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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 March 31, 2000
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
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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
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(Address of principal executive offices) (Zip Code)
813-884-0000
------------
(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 April 30, 2000:
2,158,094 shares.
1 of 13
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ANCHOR GLASS CONTAINER CORPORATION
FORM 10-Q
For the Quarterly Period Ended March 31, 2000
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Statements of Operations and Comprehensive Income -
Three Months Ended March 31, 2000 and 1999 3
Condensed Balance Sheets -
March 31, 2000 and December 31, 1999 4
Condensed Statements of Cash Flows -
Three Months Ended March 31, 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
</TABLE>
2
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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>
- ----------------------------------------------------------------------------------------------------
Three Months Ended March 31,
--------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 153,884 $ 146,927
Costs and expenses:
Cost of products sold 143,606 137,937
Selling and administrative expenses 7,504 8,044
- ----------------------------------------------------------------------------------------------------
Income from operations 2,774 946
Other income, net 6,642 249
Interest expense (7,586) (7,312)
--------- ---------
Net income (loss) $ 1,830 $ (6,117)
========= =========
Preferred stock dividends $ (3,466) $ (3,307)
========= =========
Loss applicable to common stock $ (1,636) $ (9,424)
========= =========
Basic net loss per share applicable to common stock $ (0.31) $ (1.79)
========= =========
Basic weighted average number of common
shares outstanding 5,251,356 5,251,356
========= =========
Comprehensive income (loss) $ 1 ,830 $ (6,117)
========= =========
</TABLE>
- ---------
See Notes to Condensed Financial Statements.
3
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ANCHOR GLASS CONTAINER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
March 31, 2000 December 31, 1999
(unaudited)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,239 $ 5,278
Accounts receivable 62,054 53,556
Advance to affiliate 17,571 17,571
Inventories:
Raw materials and manufacturing supplies 23,973 24,415
Finished products 91,380 82,562
Other current assets 8,191 7,603
------------ -----------
Total current assets 208,408 190,985
Property, plant and equipment, net 314,849 320,001
Other assets 29,822 29,545
Strategic alliances with customers 9,731 11,089
Goodwill 50,060 50,804
------------ -----------
$ 612,870 $ 602,424
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility $ 43,532 $ 40,895
Current maturities of long-term debt 2,014 2,029
Accounts payable 58,163 48,729
Accrued expenses 30,238 34,545
Accrued interest 8,989 5,953
Accrued compensation and employee benefits 22,469 23,895
------------ -----------
Total current liabilities 165,405 156,046
Long-term debt 209,852 210,208
Long-term pension liabilities 25,691 24,569
Long-term post-retirement liabilities 59,318 59,464
Other long-term liabilities 33,757 35,120
------------ -----------
328,618 329,361
Commitments and contingencies
Redeemable preferred stock 72,210 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 (89,129) (89,579)
------------ -----------
46,637 46,187
------------ -----------
$ 612,870 $ 602,424
============ ===========
</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>
- -----------------------------------------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
2000 1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,830 $ (6,117)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation and amortization 14,294 14,715
Gain on sale of property, plant and equipment (4,107) --
Other 116 119
Decrease in cash resulting from changes in
assets and liabilities (9,299) (463)
--------- ---------
2,834 8,254
- -----------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Expenditures for property, plant and equipment (16,648) (16,466)
Deposit of sale proceeds into escrow account (10,000) --
Withdrawal of funds from escrow account 15,497 --
Proceeds from sale of property, plant and equipment 8,000 --
Payments of strategic alliance with customers (550) (2,000)
Other (969) (500)
--------- ---------
(4,670) (18,966)
- -----------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments of long-term debt (450) (175)
Net draws on revolving credit facility 2,637 7,708
Other, primarily financing fees (390) (137)
--------- ---------
1,797 7,396
- -----------------------------------------------------------------------------------------------------
Cash and equivalents:
Decrease in cash and cash equivalents (39) (3,316)
Balance, beginning of period 5,278 4,106
--------- ---------
Balance, end of period $ 5,239 $ 790
========= =========
- -----------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Interest payments, net $ 3,998 $ 3,676
========= =========
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 March 31,
2000 and the results of operations and cash flows for the three months ended
March 31, 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
$10,000 from the sale. Concurrently, Consumers Packaging Inc. ("Consumers"), the
Company's indirect parent, for an aggregate consideration of $15,000, 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 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 are voting, and
Class C, which was 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 first quarter of 2000 were $153.9 million
compared to $146.9 million for the first quarter of 1999, an increase of $7.0
million, or 4.7% on a volume increase of approximately 6%. 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 first
quarter of 2000 was $143.6 million (or 93.3% of net sales), while the cost of
products sold for the first quarter of 1999 was $137.9 million (or 93.9% of net
sales). The decrease in the percentage of cost of products sold for the first
quarter of 2000 as compared with the first quarter of 1999 principally reflects
the benefits of the cost savings strategies that the Company began to implement
in prior years. Also, this decrease reflects improved margins in the beer and
tea product lines. These cost decreases are partially offset by increases in
other manufacturing costs. 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. In addition, the Company experienced
increases in the cost of natural gas and corrugate as compared to the same
quarter of the preceding year.
