<PAGE> 1
===============================================================================
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, 1999
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
November 8, 1999: Class A - 556,025 shares, Class B - 1,427,615
shares, and Class C - 174,391 shares.
1 of 13
<PAGE> 2
ANCHOR GLASS CONTAINER CORPORATION
FORM 10-Q
For the Quarterly Period Ended September 30, 1999
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Statements of Operations and Comprehensive Income -
Three and Nine Months Ended September 30, 1999 and 1998 3
Condensed Balance Sheets -
September 30, 1999 and December 31, 1998 4
Condensed Statements of Cash Flows -
Nine Months Ended September 30, 1999 and 1998 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
PART II - OTHER INFORMATION 12
SIGNATURES 13
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 486,687 $ 493,613 $ 170,105 $ 169,211
Costs and expenses:
Cost of products sold 448,465 456,270 156,782 154,467
Selling and administrative expenses 20,820 22,197 6,939 7,763
Restructuring charges -- 4,000 -- 4,000
- -------------------------------------------------------------------------------------------------------
Income from operations 17,402 11,146 6,384 2,981
Other income, net 1,323 155 740 (5)
Interest expense (21,658) (19,947) (7,029) (6,867)
----------- ----------- ----------- -----------
Net income (loss) (2,933) (8,646) 95 (3,891)
Preferred stock dividends (10,149) (9,695) (3,459) (3,304)
----------- ----------- ----------- -----------
Loss applicable to common stock $ (13,082) $ (18,341) $ (3,364) $ (7,195)
=========== =========== =========== ===========
Basic net loss per share applicable
to common stock $ (2.49) $ (4.38) $ (0.64) $ (1.37)
=========== =========== =========== ===========
Basic weighted average number of
common shares outstanding 5,251,356 4,187,253 5,251,356 5,251,356
=========== =========== =========== ===========
Comprehensive income (loss) $ (2,933) $ (8,646) $ 95 $ (3,891)
=========== =========== =========== ===========
</TABLE>
See Notes to Condensed Financial Statements.
3
<PAGE> 4
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
(unaudited)
------------------ -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,507 $ 4,106
Accounts receivable 68,717 86,846
Advance to affiliate 17,477 17,866
Inventories:
Raw materials and manufacturing supplies 23,907 23,099
Finished products 75,189 81,230
Other current assets 6,948 8,304
--------- ---------
Total current assets 195,745 221,451
Property, plant and equipment, net 309,383 316,705
Other assets 29,295 22,839
Strategic alliances with customers 11,545 26,187
Goodwill 51,548 53,780
--------- ---------
$ 597,516 $ 640,962
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility $ 41,507 $ 50,162
Current maturities of long-term debt 1,038 840
Accounts payable 46,942 51,838
Accrued expenses 21,911 36,458
Accrued interest 8,945 5,970
Accrued compensation and employee benefits 21,622 27,249
--------- ---------
Total current liabilities 141,965 172,517
Long-term debt 203,288 202,920
Long-term pension liabilities 23,691 33,855
Long-term post-retirement liabilities 59,340 59,853
Other long-term liabilities 52,431 47,896
--------- ---------
338,750 344,524
Commitments and contingencies
Redeemable preferred stock 55,983 55,983
--------- ---------
Stockholders' equity:
Preferred stock 34 34
Issuable preferred stock 19,641 13,679
Common stock 216 163
Warrants 15,448 18,073
Capital in excess of par value 97,137 94,565
Accumulated deficit (71,500) (58,418)
Amount related to minimum pension liability (158) (158)
--------- ---------
60,818 67,938
--------- ---------
$ 597,516 $ 640,962
========= =========
</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>
Nine Months Ended September 30,
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,933) $ (8,646)
Adjustments to reconcile net loss to cash provided
by (used in) operating activities:
Depreciation and amortization 42,108 40,849
Other 16 (43)
Restructuring charges -- 4,000
Decrease in cash resulting from changes in
assets and liabilities (2,888) (68,569)
-------- --------
36,303 (32,409)
- -----------------------------------------------------------------------------------------
Cash flows from investing activities:
Expenditures for property, plant and equipment (32,920) (23,300)
Stock in Parent, held for Pension Fund, pending
government approval (3,000) --
Payments of strategic alliances with customers (2,000) (2,000)
Proceeds from the sale of property, plant and
equipment 193 743
Acquisition related contribution to defined benefit
pension plans -- (745)
Other (912) (974)
-------- --------
(38,639) (26,276)
- ----------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt -- 50,000
Principal payments of long-term debt (671) (346)
Net draws (repayments) on revolving credit facility (8,655) 33,170
Sale of note receivable 11,200 --
Advance to affiliate -- (17,330)
Other, primarily financing fees (137) (3,377)
-------- --------
1,737 62,117
- ----------------------------------------------------------------------------------------
Cash and equivalents:
Increase (decrease) in cash and cash equivalents (599) 3,432
Balance, beginning of period 4,106 1,060
-------- --------
Balance, end of period $ 3,507 $ 4,492
======== ========
- ----------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Interest payments, net $ 17,117 $ 14,292
======== ========
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 September 30, 1999 and
the results of operations for the three and nine months ended September 30,
1999 and 1998 and cash flows for the nine months ended September 30, 1999 and
1998.
