Silgan Holdings increases cash flow in 2008

By Jennifer Lanning Drey

Portland, Ore., Feb. 4 - Silgan Holdings Inc. increased free cash flow to $180.7 million for 2008, versus $117.5 million in 2007 through a reduction in working capital, lower capital expenditures and improved earnings, Robert Lewis, chief financial officer of Silgan, said Wednesday during the company's fourth-quarter earnings conference call.

The reduction allowed the company to repay $94 million of term debt during 2008, pay dividends and fund acquisition costs, he said.

All domestic term loans were also repaid prior to year-end, according to the company's earnings release.

"While we chose to pay down our entire domestic revolver at year-end, given our ongoing caution regarding the credit markets, we continue to hold sufficient cash to meet our peak seasonal working capital needs," Lewis said.

Silgan ended 2008 with cash and cash equivalents of $163 million.

The company expects 2009 free cash flow to be consistent with the 2008 level with the primary drivers being improved earnings and lower capital spending offset by higher working capital and incremental pension contributions, Lewis said.

Silgan plans to keep capital expenditures in the lower end of its historical range of $110 million to $140 million in 2009.

"We continue to see disciplined opportunities to reinvest in our business while optimizing our free cash flow generation during this uncertain credit market," Lewis said.

Silgan reported net income for the fourth quarter of $24.4 million, compared to net income of $19.9 million in the comparable prior-year period.

Net sales for the fourth quarter increased by 8.5% to $741.6 million compared to the same period in 2007. The increase was primarily the result of higher average selling prices in the metal food container business and for metal closures in the closures business, as well as higher unit volumes in the metal food container business.

Silgan is a Stamford, Conn.-based manufacturer of consumer goods packaging products.

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