<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 Quarter Ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
ANCHOR GLASS CONTAINER CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2452609
- ------------------------------- ----------- -------------------
(State or other jurisdiction of Commission (I.R.S. Employer
incorporation or organization) file number 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 of common stock, $.10 par value, outstanding at May 10, 1996:
1 share (owned by parent - Container Holdings Corp., a Delaware corporation and
a direct subsidiary of Vitro, Sociedad Anonima). All voting stock of the
Registrant is held by an affiliate of the Registrant.
1 of 17
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ANCHOR GLASS CONTAINER CORPORATION
FORM 10-Q
For the Quarter Ended March 31, 1996
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Independent Accountants' Report 3
Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 1996 and 1995 4
Condensed Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995 5
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
PART II - OTHER INFORMATION 16
</TABLE>
2
<PAGE> 3
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors of
Anchor Glass Container Corporation
Tampa, Florida
We have reviewed the accompanying condensed consolidated balance sheet of
Anchor Glass Container Corporation and subsidiaries (the "Company") as of March
31, 1996, and the related condensed consolidated statements of operations and
of cash flows for the three-month periods ended March 31, 1996 and 1995. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for
them to be in conformity with generally accepted accounting principles.
As discussed in the notes to the condensed consolidated financial statements,
the Company is a wholly-owned subsidiary of Container Holdings Corp. which is a
wholly-owned direct subsidiary of Vitro, Sociedad Anonima ("Vitro"), a limited
liability corporation incorporated under the laws of the United Mexican States.
Vitro has made a $40.0 million capital contribution to the Company during
January of 1996 and a $10.0 million capital contribution during April of 1996
and has committed to make an additional capital contribution of $15.0 million
on or before January 31, 1997, the timing of which will be determined by the
liquidity needs of the Company. Additionally, Vitro intends to contribute up
to $61.0 million of additional capital to satisfy the future liquidity needs of
the Company.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of operations, stockholder's equity, and cash
flows for the year then ended (not presented herein); and in our report dated
February 23, 1996, we expressed an unqualified opinion on those financial
statements and included an explanatory paragraph concerning Vitro's
contributions of additional capital to the Company. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1995 is fairly stated in all material respects in relation
to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Tampa, Florida
April 25, 1996
3
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANCHOR GLASS CONTAINER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
Net sales $200,908 $247,598
Costs and expenses:
Cost of products sold 201,729 232,290
Selling and administrative expenses 10,696 11,700
Restructuring charges 49,973 10,267
- ----------------------------------------------------------------------
Loss from operations (61,490) (6,659)
Other expense, net (993) (562)
Interest expense (14,323) (14,254)
-------- --------
Loss before extraordinary item (76,806) (21,475)
Extraordinary item - write-off of
deferred financing fees (2,336) -
-------- --------
Net loss $(79,142) $(21,475)
======== ========
- ----------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
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ANCHOR GLASS CONTAINER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited)
- -----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 4,216 $ 18,315
Accounts receivable, net 79,138 40,965
Inventories:
Raw materials and manufacturing supplies 38,764 39,036
Semi-finished and finished products 144,610 141,538
Other current assets 19,605 14,982
---------- ----------
Total current assets 286,333 254,836
Property, plant and equipment, net 370,304 398,847
Other assets 42,503 38,742
Intangible pension asset 21,773 21,773
Deferred taxes 1,468 2,367
Investment in joint venture 25,781 20,631
Excess of cost over fair value of net assets
acquired 467,672 471,152
---------- ----------
$1,215,834 $1,208,348
========== ==========
- -----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Credit Facility advances $ 40,365 $ 3,000
Current maturities of long-term debt 1,768 1,770
Accounts payable 68,096 74,120
Accrued expenses 40,223 32,648
Accrued interest 10,203 11,246
Accrued compensation and employee benefits 55,693 55,869
---------- ----------
Total current liabilities 216,348 178,653
Long-term debt 552,703 552,680
Pension liabilities 66,163 68,260
Other long-term liabilities 130,159 119,152
---------- ----------
Total long-term liabilities 749,025 740,092
