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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 September 30, 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
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(Exact name of registrant as specified in its charter)
Delaware 59-3417812
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(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
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(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
November 1, 1998: Class A - 555,802 shares, Class B - 902,615
shares, and Class C - 173,968 shares.
1 of 14
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ANCHOR GLASS CONTAINER CORPORATION
FORM 10-Q
For the Quarterly Period Ended September 30, 1998
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Statements of Operations -
Three and Nine Months Ended September 30, 1998,
Three Months Ended September 30, 1997 and
the Period from February 5, 1997 to September 30, 1997 3
Condensed Balance Sheets -
September 30, 1998 and December 31, 1997 4
Condensed Statements of Cash Flows -
Nine Months Ended September 30, 1998 and
the Period from February 5, 1997 to September 30, 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 12
</TABLE>
2
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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>
- -------------------------------------------------------------------------------------------------------------------
Nine Months Period from Three Months
Ended February 5, 1997 to Ended September 30,
September 30, 1998 September 30, 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 493,613 $ 415,636 $ 169,211 $ 154,495
Costs and expenses:
Cost of products sold 456,270 386,130 154,467 141,845
Selling and administrative expenses 22,197 18,127 7,763 6,951
Restructuring charges 4,000 -- 4,000 --
Income from operations 11,146 11,379 2,981 5,699
Other income (expense), net 155 234 (5) 23
Interest expense (19,947) (12,725) (6,867) (4,843)
---------- ---------- ---------- ----------
Income (loss) before extraordinary item (8,646) (1,112) (3,891) 879
Extraordinary item - write-off of
financing costs -- (11,200) -- --
---------- ---------- ---------- ----------
Net income (loss) (8,646) (12,312) (3,891) 879
Preferred stock dividends (9,695) (8,032) (3,304) (3,105)
---------- ---------- ---------- ----------
Loss applicable to common stock $ (18,341) $ (20,344) $ (7,195) $ (2,226)
========== ========== ========== ==========
Basic net loss per share
before extraordinary item
applicable to common stock $ (4.38) $ (2.78) $ (1.37) $ (0.64)
========== ========== =========== ===========
Basic net loss per share applicable
to common stock $ (4.38) $ (6.18) $ (1.37) $ (0.64)
========== ========== =========== ===========
Basic weighted average number of
common shares outstanding 4,187,253 3,291,752 5,251,356 3,501,356
========== =========== =========== ===========
</TABLE>
See Notes to Condensed Financial Statements.
3
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ANCHOR GLASS CONTAINER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
September 30, 1998 December 31, 1997
(unaudited)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,492 $ 1,060
Accounts receivable 79,691 56,940
Due from affiliate 17,330 -
Inventories:
Raw materials and manufacturing supplies 26,141 23,303
Finished products 79,710 96,820
Other current assets 7,237 8,082
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Total current assets 214,601 186,205
Property, plant and equipment, net 311,545 324,871
Other assets 22,130 22,462
Strategic alliances with customers 24,772 25,389
Goodwill 54,524 55,803
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$ 627,572 $ 614,730
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility $ 43,638 $ 10,468
Current maturities of long-term debt 483 567
Accounts payable 36,072 63,796
Accrued expenses 38,699 64,075
Accrued interest 9,017 4,576
Accrued compensation and employee benefits 28,731 25,185
--------- ---------
Total current liabilities 156,640 168,667
Long-term debt 202,930 152,758
Long-term pension liabilities 35,265 48,826
Long-term postretirement liabilities 59,895 57,900
Other long-term liabilities 47,868 57,522
--------- ---------
345,958 317,006
Commitments and contingencies
Redeemable preferred stock 55,983 55,983
--------- ---------
Stockholders' equity:
Preferred stock 34 34
Issuable preferred stock 11,748 6,240
Common stock 139 139
Warrants 19,268 10,518
Capital in excess of par value 92,294 92,294
Accumulated deficit (53,952) (35,611)
Accumulated comprehensive income (540) (540)
--------- ---------
68,991 73,074
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$ 627,572 $ 614,730
========= =========
</TABLE>
See Notes to Condensed Financial Statements.
