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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION  FORM 10-Q (Mark one)[X]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2004
OR[  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 ANCHOR GLASS CONTAINER CORPORATION 
  0-23359   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)
 Registrants telephone number, including area code: 813-884-0000 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [  ]. Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]. Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date. The number of shares of Anchor Glass Container Corporation, common stock, $.10
par value, outstanding at July 30, 2004 was 24,609,343.




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ANCHOR GLASS CONTAINER CORPORATION FORM 10-Q For the Quarterly Period Ended June 30, 2004 INDEX Page No.PART I - FINANCIAL INFORMATIONItem 1. Financial Statements:Condensed Statements of Operations and Comprehensive Income (Loss) -
Three and Six Months Ended June 30, 2004 and 2003
    
    
    3Condensed Balance Sheets -
June 30, 2004 and December 31, 2003
    
    
    4Condensed Statements of Cash Flows -
Six Months Ended June 30, 2004 and 2003
    
    
    5Notes to Condensed Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    8Item 3. Quantitative and Qualitative Disclosures About
Market Risk
    
    
    12Item 4. Controls and Procedures
    
    
    12PART II - OTHER INFORMATION
    
    
    13Item 1. Legal Proceedings
    
    
    13Item 2. Changes in Securities and Use of Proceeds
    
    
    13Item 3. Defaults Upon Senior Securities
    
    
    13Item 4. Submission of Matters to a Vote of Security Holders
    
    
    13Item 5. Other Information
    
    
    13Item 6. Exhibits and Reports on Form 8-K
    
    
    13SIGNATURES
    
    
    14Ex-31.1: 302 Certification of CEOEx-31.2: 302 Certification of CFOEx-32: 906 Certification fo CEO and CFO
 2




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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)
 Six Months Ended
    
    Three Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Net sales
    
    $
    403,612
    
    
    $
    349,225
    
    
    $
    214,051
    
    
    $
    186,822Costs and expenses:Cost of products sold
    
    
    369,258
    
    
    
    321,281
    
    
    
    194,263
    
    
    
    168,283Gain on sale
of non-operating properties
    
    
    (3,823
    )
    
    
    
    
    
    
    (3,823
    )
    
    
    Selling and administrative expenses
    
    
    13,309
    
    
    
    13,466
    
    
    
    6,218
    
    
    
    6,820Income from operations
    
    
    24,868
    
    
    
    14,478
    
    
    
    17,393
    
    
    
    11,719Other income, net
    
    
    399
    
    
    
    68
    
    
    
    3
    
    
    
    585Interest expense
    
    
    (24,161
    )
    
    
    (25,138
    )
    
    
    (12,020
    )
    
    
    (11,007
    )Net income (loss)
    
    $
    1,106
    
    
    $
    (10,592
    )
    
    $
    5,376
    
    
    $
    1,297Preferred stock dividends
    
    $
    
    
    
    $
    (4,751
    )
    
    $
    
    
    
    $
    (2,410
    )Income (loss) applicable to common
stock
    
    $
    1,106
    
    
    $
    (15,343
    )
    
    $
    5,376
    
    
    $
    (1,113
    )Basic and diluted net income (loss)
per share applicable to common stock.
    
    $
    0.05
    
    
    $
    (1.14
    )
    
    $
    0.22
    
    
    $
    (0.08
    )Basic weighted average number of
common shares outstanding
    
    
    24,535,546
    
    
    
    13,499,995
    
    
    
    24,554,848
    
    
    
    13,499,995Diluted weighted average number of
common shares outstanding
    
    
    24,735,322
    
    
    
    13,499,995
    
    
    
    24,753,743
    
    
    
    13,499,995Dividends per common share
    
    $
    0.08
    
    
    $
    
    
    
    $
    0.04
    
    
    $
    Comprehensive income (loss):Net income (loss)
    
    $
    1,106
    
    
    $
    (10,592
    )
    
