<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number : 0-233-59
ANCHOR GLASS CONTAINER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-3417812
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Anchor Plaza, 4343 Anchor Plaza Parkway, Tampa, FL 33634-7513
(Address of principal executive offices) (Zip Code)
813-884-0000
(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 .
--- ---
Number of shares outstanding of each class of common stock at May 15, 1998:
Class A - 490,898 shares, Class B - 902,615 shares, and Class C - none.
1 of 12
<PAGE> 2
ANCHOR GLASS CONTAINER CORPORATION
FORM 10-Q/A
For the Quarterly Period Ended March 31, 1998
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Statements of Operations -
Three Months Ended March 31, 1998 and
the Period from February 5, 1997 to March 31, 1997 3
Condensed Balance Sheets -
March 31, 1998 and December 31, 1997 4
Condensed Statements of Cash Flows -
Three Months Ended March 31, 1998 and
the Period from February 5, 1997 to March 31, 1997 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION 11
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Three Months Period from
Ended February 5, 1997
March 31, 1998 to March 31, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 149,187 $ 94,104
Costs and expenses:
Cost of products sold 143,393 92,682
Selling and administrative expenses 7,193 4,395
- -----------------------------------------------------------------------------------------------
Loss from operations (1,399) (2,973)
Other expense, net (153) (66)
Interest expense (6,204) (3,004)
---------- ----------
Net loss (7,756) (6,043)
Preferred stock dividends (3,160) (1,856)
---------- ----------
Loss applicable to common stock $ (10,916) $ (7,899)
========== ==========
Basic net loss per share applicable to common stock $ (3.12) $ (3.77)
========== ==========
Basic weighted average number of common
shares outstanding 3,501,356 2,096,127
========== ==========
</TABLE>
- --------------------------------------------
See Notes to Condensed Financial Statements.
3
<PAGE> 4
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED BALANCE SHEETS
RESTATED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, 1998
(unaudited) December 31, 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,893 $ 1,060
Accounts receivable 71,238 56,940
Inventories:
Raw materials and manufacturing supplies 23,606 23,303
Finished products 99,179 96,820
Other current assets 6,383 8,082
-------- --------
Total current assets 202,299 186,205
Property, plant and equipment, net 326,109 324,871
Other assets 23,977 22,462
Strategic alliances with customers 26,794 25,389
Goodwill 56,177 55,803
-------- --------
$635,356 $614,730
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility $ 18,804 $ 10,468
Current maturities of long-term debt 447 567
Accounts payable 39,778 63,796
Accrued expenses 62,196 64,075
Accrued interest 9,131 4,576
Accrued compensation and employee benefits 25,450 25,185
-------- --------
Total current liabilities 155,806 168,667
Long-term debt 202,826 152,758
Long-term pension liabilities 45,466 48,826
Long-term postretirement liabilities 58,695 57,900
Other long-term liabilities 52,642 57,522
-------- --------
359,629 317,006
Commitments and contingencies
Redeemable preferred stock 55,983 55,983
-------- --------
Stockholders' equity:
Preferred stock 34 34
Issuable preferred stock 8,020 6,240
Common stock 139 139
Warrants 10,518 10,518
Capital in excess of par value 92,294 92,294
Accumulated deficit (Note 2) (46,527) (35,611)
Accumulated comprehensive income (540) (540)
-------- --------
63,938 73,074
-------- --------
$635,356 $614,730
======== ========
</TABLE>
- --------------------------------------------
See Notes to Condensed Financial Statements.
