UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number  000-22117

SILGAN HOLDINGS INC.

(Exact name of Registrant as specified in its charter)

Delaware		06-1269834
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)
4 Landmark Square
Stamford,	Connecticut	06901
(Address of principal executive offices)		(Zip Code)

(203) 975-7110

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SLGN	Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒   No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  Yes ☒   No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

As of July 31, 2020, the number of shares outstanding of the Registrant’s common stock was 110,885,829.

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SILGAN HOLDINGS INC.
TABLE OF CONTENTS
	Page No.
Part I.  Financial Information	3
Item 1.    Financial Statements	3
Condensed Consolidated Balance Sheets at June 30, 2020 and 2019 and December 31, 2019	3
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2019	4
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019	5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	6
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019	7
Notes to Condensed Consolidated Financial Statements	8
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.    Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.    Controls and Procedures	28
Part II.  Other Information	29
Item 6.    Exhibits	29
Signatures	30

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Part I. Financial Information

Item 1. Financial Statements

SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	June 30, 2020		June 30, 2019		Dec. 31, 2019
	(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	191,082	$	111,341	$	203,824
Trade accounts receivable, net	729,275		666,681		504,986
Inventories	821,448		822,584		633,005
Prepaid expenses and other current assets	85,918		59,245		64,993
Total current assets	1,827,723		1,659,851		1,406,808
Property, plant and equipment, net	1,729,481		1,523,850		1,570,331
Goodwill	1,668,614		1,146,363		1,142,223
Other intangible assets, net	635,156		369,210		354,615
Other assets, net	512,082		411,944		457,082
	$	6,373,056	$	5,111,218	$	4,931,059
Liabilities and Stockholders’ Equity
Current liabilities:
Revolving loans and current portion of long-term debt	$	391,418	$	886,458	$	29,813
Trade accounts payable	601,740		598,484		727,053
Accrued payroll and related costs	103,458		68,585		66,866
Accrued liabilities	266,512		143,360		194,797
Total current liabilities	1,363,128		1,696,887		1,018,529
Long-term debt	3,106,425		1,824,533		2,214,608
Deferred income taxes	357,131		270,430		254,836
Other liabilities	456,678		389,466		419,764
Stockholders’ equity:
Common stock	1,751		1,751		1,751
Paid-in capital	296,639		280,636		289,422
Retained earnings	2,249,391		2,049,995		2,141,302
Accumulated other comprehensive loss	(297,360)		(265,373)		(259,742)
Treasury stock	(1,160,727)		(1,137,107)		(1,149,411)
Total stockholders’ equity	1,089,694		929,902		1,023,322
	$	6,373,056	$	5,111,218	$	4,931,059

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three and six months ended June 30, 2020 and 2019

(Dollars and shares in thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net sales	$	1,176,470	$	1,093,163	$	2,206,854	$	2,120,294
Cost of goods sold	952,375		909,650		1,797,661		1,770,784
Gross profit	224,095		183,513		409,193		349,510
Selling, general and administrative expenses	100,624		80,087		190,487		157,749
Rationalization charges	1,942		39,317		4,741		45,400
Other pension and postretirement income	(9,705)		(4,490)		(19,410)		(8,980)
Income before interest and income taxes	131,234		68,599		233,375		155,341
Interest and other debt expense before loss on early extinguishment of debt	25,837		28,401		49,326		55,505
Loss on early extinguishment of debt	—		—		1,481		—
Interest and other debt expense	25,837		28,401		50,807		55,505
Income before income taxes	105,397		40,198		182,568		99,836
Provision for income taxes	27,225		9,243		46,796		22,140
Net income	$	78,172	$	30,955	$	135,772	$	77,696
Earnings per share:
Basic net income per share	$	0.70	$	0.28	$	1.22	$	0.70
Diluted net income per share	$	0.70	$	0.28	$	1.22	$	0.70
Weighted average number of shares:
Basic	110,901		111,185		110,879		110,945
Effect of dilutive securities	433		317		501		600
Diluted	111,334		111,502		111,380		111,545

See accompanying notes.

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 SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and six months ended June 30, 2020 and 2019

(Dollars in thousands)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net income	$	78,172	$	30,955	$	135,772	$	77,696
Other comprehensive income (loss), net of tax:
Changes in net prior service credit and actuarial losses	1,809		2,614		2,748		5,120
Change in fair value of derivatives	104		(1,601)		(2,351)		(2,488)
Foreign currency translation	(1,576)		6,045		(38,015)		803
Other comprehensive income (loss)	337		7,058		(37,618)		3,435
Comprehensive income	$	78,509	$	38,013	$	98,154	$	81,131

See accompanying notes.

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 SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2020 and 2019

(Dollars in thousands)

(Unaudited)

	2020		2019
Cash flows provided by (used in) operating activities:
Net income	$	135,772	$	77,696
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	104,197		104,102
Rationalization charges	4,741		45,400
Stock compensation expense	9,056		8,244
Loss on early extinguishment of debt	1,481		—
Other changes that provided (used) cash, net of effects from acquisitions:
Trade accounts receivable, net	(179,949)		(155,198)
Inventories	(148,141)		(187,790)
Trade accounts payable	(68,026)		(19,421)
Accrued liabilities	67,936		(22,875)
Other, net	9,129		20,764
Net cash used in operating activities	(63,804)		(129,078)
Cash flows provided by (used in) investing activities:
Purchase of businesses, net of cash acquired	(941,102)		—
Capital expenditures	(106,436)		(116,165)
Other, net	983		560
Net cash used in investing activities	(1,046,555)		(115,605)
Cash flows provided by (used in) financing activities:
Borrowings under revolving loans	927,302		703,359
Repayments under revolving loans	(570,955)		(287,368)
Proceeds from issuance of long-term debt	1,639,661		—
Repayments of long-term debt	(766,170)		(8,161)
Changes in outstanding checks - principally vendors	(79,006)		(83,670)
Dividends paid on common stock	(27,121)		(26,415)
Debt issuance costs	(10,265)		—
Repurchase of common stock	(13,155)		(15,252)
Net cash provided by financing activities	1,100,291		282,493
Effect of exchange rate changes on cash and cash equivalents	(2,674)		712
Cash and cash equivalents:
Net (decrease) increase	(12,742)		38,522
Balance at beginning of year	203,824		72,819
Balance at end of period	$	191,082	$	111,341
Interest paid, net	$	38,058	$	53,069
Income taxes paid, net	28,974		23,634

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the three and six months ended June 30, 2020 and 2019

(Dollars and shares in thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Common stock - shares outstanding
Balance at beginning of period	110,834		111,128		110,780		110,430
Net issuance of treasury stock for vested restricted stock units	52		48		365		746
Repurchases of common stock	—		—		(259)		—
Balance at end of period	110,886		111,176		110,886		111,176
Common stock - par value
Balance at beginning and end of period	$	1,751	$	1,751	$	1,751	$	1,751
Paid-in capital
Balance at beginning of period	292,283		276,435		289,422		276,062
Stock compensation expense	4,573		4,335		9,056		8,244
Net issuance of treasury stock for vested restricted stock units	(217)		(134)		(1,839)		(3,670)
Balance at end of period	296,639		280,636		296,639		280,636
Retained earnings
Balance at beginning of period	2,184,691		2,031,487		2,141,302		1,997,785
Net income	78,172		30,955		135,772		77,696
Dividends declared on common stock	(13,472)		(12,447)		(27,018)		(24,893)
Adoption of accounting standards updates related to credit losses in 2020 and leases in 2019	—		—		(665)		(593)
Balance at end of period	2,249,391		2,049,995		2,249,391		2,049,995
Accumulated other comprehensive loss
Balance at beginning of period	(297,697)		(272,431)		(259,742)		(268,808)
Other comprehensive loss	337		7,058		(37,618)		3,435
Balance at end of period	(297,360)		(265,373)		(297,360)		(265,373)
Treasury stock
Balance at beginning of period	(1,160,453)		(1,137,035)		(1,149,411)		(1,125,525)
Net issuance of treasury stock for vested restricted stock units	(274)		(72)		(4,382)		(11,582)
Repurchases of common stock	—		—		(6,934)		—
Balance at end of period	(1,160,727)		(1,137,107)		(1,160,727)		(1,137,107)
Total stockholders' equity	$	1,089,694	$	929,902	$	1,089,694	$	929,902
Dividends declared on common stock per share	$	0.12	$	0.11	$	0.24	$	0.22

See accompanying notes.