    $
    5,376
    
    
    $
    1,297Other comprehensive income
(loss):Derivative income (loss)
    
    
    1,755
    
    
    
    707
    
    
    
    (259
    )
    
    
    897Comprehensive income (loss)
    
    $
    2,861
    
    
    $
    (9,885
    )
    
    $
    5,117
    
    
    $
    2,194
 See Notes to Condensed Financial Statements. 3




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ANCHOR GLASS CONTAINER CORPORATION 
 CONDENSED BALANCE SHEETS
 (dollars in thousands)
 June 30, 2004(unaudited)
    
    December 31, 2003ASSETSCurrent assets:Cash and cash equivalents
    
    $
    183
    
    
    $
    23,083Accounts receivable
    
    
    53,635
    
    
    
    36,674Inventories:Raw materials and manufacturing supplies
    
    
    30,080
    
    
    
    28,144Finished products
    
    
    96,508
    
    
    
    108,640Other current assets
    
    
    9,184
    
    
    
    11,230Total current assets
    
    
    189,590
    
    
    
    207,771Property, plant and equipment, net
    
    
    488,070
    
    
    
    477,253Other assets
    
    
    14,088
    
    
    
    14,674Intangible assets
    
    
    6,450
    
    
    
    6,846$
    698,198
    
    
    $
    706,544LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Borrowings under revolving credit facility
    
    $
    8,126
    
    
    $
    Current maturities of long-term debt
    
    
    9,106
    
    
    
    8,895Accounts payable
    
    
    48,604
    
    
    
    55,000Accrued expenses
    
    
    16,448
    
    
    
    17,004Accrued interest
    
    
    14,952
    
    
    
    14,900Accrued compensation and employee benefits
    
    
    26,016
    
    
    
    31,271Total current liabilities
    
    
    123,252
    
    
    
    127,070Long-term debt
    
    
    417,401
    
    
    
    422,881Long-term post-retirement liabilities
    
    
    41,529
    
    
    
    40,197Other long-term liabilities
    
    
    18,980
    
    
    
    20,833477,910
    
    
    
    483,911Commitments and contingenciesStockholders equity:Common stock
    
    
    2,461
    
    
    
    2,451Capital in excess of par value
    
    
    128,151
    
    
    
    129,549Accumulated deficit
    
    
    (37,475
    )
    
    
    (38,581
    )Accumulated other comprehensive income
    
    
    3,899
    
    
    
    2,14497,036
    
    
    
    95,563$
    698,198
    
    
    $
    706,544
 See Notes to Condensed Financial Statements. 4




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ANCHOR GLASS CONTAINER CORPORATION 
 CONDENSED STATEMENTS OF CASH FLOWS
 (unaudited)
(dollars in thousands)
 Six Months Ended June 30,2004
    
    2003Cash flows from operating activities:Net income (loss)
    
    $
    1,106
    
    
    $
    (10,592
    )Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities:Depreciation
    
    
    31,520
    
    
    
    31,901Amortization
    
    
    2,333
    
    
    
    1,508Amortization of financing fees
    
    
    881
    
    
    
    4,433Gain on sale
of non-operating properties
    
    
    (3,823
    )
    
    
    Loss on fixed asset sales
    
    
    81
    
    
    
    292Other
    
    
    141
    
    
    
    (82
    )Decrease in cash resulting from changes in assets and
liabilities
    
    
    (21,926
    )
    
    
    (37,587
    )10,313
    
    
    
    (10,127
    )Cash flows from investing activities:Expenditures for property, plant and equipment
    
    
    (42,362
    )
    
    
    (56,183
    )Purchase of equipment under leases
    
    
    
    
    
    
    (39,217
    )Proceeds from sale of property and equipment
    
    
    5,513
    
    
    
    10,414Change in restricted cash
    
    
    
    
    
    
    4,387Other
    
    
    (2,458
    )
    
