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~~September 30, 2019



	☐		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.

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~~October 31, 2019, the number of shares outstanding of the Registrant’s common stock was ~~111,175,846.~~110,768,306.



SILGAN HOLDINGS INC.

TABLE OF CONTENTS

	Page No.


Part I. Financial Information	3

Item 1. Financial Statements	3

Condensed Consolidated Balance Sheets at ~~June~~September 30, 2019 and 2018 and December 31, 2018	3

Condensed Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018	4

Condensed Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018	5

Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018	6

Condensed Consolidated Statements of Stockholders’ Equity for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018	7

Notes to Condensed Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3. Quantitative and Qualitative Disclosures About Market Risk	2627

Item 4. Controls and Procedures	2627

Part II. Other Information	2728

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6. Exhibits	2729

Signatures	2830

Part I. Financial Information

Item 1. Financial Statements

SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	June 30, 2019			June 30, 2018			Dec. 31, 2018			Sept. 30, 2019			Sept. 30, 2018			Dec. 31, 2018
	(unaudited)			(unaudited)						(unaudited)			(unaudited)
Assets

Current assets:
Cash and cash equivalents	$	111,341		$	181,220		$	72,819		$	117,389		$	171,369		$	72,819
Trade accounts receivable, net	666,681			648,525			511,332			751,404			783,306			511,332
Inventories	822,584			833,719			634,806			703,206			690,378			634,806
Prepaid expenses and other current assets	59,245			63,361			71,177			61,310			67,492			71,177
Total current assets	1,659,851			1,726,825			1,290,134			1,633,309			1,712,545			1,290,134

Property, plant and equipment, net	1,523,850			1,480,390			1,517,510			1,522,541			1,502,231			1,517,510
Goodwill	1,146,363			1,158,910			1,148,302			1,128,151			1,156,051			1,148,302
Other intangible assets, net	369,210			399,590			383,448			358,046			392,144			383,448
Other assets, net	411,944			293,962			239,900			431,970			295,228			239,900
	$	5,111,218		$	5,059,677		$	4,579,294		$	5,074,017		$	5,058,199		$	4,579,294

Liabilities and Stockholders’ Equity

Current liabilities:
Revolving loans and current portion of long-term debt	$	886,458		$	788,731		$	170,214		$	841,430		$	733,404		$	170,214
Trade accounts payable	598,484			609,164			712,739			550,557			552,897			712,739
Accrued payroll and related costs	68,585			65,493			68,773			69,191			71,658			68,773
Accrued liabilities	143,360			90,360			127,342			156,599			101,895			127,342
Total current liabilities	1,696,887			1,553,748			1,079,068			1,617,777			1,459,854			1,079,068

Long-term debt	1,824,533			2,173,941			2,134,400			1,809,955			2,186,275			2,134,400
Deferred income taxes	270,430			274,086			268,036			274,107			279,449			268,036
Other liabilities	389,466			219,892			216,525			403,648			220,704			216,525

Stockholders’ equity:
Common stock	1,751			1,751			1,751			1,751			1,751			1,751
Paid-in capital	280,636			268,559			276,062			285,061			272,301			276,062
Retained earnings	2,049,995			1,897,417			1,997,785			2,118,860			1,970,875			1,997,785
Accumulated other comprehensive loss	(265,373		)	(208,963		)	(268,808		)	(287,923		)	(212,256		)	(268,808		)
Treasury stock	(1,137,107		)	(1,120,754		)	(1,125,525		)	(1,149,219		)	(1,120,754		)	(1,125,525		)
Total stockholders’ equity	929,902			838,010			881,265			968,530			911,917			881,265
	$	5,111,218		$	5,059,677		$	4,579,294		$	5,074,017		$	5,058,199		$	4,579,294

See accompanying notes.

SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018

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

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018

Net sales	$	1,093,163		$	1,059,103		$	2,120,294		$	2,071,385		$	1,321,342		$	1,306,999		$	3,441,635		$	3,378,383
Cost of goods sold	909,650			885,853			1,770,784			1,738,101			1,113,727			1,102,892			2,884,510			2,840,991
Gross profit	183,513			173,250			349,510			333,284			207,615			204,107			557,125			537,392
Selling, general and administrative expenses	80,087			78,253			157,749			154,998			76,065			73,690			233,816			228,691
Rationalization charges	39,317			492			45,400			1,195			3,195			288			48,594			1,483
Other pension and postretirement income	(4,490		)	(9,612		)	(8,980		)	(19,210		)	(4,340		)	(8,326		)	(13,320		)	(27,536		)
Income before interest and income taxes	68,599			104,117			155,341			196,301			132,695			138,455			288,035			334,754
Interest and other debt expense before loss on early extinguishment of debt	28,401			29,922			55,505			60,401			26,767			28,199			82,272			88,602
Loss on early extinguishment of debt	—			2,493			—			2,493			1,676			—			1,676			2,493
Interest and other debt expense	28,401			32,415			55,505			62,894			28,443			28,199			83,948			91,095
Income before income taxes	40,198			71,702			99,836			133,407			104,252			110,256			204,087			243,659
Provision for income taxes	9,243			16,359			22,140			32,340			22,978			25,517			45,117			57,857
Net income	$	30,955		$	55,343		$	77,696		$	101,067		$	81,274		$	84,739		$	158,970		$	185,802

Earnings per share:
Basic net income per share	$	0.28		$	0.50		$	0.70		$	0.91		$	0.73		$	0.77		$	1.43		$	1.68
Diluted net income per share	$	0.28		$	0.50		$	0.70		$	0.91		$	0.73		$	0.76		$	1.43		$	1.66

Weighted average number of shares:
Basic	111,185			110,645			110,945			110,566			111,058			110,657			110,985			110,599
Effect of dilutive securities	317			929			600			998			463			1,036			554			1,010
Diluted	111,502			111,574			111,545			111,564			111,521			111,693			111,539			111,609

See accompanying notes.

SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018

(Dollars in thousands)

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018

Net income	$	30,955		$	55,343		$	77,696		$	101,067		$	81,274		$	84,739		$	158,970		$	185,802
Other comprehensive income (loss), net of tax:
Changes in net prior service credit and actuarial losses	2,614			778			5,120			1,634			2,625			807			7,745			2,441
Change in fair value of derivatives	(1,601		)	587			(2,488		)	197			(159		)	476			(2,647		)	673
Foreign currency translation	6,045			(35,621		)	803			(21,821		)	(25,016		)	(4,576		)	(24,213		)	(26,397		)
Other comprehensive income (loss)	7,058			(34,256		)	3,435			(19,990		)
Other comprehensive loss													(22,550		)	(3,293		)	(19,115		)	(23,283		)
Comprehensive income	$	38,013		$	21,087		$	81,131		$	81,077		$	58,724		$	81,446		$	139,855		$	162,519

See accompanying notes.

SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018

(Dollars in thousands)

(Unaudited)


	2019			2018			2019			2018
Cash flows provided by (used in) operating activities:
Net income	$	77,696		$	101,067		$	158,970		$	185,802
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	104,102			97,903			156,780			146,246
Rationalization charges	45,400			1,195			48,594			1,483
Stock compensation expense	8,244			7,420			12,669			11,162
Loss on early extinguishment of debt	—			2,493			1,676			2,493
Other changes that provided (used) cash:
Trade accounts receivable, net	(155,198		)	(134,961		)	(250,783		)	(271,636		)
Inventories	(187,790		)	(176,222		)	(75,414		)	(32,743		)
Trade accounts payable	(19,421		)	45,232			(63,609		)	(11,185		)
Accrued liabilities	(22,875		)	(29,125		)	(10,475		)	(11,227		)
Other, net	20,764			(7,886		)	19,181			(7,304		)
Net cash used in operating activities	(129,078		)	(92,884		)
Net cash (used in) provided by operating activities							(2,411		)	13,091

Cash flows provided by (used in) investing activities:
Capital expenditures	(116,165		)	(91,278		)	(166,848		)	(134,636		)
Other, net	560			486			509			236
Net cash used in investing activities	(115,605		)	(90,792		)	(166,339		)	(134,400		)

Cash flows provided by (used in) financing activities:
Borrowings under revolving loans	703,359			848,686			1,139,329			923,639
Repayments under revolving loans	(287,368		)	(132,386		)	(464,759		)	(266,477		)
Repayments of long-term debt	(8,161		)	(284,638		)	(308,161		)	(286,200		)
Changes in outstanding checks - principally vendors	(83,670		)	(87,795		)	(83,670		)	(87,795		)
Dividends paid on common stock	(26,415		)	(22,417		)	(38,615		)	(33,843		)
Debt issuance costs	—			(2,866		)	—			(2,866		)
Repurchase of common stock under stock plan	(15,252		)	(3,057		)	(27,364		)	(3,057		)
Net cash provided by financing activities	282,493			315,527			216,760			243,401

Effect of exchange rate changes on cash and cash equivalents	712			(4,164		)	(3,440		)	(4,256		)

Cash and cash equivalents:
Net increase	38,522			127,687			44,570			117,836
Balance at beginning of year	72,819			53,533			72,819			53,533
Balance at end of period	$	111,341		$	181,220		$	117,389		$	171,369

Interest paid, net	$	53,069		$	62,192		$	97,630		$	104,040
Income taxes paid, net	23,634			31,303			31,067			39,400

See accompanying notes.

SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF

STOCKHOLDERS' EQUITY

For the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018

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

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018

Common stock - shares outstanding
Balance at beginning of period	111,128			110,569			110,430			110,385			111,176			110,618			110,430			110,385
Net issuance of treasury stock for vested restricted stock units	48			49			746			233			—			—			746			233
Repurchases of common stock													(408		)	—			(408		)	—
Balance at end of period	111,176			110,618			111,176			110,618			110,768			110,618			110,768			110,618

Common stock - par value
Balance at beginning and end of period	$	1,751		$	1,751		$	1,751		$	1,751		$	1,751		$	1,751		$	1,751		$	1,751

Paid-in capital
Balance at beginning of period	276,435			265,022			276,062			262,201			280,636			268,559			276,062			262,201
Stock compensation expense	4,335			3,720			8,244			7,420			4,425			3,742			12,669			11,162
Net issuance of treasury stock for vested restricted stock units	(134		)	(183		)	(3,670		)	(1,062		)	—			—			(3,670		)	(1,062		)
Balance at end of period	280,636			268,559			280,636			268,559			285,061			272,301			285,061			272,301

Retained earnings
Balance at beginning of period	2,031,487			1,853,351			1,997,785			1,809,845			2,049,995			1,897,417			1,997,785			1,809,845
Net income	30,955			55,343			77,696			101,067			81,274			84,739			158,970			185,802
Dividends declared on common stock	(12,447		)	(11,277		)	(24,893		)	(22,556		)	(12,409		)	(11,281		)	(37,302		)	(33,833		)
Adoption of accounting standards updates related to leases in 2019 and revenue recognition in 2018	—			—			(593		)	9,061			—			—			(593		)	9,061
Balance at end of period	2,049,995			1,897,417			2,049,995			1,897,417			2,118,860			1,970,875			2,118,860			1,970,875

Accumulated other comprehensive loss
Balance at beginning of period	(272,431		)	(174,707		)	(268,808		)	(188,973		)	(265,373		)	(208,963		)	(268,808		)	(188,973		)
Other comprehensive income (loss)	7,058			(34,256		)	3,435			(19,990		)
Other comprehensive loss													(22,550		)	(3,293		)	(19,115		)	(23,283		)
Balance at end of period	(265,373		)	(208,963		)	(265,373		)	(208,963		)	(287,923		)	(212,256		)	(287,923		)	(212,256		)

Treasury stock
Balance at beginning of period	(1,137,035		)	(1,120,626		)	(1,125,525		)	(1,118,759		)	(1,137,107		)	(1,120,754		)	(1,125,525		)	(1,118,759		)
Net issuance of treasury stock for vested restricted stock units	(72		)	(128		)	(11,582		)	(1,995		)	—			—			(11,582		)	(1,995		)
Repurchases of common stock													(12,112		)	—			(12,112		)	—
Balance at end of period	(1,137,107		)	(1,120,754		)	(1,137,107		)	(1,120,754		)	(1,149,219		)	(1,120,754		)	(1,149,219		)	(1,120,754		)
Total stockholders' equity	$	929,902		$	838,010		$	929,902		$	838,010		$	968,530		$	911,917		$	968,530		$	911,917

Dividends declared on common stock per share	$	0.11		$	0.10		$	0.22		$	0.20		$	0.11		$	0.10		$	0.33		$	0.30

See accompanying notes.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine 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, 2018 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, 2018.

Goodwill and Other Intangible Assets. We review goodwill and other indefinite-lived intangible assets for impairment as of July 1 of each year and more frequently if circumstances indicate a possible impairment. We determined that our goodwill and other indefinite-lived intangible assets were not impaired in our annual 2019 assessment performed during the third quarter.

Recently Adopted Accounting Pronouncements. In February 2016, the Financial Accounting Standards Board, or FASB, issued an accounting standards update, or ASU, that amends existing guidance for certain leases by lessees. This amendment required us to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. We adopted this amendment on January 1, 2019 using the transition method, which allowed us to recognize the effects of applying this amendment as a cumulative effect to retained earnings as of January 1, 2019. We elected certain practical expedients permitted under the transition guidance for this amendment, which did not require us to reassess whether other contracts contain leases and allowed us to carryforward our lease classifications determined under the previous guidance. In addition, we elected to retain our previously determined assumptions concerning options to extend or terminate our leases. As a result of the adoption of this amendment, we recognized additional long-term assets of $160.8 million, additional related lease liabilities of $161.4 million and reduced retained earnings by $0.6 million all on January 1, 2019. The adoption of this amendment did not have a material impact on our results of operations or cash flows. See Note 2 for further information.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

Note 2. Leases

We have noncancelable operating leases for office and plant facilities, equipment and automobiles that expire at various dates through 2040. Certain operating leases have renewal options and rent escalation clauses as well as various purchase options.

Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, where applicable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

Lease expense for operating leases consists of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. The depreciable life of lease right-of-use assets is generally the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise for such assets.

We recognized total lease expense of ~~$17.3~~$18.7 million and ~~$33.8~~$52.6 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively, primarily related to operating lease costs paid to lessors from operating cash flows. We did not recognize any new significant leases in our Condensed Consolidated Balance Sheet for the period ended ~~June~~September 30, 2019.

The aggregate annual maturities of operating lease liabilities are as follows (dollars in thousands):


Six months ended December 31, 2019	$	22,297
Three months ended December 31, 2019				$	11,459
2020	41,237			44,800
2021	34,365			38,031
2022	26,734			30,278
2023	22,297			25,417
Thereafter	75,794			93,783
Total lease payments	222,724			243,768
Less imputed interest	(42,287		)	(48,051		)
Total	$	180,437		$	195,717

Operating lease right-of-use assets as of ~~June~~September 30, 2019 were recorded in our Condensed Consolidated Balance Sheets as other assets, net of ~~$172.4~~$187.3 million. Operating lease liabilities of ~~$180.4~~$195.7 million as of ~~June~~September 30, 2019 were recorded in our Condensed Consolidated Balance Sheets as accrued liabilities of ~~$34.2~~$35.3 million and other liabilities of ~~$146.2~~$160.4 million. At ~~June~~September 30, 2019, our operating leases had a weighted average discount rate of 5.7 percent and a weighted average remaining lease term of approximately seven years.

To a lesser extent, we have certain leases that qualify as finance leases. Finance lease right-of-use assets as of ~~June~~September 30, 2019 were recorded in our Condensed Consolidated Balance Sheets as property, plant and equipment, net of ~~$22.6~~$33.9 million. Finance lease liabilities of ~~$22.2~~$33.4 million as of ~~June~~September 30, 2019 were recorded in our Condensed Consolidated Balance Sheets as revolving loans and current portion of long term-debt of ~~$1.2~~$1.6 million and long-term debt of ~~$21.0~~$31.8 million.