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SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Note 1.               Significant Accounting Policies

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of Silgan Holdings Inc., or Silgan, have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, the accompanying financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation.  The results of operations for any interim period are not necessarily indicative of the results of operations for the full year.

The Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from our audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

You should read the accompanying condensed consolidated financial statements in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Recently Adopted Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board, or FASB, issued an accounting standards update, or ASU, that amends the guidance on the accounting for credit losses on financial instruments. This new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables. We adopted this new standard on January 1, 2020 using the transition method, which allowed us to recognize the effects of applying this standard as a cumulative effect to retained earnings as of January 1, 2020. As a result of the adoption of this standard, we reduced retained earnings by $0.7 million. The adoption of this standard did not have a material impact on our financial position, results of operations or cash flows.

Note 2.               Revenue

The following tables present our revenues disaggregated by reportable business segment and geography as they best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenues by business segment were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollars in thousands)
Metal containers	$	597,191	$	575,618	$	1,105,709	$	1,082,680
Closures	410,468		363,344		767,619		719,543
Plastic containers	168,811		154,201		333,526		318,071
	$	1,176,470	$	1,093,163	$	2,206,854	$	2,120,294

Revenues by geography were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollars in thousands)
North America	$	897,327	$	858,565	$	1,715,000	$	1,669,332
Europe and other	279,143		234,598		491,854		450,962
	$	1,176,470	$	1,093,163	$	2,206,854	$	2,120,294

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SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Our contracts generally include standard commercial payment terms generally acceptable in each region. We do not provide financing with extended payment terms beyond generally standard commercial payment terms for the applicable industry. We have no significant obligations for refunds, warranties or similar obligations. Trade accounts receivable, net are shown separately on our Condensed Consolidated Balance Sheet. Contract assets are the result of the timing of revenue recognition, billings and cash collections. Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $80.4 million, $77.2 million, and $71.1 million as of June 30, 2020 and 2019 and December 31, 2019, respectively. Unbilled receivables are included in trade accounts receivable, net on our Condensed Consolidated Balance Sheet.

Note 3.               Acquisitions

Cobra Plastics Acquisition

On February 4, 2020 we acquired Cobra Plastics, Inc., or Cobra Plastics, a manufacturer and seller of injection molded plastic closures for a wide variety of consumer products, with a particular focus on the aerosol overcap market. The purchase price for this acquisition of $39.8 million, net of cash acquired, was primarily funded with revolving loan borrowings under our amended and restated senior secured credit facility, or the Credit Agreement. For this acquisition, we applied the acquisition method of accounting and recognized assets acquired and liabilities assumed at fair value as of the acquisition date, and we recognized goodwill of $18.4 million and a customer relationship intangible asset of $11.5 million. Cobra Plastics' results of operations were included in our closures business since the acquisition date and were not significant since such date.

Albéa Dispensing Business Acquisition

On June 1, 2020, we acquired the dispensing operations of the Albéa Group, or the Albéa Dispensing Business, a leading global supplier of highly engineered pumps, sprayers and foam dispensing solutions to major branded consumer goods product companies in the beauty and personal care markets. It operates a global network of ten manufacturing facilities across North America, Europe, South America and Asia. This acquisition is strategically important for us, as it expands our closures franchise and, in particular, our dispensing systems operations. The Albéa Dispensing Business is included in our closures business as of the acquisition date.

We acquired the Albéa Dispensing Business for a purchase price in cash of $901.3 million, net of cash acquired. The purchase price is subject to adjustment for working capital, other current assets and current liabilities and net indebtedness. We incurred acquisition related costs for the Albéa Dispensing Business totaling $16.1 million and $18.3 million for the three and six months ended June 30, 2020, respectively, which are included in selling, general and administrative expenses in our Condensed Consolidated Statements of Income. We funded the purchase price for this acquisition with term and revolving loan borrowings under the Credit Agreement, including a delayed draw term loan of $900 million. See Note 8 for further information.

The initial purchase price has been allocated to assets acquired and liabilities assumed based on estimated fair values at the date of acquisition using valuation techniques including the income, cost and market approaches, primarily using Level 3 inputs (as defined in Note 9). The purchase price allocation is preliminary and subject to change pending a final valuation of the assets and liabilities, including property, plant and equipment and intangible assets, and the related tax impact of any adjustments to such valuations. In connection with this acquisition, we recorded a charge of $3.5 million related to the write-up of acquired inventory of the Albéa Dispensing Business as a result of purchase accounting.

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SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

The allocated fair value of assets acquired and liabilities assumed are summarized as follows (in thousands)

Trade accounts receivable	$	48,177
Inventories	41,178
Property, plant and equipment	167,316
Other intangible assets	287,000
Other assets	42,593
Trade accounts payable and accrued liabilities	(66,506)
Deferred income tax liabilities	(90,791)
Debt and other liabilities	(36,587)
Total identifiable net assets	392,380
Goodwill	508,894
Cash paid at closing, net of cash acquired	$	901,274

Goodwill of $508.9 million consists largely of our increased capacity to serve our global customers and achieve operational synergies and has been assigned to our closures segment. A majority of the goodwill is not expected to be deductible for income tax purposes. Other intangible assets consist of customer relationships of $260.0 million with an estimated remaining life of 24 years and technology know-how of $27.0 million with an estimated remaining life of 8 years. Acquired property, plant and equipment are being depreciated on a straight-line basis with estimated remaining lives of up to 35 years.

Our consolidated results of operations for the three and six months ended June 30, 2020 included the results for the Albéa Dispensing Business since the acquisition date. Net sales from the Albéa Dispensing Business operations of $29.9 million were included in our Condensed Consolidated Statements of Income for the three and six months ended June 30, 2020.

Note 4.               Rationalization Charges

We continually evaluate cost reduction opportunities across each of our businesses, including rationalizations of our existing facilities through plant closings and downsizings. We use a disciplined approach to identify opportunities that generate attractive cash returns. Rationalization charges by business segment were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollars in thousands)
Metal containers	$	1,153	$	39,023	$	3,116	$	39,245
Closures	700		248		1,442		5,908
Plastic containers	89		46		183		247
	$	1,942	$	39,317	$	4,741	$	45,400

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SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Activity in reserves for our rationalization plans were as follows:

	Employee Severance and Benefits		Plant Exit Costs		Non-Cash Asset Write-Down		Total
	(Dollars in thousands)
Balance at December 31, 2019	$	42,815	$	898	$	—	$	43,713
Charged to expense	2,715		1,506		520		4,741
Utilized and currency translation	(3,887)		(1,752)		(520)		(6,159)
Balance at June 30, 2020	$	41,643	$	652	$	—	$	42,295

Rationalization reserves as of June 30, 2020 were recorded in our Condensed Consolidated Balance Sheets as accrued liabilities of $4.5 million and other liabilities of $37.8 million. Exclusive of the footprint optimization plan for our metal container business and our resulting withdrawal from the Central States, Southeast and Southwest Areas Pension Plan, or the Central States Pension Plan, announced in 2019, remaining expenses and cash expenditures for our rationalization plans are expected to be $1.9 million and $3.4 million, respectively. Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $1.1 million per year and be recognized annually for the next twenty years, and remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $3.1 million annually for the next twenty years, beginning in 2020.

