portion of long-term debt ............. 20,218 38,427 ----------- ----------- Total current liabilities ................. 234,930 247,827 Long-term debt ..................................... 785,036 721,583 Other long-term liabilities ........................ 97,849 82,118 Cumulative exchangeable redeemable preferred stock (10,000,000 shares authorized, 51,556 issued and outstanding in 1996) ........... -- 52,998 Deficiency in stockholders' equity: Common stock ($0.01 par value per share; 100,000,000 shares authorized, 18,862,834 and 15,162,833 shares issued and outstanding, respectively) ............................... 189 152 Additional paid-in capital .................... 110,935 18,466 Foreign currency translation adjustment ....... (508) (774) Accumulated deficit ........................... (177,864) (208,824) ----------- ----------- Total deficiency in stockholders' equity .. (67,248) (190,980) ----------- ----------- $ 1,050,567 $ 913,546 =========== =========== See accompanying notes. |
Long-Term Debt Long-term debt at December 31, 1997 and 1996 consists of the following: 1997 1996 ---- ---- (Dollars in thousands) Bank Debt: Bank Revolving Loans ........................ $ -- $ 27,800 Bank A Term Loans ........................... 235,714 194,554 Bank B Term Loans ........................... 199,000 343,716 Canadian Bank Facility ...................... 14,334 -- -------- -------- Total bank debt .......................... 449,048 566,070 Subordinated Debt: 9% Senior Subordinated Debentures ........... 300,000 -- 11 3/4% Senior Subordinated Notes ........... -- 135,000 13 1/4% Subordinated Debentures ............. 56,206 -- 13 1/4% Senior Discount Debentures .......... -- 58,940 -------- -------- Total subordinated debt .................. 356,206 193,940 -------- -------- Total Debt ....................................... 805,254 760,010 Less: Amounts due within one year .......... 20,218 38,427 -------- -------- $785,036 $721,583 ======== ======== The aggregate annual maturities of long-term debt at December 31, 1997 are as follows (dollars in thousands): 1998................ $ 20,218 1999................ 33,471 2000................ 38,724 2001................ 43,977 2002................ 59,736 2003 and thereafter. |
The composition of total pension cost for 1997, 1996, and 1995 in the Company's Consolidated Statements of Operations is as follows: 1997 1996 1995 ---- ---- ---- (Dollars in thousands) Net periodic pension cost .................. $ 6,586 $ 6,385 $ 4,678 Settlement and curtailment losses, net ..... 74 48 418 Contributions to multi-employer union plans .............................. 4,223 3,813 2,708 ------- ------- ------- Total pension costs .................... $10,883 $10,246 $ 7,804 ======= ======= ======= The assumptions used in determining the actuarial present value of accumulated benefit obligations as of December 31, 1997, 1996 and 1995 are as follows: 1997 1996 1995 ---- ---- ---- Discount rate .............................. 7.25% 7.5% 7.5% Weighted average rate of compensation increase ................................. 3.75% 4.0% 4.0% Expected long-term rate of return on plan assets .............................. 9.0% 9.0% 8.5% The Company also sponsors defined contribution pension and profit sharing plans covering substantially all employees. |
The following table presents the funded status of the postretirement plans and amounts recognized in the Company's balance sheet as of December 31, 1997 and 1996: 1997 1996 ---- ---- (Dollars in thousands) Accumulated postretirement benefit obligation: Retirees ...................................... $ 3,983 $ 3,885 Fully eligible active plan participants ....... 13,411 10,741 Other active plan participants ................ 18,882 12,983 -------- -------- Total accumulated postretirement benefit obligation .............................. 36,276 27,609 Unrecognized experience net loss ................... 552 1,865 Unrecognized prior service costs ................... (252) (275) -------- -------- Accrued postretirement benefit liability ........... $ 36,576 $ 29,199 ======== ======== Net periodic postretirement benefit cost include the following components: 1997 1996 1995 ---- ---- ---- (Dollars in thousands) Service cost ..................................... $ 942 $ 871 $ 372 Interest cost .................................... 2,347 1,766 1,097 Net amortization and deferral .................... 65 25 42 ------ ------ ------ Net periodic postretirement benefit cost ....... $3,354 $2,662 $1,511 ====== ====== ====== The weighted average discount rates used to determine the accumulated postretirement benefit obligation as of December 31, 1997 and 1996 were 7.25% and 7.50%, respectively. |