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 year ended December 31, 1998. The results of operations
for the interim periods are not necessarily indicative of the results of the
full fiscal year.
NOTE 2 - STRATEGIC ALLIANCES WITH CUSTOMERS
On April 30, 1999, Stroh Brewing Company ("Stroh's") closed on an
agreement to sell its assets to a consortium made up of Pabst Brewing Company
("Pabst") and Miller Brewing Company ("Miller"). Under the terms of this
agreement, the Company received $5,000 in cash and a non-interest bearing note
of $14,000 from Miller in satisfaction of the unamortized balance of the
Stroh's strategic alliance agreement. The note receivable was sold to a third
party in the second quarter of 1999. In satisfaction of a portion of the
Stroh's outstanding trade accounts receivable, the Company received from Pabst,
a five year note receivable for $5,000 and an additional 68 month note for
$5,000 representing a strategic alliance with Pabst. Pabst is committed to take
a specified quantity of production during the note period or repay the
strategic alliance note receivable.
6
<PAGE> 7
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 acquired substantially all of the assets, 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.
RESULTS OF OPERATIONS
Net Sales. Net sales for the 1999 third quarter were $170.1 million
compared to $169.2 million for the third quarter of 1998. Net sales for the
first nine months of 1999 were $486.7 million and $493.6 million for the
comparable period of 1998. This year to year decline of $6.9 million, or 1.4%
in net sales, on slightly higher unit shipments, reflects a shift from higher
margin product lines such as liquor to higher volume, lower margin products,
including beer and teas and the sale of the consumers products line inventory
to a customer. While the Company continues to supply all the glass relating to
this consumers products line customer, we no longer include lids and cartons in
either sales or cost of sales.
Cost of Products Sold. The Company's cost of products sold in the
third quarter and first nine months of 1999 were $156.7 million and $448.4
million, respectively (or 92.2% and 92.1% of net sales), while the cost of
products sold for the third quarter of 1998 and first nine months of 1998 were
$154.5 million and $456.3 million, respectively (or 91.3% and 92.4% of net
sales). The decrease in the percentage of cost of products sold for the first
nine months of 1999 as compared with 1998 principally reflects the benefits of
productivity improvements that have resulted from the cost savings strategies
which the Company began to implement during 1998. This improvement is partially
offset by increases in labor and benefit costs, as compared to the same period
of 1998, as a result of scheduled increases under a labor contract with hourly
employees that became effective in April 1999, as well as increases in the cost
of cartons and natural gas.
Selling and Administrative Expenses. Selling and administrative
expenses for the nine months ended September 30, 1999 were approximately $20.9
million (or 4.3% of net sales), while selling and administrative expenses for
the comparable period of 1998 were $22.2 million (or 4.5% of net sales). This
decrease in selling and administrative expenses principally reflects increased
allocations of overhead expenses to affiliated companies resulting from the
integration of corporate functions, partially offset by costs associated with
Year 2000 upgrades incurred in the first half of 1999.
