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Silgan Announces Second Quarter Earnings And Confirms Full Year 2012 Estimate

Stocks in this article: SLGN

Net sales for the second quarter of 2012 were $821.6 million, a decrease of $0.6 million as compared to $822.2 million in 2011. This decrease was the result of lower net sales over the prior year period in the metal container and closures businesses due primarily to the impact of unfavorable foreign currency translation, partially offset by higher net sales in the plastic container business.

Income from operations for the second quarter of 2012 was $68.6 million as compared to $94.5 million for the second quarter of 2011, and operating margin decreased to 8.3 percent from 11.5 percent over the same periods. The decrease in income from operations was primarily attributable to income of $27.0 million included in the second quarter of 2011 in corporate selling, general and administrative expenses for proceeds received as a result of the termination of the Graham Packaging merger agreement, net of costs attributable to certain corporate development activities, and a decrease in income from operations in the metal container business, partially offset by an increase in income from operations in the plastic container and closures businesses.

Interest and other debt expense before loss on early extinguishment of debt for the second quarter of 2012 was $16.0 million, a decrease of $0.5 million as compared to 2011. This decrease was primarily due to lower average interest rates, partially offset by higher average outstanding borrowings as a result of the issuance in March 2012 of $500 million of 5% Senior Notes due 2020 and the refinancing of the senior secured credit facility in July 2011. On April 9, 2012, the Company redeemed all $250 million of its outstanding 7¼% Senior Notes due 2016 at a redemption price of 112.37 percent of their principal amount, or $280.9 million, using proceeds from the 5% Senior Notes. As a result, the Company recorded a charge of $0.37 per diluted share net of tax, for the early extinguishment of debt in the second quarter of 2012.

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