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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number : 333-31363-01
-------------------------------------
CONSUMERS U.S., INC.
--------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2874087
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3140 William Flinn Highway, Allison Park, Pennsylvania 15101
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
412-486-9100
------------
(Registrant's telephone number, including area code)
None
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 X No .
--- ---
All voting and non-voting stock of the registrant is held by
an affiliate of the registrant.
Number of shares outstanding of each class of common stock at August 14, 1998:
Common Stock, $.01 par value, 17,000,100 shares
1 of 13
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CONSUMERS U.S., INC.
FORM 10-Q
For the Quarterly Period Ended June 30, 1998
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements of Operations -
Three and Six Months Ended June 30, 1998,
Three Months Ended June 30, 1997 and
the Period from February 5, 1997 to June 30, 1997 3
Condensed Consolidated Balance Sheets -
June 30, 1998 and December 31, 1997 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1998 and
the Period from February 5, 1997 to June 30, 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION 12
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSUMERS U.S., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Three Months
Six Months Period from Ended June 30,
Ended February 5, 1997 ----------------------------
June 30, 1998 to June 30, 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales .............................. $ 324,402 $ 261,141 $ 175,215 $ 167,037
Costs and expenses:
Cost of products sold ............. 301,803 244,285 158,410 151,603
Selling and administrative expenses 14,434 11,176 7,241 6,781
- ----------------------------------------------------------------------------------------------------------------
Income from operations ................. 8,165 5,680 9,564 8.653
Other income, net ...................... 160 211 313 277
Interest expense ....................... (13,080) (7,882) (6,876) (4,878)
--------- --------- --------- ---------
Income (loss) before extraordinary item (4,755) (1,991) 3,001 4,052
Extraordinary item - write-off of
financing costs ................... -- (11,200) -- (11,200)
--------- --------- --------- ---------
Income (loss) before preferred stock
dividends and minority interest ... (4,755) (13,191) 3,001 (7,148)
Preferred stock dividends of subsidiary (2,776) (2,239) (1,396) (1,395)
--------- --------- --------- ---------
Loss before minority interest .......... (7,531) (15,430) 1,605 (8,543)
Minority interest ...................... -- 5,451 -- 3,027
--------- --------- --------- ---------
Net loss ............................... $ (7,531) $ (9,979) $ 1,605 $ (5,516)
========= ========= ========= =========
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
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CONSUMERS U.S., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
- ---------------------------------------------------------------------------------------------
June 30, 1998
(unaudited) December 31, 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ......................... $ 5,246 $ 1,060
Accounts receivable ............................... 77,422 56,940
Inventories:
Raw materials and manufacturing supplies ...... 24,852 23,303
Finished products ............................. 90,153 96,820
Other current assets .............................. 4,380 8,082
--------- ---------
Total current assets ..................... 202,053 186,205
Property, plant and equipment, net ...................... 320,082 324,871
Other assets ............................................ 22,481 22,462
Strategic alliances with customers ...................... 26,386 25,389
Goodwill ................................................ 54,560 55,095
--------- ---------
$ 625,562 $ 614,022
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Revolving credit facility ......................... $ 30,435 $ 10,468
Current maturities of long-term debt .............. 609 567
Accounts payable .................................. 38,815 63,796
Accrued expenses .................................. 50,579 67,588
Accrued interest .................................. 5,998 4,576
Accrued compensation and employee benefits ........ 23,521 25,185
--------- ---------
Total current liabilities ................ 149,957 172,180
Long-term debt ......................................... 202,849 152,758
Long-term pension liabilities ........................... 37,795 48,826
Long-term postretirement liabilities .................... 59,380 57,900
Other long-term liabilities ............................. 49,526 57,522
--------- ---------
349,550 317,006
Commitments and contingencies
Redeemable preferred stock .............................. 55,983 55,983
--------- ---------
Minority interest ....................................... 15,563 6,813
--------- ---------
Stockholder's equity:
