##### Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

CHECKBOXQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2001

OR

BOXTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-233-59

ANCHOR GLASS CONTAINER CORPORATION

---

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 59-3417812                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

|                                                       |  |           
|------------------------------------------------------ |  | ----------
|One Anchor Plaza, 4343 Anchor Plaza Parkway, Tampa, FL |  | 33634-7513
|                                                       |  |           
|(Address of principal executive offices)               |  | (Zip Code)

813-884-0000

---

None

---

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 CHECKBOX       No BOX .

Number of shares outstanding of each class of common stock at September 30, 2001:
3,355,665 shares





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TABLE OF CONTENTS



|                               |                                                                                               |                                                                    |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|                               |                                                                                               | CONDENSED BALANCE SHEETS                                          
|                               |                                                                                               | CONDENSED STATEMENTS OF CASH FLOWS                                
|                               |                                                                                               | NOTES TO CONDENSED FINANCIAL STATEMENTS                           
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II  OTHER INFORMATION   
|SIGNATURES                    



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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION

FORM 10-Q

For the Quarterly Period Ended September 30, 2001

INDEX

|                               |                                                             |                                                                      |    |  |    |  |          |  | 
|------------------------------ | ----------------------------------------------------------- | -------------------------------------------------------------------- | -- |  | -- |  | -------- |  | 
|                               |                                                             |                                                                      |    |  |    |  | Page No.
|                               |                                                             |                                                                      |    |  |    |  |         
|PART I  FINANCIAL INFORMATION |                                                             |                                                                      |    | 
|                              
|                              
|                              
|                              
|                               |                                                             |                                                                      |    |  |    |  |          | 
|                              
|                              
|                              
|                              
|                               | Item 1.   Financial Statements:                             |                                                                      |    |  |   
|                              
|                              
|                              
|                              
|                               |                                                             |                                                                      |    |  |    |  |          | 
|                              
|                              
|                              
|                              
|                               |                                                             | Condensed Statements of Operations and Comprehensive Income (Loss) - |    |  |    | 
|                              
|                              
|                              
|                              
|                               |                                                             | Nine and Three Months Ended September 30, 2001 and 2000              |    |  | 3  | 
|                              
|                              
|                              
|                              
|                               |                                                             |                                                                      |    |  |    |  |          | 
|                              
|                              
|                              
|                              
|                               |                                                             | Condensed Balance Sheets -                                           |    |  |    | 
|                              
|                              
|                              
|                              
|                               |                                                             | September 30, 2001 and December 31, 2000                             |    |  | 4  | 
|                              
|                              
|                              
|                              
|                               |                                                             |                                                                      |    |  |    |  |          | 
|                              
|                              
|                              
|                              
|                               |                                                             | Condensed Statements of Cash Flows -                                 |    |  |    | 
|                              
|                              
|                              
|                              
|                               |                                                             | Nine Months Ended September 30, 2001 and 2000                        |    |  | 5  | 
|                              
|                              
|                              
|                              
|                               |                                                             |                                                                      |    |  |    |  |          | 
|                               |                                                             | Notes to Condensed Financial Statements                              |    |  | 6  | 
|                              
|                               | Item 2.   Management's
Discussion and Analysis of Financial |                                                                      |    |  |   
|                              
|                              
|                              
|                              
|                               |                                                             | Condition and Results of Operations                                  |    |  | 12 | 
|                              
|                              
|                              
|                              
|                               |                                                             |                                                                      |    |  |    |  |          | 
|                              
|                              
|                              
|                              
|                               | Item 3.   Quantitative and Qualitative Disclosures About    |                                                                      |    |  |   
|                              
|                              
|                              
|                              
|                               |                                                             | Market Risk                                                          |    |  | 19 | 
|                              
|                              
|                              
|                              
|                               |                                                             |                                                                      |    |  |    |  |          | 
|                              
|                              
|                              
|                              
|PART II  OTHER INFORMATION    |                                                             |                                                                      | 20 | 
|                              
|                              
|                              
|                              
|                               |                                                             |                                                                      |    |  |    |  |          | 
|                              
|                              
|                              
|                              
|SIGNATURES                     |                                                             |                                                                      |    |  | 23 | 

2



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements




ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited)
(dollars in thousands, except per share data)

|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |         |   | 
|---------------------------------------------------------------------- | ------------------------------------ | --------------- | --------- | ----------------- | ------ | ------------------ | --------- | ------- | - | ---- | --------- | ------- | ---- | - | --------- | ------- | - | 
|                                                                      
|                                                                       |                                      |                 |           | Nine Months Ended |        | Three Months Ended
|                                                                       |                                      |                 |           | September 30,     |        | September 30,     
|                                                                       |                                      |                 |           |                   |        |                   
|                                                                       |                                      |                 |           | 2001              |        | 2000               |           | 2001    |   | 2000
|                                                                      
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Net sales                                                              |                                      | $               | 539,464   |                   |        | $                  | 492,712   |         |   | $    | 190,124   |         |      | $ | 163,729   |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Costs and expenses:                                                    |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Cost of products sold                |                 |           | 503,512           |        |                    |           | 453,487 |   |      |           | 174,775 |      |   |           | 150,635 |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Selling and administrative expenses  |                 |           | 21,114            |        |                    |           | 22,806  |   |      |           | 7,020   |      |   |           | 7,229   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Provision for related party accounts |                 |           | 19,500            |        |                    |           |        |   |      |           |        |      |   |           |        |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Litigation settlement                |                 |           |                  |        |                    |           | 2,300   |   |      |           |        |      |   |           | 2,300   |  
|                                                                      
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Income (loss) from operations                                          |                                      |                 | (4,662    | )                 |        |                    | 14,119    |         |   |      | 8,329     |         |      |   | 3,565     |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Other income (expense), net                                            |                                      |                 | (2        | )                 |        |                    | 6,293     |         |   |      | (355      | )       |      |   | 11        |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Interest expense                                                       |                                      |                 | (21,932   | )                 |        |                    | (22,169   | )       |   |      | (7,006    | )       |      |   | (7,783    | )      
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|Net income (loss)                                                      |                                      |                 | (26,596   | )                 |        |                    | (1,757    | )       |   |      | 968       |         |      |   | (4,207    | )      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Preferred stock dividends                                              |                                      |                 | (10,543   | )                 |        |                    | (10,514   | )       |   |      | (3,515    | )       |      |   | (3,543    | )      
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|Loss applicable to common stock                                        |                                      | $               | (37,139   | )                 |        | $                  | (12,271   | )       |   | $    | (2,547    | )       |      | $ | (7,750    | )      
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|Basic and diluted net loss per share
applicable to common stock        |                                      | $               | (7.07     | )                 |        | $                  | (2.34     | )       |   | $    | (0.49     | )       |      | $ | (1.48     | )      
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|Basic and diluted weighted average number
of common shares outstanding |                                      |                 | 5,251,356 |                   |        |                    | 5,251,356 |         |   |      | 5,251,356 |         |      |   | 5,251,356 |        
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|Other comprehensive income (loss):                                     |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net income (loss)                    |                 | $         | (26,596           | )      |                    | $         | (1,757  | ) |      | $         | 968     |      |   | $         | (4,207  | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Other comprehensive loss:            |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |         |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                      | Derivative loss |           |                   | (1,467 | )                  |           |         |  |      |           |         | (312 | ) |           |         |  | 
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        
|Comprehensive income (loss)                                            |                                      | $               | (28,063   | )                 |        | $                  | (1,757    | )       |   | $    | 656       |         |      | $ | (4,207    | )      
|                                                                       |                                      |                 |           |                   |        |                    |           |         |   |      |           |         |      |   |           |        



---

| |  | See Notes to Condensed Financial Statements.
| |  | --------------------------------------------