Interest Expense. Interest expense for the third quarter of 1999 was
approximately $7.1 million compared to $6.8 million in the third quarter of
1998, an increase of 2.4%. Interest expense for the first nine months of 1999
was approximately $21.7 million compared to $19.9 million in the first nine
months of 1998, an increase of 8.6%. On March 16, 1998, the Company completed
an offering of $50.0 million aggregate principal amount 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., our majority shareholder,
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 our $110.0 million
Revolving Credit Facility during 1999, as compared to 1998.
Net Income (Loss). As a result of the foregoing, the Company had
essentially break even results in the third quarter of 1999 as compared to a
net loss of approximately $3.9 million in the same period of 1998 and a year to
date net loss of approximately $2.9 million compared to a net loss of $8.6
million in the comparable period of 1998. The results of the third quarter and
nine months of 1998 included a restructuring charge of $4.0 million as a result
of the removal from service of one furnace and one machine at the Jacksonville,
Florida manufacturing facility.
7
<PAGE> 8
LIQUIDITY AND CAPITAL RESOURCES
In the first nine months of 1999, operating activities provided $36.3
million in cash as compared to $32.4 million of cash used in the same period of
1998. This increase in cash provided reflects our lower net loss adjusted for
changes in working capital items. Accounts receivable decreased approximately
$18.1 million from year end 1998 reflecting the receipt of $20.0 million of
intercompany receivable balances. Cash consumed in investing activities for the
first nine months of 1999 and 1998 were $38.6 million and $26.3 million,
respectively, principally reflecting capital expenditures. Capital expenditures
in the first nine months of 1999 were $32.9 million compared to $23.3 million
in the same period of 1998. Net cash of $1.7 million was provided by financing
activities in the first nine months of 1999, principally reflecting the sale of
a note receivable, but partially offset by net repayments under the Revolving
Credit Facility.
In conjunction with the Anchor Acquisition, the Company entered into
its $110.0 million Revolving Credit Facility. At November 1, 1999, under the
Revolving Credit Facility, advances outstanding were $47.2 million, borrowing
availability was $7.0 million and total outstanding letters of credit under
this facility were $11.3 million.
In September 1998, G&G (acting on behalf of Consumers) entered into an
agreement to purchase a controlling interest in a European glass manufacturer
and had advanced $17.3 million toward that end. This amount was funded by G&G
through a loan from the Company of approximately $17.3 million in September
1998. The loan is evidenced by a promissory note which originally matured in
January 1999. This loan was permitted through an amendment to the Intercompany
Agreement, which was approved by the Company's Board of Directors. The
repayment date of the promissory note has been extended to December 31, 2000,
consistent with a recent amendment to the Revolving Credit Facility. The funds
were obtained through borrowings under the Revolving Credit Facility. The
Company has pledged the promissory note to the lenders under the Revolving
Credit Facility and G&G has provided security against the promissory note to
the lenders. Interest on the note is payable at the interest rate payable by
the Company on its revolving credit advances plus 1/2 %. A number of issues
have arisen and the transaction has not closed. Should the transaction not
close, the sellers are obligated to return the advance to G&G. G&G has demanded
the return of the advance plus interest accrued to date, and will upon receipt,
repay the loan from the Company. Discussions are continuing, but as of this
date outstanding issues have not been resolved. Failing a resolution of the
issues or a repayment of the advance, G&G intends to begin an arbitration
proceeding in accordance with the terms of the agreement to secure a return of
the advance.
The indentures governing 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 is currently in compliance with
these covenants.
The level of the Company's indebtedness could have important
consequences, including:
o a substantial portion of the Company's cash flow from operations
must be dedicated to debt service;
o the Company's ability to obtain additional future debt financing may
be limited; and
o the level of indebtedness could limit the Company's flexibility in
reacting to changes in the industry and economic conditions in
general.
