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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-233-59
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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
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(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 July 31, 2000:
2,158,094 shares.
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ANCHOR GLASS CONTAINER CORPORATION
FORM 10-Q
For the Quarterly Period Ended June 30, 2000
INDEX
Page No.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Statements of Operations and Comprehensive Income -
Three and Six Months Ended June 30, 2000 and 1999 3
Condensed Balance Sheets -
June 30, 2000 and December 31, 1999 4
Condensed Statements of Cash Flows -
Six Months Ended June 30, 2000 and 1999 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 10
PART II - OTHER INFORMATION 11
SIGNATURES 13
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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>
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------------- --------------------------------
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 328,983 $ 316,582 $ 175,099 $ 169,655
Costs and expenses:
Cost of products sold 302,852 291,683 159,246 153,746
Selling and administrative expenses 15,577 13,881 8,073 5,837
---------------------------------------------------------------------------------------------------------------------------
Income from operations 10,554 11,018 7,780 10,072
Other income, net 7,177 583 535 334
Interest expense (15,281) (14,629) (7,695) (7,317)
----------- ----------- ----------- -----------
Net income (loss) 2,450 (3,028) 620 3,089
Preferred stock dividends (6,971) (6,690) (3,505) (3,383)
----------- ----------- ----------- -----------
Loss applicable to common stock $ (4,521) $ (9,718) $ (2,885) $ (294)
=========== =========== =========== ===========
Basic net loss per share applicable
to common stock $ (0.86) $ (1.85) $ (0.55) $ (0.06)
=========== =========== =========== ===========
Basic weighted average number of
common shares outstanding 5,251,356 5,251,356 5,251,356 5,251,356
=========== =========== =========== ===========
Comprehensive income (loss) $ 2,450 $ (3,028) $ 620 $ 3,089
=========== =========== =========== ===========
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Financial Statements.
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ANCHOR GLASS CONTAINER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
June 30, 2000 December 31, 1999
(unaudited)
-------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 866 $ 5,278
Accounts receivable 71,475 53,556
Advance to affiliate 17,588 17,571
Inventories:
Raw materials and manufacturing supplies 23,666 24,415
Finished products 89,139 82,562
Other current assets 9,848 7,603
--------- ---------
Total current assets 212,582 190,985
Property, plant and equipment, net 308,144 320,001
Other assets 29,772 29,545
Strategic alliances with customers 8,444 11,089
Goodwill 49,316 50,804
--------- ---------
$ 608,258 $ 602,424
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility $ 48,349 $ 40,895
Current maturities of long-term debt 1,980 2,029
Accounts payable 48,095 48,729
Accrued expenses 31,540 34,545
Accrued interest 5,998 5,953
Accrued compensation and employee benefits 23,747 23,895
--------- ---------
Total current liabilities 159,709 156,046
Long-term debt 209,336 210,208
Long-term pension liabilities 26,813 24,569
Long-term post-retirement liabilities 59,194 59,464
Other long-term liabilities 33,739 35,120
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329,082 329,361
Commitments and contingencies
Redeemable preferred stock 73,606 70,830
--------- ---------
Stockholders' equity:
Preferred stock 34 34
Issuable preferred stock 21,731 21,731
Common stock 216 216
Warrants 15,445 15,445
Capital in excess of par value 98,340 98,340
Accumulated deficit (89,905) (89,579)
--------- ---------
45,861 46,187
--------- ---------
$ 608,258 $ 602,424
========= =========
</TABLE>
--------------------------------------------
See Notes to Condensed Financial Statements.
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ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Six Months Ended June 30,
---------------------------
2000 1999
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,450 $ (3,028)
Adjustments to reconcile net income (loss) to cash provided
by operating activities:
Depreciation and amortization 28,179 28,074
Gain on sale of property, plant and equipment (4,139) --
Other (32) 149
Increase (decrease) in cash resulting from changes in
assets and liabilities (24,727) 4,463
-------- --------
1,731 29,658
---------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Expenditures for property, plant and equipment (24,805) (26,781)
Deposit of sale proceeds into escrow account (10,000) --
Withdrawal of funds from escrow account 18,267 --
Proceeds from the sale of property, plant and
equipment 8,066 193
Stock in Parent, held for Pension Fund, pending
government approval -- (3,000)
Payments of strategic alliances with customers (1,775) (2,000)
Other (1,758) (798)
-------- --------
(12,005) (32,386)
---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments of long-term debt (1,022) (481)
Net draws (repayments) on revolving credit facility 7,454 (5,783)
Sale of note receivable -- 11,200
Other, primarily financing fees (570) (137)
-------- --------
5,862 4,799
---------------------------------------------------------------------------------------------------
Cash and equivalents:
Increase (decrease) in cash and cash equivalents (4,412) 2,071
Balance, beginning of period 5,278 4,106
-------- --------
Balance, end of period $ 866 $ 6,177
======== ========
---------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Interest payments, net $ 14,132 $ 13,554
======== ========
Income tax payments (refunds), net $ -- $ --
======== ========
</TABLE>
--------------------------------------------
See Notes to Condensed Financial Statements.