Note 5.               Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is reported in our Condensed Consolidated Statements of Stockholders’ Equity.  Amounts included in accumulated other comprehensive loss, net of tax, were as follows:

	Unrecognized Net Defined Benefit Plan Costs		Change in Fair Value of Derivatives		Foreign Currency Translation		Total
	(Dollars in thousands)
Balance at December 31, 2019	$	(139,102)	$	(3,182)	$	(117,458)	$	(259,742)
Other comprehensive loss before reclassifications	(872)		(3,192)		(38,015)		(42,079)
Amounts reclassified from accumulated other     comprehensive loss	3,620		841		—		4,461
Other comprehensive loss	2,748		(2,351)		(38,015)		(37,618)
Balance at June 30, 2020	$	(136,354)	$	(5,533)	$	(155,473)	$	(297,360)

The amounts reclassified to earnings from the unrecognized net defined benefit plan costs component of accumulated other comprehensive loss for the three and six months ended June 30, 2020, were net (losses) of $(2.5) million and $(4.9) million, respectively, excluding income tax benefits of $0.7 million and $1.3 million, respectively. For the three and six months ended June 30, 2020 these net (losses) consisted of amortization of net actuarial (losses) of $(2.9) million and $(5.7) million and amortization of net prior service credit of $0.4 million and $0.8 million, respectively. Amortization of net actuarial losses and net prior service credit was recorded in other pension and postretirement income in our Condensed Consolidated Statements of Income. See Note 11 for further information.

The amounts reclassified to earnings from the change in fair value of derivatives component of accumulated other comprehensive loss for the three and six months ended June 30, 2020 were not significant.

-11-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Other comprehensive loss before reclassifications related to foreign currency translation for the three and six months ended June 30, 2020, consisted of (i) foreign currency gains (losses) related to translation of quarter end financial statements of foreign subsidiaries utilizing a functional currency other than the U.S. dollar of $10.2 million and $(22.7) million, respectively, (ii) foreign currency gains (losses) related to intra-entity foreign currency transactions that are of a long-term investment nature of $0.1 million and $(2.9) million, respectively, and (iii) foreign currency (losses) related to our net investment hedges of $(15.6) million and $(16.2) million, respectively, excluding income tax benefits of $3.6 million and $3.8 million, respectively. See Note 9 for further discussion.

Note 6.               Inventories

Inventories consisted of the following: 

	June 30, 2020		June 30, 2019		Dec. 31, 2019
	(Dollars in thousands)
Raw materials	$	298,550	$	271,396	$	286,953
Work-in-process	165,505		141,268		134,417
Finished goods	499,799		523,145		355,337
Other	14,089		12,658		12,793
	977,943		948,467		789,500
Adjustment to value inventory at cost on the LIFO method	(156,495)		(125,883)		(156,495)
	$	821,448	$	822,584	$	633,005

Note 7.               Goodwill and Other Intangibles

Changes in the carrying amount of goodwill were as follows:

	Metal Containers		Closures		Plastic Containers		Total
	(Dollars in thousands)
Balance at December 31, 2019	$	113,463	$	801,776	$	226,984	$	1,142,223
Acquisitions	—		527,270		—		527,270
Currency translation	(84)		35		(830)		(879)
Balance at June 30, 2020	$	113,379	$	1,329,081	$	226,154	$	1,668,614

In connection with our acquisitions of Cobra Plastics and the Albéa Dispensing Business as discussed in Note 3, we recognized goodwill of $527.3 million.

-12-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

The components of other intangible assets, net were as follows:

	June 30, 2020				December 31, 2019
	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
	(Dollars in thousands)
Definite-lived intangibles:
Customer relationships	$	688,391	$	(126,737)	$	422,042	$	(116,575)
Other	68,075		(26,713)		39,447		(22,439)
	756,466		(153,450)		461,489		(139,014)
Indefinite-lived intangibles:
Trade names	32,140		—		32,140		—
	$	788,606	$	(153,450)	$	493,629	$	(139,014)

In connection with our acquisitions of Cobra Plastics and the Albéa Dispensing Business as discussed in Note 3, we recognized intangible assets for customer relationships of $271.5 million and technology know-how of $27.0 million.

Amortization expense was $8.1 million and $14.9 million for the three and six months ended June 30, 2020, respectively, and $6.8 million and $13.6 million for the three and six months ended June 30, 2019, respectively. Amortization expense is expected to be $35.8 million, $40.4 million, $39.3 million, $39.2 million and $38.3 million for the years ended December 31, 2020 through 2024, respectively.

Note 8.               Long-Term Debt

Long-term debt consisted of the following: 

	June 30, 2020		June 30, 2019		Dec. 31, 2019
	(Dollars in thousands)
Bank debt
Bank revolving loans	$	354,000	$	506,000	$	—
U.S. term loans	900,000		800,000		760,000
Canadian term loans	—		16,133		4,703
Other foreign bank revolving and term loans	42,534		39,269		31,127
Total bank debt	1,296,534		1,361,402		795,830
5½% Senior Notes	—		300,000		—
4¾% Senior Notes	300,000		300,000		300,000
3¼% Senior Notes	728,520		739,245		729,755
4⅛% Senior Notes	600,000		—		400,000
2¼% Senior Notes	560,400		—		—
Finance leases	35,102		22,219		33,288
Total debt - principal	3,520,556		2,722,866		2,258,873
Less unamortized debt issuance costs and debt discount	22,713		11,875		14,452
Total debt	3,497,843		2,710,991		2,244,421
Less current portion	391,418		886,458		29,813
	$	3,106,425	$	1,824,533	$	2,214,608

-13-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

At June 30, 2020, the current portion of long-term debt consisted of $354.0 million of bank revolving loans under the Credit Agreement, $35.6 million of other foreign bank revolving and term loans and $1.8 million of finance leases.

On February 26, 2020, we issued (i) an additional $200 million aggregate principal amount of our 4⅛% Senior Notes due 2028, or the 4⅛% Notes, at 99.5 percent of their principal amount, plus accrued and unpaid interest from November 12, 2019, and €500 million aggregate principal amount of our 2¼% Senior Notes due 2028, or the 2¼% Notes, at 100 percent of their principal amount. We used the net proceeds from these issuances and revolving loan borrowings under the Credit Agreement to prepay all of our outstanding U.S. term loans under the Credit Agreement at that time. As a result of this prepayment, we recorded a pre-tax charge for the loss on early extinguishment of debt of $1.5 million during the first quarter of 2020 for the write-off of unamortized debt issuance costs.

2¼% SENIOR NOTES

The 2¼% Notes are general unsecured obligations of Silgan, ranking equal in right of payment with our existing and future unsecured unsubordinated indebtedness, including our 4¾% Senior Notes due 2025, or the 4¾% Notes, our 3¼% Senior Notes due 2025, or the 3¼% Notes, and the 4⅛% Notes, and ahead of our existing and future subordinated debt, if any. The 2¼% Notes are effectively subordinated to Silgan’s secured debt to the extent of the assets securing such debt and structurally subordinated to all obligations of subsidiaries of Silgan.