Commitments and contingencies - -
Stockholder's equity:
Common stock - $.10 par value - -
Capital in excess of par value 523,816 483,816
Accumulated deficit (246,515) (167,373)
Amount related to minimum pension liability (26,840) (26,840)
---------- ----------
Total stockholder's equity 250,461 289,603
---------- ----------
$1,215,834 $1,208,348
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
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ANCHOR GLASS CONTAINER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Loss before extraordinary item $(76,806) $(21,475)
Adjustments to reconcile loss before
extraordinary item to net cash used in
operating activities:
Restructuring charges 49,973 10,267
Depreciation and amortization 25,548 26,964
Other 199 168
Decrease in cash resulting
from changes in assets and liabilities (59,472) (30,217)
-------- --------
(60,558) (14,293)
- -------------------------------------------------------------------------
Cash flows from investing activities:
Expenditures for property, plant
and equipment (15,304) (20,634)
Investment in joint venture (6,015) -
Proceeds from sales of property, plant and
equipment 548 6
Other (2,316) (1,044)
-------- --------
(23,087) (21,672)
- -------------------------------------------------------------------------
Cash flows from financing activities:
Capital contributions from Vitro, S.A. 40,000 50,000
Net draws (repayments) on Credit Facility 37,365 (10,000)
Principal payments on long-term debt (80,012) (102)
Proceeds from issuance of long-term debt 80,000 -
Other (7,807) (400)
-------- --------
69,546 39,498
- -------------------------------------------------------------------------
Cash and equivalents:
Increase (decrease) in net cash position (14,099) 3,533
Balance, beginning of year 18,315 14,187
-------- --------
Balance, end of period $ 4,216 $ 17,720
======== ========
- -------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Interest payments, net $ 15,366 $ 6,725
======== ========
Income tax payments (refunds), net $ (107) $ (95)
======== ========
- -------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
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ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS)
NOTE 1 - MANAGEMENT'S RESPONSIBILITY
In the opinion of Management, the accompanying condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of March 31,
1996 and the results of operations and cash flows for the three-month periods
ended March 31, 1996 and 1995.
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
consolidated financial statements be read in conjunction with the Consolidated
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, 1995. The results of operations for the interim periods are not
necessarily indicative of the results of the full fiscal year.
NOTE 2 - LONG-TERM DEBT
Effective January 12, 1996, the Company and the holders of the Senior Secured
Notes entered into a Noteholder Restructuring Agreement which provides for,
among other things, consent by the holders to the replacement of the then
current Credit Agreement with a new $130,000 credit facility and waiver by the
holders to identified defaults or events of default existing on the effective
date or which may occur during the waiver period which expires not later than
January 31, 1998. The restructuring period is defined as the period between the
effective date and the termination date, which will occur no later than June
30, 1998 (the "Restructuring Period"). The following events occurred in
connection with the effectiveness of the Noteholder Restructuring Agreement:
- - execution of the $130,000 New Senior Credit Facility
- - mandatory prepayment on January 12, 1996 of the aggregate principal amount
of the Senior Secured Notes as follows:
Series A $12,160; Series B $64,640 and Series C $3,200;
- - payment of a restructuring fee of 1.75% of the principal amount of the
consenting noteholders' Senior Secured Notes outstanding prior to giving
effect to the prepayments above, approximately $4,100, and
- - $40,000 cash capital contribution from Vitro and a commitment from Vitro
to contribute an additional $25,000 on or before January 31, 1997, the
timing of which is to be determined by the liquidity needs of the Company.
Of this
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committed amount, the Company received $10,000 cash from Vitro in
April 1996. Additionally, Vitro intends to contribute up to $61,000 of
additional capital during the Restructuring Period (defined to terminate
no later than June 30, 1998) to satisfy future liquidity needs of the
Company.
Compliance with the financial maintenance tests as defined in the amendments to
the Note Purchase Agreement, including fixed charge coverage, net worth,
current ratio and debt to equity has been waived through the period ending
January 31, 1998. However, the Company must maintain capital expenditures and
net worth in amounts not less than that defined in the Noteholder Restructuring
Agreement.
During the Restructuring Period, the Series A Notes and Series C Notes bear a
floating rate of interest at the one-month LIBOR rate, as defined, plus 2.0%.