    
    (1,714
    )(39,307
    )
    
    
    (82,313
    )Cash flows from financing activities:Proceeds from issuance of long-term debt
    
    
    
    
    
    
    300,000Principal payments of long-term debt
    
    
    (5,072
    )
    
    
    (173,834
    )Dividends paid on common stock
    
    
    (1,963
    )
    
    
    Net draws (repayments) on revolving credit facility
    
    
    8,126
    
    
    
    (9,031
    )Payment of capital lease obligations for assets purchased
    
    
    
    
    
    
    (5,539
    )Plan distributions to Series A preferred stock
    
    
    
    
    
    
    (3,678
    )Repurchase of warrants
    
    
    
    
    
    
    (1,500
    )Other
    
    
    5,003
    
    
    
    (14,009
    )6,094
    
    
    
    92,409Cash and cash equivalents:Decrease in cash and cash equivalents
    
    
    (22,900
    )
    
    
    (31
    )Balance, beginning of period
    
    
    23,083
    
    
    
    351Balance, end of period
    
    $
    183
    
    
    $
    320Supplemental noncash activities:Non-cash equipment financing
    
    $
    
    
    
    $
    10,000
 See Notes to Condensed Financial Statements. 5




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ANCHOR GLASS CONTAINER CORPORATION 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (unaudited)
(dollars in thousands)
 NOTE 1  Basis of Presentation Management Responsibility In the opinion of management, the accompanying condensed financial
statements contain all adjustments, consisting only of normal recurring
adjustments, that are necessary to present fairly the financial position of
Anchor Glass Container Corporation (the Company or Anchor) as of June 30,
2004 and the results of operations for the three and six months ended June 30,
2004 and 2003 and cash flows for the six months then ended June 30, 2004 and
2003. 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 included in the Companys annual report on Form 10-K for
the year ended December 31, 2003. The results of operations for the interim
periods are not necessarily indicative of the results of the full fiscal year. Post-retirement Benefits The Company provides post-retirement benefits to certain salaried and
hourly employees and former employees. The Company accrues post-retirement
benefits (such as healthcare benefits) during the years an employee provides
services. Currently, the Company funds these healthcare benefits on a
pay-as-you-go basis. The components of the net periodic benefit cost are: Six Months Ended
    Three Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Service cost-benefits earned
during the period
    
    $
    232
    
    
    $
    231
    
    
    $
    116
    
    
    $
    116Interest cost on projected
benefit obligation
    
    
    1,671
    
    
    
    1,805
    
    
    
    835
    
    
    
    902Amortization of actuarial losses
    
    
    348
    
    
    
    264
    
    
    
    174
    
    
    
    132Total net periodic benefit cost
    
    $
    2,251
    
    
    $
    2,300
    
    
    $
    1,125
    
    
    $
    1,150
 Capital Stock In the six months ended June 30, 2004, the Company declared and paid cash
dividends on its common stock of $1,963, recorded stock option compensation
expense of $337 and received the proceeds from the exercise of stock options of
$238. Income Taxes The Company applies Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes under which the liability method is used in
accounting for income taxes. Although the Company has reported year-to-date net
income, no income tax provision has been recorded. Any current taxable income
that may result will be offset by tax depreciation. Deferred tax expense will
be offset by a valuation allowance. Therefore, the effective tax rate in the
second quarter is zero. Management deems it appropriate to maintain the
valuation allowance against the Companys net deferred tax assets. 6