The 2¼% Notes will mature on June 1, 2028. Interest on the 2¼% Notes will be payable semi-annually in cash on January 15 and July 15 of each year, beginning on July 15, 2020. The 2¼% Notes were issued pursuant to an indenture by and among Silgan, U.S. Bank National Association, as trustee, Elavon Financial Services DAC, UK Branch, as paying agent, and Elavon Financial Services DAC, as registrar and transfer agent, which indenture contains covenants that are generally less restrictive than those in the Credit Agreement and substantially similar to the covenants in the indenture for the 4¾% Notes and the 3¼% Notes and the indenture for the 4⅛% Notes.

The 2¼% Notes are redeemable, at our option, in whole or in part, at any time after March 1, 2023, initially at 101.125 percent of their principal amount, plus accrued and unpaid interest to the redemption date, declining ratably to 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date, on or after March 1, 2025.

In addition, prior to March 1, 2023, we may redeem up to 35 percent of the aggregate principal amount of the 2¼% Notes with the proceeds of certain equity offerings at a redemption price of 102.25 percent of their principal amount, plus accrued and unpaid interest to the date of redemption. We may also redeem the 2¼% Notes, in whole or in part, prior to March 1, 2023 at a redemption price equal to 100 percent of their principal amount plus a make-whole premium as provided in the indenture for the 2¼% Notes, together with accrued and unpaid interest to the date of redemption. We will be required to make an offer to repurchase the 2¼% Notes at a repurchase price equal to 101 percent of their principal amount, plus accrued and unpaid interest to the date of repurchase, upon the occurrence of a change of control repurchase event as provided in the indenture for the 2¼% Notes.

Incremental U.S. Term Loans

On April 17, 2020, we and certain of our subsidiaries entered into an Incremental Term Loan Commitment Agreement, or the Incremental Term Loan Commitment Agreement, with the lenders thereunder and Wells Fargo Bank, National Association, as Administrative Agent and a lender. The Incremental Term Loan Commitment Agreement was entered into pursuant to the Credit Agreement and provided for the lenders thereunder to lend to us, on a delayed draw basis, $900 million of Incremental U.S. Term Loans, or the Incremental U.S. Term Loans, to fund the purchase price for the acquisition of the Albéa Dispensing Business. On June 1, 2020, we borrowed $900 million of Incremental U.S. Term Loans under the Incremental Term Loan Commitment Agreement to fund the purchase price for the acquisition of the Albéa Dispensing Business.

The Incremental U.S. Term Loans mature on May 30, 2024 and are repayable in installments of $90 million on each of December 31, 2021, 2022 and 2023, with the remaining outstanding principal balance to be repaid on May 30, 2024.

The Incremental U.S. Term Loans initially have an Applicable Margin (as defined in the Credit Agreement) of 1.75 percent per annum in the case of Eurodollar Rate Loans (as defined in the Credit Agreement) and 0.75 percent per annum in the case of Base Rate Loans (as defined in the Credit Agreement), in both cases until the delivery of our financial statements for the fiscal quarter ending June 30, 2020. The Applicable Margin will vary between 1.25 percent to 1.75 percent per annum for Eurodollar

-14-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Rate Loans and between 0.25 percent to 0.75 percent per annum for Base Rate Loans, in both cases based on our Total Net Leverage Ratio (as defined in the Credit Agreement).

The Incremental U.S. Term Loans are guaranteed by the US Guarantors (as defined in the Credit Agreement) and secured on a pari passu basis by the same collateral that secures our outstanding loans under the Credit Agreement.

Note 9.               Financial Instruments

The financial instruments recorded in our Condensed Consolidated Balance Sheets include cash and cash equivalents, trade accounts receivable, trade accounts payable, debt obligations and swap agreements.  Due to their short-term maturity, the carrying amounts of trade accounts receivable and trade accounts payable approximate their fair market values.  The following table summarizes the carrying amounts and estimated fair values of our other financial instruments at June 30, 2020:

	Carrying Amount		Fair Value
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	191,082	$	191,082
Liabilities:
Bank debt	$	1,296,534	$	1,296,534
4¾% Senior Notes	300,000		303,813
3¼% Senior Notes	728,520		734,592
4⅛% Senior Notes	599,035		594,750
2¼% Senior Notes	560,400		540,450
Derivative instruments (accrued and other liabilities)	7,259		7,259

Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).  GAAP classifies the inputs used to measure fair value into a hierarchy consisting of three levels. Level 1 inputs represent unadjusted quoted prices in active markets for identical assets or liabilities.  Level 2 inputs represent unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs represent unobservable inputs for the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Financial Instruments Measured at Fair Value

The financial assets and liabilities that were measured on a recurring basis at June 30, 2020 consisted of our cash and cash equivalents and derivative instruments. We measured the fair value of cash and cash equivalents using Level 1 inputs. We measured the fair value of our derivative instruments using the income approach. The fair value of our derivative instruments reflects the estimated amounts that we would pay or receive based on the present value of the expected cash flows derived from market interest rates and prices. As such, these derivative instruments were classified within Level 2.

Financial Instruments Not Measured at Fair Value

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

-15-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Notes, 3¼% Senior Notes, 4⅛% Senior Notes and 2¼% Senior Notes were estimated based on quoted market prices, a Level 1 input.

Derivative Instruments and Hedging Activities

Our derivative financial instruments were recorded in the Condensed Consolidated Balance Sheets at their fair values.  Changes in fair values of derivatives are recorded in each period in earnings or comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction.

We utilize certain derivative financial instruments to manage a portion of our interest rate and natural gas cost exposures. We generally limit our use of derivative financial instruments to interest rate and natural gas swap agreements. We do not engage in trading or other speculative uses of these financial instruments. For a financial instrument to qualify as a hedge, we must be exposed to interest rate or price risk, and the financial instrument must reduce the exposure and be designated as a hedge.  Financial instruments qualifying for hedge accounting must maintain a high correlation between the hedging instrument and the item being hedged, both at inception and throughout the hedged period.

We utilize certain internal hedging strategies to minimize our foreign currency exchange rate risk.  Net investment hedges that qualify for hedge accounting result in the recognition of foreign currency gains or losses, net of tax, in accumulated other comprehensive loss. We generally do not utilize external derivative financial instruments to manage our foreign currency exchange rate risk.

Interest Rate Swap Agreements

We have entered into two U.S. dollar interest rate swap agreements, each for $50.0 million notional principal amount, to manage a portion of our exposure to interest rate fluctuations.  These agreements have a fixed rate of 2.878 percent and mature on March 24, 2023. The difference between amounts to be paid or received on our interest rate swap agreements is recorded in interest and other debt expense in our Condensed Consolidated Statements of Income and was not significant for the three and six month periods ended June 30, 2020. These agreements are with a financial institution which is expected to fully perform under the terms thereof. The total fair value of our interest rate swap agreements in effect at June 30, 2020 was not significant.

Natural Gas Swap Agreements

We have entered into natural gas swap agreements to manage a portion of our exposure to fluctuations in natural gas prices. The difference between amounts to be paid or received on our natural gas swap agreements is recorded in cost of goods sold in our Condensed Consolidated Statements of Income and was not significant for the three and six month periods ended June 30, 2020. These agreements are with a financial institution which is expected to fully perform under the terms thereof. The total fair value of our natural gas swap agreements in effect at June 30, 2020 was not significant.