4
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ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Nine Months Period from
Ended February 5, 1997 to
September 30, 1998 September 30, 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (8,646) $ (12,312)
Restructuring charges 4,000 -
Extraordinary item - 11,200
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
Depreciation and amortization 40,849 38,422
Other (43) 224
Decrease in cash resulting from changes in
assets and liabilities (70,569) (34,170)
--------- ---------
(34,409) 3,364
Cash flows from investing activities:
Purchase of assets and assumption of liabilities of Old Anchor - (200,470)
Expenditures for property, plant and equipment (23,300) (21,034)
Proceeds from the sale of property, plant and equipment 743 -
Acquisition related contribution to defined benefit pension plans (745) (9,056)
Other (974) (773)
-------- ---------
(24,276) (231,333)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 50,000 280,000
Principal payments of long-term debt (346) (130,148)
Proceeds from issuance of preferred stock - 84,000
Proceeds from issuance of common stock - 1,000
Net draws on revolving credit facility 33,170 5,861
Advance to affiliate (17,330) -
Other, primarily financing fees (3,377) (11,940)
-------- ---------
62,117 228,773
Cash and equivalents:
Increase in cash and cash equivalents 3,432 804
Balance, beginning of period 1,060 -
-------- ---------
Balance, end of period $ 4,492 $ 804
======== =========
Supplemental disclosure of cash flow information:
Interest payments, net $ 14,292 $ 4,103
======== =========
Income tax payments (refunds), net $ - $ -
======== =========
</TABLE>
See Notes to Condensed Financial Statements.
5
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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 September
30, 1998 and the results of operations for the three months and nine months
ended September 30, 1998, the three months ended September 30, 1997 and the
period from February 5, 1997 to September 30, 1997 and cash flows for the nine
months ended September 30, 1998 and the period from February 5, 1997 to
September 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
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/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 - RESTRUCTURING CHARGE
In the third quarter of 1998, formal plans were approved to remove
from service one furnace and one machine at the Jacksonville, Florida
manufacturing facility. The furnace is scheduled to cease operations in
December 1998 and approximately 100 hourly employees will be terminated. The
Company has recorded a restructuring charge of $4,000. Of this total charge,
approximately $2,365 relates to operating lease exit costs, approximately $875
represents closing and other costs and approximately $760 relates to the
write-down of certain equipment to net realizable value. This plan was
announced in October 1998 and, as a result, the Company will record an
additional $400 of restructuring charges in the fourth quarter of 1998 related
to certain employee costs.
NOTE 3 - 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 the Company 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, the Company issued warrants to purchase
additional shares of common stock to an affiliate of Consumers U.S. Inc., the
Company's parent. None of the warrants issued require any payment upon
exercise. The effects of the settlement had been reflected in the Company's
financial statements for the period ended December 31, 1997.
In accordance with the settlement, the Company issued in June of 1998,
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 4 - 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
6
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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 filed an exchange offer
registration statement with the Securities and Exchange Commission, which was
declared effective on April 28, 1998. In June 1998, the Company 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 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.
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 5 - 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 September 30, 1998 are as
follows:
<TABLE>
<CAPTION>
Amount Charged
Exit Charges Against Liability
------------ -----------------
<S> <C> <C>
Severance and employee benefit costs $13,000 $12,800
Plant shutdown costs related to consolidation
and discontinuation of manufacturing facilities 12,800 11,700
</TABLE>
NOTE 6 - NEW ACCOUNTING STANDARD
In September 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 September 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 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 third quarter and first nine months of 1998 and the third quarter of
1997 and the period from February 5, 1997 to September 30, 1997 (the "1997
Period"). Accordingly, operations for the Company for the 1997 Period are not
directly comparable to operations for the first nine months of 1998.