4
<PAGE> 5
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Three Months Period from
Ended February 5, 1997
March 31, 1998 to March 31, 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (7,756) $ (6,043)
Adjustments to reconcile net loss to cash provided
by (used in) operating activities:
Depreciation and amortization 13,744 9,120
Other 28 431
Decrease in cash resulting from changes in
assets and liabilities (46,875) (3,021)
-------- ---------
(40,859) 487
- -------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of assets and assumption of liabilities
of Old Anchor -- (200,470)
Expenditures for property, plant and equipment (13,491) (4,540)
Acquisition related contribution to defined benefit
pension plans (745) (9,056)
Other (197) (155)
-------- ---------
(14,433) (214,221)
- -------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 50,000 130,000
Principal payments of long-term debt (79) (3)
Proceeds from issuance of preferred stock -- 84,000
Proceeds from issuance of common stock -- 1,000
Net draws on revolving credit facility 8,336 8,800
Other, primarily financing fees (2,132) (7,709)
-------- ---------
56,125 216,088
- -------------------------------------------------------------------------------------------------
Cash and equivalents:
Increase in cash and cash equivalents 833 2,354
Balance, beginning of period 1,060 --
-------- ---------
Balance, end of period $ 1,893 $ 2,354
======== =========
- -------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Interest payments, net $ 1,116 $ 1,303
======== =========
Income tax payments (refunds), net $ -- $ --
======== =========
</TABLE>
- --------------------------------------------
See Notes to Condensed Financial Statements.
5
<PAGE> 6
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED 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 March 31, 1998 and the
results of operations and cash flows for the three months ended March 31, 1998
and the period from February 5, 1997 to March 31, 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 financial
statements be read in conjunction with the Financial Statements of Anchor Glass
Container Corporation (the "Company") included in the Company's Annual Report on
Form 10-K 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 - LONG-TERM DEBT
Effective March 16, 1998, the Company 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 the
Company, Consumers U.S., Inc. and The Bank of New York, as Trustee. The Senior
Notes are unsecured obligations of the Company ranking senior in right of
payment to all existing and future subordinate indebtedness of the Company and
pari passu with all existing and future senior indebtedness of the Company.
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.
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.
The Company entered into a Registration Rights Agreement on March 16, 1998.
Pursuant to the agreement, the Company has filed an exchange offer registration
statement (declared effective April 28, 1998) with the Securities and Exchange
Commission. The Company has commenced 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 will not contain terms with respect to transfer restrictions.
The exchange offer is expected to be completed in May 1998.
The Senior Notes are redeemable at any time at the option of the Company, 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, the Company
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.
6
<PAGE> 7
The Indenture, subject to certain exceptions, restricts the Company 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 3 - 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 March 31, 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 9,900
</TABLE>
7
<PAGE> 8
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 Anchor Resolution Corp. 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. The following discussion represents activity for the first
quarter of 1998 and the period from February 5, 1997 to March 31, 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 first quarter were $149.2 million, or
approximately $11.5 million per week. Net sales for the 1997 Period were
approximately $94.1 million, or approximately $11.8 million per week. This
slight decrease in net sales per week was principally as a result of lower sales
of beer products in the 1998 first quarter than expected, due to timing of
customer requirements.
Cost of Products Sold. The Company's cost of products sold in the first
quarter of 1998 was $143.4 million (or 96.1% of net sales), while the cost of
products sold for the 1997 Period was $92.7 million (or 98.5% of net sales).
Following the Anchor Acquisition, the Company closed its Houston, Texas plant
effective February 1997 and removed from production two furnaces, one at each of
two other plants. The decrease in the percentage of cost of products sold for
the first quarter of 1998 as compared with the 1997 Period partially reflects
the impact of the closing of the Dayville, Connecticut plant effective second
quarter of 1997. This improvement is partially offset by higher than expected
freight costs and 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 first three months of 1998 were approximately $7.2 million (or
4.8% of net sales), while selling and administrative expenses in the 1997 Period
were $4.4 million (or 4.7% of net sales). This slight increase in selling and
administrative expenses as a percentage of net sales reflects slightly higher
personnel costs as an experienced glass industry management team joined the
Company in the second half of 1997, offset by focused reductions in other
selling and administrative categories.
Net Income (Loss). The Company had a net loss in the first quarter of
1998 of approximately $7.7 million as compared to a net loss of $6.0 million for
the 1997 Period.
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 1998, operating activities consumed $40.9
million in cash as compared to $0.5 million of cash provided in the 1997 Period.