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ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - MANAGEMENT'S RESPONSIBILITY
In the opinion of Management, the accompanying condensed financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of June 30,
2000 and the results of operations and cash flows for the three and six months
ended June 30, 2000 and 1999 and cash flows for the six months ended June 30,
2000 and 1999.
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, 1999. The results of
operations for the interim periods are not necessarily indicative of the results
of the full fiscal year.
NOTE 2 - SALE OF CLOSED MANUFACTURING FACILITY
In March 2000, Anheuser-Busch Companies, Inc. ("Anheuser-Busch")
purchased the previously closed Houston, Texas glass container manufacturing
facility and certain related operating rights. The Company received proceeds of
$10.0 million from the sale. Concurrently, Consumers Packaging Inc.
("Consumers"), the Company's indirect parent, for an aggregate consideration of
$15.0 million, entered into a contract with Anheuser-Busch to manage the
renovation and provide the technical expertise in the re-opening of the Houston
facility, while simultaneously agreeing to give up all rights under a proposed
joint venture agreement with Anheuser-Busch to own and operate the Houston
facility. The Company expects to negotiate a contract with Anheuser-Busch to
provide management assistance in the operations of the facility upon its
refurbishment.
NOTE 3- REDEEMABLE PREFERRED STOCK
The Company has designated 2,239,320 shares as Series A Preferred Stock
and 5,000,000 shares as Series B Preferred Stock. The Series A Preferred Stock
ranks, as to dividends and redemption and upon liquidation, prior to all other
classes and series of capital stock of the Company. The holders of Series A
Preferred Stock are entitled to receive, when and as declared by the Board of
Directors of the Company, cumulative dividends, payable quarterly in cash, at an
annual rate of 10%. Unpaid dividends have been accrued and included with the
value of the related preferred stock on the condensed balance sheets.
The Series B Preferred Stock ranks, as to dividends and redemption and
upon liquidation, junior to the Series A Preferred Stock but senior to all other
classes and series of capital stock of the Company. The holders of Series B
Preferred Stock are entitled to receive, when and as declared by the Board of
Directors of the Company, cumulative dividends, payable quarterly in cash, at an
annual rate of 8%. Dividends on the Series B Preferred Stock are recorded within
the caption Accumulated deficit on the condensed balance sheet until declared.
NOTE 4 - COMMON STOCK
For the period from February 5, 1997 to February 5, 2000, the common
stock was divided into three classes, Class A and Class B, which were voting,
and Class C, which were non-voting. On February 5, 2000, the three classes of
common stock were consolidated into one single class of common stock with
identical rights.
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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 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 2000 second quarter were $175.1 million
compared to $169.7 million for the second quarter of 1999, an increase of $5.4
million, or 3.2%. Net sales for the first half of 2000 were $329.0 million and
$316.6 million for the comparable period of 1999. This increase in net sales
dollars was principally as a result of the increase in shipment volume,
particularly in the beer and tea product lines. Also, this improvement reflects
some minor increases in pricing.
Cost of Products Sold. The Company's cost of products sold in the
second quarter and first half of 2000 were $159.3 million and $302.9 million,
respectively (or 90.9% and 92.0% of net sales), while the cost of products sold
for the second quarter of 1999 and first half of 1999 were $153.8 million and
$291.7 million, respectively (or 90.6% and 92.1% of net sales). This level
percentage of cost of products sold principally reflects the benefits of the
cost savings strategies that the Company began to implement in prior years and
improved margins in the beer and tea product lines. These cost decreases have
been offset by increases in other manufacturing costs. The Company experienced
increases in the cost of natural gas and corrugated as compared to the same
periods of the preceding year. Effective April 1, 1999, the Company finalized
its labor contract with approximately 90% of its hourly personnel. As a result,
the Company experienced an increase in hourly labor costs and pension expense
beginning in the second quarter of 1999.