At ~~June~~September 30, 2019, we did not have any significant operating or finance leases that had not commenced.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

Note 3. 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				Three Months Ended				Nine Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018		Sept. 30, 2019		Sept. 30, 2018		Sept. 30, 2019		Sept. 30, 2018
	(Dollars in thousands)								(Dollars in thousands)
Metal containers	$	575,618	$	524,863	$	1,082,680	$	1,010,818	$	822,262	$	797,768	$	1,904,941	$	1,808,585
Closures	363,344		378,762		719,543		749,108		353,436		360,816		1,072,979		1,109,924
Plastics	154,201		155,478		318,071		311,459		145,644		148,415		463,715		459,874
	$	1,093,163	$	1,059,103	$	2,120,294	$	2,071,385	$	1,321,342	$	1,306,999	$	3,441,635	$	3,378,383

Revenues by geography were as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018		Sept. 30, 2019		Sept. 30, 2018		Sept. 30, 2019		Sept. 30, 2018
	(Dollars in thousands)								(Dollars in thousands)
North America	$	858,565	$	815,337	$	1,669,332	$	1,595,127	$	1,078,187	$	1,056,099	$	2,747,518	$	2,651,225
Europe and other	234,598		243,766		450,962		476,258		243,155		250,900		694,117		727,158
	$	1,093,163	$	1,059,103	$	2,120,294	$	2,071,385	$	1,321,342	$	1,306,999	$	3,441,635	$	3,378,383

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 ~~$77.2~~$73.4 million, ~~$76.7~~$77.2 million, and $72.5 million as of ~~June~~September 30, 2019 and 2018 and December 31, 2018, respectively. Unbilled receivables are included in trade accounts receivable, net on our Condensed Consolidated Balance Sheet.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

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				Nine Months Ended
	Sept. 30, 2019		Sept. 30, 2018		Sept. 30, 2019		Sept. 30, 2018
	(Dollars in thousands)
Metal containers	$	3,035	$	72	$	42,280	$	812
Closures	72		111		5,979		150
Plastic containers	88		105		335		521
	$	3,195	$	288	$	48,594	$	1,483

Three Months Ended Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
(Dollars in thousands)
Metal containers $ 39,023
$ 258
$ 39,245
$ 740
Closures 248
—
5,908
39
Plastic containers 46
234
247
416
$ 39,317
$ 492
$ 45,400
$ 1,195

In June 2019, we announced a footprint optimization plan for our metal container business, which includes the closing of our metal container manufacturing facilities in Mt. Vernon, Missouri and Waupun, Wisconsin anticipated to occur in the fourth quarter of 2019. These plant closings, in conjunction with the prior ratification of a new labor agreement at our Menomonee Falls, Wisconsin metal container manufacturing facility that provided for the withdrawal for that facility from the Central States, Southeast and Southwest Areas Pension Plan, or the Central States Pension Plan, will result in our complete withdrawal from the Central States Pension Plan. We estimate net rationalization charges for this plan of $3.7 million for the plant closings and $56.4 million for the withdrawal from the Central States Pension Plan. We recorded total rationalization charges for this plan of ~~$38.7~~$40.7 million in the ~~second quarter~~first nine months of 2019 ~~consisting of $2.5 million for the plant closings and $36.2 million~~largely to recognize the present value of the estimated withdrawal liability related to the Central States Pension Plan. Remaining expenses and cash expenditures for the plant closings are ~~$1.2 million and $2.9 million, respectively, and are~~not expected ~~through 2021.~~to be significant. Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $1.0 million per year and be recognized annually for the next twenty years, and remaining cash expenditures related to the withdrawal from the Central States Pension Plan are expected to be approximately $2.8 million annually for the next twenty ~~years.~~years, beginning in 2020.

Rationalization charges in the first ~~six~~nine months of 2019 for the closures business were primarily related to the announced shutdown in the first quarter of 2019 of the Torello, Spain metal closures manufacturing facility.

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, 2018	$	130		$	1,482		$	—		$	1,612
Charged to expense	42,556			808			5,230			48,594
Utilized and currency translation	(2,543		)	(1,241		)	(5,230		)	(9,014		)
Balance at September 30, 2019	$	40,143		$	1,049		$	—		$	41,192

Employee
Severance
and Benefits

Plant
Exit
Costs

Non-Cash
Asset
Write-Down
Total
(Dollars in thousands)
Balance at December 31, 2018 $ 130
$ 1,482
$ —
$ 1,612
Charged to expense 41,661
437
3,302
45,400
Utilized and currency translation (1,146 ) (723 ) (3,302 ) (5,171 )
Balance at June 30, 2019 $ 40,645
$ 1,196
$ —
$ 41,841

Rationalization reserves as of ~~June~~September 30, 2019 were recorded in our Condensed Consolidated Balance Sheets as accrued liabilities of ~~$5.5~~$5.3 million and other liabilities of ~~$36.3~~$35.9 million. Exclusive of the footprint optimization plan for our metal container business and withdrawal from the Central States Pension Plan discussed above, remaining expenses for our rationalization plans of ~~$4.2~~$2.4 million are expected primarily through 2019 and remaining cash expenditures for our rationalization plans of ~~$4.7~~$5.0 million are expected through 2023.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

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			Unrecognized Net Defined Benefit Plan Costs			Change in Fair Value of Derivatives			Foreign Currency Translation			Total
	(Dollars in thousands)												(Dollars in thousands)
Balance at December 31, 2018	$	(154,466	)	$	(1,008	)	$	(113,334	)	$	(268,808	)	$	(154,466	)	$	(1,008	)	$	(113,334	)	$	(268,808	)
Other comprehensive loss before reclassifications	—			(2,557		)	803			(1,754		)	—			(2,975		)	(24,213		)	(27,188		)
Amounts reclassified from accumulated other comprehensive loss	5,120			69			—			5,189			7,745			328			—			8,073
Other comprehensive income	5,120			(2,488		)	803			3,435
Balance at June 30, 2019	$	(149,346	)	$	(3,496	)	$	(112,531	)	$	(265,373	)
Other comprehensive loss													7,745			(2,647		)	(24,213		)	(19,115		)
Balance at September 30, 2019													$	(146,721	)	$	(3,655	)	$	(137,547	)	$	(287,923	)

The amounts reclassified to earnings from the unrecognized net defined benefit plan costs component of accumulated other comprehensive loss for the three and ~~six~~nine months ended ~~June~~September 30, 2019 were net (losses) of $~~(3.4)~~(3.5) million and ~~$(6.8)~~$(10.3) million, respectively, excluding income tax benefits of $0.8 million and ~~$1.7~~$2.6 million, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2019, these net (losses) consisted of amortization of net actuarial (losses) of ~~$(4.0)~~$(4.1) million and ~~$(7.9)~~$(12.0) million and amortization of net prior service credit of $0.6 million and ~~$1.1~~$1.7 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 10 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~~nine months ended ~~June~~September 30, 2019 were not significant.