The Company expects significant expenditures in the remainder of 1999,
including interest expense on the First Mortgage Notes, the Senior Notes and
advances under the Revolving Credit Facility and capital expenditures in the
range of $15.0 million to $19.0 million (a portion of which may be acquired
through capital leases). The Company has announced that it has signed an
agreement with Anheuser-Busch, Inc. to provide all the bottles for the brewer's
Jacksonville, Fla. and Cartersville, Ga. breweries beginning in 2001. To meet
the expanded demand from the supply contract, the Company will invest
approximately $45 million in
8
<PAGE> 9
new equipment for its Jacksonville, Fla. and Warner Robins, Ga. plants over the
next 18 months to increase production efficiency. The Company expects to
complete its funding arrangements for this project by December 31, 1999. In
addition, effective April 1, 1999, the Company finalized its labor contract
with approximately 90% of its hourly personnel. As a result, the Company will
experience an increase in hourly labor costs and pension expense in the
remainder of 1999 and in subsequent years. On October 27, 1999 Consumers
Packaging Inc., the Company's parent, announced that it had reached a
preliminary agreement with the Anheuser-Busch Packaging Group to create a joint
venture that would re-open the previously closed Houston, Texas glass
manufacturing facility, currently owned by the Company. It is anticipated that
a Consumers Packaging affiliate will purchase the Houston facility and certain
related operating rights. The Company expects to realize proceeds of
approximately $12 million from this sale.
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 the end of the year
are expected to be funds derived from operations, borrowings under the
Revolving Credit Facility and proceeds from sales of discontinued manufacturing
facilities.
Management believes that the cash flows discussed above, will provide
adequate funds for the Company's working capital needs and capital
expenditures. However, cash flows from operations depend on future operating
performance which is subject to prevailing conditions and to financial,
business and other factors, many of which are beyond the Company's control.
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
other beverage 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 has in the past
and will continue in the future to implement alternatives to reduce downtime
during these periods in order to minimize disruption to the production process
and its negative effect on profitability.
YEAR 2000
General. The Year 2000 issue arises because many computer systems, as
well as equipment with embedded date-sensitive technology, use only the last
two digits of a date to refer to a year and may recognize "00" as the year 1900
rather than 2000. If not corrected, many computer applications could fail or
provide erroneous results. If the Company, or a third party with whom it has a
material relationship, such as a customer, supplier or utility, does not
correct a material Year 2000 issue, its operations and financial results could
be adversely impacted due to:
o the inability to receive raw materials,
o the malfunctioning of our manufacturing or service processes,
o the inability to properly bill and collect payments from our
customers, and/or
o errors or omissions in accounting and financial data.
Compliance Plan and State of Readiness. The Company's plan for
mitigating the impact of Year 2000 on Company operations covers three phases.
The implementation of this plan has not resulted in the deferral of any
information technology projects.
9
<PAGE> 10
Phase One. The first phase includes an inventory and assessment of
Year 2000 issues, including the prioritizing of these issues. The plan requires
an assessment of the scope and extent of Year 2000 issues in the following
three areas:
o information technology systems known as IT systems;
o manufacturing operations and process controls known as non-IT
systems; and
o impact on our operations and business of non-compliant third parties
with whom we have a material relationship.
The Company's information technology systems cover a broad spectrum of
software applications and hardware custom designed for our manufacturing
processes. After an extensive study of the general technology needs, the
Company had decided on its plan to achieve Year 2000 compliance by upgrading
both the packaged and custom-designed software currently in place, along with
certain hardware upgrades.
In addition to software and hardware considerations, the Company has
completed reviewing the impact of the Year 2000 on the manufacturing operations
and process controls. The Company has prepared an inventory of control and
embedded chip technology and reviewed each for required actions. The Company
continues to identify components requiring modification or replacement.
Phase Two. The second phase of the Year 2000 plan is remediation in
which the Company takes the actions necessary to upgrade or replace the systems
that are not Year 2000 compliant. The upgrade of certain hardware, including
the personal computer-based environment, was completed in December 1998. The
primary accounting software applications were upgraded to a Year 2000 compliant
release in February 1999. The upgrade of other custom-designed software, which
represents a small percentage of the total applications, was completed in
August 1999. Management believes this timetable provides sufficient time to
resolve any unexpected issues. The Company continues to test control and
embedded chip technology, as well as non-IT critical control technology and
non-IT non-critical control and reporting systems.
The Company relies on numerous third-party suppliers for a wide
variety of goods and services, including raw materials, transportation and
utilities such as electricity and natural gas. The Company has initiated formal
communications with all of its significant suppliers to determine the extent to
which we are 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 it 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 information technology systems of other companies on which the Company
relies, such as utilities, will be timely converted, or that a failure to
remediate by one or more customers, suppliers or utilities would not have a
material adverse effect on the Company's business.