Foreign Currency Exchange Rate Risk

In an effort to minimize foreign currency exchange rate risk, we have financed acquisitions of foreign operations primarily with borrowings denominated in Euros and Canadian dollars. In addition, where available, we have borrowed funds in local currency or implemented certain internal hedging strategies to minimize our foreign currency exchange rate risk related to foreign operations. We have designated the 3¼% Senior Notes and the 2¼% Senior Notes, which are Euro denominated, as net investment hedges. Foreign currency losses related to our net investment hedges included in accumulated other comprehensive loss for the three and six months ended June 30, 2020 were $(15.6) million and $(16.2) million, respectively.

Note 10.               Commitments and Contingencies

A competition authority in Germany commenced an antitrust investigation in 2015 involving the industry association for metal packaging in Germany and its members, including our metal container and closures subsidiaries in Germany. At the end of April 2018, the European Commission commenced an antitrust investigation involving the metal packaging industry in Europe including our metal container and closures subsidiaries, which should effectively close out the investigation in Germany. Given

-16-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

the current stage of the investigation, we cannot reasonably assess what actions may result from these investigations or estimate what costs we may incur as a result thereof.

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

Note 11.               Retirement Benefits

The components of the net periodic pension benefit credit were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollars in thousands)
Service cost	$	3,489	$	3,254	$	6,975	$	6,512
Interest cost	5,710		7,043		11,420		14,092
Expected return on plan assets	(17,993)		(15,112)		(35,987)		(30,225)
Amortization of prior service cost	56		21		111		40
Amortization of actuarial losses	2,934		4,121		5,869		8,240
Net periodic benefit credit	$	(5,804)	$	(673)	$	(11,612)	$	(1,341)

The components of the net periodic other postretirement benefit credit were as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollars in thousands)
Service cost	$	25	$	22	$	48	$	44
Interest cost	141		184		283		369
Amortization of prior service credit	(484)		(581)		(967)		(1,163)
Amortization of actuarial gains	(69)		(166)		(139)		(333)
Net periodic benefit credit	$	(387)	$	(541)	$	(775)	$	(1,083)

-17-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Note 12.               Income Taxes

Silgan and its subsidiaries file U.S. Federal income tax returns, as well as income tax returns in various states and foreign jurisdictions. The Internal Revenue Service, or IRS, has completed its review of the 2018 tax year with no change to our filed federal income tax return. We have been accepted into the Compliance Assurance Program for the 2019 and 2020 tax years which provides for the review by the IRS of tax matters relating to our tax return prior to filing.

Note 13.               Treasury Stock

On October 17, 2016, our Board of Directors authorized the repurchase by us of up to an aggregate of $300.0 million of our common stock by various means from time to time through and including December 31, 2021. During the six months ended June 30, 2020, we repurchased an aggregate of 259,461 shares of our common stock at an average price per share of $26.71, for a total purchase price of $6.9 million. At June 30, 2020, we had approximately $105.6 million remaining under this authorization for the repurchase of our common stock.

During the first six months of 2020, we issued 582,151 treasury shares which had an average cost of $3.16 per share for restricted stock units that vested during the period. In accordance with the Silgan Holdings Inc. Amended and Restated 2004 Stock Incentive Plan, we repurchased 217,325 shares of our common stock at an average cost of $28.63 to satisfy minimum employee withholding tax requirements resulting from the vesting of such restricted stock units.

We account for treasury shares using the first-in, first-out (FIFO) cost method.  As of June 30, 2020, 64,226,667 shares of our common stock were held in treasury.

Note 14.             Stock-Based Compensation

We currently have one stock-based compensation plan in effect under which we have issued options and restricted stock units to our officers, other key employees and outside directors.  During the first six months of 2020, 423,622 restricted stock units were granted to certain of our officers, other key employees and outside directors.  The fair value of these restricted stock units at the grant date was $12.5 million, which is being amortized ratably over the respective vesting period from the grant date.

-18-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Note 15.             Business Segment Information

Reportable business segment information was as follows:

	Metal Containers		Closures		Plastic Containers		Corporate		Total
	(Dollars in thousands)
Three Months Ended June 30, 2020
Net sales	$	597,191	$	410,468	$	168,811	$	—	$	1,176,470
Depreciation and amortization(1)	20,545		22,026		9,352		42		51,965
Rationalization charges	1,153		700		89		—		1,942
Segment income	71,782		58,581		22,987		(22,116)		131,234
Three Months Ended June 30, 2019
Net sales	$	575,618	$	363,344	$	154,201	$	—	$	1,093,163
Depreciation and amortization(1)	21,437		21,145		9,336		39		51,957
Rationalization charges	39,023		248		46		—		39,317
Segment income	14,029		46,857		13,410		(5,697)		68,599
Six Months Ended June 30, 2020
Net sales	$	1,105,709	$	767,619	$	333,526	$	—	$	2,206,854
Depreciation and amortization(1)	41,026		42,150		18,840		79		102,095
Rationalization charges	3,116		1,442		183		—		4,741
Segment income	119,261		103,810		45,032		(34,728)		233,375
Six Months Ended June 30, 2019
Net sales	$	1,082,680	$	719,543	$	318,071			$	2,120,294
Depreciation and amortization(1)	42,543		41,498		18,153		80		102,274
Rationalization charges	39,245		5,908		247				45,400
Segment income	52,926		87,113		25,476		(10,174)		155,341

_____________

⁽¹⁾Depreciation and amortization excludes amortization of debt discount and debt issuance costs of $1.1 million and $2.1 million for the three and six months ended June 30, 2020, respectively, and debt issuance costs of $0.9 million and $1.8 million for the three and six months ended June 30, 2019, respectively.

Total segment income is reconciled to income before income taxes as follows:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollars in thousands)
Total segment income	$	131,234	$	68,599	$	233,375	$	155,341
Interest and other debt expense	25,837		28,401		50,807		55,505
Income before income taxes	$	105,397	$	40,198	$	182,568	$	99,836

-19-

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2020 and 2019 and for the

three and six months then ended is unaudited)

Sales and segment income of our metal container business and part of our closures business are dependent, in part, upon fruit and vegetable harvests.  The size and quality of these harvests varies from year to year, depending in large part upon the weather conditions in applicable regions.  Because of the seasonality of the harvests, we have historically experienced higher unit sales volume in the third quarter of our fiscal year and generated a disproportionate amount of our annual segment income during that quarter.

-20-

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q that are not historical facts are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and Securities Exchange Act of 1934, as amended.  Such forward-looking statements are made based upon management’s expectations and beliefs concerning future events impacting us and therefore involve a number of uncertainties and risks, including, but not limited to, those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in our other filings with the Securities and Exchange Commission.  As a result, the actual results of our operations or our financial condition could differ materially from those expressed or implied in these forward-looking statements.

General

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

Our objective is to increase shareholder value by efficiently deploying capital and management resources to grow our business, reduce operating costs and build sustainable competitive positions, or franchises, and to complete acquisitions that generate attractive cash returns.  We have grown our net sales and income from operations largely through acquisitions but also through internal growth, and we continue to evaluate acquisition opportunities in the consumer goods packaging market.  If acquisition opportunities are not identified over a longer period of time, we may use our cash flow to repay debt, repurchase shares of our common stock or increase dividends to our stockholders or for other permitted purposes.

-21-

RESULTS OF OPERATIONS

The following table sets forth certain unaudited income statement data expressed as a percentage of net sales for the periods presented:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net sales
Metal containers	50.8	%	52.7	%	50.1	%	51.1	%
Closures	34.9		33.2		34.8		33.9
Plastic containers	14.3		14.1		15.1		15.0
Consolidated	100.0		100.0		100.0		100.0
Cost of goods sold	80.9		83.2		81.5		83.5
Gross profit	19.1		16.8		18.5		16.5
Selling, general and administrative expenses	8.5		7.3		8.6		7.4
Rationalization charges	0.2		3.6		0.2		2.2
Other pension and postretirement income	(0.8)		(0.4)		(0.9)		(0.4)
Income before interest and income taxes	11.2		6.3		10.6		7.3
Interest and other debt expense	2.2		2.6		2.3		2.6
Income before income taxes	9.0		3.7		8.3		4.7
Provision for income taxes	2.3		0.9		2.1		1.0
Net income	6.7	%	2.8	%	6.2	%	3.7	%

Summary unaudited results of operations for the periods presented are provided below.