RESULTS OF OPERATIONS
Income from operations for the nine months ended September 30, 1998
was $11.1 million compared to $11.4 million for the 1997 Period. The 1997
Period excludes the month January which, historically, is a below average
operating period due to post holiday shutdown start-up costs. Income from
operations for the quarter ended September 30, 1998 was $2.9 million compared
to $5.7 million for the third quarter of 1997.
Net sales. Net sales for the 1998 third quarter were $169.2 million,
compared to $154.5 million for the comparable quarter of 1997, an increase of
9.5% on a unit volume increase of approximately 23%. Net sales for the first
nine months of 1998 were $493.6 million, or approximately $12.6 million per
week. Net sales for the 1997 Period were approximately $415.6 million, or
approximately $12.2 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. The continued 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 affecting margins.
Cost of products sold. The Company's cost of products sold in the
third quarter and first nine months of 1998 were $154.5 million and $456.3
million, respectively (or 91.3% and 92.4% of net sales), while the cost of
products sold for the third quarter of 1997 and the 1997 Period were $141.9
million and $386.1 million, respectively (or 91.8% and 92.9% of net sales). The
slight decrease in the percentage of cost of products sold for 1998, as
compared with 1997, 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.
Restructuring charge. In the third quarter of 1998, formal plans were
approved to remove from service one furnace and one machine at the Jacksonville,
Florida manufacturing facility. The furnace is scheduled to cease operations in
December 1998 and approximately 100 hourly employees will be terminated. The
Company has recorded a restructuring charge of $4.0 million. Of this total
charge, approximately $2.3 million relates to operating lease exit costs,
approximately $0.9 million represents closing and other costs and approximately
$0.8 million relates to the write-down of certain equipment to net realizable
value. This plan was announced in October 1998 and, as a result, the Company
will record an additional $0.4 milliin of restructuring charges in the fourth
quarter of 1998 related to certain employee costs.
8
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Selling and administrative expenses. Selling and administrative
expenses for the 1998 third quarter and the first nine months of 1998 were
approximately $7.8 million (or 4.6% of net sales) and $22.2 million (or 4.5% of
net sales), respectively, while selling and administrative expenses in the
third quarter of 1997 and the 1997 Period were $6.9 million (or 4.5% of net
sales) and $18.1 million (or 4.4% of net sales), respectively. 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 and expenditures in connection with
Year 2000 compliance, offset by focused reductions in other selling and
administrative categories.
Interest expense. Interest expense for the 1998 third quarter was
approximately $6.8 million compared to $4.8 million in the third quarter of
1997, an increase of 41.8%. Interest expense for the first nine months of 1998
was approximately $19.9 million compared to $12.7 million in the 1997 Period,
an increase of 56.8%. 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.
Annual interest expense on the Senior Notes approximates $4.9 million.
Additionally, interest expense has increased based upon higher average
outstanding borrowings under the Revolving Credit Facility during 1998, as
compared to 1997.
Net income (loss). The Company had a loss of approximately $3.9
million in the third quarter of 1998 as compared to income of $0.9 million in
the third quarter of 1997. The Company had a net loss of $8.6 million for the
first nine months of 1998 compared to a loss before extraordinary item of $1.1
million for the 1997 Period.
LIQUIDITY AND CAPITAL RESOURCES
In the first nine months of 1998, operating activities consumed $34.4
million in cash as compared to $3.4 million of cash provided in the 1997
Period. This increase in cash consumed reflects adjustments for changes in
working capital items and the higher loss in the first nine months of 1998 as
compared with the loss before the extraordinary item in the 1997 Period. The
balance of trade related accounts receivable increased approximately $22.7
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 $27.7 million from year-end partially
as a result of the increase in cash from other financing activities, allowing
the Company to take advantage of available cash discounts. 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 nine months of
1998 and the 1997 Period were $24.3 million and $231.4 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 cash in March 1998. Capital expenditures in the first nine months of
1998 were $23.3 million.
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 November 1, 1998, advances outstanding under
the Revolving Credit Facility were $52.7 million, outstanding letters of credit
on this facility were $11.1 million and the borrowing availability was $20.6
million.