Income Taxes The components of income tax expense (benefit) are as follows: 1997 1996 1995 ---- ---- ---- (Dollars in thousands) Current Federal .............. $ 100 $ -- $ 500 State ................ 200 3,000 1,900 Foreign .............. 1,100 300 100 -------- -------- -------- 1,400 3,300 2,500 Deferred Federal .............. (16,300) -- -- State ................ (1,600) -- -- Foreign .............. 100 -- -- -------- -------- -------- (17,800) -- -- -------- -------- -------- $(16,400) $ 3,300 $ 2,500 ======== ======== ======== Income tax expense (benefit) is included in the financial statements as follows: 1997 1996 1995 ---- ---- ---- (Dollars in thousands) Income before extraordinary charges ....... $ (6,700) $ 3,300 $ 5,100 Extraordinary charges ......... (9,700) -- (2,600) -------- -------- -------- $(16,400) $ 3,300 $ 2,500 ======== ======== ======== The income tax provision varied from that computed by using the U.S. statutory rate as a result of the following: 1997 1996 1995 ---- ---- ---- (Dollars in thousands) Income tax expense (benefit) at the U.S. federal income tax rate .. $ 6,200 $ 11,100 $ (3,811) State and foreign tax expense, net of federal income benefit ..... 260 2,145 1,820 Amortization of goodwill ............ 500 621 471 Change in valuation allowance ....... (27,400) (10,566) 6,620 Provision for tax contingencies ..... 4,040 -- -- -------- -------- -------- $(16,400) $ 3,300 $ 5,100 ======== ======== ======== SILGAN HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997, 1996 and 1995 11. |
Significant components of the Company's deferred tax liabilities and assets at December 31, 1997 and 1996 are as follows: 1997 1996 ---- ---- (Dollars in thousands) Deferred tax liabilities: Tax over book depreciation ..................... $ 71,800 $ 65,000 Book over tax basis of assets acquired ......... 19,700 13,200 Other .......................................... 6,076 4,100 --------- --------- Total deferred tax liabilities ............... 97,576 82,300 Deferred tax assets: Book reserves not yet deductible for tax purposes ............................. 66,200 59,200 Deferred interest on high yield obligations .... -- 7,700 Net operating loss carryforwards ............... 63,400 57,200 Other .......................................... -- 500 --------- --------- Total deferred tax assets .................... 129,600 124,600 Valuation allowance for deferred tax assets .... -- (42,300) --------- --------- Net deferred tax assets ...................... 129,600 82,300 --------- --------- Net deferred tax (assets) liabilities ............ $ (32,024) $ -- ========= ========= During 1997, the Company determined that it was more likely than not that the future tax benefits arising from its net operating loss carryforwards would be realized in future years due to the Company's continued improvement in earnings and the probability of future taxable income. |
Stock Option Plans (continued) The following is a summary of stock option activity for the three year period ended December 31, 1997: Number Weighted Average of Shares Exercise Price --------- -------------- Options outstanding December 31, 1994 .......... 1,752,873 $ 2.09 Granted ........................................ 67,230 4.43 Exercised ...................................... -- -- Canceled ....................................... -- -- -------- Options outstanding December 31, 1995 .......... 1,820,103 2.18 Granted ........................................ -- -- Exercised ...................................... -- -- Canceled ....................................... -- -- -------- Options outstanding December 31, 1996 .......... 1,820,103 2.18 Granted ........................................ 120,000 26.91 Exercised ...................................... -- -- Canceled ....................................... -- -- -------- Options outstanding December 31, 1997 .......... 1,940,103 $ 3.71 ========= The number of options exercisable was 1,578,952, 1,465,098, and 1,351,242; the weighted average exercise price was $2.08, $2.03, and $1.97; and, the remaining contractual life of options outstanding was 3.7 years, 4.3 years, and 5.3 years at December 31, 1997, 1996, and 1995, respectively. |
Below is a list of the Company's operating facilities, including attached warehouses, as of February 28, 1997 for its metal container business: Approximate Building Area Location (square feet) - -------- ------------------------- City of Industry, CA............................... 50,000 (leased) Kingsburg, CA...................................... 37,783 (leased) Modesto, CA........................................ 35,585 (leased) Modesto, CA........................................ 128,000 (leased) Modesto, CA........................................ 150,000 (leased) Riverbank, CA...................................... 167,000 San Leandro, CA.................................... 200,000 (leased) Stockton, CA....................................... 243,500 Norwalk, CT........................................ 14,359 (leased) Broadview, IL...................................... 85,000 Hoopeston, IL...................................... 323,000 Rochelle, IL....................................... 175,000 Waukegan, IL....................................... 40,000 (leased) Woodstock, IL...................................... 160,000 (leased) Evansville, IN..................................... 188,000 Hammond, IN........................................ 160,000 (leased) Laporte, IN........................................ 144,000 (leased) Fort Madison, IA................................... 66,000 Ft. |