Selling and Administrative Expenses. Selling and administrative
expenses for the first three months of 2000 were approximately $7.5 million (or
4.9% of net sales), while selling and administrative expenses in the first three
months of 1999 were $8.0 million (or 5.5% of net sales). This decrease in
selling and administrative expenses, in total dollars and as a percentage of net
sales, reflects increased allocations of overhead expenses to affiliated
companies resulting from the integration of corporate functions, partially
offset by generally increased costs overall. The quarter to quarter comparison
also reflects the spending in 1999 associated with compliance of the Year 2000
issue, which is non-recurring in the current year.
Net Income (Loss). The Company had a net income in the first quarter of
2000 of approximately $1.8 million as compared to a net loss of $6.1 million in
the first quarter 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
of certain operating rights related to the Texas facility, both included in
Other income, net. Excluding these sales transactions, the Company would have
reported a loss of approximately $4.3 million.
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 2000, operating activities provided $2.8
million in cash as compared to $8.3 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
$8.5 million as compared with the December 1999 year end, primarily reflecting
the increased sales and the impact of providing extended credit terms, with
certain customers whose sales were greater in the first quarter of 2000.
Accounts receivable at March 1999 decreased by approximately $12.6 million from
year end 1998 reflecting the receipt of $20.0 million of intercompany receivable
balances, offset by the impact of similar extended credit terms. The reduction
of accounts payable consumed approximately $3.2 million in cash in the first
quarter of 1999, while the increase in accounts payable in the first three
months of 2000 provided
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approximately $9.4 million. The net effect of these working capital changes
accounted for a reduction in cash provided of approximately $8.5 million.
Cash consumed in investing activities for the first three months of
2000 and 1999 were $4.7 million and $19.0 million, respectively. Capital
expenditures in the 2000 first quarter were $16.6 million compared to $16.5
million in the same quarter of 1999. In the first three months of 2000, the
Company applied cash, deposited into escrow, to fund capital expenditures in the
first quarter, as provided for under the terms of the indentures. These escrowed
funds resulted from the proceeds of assets sold 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 April 30, 2000, advances outstanding under the
Revolving Credit Facility were $43.5 million, borrowing availability was $11.4
million and total outstanding letters of credit on this facility were $11.3
million. Net cash of $1.8 million was provided by financing activities in the
2000 first quarter, principally reflecting borrowings under the Revolving Credit
Facility.
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 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 March 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 $150,000 aggregate principal amount of
11 1/4% First Mortgage Notes due 2005 (the "First Mortgage Notes") and $50.0
million 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, 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:
- a substantial portion of the Company's cash flow from operations
must be dedicated to debt service,
- the Company's ability to obtain additional future debt financing
may be limited and
- 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.
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 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 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 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.
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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:
- the Company's liquidity and capital resources,
- the Company's debt levels and ability to obtain financing and
service debt,
- competitive pressures and trends in the glass container industry,
- prevailing interest rates,
- legal proceedings and regulatory matters, and
- 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.
10
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On February 17, 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 Licensing 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 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
11
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Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.61 Preliminary Injunction Entered Upon Consent, United
States District Court Southern District of New York,
Owens-Brockway Glass Container Inc., Plaintiff,
against Consumers Packaging Inc., GGC, L.L.C.,
Hillsboro Glass Co., and Anchor Glass Container
Corp., Defendants.
10.62 Twentieth Amendment dated as of April 26, 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 (for SEC use only)
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: May 15, 2000 /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
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EXHIBIT 10.61
1
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - - - - - - - - - - x
OWENS-BROCKWAY GLASS CONTAINER INC., :
: 00 Civ. 1169 (JSM)
:
Plaintiff, :
:
- against - : PRELIMINARY INJUNCTION
: ENTERED UPON CONSENT
CONSUMERS PACKAGING INC., :
GGC, L.L.C., HILLSBORO GLASS CO., :
and ANCHOR GLASS CONTAINER CORP., :
:
:
Defendants. :
- - - - - - - - - - - - - - - - - - - - - - - - - - - x
Based on the consent of the parties and pursuant to Rule 65 of the
Federal Rules of Civil Procedure, the Court hereby preliminarily enjoins the
defendants Consumers Packaging Inc., GGC, L.L.C., Hillsboro Glass Co. and Anchor
Glass Container Corp. (collectively, the "Consumers Group"), their officers,
agents, servants, employees, and attorneys, and all persons in active concert or
participation with them:
1. from disclosing Owens-Brockway Glass Container Inc.