3



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##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
CONDENSED BALANCE SHEETS
(dollars in thousands)

|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  |  |  |  | 
|---------------------------------------------- | ------------------------------------------ | ---------------------------------------- | ------------------------- | -------- | ------------------ | ------- | ----------------- | -------- | ------- | ------- |  |  |  |  |  |  |  |  | 
|                                              
|                                               |                                            |                                          |                           |          | September 30, 2001 |         | December 31, 2000 |          |         |         |  |  |  |  | 
|                                               |                                            |                                          |                           |          | (unaudited)        |         |                   |          |         |         |  |  |  | 
|                                              
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|ASSETS                                         |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|Current assets:                                |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Cash and cash equivalents                  |                                          | $                         | 3,893    |                    |         | $                 | 4,532    |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts receivable                        |                                          |                           | 59,654   |                    |         |                   | 60,372   |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Inventories:                               |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                            | Raw materials and manufacturing supplies |                           |          | 22,243             |         |                   |          | 22,408  |         |  |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                            | Finished products                        |                           |          | 84,312             |         |                   |          | 103,113 |         |  |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Other current assets                       |                                          |                           | 5,367    |                    |         |                   | 9,765    |         |         |  |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          | Total current assets      |          |                    | 175,469 |                   |          |         | 200,190 |  |  |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Property, plant and equipment, net             |                                            |                                          | 269,992                   |          |                    |         | 293,724           |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Other assets                                   |                                            |                                          | 24,803                    |          |                    |         | 28,016            |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Intangible pension asset                       |                                            |                                          | 25,822                    |          |                    |         | 25,822            |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Advance to affiliate                           |                                            |                                          | 17,446                    |          |                    |         | 17,330            |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Strategic alliances with customers             |                                            |                                          | 9,891                     |          |                    |         | 12,451            |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Goodwill                                       |                                            |                                          | 45,596                    |          |                    |         | 47,828            |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                               |                                            | $                                        | 569,019                   |          |                    | $       | 625,361           |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Current liabilities:                           |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Revolving credit facility                  |                                          | $                         | 55,730   |                    |         | $                 | 58,957   |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Current maturities of long-term debt       |                                          |                           | 2,073    |                    |         |                   | 1,937    |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts payable                           |                                          |                           | 49,798   |                    |         |                   | 55,285   |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Accrued expenses                           |                                          |                           | 28,313   |                    |         |                   | 42,335   |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Accrued interest                           |                                          |                           | 8,671    |                    |         |                   | 5,686    |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Accrued compensation and employee benefits |                                          |                           | 22,727   |                    |         |                   | 27,104   |         |         |  |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          | Total current liabilities |          |                    | 167,312 |                   |          |         | 191,304 |  |  |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Long-term debt                                 |                                            |                                          | 206,925                   |          |                    |         | 208,385           |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Long-term pension liabilities                  |                                            |                                          | 61,486                    |          |                    |         | 65,033            |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Long-term post-retirement liabilities          |                                            |                                          | 61,856                    |          |                    |         | 60,107            |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Other long-term liabilities                    |                                            |                                          | 27,701                    |          |                    |         | 28,730            |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          | 357,968                   |          |                    |         | 362,255           |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Commitments and contingencies                  |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|Redeemable preferred stock                     |                                            |                                          | 80,627                    |          |                    |         | 76,428            |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|Stockholders equity (deficit):                |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Preferred stock                            |                                          |                           | 34       |                    |         |                   | 34       |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Issuable preferred stock                   |                                          |                           | 21,731   |                    |         |                   | 21,731   |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Common stock                               |                                          |                           | 335      |                    |         |                   | 216      |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Warrants                                   |                                          |                           | 9,457    |                    |         |                   | 15,433   |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Capital in excess of par value             |                                          |                           | 104,260  |                    |         |                   | 98,403   |         |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Accumulated deficit                        |                                          |                           | (158,238 | )                  |         |                   | (127,443 | )       |         |  |  |  |  |  |  | 
|                                              
|                                              
|                                              
|                                              
|                                               | Accumulated other comprehensive loss       |                                          |                           | (14,467  | )                  |         |                   | (13,000  | )       |         |  |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          | (36,888                   | )        |                    |         | (4,626            | )        |         |         |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 
|                                               |                                            | $                                        | 569,019                   |          |                    | $       | 625,361           |          |         |         |  |  |  |  |  | 
|                                               |                                            |                                          |                           |          |                    |         |                   |          |         |         |  |  |  |  |  | 



---

| |  | See Notes to Condensed Financial Statements.
| |  | --------------------------------------------

4



---



##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)

|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------- | ------- | ------------------------------- | ------ | ---- | ------- | ------- | ------ | - |  |  |  |  |  |  |  | 
|                                                 
|                                                  |                                                                             |                                               |         | Nine Months Ended September 30, |        |      |         |         |        |   |  | 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  | 
|                                                  |                                                                             |                                               |         | 2001                            |        | 2000 |         |         |        |   |  |  |  | 
|                                                 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from operating activities:             |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net loss                                                                    |                                               | $       | (26,596                         | )      |      | $       | (1,757  | )      |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Adjustments to reconcile net loss to
cash provided by operating activities: |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Depreciation and amortization                 |         |                                 | 42,281 |      |         |         | 42,474 |   |  |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Provision for related party accounts          |         |                                 | 19,500 |      |         |         |       |   |  |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Gain on sale of property, plant and equipment |         |                                 | (431   | )    |         |         | (4,138 | ) |  |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Litigation settlement                         |         |                                 |       |      |         |         | 2,300  |   |  |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                                             | Other                                         |         |                                 | (349   | )    |         |         | (222   | ) |  |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Decrease in cash resulting from changes in
assets and liabilities           |                                               |         | (14,732                         | )      |      |         | (20,201 | )      |   |  |  |  |  |  |  | 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                  |                                                                             |                                               | 19,673  |                                 |        |      | 18,456  |         |        |   |  |  |  |  |  | 
|                                                 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from investing activities:             |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Expenditures for property, plant and equipment                              |                                               |         | (26,160                         | )      |      |         | (28,372 | )      |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Deposit of sale proceeds into escrow account                                |                                               |         | (13,348                         | )      |      |         | (10,000 | )      |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Withdrawal of funds from escrow account                                     |                                               |         | 13,348                          |        |      |         | 18,267  |        |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Proceeds from sale of property, plant and equipment                         |                                               |         | 13,974                          |        |      |         | 8,069   |        |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Payments for strategic alliances with customers                             |                                               |         | (1,402                          | )      |      |         | (2,750  | )      |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Other                                                                       |                                               |         | (1,311                          | )      |      |         | (2,164  | )      |   |  |  |  |  |  |  | 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                  |                                                                             |                                               | (14,899 | )                               |        |      | (16,950 | )       |        |   |  |  |  |  |  | 
|                                                 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Cash flows from financing activities:             |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Principal payments of long-term debt                                        |                                               |         | (1,377                          | )      |      |         | (1,488  | )      |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net repayments on revolving credit facility                                 |                                               |         | (3,227                          | )      |      |         | (3,290  | )      |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Other, primarily financing fees                                             |                                               |         | (809                            | )      |      |         | (778    | )      |   |  |  |  |  |  |  | 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                  |                                                                             |                                               | (5,413  | )                               |        |      | (5,556  | )       |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                 
|Cash and equivalents:                             |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Decrease in cash and cash equivalents                                       |                                               |         | (639                            | )      |      |         | (4,050  | )      |   |  |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Balance, beginning of period                                                |                                               |         | 4,532                           |        |      |         | 5,278   |        |   |  |  |  |  |  |  | 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                  | Balance, end of period                                                      |                                               | $       | 3,893                           |        |      | $       | 1,228   |        |   |  |  |  |  |  |  | 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Supplemental disclosure of cash flow information: |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Interest payments, net                                                      |                                               | $       | 17,140                          |        |      | $       | 17,361  |        |   |  |  |  |  |  |  | 
|                                                  |                                                                             |                                               |         |                                 |        |      |         |         |        |   |  |  |  |  |  | 



---

| |  | See Notes to Condensed Financial Statements.
| |  | --------------------------------------------

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##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands)

NOTE 1  Managements Responsibility

In the opinion of Management, the accompanying condensed financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of September
30, 2001 and the results of operations for the three and nine months ended
September 30, 2001 and 2000 and cash flows for the nine months ended September
30, 2001 and 2000.

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 or Anchor)
included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2000. The results of operations for the interim periods are not
necessarily indicative of the results of the full fiscal year.