This increase in cash consumed reflects the net loss adjusted for changes in
working capital items. The balance of accounts receivable increased
approximately $14.3 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 $24.0 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
for the first three months of 1998 and
8
<PAGE> 9
the 1997 Period were $14.4 million and $214.2 million, respectively, principally
reflecting the capital expenditures in 1998 and the cash component of the Anchor
Acquisition in the 1997 Period. In February 1997, the Company contributed $9.0
million in cash to the Company'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,
the Company made an additional pension contribution of $0.7 million in the first
quarter of 1998. Capital expenditures in the 1998 first quarter were $13.5
million. Cash increased from financing activities for the 1998 first quarter by
$56.1 million principally reflecting the issuance of the Senior Notes in March
1998.
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 May 8, 1998, advances outstanding under the
Revolving Credit Facility were $46.2 million and the total outstanding letters
of credit on this facility were $11.1 million.
On March 16, 1998, the Company 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 the
Company, Consumers U.S., Inc. and The Bank of New York, as Trustee. The Senior
Notes are unsecured obligations of the Company ranking senior in right of
payment to all existing and future subordinate indebtedness of the Company and
pari passu with all existing and future senior indebtedness of the Company.
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 restrict the Company 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 also contains certain financial covenants that require the Company to
meet and maintain certain financial tests and minimum ratios, including 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, required pension plan contributions of approximately
$17.0 million (a portion of which is expensed), payment in respect of the
Company's supply agreement with The Stroh Brewery Company of $7.0 million,
capital expenditures of approximately $41.0 million (a portion of which will be
leased) and closing costs associated with the closed manufacturing facilities of
approximately $5.0 million. In addition, the Company is required to make pension
plan contributions for prior years' underfundings of approximately $13.0 million
annually in 1999 and over the three years thereafter. Peak 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.
9
<PAGE> 10
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 expected to be 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 will schedule 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 reviewing
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 plan is to achieve Year 2000 compliance while integrating
the operations of the Company and Consumers. The Company's information systems
cover a broad spectrum of software applications and hardware custom designed for
its manufacturing processes and are similar to those of Consumers. Consumers,
after an extensive study of its general technology needs, decided to upgrade its
information systems from a platform based on large IBM mainframes to a platform
based on mid-range database servers. This upgrade is expected to resolve any
Year 2000 issues. To better integrate its information systems with those of
Consumers, the Company will begin a similar upgrade of its systems in the second
quarter of 1998 with a planned implementation date of March 1999, which
management believes provides sufficient time to resolve any unexpected issues.
Certain of these upgrades are included in the capital expenditure budget. The
Company is taking steps to ensure that its critical suppliers will be Year 2000
compliant.
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. 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.
10
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a respondent is 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 of the Company (for SEC use only)
b. Reports on Form 8-K
On March 16, 1998, a Form 8-K was filed disclosing the
issuance of $50.0 million aggregate principal amount of the
9 7/8 % Senior Notes due 2008.
11
<PAGE> 12
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.
ANCHOR GLASS CONTAINER CORPORATION
Date: July 13, 1998 /s/ M. William Lightner, Jr.
----------------------------
M. William Lightner, Jr.
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
(Principal Financial Officer and
Duly Authorized Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ANCHOR GLASS CONTAINER CORPORATION INCLUDED IN FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,893
<SECURITIES> 0
<RECEIVABLES> 71,238
<ALLOWANCES> 2,152
<INVENTORY> 122,785
<CURRENT-ASSETS> 202,299
<PP&E> 382,015
<DEPRECIATION> 55,906
<TOTAL-ASSETS> 635,356
<CURRENT-LIABILITIES> 155,806
<BONDS> 202,826
55,983
34
<COMMON> 139
<OTHER-SE> 63,765
<TOTAL-LIABILITY-AND-EQUITY> 635,356
<SALES> 149,187
<TOTAL-REVENUES> 149,187
<CGS> 143,393
<TOTAL-COSTS> 143,393
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,204
<INCOME-PRETAX> (7,756)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,756)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,756)
<EPS-PRIMARY> (3.12)
<EPS-DILUTED> (3.12)
</TABLE>