("Owens-Brockway") Technical Information and/or Licensed Trade Secrets
(as those terms are defined in P. 1(i) of the Technical Assistance and
Licensing Agreement dated December 18, 1996, among Owens-Brockway and
the members of the Consumers Group; hereinafter, the "TALA") to any
person not expressly authorized by the TALA to possess such Technical
Information and/or Licensed Trade Secrets, including but not limited to
any subsidiary or affiliate of any of them which is not a party to the
TALA, such as Consumers SrL in Teramo, Italy;
<PAGE> 2
2
2. from implementing or installing in any facility any
equipment or machinery for glass container manufacturing that
incorporates or embodies, in whole or in part, Owens-Brockway Technical
Information and/or Licensed Trade Secrets, provided, however, that any
member of the Consumers Group may transfer any such equipment or
machinery that is already in the possession of any member of the
Consumers Group between or among any of their facilities within the
licensed territory in which any such equipment or machinery is
currently used;
3. from disclosing or utilizing any Owens-Brockway Technical
Information and/or Licensed Trade Secrets to assist others in the
construction, utilization or selection of equipment or machinery for
any facility where equipment or machinery that incorporates or
embodies, in whole or in part, Owens-Brockway Technical Information
and/or Licensed Trade Secrets is not currently located;
4. to prepare a detailed inventory, on a facility-by-facility
basis, of all technical documents, engineering drawings or similar
materials describing or containing Owens- Brockway Technical
Information and/or Licensed Trade Secrets (including but not limited to
Owens-Brockway aperture cards and Owens-Brockway technical assistance
bulletins, manuals and technical correspondence), and to deliver said
inventory to Owens-Brockway by Friday, May 12, 2000;
5. to maintain all such technical documents, engineering
drawings or similar materials describing or containing Owens-Brockway
Technical Information and/or Licensed Trade Secrets in a secure manner,
to control access thereto and to maintain a log of the persons
accessing such materials and the materials accessed;
6. to prepare a detailed inventory, on a facility-by-facility
basis, of all equipment or machinery for glass container manufacturing
that incorporates or embodies, in whole or in part, Owens-Brockway
Technical Information and/or Licensed Trade Secrets, and to deliver
said inventory to Owens-Brockway by Monday, May 29, 2000;
7. to provide to Owens-Brockway, within fifteen (15) days
following the end of each calendar quarter, a current version of the
inventories described in Paragraphs 4 and 6 above, at a level of detail
sufficient to show any transfers or dispositions of the items subject
to the inventories;
8. to maintain, in each plant or facility containing equipment
or machinery that incorporates or embodies, in whole or in part,
Owens-Brockway Technical Information and/or Licensed Trade Secrets, a
current log of all such equipment and machinery;
9. to provide any person who expresses to any member of the
Consumers Group interest in acquiring any property, security or
collateral interest of any nature, contingent or otherwise, in (a) any
equipment or machinery that incorporates or embodies, in whole or in
part, Owens-Brockway Technical Information and/or Licensed Trade
Secrets, or (b)
<PAGE> 3
3
any plant or facility containing such equipment or machinery, prior to
the acquisition by such person of any such interest, with notice of (x)
the TALA, (y) the fact that such machinery or equipment may be subject
to the TALA, and (z) this preliminary injunction;
10. to retrieve all Owens-Brockway Technical Information
and/or Licensed Trade Secrets disclosed by any of them or any of their
subsidiaries or affiliates from all persons which are not parties to
the TALA, including their subsidiaries and affiliates, and to instruct
and direct all such persons to cease using any and all equipment or
machinery for glass container manufacturing, to the extent that it
incorporates or embodies Owens-Brockway Technical Information and/or
Licensed Trade Secrets, by Tuesday, May 2, 2000;
11. to cause Consumers SrL to cease using each and every item
of equipment or machinery that incorporates or embodies Owens-Brockway
Technical Information and/or Licensed Trade Secrets by Thursday, April
13, 2000; to furnish evidence satisfactory to the Court, by Friday,
April 14, 2000, that Consumers SrL has ceased using any and all such
equipment or machinery; and to remove all such equipment or machinery
from Italy and to return it to the United States by the later of
Tuesday, May 2, 2000, or within ten (10) days following the release of
such equipment or machinery from any court order in Italy restraining
its removal from Italy;
12. to comply with all of their obligations under the TALA