The interest rate is adjusted monthly. Interest on the Series B Notes is fixed
at 9.91% per annum. Interest during the Restructuring Period is payable on the
15th of each month.
Effective January 12, 1996, and concurrent with the Noteholder Restructuring
Agreement, the Company entered into a Loan Agreement with Foothill Capital
Corporation, as agent, and Congress Financial Corporation, as co-agent, to
provide for a $130,000 senior secured revolving credit facility (the "New
Senior Credit Facility"). $80,000 of proceeds from the New Senior Credit
Facility were used at closing to make the mandatory prepayment of certain
payments of the Senior Secured Notes originally scheduled to be made in July
1996 and July 1997 and the remaining $50,000 is being used to finance working
capital and other general corporate purposes. The $80,000 of borrowings under
the New Senior Credit Facility, used to fund the mandatory prepayment of
$80,000 of Senior Secured Notes on January 12, 1996 is recorded as a long-term
liability reflecting the refinancing that took place on January 12, 1996 and is
scheduled for repayment in 1998 at the expiration of the New Senior Credit
Facility. Borrowings under the $50,000 portion of the New Senior Credit
Facility are classified as a short-term liability. Advances outstanding at any
one time are not to exceed an amount equal to the Borrowing Base, consisting of
accounts receivable and finished product inventory, as defined in the New
Senior Credit Facility. Interest, at prime plus 1.125%, as defined, is payable
monthly. A commitment fee of .5% of the unused portion of the New Senior Credit
Facility is payable monthly. The New Senior Credit Facility expires June 30,
1998.
In April 1996, Vitro renewed the $20,000 letter of credit facility provided on
behalf of the Company. This facility currently expires in April 1997.
NOTE 3 - RESTRUCTURING AND OTHER CHARGES
In January 1996, formal plans were approved to further restructure certain of
the Company's operations to respond to the continued decline in the industry
sales volume combined with the loss of a significant portion of the business of
the Company's largest customer. A restructuring charge of approximately
$50,000 has been recorded in the 1996 first quarter Statement of Operations for
the closure of the Cliffwood, New Jersey plant and other restructuring
obligations.
8
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The Company previously announced the closure of one additional furnace as part
of this plan; however, based on current business conditions the 1996
restructuring plan does not include a furnace closure and the restructuring
charge has been reduced accordingly.
A summary of activity related to the Company's 1996 and 1995 restructuring
plans follows:
<TABLE>
<CAPTION>
Amount Charged
Against Liability
Restructuring as of
Liability March 31, 1996
-------------- -----------------
1996 RESTRUCTURING PLAN
- -----------------------
<S> <C> <C>
Plant shutdown costs, including severance
costs and pension curtailment losses $25,100 $ 5,400
Writedown of certain manufacturing assets to
net realizable value 24,900 -
1995 RESTRUCTURING PLAN
- -----------------------
Plant shutdown costs, including severance
costs and pension curtailment losses 39,200 30,700
Writedown of certain manufacturing assets to
net realizable value 36,600 -
Writedown of previously shutdown
manufacturing facilities to net realizable
value 14,000 -
</TABLE>
In January 1996, Vitro and the Company commenced plans to focus on operational
integration and streamlining of Vitro's glass container operations composed of
Vitro Envases (Vitro's Mexican, South and Central American glass container
operation), Vitro Packaging, Inc. (Vitro Envases' U.S. trading company) and the
Company. These integration activities are expected to include the realization
of synergies from the combination of production, purchasing and administrative
expenses across the three companies which could result in significant cost
savings. Inclusive in this plan is the Company's and Vitro's review of
combining certain of the operations and businesses of the Company and Vitro
Packaging. These integration activities are intended to ultimately create a
more cohesive international strategy that will provide the Company's customers
with centralized operations throughout the Americas. It is the intent of Vitro
and the Company to integrate certain of the Company's operations and
administrative activities and not to legally merge with Vitro Envases. As an
example of the impact of this strategy, the Company announced in January 1996 a
long-term supply agreement among Bacardi, the Company and Vitro Envases.