Vernon, MO..................................... 100,000 Northtown, MO...................................... 112,000 (leased) St. Joseph, MO..................................... 173,725 St. Louis, MO...................................... 174,000 (leased) Edison, NJ......................................... 280,000 Lyons, NY.......................................... 145,000 Crystal City, TX................................... 26,045 (leased) Toppenish, WA...................................... 98,000 Vancouver, WA...................................... 127,000 (leased) Menomonee Falls, WI................................ 116,000 Menomonie, WI...................................... 60,000 (leased) Oconomowoc, WI..................................... 105,200 Plover, WI......................................... 58,000 (leased) Waupun, WI......................................... 212,000 Below is a list of the Company's operating facilities, including attached warehouses, as of February 28, 1997 for its plastic container business: Approximate Building Area Location (square feet) - -------- ------------------------- Anaheim, CA........................................ 127,000 (leased) Deep River, CT..................................... 140,000 Monroe, GA......................................... 117,000 Norcross, GA....................................... 59,000 (leased) Ligonier, IN....................................... 477,000 (284,000 leased) Seymour, IN........................................ 406,000 Franklin, KY....................................... 122,000 (leased) Port Clinton, OH................................... 336,000 (leased) Langhorne, PA...................................... 156,000 (leased) Mississauga, Ontario............................... 80,000 (leased) Mississauga, Ontario............................... 60,000 (leased) The Company owns and leases certain other warehouse facilities that are detached from its manufacturing facilities. |
In addition to its operating cash needs, the Company believes its cash requirements over the next several years consist primarily of (i) annual capital expenditures of $50.0 to $60.0 million, (ii) scheduled principal amortization payments of term loans under the Credit Agreement (after giving effect to the use of a portion of the net proceeds from the Offering to prepay $8.9 million of bank terms loans) of $29.6 million, $53.4 million, $53.4 million, $126.1 million and $155.9 million over the next five years, respectively, (iii) expenditures of approximately $30.0 million over the next three years associated with plant rationalizations, employee severance and administrative workforce reductions, other plant exit costs and employee relocation costs of AN Can, (iv) the Company's interest requirements, including interest on working capital loans, the principal amount of which will vary depending upon seasonal requirements, the bank term loans, most of which bear fluctuating rates of interest, and the 11-3/4% Notes, and (v) payments of approximately $5.0 million (based on the Company's current estimate of its 1997 net income) for federal and state tax liabilities in 1997. |
The Stockholders Agreement prohibits the transfer prior to June 30, 1999 by MSLEF II or by Messrs. Silver or Horrigan of Common Stock without the prior written consent of the others, except for (i) transfers made in connection with a public offering or a Rule 144 Open Market Transaction (as defined in the Stockholders Agreement), (ii) transfers made to an affiliate, which, in the case of a transfer by MSLEF II to an affiliate, must be an Investment Entity (defined generally to be any person who is primarily engaged in the business of investing in securities of other companies and not taking an active role in the management or operations of such companies), (iii) certain transfers by MSLEF II to an Investment Entity or, in the event of certain defaults under the Management Agreement between S&H and Holdings, to a third party, in each case that comply with certain rights of first refusal granted to the Group (the "Group" is defined generally to mean, collectively, Messrs. Silver and Horrigan and their respective affiliates and certain related family transferees and estates, with Mr. Silver and his affiliates and certain related family transferees and estates being deemed to be collectively one member of the Group, and Mr. Horrigan and his affiliates and certain related family transferees and estates being deemed to be collectively another member of the Group) set forth in the Stockholders Agreement, (iv) certain transfers by either member of the Group to a third party that comply with certain rights of first refusal granted to the other member of the Group and MSLEF II set forth in the Stockholders Agreement, and (v) in the case of MSLEF II, a distribution of all or substantially all of the shares of Common Stock then owned by MSLEF II to the partners of MSLEF II (a "MSLEF Distribution"). |