Cash from financing activities increased for the first nine months of
1998 by $62.1 million principally reflecting the issuance of the Senior Notes
in March 1998 and borrowings under the Revolving Credit Facility. The Company
advanced approximately $17.3 million to an affiliate in September 1998. The
advance is evidenced by a promissory note maturing in January 1999. The funds
were obtained through borrowings under the Revolving Credit Facility. Interest
on the note is payable at the interest rate payable by the Company on its
revolving credit advances plus 1/2%.
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On March 16, 1998, the Company completed an offering of the Senior
Notes. 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 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 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, an obligation in respect of the Company's supply
agreement with The Stroh Brewery Company of $7.0 million, capital expenditures
of approximately $22.0 million (a portion of which will be leased) and closing
costs associated with the closed manufacturing facilities of approximately $1.0
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 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 sales of discontinued
manufacturing facilities.
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 experienced pricing
pressures in the current market and has not been fully able to pass on
inflationary cost increases to its 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 considering
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 the packaged and custom-designed
software currently in place, along with certain hardware upgrades. These
upgrades are expected to resolve any Year 2000 issues.
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The upgrade of certain hardware, including the personal computer-based
environment is expected to be completed by December 1998. The primary
accounting software applications will be upgraded to a Year 2000 certified
compliant release and should be completed by February 1999. The upgrade of
other custom-designed software, which represents a small percentage of the
total applications, is expected to be completed in the third quarter of 1999.
Management believes this timetable provides sufficient time to resolve any
unexpected issues.
In addition to software and hardware considerations, the Company has
completed its review of the impact of the Year 2000 on its manufacturing
operations and process controls. The Company has identified components
requiring modification or replacement, and expects that critical control
technology will be Year 2000 compliant in the second quarter 1999 and
non-critical control and reporting systems will be compliant by the third
quarter of 1999.
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.
Expenditures for Year 2000 compliance will approximate $1.5 million in
the aggregate in 1998 and 1999, of which approximately $0.4 million has been
incurred. However, no assurance can be given that the Company's actual
expenditures for Year 2000 compliance will not be higher.
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
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
<PAGE> 12
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.
On May 28, 1998, Smith Barney Inc., as escrow agent for
Anchor Liquidating Trust, which was the holder of all issued
and outstanding shares of the Company's Class A Common Stock,
and Consumers U.S., Inc., which is the holder of all issued
and outstanding shares of Class B Common Stock, executed a
unanimous written consent approving (i) certain amendments to
the Company's certificate of incorporation, and (ii) electing
certain directors to the Company's Board of Directors. The
amendments to the Company's certificate of incorporation
increased the number of directors on the Board of Directors
from nine (9) to eleven (11), with seven to be elected by the
holders of the Class B Common Stock. William M. Shaw,
Christopher Mackey and Barry J. Alperin were elected to serve
on the Board of Directors by Smith Barney Inc. and John J.
Ghaznavi, David T. Gutowski, M. William Lightner, C. Kent May
and Paul H. Farrar were elected to serve on the Board of
Directors by Consumers U.S., Inc. Subsequently, Mr. Alperin
resigned from the Company's Board of Directors.
On August 12, 1998, Consumers U.S., Inc. executed a
unanimous written consent electing Richard M. Deneau and
Steven J. Friesen to the Company's Board of Directors.
Item 5. Other Information
The Securities and Exchange Commission recently amended Rule
14a-4 of the Securities Exchange Act of 1934, as amended. As
so amended, Rule 14a-4(c)(1) provides that a proxy may confer
discretionary authority to vote on a proposal for an annual
meeting of stockholders if the proponent fails to notify the
Company at least 45 days prior to the month and day of mailing
the prior year's proxy statement, or if the Company did not
have an annual meeting during the prior year, then at least a
reasonable time before the Company mails its proxy materials.