NOTE 4 - CAPITAL CONTRIBUTION
As a condition of closing to the Noteholder Restructuring Agreement, as
discussed in Note 2, in January 1996, the Company received a $40,000 cash
capital contribution from Vitro and received a commitment from Vitro to
contribute an additional $25,000 on or before January 31, 1997, the timing of
which is to be determined by the liquidity needs of the Company. Of this
committed amount, the Company received
9
<PAGE> 10
$10,000 cash from Vitro in April 1996. Additionally, Vitro intends to contribute
up to $61,000 of additional capital during the Restructuring Period (which
terminates no later than June 30, 1998) to satisfy future liquidity needs of the
Company.
NOTE 5 - ADOPTION OF SFAS 121
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, - Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of ("SFAS 121"). SFAS 121
requires that certain long-lived assets and intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The adoption of SFAS 121
did not have a material effect on the Company's financial statements.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The loss from operations for the quarter ended March 31, 1996 was $61.5 million
compared to $6.7 million for the same period of 1995. The net loss recorded in
first quarter 1996 was $79.1 million compared to a net loss of $21.5 million
for the same period of 1995. Included in the 1996 and 1995 results were first
quarter charges of $50.0 million and $10.3 million, respectively, for the
Company's 1996 and 1995 restructuring programs.
The Company's first quarter operating results continue to be negatively
impacted by industry-wide volume declines. Net sales for the first quarter
decreased 18.9% compared to the 1995 first quarter, on a volume decline of
approximately 14%, primarily in the iced tea, beer and soft drink markets. The
softness in overall industry volume shipments has led to severe competitive
pricing pressures, negatively impacting operating margins. In accordance with
its restructuring plans, the Company closed its Cliffwood, New Jersey plant in
January 1996, and closed its Waukegan, Illinois, Los Angeles, California and
Keyser, West Virginia plants in 1995.
As a result of the current highly competitive environment, the Company has been
informed by its largest customer, Anheuser-Busch, (which accounted for
approximately 24% of the Company's sales in 1995), that the Company's 1996
volume allocation will be reduced by approximately 50%. Such a reduction will
negatively impact the Company's 1996 total volume. However, the Company expects
to replace at least a portion of this volume with new business.
NET SALES
Net sales for the first quarter of 1996 were $200.9 million, a decrease of
18.9% compared to $247.6 million for the comparable period of 1995. The
decrease in net sales principally reflects the softening in 1996 of the
year-to-year demand for glass containers in the iced tea and beer segments and
year-to-year reduction of unit shipments in the soft drink segment, as
discussed above. The softness in demand has resulted in increased competition
for market share and lower pricing trends. In addition, as described above,
Anheuser-Busch has significantly reduced its purchases from the Company.
COST OF PRODUCTS SOLD
Cost of products sold as a percentage of net sales was 100.4% for the first
quarter of 1996 compared to 93.8% for the same period of 1995. This increase
principally reflects the impact of reduced shipping volumes and lower pricing
trends, as described above. Additionally, the Company's gross profit margin was
negatively impacted by cost increases in certain raw materials. Partially
offsetting this increase is the impact of the Company's strategic initiatives
and cost savings derived from the Company's restructuring plan and
re-engineering program.
11
<PAGE> 12
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses declined $1.0 million, or 8.6%, in 1996
compared to 1995. This decrease principally reflects lower personnel and fringe
benefit costs as a result of headcount reductions associated with the Company's
re-engineering and cost reduction programs.
RESTRUCTURING AND OTHER CHARGES
In January 1996, formal plans were approved to further restructure certain of
the Company's operations to respond to the continued decline in the industry
sales volume combined with the loss of a significant portion of the business of
the Company's largest customer. A restructuring charge of approximately
$50,000 has been recorded in the 1996 first quarter Statement of Operations for
the closure of the Cliffwood, New Jersey plant and other restructuring
obligations.