The Principals Stockholders Agreement provides that (i) for so long as MSLEF II and its affiliates (excluding the non-affiliated limited partners of MSLEF II who acquire shares of Common Stock from MSLEF II in a MSLEF Distribution) hold at least one-half of the number of shares of Common Stock held by MSLEF II immediately prior to the Offering, each of Messrs. Silver and Horrigan will use his best efforts (including to vote any shares of Common Stock owned or controlled by him) to cause the nomination and election of two members of the Board of Directors of Holdings to be chosen by MSLEF II; provided, however, that each such nominee shall be either (a) an employee of Morgan Stanley whose primary responsibility is managing investments for MSLEF II (or a successor or related partnership) or (b) a person reasonably acceptable to the Group not engaged in (as a director, officer, employee, agent or consultant or as a holder of more than five percent of the equity securities of) a business competitive with that of Holdings, and (ii) from and after the time that MSLEF II and its affiliates (excluding the non-affiliated limited partners of MSLEF II who acquire shares of Common Stock from MSLEF II in a MSLEF Distribution) hold less than one-half of the number of shares of Common Stock held by MSLEF II immediately prior to the Offering and until such time that MSLEF II and its affiliates (excluding the non-affiliated limited partners of MSLEF II who acquire shares of Common Stock from MSLEF II in a MSLEF Distribution) hold less than five percent (5%) of the outstanding Common Stock beneficially owned, each of Messrs. Silver and Horrigan will use his best efforts (including to vote any shares of Common Stock owned or controlled by him) to cause the nomination and election of one member of the Board of Directors of Holdings to be chosen by MSLEF II; provided, however, that such nominee shall be (i) either an employee of Morgan Stanley whose primary responsibility is managing investments for MSLEF II (or a successor or related partnership) or (ii) a person reasonably acceptable to the Group not engaged in (as a director, officer, employee, agent or consultant or as a holder of more than five percent of the equity securities of) a business competitive with that of Holdings. |
In addition, the Principals Stockholders Agreement provides that (i) for so long as the Group holds at least one-half of the number of shares of Common Stock held by it in the aggregate on the date of this Annual Report on Form 10-K, MSLEF II will use its best efforts (including to vote any shares of Common Stock owned or controlled by it) to cause the nomination and election of two individuals nominated by the holders of a majority of the shares of Common Stock held by the Group as members of the Board of Directors of Holdings; provided, however, that at least one of such nominees shall be Mr. Silver or Mr. Horrigan and the other person, if not Mr. Silver or Mr. Horrigan, will be a person reasonably acceptable to MSLEF II, so long as MSLEF II and its affiliates (excluding the non-affiliated limited partners of MSLEF II who may acquire shares of Common Stock from MSLEF II in a MSLEF Distribution) hold at least one-half of the number of shares of Common Stock held by MSLEF II immediately prior to the Offering, (ii) from and after the time that the Group holds less than one-half of the number of shares of Common Stock held by it in the aggregate on the date hereof and until such time that the Group holds less than five percent (5%) of the outstanding Common Stock beneficially owned, MSLEF II will use its best efforts (including to vote any shares of Common Stock owned or controlled by it) to cause the nomination and election of one individual nominated by the holders of a majority of the shares of Common Stock held by the Group as a member of the Board of Directors of Holdings; provided, however, that such nominee shall be Silver or Horrigan or, if not Silver or Horrigan, a person reasonably acceptable to MSLEF II, so long as MSLEF II and its affiliates (excluding the non-affiliated limited partners of MSLEF II who acquire shares of Common Stock from MSLEF II in a MSLEF Distribution) hold at least one-half of the number of shares of Common Stock held by MSLEF II immediately prior to the Offering, and (iii) so long as the Group holds at least one-half of the number of shares of Common Stock held by it in the aggregate on the date of this Annual Report on form 10-K, the Group will have the right to nominate for election all directors of Holdings other than the directors referred to above in this paragraph and in the preceding paragraph, and upon such nomination by the Group such nominees will stand for election to Holdings' Board of Directors in accordance with Holdings' Restated Certificate of Incorporation, and MSLEF II will vote all shares of Common Stock owned or controlled by it and its affiliates against any director standing for election for Holdings' Board of Directors that has not been nominated by the Group, other than the directors referred to above in this paragraph and in the preceding paragraph. |