For purposes of the Company's 1999 Annual Meeting of
Stockholders, management may use its discretionary voting
authority to vote on any proposal with respect to which the
Company receives notice after March 15, 1999, even if such
proposal is not discussed in the proxy statement for the 1999
Annual Meeting of Stockholders.
12
<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.49+ Eleventh Amendment and Waiver dated as of September 8,
1998, to the Credit Agreement dated as of February 7,
1997, among the Company, the financial institutions
party to the Credit Agreement, Bankers Trust Company,
BT Commercial Corporation and PNC Bank, National
Association (Amendments numbered eighth, ninth and
tenth do not exist).
10.50 Second Amendment to Intercompany Agreement dated as of
September 8, 1998 among G&G Investments, Inc., Glenshaw
Glass Company, Inc., Hillsboro Glass Company, I.M.T.E.C
Enterprises, Inc., Consumers Packaging Inc., Consumers
International Inc., Consumers U.S., Inc., the Company,
BT Commercial Corporation and PNC Bank.
27 Financial Data Schedule (for SEC use only)
------------------------------------------
+ Portions hereof have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for
confidential treatment in accordance with Rule 24b-2.
b. Reports on Form 8-K
None
13
<PAGE> 14
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: November 14, 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)
14
<PAGE> 1
Exhibit 10.49
ELEVENTH AMENDMENT AND WAIVER
ELEVENTH AMENDMENT AND WAIVER (this "Amendment"), dated as of
September 8, 1998, among ANCHOR GLASS CONTAINER CORPORATION, f/k/a Anchor Glass
Acquisition Corporation, a Delaware Corporation (the "Borrower"), the financial
institutions party to the Credit Agreement referred to below (the "Lenders"),
BANKERS TRUST COMPANY ("BTCC"), as an Issuing Bank (an "Issuing Bank"), BT
COMMERCIAL CORPORATION, acting as Co-Syndication Agent and Agent (the "Agent"),
and PNC BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent and as an Issuing
Bank (an "Issuing Bank"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings provided such terms in the Credit
Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Issuing Banks and the
Agent are parties to a Credit Agreement, dated as of February 5, 1997 (as
amended, modified or supplemented through the date hereof, the "Credit
Agreement");
***
WHEREAS, the parties hereto wish to amend and/or waive
certain provisions of the Credit Agreement as herein provided, subject to and
on the terms and conditions set forth herein;
NOW, THEREFORE, it is agreed:
1. Notwithstanding any provision of the Credit Agreement, the
Borrower may make an intercompany advance to G&G, the repayment of which shall
be evidenced by the Promissory Note dated September 8, 1998 (the "Intercompany
Note") in the principal amount of U.S. $17,330,021.37, provided that (a) ***
(b) unless sooner repaid, the Intercompany Note will
mature 120 days after its issuance (the "Note Maturity Date"); (c) the
Intercompany Note will bear interest from the date of its issuance to the Note
Maturity Date (the "Interest Period") at the rate paid by the Borrower on
Revolving Loans under the Credit Agreement plus 1/2%; (d) the Intercompany Note
shall be pledged to BTCC, as Collateral Agent under the Security Agreement; (e)
the Borrower hereby agrees not to amend, modify or supplement the Intercompany
Note; and (f) the Intercompany Note shall be guaranteed by G&G for the benefit
of the Lenders, which guaranty secured by a pledge of certain stock owned by
<PAGE> 2
G&G and pledged to BTCC, as Collateral Agent under Guaranty and Pledge Agreement
in the form attached hereto as Exhibit B.
2. Section 1 of the Credit Agreement is hereby amended by (i)
adding ", the Guaranty and Pledge Agreement" after the words "the Security
Agreement" appearing in the definition of Collateral Documents; and (ii) adding
the following definition in alphabetical order:
"Guaranty and Pledge Agreement" shall mean the Guaranty and
Pledge Agreement attached to the Eleventh Amendment to this Agreement,
dated as of September 8, 1998, as same may be amended, modified or
supplemented from time to time."