Phase Three. The third phase of the Year 2000 plan is system testing
and implementation. Many financial information technology systems have
completed the testing phase and are operational. The Company continues to test
manufacturing operations and process controls.
Costs. The Company anticipates that aggregate expenditures for Year
2000 compliance and system upgrades will approximate $2.5 million in 1998 and
1999, of which, as of September 30, 1999, approximately $2.3 million has been
incurred. However, no assurance can be given that the Company's actual
expenditures for Year 2000 compliance will not be higher. All of these
expenditures have been funded through cash flows from operations.
Contingency Plan and Risks. The Company's continuing analysis of the
nature and extent of operational problems that would be reasonably likely to
result will provide the information necessary to develop a contingency plan for
dealing with the most likely worst case scenario. The Company has begun
contingency planning and will develop and revise plans as additional
information becomes available. These plans are expected to include increasing
inventory levels of raw materials and finished products and
10
<PAGE> 11
documenting manual contingencies. The Company is continuing to analyze its
potential liability to third parties if its systems are not Year 2000
compliant, but currently has not made any assessment of its potential exposure.
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:
o the Company's liquidity and capital resources,
o the Company's debt levels and ability to obtain financing and
service debt,
o competitive pressures and trends in the glass container industry,
o prevailing interest rates,
o legal proceedings and regulatory matters, and
o 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; 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's debt instruments are subject to fixed interest rates
and, in addition, the amount of principal to be repaid at maturity is also
fixed. Therefore, the Company is not subject to market risk from its debt
instruments. Less than 1% of the Company's sales are denominated in currencies
other than the U.S. dollar, and the Company does not believe its total exposure
to be significant.
11
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not party to, and none of its assets are
subject to any 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, including various
environmental-related cases. The Company believes that the
ultimate outcome of these cases will not materially affect
future operations.
Item 2. Changes in Securities and Use of Proceeds.
None
Item 3. Defaults 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
10.57 Sixteenth Amendment and Waiver dated as of August 8,
1999, 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.
10.58 Seventeenth Amendment and Waiver dated as of October
11, 1999, 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.
Exhibit 27 - Financial Data Schedule
b. Reports on Form 8-K
None
12
<PAGE> 13
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 8, 1999 /s/ M. William Lightner, Jr.
---------------------------------------------
M. William Lightner, Jr.
Senior Vice President - Finance and
Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer)
13
<PAGE> 1
EXHIBIT 10.57
SIXTEENTH AMENDMENT AND WAIVER
SIXTEENTH AMENDMENT AND WAIVER (this "Amendment"), dated as of August
8, 1999, 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, 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, G&G Investments, Inc. ("G&G") and the Borrower are parties to
an Intercompany Note, dated as of September 8, 1998 (the "Intercompany Note"),
in the principal amount of U.S. $17,330,021.37, between G&G, as Maker, and the
Borrower, as Holder;
WHEREAS, G&G and BT Commercial Corporation, individually and as
Collateral Agent (including any successor collateral agent, the "Pledgee"), are
parties to a Guaranty and Pledge Agreement, dated as of September 8, 1998 (as
amended, modified, or supplemented through the date hereof, the "Guaranty and
Pledge Agreement");
WHEREAS, pursuant to Section 9.1(c) of the Credit Agreement, the
failure by the Borrower to maintain the Interest Coverage Ratio in accordance
with Section 8.11 of the Credit Agreement constitutes an Event of Default;
WHEREAS, pursuant to Section 9.1(o) of the Credit Agreement, the
failure by G&G to pay the Intercompany Note constitutes an Event of Default;