Certain reclassifications have been made to prior year financial
statements to be consistent with the current year presentation.

NOTE 2  Organization of the Company

The Company, formed in January 1997, is an indirect subsidiary of
Consumers Packaging Inc. (Consumers) through its parent Consumers U.S., Inc.
(Consumers U.S.), a wholly-owned indirect subsidiary of Consumers.

On February 5, 1997, pursuant to an Asset Purchase Agreement dated
December 18, 1996, as amended, among Consumers, Owens-Brockway Glass Container
Inc. (Owens) and the former Anchor Glass Container Corporation (Old
Anchor), the Company (the rights and obligations of Consumers having been
assigned to the Company) and Owens acquired substantially all of the assets,
and assumed certain liabilities, of Old Anchor (the Anchor Acquisition). Old
Anchor was subsequently liquidated in a proceeding under Chapter 11 of the
United States Bankruptcy Code of 1978, as amended.

The Company is part of a group of glass manufacturing companies with
Consumers and GGC, L.L.C. (GGC) each of which is controlled through G&G
Investments, Inc. (G&G), the majority owner of Consumers. See Note 6 
Liquidity.

The Company has historically engaged in a variety of transactions with
Consumers and GGC. These transactions included bulk purchasing of raw and
packaging materials, provision of technical and engineering services, joint
utilization of the Companys mold and repair shops and the consolidation of
certain functions such as sales, engineering and management information
services. On October 1, 2001, Consumers announced that it had completed the
sale of its Canadian glass producing assets to a subsidiary of Owens-Illinois,
Inc. (O-I). With the sale of Consumers Canadian glass producing assets,
Anchor and Consumers have separated activities related to these functions as of
October 1, 2001. See Note 6  Liquidity.

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##### Table of Contents



During the second and third quarters of 2001, certain Anchor warrant
holders exercised 1,195,178 warrants to purchase common stock of Anchor. This
resulted in an increase in the percentage of minority interest from 33.9% at
the beginning of the year to 45.9% at September 30, 2001, based on outstanding
common stock. Consumers U.S. continues to own approximately 59.5% of Anchors
equity on a fully diluted basis, giving effect to the exercise of all warrants
and the conversion of Anchors convertible preferred stock. See Note 5 
Stockholders Rights Plan and Note 6  Liquidity.

On September 5, 2001, Mr. John J. Ghaznavi was removed as chairman and
chief executive officer of Anchor by a vote of the majority of the members of
the Board of Directors of Anchor. He continues as a director of Anchor.

NOTE 3  Accounting for Derivative
Instruments and Hedging Activities

Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133  Accounting for Derivative Instruments and
Hedging Activities, as amended by SFAS 137 and SFAS 138 (SFAS 133). SFAS 133
establishes accounting and reporting standards requiring every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the derivative
fair values that are designated, effective and qualify as cash flow hedges will
be deferred and recorded as a component of accumulated other comprehensive
income until the hedged transactions occur and are recognized in earnings. The
ineffective portion of a hedging derivatives change in fair value will be
immediately recognized in earnings. For derivative instruments that do not
qualify as cash flow hedges, SFAS 133 requires that changes in the derivative
fair values be recognized in earnings in the period of change.

The Company hedges certain of its estimated natural gas purchases,
typically over a maximum of six to twelve months, through the purchase of
natural gas futures. During the nine months ended September 30, 2001, a loss
of approximately $2,271 was recognized in cost of products sold related to
these futures. The Company recorded the fair market value of the outstanding
futures, approximately $1,467, as a liability and accumulated other
comprehensive income on the balance sheet as of September 30, 2001. In the nine
months ended September 30, 2001, the Company entered into put options for
purchases of natural gas. These put options do not qualify as an effective cash
flow hedge for natural gas purchases. As a result of these contracts, the
Company recognized a derivative loss of $545 in the nine months ended September
30, 2001.

NOTE 4  Related Party Information

At
September 30, 2001, before the provision noted below, G&G, Consumers
and their affiliates owe Anchor approximately $26,500, in addition to the
advance to affiliate receivable of approximately $17,300, while Anchor owes
G&G, Consumers and their affiliates approximately $12,000 (of which
approximately $9,700 relates to the allocation of the write-off of certain
software costs and is the subject of litigation. See Part II Item 1. Legal
Proceedings.) Additionally, Anchor holds an investment in 1,842,000 common
shares of Consumers.

As a result of Consumers announcement of its intention to sell its
Canadian glass producing assets to O-I, see Note 6  Liquidity  Consumers, and
Consumers filing under the Canadian Companies Creditors Arrangement Act
(CCAA), Anchor recorded a charge to earnings during the second quarter of
2001 of $19,500 ($26,258 receivables and $1,842

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##### Table of Contents



investment in common shares of
Consumers, net of $8,600 payables). This amount is recorded as
a provision for related party accounts on the condensed statement of
operations. Although the Company has recorded this reserve, it is actively
pursuing collection of its receivables and, accordingly, has filed a proof of
claim against Consumers in its filing under the CCAA. Anchor has continued and
will continue to bill and collect for services, sales of assets and costs
incurred on behalf of Consumers and its affiliates and has appropriately
reserved for potentially uncollectible amounts.

In 2000 and 1999, in connection with the management agreement with G&G,
Anchor accrued $250 and $296, respectively, for out-of-pocket costs associated
with the agreement. No costs have been accrued in 2001.

In September 1998, G&G entered into an agreement to purchase a controlling
interest in a European glass manufacturer and advanced approximately $17,300
toward that end. This amount was funded by G&G through a loan from the Company
to G&G of approximately $17,300 in September 1998 (the G&G Loan). The funds
for the G&G Loan were obtained through a borrowing under the Anchor $110.0
million revolving credit facility entered into in conjunction with the Anchor
Acquisition (the Original Credit Facility). The G&G Loan was evidenced by a
promissory note that originally matured in January 1999. There is a
disagreement among the directors as to the propriety of the extension of the
original maturity date for the G&G Loan beyond January 1999. See Part II  Item
1. Legal Proceedings. The transaction to purchase a controlling interest in the
European glass manufacturer 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
the devaluation of the Deutschemark. Discussions have been held, but as of this
date outstanding issues have not been resolved. In March 2000, G&G commenced an
arbitration proceeding against the seller of the European glass manufacturer in
accordance with the terms of the agreement to secure a return of the advance. A
hearing was held in June 2001, with a follow-up hearing held in August 2001. No
decision has been rendered and the outcome of this proceeding is uncertain. In
connection with the pledge by Anchor of the note issued pursuant to the G&G
Loan to Bank of America, National Association, as agent under the Loan and
Security Agreement dated as of October 16, 2000, with Bank of America, National
Association, as agent (the Loan and Security Agreement), the original
promissory note issued pursuant to the G&G Loan was replaced by a new
promissory note (the Replacement Note). G&G has provided security against the
Replacement Note to Bank of America, National Association, as agent under the
Loan and Security Agreement. The maturity date of the Replacement Note is
October 31, 2003. Interest on the Replacement Note is payable at the interest
rate payable by the Company on advances under the Loan and Security Agreement
plus 0.5% and has been paid through September 2000. Unpaid interest of $1,710
is due for the period October 1, 2000 through September 30, 2001. Various
rights, including the right to enforce the obligations under the Replacement
Note were assigned by Anchor to Bank of America, National Association. Any
property received by G&G in respect of the arbitration proceeding has been
pledged by G&G to Bank of America, National Association, and will be used to
repay outstanding borrowings under the Loan and Security Agreement. There is a
disagreement among the directors as to the propriety of the assignment of those
rights, the pledge of those proceeds and the replacement of the original
promissory note with the Replacement Note. See Part II  Item 1. Legal
Proceedings.

During the years 1997, 1998, 1999 and 2000, the Company participated in
bulk purchases of supplies for the Company and certain of its affiliates,
including Consumers, with vendors that were unrelated to the Company and
Consumers. The bulk purchases were negotiated by a sister company to G&G. The
sister company received rebates from these

8



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##### Table of Contents



unrelated vendors. The rebates
attributable to purchases by the Company totaled $711 over the
four-year period. When this practice became known, the Company took steps to
ensure that the practice was discontinued.