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ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands) New Accounting Standards In December 2003, the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Medicare Act) was signed into law. The
Medicare Act introduces a prescription drug benefit under Medicare as well as a
federal subsidy to sponsors of retiree health care benefit plans that provide a
benefit that is at least actuarially equivalent to Medicare Part D. In May
2004, the Financial Accounting Standards Board issued FSP No. FAS 106-2 -
Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (FSP FAS 106-2). FSP FAS
106-2 provides guidance on accounting for the effects of the Medicare Act for
employers that sponsor postretirement health care plans that provide
prescription drug benefits and is effective for interim periods beginning after
June 15, 2004. As of June 30, 2004, the Company has not
determined the impact of FSP FAS 106-2 and accordingly, the accounting for the accumulated
post-retirement benefit obligation and the net periodic benefit cost under
Statement of Financial Accounting Standards No. 106Employers Accounting for
Postretirement Benefits Other Than Pensions (SFAS 106) in the accompanying
condensed financial statements does not reflect the effects of the Medicare Act
on the plan. Reclassifications Certain reclassifications have been made to the statements of operations
and cash flows for the periods prior to the six months ended June 30, 2004 to
conform to the current period presentation. NOTE 2  Property, Plant and Equipment In the second quarter of 2004, the Company sold three previously closed
facilities located at Cliffwood, New Jersey, Royersford, Pennsylvania and
Chattanooga, Tennessee. The Company received proceeds from these sales of
$5,469. Included on the accompanying
condensed statement of operations is a gain of $2,848 and the associated
release of a non-cash reserve of $975 as a result of the sale. Effective January 1, 2004, the Company implemented the results of an
independent appraisal to update the depreciable lives of its property, plant
and equipment, and accordingly, calculated depreciation expense for the first
six months of 2004 using the updated lives, resulting in a reduction in the
amount of depreciation that would have been otherwise expensed. Depreciation
and amortization recorded in the three months and six months ended June 30,
2004 were $16,257 and $33,853, respectively. On a pro forma basis, without the
update to depreciable lives, depreciation and amortization expense in the three
months and six months ended June 30, 2004 would have been greater by $4,481 and
6,376, respectively. NOTE 3  Commitments and Contingencies 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 any
such pending or threatened proceedings is not expected to have a material
adverse effect on the financial condition, operating results or cash flows of
the Company, based on the Companys current understanding of the relevant
facts. Legal expenses incurred related to these contingencies are generally
expensed as incurred. The Companys operations are subject to various Federal, state and local
requirements that are designed to protect the environment. Such requirements
have resulted in the Company being involved in related legal proceedings,
claims and remediation obligations. The Company does not believe that
its environmental exposure is in excess of the reserves reflected on its balance
sheet, although there can be no assurance that this will continue to be the
case. 7