The Management Agreements provided for payments to S&H (i) on a monthly basis, of $5,000 plus an amount equal to 2.475% of consolidated earnings before depreciation, interest and taxes of Holdings and its subsidiaries ("Holdings EBDIT"), for such calendar month until Holdings EBDIT for the calendar year shall have reached an amount set forth in the Management Agreements for such calendar year (the "Scheduled Amount") and 1.65% of Holdings EBDIT for such calendar month to the extent that Holdings EBDIT for the calendar year shall have exceeded the Scheduled Amount but shall not have been greater than an amount (the "Maximum Amount") set forth in the Management Agreements and (ii) on a quarterly basis, of an amount equal to 2.475% of Holdings EBDIT for such calendar quarter until Holdings EBDIT for the calendar year shall have reached the Scheduled Amount and 1.65% of Holdings EBDIT for such calendar quarter to the extent that Holdings EBDIT for the calendar year shall have exceeded the Scheduled Amount but shall not have been greater than the Maximum Amount (the "Quarterly Management Fee"). |
The New Management Agreements may be terminated (i) at the option of each of the respective companies upon the failure or refusal of S&H to perform its obligations under the New Management Agreements, if such failure or refusal continues unremedied for more than 60 days after written notice of its existence shall have been given; (ii) at the option of S&H upon the failure or refusal of any of the respective companies to perform its obligations under the New Management Agreements, if such failure or refusal continues unremedied for more than 60 days after written notice of its existence shall have been given; (iii) at the option of S&H or the respective companies (a) if S&H or one of the companies is declared insolvent or bankrupt or a voluntary bankruptcy petition is filed by any of them, (b) upon the occurrence of any of the following events with respect to S&H or one of the companies if not cured, dismissed or stayed within 45 days: the filing of an involuntary petition in bankruptcy, the appointment of a trustee or receiver or the institution of a proceeding seeking a reorganization, arrangement, liquidation or dissolution, (c) if S&H or one of the companies voluntarily seeks a reorganization or arrangement or makes an assignment for the benefit of creditors or (d) upon the death or permanent disability of both of Messrs. Silver and Horrigan; (iv) upon at least 180 days prior written notice at the option of each of the respective companies for any reason; (v) upon at least 180 days prior written notice at the option of S&H for any reason other than Cause or a Change of Control (each as defined in the New Management Agreements); (vi) at the option of S&H after a Change of Control; (vii) at the option of the respective companies in the event of criminal conduct or gross negligence by S&H in the performance of the Services; or (viii) at the option of S&H or the respective companies upon the termination of any of the New Management Agreements for Cause (as defined therein). |
Signature Title Date - --------- ----- ---- Chairman of the Board and /s/ R. Philip Silver Co-Chief Executive Officer ____________________________ (Principal Executive Officer) March 21, 1997 (R. Philip Silver) /s/ D. Greg Horrigan President, Co-Chief Executive ____________________________ Officer and Director March 21, 1997 (D. Greg Horrigan) /s/ Robert H. Niehaus ____________________________ Director March 21, 1997 (Robert H. Niehaus) /s/ Leigh J. Abramson ____________________________ Director March 21, 1997 (Leigh J. Abramson) Executive Vice President, Chief /s/ Harley Rankin, Jr. Financial Officer and Treasurer ____________________________ (Principal Financial Officer) March 21, 1997 (Harley Rankin, Jr.) Vice President, Controller and /s/ Harold J. Rodriguez, Jr. Assistant Treasurer ____________________________ (Principal Accounting Officer) March 21, 1997 (Harold J. Rodriguez, Jr.) REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Silgan Holdings Inc. We have audited the accompanying consolidated balance sheets of Silgan Holdings Inc. as of December 31, 1996 and 1995, and the related consolidated statements of operations, deficiency in stockholders' equity and cash flows for each of the three years in the period ended December 31, 1996. |