3. Section 2.2 of the Credit Agreement is hereby amended by
(i) renumbering Section 2.2(a)(ii)(D) as Section 2.2(a)(ii)(E); (ii) amending
the definition of "Borrowing Base" appearing in such Section 2.2 to mean the
"sum of the amounts calculated in accordance with clauses (ii)(A), (B), (C) and
(D) above"; and (iii) inserting the following clause (a)(ii)(D):
"(D) an amount equal to $5,000,000, so long as the
Intercompany Note (as defined in the Eleventh Amendment to this
Agreement dated as of September 8, 1998) remains outstanding and
unpaid, and minus"
4. Section 9.1 of the Credit Agreement is hereby amended by
(i) adding "G&G Investments, Inc.," before "the Borrower" where it appears
Sections 9.1(b) and (g); and (ii) inserting the following section (o):
"(o) Intercompany Note, Guaranty and Pledge
Agreement. G&G shall fail to pay all principal and interest on the
Intercompany Note on or before the Note Maturity Date (capitalized
terms used in this Section 9.1(o) shall have the meanings set forth in
the Eleventh Amendment to this Agreement, dated as of September 8,
1998), or the Intercompany Note shall fail to be in full force and
effect prior to its repayment in full, or G&G shall breach its
agreements set forth therein or in the Guaranty and Pledge Agreement
or deny or disaffirm its obligation thereunder;"
5. Section 7.1(e) of the Credit Agreement is hereby amended
by adding the following text at the end thereof:
"(together, so long as the Intercompany Note is outstanding,
with the calculation of the aggregate value of the price per share of common
stock of Consumers pledged pursuant to the Guaranty and Pledge Agreement)"
6. The undersigned Lenders hereby authorize the Agent to
execute the Second Amendment to the Intercompany Agreement in the form of
Exhibit C hereto.
7. In order to induce the Lenders to enter into this
Amendment, the Borrower hereby represents and warrants that (i) the
representations, warranties and agreements contained in Article 6 of the Credit
Agreement are true and correct in all material respects on and as of the
-2-
<PAGE> 3
Eleventh Amendment Effective Date (as defined in Section 11 of this Amendment
and after giving effect thereto) (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date) and (ii) there exists no Default or Event of Default on
the Eleventh Amendment Effective Date, after giving effect to this Amendment.
8. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
9. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower, the Agent and each Lender.
10. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
11. This Amendment shall become effective on the date (the
"Eleventh Amendment Effective Date") when (i) the Borrower and the Required
Lenders shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent at its address for notice provided for in
the Credit Agreement; (ii) G&G and Anchor shall have executed and pledged
Intercompany Note, substantially in the form of Exhibit D to this Amendment, to
BTCC as Collateral Agent under the Security Agreement; (iii) G&G shall have
executed and delivered the Guaranty and Pledge Agreement, and G&G shall have
delivered the capital stock initially required to be delivered thereunder,
together with signed and undated stock powers; (iv) the Agent shall have
received a legal opinion, substantially in the form of Exhibit E to this
Amendment, from Eckert Seamans Cherin & Mellot, LLC; (v) the Lenders shall have
received true and correct copies of the Purchase Agreement, which shall be in
form and substance satisfactory to the Required Lenders and (vi) the Agent
shall have received a fee of $137,500 for pro rata distribution among the
Lenders according to their respective Commitments under the Credit Agreement.
12. From and after the Eleventh Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
* * *
-3-
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
*** Portions hereof have been omitted and filed separately pursuant to a
request for confidential treatment in accordance with Rule 24b-2.
ANCHOR GLASS CONTAINER CORPORATION
By /s/ M. William Lightner, Jr.
----------------------------------
Name: M. William Lightner, Jr.