During the year 1997, the Company participated in bulk purchases of soda
ash for the Company and certain of its affiliates, including Consumers, with
vendors that were unrelated to the Company and Consumers. The bulk purchases
were negotiated by a subsidiary of G&G. The subsidiary received rebates from
the unrelated vendors. The rebates attributable to purchases by the Company
totaled $547. This practice was discontinued at the end of 1997.

A special committee of the Board has been appointed to review these
transactions and has held several meetings since its appointment. The special
committee has issued a demand letter to G&G and certain
affiliates of G&G, requesting reimbursement to Anchor
of the amounts paid as rebates.

NOTE 5  Stockholders Rights Plan

On September 26, 2001, the Board of Directors of Anchor adopted a
Stockholder Rights Plan (the Rights Plan). Under the Rights Plan, stock
purchase rights (Rights) will be distributed as a dividend to all
stockholders at the rate of one Right for each share of Anchor common stock
held of record as of the close of business on September 26, 2001. Each Right
entitles the registered holder, upon the occurrence of certain events, to
purchase from Anchor one one-thousandth of a share of Series C Junior
Participating Preferred Stock (the Preferred Stock), at a price of $0.01 per
one one-thousandth of a share (the Purchase Price), subject to adjustment.
The Rights are not exercisable until the distribution date, as defined. The
Rights will expire at the close of business on September 26, 2003, unless
earlier redeemed or exchanged by the Company in accordance with the Rights
Plan. The description and terms of the Rights are set forth in a Rights
Agreement between the Company and Continental Stock Transfer & Trust Company,
as Rights Agent. On September 27, 2001, the Rights Plan was amended for a
clarification. On October 31, 2001, the Rights Plan was amended to extend the
Rights to the holders of Anchors Series A Preferred Stock and Series B
Preferred Stock. The Board of Directors of Anchor, prior to the distribution
date of the Rights, may amend any of the provisions of the Rights Agreement.

On October 5, 2001 an action was filed by Consumers U.S., against Anchor
and certain members of its Board of Directors. The action alleges, among other
things, that the Rights Plan adopted by the Anchor Board of Directors is
unlawful. On October 11, 2001 O-I filed a similar action, alleging,
among other things, that the Rights Plan adopted by the Anchor Board
of Directors is unlawful. See Part II  Item 1. Legal Proceedings.

The acquisition of the stock of Consumers U.S. (and the equity interest in
Anchor) by either O-I or Mr. Ghaznavi may result in the Rights becoming
exercisable. See Note 6  Liquidity  Consumers.

NOTE 6  Liquidity

Anchor

Certain events described below may result in the Company having to make a
purchase offer for approximately $200 million of indebtedness, which the
Company may not be able to fund. In such event, the Company may be in default
under such debt obligations and other obligations would be cross-defaulted. See
Consumers below.

9



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##### Table of Contents



The Companys results of operations were significantly impacted by the
cost of natural gas in 2000 and 2001. This is a variable cost over which the
Company has little control.
Significant increases in natural gas or energy costs could materially impact
the Companys results of operations or liquidity plans; however, energy costs
have softened considerably in recent months and are currently having a
favorable impact on the Companys costs. There can be no assurance that this
trend will continue.

The Companys principal sources of liquidity through the end of 2001 are
expected to continue to be funds derived from operations, borrowings under the
Replacement Credit Facility and proceeds from sales of discontinued
manufacturing facilities. The Companys plans to increase liquidity include
continuation of its cost reduction efforts, continuation of its natural gas
cost recovery program, as well as increased sales from its supply agreements
with major customers. While the initial positive effects of the implementation
of these plans are currently being realized, there can be no assurance that
these efforts will continue to be successful or if successful, that they will
provide sufficient liquidity to meet the Companys needs.

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. Should the Company suffer
material adverse conditions from the issues discussed in this Note 6,
additional measures may be required. This may include sales of assets and/or
consideration of other strategic alternatives. No assurance can be given that
the Company will have sufficient liquidity either from internally generated
sources or external borrowings to continue its operations and to meet its
obligations as they come due. If future operations result in noncompliance with
the fixed charge coverage ratio test under Anchors $110.0 million credit
facility provided by Bank of America (the Replacement Credit Facility)or
various equipment leases, Anchor would seek a waiver; however, there can be no
assurance that such a waiver would be granted.

Consumers

On February 2, 2001, Consumers, the majority owner of Anchor on a
fully-diluted basis through an indirect, wholly-owned subsidiary, Consumers
U.S., announced a suspension of interest payments on its senior notes maturing
in 2007 and the senior secured notes of Consumers International Inc. maturing
in 2005, until it has reached agreement on the restructuring of Consumers. In
March 2001, Consumers appointed Brent Ballantyne as its chief restructuring
officer and chief executive officer, reporting to a committee of the Consumers
Board of Directors comprised of independent directors and also appointed Graeme
Eadie as chief financial officer.

On May 23, 2001, Consumers, the majority owner of Anchor on a
fully-diluted basis through Consumers U.S., filed for protection under the
Canadian CCAA, with the Ontario Superior Court of Justice, in order to provide
an orderly process and time to complete its restructuring.

On August 3, 2001, Consumers and O-I announced an agreement whereby O-I
would acquire Consumers Canadian glass producing assets as well as the stock
of Consumers U.S. Anchor was informed by its former chairman and chief
executive officer, John J. Ghaznavi, that he entered into a non-binding letter
of intent with O-I to purchase, individually or through an entity controlled by
him, the shares of Consumers U.S. that O-I agreed to purchase from Consumers.
The Ontario Court of Justice approved the sale of Consumers Canadian glass
producing assets and stock of Consumers U.S. to O-I on August 31, 2001, subject
to any needed

10



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##### Table of Contents



regulatory approval. The asset sale was completed on October 1,
2001. Consumers has not received regulatory approval to sell the stock of
Consumers U.S. to O-I.

Management of Anchor believes, upon the advice of its counsel, that the
sale of the Canadian glass producing assets by Consumers to O-I does not
constitute a change in control as defined in the indentures governing
Anchors 11.25% First Mortgage Notes due 2005, aggregate principal amount of
$150.0 million (the First Mortgage Notes) and its 9.875% Senior Notes due
2008, aggregate principal amount of $50.0 million (the Senior Notes) (the
Indentures). Management of Anchor believes, upon the advice of its counsel,
that the acquisition of the stock of Consumers U.S. by O-I or Mr. Ghaznavi will
trigger a change in control as defined in the Indentures. Upon a change in
control as defined in the Indentures, Anchor would be required to make an
offer to repurchase all of the First Mortgage Notes and the Senior Notes at
101% of the outstanding principal amount plus accrued and unpaid interest.
Anchor does not have the cash available to make this repurchase offer. The
failure to make the offer would result in an event of default under the
Indentures that would give the noteholders the right to accelerate the debt and
is also a default under the Replacement Credit Facility and would create an
event of default under various equipment leases.

In addition, G&G and one of its affiliates have pledged common shares of
Consumers that they own as collateral for certain indebtedness guaranteed by
G&G. This indebtedness, together with the common shares of Consumers pledged as
collateral, has been assigned to Fevisa Industrial, S.A. de C.V. (Fevisa), a
Mexican company in which G&G has a 25% ownership interest. Certain defaults on
the indebtedness have occurred which give Fevisa the right to foreclose on
those common shares. Such a foreclosure would also trigger a change in
control as defined in the Indentures. Fevisa has agreed to forbear on a
day-to-day basis from the exercise of its foreclosure rights. If Fevisa
exercises its foreclosure rights, such event would also constitute a change in
control and require Anchor to make a repurchase offer for the First Mortgage
Notes and the Senior Notes, which as described above, the Company would be
unable to do.

On August 13, 2001, the Board of Directors of Anchor formed an independent
committee to review, among other things, (i) the proposed sale of Consumers
assets, including the Consumers U.S. stock, to O-I, (ii) the subsequent
proposed sale of the Consumers U.S. stock to Mr. Ghaznavi, (iii) the settlement
documents with Owens related to the patent litigation and (iv) the refinancing
or restructuring of the First Mortgage Notes and the Senior Notes and what
action, if any, to take in connection therewith.