Selling and Administrative Expenses. Selling and administrative
expenses for the six months ended June 30, 2000 were approximately $15.5 million
(or 4.7% of net sales), while selling and administrative expenses for the
comparable period of 1999 were $13.9 million (or 4.4% of net sales). This
increase in selling and administrative expenses, in total dollars and as a
percentage of net sales, reflects increased legal costs as a result of the legal
proceedings discussed in Part II - Item 1 and higher overall employee related
costs. The quarter to quarter comparison also reflects the spending in 1999
associated with Year 2000 compliance, which is non-recurring in the current
year.
Net Income (Loss). As a result of the foregoing, the Company had net
income in the second quarter of 2000 of approximately $0.6 million as compared
to net income of approximately $3.1 million in the same period of 1999 and a
year to date net income of approximately $2.4 million compared to a net loss of
$3.0 million in the comparable period of 1999. The results of the 2000 first
quarter included a gain on sale of the previously closed Houston, Texas glass
container manufacturing facility of approximately $4.1 million and a gain of
approximately $2.0 million on the sale of certain operating rights related to
the Texas facility, both included in Other income, net. Excluding the gains on
these sales transactions, the Company would have reported a loss of
approximately $3.6 million for the six months ended June 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
In the first six months of 2000, operating activities provided $1.7
million in cash as compared to $29.7 million in the same period of 1999. This
decrease in cash provided reflects the improvement in earnings adjusted for
changes in working capital items. Accounts receivable increased approximately
$17.9 million as compared with the December 1999 year end, primarily reflecting
the increased sales and the impact of providing extended credit terms, to
certain customers whose sales were greater in the first half of 2000 than in
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the latter months of 1999. Accounts receivable at June 1999 decreased by
approximately $24.9 million from year end 1998 reflecting the receipt of $20.0
million of intercompany receivable balances.
Cash consumed in investing activities for the first half of 2000 and
1999 were $12.0 million and $32.4 million, respectively. Capital expenditures in
the six months ended June 30, 2000 were $24.8 million compared to $26.8 million
in the comparable period of 1999. In the first six months of 2000, the Company
applied cash that had been deposited into escrow, as provided for under the
terms of the indentures, to fund capital expenditures. These escrowed funds
resulted from the proceeds of asset sales in the fourth quarter of 1999 and the
first quarter of 2000.
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 July 31, 2000, advances outstanding under the
Revolving Credit Facility were $47.8 million, borrowing availability was $6.2
million and total outstanding letters of credit on this facility were $11.3
million. Net cash of $5.9 million was provided by financing activities in the
first half of 2000, principally reflecting borrowings under the Revolving Credit
Facility.
In September 1998, G&G Investments, Inc. ("G&G) (acting on behalf of
Consumers) entered into an agreement to purchase a controlling interest in a
European glass manufacturer and 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% and has been
paid through June 2000. A number of issues have arisen and the transaction has
not closed. Should the transaction not close, the seller is obligated to return
the advance to G&G. G&G has demanded the return of the advance plus interest
accrued to date and related costs including costs related to the devaluation of
the Deutschemark, and will upon receipt, repay the loan from the Company.
Discussions have been held, but as of this date outstanding issues have not been
resolved. In March 2000, G&G commenced an arbitration proceeding in accordance
with the terms of the agreement to secure a return of the advance.
The indentures covering the $150.0 million aggregate principal amount
of 11-1/4% First Mortgage Notes due 2005 (the "First Mortgage Notes") and $50.0
million aggregate principal amount of 9-7/8% Senior Notes due 2008 (the "Senior
Notes") contain certain covenants that restrict the Company from taking various
actions, including, subject to specified exceptions and limits, 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 fixed
charge ratio.
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 2000, 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
$28.0 million to $31.0 million, any additional capital expenditures beyond this
level will be
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financed from sources outside the Company. The Company announced that it signed
an agreement with Anheuser-Busch to provide all the bottles for the
Anheuser-Busch's Jacksonville, Florida and Cartersville, Georgia breweries
beginning in 2001. To meet the expanded demand from the supply contract, the
Company will invest approximately $30.0 million in new equipment for its
Jacksonville plant over the next 18 months to increase production efficiency.