respecting preservation of confidentiality of Owens-Brockway Technical
Information and/or Licensed Trade Secrets and respecting the
territorial limitations on the use thereof;
13. to pay any outstanding royalties (including interest) owed
to Owens-Brockway and to make future quarterly payments at the rate
specified in the TALA on a timely basis;
14. to permit an audit of the records of each member of the
Consumers Group in accordance with the TALA;
15. to provide to the Court and to Owens-Brockway, within
thirty (30) days of the end of each calendar quarter beginning June 30,
2000, an affidavit or declaration of Consumers' chairman certifying
that each member of the Consumers Group: (a) has made royalty payments
to Owens-Brockway upon the basis and at the rate specified in the TALA;
(b) has not disclosed Owens-Brockway Technical Information and/or
Licensed Trade Secrets to any unauthorized person or used any
Owens-Brockway Technical Information and/or Licensed Trade Secrets in
any location where such use is not permitted under the TALA; and (c)
has provided Owens-Brockway with the updated inventories described in
Paragraph 7 above, upon penalty of contempt of Court if such
certificate should be inaccurate; and
<PAGE> 4
4
16. to notify each and every one of its or their parent
companies, subsidiaries or affiliates which is not a party to this
action of the entry of this preliminary injunction, by sending a true
copy thereof via certified mail, within five (5) days after entry of
the preliminary injunction.
Dated: April 14, 2000 /s/ John S. Martin, Jr.
------------------- --------------------------------
John S. Martin, Jr.
United States District Judge
<PAGE> 1
Exhibit 10.62
TWENTIETH AMENDMENT
TWENTIETH AMENDMENT (this "Amendment"), dated as of April 26, 2000,
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, BT COMMERCIAL CORPORATION, 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 Borrower is in default under Section 8.4 of the Credit
Agreement; and
WHEREAS, the parties hereto wish to amend 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. Section 2.3(c) of the Credit Agreement is hereby amended by
inserting "or until June 15, 2000 for Agent Advances resulting from any Default
under Section 8.4 prior to March 10, 2000" after the phrase "(i) the fifteenth
Business Day after such date."
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 Amendment Effective Date (as
defined in Section 7 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 for the Default described above, on the
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 provision of the Credit Agreement or
any other Credit Document.
<PAGE> 2
4. This Amendment is limited as specified and does not constitute a
modification, acceptance or waiver of the Default under Section 8.4 of the
Credit Agreement described above.
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 "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 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.
* * *
-2-
<PAGE> 3
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/ M. William Lightner
-----------------------------------
Name: M. William Lighter
Title: Sr. VP & CFO
BT COMMERCIAL CORPORATION
By
-----------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
Individually, as Co-Syndication
Agent and Issuing Bank
By /s/ Enrico Della Corna
-----------------------------------
Name: Enrico Della Corna
Title: V.P Senior Relationship Manager
BANKERS TRUST COMPANY
By
-----------------------------------
Name:
Title:
<PAGE> 4
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ Karen Hoffman
-----------------------------------
Name: Karen Hoffman
Title: Vice President
FIRST UNION NATIONAL BANK
By /s/ Anne D. Brehony
-----------------------------------
Name: Anne D. Brehony
Title: Director
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> 5
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/ Matthew D. Sheets
-----------------------------------
Name: Matthew D. Sheets
Title: Account Executive
SUMMIT COMMERCIAL/GIBRALTAR CORP.
By /s/ Jay Oliner
-----------------------------------
Name: Jay Oliner
Title: Vice President
<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 FORM 10-Q FOR THE QUARTER
ENDED MARCH 31, 2000.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,239
<SECURITIES> 0
<RECEIVABLES> 62,054
<ALLOWANCES> 953
<INVENTORY> 115,353
<CURRENT-ASSETS> 208,408
<PP&E> 456,904
<DEPRECIATION> 142,055
<TOTAL-ASSETS> 612,870
<CURRENT-LIABILITIES> 165,405
<BONDS> 209,852
72,210
34
<COMMON> 216
<OTHER-SE> 46,387
<TOTAL-LIABILITY-AND-EQUITY> 612,870
<SALES> 153,884
<TOTAL-REVENUES> 153,884
<CGS> 143,606
<TOTAL-COSTS> 143,606
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 94
<INTEREST-EXPENSE> 7,586
<INCOME-PRETAX> 1,830
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,830
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,830
<EPS-BASIC> (0.31)
<EPS-DILUTED> (0.31)
</TABLE>