On September 26, 2001, Anchor filed a complaint in the United States
Federal District Court in Tampa, Florida against O-I seeking an injunction
against O-I from acquiring indirectly the majority equity interest in Anchor
from Consumers or statutory treble damages in lieu thereof. In its complaint,
Anchor alleges that the proposed acquisition by O-I would violate U.S. Federal
and Florida antitrust laws as well as tortiously interfere with Anchors
Indentures. On October 2, 2001, O-I agreed with Anchor that it would
not acquire the stock of Consumers U.S. until 60 days from the time
O-I gives Anchor notice that it has made a filing with the Federal
Trade Commission (the FTC). To date, Anchor has not
received notice from O-I that a filing with the FTC has been made.

Subsequent Events

On October 5, 2001 an action was filed by Consumers U.S., in the Court of
Chancery of the State of Delaware in and for New Castle County against Anchor
and certain members of its Board of Directors. The action alleges, among other
things, that the Rights Plan (see Note 5) adopted by the Anchor Board of
Directors on September 26, 2001, and the amendment dated September 27, 2001, is
unlawful and that certain members of the Board of Directors breached their
fiduciary duties of loyalty, good faith and care and have acted unlawfully in
adopting the Rights Plan. Through this action in the Delaware court, Consumers
U.S. seeks injunctive relief

11



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##### Table of Contents



to, among other things, prevent the application of
the Rights Plan to the proposed sale of the stock of Consumers U.S.
to O-I. The complaint also seeks declaratory relief
and damages with respect to the actions associated with the adoption
of the Rights Plan by Anchor. The scope of the rights and the holders of the
rights may be affected by any final judgment entered in such action. Anchor
intends to vigorously defend the claims alleged in the action. On
October 11, 2001 O-I filed a similar action, alleging, among other
things, that the Rights Plan adopted by the Anchor Board of Directors
is unlawful.

The foregoing represents significant uncertainties as to the future
financial position of Anchor. As a result of the uncertainties surrounding the
Consumers restructuring and its impact on Anchor, the Companys outside
auditors rendered a qualified opinion on the Companys financial statements for
the year ended December 31, 2000. The failure by the Company to obtain an
unqualified opinion on its financial statements was an event of default under
the Loan and Security Agreement dated as of October 16, 2000, with Bank of
America, National Association, as agent, for which the Company received a
waiver.

NOTE 7  Summary of Recent Accounting Pronouncements

On July 20, 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141  Business Combinations
(SFAS No. 141) and No. 142  Goodwill and Other Intangible Assets (SFAS No.
142). SFAS No. 141 addresses financial accounting and reporting for goodwill
and other intangible assets acquired in a business combination at acquisition.
SFAS No. 141 requires the purchase method of accounting to be used for all
business combinations initiated after June 30, 2001. SFAS No. 141 also
establishes specific criteria for the recognition of intangible assets
separately from goodwill and requires unallocated negative goodwill to be
written off immediately as an extraordinary gain (instead of being deferred and
amortized). SFAS No.142 addresses financial accounting and reporting for
intangible assets acquired individually or with a group of other assets (but
not those acquired in a business combination) at acquisition. SFAS No. 142 also
addresses financial accounting and reporting for goodwill and other intangible
assets subsequent to their acquisition. SFAS No. 142 provides that goodwill and
intangible assets that have indefinite useful lives will not be amortized but
rather will be tested at least annually for impairment. It also provides that
intangible assets that have finite useful lives will continue to be amortized
over their useful lives, but those lives will no longer be limited to forty
years. SFAS No. 141 is effective for all business combinations initiated after
June 30, 2001 and for all business combinations accounted for by the purchase
method for which the date of acquisition is after June 30, 2001. The provisions
of SFAS No. 142 are effective for fiscal years beginning after December 15,
2001. The Company will adopt SFAS No. 142 beginning January 1, 2002. The
Company is considering the provisions of SFAS No. 141 and No. 142 and at
present has not determined the impact of adopting SFAS No. 141 and SFAS No.
142.

In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 143  Accounting for Asset Retirement
Obligation (SFAS No. 143), that addresses the accounting for the recognition
of liabilities associated with the retirement of long-lived assets. SFAS 143 is
effective for financial statements issued for years beginning after June 15,
2002. The Company has not yet determined the impact of adopting SFAS 143.

In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144  Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS No. 144), that addresses financial
reporting for the impairment or disposal of long-lived assets. SFAS 144
supersedes SFAS No. 121  Accounting for the Impairment of Long-Lived Assets to
be Disposed Of, and the reporting provisions of Accounting Principles

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Board
Opinion No. 30  Reporting the Results of Operations, for the disposal of a
segment of a business. SFAS 144 is effective for financial statements issued
for years beginning after December 15, 2001. The Company has not yet determined
the impact of adopting SFAS 144.




Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations

Overview

Net income for the third quarter was $1.0 million compared to a loss of
$4.2 million for the third quarter of 2000. Income from operations improved
approximately $2.5 million in the third quarter of 2001 compared to the third
quarter of 2000, while income from operations for the nine months ended
September 30, 2001 was slightly below that of the comparable period of 2000, by
approximately $1.6 million, notwithstanding the unusual items noted below. The
Companys plans to improve operations include continuation of its cost
reduction efforts, continuation of its natural gas cost recovery program, sale
of discontinued manufacturing facilities, as well as increased sales from its
supply agreements with major customers. While the initial positive effects of
the implementation of these plans is currently being realized, they have been
partially offset by the unrecovered high costs of energy experienced in the
first nine months of 2001, primarily in the first quarter.

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Results of Operations

Net Sales. Net sales for the third quarter of 2001 were $190.1 million
compared to $163.7 million for the third quarter of 2000, an increase of $26.4
million, or 16.1%. Net sales for the nine months ended September 30, 2001 were
$539.5 million and $492.7 million for the comparable period of 2000. This $46.8
million, or 9.5%, increase in net sales was principally a result of the
increase in shipment volume (10%), particularly in the beer product line,
primarily associated with the Southeast Agreement (see Liquidity and Capital
Resources below), the natural gas related price recovery program discussed
below and general price increases. These increases were offset by a reduction
in sales, occurring in the first six months of 2001, due to a change in the way
certain packaging materials are sold to a certain customer. This change
resulted in a comparable reduction in cost of products sold in 2001. Net sales
for the nine months ended September 30, 2001, adjusted for the packaging
change, would have increased by $70.6 million or 13%.

Cost of Products Sold.The Companys cost of products sold in the third
quarter and first nine months of 2001 were $174.7 million and $503.5 million,
respectively (or 91.9% and 93.3% of net sales), while the cost of products sold
for the third quarter of 2000 and first nine months of 2000 were $150.6 million
and $453.5 million, respectively (or 92.0% and 92.0% of net sales). This slight
increase in the cost of products sold for the nine months ended September 30,
2001 as compared with the comparable period of 2000, principally reflects the
increases in net sales noted above. In addition, the Company has continued to
experience significant increases in the cost of natural gas as compared to the
same period of the preceding year. These increased prices for natural gas, the
principal fuel for manufacturing glass, increased costs by approximately $18.2
million compared to the comparable period of 2000. In addition, the high costs
of natural gas in December 2000 contributed to the Companys decision to reduce
manufacturing production in that month. The carryover effect of this decision
resulted in approximately $1.0 million of unabsorbed overhead costs, negatively
impacting results of operations in early 2001. In the second half of 2000, the
Company initiated a price recovery program for the escalating natural gas costs
incurred. Approximately $16.5 million was recovered through this program in the
first nine months of 2001 and is included in net sales.

Selling and Administrative Expenses. Selling and administrative expenses
for the nine months ended September 30, 2001 were approximately $21.1 million
(or 3.9% of net sales), while selling and administrative expenses for the
comparable period of 2000 were $22.8 million (or 4.6% of net sales). This
decrease is attributable to a focus on overall cost reduction, including
reducing personnel related costs, data processing costs and support costs of
related parties.