Other comprehensive income before reclassifications related to foreign currency translation for the three and ~~six~~nine months ended ~~June~~September 30, 2019 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 ~~$9.7~~$(36.1) million and ~~$(1.6)~~$(37.7) million, respectively, (ii) foreign currency ~~(losses)~~ gains related to intra-entity foreign currency transactions that are of a long-term investment nature of ~~$(0.1)~~$0.3 million and ~~$0.6~~$0.9 million, respectively, and (iii) foreign currency ~~(losses)~~ gains related to our net investment hedges of ~~$(4.7)~~$14.1 million and ~~$2.4~~$16.5 million, respectively, excluding income tax ~~benefits~~ (provisions) of ~~$1.1~~$(3.3) million and ~~$(0.6)~~$(3.9) million, respectively. See Note 8 for further discussion.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

Note 6. Inventories

Inventories consisted of the following:


	June 30, 2019			June 30, 2018			Dec. 31, 2018			Sept. 30, 2019			Sept. 30, 2018			Dec. 31, 2018
	(Dollars in thousands)									(Dollars in thousands)
Raw materials	$	271,396		$	252,792		$	288,860		$	275,015		$	250,051		$	288,860
Work-in-process	141,268			136,210			123,574			127,590			125,336			123,574
Finished goods	523,145			514,911			335,180			413,864			384,815			335,180
Other	12,658			12,629			13,075			12,620			12,999			13,075
	948,467			916,542			760,689			829,089			773,201			760,689
Adjustment to value inventory at cost on the LIFO method	(125,883		)	(82,823		)	(125,883		)	(125,883		)	(82,823		)	(125,883		)
	$	822,584		$	833,719		$	634,806		$	703,206		$	690,378		$	634,806

Note 7. Long-Term Debt

Long-term debt consisted of the following:


	June 30, 2019		June 30, 2018		Dec. 31, 2018		Sept. 30, 2019		Sept. 30, 2018		Dec. 31, 2018
	(Dollars in thousands)						(Dollars in thousands)
Bank debt
Bank revolving loans	$	506,000	$	760,000	$	—	$	766,000	$	698,000	$	—
U.S. term loans	800,000		800,000		800,000		800,000		800,000		800,000
Canadian term loans	16,133		22,937		22,103		15,943		23,335		22,103
Other foreign bank revolving and term loans	39,269		34,914		129,697		37,062		36,143		129,697
Total bank debt	1,361,402		1,617,851		951,800		1,619,005		1,557,478		951,800
5½% Senior Notes	300,000		300,000		300,000		—		300,000		300,000
4¾% Senior Notes	300,000		300,000		300,000		300,000		300,000		300,000
3¼% Senior Notes	739,245		759,460		744,380		708,630		754,260		744,380
Finance leases	22,219		—		21,543		33,440		21,950		21,543
Total debt - principal	2,722,866		2,977,311		2,317,723		2,661,075		2,933,688		2,317,723
Less unamortized debt issuance costs	11,875		14,639		13,109		9,690		14,009		13,109
Total debt	2,710,991		2,962,672		2,304,614		2,651,385		2,919,679		2,304,614
Less current portion	886,458		788,731		170,214		841,430		733,404		170,214
	$	1,824,533	$	2,173,941	$	2,134,400	$	1,809,955	$	2,186,275	$	2,134,400

~~On August 1, 2019, we redeemed all $300 million aggregate principal amount of our outstanding 5½% Senior Notes. See Note 15 for more information on this redemption.~~

At ~~June~~September 30, 2019, the current portion of long-term debt consisted of ~~$506.0~~$766.0 million of bank revolving loans under our amended and restated senior secured credit facility, as amended, or the Credit Agreement, $40.0 million of term loans under the Credit Agreement, ~~$39.3~~$33.8 million of other foreign bank revolving and term loans ~~$1.2~~and $1.6 million of finance ~~leases and~~leases.

On August 1, 2019, we redeemed all $300.0 million aggregate principal amount of our outstanding 5½% Senior Notes ~~which were redeemed~~due 2022, or the 5½% Notes, at a redemption price of 100 percent of their principal amount plus accrued and unpaid interest up to the redemption date. We funded this redemption with revolving loan borrowings under the Credit Agreement and cash on ~~August 1, 2019.~~

hand. As a result of this redemption, we recorded a pre-tax charge for the loss on early extinguishment of debt of $1.7 million during the third quarter of 2019 for the write-off of unamortized debt issuance costs.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

Note 8. 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~~September 30, 2019:


	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)				(Dollars in thousands)
Assets:
Cash and cash equivalents	$	111,341	$	111,341	$	117,389	$	117,389

Liabilities:
Bank debt	$	1,361,402	$	1,361,402	$	1,619,005	$	1,619,005
5½% Senior Notes	300,000		301,404
4¾% Senior Notes	300,000		303,672		300,000		307,761
3¼% Senior Notes	739,245		766,841		708,630		728,394
Derivative instruments (accrued and other liabilities)	4,571		4,571		4,779		4,779

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~~September 30, 2019 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, ~~5½% Senior Notes,~~ 4¾% Senior Notes and 3¼% 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 ~~5½% Senior Notes,~~ 4¾% Senior Notes and 3¼% 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.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

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~~nine month periods ended ~~June~~September 30, 2019. These agreements are with financial institutions which are expected to fully perform under the terms thereof. The total fair value of our interest rate swap agreements in effect at ~~June~~September 30, 2019 was not significant.

Natural Gas Swap Agreements

We have entered into natural gas swap agreements with a major financial institution 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 ~~quarter~~three and nine month periods ended ~~June~~September 30, 2019. These agreements are with financial institutions which are expected to fully perform under the terms thereof. The total fair value of our natural gas swap agreements in effect at ~~June~~September 30, 2019 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, which are Euro denominated, as net investment hedges. Foreign currency ~~(losses)~~ gains related to our net investment hedges included in accumulated other comprehensive loss for the three and ~~six~~nine months ended ~~June~~September 30, 2019 were ~~$(4.7)~~$14.1 million and ~~$2.4~~$16.5 million, respectively.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

Note 9. 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 the continued early 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 10. Retirement Benefits

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


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
	(Dollars in thousands)												(Dollars in thousands)
Service cost	$	3,254		$	3,710		$	6,512		$	7,431		$	2,871		$	3,411		$	9,383		$	10,842
Interest cost	7,043			6,296			14,092			12,605			7,149			6,348			21,241			18,953
Expected return on plan assets	(15,112		)	(17,122		)	(30,225		)	(34,245		)	(15,200		)	(17,137		)	(45,425		)	(51,382		)
Amortization of prior service cost	21			34			40			69			46			34			86			103
Amortization of actuarial losses	4,121			1,787			8,240			3,573			4,084			1,877			12,324			5,450
Net periodic benefit credit	$	(673	)	$	(5,295	)	$	(1,341	)	$	(10,567	)	$	(1,050	)	$	(5,467	)	$	(2,391	)	$	(16,034	)

The components of the net periodic other postretirement benefit ~~credit~~(credit) cost were as follows:


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
	(Dollars in thousands)												(Dollars in thousands)
Service cost	$	22		$	32		$	44		$	63		$	16		$	15		$	60		$	78
Interest cost	184			162			369			325			200			158			569			483
Amortization of prior service credit	(581		)	(650		)	(1,163		)	(1,299		)
Amortization of prior service (credit) cost													(586		)	561			(1,749		)	(738		)
Amortization of actuarial gains	(166		)	(119		)	(333		)	(238		)	(33		)	(167		)	(366		)	(405		)
Net periodic benefit credit	$	(541	)	$	(575	)	$	(1,083	)	$	(1,149	)
Net periodic benefit (credit) cost													$	(403	)	$	567		$	(1,486	)	$	(582	)

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

Note 11. 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 2017 tax year with no material change to our filed federal income tax return. We have been accepted into the Compliance Assurance Program for the 2018 and 2019 tax years which provides for the review by the IRS of tax matters relating to our tax return prior to filing.

Note 12. 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,~~2021. During the nine months ended September 30, 2019, we repurchased an aggregate of ~~which~~407,540 shares of our common stock at an average price per share of $29.70, for a total purchase price of $12.1 million. At September 30, 2019, we had approximately ~~$124.6~~$112.5 million remaining under this authorization for the repurchase of our common ~~stock at June 30, 2019. We did not repurchase any shares of our common stock under this authorization during the six months ended June 30, 2019.~~stock.

During the first ~~six~~nine months of 2019, we issued 1,281,777 treasury shares which had an average cost of $2.86 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 535,527 shares of our common stock at an average cost of $28.48 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~~September 30, 2019, ~~63,936,650~~64,344,190 shares of our common stock were held in treasury.

Note 13. 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~~nine months of 2019, 1,079,504 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 $30.8 million, which is being amortized ratably over the respective vesting period from the grant date.