WHEREAS, pursuant to Section 9.1(o) of the Credit Agreement, the
failure by G&G to pledge additional common stock of Consumers Packaging Inc. in
accordance with Section 4.1 of the Guaranty and Pledge Agreement constitutes an
Event of Default; and
WHEREAS, notwithstanding the events of defaults as stated above, the
parties hereto wish to amend Section 2.3(c) of the Credit Agreement as herein
provided, subject to and on the terms and conditions set forth herein, in order
to modify the Agent Advance Period and thereby provide the Borrower with access
to funds;
<PAGE> 2
NOW, THEREFORE, it is agreed:
1. Section 2.3(c) is hereby amended by inserting ", except for Agent
Advances to the Borrower made after August 24, 1999 up to and until October 15,
1999" after "(i) the fifteenth Business Day after such date", so that the
paragraph will now read as follows:
"(c) In the event the Borrower is unable to comply with (i)
the Borrowing Base limitations set forth in Section 2.2(a) or the
Inventory Sublimit or (ii) the conditions precedent to the making of a
Revolving Loan or the issuance of a Letter of Credit set forth in
Section 5.2, the Lenders authorize the Payments Administrator, for the
account of the Lenders, to make Agent Advances to the Borrower for a
period commencing on the date the Payments Administrator first
receives a Notice of Borrowing requesting an Agent Advance until the
earlier of (i) the fifteenth Business Day after such date, except for
Agent Advances to the Borrower made after August 24, 1999 up to and
until October 15, 1999, (ii) the date the Borrower is again able to
comply with the Borrowing Base limitations, the Inventory Sublimit,
and the conditions precedent to the making of Revolving Loans and
issuance of Letters of Credit, or obtains an amendment or waiver with
respect thereto, or (iii) the date the Required Lenders instruct the
Payments Administrator to cease making Agent Advances (in each case,
the "Agent Advance Period"). The Payments Administrator shall not make
any Agent Advance to the extent that at such time the amount of such
Agent Advance when added to the aggregate outstanding amount of other
Agent Advances would exceed the lesser of (A) the remainder of (i) the
Total Commitments at such time less (ii) the Outstandings at such time
and (B) the lesser of (x) $10,000,000 or (y) 10% of the Outstandings
at such time."
2. 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 Sixteenth Amendment
Effective Date (as defined in Section 6 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, except as described
above, on the Sixteenth Amendment Effective Date after giving effect to this
Amendment.
3. 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.
-2-
<PAGE> 3
4. This Amendment does not constitute a waiver to any of the events
of default described above and does not in any way limit the rights or remedies
of the Lenders with respect to such events of default.
5. 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.
6. 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.
7. This Amendment shall become effective on the date (the "Sixteenth
Amendment Effective Date") when 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.
8. From and after the Sixteenth 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.
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ David Jack
-------------------------------------
Name: David Jack
Title: Treasurer
BT COMMERCIAL CORPORATION,
Individually, as Agent and
as Co-Syndication Agent
By: /s/ Frank A. Chiovari
-------------------------------------
Name: Frank A. Chiovari
Title: 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/ Frank A. Chiovari
-------------------------------------
Name: Frank A. Chiovari
Title: Vice President
<PAGE> 5
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Robert Smith
-------------------------------------
Name: Robert Smith
Title: Senior Vice President
CORESTATES BANK, N.A.
By: /s/ Jennifer Avrigian
-------------------------------------
Name: Jennifer Avrigian
Title: Asst. Vice President
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/ Eric L. Moore
-------------------------------------
Name: Eric L. Moore
Title: Vice President
By: /s/ Donald P. Haddad
-------------------------------------
Name: Donald P. Haddad
Title: Vice President/Manager
NATIONAL CITY COMMERCIAL FINANCE, INC.
By: /s/ Elizabeth M. Lynch
-------------------------------------
Name: Elizabeth M. Lynch
Title: Senior Vice President
SUMMIT COMMERCIAL/GIBRALTAR CORP.