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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations. Company Background The Company is the third largest manufacturer of glass containers in the
United States, focused solely on this packaging industry segment. The Company
has nine strategically located facilities where it produces a diverse line of
flint (clear), amber, green and other colored glass containers of various
types, designs and sizes for the beer, beverage, food, liquor and flavored
alcoholic beverage markets. The Company manufactures and sells its products to
many of the leading producers of products in these categories. Results of Operations Net sales.Net sales for the second quarter of 2004 were $214.1 million
compared to $186.8 million for the second quarter of 2003, an increase of $27.3
million, or 14.6%. Net sales for the first half of 2004 were $403.6 million and
$349.2 million for the comparable period of 2003, an increase of $54.4 million,
or 15.6%. The increase in net sales was principally the result of an increase
in unit shipments of approximately 19% in both the three months and six months
ended June 30, 2004 as compared with the same periods of 2003. These sales
increases reflect strong sales gains from new business in the beverage and
liquor categories as well as core beer category sales increases. New business
volumes and higher shipments in the beer category were partially offset by the
declines in food and ready-to-drink categories. The growth in unit shipments
exceeded the growth in sales dollars, reflecting in part, the planned changes
in sales mix attributable to current customer contracts and the Companys
inability to fully pass through the high cost of energy to its customers. Cost of products sold.The Companys
cost of products sold in the second
quarter and the first half of 2004 was $194.3 million and $369.3 million,
respectively (or 90.8% and 91.5% of net sales), while the cost of products sold
for the second quarter and first half of 2003 was $168.3 million and $321.3
million, respectively (or 90.1% and 92.0% of net sales). Included in margin
results for the second quarter of 2004 were incremental energy penalties of
$6.0 million, comprised of higher energy costs and lower energy
recoveries. The record-high global energy prices continue to affect several
areas of glass production operations, including energy surcharges on raw
materials, in-bound and out-bound freight and electricity. In the second
quarter of 2004, the Company was not able to fully realize relief of its high
energy costs through cost pass-throughs to its customers. Improved efficiencies
from the Companys facilities betterment initiatives more than offset on-going
higher energy costs in manufacturing and distribution. Effective
January 1, 2004, the Company implemented the results of an
independent appraisal to update the depreciable lives of its
property, plant and equipment, and accordingly, calculated
depreciation expense for the first six months of 2004 using the
updated lives, resulting in a reduction in the amount of depreciation
that would have been otherwise expensed. Depreciation and
amortization expense is comparable period over period as a result of
the combination of lower expense from the update of depreciable lives
and higher expense from the significant capital improvement projects
in 2003 and 2004. Gain on sale of
non-operating properties. In the second quarter of 2004, the Company sold three previously closed
facilities located at Cliffwood, New Jersey, Royersford, Pennsylvania and
Chattanooga, Tennessee. The Company received proceeds from these sales of $5.5
million. Included in gain on sale of non-operating properties is a gain of $2.8
million and the associated release of a non-cash reserve of
$1.0 million as a result of the sale. Selling and administrative expenses.Selling and administrative expenses
for the three months and six months ended June 30, 2004 were $6.2 million and
$13.3 million, respectively, or 2.9% and 3.3% of net sales, while selling and
administrative expenses for the three months and six months ended June 30, 2003
were $6.8 million and $13.5 million, respectively, or 3.7% and 3.9% of net
sales. The decrease in selling and administrative expenses resulted from lower
professional fees and the benefits of renegotiated corporate headquarters
lease, partially offset by higher personnel and benefit costs, including stock
option compensation expenses. Interest expense.Interest expense for the second quarter of 2004 was
$12.0 million compared to $11.0 million for the second quarter of 2003, an
increase of $1.0 million. Interest expense for the first half of 2004 was $24.1
million compared to $25.1 million for the first half of 2003, a decrease of
$1.0 million. Interest expense in the first half of 2003 included a charge of
$4.3 million for the noncash write-off of deferred fees of $3.6 million and
related payments of $0.7 million, related to debt repaid with the proceeds from
the issuance of the 11% Senior Secured Notes due 2013, aggregate principal
amount of $350.0 million (the Senior Secured Notes). Cash interest expense
increased $1.0 million in the second quarter 8