Title: Senior Vice President and
Chief Financial Officer
BT COMMERCIAL CORPORATION,
Individually, as Agent
and as Co-Syndication Agent
By /s/ Bruce Phoel
----------------------------------
Name: Bruce Phoel
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION,
Individually, as Co-Syndication
Agent and Issuing Bank
By /s/ Enrico A. Della Corna
----------------------------------
Name: Enrico A. Della Corna
Title: Vice President
BANKERS TRUST COMPANY, as Issuing Bank
By /s/ Bruce Phoel
----------------------------------
Name: Bruce Phoel
Title: Principal
<PAGE> 5
THE CIT GROUP/BUSINESS CREDIT, INC.
By
----------------------------------
Name:
Title:
CORESTATES BANK, N.A.
By
----------------------------------
Name:
Title:
FLEET BANK
By
----------------------------------
Name:
Title:
KEY CORPORATE CAPITAL, INC.
By
----------------------------------
Name:
Title:
MELLON BANK, N.A.
By
----------------------------------
Name:
Title:
<PAGE> 6
NATIONAL BANK OF CANADA
By /s/ Donald P. Haddad
----------------------------------
Name: Donald P. Haddad
Title: Vice President / Manager
By /s/ Eric L. Moore
----------------------------------
Name: Eric L. Moore
Title: Vice President
NATIONAL CITY COMMERCIAL FINANCE, INC.
By /s/ Joseph L. White
----------------------------------
Name: Joseph L. White
Title: Senior Vice President
SUMMIT COMMERCIAL/GIBRALTAR CORP.
By /s/ Alan M. Lapidus
----------------------------------
Name: Alan M. Lapidus
Title: Vice President
<PAGE> 1
Exhibit 10.50
SECOND
AMENDMENT
TO
INTERCOMPANY AGREEMENT
This Amendment to Intercompany Agreement (this "Amendment") is made and
entered into as of the 8th day of September, 1998 by and among G & G
INVESTMENTS, INC., a Delaware corporation ("G & G"), GLENSHAW GLASS COMPANY, a
Pennsylvania corporation ("Glenshaw"), HILLSBORO GLASS COMPANY, a Delaware
corporation ("Hillsboro"), I.M.T.E.C. ENTERPRISES, INC., an Oklahoma
corporation ("IMTEC"), CONSUMERS PACKAGING INC., a corporation organized under
the federal laws of Canada ("Consumers Packaging"), ANCHOR GLASS CONTAINER
CORPORATION, a Delaware corporation ("Anchor"), CONSUMERS INTERNATIONAL INC., a
corporation organized under the federal laws of Canada ("Consumers
International"), CONSUMERS U.S., INC., a Delaware corporation ("Consumers
U.S.") and BT COMMERCIAL CORPORATION ("BTCC"), as agent for the Lenders
identified in that certain Credit Agreement dated as of February 5, 1997, as
amended from time to time (the "Credit Agreement"), among New Anchor, the
Lenders named therein (including Bankers Trust Company as Co-Syndication Agent
and Issuing Bank ("BTCO") and PNC Bank, National Association as Co-Syndication
Agent and Issuing Bank).
WHEREAS, G & G, Hillsboro, IMTEC, Consumers Packaging, Anchor, Consumers
International, Consumers U.S. and BTCC are parties to the Intercompany
Agreement dated as of April 17, 1997, as amended by the First Amendment to
Intercompany Agreement dated as of April 6, 1998 (as so amended, the
"Agreement"); and
WHEREAS, the parties desire to amend the Agreement in accordance with
Section 22 thereof; and
WHEREAS, the Board of Directors of Anchor (including a majority of
independent directors) have determined that this Amendment contains terms no
less favorable to Anchor than could have been obtained in a comparable
transaction from a Person not an Affiliate of Anchor.
NOW, THEREFORE, it is agreed as follows:
1. Amendments. The Agreement is amended as follows:
(a) Delete the reference to "paragraphs 2-12" in the sixth line of
Paragraph 2 and insert "Paragraphs 2 - 13" in lieu thereof.
(b) Add the following after Paragraph 12:
"13 Anchor may advance a principal amount not to exceed U.S.