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(dollars in millions)
Net sales
Metal containers	$	597.2	$	575.6	$	1,105.7	$	1,082.7
Closures	410.5		363.4		767.6		719.5
Plastic containers	168.8		154.2		333.5		318.1
Consolidated	$	1,176.5	$	1,093.2	$	2,206.8	$	2,120.3
Segment income
Metal containers (1)	$	71.8	$	14.0	$	119.3	$	52.9
Closures (2)	58.6		46.9		103.8		87.1
Plastic containers (3)	23.0		13.4		45.0		25.5
Corporate (4)	(22.2)		(5.7)		(34.7)		(10.2)
Consolidated	$	131.2	$	68.6	$	233.4	$	155.3

⁽¹⁾ Includes rationalization charges of $1.2 million and $39.0 million for the three months ended June 30, 2020 and 2019, respectively, and $3.1 million and $39.3 million for the six months ended June 30, 2020 and 2019, respectively.

⁽²⁾ Includes rationalization charges of $0.7 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively, and $1.4 million and $5.9 million for the six months ended June 30, 2020 and 2019, respectively. Includes a charge of $3.5 million for the write-up of inventory for purchase accounting as a result of the acquisition of the Albéa Dispensing Business for each of the three and six months ended June 30, 2020.

⁽³⁾ Includes rationalization charges of $0.1 million for each of the three months ended June 30, 2020 and 2019 and $0.2 million for each of the six months ended June 30, 2020 and 2019.

⁽⁴⁾ Includes costs attributed to announced acquisitions of $16.1 million and $18.3 million for the three and six months ended June 30, 2020, respectively.

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Three Months Ended June 30, 2020 Compared with Three Months Ended June 30, 2019

Overview.  Consolidated net sales were $1.18 billion in the second quarter of 2020, a 7.6 percent increase as compared to the second quarter of 2019 primarily due to higher volumes across all businesses, including the impact from acquisitions, and a more favorable mix of products sold in the closures business, partially offset by the pass through of lower raw material costs, a less favorable mix of products sold in the metal and plastic container businesses and the impact of unfavorable foreign currency translation. Income before interest and income taxes for the second quarter of 2020 was $131.2 million, a $62.6 million increase as compared to the same period in 2019, primarily due to higher volumes and strong operating performance across all businesses, lower rationalization charges, higher pension income and a more favorable mix of products sold in the closures business, partially offset by acquisition related costs of $16.1 million, a less favorable mix of products sold in the metal container business, the negative impact of a charge for the purchase accounting write-up of acquired inventory of the Albéa Dispensing Business and the unfavorable impact of a charge for a non-commercial legal dispute relating to prior periods in the plastic container business. Results for the second quarters of 2020 and 2019 included rationalization charges of $2.0 million and $39.3 million, respectively. Results for the second quarters of 2020 and 2019 also included other pension and postretirement income of $9.7 million and $4.5 million, respectively. Results for the second quarter of 2020 also included costs attributed to announced acquisitions of $16.1 million. Net income for the second quarter of 2020 was $78.2 million as compared to $31.0 million for the same period in 2019.  Net income per diluted share for the second quarter of 2020 was $0.70 as compared to $0.28 for the same period in 2019.

Net Sales.  The $83.3 million increase in consolidated net sales in the second quarter of 2020 as compared to the second quarter of 2019 was the result of higher net sales across all the businesses.

Net sales for the metal container business increased $21.6 million, or 3.8 percent, in the second quarter of 2020 as compared to the same period in 2019.  This increase was primarily the result of higher unit volumes of approximately fifteen percent, partially offset by the pass through of lower raw material costs, a less favorable mix of products sold and the impact of unfavorable foreign currency translation of approximately $2.0 million. The increase in unit volumes was primarily due to continued higher demand for products consumed in the home, partially offset by the volume benefit in the prior year from a certain customer that increased purchases following a destocking of inventory in previous periods.

Net sales for the closures business increased $47.1 million, or 13 percent, in the second quarter of 2020 as compared to the same period in 2019.  This increase was primarily the result of higher unit volumes of approximately three percent and a more favorable mix of products sold, partially offset by the impact of unfavorable foreign currency translation of approximately $7.0 million and the pass through of lower raw material costs. The increase in unit volumes was principally the result of strong volumes for certain consumer health, hygiene, personal care and food products as well as the inclusion of the recent acquisitions of Cobra Plastics and the Albéa Dispensing Business. These volume gains were partially offset by weak demand for certain beauty and beverage products.

Net sales for the plastic container business increased $14.6 million, or 9.5 percent, in the second quarter of 2020 as compared to the same period in 2019. This increase was principally due to higher volumes of approximately fourteen percent, partially offset by a less favorable mix of products sold, the pass through of lower raw material costs and the impact of unfavorable foreign currency translation of approximately $1.0 million. The increase in volumes was due primarily to continued higher demand for certain food and consumer health and hygiene products.

Gross Profit.  Gross profit margin increased 2.3 percentage points to 19.1 percent in the second quarter of 2020 as compared to the same period in 2019 for the reasons discussed below in "Income before Interest and Income Taxes."

Selling, General and Administrative Expenses.  Selling, general and administrative expenses as a percentage of consolidated net sales increased to 8.5 percent in the second quarter of 2020 as compared to 7.3 percent in the same period in 2019. Selling, general and administrative expenses increased $20.5 million to $100.6 million for the second quarter of 2020 as compared to $80.1 million for the same period in 2019. The increase in selling, general and administrative expenses was principally due to costs attributed to announced acquisitions of $16.1 million, the inclusion of the selling, general and administrative expenses from Cobra Plastics and the Albéa Dispensing Business which were acquired in 2020 and a charge of $2.8 million for a non-commercial legal dispute relating to prior periods.

Income before Interest and Income Taxes.  Income before interest and income taxes for the second quarter of 2020 increased by $62.6 million as compared to the second quarter of 2019, and margins increased to 11.2 percent from 6.3 percent over the same periods. The increase in income before interest and income taxes was primarily the result of higher income in each of the

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businesses and lower rationalization charges, partially offset by higher selling, general and administrative expenses. Rationalization charges were $2.0 million and $39.3 million in the second quarters of 2020 and 2019, respectively.

Segment income of the metal container business for the second quarter of 2020 increased $57.8 million as compared to the same period in 2019, and segment income margin increased to 12.0 percent from 2.4 percent over the same periods. The increase in segment income was due primarily to lower rationalization charges, higher unit volumes and higher pension income, partially offset by a less favorable mix of products sold. Rationalization charges were $1.2 million and $39.0 million in the second quarters of 2020 and 2019, respectively.

Segment income of the closures business for the second quarter of 2020 increased $11.7 million as compared to the same period in 2019, and segment income margin increased to 14.3 percent from 12.9 percent over the same periods.  The increase in segment income was primarily due to higher unit volumes, a more favorable mix of products sold and higher pension income, partially offset by the negative impact of a $3.5 million charge for the purchase accounting write-up of inventory of the Albéa Dispensing Business.