Common stock ...................................... 170 170
Capital in excess of par value .................... 86,330 86,330
Accumulated deficit ............................... (31,451) (23,920)
Accumulated comprehensive income .................. (540) (540)
--------- ---------
54,509 62,040
--------- ---------
$ 625,562 $ 614,022
========= =========
- ---------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
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CONSUMERS U.S., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Six Months Period from
Ended February 5, 1997
June 30, 1998 to June 30, 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................... $ (7,531) $ (9,979)
Extraordinary item ..................................... -- 11,200
Adjustments to reconcile net loss to cash provided
by (used in) operating activities:
Depreciation and amortization ................... 27,035 23,176
Other ........................................... (195) 140
Dividend accrued on preferred stock of subsidiary 2,776 2,239
Minority interest ............................... -- (5,451)
Decrease in cash resulting from changes in
assets and liabilities .............................. (64,926) (17,344)
--------- ---------
(42,841) 3,981
- ----------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of assets and assumption of liabilities
of Old Anchor ...................................... -- (200,470)
Expenditures for property, plant and equipment ......... (19,118) (12,251)
Proceeds from the sale of property, plant and
equipment ........................................... 743 --
Acquisition related contribution to defined benefit
pension plans ....................................... (745) (9,056)
Other .................................................. (690) (871)
--------- ---------
(19,810) (222,648)
- ----------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt ............... 50,000 280,000
Principal payments of long-term debt ................... (273) (130,137)
Proceeds from issuance of common stock ................. -- 85,000
Net draws on revolving credit facility ................. 19,967 963
Other, primarily financing fees ........................ (2,857) (11,053)
--------- ---------
66,837 224,773
- ----------------------------------------------------------------------------------------------------
Cash and equivalents:
Increase in cash and cash equivalents .................. 4,186 6,106
Balance, beginning of period ........................... 1,060 --
--------- ---------
Balance, end of period ................................. $ 5,246 $ 6,106
========= =========
- ----------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Interest payments, net ................................. $ 10,969 $ 3,546
========= =========
Income tax payments (refunds), net ..................... $ -- $ --
========= =========
- ----------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
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CONSUMERS U.S., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 1 - MANAGEMENT'S RESPONSIBILITY
In the opinion of Management, the accompanying condensed financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position as of June 30, 1998 and the
results of operations for the three months and six months ended June 30, 1998,
the three months ended June 30, 1997 and the period from February 5, 1997 to
June 30, 1997 and cash flows for the six months ended June 30, 1998 and the
period from February 5, 1997 to June 30, 1997.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the Financial
Statements of Consumers U.S., Inc., consolidated with its majority-owned
subsidiary, Anchor Glass Container Corporation ("Anchor"), (together, the
"Company") included in the Company's Annual Report on Form 10-K/A for the period
ended December 31, 1997. The results of operations for the interim periods are
not necessarily indicative of the results of the full fiscal year.
NOTE 2 - ANCHOR ACQUISITION
On February 5, 1997, pursuant to an Asset Purchase Agreement, the Company
purchased eleven operating glass container manufacturing facilities and other
related assets (the "Anchor Acquisition"), from Old Anchor for a purchase price
of approximately $250,000. The purchase price paid by the Company was subject to
adjustment. In June 1998, the bankruptcy court approved the final settlement of
the purchase price which required the payment by Anchor to Old Anchor of an
additional $1,000 in cash and the issuance of 1,225,000 warrants for the
purchase of additional shares of common stock, valued at approximately $6,100.
In addition, Anchor issued warrants to purchase additional shares of common
stock to an affiliate of the Company. None of the warrants issued require any
payment upon exercise. The effects of the settlement have been reflected in the
Company's financial statements for the period ended December 31, 1997.
In accordance with the settlement, Anchor issued 332,844 warrants for Class A
Common Stock, 525,000 warrants for Class B Common Stock and 892,156 warrants for
Class C Common Stock, all valued at $5.00 per share.