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine months then ended is unaudited)

Note 14. Business Segment Information

Reportable business segment information was as follows:


	Metal Containers		Closures		Plastic Containers			Corporate			Total		Metal Containers		Closures		Plastic Containers		Corporate			Total
	(Dollars in thousands)												(Dollars in thousands)
Three Months Ended June 30, 2019
Three Months Ended September 30, 2019
Net sales	$	575,618	$	363,344	$	154,201		$	—		$	1,093,163	$	822,262	$	353,436	$	145,644	$	—		$	1,321,342
Depreciation and amortization⁽¹⁾	21,437		21,145		9,336		��	39			51,957		21,477		20,847		9,512		39			51,875
Rationalization charges	39,023		248		46			—			39,317		3,035		72		88		—			3,195
Segment income	14,029		46,857		13,410			(5,697		)	68,599		81,128		44,784		11,425		(4,642		)	132,695

Three Months Ended June 30, 2018
Three Months Ended September 30, 2018
Net sales	$	524,863	$	378,762	$	155,478		$	—		$	1,059,103	$	797,768	$	360,816	$	148,415	$	—		$	1,306,999
Depreciation and amortization⁽¹⁾	20,423		18,758		8,854			43			48,078		19,823		18,378		9,171		43			47,415
Rationalization charges	258		—		234			—			492		72		111		105		—			288
Segment income	48,248		47,702		13,160			(4,993		)	104,117		86,928		47,349		8,446		(4,268		)	138,455

Six Months Ended June 30, 2019
Nine Months Ended September 30, 2019
Net sales	$	1,082,680	$	719,543	$	318,071		$	—		$	2,120,294	$	1,904,941	$	1,072,979	$	463,715	$	—		$	3,441,635
Depreciation and amortization⁽¹⁾	42,543		41,498		18,153			80			102,274		64,021		62,345		27,665		120			154,151
Rationalization charges	39,245		5,908		247			—			45,400		42,280		5,979		335		—			48,594
Segment income	52,926		87,113		25,476			(10,174		)	155,341		134,053		131,896		36,902		(14,816		)	288,035

Six Months Ended June 30, 2018
Nine Months Ended September 30, 2018
Net sales	$	1,010,818	$	749,108	$	311,459		$	—		$	2,071,385	$	1,808,585	$	1,109,924	$	459,874	$	—		$	3,378,383
Depreciation and amortization⁽¹⁾	40,676		37,408		17,804			64			95,952		60,500		55,786		26,975		107			143,368
Rationalization charges	740		39		416			—			1,195		812		150		521		—			1,483
Segment income	85,341		95,927		24,242			(9,209		)	196,301		172,268		143,277		32,687		(13,478		)	334,754

_____________


⁽¹⁾	Depreciation and amortization excludes amortization of debt issuance costs of $0.8 million and $0.9 million for ~~each of~~ the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$1.8~~$2.6 million and ~~$2.0~~$2.9 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

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


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018		Sept. 30, 2019		Sept. 30, 2018		Sept. 30, 2019		Sept. 30, 2018
	(Dollars in thousands)								(Dollars in thousands)
Total segment income	$	68,599	$	104,117	$	155,341	$	196,301	$	132,695	$	138,455	$	288,035	$	334,754
Interest and other debt expense	28,401		32,415		55,505		62,894		28,443		28,199		83,948		91,095
Income before income taxes	$	40,198	$	71,702	$	99,836	$	133,407	$	104,252	$	110,256	$	204,087	$	243,659

SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at ~~June~~September 30, 2019 and 2018 and for the

three and ~~six~~nine 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.

Note 15. Subsequent Event

On ~~August 1,~~November 4, 2019, we ~~redeemed all $300.0~~announced that we had entered into an agreement to sell $400 million aggregate principal amount of 4⅛% Senior Notes due 2028 in a private offering. These new senior notes will mature on February 1, 2028, and interest on these new senior notes will accrue and be payable semi-annually on April 1st and October 1st of each year, commencing April 1, 2020. We intend to use the net proceeds of approximately $394.6 million from this senior notes offering to repay outstanding revolving loans under our ~~outstanding~~Credit Agreement that were used to redeem our 5½% ~~Senior~~ Notes ~~at a redemption price~~in August 2019 and for other general corporate purposes, including acquisitions, stock repurchases and repayments of ~~100 percent~~other indebtedness. The closing for the sale of ~~their principal amount plus accrued and unpaid interest up~~these new senior notes is expected to ~~the redemption date. We funded this redemption with revolving loan borrowings under the Credit Agreement and cash~~occur on ~~hand.~~November 12, 2019.

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, 2018 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 rigid packaging 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, personal care, home 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.

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				Three Months Ended				Nine Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018		Sept. 30, 2019		Sept. 30, 2018		Sept. 30, 2019		Sept. 30, 2018
Net sales
Metal containers	52.7	%	49.5	%	51.1	%	48.8	%	62.2	%	61.0	%	55.3	%	53.5	%
Closures	33.2		35.8		33.9		36.2		26.8		27.6		31.2		32.9
Plastic containers	14.1		14.7		15.0		15.0		11.0		11.4		13.5		13.6
Consolidated	100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0
Cost of goods sold	83.2		83.6		83.5		83.9		84.3		84.4		83.8		84.1
Gross profit	16.8		16.4		16.5		16.1		15.7		15.6		16.2		15.9
Selling, general and administrative expenses	7.3		7.4		7.4		7.5		5.8		5.6		6.8		6.8
Rationalization charges	3.6		0.1		2.2		0.1		0.2		—		1.4		—
Other pension and postretirement income	(0.4	)	(0.9	)	(0.4	)	(1.0	)	(0.3	)	(0.6	)	(0.4	)	(0.8	)
Income before interest and income taxes	6.3		9.8		7.3		9.5		10.0		10.6		8.4		9.9
Interest and other debt expense	2.6		3.1		2.6		3.0		2.1		2.2		2.5		2.7
Income before income taxes	3.7		6.7		4.7		6.5		7.9		8.4		5.9		7.2
Provision for income taxes	0.9		1.5		1.0		1.6		1.7		1.9		1.3		1.7
Net income	2.8	%	5.2	%	3.7	%	4.9	%	6.2	%	6.5	%	4.6	%	5.5	%

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


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			Sept. 30, 2019			Sept. 30, 2018			Sept. 30, 2019			Sept. 30, 2018
	(dollars in millions)												(dollars in millions)
Net sales
Metal containers	$	575.6		$	524.9		$	1,082.7		$	1,010.8		$	822.3		$	797.8		$	1,904.9		$	1,808.6
Closures	363.4			378.8			719.5			749.1			353.4			360.8			1,073.0			1,109.9
Plastic containers	154.2			155.4			318.1			311.5			145.6			148.4			463.7			459.9
Consolidated	$	1,093.2		$	1,059.1		$	2,120.3		$	2,071.4		$	1,321.3		$	1,307.0		$	3,441.6		$	3,378.4

Segment income
Metal containers⁽¹⁾	$	14.0		$	48.2		$	52.9		$	85.3		$	81.1		$	86.9		$	134.1		$	172.3
Closures ⁽²⁾	46.9			47.7			87.1			96.0			44.8			47.3			131.9			143.3
Plastic containers ⁽³⁾	13.4			13.2			25.5			24.2			11.4			8.5			36.9			32.7
Corporate	(5.7		)	(5.0		)	(10.2		)	(9.2		)	(4.6		)	(4.2		)	(14.9		)	(13.5		)
Consolidated	$	68.6		$	104.1		$	155.3		$	196.3		$	132.7		$	138.5		$	288.0		$	334.8

⁽¹⁾Includes rationalization charges of ~~$39.0~~$3.0 million and ~~$0.3~~$0.1 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$39.3~~$42.3 million and $0.8 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

⁽²⁾Includes rationalization charges of ~~$0.2~~$0.1 million for each of the three months ended September 30, 2019 and 2018 and $6.0 million and ~~$5.9~~$0.2 million for the ~~three and six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