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of 2004 and increased $3.3 million in the first half of 2004 as a result of higher
outstanding debt levels in 2004 as compared with 2003. Net income (loss).The Company recorded net income of $5.4 million for the
second quarter of 2004 as compared to net income of $1.3 million for the second
quarter of 2003. The Company recorded net income of $1.1 million in the first
half of 2004 as compared to a net loss of $10.6 million for the first half of
2003. The improvement in net income quarter over quarter of $4.1 million and
year over year of $11.7 million, were primarily due to the factors noted above. Liquidity and Capital Resources The Companys principal sources of liquidity are funds derived from
operations and borrowings under the Companys $100.0 million revolving credit
facility (the Revolving Credit Facility). The Company believes that cash
flows from operating activities, combined with available borrowings under the
Revolving Credit Facility, will be sufficient to support its operations and
liquidity requirements for the foreseeable future, although the Company cannot
be assured that this will be the case. Peak operating needs are in the spring,
at which time working capital borrowings are significantly higher than at other
times of the year. Cash Flows Operating Activities.Operating activities provided $10.3 million in cash
in the first half of 2004, as compared to cash consumed of $10.1 million in the
first half of 2003. This overall improvement in cash provided reflects the
changes in working capital items and the improvement in earnings. Accounts
receivable levels increased in 2004, using $15.2 million in cash. Inventory
levels declined, providing cash of $7.6 million. Cash used in the reduction of
current liabilities was $16.9 million. Cash interest payments in the first half of 2004 were $11.3 million
greater than payments made in the first half of 2003. Investing Activities.Cash consumed in investing activities was $39.3
million in the first half of 2004, as compared to $82.3 million in the same
period of 2003. Capital expenditures were $42.4 million in the first six months
of 2004, as compared to $56.2 million in the first six months of 2003. In the
second quarter of 2004, the Company received proceeds of $5.5 million from the
sale of three previously closed facilities. In the first quarter of 2003, the
Company used $45.0 million of the proceeds from the offering of the Senior
Secured Notes to terminate certain equipment leases and purchased the equipment
leased thereunder (of which $39.2 million was included in investing activities
and $5.5 million was included in financing activities). Financing Activities.Net cash provided for financing activities was $6.1
million in the six months ended June 30, 2004, as compared to $92.4 million in
the six months ended June 30, 2003. The net financing activities in 2004
principally reflect borrowings under the Revolving Credit Facility. The Company
paid approximately $2.0 million in cash dividends on its common stock. The net
financing activities in 2003 principally reflect the proceeds of the offering
of the Senior Secured Notes of $289.0 million and the use of a portion of these
proceeds for the repayment of debt then outstanding. Debt and Other Contractual Obligations The Company has aggregate indebtedness of $350.0 million under its Senior
Secured Notes. As of June 30, 2004, advances outstanding under the Revolving Credit
Facility were $8.1 million, borrowing availability was $69.9 million and
outstanding letters of credit on this facility were $11.4 million. Availability
under the Revolving Credit Facility was $58.6 million as of August 4, 2004. 9




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Under a master lease agreement entered into in December 2002, the Company
leased equipment in the amount of $20.0 million in the aggregate under a lease
term of five years. The master lease agreement is
structured as a capital lease under generally accepted accounting
principles. For each group of equipment items the Company agreed to lease, it
entered into an equipment schedule that applied the terms of the master lease
to such equipment. In August 2002, in connection with its reorganization, the Company entered
into a ten-year payment obligation under an agreement with the Pension Benefit
Guaranty Corporation (PBGC). The present value of this obligation was $58.3
million at June 30, 2004. The Companys obligations under the Revolving Credit Facility are secured
by a first priority security interest in all of the Companys inventories,
receivables, general intangibles and proceeds therefrom. In addition, the
Revolving Credit Facility contains customary negative covenants and
restrictions for transactions including, without limitation, restrictions on
indebtedness, liens, investments, fundamental business changes, asset
dispositions outside of the ordinary course of business, certain junior
payments, transactions with affiliates and changes relating to indebtedness.
The Revolving Credit Facility requires that the Company meet a quarterly fixed
charge coverage test, unless minimum availability declines below $10.0 million
in which case the Company must meet a monthly fixed charge coverage test. The Company anticipates expenditures in the remainder of 2004 of $13 to
$17 million for capital expenditures, primarily for routine maintenance and
molds, $19.3 million of interest payments on the Senior Secured Notes, $5.0
million of payments under the agreement with the PBGC and $5.2 million of
payments under operating and capital leases. In addition, the Company is
obligated to pay approximately $4.2 million annually related to its
post-retirement benefit plan and $5.2 million annually to multiemployer pension
plans for the future service benefits of its hourly employees. Capital Expenditures Capital expenditures were $42.4 million in the first half of 2004,
including a major reconstruction on a furnace at the Companys Shakopee,
Minnesota facility. This rebuild is the only major maintenance capital project
planned for 2004. Annual capital spending in 2004 is expected to approximate
$55 to $59 million. Capital spending in 2005 is expected to approximate $55
million. The Companys principal sources of liquidity for the funding of the
2004 capital expenditures are expected to be from operations and borrowings
under the Revolving Credit Facility. Off-Balance Sheet Arrangements The Company is not party to off-balance sheet arrangements. Impact of Inflation The impact of inflation on the Companys costs, and the ability to pass on
cost increases in the form of increased sales prices, is dependent upon market
conditions. The Company has experienced significant cost increases in specific
materials and energy and has not been fully able to pass on these cost
increases to its customers for several years, although the Company did realize
some price increases in recent years, primarily due to abnormally high energy
costs, which the Company has experienced since 2001. In the second quarter of
2004, the Company was not able to realize timely relief of its high energy
costs through cost pass-throughs to its customers. Since 2000, closing prices for natural gas have fluctuated significantly
from a low of $1.830 per MMBTU, in October 2001 to a high of $9.978 per MMBTU
in January 2001, compared to an average price of $2.238 per MMBTU from 1995
through 1999. Since the 2001 price peak, natural gas prices have remained
volatile. In 2003, natural gas prices have closed at between $4.430 and $9.133
per MMBTU, with the low being October 2003 and the high being March 2003. The
natural gas price for July 2004 closed at $6.141 per MMBTU. The Company has no
way of predicting to what extent natural gas prices 10