Provision for related party accounts. As a result of Consumers
announcement of its intention to sell its Canadian glass producing assets to
O-I, see Note 6  Liquidity  Consumers, and Consumers filing under the CCAA,
Anchor recorded a charge to earnings during the quarter ended June 30, 2001, of
$19.5 million ($26.3 million receivables and $1.8 million investment in common
shares of Consumers, net of $8.6 million payables). This amount is recorded as
a provision for related party accounts on the condensed statement of
operations. Although the Company has recorded this reserve, it is actively
pursuing collection of its receivables and, accordingly, has filed a proof of
claim against Consumers in its CCAA filing.

Other Income (Expense), net. Other expense, net for the first nine months
of 2001 was $0.2 million compared to other income, net of $6.3 million for the
comparable period of 2000, which included the gain on sale of approximately
$6.1 million of the Companys previously closed

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Houston, Texas glass container
manufacturing facility and certain related operating rights to Anheuser-Busch,
Inc. (Anheuser-Busch).

Interest Expense. Interest expense for the nine months ended September
30, 2001 decreased approximately $0.2 million compared to the same period of
2000, due primarily to lower interest rates offset by higher average
outstanding borrowings under the Replacement Credit Facility and less interest
incurred on related party liabilities.

Net Income (Loss). The Company recorded income in the third quarter of
2001 of approximately $1.0 million as compared to a net loss of $4.2 million in
the third quarter of 2000. This improvement in earnings results from increased
sales volume, general price increases and reduced selling, general and
administrative costs. The Company had a year to date loss of $26.6 million
compared to a net loss of $1.8 million in the prior year. Excluding the
provision for related party accounts of $19.5 million, the Company would have
recorded a net loss of approximately $7.1 million in the first nine months of
2001. The results of the first nine months of 2000 included a gain on the 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 Houston, Texas facility, both
included in Other income, net and a $2.3 million charge for settlement of
litigation with Owens. Excluding these sales transactions, the Company would
have reported a loss of approximately $4.3 million in the nine months ended
September 30, 2000. Taking all adjustments discussed above into account, the
$1.5 million decrease in earnings over the first nine months of the prior year
can be attributed to the high cost of natural gas as discussed under Costs of
Products Sold.

Liquidity and Capital Resources

On August 3, 2001, Consumers, the majority owner of Anchor on a
fully-diluted basis through Consumers U.S., and O-I announced an agreement
whereby O-I would acquire Consumers Canadian glass producing assets as well as
the stock of Consumers U.S. Anchor was informed by its former chairman and
chief executive officer, John J. Ghaznavi, that he entered into a non-binding
letter of intent with O-I to purchase, individually or through an entity
controlled by him, the shares of Consumers U.S. that O-I has agreed to purchase
from Consumers. The Ontario Superior Court of Justice approved the sale of
Consumers Canadian glass producing assets and the stock of Consumers U.S. to
O-I on August 31, 2001. The asset sale was completed on October 1, 2001.
Consumers has not received regulatory approval to sell the stock of Consumers
U.S. to O-I.

Management of Anchor believes, upon the advice of its counsel, that the
sale of the Canadian glass producing assets by Consumers to O-I does not
constitute a change in control as defined in the Indentures governing
Anchors First Mortgage Notes and Senior Notes. Management of Anchor believes,
upon the advice of its counsel, that the acquisition of the stock of Consumers
U.S. by O-I or Mr. Ghaznavi will trigger a change in control as defined in
the Indentures. Upon a change in control as defined in the Indentures, Anchor
would be required to make an offer to repurchase all of the First Mortgage
Notes and the Senior Notes at 101% of the outstanding principal amount plus
accrued and unpaid interest. Anchor does not have the cash available to make
this repurchase offer. The failure to make the offer would result in an event
of default under the Indentures that would give the noteholders the right to
accelerate the debt and is also a default under Anchors Replacement Credit
Facility and would create an event of default under various equipment leases.

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In addition, G&G and one of its affiliates have pledged common shares of
Consumers that they own as collateral for certain indebtedness guaranteed by
G&G. This indebtedness, together with the common shares of Consumers pledged as
collateral, has been assigned to Fevisa, a Mexican company in which G&G has a
25% ownership interest. Certain defaults on the
indebtedness have occurred which give Fevisa the right to foreclose on
those common shares. Such a foreclosure would also trigger a change in
control as defined in the Indentures. Fevisa has agreed to forbear on a
day-to-day basis from the exercise of its foreclosure rights. If Fevisa
exercises its foreclosure rights, such event would also constitute a change in
control and require Anchor to make a repurchase offer for the First Mortgage
Notes and the Senior Notes, which as described in the foregoing paragraph, the
Company would be unable to do.

On August 13, 2001, the Board of Directors of Anchor formed an independent
committee to review, among other things, (i) the proposed sale of Consumers
assets, including the Consumers U.S. stock, to O-I, (ii) the subsequent
proposed sale of the Consumers U.S. stock to Mr. Ghaznavi, (iii) the settlement
documents with Owens related to the patent litigation and (iv) the refinancing
or restructuring of the First Mortgage Notes and the Senior Notes and what
action, if any, to take in connection therewith.

On September 26, 2001, Anchor filed a complaint in the United States
Federal District Court in Tampa, Florida against O-I seeking an injunction
against O-I from acquiring indirectly the majority equity interest in Anchor
from Consumers or statutory treble damages in lieu thereof. In its complaint,
Anchor alleges that the proposed acquisition by O-I would violate U.S. Federal
and Florida antitrust laws as well as tortiously interfere with Anchors
Indentures. On October 2, 2001, O-I agreed with Anchor that it would
not acquire the stock of Consumers U.S. until 60 days from the time
O-I gives Anchor notice that it has made a filing with the FTC. To date, Anchor has not
received notice from O-I that a filing with the FTC has been made.

The foregoing represents significant uncertainties as to the future
financial position of Anchor. As a result of the uncertainties surrounding the
Consumers restructuring and its impact on Anchor, the Companys outside
auditors have rendered a qualified opinion on the Companys financial
statements for the year ended December 31, 2000. The failure by the Company to
obtain an unqualified opinion on its financial statements was an event of
default under the Loan and Security Agreement, for which the Company received a
waiver.

At
September 30, 2001, before the provision noted below, G&G, Consumers
and their affiliates owe Anchor approximately $26.5 million, in addition to the
advance to affiliate receivable of approximately $17.3 million, while Anchor
owes G&G, Consumers and their affiliates approximately $12.0 million (of which
approximately $9.7 million relates to the allocation of the write-off of
certain software costs and is the subject of litigation. See Part II Item 1.
Legal Proceedings.) Additionally, Anchor holds an investment in 1,842,000
common shares of Consumers.

As a result of Consumers announcement of its intention to sell its
Canadian glass producing assets to O-I, and Consumers filing under the CCAA,
Anchor recorded a charge to earnings in the second quarter of 2001, of $19.5
million ($26.3 million receivables and $1.8 million investment in common shares
of Consumers, net of $8.6 million payables). This amount is recorded as a
provision for related party accounts on the condensed statement of operations.
Although the Company has recorded this reserve, it is actively pursuing
collection of its receivables and, accordingly, has filed a proof of claim
against Consumers in its CCAA filing.

In the first nine months of 2001, operating activities provided $19.7
million in cash as compared to $18.5 million of cash provided in the same
period of 2000. This increase in cash provided reflects the slight decline in
earnings (before unusual charges/income) and changes in working capital items.
Accounts receivable at September 30, 2001 increased approximately $25.2

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million
(notwithstanding the provision for related party receivables) as compared with
the 2000 year end, consistent with the increase in net sales. Inventory levels
decreased approximately $19.0 million in 2001. The Company has reduced accounts
payable approximately $5.5 million since December 31, 2000 and contributed
approximately $7.4 million to its defined benefit pension plan. Cash outlays
for natural gas purchases in the nine months ended September 30, 2001 increased
approximately $18.2 million over the 2000 levels for the comparable periods, as
a result of the increased prices for natural gas. In the second half of 2000,
the Company initiated a price recovery program for the escalating natural gas
costs incurred. Approximately $16.5 million was recovered through this program
in 2001.