By: /s/ Alan M. Lapidus
-------------------------------------
Name: Alan M. Lapidus
Title: Senior Vice President
<PAGE> 1
EXHIBIT 10.58
SEVENTEENTH AMENDMENT
SEVENTEENTH AMENDMENT (this "Amendment"), dated as of October 11,
1999, 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, 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, G&G Investments, Inc. ("G&G") and the Borrower are parties to
an Intercompany Note, dated as of September 8, 1998 (the "Intercompany Note"),
in the principal amount of U.S. $17,330,021.37, between G&G, as Maker, and the
Borrower, as Holder;
WHEREAS, G&G and BT Commercial Corporation, individually and as
Collateral Agent (including any successor collateral agent, the "Pledgee"), are
parties to a Guaranty and Pledge Agreement, dated as of September 8, 1998 (as
amended, modified, or supplemented through the date hereof, the "Guaranty and
Pledge Agreement");
WHEREAS, pursuant to Section 9.1(c) of the Credit Agreement, the
failure by the Borrower to maintain the Interest Coverage Ratio in accordance
with Section 8.11 of the Credit Agreement constitutes an Event of Default;
WHEREAS, pursuant to Section 9.1(o) of the Credit Agreement, the
failure by G&G to pay the Intercompany Note constitutes an Event of Default;
WHEREAS, pursuant to Section 9.1(o) of the Credit Agreement, the
failure by G&G to pledge additional common stock of Consumers Packaging Inc. in
accordance with Section 4.1 of the Guaranty and Pledge Agreement constitutes an
Event of Default; and
WHEREAS, notwithstanding the events of default described above, the
parties hereto wish to amend the Credit Agreement as herein provided, subject
to and on the terms and conditions set forth herein;
<PAGE> 2
NOW, THEREFORE, it is agreed:
1. Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new definitions in alphabetical order:
Fixed Charge Ratio shall mean for any period, the ratio of
(x) EBITDA for such period to (y) the sum of the following made during
such period: (i) Interest Expense, (ii) Capital Expenditures, (iii)
cash Dividends, (iv) cash costs and expenses resulting from Plant
Closures, (v) any Investments made pursuant to Sections 8.5(a)-(h),
(vi) principal payments of term debt, without duplication of any
amount paid pursuant to the Capital Expenditure provision above, and
(vi) cash taxes paid.
Southeast Project shall mean, pursuant to documentation
satisfactory in form and substance to the Agent, (i) the sale and
leaseback of certain existing equipment of the Borrower, (ii) the
financing of certain improvements to existing equipment of the
Borrower, (iii) financing by the lessor of certain new equipment of
the Borrower, and (iv) the replacement of certain existing Operating
Leases of the Borrower.
2. Section 8.1 is hereby amended by (i) deleting "and" at the end
of Section 8.1(d), (ii) deleting the period at the end of Section 8.1(e) and
adding in lieu thereof "; and", and (iii) inserting the following clause:
(f) the transactions made in connection with the Southeast
Project.
3. Section 8.3 is hereby amended by (i) deleting the period after
Section 8.3(i) and inserting a semicolon in lieu thereof, (ii) deleting the
period after Section 8.3(j) and inserting in lieu thereof "; and", and (iii)
inserting the following clause:
(k) Indebtedness of the Borrower or any of the Borrower's
Subsidiaries incurred pursuant to the Southeast Project.
4. Section 8.11 is hereby amended by deleting such section in its
entirety and replacing it with the following provision in lieu thereof:
8.11 Fixed Charge Ratio. The Borrower will not permit the
Fixed Charge Ratio for any period of four consecutive fiscal quarters
(or if shorter, any period beginning on October 1, 1999 and ending on
the last day of any fiscal quarter) in each case taken as one
accounting period, ended on a date set forth below to be less than the
ratio set forth opposite such date:
-2-
<PAGE> 3
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Ratio
----- -----
<S> <C>
December 31,1999 0.4:1.0
March 31, 2000 0.55:1.0
June 30, 2000 0.8:1.0
September 30, 2000 1.0:1.0
December 31, 2000 1.0:1.0
March 31, 2001 1.1:1.0
June 30, 2001 1.1:1.0
September 30, 2001 1.2:1.0
December 31, 2001 1.2:1.0
</TABLE>
5. Section 8.23 is hereby amended by inserting "(i)" immediately
before the phrase "have a Material Adverse Effect" and inserting "or (ii)
materially change the Borrower's ability to comply with Section 8.25"
immediately after.
6. Article 8 of the Credit Agreement is hereby amended by inserting
the following new section:
8.25 Minimum Availability. The Available Borrowing Amount less the
Outstandings shall not be permitted to be less than $12,500,000 until the sale
and leaseback portion of the Southeast Project is consummated and the Borrower
has received and notified the Agent of receipt of proceeds in the amount of
$30,000,000.