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will fluctuate in the future.
Any significant increase, or the inability to pass on those costs to customers,
could adversely impact the Companys margins and operating performance. Seasonality Demand for beer, iced tea and other beverages is stronger during the
summer months. Because the Companys shipment volume is typically higher in the
second and third quarters, the Company usually builds inventory during the
fourth and first quarters in anticipation of seasonal demands, although as a
result of 2004 shipment levels, inventory declined slightly in the 2004 first
quarter. In addition, although the Company seeks to minimize downtime, it has
historically scheduled shutdowns of its plants for furnace rebuilds and machine
repairs in the fourth and first quarters of the year to coincide with scheduled
holiday and vacation time under its labor union contracts. These shutdowns,
coupled with the Companys contemporaneous inventory build-up, consume working
capital and adversely affect its liquidity on a seasonal basis. New Accounting Standards In December 2003, the Medicare Act was signed into law. The Medicare Act
introduces a prescription drug benefit under Medicare as well as a federal
subsidy to sponsors of retiree health care benefit plans that provide a benefit
that is at least actuarially equivalent to Medicare Part D. In May 2004, the
Financial Accounting Standards Board issued FSP FAS 106-2 which provides
guidance on accounting for the effects of the Medicare Act for employers that
sponsor postretirement health care plans that provide prescription drug
benefits and is effective for interim periods beginning after June 15, 2004. As
of June 30, 2004, the Company has not determined the impact of
FSP FAS 106-2 and accordingly, the accounting for the accumulated post-retirement benefit
obligation and the net periodic benefit cost under SFAS 106 in the accompanying
condensed financial statements does not reflect the effects of the Medicare Act
on the plan. Information Concerning Forward-Looking Statements This report includes forward-looking statements. 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, among other things, statements
concerning:  
    
    the Companys liquidity and capital resources;
    
    competitive pressures and trends in the glass container or beverage and food industries;
    
    prevailing interest rates;
    
    prices for energy, particularly natural gas, and other raw materials;
    
    legal proceedings and regulatory matters; and
    
    general economic conditions. Forward-looking statements involve risks and uncertainties faced by the
Company 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 highly competitive nature of the glass
container industry and the intense competition from makers of alternative forms
of packaging; fluctuations 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 and other beverage industries; volatility in demand from
emerging new markets; the Companys dependence on certain executive officers;
and changes in environmental and other government regulations. The Company
operates in a changing environment in which new risk factors can emerge from
time to time. It is not possible for management to predict all of these risks,
nor can it assess 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. All forward-looking statements are subject to risks
and uncertainties, including without limitation those identified in the
Companys annual report on Form 11