⁽³⁾Includes rationalization charges of $0.1 million ~~and $0.2 million~~ for each of the three months ended ~~June~~September 30, 2019 and 2018 ~~respectively,~~ and ~~$0.2~~$0.3 million and ~~$0.4~~$0.5 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

Three Months Ended ~~June~~September 30, 2019 Compared with Three Months Ended ~~June~~September 30, 2018

Overview. Consolidated net sales were ~~$1.09~~$1.32 billion in the ~~second~~third quarter of 2019, a ~~3.2~~1.1 percent increase as compared to the ~~second~~third quarter of 2018 primarily due to the pass through of higher raw material and other manufacturing costs in the metal container business and higher volumes in the ~~metal and~~ plastic container ~~businesses,~~business, partially offset by a less favorable mix of products sold, the impact from unfavorable foreign currency translation ~~a less favorable mix of products sold in the closures business~~ and the pass through of lower raw material costs in the plastic container business. Income before interest and income taxes for the ~~second~~third quarter of 2019 was ~~$68.6~~$132.7 million, a ~~$35.5~~$5.8 million decrease as compared to the same period in 2018 primarily due to $38.8 million of higher rationalization charges incurred primarily in connection with the footprint optimization plan for the metal container business and the withdrawal from the Central States Pension Plan, lower pension income, ~~in each of the businesses, the impact of unfavorable foreign currency translation and~~ a less favorable mix of products sold ~~in the closures business.~~and higher rationalization charges. These decreases were partially offset by ~~higher volumes~~production efficiencies in the metal ~~and plastic~~ container ~~businesses~~business, higher volumes and strong operating performance in ~~all businesses.~~the plastic container business, the favorable impact from the lagged pass through to customers of lower resin costs in the current year period as compared to an unfavorable impact from higher resin costs in the prior year period in the closures business and the prior year unfavorable impact of costs associated with the start-up of the new manufacturing facility in Fort Smith, Arkansas. Results for the ~~second~~third quarters of 2019 and 2018 included rationalization charges of ~~$39.3~~$3.2 million and ~~$0.5~~$0.3 million, ~~respectively. Results for the second quarters of 2019~~respectively, and ~~2018 included~~ other pension and postretirement income of ~~$4.5~~$4.3 million and ~~$9.6~~$8.3 million, respectively. Results for the ~~second~~third quarter of ~~2018~~2019 also included a loss on early extinguishment of debt of ~~$2.5~~$1.7 million. Net income for the ~~second~~third quarter of 2019 was ~~$31.0~~$81.3 million as compared to ~~$55.3~~$84.7 million for the same period in 2018. Net income per diluted share for the ~~second~~third quarter of 2019 was ~~$0.28~~$0.73 as compared to ~~$0.50~~$0.76 for the same period in 2018.

Net Sales. The ~~$34.1~~$14.3 million increase in consolidated net sales in the ~~second~~third quarter of 2019 as compared to the ~~second~~third quarter of 2018 was the result of higher net sales in the metal container business, partially offset by lower net sales in the closures and plastic container businesses.

Net sales for the metal container business increased ~~$50.7~~$24.5 million, or ~~9.7~~3.1 percent, in the ~~second~~third quarter of 2019 as compared to the same period in 2018. This increase was primarily the result of the pass through of higher raw material and other manufacturing costs, ~~and higher unit volumes of approximately six percent,~~ partially offset by a less favorable mix of products sold and the impact of unfavorable foreign currency translation of approximately $5$4 million. ~~The increase in unit~~Unit volumes ~~was primarily as a result of higher volumes for a seasonal customer that had been destocking inventory in~~were flat versus the prior year period, as ~~well as continued growth in pet food volumes.~~lower volumes with U.S. fruit and vegetable pack customers were offset by volume increases with other customers, including for soup.

Net sales for the closures business decreased ~~$15.4~~$7.4 million, or ~~4.1~~2.1 percent, in the ~~second~~third quarter of 2019 as compared to the same period in 2018. This decrease was primarily the result of the impact of unfavorable foreign currency translation of approximately $9$7 million and a less favorable mix of products sold. Unit volumes were ~~up slightly~~flat in the ~~second~~third quarter of 2019 as compared to the prior year quarter, with higher volume demand in the U.S. beverage markets largely offset by lower unit volumes in international ~~markets primarily attributable to weather challenges.~~markets.

Net sales for the plastic container business decreased ~~$1.2~~$2.8 million, or ~~0.8~~1.9 percent, in the ~~second~~third quarter of 2019 as compared to the same period in 2018. This decrease was primarily due to a less favorable mix of products sold and the pass through of lower raw material costs, ~~and the impact of unfavorable foreign currency translation of approximately $1 million,~~ partially offset by higher volumes of approximately ~~one~~three percent.

Gross Profit. Gross profit margin increased ~~0.4~~0.1 percentage points to ~~16.8~~15.7 percent in the ~~second~~third quarter of 2019 as compared to the same period in 2018 for the reasons discussed below in "Income before Interest and Income ~~Taxes".~~Taxes."

Selling, General and Administrative Expenses. Selling, general and administrative expenses as a percentage of consolidated net sales ~~decreased slightly~~increased to ~~7.3~~5.8 percent in the ~~second~~third quarter of 2019 as compared to 5.6 percent in the same period in 2018. Selling, general and administrative expenses increased ~~$1.8~~$2.4 million to ~~$80.1~~$76.1 million for the ~~second~~third quarter of 2019 as compared to ~~$78.3~~$73.7 million for the same period in 2018.

Income before Interest and Income Taxes. Income before interest and income taxes for the ~~second~~third quarter of 2019 decreased by ~~$35.5~~$5.8 million as compared to the ~~second~~third quarter of 2018, and margins decreased to ~~6.3~~10.0 percent from ~~9.8~~10.6 percent over the same periods. The decrease in income before interest and income taxes ~~and margins~~ was primarily the result of higher rationalization ~~charges.~~charges and lower pension income. In addition, ~~each of~~ the metal container and closures businesses ~~was unfavorably impacted~~had slightly lower segment income, partially offset by higher segment income in the ~~reduction in pension income.~~plastic container business. Rationalization charges were ~~$39.3~~$3.2 million and ~~$0.5~~$0.3 million in the ~~second~~third quarters of 2019 and 2018, respectively.

Segment income of the metal container business for the ~~second~~third quarter of 2019 decreased ~~$34.2~~$5.8 million as compared to the same period in 2018, and segment income margin decreased to ~~2.4~~9.9 percent from ~~9.2~~10.9 percent over the same periods. The decrease in segment income ~~and segment income margin~~ was principally due ~~to $38.7 million~~a less favorable mix of products sold, higher rationalization charges and lower pension income, partially offset by production efficiencies in the U.S. due in part to a larger amount of finished goods inventory produced in the current year quarter in anticipation of higher ~~unit volumes and strong operating performance.~~sales volume. Rationalization charges were ~~$39.0~~$3.0 million and ~~$0.3~~$0.1 million in the ~~second~~third quarters of 2019 and 2018, respectively. ~~Rationalization charges in the second quarter of 2019 were primarily a result of the recently announced footprint optimization plan and the withdrawal from the Central States Pension Plan.~~

Segment income of the closures business for the ~~second~~third quarter of 2019 decreased ~~$0.8~~$2.5 million as compared to the same period in 2018, ~~while~~and segment income margin ~~increased~~decreased to ~~12.9~~12.7 percent from ~~12.6~~13.1 percent over the same periods. The decrease in segment income was primarily due to ~~the impact of unfavorable foreign currency translation, lower pension income and~~ a less favorable mix of products sold and lower pension income, partially offset by ~~strong operating performance.~~the favorable impact from the lagged pass through to customers of lower resin costs in the current year period as compared to an unfavorable impact from higher resin costs in the prior year period.