7. In order to induce the undersigned 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
Seventeenth Amendment Effective Date (as defined in Section 6 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,
except as described above, on the Seventeenth 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.
-3-
<PAGE> 4
11. This Amendment shall become effective on the date (the
"Seventeenth Amendment Effective Date") when (a) 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 (b) G&G or Ghaznavi Canada Inc. pledges an additional
4,023,159 shares of common stock of Consumers pursuant to Section 4.1 of the
Guaranty and Pledge Agreement, (c) the Borrower pays all outstanding and
invoiced legal fees of White & Case LLP, (d) the Agent receives a fee equal to
$250,000 for pro rata distribution among the Lenders according to their
respective Commitments under the Credit Agreement, (e) G&G delivers an
amendment to the Intercompany Note in form and substance satisfactory to the
Agent to (i) change the maturity date to December 31, 2000, (ii) in addition to
the foregoing, require that G&G use any cash Dividends received after the
Seventeenth Amendment Effective Date from Consumers to pay amounts outstanding
under the Intercompany Note and (iii) require that G&G cause Consumers to pay
to G&G 85% of any cash Dividends permissible under any debt agreements to which
Consumers is a party and permissible under applicable laws, rules or
regulations.
12. From and after the Seventeenth 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.
* * *
-4-
<PAGE> 5
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.
ANCHOR GLASS CONTAINER CORPORATION
By: /s/ David Jack
-------------------------------------
Name: David Jack
Title: Vice President - Treasurer
BT COMMERCIAL CORPORATION, Individually,
as Agent and as Co-Syndication Agent
By: /s/ Frank A. Chiovari
-------------------------------------
Name: Frank A. Chiovari
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
Individually, as Co-Syndication Agent
and Issuing Bank
By:
-------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, as Issuing Bank
By: /s/ Frank A. Chiovari
-------------------------------------
Name: Frank A. Chiovari
Title: Vice President
<PAGE> 6
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Karen Hoffman
-------------------------------------
Name: Karen Hoffman
Title: Vice President
CORESTATES BANK, N.A.
By: /s/ Jennifer Avrigian
-------------------------------------
Name: Jennifer Avrigian
Title: Asst. Vice President
FLEET BANK
By:
-------------------------------------
Name:
Title:
KEY CORPORATE CAPITAL, INC.
By:
-------------------------------------
Name:
Title:
MELLON BANK, N.A.
By: /s/ Michael F. Aliberto III
-------------------------------------
Name: Michael F. Aliberto III
Title: Vice President
<PAGE> 7
NATIONAL BANK OF CANADA
By: /s/ Donald P. Haddad
-------------------------------------
Name: Donald P. Haddad
Title: Vice President
By: /s/ Eric L. Moore
-------------------------------------
Name: Eric L. Moore
Title: Vice President
NATIONAL CITY COMMERCIAL FINANCE, INC.
By: /s/ Gregory A. Godec
-------------------------------------
Name: Gregory A. Godec
Title: Vice President
SUMMIT COMMERCIAL/GIBRALTAR CORP.
By: /s/ Alan M. Lapidus
-------------------------------------
Name: Alan M. Lapidus
Title: Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
FINANCIAL STATEMENT OF ANCHOR GLASS CONTAINER INCLUDED IN FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 3,507
<SECURITIES> 0
<RECEIVABLES> 86,194
<ALLOWANCES> 1,034
<INVENTORY> 99,096
<CURRENT-ASSETS> 195,745
<PP&E> 434,398
<DEPRECIATION> 125,015
<TOTAL-ASSETS> 597,516
<CURRENT-LIABILITIES> 141,965
<BONDS> 203,288
55,983
34
<COMMON> 216
<OTHER-SE> 60,568
<TOTAL-LIABILITY-AND-EQUITY> 597,516
<SALES> 486,687
<TOTAL-REVENUES> 486,687
<CGS> 448,465
<TOTAL-COSTS> 448,465
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 31
<INTEREST-EXPENSE> 21,658
<INCOME-PRETAX> (2,933)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,933)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,933)
<EPS-BASIC> (2.49)
<EPS-DILUTED> (2.49)
</TABLE>