NOTE 3 - LONG-TERM DEBT
Effective March 16, 1998, Anchor completed an offering of an aggregate principal
amount of $50.0 million of its 9 7/8% Senior Notes due 2008 (the "Senior Notes")
issued under an Indenture dated as of March 16, 1998, among Anchor, Consumers
U.S., Inc. and The Bank of New York, as Trustee. The Senior Notes are unsecured
obligations of Anchor ranking senior in right of payment to all existing and
future subordinate indebtedness of Anchor and pari passu with all existing and
future senior indebtedness of Anchor. Proceeds from the issuance of the Senior
Notes will be used for growth capital expenditures and general corporate
purposes. Pending such use, Anchor used the net proceeds to temporarily repay
advances outstanding under the Revolving Credit Facility.
Interest on the Senior Notes accrues at 9 7/8% per annum and is payable
semiannually on each March 15 and September 15 to registered holders of the
Senior Notes at the close of business on the March 1 and September 1 immediately
preceding the applicable interest payment date.
Anchor entered into a Registration Rights Agreement on March 16, 1998. Pursuant
to the agreement, Anchor filed an exchange offer registration statement with the
Securities and Exchange Commission, which was
6
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declared effective on April 28, 1998. In June 1998, Anchor completed an offer to
the holders of the Senior Notes to exchange their Senior Notes for like
principal amount of new Senior Notes, substantially identical to the Senior
Notes except that the new Senior Notes do not contain terms with respect to
transfer restrictions.
The Senior Notes are redeemable at any time at the option of Anchor, in whole
and not in part, at redemption prices defined in the Indenture. The Indenture
provides that upon the occurrence of a change in control, Anchor will be
required to offer to repurchase all of the Senior Notes at a purchase price
equal to 101% of the principal amount plus interest accrued to the date of
purchase.
The Indenture, subject to certain exceptions, restricts Anchor from taking
various actions, including, but not limited to, the incurrence of additional
indebtedness, the granting of additional liens, the payment of dividends and
other restricted payments, mergers, acquisitions and transactions with
affiliates.
NOTE 4 - PLANT CLOSING COSTS
In an effort to reduce the Company's cost structure and improve productivity,
the Company closed its Houston, Texas plant effective February 1997 and its
Dayville, Connecticut plant effective April 1997. Exit charges and the amounts
charged against the liability as of June 30, 1998 are as follows:
<TABLE>
<CAPTION>
Amount Charged
Exit Charges Against Liability
------------ -----------------
<S> <C> <C>
Severance and employee benefit costs $13,000 $12,500
Plant shutdown costs related to consolidation
and discontinuation of manufacturing facilities 12,800 11,200
</TABLE>
NOTE 5 - NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 --Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133, effective for fiscal
years beginning after June 15, 1999, establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. SFAS 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. The Company has not yet quantified the impacts of
adopting SFAS 133 and has not determined the timing of or method of adoption.
SFAS 133 could increase volatility in earnings and other comprehensive income.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company was formed in January 1997 to consummate the Anchor
Acquisition. On February 5, 1997, pursuant to an Asset Purchase Agreement, the
Company and Owens-Brockway Glass Container Inc. acquired substantially all of
the assets of, and assumed certain liabilities, of Anchor Glass Container
Corporation ("Old Anchor"), now being liquidated in a proceeding under Chapter
11 of the U.S. Bankruptcy Code of 1978, as amended. The Company purchased eleven
operating glass container manufacturing facilities and other related assets (the
"Anchor Acquisition"). Prior to the Anchor Acquisition, the Company had no
operations. As a result, the following discussion represents activity for the
second quarter and year to date of 1998 and the second quarter of 1997 and the
period from February 5, 1997 to June 30, 1997 (the "1997 Period"). Accordingly,
operations for the Company for the 1997 Period are not directly comparable to
operations for 1998.