Segment income of the plastic container business for the ~~second~~third quarter of 2019 increased ~~$0.2~~$2.9 million as compared to the same period in 2018, and segment income margin increased to ~~8.7~~7.8 percent from ~~8.5~~5.7 percent over the same periods. The increase in segment income was primarily attributable to higher volumes, strong operating performance and the prior year unfavorable impact of costs associated with the start-up of the new manufacturing facility in Fort Smith, Arkansas, partially offset by lower pension ~~income.~~income and a less favorable mix of products sold.

Interest and Other Debt Expense. Interest and other debt expense before loss on early extinguishment of debt for the ~~second~~third quarter of 2019 decreased ~~$1.5~~$1.4 million to ~~$28.4~~$26.8 million as compared to ~~$29.9~~$28.2 million in the same period in 2018 primarily due to lower average outstanding borrowings as a result of the repayment of debt at the end of ~~2018.~~2018 and lower weighted average interest rates due in part to the redemption on August 1, 2019 of all outstanding 5½% Notes. Loss on early extinguishment of debt of ~~$2.5~~$1.7 million in the ~~second~~third quarter of ~~2018~~2019 was the result of the redemption of all ~~remaining 5% Senior Notes in April 2018 and the completion of an amendment to the Credit Agreement in May 2018.~~outstanding 5½% Notes.

Provision for Income Taxes. The effective tax rates were ~~23.0~~22.0 percent and ~~22.8~~23.1 percent for the ~~second~~third quarters of 2019 and 2018, respectively. The effective tax rate in the second quarter of 2019 was favorably impacted by the resolution of a prior year tax audit. The effective tax rate in the second quarter of 2018 benefitted from the timing of certain state tax rate changes.

~~Six~~Nine Months Ended ~~June~~September 30, 2019 Compared with ~~Six~~Nine Months Ended ~~June,~~September 30, 2018

Overview. Consolidated net sales were ~~$2.12~~$3.44 billion in the first ~~six~~nine months of 2019, a ~~2.4~~1.9 percent increase as compared to the first ~~six~~nine months of 2018 primarily as a result of the pass through of higher raw material and other manufacturing costs in ~~each of our businesses~~the metal container business and higher volumes in the metal and plastic container businesses, partially offset by the impact of unfavorable foreign currency translation, a less favorable mix of products sold and slightly lower unit volumes in the closures business. Income before interest and income taxes for the first ~~six~~nine months of 2019 decreased by ~~$41.0~~$46.8 million as compared to the same period in 2018 primarily due to ~~$44.2~~$47.1 million of higher rationalization charges incurred ~~primarily~~principally in connection with the previously announced footprint optimization plan for the metal container business and the resulting withdrawal from the Central States Pension Plan, lower pension income, ~~across all businesses,~~a less favorable mix of products sold, the impact of unfavorable foreign currency translation and slightly lower unit volumes in the closures business. These decreases were partially offset by strong operating performance in all businesses, ~~a larger seasonal inventory build in the metal container business in the current year period as compared to the same period in 2018,~~ the favorable impact from the lagged pass through of lower resin costs in the closures business ~~and~~as compared to an unfavorable impact from higher resin costs in the prior year period, higher volumes in the metal and plastic container ~~businesses.~~businesses and the prior year unfavorable impact of costs associated with the start-up of two new manufacturing facilities. Results for the first ~~six~~nine months of 2019 and 2018 included rationalization charges of ~~$45.4~~$48.6 million and ~~$1.2~~$1.5 million, ~~respectively. Results for the first six months of 2019 and 2018 also included~~respectively, other pension and postretirement income of ~~$9.0~~$13.3 million and ~~$19.2~~$27.5 million, ~~respectively. Results for the first six months of 2018 also included a~~respectively, and loss on early extinguishment of debt of $1.7 million and $2.5 ~~million.~~million, respectively. Net income for the first ~~six~~nine months of 2019 was ~~$77.7~~$159.0 million as compared to ~~$101.1~~$185.8 million for the same period in 2018. Net income per diluted share for the first ~~six~~nine months of 2019 was ~~$0.70~~$1.43 as compared to ~~$0.91~~$1.66 for the same period in 2018.

Net Sales. The ~~$48.9~~$63.2 million increase in consolidated net sales in the first ~~six~~nine months of 2019 as compared to the first ~~six~~nine months of 2018 was the result of higher net sales in the metal and plastic container businesses, partially offset by lower net sales in the closures business.

Net sales for the metal container business increased ~~$71.9~~$96.3 million, or ~~7.1~~5.3 percent, in the first ~~six~~nine months of 2019 as compared to the same period in 2018. This increase was primarily the result of the pass through of higher raw material and other manufacturing costs and higher unit volumes of approximately one percent, partially offset by the impact of unfavorable foreign currency translation of approximately ~~$10 million.~~$14 million and a less favorable mix of products sold. The increase in unit volumes was primarily the result of continued growth in pet food volumes as well as higher volumes for a seasonal customer that had been destocking inventory in the prior year period, ~~as well as continued growth in pet food volumes,~~ partially offset by the unfavorable impact from customers who bought ahead of 2019 steel inflation in the fourth quarter of 2018 and ~~the prior year loss of a smaller customer.~~lower U.S. fruit and vegetable pack volumes.

Net sales for the closures business decreased ~~$29.6~~$36.9 million, or ~~4.0~~3.3 percent, in the first ~~six~~nine months of 2019 as compared to the same period in 2018. This decrease was primarily the result of the impact of unfavorable foreign currency translation of approximately ~~$22~~$29 million, a less favorable mix of products sold and lower unit volumes of approximately one ~~percent, partially offset by the pass through of higher raw material costs.~~percent.

Net sales for the plastic container business increased ~~$6.6~~$3.8 million, or ~~2.1~~0.8 percent, in the first ~~six~~nine months of 2019 as compared to the same period in 2018. This increase was primarily due to ~~the pass through of higher raw material costs and~~ higher volumes of approximately two percent and the pass through

of higher raw material costs, partially offset by a less favorable mix of products sold and the impact of unfavorable foreign currency translation of approximately $2$3 million.

Gross Profit. Gross profit margin increased ~~0.4~~0.3 percentage points to ~~16.5~~16.2 percent in the first ~~six~~nine months of 2019 as compared to the same period in 2018 for the reasons discussed below in "Income before Interest and Income ~~Taxes".~~Taxes."

Selling, General and Administrative Expenses. Selling, general and administrative expenses as a percentage of consolidated net sales ~~decreased slightly to 7.4~~remained constant at 6.8 percent for the first ~~six~~nine months of 2019 as compared to the same period in 2018. Selling, general and administrative expenses increased ~~$2.8~~$5.1 million to ~~$157.8~~$233.8 million for the first ~~six~~nine months of 2019 as compared to ~~$155.0~~$228.7 million for the same period in 2018.

Income before Interest and Income Taxes. Income before interest and income taxes for the first ~~six~~nine months of 2019 decreased by ~~$41.0~~$46.8 million as compared to the first ~~six~~nine months of 2018, and margins decreased to ~~7.3~~8.4 percent from ~~9.5~~9.9 percent over the same periods. The decrease in income before interest and income taxes was primarily the result of higher rationalization charges. Rationalization charges were ~~$45.4~~$48.6 million and ~~$1.2~~$1.5 million for the first ~~six~~nine months of 2019 and 2018, respectively.

Segment income of the metal container business for the first ~~six~~nine months of 2019 decreased ~~$32.4~~$38.2 million as compared to the same period in 2018, and segment income margin decreased to ~~4.9~~7.0 percent from ~~8.4~~9.5 percent over the same periods. The decrease in segment income and segment income margin was primarily attributable to ~~$38.5~~$41.5 million of higher rationalization charges, ~~and~~ lower pension income and a less favorable mix of products sold, partially offset by production efficiencies in the U.S. due in part to the favorable impact from a larger ~~seasonal~~amount of finished goods inventory ~~build~~produced in the current year period ~~as compared to the same period in 2018, strong operating performance~~ and higher unit volumes. Rationalization charges were ~~$39.3~~$42.3 million and $0.8 million in the first ~~six~~nine months of 2019 and 2018, respectively. Rationalization charges in the first ~~six~~nine months of 2019 were principally related to the ~~recently~~previously announced footprint optimization plan and the resulting withdrawal from the Central States Pension Plan.

