Silgan Announces Record Earnings and Strong Cash Flow for the Full Year 2009

Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of consumer goods packaging products, reported full year 2009 net income of $159.4 million, or $4.14 per diluted share, as compared to full year 2008 net income of $125.0 million, or $3.26 per diluted share. Results for 2009 included pre-tax rationalization charges of $1.5 million, or $0.03 per diluted share net of tax, and a pre-tax charge of $1.3 million, or $0.02 per diluted share net of tax, for the loss on early extinguishment of debt. Results for 2008 included pre-tax rationalization charges of $12.2 million, or $0.25 per diluted share net of tax. Adjusted net income per diluted share was $4.19 for the full year 2009 and $3.51 for the full year 2008.

Highlights of the Company’s performance in 2009 include:

* Achieved record income from operations and increased adjusted net income per diluted share by 19.4 percent over the prior year.

* Demonstrated the continued strength of its business franchises by completing a five-year period with compounded annual growth in adjusted net income per diluted share of approximately 12 percent, with earnings growth in years of general economic strength or weakness.

* Increased consolidated operating margin by 160 basis points over the prior year.

* Further improved returns on assets and managed capital investments to $100 million to support growth and productivity improvements.

* Generated $322.8 million of net cash from operating activities and record free cash flow of $264.1 million, or $6.86 per diluted share.

* Continued to strengthen the balance sheet with an increase in cash and cash equivalents from $163.0 million to $305.8 million.

* Effectively eliminated near term credit market risk with the successful issuance of $250 million aggregate principal amount of 7.25% senior unsecured notes maturing in 2016.

* Positioned the Company for future opportunities by significantly improving its credit statistics through debt reduction, improved earnings performance and cash generation.

* Increased the cash dividend by approximately 12 percent to $0.76 annually per share.

A reconciliation of net income per diluted share to “adjusted net income per diluted share,” a Non-GAAP financial measure used by the Company, which adjusts net income per diluted share for certain items, can be found in Tables A and B at the back of this press release. In addition, the Company is providing a reconciliation in Table C of this press release of net cash provided by operating activities to free cash flow, a Non-GAAP financial measure, which adjusts net cash provided by operating activities for capital expenditures and changes in outstanding checks.

In the fourth quarter of 2009, the Company changed its accounting for inventories for its domestic plastic container business from the last in, first out (LIFO) method to the first in, first out (FIFO) method. All amounts have been presented as if such accounting change occurred as of the beginning of the earliest period presented. The Company is providing a reconciliation in Table D of this press release of the impact of the change from LIFO to FIFO for each of the quarterly periods in 2009 and 2008 and each of the annual periods for the past five years with respect to income from operations of the plastic container business and net income per diluted share and adjusted net income per diluted share of the Company.

Net sales for the full year of 2009 were $3.07 billion, a decrease of $54.2 million, or 1.7 percent, as compared to $3.12 billion in 2008. This decrease was primarily the result of lower average selling prices in the plastic container business largely attributable to the pass through of lower resin prices, lower volumes in the closures and plastic container businesses and the impact of unfavorable foreign currency translation, partially offset by higher average selling prices in the metal food container business due to the pass through of higher raw material and other manufacturing costs.

Income from operations for 2009 was $298.6 million, an increase of $44.9 million, or 17.7 percent, as compared to $253.7 million for 2008, and operating margin increased to 9.7 percent from 8.1 percent for the same periods. These increases were primarily attributable to improved manufacturing efficiencies and ongoing cost controls across all businesses and lower rationalization charges, partially offset by increased pension expense and the impact from lower unit volumes in the closures and plastic container businesses.

Interest and other debt expense before loss on early extinguishment of debt for 2009 was $49.7 million, a decrease of $10.4 million as compared to 2008. This decrease was primarily due to lower average debt balances outstanding in 2009 as compared to 2008, partially offset by slightly higher interest rates largely as a result of the issuance of $250 million principal amount of 7.25% senior unsecured notes in May 2009. During 2009, the Company utilized the net proceeds from this issuance and cash on hand to prepay certain term loan installment payments and foreign debt. Additionally, as a result of these prepayments, the Company incurred a loss on early extinguishment of debt of $1.3 million.

The Company delivered record free cash flow for 2009 of $264.1 million compared to $180.7 million in 2008, primarily as a result of a reduction in working capital due largely to strong cash collections, improved earnings and lower capital expenditures.

Dividend

On December 15, 2009, the Company paid a quarterly cash dividend in the amount of $0.19 per share to holders of record of common stock of the Company on December 1, 2009. This dividend payment aggregated $7.3 million.