RESULTS OF OPERATIONS
Net Sales. Net sales for the 1998 second quarter were $175.2 million,
compared to $167.0 million for the comparable quarter of 1997, an increase of
4.9% on a unit volume increase of 16%. Net sales for the first half of 1998 were
$324.4 million, or approximately $12.5 million per week. Net sales for the 1997
Period were approximately $261.1 million, or approximately $12.4 million per
week. This slight increase in net sales was principally as a result of higher
sales of beer and tea products in 1998 as compared to 1997. This shift in
product mix in 1998 towards higher volume, lower margin products has unfavorably
impacted margins, as noted below. Also, despite operating at near full
manufacturing capacity, the industry has experienced significant pricing
pressures, unfavorably effecting margins.
Cost of Products Sold. The Company's cost of products sold in the
second quarter and first half of 1998 were $158.4 million and $301.8 million,
respectively (or 90.4% and 93.0% of net sales), while the cost of products sold
for the second quarter of 1997 and the 1997 Period were $151.6 million and
$244.2 million, respectively (or 90.8% and 93.5% of net sales). The decrease in
the percentage of cost of products sold for 1998, as compared with the 1997
Period, reflects more favorable employee benefit costs, particularly in the
areas of pensions and health insurance, as the result of favorable claims and
census experience, which may be non-recurring, offset by higher freight costs
and the impact of increased sales of lower margin items. This improvement also
reflects the impact of the closing of the Dayville, Connecticut plant effective
during the second quarter of 1997 and is partially offset by costs related to
the delay and start-up of a rebuilt furnace and machine rebuilds at one
manufacturing plant, originally scheduled for December 1997 but completed in
February 1998.
Selling and Administrative Expenses. Selling and administrative
expenses for the 1998 second quarter were approximately $7.2 million (or 4.1% of
net sales), while selling and administrative expenses in the second quarter of
1997 were $6.8 million (or 4.1% of net sales). Selling and administrative
expenses for the first six months of 1998 were approximately $14.4 million (or
4.4% of net sales), while selling and administrative expenses in the 1997 Period
were $11.2 million (or 4.3% of net sales). This slight increase in selling and
administrative expenses as a percentage of net sales reflects slightly higher
personnel costs as the Company augmented its management team in the second half
of 1997, offset by focused reductions in other selling and administrative
categories.
Net Income (Loss). The Company had net income in the second quarter of
1998 of approximately $1.6 million as compared to income excluding the
extraordinary item of $5.7 million in the second quarter of 1997. The Company
had a net loss of $7.5 million for the first six months of 1998 compared to a
loss excluding the extraordinary item of $1.2 million for the 1997 Period.
8
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LIQUIDITY AND CAPITAL RESOURCES
In the first six months of 1998, operating activities consumed $42.8
million in cash as compared to $4.0 million of cash provided in the 1997 Period.
This increase in cash consumed reflects the higher loss in the first half of
1998 as compared with the loss before the extraordinary item in the 1997 Period,
adjusted for changes in working capital items. The balance of accounts
receivable increased approximately $20.6 million from year-end 1997 reflecting
the seasonal nature of certain sales and the impact of credit terms of certain
customers. Additionally, the balance of accounts payable decreased approximately
$25.0 million from year-end partially as a result of the increase in cash from
other financing activities, allowing the Company to take cash discounts earlier
in the year than usual. In addition, trade payables were higher in December
1997, due to the furnace and machine rebuilds noted above. Cash consumed in
investing activities in the first half of 1998 and the 1997 Period were $19.8
million and $222.6 million, respectively, principally reflecting the capital
expenditures in 1998 and the cash component of the Anchor Acquisition in the
1997 Period. In February 1997, Anchor contributed $9.0 million in cash to
Anchor's defined benefit pension plans. Also, as a result of the valuation
performed by an independent appraiser of the Series A Preferred Stock
contributed to the plans, which was completed in November 1997, Anchor made an
additional pension contribution of $0.7 million in cash in March 1998. Capital
expenditures in the first six months of 1998 were $19.1 million. Cash increased
from financing activities for the first half of 1998 by $66.8 million
principally reflecting the issuance of the Senior Notes in March 1998 and
borrowings under the Revolving Credit Facility.