Cash consumed in investing activities for the first nine months of 2001
and 2000 were $14.9 million and $17.0 million, respectively. Capital
expenditures in the nine months ended September 30, 2001 were $26.2 million
compared to $28.4 million in the same period of 2000. To fund capital
expenditures as provided for under the terms of the Indentures, the Company
applied cash deposited into escrow, of $13.3 million and $18.3 million,
respectively, in the first nine months of 2001 and 2000. These escrowed funds
were the proceeds of sale and sale-leaseback transactions in 1999, 2000 and
2001.

In conjunction with the Anchor Acquisition, the Company entered into a
credit agreement providing for the $110.0 million Original Credit Facility. In
October 2000, the Company replaced the Original Credit Facility with a credit
facility under a Loan and Security Agreement dated as of October 16, 2000, with
Bank of America, National Association, as agent, to provide a $100.0 million
Replacement Credit Facility. The Replacement Credit Facility enables the
Company to obtain revolving credit loans for working capital purposes and the
issuance of letters of credit for its account in an aggregate amount not to
exceed $100.0 million. Advances outstanding at any one time cannot exceed an
amount equal to the borrowing base as defined in the Loan and Security
Agreement.

At October 15, 2001, advances outstanding under the Replacement Credit
Facility were $58.2 million, borrowing availability was $16.0 million and total
outstanding letters of credit on this facility were $7.2 million. Net cash of
$5.4 million was used in financing activities in the first nine months of 2001,
principally reflecting borrowings under the Replacement Credit Facility.

The Companys obligations under the Replacement Credit Facility are
secured by a first priority lien on all of the Companys inventories and
accounts receivable and related collateral and a second priority pledge of all
of the issued and issuable Series B Preferred Stock of the Company and 902,615
shares of the Companys Common Stock. In addition, the Companys obligations
under the Loan and Security Agreement are guaranteed by Consumers U.S., the
holder of the outstanding Series B Preferred Stock of the Company and 902,615
shares of the Companys Common Stock.

The Loan and Security Agreement contains certain covenants that restrict
the Companys ability to take 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, sales of assets and other
fundamental corporate changes, capital expenditures, operating lease payments
and transactions with affiliates. The Loan and Security Agreement also
contains a financial covenant that requires the Company to maintain a fixed
charge coverage ratio.

In 2000, the Company signed an agreement with Anheuser-Busch to provide
all the bottles for the Anheuser-Busch Jacksonville, Florida and Cartersville,
Georgia breweries, beginning in

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2001 (the Southeast Agreement). To meet the
expanded demand from the supply contract and increase production efficiency,
the Company invested approximately $18.0 million in new equipment in 2000 for
its Jacksonville plant, funded through the proceeds from the sale of the
Houston plant, certain leasing transactions and internal cash flows. In
December 1999, the Company entered into an agreement with a major lessor for
$30.0 million of lease transactions. Under this agreement, in December 1999,
December 2000, March 2001 and April 2001, the
Company financed approximately $8.2 million, $4.2 million, $7.8 million
and $5.4 million, respectively, of the expansion through sale leaseback
arrangements.

In September 1998, G&G entered into an agreement to purchase a controlling
interest in a European glass manufacturer and advanced approximately $17.3
million toward that end. The G&G Loan was funded by G&G through a loan from the
Company to G&G of approximately $17.3 million in September 1998. The funds for
the G&G Loan were obtained through a borrowing under the Original Credit
Facility. The G&G Loan was evidenced by a promissory note that originally
matured in January 1999. There is a disagreement among the directors as to the
propriety of the extension of the original maturity date for the G&G Loan
beyond January 1999. See Part II  Item 1. Legal Proceedings. The transaction
to purchase a controlling interest in the European glass manufacturer 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 the devaluation of the
Deutschemark. Discussions have been held, but as of this date outstanding
issues have not been resolved. In March 2000, G&G commenced an arbitration
proceeding against the seller of the European glass manufacturer in accordance
with the terms of the agreement to secure a return of the advance. A hearing
was held in June 2001, with a follow-up hearing held in August 2001. No
decision has been rendered and the outcome of this proceeding is uncertain. In
connection with the pledge by Anchor of the note issued pursuant to the G&G
Loan to Bank of America, National Association, as agent under the Loan and
Security Agreement, the original promissory note issued pursuant to the G&G
Loan was replaced by the Replacement Note. G&G has provided security against
the Replacement Note to Bank of America, National Association, as agent under
the Loan and Security Agreement. The maturity date of the Replacement Note is
October 31, 2003. Interest on the Replacement Note is payable at the interest
rate payable by the Company on advances under the Loan and Security Agreement
plus 0.5% and has been paid through September 2000. Unpaid interest of $1.7
million is due for the period October 1, 2000 through September 30, 2001.
Various rights, including the right to enforce the obligations under the
Replacement Note were assigned by Anchor to Bank of America, National
Association. Any property received by G&G in respect of the arbitration
proceeding has been pledged by G&G to Bank of America, National Association,
and will be used to repay outstanding borrowings under the Loan and Security
Agreement. There is a disagreement among the directors as to the propriety of
the assignment of those rights, the pledge of those proceeds and the
replacement of the original promissory note with the Replacement Note. See Part
II  Item 1. Legal Proceedings.

The Indentures 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, asset sales and transactions with affiliates.



| |                                                                                      
| | -------------------------------------------------------------------------------------
| | 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,
|- |  | ---------------------------------------------------------------------------------------------------

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| |  | 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 the remainder of 2001,
including interest expense on the First Mortgage Notes (approximately $8.4
million paid October 1, 2001), the Senior
Notes (approximately $2.5 million paid September 15, 2001) and advances under
the Replacement Credit Facility, capital expenditures of approximately $14.0
million and payment of the $2.9 million litigation settlement as discussed in
Part II  Item 1. Legal Proceedings. As a result of the higher gas prices in
2001, the Company estimates that its cash outlays for purchases of natural gas,
based on current natural gas prices, will increase by approximately $14 million
over 2000 levels. The Company has significantly offset this impact through the
cost recovery program implemented in 2000. Natural gas costs, however, have
softened considerably in recent months, but there is no assurance that this
trend will continue. 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.

There are currently a number of litigations pending which may consume a
portion of Anchors liquidity. See Part II  Item 1. Legal Proceedings.

The Companys results of operations were significantly impacted by the
cost of natural gas in 2000 and in the first nine months of 2001. This is a
variable cost over which the Company has little control. Significant increases
in natural gas or energy costs could materially impact the Companys results of
operations or liquidity plans in 2001.

The Companys principal sources of liquidity through 2001 are expected to
continue to be funds derived from operations, borrowings under the Replacement
Credit Facility and proceeds from sales of discontinued manufacturing
facilities. Because of the change in control that would occur upon consummation
of the sale of Consumers U.S. stock from Consumers to O-I, the Company may not
have the ability to borrow additional funds. Substantially all of its assets
have been pledged and the Company may be unable to raise needed cash from the
sale of discontinued manufacturing facilities or other assets. The Companys
plans to increase liquidity include continuation of its cost reduction efforts,
continuation of its natural gas cost recovery program, as well as increased
sales from its supply agreements with major customers. No assurance can be
given that the Company can accomplish these plans.

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. Should the Company suffer
material adverse conditions from the issues discussed above, additional
measures may be required. This may include sales of assets and/or consideration
of other strategic alternatives. No assurance can be given that the Company
will have sufficient liquidity either from internally generated sources or
external borrowings to continue its operations and to meet its obligation as
they come due. If future operations result in noncompliance with the fixed
charge coverage ratio test under the Replacement Credit Facility or various
equipment leases, Anchor would seek a waiver; however, there can be no
assurance that such a waiver would be granted.

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

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experienced significant cost increases
in specific materials and energy, primarily due to the abnormally high energy
costs experienced during the year, and has not been fully able to pass on
inflationary cost increases to its customers for several years, although it did
realize some price relief in 2001.