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10-K, which could cause actual results to
differ from those projected. The Company disclaims any obligation to update any
forward-looking statements. 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk. The Revolving Credit Facility is subject to interest rates based on a
floating benchmark rate (the prime rate or eurodollar rate), plus an applicable
margin. A change in interest rates under the Revolving Credit Facility could
adversely impact results of operations. A 50 basis point fluctuation in the
market rate of interest would impact annual interest expense by approximately
$0.2 million, based on average borrowings outstanding during 2004. 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 net sales are denominated in currencies
other than the U.S. dollar, and the Company does not believe its total exposure
to currency fluctuations to be significant. Through the purchase of natural gas
futures, the Company has hedged certain of its estimated natural gas purchases,
typically over a period of six to twelve months, although the Company currently
has hedges in place extending into 2005. The Company does not enter into such
hedging transactions for speculative trading purposes but rather to lock in
energy prices. Also, the Company has entered into put and call options for
purchases of natural gas. Accounting for these derivatives may increase
volatility in earnings. 
 Item 4. Controls and Procedures. An evaluation was carried out, as of the end of the period covered by this
report, under the supervision of the Chief Executive Officer and the Chief
Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934, as amended. Based on that
evaluation, Anchors Chief Executive Officer and Chief Financial Officer have
concluded that the Companys disclosure controls and procedures are effective. There were no significant changes in the Companys internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation and there were no corrective actions with regard to
significant deficiencies and material weaknesses. 12




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PART II - OTHER INFORMATION 
 Item 1. Legal Proceedings. 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 any
such pending or threatened proceedings is not expected to have a material
adverse effect on the financial condition, operating results or cash flows of
the Company, based on the Companys current understanding of the relevant
facts. Legal expenses incurred related to these contingencies are generally
expensed as incurred. The Companys operations are subject to various Federal, state and local
requirements that are designed to protect the environment. Such requirements
have resulted in the Company being involved in related legal proceedings,
claims and remediation obligations. The Company does not believe that its
environmental exposure is in excess of the reserves reflected on its balance
sheet, although there can be no assurance that this will continue to be the
case. 
 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.  At the Annual Meeting of Stockholders of the Company held June 9, 2004,
the following matter was voted upon:Election of Joel A. Asen, James N. Chapman, Richard M. Deneau, Jonathan
Gallen, Timothy F. Price, Alan H. Schumacher, Lenard B. Tessler and
Alexander Wolf to serve as directors of the Company for a term that
expires at the next succeeding annual meeting after their election, or
until their successors, if any, are elected and appointed. For
    
    WithheldJoel A. Asen
    
    
    24,344,841
    
    
    
    17,520James N. Chapman
    
    
    24,344,841
    
    
    
    17,520Richard M. Deneau
    
    
    22,961,729
    
    
    
    1,400,632Jonathan Gallen
    
    
    24,299,500
    
    
    
    62,861Timothy F. Price
    
    
    24,345,661
    
    
    
    16,700Alan H. Schumacher
    
    
    24,344,841
    
    
    
    17,520Lenard B. Tessler
    
    
    21,899,048
    
    
    
    2,463,313Alexander Wolf
    
    
    22,986,385
    
    
    
    1,375,976
 
 Item 5. Other Information. None 
 Item 6. Exhibits and Reports on Form 8-K. (a.) Exhibits Exhibit 31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive OfficerExhibit 31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial OfficerExhibit 32
    
    Section 1350 Certifications
 (b.) Reports on Form 8-K Current Report on Form 8-K dated May 5, 2004 and filed May 6, 2004
pursuant to Items 7 and 12. A press release regarding the release of
the Companys results of operations for the first quarter ended March
31, 2004 is furnished as an exhibit. 13
    Table of Contents  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 CORPORATIONDate:  August 10, 2004
    /s/ Peter T. RenoPeter T. RenoChief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer) 14