Expenditures for Year 2000 compliance are anticipated to be
approximately $1.0 million in the aggregate in 1998 and 1999. However, no
assurance can be given that the Company's actual expenditures for Year 2000
compliance will not be higher.
In conjunction with the Anchor Acquisition, the Company entered into a
credit agreement providing for a $110.0 million Revolving Credit Facility (the
"Revolving Credit Facility"). At August 1, 1998, advances outstanding under the
Revolving Credit Facility were $22.7 million and the total outstanding letters
of credit on this facility were $11.1 million.
On March 16, 1998, Anchor completed an offering of an aggregate
principal amount of $50.0 million of its 9 7/8% Senior Notes due 2008 (the
"Senior Notes") issued under an Indenture dated as of March 16, 1998, among
Anchor, Consumers U.S., Inc. and The Bank of New York, as Trustee. The Senior
Notes are unsecured obligations of Anchor ranking senior in right of payment to
all existing and future subordinate indebtedness of Anchor and pari passu with
all existing and future senior indebtedness of Anchor. Proceeds from the
issuance of the Senior Notes will be used for growth capital expenditures and
general corporate purposes. Pending such use, the Company used the net proceeds
to temporarily repay advances outstanding under the Revolving Credit Facility.
The indentures covering the $150,000 aggregate principal amount of 11
1/4 % First Mortgage Notes due 2005 (the "First Mortgage Notes") and the Senior
Notes contain certain covenants that Anchor from taking various actions,
including, subject to specified exceptions, the incurrence of additional
indebtedness, the granting of additional liens, the making of investments, the
payment of dividends and other restricted payments, mergers, acquisitions and
other fundamental corporate changes, capital expenditures, operating lease
payments and transactions with affiliates. The Revolving Credit Facility
contains other and more restrictive covenants, including certain financial
covenants that require the Company to meet and maintain certain financial tests
and minimum ratios, such as a minimum working capital ratio, a minimum
consolidated net worth test and a minimum interest coverage ratio.
The Company expects significant expenditures in the remainder of 1998,
including interest expense on the First Mortgage Notes, the Senior Notes and the
Revolving Credit Facility, a payment in respect of Anchor's supply agreement
with The Stroh Brewery Company of $7.0 million, capital expenditures of
approximately $35.0 million (a portion of which will be leased) and closing
costs associated with the closed manufacturing facilities of approximately $2.0
million. Because of a change, effective January 1, 1998, to the market value
asset valuation method for determining pension plan contributions, no further
pension contributions will be required in 1998 with respect to either current
funding or past underfundings. Peak cash
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needs are in spring and fall at which time working capital borrowings are
estimated to be $20.0 million higher than at other times of the year. The
Company's principal sources of liquidity through 1998 are expected to be funds
derived from operations, borrowings under the Revolving Credit Facility and
proceeds from asset sales.
IMPACT OF INFLATION
The impact of inflation on the costs of the Company, and the ability to
pass on cost increases in the form of increased sales prices, is dependent upon
market conditions. While the general level of inflation in the domestic economy
has been at relatively low levels, the Company has begun to pass on inflationary
cost increases either as a result of contractual arrangements permitting the
pass on of cost increases or as the result of recent negotiations with various
customers.
SEASONALITY
Due principally to the seasonal nature of the brewing, iced tea and
soft drink industries, in which demand is stronger during the summer months, the
Company's shipment volume is typically higher in the second and third quarters.
Consequently, the Company will build inventory during the first quarter in
anticipation of seasonal demands during the second and third quarters. In
addition, the Company generally schedules shutdowns of its plants for furnace
rebuilds and machine repairs in the first and fourth quarters of the year to
coincide with scheduled holiday and vacation time under its labor union
contracts. These shutdowns and seasonal sales patterns adversely affect
profitability during the first and fourth quarters. The Company is implementing
alternatives to reduce downtime during these periods in order to minimize
disruption to the production process and its negative effect on profitability.