Segment income of the plastic container business for the second quarter of 2020 increased $9.6 million as compared to the same period in 2019, and segment income margin increased to 13.6 percent from 8.7 percent over the same periods.  The increase in segment income was primarily attributable to higher volumes, lower manufacturing costs including for raw materials and higher pension income, partially offset by the unfavorable impact of a $2.8 million charge for a non-commercial legal dispute relating to prior periods.

Interest and Other Debt Expense. Interest and other debt expense for the second quarter of 2020 decreased $2.6 million to $25.8 million as compared to $28.4 million in the same period in 2019. This decrease was due to lower weighted average interest rates, partially offset by higher average outstanding borrowings primarily related to the acquisition of the Albéa Dispensing Business and additional revolving loan borrowings in the current year quarter principally to hold cash and cash equivalents to ensure liquidity against potential credit market disruptions as a result of the COVID-19 pandemic. We repaid such additional revolving loan borrowings in June 2020. Weighted average interest rates were lower during the current quarter due to lower variable market rates and the redemption of all outstanding 5½% Senior Notes due 2022 in the third quarter of 2019.

Provision for Income Taxes. The effective tax rates were 25.8 percent and 23.0 percent for the second quarters of 2020 and 2019, respectively. The effective tax rate in the second quarter of 2020 was unfavorably impacted by certain nondeductible expenses principally related to costs incurred for the acquisition of the Albéa Dispensing Business. The effective tax rate in the second quarter of 2019 was favorably impacted by the resolution of a prior year tax audit.

Six Months Ended June 30, 2020 Compared with Six Months Ended June, 2019

Overview.  Consolidated net sales were $2.21 billion in the first six months of 2020, a 4.1 percent increase as compared to the first six months of 2019 primarily as a result of higher volumes in each of our businesses, including the impact from acquisitions, and a more favorable mix of products sold in the closures business, partially offset by the pass through of lower raw material costs across all businesses, a less favorable mix of products sold in the metal and plastic container businesses and the impact of unfavorable foreign currency translation. Income before interest and income taxes for the first six months of 2020 increased by $78.1 million as compared to the same period in 2019 primarily due to higher volumes and strong operating performance in each of the businesses, lower rationalization charges, higher pension income and a more favorable mix of products sold in the closures business. These increases were partially offset by higher selling, general and administrative expenses, a less favorable mix of products sold in the metal container business, the negative impact from the purchase accounting write-up of acquired inventory of the Albéa Dispensing Business and the unfavorable impact of a charge in the plastic container business for a non-commercial legal dispute relating to prior periods. Results for the first six months of 2020 and 2019 included rationalization charges of $4.7 million and $45.4 million, respectively. Results for the first six months of 2020 also included costs attributed to acquisitions of $18.3 million and a loss on early extinguishment of debt of $1.5 million. Results for the first six months of 2020 and 2019 also included other pension and postretirement income of $19.4 million and $9.0 million, respectively. Net income for the first six months of 2020 was $135.8 million as compared to $77.7 million for the same period in 2019.  Net income per diluted share for the first six months of 2020 was $1.22 as compared to $0.70 for the same period in 2019.

Net Sales.  The $86.5 million increase in consolidated net sales in the first six months of 2020 as compared to the first six months of 2019 was the result of higher net sales across all businesses.

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Net sales for the metal container business increased $23.0 million, or 2.1 percent, in the first six months of 2020 as compared to the same period in 2019.  This increase was primarily the result of higher unit volumes of approximately eleven percent, partially offset by the pass through of lower raw material and other manufacturing costs, a less favorable mix of products sold and the impact of unfavorable foreign currency translation of approximately $4.0 million. The increase in unit volumes was primarily the result of continued higher demand for products consumed in the home and lower volumes in the first quarter of 2019 as a result of the 2018 pre-buy of products by customers in anticipation of significant metal inflation in 2019, partially offset by the volume benefit in the prior year from a certain customer that increased purchases following a destocking of inventory in previous periods.

Net sales for the closures business increased $48.1 million, or 6.7 percent, in the first six months of 2020 as compared to the same period in 2019.  This increase was primarily the result of higher unit volumes of approximately four percent and a more favorable mix of products sold, partially offset by the pass through of lower raw material costs and the impact of unfavorable foreign currency translation of approximately $12.0 million. The increase in unit volumes was principally the result of strong volumes for certain consumer health, hygiene, personal care and food products, the inclusion of the recent acquisitions of Cobra Plastics and the Albéa Dispensing Business and lower volumes in the first quarter of 2019 as a result of the 2018 pre-buy of products by customers in anticipation of significant metal inflation in 2019. These volume gains were partially offset by weak demand for certain beauty and beverage products.

Net sales for the plastic container business increased $15.4 million, or 4.8 percent, in the first six months of 2020 as compared to the same period in 2019. This increase was primarily due to higher volumes of approximately ten percent, partially offset by the pass through of lower raw material costs, a less favorable mix of products sold and the impact of unfavorable foreign currency translation of approximately $1.0 million. The increase in volumes was due primarily to continued higher demand for certain food and consumer health and hygiene products.

Gross Profit.  Gross profit margin increased 2.0 percentage points to 18.5 percent in the first six months of 2020 as compared to the same period in 2019 for the reasons discussed below in "Income before Interest and Income Taxes".

Selling, General and Administrative Expenses.  Selling, general and administrative expenses as a percentage of consolidated net sales increased to 8.6 percent for the first six months of 2020 as compared to 7.4 percent in the same period in 2019. Selling, general and administrative expenses increased $32.7 million to $190.5 million for the first six months of 2020 as compared to $157.8 million for the same period in 2019. The increase in selling, general and administrative expenses was principally the result of costs attributed to announced acquisitions of $18.3 million, the inclusion of selling, general and administrative expenses from Cobra Plastics and the Albéa Dispensing Business which were acquired in 2020, one-time plant employee incentive payments in the first quarter of 2020 and a charge of $2.8 million for a non-commercial legal dispute relating to prior periods.

Income before Interest and Income Taxes.  Income before interest and income taxes for the first six months of 2020 increased by $78.1 million as compared to the first six months of 2019, and margins increased to 10.6 percent from 7.3 percent over the same periods. The increase in income before interest and income taxes was primarily due to higher income in each of the businesses, partially offset by higher selling, general and administrative expenses. Rationalization charges were $4.7 million and $45.4 million for the first six months of 2020 and 2019, respectively.

Segment income of the metal container business for the first six months of 2020 increased $66.4 million as compared to the same period in 2019, and segment income margin increased to 10.8 percent from 4.9 percent over the same periods. The increase in segment income was primarily attributable to lower rationalization charges, higher unit volumes and higher pension income, partially offset by a less favorable mix of products sold. Rationalization charges were $3.1 million and $39.3 million in the first six months of 2020 and 2019, respectively.

Segment income of the closures business for the first six months of 2020 increased $16.7 million, as compared to the same period in 2019, and segment income margin increased to 13.5 percent from 12.1 percent over the same periods.  The increase in segment income was primarily due to higher unit volumes, a more favorable mix of products sold, higher pension income and lower rationalization charges, partially offset by the negative impact from the purchase accounting write-up of inventory of the Albéa Dispensing Business.

Segment income of the plastic container business for the first six months of 2020 increased $19.5 million as compared to the same period in 2019, and segment income margin increased to 13.5 percent from 8.0 percent over the same periods.  The increase in segment income was primarily attributable to higher volumes, lower manufacturing costs including for raw materials and higher pension income, partially offset by the unfavorable impact of a charge for a non-commercial legal dispute relating to prior periods.