$17,335,000 to G&G (the "G&G Advance") on the following
conditions:
<PAGE> 2
(i) Unless sooner repaid, the G&G Advance will mature 120 days
after the date of the Advance (the "Maturity Date");
(ii) the G&G Advance will bear interest from the date of the G&G
Advance to the Maturity Date (the "Interest Period") at the rate paid
by Anchor under the Credit Agreement during the Interest Period Plus
one-half (1/2%);
(iii) the G&G Advance will be evidenced by G&G's promissory note
which will be pledged to BTCC as Agent for the Lenders; and
(iv) G&G will guarantee, for the benefit of the Lenders, its
obligations under said promissory note, which guarantee will be
secured by a pledge to BTCC as Agent for the Lenders of common shares
of Consumers Packaging having a fair market value equal to not less
than 1.25 of the outstanding principal amount of the G&G Advance.
(c) Delete the reference to "Paragraph 17" in the twelfth line of
Paragraph 21 and insert "Paragraph 18" in lieu thereof.
(d) Redesignate numbered Paragraphs 13 through 22 as Paragraphs 14
through 23.
2. Ratification of Agreement. The Agreement, as amended hereby,
continues in full force and effect and is, in all respects, ratified and
confirmed.
3. Counterparts. This Amendment may be executed in counterparts and by
different signatures or separate counterparts each of which shall be an
original, but all of which together shall constitute one and the same
instrument. One or more counterparts of this Amendment may be delivered via
facsimile transmission with the intention that it or they shall constitute an
original counterpart hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be duly executed and delivered as of the date first above written.
G & G INVESTMENTS, INC.
By: /s/ John J. Ghaznavi
---------------------------------
Name: John J. Ghaznavi
Title: President and
Chief Executive Officer
[Signatures Continued on the Following Page]
2
<PAGE> 3
[Signatures Continued from the Previous Page]
GLENSHAW GLASS COMPANY
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: President and
Chief Executive Officer
HILLSBORO GLASS COMPANY
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: President and
Chief Executive Officer
I.M.T.E.C. ENTERPRISES, INC.
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: President and
Chief Executive Officer
CONSUMERS PACKAGING INC.
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: President and
Chief Executive Officer
By: /s/ M. William Lightner, Jr.
----------------------------------
Name: M. William Lightner, Jr.
Title: Vice President
[Signatures Continued on the Following Page]
3
<PAGE> 4
[Signatures Continued from the Previous Page]
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: President and
Chief Executive Officer
CONSUMERS INTERNATIONAL INC.
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: President and
Chief Executive Officer
By: /s/ M. William Lightner, Jr.
----------------------------------
Name: M. William Lightner, Jr.
Title: Vice President
CONSUMERS U.S., INC.
By: /s/ John J. Ghaznavi
----------------------------------
Name: John J. Ghaznavi
Title: President and
Chief Executive Officer
[Signatures Continued on the Following Page]
4
<PAGE> 5
[Signatures Continued From the Previous Page]
BT COMMERCIAL CORPORATION
for itself and as Agent
By: /s/ Bruce Phoel
-----------------------------------
Name: Bruce Phoel
Title: Senior Vice President
5
<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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,492
<SECURITIES> 0
<RECEIVABLES> 79,691
<ALLOWANCES> 2,108
<INVENTORY> 105,851
<CURRENT-ASSETS> 214,601
<PP&E> 390,795
<DEPRECIATION> 79,250
<TOTAL-ASSETS> 627,572
<CURRENT-LIABILITIES> 156,640
<BONDS> 202,930
55,983
34
<COMMON> 139
<OTHER-SE> 68,818
<TOTAL-LIABILITY-AND-EQUITY> 627,572
<SALES> 493,613
<TOTAL-REVENUES> 493,613
<CGS> 456,270
<TOTAL-COSTS> 456,270
<OTHER-EXPENSES> 4,000
<LOSS-PROVISION> 250
<INTEREST-EXPENSE> 19,947
<INCOME-PRETAX> (8,646)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,646)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,646)
<EPS-PRIMARY> (4.38)
<EPS-DILUTED> (4.38)
</TABLE>