YEAR 2000
The Company's information systems cover a broad spectrum of software
applications for its manufacturing processes, certain of which are custom
designed. After an extensive study, the Company has updated its plan to achieve
Year 2000 compliance by upgrading both packaged and custom-designed software,
currently in place. This upgrade is expected to resolve any Year 2000 issues.
The Company has begun the upgrade of its systems in the second quarter of 1998
with a planned completion date of December 1998 for its packaged software and
June 1999 for its custom-designed software, which management believes provides
sufficient time to resolve any unexpected issues.
The Company has initiated formal communications with all of its
significant suppliers to determine the extent to which the Company is vulnerable
to the failure of such suppliers to remediate their own Year 2000 problems. The
Company is currently in the process of grading the responses from low to high
risk. In addition, although many of the Company's customers have been
communicating with the Company regarding Year 2000 issues, the Company has not
made any formal assessment of the effect which the failure of its larger
customers to remediate their own Year 2000 problems could have on the Company's
operations. Despite, these efforts, there can be no assurance that the systems
of other companies on which the Company relies will be timely converted, or that
a failure to remediate by one or more of the Company's customers or suppliers
would not have a material adverse effect on the Company.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
With the exception of the historical information contained in this
report, the matters described herein contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, any statement that may
predict, forecast, indicate or imply future results, performance or
achievements, and may contain the words "believe," "anticipate," "expect,"
"estimate," "intend," "project," "will be," "will likely continue," "will likely
result," or words or phrases of similar meaning including statements concerning
(a) the Company's liquidity and capital resources, (b) the Company's debt levels
and ability to obtain financing and service debt, (c) competitive pressures and
trends in the glass container industry, (d) prevailing interest
10
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rates, (e) legal proceedings and regulatory matters and (f) general economic
conditions. Forward-looking statements involve risks and uncertainties
(including, but not limited to, economic, competitive, governmental and
technological factors outside the control of the Company) which may cause actual
results to differ materially from the forward-looking statements. These risks
and uncertainties may include the ability of management to implement its
business strategy in view of the Company's limited operating history and the
recent insolvency of Old Anchor; the highly competitive nature of the glass
container market and the intense competition from makers of alternative forms of
packaging; the Company's focus on the beer industry and its dependence on
certain key customers; the seasonal nature of brewing, iced tea and other
beverage industries; the Company's dependence on certain executive officers; and
changes in environmental and other government regulations. The Company operates
in a very competitive environment in which new risk factors can emerge from time
to time. It is not possible for management to predict all such risk factors, nor
can it assess the impact of all such risk factors on the Company's business or
the extent to which any factor, or a combination of factors, may cause actual
results to differ materially from those contained in forward-looking statements.
Given these risks and uncertainties, readers are cautioned not to place undue
reliance on forward-looking statements.
11
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a respondent in various environment-related
cases. The Company is not otherwise party to, and none of its
assets are subject to any other pending legal proceedings,
other than ordinary routine litigation incidental to its
business and against which the Company is adequately insured
and indemnified or which is not material. The Company believes
that the ultimate outcome of these cases will not materially
affect future operations.
Item 2. Changes in Securities.
None
Item 3. Default Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27 - Financial Data Schedule (for SEC use only)
b. Reports on Form 8-K
None
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSUMERS U.S., INC.
Date: August 14, 1998 /s/ M. William Lightner, Jr.
----------------------------
M. William Lightner, Jr.
Vice President and Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CONSUMERS U.S., INC. INCLUDED IN FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 5,246
<SECURITIES> 0
<RECEIVABLES> 77,422
<ALLOWANCES> 1,987
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55,983
0
<COMMON> 170
<OTHER-SE> 54,339
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<CGS> 301,803
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<INCOME-PRETAX> (4,755)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,755)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,531)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