/s/ Ernst & Young LLP Stamford, Connecticut January 31, 1997 except for Note 22, as to which date is February 13, 1997 SILGAN HOLDINGS INC. CONSOLIDATED BALANCE SHEETS December 31, 1996 and 1995 (Dollars in thousands) 1996 1995 ---- ---- Assets Current assets: Cash and cash equivalents ....................... $ 1,017 $ 2,102 Accounts receivable, less allowances for doubtful accounts of $4,045 and $4,843 for 1996 and 1995, respectively .................... 101,436 109,929 Inventories ..................................... 195,981 210,471 Prepaid expenses and other current assets ....... 7,403 5,801 -------- -------- Total current assets ........................ 305,837 328,303 Property, plant and equipment, net ................... 499,781 487,301 Goodwill, net ........................................ 77,176 53,562 Other assets ......................................... 30,752 30,880 -------- -------- $913,546 $900,046 ======== ======== Liabilities and Deficiency in Stockholders' Equity Current liabilities: Trade accounts payable .......................... $122,623 $138,195 Accrued payroll and related costs ............... 41,799 32,805 Accrued interest payable ........................ 9,522 4,358 Accrued expenses and other current liabilities .. 35,456 43,457 Bank working capital loans ...................... 27,800 7,100 Current portion of long-term debt ............... 38,427 28,140 -------- ------- Total current liabilities ................... 275,627 254,055 Long-term debt ....................................... 693,783 750,873 Deferred income taxes ................................ 6,836 6,836 Other long-term liabilities .......................... 74,508 68,086 Cumulative exchangeable redeemable preferred stock (10,000,000 shares authorized, 51,556 shares issued and outstanding) .............. 52,998 -- Deficiency in stockholders' equity: Common stock ($0.01 par value per share; 100,000,000 shares authorized, 15,162,833 and 19,446,120 shares issued and outstanding in 1996 and 1995, respectively) ............... 152 195 Additional paid-in capital ...................... 18,466 33,423 Accumulated deficit ............................. (208,824) (213,422) -------- -------- Total deficiency in stockholders' equity .... (190,206) (179,804) -------- -------- $913,546 $900,046 ======== ======== See accompanying notes. |
-- 14,745 16,729 ---------- ---------- -------- Income from operations ........... 123,290 69,821 58,358 Interest expense and other related financing costs ..................... 89,353 80,710 65,789 ---------- ---------- -------- Income (loss) before income taxes 33,937 (10,889) (7,431) Income tax provision .................. 3,300 5,100 5,600 ---------- ---------- -------- Income (loss) before extraordinary charge ......................... 30,637 (15,989) (13,031) Extraordinary charges relating to early extinguishment of debt, net of taxes (2,222) (5,817) -- ---------- ---------- -------- Net income (loss) before preferred stock dividend requirement ..... 28,415 (21,806) (13,031) Preferred stock dividend requirement .. (3,006) -- -- ---------- ---------- -------- Net income (loss) available to common stockholders ............ $ 25,409 $ (21,806) $(13,031) ========== ========== ======== Income (loss) per common share: Income (loss) before extraordinary charges ........................ $1.60 $(0.77) $(0.63) Extraordinary charges ............ (0.12) (0.29) -- Preferred stock dividend requirement .................... (0.16) -- -- ----- ------ ------ Net income (loss) $1.32 $(1.06) $(0.63) ===== ====== ====== Weighted average number of common and common equivalent shares outstanding 19,178,730 20,656,877 20,656,877 ========== ========== ========== See accompanying notes. |
SILGAN HOLDINGS INC. CONSOLIDATED STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY For the years ended December 31, 1996, 1995 and 1994 (Dollars in thousands, except per share data) Common Stock Total ------------ Additional Accum- deficiency in Par paid-in ulated stockholders' Shares Value capital deficit equity ------ ----- ------- ------- ------ Balance at December 31, 1993 1,135,000 $ 12 $33,606 $(178,585) $(144,967) Adjustment for 17.133145 for 1 stock split ...... 18,311,120 183 (183) -- -- ---------- ---- ------- --------- --------- As restated at December 31, 1993 for stock split ..... 19,446,120 195 33,423 (178,585) (144,967) Net loss ................... -- -- -- (13,031) (13,031) ---------- ---- ------- --------- --------- Balance at December 31, 1994 19,446,120 195 33,423 (191,616) (157,998) Net loss ................... -- -- -- (21,806) (21,806) ---------- ---- ------- --------- --------- Balance at December 31, 1995 19,446,120 195 33,423 (213,422) (179,804) Purchase and retirement of 250,000 shares of Class B Common Stock ............. (4,283,287) (43) (14,957) (20,811) (35,811) Net income ................. -- -- -- 25,409 25,409 ---------- ---- ------- --------- --------- Balance at December 31, 1996 15,162,833 $152 $18,466 $(208,824) $(190,206) ========== ==== ======= ========= ========= See accompanying notes. |
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