In January 1996, Vitro and the Company commenced plans to focus on operational
integration and streamlining of Vitro's glass container operations composed of
Vitro Envases (Vitro's Mexican, South and Central American glass container
operation), Vitro Packaging, Inc. (Vitro Envases' U.S. trading company) and the
Company. These integration activities are expected to include the realization
of synergies from the combination of production, purchasing and administrative
expenses across the three companies which could result in significant cost
savings. Inclusive in this plan is the Company's and Vitro's review of
combining certain of the operations and businesses of the Company and Vitro
Packaging. These integration activities are intended to ultimately create a
more cohesive international strategy that will provide the Company's customers
with centralized operations throughout the Americas. It is the intent of Vitro
and the Company to integrate certain of the Company's operations and
administrative activities and not to legally merge with Vitro Envases. As an
example of the impact of this strategy, the Company announced in January 1996 a
long-term supply agreement among Bacardi, the Company and Vitro Envases.
INTEREST EXPENSE, NET
Interest expense was $14.3 million for the three months ended March 31, 1996
and 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 1996, operating activities consumed $60.6 million in
cash compared to $14.3 million in the first quarter of 1995. This increase in
cash consumed principally reflects the decrease in earnings and the changes in
working capital items during the periods compared.
Capital expenditures in 1996 were $15.3 million compared to $20.6 million in
1995. In addition, in 1996 the Company invested approximately $6.0 million in
the joint venture with Coors Brewing Company ("Coors"). Capital expenditures
in 1996 are expected to be in the range of $65 million to $75 million, plus
approximately $25
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million related to the joint venture with Coors. Additionally, the Company
estimates that its pension plan expense for calendar year 1996 will approximate
$15 million and its pension funding in excess of plan expense for calendar year
1996 will approximate $25 million resulting in total 1996 pension funding
requirements of approximately $40 million. These expenditures are expected to
be funded with cash generated from operations, proceeds from asset sales,
additional borrowings under the New Senior Credit Facility and capital
contributions from Vitro.
Cash flows from financing activities for the quarters ended March 31, 1996 and
1995 were $69.5 million and $39.5 million, respectively. The 1996 cash flows
from financing activities principally reflects a $40.0 million capital
contribution received from Vitro in January 1996 and borrowings under the New
Senior Credit Facility (discussed below).
Effective January 12, 1996, the Company and the holders of the Senior Secured
Notes entered into a Noteholder Restructuring Agreement which provides for,
among other things, consent by the holders to the replacement of the then
current Credit Agreement with a new $130 million credit facility and waiver by
the holders to identified defaults or events of default existing on the
effective date or which may occur during the waiver period which expires not
later than January 31, 1998. As a condition to closing, the Company made a
mandatory prepayment of $80 million of Senior Secured Notes, received a $40
million cash capital contribution from Vitro and received a commitment from
Vitro to contribute an additional $25 million on or before January 31, 1997,
the timing of which is to be determined by the liquidity needs of the Company.
Of this committed amount, the Company received $10 million cash from Vitro in
April 1996. Additionally, Vitro intends to contribute up to $61 million of
additional capital during the Restructuring Period (defined to terminate no
later than June 30, 1998) to satisfy future liquidity needs of the Company.
Effective January 12, 1996, and concurrent with the Noteholder Restructuring
Agreement, the Company entered into a Loan Agreement with Foothill Capital
Corporation, as agent, and Congress Financial Corporation, as co-agent, to
provide for a $130 million senior secured revolving credit facility (the "New
Senior Credit Facility"). $80 million of proceeds from the New Senior Credit
Facility were used at closing to make the mandatory prepayment of certain
payments of the Senior Secured Notes originally scheduled to be made in July
1996 and July 1997 and the remaining $50 million is being used to finance
working capital and other general corporate purposes. The $80 million of
borrowings under the New Senior Credit Facility used to fund the mandatory
prepayment of $80 million of Senior Secured Notes on January 12, 1996 is
recorded as a long-term liability reflecting the refinancing that took place on
January 12, 1996 and is scheduled for repayment in 1998 at the expiration of the
New Senior Credit Facility. Borrowings under the $50 million portion of the New
Senior Credit Facility are classified as a short-term liability. Advances
outstanding at any one time are not to exceed an amount equal to the Borrowing
Base, consisting of accounts receivable and finished product inventory, as
defined in the New Senior Credit Facility. At March 31, 1996, advances
outstanding under the New Senior Credit Facility were approximately $118
million. Interest, at prime plus 1.125%, as defined, is payable monthly. A
commitment fee of
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<PAGE> 14
.5% of the unused portion of the New Senior Credit Facility is payable monthly.