The funding for this project will be provided through certain leasing
transactions, the proceeds from the sale of the Houston plant (see below) and
internal cash flows. In December 1999, the Company entered into a firm agreement
with a major lessor for $30.0 million of lease transactions. Under this
agreement, the Company sold, in December 1999, and leased back under a capital
lease, equipment located at the Warner Robins facility, for a net selling price
of approximately $8.2 million. No further funding has been provided under this
agreement pending resolution of certain arbitration, (see Part II - Item 1 -
Legal Proceedings.) However, certain co-lessors identified as part of the $30.0
million transaction may proceed to fund.
In March 2000, Anheuser-Busch purchased the previously closed Houston,
Texas glass container manufacturing facility and certain related operating
rights. Anchor received proceeds of $10.0 million from the sale. Concurrently,
Consumers, for an aggregate consideration of $15.0 million, entered into a
contract with Anheuser-Busch to manage the renovation and provide the technical
expertise in the re-opening of the Houston facility, while simultaneously
agreeing to give up all rights under a proposed joint venture agreement with
Anheuser-Busch to own and operate the Houston facility. The Company expects to
negotiate a contract with Anheuser-Busch to provide management assistance in the
operations of the facility upon its refurbishment.
In addition, effective April 1, 1999, the Company finalized its labor
contract with approximately 90% of its hourly personnel. As a result, the
Company experienced an increase in hourly labor costs and pension expense in
1999 and will incur increased costs in subsequent years.
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, proceeds from the sale/leaseback transactions noted above and
proceeds from sales of discontinued manufacturing facilities.
Without taking into account the litigation and arbitration with
Owens-Brockway Glass Container Inc. ("Owens"), (see Part II - Item 1 - Legal
Proceedings), 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 relatively low, the Company has experienced pricing pressures in the
current market and while it has not been fully able to pass on inflationary cost
increases to its customers, it did realize some price relief in 2000.
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 adversely affect profitability during the first and
fourth quarters. The Company has in
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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.
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 industry 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 long-term 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.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On February 16, 2000, Owens commenced an action against the Company and
certain of its affiliates, including Consumers and GGC, L.L.C., in the United
States District Court for the Southern District of New York. Owens alleges
violations of the Technical Assistance and License Agreement ("TALA") and its
resulting termination. Owens is seeking various forms of relief including (1) a
permanent injunction restraining the Company and its affiliates from infringing
Owens' patents and using or disclosing Owens' trade secrets and (2) damages for
breaches of the TALA.
The Company and its affiliates filed a demand for arbitration with the
American Arbitration Association on February 24, 2000. On March 15, 2000, the
Court ruled that the dispute as to whether there was a valid termination of the
TALA is subject to arbitration. On March 31, 2000, Owens submitted its answer
and counterclaims in the arbitration. Owens has asserted the position that (i)
the Court referred to arbitration only the question whether there was a valid
termination of the TALA and (ii) certain of Owens' claims are not arbitrable. On
May 1, 2000, the Company and its affiliates submitted Claimants' Reply to the
counterclaim in the arbitration. The hearing on the merits in the arbitration is
scheduled to begin on October 24, 2000.
On April 14, 2000, Owens and the Company and certain of its affiliates
consented to the entry of an order by the Court which requires compliance with
the TALA until further order of the Court. In addition, the order requires the
Company and its affiliates to inventory all equipment, other technology and
documents subject to the TALA and certify to the Court periodically that all
royalties have been paid and no unauthorized technology transfer has occurred.
In compliance with the order, Consumers' Italian subsidiary ceased using the
disputed technology.
The Company believes that it has meritorious defenses to the claims in
the action and counterclaim in the arbitration and intends to conduct a vigorous
defense. An unfavorable outcome in this matter could have a material and adverse
effect on the Company's business prospects and financial condition. In addition,
even if the ultimate outcome of the matter were resolved in favor of the
Company, the litigation and arbitration may involve considerable cost, which
could be material, and could divert the efforts of management.
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
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Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
--------
10.63 Twenty First Amendment dated as of May 18, 2000, 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.
27 Financial Data Schedule
b. Reports on Form 8-K
Current Report on Form 8-K dated February 17, 2000 (filed April 4,
2000) reporting an action commenced against the Company and
certain of its affiliates by Owens alleging violations of the
TALA.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANCHOR GLASS CONTAINER CORPORATION
Date: August 14, 2000 /s/ Lawrence M. Murray
--------------------------------
Lawrence M. Murray
Senior Vice President - Finance
(Principal Financial Officer and
Duly Authorized Officer)
13