Segment income of the closures business for the first ~~six~~nine months of 2019 decreased ~~$8.9~~$11.4 million as compared to the same period in 2018, and segment income margin decreased to ~~12.1~~12.3 percent from ~~12.8~~12.9 percent over the same periods. The decrease in segment income was primarily due to rationalization charges of ~~$5.9~~$6.0 million principally related to the previously announced shutdown of a metal closures manufacturing facility in Spain, lower pension income, a less favorable mix of products sold, the impact of unfavorable foreign currency translation ~~lower pension income~~ and slightly lower unit volumes, partially offset by strong operating performance and the favorable impact from the lagged pass through of lower resin ~~costs.~~costs in the current year period as compared to the unfavorable impact from higher resin costs in the prior year period.

Segment income of the plastic container business for the first ~~six~~nine months of 2019 increased ~~$1.3~~$4.2 million as compared to the same period in 2018, and segment income margin increased to 8.0 percent from ~~7.8~~7.1 percent over the same periods. The increase in segment income was primarily attributable to higher volumes, ~~and~~ lower manufacturing costs and the prior year unfavorable impact of costs associated with the start-up of the new manufacturing facility in Fort Smith, Arkansas, partially offset by lower pension ~~income.~~income and a less favorable mix of products sold.

Interest and Other Debt Expense. Interest and other debt expense before loss on early extinguishment of debt for the first ~~six~~nine months of 2019 decreased ~~$4.9~~$6.3 million to ~~$55.5~~$82.3 million as compared to ~~$60.4~~$88.6 million in the same period in 2018 primarily due to lower average outstanding borrowings. Loss on early extinguishment of debt of $1.7 million in the first nine months of 2019 was a result of the redemption of all outstanding 5½% Notes in August 2019. Loss on early extinguishment of debt of $2.5 million in the first ~~six~~nine months of 2018 was primarily a result of the redemption in April 2018 of all remaining outstanding 5% Senior Notes ~~in April 2018~~due 2020 and the completion of an amendment to the Credit Agreement in May 2018.

Provision for Income Taxes. The effective tax rates were ~~22.2~~22.1 percent and ~~24.2~~23.8 percent for the first ~~six~~nine months of 2019 and 2018, respectively. The effective tax rate in the first ~~six~~nine months of 2019 benefitted from ~~the timing of certain tax deductions recognized in such~~an audit period ~~and~~expiration, the resolution of a prior year tax ~~audit.~~audit and the timing of certain tax deductions.

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 August 1, 2019, we redeemed all $300.0 million aggregate principal amount of our outstanding 5½% ~~Senior~~ Notes at a redemption price of 100 percent of their principal amount plus accrued and unpaid interest up to the redemption date. We funded this redemption with revolving loan borrowings under the Credit Agreement and cash on hand. As a result of this redemption, we recorded a pre-tax charge for the loss on early extinguishment of debt of $1.7 million during the third quarter of 2019 for the write-off of unamortized debt issuance costs.

For the ~~six~~nine months ended ~~June~~September 30, 2019, we used net borrowings of revolving loans of ~~$416.0~~$674.6 million to fund ~~cash used in operations~~repayments of ~~$129.1~~long-term debt of $308.2 million, decreases in outstanding checks of $83.7 million, cash used in operations of $2.4 million, net capital expenditures and other investing activities of ~~$115.6~~$166.3 million, dividends paid on our common stock of ~~$26.4 million, repayments of long-term debt of $8.2~~$38.6 million and repurchases of

our common stock of ~~$15.2~~$27.4 million and to increase cash and cash equivalents (including the ~~positive~~negative effect of exchange rate changes of ~~$0.7~~$3.4 million) by ~~$38.5~~$44.6 million.

For the ~~six~~nine months ended ~~June~~September 30, 2018, we used net borrowings of revolving loans of ~~$716.3~~$657.2 million and cash provided by operations of $13.1 million to fund repayments of long-term debt of ~~$284.6 million, cash used in operations of $92.9~~$286.2 million, decreases in outstanding checks of $87.8 million, net capital expenditures and other investing activities of ~~$90.8~~$134.4 million, dividends paid on our common stock of ~~$22.4~~$33.8 million, repurchases of our common stock of ~~$3.0~~$3.1 million and debt issuance costs of $2.9 million and to increase cash and cash equivalents (including the negative effect of exchange rate changes of ~~$4.2~~$4.3 million) by ~~$127.7~~$117.8 million.

At ~~June~~September 30, 2019, we had ~~$506.0~~$766.0 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~~September 30, 2019 was ~~$667.3~~$407.3 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 2019 with all of these covenants.

Rationalization Charges

In June 2019, we announced a footprint optimization plan for our metal container business, which includes the closing of our metal container manufacturing facilities in Mt. Vernon, Missouri and Waupun, Wisconsin anticipated to occur in the fourth quarter of 2019. These plant closings, in conjunction with the prior ratification of a new labor agreement at our Menomonee Falls, Wisconsin metal container manufacturing facility that provided for the withdrawal for that facility from the Central States Pension Plan, will result in our complete withdrawal from the Central States Pension Plan. We estimate net rationalization charges for this plan of $3.7 million for the plant closings and $56.4 million for the withdrawal from the Central States Pension Plan. We recorded total rationalization charges for this plan of ~~$38.7~~$40.7 million in the ~~second quarter~~first nine months of 2019, ~~consisting of $2.5 million for the plant closings and $36.2 million~~largely to recognize the present value of the estimated withdrawal liability related to the Central States Pension Plan. Remaining expenses and cash expenditures for the plant closings are ~~$1.2 million and $2.9 million, respectively, and are~~not expected ~~through 2021.~~to be significant. Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $1.0 million per year and be recognized annually for the next twenty years, and remaining cash expenditures related to the withdrawal from the Central States Pension Plan are expected to be approximately $2.8 million annually for the next twenty ~~years.~~years, beginning in 2020. Cost savings from this footprint optimization plan are not expected to be material to our results of operations or cash flows.

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 ~~$1.9~~$3.8 million and ~~$1.3~~$1.8 million for the ~~six~~nine months ended ~~June~~ September

30, 2019 and 2018, respectively. Exclusive of the footprint optimization plan for our metal container business and withdrawal from the Central States Pension Plan discussed above, remaining expenses for our rationalization plans of ~~$4.2~~$2.4 million are expected primarily through 2019 and remaining cash expenditures for our rationalization plans of ~~$4.7~~$5.0 million are expected through 2023.

You should also read Note 4 to our Condensed Consolidated Financial Statements for the three and ~~six~~nine months ended ~~June~~September 30, 2019 included elsewhere in this Quarterly Report.

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, 2018. Since such filing, other than the changes discussed in Notes 7 and 15 to our Condensed Consolidated Financial Statements for the three and ~~six~~nine months ended ~~June~~September 30, 2019 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.

Part II. Other Information

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about shares of our common stock that we repurchased during the third quarter of 2019:



ISSUER PURCHASES OF EQUITY SECURITIES


			(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) ⁽¹⁾
	(a) Total Number of Shares Purchased
		(b) Average Price Paid per Share


July 1-31, 2019	—	—	—	$124.6
August 1-31, 2019	205,134	$29.58	205,134	$118.5
September 1-30, 2019	202,406	$29.82	202,406	$112.5

Total	407,540	$29.70	407,540	$112.5

(1) 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. Prior to the third quarter of 2019, we had repurchased approximately $175.4 million of our common stock pursuant to such authorization.

Item 6. Exhibits



Exhibit Number		Description

~~10.1~~		~~Amendment to the Silgan Holdings Inc. Amended and Restated 2004 Stock Incentive Plan~~

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.

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~~November 8, 2019	/s/ Robert B. Lewis	��
	Robert B. Lewis
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial and
	Accounting Officer)

~~-28-~~-30-

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