The New Senior Credit Facility expires June 30, 1998.
The agreements relating to the Company's outstanding debt include various
covenants that restrict its ability to incur additional indebtedness, sell or
transfer assets, make investments, enter into transactions with or make
distributions to affiliates and pay dividends or make other distributions in
respect of its capital stock, as well as require it to meet various financial
maintenance tests. The most restrictive financial maintenance tests are
contained in the agreements covering the Company's Senior Secured Notes and the
New Senior Credit Facility. Effective with the Noteholder Restructuring
Agreement, the holders of the Senior Secured Notes waived compliance with the
financial maintenance covenants through the waiver period, which expires not
later than January 31, 1998. However, the Company must maintain capital
expenditures and net worth in amounts not less than those defined in the
Noteholder Restructuring Agreement.
The Company's principal sources of liquidity through 1996 are expected to be
funds derived from operations, additional borrowings under the New Senior
Credit Facility, proceeds from asset sales and capital contributions from
Vitro. As discussed in Notes 2 and 4 of Notes to Condensed Consolidated
Financial Statements, the Company received at the closing of the Noteholder
Restructuring Agreement, a $40 million cash capital contribution from Vitro and
a commitment from Vitro to contribute an additional $25 million on or before
January 31, 1997, the timing of which is to be determined by the liquidity
needs of the Company. Of this committed amount, the Company received $10
million cash from Vitro in April 1996. Additionally, Vitro intends to
contribute up to $61 million of additional capital during the Restructuring
Period (defined to terminate no later than June 30, 1998) to satisfy future
liquidity needs of the Company.
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 since the Company's formation in 1983, the
Company has generally been unable, since the end of 1991, to fully pass on
inflationary cost increases as a result of competitive pricing pressures.
During 1996, these competitive pricing pressures have resulted in decreased
prices to customers which has negatively impacted the Company's operating
results.
SEASONALITY
Due principally to the seasonal nature of the brewing, iced tea and soft drink
industries, in which demand is stronger during the summer months, the Company's
shipment volume is typically highest in the second and third quarters.
Consequently, the Company historically builds inventory during the first quarter
in anticipation of seasonal demands during the second and third quarters.
However, in the second and third quarters of 1995, industry shipments declined
significantly, resulting in lower net sales and increased inventory levels, as
compared to normal seasonal levels. In addition, the Company generally
schedules shutdowns of its plants for
14
<PAGE> 15
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, with the most significant
impact typically occurring in the first quarter.
15
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PART II - OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
EX 27 - Financial Data Schedule (for SEC use only)
b. Reports on Form 8-K
During the quarter for which this report is filed, no
reports on Form 8-K were filed.
16
<PAGE> 17
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 10, 1996 /s/ Mark A. Kirk
-----------------------------------
Mark A. Kirk, Senior Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer and Duly
Authorized Officer)
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF ANCHOR GLASS CONTAINER
CORPORATION FOR THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN THE ANCHOR GLASS
CONTAINER CORPORATION FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,216
<SECURITIES> 0
<RECEIVABLES> 79,138
<ALLOWANCES> 1,991
<INVENTORY> 183,374
<CURRENT-ASSETS> 286,333
<PP&E> 711,989
<DEPRECIATION> 341,685
<TOTAL-ASSETS> 1,215,834
<CURRENT-LIABILITIES> 216,348
<BONDS> 552,703
0
0
<COMMON> 0
<OTHER-SE> 250,461
<TOTAL-LIABILITY-AND-EQUITY> 1,215,834
<SALES> 200,908
<TOTAL-REVENUES> 200,908
<CGS> 201,729
<TOTAL-COSTS> 262,398<F1>
<OTHER-EXPENSES> 993
<LOSS-PROVISION> 126
<INTEREST-EXPENSE> 14,323
<INCOME-PRETAX> (76,806)
<INCOME-TAX> 0
<INCOME-CONTINUING> (76,806)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,336)
<CHANGES> 0
<NET-INCOME> (79,142)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>TOTAL-COSTS INCLUDES A RESTRUCTURING CHARGE OF 49,973
</FN>
</TABLE>