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Interest and Other Debt Expense. Interest and other debt expense before loss on early extinguishment of debt for the first six months of 2020 decreased $6.2 million to $49.3 million as compared to $55.5 million in the same period in 2019 primarily due to lower weighted average interest rates, partially offset by higher average outstanding borrowings primarily related to the acquisition of the Albéa Dispensing Business and additional revolving loan borrowings in the current year period principally to hold cash and cash equivalents to ensure liquidity against potential credit market disruptions as a result of the COVID-19 pandemic. We repaid such additional revolving loan borrowings in June 2020. Weighted average interest rates were lower during the first six months of 2020 due to lower variable market rates and the redemption of all outstanding 5½% Senior Notes due 2022 in the third quarter of 2019. In the first quarter of 2020, we recognized a loss on early extinguishment of debt of $1.5 million in conjunction with the prepayment of U.S. term loans under the Credit Agreement.

Provision for Income Taxes. The effective tax rates were 25.6 percent and 22.2 percent for the first six months of 2020 and 2019, respectively. The effective tax rate for the first six months of 2020 was unfavorably impacted by certain nondeductible expenses principally related to costs incurred for the acquisition of the Albéa Dispensing Business. The effective tax rate for the first six months of 2019 was favorably impacted by the timing of certain tax deductions and the resolution of a prior year tax audit.

CAPITAL RESOURCES AND LIQUIDITY

Our principal sources of liquidity have been net cash from operating activities and borrowings under our debt instruments, including our senior secured credit facility.  Our liquidity requirements arise from our obligations under the indebtedness incurred in connection with our acquisitions and the refinancing of that indebtedness, capital investment in new and existing equipment, the funding of our seasonal working capital needs and other general corporate uses.

On February 26, 2020, we issued (i) an additional $200 million aggregate principal amount of the 4⅛% Notes at 99.5 percent of their principal amount, plus accrued and unpaid interest from November 12, 2019, and €500 million aggregate principal amount of the 2¼% Notes at 100 percent of their principal amount. We used the net proceeds from these issuances and revolving loan borrowings under the Credit Agreement to prepay all of our outstanding U.S. term loans under the Credit Agreement. As a result of this prepayment, we recorded a pre-tax charge for the loss on early extinguishment of debt of $1.5 million during the first quarter of 2020 for the write-off of unamortized debt issuance costs.

On April 17, 2020, we and certain of our subsidiaries entered into the Incremental Term Loan Commitment Agreement pursuant to the Credit Agreement, which provided for the lenders thereunder to lend to us, on a delayed draw basis, $900 million of Incremental U.S. Term Loans to fund the purchase price for the acquisition of the Albéa Dispensing Business. On June 1, 2020, we borrowed the Incremental U.S. Term Loans to fund the purchase price for the acquisition of the Albéa Dispensing Business.

On June 1, 2020, we acquired the Albéa Dispensing Business. This business operates a global network of ten manufacturing facilities across North America, Europe, South America and Asia. We funded the purchase price for this acquisition with the Incremental U.S. Term Loans and revolving loan borrowings under the Credit Agreement.

You should also read Notes 3 and 8 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020 included elsewhere in this Quarterly Report.

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

For the six months ended June 30, 2019, we used net borrowings of revolving loans of $416.0 million to fund cash used in operations of $129.1 million, decreases in outstanding checks of $83.7 million, net capital expenditures and other investing activities of $115.6 million, dividends paid on our common stock of $26.4 million, repayments of long-term debt of $8.2 million and repurchases of our common stock of $15.2 million and to increase cash and cash equivalents (including the positive effect of exchange rate changes of $0.7 million) by $38.5 million.

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At June 30, 2020, we had $354.0 million of revolving loans outstanding under the Credit Agreement.  After taking into account outstanding letters of credit, the available portion of revolving loans under the Credit Agreement at June 30, 2020 was $819.3 million and Cdn $15.0 million.

Because we sell metal containers and closures used in fruit and vegetable pack processing, we have seasonal sales.  As is common in the industry, we must utilize working capital to build inventory and then carry accounts receivable for some customers beyond the end of the packing season.  Due to our seasonal requirements, which generally peak sometime in the summer or early fall, we may incur short-term indebtedness to finance our working capital requirements.  Our peak seasonal working capital requirements have historically averaged approximately $350 million. We fund seasonal working capital requirements through revolving loans under the Credit Agreement, other foreign bank loans and cash on hand. We may use the available portion of revolving loans under the Credit Agreement, after taking into account our seasonal needs and outstanding letters of credit, for other general corporate purposes including acquisitions, capital expenditures, dividends, stock repurchases and to refinance or repurchase other debt.

We believe that cash generated from operations and funds from borrowings available under the Credit Agreement and other foreign bank loans will be sufficient to meet our expected operating needs, planned capital expenditures, debt service, tax obligations, pension benefit plan contributions, share repurchases and common stock dividends for the foreseeable future.  We continue to evaluate acquisition opportunities in the consumer goods packaging market and may incur additional indebtedness, including indebtedness under the Credit Agreement, to finance any such acquisition.

We are in compliance with all financial and operating covenants contained in our financing agreements and believe that we will continue to be in compliance during 2020 with all of these covenants.

Rationalization Charges

We continually evaluate cost reduction opportunities across each of our businesses, including rationalizations of our existing facilities through plant closings and downsizings. We use a disciplined approach to identify opportunities that generate attractive cash returns. Under our rationalization plans, we made cash payments of $3.6 million and $1.9 million for the six months ended June 30, 2020 and 2019, respectively. Exclusive of the footprint optimization plan for our metal container business and our resulting withdrawal from the Central States Pension Plan announced in 2019, remaining expenses and cash expenditures for our rationalization plans are expected to be $1.9 million and $3.4 million, respectively. Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $1.1 million per year and be recognized annually for the next twenty years, and remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $3.1 million annually for the next twenty years, beginning in 2020.

You should also read Note 4 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020 included elsewhere in this Quarterly Report.

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Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in interest rates and, with respect to our international metal container and closures operations and our Canadian plastic container operations, from foreign currency exchange rates.  In the normal course of business, we also have risk related to commodity price changes for items such as natural gas.  We employ established policies and procedures to manage our exposure to these risks.  Interest rate, foreign currency and commodity pricing transactions are used only to the extent considered necessary to meet our objectives.  We do not utilize derivative financial instruments for trading or other speculative purposes.

Information regarding our interest rate risk, foreign currency exchange rate risk and commodity pricing risk has been disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.  Since such filing, other than the changes discussed in Notes 3, 8 and 9 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020 included elsewhere in this Quarterly Report, there has not been a material change to our interest rate risk, foreign currency exchange rate risk or commodity pricing risk or to our policies and procedures to manage our exposure to these risks.

Item 4.  CONTROLS AND PROCEDURES

As required by Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures.  Based upon that evaluation, as of the end of the period covered by this Quarterly Report, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal controls over financial reporting during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, these internal controls.

On June 1, 2020, we acquired the Albéa Dispensing Business. You should read Note 3 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020 included elsewhere in this Quarterly Report for further information on our acquisition of the Albéa Dispensing Business. We are currently in the process of integrating the internal controls and procedures of the Albéa Dispensing Business into our internal controls over financial reporting. As provided under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the Securities and Exchange Commission, we will include the internal controls and procedures of the Albéa Dispensing Business in our annual assessment of the effectiveness of our internal control over financial reporting for our 2021 fiscal year. 

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Part II.  Other Information

Item 6.  Exhibits

Exhibit Number	Description
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1	Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
32.2	Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.

	SILGAN HOLDINGS INC.
Dated: August 7, 2020	/s/ Robert B. Lewis
	Robert B. Lewis
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial and
	Accounting Officer)

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