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 has historically scheduled 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 normally adversely affect profitability during the
first and fourth quarters, however 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) that may cause actual results to differ
materially from the forward-looking statements. These risks and uncertainties
may include the restructuring of Consumers and the proposed sale of Consumers
U.S. stock to O-I; the highly competitive nature of the glass container
industry and the intense competition from makers of alternative forms of
packaging; the fluctuation in the price of natural gas; 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 Replacement Credit Facility is subject to variable interest rates. A
change in interest rates could have an impact on results of operations. 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 long-term 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. The Company hedges certain of its estimated natural gas
purchases, typically over a maximum of six to twelve months, through the
purchase of natural gas futures. Also, the Company may enter into put options
for purchases of natural gas. Accounting for these derivatives may increase
volatility in earnings.

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PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

On October 5, 2001 an action was filed by Consumers U.S., in the Court of
Chancery of the State of Delaware in and for New Castle County against Anchor
and certain members of its Board of Directors. The action alleges, among other
things, that the Rights Plan adopted by the Anchor Board of Directors on
September 26, 2001, and the amendment dated September 27, 2001, is unlawful and
that certain members of the board breached their fiduciary duties of loyalty,
good faith and care and have acted unlawfully in adopting the rights plan.
Through this action in the Delaware court, Consumers U.S. seeks injunctive
relief to, among other things, prevent the application of the Rights Plan to a
proposed sale of the stock of Consumers U.S. to O-I. The complaint also seeks declaratory relief and damages with
respect to the actions associated with the adoption of the Rights Plan by
Anchor. The scope of the rights and the holders of the rights may be affected
by any final judgment entered in such action. Anchor intends to vigorously
defend the claims alleged in the action. On October 11, 2001 O-I
filed a similar action, alleging, among other things, that the Rights
Plan adopted by the Anchor Board of Directors is unlawful.

On September 26, 2001, Anchor filed a complaint in the United States
Federal District Court in Tampa, Florida against O-I seeking an injunction
against O-I from acquiring the majority equity interest in Anchor from
Consumers or statutory treble damages in lieu thereof. In its complaint,
Anchor alleges that the proposed acquisition by O-I would violate Federal and
Florida antitrust laws as well as tortiously interfere with Anchors
Indentures. On October 2, 2001, O-I agreed with Anchor that it would
not acquire the stock of Consumers U.S. until 60 days from the time
O-I gives Anchor notice that it has made a filing with the FTC. To date, Anchor has not
received notice from O-I that a filing with the FTC has been made.

On October 13, 2000, certain stockholders of the Company, specifically
CoMac Partners, L.P., CoMac Endowment Fund, L.P., CoMac Opportunities Fund,
L.P., CoMac International, N.V., Carl Marks Strategic Investments, LP, Carl
Marks Strategic Investments II, LP, Varde Partners, L.P., Varde Fund (Cayman)
Ltd., Pequod Investments, L.P., Pequod International Ltd., Cerberus Partner
L.P. and Cerberus International Ltd. (collectively, the Plaintiffs),
commenced a shareholder derivative action against certain of the Companys
directors, officers and certain related entities in The Court of Chancery of
the State of Delaware in and for New Castle County. The action seeks recovery
to the Company, which is named as a party to the action in the capacity of a
nominal defendant, for damages Plaintiffs allege the Company suffered through
breach of fiduciary duties (including extension of the G&G promissory note
without proper authority and approval of an allocation of write off of certain
software costs from Consumers to Anchor), unjust enrichment and usurpation of
corporate opportunity of the Company (including the receipt of $15.0 million by
Consumers in connection with an agreement to manage the renovation of the
Houston facility). The Company is named as a party to the case for procedural
purposes but no recovery is sought from the Company. The Company has been
advised by the other defendants that they will vigorously defend the action and
that they believe they have meritorious defenses.

On June 22, 2001, the stockholders of the Company identified in the
preceding paragraph of this Item 1 commenced an action against the Company in
the Court of Chancery of the State of Delaware in and for New Castle County.
The plaintiffs are seeking an order directing that the Company hold an annual
meeting for the election of directors and setting the time and place for the
meeting, and directing that the entire board of directors stand for election at
that meeting. On October 25, 2001, the court ruled that the
fifteen classified directors should
stand for re-election. If a majority of the continuing directors, as defined in
the Indentures, are not re-elected, it may result in a change in control as
defined in the Indentures.

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On February 16, 2000, Owens commenced an action against the Company and
certain of its affiliates, including Consumers and GGC, in the United States
District Court for the Southern District of New York. Owens alleged violations
of the Technical Assistance and License Agreement (TALA) and its resulting
termination. Owens sought 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.

On November 6, 2000, the Company and its affiliates, including Consumers,
reached a settlement concerning all aspects of the Owens dispute. As part of
the settlement, Owens will grant the Company and its affiliates a limited
license through 2005. The limited license will cover technology in place during
the term of the TALA, at the same royalty rate as in the TALA. Upon expiration
of the limited license, the Company and its affiliates, including Consumers,
will receive a paid-up license for that technology. Documentation for the
settlement (including mutual releases) and the limited license agreement is
being negotiated. The Company believes that it has reached agreement with Owens
on all of the terms of the definitive documentation of the settlement. Under
the settlement, the Company, Consumers and GGC will pay an aggregate of $5.0
million to Owens. The Company estimated its allocation of this settlement to be
$2.9 million, based on sales and machine installations. Consumers, GGC and
another affiliate will receive a refund of $1.2 million, in the aggregate, of
royalties paid previously under protest. Consummation of the settlement will
terminate all litigation over the matter, including the federal court suit and
an overseas lawsuit, as well as arbitration proceedings.The special committee
of the Board has been directed by the Board to review the terms of this
settlement and the terms of the sale by Consumers to O-I.

In addition, the Company is, and from time to time may be, a party to
routine legal proceedings incidental to the operation of its business. The
outcome of these proceedings is not expected to have a material adverse effect
on the financial condition or operating results of the Company, based on the
Companys current understanding of the relevant facts and law.

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Item 2. Changes in Securities and Use of Proceeds.



| |  |  | None
| |  |  | ----

Item 3. Defaults Upon Senior Securities.



| |  |  | None
| |  |  | ----

Item 4. Submission of Matters to a Vote of Security Holders.



| |  |  | None
| |  |  | ----

Item 5. Other Information.



| |  |  | None
| |  |  | ----

Item 6. Exhibits and Reports on Form 8-K.



| | a. |  | Exhibits
| | -- |  | --------



| |  |  | None
| |  |  | ----



| | b. |  | Reports on Form 8-K
| | -- |  | -------------------



| |  |  | Current Report on Form 8-K dated September 5, 2001 and filed
September 12, 2001 pursuant to Item 5, disclosing that John J.
Ghaznavi was removed as chairman and chief executive officer of
Anchor.                                                                                                                                                                                                               
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Current Report on Form 8-K dated September 26, 2001 and filed
September 27, 2001 pursuant to Item 5, filing as an exhibit the
Rights Agreement, dated as of September 26, 2001 and filing as an
exhibit a press release disclosing the adoption of a stockholder
rights plan and lawsuit against Owens-Illinois. See Notes 5 and 6
to the Condensed Financial Statement and Part II  Item 1.  Legal
Proceedings.
|
| |  |  | Current Report on Form 8-K dated and filed September 27, 2001
pursuant to Item 5, filing as an exhibit Amendment No. 1 to the
Rights Agreement, dated as of September 27, 2001. See Note 5 to
the Condensed Financial Statements.                                                                                                                                                                                 
|
| |  |  | Current Report on Form 8-K dated and filed October 11, 2001
pursuant to Item 5, reporting an action against the Company and
certain of the Companys directors commenced by Consumers U.S. and
filing as an exhibit, a copy of the complaint filed October 5,
2001. See Note 6 to the Condensed Financial Statement and Part II
 Item 1.  Legal Proceedings.                                                    
|
| |  |  | Current Report on Form 8-K dated October 31, 2001 and filed
November 1, 2001 pursuant to Item 5, filing as an exhibit the
Amended and Restated Rights
Agreement, dated as of October 31,
2001. See Note 5 to the Condensed Financial Statements.                                                                                                                                                                  

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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: November 2, 2001 |  |                                    |  | /s/ Dale A. Buckwalter                                                                                                            
|                       |  |                                    |  |                                                                                                                                   
|                       |  |                                    |  | Dale A. Buckwalter 
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer)

25